Page 130 - DCP AR2011 Dev

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DCP MIDSTREAM PARTNERS, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2011, 2010 and 2009 — (Continued)
ASU 2011-08 “Intangibles – Goodwill and Other (Topic 350),”
or ASU 2011-08
— In September 2011,
the FASB issued ASU 2011-08, which amends Accounting Standards Codification, or ASC, Topic 350
“Intangibles — Goodwill and Other.” ASU 2011-08 provides additional guidance on the two-step test for
goodwill impairment as previously described in Topic 350 “Intangibles — Goodwill and Other.” Under the new
guidance, entities may elect to first assess qualitative factors instead of calculating the fair value of a reporting
unit unless the entity determines that it is more likely than not the fair value of the reporting unit is less than its
carrying value. This ASU is effective for interim and annual goodwill impairment tests performed for fiscal
years beginning after December 15, 2011, with early adoption permitted. We elected to adopt ASU 2011-08 for
our 2011 annual goodwill impairment test. There was no impact from the adoption of ASU 2011-08 on our
consolidated results of operations, cash flows and financial position.
ASU 2011-04 “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”,
or ASU 2011-04
— In May 2011,
the FASB issued ASU 2011-04 which amends ASC, Topic 820 “Fair Value Measurements and Disclosures” to
change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for
disclosing information about fair value measurements, clarify the FASB’s intent about the application of
existing fair value measurement requirements, and change a particular principle or requirement for measuring
fair value or for disclosing information about fair value measurements. The provisions of ASU 2011-04 are
effective for us for interim and annual periods beginning after December 15, 2011 and we are currently
assessing the impact of adoption on our consolidated results of operations, cash flows and financial position.
4. Acquisitions
On August 1, 2011, we reached an agreement with DCP Midstream, LLC for us to construct a 200
MMcf/d cryogenic natural gas processing plant, or the Eagle Plant, in the Eagle Ford shale which represents an
investment of approximately $120.0 million. In support of our construction of the Eagle Plant, we entered into a
15 year fee-based processing agreement with an affiliate of DCP Midstream, LLC, which provides us with a
fixed demand charge for 150 MMcf/d along with a throughput fee on all volumes processed. The processing
agreement commences with commercial operations of the new plant, which is expected to be online by the
fourth quarter of 2012. In conjunction with the agreement, we also entered into a purchase and sale agreement
with DCP Midstream, LLC to purchase certain tangible assets and land located in the Eagle Ford Shale for
$23.4 million, financed initially at closing with borrowings under the Partnership’s revolving credit facility.
On March 24, 2011, we acquired two NGL fractionation facilities in Weld County, Colorado, located in
the Denver-Julesburg Basin, from a third party in a transaction accounted for as an asset acquisition. We paid a
purchase price of $30.0 million, financed initially at closing with borrowings under the Partnership’s revolving
credit facility, and received a post-closing purchase price adjustment of $0.4 million. The NGL fractionation
facilities are located on DCP Midstream, LLC’s processing plant sites and are operated by DCP Midstream,
LLC. Subsequent to our acquisition, DCP Midstream, LLC continues to operate and supply certain committed
NGLs produced by them in Weld County to our DJ Basin NGL Fractionators under the existing agreements that
are effective through March 2018. The results of the assets are included in our NGL Logistics segment
prospectively, from the date of acquisition.
On January 1, 2011, we acquired a 33.33% interest in Southeast Texas for $150.0 million, in a transaction
among entities under common control, financed initially at closing with proceeds from our November 2010 public
equity offering and borrowings under the Partnership’s revolving credit facility. DCP Midstream, LLC’s historical
carrying value of the net assets acquired was $114.3 million; accordingly we have recorded the $35.7 million excess
purchase price over acquired assets as a decrease in common unitholders equity. The results of our 33.33% interest
in Southeast Texas are included in our Natural Gas Services segment for all periods presented.
On December 30, 2010, we acquired all of the interests in Marysville. The acquisition involved three
separate transactions with a number of parties. We acquired a 90% interest in Marysville from Dart Energy
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