Risk Management and Hedging Activities | Risk Management and Hedging Activities Our day-to-day operations expose us to a variety of risks including but not limited to changes in the prices of commodities that we buy or sell, changes in interest rates, and the creditworthiness of each of our counterparties. We manage certain of these exposures with either physical or financial transactions. We have established a comprehensive risk management policy and a risk management committee, or the Risk Management Committee, to monitor and manage market risks associated with commodity prices and counterparty credit. The Risk Management Committee is composed of senior executives who receive regular briefings on positions and exposures, credit exposures and overall risk management in the context of market activities. The Risk Management Committee is responsible for the overall management of credit risk and commodity price risk, including monitoring exposure limits. The following describes each of the risks that we manage. Commodity Price Risk Cash Flow Protection Activities — We are exposed to the impact of market fluctuations in the prices of natural gas, NGLs and condensate as a result of our gathering, processing, sales and storage activities. For gathering, processing and storage services, we may receive cash or commodities as payment for these services, depending on the contract type. We enter into derivative financial instruments to mitigate a portion of the risk of weakening natural gas, NGL and condensate prices associated with our gathering, processing and sales activities, thereby stabilizing our cash flows. We have mitigated a portion of our expected commodity price risk associated with our gathering, processing and sales activities through 2017 with commodity derivative instruments, with the majority of our positions settling through the first quarter of 2016 . Our commodity derivative instruments used for our hedging program are a combination of direct NGL product, crude oil, and natural gas hedges. Due to the limited liquidity and tenor of the NGL derivative market, we have used crude oil swaps and costless collars to mitigate a portion of our commodity price exposure to NGLs. Historically, prices of NGLs have generally been related to crude oil prices; however, there are periods of time when NGL pricing may be at a greater discount to crude oil, resulting in additional exposure to NGL commodity prices. The relationship of NGLs to crude oil continues to be lower than historical relationships; however, a significant amount of our NGL hedges from 2015 through 2016 are direct product hedges. When our crude oil swaps become short-term in nature, we have periodically converted certain crude oil derivatives to NGL derivatives by entering into offsetting crude oil swaps while adding NGL swaps. Our crude oil and NGL transactions are primarily accomplished through the use of forward contracts that effectively exchange our floating price risk for a fixed price. We also utilize crude oil costless collars that minimize our floating price risk by establishing a fixed price floor and a fixed price ceiling. However, the type of instrument that we use to mitigate a portion of our risk may vary depending upon our risk management objective. These transactions are not designated as hedging instruments for accounting purposes and the change in fair value is reflected within our condensed consolidated statements of operations as a gain or a loss on commodity derivative activity. Our Wholesale Propane Logistics segment is generally designed with the intent to establish stable margins by entering into supply arrangements that specify prices based on established floating price indices and by entering into sales agreements that provide for floating prices that are tied to our variable supply costs plus a margin. To the extent possible, we match the pricing of our supply portfolio to our sales portfolio in order to lock in value and reduce our overall commodity price risk. However, to the extent that we carry propane inventories or our sales and supply arrangements are not aligned, we are exposed to market variables and commodity price risk. We manage the commodity price risk of our supply portfolio and sales portfolio with both physical and financial transactions, including fixed price sales. While the majority of our sales and purchases in this segment are index-based, occasionally, we may enter into fixed price sales agreements in the event that a propane distributor desires to purchase propane from us on a fixed price basis. In such cases, we may manage this risk with derivatives that allow us to swap our fixed price risk to market index prices that are matched to our market index supply costs. In addition, we may use financial derivatives to manage the value of our propane inventories. These transactions are not designated as hedging instruments for accounting purposes and any change in fair value is reflected in the current period within our condensed consolidated statements of operations as a gain or loss on commodity derivative activity. Our portfolio of commodity derivative activity is primarily accounted for using the mark-to-market method of accounting, whereby changes in fair value are recorded directly to the condensed consolidated statements of operations; however, depending upon our risk profile and objectives, in certain