NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018
(Unaudited)
1. Description of Business and Basis of Presentation
DCP Midstream, LP, with its consolidated subsidiaries, or "us", "we", "our" or the "Partnership" is a Delaware limited partnership formed in 2005 by DCP Midstream, LLC to own, operate, acquire and develop a diversified portfolio of complementary midstream energy assets.
Our Partnership includes our Logistics and Marketing and Gathering and Processing segments. For additional information regarding these segments, see Note
19
- Business Segments.
Our operations and activities are managed by our general partner, DCP Midstream GP, LP, which in turn is managed by its general partner, DCP Midstream GP, LLC, which we refer to as the General Partner, and which is
100%
owned by DCP Midstream, LLC. DCP Midstream, LLC and its subsidiaries and affiliates, collectively referred to as DCP Midstream, LLC, is owned
50%
by Phillips 66 and
50%
by Enbridge Inc. and its affiliates, or Enbridge. DCP Midstream, LLC directs our business operations through its ownership and control of the General Partner. As of
March 31, 2019
, DCP Midstream, LLC owned approximately
38.1%
of us, including limited partner and general partner interests.
The condensed consolidated financial statements include the accounts of the Partnership and all majority-owned subsidiaries where we have the ability to exercise control. Investments in greater than
20%
owned affiliates that are not variable interest entities and where we do not have the ability to exercise control, and investments in less than
20%
owned affiliates where we have the ability to exercise significant influence, are accounted for using the equity method.
The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. All intercompany balances and transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the SEC). Accordingly, these condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary to present fairly the financial position and results of operations for the respective interim periods. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted from these interim financial statements pursuant to such rules and regulations, although we believe that the disclosures made are adequate to make the information presented not misleading. Results of operations for the three months ended
March 31, 2019
are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. These unaudited condensed consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with the 2018 audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
2. Update to Significant Accounting Policies
Our significant accounting policies are detailed in Note 2 - Summary of Significant Accounting Policies of our Annual Report on Form 10-K for the year ended December 31, 2018. Significant changes to our accounting policies as a result of Topic 842 (as defined below) are discussed below:
Leases
- Our leasing activity primarily consists of transportation agreements, office space, vehicles, compressors and field equipment. We determine if an arrangement is an operating or finance lease at inception. Right of use assets represent our right to use an underlying asset for the lease term when we control the use of the asset by obtaining substantially all of the economic benefits of the asset and direct the use of the asset. Lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right of use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The interest rate used to calculate the present value of lease payments is the rate implicit in the lease when determinable or our incremental borrowing rate. Our incremental borrowing rate is primarily based on our collateralized borrowing rate when such borrowings exist or an estimated collateralized borrowing rate based on independent third party quotes when such borrowings do not exist. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.
3. New Accounting Pronouncements
Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" or ASU 2016-13
- In June 2016, the FASB issued ASU 2016-13, which amends current measurement techniques used to estimate credit losses for financial assets. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019, with the option to early adopt for financial statements that have not been issued. We are currently evaluating the potential impact this standard will have on our consolidated financial statements and related disclosures.
FASB ASU, 2016-02 “Leases (Topic 842),” or ASU 2016-02
- In February 2016, the FASB issued ASU 2016-02, which requires lessees to recognize a lease liability on a discounted basis and the right of use of a specified asset at the commencement date for all leases. We adopted this ASU on January 1, 2019 using the modified retrospective approach without application to prior periods. We implemented the following practical expedients and policy elections permitted under the new standard: (a) the package of practical expedients allowing us to not reassess whether expired or existing contracts contain a lease, the lease classification for any expired or existing leases and the treatment of initial direct costs for any expired or existing leases, (b) the land easement practical expedient, allowing us to carry forward our current accounting treatment for land easements on existing agreements, (c) not recognizing lease assets or liabilities when lease terms are less than twelve months and (d) for agreements that contain both lease and non-lease components, combining these components together and accounting for them as a single lease.
The effect of the changes made to our consolidated January 1, 2019 balance sheet as a result of the adoption of Topic 842 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
Adjustments due to Topic 842
|
|
Balance at
|
|
|
|
December 31, 2018
|
|
|
January 1, 2019
|
|
|
|
(millions)
|
|
Balance Sheet
|
|
|
|
|
|
|
|
Operating lease assets
|
|
$
|
—
|
|
|
$
|
84
|
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Other
|
|
$
|
100
|
|
|
$
|
25
|
|
|
$
|
125
|
|
|
Operating lease liabilities
|
|
$
|
—
|
|
|
$
|
66
|
|
|
$
|
66
|
|
|
Other long-term liabilities
|
|
$
|
243
|
|
|
$
|
(7
|
)
|
|
$
|
236
|
|
This change did not have any impact on our consolidated statement of operations or consolidated statement of cash flows.
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
4
. Dispositions
On January 30, 2019, we entered into a purchase and sale agreement with NGL Energy Partners LP to sell Gas Supply Resources, our wholesale propane business primarily consisting of seven natural gas liquids terminals in the Eastern United States within our Logistics and Marketing segment for a purchase price of
$90 million
. Net proceeds received were approximately
$103 million
due to customary purchase price adjustments. The transaction closed effective March 1, 2019. We recognized a loss on sale of $
9 million
, net of goodwill, in the first quarter of 2019.
5
. Revenue Recognition
We disaggregate our revenue from contracts with customers by type of contract for each of our reportable segments, as we believe it best depicts the nature, timing and uncertainty of our revenue and cash flows. The following tables set forth our revenue by those categories:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
|
|
|
Logistics and Marketing
|
|
Gathering and Processing
|
|
Eliminations
|
|
Total
|
|
|
|
(millions)
|
|
Sales of natural gas
|
|
$
|
637
|
|
|
$
|
557
|
|
|
$
|
(498
|
)
|
|
$
|
696
|
|
|
Sales of NGLs and condensate (a)
|
|
1,403
|
|
|
648
|
|
|
(636
|
)
|
|
1,415
|
|
|
Transportation, processing and other
|
|
12
|
|
|
103
|
|
|
—
|
|
|
115
|
|
|
Trading and marketing losses, net (b)
|
|
$
|
(7
|
)
|
|
$
|
(20
|
)
|
|
—
|
|
|
(27
|
)
|
|
Total operating revenues
|
|
$
|
2,045
|
|
|
$
|
1,288
|
|
|
$
|
(1,134
|
)
|
|
$
|
2,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
|
|
|
Logistics and Marketing
|
|
Gathering and Processing
|
|
Eliminations
|
|
Total
|
|
|
|
(millions)
|
|
Sales of natural gas
|
|
$
|
553
|
|
|
$
|
446
|
|
|
$
|
(419
|
)
|
|
$
|
580
|
|
|
Sales of NGLs and condensate (a)
|
|
1,456
|
|
|
740
|
|
|
(707
|
)
|
|
1,489
|
|
|
Transportation, processing and other
|
|
14
|
|
|
97
|
|
|
—
|
|
|
111
|
|
|
Trading and marketing (losses) gains, net (b)
|
|
$
|
(44
|
)
|
|
$
|
3
|
|
|
—
|
|
|
(41
|
)
|
|
Total operating revenues
|
|
$
|
1,979
|
|
|
$
|
1,286
|
|
|
$
|
(1,126
|
)
|
|
$
|
2,139
|
|
(a) Includes $
858 million
and $
793 million
for the
three months ended March 31, 2019
and
2018
, respectively, of revenues from physical sales contracts and buy-sell exchange transactions in our logistics and marketing segment, which are not within the scope of FASB ASU 2014-09 "Revenue from Contracts with Customers" (Topic 606).
(b) Not within the scope of Topic 606.
The revenue expected to be recognized in the future related to performance obligations that are not satisfied is approximately
$212
million as of
March 31, 2019
. Our remaining performance obligations primarily consist of minimum volume commitment fee arrangements and are expected to be recognized through 2028 with a weighted average remaining life of
5
years as of
March 31, 2019
. As a practical expedient permitted by ASC 606, this amount excludes variable consideration as well as remaining performance obligations that have original expected durations of one year or less, as applicable. Our remaining performance obligations also exclude estimates of variable rate escalation clauses in our contracts with customers.
6. Contract Liabilities
Our contract liabilities consist of deferred revenue received from reimbursable projects. The noncurrent portion of deferred revenue is included in other long-term liabilities on our condensed consolidated balance sheet.
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
The following table summarizes changes in contract liabilities included in our condensed consolidated balance sheet:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
2019
|
|
|
|
(millions)
|
|
Balance, beginning of period
|
|
$
|
34
|
|
|
Revenue recognized (a)
|
|
—
|
|
|
Balance, end of period
|
|
$
|
34
|
|
(a) Deferred revenue recognized is included in transportation, processing and other on the condensed consolidated statement of operations.
The contract liabilities disclosed in the table above will be recognized as revenue as the obligations are satisfied over their average remaining contract life, which is
35
years as of
March 31, 2019
.
7
. Agreements and Transactions with Affiliates
DCP Midstream, LLC
Services Agreement and Other General and Administrative Charges
Under the Services and Employee Secondment Agreement (the “Services Agreement”), we are required to reimburse DCP Midstream, LLC for costs, expenses, and expenditures incurred or payments made on our behalf for general and administrative functions including, but not limited to, legal, accounting, compliance, treasury, insurance administration and claims processing, risk management, health, safety and environmental, information technology, human resources, benefit plan maintenance and administration, credit, payroll, internal audit, taxes and engineering, as well as salaries and benefits of seconded employees, insurance coverage and claims, capital expenditures, maintenance and repair costs and taxes. There is no limit on the reimbursements we make to DCP Midstream, LLC under the Services Agreement for costs, expenses and expenditures incurred or payments made on our behalf. The following table summarizes employee related costs that were charged by DCP Midstream, LLC to the Partnership that are included in the condensed consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
2018
|
|
|
(millions)
|
|
Employee related costs charged by DCP Midstream, LLC
|
|
|
|
|
|
Operating and maintenance expense
|
|
$
|
49
|
|
|
$
|
50
|
|
|
General and administrative expense
|
|
$
|
47
|
|
|
$
|
38
|
|
Phillips 66 and its Affiliates
We
sell a portion of our residue gas and NGLs to and purchase NGLs from Phillips 66 and its respective affiliates
. We anticipate continuing to sell commodities to and purchase commodities from Phillips 66 and its affiliates in the ordinary course of business.
