Fair Value Measurements

3 Months Ended

12 Months Ended

Mar. 31, 2016

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 6 – Fair Value Measurements

The accounting standards for fair value measurement establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

• Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed equities and US government treasury securities.

• Level 2—Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange-traded derivatives such as over the counter (OTC) forwards, options and physical exchanges.

• Level 3—Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Cash and Cash Equivalents, Accounts Receivable and Accounts Payable

As of March 31, 2016 and December 31, 2015, the carrying amounts of cash, accounts receivable and accounts payable represent fair value based on the short-term nature of these instruments.

Credit Facility

The fair value of the amount outstanding under our CMLP credit facility approximates its carrying amount as of March 31, 2016 and December 31, 2015, due primarily to the variable nature of the interest rate of the instrument, which is considered a Level 2 fair value measurement.

Senior Notes

We estimate the fair value of our senior notes primarily based on quoted market prices for the same or similar issuances (representing a Level 2 fair value measurement). The following table reflects the carrying value and fair value of our CMLP senior notes (in millions):

	March 31, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Crestwood Midstream 2020 Senior Notes	$	503.2	$	399.8	$	503.3	$	382.3
Crestwood Midstream 2022 Senior Notes	$	600.0	$	446.0	$	600.0	$	437.4
Crestwood Midstream 2023 Senior Notes	$	700.0	$	519.8	$	700.0	$	491.8

Financial Assets and Liabilities

As of March 31, 2016 and December 31, 2015, we held certain assets and liabilities that are required to be measured at fair value on a recurring basis, which include our derivative instruments related to heating oil, crude oil, and NGLs. Our derivative instruments consist of forwards, swaps, futures, physical exchanges and options.

Certain of our derivative instruments are traded on the NYMEX. These instruments have been categorized as Level 1.

Our derivative instruments also include OTC contracts, which are not traded on a public exchange. The fair values of these derivative instruments are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. These instruments have been categorized as Level 2.

Our OTC options are valued based on the Black Scholes option pricing model that considers time value and volatility of the underlying commodity. The inputs utilized in the model are based on publicly available information as well as broker quotes. These options have been categorized as Level 2.

Our financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

The following tables set forth by level within the fair value hierarchy, our financial instruments that were accounted for at fair value on a recurring basis at March 31, 2016 and December 31, 2015 (in millions):

	March 31, 2016
	Fair Value of Derivatives
	Level 1		Level 2		Level 3		Gross Fair Value		Contract Netting(1)			Collateral/Margin Received or Paid			Recorded in Balance Sheet
Assets
Assets from price risk management	$	0.4	$	32.2	$	—	$	32.6	$	(19.7	)	$	1.5		$	14.4
Suburban Propane Partners, L.P. units(2)		4.2		—		—		4.2		—			—			4.2
Total assets at fair value	$	4.6	$	32.2	$	—	$	36.8	$	(19.7	)	$	1.5		$	18.6
Liabilities
Liabilities from price risk management	$	0.2	$	26.6	$	—	$	26.8	$	(19.7	)	$	0.2		$	7.3
Total liabilities at fair value	$	0.2	$	26.6	$	—	$	26.8	$	(19.7	)	$	0.2		$	7.3
	December 31, 2015
	Fair Value of Derivatives
	Level 1		Level 2		Level 3		Gross Fair Value		Contract Netting(1)			Collateral/Margin Received or Paid			Recorded in Balance Sheet
Assets
Assets from price risk management	$	0.5	$	57.8	$	—	$	58.3	$	(13.7	)	$	(12.0	)	$	32.6
Suburban Propane Partners, L.P. units(2)		3.4		—		—		3.4		—			—			3.4
Total assets at fair value	$	3.9	$	57.8	$	—	$	61.7	$	(13.7	)	$	(12.0	)	$	36.0
Liabilities
Liabilities from price risk management	$	0.2	$	41.3	$	—	$	41.5	$	(13.7	)	$	(20.4	)	$	7.4
Total liabilities at fair value	$	0.2	$	41.3	$	—	$	41.5	$	(13.7	)	$	(20.4	)	$	7.4

(1) Amounts represent the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions as well as cash collateral held or placed with the same counterparties.

(2) Amount is reflected in other assets on CEQP’s consolidated balance sheets.

Note 8—Fair Value Measurements

The accounting standard for fair value measurement establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

• Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed equities and US government treasury securities.

