3.	Acquisitions

On July 3, 2012, we acquired the Crossroads processing plant and associated gathering system from Penn Virginia Resource Partners, L.P. for $63.0 million. The acquisition was financed at closing with borrowings under our revolving credit facility. The Crossroads system, located in the southeastern portion of Harrison County in East Texas, includes approximately 8 miles of gas gathering pipeline, an 80 MMcf/d cryogenic processing plant, approximately 20 miles of NGL pipeline and a 50% ownership interest in an approximately 11-mile residue gas pipeline, or CrossPoint Pipeline, LLC, which we have accounted for as an unconsolidated affiliate using the equity method.

We have accounted for the Crossroads business combination based on estimates of the fair value of assets acquired and liabilities assumed, including: property, plant and equipment; the equity investment in CrossPoint Pipeline, LLC; a liability for a firm transportation agreement which expires in 2015; and a gas purchase agreement under which a portion of those firm transportation payments are recoverable. Expected cash payments and receipts have been recorded at their estimated fair value and are included in other current liabilities, other long-term liabilities, and accounts receivable in our September 30, 2012 condensed consolidated balance sheet. The purchase price allocation is preliminary and is based on initial estimates of fair values at the date of the acquisition. We are currently evaluating the preliminary purchase price allocation, which will be adjusted as additional information relative to the fair value of assets and liabilities becomes available. This allocation may change in subsequent financial statements pending the final estimates of fair value. The preliminary purchase price allocation as of September 30, 2012 is as follows:


	September 30, 2012
	(Millions)
Aggregate consideration	$	63.0

Accounts receivable	$	4.2
Property, plant and equipment		63.1
Investments in unconsolidated affiliates		6.1
Other current liabilities		(4.1	)
Other long-term liabilities		(6.3	)

Total preliminary purchase price allocation	$	63.0

The results of operations for acquisitions accounted for as a business combination are included in our results subsequent to the date of acquisition. Accordingly, for the three and nine months ended September 30, 2012 total operating revenues of $8.5 million and net income attributable to the Partnership of $0.8 million associated with Crossroads, are included in the condensed consolidated statement of operations. Pro forma information is presented for comparative periods prior to the date of acquisition; however, comparative periods in the condensed consolidated financial statements are not adjusted to include the results of the acquisition.

The following tables present unaudited pro forma information for the condensed consolidated statement of operations for the nine months ended September 30, 2012 and 2011 and the three months ended September 30, 2011, as if the acquisition of Crossroads had occurred at the beginning of the earliest period presented.


	Nine Months Ended September 30, 2012
	DCP Midstream Partners, LP			Acquisition of Crossroads (a)		DCP Midstream Partners, LP Pro Forma
	(Millions)
Total operating revenues	$	1,270.2		$	27.0	$	1,297.2
Net income attributable to partners	$	103.7		$	1.6	$	105.3
Less:
Net income attributable to predecessor operations		(2.6	)		—		(2.6	)
General partner unitholders interest in net income		(29.4	)		—		(29.4	)

Net income allocable to limited partners	$	71.7		$	1.6	$	73.3

Net income per limited partner unit — basic	$	1.37		$	0.03	$	1.40
Net income per limited partner unit — diluted	$	1.36		$	0.03	$	1.39

(a)	The nine months ended September 30, 2012, includes the financial results of Crossroads for the period from January 1, 2012 through July 2, 2012.


	Nine Months Ended September 30, 2011
	DCP Midstream Partners, LP			Acquisition of Crossroads		DCP Midstream Partners, LP Pro Forma
	(Millions)
Total operating revenues	$	1,803.1		$	91.3	$	1,894.4
Net income attributable to partners	$	116.2		$	3.4	$	119.6
Less:
Net income attributable to predecessor operations		(14.3	)		—		(14.3	)
General partner unitholders interest in net income		(18.5	)		—		(18.5	)

