TARGA RESOURCES PARTNERS LP (NASDAQ:NGLS) Files An 8-K Other Events

TARGA RESOURCES PARTNERS LP (NASDAQ:NGLS) Files An 8-K Other Events

Item8.01

Other Events.

During the fourth quarter of 2016, Targa Resources Partners LP
(the Partnership, we or our) concluded that
we should revise supplementary information regarding the notional
volumes of NGL futures contracts on the Intercontinental Exchange
(ICE) previously reported in our Form 10-Q for the quarter
ended September30, 2016. We utilize those ICE futures to hedge
future commodity purchases and sales in our Logistics and
Marketing segment. Weconcluded that these revisions to the
notional volumes of the NGL futures positions on ICE as of
September30, 2016 were not material, and had no effect on our
Consolidated Balance Sheet, Consolidated Statement of Operations,
Consolidated Statement of Comprehensive Income (Loss),
Consolidated Statement of Changes in Owners Equity, or
Consolidated Statement of Cash Flows.

The following tables reflect the impact of the error and the
revised notional volumes of NGL futures contracts, which were
previously reported in the Derivative Instruments and Hedging
Activities note of the Partnerships Form 10-Q for the quarter
ended September30, 2016.

Commodity		Instrument		Unit
As reported:
NGL		Futures		Bbl/d			85,887				50,889				5,000
As corrected:
NGL		Futures		Bbl/d			20,055				3,789				411
The revised notional volumes of our commodity derivative contracts as disclosed in Note 12 to the interim financial statements for the quarter ended September30, 2016 were as follows:
Commodity		Instrument		Unit
Natural Gas		Swaps		MMBtu/d			134,436				92,448				68,800				29,683
Natural Gas		BasisSwaps		MMBtu/d			95,979				58,026
Natural Gas		Options		MMBtu/d			22,900				22,900				9,486
NGL		Swaps		Bbl/d			5,073				3,875				2,678				1,779
NGL		Futures		Bbl/d			20,055				3,789				411
NGL		Options		Bbl/d			920				1,468				1,676
Condensate		Swaps		Bbl/d			2,770				1,850				1,350				223
Condensate		Options		Bbl/d			790				1,380				691				590

In addition, Part I. Item3. Quantitative and Qualitative
Disclosures About Market Risk of the Partnerships Form 10-Q for
the quarter ended September30, 2016 has been amended as noted
below to reflect the revised notional volumes of the ethane
(C2-ICE) futures contracts, propane (C3-ICE) futures contracts
and normal butane (NC4-ICE) futures contracts.

Part I. Item3. Quantitative and Qualitative Disclosures
About Market Risk.

Commodity Price Risk

Our principal market risks are our exposure to changes in
commodity prices, particularly to the prices of natural gas, NGLs
and crudeoil and changes in interest rates.

A significant portion of our revenues are derived from
percent-of-proceeds contracts under which we receive a portion of
the natural gas and/or NGLs or equity volumes as payment for
services. The prices of natural gas and NGLs are subject to
fluctuations in response to changes in supply, demand, market
uncertainty and a variety of additional factors beyond our
control. We monitor these risks and enter into hedging
transactions designed to mitigate the impact of commodity price
fluctuations on our business. Cash flows from a derivative
instrument designated as a hedge are classified in the same
category as the cash flows from the item being hedged.

The primary purpose of the 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. In an effort to reduce the
variability of our

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cash flows, as of September30, 2016, we have hedged the commodity
price associated with a portion of our expected (i)natural gas
equity volumes in our Gathering and Processing operations and
(ii)NGL and condensate equity volumes in our Gathering and
Processing operations that result from our percent-of-proceeds
processing arrangements by entering into derivative instruments.
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. With
swaps, we typically receive an agreed fixed price for a specified
notional quantity of natural gas or NGLs and we pay the hedge
counterparty a floating price for that same quantity based upon
published index prices. Since we receive from our customers
substantially the same floating index price from the sale of the
underlying physical commodity, these transactions are designed to
effectively lock-in the agreed fixed price in advance for the
volumes hedged. In order to avoid having a greater volume hedged
than our actual equity volumes, we typically limit our use of
swaps to hedge the prices of less than our expected natural gas
and NGL equity volumes. We utilize purchased puts (or floors) and
calls (or caps) to hedge additional expected equity commodity
volumes without creating volumetric risk. We may buy calls in
connection with swap positions to create a price floor with
upside. We intend to continue to manage our exposure to commodity
prices in the future by entering into derivative transactions
using swaps, collars, purchased puts (or floors) or other
derivative instruments as market conditions permit.

