0001136352 ceqp:NGLTransportationMember 2019-01-01 2019-06-30
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019March 31, 2020

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

(Exact name of registrant as specified in its charter)Commission file numberState or other jurisdiction of incorporation or organization(I.R.S. Employer Identification No.)
Crestwood Equity Partners LP001-34664Delaware43-1918951
Crestwood Midstream Partners LP001-35377Delaware20-1647837

811 Main StreetSuite 3400HoustonTexas77002
(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:
Title of each classTrading SymbolName of each exchange on which registered
Crestwood Equity Partners LPCommon Units representing limited partnership interestsCEQPNew York Stock Exchange
Crestwood Equity Partners LPPreferred Units representing limited partnership interestsCEQP-PNew York Stock Exchange
Crestwood Midstream Partners LPNoneNoneNone
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Crestwood Equity Partners LP Yes☒No ☐ 
Crestwood Midstream Partners LP Yes☒No ☐ 

(Explanatory Note: Crestwood Midstream Partners LP is currently a voluntary filer and is not subject to the filing requirements of the Securities Exchange Act of 1934. Although not subject to these filing requirements, Crestwood Midstream Partners LP has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Crestwood Equity Partners LP Yes☒No ☐ 
Crestwood Midstream Partners LP Yes☒No ☐ 


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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 growth company” in Rule 12b-2 of the Exchange Act.
Crestwood Equity Partners LPLarge accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐Emerging growth company☐
Crestwood Midstream Partners LPLarge accelerated filer☐Accelerated filer☐Non-accelerated filer☒Smaller reporting company☐Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange act.
Crestwood Equity Partners LP ☐
Crestwood Midstream Partners LP ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Crestwood Equity Partners LP Yes☐No☒ 
Crestwood Midstream Partners LP Yes☐No☒ 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date (July 29, 2019)(May 1, 2020).
Crestwood Equity Partners LP 71,830,98673,172,706
Crestwood Midstream Partners LP NoneNaN

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



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CRESTWOOD EQUITY PARTNERS LP
CRESTWOOD MIDSTREAM PARTNERS LP
INDEX TO FORM 10-Q

 Page
Part I – Financial Information
 
  
Item 1. Financial Statements (Unaudited):
 
  
Crestwood Equity Partners LP
 
  
Consolidated Balance Sheets
4
  
Consolidated Statements of Operations
5
  
Consolidated Statements of Comprehensive Income
7
  
Consolidated Statements of Partners’ Capital
8
  
Consolidated Statements of Cash Flows
109
  
Crestwood Midstream Partners LP
 
  
Consolidated Balance Sheets
1110
  
Consolidated Statements of Operations
1211
  
Consolidated Statements of Partners’ Capital
1312
  
Consolidated Statements of Cash Flows
1413
  
Notes to Consolidated Financial Statements
1514
  
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
4939
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk
5951
  
Item 4. Controls and Procedures
5951
  
Part II – Other Information
 
  
Item 1. Legal Proceedings
6052
  
Item 1A. Risk Factors
6052
  
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
6055
  
Item 3. Defaults Upon Senior Securities
6055
  
Item 4. Mine Safety Disclosures
6055
  
Item 5. Other Information
6055
  
Item 6. Exhibits
6156
  
Signature
6358


3
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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(in millions, except unit information)
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(in millions, except unit information)
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(in millions, except unit information)
June 30,
2019		 December 31,
2018		March 31,
2020		 December 31,
2019
(unaudited)  (unaudited)  
Assets      
Current assets:      
Cash$2.1
 $0.9
$5.2
 $25.7
Restricted cash—
 16.3
Accounts receivable, less allowance for doubtful accounts of $0.3 million at both June 30, 2019 and December 31, 2018195.7
 251.5
Accounts receivable, less allowance for doubtful accounts of $0.6 million and $0.3 million at March 31, 2020 and December 31, 2019202.4
 242.2
Inventory33.2
 64.6
20.1
 53.7
Assets from price risk management activities25.0
 34.7
52.7
 43.2
Prepaid expenses and other current assets11.2
 11.3
8.5
 11.6
Total current assets267.2
 379.3
288.9
 376.4
Property, plant and equipment3,354.1
 2,598.1
3,676.2
 3,612.5
Less: accumulated depreciation630.0
 568.4
743.3
 703.4
Property, plant and equipment, net2,724.1
 2,029.7
2,932.9
 2,909.1
Intangible assets1,080.3
 770.3
1,076.3
 1,076.3
Less: accumulated amortization241.7
 216.5
285.8
 271.1
Intangible assets, net838.6
 553.8
790.5
 805.2
Goodwill220.4
 138.6
138.6
 218.9
Operating lease right-of-use assets, net59.5
 —
49.4
 53.8
Investments in unconsolidated affiliates971.9
 1,188.2
972.2
 980.4
Other non-current assets5.5
 4.9
4.6
 5.5
Total assets$5,087.2
 $4,294.5
$5,177.1
 $5,349.3
Liabilities and capital      
Current liabilities:      
Accounts payable$161.6
 $213.0
$118.1
 $189.2
Accrued expenses and other liabilities127.9
 112.4
158.3
 161.7
Liabilities from price risk management activities7.4
 5.8
5.6
 6.7
Current portion of long-term debt0.2
 0.9
0.2
 0.2
Total current liabilities297.1
 332.1
282.2
 357.8
Long-term debt, less current portion2,131.2
 1,752.4
2,358.9
 2,328.3
Long-term operating lease liabilities47.3
 —
Other long-term liabilities205.9
 173.6
280.0
 301.6
Deferred income taxes2.9
 2.6
2.4
 2.6
Total liabilities2,684.4
 2,260.7
2,923.5
 2,990.3
Commitments and contingencies (Note 11)


 


Interest of non-controlling partner in subsidiary (Note 10)
424.4
 —
Crestwood Equity Partners LP partners’ capital (72,269,325 and 71,659,385 common and subordinated units issued and outstanding at June 30, 2019 and December 31, 2018)1,366.4
 1,240.5
Preferred units (71,257,445 units issued and outstanding at both June 30, 2019 and December 31, 2018)612.0
 612.0
Total Crestwood Equity Partners LP partners’ capital1,978.4
 1,852.5
Interest of non-controlling partner in subsidiary (Note 10)
—
 181.3
Commitments and contingencies (Note 10)


 


Interest of non-controlling partner in subsidiary (Note 9)
426.9
 426.2
Crestwood Equity Partners LP partners’ capital (73,703,476 and 72,282,942 common and subordinated units issued and outstanding at March 31, 2020 and December 31, 2019)1,214.7
 1,320.8
Preferred units (71,257,445 units issued and outstanding at both March 31, 2020 and December 31, 2019)612.0
 612.0
Total partners’ capital1,978.4
 2,033.8
1,826.7
 1,932.8
Total liabilities and capital$5,087.2
 $4,294.5
$5,177.1
 $5,349.3
See accompanying notes.

4
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CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per unit data)
(unaudited)
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per unit data)
(unaudited)
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per unit data)
(unaudited)
Three Months Ended Six Months EndedThree Months Ended
June 30, June 30,March 31,
2019 2018 2019 20182020 2019
Revenues:          
Product revenues:          
Gathering and processing$106.2
 $186.9
 $215.8
 $459.1
$102.7
 $109.6
Marketing, supply and logistics472.1
 562.7
 1,108.9
 1,316.1
496.5
 636.8
Related party (Note 12)
1.3
 —
 2.5
 —
Related party (Note 11)
7.3
 1.2
579.6
 749.6
 1,327.2
 1,775.2
606.5
 747.6
Services revenues:          
Gathering and processing93.5
 68.5
 166.2
 136.6
112.2
 72.7
Storage and transportation4.9
 5.1
 12.7
 9.3
3.5
 7.8
Marketing, supply and logistics5.4
 17.0
 12.5
 33.8
5.5
 7.1
Related party (Note 12)
—
 0.3
 —
 0.6
Related party (Note 11)
0.2
 —
103.8
 90.9
 191.4
 180.3
121.4
 87.6
Total revenues683.4
 840.5
 1,518.6
 1,955.5
727.9
 835.2
          
Costs of product/services sold (exclusive of items shown separately below):          
Product costs529.5
 681.8
 1,183.0
 1,620.7
524.6
 653.5
Product costs - related party (Note 12)
0.9
 32.2
 35.3
 45.3
Product costs - related party (Note 11)
3.2
 34.4
Service costs6.8
 11.4
 14.5
 25.2
6.6
 7.7
Total costs of products/services sold537.2
 725.4
 1,232.8
 1,691.2
534.4
 695.6
          
Operating expenses and other:          
Operations and maintenance34.7
 31.9
 63.3
 66.4
37.6
 28.6
General and administrative22.3
 23.4
 59.5
 47.3
14.9
 37.2
Depreciation, amortization and accretion49.3
 44.5
 89.1
 89.6
56.1
 39.8
Loss on long-lived assets, net—
 24.4
 2.0
 24.1
1.0
 2.0
Gain on acquisition(209.4) —
 (209.4) —
Goodwill impairment80.3
 —
(103.1) 124.2
 4.5
 227.4
189.9
 107.6
Operating income (loss)249.3
 (9.1) 281.3
 36.9
Operating income3.6
 32.0

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CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(in millions, except per unit data)
(unaudited)
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(in millions, except per unit data)
(unaudited)
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(in millions, except per unit data)
(unaudited)
Three Months Ended Six Months EndedThree Months Ended
June 30, June 30,March 31,
2019 2018 2019 20182020 2019
Earnings from unconsolidated affiliates, net3.7
 12.0
 10.6
 24.4
5.5
 6.9
Interest and debt expense, net(27.8) (24.3) (52.7) (48.7)(32.6) (24.9)
Other income, net0.1
 0.1
 0.2
 0.2
0.1
 0.1
Income (loss) before income taxes225.3
 (21.3) 239.4
 12.8
Provision for income taxes(0.3) (0.2) (0.3) (0.2)
Net income (loss)225.0
 (21.5) 239.1
 12.6
(23.4) 14.1
Net income attributable to non-controlling partner10.6
 4.0
 14.6
 8.0
9.9
 4.0
Net income (loss) attributable to Crestwood Equity Partners LP214.4
 (25.5) 224.5
 4.6
(33.3) 10.1
Net income attributable to preferred units15.0
 15.1
 30.0
 30.1
15.0
 15.0
Net income (loss) attributable to partners$199.4
 $(40.6) $194.5
 $(25.5)
Net loss attributable to partners$(48.3) $(4.9)
          
Subordinated unitholders’ interest in net income$1.2
 $—
 $1.2
 $—
Common unitholders’ interest in net income (loss)$198.2
 $(40.6) $193.3
 $(25.5)
Net income (loss) per limited partner unit:       
Common unitholders’ interest in net loss$(48.3) $(4.9)
Net loss per limited partner unit:   
Basic$2.76
 $(0.57) $2.69
 $(0.36)$(0.66) $(0.07)
Diluted$2.58
 $(0.57) $2.53
 $(0.36)$(0.66) $(0.07)
Weighted-average limited partners’ units outstanding:Weighted-average limited partners’ units outstanding:         
Basic71.8
 71.2
 71.8
 71.2
72.9
 71.8
Dilutive11.2
 —
 5.2
 —
—
 —
Diluted83.0
 71.2
 77.0
 71.2
72.9
 71.8

See accompanying notes.

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CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
Three Months Ended Six Months EndedThree Months Ended
June 30, June 30,March 31,
2019 2018 2019 20182020 2019
Net income (loss)$225.0
 $(21.5) $239.1
 $12.6
$(23.4) $14.1
Change in fair value of Suburban Propane Partners, L.P. units0.3
 0.2
 0.7
 (0.1)(1.1) 0.4
Comprehensive income (loss)225.3
 (21.3) 239.8
 12.5
(24.5) 14.5
Comprehensive income attributable to non-controlling partner10.6
 4.0
 14.6
 8.0
9.9
 4.0
Comprehensive income (loss) attributable to Crestwood Equity Partners LP$214.7
 $(25.3) $225.2
 $4.5
$(34.4) $10.5

See accompanying notes.


7
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CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(in millions)
(unaudited)

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

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

Preferred Partners    Preferred Partners  
Units Capital Common Units Subordinated Units Capital 
Non-Controlling
Partner
 
Total Partners’
Capital
Units Capital Common Units Subordinated Units Capital 
Total Partners’
Capital
Balance at December 31, 201871.3
 $612.0
 71.2
 0.4
 $1,240.5
 $181.3
 $2,033.8
Balance at December 31, 201971.3
 $612.0
 71.9
 0.4
 $1,320.8
 $1,932.8
Distributions to partners—
 (15.0) —
 —
 (43.1) (3.3) (61.4)—
 (15.0) —
 —
 (45.3) (60.3)
Unit-based compensation charges—
 —
 0.9
 —
 17.3
 —
 17.3
—
 —
 1.7
 —
 0.2
 0.2
Taxes paid for unit-based compensation vesting—
 —
 (0.2) —
 (7.0) —
 (7.0)—
 —
 (0.5) —
 (15.1) (15.1)
Change in fair value of Suburban Propane Partners, L.P. units—
 —
 —
 —
 0.4
 —
 0.4
—
 —
 —
 —
 (1.1) (1.1)
Other—
 —
 —
 —
 (0.7) —
 (0.7)—
 —
 0.2
 —
 3.5
 3.5
Net income (loss)—
 15.0
 —
 —
 (4.9) 4.0
 14.1
—
 15.0
 —
 —
 (48.3) (33.3)
Balance at March 31, 201971.3
 $612.0
 71.9
 0.4
 $1,202.5
 $182.0
 $1,996.5
Distributions to partners—
 (15.0) —
 —
 (43.1) (3.3) (61.4)
Unit-based compensation charges—
 —
 —
 —
 11.3
 —
 11.3
Taxes paid for unit-based compensation vesting—
 —
 (0.1) —
 (3.6) —
 (3.6)
Change in fair value of Suburban Propane Partners, L.P. units—
 —
 —
 —
 0.3
 —
 0.3
Non-controlling interest reclassification (Note 10)
—
 —
 —
 —
 —
 (178.8) (178.8)
Other—
 —
 —
 —
 (0.4) 0.1
 (0.3)
Net income—
 15.0
 —
 —
 199.4
 —
 214.4
Balance at June 30, 201971.3
 $612.0
 71.8
 0.4
 $1,366.4
 $—
 $1,978.4
Balance at March 31, 202071.3
 $612.0
 73.3
 0.4
 $1,214.7
 $1,826.7

 Preferred Partners    
 Units Capital Common Units Subordinated Units Capital 
Non-Controlling
Partner
 
Total Partners’
Capital
Balance at December 31, 201871.3
 $612.0
 71.2
 0.4
 $1,240.5
 $181.3
 $2,033.8
Distributions to partners—
 (15.0) —
 —
 (43.1) (3.3) (61.4)
Unit-based compensation charges—
 —
 0.9
 —
 17.3
 —
 17.3
Taxes paid for unit-based compensation vesting—
 —
 (0.2) —
 (7.0) —
 (7.0)
Change in fair value of Suburban Propane Partners, L.P. units—
 —
 —
 —
 0.4
 —
 0.4
Other—
 —
 —
 —
 (0.7) —
 (0.7)
Net income (loss)—
 15.0
 —
 —
 (4.9) 4.0
 14.1
Balance at March 31, 201971.3
 $612.0
 71.9
 0.4
 $1,202.5
 $182.0
 $1,996.5

See accompanying notes.


8
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CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL (continued)
(in millions)
(unaudited)
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Preferred Partners    Three Months Ended
Units Capital Common Units Subordinated Units Capital 
Non-Controlling
Partner
 
Total Partners’
Capital
March 31,
Balance at December 31, 201771.3
 $612.0
 70.3
 0.4
 $1,393.5
 $175.0
 $2,180.5
Cumulative effect of accounting change—
 —
 —
 —
 7.5
 —
 7.5
2020 2019
Operating activities   
Net income (loss)$(23.4) $14.1
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
Depreciation, amortization and accretion56.1
 39.8
Amortization of debt-related deferred costs1.6
 1.4
Unit-based compensation charges(4.4) 17.3
Loss on long-lived assets, net1.0
 2.0
Goodwill impairment80.3
 —
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received4.5
 3.3
Deferred income taxes(0.2) 0.2
Changes in operating assets and liabilities3.7
 52.8
Net cash provided by operating activities119.2
 130.9
Investing activities   
Purchases of property, plant and equipment(86.8) (68.5)
Investment in unconsolidated affiliates(6.0) (38.2)
Capital distributions from unconsolidated affiliates9.5
 16.7
Other—
 (1.0)
Net cash used in investing activities(83.3) (91.0)
Financing activities   
Proceeds from the issuance of long-term debt275.9
 298.9
Payments on long-term debt(246.9) (284.4)
Payments on finance leases(0.8) (1.1)
Payments for deferred financing costs—
 (0.2)
Distributions to partners—
 (15.0) —
 —
 (42.7) —
 (57.7)(45.3) (43.1)
Unit-based compensation charges—
 —
 1.2
 —
 7.2
 —
 7.2
Distributions to non-controlling partner(9.2) (3.3)
Distributions to preferred unitholders(15.0) (15.0)
Taxes paid for unit-based compensation vesting—
 —
 (0.2) —
 (6.3) —
 (6.3)(15.1) (7.0)
Change in fair value of Suburban Propane Partners, L.P. units—
 —
 —
 —
 (0.3) —
 (0.3)
Other—
 (0.1) —
 —
 (0.1) —
 (0.2)—
 (0.1)
Net income—
 15.0
 —
 —
 15.1
 4.0
 34.1
Balance at March 31, 201871.3
 $611.9
 71.3
 0.4
 $1,373.9
 $179.0
 $2,164.8
Distributions to partners—
 (15.0) —
 —
 (42.7) (3.3) (61.0)
Unit-based compensation charges—
 —
 —
 —
 10.3
 —
 10.3
Taxes paid for unit-based compensation vesting—
 —
 —
 —
 (0.6) —
 (0.6)
Change in fair value of Suburban Propane Partners, L.P. units—
 —
 —
 —
 0.2
 —
 0.2
Other—
 —
 —
 —
 (0.2) —
 (0.2)
Net income (loss)—
 15.1
 —
 —
 (40.6) 4.0
 (21.5)
Balance at June 30, 201871.3
 $612.0
 71.3
 0.4
 $1,300.3
 $179.7
 $2,092.0
Net cash used in financing activities(56.4) (55.3)
Net change in cash(20.5) (15.4)
Cash at beginning of period25.7
 17.2
Cash at end of period$5.2
 $1.8
Supplemental schedule of noncash investing activities   
Net change to property, plant and equipment through accounts payable and accrued expenses$21.3
 $5.7

See accompanying notes.


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CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
 Six Months Ended
 June 30,
 2019 2018
Operating activities   
Net income$239.1
 $12.6
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion89.1
 89.6
Amortization of debt-related deferred costs2.9
 3.6
Unit-based compensation charges28.6
 17.5
Loss on long-lived assets, net2.0
 24.1
Gain on acquisition(209.4) —
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received6.3
 (0.2)
Deferred income taxes0.3
 (0.2)
Other—
 0.2
Changes in operating assets and liabilities35.0
 12.8
Net cash provided by operating activities193.9
 160.0
Investing activities   
Acquisition, net of cash acquired (Note 3)
(462.1) —
Purchases of property, plant and equipment(204.7) (118.7)
Investment in unconsolidated affiliates(40.9) (6.9)
Capital distributions from unconsolidated affiliates24.2
 23.9
Other(0.5) 6.8
Net cash used in investing activities(684.0) (94.9)
Financing activities   
Proceeds from the issuance of long-term debt1,544.0
 847.1
Payments on long-term debt(1,159.5) (781.0)
Payments on finance/capital leases(1.9) (0.7)
Payments for deferred financing costs(9.0) —
Net proceeds from issuance of non-controlling interest235.0
 —
Distributions to partners(86.2) (85.4)
Distributions to non-controlling partner(6.6) (3.3)
Distributions to preferred unit holders(30.0) (30.0)
Taxes paid for unit-based compensation vesting(10.6) (6.9)
Other(0.2) (0.1)
Net cash provided by (used in) financing activities475.0
 (60.3)
Net change in cash and restricted cash(15.1) 4.8
Cash and restricted cash at beginning of period17.2
 1.3
Cash and restricted cash at end of period$2.1
 $6.1
Supplemental schedule of noncash investing and financing activities   
Net change to property, plant and equipment through accounts payable and accrued expenses$(22.2) $6.0
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(in millions)
 March 31,
2020		 December 31,
2019
 (unaudited)  
Assets   
Current assets:   
Cash$4.8
 $25.4
Accounts receivable, less allowance for doubtful accounts of $0.6 million and $0.3 million at March 31, 2020 and December 31, 2019202.2
 241.9
Inventory20.1
 53.7
Assets from price risk management activities52.7
 43.2
Prepaid expenses and other current assets8.5
 11.6
Total current assets288.3
 375.8
Property, plant and equipment4,006.2
 3,942.6
Less: accumulated depreciation918.5
 875.1
Property, plant and equipment, net3,087.7
 3,067.5
Intangible assets1,076.3
 1,076.3
Less: accumulated amortization285.8
 271.1
Intangible assets, net790.5
 805.2
Goodwill138.6
 218.9
Operating lease right-of-use assets, net49.4
 53.8
Investments in unconsolidated affiliates972.2
 980.4
Other non-current assets2.6
 2.4
Total assets$5,329.3
 $5,504.0
Liabilities and capital   
Current liabilities:   
Accounts payable$115.5
 $186.6
Accrued expenses and other liabilities156.9
 160.4
Liabilities from price risk management activities5.6
 6.7
Current portion of long-term debt0.2
 0.2
Total current liabilities278.2
 353.9
Long-term debt, less current portion2,358.9
 2,328.3
Other long-term liabilities278.4
 295.6
Deferred income taxes0.7
 0.7
Total liabilities2,916.2
 2,978.5
Commitments and contingencies (Note 10)
   
Interest of non-controlling partner in subsidiary (Note 9)
426.9
 426.2
Partners’ capital1,986.2
 2,099.3
Total liabilities and capital$5,329.3
 $5,504.0

See accompanying notes.


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CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(in millions)
 June 30,
2019		 December 31,
2018
 (unaudited)  
Assets   
Current assets:   
Cash$1.5
 $0.2
Restricted cash—
 16.3
Accounts receivable, less allowance for doubtful accounts of $0.3 million at both June 30, 2019 and December 31, 2018195.0
 249.9
Inventory33.2
 64.6
Assets from price risk management activities25.0
 34.7
Prepaid expenses and other current assets11.2
 11.3
Total current assets265.9
 377.0
Property, plant and equipment3,684.2
 2,928.2
Less: accumulated depreciation794.6
 725.9
Property, plant and equipment, net2,889.6
 2,202.3
Intangible assets1,080.3
 770.3
Less: accumulated amortization241.7
 216.5
Intangible assets, net838.6
 553.8
Goodwill220.4
 138.6
Operating lease right-of-use assets, net59.5
 —
Investments in unconsolidated affiliates971.9
 1,188.2
Other non-current assets2.1
 2.1
Total assets$5,248.0
 $4,462.0
Liabilities and capital   
Current liabilities:   
Accounts payable$159.0
 $210.5
Accrued expenses and other liabilities126.7
 111.3
Liabilities from price risk management activities7.4
 5.8
Current portion of long-term debt0.2
 0.9
Total current liabilities293.3
 328.5
Long-term debt, less current portion2,131.2
 1,752.4
Long-term operating lease liabilities47.3
 —
Other long-term liabilities202.8
 171.0
Deferred income taxes0.8
 0.6
Total liabilities2,675.4
 2,252.5
Commitments and contingencies (Note 11)
   
Interest of non-controlling partner in subsidiary (Note 10)
424.4
 —
Partners’ capital2,148.2
 2,028.2
Interest of non-controlling partner in subsidiary (Note 10)
—
 181.3
Total partners’ capital2,148.2
 2,209.5
Total liabilities and capital$5,248.0
 $4,462.0
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions)
(unaudited)
  Three Months Ended
 March 31,
 2020 2019
Revenues:   
Product revenues:   
Gathering and processing$102.7
 $109.6
Marketing, supply and logistics496.5
 636.8
Related party (Note 11)
7.3
 1.2
 606.5
 747.6
Service revenues:   
Gathering and processing112.2
 72.7
Storage and transportation3.5
 7.8
Marketing, supply and logistics5.5
 7.1
Related party (Note 11)
0.2
 —
 121.4
 87.6
Total revenues727.9
 835.2
    
Costs of product/services sold (exclusive of items shown separately below):   
Product costs524.6
 653.5
Product costs - related party (Note 11)
3.2
 34.4
Service costs6.6
 7.7
Total costs of product/services sold534.4
 695.6
    
Operating expenses and other:   
Operations and maintenance37.6
 28.6
General and administrative13.5
 36.0
Depreciation, amortization and accretion59.6
 43.4
Loss on long-lived assets, net1.0
 2.0
Goodwill impairment80.3
 —
 192.0
 110.0
Operating income1.5
 29.6
Earnings from unconsolidated affiliates, net5.5
 6.9
Interest and debt expense, net(32.6) (24.9)
Net income (loss)(25.6) 11.6
Net income attributable to non-controlling partner9.9
 4.0
Net income (loss) attributable to Crestwood Midstream Partners LP$(35.5) $7.6

See accompanying notes.