Net income allocable to limited partners	$	83.4		$	3.4	$	86.8

Net income per limited partner unit — basic and diluted	$	1.93		$	0.08	$	2.01


	Three Months Ended September 30, 2011
	DCP Midstream Partners, LP				DCP Midstream Partners, LP Pro Forma
	(Millions)
Total operating revenues	$	593.6		$	28.0	$	621.6
Net income attributable to partners	$	68.5		$	0.7	$	69.2
Less:
Net income attributable to predecessor operations		(2.2	)		—		(2.2	)
General partner unitholders interest in net income		(6.8	)		—		(6.8	)

Net income allocable to limited partners	$	59.5		$	0.7	$	60.2

Net income per limited partner unit — basic and diluted	$	1.35		$	0.02	$	1.37

The supplemental pro forma total operating revenues for the nine months ended September 30, 2012 was adjusted to eliminate $5.4 million related to a contractual gas processing arrangement between us and Crossroads during the period.

The pro forma information is not intended to reflect actual results that would have occurred if the acquired business had been combined during the periods presented, nor is it intended to be indicative of the results of operations that may be achieved by us in the future.

On July 2, 2012, we acquired the minority ownership interests in two non-operated Mont Belvieu fractionators, or the Mont Belvieu fractionators, from DCP Midstream, LLC for aggregate consideration of $200.0 million. $60.0 million of the aggregate consideration was financed by the issuance at closing of 1,536,098 of our common units to DCP Midstream, LLC. We entered into a 2-year Term Loan Agreement to fund the remaining $140.0 million. The $170.2 million excess purchase price over the historical basis of the net assets acquired was recorded as a decrease in common unitholders’ equity. The minority ownership interests include a 12.5% interest in the Enterprise fractionator, which is operated by Enterprise Products Partners L.P., and a 20% interest in the Mont Belvieu 1 fractionator, which is operated by ONEOK Partners. Accordingly, we have accounted for the results of the minority ownership interests in the Mont Belvieu fractionators prospectively from the date of acquisition. The Mont Belvieu fractionators are accounted for as unconsolidated affiliates using the equity method.

On April 12, 2012, we acquired a 10% ownership interest in the Texas Express Pipeline joint venture from the operator, Enterprise Products Partners, L.P., or Enterprise, representing an approximate investment of $85.0 million in the joint venture. At closing, we paid $10.9 million for our 10% ownership interest in the Texas Express Pipeline joint venture, representing our proportionate share of the investment through the closing date, and will be responsible for spending an approximate $75.0 million for our share of the remaining construction costs of the pipeline. Originating near Skellytown in Carson County, Texas, the 20-inch diameter Texas Express Pipeline will extend approximately 580 miles to Enterprise’s natural gas liquids fractionation and storage complex at Mont Belvieu, Texas, and will provide access to other third party facilities in the area. The Texas Express Pipeline will have an initial capacity of approximately 280 MBbls/d and as of September 30, 2012, has long-term, fee-based, ship-or-pay transportation commitments of 252 MBbls/d, including a commitment from DCP Midstream, LLC of 20 MBbls/d. The pipeline is expected to be completed by the second quarter of 2013.

On March 30, 2012, we acquired the remaining 66.67% interest in Southeast Texas, and commodity derivative instruments related to the Southeast Texas storage business, for consideration of $240.0 million plus $20.7 million in working capital and other customary purchase price adjustments. $192.0 million of the consideration was financed with a portion of the net proceeds from our 4.95% 10-year Senior Notes offering. The remaining $48.0 million consideration was financed by the issuance at closing of an aggregate of 1,000,417 of our common units to DCP Midstream, LLC. DCP Midstream, LLC also provided fixed price NGL commodity derivatives, valued at $39.5 million, for the three year period subsequent to closing the newly acquired interest. The $8.9 million deficit purchase price under the historical basis of the net assets acquired and the $48.0 million of common units issued as consideration for this acquisition were recorded as an increase in common unitholders equity. Prior to the acquisition of the additional interest in Southeast Texas, we owned a 33.33% interest which we accounted for as an unconsolidated affiliate using the equity method. Certain of the NGL commodity derivatives were valued at $24.6 million and represent consideration for the termination of a fee-based storage arrangement we had with DCP Midstream, LLC in conjunction with our initial 33.33% interest in Southeast Texas; the remaining portion of the commodity derivatives, valued at $14.9 million, mitigate a portion of our currently anticipated commodity price risk associated with the gathering and processing portion of the 66.67% interest in Southeast Texas acquired on March 30, 2012. The acquisition of the remaining 66.67% interest in Southeast Texas represents a transaction between entities under common control and a change in reporting entity. Accordingly, our consolidated financial statements have been adjusted to retrospectively include the historical results of our 100% interest in Southeast Texas and the natural gas commodity derivatives associated with the storage business for all periods presented, similar to the pooling method.

