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Derivatives and Risk Management Activities (Tables)
6 Months Ended
Jun. 30, 2019
Derivatives and Risk Management Activities  
Impact of derivatives recognized in earnings
A summary of the impact of our derivatives recognized in earnings is as follows (in millions):
 
Three Months Ended June 30, 2019
Location of Gain/(Loss)
Commodity
Derivatives
 
Foreign Currency Derivatives
 
Preferred Distribution Rate Reset Option
 
Interest Rate Derivatives
 
Total
Supply and Logistics segment revenues (1)
$
56

 
$
2

 
$

 
$

 
$
58

Field operating costs (1)
4

 

 

 

 
4

Interest expense, net (2)

 

 

 
(3
)
 
(3
)
Other income/(expense), net (1)

 

 
(7
)
 

 
(7
)
Total gain/(loss) on derivatives recognized in net income
$
60

 
$
2

 
$
(7
)
 
$
(3
)
 
$
52


 
Three Months Ended June 30, 2018
Location of Gain/(Loss)
Commodity
Derivatives
 
Foreign Currency Derivatives
 
Preferred Distribution Rate Reset Option
 
Interest Rate Derivatives
 
Total
Supply and Logistics segment revenues (1)
$
(339
)
 
$
(6
)
 
$

 
$

 
$
(345
)
Interest expense, net (2)

 

 

 
(2
)
 
(2
)
Other income/(expense), net (1)

 

 
8

 

 
8

Total gain/(loss) on derivatives recognized in net income
$
(339
)
 
$
(6
)
 
$
8

 
$
(2
)
 
$
(339
)

 
Six Months Ended June 30, 2019
Location of Gain/(Loss)
Commodity
Derivatives
 
Foreign Currency Derivatives
 
Preferred Distribution Rate Reset Option
 
Interest Rate Derivatives
 
Total
Supply and Logistics segment revenues (1)
$
231

 
$
7

 
$

 
$

 
$
238

Field operating costs (1)
11

 

 

 

 
11

Interest expense, net (2)

 

 

 
(5
)
 
(5
)
Other income/(expense), net (1)

 

 
16

 

 
16

Total gain/(loss) on derivatives recognized in net income
$
242

 
$
7

 
$
16

 
$
(5
)
 
$
260


 
Six Months Ended June 30, 2018
Location of Gain/(Loss)
Commodity
Derivatives
 
Foreign Currency Derivatives
 
Preferred Distribution Rate Reset Option
 
Interest Rate Derivatives
 
Total
Supply and Logistics segment revenues (1)
$
(384
)
 
$
(12
)
 
$

 
$

 
$
(396
)
Field operating costs (1)
1

 

 

 

 
1

Interest expense, net (2)

 

 

 
(1
)
 
(1
)
Other income/(expense), net (1)

 

 
5

 

 
5

Total gain/(loss) on derivatives recognized in net income
$
(383
)
 
$
(12
)
 
$
5

 
$
(1
)
 
$
(391
)
 
(1) 
Derivatives not designated as a hedge.
(2) 
Derivatives in hedging relationships.

Summary of derivative assets and liabilities on Condensed Consolidated Balance Sheets on a gross basis
The following table summarizes the derivative assets and liabilities on our Condensed Consolidated Balance Sheet on a gross basis as of June 30, 2019 (in millions):
 
 
Derivatives Not Designated As Hedging Instruments
 
 
 
 
Balance Sheet Location
 
Commodity
Derivatives
 
Foreign Currency Derivatives
 
Preferred Distribution Rate Reset Option
 
Total
 
Interest Rate Derivatives (1)
 
Total Derivatives
Derivative Assets
 
 
 
 
 
 
 
 
 
 
 
 
Other current assets
 
$
389

 
$
4

 
$

 
$
393

 
$

 
$
393

Other long-term assets, net
 
37

 

 

 
37

 

 
37

Other current liabilities
 

 

 

 

 

 

Other long-term liabilities and deferred credits
 
6

 

 

 
6

 

 
6

Total Derivative Assets
 
$
432

 
$
4

 
$

 
$
436

 
$

 
$
436

 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Other current assets
 
$
(96
)
 
$
(1
)
 
$

 
$
(97
)
 
$

 
$
(97
)
Other long-term assets, net
 
(4
)
 

 

 
(4
)
 

 
(4
)
Other current liabilities
 
(8
)
 

 

 
(8
)
 
(43
)
 
(51
)
Other long-term liabilities and deferred credits
 
(15
)
 

 
(20
)
 
(35
)
 

 
(35
)
Total Derivative Liabilities
 
$
(123
)
 
$
(1
)
 
$
(20
)
 
$
(144
)
 
$
(43
)
 
$
(187
)
 
(1) 
Derivatives in hedging relationships.

