Page 45 - DCP AR2011 Dev

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regulations implementing the new legislation. In its rulemaking under the Act, the CFTC has proposed
regulations to set position limits for certain futures and option contracts in the major energy markets and for
swaps that are their economic equivalents. Although certain bona fide hedging transactions or positions would
be exempt from these position limits, it is not possible at this time to predict what impact these regulations will
have on our hedging program or when the CFTC will finalize these regulations. The Act may also require us to
comply with margin requirements and with certain clearing and trade-execution requirements in connection
with our hedging activities, although the application of those provisions to us is uncertain at this time. The Act
may also require the counterparties to our derivative instruments to spin off some of their hedging activities to a
separate entity, which may not be as creditworthy as the current counterparty. The new legislation and any new
regulations could significantly increase the cost of derivatives contracts (including through requirements to post
collateral which could adversely affect our available liquidity), materially alter the terms of derivatives
contracts, reduce the availability of derivatives to protect against risks we encounter, reduce our ability to
monetize or restructure our existing derivatives contracts, and increase our exposure to less creditworthy
counterparties. If we reduce our use of hedging as a result of the legislation and regulations, our results of
operations may become more volatile and our cash flows may be less predictable, which could adversely affect
our ability to plan for and fund capital expenditures and fund unitholder distributions. Finally, the legislation
was intended, in part, to reduce the volatility of oil and natural gas prices, which some legislators attributed to
speculative trading in derivatives and commodity instruments related to oil and natural gas. Our revenues could
therefore be adversely affected if a consequence of the legislation and regulations is to lower commodity prices.
Any of these consequences could have a material adverse effect on our business, our financial condition, and
our results of operations.
We may not be able to grow or effectively manage our growth.
A principal focus of our strategy is to continue to grow the per unit distribution on our units by expanding
our business. Our future growth will depend upon a number of factors, some of which we can control and some
of which we cannot. These factors include our ability to:
• identify businesses engaged in managing, operating or owning pipelines, processing and storage assets
or other midstream assets for acquisitions, joint ventures and construction projects;
• consummate accretive acquisitions or joint ventures and complete construction projects;
• participate in co-investment opportunities with DCP Midstream, LLC;
• appropriately identify liabilities associated with acquired businesses or assets;
• integrate acquired or constructed businesses or assets successfully with our existing operations and into
our operating and financial systems and controls;
• hire, train and retain qualified personnel to manage and operate our growing business; and
• obtain required financing for our existing and new operations at reasonable rates.
A deficiency in any of these factors could adversely affect our ability to achieve growth in the level of our
cash flows or realize benefits from acquisitions, joint ventures or construction projects. In addition, competition
from other buyers could reduce our acquisition opportunities. DCP Midstream, LLC and its affiliates are not
restricted from competing with us. DCP Midstream, LLC and its affiliates may acquire, construct or dispose of
midstream or other assets in the future without any obligation to offer us the opportunity to purchase or
construct those assets.
Furthermore, we have recently grown significantly through a number of acquisitions. If we fail to properly
integrate these acquired assets successfully with our existing operations, if the future performance of these
acquired assets does not meet our expectations, if we did not properly value the acquired assets, or we did not
identify significant liabilities associated with the acquired assets, the anticipated benefits from these
acquisitions may not be fully realized.
We may not successfully balance our purchases and sales of natural gas and propane.
We purchase from producers and other customers a substantial amount of the natural gas that flows
through our natural gas gathering, processing and transportation systems for resale to third parties, including
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