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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
FORM 10-Q
 
(Mark One)
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or 
¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission File Number: 001-32678 

 
DCP MIDSTREAM, LP
(Exact name of registrant as specified in its charter) 
  
Delaware 03-0567133
(State or other jurisdiction
of incorporation or organization)
 (I.R.S. Employer
Identification No.)
6900 E. Layton Ave, Suite 900
Denver, Colorado
 80237
(Address of principal executive offices) (Zip Code)
(303) 595-3331
(Registrant’s telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common units representing limited partnership interestsDCPNew York Stock Exchange
7.875% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred UnitsDCP PRBNew York Stock Exchange
7.95% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred UnitsDCP PRCNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerýAccelerated filer¨Emerging growth company¨
Non-accelerated filer¨Smaller reporting company¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨    No  ý

As of April 29, 2022, there were 208,383,409 common units representing limited partnership interests outstanding.
1


 DCP MIDSTREAM, LP
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2022
TABLE OF CONTENTS
 
Item Page
PART I. FINANCIAL INFORMATION
1Financial Statements (unaudited):
Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 2021
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021
Condensed Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2022
Condensed Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2021
Notes to the Condensed Consolidated Financial Statements
2Management's Discussion and Analysis of Financial Condition and Results of Operations
3Quantitative and Qualitative Disclosures about Market Risk
4Controls and Procedures
PART II. OTHER INFORMATION
1Legal Proceedings
1ARisk Factors
6Exhibits
Signatures
i


GLOSSARY OF TERMS
The following is a list of terms used in the industry and throughout this report:
 
ASUaccounting standards update
Bblbarrel
Bbls/dbarrels per day
Bcfbillion cubic feet
Bcf/dbillion cubic feet per day
BtuBritish thermal unit, a measurement of energy
Credit AgreementCredit Agreement governing our $1.4 billion unsecured revolving credit facility, maturing March 18, 2027
Fractionationthe process by which natural gas liquids are separated
    into individual components
GAAPgenerally accepted accounting principles in the United States of America
LIBORLondon Interbank Offered Rate
MBblsthousand barrels
MBbls/dthousand barrels per day
MMBtumillion Btus
MMBtu/dmillion Btus per day
MMcfmillion cubic feet
MMcf/dmillion cubic feet per day
NGLsnatural gas liquids
OPECOrganization of the Petroleum Exporting Countries
OPEC+OPEC members plus ten other oil producing countries
OPISOil Price Information Service
SECU.S. Securities and Exchange Commission
Securitization Facility$350 million Accounts Receivable Securitization
    Facility, maturing August 12, 2024
SOFRSecured Overnight Financing Rate
TBtu/dtrillion Btus per day
Throughputthe volume of product transported or passing through a
    pipeline or other facility
 

ii


CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

Our reports, filings and other public announcements may from time to time contain statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You can typically identify forward-looking statements by the use of forward-looking words, such as “may,” “could,” “should,” “intend,” “assume,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “potential,” “plan,” “forecast” and other similar words.

All statements that are not statements of historical facts, including, but not limited to, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements.

These forward-looking statements reflect our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside our control. Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Known risks and uncertainties include, but are not limited to, the risks set forth in Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, and in our Annual Report on Form 10-K for the year ended December 31, 2021, including the following risks and uncertainties:

