DCP SOUTHEAST TEXAS HOLDINGS, GP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2011, 2010 and 2009
1. Description of Business and Basis of Presentation
DCP Southeast Texas Holdings, GP, or Southeast Texas, we, our, or us, is engaged in the business of
gathering, processing, compressing, transporting, treating and storing natural gas and transporting, gathering,
treating and processing natural gas liquids, or NGLs. The operations, located in Southeast Texas, include 3
natural gas processing facilities with a total capacity of approximately 400 million cubic feet per day. The
facilities are connected to our 36-mile Liberty gathering system and to our CIPCO system, which includes 675
miles of gathering and transmission lines, as well as our 3 salt dome natural gas storage caverns at Spindletop
with a total capacity of 9 billion cubic feet. We are currently constructing a fourth storage cavern at Spindletop,
which is expected to be completed in the third quarter of 2013.
We are owned 66.66% by DCP Southeast Texas, LLC, a wholly-owned subsidiary of DCP Midstream,
LLC, or DCP Midstream, 33.33% by DCP Partners SE Texas LLC, a wholly-owned subsidiary of DCP Assets
Holdings, LP, or DCP Partners, and 0.01% by Gas Supply Resources Holdings, Inc. a wholly-owned subsidiary
of DCP Midstream, LLC, or GSR. DCP Midstream is a joint venture owned 50% by Spectra Energy Corp, or
Spectra Energy, and 50% by ConocoPhillips. As of December 31, 2011, DCP Midstream owned an
approximate 27% interest, including a 1% general partner interest, in DCP Partners. Throughout this report,
DCP Midstream, DCP Partners and GSR will together be referenced as “the Partners.”
These consolidated financial statements include the accounts of Southeast Texas and, prior to January 1,
2011, the operations, assets and liabilities contributed to us by DCP Midstream, or the Business. Certain assets
and liabilities presented with the December 31, 2010 balance sheet of the Business were excluded from the
January 1, 2011 drop-down transaction, and as such are not included in the 2011 results of Southeast Texas.
These excluded assets and liabilities are defined within the Contribution Agreement and include (1) short-term
unrealized gains on derivative instruments of $12.6 million; (2) long-term unrealized gains on derivative
instruments of $0.5 million; (3) short-term unrealized losses on derivative instruments of $13.6 million;
(4) other short-term liabilities of $3.2 million; (4) long-term unrealized losses on derivative instruments of $0.2
million and (6) other long-term liabilities of $1.2 million, and result in a net equity impact of $5.1 million. The
drop-down transaction was a transaction between entities under common control and a change in reporting
entity. The Business was contributed to DCP Southeast Texas Holdings, GP, and on January 1, 2011, DCP
Partners acquired from DCP Midstream a 33.33% interest in DCP Southeast Texas Holdings, GP.
The consolidated financial statements include the accounts of Southeast Texas and its wholly-owned
subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United
States of America, or GAAP. The consolidated financial statements of the Business were prepared from the
separate records maintained by DCP Midstream and may not necessarily be indicative of the conditions that
would have existed, or the results of operations, if the Business had been operated as an unaffiliated entity.
Because a direct ownership relationship did not exist among all the various assets comprising Southeast Texas
until January 1, 2011, DCP Midstream’s contributions and distributions are shown as net change in parent
advances in lieu of contributions and distributions in the consolidated statements of changes in parents’ equity.
Intercompany balances and transactions have been eliminated. Transactions between us and other DCP
Midstream operations have been identified in the consolidated financial statements as transactions between
affiliates. In the opinion of management, all adjustments have been reflected that are necessary for a fair
presentation of the consolidated financial statements.
2. Summary of Significant Accounting Policies
Use of Estimates
— Conformity with GAAP requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements and notes. Although these estimates are
based on management’s best available knowledge of current and expected future events, actual results could
differ from those estimates.
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