Combined Financial Information

The results of our 100% interest in Southeast Texas are included in the condensed consolidated balance sheets as of September 30, 2012 and December 31, 2011. The following table presents the previously reported December 31, 2011 condensed consolidated balance sheet, adjusted for the acquisition of the remaining 66.67% interest in Southeast Texas from DCP Midstream, LLC:

As of December 31, 2011


	DCP Midstream Partners, LP (As previously reported) (a)			Consolidate Southeast Texas (b)			Remove Southeast Texas Investment in Unconsolidated Affiliate (c)			Combined DCP Midstream Partners, LP (As currently reported)
	(Millions)
ASSETS
Current assets:
Cash and cash equivalents	$	6.7		$	0.9		$	—		$	7.6
Accounts receivable		161.4			53.4			—			214.8
Inventories		64.7			23.2			—			87.9
Other		7.1			36.3			—			43.4

Total current assets		239.9			113.8			—			353.7
Property, plant and equipment, net		1,181.8			317.6			—			1,499.4
Goodwill and intangible assets, net		255.8			43.3			—			299.1
Investments in unconsolidated affiliates		208.7			—			(101.6	)		107.1
Other non-current assets		17.4			0.7			—			18.1

Total assets	$	1,903.6		$	475.4		$	(101.6	)	$	2,277.4

LIABILITIES AND EQUITY
Accounts payable and other current liabilities	$	269.2		$	111.3		$	—		$	380.5
Long-term debt		746.8			—			—			746.8
Other long-term liabilities		46.7			5.1			—			51.8

Total liabilities		1,062.7			116.4			—			1,179.1

Commitments and contingent liabilities
Equity:
Partners’ equity
Net equity		649.7			360.8			(103.4	)		907.1
Accumulated other comprehensive loss		(21.2	)		(1.8	)		1.8			(21.2	)

Total partners’ equity		628.5			359.0			(101.6	)		885.9
Noncontrolling interests		212.4			—			—			212.4

Total equity		840.9			359.0			(101.6	)		1,098.3

Total liabilities and equity	$	1,903.6		$	475.4		$	(101.6	)	$	2,277.4

(a)	Amounts as previously reported with 33.33% of Southeast Texas’ results presented as investments in unconsolidated affiliates.

(b)	Adjustments to present Southeast Texas on a consolidated basis at 100% ownership, including commodity derivatives.

(c)	Adjustments to remove Southeast Texas 33.33% investment in unconsolidated affiliates.

The results of our 100% interest in Southeast Texas are included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2012 and 2011. The following tables presents the previously reported condensed consolidated statements of operations for the three and nine months ended September 30, 2011, adjusted for the acquisition of the remaining 66.67% interest in Southeast Texas from DCP Midstream, LLC:

Three Months Ended September 30, 2011


	DCP Midstream Partners, LP (As previously reported) (a)			Consolidate Southeast Texas (b)			Remove Southeast Texas Equity Earnings (c)			Combined DCP Midstream Partners, LP (As currently reported)
	(Millions)
Operating revenues:
Sales of natural gas, propane, NGLs and condensate	$	290.4		$	205.7		$	—		$	496.1
Transportation, processing and other		40.8			2.0			—			42.8
Gains from commodity derivative activity, net		52.1			2.6			—			54.7

Total operating revenues		383.3			210.3			—			593.6

Operating costs and expenses:
Purchases of natural gas, propane and NGLs		257.3			191.7			—			449.0
Operating and maintenance expense		31.5			5.2			—			36.7
Depreciation and amortization expense		20.6			5.3			—			25.9
General and administrative expense		9.4			2.6			—			12.0
Other income		(0.2	)		—			—			(0.2	)