Enbridge and its Affiliates
We sell NGLs to and purchase NGLs from Enbridge and its affiliates.
We anticipate continuing to sell commodities to and purchase commodities from Enbridge and its affiliates in the ordinary course of business.
Unconsolidated Affiliates
We sell
a portion of our residue gas and NGLs to, purchase natural gas and other NGL products from, and provide gathering and transportation services to other unconsolidated affiliates.
We anticipate
continuing to purchase and sell commodities and provide services to unconsolidated affiliates in the ordinary course of business.
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
Summary of Transactions with Affiliates
The following table summarizes our transactions with affiliates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
2018
|
|
|
(millions)
|
|
Phillips 66 (including its affiliates):
|
|
|
|
|
|
Sales of natural gas, NGLs and condensate to affiliates
|
|
$
|
326
|
|
|
$
|
302
|
|
|
Purchases and related costs from affiliates
|
|
$
|
45
|
|
|
$
|
10
|
|
|
Operating and maintenance and general administrative expenses
|
|
$
|
4
|
|
|
$
|
3
|
|
|
Enbridge (including its affiliates):
|
|
|
|
|
|
Sales of natural gas, NGLs and condensate to affiliates
|
|
$
|
—
|
|
|
$
|
12
|
|
|
Purchases and related costs from affiliates
|
|
$
|
7
|
|
|
$
|
10
|
|
|
Unconsolidated affiliates:
|
|
|
|
|
|
Sales of natural gas, NGLs and condensate to affiliates
|
|
$
|
14
|
|
|
$
|
11
|
|
|
Transportation, processing, and other to affiliates
|
|
$
|
1
|
|
|
$
|
1
|
|
|
Purchases and related costs from affiliates
|
|
$
|
219
|
|
|
$
|
145
|
|
We had balances with affiliates as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
|
(millions)
|
|
Phillips 66 (including its affiliates):
|
|
|
|
|
Accounts receivable
|
$
|
146
|
|
|
$
|
145
|
|
|
Accounts payable
|
$
|
28
|
|
|
$
|
22
|
|
|
Enbridge (including its affiliates):
|
|
|
|
|
Accounts payable
|
$
|
2
|
|
|
$
|
2
|
|
|
Unconsolidated affiliates:
|
|
|
|
|
Accounts receivable
|
$
|
30
|
|
|
$
|
21
|
|
|
Accounts payable
|
$
|
86
|
|
|
$
|
72
|
|
8
. Inventories
Inventories were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
|
(millions)
|
|
Natural gas
|
$
|
23
|
|
|
$
|
34
|
|
|
NGLs
|
29
|
|
|
45
|
|
|
Total inventories
|
$
|
52
|
|
|
$
|
79
|
|
We recognize lower of cost or market adjustments when the carrying value of our inventories exceeds their estimated market value. These non-cash charges are a component of purchases and related costs in the condensed consolidated statements of operations.
During the
three months ended March 31, 2019
, we recognized lower of cost or net realizable value adjustments of
$5 million
.
We recognized no lower of cost or net realizable value adjustments
during the
three months ended March 31, 2018
.
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
9. Property, Plant and Equipment
A summary of property, plant and equipment by classification is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciable
Life
|
|
March 31, 2019
|
|
December 31, 2018
|
|
|
|
|
(millions)
|
|
Gathering and transmission systems
|
20 — 50 Years
|
|
$
|
8,539
|
|
|
$
|
8,492
|
|
|
Processing, storage and terminal facilities
|
35 — 60 Years
|
|
5,149
|
|
|
5,194
|
|
|
Other
|
3 — 30 Years
|
|
571
|
|
|
568
|
|
|
Construction work in progress
|
|
|
527
|
|
|
470
|
|
|
Property, plant and equipment
|
|
|
14,786
|
|
|
14,724
|
|
|
Accumulated depreciation
|
|
|
(5,676
|
)
|
|
(5,589
|
)
|
|
Property, plant and equipment, net
|
|
|
$
|
9,110
|
|
|
$
|
9,135
|
|
Interest capitalized on construction projects was
$5 million
for the
three months ended
March 31, 2019
and
2018
, respectively.
Depreciation expense was
$101 million
and
$92 million
for the
three months ended
March 31, 2019
and
2018
, respectively.
10
.
Goodwill
The carrying amount of goodwill in each of our reportable segments was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
|
(millions)
|
|
|
Gathering and Processing
|
|
Logistics and Marketing
|
|
Total
|
|
Balance, beginning of period
|
$
|
159
|
|
|
$
|
72
|
|
|
$
|
231
|
|
|
Dispositions
|
—
|
|
|
(37
|
)
|
|
(37
|
)
|
|
Balance, end of period
|
$
|
159
|
|
|
$
|
35
|
|
|
$
|
194
|
|
11
. Investments in Unconsolidated Affiliates
The following table summarizes our investments in unconsolidated affiliates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying Value as of
|
|
|
Percentage
Ownership
|
|
March 31,
2019
|
|
December 31, 2018
|
|
|
|
|
(millions)
|
|
DCP Sand Hills Pipeline, LLC
|
66.67%
|
|
$
|
1,787
|
|
|
$
|
1,791
|
|
|
DCP Southern Hills Pipeline, LLC
|
66.67%
|
|
731
|
|
|
728
|
|
|
Discovery Producer Services LLC
|
40.00%
|
|
339
|
|
|
344
|
|
|
Front Range Pipeline LLC
|
33.33%
|
|
185
|
|
|
175
|
|
|
Texas Express Pipeline LLC
|
10.00%
|
|
98
|
|
|
95
|
|
|
Gulf Coast Express Pipeline LLC
|
25.00%
|
|
257
|
|
|
146
|
|
|
Mont Belvieu Enterprise Fractionator
|
12.50%
|
|
27
|
|
|
24
|
|
|
Panola Pipeline Company, LLC
|
15.00%
|
|
22
|
|
|
23
|
|
|
Mont Belvieu 1 Fractionator
|
20.00%
|
|
10
|
|
|
10
|
|
|
Other
|
Various
|
|
4
|
|
|
4
|
|
|
Total investments in unconsolidated affiliates
|
|
|
$
|
3,460
|
|
|
$
|
3,340
|
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
Earnings from investments in unconsolidated affiliates were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2019
|
|
2018
|
|
|
(millions)
|
|
DCP Sand Hills Pipeline, LLC
|
$
|
68
|
|
|
$
|
48
|
|
|
DCP Southern Hills Pipeline, LLC
|
23
|
|
|
13
|
|
|
Discovery Producer Services LLC
|
—
|
|
|
1
|
|
|
Front Range Pipeline LLC
|
7
|
|
|
5
|
|
|
Texas Express Pipeline LLC
|
5
|
|
|
2
|
|
|
Mont Belvieu Enterprise Fractionator
|
4
|
|
|
4
|
|
|
Mont Belvieu 1 Fractionator
|
4
|
|
|
4
|
|
|
Other
|
2
|
|
|
1
|
|
|
Total earnings from unconsolidated affiliates
|
$
|
113
|
|
|
$
|
78
|
|
The following tables summarize the combined financial information of our investments in unconsolidated affiliates:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2019
|
|
2018
|
|
|
(millions)
|
|
Statements of operations:
|
|
|
|
|
Operating revenue
|
$
|
421
|
|
|
$
|
334
|
|
|
Operating expenses
|
$
|
191
|
|
|
$
|
139
|
|
|
Net income
|
$
|
231
|
|
|
$
|
194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
|
(millions)
|
|
Balance sheets:
|
|
|
|
|
Current assets
|
$
|
327
|
|
|
$
|
411
|
|
|
Long-term assets
|
6,941
|
|
|
6,359
|
|
|
Current liabilities
|
(450
|
)
|
|
(424
|
)
|
|
Long-term liabilities
|
(249
|
)
|
|
(221
|
)
|
|
Net assets
|
$
|
6,569
|
|
|
$
|
6,125
|
|
12
. Fair Value Measurement
Valuation Hierarchy
Our fair value measurements are grouped into a three-level valuation hierarchy and are categorized in their entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows.
|
|
|
|
•
|
Level 1 — inputs are unadjusted quoted prices for
identical
assets or liabilities in active markets.
|
|
|
|
|
•
|
Level 2 — inputs include quoted prices for
similar
assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
|
|
|
|
•
|
Level 3 — inputs are unobservable and considered significant to the fair value measurement.
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
A financial instrument’s categorization within the hierarchy is based upon the level of judgment involved in the most significant input in the determination of the instrument’s fair value. Following is a description of the valuation methodologies used as well as the general classification of such instruments pursuant to the hierarchy.
Commodity Derivative Assets and Liabilities
We enter into a variety of derivative financial instruments, which may include exchange traded instruments (such as New York Mercantile Exchange, or NYMEX, crude oil or natural gas futures) or over-the-counter, or OTC, instruments (such as natural gas contracts, crude oil or NGL swaps). The exchange traded instruments are generally executed with a highly rated broker dealer serving as the clearinghouse for individual transactions.
Our activities expose us to varying degrees of commodity price risk. To mitigate a portion of this risk and to manage commodity price risk related primarily to owned natural gas storage and pipeline assets, we engage in natural gas asset based trading and marketing, and we may enter into natural gas and crude oil derivatives to lock in a specific margin when market conditions are favorable. A portion of this may be accomplished through the use of exchange traded derivative contracts. Such instruments are generally classified as Level 1 since the value is equal to the quoted market price of the exchange traded instrument as of our balance sheet date, and no adjustments are required. Depending upon market conditions and our strategy we may enter into exchange traded derivative positions with a significant time horizon to maturity. Although such instruments are exchange traded, market prices may only be readily observable for a portion of the duration of the instrument. In order to calculate the fair value of these instruments, readily observable market information is utilized to the extent it is available; however, in the event that readily observable market data is not available, we may interpolate or extrapolate based upon observable data. In instances where we utilize an interpolated or extrapolated value, and it is considered significant to the valuation of the contract as a whole, we would classify the instrument within Level 3.
