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Fair Value (Notes)

9 Months Ended

Sep. 30, 2019

The fair values of our financial instruments are separated into three broad levels (Levels 1, 2 and 3) based on our assessment of the availability of observable market data and the significance of non-observable data used to determine fair value. Each fair value measurement must be assigned to a level corresponding to the lowest level input that is significant to the fair value measurement in its entirety.

The three broad levels of inputs defined by the fair value hierarchy are as follows:


•	Level 1 Inputs—quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;


•	Level 2 Inputs—inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability; and


•	Level 3 Inputs—unobservable inputs for the asset or liability. These unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances (which might include the reporting entity’s own data).

Fair Value of Derivative Contracts

The following two tables summarize the fair value measurements of our (i) energy commodity derivative contracts; (ii) interest rate swap agreements; and (iii) cross-currency swap agreements, based on the three levels established by the ASC (in millions). The tables also identify the impact of derivative contracts which we have elected to present on our accompanying consolidated balance sheets on a gross basis that are eligible for netting under master netting agreements.



	Balance sheet asset fair value measurements by level														Net amount
	Level 1		Level 2		Level 3		Gross amount		Contracts available for netting			Cash collateral held(b)			Net amount
As of September 30, 2019
Energy commodity derivative contracts(a)	$	23	$	116	$	—	$	139	$	(19	)	$	(34	)	$	86
Interest rate contracts	—		474		—		474		(1		)	—			473
Foreign currency contracts	—		20		—		20		(14		)	—			6
As of December 31, 2018
Energy commodity derivative contracts(a)	$	28	$	193	$	—	$	221	$	(39	)	$	(25	)	$	157
Interest rate contracts	—		133		—		133		(7		)	—			126
Foreign currency contracts	—		197		—		197		(6		)	—			191



	Balance sheet liability fair value measurements by level															Net amount
	Level 1			Level 2			Level 3		Gross amount			Contracts available for netting		Cash collateral posted(b)		Net amount
As of September 30, 2019
Energy commodity derivative contracts(a)	$	(2	)	$	(39	)	$	—	$	(41	)	$	19	$	—	$	(22	)
Interest rate contracts	—			(4		)	—		(4		)	1		—		(3		)
Foreign currency contracts	—			(14		)	—		(14		)	14		—		—
As of December 31, 2018
Energy commodity derivative contracts(a)	$	(11	)	$	(39	)	$	—	$	(50	)	$	39	$	—	$	(11	)
Interest rate contracts	—			(115		)	—		(115		)	7		—		(108		)
Foreign currency contracts	—			(6		)	—		(6		)	6		—		—

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(a)	Level 1 consists primarily of NYMEX natural gas futures. Level 2 consists primarily of OTC WTI swaps, NGL swaps and crude oil basis swaps.


(b)	Any cash collateral paid or received is reflected in this table, but only to the extent that such cash collateral represents variation margins. Any amount associated with derivative prepayments or initial margins that are not influenced by the derivative asset or liability amounts, or those that are determined solely on their volumetric notional amounts, are excluded from this table.

Fair Value of Financial Instruments

The carrying value and estimated fair value of our outstanding debt balances are disclosed below (in millions):



	September 30, 2019				December 31, 2018
	Carrying value		Estimated fair value		Carrying value		Estimated fair value
Total debt	$	36,517	$	40,056	$	37,324	$	37,469

We used Level 2 input values to measure the estimated fair value of our outstanding debt balance as of both September 30, 2019 and December 31, 2018.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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