Part II, Item 5 - Fair Value Measurements Fair Value Measurements (Notes) | 9 Months Ended |
Sep. 30, 2013 |
Fair Value Disclosures [Abstract] | ' |
Derivatives and Fair Value [Text Block] | ' |
FAIR VALUE MEASUREMENTS |
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Derivative Financial Instruments |
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The accounting guidance for fair value measurements requires certain disclosures about assets and liabilities measured at fair value. This guidance establishes a hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy levels. We record transfers, if necessary, between levels at the end of the reporting period for all of our financial instruments. For additional information see Notes 1, 3 and 4 to the Consolidated Financial Statements included in our 2012 Annual Report on Form 10-K filed with the SEC. |
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Transfers into Level 3, if any, occur when significant inputs used to value the derivative instruments become less observable such as a significant decrease in the frequency and volume in which the instrument is traded, negatively impacting the availability of observable pricing inputs. Transfers out of Level 3, if any, occur when the significant inputs become more observable, such as when the time between the valuation date and the delivery date of a transaction becomes shorter, positively impacting the availability of observable pricing inputs. |
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Valuation Methodologies for Derivatives |
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Oil and Gas Segment: |
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• | The commodity option contracts for our Oil and Gas segment are valued using the market approach and can include calls and puts. Fair value was derived using quoted prices from third party brokers for similar instruments as to quantity and timing. The prices are then validated through third party sources and therefore support Level 2 disclosure. | | | | | | | | | | | | | | | |
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• | The commodity basis swaps for our Oil and Gas segment are valued using the market approach using the instrument’s current forward price strip hedged for the same quantity and date and discounted based on the three-month LIBOR. We utilize observable inputs which support Level 2 disclosure. | | | | | | | | | | | | | | | |
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Utilities Segments: |
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• | The commodity contracts for our Utilities Segments, valued using the market approach, include exchange-traded futures, options and basis swaps (Level 2) and OTC basis swaps (Level 3) for natural gas contracts. For Level 2 assets and liabilities, fair value was derived using broker quotes validated by the Chicago Mercantile Exchange pricing for similar instruments. For Level 3 assets and liabilities, fair value was derived using average price quotes from the OTC contract broker and an independent third party market participant because these instruments are not traded on an exchange. | | | | | | | | | | | | | | | |
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Corporate Activities: |
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• | The interest rate swaps are valued using the market approach. We establish fair value by obtaining price quotes directly from the counterparty which are based on the floating three-month LIBOR curve for the term of the contract. The fair value obtained from the counterparty is then validated by utilizing a nationally recognized service that obtains observable inputs to compute fair value for the same instrument. In addition, the fair value for the interest rate swap derivatives includes a CVA component. The CVA considers the fair value of the interest rate swap and the probability of default based on the life of the contract. For the probability of a default component, we utilize observable inputs supporting Level 2 disclosure by using our credit default spread, if available, or a generic credit default spread curve that takes into account our credit ratings. | | | | | | | | | | | | | | | |
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Recurring Fair Value Measurements |
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There have been no significant transfers between Level 1 and Level 2 derivative balances. Amounts included in cash collateral and counterparty netting in the following tables represent the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions, netting of asset and liability positions permitted in accordance with accounting standards for offsetting as well as cash collateral posted with the same counterparties. |
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The following tables set forth by level within the fair value hierarchy our gross assets and gross liabilities and related offsetting as permitted by GAAP that were accounted for at fair value on a recurring basis for derivative instruments. A discussion of fair value of financial instruments is included in Note 12: |
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| As of Sept. 30, 2013 |
| Level 1 | Level 2 | Level 3 | | Cash Collateral and Counterparty | Total |
Netting |
| (in thousands) |
Assets: | | | | | | |
Commodity derivatives — Oil and Gas | | | | | | | |
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Options -- Oil | $ | — | | $ | 2 | | $ | — | | | $ | — | | $ | 2 | |
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Basis Swaps -- Oil | — | | 51 | | — | | | (40 | ) | 11 | |
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Options -- Gas | — | | — | | — | | | — | | — | |
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Basis Swaps -- Gas | — | | 1,752 | | — | | | (1,639 | ) | 113 | |
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Commodity derivatives — Utilities | — | | 2,351 | | — | | | (2,351 | ) | — | |
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Total | $ | 13,637 | | $ | 4,156 | | $ | — | | | $ | (4,030 | ) | $ | 126 | |
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Liabilities: | | | | | | |