We also engage in the business of trading energy related products and services, which exposes us to market variables and commodity price risk. We may enter into physical contracts or financial instruments with the objective of realizing a positive margin from the purchase and sale of these commodity-based instruments. We may enter into derivative instruments for NGLs or other energy related products, primarily using the OTC derivative instrument markets, which are not as active and liquid as exchange traded instruments. Market quotes for such contracts may only be available for short dated positions (up to six months), and an active market itself may not exist beyond such time horizon. Contracts entered into with a relatively short time horizon for which prices are readily observable in the OTC market are generally classified within Level 2. Contracts with a longer time horizon, for which we internally generate a forward curve to value such instruments, are generally classified within Level 3. The internally generated curve may utilize a variety of assumptions including, but not limited to, data obtained from third-party pricing services, historical and future expected relationship of NGL prices to crude oil prices, the knowledge of expected supply sources coming online, expected weather trends within certain regions of the United States, and the future expected demand for NGLs.
Each instrument is assigned to a level within the hierarchy at the end of each financial quarter depending upon the extent to which the valuation inputs are observable. Generally, an instrument will move toward a level within the hierarchy that requires a lower degree of judgment as the time to maturity approaches, and as the markets in which the asset trades will likely become more liquid and prices more readily available in the market, thus reducing the need to rely upon our internally developed assumptions. However, the level of a given instrument may change, in either direction, depending upon market conditions and the availability of market observable data.
Nonfinancial Assets and Liabilities
We utilize fair value to perform impairment tests as required on our property, plant and equipment, goodwill, equity investments in unconsolidated affiliates, and intangible assets. Assets and liabilities acquired in third party business combinations are recorded at their fair value as of the date of acquisition. The inputs used to determine such fair value are primarily based upon internally developed cash flow models and would generally be classified within Level 3 in the event that we were required to measure and record such assets at fair value within our condensed consolidated financial statements. Additionally, we use fair value to determine the inception value of our asset retirement obligations. The inputs used to determine such fair value are primarily based upon costs
incurred historically for similar work, as well as estimates from independent third parties for costs that would be incurred to restore leased property to the contractually stipulated condition, and would generally be classified within Level 3.
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
The following table presents the financial instruments carried at fair value as of
March 31, 2019
and
December 31,
2018
, by condensed consolidated balance sheet caption and by valuation hierarchy, as described above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Carrying
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
Carrying
Value
|
|
|
(millions)
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity derivatives (a)
|
$
|
16
|
|
|
$
|
14
|
|
|
$
|
5
|
|
|
$
|
35
|
|
|
$
|
62
|
|
|
$
|
32
|
|
|
$
|
14
|
|
|
$
|
108
|
|
|
Long-term assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity derivatives (b)
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
8
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity derivatives (c)
|
$
|
(14
|
)
|
|
$
|
(46
|
)
|
|
$
|
(1
|
)
|
|
$
|
(61
|
)
|
|
$
|
(39
|
)
|
|
$
|
(52
|
)
|
|
$
|
—
|
|
|
$
|
(91
|
)
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity derivatives (d)
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
(5
|
)
|
|
$
|
(1
|
)
|
|
$
|
(5
|
)
|
|
$
|
(2
|
)
|
|
$
|
(8
|
)
|
|
|
|
|
(a)
|
Included in current unrealized gains on derivative instruments in our condensed consolidated balance sheets.
|
|
|
|
|
(b)
|
Included in long-term unrealized gains on derivative instruments in our condensed consolidated balance sheets.
|
|
|
|
|
(c)
|
Included in current unrealized losses on derivative instruments in our condensed consolidated balance sheets.
|
|
|
|
|
(d)
|
Included in long-term unrealized losses on derivative instruments in our condensed consolidated balance sheets.
|
Changes in Levels 1 and 2 Fair Value Measurements
The determination to classify a financial instrument within Level 1 or Level 2 is based upon the availability of quoted prices for identical or similar assets and liabilities in active markets. Depending upon the information readily observable in the market, and/or the use of identical or similar quoted prices, which are significant to the overall valuation, the classification of any individual financial instrument may differ from one measurement date to the next. To qualify as a transfer, the asset or liability must have existed in the previous reporting period and moved into a different level during the current period. In the event that there is a movement between the classification of an instrument as Level 1 or 2, the transfer would be reflected in a table as “Transfers into or out of Level 1 and Level 2”. During the
three months ended
March 31, 2019
and
2018
, there were no transfers between Level 1 and Level 2 of the fair value hierarchy.
Changes in Level 3 Fair Value Measurements
The tables below illustrate a rollforward of the amounts included in our
condensed
consolidated balance sheets for derivative financial instruments that we have classified within Level 3. Since financial instruments classified as Level 3 typically include a combination of observable components (that is, components that are actively quoted and can be validated to external sources) and unobservable components, the gains and losses in the table below may include changes in fair value due in part to observable market factors, or changes to our assumptions on the unobservable components. Depending upon the information readily observable in the market, and/or the use of unobservable inputs, which are significant to the overall valuation, the classification of any individual financial instrument may differ from one measurement date to the next. The significant unobservable inputs used in determining fair value include adjustments by other market-based or independently sourced market data such as historical commodity volatilities, crude oil future yield curves, and/or counterparty specific considerations. In the event that there is a movement to/from the classification of an instrument as Level 3, we would reflect such items in the table below within the “Transfers into/out of Level 3” captions.
We manage our overall risk at the portfolio level and in the execution of our strategy, we may use a combination of financial instruments, which may be classified within any level. Since Level 1 and Level 2 risk management instruments are not included in the rollforward below, the gains or losses in the table do not reflect the effect of our total risk management activities.
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity Derivative Instruments
|
|
|
Current
Assets
|
|
Long-Term
Assets
|
|
Current
Liabilities
|
|
Long-Term
Liabilities
|
|
|
(millions)
|
|
Three months ended March 31, 2019 (a):
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
14
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
Net unrealized (losses) gains included in earnings (b)
|
(4
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
1
|
|
|
Transfers out of Level 3 (c)
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Settlements
|
(3
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
Ending balance
|
$
|
5
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
Net unrealized losses on derivatives still held included in earnings (b)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
Three months ended March 31, 2018 (a):
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
(13
|
)
|
|
$
|
(1
|
)
|
|
Net unrealized (losses) gains included in earnings (b)
|
—
|
|
|
(1
|
)
|
|
4
|
|
|
(2
|
)
|
|
Transfers out of Level 3 (c)
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
Settlements
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
Ending balance
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
(3
|
)
|
|
Net unrealized (losses) gains on derivatives still held included in earnings (b)
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
|
|
|
(a)
|
There were no purchases, issuances or sales of derivatives or transfers into Level 3 for the
three months ended
March 31, 2019
and
2018
.
|
|
|
|
|
(b)
|
Represents the amount of unrealized gains or losses for the period, included in trading and marketing gains (losses), net.
|
|
|
|
|
(c)
|
Amounts transferred out of Level 3 are reflected at fair value at the end of the period.
|
Quantitative Information and Fair Value Sensitivities Related to Level 3 Unobservable Inputs
We utilize the market approach to measure the fair value of our commodity contracts. The significant unobservable inputs used in this approach to fair value are longer dated price quotes. Our sensitivity to these longer dated forward curve prices are presented in the table below. Significant changes in any of those inputs in isolation would result in significantly different fair value measurements, depending on our short or long position in contracts.
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
|
|
Product Group
|
Fair Value
|
|
Forward
Curve Range
|
|
|
|
|
(millions)
|
|
|
|
Assets
|
|
|
|
|
|
|
NGLs
|
$
|
5
|
|
|
$0.24-$1.24
|
|
Per gallon
|
|
Natural gas
|
$
|
1
|
|
|
$1.95-$2.58
|
|
Per MMBtu
|
|
Liabilities
|
|
|
|
|
|
|
NGLs
|
$
|
(1
|
)
|
|
$0.13-$1.24
|
|
Per gallon
|
|
Natural gas
|
$
|
(1
|
)
|
|
$2.42-$2.86
|
|
Per MMBtu
|
Estimated Fair Value of Financial Instruments
Valuation of a contract’s fair value is validated by an internal group independent of the marketing group. While common industry practices are used to develop valuation techniques, changes in pricing methodologies or the underlying assumptions could result in significantly different fair values and income recognition. When available, quoted market prices or prices obtained through external sources are used to determine a contract’s fair value. For contracts with a delivery location or duration for which quoted market prices are not available, fair value is determined based on pricing models developed primarily from historical and expected relationships with quoted market prices.
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
The fair value of accounts receivable and accounts payable are not materially different from their carrying amounts because of the short-term nature of these instruments or the stated rates approximating market rates. Derivative instruments are carried at fair value.
We determine the fair value of our fixed-rate senior notes and junior subordinated notes based on quotes obtained from bond dealers. The fair value of borrowings under the Credit Agreement (defined below) and the accounts receivable securitization facility (the Securitization Facility) are based on carrying value, which approximates fair value as their interest rates are based on prevailing market interest rates. We classify the fair values of our outstanding debt balances within Level 2 of the valuation hierarchy. As of
March 31, 2019
and
December 31, 2018
, the carrying value and fair value of our total debt, including current maturities, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
|
|
Carrying Value (a)
|
|
Fair Value
|
|
Carrying Value (a)
|
|
Fair Value
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
$
|
5,391
|
|
|
$
|
5,476
|
|
|
$
|
5,337
|
|
|
$
|
5,170
|
|
(a)
Excludes unamortized issuance costs.