the impact resulting from the COVID-19 pandemic and disruption to economies around the world including the oil, gas and NGL industry in which we operate and the resulting adverse impact on our business, liquidity, commodity prices, workforce, third-party and counterparty effects and resulting federal, state and local actions;
the extent of changes in commodity prices and the demand for our products and services, our ability to effectively limit a portion of the adverse impact of potential changes in commodity prices through derivative financial instruments, and the potential impact of price, and of producers’ access to capital on natural gas drilling, demand for our services, and the volume of NGLs and condensate extracted;
the demand for crude oil, residue gas and NGL products;
the level and success of drilling and quality of production volumes around our assets and our ability to connect supplies to our gathering and processing systems, as well as our residue gas and NGL infrastructure;
new, additions to, and changes in, laws and regulations, particularly with regard to taxes, safety, regulatory and protection of the environment, including, but not limited to, climate change legislation, regulation of over-the-counter derivatives markets and entities, and hydraulic fracturing regulations, or the increased regulation of our industry, including additional local control over such activities, and their impact on producers and customers served by our systems;
volatility in the price of our common units and preferred units;
general economic, market and business conditions;
the amount of natural gas we gather, compress, treat, process, transport, store and sell, or the NGLs we produce, fractionate, transport, store and sell, may be reduced if the pipelines, storage and fractionation facilities to which we deliver the natural gas or NGLs are capacity constrained and cannot, or will not, accept the natural gas or NGLs or we may be required to find alternative markets and arrangements for our natural gas and NGLs;
our ability to continue the safe and reliable operation of our assets;
our ability to grow through organic growth projects, or acquisitions, and the successful integration and future performance of such assets;
our ability to access the debt and equity markets and the resulting cost of capital, which will depend on general market conditions, our financial and operating results, inflation rates, interest rates, our ability to comply with the covenants in our Credit Agreement or other credit facilities, and the indentures governing our notes, as well as our ability to maintain our credit ratings;
the creditworthiness of our customers and the counterparties to our transactions, including the impact of bankruptcies;
the amount of collateral we may be required to post from time to time in our transactions;
industry changes, including consolidations, alternative energy sources, technological advances, infrastructure constraints and changes in competition;
our ability to construct and start up facilities on budget and in a timely fashion, which is partially dependent on obtaining required construction, environmental and other permits issued by federal, state and municipal governments, or agencies thereof, the availability of specialized contractors and laborers, and the price of and demand for materials;
our ability to hire, train, and retain qualified personnel and key management to execute our business strategy;
weather, weather-related conditions and other natural phenomena, including, but not limited to, their potential impact on demand for the commodities we sell and the operation of company-owned and third party-owned infrastructure;
security threats such as terrorist attacks, and cybersecurity attacks and breaches, against, or otherwise impacting, our facilities and systems; and
our ability to obtain insurance on commercially reasonable terms, if at all, as well as the adequacy of insurance to cover our losses.

In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. The forward-looking statements in this report speak as of the filing date of this report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.
iii


PART I
Item 1. Financial Statements
1


DCP MIDSTREAM, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

March 31, 2022December 31, 2021
ASSETS(millions)
Current assets:
Cash and cash equivalents$1 $1 
Accounts receivable:
Trade, net of allowance for credit losses of $1 and $2 million, respectively
1,130 1,029 
Affiliates619 389 
Other11 7 
Inventories46 77 
Unrealized gains on derivative instruments94 86 
Collateral cash deposits261 128 
Other18 32 
Total current assets2,180 1,749 
Property, plant and equipment, net7,632 7,701 
Intangible assets, net37 39 
Investments in unconsolidated affiliates3,554 3,578 
Unrealized gains on derivative instruments35 10 
Operating lease assets101 104 
Other long-term assets212 199 
Total assets$13,751 $13,380 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable:
Trade$1,237 $977 
Affiliates263 205 
Other
25 16 
Current debt505 355 
Unrealized losses on derivative instruments288 145 
Accrued interest68 79 
Accrued taxes65 51 
Accrued wages and benefits31 60 
Capital spending accrual2 7 
Other96 115 
Total current liabilities2,580 2,010 
Long-term debt4,838 5,078 
Unrealized losses on derivative instruments78 30 
Deferred income taxes34 34 
Operating lease liabilities92 93 
Other long-term liabilities258 259 
Total liabilities7,880 7,504 
Commitments and contingent liabilities (see note 12)
Equity:
Series A preferred limited partners (500,000 preferred units authorized, issued and outstanding, respectively)
498 489 
Series B preferred limited partners (6,450,000 preferred units authorized, issued and outstanding, respectively)
156 156 
Series C preferred limited partners (4,400,000 preferred units authorized, issued and outstanding, respectively)
106 106 
Limited partners (208,383,409 and 208,373,672 common units authorized, issued and outstanding, respectively)
5,092 5,106 
Accumulated other comprehensive loss(6)(6)
Total partners’ equity5,846 5,851 
Noncontrolling interests25 25 
Total equity5,871 5,876 
Total liabilities and equity$13,751 $13,380 

