DISCOVERY PRODUCER SERVICES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Foreign Currency Transactions.
Transactions denominated in currencies other than the functional
currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in
exchange rates result in transaction gains or losses which are reflected in net income.
Note 3. Related Party Transactions
We have various business transactions with our members and subsidiaries and affiliates of our members.
Revenues include the following:
• sales to Williams of natural gas liquids (NGLs) to which we take title and excess natural gas at current
market prices for the products and
• processing and sales of NGLs and transportation of natural gas and condensate for DCP’s affiliates,
Texas Eastern Corporation and ConocoPhillips Company.
The following table summarizes these related-party revenues during 2011, 2010 and 2009.
Years Ended December 31,
2011
2010
2009
(In thousands)
Williams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $172,143 $158,070 $114,869
Texas Eastern Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
190
ConocoPhillips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124
322
295
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $172,267 $158,392 $115,354
Product cost and shrink replacement — affiliate includes natural gas purchases from Williams for fuel and
shrink requirements made at market rates at the time of purchase.
We have no employees. Pipeline and plant operations are performed under operation and maintenance
agreements with Williams. Most costs for materials, services and other charges are third-party charges and are
invoiced directly to us. Operating and maintenance expenses — affiliate includes the following:
• direct payroll and employee benefit costs incurred on our behalf by Williams, and
• transportation expense under a 10-year transportation agreement for pipeline capacity through 2015
from Texas Eastern Transmission, LP (an affiliate of DCP)
General and administrative expenses — affiliate includes a monthly operation and management fee paid to
Williams to cover the cost of accounting services, computer systems and management services provided to us.
We also pay Williams a project management fee to cover the cost of managing capital projects. This fee is
determined on a project by project basis and is capitalized as part of the construction costs. A summary of the
payroll costs and project fees charged to us by Williams and capitalized are as follows:
Years Ended December 31,
2011
2010 2009
(In thousands)
Capitalized labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 834 $295 $280
Capitalized project fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
566 288 312
$1,400 $583 $592
229