commodity price sensitivities in “— Quantitative and Qualitative Disclosures about Market Risk.” Our results
may also be impacted as a result of non-cash lower of cost or market inventory or imbalance adjustments,
which occur when the market value of commodities decline below our carrying value.
The natural gas services business is highly competitive in our markets and includes major integrated oil
and gas companies, interstate and intrastate pipelines, and companies that gather, compress, treat, process,
transport, store and/or market natural gas. Competition is often the greatest in geographic areas experiencing
robust drilling by producers and during periods of high commodity prices for crude oil, natural gas and/or
natural gas liquids. Competition is also increased in those geographic areas where our commercial contracts
with our customers are shorter in length of term and therefore must be renegotiated on a more frequent basis.
NGL Logistics Segment
Our NGL Logistics segment operating results are impacted by the throughput volumes of the NGLs we
transport on our NGL pipelines and the volumes of NGLs we fractionate and store in our fractionation and
storage facilities. We transport, fractionate and store NGLs primarily on a fee basis. Throughput may be
negatively impacted as a result of our customers operating their processing plants in ethane rejection mode,
often as a result of low commodity prices for ethane. Factors that impact the supply and demand of NGLs, as
described above in our Natural Gas Services segment, may also impact the throughput and volume for our NGL
Logistics segment. Our results may also be impacted as a result of non-cash lower of cost or market inventory
adjustments, which occur when the market value of NGLs decline below our carrying value.
Wholesale Propane Logistics Segment
Our Wholesale Propane Logistics segment operating results are impacted by our ability to provide our
retail propane distribution customers with reliable supplies of propane. We use physical inventory, physical
purchase agreements and financial derivative instruments, with DCP Midstream, LLC or third parties, which
typically match the quantities of propane subject to fixed price sales agreements to mitigate our commodity
price risk. Our results may also be impacted as a result of non-cash lower of cost or market inventory
adjustments, which occur when the market value of propane declines below our inventory value. We generally
recover lower of cost or market inventory adjustments in subsequent periods through the sale of inventory.
There may be positive or negative impacts on sales volumes and gross margin from supply disruptions and
weather conditions in the mid-Atlantic, upper midwestern and northeastern areas of the United States. Our
annual sales volumes of propane may decline when these areas experience periods of milder weather in the
winter months. Volumes may also be impacted by conservation and reduced demand in a recessionary
environment.
The wholesale propane business is highly competitive in our market areas which include the mid-Atlantic,
upper midwest and northeastern areas of the United States. Our competitors include major integrated oil and gas
and energy companies, and interstate and intrastate pipelines.
Weather
The economic impact of severe weather may negatively affect the nation’s short-term energy supply and
demand, and may result in commodity price volatility. Additionally, severe weather may restrict or prevent us
from fully utilizing our assets, by damaging our assets, interrupting utilities, and through possible NGL and
natural gas curtailments downstream of our facilities, which restricts our production. These impacts may linger
past the time of the actual weather event. Severe weather may also impact the supply availability and propane
demand in our Wholesale Propane Logistics segment. Although we carry insurance on the vast majority of our
assets, insurance may be inadequate to cover our loss in some instances, and in certain circumstances we have
been unable to obtain insurance on commercially reasonable terms, if at all.
Capital Markets
Volatility in the capital markets may impact our business in multiple ways, including limiting our
producers’ ability to finance their drilling programs and limiting our ability to fund our operations through
acquisitions or organic growth projects. These events may impact our counterparties’ ability to perform under
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