UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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x☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended September 30, 2017 |
OR
For the quarterly period ended March 31, 2022
OR
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¨☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from to . |
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(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 |
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811 Main Street | Suite 3400 Houston, Texas
| Houston | Texas | 77002 |
(Address of principal executive offices) | | | | (Zip code) |
(832) 519-2200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | Trading Symbol | Name of each exchange on which registered |
Crestwood Equity Partners LP | Common Units representing limited partnership interests | CEQP | New York Stock Exchange |
Crestwood Equity Partners LP | Preferred Units representing limited partnership interests | CEQP-P | New York Stock Exchange |
Crestwood Midstream Partners LP | None | None | None |
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.
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Crestwood Equity Partners LP | | Yesx | ☒ | No o | ☐ | |
Crestwood Midstream Partners LP | | Yesx | ☒ | 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).
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Crestwood Equity Partners LP | | Yesx | ☒ | No o | ☐ | |
Crestwood Midstream Partners LP | | Yesx | ☒ | 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.
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Crestwood Equity Partners LP | Large accelerated filerx | ☒ | Accelerated filero
| ☐ | Non-accelerated filero | ☐ | Smaller reporting companyo | ☐ | Emerging growth companyo | ☐ |
Crestwood Midstream Partners LP | Large accelerated filero | ☐ | Accelerated filero | ☐ | Non-accelerated filerx | ☒ | Smaller reporting companyo | ☐ | Emerging growth companyo | ☐ |
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.
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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).
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Crestwood Equity Partners LP | | Yeso | ☐ | Nox | ☒ | |
Crestwood Midstream Partners LP | | Yeso | ☐ | Nox | ☒ | |
Indicate the number of shares outstanding of each of the issuer'sissuer’s classes of common stock, as of the latest practicable date (October 30, 2017)
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Crestwood Equity Partners LP | | 70,291,07197,966,187 |
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.
CRESTWOOD EQUITY PARTNERS LP
CRESTWOOD MIDSTREAM PARTNERS LP
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED BALANCE SHEETS (in millions, except unit information) |
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
| (unaudited) | | |
Assets | | | |
Current assets: | | | |
Cash | $ | 1.4 |
| | $ | 1.6 |
|
Accounts receivable, less allowance for doubtful accounts of $1.2 million and $1.9 million at September 30, 2017 and December 31, 2016 | 345.0 |
| | 289.8 |
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Inventory | 92.9 |
| | 66.0 |
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Assets from price risk management activities | 7.8 |
| | 6.3 |
|
Prepaid expenses and other current assets | 5.2 |
| | 9.7 |
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Total current assets | 452.3 |
| | 373.4 |
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Property, plant and equipment | 2,599.6 |
| | 2,555.4 |
|
Less: accumulated depreciation and depletion | 547.5 |
| | 457.8 |
|
Property, plant and equipment, net | 2,052.1 |
| | 2,097.6 |
|
Intangible assets | 898.6 |
| | 898.6 |
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Less: accumulated amortization | 281.4 |
| | 241.2 |
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Intangible assets, net | 617.2 |
| | 657.4 |
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Goodwill | 199.0 |
| | 199.0 |
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Investments in unconsolidated affiliates | 1,198.5 |
| | 1,115.4 |
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Other assets | 6.2 |
| | 6.1 |
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Total assets | $ | 4,525.3 |
| | $ | 4,448.9 |
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Liabilities and partners’ capital | | | |
Current liabilities: | | | |
Accounts payable | $ | 312.7 |
| | $ | 217.2 |
|
Accrued expenses and other liabilities | 112.5 |
| | 90.5 |
|
Liabilities from price risk management activities | 52.6 |
| | 28.6 |
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Current portion of long-term debt | 0.9 |
| | 1.0 |
|
Total current liabilities | 478.7 |
| | 337.3 |
|
Long-term debt, less current portion | 1,615.4 |
| | 1,522.7 |
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Other long-term liabilities | 48.2 |
| | 44.6 |
|
Deferred income taxes | 4.7 |
| | 5.3 |
|
Commitments and contingencies (Note 10) |
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| |
|
|
Partners’ capital: | | | |
Crestwood Equity Partners LP partners’ capital (70,551,614 and 69,499,741 common and subordinated units issued and outstanding at September 30, 2017 and December 31, 2016) | 1,566.4 |
| | 1,782.0 |
|
Preferred units (71,257,445 and 66,533,415 units issued and outstanding at September 30, 2017 and December 31, 2016) | 612.0 |
| | 564.5 |
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Total Crestwood Equity Partners LP partners’ capital | 2,178.4 |
| | 2,346.5 |
|
Interest of non-controlling partners in subsidiaries | 199.9 |
| | 192.5 |
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Total partners’ capital | 2,378.3 |
| | 2,539.0 |
|
Total liabilities and partners’ capital | $ | 4,525.3 |
| | $ | 4,448.9 |
|
CRESTWOOD EQUITY PARTNERS LPCONSOLIDATED BALANCE SHEETS
(in millions, except unit information)
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
| (unaudited) | | |
Assets | | | |
Current assets: | | | |
Cash | $ | 11.9 | | | $ | 13.3 | |
| | | |
Accounts receivable, less allowance for doubtful accounts of $0.5 million and $0.6 million at March 31, 2022 and December 31, 2021 | 485.6 | | | 378.0 | |
Inventory | 94.0 | | | 156.5 | |
Assets from price risk management activities | 25.5 | | | 42.1 | |
| | | |
Prepaid expenses and other current assets | 42.4 | | | 14.8 | |
Total current assets | 659.4 | | | 604.7 | |
Property, plant and equipment | 5,047.0 | | | 3,771.5 | |
Less: accumulated depreciation | 1,046.6 | | | 992.1 | |
Property, plant and equipment, net | 4,000.4 | | | 2,779.4 | |
Intangible assets | 1,623.1 | | | 1,126.1 | |
Less: accumulated amortization | 412.7 | | | 393.2 | |
Intangible assets, net | 1,210.4 | | | 732.9 | |
Goodwill | 177.9 | | | 138.6 | |
Operating lease right-of-use assets, net | 20.3 | | | 27.4 | |
Investments in unconsolidated affiliates | 164.8 | | | 155.8 | |
Other non-current assets | 6.9 | | | 6.9 | |
Total assets | $ | 6,240.1 | | | $ | 4,445.7 | |
| | | |
Liabilities and capital | | | |
Current liabilities: | | | |
Accounts payable | $ | 446.3 | | | $ | 336.5 | |
Accrued expenses and other liabilities | 190.3 | | | 147.1 | |
Liabilities from price risk management activities | 107.6 | | | 114.6 | |
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Current portion of long-term debt | 0.2 | | | 0.2 | |
Total current liabilities | 744.4 | | | 598.4 | |
Long-term debt, less current portion | 2,809.9 | | | 2,052.1 | |
| | | |
Other long-term liabilities | 283.1 | | | 258.7 | |
Deferred income taxes | 2.2 | | | 2.3 | |
Total liabilities | 3,839.6 | | | 2,911.5 | |
Commitments and contingencies (Note 9) | 0 | | 0 |
Interest of non-controlling partner in subsidiary | 434.5 | | | 434.6 | |
Crestwood Equity Partners LP partners’ capital (97,980,192 and 62,991,511 common units issued and outstanding at March 31, 2022 and December 31, 2021) | 1,354.0 | | | 487.6 | |
Preferred units (71,257,445 units issued and outstanding at both March 31, 2022 and December 31, 2021) | 612.0 | | | 612.0 | |
Total partners’ capital | 1,966.0 | | | 1,099.6 | |
Total liabilities and capital | $ | 6,240.1 | | | $ | 4,445.7 | |
See accompanying notes.
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CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per unit data) (unaudited)
| |
| | | Three Months Ended | |
| | | March 31, | |
| | | | | 2022 | | 2021 | |
Revenues: | | | | | | | | |
Product revenues | | | | | $ | 1,390.5 | | | $ | 930.6 | | |
Product revenues - related party (Note 15) | | | | | 60.6 | | | 4.9 | | |
Service revenues | | | | | 95.6 | | | 97.2 | | |
Service revenues - related party (Note 15) | | | | | 37.1 | | | — | | |
Total revenues | | | | | 1,583.8 | | | 1,032.7 | | |
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Costs of product/services sold (exclusive of items shown separately below): | | | | | | | | |
Product costs | | | | | 1,290.8 | | | 767.6 | | |
Product costs - related party (Note 15) | | | | | 68.5 | | | 41.1 | | |
Service costs | | | | | 5.1 | | | 5.1 | | |
Total costs of products/services sold | | | | | 1,364.4 | | | 813.8 | | |
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Operating expenses and other: | | | | | | | | |
Operations and maintenance | | | | | 42.4 | | | 32.8 | | |
General and administrative | | | | | 43.4 | | | 18.7 | | |
Depreciation, amortization and accretion | | | | | 74.8 | | | 59.2 | | |
Loss on long-lived assets, net | | | | | 3.8 | | | 1.4 | | |
| | | | | | | | |
| | | | | 164.4 | | | 112.1 | | |
Operating income | | | | | 55.0 | | | 106.8 | | |
Earnings (loss) from unconsolidated affiliates, net | | | | | 3.0 | | | (103.7) | | |
Interest and debt expense, net | | | | | (36.1) | | | (36.0) | | |
Loss on modification/extinguishment of debt | | | | | — | | | (5.5) | | |
Other income, net | | | | | 0.3 | | | — | | |
Income (loss) before income taxes | | | | | 22.2 | | | (38.4) | | |
Benefit for income taxes | | | | | — | | | 0.1 | | |
Net income (loss) | | | | | 22.2 | | | (38.3) | | |
Net income attributable to non-controlling partner | | | | | 10.2 | | | 10.1 | | |
Net income (loss) attributable to Crestwood Equity Partners LP | | | | | 12.0 | | | (48.4) | | |
Net income attributable to preferred units | | | | | 15.0 | | | 15.0 | | |
Net loss attributable to partners | | | | | $ | (3.0) | | | $ | (63.4) | | |
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Net loss per limited partner unit: (Note 12) | | | | | | | | |
Basic and Diluted | | | | | $ | (0.04) | | | $ | (0.86) | | |
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Weighted-average limited partners’ units outstanding: | | | | | | | | |
Basic and Diluted | | | | | 86.0 | | | 74.1 | | |
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CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except unit and per unit data) (unaudited) |
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Revenues: | | | | | | | |
Product revenues: | | | | | | | |
Gathering and processing | $ | 353.3 |
| | $ | 206.1 |
| | $ | 971.7 |
| | $ | 567.7 |
|
Marketing, supply and logistics | 502.0 |
| | 271.3 |
| | 1,353.7 |
| | 735.2 |
|
| 855.3 |
| | 477.4 |
| | 2,325.4 |
| | 1,302.9 |
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Services revenues: | | | | | | | |
Gathering and processing | 80.6 |
| | 72.5 |
| | 235.0 |
| | 217.9 |
|
Storage and transportation | 6.2 |
| | 18.3 |
| | 24.7 |
| | 131.5 |
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Marketing, supply and logistics | 13.0 |
| | 18.7 |
| | 47.5 |
| | 71.1 |
|
Related party (Note 11) | 0.5 |
| | 0.7 |
| | 1.4 |
| | 2.1 |
|
| 100.3 |
| | 110.2 |
| | 308.6 |
| | 422.6 |
|
Total revenues | 955.6 |
| | 587.6 |
| | 2,634.0 |
| | 1,725.5 |
|
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Costs of product/services sold (exclusive of items shown separately below): | | | | | | | |
Product costs: | | | | | | | |
Gathering and processing | 374.9 |
| | 221.1 |
| | 1,038.1 |
| | 618.4 |
|
Marketing, supply and logistics | 468.4 |
| | 229.1 |
| | 1,185.6 |
| | 605.1 |
|
Related party (Note 11) | 3.7 |
| | 5.0 |
| | 11.8 |
| | 13.7 |
|
| 847.0 |
| | 455.2 |
| | 2,235.5 |
| | 1,237.2 |
|
Service costs: | | | | | | | |
Gathering and processing | — |
| | — |
| | — |
| | 0.1 |
|
Storage and transportation | 0.2 |
| | 0.1 |
| | 0.3 |
| | 4.9 |
|
Marketing, supply and logistics | 11.3 |
| | 11.4 |
| | 35.8 |
| | 37.9 |
|
| 11.5 |
| | 11.5 |
| | 36.1 |
| | 42.9 |
|
Total costs of products/services sold | 858.5 |
| | 466.7 |
| | 2,271.6 |
| | 1,280.1 |
|
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Expenses: | | | | | | | |
Operations and maintenance | 35.5 |
| | 33.1 |
| | 103.4 |
| | 119.9 |
|
General and administrative | 22.5 |
| | 18.3 |
| | 71.6 |
| | 70.2 |
|
Depreciation, amortization and accretion | 48.1 |
| | 50.3 |
| | 145.2 |
| | 177.0 |
|
| 106.1 |
| | 101.7 |
| | 320.2 |
| | 367.1 |
|
Other operating expenses: | | | | | | | |
Loss on long-lived assets, net | (6.3 | ) | | (2.1 | ) | | (6.3 | ) | | (34.8 | ) |
Goodwill impairment | — |
| | — |
| | — |
| | (109.7 | ) |
Operating income (loss) | (15.3 | ) | | 17.1 |
| | 35.9 |
| | (66.2 | ) |
CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (continued) (in millions, except unit and per unit data) (unaudited) |
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Earnings from unconsolidated affiliates, net | 11.5 |
| | 13.4 |
| | 29.2 |
| | 26.1 |
|
Interest and debt expense, net | (24.2 | ) | | (27.5 | ) | | (74.8 | ) | | (97.9 | ) |
Gain (loss) on modification/extinguishment of debt | — |
| | — |
| | (37.7 | ) | | 10.0 |
|
Other income, net | 0.2 |
| | 0.2 |
| | 0.4 |
| | 0.4 |
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Income (loss) before income taxes | (27.8 | ) | | 3.2 |
| | (47.0 | ) | | (127.6 | ) |
Provision for income taxes | (0.1 | ) | | (0.2 | ) | | — |
| | (0.2 | ) |
Net income (loss) | (27.9 | ) | | 3.0 |
| | (47.0 | ) | | (127.8 | ) |
Net income attributable to non-controlling partners | 6.4 |
| | 6.1 |
| | 18.8 |
| | 18.0 |
|
Net loss attributable to Crestwood Equity Partners LP | (34.3 | ) | | (3.1 | ) | | (65.8 | ) | | (145.8 | ) |
Net income attributable to preferred units | 16.2 |
| | 6.9 |
| | 47.5 |
| | 16.6 |
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Net loss attributable to partners | $ | (50.5 | ) | | $ | (10.0 | ) | | $ | (113.3 | ) | | $ | (162.4 | ) |
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Subordinated unitholders' interest in net loss | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
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Common unitholders' interest in net loss | $ | (50.5 | ) | | $ | (10.0 | ) | | $ | (113.3 | ) | | $ | (162.4 | ) |
Net loss per limited partner unit: | | | | | | | |
Basic | $ | (0.72 | ) | | $ | (0.14 | ) | | $ | (1.63 | ) | | $ | (2.35 | ) |
Diluted | $ | (0.72 | ) | | $ | (0.14 | ) | | $ | (1.63 | ) | | $ | (2.35 | ) |
Weighted-average limited partners’ units outstanding (in thousands): | | | | | | |
Basic | 69,725 |
| | 69,050 |
| | 69,692 |
| | 69,002 |
|
Dilutive units | — |
| | — |
| | — |
| | — |
|
Diluted | 69,725 |
| | 69,050 |
| | 69,692 |
| | 69,002 |
|
See accompanying notes.
CRESTWOOD EQUITY PARTNERS LP CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (unaudited) |
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Net income (loss) | $ | (27.9 | ) | | $ | 3.0 |
| | $ | (47.0 | ) | | $ | (127.8 | ) |
Change in fair value of Suburban Propane Partners, L.P. units | 0.3 |
| | — |
| | (0.6 | ) | | 1.3 |
|
Comprehensive income (loss) | (27.6 | ) | | 3.0 |
| | (47.6 | ) | | (126.5 | ) |
Comprehensive income attributable to non-controlling interest | 6.4 |
| | 6.1 |
| | 18.8 |
| | 18.0 |
|
Comprehensive loss attributable to Crestwood Equity Partners LP | $ | (34.0 | ) | | $ | (3.1 | ) | | $ | (66.4 | ) | | $ | (144.5 | ) |
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(in millions)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred | | Common | | |
| Units | | Capital | | Units | | Capital | | Total Partners’ Capital |
Balance at December 31, 2021 | 71.3 | | | $ | 612.0 | | | 63.0 | | | $ | 487.6 | | | $ | 1,099.6 | |
Distributions to partners | — | | | (15.0) | | | — | | | (60.9) | | | (75.9) | |
Issuance of common units (Note 3) | | | | | 33.8 | | | 930.0 | | | 930.0 | |
Unit-based compensation charges | — | | | — | | | 1.6 | | | 13.0 | | | 13.0 | |
Taxes paid for unit-based compensation vesting | — | | | — | | | (0.5) | | | (14.9) | | | (14.9) | |
Other | — | | | — | | | 0.1 | | | 2.2 | | | 2.2 | |
Net income (loss) | — | | | 15.0 | | | — | | | (3.0) | | | 12.0 | |
Balance at March 31, 2022 | 71.3 | | | $ | 612.0 | | | 98.0 | | | $ | 1,354.0 | | | $ | 1,966.0 | |
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| Preferred | | Partners | | |
| Units | | Capital | | Common Units | | Subordinated Units | | Capital | | Total Partners’ Capital |
Balance at December 31, 2020 | 71.3 | | | $ | 612.0 | | | 73.6 | | | 0.4 | | | $ | 1,043.4 | | | $ | 1,655.4 | |
Crestwood Holdings Transactions (Note 11) | — | | | — | | | — | | | — | | | (273.2) | | | (273.2) | |
Retirement of units (Note 11) | — | | | — | | | (11.5) | | | (0.4) | | | — | | | — | |
Distributions to partners | — | | | (15.0) | | | — | | | — | | | (46.4) | | | (61.4) | |
Unit-based compensation charges | — | | | — | | | 1.1 | | | — | | | 3.7 | | | 3.7 | |
Taxes paid for unit-based compensation vesting | — | | | — | | | (0.4) | | | — | | | (8.1) | | | (8.1) | |
Other | — | | | — | | | — | | | — | | | (0.4) | | | (0.4) | |
Net income (loss) | — | | | 15.0 | | | — | | | — | | | (63.4) | | | (48.4) | |
Balance at March 31, 2021 | 71.3 | | | $ | 612.0 | | | 62.8 | | | — | | | $ | 655.6 | | | $ | 1,267.6 | |
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See accompanying notes.
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CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)
|
| Three Months Ended |
| March 31, |
| 2022 | | 2021 |
Operating activities | | | |
Net income (loss) | $ | 22.2 | | | $ | (38.3) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
Depreciation, amortization and accretion | 74.8 | | | 59.2 | |
Amortization of debt-related deferred costs and fair value adjustment | 0.8 | | | 1.7 | |
Unit-based compensation charges | 8.6 | | | 2.3 | |
Loss on long-lived assets, net | 3.8 | | | 1.4 | |
| | | |
Loss on modification/extinguishment of debt | — | | | 5.5 | |
(Earnings) loss from unconsolidated affiliates, net, adjusted for cash distributions received | (0.4) | | | 103.8 | |
Deferred income taxes | (0.1) | | | — | |
Other | (0.1) | | | 0.1 | |
Changes in operating assets and liabilities | 112.9 | | | 122.8 | |
| | | |
| | | |
| | | |
| | | |
| | | |
Net cash provided by operating activities | 222.5 | | | 258.5 | |
Investing activities | | | |
Acquisition, net of cash acquired (Note 3) | (145.1) | | | — | |
Purchases of property, plant and equipment | (26.4) | | | (9.3) | |
Investments in unconsolidated affiliates | (14.5) | | | (10.2) | |
Capital distributions from unconsolidated affiliates | 5.9 | | | 17.3 | |
Net proceeds from sale of assets | 0.4 | | | 0.2 | |
| | | |
Net cash used in investing activities | (179.7) | | | (2.0) | |
Financing activities | | | |
Proceeds from the issuance of long-term debt | 919.1 | | | 1,126.3 | |
Payments on long-term debt | (859.1) | | | (1,018.1) | |
Payments on finance leases | (0.8) | | | (0.7) | |
Payments for deferred financing costs | (1.7) | | | (11.1) | |
| | | |
| | | |
| | | |
| | | |
Payments for Crestwood Holdings Transactions | — | | | (271.8) | |
Distributions to partners | (60.9) | | | (46.4) | |
Distributions to non-controlling partner | (10.3) | | | (9.3) | |
Distributions to preferred unitholders | (15.0) | | | (15.0) | |
| | | |
Taxes paid for unit-based compensation vesting | (14.9) | | | (8.1) | |
Other | (0.6) | | | — | |
Net cash used in financing activities | (44.2) | | | (254.2) | |
Net change in cash | (1.4) | | | 2.3 | |
Cash at beginning of period | 13.3 | | | 14.0 | |
Cash at end of period | $ | 11.9 | | | $ | 16.3 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL (in millions) (unaudited) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred | | Partners | | | | |
| Units | | Capital | | Common Units | | Subordinated Units | | Capital | | Non-Controlling Partners | | Total Partners’ Capital |
Balance at December 31, 2016 | 66.5 |
| | $ | 564.5 |
| | 69.1 |
| | 0.4 |
| | $ | 1,782.0 |
| | $ | 192.5 |
| | $ | 2,539.0 |
|
Distributions to partners | 4.8 |
| | — |
| | — |
| | — |
| | (125.4 | ) | | (11.4 | ) | | (136.8 | ) |
Unit-based compensation charges | — |
| | — |
| | 0.9 |
| | — |
| | 18.9 |
| | — |
| | 18.9 |
|
Taxes paid for unit-based compensation vesting | — |
| | — |
| | (0.2 | ) | | — |
| | (5.3 | ) | | — |
| | (5.3 | ) |
Change in fair value of Suburban Propane Partners, L.P. units | — |
| | — |
| | — |
| | — |
| | (0.6 | ) | | — |
| | (0.6 | ) |
Issuance of common units | — |
| | — |
| | 0.4 |
| | — |
| | 10.6 |
| | — |
| | 10.6 |
|
Other | — |
| | — |
| | — |
| | — |
| | (0.5 | ) | | — |
| | (0.5 | ) |
Net income (loss) | — |
| | 47.5 |
| | — |
| | — |
| | (113.3 | ) | | 18.8 |
| | (47.0 | ) |
Balance at September 30, 2017 | 71.3 |
| | $ | 612.0 |
| | 70.2 |
| | 0.4 |
| | $ | 1,566.4 |
| | $ | 199.9 |
| | $ | 2,378.3 |
|
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in millions)
(unaudited)
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| 2022 | | 2021 |
Supplemental schedule of non-cash investing activities | | | |
Net change to property, plant and equipment through accounts payable and accrued expenses | $ | 3.8 | | | $ | (2.2) | |
| | | |
Acquisition, net of cash acquired: | | | |
Current assets | $ | 63.4 | | | $ | — | |
Property, plant and equipment | 1,245.8 | | | — | |
Intangible assets | 497.0 | | | — | |
Goodwill | 39.3 | | | — | |
Current liabilities | (45.9) | | | — | |
Debt | (698.7) | | | — | |
Change in invested capital of Crestwood Equity Partners LP, net | (930.0) | | | — | |
Other liabilities | (25.8) | | | — | |
Total acquisition, net of cash acquired | $ | 145.1 | | | $ | — | |
See accompanying notes.
CRESTWOOD MIDSTREAM PARTNERS LP CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited) |
| | | | | | | |
| Nine Months Ended |
| September 30, |
| 2017 | | 2016 |
Operating activities | | | |
Net loss | $ | (47.0 | ) | | $ | (127.8 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: | | | |
Depreciation, amortization and accretion | 145.2 |
| | 177.0 |
|
Amortization of debt-related deferred costs | 5.4 |
| | 5.1 |
|
Unit-based compensation charges | 18.9 |
| | 13.4 |
|
Loss on long-lived assets, net | 6.3 |
| | 34.8 |
|
Goodwill impairment | — |
| | 109.7 |
|
(Gain) loss on modification/extinguishment of debt | 37.7 |
| | (10.0 | ) |
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received | (2.5 | ) | | (3.9 | ) |
Deferred income taxes | (0.7 | ) | | (0.9 | ) |
Other | (0.3 | ) | | 0.3 |
|
Changes in operating assets and liabilities | 65.2 |
| | 46.8 |
|
Net cash provided by operating activities | 228.2 |
| | 244.5 |
|
Investing activities | | | |
Purchases of property, plant and equipment | (134.4 | ) | | (79.3 | ) |
Investment in unconsolidated affiliates | (46.5 | ) | | (6.2 | ) |
Capital distributions from unconsolidated affiliates | 35.3 |
| | 9.2 |
|
Net proceeds from sale of assets | 1.3 |
| | 943.1 |
|
Net cash provided by (used in) investing activities | (144.3 | ) | | 866.8 |
|
Financing activities | | | |
Proceeds from the issuance of long-term debt | 2,209.8 |
| | 1,364.0 |
|
Payments on long-term debt | (2,159.2 | ) | | (2,279.4 | ) |
Payments on capital leases | (2.2 | ) | | (1.5 | ) |
Payments for debt-related deferred costs | (1.0 | ) | | (3.4 | ) |
Distributions to partners | (125.4 | ) | | (178.4 | ) |
Distributions paid to non-controlling partners | (11.4 | ) | | (11.4 | ) |
Issuance of common units | 10.6 |
| | — |
|
Taxes paid for unit-based compensation vesting | (5.3 | ) | | (0.8 | ) |
Other | — |
| | 0.1 |
|
Net cash used in financing activities | (84.1 | ) | | (1,110.8 | ) |
Net change in cash | (0.2 | ) | | 0.5 |
|
Cash at beginning of period | 1.6 |
| | 0.5 |
|
Cash at end of period | $ | 1.4 |
| | $ | 1.0 |
|
Supplemental schedule of noncash investing and financing activities | | | |
Net change to property, plant and equipment through accounts payable and accrued expenses | $ | (15.4 | ) | | $ | (9.4 | ) |
CONSOLIDATED BALANCE SHEETS(in millions)
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
| (unaudited) | | |
Assets | | | |
Current assets: | | | |
Cash | $ | 11.3 | | | $ | 12.9 | |
| | | |
Accounts receivable, less allowance for doubtful accounts of $0.5 million and $0.6 million at March 31, 2022 and December 31, 2021 | 485.6 | | | 378.0 | |
Inventory | 94.0 | | | 156.5 | |
Assets from price risk management activities | 25.5 | | | 42.1 | |
| | | |
Prepaid expenses and other current assets | 42.4 | | | 14.4 | |
Total current assets | 658.8 | | | 603.9 | |
Property, plant and equipment | 5,376.2 | | | 4,100.8 | |
Less: accumulated depreciation | 1,250.9 | | | 1,193.0 | |
Property, plant and equipment, net | 4,125.3 | | | 2,907.8 | |
Intangible assets | 1,623.1 | | | 1,126.1 | |
Less: accumulated amortization | 412.7 | | | 393.2 | |
Intangible assets, net | 1,210.4 | | | 732.9 | |
Goodwill | 177.9 | | | 138.6 | |
Operating lease right-of-use assets, net | 20.3 | | | 27.4 | |
Investments in unconsolidated affiliates | 164.8 | | | 155.8 | |
Other non-current assets | 4.6 | | | 4.8 | |
Total assets | $ | 6,362.1 | | | $ | 4,571.2 | |
Liabilities and capital | | | |
Current liabilities: | | | |
Accounts payable | $ | 446.2 | | | $ | 336.4 | |
Accrued expenses and other liabilities | 188.9 | | | 146.1 | |
Liabilities from price risk management activities | 107.6 | | | 114.6 | |
| | | |
Current portion of long-term debt | 0.2 | | | 0.2 | |
Total current liabilities | 742.9 | | | 597.3 | |
Long-term debt, less current portion | 2,809.9 | | | 2,052.1 | |
| | | |
Other long-term liabilities | 281.6 | | | 254.1 | |
Deferred income taxes | 0.8 | | | 0.8 | |
Total liabilities | 3,835.2 | | | 2,904.3 | |
Commitments and contingencies (Note 9) | 0 | | 0 |
Interest of non-controlling partner in subsidiary | 434.5 | | | 434.6 | |
Partners’ capital | 2,092.4 | | | 1,232.3 | |
| | | |
| | | |
| | | |
Total liabilities and capital | $ | 6,362.1 | | | $ | 4,571.2 | |
See accompanying notes.
