UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended ~~September~~June 30, ~~2016~~2017



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to .



(Exact name of registrant as specified in its charter)	Commission file number	State or other jurisdiction of incorporation or organization	(I.R.S. Employer Identification No.)
Crestwood Equity Partners LP	001-34664	Delaware	43-1918951
Crestwood Midstream Partners LP	001-35377	Delaware	20-1647837



~~700 Louisiana~~811 Main Street, Suite ~~2550~~3400 Houston, Texas		77002
(Address of principal executive offices)		(Zip code)

(832) 519-2200

(Registrant’s telephone number, including area code)

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.



Crestwood Equity Partners LP		Yes x No o
Crestwood Midstream Partners LP		Yes x No o

(Explanatory Note: Crestwood Midstream Partners LP is currently a voluntary filer and is not subject to the filing requirements of the Securities Exchange Act of 1934. Although not subject to these filing requirements, Crestwood Midstream Partners LP 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.)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).



Crestwood Equity Partners LP		Yes x No o
Crestwood Midstream Partners LP		Yes x No o

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



Crestwood Equity Partners LP	Large accelerated filer ox	Accelerated filer xo	Non-accelerated filer o	Smaller reporting company o	Emerging growth company o
Crestwood Midstream Partners LP	Large accelerated filer o	Accelerated filer o	Non-accelerated filer x	Smaller reporting company o	Emerging growth company o

Table of Contents

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.



Crestwood Equity Partners LP		o
Crestwood Midstream Partners LP		o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Crestwood Equity Partners LP		Yes o No x
Crestwood Midstream Partners LP		Yes o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date ~~(October 28, 2016)~~(July 31, 2017)



Crestwood Equity Partners LP		~~69,062,914~~69,675,760
Crestwood Midstream Partners LP		None

Crestwood Midstream Partners LP, as a wholly-owned subsidiary of a reporting company, meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this report with the reduced disclosure format as permitted by such instruction.

Table of Contents

CRESTWOOD EQUITY PARTNERS LP

CRESTWOOD MIDSTREAM PARTNERS LP

INDEX TO FORM 10-Q



	Page
Part I – Financial Information

Item 1. Financial Statements (Unaudited):

Crestwood Equity Partners LP

Consolidated Balance Sheets	4

Consolidated Statements of Operations	5

Consolidated Statements of Comprehensive Income	7

Consolidated Statement of Partners’ Capital	8

Consolidated Statements of Cash Flows	9

Crestwood Midstream Partners LP

Consolidated Balance Sheets	10

Consolidated Statements of Operations	11

Consolidated Statement of Partners’ Capital	13

Consolidated Statements of Cash Flows	14

Notes to Consolidated Financial Statements	15

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	4442

Item 3. Quantitative and Qualitative Disclosures About Market Risk	5953

Item 4. Controls and Procedures	5953

Part II – Other Information

Item 1. Legal Proceedings	6054

Item 1A. Risk Factors	6054

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	6054

Item 3. Defaults Upon Senior Securities	6054

Item 4. Mine Safety Disclosures	6054

Item 5. Other Information	6054

Item 6. Exhibits	6155

Signature	6357

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED BALANCE SHEETS (in millions, except unit information)	CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED BALANCE SHEETS (in millions, except unit information)				CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED BALANCE SHEETS (in millions, except unit information)

	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
	(unaudited)				(unaudited)
Assets
Current assets:
Cash	$	1.0	$	0.5	$	2.3	$	1.6
Accounts receivable	224.3		236.5
Accounts receivable, less allowance for doubtful accounts of $1.4 million and $1.9 million at June 30, 2017 and December 31, 2016					290.3		289.8
Inventory	61.8		44.5		63.1		66.0
Assets from price risk management activities	10.4		32.6		12.8		6.3
Assets held for sale	55.0		—
Prepaid expenses and other current assets	5.1		21.7		7.0		9.7
Total current assets	357.6		335.8		375.5		373.4
Property, plant and equipment	2,548.6		3,747.7		2,556.7		2,555.4
Less: accumulated depreciation and depletion	424.4		436.9		516.4		457.8
Property, plant and equipment, net	2,124.2		3,310.8		2,040.3		2,097.6
Intangible assets	946.8		975.8		898.6		898.6
Less: accumulated amortization	240.8		206.6		268.0		241.2
Intangible assets, net	706.0		769.2		630.6		657.4
Goodwill	249.5		1,085.5		199.0		199.0
Investment in unconsolidated affiliates (Note 4)	1,099.2		254.3
Investments in unconsolidated affiliates					1,181.7		1,115.4
Other assets	7.7		7.2		5.5		6.1
Total assets	$	4,544.2	$	5,762.8	$	4,432.6	$	4,448.9
Liabilities and partners’ capital
Current liabilities:
Accounts payable	$	149.6	$	144.1	$	237.5	$	217.2
Accrued expenses and other liabilities (Note 3)	113.5		105.6
Accrued expenses and other liabilities					84.5		90.5
Liabilities from price risk management activities	14.2		7.4		8.0		28.6
Current portion of long-term debt (Note 7)	0.9		1.1
Current portion of long-term debt					1.0		1.0
Total current liabilities	278.2		258.2		331.0		337.3
Long-term debt, less current portion (Note 7)	1,576.7		2,501.8
Long-term debt, less current portion					1,613.0		1,522.7
Other long-term liabilities	38.6		47.5		47.3		44.6
Deferred income taxes	7.5		8.4		4.7		5.3
Commitments and contingencies (Note 10)
Partners’ capital (Note 9):
Crestwood Equity Partners LP partners’ capital (69,480,556 and 68,555,305 common and subordinated units issued and outstanding at September 30, 2016 and December 31, 2015)	1,900.7		2,227.6
Preferred units (65,029,388 and 60,718,245 units issued and outstanding at September 30, 2016 and December 31, 2015)	552.4		535.8
Partners’ capital:
Crestwood Equity Partners LP partners’ capital (70,027,261 and 69,499,741 common and subordinated units issued and outstanding at June 30, 2017 and December 31, 2016)					1,643.5		1,782.0
Preferred units (69,646,630 and 66,533,415 units issued and outstanding at June 30, 2017 and December 31, 2016)					595.8		564.5
Total Crestwood Equity Partners LP partners’ capital	2,453.1		2,763.4		2,239.3		2,346.5
Interest of non-controlling partners in subsidiaries	190.1		183.5		197.3		192.5
Total partners’ capital	2,643.2		2,946.9		2,436.6		2,539.0
Total liabilities and partners’ capital	$	4,544.2	$	5,762.8	$	4,432.6	$	4,448.9

See accompanying notes.

Table of Contents

CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except unit and per unit data) (unaudited)	CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except unit and per unit data) (unaudited)												CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except unit and per unit data) (unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended					Six Months Ended
	September 30,						September 30,						June 30,					June 30,
	2016			2015			2016			2015			2017		2016			2017		2016
Revenues:
Product revenues:
Gathering and processing	$	206.1		$	275.3		$	567.7		$	799.5		$	325.3	$	199.1		$	618.4	$	361.6
Marketing, supply and logistics	271.3			179.3			735.2			653.0			421.5		257.4			851.7		463.9
	477.4			454.6			1,302.9			1,452.5			746.8		456.5			1,470.1		825.5
Services revenues:
Gathering and processing	72.5			79.4			217.9			250.2			79.4		69.7			154.4		145.4
Storage and transportation	18.3			65.0			131.5			201.1			8.5		53.8			18.5		113.2
Marketing, supply and logistics	18.7			30.8			71.1			96.9			15.2		21.2			34.5		52.4
Related party (Note 11)	0.7			0.9			2.1			3.0			0.4		0.7			0.9		1.4
	110.2			176.1			422.6			551.2			103.5		145.4			208.3		312.4
Total revenues	587.6			630.7			1,725.5			2,003.7			850.3		601.9			1,678.4		1,137.9

Costs of product/services sold (exclusive of items shown separately below):
Product costs:
Gathering and processing	221.1			275.4			618.4			818.9			350.7		221.9			663.2		397.3
Marketing, supply and logistics	229.1			149.2			605.1			538.5			363.0		210.0			717.2		376.0
Related party (Note 11)	5.0			7.2			13.7			23.2			4.0		4.4			8.1		8.7
	455.2			431.8			1,237.2			1,380.6			717.7		436.3			1,388.5		782.0
Service costs:
Gathering and processing	—			0.2			0.1			0.5			—		—			—		0.1
Storage and transportation	0.1			5.2			4.9			15.8			0.1		1.9			0.1		4.8
Marketing, supply and logistics	11.4			12.0			37.9			41.5			11.8		11.8			24.5		26.5
	11.5			17.4			42.9			57.8			11.9		13.7			24.6		31.4
Total costs of products/services sold	466.7			449.2			1,280.1			1,438.4			729.6		450.0			1,413.1		813.4

Expenses:
Operations and maintenance	33.1			49.3			119.9			143.8			34.2		45.0			67.9		86.8
General and administrative	18.3			32.8			70.2			90.9			22.7		28.9			49.1		51.9
Depreciation, amortization and accretion	50.3			75.5			177.0			224.5			48.7		64.4			97.1		126.7
	101.7			157.6			367.1			459.2			105.6		138.3			214.1		265.4
Other operating expenses:
Loss on long-lived assets, net	(2.1		)	(2.3		)	(34.8		)	(3.9		)	—		(32.7		)	—		(32.7		)
Goodwill impairment	—			(609.9		)	(109.7		)	(890.9		)	—		—			—		(109.7		)
Operating income (loss)	17.1			(588.3		)	(66.2		)	(788.7		)	15.1		(19.1		)	51.2		(83.3		)

Table of Contents

CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (continued) (in millions, except unit and per unit data) (unaudited)	CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (continued) (in millions, except unit and per unit data) (unaudited)												CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (continued) (in millions, except unit and per unit data) (unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Earnings from unconsolidated affiliates, net	13.4			2.8			26.1			11.2			9.6			6.2			17.7			12.7
Interest and debt expense, net	(27.5		)	(35.7		)	(97.9		)	(104.7		)	(24.1		)	(34.3		)	(50.6		)	(70.4		)
Gain (loss) on modification/extinguishment of debt	—			(2.7		)	10.0			(19.8		)	(0.4		)	10.0			(37.7		)	10.0
Other income, net	0.2			0.2			0.4			0.5			0.1			0.1			0.2			0.2
Income (loss) before income taxes	3.2			(623.7		)	(127.6		)	(901.5		)	0.3			(37.1		)	(19.2		)	(130.8		)
(Provision) benefit for income taxes	(0.2		)	0.3			(0.2		)	0.2
Benefit for income taxes													—			—			0.1			—
Net income (loss)	3.0			(623.4		)	(127.8		)	(901.3		)	0.3			(37.1		)	(19.1		)	(130.8		)
Net income (loss) attributable to non-controlling partners	6.1			(396.5		)	18.0			(642.7		)
Net income attributable to non-controlling partners													6.3			6.0			12.4			11.9
Net loss attributable to Crestwood Equity Partners LP	(3.1		)	(226.9		)	(145.8		)	(258.6		)	(6.0		)	(43.1		)	(31.5		)	(142.7		)
Net income attributable to preferred units	6.9			—			16.6			—			13.5			8.1			31.3			9.7
Net loss attributable to partners	$	(10.0	)	$	(226.9	)	$	(162.4	)	$	(258.6	)	$	(19.5	)	$	(51.2	)	$	(62.8	)	$	(152.4	)

Subordinated unitholders' interest in net loss	$	—		$	(5.4	)	$	—		$	(6.1	)	$	—		$	—		$	—		$	—
Common unitholders' interest in net loss	$	(10.0	)	$	(221.5	)	$	(162.4	)	$	(252.5	)	$	(19.5	)	$	(51.2	)	$	(62.8	)	$	(152.4	)
Net loss per limited partner unit:
Basic	$	(0.14	)	$	(11.78	)	$	(2.35	)	$	(13.65	)	$	(0.28	)	$	(0.74	)	$	(0.90	)	$	(2.21	)
Diluted	$	(0.14	)	$	(11.76	)	$	(2.35	)	$	(13.68	)	$	(0.28	)	$	(0.74	)	$	(0.90	)	$	(2.21	)
Weighted-average limited partners’ units outstanding (in thousands):	Weighted-average limited partners’ units outstanding (in thousands):												Weighted-average limited partners’ units outstanding (in thousands):
Basic	69,050			18,834			69,002			18,468			69,655			69,044			69,676			68,978
Dilutive units	—			439			—			439			—			—			—			—
Diluted	69,050			19,273			69,002			18,907			69,655			69,044			69,676			68,978

See accompanying notes.

Table of Contents

CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (unaudited)	CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (unaudited)												CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Net income (loss)	$	3.0		$	(623.4	)	$	(127.8	)	$	(901.3	)	$	0.3		$	(37.1	)	$	(19.1	)	$	(130.8	)
Change in fair value of Suburban Propane Partners, L.P. units	—			(1.0		)	1.3			(1.4		)	(0.5		)	0.5			(0.9		)	1.3
Comprehensive income (loss)	3.0			(624.4		)	(126.5		)	(902.7		)
Comprehensive income (loss) attributable to non-controlling interest	6.1			(396.5		)	18.0			(642.7		)
Comprehensive loss													(0.2		)	(36.6		)	(20.0		)	(129.5		)
Comprehensive income attributable to non-controlling interest													6.3			6.0			12.4			11.9
Comprehensive loss attributable to Crestwood Equity Partners LP	$	(3.1	)	$	(227.9	)	$	(144.5	)	$	(260.0	)	$	(6.5	)	$	(42.6	)	$	(32.4	)	$	(141.4	)

See accompanying notes.

Table of Contents

CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL (in millions) (unaudited)	CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL (in millions) (unaudited)														CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL (in millions) (unaudited)

	Preferred			Partners											Preferred			Partners
	Units	Capital		Common Units	Subordinated Units	Capital			Non-Controlling Partners			Total Partners’ Capital			Units	Capital		Common Units		Subordinated Units	Capital			Non-Controlling Partners			Total Partners’ Capital
Balance at December 31, 2015	60.7	$	535.8	68.2	0.4	$	2,227.6		$	183.5		$	2,946.9
Balance at December 31, 2016															66.5	$	564.5	69.1		0.4	$	1,782.0		$	192.5		$	2,539.0
Distributions to partners	4.3	—		—	—	(178.4		)	(11.4		)	(189.8		)	3.1	—		—		—	(83.6		)	(7.6		)	(91.2		)
Unit-based compensation charges	—	—		0.9	—	13.4			—			13.4			—	—		0.7		—	12.7			—			12.7
Taxes paid for unit-based compensation vesting	—	—		—	—	(0.8		)	—			(0.8		)	—	—		(0.2	)	—	(3.6		)	—			(3.6		)
Change in fair value of Suburban units	—	—		—	—	1.3			—			1.3
Change in fair value of Suburban Propane Partners, L.P. units															—	—		—		—	(0.9		)	—			(0.9		)
Other															—	—		—		—	(0.3		)	—			(0.3		)
Net income (loss)	—	16.6		—	—	(162.4		)	18.0			(127.8		)	—	31.3		—		—	(62.8		)	12.4			(19.1		)
Balance at September 30, 2016	65.0	$	552.4	69.1	0.4	$	1,900.7		$	190.1		$	2,643.2
Balance at June 30, 2017															69.6	$	595.8	69.6		0.4	$	1,643.5		$	197.3		$	2,436.6

See accompanying notes.

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CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)	CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)						CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)

	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2016			2015			2017			2016
Operating activities
Net loss	$	(127.8	)	$	(901.3	)	$	(19.1	)	$	(130.8	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and accretion	177.0			224.5			97.1			126.7
Amortization of debt-related deferred costs, discounts and premiums	5.1			6.6			3.5			3.4
Market adjustment on interest rate swaps	—			(0.5		)
Unit-based compensation charges	13.4			15.6			12.7			9.3
Loss on long-lived assets, net	34.8			3.9			—			32.7
Goodwill impairment	109.7			890.9			—			109.7
(Gain) loss on modification/extinguishment of debt	(10.0		)	19.8			37.7			(10.0		)
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received	(3.9		)	(1.6		)	0.5			(0.8		)
Deferred income taxes	(0.9		)	(2.5		)	(0.7		)	(0.6		)
Other	0.3			0.6			(0.4		)	0.1
Changes in operating assets and liabilities	46.8			45.6			1.6			53.3
Net cash provided by operating activities	244.5			301.6			132.9			193.0
Investing activities
Purchases of property, plant and equipment	(79.3		)	(122.8		)	(88.7		)	(76.2		)
Investment in unconsolidated affiliates	(6.2		)	(40.0		)	(18.5		)	(5.5		)
Capital distributions from unconsolidated affiliates	9.2			4.4			21.1			5.5
Net proceeds from sale of assets	943.1			2.9			1.0			942.0
Net cash provided by (used in) investing activities	866.8			(155.5		)	(85.1		)	865.8
Financing activities
Proceeds from the issuance of long-term debt	1,364.0			3,470.5			1,680.4			1,078.8
Principal payments on long-term debt	(2,279.4		)	(3,330.0		)
Payments on long-term debt							(1,630.3		)	(1,987.7		)
Payments on capital leases	(1.5		)	(1.6		)	(1.3		)	(0.9		)
Payments for debt-related deferred costs	(3.4		)	(17.3		)	(1.0		)	(3.3		)
Financing fees paid for early debt redemption	—			(13.6		)
Distributions to partners	(178.4		)	(77.2		)	(83.6		)	(137.0		)
Distributions paid to non-controlling partners	(11.4		)	(230.5		)	(7.6		)	(7.6		)
Net proceeds from the issuance of Crestwood Midstream Partners LP Class A preferred units	—			58.8
Taxes paid for unit-based compensation vesting	(0.8		)	(3.8		)	(3.6		)	(0.6		)
Other	0.1			(1.2		)	(0.1		)	(0.1		)
Net cash used in financing activities	(1,110.8		)	(145.9		)	(47.1		)	(1,058.4		)
Net change in cash	0.5			0.2			0.7			0.4
Cash at beginning of period	0.5			8.8			1.6			0.5
Cash at end of period	$	1.0		$	9.0		$	2.3		$	0.9
Supplemental schedule of noncash investing and financing activities
Net change to property, plant and equipment through accounts payable and accrued expenses	$	(9.4	)	$	(19.3	)	$	(6.9	)	$	(11.9	)

See accompanying notes.

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CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED BALANCE SHEETS (in millions)	CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED BALANCE SHEETS (in millions)				CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED BALANCE SHEETS (in millions)

	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
	(unaudited)				(unaudited)
Assets
Current assets:
Cash	$	0.5	$	0.1	$	2.0	$	1.3
Accounts receivable	223.2		236.5
Accounts receivable, less allowance for doubtful accounts of $1.4 million and $1.9 million at June 30, 2017 and December 31, 2016					290.3		289.8
Inventory	61.8		44.5		63.1		66.0
Assets from price risk management activities	10.4		32.6		12.8		6.3
Assets held for sale	55.0		—
Prepaid expenses and other current assets	5.1		19.9		7.0		9.7
Total current assets	356.0		333.6		375.2		373.1
Property, plant and equipment	2,878.7		4,077.7		2,886.8		2,885.5
Less: accumulated depreciation and depletion	550.2		552.0		652.8		587.1
Property, plant and equipment, net	2,328.5		3,525.7		2,234.0		2,298.4
Intangible assets	930.3		959.3		883.1		883.1
Less: accumulated amortization	229.6		197.9		255.5		230.2
Intangible assets, net	700.7		761.4		627.6		652.9
Goodwill	249.5		1,085.5		199.0		199.0
Investment in unconsolidated affiliates (Note 4)	1,099.2		254.3
Investments in unconsolidated affiliates					1,181.7		1,115.4
Other assets	2.9		3.1		2.1		1.8
Total assets	$	4,736.8	$	5,963.6	$	4,619.6	$	4,640.6
Liabilities and partners’ capital
Current liabilities:
Accounts payable	$	147.1	$	141.4	$	234.8	$	214.5
Accrued expenses and other liabilities (Note 3)	111.9		103.3
Accrued expenses and other liabilities					83.3		87.9
Liabilities from price risk management activities	14.2		7.4		8.0		28.6
Current portion of long-term debt (Note 7)	0.9		0.9
Current portion of long-term debt					1.0		1.0
Total current liabilities	274.1		253.0		327.1		332.0
Long-term debt, less current portion (Note 7)	1,576.7		2,501.8
Long-term debt, less current portion					1,613.0		1,522.7
Other long-term liabilities	34.5		43.3		44.6		42.0
Deferred income taxes	0.7		0.4		0.7		0.7
Commitments and contingencies (Note 10)
Partners’ capital (Note 9):
Partners’ capital	2,660.7		2,981.6		2,436.9		2,550.7
Interest of non-controlling partners in subsidiary	190.1		183.5		197.3		192.5
Total partners’ capital	2,850.8		3,165.1		2,634.2		2,743.2
Total liabilities and partners’ capital	$	4,736.8	$	5,963.6	$	4,619.6	$	4,640.6

See accompanying notes.

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CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (in millions) (unaudited)	CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (in millions) (unaudited)												CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (in millions) (unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended					Six Months Ended
	September 30,						September 30,						June 30,					June 30,
	2016			2015			2016			2015			2017		2016			2017		2016
Revenues:
Product revenues:
Gathering and processing	$	206.1		$	275.3		$	567.7		$	799.5		$	325.3	$	199.1		$	618.4	$	361.6
Marketing, supply and logistics	271.3			179.3			735.2			653.0			421.5		257.4			851.7		463.9
	477.4			454.6			1,302.9			1,452.5			746.8		456.5			1,470.1		825.5
Service revenues:
Gathering and processing	72.5			79.4			217.9			250.2			79.4		69.7			154.4		145.4
Storage and transportation	18.3			65.0			131.5			201.1			8.5		53.8			18.5		113.2
Marketing, supply and logistics	18.7			30.8			71.1			96.9			15.2		21.2			34.5		52.4
Related party (Note 11)	0.7			0.9			2.1			3.0			0.4		0.7			0.9		1.4
	110.2			176.1			422.6			551.2			103.5		145.4			208.3		312.4
Total revenues	587.6			630.7			1,725.5			2,003.7			850.3		601.9			1,678.4		1,137.9

Costs of product/services sold (exclusive of items shown separately below):
Product costs:
Gathering and processing	221.1			275.4			618.4			818.9			350.7		221.9			663.2		397.3
Marketing, supply and logistics	229.1			149.2			605.1			538.5			363.0		210.0			717.2		376.0
Related party (Note 11)	5.0			7.2			13.7			23.2			4.0		4.4			8.1		8.7
	455.2			431.8			1,237.2			1,380.6			717.7		436.3			1,388.5		782.0
Service costs:
Gathering and processing	—			0.2			0.1			0.5			—		—			—		0.1
Storage and transportation	0.1			5.2			4.9			15.8			0.1		1.9			0.1		4.8
Marketing, supply and logistics	11.4			12.0			37.9			41.5			11.8		11.8			24.5		26.5
	11.5			17.4			42.9			57.8			11.9		13.7			24.6		31.4
Total costs of product/services sold	466.7			449.2			1,280.1			1,438.4			729.6		450.0			1,413.1		813.4

Expenses:
Operations and maintenance	33.6			48.8			116.7			143.3			34.2		41.4			67.9		83.1
General and administrative	17.3			29.2			67.5			82.1			22.1		28.0			47.6		50.2
Depreciation, amortization and accretion	53.2			70.0			185.2			208.3			51.4		67.1			102.6		132.0
	104.1			148.0			369.4			433.7			107.7		136.5			218.1		265.3
Other operating expenses:
Loss on long-lived assets, net	(2.1		)	(2.3		)	(34.8		)	(3.8		)	—		(32.7		)	—		(32.7		)
Goodwill impairment	—			(609.9		)	(109.7		)	(678.5		)	—		—			—		(109.7		)
Operating income (loss)	14.7			(578.7		)	(68.5		)	(550.7		)	13.0		(17.3		)	47.2		(83.2		)

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CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (continued) (in millions) (unaudited)	CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (continued) (in millions) (unaudited)												CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (continued) (in millions) (unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
Earnings from unconsolidated affiliates, net	13.4			2.8			26.1			11.2			9.6			6.2			17.7			12.7
Interest and debt expense, net	(27.5		)	(32.6		)	(97.9		)	(95.1		)	(24.1		)	(34.3		)	(50.6		)	(70.4		)
Gain (loss) on modification/extinguishment of debt	—			(1.8		)	10.0			(18.9		)	(0.4		)	10.0			(37.7		)	10.0
Income (loss) before income taxes	0.6			(610.3		)	(130.3		)	(653.5		)
(Provision) benefit for income taxes	—			0.1			—			(0.4		)
Net income (loss)	0.6			(610.2		)	(130.3		)	(653.9		)
Loss before income taxes													(1.9		)	(35.4		)	(23.4		)	(130.9		)
Benefit (provision) for income taxes													—			(0.2		)	0.1			—
Net loss													(1.9		)	(35.6		)	(23.3		)	(130.9		)
Net income attributable to non-controlling partners	6.1			5.9			18.0			17.2			6.3			6.0			12.4			11.9
Net loss attributable to Crestwood Midstream Partners LP	(5.5		)	(616.1		)	(148.3		)	(671.1		)	$	(8.2	)	$	(41.6	)	$	(35.7	)	$	(142.8	)
Net income attributable to Class A preferred units	—			6.4			—			23.1
Net loss attributable to partners	$	(5.5	)	$	(622.5	)	$	(148.3	)	$	(694.2	)

See accompanying notes.

Table of Contents

CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL (in millions) (unaudited)	CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL (in millions) (unaudited)										CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL (in millions) (unaudited)

		Partners			Non-Controlling Partners			Total Partners’ Capital				Partners			Non-Controlling Partners			Total Partners’ Capital
Balance at December 31, 2015		$	2,981.6		$	183.5		$	3,165.1
Balance at December 31, 2016												$	2,550.7		$	192.5		$	2,743.2
Distributions to partners		(185.0		)	(11.4		)	(196.4		)		(86.9		)	(7.6		)	(94.5		)
Unit-based compensation charges		13.4			—			13.4				12.7			—			12.7
Taxes paid for unit-based compensation vesting		(0.8		)	—			(0.8		)		(3.6		)	—			(3.6		)
Other		(0.2		)	—			(0.2		)		(0.3		)	—			(0.3		)
Net income (loss)		(148.3		)	18.0			(130.3		)		(35.7		)	12.4			(23.3		)
Balance at September 30, 2016		$	2,660.7		$	190.1		$	2,850.8
Balance at June 30, 2017												$	2,436.9		$	197.3		$	2,634.2

See accompanying notes.

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CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)	CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)						CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)

	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2016			2015			2017			2016
Operating activities
Net loss	$	(130.3	)	$	(653.9	)	$	(23.3	)	$	(130.9	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and accretion	185.2			208.3			102.6			132.0
Amortization of debt-related deferred costs and premiums	5.1			5.9			3.5			3.4
Unit-based compensation charges	13.4			14.0			12.7			9.3
Goodwill impairment	109.7			678.5			—			109.7
Loss on long-lived assets	34.8			3.8			—			32.7
(Gain) loss on modification/extinguishment of debt	(10.0		)	18.9			37.7			(10.0		)
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received	(3.9		)	(1.6		)	0.5			(0.8		)
Deferred income taxes	0.2			0.2			—			0.2
Other	0.3			0.6			(0.4		)	0.1
Changes in operating assets and liabilities	46.3			55.9			2.8			50.3
Net cash provided by operating activities	250.8			330.6			136.1			196.0
Investing activities
Purchases of property, plant and equipment	(79.3		)	(122.8		)	(88.7		)	(76.2		)
Investment in unconsolidated affiliates	(6.2		)	(39.8		)	(18.5		)	(5.5		)
Capital distributions from unconsolidated affiliates	9.2			4.4			21.1			5.5
Net proceeds from sale of assets	943.1			2.9			1.0			942.0
Net cash provided by (used in) investing activities	866.8			(155.3		)	(85.1		)	865.8
Financing activities
Proceeds from the issuance of long-term debt	1,364.0			2,698.8			1,680.4			1,078.8
Principal payments on long-term debt	(2,279.2		)	(2,187.9		)
Payments on long-term debt							(1,630.3		)	(1,987.5		)
Payments on capital leases	(1.5		)	(1.6		)	(1.3		)	(0.9		)
Payments for debt-related deferred costs	(3.4		)	(17.3		)	(1.0		)	(3.3		)
Financing fees paid for early debt redemption	—			(13.6		)
Distributions to partners	(185.0		)	(710.0		)	(94.5		)	(148.2		)
Distributions paid to non-controlling partners	(11.4		)	(7.6		)
Net proceeds from the issuance of Class A preferred units	—			58.8
Taxes paid for unit-based compensation vesting	(0.8		)	(2.1		)	(3.6		)	(0.6		)
Other	0.1			(0.2		)
Net cash used in financing activities	(1,117.2		)	(182.7		)	(50.3		)	(1,061.7		)
Net change in cash	0.4			(7.4		)	0.7			0.1
Cash at beginning of period	0.1			7.6			1.3			0.1
Cash at end of period	$	0.5		$	0.2		$	2.0		$	0.2
Supplemental schedule of non-cash investing and financing activities
Net change to property, plant and equipment through accounts payable and accrued expenses	$	(9.4	)	$	(19.3	)	$	(6.9	)	$	(11.9	)

See accompanying notes.