13
. Leases
We have operating leases for transportation agreements, office space, vehicles, compressors and field equipment. Our leases have remaining lease terms of less than
1
year to
22
years, some of which may include options to extend leases up to
20
years, and some of which may include options to terminate the leases in less than one year. Extension options on certain compressors and field equipment are included in the lease terms used to calculate our operating lease assets and liabilities as it is reasonably certain that we will exercise those options. We do not have any finance leases as of
March 31, 2019
. Operating leases are included in operating lease assets, other current liabilities and operating lease liabilities on our condensed consolidated balance sheet as of
March 31, 2019
as follows:
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
March 31, 2019
|
|
|
|
(millions)
|
|
Operating lease assets
|
|
$
|
78
|
|
|
|
|
|
|
Operating lease liabilities
|
|
$
|
66
|
|
|
Other current liabilities
|
|
18
|
|
|
Total
|
|
$
|
84
|
|
The components of lease expense, including variable lease costs primarily consisting of common area maintenance on our office spaces and variable transportation costs, are as follows:
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
March 31, 2019
|
|
|
|
(millions)
|
|
Operating lease cost
|
|
$
|
6
|
|
|
Variable lease cost
|
|
2
|
|
|
Short term lease cost
|
|
1
|
|
|
Total lease cost
|
|
$
|
9
|
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
Maturities of operating lease liabilities under non-cancelable leases as of
March 31, 2019
are as follows:
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
March 31, 2019
|
|
|
|
(millions)
|
|
2019 - remainder
|
|
$
|
16
|
|
|
2020
|
|
22
|
|
|
2021
|
|
20
|
|
|
2022
|
|
15
|
|
|
2023
|
|
9
|
|
|
Thereafter
|
|
11
|
|
|
Total lease payments
|
|
$
|
93
|
|
|
Less imputed interest
|
|
(9
|
)
|
|
Total operating lease liabilities
|
|
$
|
84
|
|
Minimum rental payments under our various operating leases in the year indicated were as follows as of
December 31, 2018
:
|
|
|
|
|
|
|
|
|
|
|
Future Minimum Rental Payments as of December 31, 2018
|
|
|
|
(millions)
|
|
|
2019
|
$
|
22
|
|
|
|
2020
|
18
|
|
|
|
2021
|
14
|
|
|
|
2022
|
9
|
|
|
|
2023
|
5
|
|
|
|
Thereafter
|
7
|
|
|
|
Total minimum rental payments
|
$
|
75
|
|
Consolidated rental expense totaled
$8 million
for the
three months ended March 31, 2018
.
Supplemental cash flow information related to leases as follows:
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
March 31, 2019
|
|
|
|
(millions)
|
|
Cash paid for amounts included in the measurement of operating lease liabilities:
|
|
$
|
6
|
|
|
Right-of-use assets obtained in exchange for operating lease obligations following the adoption of Topic 842:
|
|
$
|
6
|
|
|
|
|
|
|
Other information related to operating leases as follows:
|
|
|
|
Weighted average remaining lease term
|
|
6 years
|
|
|
Weighted average discount rate
|
|
4.00
|
%
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
14
. Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
|
(millions)
|
|
Senior notes:
|
|
|
|
|
Issued March 2014, interest at 2.700% payable semi-annually, due April 2019
|
325
|
|
|
325
|
|
|
Issued March 2010, interest at 5.350% payable semiannually, due March 2020 (a)
|
600
|
|
|
600
|
|
|
Issued September 2011, interest at 4.750% payable semiannually, due September 2021
|
500
|
|
|
500
|
|
|
Issued March 2012, interest at 4.950% payable semi-annually, due April 2022
|
350
|
|
|
350
|
|
|
Issued March 2013, interest at 3.875% payable semi-annually, due March 2023
|
500
|
|
|
500
|
|
|
Issued July 2018 and January 2019, interest at 5.375% payable semi-annually, due July 2025
|
825
|
|
|
500
|
|
|
Issued August 2000, interest at 8.125% payable semi-annually, due August 2030 (a)
|
300
|
|
|
300
|
|
|
Issued October 2006, interest at 6.450% payable semi-annually, due November 2036
|
300
|
|
|
300
|
|
|
Issued September 2007, interest at 6.750% payable semi-annually, due September 2037
|
450
|
|
|
450
|
|
|
Issued March 2014, interest at 5.600% payable semi-annually, due April 2044
|
400
|
|
|
400
|
|
|
Junior subordinated notes:
|
|
|
|
|
Issued May 2013, interest at 5.850% payable semi-annually, due May 2043
|
550
|
|
|
550
|
|
|
Credit agreement:
|
|
|
|
|
Revolving credit facility, weighted-average variable interest rate of 3.950%, as of March 31, 2019, due December 2022
|
80
|
|
|
351
|
|
|
Accounts receivable securitization facility:
|
|
|
|
|
Accounts receivable securitization facility, weighted-average variable interest rate of 3.290% as of March 31, 2019, due August 2019
|
200
|
|
|
200
|
|
|
Fair value adjustments related to interest rate swap fair value hedges (a)
|
20
|
|
|
21
|
|
|
Unamortized issuance costs
|
(30
|
)
|
|
(30
|
)
|
|
Unamortized discount
|
(9
|
)
|
|
(10
|
)
|
|
Total debt
|
5,361
|
|
|
5,307
|
|
|
Current debt
|
1,125
|
|
|
525
|
|
|
Total long-term debt
|
$
|
4,236
|
|
|
$
|
4,782
|
|
(a) The swaps associated with this debt were previously terminated. The remaining long-term fair value of approximately
$20 million
related to the swaps is being amortized as a reduction to interest expense through 2020 and 2030, the original maturity dates of the debt.
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
Accounts Receivable Securitization Facility
In August 2018, we entered into our Securitization Facility that provides up to
$200
million of borrowing capacity through August 2019 at LIBOR market index rates plus a margin. Under this Securitization Facility, certain of the Partnership’s wholly owned subsidiaries sell or contribute receivables to another of the Partnership’s consolidated subsidiaries, DCP Receivables LLC (“DCP Receivables”), a bankruptcy-remote special purpose entity created for the sole purpose of the Securitization Facility.
DCP Receivables’ sole activity consists of purchasing receivables from the Partnership’s wholly owned subsidiaries that participate in the Securitization Facility and providing these receivables as collateral for DCP Receivables’ borrowings under the Securitization Facility. DCP Receivables is a separate legal entity and the accounts receivable of DCP Receivables, up to the amount of the outstanding debt under the Securitization Facility, are not available to satisfy the claims of creditors of the Partnership, its subsidiaries selling receivables under the Securitization Facility, or their affiliates. Any excess receivables are eligible to satisfy the claims of creditors of the Partnership, its subsidiaries selling receivables under the Securitization Facility, or their affiliates. The amount available for borrowing is based on the availability of eligible receivables and other customary factors and conditions. As of March 31, 2019, DCP Receivables had
$766 million
of our accounts receivable securing borrowings of $200 million under its Securitization Facility. Borrowings under the Securitization Facility are included in “Current debt” on the condensed consolidated balance sheet.
Senior Notes Issuance
On
January 18, 2019
, we issued an additional
$325 million
of aggregate principal amount of our existing
$500
million
5.375%
Senior Notes due
July 2025
. We received proceeds of
$324 million
, net of underwriters’ fees, related expenses and issuance premiums, which we used for general partnership purposes including the funding of capital expenditures and repayment of outstanding indebtedness under the Credit Agreement. The full $
825 million
of our
5.375%
Senior Notes due
July 2025
is treated as a single series of debt. The 2025 notes will mature on July 15, 2025 unless redeemed prior to maturity. Interest on the 2025 notes is payable semi-annually in arrears on January 15 and July 15 of each year.
Credit Agreement
We are a party to a $
1.4 billion
unsecured revolving Credit Agreement (the "Credit Agreement") which matures on
December 6, 2022
. The Credit Agreement also grants us the option to increase the revolving loan commitment by an aggregate principal amount of up to
$500 million
, subject to requisite lender approval. The Credit Agreement may be extended for up to two additional one-year periods subject to requisite lender approval. Loans under the Credit Agreement may be used for working capital and other general partnership purposes including acquisitions.
The Credit Agreement allows for unrestricted cash and cash equivalents to be netted against consolidated indebtedness for purposes of calculating the Partnership’s Consolidated Leverage Ratio (as defined in the Credit Agreement). Additionally, under the Credit Agreement, the Consolidated Leverage Ratio of the Partnership as of the end of any fiscal quarter shall not exceed
5.00
to
1.0
provided that, if there is a Qualified Acquisition (as defined in the Credit Agreement), the maximum Consolidated Leverage Ratio shall not exceed
5.50
to
1.0
at the end of the three consecutive fiscal quarters, including the fiscal quarter in which the Qualified Acquisition occurs.
Our cost of borrowing under the Credit Agreement is determined by a ratings-based pricing grid. Indebtedness under the Credit Agreement bears interest at either: (1) LIBOR, plus an applicable margin of
1.45%
based on our current credit rating; or (2) (a) the base rate which shall be the higher of the prime rate, the Federal Funds rate plus
0.50%
or the LIBOR Market Index rate plus
1%
, plus (b) an applicable margin of
0.45%
based on our current credit rating. The Credit Agreement incurs an annual facility fee of
0.30%
based on our current credit rating. This fee is paid on drawn and undrawn portions of the
$1.4 billion
revolving credit facility.
As of
March 31, 2019
, we had unused borrowing capacity of
$1,307 million
, net of
$13 million
of letters of credit, under the Credit Agreement. Our borrowing capacity may be limited by financial covenants set forth in the Credit Agreement. The financial covenants set forth in the Credit Agreement limit the Partnership's ability to incur incremental debt by the unused borrowing capacity of
$1,307 million
as of
March 31, 2019
. Except in the case of a default, amounts borrowed under our Credit Agreement will not become due prior to the
December 6, 2022
maturity date.
