DISCOVERY PRODUCER SERVICES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
We also have a ten-year agreement for pipeline capacity from Texas Eastern Transmission, LP that expires
in June 2015 and includes renewal options and options to increase capacity which would also increase rentals.
The future minimum annual commitments under these non-cancelable arrangements as of December 31, 2011
are payable as follows:
(In thousands)
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,150
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,150
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,150
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
575
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
$4,025
Total rent and lease expense for 2011, 2010 and 2009, including a cancelable platform space lease and
miscellaneous month-to-month leases, was $1.7 million, $1.8 million and $1.8 million, respectively.
Note 6. Financial Instruments, Concentrations of Credit Risk and Major Customers
Fair Value of Financial Instruments
We used the following methods and assumptions to estimate the fair value of financial instruments:
Cash and cash equivalents.
The carrying amounts reported in the Consolidated Balance Sheets
approximate fair value due to the short-term maturity of these instruments.
2011
2010
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
(In thousands)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $17,457 $17,457 $10,230 $10,230
Concentrations of Credit Risk
Our cash equivalents balance is primarily invested in funds with high-quality, short-term securities and
instruments that are issued or guaranteed by the U.S. government.
At December 31, 2011, substantially all of our customer accounts receivable result from product sales to
and gas transmission services provided for our largest three customers. This concentration of customers may
impact our overall credit risk either positively or negatively, in that these entities may be similarly affected by
industry-wide changes in economic or other conditions. As a general policy, collateral is not required for
receivables, but customers’ financial condition and credit worthiness are evaluated regularly. Our credit policy
and the relatively short duration of receivables mitigate the risk of uncollected receivables. We did not incur
any credit losses on receivables during 2011, 2010 or 2009.
Major Customers
Williams accounted for $172.1 million (82%), $158.1 million (76%) and $114.9 million (71%),
respectively, of our total revenues in 2011, 2010 and 2009. These revenues were for the sale of NGLs received
as compensation under processing contracts with third-party producers.
Note 7. Rate and Regulatory Matters
Rate and Regulatory Matters
. Annually, DGT files a request with the FERC for a fuel
lost-and-unaccounted-for gas (L&U) percentage to be allocated to shippers for the upcoming fiscal year
beginning July 1. On June 1, 2011, DGT filed to increase the L&U percentage from zero percent to 0.35% until
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