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 June 30, ~~2017~~2018



¨	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



811 Main Street, Suite 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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.



Crestwood Equity Partners LP	Large accelerated filer x	Accelerated filer o	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~~issuer’s classes of common stock, as of the latest practicable date (July 31, ~~2017)~~2018)



Crestwood Equity Partners LP		~~69,675,760~~71,214,368
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.

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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	1312

Consolidated Statements of Cash Flows	1413

Notes to Consolidated Financial Statements	1514

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	4245

Item 3. Quantitative and Qualitative Disclosures About Market Risk	5355

Item 4. Controls and Procedures	5355

Part II – Other Information

Item 1. Legal Proceedings	5457

Item 1A. Risk Factors	5457

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	5458

Item 3. Defaults Upon Senior Securities	5458

Item 4. Mine Safety Disclosures	5458

Item 5. Other Information	5458

Item 6. Exhibits	5559

Signature	5761

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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)

	June 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017
	(unaudited)				(unaudited)
Assets
Current assets:
Cash	$	2.3	$	1.6	$	6.1	$	1.3
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
Accounts receivable, less allowance for doubtful accounts of $0.3 million and $2.4 million at June 30, 2018 and December 31, 2017					326.6		442.7
Inventory	63.1		66.0		73.6		68.4
Assets from price risk management activities	12.8		6.3		6.0		7.2
Assets held for sale					54.0		3.0
Prepaid expenses and other current assets	7.0		9.7		8.3		7.9
Total current assets	375.5		373.4		474.6		530.5
Property, plant and equipment	2,556.7		2,555.4		2,409.8		2,285.2
Less: accumulated depreciation and depletion	516.4		457.8		518.1		464.4
Property, plant and equipment, net	2,040.3		2,097.6		1,891.7		1,820.8
Intangible assets	898.6		898.6		770.3		788.8
Less: accumulated amortization	268.0		241.2		195.7		191.6
Intangible assets, net	630.6		657.4		574.6		597.2
Goodwill	199.0		199.0		138.6		147.6
Investments in unconsolidated affiliates	1,181.7		1,115.4		1,156.7		1,183.0
Other assets	5.5		6.1
Other non-current assets					5.7		5.8
Total assets	$	4,432.6	$	4,448.9	$	4,241.9	$	4,284.9
Liabilities and partners’ capital
Current liabilities:
Accounts payable	$	237.5	$	217.2	$	310.5	$	349.4
Accrued expenses and other liabilities	84.5		90.5		85.2		105.9
Liabilities from price risk management activities	8.0		28.6		23.0		48.9
Current portion of long-term debt	1.0		1.0		0.9		0.9
Total current liabilities	331.0		337.3		419.6		505.1
Long-term debt, less current portion	1,613.0		1,522.7		1,561.0		1,491.3
Other long-term liabilities	47.3		44.6		166.2		104.7
Deferred income taxes	4.7		5.3		3.1		3.3
Commitments and contingencies (Note 10)
Commitments and contingencies (Note 11)
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
Crestwood Equity Partners LP partners’ capital (71,657,106 and 70,721,563 common and subordinated units issued and outstanding at June 30, 2018 and December 31, 2017)					1,300.3		1,393.5
Preferred units (71,257,445 units issued and outstanding at both June 30, 2018 and December 31, 2017)					612.0		612.0
Total Crestwood Equity Partners LP partners’ capital	2,239.3		2,346.5		1,912.3		2,005.5
Interest of non-controlling partners in subsidiaries	197.3		192.5
Interest of non-controlling partner in subsidiary					179.7		175.0
Total partners’ capital	2,436.6		2,539.0		2,092.0		2,180.5
Total liabilities and partners’ capital	$	4,432.6	$	4,448.9	$	4,241.9	$	4,284.9

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					Six Months Ended					Three Months Ended					Six Months Ended
	June 30,					June 30,					June 30,					June 30,
	2017		2016			2017		2016			2018			2017		2018		2017
Revenues:
Product revenues:
Gathering and processing	$	325.3	$	199.1		$	618.4	$	361.6		$	186.9		$	325.3	$	459.1	$	618.4
Marketing, supply and logistics	421.5		257.4			851.7		463.9			562.7			421.5		1,316.1		851.7
	746.8		456.5			1,470.1		825.5			749.6			746.8		1,775.2		1,470.1
Services revenues:
Gathering and processing	79.4		69.7			154.4		145.4			68.5			79.4		136.6		154.4
Storage and transportation	8.5		53.8			18.5		113.2			5.1			8.5		9.3		18.5
Marketing, supply and logistics	15.2		21.2			34.5		52.4			17.0			15.2		33.8		34.5
Related party (Note 11)	0.4		0.7			0.9		1.4
Related party (Note 12)											0.3			0.4		0.6		0.9
	103.5		145.4			208.3		312.4			90.9			103.5		180.3		208.3
Total revenues	850.3		601.9			1,678.4		1,137.9			840.5			850.3		1,955.5		1,678.4

Costs of product/services sold (exclusive of items shown separately below):
Product costs:
Gathering and processing	350.7		221.9			663.2		397.3
Marketing, supply and logistics	363.0		210.0			717.2		376.0
Related party (Note 11)	4.0		4.4			8.1		8.7
	717.7		436.3			1,388.5		782.0
Service costs:
Gathering and processing	—		—			—		0.1
Storage and transportation	0.1		1.9			0.1		4.8
Marketing, supply and logistics	11.8		11.8			24.5		26.5
	11.9		13.7			24.6		31.4
Product costs											681.8			713.7		1,620.7		1,380.4
Product costs - related party (Note 12)											32.2			4.0		45.3		8.1
Service costs											11.4			11.9		25.2		24.6
Total costs of products/services sold	729.6		450.0			1,413.1		813.4			725.4			729.6		1,691.2		1,413.1

Expenses:
Operating expenses and other:
Operations and maintenance	34.2		45.0			67.9		86.8			31.9			34.2		66.4		67.9
General and administrative	22.7		28.9			49.1		51.9			23.4			22.7		47.3		49.1
Depreciation, amortization and accretion	48.7		64.4			97.1		126.7			44.5			48.7		89.6		97.1
Loss on long-lived assets, net											24.4			—		24.1		—
	105.6		138.3			214.1		265.4			124.2			105.6		227.4		214.1
Other operating expenses:
Loss on long-lived assets, net	—		(32.7		)	—		(32.7		)
Goodwill impairment	—		—			—		(109.7		)
Operating income (loss)	15.1		(19.1		)	51.2		(83.3		)	(9.1		)	15.1		36.9		51.2

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						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Earnings from unconsolidated affiliates, net	9.6			6.2			17.7			12.7			12.0			9.6			24.4			17.7
Interest and debt expense, net	(24.1		)	(34.3		)	(50.6		)	(70.4		)	(24.3		)	(24.1		)	(48.7		)	(50.6		)
Gain (loss) on modification/extinguishment of debt	(0.4		)	10.0			(37.7		)	10.0
Loss on modification/extinguishment of debt													—			(0.4		)	—			(37.7		)
Other income, net	0.1			0.1			0.2			0.2			0.1			0.1			0.2			0.2
Income (loss) before income taxes	0.3			(37.1		)	(19.2		)	(130.8		)	(21.3		)	0.3			12.8			(19.2		)
Benefit for income taxes	—			—			0.1			—
(Provision) benefit for income taxes													(0.2		)	—			(0.2		)	0.1
Net income (loss)	0.3			(37.1		)	(19.1		)	(130.8		)	(21.5		)	0.3			12.6			(19.1		)
Net income attributable to non-controlling partners	6.3			6.0			12.4			11.9
Net loss attributable to Crestwood Equity Partners LP	(6.0		)	(43.1		)	(31.5		)	(142.7		)
Net income attributable to non-controlling partner													4.0			6.3			8.0			12.4
Net income (loss) attributable to Crestwood Equity Partners LP													(25.5		)	(6.0		)	4.6			(31.5		)
Net income attributable to preferred units	13.5			8.1			31.3			9.7			15.1			13.5			30.1			31.3
Net loss attributable to partners	$	(19.5	)	$	(51.2	)	$	(62.8	)	$	(152.4	)	$	(40.6	)	$	(19.5	)	$	(25.5	)	$	(62.8	)

Subordinated unitholders' interest in net loss	$	—		$	—		$	—		$	—
Common unitholders' interest in net loss	$	(19.5	)	$	(51.2	)	$	(62.8	)	$	(152.4	)
Common unitholders’ interest in net loss													$	(40.6	)	$	(19.5	)	$	(25.5	)	$	(62.8	)
Net loss per limited partner unit:
Basic	$	(0.28	)	$	(0.74	)	$	(0.90	)	$	(2.21	)	$	(0.57	)	$	(0.28	)	$	(0.36	)	$	(0.90	)
Diluted	$	(0.28	)	$	(0.74	)	$	(0.90	)	$	(2.21	)	$	(0.57	)	$	(0.28	)	$	(0.36	)	$	(0.90	)
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	69,655			69,044			69,676			68,978			71,225			69,655			71,195			69,676
Dilutive units	—			—			—			—			—			—			—			—
Diluted	69,655			69,044			69,676			68,978			71,225			69,655			71,195			69,676

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						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Net income (loss)	$	0.3		$	(37.1	)	$	(19.1	)	$	(130.8	)	$	(21.5	)	$	0.3		$	12.6		$	(19.1	)
Change in fair value of Suburban Propane Partners, L.P. units	(0.5		)	0.5			(0.9		)	1.3			0.2			(0.5		)	(0.1		)	(0.9		)
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	$	(6.5	)	$	(42.6	)	$	(32.4	)	$	(141.4	)
Comprehensive income (loss)													(21.3		)	(0.2		)	12.5			(20.0		)
Comprehensive income attributable to non-controlling partner													4.0			6.3			8.0			12.4
Comprehensive income (loss) attributable to Crestwood Equity Partners LP													$	(25.3	)	$	(6.5	)	$	4.5		$	(32.4	)

See accompanying notes.

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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 Partner			Total Partners’ Capital
Balance at December 31, 2016	66.5	$	564.5	69.1		0.4	$	1,782.0		$	192.5		$	2,539.0
Balance at December 31, 2017																71.3	$	612.0		70.3		0.4	$	1,393.5		$	175.0		$	2,180.5
Cumulative effect of accounting change (Note 2)																—	—			—		—	7.5			—			7.5
Distributions to partners	3.1	—		—		—	(83.6		)	(7.6		)	(91.2		)	—	(30.0		)	—		—	(85.4		)	(3.3		)	(118.7		)
Unit-based compensation charges	—	—		0.7		—	12.7			—			12.7			—	—			1.2		—	17.5			—			17.5
Taxes paid for unit-based compensation vesting	—	—		(0.2	)	—	(3.6		)	—			(3.6		)	—	—			(0.2	)	—	(6.9		)	—			(6.9		)
Change in fair value of Suburban Propane Partners, L.P. units	—	—		—		—	(0.9		)	—			(0.9		)	—	—			—		—	(0.1		)	—			(0.1		)
Other	—	—		—		—	(0.3		)	—			(0.3		)	—	(0.1		)	—		—	(0.3		)	—			(0.4		)
Net income (loss)	—	31.3		—		—	(62.8		)	12.4			(19.1		)	—	30.1			—		—	(25.5		)	8.0			12.6
Balance at June 30, 2017	69.6	$	595.8	69.6		0.4	$	1,643.5		$	197.3		$	2,436.6
Balance at June 30, 2018																71.3	$	612.0		71.3		0.4	$	1,300.3		$	179.7		$	2,092.0

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)

	Six Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2018			2017
Operating activities
Net loss	$	(19.1	)	$	(130.8	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net income (loss)							$	12.6		$	(19.1	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and accretion	97.1			126.7			89.6			97.1
Amortization of debt-related deferred costs, discounts and premiums	3.5			3.4
Amortization of debt-related deferred costs							3.6			3.5
Unit-based compensation charges	12.7			9.3			17.5			12.7
Loss on long-lived assets, net	—			32.7			24.1			—
Goodwill impairment	—			109.7
(Gain) loss on modification/extinguishment of debt	37.7			(10.0		)
Loss on modification/extinguishment of debt							—			37.7
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received	0.5			(0.8		)	(0.2		)	0.5
Deferred income taxes	(0.7		)	(0.6		)	(0.2		)	(0.7		)
Other	(0.4		)	0.1			0.2			(0.4		)
Changes in operating assets and liabilities	1.6			53.3			12.8			1.6
Net cash provided by operating activities	132.9			193.0			160.0			132.9
Investing activities
Purchases of property, plant and equipment	(88.7		)	(76.2		)	(118.7		)	(88.7		)
Investment in unconsolidated affiliates	(18.5		)	(5.5		)	(6.9		)	(18.5		)
Capital distributions from unconsolidated affiliates	21.1			5.5			23.9			21.1
Net proceeds from sale of assets	1.0			942.0			6.8			1.0
Net cash provided by (used in) investing activities	(85.1		)	865.8
Net cash used in investing activities							(94.9		)	(85.1		)
Financing activities
Proceeds from the issuance of long-term debt	1,680.4			1,078.8			847.1			1,680.4
Payments on long-term debt	(1,630.3		)	(1,987.7		)	(781.0		)	(1,630.3		)
Payments on capital leases	(1.3		)	(0.9		)	(0.7		)	(1.3		)
Payments for debt-related deferred costs	(1.0		)	(3.3		)	—			(1.0		)
Distributions to partners	(83.6		)	(137.0		)	(85.4		)	(83.6		)
Distributions paid to non-controlling partners	(7.6		)	(7.6		)
Distributions to non-controlling partner							(3.3		)	(7.6		)
Distribution to preferred unit holders							(30.0		)	—
Taxes paid for unit-based compensation vesting	(3.6		)	(0.6		)	(6.9		)	(3.6		)
Other	(0.1		)	(0.1		)	(0.1		)	(0.1		)
Net cash used in financing activities	(47.1		)	(1,058.4		)	(60.3		)	(47.1		)
Net change in cash	0.7			0.4			4.8			0.7
Cash at beginning of period	1.6			0.5			1.3			1.6
Cash at end of period	$	2.3		$	0.9		$	6.1		$	2.3
Supplemental schedule of noncash investing and financing activities
Net change to property, plant and equipment through accounts payable and accrued expenses	$	(6.9	)	$	(11.9	)	$	6.0		$	(6.9	)

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)

	June 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017
	(unaudited)				(unaudited)
Assets
Current assets:
Cash	$	2.0	$	1.3	$	5.7	$	1.0
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
Accounts receivable, less allowance for doubtful accounts of $0.3 million and $2.4 million at June 30, 2018 and December 31, 2017					324.3		442.6
Inventory	63.1		66.0		73.6		68.4
Assets from price risk management activities	12.8		6.3		6.0		7.2
Assets held for sale					54.0		3.0
Prepaid expenses and other current assets	7.0		9.7		8.3		7.9
Total current assets	375.2		373.1		471.9		530.1
Property, plant and equipment	2,886.8		2,885.5		2,739.9		2,615.3
Less: accumulated depreciation and depletion	652.8		587.1		668.6		607.8
Property, plant and equipment, net	2,234.0		2,298.4		2,071.3		2,007.5
Intangible assets	883.1		883.1		770.3		773.3
Less: accumulated amortization	255.5		230.2		195.7		177.6
Intangible assets, net	627.6		652.9		574.6		595.7
Goodwill	199.0		199.0		138.6		147.6
Investments in unconsolidated affiliates	1,181.7		1,115.4		1,156.7		1,183.0
Other assets	2.1		1.8
Other non-current assets					2.4		2.4
Total assets	$	4,619.6	$	4,640.6	$	4,415.5	$	4,466.3
Liabilities and partners’ capital
Current liabilities:
Accounts payable	$	234.8	$	214.5	$	307.8	$	346.8
Accrued expenses and other liabilities	83.3		87.9		84.2		104.7
Liabilities from price risk management activities	8.0		28.6		23.0		48.9
Current portion of long-term debt	1.0		1.0		0.9		0.9
Total current liabilities	327.1		332.0		415.9		501.3
Long-term debt, less current portion	1,613.0		1,522.7		1,561.0		1,491.3
Other long-term liabilities	44.6		42.0		163.7		102.6
Deferred income taxes	0.7		0.7		0.6		0.7
Commitments and contingencies (Note 10)
Commitments and contingencies (Note 11)
Partners’ capital	2,436.9		2,550.7		2,094.6		2,195.4
Interest of non-controlling partners in subsidiary	197.3		192.5
Interest of non-controlling partner in subsidiary					179.7		175.0
Total partners’ capital	2,634.2		2,743.2		2,274.3		2,370.4
Total liabilities and partners’ capital	$	4,619.6	$	4,640.6	$	4,415.5	$	4,466.3

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					Six Months Ended					Three Months Ended						Six Months Ended
	June 30,					June 30,					June 30,						June 30,
	2017		2016			2017		2016			2018			2017			2018			2017
Revenues:
Product revenues:
Gathering and processing	$	325.3	$	199.1		$	618.4	$	361.6		$	186.9		$	325.3		$	459.1		$	618.4
Marketing, supply and logistics	421.5		257.4			851.7		463.9			562.7			421.5			1,316.1			851.7
	746.8		456.5			1,470.1		825.5			749.6			746.8			1,775.2			1,470.1
Service revenues:
Gathering and processing	79.4		69.7			154.4		145.4			68.5			79.4			136.6			154.4
Storage and transportation	8.5		53.8			18.5		113.2			5.1			8.5			9.3			18.5
Marketing, supply and logistics	15.2		21.2			34.5		52.4			17.0			15.2			33.8			34.5
Related party (Note 11)	0.4		0.7			0.9		1.4
Related party (Note 12)											0.3			0.4			0.6			0.9
	103.5		145.4			208.3		312.4			90.9			103.5			180.3			208.3
Total revenues	850.3		601.9			1,678.4		1,137.9			840.5			850.3			1,955.5			1,678.4

Costs of product/services sold (exclusive of items shown separately below):
Product costs:
Gathering and processing	350.7		221.9			663.2		397.3
Marketing, supply and logistics	363.0		210.0			717.2		376.0
Related party (Note 11)	4.0		4.4			8.1		8.7
	717.7		436.3			1,388.5		782.0
Service costs:
Gathering and processing	—		—			—		0.1
Storage and transportation	0.1		1.9			0.1		4.8
Marketing, supply and logistics	11.8		11.8			24.5		26.5
	11.9		13.7			24.6		31.4
Product costs											681.8			713.7			1,620.7			1,380.4
Product costs - related party (Note 12)											32.2			4.0			45.3			8.1
Service costs											11.4			11.9			25.2			24.6
Total costs of product/services sold	729.6		450.0			1,413.1		813.4			725.4			729.6			1,691.2			1,413.1

Expenses:
Operating expenses and other:
Operations and maintenance	34.2		41.4			67.9		83.1			31.9			34.2			66.4			67.9
General and administrative	22.1		28.0			47.6		50.2			22.5			22.1			45.3			47.6
Depreciation, amortization and accretion	51.4		67.1			102.6		132.0			47.4			51.4			95.2			102.6
Loss on long-lived assets, net											24.4			—			24.1			—
	107.7		136.5			218.1		265.3			126.2			107.7			231.0			218.1
Other operating expenses:
Loss on long-lived assets, net	—		(32.7		)	—		(32.7		)
Goodwill impairment	—		—			—		(109.7		)
Operating income (loss)	13.0		(17.3		)	47.2		(83.2		)	(11.1		)	13.0			33.3			47.2
Earnings from unconsolidated affiliates, net											12.0			9.6			24.4			17.7
Interest and debt expense, net											(24.3		)	(24.1		)	(48.7		)	(50.6		)
Loss on modification/extinguishment of debt											—			(0.4		)	—			(37.7		)
Income (loss) before income taxes											(23.4		)	(1.9		)	9.0			(23.4		)
(Provision) benefit for income taxes											(0.1		)	—			(0.1		)	0.1
Net income (loss)											(23.5		)	(1.9		)	8.9			(23.3		)
Net income attributable to non-controlling partner											4.0			6.3			8.0			12.4
Net income (loss) attributable to Crestwood Midstream Partners LP											$	(27.5	)	$	(8.2	)	$	0.9		$	(35.7	)

See accompanying notes.