See accompanying notes to condensed consolidated financial statements.
2


DCP MIDSTREAM, LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

 Three Months Ended March 31,
 20222021
 (millions, except per unit amounts)
Operating revenues:
Sales of natural gas, NGLs and condensate$2,328 $2,014 
Sales of natural gas, NGLs and condensate to affiliates1,127 555 
Transportation, processing and other155 118 
Trading and marketing losses, net(235)(369)
Total operating revenues3,375 2,318 
Operating costs and expenses:
Purchases and related costs2,719 1,763 
Purchases and related costs from affiliates99 55 
Transportation and related costs from affiliates257 219 
Operating and maintenance expense152 149 
Depreciation and amortization expense90 91 
General and administrative expense55 38 
Gain on sale of assets, net(7) 
Total operating costs and expenses3,365 2,315 
Operating income10 3 
Earnings from unconsolidated affiliates143 128 
Interest expense, net(71)(77)
Income before income taxes82 54 
Income tax expense(1) 
Net income81 54 
Net income attributable to noncontrolling interests(1)(1)
Net income attributable to partners80 53 
Series A preferred limited partners' interest in net income
(9)(9)
Series B preferred limited partners' interest in net income(3)(3)
Series C preferred limited partners' interest in net income(2)(2)
Net income allocable to limited partners$66 $39 
Net income per limited partner unit — basic and diluted$0.32 $0.19 
Weighted-average limited partner units outstanding — basic208.4 208.4 
Weighted-average limited partner units outstanding — diluted208.8 208.5 
See accompanying notes to condensed consolidated financial statements.

3


DCP MIDSTREAM, LP
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)

 Three Months Ended March 31,
 20222021
 (millions)
Net income$81 $54 
Other comprehensive income:
Total other comprehensive income  
Total comprehensive income81 54 
Total comprehensive income attributable to noncontrolling interests(1)(1)
Total comprehensive income attributable to partners$80 $53 
See accompanying notes to condensed consolidated financial statements.

4


DCP MIDSTREAM, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Three Months Ended March 31,
 20222021
 (millions)
OPERATING ACTIVITIES:
Net income$81 $54 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense90 91 
Earnings from unconsolidated affiliates(143)(128)
Distributions from unconsolidated affiliates168 129 
Net unrealized losses on derivative instruments176 53 
Gain on sale of assets, net(7) 
Other, net2 2 
Change in operating assets and liabilities, which (used) provided cash:
Accounts receivable(334)(245)
Inventories31 8 
Accounts payable327 170 
Other assets and liabilities(202)(138)
Net cash provided by (used in) operating activities189 (4)
INVESTING ACTIVITIES:
Capital expenditures(23)(14)
Investments in unconsolidated affiliates(1) 
Proceeds from sale of assets16  
Net cash used in investing activities(8)(14)
FINANCING ACTIVITIES:
Proceeds from debt1,542 1,143 
Payments of debt(1,632)(1,086)
Distributions to preferred limited partners(5)(5)
Distributions to limited partners and general partner(81)(81)
Distributions to noncontrolling interests(1)(1)
Debt issuance costs(4) 
Net cash used in financing activities(181)(30)
Net change in cash, cash equivalents and restricted cash (48)
Cash, cash equivalents and restricted cash, beginning of period1 56 
Cash, cash equivalents and restricted cash, end of period$1 $8 
Reconciliation of cash, cash equivalents, and restricted cash:March 31, 2022March 31, 2021
Cash and cash equivalents$1 $5 
Restricted cash included in other current assets 3 
Total cash, cash equivalents, and restricted cash$1 $8 