limited cases, we may execute transactions that qualify for the hedge method of accounting. As a result of assets contributed to us by DCP Midstream, LLC, we have previously entered into derivative transactions directly with DCP Midstream, LLC whereby DCP Midstream, LLC was the counterparty. In March 2015, DCP Midstream, LLC novated those fixed price derivatives and our counterparty is now one of the financial institutions associated with our Amended and Restated Credit Agreement. Accordingly, the counterparties to the majority of our commodity swap contracts are investment-grade rated financial institutions. Natural Gas Storage and Pipeline Asset Based Commodity Derivative Program — Our natural gas storage and pipeline assets are exposed to certain risks including changes in commodity prices. We manage commodity price risk related to our natural gas storage and pipeline assets through our commodity derivative program. The commercial activities related to our natural gas storage and pipeline assets primarily consist of the purchase and sale of gas and associated time spreads and basis spreads. A time spread transaction is executed by establishing a long gas position at one point in time and establishing an equal short gas position at a different point in time. Time spread transactions allow us to lock in a margin supported by the injection, withdrawal, and storage capacity of our natural gas storage assets. We may execute basis spread transactions to mitigate the risk of sale and purchase price differentials across our system. A basis spread transaction allows us to lock in a margin on our physical purchases and sales of gas, including injections and withdrawals from storage. We typically use swaps to execute these transactions, which are not designated as hedging instruments and are recorded at fair value with changes in fair value recorded in the current period condensed consolidated statements of operations. While gas held in our storage locations is recorded at the lower of average cost or market, the derivative instruments that are used to manage our storage facilities are recorded at fair value and any changes in fair value are currently recorded in our condensed consolidated statements of operations. Even though we may have economically hedged our exposure and locked in a future margin, the use of lower-of-cost-or-market accounting for our physical inventory and the use of mark-to-market accounting for our derivative instruments may subject our earnings to market volatility. Commodity Cash Flow Hedges — In order for storage facilities to remain operational, a minimum level of base gas must be maintained in each storage cavern, which is capitalized on our condensed consolidated balance sheets as a component of property, plant and equipment, net. During construction or expansion of our storage caverns, we may execute a series of derivative financial instruments to mitigate a portion of the risk associated with the forecasted purchase of natural gas when we bring the storage caverns to operation. These derivative financial instruments may be designated as cash flow hedges. While the cash paid upon settlement of these hedges economically fixes the cash required to purchase the base gas, the deferred losses or gains would remain in accumulated other comprehensive income, or AOCI, until the cavern is emptied and the base gas is sold. The balance in AOCI of our previously settled base gas cash flow hedges was in a loss position of $6 million as of September 30, 2015 . Interest Rate Risk We enter into debt arrangements that have either fixed or floating rates, therefore we are exposed to market risks related to changes in interest rates. We periodically use interest rate swaps to convert our floating rate debt to fixed-rate debt or to convert our fixed-rate debt to floating rate debt. Our primary goals include: (1) maintaining an appropriate ratio of fixed-rate debt to floating-rate debt; (2) reducing volatility of earnings resulting from interest rate fluctuations; and (3) locking in attractive interest rates. In conjunction with the issuance of our 4.95% Senior Notes in March 2012, we entered into forward-starting interest rate swap agreements to reduce our exposure to market rate fluctuations prior to issuance. These derivative financial instruments were designated as cash flow hedges. While the cash paid upon settlement of these hedges economically fixed the rate we would pay on a portion of our 4.95% Senior Notes, the deferred loss in AOCI will be amortized into interest expense through the maturity of the notes in 2022. The balance in AOCI of these cash flow hedges was in a loss position of $3 million as of September 30, 2015 . Contingent Credit Features Each of the above risks is managed through the execution of individual contracts with a variety of counterparties. Certain of our derivative contracts may contain credit-risk related contingent provisions that may require us to take certain actions in certain circumstances. We have International Swaps and Derivatives Association, or ISDA, contracts which are standardized master legal arrangements that establish key terms and conditions which govern certain derivative transactions. These ISDA contracts contain standard credit-risk related contingent provisions. Some of the provisions we are subject to are outlined below. • If we were to have an effective