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CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions)
(unaudited)
  Three Months Ended Six Months Ended
 June 30, June 30,
 2019 2018 2019 2018
Revenues:       
Product revenues:       
Gathering and processing$106.2
 $186.9
 $215.8
 $459.1
Marketing, supply and logistics472.1
 562.7
 1,108.9
 1,316.1
Related party (Note 12)
1.3
 —
 2.5
 —
 579.6
 749.6
 1,327.2
 1,775.2
Service revenues:       
Gathering and processing93.5
 68.5
 166.2
 136.6
Storage and transportation4.9
 5.1
 12.7
 9.3
Marketing, supply and logistics5.4
 17.0
 12.5
 33.8
Related party (Note 12)
—
 0.3
 —
 0.6
 103.8
 90.9
 191.4
 180.3
Total revenues683.4
 840.5
 1,518.6
 1,955.5
        
Costs of product/services sold (exclusive of items shown separately below):       
Product costs529.5
 681.8
 1,183.0
 1,620.7
Product costs - related party (Note 12)
0.9
 32.2
 35.3
 45.3
Service costs6.8
 11.4
 14.5
 25.2
Total costs of product/services sold537.2
 725.4
 1,232.8
 1,691.2
        
Operating expenses and other:       
Operations and maintenance34.7
 31.9
 63.3
 66.4
General and administrative20.9
 22.5
 56.9
 45.3
Depreciation, amortization and accretion52.7
 47.4
 96.1
 95.2
Loss on long-lived assets, net—
 24.4
 2.0
 24.1
Gain on acquisition(209.4) —
 (209.4) —
 (101.1) 126.2
 8.9
 231.0
Operating income (loss)247.3
 (11.1) 276.9
 33.3
Earnings from unconsolidated affiliates, net3.7
 12.0
 10.6
 24.4
Interest and debt expense, net(27.8) (24.3) (52.7) (48.7)
Income (loss) before income taxes223.2
 (23.4) 234.8
 9.0
Provision for income taxes(0.3) (0.1) (0.3) (0.1)
Net income (loss)222.9
 (23.5) 234.5
 8.9
Net income attributable to non-controlling partner10.6
 4.0
 14.6
 8.0
Net income (loss) attributable to Crestwood Midstream Partners LP$212.3
 $(27.5) $219.9
 $0.9
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(in millions)
(unaudited)

  
Total Partners’
Capital
Balance at December 31, 2019 $2,099.3
Distributions to partners (57.0)
Unit-based compensation charges (4.4)
Taxes paid for unit-based compensation vesting (15.1)
Other (1.1)
Net loss (35.5)
Balance at March 31, 2020 $1,986.2

  Partners Non-Controlling Partner 
Total Partners’
Capital
Balance at December 31, 2018 $2,028.2
 $181.3
 $2,209.5
Distributions to partners (57.8) (3.3) (61.1)
Unit-based compensation charges 17.3
 —
 17.3
Taxes paid for unit-based compensation vesting (7.0) —
 (7.0)
Other (0.3) —
 (0.3)
Net income 7.6
 4.0
 11.6
Balance at March 31, 2019 $1,988.0
 $182.0
 $2,170.0
See accompanying notes.


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

  Partners Non-Controlling Partner 
Total Partners’
Capital
Balance at December 31, 2018 $2,028.2
 $181.3
 $2,209.5
Distributions to partners (57.8) (3.3) (61.1)
Unit-based compensation charges 17.3
 —
 17.3
Taxes paid for unit-based compensation vesting (7.0) —
 (7.0)
Other (0.3) —
 (0.3)
Net income 7.6
 4.0
 11.6
Balance at March 31, 2019 $1,988.0
 $182.0
 $2,170.0
Distributions to partners (59.7) (3.3) (63.0)
Unit-based compensation charges 11.3
 —
 11.3
Taxes paid for unit-based compensation vesting (3.6) —
 (3.6)
Non-controlling interest reclassification (Note 10)
 —
 (178.8) (178.8)
Other (0.1) 0.1
 —
Net income 212.3
 —
 212.3
Balance at June 30, 2019 $2,148.2
 $—
 $2,148.2
  Partners Non-Controlling Partner 
Total Partners’
Capital
Balance at December 31, 2017 $2,195.4
 $175.0
 $2,370.4
Cumulative effect of accounting change 7.5
 —
 7.5
Distributions to partners (60.5) —
 (60.5)
Unit-based compensation charges 7.2
 —
 7.2
Taxes paid for unit-based compensation vesting (6.3) —
 (6.3)
Other 0.2
 —
 0.2
Net income 28.4
 4.0
 32.4
Balance at March 31, 2018 $2,171.9
 $179.0
 $2,350.9
Distributions to partners (59.5) (3.3) (62.8)
Unit-based compensation charges 10.3
 —
 10.3
Taxes paid for unit-based compensation vesting (0.6) —
 (0.6)
Net income (loss) (27.5) 4.0
 (23.5)
Balance at June 30, 2018 $2,094.6
 $179.7
 $2,274.3

See accompanying notes.


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

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

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

Six Months EndedThree Months Ended
June 30,March 31,
2019 20182020 2019
Operating activities      
Net income$234.5
 $8.9
Adjustments to reconcile net income to net cash provided by operating activities:   
Net income (loss)$(25.6) $11.6
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
Depreciation, amortization and accretion96.1
 95.2
59.6
 43.4
Amortization of debt-related deferred costs2.9
 3.6
1.6
 1.4
Unit-based compensation charges28.6
 17.5
(4.4) 17.3
Loss on long-lived assets2.0
 24.1
Gain on acquisition(209.4) —
Loss on long-lived assets, net1.0
 2.0
Goodwill impairment80.3
 —
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received6.3
 (0.2)4.5
 3.3
Deferred income taxes0.2
 (0.1)
Other—
 0.2
Changes in operating assets and liabilities33.9
 15.2
(1.2) 51.9
Net cash provided by operating activities195.1
 164.4
115.8
 130.9
Investing activities      
Acquisition, net of cash acquired (Note 3)
(462.1) —
Purchases of property, plant and equipment(204.7) (118.7)(86.8) (68.5)
Investment in unconsolidated affiliates(40.9) (6.9)(6.0) (38.2)
Capital distributions from unconsolidated affiliates24.2
 23.9
9.5
 16.7
Other(0.5) 6.8
—
 (1.0)
Net cash used in investing activities(684.0) (94.9)(83.3) (91.0)
Financing activities      
Proceeds from the issuance of long-term debt1,544.0
 847.1
275.9
 298.9
Payments on long-term debt(1,159.5) (781.0)(246.9) (284.4)
Payments on finance/capital leases(1.9) (0.7)
Payments on finance leases(0.8) (1.1)
Payments for deferred financing costs(9.0) —
—
 (0.2)
Net proceeds from issuance of non-controlling interest235.0
 —
Distributions to partners(117.5) (120.0)(57.0) (57.8)
Distributions paid to non-controlling partners(6.6) (3.3)
Distributions to non-controlling partner(9.2) (3.3)
Taxes paid for unit-based compensation vesting(10.6) (6.9)(15.1) (7.0)
Net cash provided by (used in) financing activities473.9
 (64.8)
Net change in cash and restricted cash(15.0) 4.7
Cash and restricted cash at beginning of period16.5
 1.0
Cash and restricted cash at end of period$1.5
 $5.7
Supplemental schedule of non-cash investing and financing activities   
Net cash used in financing activities(53.1) (54.9)
Net change in cash(20.6) (15.0)
Cash at beginning of period25.4
 16.5
Cash at end of period$4.8
 $1.5
Supplemental schedule of noncash investing activities   
Net change to property, plant and equipment through accounts payable and accrued expenses$(22.2) $6.0
$21.3
 $5.7

See accompanying notes.

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CRESTWOOD EQUITY PARTNERS LP
CRESTWOOD MIDSTREAM PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1 – Organization and Business Description

Organization

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

The accompanying consolidated financial statements and related notes should be read in conjunction with our 20182019 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 22, 2019.21, 2020. The financial information as of June 30, 2019,March 31, 2020, and for the three and six months ended June 30,March 31, 2020 and 2019, and 2018, is unaudited. The consolidated balance sheets as of December 31, 2018,2019, were derived from the audited balance sheets filed in our 20182019 Annual Report on Form 10-K.

Business Description

Crestwood Equity is a publicly-traded (NYSE: CEQP) Delaware limited partnership that develops, acquires, owns or controls, and operates primarily fee-based assets and operations within the energy midstream sector. We provide broad-ranging infrastructure solutions across the value chain to service premier liquids-rich natural gas and crude oil shale plays across the United States. We own and operate a diversified portfolio of crude oil and natural gas gathering, processing, storage and transportation assets that 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.


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

Effective January 1, 2019, we adopted the following accounting standard. There were no other material changes in our significant accounting policies from those described in our 20182019 Annual Report on Form10-K.Form 10-K. Below is an update of our accounting policies related to Goodwill and Accounts Receivable.

LeasesGoodwill

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

We maintain leases inestimate the ordinary coursefair value of our business activities. Our leases include those forreporting units based on a number of factors, including discount rates, projected cash flows and the office buildings, crude oil railroad cars, certain vehicles and other operating facilities and equipment leases. We also sublease certain of our crude oil railroad cars and truckspotential value we would receive if we sold the reporting unit. Estimating projected cash flows requires us to a third party. We do not have any material leases where we are considered to be the lessor. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Prior to January 1, 2019, we classified our leases as either capital or operating leases under Accounting Standards Codification (ASC) Topic 840, Leases (Topic 840). We recognized assets (included in property, plant and equipment) and liabilities (included in accrued expenses and other liabilities and other long-term liabilities) related to our capital leases on ourmake

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consolidated balance sheets. We also recognized depreciation expensecertain assumptions as it relates to the future operating performance of each of our reporting units (which includes assumptions, among others, about estimating future operating margins and interest expenserelated future growth in those margins, contracting efforts and the cost and timing of facility expansions) and assumptions related to our customers, such as their future capital leases onand operating plans and their financial condition. When considering operating performance, various factors are considered such as current and changing economic conditions and the commodity price environment, among others. Due to the imprecise nature of these projections and assumptions, actual results can and often do, differ from our consolidated statementsestimates. If the assumptions embodied in the projections prove inaccurate, we could incur a future impairment charge. In addition, the use of operations. The majoritythe income approach to determine the fair value of our lease arrangements were classified as operating leases, under which we did not recognize assets or liabilities on our consolidated balance sheets, but rather recognized lease payments on our consolidated statements of operations as either costs of product/services sold or operations and maintenance expense on a straight-line basis over the lease term.

On January 1, 2019, we adopted the provisions of ASC Topic 842, 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 adopted the standard using the modified retrospective method. Based on the practical expedients allowed for in the standard, we did not reassess the current GAAP classification of leases, easements and rights of way that existed as of January 1, 2019, and we did not utilize the hindsight method in determining the assets and liabilities to be recorded for our existing leases on January 1, 2019. The adoption of this standard required us to make significant judgments on whether our revenue and expenditure-related contracts were considered to be leases (or contain leases) under Topic 842, and if contracts were considered to be leases whether they should be considered operating leases or finance leases under the new standard. We do not have any material revenue contracts that are considered leases under Topic 842.
Upon the adoption of this standard, on January 1, 2019, we recorded a $67.5 million increase to our operating lease right-of-use assets, a $18.6 million increase to our accrued expenses and other liabilities and a $48.9 million increase to our long-term operating lease liabilities, related to reflecting our operating leases on our consolidated balance sheet as a result of adopting the new standard. We also recorded a $1.6 million increase to our property, plant and equipment, $0.3 million increase to our accrued expenses and other liabilities and a $1.3 million increase to our other long-term liabilities, related to our finance leases (which were all formerly capital leases under Topic 840) as a result of applying the provisionsreporting units (see further discussion of the new standard to the leases. The adoptionuse of the standard did notincome approach below) could result in a material cumulative effect of accounting change to our consolidated financial statements. The following table summarizes the balance sheet information related to our operating and finance leases at June 30, 2019 (in millions):
Operating Leases 
Operating lease right-of-use assets, net$59.5
  
Accrued expenses and other liabilities$17.2
Long-term operating lease liabilities47.3
Total operating lease liabilities$64.5
Finance Leases 
Property, plant and equipment$14.6
Less: accumulated depreciation3.6
Property, plant and equipment, net$11.0
  
Accrued expenses and other liabilities$3.0
Other long-term liabilities6.7
Total finance lease liabilities$9.7


The estimation of our right-of-use assets and lease liabilities requires us to make significant assumptions and judgments about the term of the lease, variable payments, and discount rates. Our operating leases have remaining terms that vary from one year to 21 years and certain of those leases have renewal options to extend the leases from one year to ten years at the end of each lease term,different fair value if we had utilized a market approach, or terminate the leases at our sole discretion. In addition, our finance leases have remaining terms that vary from two years to four years and certain of those leases have options to purchase the lease property by the end of the lease term. We made significant assumptions on the likelihood on whether we would renew our leases or purchase the property at the end of the lease terms in determining the discounted cash flows to measure our right-of-use assets and lease liabilities. The estimation of variable lease payments in determining discounted cash flows, including those with usage-based costs, also required us to make significant assumptions on the timing and nature of the variability of those payments based on the lease terms. We utilized discount rates ranging from 4.9% to 8.3% to estimate the discounted cash flows used in estimating our right-of-use assets and lease liabilities as of June 30, 2019, which were primarily based on our credit-adjusted collateralized incremental borrowing rate.

We recognize operating lease expense and amortize our right-of-use assets for our finance leases on a straight-line basis over the term of the respective leases. We have applied the practical expedient of not separating the lease and non-lease components

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for our leases where the predominant consideration paid related to the underlying operating and finance lease contracts relate to the lease component. The following table presents the costs and sublease income associated with our operating and finance leases for the three and six months ended June 30, 2019 (in millions):
 Three Months Ended Six Months Ended
 June 30, 2019 June 30, 2019
Operating leases:   
Operating lease expense (1)(2)
$7.5
 $15.0
Sublease income(3)
0.2
 0.4
Total operating lease expense, net$7.3
 $14.6
Finance leases:   
Amortization of right-of-use assets(4)
$0.9
 $1.8
Interest on lease liabilities(5)
0.2
 0.4
Total finance lease expense$1.1
 $2.2

(1)Approximately $4.7 million and $9.5 million is included in costs of product/services sold on our consolidated statements of operations for the three and six months ended June 30, 2019, and $2.8 million and $5.5 million is included in operations and maintenance expense on our consolidated statements of operations for the three and six months ended June 30, 2019.
(2)Includes short-term and variable lease costs of approximately $1.3 million and $2.0 million for the three and six months ended June 30, 2019.
(3)Included in Marketing, Supply and Logistics service revenues on our consolidated statements of operations.
(4)Included in depreciation, amortization and accretion on our consolidated statements of operations.
(5)Included in interest and debt expense, net on our consolidated statements of operations.

The following table presents supplemental cash flow information for our operating and finance leases for the six months ended June 30, 2019 (in millions):
Cash paid for lease liabilities: 
Operating cash flows from operating leases$12.1
Operating cash flows from finance leases$0.4
Financing cash flows from finance leases$1.9
Right-of-use assets obtained in exchange for lease obligations: 
Operating leases(1)
$3.6
Finance leases$1.6

(1)Includes approximately $2.9 million of operating leases obtained from the Jackalope Acquisition, which is further discussed in Note 3.

The following table presents the weighted-average remaining lease term and the weighted-average discount rate associated with our operating and finance leases for the six months ended June 30, 2019:
Weighted-average remaining lease term (in years):
Operating leases4.7
Finance leases3.0
Weighted-average discount rate:
Operating leases6.0%
Finance leases7.3%



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combination thereof.

The following table presentssummarizes the future minimum lease liabilities undergoodwill of our various reporting units Topic 842(in millions) and Topic 840 for our leases for the next five years and in total thereafter (in millions):
   
Impairment during the
Three Months Ended
  
 December 31, 2019 March 31, 2020 March 31, 2020
Gathering and Processing     
Arrow$45.9
 $—
 $45.9
Powder River Basin80.3
 80.3
 —
Marketing, Supply and Logistics    
NGL Marketing and Logistics92.7
 —
 92.7
Total$218.9
 $80.3
 $138.6
 Topic 842 Topic 840
 June 30, 2019 December 31, 2018
Year Ending December 31,Operating Leases Finance Leases Total Operating Leases Capital Leases Total
2019(1)
$10.2
 $1.8
 $12.0
 $22.3
 $3.0
 $25.3
202018.8
 3.6
 22.4
 18.1
 3.3
 21.4
202115.3
 3.5
 18.8
 14.4
 3.2
 17.6
202210.5
 1.9
 12.4
 9.7
 1.9
 11.6
20236.7
 —
 6.7
 6.0
 —
 6.0
Thereafter13.6
 —
 13.6
 10.7
 —
 10.7
Total lease payments75.1
 10.8
 85.9
 81.2
 11.4
 92.6
Less: Interest10.6
 1.1
 11.7
 —
 1.3
 1.3
Present value of lease liabilities$64.5
 $9.7
 $74.2
 $81.2
 $10.1
 $91.3

(1)Represents the remainder of 2019 at June 30, 2019.

New Accounting Pronouncement Issued But Not Yet Adopted

During the first quarter of 2020, current and forward commodity prices significantly declined from their levels at December 31, 2019 due primarily to the decreases in energy demand as a result of the outbreak of the COVID-19 pandemic and actions taken by the Organization of the Petroleum Exporting Countries, Russia, the United States and other oil-producing countries relating to the oversupply of oil. We currently anticipate that the decrease in commodity prices will have a negative impact on certain of our customers in our gathering and processing segment, which could adversely impact the financial performance of certain of the reporting units within those operations.

Upon acquisition, we are required to record the assets, liabilities and goodwill of a reporting unit at its fair value on the date of acquisition. As a result, any level of June 30,decrease in the forecasted cash flows of these businesses or increases in the discount rates utilized to value those businesses from their respective acquisition dates would likely result in the fair value of the reporting unit falling below the carrying value of the reporting unit, and could result in an assessment of whether that reporting unit's goodwill is impaired.

We acquired our Powder River Basin reporting unit in 2019 and recorded it at fair value at that time. Based on the following accounting standard hadevents that occurred during the first quarter of 2020 described above, we determined that the forecasted cash flows, and therefore the fair value, of our Powder River Basin reporting unit significantly decreased during the three months ended March 31, 2020, and accordingly performed a quantitative impairment assessment of the goodwill related to that reporting unit as of March 31, 2020. Based on our quantitative assessment, which utilized the income approach, we determined that the goodwill associated with the Powder River Basin reporting unit should be fully impaired as of March 31, 2020, and accordingly recorded an $80.3 million impairment of the goodwill attributed to that reporting unit during the three months ended March 31, 2020. We did not yet been adopted by us:record any impairments of the goodwill associated with our Arrow or NGL Marketing and Logistics reporting units during the three months ended March 31, 2020, as we do not have indicators that it is more likely than not that the fair value of those reporting units has declined to below their carrying value at March 31, 2020.

Accounts Receivable

In June 2016,Effective January 1, 2020, we adopted the Financial Accounting Standards Board issuedprovision of Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326), which provides revised guidance on how companies should evaluate theirevaluating accounts and notes receivable and other financial instruments for impairment. The standard We record accounts receivable when products or services are delivered and it is probable that payment will be received for those products or services, and we do not record any interest or penalties on accounts receivable that are past due under the terms of the related arrangement or invoice until those amounts are received. Topic 326 requires companies to evaluate their financial instruments for impairment by recording an allowance for doubtful accounts and/or bad debt expense based on certain categories of instruments rather than a specific identification approach. We expect to adoptadopted the provisions of this standard effective January 1, 2020 and are currently evaluating the impact that this standard may have on our consolidated financial statements.


Note 3 – Acquisition

On April 9, 2019, Crestwood Niobrara LLC (Crestwood Niobrara), our consolidated subsidiary, acquired Williams Partners LP’s (Williams) 50%equity interest in Jackalope Gas Gathering Services, L.L.C. (Jackalope) for approximately $484.6 million (Jackalope Acquisition). The acquisition was funded through a combination of borrowings under the CMLP credit facility and the issuance of $235 million of new preferred units to CN Jackalope Holdings LLC (Jackalope Holdings) (see Note 10 for a further discussion of the issuance of the new preferred units). Prior to the Jackalope Acquisition, Crestwood Niobrara owned a 50% equity interest in Jackalope, which we accounted for under the equity method of accounting. As a result of this transaction, Crestwood Niobrara controls and owns 100% of the equity interests in Jackalope. The financial results of Jackalope are included in our gathering and processing segment from the date of the acquisition. Transaction costs related to the Jackalope Acquisition were approximately $2.6 million during both the three and six months ended June 30, 2019. These costs are included in operations and maintenance expenses in our consolidated statements of operations.

The purchase price has been allocated to the assets acquired and liabilities assumed based on preliminary fair values. Those preliminary fair values are Level 3 fair value measurements and were developed by management with the assistance of a third-party valuation firm. The preliminary fair values were estimated primarily utilizing market related information and other projections on the performance of the assets acquired, including an analysis of discounted cash flows at a discount rate of approximately 12%. The preliminary fair values are subject to change pending a final determination of the fair value of the assets and liabilities acquired as more information is received about their respective values. We expect to finalize the purchase price allocation for this transaction in 2019.


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The following table summarizesprovisions of this standard using a method to estimate the preliminary fair valuesallowance for doubtful accounts that considered both the aging of the assets acquired and liabilities assumed at the acquisition date (in millions):
Cash$22.5
Other current assets30.9
Property, plant and equipment525.4
Intangible assets310.0
Goodwill81.8
Current liabilities(30.1)
Other long-term liabilities(19.8)
Estimated fair value of 100% interest in Jackalope920.7
Less: 
 Elimination of equity investment in Jackalope226.7
     Gain on acquisition of Jackalope209.4
Total purchase price$484.6


The identifiable intangible assets primarily consists of a customer contract that has a weighted-average remaining life of 18 years. The goodwill recognized relates primarily to anticipated operating synergies between the assets acquired and our existing operations. The fair value of the assets acquired and liabilities assumed in the Jackalope Acquisition exceeded the sum of the cash consideration paidaccounts receivable and the historical book valueprojected loss rate of our receivables. We write off accounts receivable, and the related allowance for doubtful accounts, when it becomes remote that payment for products or services will be received. On January 1, 2020, we recorded a $0.7 million increase to our allowance for doubtful accounts and a $0.7 million decrease to partners’ capital to reflect the cumulative effect of adopting the new standard. In addition, on January 1, 2020, Crestwood Permian Basin Holdings LLC (Crestwood Permian), our 50% equity interest in Jackalope (which was remeasured at fair value investment, also adopted the provisions of Topic 326 and derecognized) and, aswe recorded a result, we recognized a gaindecrease of approximately $209.4 million. This gain is included in gain on acquisition in$0.2 million to our consolidated statements of operations.

Our consolidated statements of operations include the results of Jackalope since April 9, 2019, the closing dateequity investment and a corresponding decrease to our partners’ capital to reflect our proportionate share of the acquisition. During bothcumulative effect of accounting change recorded by the three and six months ended June 30, 2019, we recognized approximately $20.2 million of revenues and $3.4 million of net incomeequity investment related to Jackalope’s operations.

the new standard. The tables below presents selected unaudited pro forma information as if the Jackalope Acquisition had occurred on January 1, 2018. The pro forma information isadoption of this standard was not necessarily indicative of the financial results that would have occurred if the transaction had been completed as of the dates indicated. The amounts have been calculated after applyingmaterial to our accounting policies and adjusting the results to reflect the depreciation, amortization and accretion expense that would have been charged assuming the preliminary fair value adjustments to property, plant and equipment and intangible assets had been made at the beginning of the respective reporting period. The pro forma net income also includes the effects of interest expense on incremental borrowings and recognition of deferred revenue.

Crestwood Equity
  Three Months Ended Six Months Ended
  June 30, June 30,
  2019 2018 2019 2018
Revenues $685.3
 $857.3
 $1,539.3
 $1,987.3
Net income (loss) $225.1
 $(28.1) $232.3
 $(1.1)
Crestwood Midstream
  Three Months Ended Six Months Ended
  June 30, June 30,
  2019 2018 2019 2018
Revenues $685.3
 $857.3
 $1,539.3
 $1,987.3
Net income (loss) $223.0
 $(30.1) $227.7
 $(4.8)

other equity investments.


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Note 43 – Certain Balance Sheet Information

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following (in millions):
CEQP CMLPCEQP CMLP
June 30, December 31, June 30, December 31,March 31, December 31, March 31, December 31,
2019 2018 2019 20182020 2019 2020 2019
Accrued expenses(1)
$43.3
 $64.8
 $42.1
 $63.7
$29.7
 $61.6
 $28.3
 $60.3
Accrued property taxes6.7
 2.6
 6.7
 2.6
4.6
 6.1
 4.6
 6.1
Income tax payable0.2
 0.3
 0.2
 0.3
0.4
 0.3
 0.4
 0.3
Interest payable27.2
 19.8
 27.2
 19.8
52.0
 25.6
 52.0
 25.6
Accrued additions to property, plant and equipment17.7
 10.5
 17.7
 10.5
21.7
 38.0
 21.7
 38.0
Contingent consideration19.0
 —
 19.0
 —
Operating leases17.2
 —
 17.2
 —
18.6
 18.1
 18.6
 18.1
Finance leases3.0
 2.4
 3.0
 2.4
3.3
 3.2
 3.3
 3.2
Deferred revenue12.6
 12.0
 12.6
 12.0
9.0
 8.8
 9.0
 8.8
Total accrued expenses and other liabilities$127.9
 $112.4
 $126.7
 $111.3
$158.3
 $161.7
 $156.9
 $160.4


(1)Includes $16.2 million of related party accrued expenses at December 31, 2018 related to deposits received from Jackalope prior to the acquisition of the remaining 50% equity interest in Jackalope from Williams in April 2019.
Other Long-Term Liabilities

Other long-term liabilities consisted of the following (in millions):
 CEQP CMLP
 March 31, December 31, March 31, December 31,
 2020 2019 2020 2019
Contract liabilities$151.3
 $144.7
 $151.3
 $144.7
Contingent consideration38.0
 57.0
 38.0
 57.0
Operating leases36.8
 41.5
 36.8
 41.5
Asset retirement obligations33.8
 33.3
 33.8
 33.3
Other20.1
 25.1
 18.5
 19.1
Total other long-term liabilities$280.0
 $301.6
 $278.4
 $295.6



Note 54 - Investments in Unconsolidated Affiliates

Variable Interest Entity

Crestwood Permian Basin Holdings LLC (Crestwood Permian) is a joint venture owned by Crestwood Infrastructure Holdings LLC (Crestwood Infrastructure), our wholly-owned subsidiary, and an affiliate of First Reserve Management, L.P. (First Reserve). We manage and account for our 50% ownership interest in Crestwood Permian, which is a variable interest entity, under the equity method of accounting as we

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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.