See accompanying notes to condensed consolidated financial statements.
5


DCP MIDSTREAM, LP
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited)

 
 Partners' Equity  
 Series A Preferred Limited PartnersSeries B Preferred Limited PartnersSeries C Preferred Limited PartnersLimited 
Partners
Accumulated 
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
Equity
 (millions)
Balance, January 1, 2022$489 $156 $106 $5,106 $(6)$25 $5,876 
Net income9 3 2 66  1 81 
Distributions to unitholders (3)(2)(81)  (86)
Distributions to noncontrolling interests     (1)(1)
Equity based compensation   1   1 
Balance, March 31, 2022$498 $156 $106 $5,092 $(6)$25 $5,871 
See accompanying notes to condensed consolidated financial statements.

6


DCP MIDSTREAM, LP
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited)

 Partner's Equity  
 Series A Preferred Limited PartnersSeries B Preferred Limited PartnersSeries C Preferred Limited PartnersLimited 
Partners
Accumulated 
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
Equity
 (millions)
Balance, January 1, 2021$489 $156 $106 $5,090 $(7)$27 $5,861 
Net income9 3 2 39  1 54 
Distributions to unitholders (3)(2)(81)  (86)
Distributions to noncontrolling interests     (1)(1)
Equity based compensation   4   4 
Balance, March 31, 2021$498 $156 $106 $5,052 $(7)$27 $5,832 
See accompanying notes to condensed consolidated financial statements.

7

DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2022 and 2021
(unaudited)









1. Description of Business and Basis of Presentation

DCP Midstream, LP, with its consolidated subsidiaries, or us, we, our or the Partnership is a Delaware limited partnership formed in 2005 by DCP Midstream, LLC to own, operate, acquire and develop a diversified portfolio of complementary midstream energy assets.
Our Partnership includes our Logistics and Marketing and Gathering and Processing segments. For additional information regarding these segments, see Note 13 - Business Segments.
Our operations and activities are managed by our general partner, DCP Midstream GP, LP, which in turn is managed by its general partner, DCP Midstream GP, LLC, which we refer to as the General Partner, and which is 100% owned by DCP Midstream, LLC. DCP Midstream, LLC and its subsidiaries and affiliates, collectively referred to as DCP Midstream, LLC, is owned 50% by Phillips 66 and 50% by Enbridge Inc. and its affiliates, or Enbridge. DCP Midstream, LLC directs our business operations through its ownership and control of the General Partner. As of March 31, 2022, DCP Midstream, LLC, together with our general partner, owned approximately 57% of us through limited partner interests.
The condensed consolidated financial statements include the accounts of the Partnership and all majority-owned subsidiaries where we have the ability to exercise control. Investments in greater than 20% owned affiliates that are not variable interest entities and where we do not have the ability to exercise control, and investments in less than 20% owned affiliates where we have the ability to exercise significant influence, are accounted for using the equity method.
The condensed consolidated financial statements have been prepared in accordance with GAAP. Conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and notes. Although these estimates are based on management's best available knowledge of current and expected future events, actual results could differ from these estimates, which may be significantly impacted by various factors, including those outside of our control, such as the impact of a sustained deterioration in commodity prices and volumes, which would negatively impact our results of operations, financial condition and cash flows. All intercompany balances and transactions have been eliminated in consolidation.
These unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q have been prepared pursuant to the rules and regulations of the SEC. Accordingly, these condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary to present fairly the financial position and results of operations for the respective interim periods. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted from these interim financial statements pursuant to such rules and regulations, although we believe that the disclosures made are adequate to make the information presented not misleading. Results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. These unaudited condensed consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with the 2021 audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

