As a result of these factors, our hedging activities may not be as effective as we intend in reducing the
volatility of our cash flows and, in certain circumstances, may actually increase the volatility of our earnings
and cash flows. In addition, even though our management monitors our hedging activities, these activities can
result in material losses. Such losses could occur under various circumstances, including if a counterparty does
not or is unable to perform its obligations under the applicable derivative arrangement, the derivative
arrangement is imperfect or ineffective, or our risk management policies and procedures are not properly
followed or do not work as planned.
Volumes of natural gas dedicated to our systems in the future may be less than we anticipate.
As a result of the unwillingness of producers to provide reserve information as well as the cost of such
evaluation, we do not have independent estimates of total reserves dedicated to our systems or the anticipated
life of such reserves. If the reserves connected to our gathering systems are less than we anticipate and we are
unable to secure additional sources of natural gas, then the volumes of natural gas on our systems in the future
could be less than we anticipate.
We depend on certain natural gas producer customers for a significant portion of our supply of natural
gas and NGLs.
We identify as primary natural gas suppliers those suppliers individually representing 10% or more of our
total natural gas supply. We had no natural gas suppliers representing 10% or more of our total natural gas
supply during the year ended December 31, 2011. In our NGL Logistics segment, our largest NGL supplier is
DCP Midstream, LLC, who obtains NGLs from various third party producer customers. While some of these
customers are subject to long-term contracts, we may be unable to negotiate extensions or replacements of these
contracts on favorable terms, if at all. The loss of all or even a portion of the natural gas and NGL volumes
supplied by these customers, as a result of competition or otherwise, could have a material adverse effect on our
business.
If we are not able to purchase propane from our principal suppliers, or we are unable to secure
transportation under our transportation arrangements, our results of operations in our wholesale propane
logistics business would be adversely affected.
Most of our propane purchases are made under supply contracts that have a term of between one to five
years and provide various pricing formulas. We identify primary suppliers as those individually representing
10% or more of our total propane supply. Our three primary suppliers of propane, two of which are affiliated
entities, represented approximately 88% of our propane supplied during the year ended December 31, 2011.
Forty-three percent of our propane supply is provided by Spectra Energy. The propane supply agreement with
Spectra Energy expires April 30, 2012. We are currently assessing several available options for future supply
sources. A portion of our suppliers’ propane is sourced by them internationally. If current unrest in North Africa
should expand further into countries where our propane supply originates, it could result in supply disruptions.
In the event that we are unable to purchase propane from our significant suppliers due to their failure to perform
under contractual obligations or otherwise, replace terminated or expired supply contracts, or if there are
domestic or international supply disruptions, our failure to obtain alternate sources of supply at competitive
prices and on a timely basis would affect our ability to satisfy customer demand, reduce our revenues and
adversely affect our results of operations. In addition, if we are unable to transport propane supply to our
terminals under our rail commitments, our ability to satisfy customer demand, our revenue and results of
operations would be adversely affected.
The adoption of financial reform legislation by the United States Congress could have an adverse effect on
our ability to use derivative instruments to hedge risks associated with our business.
We hedge a portion of our commodity risk and our interest rate risk. The United States Congress adopted
comprehensive financial reform legislation that establishes federal oversight and regulation of the
over-the-counter derivatives market and entities, including businesses like ours, that participate in that market.
The new legislation, known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Act, was
signed into law by the President on July 21, 2010, and requires the CFTC and the SEC to promulgate rules and
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