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CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(in millions)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
Earnings from unconsolidated affiliates, net 9.6
6.2
17.7
12.7
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
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 6.3
6.0
12.4
11.9
Net loss attributable to Crestwood Midstream Partners LP $ (8.2 ) $ (41.6 ) $ (35.7 ) $ (142.8 )

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

	Partners			Non-Controlling Partner			Total Partners’ Capital
Balance at December 31, 2017	$	2,195.4		$	175.0		$	2,370.4
Cumulative effect of accounting change (Note 2)	7.5			—			7.5
Distributions to partners	(120.0		)	(3.3		)	(123.3		)
Unit-based compensation charges	17.5			—			17.5
Taxes paid for unit-based compensation vesting	(6.9		)	—			(6.9		)
Other	0.2			—			0.2
Net income	0.9			8.0			8.9
Balance at June 30, 2018	$	2,094.6		$	179.7		$	2,274.3

See accompanying notes.

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CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL (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)

	Partners			Non-Controlling Partners			Total Partners’ Capital			Six Months Ended
Balance at December 31, 2016	$	2,550.7		$	192.5		$	2,743.2
										June 30,
										2018			2017
Operating activities
Net income (loss)										$	8.9		$	(23.3	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and accretion										95.2			102.6
Amortization of debt-related deferred costs										3.6			3.5
Unit-based compensation charges										17.5			12.7
Loss on long-lived assets										24.1			—
Loss on modification/extinguishment of debt										—			37.7
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received										(0.2		)	0.5
Deferred income taxes										(0.1		)	—
Other										0.2			(0.4		)
Changes in operating assets and liabilities										15.2			2.8
Net cash provided by operating activities										164.4			136.1
Investing activities
Purchases of property, plant and equipment										(118.7		)	(88.7		)
Investment in unconsolidated affiliates										(6.9		)	(18.5		)
Capital distributions from unconsolidated affiliates										23.9			21.1
Net proceeds from sale of assets										6.8			1.0
Net cash used in investing activities										(94.9		)	(85.1		)
Financing activities
Proceeds from the issuance of long-term debt										847.1			1,680.4
Payments on long-term debt										(781.0		)	(1,630.3		)
Payments on capital leases										(0.7		)	(1.3		)
Payments for debt-related deferred costs										—			(1.0		)
Distributions to partners	(86.9		)	(7.6		)	(94.5		)	(123.3		)	(94.5		)
Unit-based compensation charges	12.7			—			12.7
Taxes paid for unit-based compensation vesting	(3.6		)	—			(3.6		)	(6.9		)	(3.6		)
Other	(0.3		)	—			(0.3		)
Net income (loss)	(35.7		)	12.4			(23.3		)
Balance at June 30, 2017	$	2,436.9		$	197.3		$	2,634.2
Net cash used in financing activities										(64.8		)	(50.3		)
Net change in cash										4.7			0.7
Cash at beginning of period										1.0			1.3
Cash at end of period										$	5.7		$	2.0
Supplemental schedule of non-cash investing and financing activities
Net change to property, plant and equipment through accounts payable and accrued expenses										$	6.0		$	(6.9	)

See accompanying notes.

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

Six Months Ended
June 30,
2017 2016
Operating activities
Net loss $ (23.3 ) $ (130.9 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and accretion 102.6
132.0
Amortization of debt-related deferred costs and premiums 3.5
3.4
Unit-based compensation charges 12.7
9.3
Goodwill impairment —
109.7
Loss on long-lived assets —
32.7
(Gain) loss on modification/extinguishment of debt 37.7
(10.0 )
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received 0.5
(0.8 )
Deferred income taxes —
0.2
Other (0.4 ) 0.1
Changes in operating assets and liabilities 2.8
50.3
Net cash provided by operating activities 136.1
196.0
Investing activities
Purchases of property, plant and equipment (88.7 ) (76.2 )
Investment in unconsolidated affiliates (18.5 ) (5.5 )
Capital distributions from unconsolidated affiliates 21.1
5.5
Net proceeds from sale of assets 1.0
942.0
Net cash provided by (used in) investing activities (85.1 ) 865.8
Financing activities
Proceeds from the issuance of long-term debt 1,680.4
1,078.8
Payments on long-term debt (1,630.3 ) (1,987.5 )
Payments on capital leases (1.3 ) (0.9 )
Payments for debt-related deferred costs (1.0 ) (3.3 )
Distributions to partners (94.5 ) (148.2 )
Taxes paid for unit-based compensation vesting (3.6 ) (0.6 )
Net cash used in financing activities (50.3 ) (1,061.7 )
Net change in cash 0.7
0.1
Cash at beginning of period 1.3
0.1
Cash at end of period $ 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 $ (6.9 ) $ (11.9 )

~~See accompanying notes.~~

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CRESTWOOD EQUITY PARTNERS LP

CRESTWOOD MIDSTREAM PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1 – Organization and Business Description

Organization

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~~“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"~~“Crestwood Midstream” and ~~"CMLP"~~“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 ~~2016~~2017 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February ~~27, 2017.~~26, 2018. The financial information as of June 30, ~~2017,~~2018, and for the three and six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, is unaudited. The consolidated balance sheets as of December 31, ~~2016,~~2017, were derived from the audited balance sheets filed in our ~~2016~~2017 Annual Report on Form 10-K.

~~Organization~~Business Description

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~~that 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 Generally Accepted Accounting Principles (GAAP) and include the accounts of all consolidated subsidiaries after the elimination of all intercompany accounts and transactions. Certain amounts in prior periods have been reclassified to conform to the current year presentation, none of which impacted our previously reported net income, earnings per unit or partners’ capital. 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

Effective January 1, 2018, we adopted the following accounting standards. There were no other material changes in our significant accounting policies from those described in our ~~2016~~2017 Annual Report on ~~Form 10-K. Below is an update of our accounting policies related to Goodwill and Unit-Based Compensation, and a description of Crestwood Equity's 2017 Long Term Incentive Plan.~~Form10-K.

Revenue Recognition

~~Goodwill~~We provide gathering, processing, compression, storage, fractionation, and transportation (consisting of pipelines, truck and rail terminals, truck/trailer units and rail cars) services and we sell commodities (including crude oil, natural gas, NGLs and water) under various contracts. These contracts include:

Fixed-fee contracts. Under these contracts, we do not take title to the underlying crude oil, natural gas or NGLs but charge our customers a fixed-fee for the services we provide, which can be a firm reservation charge and/or a charge

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per volume gathered, processed, compressed, stored, loaded and/or transported (which, in certain contracts, can be subject to a minimum level of volumes);

Percentage-of-proceeds service contracts. Under these contracts, we take title to crude oil, natural gas or NGLs after the commodity leaves our gathering and processing facilities. We often market and sell those commodities to third parties after they leave our facilities and we will remit a portion of the sales proceeds to our producers;

Percentage-of-proceeds product contracts. Under these contracts, we take title to crude oil, natural gas or NGLs before the commodity enters our facilities. We market and sell those commodities to third parties and we will remit a portion of the sales proceeds to our producers; and

Purchase and sale contracts. Under these contracts, we purchase crude oil, natural gas or NGLs before the commodity enters our facilities, and we market and sell those commodities to third parties.

On January 1, 2018, we adopted the provisions of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. We adopted the standard using the modified retrospective method for all revenue contracts that involve revenue generating activities that occur after January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the new standard, while amounts prior to January 1, 2018 continue to be reported in accordance with our historic accounting under Revenue Recognition (Topic 605).

Prior to January 1, 2018, we recognized revenues for services and products when all of the following criteria were met under Topic 605: (i) services had been rendered or products delivered or sold; (ii) persuasive evidence of an exchange arrangement existed; (iii) the price for services was fixed or determinable; and (iv) collectability was reasonably assured. We recorded deferred revenue when we received amounts from our customers but had not yet met the criteria listed above. We recognized deferred revenue in our consolidated statement of operations when the criteria had been met and all services had been rendered. At December 31, 2017, we had deferred revenue of approximately $0.6 million, which is reflected in accrued expenses and other liabilities on our consolidated balance sheet.

Beginning January 1, 2018, we recognize revenues for services and products under revenue contracts as our obligations to perform services or deliver/sell products under the contracts are satisfied. A contract’s transaction price is allocated to each performance obligation in the contract and recognized as revenue when, or as, the performance obligation is satisfied. Our fixed-fee contracts and our percentage-of-proceeds service contracts primarily have a single performance obligation to deliver a series of distinct goods or services that are substantially the same and have the same pattern of transfer to our customers. For performance obligations associated with these contracts, we recognize revenues over time utilizing the output method based on the actual volumes of products delivered/sold or services performed, because the single performance obligation is satisfied over time using the same performance measure of progress toward satisfaction of the performance obligation. 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 considering the significant, sustained decrease in the markettransaction price under certain of our ~~common units~~fixed-price contracts and percentage-of-proceeds service contracts includes variable consideration that varies primarily based on actual volumes that are delivered under the ~~continued decrease in commodity prices~~contracts. Because the variable consideration specifically relates to our efforts to transfer the services and/or products under the contracts, we allocate the variable consideration entirely to the distinct service utilizing the allocation exception guidance under Topic 606, and ~~its impact on~~accordingly recognize the ~~midstream industry and our customers during that period. We utilized~~variable consideration as revenues at the ~~income approach~~time the good or service is transferred to ~~determine~~ the fair value of our reporting units given the limited availability of comparable market-based transactions as of March 31, 2016, 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.customer.

Certain of our fixed-fee contracts contain minimum volume features under which the customers must utilize our services to gather, compress or load a specified quantity of crude oil or natural gas or pay a deficiency fee based on the difference between actual volumes and the contractual minimum volume. We recognize revenues from these contracts when actual volumes are gathered, compressed or loaded and the likelihood of a customer exercising its remaining rights to make up the deficient volumes under minimum volume commitments becomes remote.

We recognize revenues at a point in time for performance obligations associated with our percentage-of proceeds product contracts and purchase and sale contracts, and these revenues are recognized because control of the underlying product is transferred to the customer when the distinct good is provided to the customer.

The evaluation of when performance obligations have been satisfied and the transaction price that is allocated to our performance obligations requires significant judgment and assumptions, including our evaluation of the timing of when control of the underlying good or service has transferred to our customers and the relative standalone selling price of goods and services provided to customers under contracts with multiple performance obligations. Actual results can significantly vary from those judgments and assumptions. We did not have any material contracts with multiple performance obligations or under which we receive material amounts of non-cash consideration during the six months ended June 30, 2018.

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The following table summarizes ~~goodwill impairments~~the transaction price allocated to our remaining performance obligations under certain contracts that have not been recognized as of June 30, 2018 (in millions):



Remainder of 2018	$	32.9
2019	25.4
2020	20.7
2021	8.7
2022	7.3
Thereafter	10.5
Total	$	105.5

Our remaining performance obligations presented in the table above exclude estimates of variable rate escalation clauses in our contracts with customers, and is generally limited to fixed-fee and percentage-of-proceeds service contracts which have fixed pricing and minimum volume terms and conditions. Our remaining performance obligations generally exclude, based on the following practical expedients that we elected to apply, disclosures for (i) variable consideration allocated to a wholly-unsatisfied promise to transfer a distinct service that forms part of the identified single performance obligation; (ii) unsatisfied performance obligations where the contract term is one year or less; and (iii) contracts for which we recognize revenues as amounts are invoiced.

Contract Assets and Contract Liabilities.Amounts due from our customers under our revenue contracts are typically billed as the service is being provided or on a weekly, bi-weekly or monthly basis and are due within 30 days of billing. Under certain of our contracts, we recognize revenues in excess of billings which we present as contract assets on our consolidated balance sheets.

Under certain contracts, we may be entitled to receive payments in advance of satisfying our performance obligations under the contract. We recognize a liability for these payments in excess of revenue recognized and present it as deferred revenue or contract liabilities on our consolidated balance sheets. Our deferred revenue primarily relates to:

Capital Reimbursements. Certain contracts in our G&P segment require that our customers reimburse us for capital expenditures related to the construction of long-lived assets utilized to provide services to them under the revenue contracts. Because we consider these amounts as consideration from customers associated with ongoing services to be provided to customers, we defer these upfront payments in deferred revenue and recognize the amounts in revenue over the life of the associated revenue contract as the performance obligations are satisfied under the contract. On January 1, 2018, we recorded an $87.6 million increase to our property, plant and equipment, net, a $69.1 million increase to our deferred revenue liability and an $18.5 million increase to partners’ capital as a result of applying the cumulative impact of adopting the new standard on these types of contracts.

Contracts with Increasing (Decreasing) Rates per Unit. Certain contracts in our G&P, S&T and MS&L segments have fixed rates per volume that increase and/or decrease over the life of the contract once certain time periods or thresholds are met. We record revenues on these contracts ratably per unit over the life of the contract based on the remaining performance obligations to be performed, which can result in the deferral of revenue for the difference between the consideration received and the ratable revenue recognized. On January 1, 2018, we recorded a $1.5 million increase to our deferred revenue liability and a corresponding decrease to partners’ capital as a result of applying the cumulative impact of adopting the new standard on these types of contracts.

Our contract assets and contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting ~~units recorded during the six months ended~~period. Our receivables related to our Topic 606 revenue contracts totaled $312.4 million for both CEQP and CMLP at June 30, ~~2016 (~~2018, and are included in accounts receivable on our consolidated balance sheet. Our contract assets are included in other non-current assets on our consolidated balance sheet. The majority of our deferred revenues are included in other long-term liabilities on our consolidated balance sheet and are classified as non-current, for which the majority of revenue is expected to be recognized as the performance obligations under the related revenue contracts are satisfied over the next 14 years.

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The following table summarizes the opening and closing balances of our contract assets and contract liabilities (in ~~millions~~millions)):



	Balance at January 1, 2018		Balance at June 30, 2018
Contract Assets (Non-current)	$	1.1	$	1.0
Contract Liabilities (Current)⁽¹⁾	12.2		12.4
Contract Liabilities (Non-current)⁽²⁾	60.6		62.9


(1)	Our current contract liabilities primarily consist of current deferred revenues and are included in accrued expenses and other liabilities on our consolidated balance sheets. During the three and six months ended June 30, 2018, we recognized revenues of approximately $3.1 million and $6.2 million that were previously included in deferred revenues (current) at January 1, 2018.


(2)	Our non-current contract liabilities primarily consist of non-current deferred revenues and are included in other long-term liabilities on our consolidated balance sheets.

Impact of financial statement line items.For contracts that were modified prior to January 1, 2018, we have not retrospectively restated the contract for those modifications and instead we have reflected the aggregate effect of those modifications when identifying satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price to satisfied and unsatisfied obligations. The impact of applying this transition practical expedient was not material to our financial statements. The adoption of Topic 606 had the following impact on CEQP’s and CMLP’s consolidated income statements and balance sheets (in millions):

Crestwood Equity



	Three Months Ended June 30, 2018									Six Months Ended June 30, 2018
	As Reported under Topic 606			Prior to Adoption of Topic 606			Increase (Decrease)			As Reported under Topic 606		Prior to Adoption of Topic 606		Increase (Decrease)
Income Statement
Product revenues:
Gathering and processing⁽¹⁾	$	186.9		$	437.3		$	(250.4	)	$	459.1	$	866.9	$	(407.8	)
Service revenues:
Gathering and processing⁽¹⁾⁽²⁾	68.5			78.4			(9.9		)	136.6		157.9		(21.3		)
Marketing, supply and logistics⁽³⁾	17.0			16.8			0.2			33.8		33.3		0.5
Costs of product/services sold:
Product costs⁽¹⁾	681.8			945.0			(263.2		)	1,620.7		2,055.5		(434.8		)
Depreciation, amortization and accretion⁽²⁾	44.5			43.3			1.2			89.6		87.1		2.5
Earnings from unconsolidated affiliates, net⁽⁴⁾	12.0			15.0			(3.0		)	24.4		29.4		(5.0		)
Net income (loss)	(21.5		)	(20.4		)	(1.1		)	12.6		13.9		(1.3		)

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



	June 30, 2018
		As Reported under Topic 606		Prior to Adoption of Topic 606		Increase (Decrease)
Balance Sheet
Assets:
Property, plant and equipment⁽²⁾		$	2,409.8	$	2,300.5	$	109.3
Accumulated depreciation and depletion⁽²⁾		518.1		503.4		14.7
Investments in unconsolidated affiliates⁽⁴⁾		1,156.7		1,171.2		(14.5		)
Liabilities:
Accrued expenses and other liabilities⁽²⁾⁽³⁾		85.2		73.5		11.7
Other long-term liabilities⁽²⁾⁽³⁾		166.2		104.0		62.2
Partners’ capital:
Crestwood Equity Partners LP partners’ capital^(2)(3)(4)		1,300.3		1,294.1		6.2

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Crestwood Midstream



	Three Months Ended June 30, 2018									Six Months Ended June 30, 2018
	As Reported under Topic 606			Prior to Adoption of Topic 606			Increase (Decrease)			As Reported under Topic 606		Prior to Adoption of Topic 606		Increase (Decrease)
Income Statement
Product revenues:
Gathering and processing⁽¹⁾	$	186.9		$	437.3		$	(250.4	)	$	459.1	$	866.9	$	(407.8	)
Service revenues:
Gathering and processing⁽¹⁾⁽²⁾	68.5			78.4			(9.9		)	136.6		157.9		(21.3		)
Marketing, supply and logistics⁽³⁾	17.0			16.8			0.2			33.8		33.3		0.5
Costs of product/services sold:
Product costs⁽¹⁾	681.8			945.0			(263.2		)	1,620.7		2,055.5		(434.8		)
Depreciation, amortization and accretion⁽²⁾	47.4			46.2			1.2			95.2		92.7		2.5
Earnings from unconsolidated affiliates, net⁽⁴⁾	12.0			15.0			(3.0		)	24.4		29.4		(5.0		)
Net income (loss)	(23.5		)	(22.4		)	(1.1		)	8.9		10.2		(1.3		)



	June 30, 2018
		As Reported under Topic 606		Prior to Adoption of Topic 606		Increase (Decrease)
Balance Sheet
Assets:
Property, plant and equipment⁽²⁾		$	2,739.9	$	2,630.6	$	109.3
Accumulated depreciation and depletion⁽²⁾		668.6		653.9		14.7
Investments in unconsolidated affiliates⁽⁴⁾		1,156.7		1,171.2		(14.5		)
Liabilities:
Accrued expenses and other liabilities⁽²⁾⁽³⁾		84.2		72.5		11.7
Other long-term liabilities⁽²⁾⁽³⁾		163.7		101.5		62.2
Partners’ capital^(2)(3)(4)		2,094.6		2,088.4		6.2


(1)	On January 1, 2018, we began classifying product and service revenues as a reduction of costs of product sold on certain of our gathering and processing contracts where we do not obtain control of the customers’ product prior to it entering our facilities.


(2)	On January 1, 2018, we began recording proceeds received from customers for reimbursable construction as deferred revenue instead of as reductions of property, plant and equipment.


(3)	For contracts that have fixed rates per volume that increase and/or decrease over the life of the contract once certain time periods or thresholds have been met, on January 1, 2018, we began recording revenues on those contracts ratably per unit over the life of the contract based on the remaining performance obligations to be performed.

(4)

On January 1, 2018, Jackalope Gas Gathering Services, L.L.C. (Jackalope) adopted the provisions of Topic 606, and we recorded a $9.5 million decrease to our equity method investment and a corresponding decrease to our partners’ capital to reflect our proportionate share of the cumulative effect of accounting change recorded by the equity investment related to the new standard. In addition, our earnings from unconsolidated affiliates decreased by approximately $3.0 million and $5.0 million during the three and six months ended June 30, 2018 to reflect our proportionate share of the ongoing impact of the new standard on Jackalope’s revenues. The adoption of Topic 606 was not material to our other equity method investments.

Cash Flows

~~Unit-Based Compensation~~. Effective January 1, ~~2017,~~2018, we adopted the provisions of ~~Accounting Standards Update (ASU) 2016-09,~~ASU 2016-15, ~~Compensation - Stock Compensation~~Statement of Cash Flows (Topic ~~718)~~230): ~~Improvements to Employee Share-Based Payment Accounting~~Classification of Certain Cash Receipts and Cash Payments, , which ~~simplifies several aspects of the accounting for share-based payment award transactions, including the classification of awards as either equity or liabilities~~clarifies how certain cash receipts and ~~the presentation on~~cash payments are presented and classified in the statement of cash flows. The adoption of this accounting standard did not have a material impact on our consolidated financial statements.