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED BALANCE SHEETS (in millions)
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
| (unaudited) | | |
Assets | | | |
Current assets: | | | |
Cash | $ | 1.1 |
| | $ | 1.3 |
|
Accounts receivable, less allowance for doubtful accounts of $1.2 million and $1.9 million at September 30, 2017 and December 31, 2016 | 344.7 |
| | 289.8 |
|
Inventory | 92.9 |
| | 66.0 |
|
Assets from price risk management activities | 7.8 |
| | 6.3 |
|
Prepaid expenses and other current assets | 5.2 |
| | 9.7 |
|
Total current assets | 451.7 |
| | 373.1 |
|
Property, plant and equipment | 2,929.6 |
| | 2,885.5 |
|
Less: accumulated depreciation and depletion | 687.4 |
| | 587.1 |
|
Property, plant and equipment, net | 2,242.2 |
| | 2,298.4 |
|
Intangible assets | 883.1 |
| | 883.1 |
|
Less: accumulated amortization | 268.1 |
| | 230.2 |
|
Intangible assets, net | 615.0 |
| | 652.9 |
|
Goodwill | 199.0 |
| | 199.0 |
|
Investments in unconsolidated affiliates | 1,198.5 |
| | 1,115.4 |
|
Other assets | 2.6 |
| | 1.8 |
|
Total assets | $ | 4,709.0 |
| | $ | 4,640.6 |
|
Liabilities and partners’ capital | | | |
Current liabilities: | | | |
Accounts payable | $ | 310.0 |
| | $ | 214.5 |
|
Accrued expenses and other liabilities | 111.8 |
| | 87.9 |
|
Liabilities from price risk management activities | 52.6 |
| | 28.6 |
|
Current portion of long-term debt | 0.9 |
| | 1.0 |
|
Total current liabilities | 475.3 |
| | 332.0 |
|
Long-term debt, less current portion | 1,615.4 |
| | 1,522.7 |
|
Other long-term liabilities | 45.3 |
| | 42.0 |
|
Deferred income taxes | 0.7 |
| | 0.7 |
|
Commitments and contingencies (Note 10) | | | |
Partners’ capital | 2,372.4 |
| | 2,550.7 |
|
Interest of non-controlling partners in subsidiary | 199.9 |
| | 192.5 |
|
Total partners’ capital | 2,572.3 |
| | 2,743.2 |
|
Total liabilities and partners’ capital | $ | 4,709.0 |
| | $ | 4,640.6 |
|
(unaudited) | | | | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2022 | | 2021 |
Revenues: | | | | | | | |
Product revenues | | | | | $ | 1,390.5 | | | $ | 930.6 | |
Product revenues - related party (Note 15) | | | | | 60.6 | | | 4.9 | |
Service revenues | | | | | 95.6 | | | 97.2 | |
Service revenues - related party (Note 15) | | | | | 37.1 | | | — | |
Total revenues | | | | | 1,583.8 | | | 1,032.7 | |
| | | | | | | |
Costs of product/services sold (exclusive of items shown separately below): | | | | | | | |
Product costs | | | | | 1,290.8 | | | 767.6 | |
Product costs - related party (Note 15) | | | | | 68.5 | | | 41.1 | |
Service costs | | | | | 5.1 | | | 5.1 | |
Total costs of product/services sold | | | | | 1,364.4 | | | 813.8 | |
| | | | | | | |
Operating expenses and other: | | | | | | | |
Operations and maintenance | | | | | 42.4 | | | 32.8 | |
General and administrative | | | | | 41.7 | | | 17.2 | |
Depreciation, amortization and accretion | | | | | 78.2 | | | 62.8 | |
Loss on long-lived assets, net | | | | | 3.8 | | | 1.4 | |
| | | | | | | |
| | | | | 166.1 | | | 114.2 | |
Operating income | | | | | 53.3 | | | 104.7 | |
Earnings (loss) from unconsolidated affiliates, net | | | | | 3.0 | | | (103.7) | |
Interest and debt expense, net | | | | | (36.1) | | | (36.0) | |
Loss on modification/extinguishment of debt | | | | | — | | | (5.5) | |
Income (loss) before income taxes | | | | | 20.2 | | | (40.5) | |
Benefit for income taxes | | | | | — | | | 0.1 | |
Net income (loss) | | | | | 20.2 | | | (40.4) | |
Net income attributable to non-controlling partner | | | | | 10.2 | | | 10.1 | |
Net income (loss) attributable to Crestwood Midstream Partners LP | | | | | $ | 10.0 | | | $ | (50.5) | |
| | | | | | | |
| | | | | | | |
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| | | | | | | |
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| | | | | | |
| | | | | | | |
| | | | | | | |
See accompanying notes.
CRESTWOOD MIDSTREAM PARTNERS LP CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (in millions) (unaudited) |
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Revenues: | | | | | | | |
Product revenues: | | | | | | | |
Gathering and processing | $ | 353.3 |
| | $ | 206.1 |
| | $ | 971.7 |
| | $ | 567.7 |
|
Marketing, supply and logistics | 502.0 |
| | 271.3 |
| | 1,353.7 |
| | 735.2 |
|
| 855.3 |
| | 477.4 |
| | 2,325.4 |
| | 1,302.9 |
|
Service revenues: | | | | | | | |
Gathering and processing | 80.6 |
| | 72.5 |
| | 235.0 |
| | 217.9 |
|
Storage and transportation | 6.2 |
| | 18.3 |
| | 24.7 |
| | 131.5 |
|
Marketing, supply and logistics | 13.0 |
| | 18.7 |
| | 47.5 |
| | 71.1 |
|
Related party (Note 11) | 0.5 |
| | 0.7 |
| | 1.4 |
| | 2.1 |
|
| 100.3 |
| | 110.2 |
| | 308.6 |
| | 422.6 |
|
Total revenues | 955.6 |
| | 587.6 |
| | 2,634.0 |
| | 1,725.5 |
|
| | | | | | | |
Costs of product/services sold (exclusive of items shown separately below): | | | | | | | |
Product costs: | | | | | | | |
Gathering and processing | 374.9 |
| | 221.1 |
| | 1,038.1 |
| | 618.4 |
|
Marketing, supply and logistics | 468.4 |
| | 229.1 |
| | 1,185.6 |
| | 605.1 |
|
Related party (Note 11) | 3.7 |
| | 5.0 |
| | 11.8 |
| | 13.7 |
|
| 847.0 |
| | 455.2 |
| | 2,235.5 |
| | 1,237.2 |
|
Service costs: | | | | | | | |
Gathering and processing | — |
| | — |
| | — |
| | 0.1 |
|
Storage and transportation | 0.2 |
| | 0.1 |
| | 0.3 |
| | 4.9 |
|
Marketing, supply and logistics | 11.3 |
| | 11.4 |
| | 35.8 |
| | 37.9 |
|
| 11.5 |
| | 11.5 |
| | 36.1 |
| | 42.9 |
|
Total costs of product/services sold | 858.5 |
| | 466.7 |
| | 2,271.6 |
| | 1,280.1 |
|
| | | | | | | |
Expenses: | | | | | | | |
Operations and maintenance | 35.5 |
| | 33.6 |
| | 103.4 |
| | 116.7 |
|
General and administrative | 21.4 |
| | 17.3 |
| | 69.0 |
| | 67.5 |
|
Depreciation, amortization and accretion | 50.9 |
| | 53.2 |
| | 153.5 |
| | 185.2 |
|
| 107.8 |
| | 104.1 |
| | 325.9 |
| | 369.4 |
|
Other operating expenses: | | | | | | | |
Loss on long-lived assets, net | (6.3 | ) | | (2.1 | ) | | (6.3 | ) | | (34.8 | ) |
Goodwill impairment | — |
| | — |
| | — |
| | (109.7 | ) |
Operating income (loss) | (17.0 | ) | | 14.7 |
| | 30.2 |
| | (68.5 | ) |
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(in millions)
| | | | | | | | | | |
| | | | Total Partners’ Capital |
Balance at December 31, 2021 | | | | $ | 1,232.3 | |
Non-cash contribution from partner (Note 11) | | | | 1,075.1 | |
Cash contribution from partner (Note 11) | | | | 14.9 | |
Distributions to partners | | | | (238.1) | |
Unit-based compensation charges | | | | 13.0 | |
Taxes paid for unit-based compensation vesting | | | | (14.9) | |
Other | | | | 0.1 | |
Net income | | | | 10.0 | |
Balance at March 31, 2022 | | | | $ | 2,092.4 | |
| | | | |
| | | | |
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| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | | | | | | | |
| | | | Total Partners’ Capital |
Balance at December 31, 2020 | | | | $ | 1,805.1 | |
Distributions to partners | | | | (334.0) | |
Unit-based compensation charges | | | | 2.3 | |
Taxes paid for unit-based compensation vesting | | | | (8.1) | |
Other | | | | (0.1) | |
Net loss | | | | (50.5) | |
Balance at March 31, 2021 | | | | $ | 1,414.7 | |
| | | | |
| | | | |
| | | | |
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| | | | |
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| | | | |
| | | | |
| | | | |
CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (continued) (in millions) (unaudited) |
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Earnings from unconsolidated affiliates, net | 11.5 |
| | 13.4 |
| | 29.2 |
| | 26.1 |
|
Interest and debt expense, net | (24.2 | ) | | (27.5 | ) | | (74.8 | ) | | (97.9 | ) |
Gain (loss) on modification/extinguishment of debt | — |
| | — |
| | (37.7 | ) | | 10.0 |
|
Income (loss) before income taxes | (29.7 | ) | | 0.6 |
| | (53.1 | ) | | (130.3 | ) |
Provision for income taxes | (0.1 | ) | | — |
| | — |
| | — |
|
Net income (loss) | (29.8 | ) | | 0.6 |
| | (53.1 | ) | | (130.3 | ) |
Net income attributable to non-controlling partners | 6.4 |
| | 6.1 |
| | 18.8 |
| | 18.0 |
|
Net loss attributable to Crestwood Midstream Partners LP | $ | (36.2 | ) | | $ | (5.5 | ) | | $ | (71.9 | ) | | $ | (148.3 | ) |
See accompanying notes.
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| 2022 | | 2021 |
Operating activities | | | |
Net income (loss) | $ | 20.2 | | | $ | (40.4) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
Depreciation, amortization and accretion | 78.2 | | | 62.8 | |
Amortization of debt-related deferred costs and fair value adjustment | 0.8 | | | 1.7 | |
Unit-based compensation charges | 8.6 | | | 2.3 | |
Loss on long-lived assets, net | 3.8 | | | 1.4 | |
| | | |
Loss on modification/extinguishment of debt | — | | | 5.5 | |
(Earnings) loss from unconsolidated affiliates, net, adjusted for cash distributions received | (0.4) | | | 103.8 | |
| | | |
Other | (0.1) | | | 0.1 | |
Changes in operating assets and liabilities | 112.8 | | | 122.0 | |
Net cash provided by operating activities | 223.9 | | | 259.2 | |
Investing activities | | | |
| | | |
Purchases of property, plant and equipment | (26.4) | | | (9.3) | |
Investments in unconsolidated affiliates | (14.5) | | | (10.2) | |
Capital distributions from unconsolidated affiliates | 5.9 | | | 17.3 | |
Net proceeds from sale of assets | 0.4 | | | 0.2 | |
| | | |
Net cash used in investing activities | (34.6) | | | (2.0) | |
Financing activities | | | |
Proceeds from the issuance of long-term debt | 919.1 | | | 1,126.3 | |
Payments on long-term debt | (859.1) | | | (1,018.1) | |
Payments on finance leases | (0.8) | | | (0.7) | |
Payments for deferred financing costs | (1.7) | | | (11.1) | |
| | | |
Contribution from partner | 14.9 | | | — | |
Distributions to partners | (238.1) | | | (334.0) | |
Distributions to non-controlling partner | (10.3) | | | (9.3) | |
Taxes paid for unit-based compensation vesting | (14.9) | | | (8.1) | |
| | | |
Net cash used in financing activities | (190.9) | | | (255.0) | |
Net change in cash | (1.6) | | | 2.2 | |
Cash at beginning of period | 12.9 | | | 13.7 | |
Cash at end of period | $ | 11.3 | | | $ | 15.9 | |
Supplemental schedule of non-cash investing activities | | | |
Net change to property, plant and equipment through accounts payable and accrued expenses | $ | 3.8 | | | $ | (2.2) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL (in millions) (unaudited)
|
| | | | | | | | | | | | |
| | Partners | | Non-Controlling Partners | | Total Partners’ Capital |
Balance at December 31, 2016 | | $ | 2,550.7 |
| | $ | 192.5 |
| | $ | 2,743.2 |
|
Distributions to partners | | (119.5 | ) | | (11.4 | ) | | (130.9 | ) |
Unit-based compensation charges | | 18.9 |
| | — |
| | 18.9 |
|
Taxes paid for unit-based compensation vesting | | (5.3 | ) | | — |
| | (5.3 | ) |
Other | | (0.5 | ) | | — |
| | (0.5 | ) |
Net income (loss) | | (71.9 | ) | | 18.8 |
| | (53.1 | ) |
Balance at September 30, 2017 | | $ | 2,372.4 |
| | $ | 199.9 |
| | $ | 2,572.3 |
|
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in millions)
(unaudited)
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| 2022 | | 2021 |
Supplemental schedule of non-cash financing activities | | | |
Non-cash contribution: | | | |
Current assets | $ | 63.4 | | | $ | — | |
Property, plant and equipment | 1,245.8 | | | — | |
Intangible assets | 497.0 | | | — | |
Goodwill | 39.3 | | | — | |
Current liabilities | (45.9) | | | — | |
Debt | (698.7) | | | — | |
Other liabilities | (25.8) | | | — | |
Total non-cash contribution | $ | 1,075.1 | | | $ | — | |
See accompanying notes.
CRESTWOOD MIDSTREAM PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)
|
| | | | | | | |
| Nine Months Ended |
| September 30, |
| 2017 | | 2016 |
Operating activities | | | |
Net loss | $ | (53.1 | ) | | $ | (130.3 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: | | | |
Depreciation, amortization and accretion | 153.5 |
| | 185.2 |
|
Amortization of debt-related deferred costs | 5.4 |
| | 5.1 |
|
Unit-based compensation charges | 18.9 |
| | 13.4 |
|
Goodwill impairment | — |
| | 109.7 |
|
Loss on long-lived assets | 6.3 |
| | 34.8 |
|
(Gain) loss on modification/extinguishment of debt | 37.7 |
| | (10.0 | ) |
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received | (2.5 | ) | | (3.9 | ) |
Deferred income taxes | 0.1 |
| | 0.2 |
|
Other | (0.3 | ) | | 0.3 |
|
Changes in operating assets and liabilities | 66.9 |
| | 46.3 |
|
Net cash provided by operating activities | 232.9 |
| | 250.8 |
|
Investing activities | | | |
Purchases of property, plant and equipment | (134.4 | ) | | (79.3 | ) |
Investment in unconsolidated affiliates | (46.5 | ) | | (6.2 | ) |
Capital distributions from unconsolidated affiliates | 35.3 |
| | 9.2 |
|
Net proceeds from sale of assets | 1.3 |
| | 943.1 |
|
Net cash provided by (used in) investing activities | (144.3 | ) | | 866.8 |
|
Financing activities | | | |
Proceeds from the issuance of long-term debt | 2,209.8 |
| | 1,364.0 |
|
Payments on long-term debt | (2,159.2 | ) | | (2,279.2 | ) |
Payments on capital leases | (2.2 | ) | | (1.5 | ) |
Payments for debt-related deferred costs | (1.0 | ) | | (3.4 | ) |
Distributions to partners | (130.9 | ) | | (196.4 | ) |
Taxes paid for unit-based compensation vesting | (5.3 | ) | | (0.8 | ) |
Other | — |
| | 0.1 |
|
Net cash used in financing activities | (88.8 | ) | | (1,117.2 | ) |
Net change in cash | (0.2 | ) | | 0.4 |
|
Cash at beginning of period | 1.3 |
| | 0.1 |
|
Cash at end of period | $ | 1.1 |
| | $ | 0.5 |
|
Supplemental schedule of non-cash investing and financing activities | | | |
Net change to property, plant and equipment through accounts payable and accrued expenses | $ | (15.4 | ) | | $ | (9.4 | ) |
See accompanying notes.
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 (Crestwood Equity or CEQP) and Crestwood Midstream Partners LP (Crestwood Midstream or CMLP), unless otherwise indicated.
The accompanying consolidated financial statements and related notes should be read in conjunction with our 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 25, 2022. The financial information as of March 31, 2022, and for the three months ended March 31, 2022 and 2021, is unaudited. The consolidated balance sheets as of December 31, 2021 were derived from the audited balance sheets filed in our 2021 Annual Report on Form 10-K.
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 either Crestwood Midstream Partners LP itself or Crestwood Midstream Partners LP and its consolidated subsidiaries.
The accompanying consolidated financial statements and related notes should be read in conjunction with our 2016 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 27, 2017. The financial information as of September 30, 2017, and for the three and nine months ended September 30, 2017 and 2016, is unaudited. The consolidated balance sheets as of December 31, 2016, were derived from the audited balance sheets filed in our 2016 Annual Report on Form 10-K.Organization
Business Description
Crestwood Equity Partners LP. CEQP is a publicly-traded (NYSE: CEQP) Delaware limited partnership thatformed in March 2001. Crestwood Equity GP LLC (Crestwood Equity GP), our wholly-owned subsidiary, owns our non-economic general partnership interest.
Crestwood Midstream Partners LP. Crestwood Equity owns a 99.9% limited partnership interest in Crestwood Midstream and Crestwood Gas Services GP LLC (CGS GP), a wholly-owned subsidiary of Crestwood Equity, owns a 0.1% limited partnership interest in Crestwood Midstream. Crestwood Midstream GP LLC, a wholly-owned subsidiary of Crestwood Equity, owns the non-economic general partnership interest of Crestwood Midstream.
Business Description
Crestwood Equity 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 natural gas liquids (NGLs), crude oil, and natural gas and produced water gathering, processing, storage, disposal and transportation assets andthat connect fundamental energy supply with energy demand across North America.the United States. 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.Midstream.
See Note 13 for information regarding our operating and reporting segments.
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. In management’s opinion, all necessary adjustments to fairly present our results of operations, financial position and cash flows for the periods presented have been made and all such adjustments are of a normal and recurring nature. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the SEC.
Significant Accounting Policies
There were no material changes in our significant accounting policies from those described in our 20162021 Annual Report on Form 10-K. Below
Note 3 – Acquisition
On October 25, 2021, we entered into a merger agreement to acquire Oasis Midstream Partners LP (Oasis Midstream) in an equity and cash transaction (the Merger). Oasis Midstream is an updatea master limited partnership which operates a diversified portfolio of our accounting policies relatedmidstream assets located in the Williston and Delaware Basins and its operations include natural gas services (gathering, compression, processing and gas lift supply), crude oil services (gathering, terminalling and transportation), and water services (gathering and disposal of produced and flowback water and freshwater distribution).
On February 1, 2022, we completed the merger with Oasis Midstream, which was valued at approximately $1.8 billion. Pursuant to Goodwill and Unit-Based Compensation, andthe merger agreement, Oasis Petroleum Inc. (Oasis Petroleum) received $150 million in cash plus approximately 20.9 million newly issued CEQP common units in exchange for its 33.8 million common units held in Oasis Midstream. In addition, Oasis Midstream’s public unitholders received approximately 12.9 million newly issued CEQP common units in exchange for the approximately 14.8 million Oasis Midstream common units held by them. Additionally, under the merger agreement Oasis Petroleum received a description of Crestwood Equity's Long Term Incentive Plan.
Goodwill. The goodwill impairments recorded during the first quarter of 2016 primarily resulted from increasing the discount rates utilized$10 million cash payment in determining the fair valueexchange for its ownership of the reporting units consideringgeneral partner of Oasis Midstream.
We accounted for the significant, sustained decrease inMerger as a business combination using the market priceacquisition method of our common units andaccounting. In addition, the continued decrease in commodity prices and its impact onpurchase accounting reflects the midstream industry and our customers during that period. We utilized the income approach to determine the fair value of our reporting units given the limited availability of comparable market-based transactions as of March 31, 2016, and 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.
The following table summarizes goodwill impairments of certain of our reporting units recorded during the nine months ended September 30, 2016 (in millions):
|
| | | |
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 |
|
Unit-Based Compensation. Effective January 1, 2017, we adopted the provisionsadoption of Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation2021-08, Business Combinations (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment award transactions, including the classification of awards as either equity or liabilities and the presentation on the statement of cash flows. The adoption of this accounting standard did not have a material impact on our consolidated financial statements.
Crestwood Equity Long Term Incentive Plan. As of September 30, 2017, Crestwood Equity had 404,847 performance units outstanding under the Crestwood Equity Partners LP Long Term Incentive Plan (Crestwood LTIP) that were issued in 2017. The performance units are designed to provide an incentive for continuous employment to certain key employees. The vesting of performance units is subject to the attainment of certain performance and market goals over a three-year period, and entitle a participant to receive common units of Crestwood Equity without payment of an exercise price upon vesting. As of September 30, 2017, we had total unamortized compensation expense of approximately $7.6 million related to these performance units, which we expect will be amortized during the next three years. We recognized compensation expense of approximately $0.9 million and $2.9 million under the Crestwood LTIP related to these performance units 805) during the three and nine months ended September 30, 2017,March 31, 2022. The financial results of Oasis Midstream’s Williston Basin operations are included in our gathering and processing north segment and Oasis Midstream’s Delaware Basin operations are included in our gathering and processing south segment from the date of acquisition. During the three months ended March 31, 2022, we recognized approximately $17 million of transaction costs related to the Merger, which isare included in general and administrative expenses onin our consolidated statements of operations.
New Accounting Pronouncements Issued But Not Yet Adopted
AsThe purchase price has been allocated to the assets acquired and liabilities assumed based on preliminary fair values. Certain preliminary fair values are Level 3 fair value measurements and were developed by management with the assistance of September 30, 2017,a third-party valuation firm. We estimated the following accounting standards had not yet been adopted by us:
In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. We anticipate utilizing the modified retrospective method to adopt the provisions of this standard effective January 1, 2018 and are currently applying the provisionsfair value of the standard to our aggregated listing of gatheringsenior notes assumed based on quoted market prices for similar issuances which are considered Level 2 fair value measurements. The preliminary fair values were estimated primarily utilizing market related information 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 inother projections on the process of implementing appropriate changes to our processes, systems and controls to support the accounting and disclosure requirementsperformance of the new standard. We are currently evaluating the impact that this standard will have on our consolidated financial statements, and currently believe that the standard will require us to begin classifying certain capital expenditure reimbursements received from our customers as deferred revenue rather than as reductionsassets acquired, including an analysis of discounted cash flows at a discount rate of approximately 12%. The preliminary fair values of property, plant and equipment, intangible assets and goodwill and their allocation to our segments are subject to change pending a final determination of the fair values as more information is received about their respective values. We expect to finalize the purchase price allocation for this transaction in our consolidated financial statements. We currently anticipate that2022.
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):
| | | | | | |
Cash | $ | 14.9 | | |
Other current assets | 63.4 | | |
Property, plant and equipment | 1,245.8 | | |
Intangible assets | 497.0 | | |
Total assets acquired | 1,821.1 | | |
Current liabilities | 45.9 | | |
Long-term debt(1) | 698.7 | | |
Other long-term liabilities(2) | 25.8 | | |
Total liabilities assumed | 770.4 | | |
Net assets acquired excluding goodwill | 1,050.7 | | |
Goodwill | 39.3 | | |
Net assets acquired | $ | 1,090.0 | | |
(1) Consists of approximately $60$218 million to $70outstanding borrowings under the Oasis Midstream revolver, which was immediately repaid upon the closing of the Merger and approximately $450 million of these net reimbursements will be reclassifiedunsecured senior notes and the related fair value adjustment of approximately $30.7 million. For a further discussion of the long-term debt assumed in conjunction with the Merger, see Note 8.
(2) Consists primarily of liabilities for asset retirement obligations of approximately $16.5 million.
The identifiable intangible assets primarily consist of customer accounts with Oasis Petroleum and other customers with a weighted-average remaining life of 20 years. The goodwill recognized relates primarily to net deferred revenue on January 1, 2018, which would resultthe anticipated operating synergies between the assets acquired and our existing operations and is reflected in a $15 million to $25 million cumulative effect of accounting change being recorded as an increase to partners' capital on January 1, 2018. In addition, we currently believe that the standard will require us to begin classifying service revenues on certain of our gathering and processing contractsnorth segment.
Our consolidated statement of operations for three months ended March 31, 2022 include the results of Oasis Midstream since February 1, 2022, the closing date of the Merger. During the three months ended March 31, 2022, we recognized approximately $66.8 million of revenues and $23.5 million of net income related to Oasis Midstream’s operations.
The table below presents selected unaudited pro forma information as reductions of costs of product sold prospectively beginningif the Merger had occurred on January 1, 2018. We continue2021 (in millions). The pro forma information is not necessarily indicative of the financial results that would have occurred if the Merger had been completed as of the date indicated. The amounts were calculated after applying our accounting policies and adjusting the results to evaluatereflect the impactdepreciation, amortization and accretion expense that this standard willwould have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been made at the beginning of the reporting period. The pro forma net income (loss) also includes the net effects of interest expense on our consolidated financial statements, especially as it relatesincremental borrowings, repayments of long-term debt and amortization of the fair value adjustment to non-cash consideration received under certain of our gathering, processing, storage and transportation contracts.long-term debt.
Crestwood Equity
| | | | | | | | | | | | | | | | | | |
| | | | Three Months Ended March 31, |
| | | | | | 2022 | | 2021 |
Revenues | | | | | | $ | 1,618.4 | | | $ | 1,133.1 | |
Net income (loss) | | | | | | $ | 28.4 | | | $ | (15.2) | |
Net income (loss) per limited partner unit: | | | | | | | | |
Basic and Diluted | | | | | | $ | 0.03 | | | $ | (0.37) | |
| | | | | | | | |
Crestwood Midstream
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which revises the accounting for leases by requiring certain leases to be recognized as assets and liabilities on the balance sheet, and requiring companies to disclose additional information about their leasing arrangements. We expect to adopt the provisions of this standard effective January 1, 2019 and are currently evaluating the impact that this standard will have on our consolidated financial statements.
| | | | | | | | | | | | | | | | | | |
| | | | Three Months Ended March 31, |
| | | | | | 2022 | | 2021 |
Revenues | | | | | | $ | 1,618.4 | | | $ | 1,133.1 | |
Net income (loss) | | | | | | $ | 26.4 | | | $ | (17.3) | |
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. We expect to adopt the provisions of this standard effective January 1, 2018 and are currently evaluating the impact that this standard may have on our consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which changes the annual quantitative goodwill impairment test to eliminate the current two step method and replace it with a single test to determine if goodwill is impaired and the amount of any impairment. We are required to adopt the provisions of this standard by January 1, 2020 and are currently evaluating the impact that this standard may have on our consolidated financial statements.
Note 34 – Certain Balance Sheet Information
Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in millions): | | | | | | | | | | | | | | |
| | March 31, | | December 31, |
| | 2022 | | 2021 |
CMLP | | | | |
Accrued expenses | | $ | 50.0 | | | $ | 66.3 | |
Accrued property taxes | | 5.2 | | | 4.4 | |
Income tax payable | | 0.4 | | | 0.4 | |
Interest payable | | 54.7 | | | 30.6 | |
Accrued additions to property, plant and equipment | | 25.6 | | | 17.4 | |
Operating leases | | 10.4 | | | 13.2 | |
Finance leases | | 30.5 | | | 1.7 | |
Contract liabilities | | 11.0 | | | 10.7 | |
Asset retirement obligations | | 1.1 | | | 1.4 | |
Total CMLP accrued expenses and other liabilities | | $ | 188.9 | | | $ | 146.1 | |
CEQP | | | | |
Accrued expenses | | 1.2 | | | 0.9 | |
Income tax payable | | 0.2 | | | 0.1 | |
Total CEQP accrued expenses and other liabilities | | $ | 190.3 | | | $ | 147.1 | |
Other Long-Term Liabilities
Other long-term liabilities consisted of the following (in millions):
| | | | | | | | | | | |
| March 31, | | December 31, |
| 2022 | | 2021 |
CMLP | | | |
Contract liabilities | $ | 202.1 | | | $ | 187.1 | |
Operating leases | 14.5 | | | 19.4 | |
Asset retirement obligations | 51.7 | | | 34.8 | |
Other | 13.3 | | | 12.8 | |
Total CMLP other long-term liabilities | $ | 281.6 | | | $ | 254.1 | |
CEQP | | | |
Other | 1.5 | | | 4.6 | |
Total CEQP other long-term liabilities | $ | 283.1 | | | $ | 258.7 | |
|
| | | | | | | | | | | | | | | |
| CEQP | | CMLP |
| September 30, | | December 31, | | September 30, | | December 31, |
| 2017 | | 2016 | | 2017 | | 2016 |
Accrued expenses | $ | 40.6 |
| | $ | 46.9 |
| | $ | 39.9 |
| | $ | 45.5 |
|
Accrued property taxes | 6.3 |
| | 4.2 |
| | 6.3 |
| | 4.2 |
|
Accrued natural gas purchases | 0.7 |
| | 4.9 |
| | 0.7 |
| | 4.9 |
|
Tax payable | — |
| | 1.2 |
| | — |
| | — |
|
Interest payable | 39.7 |
| | 22.8 |
| | 39.7 |
| | 22.8 |
|
Accrued additions to property, plant and equipment | 16.6 |
| | 1.7 |
| | 16.6 |
| | 1.7 |
|
Capital leases | 1.1 |
| | 1.3 |
| | 1.1 |
| | 1.3 |
|
Deferred revenue | 7.5 |
| | 7.5 |
| | 7.5 |
| | 7.5 |
|
Total accrued expenses and other liabilities | $ | 112.5 |
| | $ | 90.5 |
| | $ | 111.8 |
| | $ | 87.9 |
|
Note 45 - Investments in Unconsolidated Affiliates
Crestwood Permian Basin Holdings LLC
In October 2016, 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 Crestwood Permian joint venture 100% of the equity interests of Crestwood Permian Basin LLC (Crestwood Permian Basin), which owns the Nautilus gathering system. We manage and account for our 50% ownership interest in Crestwood Permian, which is a VIE, under the equity method of accounting as we exercise significant influence, but do not control Crestwood Permian and we are not its primary beneficiary due to First Reserve’s rights to exercise control over the entity.