Senior Notes and Junior Subordinated Notes
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
Our senior notes and junior subordinated notes, collectively referred to as our debt securities, mature and become payable on their respective due dates, and are not subject to any sinking fund or mandatory redemption provisions. The senior notes are senior unsecured obligations that are guaranteed by the Partnership and rank equally in a right of payment with our other senior unsecured indebtedness, including indebtedness under our Credit Agreement, and the junior subordinated notes are unsecured and rank subordinate in right of payment to all of our existing and future senior indebtedness. The debt securities include an optional redemption whereby we may elect to redeem the notes, in whole or in part from time-to-time for a premium. Additionally, we may defer the payment of all or part of the interest on the junior subordinated notes for one or more periods up to
5
consecutive years. The underwriters’ fees and related expenses are recorded in our condensed consolidated balance sheets within the carrying amount of long-term debt and will be amortized over the term of the notes.
The maturities of our debt as of
March 31, 2019
are as follows:
|
|
|
|
|
|
|
|
|
Debt
Maturities
|
|
|
(millions)
|
|
2019
|
$
|
525
|
|
|
2020
|
600
|
|
|
2021
|
500
|
|
|
2022
|
430
|
|
|
2023
|
500
|
|
|
Thereafter
|
2,825
|
|
|
Total debt
|
$
|
5,380
|
|
15
. Risk Management and Hedging Activities
Our operations expose us to a variety of risks including but not limited to changes in the prices of commodities that we buy or sell, changes in interest rates, and the creditworthiness of each of our counterparties. We manage certain of these exposures with either physical or financial transactions. We have established a comprehensive risk management policy and a risk management committee (the Risk Management Committee), to monitor and manage market risks associated with commodity prices and counterparty credit. The Risk Management Committee is composed of senior executives who receive regular briefings on positions and exposures, credit exposures and overall risk management in the context of market activities. The Risk Management Committee is responsible for the overall management of credit risk and commodity price risk, including monitoring exposure limits.
Collateral
As of
March 31, 2019
, we had cash deposits of
$64 million
, included in collateral cash deposits in our condensed consolidated balance sheets.
Additionally, as of
March 31, 2019
, we held
letters of credit of
$59 million
from counterparties to secure their future performance under financial or physical contracts. Collateral amounts held or posted may be fixed or may vary, depending on the value of the underlying contracts, and could cover normal purchases and sales, services, trading and hedging contracts. In many cases, we and our counterparties have publicly disclosed credit ratings, which may impact the amounts of collateral requirements.
Physical forward contracts and financial derivatives are generally cash settled at the expiration of the contract term. These transactions are generally subject to specific credit provisions within the contracts that would allow the seller, at its discretion, to suspend deliveries, cancel agreements or continue deliveries to the buyer after the buyer provides security for payment satisfactory to the seller
.
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
Offsetting
Certain of our derivative instruments are subject to a master netting or similar arrangement, whereby we may elect to settle multiple positions with an individual counterparty through a single net payment. Each of our individual derivative instruments are presented on a gross basis on the condensed consolidated balance sheets, regardless of our ability to net settle our positions. Instruments that are governed by agreements that include net settle provisions allow final settlement, when presented with a termination event, of outstanding amounts by extinguishing the mutual debts owed between the parties in exchange for a net amount due. We have trade receivables and payables associated with derivative instruments, subject to master netting or similar agreements, which are not included in the table below. The following summarizes the gross and net amounts of our derivative instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
|
Gross Amounts
of Assets and
(Liabilities)
Presented in the
Balance Sheet
|
|
Amounts Not
Offset in the
Balance Sheet -
Financial
Instruments
|
|
Net
Amount
|
|
Gross Amounts
of Assets and
(Liabilities)
Presented in the
Balance Sheet
|
|
Amounts Not
Offset in the
Balance Sheet -
Financial
Instruments
|
|
Net
Amount
|
|
|
(millions)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity derivatives
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
37
|
|
|
$
|
116
|
|
|
$
|
—
|
|
|
$
|
116
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity derivatives
|
$
|
(66
|
)
|
|
$
|
—
|
|
|
$
|
(66
|
)
|
|
$
|
(99
|
)
|
|
$
|
—
|
|
|
$
|
(99
|
)
|
Summarized Derivative Information
The fair value of our derivative instruments that are marked-to-market each period, as well as the location of each within our condensed consolidated balance sheets, by major category, is summarized below. We have no derivative instruments that are designated as hedging instruments for accounting purposes as of
March 31, 2019
and
December 31, 2018
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Line Item
|
March 31,
2019
|
|
December 31,
2018
|
|
Balance Sheet Line Item
|
|
March 31,
2019
|
|
December 31,
2018
|
|
|
(millions)
|
|
|
|
(millions)
|
|
Derivative Assets Not Designated as Hedging Instruments:
|
|
Derivative Liabilities Not Designated as Hedging Instruments:
|
|
Commodity derivatives:
|
|
|
|
|
Commodity derivatives:
|
|
|
|
|
|
Unrealized gains on derivative instruments — current
|
$
|
35
|
|
|
$
|
108
|
|
|
Unrealized losses on derivative instruments — current
|
|
$
|
(61
|
)
|
|
$
|
(91
|
)
|
|
Unrealized gains on derivative instruments — long-term
|
2
|
|
|
8
|
|
|
Unrealized losses on derivative instruments — long-term
|
|
(5
|
)
|
|
(8
|
)
|
|
Total
|
$
|
37
|
|
|
$
|
116
|
|
|
Total
|
|
$
|
(66
|
)
|
|
$
|
(99
|
)
|
The following summarizes the balance and activity within AOCI relative to our interest rate, commodity and foreign currency cash flow hedges as of and for the
three months ended March 31, 2019
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate Cash
Flow
Hedges
|
|
Commodity
Cash Flow
Hedges
|
|
Foreign
Currency
Cash Flow
Hedges (a)
|
|
Total
|
|
|
(millions)
|
|
Net deferred (losses) gains in AOCI (beginning balance)
|
$
|
(3
|
)
|
|
$
|
(6
|
)
|
|
$
|
1
|
|
|
$
|
(8
|
)
|
|
Net deferred (losses) gains in AOCI (ending balance)
|
$
|
(3
|
)
|
|
$
|
(6
|
)
|
|
$
|
1
|
|
|
$
|
(8
|
)
|
|
Deferred losses in AOCI expected to be reclassified into earnings over the next 12 months
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
(a)
Relates to Discovery Producer Services LLC ("Discovery"), an unconsolidated affiliate.
The following summarizes the balance and activity within AOCI relative to our interest rate, commodity and foreign currency cash flow hedges as of and for the
three months ended
March 31, 2018
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Rate Cash
Flow
Hedges
|
|
Commodity
Cash Flow
Hedges
|
|
Foreign
Currency
Cash Flow
Hedges (a)
|
|
Total
|
|
|
(millions)
|
|
Net deferred (losses) gains in AOCI (beginning balance)
|
$
|
(4
|
)
|
|
$
|
(6
|
)
|
|
$
|
1
|
|
|
$
|
(9
|
)
|
|
Net deferred (losses) gains in AOCI (ending balance)
|
$
|
(4
|
)
|
|
$
|
(6
|
)
|
|
$
|
1
|
|
|
$
|
(9
|
)
|
|
|
|
|
(a)
|
Relates to Discovery, an unconsolidated affiliate.
|
For the
three months ended
March 31, 2019
and
2018
,
no
derivative losses attributable to the ineffective portion or to amounts excluded from effectiveness testing were recognized in trading and marketing gains or losses, net or interest expense in our condensed consolidated statements of operations. For the
three months ended
March 31, 2019
and
2018
,
no
derivative losses were reclassified from AOCI to trading and marketing gains or losses, net or interest expense as a result of the discontinuance of cash flow hedges related to certain forecasted transactions that are not probable of occurring.
Changes in the value of derivative instruments, for which the hedge method of accounting has not been elected from one period to the next, are recorded in the condensed consolidated statements of operations. The following summarizes these amounts and the location within the condensed consolidated statements of operations that such amounts are reflected:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity Derivatives: Statements of Operations Line Item
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
2018
|
|
|
(millions)
|
|
Realized gains (losses)
|
|
$
|
27
|
|
|
$
|
(12
|
)
|
|
Unrealized losses
|
|
(54
|
)
|
|
(29
|
)
|
|
Trading and marketing losses, net
|
|
$
|
(27
|
)
|
|
$
|
(41
|
)
|
We do not have any derivative financial instruments that qualify as a hedge of a net investment.
The following tables represent, by commodity type, our net long or short positions that are expected to partially or entirely settle in each respective year. To the extent that we have long dated derivative positions that span multiple calendar years, the contract will appear in more than one line item in the tables below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
|
Crude Oil
|
|
Natural Gas
|
|
Natural Gas
Liquids
|
|
Natural Gas
Basis Swaps
|
|
Year of Expiration
|
Net Short
Position
(Bbls)
|
|
Net Short Position
(MMBtu)
|
|
Net Short
Position
(Bbls)
|
|
Net Long (Short)
Position
(MMBtu)
|
|
2019
|
(1,191,000
|
)
|
|
(32,148,650
|
)
|
|
(26,987,090
|
)
|
|
2,102,500
|
|
|
2020
|
(283,000
|
)
|
|
(930,000
|
)
|
|
(14,388,830
|
)
|
|
3,660,000
|
|
|
2021
|
(100,000
|
)
|
|
—
|
|
|
(5,516,168
|
)
|
|
(3,650,000
|
)
|
|
2022
|
—
|
|
|
—
|
|
|
(175
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
|
Crude Oil
|
|
Natural Gas
|
|
Natural Gas
Liquids
|
|
Natural Gas
Basis Swaps
|
|
Year of Expiration
|
Net Short
Position
(Bbls)
|
|
Net Short Position
(MMBtu)
|
|
Net (Short) Long
Position
(Bbls)
|
|
Net (Short) Long
Position
(MMBtu)
|
|
2018
|
(2,511,000
|
)
|
|
(20,737,300
|
)
|
|
(24,473,245
|
)
|
|
(3,850,000
|
)
|
|
2019
|
(650,000
|
)
|
|
—
|
|
|
(3,240,167
|
)
|
|
2,402,500
|
|
|
2020
|
—
|
|
|
—
|
|
|
231,548
|
|
|
3,660,000
|
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
16
.
