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Derivatives and Risk Management Activities (Tables) | 3 Months Ended
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Mar. 31, 2015
Derivative disclosures |
Impact of derivative activities recognized in earnings | A summary of the impact of our derivative activities recognized in earnings for the three months ended March 31, 2015 and 2014 is as follows (in millions):
|  | Three Months Ended March 31, 2015 |  |  | Three Months Ended March 31, 2014 |
Location of gain/(loss) |  | Derivatives in Hedging Relationships (1) |  | Derivatives Not Designated as a Hedge |  | Total |  |  | Derivatives in Hedging Relationships (1) |  | Derivatives Not Designated as a Hedge |  | Total |
Commodity Derivatives |  |  |  |  |  |  |  |  |  |  |  |  |  |
Supply and Logistics segment revenues |  | $ | 7 |  | $ | (34 | ) | $ | (27 | ) |  | $ | (19 | ) | $ | — |  | $ | (19 | )
Transportation segment revenues |  | — |  | 2 |  | 2 |  |  | — |  | — |  | — |
Field operating costs |  | — |  | (4 | ) | (4 | ) |  | — |  | (1 | ) | (1 | )
Interest Rate Derivatives |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  | (1 | ) | — |  | (1 | ) |  | (1 | ) | — |  | (1 | )
Foreign Currency Derivatives |  |  |  |  |  |  |  |  |  |  |  |  |  |
Supply and Logistics segment revenues |  | — |  | (17 | ) | (17 | ) |  | — |  | (9 | ) | (9 | )
Total Gain/(Loss) on Derivatives Recognized in Net Income |  | $ | 6 |  | $ | (53 | ) | $ | (47 | ) |  | $ | (20 | ) | $ | (10 | ) | $ | (30 | )
| (1) |  | Represents gains/(losses) on cash flow hedges reclassified from AOCI to income during the period.
Summary of derivative assets and liabilities on condensed consolidated balance sheet on a gross basis | The following table summarizes the derivative assets and liabilities on our Condensed Consolidated Balance Sheet on a gross basis as of March 31, 2015 (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 |  | $ | 18 |  |  | Other long-term liabilities and deferred credits |  | $ | (2 | )
|  | Other long-term liabilities and deferred credits |  | 3 |  |  |  |  |  |
Interest rate derivatives |  |  |  |  |  |  | Other current liabilities |  | (64 | )
|  |  |  |  |  |  | Other long-term liabilities and deferred credits |  | (80 | )
Total derivatives designated as hedging instruments |  |  |  | $ | 21 |  |  |  |  | $ | (146 | )
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Commodity derivatives |  | Other current assets |  | $ | 205 |  |  | Other current assets |  | $ | (47 | )
|  | Other long-term assets, net |  | 18 |  |  | Other current liabilities |  | (40 | )
|  | Other long-term liabilities and deferred credits |  | 2 |  |  | Other long-term liabilities and deferred credits |  | (13 | )
Foreign currency derivatives |  |  |  |  |  |  | Other current liabilities |  | (4 | )
Total derivatives not designated as hedging instruments |  |  |  | $ | 225 |  |  |  |  | $ | (104 | )
Total derivatives |  |  |  | $ | 246 |  |  |  |  | $ | (250 | )
The following table summarizes the derivative assets and liabilities on our Condensed Consolidated Balance Sheet on a gross basis as of December 31, 2014 (in millions):
|  | Asset Derivatives |  |  | Liability Derivatives |
|  | Balance Sheet |  | Fair |  |  | Balance Sheet |  | Fair |
|  | Location |  | Value |  |  | Location |  | Value |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Commodity derivatives |  | Other current assets |  | $ | 23 |  |  | Other current assets |  | $ | (12 | )
|  | Other long-term assets, net |  | 8 |  |  | Other long-term assets, net |  | (1 | )
Interest rate derivatives |  |  |  |  |  |  | Other current liabilities |  | (44 | )
|  |  |  |  |  |  | Other long-term liabilities and deferred credits |  | (26 | )
Total derivatives designated as hedging instruments |  |  |  | $ | 31 |  |  |  |  | $ | (83 | )
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Commodity derivatives |  | Other current assets |  | $ | 439 |  |  | Other current assets |  | $ | (246 | )
|  | Other long-term assets, net |  | 23 |  |  | Other long-term assets, net |  | (3 | )
|  |  |  |  |  |  | Other current liabilities |  | (35 | )
|  |  |  |  |  |  | Other long-term liabilities and deferred credits |  | (5 | )
Foreign currency derivatives |  |  |  |  |  |  | Other current liabilities |  | (12 | )
Total derivatives not designated as hedging instruments |  |  |  | $ | 462 |  |  |  |  | $ | (301 | )
Total derivatives |  |  |  | $ | 493 |  |  |  |  | $ | (384 | )
Schedule of derivative financial assets and liabilities that are subject to offsetting, including enforceable master netting arrangements | The following tables present information about derivatives and financial assets and liabilities that are subject to offsetting, including enforceable master netting arrangements as of the dates indicated (in millions):
