XML 35 R30.htm IDEA: XBRL DOCUMENT v2.4.0.8
Derivatives and Risk Management Activities (Tables)
9 Months Ended
Sep. 30, 2014
Derivative disclosures  
Schedule of interest rate risk hedging

The following table summarizes the terms of our forward starting interest rate swaps as of September 30, 2014 (notional amounts in millions):

 

Hedged Transaction

 

Number and Types of
Derivatives Employed

 

Notional
Amount

 

Expected
Termination Date

 

Average Rate
Locked

 

Accounting
Treatment

 

Anticipated debt offering

 

10 forward starting swaps (30-year)

 

$

250

 

6/15/2015

 

3.60%

 

Cash flow hedge

 

Open foreign currency exchange contracts

The following table summarizes our open forward exchange contracts as of September 30, 2014 (in millions):

 

 

 

 

 

USD

 

CAD

 

Average Exchange Rate USD
to CAD

 

Forward exchange contracts that exchange CAD for USD:

 

 

 

 

 

 

 

 

 

 

 

2014

 

$

284

 

$

319

 

$1.00 - $1.12

 

 

 

2015

 

178

 

200

 

$1.00 - $1.12

 

 

 

 

 

$

462

 

$

519

 

$1.00 - $1.12

 

 

 

 

 

 

 

 

 

 

 

Forward exchange contracts that exchange USD for CAD:

 

 

 

 

 

 

 

 

 

 

 

2014

 

$

284

 

$

313

 

$1.00 - $1.10

 

 

 

2015

 

178

 

195

 

$1.00 - $1.09

 

 

 

 

 

$

462

 

$

508

 

$1.00 - $1.10

 

 

Impact of derivative activities recognized in earnings

A summary of the impact of our derivative activities recognized in earnings for the three and nine months ended September 30, 2014 and 2013 is as follows (in millions):

 

 

 

Three Months Ended September 30, 2014

 

 

Three Months Ended September 30, 2013

 

 

 

Derivatives in Hedging
Relationships

 

 

 

 

 

 

Derivatives in Hedging
Relationships

 

 

 

 

 

Location of gain/(loss)

 

Gain/(loss)
reclassified
from
AOCI into
income
(1)

 

Other
gain/(loss)
recognized
in income

 

Derivatives
Not
Designated
as a
Hedge

 

Total

 

 

Gain/(loss)
reclassified
from
AOCI into
income 
(1)

 

Other
gain/(loss)
recognized
in income

 

Derivatives
Not
Designated
as a
Hedge

 

Total

 

Commodity Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply and Logistics segment revenues

 

$

(4

)

$

 

$

(17

)

$

(21

)

 

$

109

 

$

 

$

(91

)

$

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Facilities segment revenues

 

 

 

 

 

 

(2

)

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Field operating costs

 

 

 

(2

)

(2

)

 

 

 

2

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(1

)

 

 

(1

)

 

(2

)

3

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply and Logistics segment revenues

 

 

 

(17

)

(17

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income/(expense), net

 

 

 

 

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Gain/(Loss) on Derivatives Recognized in Net Income

 

$

(5

)

$

 

$

(36

)

$

(41

)

 

$

106

 

$

3

 

$

(89

)

$

20

 

 

 

 

Nine Months Ended September 30, 2014

 

 

Nine Months Ended September 30, 2013

 

 

 

Derivatives in Hedging
Relationships

 

 

 

 

 

 

Derivatives in Hedging
Relationships

 

 

 

 

 

Location of gain/(loss)

 

Gain/(loss)
reclassified
from
AOCI into
income
(1)

 

Other
gain/(loss)
recognized
in income

 

Derivatives
Not
Designated
as a
Hedge

 

Total

 

 

Gain/(loss)
reclassified
from
AOCI into
income 
(1)

 

Other
gain/(loss)
recognized
in income

 

Derivatives
Not
Designated
as a
Hedge

 

Total

 

Commodity Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply and Logistics segment revenues

 