event of default under our Amended and Restated Credit Agreement that occurs and is continuing, our ISDA counterparties may have the right to request early termination and net settlement of any outstanding derivative liability positions. • Certain of our ISDA counterparties would have the right to reduce our collateral threshold to zero, potentially requiring us to fully collateralize any commodity contracts in a net liability position, when our credit rating is below investment grade. • Additionally, in some cases, our ISDA contracts contain cross-default provisions that could constitute a credit-risk related contingent feature. These provisions apply if we default in making timely payments under other credit arrangements and the amount of the default is above certain predefined thresholds, which are significantly high and are generally consistent with the terms of our Amended and Restated Credit Agreement. As of September 30, 2015 , we were not a party to any agreements that would trigger the cross-default provisions. Our commodity derivative contracts that are not governed by ISDA contracts do not have any credit-risk related contingent features. Depending upon the movement of commodity prices and interest rates, each of our individual contracts with counterparties to our commodity derivative instruments or to our interest rate swap instruments are in either a net asset or net liability position. As of September 30, 2015 , all of our individual commodity derivative contracts that contain credit-risk related contingent features were in a net asset position. If we were required to net settle our position with an individual counterparty, due to a credit-risk related event, our ISDA contracts may permit us to net all outstanding contracts with that counterparty, whether in a net asset or net liability position, as well as any cash collateral already posted. As of September 30, 2015 , we were not required to post additional collateral or offset net liability contracts with contracts in a net asset position because all of our commodity derivative contracts that contain credit-risk related contingent features were in a net asset position. Offsetting Certain of our derivative instruments are subject to a master netting or similar arrangement, whereby we may elect to settle multiple positions with an individual counterparty through a single net payment. Each of our individual derivative instruments are presented on a gross basis on the condensed consolidated balance sheets, regardless of our ability to net settle our positions. Instruments that are governed by agreements that include net settle provisions allow final settlement, when presented with a termination event, of outstanding amounts by extinguishing the mutual debts owed between the parties in exchange for a net amount due. We have trade receivables and payables associated with derivative instruments, subject to master netting or similar agreements, which are not included in the table below. The following summarizes the gross and net amounts of our derivative instruments: September 30, 2015 December 31, 2014 Gross Amounts of Assets and (Liabilities) Presented in the Balance Sheet Amounts Not Offset in the Balance Sheet - Financial Instruments (a) Net Amount Gross Amounts of Assets and (Liabilities) Presented in the Balance Sheet Amounts Not Offset in the Balance Sheet - Financial Instruments (a) Net Amount (Millions) Assets: Commodity derivatives $ 148 $ (28 ) $ 120 $ 269 $ (42 ) $ 227 Liabilities: Commodity derivatives $ (28 ) $ 28 $ — $ (43 ) $ 42 $ (1 ) (a) There is no cash collateral pledged or received against these positions. Summarized Derivative Information The fair value of our derivative instruments that are marked-to-market each period, as well as the location of each within our condensed consolidated balance sheets, by major category, is summarized below. We have no derivative instruments that are designated as hedging instruments for accounting purposes as of September 30, 2015 and December 31, 2014 . Balance Sheet Line Item September 30, December 31, Balance Sheet Line Item September 30, December 31, (Millions) (Millions) Derivative Assets Not Designated as Hedging Instruments: Derivative Liabilities Not Designated as Hedging Instruments: Commodity derivatives: Commodity derivatives: Unrealized gains on derivative instruments — current $ 131 $ 230 Unrealized losses on derivative instruments — current $ (28 ) $ (43 ) Unrealized gains on derivative instruments — long-term 17 39 Unrealized losses on derivative instruments — long-term — — Total $ 148 $ 269 Total $ (28 ) $ (43 ) The following summarizes the balance and activity within AOCI relative to our interest rate, commodity and foreign currency cash flow hedges as of and for the three months ended September 30, 2015 : Interest Commodity Foreign Total (Millions) Net deferred (losses) gains in AOCI (beginning balance) $ (3 ) $ (6 ) $ 1 $ (8 ) Losses reclassified from AOCI to earnings — effective portion — — — — Net deferred (losses) gains in AOCI (ending balance) $ (3 ) $ (6 ) $ 1 $ (8 ) (a) Relates to Discovery, an unconsolidated affiliate. The following summarizes the balance and activity within AOCI relative to our interest rate, commodity and foreign currency cash flow hedges as of and for the nine months ended September 30, 2015 : Interest Rate Cash Flow Hedges Commodity Cash Flow Hedges