Partnership Equity and Distributions
Common Units
—
During the
three months ended
March 31, 2019
, we issued no common units pursuant to our at-the-market program. As of
March 31, 2019
,
$750 million
of common units remained available for sale pursuant to our at-the-market program.
Distributions
— The following table presents our cash distributions paid in
2019
and
2018
:
|
|
|
|
|
|
|
|
|
|
|
|
Payment Date
|
Per Unit
Distribution
|
|
Total Cash
Distribution
|
|
|
|
|
|
(millions)
|
|
Distributions to common unitholders
|
|
|
|
|
February 14, 2019
|
$
|
0.7800
|
|
|
$
|
154
|
|
|
November 14, 2018
|
$
|
0.7800
|
|
|
$
|
155
|
|
|
August 14, 2018
|
$
|
0.7800
|
|
|
$
|
154
|
|
|
May 15, 2018
|
$
|
0.7800
|
|
|
$
|
155
|
|
|
February 14, 2018
|
$
|
0.7800
|
|
|
$
|
194
|
|
|
|
|
|
|
|
Distributions to Series A Preferred unitholders
|
|
|
|
|
December 17, 2018
|
$
|
36.8750
|
|
|
$
|
18
|
|
|
June 15, 2018
|
$
|
41.9965
|
|
|
$
|
21
|
|
|
|
|
|
|
|
Distributions to Series B Preferred unitholders
|
|
|
|
|
March 15, 2019
|
$
|
0.4922
|
|
|
$
|
3
|
|
|
December 17, 2018
|
$
|
0.4922
|
|
|
$
|
3
|
|
|
September 17, 2018
|
$
|
0.6781
|
|
|
$
|
4
|
|
|
|
|
|
|
|
Distributions to Series C Preferred unitholders
|
|
|
|
|
January 15, 2019
|
$
|
0.5576
|
|
|
$
|
2
|
|
17. Net Income or Loss per Limited Partner Unit
Basic and diluted net income or loss per limited partner unit (LPU) is calculated by dividing net income or loss allocable to limited partners, by the weighted-average number of LPUs outstanding during the period. Diluted net income or loss per LPU is computed based on the weighted average number of units plus the effect of potential dilutive units outstanding during the period using the two-class method.
18
. Commitments and Contingent Liabilities
Litigation
— We are not a party to any significant legal proceedings, but are a party to various administrative and regulatory proceedings and commercial disputes that have arisen in the ordinary course of our business. Management currently believes that the ultimate resolution of the foregoing matters, taken as a whole, and after consideration of amounts accrued, insurance coverage or other indemnification arrangements, will not have a material adverse effect on our results of operations, financial position, or cash flow.
Insurance
— Our insurance coverage is carried with third-party insurers and with an affiliate of Phillips 66. Our insurance coverage includes: (i) general liability insurance covering third-party exposures; (ii) statutory workers’ compensation insurance; (iii) automobile liability insurance for all owned, non-owned and hired vehicles; (iv) excess liability insurance above the established primary limits for general liability and automobile liability insurance; (v) property insurance, which covers the replacement value of real and personal property and includes business interruption; and (vi) insurance covering our directors and officers for acts related to our business activities. All coverage is subject to certain limits and deductibles, the terms and conditions of which are common for companies with similar types of operations.
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
Environmental
— The operation of pipelines, plants and other facilities for gathering, transporting, processing, treating, fractionating, or storing natural gas, NGLs and other products is subject to stringent and complex laws and regulations pertaining to health, safety and the environment. As an owner or operator of these facilities, we must comply with laws and regulations at the federal, state and, in some cases, local levels that relate to worker safety, pipeline safety, air and water quality, solid and hazardous waste management and disposal, and other environmental matters. The cost of planning, designing, constructing and operating pipelines, plants, and other facilities incorporates compliance with environmental laws and regulations, worker safety standards, and safety standards applicable to our various facilities. In addition, there is increasing focus from (i) regulatory bodies and communities, and through litigation, on hydraulic fracturing and the real or perceived environmental or public health impacts of this technique, which indirectly presents some risk to our available supply of natural gas and the resulting supply of NGLs, (ii) regulatory bodies regarding pipeline system safety which could impose additional regulatory burdens and increase the cost of our operations, (iii) state and federal regulatory officials regarding the emission of greenhouse gases, which could impose regulatory burdens and increase the cost of our operations, and (iv) regulatory bodies and communities that could prevent or delay the development of fossil fuel energy infrastructure such as pipelines, plants, and other facilities used in our business. Failure to comply with these various health, safety and environmental laws and regulations may trigger a variety of administrative, civil and potentially criminal enforcement measures, including citizen suits, which can include the assessment of monetary penalties, the imposition of remedial requirements, and the issuance of injunctions or restrictions on operation. Management believes that, based on currently known information, compliance with these existing laws and regulations will not have a material adverse effect on our results of operations, financial position or cash flows.
The following pending proceedings involve governmental authorities under federal, state, and local laws regulating the discharge of materials into the environment. It is not possible for us to predict the final outcome of these pending proceedings; however, we do not expect the outcome of one or more of these proceedings to have a material adverse effect to our results of operations, financial position, or cash flows:
|
|
|
|
•
|
In March 2018, the New Mexico Environment Department ("NMED") issued two separate Notices of Violation ("NOV") relating to upset and malfunction event emissions at two of our gas processing plants. Following information exchanges and discussions with NMED regarding the events and the propriety of the alleged violations, on February 14, 2019 we entered into preliminary settlement agreements to resolve the alleged violations under each NOV for administrative penalties in the amount of $
149,832
and $
142,233
, respectively. We intend to mitigate a portion of each administrative penalty through the implementation of environmentally beneficial projects.
|
|
|
|
|
•
|
In April 2018, the Colorado Department of Public Health and Environment ("CDPHE") issued a Compliance Advisory in relation to an improperly permitted facility flare and related air emissions from flare operations at one of our gas processing plants that we self-disclosed to CDPHE in December 2017. Following information exchanges and discussions with CDPHE, during the first quarter of 2019, a resolution was proposed pursuant to which the plant's air permit would be revised to include the flare and emissions limits for such flare in addition to us paying an administrative penalty as well as an economic benefit payment generally covering the period when the flare was required to be included in the facility air permit, in a combined amount expected to be between approximately
$375,000
and
$420,000
. We are still evaluating and holding discussions with CDPHE as to the foregoing amounts and proposed settlement terms.
|
19
. Business Segments
Our operations are organized into
two
reportable segments: (i) Logistics and Marketing and (ii) Gathering and Processing. These segments are monitored separately by management for performance against our internal forecast and are consistent with internal financial reporting. These segments have been identified based on the differing products and services, regulatory environment and the expertise required for these operations. Our Gathering and Processing reportable segment includes operating segments that have been aggregated based on the nature of the products and services provided. Gross margin is a performance measure utilized by management to monitor the operations of each segment. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies included in Note
2
of the Notes to Consolidated Financial Statements in “Financial Statements and Supplementary Data” included as Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2018.
Our Logistics and Marketing segment includes transporting, trading, marketing, storing natural gas and NGLs, and fractionating NGLs. The operations of our wholesale propane business were included in our Logistics and Marketing segment through March 1, 2019. Our Gathering and Processing segment consists of gathering, compressing, treating, processing natural
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
gas, producing and fractionating NGLs, and recovering condensate. The remainder of our business operations is presented as “Other,” and consists of unallocated corporate costs. Elimination of inter-segment transactions are reflected in the eliminations column.
The following tables set forth our segment information:
Three Months Ended March 31, 2019
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Logistics and Marketing
|
|
Gathering and Processing
|
|
Other
|
|
Eliminations
|
|
Total
|
|
|
(millions)
|
|
Total operating revenue
|
$
|
2,045
|
|
|
$
|
1,288
|
|
|
$
|
—
|
|
|
$
|
(1,134
|
)
|
|
$
|
2,199
|
|
|
Gross margin (a)
|
$
|
58
|
|
|
$
|
337
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
395
|
|
|
Operating and maintenance expense
|
(9
|
)
|
|
(165
|
)
|
|
(4
|
)
|
|
—
|
|
|
(178
|
)
|
|
Depreciation and amortization expense
|
(3
|
)
|
|
(93
|
)
|
|
(7
|
)
|
|
—
|
|
|
(103
|
)
|
|
General and administrative expense
|
(3
|
)
|
|
(6
|
)
|
|
(58
|
)
|
|
—
|
|
|
(67
|
)
|
|
Other expense, net
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
Loss on sale of assets, net
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
Earnings from unconsolidated affiliates
|
113
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
113
|
|
|
Interest expense
|
—
|
|
|
—
|
|
|
(69
|
)
|
|
—
|
|
|
(69
|
)
|
|
Income tax expense
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
Net income (loss)
|
$
|
147
|
|
|
$
|
68
|
|
|
$
|
(139
|
)
|
|
$
|
—
|
|
|
$
|
76
|
|
|
Net income attributable to noncontrolling interests
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
Net income (loss) attributable to partners
|
$
|
147
|
|
|
$
|
67
|
|
|
$
|
(139
|
)
|
|
$
|
—
|
|
|
$
|
75
|
|
|
Non-cash derivative mark-to-market (b)
|
$
|
(18
|
)
|
|
$
|
(36
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(54
|
)
|
|
Non-cash lower of cost or market adjustments
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
Capital expenditures
|
$
|
14
|
|
|
$
|
165
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
182
|
|
|
Investments in unconsolidated affiliates, net
|
$
|
131
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
131
|
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
Three Months Ended March 31, 2018
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Logistics and Marketing
|
|
Gathering and Processing
|
|
Other
|
|
Eliminations
|
|
Total
|
|
|
(millions)
|
|
Total operating revenue
|
$
|
1,979
|
|
|
$
|
1,286
|
|
|
$
|
—
|
|
|
$
|
(1,126
|
)
|
|
$
|
2,139
|
|
|
Gross margin (a)
|
$
|
18
|
|
|
$
|
352
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
370
|
|
|
Operating and maintenance expense
|
(11
|
)
|
|
(148
|
)
|
|
(3
|
)
|
|
—
|
|
|
(162
|
)
|
|
Depreciation and amortization expense
|
(3
|
)
|
|
(84
|
)
|
|
(7
|
)
|
|
—
|
|
|
(94
|
)
|
|
General and administrative expense
|
(3
|
)
|
|
(4
|
)
|
|
(52
|
)
|
|
—
|
|
|
(59
|
)
|
|
Other income (expense)
|
1
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
Earnings from unconsolidated affiliates
|
77
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|
Interest expense
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
(67
|
)
|
|
Income tax expense
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
Net income (loss)
|
$
|
79
|
|
|
$
|
114
|
|
|
$
|
(130
|
)
|
|
$
|
—
|
|
|
$
|
63
|
|
|
Net income attributable to noncontrolling interests
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
Net income (loss) attributable to partners
|
$
|
79
|
|
|
$
|
113
|
|
|
$
|
(130
|
)
|
|
$
|
—
|
|
|
$
|
62
|
|
|
Non-cash derivative mark-to-market (b)
|
$
|
(43
|
)
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(29
|
)
|
|
Capital expenditures
|
$
|
1
|
|
|
$
|
120
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
124
|
|
|
Investments in unconsolidated affiliates, net
|
$
|
59
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
|
(millions)
|
|
Segment long-term assets:
|
|
|
|
|
Gathering and Processing
|
$
|
9,126
|
|
|
$
|
9,058
|
|
|
Logistics and Marketing
|
3,692
|
|
|
3,661
|
|
|
Other (c)
|
287
|
|
|
276
|
|
|
Total long-term assets
|
13,105
|
|
|
12,995
|
|
|
Current assets
|
1,082
|
|
|
1,271
|
|
|
Total assets
|
$
|
14,187
|
|
|
$
|
14,266
|
|
|
|
|
|
(a)
|
Gross margin consists of total operating revenues, including commodity derivative activity, less purchases and related costs. Gross margin is viewed as a non-GAAP financial measure under the rules of the SEC, but is included as a supplemental disclosure because it is a primary performance measure used by management as it represents the results of product sales versus product purchases. As an indicator of our operating performance, gross margin should not be considered an alternative to, or more meaningful than, net income or net cash provided by operating activities as determined in accordance with GAAP. Our gross margin may not be comparable to a similarly titled measure of another company because other entities may not calculate gross margin in the same manner.