~~Crestwood Equity 2017 Long Term Incentive Plan~~. 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

Table 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 statements of operations.Contents

New Accounting Pronouncements Issued But Not Yet Adopted

As of June 30, ~~2017,~~2018, the following accounting ~~standards~~standard had not yet been adopted by us:

In ~~May 2014,~~February 2016, 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 anticipate utilizing the modified retrospective method

to adopt the provisions of this standard effective January 1, 2018 and are currently applying the 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, especially on contractual arrangements that involve reimbursements of 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. Companies are required to adopt the provisions of the standard using the modified retrospective transition method. We expect to adopt the provisions of this standard effective January 1, ~~2019~~2019. We are in the process of implementing appropriate changes to our processes, systems and controls to support the accounting and disclosure requirements of the new standard and are currently evaluating the impact that this standard will have on our consolidated financial statements.

Note 3 – Assets Held for Sale

In ~~August 2016,~~June 2018, we entered into an agreement with a third-party to sell our West Coast facilities included in our Marketing, Supply and Logistics segment, which are further described in our 2017 Annual Report on Form 10-K. We recorded a $54.0 million current asset held for sale at June 30, 2018 related to the ~~FASB issued ASU 2016-15,~~ ~~Statement~~fair value of ~~Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~,the facilities to be sold, which ~~clarifies how certain cash receipts and cash payments are presented and classified~~is a Level 3 fair value measurement based on the sales price plus working capital adjustments in the ~~statement~~sales agreement. We recorded a loss on long-lived assets of ~~cash flows.~~approximately $24.5 million (including the goodwill impairment discussed further below) during the three months ended June 30, 2018 based on the difference between the carrying value of West Coast’s current assets and liabilities, goodwill and its $61.6 million of property, plant and equipment, net and the fair value of the assets held for sale at June 30, 2018. The sale is contingent upon customary approvals and satisfaction of certain other closing conditions, which we believe is probable at June 30, 2018. We expect to ~~adopt~~close the ~~provisions~~sale during the third quarter of ~~this standard effective~~2018.

Our Marketing, Supply and Logistics segment had approximately $101.7 million of goodwill associated with it at December 31, 2017. On January 1, 2018, we combined four of the reporting units included in the Marketing, Supply and ~~are currently~~Logistics segment into one NGL Marketing and Logistics reporting unit for the purpose of evaluating goodwill for impairment on an ongoing basis. We combined these reporting units based on a strategic shift in the ~~impact that~~way in which we manage, operate and report our NGL operations as an integrated platform instead of as four individual stand-alone operations. As a result, we attributed approximately $9.0 million of the goodwill associated with our NGL Marketing and Logistics reporting unit to our West Coast facilities to be sold as of June 30, 2018, and this ~~standard may have on our consolidated financial statements.~~

~~Table~~goodwill was fully impaired in conjunction with the reclassification of ~~Contents~~

~~In January 2017,~~ the ~~FASB issued ASU 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying~~West Coast net assets to assets held for sale during 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.three months ended June 30, 2018.

Note 34 – Certain Balance Sheet Information

Accrued Expenses and Other Liabilities

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


	CEQP				CMLP				CEQP				CMLP
	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
	2017		2016		2017		2016		2018		2017		2018		2017
Accrued expenses	$	39.0	$	46.9	$	38.1	$	45.5	$	35.7	$	56.6	$	34.7	$	55.5
Accrued property taxes	6.6		4.2		6.6		4.2		6.0		4.8		6.0		4.8
Accrued natural gas purchases	0.2		4.9		0.2		4.9
Tax payable	0.3		1.2		—		—
Income tax payable									0.2		0.3		0.2		0.3
Interest payable	21.6		22.8		21.6		22.8		20.5		20.3		20.5		20.3
Accrued additions to property, plant and equipment	9.0		1.7		9.0		1.7		9.2		22.3		9.2		22.2
Capital leases	1.1		1.3		1.1		1.3		1.2		1.0		1.2		1.0
Deferred revenue	6.7		7.5		6.7		7.5		12.4		0.6		12.4		0.6
Total accrued expenses and other liabilities	$	84.5	$	90.5	$	83.3	$	87.9	$	85.2	$	105.9	$	84.2	$	104.7

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Note 45 - Investments in Unconsolidated Affiliates

Variable Interest Entity

Crestwood Permian Basin Holdings LLC

~~In October 2016,~~ (Crestwood Permian) is a joint venture owned by Crestwood Infrastructure Holdings LLC (Crestwood Infrastructure), our wholly-owned subsidiary, and an affiliate of First Reserve formed a 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.Management, L.P. (First Reserve). We manage and we account for our 50% ownership interest in Crestwood Permian, which is a ~~VIE,~~variable interest entity, 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 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 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 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 granted SWEPI an option to purchase up to a 50% equity interest in 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 Permian Basin.

Through June 30, 2017, First Reserve has contributed $37.5 million to the joint venture and 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

~~Table of Contents~~

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 the~~equity 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 (because of our relationship with First Reserve), 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 cost required to fund the expansion of the Delaware Basin assets, which includes a new processing plant located in Orla, Texas and associated pipelines (Orla processing plant).

Pursuant to Crestwood Permian's limited liability company agreement, we will receive 100% of Crestwood New Mexico's available cash (as defined in the limited liability company agreement) 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 during this period, equity earnings from 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 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.

~~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 (net of approximately~~ ~~$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 under the equity method of accounting. We recognized a loss on the deconsolidation of the Northeast storage and transportation assets of approximately ~~$32.9 million~~.

~~Table of Contents~~

Net Investments and Earnings

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


	Investment					Earnings (Loss) from Unconsolidated Affiliates												Investment				Earnings (Loss) from Unconsolidated Affiliates
	June 30,		December 31,			Three Months Ended June 30,						Six Months Ended June 30,						June 30,		December 31,		Three Months Ended June 30,					Six Months Ended June 30,
	2017		2016			2017			2016			2017			2016			2018		2017		2018		2017			2018		2017
Stagecoach Gas Services LLC⁽¹⁾	$	859.9	$	871.0		$	6.6		$	2.3		$	12.6		$	2.3		$	840.0	$	849.8	$	7.0	$	6.6		$	12.7	$	12.6
Jackalope Gas Gathering Services, L.L.C.⁽²⁾⁽⁶⁾	190.4		197.2			2.2			5.9			4.0			11.0			174.0		184.9		3.8		2.2			6.8		4.0
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		)	—
Crestwood Permian Basin Holdings LLC⁽³⁾																		97.2		102.0		0.7		(0.4		)	3.4		(0.6		)
Tres Palacios Holdings LLC⁽⁴⁾																		36.8		37.8		—		0.7			0.4		1.2
Powder River Basin Industrial Complex, LLC⁽⁵⁾																		8.7		8.5		0.5		0.5			1.1		0.5
Total	$	1,181.7	$	1,115.4		$	9.6		$	6.2		$	17.7		$	12.7		$	1,156.7	$	1,183.0	$	12.0	$	9.6		$	24.4	$	17.7


(1)	As of June 30, ~~2017,~~2018, 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,~~2018, our equity in the underlying net assets of Jackalope ~~Gas Gathering Services, L.L.C. (Jackalope)~~ exceeded our investment balance by approximately ~~$0.8~~$0.7 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)

In June 2017, we contributed to Crestwood Permian 100% of the equity interest of Crestwood New Mexico Pipeline LLC (Crestwood New Mexico). This contribution was treated as a transaction between entities under common control (because of our relationship with First Reserve) and the accounting standards related to such transactions required Crestwood Permian to record the assets and liabilities of Crestwood New Mexico at our historical book value. The difference between our equity in Crestwood Permian’s net assets and our investment balance is not subject to amortization. Our Crestwood Permian investment is included in our gathering and processing segment.

(4)

As of June 30, ~~2017,~~2018, our equity in the underlying net assets of Tres Palacios Holdings LLC (Tres Holdings) exceeded our investment balance by approximately ~~$27.2~~$25.9 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)~~(5)

As of June 30, ~~2017,~~2018, our equity in the underlying net assets of Powder River Basin Industrial Complex, LLC (PRBIC) exceeded our investment balance by approximately ~~$6.7~~$6.1 million. We amortize ~~a portion of~~ this amount over the life of ~~PRBIC's~~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)~~(6)

On January 1, 2018, Jackalope adopted the provisions ofTopic 606, and we recorded a $9.5 million decrease to our equity method investment and a corresponding decrease to our partners’ capital to reflect our proportionate share of the cumulative effect of accounting change recorded by the equity investment related to the new standard. In addition, our earnings from unconsolidated affiliates decreased by approximately $3.0 million and $5.0 million during the three and six months ended June 30, ~~2017,~~2018 to reflect our ~~equity in~~proportionate share of Jackalope’s deferred revenues related to 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.new standard.

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Summarized Financial Information of Unconsolidated Affiliates

Below is the summarized operating results for our significant unconsolidated affiliates (in millions; amounts represent 100% of

unconsolidated affiliate information):

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 Contents~~


	Six Months Ended June 30,												Six Months Ended June 30,
	2017						2016						2018						2017
	Operating Revenues		Operating Expenses		Net Income		Operating Revenues		Operating Expenses		Net Income		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	$	85.5	$	39.9	$	45.6	$	84.0	$	38.0	$	46.1
Other⁽¹⁾	46.3		37.3		8.9		60.2		42.2		17.9		92.9		76.8		18.9		76.5		63.3		13.1
Total	$	130.3	$	75.3	$	55.0	$	73.4	$	47.9	$	25.4	$	178.4	$	116.7	$	64.5	$	160.5	$	101.3	$	59.2

(1)

Includes our Jackalope, Crestwood Permian, Tres Holdings ~~PRBIC~~ and ~~Crestwood Permian~~PRBIC 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~~2018 and ~~2016.~~2017. 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~~2018 and ~~2016.~~2017. We recorded amortization of the excess basis in our PRBIC equity investment of approximately $0.3 million ~~and $0.8 million~~ for both the six months ended June 30, ~~2017~~2018 and ~~2016.~~2017.

Distributions and Contributions

The following table summarizes our distributions and contributions from our unconsolidated affiliates (in millions):


	Distributions				Contributions				Distributions⁽¹⁾				Contributions
	Six Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2018		2017		2018		2017
Stagecoach Gas⁽¹⁾	$	23.7	$	—	$	—	$	—	$	22.5	$	23.7	$	—	$	—
Jackalope	12.3		12.1		1.5		—		15.0		12.3		6.8		1.5
Tres Holdings⁽¹⁾	2.7		4.1		—		5.5
Crestwood Permian⁽²⁾									8.3		—		0.1		86.4
Tres Holdings									1.4		2.7		—		—
PRBIC	0.6		1.2		—		—		0.9		0.6		—		—
Crestwood Permian⁽²⁾	—		—		86.4		—
Total	$	39.3	$	17.4	$	87.9	$	5.5	$	48.1	$	39.3	$	6.9	$	87.9


(1)	In July ~~2017,~~2018, we received a cash ~~distribution~~distributions from Stagecoach Gas, ~~and~~Crestwood Permian, Tres Holdings and PRBIC of approximately ~~$12.0~~$12.2 million, $2.3 million, $2.5 million and ~~$3.1~~$0.5 million, respectively. In July 2018, we made a cash contribution of approximately $2.5 million to Tres Holdings.


(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.

Other

Contingent Consideration. Pursuant to the Stagecoach Gas limited liability company agreement, we may be required to make payments of up to $57 million to Con Edison Gas Pipeline and Storage Northeast, LLC after December 31, 2020 if certain criteria are not met by Stagecoach Gas by December 31, 2020, including achieving certain performance targets on growth capital projects. These growth capital projects depend on the construction of other third-party expansion projects, and those third-party projects have experienced regulatory and other delays that have caused Stagecoach Gas to delay its growth capital projects. Although Stagecoach Gas anticipates that these growth capital projects will be constructed in the future, it does not expect that these projects will produce meaningful operating results prior to December 31, 2020. As a result, at June 30, 2018 and December 31, 2017, we have recorded a liability of $57 million for this obligation, which in reflected in other long-term liabilities on our consolidated balance sheets.

Guarantee. Crestwood Permian owns a 50% equity interest in Crestwood Permian Basin LLC (Crestwood Permian Basin) and Shell Midstream Partners L.P. (Shell Midstream), a subsidiary of Royal Dutch Shell plc, owns the remaining 50% equity interest in Crestwood Permian Basin. Crestwood Permian Basin owns the Nautilus gathering system. CEQP issued a guarantee in conjunction with the Crestwood Permian Basin gas gathering agreement with SWEPI LP, a subsidiary of Royal Dutch Shell plc, 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, of which approximately $112.3 million has been spent through June 30, 2018) 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

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outstanding, and as a result, we have not recorded a liability on our consolidated balance sheets at June 30, 2018 and December 31, 2017.

Note 56 – 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 6.7.

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. Our commodity-based derivatives that are settled with physical commodity are reflected as an increase to product revenues, and the commodity inventory that is utilized to satisfy those physical obligations is reflected as an increase to cost of product sold in our consolidated statements of operations. During the three and six months ended June 30, 2018, the impact to our consolidated statements of operations related to our commodity-based derivatives reflected in costs of product/services sold was a loss of $6.4 million and a gain of $1.4 million, and reflected in operating revenues was a $33.0 million and $130.8 million increase in product revenues. During the three and six months ended 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~~million, 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~~operating revenues was a ~~gain of $1.3~~$28.0 million and ~~$2.0 million.~~$73.1 million increase in product revenues. 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~~ ~~June 30, 2017~~ ~~and~~ ~~December 31, 2016~~:following:


	June 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017
	Fixed Price Payor	Fixed Price Receiver	Fixed Price Payor	Fixed Price Receiver	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	11.6	13.8	15.3	17.5
Natural gas (MMBTU’s)	0.2	—	—	—
Natural gas (MMcf)					870	820	780	660

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.

All contracts subject to price risk had a maturity of 36 months or less; however, ~~85%~~91% of the contracted volumes will be delivered or settled within 12 months.

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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 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 June 30, ~~2017~~2018 and December 31, ~~2016~~2017 was ~~$4.9~~$13.5 million and ~~$13.9~~$28.9 million. At both June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, we posted less than $0.1 million of collateral for our commodity derivative instruments with credit-risk-related contingent features. In addition, ~~at June 30, 2017 and December 31, 2016,~~ we ~~had~~have margin requirements with a New York Mercantile Exchange (NYMEX) broker related to our net asset or liability position with such broker. At June 30, 2018 and December 31, 2017, we had a NYMEX related net derivative asset position of ~~$5.7~~$24.8 million and ~~$14.3~~$27.2 million, for which we posted ~~$3.6~~$4.9 million and ~~$4.2~~$5.6 million of cash collateral in the normal course of business. At June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, we also received collateral of ~~$4.3~~$2.4 million and $3.7 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 67 – Fair Value Measurements

The accounting standard for fair value measurement 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, Accounts Receivable and Accounts Payable

As of June 30, ~~2017~~2018 and December 31, ~~2016~~2017, the carrying amounts of cash, accounts receivable and accounts payable approximate fair value based on the short-term nature of these instruments.

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Credit Facility

The fair value of the amounts outstanding under our CMLP credit facility approximates the carrying amounts as of June 30, ~~2017~~2018 and December 31, ~~2016~~2017, 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~~amount (reduced for deferred financing costs associated with the respective notes) and fair value of our senior notes (in millions):


	June 30, 2017				December 31, 2016				June 30, 2018				December 31, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		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	$	692.9	$	713.8	$	692.1	$	728.8
2025 Senior Notes	$	491.8	$	498.8	$	—	$	—	$	492.8	$	500.4	$	492.3	$	517.9

Financial Assets and Liabilities

As of June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, 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.

Our derivative instruments that are traded on the 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 June 30, ~~2017~~2018 and December 31, ~~2016~~2017 (in millions):


	June 30, 2017
	Fair Value of Derivatives																June 30, 2018
	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			Fair Value
Assets
Assets from price risk management	$	0.7	$	41.7	$	—	$	42.4	$	(30.2	)	$	0.6		$	12.8	$	5.1	$	71.2	$	—	$	76.3	$	(50.2	)	$	(20.1	)	$	6.0
Suburban Propane Partners, L.P. units⁽²⁾	3.4		—		—		3.4		—			—			3.4		3.4		—		—		3.4		—			—			3.4
Total assets at fair value	$	4.1	$	41.7	$	—	$	45.8	$	(30.2	)	$	0.6		$	16.2	$	8.5	$	71.2	$	—	$	79.7	$	(50.2	)	$	(20.1	)	$	9.4

Liabilities
Liabilities from price risk management	$	0.3	$	36.6	$	—	$	36.9	$	(30.2	)	$	1.3		$	8.0	$	5.8	$	65.3	$	—	$	71.1	$	(50.2	)	$	2.1		$	23.0
Total liabilities at fair value	$	0.3	$	36.6	$	—	$	36.9	$	(30.2	)	$	1.3		$	8.0	$	5.8	$	65.3	$	—	$	71.1	$	(50.2	)	$	2.1		$	23.0

	December 31, 2016																December 31, 2017
	Fair Value of Derivatives																Level 1		Level 2		Level 3		Gross Fair Value		Contract Netting⁽¹⁾			Collateral/Margin Received or Paid			Fair Value
	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	$	0.6	$	84.4	$	—	$	85.0	$	(67.8	)	$	(10.9	)	$	6.3	$	1.1	$	102.2	$	—	$	103.3	$	(74.6	)	$	(21.5	)	$	7.2
Suburban Propane Partners, L.P. units⁽²⁾	4.3		—		—		4.3		—			—			4.3		3.5		—		—		3.5		—			—			3.5
Total assets at fair value	$	4.9	$	84.4	$	—	$	89.3	$	(67.8	)	$	(10.9	)	$	10.6	$	4.6	$	102.2	$	—	$	106.8	$	(74.6	)	$	(21.5	)	$	10.7

Liabilities
Liabilities from price risk management	$	2.7	$	90.2	$	—	$	92.9	$	(67.8	)	$	3.5		$	28.6	$	1.4	$	118.2	$	—	$	119.6	$	(74.6	)	$	3.9		$	48.9
Total liabilities at fair value	$	2.7	$	90.2	$	—	$	92.9	$	(67.8	)	$	3.5		$	28.6	$	1.4	$	118.2	$	—	$	119.6	$	(74.6	)	$	3.9		$	48.9


(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~~CEQP’s consolidated balance sheets.

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Note 78 – Long-Term Debt

Long-term debt consisted of the following at June 30, ~~2017~~2018 and December 31, ~~2016~~2017 (in millions):


	June 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017
Credit Facility	$	443.0	$	77.0	$	385.0	$	318.2
2020 Senior Notes	—		338.8
Fair value adjustment of 2020 Senior Notes	—		1.8
2022 Senior Notes	—		436.4
2023 Senior Notes	700.0		700.0		700.0		700.0
2025 Senior Notes	500.0		—		500.0		500.0
Other	3.0		3.7		1.7		2.4
Less: deferred financing costs, net	32.0		34.0		24.8		28.4
Total debt	1,614.0		1,523.7		1,561.9		1,492.2
Less: current portion	1.0		1.0		0.9		0.9
Total long-term debt, less current portion	$	1,613.0	$	1,522.7	$	1,561.0	$	1,491.3

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Credit Facility

At June 30, ~~2017,~~2018, Crestwood Midstream had ~~$631.3~~$582.1 million of available capacity under its credit facility considering the most restrictive debt covenants in its credit agreement. At June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, Crestwood ~~Midstream's~~Midstream’s outstanding standby letters of credit were ~~$68.6~~$55.5 million and ~~$64.0~~$52.2 million. Borrowings under the ~~CMLP~~ credit facility accrue interest at prime or Eurodollar based rates plus applicable spreads, which resulted in interest rates between ~~3.34%~~4.26% and ~~5.50%~~6.25% at June 30, ~~2017~~2018 and ~~3.21%~~3.94% and ~~5.25%~~6.00% at December 31, ~~2016.~~2017. The weighted-average interest rate as of June 30, ~~2017~~2018 and December 31, ~~2016~~2017 was ~~3.48%~~4.33% and ~~3.23%~~4.11%.