Crestwood Permian Basin 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 (the Nautilus gathering 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 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 Basin provides gathering, dehydration, compression and liquids handling services to SWEPI on a fixed fee basis. In October 2017, Shell Midstream Partners L.P. (Shell Midstream), a subsidiary of Royal Dutch Shell plc, purchased a 50% equity interest in Crestwood Permian Basin for approximately $37.9 million in cash.
CEQP issued a guarantee in conjunction with the Crestwood Permian Basin 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, of which approximately $72.7 million has been spent through September 30, 2017) 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 September 30, 2017 and December 31, 2016.
On June 21, 2017, we contributed to Crestwood Permian 100% of theequity interest of Crestwood New Mexico Pipeline LLC (Crestwood New Mexico), our wholly-owned subsidiary that owns our Delaware Basin assets located in Eddy County, New Mexico. This contribution was treated as a transaction between entities under common control (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. Additionally, 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. Pursuant to the Stagecoach Gas limited liability company agreement, we may be required to make payments of up to $57 million to CEGP 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. We do not believe that this provision is probable of resulting in future payments to CEGP, and as a result we have not recorded a liability on our balance sheet as of September 30, 2017 and December 31, 2016.
We deconsolidated the Northeast storage and transportation assets as a result of this transaction discussed above 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.
Net Investments and Earnings (Loss) of Unconsolidated Affiliates
Our net investments in and earnings (loss) from our unconsolidated affiliates are as follows (in millions unless otherwise stated):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Investment | | | | Earnings (Loss) from Unconsolidated Affiliates |
| | | | | | | | | Three Months Ended |
| | | March 31, | | December 31, | | | | March 31, |
| | | 2022 | | 2021 | | | | | | 2022 | | 2021 |
Crestwood Permian Basin Holdings LLC(1) | | | $ | 118.7 | | | $ | 116.1 | | | | | | | $ | 2.6 | | | $ | (0.8) | |
Tres Palacios Holdings LLC(2) | | | 42.8 | | | 36.2 | | | | | | | 0.6 | | | 9.3 | |
Powder River Basin Industrial Complex, LLC(3) | | | 3.3 | | | 3.5 | | | | | | | (0.2) | | | 0.1 | |
Stagecoach Gas Services LLC(4) | | | — | | | — | | | | | | | — | | | (112.3) | |
Total | | | $ | 164.8 | | | $ | 155.8 | | | | | | | $ | 3.0 | | | $ | (103.7) | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Investment | | Earnings (Loss) from Unconsolidated Affiliates |
| September 30, | | December 31, | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 |
Stagecoach Gas Services LLC(1) | $ | 854.3 |
| | $ | 871.0 |
| | $ | 6.4 |
| | $ | 6.8 |
| | $ | 19.0 |
| | $ | 9.1 |
|
Jackalope Gas Gathering Services, L.L.C.(2) | 186.2 |
| | 197.2 |
| | 1.5 |
| | 5.5 |
| | 5.5 |
| | 16.5 |
|
Tres Palacios Holdings LLC(3) | 34.7 |
| | 39.0 |
| | 0.3 |
| | 0.8 |
| | 1.5 |
| | (0.7 | ) |
Powder River Basin Industrial Complex, LLC(4) | 8.6 |
| | 8.7 |
| | 0.5 |
| | 0.3 |
| | 1.0 |
| | 1.2 |
|
Crestwood Permian Basin Holdings LLC(5) | 114.7 |
| | (0.5 | ) | | 2.8 |
| | — |
| | 2.2 |
| | — |
|
Total | $ | 1,198.5 |
| | $ | 1,115.4 |
| | $ | 11.5 |
| | $ | 13.4 |
| | $ | 29.2 |
| | $ | 26.1 |
|
| |
(1) | As of September 30, 2017,(1)As of March 31, 2022, 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 September 30, 2017, our equity in the underlying net assets of Jackalope Gas Gathering Services, L.L.C. (Jackalope) exceeded our investment balance by approximately $0.8 million. We amortize this amount over 20 years, which represents the life of Jackalope’s gathering agreement with Chesapeake Energy Corporation (Chesapeake), and we reflect the underlying net assets of Crestwood Permian Basin Holdings LLC (Crestwood Permian) exceeded our investment balance by $4.6 million, and this excess amount is not subject to amortization. Our Crestwood Permian investment is included in our gathering and processing south segment.(2)As of March 31, 2022, our equity in the underlying net assets of Tres Palacios Holdings LLC (Tres Holdings) exceeded the carrying value of our investment balance by approximately $21.2 million. During both the three months ended March 31, 2022 and 2021, we recorded amortization of approximately $0.3 million related to this excess basis, which is reflected as an increase in our earnings from unconsolidated affiliates. Our Jackalope investment is included in our gathering and processing segment. |
| |
(3) | As of September 30, 2017, our equity in the underlying net assets of Tres Palacios Holdings LLC (Tres Holdings) exceeded our investment balance by approximately $26.9 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) | As of September 30, 2017, our equity in the underlying net assets of Powder River Basin Industrial Complex, LLC (PRBIC) exceeded our investment balance by approximately $6.5 million. We amortize a portion of this amount over the life of PRBIC's property, plant and equipment and its agreement with Chesapeake, and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. During 2015, we recorded an impairment of our PRBIC equity investment as further discussed in our 2016 Annual Report on Form 10-K. For the year ended December 31, 2016, PRBIC recorded a $41.3 million impairment of its goodwill and long-lived assets and as a result, we adjusted our excess basis in PRBIC by approximately $8.3 million to reflect our proportionate share of the fair value of PRBIC's net assets. Our PRBIC investment is included in our storage and transportation segment. |
| |
(5) | As of September 30, 2017, our equity in the underlying net assets of Crestwood Permian exceeded our investment balance by approximately $22.0 million, which is entirely attributable to goodwill and, as such, is not subject to amortization. Our Crestwood Permian investment is included in our gathering and processing segment. |
Summarized Financial Information of Unconsolidated Affiliates
Below is the summarized operating results for our significant unconsolidated affiliates (in millions; amounts represent 100%our consolidated statements of operations. Our Tres Holdings investment is included in our storage and logistics segment.
(3)As of March 31, 2022, our equity in the underlying net assets of Powder River Basin Industrial Complex, LLC (PRBIC) approximates the carrying value of our investment balance. Our PRBIC investment is included in our storage and logistics segment.
(4)In 2021, we sold our 50% equity interest in our Stagecoach Gas Services LLC (Stagecoach Gas) equity investment to a subsidiary of Kinder Morgan, Inc. During the first quarter of 2021, we recorded our share of a goodwill impairment recorded by Stagecoach Gas based on market-based information received by Stagecoach Gas from Con Edison Gas Pipeline and Storage Northeast, LLC’s (the previous owner of the other 50% equity interest in Stagecoach Gas) strategic evaluation of its investment during the three months ended March 31, 2021. This resulted in a $119.9 million reduction in our earnings from unconsolidated affiliate information):affiliates during the three months ended March 31, 2021. Our Stagecoach Gas investment was previously included in our storage and logistics segment.
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 |
| Operating Revenues | | Operating Expenses | | Net Income | | Operating Revenues | | Operating Expenses | | Net Income |
Stagecoach Gas | $ | 43.1 |
| | $ | 20.4 |
| | $ | 22.7 |
| | $ | 42.8 |
| | $ | 18.4 |
| | $ | 24.4 |
|
Other(1) | 78.3 |
| | 66.4 |
| | 11.9 |
| | 30.1 |
| | 18.4 |
| | 11.7 |
|
Total | $ | 121.4 |
| | $ | 86.8 |
| | $ | 34.6 |
| | $ | 72.9 |
| | $ | 36.8 |
| | $ | 36.1 |
|
| |
(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 September 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 September 30, 2017 and 2016. We recorded amortization of the excess basis in our PRBIC equity investment of approximately $0.2 million and $0.4 million for the three months ended September 30, 2017 and 2016. |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 |
| Operating Revenues | | Operating Expenses | | Net Income | | Operating Revenues | | Operating Expenses | | Net Income |
Stagecoach Gas | $ | 127.1 |
| | $ | 58.4 |
| | $ | 68.8 |
| | $ | 56.0 |
| | $ | 24.1 |
| | $ | 31.9 |
|
Other(1) | 124.6 |
| | 103.7 |
| | 20.8 |
| | 90.3 |
| | 60.6 |
| | 29.6 |
|
Total | $ | 251.7 |
| | $ | 162.1 |
| | $ | 89.6 |
| | $ | 146.3 |
| | $ | 84.7 |
| | $ | 61.5 |
|
| |
(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 nine months ended September 30, 2017 and 2016. We recorded amortization of the excess basis in our Tres Holdings equity investment of approximately $0.9 million for both the nine months ended September 30, 2017 and 2016. We recorded amortization of the excess basis in our PRBIC equity investment of approximately $0.5 million and $1.2 million for the nine months ended September 30, 2017 and 2016. |
Distributions and Contributions
The following table summarizes our distributions from and contributions to our unconsolidated affiliates (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Distributions(1) | | Contributions | | | | |
| | Three Months Ended | | Three Months Ended | | | | |
| | March 31, | | March 31, | | |
| | 2022 | | 2021 | | 2022 | | 2021 | | | | |
Crestwood Permian | | $ | 8.5 | | | $ | 3.3 | | | $ | 8.5 | | | $ | 3.3 | | | | | |
Tres Holdings | | — | | | — | | | 6.0 | | | 6.9 | | | | | |
PRBIC | | — | | | 0.1 | | | — | | | — | | | | | |
Stagecoach Gas | | — | | | 14.0 | | | — | | | — | | | | | |
Total | | $ | 8.5 | | | $ | 17.4 | | | $ | 14.5 | | | $ | 10.2 | | | | | |
(1) In April 2022, we received cash distributions from Crestwood Permian and Tres Holdings of approximately $5.1 million and $1.4 million, respectively.
|
| | | | | | | | | | | | | | | | |
| | Distributions | | Contributions |
| | Nine Months Ended September 30, | | Nine Months Ended September 30, |
| | 2017 | | 2016 | | 2017 | | 2016 |
Stagecoach Gas(1) | | $ | 35.7 |
| | $ | 3.7 |
| | $ | — |
| | $ | — |
|
Jackalope | | 19.4 |
| | 19.9 |
| | 2.9 |
| | 0.7 |
|
Tres Holdings(1) | | 5.8 |
| | 6.2 |
| | — |
| | 5.5 |
|
PRBIC | | 1.1 |
| | 1.6 |
| | — |
| | — |
|
Crestwood Permian(2) | | — |
| | — |
| | 113.0 |
| | — |
|
Total | | $ | 62.0 |
| | $ | 31.4 |
| | $ | 115.9 |
| | $ | 6.2 |
|
| |
(1) | In October 2017, we received a cash distribution from Stagecoach Gas, Tres Holdings and Crestwood Permian of approximately $11.6 million, $3.1 million and $4.5 million, respectively. |
| |
(2) | On June 21, 2017, we contributed to Crestwood Permian 100% of the equity interest of Crestwood New Mexico at our historical book value of approximately $69.4 million. This contribution was treated as a non-cash transaction between entities under common control. |
Note 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 (such as propane, ethane, butane and heating oil), crude oil and natural gas to energy relatedenergy-related businesses and may use a variety of financial and other instruments including forward contracts involving physical delivery of NGLs, heatingcrude oil and crude oil.natural gas. 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 theour 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. DuringOur commodity-based derivatives that are settled with physical commodities are reflected as an increase to product revenues, and the three and nine months ended September 30, 2017,commodity inventory that is utilized to satisfy those physical obligations is reflected as an increase to product costs in our consolidated statements of operations. The following table summarizes 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 $24.1 million and $22.6 million. During the three and nine months ended September 30, 2016, the impact to the statement of operations related to our commodity-based derivatives reflected in costs of product/services sold was a gain of $2.1 million and $4.1 million. millions):
| | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2022 | | 2021 |
Product revenues | | | | | $ | 202.2 | | | $ | 114.8 | |
Loss reflected in product costs | | | | | $ | (47.6) | | | $ | (8.1) | |
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 product costs of product/services sold related to these instruments.
Commodity Price and Credit Risk
Notional Amounts and Terms
The notional amounts and terms of our derivative financial instruments include the following:
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
| Fixed Price Payor | | Fixed Price Receiver | | Fixed Price Payor | | Fixed Price Receiver |
Propane, ethane, butane, heating oil and crude oil (MMBbls) | 57.9 | | | 60.1 | | | 71.6 | | | 75.8 | |
Natural gas (Bcf) | 24.3 | | | 36.2 | | | 31.9 | | | 43.4 | |
|
| | | | | | | | | | | |
| September 30, 2017 | | December 31, 2016 |
| Fixed Price Payor | | Fixed Price Receiver | | Fixed Price Payor | | Fixed Price Receiver |
Propane, crude and heating oil (MMBbls) | 19.7 |
| | 22.7 |
| | 13.1 |
| | 15.1 |
|
Natural gas (MMBTU’s) | 0.9 |
| | 0.6 |
| | — |
| | — |
|
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 3536 months or less; however, 87% of the contracted volumes will be delivered or settled within 12 months.
Credit Risk
Inherent in our contractual portfolio are certain credit risks. Credit risk is the risk of loss from nonperformance by suppliers, customers or financial counterparties to a contract. We take an active role in managing credit risk and have established control procedures, which are reviewed on an ongoing basis. We attempt to minimize credit risk exposure through credit policies and periodic monitoring procedures as well as through customer deposits, letters of credit and entering into netting agreements that allow for offsetting counterparty receivable and payable balances for certain financial transactions, as deemed appropriate. The counterparties associated with our 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 commodityIn addition, we have margin requirements with a derivative instruments with credit-risk-related contingent features that were inclearing broker and a third party broker related to our net asset or liability position at September 30, 2017 and December 31, 2016 was $30.1 million and $13.9 million. At September 30, 2017 and December 31, 2016, we posted less than $0.1 million of collateral for our commodity derivative instruments with credit-risk-related contingent features. In addition, at September 30, 2017 and December 31, 2016, we had a New York Mercantile Exchange (NYMEX) related net derivative asset position of $30.7 million and $14.3 million, for which we posted $25.2 million and $4.2 million of cash collateral in the normal course of business. At September 30, 2017 and December 31, 2016, we also received collateral of $5.7 million and $4.3 million in the normal course of business.each respective broker. 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.
The following table presents the fair value of our commodity derivative instruments with credit-risk related contingent features and their associated collateral (in millions):
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Aggregate fair value liability of derivative instruments with credit-risk-related contingent features(1) | $ | 71.6 | | | $ | 57.9 | |
Broker-related net derivative asset position | $ | 87.7 | | | $ | 104.8 | |
Broker-related cash collateral received | $ | 68.7 | | | $ | 76.8 | |
Cash collateral (paid) received, net | $ | (6.8) | | | $ | 11.4 | |
(1)At March 31, 2022 and December 31, 2021, we posted $11.6 million and $1.5 million of collateral associated with these derivatives.
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 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 September 30, 2017 and December 31, 2016, the carrying amounts of cash, accounts receivable and accounts payable approximate fair value based on the short-term nature of these instruments.
Credit Facility
The fair value of the amounts outstanding under our CMLP credit facility approximates the carrying amounts as of September 30, 2017 and December 31, 2016, due primarily to the variable nature of the interest rate of the instrument, which is considered a Level 2 fair value measurement.
Senior Notes
We estimate the fair value of our senior notes primarily based on quoted market prices for the same or similar issuances (representing a Level 2 fair value measurement). The following table reflects the carrying value (reduced for deferred financing costs associated with the respective notes) and fair value of our senior notes (in millions):
|
| | | | | | | | | | | | | | | |
| September 30, 2017 | | December 31, 2016 |
| Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
2020 Senior Notes | $ | — |
| | $ | — |
| | $ | 340.6 |
| | $ | 350.2 |
|
2022 Senior Notes | $ | — |
| | $ | — |
| | $ | 429.3 |
| | $ | 447.3 |
|
2023 Senior Notes | $ | 691.7 |
| | $ | 724.7 |
| | $ | 690.6 |
| | $ | 722.6 |
|
2025 Senior Notes | $ | 492.1 |
| | $ | 511.5 |
| | $ | — |
| | $ | — |
|
Financial Assets and Liabilities
As of September 30, 2017March 31, 2022 and December 31, 2016,2021, 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, NGLs and NGLs.natural gas. Our derivative instruments consist of forwards, swaps, futures, physical exchanges and options.
Our derivative instruments that are traded on the NYMEXNew York Mercantile Exchange 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.
The following tables set forth by level within the fair value hierarchy, our financial instruments that were accounted for at fair value on a recurring basis at September 30, 2017March 31, 2022 and December 31, 20162021 (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2022 |
| | | | | | |
| 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 | $ | 53.3 | | | $ | 856.4 | | | $ | — | | | $ | 909.7 | | | $ | (816.5) | | | $ | (67.7) | | | $ | 25.5 | |
Other investments(2) | 2.5 | | | — | | | — | | | 2.5 | | | — | | | — | | | 2.5 | |
Total assets at fair value | $ | 55.8 | | | $ | 856.4 | | | $ | — | | | $ | 912.2 | | | $ | (816.5) | | | $ | (67.7) | | | $ | 28.0 | |
| | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | |
Liabilities from price risk management | $ | 62.3 | | | $ | 867.6 | | | $ | — | | | $ | 929.9 | | | $ | (816.5) | | | $ | (5.8) | | | $ | 107.6 | |
Total liabilities at fair value | $ | 62.3 | | | $ | 867.6 | | | $ | — | | | $ | 929.9 | | | $ | (816.5) | | | $ | (5.8) | | | $ | 107.6 | |
| | | | | | | | | | | | | |
| December 31, 2021 |
| | | | | | |
| 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 | $ | 33.3 | | | $ | 695.6 | | | $ | — | | | $ | 728.9 | | | $ | (607.4) | | | $ | (79.4) | | | $ | 42.1 | |
Other investments(2) | 2.2 | | | — | | | — | | | 2.2 | | | — | | | — | | | 2.2 | |
Total assets at fair value | $ | 35.5 | | | $ | 695.6 | | | $ | — | | | $ | 731.1 | | | $ | (607.4) | | | $ | (79.4) | | | $ | 44.3 | |
| | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | |
Liabilities from price risk management | $ | 26.9 | | | $ | 686.3 | | | $ | — | | | $ | 713.2 | | | $ | (607.4) | | | $ | 8.8 | | | $ | 114.6 | |
Total liabilities at fair value | $ | 26.9 | | | $ | 686.3 | | | $ | — | | | $ | 713.2 | | | $ | (607.4) | | | $ | 8.8 | | | $ | 114.6 | |
(1)Amounts represent the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions.
(2)Amount primarily relates to our investment in Suburban Propane Partners, L.P. units which is reflected in other non-current assets on CEQP’s consolidated balance sheets.
Cash, Accounts Receivable and Accounts Payable
As of March 31, 2022 and December 31, 2021, the carrying amounts of cash, accounts receivable and accounts payable approximate fair value based on the short-term nature of these instruments.
Credit Facility
The fair value of the amounts outstanding under our Crestwood Midstream credit facility approximates the carrying amounts as of March 31, 2022 and December 31, 2021, due primarily to the variable nature of the interest rate of the instrument, which is considered a Level 2 fair value measurement.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2017 | | |
| Fair Value of Derivatives | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Gross Fair Value | | Contract Netting(1) | | Collateral/Margin Received or Paid | | Recorded in Balance Sheet |
Assets | | | | | | | | | | | | | |
Assets from price risk management | $ | 0.9 |
| | $ | 127.1 |
| | $ | — |
| | $ | 128.0 |
| | $ | (94.2 | ) | | $ | (26.0 | ) | | $ | 7.8 |
|
Suburban Propane Partners, L.P. units(2) | 3.7 |
| | — |
| | — |
| | 3.7 |
| | — |
| | — |
| | 3.7 |
|
Total assets at fair value | $ | 4.6 |
| | $ | 127.1 |
| | $ | — |
| | $ | 131.7 |
| | $ | (94.2 | ) | | $ | (26.0 | ) | | $ | 11.5 |
|
| | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | |
Liabilities from price risk management | $ | 1.6 |
| | $ | 140.3 |
| | $ | — |
| | $ | 141.9 |
| | $ | (94.2 | ) | | $ | 4.9 |
| | $ | 52.6 |
|
Total liabilities at fair value | $ | 1.6 |
| | $ | 140.3 |
| | $ | — |
| | $ | 141.9 |
| | $ | (94.2 | ) | | $ | 4.9 |
| | $ | 52.6 |
|
| | | | | | | | | | | | | |
| December 31, 2016 | | |
| Fair Value of Derivatives | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Gross Fair Value | | Contract Netting(1) | | Collateral/Margin Received or Paid | | Recorded in Balance Sheet |
Assets | | | | | | | | | | | | | |
Assets from price risk management | $ | 0.6 |
| | $ | 84.4 |
| | $ | — |
| | $ | 85.0 |
| | $ | (67.8 | ) | | $ | (10.9 | ) | | $ | 6.3 |
|
Suburban Propane Partners, L.P. units(2) | 4.3 |
| | — |
| | — |
| | 4.3 |
| | — |
| | — |
| | 4.3 |
|
Total assets at fair value | $ | 4.9 |
| | $ | 84.4 |
| | $ | — |
| | $ | 89.3 |
| | $ | (67.8 | ) | | $ | (10.9 | ) | | $ | 10.6 |
|
| | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | |
Liabilities from price risk management | $ | 2.7 |
| | $ | 90.2 |
| | $ | — |
| | $ | 92.9 |
| | $ | (67.8 | ) | | $ | 3.5 |
| | $ | 28.6 |
|
Total liabilities at fair value | $ | 2.7 |
| | $ | 90.2 |
| | $ | — |
| | $ | 92.9 |
| | $ | (67.8 | ) | | $ | 3.5 |
| | $ | 28.6 |
|
| |
(1) | Amounts represent the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions as well as cash collateral held or placed with the same counterparties. |
| |
(2) | Amount is reflected in other assets on CEQP's consolidated balance sheets. |
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 represents the carrying amount (reduced for deferred financing costs associated with the respective notes) and fair value of our senior notes (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
| Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
2025 Senior Notes | $ | 496.8 | | | $ | 503.8 | | | $ | 496.5 | | | $ | 511.9 | |
2027 Senior Notes | $ | 594.5 | | | $ | 595.1 | | | $ | 594.2 | | | $ | 615.0 | |
February 2029 Senior Notes | $ | 691.2 | | | $ | 699.7 | | | $ | 690.8 | | | $ | 727.3 | |
April 2029 Senior Notes (1) | $ | 480.0 | | | $ | 480.3 | | | $ | — | | | $ | — | |
(1)Represents $450 million of unsecured senior notes assumed in conjunction with the merger with Oasis Midstream discussed in Note 73, and the related net fair value adjustment which are further described in Note 8.
Note 8 – Long-Term Debt
Long-term debt consisted of the following at September 30, 2017March 31, 2022 and December 31, 20162021 (in millions):
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Credit Facility | $ | 560.0 | | | $ | 282.0 | |
2025 Senior Notes | 500.0 | | | 500.0 | |
2027 Senior Notes | 600.0 | | | 600.0 | |
February 2029 Senior Notes | 700.0 | | | 700.0 | |
April 2029 Senior Notes | 450.0 | | | — | |
April 2029 Senior Notes fair value adjustment, net | 30.0 | | | — | |
Other(1) | 0.2 | | | 0.2 | |
Less: deferred financing costs, net | 30.1 | | | 29.9 | |
Total debt | 2,810.1 | | | 2,052.3 | |
Less: current portion | 0.2 | | | 0.2 | |
Total long-term debt, less current portion | $ | 2,809.9 | | | $ | 2,052.1 | |
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Credit Facility | $ | 444.1 |
| | $ | 77.0 |
|
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 |
|
2025 Senior Notes | 500.0 |
| | — |
|
Other | 2.4 |
| | 3.7 |
|
Less: deferred financing costs, net | 30.2 |
| | 34.0 |
|
Total debt | 1,616.3 |
| | 1,523.7 |
|
Less: current portion | 0.9 |
| | 1.0 |
|
Total long-term debt, less current portion | $ | 1,615.4 |
| | $ | 1,522.7 |
|
(1)Represents non-interest bearing obligations related to certain companies acquired in 2014 with payments due through 2022.
Credit Facility
At September 30, 2017, Crestwood Midstream’s five-year $1.5 billion revolving credit facility (the CMLP Credit Facility) is available to fund acquisitions, working capital and internal growth projects and for general partnership purposes. In conjunction with the merger with Oasis Midstream had $548.7on February 1, 2022, we borrowed amounts under the CMLP Credit Facility to fund the cash paid of $160 million to Oasis Petroleum and to repay approximately $218 million of available capacity under itsborrowings on Oasis Midstream’s credit facility, considering the most restrictive debt covenants in its credit agreement. At September 30, 2017 and December 31, 2016, Crestwood Midstream's outstanding standby letters of credit were $63.6 million and $64.0 million. Borrowings under the credit facility accrue interest at prime or Eurodollar based rates plus applicable spreads, which resulted in interest rates between 3.49% and 5.50% at September 30, 2017 and 3.21% and 5.25% at December 31, 2016. The weighted-average interest rate as of September 30, 2017 and December 31, 2016 was 3.50% and 3.23%.retired on February 1, 2022.
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 3.753.50 to 1.0. At September 30, 2017,March 31, 2022, the net debt to consolidated EBITDA ratio was approximately 4.133.48 to 1.0, the consolidated EBITDA to consolidated interest expense ratio was approximately 4.085.04 to 1.0, and the senior secured leverage ratio was 1.110.69 to 1.0.
The CMLPAt March 31, 2022, Crestwood Midstream had $931.2 million of available capacity under its credit facility allowsconsidering the most restrictive debt covenants in its credit agreement. At March 31, 2022 and December 31, 2021, Crestwood Midstream to increase its available borrowingsMidstream’s
outstanding standby letters of credit were $8.8 million and $6.3 million. Borrowings under the credit facility by $350.0 million, subject to lender approval andaccrue interest at either prime or the satisfaction of certain other conditions, as describedAdjusted Term SOFR (as defined in the credit agreement.agreement) plus applicable spreads, which resulted in interest rates between 2.07% and 4.00% at March 31, 2022 and 1.90% and 4.00% at December 31, 2021. The weighted-average interest rate on outstanding borrowings as of March 31, 2022 and December 31, 2021 was 2.16% and 1.91%.
Senior Notes
RepaymentsFebruary 2029 Senior Notes.In January 2021, Crestwood Midstream issued $700 million of 6.00% unsecured senior notes due 2029 (the February 2029 Senior Notes). The February 2029 Senior Notes will mature on February 1, 2029, and interest is payable semi-annually in arrears on February 1 and August 1 of each year, beginning on August 1, 2021. The net proceeds from this offering of approximately $691.0 million were used to repay a portion of our senior notes that were due in 2023 and to repay indebtedness under the CMLP Credit Facility.
April 2029 Senior Notes.In February 2022, in conjunction with the merger with Oasis Midstream, we assumed $450 million of 8.00% unsecured senior notes due 2029 (the April 2029 Senior Notes) and we recorded a fair value adjustment of approximately $30.7 million related to the senior notes. During the ninethree months ended September 30, 2017, Crestwood Midstream paidMarch 31, 2022, we recorded a reduction to our interest and debt expense of approximately $457.8$0.7 million related to purchase, redeem and/or cancel allthe amortization of the principal amount outstanding under the 2022fair value adjustment. The April 2029 Senior Notes will mature on April 1, 2029, and approximately $349.9 million to redeem allinterest is payable semi-annually on April 1 and October 1 of each year.
