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, 20192020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to_____
Commission file number: 001-37640
nblxupdatedlogoa79.jpg
NOBLE MIDSTREAM PARTNERS LP
(Exact name of registrant as specified in its charter)
Delaware 47-3011449
(State or other jurisdiction of incorporation or organization) (I.R.S. employer identification number)
1001 Noble Energy Way  
Houston,Texas 77070
(Address of principal executive offices) (Zip Code)
(281)872-3100
(281) 872-3100
(Registrant’s telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
     
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Units, Representing Limited Partner Interests NBLX New YorkThe Nasdaq Stock ExchangeMarket LLC
(Nasdaq Global Select Market)

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.
Yes  No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Yes     No 
 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 ”company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer 
Non-accelerated filer 
Smaller reporting companyEmerging 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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes     No
As of July 31, 2019,June 30, 2020, the registrant had 39,752,18890,369,975 Common Units outstanding.




Table of Contents
  
  
  
  
  
  
  
  
  
  
  
  
  
Item 1A.  Risk Factors
  
Item 6.  Exhibits
  

Part I. Financial Information
Item 1. Financial Statements
Noble Midstream Partners LP
Consolidated Balance Sheets
(in thousands, unaudited)
June 30, 2019 December 31, 2018June 30, 2020 December 31, 2019
ASSETS      
Current Assets      
Cash and Cash Equivalents$9,388
 $10,740
$12,729
 $12,676
Accounts Receivable — Affiliate38,697
 31,613
37,298
 42,428
Accounts Receivable — Third Party25,852
 23,091
24,751
 44,093
Other Current Assets8,805
 5,875
7,196
 8,730
Total Current Assets82,742
 71,319
81,974
 107,927
Property, Plant and Equipment      
Total Property, Plant and Equipment, Gross1,621,885
 1,500,609
2,056,882
 2,006,995
Less: Accumulated Depreciation and Amortization(102,338) (79,357)(279,115) (244,038)
Total Property, Plant and Equipment, Net1,519,547
 1,421,252
1,777,767
 1,762,957
Investments860,817
 660,778
Intangible Assets, Net294,184
 310,202
261,794
 277,900
Goodwill109,734
 109,734

 109,734
Investments487,383
 82,317
Other Noncurrent Assets4,941
 3,093
25,995
 6,786
Total Assets$2,498,531
 $1,997,917
$3,008,347
 $2,926,082
LIABILITIES, MEZZANINE EQUITY AND EQUITY      
Current Liabilities      
Accounts Payable — Affiliate$534
 $2,778
$6,557
 $8,155
Accounts Payable — Trade101,094
 92,756
46,138
 107,705
Other Current Liabilities8,144
 9,217
11,096
 11,680
Total Current Liabilities109,772
 104,751
63,791
 127,540
Long-Term Liabilities      
Long-Term Debt870,047
 559,021
1,635,919
 1,495,679
Asset Retirement Obligations19,009
 17,330
40,762
 37,842
Other Long-Term Liabilities1,143
 582
3,849
 4,160
Total Liabilities999,971
 681,684
1,744,321
 1,665,221
Mezzanine Equity      
Redeemable Noncontrolling Interest, Net99,616
 
112,646
 106,005
Equity      
Limited Partner   
Common Units (39,753 and 23,759 units outstanding, respectively)606,575

699,866
Subordinated Units (15,903 units outstanding as of December 31, 2018)
 (130,207)
General Partner4,640
 2,421
Total Partners’ Equity611,215
 572,080
Common Units (90,164 and 90,136 units outstanding, respectively)787,584

813,999
Noncontrolling Interests787,729
 744,153
363,796
 340,857
Total Equity1,398,944
 1,316,233
1,151,380
 1,154,856
Total Liabilities, Mezzanine Equity and Equity$2,498,531
 $1,997,917
$3,008,347
 $2,926,082
The accompanying notes are an integral part of these consolidated financial statements.

Noble Midstream Partners LP
Consolidated Statements of Operations and Comprehensive Income
(in thousands, except per unit amounts, unaudited)
Three Months Ended June 30,
Six Months Ended June 30,Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
20182020
2019
2020
2019
Revenues





















Midstream Services — Affiliate$85,882

$66,924

$177,878

$131,187
$93,739

$97,269

$207,523

$201,072
Midstream Services — Third Party20,597

13,469

43,691

24,829
22,997

21,609

50,895

45,638
Crude Oil Sales — Third Party51,782
 41,578
 84,652
 63,688
29,214
 51,782
 111,577
 84,652
Total Revenues158,261

121,971

306,221

219,704
145,950

170,660

369,995

331,362
Costs and Expenses              
Cost of Crude Oil Sales48,079
 40,012
 78,977
 61,451
29,104
 48,079
 108,963
 78,977
Direct Operating27,697

18,393

55,134

35,541
20,039

32,866

46,889

63,289
Depreciation and Amortization20,285

16,371

39,636

27,700
26,354

23,980

52,285

47,013
General and Administrative4,838

4,980

8,861

15,422
6,446

5,171

11,932

9,532
Goodwill Impairment
 
 109,734
 
Other Operating Expense2,576
 
 3,862
 
Total Operating Expenses100,899

79,756

182,608

140,114
84,519

110,096

333,665

198,811
Operating Income57,362

42,215

123,613

79,590
61,431

60,564

36,330

132,551
Other Expense (Income)              
Interest Expense, Net of Amount Capitalized2,325

1,681

7,555

2,714
6,633

2,322

13,490

7,550
Investment Loss (Income)1,748
 (4,091) (593) (6,959)2,730
 1,748
 8,139
 (593)
Other Non-Operating Expense1,336
 
 1,336
 
Total Other Expense (Income)4,073

(2,410)
6,962

(4,245)10,699

4,070

22,965

6,957
Income Before Income Taxes53,289

44,625

116,651

83,835
50,732

56,494

13,365

125,594
State Income Tax Provision91

183

198

257
Income Tax (Benefit) Expense(128)
731

21

2,040
Net Income53,198

44,442

116,453

83,578
50,860

55,763

13,344

123,554
Less: Net Income Attributable to Noncontrolling Interests16,789
 7,858
 36,485
 7,633
Less: Net Income Prior to the Drop-Down and Simplification Transaction
 2,565
 