Commodity derivatives — Oil and Gas | | | | | | | |
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Options -- Oil | $ | — | | $ | 142 | | $ | — | | | $ | (77 | ) | $ | 65 | |
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Basis Swaps -- Oil | — | | 1,318 | | — | | | (1,284 | ) | 34 | |
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Options -- Gas | — | | — | | — | | | — | | — | |
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Basis Swaps -- Gas | — | | 232 | | — | | | (181 | ) | 51 | |
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Commodity derivatives — Utilities | — | | 10,747 | | — | | | (10,747 | ) | — | |
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Interest rate swaps | — | | 83,142 | | — | | | (5,960 | ) | 77,182 | |
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Total | $ | — | | $ | 95,581 | | $ | — | | | $ | (18,249 | ) | $ | 77,332 | |
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| As of Dec. 31, 2012 |
| Level 1 | Level 2 | Level 3 | | Cash Collateral and Counterparty | Total |
Netting |
| (in thousands) |
Assets: | | | | | | |
Commodity derivatives — Oil and Gas | | | | | | |
Options -- Oil | $ | — | | $ | 378 | | $ | — | | | $ | — | | $ | 378 | |
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Basis Swaps -- Oil | — | | 1,325 | | — | | | — | | 1,325 | |
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Options -- Gas | — | | — | | — | | | — | | — | |
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Basis Swaps -- Gas | — | | 2,000 | | — | | | — | | 2,000 | |
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Commodity derivatives —Utilities | — | | — | | 43 | | (a) | — | | 43 | |
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Total | $ | — | | $ | 3,703 | | $ | 43 | | | $ | — | | $ | 3,746 | |
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Liabilities: | | | | | | |
Commodity derivatives — Oil and Gas | | | | | | |
Options -- Oil | $ | — | | $ | 1,131 | | $ | — | | | $ | (336 | ) | $ | 795 | |
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Basis Swaps -- Oil | — | | 502 | | — | | | (450 | ) | 52 | |
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Options -- Gas | — | | — | | — | | | — | | — | |
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Basis Swaps -- Gas | — | | 1,127 | | — | | | (620 | ) | 507 | |
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Commodity derivatives — Utilities | — | | 10,162 | | — | | | (10,162 | ) | — | |
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Interest rate swaps | — | | 118,088 | | — | | | (5,960 | ) | 112,128 | |
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Total | $ | — | | $ | 131,010 | | $ | — | | | $ | (17,528 | ) | $ | 113,482 | |
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(a) | The significant unobservable inputs used in the fair value measurement of the long-term OTC contracts are based on the average of price quotes from an independent third party market participant and the OTC contract broker. The unobservable inputs are long-term natural gas prices. Significant changes to these inputs along with the contract term would impact the derivative asset/liability and regulatory asset/liability, but will not impact the results of operations until the contract is settled under the original terms of the contract. The contracts will be classified as Level 2 once settlement is within 60 months of maturity and quoted market prices from a market exchange are available. | | | | | | | | | | | | | | | |
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| As of Sept. 30, 2012 |
| Level 1 | Level 2 | Level 3 | | Cash Collateral and Counterparty | Total |
Netting |
| (in thousands) |
Assets: | | | | | | |
Commodity derivatives — Oil and Gas | | | | | | |
Options -- Oil | $ | — | | $ | 619 | | $ | — | | | $ | — | | $ | 619 | |
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Basis Swaps -- Oil | — | | 1,526 | | — | | | — | | 1,526 | |
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Options -- Gas | — | | — | | — | | | — | | — | |
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Basis Swaps -- Gas | — | | 2,071 | | — | | | — | | 2,071 | |
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Commodity derivatives — Utilities | — | | (2,760 | ) | 34 | | (a) | 15,740 | | 13,014 | |
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Total | $ | — | | $ | 1,456 | | $ | 34 | | | $ | 15,740 | | $ | 17,230 | |
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Liabilities: | | | | | | |
Commodity derivatives — Oil and Gas | | | | | | |
Options -- Oil | $ | — | | $ | 885 | | $ | — | | | $ | — | | $ | 885 | |
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Basis Swaps -- Oil | — | | 56 | | — | | | — | | 56 | |
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Options -- Gas | — | | — | | — | | | — | | — | |
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Basis Swaps -- Gas | — | | 1,181 | | — | | | — | | 1,181 | |
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Commodity derivatives — Utilities | — | | 4,527 | | — | | | — | | 4,527 | |
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Interest rate swaps | — | | 124,580 | | — | | | (3,310 | ) | 121,270 | |
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Total | $ | — | | $ | 131,229 | | $ | — | | | $ | (3,310 | ) | $ | 127,919 | |
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__________ |
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(a) | The significant unobservable inputs used in the fair value measurement of the long-term OTC contracts are based on the average of price quotes from an independent third party market participant and the OTC contract broker. The unobservable inputs are long-term natural gas prices. Significant changes to these inputs along with the contract term would impact the derivative asset/liability and regulatory asset/liability, but will not impact the results of operations until the contract is settled under the original terms of the contract. The contracts will be classified as Level 2 once settlement is within 60 months of maturity and quoted market prices from a market exchange are available. | | | | | | | | | | | | | | | |
