Print Page | Close Window
SEC Filings
10-Q
SOUTHERN UNION CO filed this Form 10-Q on 05/09/2013
Entire Document
 << Previous Page | Next Page >>

Commodity Contracts – Gathering and Processing Segment
The Company primarily enters into natural gas and NGL price swaps and NGL processing spread swaps to manage its exposure to changes in margin on forecasted sales of natural gas and NGL volumes resulting from movements in market commodity prices.
Natural Gas Price Swaps.  As of March 31, 2013, the Company had outstanding receive-fixed natural gas price swaps with a total notional amount of 3,437,500 MMBtu for 2013.  These natural gas price swaps are accounted for as cash flow hedges, with the effective portion of changes in their fair value recorded in accumulated other comprehensive income and reclassified into operating revenues in the same periods during which the forecasted natural gas sales impact earnings.  As of March 31, 2013, approximately $3 million of net after-tax losses in accumulated other comprehensive income related to these natural gas price swaps are expected to be recognized in operating revenues during the next 12 months.  Any ineffective portion of the cash flow hedge is reported in current-period earnings.
Commodity Contracts – Distribution Segment
Through the Distribution segment, included in the LDC Disposal Group at March 31, 2013, the Company enters into natural gas commodity financial instruments to manage the exposure to changes in the cost of natural gas passed through to utility customers that result from movements in market commodity prices.  The cost of the derivative instruments and settlement of the respective obligations are recovered from utility customers through the purchased natural gas adjustment clause as authorized by the applicable regulatory authority and therefore do not impact earnings.
Natural Gas Price Swaps.  As of March 31, 2013, the Company had outstanding pay-fixed natural gas price swaps with total notional amounts of 14,030,000 MMBtu, 8,160,000 MMBtu and 220,000 MMBtu for the remainder of 2013, 2014 and 2015, respectively.  These natural gas price swaps are accounted for as economic hedges, with changes in their fair value recorded to deferred natural gas purchases.
Summary Financial Statement Information
The following table summarizes the fair value amounts of the Company’s asset and liability derivative instruments and their location reported in the consolidated balance sheets at the dates indicated. The asset and liability derivative instruments belonging to the Distribution segment have been included in current asset and liabilities held for sale at March 31, 2013.
 
 
Fair Value
 
 
Asset Derivatives
 
Liability Derivatives
Balance Sheet Location
 
March 31,
2013
 
December 31, 2012
 
March 31,
2013
 
December 31, 2012
Cash Flow Hedges:
 
 
 
 
 
 
 
 
Commodity contracts — Gathering and Processing:
 
 

 
 

 
 

 
 

Natural gas price swaps:
 
 

 
 

 
 

 
 

Accounts payable to related companies
 
$

 
$

 
$
3

 
$
5

 
 

 

 
3

 
5

Economic Hedges:
 
 

 
 

 
 

 
 

Interest rate contracts:
 
 

 
 

 
 

 
 

Derivative instruments — liabilities
 

 

 
18

 
18

Deferred credits
 

 

 
54

 
59

Commodity contracts — Distribution:
 
 

 
 

 
 

 
 

Natural gas price swaps:
 
 

 
 

 
 

 
 

Current assets held for sale
 
8

 
1

 

 

Non-current assets held for sale
 

 
1

 

 

Current liabilities held for sale
 

 

 
2

 
9

 
 
8

 
2

 
74

 
86

Total
 
$
8

 
$
2

 
$
77

 
$
91

The Company has master netting arrangements with certain of its counterparties, which permit applicable obligations of the parties to be settled on a net versus gross basis.  If a right of offset exists, the fair value amounts for the derivative instruments are reported in the consolidated balance sheets on a net basis and disclosed herein on a gross basis.

12

 << Previous Page | Next Page >>