 7,101
Net Income Subsequent to the Drop-Down and Simplification Transaction50,860
 53,198
 13,344
 116,453
Less: Net Income (Loss) Attributable to Noncontrolling Interests2,624
 16,789
 (44,995) 36,485
Net Income Attributable to Noble Midstream Partners LP36,409
 36,584
 79,968
 75,945
48,236
 36,409
 58,339
 79,968
Less: Net Income Attributable to Incentive Distribution Rights4,640
 1,134
 8,147
 1,953

 4,640
 
 8,147
Net Income Attributable to Limited Partners$31,769
 $35,450
 $71,821
 $73,992
$48,236
 $31,769
 $58,339
 $71,821
              
Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic and Diluted              
Common Units$0.79
 $0.90
 $1.77
 $1.87
$0.53
 $0.79
 $0.65
 $1.77
Subordinated Units$0.84
 $0.90
 $1.91
 $1.87
$
 $0.84
 $
 $1.91
              
Weighted Average Limited Partner Units Outstanding Basic
              
Common Units32,090
 23,686
 27,916
 23,684
90,163
 32,090
 90,158
 27,916
Subordinated Units7,514
 15,903
 11,685
 15,903

 7,514
 
 11,685
              
Weighted Average Limited Partner Units Outstanding Diluted
              
Common Units32,121
 23,700
 27,944
 23,699
90,164
 32,121
 90,163
 27,944
Subordinated Units7,514
 15,903
 11,685
 15,903

 7,514
 
 11,685
The accompanying notes are an integral part of these consolidated financial statements.

Noble Midstream Partners LP
Consolidated Statements of Cash Flows
(in thousands, unaudited)
Six Months Ended June 30,Six Months Ended June 30,
2019 20182020 2019
Cash Flows From Operating Activities      
Net Income$116,453
 $83,578
$13,344
 $123,554
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities      
Depreciation and Amortization39,636
 27,700
52,285
 47,013
Loss (Income) from Equity Method Investees2,083
 (4,798)
Income Taxes
 1,842
Goodwill Impairment109,734
 
Loss from Equity Method Investees10,276
 2,083
Distributions from Equity Method Investees6,944
 3,520
18,820
 6,944
Unit-Based Compensation843
 714
Other Adjustments for Noncash Items Included in Income804
 329
6,354
 1,647
Changes in Operating Assets and Liabilities, Net of Assets Acquired and Liabilities Assumed      
Increase in Accounts Receivable(10,048) (4,874)
Increase in Accounts Payable19,364
 3,241
Decrease (Increase) in Accounts Receivable24,472
 (12,284)
(Decrease) Increase in Accounts Payable(16,630) 22,739
Other Operating Assets and Liabilities, Net(3,330) (4,338)796
 (4,593)
Net Cash Provided by Operating Activities172,749
 105,072
219,451
 188,945
Cash Flows From Investing Activities      
Additions to Property, Plant and Equipment(138,139) (409,059)(96,777) (141,716)
Black Diamond Acquisition, Net of Cash Acquired
 (650,131)
Additions to Investments(414,587) (119)(228,226) (414,587)
Distributions from Cost Method Investee and Other588
 715
Loan to Equity Method Investee(22,500) 
Other2,224
 588
Net Cash Used in Investing Activities(552,138) (1,058,594)(345,279) (555,715)
Cash Flows From Financing Activities      
Distributions to Noncontrolling Interests(11,985) (3,529)
Distributions to Noncontrolling Interests and Parent(13,224) (26,476)
Contributions from Noncontrolling Interests34,110
 515,622
81,158
 34,110
Borrowings Under Revolving Credit Facility560,000
 610,000
350,000
 560,000
Repayment of Revolving Credit Facility(250,000) (165,000)(210,000) (250,000)
Distributions to Unitholders(53,459) (40,913)(79,020) (53,459)
Proceeds from Preferred Equity, Net of Issuance Costs99,450
 

 99,450
Debt Issuance Costs and Other(980) (1,987)
Other(3,083) (980)
Net Cash Provided by Financing Activities377,136
 914,193
125,831
 362,645
Decrease in Cash, Cash Equivalents, and Restricted Cash(2,253) (39,329)
Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash3
 (4,125)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period (1)
11,691
 55,531
12,726
 15,712
Cash, Cash Equivalents, and Restricted Cash at End of Period (1)
$9,438
 $16,202
$12,729
 $11,587
(1) 
See Note 2. Basis of Presentation for our reconciliation of total cash.
The accompanying notes are an integral part of these consolidated financial statements.

Noble Midstream Partners LP
Consolidated Statements of Changes in Equity
(in thousands, unaudited)
Partnership  Partner's Equity 
Common UnitsSubordinated UnitsGeneral PartnerNoncontrolling InterestsTotalParent Net InvestmentCommon UnitsSubordinated UnitsGeneral PartnerNoncontrolling InterestsTotal
December 31, 2017$642,616
$(168,136)$520
$141,230
$616,230
December 31, 2019$
$813,999
$
$
$340,857
$1,154,856
Net Income (Loss)
10,103


(47,619)(37,516)
Contributions from Noncontrolling Interests



77,966
77,966
Distributions to Noncontrolling Interests



(5,700)(5,700)
Distributions to Unitholders
(62,114)


(62,114)
Preferred Equity Accretion
(3,276)


(3,276)
Other
433



433
March 31, 2020
759,145


365,504
1,124,649
Net Income23,058
15,484
819
(225)39,136

48,236


2,624
50,860
Contributions from Noncontrolling Interests


409,865
409,865




3,192
3,192
Distributions to Noncontrolling Interests


(3,007)(3,007)



(7,524)(7,524)
Distributions to Unitholders(11,575)(7,765)(520)
(19,860)
(16,906)


(16,906)
Black Diamond Equity Ownership Promote Vesting (1)
1,215
1,214


(2,429)
Unit-Based Compensation and Other288



288
March 31, 2018655,602
(159,203)819
545,434
1,042,652
Net Income21,210
14,240
1,134
7,858
44,442
Contributions from Noncontrolling Interests