The following table summarizes the derivative assets and liabilities on our Condensed Consolidated Balance Sheet on a gross basis as of December 31, 2018 (in millions):
 
 
Derivatives Not Designated As Hedging Instruments
 
 
 
 
Balance Sheet Location
 
Commodity
Derivatives
 
Foreign Currency Derivatives
 
Preferred Distribution Rate Reset Option
 
Total
 
Interest Rate Derivatives (1)
 
Total Derivatives
Derivative Assets
 
 
 
 
 
 
 
 
 
 
 
 
Other current assets
 
$
441

 
$

 
$

 
$
441

 
$
2

 
$
443

Other long-term assets, net
 
34

 

 

 
34

 

 
34

Other long-term liabilities and deferred credits
 
3

 

 

 
3

 

 
3

Total Derivative Assets
 
$
478

 
$

 
$

 
$
478

 
$
2

 
$
480

 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Other current assets
 
$
(182
)
 
$

 
$

 
$
(182
)
 
$

 
$
(182
)
Other long-term assets, net
 
(7
)
 

 

 
(7
)
 

 
(7
)
Other current liabilities
 
(10
)
 
(9
)
 

 
(19
)
 
(1
)
 
(20
)
Other long-term liabilities and deferred credits
 
(9
)
 

 
(36
)
 
(45
)
 
(8
)
 
(53
)
Total Derivative Liabilities
 
$
(208
)
 
$
(9
)
 
$
(36
)
 
$
(253
)
 
$
(9
)
 
$
(262
)
 
(1) 
Derivatives in hedging relationships.
Schedule of net broker receivable/(payable)  The following table provides the components of our net broker receivable/(payable):
 
June 30,
2019
 
December 31,
2018
Initial margin
$
71

 
$
95

Variation margin returned
(85
)
 
(91
)
Letters of credit
(59
)
 
(84
)
Net broker payable
$
(73
)
 
$
(80
)

Schedule of derivative financial assets that are subject to offsetting, including enforceable master netting arrangements
The following table presents information about derivative financial assets and liabilities that are subject to offsetting, including enforceable master netting arrangements (in millions):
 
June 30, 2019
 
 
December 31, 2018
 
Derivative
Asset Positions
 
Derivative
Liability Positions
 
 
Derivative
Asset Positions
 
Derivative
Liability Positions
Netting Adjustments:
 

 
 

 
 
 

 
 

Gross position - asset/(liability)
$
436

 
$
(187
)
 
 
$
480

 
$
(262
)
Netting adjustment
(107
)
 
107

 
 
(192
)
 
192

Cash collateral received
(73
)
 

 
 
(80
)
 

Net position - asset/(liability)
$
256

 
$
(80
)
 
 
$
208

 
$
(70
)
 
 
 
 
 
 
 
 
 
Balance Sheet Location After Netting Adjustments:
 

 
 

 
 
 

 
 

Other current assets
$
223

 
$

 
 
$
181

 
$

Other long-term assets, net
33

 

 
 
27

 

Other current liabilities

 
(51
)
 
 

 
(20
)
Other long-term liabilities and deferred credits

 
(29
)
 
 

 
(50
)
 
$
256

 
$
(80
)
 
 
$
208

 
$
(70
)

Schedule of derivative financial liabilities that are subject to offsetting, including enforceable master netting arrangements
The following table presents information about derivative financial assets and liabilities that are subject to offsetting, including enforceable master netting arrangements (in millions):
 
June 30, 2019
 
 
December 31, 2018
 
Derivative
Asset Positions
 
Derivative
Liability Positions
 
 
Derivative
Asset Positions
 
Derivative
Liability Positions
Netting Adjustments:
 

 
 

 
 
 

 
 

Gross position - asset/(liability)
$
436

 
$
(187
)
 
 
$
480

 
$
(262
)
Netting adjustment
(107
)
 
107

 
 
(192
)
 
192

Cash collateral received
(73
)
 

 
 
(80
)
 

Net position - asset/(liability)
$
256

 
$
(80
)
 
 
$
208

 
$
(70
)
 
 
 
 
 
 
 
 
 
Balance Sheet Location After Netting Adjustments:
 

 
 

 
 
 

 
 

Other current assets
$
223

 
$

 
 
$
181

 
$

Other long-term assets, net
33

 

 
 
27

 

Other current liabilities

 
(51
)
 
 