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Net Investments and Earnings

Our net investments in and earnings from our unconsolidated affiliates are as follows (in millions):
 Investment Earnings (Loss) from Unconsolidated Affiliates
 June 30, December 31, Three Months Ended June 30, 
Six Months Ended
June 30,
 2019 2018 2019 2018 2019 2018
Stagecoach Gas Services LLC(1)
$818.4
 $830.4
 $6.4
 $7.0
 $13.4
 $12.7
Jackalope Gas Gathering Services, L.L.C.(2)
—
 210.2
 0.5
 3.8
 3.7
 6.8
Crestwood Permian Basin Holdings LLC(3)
104.7
 104.3
 (3.3) 0.7
 (6.7) 3.4
Tres Palacios Holdings LLC(4)
40.4
 35.0
 0.1
 —
 0.3
 0.4
Powder River Basin Industrial Complex, LLC(5)
8.4
 8.3
 —
 0.5
 (0.1) 1.1
Total$971.9
 $1,188.2
 $3.7
 $12.0
 $10.6
 $24.4
 Investment 
Earnings (Loss) from
Unconsolidated Affiliates
 March 31, December 31, Three Months Ended March 31,
 2020 2019 2020 2019
Stagecoach Gas Services LLC(1)
$808.0
 $814.4
 $9.2
 $7.0
Crestwood Permian Basin Holdings LLC(2)
118.6
 121.8
 0.8
 (3.4)
Tres Palacios Holdings LLC(3)
41.9
 35.9
 —
 0.2
Powder River Basin Industrial Complex, LLC(4)
3.7
 8.3
 (4.5) (0.1)
Jackalope Gas Gathering Services, L.L.C.(5)
—
 —
 —
 3.2
Total$972.2
 $980.4
 $5.5
 $6.9
(1)As of June 30, 2019,March 31, 2020, our equity in the underlying net assets of Stagecoach Gas Services LLC (Stagecoach Gas) exceeded our investment balance by approximately $51.3 million. This excess amount is entirely attributable to goodwill and, as such, is not subject to amortization. Pursuant to the Stagecoach limited liability company agreement, our share of Stagecoach’s equity earnings increased from 35% to 40% effective July 1, 2018. Our Stagecoach Gas investment is included in our storage and transportation segment.
(2)As of March 31, 2020, our equity in the underlying net assets of Crestwood Permian exceeded our investment balance by $10.8 million, and this excess amount is not subject to amortization. Our Crestwood Permian investment is included in our gathering and processing segment.
(3)As of March 31, 2020, our equity in the underlying net assets of Tres Palacios Holdings LLC (Tres Holdings) exceeded our investment balance by approximately $23.7 million. Our Tres Holdings investment is included in our storage and transportation segment.
(4)As of March 31, 2020, our equity in the underlying net assets of Powder River Basin Industrial Complex, LLC (PRBIC) approximates our investment balance. During the three months ended March 31, 2020, we recorded our share of a long-lived asset impairment recorded by our PRBIC equity investment, which eliminated our $5.5 million historical basis difference between our investment balance and the equity in the underlying net assets of PRBIC, and also resulted in a $4.5 million reduction in our earnings from unconsolidated affiliates during the three months ended March 31, 2020. Our PRBIC investment is included in our storage and transportation segment.
(5)On April 9, 2019, Crestwood Niobrara LLC (Crestwood Niobrara) acquired Williams’Williams Partners LP’s (Williams) 50% equity interest in Jackalope Gas Gathering Services, L.L.C. (Jackalope), and as a result, Crestwood Niobrara controls and owns 100% of the equity interests in Jackalope. As a result of this transaction, we eliminated our historical equity investment in Jackalope of approximately $226.7 million as of April 9, 2019 and began consolidating Jackalope’s operations. Our Jackalope investment was included in our gathering and processing segment. For a further discussion of Crestwood Niobrara’s acquisition of the remaining 50% equity interest in Jackalope, see Note 3.
(3)As of June 30, 2019, the difference of $8.1 million between our equity in Crestwood Permian’s net assets and our investment balance is not subject to amortization. Pursuant to the Crestwood Permian limited liability company agreement, we were allocated 100% of Crestwood New Mexico Pipeline LLC’s (Crestwood New Mexico) earnings through June 30, 2018. Effective July 1, 2018, our equity earnings from Crestwood New Mexico is based on our ownership percentage of Crestwood Permian, which is currently 50%. Our Crestwood Permian investment is included in our gathering and processing segment.
(4)As of June 30, 2019, our equity in the underlying net assets of Tres Palacios Holdings LLC (Tres Holdings) exceeded our investment balance by approximately $24.7 million. Our Tres Holdings investment is included in our storage and transportation segment.
(5)As of June 30, 2019, our equity in the underlying net assets of Powder River Basin Industrial Complex, LLC (PRBIC) exceeded our investment balance by approximately $5.7 million. Our PRBIC investment is included in our storage and transportation segment.

Summarized Financial Information of Unconsolidated Affiliates

Below is the summarized operating results for our significant unconsolidated affiliates (in millions; amounts represent 100% of unconsolidated affiliate information):
Six Months Ended June 30,Three Months Ended March 31,
2019 20182020 2019
Operating Revenues Operating Expenses Net Income (Loss) Operating Revenues Operating Expenses Net IncomeOperating Revenues Operating Expenses Net Income (Loss) Operating Revenues Operating Expenses Net Income (Loss)
Stagecoach Gas$79.1
 $40.4
 $38.9
 $85.5
 $39.9
 $45.6
$37.7
 $19.4
 $18.4
 $40.3
 $20.2
 $20.2
Crestwood Permian17.3
 29.6
 (13.4) 40.0
 38.4
 4.4
Other(1)
38.1
 32.6
 5.5
 52.9
 38.4
 14.5
28.3
 48.5
 (19.5) 41.8
 42.2
 (1.1)
Total$134.5
 $102.6
 $31.0
 $178.4
 $116.7
 $64.5
$66.0
 $67.9
 $(1.1) $82.1
 $62.4
 $19.1


(1)Includes our Crestwood Permian, Tres Holdings and PRBIC equity investments during the three months ended March 31, 2020 and 2019, and our Jackalope equity investment during the three months ended March 31, 2019 (prior to the acquisition of the remaining 50% equity interest from Williams), Tres Holdings and PRBIC equity investments during the six months ended June 30, 2019 and 2018.Williams in April 2019). We amortize the excess basis in thesecertain of our equity investments as an increase in our earnings from unconsolidated affiliates. We recorded amortization of the excess basis in our Tres Holdings equity investment of $0.6$0.3 million during both the sixthree months ended June 30, 2019March 31, 2020 and 2018.2019. We recorded amortization of the excess basis in our PRBIC equity investment of $0.2 million and $0.3$0.1 million during the sixthree months ended June 30, 2019 and 2018.March 31, 2019. We recorded amortization of the excess basis in the Jackalope equity investment of less than $0.1 million during both the sixthree months ended June 30, 2019 and 2018.March 31, 2019.


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Distributions and Contributions

The following table summarizes our distributions from and contributions to our unconsolidated affiliates (in millions):
 
Distributions(1)
 Contributions 
Distributions(1)
 Contributions
 Six Months Ended June 30, Six Months Ended June 30, Three Months Ended March 31, Three Months Ended March 31,
 2019 2018 2019 2018 2020 2019 2020 2019
Stagecoach Gas $25.4
 $22.5
 $—
 $—
 $15.6
 $13.0
 $—
 $—
Jackalope 11.6
 15.0
 24.4
 6.8
Crestwood Permian 2.9
 8.3
 10.0
 0.1
 3.8
 2.3
 —
 7.5
Tres Holdings 1.2
 1.4
 6.3
 —
 —
 —
 6.0
 6.3
PRBIC —
 0.9
 0.2
 —
 0.1
 —
 —
 —
Jackalope —
 11.6
 —
 24.4
Total $41.1
 $48.1
 $40.9
 $6.9
 $19.5
 $26.9
 $6.0
 $38.2

(1)
In July 2019,April 2020, we received cash distributions from Stagecoach Gas, Crestwood Permian and Tres Holdings of approximately $11.8$14.4 million, $2.9 millionand $2.3$1.4 million, respectively.

Other

Contingent Consideration. Pursuant to the Stagecoach Gas limited liability company agreement, we may be required to make payments of up to $57 million to Con Edison Gas Pipeline and Storage Northeast, LLC after December 31, 2020 if certain criteria are not met by Stagecoach Gas by December 31, 2020, including achieving certain performance targets on growth capital projects. These growth capital projects depend on the construction of other third-party expansion projects, and during 2017, those third-party projects experienced regulatory and other delays that caused Stagecoach Gas to delay its growth capital projects. As a result, our consolidated balance sheets reflect ansheet at March 31, 2020 reflects a $19 million current liability included in accrued expenses and other liabilities and a $38 million other long-term liability related to the anticipated settlement of $57 million at June 30, 2019 and December 31, 2018.this obligation.

Guarantee. CEQP issued a guarantee under which CEQP has agreedwould be required to fund 100% of the costspay up to build the Nautilus gathering system (which is currently estimated to cost $180$10 million of which approximately $169.0 million has been spent through June 30, 2019) if Crestwood Permian fails to do so. The Nautilus gathering system is owned byhonor its obligations to Crestwood Permian Basin LLC, a 50% equity investment of Crestwood Permian.Permian, in the event Crestwood Permian Basin LLC fails to satisfy its obligations under its gas gathering agreement. We do not believe that it is probable that this guarantee is probable of resultingwill result 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 consolidated balance sheets at June 30, 2019March 31, 2020 and December 31, 2018.2019.


Note 65 – 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 7.6.

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 the consolidated balance sheets, and changes in the fair value of these derivatives that impact the consolidated statements of operations are reflected in costs of product/services sold. Our commodity-based derivatives that are settled with physical commodities are reflected as an increase to product revenues, and the commodity inventory that is utilized to satisfy those physical obligations is reflected as an increase to costs of product sold 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 operating revenues and costs of product/services sold during the three and six months ended June 30,March 31, 2020 and 2019 and 2018 (in millions):

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 Three Months Ended Six Months Ended Three Months Ended
 June 30, June 30, March 31,
 2019 2018 2019 2018 2020 2019
Product revenues $40.2
 $33.0
 $144.3
 $130.8
 $75.0
 $104.1
Gain (loss) reflected in costs of product/services sold $9.9
 $(6.4) $7.0
 $1.4
 $22.0
 $(2.9)


We attempt to balance our contractual portfolio in terms of notional amounts and timing of performance and delivery obligations. This balance in the contractual portfolio significantly reduces the volatility in costs of product/services sold related to these instruments.

Commodity Price and Credit Risk

Notional Amounts and Terms

The notional amounts and terms of our derivative financial instruments include the following:
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
Fixed Price
Payor
 
Fixed Price
Receiver
 
Fixed Price
Payor
 
Fixed Price
Receiver
Fixed Price
Payor
 
Fixed Price
Receiver
 
Fixed Price
Payor
 
Fixed Price
Receiver
Propane, crude and heating oil (MMBbls)36.8
 38.3
 27.8
 30.1
Propane, ethane, butane, heating oil and crude oil (MMBbls)43.1
 45.4
 33.5
 36.6
Natural gas (Bcf)1.2
 1.3
 1.8
 1.8
6.5
 10.7
 3.7
 8.7


Notional amounts reflect the volume of transactions, but do not represent the amounts exchanged by the parties to the financial instruments. Accordingly, notional amounts do not reflect our monetary exposure to market or credit risks. All contracts subject to price risk had a maturity of 36 months or less; however, 83%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 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. In addition, we have margin requirements with a New York Mercantile Exchange (NYMEX) broker related to our net asset or liability position with such 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.


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The following table presents the fair value of our commodity derivative instruments with credit-risk related contingent features and their associated collateral (in millions):
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
Aggregate fair value of derivative instruments with credit-risk-related contingent features(1)
$3.8
 $2.2
$3.1
 $1.6
NYMEX-related net derivative liability position$10.3
 $9.4
$32.1
 $28.8
NYMEX-related cash collateral posted$21.6
 $21.7
$55.0
 $40.4
Cash collateral received$15.5
 $14.2
Cash collateral received, net$28.9
 $16.9
(1)At June 30, 2019March 31, 2020 and December 31, 2018,2019, we posted less than $0.1 million of collateral associated with these derivatives.


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Note 76 – 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 June 30, 2019March 31, 2020 and December 31, 20182019, 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 CMLPCrestwood Midstream credit facility approximates the carrying amounts as of June 30, 2019March 31, 2020 and December 31, 20182019, due primarily to the variable nature of the interest rate of the instrument, which is considered a Level 2 fair value measurement.


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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 detailsrepresents the carrying amount (reduced for deferred financing costs associated with the respective notes) and fair value of our senior notes (in millions):
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
Carrying
 Amount
 
Fair
Value
 
Carrying
 Amount
 
Fair
Value
Carrying
 Amount
 
Fair
Value
 
Carrying
 Amount
 
Fair
Value
2023 Senior Notes$694.4
 $716.1
 $693.6
 $668.1
$695.5
 $392.1
 $695.1
 $714.0
2025 Senior Notes$493.9
 $509.5
 $493.4
 $466.2
$494.7
 $293.9
 $494.4
 $514.4
2027 Senior Notes$591.6
 $598.4
 $—
 $—
$592.4
 $329.8
 $592.1
 $610.1


Financial Assets and Liabilities

As of June 30, 2019March 31, 2020 and December 31, 2018,2019, 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 NYMEX have been categorized as Level 1.


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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 June 30, 2019March 31, 2020 and December 31, 20182019 (in millions):
June 30, 2019March 31, 2020
Level 1 Level 2 Level 3 Gross Fair Value 
Contract Netting(1)
 Collateral/Margin Received or Paid Fair ValueLevel 1 Level 2 Level 3 Gross Fair Value 
Contract Netting(1)
 Collateral/Margin Received or Paid Fair Value
Assets                          
Assets from price risk management$6.2
 $151.8
 $—
 $158.0
 $(132.8) $(0.2) $25.0
$35.3
 $255.0
 $—
 $290.3
 $(235.0) $(2.6) $52.7
Suburban Propane Partners, L.P. units(2)
3.5
 —
 —
 3.5
 —
 —
 3.5
2.0
 —
 —
 2.0
 —
 —
 2.0
Total assets at fair value$9.7
 $151.8
 $—
 $161.5
 $(132.8) $(0.2) $28.5
$37.3
 $255.0
 $—
 $292.3
 $(235.0) $(2.6) $54.7
                          
Liabilities                          
Liabilities from price risk management$5.9
 $140.6
 $—
 $146.5
 $(132.8) $(6.3) $7.4
$31.6
 $237.7
 $—
 $269.3
 $(235.0) $(28.7) $5.6
Total liabilities at fair value$5.9
 $140.6
 $—
 $146.5
 $(132.8) $(6.3) $7.4
$31.6
 $237.7
 $—
 $269.3
 $(235.0) $(28.7) $5.6
                          
December 31, 2018
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$12.4
 $160.7
 $—
 $173.1
 $(140.3) $1.9
 $34.7
Suburban Propane Partners, L.P. units(2)
2.8
 —
 —
 2.8
 —
 —
 2.8
Total assets at fair value$15.2
 $160.7
 $—
 $175.9
 $(140.3) $1.9
 $37.5
             
Liabilities             
Liabilities from price risk management$7.0
 $144.7
 $—
 $151.7
 $(140.3) $(5.6) $5.8
Total liabilities at fair value$7.0
 $144.7
 $—
 $151.7
 $(140.3) $(5.6) $5.8

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 December 31, 2019
 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$3.7
 $164.0
 $—
 $167.7
 $(122.3) $(2.2) $43.2
Suburban Propane Partners, L.P. units(2)
3.1
 —
 —
 3.1
 —
 —
 3.1
Total assets at fair value$6.8
 $164.0
 $—
 $170.8
 $(122.3) $(2.2) $46.3
              
Liabilities             
Liabilities from price risk management$2.8
 $151.9
 $—
 $154.7
 $(122.3) $(25.7) $6.7
Total liabilities at fair value$2.8
 $151.9
 $—
 $154.7
 $(122.3) $(25.7) $6.7

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



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Note 87 – Long-Term Debt

Long-term debt consisted of the following at June 30, 2019March 31, 2020 and December 31, 20182019 (in millions):
June 30,
2019		 December 31,
2018		March 31,
2020		 December 31,
2019
Credit Facility$363.0
 $578.2
$586.0
 $557.0
2023 Senior Notes700.0
 700.0
700.0
 700.0
2025 Senior Notes500.0
 500.0
500.0
 500.0
2027 Senior Notes600.0
 —
600.0
 600.0
Other0.8
 1.5
0.6
 0.6
Less: deferred financing costs, net32.4
 26.4
27.5
 29.1
Total debt2,131.4
 1,753.3
2,359.1
 2,328.5
Less: current portion0.2
 0.9
0.2
 0.2
Total long-term debt, less current portion$2,131.2
 $1,752.4
$2,358.9
 $2,328.3


Credit Facility

In April 2019, Crestwood Niobrara acquired the remaining 50% equity interest in Jackalope and funded approximately $250 million of the total purchase price through borrowings under Crestwood Midstream’s credit facility. Contemporaneously with the acquisition of the remaining interest in Jackalope, Crestwood Midstream entered into the First Amendment to the Second Amended and Restated Credit Agreement to modify certain defined terms and calculations, among other things, to account for the Jackalope acquisition. The other debt covenants under the amended credit agreement are materially consistent with the credit facility that existed at DecemberAt March 31, 2018.

At June 30, 2019,2020, Crestwood Midstream had $655.7$636.0 million of available capacity under its credit facility considering the most restrictive debt covenants in its credit agreement. At June 30, 2019March 31, 2020 and December 31, 2018,2019, Crestwood Midstream’s outstanding standby letters of credit were $64.0$28.0 million and $68.0$31.7 million. Borrowings under the credit facility accrue interest at prime or Eurodollar based rates plus applicable spreads, which resulted in interest rates between 4.39%2.96% and 6.50%4.50% at June 30, 2019March 31, 2020 and 4.63%3.96% and 6.75%6.00% at December 31, 2018.2019. The weighted-average interest rate on outstanding borrowings as of June 30, 2019March 31, 2020 and December 31, 20182019 was 4.41%3.16% and 4.79%4.00%.

Crestwood Midstream is required under its credit agreement to maintain a net debt to consolidated EBITDA ratio (as defined in its credit agreement) of not more than 5.50 to 1.0, a consolidated EBITDA to consolidated interest expense ratio (as defined in its credit agreement) of not less than 2.50 to 1.0, and a senior secured leverage ratio (as defined in its credit agreement) of not more than 3.75 to 1.0. At June 30, 2019,March 31, 2020, the net debt to consolidated EBITDA ratio was approximately 4.224.02 to 1.0, the consolidated EBITDA to consolidated interest expense ratio was approximately 4.354.53 to 1.0, and the senior secured leverage ratio was 0.710.99 to 1.0.

Senior Notes

In April 2019, Crestwood Midstream issued $600 million of 5.625% unsecured senior notes due 2027 (the 2027 Senior Notes). The 2027 Senior Notes will mature on May 1, 2027, and interest is payable semiannually in arrears on May 1 and November 1 of each year, beginning November 1, 2019. The net proceeds from this offering of approximately $591.1 million were used to repay a portion of the outstanding borrowings under our credit facility, which included the borrowings that were used to fund the acquisition of the remaining 50% equity interest in Jackalope.


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Note 98 - 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.


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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. The following table summarizes information regarding the weighted-average of common units excluded during the three and six months ended June 30,March 31, 2020 and 2019 and 2018 (in millions):
Three Months Ended Six Months EndedThree Months Ended
June 30, June 30,March 31,
2019 2018 2019 20182020 2019
Preferred units (1)
—
 7.1
 7.1
 7.1
7.1
 7.1
Crestwood Niobrara’s preferred units(1)
—
 5.9
 —
 5.9
25.6
 5.8
Stock-based compensation performance units(2)
—
 0.3
 —
 0.3
Unit-based compensation performance units(2)
0.5
 0.5
Subordinated units(2)
—
 0.4
 —
 0.4
0.4
 0.4
(1)See Note 10 forFor additional information regarding the potential conversion/redemption of our preferred units and Crestwood Niobrara’s preferred units to CEQP common units.
(2)For a descriptionunits, and of our performance units and subordinated units, see our 20182019 Annual Report on Form 10-K.

The table below shows CEQP’s net income per limited partner unit based on the number of basic and diluted limited partner units outstanding for the three and six months ended June 30, 2019 and 2018 (in millions, except per unit data):
  Three Months Ended Six Months Ended
  June 30, June 30,
  2019 2018 2019 2018
Common unitholders’ interest in net income (loss) $198.2
 $(40.6) $193.3
 $(25.5)
Dilutive effect of net income attributable to preferred units 15.0
 —
 —
 —
Dilutive effect of net income attributable to subordinated units 1.2
 —
 1.2
 —
Diluted net income (loss) $214.4
 $(40.6) $194.5
 $(25.5)
         
Weighted-average limited partners’ units outstanding - basic 71.8
 71.2
 71.8
 71.2
Dilutive effect of preferred units 7.1
 —
 —
 —
Dilutive effect of Crestwood Niobrara preferred units 3.4
 —
 4.5
 —
Dilutive effect of stock-based compensation performance units 0.3
 —
 0.3
 —
Dilutive effect of subordinated units 0.4
 —
 0.4
 —
Weighted-average limited partners’ units outstanding - diluted 83.0
 71.2
 77.0
 71.2
         
Basic earnings per unit:        
Net income (loss) per limited partner unit $2.76
 $(0.57) $2.69
 $(0.36)
Diluted earnings per unit:        
Net income (loss) per limited partner unit $2.58
 $(0.57) $2.53
 $(0.36)
         





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Note 109 – Partners’ Capital

Common Units

We have an employee unit purchase planEffective April 1, 2020, we suspended the equity distribution program with certain financial institutions under which employeeswe were allowed to offer and sell, from time to time through one or more of the general partner may purchase ourthese financial institutions, common units through payroll deductionshaving an aggregate offering price of up to a maximum of 10% of the employees’ eligible compensation,$250 million. We did not to exceed $25,000 forissue any calendar year. During the three and six months ended June 30, 2019, 1,761 and 2,550 common units were purchased under the plan. There were no common units purchased under the planthis program during the three and six months ended June 30, 2018. For a further description of our employee unit purchase plan, see our 2018 Annual Report on Form 10-K.

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, such as a change in control. The preferred units have voting rights that are identical to the voting rights of the common unitsMarch 31, 2020 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.2019.

Distributions

Crestwood Equity

Limited Partners. A summary of CEQP’s limited partner quarterly cash distributions for the sixthree months ended June 30, 2019March 31, 2020 and 20182019 is presented below:
Record Date Payment Date Per Unit Rate 
Cash Distributions
(in millions)
2019      
February 7, 2019
 
February 14, 2019
 $0.60
 $43.1
May 8, 2019
 
May 15, 2019
 0.60
 43.1
      $86.2
2018      
February 7, 2018
 
February 14, 2018
 $0.60
 $42.7
May 8, 2018
 
May 15, 2018
 0.60
 42.7
      $85.4
Record Date Payment Date Per Unit Rate 
Cash Distributions
(in millions)
2020      
February 7, 2020
 
February 14, 2020
 $0.625
 $45.3
2019      
February 7, 2019
 
February 14, 2019
 $0.60
 $43.1


On July 18, 2019,April 16, 2020, we declared a distribution of $0.60$0.625 per limited partner unit to be paid on August 14, 2019May 15, 2020 to unitholders of record on August 7, 2019May 8, 2020 with respect to the quarter ended June 30, 2019March 31, 2020.

Preferred Unit Holders. During the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, we made cash distributions to our preferred unitholders of approximately $30.0$15.0 million in both periods. On July 18, 2019,April 16, 2020, the board of directors of our general partner authorized a cash distribution to our preferred unitholders of approximately $15.0 million for the quarter ended June 30, 2019.March 31, 2020.


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Crestwood Midstream

During the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, Crestwood Midstream paid cash distributions of $117.5$57.0 million and $120.0$57.8 million to Crestwood Equity.

Non-Controlling Partner

Crestwood Niobrara issued preferred interests (Series A-2 Preferred Units) to Jackalope Holdings, which are reflected as non-controlling interest in our consolidated financial statements and included as a component of partners’ capital on our consolidated balance sheet at December 31, 2018. In April 2019, Crestwood Niobrara issued $235 million in new preferred interests (Series A-3 Preferred Units, and collectively with the Series A-2 Preferred Units defined as the Crestwood Niobrara Preferred Units) to Jackalope Holdings in conjunction with Crestwood Niobrara’s acquisition of the remaining 50% equity interest in Jackalope from

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Williams. In connection with the issuance of the Series A-3 Preferred Units, we entered into a Third Amended and Restated Limited Liability Company Agreement (Crestwood Niobrara Amended Agreement) with Jackalope Holdings, pursuant to which we serve as managing member of Crestwood Niobrara. The Crestwood Niobrara Amended Agreement modified certain provisions under the previous limited liability company agreement related to the conversion and redemption of the Series A-2 Preferred Units, as follows:

The Crestwood Niobrara Preferred Units are convertible by the preferred interest holder starting on January 1, 2021 into Crestwood Niobrara common units. The preferred interest holder has the option to contribute additional capital to Crestwood Niobrara to increase their common ownership percentage in Crestwood Niobrara to 50% upon the conversion.