Table of Contents

CRESTWOOD EQUITY PARTNERS LP

CRESTWOOD MIDSTREAM PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1 – Organization and Business Description

The accompanying notes to the consolidated financial statements apply to Crestwood Equity Partners LP and Crestwood Midstream Partners LP, unless otherwise indicated. References in this report to “we,” “us,” “our,” “ours,” “our company,” the “partnership,” the “Company,” "Crestwood Equity," “CEQP,” and similar terms refer to either Crestwood Equity Partners LP itself or Crestwood Equity Partners LP and its consolidated subsidiaries, as the context requires. Unless otherwise indicated, references to "Crestwood Midstream" and "CMLP" refer to Crestwood Midstream Partners LP and its consolidated subsidiaries.

The accompanying consolidated financial statements and related notes should be read in conjunction with our ~~2015~~2016 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February ~~29, 2016.~~27, 2017. The financial information as of ~~September~~June 30, ~~2016,~~2017, and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, is unaudited. The consolidated balance sheets as of December 31, ~~2015,~~2016, were derived from the audited balance sheets filed in our ~~2015~~2016 Annual Report on Form 10-K.

Organization

Crestwood Equity is a publicly-traded (NYSE: CEQP) Delaware limited partnership that develops, acquires, owns or controls, and operates primarily fee-based assets and operations within the energy midstream sector. We provide broad-ranging infrastructure solutions across the value chain to service premier liquids-rich natural gas and crude oil shale plays across the United States. We own and operate a diversified portfolio of crude oil and natural gas gathering, processing, storage and transportation assets and connect fundamental energy supply with energy demand across North America. Crestwood Equity is a holding company and all of its consolidated operating assets are owned by or through its wholly-owned subsidiary, Crestwood Midstream, a Delaware limited partnership.

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

Our consolidated financial statements are prepared in accordance with ~~accounting principles generally accepted in the United States of America~~Generally Accepted Accounting Principles (GAAP) and include the accounts of all consolidated subsidiaries after the elimination of all intercompany accounts and transactions. In management’s opinion, all necessary adjustments to fairly present our results of operations, financial position and cash flows for the periods presented have been made and all such adjustments are of a normal and recurring nature. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the SEC.

Significant Accounting Policies

There were no material changes in our significant accounting policies from those described in our ~~2015~~2016 Annual Report on Form 10-K. Below is an update of ~~certain of~~ our accounting ~~policies.~~

~~Principles~~policies related to Goodwill and Unit-Based Compensation, and a description of ~~Consolidation~~

We consolidate entities when we have the ability to control or direct the operating and financial decisions of the entity or when we have a significant interest in the entity that give us the ability to direct the activities that are significant to that entity. The determination to consolidate or apply the equity method of accounting to an entity can also require us to evaluate whether the entity is considered a variable interest entity. This evaluation, along with the determination of our ability to control, direct or exert significant influence over an entity involves the use of judgment. We apply the equity method of accounting where we can exert significant influence over, but do not control or direct the policies, decisions or activities of an entity. We use the cost method of accounting where we are unable to exert significant influence over the entity.

~~In April 2016, our wholly-owned subsidiary,~~ Crestwood Pipeline and Storage Northeast LLC (Crestwood Northeast) and Con Edison Gas Pipeline and Storage Northeast, LLC (CEGP), a wholly-owned subsidiary of Consolidated Edison, Inc. (Con Edison), entered into a definitive agreement to form a joint venture, Stagecoach Gas Services LLC (Stagecoach Gas), to own

~~Table of Contents~~

and further develop our existing natural gas pipeline and storage business located in southern New York and northern Pennsylvania (the NE S&T assets) and our 37.5 mile intrastate natural gas pipeline located in New York which is owned by Crestwood Pipeline East LLC (Pipeline East). On June 3, 2016, we contributed to Stagecoach Gas the entities owning the NE S&T assets, CEGP contributed $945 million to Stagecoach Gas in exchange for a 50% equity interest in Stagecoach Gas, and Stagecoach Gas distributed to Crestwood Northeast the net cash proceeds received from CEGP. Our NE S&T assets were previously included in our storage and transportation segment.Equity's 2017 Long Term Incentive Plan.

Effective June 3, 2016, we deconsolidated the NE S&T assets as a result of the contribution of these assets to Stagecoach Gas as described above and began accounting for our 50% equity interest in Stagecoach Gas under the equity method of accounting and recorded our Pipeline East assets as assets held for sale as of June 30, 2016. See Notes 3 and 4 for a further discussion of our investment in Stagecoach Gas and our assets held for sale. The deconsolidation of our NE S&T assets resulted in a decrease of $1,094.6 million in property, plant and equipment, net, $8.5 million of intangible assets, net and $10.9 million of other assets and liabilities, net as of June 3, 2016. For a discussion of decreases in goodwill associated with the joint venture transactions, see "Goodwill~~" below.~~

~~Property, Plant and Equipment~~

Property, plant and equipment is recorded at its original cost of construction or, upon acquisition, at the fair value of the assets acquired. The accounting predecessor of Crestwood Equity acquired the accounting predecessor of Crestwood Midstream in October 2010, and accordingly recorded its acquisition of Crestwood Midstream's property, plant and equipment related to its gathering and processing assets in the Barnett Shale at fair value on that date. The resulting increase to Crestwood Midstream's property, plant and equipment was not pushed down by Crestwood Equity to Crestwood Midstream's balance sheet, as permitted by GAAP.

We evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that the amount of an asset may not be recoverable. If such events or changes in circumstances are present, a loss is recognized if the carrying value of the asset is in excess of the sum of the undiscounted cash flows expected to result from the use of the asset and its eventual disposition. During the fourth quarter of 2015, Crestwood Equity recorded a $354.4 million impairment of its property, plant and equipment related to its gathering and processing assets in the Barnett Shale. Crestwood Midstream did not record an impairment of its property, plant and equipment related to its gathering and processing assets in the Barnett Shale as the sum of the undiscounted cash flows expected to result from the use of the assets and their eventual disposition exceeded the carrying value of the property, plant and equipment by over 30%. As a result, Crestwood Midstream's property, plant and equipment exceeds Crestwood Equity's property, plant and equipment related to its gathering and processing assets in the Barnett Shale as of September 30, 2016 and December 31, 2015.

~~Assets Held for Sale~~

We classify assets (or groups of assets) to be disposed of as held for sale when specific criteria have been met. Assets classified as held for sale are recorded at the lower of the carrying value or the estimated fair value less cost to sell of those assets. We cease depreciation and amortization of the assets in the period they are considered held for sale.

~~Goodwill~~

Our goodwill represents the excess of the amount we paid for a business over the fair value of the net identifiable assets acquired. We evaluate goodwill for impairment annually on December 31, and whenever events indicate that it is more likely than not that the fair value of a reporting unit could be less than its carrying amount. This evaluation requires us to compare the fair value of each of our reporting units to its carrying value (including goodwill). If the fair value exceeds the carrying amount, goodwill of the reporting unit is not considered impaired.

We estimate the fair value of our reporting units based on a number of factors, including discount rates, projected cash flows, and the potential value we would receive if we sold the reporting unit. We also compare the total fair value of our reporting units to our overall enterprise value, which considers the market value for our common and preferred units. Estimating projected cash flows requires us to make certain assumptions as it relates to the future operating performance of each of our reporting units (which includes assumptions, among others, about estimating future operating margins and related future growth in those margins, contracting efforts and the cost and timing of facility expansions) and assumptions related to our customers, such as their future capital and operating plans and their financial condition. When considering operating performance, various factors are considered such as current and changing economic conditions and the commodity price environment, among others. Due to the imprecise nature of these projections and assumptions, actual results can and often do, differ from our estimates. If

~~Table of Contents~~

the assumptions embodied in the projections prove inaccurate, we could incur a future impairment charge. In addition, the use of the income approach to determine the fair value of our reporting units (see further discussion of the use of the income approach below) could result in a different fair value if we had utilized a market approach, or a combination thereof.

We acquired substantially all of our reporting units in 2013, 2012 and 2011, which required us to record the assets, liabilities and goodwill of each of those reporting units at fair value on the date they were acquired. As a result, any level of decrease in the forecasted cash flows of these businesses or increases in the discount rates utilized to value those businesses from their respective acquisition dates would likely result in the fair value of the reporting unit falling below the carrying value of the reporting unit, and could result in an assessment of whether that reporting unit's goodwill is impaired.

Commodity prices have declined since 2014, and that decline has adversely impacted forecasted cash flows, discount rates and stock/unit prices for most companies in the midstream industry, including us. In particular, due to the significant, sustained decrease in the market price of our common units during the first quarter of 2016, we evaluated the carrying value of our reporting units and determined it was more likely than not that the goodwill associated with several of our reporting units was impaired as of March 31, 2016. As a result of further analysis of the fair value of our reporting units, we recorded goodwill impairments on several of our reporting units during the first quarter of 2016. Since March 31, 2016, the market price of our common units improved and, as such, we did not record any additional goodwill impairments during the second and third quarters of 2016.

~~The following table summarizes the goodwill of our various reporting units at September 30, 2016 (in millions).~~

Goodwill at December 31, 2015
Goodwill Impairments during the
Three Months Ended
March 31,
2016

Impact of Deconsolidation of NE S&T Assets during the Three Months Ended
June 30,
2016
Goodwill at September 30, 2016
Gathering and Processing
Marcellus $ 8.6
$ 8.6
$ —
$ —
Arrow 45.9
—
—
45.9
Storage and Transportation
Northeast Storage and Transportation 726.3
—
726.3
—
COLT 44.9
13.7
—
31.2
Marketing, Supply and Logistics
Supply and Logistics 167.2
65.5
—
101.7
Storage and Terminals 50.5
14.1
—
36.4
US Salt 12.6
—
—
12.6
Trucking 29.5
7.8
—
21.7
Total $ 1,085.5
$ 109.7
$ 726.3
$ 249.5

The goodwill impairments recorded during the first quarter of 2016 primarily resulted from increasing the discount rates utilized in determining the fair value of the ~~reporting units for certain of those~~ reporting units considering the significant, sustained decrease in the market price of our common units and the continued decrease in commodity prices and its impact on the midstream industry and our ~~customers. Our COLT, Supply and Logistics, Storage and Terminals and Trucking reporting units also experienced impairments~~customers during ~~2015 based on the impact~~ that the prolonged low commodity price environment was expected to have on the demand for future services provided by these operations. Despite increases in the operating results of these reporting units from 2013 to 2015, we revised our cash flow forecasts for these operations at December 31, 2015 in light of our view at the time that these operations would not grow as fast or as significantly in the future as originally forecasted in 2013 when the assets were acquired.

~~The remaining goodwill related to these reporting units represented the fair value of the goodwill, which is a Level 3 fair value measurement.~~period. We utilized the income approach to determine the fair value of our reporting units given the limited availability of comparable market-based transactions as of March 31, 2016, and ~~December 31, 2015, and~~ we utilized discount rates ranging

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from 10% to 19% in applying the income approach to determine the fair value of our reporting units with goodwill as of March 31, 2016.

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The following table summarizes ~~the~~ goodwill impairments of certain of our reporting units recorded during the ~~three and nine~~six months ended ~~September~~June 30, ~~2015 (in millions).~~2016 (in millions):

Three Months Ended Nine Months Ended
September 30, 2015
September 30,
2015
Gathering and Processing
Fayetteville $ 39.1
$ 47.4
Storage and Transportation
COLT 348.0
348.0
Marketing, Supply and Logistics
West Coast 57.5
85.9
Trucking 147.3
147.3
Watkins Glen 18.0
49.9
Total Crestwood Midstream $ 609.9
$ 678.5
Barnett (Gathering and Processing) —
212.4
Total Crestwood Equity $ 609.9
$ 890.9

The impairment of the Fayetteville, COLT, West Coast and Trucking goodwill primarily resulted from increasing the discount rate utilized in determining the fair value of the reporting units, considering the decrease in commodity prices and its impact on the midstream industry and Crestwood Midstream's customers in those areas. The impairment of the Watkins Glen goodwill primarily resulted from increasing the discount rate utilized in determining the fair value of the reporting unit and delays and uncertainties in the permitting of the proposed storage facility.

In addition to the goodwill impairments recorded by Crestwood Midstream as reflected in the table above, Crestwood Equity recorded a goodwill impairment of its Barnett reporting unit of approximately $212.4 million during the three months ended June 30, 2015. The impairment primarily resulted from increasing the discount rate utilized in determining the fair value of the reporting unit, considering the actions of its primary customer in the Barnett Shale, Quicksilver, related to its filing for protection under Chapter 11 of the U.S. Bankruptcy Code in March 2015.

~~Deferred Financing Costs~~



Gathering and Processing
Marcellus	$	8.6
Storage and Transportation
COLT	13.7
Marketing, Supply and Logistics
Supply and Logistics	65.5
Storage and Terminals	14.1
Trucking	7.8
Total	$	109.7

Deferred financing costs represent costs associated with obtaining long-term financing and are amortized over the term of the related debt using a method which approximates the effective interest method and has a weighted average life of six years.Unit-Based Compensation. Effective January 1, ~~2016,~~2017, we adopted the provisions of Accounting Standards Update (ASU) ~~2015-03,~~2016-09, ~~Interest~~Compensation - ~~Imputation~~Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of ~~Interest (Subtopic 835-30),~~ ~~which requires us to classify our net deferred financing costs~~the accounting for share-based payment award transactions, including the classification of ~~$35.9 million~~awards as either equity or liabilities and ~~$40.9 million as~~the presentation on the statement of cash flows. The adoption of this accounting standard did not have a ~~reduction of long-term debt~~material impact on our consolidated ~~balance sheets at~~ financial statements.

~~September 30, 2016~~ ~~and~~ ~~December 31, 2015~~Crestwood Equity 2017 Long Term Incentive Plan. ~~Such costs were previously reflected as intangible assets~~In February 2017, Crestwood Equity issued 381,704 performance units under the Crestwood Equity Partners LP Long Term Incentive Plan (Crestwood LTIP). The performance units are designed to provide an incentive for continuous employment to certain key employees. The vesting of performance units is subject to the attainment of certain performance and market goals over a three-year period, and entitle a participant to receive common units of Crestwood Equity without payment of an exercise price upon vesting. As of June 30, 2017, we had total unamortized compensation expense of approximately $7.8 million related to these performance units, which we expect will be amortized during the next three years. We recognized compensation expense of approximately $1.6 million and $2.0 million under the Crestwood LTIP related to these performance units during the three and six months ended June 30, 2017, which is included in general and administrative expenses on our consolidated ~~balance sheets.~~statements of operations.

New Accounting Pronouncements Issued But Not Yet Adopted

As of ~~September~~June 30, ~~2016,~~2017, the following accounting standards had not yet been adopted by us:

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. We ~~expect~~ anticipate utilizing the modified retrospective method

to adopt the provisions of this standard effective January 1, 2018 and are currently ~~evaluating~~applying the ~~method by which we will adopt~~provisions of the standard to our aggregated listing of gathering and processing, storage and transportation, and marketing, supply and logistics revenue contracts that involve revenue generating activities that occur after January 1, 2018. We are also in the process of implementing appropriate changes to our processes, systems and controls to support the accounting and disclosure requirements of the new standard. We are currently evaluating the impact that this standard will have on our consolidated financial ~~statements.~~

~~Table~~statements, especially on contractual arrangements that involve reimbursements of ~~Contents~~

capital expenditures, tiered-rate structures, and non-cash consideration, including the presentation of the related revenues in our financial statements and related footnotes.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which revises the accounting for leases by requiring certain leases to be recognized as assets and liabilities on the balance sheet, and requiring companies to disclose additional information about their leasing arrangements. We expect to adopt the provisions of this standard effective January 1, 2019 and are currently evaluating the impact that this standard will ~~have on our consolidated financial statements.~~

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~, which simplifies several aspects of the accounting for share-based payment award transactions, including the classification of awards as either equity or liabilities and presentation on the statement of cash flows. We expect to adopt the provisions of this standard effective January 1, 2017 and are currently evaluating the impact that this standard may have on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. We expect to adopt the provisions of this standard effective January 1, 2018 and are currently evaluating the impact that this standard may have on our consolidated financial statements.

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In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which changes the annual quantitative goodwill impairment test to eliminate the current two step method and replace it with a single test to determine if goodwill is impaired and the amount of any impairment. We are required to adopt the provisions of this standard by January 1, 2020 and are currently evaluating the impact that this standard may have on our consolidated financial statements.

Note 3 – Certain Balance Sheet Information

~~Assets Held for Sale~~

In conjunction with the contribution agreement related to Stagecoach Gas, we agreed to contribute our wholly-owned subsidiary, Pipeline East, to Stagecoach Gas, CEGP has agreed to contribute approximately $30 million to Stagecoach Gas, and Stagecoach Gas will distribute to us the net cash proceeds received from CEGP. We classified the property, plant and equipment and goodwill to be contributed to Stagecoach Gas as assets held for sale on our consolidated balance sheet at their fair value at September 30, 2016. The fair value is based on the consideration to be received from the contribution of Pipeline East to Stagecoach Gas and the forecasted discounted cash flows to be received from our investment in Stagecoach Gas, which is a Level 3 fair value measurement. The sale is contingent upon New York State regulatory approval and satisfaction of certain other closing conditions, which we believe is probable at September 30, 2016.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 (in millions):


	CEQP				CMLP				CEQP				CMLP
	September 30,		December 31,		September 30,		December 31,		June 30,		December 31,		June 30,		December 31,
	2016		2015		2016		2015		2017		2016		2017		2016
Accrued expenses	$	36.8	$	46.4	$	35.3	$	44.1	$	39.0	$	46.9	$	38.1	$	45.5
Accrued property taxes	6.7		4.8		6.7		4.8		6.6		4.2		6.6		4.2
Accrued product purchases payable	5.2		1.5		5.2		1.5
Taxes payable	0.3		0.5		0.2		0.5
Accrued natural gas purchases									0.2		4.9		0.2		4.9
Tax payable									0.3		1.2		—		—
Interest payable	32.8		26.2		32.8		26.2		21.6		22.8		21.6		22.8
Accrued additions to property, plant and equipment	2.6		10.4		2.6		10.4		9.0		1.7		9.0		1.7
Capital leases	1.5		1.6		1.5		1.6		1.1		1.3		1.1		1.3
Deferred revenue	27.6		14.2		27.6		14.2		6.7		7.5		6.7		7.5
Total accrued expenses and other liabilities	$	113.5	$	105.6	$	111.9	$	103.3	$	84.5	$	90.5	$	83.3	$	87.9

Note 4 - Investments in Unconsolidated Affiliates

~~Stagecoach Gas Services LLC.~~Crestwood Permian Basin Holdings LLC

In ~~April~~October 2016, Crestwood ~~Northeast~~Infrastructure, our wholly-owned subsidiary, and ~~CEGP entered into~~an affiliate of First Reserve formed a ~~definitive~~joint venture, Crestwood Permian Basin Holdings LLC (Crestwood Permian), to fund and own the Nautilus gathering system (described below) and other potential investments in the Delaware Permian. As part of this transaction, we transferred to the joint venture 100% of the equity interest of the Crestwood Permian Basin LLC (Crestwood Permian Basin), which owns the Nautilus gathering system. We manage and we account for our 50% ownership interest in Crestwood Permian, which is a VIE, under the equity method of accounting as we exercise significant influence, but do not control Crestwood Permian and we are not its primary beneficiary due to First Reserve’s rights to exercise control over the entity.

Crestwood Permian has a long-term agreement with SWEPI LP (SWEPI), a subsidiary of Royal Dutch Shell plc, to ~~form the Stagecoach JV to~~construct, own and ~~further develop our NE S&T assets. Pursuant~~operate a natural gas gathering system in SWEPI’s operated position in the Delaware Permian. SWEPI has dedicated to Crestwood Permian approximately 100,000 acres and gathering rights for SWEPI’s gas production across a large acreage position in Loving, Reeves and Ward Counties, Texas. The Nautilus gathering system is designed to include 194 miles of low pressure gathering lines, 36 miles of high pressure trunklines and centralized compression facilities which are expandable over time as production increases, providing gas gathering capacity of approximately 250 MMcf/d. The initial build-out of the ~~contribution agreement,~~Nautilus gathering system was completed on June 6, 2017 and includes 20 receipt point meters, 60 miles of pipeline, a 24-mile high pressure header system, 10,800 horsepower of compression and a high pressure delivery point. Crestwood Permian provides gathering, dehydration, compression and liquids handling services to SWEPI on a fixed fee basis. In conjunction with this growth project, we ~~contributed~~granted SWEPI an option to ~~Stagecoach Gas the entities owning the NE S&T assets, CEGP contributed $945 million~~purchase up to ~~Stagecoach Gas in exchange for~~ a 50% equity interest in ~~Stagecoach Gas, and Stagecoach Gas distributed~~Crestwood Permian Basin, which owns the Nautilus gathering system. On August 1, 2017, SWEPI exercised their option to purchase a 50% equity interest in Crestwood ~~Northeast the cash proceeds received (net of approximately $3~~Permian Basin.

Through June 30, 2017, First Reserve has contributed $37.5 million ~~of cash transferred~~ to the joint ~~venture) from CEGP. Effective June 3, 2016,~~venture and we ~~deconsolidated~~have contributed approximately $17.0 million to the joint venture to fund the early-stage build-out of the Nautilus gathering system. We will fund the next $20.5 million of capital requirements for the build-out, and then both parties will fund the remaining capital requirements on a

1917

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~~NE S&T assets~~pro rata basis. CEQP issued a guarantee in conjunction with the Crestwood Permian gas gathering agreement with SWEPI described above, under which CEQP has agreed to fund 100% of the costs to build the Nautilus gathering system (which is currently estimated to cost $180 million) if Crestwood Permian fails to do so. We do not believe this guarantee is probable of resulting in future losses based on our assessment of the nature of the guarantee, the financial condition of the guaranteed party and the period of time that the guarantee has been outstanding, and as a result, we have not recorded a liability on our balance sheet at June 30, 2017 and December 31, 2016.

On June 21, 2017, we contributed to Crestwood Permian 100% of ~~this transaction and began accounting for our 50%~~ theequity interest of Crestwood New Mexico Pipeline LLC (Crestwood New Mexico), our wholly-owned subsidiary that owns our Delaware Basin assets located in ~~Stagecoach Gas~~Eddy County, New Mexico. This contribution was treated as a transaction between entities under ~~the equity method~~common control (because of ~~accounting. We reflected~~our relationship with First Reserve), and accordingly we deconsolidated Crestwood New Mexico and our investment in ~~Stagecoach Gas at $844 million, which represented~~Crestwood Permian was increased by the ~~fair~~historical book value of our proportionate share of the assets at June 3, 2016 and is based on the forecasted discounted cash flows of the investment (which is a Level 3 fair value measurement). We recognized a loss on the deconsolidation of the NE S&Tthese assets of approximately ~~$32.9~~$69.4 million. ~~See our 2015 Annual Report on Form 10-K for~~In conjunction with this contribution, First Reserve has agreed to contribute to Crestwood Permian the first $151 million of capital cost required to fund the expansion of the Delaware Basin assets, which includes a ~~description of our NE S&T assets.~~new processing plant located in Orla, Texas and associated pipelines (Orla processing plant).

~~Net Investments and Earnings~~

~~Our net investments in and earnings from our unconsolidated affiliates are as follows (in millions, unless otherwise stated~~):

Ownership Percentage Investment Earnings (Loss) from Unconsolidated Affiliates
September 30, September 30, December 31, Three Months Ended September 30, Nine Months Ended September 30,
2016 2016 2015 2016 2015 2016 2015
Stagecoach Gas Services LLC⁽¹⁾
50.00 % $ 849.4
$ —
$ 6.8
$ —
$ 9.1
$ —
Jackalope Gas Gathering Services, L.L.C.⁽²⁾
50.00 %
⁽³⁾
199.7
202.4
5.5
2.0
16.5
5.6
Tres Palacios Holdings LLC⁽⁴⁾
50.01 % 35.4
36.8
0.8
0.6
(0.7 ) 2.1
Powder River Basin Industrial Complex, LLC⁽⁵⁾
50.01 % 14.7
15.1
0.3
0.2
1.2
3.5
Total $ 1,099.2
$ 254.3
$ 13.4
$ 2.8
$ 26.1
$ 11.2


~~(1)~~	As of September 30, 2016, our equity in the underlying net assets of Stagecoach Gas exceeded our investment balance by approximately $51.0 million. This excess amount is entirely attributable to goodwill and, as such, is not subject to amortization. Our Stagecoach Gas investment is included in our storage and transportation segment.

~~(2)~~

As of September 30, 2016, our equity in the underlying net assets of Jackalope Gas Gathering Services, L.L.C. (Jackalope) exceeded our investment balance by approximately $0.8 million. We amortize this amount over 20 years, which represents the life of Jackalope’s gathering agreement with Chesapeake Energy Corporation (Chesapeake), and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. We recorded amortization of less than $0.1 million for both the three and nine months ended September 30, 2016 and $0.8 million and $2.3 million for the three and nine months ended September 30, 2015. Our Jackalope investment is included in our gathering and processing segment.


~~(3)~~	~~Excludes non-controlling interests related to our investment in Jackalope. See Note 9 for a further discussion of our non-controlling interest related to our investment in Jackalope.~~

~~(4)~~

As of September 30, 2016, our equity in the underlying net assets of Tres Palacios Holdings LLC (Tres Holdings) exceeded our investment balance by approximately $28.2 million. We amortize this amount over the life of the Tres Palacios Gas Storage LLC (Tres Palacios) sublease agreement, and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. We recorded amortization of $0.3 million for the three months ended September 30, 2016 and 2015, and $0.9 million for the nine months ended September 30, 2016 and 2015. Our Tres Holdings investment is included in our storage and transportation segment.

~~(5)~~

As of September 30, 2016, our equity in the underlying net assets of Powder River Basin Industrial Complex, LLC (PRBIC) exceeded our investment balance by approximately $22.2 million. We amortize a portion of this amount over the life of PRBIC's property, plant and equipment and its agreement with Chesapeake, and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. Approximately $10.6 million of this excess amount relates to goodwill and, as such, is not subject to amortization. We recorded amortization of approximately $0.4 million and $1.2 million for the three and nine months ended September 30, 2016. During the three months ended June 30, 2015, we recorded additional equity earnings of approximately $3.2 million related to a gain associated with the adjustment of our member's capital account by our equity investee. Our PRBIC investment is included in our storage and transportation segment.

~~Distributions and Contributions~~

~~Stagecoach Gas.~~ ~~Stagecoach Gas is required, within 30 days following the end~~Pursuant to Crestwood Permian's limited liability company agreement, we will receive 100% of ~~each quarter, to distribute 65% and 35% of its~~Crestwood New Mexico's available cash (as defined in ~~its~~the limited liability company agreement) ~~to CEGP and us, respectively.~~until the earlier of the Orla processing plant in-service date or June 30, 2018, at which time the distributions will be based on the members respective ownership percentages. Because our ownership and distribution percentages will differ ~~we determine the~~during this period, equity earnings from ~~Stagecoach Gas~~Crestwood Permian is determined using the Hypothetical Liquidation at Book Value (HLBV) method. Under the HLBV method, a calculation is prepared at each balance sheet date to determine the amount that we would receive if ~~Stagecoach Gas~~Crestwood Permian were to liquidate all of its assets, as valued in accordance with GAAP, and distribute that cash to the members. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is our share of the earnings or losses from the equity investment for the period, which approximates how earnings are allocated under the terms of the limited liability company agreement. ~~During the three months ended September 30,~~

Stagecoach Gas Services LLC. In June 2016, we contributed to Stagecoach Gas Services LLC (Stagecoach Gas) the entities owning the Northeast storage and transportation assets, Con Edison Gas Pipeline Storage Northeast, LLC (CEGP), a wholly-owned subsidiary of Consolidated Edison, Inc., contributed $945 million to Stagecoach Gas in exchange for a 50% equity interest in Stagecoach Gas, and Stagecoach Gas distributed to us the cash proceeds received ~~a cash distribution~~(net of approximately ~~$3.7~~$3 million of cash transferred to the joint venture) from CEGP. We deconsolidated the Northeast storage and transportation assets as a result of this transaction and began accounting for our 50% equity interest in Stagecoach ~~Gas. In October 2016, we received~~under the equity method of accounting. We recognized a ~~cash distribution~~loss on the deconsolidation of the Northeast storage and transportation assets of approximately ~~$12.3~~$32.9 million ~~from Stagecoach Gas.~~.