When entering into new hedges, we intend to generally match the
NGL product composition and the NGL and natural gas delivery
points to those of our physical equity volumes. The NGL hedges
cover specific NGL products based upon the expected equity NGL
composition. We believe this strategy avoids uncorrelated risks
resulting from employing hedges on crude oil or other petroleum
products as proxy hedges of NGL prices. The natural gas and NGL
hedges fair values are based on published index prices for
delivery at various locations and we seek to closely approximate
the actual natural gas and NGL delivery points. A portion of our
condensate sales are hedged using crude oil hedges that are based
on the NYMEX futures contracts for West Texas Intermediate light,
sweet crude.

A majority of these commodity price hedging transactions are
typically documented to a standard International Swap Dealers
Association form with customized credit and legal terms. The
principal counterparties (or, if applicable, their guarantors)
have investment grade credit ratings. Our payment obligations in
connection with substantially all of these hedging transactions
and any additional credit exposure due to a rise in natural gas
and NGL prices relative to the fixed prices set forth in the
hedges are secured by a first priority lien in the collateral
securing the Partnerships senior secured indebtedness that ranks
equal in right of payment with liens granted in favor of the
Partnerships senior secured lenders. 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 counterpartys 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. 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; however, we are exposed to the risk
of default by the counterparty, which is the risk that the
counterparty will not honor its obligation under the put
transaction.

We also enter into commodity price hedging transactions using
futures contracts on futures exchanges. Exchange traded futures
are subject to exchange margin requirements, so we may have to
increase our cash deposit due to a rise in natural gas and NGL
prices. Unlike bilateral hedges, we are not subject to
counterparty credit risks when using futures.

For all periods presented, we have entered into hedging
arrangements for a portion of our forecasted equity volumes.
During the three months ended September30, 2016 and 2015, our
operating revenues increased (decreased) by net hedge adjustments
on commodity derivative contracts of $11.2million and $21.8
million. During the nine months ended September30, 2016 and 2015,
our operating revenues increased (decreased) by net hedge
adjustments on commodity derivative contracts of $56.9 million
and $60.7million.

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As of September30, 2016, we had the following derivative
instruments designated as hedging instruments that will settle
during the years ending below:

NATURAL GAS

Instrument Type				Price						MMBtu/d
		Index		$/MMBtu																		Fair Value
																						(Inmillions)
Swap		IF-NGPL MC			3.93								3,456															$	0.4
Swap		IF-Waha			2.96								77,736																0.3
Swap		IF-Waha			2.79												62,900												(4.0	)
Swap		IF-Waha			2.71																57,900								(2.4	)
Swap		IF-Waha			2.87																				29,683				1.1
													77,736				62,900				57,900				29,683
					PutPrice				CallPrice
Collar		IF-Waha			2.85				3.47				7,500																0.0
Collar		IF-Waha			3.00				3.67								7,500												0.6
Collar		IF-Waha			3.25				4.20												1,849								0.2
													7,500				7,500				1,849
Swap		IF-PB			3.12								18,508																0.4
Swap		IF-PB			2.51												10,900												(1.5	)
Swap		IF-PB			2.51																10,900								(0.9	)
													18,508				10,900				10,900
					PutPrice				CallPrice
Collar		IF-PB			2.65				3.31				15,400																(0.0	)
Collar		IF-PB			2.80				3.50								15,400												0.7
Collar		IF-PB			3.00				3.65												7,637								0.9
													15,400				15,400				7,637
Swap		NG-NYMEX			4.12								34,239																3.5
Swap		NG-NYMEX			4.11												18,082												6.4
													34,239				18,082
Swap		NG-NYMEX-mtm			3.11																								(0.0	)
Swap		NG-NYMEX-mtm			3.17																								(0.0	)
Basis Swap		EP_PERMIAN			(0.1703	)							17,120																(0.1	)
Basis Swap		EP_PERMIAN			(0.1444	)											9,041												0.1
													17,120				9,041
Basis Swap		PEPL			(0.3278	)							17,120																(0.2	)
Basis Swap		PEPL			(0.3308	)											9,041												(0.4	)
													17,120				9,041
Basis Swap		PEPL-mtm			(0.1870	)							16,576																0.1
Basis Swap		PEPL-mtm			(0.2025	)											14,959												(0.1	)
													16,576				14,959