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Fair Value Measures by Balance Sheet Classification |
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As required by accounting standards for derivatives and hedges, fair values within the following tables are presented on a gross basis reflecting the netting of asset and liability positions permitted in accordance with accounting standards for offsetting and under terms of our master netting agreements and the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions, however, the amounts do not include net cash collateral on deposit in margin accounts at Sept. 30, 2013, Dec. 31, 2012, and Sept. 30, 2012, to collateralize certain financial instruments, which are included in Derivative assets and/or Derivative liabilities. Therefore, the balances are not indicative of either our actual credit exposure or net economic exposure. Additionally, the amounts below will not agree with the amounts presented on our Condensed Consolidated Balance Sheets, nor will they correspond to the fair value measurements presented in Note 10. |
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The following tables present the fair value and balance sheet classification of our derivative instruments (in thousands): |
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As of Sept. 30, 2013 | | | | | | | | |
| Balance Sheet Location | | Fair Value | Fair Value | | | | | | | | |
of Asset | of Liability | | | | | | | | |
Derivatives | Derivatives | | | | | | | | |
Derivatives designated as hedges: | | | | | | | | | | | | |
Commodity derivatives | Derivative assets — current | | $ | 846 | | $ | — | | | | | | | | | |
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Commodity derivatives | Derivative assets — non-current | | 959 | | — | | | | | | | | | |
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Commodity derivatives | Derivative liabilities — current | | — | | 1,317 | | | | | | | | | |
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Commodity derivatives | Derivative liabilities — non-current | | — | | 375 | | | | | | | | | |
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Interest rate swaps | Derivative liabilities — current | | — | | 7,039 | | | | | | | | | |
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Interest rate swaps | Derivative liabilities — non-current | | — | | 11,388 | | | | | | | | | |
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Total derivatives designated as hedges | | | $ | 1,805 | | $ | 20,119 | | | | | | | | | |
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Derivatives not designated as hedges: | | | | | | | | | | | | |
Commodity derivatives | Derivative assets — current | | $ | — | | $ | — | | | | | | | | | |
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Commodity derivatives | Derivative assets — non-current | | — | | — | | | | | | | | | |
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Commodity derivatives | Derivative liabilities — current | | — | | 1,795 | | | | | | | | | |
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Commodity derivatives | Derivative liabilities — non-current | | — | | 6,601 | | | | | | | | | |
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Interest rate swaps | Derivative liabilities — current | | — | | 64,715 | | | | | | | | | |
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Interest rate swaps | Derivative liabilities — non-current | | — | | — | | | | | | | | | |
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Total derivatives not designated as hedges | | | $ | — | | $ | 73,111 | | | | | | | | | |
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As of Dec. 31, 2012 | | | | | | | | |
| Balance Sheet Location | | Fair Value | Fair Value | | | | | | | | |
of Asset | of Liability | | | | | | | | |
Derivatives | Derivatives | | | | | | | | |
Derivatives designated as hedges: | | | | | | | | | | | | |
Commodity derivatives | Derivative assets — current | | $ | 2,874 | | $ | — | | | | | | | | | |
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Commodity derivatives | Derivative assets — non-current | | 510 | | — | | | | | | | | | |
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Commodity derivatives | Derivative liabilities — current | | — | | 1,993 | | | | | | | | | |
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Commodity derivatives | Derivative liabilities — non-current | | — | | 821 | | | | | | | | | |
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Interest rate swaps | Derivative liabilities — current | | — | | 7,038 | | | | | | | | | |
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Interest rate swaps | Derivative liabilities — non-current | | — | | 16,941 | | | | | | | | | |
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Total derivatives designated as hedges | | | $ | 3,384 | | $ | 26,793 | | | | | | | | | |
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Derivatives not designated as hedges: | | | | | | | | | | | | |
Commodity derivatives | Derivative assets — current | | $ | 362 | | $ | — | | | | | | | | | |
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Commodity derivatives | Derivative assets — non-current | | — | | — | | | | | | | | | |
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Commodity derivatives | Derivative liabilities — current | | 1,180 | | 4,957 | | | | | | | | | |
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Commodity derivatives | Derivative liabilities — non-current | | 406 | | 5,153 | | | | | | | | | |
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Interest rate swaps | Derivative liabilities — current | | — | | 94,108 | | | | | | | | | |
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Interest rate swaps | Derivative liabilities — non-current | | — | | — | | | | | | | | | |
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Total derivatives not designated as hedges | | | $ | 1,948 | | $ | 104,218 | | | | | | | | | |
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As of Sept. 30, 2012 | | | | | | | | |
| Balance Sheet Location | | Fair Value | Fair Value | | | | | | | | |
of Asset | of Liability | | | | | | | | |
Derivatives | Derivatives | | | | | | | | |