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 June 30, ~~2017,~~2018, the net debt to consolidated EBITDA ratio was approximately ~~3.98~~4.02 to 1.0, the consolidated EBITDA to consolidated interest expense ratio was approximately ~~4.16~~4.37 to 1.0, and the senior secured leverage ratio was ~~1.07~~0.98 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 4. Crestwood Midstream recognized a gain on extinguishment of debt of approximately $10 million in conjunction with the early tender of these notes.

~~2025 Senior Notes~~. In March 2017, Crestwood Midstream issued $500 million of 5.75% unsecured senior notes due 2025 (the 2025 Senior Notes) ~~in a private offering.~~, which were registered with the SEC effective July 2017. 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 certain of Crestwood Midstream’s senior notes. During the ~~2020 Senior Notes~~three and ~~the 2022 Senior Notes.~~

~~In May~~six months ended June 30, 2017, ~~Crestwood Midstream filed~~we recognized a ~~registration statement~~loss on extinguishment of debt of approximately $0.4 million and $37.7 million in conjunction with the ~~SEC under which it offered to exchange new~~tender of principal amounts of certain of Crestwood Midstream’s senior notes for any and all outstanding 2025 Senior Notes. Crestwood Midstream completed the exchange offer in July 2017. The terms of the exchange notes are substantially identical to the terms of the 2025 Senior Notes, except that the exchange notes are freely tradable.

notes. At June 30, ~~2017~~2018, Crestwood Midstream was in compliance with all of its debt covenants applicable to ~~the CMLP~~its credit facility and ~~its~~ senior notes.

Note 89 - 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 ~~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 six months ended June 30, 2018, we excluded a weighted-average of 7,125,744 common units in both periods (representing preferred units), a weighted-average of 5,946,194 and 5,916,641 common units (representing Crestwood Niobrara’s preferred units), a weighted average of 343,632 and 337,694 common units (representing performance units), and a weighted average of 438,789 common units in both periods (representing subordinated units). During the three and six months ended June 30, 2017, we excluded a weighted-average of 6,964,663 and 6,887,247 common units (representing preferred units), a weighted-average of 8,228,378 common units in both periods (representing Crestwood ~~Niobrara's~~Niobrara’s preferred units), a weighted average of 369,203 and a weighted-average of 438,789 common units in both periods (representing subordinated units). During the three and six months ended June 30, 2016, we excluded a weighted-average of 6,355,936 and 6,284,885280,520 common units (representing ~~preferred units), and a weighted-average of 8,438,849 common units in both periods (representing Crestwood Niobrara's preferred~~performance units) and a weighted-average of 438,789 common units in both periods (representing subordinated units). See Note 910 for additional information regarding the potential conversion of our preferred units and Crestwood ~~Niobrara's~~Niobrara’s preferred units to common units. For a description of our subordinated and performance units, see our 2017 Annual Report on Form 10-K.

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Note 910 – Partners’ Capital

Preferred Units

Subject to certain conditions, the holders of the ~~Preferred Units~~preferred units have the right to convert their ~~Preferred Units~~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 ~~Equity's~~Equity’s partnership agreement upon the occurrence of certain events, such as a change in control. The ~~Preferred Units~~preferred units have voting rights that are identical to the voting rights of the common units and will vote with the common units as a single class, with each ~~Preferred Unit~~preferred unit entitled to one vote for each common unit into which such ~~Preferred Unit~~preferred unit is convertible, except that the ~~Preferred Units~~preferred units are entitled to vote as a separate class on any matter on which all unitholders are entitled to vote that adversely affects the rights, powers, privileges or preferences of the ~~Preferred Units~~preferred units in relation to Crestwood ~~Equity's~~Equity’s other securities outstanding.

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Common Units

On August 4, 2017, we entered into an equity distribution agreement with certain financial institutions (each, a Manager), under which we may offer and sell from time to time through one or more of the Managers, common units having an aggregate offering price of up to $250 million. Common units sold pursuant to this at-the-market (ATM) equity distribution program are issued under a registration statement that became effective on April 12, 2017. We are required to pay the Managers an aggregate fee of up to 2.0% of the gross sales price per common unit sold under our ATM equity distribution program. There were no units issued under our ATM equity distribution program during the six months ended June 30, 2018.

Distributions

Crestwood Equity

Limited Partners. A summary of ~~CEQP's~~CEQP’s limited partner quarterly cash distributions for the six months ended June 30, ~~2017~~2018 and ~~2016~~2017 is presented below:


Record Date	Payment Date	Per Unit Rate		Cash Distributions (in millions)		Payment Date	Per Unit Rate		Cash Distributions (in millions)
2018
February 7, 2018						February 14, 2018	$	0.60	$	42.7
May 8, 2018						May 15, 2018	0.60		42.7
									$	85.4
2017
February 7, 2017	February 14, 2017	$	0.60	$	41.8	February 14, 2017	$	0.60	$	41.8
May 8, 2017	May 15, 2017	0.60		41.8		May 15, 2017	0.60		41.8
				$	83.6				$	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 July ~~20, 2017,~~19, 2018, we declared a distribution of $0.60 per limited partner unit to be paid on August 14, ~~2017,~~2018 to unitholders of record on August 7, ~~2017~~2018 with respect to the second quarter of ~~2017~~2018.

Preferred Unit Holders. WeBeginning with the distribution for the quarter ended December 31, 2017, we are required to make quarterly cash distributions to our preferred unitholders. During the six months ended June 30, 2018, we made cash distributions to our preferred unitholders of approximately $30.0 million. During the six months ended June 30, 2017, ~~and 2016,~~ we issued 3,113,215 ~~and 2,841,114~~ Preferred Units to our preferred unitholders in lieu of paying cash distributions of $28.4 ~~million and $25.9 million, respectively.~~million. On July ~~20, 2017,~~19, 2018, the board of directors of our general partner authorized ~~the issuance of 1,610,815 Preferred Units~~a cash distribution to our preferred ~~unit holders~~unitholders of approximately $15.0 million for the quarter ended June 30, ~~2017 in lieu~~2018.

On April 24, 2018, Crestwood Equity filed a shelf registration statement with the SEC under which holders of ~~paying a cash distribution of $14.7 million.~~the Preferred Units may sell their preferred units. The registration statement became effective on May 3, 2018. Crestwood Equity registered 71,257,445 preferred units under the registration statement.

Crestwood Midstream

During the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, Crestwood Midstream paid cash distributions of ~~$86.9~~$120.0 million and ~~$140.6~~$86.9 million to Crestwood Equity.

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Non-Controlling ~~Partners~~Partner

Crestwood Niobrara issued a preferred interest (Series A Preferred Units) 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. In December 2017, Crestwood Niobrara redeemed 100% of the outstanding Series A Preferred Units from GE and issued new preferred interests (Series A-2 Preferred Units) to CN Jackalope Holdings LLC (Jackalope Holdings). Subject to certain restrictions, we have the ability to redeem the Series A-2 Preferred Units for an amount in cash for CEQP common units equal to an amount necessary for Jackalope Holdings to acheive a certain rate of return. During the three and six months ended June 30, 2018, net income attributable to non-controlling partners was approximately $4.0 million and $8.0 million. During the three and six months ended June 30, 2017, net income attributable to non-controlling partners was approximately $6.3 million and $12.4 million. During the ~~three and six months ended 2016, net income attributable to non-controlling partners was approximately $6.0 million and $11.9 million. During both the~~ six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, Crestwood Niobrara paid cash distributions of $3.3 million and $7.6 million to ~~GE.~~its non-controlling partners, respectively. In July ~~2017,~~2018, Crestwood Niobrara paid a cash distribution of ~~$3.8~~$3.3 million to GEJackalope Holdings for the quarter ended June 30, ~~2017.~~2018.

Note 1011 – Commitments and Contingencies

Legal Proceedings

~~Simplification Merger Lawsuits~~California Trucking Lawsuit. . On ~~May 20, 2015, Lawrence G. Farber,~~March 13, 2017, a ~~purported unitholder of~~former Crestwood ~~Midstream,~~truck driver filed a ~~complaint~~lawsuit in the ~~United States District~~Superior Court (the Court) for ~~the Southern District of Texas, Houston Division, as a putative class action on behalf of Crestwood Midstream's unitholders, entitled~~ ~~Lawrence G. Farber, individually and~~Kern County, California 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,~~Transportation LLC’s California drivers alleging that 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,~~officers, directors and employees violated the California wage and hour laws by failing to comply with certain ~~individual defendants breached their fiduciary duties~~requirements of ~~loyalty~~the laws. The plaintiffs currently include a total of 13 former 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 Texas, Houston Division,~~current Company drivers, however they are seeking to certify this lawsuit 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.

which could potentially include approximately 160 drivers. 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,February 26, 2018, the parties entered into a memorandum of ~~understanding (MOU)~~agreement with respect to ~~a proposed settlement~~the lawsuit to settle any or all of the ~~Aron lawsuit. The settlement contemplated~~claims of the potential class members. On April 16, 2018, the parties executed the Stipulation of Settlement of Class Action and Release of Claims, which was preliminarily approved by the ~~MOU is subject to a number of conditions, including notice to the class, limited confirmatory discovery and~~Court on May 29, 2018. The hearing for final ~~court~~ approval of the ~~settlement. In~~settlement is scheduled for October ~~2016, the court~~4, 2018. If approved ~~the settlement. On November 7, 2016, a unitholder~~and no appeals are filed, ~~an appeal of~~ the settlement ~~and a hearingwas held on June 5, 2017, at which the court denied the appeal and~~of this lawsuit should be finalized ~~the settlement. The settlement did not have a material impact to our consolidated financial statements.~~by late 2018.

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 June 30, ~~2017~~2018 and December 31, ~~2016~~2017, both CEQP and CMLP had ~~less than $0.1~~approximately $1.2 million and $2.1 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~~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 our results of operations, cash flows or financial condition.

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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~~authorities. Thereafter, we 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.

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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 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~~On December 13, 2017, the EPA ~~from seeking~~and Crestwood signed a Combined Complaint and Consent Agreement (CCCA) whereby we agreed to ~~impose fines~~pay a civil penalty of $49,000 to the EPA and ~~penalties~~purchase emergency response equipment at an estimated cost of approximately $173,000 for the Three Affiliated Tribes as a ~~result of~~Supplemental Environmental Project (SEP). The CCCA and SEP concludes the ~~water releases.~~EPA’s penalty phase related to this matter.

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. 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'~~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~~EPA related to the ~~2014 produced water releases.~~NOPV. Our discussions regarding the notice of violation continue with the Three Affiliated Tribes.

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 June 30, ~~2017.~~2018.

At June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, our accrual of approximately ~~$2.4~~$1.7 million and ~~$2.1~~$1.9 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.~~penalties (including the Arrow water releases described above). 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~~$1.7 million to $3.5 million at June 30, ~~2017.~~2018.

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'~~workers’ compensation claims and general, product, vehicle and environmental liability. At June 30, ~~2017~~2018 and December 31, ~~2016, CEQP's~~2017, CEQP’s self-insurance reserves were ~~$15.5~~$12.6 million and ~~$15.6~~$13.6 million. We estimate that ~~$10.6~~$9.1 million of this balance will be paid subsequent to June 30, ~~2018.~~2019. As such, CEQP has classified ~~$10.6~~$9.1 million in other long-term liabilities on its consolidated balance sheet at June 30, ~~2017.~~2018. At June 30, ~~2017~~2018 and December 31, ~~2016, CMLP's~~2017, CMLP’s self insurance reserves were ~~$12.5~~$10.7 million and ~~$12.2~~$11.6 million. CMLP estimates that ~~$8.0~~$7.6 million of this balance will be paid subsequent to June 30, ~~2018.~~2019. As such, CMLP has classified ~~$8.0~~$7.6 million in other long-term liabilities on its consolidated balance sheet at June 30, ~~2017.~~2018.

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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 4,5, and for a further description of our guarantees associated with our assets or businesses we have sold, see our ~~2016~~2017 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~~2018 and December 31, ~~2016,~~2017, we have no amounts accrued for these guarantees.

Note 1112 – Related Party Transactions

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

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The following table shows transactions with our affiliates which are reflected in our consolidated statements of operations ~~for the three and six months ended~~ ~~June 30, 2017~~ ~~and~~ ~~2016~~(in millions):


	Three Months Ended					Six Months Ended						Three Months Ended					Six Months Ended
	June 30,					June 30,						June 30,					June 30,
	2017		2016			2017			2016			2018			2017		2018			2017
Gathering and processing revenues at CEQP and CMLP	$	0.4	$	0.7		$	0.9		$	1.4
Gathering and processing costs of product/services sold at CEQP and CMLP⁽¹⁾	$	4.0	$	4.4		$	8.1		$	8.7
Revenues at CEQP and CMLP												$	0.3		$	0.4	$	0.6		$	0.9
Costs of product/services sold at CEQP and CMLP⁽¹⁾												$	32.2		$	4.0	$	45.3		$	8.1
Operations and maintenance expenses at CEQP and CMLP⁽²⁾	$	5.0	$	1.0		$	9.8		$	1.7		$	7.3		$	5.0	$	14.0		$	9.8
General and administrative expenses charged by CEQP to CMLP, net⁽³⁾	$	4.9	$	3.2		$	10.4		$	6.9		$	4.9		$	4.9	$	10.5		$	10.4
General and administrative expenses at CEQP charged to (from) Crestwood Holdings, net⁽⁴⁾	$	0.6	$	(0.2	)	$	(0.2	)	$	(0.1	)	$	(4.4	)	$	0.6	$	(4.8	)	$	(0.2	)

(1)

~~Represents~~Includes $15.2 million and $28.3 million during the three and six months ended June 30, 2018 related to purchases of NGLs from a subsidiary of Crestwood Permian and $17.0 million during both periods in 2018 related to an agency marketing agreement with Ascent Resources - Utica, LLC (Ascent). Includes $4.0 million and $8.1 million representing natural gas purchases from ~~Sabine.~~Sabine for the three and six months ended June 30, 2017. Ascent and Sabine are affiliates of Crestwood Holdings.

(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.~~agreements, and these charges are reflected as a reduction of operations and maintenance expenses in our consolidated statements of income. During the three and six months ended June 30, 2018, we charged $2.1 million and $4.2 million to Stagecoach Gas, $0.9 million and $2.0 million to Tres Palacios, $4.1 million and $7.5 million to Crestwood Permian and $0.2 million and $0.3 million to Jackalope. 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 ~~$5.6~~$5.7 million and ~~$11.9~~$12.1 million of net unit-based compensation charges allocated from CEQP to CMLP for the three and six months ended June 30, ~~2017~~2018 and ~~$3.9~~$5.6 million and ~~$8.4~~$11.9 million for the three and six months ended June 30, ~~2016.~~2017. In addition, ~~CMLP shares common management,~~includes $0.8 million and $1.6 million of CMLP’s general and administrative ~~and overhead~~ costs ~~with CEQP. During~~allocated to CEQP during the three and six months ended June 30, ~~2017, CMLP allocated $0.7 million and $1.5 million of general and administrative costs to CEQP~~2018 and $0.7 million and $1.5 million ~~for~~during the three and six months ended June 30, ~~2016.~~2017.


(4)	Includes ~~less than $0.1~~$4.6 million and ~~$0.8~~$5.4 million unit-based compensation charges allocated from Crestwood Holdings to CEQP and CMLP during the three and six months ended June 30, ~~2017~~2018 and ~~$0.9~~less than $0.1 million and $0.8 million during ~~both~~ the three and six months ended June 30, ~~2016.~~2017.

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


	June 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017
Accounts receivable at CEQP and CMLP	$	7.6	$	5.6	$	3.4	$	7.1
Accounts payable at CEQP	$	4.8	$	2.5	$	18.9	$	7.4
Accounts payable at CMLP	$	2.3	$	—	$	16.4	$	5.0

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Note 1213 – 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. We assess the performance of our operating segments based on EBITDA, which is defined as income before income taxes, plus debt-related costs (interest and debt expense, net and ~~gain (loss)~~loss on modification/extinguishment of debt) and depreciation, amortization and accretion expense.

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


	Three Months Ended					Six Months Ended						Three Months Ended					Six Months Ended
	June 30,					June 30,						June 30,					June 30,
	2017		2016			2017			2016			2018			2017		2018		2017
Net income (loss)	$	0.3	$	(37.1	)	$	(19.1	)	$	(130.8	)	$	(21.5	)	$	0.3	$	12.6	$	(19.1	)
Add:
Interest and debt expense, net	24.1		34.3			50.6			70.4			24.3			24.1		48.7		50.6
(Gain) loss on modification/extinguishment of debt	0.4		(10.0		)	37.7			(10.0		)
Benefit for income taxes	—		—			(0.1		)	—
Loss on modification/extinguishment of debt												—			0.4		—		37.7
Provision (benefit) for income taxes												0.2			—		0.2		(0.1		)
Depreciation, amortization and accretion	48.7		64.4			97.1			126.7			44.5			48.7		89.6		97.1
EBITDA	$	73.5	$	51.6		$	166.2		$	56.3		$	47.5		$	73.5	$	151.1	$	166.2

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



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018		2017
Net income (loss)	$	(23.5	)	$	(1.9	)	$	8.9	$	(23.3	)
Add:
Interest and debt expense, net	24.3			24.1			48.7		50.6
Loss on modification/extinguishment of debt	—			0.4			—		37.7
Provision (benefit) for income taxes	0.1			—			0.1		(0.1		)
Depreciation, amortization and accretion	47.4			51.4			95.2		102.6
EBITDA	$	48.3		$	74.0		$	152.9	$	167.5

The following tables summarize ~~CEQP's~~CEQP’s and CMLP’s reportable segment data for the three and six months ended June 30, ~~2017~~2018 and ~~2016~~2017 (in millions). Intersegment revenues included in the following tables are accounted for as arms-length transactions that apply our revenue recognition policies as described in ~~our 2016 Annual Report on Form 10-K.~~Note 2. Included in earnings from unconsolidated affiliates, net below was approximately ~~$8.2~~$9.9 million and ~~$4.4~~$8.2 million of depreciation and amortization expense, ~~and~~ gains (losses) on long-lived assets, net, and interest expense related to our equity investments for the three months ended June 30, 2018 and 2017 and ~~2016~~$19.6 million and $15.7 ~~million and $7.0~~ million for the six months ended June 30, ~~2017~~2018 and ~~2016.~~2017.