The Crestwood Niobrara Preferred Units are redeemable by the preferred interest holder starting on December 31, 2023 for an amount equal to the Liquidation Preference (as defined in the Crestwood Niobrara Amended Agreement). If redemption is elected by the preferred interest holder, we have the option to elect to give consideration equal to the Liquidation Preference in either (i) unregistered CEQP common units (subject to a Registration Rights Agreement) with total value of up to $100 million and/or cash; or (ii) proceeds from a full liquidation of Crestwood Niobrara’s assets and unregistered CEQP common units (subject to a Registration Rights Agreement).

The Crestwood Niobrara Preferred Units are redeemable by us starting on January 1, 2023 for either (i) unregistered CEQP common units (subject to a Registration Rights Agreement) with total value of up to $100 million and/or cash; or (ii) proceeds from a full liquidation of Crestwood Niobrara’s assets and registered CEQP common units (subject to a Registration Rights Agreement).

As a result of the modification of the conversion and redemption provisions of the Crestwood Niobrara Preferred Units, we have reflected these preferred interests as a non-controlling interest in subsidiary apart from partners’ capital (i.e., temporary equity) on our consolidated balance sheet at June 30, 2019. sheets.

The following table shows the change in our non-controlling interest in subsidiary at June 30, 2019March 31, 2020 (in millions):
Balance at December 31, 2019 $426.2
Distributions to non-controlling partner (9.2)
Net income attributable to non-controlling partner(1)
 9.9
Balance at March 31, 2020 $426.9
Balance at December 31, 2018 $—
Reclassification of Series A-2 Preferred Units 178.8
Issuance of Series A-3 Preferred Units 235.0
Net income attributable to non-controlling partner(1)
 10.6
Balance at June 30, 2019 $424.4

(1)We adjust the carrying amount of our non-controlling interest to its redemption value each period through net income attributable to non-controlling partner.

Crestwood Niobrara makes quarterly cash distributions on its preferred interests within 30 days after the end of each quarter. During the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, Crestwood Niobrara paid cash distributions related to the Series A-2 Preferred Units of $6.6$9.2 million and $3.3 million to Jackalope Holdings. In July 2019,April 2020, Crestwood Niobrara paid cash distributions to Jackalope Holdings of $3.9$9.2 million related to the Series A-2 Preferred Units and $5.3 million related to the Series A-3 Preferred Units for the quarter ended June 30, 2019.March 31, 2020.

Other

In February 2019,2020, Crestwood Equity issued 238,263184,528 performance units under the Crestwood Equity Partners LP Long Term Incentive Plan (Crestwood LTIP). The performance units are designed to provide an incentive for continuous employment to certain key employees. The vesting of performance units is subject to the attainment of certain performance and market goals over a three-year period, and entitle a participant to receive common units of Crestwood Equity without payment of an exercise price upon vesting. As of June 30, 2019,March 31, 2020, we had total unamortized compensation expense of approximately $6.3$4.2 million related to these performance units, which we expect will be amortized during the next three years. We recognized compensation expense of approximately $0.5 million and $1.9$0.2 million under the Crestwood LTIP related to these performance units during the three and six months ended June 30, 2019,March 31, 2020, which is included in general and administrative expenses on our consolidated statements of operations.

During the three months ended March 31, 2020, 405,620 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 838,556 common units during the three months ended March 31, 2020 related to those performance units.


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Note 1110 – Commitments and Contingencies

Legal Proceedings

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. Linde claims damages of $55 million in unpaid invoices and 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.


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General. We are periodically involved in litigation proceedings. If we determine that a negative outcome is probable and the amount of loss is reasonably estimable, then we accrue the estimated amount. The results of litigation proceedings cannot be predicted with certainty. We could incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on our results of operations or cash flows in the period in which the amounts are paid and/or accrued. As of June 30, 2019March 31, 2020 and December 31, 20182019, both CEQP and CMLPwe had approximately $0.2$10.9 million and $0.1$10.7 million accrued for outstanding legal matters. Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures for which we can estimate will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures.

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

Regulatory Compliance

In the ordinary course of our business, we are subject to various laws and regulations. In the opinion of our management, compliance with current laws and regulations will not have a material effect on 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 three3 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. Thereafter, we contained and cleaned up the releases, 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 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. Our discussions regarding the notice of violation continue with the Three Affiliated Tribes.

During September 2019, we experienced 2 produced water releases totaling approximately 5,000 barrels on our Arrow system located on the Fort Berthold Indian Reservation in North Dakota.  We immediately notified the National Response Center, the State of North Dakota, the Three Affiliated Tribes, affected landowners and numerous other regulatory authorities. We are substantially complete with the remediation efforts and continue to monitor the impact of both spills.

In response to the water releases on our Arrow system, we removed approximately 30 miles of water gathering pipeline from service. In addition, we are currently in the process of replacing certain sections of our water gathering pipeline with pipeline composed of higher capacity material that is more suitable to the environment and climate conditions in the Bakken, which will increase water gathering capacity on the Arrow system and further our commitment to sustainability and environmental stewardship in the areas where we live and operate.

We will continue our remediation efforts to ensure the impacted lands are restored to their prior state. We believe these releases are insurable events under our policies, and we have notified our carriers of these events. We have not recorded an insurance receivable as of June 30, 2019.March 31, 2020.


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At June 30, 2019March 31, 2020 and December 31, 2018,2019, our accrual of approximately $1.7$4.3 million and $1.8$6.7 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 (including the Arrow water releases described above).penalties. We estimate that our potential liability for reasonably possible outcomes related to our environmental exposures could range from approximately $1.7$4.3 million to $3.3$8.5 million at June 30, 2019.


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March 31, 2020.

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 based 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 disposed retail propane operations, provided they were reported prior to August 1, 2012. The following table summarizes CEQP’s and CMLP’s self-insurance reserves at June 30, 2019March 31, 2020 and December 31, 20182019 (in millions):
 CEQP CMLP
 June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018
Self-insurance reserves(1)
$10.1
 $11.3
 $8.6
 $9.6
 CEQP CMLP
 March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
Self-insurance reserves(1)
$9.7
 $9.7
 $8.5
 $8.3
(1)At June 30, 2019,March 31, 2020, CEQP and CMLP classified approximately $7.4$6.2 million and $6.3$5.2 million, respectively of these reserves as other long-term liabilities on their consolidated balance sheets.

Leases

The following table summarizes the balance sheet information related to our operating and finance leases at March 31, 2020 and December 31, 2019 (in millions):
 March 31, December 31,
 2020 2019
Operating Leases   
Operating lease right-of-use assets, net$49.4
 $53.8
    
Accrued expenses and other liabilities$18.6
 $18.1
Long-term operating lease liabilities36.8
 41.5
Total operating lease liabilities$55.4
 $59.6
Finance Leases   
Property, plant and equipment$15.0
 $14.9
Less: accumulated depreciation6.4
 5.4
Property, plant and equipment, net$8.6
 $9.5
    
Accrued expenses and other liabilities$3.3
 $3.2
Other long-term liabilities4.4
 5.2
Total finance lease liabilities$7.7
 $8.4


Lease expense. Our operating lease expense, net totaled $7.5 million and $7.3 million for the three months endedMarch 31, 2020 and 2019. Our finance lease expense totaled $1.1 million for both the three months endedMarch 31, 2020 and 2019.

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Guarantees and Indemnifications

We are involved in various joint ventures that sometimes require financial and performance guarantees. In a financial guarantee, we are obligated to make payments if the guaranteed party fails to make payments under, or violates the terms of, the financial arrangement. In a performance guarantee, we provide assurance that the guaranteed party will execute on the terms of the contract. If they do not, we are required to perform on their behalf. We also periodically provide indemnification arrangements related to assets or businesses we have sold. For a further description of our guarantees associated with our joint ventures, see Note 5.4.

Our potential exposure under guarantee and indemnification arrangements can range from a specified amount to an unlimited dollar amount, depending on the nature of the claim, specificity as to duration, and the particular transaction. As of June 30, 2019March 31, 2020 and December 31, 2018,2019, we have no amounts accrued for these guarantees.


Note 1211 – Related Party Transactions

Crestwood Holdings LLC (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. We enter into transactions with our 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. We also enter into transactions with our affiliates related to services provided on our expansion projects. ForDuring the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, we paid approximately $5.1$2.4 million and $1.9$2.2 million of capital expenditures to Applied Consultants, Inc., an affiliate of Crestwood Holdings.


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The following table shows transactions with our affiliates which are reflected in our consolidated statements of operations (in millions). For a further description of our related party agreements, see our 20182019 Annual Report on Form 10-K.
Three Months Ended Six Months EndedThree Months Ended
June 30, June 30,March 31,
2019 2018 2019 20182020 2019
Revenues at CEQP and CMLP(1)$1.3
 $0.3
 $2.5
 $0.6
$7.5
 $1.2
Costs of product/services sold at CEQP and CMLP(1)(2)
$0.9
 $32.2
 $35.3
 $45.3
$3.2
 $34.4
Operations and maintenance expenses at CEQP and CMLP(2)
$5.9
 $7.3
 $13.4
 $14.0
Operations and maintenance expenses charged by CEQP and CMLP(3)
$6.2
 $7.5
General and administrative expenses charged by CEQP to CMLP, net(3)(4)
$10.1
 $4.9
 $21.1
 $10.5
$7.1
 $11.0
General and administrative expenses at CEQP charged from Crestwood Holdings, net(4)
$(0.1) $(4.4) $(5.3) $(4.8)
General and administrative expenses at CEQP charged to (from) Crestwood Holdings, net(5)
$12.8
 $(5.2)

(1)Includes $0.9 million and $9.1$7.5 million during the three and six months ended June 30, 2019March 31, 2020 related to the sale of NGLs to a subsidiary of Crestwood Permian and $15.2 million and $28.3$1.2 million during the three and six months ended June 30, 2018March 31, 2019 related to the sale of natural gas to a subsidiary of Stagecoach Gas.
(2)
Includes (i) $3.2 million and $8.2 million during the three months ended March 31, 2020and2019 related to purchases of NGLs from a subsidiary of Crestwood Permian. Includes less than $0.1Permian; (ii) $2.3 million during the three months ended March 31, 2019 related to purchases of natural gas from a subsidiary of Stagecoach Gas; and (iii) $23.9 million during the three and six months ended June 30,March 31, 2019 and $17.0 million during both the three and six months ended June 30, 2018 related to an agency marketing agreement with Ascent Resources - Utica, LLC, an affiliate of Crestwood Holdings. Includes less than $0.1 million and $2.3 million during the three and six months ended June 30, 2019 related to purchases of natural gas from a subsidiary of Stagecoach Gas.
(2)(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 income.operations. During the three and six months ended June 30, 2019,March 31, 2020, we charged $1.9 million and $3.9$1.7 million to Stagecoach Gas, $1.0 million and $2.2$1.1 million to Tres Palacios, and $3.0 million and $6.8$3.4 million to Crestwood Permian.Permian under these agreements. During the sixthree months ended June 30,March 31, 2019, we charged $0.5 million to Jackalope. During the three and six months ended June 30, 2018, we charged $2.1 million and $4.2$2.0 million to Stagecoach Gas, $0.9 million and $2.0$1.2 million to Tres Palacios, $4.1 million and $7.5$3.8 million to Crestwood Permian, and $0.2 million and $0.3$0.5 million to Jackalope.Jackalope under these agreements.
(3)(4)Includes $11.0$8.2 million and $22.9$11.9 million of net unit-based compensation charges allocated from CEQP to CMLP for the three and six months ended June 30, 2019March 31, 2020 and and $5.7 million and $12.1 million for the three and six months ended June 30, 2018.2019. In addition, includes $0.9$1.1 million and $1.8$0.9 million of CMLP’s general and administrative costs allocated to CEQP during the three and six months ended June 30, 2019March 31, 2020 and and $0.8 million and $1.6 million during the three and six months ended June 30, 2018.2019.
(4)(5)Includes $0.2a $12.6 million and $5.6 millionreduction of unit-based compensation charges allocated from Crestwood Holdings to CEQP and CMLP during the three and six months ended June 30, 2019 and $4.6 millionMarch 31, 2020 and $5.4 million of unit-based compensation charges allocated from Crestwood Holdings to CEQP and CMLP during the three and six months ended June 30, 2018.March 31, 2019. In addition, includes $0.2 million of CEQP’s general and administrative costs allocated to Crestwood Holdings during both the three months ended March 31, 2020 and 2019.


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The following table shows accounts receivable and accounts payable with our affiliates (in millions):
June 30,
2019		 December 31,
2018		March 31,
2020		 December 31,
2019
Accounts receivable at CEQP and CMLP$5.1
 $4.1
$17.2
 $7.3
Accounts payable at CEQP$6.7
 $16.1
$18.4
 $15.6
Accounts payable at CMLP$4.2
 $13.6
$15.9
 $13.1



Note 1312 – Segments

Financial Information

We have three3 operating and reportable segments: (i) gathering and processing operations; (ii) storage and transportation operations; and (iii) marketing, supply and logistics operations. Our corporate operations include all general and administrative expenses that are not allocated to our reportable segments. We assess the performance of our operating segments based on EBITDA, which is defined as income before income taxes, plus interest and debt expense, net and depreciation, amortization and accretion expense.


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Below is a reconciliation of CEQP’s net income (loss) to EBITDA (in millions):
Three Months Ended Six Months EndedThree Months Ended
June 30, June 30,March 31,
2019 2018 2019 20182020 2019
Net income (loss)$225.0
 $(21.5) $239.1
 $12.6
$(23.4) $14.1
Add:          
Interest and debt expense, net27.8
 24.3
 52.7
 48.7
32.6
 24.9
Provision for income taxes0.3
 0.2
 0.3
 0.2
Depreciation, amortization and accretion49.3
 44.5
 89.1
 89.6
56.1
 39.8
EBITDA$302.4
 $47.5
 $381.2
 $151.1
$65.3
 $78.8

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

Three Months Ended Six Months EndedThree Months Ended
June 30, June 30,March 31,
2019 2018 2019 20182020 2019
Net income (loss)$222.9
 $(23.5) $234.5
 $8.9
$(25.6) $11.6
Add:          
Interest and debt expense, net27.8
 24.3
 52.7
 48.7
32.6
 24.9
Provision for income taxes0.3
 0.1
 0.3
 0.1
Depreciation, amortization and accretion52.7
 47.4
 96.1
 95.2
59.6
 43.4
EBITDA$303.7
 $48.3
 $383.6
 $152.9
$66.6
 $79.9


The following tables summarize CEQP’s and CMLP’s reportable segment data for the three and six months ended June 30,March 31, 2020 and 2019 and 2018 (in millions). Intersegment revenues included in the following tables are accounted for as arms-length transactions that apply our revenue recognition policies as described in our 20182019 Annual Report on Form 10-K. Included in earnings from unconsolidated affiliates, net below was approximately $10.3$13.8 million and $9.9$12.7 million of our proportionate share of interest expense, depreciation and amortization expense and gains (losses) on long-lived assets, net related torecorded by our equity investments for the three months ended June 30, 2019March 31, 2020 and 2018 and $23.0 million and $19.6 million for the six months ended June 30, 2019 and 2018.

Crestwood Equity
 Three Months Ended June 30, 2019
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$199.7
 $4.9
 $478.8
 $—
 $683.4
Intersegment revenues25.4
 3.2
 (28.6) —
 —
Costs of product/services sold108.9
 —
 428.3
 —
 537.2
Operations and maintenance expense24.6
 0.9
 9.2
 —
 34.7
General and administrative expense—
 —
 —
 22.3
 22.3
Gain (loss) on long-lived assets, net(0.2) —
 —
 0.2
 —
Gain on acquisition209.4
 —
 —
 —
 209.4
Earnings (loss) from unconsolidated affiliates, net(2.8) 6.5
 —
 —
 3.7
Other income, net—
 —
 —
 0.1
 0.1
EBITDA$298.0
 $13.7
 $12.7
 $(22.0) $302.4
Goodwill$127.7
 $—
 $92.7
 $—
 $220.4
Total assets$3,505.7
 $991.7
 $548.1
 $41.7
 $5,087.2


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 Three Months Ended June 30, 2018
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$255.5
 $5.1
 $579.9
 $—
 $840.5
Intersegment revenues45.4
 2.5
 (47.9) —
 —
Costs of product/services sold208.8
 0.1
 516.5
 —
 725.4
Operations and maintenance expense17.8
 0.8
 13.3
 —
 31.9
General and administrative expense—
 —
 —
 23.4
 23.4
Loss on long-lived assets—
 —
 (24.4) —
 (24.4)
Earnings from unconsolidated affiliates, net4.5
 7.5
 —
 —
 12.0
Other income, net—
 —
 —
 0.1
 0.1
EBITDA$78.8
 $14.2
 $(22.2) $(23.3) $47.5

 Six Months Ended June 30, 2019
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$382.0
 $12.7
 $1,123.9
 $—
 $1,518.6
Intersegment revenues78.2
 6.8
 (85.0) —
 —
Costs of product/services sold246.9
 —
 985.9
 —
 1,232.8
Operations and maintenance expense42.7
 1.9
 18.7
 —
 63.3
General and administrative expense—
 —
 —
 59.5
 59.5
Gain (loss) on long-lived assets, net(2.0) —
 (0.2) 0.2
 (2.0)
Gain on acquisition209.4
 —
 —
 —
 209.4
Earnings (loss) from unconsolidated affiliates, net(3.0) 13.6
 —
 —
 10.6
Other income, net—
 —
 —
 0.2
 0.2
EBITDA$375.0
 $31.2
 $34.1
 $(59.1) $381.2
Goodwill$127.7
 $—
 $92.7
 $—
 $220.4
Total assets$3,505.7
 $991.7
 $548.1
 $41.7
 $5,087.2

 Six Months Ended June 30, 2018
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$595.8
 $9.3
 $1,350.4
 $—
 $1,955.5
Intersegment revenues86.7
 4.5
 (91.2) —
 —
Costs of product/services sold496.5
 0.2
 1,194.5
 —
 1,691.2
Operations and maintenance expense35.5
 1.6
 29.3
 —
 66.4
General and administrative expense—
 —
 —
 47.3
 47.3
Gain (loss) on long-lived assets0.1
 —
 (24.2) —
 (24.1)
Earnings from unconsolidated affiliates, net10.2
 14.2
 —
 —
 24.4
Other income, net—
 —
 —
 0.2
 0.2
EBITDA$160.8
 $26.2
 $11.2
 $(47.1) $151.1

2019.


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Crestwood Equity
 Three Months Ended March 31, 2020
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$214.9
 $3.5
 $509.5
 $—
 $727.9
Intersegment revenues40.0
 2.6
 (42.6) —
 —
Costs of product/services sold108.3
 0.2
 425.9
 —
 534.4
Operations and maintenance expense27.0
 1.4
 9.2
 —
 37.6
General and administrative expense—
 —
 —
 14.9
 14.9
Loss on long-lived assets, net(1.0) —
 —
 —
 (1.0)
Goodwill impairment(80.3) —
 —
 —
 (80.3)
Earnings from unconsolidated affiliates, net0.8
 4.7
 —
 —
 5.5
Other income, net—
 —
 —
 0.1
 0.1
EBITDA$39.1
 $9.2
 $31.8
 $(14.8) $65.3
Goodwill$45.9
 $—
 $92.7
 $—
 $138.6
Total assets$3,633.8
 $973.7
 $531.0
 $38.6
 $5,177.1

 Three Months Ended March 31, 2019
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$182.3
 $7.8
 $645.1
 $—
 $835.2
Intersegment revenues52.8
 3.6
 (56.4) —
 —
Costs of product/services sold138.0
 —
 557.6
 —
 695.6
Operations and maintenance expense18.1
 1.0
 9.5
 —
 28.6
General and administrative expense—
 —
 —
 37.2
 37.2
Loss on long-lived assets, net(1.8) —
 (0.2) —
 (2.0)
Earnings (loss) from unconsolidated affiliates, net(0.2) 7.1
 —
 —
 6.9
Other income, net—
 —
 —
 0.1
 0.1
EBITDA$77.0
 $17.5
 $21.4
 $(37.1) $78.8


Crestwood Midstream
 Three Months Ended June 30, 2019
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$199.7
 $4.9
 $478.8
 $—
 $683.4
Intersegment revenues25.4
 3.2
 (28.6) —
 —
Costs of product/services sold108.9
 —
 428.3
 —
 537.2
Operations and maintenance expense24.6
 0.9
 9.2
 —
 34.7
General and administrative expense—
 —
 —
 20.9
 20.9
Gain (loss) on long-lived assets, net(0.2) —
 —
 0.2
 —
Gain on acquisition209.4
 —
 —
 —
 209.4
Earnings (loss) from unconsolidated affiliates, net(2.8) 6.5
 —
 —
 3.7
EBITDA$298.0
 $13.7
 $12.7
 $(20.7) $303.7
Goodwill$127.7
 $—
 $92.7
 $—
 $220.4
Total assets$3,672.2
 $991.7
 $548.1
 $36.0
 $5,248.0

 Three Months Ended June 30, 2018
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$255.5
 $5.1
 $579.9
 $—
 $840.5
Intersegment revenues45.4
 2.5
 (47.9) —
 —
Costs of product/services sold208.8
 0.1
 516.5
 —
 725.4
Operations and maintenance expense17.8
 0.8
 13.3
 —
 31.9
General and administrative expense—
 —
 —
 22.5
 22.5
Loss on long-lived assets—
 —
 (24.4) —
 (24.4)
Earnings from unconsolidated affiliates, net4.5
 7.5
 —
 —
 12.0
EBITDA$78.8
 $14.2
 $(22.2) $(22.5) $48.3

Six Months Ended June 30, 2019Three Months Ended March 31, 2020
Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate TotalGathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$382.0
 $12.7
 $1,123.9
 $—
 $1,518.6
$214.9
 $3.5
 $509.5
 $—
 $727.9
Intersegment revenues78.2
 6.8
 (85.0) —
 —
40.0
 2.6
 (42.6) —
 —
Costs of product/services sold246.9
 —
 985.9
 —
 1,232.8
108.3
 0.2
 425.9
 —
 534.4
Operations and maintenance expense42.7
 1.9
 18.7
 —
 63.3
27.0
 1.4
 9.2
 —
 37.6
General and administrative expense—
 —
 —
 56.9
 56.9
—
 —
 —
 13.5
 13.5
Gain (loss) on long-lived assets, net(2.0) —
 (0.2) 0.2
 (2.0)
Gain on acquisition209.4
 —
 —
 —
 209.4
Earnings (loss) from unconsolidated affiliates, net(3.0) 13.6
 —
 —
 10.6
Loss on long-lived assets, net(1.0) —
 —
 —
 (1.0)
Goodwill impairment(80.3) —
 —
 —
 (80.3)
Earnings from unconsolidated affiliates, net0.8
 4.7
 —
 —
 5.5
EBITDA$375.0
 $31.2
 $34.1
 $(56.7) $383.6
$39.1
 $9.2
 $31.8
 $(13.5) $66.6
Goodwill$127.7
 $—
 $92.7
 $—
 $220.4
$45.9
 $—
 $92.7
 $—
 $138.6
Total assets$3,672.2
 $991.7
 $548.1
 $36.0
 $5,248.0
$3,789.7
 $973.7
 $531.0
 $34.9
 $5,329.3


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Six Months Ended June 30, 2018Three Months Ended March 31, 2019
Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate TotalGathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$595.8
 $9.3
 $1,350.4
 $—
 $1,955.5
$182.3
 $7.8
 $645.1
 $—
 $835.2
Intersegment revenues86.7
 4.5
 (91.2) —
 —
52.8
 3.6
 (56.4) —
 —
Costs of product/services sold496.5
 0.2
 1,194.5
 —
 1,691.2
138.0
 —
 557.6
 —
 695.6
Operations and maintenance expense35.5
 1.6
 29.3
 —
 66.4
18.1
 1.0
 9.5
 —
 28.6
General and administrative expense—
 —
 —
 45.3
 45.3
—
 —
 —
 36.0
 36.0
Gain (loss) on long-lived assets0.1
 —
 (24.2) —
 (24.1)
Earnings from unconsolidated affiliates, net10.2
 14.2
 —
 —
 24.4
Loss on long-lived assets, net(1.8) —
 (0.2) —
 (2.0)
Earnings (loss) from unconsolidated affiliates, net(0.2) 7.1
 —
 —
 6.9
EBITDA$160.8
 $26.2
 $11.2
 $(45.3) $152.9
$77.0
 $17.5
 $21.4
 $(36.0) $79.9



Note 1413 - 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 Topic 606 revenue contracts totaled $179.6$185.7 million and $209.7$225.0 million for both CEQP and CMLP at June 30, 2019March 31, 2020 and December 31, 2018,2019, 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 1817 years.

The following table provides a summary of the opening and closing balances ofsummarizes our contract assets and contract liabilities (in millions):


 June 30, 2019 December 31, 2018
Contract Assets (Non-current) $0.9
 $1.0
Contract Liabilities (Current)(1)
 $12.6
 $12.0
Contract Liabilities (Non-current)(1)
 $95.5
 $65.4


 March 31, 2020 December 31, 2019
Contract assets (non-current) $1.1
 $1.2
Contract liabilities (current)(1)
 $9.0
 $8.8
Contract liabilities (non-current)(1)
 $151.3
 $144.7

(1)During the three and six months ended June 30, 2019,March 31, 2020, we recognized revenues of approximately $3.0 million and $5.8$3.8 million that were previously included in contract liabilities (current) at December 31, 2018.2019. The remaining change in our contract liabilities during the three and six months ended June 30, 2019 primarilyMarch 31, 2020, related to approximately $19.8 million of deferred revenues recorded in the purchase price allocation for the Jackalope Acquisition described in more detail in Note 3, and the remainder relates primarily 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 not been recognized as of June 30, 2019March 31, 2020 (in millions):
Remainder of 2019$50.7
202098.0
Remainder of 2020$73.0
202186.1
86.2
202266.0
63.8
20237.3
7.4
Thereafter3.3
20243.3
Total$311.4
$233.7


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

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performance obligations where the contract term is one year or less; and (iii) contracts for which we recognize revenues as amounts are invoiced.