2018

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Net Investments and Earnings

~~Jackalope.~~Our net investments in and earnings from our unconsolidated affiliates are as follows (in millions, unless otherwise stated):



	Investment					Earnings (Loss) from Unconsolidated Affiliates
	June 30,		December 31,			Three Months Ended June 30,						Six Months Ended June 30,
	2017		2016			2017			2016			2017			2016
Stagecoach Gas Services LLC⁽¹⁾	$	859.9	$	871.0		$	6.6		$	2.3		$	12.6		$	2.3
Jackalope Gas Gathering Services, L.L.C.⁽²⁾	190.4		197.2			2.2			5.9			4.0			11.0
Tres Palacios Holdings LLC⁽³⁾	37.5		39.0			0.7			(2.3		)	1.2			(1.5		)
Powder River Basin Industrial Complex, LLC⁽⁴⁾	8.6		8.7			0.5			0.3			0.5			0.9
Crestwood Permian Basin Holdings LLC⁽⁵⁾	85.3		(0.5		)	(0.4		)	—			(0.6		)	—
Total	$	1,181.7	$	1,115.4		$	9.6		$	6.2		$	17.7		$	12.7


(1)	As of June 30, 2017, our equity in the underlying net assets of Stagecoach Gas exceeded our investment balance by approximately $51.4 million. This excess amount is entirely attributable to goodwill and, as such, is not subject to amortization. Our Stagecoach Gas investment is included in our storage and transportation segment.

(2)

As of June 30, 2017, our equity in the underlying net assets of Jackalope Gas Gathering Services, L.L.C. (Jackalope) exceeded our investment balance by approximately $0.8 million. We amortize this amount over 20 years, which represents the life of Jackalope’s gathering agreement with Chesapeake Energy Corporation (Chesapeake), and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. Our Jackalope investment is included in our gathering and processing segment.

(3)

As of June 30, 2017, our equity in the underlying net assets of Tres Palacios Holdings LLC (Tres Holdings) exceeded our investment balance by approximately $27.2 million. We amortize this amount over the life of the Tres Palacios Gas Storage LLC (Tres Palacios) sublease agreement, and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. Our Tres Holdings investment is included in our storage and transportation segment.

(4)

As of June 30, 2017, our equity in the underlying net assets of Powder River Basin Industrial Complex, LLC (PRBIC) exceeded our investment balance by approximately $6.7 million. We amortize a portion of this amount over the life of PRBIC's property, plant and equipment and its agreement with Chesapeake, and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. During 2015, we recorded an impairment of our PRBIC equity investment as further discussed in our 2016 Annual Report on Form 10-K. For the year ended December 31, 2016, PRBIC recorded a $41.3 million impairment of its goodwill and long-lived assets and as a result, we adjusted our excess basis in PRBIC by approximately $8.3 million to reflect our proportionate share of the fair value of PRBIC's net assets. Our PRBIC investment is included in our storage and transportation segment.


(5)	As of June 30, 2017, our equity in the underlying net assets of Crestwood Permian exceeded our investment balance by approximately $23.9 million, which is entirely attributable to goodwill and, as such, is not subject to amortization. Our Crestwood Permian investment is included in our gathering and processing segment.

Summarized Financial Information of Unconsolidated Affiliates

Below is ~~required, within 30 days following~~ the ~~end~~summarized operating results for our significant unconsolidated affiliates (in millions; amounts represent 100% of each quarter, to make quarterly distributions of its available cash to its members based on their respective ownership percentage. During the nine months ended September 30, 2016 and 2015, we received cash distributions of approximately $19.9 million and $8.7 million from Jackalope. During the nine months ended September 30, 2016 and 2015, we contributed approximately $0.7 million and $25.4 million to Jackalope.

unconsolidated affiliate information):

~~Tres Holdings.Tres Holdings is required, within 30 days following the end~~



	Three Months Ended June 30,
	2017						2016
	Operating Revenues		Operating Expenses		Net Income		Operating Revenues		Operating Expenses		Net Income
Stagecoach Gas	$	42.0	$	18.6	$	23.5	$	13.2	$	5.7	$	7.5
Other⁽¹⁾	26.4		21.1		5.2		29.8		23.3		6.4
Total	$	68.4	$	39.7	$	28.7	$	43.0	$	29.0	$	13.9

(1)

Includes our Jackalope, Tres Holdings, PRBIC and Crestwood Permian equity investments. We amortize the excess basis in certain of our equity investments as an increase in our earnings from unconsolidated affiliates. We recorded amortization of the excess basis in our Jackalope equity investment of less than $0.1 million for both the three months ended June 30, 2017 and 2016. We recorded amortization of the excess basis in our Tres Holdings equity investment of approximately $0.3 million for both the three months ended June 30, 2017 and 2016. We recorded amortization of the excess basis in our PRBIC equity investment of approximately $0.1 million and $0.4 million for the three months ended June 30, 2017 and 2016.

Table of each quarter, to make quarterly distributions of its available cash (as defined in its limited liability company agreement) to its members based on their respective ownership percentage. During the nine months ended September 30, 2016 and 2015, we received cash distributions of approximately $6.2 million and $4.0 million from Tres Holdings. In October 2016, we received a cash distribution of approximately $2.3 million from Tres Holdings. During the nine months ended September 30, 2016 and 2015, we contributed approximately $5.5 million and $5.7 million to Tres Holdings.Contents

~~PRBIC.~~ ~~PRBIC is required to make quarterly distributions of its available cash to its members based on their respective ownership percentage. During the nine months ended September 30, 2016~~



	Six Months Ended June 30,
	2017						2016
	Operating Revenues		Operating Expenses		Net Income		Operating Revenues		Operating Expenses		Net Income
Stagecoach Gas	$	84.0	$	38.0	$	46.1	$	13.2	$	5.7	$	7.5
Other⁽¹⁾	46.3		37.3		8.9		60.2		42.2		17.9
Total	$	130.3	$	75.3	$	55.0	$	73.4	$	47.9	$	25.4

(1)

Includes our Jackalope, Tres Holdings, PRBIC and Crestwood Permian equity investments. We amortize the excess basis in certain of our equity investments as an increase in our earnings from unconsolidated affiliates. We recorded amortization of the excess basis in our Jackalope equity investment of less than $0.1 million for both the six months ended June 30, 2017 and 2016. We recorded amortization of the excess basis in our Tres Holdings equity investment of approximately $0.6 million for both the six months ended June 30, 2017 and 2016. We recorded amortization of the excess basis in our PRBIC equity investment of approximately $0.3 million and $0.8 million for the six months ended June 30, 2017 and 2016.

Distributions and 2015, we received cash distributions of approximately $1.6 million and $1.3 million from PRBIC. In October 2016, we received a cash distribution of approximately $0.4 million from PRBIC. During the nine months ended September 30, 2015, we contributed approximately $8.7 million to PRBIC.Contributions



	Distributions				Contributions
	Six Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Stagecoach Gas⁽¹⁾	$	23.7	$	—	$	—	$	—
Jackalope	12.3		12.1		1.5		—
Tres Holdings⁽¹⁾	2.7		4.1		—		5.5
PRBIC	0.6		1.2		—		—
Crestwood Permian⁽²⁾	—		—		86.4		—
Total	$	39.3	$	17.4	$	87.9	$	5.5


(1)	In July 2017, we received a cash distribution from Stagecoach Gas and Tres Holdings of approximately $12.0 million and $3.1 million, respectively.


(2)	On June 21, 2017, we contributed to Crestwood Permian 100% of the equity interest of Crestwood New Mexico at our historical book value of approximately $69.4 million. This contribution was treated as a non-cash transaction between entities under common control.

Note 5 – Risk Management

We are exposed to certain market risks related to our ongoing business operations. These risks include exposure to changing commodity prices. We utilize derivative instruments to manage our exposure to fluctuations in commodity prices, which is discussed below. Additional information related to our derivatives is discussed in Note 6.

Commodity Derivative Instruments and Price Risk Management

Risk Management Activities

We sell NGLs and crude oil to energy related businesses and may use a variety of financial and other instruments including forward contracts involving physical delivery of NGLs, heating oil and crude oil. We periodically enter into offsetting positions to economically hedge against the exposure our customer contracts create. Certain of these contracts and positions are derivative instruments. We do not designate any of our commodity-based derivatives as hedging instruments for accounting purposes. Our commodity-based derivatives are reflected at fair value in the consolidated balance sheets, and changes in the fair value of these derivatives that impact the consolidated statements of operations are reflected in costs of product/services sold. During the three and ~~nine~~six months ended ~~September~~June 30, 2017, the impact to our consolidated statements of operations related to our commodity-based derivatives reflected in costs of product/services sold was a gain of $6.9 million and $1.5 million. During the three and six months ended June 30, 2016, the impact to the statement of operations related to our commodity-based derivatives reflected in costs of product/services sold was a gain of ~~$2.1~~$1.3 million and $4.1 million. During the three and nine months ended September 30, 2015, the impact to the statement of operations related to our commodity-based derivatives reflected in costs of product/services sold was a gain of $5.7 million and $11.0$2.0 million. We attempt to balance our contractual portfolio in terms of notional amounts and timing of performance and delivery obligations. This balance in the contractual portfolio significantly reduces the volatility in costs of product/services sold related to these instruments.

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Commodity Price and Credit Risk

Notional Amounts and Terms

The notional amounts and terms of our derivative financial instruments include the following at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 (~~in millions~~):

September 30, 2016 December 31, 2015

Fixed Price
Payor

Fixed Price
Receiver

Fixed Price
Payor

Fixed Price
Receiver
Propane, crude and heating oil (barrels)
15.9
18.0
9.1
10.9



	June 30, 2017		December 31, 2016
	Fixed Price Payor	Fixed Price Receiver	Fixed Price Payor	Fixed Price Receiver
Propane, crude and heating oil (MMBbls)	14.8	16.8	13.1	15.1
Natural gas (MMBTU’s)	0.2	—	—	—

Notional amounts reflect the volume of transactions, but do not represent the amounts exchanged by the parties to the financial instruments. Accordingly, notional amounts do not reflect our monetary exposure to market or credit risks.

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All contracts subject to price risk had a maturity of 3136 months or less; however, ~~84%~~85% of the contracted volumes will be delivered or settled within 12 months.

Credit Risk

Inherent in our contractual portfolio are certain credit risks. Credit risk is the risk of loss from nonperformance by suppliers, customers or financial counterparties to a contract. We take an active role in managing credit risk and have established control procedures, which are reviewed on an ongoing basis. We attempt to minimize credit risk exposure through credit policies and periodic monitoring procedures as well as through customer deposits, letters of credit and entering into netting agreements that allow for offsetting counterparty receivable and payable balances for certain financial transactions, as deemed appropriate. The counterparties associated with our ~~assets from~~ price risk management activities are primarily energy marketers and propane retailers, resellers and dealers.

Certain of our derivative instruments have credit limits that require us to post collateral. The amount of collateral required to be posted is a function of the net liability position of the derivative as well as our established credit limit with the respective counterparty. If our credit rating were to change, the counterparties could require us to post additional collateral. The amount of additional collateral that would be required to be posted would vary depending on the extent of change in our credit rating as well as the requirements of the individual counterparty. The aggregate fair value of all commodity derivative instruments with credit-risk-related contingent features that were in a liability position at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 was ~~$6.3~~$4.9 million and ~~$3.3~~$13.9 million. At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, we posted less than $0.1 million of collateral for our commodity derivative instruments with credit-risk-related contingent features. In addition, at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, we had a New York Mercantile Exchange (NYMEX) related net derivative asset position of ~~$9.4~~$5.7 million and ~~a NYMEX related net derivative liability position of $20.8~~$14.3 million, for which we posted ~~$6.6~~$3.6 million and ~~$26.7~~$4.2 million of cash collateral in the normal course of business. At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, we also received collateral of ~~$6.7 million and $16.8~~$4.3 million in the normal course of business. All collateral amounts have been netted against the asset or liability with the respective counterparty and are reflected in our consolidated balance sheets as assets and liabilities from price risk management activities.

Note 6 – Fair Value Measurements

The accounting ~~standards~~standard for fair value measurement ~~establish~~establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed equities and US government treasury securities.

Level 2—Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models

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or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange-traded derivatives such as over the counter (OTC) forwards, options and physical exchanges.

Level 3—Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Cash, ~~and Cash Equivalents,~~ Accounts Receivable and Accounts Payable

As of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016, the carrying amounts of cash, accounts receivable and accounts payable ~~represent~~approximate fair value based on the short-term nature of these instruments.

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Credit Facility

The fair value of the ~~amount~~amounts outstanding under our CMLP credit facility approximates ~~its~~the carrying ~~amount~~amounts as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016, due primarily to the variable nature of the interest rate of the instrument, which is considered a Level 2 fair value measurement.

Senior Notes

We estimate the fair value of our senior notes primarily based on quoted market prices for the same or similar issuances (representing a Level 2 fair value measurement). The following table reflects the carrying value (reduced for deferred financing costs associated with the respective notes) and fair value of our ~~CMLP~~ senior notes (in millions):

September 30, 2016 December 31, 2015

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value
Crestwood Midstream 2020 Senior Notes $ 340.7
$ 341.1
$ 503.3
$ 382.3
Crestwood Midstream 2022 Senior Notes $ 436.4
$ 436.2
$ 600.0
$ 437.4
Crestwood Midstream 2023 Senior Notes $ 700.0
$ 710.0
$ 700.0
$ 491.8



	June 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
2020 Senior Notes	$	—	$	—	$	340.6	$	350.2
2022 Senior Notes	$	—	$	—	$	429.3	$	447.3
2023 Senior Notes	$	691.3	$	717.5	$	690.6	$	722.6
2025 Senior Notes	$	491.8	$	498.8	$	—	$	—

Financial Assets and Liabilities

As of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, we held certain assets and liabilities that are required to be measured at fair value on a recurring basis, which include our derivative instruments related to heating oil, crude oil, and NGLs. Our derivative instruments consist of forwards, swaps, futures, physical exchanges and options.

~~Certain of our~~Our derivative instruments that are traded on the ~~NYMEX. These instruments~~NYMEX have been categorized as Level 1.

Our derivative instruments also include OTC contracts, which are not traded on a public exchange. The fair values of these derivative instruments are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. These instruments have been categorized as Level 2.

Our OTC options are valued based on the Black Scholes option pricing model that considers time value and volatility of the underlying commodity. The inputs utilized in the model are based on publicly available information as well as broker quotes. These options have been categorized as Level 2.

Our financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

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The following tables set forth by level within the fair value hierarchy, our financial instruments that were accounted for at fair value on a recurring basis at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 (in millions):


	September 30, 2016																June 30, 2017
	Fair Value of Derivatives																Fair Value of Derivatives
	Level 1		Level 2		Level 3		Gross Fair Value		Contract Netting⁽¹⁾			Collateral/Margin Received or Paid			Recorded in Balance Sheet		Level 1		Level 2		Level 3		Gross Fair Value		Contract Netting⁽¹⁾			Collateral/Margin Received or Paid			Recorded in Balance Sheet
Assets
Assets from price risk management	$	1.1	$	55.7	$	—	$	56.8	$	(40.9	)	$	(5.5	)	$	10.4	$	0.7	$	41.7	$	—	$	42.4	$	(30.2	)	$	0.6		$	12.8
Suburban Propane Partners, L.P. units⁽²⁾	4.7		—		—		4.7		—			—			4.7		3.4		—		—		3.4		—			—			3.4
Total assets at fair value	$	5.8	$	55.7	$	—	$	61.5	$	(40.9	)	$	(5.5	)	$	15.1	$	4.1	$	41.7	$	—	$	45.8	$	(30.2	)	$	0.6		$	16.2

Liabilities
Liabilities from price risk management	$	1.2	$	50.0	$	—	$	51.2	$	(40.9	)	$	3.9		$	14.2	$	0.3	$	36.6	$	—	$	36.9	$	(30.2	)	$	1.3		$	8.0
Total liabilities at fair value	$	1.2	$	50.0	$	—	$	51.2	$	(40.9	)	$	3.9		$	14.2	$	0.3	$	36.6	$	—	$	36.9	$	(30.2	)	$	1.3		$	8.0

	December 31, 2015																December 31, 2016
	Fair Value of Derivatives																Fair Value of Derivatives
	Level 1		Level 2		Level 3		Gross Fair Value		Contract Netting⁽¹⁾			Collateral/Margin Received or Paid			Recorded in Balance Sheet		Level 1		Level 2		Level 3		Gross Fair Value		Contract Netting⁽¹⁾			Collateral/Margin Received or Paid			Recorded in Balance Sheet
Assets
Assets from price risk management	$	0.5	$	57.8	$	—	$	58.3	$	(13.7	)	$	(12.0	)	$	32.6	$	0.6	$	84.4	$	—	$	85.0	$	(67.8	)	$	(10.9	)	$	6.3
Suburban Propane Partners, L.P. units⁽²⁾	3.4		—		—		3.4		—			—			3.4		4.3		—		—		4.3		—			—			4.3
Total assets at fair value	$	3.9	$	57.8	$	—	$	61.7	$	(13.7	)	$	(12.0	)	$	36.0	$	4.9	$	84.4	$	—	$	89.3	$	(67.8	)	$	(10.9	)	$	10.6

Liabilities
Liabilities from price risk management	$	0.2	$	41.3	$	—	$	41.5	$	(13.7	)	$	(20.4	)	$	7.4	$	2.7	$	90.2	$	—	$	92.9	$	(67.8	)	$	3.5		$	28.6
Total liabilities at fair value	$	0.2	$	41.3	$	—	$	41.5	$	(13.7	)	$	(20.4	)	$	7.4	$	2.7	$	90.2	$	—	$	92.9	$	(67.8	)	$	3.5		$	28.6


(1)	Amounts represent the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions as well as cash collateral held or placed with the same counterparties.


(2)	Amount is reflected in other assets on CEQP's consolidated balance sheets.

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Note 7 – Long-Term Debt

Long-term debt consisted of the following at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 (in millions):


	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
Credit Facility	$	132.6	$	735.0	$	443.0	$	77.0
2020 Senior Notes	338.8		500.0		—		338.8
Fair value adjustment of 2020 Senior Notes	1.9		3.3		—		1.8
2022 Senior Notes	436.4		600.0		—		436.4
2023 Senior Notes	700.0		700.0		700.0		700.0
2025 Senior Notes					500.0		—
Other	3.8		5.3		3.0		3.7
Less: deferred financing costs, net	35.9		40.9		32.0		34.0
Total Crestwood Midstream debt	1,577.6		2,502.7
Other	—		0.2
Total Crestwood Equity debt	1,577.6		2,502.9
Total debt					1,614.0		1,523.7
Less: current portion	0.9		1.1		1.0		1.0
Total long-term debt, less current portion	$	1,576.7	$	2,501.8	$	1,613.0	$	1,522.7

~~Crestwood Midstream~~ Credit Facility

In conjunction with the contribution agreement with CEGP, Crestwood Midstream amended its credit facility during the second quarter of 2016 to, among other things, (i) facilitate the closing of the joint venture and make investments in the joint venture thereafter, and (ii) implement our liability management plan with the net cash proceeds received from Stagecoach Gas, including the repurchase of Crestwood Midstream's senior notes with the borrowings under its credit facility.

At ~~September~~June 30, ~~2016,~~2017, Crestwood Midstream had ~~$586.6~~$631.3 million of available capacity under its credit facility considering the most restrictive debt covenants in its credit agreement. At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, Crestwood Midstream's outstanding standby letters of credit were ~~$65.1~~$68.6 million and ~~$62.2~~$64.0 million. Borrowings under the CMLP credit facility accrue interest at prime or Eurodollar based rates plus applicable spreads, which resulted in interest rates between ~~2.77%~~3.34% and ~~4.75%~~5.50% at ~~September~~June 30, ~~2016~~2017 and ~~2.70%~~3.21% and ~~5.00%~~5.25% at December 31, ~~2015.~~2016. The weighted-average interest rate as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 was ~~2.88%~~3.48% and ~~2.70%~~3.23%.

Crestwood Midstream is required under its credit agreement to maintain a net debt to consolidated EBITDA ratio (as defined in its credit agreement) of not more than 5.50 to 1.0, a consolidated EBITDA to consolidated interest expense ratio (as defined in its credit agreement) of not less than 2.50 to 1.0, and a senior secured leverage ratio (as defined in its credit agreement) of not more than 3.75 to 1.0. At ~~September~~June 30, ~~2016,~~2017, the net debt to consolidated EBITDA was approximately ~~4.03~~3.98 to 1.0, the consolidated EBITDA to consolidated interest expense was approximately ~~3.76~~4.16 to 1.0, and the senior secured leverage ratio was ~~0.33~~1.07 to 1.0.

The CMLP credit facility allows Crestwood Midstream to increase its available borrowings under the facility by $350.0 million, subject to lender approval and the satisfaction of certain other conditions, as described in the CMLP credit agreement.

Senior Notes

Repayments. During the six months ended June 30, 2017, Crestwood Midstream paid approximately $457.8 million to purchase, redeem and/or cancel all of the principal amount outstanding under the 2022 Senior Notes and approximately $349.9 million to redeem all of the principal amount outstanding under the 2020 Senior Notes. Crestwood Midstream funded the repayments with a combination of net proceeds from the issuance of the 2025 Senior Notes described below and borrowings under the CMLP credit facility. In conjunction with these note repayments, Crestwood Midstream (i) recognized a loss on extinguishment of debt of approximately $0.4 million and $37.7 million during the three and six months ended June 30, 2017 (including the write off of approximately $6.8 million of deferred financing costs associated with the 2022 Senior Notes); and (ii) paid $5.1 million and $1.0 million of accrued interest on the 2020 Senior Notes and 2022 Senior Notes, respectively, on the date they were tendered.

In June 2016, Crestwood Midstream paid approximately $312.9 million to purchase and cancel approximately $161.2 million and $163.6 million of the principal amounts outstanding under its 2020 Senior Notes and 2022 Senior Notes, respectively, utilizing a portion of the proceeds received from Stagecoach Gas, as further discussed in Note 2.4. Crestwood Midstream recognized a gain on extinguishment of debt of approximately ~~$10.0~~$10 million in conjunction with the early tender of these notes.

2025 Senior Notes. In March 2017, Crestwood Midstream ~~also paid $4.5 million and $2.6~~issued $500 million of ~~accrued~~5.75% unsecured senior notes due 2025 (the 2025 Senior Notes) in a private offering. The 2025 Senior Notes will mature on April 1, 2025, and interest is payable semiannually in arrears on April 1 and October 1 of each year, beginning October 1, 2017. The net proceeds from this offering

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of approximately $492 million were used to repay amounts outstanding under the 2020 Senior Notes and the 2022 Senior ~~Notes, respectively, on the date they were tendered.~~Notes.

In ~~March 2016,~~May 2017, Crestwood Midstream filed a registration statement with the SEC under which it ~~plans to offer~~offered to exchange ~~$700.0 million of its 6.25% 2023 Senior Notes~~new senior notes for any and all outstanding ~~notes. The~~2025 Senior Notes. Crestwood Midstream completed the exchange offer ~~was declared effective by the SEC on June 15, 2016 and closed on~~in July ~~13, 2016.~~2017. The terms of the exchange notes are substantially identical to the terms of the ~~2023~~2025 Senior Notes, except that the exchange notes are freely tradable. Crestwood Midstream issued the 2023 Senior Notes in March 2015. The net proceeds from the original offering of approximately $688.3 million were used to pay down borrowings under Crestwood Midstream's credit facility and for general partnership purposes.

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At ~~September~~June 30, ~~2016~~2017, Crestwood Midstream was in compliance with all of its debt covenants applicable to the CMLP credit facility and its senior notes.

Note 8 - Earnings Per Limited Partner Unit

Our net income (loss) attributable to Crestwood Equity Partners is allocated to the subordinated and limited partner unitholders based on their ownership percentage after giving effect to net income attributable to the ~~Class A preferred units.~~Preferred Units. We calculate basic net income per limited partner unit using the two-class method. Diluted net income per limited partner unit is computed using the treasury stock method, which considers the impact to net income attributable to Crestwood Equity Partners and limited partner units from the potential issuance of limited partner units.

We exclude potentially dilutive securities from the determination of diluted earnings per unit (as well as their related income statement impacts) when their impact on net income attributable to Crestwood Equity Partners per limited partner unit is anti-dilutive. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, we excluded a weighted-average of ~~6,502,907~~6,964,663 and ~~6,358,626~~6,887,247 common units (representing preferred units), a weighted-average of ~~8,669,633~~8,228,378 common units in both periods (representing Crestwood Niobrara's preferred units), and a weighted-average of 438,789 common units in both periods (representing subordinated units). During the three and ~~nine~~six months ended ~~September~~June 30, ~~2015,~~2016, we excluded a weighted-average of ~~64,506~~6,355,936 and ~~21,738~~6,284,885 common units (representing preferred units), and a weighted-average of ~~78,968 and 26,612~~8,438,849 common units in both periods (representing Crestwood Niobrara's preferred units) and a weighted-average of 438,789 common units in both periods (representing subordinated units). See Note 9 for additional information regarding the potential conversion of our preferred units and Crestwood Niobrara's preferred units to common units.

Note 9 – Partners’ Capital

~~In May 2015, CEQP,~~Preferred Units

Subject to certain conditions, the holders of the Preferred Units have the right to convert their Preferred Units into (i) common units on a 1-for-10 basis or (ii) a number of common units determined pursuant to a conversion ratio set forth in Crestwood ~~Midstream and~~Equity's partnership agreement upon the occurrence of certain ~~of their affiliates entered into a definitive agreement under which Crestwood Midstream would merge with a wholly-owned subsidiary of CEQP, with Crestwood Midstream surviving~~events, such as a ~~wholly-owned subsidiary~~change in control. The Preferred Units have voting rights that are identical to the voting rights of ~~CEQP (the Simplification Merger). The Simplification Merger closed~~the common units and will vote with the common units as a single class, with each Preferred Unit entitled to one vote for each common unit into which such Preferred Unit is convertible, except that the Preferred Units are entitled to vote as a separate class on ~~September 30, 2015.~~any matter on which all unitholders are entitled to vote that adversely affects the rights, powers, privileges or preferences of the Preferred Units in relation to Crestwood Equity's other securities outstanding.

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Distributions

Crestwood Equity

Limited Partners. A summary of CEQP's limited partner quarterly cash distributions for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 is presented below:

Record Date Payment Date Per Unit Rate
Cash Distributions
(in millions)
2016
February 5, 2016 February 12, 2016 $ 1.375
$ 95.6
May 6, 2016 May 13, 2016 0.60
41.4
August 5, 2016 August 12, 2016 0.60
41.4
$ 178.4
2015
February 6, 2015 February 13, 2015 $ 1.375
$ 25.8
May 8, 2015 May 15, 2015 1.375
25.7
August 7, 2015 August 14, 2015 1.375
25.7
$ 77.2



Record Date	Payment Date	Per Unit Rate		Cash Distributions (in millions)
2017
February 7, 2017	February 14, 2017	$	0.60	$	41.8
May 8, 2017	May 15, 2017	0.60		41.8
				$	83.6
2016
February 5, 2016	February 12, 2016	$	1.375	$	95.6
May 6, 2016	May 13, 2016	0.60		41.4
				$	137.0

On ~~October~~July 20, ~~2016,~~2017, we declared a distribution of $0.60 per limited partner unit to be paid on ~~November~~August 14, ~~2016,~~2017, to unitholders of record on ~~November~~August 7, ~~2016~~2017 with respect to the ~~third~~second quarter of ~~2016~~2017.

Preferred Unit Holders. In conjunction with the closing of the Simplification Merger, the CMLP Class A Preferred Units were exchanged for new preferred units of the Company (the Preferred Units) with substantially similar terms and conditions to those of the CMLP Preferred Units. We are required to make quarterly distributions to our preferred unitholders. During the ~~nine~~six months ended ~~September~~June 30, 2017 and 2016, we issued ~~4,311,143~~3,113,215 and 2,841,114 Preferred Units to our preferred unitholders in lieu of paying cash

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distributions of ~~$39.3 million.~~$28.4 million and $25.9 million, respectively. On ~~October~~July 20, ~~2016,~~2017, the board of directors of our general partner authorized the issuance of ~~1,504,027~~1,610,815 Preferred Units to our preferred unit holders for the quarter ended ~~September~~June 30, ~~2016~~2017 in lieu of paying a cash distribution of ~~$13.7~~$14.7 million.

On June 9, 2016, Crestwood Equity filed a shelf registration statement with the SEC under which holders of the Preferred Units may sell the common units into which the Preferred Units are convertible. The registration statement became effective on June 15, 2016. Crestwood Equity registered 7,290,552 common units under the registration statement.

