was accounted for as if the transfer occurred at the beginning of the period, and prior years were
retrospectively adjusted to furnish comparative information similar to the pooling method. Accordingly,
our consolidated financial statements have been adjusted to include the historical results of our 33.33%
interest in Southeast Texas for the years ended December 31, 2010 and 2009.
(c) We utilize commodity derivative instruments to provide stability to distributable cash flows for our
ownership in East Texas as well as all other natural gas services assets, the portion of East Texas owned by
DCP Midstream, LLC is unhedged. As such, our consolidated results depict 75% of East Texas unhedged
in all periods prior to the second quarter of 2009 and 49.9% of East Texas unhedged for all periods
subsequent to the first quarter of 2009.
(d) Includes the effect of the acquisition of the NGL Hedge, contributed by DCP Midstream, LLC in April
2009. The NGL Hedge is a fixed price natural gas liquids derivative by NGL component, which
commenced in April 2009 and expired in March 2010.
(e) Segment gross margin consists of total operating revenues, including commodity derivative activity, less
purchases of natural gas and NGLs. Please read “How We Evaluate Our Operations” above.
(f) Includes our proportionate share of the throughput volumes and NGL production of Collbran, Jackson,
East Texas, Discovery and Southeast Texas and our proportionate share of the earnings of Discovery and
Southeast Texas for each period presented. Earnings for Discovery include the accretion of the net
difference between the carrying amount of the investment and the underlying equity of the investment.
Year Ended December 31, 2011 vs. Year Ended December 31, 2010
Included in the consolidated results of operations are the noncontrolling interests which represent the third
party or affiliate interests in the non-wholly-owned entities that we consolidate, which include East Texas and
Collbran, among others. Our results of operations reflect 100% of all consolidated assets, including
noncontrolling interests.
Total Operating Revenues
— Total operating revenues increased in 2011 compared to 2010, primarily as a
result of the following:
• $107.9 million increase attributable to higher crude and NGL prices, which impact both sales and
purchases;
• $2.1 million increase related to commodity derivative activity. This includes an increase of $26.6
million in unrealized gains due to movements in forward prices of commodities, offset by an increase in
cash settlement losses of $24.5 million; and
• $6.6 million increase attributable to the East Texas recovery settlement.
These increases were partially offset by:
• $13.5 million decrease attributable to reduced volumes on our Pelico system, partially offset by
increased volumes across certain assets and an increase in transportation, processing and other revenue.
Purchases of Natural Gas and NGLs —
Purchases of natural gas and NGLs increased in 2011 compared to
2010, primarily as a result of increases in commodity prices, which impact both purchases and sales.
Segment Gross Margin
— Segment gross margin increased in 2011 compared to 2010, primarily as a
result of the following:
• $25.8 million increase as a result of higher crude oil and NGL prices;
• $7.3 million increase primarily attributable to increased volumes and NGL production across certain
assets and changes in contract terms, partially offset by planned turnaround activity at East Texas and an
extended planned third party outage at our Wyoming asset;
• $6.6 million increase attributable to the East Texas recovery settlement; and
• $2.1 million increase related to commodity derivative activity as discussed in the Operating Revenues
section above.
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