Inventory, Linefill and Base Gas and Long-term Inventory
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Sep. 30, 2014
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Inventory, Linefill and Base Gas and Long-term Inventory | Note 4—Inventory, Linefill and Base Gas and Long-term Inventory
Inventory, linefill and base gas and long-term inventory consisted of the following as of the dates indicated (barrels and natural gas volumes in thousands and carrying value in millions):
(1) Price per unit of measure is comprised of a weighted average associated with various grades, qualities and locations. Accordingly, these prices may not coincide with any published benchmarks for such products.
At the end of each reporting period, we assess the carrying value of our inventory and make any adjustments necessary to reduce the carrying value to the applicable net realizable value. We did not record any such charges during the three months ended September 30, 2014. We recorded a charge of $37 million during the nine months ended September 30, 2014 related to the writedown of our natural gas inventory that was purchased in conjunction with managing natural gas storage deliverability requirements during the extended period of severe cold weather in the first quarter of 2014. During the three and nine months ended September 30, 2013, we recorded a charge of $7 million, primarily related to the writedown of our crude oil inventory due to declines in prices during the period. These adjustments are a component of “Purchases and related costs” on our accompanying condensed consolidated statements of operations. The recognition of the adjustment in 2013 was substantially offset by the recognition of gains on derivative instruments being utilized to hedge the future sales of our crude oil inventory. Substantially all of such gains were recorded to “Supply and Logistics segment revenues” on our accompanying condensed consolidated statements of operations. See Note 10 for discussion of our derivatives and risk management activities.
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