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SEC Filings

10-Q
SOUTHERN CO GAS filed this Form 10-Q on 11/04/2016
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counter energy contracts, such as forward contracts, futures contracts, options contracts, and swap agreements. Some of these economic hedge activities may not qualify, or are not designated, for hedge accounting treatment.
The following tables include the fair values and average values of Southern Company Gas' derivative instruments as of the dates indicated. Southern Company Gas bases the average values on monthly averages for the predecessor period January 1, 2016 through June 30, 2016, the successor period July 1, 2016 through September 30, 2016, and the predecessor nine months ended September 30, 2015:
 
 
Derivative instruments average values at (*)
 
 
Successor
 
 
Predecessor
 
 
July 1, 2016 through September 30, 2016
 
 
January 1, 2016 through June 30, 2016
 
Nine Months Ended
September 30, 2015
 
 
(in millions)
 
 
(in millions)
 
(in millions)
Asset
 
$
144

 
 
$
168

 
$
185

Liability
 
79

 
 
69

 
87

(*) Excludes cash collateral amounts.
The following table illustrates the change in the net fair value of Southern Company Gas' derivative instruments during the periods presented, and provides details of the net fair value of contracts outstanding as of the dates presented.
 
 
Successor
 
 
Predecessor
 
Successor
 
 
Predecessor
 
 
Three months ended September 30, 2016
 
 
Three months ended September 30, 2015
 
July 1, 2016, through September 30, 2016
 
 
January 1, 2016, through June 30, 2016
 
Nine months ended September 30, 2015
 
 
(in millions)
 
 
(in millions)
 
(in millions)
 
 
(in millions)
Contracts outstanding at beginning of period, assets (liabilities), net
 
$
(54
)
 
 
$
35

 
$
(54
)
 
 
$
75

 
$
61

Contracts realized or otherwise settled
 
(3
)
 
 
21

 
(3
)
 
 
(77
)
 
(17
)
Change in net fair value of derivative contracts
 

 
 
(35
)
 

 
 
(82
)
 
(23
)
Contracts outstanding at the end of period, assets (liabilities), net
 
(57
)
 
 
21

 
(57
)
 
 
(84
)
 
21

Netting of cash collateral
 
111

 
 
89

 
111

 
 
120

 
89

Cash collateral and net fair value of contracts outstanding at end of period (*)
 
$
54

 
 
$
110

 
$
54

 
 
$
36

 
$
110

(*)
Net fair value of derivative instruments outstanding includes premium and associated intrinsic value associated with weather derivatives of $7 million at September 30, 2016, $5 million at June 30, 2016, and $6 million at September 30, 2015.
The maturities of Southern Company Gas' energy-related derivative contracts at September 30, 2016 were as follows:
 
 
Fair Value Measurements
Successor – September 30, 2016
 
 
Total
Fair Value
 
Maturity
 
 
 
Year 1
 
Years 2&3
 
Years 4 and thereafter
 
 
(in millions)
Level 1 (a)
 
$
(64
)
 
$
(19
)
 
$
(36
)
 
$
(9
)
Level 2 (b)
 
7

 
5

 
1

 
1

Fair value of contracts outstanding at end of period (c)
 
$
(57
)
 
$
(14
)
 
$
(35
)
 
$
(8
)
(a)
Valued using NYMEX futures prices.
(b)
Valued using basis transactions that represent the cost to transport natural gas from a NYMEX delivery point to the contract delivery point. These transactions are based on quotes obtained either through electronic trading platforms or directly from brokers.
(c)
Excludes cash collateral of $111 million at September 30, 2016.


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