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

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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 —
—
—
49.1
49.1
Earnings from unconsolidated affiliates, net 3.4
14.3
—
—
17.7
Other income, net —
—
—
0.2
0.2
EBITDA $ 134.6
$ 33.8
$ 46.7
$ (48.9 ) $ 166.2
Goodwill $ 45.9
$ —
$ 153.1
$ —
$ 199.0
Total assets $ 2,403.3
$ 1,064.0
$ 938.1
$ 27.2
$ 4,432.6

Six Months Ended June 30, 2016
Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues $ 508.4
$ 113.2
$ 516.3
$ —
$ 1,137.9
Intersegment revenues 51.1
1.5
(52.6 ) —
—
Costs of product/services sold 406.1
4.8
402.5
—
813.4
Operations and maintenance expense 38.7
15.7
32.4
—
86.8
General and administrative expense —
—
—
51.9
51.9
Goodwill impairment (8.6 ) (13.7 ) (87.4 ) —
(109.7 )
Loss on long-lived assets —
(32.7 ) —
—
(32.7 )
Earnings from unconsolidated affiliates, net 11.0
1.7
—
—
12.7
Other income, net —
—
—
0.2
0.2
EBITDA $ 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 Six Months Ended
June 30, June 30,
2017 2016 2017 2016
Net loss $ (1.9 ) $ (35.6 ) $ (23.3 ) $ (130.9 )
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 )
Provision (benefit) for income taxes —
0.2
(0.1 ) —
Depreciation, amortization and accretion 51.4
67.1
102.6
132.0
EBITDA $ 74.0
$ 56.0
$ 167.5
$ 61.5

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~~The following tables summarize CMLP's reportable segment data for the three and six months ended June 30, 2017 and 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 $8.2 million and $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 June 30, 2017 and 2016 and $15.7 million and $7.0 million for the six months ended 2017 and 2016.Crestwood Equity


	Three Months Ended June 30, 2017												Three Months Ended June 30, 2018
	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	$	405.1	$	8.5	$	436.7		$	—		$	850.3	$	255.5	$	5.1	$	579.9		$	—		$	840.5
Intersegment revenues	34.1		1.7		(35.8		)	—			—		45.4		2.5		(47.9		)	—			—
Costs of product/services sold	354.7		0.1		374.8			—			729.6		208.8		0.1		516.5			—			725.4
Operations and maintenance expense	18.2		1.3		14.7			—			34.2		17.8		0.8		13.3			—			31.9
General and administrative expense	—		—		—			22.1			22.1		—		—		—			23.4			23.4
Loss on long-lived assets, net													—		—		(24.4		)	—			(24.4		)
Earnings from unconsolidated affiliates, net	1.8		7.8		—			—			9.6		4.5		7.5		—			—			12.0
Other income, net													—		—		—			0.1			0.1
EBITDA	$	68.1	$	16.6	$	11.4		$	(22.1	)	$	74.0	$	78.8	$	14.2	$	(22.2	)	$	(23.3	)	$	47.5
Goodwill	$	45.9	$	—	$	153.1		$	—		$	199.0	$	45.9	$	—	$	92.7		$	—		$	138.6
Total assets	$	2,598.3	$	1,064.0	$	938.1		$	19.2		$	4,619.6	$	2,584.9	$	1,025.6	$	600.3		$	31.1		$	4,241.9


	Three Months Ended June 30, 2016														Three 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	$	269.5	$	53.8		$	278.6		$	—		$	601.9		$	405.1	$	8.5	$	436.7		$	—		$	850.3
Intersegment revenues	30.6		1.1			(31.7		)	—			—			34.1		1.7		(35.8		)	—			—
Costs of product/services sold	226.3		1.9			221.8			—			450.0			354.7		0.1		374.8			—			729.6
Operations and maintenance expense	20.9		4.9			15.6			—			41.4			18.2		1.3		14.7			—			34.2
General and administrative expense	—		—			—			28.0			28.0			—		—		—			22.7			22.7
Loss on long-lived assets	—		(32.7		)	—			—			(32.7		)
Earnings from unconsolidated affiliates, net	5.9		0.3			—			—			6.2			1.8		7.8		—			—			9.6
Other income, net															—		—		—			0.1			0.1
EBITDA	$	58.8	$	15.7		$	9.5		$	(28.0	)	$	56.0		$	68.1	$	16.6	$	11.4		$	(22.6	)	$	73.5


	Six Months Ended June 30, 2017												Six Months Ended June 30, 2018
	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	$	773.7	$	18.5	$	886.2		$	—		$	1,678.4	$	595.8	$	9.3	$	1,350.4		$	—		$	1,955.5
Intersegment revenues	64.4		3.5		(67.9		)	—			—		86.7		4.5		(91.2		)	—			—
Costs of product/services sold	671.3		0.1		741.7			—			1,413.1		496.5		0.2		1,194.5			—			1,691.2
Operations and maintenance expense	35.6		2.4		29.9			—			67.9		35.5		1.6		29.3			—			66.4
General and administrative expense	—		—		—			47.6			47.6		—		—		—			47.3			47.3
Gain (loss) on long-lived assets, net													0.1		—		(24.2		)	—			(24.1		)
Earnings from unconsolidated affiliates, net	3.4		14.3		—			—			17.7		10.2		14.2		—			—			24.4
Other income, net													—		—		—			0.2			0.2
EBITDA	$	134.6	$	33.8	$	46.7		$	(47.6	)	$	167.5	$	160.8	$	26.2	$	11.2		$	(47.1	)	$	151.1
Goodwill	$	45.9	$	—	$	153.1		$	—		$	199.0	$	45.9	$	—	$	92.7		$	—		$	138.6
Total assets	$	2,598.3	$	1,064.0	$	938.1		$	19.2		$	4,619.6	$	2,584.9	$	1,025.6	$	600.3		$	31.1		$	4,241.9

Table of Contents


	Six Months Ended June 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	$	508.4		$	113.2		$	516.3		$	—		$	1,137.9		$	773.7	$	18.5	$	886.2		$	—		$	1,678.4
Intersegment revenues	51.1			1.5			(52.6		)	—			—			64.4		3.5		(67.9		)	—			—
Costs of product/services sold	406.1			4.8			402.5			—			813.4			671.3		0.1		741.7			—			1,413.1
Operations and maintenance expense	38.7			12.0			32.4			—			83.1			35.6		2.4		29.9			—			67.9
General and administrative expense	—			—			—			50.2			50.2			—		—		—			49.1			49.1
Goodwill impairment	(8.6		)	(13.7		)	(87.4		)	—			(109.7		)
Loss on long-lived assets	—			(32.7		)	—			—			(32.7		)
Earnings from unconsolidated affiliates, net	11.0			1.7			—			—			12.7			3.4		14.3		—			—			17.7
Other income, net																—		—		—			0.2			0.2
EBITDA	$	117.1		$	53.2		$	(58.6	)	$	(50.2	)	$	61.5		$	134.6	$	33.8	$	46.7		$	(48.9	)	$	166.2

Crestwood Midstream



	Three Months Ended June 30, 2018
	Gathering and Processing		Storage and Transportation		Marketing, Supply and Logistics			Corporate			Total
Revenues	$	255.5	$	5.1	$	579.9		$	—		$	840.5
Intersegment revenues	45.4		2.5		(47.9		)	—			—
Costs of product/services sold	208.8		0.1		516.5			—			725.4
Operations and maintenance expense	17.8		0.8		13.3			—			31.9
General and administrative expense	—		—		—			22.5			22.5
Loss on long-lived assets, net	—		—		(24.4		)	—			(24.4		)
Earnings from unconsolidated affiliates, net	4.5		7.5		—			—			12.0
EBITDA	$	78.8	$	14.2	$	(22.2	)	$	(22.5	)	$	48.3
Goodwill	$	45.9	$	—	$	92.7		$	—		$	138.6
Total assets	$	2,765.6	$	1,025.6	$	600.3		$	24.0		$	4,415.5



	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

Table of Contents



	Six Months Ended June 30, 2018
	Gathering and Processing		Storage and Transportation		Marketing, Supply and Logistics			Corporate			Total
Revenues	$	595.8	$	9.3	$	1,350.4		$	—		$	1,955.5
Intersegment revenues	86.7		4.5		(91.2		)	—			—
Costs of product/services sold	496.5		0.2		1,194.5			—			1,691.2
Operations and maintenance expense	35.5		1.6		29.3			—			66.4
General and administrative expense	—		—		—			45.3			45.3
Gain (loss) on long-lived assets, net	0.1		—		(24.2		)	—			(24.1		)
Earnings from unconsolidated affiliates, net	10.2		14.2		—			—			24.4
EBITDA	$	160.8	$	26.2	$	11.2		$	(45.3	)	$	152.9
Goodwill	$	45.9	$	—	$	92.7		$	—		$	138.6
Total assets	$	2,765.6	$	1,025.6	$	600.3		$	24.0		$	4,415.5



	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

Table of Contents

In conjunction with the adoption of the provisions of Topic 606, we began reporting our revenues from contracts with customers disaggregated by type of product/service sold and by commodity type for each of our segments for the three and six months ended June 30, 2018, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors. See details in the table below for disaggregation of our revenues (in millions).



	Three Months Ended June 30, 2018
	Gathering and Processing		Storage and Transportation		Marketing, Supply and Logistics		Intersegment Elimination			Total
Revenues:
Topic 606 revenues
Gathering
Natural gas	$	33.9	$	—	$	—	$	—		$	33.9
Crude oil	9.4		—		—		—			9.4
Water	13.7		—		—		—			13.7
Processing
Natural gas	2.7		—		—		—			2.7
NGLs	—		—		2.4		—			2.4
Compression
Natural gas	7.9		—		—		—			7.9
Storage
Crude oil	0.4		1.2		—		(0.3		)	1.3
NGLs	—		—		2.3		—			2.3
Pipeline
Crude oil	—		1.4		—		(0.5		)	0.9
Transportation
Crude oil	0.6		—		1.7		—			2.3
NGLs	—		—		9.7		—			9.7
Water	—		—		—		—			—
Rail Loading					—
Crude oil	—		4.7		—		(1.5		)	3.2
NGLs	—		—		1.1		—			1.1
Product Sales
Natural gas	11.9		—		8.9		(2.8		)	18.0
Crude oil	197.7		—		266.0		(37.0		)	426.7
NGLs	22.7		—		254.8		(5.6		)	271.9
Other	—		0.3		—		(0.2		)	0.1
Total Topic 606 revenues	300.9		7.6		546.9		(47.9		)	807.5
Non-Topic 606 revenues⁽¹⁾	—		—		33.0		—			33.0
Total revenues	$	300.9	$	7.6	$	579.9	$	(47.9	)	$	840.5


(1)	Represents revenues related to our commodity-based derivatives. See Note 6 for additional information related to our price risk management activities.

Table of Contents



	Six Months Ended June 30, 2018
	Gathering and Processing		Storage and Transportation		Marketing, Supply and Logistics		Intersegment Elimination			Total
Revenues:
Topic 606 revenues
Gathering
Natural gas	$	69.3	$	—	$	—	$	—		$	69.3
Crude oil	18.6		—		—		—			18.6
Water	25.8		—		—		—			25.8
Processing
Natural gas	5.4		—		—		—			5.4
NGLs	—		—		4.1		—			4.1
Compression
Natural gas	15.5		—		—		—			15.5
Storage
Crude oil	0.9		1.8		—		(0.5		)	2.2
NGLs	—		—		5.5		—			5.5
Pipeline
Crude oil	—		2.6		—		(1.0		)	1.6
Transportation
Crude oil	1.2		—		2.9		—			4.1
NGLs	—		—		19.4		—			19.4
Water	—		—		0.2		—			0.2
Rail Loading
Crude oil	—		8.7		—		(2.5		)	6.2
NGLs	—		—		2.2		—			2.2
Product Sales
Natural gas	25.3		—		16.7		(6.7		)	35.3
Crude oil	477.6		—		456.6		(69.3		)	864.9
NGLs	42.9		—		712.0		(10.7		)	744.2
Other	—		0.7		—		(0.5		)	0.2
Total Topic 606 revenues	682.5		13.8		1,219.6		(91.2		)	1,824.7
Non-Topic 606 revenues⁽¹⁾	—		—		130.8		—			130.8
Total revenues	$	682.5	$	13.8	$	1,350.4	$	(91.2	)	$	1,955.5


(1)	Represents revenues related to our commodity-based derivatives. See Note 6 for additional information related to our price risk management activities.

Note 1314 – 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~~Midstream’s senior notes and its credit facility are jointly and severally guaranteed by substantially all of its subsidiaries, except for Crestwood 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~~the senior notes, is Crestwood ~~Midstream's~~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 on a stand-alone, unconsolidated basis, and Crestwood ~~Midstream's~~Midstream’s combined guarantor and combined non-guarantor subsidiaries as of June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, and for the three and six months ended June 30, ~~2017~~2018 and ~~2016.~~2017. 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 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 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 )



Crestwood Midstream Partners LP
Condensed Consolidating Balance Sheet
June 30, 2018
(in millions)
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash	$	5.7	$	—	$	—	$	—		$	5.7
Accounts receivable	—		321.3		3.0		—			324.3
Inventory	—		73.6		—		—			73.6
Other current assets	—		68.3		—		—			68.3
Total current assets	5.7		463.2		3.0		—			471.9

Property, plant and equipment, net	—		2,071.3		—		—			2,071.3
Goodwill and intangible assets, net	—		713.2		—		—			713.2
Investment in consolidated affiliates	3,670.6		—		—		(3,670.6		)	—
Investment in unconsolidated affiliates	—		—		1,156.7		—			1,156.7
Other assets	—		2.4		—		—			2.4
Total assets	$	3,676.3	$	3,250.1	$	1,159.7	$	(3,670.6	)	$	4,415.5

Liabilities and partners’ capital
Current liabilities:
Accounts payable	$	—	$	307.8	$	—	$	—		$	307.8
Other current liabilities	20.7		87.4		—		—			108.1
Total current liabilities	20.7		395.2		—		—			415.9

Long-term liabilities:
Long-term debt, less current portion	1,561.0		—		—		—			1,561.0
Other long-term liabilities	—		106.7		57.0		—			163.7
Deferred income taxes	—		0.6		—		—			0.6

Partners’ capital	2,094.6		2,747.6		923.0		(3,670.6		)	2,094.6
Interest of non-controlling partners in subsidiary	—		—		179.7		—			179.7
Total partners’ capital	2,094.6		2,747.6		1,102.7		(3,670.6		)	2,274.3
Total liabilities and partners’ capital	$	3,676.3	$	3,250.1	$	1,159.7	$	(3,670.6	)	$	4,415.5

Table of Contents

Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Six Months Ended June 30, 2017
(in millions)
Parent
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Revenues $ —
$ 1,678.4
$ —
$ —
$ 1,678.4
Costs of product/services sold —
1,413.1
—
—
1,413.1
Expenses:
Operations and maintenance —
67.9
—
—
67.9
General and administrative 34.9
12.7
—
—
47.6
Depreciation, amortization and accretion —
102.6
—
—
102.6
34.9
183.2
—
—
218.1
Operating income (loss) (34.9 ) 82.1
—
—
47.2
Earnings from unconsolidated affiliates, net —
—
17.7
—
17.7
Interest and debt expense, net (50.6 ) —
—
—
(50.6 )
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) (35.7 ) 82.2
17.7
(87.5 ) (23.3 )
Net income attributable to non-controlling partners in subsidiaries —
—
12.4
—
12.4
Net income (loss) attributable to Crestwood Midstream Partners LP $ (35.7 ) $ 82.2
$ 5.3
$ (87.5 ) $ (35.7 )



Crestwood Midstream Partners LP
Condensed Consolidating Balance Sheet
December 31, 2017
(in millions)
	Parent		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash	$	1.0	$	—	$	—	$	—		$	1.0
Accounts receivable	—		439.7		2.9		—			442.6
Inventory	—		68.4		—		—			68.4
Other current assets	—		18.1		—		—			18.1
Total current assets	1.0		526.2		2.9		—			530.1

Property, plant and equipment, net	—		2,007.5		—		—			2,007.5
Goodwill and intangible assets, net	—		743.3		—		—			743.3
Investment in consolidated affiliates	3,705.4		—		—		(3,705.4		)	—
Investment in unconsolidated affiliates	—		—		1,183.0		—			1,183.0
Other assets	—		2.4		—		—			2.4
Total assets	$	3,706.4	$	3,279.4	$	1,185.9	$	(3,705.4	)	$	4,466.3

Liabilities and partners’ capital
Current liabilities:
Accounts payable	$	—	$	346.8	$	—	$	—		$	346.8
Other current liabilities	20.5		134.0		—		—			154.5
Total current liabilities	20.5		480.8		—		—			501.3

Long-term liabilities:
Long-term debt, less current portion	1,490.5		0.8		—		—			1,491.3
Other long-term liabilities	—		45.6		57.0		—			102.6
Deferred income taxes	—		0.7		—		—			0.7

Partners’ capital	2,195.4		2,751.5		953.9		(3,705.4		)	2,195.4
Interest of non-controlling partners in subsidiary	—		—		175.0		—			175.0
Total partners’ capital	2,195.4		2,751.5		1,128.9		(3,705.4		)	2,370.4
Total liabilities and partners’ capital	$	3,706.4	$	3,279.4	$	1,185.9	$	(3,705.4	)	$	4,466.3

Table of Contents

																												Crestwood Midstream Partners LP	Condensed Consolidating Statement of Operations
Six Months Ended June 30, 2016
Three Months Ended June 30, 2018														Three Months Ended June 30, 2018
(in millions)
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations		Consolidated			Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
Revenues	$	—		$	1,137.9		$	—	$	—	$	1,137.9		$	—		$	840.5		$	—	$	—		$	840.5
Costs of product/services sold	—			813.4			—		—		813.4			—			725.4			—		—			725.4
Expenses:
Operating expenses and other:
Operations and maintenance	—			83.1			—		—		83.1			—			31.9			—		—			31.9
General and administrative	40.9			9.3			—		—		50.2			12.1			10.4			—		—			22.5
Depreciation, amortization and accretion	—			132.0			—		—		132.0			—			47.4			—		—			47.4
Loss on long-lived assets, net														—			24.4			—		—			24.4
	40.9			224.4			—		—		265.3			12.1			114.1			—		—			126.2
Other operating expense:
Loss on long-lived assets, net	—			(32.7		)	—		—		(32.7		)
Goodwill Impairment	—			(109.7		)	—		—		(109.7		)
Operating loss	(40.9		)	(42.3		)	—		—		(83.2		)
Operating income (loss)														(12.1		)	1.0			—		—			(11.1		)
Earnings from unconsolidated affiliates, net	—			—			12.7		—		12.7			—			—			12.0		—			12.0
Interest and debt expense, net	(70.4		)	—			—		—		(70.4		)	(24.3		)	—			—		—			(24.3		)
Gain on modification/extinguishment of debt	10.0			—			—		—		10.0
Equity in net income (loss) of subsidiaries	(41.5		)	—			—		41.5		—			8.9			—			—		(8.9		)	—
Income (loss) before income taxes														(27.5		)	1.0			12.0		(8.9		)	(23.4		)
Provision for income taxes														—			(0.1		)	—		—			(0.1		)
Net income (loss)	(142.8		)	(42.3		)	12.7		41.5		(130.9		)	(27.5		)	0.9			12.0		(8.9		)	(23.5		)
Net income attributable to non-controlling partners in subsidiaries	—			—			11.9		—		11.9			—			—			4.0		—			4.0
Net income (loss) attributable to Crestwood Midstream Partners LP	$	(142.8	)	$	(42.3	)	$	0.8	$	41.5	$	(142.8	)	$	(27.5	)	$	0.9		$	8.0	$	(8.9	)	$	(27.5	)

Table of Contents

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




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
Operating 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		)
Loss on modification/extinguishment of debt	(0.4		)	—		—		—			(0.4		)
Equity in net income (loss) of subsidiaries	32.9			—		—		(32.9		)	—
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 Statement of Cash Flows
Six Months Ended June 30, 2016
(in millions)
Parent
Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
Cash flows from operating activities: $ (110.9 ) $ 296.5
$ 10.4
$ —
$ 196.0

Cash flows from investing activities:
Purchases of property, plant and equipment (1.0 ) (75.2 ) —
—
(76.2 )
Investment in unconsolidated affiliates —
—
(5.5 ) —
(5.5 )
Capital distributions from unconsolidated affiliates —
—
5.5
—
5.5
Net proceeds from sale of assets

—
942.0
—
—
942.0
Capital contributions to consolidated affiliates 2.8
—
—
(2.8 ) —
Net cash provided by (used in) investing activities 1.8
866.8
—
(2.8 ) 865.8

Cash flows from financing activities:
Proceeds from the issuance of long-term debt 1,078.8
—
—
—
1,078.8
Principal payments on long-term debt (1,986.8 ) (0.7 ) —
—
(1,987.5 )
Payments on capital leases —
(0.9 ) —
—
(0.9 )
Payments for debt-related deferred costs (3.3 ) —
—
—
(3.3 )
Distributions paid (140.6 ) —
(7.6 ) —
(148.2 )
Distributions to parent —
—
(2.8 ) 2.8
—
Taxes paid for unit-based compensation vesting —
(0.6 ) —
—
(0.6 )
Change in intercompany balances 1,161.1
(1,161.1 ) —
—
—
Net cash provided by (used in) financing activities 109.2
(1,163.3 ) (10.4 ) 2.8
(1,061.7 )

Net change in cash 0.1
—
—
—
0.1
Cash at beginning of period 0.1
—
—
—
0.1
Cash at end of period $ 0.2
$ —
$ —
$ —
$ 0.2



Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Six Months Ended June 30, 2018
(in millions)
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated
Revenues	$	—		$	1,955.5		$	—	$	—		$	1,955.5
Costs of product/services sold	—			1,691.2			—		—			1,691.2
Operating expenses and other:
Operations and maintenance	—			66.4			—		—			66.4
General and administrative	27.7			17.6			—		—			45.3
Depreciation, amortization and accretion	—			95.2			—		—			95.2
Loss on long-lived assets, net	—			24.1			—		—			24.1
	27.7			203.3			—		—			231.0
Operating income (loss)	(27.7		)	61.0			—		—			33.3
Earnings from unconsolidated affiliates, net	—			—			24.4		—			24.4
Interest and debt expense, net	(48.7		)	—			—		—			(48.7		)
Equity in net income (loss) of subsidiaries	77.3			—			—		(77.3		)	—
Income (loss) before income taxes	0.9			61.0			24.4		(77.3		)	9.0
Provision for income taxes	—			(0.1		)	—		—			(0.1		)
Net income (loss)	0.9			60.9			24.4		(77.3		)	8.9
Net income attributable to non-controlling partners in subsidiaries	—			—			8.0		—			8.0
Net income (loss) attributable to Crestwood Midstream Partners LP	$	0.9		$	60.9		$	16.4	$	(77.3	)	$	0.9

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Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Six Months Ended June 30, 2017
(in millions)
	Parent			Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated
Revenues	$	—		$	1,678.4	$	—	$	—		$	1,678.4
Costs of product/services sold	—			1,413.1		—		—			1,413.1
Operating expenses:
Operations and maintenance	—			67.9		—		—			67.9
General and administrative	34.9			12.7		—		—			47.6
Depreciation, amortization and accretion	—			102.6		—		—			102.6
	34.9			183.2		—		—			218.1
Operating income (loss)	(34.9		)	82.1		—		—			47.2
Earnings from unconsolidated affiliates, net	—			—		17.7		—			17.7
Interest and debt expense, net	(50.6		)	—		—		—			(50.6		)
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)	(35.7		)	82.2		17.7		(87.5		)	(23.3		)
Net income attributable to non-controlling partners in subsidiaries	—			—		12.4		—			12.4
Net income (loss) attributable to Crestwood Midstream Partners LP	$	(35.7	)	$	82.2	$	5.3	$	(87.5	)	$	(35.7	)

Table of Contents



Crestwood Midstream Partners LP
Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2018
(in millions)
	Parent			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities	$	(72.6	)	$	212.9		$	24.1		$	—		$	164.4

Cash flows from investing activities:
Purchases of property, plant and equipment	(2.4		)	(116.3		)	—			—			(118.7		)
Investment in unconsolidated affiliates	—			—			(6.9		)	—			(6.9		)
Capital distributions from unconsolidated affiliates	—			—			23.9			—			23.9
Net proceeds from sale of assets	—			6.8			—			—			6.8
Capital distributions from consolidated affiliates	37.8			—			—			(37.8		)	—
Net cash provided by (used in) investing activities	35.4			(109.5		)	17.0			(37.8		)	(94.9		)

Cash flows from financing activities:
Proceeds from the issuance of long-term debt	847.1			—			—			—			847.1
Payments on long-term debt	(780.3		)	(0.7		)	—			—			(781.0		)
Payments on capital leases	—			(0.7		)	—			—			(0.7		)
Distributions to partners	(120.0		)	—			(3.3		)	—			(123.3		)
Distributions to parent	—			—			(37.8		)	37.8			—
Taxes paid for unit-based compensation vesting	—			(6.9		)	—			—			(6.9		)
Change in intercompany balances	95.1			(95.1		)	—			—			—
Net cash provided by (used in) financing activities	41.9			(103.4		)	(41.1		)	37.8			(64.8		)

Net change in cash	4.7			—			—			—			4.7
Cash at beginning of period	1.0			—			—			—			1.0
Cash at end of period	$	5.7		$	—		$	—		$	—		$	5.7

Table of Contents



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		)
Capital distributions from unconsolidated affiliates	—			—			21.1			—			21.1
Net proceeds from sale of assets	—			1.0			—			—			1.0
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 to partners	(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

4144

Table of Contents


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

Our ~~Management's~~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~~Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~2016~~2017 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; (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 acquisitions and success of our ~~existing businesses and acquisitions;~~joint ventures’ operations;

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;~~financing, including our ability to raise capital through alternatives like joint ventures; and

the ability to sell or monetize assets, ~~in the current market,~~ to reduce indebtedness, to repurchase our equity securities, to make strategic investments, 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 ~~2016~~2017 Annual Report on Form 10-K.

Outlook and Trends

Our business objective is to create long-term value for our 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, and effectively controlling our operating and administrative costs. Our business strategy depends, in part, on our ability to provide increased services to our customers at competitive fees, including opportunities to expand our services resulting from expansions, organic growth projects and acquisitions that can be financed appropriately.

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Through the challenging market environment since 2014, we have ~~positioned~~taken a number of strategic steps to better position the Company as a stronger, better capitalized company that can over time accretively grow cash flows and sustainably resume growing our distributions. Those strategic steps included (i) simplifying our corporate structure to eliminate our incentive distribution rights (IDRs) and create better alignment of interests with our unitholders; (ii) divesting assets to reduce approximately $1 billion of long-term debt to ensure long-term balance sheet strength; (iii) realigning our operating structure to significantly reduce operating and administrative expenses; (iv) forming strategic joint ventures to enhance our competitive position around certain operating assets; and (v) focusing our growth capital expenditures on our highest return organic projects around our core growth assets in the Bakken Shale, Delaware Permian and Powder River Basin. We will remain focused on efficiently allocating capital expenditures by investing in accretive, organic growth projects, maintaining low-cost operations (through increased operating efficiencies and cost discipline) and maintaining our balance sheet strength through continued financial discipline. We expect to focus on expansion and greenfield opportunities in the Bakken Shale, Delaware Permian and Powder River Basin in the near term, while closely monitoring longer-term expansion opportunities in the northeast Marcellus. As a result, the Company is well positioned to execute its business plan and capitalize on the improving market conditions around many of our core assets.

While market conditions remain challenging around some of our assets, the Company continues to be positioned to generate consistent results in a low commodity price environment without sacrificing revenue ~~upside.~~upside as market conditions improve. For example, many of our more mature 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 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 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 our midstream investments are based on ~~fixed fee, take-or-pay~~fixed-fee or minimum volume commitment agreements that ensure a minimum level of cash flow regardless of actual commodity prices or volumetric throughput. Over time, we expect cash flows from our more mature, non-core, assets to stabilize and potentially increase with the improving commodity price environment, while the growth from our core assets in the Bakken Shale, Delaware Permian, Powder River Basin and northeast Marcellus drive significant growth to the Company.

~~During 2017~~Segment Highlights

Below is a discussion of events that highlight our core business and ~~beyond, we will continue to execute on~~financing activities. Through continued execution of our plan, ~~to better~~we have materially improved the strategic and financial position of the Company and expect to ~~emerge from this challenging~~capitalize on increasing opportunities in an improving but competitive market environment, aswhich will position us to achieve our chief business objective to create long-term value for our unitholders.

Gathering and Processing

Bakken. In the Bakken, we are expanding and upgrading our Arrow system water handling facilities and increasing natural gas capacity on the system, which should allow for substantial growth in volumetric throughput across all of our crude oil, produced water and natural gas gathering systems.

We are also constructing a ~~stronger, better capitalized company~~120 MMcf/d cryogenic plant that can sustainably resume growing its distributions. We will remain focused on efficiently allocating capital expenditures, eliminating costs (through increased operating efficiencies and cost discipline) and strengthening our balance sheet. Based on our operating performance during the first six months of 2017, we anticipate ~~that~~will be placed in-service in the ~~Company~~third quarter of 2019 to fulfill 100% of the processing requirements for producers on the Arrow system upon expiration of third-party processing contracts in the third quarter 2019. Upon completion of the expansion, we expect to have 150 MMcf/d of gas processing capacity in the Bakken. We believe the expansion of our gas processing capacity on the Arrow system will, ~~generate Adjusted EBITDA~~among other things, spur greater development activity around the Arrow system, allow us to provide greater flow assurance to our producer customers and reduce flaring of ~~$380 million to $400 million in 2017. We anticipate our G&P segment will generate $285 million to $295 million of EBITDA, our storage~~natural gas, and ~~transportation segment to generate $85 million to $90 million of EBITDA and our marketing, supply and logistics segment will generate $75 million to $80 million of EBITDA in 2017.~~ reduce the downstream constraints currently experienced by producers on the Fort Berthold Indian Reservation.

We expect to ~~focus~~invest approximately $400 million on these water, gas and plant expansions and upgrades in 2018 and 2019.

Delaware Permian. In the Delaware Permian, we have identified gathering and processing and transportation opportunities in and around our existing assets, including our joint ventures. In July 2018, our Crestwood Permian joint venture completed construction and began processing volumes at the Orla plant, a 200 MMcf/d natural gas processing facility in Orla, Texas. Concurrently with the completion of the Orla plant, Crestwood Permian brought into service the Orla Express Pipeline, a 33 mile, 20-inch high pressure line connecting the existing Willow Lake system with the Orla plant. We are also evaluating expansion opportunities to provide midstream services for crude oil and ~~greenfield opportunities~~produced water, including crude gathering, crude oil and condensate storage and terminalling, condensate stabilization, truck loading/unloading options and connections to third party pipelines and produced water gathering, disposal and recycling.

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Crestwood Permian Basin has a long-term agreement with SWEPI to construct, own and operate a natural gas gathering system (the Nautilus system) in SWEPI’s operated position in the Delaware Permian. SWEPI has dedicated to Crestwood Permian Basin 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 will be constructed to ultimately 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, producing gas gathering capacity of approximately 250 MMcf/d. In addition, the ~~Bakken shale as~~Orla processing plant described above, will be further expanded and integrated to connect the Nautilus gas gathering system to the Orla plant, which Crestwood Permian expects to be fully in-service during the third quarter of 2018.

In July 2018, a subsidiary of Crestwood Permian Basin Holdings LLC, entered into an Asset Purchase, Ownership and Operation Agreement with Epic Y-Grade Pipeline, LP (EPIC) to acquire an undivided interest in 80,000 Bbls/d of capacity in a segment of their pipeline from Orla, Texas to Benedum, Texas, where the pipeline interconnects with Chevron Phillips Chemical Company, LP’s (Chevron Phillips) pipeline. Contemporaneous with this transaction, the subsidiary of Crestwood Permian Basin Holdings LLC also entered into a purchase and sale agreement with Chevron Phillips to sell a dedicated volume of barrels to be delivered off the EPIC pipeline to Chevron Phillips’ pipeline. Our ownership in the EPIC pipeline provides a competitive NGL takeaway solution to continue growing our G&P footprint in the Delaware Basin. Additionally, going forward, we are positioned to securely and economically move Orla NGL products into Gulf Coast markets which provides our customers optionality and flow assurance that creates a unique competitive advantage for us.

Powder River Basin. In the Powder River Basin, our Jackalope joint venture with Williams Partners LP (Williams) continues to benefit from increased drilling activity and better than anticipated well results. We and Williams are expanding the Jackalope gathering system and associated Bucking Horse processing plant to increase processing capacity to 345 MMcf/d by the end of 2019 to meet growing customer demand in the Powder River Basin. As part of the expansion, the current capacity of the Bucking Horse processing plant will increase from 120 MMcf/d to 145 MMcf/d by the end of the fourth quarter of 2018. The expansion also includes plans to add a second plant on the current Bucking Horse footprint by the end of 2019 which will add an additional 200 MMcf/d to the Jackalope gathering system.

Marketing, Supply and Logistics

West Coast. In June 2018, we entered into an agreement with a third-party to sell our West Coast facilities included in our Marketing, Supply and Logistics segment, which are further described in ~~"Segment Highlights" below.~~our 2017 Annual Report on Form 10-K. The sale is contingent upon customary approvals and satisfaction of certain other closing conditions, and we expect to close the sale during the third quarter of 2018. We expect to use the proceeds from the sale of our West Coast facilities to reduce borrowings under the Credit Facility and to fund our on-going organic growth projects in the Bakken, Delaware Permian and Powder River Basin discussed above.

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~~However, under the ~~2016 presidential election,~~current Presidential Administration, we ~~expected the trend of greater regulatory oversight to continue for the foreseeable future, However, the election results and anticipated~~anticipate changes in policy that 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~~In December 2017, the Tax Cuts and ~~financing activities.~~

~~Gathering and Processing~~

~~Bakken.~~ InJobs Act (the Tax Act) was passed by 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~~U.S. Congress, which modified 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 costaspects of the ~~expansion project is expected to cost approximately $170 million with an in-service date~~U.S. income tax code beginning in ~~the second half of~~ 2018. We are ~~also developing a crude oil~~currently evaluating how many of these modifications will impact master limited partnerships such as CEQP and ~~condensate storage terminal near Orla, Texas that would offer condensate stabilization, truck loading/unloading options and connections to third party pipelines.~~its unitholders. In ~~addition,~~particular, we are ~~developing a produced water gathering, disposal~~evaluating the impact that the Tax Act will have on our unitholders’ ability to deduct business interest from their taxable income, since the Tax Act requires that the business interest deduction be limited to the sum of business interest income and ~~recycling facility~~30% of adjusted taxable income. For the purposes of this limitation, adjusted taxable income will be computed without regard to any business interest expense or business interest income, and in the ~~Delaware Permian. We continue to believe that we are positioned well to benefit from~~case of taxable years beginning before January 1, 2022, any deduction allowable for depreciation, amortization, or depletion.

Effective December 2017, the ~~continued build-out of this world-class resource.~~

~~On June 21, 2017, we contributed to Crestwood Permian 100% of the~~equity 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 expansionTax Act changed several provisions of the ~~Delaware Basin assets, which includes the Orla processing plant and associated pipelines.~~

~~Crestwood Permian has~~federal tax code, including a ~~long-term agreement with SWEPI to construct, own and operate a natural gas gathering system in SWEPI's operated position~~reduction in the ~~Delaware Permian. SWEPI has dedicated~~maximum corporate tax rate. On March 15, 2018, the Federal Energy Regulatory Commission (FERC) issued a Revised Policy Statement on Treatment of Income Taxes (Revised Policy Statement) stating that it will no longer permit master limited partnerships to ~~Crestwood Permian approximately 100,000 acres~~recover an income tax allowance in their cost-of-service rates. Also on March 15, 2018, the FERC issued a Notice of Proposed Rulemaking (NOPR) proposing rules for implementation of the Revised Policy Statement and ~~gathering rights~~the corporate income tax rate reduction with respect to pipeline rates. On July 18, 2018, the FERC issued an order denying requests for ~~SWEPI's gas production across~~rehearing and clarification of its Revised Policy Statement because it is a ~~large acreage position~~non-binding policy and parties will have the opportunity to address the policy as applied 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~~future cases. In the rehearing order, the FERC clarified that a pipeline organized

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~~high pressure trunklines~~as a master limited partnership will not be precluded in a future proceeding from providing support that it is entitled to an income tax allowance and ~~centralized compression facilities which~~demonstrating that its recovery of an income tax allowance does not result in a double-recovery of investors’ income tax costs. Also on July 18, 2018, the FERC issued a Final Rule adopting procedures that are ~~expandable over time~~generally the same 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 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 transactionproposed in the ~~fourth quarter~~NOPR with a few clarifications and modifications. With limited exceptions, the Final Rule requires all FERC-regulated natural gas pipelines that have cost-based rates for service to make a one-time Form No. 501-G filing providing certain financial information and to select one of ~~2017.~~

~~Through June 30, 2017, First Reserve has contributed $37.5 million~~four options: (i) file a limited NGA Section 4 filing reducing its rates only as required related to the ~~joint venture~~Tax Cuts and 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 quarterJobs Act of 2017 and ~~will continue throughout~~ the ~~remainder~~Revised Policy Statement; (ii) commit to filing a general NGA Section 4 rate case in the near future; (iii) file a statement explaining why an adjustment to rates is not needed; or (iv) take no other action.

On March 15, 2018, the FERC also issued a Notice of Inquiry (NOI) requesting comments about whether, and if so how, the FERC should address changes relating to accumulated deferred income taxes and bonus depreciation. Comments on the NOI were filed by May 21, 2018, and any actions the FERC may take following receipt of these responses to the NOI are unknown at this time, but could impact the rates midstream companies are permitted to charge its customers for transportation services in the future.

In addition, the FERC issued a NOI on April 19, 2018 (Certificate Policy Statement NOI), thereby initiating a review of its policies on certification of natural gas pipelines, including an examination of its long-standing Policy Statement on Certification of New Interstate Natural Gas Pipeline Facilities, issued in 1999, that is used to determine whether to grant certificates for new pipeline projects. Comments on the Certificate Policy Statement NOI were due on July 25, 2018, and we are unable to predict what, if any, changes may be proposed as a result of the ~~year,~~NOI that will affect our natural gas pipeline business or when such proposals, if any, might become effective. We do not expect that any change in this policy would affect us in a materially different manner than any other similarly sized natural gas pipeline company operating in the United States.

Although we do not have any consolidated operations that have FERC-regulated pipelines, two of our equity investments (Stagecoach Gas Services LLC and Tres Palacios Holdings LLC) have FERC-regulated operations. These equity investments receive revenues from contracts that primarily have market-based rates or negotiated rates that are not tied to cost-of-service rates, and we ~~believe these changes will result in improved profitability for this business. Additionally, management plans~~currently do not expect rates subject to ~~realign our trucking operations service capability~~negotiated rates or market-based rates to be ~~more coordinated with~~affected by the Revised Policy Statement, the Final Rule or any final regulations that may result from the NOI. As a result, we currently do not believe that the Revised Policy Statement, the Final Rule or NOI will have a material impact on our ~~NGL, crude and water~~results of operations, ~~and less reliant~~but we continue to monitor developments at the FERC related to these matters to assess whether the final regulations could have an impact on ~~third party transportation services. This commercial realignment should allow us to optimize~~ the ~~use~~future results 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 unitholders.equity investments.

Critical Accounting Estimates

Our critical accounting estimates are consistent with those described in our ~~2016~~2017 Annual Report on Form 10-K.

How We Evaluate Our Operations

We evaluate our overall business performance based primarily on EBITDA and Adjusted EBITDA. We do not utilize depreciation, ~~depletion~~amortization and ~~amortization~~accretion 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~~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 (interest and debt expense, net and ~~gain (loss)~~loss on modification/extinguishment of debt) and depreciation, amortization and accretion expense. 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, gains or losses on long-lived assets, ~~impairments of goodwill,~~ third party costs incurred related to potential and completed acquisitions, certain environmental remediation costs, the change in fair value of commodity inventory-related derivative contracts, costs associated with ~~our 2017~~the 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~~to which these derivatives ~~relate to.~~relate. Changes in the fair value of other derivative contracts is not considered in determining Adjusted EBITDA

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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 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.

