16 unchanged sentences
The primary purpose of our commodity risk management activities is to hedge some of the exposure to commodity price risk and reduce fluctuations in our operating cash flow due to fluctuations in commodity prices.
−Removed: In an effort to reduce the variability of our cash flows, as of September 30, 2021, we have hedged the commodity price associated with a portion of our expected (i) natural gas, NGL, and condensate equity volumes in our Gathering and Processing operations that result from our percent-of-proceeds processing arrangements, (ii) future commodity purchases and sales in our Logistics and Transportation segment and (iii) natural gas transportation basis risk in our Logistics and Transportation segment.
+Added: In an effort to reduce the variability of our cash flows, as of March 31, 2022, we have hedged the commodity price associated with a portion of our expected (i) natural gas, NGL, and condensate equity volumes in our Gathering and Processing operations that result from our percent-of-proceeds processing arrangements, (ii) future commodity purchases and sales in our Logistics and Transportation segment and (iii) natural gas transportation basis risk in our Logistics and Transportation segment.
We hedge a higher percentage of our expected equity volumes in the current year compared to future years, for which we hedge incrementally lower percentages of expected equity volumes.
13 unchanged sentences
The principal counterparties (or, if applicable, their guarantors) have investment grade credit ratings.
−Removed: Our payment obligations in connection with substantially all of these hedging transactions and any additional credit exposure due to a rise in commodity prices relative to the fixed prices set forth in the hedges are secured by a first priority lien in the collateral securing the Partnership’s senior secured indebtedness that ranks equal in right of payment with liens granted in favor of the Partnership’s senior secured lenders.
−Removed: Absent federal regulations resulting from the Dodd-Frank Act, and as long as this first priority lien is in effect, we expect to have no obligation to post cash, letters of credit or other additional collateral to secure these hedges at any time, even if a counterparty’s exposure to our credit increases over the term of the hedge as a result of higher commodity prices or because there has been a change in our creditworthiness.
+Added: While we have no current obligation to post cash, letters of credit or other additional collateral to secure these hedges so long as we maintain our current credit rating, we could be obligated to post collateral to secure the hedges in the event of an adverse change in our creditworthiness where a counterparty’s exposure to our credit increases over the term of the hedge as a result of higher commodity prices.
A purchased put (or floor) transaction does not expose our counterparties to credit risk, as we have no obligation to make future payments beyond the premium paid to enter into the transaction;
10 unchanged sentences
The fair values of our derivative instruments are also influenced by changes in market volatility for option contracts and the discount rates used to determine the present values.
−Removed: The following table shows the effect of hypothetical price movements on the estimated fair value of our derivative instruments as of September 30, 2021:
+Added: The following table shows the effect of hypothetical price movements on the estimated fair value of our derivative instruments as of March 31, 2022:
Result of 10% Price Decrease
Result of 10% Price Increase
+Added: (In millions)
The table above contains all derivative instruments outstanding as of the stated date for the purpose of hedging commodity price risk, which we are exposed to due to our equity volumes and future commodity purchases and sales, as well as basis differentials related to our gas transportation arrangements.
−Removed: Our operating revenues increased (decreased) by ($83.7) million and $ 109.2 million during the three months ended September 30, 2021 and 2020 and ($328.6) million and $337.3 million during the nine months ended September 30, 2021 and 2020, as a result of transactions accounted for as derivatives.
−Removed: The estimated fair value of our risk management position has moved from a net liability position of ($51.2) million at December 31, 2020 to a net liability position of ($527.4) million at September 30, 2021.
+Added: During the three months ended March 31, 2022 and 2021, our operating revenues decreased by ($322.7) million and ( $134.7) million as a result of transactions accounted for as derivatives.
+Added: The estimated fair value of our risk management position has moved from a net liability position of ($316.7) million at December 31, 2021 to a net liability position of ($737.7) million at March 31, 2022.
Forward commodity prices have moved unfavorably relative to the fixed prices on our derivative contracts, creating this net liability position.
Interest Rate Risk
−Removed: We are exposed to the risk of changes in interest rates, primarily as a result of variable rate borrowings under the TRC Revolver, the TRP Revolver and the Securitization Facility.
−Removed: As of September 30, 2021, we do not have any interest rate hedges.
+Added: We are exposed to the risk of changes in interest rates, primarily as a result of variable rate borrowings under the TRGP Revolver and the Securitization Facility.
+Added: As of March 31, 2022, we do not have any interest rate hedges.
However, we may enter into interest rate hedges in the future with the intent to mitigate the impact of changes in interest rates on cash flows.
−Removed: To the extent that interest rates increase, interest expense for the TRC Revolver, the TRP Revolver and the Securitization Facility will also increase.
−Removed: As of September 30, 2021, the Partnership had $340.0 million in outstanding variable rate borrowings under the Securitization Facility and we had no borrowings under the TRP Revolver and TRC Revolver.
−Removed: A hypothetical change of 100 basis points in the rate of our variable interest rate debt would impact the Partnership’s and our consolidated annual interest expense by $3.4 million based on our September 30, 2021 debt balances.
+Added: To the extent that interest rates increase, interest expense for the TRGP Revolver and the Securitization Facility will also increase.
+Added: As of March 31, 2022, we had $1.3 billion in outstanding variable rate borrowings.
+Added: A hypothetical change of 100 basis points in the rate of our variable interest rate debt would impact our consolidated annual interest expense by $12.7 million based on our March 31, 2022 debt balances.
Counterparty Credit Risk
6 unchanged sentences
We have master netting provisions in the International Swap Dealers Association agreements with our derivative counterparties.
−Removed: These netting provisions allow us to net settle asset and liability positions with the same counterparties within the same Targa entity, and would reduce our maximum loss due to counterparty credit risk by $9.1 million as of September 30, 2021.
−Removed: The range of losses attributable to our individual counterparties as of September 30, 2021 would be between $9.4 million and $10.8 million, depending on the counterparty in default.
+Added: These netting provisions allow us to net settle asset and liability positions with the same counterparties within the same Targa entity.
+Added: As of March 31, 2022, all of our commodity derivative instruments with the exception of our futures contracts were in a net liability position, and as such, we had no counter-party risk exposure as of that date.
Customer Credit Risk
3 unchanged sentences
We have an active credit management process, which is focused on controlling loss exposure due to bankruptcies or other liquidity issues of counterparties.
−Removed: Our allowance for doubtful accounts was $3.6 million and $0.1 million as of September 30, 2021 and December 31, 2020.
−Removed: Changes in the allowance for doubtful accounts were not material for the three and nine months ended September 30, 2021.
−Removed: No customer comprised 10% or greater of our consolidated revenues during the three and nine months ended September 30, 2021.
−Removed: No customer comprised 10% or greater of our consolidated revenues during the three months ended September 30, 2020.
−Removed: During the nine months ended September 30, 2020, sales of commodities and fees from midstream services provided to Petredec (Europe) Limited comprised approximately 10% of our consolidated revenues.
+Added: Our allowance for doubtful accounts was $0.1 million as of both March 31, 2022 and December 31, 2021.
+Added: Changes in the allowance for doubtful accounts were not material for the three months ended March 31, 2022.
+Added: During the three months ended March 31, 2022, sales of commodities and fees from midstream services provided to Petredec (Europe) Limited comprised approximately 10% of our consolidated revenues.
+Added: No customer comprised 10% or greater of our consolidated revenues during the three months ended March 31, 2021.
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.