Thomas C. O’Connor
Chairman of the Board
Contract Mix and Hedging Positions
We have a balanced portfolio of fee-based and
commodity-based contracts. Our multi-year
commodity hedging program mitigates price
risk and provides more stable cash fows. In
2012, we anticipate approximately 59% of
our margins will be generated from fee-based
contracts. In conjunction with our hedges, we
estimate over 85% of our 2012 margins are
fee-based or supported by commodity hedges.
Condensate
6%
Fee-based
59%
2012 Margin by Contract Type
Percentage of
Proceeds/Liquids
27%
Keep Whole
8%
2012 Margin:
Fee and Hedge Position
Growth Since IPO
Fee-based
59%
Commodity
Hedged
28%
Commodity
Unhedged
13%
Third Party
Acquisitions
48%
Dropdowns
42%
Organic
Projects
10%
Condensate
6%
27%
2012 Margin:
Fee and Hedge Position
Growth Since IPO
Fee-based
59%
Commodity
Hedged
28%
Commodity
Unhedged
13%
Third Party
Acquisitions
48%
Dropdowns
42%
Organic
Projects
10%
2011 Annual Report
3
Mark A. Borer
President and Chief Executive Offcer
Era of the Enterprise and Transformational Growth
As we refect back on 2011 and look out over the next few years, the
past year represents a milestone and an important infection point for
the DCP enterprise, and consequently the Partnership.
Given the sources of growth opportunities at both the
Partnership and DCP Midstream, our growth strategy
continues to be multi-faceted. With the $4 billion to
$6 billion of growth opportunities currently in DCP
Midstream’s footprint, we would expect relatively more
emphasis on co-investment over the next few years.
From a transformational standpoint, we believe
the enterprise growth opportunities will support
the evolution of the Partnership into a large scale
MLP, possessing substantial fee-based assets,
a diversifed asset portfolio, and signifcant NGL
infrastructure assets.
We believe our structure is unique and provides
benefts to all the key stakeholders of both the
Partnership and DCP Midstream. The Partnership’s
access to capital markets supports DCP Midstream’s
execution on escalating growth opportunities while
balancing distributions to Spectra and ConocoPhillips. As
a signifcant owner of the Partnership, DCP Midstream will
realize increasing cash distributions from the Partnership.
The Partnership in turn will realize accelerating growth and is
able to participate in very signifcant projects, which otherwise
might be diffcult for the Partnership to execute on its own.
We are excited about the future and look forward to delivering
on this attractive value proposition.
We capitalized on our ratings with the successful benchmark issuance of 10-year senior notes.
Over the course of the year, we continued to take a prudent, timely and cost-effective approach to
fnancing our growth, utilizing multiple sources of capital including public equity and debt offerings,
our “at-the-market” equity offering program that we put in place in August, equity issued to
DCP Midstream, a term loan and borrowings on our new $1 billion, fve-year revolving credit facility.
Our continued strong fnancial positioning and capital markets execution have provided a strong
capital structure, access to capital markets, a competitive cost of capital and liquidity to enable us
to execute our strategy and serve as a viable and attractive funding source for
very sizeable growth at both the Partnership and DCP Midstream.