2023 Senior Note Repayments. In January 2021, we utilized a portion 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 20252029 Senior Notes described belowto repurchase and borrowingscancel approximately $399.2 million of principal outstanding under the credit facility.our senior notes that were due in 2023. In conjunction with these note repayments, Crestwood Midstream (i)the repayment of the notes, we recognized a loss on extinguishment of debt of approximately $37.7$5.5 million. During 2021, we repaid all amounts outstanding under our senior notes due 2023.
Note 9 – Commitments and Contingencies
Legal Proceedings
Oasis Unitholder Lawsuit. On December 17, 2021, Kristen Eckert-Smith (Plaintiff), a common unitholder of Oasis Midstream filed a complaint in the United States District Court for the District of Delaware on behalf of all Oasis common unitholders. This complaint alleges that the merger between Oasis Midstream and Crestwood Equity violates the Securities Exchange Act of 1934. In addition, the Plaintiff filed a lawsuit against Oasis Midstream, its board of directors and Crestwood Equity GP, claiming the Registration Statement filed with the SEC omitted material information with respect to Oasis Midstream’s calculated projections and financial analyses. The Plaintiff was seeking to block the parties from closing the merger and in the alternative, to revise the Registration Statement and award the plaintiff attorney’s and expert’s fees. The Plaintiff was unsuccessful as the merger was completed and the lawsuit was dismissed.
Linde Lawsuit. On December 23, 2019, Linde Engineering North America Inc. (Linde) filed a lawsuit in the District Court of Harris County, Texas alleging that Arrow Field Services, LLC, our consolidated subsidiary, and Crestwood Midstream breached a contract entered into in March 2018 under which Linde was to provide engineering, procurement and construction services to us related to the completion of the construction of the Bear Den II cryogenic processing plant. Since the lawsuit was filed, we have paid Linde approximately $22.7 million (including approximately $3.2 million paid during the ninethree months ended September 30, 2017 (including the write offMarch 31, 2022) related to this matter, and Linde claims remaining unpaid invoices of approximately $6.8$33 million, along with other damages. This matter is not an insurable event based on our insurance policies, and we are unable to predict the outcome for this matter.
General. We are periodically involved in litigation proceedings. If we determine that a negative outcome is probable and the amount of deferred financingloss 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 March 31, 2022 and December 31, 2021, we had approximately $16.6 million and $16.8 million accrued for outstanding legal matters. Based on currently available information, we believe it is remote that future costs associatedrelated to known contingent liability exposures for which we can estimate will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures.
Any loss estimates are inherently subjective, based on currently available information, and are subject to management’s judgment and various assumptions. Due to the inherently subjective nature of these estimates and the uncertainty and unpredictability surrounding the outcome of legal proceedings, actual results may differ materially from any amounts that have been accrued.
Regulatory Compliance
In the ordinary course of our business, we are subject to various laws and regulations. In the opinion of our management, compliance with current laws and regulations will not have a material effect on our results of operations, cash flows or financial condition.
Environmental Compliance
Our operations are subject to stringent and complex laws and regulations pertaining to worker health, safety, and the environment. We are subject to laws and regulations at the federal, state, regional and local levels that relate to air and water quality, hazardous and solid waste management and disposal, and other environmental matters. The cost of planning, designing, constructing and operating our facilities must incorporate compliance with environmental laws and regulations and safety standards. Failure to comply with these laws and regulations may trigger a variety of administrative, civil and potentially criminal enforcement measures.
At March 31, 2022 Senior Notes); and (ii) paid $5.1December 31, 2021, our accrual of approximately $0.9 million and $1.0 million was based on our undiscounted estimate of amounts we will spend on compliance with environmental and other regulations, and any associated fines or penalties. We estimate that our potential liability for reasonably possible outcomes related to our environmental exposures could range from approximately $0.9 million to $1.8 million at March 31, 2022.
Self-Insurance
We utilize third-party insurance subject to varying retention levels of self-insurance, which management considers prudent. Such self-insurance relates to losses and liabilities primarily associated with medical claims, workers’ compensation claims and general, product, vehicle and environmental liability. Losses are accrued interestbased upon management’s estimates of the aggregate liability for claims incurred using certain assumptions followed in the insurance industry and based on past experience. The primary assumption utilized is actuarially determined loss development factors. The loss development factors are based primarily on historical data. Our self-insurance reserves could be affected if future claim developments differ from the historical trends. We believe changes in health care costs, trends in health care claims of our employee base, accident frequency and severity and other factors could materially affect the estimate for these liabilities. We continually monitor changes in employee demographics, incident and claim type and evaluate our insurance accruals and adjust our accruals based on our evaluation of these qualitative data points. We are liable for the development of claims for our previously disposed of retail propane operations, provided they were reported prior to August 1, 2012. The following table summarizes CEQP’s and CMLP’s self-insurance reserves (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| CEQP | | CMLP |
| March 31, 2022 | | December 31, 2021 | | March 31, 2022 | | December 31, 2021 |
Self-insurance reserves(1) | $ | 5.9 | | | $ | 5.5 | | | $ | 4.9 | | | $ | 4.7 | |
(1)At March 31, 2022, CEQP and CMLP classified approximately $3.5 million and $2.9 million, respectively, of these reserves as other long-term liabilities on their consolidated balance sheets.
Guarantees and Indemnifications
We periodically provide indemnification arrangements related to assets or businesses we have sold. Our potential exposure under indemnification arrangements can range from a specified amount to an unlimited amount, depending 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 millionnature of the principalclaim, specificity as to duration, and the particular transaction. As of March 31, 2022 and December 31, 2021, we have no 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 ofaccrued for these notes.indemnifications.
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. The 2025 Senior Notes will mature on April 1, 2025, and interest is payable
Note 10 - Leases
semiannually
The following table summarizes the balance sheet information related to our operating and finance leases (in arrears on April 1millions):
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Operating Leases | | | |
Operating lease right-of-use assets, net | $ | 20.3 | | | $ | 27.4 | |
| | | |
Accrued expenses and other liabilities | $ | 10.4 | | | $ | 13.2 | |
Other long-term liabilities | 14.5 | | | 19.4 | |
Total operating lease liabilities | $ | 24.9 | | | $ | 32.6 | |
Finance Leases | | | |
Property, plant and equipment | $ | 13.4 | | | $ | 12.3 | |
Less: accumulated depreciation | 10.0 | | | 9.2 | |
Property, plant and equipment, net | $ | 3.4 | | | $ | 3.1 | |
| | | |
Accrued expenses and other liabilities | $ | 30.5 | | | $ | 1.7 | |
Other long-term liabilities | 1.5 | | | 1.2 | |
Total finance lease liabilities | $ | 32.0 | | | $ | 2.9 | |
Lease expense. Our operating lease expense, net totaled $3.5 million and October 1 of each year, beginning October 1, 2017. The net proceeds from this offering of approximately $492$4.8 million were used to repay amounts outstanding under the 2020 Senior Notes and the 2022 Senior Notes.
In May 2017, Crestwood Midstream filed a registration statement with the SEC under which it offered to exchange new 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.
At September 30, 2017, Crestwood Midstream was in compliance with all of its debt covenants applicable to the CMLP credit facility and its senior notes.
Note 8 - Earnings Per Limited Partner Unit
Our net income (loss) attributable to Crestwood Equity Partners is allocated to the subordinated and limited partner unitholders based on their ownership percentage after giving effect to net income attributable to the Preferred Units. We calculate basic net income per limited partner unit using the two-class method. Diluted net income per limited partner unit is computed using the treasury stock method, which considers the impact to net income attributable to Crestwood Equity Partners and limited partner units from the potential issuance of limited partner units.
We exclude potentially dilutive securities from the determination of diluted earnings per unit (as well as their related income statement impacts) when their impact on net income attributable to Crestwood Equity Partners per limited partner unit is anti-dilutive. During the three and nine months ended September 30, 2017, we excluded a weighted-average of 7,125,744March 31, 2022 and 6,968,210 common units (representing preferred units), a weighted-average of 7,277,340 common units in2021. Our finance lease expense totaled $0.9 million for both periods (representing Crestwood Niobrara's preferred units), and a weighted-average of 438,789 common units in both periods (representing subordinated units). During the three and nine months ended September 30, 2016,March 31, 2022 and 2021.
Other. During March 2022, we excluded a weighted-average of 6,502,907 and 6,358,626 common units (representing preferred units), and a weighted-average of 8,669,633 common units in both periods (representing Crestwood Niobrara's preferred units) and a weighted-average of 438,789 common units in both periods (representing subordinated units). See Note 9 for additional information regarding the potential conversionexercised an option to purchase crude oil railcars under certain of our preferred units and Crestwood Niobrara's preferred units to common units.
Note 9 – Partners’ Capital
Preferred Units
Subject to certain conditions, the holders of the Preferred Units have the right to convert their Preferred Units into (i) common units on a 1-for-10 basis or (ii) a number of common units determined pursuant to a conversion ratio set forth in Crestwood Equity's partnership agreement upon the occurrence of certain events, suchoperating leases as a change in control. The Preferred Units have voting rights that are identicalresult of our plan to the voting rights of the common units and will vote with the common units as a single class, with each Preferred Unit entitled to one vote for each common unit into which such Preferred Unit is convertible, except that the Preferred Units are entitled to vote as a separate class on any matter on which all unitholders are entitled to vote that adversely affects the rights, powers, privileges or preferences of the Preferred Units in relation to Crestwood Equity's other securities outstanding.
Common Units
On August 4, 2017,exit our crude oil railcar operations. In April 2022, we entered into an equity distribution agreement with certain financial institutions (each, a Manager),third party to sell the crude oil railcars purchased under the operating lease and, as a result, we reclassified approximately $24.7 million of these assets as current assets held for sale, which is included in prepaid expenses and other current assets on our consolidated balance sheet at March 31, 2022. The current assets held for sale were recorded at fair value based on the anticipated sale proceeds, which is a Level 3 fair value measurement. At March 31, 2022, we may offeralso reclassified approximately $28.7 million of operating lease right-of-use liabilities associated with these assets to finance lease right-of-use liabilities, which is included in accrued expenses and sell from time to time through one or moreother liabilities on our consolidated balance sheet. During the three months ended March 31, 2022, we recorded a loss on long-lived assets of approximately $4.0 million for the difference between the assets held for sale and the carrying value of the Managers,assets to be sold.
Note 11 – Partners’ Capital and Non-Controlling Partner
Common and Subordinated Units
On February 1, 2022, we completed the merger with Oasis Midstream. Pursuant to the merger agreement, Oasis Petroleum received cash plus approximately 20.9 million newly issued CEQP units in exchange for its common units having an aggregate offeringheld in Oasis Midstream. In addition, Oasis Midstream’s public unitholders received approximately 12.9 million newly issued CEQP common units in exchange for the Oasis Midstream common units held by them. For a further discussion of the merger with Oasis Midstream, see Note 3.
In March 2021, CEQP acquired approximately 11.5 million CEQP common units and 0.4 million subordinated units of CEQP from Crestwood Holdings LLC (Crestwood Holdings) for approximately $268 million. CEQP reflected the purchase price as a reduction to its common unitholders’ partners’ capital in its consolidated statement 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 will pay the Managers an aggregate fee of up to 2.0% (which totaled $0.2 millionpartners’ capital during the three and nine months ended September 30, 2017)March 31, 2021. This transaction resulted in CEQP retiring the common and subordinated units acquired from Crestwood Holdings. In addition, in conjunction with this transaction, CEQP eliminated approximately $2.6 million of accounts payable to Crestwood Holdings which is reflected as an increase to CEQP’s common unitholders’ partners capital in its consolidated statements of partners capital during the gross sales price perthree months ended March 31, 2021. Transaction costs related to this transaction of approximately $7.6 million are reflected as a reduction of CEQP’s common unit sold under our ATM equity distribution program. The table below showsunitholders’ partners’ capital in its consolidated statement of partners’ capital during the units issued and the net proceeds from the issuances:three months ended March 31, 2021.
|
| | | | | | | |
Issuance Dates | | Common Units | | Net Proceeds(1) (in millions) |
Third Quarter 2017 | | 437,518 |
| | $ | 10.6 |
|
| |
(1) | The net proceeds from sales under the ATM program are used for general partnership purposes, which may include debt repayment and capital expenditures. |
Distributions
Crestwood Equity
Limited Partners. A summary of CEQP'sCEQP’s limited partner quarterly cash distributions for the ninethree months ended September 30, 2017March 31, 2022 and 20162021 is presented below: |
| | | | | | | | | | |
Record Date | | Payment Date | | Per Unit Rate | | Cash Distributions (in millions) |
2017 | | | | | | |
February 7, 2017 | | February 14, 2017 | | $ | 0.60 |
| | $ | 41.8 |
|
May 8, 2017 | | May 15, 2017 | | 0.60 |
| | 41.8 |
|
August 7, 2017 | | August 14, 2017 | | 0.60 |
| | 41.8 |
|
| | | | | | $ | 125.4 |
|
2016 | | | | | | |
February 5, 2016 | | February 12, 2016 | | $ | 1.375 |
| | $ | 95.6 |
|
May 6, 2016 | | May 13, 2016 | | 0.60 |
| | 41.4 |
|
August 5, 2016 | | August 12, 2016 | | 0.60 |
| | 41.4 |
|
| | | | | | $ | 178.4 |
|
| | | | | | | | | | | | | | | | | | | | |
Record Date | | Payment Date | | Per Unit Rate | | Cash Distributions (in millions) |
2022 | | | | | | |
February 7, 2022 | | February 14, 2022 | | $ | 0.625 | | | $ | 60.9 | |
| | | | | | |
| | | | | | |
| | | | | | |
2021 | | | | | | |
February 5, 2021 | | February 12, 2021 | | $ | 0.625 | | | $ | 46.4 | |
| | | | | | |
| | | | | | |
| | | | | | |
On October 19, 2017,April 14, 2022,we declared a distribution of $0.60$0.655 per limited partner unit to be paid on November 14, 2017,May 13, 2022 to unitholders of record on November 7, 2017May 6, 2022 with respect to the third quarter of 2017.ended March 31, 2022.
Preferred Unit HoldersUnitholders. We are required to make quarterlyDuring the three months ended March 31, 2022 and 2021, we paid cash distributions to our preferred unitholders. During the nine months ended September 30, 2017 and 2016, we issued 4,724,030 and 4,311,143 Preferred Units to our preferred unitholders of approximately $15 million in lieu of paying cash distributions of $43.1 million and $39.3 million, respectively.both periods. On October 19, 2017,April 14, 2022, the board of directors of our general partner authorized a cash distribution to our preferred unitholders of approximately $15.0$15 million forwith respect to the quarter ended September 30, 2017 in lieu of issuing additional preferred units, and beginning with the quarter ending DecemberMarch 31, 2017, we will be required to make all future quarterly distributions to our preferred unitholders in cash.2022.
Crestwood Midstream
During the ninethree months ended September 30, 2017March 31, 2022 and 2016,2021, Crestwood Midstream paid cash distributions of $119.5$238.1 million and $185.0$334.0 million to its partners.
On February 1, 2022, Crestwood Midstream received a non-cash contribution of approximately $1,075.1 million from Crestwood Equity related to net assets it acquired in conjunction with the merger with Oasis Midstream. In addition, on February 1, 2022, Crestwood Equity contributed cash acquired in conjunction with the merger with Oasis Midstream of approximately $14.9 million to Crestwood Equity.Midstream.
Non-Controlling PartnersPartner
Crestwood Niobrara issued a preferred interestinterests to a subsidiary of General Electric Capital Corporation and GE Structured Finance, Inc. (collectively, GE) in conjunction with the acquisition of its investment inCN Jackalope Holdings LLC (Jackalope Holdings), which isare reflected as non-controlling interest in subsidiary apart from partners’ capital (i.e., temporary equity) on our consolidated financial statements. Duringbalance sheets. We adjust the three and nine months ended September 30, 2017,carrying amount of our non-controlling interest to its redemption value each period through net income attributable to non-controlling partners was approximately $6.4 millionpartner.
The following table shows the change in our non-controlling interest in subsidiary at March 31, 2022 and $18.8 million. During the three and nine months ended September 30, 2016, net income attributable to non-controlling partners was approximately $6.1 million and $18.0 million. During both the nine months ended September 30, 2017 and 2016,2021 (in millions):
| | | | | | | | |
Balance at December 31, 2021 | | $ | 434.6 | |
| | |
Distributions to non-controlling partner | | (10.3) | |
Net income attributable to non-controlling partner | | 10.2 | |
Balance at March 31, 2022 | | $ | 434.5 | |
| | | | | | | | |
Balance at December 31, 2020 | | $ | 432.7 | |
| | |
Distributions to non-controlling partner | | (9.3) | |
Net income attributable to non-controlling partner | | 10.1 | |
Balance at March 31, 2021 | | $ | 433.5 | |
In April 2022, Crestwood Niobrara paid cash distributions to Jackalope Holdings of $11.4approximately $10.3 million to GE. In October 2017, Crestwood Niobrara paid a cash distribution of $3.8 million to GE for the quarter ended September 30, 2017.March 31, 2022.
Other
In February 2022, Crestwood Equity issued 177,025 performance units under the Crestwood Equity Partners LP Long Term Incentive Plan (Crestwood LTIP). The performance units are designed to provide an incentive for continuous employment to certain key employees. The vesting of performance units is subject to the attainment of certain performance and market goals over a three-year period, and entitle a participant to receive common units of Crestwood Equity without payment of an exercise price upon vesting. As of March 31, 2022, we had total unamortized compensation expense of approximately $4.6 million related to these performance units. During the three months ended March 31, 2022, we recognized compensation expense of $0.2 million related to these performance units, which is included in general and administrative expenses on our consolidated statements of operations.
During the three months ended March 31, 2022, 206,017 performance units that were previously issued under the Crestwood LTIP vested, and as a result of the attainment of certain performance and market goals and related distributions during the three years that the awards were outstanding, we issued 526,322 common units during the three months ended March 31, 2022 related to those performance units.
Note 10 – Commitments12 - Earnings Per Limited Partner Unit
We calculate the dilutive effect of the preferred units and Contingencies
Legal Proceedings
WeCrestwood Niobrara preferred units using the if-converted method which assumes units are periodically involved in litigation proceedings. If we determine that a negative outcome is probableconverted at the beginning of the period (beginning with their respective issuance date), and the amountresulting common units are included in the denominator 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 regardingdiluted net income per common unit calculation for the outcome of certain matters, and such developments could have a material adverse effect on our results of operations or cash flowsperiod being presented. Distributions declared in the period in whichand undeclared distributions that accumulated during the amountsperiod are paid and/or accrued. As of September 30, 2017 and December 31, 2016, both CEQP and CMLP had less
than $0.1 million accrued for outstanding legal matters. Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures for which we can estimate will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures.
Any loss estimates are inherently subjective, based on currently available information, and are subject to management's judgment and various assumptions. Dueadded back to the inherently subjective naturenumerator for purposes of these estimatesthe if-converted calculation. The dilutive effect of the stock-based compensation performance units is calculated using the treasury stock method which considers the impact to net income or loss attributable to Crestwood Equity Partners and limited partner units from the uncertaintypotential 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 is anti-dilutive. The following table summarizes information regarding the weighted-average of common units excluded during the three months ended March 31, 2022 and unpredictability surrounding2021 (in millions):
| | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2022 | | 2021 |
Preferred units (1) | | | | | 7.1 | | | 7.1 | |
Crestwood Niobrara’s preferred units(1) | | | | | 3.6 | | | 4.2 | |
Unit-based compensation performance units(1) | | | | | 0.3 | | | 0.1 | |
Subordinated units(2) | | | | | — | | | 0.4 | |
(1)For additional information regarding the outcome of legal proceedings, actual results may differ materially from any amounts that have been accrued.
Regulatory Compliance
In the ordinary coursepotential conversion/redemption of our business, we are subjectpreferred units and Crestwood Niobrara’s preferred units to various lawsCEQP common units, 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.
Environmental Compliance
Our operations are subject to stringent and complex laws and regulations pertaining to worker health, safety, and the environment. We are subject to laws and regulations at the federal, state, regional and local levels that relate to air and water quality, hazardous and solid waste management and disposal and other environmental matters. The cost of planning, designing, constructing and operating our facilities must incorporate compliance with environmental laws and regulations and safety standards. Failure to comply with these laws and regulations may trigger a variety of administrative, civil and potentially criminal enforcement measures.
During 2014, we experienced three releases totaling approximately 28,000 barrels of produced water on our Arrow water gathering system located on the Fort Berthold Indian Reservation in North Dakota. We immediately notified the National Response Center, the Three Affiliated Tribes and numerous other regulatory authorities, and thereafter contained and cleaned up the releases completely and placed the impacted segments of these water lines back into service. In May 2015, we experienced a release of approximately 5,200 barrels of produced water on our Arrow water gathering system, immediately notified numerous regulatory authorities and other third parties, and thereafter contained and cleaned up the releases.
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 the EPA from seeking to impose fines and penalties as a result of the water releases.
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 key employees were interviewed by the United States’ Attorney in December 2015. On September 13, 2017, we received a notice from the United States Department of Justice that it completed the investigation with no charges being filed against us. In August 2015, we received a notice of violation from the Three Affiliated Tribes' Environmental Division related to our 2014 produced water releases on the Fort Berthold Indian Reservation. The notice of violation imposes fines and requests reimbursements exceeding $1.1 million; however, the notice of violation was stayed on September 15, 2015, upon our posting of a performance bond for the amount contemplated by the notice and pending the outcome of ongoing settlement discussions with the regulatory agencies asserting jurisdiction over the 2014 produced water releases.
We will continue our remediation efforts to ensure the impacted lands are restored to their prior state. We believe these releases are insurable events under our policies, and we have notified our carriers of these events. We have not recorded an insurance receivable as of September 30, 2017.
At September 30, 2017 and December 31, 2016, our accrual of approximately $2.7 million and $2.1 million is based on our undiscounted estimate of amounts we will spend on compliance with environmental and other regulations, and any associated fines or penalties. We estimate that our potential liability for reasonably possible outcomes related to our environmental exposures (including the Arrow water releases described above) could range from approximately $2.7 million to $4.2 million at September 30, 2017.
Self-Insurance
We utilize third-party insurance subject to varying retention levels of self-insurance, which management considers prudent. Such self-insurance relates to losses and liabilities primarily associated with medical claims, workers' compensation claims and general, product, vehicle and environmental liability. At September 30, 2017 and December 31, 2016, CEQP's self-insurance reserves were $15.8 million and $15.6 million. We estimate that $10.6 million of this balance will be paid subsequent to September 30, 2018. As such, CEQP has classified $10.6 million in other long-term liabilities on its consolidated balance sheet at September 30, 2017. At September 30, 2017 and December 31, 2016, CMLP's self insurance reserves were $12.9 million and $12.2 million. CMLP estimates that $8.0 million of this balance will be paid subsequent to September 30, 2018. As such, CMLP has classified $8.0 million in other long-term liabilities on its consolidated balance sheet at September 30, 2017.
Guarantees and Indemnifications. We are involved in various joint ventures that sometimes require financial and performance guarantees. In a financial guarantee, we are obligated to make payments if the guaranteed party fails to make payments under, or violates the terms of, the financial arrangement. In a performance guarantee, we provide assurance that the guaranteed party will execute on the terms of the contract. If they do not, we are required to perform on their behalf. We also periodically provide indemnification arrangements related to assets or businesses we have sold. For a further description of our guarantees associated with our joint ventures, see Note 4, and for a further description of our guarantees associated with our assets or businesses we have sold,units, see our 20162021 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(2)In March 2021, CEQP retired the naturesubordinated units. For additional information regarding the retirement of the claim, specificitysubordinated units, see Note 11.
Note 13 – Segments
In conjunction with the divestiture of our Stagecoach Gas equity method investment as to duration,discussed in Note 5 and the particular transaction. Asmerger with Oasis Midstream as discussed in Note 3, we modified our segments as of September 30, 2017December 31, 2021 and, as a result, our financial statements reflect 3 operating and reporting segments: (i) gathering and processing north operations (includes our Arrow, Jackalope and Oasis Midstream Williston operations); (ii) gathering and processing south operations (includes our Marcellus, Barnett and Oasis Midstream Delaware Basin operations and our Crestwood Permian Basin Holdings LLC equity method investment); and (iii) storage and logistics operations (includes our crude oil, NGL and natural gas storage and logistics operations, and our Tres Holdings and PRBIC equity method investments). Our gathering and processing north and gathering and processing south segments were historically combined into one segment, and our storage and logistics segment was historically separated into a storage and transportation segment and a marketing, supply and logistics segment. The results of our operations described above are now reflected in the new respective segments for all periods presented. Our corporate operations include all general and administrative expenses that are not allocated to our reportable segments.
Below is a description of our operating and reporting segments.
•Gathering and Processing North. Our gathering and processing north operations provide natural gas, crude oil and produced water gathering, compression, treating, processing and disposal services to producers in the Williston Basin and Powder River Basin.
•Gathering and Processing South. Our gathering and processing south operations provide natural gas gathering, compression, treating and processing and produced water gathering and disposal services to producers in the Marcellus, Barnett and Delaware basins.
•Storage and Logistics. Our storage and logistics operations provide NGLs, crude oil and natural gas storage, terminal, marketing and transportation (including rail, truck and pipeline) services to producers, refiners, marketers, utilities and other customers.
Below is a reconciliation of CEQP’s and CMLP’s net loss to EBITDA (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | CEQP | | | | | | CMLP |
| | | Three Months Ended | | | | Three Months Ended |
| | | March 31, | | | | March 31, |
| | | | | 2022 | | 2021 | | | | | | 2022 | | 2021 |
Net income (loss) | | | | | $ | 22.2 | | | $ | (38.3) | | | | | | | $ | 20.2 | | | $ | (40.4) | |
Add: | | | | | | | | | | | | | | | |
Interest and debt expense, net | | | | | 36.1 | | | 36.0 | | | | | | | 36.1 | | | 36.0 | |
Loss on modification/extinguishment of debt | | | | | — | | | 5.5 | | | | | | | — | | | 5.5 | |
Benefit for income taxes | | | | | — | | | (0.1) | | | | | | | — | | | (0.1) | |
Depreciation, amortization and accretion | | | | | 74.8 | | | 59.2 | | | | | | | 78.2 | | | 62.8 | |
EBITDA | | | | | $ | 133.1 | | | $ | 62.3 | | | | | | | $ | 134.5 | | | $ | 63.8 | |
The following tables summarize CEQP’s and CMLP’s reportable segment data for the three months ended March 31, 2022 and 2021 (in millions). Intersegment revenues included in the following tables are accounted for as arms-length transactions that apply our revenue recognition policy described in our 2021 Annual Report on Form 10-K. Included in earnings (loss) from unconsolidated affiliates, net reflected in the tables below was approximately $4.6 million and $129.4 million of our proportionate share of interest expense, depreciation and amortization expense, goodwill impairments and gains (losses) on long-lived assets, net recorded by our equity investments for the three months ended March 31, 2022 and 2021.
