FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2012

NOTE 10 FINANCIAL INSTRUMENTS

The carrying value of cash and cash equivalents, accounts receivable and other, accounts payable and accrued liabilities, and accrued interest approximate their fair values because of the short maturity or duration of these instruments, or because the instruments bear a variable rate of interest or a rate that approximates current rates. The fair value of the Partnership’s long-term debt is estimated by discounting the future cash flows of each instrument at estimated current borrowing rates. The estimated fair values of the Partnership’s and its subsidiary’s long-term debt as of March 31, 2012 is $723 million (December 31, 2011 - $763 million).

The Partnership’s long-term debt results in exposures to changing interest rates. Until December 12, 2011, the Partnership used derivatives to assist in managing its exposure to interest rate risk. For the three months ended March 31, 2012, the Partnership recorded interest expense of nil on interest rate swaps and options (2011 – $4 million).