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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 each of our segments for the three and six months ended June 30,March 31, 2020 and 2019 and 2018 (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.
Three Months Ended June 30, 2019Three Months Ended March 31, 2020
Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Intersegment Elimination TotalGathering and Processing Storage and Transportation Marketing, Supply and Logistics Intersegment Elimination Total
Revenues:         
Topic 606 revenues                  
Gathering                  
Natural gas$42.9
 $—
 $—
 $—
 $42.9
$43.8
 $—
 $—
 $—
 $43.8
Crude oil15.1
 —
 —
 —
 15.1
26.5
 —
 —
 —
 26.5
Water19.0
 —
 —
 —
 19.0
23.0
 —
 —
 —
 23.0
Processing                  
Natural gas8.1
 —
 —
 —
 8.1
10.2
 —
 —
 —
 10.2
Compression                  
Natural gas6.2
 —
 —
 —
 6.2
6.3
 —
 —
 —
 6.3
Storage                  
Crude oil0.5
 1.5
 —
 (0.5) 1.5
0.5
 0.6
 —
 (0.4) 0.7
NGLs—
 —
 1.3
 —
 1.3
—
 —
 1.6
 —
 1.6
Pipeline                  
Crude oil—
 1.5
 —
 (0.5) 1.0
—
 1.6
 —
 (0.5) 1.1
Transportation                  
Crude oil1.8
 —
 1.5
 —
 3.3
2.0
 —
 1.6
 —
 3.6
NGLs—
 —
 2.1
 —
 2.1
—
 —
 1.7
 —
 1.7
Rail Loading                  
Crude oil—
 3.9
 —
 (1.4) 2.5
—
 3.4
 —
 (1.4) 2.0
Product Sales                  
Natural gas10.9
 —
 7.9
 (4.8) 14.0
12.0
 —
 18.3
 (11.7) 18.6
Crude oil110.2
 —
 291.4
 (16.0) 385.6
121.1
 —
 250.2
 (16.3) 355.0
NGLs10.4
 —
 133.9
 (4.5) 139.8
9.5
 —
 160.3
 (11.9) 157.9
Other—
 1.2
 0.3
 (0.9) 0.6
—
 0.5
 0.5
 (0.4) 0.6
Total Topic 606 revenues225.1
 8.1
 438.4
 (28.6) 643.0
254.9
 6.1
 434.2
 (42.6) 652.6
Non-Topic 606 revenues(1)
—
 —
 40.4
 —
 40.4
—
 —
 75.3
 —
 75.3
Total revenues$225.1
 $8.1
 $478.8
 $(28.6) $683.4
$254.9
 $6.1
 $509.5
 $(42.6) $727.9

(1)Represents revenues primarily related to our commodity-based derivatives. See Note 65 for additional information related to our price risk management activities.


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 Three Months Ended June 30, 2018
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Intersegment Elimination Total
Revenues:         
Topic 606 revenues         
Gathering         
Natural gas$33.9
 $—
 $—
 $—
 $33.9
Crude oil9.4
 —
 —
 —
 9.4
Water13.7
 —
 —
 —
 13.7
Processing         
Natural gas2.7
 —
 —
 —
 2.7
NGLs—
 —
 2.4
 —
 2.4
Compression         
Natural gas7.9
 —
 —
 —
 7.9
Storage         
Crude oil0.4
 1.2
 —
 (0.3) 1.3
NGLs—
 —
 2.3
 —
 2.3
Pipeline         
Crude oil—
 1.4
 —
 (0.5) 0.9
Transportation         
Crude oil0.6
 —
 1.7
 —
 2.3
NGLs—
 —
 9.7
 —
 9.7
Rail Loading         
Crude oil—
 4.7
 —
 (1.5) 3.2
NGLs—
 —
 1.1
 —
 1.1
Product Sales         
Natural gas11.9
 —
 8.9
 (2.8) 18.0
Crude oil197.7
 —
 266.0
 (37.0) 426.7
NGLs22.7
 —
 254.8
 (5.6) 271.9
Other—
 0.3
 —
 (0.2) 0.1
Total Topic 606 revenues300.9
 7.6
 546.9
 (47.9) 807.5
Non-Topic 606 revenues(1)
—
 —
 33.0
 —
 33.0
Total revenues$300.9
 $7.6
 $579.9
 $(47.9) $840.5

 Three Months Ended March 31, 2019
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Intersegment Elimination Total
Topic 606 revenues         
Gathering         
Natural gas$30.2
 $—
 $—
 $—
 $30.2
Crude oil15.3
 —
 —
 —
 15.3
Water16.8
 —
 —
 —
 16.8
Processing         
Natural gas2.5
 —
 —
 —
 2.5
Compression         
Natural gas6.0
 —
 —
 —
 6.0
Storage         
Crude oil0.5
 1.4
 —
 (0.7) 1.2
NGLs—
 —
 1.3
 —
 1.3
Pipeline         
Crude oil—
 1.7
 —
 (0.7) 1.0
Transportation         
Crude oil1.5
 —
 1.5
 —
 3.0
NGLs—
 —
 4.1
 —
 4.1
Rail Loading         
Crude oil—
 7.2
 —
 (1.4) 5.8
Product Sales         
Natural gas18.8
 —
 22.3
 (6.6) 34.5
Crude oil131.6
 —
 290.1
 (43.3) 378.4
NGLs11.9
 —
 221.5
 (2.8) 230.6
Other—
 1.1
 —
 (0.9) 0.2
Total Topic 606 revenues235.1
 11.4
 540.8
 (56.4) 730.9
Non-Topic 606 revenues(1)
—
 —
 104.3
 —
 104.3
Total revenues$235.1
 $11.4
 $645.1
 $(56.4) $835.2
(1)Represents revenues primarily related to our commodity-based derivatives. See Note 6 for additional information related to our price risk management activities.


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 Six Months Ended June 30, 2019
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Intersegment Elimination Total
Revenues:         
Topic 606 revenues         
Gathering         
Natural gas$73.1
 $—
 $—
 $—
 $73.1
Crude oil30.4
 —
 —
 —
 30.4
Water35.8
 —
 —
 —
 35.8
Processing         
Natural gas10.6
 —
 —
 —
 10.6
Compression         
Natural gas12.2
 —
 —
 —
 12.2
Storage         
Crude oil1.0
 2.9
 —
 (1.2) 2.7
NGLs—
 —
 2.6
 —
 2.6
Pipeline         
Crude oil—
 3.2
 —
 (1.2) 2.0
Transportation         
Crude oil3.3
 —
 3.0
 —
 6.3
NGLs—
 —
 6.2
 —
 6.2
Rail Loading         
Crude oil—
 11.1
 —
 (2.8) 8.3
Product Sales         
Natural gas29.7
 —
 30.2
 (11.4) 48.5
Crude oil241.8
 —
 581.5
 (59.3) 764.0
NGLs22.3
 —
 355.4
 (7.3) 370.4
Other—
 2.3
 0.3
 (1.8) 0.8
Total Topic 606 revenues460.2
 19.5
 979.2
 (85.0) 1,373.9
Non-Topic 606 revenues(1)
—
 —
 144.7
 —
 144.7
Total revenues$460.2
 $19.5
 $1,123.9
 $(85.0) $1,518.6

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


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 Six Months Ended June 30, 2018
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Intersegment Elimination Total
Revenues:         
Topic 606 revenues         
Gathering         
Natural gas$69.3
 $—
 $—
 $—
 $69.3
Crude oil18.6
 —
 —
 —
 18.6
Water25.8
 —
 —
 —
 25.8
Processing         
Natural gas5.4
 —
 —
 —
 5.4
NGLs—
 —
 4.1
 —
 4.1
Compression         
Natural gas15.5
 —
 —
 —
 15.5
Storage         
Crude oil0.9
 1.8
 —
 (0.5) 2.2
NGLs—
 —
 5.5
 —
 5.5
Pipeline         
Crude oil—
 2.6
 —
 (1.0) 1.6
Transportation         
Crude oil1.2
 —
 2.9
 —
 4.1
NGLs—
 —
 19.4
 —
 19.4
Water—
 —
 0.2
 —
 0.2
Rail Loading         
Crude oil—
 8.7
 —
 (2.5) 6.2
NGLs—
 —
 2.2
 —
 2.2
Product Sales         
Natural gas25.3
 —
 16.7
 (6.7) 35.3
Crude oil477.6
 —
 456.6
 (69.3) 864.9
NGLs42.9
 —
 712.0
 (10.7) 744.2
Other—
 0.7
 —
 (0.5) 0.2
Total Topic 606 revenues682.5
 13.8
 1,219.6
 (91.2) 1,824.7
Non-Topic 606 revenues(1)
—
 —
 130.8
 —
 130.8
Total revenues$682.5
 $13.8
 $1,350.4
 $(91.2) $1,955.5
(1)Represents revenues related to our commodity-based derivatives. See Note 65 for additional information related to our price risk management activities.


Note 1514 – 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, Crestwood Niobrara, Crestwood Pipeline and Storage Northeast LLC, PRBIC and Tres Holdings and their respective subsidiaries (collectively, Non-Guarantor Subsidiaries). Crestwood Midstream Finance Corp., the co-issuer of the 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 June 30, 2019March 31, 2020 and December 31, 2018,2019, and for the three and six months ended June 30, 2019March 31, 2020 and 2018.2019.  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.


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Crestwood Midstream Partners LPCondensed Consolidating Balance Sheet
June 30, 2019
March 31, 2020March 31, 2020
(in millions)(unaudited)
Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations ConsolidatedParent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Assets                  
Current assets:                  
Cash$1.4
 $—
 $0.1
 $—
 $1.5
$4.8
 $—
 $—
 $—
 $4.8
Accounts receivable—
 173.2
 21.8
 —
 195.0
—
 176.3
 25.9
 —
 202.2
Inventory—
 33.2
 —
 —
 33.2
—
 20.1
 —
 —
 20.1
Other current assets—
 35.7
 0.5
 —
 36.2
—
 61.1
 0.1
 —
 61.2
Total current assets1.4
 242.1
 22.4
 —
 265.9
4.8
 257.5
 26.0
 —
 288.3
                  
Property, plant and equipment, net—
 2,269.7
 619.9
 —
 2,889.6
—
 2,316.9
 770.8
 —
 3,087.7
Goodwill and intangible assets, net—
 671.5
 387.5
 —
 1,059.0
—
 640.3
 288.8
 —
 929.1
Operating lease right-of-use assets, net—
 56.6
 2.9
 —
 59.5
—
 46.7
 2.7
 —
 49.4
Investment in consolidated affiliates4,305.4
 —
 —
 (4,305.4) —
Investment in unconsolidated affiliates—
 —
 971.9
 —
 971.9
Investments in consolidated affiliates4,392.5
 —
 —
 (4,392.5) —
Investments in unconsolidated affiliates—
 —
 972.2
 —
 972.2
Other non-current assets—
 2.1
 —
 —
 2.1
—
 2.1
 0.5
 —
 2.6
Total assets$4,306.8
 $3,242.0
 $2,004.6
 $(4,305.4) $5,248.0
$4,397.3
 $3,263.5
 $2,061.0
 $(4,392.5) $5,329.3
                  
Liabilities and capital                  
Current liabilities:                  
Accounts payable$—
 $133.5
 $25.5
 $—
 $159.0
$—
 $106.9
 $8.6
 $—
 $115.5
Other current liabilities27.4
 97.9
 9.0
 —
 134.3
52.2
 82.9
 27.6
 —
 162.7
Total current liabilities27.4
 231.4
 34.5
 —
 293.3
52.2
 189.8
 36.2
 —
 278.2
                  
Long-term liabilities:                  
Long-term debt, less current portion2,131.2
 —
 —
 —
 2,131.2
2,358.9
 —
 —
 —
 2,358.9
Other long-term liabilities—
 162.9
 87.2
 —
 250.1
—
 169.7
 108.7
 —
 278.4
Deferred income taxes—
 0.8
 —
 —
 0.8
—
 0.7
 —
 —
 0.7
Total liabilities2,158.6
 395.1
 121.7
 —
 2,675.4
2,411.1
 360.2
 144.9
 —
 2,916.2
                  
Interest of non-controlling partner in subsidiary—
 —
 424.4
 —
 424.4
—
 —
 426.9
 —
 426.9
Partners’ capital2,148.2
 2,846.9
 1,458.5
 (4,305.4) 2,148.2
1,986.2
 2,903.3
 1,489.2
 (4,392.5) 1,986.2
Total liabilities and capital$4,306.8
 $3,242.0
 $2,004.6
 $(4,305.4) $5,248.0
$4,397.3
 $3,263.5
 $2,061.0
 $(4,392.5) $5,329.3


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Crestwood Midstream Partners LPCondensed Consolidating Balance Sheet
December 31, 2018
December 31, 2019December 31, 2019
(in millions)
Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations ConsolidatedParent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Assets                  
Current assets:                  
Cash$0.2
 $—
 $—
 $—
 $0.2
$1.8
 $—
 $23.6
 $—
 $25.4
Restricted cash16.3
 —
 —
 —
 16.3
Accounts receivable—
 246.3
 19.9
 (16.3) 249.9
—
 229.1
 12.8
 —
 241.9
Inventory—
 64.6
 —
 —
 64.6
—
 53.7
 —
 —
 53.7
Other current assets—
 46.0
 —
 —
 46.0
—
 54.6
 0.2
 —
 54.8
Total current assets16.5
 356.9
 19.9
 (16.3) 377.0
1.8
 337.4
 36.6
 —
 375.8
                  
Property, plant and equipment, net—
 2,202.3
 —
 —
 2,202.3
—
 2,331.3
 736.2
 —
 3,067.5
Goodwill and intangible assets, net—
 692.4
 —
 —
 692.4
—
 650.7
 373.4
 —
 1,024.1
Investment in consolidated affiliates3,800.4
 —
 —
 (3,800.4) —
Investment in unconsolidated affiliates—
 —
 1,188.2
 —
 1,188.2
Operating lease right-of-use assets, net—
 51.0
 2.8
 —
 53.8
Investments in consolidated affiliates4,451.6
 —
 —
 (4,451.6) —
Investments in unconsolidated affiliates—
 —
 980.4
 —
 980.4
Other non-current assets—
 2.1
 —
 —
 2.1
—
 1.9
 0.5
 —
 2.4
Total assets$3,816.9
 $3,253.7
 $1,208.1
 $(3,816.7) $4,462.0
$4,453.4
 $3,372.3
 $2,129.9
 $(4,451.6) $5,504.0
                  
Liabilities and capital                  
Current liabilities:                  
Accounts payable$16.3
 $210.5
 $—
 $(16.3) $210.5
$—
 $175.9
 $10.7
 $—
 $186.6
Other current liabilities20.0
 81.8
 16.2
 —
 118.0
25.8
 123.9
 17.6
 —
 167.3
Total current liabilities36.3
 292.3
 16.2
 (16.3) 328.5
25.8
 299.8
 28.3
 —
 353.9
                  
Long-term liabilities:                  
Long-term debt, less current portion1,752.4
 —
 —
 —
 1,752.4
2,328.3
 —
 —
 —
 2,328.3
Other long-term liabilities—
 114.0
 57.0
 —
 171.0
—
 174.8
 120.8
 —
 295.6
Deferred income taxes—
 0.6
 —
 —
 0.6
—
 0.7
 —
 —
 0.7
Total liabilities1,788.7
 406.9
 73.2
 (16.3) 2,252.5
2,354.1
 475.3
 149.1
 —
 2,978.5
                  
Interest of non-controlling partner in subsidiary—
 —
 181.3
 —
 181.3
—
 —
 426.2
 —
 426.2
Partners’ capital2,028.2
 2,846.8
 953.6
 (3,800.4) 2,028.2
2,099.3
 2,897.0
 1,554.6
 (4,451.6) 2,099.3
Total partners’ capital2,028.2
 2,846.8
 1,134.9
 (3,800.4) 2,209.5
Total liabilities and capital$3,816.9
 $3,253.7
 $1,208.1
 $(3,816.7) $4,462.0
$4,453.4
 $3,372.3
 $2,129.9
 $(4,451.6) $5,504.0



42


34
Table of Contents


Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Three Months Ended March 31, 2020
(in millions)
(unaudited)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Revenues$—
 $700.4
 $27.5
 $—
 $727.9
Costs of product/services sold—
 534.4
 —
 —
 534.4
Operating expenses and other:         
Operations and maintenance—
 31.8
 5.8
 —
 37.6
General and administrative17.9
 (4.4) —
 —
 13.5
Depreciation, amortization and accretion—
 47.8
 11.8
 —
 59.6
Loss on long-lived assets, net—
 1.0
 —
 —
 1.0
Goodwill impairment—
 —
 80.3
 —
 80.3
 17.9
 76.2
 97.9
 —
 192.0
Operating income (loss)(17.9) 89.8
 (70.4) —
 1.5
Earnings from unconsolidated affiliates, net—
 —
 5.5
 —
 5.5
Interest and debt expense, net(32.4) (0.2) —
 —
 (32.6)
Equity in net income (loss) of subsidiaries14.8
 —
 —
 (14.8) —
Net income (loss)(35.5) 89.6
 (64.9) (14.8) (25.6)
Net income attributable to non-controlling partner—
 —
 9.9
 —
 9.9
Net income (loss) attributable to Crestwood Midstream Partners LP$(35.5) $89.6
 $(74.8) $(14.8) $(35.5)
Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Three Months Ended June 30, 2019
(in millions)
(unaudited)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Revenues$—
 $663.2
 $20.2
 $—
 $683.4
Costs of product/services sold—
 537.2
 —
 —
 537.2
Operating expenses and other:         
Operations and maintenance—
 27.5
 7.2
 —
 34.7
General and administrative9.7
 11.2
 —
 —
 20.9
Depreciation, amortization and accretion—
 43.0
 9.7
 —
 52.7
Gain on acquisition—
 —
 (209.4) —
 (209.4)
 9.7
 81.7
 (192.5) —
 (101.1)
Operating income (loss)(9.7) 44.3
 212.7
 —
 247.3
Earnings from unconsolidated affiliates, net—
 —
 3.7
 —
 3.7
Interest and debt expense, net(28.0) 0.2
 —
 —
 (27.8)
Equity in net income (loss) of subsidiaries250.0
 —
 —
 (250.0) —
Income (loss) before income taxes212.3
 44.5
 216.4
 (250.0) 223.2
Provision for income taxes—
 (0.3) —
 —
 (0.3)
Net income (loss)212.3
 44.2
 216.4
 (250.0) 222.9
Net income attributable to non-controlling partner in subsidiary—
 —
 10.6
 —
 10.6
Net income (loss) attributable to Crestwood Midstream Partners LP$212.3
 $44.2
 $205.8
 $(250.0) $212.3


4335
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Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Three Months Ended March 31, 2019
(in millions)
(unaudited)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Revenues$—
 $835.2
 $—
 $—
 $835.2
Costs of product/services sold—
 695.6
 —
 —
 695.6
Operating expenses and other:         
Operations and maintenance—
 28.6
 —
 —
 28.6
General and administrative18.7
 17.3
 —
 —
 36.0
Depreciation, amortization and accretion—
 43.4
 —
 —
 43.4
Loss on long-lived assets, net—
 2.0
 —
 —
 2.0
 18.7
 91.3
 —
 —
 110.0
Operating income (loss)(18.7) 48.3
 —
 —
 29.6
Earnings from unconsolidated affiliates, net—
 —
 6.9
 —
 6.9
Interest and debt expense, net(24.7) (0.2) —
 —
 (24.9)
Equity in net income (loss) of subsidiaries51.0
 —
 —
 (51.0) —
Net income (loss)7.6
 48.1
 6.9
 (51.0) 11.6
Net income attributable to non-controlling partner in subsidiary—
 —
 4.0
 —
 4.0
Net income (loss) attributable to Crestwood Midstream Partners LP$7.6
 $48.1
 $2.9
 $(51.0) $7.6
Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Three Months Ended June 30, 2018
(in millions)
(unaudited)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Revenues$—
 $840.5
 $—
 $—
 $840.5
Costs of product/services sold—
 725.4
 —
 —
 725.4
Operating expenses:         
Operations and maintenance—
 31.9
 —
 —
 31.9
General and administrative12.1
 10.4
 —
 —
 22.5
Depreciation, amortization and accretion—
 47.4
 —
 —
 47.4
Loss on long-lived assets, net—
 24.4
 —
 —
 24.4
 12.1
 114.1
 —
 —
 126.2
Operating income (loss)(12.1) 1.0
 —
 —
 (11.1)
Earnings from unconsolidated affiliates, net—
 —
 12.0
 —
 12.0
Interest and debt expense, net(24.3) —
 —
 —
 (24.3)
Equity in net income (loss) of subsidiaries8.9
 —
 —
 (8.9) —
Income (loss) before income taxes(27.5) 1.0
 12.0
 (8.9) (23.4)
Provision for income taxes—
 (0.1) —
 —
 (0.1)
Net income (loss)(27.5) 0.9
 12.0
 (8.9) (23.5)
Net income attributable to non-controlling partner in subsidiary—
 —
 4.0
 —
 4.0
Net income (loss) attributable to Crestwood Midstream Partners LP$(27.5) $0.9
 $8.0
 $(8.9) $(27.5)


4436
Table of Contents


Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Six Months Ended June 30, 2019
(in millions)
(unaudited)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Revenues$—
 $1,498.4
 $20.2
 $—
 $1,518.6
Costs of product/services sold—
 1,232.8
 —
 —
 1,232.8
Operating expenses and other:         
Operations and maintenance—
 56.1
 7.2
 —
 63.3
General and administrative28.4
 28.5
 —
 —
 56.9
Depreciation, amortization and accretion—
 86.4
 9.7
 —
 96.1
Loss on long-lived assets, net—
 2.0
 —
 —
 2.0
Gain on acquisition—
 —
 (209.4) —
 (209.4)
 28.4
 173.0
 (192.5) —
 8.9
Operating income (loss)(28.4) 92.6
 212.7
 —
 276.9
Earnings from unconsolidated affiliates, net—
 —
 10.6
 —
 10.6
Interest and debt expense, net(52.7) —
 —
 —
 (52.7)
Equity in net income (loss) of subsidiaries301.0
 —
 —
 (301.0) —
Income (loss) before income taxes219.9
 92.6
 223.3
 (301.0) 234.8
Provision for income taxes—
 (0.3) —
 —
 (0.3)
Net income (loss)219.9
 92.3
 223.3
 (301.0) 234.5
Net income attributable to non-controlling partner in subsidiary—
 —
 14.6
 —
 14.6
Net income (loss) attributable to Crestwood Midstream Partners LP$219.9
 $92.3
 $208.7
 $(301.0) $219.9
Crestwood Midstream Partners LP
Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2020
(in millions)
(unaudited)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Cash flows from operating activities$(22.3) $93.4
 $44.7
 $—
 $115.8
          
Cash flows from investing activities:         
Purchases of property, plant and equipment—
 (33.6) (53.2) —
 (86.8)
Investment in unconsolidated affiliates—
 —
 (6.0) —
 (6.0)
Capital distributions from unconsolidated affiliates—
 —
 9.5
 —
 9.5
Capital contributions from consolidated affiliates17.2
 —
 —
 (17.2) —
Net cash provided by (used in) investing activities17.2
 (33.6) (49.7) (17.2) (83.3)
          
Cash flows from financing activities:         
Proceeds from the issuance of long-term debt275.9
 —
 —
 —
 275.9
Payments on long-term debt(246.9) —
 —
 —
 (246.9)
Payments on finance leases—
 (0.8) —
 —
 (0.8)
Distributions to partners(57.0) —
 (9.2) —
 (66.2)
Distributions to parent—
 —
 (17.2) 17.2
 —
Taxes paid for unit-based compensation vesting—
 (15.1) —
 —
 (15.1)
Change in intercompany balances36.1
 (43.9) 7.8
 —
 —
Net cash provided by (used in) financing activities8.1
 (59.8) (18.6) 17.2
 (53.1)
          
Net change in cash3.0
 —
 (23.6) —
 (20.6)
Cash at beginning of period1.8
 —
 23.6
 —
 25.4
Cash at end of period$4.8
 $—
 $—
 $—
 $4.8


4537
Table of Contents


Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Six Months Ended June 30, 2018
(in millions)
(unaudited)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Revenues$—
 $1,955.5
 $—
 $—
 $1,955.5
Costs of product/services sold—
 1,691.2
 —
 —
 1,691.2
Operating expenses:         
Operations and maintenance—
 66.4
 —
 —
 66.4
General and administrative27.7
 17.6
 —
 —
 45.3
Depreciation, amortization and accretion—
 95.2
 —
 —
 95.2
Loss on long-lived assets, net—
 24.1
 —
 —
 24.1
 27.7
 203.3
 —
 —
 231.0
Operating income (loss)(27.7) 61.0
 —
 —
 33.3
Earnings from unconsolidated affiliates, net—
 —
 24.4
 —
 24.4
Interest and debt expense, net(48.7) —
 —
 —
 (48.7)
Equity in net income (loss) of subsidiaries77.3
 —
 —
 (77.3) —
Income (loss) before income taxes0.9
 61.0
 24.4
 (77.3) 9.0
Provision for income taxes—
 (0.1) —
 —
 (0.1)
Net income (loss)0.9
 60.9
 24.4
 (77.3) 8.9
Net income attributable to non-controlling partner in subsidiary—
 —
 8.0
 —
 8.0
Net income (loss) attributable to Crestwood Midstream Partners LP$0.9
 $60.9
 $16.4
 $(77.3) $0.9