Derivatives designated as hedges: | | | | | | | | | | | | |
Commodity derivatives | Derivative assets — current | | $ | 3,263 | | $ | — | | | | | | | | | |
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Commodity derivatives | Derivative assets — non-current | | 533 | | — | | | | | | | | | |
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Commodity derivatives | Derivative liabilities — current | | — | | 1,534 | | | | | | | | | |
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Commodity derivatives | Derivative liabilities — non-current | | — | | 555 | | | | | | | | | |
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Interest rate swaps | Derivative liabilities — current | | — | | 7,029 | | | | | | | | | |
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Interest rate swaps | Derivative liabilities — non-current | | — | | 18,661 | | | | | | | | | |
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Total derivatives designated as hedges | | | $ | 3,796 | | $ | 27,779 | | | | | | | | | |
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Derivatives not designated as hedges: | | | | | | | | | | | | |
Commodity derivatives | Derivative assets — current | | $ | 421 | | $ | 3,361 | | | | | | | | | |
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Commodity derivatives | Derivative assets — non-current | | — | | (634 | ) | | | | | | | | |
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Commodity derivatives | Derivative liabilities — current | | — | | 33 | | | | | | | | | |
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Commodity derivatives | Derivative liabilities — non-current | | — | | 4,527 | | | | | | | | | |
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Interest rate swaps | Derivative liabilities — current | | — | | 77,913 | | | | | | | | | |
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Interest rate swaps | Derivative liabilities — non-current | | — | | 20,977 | | | | | | | | | |
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Total derivatives not designated as hedges | | | $ | 421 | | $ | 106,177 | | | | | | | | | |
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Derivatives Offsetting |
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It is our policy to offset in our Condensed Consolidated Balance Sheets contracts which provide for legally enforceable netting of our accounts receivable and payable and derivative activities. |
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As required by accounting standards for derivatives and hedges, fair values within the following tables reconcile the gross amounts to the net amounts. Amounts included in Gross Amounts Offset on Condensed Consolidated Balance Sheets in the following tables includes the netting of asset and liability positions permitted in accordance with accounting standards for offsetting as well as the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions as well as cash collateral posted with the same counterparties. Additionally, the amounts reflect cash collateral on deposit in margin accounts at Sept. 30, 2013, Dec. 31, 2012, and Sept. 30, 2012, to collateralize certain financial instruments, which are included in Derivative assets and/or Derivative liabilities. Therefore, the gross amounts are not indicative of either our actual credit exposure or net economic exposure. |
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Offsetting of derivative assets and derivative liabilities on our Condensed Consolidated Balance Sheets was as follows: |
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| As of Sept. 30, 2013 | | | | | | | |
Derivative Assets | Gross Amounts of Derivative Assets | Gross Amounts Offset on Condensed Consolidated Balance Sheets | Net Amount of Total Derivative Assets on Condensed Consolidated Balance Sheets | | | | | | | |
| (in thousands) | | | | | | | |
Subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | $ | 40 | | $ | (40 | ) | $ | — | | | | | | | | |
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Oil and Gas - Crude Options | — | | — | | — | | | | | | | | |
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Oil and Gas - Natural Gas Basis Swaps | 1,639 | | (1,639 | ) | — | | | | | | | | |
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Utilities | 2,351 | | (2,351 | ) | — | | | | | | | | |
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Total derivative assets subject to a master netting agreement or similar arrangement | 4,030 | | (4,030 | ) | — | | | | | | | | |
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Not subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | 11 | | — | | 11 | | | | | | | | |
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Oil and Gas - Crude Options | 2 | | — | | 2 | | | | | | | | |
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Oil and Gas - Natural Gas Basis Swaps | 113 | | — | | 113 | | | | | | | | |
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Utilities | — | | — | | — | | | | | | | | |
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Total derivative assets not subject to a master netting agreement or similar arrangement | 126 | | — | | 126 | | | | | | | | |
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Total derivative assets | $ | 4,156 | | $ | (4,030 | ) | $ | 126 | | | | | | | | |
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| As of Sept. 30, 2013 | | | | | | | |
Derivative Liabilities | Gross Amounts of Derivative Liabilities | Gross Amounts Offset on Condensed Consolidated Balance Sheets | Net Amount of Total Derivative Liabilities on Condensed Consolidated Balance Sheets | | | | | | | |
| (in thousands) | | | | | | | |
Subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | $ | 1,284 | | $ | (1,284 | ) | $ | — | | | | | | | | |
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Oil and Gas - Crude Options | 77 | | (77 | ) | — | | | | | | | | |
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Oil and Gas - Natural Gas Basis Swaps | 181 | | (181 | ) | — | | | | | | | | |
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Utilities | 10,747 | | (10,747 | ) | — | | | | | | | | |