 
(20
)
Other long-term liabilities and deferred credits

 
(29
)
 
 

 
(50
)
 
$
256

 
$
(80
)
 
 
$
208

 
$
(70
)

Net deferred gain/(loss) recognized in AOCI for derivatives
The following table summarizes the net unrealized gain/(loss) recognized in AOCI for derivatives (in millions):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Interest rate derivatives, net
$
(35
)
 
$
13

 
$
(58
)
 
$
45


Schedule of derivative financial assets and liabilities accounted for at fair value on a recurring basis, by level within the fair value hierarchy
The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis (in millions):
 
 
Fair Value as of June 30, 2019
 
 
Fair Value as of December 31, 2018
Recurring Fair Value Measures (1)
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Commodity derivatives
 
$
235

 
$
80

 
$
(6
)
 
$
309

 
 
$
171

 
$
87

 
$
12

 
$
270

Interest rate derivatives
 

 
(43
)
 

 
(43
)
 
 

 
(7
)
 

 
(7
)
Foreign currency derivatives
 

 
3

 

 
3

 
 

 
(9
)
 

 
(9
)
Preferred Distribution Rate Reset Option
 

 

 
(20
)
 
(20
)
 
 

 

 
(36
)
 
(36
)
Total net derivative asset/(liability)
 
$
235

 
$
40

 
$
(26
)
 
$
249

 
 
$
171

 
$
71

 
$
(24
)
 
$
218

 
(1) 
Derivative assets and liabilities are presented above on a net basis but do not include related cash margin deposits.
Reconciliation of changes in fair value of derivatives classified as Level 3
The following table provides a reconciliation of changes in fair value of the beginning and ending balances for our derivatives classified as Level 3 (in millions):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Beginning Balance
$
(10
)
 
$
(26
)
 
$
(24
)
 
$
(30
)
Net gains/(losses) for the period included in earnings
(5
)
 
7

 
18

 
5

Settlements
(3
)
 
1

 
(11
)
 
7

Derivatives entered into during the period
(8
)
 

 
(9
)
 

Ending Balance
$
(26
)
 
$
(18
)
 
$
(26
)
 
$
(18
)
 
 
 
 
 
 
 
 
Change in unrealized gains/(losses) included in earnings relating to Level 3 derivatives still held at the end of the period
$
(13
)
 
$
7

 
$
9

 
$
5


Commodity Derivatives  
Derivatives and Risk Management Activities  
Summary of open derivative positions The following table summarizes our open derivative positions utilized to hedge the price risk associated with anticipated purchases and sales related to our natural gas processing and NGL fractionation activities as of June 30, 2019:
 
 
Notional Volume
 
 
 
 
(Short)/Long
 
Remaining Tenor
Natural gas purchases
 
77.8 Bcf
 
December 2022
Propane sales
 
(10.8) MMbls
 
March 2021
Butane sales
 
(3.2) MMbls
 
March 2021
Condensate sales (WTI position)
 
(1.2) MMbls
 
March 2021
Power supply requirements (1)
 
1.1 TWh
 
December 2022
 
(1) 
Power position to hedge a portion of our power supply requirements at our Canadian natural gas processing and fractionation plants.
Interest Rate Derivatives  
Derivatives and Risk Management Activities  
Schedule of terms of outstanding interest rate derivatives
The following table summarizes the terms of our outstanding interest rate derivatives as of June 30, 2019 (notional amounts in millions):
Hedged Transaction
 
Number and Types of
Derivatives Employed
 
Notional
Amount
 
Expected
Termination Date
 
Average Rate
Locked
 
Accounting
Treatment
Anticipated interest payments
 
8 forward starting swaps
(30-year)
 
$
200

 
12/13/2019
 
2.34
%
 
Cash flow hedge
Anticipated interest payments
 
8 forward starting swaps
(30-year)
 
$
200

 
6/15/2020
 
3.06
%
 
Cash flow hedge

Foreign Currency Derivatives  
Derivatives and Risk Management Activities  
Summary of open derivative positions
The following table summarizes our open forward exchange contracts as of June 30, 2019 (in millions):
 
 
 
 
USD
 
CAD
 
Average Exchange Rate
USD to CAD
Forward exchange contracts that exchange CAD for USD:
 
 
 
 

 
 

 
 
 
 
2019
 
$
63

 
$
83

 
$1.00 - $1.32
 
 
 
 
 
 
 
 
 
Forward exchange contracts that exchange USD for CAD:
 
 
 
 

 
 

 
 
 
 
2019
 
$
165

 
$
220

 
$1.00 - $1.33