46
Table of Contents


Crestwood Midstream Partners LP
Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2019
(in millions)
(unaudited)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Cash flows from operating activities$(87.1) $309.5
 $(27.3) $—
 $195.1
          
Cash flows from investing activities:         
Acquisition, net of cash acquired—
 —
 (462.1) —
 (462.1)
Purchases of property, plant and equipment—
 (127.7) (77.0) —
 (204.7)
Investment in unconsolidated affiliates—
 —
 (40.9) —
 (40.9)
Capital distributions from unconsolidated affiliates—
 —
 24.2
 —
 24.2
Capital contributions to consolidated affiliates(217.1) —
 —
 217.1
 —
Other—
 (0.5) —
 —
 (0.5)
Net cash provided by (used in) investing activities(217.1) (128.2) (555.8) 217.1
 (684.0)
          
Cash flows from financing activities:         
Proceeds from the issuance of long-term debt1,544.0
 —
 —
 —
 1,544.0
Payments on long-term debt(1,159.1) (0.4) —
 —
 (1,159.5)
Payments on finance leases—
 (1.9) —
 —
 (1.9)
Payments for debt-related deferred costs(9.0) —
 —
 —
 (9.0)
Net proceeds from the issuance of
     non-controlling interest
—
 —
 235.0
 —
 235.0
Distributions to partners(117.5) —
 (6.6) —
 (124.1)
Contributions from parent—
 —
 217.1
 (217.1) —
Taxes paid for unit-based compensation vesting—
 (10.6) —
 —
 (10.6)
Change in intercompany balances30.7
 (168.4) 137.7
 —
 —
Net cash provided by (used in) financing activities289.1
 (181.3) 583.2
 (217.1) 473.9
          
Net change in cash and restricted cash(15.1) —
 0.1
 —
 (15.0)
Cash and restricted cash at beginning of period16.5
 —
 —
 —
 16.5
Cash and restricted cash at end of period$1.4
 $—
 $0.1
 $—
 $1.5


47
Table of Contents


Crestwood Midstream Partners LPCondensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2018
Three Months Ended March 31, 2019Three Months Ended March 31, 2019
(in millions)(unaudited)
Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations ConsolidatedParent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Cash flows from operating activities:$(72.6) $212.9
 $24.1
 $—
 $164.4
$(38.6) $160.3
 $9.2
 $—
 $130.9
                  
Cash flows from investing activities:                  
Purchases of property, plant and equipment(2.4) (116.3) —
 —
 (118.7)—
 (68.5) —
 —
 (68.5)
Investment in unconsolidated affiliates—
 —
 (6.9) —
 (6.9)—
 —
 (38.2) —
 (38.2)
Capital distributions from unconsolidated affiliates—
 —
 23.9
 —
 23.9
—
 —
 16.7
 —
 16.7
Net proceeds from sale of assets—
 6.8
 —
 —
 6.8
Capital distributions from consolidated affiliates37.8
 —
 —
 (37.8) —
Capital contributions to consolidated affiliates(15.6) —
 —
 15.6
 —
Other—
 (1.0) —
 —
 (1.0)
Net cash provided by (used in) investing activities35.4
 (109.5) 17.0
 (37.8) (94.9)(15.6) (69.5) (21.5) 15.6
 (91.0)
                  
Cash flows from financing activities:                  
Proceeds from the issuance of long-term debt847.1
 —
 —
 —
 847.1
298.9
 —
 —
 —
 298.9
Payments on long-term debt(780.3) (0.7) —
 —
 (781.0)(284.0) (0.4) —
 —
 (284.4)
Payments on capital leases—
 (0.7) —
 —
 (0.7)
Payments on finance leases—
 (1.1) —
 —
 (1.1)
Payments for debt-related deferred costs(0.2) —
 —
 —
 (0.2)
Distributions to partners(120.0) —
 (3.3) —
 (123.3)(57.8) —
 (3.3) —
 (61.1)
Distributions to parent—
 —
 (37.8) 37.8
 —
Contributions from parent—
 —
 15.6
 (15.6) —
Taxes paid for unit-based compensation vesting—
 (6.9) —
 —
 (6.9)—
 (7.0) —
 —
 (7.0)
Change in intercompany balances95.1
 (95.1) —
 —
 —
82.3
 (82.3) —
 —
 —
Net cash provided by (used in) financing activities41.9
 (103.4) (41.1) 37.8
 (64.8)39.2
 (90.8) 12.3
 (15.6) (54.9)
                  
Net change in cash and restricted cash4.7
 —
 —
 —
 4.7
Cash and restricted cash at beginning of period1.0
 —
 —
 —
 1.0
Cash and restricted cash at end of period$5.7
 $—
 $—
 $—
 $5.7
Net change in cash(15.0) —
 —
 —
 (15.0)
Cash at beginning of period16.5
 —
 —
 —
 16.5
Cash at end of period$1.5
 $—
 $—
 $—
 $1.5



Note 15– Subsequent Event

In April 2020, we acquired several NGL storage and rail-to-truck liquid petroleum gas (LPG) terminals from Plains All American Pipeline, L.P. for approximately $160 million, in addition to final inventory adjustments pursuant to the purchase and sale agreement. These assets will be included in our marketing, supply and logistics segment.



4838
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and the accompanying footnotes and Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 20182019 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; (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 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, including our ability to raise capital through alternatives like joint ventures; and
the ability to sell or monetize assets, 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 1A. Risk Factors of our 20182019 Annual Report on Form 10-K.10-K and Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q.

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.


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In the first quarter of 2020, during a period of growing global and US oil supplies, OPEC and Russia failed to agree on a plan to cut production of oil and related commodities to balance the global oil markets. Commensurate with this excess global oil supply market condition, the COVID-19 pandemic caused an unprecedented decrease in global oil demand. Subsequently, Saudi Arabia announced plans to increase production and reduce the prices at which they sell oil. While OPEC, Russia, the United States and other oil and gas producing countries subsequently agreed to collectively decrease production, these events, combined with the impact that the COVID-19 pandemic have contributed to a significant decrease and volatility in prices for oil. The effect of these events was further exacerbated by a shortage in available storage for hydrocarbons in the U.S., which caused the prices for oil to further decrease dramatically in April 2020. The resulting low commodity price environment has adversely impacted U.S. producers and other companies in the energy industry.

Despite the recent decline in commodity prices and resulting market conditions, our long-term business strategy has not changed. We have, takenhowever, implemented a number of strategic stepsadjustments to better position the Company as a stronger, better capitalized company that can over time accretively grow cash flowsour operations and sustainably resume growingfinancial strategies in response to these market conditions, including (i) substantially reducing capital expenditures in response to lower development activity by our distributions. Those strategic steps included (i) simplifying our corporate structure to eliminate our incentive distribution rights (IDRs)gathering and create better alignment of interests with our unitholders;processing customers; (ii) divesting assets to reduce long-term debt to ensure long-term balance sheet strength; (iii) realigning our operating structureorganization to significantly reduce operating and administrative expenses; (iii) engaging with our customers to maintain volumes across our asset portfolio; (iv) forming strategic joint venturesoptimizing our storage, transportation and marketing assets to enhance our competitive position around certain operating assets;take advantage of regional commodity price volatility; and (v) focusingevaluating our acquisitionsdebt and growth capital expenditures on our highest return organic projects around our core growth assets in the Bakken Shale, Powder River Basinequity structure to preserve liquidity and Delaware Permian. We will remain focused on efficiently allocating capital expenditures by investing in accretive, organic growth projects, maintaining low-cost operations (through increased operating efficiencies and cost discipline) and maintaining ourensure balance sheet strength through continued financial discipline. We expect to focus on expansion and greenfield opportunities to provide midstream services for crude oil, natural gas, NGLs and produced water, including gathering, storage and terminalling, condensate stabilization, truck loading/unloading options and connections to third party pipelines and produced water gathering, disposal and recyclingduring this period of uncertainty in the Bakken Shale, Powder River Basinenergy and Delaware Permianfinancial markets. Given our efforts over the past few years to improve the partnership’s competitive position in the near term, while closely monitoring longer-term expansion opportunities in the northeast Marcellus. Asbusinesses we operate, manage costs and improve margins, create a result,strong balance sheet with financial flexibility and implement new operating standards consistent with our Environmental, Social and Governance program, we believe the Company is well positioned to execute its business plan and capitalize on improvingweather current market conditions.

The Company continues to be positioned to generate consistent resultsIn light of these events, we anticipate that the decrease in commodity prices will have a low commodity price environment without sacrificing revenue upside as market conditions improve. For example, manynegative impact on certain of our more mature G&P assets are supported by long-term, core acreage dedicationsgathering and processing segment’s customers. We expect this to result in shale playsreduced production volumes in our oil-weighted basins over the next six months and negatively impact our short-term gathering and processing segment results. We also believe that are economic to varying degrees based uponthe natural gas, crude and NGL storage and marketing operations in our storage and transportation and marketing, supply and logistics segments could benefit from the current shortage in available storage for hydrocarbons in the U.S. and the price volatility in the commodity markets caused by the current supply and demand imbalances for crude oil prices,and other commodities. In the availability of infrastructure to flow production tocurrent market and the operational and financial condition of our diverse customer base. In addition, a substantialenvironment, this could offset some portion of our midstream investments are based on fixed-fee or minimum volume commitment agreements that ensure a minimum levelthe negative impact of cash flow regardless of actuallower commodity prices or volumetric throughput. Over time, we expect cash flows fromon our more mature, non-core, assets to stabilizegathering and potentially increaseprocessing segment, resulting in our expectation that our full year 2020 results of operations will be relatively consistent with our consolidated results of operations in 2019, excluding the improving commodity price environment, while the growth fromimpairment of goodwill associated with our core assets in the Bakken Shale, Powder River Basin, Delaware Permian and northeast Marcellus drive significant growth to the Company.basin operations described in further detail below.

Business Highlights

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

Powder River Basin. On April 9, 2019, Crestwood Niobrara, our consolidated subsidiary, acquired Williams’ 50% equity interest in Jackalope for approximately $484.6 million. The acquisition of the remaining 50% equity interest in Jackalope was financed through a combination of borrowings under the CMLP credit facility and the issuance of $235 million in new preferred units to Jackalope Holdings. Crestwood Midstream Operations will provide field operations and construction management services for Jackalope. For a further discussion of the acquisition of the remaining 50% equity interest in Jackalope, see Item 1. Financial Statements, Notes 3 and 10.

In the Powder River Basin, our Jackalope system continues to benefit from increased drilling activity and better than anticipated well results. We are expanding the Jackalope gathering system and Bucking Horse processing plant to increase processing capacity to 345 MMcf/d in late 2019/early 2020. The Phase 2 Jackalope expansion also includes gathering, compression and a second processing plant which will add an additional 200 MMcf/d of processing capacity to the Jackalope system.

Bakken. In the Bakken, we are expanding and upgrading our Arrow system water handling facilities and increasingcompleted several capital projects to expand natural gas capacity on the Arrow gas gathering system and upgrade our Arrow produced water gathering system, disposal wells and handling facilities, which should allow for substantial growth in volumetric throughput across all ofus to better serve our crude oil, produced water and natural gas gathering systems. In addition, we are constructing a 120 MMcf/d cryogenic plant that we anticipate will be placed in-service in the third quarter of 2019 to fulfill 100% of the processing requirements for producers on the Arrow system upon expiration of third-party processing contracts in the third quarter 2019. Upon completion of the expansion, we expect to have 150 MMcf/d of gas processing capacity in the Bakken.customer needs. We believe the expansion of our gasArrow facilities, including the placing in service of the Bear Den II processing capacity on the Arrow system will, among other things, spur greater development activity around the Arrow system, allowplant in late 2019, allows us to provide greater flow assurance to our producer customers and reduce the flaring of natural gas and reduce the downstream constraints currently experienced by producers on the Fort Berthold Indian Reservation.

In response to several produced water releases on our Arrow system, over the past few years, during 2019, we removed approximately 30 miles of water gathering pipeline from service. We plan to continue replacing certain sections of our water gathering system with pipeline composed of higher capacity material that is more suitable for the environment and climate conditions in the Bakken. This capital project will increase water gathering capacity on the Arrow system and further our commitment to sustainability and environmental stewardship on the Fort Berthold Indian Reservation.

Delaware Permian.Powder River Basin. In the Delaware Permian,Powder River Basin, during the first quarter of 2020, we have identifiedplaced in-service the 200 MMcf/d expansion of our processing capacity at our Bucking Horse processing facility, which increased our processing capacity to 345 MMcf/d. In addition, we placed in-service two compressor stations with 18,750 horsepower and significantly expanded the gas gathering system to connect numerous wells that had been drilled and processing and transportation opportunities in and aroundcompleted by our existing assets, including our Crestwood Permian joint venture. Crestwood Permian Basin owns and operates the Nautilus system in SWEPI's operated position in the Delaware Permian, which will be constructed to ultimately include 194producer customers.


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miles of low pressure gathering lines, 36 miles of high pressure trunklines and centralized compression facilities whichDelaware Permian. In the Delaware Permian, through our Crestwood Permian joint venture, we are expandable over time as production increases, producingexpanded our gas gathering systems and continue to optimize processing volumes at our Orla processing plant. Additionally, in the second quarter of 2020, we completed construction and commenced operations of a produced water gathering and salt water disposal system pursuant to an agreement with a large integrated producer in Culberson and Reeves Counties, Texas. The initial system capacity is expected to be 60 MBbls/d with plans to expand up to 120 MBbls/d based on producer activity.

Marketing, Supply and Logistics. In April 2020, we acquired several NGL storage and rail-to-truck LPG terminals from Plains All American Pipeline, LP. The total purchase price was approximately $160 million, in addition to final inventory adjustments. These assets are complementary to our existing NGL assets, are located in high demand markets across the central and eastern United States and include 7 MMBbls of NGL storage and seven LPG. As a result of the acquisition, we now have approximately 250 MMcf/d.10 MMBbls of NGL and LPG storage capacity and 13 LPG terminals offering expanded propane and butane services to the market, as well as greater access to a wide range of NGL and LPG supplies from hubs, pipelines, refiners and processors.

Regulatory Matters

Our regulatory matters are discussed in our 20182019 Annual Report on Form 10-K and there have been no material changes in those matters from December 31, 20182019 to June 30, 2019.March 31, 2020.

Critical Accounting Estimates

Our critical accounting estimates are consistent with those described in our 20182019 Annual Report on Form 10-K. Below is an update of our critical accounting estimates related to goodwill, long-lived assets and equity method investments.

Goodwill

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

We estimate the fair value of our reporting units based on a number of factors, including discount rates, projected cash flows and the potential value we would receive if we sold the reporting unit. Estimating projected cash flows requires us to make certain assumptions as it relates to the future operating performance of each of our reporting units (which includes assumptions, among others, about estimating future operating margins and related future growth in those margins, contracting efforts and the cost and timing of facility expansions) and assumptions related to our customers, such as their future capital and operating plans and their financial condition. When considering operating performance, various factors are considered such as current and changing economic conditions and the commodity price environment, among others. Due to the imprecise nature of these projections and assumptions, actual results can and often do, differ from our estimates. If the assumptions embodied in the projections prove inaccurate, we could incur a future impairment charge. In addition, the use of the income approach to determine the fair value of our reporting units (see further discussion of the use of the income approach below) could result in a different fair value if we had utilized a market approach, or a combination thereof.

The following table summarizes the goodwill of our various reporting units (in millions):
   
Impairment during the
Three Months Ended
  
 December 31, 2019 March 31, 2020 March 31, 2020
Gathering and Processing     
Arrow$45.9
 $—
 $45.9
Powder River Basin80.3
 80.3
 —
Marketing, Supply and Logistics     
NGL Marketing and Logistics92.7
 —
 92.7
Total$218.9
 $80.3
 $138.6

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During the first quarter of 2020, current and forward commodity prices significantly declined from their levels at December 31, 2019 due primarily to the decreases in energy demand as a result of the outbreak of the COVID-19 pandemic and actions taken by the OPEC, Russia, the United States and other oil-producing countries relating to the oversupply of oil. We currently anticipate that the decrease in commodity prices will have a negative impact on certain of our customers in our gathering and processing segment, which could adversely impact the financial performance of certain of the reporting units within those operations.

Upon acquisition, we are required to record the assets, liabilities and goodwill of a reporting unit at its fair value on the date of acquisition. As a result, any level of decrease in the forecasted cash flows of these businesses or increases in the discount rates utilized to value those businesses from their respective acquisition dates would likely result in the fair value of the reporting unit falling below the carrying value of the reporting unit, and could result in an assessment of whether that reporting unit's goodwill is impaired.

We acquired our Powder River Basin reporting unit in 2019 and recorded it at fair value at that time. Based on the events that occurred during the first quarter of 2020 described above, we determined that the forecasted cash flows, and therefore the fair value of our Powder River Basin reporting unit significantly decreased during the three months ended March 31, 2020, and accordingly performed a quantitative impairment assessment of the goodwill related to that reporting unit as of March 31, 2020. Based on our quantitative assessment, which utilized the income approach, we determined that the goodwill associated with the Powder River Basin reporting unit should be fully impaired as of March 31, 2020, and accordingly recorded an $80.3 million impairment of the goodwill attributed to that reporting unit during the three months ended March 31, 2020.

We continue to monitor our goodwill associated with our Arrow and NGL Marketing and Logistics reporting units, and if we receive additional negative information about market conditions or the intent of our customers to further curtail production, it could negatively impact the forecasted cash flows or discount rates utilized to determine the fair value of those businesses. A 40% decrease in the forecasted cash flows related to our Arrow and NGL Marketing and Logistics reporting units would not have resulted in an impairment of either of these reporting units. A 5% increase in the discount rate utilized to determine the fair value of our Arrow and NGL Marketing and Logistics reporting units at December 31, 2019 would also not have resulted in an impairment of either of these reporting units.

Long-Lived Assets

Our long-lived assets consist of property, plant and equipment and intangible assets that have been obtained though multiple business combinations and property, plant and equipment that has been constructed in recent years. we continually monitor our business, the business environment and the performance of our operations to determine if an event has occurred that indicates that a long-lived asset may be impaired. If an event occurs, which is a determination that involves judgment, we may be required to utilize cash flow projections to assess our ability to recover the carrying value of our assets based on our long-lived assets’ ability to generate future cash flows on an undiscounted basis.

Projected cash flows of our long-lived assets are generally based on current and anticipated future market conditions, which require significant judgments to make projections and assumptions about pricing, demand, competition, operating costs, construction costs, legal and regulatory issues and other factors that may extend many years into the future and are often outside of our control. If those cash flow projections indicate that the long-lived asset’s carrying value is not recoverable, we record an impairment charge for the excess of the carrying value of the asset over its fair value. The estimate of fair value considers a number of factors, including the potential value we would receive if we sold the asset, discount rates and projected cash flows. Due to the imprecise nature of these projections and assumptions, actual results can and often do, differ from our estimates.

During the first quarter of 2020, current and forward commodity prices significantly declined from their levels at December 31, 2019 due primarily to the decreases in energy demand as a result of the outbreak of the COVID-19 pandemic and actions taken by the OPEC, Russia, the United States and other oil-producing countries relating to the oversupply of oil. We currently anticipate that the decrease in commodity prices could have a negative impact on certain of our customers in our gathering and processing segment, which could adversely impact the financial performance of certain of the reporting units within those operations. Although we currently anticipate that the decline in commodity prices have not decreased the forecasted financial performance of our operations to where the undiscounted cash flows to be generated by our long-lived asset groups have fallen below the carrying value of those long-lived asset groups, we continue to monitor our long-lived assets, and we could experience impairments of the carrying value of our long-lived assets in the future if we receive additional negative information about market conditions or the intent of our long-lived assets’ customers, which could negatively impact the forecasted cash flows utilized to determine the recoverability of those assets.


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As noted above, during the three months ended March 31, 2020, we recorded an impairment of the goodwill associated with our Powder River Basin reporting unit. The impairment of goodwill is different than our evaluation of the potential impairment of the long-lived assets of a reporting unit, because when we perform an assessment of the recoverability of goodwill, we utilize fair value estimates that primarily utilize discounted cash flows in the estimation process (as described above), and accordingly a reporting unit that has experienced a goodwill impairment may not experience a similar impairment of the underlying long-lived assets included in that reporting unit. As a result, we did not record any material impairments of our property, plant and equipment and intangible assets during the three months ended March 31, 2020. Furthermore, a 40% decrease in the forecasted cash flows of our Powder River Basin reporting unit at March 31, 2020 would not have resulted in a long-lived asset impairment.

Equity Method Investments

We evaluate our equity method investments for impairment when events or circumstances indicate that the carrying value of the equity method investment may be impaired and that impairment is other than temporary. If an event occurs, we evaluate the recoverability of our carrying value based on the fair value of the investment. If an impairment is indicated, we adjust the carrying values of the asset downward, if necessary, to their estimated fair values.

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

During the first quarter of 2020, current and forward commodity prices significantly declined from their levels at December 31, 2019 due primarily to the decreases in energy demand as a result of the outbreak of the COVID-19 pandemic and actions taken by the OPEC, Russia, the United States and other oil-producing countries relating to the over supply of oil. We currently anticipate that the decrease in commodity prices could have a negative impact on certain of the customers of our equity-method investments, which could adversely impact the financial performance of certain of those investments. Although we currently anticipate that the decline in commodity prices have not decreased the fair value of our equity investments below their carrying value and any such decline would be considered other than temporary, we continue to monitor our equity method investments (especially those with gathering and processing operations such as our Crestwood Permian equity method investment), If we receive additional negative information about market conditions or the intent of our equity method investments’ customers to curtail production in the future that negatively impacts the forecasted cash flows or discount rates utilized to determine the fair value of those investments, we could experience impairments to the carrying value of these investments.

Our equity method investments have long-lived assets, intangible assets, goodwill and equity method investments in their underlying financial statements, and our equity investees apply similar accounting policies and have similar critical accounting estimates in assessing those assets for impairment as we do. During the three months ended March 31, 2020, we recorded a $4.5 million reduction to the equity earnings from our PRBIC equity method investment as a result of us recording our proportionate share of a long-lived asset impairment recorded by the equity method investment, reducing our carrying value of our PRBIC equity method investment to $3.7 million at March 31, 2020. None of our other equity method investments recorded any material impairments during the three months ended March 31, 2020.

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’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 interest and debt expense, net and depreciation, amortization and accretion expense. Adjusted EBITDA considers the adjusted

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earnings impact of our unconsolidated affiliates by adjusting our equity earnings or losses from our unconsolidated affiliates to reflect our proportionate share (based on the distribution percentage) of their EBITDA, excluding impairments. Adjusted EBITDA also considers the impact of certain significant items, such as unit-based compensation charges, gains or losses on long-lived assets, gains on acquisitions,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 the realignment and restructuring of our Marketing, Supply and Logistics and Corporate operations, and other transactions identified in a specific reporting period. The change in fair value of commodity inventory-related derivative contracts is considered in determining Adjusted EBITDA given that the 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.


