Summary Of Significant Accounting Policies (Policy) | 9 Months Ended |
Sep. 30, 2013 |
Summary Of Significant Accounting Policies | ' |
Comprehensive Income (Loss) | ' |
Comprehensive Income (Loss) |
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Comprehensive income (loss) includes net income (loss) and all other changes in the equity of a business during a period from transactions and other events and circumstances from non-owner sources that, under GAAP, have not been recognized in the calculation of net income (loss). These changes, other than net income (loss), are referred to as “other comprehensive income (loss)” and for the Partnership only include changes in the fair value of unsettled derivative contracts which were previously accounted for as cash flow hedges (see Note 10). These contracts are wholly owned by the Partnership and the related gains and losses are not shared with the non-controlling interests. The Partnership does not have any other type of transaction which would be included within other comprehensive income (loss). During the three and nine months ended September 30, 2012, the Partnership reclassified $1.1 million and $3.3 million, respectively, from other comprehensive income to natural gas and liquids sales within the Partnership’s consolidated statements of operations. As of December 31, 2012, all amounts had been reclassified out of accumulated other comprehensive income and the Partnership had no amounts outstanding within accumulated other comprehensive income. |
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Net Income (Loss) Per Common Unit | ' |
Net Income (Loss) Per Common Unit |
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Basic net income (loss) attributable to common limited partners per unit is computed by dividing net income (loss) attributable to common limited partners by the weighted average number of common limited partner units outstanding during the period. Net income (loss) attributable to common limited partners is determined by deducting net income attributable to participating securities, if applicable, and net income (loss) attributable to the General Partner’s and the preferred unitholders' interests. The General Partner’s interest in net income (loss) is calculated on a quarterly basis based upon its 2.0% general partner interest and incentive distributions to be distributed for the quarter (see Note 5), with a priority allocation of net income to the General Partner’s incentive distributions, if any, in accordance with the partnership agreement, and the remaining net income (loss) allocated with respect to the General Partner’s and limited partners’ ownership interests. |
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The Partnership presents net income (loss) per unit under the two-class method for master limited partnerships, which considers whether the incentive distributions of a master limited partnership represent a participating security when considered in the calculation of earnings per unit under the two-class method. The two-class method considers whether the partnership agreement contains any contractual limitations concerning distributions to the incentive distribution rights that would impact the amount of earnings to allocate to the incentive distribution rights for each reporting period. If distributions are contractually limited to the incentive distribution rights’ share of currently designated available cash for distributions as defined under the partnership agreement, undistributed earnings in excess of available cash should not be allocated to the incentive distribution rights. Under the two-class method, management of the Partnership believes the partnership agreement contractually limits cash distributions to available cash; therefore, undistributed earnings are not allocated to the incentive distribution rights. |
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Class D Preferred Units participate in distributions with the common limited partner units according to a predetermined formula (see Note 5), thus they are considered participating securities and are included in the computation of earnings per unit pursuant to the two-class method. The participation rights result in a non-contingent transfer of value each time the Partnership declares a distribution. However, the contractual terms of the Class D Preferred Units do not require the holders to share in the losses of the entity, therefore the net income (loss) utilized in the calculation of net income (loss) per unit must be determined based upon the allocation of only net income to the Class D Preferred Units on a pro-rata basis. |
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Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per unit pursuant to the two-class method. The Partnership’s phantom unit awards, which consist of common units issuable under the terms of its long-term incentive plans and incentive compensation agreements (see Note 15), contain non-forfeitable rights to distribution equivalents of the Partnership. The participation rights result in a non-contingent transfer of value each time the Partnership declares a distribution or distribution equivalent right during the award’s vesting period. However, unless the contractual terms of the participating securities require the holders to share in the losses of the entity, net loss is not allocated to the participating securities. Therefore, the net income (loss) utilized in the calculation of net income (loss) per unit must be determined based upon the allocation of only net income to the phantom units on a pro-rata basis. |
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The following is a reconciliation of net income (loss) allocated to the General Partner and common limited partners for purposes of calculating net income (loss) attributable to common limited partners per unit (in thousands): |
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| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
Net income (loss) | $ | -25,564 | | $ | -6,356 | | $ | -42,965 | | $ | 74,966 |
Income attributable to non-controlling interests | | -1,514 | | | -1,511 | | | -4,693 | | | -4,108 |
Preferred unit imputed dividend effect | | -11,378 | | | - | | | -18,107 | | | - |
Preferred unit dividends in kind | | -9,072 | | | - | | | -14,413 | | | - |
Net income (loss) attributable to common limited partners and the General Partner | | -47,528 | | | -7,867 | | | -80,178 | | | 70,858 |