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Interest Rate Swaps | — | | — | | — | | | | | | | | |
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Total derivative liabilities subject to a master netting agreement or similar arrangement | 12,289 | | (12,289 | ) | — | | | | | | | | |
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Not subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | 34 | | — | | 34 | | | | | | | | |
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Oil and Gas - Crude Options | 65 | | — | | 65 | | | | | | | | |
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Oil and Gas - Natural Gas Basis Swaps | 51 | | — | | 51 | | | | | | | | |
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Utilities | — | | — | | — | | | | | | | | |
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Interest Rate Swaps | 83,142 | | (5,960 | ) | 77,182 | | | | | | | | |
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Total derivative liabilities not subject to a master netting agreement or similar arrangement | 83,292 | | (5,960 | ) | 77,332 | | | | | | | | |
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Total derivative liabilities | $ | 95,581 | | $ | (18,249 | ) | $ | 77,332 | | | | | | | | |
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| As of Dec. 31, 2012 | | | | | | | |
Derivative Assets | Gross Amounts of Derivative Assets | Gross Amounts Offset on Condensed Consolidated Balance Sheets | Net Amount of Total Derivative Assets on Condensed Consolidated Balance Sheets | | | | | | | |
| (in thousands) | | | | | | | |
Subject to master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | $ | 76 | | $ | — | | $ | 76 | | | | | | | | |
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Oil and Gas - Crude Options | 93 | | — | | 93 | | | | | | | | |
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Oil and Gas - Natural Gas Basis Swaps | 172 | | — | | 172 | | | | | | | | |
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Utilities | 1,629 | | (1,586 | ) | 43 | | | | | | | | |
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Total derivative assets subject to a master netting agreement or similar arrangement | 1,970 | | (1,586 | ) | 384 | | | | | | | | |
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Not subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | 1,249 | | — | | 1,249 | | | | | | | | |
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Oil and Gas - Crude Options | 285 | | — | | 285 | | | | | | | | |
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Oil and Gas - Natural Gas Basis Swaps | 1,828 | | — | | 1,828 | | | | | | | | |
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Utilities | — | | — | | — | | | | | | | | |
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Total derivative assets not subject to a master netting agreement or similar arrangement | 3,362 | | — | | 3,362 | | | | | | | | |
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Total derivative assets | $ | 5,332 | | $ | (1,586 | ) | $ | 3,746 | | | | | | | | |
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| As of Dec. 31, 2012 | | | | | | | |
Derivative Liabilities | Gross Amounts of Derivative Liabilities | Gross Amounts Offset on Condensed Consolidated Balance Sheets | Net Amount of Total Derivative Liabilities on Condensed Consolidated Balance Sheets | | | | | | | |
| (in thousands) | | | | | | | |
Subject to a master netting agreement or similar arrangement | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | $ | 449 | | $ | (449 | ) | $ | — | | | | | | | | |
| | | | | | |
Oil and Gas - Crude Options | 337 | | (337 | ) | — | | | | | | | | |
| | | | | | |
Oil and Gas - Natural Gas Basis Swaps | 620 | | (620 | ) | — | | | | | | | | |
| | | | | | |
Utilities | 10,162 | | (10,162 | ) | — | | | | | | | | |
| | | | | | |
Interest Rate Swaps | — | | — | | — | | | | | | | | |
| | | | | | |
Total derivative liabilities subject to a master netting agreement or similar arrangement | 11,568 | | (11,568 | ) | — | | | | | | | | |
| | | | | | |
| | | | | | | | | | |
Not subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | 52 | | — | | 52 | | | | | | | | |
| | | | | | |
Oil and Gas - Crude Options | 795 | | — | | 795 | | | | | | | | |
| | | | | | |
Oil and Gas - Natural Gas Basis Swaps | 507 | | — | | 507 | | | | | | | | |
| | | | | | |
Utilities | — | | — | | — | | | | | | | | |
| | | | | | |
Interest Rate Swaps | 118,088 | | (5,960 | ) | 112,128 | | | | | | | | |
| | | | | | |
Total derivative liabilities not subject to a master netting agreement or similar arrangement | 119,442 | | (5,960 | ) | 113,482 | | | | | | | | |
| | | | | | |
| | | | | | | | | | |
Total derivative liabilities | $ | 131,010 | | $ | (17,528 | ) | $ | 113,482 | | | | | | | | |
| | | | | | |
|
|
| | | | | | | |
| | | | | | | | | | | | | | | | |
| As of Sept. 30, 2012 | | | | | | | |
Derivative Assets | Gross Amounts of Derivative Assets | Gross Amounts Offset on Condensed Consolidated Balance Sheets | Net Amount of Total Derivative Assets on Condensed Consolidated Balance Sheets | | | | | | | |
| (in thousands) | | | | | | | |
Subject to master netting agreements or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | $ | 95 | | $ | — | | $ | 95 | | | | | | | | |
| | | | | | |
Oil and Gas - Crude Options | 194 | | — | | 194 | | | | | | | | |
| | | | | | |
Oil and Gas - Natural Gas Basis Swaps | 5 | | — | | 5 | | | | | | | | |
| | | | | | |
Utilities | (2,726 | ) | 15,740 | | 13,014 | | | | | | | | |
| | | | | | |
Total derivative assets subject to a master netting agreement or similar arrangement | (2,432 | ) | 15,740 | | 13,308 | | | | | | | | |
| | | | | | |
| | | | | | | | | | |
Not subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | 1,431 | | — | | 1,431 | | | | | | | | |
| | | | | | |
Oil and Gas - Crude Options | 425 | | — | | 425 | | | | | | | | |
| | | | | | |
Oil and Gas - Natural Gas Basis Swaps | 2,066 | | — | | 2,066 | | | | | | | | |
| | | | | | |
Utilities | — | | — | | — | | | | | | | | |
| | | | | | |
Total derivative assets not subject to a master netting agreement or similar arrangement | 3,922 | | — | | 3,922 | | | | | | | | |
| | | | | | |
| | | | | | | | | | |