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Results of Operations

The following tables summarize our results of operations for the three and six months ended June 30,March 31, 2020 and 2019 and 2018 (in millions):
Crestwood Equity Crestwood MidstreamCrestwood Equity Crestwood Midstream
Three Months Ended Six Months Ended Three Months Ended Six Months EndedThree Months Ended Three Months Ended
June 30, June 30, June 30, June 30,March 31, March 31,
2019 2018 2019 2018 2019 2018 2019 20182020 2019 2020 2019
Revenues$683.4
 $840.5
 $1,518.6
 $1,955.5
 $683.4
 $840.5
 $1,518.6
 $1,955.5
$727.9
 $835.2
 $727.9
 $835.2
Costs of product/services sold537.2
 725.4
 1,232.8
 1,691.2
 537.2
 725.4
 1,232.8
 1,691.2
534.4
 695.6
 534.4
 695.6
Operations and maintenance expense34.7
 31.9
 63.3
 66.4
 34.7
 31.9
 63.3
 66.4
37.6
 28.6
 37.6
 28.6
General and administrative expense22.3
 23.4
 59.5
 47.3
 20.9
 22.5
 56.9
 45.3
14.9
 37.2
 13.5
 36.0
Depreciation, amortization and accretion49.3
 44.5
 89.1
 89.6
 52.7
 47.4
 96.1
 95.2
56.1
 39.8
 59.6
 43.4
Loss on long-lived assets, net—
 (24.4) (2.0) (24.1) —
 (24.4) (2.0) (24.1)1.0
 2.0
 1.0
 2.0
Gain on acquisition209.4
 —
 209.4
 —
 209.4
 —
 209.4
 —
Operating income (loss)249.3
 (9.1) 281.3
 36.9
 247.3
 (11.1) 276.9
 33.3
Goodwill impairment80.3
 —
 80.3
 —
Operating income3.6
 32.0
 1.5
 29.6
Earnings from unconsolidated affiliates, net3.7
 12.0
 10.6
 24.4
 3.7
 12.0
 10.6
 24.4
5.5
 6.9
 5.5
 6.9
Interest and debt expense, net(27.8) (24.3) (52.7) (48.7) (27.8) (24.3) (52.7) (48.7)(32.6) (24.9) (32.6) (24.9)
Other income, net0.1
 0.1
 0.2
 0.2
 —
 —
 —
 —
0.1
 0.1
 —
 —
Provision for income taxes(0.3) (0.2) (0.3) (0.2) (0.3) (0.1) (0.3) (0.1)
Net income (loss)225.0
 (21.5) 239.1
 12.6
 222.9
 (23.5) 234.5
 8.9
(23.4) 14.1
 (25.6) 11.6
Add:                      
Interest and debt expense, net27.8
 24.3
 52.7
 48.7
 27.8
 24.3
 52.7
 48.7
32.6
 24.9
 32.6
 24.9
Provision for income taxes0.3
 0.2
 0.3
 0.2
 0.3
 0.1
 0.3
 0.1
Depreciation, amortization and accretion49.3
 44.5
 89.1
 89.6
 52.7
 47.4
 96.1
 95.2
56.1
 39.8
 59.6
 43.4
EBITDA302.4
 47.5
 381.2
 151.1
 303.7
 48.3
 383.6
 152.9
65.3
 78.8
 66.6
 79.9
Unit-based compensation charges11.3
 10.3
 28.6
 17.5
 11.3
 10.3
 28.6
 17.5
(4.4) 17.3
 (4.4) 17.3
Loss on long-lived assets, net—
 24.4
 2.0
 24.1
 —
 24.4
 2.0
 24.1
1.0
 2.0
 1.0
 2.0
Gain on acquisition(209.4) —
 (209.4) —
 (209.4) —
 (209.4) —
Goodwill impairment80.3
 —
 80.3
 —
Earnings from unconsolidated affiliates, net(3.7) (12.0) (10.6) (24.4) (3.7) (12.0) (10.6) (24.4)(5.5) (6.9) (5.5) (6.9)
Adjusted EBITDA from unconsolidated affiliates, net14.0
 21.9
 33.6
 44.0
 14.0
 21.9
 33.6
 44.0
19.3
 19.6
 19.3
 19.6
Change in fair value of commodity inventory-related derivative contracts3.7
 10.1
 4.8
 (10.1) 3.7
 10.1
 4.8
 (10.1)(5.8) 1.1
 (5.8) 1.1
Significant transaction and environmental related costs and other items3.0
 0.7
 6.4
 2.4
 3.0
 0.7
 6.4
 2.4
1.2
 3.4
 1.2
 3.4
Adjusted EBITDA$121.3
 $102.9
 $236.6
 $204.6
 $122.6
 $103.7
 $239.0
 $206.4
$151.4
 $115.3
 $152.7
 $116.4

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Crestwood Equity Crestwood MidstreamCrestwood Equity Crestwood Midstream
Three Months Ended Six Months Ended Three Months Ended Six Months EndedThree Months Ended Three Months Ended
June 30, June 30, June 30, June 30,March 31, March 31,
2019 2018 2019 2018 2019 2018 2019 20182020 2019 2020 2019
Net cash provided by operating activities$63.0
 $11.3
 $193.9
 $160.0
 $64.2
 $13.0
 $195.1
 $164.4
$119.2
 $130.9
 $115.8
 $130.9
Net changes in operating assets and liabilities17.8
 48.7
 (35.0) (12.8) 18.0
 47.9
 (33.9) (15.2)(3.7) (52.8) 1.2
 (51.9)
Amortization of debt-related deferred costs(1.5) (1.8) (2.9) (3.6) (1.5) (1.8) (2.9) (3.6)(1.6) (1.4) (1.6) (1.4)
Interest and debt expense, net27.8
 24.3
 52.7
 48.7
 27.8
 24.3
 52.7
 48.7
32.6
 24.9
 32.6
 24.9
Unit-based compensation charges(11.3) (10.3) (28.6) (17.5) (11.3) (10.3) (28.6) (17.5)4.4
 (17.3) 4.4
 (17.3)
Loss on long-lived assets, net—
 (24.4) (2.0) (24.1) —
 (24.4) (2.0) (24.1)(1.0) (2.0) (1.0) (2.0)
Gain on acquisition209.4
 —
 209.4
 —
 209.4
 —
 209.4
 —
Goodwill impairment(80.3) —
 (80.3) —
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received(3.0) (0.4) (6.3) 0.2
 (3.0) (0.4) (6.3) 0.2
(4.5) (3.3) (4.5) (3.3)
Deferred income taxes(0.1) —
 (0.3) 0.2
 (0.2) —
 (0.2) 0.1
0.2
 (0.2) —
 —
Provision for income taxes0.3
 0.2
 0.3
 0.2
 0.3
 0.1
 0.3
 0.1
Other non-cash income—
 (0.1) —
 (0.2) —
 (0.1) —
 (0.2)
EBITDA302.4
 47.5
 381.2
 151.1
 303.7
 48.3
 383.6
 152.9
65.3
 78.8
 66.6
 79.9
Unit-based compensation charges11.3
 10.3
 28.6
 17.5
 11.3
 10.3
 28.6
 17.5
(4.4) 17.3
 (4.4) 17.3
Loss on long-lived assets, net—
 24.4
 2.0
 24.1
 —
 24.4
 2.0
 24.1
1.0
 2.0
 1.0
 2.0
Gain on acquisition(209.4) —
 (209.4) —
 (209.4) —
 (209.4) —
Goodwill impairment80.3
 —
 80.3
 —
Earnings from unconsolidated affiliates, net(3.7) (12.0) (10.6) (24.4) (3.7) (12.0) (10.6) (24.4)(5.5) (6.9) (5.5) (6.9)
Adjusted EBITDA from unconsolidated affiliates, net14.0
 21.9
 33.6
 44.0
 14.0
 21.9
 33.6
 44.0
19.3
 19.6
 19.3
 19.6
Change in fair value of commodity inventory-related derivative contracts3.7
 10.1
 4.8
 (10.1) 3.7
 10.1
 4.8
 (10.1)(5.8) 1.1
 (5.8) 1.1
Significant transaction and environmental related costs and other items3.0
 0.7
 6.4
 2.4
 3.0
 0.7
 6.4
 2.4
1.2
 3.4
 1.2
 3.4
Adjusted EBITDA$121.3
 $102.9
 $236.6
 $204.6
 $122.6
 $103.7
 $239.0
 $206.4
$151.4
 $115.3
 $152.7
 $116.4

Segment Results

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

 Three Months Ended Three Months Ended
 June 30, 2019 June 30, 2018
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Gathering and Processing Storage and Transportation Marketing, Supply and Logistics
Revenues$199.7
 $4.9
 $478.8
 $255.5
 $5.1
 $579.9
Intersegment revenues25.4
 3.2
 (28.6) 45.4
 2.5
 (47.9)
Costs of product/services sold108.9
 —
 428.3
 208.8
 0.1
 516.5
Operations and maintenance expenses24.6
 0.9
 9.2
 17.8
 0.8
 13.3
Loss on long-lived assets, net(0.2) —
 —
 —
 —
 (24.4)
Gain on acquisition209.4
 —
 —
 —
 —
 —
Earnings (loss) from unconsolidated affiliates, net(2.8) 6.5
 —
 4.5
 7.5
 —
EBITDA$298.0
 $13.7
 $12.7
 $78.8
 $14.2
 $(22.2)


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Six Months Ended Six Months EndedThree Months Ended Three Months Ended
June 30, 2019 June 30, 2018March 31, 2020 March 31, 2019
Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Gathering and Processing Storage and Transportation Marketing, Supply and LogisticsGathering and Processing Storage and Transportation Marketing, Supply and Logistics Gathering and Processing Storage and Transportation Marketing, Supply and Logistics
Revenues$382.0
 $12.7
 $1,123.9
 $595.8
 $9.3
 $1,350.4
$214.9
 $3.5
 $509.5
 $182.3
 $7.8
 $645.1
Intersegment revenues78.2
 6.8
 (85.0) 86.7
 4.5
 (91.2)40.0
 2.6
 (42.6) 52.8
 3.6
 (56.4)
Costs of product/services sold246.9
 —
 985.9
 496.5
 0.2
 1,194.5
108.3
 0.2
 425.9
 138.0
 —
 557.6
Operations and maintenance expenses42.7
 1.9
 18.7
 35.5
 1.6
 29.3
27.0
 1.4
 9.2
 18.1
 1.0
 9.5
Gain (loss) on long-lived assets, net(2.0) —
 (0.2) 0.1
 —
 (24.2)
Gain on acquisition209.4
 —
 —
 —
 —
 —
Loss on long-lived assets, net(1.0) —
 —
 (1.8) —
 (0.2)
Goodwill impairment(80.3) —
 —
 —
 —
 —
Earnings (loss) from unconsolidated affiliates, net(3.0) 13.6
 —
 10.2
 14.2
 —
0.8
 4.7
 —
 (0.2) 7.1
 —
EBITDA$375.0
 $31.2
 $34.1
 $160.8
 $26.2
 $11.2
$39.1
 $9.2
 $31.8
 $77.0
 $17.5
 $21.4

Below is a discussion of the factors that impacted EBITDA by segment for the three and six months ended June 30, 2019March 31, 2020 compared to the same periodsperiod in 2018.2019.

Gathering and Processing

EBITDA for our gathering and processing segment increaseddecreased by approximately $219.2 million and $214.2$37.9 million during the three and six months ended June 30, 2019March 31, 2020 compared to the same periodsperiod in 2018. Our2019. The comparability of our gathering and processing segment’s EBITDA was impacted by a $209.4 million gain recorded during the three months ended June 30, 2019 whichMarch 31, 2020 was impacted by an $80.3 million goodwill impairment related to the acquisitionour Jackalope

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Table of the remaining 50% equity interest in Jackalope. See Item. Financial Statements, Note 3 forContents


operations. For a further discussion of the Jackalope Acquisition.this goodwill impairment, see “Critical Accounting Estimates” above and Part I, Item 1. Financial Statements, Note 2.

In April 2019, Crestwood Niobrara acquired the remaining 50% equity interest in Jackalope from Williams, and as a result, we began reflecting 100% of the operating results of Jackalope in our operating results. During the three and six months ended June 30, 2019, we recognized revenues of approximately $20.2 million related to our Jackalope operations. Our gathering and processing segment’s revenues (excluding the impact related to our Jackalope operations) decreasedincreased by approximately $96.0 million and $242.5$19.8 million during the three and six months ended June 30, 2019March 31, 2020 compared to the same periodsperiod in 2018,2019, while our costs of product/services sold decreased by approximately $99.9$29.7 million period over period. The increase in our gathering and $249.6 million during those same periods. The remaining variances wereprocessing segment’s revenues was primarily driven by our consolidated Jackalope operations which contributed approximately $27.5 million of operating revenues during the three months ended March 31, 2020. In April 2019, we acquired the remaining 50% equity interest in Jackalope, and as a result, we began consolidating Jackalope’s operating results from the date of acquisition.

During the three months ended March 31, 2020, our Arrow operations which experienced lower average prices on its agreements under which it purchases and sells crude oil as a result of the continued decrease in crude oil prices during the three and six month ended June 30, 2019 compared to the same periodsperiod in 2018.2019. Our costs of product/services sold decreased faster than our revenues period over period due to the offsetting impact of increasing volumes, which during the sixthree months ended June 30, 2019,March 31, 2020, natural gas, crude oil and water volumes gathered by our Arrow system increased by 17%59%, 16%39% and 45%59%, respectively, compared to the same periodthree months ended March 31, 2019. In August 2019, Arrow placed in 2018.service a 120 MMcf/d cryogenic plant and as a result, Arrow experienced a 251% increase in its processing volumes during the three months ended March 31, 2020 compared to the three months ended March 31, 2019. We currently anticipate that our crude oil, natural gas and water gathering volumes on our Arrow and Jackalope operations will decrease during the three months ended June 30, 2020 compared to the volumes during the three months ended March 31, 2020 due to the impact of the events described in more detail in Outlook and Trends above.

Our gathering and processing segment’s operations and maintenance expenses increased by approximately $7$8.9 million during both the three and six months ended June 30, 2019March 31, 2020 compared to the same periodsperiod in 20182019, primarily due to the acquisition of the remaining 50% equity interest in Jackalope Acquisition.in April 2019. In addition, our gathering and processing segment’s operations and maintenance increased due to placing the Bear Den and Bucking Horse processing plants into service during 2019 and early 2020.

Our gathering and processing segment’s EBITDAsegment was also impacted by a decreasean increase in earnings from unconsolidated affiliates of approximately $7.3 million and $13.2$1.0 million during the three and six months ended June 30, 2019 compared to the same periods in 2018. The decrease was primarily driven by a $4.0 million and $10.1 million decrease in equity earnings from Crestwood Permian resulting from lower average prices on certain of its gathering contracts due to higher transportation and fractionation fees during the first half of 2019March 31, 2020 compared to the same period in 2018, and lower gathering and processing volumes due to producer well shut-ins2019. Equity earnings from our Crestwood Permian equity investment increased by $4.2 million during the second quarter ofthree months ended March 31, 2020. During the three months ended March 31, 2019, that resulted from declining regional natural gas prices. Also impacting the decrease in equity earnings from Crestwood Permian wasrecorded a loss of approximately $2.3 million on the retirement of certain of its gathering and processing assets and an increase in its depreciation, amortization and accretion expense due to placing its Orla processing plant into service in mid-2018. Our gathering and processing segment also experienced lower equitylong-lived assets. Equity earnings from our Jackalope ofequity investment decreased by approximately $3$3.2 million during both the three and six months June 30, 2019ended March 31, 2020 compared to 2018the same period in 2019, due to the acquisition of the remaining 50% equity interest in Jackalope from Williams in April 2019.


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Storage and Transportation

EBITDA for our storage and transportation segment decreased by $0.5approximately $8.3 million during the three months ended June 30, 2019March 31, 2020 compared to the same period in 2018, while we experienced an increase in EBITDA of2019. Revenues from our COLT Hub operations decreased by approximately $5.0$5.3 million during the sixthree months ended June 30, 2019March 31, 2020 compared to the same period in 2018. Revenues from our COLT Hub operations increased by $0.5 million and $5.7 million during2019. During the three and six months ended June 30, 2019 compared to the same periods in 2018. During the six months ended June 30,March 31, 2019, we recognized approximately $4.9$4.0 million of revenues under a take-or-pay contract with one of our rail loading customers that expireswhich expired in 2019. In addition, duringRevenues from our COLT Hub operations also decreased due to the renewal of several rail loading and storage contracts at lower rates in late 2019 and early 2020.

During the three and six months ended June 30, 2019,March 31, 2020, COLT’s rail loading volumes increased by 38% and 49%4% compared to the same periodsperiod in 20182019 due to higher demand for rail loading services resulting from higher Bakken crude oil production and higher basis differentials between the Bakken and the U.S. western and eastern markets.

Ourwhich resulted in an increase in our storage and transportation segment’s costs of product/services sold and operations and maintenance expenses were relatively flat during the threeexpense of approximately $0.2 million and six months ended June 30, 2019 compared to the same periods in 2018.$0.4 million, respectively.

Our storage and transportation segment’s EBITDA was also impacted by a net decrease in earnings from unconsolidated affiliates during the three and six months ended June 30, 2019 compared to the same periods in 2018.of approximately $2.4 million. Earnings from our Stagecoach Gas equity investment decreased by $0.6 million during the three months ended June 30, 2019 compared to the same period in 2018 due to the renewal of certain of its storage contracts at lower rates given market conditions in the Northeast, while our earnings from Stagecoach Gas increased by $0.7 million during the six months ended June 30, 2019 compared to the same period in 2018 due to our share its equity earnings increasing from 35% to 40% effective July 1, 2018. Effective July 1, 2019, our equity earnings from Stagecoach Gas will be allocated based on our ownership percentage, which is currently 50%. During the three and six months ended June 30, 2019, equity earnings from our PRBIC equity investment decreased by approximately $0.5$4.4 million and $1.2during the three months ended March 31, 2020 compared to the same period in 2019. During the three months ended March 31, 2020, we recorded a $4.5 million reduction in earnings from PRBIC to reflect our proportionate share of a long-lived asset impairment recorded by our PRBIC equity investment. Earnings from our Stagecoach Gas equity investment increased by approximately $2.2 million primarily due to the expiration of a rail loading contract with oneour share of its customersequity earnings increasing from 40% to 50% effective July 1, 2019. Aside from this change in mid-2018.earnings percentage, our earnings from our Stagecoach Gas equity investment were relatively flat. This was due to demand for the natural gas storage and transportation services provided by Stagecoach Gas being relatively flat given that the Northeast market for natural gas in which Stagecoach Gas operates is experiencing declining natural gas prices

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and basis differentials, offset by an increase in producer activity and lack of new infrastructure being built, which is keeping the demand for Stagecoach Gas’s storage and transportation services relatively stable.

Marketing, Supply and Logistics

EBITDA for our marketing, supply and logistics segment increased by approximately $34.9 million and $22.9$10.4 million during the three and six months ended June 30, 2019March 31, 2020 compared to the same periodsperiod in 2018. The comparability of our2019. Our marketing, supply and logistics segment’s EBITDA period over period was impactedcosts of product/services decreased by a $24.4 million loss on sale of long-lived assets recorded during the second quarter of 2018 primarily related to the sale of our West Coast facilities. In addition, our marketing, supply and logistics segment’s EBITDA was also impacted by lower revenues of approximately $81.8 million and $220.3$131.7 million during the three and six months ended June 30, 2019 and lower costs of product/services sold of approximately $88.2 million and $208.6 million during those same periods.

Our marketing, supply and logistics results for the three and six months ended June 30, 2019 were impacted by the sale of our West Coast assets in late 2018, which resulted in lower revenues of approximately $49.3 million and $147.5 million and lower costs of product/services sold of approximately $47.4 million and $137.4 millionMarch 31, 2020 compared to the same periodsperiod in 2018. In addition, the sale of the West Coast assets was the primary driver for the lower operations and maintenance expenses of2019, while our revenues decreased by approximately $4.1 million and $10.6 million during the three and six months ended June 30, 2019 compared to the same periods in 2018.$121.8 million.

Our NGL marketing and logistics operations (other than West Coast) experienced a reduction in its revenues during the three and six months ended June 30, 2019 of approximately $67.3 million and $198.1 million compared to the same periods in 2018 and a reduction in its costs of product/services sold of approximately $72.4$82.8 million and $186.9$95.1 million, respectively, during thosethe three months ended March 31, 2020 compared to the same periodsperiod in 2019, primarily as a result of decreasing NGL prices. During the first quarter of 2020, NGL prices decreased due to a combination of record high NGL production and constrained NGL infrastructure. These market conditions allowed ourOur NGL marketing and logistics operationsoperations’ costs of product/services sold decreased more than its revenues as we experienced an increase in our NGL marketing activity, as we continued to utilize our trucking, railtake advantage of market disruptions and storage assetslow NGL prices to economically source seasonal inventory and create strong margin for delivery into forward markets, duringand the quarter ended June 30, 2019.constrained NGL infrastructure increased demand for our storage, terminalling and transportation assets. Included in our costs of product/services sold was a gain of approximately $9.9 million and $7.0$22.0 million during the three and six months ended June 30, 2019,March 31, 2020 and a loss of approximately $6.4 million and a gain of approximately $1.4$2.9 million during the three and six months ended June 30, 2018March 31, 2019 related to the change in fair value of our derivative instruments.commodity-based derivatives.

Our crude and natural gas marketing operations experienced an increasea decrease in its revenues and product costs of approximately $34.8$39.0 million and $125.3$36.6 million, during the three and six months ended June 30, 2019 comparedrespectively. These decreases were driven by lower average sales prices to the same periods in 2018, and an increase in its costs of product/services sold of approximately $31.6 million and $115.7 million during those same periods. These increases were drivenour customers due to lower commodity prices, partially offset by higher crude marketing volumes due to increased marketing activity surrounding our crude-related operations.

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Other EBITDA Results

General and Administrative Expenses. During the sixthree months ended June 30, 2019,March 31, 2020, our general and administrative expenses increaseddecreased by approximately $12$22 million compared to the same period in 2018, primarily due to an increase in unit-based compensation charges based on the acceleration of certain awards due to the Corporate restructuring that occurred in early 2019, higher average awards outstanding under our long-term incentive plans and the impact of higher allocations of unit-based compensation costs from Crestwood Holdings. General and administrative expenses were approximately $2 million lower during2019. During the three months ended June 30, 2019 compared toMarch 31, 2020, we were allocated less unit-based compensation charges from Crestwood Holdings as a result of the same periodimpact of the decrease in 2018 primarily due to ongoing cost-reduction efforts, including the Corporate restructuring mentioned above.market price for Crestwood Equity’s common units.

Items not affecting EBITDA include the following:

Depreciation, Amortization and Accretion Expense. During the three months ended June 30, 2019,March 31, 2020, our depreciation, amortization and accretion expense increased by approximately $5$16 million compared to the same period in 2018,2019, primarily due to the Jackalope Acquisition partially offset by the saleacquisition of the West Coast assetsremaining 50% equity interest in late 2018.Jackalope in April 2019.

Interest and Debt Expense, Net. During the both three and six months ended June 30, 2019,March 31, 2020, interest and debt expense, net increased by approximately $4$7.7 million compared to the same periodsperiod in 20182019, primarily due to the issuance of the$600 million unsecured senior notes due 2027 Senior Notes in April 2019, and higherpartially offset by lower average outstanding balancesinterest rates on borrowings under our credit facility that were primarily utilized to fund growth capital expenditures during the first half of 2019.facility.

The following table provides a summary of interest and debt expense (in millions):
Three Months Ended Six Months EndedThree Months Ended
June 30, June 30,March 31,
2019 2018 2019 20182020 2019
Credit facility$5.7
 $5.4
 $13.6
 $10.4
$6.4
 $7.9
Senior notes25.2
 18.2
 43.3
 36.3
26.6
 18.1
Other debt-related costs1.6
 1.8
 3.2
 3.6
1.8
 1.6
Gross interest and debt expense32.5
 25.4
 60.1
 50.3
34.8
 27.6
Less: capitalized interest4.7
 1.1
 7.4
 1.6
2.2
 2.7
Interest and debt expense, net$27.8
 $24.3
 $52.7
 $48.7
$32.6
 $24.9


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Liquidity and Sources of Capital

Crestwood Equity is a holding company that derives all of its operating cash flow from its operating subsidiaries.  Our principal sources of liquidity include cash generated by operating activities from our subsidiaries, distributions from our joint ventures, borrowings under the CMLPCrestwood Midstream credit facility, and sales of equity and debt securities. Our equity investments use cash from their respective operations to fund their operating activities, maintenance and growth capital expenditures, and service their outstanding indebtedness.

The COVID-19 pandemic’s impact on global crude oil demand and corresponding supply and demand imbalances have created significant near-term challenges for the energy industry including record low commodity prices, production declines and temporary shut-ins for producers in every major basin across North America. We are aggressively responding to these extraordinary market events by canceling or delaying capital projects, substantially reducing operating and administrative costs, optimizing our storage assets and working closely with our customers to maintain volumes across our diversified asset portfolio. Through these steps, combined with the steps we have taken over the past few years, 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 quarterly distributions to our common unitholders within approximately 45 days after the end of each fiscal quarter in an aggregate amount equal to our available cash for such quarter. We also pay quarterly cash quarterly distributions of approximately $15 million to our preferred unitholders and quarterly cash distributions of approximately $9 million to ourCrestwood Niobrara’s non-controlling partner. We believe our operating cash flows will well exceed cash distributions to our partners, preferred unitholders and non-controlling partner, at current levels, and as a result, we will have substantialadequate operating cash flows as a source of liquidity for our growth capital expenditures.

InOn April 2019, Crestwood Niobrara acquired Williams’ 50% equity interest in Jackalope for approximately $484.6 million. The acquisition16, 2020, we declared a quarterly cash distribution of the remaining 50% equity interest in Jackalope$0.625 per unit to our common unitholders, which will be paid on May 15, 2020 and was funded through a combination of borrowings under the CMLP credit facility and the issuance of $235 million of new preferred units to Jackalope Holdings. Contemporaneously with the closing of the remaining interest in Jackalope, Crestwood Midstream entered into the First Amendment to the Second Amended and Restated Credit Agreement to modify certain defined terms and calculations, among other things, to account for the Jackalope acquisition. The other debt covenants under the amended credit agreement are materially consistent with the credit facilitydistribution paid in February 2020. Based on the impact that existedthe recent decline in commodity prices has had and could continue to have on our customers and our financial performance in future quarters, our Board of Directors will be evaluating the level of distributions to our common and preferred unitholders. The Board of Directors will consider a wide range of strategic, commercial, operational and financial factors, including current and projected operating cash flows and liquidity needs and the potential adverse impact of future distributions reductions on our common unitholders, including our general partner. The evaluation will also include a review of the potential for an event of default of the debt of Crestwood Holdings, which could result in a change in control at December 31, 2018.

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Crestwood Holdings and, accordingly, in us, which is further described in Part II, Item 1A. Risk Factors.

As of June 30, 2019,March 31, 2020, we had $655.7$636.0 million of available capacity under the Crestwood Midstream credit facility considering the most restrictive debt covenants in the credit agreement. As of June 30, 2019,March 31, 2020, we were in compliance with all of our debt covenants applicable to the credit facility and senior notes.

In April 2019, Crestwood Midstream issued $600 million of 5.625% unsecured senior notes due 2027. The net proceeds from this offering of approximately $591.1 million were used to repay a portion of the outstanding borrowings under the CMLP credit facility, which included approximately $250 million of borrowings that were used to fund the acquisition of the remaining 50% equity interest in Jackalope.