105,757
105,757
Distributions to Noncontrolling Interests


(522)(522)
Distributions to Unitholders(12,108)(8,126)(819)
(21,053)
Black Diamond Equity Ownership Promote Vesting (1)
2,731
1,833

(4,564)
Unit-Based Compensation and Other395



395
June 30, 2018$667,830
$(151,256)$1,134
$653,963
$1,171,671
 
December 31, 2018$699,866
$(130,207)$2,421
$744,153
$1,316,233
Net Income23,967
16,085
3,507
19,696
63,255
Contributions from Noncontrolling Interests


15,969
15,969
Distributions to Noncontrolling Interests


(4,669)(4,669)
Distributions to Unitholders(13,930)(9,316)(2,421)
(25,667)
Black Diamond Equity Ownership Promote Vesting (1)
4,092
2,746

(6,838)
Unit-Based Compensation and Other470



470
March 31, 2019714,465
(120,692)3,507
768,311
1,365,591
Net Income25,487
6,282
4,640
16,789
53,198
Contributions from Noncontrolling Interests


18,141
18,141
Distributions to Noncontrolling Interests


(7,316)(7,316)
Distributions to Unitholders(14,534)(9,751)(3,507)
(27,792)
Black Diamond Equity Ownership Promote Vesting (1)
8,196


(8,196)
Conversion of Subordinated Units to Common Units (2)
(124,161)124,161



Preferred Equity Accretion(3,151)


(3,151)
(3,366)


(3,366)
Unit-Based Compensation and Other273



273
June 30, 2019$606,575
$
$4,640
$787,729
$1,398,944
Other
475



475
June 30, 2020$
$787,584
$
$
$363,796
$1,151,380
December 31, 2018$170,322
$699,866
$(130,207)$2,421
$744,153
$1,486,555
Net Income4,536
23,967
16,085
3,507
19,696
67,791
Contributions from Noncontrolling Interests and Parent



15,969
15,969
Distributions to Noncontrolling Interests and Parent(6,495)


(4,669)(11,164)
Distributions to Unitholders
(13,930)(9,316)(2,421)
(25,667)
Black Diamond Equity Ownership Promote Vesting
4,092
2,746

(6,838)
Other
470



470
March 31, 2019168,363
714,465
(120,692)3,507
768,311
1,533,954
Net Income2,565
25,487
6,282
4,640
16,789
55,763
Contributions from Noncontrolling Interests



18,141
18,141
Distributions to Noncontrolling Interests and Parent(9,905)


(7,316)(17,221)
Distributions to Unitholders
(14,534)(9,751)(3,507)
(27,792)
Black Diamond Equity Ownership Promote Vesting
8,196


(8,196)
Conversion of Subordinated Units to Common Units
(124,161)124,161



Preferred Equity Accretion
(3,151)


(3,151)
Other
273



273
June 30, 2019$161,023
$606,575
$
$4,640
$787,729
$1,559,967

(1)
See Note 2. Basis of Presentation for further discussion of the Black Diamond equity ownership promote vesting.
(2)
See Note 10. Partnership Distributions for further discussion of the conversion of Subordinated Units.
The accompanying notes are an integral part of these consolidated financial statements.



6

Table of Contents
Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Note 1. Organization and Nature of Operations
Organization Noble Midstream Partners LP (the Partnership, NBLX, we, us“Partnership”, “NBLX”, “we”, “us” or our)“our”) is a growth-oriented Delaware master limited partnership formed in December 2014 by our sponsor, Noble Energy, Inc. (Noble(“Noble” or Parent)“Parent”), to own, operate, develop and acquire a wide range of domestic midstream infrastructure assets. Our current focus areas are the Denver-Julesburg Basin (DJ Basin)(“DJ Basin”) in Colorado and the Southern Delaware Basin position of the Permian Basin (Delaware Basin)(“Delaware Basin”) in Texas.
Chevron Merger On July 20, 2020, Noble, our sponsor and majority unitholder, entered into a definitive merger agreement (the “Chevron Merger Agreement”) with Chevron Corporation (NYSE: CVX) pursuant to which, and subject to the conditions of the agreement, all outstanding shares of Noble will be acquired by Chevron in an all-stock transaction (the “Chevron Merger”). The transaction was approved by the Boards of Directors of both Noble and Chevron and is anticipated to close in fourth quarter 2020. The transaction is subject to Noble stockholder approval, regulatory approvals, and other customary closing conditions. See Item 1A. Risk Factors for a discussion of risks related to the Chevron Merger.
Partnership Assets Our assets consist of ownership interests in certain development companies (DevCos) which serve specific areas and integrated development plan (IDP)(“IDP”) areas and consist of the following:
DevCoAreas ServedNBLX Dedicated ServiceNBLX Ownership
Noncontrolling Interest (1)
Areas ServedNBLX Dedicated ServiceNBLX Ownership
Noncontrolling Interest (1)
Colorado River DevCo LP

Wells Ranch IDP (DJ Basin)


East Pony IDP (DJ Basin)

All Noble DJ Basin Acreage
Crude Oil Gathering
Natural Gas Gathering
Water Services

Crude Oil Gathering

Crude Oil Treating
100%N/A
San Juan River DevCo LPEast Pony IDP (DJ Basin)Water Services25%75%
Green River DevCo LPMustang IDP (DJ Basin)
Crude Oil Gathering
Natural Gas Gathering
Water Services
25%75%
Laramie River DevCo LPGreeley Crescent IDP (DJ Basin)
Crude Oil Gathering
Water Services
100%N/A
Black Diamond Dedication Area (DJ Basin)(3)
Crude Oil Gathering
Natural Gas Gathering
54.4%45.6%
Blanco River DevCo LPDelaware Basin
Crude Oil Gathering
Natural Gas Gathering
Produced Water Services
40%60%
Colorado River LLC (2)

Wells Ranch IDP (DJ Basin)


East Pony IDP (DJ Basin)

All Noble DJ Basin Acreage
Crude Oil Gathering
Natural Gas Gathering
Water Services