Total operating costs and expenses		318.6			204.8			—			523.4

Operating income		64.7			5.5			—			70.2
Interest expense, net		(8.6	)		—			—			(8.6	)
Earnings from unconsolidated affiliates		10.0			—			(3.1	)		6.9

Income before income taxes		66.1			5.5			(3.1	)		68.5
Income tax expense		(0.2	)		(0.2	)		—			(0.4	)

Net income		65.9			5.3			(3.1	)		68.1
Net loss attributable to noncontrolling interests		0.4			—			—			0.4

Net income attributable to partners	$	66.3		$	5.3		$	(3.1	)	$	68.5

(a)	Amounts as previously reported with 33.33% of Southeast Texas’ results presented as earnings from unconsolidated affiliates.

(b)	Adjustments to present Southeast Texas on a consolidated basis at 100% ownership, including commodity derivatives.

(c)	Adjustments to remove Southeast Texas equity earnings at 33.33%.

Nine Months Ended September 30, 2011


	DCP Midstream Partners, LP (As previously reported) (a)			Consolidate Southeast Texas (b)			Remove Southeast Texas Equity Earnings (c)			Combined DCP Midstream Partners, LP (As currently reported)
	(Millions)
Operating revenues:
Sales of natural gas, propane, NGLs and condensate	$	1,043.2		$	609.5		$	—		$	1,652.7
Transportation, processing and other		114.9			7.3			—			122.2
Gains from commodity derivative activity, net		24.5			3.7			—			28.2

Total operating revenues		1,182.6			620.5			—			1,803.1

Operating costs and expenses:
Purchases of natural gas, propane and NGLs		906.6			557.7			—			1,464.3
Operating and maintenance expense		77.3			14.0			—			91.3
Depreciation and amortization expense		60.6			14.3			—			74.9
General and administrative expense		27.0			8.2			—			35.2
Other income		(0.4	)		—			—			(0.4	)

Total operating costs and expenses		1,071.1			594.2			—			1,665.3

Operating income		111.5			26.3			—			137.8
Interest expense, net		(25.0	)		—			—			(25.0	)
Earnings from unconsolidated affiliates		28.6			—			(11.5	)		17.1

Income before income taxes		115.1			26.3			(11.5	)		129.9
Income tax expense		(0.4	)		(0.5	)		—			(0.9	)

Net income		114.7			25.8			(11.5	)		129.0
Net income attributable to noncontrolling interests		(12.8	)		—			—			(12.8	)

Net income attributable to partners	$	101.9		$	25.8		$	(11.5	)	$	116.2

(a)	Amounts as previously reported with 33.33% of Southeast Texas’ results presented as earnings from unconsolidated affiliates.

(b)	Adjustments to present Southeast Texas on a consolidated basis at 100% ownership, including commodity derivatives.

(c)	Adjustments to remove Southeast Texas equity earnings at 33.33%.

The currently reported results are not intended to reflect actual results that would have occurred if the acquired business had been combined during the period presented, nor is it intended to be indicative of the results of operations that may be achieved by us in the future.

On January 3, 2012, we acquired the remaining 49.9% interest in East Texas from DCP Midstream, LLC for consideration of $165.0 million, less $2.5 million in working capital and other customary purchase price adjustments, for a net purchase price of $162.5 million. $132.0 million of the consideration was financed with proceeds from our January 3, 2012 Term Loan Agreement. The remaining $33.0 million consideration was financed by the issuance at closing of an aggregate of 727,520 of our common units to DCP Midstream, LLC. The $22.7 million deficit purchase price under the historical basis of the net assets acquired and the $33.0 million of common units issued as consideration for this acquisition were recorded as an increase in common unitholders equity. Prior to the contribution of the additional interest in East Texas, we owned a 50.1% interest which we accounted for as a consolidated subsidiary. The contribution of the remaining 49.9% interest in East Texas represents a transaction between entities under common control, but does not represent a change in reporting entity. Accordingly, we have included the results of the remaining 49.9% interest in East Texas prospectively from the date of contribution.