Crestwood Midstream

Prior to the Simplification Merger, the Company indirectly owned a non-economic general partnership interest in Crestwood Midstream and 100% of its incentive distribution rights (IDRs). Crestwood Midstream was also a publicly-traded limited partnership with common units listed on the NYSE. However, as a result of Crestwood Midstream's completion of the Simplification Merger on September 30, 2015, its common units ceased to be listed on the NYSE, the IDRs were eliminated and Crestwood Midstream became a wholly-owned subsidiary of the Company.

On September 30, 2015, Crestwood Midstream made a distribution of approximately $378.3 million to Crestwood Equity for purposes of repaying (or, if applicable, satisfying and discharging) substantially all of its outstanding indebtedness. The distribution was funded with borrowings under the CMLP Credit Facility.

During the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, Crestwood Midstream paid cash distributions of ~~$185.0~~$86.9 million and ~~$77.4~~$140.6 million to Crestwood Equity. ~~During the nine months ended~~ ~~September 30, 2015, Crestwood Midstream paid a cash distribution to its general partner (representing IDRs and distributions related to common units held by the general partner) of approximately~~ ~~$31.4 million~~.

~~Limited Partners. The following table presents quarterly cash distributions paid to Crestwood Midstream's limited partners (excluding distributions paid to its general partner on its common units held) during the~~ ~~nine months endedSeptember 30, 2015~~.

Record Date Payment Date Per Unit Rate
Cash Distributions
(in millions)
February 6, 2015 February 13, 2015 $ 0.41
$ 74.3
May 8, 2015 May 15, 2015 0.41
74.3
August 7, 2015 August 14, 2015 0.41
74.3
$ 222.9

Non-Controlling Partners

~~Crestwood Midstream Class A Preferred Units~~

Prior to the completion of the Simplification Merger, in August 2015, Crestwood Midstream issued $60.0 million of its Class A Preferred Units for net proceeds of approximately $58.8 million after deducting transaction fees and offering expenses. In conjunction with the closing of the Simplification Merger, the CMLP Class A Preferred Units were exchanged for new preferred units of Crestwood Equity. Prior to the Simplification Merger, Crestwood Equity classified the CMLP Class A Preferred Units as a component of Interest of Non-Controlling Partners on its consolidated balance sheet.

~~Crestwood Niobrara Preferred Interest~~

Crestwood Niobrara issued a preferred interest to a subsidiary of General Electric Capital Corporation and GE Structured Finance, Inc. (collectively, GE) in conjunction with the acquisition of its investment in Jackalope, which is reflected as non-controlling interest in our consolidated financial statements.

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~~Net Income (Loss) Attributable to Non-Controlling Partners~~

~~The components of~~ During the three and six months ended June 30, 2017, net income ~~(loss)~~ attributable to non-controlling partners ~~for~~was approximately $6.3 million and $12.4 million. During the three and ~~nine~~six months ended ~~September 30,~~ 2016, net income attributable to non-controlling partners was approximately $6.0 million and ~~2015, are as follows~~ ~~(in millions)~~:

Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Crestwood Niobrara preferred interests $ 6.1
$ 5.9
$ 18.0
$ 17.2
CMLP net income attributable to non-controlling partners 6.1
5.9
18.0
17.2
Crestwood Midstream limited partner interests —
(408.8 ) —
(683.0 )
Crestwood Midstream Class A preferred units —
6.4
—
23.1
CEQP net income (loss) attributable to non-controlling partners $ 6.1
$ (396.5 ) $ 18.0
$ (642.7 )

~~Distributions to Non-Controlling Partners~~

~~Crestwood Midstream Limited Partners.~~ ~~As discussed above, Crestwood Midstream paid cash distributions to its limited partners (excluding distributions to its general partner and distributions on~~$11.9 million. During both the ~~limited partner units that were owned by Crestwood Equity) of $222.9 million during the nine~~six months ended ~~September~~June 30, ~~2015.~~

~~Crestwood Midstream Class A Preferred Unit Holders. During the nine months ended September 30, 2015, Crestwood Midstream issued 1,271,935 Class A Preferred Units to its preferred unit holders in lieu of paying cash distributions of $25.6 million.~~

~~Crestwood Niobrara Preferred Unit Holders.~~ ~~During the nine months ended September 30,~~2017 and 2016, ~~and 2015,~~ Crestwood Niobrara paid cash distributions of ~~$11.4 million and~~ $7.6 million to GE. In ~~October 2016,~~July 2017, Crestwood Niobrara paid a cash distribution of $3.8 million to GE for the quarter ended ~~September~~June 30, ~~2016.~~2017.

Note 10 – Commitments and Contingencies

Legal Proceedings

Simplification Merger Lawsuits. On May 20, 2015, Lawrence G. Farber, a purported unitholder of Crestwood Midstream, filed a complaint in the United States District Court for the Southern District of ~~the United States,~~Texas, Houston Division, as a putative class action on behalf of Crestwood Midstream's unitholders, entitled Lawrence G. Farber, individually and on behalf of all others similarly situated v. Crestwood Midstream Partners LP, Crestwood Midstream GP LLC, Robert G. Phillips, Alvin Bledsoe, Michael G. France, Philip D. Gettig, Warren H. Gfellar, David Lumpkins, John J. Sherman, David Wood, Crestwood Equity Partners LP, Crestwood Equity GP LLC, CEQP ST Sub LLC, MGP GP, LLC, Crestwood Midstream Holdings LP, and Crestwood Gas Services GP LLC. This complaint alleges, among other things, that Crestwood Midstream's general partner breached its fiduciary duties, certain individual defendants breached their fiduciary duties of loyalty and due care, and that other defendants aided and abetted such breaches.

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On July 21, 2015, Isaac Aron, another purported unitholder of Crestwood Midstream, filed a complaint in the United States District Court for the Southern District of ~~the United States,~~Texas, Houston Division, as a putative class action on behalf of Crestwood Midstream's unitholders, entitled Isaac Aron, individually and on behalf of all others similarly situated vs. Robert G. Phillps, Alvin Bledsoe, Michael G. France, Philip D. Getting, Warren H. Gfeller, David Lumpkins, John J. Sherman, David Wood, Crestwood Midstream Partners, LP Crestwood Midstream Holdings LP, Crestwood Midstream GP LLC, Crestwood Gas Services GP, LLC, Crestwood Equity Partners LP, Crestwood Equity GP LLC, CEQP ST Sub LLC and MGP GP, LLC. The complaint alleges, among other things, that Crestwood Midstream's general partner and certain individual defendants violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and Rule 14a-9 by filing an alleged incomplete and misleading Form S-4 Registration Statement with the SEC.

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On August 12, 2015, the defendants filed a motion to consolidate the Farber and Aron cases, which the court granted on September 4, 2015. Farber subsequently dismissed his claims against all the defendants on September 16, 2015. Aron filed a motion for temporary restraining order and requested an expedited preliminary injunction hearing, which had been scheduled for September 23, 2015. On September 22, 2015, however, the parties entered into a memorandum of understanding (MOU) with respect to a proposed settlement of the Aron lawsuit. The settlement contemplated by the MOU is subject to a number of conditions, including notice to the class, limited confirmatory discovery and final court approval of the settlement. In October 2016, the court approved the settlement. On November 7, 2016, a unitholder filed an appeal of the settlement and a hearingwas held on June 5, 2017, at which the court denied the appeal and finalized the settlement. The settlement did not have a material impact to our consolidated financial statements.

~~Property Taxes.~~ Tres Palacios filed several lawsuits in Matagorda County for tax years 2011, 2012 and 2013 alleging that the Matagorda County Appraisal District (MCAD) assessed taxable value above the fair market value and on an unequal and non-uniform basis compared to other properties. In conjunction with its sale of Tres Palacios to Tres Holdings, Crestwood Equity retained liability for certain tax matters, including these lawsuits. In January 2015, Crestwood Equity received a refund related to the 2011 tax year at the conclusion of the litigation related to that tax year. For the 2012 and 2013 tax years, the MCAD asserted a taxable value that would result in property taxes of approximately $7 million for each of those years, while Tres Palacios asserted a taxable value that would result in property taxes of less than $2 million in each year. Tres Palacios paid approximately $8.6 million to Matagorda County in total for those two tax years. A bench trial was held in October 2015 related to the 2012 and 2013 tax years. In June 2016, the court issued a final judgment on the 2012 and 2013 property tax years which resulted in Crestwood Equity recording additional net property taxes (including interest and penalties) of approximately $2.9 million during the nine months ended September 30, 2016. In September 2016, Crestwood Equity paid an additional $2.1 million to Matagorda County to settle the litigation related to the 2012 and 2013 tax years.

General. We are periodically involved in litigation proceedings. If we determine that a negative outcome is probable and the amount of loss is reasonably estimable, then we accrue the estimated amount. The results of litigation proceedings cannot be predicted with certainty. We could incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on our results of operations or cash flows in the period in which the amounts are paid and/or accrued. As of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016, both CEQP and CMLP had less than $0.1 million accrued for outstanding legal matters. Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures for which we can estimate will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures.

Any loss estimates are inherently subjective, based on currently available information, and are subject to management's judgment and various assumptions. Due to the inherently subjective nature of these estimates and the uncertainty and unpredictability surrounding the outcome of legal proceedings, actual results may differ materially from any amounts that have been accrued.

Regulatory Compliance

In the ordinary course of our business, we are subject to various laws and regulations. In the opinion of our management, compliance with current laws and regulations will not have a material effect on ~~its~~our results of operations, cash flows or financial condition.

Environmental Compliance

Our operations are subject to stringent and complex laws and regulations pertaining to worker health, safety, and the environment. We are subject to laws and regulations at the federal, state, regional and local levels that relate to air and water quality, hazardous and solid waste management and disposal and other environmental matters. The cost of planning, designing, constructing and operating our facilities must incorporate compliance with environmental laws and regulations and safety standards. Failure to comply with these laws and regulations may trigger a variety of administrative, civil and potentially criminal enforcement measures.

During 2014, we experienced three releases totaling approximately 28,000 barrels of produced water on our Arrow water gathering system located on the Fort Berthold Indian Reservation in North Dakota. We immediately notified the National Response Center, the Three Affiliated Tribes and numerous other regulatory authorities, and thereafter contained and cleaned up the releases completely and placed the impacted segments of these water lines back into service. In May 2015, we experienced a release of approximately 5,200 barrels of produced water on our Arrow water gathering system, immediately notified numerous regulatory authorities and other third parties, and thereafter contained and cleaned up the releases. We will continue our remediation efforts to ensure the impacted lands are restored to their prior state. We believe these releases are insurable events under our policies, and we have notified our carriers of these events. We have not recorded an insurance receivable as of September 30, 2016.

~~We may potentially be subject to fines and penalties as a result~~

Table of ~~the water releases.~~ Contents

In October 2014, we received data requests from the Environmental Protection Agency (EPA) related to the 2014 water releases and we responded to the requests during the first half of 2015. In April 2015, the EPA issued a Notice of Potential Violation (NOPV) under the Clean Water Act relating to the largest of the 2014 water releases. We responded to the NOPV in May 2015, and ~~have commenced settlement discussions~~in April 2017, we entered into an Administrative Order on Consent (the Order) with the EPA. The Order requires us to continue to remediate and monitor the impacted area for no less than four years unless all goals of the Order are satisfied earlier. The Order does not preclude the EPA from seeking to impose fines and penalties as a result of the water releases.

~~Table of Contents~~

~~the EPA concerning the NOPV.~~ On March 3, 2015, we received a grand jury subpoena from the United States Attorney’s Office in Bismarck, North Dakota, seeking documents and information relating to the largest of the three 2014 water ~~releases, and we~~releases. We provided the requested information during the second quarter of 2015 and provided key employees to be interviewed by the United States’ Attorney in December 2015. We have not received any further requests for additional information or interviews and it is unclear whether the government will continue to pursue this matter. In August 2015, we received a notice of violation from the Three Affiliated Tribes' Environmental Division related to our 2014 produced water releases on the Fort Berthold Indian Reservation. The notice of violation imposes fines and requests reimbursements exceeding $1.1 million; however, the notice of violation was stayed on September 15, 2015, upon our posting of a performance bond for the amount contemplated by the notice and pending the outcome of ongoing settlement discussions with the regulatory agencies asserting jurisdiction over the 2014 produced water releases.

We ~~cannot predict what~~will continue our remediation efforts to ensure the ~~outcome~~impacted lands are restored to their prior state. We believe these releases are insurable events under our policies, and we have notified our carriers of these ~~investigations will be.~~events. We have not recorded an insurance receivable as of June 30, 2017.

Our operations are subject to stringent and complex laws and regulations pertaining to health, safety, and the environment. We are subject to laws and regulations at the federal, state and local levels that relate to air and water quality, hazardous and solid waste management and disposal and other environmental matters. The cost of planning, designing, constructing and operating our facilities must incorporate compliance with environmental laws and regulations and safety standards. Failure to comply with these laws and regulations may trigger a variety of administrative, civil and potentially criminal enforcement measures. At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, our accrual of approximately $2.4 million and ~~$1.7~~$2.1 million is based on our undiscounted estimate of amounts we will spend on compliance with environmental and other regulations, and any associated fines or penalties. We estimate that our potential liability for reasonably possible outcomes related to our environmental exposures (including the Arrow water releases described above) could range from approximately $2.4 million to ~~$4.1~~$3.5 million at ~~September~~June 30, ~~2016.~~2017.

Self-Insurance

We utilize third-party insurance subject to varying retention levels of self-insurance, which management considers prudent. Such self-insurance relates to losses and liabilities primarily associated with medical claims, workers' compensation claims and general, product, vehicle and environmental liability. At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, CEQP's self-insurance reserves were ~~$18.0~~$15.5 million and ~~$17.2~~$15.6 million. We estimate that ~~$11.3~~$10.6 million of this balance will be paid subsequent to ~~September~~June 30, ~~2017.~~2018. As such, CEQP has classified ~~$11.3~~$10.6 million in other long-term liabilities on its consolidated balance sheet at ~~September~~June 30, ~~2016.~~2017. At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, CMLP's self insurance reserves were ~~$12.9~~$12.5 million and ~~$11.4~~$12.2 million. CMLP estimates that ~~$7.1~~$8.0 million of this balance will be paid subsequent to ~~September~~June 30, ~~2017.~~2018. As such, CMLP has classified ~~$7.1~~$8.0 million in other long-term liabilities on its consolidated balance sheet at ~~September~~June 30, ~~2016.~~2017.

Guarantees and Indemnifications. We are involved in various joint ventures that sometimes require financial and performance guarantees. In a financial guarantee, we are obligated to make payments if the guaranteed party fails to make payments under, or violates the terms of, the financial arrangement. In a performance guarantee, we provide assurance that the guaranteed party will execute on the terms of the contract. If they do not, we are required to perform on their behalf. We also periodically provide indemnification arrangements related to assets or businesses we have sold. For a further description of our guarantees associated with our joint ventures, see Note 4, and for a further description of our guarantees associated with our assets or businesses we have sold, see our 2016 Annual Report on Form 10-K.

Our potential exposure under guarantee and indemnification arrangements can range from a specified amount to an unlimited dollar amount, depending on the nature of the claim, specificity as to duration, and the particular transaction. As of June 30, 2017 and December 31, 2016, we have no amounts accrued for these guarantees.

Note 11 – Related Party Transactions

Crestwood Holdings indirectly owns both CEQP's and CMLP's general partner. The affiliates of Crestwood Holdings and its owners are considered CEQP's and CMLP's related parties, including Sabine Oil and Gas LLC (Sabine) and Mountaineer Keystone LLC. CEQP and CMLP enter into transactions with their affiliates within the ordinary course of business, ~~and the services are based on the same terms as non-affiliates,~~ including gas gathering and processing services under long-term contracts, product purchases and various operating agreements.

In May 2016, Crestwood Midstream Operations, LLC (Crestwood Midstream Operations), our wholly-owned subsidiary and Stagecoach Gas entered into a management agreement under which Crestwood Midstream Operations will provide the management and operating services required by Stagecoach Gas' facilities. The initial term of the agreement will expire in May 2021, and is automatically extended for three-year periods unless otherwise terminated pursuant to the terms of the agreement. During the three and nine months ended September 30, 2016, we charged Stagecoach Gas $1.0 million and $1.3 million under this agreement, which is reflected as operations and maintenance expenses charged by CEQP and CMLP in the table below.

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The following table shows ~~revenues, costs~~transactions with our affiliates which are reflected in our consolidated statements of ~~product/services sold, general and administrative expenses and reimbursements of expenses from our affiliates~~operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (in millions):


	Three Months Ended					Nine Months Ended					Three Months Ended					Six Months Ended
	September 30,					September 30,					June 30,					June 30,
	2016			2015		2016			2015		2017		2016			2017			2016
Gathering and processing revenues at CEQP and CMLP	$	0.7		$	0.9	$	2.1		$	3.0	$	0.4	$	0.7		$	0.9		$	1.4
Gathering and processing costs of product/services sold at CEQP and CMLP⁽¹⁾	$	5.0		$	7.2	$	13.7		$	23.2	$	4.0	$	4.4		$	8.1		$	8.7
Operations and maintenance expenses charged by CEQP and CMLP	$	1.8		$	0.6	$	3.5		$	2.2
Operations and maintenance expenses at CEQP and CMLP⁽²⁾											$	5.0	$	1.0		$	9.8		$	1.7
General and administrative expenses charged by CEQP to CMLP, net⁽²⁾⁽³⁾	$	2.7		$	14.4	$	9.6		$	46.2	$	4.9	$	3.2		$	10.4		$	6.9
General and administrative expenses at CEQP charged to (from) Crestwood Holdings, net⁽³⁾⁽⁴⁾	$	(0.5	)	$	0.2	$	(0.6	)	$	0.4	$	0.6	$	(0.2	)	$	(0.2	)	$	(0.1	)


(1)	Represents natural gas purchases from ~~Sabine Oil and Gas Corporation.~~Sabine.

(2)

We have operating agreements with certain of our unconsolidated affiliates pursuant to which we charge them operations and maintenance expenses in accordance with their respective agreements. During the three and six months ended June 30, 2017, we charged $1.9 million and $4.5 million to Stagecoach Gas, $0.9 million and $1.8 million to Tres Palacios, $2.1 million and $3.3 million to Crestwood Permian and $0.1 million and $0.2 million to Jackalope. During the three and six months ended June 30, 2016, we charged $0.7 million and $1.4 million to Tres Palacios and $0.3 million to Stagecoach Gas in both periods .

(3)

Includes ~~$3.5~~$5.6 million and $11.9 million of net unit-based compensation charges allocated from CEQP to CMLP for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~$1.5~~$3.9 million and ~~$5.9~~$8.4 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2015.~~2016. In addition, ~~prior to the completion of the Simplification Merger, CEQP allocated general and administrative costs to CMLP. In conjunction with the Simplification Merger,~~ CMLP shares common management, general and administrative and overhead costs with CEQP. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, CMLP allocated ~~$0.8~~$0.7 million and ~~$2.3~~$1.5 million of general and administrative costs to ~~CEQP.~~CEQP and $0.7 million and $1.5 million for the three and six months ended June 30, 2016.


~~(3)~~(4)	Includes ~~$0.6~~less than $0.1 million and ~~$1.5~~$0.8 million unit-based compensation charges allocated from Crestwood Holdings to CEQP and CMLP during the three and ~~nine~~six months ended ~~September~~June 30, 2017 and $0.9 million during both the three and six months ended June 30, 2016.

The following table shows accounts receivable and accounts payable from our affiliates as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 (in millions):

CEQP CMLP
September 30, 2016 December 31, 2015 September 30, 2016 December 31, 2015
Accounts receivable $ 3.1
$ 1.7
$ 3.1
$ 1.7
Accounts payable $ 2.5
$ 4.0
$ —
$ 1.5



	June 30, 2017		December 31, 2016
Accounts receivable at CEQP and CMLP	$	7.6	$	5.6
Accounts payable at CEQP	$	4.8	$	2.5
Accounts payable at CMLP	$	2.3	$	—

Note 12 – Segments

Financial Information

We have three operating and reportable segments: (i) gathering and processing operations; (ii) storage and transportation operations; and (iii) marketing, supply and logistics operations. Our corporate operations include all general and administrative expenses that are not allocated to our reportable segments. ~~For a further description of our operating and reporting segments, see our 2015 Annual Report on Form 10-K.~~ We assess the performance of our operating segments based on EBITDA, ~~a non-GAAP financial measure,~~ which is defined as income before income taxes, plus debt-related costs ~~(net interest~~(interest and debt expense, net and gain ~~or loss~~(loss) on modification/extinguishment of debt) and depreciation, amortization and accretion expense.

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Below is a reconciliation of CEQP's net loss to EBITDA (in millions):

Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Net income (loss) $ 3.0
$ (623.4 ) $ (127.8 ) $ (901.3 )
Add:
Interest and debt expense, net 27.5
35.7
97.9
104.7
(Gain) loss on modification/extinguishment of debt —
2.7
(10.0 ) 19.8
Provision (benefit) for income taxes 0.2
(0.3 ) 0.2
(0.2 )
Depreciation, amortization and accretion 50.3
75.5
177.0
224.5
EBITDA $ 81.0
$ (509.8 ) $ 137.3
$ (552.5 )

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	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2017		2016			2017			2016
Net income (loss)	$	0.3	$	(37.1	)	$	(19.1	)	$	(130.8	)
Add:
Interest and debt expense, net	24.1		34.3			50.6			70.4
(Gain) loss on modification/extinguishment of debt	0.4		(10.0		)	37.7			(10.0		)
Benefit for income taxes	—		—			(0.1		)	—
Depreciation, amortization and accretion	48.7		64.4			97.1			126.7
EBITDA	$	73.5	$	51.6		$	166.2		$	56.3

The following tables summarize CEQP's reportable segment data for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (in millions). Intersegment revenues included in the following tables are accounted for as arms-length transactions that apply our revenue recognition policies described in our 2016 Annual Report on Form 10-K. Included in earnings from unconsolidated affiliates, net below was approximately ~~$8.3~~$8.2 million and ~~$3.4~~$4.4 million of depreciation and amortization expense and gains (losses) on long-lived assets, net related to our equity investments for the three months ended ~~September~~June 30, 2017 and 2016 and ~~2015 and $15.3~~$15.7 million and ~~$7.2~~$7.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015.~~2016.



	Three Months Ended June 30, 2017
	Gathering and Processing		Storage and Transportation		Marketing, Supply and Logistics			Corporate			Total
Revenues	$	405.1	$	8.5	$	436.7		$	—		$	850.3
Intersegment revenues	34.1		1.7		(35.8		)	—			—
Costs of product/services sold	354.7		0.1		374.8			—			729.6
Operations and maintenance expense	18.2		1.3		14.7			—			34.2
General and administrative expense	—		—		—			22.7			22.7
Earnings from unconsolidated affiliates, net	1.8		7.8		—			—			9.6
Other income, net	—		—		—			0.1			0.1
EBITDA	$	68.1	$	16.6	$	11.4		$	(22.6	)	$	73.5
Goodwill	$	45.9	$	—	$	153.1		$	—		$	199.0
Total assets	$	2,403.3	$	1,064.0	$	938.1		$	27.2		$	4,432.6



	Three Months Ended June 30, 2016
	Gathering and Processing		Storage and Transportation			Marketing, Supply and Logistics			Corporate			Total
Revenues	$	269.5	$	53.8		$	278.6		$	—		$	601.9
Intersegment revenues	30.6		1.1			(31.7		)	—			—
Costs of product/services sold	226.3		1.9			221.8			—			450.0
Operations and maintenance expense	20.9		8.5			15.6			—			45.0
General and administrative expense	—		—			—			28.9			28.9
Loss on long-lived assets	—		(32.7		)	—			—			(32.7		)
Earnings from unconsolidated affiliates, net	5.9		0.3			—			—			6.2
Other income, net	—		—			—			0.1			0.1
EBITDA	$	58.8	$	12.1		$	9.5		$	(28.8	)	$	51.6

Three Months Ended September 30, 2016
Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues $ 279.3
$ 18.3
$ 290.0
$ —
$ 587.6
Intersegment revenues 24.8
1.5
(26.3 ) —
—
Costs of product/services sold 226.1
0.1
240.5
—
466.7
Operations and maintenance expense 17.4
2.5
13.2
—
33.1
General and administrative expense —
—
—
18.3
18.3
Loss on long-lived assets (2.0 ) (0.1 ) —
—
(2.1 )
Earnings from unconsolidated affiliates, net 5.5
7.9
—
—
13.4
Other income, net —
—
—
0.2
0.2
EBITDA $ 64.1
$ 25.0
$ 10.0
$ (18.1 ) $ 81.0
Goodwill $ 45.9
$ 31.2
$ 172.4
$ —
$ 249.5
Total assets $ 2,378.6
$ 1,174.0
$ 963.2
$ 28.4
$ 4,544.2

Three Months Ended September 30, 2015
Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues $ 355.6
$ 65.0
$ 210.1
$ —
$ 630.7
Intersegment revenues 10.6
—
(10.6 ) —
—
Costs of product/services sold 282.8
5.2
161.2
—
449.2
Operations and maintenance expense 20.6
10.7
18.0
—
49.3
General and administrative expense —
—
—
32.8
32.8
Loss on long-lived assets (0.3 ) (0.9 ) (1.1 ) —
(2.3 )
Goodwill impairment (39.1 ) (348.0 ) (222.8 ) —
(609.9 )
Earnings from unconsolidated affiliates, net 2.0
0.8
—
—
2.8
Other income, net —
—
—
0.2
0.2
EBITDA $ 25.4
$ (299.0 ) $ (203.6 ) $ (32.6 ) $ (509.8 )

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	Nine Months Ended September 30, 2016															Six Months Ended June 30, 2017
	Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Corporate			Total			Gathering and Processing		Storage and Transportation		Marketing, Supply and Logistics			Corporate			Total
Revenues	$	787.7		$	131.5		$	806.3		$	—		$	1,725.5		$	773.7	$	18.5	$	886.2		$	—		$	1,678.4
Intersegment revenues	75.9			3.0			(78.9		)	—			—			64.4		3.5		(67.9		)	—			—
Costs of product/services sold	632.2			4.9			643.0			—			1,280.1			671.3		0.1		741.7			—			1,413.1
Operations and maintenance expense	56.1			18.2			45.6			—			119.9			35.6		2.4		29.9			—			67.9
General and administrative expense	—			—			—			70.2			70.2			—		—		—			49.1			49.1
Loss on long-lived assets	(2.0		)	(32.8		)	—			—			(34.8		)
Goodwill impairment	(8.6		)	(13.7		)	(87.4		)	—			(109.7		)
Earnings from unconsolidated affiliates, net	16.5			9.6			—			—			26.1			3.4		14.3		—			—			17.7
Other income, net	—			—			—			0.4			0.4			—		—		—			0.2			0.2
EBITDA	$	181.2		$	74.5		$	(48.6	)	$	(69.8	)	$	137.3		$	134.6	$	33.8	$	46.7		$	(48.9	)	$	166.2
Goodwill	$	45.9		$	31.2		$	172.4		$	—		$	249.5		$	45.9	$	—	$	153.1		$	—		$	199.0
Total assets	$	2,378.6		$	1,174.0		$	963.2		$	28.4		$	4,544.2		$	2,403.3	$	1,064.0	$	938.1		$	27.2		$	4,432.6


	Nine Months Ended September 30, 2015															Six Months Ended June 30, 2016
	Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Corporate			Total			Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Corporate			Total
Revenues	$	1,052.7		$	201.1		$	749.9		$	—		$	2,003.7		$	508.4		$	113.2		$	516.3		$	—		$	1,137.9
Intersegment revenues	54.5			—			(54.5		)	—			—			51.1			1.5			(52.6		)	—			—
Costs of product/services sold	842.6			15.8			580.0			—			1,438.4			406.1			4.8			402.5			—			813.4
Operations and maintenance expense	67.0			23.0			53.8			—			143.8			38.7			15.7			32.4			—			86.8
General and administrative expense	—			—			—			90.9			90.9			—			—			—			51.9			51.9
Goodwill impairment	(259.8		)	(348.0		)	(283.1		)	—			(890.9		)	(8.6		)	(13.7		)	(87.4		)	—			(109.7		)
Loss on long-lived assets	(1.2		)	(1.6		)	(1.1		)	—			(3.9		)	—			(32.7		)	—			—			(32.7		)
Earnings from unconsolidated affiliates, net	5.6			5.6			—			—			11.2			11.0			1.7			—			—			12.7
Other income, net	—			—			—			0.5			0.5			—			—			—			0.2			0.2
EBITDA	$	(57.8	)	$	(181.7	)	$	(222.6	)	$	(90.4	)	$	(552.5	)	$	117.1		$	49.5		$	(58.6	)	$	(51.7	)	$	56.3

Below is a reconciliation of CMLP's net loss to EBITDA (in millions):


	Three Months Ended					Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,					September 30,						June 30,						June 30,
	2016		2015			2016			2015			2017			2016			2017			2016
Net income (loss)	$	0.6	$	(610.2	)	$	(130.3	)	$	(653.9	)
Net loss												$	(1.9	)	$	(35.6	)	$	(23.3	)	$	(130.9	)
Add:
Interest and debt expense, net	27.5		32.6			97.9			95.1			24.1			34.3			50.6			70.4
(Gain) loss on modification/extinguishment of debt	—		1.8			(10.0		)	18.9			0.4			(10.0		)	37.7			(10.0		)
Provision (benefit) for income taxes	—		(0.1		)	—			0.4			—			0.2			(0.1		)	—
Depreciation, amortization and accretion	53.2		70.0			185.2			208.3			51.4			67.1			102.6			132.0
EBITDA	$	81.3	$	(505.9	)	$	142.8		$	(331.2	)	$	74.0		$	56.0		$	167.5		$	61.5

Table of Contents

The following tables summarize CMLP's reportable segment data for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (in millions). Intersegment revenues included in the following tables are accounted for as arms-length transactions that apply our revenue recognition policies described in our 2016 Annual Report on Form 10-K. Included in earnings from unconsolidated affiliates, net below was approximately ~~$8.3~~$8.2 million and ~~$3.4~~$4.4 million of depreciation and amortization expense and gains (losses) on long-lived assets, net related to our equity investments for the three months ended ~~September~~June 30, 2017 and 2016 and ~~2015 and $15.3~~$15.7 million and ~~$7.2~~$7.0 million for the ~~nine~~six months ended ~~September 30, 2016~~2017 and ~~2015.~~2016.