Segment EBITDA Information
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2022 |
| Gathering and Processing North | | Gathering and Processing South | | Storage and Logistics | | Corporate | | Total |
Crestwood Midstream | | | | | | | | | |
Revenues | $ | 235.2 | | | $ | 30.7 | | | $ | 1,317.9 | | | $ | — | | | $ | 1,583.8 | |
Intersegment revenues | 127.4 | | | — | | | (127.4) | | | — | | | — | |
Costs of product/services sold | 205.6 | | | (0.6) | | | 1,159.4 | | | — | | | 1,364.4 | |
Operations and maintenance expense | 23.7 | | | 6.7 | | | 12.0 | | | — | | | 42.4 | |
General and administrative expense | — | | | — | | | — | | | 41.7 | | | 41.7 | |
Gain (loss) on long-lived assets, net | — | | | 0.2 | | | (4.0) | | | — | | | (3.8) | |
| | | | | | | | | |
Earnings from unconsolidated affiliates, net | — | | | 2.6 | | | 0.4 | | | — | | | 3.0 | |
Crestwood Midstream EBITDA | $ | 133.3 | | | $ | 27.4 | | | $ | 15.5 | | | $ | (41.7) | | | $ | 134.5 | |
Crestwood Equity | | | | | | | | | |
General and administrative expense | — | | | — | | | — | | | 1.7 | | | 1.7 | |
Other income, net | — | | | — | | | — | | | 0.3 | | | 0.3 | |
Crestwood Equity EBITDA | $ | 133.3 | | | $ | 27.4 | | | $ | 15.5 | | | $ | (43.1) | | | $ | 133.1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2021 |
| Gathering and Processing North | | Gathering and Processing South | | Storage and Logistics | | Corporate | | Total |
Crestwood Midstream | | | | | | | | | |
Revenues | $ | 129.8 | | | $ | 24.6 | | | $ | 878.3 | | | $ | — | | | $ | 1,032.7 | |
Intersegment revenues | 105.3 | | | — | | | (105.3) | | | — | | | — | |
Costs of product/services sold | 116.2 | | | 0.3 | | | 697.3 | | | — | | | 813.8 | |
Operations and maintenance expense | 15.1 | | | 6.3 | | | 11.4 | | | — | | | 32.8 | |
General and administrative expense | — | | | — | | | — | | | 17.2 | | | 17.2 | |
Gain (loss) on long-lived assets, net | (0.2) | | | (1.3) | | | 0.1 | | | — | | | (1.4) | |
Loss from unconsolidated affiliates, net | — | | | (0.8) | | | (102.9) | | | — | | | (103.7) | |
Crestwood Midstream EBITDA | $ | 103.6 | | | $ | 15.9 | | | $ | (38.5) | | | $ | (17.2) | | | $ | 63.8 | |
Crestwood Equity | | | | | | | | | |
General and administrative expense | — | | | — | | | — | | | 1.5 | | | 1.5 | |
| | | | | | | | | |
Crestwood Equity EBITDA | $ | 103.6 | | | $ | 15.9 | | | $ | (38.5) | | | $ | (18.7) | | | $ | 62.3 | |
Other Segment Information
| | | | | | | | | | | | | | | | | | | | | | | |
| CEQP | | CMLP |
| March 31, 2022 | | December 31, 2021 | | March 31, 2022 | | December 31, 2021 |
Total Assets | | | | | | | |
Gathering and Processing North | $ | 4,090.1 | | | $ | 2,408.0 | | | $ | 4,090.1 | | | $ | 2,408.0 | |
Gathering and Processing South | 1,023.1 | | | 886.5 | | | 1,150.4 | | | 1,017.4 | |
Storage and Logistics | 1,097.3 | | | 1,125.1 | | | 1,097.3 | | | 1,125.1 | |
Corporate | 29.6 | | | 26.1 | | | 24.3 | | | 20.7 | |
Total Assets | $ | 6,240.1 | | | $ | 4,445.7 | | | $ | 6,362.1 | | | $ | 4,571.2 | |
Note 14 - Revenues
Contract Assets and Contract Liabilities
Our contract assets and contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. Our receivables related to our revenue contracts accounted for under Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) totaled $429.8 million and $331.0 million at March 31, 2022 and December 31, 2016,2021, and are included in accounts receivable on our consolidated balance sheets. Our contract assets are included in other non-current assets on our consolidated balance sheets. Our contract liabilities primarily consist of current and non-current deferred revenues. On our consolidated balance sheets, our current deferred revenues are included in accrued expenses and other liabilities and our non-current deferred revenues are included in other long-term liabilities. The majority of revenues associated with our deferred revenues is expected to be recognized as the performance obligations under the related contracts are satisfied over the next 15 years.
The following table summarizes our contract assets and contract liabilities (in millions):
| | | | | | | | | | | | | | |
| | March 31, 2022 | | December 31, 2021 |
Contract assets (non-current) | | $ | 1.2 | | | $ | 1.3 | |
Contract liabilities (current)(1) | | $ | 11.0 | | | $ | 10.7 | |
Contract liabilities (non-current)(1) | | $ | 202.1 | | | $ | 187.1 | |
(1)During the three months ended March 31, 2022, we recognized revenues of approximately $3.5 million that were previously included in contract liabilities at December 31, 2021. The remaining change in our contract liabilities during the three months ended March 31, 2022 related to capital reimbursements associated with our revenue contracts and revenue deferrals associated with our contracts with increasing (decreasing) rates.
The following table summarizes the transaction price allocated to our remaining performance obligations under certain contracts that have nonot been recognized as of March 31, 2022 (in millions):
| | | | | |
Remainder of 2022 | $ | 65.8 | |
2023 | 65.1 | |
2024 | 44.4 | |
2025 | 2.6 | |
2026 | 0.5 | |
Thereafter | 1.3 | |
Total | $ | 179.7 | |
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 accruedare invoiced.
Disaggregation of Revenues
The following tables summarize our revenues from contracts with customers disaggregated by type of product/service sold and by commodity type for these guarantees.each of our segments for the three months ended March 31, 2022 and 2021 (in millions). We believe this summary best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors. Our non-Topic 606 revenues presented in the tables below primarily represents revenues related to our commodity-based derivatives.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2022 |
| Gathering and Processing North | | Gathering and Processing South | | Storage and Logistics | | Intersegment Elimination | | Total |
Topic 606 revenues | | | | | | | | | |
Gathering | | | | | | | | | |
Natural gas | $ | 25.9 | | | $ | 22.4 | | | $ | — | | | $ | — | | | $ | 48.3 | |
Crude oil | 14.8 | | | 1.0 | | | — | | | — | | | 15.8 | |
Water | 34.7 | | | 2.2 | | | — | | | — | | | 36.9 | |
Processing | | | | | | | | | |
Natural gas | 14.4 | | | 1.1 | | | — | | | — | | | 15.5 | |
| | | | | | | | | |
Compression | | | | | | | | | |
Natural gas | — | | | 3.5 | | | — | | | — | | | 3.5 | |
Storage | | | | | | | | | |
Crude oil | 0.5 | | | — | | | — | | | (0.1) | | | 0.4 | |
NGLs | — | | | — | | | 2.8 | | | — | | | 2.8 | |
Pipeline | | | | | | | | | |
Crude oil | — | | | — | | | 0.5 | | | — | | | 0.5 | |
| | | | | | | | | |
Transportation | | | | | | | | | |
Crude oil | 1.2 | | | 0.1 | | | — | | | — | | | 1.3 | |
NGLs | — | | | — | | | 5.8 | | | — | | | 5.8 | |
| | | | | | | | | |
Rail Loading | | | | | | | | | |
Crude oil | — | | | — | | | 0.4 | | | — | | | 0.4 | |
| | | | | | | | | |
Product Sales | | | | | | | | | |
Natural gas | 63.9 | | | 0.3 | | | 98.7 | | | (52.1) | | | 110.8 | |
Crude oil | 128.1 | | | — | | | 374.0 | | | (11.2) | | | 490.9 | |
NGLs | 76.9 | | | — | | | 632.7 | | | (64.0) | | | 645.6 | |
Water | 1.6 | | | — | | | — | | | — | | | 1.6 | |
Other | 0.2 | | | — | | | 0.3 | | | — | | | 0.5 | |
Total Topic 606 revenues | 362.2 | | | 30.6 | | | 1,115.2 | | | (127.4) | | | 1,380.6 | |
Non-Topic 606 revenues | 0.4 | | | 0.1 | | | 202.7 | | | — | | | 203.2 | |
Total revenues | $ | 362.6 | | | $ | 30.7 | | | $ | 1,317.9 | | | $ | (127.4) | | | $ | 1,583.8 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2021 |
| Gathering and Processing North | | Gathering and Processing South | | Storage and Logistics | | Intersegment Elimination | | Total |
Topic 606 revenues | | | | | | | | | |
Gathering | | | | | | | | | |
Natural gas | $ | 13.2 | | | $ | 18.2 | | | $ | — | | | $ | — | | | $ | 31.4 | |
Crude oil | 20.7 | | | — | | | — | | | — | | | 20.7 | |
Water | 22.0 | | | — | | | — | | | — | | | 22.0 | |
Processing | | | | | | | | | |
Natural gas | 5.8 | | | 1.2 | | | — | | | — | | | 7.0 | |
| | | | | | | | | |
Compression | | | | | | | | | |
Natural gas | — | | | 4.7 | | | — | | | — | | | 4.7 | |
Storage | | | | | | | | | |
Crude oil | 0.1 | | | — | | | 0.2 | | | (0.1) | | | 0.2 | |
NGLs | — | | | — | | | 3.7 | | | — | | | 3.7 | |
Pipeline | | | | | | | | | |
Crude oil | — | | | — | | | 0.8 | | | — | | | 0.8 | |
| | | | | | | | | |
Transportation | | | | | | | | | |
Crude oil | 0.7 | | | — | | | — | | | — | | | 0.7 | |
NGLs | — | | | — | | | 4.2 | | | — | | | 4.2 | |
| | | | | | | | | |
Rail Loading | | | | | | | | | |
Crude oil | — | | | — | | | 1.0 | | | — | | | 1.0 | |
| | | | | | | | | |
Product Sales | | | | | | | | | |
Natural gas | 42.3 | | | 0.5 | | | 95.6 | | | (42.2) | | | 96.2 | |
Crude oil | 90.0 | | | — | | | 251.2 | | | (22.7) | | | 318.5 | |
NGLs | 40.3 | | | — | | | 406.0 | | | (40.3) | | | 406.0 | |
Other | — | | | — | | | 0.2 | | | — | | | 0.2 | |
Total Topic 606 revenues | 235.1 | | | 24.6 | | | 762.9 | | | (105.3) | | | 917.3 | |
Non-Topic 606 revenues | — | | | — | | | 115.4 | | | — | | | 115.4 | |
Total revenues | $ | 235.1 | | | $ | 24.6 | | | $ | 878.3 | | | $ | (105.3) | | | $ | 1,032.7 | |
Note 1115 – Related Party Transactions
Crestwood Holdings indirectly owns both CEQP's and CMLP's general partner. The affiliates of Crestwood Holdings and its owners are considered CEQP's and CMLP's related parties, including Sabine Oil and Gas LLC (Sabine) and Arsenal Resources. CEQP and CMLPWe enter into transactions with theirour affiliates within the ordinary course of business, including gas gathering and processing services under long-term contracts, product purchases, marketing services and various operating agreements.agreements, including operating leases. We also enter into transactions with our affiliates related to services provided on our expansion projects.
Prior to August 2021, Crestwood Holdings indirectly owned our general partner and the affiliates of Crestwood Holdings and its owners were considered CEQP’s and CMLP’s related parties. With the completion of our strategic transactions with Crestwood Holdings in August 2021, Crestwood Holdings and its affiliates are no longer considered related parties of CEQP and CMLP. During the three months ended March 31, 2021, we paid approximately $0.3 million of capital expenditures to Applied Consultants, Inc., an affiliate of Crestwood Holdings. In addition, during the three months ended March 31, 2021, Crestwood Holdings allocated a $4.6 million reduction of unit-based compensation charges to CEQP and CMLP. Also, CEQP allocated approximately $0.2 million of its general and administrative costs to Crestwood Holdings during the three months ended March 31, 2021.
The following table shows transactions with our affiliates which are reflected in our consolidated statements of operations (in millions):
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Gathering and processing revenues at CEQP and CMLP | $ | 0.5 |
| | $ | 0.7 |
| | $ | 1.4 |
| | $ | 2.1 |
|
Gathering and processing costs of product/services sold at CEQP and CMLP(1) | $ | 3.7 |
| | $ | 5.0 |
| | $ | 11.8 |
| | $ | 13.7 |
|
Operations and maintenance expenses at CEQP and CMLP(2) | $ | 6.6 |
| | $ | 1.8 |
| | $ | 16.4 |
| | $ | 3.5 |
|
General and administrative expenses charged by CEQP to CMLP, net(3) | $ | 4.4 |
| | $ | 2.7 |
| | $ | 14.8 |
| | $ | 9.6 |
|
General and administrative expenses at CEQP charged from Crestwood Holdings, net(4) | $ | (0.2 | ) | | $ | (0.5 | ) | | $ | (0.4 | ) | | $ | (0.6 | ) |
| |
(1) | Represents natural gas purchases from Sabine. |
| |
(2) | We have operating agreements with certain of our unconsolidated affiliates pursuant to which we charge them operations and maintenance expenses in accordance with their respective agreements. During the three and nine months ended September 30, 2017, we charged $2.0 million and $6.5 million to Stagecoach Gas, $0.8 million and $2.6 million to Tres Palacios, $3.7 million and $7.0 million to Crestwood Permian and $0.1 million and $0.3 million to Jackalope. During the three and nine months ended September 30, 2016, we charged $0.8 million and $2.2 million to Tres Palacios and $1.0 million and$1.3 million to Stagecoach Gas.
|
| |
(3) | Includes $5.2 million and $17.1 million of net unit-based compensation charges allocated from CEQP to CMLP for the three and nine months ended September 30, 2017 and $3.5 million and $11.9 million for the three and nine months ended September 30, 2016. In addition, CMLP shares common management, general and administrative and overhead costs with CEQP. During both the three and nine months ended September 30, 2017 and 2016, CMLP allocated $0.8 million and $2.3 million of general and administrative costs to CEQP. |
| |
(4) | Includes less than $1.1 million and $1.9 million unit-based compensation charges allocated from Crestwood Holdings to CEQP and CMLP during the three and nine months ended September 30, 2017 and $0.6 million and $1.5 million during the three and nine months ended September 30, 2016. |
The following table shows accounts receivable and accounts payable from our affiliates (in millions):
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Accounts receivable at CEQP and CMLP | $ | 9.8 |
| | $ | 5.6 |
|
Accounts payable at CEQP | $ | 9.7 |
| | $ | 2.5 |
|
Accounts payable at CMLP | $ | 7.2 |
| | $ | — |
|
Note 12 – Segments
Financial Information
We have three operating and reportable segments: (i) gathering and processing operations; (ii) storage and transportation operations; and (iii) marketing, supply and logistics operations. Our corporate operations include all general and administrative expenses that are not allocated to our reportable segments. We assess the performance. For a further description 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) on modification/extinguishment of debt) and depreciation, amortization and accretion expense.
Below is a reconciliation of CEQP's net income (loss) to EBITDA (in millions):
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Net income (loss) | $ | (27.9 | ) | | $ | 3.0 |
| | $ | (47.0 | ) | | $ | (127.8 | ) |
Add: | | | | | | | |
Interest and debt expense, net | 24.2 |
| | 27.5 |
| | 74.8 |
| | 97.9 |
|
(Gain) loss on modification/extinguishment of debt | — |
| | — |
| | 37.7 |
| | (10.0 | ) |
Provision for income taxes | 0.1 |
| | 0.2 |
| | — |
| | 0.2 |
|
Depreciation, amortization and accretion | 48.1 |
| | 50.3 |
| | 145.2 |
| | 177.0 |
|
EBITDA | $ | 44.5 |
| | $ | 81.0 |
| | $ | 210.7 |
| | $ | 137.3 |
|
The following tables summarize CEQP's reportable segment data for the three and nine months ended September 30, 2017 and 2016 (in millions). Intersegment revenues included in the following tables are accounted for as arms-length transactions that applyrelated party agreements, see our revenue recognition policies described in our 20162021 Annual Report on Form 10-K. Included in earnings from unconsolidated affiliates, net below was approximately $10.0
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2022 | | 2021 |
Revenues at CEQP and CMLP(1) | | | | | $ | 97.7 | | | $ | 4.9 | |
Costs of product/services sold at CEQP and CMLP(2) | | | | | $ | 68.5 | | | $ | 41.1 | |
Operations and maintenance expenses at CEQP and CMLP charged to our unconsolidated affiliates(3) | | | | | $ | 4.8 | | | $ | 5.7 | |
General and administrative expenses charged by CEQP to CMLP, net(4) | | | | | $ | 7.5 | | | $ | 5.9 | |
General and administrative expenses at CEQP and CMLP(5) | | | | | $ | 0.9 | | | $ | — | |
(1)Includes (i) $1.6 million and $8.3$4.9 million of depreciation and amortization expense and gains (losses) on long-lived assets, net related to our equity investments forduring the three months ended September 30, 2017March 31, 2022 and 2016 and $25.7 million and $15.3 million for the nine months ended September 30, 2017 and 2016.
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2017 |
| Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics | | Corporate | | Total |
Revenues | $ | 434.4 |
| | $ | 6.2 |
| | $ | 515.0 |
| | $ | — |
| | $ | 955.6 |
|
Intersegment revenues | 29.9 |
| | 1.2 |
| | (31.1 | ) | | — |
| | — |
|
Costs of product/services sold | 378.6 |
| | 0.2 |
| | 479.7 |
| | — |
| | 858.5 |
|
Operations and maintenance expense | 16.2 |
| | 1.0 |
| | 18.3 |
| | — |
| | 35.5 |
|
General and administrative expense | — |
| | — |
| | — |
| | 22.5 |
| | 22.5 |
|
Gain (loss) on long-lived assets | (3.9 | ) | | — |
| | 0.6 |
| | (3.0 | ) | | (6.3 | ) |
Earnings from unconsolidated affiliates, net | 4.3 |
| | 7.2 |
| | — |
| | — |
| | 11.5 |
|
Other income, net | — |
| | — |
| | — |
| | 0.2 |
| | 0.2 |
|
EBITDA | $ | 69.9 |
| | $ | 13.4 |
| | $ | (13.5 | ) | | $ | (25.3 | ) | | $ | 44.5 |
|
Goodwill | $ | 45.9 |
| | $ | — |
| | $ | 153.1 |
| | $ | — |
| | $ | 199.0 |
|
Total assets | $ | 2,452.2 |
| | $ | 1,049.9 |
| | $ | 1,002.3 |
| | $ | 20.9 |
| | $ | 4,525.3 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2016 |
| Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics | | Corporate | | Total |
Revenues | $ | 279.3 |
| | $ | 18.3 |
| | $ | 290.0 |
| | $ | — |
| | $ | 587.6 |
|
Intersegment revenues | 24.8 |
| | 1.5 |
| | (26.3 | ) | | — |
| | — |
|
Costs of product/services sold | 226.1 |
| | 0.1 |
| | 240.5 |
| | — |
| | 466.7 |
|
Operations and maintenance expense | 17.4 |
| | 2.5 |
| | 13.2 |
| | — |
| | 33.1 |
|
General and administrative expense | — |
| | — |
| | — |
| | 18.3 |
| | 18.3 |
|
Loss on long-lived assets | (2.0 | ) | | (0.1 | ) | | — |
| | — |
| | (2.1 | ) |
Earnings from unconsolidated affiliates, net | 5.5 |
| | 7.9 |
| | — |
| | — |
| | 13.4 |
|
Other income, net | — |
| | — |
| | — |
| | 0.2 |
| | 0.2 |
|
EBITDA | $ | 64.1 |
| | $ | 25.0 |
| | $ | 10.0 |
| | $ | (18.1 | ) | | $ | 81.0 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2017 |
| Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics | | Corporate | | Total |
Revenues | $ | 1,208.1 |
| | $ | 24.7 |
| | $ | 1,401.2 |
| | $ | — |
| | $ | 2,634.0 |
|
Intersegment revenues | 94.3 |
| | 4.7 |
| | (99.0 | ) | | — |
| | — |
|
Costs of product/services sold | 1,049.9 |
| | 0.3 |
| | 1,221.4 |
| | — |
| | 2,271.6 |
|
Operations and maintenance expense | 51.8 |
| | 3.4 |
| | 48.2 |
| | — |
| | 103.4 |
|
General and administrative expense | — |
| | — |
| | — |
| | 71.6 |
| | 71.6 |
|
Gain (loss) on long-lived assets | (3.9 | ) | | — |
| | 0.6 |
| | (3.0 | ) | | (6.3 | ) |
Earnings from unconsolidated affiliates, net | 7.7 |
| | 21.5 |
| | — |
| | — |
| | 29.2 |
|
Other income, net | — |
| | — |
| | — |
| | 0.4 |
| | 0.4 |
|
EBITDA | $ | 204.5 |
| | $ | 47.2 |
| | $ | 33.2 |
| | $ | (74.2 | ) | | $ | 210.7 |
|
Goodwill | $ | 45.9 |
| | $ | — |
| | $ | 153.1 |
| | $ | — |
| | $ | 199.0 |
|
Total assets | $ | 2,452.2 |
| | $ | 1,049.9 |
| | $ | 1,002.3 |
| | $ | 20.9 |
| | $ | 4,525.3 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2016 |
| Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics | | Corporate | | Total |
Revenues | $ | 787.7 |
| | $ | 131.5 |
| | $ | 806.3 |
| | $ | — |
| | $ | 1,725.5 |
|
Intersegment revenues | 75.9 |
| | 3.0 |
| | (78.9 | ) | | — |
| | — |
|
Costs of product/services sold | 632.2 |
| | 4.9 |
| | 643.0 |
| | — |
| | 1,280.1 |
|
Operations and maintenance expense | 56.1 |
| | 18.2 |
| | 45.6 |
| | — |
| | 119.9 |
|
General and administrative expense | — |
| | — |
| | — |
| | 70.2 |
| | 70.2 |
|
Loss on long-lived assets | (2.0 | ) | | (32.8 | ) | | — |
| | — |
| | (34.8 | ) |
Goodwill impairment | (8.6 | ) | | (13.7 | ) | | (87.4 | ) | | — |
| | (109.7 | ) |
Earnings from unconsolidated affiliates, net | 16.5 |
| | 9.6 |
| | — |
| | — |
| | 26.1 |
|
Other income, net | — |
| | — |
| | — |
| | 0.4 |
| | 0.4 |
|
EBITDA | $ | 181.2 |
| | $ | 74.5 |
| | $ | (48.6 | ) | | $ | (69.8 | ) | | $ | 137.3 |
|
Below is a reconciliation of CMLP's net income (loss) to EBITDA (in millions):
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Net income (loss) | $ | (29.8 | ) | | $ | 0.6 |
| | $ | (53.1 | ) | | $ | (130.3 | ) |
Add: | | | | | | | |
Interest and debt expense, net | 24.2 |
| | 27.5 |
| | 74.8 |
| | 97.9 |
|
(Gain) loss on modification/extinguishment of debt | — |
| | — |
| | 37.7 |
| | (10.0 | ) |
Provision for income taxes | 0.1 |
| | — |
| | — |
| | — |
|
Depreciation, amortization and accretion | 50.9 |
| | 53.2 |
| | 153.5 |
| | 185.2 |
|
EBITDA | $ | 45.4 |
| | $ | 81.3 |
| | $ | 212.9 |
| | $ | 142.8 |
|
The following tables summarize CMLP's reportable segment data for the three and nine months ended September 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 $10.0 million and $8.3 million of depreciation and amortization expense and gains (losses) on long-lived assets, net2021 related to our equity investments forthe sale of NGLs to a subsidiary of Crestwood Permian; (ii) $0.5 million during the three months ended September 30, 2017March 31, 2022 related to compressor leases with a subsidiary of Crestwood Permian; (iii) $59.0 million during the three months ended March 31, 2022 primarily related to the sale of crude oil and 2016NGLs to a subsidiary of Oasis Petroleum; and $25.7(iv) $36.6 million during the three months ended March 31, 2022 primarily related to gathering and processing services under agreements with a subsidiary of Oasis Petroleum.
(2)Includes (i) $36.2 million and $15.3$30.3 million forduring the ninethree months ended September 30, 2017March 31, 2022 and 2016.2021 related to purchases of natural gas and NGLs from a subsidiary of Crestwood Permian; (ii) $0.9 million and $10.8 million during the three months ended March 31, 2022 and 2021 primarily related to purchases of natural gas from a subsidiary of Tres Holdings; and (iii) $31.4 million during the three months ended March 31, 2022 primarily related to purchases of NGLs from a subsidiary of Oasis Petroleum.
(3)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, and these charges are reflected as a reduction of operations and maintenance expenses in our consolidated statements of operations. During the three months ended March 31, 2022, we charged $1.2 million to Tres Holdings and $3.6 million to Crestwood Permian. During the three months ended March 31, 2021, we charged $1.7 million to Stagecoach Gas, $1.2 million to Tres Holdings, and $2.8 million to Crestwood Permian.
(4)Includes $8.6 million and $6.9 million of unit-based compensation charges allocated from CEQP to CMLP during the three months ended March 31, 2022 and 2021. In addition, includes $1.1 million and $1.0 million of CMLP’s general and administrative costs allocated to CEQP during the three months ended March 31, 2022 and 2021.
(5)Includes $0.9 million during the three months ended March 31, 2022 of general and administrative expenses related to a transition services agreement with Oasis Petroleum.
The following table shows balances with our affiliates which are reflected in our consolidated balance sheets (in millions):
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Accounts receivable at CEQP and CMLP | $ | 60.2 | | | $ | 8.2 | |
Accounts payable at CEQP and CMLP | $ | 16.4 | | | $ | 12.0 | |
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2017 |
| Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics | | Corporate | | Total |
Revenues | $ | 434.4 |
| | $ | 6.2 |
| | $ | 515.0 |
| | $ | — |
| | $ | 955.6 |
|
Intersegment revenues | 29.9 |
| | 1.2 |
| | (31.1 | ) | | — |
| | — |
|
Costs of product/services sold | 378.6 |
| | 0.2 |
| | 479.7 |
| | — |
| | 858.5 |
|
Operations and maintenance expense | 16.2 |
| | 1.0 |
| | 18.3 |
| | — |
| | 35.5 |
|
General and administrative expense | — |
| | — |
| | — |
| | 21.4 |
| | 21.4 |
|
Gain (loss) on long-lived assets | (3.9 | ) | | — |
| | 0.6 |
| | (3.0 | ) | | (6.3 | ) |
Earnings from unconsolidated affiliates, net | 4.3 |
| | 7.2 |
| | — |
| | — |
| | 11.5 |
|
EBITDA | $ | 69.9 |
| | $ | 13.4 |
| | $ | (13.5 | ) | | $ | (24.4 | ) | | $ | 45.4 |
|
Goodwill | $ | 45.9 |
| | $ | — |
| | $ | 153.1 |
| | $ | — |
| | $ | 199.0 |
|
Total assets | $ | 2,643.7 |
| | $ | 1,049.9 |
| | $ | 1,002.3 |
| | $ | 13.1 |
| | $ | 4,709.0 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2016 |
| Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics | | Corporate | | Total |
Revenues | $ | 279.3 |
| | $ | 18.3 |
| | $ | 290.0 |
| | $ | — |
| | $ | 587.6 |
|
Intersegment revenues | 24.8 |
| | 1.5 |
| | (26.3 | ) | | — |
| | — |
|
Costs of product/services sold | 226.1 |
| | 0.1 |
| | 240.5 |
| | — |
| | 466.7 |
|
Operations and maintenance expense | 17.4 |
| | 3.0 |
| | 13.2 |
| | — |
| | 33.6 |
|
General and administrative expense | — |
| | — |
| | — |
| | 17.3 |
| | 17.3 |
|
Loss on long-lived assets | (2.0 | ) | | (0.1 | ) | | — |
| | — |
| | (2.1 | ) |
Earnings from unconsolidated affiliates, net | 5.5 |
| | 7.9 |
| | — |
| | — |
| | 13.4 |
|
EBITDA | $ | 64.1 |
| | $ | 24.5 |
| | $ | 10.0 |
| | $ | (17.3 | ) | | $ | 81.3 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2017 |
| Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics | | Corporate | | Total |
Revenues | $ | 1,208.1 |
| | $ | 24.7 |
| | $ | 1,401.2 |
| | $ | — |
| | $ | 2,634.0 |
|
Intersegment revenues | 94.3 |
| | 4.7 |
| | (99.0 | ) | | — |
| | — |
|
Costs of product/services sold | 1,049.9 |
| | 0.3 |
| | 1,221.4 |
| | — |
| | 2,271.6 |
|
Operations and maintenance expense | 51.8 |
| | 3.4 |
| | 48.2 |
| | — |
| | 103.4 |
|
General and administrative expense | — |
| | — |
| | — |
| | 69.0 |
| | 69.0 |
|
Gain (loss) on long-lived assets | (3.9 | ) | | — |
| | 0.6 |
| | (3.0 | ) | | (6.3 | ) |
Earnings from unconsolidated affiliates, net | 7.7 |
| | 21.5 |
| | — |
| | — |
| | 29.2 |
|
EBITDA | $ | 204.5 |
| | $ | 47.2 |
| | $ | 33.2 |
| | $ | (72.0 | ) | | $ | 212.9 |
|
Goodwill | $ | 45.9 |
| | $ | — |
| | $ | 153.1 |
| | $ | — |
| | $ | 199.0 |
|
Total assets | $ | 2,643.7 |
| | $ | 1,049.9 |
| | $ | 1,002.3 |
| | $ | 13.1 |
| | $ | 4,709.0 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2016 |
| Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics | | Corporate | | Total |
Revenues | $ | 787.7 |
| | $ | 131.5 |
| | $ | 806.3 |
| | $ | — |
| | $ | 1,725.5 |
|
Intersegment revenues | 75.9 |
| | 3.0 |
| | (78.9 | ) | | — |
| | — |
|
Costs of product/services sold | 632.2 |
| | 4.9 |
| | 643.0 |
| | — |
| | 1,280.1 |
|
Operations and maintenance expense | 56.1 |
| | 15.0 |
| | 45.6 |
| | — |
| | 116.7 |
|
General and administrative expense | — |
| | — |
| | — |
| | 67.5 |
| | 67.5 |
|
Loss on long-lived assets | (2.0 | ) | | (32.8 | ) | | — |
| | — |
| | (34.8 | ) |
Goodwill impairment | (8.6 | ) | | (13.7 | ) | | (87.4 | ) | | — |
| | (109.7 | ) |
Earnings from unconsolidated affiliates, net | 16.5 |
| | 9.6 |
| | — |
| | — |
| | 26.1 |
|
EBITDA | $ | 181.2 |
| | $ | 77.7 |
| | $ | (48.6 | ) | | $ | (67.5 | ) | | $ | 142.8 |
|
Note 13 – Condensed Consolidating Financial Information
Crestwood Midstream is a holding company (Parent) and owns no operating assets and has no significant operations independent of its subsidiaries. Obligations under Crestwood Midstream's senior notes and its credit facility are jointly and severally guaranteed by substantially all of its subsidiaries, except for Crestwood Infrastructure Holdings LLC, Crestwood Niobrara, Crestwood Pipeline and Storage Northeast LLC (Crestwood Northeast), PRBIC and Tres Holdings and their respective subsidiaries (collectively, Non-Guarantor Subsidiaries). Crestwood Midstream Finance Corp., the co-issuer of its senior notes, is Crestwood Midstream's 100% owned subsidiary and has no material assets, operations, revenues or cash flows other than those related to its service as co-issuer of the Crestwood Midstream senior notes.