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’s cash flows by category (in millions):
Six Months EndedThree Months Ended
June 30,March 31,
2019 20182020 2019
Net cash provided by operating activities$193.9
 $160.0
$119.2
 $130.9
Net cash used in investing activities$(684.0) $(94.9)$(83.3) $(91.0)
Net cash provided by (used in) financing activities$475.0
 $(60.3)
Net cash used in financing activities$(56.4) $(55.3)


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Operating Activities

Our operating cash flows increaseddecreased by approximately $33.9$11.7 million during the sixthree months ended June 30, 2019March 31, 2020 compared to the same period in 2018. The increase was2019. During the three months ended March 31, 2020, our operating revenues decreased by approximately $107.3 million, while our costs of product services/sold decreased by approximately $161.2 million compared to the same period in 2019. These decreases were primarily driven by our marketing, supply and logistics operations discussed in Results of Operations above. We also experienced an increase in our gatheringoperations and processing segment’s revenuesmaintenance expenses of approximately $20.2$9.0 million relatedduring the three months ended March 31, 2020 compared to our Jackalope operations as a result ofthe same period in 2019, primarily due to the acquisition of the remaining 50% equity interest in Jackalope as discussed above in Segment Results.April 2019. Our interest and debt expense, net increased by approximately $7.7 million during the three months ended March 31, 2020 compared to the same period in 2019 due to the issuance of $600 million of senior notes in April 2019. In addition, the decrease in net operating cash flows was also impacted by a $49.1 million reduction in net cash inflow from working capital requirements, primarily from our marketing, supply and logistics operations.

Investing Activities

Acquisition. On April 9, 2019, Crestwood Niobrara acquired Williams’ 50% equity interest in Jackalope for approximately $462.1 million, net of cash acquired of approximately $22.5 million. See Item 1. Financial Statements, Note 3 for a further discussion of this acquisition.

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.

Adjusting forAs a part of our strategic plan to address the acquisitioncurrent downturn in commodity prices, we have reduced our projection of the remaining 50% equity interest in Jackalope, we currently estimate that our growth capital expenditures during 2019 will beto approximately $425$140 million to $475 million. We anticipate that$160 million for 2020, and our growthprojection of maintenance capital expenditures to approximately $10 million to $15 million and reimbursable capital expenditures to $15 million and $25 million, respectively for 2020. Our growth capital expenditures to be spent over the remainder of 2019the year will increase the services we can provide to our customersbe primarily focused on completing in-progress water and the operating efficiencies of our systems.gas gathering and processing projects and well connections. We expect to finance our capital expenditures with a combination of cash generated by our operating subsidiaries, distributions received from our equity investments and borrowings under our credit facility.

We have identified growth capital project opportunities for our reporting segments. Additional commitments or expenditures will be made at our discretion, and any discontinuation of the construction of these projects will likely result in less future cash flows and earnings. The following table summarizes our capital expenditures for the sixthree months ended June 30, 2019March 31, 2020 (in millions).:

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Growth capital$172.5
$77.0
Maintenance capital7.4
3.0
Other (1)
24.8
6.8
Purchases of property, plant and equipment$204.7
$86.8

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

Investments in Unconsolidated Affiliates. During the sixthree months ended June 30,March 31, 2020 and 2019, we contributed approximately $10.0$6.0 million and $6.3 million to our Tres Palacios equity investment for its operating purposes. During the three months ended March 31, 2019, we contributed approximately $7.5 million to our Crestwood Permian equity investment primarily to fund itstis expansion projects and contributed $6.5 million to our Tres Holdings and PRBIC equity investments for other operating purposes.projects. We also contributed approximately $24.4 million to our Jackalope equity investment prior to our acquisition of the remaining 50% equity interest in Jackalope from Williams, and this contribution was primarily utilized by us after itsJackalope’s consolidation to fund Jackalope’s consolidatedits growth capital expenditures. See Item 1. Financial Statements, Note 3 for a further discussion


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Financing Activities

Significant items impactingThe following equity and debt transactions impacted our financing activities during the sixthree months ended June 30, 2019March 31, 2020, included the following::

Equity and Debt Transactions

During the sixthree months ended June 30, 2019, Crestwood Niobrara issued $235 million in new Series A-3 Preferred UnitsMarch 31, 2020, distributions to Jackalope Holdings in conjunction with Crestwood Niobrara’s acquisition of the remaining 50% equity interest in Jackalope from Williams. For a further discussion of this transaction, see Item 1. Financial Statements, Note 10;

During the six months ended June 30, 2019 and 2018, we distributed approximately $6.6 million and $3.3 million to Crestwood Niobrara’s preferred interest holder; and

During the six months ended June 30, 2019, our taxes paid for unit-based compensation vestingpartners increased by approximately $3.7$2.2 million compared to the same period in 2018,2019, primarily due to the increase in our distribution per limited partner unit from $0.60 per limited partner unit to $0.625 per limited partner unit;

During the three months ended March 31, 2020 and 2019, Crestwood Niobrara paid cash distributions of $9.2 million and $3.3 million to its non-controlling partner;

During the three months ended March 31, 2020, our taxes paid from unit-based compensation vesting increased by $8.1 million compared to 2019, primarily due to higher vesting of unit-based compensation awards.

Debt Transactionsawards; and

During the sixthree months ended June 30, 2019,March 31, 2020, our debt-related transactions resulted in net borrowingsproceeds of approximately$375.5approximately $29.0 million compared to net borrowingsproceeds of approximately $66.1$14.3 million during the same period in 2018. The net increase during 2019 was primarily driven by the issuance of $600 million unsecured senior notes due 2027, partially offsetting by a decrease of approximately $215.2 million in borrowings under the Crestwood Midstream’s credit facility.

three months ended March 31, 2019.



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Item 3.Quantitative and Qualitative Disclosures About Market Risk

Our interest rate risk and commodity price and market risks are discussed in our 20182019 Annual Report on Form 10-K and there have been no material changes in those exposures from December 31, 20182019 to June 30, 2019.March 31, 2020.


Item 4.Controls and Procedures

Disclosure Controls and Procedures

As of June 30, 2019March 31, 2020, Crestwood Equity and Crestwood Midstream carried out an evaluation under the supervision and with the participation of their respective management, including the Chief Executive Officer and Chief Financial Officer of their General Partners, as to the effectiveness, design and operation of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (Exchange Act) Rules 13a-15(e) and 15d-15(e)). Crestwood Equity and Crestwood Midstream maintain controls and procedures designed to provide reasonable assurance that information required to be disclosed in their respective reports that are filed or submitted under the Exchange Act of 1934, as amended, are recorded, processed, summarized and reported within the time periods specified by the rules and forms of the SEC, and that information is accumulated and communicated to their respective management, including the Chief Executive Officer and Chief Financial Officer of their General Partners, as appropriate, to allow timely decisions regarding required disclosure. Such management, including the Chief Executive Officer and Chief Financial Officer of their General Partners, do not expect that the disclosure controls and procedures or the internal controls will prevent and/or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Crestwood Equity’s and Crestwood Midstream’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer of their General Partners concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2019March 31, 2020.

Changes in Internal Control over Financial Reporting

There were no changes to Crestwood Equity’s or Crestwood Midstream’s internal control over financial reporting during the three months ended June 30, 2019March 31, 2020 that have materially affected, or are reasonably likely to materially affect Crestwood Equity’s or Crestwood Midstream’s internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.Legal Proceedings

Part I, Item 1. Financial Statements, Note 1110 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 20182019 Annual Report on Form 10-K.10-K, as supplemented by the risk factors set forth below. There has been no material change in the risk factors set forth in our 2019 Annual Report on Form 10-K other than those set forth below.

Our gathering and processing operations depend, in part, on drilling and production decisions of others.

Our gathering and processing operations are dependent on the continued availability of natural gas and crude oil production. We have no control over the level of drilling activity in our areas of operation, the amount of reserves associated with wells connected to our systems, or the rate at which production from a well declines. Our gathering systems are connected to wells whose production will naturally decline over time, which means that our cash flows associated with these wells will decline over time. To maintain or increase throughput levels on our gathering systems and utilization rates at our natural gas processing plants, we must continually obtain new natural gas and crude oil supplies. Our ability to obtain additional sources of natural gas and crude oil primarily depends on the level of successful drilling activity near our systems, our ability to compete for volumes from successful new wells, and our ability to expand our system capacity as needed. If we are not able to obtain new supplies of natural gas and crude oil to replace the natural decline in volumes from existing wells, throughput on our gathering and processing facilities would decline, which could have a material adverse effect on our results of operations and distributable cash flow.

Although we have acreage dedications from customers that include certain producing and non-producing oil and gas properties, our customers are not contractually required to develop the reserves or properties they have dedicated to us. We have no control over producers or their drilling and production decisions in our areas of operations, which are affected by, among other things: (i) the availability and cost of capital; (ii) prevailing and projected commodity prices; (iii) demand for natural gas, NGLs and crude oil; (iv) levels of reserves and geological considerations; (v) governmental regulations, including the availability of drilling permits and the regulation of hydraulic fracturing; (vi) the availability of drilling rigs and other development services; (vii) fluctuations in energy prices that can greatly affect the development of oil and gas reserves; (viii) the availability of storage of crude oil and other commodities; and (ix) the impact of illness, pandemics or any other public health crisis, including the COVID-19 pandemic, could have on demand for commodities. Drilling and production activity generally decreases as commodity prices decrease (such as what could be experienced with the decline in commodity prices during the first quarter of 2020, as further described in “Our business depends on hydrocarbon supply and demand fundamentals, which can be adversely affected by numerous factors outside of our control” below), and sustained declines in commodity prices could lead to a material decrease in such activity. Because of these factors, even if oil and gas reserves are known to exist in areas served by our assets, producers may choose not to develop those reserves. For example, many of our customers have recently announced reductions in their estimated capital expenditures for 2020 and beyond. Reductions in exploration or production activity in our areas of operations could lead to reduced utilization of our systems.

Our business depends on hydrocarbon supply and demand fundamentals, which can be adversely affected by numerous factors outside of our control.

Our success depends on the supply and demand for natural gas, NGLs and crude oil, which has historically generated the need for new or expanded midstream infrastructure. The degree to which our business is impacted by changes in supply or demand varies. Our business can be negatively impacted by sustained downturns in supply and demand for one or more commodities, including reductions in our ability to renew contracts on favorable terms and to construct new infrastructure. For example, significantly lower commodity prices during the past few years have resulted in an industry-wide reduction in capital expenditures by producers and a slowdown in drilling, completion and supply development efforts. Notwithstanding this market downturn, production volumes of crude oil, natural gas and NGLs have continued to grow (or decline at a slower rate

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than expected). Similarly, major factors that will impact natural gas demand domestically will be the realization of potential liquefied natural gas exports and demand growth within the power generation market. Factors expected to impact crude oil demand include production cuts and freezes implemented by Organization of the Petroleum Exporting Countries (OPEC) members and other large oil producers such as Russia. For example, during the first quarter of 2020, OPEC and Russia failed to agree on a plan to cut production of oil and related commodities. Subsequently, Saudi Arabia announced plans to increase production and reduce the prices at which they sell oil. While OPEC, Russia, the United States and other oil and gas producing countries subsequently agreed to collectively decrease production, these events, combined with the outbreak of the COVID-19 pandemic that has reduced economic activity and the related demand for oil, have contributed to a sharp drop in prices for crude oil in the first quarter of 2020. The effect of these events on the price of oil was further exacerbated by a shortage in available storage for hydrocarbons in the United States, which caused the prices for oil to further decrease dramatically in April 2020. In addition, the supply and demand for natural gas, NGLs and crude oil for our business will depend on many other factors outside of our control, some of which include:

changes in general domestic and global economic and political conditions;
changes in domestic regulations that could impact the supply or demand for oil and gas;
technological advancements that may drive further increases in production and reduction in costs of developing shale plays;
competition from imported supplies and alternate fuels;
commodity price changes, including the recent decline in crude oil and natural gas prices, that could negatively impact the supply of, or the demand for these products;
outbreak of illness, pandemic or any other public health crisis, including the COVID-19 pandemic;
the availability of hydrocarbon storage;
increased costs to explore for, develop, produce, gather, process or transport commodities;
impact of interest rates on economic activity;
shareholder activism and activities by non-governmental organizations to limit sources of funding for the energy sector or restrict the exploration, development and production of oil and gas:
operational hazards, including terrorism, cyber-attacks or domestic vandalism;
adoption of various energy efficiency and conservation measures; and
perceptions of customers on the availability and price volatility of our services, particularly customers’ perceptions on the volatility of commodity prices over the longer-term.

If volatility and seasonality in the oil and gas industry increase, because of increased production capacity, reduced demand for energy, or otherwise, the demand for our services and the fees that we will be able to charge for those services may decline. In addition to volatility and seasonality, an extended period of low commodity prices, as the industry is currently experiencing, could adversely impact storage and transportation values for some period of time until market conditions adjust. With West Texas Intermediate crude oil prices ranging from $66.24 to $46.31 per barrel in 2019 and from $63.27 to negative $36.98 per barrel in 2020, the sustainability of recent and longer-term oil prices cannot be predicted. These commodity price impacts could have a negative impact on our business, financial condition, and results of operations.

The widespread outbreak of an illness, pandemic (like COVID-19) or any other public health crisis may have material adverse effects on our business, financial position, results of operations and/or cash flows.

In December 2019, a novel strain of coronavirus (SARS-Cov-2), which causes COVID-19, was reported to have surfaced in China. The spread of this virus has caused business disruption, including disruption to the oil and natural gas industry. In March 2020, the World Health Organization declared the outbreak of COVID-19 to be a pandemic, and the U.S. economy began to experience pronounced effects. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, reduced global demand for oil and gas, and created significant volatility and disruption of financial and commodity markets. The COVID-19 pandemic has also caused federal and local governments to implement measures to quarantine individuals and limit gatherings, which has impacted our workforce and the way we have traditionally conducted our business. If COVID-19 were to impact a location where we have a high concentration of business and resources, our local workforce could be affected by such an occurrence or outbreak which could also significantly disrupt our operations and decrease our ability to provide gathering, processing, storage and transportation services to our natural gas and crude oil customers. The extent of the impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, is uncertain and depends on various factors, including the demand for oil and natural gas (including the impact that reductions in travel, manufacturing and consumer product demand have had and will have on the demand for commodities), the availability of personnel, equipment and services critical to our ability to operate our assets and the impact of potential governmental restrictions on travel, transportation and operations. There is uncertainty around the extent and duration of the disruption. The degree to which the COVID-19 pandemic or any other public health crisis adversely impacts our results will depend on future developments, which are highly

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uncertain and cannot be predicted. These developments include, but are not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, its impact on the economy and market conditions, and how quickly and to what extent normal economic and operating conditions can resume. These potential impacts, while uncertain, could adversely affect our operating results.

A significant portion of our revenues is derived from our operations in the Bakken shale, and due to such geographic concentration, adverse developments in the Bakken could impact our financial condition and results of operations.

A significant portion of the our revenue is derived from our operations in the Bakken shale. These operations accounted for approximately 45% of our total revenues, less of costs of product/services sold, during the three months ended March 31, 2020. Due to this geographic concentration of our operations, adverse developments that affect customers, suppliers or operations in the Bakken, such as catastrophic events or weather, health pandemics, and changes in supply or demand of crude oil, natural gas and related commodities that impact regional commodity prices and availability of infrastructure, could have a significantly greater impact on our financial condition and results of operations than if we maintained operations in more diverse locations.

We are exposed to credit risks of our customers, and any material nonpayment or nonperformance by our key customers could adversely affect our cash flows and results of operations.

Many of our customers may experience financial problems that could have a significant effect on their creditworthiness. Severe financial problems encountered by our customers could limit our ability to collect amounts owed to us, or to enforce performance of obligations under contractual arrangements. In addition, many of our customers finance their activities through cash flows from operations, the incurrence of debt or the issuance of equity. The combination of the reduction of cash flows resulting from declines in commodity prices (such as experienced in the first quarter of 2020), a reduction in borrowing bases under a reserve-based credit facility and the lack of availability of debt or equity financing may result in a significant reduction of customers’ liquidity and limit their ability to make payments or perform on their obligations to us. Furthermore, some of our customers may be highly leveraged and subject to their own operating and regulatory risks, which increases the risk that they may default on their obligations to us. Financial problems experienced by our customers could result in the impairment of our assets, reduction of our operating cash flows and may also reduce or curtail their future use of our products and services, which could reduce our revenues.

Changes in future business conditions could cause recorded long-lived assets and goodwill to become further impaired, and our financial condition and results of operations could suffer if there is an additional impairment of long-lived assets and goodwill.

We continually monitor our business, the business environment and the performance of our operations to determine if an event has occurred that indicates that a long-lived asset may be impaired. If an event occurs, which is a determination that involves judgment, we may be required to utilize cash flow projections to assess our ability to recover the carrying value of our assets based on our long-lived assets’ ability to generate future cash flows on an undiscounted basis. This differs from our evaluation of goodwill, which is evaluated for impairment annually on December 31, and whenever events indicate that it is more likely than not that the fair value of a reporting unit could be less than the carrying amount. This evaluation requires us to compare the fair value of each of our reporting units primarily utilizing discounted cash flows, to its carrying value (including goodwill). If the fair value exceeds the carrying value amount, goodwill of the reporting unit is not considered impaired.

During the three months ended March 31, 2020, we determined that the goodwill associated with our Powder River Basin reporting unit should be fully impaired, and accordingly recorded an $80.3 million impairment of its goodwill.

Our long-lived assets and goodwill impairment analyses are sensitive to changes in key assumptions used in our analysis, such as expected future cash flows, the degree of volatility in equity and debt markets and our unit price. If the assumptions used in our analysis are not realized, it is possible a material impairment charge may need to be recorded in the future. We cannot accurately predict the amount and timing of any impairment of long-lived assets or goodwill. Any additional impairment charges that we may take in the future could be material to our results of operations and financial condition. For a further discussion of our goodwill impairment, see Part I, Item 1. Financial Information, Note 2.

A change of control could result in us facing substantial repayment obligations under our revolving credit facility and indentures governing our senior notes.

Our credit agreement and indentures governing our senior notes contain provisions relating to change of control of Crestwood Equity’s general partner. If these provisions are triggered, our outstanding indebtedness may become due. For example, a change of control of Crestwood Equity’s general partner may occur if our parent, Crestwood Holdings, became unable to

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service its debt and an event of default occurred under the documents governing its debt. If our Board of Directors reduces the level of distributions to our common unitholders in future quarters as a consequence of the recent significant decline in commodity prices or for other reasons, the ability of our parent to service its debt may be adversely affected. In the event our outstanding indebtedness became due, there is no assurance that we would be able to pay the indebtedness, in which case the lenders under the revolving credit facility would have the right to foreclose on our assets and holders of our senior notes would be entitled to require us to repurchase all or a portion of our notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of such repurchase, which would have a material adverse effect on us. There is no restriction on our ability or the ability of Crestwood Equity’s general partner or its parent companies to enter into a transaction which would trigger the change of control provision. In certain circumstances, the control of our general partner may be transferred to a third party without unitholder consent, and this may be considered a change in control under our revolving credit facility and senior notes. Please read “The control of our general partner may be transferred to a third party without unitholder consent below.”

The control of our general partner may be transferred to a third party without unitholder consent.
Our general partner may transfer its general partner interest to a third party in a merger or in a sale of all or substantially all of its assets without the consent of our unitholders. Furthermore, there is no restriction in our partnership agreement on the ability of the owner of our general partner, Holdings LP, from transferring its ownership interest in our general partner to a third party. Additionally, Holdings LP’s general partner interest in our general partner is pledged as collateral under a Credit Agreement between Crestwood Holdings and various lenders (Holdings Credit Agreement).  In the event of a default by Crestwood Holdings under the Holdings Credit Agreement, the lenders may foreclose on the pledged general partner interest and take or transfer control of our general partner without unitholder consent. The new owner of our general partner would then be in a position to replace the board of directors and officers of our general partner with its own choices and to control the decisions taken by our board of directors and officers. This effectively permits a “change of control” without the vote or consent of the common unitholders. In addition, such a change of control could result in our indebtedness becoming due.


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

None.


Item 3.Defaults Upon Senior Securities

None.


Item 4.Mine Safety Disclosures

Not applicable.


Item 5.Other Information

None.


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Item 6.Exhibits
Exhibit
Number		  Description
2.1 
Contribution Agreement, dated as of April 20, 2016, by and between Crestwood Pipeline and Storage Northeast LLC and Con Edison Gas Pipeline and Storage Northeast, LLC (incorporated by reference to Exhibit 2.1 to Crestwood Equity Partners LP's Form 8-K filed on April 22, 2016)
   
2.2 
Purchase Agreement, dated as of April 9, 2019, by and between Crestwood Niobrara LLC and Williams MLP Operating, LLC (incorporated by reference to Exhibit 2.1 to Crestwood Equity Partners LP’s Form 8-K filed on April 10, 2019)
   
3.1  
Certificate of Limited Partnership of Inergy, L.P. (incorporated by reference to Exhibit 3.1 to Inergy, L.P.'s Registration Statement on Form S-1 filed on March 14, 2001)
   
3.2  
Certificate of Correction of Certificate of Limited Partnership of Inergy, L.P. (incorporated by reference to Exhibit 3.1 to Inergy, L.P.'s Form 10-Q filed on May 12, 2003)
   
3.3 
Amendment to the Certificate of Limited Partnership of Crestwood Equity Partners LP (the “Company”) (f/k/a Inergy, L.P.) dated as of October 7, 2013 (incorporated herein by reference to Exhibit 3.2 to Crestwood Equity Partners LP's Form 8-K filed on October 10, 2013)
   
3.4 
Certificate of Formation of Inergy GP, LLC (incorporated by reference to Exhibit 3.5 to Inergy, L.P.'s Registration Statement on Form S-1/A filed on May 7, 2001)
   
3.5 
Certificate of Amendment of Crestwood Equity GP LLC (the “General Partner”) (f/k/a Inergy GP, LLC) dated as of October 7, 2013 (incorporated by reference to Exhibit 3.3A to Crestwood Equity Partners LP's Form 10-Q filed on November 8, 2013)
   
3.6  
First Amended and Restated Limited Liability Company Agreement of Inergy GP, LLC dated as of September 27, 2012 (incorporated by reference to Exhibit 3.1 to Inergy, L.P.'s Form 8-K filed on September 27, 2012)
   
3.7  
Amendment No. 1 to the First Amended and Restated Limited Liability Company Agreement of the General Partner entered into and effective as of October 7, 2013 (incorporated by reference to Exhibit 3.4A to Crestwood Equity Partners LP's Form 10-Q filed on November 8, 2013)
   
3.8 
Fifth Amended and Restated Agreement of Limited Partnership of Crestwood Equity Partners LP dated as of April 11, 2014 (incorporated herein by reference to Exhibit 3.1 to Crestwood Equity Partners LP's Form 8-K filed on April 11, 2014)
   
3.9  
First Amendment to the Fifth Amended and Restated Agreement of Limited Partnership of Crestwood Equity Partners LP entered into and effective as of September 30, 2015 (incorporated by reference to Exhibit 3.1 to Crestwood Equity Partner LP’s Form 8-K filed on October 1, 2015)
   
3.10 
Second Amendment to the Fifth Amended and Restated Agreement of Limited Partnership of Crestwood Equity Partners LP entered into and effective as of November 8, 2017 (incorporated by reference to Exhibit 3.1 to Crestwood Equity Partners LP’s Form 8-K filed on November 13, 2017)
   
3.11 
Third Amendment to the Fifth Amended and Restated Agreement of Limited Partnership of Crestwood Equity Partners LP entered into and effective as of May 30, 2018 (incorporated by reference to Exhibit 3.1 to Crestwood Equity Partners LP’s Form 8-K filed on June 4, 2018)
   
3.12 
Second Amended and Restated Agreement of Limited Partnership of Crestwood Midstream Partners LP, dated as of September 30, 2015 (incorporated by reference to Exhibit 3.1 to Crestwood Midstream Partners LP's Form 8-K filed on October 1, 2015)
   
3.13 
Certificate of Formation of NRGM GP, LLC (incorporated herein by reference to Exhibit 3.7 to Inergy Midstream, L.P.'s Form S-1/A filed on November 21, 2011)
   
3.14 
Amended and Restated Limited Liability Company Agreement of NRGM GP, LLC, dated December 21, 2011 (incorporated herein by reference to Exhibit 3.2 to Inergy Midstream, L.P.'s Form 8-K filed on December 22, 2011)
   
3.15 
Amendment No. 1 to the Amended and Restated Limited Liability Company Agreement of Crestwood Midstream GP LLC (f/k/a NRGM GP, LLC) (incorporated herein by reference to Exhibit 3.39 to Crestwood Midstream Partners LP's Form S-4/A filed on October 28, 2013)
   
3.16 
Fourth Amendment to the Fifth Amended and Restated Agreement of Limited Partnership of Crestwood Equity Partners LP entered into and effective as of June 28, 2019 (incorporated by reference to Exhibit 3.1 to Crestwood Equity Partners LP’s Form 8-K filed on June 28, 2019)
   

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*31.1  
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended - Crestwood Equity Partners LP
   
*31.2  
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended - Crestwood Equity Partners LP
   
*31.3 
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended - Crestwood Midstream Partners LP
   
*31.4 
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended - Crestwood Midstream Partners LP
   
*32.1  
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Crestwood Equity Partners LP
   
*32.2  
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Crestwood Equity Partners LP
   
*32.3 
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Crestwood Midstream Partners LP
   
*32.4 
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Crestwood Midstream Partners LP
   
**101.INS  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
   
**101.SCH  Inline XBRL Taxonomy Extension Schema Document
   
**101.CAL  Inline XBRL Taxonomy Extension Calculation Linkbase Document
   
**101.LAB  Inline XBRL Taxonomy Extension Label Linkbase Document
   
**101.PRE  Inline XBRL Taxonomy Extension Presentation Linkbase Document
   
**101.DEF  Inline XBRL Taxonomy Extension Definition Linkbase Document
104Cover Page Interactive Data File (contained in Exhibit 101)
*Filed herewith
**Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.


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SIGNATURE

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

  CRESTWOOD EQUITY PARTNERS LP  
  By:CRESTWOOD EQUITY GP LLC  
   (its general partner)  
      
Date:August 2, 2019May 7, 2020By:/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:August 2, 2019May 7, 2020By:/s/ ROBERT T. HALPIN  
   Robert T. Halpin  
   Executive Vice President and Chief Financial Officer  
   (Duly Authorized Officer and Principal Financial Officer)  


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