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Derivatives and Risk Management Activities (Tables) | 6 Months Ended
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Jun. 30, 2023
Derivatives and Risk Management Activities |
Impact of derivatives recognized in earnings | The following table summarizes the impact of our commodity derivatives recognized in earnings (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Product sales revenues | $ | 119 |  |  | $ | 76 |  |  | $ | 118 |  |  | $ | (136) |
Field operating costs | 6 |  |  | 8 |  |  | (13) |  |  | 21 |
Net gain/ (loss) from commodity derivative activity | $ | 125 |  |  | $ | 84 |  |  | $ | 105 |  |  | $ | (115) |
Schedule of net broker receivable/(payable) | The following table provides the components of our net broker receivable/(payable) (in millions):
| June 30, 2023 |  | December 31, 2022
Initial margin | $ | 46 |  |  | $ | 93 |
Variation margin returned | (177) |  |  | (236) |
Letters of credit | (25) |  |  | (25) |
Net broker payable | $ | (156) |  |  | $ | (168) |
Summary of derivative assets and liabilities on condensed consolidated balance sheets on a gross basis | The following table reflects the Condensed Consolidated Balance Sheet line items that include the fair values of our commodity derivative assets and liabilities and the effect of the collateral netting. Such amounts are presented on a gross basis, before the effects of counterparty netting. However, we have elected to present our commodity derivative assets and liabilities with the same counterparty on a net basis on our Condensed Consolidated Balance Sheet when the legal right of offset exists. Amounts in the table below are presented in millions.
|  | June 30, 2023 |  |  | December 31, 2022
|  |  |  |  |  | Effect of Collateral Netting |  | Net Carrying Value Presented on the Balance Sheet |  |  |  |  |  |  | Effect of Collateral Netting |  | Net Carrying Value Presented on the Balance Sheet
|  | Commodity Derivatives |  |  |  |  | Commodity Derivatives |  |
|  | Assets |  | Liabilities |  |  |  |  | Assets |  | Liabilities |  |
Derivative Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other current assets |  | $ | 221 |  |  | $ | (21) |  |  | $ | (156) |  |  | $ | 44 |  |  |  | $ | 300 |  |  | $ | (71) |  |  | $ | (168) |  |  | $ | 61 |
Other long-term assets, net |  | 3 |  |  | — |  |  | — |  |  | 3 |  |  |  | 9 |  |  | (5) |  |  | — |  |  | 4 |
Derivative Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other current liabilities |  | — |  |  | (33) |  |  | — |  |  | (33) |  |  |  | 2 |  |  | (13) |  |  | — |  |  | (11) |
Other long-term liabilities and deferred credits |  | 2 |  |  | (9) |  |  | — |  |  | (7) |  |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | $ | 226 |  |  | $ | (63) |  |  | $ | (156) |  |  | $ | 7 |  |  |  | $ | 311 |  |  | $ | (89) |  |  | $ | (168) |  |  | $ | 54 |
Net unrealized gain/(loss) recognized in AOCI for derivatives | The following table summarizes the net unrealized gain/(loss) recognized in AOCI for derivatives (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Interest rate derivatives, net | $ | 8 |  |  | $ | 36 |  |  | $ | 2 |  |  | $ | 68 |
Schedule of derivative financial assets and liabilities accounted for at fair value on a recurring basis, by level within the fair value hierarchy | 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 (in millions):
|  | Fair Value as of June 30, 2023 |  |  | Fair Value as of December 31, 2022
Recurring Fair Value Measures (1) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Commodity derivatives |  | $ | 9 |  |  | $ | 154 |  |  | $ | — |  |  | $ | 163 |  |  |  | $ | (7) |  |  | $ | 229 |  |  | $ | — |  |  | $ | 222 |
Interest rate derivatives |  | — |  |  | 42 |  |  | — |  |  | 42 |  |  |  | — |  |  | 120 |  |  | — |  |  | 120 |
Preferred Distribution Rate Reset Option |  | — |  |  | — |  |  | — |  |  | — |  |  |  | — |  |  | — |  |  | (189) |  |  | (189) |
Total net derivative asset/(liability) |  | $ | 9 |  |  | $ | 196 |  |  | $ | — |  |  | $ | 205 |  |  |  | $ | (7) |  |  | $ | 349 |  |  | $ | (189) |  |  | $ | 153 |
(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 (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Beginning Balance | $ | — |  |  | $ | (44) |  |  | $ | (189) |  |  | $ | (2) |
Net gains/(losses) for the period included in earnings | — |  |  | (103) |  |  | 58 |  |  | (147) |
Settlements | — |  |  | — |  |  | 131 |  |  | 2 |
Ending Balance | $ | — |  |  | $ | (147) |  |  | $ | — |  |  | $ | (147) |
Change in unrealized gains/(losses) included in earnings relating to Level 3 derivatives still held at the end of the period | $ | — |  |  | $ | (103) |  |  | $ | — |  |  | $ | (147) |
Commodity Derivatives |
Derivatives and Risk Management Activities |
Summary of open derivative positions | The following table summarizes our open derivative positions utilized to hedge the price risk associated with anticipated purchases and sales related to our natural gas processing and NGL fractionation activities as of June 30, 2023:
|  | Notional Volume |  |
|  | (Short)/Long |  | Remaining Tenor
Natural gas purchases |  | 38.9 Bcf |  | December 2023
Propane sales |  | (7.5) MMbls |  | December 2023
Butane sales |  | (0.9) MMbls |  | December 2023
Condensate sales |  | (0.5) MMbls |  | December 2023
Fuel gas requirements (1) |  | 4.4 Bcf |  | June 2024
Power supply requirements (1) |  | 2.2 TWh |  | December 2030
(1)Positions to hedge a portion of our power supply and fuel gas requirements at our Canadian natural gas processing and fractionation plants.
Interest rate derivatives |
Derivatives and Risk Management Activities |
Schedule of terms of outstanding interest rate derivatives | The following table summarizes the terms of our outstanding interest rate derivatives as of June 30, 2023 (notional amounts in millions):
Hedged Transaction |  | Number and Types of Derivatives Employed |  | Notional Amount |  | Expected Termination Date |  | Average Rate Locked |  | Accounting Treatment
Anticipated interest payments |  | 8 forward starting swaps (30-year) |  | $ | 200 |  |  | 6/15/2026 |  | 3.09 | % |  | Cash flow hedge
Anticipated interest payments |  | 4 forward starting swaps (30-year) |  | $ | 100 |  |  | 6/14/2024 |  | 0.74 | % |  | Cash flow hedge

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- Definition Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Section 50 -Paragraph 2 -SubTopic 10 -Topic 815 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-2 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-1A Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-1B Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 8 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-8 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-4B Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-1 Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-4 Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5 Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-4C + Details
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