2. Revenue Recognition
We disaggregate our revenue from contracts with customers by type of contract for each of our reportable segments, as we believe it best depicts the nature, timing and uncertainty of our revenue and cash flows. The following tables set forth our revenue by those categories:
Three Months Ended March 31, 2022
Logistics and MarketingGathering and ProcessingEliminationsTotal
(millions)
Sales of natural gas$1,063 $882 $(821)$1,124 
Sales of NGLs and condensate (a)2,122 1,282 (1,073)2,331 
Transportation, processing and other19 136  155 
Trading and marketing losses, net (b)(41)(194) (235)
     Total operating revenues$3,163 $2,106 $(1,894)$3,375 
8

DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2022 and 2021
(unaudited)
(a)    Includes $676 million of revenues from physical sales contracts and buy-sell exchange transactions in our Logistics and Marketing segment for the three months ended March 31, 2022, which is net of $756 million of buy-sell purchases related to buy-sell revenues of $851 million that are not within the scope of FASB ASC 606 "Revenue from Contractors with Customer" ("Topic 606").
(b)   Not within the scope of Topic 606.

Three Months Ended March 31, 2021
Logistics and MarketingGathering and ProcessingEliminationsTotal
(millions)
Sales of natural gas$1,120 $628 $(508)$1,240 
Sales of NGLs and condensate (a)1,205 710 (586)1,329 
Transportation, processing and other14 104  118 
Trading and marketing losses, net (b)(241)(128) (369)
     Total operating revenues$2,098 $1,314 $(1,094)$2,318 
(a)    Includes $414 million of revenues from physical sales contracts and buy-sell exchange transactions in our Logistics and Marketing segment for the three months ended March 31, 2021, which is net of $390 million of buy-sell purchases related to buy-sell revenues of $444 million that are not within the scope of Topic 606.
(b)   Not within the scope of Topic 606.
The revenue expected to be recognized in the future related to performance obligations that are not satisfied is approximately $419 million as of March 31, 2022. Our remaining performance obligations primarily consist of minimum volume commitment fee arrangements and are expected to be recognized through 2031 with a weighted average remaining life of three years as of March 31, 2022. As a practical expedient permitted by Topic 606, this amount excludes variable consideration as well as remaining performance obligations that have original expected durations of one year or less, as applicable. Our remaining performance obligations also exclude estimates of variable rate escalation clauses in our contracts with customers.

3. Agreements and Transactions with Affiliates
DCP Midstream, LLC
The following table summarizes employee related costs that were charged by DCP Midstream, LLC to the Partnership that are included in the condensed consolidated statements of operations:
Three Months Ended March 31,
20222021
(millions)
Employee related costs charged by DCP Midstream, LLC
Operating and maintenance expense$40 $39 
General and administrative expense$33 $26 








9

DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2022 and 2021
(unaudited)
Summary of Transactions with Affiliates
The following table summarizes our transactions with affiliates:
 Three Months Ended March 31,
 20222021
(millions)
Phillips 66 (including its affiliates):
Sales of natural gas, NGLs and condensate to affiliates$1,095 $527 
Purchases and related costs from affiliates$62 $30 
Transportation and related costs from affiliates$43 $37 
Operating and maintenance and general administrative expenses$3 $2 
Enbridge (including its affiliates):
Sales of natural gas, NGLs and condensate to affiliates$ $4 
Purchases and related costs from affiliates$13 $7 
Unconsolidated affiliates:
Sales of natural gas, NGLs and condensate to affiliates$32 $24 
Transportation, processing, and other to affiliates$4 $5 
Purchases and related costs from affiliates$24 $18 
Transportation and related costs from affiliates$214 $182 

 We had balances with affiliates as follows:
March 31, 2022December 31, 2021
 (millions)
Phillips 66 (including its affiliates):
Accounts receivable$585 $361 
Accounts payable$165 $114 
Other assets$ $1 
Enbridge (including its affiliates):
Accounts payable$5 $4 
Unconsolidated affiliates:
Accounts receivable$34 $28 
Accounts payable$93 $87 