General Partner’s cash incentive distributions | | 4,901 | | | 1,572 | | | 12,678 | | | 4,537 |
General Partner’s ownership interest | | -1,053 | | | -190 | | | -1,866 | | | 1,333 |
Net income attributable to the General Partner’s ownership interests | | 3,848 | | | 1,382 | | | 10,812 | | | 5,870 |
Net income (loss) attributable to common limited partners | | -51,376 | | | -9,249 | | | -90,990 | | | 64,988 |
Net income attributable to participating securities – phantom units(1) | | - | | | - | | | - | | | 886 |
Net income attributable to participating securities – Class D Preferred Units(2) | | - | | | - | | | - | | | - |
Net income attributable to participating securities | | - | | | - | | | - | | | 886 |
Net income (loss) utilized in the calculation of net income (loss) attributable to common limited partners per unit | $ | -51,376 | | $ | -9,249 | | $ | -90,990 | | $ | 64,102 |
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-1 | Net income attributable to common limited partners’ ownership interest is allocated to the phantom units on a pro-rata basis (weighted average phantom units outstanding as a percentage of the sum of the weighted average phantom units and common limited partner units outstanding). Net loss attributable to common limited partners’ ownership interest is not allocated to approximately 1,455,000 and 1,160,000 weighted average phantom units for the three and nine months ended September 30, 2013, respectively, and 964,000 weighted average phantom units for the three months ended September 30, 2012, because the contractual terms of the phantom units as participating securities do not require the holders to share in the losses of the entity. | | | | | | | | | |
-2 | Net income attributable to common limited partners’ ownership interest is allocated to the Class D Preferred Units on a pro-rata basis (weighted average Class D Preferred Units outstanding as a percentage of the sum of the weighted average Class D Preferred Units and common limited partner units outstanding). For the three and nine months ended September 30, 2013 net loss attributable to common limited partners’ ownership interest is not allocated to approximately 13,518,000 and 7,560,000 weighted average Class D Preferred Units, respectively, because the contractual terms of the Class D Preferred Units as participating securities do not require the holders to share in the losses of the entity. | | | | | | | | | |
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Diluted net income (loss) attributable to common limited partners per unit is calculated by dividing net income (loss) attributable to common limited partners, plus income allocable to participating securities, by the sum of the weighted average number of common limited partner units outstanding plus the dilutive effect of outstanding participating securities. |
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The following table sets forth the reconciliation of the Partnership’s weighted average number of common limited partner units used to compute basic net income (loss) attributable to common limited partners per unit with those used to compute diluted net income (loss) attributable to common limited partners per unit (in thousands): |
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| Three Months Ended | | Nine Months Ended | | | | |
| September 30, | | September 30, | | | | |
| 2013 | | 2012 | | 2013 | | 2012 | | | | |
Weighted average number of common limited partner units – basic | 78,398 | | 53,736 | | 72,512 | | 53,668 | | | | |
Add effect of dilutive securities – phantom units(1) | - | | - | | - | | 741 | | | | |
Add effect of convertible preferred limited partner units(2) | - | | - | | - | | - | | | | |
Weighted average common limited partner units – diluted | 78,398 | | 53,736 | | 72,512 | | 54,409 | | | | |
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-1 | For the three and nine months ended September 30, 2013, and for the three months ended September 30, 2012, approximately 1,455,000, 1,160,000, and 964,000 weighted average phantom units, respectively, were excluded from the computation of diluted earnings attributable to common limited partners per unit, because the inclusion of such phantom units would have been anti-dilutive. | | | | | | | | | |
-2 | For the three and nine months ended September 30, 2013, approximately 13,518,000 and 7,560,000 weighted average Class D Preferred Units, respectively were excluded from the computation of diluted net income (loss) attributable to common limited partners as the impact of the conversion would have been anti-dilutive. | | | | | | | | | |
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Revenue Recognition | ' |
Revenue Recognition |
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The Partnership’s revenue primarily consists of the sale of natural gas and NGLs along with the fees earned from its gathering, processing, treating and transportation operations. Under certain agreements, the Partnership purchases natural gas from producers and moves it into receipt points on its pipeline systems, and then sells the natural gas, or produced NGLs, if any, off delivery points on its systems. Under other agreements, the Partnership gathers natural gas across its systems, from receipt to delivery point, without taking title to the natural gas. Revenue associated with the physical sale of natural gas and NGLs is recognized upon physical delivery. In connection with the Partnership’s gathering, processing and transportation operations, it enters into the following types of contractual relationships with its producers and shippers: |
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Fee-Based Contracts. These contracts provide a set fee for gathering and/or processing raw natural gas and for transporting NGLs. Revenue is a function of the volume of natural gas that the Partnership gathers and processes or the volume of NGLs transported and is not directly dependent on the value of the natural gas or NGLs. The Partnership is also paid a separate compression fee on many of its gathering systems. The fee is dependent upon the volume of gas flowing through its compressors and the quantity of compression stages utilized to gather the gas. |