Crude Oil Gathering

Crude Oil Treating
100%N/A
San Juan River LLC (2)
East Pony IDP (DJ Basin)Water Services100%N/A
Green River DevCo LLC (2)
Mustang IDP (DJ Basin)
Crude Oil Gathering
Natural Gas Gathering
Water Services
100%N/A
Laramie River LLC (2)
Greeley Crescent IDP (DJ Basin)
Crude Oil Gathering
Water Services
100%N/A
Black Diamond Dedication Area (DJ Basin)(3)
Crude Oil Gathering
Natural Gas Gathering
Crude Oil Transmission
54.4%45.6%
Gunnison River DevCo LPBronco IDP (DJ Basin)
Crude Oil Gathering
Water Services
5%95%
Bronco IDP (DJ Basin) (4)
Crude Oil Gathering
Water Services
5%95%
Blanco River LLC (2)
Delaware Basin
Crude Oil Gathering
Natural Gas Gathering
Produced Water Services
100%N/A
Trinity River DevCo LLC (2)(5)
Delaware Basin
Crude Oil Transmission
Natural Gas Compression
100%N/ADelaware Basin
Crude Oil Transmission
Natural Gas Compression
100%N/A
Dos Rios DevCo LLC (3)(6)
Delaware Basin
Crude Oil Transmission
Y-Grade Transmission
100%N/ADelaware Basin
Crude Oil Transmission
Y-Grade Transmission
100%N/A
NBL Midstream Holdings LLCEast Pony IDP (DJ Basin)Natural Gas Gathering
Natural Gas Processing
100%N/A
Delaware BasinCrude Oil Gathering
Natural Gas Gathering
Produced Water Services
100%N/A
(1) 
The noncontrolling interest represents Noble’s retained ownership interest in each DevCo.the Gunnison River DevCo LP. The noncontrolling interest in Black Diamond Gathering LLC (Black Diamond)(“Black Diamond”) represents Greenfield Member’sMidstream, LLC's (the “Greenfield Member”) interest in Black Diamond.
(2) 
Our ownership interest in Advantage Pipeline Holdings, L.L.C. (the Advantage Joint Venture) is owned through Trinity River DevCo LLC. See Note 7. Investments.
On December 31, 2019, the general partner and limited partnership of each of the companies were merged into limited liability companies.
(3) 
Our ownership interest in Saddlehorn Pipeline Company, LLC (“Saddlehorn”) is owned through a wholly-owned subsidiary of Black Diamond. See Note 6. Investments.
(4)
The Bronco IDP is a future development area. We currently have no midstream infrastructure assets in the Bronco IDP.
(5)
Our interest in Advantage Pipeline Holdings, L.L.C. (“Advantage”) is owned through Trinity River DevCo LLC.
(6)
Our ownership interests in Delaware Crossing LLC (the (“Delaware Crossing Joint Venture)Crossing”), EPIC Y-Grade, LP (EPIC Y-Grade) and(“EPIC Y-Grade”), EPIC Crude Holdings, LP (EPIC Crude)(“EPIC Crude”) and EPIC Propane Pipeline Holdings, LP (“EPIC Propane”) are owned through wholly-owned subsidiaries of Dos Rios DevCo LLC. See Note 7.6. Investments.

7

Table of Contents
Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Nature of OperationsThrough our ownership interests in the DevCos, weWe operate and own interests in the following assets:
crude oil gathering systems;
natural gas gathering and processing systems and compression units;
crude oil treating facilities;
produced water collection, gathering, and cleaning systems;
fresh water storage and delivery systems; and
investments in midstream entities that provide transportation and fractionation services.
We generate revenues primarily by charging fees on a per unit basis for gathering crude oil and natural gas, delivering and storing fresh water, and collecting, cleaning and disposing of produced water. Additionally, we purchase and sell crude oil to customers at various delivery points on our gathering systems.