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Instrument Type				Price						MMBtu/d
		Index		$/MMBtu																		Fair Value
																						(Inmillions)
Basis Swap		TENN_800			(0.0567)								15,000																(0.0	)
Basis Swap		TENN_800			(0.0575)												12,493												(0.1	)
													15,000				12,493
Basis Swap		NGPL_TXOK			(0.0967)								10,109																0.0
Basis Swap		WAHA			(0.1283)								10,109																(0.0	)
Basis Swap		TRANSCO_Z4			0.0225								9,945																0.0
Basis Swap		TRANSCO_Z4			0.0225												12,492												0.1
													9,945				12,492
Total													253,315				173,374				78,286				29,683
																												$	5.1

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NGLs
Instrument Type				Price						Bbl/d
		Index		$/gal																		Fair Value
																						(Inmillions)
Swap		C2-OPIS-MB			0.2209																							$	(0.0	)
Swap		C2-OPIS-MB			0.2517												1,857												0.0
Swap		C2-OPIS-MB			0.2648																1,318								(0.7	)
Swap		C2-OPIS-MB			0.2925																								(0.2	)
Total																	1,857				1,318
					PutPrice
Option		C2-OPIS-MB			0.2694																								0.2
Option		C2-OPIS-MB			0.2963																1,644								0.9
Total																					1,644
Future		C2-OPIS-MB			0.2200																								(0.0	)
Future		C2-OPIS-MB			0.2713																								(0.1	)
Total
Future		C2-ICE			0.1942								5,489																0.0
Future		C2-ICE			0.2593												2,315												0.1
Future		C2-ICE			0.2956																								0.0
Total													5,489				2,315
Swap		C3-OPIS-MB			0.7959								3,883																3.6
Swap		C3-OPIS-MB			0.7396												1,528												4.4
Swap		C3-OPIS-MB			0.5125																								(0.5	)
Swap		C3-OPIS-MB			0.5125																								(0.4	)
Total													3,883				1,528
Future		C3-OPIS-MB			0.4948																								(0.1	)
Future		C3-OPIS-MB			0.5433																								(0.2	)
Total
Future		C3-ICE			0.4576								8,043																(0.3	)
Future		C3-ICE			0.5237																								0.2
Total													8,043
Future		NC4-OPIS-MB			0.6358								2,011																(0.7	)
Future		NC4-ICE			0.6080								3,370																1.1
Swap		C5-OPIS-MB			0.9600																								(0.2	)
Swap		C5-OPIS-MB			0.9943																								(0.7	)
Swap		C5-OPIS-MB			0.9943																								(0.9	)
Swap		C5-OPIS-MB			1.0520																								(0.3	)
Total
					PutPrice				CallPrice
Collar		C2-OPIS-MB			0.200				0.235																				(0.0	)
Collar		C2-OPIS-MB			0.240				0.290																				0.1
Total

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Instrument Type				Price						Bbl/d
		Index		$/gal																		Fair Value
																						(Inmillions)
					PutPrice				CallPrice
Collar		C3-OPIS-MB			0.560				0.68000																				0.0
Collar		C3-OPIS-MB			0.570				0.68625																				0.4
Total
					Put Price				Call Price
Collar		C5-OPIS-MB			1.200				1.390																				0.1
Collar		C5-OPIS-MB			1.210				1.415																				0.3
Collar		C5-OPIS-MB			1.230				1.385																				0.1
Total
Total													26,048				9,132				4,765				1,779
																												$	6.2
CONDENSATE
Instrument Type				Price						Bbl/d
		Index		$/Bbl																		Fair Value
																						(Inmillions)
Swap		NY-WTI			59.98								2,770															$	2.8
Swap		NY-WTI			56.15												1,850												3.0
Swap		NY-WTI			47.43																1,350								(3.0	)
Swap		NY-WTI			52.00																								(0.2	)
													2,770				1,850				1,350
				PutPrice			CallPrice
Collar		NY-WTI			57.08				67.97																				0.6
Collar		NY-WTI			54.04				64.09								1,380												2.7
Collar		NY-WTI			49.76				58.50																				0.1
Collar		NY-WTI			48.00				56.25																				(0.5	)
																	1,380
Total Sales													3,560				3,230				2,041
																												$	5.5