|  | March 31, 2015 |  |  | December 31, 2014 |
|  | Derivative |  | Derivative |  |  | Derivative |  | Derivative |
|  | Asset Positions |  | Liability Positions |  |  | Asset Positions |  | Liability Positions |
Netting Adjustments: |  |  |  |  |  |  |  |  |  |
Gross position - asset/(liability) |  | $ | 246 |  | $ | (250 | ) |  | $ | 493 |  | $ | (384 | )
Netting adjustment |  | (52 | ) | 52 |  |  | (262 | ) | 262 |
Cash collateral paid/(received) |  | (112 | ) | — |  |  | (133 | ) | — |
Net position - asset/(liability) |  | $ | 82 |  | $ | (198 | ) |  | $ | 98 |  | $ | (122 | )
Balance Sheet Location After Netting Adjustments: |  |  |  |  |  |  |  |  |  |
Other current assets |  | $ | 64 |  | $ | — |  |  | $ | 71 |  | $ | — |
Other long-term assets, net |  | 18 |  | — |  |  | 27 |  | — |
Other current liabilities |  | — |  | (108 | ) |  | — |  | (91 | )
Other long-term liabilities and deferred credits |  | — |  | (90 | ) |  | — |  | (31 | )
|  | $ | 82 |  | $ | (198 | ) |  | $ | 98 |  | $ | (122 | )
Net deferred gain/(loss), including tax effects, recognized in AOCI for derivatives | The net deferred gain/(loss), including tax effects, recognized in AOCI for derivatives for the three months ended March 31, 2015 and 2014 was as follows (in millions):
|  | Three Months Ended |
|  | March 31, |
|  | 2015 |  | 2014 |
Commodity derivatives, net |  | $ | 3 |  | $ | (12 | )
Interest rate derivatives, net |  | (75 | ) | (20 | )
Total |  | $ | (72 | ) | $ | (32 | )
Schedule of derivative financial assets and liabilities by level within the fair value hierarchy accounted for at fair value on a recurring basis | The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2015 and December 31, 2014 (in millions):
|  | Fair Value as of March 31, 2015 |  |  | Fair Value as of December 31, 2014 |
Recurring Fair Value Measures (1) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |
Commodity derivatives |  | $ | 16 |  | $ | 123 |  | $ | 5 |  | $ | 144 |  |  | $ | (85 | ) | $ | 261 |  | $ | 15 |  | $ | 191 |
Interest rate derivatives |  | — |  | (144 | ) | — |  | (144 | ) |  | — |  | (70 | ) | — |  | (70 | )
Foreign currency derivatives |  | — |  | (4 | ) | — |  | (4 | ) |  | — |  | (12 | ) | — |  | (12 | )
Total net derivative asset/(liability) |  | $ | 16 |  | $ | (25 | ) | $ | 5 |  | $ | (4 | ) |  | $ | (85 | ) | $ | 179 |  | $ | 15 |  | $ | 109 |
| (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 | The following table provides a reconciliation of changes in fair value of the beginning and ending balances for our derivatives classified as Level 3 for the three months ended March 31, 2015 and 2014 (in millions):
|  | Three Months Ended |
|  | March 31, |
|  | 2015 |  | 2014 |
Beginning Balance |  | $ | 15 |  | $ | (3 | )
Total gains/(losses) for the period: |  |  |  |  |
Settlements |  | (12 | ) | 3 |
Derivatives entered into during the period |  | 2 |  | 1 |
Ending Balance |  | $ | 5 |  | $ | 1 |
Change in unrealized gains/(losses) included in earnings relating to Level 3 derivatives still held at the end of the period |  | $ | 2 |  | $ | 1 |
Interest Rate Swaps |
Derivative disclosures |
Schedule of terms of forward starting interest rate swaps | The following table summarizes the terms of our forward starting interest rate swaps as of March 31, 2015 (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 |  | 10 forward starting swaps (30-year) |  | $ | 250 |  | 6/15/2015 |  | 3.60% |  | Cash flow hedge |
Anticipated debt offering |  | 8 forward starting swaps (30-year) |  | $ | 200 |  | 6/15/2016 |  | 3.06% |  | Cash flow hedge |
Anticipated debt offering |  | 8 forward starting swaps (30-year) |  | $ | 200 |  | 6/15/2017 |  | 3.14% |  | Cash flow hedge |
Anticipated debt offering |  | 8 forward starting swaps (30-year) |  | $ | 200 |  | 6/15/2018 |  | 3.20% |  | Cash flow hedge |
Anticipated debt offering |  | 8 forward starting swaps (30-year) |  | $ | 200 |  | 6/14/2019 |  | 2.83% |  | Cash flow hedge |
Foreign Currency Derivatives |
Derivative disclosures |
Open forward exchange contracts | The following table summarizes our open forward exchange contracts as of March 31, 2015 (in millions):
|  |  |  | USD |  | CAD |  | Average Exchange Rate USD to CAD |
Forward exchange contracts that exchange CAD for USD: |  |  |  |  |  |  |  |  |
|  | 2015 |  | $ | 147 |  | $ | 187 |  | $1.00 - $1.27 |
|  | 2016 |  | 5 |  | 7 |  | $1.00 - $1.27 |
|  |  |  | $ | 152 |  | $ | 194 |  |  |
Forward exchange contracts that exchange USD for CAD: |  |  |  |  |  |  |  |  |
|  | 2015 |  | $ | 181 |  | $ | 225 |  | $1.00 - $1.24 |
|  | 2016 |  | 5 |  | 7 |  | $1.00 - $1.27 |
|  |  |  | $ | 186 |  | $ | 232 |  |  |

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