Results of Operations

The following tables summarize our results of operations for the three and six months ended June 30, ~~2017~~2018 and ~~2016~~2017 (in millions):


	Crestwood Equity												Crestwood Midstream												Crestwood Equity												Crestwood Midstream
	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,						June 30,						June 30,						June 30,						June 30,
	2017			2016			2017			2016			2017			2016			2017			2016			2018			2017			2018			2017			2018			2017			2018			2017
Revenues	$	850.3		$	601.9		$	1,678.4		$	1,137.9		$	850.3		$	601.9		$	1,678.4		$	1,137.9		$	840.5		$	850.3		$	1,955.5		$	1,678.4		$	840.5		$	850.3		$	1,955.5		$	1,678.4
Costs of product/services sold	729.6			450.0			1,413.1			813.4			729.6			450.0			1,413.1			813.4			725.4			729.6			1,691.2			1,413.1			725.4			729.6			1,691.2			1,413.1
Operations and maintenance expense	34.2			45.0			67.9			86.8			34.2			41.4			67.9			83.1			31.9			34.2			66.4			67.9			31.9			34.2			66.4			67.9
General and administrative expense	22.7			28.9			49.1			51.9			22.1			28.0			47.6			50.2			23.4			22.7			47.3			49.1			22.5			22.1			45.3			47.6
Depreciation, amortization and accretion	48.7			64.4			97.1			126.7			51.4			67.1			102.6			132.0			44.5			48.7			89.6			97.1			47.4			51.4			95.2			102.6
Loss on long-lived assets, net	—			(32.7		)	—			(32.7		)	—			(32.7		)	—			(32.7		)	(24.4		)	—			(24.1		)	—			(24.4		)	—			(24.1		)	—
Goodwill impairment	—			—			—			(109.7		)	—			—			—			(109.7		)
Operating income (loss)	15.1			(19.1		)	51.2			(83.3		)	13.0			(17.3		)	47.2			(83.2		)	(9.1		)	15.1			36.9			51.2			(11.1		)	13.0			33.3			47.2
Earnings from unconsolidated affiliates, net	9.6			6.2			17.7			12.7			9.6			6.2			17.7			12.7			12.0			9.6			24.4			17.7			12.0			9.6			24.4			17.7
Interest and debt expense, net	(24.1		)	(34.3		)	(50.6		)	(70.4		)	(24.1		)	(34.3		)	(50.6		)	(70.4		)	(24.3		)	(24.1		)	(48.7		)	(50.6		)	(24.3		)	(24.1		)	(48.7		)	(50.6		)
Gain (loss) on modification/extinguishment of debt	(0.4		)	10.0			(37.7		)	10.0			(0.4		)	10.0			(37.7		)	10.0
Loss on modification/extinguishment of debt																									—			(0.4		)	—			(37.7		)	—			(0.4		)	—			(37.7		)
Other income, net	0.1			0.1			0.2			0.2			—			—			—			—			0.1			0.1			0.2			0.2			—			—			—			—
(Provision) benefit for income taxes	—			—			0.1			—			—			(0.2		)	0.1			—			(0.2		)	—			(0.2		)	0.1			(0.1		)	—			(0.1		)	0.1
Net income (loss)	0.3			(37.1		)	(19.1		)	(130.8		)	(1.9		)	(35.6		)	(23.3		)	(130.9		)	(21.5		)	0.3			12.6			(19.1		)	(23.5		)	(1.9		)	8.9			(23.3		)
Add:
Interest and debt expense, net	24.1			34.3			50.6			70.4			24.1			34.3			50.6			70.4			24.3			24.1			48.7			50.6			24.3			24.1			48.7			50.6
(Gain) loss on modification/extinguishment of debt	0.4			(10.0		)	37.7			(10.0		)	0.4			(10.0		)	37.7			(10.0		)
Loss on modification/extinguishment of debt																									—			0.4			—			37.7			—			0.4			—			37.7
Provision (benefit) for income taxes	—			—			(0.1		)	—			—			0.2			(0.1		)	—			0.2			—			0.2			(0.1		)	0.1			—			0.1			(0.1		)
Depreciation, amortization and accretion	48.7			64.4			97.1			126.7			51.4			67.1			102.6			132.0			44.5			48.7			89.6			97.1			47.4			51.4			95.2			102.6
EBITDA	73.5			51.6			166.2			56.3			74.0			56.0			167.5			61.5			47.5			73.5			151.1			166.2			48.3			74.0			152.9			167.5
Unit-based compensation charges	5.4			4.8			12.7			9.3			5.4			4.8			12.7			9.3			10.3			5.4			17.5			12.7			10.3			5.4			17.5			12.7
Loss on long-lived assets, net	—			32.7			—			32.7			—			32.7			—			32.7			24.4			—			24.1			—			24.4			—			24.1			—
Goodwill impairment	—			—			—			109.7			—			—			—			109.7
Earnings from unconsolidated affiliates, net	(9.6		)	(6.2		)	(17.7		)	(12.7		)	(9.6		)	(6.2		)	(17.7		)	(12.7		)	(12.0		)	(9.6		)	(24.4		)	(17.7		)	(12.0		)	(9.6		)	(24.4		)	(17.7		)
Adjusted EBITDA from unconsolidated affiliates, net	17.8			10.6			33.4			19.7			17.8			10.6			33.4			19.7			21.9			17.8			44.0			33.4			21.9			17.8			44.0			33.4
Change in fair value of commodity inventory-related derivative contracts	3.7			3.5			(14.9		)	0.8			3.7			3.5			(14.9		)	0.8			10.1			3.7			(10.1		)	(14.9		)	10.1			3.7			(10.1		)	(14.9		)
Significant transaction and environmental related costs and other items	6.5			9.5			8.5			10.7			6.5			9.5			8.5			10.7			0.7			6.5			2.4			8.5			0.7			6.5			2.4			8.5
Adjusted EBITDA	$	97.3		$	106.5		$	188.2		$	226.5		$	97.8		$	110.9		$	189.5		$	231.7		$	102.9		$	97.3		$	204.6		$	188.2		$	103.7		$	97.8		$	206.4		$	189.5

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Crestwood Equity Crestwood Midstream
Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2017 2016 2017 2016 2017 2016 2017 2016
Net cash provided by operating activities $ 74.0
$ 58.7
$ 132.9
$ 193.0
$ 76.1
$ 60.3
$ 136.1
$ 196.0
Net changes in operating assets and liabilities (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 ) (1.7 ) (3.5 ) (3.4 ) (1.7 ) (1.7 ) (3.5 ) (3.4 )
Interest and debt expense, net 24.1
34.3
50.6
70.4
24.1
34.3
50.6
70.4
Unit-based compensation charges (5.4 ) (4.8 ) (12.7 ) (9.3 ) (5.4 ) (4.8 ) (12.7 ) (9.3 )
Loss on long-lived assets, net —
(32.7 ) —
(32.7 ) —
(32.7 ) —
(32.7 )
Goodwill impairment —
—
—
(109.7 ) —
—
—
(109.7 )
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received (0.8 ) —
(0.5 ) 0.8
(0.8 ) —
(0.5 ) 0.8
Deferred income taxes 0.1
0.5
0.7
0.6
—
—
—
(0.2 )
Provision (benefit) for income taxes —
—
(0.1 ) —
—
0.2
(0.1 ) —
Other non-cash (income) expense —
—
0.4
(0.1 ) —
—
0.4
(0.1 )
EBITDA 73.5
51.6
166.2
56.3
74.0
56.0
167.5
61.5
Unit-based compensation charges 5.4
4.8
12.7
9.3
5.4
4.8
12.7
9.3
Loss on long-lived assets, net —
32.7
—
32.7
—
32.7
—
32.7
Goodwill impairment —
—
—
109.7
—
—
—
109.7
Earnings from unconsolidated affiliates, net (9.6 ) (6.2 ) (17.7 ) (12.7 ) (9.6 ) (6.2 ) (17.7 ) (12.7 )
Adjusted EBITDA from unconsolidated affiliates, net 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 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 6.5
9.5
8.5
10.7
6.5
9.5
8.5
10.7
Adjusted EBITDA $ 97.3
$ 106.5
$ 188.2
$ 226.5
$ 97.8
$ 110.9
$ 189.5
$ 231.7

~~Table of Contents~~



	Crestwood Equity												Crestwood Midstream
	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2018			2017			2018			2017			2018			2017			2018			2017
Net cash provided by operating activities	$	11.3		$	74.0		$	160.0		$	132.9		$	13.0		$	76.1		$	164.4		$	136.1
Net changes in operating assets and liabilities	48.7			(16.8		)	(12.8		)	(1.6		)	47.9			(18.3		)	(15.2		)	(2.8		)
Amortization of debt-related deferred costs	(1.8		)	(1.7		)	(3.6		)	(3.5		)	(1.8		)	(1.7		)	(3.6		)	(3.5		)
Interest and debt expense, net	24.3			24.1			48.7			50.6			24.3			24.1			48.7			50.6
Unit-based compensation charges	(10.3		)	(5.4		)	(17.5		)	(12.7		)	(10.3		)	(5.4		)	(17.5		)	(12.7		)
Loss on long-lived assets, net	(24.4		)	—			(24.1		)	—			(24.4		)	—			(24.1		)	—
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received	(0.4		)	(0.8		)	0.2			(0.5		)	(0.4		)	(0.8		)	0.2			(0.5		)
Deferred income taxes	—			0.1			0.2			0.7			—			—			0.1			—
Provision (benefit) for income taxes	0.2			—			0.2			(0.1		)	0.1			—			0.1			(0.1		)
Other non-cash (income) expense	(0.1		)	—			(0.2		)	0.4			(0.1		)	—			(0.2		)	0.4
EBITDA	47.5			73.5			151.1			166.2			48.3			74.0			152.9			167.5
Unit-based compensation charges	10.3			5.4			17.5			12.7			10.3			5.4			17.5			12.7
Loss on long-lived assets, net	24.4			—			24.1			—			24.4			—			24.1			—
Earnings from unconsolidated affiliates, net	(12.0		)	(9.6		)	(24.4		)	(17.7		)	(12.0		)	(9.6		)	(24.4		)	(17.7		)
Adjusted EBITDA from unconsolidated affiliates, net	21.9			17.8			44.0			33.4			21.9			17.8			44.0			33.4
Change in fair value of commodity inventory-related derivative contracts	10.1			3.7			(10.1		)	(14.9		)	10.1			3.7			(10.1		)	(14.9		)
Significant transaction and environmental related costs and other items	0.7			6.5			2.4			8.5			0.7			6.5			2.4			8.5
Adjusted EBITDA	$	102.9		$	97.3		$	204.6		$	188.2		$	103.7		$	97.8		$	206.4		$	189.5

Segment Results

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

~~Crestwood Equity~~

Three Months Ended Three Months Ended
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
Revenues $ 405.1
$ 8.5
$ 436.7
$ 269.5
$ 53.8
$ 278.6
Intersegment revenues 34.1
1.7
(35.8 ) 30.6
1.1
(31.7 )
Costs of product/services sold 354.7
0.1
374.8
226.3
1.9
221.8
Operations and maintenance expense 18.2
1.3
14.7
20.9
8.5
15.6
Loss on long-lived assets —
—
—
—
(32.7 ) —
Earnings from unconsolidated affiliates, net 1.8
7.8
—
5.9
0.3
—
EBITDA $ 68.1
$ 16.6
$ 11.4
$ 58.8
$ 12.1
$ 9.5


	Six Months Ended							Six Months Ended									Three Months Ended							Three Months Ended
	June 30, 2017							June 30, 2016									June 30, 2018							June 30, 2017
	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	$	773.7	$	18.5	$	886.2		$	508.4		$	113.2		$	516.3		$	255.5	$	5.1	$	579.9		$	405.1	$	8.5	$	436.7
Intersegment revenues	64.4		3.5		(67.9		)	51.1			1.5			(52.6		)	45.4		2.5		(47.9		)	34.1		1.7		(35.8		)
Costs of product/services sold	671.3		0.1		741.7			406.1			4.8			402.5			208.8		0.1		516.5			354.7		0.1		374.8
Operations and maintenance expense	35.6		2.4		29.9			38.7			15.7			32.4
Goodwill impairment	—		—		—			(8.6		)	(13.7		)	(87.4		)
Loss on long-lived assets	—		—		—			—			(32.7		)	—
Operations and maintenance expenses																	17.8		0.8		13.3			18.2		1.3		14.7
Loss on long-lived assets, net																	—		—		(24.4		)	—		—		—
Earnings from unconsolidated affiliates, net	3.4		14.3		—			11.0			1.7			—			4.5		7.5		—			1.8		7.8		—
EBITDA	$	134.6	$	33.8	$	46.7		$	117.1		$	49.5		$	(58.6	)	$	78.8	$	14.2	$	(22.2	)	$	68.1	$	16.6	$	11.4

~~Crestwood Midstream~~

Three Months Ended Three Months Ended
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
Revenues $ 405.1
$ 8.5
$ 436.7
$ 269.5
$ 53.8
$ 278.6
Intersegment revenues 34.1
1.7
(35.8 ) 30.6
1.1
(31.7 )
Costs of product/services sold 354.7
0.1
374.8
226.3
1.9
221.8
Operations and maintenance expense 18.2
1.3
14.7
20.9
4.9
15.6
Loss on long-lived assets —
—
—
—
(32.7 ) —
Earnings from unconsolidated affiliates, net 1.8
7.8
—
5.9
0.3
—
EBITDA $ 68.1
$ 16.6
$ 11.4
$ 58.8
$ 15.7
$ 9.5

4750

Table of Contents


	Six Months Ended							Six Months Ended									Six Months Ended							Six Months Ended
	June 30, 2017							June 30, 2016									June 30, 2018							June 30, 2017
	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	$	773.7	$	18.5	$	886.2		$	508.4		$	113.2		$	516.3		$	595.8	$	9.3	$	1,350.4		$	773.7	$	18.5	$	886.2
Intersegment revenues	64.4		3.5		(67.9		)	51.1			1.5			(52.6		)	86.7		4.5		(91.2		)	64.4		3.5		(67.9		)
Costs of product/services sold	671.3		0.1		741.7			406.1			4.8			402.5			496.5		0.2		1,194.5			671.3		0.1		741.7
Operations and maintenance expense	35.6		2.4		29.9			38.7			12.0			32.4
Goodwill impairment	—		—		—			(8.6		)	(13.7		)	(87.4		)
Loss on long-lived assets	—		—		—			—			(32.7		)	—
Operations and maintenance expenses																	35.5		1.6		29.3			35.6		2.4		29.9
Gain (loss) on long-lived assets, net																	0.1		—		(24.2		)	—		—		—
Earnings from unconsolidated affiliates, net	3.4		14.3		—			11.0			1.7			—			10.2		14.2		—			3.4		14.3		—
EBITDA	$	134.6	$	33.8	$	46.7		$	117.1		$	53.2		$	(58.6	)	$	160.8	$	26.2	$	11.2		$	134.6	$	33.8	$	46.7

Below is a discussion of the factors that impacted EBITDA by segment for the three and six months ended June 30, ~~2017~~2018 compared to the same periods in ~~2016.~~2017.

Gathering and Processing

EBITDA for our gathering and processing segment increased by approximately ~~$9.3~~$10.7 million and $17.5 million for the three and six months ended June 30, 2017 compared to the same periods in 2016. The comparability of our G&P segment's EBITDA was impacted by an $8.6 million goodwill impairment recorded during the first quarter of 2016 related to our Marcellus operations. For a further discussion of our goodwill impairments recorded during 2016, see Item 1. Financial Statements, Note 2. During the three and six months ended June 30, 2017, our G&P segment's revenues increased by approximately $139.1 million and $278.6 million compared to the same periods in 2016, partially offset by an increase in costs of product/services sold of approximately $128.4 million and $265.2 million. These increases were primarily driven by our Arrow operations, which experienced a $131.5 million and $266.1 million increase in revenues during the three and six months ended June 30, 2017 compared to the same periods in 2016, and a $123.8 million and $253.6 million increase in costs of product/services sold. The increase in Arrow's revenues and costs was primarily driven by higher average prices on Arrow's agreements under which it purchases and sells crude. In addition, our crude, gas and water volumes increased by 18%, 14% and 24%, respectively, during the six months ended June 30, 2017 compared to 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 increase in our G&P segment's revenues were higher product revenues from our Permian operations of approximately $6.7 million and $14.4~~$26.2 million during the three and six months ended June 30, ~~2017~~2018 compared to the same periods in ~~2016~~2017. Our gathering and ~~higher~~processing segment’s costs of product/services sold ofdecreased by approximately ~~$5.5~~$145.9 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 2016, and a 12% increase in volumes gathered during the three months ended 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 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.

~~Our gathering and processing segment's operations and maintenance expenses decreased approximately $2.7 million and $3.1~~$174.8 million during the three and six months ended June 30, ~~2017~~2018 compared to the same periods in ~~2016~~2017, and our revenues also experienced a decrease of $138.3 million and $155.6 million during the same periods.

Our gathering and processing segment’s revenues and product costs were impacted by the modified retrospective adoption of Topic 606 during the three and six months ended June 30, 2018, which decreased its second quarter 2018 revenues and product costs by approximately $260.3 million and $263.2 million, respectively, and decreased its six months 2018 revenues and product costs by approximately $429.1 million and $434.8 million, respectively. Also impacting our gathering and processing segment’s EBITDA during the three and six months ended June 30, 2018 compared to the same periods in 2017, were lower revenues of approximately $15.6 million and $30.2 million from our Permian operations as a result of the deconsolidation of Crestwood New Mexico Pipeline LLC (Crestwood New Mexico) in June 2017, and lower costs of product/services sold of approximately $11.2 million and $21.8 million during the same periods.

The remaining variance in our gathering and processing segment’s revenues (approximately $137.6 million and $303.7 million during the three and six months ended June 30, 2018 compared to the same periods in 2017) and costs of product/services sold (approximately $128.5 million and $281.8 million during the three and six months ended June 30, 2018 compared to the same periods in 2017), was primarily driven by our Arrow operations. During the three and six months ended June 30, 2018, Arrow experienced higher average prices on its agreements under which it purchases and sells crude oil. In addition, crude, natural gas and water volumes gathered by our Arrow system increased by 4%, 33% and 22%, respectively, during the six months ended June 30, 2018 compared to the same period in 2017, driven by increased producer activity and expanded capacity on our Arrow system. In addition, during late 2017, the Bear Den processing plant was placed into service, which increased natural gas volumes gathered and processed on the Arrow system.

Our gathering and processing segment’s operations and maintenance expenses were relatively flat during the three and six months ended June 30, 2018 compared to the same periods in 2017.

Our gathering and processing segment’s EBITDA was also impacted by an increase in earnings from unconsolidated affiliates of approximately $2.7 million and $6.8 million during the three and six months ended June 30, 2018 compared to the same periods in 2017. These increases were driven by our Jackalope equity investment due to ~~continued cost-reduction efforts undertaken~~an increase in its gathering and processing volumes during the three and six months ended June 30, 2018 compared to the same periods in 2017. In addition, our ~~operations.~~equity earnings from our Crestwood Permian equity investment increased during the three and six months ended June 30, 2018 compared to the same periods in 2017, primarily due to the Nautilus system coming online in June 2017 and the contribution of Crestwood New Mexico to Crestwood Permian in June 2017.

4851

Table of Contents

Storage and Transportation

~~Our gathering~~EBITDA for our storage and ~~processing segment's EBITDA was also impacted~~transportation segment decreased by ~~a decrease in earnings from our unconsolidated affiliates of~~ approximately ~~$4.1~~$2.4 million and $7.6 million during the three and six months ended June 30, ~~2017~~2018 compared to the same periods in ~~2016. The decrease was~~2017, primarily ~~driven by~~due to a reduction in revenues atof approximately $2.6 million and $8.2 million, respectively, from our ~~Jackalope equity investment as~~COLT Hub operations. These decreases were primarily due to a ~~result of~~reduction in the ~~restructuring of its contracts with Chesapeake Energy Corporation (Chesapeake) effective January 1, 2017. Jackalope~~COLT Hub’s rail throughput revenues, resulting from a 22% decrease in rail loading volumes and ~~Chesapeake replaced~~decreased demand and rates for our rail loading services during the ~~cost-of-service based contract with a 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 $0.9 million for the three~~six months ended June 30, ~~2017~~2018 compared to the same period in ~~2016, while we experienced a decrease~~2017. The reduction 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~~rail loading services from our storage and transportation segment's results was impacted by a $32.9 million loss recognized on the deconsolidation of our Northeast storage and transportation assets as a result of the contribution of the assets to Stagecoach Gas on June 3, 2016. The deconsolidation of the Northeast storage and transportation assetsCOLT Hub operations also resulted in lower ~~revenues of approximately $30.0 million~~operations and ~~$73.2 million~~maintenance expenses during the three and six months ended June 30, ~~2017~~2018 of approximately $0.5 million and $0.8 million compared to the same periods in ~~2016, partially offset by lower~~2017.

Our storage and transportation segment’s costs of product/services sold ~~of approximately $1.7 million~~ and ~~$4.6 million. We also experienced lower operations and maintenance expense of approximately $3.6 million and $9.6 million~~earnings from unconsolidated affiliates were relatively flat during the three and six months ended June 30, ~~2017~~2018 compared to the same periods in ~~2016, primarily as a result of~~2017. Beginning with the ~~deconsolidation of the Northeast storage and transportation assets.~~

The decrease in our storage and transportation segment's revenues was also impacted by lower revenues of approximately $14.7 million and $19.4 million from our COLT Hub operations during the three and six months ended June 30, 2017 compared to the same periods in 2016. The decrease was primarily due to a reduction in our rail throughput revenues resulting from lower rail loading volumes as a result of two rail loading contracts that expired in late 2016.