|
|
|
|
|
(b)
|
Non-cash commodity derivative mark-to-market is included in gross margin, along with cash settlements for our commodity derivative contracts.
|
|
|
|
|
(c)
|
Other long-term assets not allocable to segments consist of corporate leasehold improvements and other long-term assets.
|
20. Supplemental Cash Flow Information
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2019
|
|
2018
|
|
|
(millions)
|
|
Cash paid for interest:
|
|
|
|
|
Cash paid for interest, net of amounts capitalized
|
$
|
65
|
|
|
$
|
84
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
Property, plant and equipment acquired with accounts payable and accrued liabilities
|
$
|
40
|
|
|
$
|
54
|
|
|
Other non-cash activities:
|
|
|
|
|
Operating lease assets arising from the implementation of Topic 842
|
$
|
84
|
|
|
$
|
—
|
|
21. Supplementary Information - Condensed Consolidating Financial Information
The following condensed consolidating financial information presents the results of operations, financial position and cash flows of DCP Midstream, LP, or parent guarantor, DCP Midstream Operating LP, or subsidiary issuer, which is a
100%
owned subsidiary, and non-guarantor subsidiaries, as well as the consolidating adjustments necessary to present DCP Midstream, LP’s results on a consolidated basis. The parent guarantor has agreed to fully and unconditionally guarantee debt securities of the subsidiary issuer. For the purpose of the following financial information, investments in subsidiaries are reflected in accordance with the equity method of accounting. The financial information may not necessarily be indicative of results of operations, cash flows, or financial position had the subsidiaries operated as independent entities.
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Balance Sheets
|
|
|
March 31, 2019
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
(millions)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
914
|
|
|
—
|
|
|
914
|
|
|
Inventories
|
—
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|
Other
|
—
|
|
|
—
|
|
|
115
|
|
|
—
|
|
|
115
|
|
|
Total current assets
|
—
|
|
|
—
|
|
|
1,082
|
|
|
—
|
|
|
1,082
|
|
|
Property, plant and equipment, net
|
—
|
|
|
—
|
|
|
9,110
|
|
|
—
|
|
|
9,110
|
|
|
Goodwill and intangible assets, net
|
—
|
|
|
—
|
|
|
271
|
|
|
—
|
|
|
271
|
|
|
Advances receivable — consolidated subsidiaries
|
2,293
|
|
|
1,870
|
|
|
—
|
|
|
(4,163
|
)
|
|
—
|
|
|
Investments in consolidated subsidiaries
|
4,893
|
|
|
8,255
|
|
|
—
|
|
|
(13,148
|
)
|
|
—
|
|
|
Investments in unconsolidated affiliates
|
—
|
|
|
—
|
|
|
3,460
|
|
|
—
|
|
|
3,460
|
|
|
Other long-term assets
|
—
|
|
|
—
|
|
|
264
|
|
|
—
|
|
|
264
|
|
|
Total assets
|
$
|
7,186
|
|
|
$
|
10,125
|
|
|
$
|
14,187
|
|
|
$
|
(17,311
|
)
|
|
$
|
14,187
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and other current liabilities
|
$
|
2
|
|
|
$
|
71
|
|
|
$
|
1,206
|
|
|
$
|
—
|
|
|
$
|
1,279
|
|
|
Current maturities of long-term debt
|
—
|
|
|
925
|
|
|
200
|
|
|
—
|
|
|
1,125
|
|
|
Advances payable — consolidated subsidiaries
|
—
|
|
|
—
|
|
|
4,163
|
|
|
(4,163
|
)
|
|
—
|
|
|
Long-term debt
|
—
|
|
|
4,236
|
|
|
—
|
|
|
—
|
|
|
4,236
|
|
|
Other long-term liabilities
|
—
|
|
|
—
|
|
|
334
|
|
|
—
|
|
|
334
|
|
|
Total liabilities
|
2
|
|
|
5,232
|
|
|
5,903
|
|
|
(4,163
|
)
|
|
6,974
|
|
|
Commitments and contingent liabilities
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
Partners’ equity:
|
|
|
|
|
|
|
|
|
|
|
Net equity
|
7,184
|
|
|
4,896
|
|
|
8,260
|
|
|
(13,148
|
)
|
|
7,192
|
|
|
Accumulated other comprehensive loss
|
—
|
|
|
(3
|
)
|
|
(5
|
)
|
|
—
|
|
|
(8
|
)
|
|
Total partners’ equity
|
7,184
|
|
|
4,893
|
|
|
8,255
|
|
|
(13,148
|
)
|
|
7,184
|
|
|
Noncontrolling interests
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|
Total equity
|
7,184
|
|
|
4,893
|
|
|
8,284
|
|
|
(13,148
|
)
|
|
7,213
|
|
|
Total liabilities and equity
|
$
|
7,186
|
|
|
$
|
10,125
|
|
|
$
|
14,187
|
|
|
$
|
(17,311
|
)
|
|
$
|
14,187
|
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Balance Sheets
|
|
|
December 31, 2018
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
(millions)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,033
|
|
|
—
|
|
|
1,033
|
|
|
Inventories
|
—
|
|
|
—
|
|
|
79
|
|
|
—
|
|
|
79
|
|
|
Other
|
—
|
|
|
—
|
|
|
158
|
|
|
—
|
|
|
158
|
|
|
Total current assets
|
—
|
|
|
—
|
|
|
1,271
|
|
|
—
|
|
|
1,271
|
|
|
Property, plant and equipment, net
|
—
|
|
|
—
|
|
|
9,135
|
|
|
—
|
|
|
9,135
|
|
|
Goodwill and intangible assets, net
|
—
|
|
|
—
|
|
|
328
|
|
|
—
|
|
|
328
|
|
|
Advances receivable — consolidated subsidiaries
|
2,452
|
|
|
1,883
|
|
|
—
|
|
|
(4,335
|
)
|
|
—
|
|
|
Investments in consolidated subsidiaries
|
4,818
|
|
|
8,113
|
|
|
—
|
|
|
(12,931
|
)
|
|
—
|
|
|
Investments in unconsolidated affiliates
|
—
|
|
|
—
|
|
|
3,340
|
|
|
—
|
|
|
3,340
|
|
|
Other long-term assets
|
—
|
|
|
—
|
|
|
192
|
|
|
—
|
|
|
192
|
|
|
Total assets
|
$
|
7,270
|
|
|
$
|
9,996
|
|
|
$
|
14,266
|
|
|
$
|
(17,266
|
)
|
|
$
|
14,266
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and other current liabilities
|
$
|
2
|
|
|
$
|
71
|
|
|
$
|
1,306
|
|
|
$
|
—
|
|
|
$
|
1,379
|
|
|
Current maturities of long-term debt
|
—
|
|
|
325
|
|
|
200
|
|
|
—
|
|
|
525
|
|
|
Advances payable — consolidated subsidiaries
|
—
|
|
|
—
|
|
|
4,335
|
|
|
(4,335
|
)
|
|
—
|
|
|
Long-term debt
|
—
|
|
|
4,782
|
|
|
—
|
|
|
—
|
|
|
4,782
|
|
|
Other long-term liabilities
|
—
|
|
|
—
|
|
|
283
|
|
|
—
|
|
|
283
|
|
|
Total liabilities
|
2
|
|
|
5,178
|
|
|
6,124
|
|
|
(4,335
|
)
|
|
6,969
|
|
|
Commitments and contingent liabilities
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
Partners’ equity:
|
|
|
|
|
|
|
|
|
|
|
Net equity
|
7,268
|
|
|
4,821
|
|
|
8,118
|
|
|
(12,931
|
)
|
|
7,276
|
|
|
Accumulated other comprehensive loss
|
—
|
|
|
(3
|
)
|
|
(5
|
)
|
|
—
|
|
|
(8
|
)
|
|
Total partners’ equity
|
7,268
|
|
|
4,818
|
|
|
8,113
|
|
|
(12,931
|
)
|
|
7,268
|
|
|
Noncontrolling interests
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|
Total equity
|
7,268
|
|
|
4,818
|
|
|
8,142
|
|
|
(12,931
|
)
|
|
7,297
|
|
|
Total liabilities and equity
|
$
|
7,270
|
|
|
$
|
9,996
|
|
|
$
|
14,266
|
|
|
$
|
(17,266
|
)
|
|
$
|
14,266
|
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Operations
|
|
|
Three Months Ended March 31, 2019
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
(millions)
|
|
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
Sales of natural gas, NGLs and condensate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,111
|
|
|
$
|
—
|
|
|
$
|
2,111
|
|
|
Transportation, processing and other
|
—
|
|
|
—
|
|
|
115
|
|
|
—
|
|
|
115
|
|
|
Trading and marketing losses, net
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
(27
|
)
|
|
Total operating revenues
|
—
|
|
|
—
|
|
|
2,199
|
|
|
—
|
|
|
2,199
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Purchases and related costs
|
—
|
|
|
—
|
|
|
1,804
|
|
|
—
|
|
|
1,804
|
|
|
Operating and maintenance expense
|
—
|
|
|
—
|
|
|
178
|
|
|
—
|
|
|
178
|
|
|
Depreciation and amortization expense
|
—
|
|
|
—
|
|
|
103
|
|
|
—
|
|
|
103
|
|
|
General and administrative expense
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
67
|
|
|
Loss on sale of assets, net
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
Other expense, net
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
Total operating costs and expenses
|
—
|
|
|
—
|
|
|
2,166
|
|
|
—
|
|
|
2,166
|
|
|
Operating income
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
33
|
|
|
Interest expense, net
|
—
|
|
|
(67
|
)
|
|
(2
|
)
|
|
—
|
|
|
(69
|
)
|
|
Income from consolidated subsidiaries