The tables below present condensed consolidating financial statements for Crestwood Midstream as Parent on a stand-alone, unconsolidated basis, and Crestwood Midstream's combined guarantor and combined non-guarantor subsidiaries as of September 30, 2017 and December 31, 2016, and for the three and nine months ended September 30, 2017 and 2016. The financial information may not necessarily be indicative of the results of operations, cash flows or financial position had the subsidiaries operated as independent entities.
The condensed consolidating financial statements for the three and nine months ended September 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.
|
| | | | | | | | | | | | | | | | | | | |
Crestwood Midstream Partners LP |
Condensed Consolidating Balance Sheet |
September 30, 2017 |
(in millions) |
| Parent | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | | Eliminations | | Consolidated |
Assets | | | | | | | | | |
Current assets: | | | | | | | | | |
Cash | $ | 1.1 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 1.1 |
|
Accounts receivable | — |
| | 341.0 |
| | 3.7 |
| | — |
| | 344.7 |
|
Inventory | — |
| | 92.9 |
| | — |
| | — |
| | 92.9 |
|
Other current assets | — |
| | 13.0 |
| | — |
| | — |
| | 13.0 |
|
Total current assets | 1.1 |
| | 446.9 |
| | 3.7 |
| | — |
| | 451.7 |
|
| | | | | | | | | |
Property, plant and equipment, net | — |
| | 2,242.2 |
| | — |
| | — |
| | 2,242.2 |
|
Goodwill and intangible assets, net | — |
| | 814.0 |
| | — |
| | — |
| | 814.0 |
|
Investment in consolidated affiliates | 4,025.8 |
| | — |
| | — |
| | (4,025.8 | ) | | — |
|
Investment in unconsolidated affiliates | — |
| | — |
| | 1,198.5 |
| | — |
| | 1,198.5 |
|
Other assets | — |
| | 2.6 |
| | — |
| | — |
| | 2.6 |
|
Total assets | $ | 4,026.9 |
| | $ | 3,505.7 |
| | $ | 1,202.2 |
| | $ | (4,025.8 | ) | | $ | 4,709.0 |
|
| | | | | | | | | |
Liabilities and partners' capital | | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable | $ | — |
| | $ | 310.0 |
| | $ | — |
| | $ | — |
| | $ | 310.0 |
|
Other current liabilities | 39.9 |
| | 125.4 |
| | — |
| | — |
| | 165.3 |
|
Total current liabilities | 39.9 |
| | 435.4 |
| | — |
| | — |
| | 475.3 |
|
| | | | | | | | | |
Long-term liabilities: | | | | | | | | | |
Long-term debt, less current portion | 1,614.6 |
| | 0.8 |
| | — |
| | — |
| | 1,615.4 |
|
Other long-term liabilities | — |
| | 45.3 |
| | — |
| | — |
| | 45.3 |
|
Deferred income taxes | — |
| | 0.7 |
| | — |
| | — |
| | 0.7 |
|
| | | | | | | | | |
Partners' capital | 2,372.4 |
| | 3,023.5 |
| | 1,002.3 |
| | (4,025.8 | ) | | 2,372.4 |
|
Interest of non-controlling partners in subsidiaries | — |
| | — |
| | 199.9 |
| | — |
| | 199.9 |
|
Total partners' capital | 2,372.4 |
| | 3,023.5 |
| | 1,202.2 |
| | (4,025.8 | ) | | 2,572.3 |
|
Total liabilities and partners' capital | $ | 4,026.9 |
| | $ | 3,505.7 |
| | $ | 1,202.2 |
| | $ | (4,025.8 | ) | | $ | 4,709.0 |
|
|
| | | | | | | | | | | | | | | | | | | |
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 |
|
|
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Crestwood Midstream Partners LP |
Condensed Consolidating Statement of Operations |
Three Months Ended September 30, 2017 |
(in millions) |
| Parent | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | | Eliminations | | Consolidated |
Revenues | $ | — |
| | $ | 955.6 |
| | $ | — |
| | $ | — |
| | $ | 955.6 |
|
Costs of product/services sold | — |
| | 858.5 |
| | — |
| | — |
| | 858.5 |
|
Expenses: | | | | | | | | | |
Operations and maintenance | — |
| | 35.5 |
| | — |
| | — |
| | 35.5 |
|
General and administrative | 15.2 |
| | 6.2 |
| | — |
| | — |
| | 21.4 |
|
Depreciation, amortization and accretion | — |
| | 50.9 |
| | — |
| | — |
| | 50.9 |
|
| 15.2 |
| | 92.6 |
| | — |
| | — |
| | 107.8 |
|
Other operating expense: | | | | | | | | | |
Loss on long-lived assets, net | — |
| | (6.3 | ) | | — |
| | — |
| | (6.3 | ) |
Operating loss | (15.2 | ) | | (1.8 | ) | | — |
| | — |
| | (17.0 | ) |
Earnings from unconsolidated affiliates, net | — |
| | — |
| | 11.5 |
| | — |
| | 11.5 |
|
Interest and debt expense, net | (24.2 | ) | | — |
| | — |
| | — |
| | (24.2 | ) |
Equity in net income (loss) of subsidiaries | 3.2 |
| | — |
| | — |
| | (3.2 | ) | | — |
|
Income (loss) before income taxes | (36.2 | ) | | (1.8 | ) | | 11.5 |
| | (3.2 | ) | | (29.7 | ) |
Provision for income taxes | — |
| | (0.1 | ) | | — |
| | — |
| | (0.1 | ) |
Net income (loss) | (36.2 | ) | | (1.9 | ) | | 11.5 |
| | (3.2 | ) | | (29.8 | ) |
Net income attributable to non-controlling partners in subsidiaries | — |
| | — |
| | 6.4 |
| | — |
| | 6.4 |
|
Net income (loss) attributable to Crestwood Midstream Partners LP | $ | (36.2 | ) | | $ | (1.9 | ) | | $ | 5.1 |
| | $ | (3.2 | ) | | $ | (36.2 | ) |
|
| | | | | | | | | | | | | | | | | | | |
Crestwood Midstream Partners LP |
Condensed Consolidating Statement of Operations |
Three Months Ended September 30, 2016 |
(in millions) |
| Parent | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | �� | Eliminations | | Consolidated |
Revenues | $ | — |
| | $ | 587.6 |
| | $ | — |
| | $ | — |
| | $ | 587.6 |
|
Costs of product/services sold | — |
| | 466.7 |
| | — |
| | — |
| | 466.7 |
|
Expenses: | | | | | | | | | |
Operations and maintenance | — |
| | 33.6 |
| | — |
| | — |
| | 33.6 |
|
General and administrative | 13.3 |
| | 4.0 |
| | — |
| | — |
| | 17.3 |
|
Depreciation, amortization and accretion | — |
| | 53.2 |
| | — |
| | — |
| | 53.2 |
|
| 13.3 |
| | 90.8 |
| | — |
| | — |
| | 104.1 |
|
Other operating expense: | | | | | | | | | |
Loss on long-lived assets, net | — |
| | (2.1 | ) | | — |
| | — |
| | (2.1 | ) |
Operating income (loss) | (13.3 | ) | | 28.0 |
| | — |
| | — |
| | 14.7 |
|
Earnings from unconsolidated affiliates, net | — |
| | — |
| | 13.4 |
| | — |
| | 13.4 |
|
Interest and debt expense, net | (27.5 | ) | | — |
| | — |
| | — |
| | (27.5 | ) |
Equity in net income (loss) of subsidiaries | 35.3 |
| | — |
| | — |
| | (35.3 | ) | | — |
|
Net income (loss) | (5.5 | ) | | 28.0 |
| | 13.4 |
| | (35.3 | ) | | 0.6 |
|
Net income attributable to non-controlling partners in subsidiaries | — |
| | — |
| | 6.1 |
| | — |
| | 6.1 |
|
Net income (loss) attributable to Crestwood Midstream Partners LP | (5.5 | ) | | 28.0 |
| | 7.3 |
| | (35.3 | ) | | (5.5 | ) |
|
| | | | | | | | | | | | | | | | | | | |
Crestwood Midstream Partners LP |
Condensed Consolidating Statement of Operations |
Nine Months Ended September 30, 2017 |
(in millions) |
| Parent | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | | Eliminations | | Consolidated |
Revenues | $ | — |
| | $ | 2,634.0 |
| | $ | — |
| | $ | — |
| | $ | 2,634.0 |
|
Costs of product/services sold | — |
| | 2,271.6 |
| | — |
| | — |
| | 2,271.6 |
|
Expenses: | | | | | | | | | |
Operations and maintenance | — |
| | 103.4 |
| | — |
| | — |
| | 103.4 |
|
General and administrative | 50.1 |
| | 18.9 |
| | — |
| | — |
| | 69.0 |
|
Depreciation, amortization and accretion | — |
| | 153.5 |
| | — |
| | — |
| | 153.5 |
|
| 50.1 |
| | 275.8 |
| | — |
| | — |
| | 325.9 |
|
Other operating expense: | | | | | | | | | |
Loss on long-lived assets, net | — |
| | (6.3 | ) | | — |
| | — |
| | (6.3 | ) |
Operating income (loss) | (50.1 | ) | | 80.3 |
| | — |
| | — |
| | 30.2 |
|
Earnings from unconsolidated affiliates, net | — |
| | — |
| | 29.2 |
| | — |
| | 29.2 |
|
Interest and debt expense, net | (74.8 | ) | | — |
| | — |
| | — |
| | (74.8 | ) |
Loss on modification/extinguishment of debt | (37.7 | ) | | — |
| | — |
| | — |
| | (37.7 | ) |
Equity in net income (loss) of subsidiaries | 90.7 |
| | — |
| | — |
| | (90.7 | ) | | — |
|
Net income (loss) | (71.9 | ) | | 80.3 |
| | 29.2 |
| | (90.7 | ) | | (53.1 | ) |
Net income attributable to non-controlling partners in subsidiaries | — |
| | — |
| | 18.8 |
| | — |
| | 18.8 |
|
Net income (loss) attributable to Crestwood Midstream Partners LP | $ | (71.9 | ) | | $ | 80.3 |
| | $ | 10.4 |
| | $ | (90.7 | ) | | $ | (71.9 | ) |
|
| | | | | | | | | | | | | | | | | | | |
Crestwood Midstream Partners LP |
Condensed Consolidating Statement of Operations |
Nine Months Ended September 30, 2016 |
(in millions) |
| Parent | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | | Eliminations | | Consolidated |
Revenues | $ | — |
| | $ | 1,725.5 |
| | $ | — |
| | $ | — |
| | $ | 1,725.5 |
|
Costs of product/services sold | — |
| | 1,280.1 |
| | — |
| | — |
| | 1,280.1 |
|
Expenses: | | | | | | | | | |
Operations and maintenance | — |
| | 116.7 |
| | — |
| | — |
| | 116.7 |
|
General and administrative | 54.2 |
| | 13.3 |
| | — |
| | — |
| | 67.5 |
|
Depreciation, amortization and accretion | — |
| | 185.2 |
| | — |
| | — |
| | 185.2 |
|
| 54.2 |
| | 315.2 |
| | — |
| | — |
| | 369.4 |
|
Other operating expense: | | | | | | | | | |
Loss on long-lived assets, net | — |
| | (34.8 | ) | | — |
| | — |
| | (34.8 | ) |
Goodwill Impairment | — |
| | (109.7 | ) | | — |
| | — |
| | (109.7 | ) |
Operating loss | (54.2 | ) | | (14.3 | ) | | — |
| | — |
| | (68.5 | ) |
Earnings from unconsolidated affiliates, net | — |
| | — |
| | 26.1 |
| | — |
| | 26.1 |
|
Interest and debt expense, net | (97.9 | ) | | — |
| | — |
| | — |
| | (97.9 | ) |
Gain on modification/extinguishment of debt | 10.0 |
| | — |
| | — |
| | — |
| | 10.0 |
|
Equity in net income (loss) of subsidiaries | (6.2 | ) | | — |
| | — |
| | 6.2 |
| | — |
|
Net income (loss) | (148.3 | ) | | (14.3 | ) | | 26.1 |
| | 6.2 |
| | (130.3 | ) |
Net income attributable to non-controlling partners in subsidiaries | — |
| | — |
| | 18.0 |
| | — |
| | 18.0 |
|
Net income (loss) attributable to Crestwood Midstream Partners LP | $ | (148.3 | ) | | $ | (14.3 | ) | | $ | 8.1 |
| | $ | 6.2 |
| | $ | (148.3 | ) |
|
| | | | | | | | | | | | | | | | | | | |
Crestwood Midstream Partners LP |
Condensed Consolidating Statement of Cash Flows |
Nine Months Ended September 30, 2017 |
(in millions) |
| Parent | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | | Eliminations | | Consolidated |
Cash flows from operating activities: | $ | (102.6 | ) | | $ | 312.0 |
| | $ | 23.5 |
| | $ | — |
| | $ | 232.9 |
|
| | | | | | | | | |
Cash flows from investing activities: | | | | | | | | | |
Purchases of property, plant and equipment | (5.8 | ) | | (128.6 | ) | | — |
| | — |
| | (134.4 | ) |
Investment in unconsolidated affiliates | — |
| | — |
| | (46.5 | ) | | — |
| | (46.5 | ) |
Capital distributions from unconsolidated affiliates | — |
| | — |
| | 35.3 |
| | — |
| | 35.3 |
|
Net proceeds from sale of assets | — |
| | 1.3 |
| | — |
| | — |
| | 1.3 |
|
Capital distributions from consolidated affiliates | 0.9 |
| | — |
| | — |
| | (0.9 | ) | | — |
|
Net cash used in investing activities | (4.9 | ) | | (127.3 | ) | | (11.2 | ) | | (0.9 | ) | | (144.3 | ) |
| | | | | | | | | |
Cash flows from financing activities: | | | | | | | | | |
Proceeds from the issuance of long-term debt | 2,209.8 |
| | — |
| | — |
| | — |
| | 2,209.8 |
|
Payments on long-term debt | (2,157.9 | ) | | (1.3 | ) | | — |
| | — |
| | (2,159.2 | ) |
Payments on capital leases | — |
| | (2.2 | ) | | — |
| | — |
| | (2.2 | ) |
Payments for debt-related deferred costs | (1.0 | ) | | — |
| | — |
| | — |
| | (1.0 | ) |
Distributions paid | (119.5 | ) | | — |
| | (11.4 | ) | | — |
| | (130.9 | ) |
Distributions to parent | — |
| | — |
| | (0.9 | ) | | 0.9 |
| | — |
|
Taxes paid for unit-based compensation vesting | — |
| | (5.3 | ) | | — |
| | — |
| | (5.3 | ) |
Change in intercompany balances | 175.9 |
| | (175.9 | ) | | — |
| | — |
| | — |
|
Net cash provided by (used in) financing activities | 107.3 |
| | (184.7 | ) | | (12.3 | ) | | 0.9 |
| | (88.8 | ) |
| | | | | | | | | |
Net change in cash | (0.2 | ) | | — |
| | — |
| | — |
| | (0.2 | ) |
Cash at beginning of period | 1.3 |
| | — |
| | — |
| | — |
| | 1.3 |
|
Cash at end of period | $ | 1.1 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 1.1 |
|
|
| | | | | | | | | | | | | | | | | | | |
Crestwood Midstream Partners LP |
Condensed Consolidating Statement of Cash Flows |
Nine Months Ended September 30, 2016 |
(in millions) |
| Parent | | Guarantor Subsidiaries | | Non- Guarantor Subsidiaries | | Eliminations | | Consolidated |
Cash flows from operating activities: | $ | (140.4 | ) | | $ | 371.3 |
| | $ | 19.9 |
| | $ | — |
| | $ | 250.8 |
|
| | | | | | | | | |
Cash flows from investing activities: | | | | | | | | | |
Purchases of property, plant and equipment | (1.6 | ) | | (77.7 | ) | | — |
| | — |
| | (79.3 | ) |
Investment in unconsolidated affiliates | — |
| | — |
| | (6.2 | ) | | — |
| | (6.2 | ) |
Capital distributions from unconsolidated affiliates | — |
| | — |
| | 9.2 |
| | — |
| | 9.2 |
|
Net proceeds from sale of assets
| — |
| | 943.1 |
| | — |
| | — |
| | 943.1 |
|
Capital distributions from consolidated affiliates | 11.5 |
| | — |
| | — |
| | (11.5 | ) | | — |
|
Net cash provided by (used in) investing activities | 9.9 |
| | 865.4 |
| | 3.0 |
| | (11.5 | ) | | 866.8 |
|
| | | | | | | | | |
Cash flows from financing activities: | | | | | | | | | |
Proceeds from the issuance of long-term debt | 1,364.0 |
| | — |
| | — |
| | — |
| | 1,364.0 |
|
Payments on long-term debt | (2,278.4 | ) | | (0.8 | ) | | — |
| | — |
| | (2,279.2 | ) |
Payments on capital leases | — |
| | (1.5 | ) | | — |
| | — |
| | (1.5 | ) |
Payments for debt-related deferred costs | (3.4 | ) | | — |
| | — |
| | — |
| | (3.4 | ) |
Distributions paid | (185.0 | ) | | — |
| | (11.4 | ) | | — |
| | (196.4 | ) |
Distributions to parent | — |
| | — |
| | (11.5 | ) | | 11.5 |
| | — |
|
Taxes paid for unit-based compensation vesting | — |
| | (0.8 | ) | | — |
| | — |
| | (0.8 | ) |
Change in intercompany balances | 1,233.7 |
| | (1,233.7 | ) | | — |
| | — |
| | — |
|
Other | — |
| | 0.1 |
| | — |
| | — |
| | 0.1 |
|
Net cash provided by (used in) financing activities | 130.9 |
| | (1,236.7 | ) | | (22.9 | ) | | 11.5 |
| | (1,117.2 | ) |
| | | | | | | | | |
Net change in cash | 0.4 |
| | — |
| | — |
| | — |
| | 0.4 |
|
Cash at beginning of period | 0.1 |
| | — |
| | — |
| | — |
| | 0.1 |
|
Cash at end of period | $ | 0.5 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 0.5 |
|
Note 14– Subsequent Event
In October 2017, we entered into a Purchase Agreement with an affiliate of Kissner Group Holdings LP to sell 100% of our equity interests in US Salt, LLC (US Salt) for approximately $225 million. US Salt is a solution mining and salt production company located on the shores of Seneca Lake near Watkins Glen in Schuyler County, New York. US Salt is included in our marketing, supply and logistics segment. Subject to the terms and conditions of the Purchase Agreement (including customary closing conditions and purchase price adjustments), we expect to close the transaction during the fourth quarter of 2017. The impact of this transaction has not been reflected in this Quarterly Report on Form 10-Q as of and for the three and nine months ended September 30, 2017.
| |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Management'sManagement’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 Part II, Item 7. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations in our 20162021 Annual Report on Form 10-K.
This report, including information included or incorporated by reference herein, contains forward-looking statements concerning the financial condition, results of operations, plans, objectives, future performance and business of our company and its subsidiaries. These forward-looking statements include:
•statements that are not historical in nature, including, but not limited to: (i) our belief that anticipated cash from operations, cash distributions from entities that we control, and borrowing capacity under our credit facility will be sufficient to meet our anticipated liquidity needs for the foreseeable future; and (ii) our belief that we do not have material potential liability in connection with legal proceedings that would have a significant financial impact on our consolidated financial condition, results of operations or cash flows; and (iii) our belief that our assets will continue to benefit from the development of unconventional shale plays as significant supply basins; and
•statements preceded by, followed by or that contain forward-looking terminology including the words “believe,” “expect,” “may,” “will,” “should,” “could,” “anticipate,” “estimate,” “intend” or the negation thereof, or similar expressions.
Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties and assumptions. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the following factors:
•our ability to successfully implement our business plan for our assets and operations;
•governmental legislation and regulations;
•industry factors that influence the supply of and demand for crude oil, natural gas and NGLs;
•industry factors that influence the demand for services in the markets (particularly unconventional shale plays) in which we provide services;
•weather conditions;
•outbreak of illness, pandemic or any other public health crisis, including the COVID-19 pandemic;
•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;
•the availability of storage for hydrocarbons;
•the ability of members of the Organization of Petroleum Exporting Countries (OPEC) and other oil-producing countries to agree and maintain oil price and production controls;
•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.1A. Risk Factors of our 20162021 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 for our investors by consistently generating stable operating marginmargins and improvedimproving cash flows from our diversified midstream operations by prudently financing investments in our investments,assets and expansions of our portfolio, maximizing throughput and optimizing services on our assets, and effectively controlling our capital expenditures, 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.
We have positioned the Company to generate consistent results in a low commodity price environment without sacrificing revenue upside. For example, many of our G&P assets are supported by long-term, core acreage dedications in shale plays that are economic to varying degrees based upon natural gas, NGL and crude oil prices, the availability of 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
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,We have taken a substantial portionnumber of our midstream investments are based on fixed fee, take-or-pay or minimum volume commitment agreements that ensure a minimum level of cash flow regardless of actual commodity prices or volumetric throughput.
For the remainder of 2017 and beyond, we will continue to execute on our planstrategic steps to better position the Company to emerge from this challenging market environment as a stronger, better capitalized company that can sustainably resume growingaccretively grow cash flows and as an industry leader in Environmental, Social and Governance (ESG) efforts.
We continue to drive our long-term growth strategy through disciplined capital investments utilizing our current financial flexibility, and on February 1, 2022, we acquired Oasis Midstream Partners LP (Oasis Midstream) in an equity and cash transaction valued at approximately $1.8 billion. Pursuant to the merger agreement, Oasis Petroleum Inc. (Oasis Petroleum) received $150 million in cash plus 20.9 million newly issued CEQP common units in exchange for its distributions. We will remain focused on efficiently allocating33.8 million common units held in Oasis Midstream. In addition, Oasis Midstream’s public unitholders received 12.9 million newly issued CEQP common units in exchange for the 14.8 million Oasis Midstream common units held by them. Additionally, under the merger agreement, Oasis Petroleum received a $10 million cash payment for its ownership of the general partner of Oasis Midstream. This transaction further solidifies Crestwood’s competitive position in the Williston Basin with exposure to approximately 1,200 drilling locations and 535,000 dedicated acres and expands the company’s relationship with Oasis Petroleum. Additionally, Oasis Midstream’s Wild Basin gathering and processing assets are highly complementary with our Arrow gathering system and Bear Den processing facility which provides for immediate opportunities to drive cost savings and commercial synergies and better utilization of available gas processing capacity.
In addition to the merger with Oasis Midstream discussed above, we have also taken steps to (i) minimize capital expenditures eliminating costs (through increasedto better align with development activity by our gathering and processing customers; (ii) realign our organization to reduce operating efficiencies and cost discipline)administrative expenses; (iii) engage with our customers to maintain volumes across our asset portfolio; (iv) optimize our storage, transportation and strengtheningmarketing assets to take advantage of regional commodity price volatility; and (v) evaluate our debt and equity structure to preserve liquidity and ensure balance sheet. We expect to focus on expansion and greenfield opportunities in the Delaware Permian and the Bakken shale as further described in "Segment Highlights" below.
Regulatory Matters
Many aspects of the energy midstream sector, such as crude-by-rail activities and pipeline integrity, have experienced increased regulatory oversightsheet strength. Given our efforts over the past few years. Prioryears to improve the partnership’s competitive position in the businesses we operate, manage costs and improve margins and create a stronger balance sheet, we believe the Company is well positioned to execute its business plan.
Recent Developments
Bakken DAPL Matter. In July 2020, a U.S. District Court (District Court) ordered the Dakota Access Pipeline (DAPL) to cease operation based on an alleged procedural permitting failure. On August 5, 2020, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) stayed the DAPL shutdown, and subsequently issued an opinion upholding the District Court’s decision on the merits, but not prohibiting DAPL’s continued operation. The plaintiffs sought another injunction against DAPL’s operation, which was denied by the District Court in May 2021. As required by the District Court, the U.S. Army Corps of Engineers is currently conducting an environmental impact statement, which is currently expected to be complete in September 2022. We expect DAPL will remain in operation while the environmental impact statement is being completed.
The Arrow gathering system currently connects to the 2016 presidential election, we expected the trend of greater regulatory oversight to continueDAPL, Kinder Morgan Hiland, Tesoro and True Companies’ Bridger Four Bears pipelines, providing significant downstream delivery capacity for the foreseeable future, However, the election results and anticipated changes in policy could lessen the degree of regulatory scrutiny we face in the near term.
Segment Highlights
Below is a discussion of events that highlight our core business and financing activities.
Gathering and Processing
Bakken. In the Bakken, we are expanding and upgrading our Arrow system 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 thatcustomers. Additionally, we expect to place into service in late 2017. We believe the installation of a gas processing solution on thecan transport Arrow system will, among other things, spur greater development activity around the Arrow system, allow us to provide greater flow assurancecrude volumes to our producer customers, and reduce the downstream constraints currently experiencedCOLT Hub facility by producers on the Fort Berthold Indian Reservation. The anticipated cost of this natural gas processing facility and associated pipeline is approximately $115 million.In conjunction with this project, we are negotiating various amendments and extensions with several of our producer customers, andor truck, which mitigates the impact of any potential pipeline shut-downs to our producers with the ability to access multiple markets out of the basin.
Carbon Management. One of the core initiatives related to our ESG efforts surrounds our focus on managing the intensity of our emissions in order to reduce climate-related risk to our business.
In January 2022, we published our first carbon management plan (CMP), which outlines near-term emissions reduction and management activities that we intend to implement over the next three years. The CMP includes several core objectives, including (i) reducing emissions intensity of our assets; (ii) evaluating opportunities to reduce Scope 2 greenhouse gas (GHG) emissions while managing our operations’ energy efficiency; (iii) enhancing our process by which we manage GHG emissions; (iv) piloting methane emission monitoring devices at certain of our facilities; (v) participating in the development of responsibly sourced gas standards for the midstream sector; (vi) investing in technology to better inventory and calculate emissions data and integrating the technology into our operations; and (vii) participating in and providing leadership to trade associations focused on climate-related risks.
We currently believe that our carbon management efforts will help to mitigate the potential impact that emissions may have on our capital expenditures or results of operations in the future, although we currently anticipate that these contract negotiations isefforts will not expected to have a material impact toon our 2017capital expenditures or results of operations.operations in 2022.
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. Through our Crestwood Permian joint venture, we are expanding both our processing capacity in the region, which includes the construction of a 200 MMcf/d natural gas processing facility in Orla, Texas, and associated pipelines, as well as our interconnection capacity to accommodate greater takeaway options for residue gas and NGLs. The initial cost of the expansion project is expected to cost approximately $170 million with an in-service date in the second half of 2018. We are also developing a crude oil and condensate storage terminal near Orla, Texas that would offer condensate stabilization, truck loading/unloading options and connections to third party pipelines. In addition, we are developing a produced water gathering, disposal and recycling facility in the Delaware Permian. We continue to believe that we are positioned well to benefit from the continued build-out of this world-class resource.
On June 21, 2017, we contributed to Crestwood Permian 100% of theequity interest of Crestwood New Mexico Pipeline LLC (Crestwood New Mexico), our wholly-owned subsidiary that owns our Delaware Basin assets located in Eddy County, New Mexico. This contribution was treated as a transaction between entities under common control, and accordingly we deconsolidated Crestwood New Mexico and our investment in Crestwood Permian was increased by the historical book value of these assets of approximately $69.4 million. In conjunction with this contribution, First Reserve has agreed to contribute to Crestwood Permian the first $151 million of capital costs required to fund the expansion of the Delaware Basin assets, which includes the Orla processing plant and associated pipelines. In October 2017, CPB Subsidiary Holdings LLC, a wholly-subsidiary of Crestwood Permian, entered into a credit agreement with certain lenders. The five year term credit agreement allows for revolving loans, letters of credit and swingline loans in an aggregate principal amount of up to $150 million. Borrowings under the credit agreement will be used to fund expansion projects and for general corporate purposes.