~~The comparability of our storage and transportation segment's EBITDA was also impacted by a $13.7 million goodwill impairment recorded during the first~~third quarter of ~~2016 related to~~2018, our ~~COLT Hub operations. For a further discussion of our goodwill impairments recorded during 2016, see Item 1. Financial Statements, Note 2.~~

~~Our storage and transportation segment's EBITDA was impacted by an increase in~~equity earnings from our ~~unconsolidated affiliates. As discussed above, in June 2016, we deconsolidated~~Stagecoach equity investment will be based on 40% of earnings from this equity investment, an increase from the current 35%, which may impact the trend of our Northeast storage and transportation assets as a result of 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 $6.6 million and $12.6 million during the three and six months ended June 30, 2017. Earnings from our Tres Holdings equity investment increased by approximately $3 million during both the three and six months ended June 30, 2017 compared to the same periods in 2016 primarily due to property tax accruals recorded by Tres Holdings during 2016.

EBITDA for CEQP's storage and transportation segment increased by $4.5 million during the three months ended June 30, 2017 compared to the same period in 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 $3.5 million.going forward.

Marketing, Supply and Logistics

EBITDA for our marketing, supply and logistics segment ~~increased~~decreased by approximately ~~$1.9~~$33.6 million and ~~$105.3~~$35.5 million during the three and six months ended June 30, ~~2017~~2018 compared to the same periods in ~~2016. The comparability~~2017, primarily due to a $24.4 million loss on sale of long-lived assets recorded during the second quarter of 2018 primarily related to our West Coast facilities. See Item 1. Financial Statements, Note 2 for a further discussion of the sale of our West Coast facilities. In addition, our marketing, supply and logistics ~~segment's results~~segment’s EBITDA was also impacted by ~~goodwill impairments~~lower revenues and costs of product/services sold related to US Salt, LLC, which we sold in December 2017, resulting in lower revenues of approximately ~~$87.4~~$17.2 million ~~recorded~~and $32.8 million compared to the same periods in 2017, and lower costs of product/services sold of approximately $9.8 million and $18.8 million during the ~~first quarter of 2016 related to~~same periods.

EBITDA for our marketing, supply and logistics ~~storage and terminals and trucking operations. For a further discussion~~segment (excluding the impacts from the sale of ~~our goodwill impairments recorded during 2016, see Item 1. Financial Statements, Note 2.~~

~~Our supply and logistics operations experienced~~US Salt described above) was also impacted by an increase in its revenues of approximately ~~$58.8~~$148.3 million and ~~$197.4~~$473.7 million during the three and six months ended June 30, ~~2017~~2018 compared to the same periods in ~~2016,~~2017, and an increase in its costs of product/services sold of approximately ~~$57.7~~$151.5 million and ~~$178.9~~$471.6 million during ~~those~~the 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~~

~~Table of Contents~~

~~costs of product/services sold increases include~~Our crude and natural gas marketing operations experienced a ~~gain of $6.9~~$148.9 million and ~~$1.5~~$284.2 million ~~on our commodity-based derivative contracts~~increase in revenues 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 revenues2018 compared to the same periods in ~~2016~~2017, and a ~~$35.9~~$149.7 million and ~~$64.6~~$285.9 million increase in costs of product/services sold during ~~those~~the 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~~The remaining $189.5 million increase in our revenues and $185.7 million increase in our costs of product/services sold during the six months ended June 30, 2018 was driven by our NGL Marketing and ~~crude trucking~~Logistics operations. During the three and six months ended June 30, 2018, our NGL Marketing and Logistics operations ~~continued~~were able to ~~experience a decline~~capture more marketing opportunities to purchase and sell NGLs given the unusually cold weather during the early 2018 and NGL Marketing and Logistics opportunities surrounding our Bear Den processing plant, which was placed into service in late 2017. In addition, we experienced increased demand for ~~their~~trucking, rail, storage and terminal services ~~due to lower~~as a result of an expanded US NGL supply ~~volumes,~~base and market dislocations caused by increased ~~competition, excess trucking capacity~~NGL supplies from various high growth regions and regional pipeline outages. Included in our costs of product/services sold was a loss of $6.4 million and a gain of $1.4 million during the ~~market place~~three and ~~lower commodity prices~~six months ended June 30, 2018, and a gain of $6.9 million and $1.5 million during the three and six months ended June 30, 2017 related to our price risk management activities.

During the three and six months ended June 30, 2018, our marketing, supply and logistics segment’s operations and maintenance expenses decreased by approximately $1.4 million and $0.6 million 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~~2017, primarily due to our efforts to realign certain of ~~product/services sold period over period.~~its operations.

Other EBITDA Results

General and Administrative ~~Expenses~~Expenses. . During the ~~three and~~ six months ended June 30, ~~2017,~~2018, our general and administrative expenses decreased by approximately $6$2 million ~~and $3 million, respectively,~~ compared to the same ~~periods~~period in ~~2016~~2017, primarily due to ~~transaction~~the cost savings and realignment initiatives we undertook over the past several years to reduce the administrative costs ~~incurred~~of operating our business. General and administrative expenses during ~~2016 related~~the three months ended June 30, 2018 were relatively flat compared to the ~~Stagecoach Gas joint venture transaction described~~same period in ~~Item 1. Financial Statements, Note 4.~~2017.

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Items not affecting EBITDA include the following:

Depreciation, Amortization and Accretion ~~Expense -~~Expense. ~~Depreciation, amortization and accretion expense decreased during~~During the three and six months ended June 30, ~~2017~~2018, our depreciation, amortization and accretion expense decreased by approximately $4 million and $7 million compared to the same periods in ~~2016,~~2017, primarily due to the deconsolidation of ~~the Northeast storage and transportation assets~~our Crestwood New Mexico operations in June ~~2016.~~2017 and the sale of US Salt, LLC in December 2017.

Interest and Debt Expense, ~~Net~~ Net.- Interest and debt expense, net decreased by approximately ~~$10.2 million and $19.8~~$1.9 million during the ~~three and~~ six ~~month~~months ended June 30, ~~2017~~2018 compared to the same ~~periods~~period in ~~2016,~~2017, primarily due to a decrease of approximately $3.8 million in interest expense on our senior notes due to repayments of ~~Crestwood Midstream's 2020 Senior Notes~~certain of our senior notes during 2017, partially offset by a $2.6 million increase in interest expense on our credit facility due to higher outstanding balances during the period ended June 30, 2018. Interest and ~~2022 Senior Notes and lower interest costs related~~debt expense, net was relatively flat during the three months ended June 30, 2018 compared to the ~~Credit Facility.~~same period in 2017.

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


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2017		2016		2017		2016		2018		2017		2018		2017
Credit facility	$	4.8	$	6.1	$	7.8	$	13.1	$	5.4	$	4.8	$	10.4	$	7.8
Senior notes	18.1		26.6		40.1		54.3		18.2		18.1		36.3		40.1
Other debt-related costs	1.9		1.8		3.7		3.5		1.8		1.9		3.6		3.7
Gross interest and debt expense	24.8		34.5		51.6		70.9		25.4		24.8		50.3		51.6
Less: capitalized interest	0.7		0.2		1.0		0.5		1.1		0.7		1.6		1.0
Interest and debt expense, net	$	24.1	$	34.3	$	50.6	$	70.4	$	24.3	$	24.1	$	48.7	$	50.6

Loss on Modification/Extinguishment of Debt. During the three and six months ended 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 outstanding on certain 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 of approximately $10 million on the early tender of principal amounts under Crestwood Midstream's 2020 Senior Notes and 2022 Senior Notes. For a further discussion of these repayments, see Item 1. Financial Statements, Note 9.Midstream’s senior notes.

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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, distributions from our joint ventures, borrowings under ~~our~~the CMLP credit facility, and sales of equity and 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.

We make cash quarterly distributions to our common unitholders within approximately 45 days after the end of each fiscal quarter in an aggregate amount equal to our available cash for such quarter. We also pay cash quarterly distributions of approximately $15 million to our preferred unitholders. For the quarter ending September 30, 2017, we expect to pay the distribution to our preferred unitholders in cash in lieu of issuing additional preferred units, and beginning with the quarter ending December 31, 2017, we will be required to make all future quarterly distributions to our preferred unitholders in cash. We believe ~~that during 2017,~~ our operating cash flows will well exceed ~~our quarterly distributions at the current level and~~ cash distributions to our partners and our preferred ~~unitholders.~~unitholders at current levels, and as a result, we will have substantial operating cash flows as a source of liquidity for our growth capital expenditures.

As of June 30, ~~2017, Crestwood Midstream~~2018, we had ~~$631.3~~$582.1 million of available capacity under ~~its~~our credit facility considering the most restrictive debt covenants in ~~its~~the credit agreement. ~~At June 30, 2017, Crestwood Midstream was in compliance with all of its debt covenants applicable to its credit facility and 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 June 30, 2018, we were in compliance with all of our debt covenants applicable to the credit facility and senior notes.

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Cash Flows

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


	Six Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2018			2017
Net cash provided by operating activities	$	132.9		$	193.0		$	160.0		$	132.9
Net cash provided by (used in) investing activities	(85.1		)	865.8
Net cash used in investing activities							(94.9		)	(85.1		)
Net cash used in financing activities	(47.1		)	(1,058.4		)	(60.3		)	(47.1		)

Operating Activities

Our operating cash flows ~~decreased~~increased by approximately ~~$60.1~~$27.1 million during the six months ended June 30, ~~2017~~2018 compared to the same period in ~~2016,~~2017. The increase was primarily driven by a net cash inflow of approximately $11.2 million from working capital primarily resulting from higher proceeds from NGL inventory sales and other marketing activities in our marketing, supply and logistics operations as we exited a colder winter season during early 2018 compared to the same period in 2017. In addition, we experienced less working capital requirements related to our marketing, supply and logistics transportation operations due to the realignment of these operations in late 2017. We also experienced an increase in our gathering and processing segment’s operating revenues and costs of product/services sold of approximately ~~$599.7~~$303.7 million and $281.8 million, respectively, primarily from our ~~gathering and processing and marketing, supply and logistics segments'~~Arrow operations, discussed above, partially offset by a $540.5 million increase in operating revenues from these segments' operations. The decrease in net operating cash flows was also impacted by the deconsolidation of our Northeast storage and transportation assets in June 2016.which is further described above.

Investing Activities

Capital Expenditures. 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.

We currently anticipate that our growth capital expenditures ~~in 2017~~and our capital contributions to our equity investments will range from ~~$225~~$300 million to ~~$250~~$350 million ~~which considers the new~~during 2018, primarily focused on our gathering and processing expansion projects in the Bakken, Delaware Permian and ~~capital contributions to our equity investments~~Powder River Basin described in Segment Highlights above. We anticipate that our growth and reimbursable capital expenditures ~~throughout 2017~~during 2018 will increase the services we can provide to our customers and the operating efficiencies of our ~~systems and generate meaningful contributions to our results of operations beginning in 2018.~~systems. 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~~equity investments and borrowings under ~~the CMLP Credit Facility.~~our credit facility.

We have identified additional growth capital project opportunities for each of our reporting segments. 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~~2018 (in millions).


Growth capital	$	62.4		$	105.0
Maintenance capital	11.8			11.3
Other ⁽¹⁾	14.5			2.4
Purchases of property, plant and equipment	88.7			$	118.7
Reimbursements of property, plant and equipment	(7.1		)
Net	$	81.6

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

Investments in Unconsolidated Affiliates. During the six months ended June 30, 2018, we contributed approximately $6.9 million to our equity investments to fund their expansion projects described in Segment Highlights above.

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Financing Activities

Significant items impacting our financing activities during the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, included the following:

Equity Transactions

~~Beginning in 2016,~~During the six months ended June 30, 2018, we ~~declared a decrease in~~made cash distributions ~~paid per limited~~of $30 million to our preferred unitholders; prior to September 30, 2017, we had the option to make quarterly distributions to our preferred unitholders by issuing additional preferred units;

In December 2017, Crestwood Niobrara redeemed 100% of the outstanding Series A Preferred Units from GE and issued new Series A-2 Preferred Units to Jackalope Holdings. We began making distributions to Jackalope Holdings on its Series A-2 Preferred Units during the three months ended June 30, 2018, and during that period, we distributed approximately $3.3 million to our non-controlling partner. During the six months ended June 30, 2017, we made distributions to our non-controlling partner ~~unit from $1.375 to $0.60. This reduction resulted in a decrease in distributions paid to partners~~ of approximately ~~$53.4~~$7.6 million; and

Our taxes paid for unit-based compensation vesting increased by approximately $3.3 million during the six months ended June 30, ~~2017~~2018 compared to the same period in ~~2016; and~~

~~Increase in taxes paid for unit-based compensation vesting of approximately $3.0 million~~2017, primarily due to higher vesting of unit-based compensation ~~awards~~awards.

Debt Transactions

Our debt-related transactions during the six months ended June 30, ~~2017 compared to the same period in 2016.~~

~~Debt Transactions~~

~~During the six months ended June 30, 2017, our debt-related transactions~~2018 resulted in net proceeds of approximately ~~$49.1~~$66.1 million compared to net ~~repayments~~proceeds of ~~$912.2~~approximately $49.1 million during the same period in ~~2016. This variance is~~2017. The net increase during 2018 was primarily ~~due to repayments of amounts outstanding~~driven by an increase in borrowings under our Credit Facility to fund our capital expenditures primarily related to our Arrow expansion projects described in Segment Highlights above. During 2017, we repaid amounts outstanding under certain of Crestwood Midstream’s senior notes with the proceeds from ~~our Stagecoach Gas transaction and repayments~~the issuance of ~~Crestwood Midstream's 2020 Senior Notes and 2022 Senior Notes. For a further discussion of these transactions, see Item 1. Financial Statements, Notes 4 and 7.~~its $500 million, 5.75% unsecured notes due 2025.

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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 ~~2016~~2017 Annual Report on Form 10-K and there have been no material changes in those exposures from December 31, ~~2016~~2017 to June 30, ~~2017.~~2018.


Item 4.	Controls and Procedures

Disclosure Controls and Procedures

As of June 30, ~~2017~~2018, 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~~Equity’s and Crestwood ~~Midstream's~~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 June 30, ~~2017~~2018.

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Changes in Internal Control over Financial Reporting

There were no changes to Crestwood ~~Equity's~~Equity’s or Crestwood ~~Midstream's~~Midstream’s internal control over financial reporting during the three months ended June 30, ~~2017~~2018 that have materially affected, or are reasonably likely to materially affect Crestwood ~~Equity's~~Equity’s or Crestwood ~~Midstream's~~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 1011 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 ~~2016~~2017 Annual Report on Form ~~10-K.~~10-K, as supplemented by the risk factors set forth below. There have been no material changes to the risk factors disclosed in our 2017 Annual Report on Form 10-K other than described below.

Terrorist attacks or “cyber security” events, or the threat of them, may adversely affect our business.

The U.S. government has issued public warnings that indicate that pipelines and other assets might be specific targets of terrorist organizations or “cyber security” events. These potential targets might include our pipeline systems or operating systems and may affect our ability to operate or control our pipeline assets or utilize our customer service systems. Recently, other companies in our industry have been the targets of cyber-attacks, and it is possible that the attacks in our industry will continue and grow in number. In addition, to assist in conducting our business, we rely on information technology systems and data hosting facilities, including systems and facilities that are hosted by third parties and with respect to which we have limited visibility and control. These systems and facilities may be vulnerable to a variety of evolving cyber security risks, including unauthorized access, denial-of-service attacks, malicious software, data privacy breaches by employees, insiders or others with authorized access, cyber or phishing-attacks, ransomware, malware, social engineering, physical breaches or other actions. The occurrence of any of these events, including any attack or threat targeted at our pipelines and other assets, could cause a substantial decrease in revenues, increased costs or other financial losses, exposure or loss of customer information, damage to our reputation or business relationships, increased regulation or litigation, disruption of our operations and/or inaccurate information reported from our operations. These developments may subject our operations to increased risks, as well as increased costs, and, depending on their ultimate magnitude, could have a material adverse effect on our business, results of operations and financial condition. Although we have adopted controls and systems, including procuring limited insurance for certain cyber-related losses, that are designed to protect information and mitigate the risk of data loss and other cyber security events, such measures cannot entirely eliminate cyber security threats, particularly as these threats continue to evolve and grow. Furthermore the controls and systems we have installed may be breached or be inadequate to address a risk that arises. While, similar to other companies in our industry, we have not experienced any material cyber security events in the past, we are not aware of and do not believe we have suffered any material loss from any cyber-related event; however, there is no assurance that we will not suffer such a loss in the future.

Our operations are subject to extensive regulation, and regulatory measures adopted by regulatory authorities could have a material adverse effect on our business, financial condition and results of operations.

On March 15, 2018, the FERC issued a Revised Policy Statement on Treatment of Income Taxes (Revised Policy Statement) stating that it will no longer permit master limited partnerships to recover an income tax allowance in their cost-of-service rates. Also on March 15, 2018, the FERC issued a Notice of Proposed Rulemaking (NOPR) proposing rules for implementation of the Revised Policy Statement and the corporate income tax rate reduction with respect to pipeline rates. On July 18, 2018, the FERC issued an order denying requests for rehearing and clarification of its Revised Policy Statement because it is a non-binding policy and parties will have the opportunity to address the policy as applied in future cases. In the rehearing order, the FERC clarified that a pipeline organized as a master limited partnership will not be precluded in a future proceeding from providing support that it is entitled to an income tax allowance and demonstrating that its recovery of an income tax allowance does not result in a double-recovery of investors’ income tax costs. Also on July 18, 2018, the FERC issued a Final Rule adopting procedures that are generally the same as proposed in the NOPR with a few clarifications and modifications. With limited exceptions, the Final Rule requires all FERC-regulated natural gas pipelines that have cost-based rates for service to make a one-time Form No. 501-G filing providing certain financial information and to select one of four options: (i) file a limited NGA Section 4 filing reducing its rates only as required related to the Tax Cuts and Jobs Act of 2017 and the Revised Policy Statement; (ii) commit to filing a general NGA Section 4 rate case in the near future; (iii) file a statement explaining why an adjustment to rates is not needed; or (iv) take no other action.

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The FERC also issued a Notice of Inquiry (NOI) requesting comments about whether, and if so how, the FERC should address changes relating to accumulated deferred income taxes and bonus depreciation. Any actions the FERC will take related to the NOI are unknown at this time, but could impact the rates midstream companies are permitted to charge its customers for transportation services in the future. At this time, we cannot predict the outcome of the Revised Policy Statement, the Final Rule or NOI, but the rates that our equity investments with FERC-regulated operations are permitted to charge its customers for transportation services after the expiration of the existing negotiated rates could be impacted if they file a limited or general NGA Section 4 rate filing or if the FERC or customers challenge the cost-of-service rates our equity investments are authorized to charge.


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~~entered into and effective 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.~~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 Amendment to the Fifth Amended and Restated Agreement of Limited Partnership of Crestwood Equity Partners LP entered into and effective as of November 8, 2017 (incorporated by reference to Exhibit 3.1 to Crestwood Equity Partners LP’s Form 8-K filed on November 13, 2017)

3.11		Third Amendment to the Fifth Amended and Restated Agreement of Limited Partnership of Crestwood Equity Partners LP entered into and effective as of May 30, 2018 (incorporated by reference to Exhibit 3.1 to Crestwood Equity Partners LP’s Form 8-K filed on June 4, 2018)

3.12		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,~~October 1, 2015)

~~3.11~~3.13		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~~3.14		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~~3.15		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~~S-4/A filed on October 28, 2013)

~~4.1~~		Indenture, dated as of 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.

*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

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*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

*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

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

*32.1		Certification of Chief Executive Officer 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 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 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 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.

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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:	August ~~3, 2017~~2, 2018	By:	/s/ ROBERT T. HALPIN
			Robert T. Halpin
			~~Senior~~Executive 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:	August ~~3, 2017~~2, 2018	By:	/s/ ROBERT T. HALPIN
			Robert T. Halpin
			~~Senior~~Executive Vice President and Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)

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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