|
75
|
|
|
142
|
|
|
—
|
|
|
(217
|
)
|
|
—
|
|
|
Earnings from unconsolidated affiliates
|
—
|
|
|
—
|
|
|
113
|
|
|
—
|
|
|
113
|
|
|
Income before income taxes
|
75
|
|
|
75
|
|
|
144
|
|
|
(217
|
)
|
|
77
|
|
|
Income tax expense
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
Net income
|
75
|
|
|
75
|
|
|
143
|
|
|
(217
|
)
|
|
76
|
|
|
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
Net income attributable to partners
|
$
|
75
|
|
|
$
|
75
|
|
|
$
|
142
|
|
|
$
|
(217
|
)
|
|
$
|
75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|
|
Three Months Ended March 31, 2019
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
(millions)
|
|
Net income
|
$
|
75
|
|
|
$
|
75
|
|
|
$
|
143
|
|
|
$
|
(217
|
)
|
|
$
|
76
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total comprehensive income
|
75
|
|
|
75
|
|
|
143
|
|
|
(217
|
)
|
|
76
|
|
|
Total comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
Total comprehensive income attributable to partners
|
$
|
75
|
|
|
$
|
75
|
|
|
$
|
142
|
|
|
$
|
(217
|
)
|
|
$
|
75
|
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Operations
|
|
|
Three Months Ended March 31, 2018
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
(millions)
|
|
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
Sales of natural gas, NGLs and condensate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,069
|
|
|
$
|
—
|
|
|
$
|
2,069
|
|
|
Transportation, processing and other
|
—
|
|
|
—
|
|
|
111
|
|
|
—
|
|
|
111
|
|
|
Trading and marketing losses, net
|
—
|
|
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
(41
|
)
|
|
Total operating revenues
|
—
|
|
|
—
|
|
|
2,139
|
|
|
—
|
|
|
2,139
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Purchases and related costs
|
—
|
|
|
—
|
|
|
1,769
|
|
|
—
|
|
|
1,769
|
|
|
Operating and maintenance expense
|
—
|
|
|
—
|
|
|
162
|
|
|
—
|
|
|
162
|
|
|
Depreciation and amortization expense
|
—
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
|
General and administrative expense
|
—
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
59
|
|
|
Other expense, net
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
Total operating costs and expenses
|
—
|
|
|
—
|
|
|
2,086
|
|
|
—
|
|
|
2,086
|
|
|
Operating income
|
—
|
|
|
—
|
|
|
53
|
|
|
—
|
|
|
53
|
|
|
Interest expense, net
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
Income from consolidated subsidiaries
|
62
|
|
|
129
|
|
|
—
|
|
|
(191
|
)
|
|
—
|
|
|
Earnings from unconsolidated affiliates
|
—
|
|
|
—
|
|
|
78
|
|
|
—
|
|
|
78
|
|
|
Income before income taxes
|
62
|
|
|
62
|
|
|
131
|
|
|
(191
|
)
|
|
64
|
|
|
Income tax expense
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
Net income
|
62
|
|
|
62
|
|
|
130
|
|
|
(191
|
)
|
|
63
|
|
|
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
Net income attributable to partners
|
$
|
62
|
|
|
$
|
62
|
|
|
$
|
129
|
|
|
$
|
(191
|
)
|
|
$
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|
|
Three Months Ended March 31, 2018
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
(millions)
|
|
Net income
|
$
|
62
|
|
|
$
|
62
|
|
|
$
|
130
|
|
|
$
|
(191
|
)
|
|
$
|
63
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total comprehensive income
|
62
|
|
|
62
|
|
|
130
|
|
|
(191
|
)
|
|
63
|
|
|
Total comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
Total comprehensive income attributable to partners
|
$
|
62
|
|
|
$
|
62
|
|
|
$
|
129
|
|
|
$
|
(191
|
)
|
|
$
|
62
|
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Cash Flows
|
|
|
Three Months Ended March 31, 2019
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
(millions)
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
$
|
—
|
|
|
$
|
(66
|
)
|
|
$
|
383
|
|
|
$
|
—
|
|
|
$
|
317
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Intercompany transfers
|
159
|
|
|
13
|
|
|
—
|
|
|
(172
|
)
|
|
—
|
|
|
Capital expenditures
|
—
|
|
|
—
|
|
|
(182
|
)
|
|
—
|
|
|
(182
|
)
|
|
Investments in unconsolidated affiliates, net
|
—
|
|
|
—
|
|
|
(131
|
)
|
|
—
|
|
|
(131
|
)
|
|
Proceeds from sale of assets
|
—
|
|
|
—
|
|
|
103
|
|
|
—
|
|
|
103
|
|
|
Net cash provided by (used in) investing activities
|
159
|
|
|
13
|
|
|
(210
|
)
|
|
(172
|
)
|
|
(210
|
)
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Intercompany transfers
|
—
|
|
|
—
|
|
|
(172
|
)
|
|
172
|
|
|
—
|
|
|
Proceeds from debt
|
—
|
|
|
1,402
|
|
|
—
|
|
|
—
|
|
|
1,402
|
|
|
Payments of debt
|
—
|
|
|
(1,348
|
)
|
|
—
|
|
|
—
|
|
|
(1,348
|
)
|
|
Distributions to preferred limited partners
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
Distributions to limited partners and general partner
|
(154
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(154
|
)
|
|
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
Other
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
Net cash (used in) provided by financing activities
|
(159
|
)
|
|
53
|
|
|
(173
|
)
|
|
172
|
|
|
(107
|
)
|
|
Net change in cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Cash and cash equivalents, beginning of period
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statements of Cash Flows
|
|
|
Three Months Ended March 31, 2018
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
(millions)
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
$
|
—
|
|
|
$
|
(84
|
)
|
|
$
|
206
|
|
|
$
|
—
|
|
|
$
|
122
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Intercompany transfers
|
194
|
|
|
(171
|
)
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
Capital expenditures
|
—
|
|
|
—
|
|
|
(124
|
)
|
|
—
|
|
|
(124
|
)
|
|
Investments in unconsolidated affiliates, net
|
—
|
|
|
—
|
|
|
(60
|
)
|
|
—
|
|
|
(60
|
)
|
|
Proceeds from sale of assets
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
Net cash provided by (used in) investing activities
|
194
|
|
|
(171
|
)
|
|
(181
|
)
|
|
(23
|
)
|
|
(181
|
)
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Intercompany transfers
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
23
|
|
|
—
|
|
|
Proceeds from long-term debt
|
—
|
|
|
635
|
|
|
—
|
|
|
—
|
|
|
635
|
|
|
Payments of debt
|
—
|
|
|
(535
|
)
|
|
—
|
|
|
—
|
|
|
(535
|
)
|
|
Distributions to limited partners and general partner
|
(194
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(194
|
)
|
|
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
Net cash (used in) provided by financing activities
|
(194
|
)
|
|
100
|
|
|
(24
|
)
|
|
23
|
|
|
(95
|
)
|
|
Net change in cash and cash equivalents
|
—
|
|
|
(155
|
)
|
|
1
|
|
|
—
|
|
|
(154
|
)
|
|
Cash and cash equivalents, beginning of period
|
—
|
|
|
155
|
|
|
1
|
|
|
—
|
|
|
156
|
|
|
Cash and cash equivalents, end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2019 and 2018 (Continued)
(Unaudited)
22. Subsequent Events
On
April 23, 2019
, we announced that the board of directors of the General Partner declared a quarterly distribution on our common units of
$0.78
per common unit. The distribution will be paid on
May 15, 2019
to unitholders of record on
May 3, 2019
.
On the same date, we announced that the board of directors of the General Partner declared a semi-annual distribution on our Series A Preferred Units o
f
$36.8750
per unit. The distribution will be paid on
June 17, 2019
to unitholders of record on
June 3, 2019
.
On the same date, the board of directors of the General Partner declared a quarterly distribution on our Series B and Series C Preferred Units of
$0.4922
and
$0.4969
per unit, respectively. The Series B distributions will be paid on
June 17, 2019
to unitholders of record on
June 3, 2019
. The Series C distribution will be paid on
July 15, 2019
to unitholders of record on
July 1, 2019
.