Crestwood Permian Basin has a long-term agreement with SWEPI to construct, own and operate a natural gas gathering system in SWEPI's operated position in the Delaware Permian. SWEPI has dedicated to Crestwood Permian 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 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, 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 Basin provides gathering, dehydration, compression and liquids handling services to SWEPI on a fixed fee basis. In October 2017, Shell Midstream purchased a 50% equity interest in Crestwood Permian Basin for approximately $37.9 million in cash. See Item 1. Financial Statements, Note 4 for additional information regarding Crestwood Permian Basin.
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 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 2017 and will continue throughout the remainder of the year, and we believe these changes will result in improved profitability for this business. Additionally, management plans to realign our trucking operations service capability to be more coordinated with our NGL, crude and water operations and less reliant on third party transportation services. This commercial realignment should allow us to optimize the use of available capacity and position us to reevaluate our trucking and transportation operations in future periods. We anticipate that these realignment efforts will be completed before the end of 2017, which includes the consolidation and relocation of our three corporate offices into two offices located in Houston and Kansas City.
In October 2017, we entered into a Purchase Agreement with an affiliate of Kissner Group Holdings LP to sell 100% of our equity interests in US Salt, LLC (US Salt) for approximately $225 million. US Salt is a solution mining and salt production company located on the shores of Seneca Lake near Watkins Glen in Schuyler County, New York. We intend to use the proceeds from the divestiture to reduce borrowings under the CMLP credit facility and reinvest in on-going organic growth projects in the Bakken and Delaware Basin discussed above in our Gathering and Processing Segment Highlights. Subject to the terms and conditions of the Purchase Agreement (including customary closing conditions and purchase price adjustments), we expect to close the transaction during the fourth quarter 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.
Critical Accounting Estimates
Our critical accounting estimates are consistent with those described in our 2016 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, amortization and 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'scompany’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 gains and losses on long-lived assets and other 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 2017the realignment and restructuring of our Marketing, Supply and Logistics operations and related consolidation and relocation of our corporate offices,structure, 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 timing of recognizing gains and losses on these derivative contracts differs from the recognition of revenue for the related underlying sale of inventory to which these derivatives relate. Changes in the fair value of other derivative contracts is not considered in determining Adjusted EBITDA given the relatively short-term nature of those derivative contracts. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, as they do not include deductions for items such as depreciation, amortization and accretion, interest and income taxes, which are necessary to maintain our business. EBITDA and Adjusted EBITDA should not be considered 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 nine months ended September 30, 2017 and 2016 (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Crestwood Equity | | | | | | Crestwood Midstream |
| | | Three Months Ended | | | | Three Months Ended |
| | | March 31, | | | | March 31, |
| | | | | 2022 | | 2021 | | | | | | 2022 | | 2021 |
Revenues | | | | | $ | 1,583.8 | | | $ | 1,032.7 | | | | | | | $ | 1,583.8 | | | $ | 1,032.7 | |
Costs of product/services sold | | | | | 1,364.4 | | | 813.8 | | | | | | | 1,364.4 | | | 813.8 | |
Operations and maintenance expense | | | | | 42.4 | | | 32.8 | | | | | | | 42.4 | | | 32.8 | |
General and administrative expense | | | | | 43.4 | | | 18.7 | | | | | | | 41.7 | | | 17.2 | |
Depreciation, amortization and accretion | | | | | 74.8 | | | 59.2 | | | | | | | 78.2 | | | 62.8 | |
Loss on long-lived assets, net | | | | | 3.8 | | | 1.4 | | | | | | | 3.8 | | | 1.4 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Operating income | | | | | 55.0 | | | 106.8 | | | | | | | 53.3 | | | 104.7 | |
Earnings (loss) from unconsolidated affiliates, net | | | | | 3.0 | | | (103.7) | | | | | | | 3.0 | | | (103.7) | |
Interest and debt expense, net | | | | | (36.1) | | | (36.0) | | | | | | | (36.1) | | | (36.0) | |
Loss on modification/extinguishment of debt | | | | | — | | | (5.5) | | | | | | | — | | | (5.5) | |
Other income, net | | | | | 0.3 | | | — | | | | | | | — | | | — | |
Benefit for income taxes | | | | | — | | | 0.1 | | | | | | | — | | | 0.1 | |
Net income (loss) | | | | | 22.2 | | | (38.3) | | | | | | | 20.2 | | | (40.4) | |
Add: | | | | | | | | | | | | | | | |
Interest and debt expense, net | | | | | 36.1 | | | 36.0 | | | | | | | 36.1 | | | 36.0 | |
Loss on modification/extinguishment of debt | | | | | — | | | 5.5 | | | | | | | — | | | 5.5 | |
Benefit for income taxes | | | | | — | | | (0.1) | | | | | | | — | | | (0.1) | |
Depreciation, amortization and accretion | | | | | 74.8 | | | 59.2 | | | | | | | 78.2 | | | 62.8 | |
EBITDA | | | | | 133.1 | | | 62.3 | | | | | | | 134.5 | | | 63.8 | |
Unit-based compensation charges | | | | | 8.6 | | | 2.3 | | | | | | | 8.6 | | | 2.3 | |
Loss on long-lived assets, net | | | | | 3.8 | | | 1.4 | | | | | | | 3.8 | | | 1.4 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
(Earnings) loss from unconsolidated affiliates, net | | | | | (3.0) | | | 103.7 | | | | | | | (3.0) | | | 103.7 | |
Adjusted EBITDA from unconsolidated affiliates, net | | | | | 7.6 | | | 25.7 | | | | | | | 7.6 | | | 25.7 | |
Change in fair value of commodity inventory-related derivative contracts | | | | | 5.7 | | | (30.5) | | | | | | | 5.7 | | | (30.5) | |
Significant transaction and environmental related costs and other items | | | | | 17.0 | | | 0.5 | | | | | | | 17.0 | | | 0.3 | |
Adjusted EBITDA | | | | | $ | 172.8 | | | $ | 165.4 | | | | | | | $ | 174.2 | | | $ | 166.7 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Crestwood Equity | | Crestwood Midstream |
| Three Months Ended | | Nine Months Ended | | Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, | | September 30, | | September 30, |
| 2017 | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 |
Revenues | $ | 955.6 |
| | $ | 587.6 |
| | $ | 2,634.0 |
| | $ | 1,725.5 |
| | $ | 955.6 |
| | $ | 587.6 |
| | $ | 2,634.0 |
| | $ | 1,725.5 |
|
Costs of product/services sold | 858.5 |
| | 466.7 |
| | 2,271.6 |
| | 1,280.1 |
| | 858.5 |
| | 466.7 |
| | 2,271.6 |
| | 1,280.1 |
|
Operations and maintenance expense | 35.5 |
| | 33.1 |
| | 103.4 |
| | 119.9 |
| | 35.5 |
| | 33.6 |
| | 103.4 |
| | 116.7 |
|
General and administrative expense | 22.5 |
| | 18.3 |
| | 71.6 |
| | 70.2 |
| | 21.4 |
| | 17.3 |
| | 69.0 |
| | 67.5 |
|
Depreciation, amortization and accretion | 48.1 |
| | 50.3 |
| | 145.2 |
| | 177.0 |
| | 50.9 |
| | 53.2 |
| | 153.5 |
| | 185.2 |
|
Loss on long-lived assets, net | (6.3 | ) | | (2.1 | ) | | (6.3 | ) | | (34.8 | ) | | (6.3 | ) | | (2.1 | ) | | (6.3 | ) | | (34.8 | ) |
Goodwill impairment | — |
| | — |
| | — |
| | (109.7 | ) | | — |
| | — |
| | — |
| | (109.7 | ) |
Operating income (loss) | (15.3 | ) | | 17.1 |
| | 35.9 |
| | (66.2 | ) | | (17.0 | ) | | 14.7 |
| | 30.2 |
| | (68.5 | ) |
Earnings from unconsolidated affiliates, net | 11.5 |
| | 13.4 |
| | 29.2 |
| | 26.1 |
| | 11.5 |
| | 13.4 |
| | 29.2 |
| | 26.1 |
|
Interest and debt expense, net | (24.2 | ) | | (27.5 | ) | | (74.8 | ) | | (97.9 | ) | | (24.2 | ) | | (27.5 | ) | | (74.8 | ) | | (97.9 | ) |
Gain (loss) on modification/extinguishment of debt | — |
| | — |
| | (37.7 | ) | | 10.0 |
| | — |
| | — |
| | (37.7 | ) | | 10.0 |
|
Other income, net | 0.2 |
| | 0.2 |
| | 0.4 |
| | 0.4 |
| | — |
| | — |
| | — |
| | — |
|
Provision for income taxes | (0.1 | ) | | (0.2 | ) | | — |
| | (0.2 | ) | | (0.1 | ) | | — |
| | — |
| | — |
|
Net income (loss) | (27.9 | ) | | 3.0 |
| | (47.0 | ) | | (127.8 | ) | | (29.8 | ) | | 0.6 |
| | (53.1 | ) | | (130.3 | ) |
Add: | | | | | | | | | | | | | | | |
Interest and debt expense, net | 24.2 |
| | 27.5 |
| | 74.8 |
| | 97.9 |
| | 24.2 |
| | 27.5 |
| | 74.8 |
| | 97.9 |
|
(Gain) loss on modification/extinguishment of debt | — |
| | — |
| | 37.7 |
| | (10.0 | ) | | — |
| | — |
| | 37.7 |
| | (10.0 | ) |
Provision for income taxes | 0.1 |
| | 0.2 |
| | — |
| | 0.2 |
| | 0.1 |
| | — |
| | — |
| | — |
|
Depreciation, amortization and accretion | 48.1 |
| | 50.3 |
| | 145.2 |
| | 177.0 |
| | 50.9 |
| | 53.2 |
| | 153.5 |
| | 185.2 |
|
EBITDA | 44.5 |
| | 81.0 |
| | 210.7 |
| | 137.3 |
| | 45.4 |
| | 81.3 |
| | 212.9 |
| | 142.8 |
|
Unit-based compensation charges | 6.2 |
| | 4.1 |
| | 18.9 |
| | 13.4 |
| | 6.2 |
| | 4.1 |
| | 18.9 |
| | 13.4 |
|
Loss on long-lived assets, net | 6.3 |
| | 2.1 |
| | 6.3 |
| | 34.8 |
| | 6.3 |
| | 2.1 |
| | 6.3 |
| | 34.8 |
|
Goodwill impairment | — |
| | — |
| | — |
| | 109.7 |
| | — |
| | — |
| | — |
| | 109.7 |
|
Earnings from unconsolidated affiliates, net | (11.5 | ) | | (13.4 | ) | | (29.2 | ) | | (26.1 | ) | | (11.5 | ) | | (13.4 | ) | | (29.2 | ) | | (26.1 | ) |
Adjusted EBITDA from unconsolidated affiliates, net | 21.5 |
| | 21.7 |
| | 54.9 |
| | 41.4 |
| | 21.5 |
| | 21.7 |
| | 54.9 |
| | 41.4 |
|
Change in fair value of commodity inventory-related derivative contracts | 27.4 |
| | 7.5 |
| | 12.5 |
| | 8.3 |
| | 27.4 |
| | 7.5 |
| | 12.5 |
| | 8.3 |
|
Significant transaction and environmental related costs and other items | 1.9 |
| | 0.5 |
| | 10.4 |
| | 11.2 |
| | 1.9 |
| | 0.5 |
| | 10.4 |
| | 11.2 |
|
Adjusted EBITDA | $ | 96.3 |
| | $ | 103.5 |
| | $ | 284.5 |
| | $ | 330.0 |
| | $ | 97.2 |
| | $ | 103.8 |
| | $ | 286.7 |
| | $ | 335.5 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Crestwood Equity | | | | | | Crestwood Midstream |
| | | Three Months Ended | | | | Three Months Ended |
| | | March 31, | | | | March 31, |
| | | | | 2022 | | 2021 | | | | | | 2022 | | 2021 |
Net cash provided by operating activities | | | | | $ | 222.5 | | | $ | 258.5 | | | | | | | $ | 223.9 | | | $ | 259.2 | |
Net changes in operating assets and liabilities | | | | | (112.9) | | | (122.8) | | | | | | | (112.8) | | | (122.0) | |
Amortization of debt-related deferred costs | | | | | (0.8) | | | (1.7) | | | | | | | (0.8) | | | (1.7) | |
Interest and debt expense, net | | | | | 36.1 | | | 36.0 | | | | | | | 36.1 | | | 36.0 | |
Unit-based compensation charges | | | | | (8.6) | | | (2.3) | | | | | | | (8.6) | | | (2.3) | |
Loss on long-lived assets, net | | | | | (3.8) | | | (1.4) | | | | | | | (3.8) | | | (1.4) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Earnings (loss) from unconsolidated affiliates, net, adjusted for cash distributions received | | | | | 0.4 | | | (103.8) | | | | | | | 0.4 | | | (103.8) | |
Deferred income taxes | | | | | 0.1 | | | — | | | | | | | — | | | — | |
Benefit for income taxes | | | | | — | | | (0.1) | | | | | | | — | | | (0.1) | |
Other non-cash income | | | | | 0.1 | | | (0.1) | | | | | | | 0.1 | | | (0.1) | |
EBITDA | | | | | 133.1 | | | 62.3 | | | | | | | 134.5 | | | 63.8 | |
Unit-based compensation charges | | | | | 8.6 | | | 2.3 | | | | | | | 8.6 | | | 2.3 | |
Loss on long-lived assets, net | | | | | 3.8 | | | 1.4 | | | | | | | 3.8 | | | 1.4 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
(Earnings) loss from unconsolidated affiliates, net | | | | | (3.0) | | | 103.7 | | | | | | | (3.0) | | | 103.7 | |
Adjusted EBITDA from unconsolidated affiliates, net | | | | | 7.6 | | | 25.7 | | | | | | | 7.6 | | | 25.7 | |
Change in fair value of commodity inventory-related derivative contracts | | | | | 5.7 | | | (30.5) | | | | | | | 5.7 | | | (30.5) | |
Significant transaction and environmental related costs and other items | | | | | 17.0 | | | 0.5 | | | | | | | 17.0 | | | 0.3 | |
Adjusted EBITDA | | | | | $ | 172.8 | | | $ | 165.4 | | | | | | | $ | 174.2 | | | $ | 166.7 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Crestwood Equity | | Crestwood Midstream |
| Three Months Ended | | Nine Months Ended | | Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, | | September 30, | | September 30, |
| 2017 | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 |
Net cash provided by operating activities | $ | 95.3 |
| | $ | 51.5 |
| | $ | 228.2 |
| | $ | 244.5 |
| | $ | 96.8 |
| | $ | 54.8 |
| | $ | 232.9 |
| | $ | 250.8 |
|
Net changes in operating assets and liabilities | (63.6 | ) | | 6.5 |
| | (65.2 | ) | | (46.8 | ) | | (64.1 | ) | | 4.0 |
| | (66.9 | ) | | (46.3 | ) |
Amortization of debt-related deferred costs | (1.9 | ) | | (1.7 | ) | | (5.4 | ) | | (5.1 | ) | | (1.9 | ) | | (1.7 | ) | | (5.4 | ) | | (5.1 | ) |
Interest and debt expense, net | 24.2 |
| | 27.5 |
| | 74.8 |
| | 97.9 |
| | 24.2 |
| | 27.5 |
| | 74.8 |
| | 97.9 |
|
Unit-based compensation charges | (6.2 | ) | | (4.1 | ) | | (18.9 | ) | | (13.4 | ) | | (6.2 | ) | | (4.1 | ) | | (18.9 | ) | | (13.4 | ) |
Loss on long-lived assets, net | (6.3 | ) | | (2.1 | ) | | (6.3 | ) | | (34.8 | ) | | (6.3 | ) | | (2.1 | ) | | (6.3 | ) | | (34.8 | ) |
Goodwill impairment | — |
| | — |
| | — |
| | (109.7 | ) | | — |
| | — |
| | — |
| | (109.7 | ) |
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received | 3.0 |
| | 3.1 |
| | 2.5 |
| | 3.9 |
| | 3.0 |
| | 3.1 |
| | 2.5 |
| | 3.9 |
|
Deferred income taxes | — |
| | 0.3 |
| | 0.7 |
| | 0.9 |
| | (0.1 | ) | | — |
| | (0.1 | ) | | (0.2 | ) |
Provision for income taxes | 0.1 |
| | 0.2 |
| | — |
| | 0.2 |
| | 0.1 |
| | — |
| | — |
| | — |
|
Other non-cash (income) expense | (0.1 | ) | | (0.2 | ) | | 0.3 |
| | (0.3 | ) | | (0.1 | ) | | (0.2 | ) | | 0.3 |
| | (0.3 | ) |
EBITDA | 44.5 |
| | 81.0 |
| | 210.7 |
| | 137.3 |
| | 45.4 |
| | 81.3 |
| | 212.9 |
| | 142.8 |
|
Unit-based compensation charges | 6.2 |
| | 4.1 |
| | 18.9 |
| | 13.4 |
| | 6.2 |
| | 4.1 |
| | 18.9 |
| | 13.4 |
|
Loss on long-lived assets, net | 6.3 |
| | 2.1 |
| | 6.3 |
| | 34.8 |
| | 6.3 |
| | 2.1 |
| | 6.3 |
| | 34.8 |
|
Goodwill impairment | — |
| | — |
| | — |
| | 109.7 |
| | — |
| | — |
| | — |
| | 109.7 |
|
Earnings from unconsolidated affiliates, net | (11.5 | ) | | (13.4 | ) | | (29.2 | ) | | (26.1 | ) | | (11.5 | ) | | (13.4 | ) | | (29.2 | ) | | (26.1 | ) |
Adjusted EBITDA from unconsolidated affiliates, net | 21.5 |
| | 21.7 |
| | 54.9 |
| | 41.4 |
| | 21.5 |
| | 21.7 |
| | 54.9 |
| | 41.4 |
|
Change in fair value of commodity inventory-related derivative contracts | 27.4 |
| | 7.5 |
| | 12.5 |
| | 8.3 |
| | 27.4 |
| | 7.5 |
| | 12.5 |
| | 8.3 |
|
Significant transaction and environmental related costs and other items | 1.9 |
| | 0.5 |
| | 10.4 |
| | 11.2 |
| | 1.9 |
| | 0.5 |
| | 10.4 |
| | 11.2 |
|
Adjusted EBITDA | $ | 96.3 |
| | $ | 103.5 |
| | $ | 284.5 |
| | $ | 330.0 |
| | $ | 97.2 |
| | $ | 103.8 |
| | $ | 286.7 |
| | $ | 335.5 |
|
Segment Results
The following tables summarizetable summarizes the EBITDA of our segments (in millions):
Crestwood Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Three Months Ended |
| March 31, 2022 | | March 31, 2021 |
| Gathering and Processing North | | Gathering and Processing South | | Storage and Logistics | | Gathering and Processing North | | Gathering and Processing South | | Storage and Logistics |
Revenues | $ | 235.2 | | | $ | 30.7 | | | $ | 1,317.9 | | | $ | 129.8 | | | $ | 24.6 | | | $ | 878.3 | |
Intersegment revenues | 127.4 | | | — | | | (127.4) | | | 105.3 | | | — | | | (105.3) | |
Costs of product/services sold | 205.6 | | | (0.6) | | | 1,159.4 | | | 116.2 | | | 0.3 | | | 697.3 | |
Operations and maintenance expenses | 23.7 | | | 6.7 | | | 12.0 | | | 15.1 | | | 6.3 | | | 11.4 | |
Gain (loss) on long-lived assets, net | — | | | 0.2 | | | (4.0) | | | (0.2) | | | (1.3) | | | 0.1 | |
| | | | | | | | | | | |
Earnings (loss) from unconsolidated affiliates, net | — | | | 2.6 | | | 0.4 | | | — | | | (0.8) | | | (102.9) | |
EBITDA | $ | 133.3 | | | $ | 27.4 | | | $ | 15.5 | | | $ | 103.6 | | | $ | 15.9 | | | $ | (38.5) | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Three Months Ended |
| September 30, 2017 | | September 30, 2016 |
| Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics | | Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics |
Revenues | $ | 434.4 |
| | $ | 6.2 |
| | $ | 515.0 |
| | $ | 279.3 |
| | $ | 18.3 |
| | $ | 290.0 |
|
Intersegment revenues | 29.9 |
| | 1.2 |
| | (31.1 | ) | | 24.8 |
| | 1.5 |
| | (26.3 | ) |
Costs of product/services sold | 378.6 |
| | 0.2 |
| | 479.7 |
| | 226.1 |
| | 0.1 |
| | 240.5 |
|
Operations and maintenance expenses | 16.2 |
| | 1.0 |
| | 18.3 |
| | 17.4 |
| | 2.5 |
| | 13.2 |
|
Gain (loss) on long-lived assets | (3.9 | ) | | — |
| | 0.6 |
| | (2.0 | ) | | (0.1 | ) | | — |
|
Earnings from unconsolidated affiliates, net | 4.3 |
| | 7.2 |
| | — |
| | 5.5 |
| | 7.9 |
| | — |
|
EBITDA | $ | 69.9 |
| | $ | 13.4 |
| | $ | (13.5 | ) | | $ | 64.1 |
| | $ | 25.0 |
| | $ | 10.0 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended | | Nine Months Ended |
| September 30, 2017 | | September 30, 2016 |
| Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics | | Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics |
Revenues | $ | 1,208.1 |
| | $ | 24.7 |
| | $ | 1,401.2 |
| | $ | 787.7 |
| | $ | 131.5 |
| | $ | 806.3 |
|
Intersegment revenues | 94.3 |
| | 4.7 |
| | (99.0 | ) | | 75.9 |
| | 3.0 |
| | (78.9 | ) |
Costs of product/services sold | 1,049.9 |
| | 0.3 |
| | 1,221.4 |
| | 632.2 |
| | 4.9 |
| | 643.0 |
|
Operations and maintenance expenses | 51.8 |
| | 3.4 |
| | 48.2 |
| | 56.1 |
| | 18.2 |
| | 45.6 |
|
Goodwill impairment | — |
| | — |
| | — |
| | (8.6 | ) | | (13.7 | ) | | (87.4 | ) |
Gain (loss) on long-lived assets | (3.9 | ) | | — |
| | 0.6 |
| | (2.0 | ) | | (32.8 | ) | | — |
|
Earnings from unconsolidated affiliates, net | 7.7 |
| | 21.5 |
| | — |
| | 16.5 |
| | 9.6 |
| | — |
|
EBITDA | $ | 204.5 |
| | $ | 47.2 |
| | $ | 33.2 |
| | $ | 181.2 |
| | $ | 74.5 |
| | $ | (48.6 | ) |
Crestwood Midstream
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Three Months Ended |
| September 30, 2017 | | September 30, 2016 |
| Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics | | Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics |
Revenues | $ | 434.4 |
| | $ | 6.2 |
| | $ | 515.0 |
| | $ | 279.3 |
| | $ | 18.3 |
| | $ | 290.0 |
|
Intersegment revenues | 29.9 |
| | 1.2 |
| | (31.1 | ) | | 24.8 |
| | 1.5 |
| | (26.3 | ) |
Costs of product/services sold | 378.6 |
| | 0.2 |
| | 479.7 |
| | 226.1 |
| | 0.1 |
| | 240.5 |
|
Operations and maintenance expenses | 16.2 |
| | 1.0 |
| | 18.3 |
| | 17.4 |
| | 3.0 |
| | 13.2 |
|
Gain (loss) on long-lived assets | (3.9 | ) | | — |
| | 0.6 |
| | (2.0 | ) | | (0.1 | ) | | — |
|
Earnings from unconsolidated affiliates, net | 4.3 |
| | 7.2 |
| | — |
| | 5.5 |
| | 7.9 |
| | — |
|
EBITDA | $ | 69.9 |
| | $ | 13.4 |
| | $ | (13.5 | ) | | $ | 64.1 |
| | $ | 24.5 |
| | $ | 10.0 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended | | Nine Months Ended |
| September 30, 2017 | | September 30, 2016 |
| Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics | | Gathering and Processing | | Storage and Transportation | | Marketing, Supply and Logistics |
Revenues | $ | 1,208.1 |
| | $ | 24.7 |
| | $ | 1,401.2 |
| | $ | 787.7 |
| | $ | 131.5 |
| | $ | 806.3 |
|
Intersegment revenues | 94.3 |
| | 4.7 |
| | (99.0 | ) | | 75.9 |
| | 3.0 |
| | (78.9 | ) |
Costs of product/services sold | 1,049.9 |
| | 0.3 |
| | 1,221.4 |
| | 632.2 |
| | 4.9 |
| | 643.0 |
|
Operations and maintenance expenses | 51.8 |
| | 3.4 |
| | 48.2 |
| | 56.1 |
| | 15.0 |
| | 45.6 |
|
Goodwill impairment | — |
| | — |
| | — |
| | (8.6 | ) | | (13.7 | ) | | (87.4 | ) |
Gain (loss) on long-lived assets | (3.9 | ) | | — |
| | 0.6 |
| | (2.0 | ) | | (32.8 | ) | | — |
|
Earnings from unconsolidated affiliates, net | 7.7 |
| | 21.5 |
| | — |
| | 16.5 |
| | 9.6 |
| | — |
|
EBITDA | $ | 204.5 |
| | $ | 47.2 |
| | $ | 33.2 |
| | $ | 181.2 |
| | $ | 77.7 |
| | $ | (48.6 | ) |
Below is a discussion of the factors that impacted EBITDA by segment for the three and nine months ended September 30, 2017March 31, 2022 compared to the same periodsperiod in 2016.2021.
Gathering and Processing North
EBITDA for our gathering and processing north segment increased by approximately $5.8$29.7 million and $23.3 million for during the three and nine months ended September 30, 2017March 31, 2022 compared to the same periodsperiod in 2016.
During2021. On February 1, 2022, we completed the threemerger with Oasis Midstream, and nine months ended September 30, 2017,as a result, we began reflecting the financial results of Oasis Midstream’s Williston Basin operations in our gathering and processing segment'snorth segment.
Our gathering and processing north segment’s revenues increased by approximately $160.2$127.5 million and $438.8 million during the three months ended March 31, 2022 compared to the same periodsperiod in 2016, partially offset by an increase in2021, while our costs of product/services sold increased by
approximately $89.4 million. During the three months ended March 31, 2022, we recognized revenues and product costs of approximately $152.5$63.5 million and $417.7$19.3 million,. These respectively, related to our Oasis Midstream Williston operations. The remaining increases in our gathering and processing north segment’s revenues and costs of product/services sold were primarily driven by our Arrow operations which experienced a $176.1 million and $442.3 million increase in revenues and a $166.1 million and $419.7 million increase in costs of product/services sold during the three and nine months ended September 30, 2017 compared to the same periods in 2016. The increase in Arrow's revenues and costs was primarily driven by higher average commodity prices on Arrow'sits agreements under which it purchases and sells crude oil. In addition,oil and natural gas, partially offset by lower volumes due to our crude, gas and water volumes increased by 31%, 12% and 29%, respectively,customers shutting in production during early 2022 as a result of winter weather conditions. During the ninethree months ended September 30, 2017March 31, 2022, Arrow’s natural gas gathering and processing volumes decreased by 10% and its crude oil volumes decreased by 32% compared to the same period in 2016, due to the connection of 78 wells on our Arrow system during the nine months ended September 30, 2017 compared to 31 wells during the same period in 2016, and higher initial production rates experienced on those connected wells in 2017 compared to 2016.2021.
Partially offsetting the increase in ourOur gathering and processing segment's revenuesnorth segment’s operations and costs from our Arrow operationsmaintenance expenses increased by approximately $8.6 million during the three months ended September 30, 2017March 31, 2022 compared to the same period in 2016, were lower revenues2021, primarily due to our Oasis Midstream Williston operations.
Gathering and costs ofProcessing South
EBITDA for our gathering and processing south segment increased by approximately $16.1$11.5 million and $11.4 million, respectively, from our Permian operations as a result during the three months ended March 31, 2022 compared to the same period in 2021. As described above, upon the completion of the deconsolidationmerger with Oasis Midstream, we began reflecting the financial results of Crestwood New MexicoOasis Midstream’s Delaware Basin operations in June 2017 due to the contribution of these assets to Crestwood Permian. For a further discussion of this transaction, see Item 1. Financial Statements, Note 4.our gathering and processing south segment.
Our gathering and processing segment'ssouth segment’s revenues increased by approximately $6.1 million during the three months ended March 31, 2022 compared to the same period in 2021. During the three months ended March 31, 2022, we recognized revenues of approximately $3.3 million related to our Oasis Midstream Delaware Basin operations. The remaining variance in our gathering and processing south segment’s revenues was primarily driven by higher commodity prices and a 16% increase in natural gas gathering volumes on our Barnett system. During the three months ended March 31, 2021, gathering volumes on our Barnett system were lower due to the extreme winter weather conditions experienced during that period.
