DCP SOUTHEAST TEXAS HOLDINGS, GP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Years Ended December 31, 2011, 2010 and 2009
project was completed and base gas was repurchased to restore our storage cavern to operation. To mitigate the
risk associated with the forecasted re-purchase of base gas, we executed a series of derivative financial
instruments, which were designated as cash flow hedges. The cash paid upon settlement of these hedges
economically offsets the cash paid to purchase the base gas. A deferred loss of $2.7 million was recognized and
will remain in AOCI until such time that our cavern is emptied and the base gas is sold. In conjunction with our
construction of a fourth storage cavern, we have applied additional base gas derivatives which are classified as
cash flow hedges. These cash flow hedges were in a loss position of $2.6 million as of December 31, 2011 and
will fluctuate in value through the term of construction. Following completion of the fourth cavern, the cash
flow hedges will remain in AOCI until the cavern is emptied and the base gas is sold.
Summarized Derivative Information
The following summarizes the balance within AOCI relative to our commodity cash flow hedges:
December 31,
2011 2010
(Millions)
Commodity cash flow hedges:
Net deferred losses in AOCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(5.3) $(2.7)
The fair value of our derivative instruments that are designated as hedging instruments, those that are
marked-to-market each period, as well as the location of each within our consolidated balance sheets, by major
category, is summarized as follows:
December 31,
December 31,
Balance Sheet Line Item
2011 2010 Balance Sheet Line Item
2011 2010
(Millions)
(Millions)
Derivative Assets Designated as Hedging Instruments:
Derivative Liabilities Designated as Hedging Instruments:
Commodity derivatives:
Commodity derivatives:
Unrealized gains on derivative instruments —
current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $— $ —
Unrealized losses on derivative instruments —
current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ —
Unrealized gains on derivative instruments —
long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
Unrealized losses on derivative instruments —
long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.6) —
$— $ —
$(2.6) $ —
Derivative Assets Not Designated as Hedging Instruments: Derivative Liabilities Not Designated as Hedging Instruments:
Commodity derivatives:
Commodity derivatives:
Unrealized gains on derivative instruments —
current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $— $12.6
Unrealized losses on derivative instruments —
current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $(13.6)
Unrealized gains on derivative instruments —
long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.5
Unrealized losses on derivative instruments —
long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0.2)
$— $13.1
$ — $(13.8)
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