Total derivative assets | $ | 1,490 | | $ | 15,740 | | $ | 17,230 | | | | | | | | |
| | | | | | |
|
| | | | | | | |
| | | | | | | | | | | | | | | | |
| As of Sept. 30, 2012 | | | | | | | |
Derivative Liabilities | Gross Amounts of Derivative Liabilities | Gross Amounts Offset on Condensed Consolidated Balance Sheets | Net Amount of Total Derivative Liabilities on Condensed Consolidated Balance Sheets | | | | | | | |
| (in thousands) | | | | | | | |
Subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | $ | — | | $ | — | | $ | — | | | | | | | | |
| | | | | | |
Oil and Gas - Crude Options | — | | — | | — | | | | | | | | |
| | | | | | |
Oil and Gas - Natural Gas Basis Swaps | — | | — | | — | | | | | | | | |
| | | | | | |
Utilities | 4,527 | | — | | 4,527 | | | | | | | | |
| | | | | | |
Interest Rate Swaps | — | | — | | — | | | | | | | | |
| | | | | | |
Total derivative liabilities subject to a master netting agreement or similar arrangement | 4,527 | | — | | 4,527 | | | | | | | | |
| | | | | | |
| | | | | | | | | | |
Not subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | 56 | | — | | 56 | | | | | | | | |
| | | | | | |
Oil and Gas - Crude Options | 885 | | — | | 885 | | | | | | | | |
| | | | | | |
Oil and Gas - Natural Gas Basis Swaps | 1,181 | | — | | 1,181 | | | | | | | | |
| | | | | | |
Utilities | — | | — | | — | | | | | | | | |
| | | | | | |
Interest Rate Swaps | 124,580 | | (3,310 | ) | 121,270 | | | | | | | | |
| | | | | | |
Total derivative liabilities not subject to a master netting agreement or similar arrangement | 126,702 | | (3,310 | ) | 123,392 | | | | | | | | |
| | | | | | |
| | | | | | | | | | |
Total derivative liabilities | $ | 131,229 | | $ | (3,310 | ) | $ | 127,919 | | | | | | | | |
| | | | | | |
|
Derivative assets and derivative liabilities and collateral held by counterparty included in our Condensed Consolidated Balance Sheets were (in thousands): |
|
| | | | | | |
| | | | | | | | | | | | | | | | |
| | As of Sept. 30, 2013 | | | | | | |
| | | Gross Amounts Not Offset on Condensed Consolidated Balance Sheets | | | | | | | |
Contract Type | | Net Amount of Total Derivative Assets | Cash Collateral Received | Net Amount with Counterparty | | | | | | |
Asset: | | | | | | | | | | |
Oil and Gas | Counterparty A | $ | — | | $ | — | | $ | — | | | | | | | |
| | | | | |
Oil and Gas | Counterparty B | 126 | | — | | 126 | | | | | | | |
| | | | | |
Utilities | Counterparty A | — | | — | | — | | | | | | | |
| | | | | |
| | $ | 126 | | $ | — | | $ | 126 | | | | | | | |
| | | | | |
|
| | | | | | |
| | | | | | | | | | | | | | | | |
| | As of Sept. 30, 2013 | | | | | | |
| | | Gross Amounts Not Offset on Condensed Consolidated Balance Sheets | | | | | | | |
Contract Type | | Net Amount of Total Derivative Liabilities | Cash Collateral Posted | Net Amount with Counterparty | | | | | | |
Liabilities | | | | | | | | | | |
Oil and Gas | Counterparty A | $ | — | | $ | (355 | ) | $ | (355 | ) | | | | | | |
| | | | | |
Oil and Gas | Counterparty B | 150 | | — | | 150 | | | | | | | |
| | | | | |
Utilities | Counterparty A | — | | (3,333 | ) | (3,333 | ) | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty D | 3,563 | | — | | 3,563 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty E | 19,993 | | — | | 19,993 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty F | 9,858 | | — | | 9,858 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty G | 20,138 | | — | | 20,138 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty H | 8,857 | | — | | 8,857 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty I | 14,773 | | — | | 14,773 | | | | | | | |
| | | | | |
| | $ | 77,332 | | $ | (3,688 | ) | $ | 73,644 | | | | | | | |
| | | | | |
|
| | | | | | |
| | | | | | | | | | | | | | | | |
| | As of Dec. 31, 2012 | | | | | | |
| | | Gross Amounts Not Offset on Condensed Consolidated Balance Sheets | | | | | | | |
Contract Type | | Net Amount of Total Derivative Assets | Cash Collateral Received | Net Amount with Counterparty | | | | | | |
Assets: | | | | | | | | | | |
Oil and Gas | Counterparty A | $ | 341 | | $ | — | | $ | 341 | | | | | | | |
| | | | | |
Oil and Gas | Counterparty B | 3,362 | | — | | 3,362 | | | | | | | |
| | | | | |
Utilities | Counterparty A | 43 | | — | | 43 | | | | | | | |
| | | | | |
| | $ | 3,746 | | $ | — | | $ | 3,746 | | | | | | | |
| | | | | |
|
| | | | | | |
| | | | | | | | | | | | | | | | |
| | As of Dec. 31, 2012 | | | | | | |
| | | Gross Amounts Not Offset on Condensed Consolidated Balance Sheets | | | | | | | |
Contract Type | | Net Amount of Total Derivative Liabilities | Cash Collateral Posted | Net Amount with Counterparty | | | | | | |
Liabilities: | | | | | | | | | | |
Oil and Gas | Counterparty A | $ | — | | $ | (1,787 | ) | $ | (1,787 | ) | | | | | | |
| | | | | |
Oil and Gas | Counterparty B | 1,354 | | — | | 1,354 | | | | | | | |
| | | | | |
Utilities | Counterparty A | — | | (4,354 | ) | (4,354 | ) | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty D | 4,588 | | — | | 4,588 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty E | 29,245 | | — | | 29,245 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty F | 12,721 | | — | | 12,721 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty G | 26,520 | | — | | 26,520 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty H | 16,809 | | — | | 16,809 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty I | 22,245 | | — | | 22,245 | | | | | | | |
| | | | | |
| | $ | 113,482 | | $ | (6,141 | ) | $ | 107,341 | | | | | | | |
| | | | | |
|
| | | | | | |
| | | | | | | | | | | | | | | | |
| | As of Sept. 30, 2012 | | | | | | |
| | | Gross Amounts Not Offset on Condensed Consolidated Balance Sheets | | | | | | | |
Contract Type | | Net Amount of Total Derivative Assets | Cash Collateral Received | Net Amount with Counterparty | | | | | | |
Assets: | | | | | | | | | | |
Oil and Gas | Counterparty A | $ | 294 | | $ | (2,414 | ) | $ | (2,120 | ) | | | | | | |
| | | | | |
Oil and Gas | Counterparty B | 3,922 | | — | | 3,922 | | | | | | | |
| | | | | |
Utilities | Counterparty A | 13,014 | | — | | 13,014 | | | | | | | |
| | | | | |
| | $ | 17,230 | | $ | (2,414 | ) | $ | 14,816 | | | | | | | |
| | | | | |
|
| | | | | | |
| | | | | | | | | | | | | | | | |
