XML 103 R30.htm IDEA: XBRL DOCUMENT v2.4.0.8
Derivatives and Risk Management Activities (Tables)
 6 Months Ended
Jun. 30, 2013
Derivative disclosures  
Open foreign currency exchange contracts

The following table summarizes our open forward exchange contracts as of June 30, 2013 (in millions):

 

 

 

 

 

USD

 

CAD

 

Average Exchange Rate
USD to CAD

 

Forward exchange contracts that exchange CAD for USD:

 

 

 

 

 

 

 

 

 

 

 

2013

 

$

214

 

$

224

 

$1.00 - $1.05

 

 

 

2014

 

 

42

 

 

44

 

$1.00 - $1.06

 

 

 

2015

 

 

9

 

 

9

 

$1.00 - $1.07

 

 

 

 

 

$

265

 

$

277

 

$1.00 - $1.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forward exchange contracts that exchange USD for CAD:

 

 

 

 

 

 

 

 

 

 

 

2013

 

$

209

 

$

216

 

$1.00 - $1.03

 

 

 

2014

 

42

 

43

 

$1.00 - $1.03

 

 

 

2015

 

 

9

 

 

9

 

$1.00 - $1.06

 

 

 

 

 

$

260

 

$

268

 

$1.00 - $1.03

 

 

 

 

 

 

 

 

 

 

 

Net position by currency:

 

 

 

 

 

 

 

 

 

 

 

2013

 

$

5

 

$

8

 

 

 

 

 

2014

 

 

—

 

 

1

 

 

 

 

 

2015

 

 

—

 

 

—

 

 

 

 

 

 

 

$

5

 

$

9

 

 

 

 
Impact of derivative activities recognized in earnings

 

 

 

 

Three Months Ended June 30, 2013

 

Three Months Ended June 30, 2012

 

 

 

Derivatives in Hedging
Relationships

 

 

 

 

 

Derivatives in Hedging
Relationships

 

 

 

 

 

Location of gain/(loss)

 

Gain/(loss)
reclassified
from
AOCI into
income (1)

 

Other
gain/(loss)
recognized
in income

 

Derivatives
Not
Designated
as a
Hedge (2)

 

Total

 

Gain/(loss)
reclassified
from
AOCI into
income (1)

 

Other
gain/(loss)
recognized
in income

 

Derivatives
Not
Designated
as a
Hedge (2)

 

Total

 

Commodity Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply and Logistics segment revenues

 

$

21

 

$

—

 

$

21

 

$

42

 

 

$

(97

)

$

1

 

$

199

 

$

103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Facilities segment revenues

 

(9

)

—

 

—

 

(9

)

 

1

 

—

 

—

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases and related costs

 

—

 

—

 

—

 

—

 

 

37

 

—

 

(1

)

36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Field operating costs

 

—

 

—

 

4

 

4

 

 

—

 

—

 

(4

)

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(2

)

—

 

—

 

(2

)

 

(1

)

1

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply and Logistics segment revenues

 

—

 

—

 

—

 

—

 

 

—

 

—

 

(1

)

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income/(expense), net

 

1

 

—

 

—

 

1

 

 

1

 

—

 

—

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Gain/(Loss) on Derivatives Recognized in Net Income

 

$

11

 

$

—

 

$

25

 

$

36

 

 

$

(59

)

$

2

 

$

193

 

$

136

 

 

 

 

Six Months Ended June 30, 2013

 

Six Months Ended June 30, 2012

 

 

 

Derivatives in Hedging
Relationships

 

 

 

 

 

Derivatives in Hedging
Relationships

 

 

 

 

 

Location of gain/(loss)

 

Gain/(loss)
reclassified
from
AOCI into
income (1)

 

Other
gain/(loss)
recognized
in income

 

Derivatives
Not
Designated
as a
Hedge (2)

 

Total

 

Gain/(loss)
reclassified
from
AOCI into
income (1)

 

Other
gain/(loss)
recognized
in income

 

Derivatives
Not
Designated
as a
Hedge (2)

 

Total

 

Commodity Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply and Logistics segment revenues

 

$

29

 

$

—

 

$

59

 

$

88

 

 

$

(59

)

$

(2

)

$

161

 

$

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Facilities segment revenues

 

(12

)

—

 

—

 

(12

)

 

13

 

—

 

—

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases and related costs

 

—

 

—

 

—

 

—

 

 

41

 

—

 

—

 

41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Field operating costs

 

—

 

—

 

5

 

5

 

 

—

 

—

 

(2

)

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(3

)

—

 

—

 

(3

)

 

(3

)

2

 