	Three Months Ended June 30, 2017
	Gathering and Processing		Storage and Transportation		Marketing, Supply and Logistics			Corporate			Total
Revenues	$	405.1	$	8.5	$	436.7		$	—		$	850.3
Intersegment revenues	34.1		1.7		(35.8		)	—			—
Costs of product/services sold	354.7		0.1		374.8			—			729.6
Operations and maintenance expense	18.2		1.3		14.7			—			34.2
General and administrative expense	—		—		—			22.1			22.1
Earnings from unconsolidated affiliates, net	1.8		7.8		—			—			9.6
EBITDA	$	68.1	$	16.6	$	11.4		$	(22.1	)	$	74.0
Goodwill	$	45.9	$	—	$	153.1		$	—		$	199.0
Total assets	$	2,598.3	$	1,064.0	$	938.1		$	19.2		$	4,619.6



	Three Months Ended June 30, 2016
	Gathering and Processing		Storage and Transportation			Marketing, Supply and Logistics			Corporate			Total
Revenues	$	269.5	$	53.8		$	278.6		$	—		$	601.9
Intersegment revenues	30.6		1.1			(31.7		)	—			—
Costs of product/services sold	226.3		1.9			221.8			—			450.0
Operations and maintenance expense	20.9		4.9			15.6			—			41.4
General and administrative expense	—		—			—			28.0			28.0
Loss on long-lived assets	—		(32.7		)	—			—			(32.7		)
Earnings from unconsolidated affiliates, net	5.9		0.3			—			—			6.2
EBITDA	$	58.8	$	15.7		$	9.5		$	(28.0	)	$	56.0



	Six Months Ended June 30, 2017
	Gathering and Processing		Storage and Transportation		Marketing, Supply and Logistics			Corporate			Total
Revenues	$	773.7	$	18.5	$	886.2		$	—		$	1,678.4
Intersegment revenues	64.4		3.5		(67.9		)	—			—
Costs of product/services sold	671.3		0.1		741.7			—			1,413.1
Operations and maintenance expense	35.6		2.4		29.9			—			67.9
General and administrative expense	—		—		—			47.6			47.6
Earnings from unconsolidated affiliates, net	3.4		14.3		—			—			17.7
EBITDA	$	134.6	$	33.8	$	46.7		$	(47.6	)	$	167.5
Goodwill	$	45.9	$	—	$	153.1		$	—		$	199.0
Total assets	$	2,598.3	$	1,064.0	$	938.1		$	19.2		$	4,619.6

3332

Table of Contents

Three Months Ended September 30, 2016
Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues $ 279.3
$ 18.3
$ 290.0
$ —
$ 587.6
Intersegment revenues 24.8
1.5
(26.3 ) —
—
Costs of product/services sold 226.1
0.1
240.5
—
466.7
Operations and maintenance expense 17.4
3.0
13.2
—
33.6
General and administrative expense —
—
—
17.3
17.3
Loss on long-lived assets (2.0 ) (0.1 ) —
—
(2.1 )
Earnings from unconsolidated affiliates, net 5.5
7.9
—
—
13.4
EBITDA $ 64.1
$ 24.5
$ 10.0
$ (17.3 ) $ 81.3
Goodwill $ 45.9
$ 31.2
$ 172.4
$ —
$ 249.5
Total assets $ 2,584.4
$ 1,174.0
$ 963.2
$ 15.2
$ 4,736.8

Three Months Ended September 30, 2015
Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues $ 355.6
$ 65.0
$ 210.1
$ —
$ 630.7
Intersegment revenues 10.6
—
(10.6 ) —
—
Costs of product/services sold 282.8
5.2
161.2
—
449.2
Operations and maintenance expense 20.6
10.2
18.0
—
48.8
General and administrative expense —
—
—
29.2
29.2
Goodwill impairment (39.1 ) (348.0 ) (222.8 ) —
(609.9 )
Loss on long-lived assets (0.3 ) (0.9 ) (1.1 ) —
(2.3 )
Earnings from unconsolidated affiliates, net 2.0
0.8
—
—
2.8
EBITDA $ 25.4
$ (298.5 ) $ (203.6 ) $ (29.2 ) $ (505.9 )

Nine Months Ended September 30, 2016
Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues $ 787.7
$ 131.5
$ 806.3
$ —
$ 1,725.5
Intersegment revenues 75.9
3.0
(78.9 ) —
—
Costs of product/services sold 632.2
4.9
643.0
—
1,280.1
Operations and maintenance expense 56.1
15.0
45.6
—
116.7
General and administrative expense —
—
—
67.5
67.5
Goodwill impairment (8.6 ) (13.7 ) (87.4 ) —
(109.7 )
Loss on long-lived assets (2.0 ) (32.8 ) —
—
(34.8 )
Earnings from unconsolidated affiliates, net 16.5
9.6
—
—
26.1
EBITDA $ 181.2
$ 77.7
$ (48.6 ) $ (67.5 ) $ 142.8
Goodwill $ 45.9
$ 31.2
$ 172.4
$ —
$ 249.5
Total assets $ 2,584.4
$ 1,174.0
$ 963.2
$ 15.2
$ 4,736.8

~~Table of Contents~~


	Nine Months Ended September 30, 2015															Six Months Ended June 30, 2016
	Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Corporate			Total			Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Corporate			Total
Revenues	$	1,052.7		$	201.1		$	749.9		$	—		$	2,003.7		$	508.4		$	113.2		$	516.3		$	—		$	1,137.9
Intersegment revenues	54.5			—			(54.5		)	—			—			51.1			1.5			(52.6		)	—			—
Costs of product/services sold	842.6			15.8			580.0			—			1,438.4			406.1			4.8			402.5			—			813.4
Operations and maintenance expense	67.0			22.5			53.8			—			143.3			38.7			12.0			32.4			—			83.1
General and administrative expense	—			—			—			82.1			82.1			—			—			—			50.2			50.2
Goodwill impairment	(47.4		)	(348.0		)	(283.1		)	—			(678.5		)	(8.6		)	(13.7		)	(87.4		)	—			(109.7		)
Loss on long-lived assets	(1.2		)	(1.5		)	(1.1		)	—			(3.8		)	—			(32.7		)	—			—			(32.7		)
Earnings from unconsolidated affiliates, net	5.6			5.6			—			—			11.2			11.0			1.7			—			—			12.7
EBITDA	$	154.6		$	(181.1	)	$	(222.6	)	$	(82.1	)	$	(331.2	)	$	117.1		$	53.2		$	(58.6	)	$	(50.2	)	$	61.5

Note 13 – Condensed Consolidating Financial Information

Crestwood Midstream is a holding company (Parent) and owns no operating assets and has no significant operations independent of its subsidiaries. Obligations under Crestwood Midstream's senior notes and its credit facility are jointly and severally guaranteed by substantially all of its subsidiaries, except for Crestwood ~~Delaware Basin~~Infrastructure Holdings LLC, Crestwood Niobrara, Crestwood Pipeline and Storage Northeast LLC (Crestwood Northeast), PRBIC and Tres Holdings and their respective subsidiaries (collectively, Non-Guarantor Subsidiaries). Crestwood Midstream Finance Corp., the co-issuer of its senior notes, is Crestwood Midstream's 100% owned subsidiary and has no material assets, operations, revenues or cash flows other than those related to its service as co-issuer of the Crestwood Midstream senior notes.

The tables below present condensed consolidating financial statements for Crestwood Midstream as ~~parent~~Parent on a stand-alone, unconsolidated basis, and Crestwood Midstream's combined guarantor and combined non-guarantor subsidiaries as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015.~~2016. The financial information may not necessarily be indicative of the results of operations, cash flows or financial position had the subsidiaries operated as independent entities.

The condensed consolidating financial statements for the three and six months ended June 30, 2016 include reclassifications that were made to conform to the current year presentation, none of which impacted previously reported net income (loss) or partners’ capital. In particular, the condensed consolidating statement of operations was modified to consider the impact of net income (loss) attributable to non-controlling partners in subsidiaries in arriving at equity in net income (loss) of subsidiaries in the parent and eliminations columns of those statements.

Table of Contents



Crestwood Midstream Partners LP
Condensed Consolidating Balance Sheet
June 30, 2017
(in millions)
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash	$	2.0	$	—	$	—	$	—		$	2.0
Accounts receivable	—		288.2		2.1		—			290.3
Inventory	—		63.1		—		—			63.1
Other current assets	—		19.8		—		—			19.8
Total current assets	2.0		371.1		2.1		—			375.2

Property, plant and equipment, net	—		2,234.0		—		—			2,234.0
Goodwill and intangible assets, net	—		826.6		—		—			826.6
Investment in consolidated affiliates	4,069.0		—		—		(4,069.0		)	—
Investment in unconsolidated affiliates	—		—		1,181.7		—			1,181.7
Other assets	—		2.1		—		—			2.1
Total assets	$	4,071.0	$	3,433.8	$	1,183.8	$	(4,069.0	)	$	4,619.6

Liabilities and partners' capital
Current liabilities:
Accounts payable	$	—	$	234.8	$	—	$	—		$	234.8
Other current liabilities	21.9		70.4		—		—			92.3
Total current liabilities	21.9		305.2		—		—			327.1

Long-term liabilities:
Long-term debt, less current portion	1,612.2		0.8		—		—			1,613.0
Other long-term liabilities	—		44.6		—		—			44.6
Deferred income taxes	—		0.7		—		—			0.7

Partners' capital	2,436.9		3,082.5		986.5		(4,069.0		)	2,436.9
Interest of non-controlling partners in subsidiaries	—		—		197.3		—			197.3
Total partners' capital	2,436.9		3,082.5		1,183.8		(4,069.0		)	2,634.2
Total liabilities and partners' capital	$	4,071.0	$	3,433.8	$	1,183.8	$	(4,069.0	)	$	4,619.6

Table of Contents



Crestwood Midstream Partners LP
Condensed Consolidating Balance Sheet
December 31, 2016
(in millions)
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash	$	1.3	$	—	$	—	$	—		$	1.3
Accounts receivable	—		289.3		0.5		—			289.8
Inventory	—		66.0		—		—			66.0
Other current assets	—		16.0		—		—			16.0
Total current assets	1.3		371.3		0.5		—			373.1

Property, plant and equipment, net	—		2,298.4		—		—			2,298.4
Goodwill and intangible assets, net	—		851.9		—		—			851.9
Investment in consolidated affiliates	4,093.7		—		—		(4,093.7		)	—
Investment in unconsolidated affiliates	—		—		1,115.4		—			1,115.4
Other assets	—		1.8		—		—			1.8
Total assets	$	4,095.0	$	3,523.4	$	1,115.9	$	(4,093.7	)	$	4,640.6

Liabilities and partners' capital
Current liabilities:
Accounts payable	$	—	$	214.5	$	—	$	—		$	214.5
Other current liabilities	23.1		94.4		—		—			117.5
Total current liabilities	23.1		308.9		—		—			332.0

Long-term liabilities:
Long-term debt, less current portion	1,521.2		1.5		—		—			1,522.7
Other long-term liabilities	—		42.0		—		—			42.0
Deferred income taxes	—		0.7		—		—			0.7

Partners' capital	2,550.7		3,170.3		923.4		(4,093.7		)	2,550.7
Interest of non-controlling partners in subsidiaries	—		—		192.5		—			192.5
Total partners' capital	2,550.7		3,170.3		1,115.9		(4,093.7		)	2,743.2
Total liabilities and partners' capital	$	4,095.0	$	3,523.4	$	1,115.9	$	(4,093.7	)	$	4,640.6

Table of Contents

Crestwood Midstream Partners LP
Condensed Consolidating Balance Sheet
September 30, 2016
(in millions)
Parent
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Assets
Current assets:
Cash $ 0.5
$ —
$ —
$ —
$ 0.5
Accounts receivable —
220.5
2.7
—
223.2
Inventory —
61.8
—
—
61.8
Assets held for sale —
55.0
—
—
55.0
Other current assets —
15.5
—
—
15.5
Total current assets 0.5
352.8
2.7
—
356.0

Property, plant and equipment, net —
2,328.5
—
—
2,328.5
Goodwill and intangible assets, net —
950.2
—
—
950.2
Investment in consolidated affiliates 4,268.4
—
—
(4,268.4 ) —
Investment in unconsolidated affiliates —
—
1,099.2
—
1,099.2
Other assets —
2.9
—
—
2.9
Total assets $ 4,268.9
$ 3,634.4
$ 1,101.9
$ (4,268.4 ) $ 4,736.8

Liabilities and partners' capital
Current liabilities:
Accounts payable $ —
$ 147.1
$ —
$ —
$ 147.1
Other current liabilities 33.0
94.0
—
—
127.0
Total current liabilities 33.0
241.1
—
—
274.1

Long-term liabilities:
Long-term debt, less current portion 1,575.2
1.5
—
—
1,576.7
Other long-term liabilities —
34.5
—
—
34.5
Deferred income taxes —
0.7
—
—
0.7

Partners' capital 2,660.7
3,356.6
911.8
(4,268.4 ) 2,660.7
Interest of non-controlling partners in subsidiaries —
—
190.1
—
190.1
Total partners' capital 2,660.7
3,356.6
1,101.9
(4,268.4 ) 2,850.8
Total liabilities and partners' capital $ 4,268.9
$ 3,634.4
$ 1,101.9
$ (4,268.4 ) $ 4,736.8




Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Three Months Ended June 30, 2017
(in millions)
	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Revenues	$	—		$	850.3	$	—	$	—		$	850.3
Costs of product/services sold	—			729.6		—		—			729.6
Expenses:
Operations and maintenance	—			34.2		—		—			34.2
General and administrative	16.6			5.5		—		—			22.1
Depreciation, amortization and accretion	—			51.4		—		—			51.4
	16.6			91.1		—		—			107.7
Operating income (loss)	(16.6		)	29.6		—		—			13.0
Earnings from unconsolidated affiliates, net	—			—		9.6		—			9.6
Interest and debt expense, net	(24.1		)	—		—		—			(24.1		)
Gain on modification/extinguishment of debt	(0.4		)	—		—		—			(0.4		)
Equity in net income (loss) of subsidiaries	32.9			—		—		(32.9		)	—
Income (loss) before income taxes	(8.2		)	29.6		9.6		(32.9		)	(1.9		)
Provision for income taxes	—			—		—		—			—
Net income (loss)	(8.2		)	29.6		9.6		(32.9		)	(1.9		)
Net income attributable to non-controlling partners in subsidiaries	—			—		6.3		—			6.3
Net income (loss) attributable to Crestwood Midstream Partners LP	$	(8.2	)	$	29.6	$	3.3	$	(32.9	)	$	(8.2	)

Table of Contents

Crestwood Midstream Partners LP
Condensed Consolidating Balance Sheet
December 31, 2015
(in millions)
Parent
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Assets
Current assets:
Cash $ 0.1
$ —
$ —
$ —
$ 0.1
Accounts receivable —
236.0
0.5
—
236.5
Inventory —
44.5
—
—
44.5
Other current assets —
52.5
—
—
52.5
Total current assets 0.1
333.0
0.5
—
333.6

Property, plant and equipment, net —
3,525.7
—
—
3,525.7
Goodwill and intangible assets, net —
1,846.9
—
—
1,846.9
Investment in consolidated affiliates 5,506.8
—
—
(5,506.8 ) —
Investment in unconsolidated affiliates —
—
254.3
—
254.3
Other assets —
3.1
—
—
3.1
Total assets $ 5,506.9
$ 5,708.7
$ 254.8
$ (5,506.8 ) $ 5,963.6

Liabilities and partners' capital
Current liabilities:
Accounts payable $ —
$ 141.3
$ 0.1
$ —
$ 141.4
Other current liabilities 26.4
85.2
—
—
111.6
Total current liabilities 26.4
226.5
0.1
—
253.0

Long-term liabilities:
Long-term debt, less current portion 2,498.9
2.9
—
—
2,501.8
Other long-term liabilities —
43.3
—
—
43.3
Deferred income taxes —
0.4
—
—
0.4

Partners' capital 2,981.6
5,435.6
71.2
(5,506.8 ) 2,981.6
Interest of non-controlling partners in subsidiaries —
—
183.5
—
183.5
Total partners' capital 2,981.6
5,435.6
254.7
(5,506.8 ) 3,165.1
Total liabilities and partners' capital $ 5,506.9
$ 5,708.7
$ 254.8
$ (5,506.8 ) $ 5,963.6



Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Three Months Ended June 30, 2016
(in millions)
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
Revenues	$	—		$	601.9		$	—	$	—		$	601.9
Costs of product/services sold	—			450.0			—		—			450.0
Expenses:
Operations and maintenance	—			41.4			—		—			41.4
General and administrative	23.2			4.8			—		—			28.0
Depreciation, amortization and accretion	—			67.1			—		—			67.1
	23.2			113.3			—		—			136.5
Other operating expense:
Loss on long-lived assets, net	—			(32.7		)	—		—			(32.7		)
Operating income (loss)	(23.2		)	5.9			—		—			(17.3		)
Earnings from unconsolidated affiliates, net	—			—			6.2		—			6.2
Interest and debt expense, net	(34.3		)	—			—		—			(34.3		)
Gain on modification/extinguishment of debt	10.0			—			—		—			10.0
Equity in net income (loss) of subsidiaries	5.9			—			—		(5.9		)	—
Income (loss) before income taxes	(41.6		)	5.9			6.2		(5.9		)	(35.4		)
Provision for income taxes	—			(0.2		)	—		—			(0.2		)
Net income (loss)	(41.6		)	5.7			6.2		(5.9		)	(35.6		)
Net income attributable to non-controlling partners in subsidiaries	—			—			6.0		—			6.0
Net income (loss) attributable to Crestwood Midstream Partners LP	(41.6		)	5.7			0.2		(5.9		)	(41.6		)

Table of Contents

																												Crestwood Midstream Partners LP	Condensed Consolidating Statement of Operations
Three Months Ended September 30, 2016
Six Months Ended June 30, 2017															Six Months Ended June 30, 2017
(in millions)
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated			Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Revenues	$	—		$	587.6		$	—	$	—		$	587.6		$	—		$	1,678.4	$	—	$	—		$	1,678.4
Costs of product/services sold	—			466.7			—		—			466.7			—			1,413.1		—		—			1,413.1
Expenses:
Operations and maintenance	—			33.6			—		—			33.6			—			67.9		—		—			67.9
General and administrative	13.3			4.0			—		—			17.3			34.9			12.7		—		—			47.6
Depreciation, amortization and accretion	—			53.2			—		—			53.2			—			102.6		—		—			102.6
	13.3			90.8			—		—			104.1			34.9			183.2		—		—			218.1
Other operating expense:
Loss on long-lived assets, net	—			(2.1		)	—		—			(2.1		)
Operating income (loss)	(13.3		)	28.0			—		—			14.7			(34.9		)	82.1		—		—			47.2
Earnings from unconsolidated affiliates, net	—			—			13.4		—			13.4			—			—		17.7		—			17.7
Interest and debt expense, net	(27.5		)	—			—		—			(27.5		)	(50.6		)	—		—		—			(50.6		)
Equity in net income (loss) of subsidiary	41.4			—			—		(41.4		)	—
Loss on modification/extinguishment of debt															(37.7		)	—		—		—			(37.7		)
Equity in net income (loss) of subsidiaries															87.5			—		—		(87.5		)	—
Income (loss) before income taxes															(35.7		)	82.1		17.7		(87.5		)	(23.4		)
Benefit for income taxes															—			0.1		—		—			0.1
Net income (loss)	0.6			28.0			13.4		(41.4		)	0.6			(35.7		)	82.2		17.7		(87.5		)	(23.3		)
Net income attributable to non-controlling partners in subsidiaries	—			—			6.1		—			6.1			—			—		12.4		—			12.4
Net income (loss) attributable to Crestwood Midstream Partners LP	$	0.6		$	28.0		$	7.3	$	(41.4	)	$	(5.5	)	$	(35.7	)	$	82.2	$	5.3	$	(87.5	)	$	(35.7	)

Table of Contents

																												Crestwood Midstream Partners LP	Condensed Consolidating Statement of Operations
Three Months Ended September 30, 2015
Six Months Ended June 30, 2016															Six Months Ended June 30, 2016
(in millions)
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated			Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations		Consolidated
Revenues	$	—		$	630.7		$	—		$	—	$	630.7		$	—		$	1,137.9		$	—	$	—	$	1,137.9
Costs of product/services sold	—			449.2			—			—		449.2			—			813.4			—		—		813.4
Expenses:
Operations and maintenance	—			48.8			—			—		48.8			—			83.1			—		—		83.1
General and administrative	21.2			8.0			—			—		29.2			40.9			9.3			—		—		50.2
Depreciation, amortization and accretion	0.5			69.5			—			—		70.0			—			132.0			—		—		132.0
	21.7			126.3			—			—		148.0			40.9			224.4			—		—		265.3
Other operating expense:
Loss on long-lived assets, net	—			(2.3		)	—			—		(2.3		)	—			(32.7		)	—		—		(32.7		)
Goodwill Impairment	—			(609.9		)	—			—		(609.9		)	—			(109.7		)	—		—		(109.7		)
Operating loss	(21.7		)	(557.0		)	—			—		(578.7		)	(40.9		)	(42.3		)	—		—		(83.2		)
Earnings from unconsolidated affiliates, net	—			—			2.8			—		2.8			—			—			12.7		—		12.7
Interest and debt expense, net	(32.6		)	—			—			—		(32.6		)	(70.4		)	—			—		—		(70.4		)
Loss on modification/extinguishment of debt	(1.8		)	—			—			—		(1.8		)
Equity in net income (loss) of subsidiary	(554.1		)	—			—			554.1		—
Income (loss) before income taxes	(610.2		)	(557.0		)	2.8			554.1		(610.3		)
Benefit for income taxes	—			0.1			—			—		0.1
Gain on modification/extinguishment of debt															10.0			—			—		—		10.0
Equity in net income (loss) of subsidiaries															(41.5		)	—			—		41.5		—
Net income (loss)	(610.2		)	(556.9		)	2.8			554.1		(610.2		)	(142.8		)	(42.3		)	12.7		41.5		(130.9		)
Net income attributable to non-controlling partners in subsidiaries	—			—			5.9			—		5.9			—			—			11.9		—		11.9
Net income (loss) attributable to Crestwood Midstream Partners LP	(610.2		)	(556.9		)	(3.1		)	554.1		(616.1		)	$	(142.8	)	$	(42.3	)	$	0.8	$	41.5	$	(142.8	)
Net income attributable to Class A preferred units	6.4			—			—			—		6.4
Net income (loss) attributable to partners	$	(616.6	)	$	(556.9	)	$	(3.1	)	$	554.1	$	(622.5	)

Table of Contents

Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Nine Months Ended September 30, 2016
(in millions)
Parent
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Revenues $ —
$ 1,725.5
$ —
$ —
$ 1,725.5
Costs of product/services sold —
1,280.1
—
—
1,280.1
Expenses:
Operations and maintenance —
116.7
—
—
116.7
General and administrative 54.2
13.3
—
—
67.5
Depreciation, amortization and accretion —
185.2
—
—
185.2
54.2
315.2
—
—
369.4
Other operating expense:
Loss on long-lived assets, net —
(34.8 ) —
—
(34.8 )
Goodwill impairment —
(109.7 ) —
—
(109.7 )
Operating loss (54.2 ) (14.3 ) —
—
(68.5 )
Earnings from unconsolidated affiliates, net —
—
26.1
—
26.1
Interest and debt expense, net (97.9 ) —
—
—
(97.9 )
Gain on modification/extinguishment of debt 10.0
—
—
—
10.0
Equity in net income (loss) of subsidiary 11.8
—
—
(11.8 ) —
Net income (loss) (130.3 ) (14.3 ) 26.1
(11.8 ) (130.3 )
Net income attributable to non-controlling partners in subsidiaries —
—
18.0
—
18.0
Net income (loss) attributable to Crestwood Midstream Partners LP $ (130.3 ) $ (14.3 ) $ 8.1
$ (11.8 ) $ (148.3 )



Crestwood Midstream Partners LP
Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2017
(in millions)
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:	$	(83.2	)	$	202.7		$	16.6		$	—		$	136.1

Cash flows from investing activities:
Purchases of property, plant and equipment	(2.8		)	(85.9		)	—			—			(88.7		)
Investment in unconsolidated affiliates	—			—			(18.5		)	—			(18.5		)
Net proceeds from sale of assets	—			1.0			—			—			1.0
Capital distributions from unconsolidated affiliates	—			—			21.1			—			21.1
Capital distributions from consolidated affiliates	11.6			—			—			(11.6		)	—
Net cash provided by (used in) investing activities	8.8			(84.9		)	2.6			(11.6		)	(85.1		)

Cash flows from financing activities:
Proceeds from the issuance of long-term debt	1,680.4			—			—			—			1,680.4
Payments on long-term debt	(1,629.6		)	(0.7		)	—			—			(1,630.3		)
Payments on capital leases	—			(1.3		)	—			—			(1.3		)
Payments for debt-related deferred costs	(1.0		)	—			—			—			(1.0		)
Distributions paid	(86.9		)	—			(7.6		)	—			(94.5		)
Distributions to parent	—			—			(11.6		)	11.6			—
Taxes paid for unit-based compensation vesting	—			(3.6		)	—			—			(3.6		)
Change in intercompany balances	112.2			(112.2		)	—			—			—
Net cash provided by (used in) financing activities	75.1			(117.8		)	(19.2		)	11.6			(50.3		)

Net change in cash	0.7			—			—			—			0.7
Cash at beginning of period	1.3			—			—			—			1.3
Cash at end of period	$	2.0		$	—		$	—		$	—		$	2.0

Table of Contents

Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Nine Months Ended September 30, 2015
(in millions)
Parent
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Revenues $ —
$ 2,003.7
$ —
$ —
$ 2,003.7
Costs of product/services sold —
1,438.4
—
—
1,438.4
Expenses:
Operations and maintenance —
143.3
—
—
143.3
General and administrative 51.0
31.1
—
—
82.1
Depreciation, amortization and accretion 1.6
206.7
—
—
208.3
52.6
381.1
—
—
433.7
Other operating expense:
Loss on long-lived assets, net —
(3.8 ) —
—
(3.8 )
Goodwill Impairment —
(678.5 ) —
—
(678.5 )
Operating loss (52.6 ) (498.1 ) —
—
(550.7 )
Earnings from unconsolidated affiliates, net —
—
11.2
—
11.2
Interest and debt expense, net (95.1 ) —
—
—
(95.1 )
Loss on modification/extinguishment of debt (18.9 ) —
—
—
(18.9 )
Equity in net income (loss) of subsidiary (487.3 ) —
—
487.3
—
Income (loss) before income taxes (653.9 ) (498.1 ) 11.2
487.3
(653.5 )
Provision for income taxes —
(0.4 ) —
—
(0.4 )
Net income (loss) (653.9 ) (498.5 ) 11.2
487.3
(653.9 )
Net income attributable to non-controlling partners in subsidiaries —
—
17.2
—
17.2
Net income (loss) attributable to Crestwood Midstream Partners LP (653.9 ) (498.5 ) (6.0 ) 487.3
(671.1 )
Net income attributable to Class A preferred units 23.1
—
—
—
23.1
Net income (loss) attributable to partners $ (677.0 ) $ (498.5 ) $ (6.0 ) $ 487.3
$ (694.2 )

~~Table of Contents~~

Crestwood Midstream Partners LP
Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2016
(in millions)
Parent
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Cash flows from operating activities: $ (140.4 ) $ 371.3
$ 19.9
$ —
$ 250.8