7

Table of Contents
Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Note 2. Basis of Presentation
Basis of Presentation and Consolidation   The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP)(“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying consolidated financial statements at June 30, 20192020 and December 31, 20182019 and for the three and six months ended June 30, 20192020 and 20182019 contain all normally recurring adjustments considered necessary for a fair presentation of our financial position, results of operations, cash flows and equity for such periods.
In Note 8. Segment Information, we report a new Investments in Midstream Entities reportable segment and present prior period amounts on a comparable basis. Prior period segment information has been reclassified to conform to the current period presentation.
Operating results for the three and six months ended June 30, 20192020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.2020. We have no items of other comprehensive income; therefore, our net income is identical to our comprehensive income.
Variable Interest EntitiesConsolidation Our consolidated financial statements include our accounts, the accounts of subsidiaries which the Partnership wholly owns and the accounts of subsidiaries in which the DevCos, each of which we control as general partner. All intercompany balances and transactions have been eliminated upon consolidation. We have determined that the partners with equity at risk in each of the DevCos lack the authority, through voting rights or similar rights, to direct the activities that most significantly impact their economic performance; therefore, each DevCo is considered a variable interest entity, or VIE. Through our 100% ownership interest in Noble Midstream Services, LLC, a Delaware limited liability company which owns controlling interests in each of the DevCos, we have the authority to direct the activities that most significantly affect economic performance and the obligation to absorb losses or the right to receive benefits that could be potentially significant to us. Therefore, we are considered the primary beneficiary and consolidate each of the DevCos in our financial statements. A substantial portion of the financial statement activity associated with our DevCos is captured within the Gathering Systems and Fresh Water Delivery reportable segments. Although our unconsolidated investments are owned through certain DevCos, all financial statement activity associated with our unconsolidated investments are captured within the Investments in Midstream Entities reportable segment. See Note 7. Investments and Note 8. Segment Information.Partnership has partial ownership.
On January 31, 2018, Black Diamond, an entity formed by Black Diamond Gathering Holdings LLC (the Noble Member), a wholly-owned subsidiary of Noble Midstream Partners LP, and Greenfield Midstream, LLC (the Greenfield Member), completed the acquisition of all of the issued and outstanding limited liability company interests in Saddle Butte Rockies Midstream, LLC and certain affiliates (collectively, Saddle Butte) from Saddle Butte Pipeline II, LLC (Seller). The acquisition of Saddle Butte will be referred to as the Black Diamond Acquisition. See Note 3. AcquisitionVariable Interest Entities. Our consolidated financial statements include the accounts of Black Diamond, which we control. We have determined that the partners with equity at risk in Black Diamond lack the authority, through voting rights or similar rights, to direct the activities that most significantly impact their economic performance. Therefore, Black Diamond is considered a VIE.variable interest entity. Through our majority representation on the Black Diamond company board of directors as well as our responsibility as operator of the acquiredBlack Diamond system, we have the authority to direct the activities that most significantly affect economic performance and the obligation to absorb losses or the right to receive benefits that could be potentially significant to us. Therefore, we are considered the primary beneficiary and consolidate Black Diamond in our financial statements.
Financial statement activity associated with Black Diamond Equity Ownership Promote Vesting In accordance withis captured within the limited liability company agreement of Black Diamond, Noble Member received an equity ownership promote. The capital accounts for Noble MemberGathering Systems and Greenfield Member at June 30, 2019 do not equal their agreed equity ownership interests due to the funding structure of the total Black Diamond Acquisition purchase price.Investments in Midstream Entities reportable segments. See Note 3. Acquisition7. Segment Information.
TheDrop-Down and Simplification TransactionOn November 14, 2019, we entered into a Contribution, Conveyance, Assumption and Simplification Agreement with Noble. Pursuant to such agreement, we acquired (i) the remaining 60% limited partner interest in Blanco River DevCo LP, (ii) the remaining 75% limited partner interest in Green River DevCo LP, (iii) the remaining 75% limited partner interest in San Juan River DevCo LP and (iv) all of the issued and outstanding limited liability company agreementinterests of Black Diamond requires special allocationsNBL Midstream Holdings LLC (“NBL Holdings”). Additionally, all of gross incomethe Incentive Distribution Rights (“IDRs”) were converted into common units representing limited partner interests in the Partnership (“Common Units”). The acquisition of the interests and conversion of the IDRs are collectively referred to balanceas the ratio“Drop-Down and Simplification Transaction.” The total consideration paid by the Partnership for the Drop-Down and Simplification Transaction was $1.6 billion, which consisted of each member’s capital account$670 million in cash and 38,455,018 Common Units issued to their agreed equity ownership interest over time. Noble.
The special allocationsDrop-Down and Simplification Transaction represented a transaction between entities under common control. Prior to the acquisition of the remaining limited partner interests in Blanco River DevCo LP, Green River DevCo LP and San Juan River DevCo LP, the interests were reflected as noncontrolling interests in the Partnership’s consolidated financial statements. As we acquired additional interests in already-consolidated entities, the acquisition of these interests did not result in a change in reporting entity, as defined under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 805, Business Combinations. Therefore, results of operations related to these entities are accounted for on a prospective basis.
Conversely, the acquisition of all of the issued and outstanding limited liability company interests of NBL Holdings is characterized as equity transactions betweena change in reporting entity, as defined under FASB Accounting Standards Codification Topic 805, Business Combinations, as this entity previously had not been consolidated by us. Therefore, results of operations related to NBL Holdings have been accounted for on a retrospective basis. Our financial information has been recast to include the Partnershiphistorical results of NBL Holdings for the three and a subsidiary with no gain or loss recognized.
Noncontrolling Interests We present our consolidatedsix months ended June 30, 2019. The financial statements with a noncontrolling interest section representing Noble’s retained ownership of our DevCos as well as Greenfield Member’s ownership of Black Diamond.
Redeemable Noncontrolling Interest On March 25, 2019, we, through Dos Rios Crude Intermediate LLC, a wholly-owned subsidiary of Dos Rios DevCo LLC, secured a $200 million equity commitment from GIP CAPS Dos Rios Holding Partnership, L.P. (GIP). Upon securingNBL Holdings for the equity commitment, we issued 100,000 preferred units, with a face value of $1,000 per preferred unit (Preferred Equity). Proceeds from the Preferred Equity totaled $100 million and we incurred offering costs of $3.5 million. The remaining $100 million equity commitment is available for a one-year period, subject to certain conditions

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Table of Contents
Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