Our gathering and processing south segment’s operations and maintenance expenses decreasedincreased by approximately $1.2 million and $4.3$0.4 million during the three and nine months ended September 30, 2017March 31, 2022 compared to the same periodsperiod in 20162021, primarily due to continued cost-reduction efforts undertaken in our operations and the deconsolidation of Crestwood New Mexico.Oasis Midstream Delaware Basin operations.
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.
Our gathering and processing segment'ssouth segment’s EBITDA was also impacted by a decrease in earnings from our unconsolidated affiliates of approximately $1.2 million and $8.8 million during the three and nine months ended September 30, 2017 compared to the same periods in 2016. The decrease was primarily driven by a reduction in revenues at our Jackalope equity investment as a result of the restructuring of its contracts with Chesapeake Energy Corporation (Chesapeake) effective January 1, 2017. Jackalope and Chesapeake replaced the cost-of-service based contract with a fixed-fee gathering and processing contract that includes minimum revenue guarantees for a five to seven year period. Partially offsetting the decrease in equity earnings from our Jackalope equity investment was an increase in equity earnings of approximately $3.4 million from our Crestwood Permian equity investment of approximately $2.8 million and $2.2 millionduring the three and nine months ended September 30, 2017 primarily due to the
contribution of Crestwood New Mexico to Crestwood Permian in June 2017, and the Nautilus system coming online in June 2017.
Storage and Transportation
EBITDA for CMLP's storage and transportation segment decreased by approximately $11.1 million and $30.5 million for the three and nine months ended September 30, 2017March 31, 2022 compared to the same periodsperiod in 2016. The comparability of2021. During the three months ended March 31, 2022, Crestwood Permian experienced an increase in its natural gas gathering and processing revenues primarily due to higher commodity prices and volumes compared to the same period in 2021.
Storage and Logistics
EBITDA for our storage and transportation segment's resultslogistics segment increased by approximately $54.0 million during the three months ended March 31, 2022 compared to the same period in 2021. Our storage and logistics segment’s EBITDA for the three months ended March 31, 2021 was impacted by a $32.9$119.9 million loss recognized on reduction to the deconsolidation ofequity earnings from our Northeast storage and transportation assetsStagecoach Gas equity method investment as a result of recording our proportionate share of a goodwill impairment recorded by the contribution of these assets to Stagecoach Gas in June 2016. The deconsolidation of the Northeastequity method investee further discussed below.
Our storage and transportation assets resultedlogistics segment’s revenues increased by approximately $417.5 million during the three months ended March 31, 2022 compared to the same period in lower2021, while our costs of product/services sold increased by approximately $462.1 million.
Our NGL marketing and logistics operations experienced an increase in revenues and costs of product/services sold of approximately $74.1$289.6 million and $4.6$329.3 million,, respectively, during the ninethree months ended September 30, 2017March 31,2022 compared to the same period in 2016. We also experienced lower operations and maintenance expenses of approximately $11.6 million during the nine months ended September 30, 2017 compared to the same period in 2016, primarily as a result of the deconsolidation of the Northeast storage and transportation assets.
Our storage and transportation segment's revenues was also impacted by lower revenues of approximately $11.6 million and $31.0 million from our COLT Hub operations during the three and nine months ended September 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 and the in-service of the Dakota Access Pipeline system.
The comparability of our storage and transportation segment's EBITDA was also impacted by a $13.7 million goodwill impairment recorded during the first quarter of 2016 related to 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 earnings from our unconsolidated affiliates. As discussed above, in June 2016, we deconsolidated 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 $19.0 million during the nine months ended September 30, 2017. Earnings from our Tres Holdings equity investment increased by approximately $2.2 million during the nine months ended September 30, 2017 compared to the same period in 2016, primarily due to property tax accruals recorded by Tres Holdings during 2016.
EBITDA for CEQP's storage and transportation segment decreased by approximately $11.6 million and $27.3 million during the three and nine months ended September 30, 2017 compared to the same periods 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 CEQP recording additional net property taxes (including interest and penalties) of approximately $2.9 million during the nine months ended September 30, 2016.
Marketing, Supply and Logistics
EBITDA for our marketing, supply and logistics segment decreased by approximately $23.5 million for the three months ended September 30, 2017 compared to the same period in 2016, while we experienced an increase in EBITDA of approximately $81.8 million during the nine months ended September 30, 2017 compared to the same period in 2016. The comparability of our marketing, supply and logistics segment's results was impacted by goodwill impairments of approximately $87.4 million recorded during 2016. For a further discussion of our goodwill impairments recorded during the first quarter of 2016, see Item 1. Financial Statements, Note 2.
Our supply and logistics operations experienced an increase in revenues of approximately $105.3 million and $302.8 million during the three and nine months ended September 30, 2017 compared to the same periods in 2016, and an increase in costs of product/services sold of approximately $117.8 million and $297.3 million during those same periods. During 2016, we experienced unseasonably warm weather which resulted in lower demand for NGLs compared to 2017. The costs of product/services sold increases include a loss of $24.1 million and $22.6 million on our commodity-based derivative contracts during the three and nine months ended September 30, 2017 and a $2.1 million and $4.1 million gain on commodity-based derivative contracts during the three and nine months ended September 30, 2016. The loss on our commodity-based derivative contracts during the three and nine months ended September 30, 2017 resulted from higher average NGL prices during the third quarter of 2017 compared to the prior periods, which resulted in an increase in our liabilities from price risk management activities associated with contracts that provide fixed prices on future sales of our NGL inventory.
During the three and nine months ended September 30, 2017, our storage and terminals operations (including our West Coast operations) experienced a $39.0 million and $104.1 million increase in revenues compared to the same periods in 2016 and a $45.1 million and $109.4 million increase in costs of product/services sold during those same periods.2021. These increases were primarily driven by increases inhigher NGL prices during the three months ended September 30, 2017,March 31, 2022 as a result of overall increases in commodity prices during 2022 compared to the same period in 2021. In addition, we were able to capture additional opportunities to sell NGL inventory as a result of higher demand for NGLs during the the three months ended March 31, 2022 compared to the same period in 2021. Our NGL marketing and logistics operations’ costs of product/services sold increased more than than its revenues primarily due to the increaseimpact of increasing commodity prices on our assets and liabilities from price risk management activities. Included in our costs of product/services sold more than offset the increase in our revenues due to decreasing demand from our refinery customers primarily on the West Coast.was a loss of $47.6
Revenues from our crude marketing operations increased by approximately $76.5
million and $172.4$8.1 million during the three and nine months ended September 30, 2017March 31, 2022 and 2021 related to our price risk management activities.
Our crude oil and natural gas marketing operations experienced an increase in its revenues and product costs of approximately $128.9 million and $133.2 million, respectively, during the three months ended March 31, 2022 compared to the same periodsperiod in 2016. In addition, we experienced an increase in our costs of product/services sold of approximately $76.0 million and $172.0 million.2021. These increases were driven primarily by higher crude oil purchases and sales as a result of increases in commodity prices during early 2022 compared to 2021, as well as an increase in marketing volumesactivity surrounding our natural gas-related operations driven by higher natural gas prices. During the three months ended March 31, 2021, our natural gas marketing operations experienced higher revenues due to increased marketing activity surrounding our crude-related operations.as a result of the unusually cold weather during early 2021.
Our NGLstorage and crude trucking operations continued to experience a decline in demand for their services due to lower supply volumes, increased competition, excess trucking capacity in the marketplace and lower commodity priceslogistics segment’s EBITDA during the three and nine months ended September 30, 2017March 31, 2022 was impacted by a loss on long-lived assets of approximately $4.0 million primarily due to the buyout of leases related to our exiting the crude oil railcar leasing business. For a further discussion of this matter, see Item 1, Financial Statements, Note 10.
Our storage and transportation segment’s EBITDA was also impacted by a net increase in earnings from unconsolidated affiliates of approximately $103.3 million. During the three months ended March 31, 2021, we had a loss from unconsolidated affiliates of approximately $112.3 million from our Stagecoach Gas equity investment that was sold in mid-2021. This loss primarily related to a $119.9 million reduction to the equity earnings as a result of recording our proportionate share of a goodwill impairment recorded by the equity method investee. For a further discussion of this matter, see Item 1. Financial Statements, Note 5. During the three months ended March 31, 2022, earnings from our Tres Holdings equity investment decreased by $8.7 million compared to the same periodsperiod in 2016, resulting in a $2.8 million and $12.3 million decrease in revenues and a $1.1 million and $5.0 million decrease in costs of product/services sold period over period.
Our marketing, supply and logistics segment's operations and maintenance expenses increased during2021. During the three and nine months ended September 30, 2017 comparedMarch 31, 2021, Tres Holdings experienced higher revenues from natural gas inventory sales and an increase in demand for its storage and transportation services due to the same periods in 2016 primarily due to a $3.1 million property tax refund receivedunusually cold weather experienced during the third quarter of 2016 related to our West Coast operations.early 2021.
Other EBITDA Results
General and Administrative Expenses. Expenses. During the three and nine months ended September 30, 2017,March 31, 2022, our general and administrative expenses increased by approximately $25 million compared to the same periodsperiod in 2016,2021, primarily due to an increase intransaction costs incurred related to the merger with Oasis Midstream. In addition, we also experienced higher unit-based compensation charges based onduring the three months ended March 31, 2022 compared to the same period in 2021, primarily driven by higher average awards outstanding in 2017 compared to 2016 and the impact of performance units granted during 2017 under the Crestwood Equity LTIP. For a further discussion of Crestwood Equity's Long Term Incentive Plan, see Item 1. Financial Statements, Note 2. In addition, we incurred additional costs during the third quarter of 2017 as a result of the relocation of Crestwood's Houston corporate headquarters.our long-term incentive plans.
Items not affecting EBITDA include the following:
Depreciation, Amortization and Accretion Expense. Depreciation,During the three months ended March 31, 2022, our depreciation, amortization and accretion expense decreased during the nine months September 30, 2017increased by approximately $16 million compared to the same period in 2016,2021, primarily due to the deconsolidation of the Northeast storage and transportation assets in June 2016 and Crestwood New Mexico operations in June 2017.merger with Oasis Midstream.
Interest and Debt Expense, Net.Interest During the three months ended March 31, 2022, interest expense and debt expense net decreased by approximately $3.3 million and $23.1 million during the three and nine months ended September 30, 2017 comparedrelated to the same periods in 2016, primarilyour senior notes increased due to the repayments of Crestwood Midstream's 2020April 2029 Senior Notes and 2022 Senior Notes.assumed in conjunction with the merger with Oasis Midstream.
The following table provides a summary of interest and debt expense (in millions):
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2022 | | 2021 |
Credit facility | | | | | $ | 3.4 | | | $ | 3.5 | |
Senior notes | | | | | 32.1 | | | 29.8 | |
Other | | | | | 0.9 | | | 2.9 | |
Gross interest and debt expense | | | | | 36.4 | | | 36.2 | |
Less: capitalized interest | | | | | 0.3 | | | 0.2 | |
Interest and debt expense, net | | | | | $ | 36.1 | | | $ | 36.0 | |
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Credit facility | $ | 5.5 |
| | $ | 2.9 |
| | $ | 13.3 |
| | $ | 16.0 |
|
Senior notes | 18.2 |
| | 22.8 |
| | 58.3 |
| | 77.1 |
|
Other debt-related costs | 1.7 |
| | 1.9 |
| | 5.4 |
| | 5.4 |
|
Gross interest and debt expense | 25.4 |
| | 27.6 |
| | 77.0 |
| | 98.5 |
|
Less: capitalized interest | 1.2 |
| | 0.1 |
| | 2.2 |
| | 0.6 |
|
Interest and debt expense, net | $ | 24.2 |
| | $ | 27.5 |
| | $ | 74.8 |
| | $ | 97.9 |
|
Loss on Modification/Extinguishment of Debt.Debt. During the ninethree months ended September 30, 2017,March 31, 2021, we recognized a loss on extinguishment of debt of approximately $37.7$5.5 million in conjunction with the tenderredemption of the remaining principal amounts of Crestwood Midstream's 2020our 2023 Senior Notes and 2022 Senior Notes. During the nine months ended September 30, 2016, we
recognized a gain of $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 7.
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 the CMLPCrestwood Midstream credit facility, and sales of equity and debt securities. Our operating subsidiariesequity investments use cash from their respective operations and contributions from us 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 quarterly cash 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 quarterly cash distributions of approximately $15 million to our preferred unitholders. In November 2017,unitholders and quarterly cash distributions of approximately $10 million to Crestwood Niobrara LLC’s non-controlling partner.
On April 14, 2022, we will pay thedeclared a quarterly cash distribution relatedof $0.655 per unit to our common unitholders with respect to the first quarter ended September 30, 2017 to our preferred unitholders in cash in lieu of issuing additional preferred units, and beginning with the quarter ending December 31, 2017, we2022, which will be required to make all future quarterlypaid on May 13, 2022. Our Board of Directors evaluates the level of distributions to our common and preferred unitholders in cash.every quarter and considers a wide range of strategic, commercial, operational and financial factors, including current and projected operating cash flows. We believe our operating cash flows will well exceed our quarterly distributions at the current level and cash distributions to our partners, preferred unitholders.unitholders and non-controlling partner, and as a result, we will have adequate operating cash flows as a source of liquidity for our growth capital expenditures.
As describedIn March 2021, Crestwood Equity’s board of directors authorized a $175 million common unit and preferred unit repurchase program effective through December 31, 2022. Pursuant to the program, we may purchase common and preferred units from time to time in Segment Highlights - Marketing, Supplythe open market in accordance with applicable securities laws at current market prices. The timing and Logistics above, we have entered into an agreement to sell our US Salt operations for approximately $225 million. We intend to use the proceeds from the divestiture to reduce borrowingsamount of purchases under the CMLP credit facilityprogram will be determined based on growth capital opportunities, financial performance and reinvest in on-going organic growth projects in the Bakkenoutlook, and Delaware Basin discussed above in our Gatheringother factors, including acquisition opportunities and Processing Segment Highlights,market conditions. The unit repurchase program does not obligate us to purchase any specific dollar amount or number of units and we expect the proceeds from this divestiture will eliminate the need to access the equity capital markets to fund our current 2017 and 2018 capital programs.may be suspended or discontinued at any time.
As of September 30, 2017, Crestwood MidstreamMarch 31, 2022, we had $548.7$931.2 million of available capacity under itsthe Crestwood Midstream credit facility considering the most restrictive debt covenants in itsthe credit agreement. At September 30, 2017,Upon the closing of the merger with Oasis Midstream on February 1, 2022, the Crestwood Midstream credit facility was increased to $1.5 billion. As of March 31, 2022, we were in compliance with all of itsour debt covenants applicable to itsthe credit facility and senior notes. See Part I, Item 1. Financial Statements, Note 8 for a description of the covenants related to our credit facility.
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.
Cash Flows
The following table provides a summary of Crestwood Equity'sEquity’s cash flows by category (in millions):
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| 2022 | | 2021 |
Net cash provided by operating activities | $ | 222.5 | | | $ | 258.5 | |
Net cash used in investing activities | $ | (179.7) | | | $ | (2.0) | |
Net cash used in financing activities | $ | (44.2) | | | $ | (254.2) | |
|
| | | | | | | |
| Nine Months Ended |
| September 30, |
| 2017 | | 2016 |
Net cash provided by operating activities | $ | 228.2 |
| | $ | 244.5 |
|
Net cash provided by (used in) investing activities | (144.3 | ) | | 866.8 |
|
Net cash used in financing activities | (84.1 | ) | | (1,110.8 | ) |
Operating Activities
Our operating cash flows decreased by approximately $16.3$36.0 million during the ninethree months ended September 30, 2017March 31, 2022 compared to the same period in 2016,2021. The decrease was driven by higher general and administrative expenses of approximately $24.7 million primarily due to an increase intransaction costs of product/services sold of approximately $964.8 million primarily from our gathering and processing and marketing, supply and logistics segments' operations discussed above, partially offset by a $908.5 million increase in operating revenues from these segments' operations.related to the merger with Oasis Midstream. In addition, we experienced lower operations and maintenance expenses of approximately $16.5 million primarily due to the deconsolidation of our Northeast storage and transportation assets in June 2016. Thea decrease in our net operating cash flows described above was partially offset by a $18.4 million net cash inflow from working capital of approximately $9.9 million primarily resulting from lesser working capital requirements fromrelated to our NGLstorage and crude truckinglogistics operations.
Investing Activities
Acquisition. On February 1, 2022, we completed the merger with Oasis Midstream, which was valued at approximately $1.8 billion. We paid cash consideration of $160 million, net of cash acquired of approximately $14.9 million and issued approximately 33.8 million units to Oasis Midstream’s unitholders. See Item 1, Financial Statements, Note 3 for a further discussion of the Merger.
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 anticipate that ourOur growth capital expenditures forduring the remainder of 2017year 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 maintenance capital expenditures with a combination of cash generated by our operating subsidiaries, distributions received from our joint venturesequity investments and borrowings under the CMLPour 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 thethese construction of these projects will likelycould result in less future operating cash flows and earnings.
The following table summarizes our capital expenditures for the ninethree months ended September 30, 2017March 31, 2022 (in millions).:
| | | | | |
Growth capital (1) | $ | 24.2 | |
Maintenance capital | 1.4 | |
Other (2) | 0.8 | |
Purchases of property, plant and equipment | $ | 26.4 | |
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| |
|
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Growth capital | $ | 97.5 |
|
Maintenance capital | 16.1 |
|
Other (1) | 20.8 |
|
Purchases of property, plant and equipment | 134.4 |
|
Reimbursements of property, plant and equipment | (18.8 | ) |
Net | $ | 115.6 |
|
(1)Includes $3.2 million paid related to outstanding litigation on the construction of the Bear Den II cryogenic processing plant.
(1) (2)Represents gross purchases of property, plant and equipment that are reimbursable by third parties.
Investments in Unconsolidated Affiliates. During the three months ended March 31, 2022 and 2021, we contributed approximately $6.0 million and $6.9 million to our Tres Holdings equity investment for its operating purposes. During the three months ended March 31, 2022 and 2021, we contributed approximately $8.5 million and $3.3 million to our Crestwood Permian equity investment primarily to fund its expansion projects.
Financing Activities
Significant items impactingThe following equity and debt transactions impacted our financing activities during the ninethree months endedSeptember 30, 2017 and 2016, included the following: March 31, 2022:
Equity and Debt Transactions
Beginning in 2016, we declared a decrease in distributions paid per limited partner unit from $1.375 to $0.60. This
reduction resulted in a decrease in distributions paid to partners of approximately $53.0 million during•During the ninethree months ended September 30, 2017March 31, 2022, distributions to our partners increased by approximately $14.5 million compared to the same period in 2016;
$10.6 million of net proceeds from the issuances of CEQP2021, primarily due to an increase in common units duringoutstanding as a result of the nineunits issued in conjunction with the merger with Oasis Midstream;
•During the three months ended September 30, 2017; and
Increase inMarch 31, 2022, our taxes paid for unit-based compensation vesting ofincreased by approximately $4.5$6.8 million compared to the same period in 2021, primarily due to higher vesting of unit-based compensation awards duringawards;
•During the ninethree months ended September 30, 2017 comparedMarch 31, 2022, we borrowed amounts under our revolving credit facility to fund the same period$160.0 million of cash consideration paid to Oasis Petroleum in 2016.conjunction with the merger with Oasis Midstream and to repay approximately $218.4 million outstanding under the Oasis Midstream credit facility assumed in conjunction with the merger; and
Debt Transactions
•During the ninethree months ended September 30, 2017,March 31, 2022, our other debt-related transactions resulted in net proceedsrepayments of approximately $49.6$100.0 million compared to net repaymentsborrowings of $918.8$108.2 million during the same period in 2016. This variance2021.
Guarantor Summarized Financial Information
Crestwood Midstream and Crestwood Midstream Finance Corp. are issuers of our debt securities (the Issuers). Crestwood Midstream is primarily duea holding company and owns no operating assets and has no significant operations independent of its subsidiaries. Crestwood Midstream Finance Corp. is Crestwood Midstream’s 100% owned subsidiary and has no material assets or operations other than those related to repaymentsits service as co-issuer of amounts outstandingour senior notes. Obligations under Crestwood Midstream’s senior notes and its credit facility are jointly and severally guaranteed by substantially all of its subsidiaries (collectively, the Guarantor Subsidiaries), except for Crestwood Infrastructure Holdings LLC, Crestwood Niobrara LLC, Crestwood Pipeline and Storage Northeast LLC, Powder River Basin Industrial Complex LLC, and Tres Palacios Holdings LLC and their respective subsidiaries (collectively, Non-Guarantor Subsidiaries). The assets and credit of our Credit Facility withNon-Guarantor Subsidiaries are not available to satisfy the proceeds fromdebts of the Issuers or Guarantor Subsidiaries, and the liabilities of our Stagecoach Gas transactionNon-Guarantor Subsidiaries do not constitute obligations of the Issuers or Guarantor Subsidiaries. For additional information regarding our credit facility and repayments of Crestwood Midstream's 2020 Senior Notessenior notes and 2022 Senior Notes. For a further discussion of these transactions,related guarantees, see our 2021 Annual Report on Form 10-K and Item 1. Financial Statements, Notes 4Note 8 of this Quarterly Report on Form 10-Q.
The following tables provide summarized financial information for the Issuers and 7.Guarantor Subsidiaries (collectively, the Obligor Group) on a combined basis after elimination of significant intercompany balances and transactions between entities in the Obligor Group. The investment balances in the Non-Guarantor Subsidiaries have been excluded from the supplemental summarized combined financial information. Transactions with other related parties, including the Non-Guarantor Subsidiaries, represent affiliate transactions and are presented separately in the summarized combined financial information below.
Summarized Combined Balance Sheet Information (in millions)
| | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Current assets | $ | 570.8 | | | $ | 574.3 | |
Current assets - affiliates | $ | 58.4 | | | $ | 8.4 | |
Property, plant and equipment, net | $ | 3,385.2 | | | $ | 2,161.5 | |
Non-current assets | $ | 1,156.3 | | | $ | 642.3 | |
Current liabilities | $ | 718.3 | | | $ | 578.9 | |
Current liabilities - affiliates | $ | 19.1 | | | $ | 14.7 | |
Long-term debt, less current portion | $ | 2,809.9 | | | $ | 2,052.1 | |
Non-current liabilities | $ | 159.3 | | | $ | 138.7 | |
Summarized Combined Statement of Operations Information (in millions)
| | | | | |
| Three Months Ended March 31, 2022 |
Revenues | $ | 1,468.3 | |
Revenues - affiliates | $ | 97.4 | |
Cost of products/services sold | $ | 1,287.3 | |
Cost of products/services sold - affiliates | $ | 68.5 | |
Operations and maintenance expenses(1) | $ | 37.3 | |
General and administrative expenses(2) | $ | 41.7 | |
Operating income | $ | 63.8 | |
Net income | $ | 27.7 | |
(1) We have operating agreements with certain of our affiliates pursuant to which we charge them operations and maintenance expenses in accordance with their respective agreements, and these charges are reflected as a reduction of operations and maintenance expenses in our consolidated statements of operations. During the three months ended March 31, 2022, we charged $7.3 million to our affiliates under these agreements.
(2) Includes $7.5 million of net general and administrative expenses that were charged by our affiliates to us.
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Our interest rate risk and commodity price, market and marketcredit risks are discussed in our 20162021 Annual Report on Form 10-K and there10-K. There have been no material changes in those exposures from December 31, 20162021 to September 30, 2017.March 31, 2022.
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Item 4. | Controls and Procedures |
Item 4.Controls and Procedures
Disclosure Controls and Procedures
As of September 30, 2017,March 31, 2022, 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'sEquity’s and Crestwood Midstream'sMidstream’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and ourthe Chief Executive Officer and Chief Financial Officer of their General Partners concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2017.March 31, 2022.
Changes in Internal Control over Financial Reporting
ThereOn February 1, 2022, we completed the merger with Oasis Midstream and have extended our controls and procedures surrounding our internal control processes that support our internal control over financial reporting to include Oasis Midstream’s operations. Except for this matter, there were no changes to Crestwood Equity'sEquity’s or Crestwood Midstream'sMidstream’s internal control over financial reporting during the three months ended September 30, 2017March 31, 2022 that have materially affected, or are reasonably likely to materially affect Crestwood Equity'sEquity’s or Crestwood Midstream'sMidstream’s internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1.Legal Proceedings
Part I, Item 1. Financial Statements, Note 109 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 20162021 Annual Report on Form 10-K.
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
None.
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Item 3. | Defaults Upon Senior Securities |
Item 3.Defaults Upon Senior Securities
None.
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Item 4. | Mine Safety Disclosures |
Item 4.Mine Safety Disclosures
Not applicable.
Item 5.Other Information
None.
Item 6.Exhibits
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Exhibit
Number | | Description |
2.1 | | ContributionPurchase and Sale Agreement, dated as of April 20, 2016, by and between Crestwood Pipeline and Storage Northeast LLC andMay 31, 2021 among Con Edison Gas Pipeline and Storage Northeast, LLC, Crestwood Pipeline and Storage Northeast LLC, as the Sellers, Stagecoach Gas Services LLC as the Company, Kinder Morgan Operating LLC “A” as Buyer, Con Edison Transmission, Inc. (solely for the limited purposes set forth therein) and Crestwood Midstream Partners LP (solely for the limited purposes set forth therein) (incorporated by reference to Exhibit 2.1 to Crestwood Equity Partners LP'sLP’s Form 8-K filed on April 22, 2016)June 1, 2021) |
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3.1 | | |
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3.2 | | |
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3.3 | | |
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3.4 | | |
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3.5 | | |
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3.6 | | |
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3.7 | | |
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3.8 | | |
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3.9 | | |
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3.10 | | |
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3.11 | | |
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3.12 | | |
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3.113.13 | | |
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3.123.14 | | |
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3.133.15 | | |
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4.13.16 | | |
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3.17 | | |
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3.18 | | |
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10.1 | | Agreement and Plan of Merger, dated as of October 25, 2021, by and among Oasis Midstream Partners LP, OMP GP LLC, Crestwood Equity Partners LP, Project Falcon Merger Sub LLC, Project Phantom Merger Sub LLC, and, solely for the purposes of Section 2.1(a)(i) thereof, Crestwood Equity GP LLC (incorporated herein by reference to Exhibit 2.1 to Crestwood Equity Partners LP’s Form 8-K filed on October 28, 2021). |
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10.2 | | |
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10.3 | | |
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10.4 | | |
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10.5 | | |
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10.6 | | Indenture, dated as of March 30, 2021, by and among Oasis Midstream Partners LP, as issuer, OMP Finance Corp., as co-issuer, OMP Operating LLC, OMP DevCo Holdings Corp., Beartooth DevCo LLC, Bighorn DevCo LLC, Bobcat DevCo LLC, and Panther DevCo LLC, as guarantors, and Regions Bank, as trustee (incorporated by reference to Exhibit 4.1 to Crestwood Midstream’sOasis Midstream Partners LP’s Current Report on Form 8- K8-K filed on March 15, 2017)April 1, 2021). |
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4.210.7 | | |
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4.3 | | Registration Rights Agreement, dated as of March 14, 2017,February 1, 2022, by and among Crestwood MidstreamEquity Partners LP, Crestwood Midstream Finance Corp.Oasis Petroleum Inc., the guarantors named thereinOMS Holdings LLC and J.P. Morgan Securities LLC, as representative of the several initial purchasers, with respect to the 5.75% Senior Notes due 2025Oasis Investment Holdings LLC. (incorporated herein by reference to Exhibit 4.34.6 to Crestwood Midstream’s Form 8- K filed on March 15, 2017) |
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*12.1 | | |
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*12.2 | | |
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*31.110.8 | | |
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10.9 | | |
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10.10 | | |
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*31.1 | | |
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*31.2 | | |
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*31.3 | | |
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*31.4 | | |
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*32.1 | | |
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*32.2 | | |
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*32.3 | | |
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*32.4 | | |
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**101.INS | | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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**101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
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**101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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**101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document |
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**101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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**101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
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* | Filed herewith |
104 | | Cover Page Interactive Data File (contained in Exhibit 101) |
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* | 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.
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| | CRESTWOOD EQUITY PARTNERS LP | | |
| | By: | CRESTWOOD EQUITY GP LLC | | |
| | | (its general partner) | | |
| | | | | |
Date: | April 28, 2022 | CRESTWOOD EQUITY PARTNERS LPBy: | | |
| | By: | CRESTWOOD EQUITY GP LLC | | |
| | | (its general partner) | | |
| | | | | |
Date: | November 2, 2017 | By: | /s/ ROBERT T. HALPIN | | |
| | | Robert T. Halpin | | |
| | | 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: | November 2, 2017April 28, 2022 | By: | /s/ ROBERT T. HALPIN | | |
| | | Robert T. Halpin | | |
| | | Executive Vice President and Chief Financial Officer | | |
| | | (Duly Authorized Officer and Principal Financial Officer) | | |