Cash flows from investing activities:
Purchases of property, plant and equipment (1.6 ) (77.7 ) —
—
(79.3 )
Investment in unconsolidated affiliates —
—
(6.2 ) —
(6.2 )
Proceeds from the sale of assets —
943.1
—
—
943.1
Capital distributions from unconsolidated affiliates —
—
9.2
—
9.2
Capital distributions from consolidated affiliates 11.5
—
—
(11.5 ) —
Net cash provided by (used in) investing activities 9.9
865.4
3.0
(11.5 ) 866.8

Cash flows from financing activities:
Proceeds from the issuance of long-term debt 1,364.0
—
—
—
1,364.0
Principal payments on long-term debt (2,278.4 ) (0.8 ) —
—
(2,279.2 )
Payments on capital leases —
(1.5 ) —
—
(1.5 )
Payments for debt-related deferred costs (3.4 ) —
—
—
(3.4 )
Distributions paid (185.0 ) —
(11.4 ) —
(196.4 )
Distributions to parent —
—
(11.5 ) 11.5
—
Taxes paid for unit-based compensation vesting —
(0.8 ) —
—
(0.8 )
Change in intercompany balances 1,233.7
(1,233.7 ) —
—
—
Other —
0.1
—
—
0.1
Net cash provided by (used in) financing activities 130.9
(1,236.7 ) (22.9 ) 11.5
(1,117.2 )

Net change in cash 0.4
—
—
—
0.4
Cash at beginning of period 0.1
—
—
—
0.1
Cash at end of period $ 0.5
$ —
$ —
$ —
$ 0.5

~~Table of Contents~~

																															Crestwood Midstream Partners LP	Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2015
Six Months Ended June 30, 2016																Six Months Ended June 30, 2016
(in millions)
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:	$	(133.3	)	$	454.6		$	9.3		$	—		$	330.6		$	(110.9	)	$	296.5		$	10.4		$	—		$	196.0

Cash flows from investing activities:
Purchases of property, plant and equipment	(1.0		)	(121.8		)	—			—			(122.8		)	(1.0		)	(75.2		)	—			—			(76.2		)
Investment in unconsolidated affiliates	—			—			(39.8		)	—			(39.8		)	—			—			(5.5		)	—			(5.5		)
Capital distributions from unconsolidated affiliates	—			—			4.4			—			4.4			—			—			5.5			—			5.5
Proceeds from the sale of assets	—			2.9			—			—			2.9
Net proceeds from sale of assets																—			942.0			—			—			942.0
Capital contributions to consolidated affiliates	(33.7		)	—			—			33.7			—			2.8			—			—			(2.8		)	—
Net cash provided by (used in) investing activities	(34.7		)	(118.9		)	(35.4		)	33.7			(155.3		)	1.8			866.8			—			(2.8		)	865.8

Cash flows from financing activities:
Proceeds from the issuance of long-term debt	2,698.8			—			—			—			2,698.8			1,078.8			—			—			—			1,078.8
Principal payments on long-term debt	(2,187.9		)	—			—			—			(2,187.9		)	(1,986.8		)	(0.7		)	—			—			(1,987.5		)
Payments on capital leases	(1.2		)	(0.4		)	—			—			(1.6		)	—			(0.9		)	—			—			(0.9		)
Payments for debt-related deferred costs	(17.3		)	—			—			—			(17.3		)	(3.3		)	—			—			—			(3.3		)
Financing fees paid for early debt redemption	(13.6		)	—			—			—			(13.6		)
Distributions paid	(710.0		)	—			(7.6		)	—			(717.6		)	(140.6		)	—			(7.6		)	—			(148.2		)
Contributions from parent	—			—			33.7			(33.7		)	—
Net proceeds from issuance of Class A preferred units	58.8			—			—			—			58.8
Distributions to parent																—			—			(2.8		)	2.8			—
Taxes paid for unit-based compensation vesting	—			(2.1		)	—			—			(2.1		)	—			(0.6		)	—			—			(0.6		)
Change in intercompany balances	340.6			(340.6		)	—			—			—			1,161.1			(1,161.1		)	—			—			—
Other	(0.2		)	—			—			—			(0.2		)
Net cash provided by (used in) financing activities	168.0			(343.1		)	26.1			(33.7		)	(182.7		)	109.2			(1,163.3		)	(10.4		)	2.8			(1,061.7		)

Net change in cash	—			(7.4		)	—			—			(7.4		)	0.1			—			—			—			0.1
Cash at beginning of period	—			7.6			—			—			7.6			0.1			—			—			—			0.1
Cash at end of period	$	—		$	0.2		$	—		$	—		$	0.2		$	0.2		$	—		$	—		$	—		$	0.2

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and the accompanying footnotes and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our ~~2015~~2016 Annual Report on Form 10-K.

This report, including information included or incorporated by reference herein, contains forward-looking statements concerning the financial condition, results of operations, plans, objectives, future performance and business of our company and its subsidiaries. These forward-looking statements include:

statements that are not historical in nature, including, but not limited to: (i) our belief that anticipated cash from operations, cash distributions from entities that we control, and borrowing capacity under our credit facility will be sufficient to meet our anticipated liquidity needs for the foreseeable future; and (ii) our belief that we do not have material potential liability in connection with legal proceedings that would have a significant financial impact on our consolidated financial condition, results of operations or cash flows; ~~and (iii) our belief that our assets will continue to benefit from the development of unconventional shale plays as significant supply basins;~~ and

statements preceded by, followed by or that contain forward-looking terminology including the words “believe,” “expect,” “may,” “will,” “should,” “could,” “anticipate,” “estimate,” “intend” or the negation thereof, or similar expressions.

Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties and assumptions. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the following factors:

our ability to successfully implement our business plan for our assets and operations;

governmental legislation and regulations;

industry factors that influence the supply of and demand for crude oil, natural gas and NGLs;

industry factors that influence the demand for services in the markets (particularly unconventional shale plays) in which we provide services;

weather conditions;

the availability of crude oil, natural gas and NGLs, and the price of those commodities, to consumers relative to the price of alternative and competing fuels;

economic conditions;

costs or difficulties related to the integration of our existing businesses and acquisitions;

environmental claims;

operating hazards and other risks incidental to the provision of midstream services, including gathering, compressing, treating, processing, fractionating, transporting and storing energy products (i.e., crude oil, NGLs and natural gas) and related products (i.e., produced water);

interest rates;

the price and availability of debt and equity financing; and

the ability to sell or monetize assets in the current market, to reduce indebtedness or for other general partnership purposes.

For additional factors that could cause actual results to be materially different from those described in the forward-looking statements, see Part I, Item IA. Risk Factors of our ~~2015~~2016 Annual Report on Form 10-K.

Outlook and Trends

Our business objective is to create long-term value for our ~~stakeholders~~unitholders. We expect to create long-term value by consistently generating stable operating margin and improved cash flows from operations by prudently financing our investments, maximizing throughput on our assets, ~~expanding~~and effectively controlling our ~~services and exercising prudent control of~~ operating and administrative ~~costs, resulting in stable operating margins and improving cash flows from operations.~~costs. Our business strategy ~~further~~ depends, in part, on our ability to provide increased services to our customers at competitive fees, ~~and develop~~including opportunities to expand our services resulting from expansions, organic growth projects and acquisitions that can be financed appropriately.

We have positioned the Company to generate consistent results in a low commodity price ~~environment.~~environment without sacrificing revenue upside. For example, many of our G&P assets are supported by long-term, core acreage dedications in shale plays that are economic to varying degrees based upon natural gas, NGL and crude oil prices, the availability of ~~midstream~~ infrastructure to flow production to market, and the operational and financial condition of our diverse customer base. We believe the diversity of our asset portfolio, the risk and cost sharing nature of our strategic joint ventures, the wide range of services provided ~~and extensive customer portfolio, taken together, positions us to be successful in the current market, which~~by our

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investments, and our extensive customer portfolio collectively position us to be successful in the current market, which has been impacted by prolonged low commodity prices. In addition, a substantial portion of ~~the~~our midstream ~~services we provide to customers in the shale plays~~investments are based on fixed fee, take-or-pay or minimum volume commitment agreements that ensure a minimum level of cash flow regardless of actual commodity prices or volumetric throughput.

We continue to focus on executing our strategic plan to substantially de-risk our investment profile and increase our backlog of high-quality growth opportunities around our core assets. As part of our strategic plan, in June 2016, we formed a joint venture with a subsidiary of Con Edison to own and further develop our natural gas storage and transportation operations in the Northeast. We retired with proceeds from the joint venture transaction approximately $936 million of indebtedness (including approximately $623 million of borrowings under our credit facility and approximately $313 million of senior notes), which substantially reduced our financial leverage and improved our liquidity. As one of the largest utilities in the Northeast natural gas demand market, Con Edison offers substantial market insight and commercial expertise that should better position our joint venture to capture incremental growth opportunities in one of our core markets.

In September 2016, we also entered into a long-term agreement with a subsidiary of Royal Dutch Shell plc (SWEPI) to construct, own and operate a natural gas gathering system in SWEPI's operated position in the Delaware Permian. Consistent with our strategy of de-risking investments and raising capital for growth projects on attractive terms, we entered into a joint venture with First Reserve to fund the SWEPI gathering system and other potential growth projects in the play. The Delaware Permian in West Texas continues to emerge as one of the most prolific resource basins in North America. Superior wellhead economics for producers across multiple target drilling horizons creates substantial inventory of future wells to be developed in the coming years, which creates significant midstream growth opportunities for midstream companies like us. Through our existing G&P assets at Willow Lake, the system we will construct for SWEPI and other potential gathering projects for large producers in the area, we are establishing a scalable asset base in the core of the Delaware Permian extending from southern New Mexico down through Loving, Reeves, Ward and Culberson Counties, Texas. We believe that we are positioned well to benefit from the continued build-out of this world-class resource.

During ~~the remainder of 2016~~2017 and beyond, we will continue to execute on our plan to better position the Company to emerge from this challenging market environment as a stronger, better capitalized ~~company.~~company that can sustainably resume growing its distributions. We will remain focused on ~~reducing~~efficiently allocating capital expenditures, eliminating costs (through increased operating efficiencies and ~~otherwise)~~cost discipline) and strengthening our balance sheet.

Based on ~~financial results to date,~~our operating performance during the first six months of 2017, we ~~continue to~~ anticipate that the Company will generate Adjusted EBITDA of ~~$435~~$380 million to ~~$465~~$400 million in ~~2016. See "How~~2017. We ~~Evaluate Our Operations"~~ ~~below for~~anticipate our ~~definition~~G&P segment will generate $285 million to $295 million of EBITDA, our storage and transportation segment to generate $85 million to $90 million of EBITDA and ~~Adjusted~~our marketing, supply and logistics segment will generate $75 million to $80 million of EBITDA ~~(non-GAAP measure)~~in 2017. We expect to focus on expansion and greenfield opportunities in the Delaware Permian and the Bakken shale as further described in "Segment Highlights" below.

Regulatory Matters

Many aspects of the energy midstream sector, such as crude-by-rail activities and pipeline integrity, have experienced increased regulatory oversight over the past few years. Prior to the 2016 presidential election, we expected the trend of greater regulatory oversight to continue for the foreseeable future, However, the election results and anticipated changes in policy could lessen the degree of regulatory scrutiny we face in the near term.

Segment Highlights

Below is a discussion of events that highlight our core business and financing activities.

Gathering and Processing

Bakken. In the Bakken, we are expanding and upgrading our water handling facilities, increasing natural gas capacity on the system, and constructing a 30 million cubic feet per day (MMcf/d) natural gas processing facility and associated pipelines that we expect to place into service in late 2017. We believe the installation of a gas processing solution on the Arrow system will, among other things, spur greater development activity around the Arrow system, allow us to provide greater flow assurance to our producer customers, and reduce the downstream constraints currently experienced by producers on the Fort Berthold Indian Reservation. The anticipated cost of this natural gas processing facility and associated pipeline is approximately $115 million.In conjunction with this project, we are negotiating various amendments and extensions with several of our producer customers, and the impact of these contract negotiations is not expected to have a material impact to our 2017 results of operations.

Delaware Permian. In the Delaware Permian, we have identified gathering and processing and transportation opportunities in and around our existing assets. We are expanding both our processing capacity in the region, which includes the construction of a 200 MMcf/d natural gas processing facility in Orla, Texas, and associated pipelines, as well as our interconnection capacity to accommodate greater takeaway options for residue gas and NGLs. The initial cost of the expansion project is expected to cost approximately $170 million with an in-service date in the second half of 2018. We are also developing a crude oil and condensate storage terminal near Orla, Texas that would offer condensate stabilization, truck loading/unloading options and connections to third party pipelines. In addition, we are developing a produced water gathering, disposal and recycling facility in the Delaware Permian. We continue to believe that we are positioned well to benefit from the continued build-out of this world-class resource.

On June 21, 2017, we contributed to Crestwood Permian 100% of theequity interest of Crestwood New Mexico Pipeline LLC (Crestwood New Mexico), our wholly-owned subsidiary that owns our Delaware Basin assets located in Eddy County, New Mexico. This contribution was treated as a transaction between entities under common control, and accordingly we deconsolidated Crestwood New Mexico and our investment in Crestwood Permian was increased by the historical book value of these assets of approximately $69.4 million. In conjunction with this contribution, First Reserve has agreed to contribute to Crestwood Permian the first $151 million of capital costs required to fund the expansion of the Delaware Basin assets, which includes the Orla processing plant and associated pipelines.

Crestwood Permian has a long-term agreement with SWEPI to construct, own and operate a natural gas gathering system in SWEPI's operated position in the Delaware Permian. SWEPI has dedicated to Crestwood Permian approximately 100,000 acres and gathering rights for SWEPI's gas production across a large acreage position in Loving, Reeves, Ward and Culberson Counties, Texas. The Nautilus gathering system is designed to include 194 miles of low pressure gathering lines, 36 miles of

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high pressure trunklines and centralized compression facilities which are expandable over time as production increases, producing gas gathering capacity of approximately 250 MMcf/d. The initial build-out of the Nautilus gathering system was completed on June 6, 2017 and includes 20 receipt point meters, 60 miles of pipeline, a 24-mile high pressure header system, 10,800 horsepower of compression and a ~~reconciliation~~high pressure delivery point. Crestwood Permian provides gathering, dehydration, compression and liquids handling services to SWEPI on a fixed fee basis. On August 1, 2017, SWEPI exercised their option to purchase a 50% equity interest in Crestwood Permian Basin and we expect to complete this transaction in the fourth quarter of ~~net income~~2017.

Through June 30, 2017, First Reserve has contributed $37.5 million to ~~EBITDA~~the joint venture and ~~Adjusted EBITDA.~~we have contributed approximately $17.0 million to the joint venture to fund the early-stage build-out of the Nautilus gathering system. We will fund the next $20.5 million of capital requirements for the build-out, and then both parties will fund the remaining capital requirements on a pro rata basis.

During the first half of 2017, we terminated an agreement with a large producer to develop a three-stream gathering system in Reeves County, Texas. We continue to work with this producer and other producers in the area for the potential development of future expansion projects.

Marketing, Supply and Logistics

During the second quarter of 2017, we commenced an in-depth assessment of our trucking and transportation operations to evaluate the markets in which our trucking and transportation business operates, its operating cost structure, customer service levels and organizational efficiencies. Based on this assessment, we, along with our Board of Directors, determined that our trucking and transportation operations should be realigned, including leadership changes, cost reductions, sizing of our fleet and the implementation of rate and profitability key performance indicators. Certain of these changes were implemented during the second quarter of 2017 and will continue throughout the remainder of the year, and we believe these changes will result in improved profitability for this business. Additionally, management plans to realign our trucking operations service capability to be more coordinated with our NGL, crude and water operations and less reliant on third party transportation services. This commercial realignment should allow us to optimize the use of available capacity and position us to reevaluate our trucking and transportation operations in future periods. We anticipate that these realignment efforts will be completed before the end of 2017.

Through the execution of the strategic efforts described above, we expect to increase the stability and strength of the Company through a continued challenging and competitive market environment, which will position us to achieve our chief business objective to create long-term value for our ~~stakeholders.~~

~~Segment Highlights~~

~~Below is a discussion of events that highlight our core business and financing activities.~~

~~Gathering and Processing~~

~~Barnett Shale.~~ Our gathering and processing systems were integral to Quicksilver Resources, Inc.'s (Quicksilver) Barnett Shale operations, as a substantial amount of Quicksilver's revenues were derived from the sale of natural gas and natural gas liquids produced from acreage dedicated to us. In March 2015, Quicksilver filed for protection under Chapter 11 of the U.S. Bankruptcy Code. In January 2016, Quicksilver executed an asset purchase agreement with BlueStone Natural Resources II, LLC (BlueStone) for the sale of its U.S. oil and gas assets. On April 6, 2016, Quicksilver closed the sale with BlueStone and in connection with the closing, Quicksilver withdrew its motion to reject its gathering agreements with us. In April 2016, we entered into new 10 year agreements with BlueStone to gather and process natural gas across our Alliance, Lake Arlington and Cowtown systems in the Barnett Shale. Under the terms of these agreements, we will gather and process natural gas for BlueStone under fixed-fee and percent-of-proceeds fee structures, and pursuant to the agreements, BlueStone returned wells previously shut-in by Quicksilver to production in 2016 and will not shut-in or choke back production for economic purposes

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through the end of 2018. The new agreements with Bluestone are factored into our anticipated 2016 results described in Outlook and Trends above, and we believe the agreements will provide further stability to our investment profile.

~~Delaware Permian~~. In September 2016, we entered into a long-term agreement with SWEPI to construct, own and operate a natural gas gathering system in SWEPI's operated position in the Delaware Permian. SWEPI will provide us with a dedication of approximately 100,000 acres and gathering rights for SWEPI gas production across a large acreage position in Loving, Reeves, Ward and Culberson Counties, Texas. The initial gathering system is designed for gas production of approximately 250 million cubic feet per day (MMcf/d) and will include 194 miles of low pressure gathering lines, 36 miles of high pressure trunklines, and centralized compression facilities which are expandable over time as production increases. We will provide gathering, dehydration, compression and liquids handling services on a fixed fee basis. Additionally, Shell has the option to purchase up to a 50% equity interest in the system prior to September 1, 2017. We estimate the complete build-out of the gas gathering system will cost approximately $180 million, of which approximately $90 million is anticipated to be spent in 2016 and 2017. Project development activities are underway with a targeted initial in-service date on or before July 1, 2017.

In October 2016, Crestwood and First Reserve entered into definitive agreements to form a joint venture to fund and own the gathering system described above and future operations in the Delaware Permian. Under the joint venture, First Reserve will fund up to $37.5 million of the capital requirements during the early-stage build-out of the gathering system, after which we will fund the next $37.5 million, and then both parties will fund future remaining capital requirements evenly thereafter. We anticipate funding our portion of the capital expenditures required for the gathering system with internally generated cash flows and borrowings under the CMLP revolving credit facility.

In late 2015, we expanded the Willow Lake processing plant to 50 MMcf/d, which we completed and placed into service in January 2016. The recent expansion of the Willow Lake system was supported by a seven year contract extension with Mewbourne Oil Co. which increased the amount of WolfCamp drilling and rich gas development expected in the area.

~~Storage and Transportation~~

In April 2016, Crestwood Northeast and CEGP entered into a definitive agreement to form the Stagecoach JV to own and further develop our NE S&T assets. Pursuant to the contribution agreement, on June 3, 2016, we contributed to Stagecoach Gas the entities owning the NE S&T assets, CEGP contributed $945 million to Stagecoach Gas in exchange for a 50% equity interest in Stagecoach Gas, and Stagecoach Gas distributed to Crestwood Northeast the net cash proceeds received from CEGP. In conjunction with the contribution, we deconsolidated the NE S&T assets on June 3, 2016 and began accounting for our 50% equity interest in Stagecoach Gas under the equity method of accounting. Additional information about the announced joint venture and certain related matters is available on the Form 8-Ks filed by each of Crestwood Equity and Crestwood Midstream on April 22, 2016 and June 8, 2016.unitholders.

Critical Accounting Estimates

Our critical accounting estimates are consistent with those described in our ~~2015~~2016 Annual Report on Form 10-K. ~~Below is an update of our critical accounting estimates related to goodwill.~~

~~Goodwill Impairment~~

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of the income approach to determine the fair value of our reporting units (see further discussion of the use of the income approach below) could result in a different fair value if we had utilized a market approach, or a combination thereof.

Commodity prices have continued to decline since late 2014, and that decline has adversely impacted forecasted cash flows, discount rates and stock/unit prices for most companies in the midstream industry, including us. In particular, due to the significant, sustained decrease in the market price of our common units during the first quarter of 2016, we evaluated the carrying value of our reporting units and determined it was more likely than not that the goodwill associated with several of our reporting units was impaired as of March 31, 2016. As a result of further analysis of the fair value of our reporting units, we recorded goodwill impairments on several of our reporting units during the first quarter of 2016. We did not record any additional goodwill impairments during the second and third quarters of 2016.

~~The following table summarizes the goodwill of our various reporting units (in millions):~~

Goodwill at December 31, 2015
Goodwill Impairments during the
Three Months Ended
March 31, 2016

Impact of Deconsolidation of NE S&T Assets during the Three Months Ended
June 30,
2016
Goodwill at September 30, 2016
Gathering and Processing
Marcellus $ 8.6
$ 8.6
$ —
$ —
Arrow 45.9
—
—
45.9
Storage and Transportation
Northeast Storage and Transportation 726.3
—
726.3
—
COLT 44.9
13.7
—
31.2
Marketing, Supply and Logistics
Supply and Logistics 167.2
65.5
—
101.7
Storage and Terminals 50.5
14.1
—
36.4
US Salt 12.6
—
—
12.6
Trucking 29.5
7.8
—
21.7
Total $ 1,085.5
$ 109.7
$ 726.3
$ 249.5

The goodwill impairments recorded during the first quarter of 2016 primarily resulted from increasing the discount rates utilized in determining the fair value of the reporting units for certain of those reporting units considering the significant, sustained decrease in the market price of our common units and the continued decrease in commodity prices and its impact on the midstream industry and our customers. We utilized the income approach to determine the fair value of our reporting units given the limited availability of comparable market-based transactions as of March 31, 2016 and December 31, 2015, and we utilized discount rates ranging from 10% to 19% in applying the income approach to determine the fair value of our reporting units with goodwill as of March 31, 2016. Our COLT, Supply and Logistics, Storage and Terminals and Trucking reporting units also experienced impairments during 2015 based on the impact that the prolonged low commodity price environment is expected to have on the demand for future services provided by these operations. Despite increases in the operating results of these reporting units from 2013 to 2015, we revised our cash flow forecasts for these operations at December 31, 2015 in light of our current view that these operations will not grow as fast or as significantly in the future as originally forecasted in 2013 when the assets were acquired.

We continue to monitor the remaining goodwill described in the table above, and we could experience additional impairments of the remaining goodwill in the future if we experience a significant sustained decrease in the market value of our common or preferred units or if we receive additional negative information about market conditions or the intent of our customers on our

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remaining operations with goodwill, which could negatively impact the forecasted cash flows or discount rates utilized to determine the fair value of those businesses, especially in light of continued declining results experienced by our trucking business in 2016, as further described in Results of Operations below. In particular, a 5% decrease in the forecasted cash flows or a 1% increase in the discount rates utilized to determine the fair value of our businesses that recorded goodwill impairments in 2016 could have resulted in an additional $35 million of goodwill impairments as of March 31, 2016. There we no triggers which required us to evaluate our goodwill for impairment during the second and third quarters of 2016.

How We Evaluate Our Operations

We evaluate our overall business performance based primarily on EBITDA and Adjusted EBITDA. ~~We evaluate our ability to make distributions to our unitholders based on cash available for distribution and distributions received from Crestwood Midstream.~~

We do not utilize depreciation, depletion and amortization expense in our key measures because we focus our performance management on cash flow generation and our assets have long useful lives.

EBITDA and Adjusted EBITDA - We believe that EBITDA and Adjusted EBITDA are widely accepted financial indicators of a company's operational performance and its ability to incur and service debt, fund capital expenditures and make distributions. We believe that EBITDA and Adjusted EBITDA are useful to our investors because it allows them to use the same performance measure analyzed internally by our management to evaluate the performance of our businesses and investments without regard to the manner in which they are financed or our capital structure. EBITDA is defined as income before income taxes, plus debt-related costs ~~(net interest~~(interest and debt expense, net and gain ~~or loss~~(loss) on modification/extinguishment of debt) and depreciation, amortization and accretion expense. ~~In addition,~~ Adjusted EBITDA considers the adjusted earnings impact of our unconsolidated affiliates by adjusting our equity earnings or losses from our unconsolidated affiliates to reflect our proportionate share (based on the distribution percentage) of their EBITDA, excluding impairments. Adjusted EBITDA also considers the impact of certain significant items, such as unit-based compensation charges, losses on long-lived assets, impairments of goodwill, third party costs incurred related to potential and completed acquisitions, certain environmental remediation costs, ~~certain costs related to our 2015 cost savings initiatives,~~ the change in fair value of commodity inventory-related derivative contracts, costs associated with our 2017 realignment of our Marketing, Supply and Logistics trucking and transportation operations, and other transactions identified in a specific reporting period. The change in fair value of commodity inventory-related derivative contracts is considered in determining Adjusted EBITDA given that the

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timing of recognizing gains and losses on these derivative contracts differs from the recognition of revenue for the related underlying sale of inventory that these derivatives relate to. Changes in the fair value of other derivative contracts is not considered in determining Adjusted EBITDA given the relatively short-term nature of those derivative contracts. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, as they do not include deductions for items such as depreciation, amortization and accretion, interest and income taxes, which are necessary to maintain our business. EBITDA and Adjusted EBITDA should not be considered ~~an alternative~~as alternatives to net income, operating cash flow or any other measure of financial performance presented in accordance with GAAP. EBITDA and Adjusted EBITDA calculations may vary among entities, so our computation may not be comparable to measures used by other companies.

See our reconciliation of net income to EBITDA and Adjusted EBITDA in Results of Operations below.

