KINDER MORGAN, INC. Fair Value Disclosure
• | Level 1 Inputs—quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; |
• | Level 2 Inputs—inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability; and |
• | Level 3 Inputs—unobservable inputs for the asset or liability. These unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances (which might include the reporting entity’s own data). |
Balance sheet asset fair value measurements by level | |||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Gross amount | Contracts available for netting | Cash collateral held(b) | Net amount | |||||||||||||||||||||
As of December 31, 2018 | |||||||||||||||||||||||||||
Energy commodity derivative contracts(a) | $ | 28 | $ | 193 | $ | — | $ | 221 | $ | (39 | ) | $ | (25 | ) | $ | 157 | |||||||||||
Interest rate contracts | $ | — | $ | 133 | $ | — | $ | 133 | $ | (7 | ) | $ | — | $ | 126 | ||||||||||||
Foreign currency contracts | $ | — | $ | 197 | $ | — | $ | 197 | $ | (6 | ) | $ | — | $ | 191 | ||||||||||||
As of December 31, 2017 | |||||||||||||||||||||||||||
Energy commodity derivative contracts(a) | $ | 17 | $ | 70 | $ | — | $ | 87 | $ | (42 | ) | $ | (12 | ) | $ | 33 | |||||||||||
Interest rate contracts | $ | — | $ | 205 | $ | — | $ | 205 | $ | (15 | ) | $ | — | $ | 190 | ||||||||||||
Foreign currency contracts | $ | — | $ | 166 | $ | — | $ | 166 | $ | (6 | ) | $ | — | $ | 160 | ||||||||||||
Balance sheet liability fair value measurements by level | |||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Gross amount | Contracts available for netting | Collateral posted(b) | Net amount | |||||||||||||||||||||
As of December 31, 2018 | |||||||||||||||||||||||||||
Energy commodity derivative contracts(a) | $ | (11 | ) | $ | (39 | ) | $ | — | $ | (50 | ) | $ | 39 | $ | — | $ | (11 | ) | |||||||||
Interest rate contracts | $ | — | $ | (115 | ) | $ | — | $ | (115 | ) | $ | 7 | $ | — | $ | (108 | ) | ||||||||||
Foreign currency contracts | $ | — | $ | (6 | ) | $ | — | $ | (6 | ) | $ | 6 | $ | — | $ | — | |||||||||||
As of December 31, 2017 | |||||||||||||||||||||||||||
Energy commodity derivative contracts(a) | $ | (3 | ) | $ | (98 | ) | $ | — | $ | (101 | ) | $ | 42 | $ | — | $ | (59 | ) | |||||||||
Interest rate contracts | $ | — | $ | (65 | ) | $ | — | $ | (65 | ) | $ | 15 | $ | — | $ | (50 | ) | ||||||||||
Foreign currency contracts | $ | — | $ | (6 | ) | $ | — | $ | (6 | ) | $ | 6 | $ | — | $ | — | |||||||||||
(a) | Level 1 consists primarily of NYMEX natural gas futures. Level 2 consists primarily of OTC WTI swaps and NGL swaps. |
(b) | Any cash collateral paid or received is reflected in this table, but only to the extent that it represents variation margins. Any amount associated with derivative prepayments or initial margins that are not influenced by the derivative asset or liability amounts or those that are determined solely on their volumetric notional amounts are excluded from this table. |
December 31, 2018 | December 31, 2017 | ||||||||||||||
Carrying value | Estimated fair value | Carrying value | Estimated fair value | ||||||||||||
Total debt | $ | 37,324 | $ | 37,469 | $ | 37,843 | $ | 40,050 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2018 | Feb 8, 2019 | Showing above |
| 2017 | Feb 9, 2018 | |
| 2016 | Feb 10, 2017 | |
| 2015 | Feb 16, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.