As of September30, 2016, we had the following derivative
instruments that are not designated as hedges and are
marked-to-market:

NATURAL GAS

Instrument Type					Price			MMBtu/d
		Index			$/MMBtu															Fair Value
																				(Inmillions)
Basis Swap			Various				(0.0597	)			62,235				40,511											$	(0.2	)

These contracts may expose us to the risk of financial loss in
certain circumstances. Generally, our hedging arrangements
provide us protection on the hedged volumes if prices decline
below the prices at which these hedges are set. If prices rise
above the prices at which they have been hedged, we will receive
less revenue on the hedged volumes than we would receive in the
absence of hedges (other than with respect to purchased calls).
For derivative instruments not designated as cash flow hedges,
these contracts are marked-to-market and recorded in revenues.

We account for the fair value of our financial assets and
liabilities using a three-tier fair value hierarchy, which
prioritizes the significant inputs used in measuring fair value.
These tiers include: Level 1, defined as observable inputs such
as quoted prices in active markets;

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Level2, defined as inputs other than quoted prices in active
markets that are either directly or indirectly observable; and
Level 3, defined as unobservable inputs in which little or no
market data exists, therefore requiring an entity to develop its
own assumptions. We determine the value of our derivative
contracts utilizing a discounted cash flow model for swaps and a
standard option pricing model for options, based on inputs that
are readily available in public markets. For the contracts that
have inputs from quoted prices, the classification of these
instruments is Level 2 within the fair value hierarchy. For those
contracts which we are unable to obtain quoted prices for at
least 90% of the full term of the commodity swap and options, the
valuations are classified as Level 3 within the fair value
hierarchy. See Note13 – Fair Value Measurements in this Quarterly
Report for more information regarding classifications within the
fair value hierarchy.

Interest Rate Risk

We are exposed to the risk of changes in interest rates,
primarily as a result of variable rate borrowings under the TRP
Revolver and the Securitization Facility. As of September30,
2016, we do not have any interest rate hedges. However, we may in
the future enter into interest rate hedges intended to mitigate
the impactof changes in interest rates on cash flows. To the
extent that interest rates increase, interest expense for the TRP
Revolver and the Securitization Facility will also increase. As
of September30, 2016, we had $225.0 million in outstanding
variable rate borrowings under the TRP Revolver and the
Securitization Facility. A hypothetical change of 100 basis
points in the interest rate of our variable rate debt would
impact our annual interest expense by $2.3 million.

Counterparty Credit Risk

We are subject to risk of losses resulting from nonpayment or
nonperformance by our counterparties. The credit exposure related
to commodity derivative instruments is represented by the fair
value of the asset position (i.e. the fair value of expected
future receipts) at the reporting date. Our futures contracts
have limited credit risk since they are cleared through an
exchange and are settled daily. Should the creditworthiness of
one or more of the counterparties decline, our ability to
mitigate nonperformance risk is limited to a counterparty
agreeing to either a voluntary termination and subsequent cash
settlement or a novation of the derivative contract to a third
party. In the event of a counterparty default, we may sustain a
loss and our cash receipts could be negatively impacted. We have
master netting provisions in the International Swap Dealers
Association agreements with all of our derivative counterparties.
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 $30.6million as of September30, 2016.
The range of losses attributable to our individual counterparties
would be between less than $0.5 million and $13.7 million,
depending on the counterparty in default.

Customer Credit Risk

We extend credit to customers and other parties in the normal
course of business. We have an established policy and various
procedures to manage our credit exposure risk, including initial
and subsequent credit risk analyses, credit limits and terms and
credit enhancements when necessary. We use credit enhancements
including (but not limited to) letters of credit, prepayments,
parental guarantees and rights of offset to limit credit risk to
ensure that our established credit criteria are followed and
financial loss is mitigated or minimized.

We have an active credit management process, which is focused on
controlling loss exposure to bankruptcies or other liquidity
issues of counterparties. If an assessment of uncollectible
accounts resulted in a 1% reduction of our third-party accounts
receivable, annual operating income would decrease by $5.5
million in the year of the assessment.

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