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Results of Operations

The following tables summarize our results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016 (in millions):


	Crestwood Equity												Crestwood Midstream												Crestwood Equity												Crestwood Midstream
	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						September 30,						September 30,						June 30,						June 30,						June 30,						June 30,
	2016			2015			2016			2015			2016			2015			2016			2015			2017			2016			2017			2016			2017			2016			2017			2016
Revenues	$	587.6		$	630.7		$	1,725.5		$	2,003.7		$	587.6		$	630.7		$	1,725.5		$	2,003.7		$	850.3		$	601.9		$	1,678.4		$	1,137.9		$	850.3		$	601.9		$	1,678.4		$	1,137.9
Costs of product/services sold	466.7			449.2			1,280.1			1,438.4			466.7			449.2			1,280.1			1,438.4			729.6			450.0			1,413.1			813.4			729.6			450.0			1,413.1			813.4
Operations and maintenance expense	33.1			49.3			119.9			143.8			33.6			48.8			116.7			143.3			34.2			45.0			67.9			86.8			34.2			41.4			67.9			83.1
General and administrative expense	18.3			32.8			70.2			90.9			17.3			29.2			67.5			82.1			22.7			28.9			49.1			51.9			22.1			28.0			47.6			50.2
Depreciation, amortization and accretion	50.3			75.5			177.0			224.5			53.2			70.0			185.2			208.3			48.7			64.4			97.1			126.7			51.4			67.1			102.6			132.0
Loss on long-lived assets, net	(2.1		)	(2.3		)	(34.8		)	(3.9		)	(2.1		)	(2.3		)	(34.8		)	(3.8		)	—			(32.7		)	—			(32.7		)	—			(32.7		)	—			(32.7		)
Goodwill impairment	—			(609.9		)	(109.7		)	(890.9		)	—			(609.9		)	(109.7		)	(678.5		)	—			—			—			(109.7		)	—			—			—			(109.7		)
Operating income (loss)	17.1			(588.3		)	(66.2		)	(788.7		)	14.7			(578.7		)	(68.5		)	(550.7		)	15.1			(19.1		)	51.2			(83.3		)	13.0			(17.3		)	47.2			(83.2		)
Earnings from unconsolidated affiliates, net	13.4			2.8			26.1			11.2			13.4			2.8			26.1			11.2			9.6			6.2			17.7			12.7			9.6			6.2			17.7			12.7
Interest and debt expense, net	(27.5		)	(35.7		)	(97.9		)	(104.7		)	(27.5		)	(32.6		)	(97.9		)	(95.1		)	(24.1		)	(34.3		)	(50.6		)	(70.4		)	(24.1		)	(34.3		)	(50.6		)	(70.4		)
Gain (loss) on modification/extinguishment of debt	—			(2.7		)	10.0			(19.8		)	—			(1.8		)	10.0			(18.9		)	(0.4		)	10.0			(37.7		)	10.0			(0.4		)	10.0			(37.7		)	10.0
Other income, net	0.2			0.2			0.4			0.5			—			—			—			—			0.1			0.1			0.2			0.2			—			—			—			—
(Provision) benefit for income taxes	(0.2		)	0.3			(0.2		)	0.2			—			0.1			—			(0.4		)	—			—			0.1			—			—			(0.2		)	0.1			—
Net income (loss)	3.0			(623.4		)	(127.8		)	(901.3		)	0.6			(610.2		)	(130.3		)	(653.9		)	0.3			(37.1		)	(19.1		)	(130.8		)	(1.9		)	(35.6		)	(23.3		)	(130.9		)
Add:
Interest and debt expense, net	27.5			35.7			97.9			104.7			27.5			32.6			97.9			95.1			24.1			34.3			50.6			70.4			24.1			34.3			50.6			70.4
(Gain) loss on modification/extinguishment of debt	—			2.7			(10.0		)	19.8			—			1.8			(10.0		)	18.9			0.4			(10.0		)	37.7			(10.0		)	0.4			(10.0		)	37.7			(10.0		)
Provision (benefit) for income taxes	0.2			(0.3		)	0.2			(0.2		)	—			(0.1		)	—			0.4			—			—			(0.1		)	—			—			0.2			(0.1		)	—
Depreciation, amortization and accretion	50.3			75.5			177.0			224.5			53.2			70.0			185.2			208.3			48.7			64.4			97.1			126.7			51.4			67.1			102.6			132.0
EBITDA	81.0			(509.8		)	137.3			(552.5		)	81.3			(505.9		)	142.8			(331.2		)	73.5			51.6			166.2			56.3			74.0			56.0			167.5			61.5
Unit-based compensation charges	4.1			3.9			13.4			15.6			4.1			3.5			13.4			14.0			5.4			4.8			12.7			9.3			5.4			4.8			12.7			9.3
Loss on long-lived assets, net	2.1			2.3			34.8			3.9			2.1			2.3			34.8			3.8			—			32.7			—			32.7			—			32.7			—			32.7
Goodwill impairment	—			609.9			109.7			890.9			—			609.9			109.7			678.5			—			—			—			109.7			—			—			—			109.7
Earnings from unconsolidated affiliates, net	(13.4		)	(2.8		)	(26.1		)	(11.2		)	(13.4		)	(2.8		)	(26.1		)	(11.2		)	(9.6		)	(6.2		)	(17.7		)	(12.7		)	(9.6		)	(6.2		)	(17.7		)	(12.7		)
Adjusted EBITDA from unconsolidated affiliates, net	21.7			6.2			41.4			18.4			21.7			6.2			41.4			18.4			17.8			10.6			33.4			19.7			17.8			10.6			33.4			19.7
Change in fair value of commodity inventory-related derivative contracts	7.5			8.1			8.3			10.7			7.5			8.1			8.3			10.7			3.7			3.5			(14.9		)	0.8			3.7			3.5			(14.9		)	0.8
Significant transaction and environmental related costs and other items	0.5			15.7			11.2			32.7			0.5			13.3			11.2			27.5			6.5			9.5			8.5			10.7			6.5			9.5			8.5			10.7
Adjusted EBITDA	$	103.5		$	133.5		$	330.0		$	408.5		$	103.8		$	134.6		$	335.5		$	410.5		$	97.3		$	106.5		$	188.2		$	226.5		$	97.8		$	110.9		$	189.5		$	231.7

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	Crestwood Equity												Crestwood Midstream												Crestwood Equity												Crestwood Midstream
	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						September 30,						September 30,						June 30,						June 30,						June 30,						June 30,
	2016			2015			2016			2015			2016			2015			2016			2015			2017			2016			2017			2016			2017			2016			2017			2016
Net cash provided by operating activities	$	51.5		$	90.5		$	244.5		$	301.6		$	54.8		$	60.2		$	250.8		$	330.6		$	74.0		$	58.7		$	132.9		$	193.0		$	76.1		$	60.3		$	136.1		$	196.0
Net changes in operating assets and liabilities	6.5			(17.6		)	(46.8		)	(45.6		)	4.0			19.9			(46.3		)	(55.9		)	(16.8		)	(2.7		)	(1.6		)	(53.3		)	(18.3		)	0.4			(2.8		)	(50.3		)
Amortization of debt-related deferred costs, discounts and premiums	(1.7		)	(2.2		)	(5.1		)	(6.6		)	(1.7		)	(2.0		)	(5.1		)	(5.9		)	(1.7		)	(1.7		)	(3.5		)	(3.4		)	(1.7		)	(1.7		)	(3.5		)	(3.4		)
Interest and debt expense, net	27.5			35.7			97.9			104.7			27.5			32.6			97.9			95.1			24.1			34.3			50.6			70.4			24.1			34.3			50.6			70.4
Market adjustment on interest rate swaps	—			—			—			0.5			—			—			—			—
Unit-based compensation charges	(4.1		)	(3.9		)	(13.4		)	(15.6		)	(4.1		)	(3.5		)	(13.4		)	(14.0		)	(5.4		)	(4.8		)	(12.7		)	(9.3		)	(5.4		)	(4.8		)	(12.7		)	(9.3		)
Loss on long-lived assets, net	(2.1		)	(2.3		)	(34.8		)	(3.9		)	(2.1		)	(2.3		)	(34.8		)	(3.8		)	—			(32.7		)	—			(32.7		)	—			(32.7		)	—			(32.7		)
Goodwill impairment	—			(609.9		)	(109.7		)	(890.9		)	—			(609.9		)	(109.7		)	(678.5		)	—			—			—			(109.7		)	—			—			—			(109.7		)
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received	3.1			(0.5		)	3.9			1.6			3.1			(0.5		)	3.9			1.6			(0.8		)	—			(0.5		)	0.8			(0.8		)	—			(0.5		)	0.8
Deferred income taxes	0.3			0.9			0.9			2.5			—			0.1			(0.2		)	(0.2		)	0.1			0.5			0.7			0.6			—			—			—			(0.2		)
Provision (benefit) for income taxes	0.2			(0.3		)	0.2			(0.2		)	—			(0.1		)	—			0.4			—			—			(0.1		)	—			—			0.2			(0.1		)	—
Other non-cash income	(0.2		)	(0.2		)	(0.3		)	(0.6		)	(0.2		)	(0.4		)	(0.3		)	(0.6		)
Other non-cash (income) expense																									—			—			0.4			(0.1		)	—			—			0.4			(0.1		)
EBITDA	81.0			(509.8		)	137.3			(552.5		)	81.3			(505.9		)	142.8			(331.2		)	73.5			51.6			166.2			56.3			74.0			56.0			167.5			61.5
Unit-based compensation charges	4.1			3.9			13.4			15.6			4.1			3.5			13.4			14.0			5.4			4.8			12.7			9.3			5.4			4.8			12.7			9.3
Loss on long-lived assets, net	2.1			2.3			34.8			3.9			2.1			2.3			34.8			3.8			—			32.7			—			32.7			—			32.7			—			32.7
Goodwill impairment	—			609.9			109.7			890.9			—			609.9			109.7			678.5			—			—			—			109.7			—			—			—			109.7
Earnings from unconsolidated affiliates, net	(13.4		)	(2.8		)	(26.1		)	(11.2		)	(13.4		)	(2.8		)	(26.1		)	(11.2		)	(9.6		)	(6.2		)	(17.7		)	(12.7		)	(9.6		)	(6.2		)	(17.7		)	(12.7		)
Adjusted EBITDA from unconsolidated affiliates, net	21.7			6.2			41.4			18.4			21.7			6.2			41.4			18.4			17.8			10.6			33.4			19.7			17.8			10.6			33.4			19.7
Change in fair value of commodity inventory-related derivative contracts	7.5			8.1			8.3			10.7			7.5			8.1			8.3			10.7			3.7			3.5			(14.9		)	0.8			3.7			3.5			(14.9		)	0.8
Significant transaction and environmental related costs and other items	0.5			15.7			11.2			32.7			0.5			13.3			11.2			27.5			6.5			9.5			8.5			10.7			6.5			9.5			8.5			10.7
Adjusted EBITDA	$	103.5		$	133.5		$	330.0		$	408.5		$	103.8		$	134.6		$	335.5		$	410.5		$	97.3		$	106.5		$	188.2		$	226.5		$	97.8		$	110.9		$	189.5		$	231.7

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Segment Results

The following tables summarize the EBITDA of our segments (in millions):

Crestwood Equity


	Three Months Ended									Three Months Ended									Three Months Ended							Three Months Ended
	September 30, 2016									September 30, 2015									June 30, 2017							June 30, 2016
	Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Gathering and Processing		Storage and Transportation		Marketing, Supply and Logistics			Gathering and Processing		Storage and Transportation			Marketing, Supply and Logistics
Revenues	$	279.3		$	18.3		$	290.0		$	355.6		$	65.0		$	210.1		$	405.1	$	8.5	$	436.7		$	269.5	$	53.8		$	278.6
Intersegment revenues	24.8			1.5			(26.3		)	10.6			—			(10.6		)	34.1		1.7		(35.8		)	30.6		1.1			(31.7		)
Costs of product/services sold	226.1			0.1			240.5			282.8			5.2			161.2			354.7		0.1		374.8			226.3		1.9			221.8
Operations and maintenance expense	17.4			2.5			13.2			20.6			10.7			18.0			18.2		1.3		14.7			20.9		8.5			15.6
Goodwill impairment	—			—			—			(39.1		)	(348.0		)	(222.8		)
Loss on long-lived assets	(2.0		)	(0.1		)	—			(0.3		)	(0.9		)	(1.1		)	—		—		—			—		(32.7		)	—
Earnings from unconsolidated affiliates, net	5.5			7.9			—			2.0			0.8			—			1.8		7.8		—			5.9		0.3			—
EBITDA	$	64.1		$	25.0		$	10.0		$	25.4		$	(299.0	)	$	(203.6	)	$	68.1	$	16.6	$	11.4		$	58.8	$	12.1		$	9.5


	Nine Months Ended									Nine Months Ended									Six Months Ended							Six Months Ended
	September 30, 2016									September 30, 2015									June 30, 2017							June 30, 2016
	Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Gathering and Processing		Storage and Transportation		Marketing, Supply and Logistics			Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics
Revenues	$	787.7		$	131.5		$	806.3		$	1,052.7		$	201.1		$	749.9		$	773.7	$	18.5	$	886.2		$	508.4		$	113.2		$	516.3
Intersegment revenues	75.9			3.0			(78.9		)	54.5			—			(54.5		)	64.4		3.5		(67.9		)	51.1			1.5			(52.6		)
Costs of product/services sold	632.2			4.9			643.0			842.6			15.8			580.0			671.3		0.1		741.7			406.1			4.8			402.5
Operations and maintenance expense	56.1			18.2			45.6			67.0			23.0			53.8			35.6		2.4		29.9			38.7			15.7			32.4
Goodwill impairment	(8.6		)	(13.7		)	(87.4		)	(259.8		)	(348.0		)	(283.1		)	—		—		—			(8.6		)	(13.7		)	(87.4		)
Loss on long-lived assets	(2.0		)	(32.8		)	—			(1.2		)	(1.6		)	(1.1		)	—		—		—			—			(32.7		)	—
Earnings from unconsolidated affiliates, net	16.5			9.6			—			5.6			5.6			—			3.4		14.3		—			11.0			1.7			—
EBITDA	$	181.2		$	74.5		$	(48.6	)	$	(57.8	)	$	(181.7	)	$	(222.6	)	$	134.6	$	33.8	$	46.7		$	117.1		$	49.5		$	(58.6	)

Crestwood Midstream


	Three Months Ended									Three Months Ended									Three Months Ended							Three Months Ended
	September 30, 2016									September 30, 2015									June 30, 2017							June 30, 2016
	Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Gathering and Processing		Storage and Transportation		Marketing, Supply and Logistics			Gathering and Processing		Storage and Transportation			Marketing, Supply and Logistics
Revenues	$	279.3		$	18.3		$	290.0		$	355.6		$	65.0		$	210.1		$	405.1	$	8.5	$	436.7		$	269.5	$	53.8		$	278.6
Intersegment revenues	24.8			1.5			(26.3		)	10.6			—			(10.6		)	34.1		1.7		(35.8		)	30.6		1.1			(31.7		)
Costs of product/services sold	226.1			0.1			240.5			282.8			5.2			161.2			354.7		0.1		374.8			226.3		1.9			221.8
Operations and maintenance expense	17.4			3.0			13.2			20.6			10.2			18.0			18.2		1.3		14.7			20.9		4.9			15.6
Goodwill impairment	—			—			—			(39.1		)	(348.0		)	(222.8		)
Loss on long-lived assets	(2.0		)	(0.1		)	—			(0.3		)	(0.9		)	(1.1		)	—		—		—			—		(32.7		)	—
Earnings from unconsolidated affiliates, net	5.5			7.9			—			2.0			0.8			—			1.8		7.8		—			5.9		0.3			—
EBITDA	$	64.1		$	24.5		$	10.0		$	25.4		$	(298.5	)	$	(203.6	)	$	68.1	$	16.6	$	11.4		$	58.8	$	15.7		$	9.5

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	Nine Months Ended									Nine Months Ended									Six Months Ended							Six Months Ended
	September 30, 2016									September 30, 2015									June 30, 2017							June 30, 2016
	Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics			Gathering and Processing		Storage and Transportation		Marketing, Supply and Logistics			Gathering and Processing			Storage and Transportation			Marketing, Supply and Logistics
Revenues	$	787.7		$	131.5		$	806.3		$	1,052.7		$	201.1		$	749.9		$	773.7	$	18.5	$	886.2		$	508.4		$	113.2		$	516.3
Intersegment revenues	75.9			3.0			(78.9		)	54.5			—			(54.5		)	64.4		3.5		(67.9		)	51.1			1.5			(52.6		)
Costs of product/services sold	632.2			4.9			643.0			842.6			15.8			580.0			671.3		0.1		741.7			406.1			4.8			402.5
Operations and maintenance expense	56.1			15.0			45.6			67.0			22.5			53.8			35.6		2.4		29.9			38.7			12.0			32.4
Goodwill impairment	(8.6		)	(13.7		)	(87.4		)	(47.4		)	(348.0		)	(283.1		)	—		—		—			(8.6		)	(13.7		)	(87.4		)
Loss on long-lived assets	(2.0		)	(32.8		)	—			(1.2		)	(1.5		)	(1.1		)	—		—		—			—			(32.7		)	—
Earnings from unconsolidated affiliates, net	16.5			9.6			—			5.6			5.6			—			3.4		14.3		—			11.0			1.7			—
EBITDA	$	181.2		$	77.7		$	(48.6	)	$	154.6		$	(181.1	)	$	(222.6	)	$	134.6	$	33.8	$	46.7		$	117.1		$	53.2		$	(58.6	)

Below is a discussion of the factors that impacted EBITDA by segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the same periods in ~~2015.~~2016.

Gathering and Processing

EBITDA for ~~CMLP's G&P~~our gathering and processing segment increased by approximately ~~$38.7~~$9.3 million and ~~$26.6~~$17.5 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the same periods in ~~2015.~~2016. The comparability of our G&P segment's ~~results period over period is primarily~~EBITDA was impacted by an $8.6 million goodwill ~~impairments~~impairment recorded during the first quarter of 2016 ~~and the second and third quarters~~related to our Marcellus operations. For a further discussion of ~~2015, which are further described below.~~

our goodwill impairments recorded during 2016, see Item 1. Financial Statements, Note 2. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, our G&P segment's revenues ~~were lower~~increased by approximately ~~$62.1~~$139.1 million and ~~$243.6~~$278.6 million compared to the same periods in ~~2015,~~2016, partially offset by ~~lower~~an increase in costs of product/services sold of approximately ~~$56.7~~$128.4 million and ~~$210.4~~$265.2 million. These ~~decreases~~increases were primarily driven by our Arrow operations, which experienced a ~~$63.7~~$131.5 million and ~~$212.9~~$266.1 million ~~reduction~~increase in revenues during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the same periods in ~~2015, substantially offset by~~2016, and a ~~$61.8~~$123.8 million and ~~$212.0~~$253.6 million ~~decrease~~increase in costs of ~~products/~~product/services sold. The ~~decrease~~increase in Arrow's ~~product~~ revenues and costs ~~of product/services sold~~ was primarily driven by ~~reduced market prices on crude oil, which caused~~higher average prices on Arrow's agreements under which it purchases and sells crude. In addition, our crude, ~~oil buy/sell agreements~~gas and water volumes increased by 18%, 14% and 24%, respectively, during the six months ended June 30, 2017 compared to ~~decrease.~~the same period in 2016, and increased 19%, 1% and 15% during the three months ended June 30, 2017 compared to the three months ended March 31, 2017, due to the connection of 59 wells on our Arrow system during the six months ended June 30, 2017 compared to 26 wells connected during the same period in 2016, and higher initial production rates experienced on those connected wells in 2017 compared to 2016.

Also contributing to the ~~decrease~~increase in our G&P segment's revenues were ~~lower service~~higher product revenues from our ~~Marcellus and Barnett~~Permian operations of approximately ~~$3.5~~$6.7 million and ~~$2.0~~$14.4 million ~~respectively,~~ during the three and six months ended ~~September~~June 30, 2017 compared to the same periods in 2016 and higher costs of product/services sold of approximately $5.5 million and $12.1 million. These increases were primarily due to a 40% increase in volumes gathered in the Permian during the six months ended June 30, 2017 compared to the same period in ~~2015~~2016, and ~~$18.7 million and $14.8 million, respectively,~~a 12% increase in volumes gathered during the ~~nine~~three months ended ~~September~~June 30, 2017 compared to the three months ended March 31, 2017, as a result of our Willow Lake processing plant that was placed into service in February 2016 and our Nautilus system coming online in June 2017. Our processing volumes were 38 MMcf/d and 36 MMcf/d during the three and six months ended June 30, 2017 compared to 26 MMcf/d and 24 MMcf/d during the same periods in 2016. On June 21, 2017, we contributed to Crestwood Permian 100% of theequity interest of Crestwood New Mexico, which owns our Delaware Basin assets located in Eddy County, New Mexico, including the Willow Lake processing plant. This contribution was treated as a transaction between entities under common control, and accordingly we deconsolidated Crestwood New Mexico.

Partially offsetting the revenue increases from our Arrow and Permian operations were lower revenues from our Marcellus operations of approximately $4.8 million during the six months ended June 30, 2017 compared to the same period in ~~2015. During the three and nine months ended September 30, 2016, we experienced~~2016. We continue to experience a decrease in our gathering and compression volumes on our Marcellus system due to lack of drilling from our primary customer, ~~Antero Resources Appalachian Corporation, as a result of the decline in commodity prices. During the three and nine months ended September 30, 2016, our~~Antero.

Our gathering and compression volumes on our Marcellus system were 0.4 Bcf/d and 0.5 Bcf/d, respectively, compared to 0.5 Bcf/d and 0.6 Bcf/d, respectively, during the same periods in 2015. The service revenues from our Barnett operations decreased by $6.2 million during the third quarter of 2015 compared to the same period in 2014, and decreased by another $2.0 million during the third quarter of 2016 compared to the same period in 2015 as a result of our primary customer in the Barnett, Quicksilver, ceasing drilling and shutting in production in 2015 and the first quarter of 2016 as a result of its filing for protection under Chapter 11 of the U.S. Bankruptcy Code in 2015 (see "Segment Highlights" above for an update on the Quicksilver Bankruptcy). Our new customer in the Barnett, BlueStone, brought the shut-in wells back online throughout the second quarter of 2016, such that substantially all wells previously shut-in by Quicksilver have resumed flowing volumes.

~~Partially offsetting the decreases from our Arrow, Marcellus and Barnett operations discussed above was a $3.1 million and $10.8 million decrease in~~processing segment's operations and maintenance expenses decreased approximately $2.7 million and $3.1 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the same periods in ~~2015 that resulted from~~2016 due to continued cost-reduction efforts undertaken in our ~~cost-savings initiative implemented in 2015.~~

Our G&P segment's EBITDA was also impacted by an $8.6 million impairment of goodwill associated with our Marcellus system during the three months ended March 31, 2016 and an $8.3 million and $39.1 million impairment of goodwill associated with our Fayetteville system during the three months ended June 30, 2015 and September 30, 2015, respectively.operations.

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~~For~~

Our gathering and processing segment's EBITDA was also impacted by a ~~further discussion~~decrease in earnings from our unconsolidated affiliates of ~~our goodwill impairments recorded~~approximately $4.1 million and $7.6 million during ~~2016 and 2015, see "Critical Accounting Estimates" above and Item 1. Financial Statements, Note 2.~~

~~During~~ the three and ~~nine~~six months ended ~~September~~June 30, 2016, our equity earnings from our Jackalope investment increased by approximately $3.6 million and $11.0 million primarily due to higher gathering and processing volumes at the facility resulting from Jackalope placing the Bucking Horse processing plant into service in 2015.

~~EBITDA for CEQP's G&P segment increased by $38.7 million and $239.0 million for the three and nine months ended September 30, 2016~~2017 compared to the same periods in ~~2015 due to all the factors as discussed above for CMLP. In addition to the goodwill impairments during 2015 described above, CEQP's G&P segment~~2016. The decrease was ~~also impacted~~primarily driven by a ~~$212.4 million goodwill impairment on~~reduction in revenues at our ~~Barnett assets during the three months ended June 30, 2015 due to the impact of Quicksilver's filing for protection under Chapter 11~~Jackalope equity investment as a result of the ~~U.S. Bankruptcy Code in 2015~~restructuring of its contracts with Chesapeake Energy Corporation (Chesapeake) effective January 1, 2017. Jackalope and Chesapeake replaced the ~~impact of the decrease in commodity prices on discount rates. For~~cost-of-service based contract with a ~~further discussion of our goodwill impairments recorded during 2015, see Item 1. Financial Statements, Note 2.~~new 20-year fixed-fee gathering and processing contract that includes minimum revenue guarantees for a five to seven year period.

Storage and Transportation

EBITDA for CMLP's storage and transportation segment increased by approximately ~~$323.0 million and $258.8~~$0.9 million for the three ~~and nine~~ months ended ~~September~~June 30, ~~2016~~2017 compared to the same ~~periods~~period in ~~2015.~~2016, while we experienced a decrease in CMLP's storage and transportation segment EBITDA of approximately $19.4 million for the six months ended June 30, 2017 compared to the same period in 2016. The comparability of our storage and transportation segment's results ~~period over period is primarily~~was impacted by ~~goodwill impairments recorded during~~a $32.9 million loss recognized on the ~~first quarter~~deconsolidation of ~~2016~~our Northeast storage and ~~the third quarter of 2015, which are further described below. In addition, on June 3, 2016, we deconsolidated our NE S&T~~transportation assets as a result of the contribution of the assets to Stagecoach Gas ~~and we recognized a loss of $32.9 million.~~on June 3, 2016. The deconsolidation of the ~~NE S&T~~Northeast storage and transportation assets ~~also~~ resulted in lower revenues of approximately ~~$42.8~~$30.0 million and ~~$59.2~~$73.2 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the same periods in ~~2015,~~2016, partially offset by lower costs of product/services sold of approximately ~~$3.6~~$1.7 million and ~~$5.5 million period over period.~~$4.6 million. We also experienced lower operations and maintenance expense of approximately ~~$7.3~~$3.6 million and ~~$7.6~~$9.6 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the same periods in ~~2015~~2016, primarily as a result of the deconsolidation of the ~~NE S&T assets. See Item 1. Financial Statements, Notes 2~~Northeast storage and ~~4 for a further discussion of the deconsolidation of our NE S&T~~transportation assets.

~~Our COLT Hub operations experienced~~The decrease in our storage and transportation segment's revenues was also impacted by lower revenues of approximately ~~$2.4~~$14.7 million and ~~$7.5~~$19.4 million ~~partially offset by lower costs of product/services sold of $1.7 million and $5.3 million~~from our COLT Hub operations during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the same periods in ~~2015. This net~~2016. The decrease was primarily ~~resulted~~due to a reduction in our rail throughput revenues resulting from lower rail loading volumes ~~due to narrowed crude oil locational differences and~~as a result of two rail loading contracts that expired in late ~~2015.~~2016.

~~Our~~The comparability of our storage and transportation segment's EBITDA was also impacted by a $13.7 million goodwill ~~impairments~~impairment recorded during the first quarter of 2016 related to our COLT Hub ~~operations of approximately $13.7 million during the three months ended March 31, 2016 and approximately $348.0 million during the three months ended September 30, 2015.~~operations. For a further discussion of our goodwill impairments recorded during 2016, see ~~"Critical Accounting Estimates" above and~~ Item 1. Financial Statements, Note 2.

Our storage and transportation segment's EBITDA was impacted by an increase in earnings from our unconsolidated affiliates. As discussed above, ~~effective~~in June 3, 2016, we deconsolidated ~~the NE S&T~~our Northeast storage and transportation assets as a result of ~~this~~the Stagecoach Gas transaction and began accounting for our 50% equity interest in Stagecoach Gas under the equity method of accounting. We recognized equity earnings from Stagecoach Gas of approximately ~~$6.8~~$6.6 million and ~~$9.1~~$12.6 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016. Our equity earnings~~2017. Earnings from our Tres Holdings ~~were lower~~equity investment increased by approximately ~~$2.8~~$3 million during both the ~~nine~~three and six months ended ~~September~~June 30, ~~2016~~2017 compared to the same ~~period~~periods in ~~2015,~~2016 primarily due to ~~an increase in~~ property tax accruals at the equity investment. For the three and nine months ended September 30, 2016, our proportionate share of the net earnings from our unconsolidated affiliate, PRBIC, was $0.3 million and $1.2 million compared to $0.2 million and $3.5 millionrecorded by Tres Holdings during ~~the same periods in 2015. For additional information on our investments in unconsolidated affiliates, see Item 1. Financial Statements, Note 4.~~2016.

EBITDA for CEQP's storage and transportation segment increased by ~~$324.0~~$4.5 million ~~and $256.2 million for~~during the three ~~and nine~~ months ended ~~September~~June 30, ~~2016~~2017 compared to the same ~~periods~~period in ~~2015~~2016, while we experienced a decrease in CEQP's storage and transportation segment EBITDA of approximately $15.7 million during the six months ended June 30, 2017 compared to the same period in 2016. The change in CEQP's storage and transportation segment's EBITDA period over period was due to all the factors as discussed above for CMLP. In addition, in June 2016, the Matagorda County court issued a final judgment related to Tres Palacios' 2012 and 2013 property tax years which resulted in Crestwood Equity recording additional net property taxes (including interest and penalties) of approximately ~~$2.9 million during the nine months ended September 30, 2016. See Item 1. Financial Statements, Note 10 for a further discussion of CEQP's property tax matters.~~

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$3.5 million.

Marketing, Supply and Logistics

EBITDA for our marketing, supply and logistics segment increased by approximately ~~$213.6~~$1.9 million and ~~$174.0~~$105.3 million ~~for~~during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the same periods in ~~2015.~~2016. The comparability of our marketing, supply and logistics segment's results ~~period over period is~~was impacted by goodwill impairments of approximately $87.4 million recorded during the first quarter of 2016 ~~and the second and third quarters of 2015, which are further described below.~~

Our NGL and crude trucking operations experienced a continued decrease in the demand for their services due to lower volumes, increased competition and excess trucking capacity in the market place and the low commodity price environment during the three months ended September 30, 2016, resulting in a 17% and 76% decrease in NGL and crude volumes transported, respectively, and a 24% and 64% decrease in NGL and crude volumes, respectively during the nine months ended September 30, 2016. This resulted in a $1.0 million and $24.5 million decrease in revenues during the three and nine months ended September 30, 2016 compared to the same periods in 2015, partially offset by a $0.6 million and $3.0 million decrease in costs of services sold from these operations during the same periods.

~~During the three months September 30, 2016, we experienced an increase in activity~~ related to our other NGL terminalling, supply and logistics operations which resulted in a $39.7 million increase in costs of product/services sold, partially offset by a $26.9 million increase in revenues compared to the same period in 2015. The net change was primarily driven by an increase in NGL commodity prices and tightening of basis differentials on these operations. During the nine months ended September 30, 2016, our other NGL terminalling, supply and logistics operations experienced a $49.2 million decrease in revenues, partially offset by a $39.5 million decrease in costs of product/services swhen compared to the same period in 2015 due to the low commodity price environment coupled with warmer weather during 2016 compared to 2015. These revenue and costs of services decreases related to our NGL terminalling, supply and logistics operations include a gain on our commodity-based derivative contracts of approximately $4.1 million and $11.0 million during the nine months ended September 30, 2016 and 2015.

During the three and nine months ended September 30, 2016, revenues from our crude marketing operations increased by approximately $39.4 million and $103.8 million compared to the same periods in 2015, in addition to an increase of approximately $40.1 million and $104.2 million in our costs of product/services sold period over period. These increases were driven by higher crude marketing volumes, partially offset by lower commodity prices.