precedent. Proceedsperiod prior to the Drop-Down and Simplification Transaction have been prepared from the Preferredseparate records maintained by Noble and may not necessarily be indicative of the results of operations had these entities operated on a consolidated basis during those periods. Because a direct ownership relationship did not exist among the Partnership and NBL Holdings prior to the Drop-Down and Simplification Transaction, the net investment in NBL Holdings is shown as Parent Net Investment, in lieu of partners’ equity, in the accompanying Consolidated Statement of Changes in Equity were utilizedfor periods prior to repay a portionthe Drop-Down and Simplification Transaction.
Equity Method of outstanding borrowings underAccountingWe use the equity method of accounting for investments in entities that we do not control but over which we exert significant influence. For certain entities, we serve as the operator and exert significant influence over the day-to-day operations. For other entities, we do not serve as the operator; however, our revolving credit facility.voting position on management committees or the board of directors allows us to exert significant influence over decisions regarding capital investments, budgets, turnarounds, maintenance, monetization decisions and other project matters. Under the equity method of accounting, initially we record the investment at our cost. Differences in the cost, or basis, of the investment and the net asset value of the investee will be amortized into earnings over the remaining useful life of the underlying assets. See Note 6. DebtInvestments.
Cost Method of AccountingWe use the cost method of accounting for our 3.33% interest in White Cliffs Pipeline L.L.C. (“White Cliffs”) as we have virtually no influence over its operations and financial policies. Under the cost method of accounting, we recognize cash distributions from White Cliffs as investment income in our consolidated statements of operations to the extent there is net income and record cash distributions in excess of our ratable share of earnings as return of investment. See Note 6. Investments.
Redeemable Noncontrolling InterestOur redeemable noncontrolling interest is related to the preferred equity issuance by one of our subsidiaries. We can redeem the Preferred Equitypreferred equity in whole or in part at any time for cash at a predetermined redemption price. The predetermined redemption price is based on the greater of (i) an amount necessary to achieve a defined12% internal rate of return or the(ii) an amount necessary to achieve a 1.375x multiple on invested capital. GIP CAPS Dos Rios Holding Partnership, L.P. (“GIP”) can request redemption of the Preferred Equity following the later of the sixth anniversary of the Preferred Equity closingpreferred equity on or the fifth anniversary of the EPIC Crude pipeline completion date at a pre-determined base return.after March 25, 2025. As GIP’s redemption right is outside of our control, the Preferred Equitypreferred equity is not considered to be a component of equity on the consolidated balance sheet, and such Preferred Equity is reported as mezzanine equity on the consolidated balance sheet. In addition, because the Preferred Equitypreferred equity was issued by a subsidiary of the Partnership and is held by a third party, it is considered a redeemable noncontrolling interest.
The Preferred Equitypreferred equity was recorded initially at fair value on the issuance date. Subsequent to issuance, we accrete changes in the redemption value of the Preferred Equitypreferred equity from the date of issuance to GIP’s earliest redemption date of the Preferred Equity.date. The Preferred Equitypreferred equity is perpetual and has a 6.5% annual dividend rate, payable quarterly in cash, with the ability to accrue unpaid dividends during the first two years following the closing. During any quarter in which a dividend is accrued, the accreted value of the Preferred Equitypreferred equity will be increased by the accrued but unpaid dividend (i.e., a paid-in-kind dividend). The dividends for the first and second quarters of 2019 were paid-in-kind. Accretion during the three and six months ended June 30, 20192020 was approximately $3.2 million.$3.4 million and $6.6 million, respectively.
Accounting for Investments Noncontrolling InterestsWe use the equity methodpresent our consolidated financial statements with a noncontrolling interest section representing Greenfield Member’s ownership of accounting for our investmentsBlack Diamond and Noble’s retained ownership in the Advantage Joint Venture,Gunnison River DevCo LP.
Segment Information Accounting policies for reportable segments are the Delaware Crossing Joint Venture, EPIC Y-Grade and EPIC Crude,same as wethose described in this footnote. Transfers between segments are accounted for at market value. We do not control, but do exert significant influence over their operations. We useconsider interest income and expense or income tax benefit or expense in our evaluation of the cost methodperformance of accounting for our investment in White Cliffs Pipeline L.L.C. (White Cliffs) as we have virtually no influence over its operations and financial policies.reportable segments. See Note 7. InvestmentsSegment Information.
Leases We determine whether an arrangement contains a lease based on the conveyed rights and obligations at the inception date. If an agreement contains a lease, at the commencement date, we record a right-of-use (ROU) asset and a corresponding lease liability based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate to determine the present value of lease payments, we use our hypothetical secured borrowing rate based on information available at lease commencement. The weighted average discount rate is 3.69% for operating leases and 2.80% for our finance lease.
Leases with an initial term of 12 months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one month to one year or more. Additionally, some of our leases include an option for early termination. We include renewal periods and exclude termination periods from our lease term if, at commencement, it is reasonably likely that we will exercise the option.
Additionally, we have lease agreements that include lease and non-lease components, which are generally accounted for as a single lease component. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. See Note 9. Leases
Use of Estimates   The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Management evaluates estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic and commodity price environment. The current commodity price, supply and demand environment coupled with the novel coronavirus (“COVID-19”) pandemic contributed to an unusually high degree of uncertainty in our estimates this quarter and have increased the likelihood that actual results could differ significantly from those estimates.
Impairments During second quarter 2020, we performed qualitative impairment assessments over property, plant and equipment, investments, and intangible assets. No impairment indicators were identified and no impairments were recorded.
During first quarter 2020, we identified certain impairment indicators including the significant decrease in commodity prices, changes to our customers’ development outlook due to reductions in demand resulting from the novel coronavirus (“COVID-19”) pandemic and excess crude oil and natural gas inventories, and a decrease in our market capitalization. Due to these impairment indicators, we conducted impairment testing of certain of our assets, as follows:
Property, Plant and Equipment and Intangible Assets Our intangible asset accumulated amortization totaled approximately $29.6 millionDue to publicly announced changes to our customers’ development outlook within the Delaware Basin and $45.6 million as of December 31, 2018the Black Diamond dedication area, we concluded impairment indicators existed and June 30, 2019, respectively. Intangible asset amortization expense totaled approximately $8.1 million for the three months ended June 30, 2018 and 2019 and $13.3 million and $16.0 million for the six months ended June 30, 2018 and 2019, respectively. The weighted average amortization period for our intangible assets is approximately 11 years.
Recently Adopted Accounting Standards
Leases In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02 (ASU 2016-02), which creates Topic 842 – Leases (ASC 842). The standard requires lessees to recognize a ROU asset and lease liability on the balance sheet for the rights and obligations created by leases. ASC 842 also requires disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases.
The new standard provided a number of optional practical expedients. We elected:

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Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