| | As of Sept. 30, 2012 | | | | | | |
| | | Gross Amounts Not Offset on Condensed Consolidated Balance Sheets | | | | | | | |
Contract Type | | Net Amount of Total Derivative Liabilities | Cash Collateral Posted | Net Amount with Counterparty | | | | | | |
Liabilities: | | | | | | | | | | |
Oil and Gas | Counterparty A | $ | — | | $ | — | | $ | — | | | | | | | |
| | | | | |
Oil and Gas | Counterparty B | 2,122 | | — | | 2,122 | | | | | | | |
| | | | | |
Utilities | Counterparty A | 4,527 | | — | | 4,527 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty D | 4,903 | | — | | 4,903 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty E | 31,147 | | — | | 31,147 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty F | 13,554 | | — | | 13,554 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty G | 27,610 | | — | | 27,610 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty H | 20,331 | | — | | 20,331 | | | | | | | |
| | | | | |
Interest Rate Swap | Counterparty I | 23,725 | | — | | 23,725 | | | | | | | |
| | | | | |
| | $ | 127,919 | | $ | — | | $ | 127,919 | | | | | | | |
| | | | | |
|
A description of our derivative activities is included in Note 10. The following tables present the impact that derivatives had on our Condensed Consolidated Statements of Income (Loss). |
|
Cash Flow Hedges |
|
The impacts of cash flow hedges on our Condensed Consolidated Statements of Income (Loss) were as follows (in thousands): |
|
| | | | | | | | | | | | | | | | |
Three Months Ended Sept. 30, 2013 |
Derivatives in Cash Flow Hedging Relationships | | Amount of | | Location | | Amount of | | Location of | | Amount of |
Gain/(Loss) | of Gain/(Loss) | Reclassified | Gain/(Loss) | Gain/(Loss) |
Recognized | Reclassified | Gain/(Loss) | Recognized | Recognized in |
in AOCI | from AOCI | from AOCI | in Income | Income on |
Derivative | into Income | into Income | on Derivative | Derivative |
(Effective | (Effective | (Effective | (Ineffective | (Ineffective |
Portion) | Portion) | Portion) | Portion) | Portion) |
Interest rate swaps | | $ | (907 | ) | | Interest expense | | $ | (1,844 | ) | | | | $ | — | |
|
Commodity derivatives | | (2,140 | ) | | Revenue | | (168 | ) | | | | — | |
|
Total | | $ | (3,047 | ) | | | | $ | (2,012 | ) | | | | $ | — | |
|
|
|
| | | | | | | | | | | | | | | | |
Three Months Ended Sept. 30, 2012 |
Derivatives in Cash Flow Hedging Relationships | | Amount of | | Location | | Amount of | | Location of | | Amount of |
Gain/(Loss) | of Gain/(Loss) | Reclassified | Gain/(Loss) | Gain/(Loss) |
Recognized | Reclassified | Gain/(Loss) | Recognized | Recognized in |
in AOCI | from AOCI | from AOCI | in Income | Income on |
Derivative | into Income | into Income | on Derivative | Derivative |
(Effective | (Effective | (Effective | (Ineffective | (Ineffective |
Portion) | Portion) | Portion) | Portion) | Portion) |
Interest rate swaps | | $ | (1,684 | ) | | Interest expense | | $ | (1,853 | ) | | | | $ | — | |
|
Commodity derivatives | | (3,111 | ) | | Revenue | | 1,838 | | | | | — | |
|
Total | | $ | (4,795 | ) | | | | $ | (15 | ) | | | | $ | — | |
|
|
|
| | | | | | | | | | | | | | | | |
Nine Months Ended Sept. 30, 2013 |
Derivatives in Cash Flow Hedging Relationships | | Amount of | | Location | | Amount of | | Location of | | Amount of |
Gain/(Loss) | of Gain/(Loss) | Reclassified | Gain/(Loss) | Gain/(Loss) |
Recognized | Reclassified | Gain/(Loss) | Recognized | Recognized in |
in AOCI | from AOCI | from AOCI | in Income | Income on |
Derivative | into Income | into Income | on Derivative | Derivative |
(Effective | (Effective | (Effective | (Ineffective | (Ineffective |
Portion) | Portion) | Portion) | Portion) | Portion) |
Interest rate swaps | | $ | 141 | | | Interest expense | | $ | (5,460 | ) | | | | $ | — | |
|
Commodity derivatives | | 86 | | | Revenue | | 896 | | | | | — | |
|
Total | | $ | 227 | | | | | $ | (4,564 | ) | | | | $ | — | |
|
|
|
| | | | | | | | | | | | | | | | |
Nine Months Ended Sept. 30, 2012 |
Derivatives in Cash Flow Hedging Relationships | | Amount of | | Location | | Amount of | | Location of | | Amount of |
Gain/(Loss) | of Gain/(Loss) | Reclassified | Gain/(Loss) | Gain/(Loss) |
Recognized | Reclassified | Gain/(Loss) | Recognized | Recognized in |
in AOCI | from AOCI | from AOCI | in Income | Income on |
Derivative | into Income | into Income | on Derivative | Derivative |
(Effective | (Effective | (Effective | (Ineffective | (Ineffective |
Portion) | Portion) | Portion) | Portion) | Portion) |
Interest rate swaps | | $ | (4,697 | ) | | Interest expense | | $ | (5,518 | ) | | | | $ | — | |
|
Commodity derivatives | | 601 | | | Revenue | | 7,741 | | | | | — | |
|
Total | | $ | (4,096 | ) | | | | $ | 2,223 | | | | | $ | — | |
|
|
Derivatives Not Designated as Hedge Instruments |
|
The impacts of derivative instruments not designated as hedge instruments on our Condensed Consolidated Statements of Income (Loss) were as follows (in thousands): |
| | | | | | |
| | | | | | | | | | | | | | | | |
| | | | Three Months Ended | | Nine Months Ended | | | | | | |
| | | | Sept. 30, 2013 | | Sept. 30, 2013 | | | | | | |
Derivatives Not Designated | | Location of Gain/(Loss) | | Amount of Gain/(Loss) | | Amount of Gain/(Loss) | | | | | | |
as Hedging Instruments | on Derivatives | on Derivatives | on Derivatives | | | | | | |
| Recognized in Income | Recognized in Income | Recognized in Income | | | | | | |
Interest rate swaps - unrealized | | Unrealized gain (loss) on interest rate swaps, net | | $ | 3,144 | | | $ | 29,393 | | | | | | | |
| | | | | |
Interest rate swaps - realized | | Interest expense | | (3,300 | ) | | (10,056 | ) | | | | | | |
| | | | $ | (156 | ) | | $ | 19,337 | | | | | | | |
| | | | | |
|
| | | | | | |
| | | | | | | | | | | | | | | | |
| | | | Three Months Ended | | Nine Months Ended | | | | | | |
| | | | Sept. 30, 2012 | | Sept. 30, 2012 | | | | | | |
Derivatives Not Designated | | Location of Gain/(Loss) | | Amount of Gain/(Loss) | | Amount of Gain/(Loss) | | | | | | |
as Hedging Instruments | on Derivatives | on Derivatives | on Derivatives | | | | | | |
| Recognized in Income | Recognized in Income | Recognized in Income | | | | | | |
