construction of new systems or additions to our existing gathering, transportation and propane terminal assets
may require us to rely on third parties downstream of our facilities to have available capacity for our delivered
natural gas, NGLs, or propane. If such third party facilities are not constructed or operational at the time that the
addition to our facilities is completed, we may experience adverse effects on our results of operations and
financial condition. The construction of additional systems may require greater capital investment if the
commodity prices of certain supplies such as steel increase. Construction also subjects us to risks related to the
ability to construct projects within anticipated costs, including the risk of cost overruns resulting from inflation
or increased costs of equipment, materials, labor, or other factors beyond our control that could adversely affect
results of operations, financial position or cash flows.
If we do not make acquisitions on economically acceptable terms, our future growth could be limited.
Our acquisition strategy is based, in part, on our expectation of ongoing divestitures of energy assets by
industry participants and DCP Midstream, LLC. Our ability to make acquisitions that are accretive to our cash
generated from operations per unit is based upon our ability to identify attractive acquisition candidates or
negotiate acceptable purchase contracts with them and obtain financing for these acquisitions on economically
acceptable terms. Furthermore, even if we do make acquisitions that we believe will be accretive, these
acquisitions may nevertheless result in a decrease in the cash generated from operations per unit. Additionally,
net assets contributed by DCP Midstream, LLC represent a transfer of net assets between entities under
common control, and are recognized at DCP Midstream, LLC’s basis in the net assets transferred. The amount
of the purchase price in excess of DCP Midstream, LLC’s basis in the net assets, if any, is recognized as a
reduction to partners’ equity. The amount of the purchase price less than DCP Midstream’s basis in the net
assets, if any, is recognized as an increase to partners’ equity.
Any acquisition involves potential risks, including, among other things:
• mistaken assumptions about volumes, future contract terms with customers, revenues and costs,
including synergies;
• an inability to successfully integrate the businesses we acquire;
• the assumption of unknown liabilities;
• limitations on rights to indemnity from the seller;
• mistaken assumptions about the overall costs of equity or debt;
• the diversion of management’s and employees’ attention from other business concerns;
• change in competitive landscape;
• unforeseen difficulties operating in new product areas or new geographic areas; and
• customer or key employee losses at the acquired businesses.
If we consummate any future acquisitions, our capitalization and results of operations may change
significantly, and unitholders will not have the opportunity to evaluate the economic, financial and other
relevant information that we will consider in determining the application of these funds and other resources.
In addition, any limitations on our access to substantial new capital to finance strategic acquisitions will
impair our ability to execute this component of our growth strategy. If the cost of such capital becomes too
expensive, our ability to develop or acquire accretive assets will be limited. We may not be able to raise the
necessary funds on satisfactory terms, if at all. The primary factors that influence our cost of capital include
market conditions and offering or borrowing costs such as interest rates or underwriting discounts.
We do not own all of the land on which our pipelines, facilities and rail terminals are located, which may
subject us to increased costs.
Upon contract lease renewal, we may be subject to more onerous terms and/or increased costs to retain
necessary land use if we do not have valid rights of way or if such rights of way lapse or terminate. We obtain
the rights to construct and operate our pipelines, surface sites and rail terminals on land owned by third parties
and governmental agencies for a specific period of time.
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