conducted an undiscounted cash flow test. We developed estimates of future undiscounted cash flows expected in connection with providing midstream services within the packagededication areas and compared the estimates to the carrying amount of ‘practical expedients’, permitting usthe assets utilized to provide midstream services. Assumptions used in the estimates include expectations of throughput volumes, future development and capital spending plans. Based upon the results of the undiscounted cash flow test, we concluded that the carrying amount of the assets were recoverable and no impairment was recorded.
Goodwill All of our goodwill was assigned to the Black Diamond reporting unit within the Gathering Systems reportable segment. We performed a qualitative assessment and concluded it was more likely than not to reassess our prior conclusions about lease identification, lease classification and initial direct costs;
that the practical expedient pertaining to land easements, allowingfair value of the Black Diamond reporting unit was less than its carrying value. We then performed a fair value assessment using the income approach. Our estimate of fair value required us to use significant unobservable inputs, representative of a Level 3 fair value measurement, including assumptions for operating and development costs as well as taking into account changes and uncertainties in our customers’ development outlook. Based on these assessments, we concluded that our goodwill was fully impaired and recorded a non-cash charge of $109.7 million in March 2020.
Equity Method Investments We consider our equity method investments to be essential components of our business and necessary and integral elements of our value chain in support of our operations. We considered whether any facts or circumstances suggested that our equity method investments were impaired on an other-than-temporary basis and concluded that the carrying values of our equity method investments were not impaired.
Intangible Assets Our intangible asset accumulated amortization totaled approximately $78.0 million and $61.9 million as of June 30, 2020 and December 31, 2019, respectively. Intangible asset amortization expense totaled approximately $8.1 million for existing land easements under previous accounting policy;the three months ended June 30, 2020 and 2019 and $16.1 million and $16.0 million for the six months ended June 30, 2020 and 2019, respectively.
Loan to Equity Method Investee On April 2, 2020, we entered into a loan agreement with EPIC Y-Grade. In accordance with the practical expedientloan agreement, we loaned $22.5 million to EPIC Y-Grade, to be used for construction and working capital purposes. The maturity date of the loan is December 15, 2023. As the loan does not separate leaserepresent an in-substance capital contribution, it is recorded within other noncurrent assets in our consolidated balance sheets.
The loan bears interest at a rate equal to applicable margins plus the London Interbank Offered Rate (“LIBOR”), or alternate base rate. EPIC Y-Grade has the option to defer payment of interest (“PIK Interest”) for a 12-month period commencing on April 2, 2020. All PIK Interest is added to the outstanding principal amount of the loan and non-lease componentsshall be paid on the maturity date. The loan plus accrued PIK Interest totaled $23.1 million at June 30, 2020. We recorded an allowance for expected credit losses of $1.3 million that is recorded within other non-operating expense in our consolidated statement of operations.
The carrying amount of the loan, net of the allowance for expected credit losses, approximates fair value as a portion of the interest rate is variable and reflective of market rates.  
Tax Provision We are not a taxable entity for United States federal income tax purposes or for the majority of states that impose an income tax. Taxes are generally borne by our leases.partners through the allocation of taxable income and we do not record deferred taxes related to the aggregate difference in the basis of our assets for financial and tax reporting purposes. We are subject to a Texas margin tax due to our operations in the Delaware Basin and we recorded a de minimis state tax provision for the three months ended June 30, 2020 and 2019.
We adopted ASC 842 on January 1, 2019 usingFor periods prior to the modified retrospective approach. The standard did not materially impactDrop-Down and Simplification Transaction, our consolidated balance sheet or consolidated statement of operations and had no impact on our consolidated statement of cash flows. Prior period financial statements include a provision for tax expense on income related to the assets contributed to the Partnership. Deferred federal and state income taxes were not adjusted. provided on temporary differences between the financial statement carrying amounts of recognized assets and liabilities and their respective tax bases as if the Partnership filed tax returns as a stand-alone entity. Substantially all of our tax provision for the three months ended June 30, 2019 represents federal income taxes associated with the assets contributed in the Drop-Down and Simplification Transaction.

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See Note Table of Contents9. Leases.
Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Recently IssuedAdopted Accounting Standards
Financial Instruments: Credit LossesClarifying Certain Accounting Standards Codification (“ASC”) Topics In June 2016,first quarter 2020, the FASB issued Accounting Standards UpdateASU No. 2016-13 (ASU 2016-13):2020-01: Financial Instruments – Credit LossesInvestments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), which replacesto clarify the incurred loss impairment methodology usedinteractions between these Topics. The update provides clarifications for certain financial instruments with a methodology that reflects current expected credit losses. The current expected credit loss (CECL) model applies to a broad scope of financial instruments, including financial assets measured at amortized cost. CECL also applies to off-balance sheet credit exposures notentities investing in equity securities accounted for as insurance, such as financial guaranteesunder the ASC 321 measurement alternative and other unfunded loan commitments.companies that hold certain non-derivative forward contracts and purchased options to acquire equity securities. ASU 2016-132020-01 is effective for fiscal years beginning after December 15, 2019,2020, with early adoption permitted, and shall be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of thepermitted. We early adopted this ASU in first quarter 2020. This adoption period.
The FASB subsequently issued Accounting Standards Update No. 2019-04 (ASU 2019-04): Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives, and Topic 825, Financial Instruments and Accounting Standards Update No. 2019-05 (ASU 2019-05): Financial Instruments-Credit Losses (Topic 326)-Targeted Transition Relief. ASU 2019-04 and ASU 2019-05 provide certain codification improvements related to CECL implementation and targeted transition relief consisting of an option to irrevocably elect the fair value option for eligible instruments.
From evaluation of our current credit portfolio, which includes receivables for midstream services and crude oil sales, historical credit losses have been de minimis and we believe that our expected future credit losses willdid not be significant. As such, we do not believe adoption of the standard will have a material impact on our financial statements.
Recently Issued Accounting Standards
LIBOR Reform In first quarter 2020, the FASB issued ASU No. 2020-04 (ASU 2020-04): Reference Rate Reform (Topic 848), which provides optional guidance for a limited period of time to ease the transition from LIBOR to an alternative reference rate. The ASU intends to address certain concerns stakeholders raised relating to accounting for contract modifications and hedge accounting. These optional expedients and exceptions to applying GAAP, assuming certain criteria are met, are allowed through December 31, 2022. We are currently evaluating the provisions of ASU 2020-04 and have developed and are executingnot yet determined whether we will elect the optional expedients. We do not expect the transition to an implementation plan, which includes data collection, contract review and assessment, and evaluation ofalternative rate to have a significant impact on our systems, processes and internal controls. We will continue to monitor changes in our credit portfolio and off-balance sheet exposures as our implementation plan progresses.business, operations or liquidity.
Reconciliation of Total Cash We define total cash as cash, cash equivalents and restricted cash. Our restricted cash is included in other current assets in our consolidated balance sheets. The following table provides a reconciliation of total cash:
Six Months Ended June 30,Six Months Ended June 30,
(in thousands)2019 20182020 2019
Cash and Cash Equivalents at Beginning of Period$10,740
 $18,026
$12,676
 $14,761
Restricted Cash at Beginning of Period (1) (2)
951
 37,505
Restricted Cash at Beginning of Period (1)
50
 951
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period$11,691
 $55,531
$12,726
 $15,712
      
Cash and Cash Equivalents at End of Period$9,388
 $16,202
$12,729
 $11,537
Restricted Cash at End of Period (1)
50
 

 50
Cash, Cash Equivalents, and Restricted Cash at End of Period$9,438
 $16,202
$12,729
 $11,587
(1) 
Restricted cash represents the amount held as collateral at December 31, 2018 and June 30, 2019 for certain of our letters of credit.
(2)
Restricted cash represents the amount held in escrow at December 31, 2017 for the Black Diamond Acquisition.
Revenue Recognition We recognize revenue at an amount that reflects the consideration to which we expect to be entitled in exchange for transferring goods or services to a customer, using a five-step process, in accordance with ASC 606 Revenue from Contracts with Customers (ASC 606).