—

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income/(expense), net

 

2

 

—

 

—

 

2

 

 

2

 

—

 

—

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Gain/(Loss) on Derivatives Recognized in Net Income

 

$

16

 

$

—

 

$

64

 

$

80

 

 

$

(6

)

$

—

 

$

159

 

$

153

 

 

(1)                       During the three months ended June 30, 2013, we reclassified gains of approximately $1 million and $1 million from AOCI to Supply and Logistics segment revenues and Facilities segment revenues, respectively, as a result of anticipated hedged transactions that are probable of not occurring. During the six months ended June 30, 2013, we reclassified gains of approximately $3 million and $1 million from AOCI to Supply and Logistics segment revenues and Facilities segment revenues, respectively, as a result of anticipated hedged transactions that are probable of not occurring. All of our hedged transactions were deemed probable of occurring during the three and six months ended June 30, 2012.

 

(2)                       Includes realized and unrealized gains and losses for derivatives that did not qualify or were not designated for hedge accounting during the period.

 
Summary of derivative assets and liabilities on condensed consolidated balance sheet

The following table summarizes the derivative assets and liabilities on our condensed consolidated balance sheet on a gross basis as of June 30, 2013 (in millions):

 

 

 

Asset Derivatives

 

 

 

Liability Derivatives

 

 

 

Balance Sheet

 

 

 

 

 

Balance Sheet

 

 

 

 

 

Location

 

Fair Value

 

 

 

Location

 

Fair Value

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

Commodity derivatives

 

Other current assets

 

$

40

 

 

 

Other current assets

 

$

(14

)

 

 

Other long-term assets

 

9

 

 

 

Other long-term assets

 

(4

)

Interest rate derivatives

 

Other current assets

 

8

 

 

 

Other current assets

 

(3

)

 

 

Other long-term assets

 

10

 

 

 

Other long-term assets

 

(1

)

 

 

 

 

 

 

 

 

Other current liabilities

 

(1

)

 

 

 

 

 

 

 

 

Other long-term liabilities

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Total derivatives designated as hedging instruments

 

 

 

$

67

 

 

 

 

 

$

(24

)

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

Commodity derivatives

 

Other current assets

 

$

131

 

 

 

Other current assets

 

$

(92

)

 

 

Other long-term assets

 

9

 

 

 

Other long-term assets

 

(2

)

 

 

Other current liabilities

 

1

 

 

 

Other current liabilities

 

(4

)

 

 

Other long-term liabilities

 

1

 

 

 

Other long-term liabilities

 

(2

)

Foreign currency derivatives

 

 

 

 

 

 

 

Other current liabilities

 

(5

)

Total derivatives not designated as hedging instruments

 

 

 

$

142

 

 

 

 

 

$

(105

)

 

 

 

 

 

 

 

 

 

 

 

 

Total derivatives

 

 

 

$

209

 

 

 

 

 

$

(129

)

 

The following table summarizes the derivative assets and liabilities on our condensed consolidated balance sheet on a gross basis as of December 31, 2012 (in millions):

 

 

 

Asset Derivatives

 

Liability Derivatives

 

 

 

Balance Sheet

 

 

 

Balance Sheet

 

 

 

 

 

Location

 

Fair Value

 

Location

 

Fair Value

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

Commodity derivatives

 

Other current assets

 

$

45

 

 

 

Other current assets

 

$

(23

)

 

 

Other long-term assets

 

11

 

 

 

Other long-term assets

 

(1

)

Interest rate derivatives

 

 

 

 

 

 

 

Other long-term liabilities

 

(38

)

 

 

 

 

 

 

 

 

 

 

 

 

Total derivatives designated as hedging instruments

 

 

 

$

56

 

 

 

 

 

$

(62

)

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

Commodity derivatives

 

Other current assets

 

$

128

 

 

 

Other current assets

 

$

(115

)

 

 

Other long-term assets

 

1

 

 

 

Other long-term assets

 

(3

)

 

 

Other current liabilities

 

4

 

 

 

Other current liabilities

 

(7

)

 

 

Other long-term liabilities

 

2

 

 

 

Other long-term liabilities

 

(2

)

Total derivatives not designated as hedging instruments

 

 

 

$

135

 

 

 

 

 

$

(127

)

 

 

 

 

 

 

 

 

 

 

 

 

Total derivatives

 

 

 

$

191

 

 

 

 

 

$

(189

)

 
Schedule of derivatives assets and liabilities that are subject to offsetting, including enforceable master netting arrangements

 

 

 

 

June 30, 2013

 

December 31, 2012

 

 

 

Derivative

 

Derivative

 

