3 unchanged sentences
Our risk management policies and procedures are designed to help ensure that our hedging activities address our risks by monitoring our exchange-cleared and over-the-counter positions, as well as physical volumes, grades, locations, delivery schedules and storage capacity.
−Removed: We have a risk management function that has direct responsibility and authority for our risk policies, related controls around commercial activities and certain aspects of corporate risk management.
−Removed: Our risk management function also approves all new risk management strategies through a formal process.
+Added: The board of directors of our general partner, acting through the Audit Committee, retains a general oversight role with respect to the management of these risks while management is directly responsible for our risk management activities.
+Added: The Audit Committee has authorized the formation of a Risk Management Committee composed of senior members of management that oversees and works with our risk management function to ensure that we are in compliance with our risk policies and procedures and that we maintain related controls around commercial activities and certain aspects of corporate risk management.
+Added: Our Risk Management Committee also approves all new risk management strategies through a formal process.
The following discussion addresses each category of risk.
2 unchanged sentences
We utilize crude oil derivatives to hedge commodity price risk inherent in our Supply and Logistics and Transportation segments.
−Removed: Our objectives for these derivatives include hedging anticipated purchases and sales, stored inventory, basis differentials and storage capacity utilization.
+Added: Our objectives for these derivatives include hedging anticipated purchases and sales, stored inventory and basis differentials.
We manage these exposures with various instruments including futures, forwards, swaps and options.
20 unchanged sentences
In the event of an actual 10% change in near-term commodity prices, the fair value of our derivative portfolio would typically change less than that shown in the table as changes in near-term prices are not typically mirrored in delivery months further out.
+Added: Index to Financial Statements
Interest Rate Risk
4 unchanged sentences
The average interest rate on variable rate debt that was outstanding during the year ended December 31, 2020 was 1.4%, based upon rates in effect during the year.
−Removed: The fair value of our interest rate derivatives was a liability of $44 million as of December 31, 2019.
+Added: The fair value of our interest rate derivatives was an asset of $46 million as of December 31, 2020.
A 10% increase in the forward LIBOR curve as of December 31, 2020 would have resulted in an increase of $15 million to the fair value of our interest rate derivatives.
6 unchanged sentences
The fair value of our foreign currency derivatives was an asset of $2 million as of December 31, 2020.
−Removed: A 10% increase in the exchange rate (USD-to-CAD) would have resulted in a decrease of less than $1 million to the fair value of our foreign currency derivatives.
−Removed: A 10% decrease in the exchange rate (USD-to-CAD) would have resulted in an increase of less than $1 million to the fair value of our foreign currency derivatives.
+Added: A 10% increase in the exchange rate (USD-to-CAD) would have resulted in a decrease of $3 million to the fair value of our foreign currency derivatives.
+Added: A 10% decrease in the exchange rate (USD-to-CAD) would have resulted in an increase of $3 million to the fair value of our foreign currency derivatives.
See Note 13 to our Consolidated Financial Statements for a discussion of our currency exchange rate risk hedging.
1 unchanged sentence
The Preferred Distribution Rate Reset Option of PAA’s Series A preferred units is an embedded derivative that must be bifurcated from the related host contract, PAA’s partnership agreement, and recorded at fair value in our Consolidated Balance Sheets.
−Removed: The valuation model utilized for this embedded derivative contains inputs including PAA’s common unit price, ten-year U.S.
−Removed: treasury rates, default probabilities and timing estimates to ultimately calculate the fair value of PAA’s Series A preferred units with and without the Preferred Distribution Rate Reset Option.
+Added: The valuation model utilized for this embedded derivative contains inputs including PAA’s common unit price, ten-year United States treasury rates, default probabilities and timing estimates to ultimately calculate the fair value of PAA’s Series A preferred units with and without the Preferred Distribution Rate Reset Option.
The fair value of this embedded derivative was a liability of $14 million as of December 31, 2020.
5 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.