Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Derivative Financial Instruments

Schedule of notional amounts of derivative contracts

As of March 31, 2013, the Partnership had the following outstanding commodity contracts that were entered into to manage cash flow risk associated with future sales of NGLs or future purchases of natural gas:

Derivative contracts not designated as hedging instruments	Financial Position	Notional Quantity (net)
Crude Oil (bbl)	Short	2,626,742
Natural Gas (MMBtu)	Long	4,570,733
NGLs (gal)	Short	101,249,566

Schedule reconciling liability recorded for an embedded derivative

See the following table for a reconciliation of the liability recorded for the embedded derivative as of March 31, 2013 (in thousands):

Fair value of commodity contract	$	84,866
Inception value for period from April 1, 2015 to December 31, 2022	(53,507		)
Derivative liability as of March 31, 2013	$	31,359

Schedule of derivative instruments not designated as hedging instruments and their location in the statement of financial position or statement of financial performance

The impact of the Partnership’s derivative instruments on its Condensed Consolidated Balance Sheets is summarized below (in thousands):

	Assets				Liabilities
Derivative instruments not designated as hedging instruments and their balance sheet location	March 31, 2013		December 31, 2012		March 31, 2013			December 31, 2012
Commodity contracts(1)
Fair value of derivative instruments — current	$	16,814	$	19,504	$	(23,060	)	$	(27,229	)
Fair value of derivative instruments - long-term	10,181		10,878		(23,938		)	(32,190		)
Total	$	26,995	$	30,382	$	(46,998	)	$	(59,419	)

(1) Includes Embedded Derivatives in Commodity Contracts as discussed above.

               The impact of the Partnership’s derivative instruments on its Condensed Consolidated Statements of Operations is summarized below (in thousands):

Derivative contracts not designated as hedging instruments and the location of gain or (loss)	Three months ended March 31,
recognized in income	2013			2012
Revenue: Derivative loss
Realized gain (loss)	$	3,898		$	(10,478	)
Unrealized loss	(4,083		)	(38,237		)
Total revenue: derivative loss	(185		)	(48,715		)
Derivative gain (loss) related to purchased product costs
Realized loss	(2,080		)	(7,074		)
Unrealized gain (loss)	12,784			(11,726		)
Total derivative gain (loss) related to purchase product costs	10,704			(18,800		)
Derivative gain related to facility expenses
Unrealized gain	332			1,746
Total gain (loss)	$	10,851		$	(65,769	)

Schedule of impact on the balance sheet if Partnership had elected to net derivative positions subject to master netting arrangements

The table below summarizes the impact if the Partnership had elected to net its derivative positions that are subject to master netting arrangements (in thousands):

	Assets							Liabilities
As of March 31, 2013	Gross Amounts of Assets in the Consolidated Balance Sheet		Gross Amounts Not Offset in the Consolidated Balance Sheet			Net Amount		Gross Amounts of Liabilities in the Consolidated Balance Sheet			Gross Amounts Not Offset in the Consolidated Balance Sheet		Net Amount
Current
Commodity contracts	$	13,514	$	(8,039	)	$	5,475	$	(13,765	)	$	8,039	$	(5,726	)
Embedded derivatives in commodity contracts	3,300		—			3,300		(9,295		)	—		(9,295		)
Total current derivative instruments	16,814		(8,039		)	8,775		(23,060		)	8,039		(15,021		)
Non-current
Commodity contracts	7,003		(1,720		)	5,283		(1,874		)	1,720		(154		)
Embedded derivatives in commodity contracts	3,178		—			3,178		(22,064		)	—		(22,064		)
Total non-current derivative instruments	10,181		(1,720		)	8,461		(23,938		)	1,720		(22,218		)
Total derivative instruments	$	26,995	$	(9,759	)	$	17,236	$	(46,998	)	$	9,759	$	(37,239	)

	Assets							Liabilities
As of December 31, 2012	Gross Amounts of Assets in the Consolidated Balance Sheet		Gross Amounts Not Offset in the Consolidated Balance Sheet			Net Amount		Gross Amounts of Liabilities in the Consolidated Balance Sheet			Gross Amounts Not Offset in the Consolidated Balance Sheet		Net Amount
Current
Commodity contracts	$	16,438	$	(9,541	)	$	6,897	$	(16,679	)	$	9,541	$	(7,138	)
Embedded derivatives in commodity contracts	3,066		—			3,066		(10,550		)	—		(10,550		)
Total current derivative instruments	19,504		(9,541		)	9,963		(27,229		)	9,541		(17,688		)
Non-current
Commodity contracts	7,798		(2,637		)	5,161		(2,637		)	2,637		—
Embedded derivatives in commodity contracts	3,080		—			3,080		(29,553		)	—		(29,553		)
Total non-current derivative instruments	10,878		(2,637		)	8,241		(32,190		)	2,637		(29,553		)
Total derivative instruments	$	30,382	$	(12,178	)	$	18,204	$	(59,419	)	$	12,178	$	(47,241	)