$

(12

)

$

 

$

(17

)

$

(29

)

 

$

139

 

$

 

$

(34

)

$

105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Facilities segment revenues

 

 

 

 

 

 

(14

)

 

 

(14

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Field operating costs

 

 

 

(3

)

(3

)

 

 

 

7

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(4

)

 

 

(4

)

 

(5

)

3

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply and Logistics segment revenues

 

 

 

(17

)

(17

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income/(expense), net

 

 

 

 

 

 

4

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Gain/(Loss) on Derivatives Recognized in Net Income

 

$

(16

)

$

 

$

(37

)

$

(53

)

 

$

124

 

$

3

 

$

(27

)

$

100

 

 

(1)                   During the three and nine months ended September 30, 2014, all of our hedged transactions were probable of occurring. During the three months ended September 30, 2013 we reclassified losses of $2 million from AOCI to Facilities segment revenues as a result of anticipated hedged transactions that were probable of not occurring. During the nine months ended September 30, 2013, we reclassified gains of $3 million and losses of $1 million from AOCI to Supply and Logistics segment revenues and Facilities segment revenues, respectively, as a result of anticipated hedged transactions that were probable of not occurring.

 

Summary of derivative assets and liabilities on condensed consolidated balance sheet

The following table summarizes the derivative assets and liabilities on our condensed consolidated balance sheet on a gross basis as of September 30, 2014 (in millions):

 

 

 

Asset Derivatives

 

 

Liability Derivatives

 

 

 

Balance Sheet

 

 

 

 

Balance Sheet

 

 

 

 

 

Location

 

Fair Value

 

 

Location

 

Fair Value

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

Commodity derivatives

 

Other current assets

 

$

7

 

 

 

 

 

 

 

 

Other long-term assets

 

4

 

 

 

 

 

 

Interest rate derivatives

 

 

 

 

 

 

Other current liabilities

 

$

(15

)

Total derivatives designated as hedging instruments

 

 

 

$

11

 

 

 

 

$

(15

)

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

Commodity derivatives

 

Other current assets

 

$

65

 

 

Other current assets

 

$

(43

)

 

 

Other long-term assets

 

5

 

 

Other current liabilities

 

(7

)

 

 

Other current liabilities

 

2

 

 

Other long-term liabilities

 

(2

)

Foreign currency derivatives

 

 

 

 

 

 

Other current liabilities

 

(10

)

Total derivatives not designated as hedging instruments

 

 

 

$

72

 

 

 

 

$

(62

)

 

 

 

 

 

 

 

 

 

 

 

Total derivatives

 

 

 

$

83

 

 

 

 

$

(77

)

 

The following table summarizes the derivative assets and liabilities on our condensed consolidated balance sheet on a gross basis as of December 31, 2013 (in millions):

 

 

 

Asset Derivatives

 

 

Liability Derivatives

 

 

 

Balance Sheet

 

 

 

 

Balance Sheet

 

 

 

 

 

Location

 

Fair Value

 

 

Location

 

Fair Value

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

Commodity derivatives

 

Other current assets

 

$

36

 

 

Other current assets

 

$

(24

)

 

 

Other long-term assets

 

5

 

 

 

 

 

 

Interest rate derivatives

 

Other long-term assets

 

26

 

 

 

 

 

 

Total derivatives designated as hedging instruments

 

 

 

$

67

 

 

 

 

$

(24

)

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

Commodity derivatives

 

Other current assets

 

$

60

 

 

Other current assets

 

$

(117

)

 

 

Other long-term assets

 

5

 

 

Other long-term assets

 

(6

)

 

 

Other current liabilities

 

1

 

 

Other current liabilities

 

(5

)

 

 

 

 

 

 

 

Other long-term liabilities

 

(1

)

Foreign currency derivatives

 

 

 

 

 

 

Other current liabilities

 

(4

)

Total derivatives not designated as hedging instruments

 

 

 

$

66

 

 

 

 

$

(133

)

 

 

 

 

 

 