4. Inventories
Inventories were as follows:
March 31, 2022December 31, 2021
 (millions)
Natural gas$26 $43 
NGLs20 34 
Total inventories$46 $77 

We recognize lower of cost or net realizable value adjustments when the carrying value of our inventories exceeds their net realizable value. These non-cash charges are a component of purchases and related costs in the condensed consolidated statements of operations. We recognized no lower of cost or net realizable value adjustments for the three months ended March 31, 2022 and 2021.


10

DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2022 and 2021
(unaudited)
5. Property, Plant and Equipment
A summary of property, plant and equipment by classification is as follows:
Depreciable
Life
March 31, 2022December 31, 2021
  (millions)
Gathering and transmission systems
20 — 50 Years
$7,657 $7,645 
Processing, storage and terminal facilities
35 — 60 Years
5,064 5,057 
Other
330 Years
557 585 
Finance lease assets
25 Years
29 28 
Construction work in progress101 103 
Property, plant and equipment13,408 13,418 
Accumulated depreciation(5,776)(5,717)
Property, plant and equipment, net$7,632 $7,701 
There were no construction projects with capitalized interest during the three months ended March 31, 2022 and 2021.
Depreciation expense was $89 million and $90 million for the three months ended March 31, 2022 and 2021, respectively.

6. Investments in Unconsolidated Affiliates
The following table summarizes our investments in unconsolidated affiliates:
  Carrying Value as of
 Percentage
Ownership
March 31,
2022
December 31, 2021
  (millions)
DCP Sand Hills Pipeline, LLC66.67%$1,692 $1,703 
DCP Southern Hills Pipeline, LLC66.67%724 728 
Gulf Coast Express LLC25.00%418 422 
Front Range Pipeline LLC33.33%194 195 
Texas Express Pipeline LLC10.00%93 94 
Mont Belvieu 1 Fractionator20.00%7 6 
Discovery Producer Services LLC40.00%229 231 
Cheyenne Connector, LLC50.00%146 148 
Mont Belvieu Enterprise Fractionator12.50%28 28 
OtherVarious23 23 
Total investments in unconsolidated affiliates$3,554 $3,578 


11

DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2022 and 2021
(unaudited)
Earnings from investments in unconsolidated affiliates were as follows:
 Three Months Ended March 31,
 20222021
 (millions)
DCP Sand Hills Pipeline, LLC$71 $62 
DCP Southern Hills Pipeline, LLC24 24 
Gulf Coast Express LLC16 15 
Front Range Pipeline LLC10 9 
Texas Express Pipeline LLC5 4 
Mont Belvieu 1 Fractionator4 2 
Discovery Producer Services LLC6 8 
Cheyenne Connector, LLC4 3 
Mont Belvieu Enterprise Fractionator2 1 
Other1  
Total earnings from unconsolidated affiliates$143 $128 
The following tables summarize the combined financial information of our investments in unconsolidated affiliates:
 Three Months Ended March 31,
 20222021
 (millions)
Statements of operations:
Operating revenue$563 $489 
Operating expenses$217 $190 
Net income$344 $298 


7. Fair Value Measurement
Valuation Hierarchy
Our fair value measurements are grouped into a three-level valuation hierarchy and are categorized in their entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows.
Level 1 — inputs are unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2 — inputs include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 — inputs are unobservable and considered significant to the fair value measurement.
A financial instrument’s categorization within the hierarchy is based upon the level of judgment involved in the most significant input in the determination of the instrument’s fair value. Following is a description of the valuation methodologies used as well as the general classification of such instruments pursuant to the hierarchy.
Commodity Derivative Assets and Liabilities
We enter into a variety of derivative financial instruments, which may include exchange traded instruments (such as New York Mercantile Exchange, or NYMEX, crude oil or natural gas futures) or over-the-counter, or OTC, instruments (such as natural gas contracts, crude oil or NGL swaps). The exchange traded instruments are generally executed with a highly rated broker dealer serving as the clearinghouse for individual transactions.
12

DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2022 and 2021
(unaudited)
Our activities expose us to varying degrees of commodity price risk. To mitigate a portion of this risk and to manage commodity price risk related primarily to owned natural gas storage and pipeline assets, we engage in natural gas asset based trading and marketing, and we may enter into natural gas and crude oil derivatives to lock in a specific margin when market conditions are favorable. A portion of this may be accomplished through the use of exchange traded derivative contracts. Such instruments are generally classified as Level 1 since the value is equal to the quoted market price of the exchange traded instrument as of our balance sheet date, and no adjustments are required. Depending upon market conditions and our strategy we may enter into exchange traded derivative positions with a significant time horizon to maturity. Although such instruments are exchange traded, market prices may only be readily observable for a portion of the duration of the instrument. In order to calculate the fair value of these instruments, readily observable market information is utilized to the extent it is available; however, in the event that readily observable market data is not available, we may interpolate or extrapolate based upon observable data. In instances where we utilize an interpolated or extrapolated value, and it is considered significant to the valuation of the contract as a whole, we would classify the instrument within Level 3.
We also engage in the business of trading energy related products and services, which exposes us to market variables and commodity price risk. We may enter into physical contracts or financial instruments with the objective of realizing a positive margin from the purchase and sale of these commodity-based instruments. We may enter into derivative instruments for NGLs or other energy related products, primarily using the OTC derivative instrument markets, which are not as active and liquid as exchange traded instruments. Market quotes for such contracts may only be available for short dated positions (up to six months), and an active market itself may not exist beyond such time horizon. Contracts entered into with a relatively short time horizon for which prices are readily observable in the OTC market are generally classified within Level 2. Contracts with a longer time horizon, for which we internally generate a forward curve to value such instruments, are generally classified within Level 3. The internally generated curve may utilize a variety of assumptions including, but not limited to, data obtained from third-party pricing services, historical and future expected relationship of NGL prices to crude oil prices, the knowledge of expected supply sources coming online, expected weather trends within certain regions of the United States, and the future expected demand for NGLs.
Each instrument is assigned to a level within the hierarchy at the end of each financial quarter depending upon the extent to which the valuation inputs are observable. Generally, an instrument will move toward a level within the hierarchy that requires a lower degree of judgment as the time to maturity approaches, and as the markets in which the asset trades will likely become more liquid and prices more readily available in the market, thus reducing the need to rely upon our internally developed assumptions. However, the level of a given instrument may change, in either direction, depending upon market conditions and the availability of market observable data.
The following table presents the financial instruments carried at fair value on a recurring basis as of March 31, 2022 and December 31, 2021, by condensed consolidated balance sheet caption and by valuation hierarchy, as described above:

 March 31, 2022December 31, 2021
 Level 1Level 2Level 3Total
Carrying
Value
Level 1Level 2Level 3Total
Carrying
Value
 (millions)
Current assets:
Commodity derivatives$47 $45 $2 $94 $24 $62 $ $86 
Short-term investments (a)$4 $ $ $4 $4 $1 $ $5 
Long-term assets:
Commodity derivatives$ $31 $4 $35 $ $8 $2 $10 
Investments in marketable securities (a)$35 $ $ $35 $28 $ $ $28 
Current liabilities:
Commodity derivatives$(78)$(200)$(10)$(288)$(42)$(100)$(3)$(145)
Long-term liabilities:
Commodity derivatives$ $(73)$(5)$(78)$(1)$(25)$(4)$(30)
13

DCP MIDSTREAM, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 2022 and 2021
(unaudited)
(a) $4 million and $5 million recorded within "other" current assets and $