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POP Contracts. These contracts provide for the Partnership to retain a negotiated percentage of the sale proceeds from residue gas and NGLs it gathers and processes, with the remainder being remitted to the producer. In this contract-type, the Partnership and the producer are directly dependent on the volume of the commodity and its value; the Partnership effectively owns a percentage of the commodity and revenues are directly correlated to its market value. POP contracts may include a fee component, which is charged to the producer. |
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Keep-Whole Contracts. These contracts require the Partnership, as the processor and gatherer, to gather or purchase raw natural gas at current market rates per MMBTU. The volume and energy content of gas gathered or purchased is based on the measurement at an agreed upon location (generally at the wellhead). The BTU quantity of gas redelivered or sold at the tailgate of the Partnership’s processing facility may be lower than the BTU quantity purchased at the wellhead primarily due to the NGLs extracted from the natural gas when processed through a plant. The Partnership must make up or “keep the producer whole” for this loss in BTU quantity. To offset the make-up obligation, the Partnership retains the NGLs, which are extracted, and sells them for its own account. Therefore, the Partnership bears the economic risk (the “processing margin risk”) that (1) the BTU quantity of residue gas available for redelivery to the producer may be less than received from the producer; and/or (2) the aggregate proceeds from the sale of the processed natural gas and NGLs could be less than the amount the Partnership paid for the unprocessed natural gas. In order to help mitigate the risk associated with Keep-Whole contracts the Partnership generally imposes a fee to gather the gas that is settled under this arrangement. Also, because the natural gas volumes contracted under some Keep-Whole agreements are lower in BTU content and thus can meet downstream pipeline specifications without being processed, the natural gas can be bypassed around the processing plants on these systems and delivered directly into downstream pipelines during periods when the processing margin risk is uneconomic. |
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The Partnership accrues unbilled revenue and the related purchase costs due to timing differences between the delivery of natural gas, NGLs, and condensate and the receipt of a delivery statement. This revenue is recorded based upon volumetric data from the Partnership’s records and management estimates of the related gathering and compression fees, which are, in turn, based upon applicable product prices. The Partnership had unbilled revenues at September 30, 2013 and December 31, 2012 of $136.9 million and $100.8 million, respectively, which are included in accounts receivable within its consolidated balance sheets. |
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Accrued Producer Liabilities Policy | 'Accrued Producer LiabilitiesAccrued producer liabilities on the Partnership's consolidated balance sheets represent accrued purchase commitments payable to producers related to gas gathered and processed through its system under its POP and Keep-Whole contracts (see "-Revenue Recognition"). |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents |
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The Partnership considers all highly liquid investments with a remaining maturity of three months or less at the time of purchase to be cash equivalents. These cash equivalents consist principally of temporary investments of cash in short-term money market instruments. Checks outstanding at the end of a period that exceed available cash balances held at the bank are considered to be book overdrafts and are reclassified to accounts payable. At September 30, 2013 and December 31, 2012, respectively, the Partnership reclassified the balance related to outstanding checks of $16.9 million and $27.6 million from cash and cash equivalents to accounts payable on the Partnership’s consolidated balance sheets. |
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Recently Adopted Accounting Standards | ' |
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Recently Adopted Accounting Standards |
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In February 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-02, “Other Comprehensive Income (Topic 220) – Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,” which, among other changes, requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component and the respective line items of net income to which the amounts were reclassified. The update does not change the components of comprehensive income that must be presented. These requirements are effective for interim and annual reporting periods beginning after December 15, 2012. The Partnership began including the additional required disclosures upon the adoption of this ASU on January 1, 2013 (see “‒Comprehensive Income (Loss)”). The adoption had no material impact on the Partnership’s financial position or results of operations. |
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Recently Issued Accounting Standards | ' |
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Recently Issued Accounting Standards |
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In July 2013, the FASB issued ASU 2013-11, “Income Taxes (Topic 740) –Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists,” which, among other changes, requires an entity to present an unrecognized tax benefit as a liability and not net with deferred tax assets when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date to settle any additional income taxes under the tax law of the applicable jurisdiction that would result from the disallowance of a tax position or when the tax law of the applicable tax jurisdiction does not require, and the entity does not intend to, use the deferred tax asset for such purpose. These requirements are effective for interim and annual reporting periods beginning after December 15, 2013. Early adoption is permitted. These amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The Partnership will apply these requirements upon the adoption of the ASU on January 1, 2014. The Partnership does not expect the adoption to have a material impact on its financial position or results of operations. |
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