 

 

 

 

 

Total derivatives

 

 

 

$

133

 

 

 

 

$

(157

)

 

Schedule of derivatives assets and liabilities that are subject to offsetting, including enforceable master netting arrangements

The following tables present information about derivatives and financial assets and liabilities that are subject to offsetting, including enforceable master netting arrangements at September 30, 2014 and December 31, 2013 (in millions):

 

 

 

September 30, 2014

 

 

December 31, 2013

 

 

 

Derivative

 

Derivative

 

 

Derivative

 

Derivative

 

 

 

Asset Positions

 

Liability Positions

 

 

Asset Positions

 

Liability Positions

 

 

 

 

 

 

 

 

 

 

 

 

Netting Adjustments:

 

 

 

 

 

 

 

 

 

 

Gross position - asset/(liability)

 

$

83

 

$

(77

)

 

$

133

 

$

(157

)

Netting adjustment

 

(45

)

45

 

 

(148

)

148

 

Cash collateral paid/(received)

 

35

 

 

 

161

 

 

Net position - asset/(liability)

 

$

73

 

$

(32

)

 

$

146

 

$

(9

)

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Location After Netting Adjustments:

 

 

 

 

 

 

 

 

 

 

Other current assets

 

$

64

 

$

 

 

$

116

 

$

 

Other long-term assets

 

9

 

 

 

30

 

 

Other current liabilities

 

 

(30

)

 

 

(8

)

Other long-term liabilities

 

 

(2

)

 

 

(1

)

 

 

$

73

 

$

(32

)

 

$

146

 

$

(9

)

 

Net deferred gain/(loss), including tax effects, recognized in AOCI for derivatives

The net deferred gain/(loss), including tax effects, recognized in AOCI for derivatives for the three and nine months ended September 30, 2014 and 2013 are as follows (in millions):

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

Commodity derivatives, net

 

$

2

 

$

66

 

$

(10

)

$

77

 

Interest rate derivatives, net

 

(8

)

12

 

(47

)

63

 

Total

 

$

(6

)

$

78

 

$

(57

)

$

140

 

 

Derivative financial assets and liabilities within the fair value hierarchy accounted for at fair value on a recurring basis

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 as of September 30, 2014 and December 31, 2013 (in millions):

 

 

 

Fair Value as of September 30, 2014

 

 

Fair Value as of December 31, 2013

 

Recurring Fair Value Measures (1)

 

Level 1

 

Level 2

 

Level 3

 

Total

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Commodity derivatives

 

$

6

 

$

22

 

$

3

 

$

31

 

 

$

16

 

$

(59

)

$

(3

)

$

(46

)

Interest rate derivatives

 

 

(15

)

 

(15

)

 

 

26

 

 

26

 

Foreign currency derivatives

 

 

(10

)

 

(10

)

 

 

(4

)

 

(4

)

Total net derivative asset/(liability)

 

$

6

 

$

(3

)

$

3

 

$

6

 

 

$

16

 

$

(37

)

$

(3

)

$

(24

)

 

(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

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

Beginning Balance

 

$

1

 

$

4

 

$

(3

)

$

4

 

Unrealized gains/(losses):

 

 

 

 

 

 

 

 

 

Included in earnings (1)

 

1

 

(4

)

 

(1

)

Included in other comprehensive income

 

 

 

 

 

Settlements

 

 

(1

)

3

 

(3

)

Derivatives entered into during the period

 

1

 

 

3

 

(1

)

Transfers out of Level 3

 

 

 

 

 

Ending Balance

 

$

3

 

$

(1

)

$

3

 

$

(1

)

 

 

 

 

 

 

 

 

 

 

Change in unrealized gains/(losses) included in earnings relating to Level 3 derivatives still held at the end of the periods

 

$

2

 

$

(4

)

$

3

 

$

(1

)

 

(1)                   We reported unrealized gains and losses associated with Level 3 commodity derivatives in our condensed consolidated statements of operations as Supply and Logistics segment revenues.