Foreign Currency Cash Flow Hedges (a) Total (Millions) Net deferred (losses) gains in AOCI (beginning balance) $ (4 ) $ (6 ) $ 1 $ (9 ) Losses reclassified from AOCI to earnings — effective portion 1 (b) — — 1 Net deferred (losses) gains in AOCI (ending balance) $ (3 ) $ (6 ) $ 1 $ (8 ) Deferred losses in AOCI expected to be reclassified into earnings over the next 12 months $ (1 ) $ — $ — $ (1 ) (a) Relates to Discovery, an unconsolidated affiliate. (b) Included in interest expense in our condensed consolidated statements of operations. For the three and nine months ended September 30, 2015 , no derivative losses attributable to the ineffective portion or to amounts excluded from effectiveness testing were recognized in gains or losses from commodity derivative activity, net or interest expense in our condensed consolidated statements of operations. For the three and nine months ended September 30, 2015 , no derivative losses were reclassified from AOCI to gains or losses from commodity derivative activity, net or interest expense as a result of the discontinuance of cash flow hedges related to certain forecasted transactions that are not probable of occurring. The following summarizes the balance and activity within AOCI relative to our interest rate, commodity and foreign currency cash flow hedges as of and for the three months ended September 30, 2014 : Interest Commodity Foreign Total (Millions) Net deferred (losses) gains in AOCI (beginning balance) $ (4 ) $ (6 ) $ 1 $ (9 ) Losses reclassified from AOCI to earnings — effective portion $ — (b) $ — $ — $ — Net deferred (losses) gains in AOCI (ending balance) $ (4 ) $ (6 ) $ 1 $ (9 ) (a) Relates to Discovery, an unconsolidated affiliate. (b) For the three months ended September 30, 2014 , no derivative losses were reclassified from AOCI to interest expense as a result of the discontinuance of cash flow hedges related to certain forecasted transactions that are not probable of occurring. The following summarizes the balance and activity within AOCI relative to our interest rate, commodity and foreign currency cash flow hedges as of and for the nine months ended September 30, 2014 : Interest Commodity Foreign Total (Millions) Net deferred (losses) gains in AOCI (beginning balance) $ (6 ) $ (6 ) $ 1 $ (11 ) Losses reclassified from AOCI to earnings — effective portion $ 2 (b) (c) $ — $ — $ 2 Net deferred (losses) gains in AOCI (ending balance) $ (4 ) $ (6 ) $ 1 $ (9 ) (a) Relates to Discovery, an unconsolidated affiliate. (b) Included in interest expense in our condensed consolidated statements of operations. (c) For the nine months ended September 30, 2014 , $1 million of derivative losses were reclassified from AOCI to interest expense as a result of the discontinuance of cash flow hedges related to certain forecasted transactions that are not probable of occurring. For the three and nine months ended September 30, 2014 , no derivative losses attributable to the ineffective portion or to amounts excluded from effectiveness testing were recognized in gains or losses from commodity derivative activity, net or interest expense in our condensed consolidated statements of operations. Changes in value of derivative instruments, for which the hedge method of accounting has not been elected from one period to the next, are recorded in the condensed consolidated statements of operations. The following summarizes these amounts and the location within the condensed consolidated statements of operations that such amounts are reflected: Commodity Derivatives: Statements of Operations Line Item Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (Millions) Third party: Realized gains (losses) $ 51 $ (2 ) $ 104 $ (7 ) Unrealized (losses) gains (16 ) 15 (69 ) 6 Gains (losses) from commodity derivative activity, net $ 35 $ 13 $ 35 $ (1 ) Affiliates: Realized gains $ 1 $ 26 $ 58 $ 37 Unrealized gains (losses) 8 2 (36 ) (32 ) Gains from commodity derivative activity, net —affiliates $ 9 $ 28 $ 22 $ 5 Interest Rate Derivatives: Statements of Operations Line Item Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (Millions) Third party: Realized losses $ — $ — $ — $ (2 ) Unrealized gains — — — 2 Interest expense $ — $ — $ — $ — We do not have any derivative financial instruments that qualify as a hedge of a net investment. The following tables represent, by commodity type, our net long or short positions that are expected to partially or entirely settle in each respective year. To the extent that we have long dated derivative positions that span multiple calendar years, the contract will appear in more than one line item in the tables below. September 30, 2015 Crude Oil Natural Gas Natural Gas Liquids Natural Gas Basis Swaps Year of Expiration Net Short Position (Bbls) Net Short Position (MMBtu) Net Short Position (Bbls) Net Long Position (MMBtu) 2015 (279,956 ) (5,981,680 ) (1,303,456 ) 1,347,500 2016 (1,408,672 ) (13,218,564 ) (813,267 ) 3,450,000 2017 — (6,387,500 ) — 1,800,000 September 30, 2014 Crude Oil Natural Gas Natural Gas Liquids Natural Gas Basis Swaps Year of Expiration Net Short Position (Bbls) Net Short Position (MMBtu) Net Short Position (Bbls) Net Long (Short) Position (MMBtu) 2014 (174,156 ) (1,400,796 ) (1,473,468 ) 1,247,500 2015 (745,695 ) (21,458,975 ) (5,573,570 ) 4,485,000 2016 (561,922 ) (3,668,564 ) (813,267 ) (2,140,000 ) 2017 — (6,387,500 ) — — |