Derivative

 

Derivative

 

 

 

Asset Positions

 

Liability Positions

 

Asset Positions

 

Liability Positions

 

 

 

 

 

 

 

 

 

 

 

 

Netting Adjustments:

 

 

 

 

 

 

 

 

 

 

Gross position - asset/(liability)

 

$

209

 

$

(129

)

 

$

191

 

$

(189

)

Netting adjustment

 

(118

)

118

 

 

(148

)

148

 

Cash collateral paid/(received)

 

70

 

—

 

 

41

 

—

 

Net position - asset/(liability)

 

$

161

 

$

(11

)

 

$

84

 

$

(41

)

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Location After Netting Adjustments:

 

 

 

 

 

 

 

 

 

 

Other current assets

 

$

140

 

$

—

 

 

$

76

 

$

—

 

Other long-term assets

 

21

 

—

 

 

8

 

—

 

Other current liabilities

 

—

 

(9

)

 

—

 

(3

)

Other long-term liabilities

 

—

 

(2

)

 

—

 

(38

)

 

 

$

161

 

$

(11

)

 

$

84

 

$

(41

)

 
Amounts of gain/(loss) recognized in AOCI on derivatives (effective portion)

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Commodity derivatives, net

 

$

3

 

$

(25

)

$

11

 

$

—

 

Interest rate derivatives, net

 

32

 

(79

)

51

 

(28

)

Total

 

$

35

 

$

(104

)

$

62

 

$

(28

)

 
Financial assets and liabilities within the fair value hierarchy accounted for at fair value on a recurring basis

 

 

 

 

Fair Value as of June 30, 2013

 

 

Fair Value as of December 31, 2012

 

Recurring Fair Value Measures (1)

 

Level 1

 

Level 2

 

Level 3

 

Total

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Commodity derivatives

 

$

27

 

$

42

 

$

4

 

$

73

 

 

$

1

 

$

35

 

$

4

 

$

40

 

Interest rate derivatives

 

—

 

12

 

—

 

12

 

 

—

 

(38

)

—

 

(38

)

Foreign currency derivatives

 

—

 

(5

)

—

 

(5

)

 

—

 

—

 

—

 

—

 

Total

 

$

27

 

$

49

 

$

4

 

$

80

 

 

$

1

 

$

(3

)

$

4

 

$

2

 

 

(1)                       Derivative assets and liabilities are presented above on a net basis but do not include related cash margin deposits.

 
Reconciliation of changes in fair value of derivatives classified as level 3

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Beginning Balance

 

$

1

 

$

2

 

$

4

 

$

12

 

Unrealized gains/(losses):

 

 

 

 

 

 

 

 

 

Included in earnings (1)

 

1

 

12

 

1

 

8

 

Included in other comprehensive income

 

—

 

—

 

—

 

3

 

Settlements

 

—

 

(2

)

(3

)

(14

)

Derivatives entered into during the period

 

2

 

19

 

2

 

22

 

Transfers out of level 3

 

—

 

5

 

—

 

5

 

Ending Balance

 

$

4

 

$

36

 

$

4

 

$

36

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized gains/(losses) included in earnings relating to level 3 derivatives still held at the end of the periods

 

$

3

 

$

31

 

$

3

 

$

33

 

 

(1)                       We reported unrealized gains and losses associated with level 3 commodity derivatives in our condensed consolidated statements of operations as Supply and Logistics segment revenues.

 
Forward starting interest rate swaps
  
Derivative disclosures  
Schedule of interest rate risk hedging

The following table summarizes the terms of our forward starting interest rate swaps as of June 30, 2013 (notional amounts in millions):

 

Hedged Transaction

 

Number and Types of
Derivatives Employed

 

Notional
Amount

 

Expected
Termination Date

 

Average Rate
Locked

 

Accounting
Treatment

 

Anticipated debt offering

 

5 forward starting swaps (30-year)

 

$

125

 

6/16/2014

 

3.39

%

Cash flow hedge

 

Anticipated debt offering

 

10 forward starting swaps (30-year)

 

$

250

 

6/15/2015

 

3.60

%

Cash flow hedge

 

 
Interest Rate Swaps
  
Derivative disclosures  
Schedule of interest rate risk hedging

 

 

Hedged Transaction

 

Number and Types of
Derivatives Employed

 

Notional
Amount

 

Termination Dates

 

Average Fixed
Rate

 

Accounting
Treatment

 

Floating interest rate payments associated with PNG outstanding debt

 

3 floating-to-fixed swaps

 

$

100

 

6/6/2014
8/3/2014

 

0.95

%

Cash flow hedge