Interest rate swaps - unrealized | | Unrealized gain (loss) on interest rate swaps, net | | $ | 605 | | | $ | (2,902 | ) | | | | | | |
| | | | | |
Interest rate swaps - realized | | Interest expense | | (3,250 | ) | | (9,697 | ) | | | | | | |
Commodity derivatives | | Revenue | | (14 | ) | | (14 | ) | | | | | | |
| | | | $ | (2,659 | ) | | $ | (12,613 | ) | | | | | | |
Other Information |
|
On Jan. 1, 2013, we adopted ASU No. 2011-11, Disclosures about Offsetting Assets and Liabilities, which enhances disclosures by requiring an entity to disclose information about netting arrangements, including rights of offset, to enable users of its financial statements to understand the effect of those arrangements on its financial position. This ASU was effective for annual and interim reporting periods beginning on or after Jan. 1, 2013 and is to be applied retrospectively for all comparative periods presented. The impact of retrospectively adjusting for the adoption of this ASU was immaterial to our historical consolidated financial statements. |
|
The following presents the unaudited retrospective application of ASU 2011-11 by providing reconciliation between the gross assets and gross liabilities reflected on the Consolidated Balance Sheet and the potential effects of master netting arrangements on the fair value of our derivative contracts at Dec. 31, 2011. |
|
Offsetting of derivative assets and derivative liabilities on our Consolidated Balance Sheet was as follows (in thousands): |
| | | | | | | |
| | | | | | | | | | | | | | | | |
| As of Dec. 31, 2011 | | | | | | | |
Derivative Assets | Gross Amounts of Derivative Assets | Gross Amounts Offset on Consolidated Balance Sheet | Net Amount of Total Derivative Assets on Consolidated Balance Sheet | | | | | | | |
| | | | | | | | |
Subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Utilities | $ | 965 | | $ | 8,931 | | $ | 9,896 | | | | | | | | |
| | | | | | |
Total derivative assets subject to a master netting agreement or similar arrangement | 965 | | 8,931 | | 9,896 | | | | | | | | |
| | | | | | |
| | | | | | | | | | |
Not subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Basis Swaps | 1,500 | | — | | 1,500 | | | | | | | | |
| | | | | | |
Oil and Gas - Natural Gas Basis Swaps | 9,158 | | — | | 9,158 | | | | | | | | |
| | | | | | |
Total derivative assets not subject to a master netting agreement or similar arrangement | 10,658 | | — | | 10,658 | | | | | | | | |
| | | | | | |
| | | | | | | | | | |
Total derivative assets | $ | 11,623 | | $ | 8,931 | | $ | 20,554 | | | | | | | | |
| | | | | | |
|
| | | | | | | |
| | | | | | | | | | | | | | | | |
| As of Dec. 31, 2011 | | | | | | | |
Derivative Liabilities | Gross Amounts of Derivative Liabilities | Gross Amounts Offset on Consolidated Balance Sheet | Net Amount of Total Derivative Liabilities on Consolidated Balance Sheet | | | | | | | |
| | | | | | | | |
Subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Utilities | $ | 17,643 | | $ | (10,487 | ) | $ | 7,156 | | | | | | | | |
| | | | | | |
Total derivative liabilities subject to a master netting agreement or similar arrangement | 17,643 | | (10,487 | ) | 7,156 | | | | | | | | |
| | | | | | |
| | | | | | | | | | |
Not subject to a master netting agreement or similar arrangement: | | | | | | | | | | |
Commodity derivative: | | | | | | | | | | |
Oil and Gas - Crude Options | 3,370 | | — | | 3,370 | | | | | | | | |
| | | | | | |
Oil and Gas - Natural Gas Basis Swaps | 7 | | — | | 7 | | | | | | | | |
| | | | | | |
Interest Rate Swaps | 122,867 | | — | | 122,867 | | | | | | | | |
| | | | | | |
Total derivative liabilities not subject to a master netting agreement or similar arrangement | 126,244 | | — | | 126,244 | | | | | | | | |
| | | | | | |
| | | | | | | | | | |
Total derivative liabilities | $ | 143,887 | | $ | (10,487 | ) | $ | 133,400 | | | | | | | | |
| | | | | | |
|
Derivative assets and derivative liabilities and collateral held by counterparty on our Consolidated Balance Sheet were (in thousands): |
| | | | | | |
| | | | | | | | | | | | | | | | |
| | As of Dec. 31, 2011 | | | | | | |
| | | Gross Amounts Not Offset on Consolidated Balance Sheet | | | | | | | |
Contract Type | | Net Amount of Total Derivative Assets | Cash Collateral Received | Net Amount with Counterparty | | | | | | |
Asset: | | | | | | | | | | |
Oil and Gas | Counterparty A | $ | — | | $ | — | | $ | — | | | | | | | |
| | | | | |
Oil and Gas | Counterparty B | 10,658 | | — | | 10,658 | | | | | | | |
| | | | | |
Utilities | Counterparty A | 9,896 | | — | | 9,896 | | | | | | | |
| | | | | |
| | $ | 20,554 | | $ | — | | $ | 20,554 | | | | | | | |
| | | | | |
|
| | | | | | |
| | | | | | | | | | | | | | | | |
| | As of Dec. 31, 2011 | | | | | | |
| | | Gross Amounts Not Offset on Consolidated Balance Sheet | | | | | | | |
Contract Type | | Net Amount of Total Derivative Liabilities | Cash Collateral Posted | Net Amount with Counterparty | | | | | | |
Liabilities | | | | | | | | | | |
Oil and Gas | Counterparty A | $ | — | | $ | — | | $ | — | | | | | | | |
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Oil and Gas | Counterparty B | 3,377 | | — | | 3,377 | | | | | | | |
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Utilities | Counterparty A | 7,156 | | — | | 7,156 | | | | | | | |
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Interest Rate Swap | Counterparty D | 5,140 | | — | | 5,140 | | | | | | | |
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Interest Rate Swap | Counterparty E | 31,095 | | — | | 31,095 | | | | | | | |
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Interest Rate Swap | Counterparty F | 13,880 | | — | | 13,880 | | | | | | | |
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Interest Rate Swap | Counterparty G | 26,329 | | — | | 26,329 | | | | | | | |
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Interest Rate Swap | Counterparty H | 23,203 | | — | | 23,203 | | | | | | | |
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Interest Rate Swap | Counterparty I | 23,220 | | — | | 23,220 | | | | | | | |
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| | $ | 133,400 | | $ | — | | $ | 133,400 | | | | | | | |
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