12 unchanged sentences
Weighted-average interest rate 5.0 % 5.0 % 5.1 % 5.0 % 5.0 % 5.1 %
+Added: Commercial paper (2) $ 350 $ — $ — $ — $ — $ — $ 350 $ 350
2022 2023 2024 2025 2026 Thereafter (1) Total Fair Value December 31, 2021
4 unchanged sentences
(1) Includes unamortized discount / premium and debt issuance costs.
+Added: (2) The weighted-average interest rate for commercial paper was 4.8 percent as of December 31, 2022.
Commodity Price Risk
−Removed: We are exposed to the impact of fluctuations in the market price of natural gas, NGLs, and crude oil as well as other market factors, such as market volatility and energy commodity price correlations.
−Removed: We are exposed to these risks in connection with our owned energy-related assets, our long-term energy-related contracts, and limited proprietary trading activities.
−Removed: Our management of the risks associated with these market fluctuations includes maintaining sufficient liquidity, as well as using various derivatives and nonderivative energy-related contracts.
−Removed: The fair value of derivative contracts is subject to many factors, including changes in energy commodity market prices, the liquidity and volatility of the markets in which the contracts are transacted, and changes in interest rates.
−Removed: Sequent routinely utilizes various types of derivative instruments to economically hedge certain commodity price risks inherent in the natural gas marketing industry.
−Removed: These instruments include a variety of exchange-traded and OTC energy contracts such as forward contracts, futures contracts, and basis swaps, as well as physical transactions that qualify as derivatives.
−Removed: These economic hedging activities are not designated and do not qualify for hedge accounting treatment.
−Removed: The maturities of Sequent’s derivative contracts at December 31, 2021 were as follows:
+Added: We are exposed to commodity price risk through our natural gas and NGL marketing activities, including contracts to purchase, sell, transport, and store product.
+Added: We routinely manage this risk with a variety of exchange-traded and OTC energy contracts such as forward contracts, futures contracts, and basis swaps, as well as physical transactions.
+Added: Although many of the contracts used to manage commodity exposure are derivative instruments, these economic hedges are not designated or do not qualify for hedge accounting treatment.
+Added: We are also exposed to commodity prices through our upstream business and certain gathering and processing contracts.
+Added: We use derivative instruments to lock in forward sales prices on a portion of our expected future production.
+Added: These economic hedges are not designated for hedge accounting treatment.
+Added: The maturities of our derivative contracts at December 31, 2022, as well as the maturities of the derivative contracts related to the operations acquired in the Sequent Acquisition at December 31, 2021, were as follows:
Value Maturity
3 unchanged sentences
Level 3 (56) (19) 2 (39)
−Removed: Fair value of contracts outstanding at end of period (2) $ (402) $ (139) $ (149) $ (114)
+Added: Fair value of contracts outstanding at December 31, 2022 $ (644) $ (179) $ (231) $ (234)
+Added: Value Maturity
+Added: Fair Value Measurements Using (1) 2022 2023 - 2024 2025 - 2026+
+Added: Level 1 (3) $ (69) $ (49) $ (30) $ 10
+Added: Level 2 (317) (77) (108) (132)
+Added: Level 3 (16) (13) (11) 8
+Added: Fair value of contracts outstanding at December 31, 2021 $ (402) $ (139) $ (149) $ (114)
_______________
(1) See Note 15 – Fair Value Measurements, Guarantees, and Concentration of Credit Risk of Notes to Consolidated Financial Statements for discussion of valuation techniques by level within the fair value hierarchy.
−Removed: See Note 18 – Derivatives for the amount of change in fair value recognized in the Consolidated Statement of Income.
−Removed: (2) Excludes cash collateral of $267 million in Level 1.
−Removed: Sequent Value at Risk (VaR)
−Removed: VaR is the maximum potential loss in portfolio value over a specified time period that is not expected to be exceeded within a given degree of probability.
−Removed: Sequent’s VaR may not be comparable to that of other companies due to differences in the factors used to calculate VaR.
−Removed: Sequent’s VaR is determined using a parametric model with a 95 percent confidence interval and a one-day holding period, which means that 95 percent of the time, the risk of loss in a day from a portfolio of positions is expected to be less than or equal to the amount of VaR calculated.
−Removed: The open exposure of Sequent is managed in accordance with established policies that limit market risk and require daily reporting of potential financial exposure to senior management.
−Removed: Because Sequent generally manages physical gas assets and economically protects its positions by hedging in the futures markets, Sequent’s open exposure is generally mitigated.
−Removed: Sequent employs daily risk testing, using both VaR and stress testing, to evaluate the risk of its positions.
−Removed: Sequent actively monitors open commodity positions and the resulting VaR and maintains a relatively small risk exposure as total buy volume is close to sell volume, with minimal open natural gas price risk.
−Removed: Sequent had the following VaRs for the period subsequent to the Sequent Acquisition:
−Removed: Six Months Ended December 31, 2021
+Added: See Note 16 – Derivatives of Notes to Consolidated Financial Statements for the amount of change in fair value recognized in our Consolidated Statement of Income.
+Added: (2) Net commodity derivative assets and liabilities exclude $202 million of net cash collateral in Level 1.
+Added: (3) Net commodity derivative assets and liabilities related to the operations acquired in the Sequent Acquisition exclude $267 million of net cash collateral in Level 1.
+Added: Value at Risk (VaR)
+Added: VaR is the maximum predicted loss in portfolio value over a specified time period that is not expected to be exceeded within a given degree of probability.
+Added: Our VaR may not be comparable to that of other companies due to differences in the factors used to calculate VaR.
+Added: Our VaR is determined using parametric models with 95 percent confidence intervals and one-day holding periods, which means that 95 percent of the time, the risk of loss in a day from a portfolio of positions is expected to be less than or equal to the amount of VaR calculated.
+Added: Our open exposure is managed in accordance with established policies that limit market risk and require daily reporting of predicted financial loss to management.
+Added: Because we generally manage physical gas assets and economically protect our positions by hedging in the futures markets, our open exposure is generally mitigated.
+Added: We employ daily risk testing, using both VaR and stress testing, to evaluate the risk of our positions.
+Added: We actively monitor open commodity marketing positions and the resulting VaR and maintain a relatively small risk exposure as total buy volume is close to sell volume, with minimal open natural gas price risk.
+Added: Starting in the second quarter of 2022, following the further integration of our legacy trading activities with the operations acquired in the Sequent Acquisition, we now present VaR for our integrated natural gas trading operations.
+Added: For the second half of 2021 and the first quarter of 2022, the VaR presented reflects the legacy Sequent operations only.
+Added: At December 31, 2022, the VaR associated with this activity was $10 million.
+Added: We had the following VaRs for the periods shown:
+Added: Nine Months Ended
+Added: December 31, 2022 Three Months Ended
+Added: March 31, 2022 Six Months Ended December 31, 2021
+Added: Trading Sequent Only Sequent Only
Average $ 10 $ 6 $ 4
+Added: High $ 39 $ 10 $ 7
+Added: Low $ 4 $ 4 $ 2
+Added: Our non-trading portfolio primarily consists of derivatives that hedge our upstream business and certain gathering and processing contracts.
+Added: At December 31, 2022, the VaR associated with these derivatives was $8 million.
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.