• Level 2—Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange-traded derivatives such as over the counter (OTC) forwards, options physical exchanges and interest rate swaps.

• Level 3—Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Cash, Accounts Receivable and Accounts Payable

As of December 31, 2015 and 2014, the carrying amounts of cash, accounts receivable and accounts payable represent fair value based on the short-term nature of these instruments.

Credit Facilities

The fair value of the amounts outstanding under our credit facilities approximates their carrying amounts as of December 31, 2015 and 2014, due primarily to the variable nature of the interest rates of the instruments, which is considered a Level 2 fair value measurement.

Senior Notes

We estimate the fair value of our senior notes primarily based on quoted market prices for the same or similar issuances (representing a Level 2 fair value measurement). The following table reflects the carrying value and fair value of the senior notes (in millions):

	December 31, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
CEQP Senior Notes	$	—	$	—	$	11.4	$	11.6
Crestwood Midstream 2019 Senior Notes	$	—	$	—	$	351.0	$	360.5
Crestwood Midstream 2020 Senior Notes	$	503.3	$	382.3	$	504.0	$	481.6
Crestwood Midstream 2022 Senior Notes	$	600.0	$	437.4	$	600.0	$	568.5
Crestwood Midstream 2023 Senior Notes	$	700.0	$	491.8	$	—	$	—

Financial Assets and Liabilities

As of December 31, 2015, and 2014, we held certain financial assets and liabilities that are required to be measured at fair value on a recurring basis, which include our derivative instruments related to heating oil, crude oil, NGLs and interest rates. Our derivative instruments consist of forwards, swaps, futures, physical exchanges and options.

Certain of our derivative instruments are traded on the NYMEX. These instruments have been categorized as Level 1.

Our derivative instruments also include OTC contracts, which are not traded on a public exchange. The fair values of these derivative instruments are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. These instruments have been categorized as Level 2.

Our OTC options are valued based on the Black Scholes option pricing model that considers time value and volatility of the underlying commodity. The inputs utilized in the model are based on publicly available information as well as broker quotes. These options have been categorized as Level 2.

Our financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

The following tables set forth by level within the fair value hierarchy, our financial instruments that were accounted for at fair value on a recurring basis at December 31, 2015 and 2014 (in millions):

	December 31, 2015
	Fair Value of Derivatives
	Level 1		Level 2		Level 3		Gross Fair Value		Contract Netting(1)			Collateral/Margin Received or Paid			Recorded in Balance Sheet
Assets
Assets from price risk management	$	0.5	$	57.8	$	—	$	58.3	$	(13.7	)	$	(12.0	)	$	32.6
Suburban Propane Partners, L.P. units(2)		3.4		—		—		3.4		—			—			3.4
Total assets at fair value	$	3.9	$	57.8	$	—	$	61.7	$	(13.7	)	$	(12.0	)	$	36.0
Liabilities
Liabilities from price risk management	$	0.2	$	41.3	$	—	$	41.5	$	(13.7	)	$	(20.4	)	$	7.4
Total liabilities at fair value	$	0.2	$	41.3	$	—	$	41.5	$	(13.7	)	$	(20.4	)	$	7.4
	December 31, 2014
	Fair Value of Derivatives
	Level 1		Level 2		Level 3		Gross Fair Value		Contract Netting(1)			Collateral/Margin Received or Paid			Recorded in Balance Sheet
Assets
Assets from price risk management	$	0.5	$	146.7	$	—	$	147.2	$	(28.8	)	$	(38.6	)	$	79.8
Suburban Propane Partners, L.P. units(2)		6.1		—		—		6.1		—			—			6.1
Total assets at fair value	$	6.6	$	146.7	$	—	$	153.3	$	(28.8	)	$	(38.6	)	$	85.9
Liabilities
Liabilities from price risk management	$	1.6	$	99.2	$	—	$	100.8	$	(28.8	)	$	(46.6	)	$	25.4
Interest rate swaps(3)		—		1.6		—		1.6		—			—			1.6
Total liabilities at fair value	$	1.6	$	100.8	$	—	$	102.4	$	(28.8	)	$	(46.6	)	$	27.0

(1) Amounts represent the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions as well as cash collateral held or placed with the same counterparties.

(2) Amount is reflected in other assets on the Crestwood Equity Partners LP consolidated balance sheet.

(3) Our interest rate swaps are only reflected in the consolidated results of Crestwood Equity. See Note 9 for a further discussion of our interest rate swaps.