Changes in natural gas, NGL and condensate prices and the terms of our processing arrangements have a
direct impact on our generation and use of cash from operations due to their impact on net income, along with
the resulting changes in working capital. We have mitigated a portion of our anticipated commodity price risk
associated with the equity volumes from our gathering and processing activities through 2016 with fixed price
commodity swaps and collar arrangements. For additional information regarding our derivative activities,
please read “— Quantitative and Qualitative Disclosures about Market Risk — Commodity Price Risk —
Commodity Cash Flow Protection Activities.”
On November 10, 2011, we entered into a new Credit Agreement consisting of a senior unsecured
revolving credit facility (credit facility) with capacity of $1.0 billion, which matures on November 10, 2016
(Credit Agreement). The Credit Agreement replaced our Amended and Restated Credit Agreement dated as of
June 21, 2007 (the Prior Credit Agreement), which had a total borrowing capacity of $850.0 million and would
have matured on June 21, 2012. The initial borrowing under the revolving credit facility was used to repay the
Company’s indebtedness under the Prior Credit Agreement. The revolving credit facility provided by the Credit
Agreement will be used for ongoing working capital requirements and for other general partnership purposes
including acquisitions.
As of December 31, 2011, the outstanding balance on the revolving credit facility was $497.0 million
resulting in unused revolver capacity of $501.9 million, of which approximately $279.5 million was available
for general working capital purposes.
Our borrowing capacity is currently limited by the Credit Agreement’s financial covenant requirements.
Except in the case of a default, which would make the borrowings under the Credit Agreement fully callable,
amounts borrowed under the Credit Agreement will not mature prior to the November 10, 2016 maturity date.
As of February 23, 2012, we had approximately $431.9 million of unused capacity under the Credit Agreement.
On January 3, 2012, we entered into a 2-year Term Loan Agreement with Wells Fargo Bank, National
Association, SunTrust Bank and The Bank of Tokyo-Mitsubishi UFJ, Ltd. as lenders. We borrowed $135.0
million under the term loan on January 3, 2012, which was used to fund the acquisition of the remaining 49.9%
interest in East Texas. According to terms of the agreement, the proceeds of any subsequent indebtedness
issued with a maturity date after January 3, 2014 must be used to prepay the term loan.
On May 26, 2010, we filed a universal shelf registration statement on Form S-3 with the SEC with a
maximum aggregate offering price of $1.5 billion, to replace an existing shelf registration statement. The
universal shelf registration statement will allow us to register and issue additional common units and debt
securities.
In August 2010, we issued 2,990,000 common units at $32.57 per unit. We received proceeds of $93.1
million, net of offering costs, which we used to repay funds borrowed under the revolver portion of our Credit
Facility.
In September 2010, we issued $250.0 million of 3.25% Senior Notes due October 1, 2015. We received net
proceeds, after deducting underwriting discounts and offering expenses, of $247.7 million, which we used to
repay funds borrowed under the revolver portion of our Credit Facility.
In November 2010, we issued 2,875,000 common units at $34.96 per unit. We received proceeds of $96.2
million, net of offering costs, which we used to fund the Southeast Texas acquisition.
In March 2011, we issued 3,596,636 common limited partner units at $40.55 per unit. We received
proceeds of $139.7 million, net of offering costs.
The counterparties to each of our commodity swap contracts are investment-grade rated financial
institutions. Under these contracts, we may be required to provide collateral to the counterparties in the event
that our potential payment exposure exceeds a predetermined collateral threshold. Collateral thresholds are set
by us and each counterparty, as applicable, in the master contract that governs our financial transactions based
on our and the counterparty’s assessment of creditworthiness. The assessment of our position with respect to the
collateral thresholds are determined on a counterparty by counterparty basis, and are impacted by the
representative forward price curves and notional quantities under our swap contracts. Due to the interrelation
between the representative crude oil and natural gas forward price curves, it is not practical to determine a
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