Our marketing, supply and logistics segment's operations and maintenance expense decreased by $4.8 million and $8.2 million during the three and nine months ended September 30, 2016 compared to the same periods in 2015, primarily due to our cost-savings initiative implemented in 2015.

~~Our marketing, supply and logistics segment's EBITDA for the nine months ended September 30, 2016 was also impacted by an $87.4 million impairment of goodwill associated with~~ our supply and logistics, storage and terminals and trucking operations. During the three months ended June 30, 2015, we recorded a $28.4 million and a $31.9 million impairment of goodwill associated with our West Coast and Watkins Glen operations, respectively. In addition, during the three months ended September 30, 2015, we recorded goodwill impairments of approximately $57.5 million, $147.3 million and $18.0 million related to our West Coast, Trucking and Watkins Glen operations, respectively. For a further discussion of our goodwill impairments recorded during 2016, ~~and 2015,~~ see ~~"Critical Accounting Estimates" above and~~ Item 1. Financial Statements, Note 2.

Our supply and logistics operations experienced an increase in revenues of approximately $58.8 million and $197.4 million during the three and six months ended June 30, 2017 compared to the same periods in 2016, and an increase in costs of product/services sold of approximately $57.7 million and $178.9 million during those same periods. During the first half of 2016, we experienced unseasonably warm weather which resulted in lower demand for NGLs compared to the first half of 2017. The

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costs of product/services sold increases include a gain of $6.9 million and $1.5 million on our commodity-based derivative contracts during the three and six months ended June 30, 2017 and a $1.3 million and $2.0 million gain on commodity-based derivative contracts during the three and six months ended June 30, 2016.

During the three and six months ended June 30, 2017 and 2016, our storage and terminals operations (including our West Coast operations) experienced a $36.3 million and $65.1 million increase in revenues compared to the same periods in 2016 and a $35.9 million and $64.6 million increase in costs of product/services sold during those same periods. The increase in our storage and terminals operations was primarily driven by demand for propane-related services period over period, and the acquisition of wholesale propane assets in December 2016 from Turner Gas Company.

Revenues from our crude marketing operations increased by approximately $58.9 million and $95.9 million during the three and six months ended June 30, 2017 compared to the same periods in 2016. Additionally, we experienced an increase in our costs of product/services sold of approximately $58.7 million and $96.7 million. These increases were driven by higher crude marketing volumes due to increased marketing activity surrounding our crude-related operations.

Our NGL and crude trucking operations continued to experience a decline in demand for their services due to lower supply volumes, increased competition, excess trucking capacity in the market place and lower commodity prices during the three and six months ended June 30, 2017 compared to the same periods in 2016, resulting in a $3.7 million and $9.5 million decrease in revenues and a $1.9 million and $4.3 million decrease costs of product/services sold period over period.

Other EBITDA Results

General and Administrative Expenses. ~~As discussed~~During the three and six months ended June 30, 2017, our general and administrative expenses decreased by approximately $6 million and $3 million, respectively, compared to the same periods in 2016 primarily due to transaction costs incurred during 2016 related to the Stagecoach Gas joint venture transaction described in Item 1. Financial Statements, Note ~~12, our corporate operations include all general and administrative expenses that are not allocated to our reporting segments, however such expenses impact our consolidated EBITDA.~~4.

During 2015, we implemented a cost-saving initiative which was the primary driver in the reduction of Crestwood Equity's general and administrative expenses by approximately $14.5 million and $20.7 million during the three and nine months ended September 30, 2016 compared to the same periods in 2015 and reduced Crestwood Midstream's general and administrative expenses by approximately $11.9 million and $14.6 million during the same periods.

Items not affecting EBITDA include the following:

Depreciation, Amortization and Accretion Expense - ~~During the three and nine months ended September 30, 2016, our depreciation,~~Depreciation, amortization and accretion expense decreased during the three and six months ended June 30, 2017 compared to the same ~~period~~periods in ~~2015,~~2016, primarily due to ~~a reduction in the carrying value of certain of our assets as a result of impairments of our property, plant and equipment and intangible assets recorded during 2015 and~~ the deconsolidation of ~~our NE S&T~~the Northeast storage and transportation assets onin June 3, 2016.

Interest and Debt Expense, Net - ~~Crestwood Midstream's interest~~Interest and debt expense, net decreased by approximately ~~$5.1~~$10.2 million and $19.8 million during the three ~~months~~and six month ended ~~September~~June 30, ~~2016~~2017 compared to the same periods in ~~2015,~~2016, primarily due to repayments of a portion of its 2020 Senior Notes and 2022 Senior Notes during 2016. During the nine months ended September 30, 2016, Crestwood Midstream's interest and debt expense, net increased by approximately $2.8 million compared to the same period in 2015, primarily due to the issuance of its 2023 Senior Notes in March 2015 and higher outstanding balances on its credit facility. Crestwood Equity's interest and debt expense, net decreased by approximately $8.2 million and $6.8 million during the three and nine months ended September 30, 2016 compared to the same periods in 2015, primarily due to repayment of its senior notes in 2015 and repayments of Crestwood Midstream's 2020 Senior Notes and 2022 Senior Notes ~~in 2016.~~and lower interest costs related to the Credit Facility.

The following table provides a summary of interest and debt expense (in millions):


	Crestwood Equity								Crestwood Midstream								Three Months Ended				Six Months Ended
	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended				June 30,				June 30,
	September 30,				September 30,				September 30,				September 30,				2017		2016		2017		2016
	2016		2015		2016		2015		2016		2015		2016		2015
Credit facilities	$	2.9	$	5.9	$	16.0	$	18.8	$	2.9	$	3.4	$	16.0	$	10.8
Credit facility																	$	4.8	$	6.1	$	7.8	$	13.1
Senior notes	22.8		27.8		77.1		80.8		22.8		27.6		77.1		80.2		18.1		26.6		40.1		54.3
Other debt-related costs	1.9		2.5		5.4		7.2		1.9		2.0		5.4		6.1		1.9		1.8		3.7		3.5
Gross interest and debt expense	27.6		36.2		98.5		106.8		27.6		33.0		98.5		97.1		24.8		34.5		51.6		70.9
Less: capitalized interest	0.1		0.5		0.6		2.1		0.1		0.4		0.6		2.0		0.7		0.2		1.0		0.5
Interest and debt expense, net	$	27.5	$	35.7	$	97.9	$	104.7	$	27.5	$	32.6	$	97.9	$	95.1	$	24.1	$	34.3	$	50.6	$	70.4

~~Gain (Loss)~~Loss on Modification/Extinguishment of Debt. During the ~~nine~~three and six months ended ~~September~~June 30, 2017, we recognized a loss on extinguishment of debt of approximately $0.4 million and $37.7 million in conjunction with the tender of the remaining principal amounts of Crestwood Midstream's 2020 Senior Notes and 2022 Senior Notes. During the three and six months ended June 30, 2016, we recognized a gain ~~on extinguishment of debt~~ of approximately ~~$10.0~~$10 million ~~in conjunction with~~on the early tender of ~~a portion of our~~principal amounts under Crestwood Midstream's 2020 Senior Notes and 2022 Senior Notes.

~~During the three and nine months ended September 30, 2015, Crestwood Equity recognized~~ For a ~~loss on modification/extinguishment~~further discussion of debt of approximately $2.7 million and $19.8 million, while Crestwood Midstream recognized losses of $1.8 million and $18.9 million during the same periods. These losses were related to the termination of the Crestwood Equity's credit facility, the redemption of Crestwood Midstream's 2019 Senior Notes and modification of Crestwood Midstream's credit facility.

~~Net Income (Loss) Attributable to Non-Controlling Partners~~. The decrease in Crestwood Equity's net loss attributable to non-controlling partners was due primarily to Crestwood Midstream becoming a wholly-owned subsidiary of Crestwood Equity as a result of the Simplification Merger on September 30, 2015. Seethese repayments, see Item 1. Financial Statements, Note ~~9 for further detail of Crestwood Equity's net income (loss) attributable to non-controlling partners.~~9.

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Liquidity and Sources of Capital

Crestwood Equity is a holding company that derives all of its operating cash flow from its operating subsidiaries. Our principal sources of liquidity include cash generated by operating activities from our subsidiaries, ~~and~~ distributions from our joint ~~venture investments,~~ventures, borrowings under our credit ~~facilities, debt issuances,~~facility, and sales of ~~common~~equity and ~~preferred units.~~debt securities. Our operating subsidiaries use cash from their respective operations to fund their operating activities, maintenance and growth capital expenditures, and service their outstanding indebtedness. We believe our liquidity sources and operating cash flows are sufficient to address our future operating, debt service and capital requirements.

~~As described in~~ ~~Outlook and Trends~~ ~~above,~~We pay quarterly distributions of approximately $15 million to our preferred unitholders. For the quarter ending September 30, 2017, we ~~completed~~expect to pay the formation of a joint venture with a subsidiary of Con Edison to own and further develop our natural gas storage and transportation operations in the northeast. The contribution of the NE S&T assets to Stagecoach Gas resulted in a distribution to usour preferred unitholders in cash in lieu of ~~approximately $945 million during~~issuing additional preferred units, and beginning with the ~~second~~ quarter of 2016, which was utilized to retire indebtedness (including a portion of the principal amounts outstanding under our 2020 Senior Notes and 2022 Senior Notes and borrowings under Crestwood Midstream's credit facility). This substantially reduced our financial leverage and improved our liquidity.

Additionally, in October 2016, Crestwood and First Reserve entered into definitive agreements to form a joint venture to fund and own a new gathering system in the Delaware Permian. Under the joint venture, First Reserve will fund up to $37.5 million of the capital requirements during the early-stage build-out of the gathering system, after whichending December 31, 2017, we will ~~fund the next $37.5 million, and then both parties will fund~~be required to make all future ~~remaining capital requirements evenly thereafter. We anticipate funding~~quarterly distributions to our ~~portion of the capital expenditures required for the gathering system with internally generated cash flows and borrowings under the CMLP revolving credit facility.~~

In conjunction with these matters, for the third quarter of 2016, Crestwood Equity declared a quarterly distribution of $0.60 per common unit (or $2.40 per common unit annually), a 56% reduction of the distribution compared to the fourth quarter of 2015. This distribution reduction increases our ability to further retire indebtedness to strengthen our balance sheet, and to reinvest capitalpreferred unitholders in ~~our business (including expansions and new growth projects).~~cash. We believe that the reduction of our indebtedness and reduction of our distributions will provide us with ample liquidity to address our future operating, debt service and capital requirements without accessing the capital markets in the near future. We also believe thatduring 2017, our operating cash flows will well exceed our quarterly distributions at the current ~~reduced~~ level ~~for the remainder of 2016.~~and cash distributions to our preferred unitholders.

As of ~~September~~June 30, ~~2016,~~2017, Crestwood Midstream had ~~$586.6~~$631.3 million of available capacity under its credit facility considering the most restrictive debt covenants in its credit agreement. ~~As further described in Item 1. Financial Statements, Note 7,~~At June 30, 2017, Crestwood Midstream ~~amended~~was in compliance with all of its debt covenants applicable to its credit facility ~~during the second quarter of 2016 to, among other things, facilitate the announced joint venture with Con Edison~~ and retire indebtedness with the proceeds thereof. Additional information about the amendment is available on the Form 8-K filed by each of Crestwood Equity and Crestwood Midstream on April 22, 2016 and June 8, 2016.senior notes.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. ~~As of September 30, 2016, Crestwood Midstream was in compliance with all of its debt covenants applicable to the Crestwood Midstream credit facility and its senior notes.~~

Cash Flows

The following table provides a summary of Crestwood Equity's cash flows by category (in millions):

Nine Months Ended
September 30,
2016 2015
Net cash provided by operating activities $ 244.5
$ 301.6
Net cash provided by (used in) investing activities 866.8
(155.5 )
Net cash used in financing activities (1,110.8 ) (145.9 )

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	Six Months Ended
	June 30,
	2017			2016
Net cash provided by operating activities	$	132.9		$	193.0
Net cash provided by (used in) investing activities	(85.1		)	865.8
Net cash used in financing activities	(47.1		)	(1,058.4		)

Operating Activities

Our operating cash flows decreased approximately ~~$57.1~~$60.1 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the same period in ~~2015~~2016, primarily due to ~~a $278.2~~an increase in costs of product/services sold of approximately $599.7 million ~~decrease in operating revenues due~~ primarily ~~to the deconsolidation of our NE S&T assets in June 2016 and~~ from our gathering and processing and marketing, supply and logistics segments' ~~operations. These revenue decreases were~~operations discussed above, partially offset by ~~lower costs of product/services sold of approximately $158.3~~a $540.5 million ~~primarily due to the effect of lower commodity prices on our gathering and processing and marketing, supply and logistics~~increase in operating revenues from these segments' operations. The ~~net~~ decrease in net operating cash flows ~~described above~~ was ~~partially offset~~also impacted by ~~lower operations and maintenance and general and administrative expenses of approximately $44.6 million primarily due to~~ the deconsolidation of our ~~NE S&T~~Northeast storage and transportation assets in June 2016 and our cost-savings initiative implemented during 2015 and a $1.2 million net cash inflow from working capital primarily resulting from lesser working capital requirements of our NGL and crude trucking operations.2016.

Investing Activities

The energy midstream business is capital intensive, requiring significant investments for the acquisition or development of new facilities. We categorize our capital expenditures as either:

growth capital expenditures, which are made to construct additional assets, expand and upgrade existing systems, or acquire additional assets; or

maintenance capital expenditures, which are made to replace partially or fully depreciated assets, to maintain the existing operating capacity of our assets, extend their useful lives or comply with regulatory requirements.

~~The following table summarizes~~We anticipate our growth capital expenditures ~~for~~in 2017 to range from $225 million to $250 million, which considers the new expansion projects in the Bakken and capital contributions to our equity investments described in ~~nine months endedSeptember 30, 2016~~Segment Highlights (above. We anticipate that our growth capital expenditures throughout 2017 will increase the operating efficiencies of our systems and generate meaningful contributions to our results of operations beginning in ~~millions~~2018. We expect to finance our growth and

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maintenance capital expenditures with a combination of cash generated by our operating subsidiaries, distributions received from our joint ventures and borrowings under the CMLP Credit Facility.

). We have identified additional growth capital project opportunities for each of our reporting segments. We expect our 2016 capital expenditures to be limited to previously committed contractual projects around our existing asset footprint and the build-out of our gas gathering system in the Permian - Delaware Basin. Additional commitments or expenditures will be made at our discretion, and any discontinuation of the construction of these projects will likely result in less future cash flows and earnings. The following table summarizes our capital expenditures for the six months ended June 30, 2017 (in millions).


Growth capital	$	59.3		$	62.4
Maintenance capital	8.9			11.8
Other ⁽¹⁾	11.1			14.5
Purchases of property, plant and equipment	79.3			88.7
Reimbursements of property, plant and equipment	(15.0		)	(7.1		)
Net	$	64.3		$	81.6

(1) Represents gross purchases of property, plant and equipment that are reimbursable by third parties.

In addition to our capital expenditures described in the table above, our cash flows from investing activities were also impacted by capital contributions of approximately $6 million and $40 million to our unconsolidated affiliates during the nine months ended September 30, 2016 and 2015. On June 3, 2016, we contributed to Stagecoach Gas the entities owning the NE S&T assets, CEGP contributed $945 million to Stagecoach Gas in exchange for a 50% equity interest in Stagecoach Gas, and Stagecoach Gas distributed to Crestwood Northeast the net cash proceeds of approximately $942 million received from CEGP. For a further discussion of investments in our unconsolidated affiliates, see Item 1. Financial Statements, Note 4.

Financing Activities

Significant items impacting our financing activities during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, included the following:

Equity Transactions

~~Increase~~Beginning in 2016, we declared a decrease in distributions paid per limited partner unit from $1.375 to $0.60. This reduction resulted in a decrease in distributions paid to partners of approximately ~~$101.2~~$53.4 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the same period in ~~2015 due to an increase~~2016; and

Increase in ~~the number~~taxes paid for unit-based compensation vesting of ~~limited partner units outstanding~~approximately $3.0 million primarily due to ~~the Simplification Merger;~~

~~Table~~higher vesting of ~~Contents~~

~~Decrease in distributions to non-controlling partners of approximately $219.1 million~~unit-based compensation awards during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the same period in ~~2015 primarily due to the Simplification Merger; and~~

~~$58.8 million net proceeds from the issuance of CMLP Class A preferred units during the nine months ended September 30, 2015.~~2016.

Debt Transactions

~~$40.7~~During the six months ended June 30, 2017, our debt-related transactions resulted in net proceeds of approximately $49.1 million ~~increase~~compared to net repayments of $912.2 million during the same period in ~~net~~2016. This variance is primarily due to repayments of amounts outstanding under our ~~credit facilities primarily due to~~Credit Facility with the ~~repayment of~~proceeds from our ~~CEQP credit facility in 2015;~~

~~$313 million~~Stagecoach Gas transaction and repayments of ~~a portion of CMLP's~~Crestwood Midstream's 2020 Senior Notes and 2022 Senior Notes. For a further discussion of these transactions, see Item 1. Financial Statements, Notes ~~during the nine months ended September 30, 2016;~~4 and

~~$688.3 million net proceeds from Crestwood Midstream's issuance of the 2023 Senior Notes in March 2015.~~

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Item 3.	Quantitative and Qualitative Disclosures About Market Risk

Our interest rate risk and commodity price and market risks are discussed in our ~~2015~~2016 Annual Report on Form 10-K and there have been no material changes in those exposures from December 31, ~~2015~~2016 to ~~September~~June 30, ~~2016. Below is an update of our credit risk related to one of our gathering and processing customers.~~

We continue to closely monitor our producer customer base since a majority of our customers in our gathering and processing segment and storage and transportation segment are either not rated by the major rating agencies or had below investment grade credit ratings. As noted in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, on April 6, 2016, Quicksilver sold its U.S. oil and gas assets to BlueStone. As a result of this sale, we no longer have any credit risk related to Quicksilver and Quicksilver has paid all final amounts billed to them.2017.


Item 4.	Controls and Procedures

Disclosure Controls and Procedures

As of ~~September~~June 30, ~~2016~~2017, Crestwood Equity and Crestwood Midstream carried out an evaluation under the supervision and with the participation of their respective management, including the Chief Executive Officer and Chief Financial Officer of their General Partners, as to the effectiveness, design and operation of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (Exchange Act) Rules 13a-15(e) and 15d-15(e)). Crestwood Equity and Crestwood Midstream maintain controls and procedures designed to provide reasonable assurance that information required to be disclosed in their respective reports that are filed or submitted under the Exchange Act of 1934, as amended, are recorded, processed, summarized and reported within the time periods specified by the rules and forms of the SEC, and that information is accumulated and communicated to their respective management, including the Chief Executive Officer and Chief Financial Officer of their General Partners, as appropriate, to allow timely decisions regarding required disclosure. Such management, including the Chief Executive Officer and Chief Financial Officer of their General Partners, do not expect that the disclosure controls and procedures or the internal controls will prevent and/or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Crestwood Equity's and Crestwood Midstream's disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer of their General Partners concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~September~~June 30, ~~2016~~2017.

Changes in Internal Control over Financial Reporting

There were no changes to Crestwood Equity's or Crestwood Midstream's internal control over financial reporting during the three months ended ~~September~~June 30, ~~2016~~2017 that have materially affected, or are reasonably likely to materially affect Crestwood Equity's or Crestwood Midstream's internal control over financial reporting.

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PART II – OTHER INFORMATION


Item 1.	Legal Proceedings

Part I, Item 1. Financial Statements, Note 10 to the Consolidated Financial Statements, of this Form 10-Q is incorporated herein by reference.


Item 1A.	Risk Factors

Our business faces many risks. Any of the risks discussed below or elsewhere in this Form 10-Q or our other SEC filings could have a material impact on our business, financial position or results of operations. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. For a detailed discussion of the risk factors that should be understood by any investor contemplating investment in our common units, see Part I, Item 1A. Risk Factors in our ~~2015~~2016 Annual Report on Form ~~10-K and our Quarterly Report on Form 10-Q for the period ended March 31, 2016.~~10-K.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

None.


Item 3.	Defaults Upon Senior Securities

None.


Item 4.	Mine Safety Disclosures

Not applicable.


Item 5.	Other Information

None.

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Item 6.	Exhibits



Exhibit Number		Description
2.1		Contribution Agreement, dated as of April 20, 2016, by and between Crestwood Pipeline and Storage Northeast LLC and Con Edison Gas Pipeline and Storage Northeast, LLC (incorporated by reference to Exhibit 2.1 to Crestwood Equity Partners LP's Form 8-K filed on April 22, 2016)

3.1		Certificate of Limited Partnership of Inergy, L.P. (incorporated by reference to Exhibit 3.1 to Inergy, L.P.'s Registration Statement on Form S-1 filed on March 14, 2001)

3.2		Certificate of Correction of Certificate of Limited Partnership of Inergy, L.P. (incorporated by reference to Exhibit 3.1 to Inergy, L.P.'s Form 10-Q filed on May 12, 2003)

3.3		Amendment to the Certificate of Limited Partnership of Crestwood Equity Partners LP (the “Company”) (f/k/a Inergy, L.P.) dated as of October 7, 2013 (incorporated herein by reference to Exhibit 3.2 to Crestwood Equity Partners LP's Form 8-K filed on October 10, 2013)

3.4		Certificate of Formation of Inergy GP, LLC (incorporated by reference to Exhibit 3.5 to Inergy, L.P.'s Registration Statement on Form S-1/A filed on May 7, 2001)

3.5		Certificate of Amendment of Crestwood Equity GP LLC (the “General Partner”) (f/k/a Inergy GP, LLC) dated as of October 7, 2013 (incorporated by reference to Exhibit 3.3A to Crestwood Equity Partners LP's Form 10-Q filed on November 8, 2013)

3.6		First Amended and Restated Limited Liability Company Agreement of Inergy GP, LLC dated as of September 27, 2012 (incorporated by reference to Exhibit 3.1 to Inergy, L.P.'s Form 8-K filed on September 27, 2012)

3.7		Amendment No. 1 to the First Amended and Restated Limited Liability Company Agreement of the General Partner dated as of October 7, 2013 (incorporated by reference to Exhibit 3.4A to Crestwood Equity Partners LP's Form 10-Q filed on November 8, 2013)

3.8		Fifth Amended and Restated Agreement of Limited Partnership of Crestwood Equity Partners LP dated as of April 11, 2014 (incorporated herein by reference to Exhibit 3.1 to Crestwood Equity Partners LP's Form 8-K filed on April 11, 2014)

3.9		First Amendment to the Fifth Amended and Restated Agreement of Limited Partnership of Crestwood Equity Partners LP entered into and effective as of September 30. 2015 (incorporated by reference to Exhibit 3.1 to Crestwood Equity Partner LP’s Form 8-K filed on October 1, 2015)

3.10		Second Amended and Restated Agreement of Limited Partnership of Crestwood Midstream Partners LP, dated as of September 30, 2015 (incorporated by reference to Exhibit 3.1 to Crestwood Midstream Partners LP's Form 8-K filed on September 30, 2015)

3.11		Certificate of Formation of NRGM GP, LLC (incorporated herein by reference to Exhibit 3.7 to Inergy Midstream, L.P.'s Form S-1/A filed on November 21, 2011)

3.12		Amended and Restated Limited Liability Company Agreement of NRGM GP, LLC, dated December 21, 2011 (incorporated herein by reference to Exhibit 3.2 to Inergy Midstream, L.P.'s Form 8-K filed on December 22, 2011)

3.13		Amendment No. 1 to the Amended and Restated Limited Liability Company Agreement of Crestwood Midstream GP LLC (f/k/a NRGM GP, LLC) (incorporated herein by reference to Exhibit 3.39 to Crestwood Midstream Partners LP's Form S-4 filed on October 28, 2013)

*4.1		~~Supplemental~~ Indenture, dated as of ~~September 30, 2016,~~March 14, 2017, among Crestwood Midstream Partners LP, Crestwood Midstream Finance Corp., the guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Crestwood Midstream’s Form 8- K filed on March 15, 2017)

4.2		Form of 5.75% Senior Note due 2025 (included in Exhibit 4.1)

4.3		Registration Rights Agreement, dated as of March 14, 2017, by and among Crestwood Midstream Partners LP, Crestwood Midstream Finance Corp., the guarantors named therein and J.P. Morgan Securities LLC, as representative of the several initial purchasers, with respect to the 5.75% Senior Notes due 2025 (incorporated by reference to Exhibit 4.1 to Crestwood Midstream’s Form 8- K filed on March 15, 2017)

*10.1		Separation Agreement and Release Agreement among Crestwood Operations LLC and William C. Gautreaux dated as of June 5, 2017.

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*10.2		Supplemental Indenture dated as of June 5, 2017, among Crestwood Midstream Partners LP, Crestwood Midstream Finance Corporation, the Guarantors named therein and U.S. Bank National Association, as ~~trustee, to the Indenture, dated as of November 8, 2013, relating to the 6.125% Senior Notes due 2022 and the Indenture, dated as of March 23, 2015, relating to the 6.25% Senior Notes due 2023.~~trustee.

*12.1		Computation of ratio of earnings to fixed charges - Crestwood Equity Partners LP

*12.2		Computation of ratio of earnings to fixed charges - Crestwood Midstream Partners LP

*31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended - Crestwood Equity Partners LP ~~pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

*31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended - Crestwood Equity Partners LP ~~pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

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*31.3		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended - Crestwood Midstream Partners LP ~~pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

*31.4		Certification of Chief Financial Officer ~~of Crestwood Midstream Partners LP~~ pursuant to ~~Section 302~~Rule 13a-14(a) and Rule 15d-14(a) of the ~~Sarbanes-Oxley~~Securities Exchange Act, ~~of 2002~~as amended - Crestwood Midstream Partners LP

*32.1		Certification of Chief Executive Officer ~~of Crestwood Equity Partners LP~~ pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Crestwood Equity Partners LP

*32.2		Certification of Chief Financial Officer ~~of Crestwood Equity Partners LP~~ pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Crestwood Equity Partners LP

*32.3		Certification of Chief Executive Officer ~~of Crestwood Midstream Partners LP~~ pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Crestwood Midstream Partners LP

*32.4		Certification of Chief Financial Officer ~~of Crestwood Midstream Partners LP~~ pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Crestwood Midstream Partners LP

**101.INS		XBRL Instance Document

**101.SCH		XBRL Taxonomy Extension Schema Document

**101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

**101.LAB		XBRL Taxonomy Extension Label Linkbase Document

**101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

**101.DEF		XBRL Taxonomy Extension Definition Linkbase Document



*	Filed herewith
**	Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
†	~~Filed under confidential treatment request~~

6256

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		CRESTWOOD EQUITY PARTNERS LP
		By:	CRESTWOOD EQUITY GP LLC
			(its general partner)

Date:	~~November 4, 2016~~August 3, 2017	By:	/s/ ROBERT T. HALPIN
			Robert T. Halpin
			Senior Vice President and Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)

		CRESTWOOD MIDSTREAM PARTNERS LP
		By:	CRESTWOOD MIDSTREAM GP LLC
			(its general partner)

Date:	~~November 4, 2016~~August 3, 2017	By:	/s/ ROBERT T. HALPIN
			Robert T. Halpin
			Senior Vice President and Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)

6357



	Goodwill at December 31, 2015		Goodwill Impairments during the Three Months Ended March 31, 2016		Impact of Deconsolidation of NE S&T Assets during the Three Months Ended June 30, 2016		Goodwill at September 30, 2016
Gathering and Processing
Marcellus	$	8.6	$	8.6	$	—	$	—
Arrow	45.9		—		—		45.9
Storage and Transportation
Northeast Storage and Transportation	726.3		—		726.3		—
COLT	44.9		13.7		—		31.2
Marketing, Supply and Logistics
Supply and Logistics	167.2		65.5		—		101.7
Storage and Terminals	50.5		14.1		—		36.4
US Salt	12.6		—		—		12.6
Trucking	29.5		7.8		—		21.7
Total	$	1,085.5	$	109.7	$	726.3	$	249.5



	Ownership Percentage			Investment				Earnings (Loss) from Unconsolidated Affiliates
	September 30,			September 30,		December 31,		Three Months Ended September 30,				Nine Months Ended September 30,
	2016			2016		2015		2016		2015		2016			2015
Stagecoach Gas Services LLC⁽¹⁾	50.00	%		$	849.4	$	—	$	6.8	$	—	$	9.1		$	—
Jackalope Gas Gathering Services, L.L.C.⁽²⁾	50.00	%	⁽³⁾	199.7		202.4		5.5		2.0		16.5			5.6
Tres Palacios Holdings LLC⁽⁴⁾	50.01	%		35.4		36.8		0.8		0.6		(0.7		)	2.1
Powder River Basin Industrial Complex, LLC⁽⁵⁾	50.01	%		14.7		15.1		0.3		0.2		1.2			3.5
Total				$	1,099.2	$	254.3	$	13.4	$	2.8	$	26.1		$	11.2