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Table of Contents
Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Under ASC 606, remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied as of June 30, 2019.2020. A certain fresh water delivery affiliate revenue agreement contains a minimum volume commitment for the delivery of fresh water for a fixed fee per barrel with annual percentage escalations. The following table includes estimated revenues, as of June 30, 2019,2020, for the agreement. Our actual volumes delivered may exceed the future minimum volume commitment.
(in thousands)Midstream Services — AffiliateMidstream Services — Affiliate
Remainder of 2019$15,232
202036,817
Remainder of 2020$18,736
202137,635
37,635
Total$89,684
$56,371

Note 3. Acquisition
On January 31, 2018, Black Diamond completed the Black Diamond Acquisition for approximately $638.5 million in cash. Noble Member and Greenfield Member each funded its share of the purchase price, approximately $319.9 million and $318.6 million, respectively, through contributions to Black Diamond. Noble Member funded its share of the purchase price through a combination of cash on hand and borrowings under its revolving credit facility. See Note 6. Debt.
In addition to the payment to the Seller, Black Diamond, through an additional contribution from Greenfield Member, paid PDC Energy, Inc. (PDC Energy) approximately $24.1 million to expand PDC Energy’s acreage dedication as well as extend the duration of the acreage dedication by five years. In accordance with the limited liability company agreement of Black Diamond, Noble Member received a 54.4% equity ownership interest in Black Diamond and Greenfield Member received a 45.6% equity ownership interest in Black Diamond. Noble Member’s agreed equity ownership interest includes a 4.4% equity ownership interest promote which will vest only after Noble Member is allocated an amount of gross revenue equal to the contributions by Greenfield Member in excess of their agreed equity ownership interest.
We serve as the operator of the Black Diamond system. We acquired a large-scale integrated gathering system located in the DJ Basin with approximately 160 miles of pipeline in operation and delivery capacity of approximately 300 MBbl/d as well as approximately 141,000 dedicated acres from six customers under fixed-fee arrangements.
Purchase Price Allocation The transaction has been accounted for as a business combination, using the acquisition method. The following table represents the final allocation of the total Black Diamond Acquisition purchase price to the assets acquired and the liabilities assumed based on the fair value at the acquisition date, with any excess of the purchase price over the estimated fair value of the identifiable net assets acquired recorded as goodwill.

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Table of Contents
Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


The following table sets forth our final purchase price allocation:
(in thousands) 
Cash Consideration$638,266
PDC Energy Payment24,120
Current Liabilities Assumed18,259
Total Purchase Price and Liabilities Assumed$680,645
  
Cash and Restricted Cash$12,518
Accounts Receivable10,661
Other Current Assets2,206
Property, Plant and Equipment205,766
Intangible Assets  (1)
339,760
Fair Value of Identifiable Assets570,911
Implied Goodwill (2)
109,734
Total Asset Value$680,645
(1)
The customer contracts we acquired are long-term, fixed-fee contracts for the purchase and sale of crude oil. Fair value was calculated using the multi-period excess earnings method under the income approach for the existing customers. The fair value was determined using unobservable inputs and is considered to be a Level 3 measurement on the fair value hierarchy.
(2)
Based upon the final purchase price allocation, we have recognized $109.7 million of goodwill, all of which is assigned to the Black Diamond reporting unit within the Gathering Systems reportable segment. As a result of the acquisition, we expect to realize certain synergies which may result from our operation of the Black Diamond system.
Pro Forma Results The following pro forma consolidated financial information was derived from the historical financial statements of the Partnership and Saddle Butte and gives effect to the acquisition as if it had occurred on January 1, 2018. The pro forma results of operations do not include any cost savings or other synergies that may result from the Black Diamond Acquisition or any estimated costs that have been or will be incurred by us to integrate the acquired assets. The pro forma consolidated financial information has been included for comparative purposes and is not necessarily indicative of the results that might have actually occurred had the acquisition taken place on January 1, 2018; furthermore, the financial information is not intended to be a projection of future results.
 Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except per unit amounts)
2019 (1)
 
2018 (1)
 
2019 (1)
 2018
Revenues$158,261
 $121,971
 $306,221
 $230,216
Net Income53,198
 44,442
 116,453
 81,092
Net Income Attributable to Noble Midstream Partners LP36,409
 36,584
 79,968
 74,279
        
Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic and Diluted       
Common Units$0.79
 $0.90
 $1.77
 $1.83
Subordinated Units$0.84
 $0.90
 $1.91
 $1.83
(1)
No pro forma adjustments were made for the period as Black Diamond operations are included in our results for the full period.

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Table of Contents
Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Note 4.3. Transactions with Affiliates
Revenues We derive a substantial portion of our revenues from commercial agreements with Noble. Revenues generated from commercial agreements with Noble and its affiliates consist of the following:
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2019 2018 2019 20182020 2019 2020 2019
Crude Oil, Natural Gas and Produced Water Gathering$66,749
 $46,871
 $130,322
 $89,895
Gathering and Processing$82,671
 $78,136
 $171,969
 $153,516
Fresh Water Delivery18,367
 19,074
 45,954
 39,358
10,300
 18,367
 33,899
 45,954
Other766
 979
 1,602
 1,934
768
 766
 1,655
 1,602
Total Midstream Services — Affiliate$85,882
 $66,924
 $177,878
 $131,187
$93,739
 $97,269
 $207,523
 $201,072

Expenses General and administrative expense consists of the following:
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2019 2018 2019 20182020 2019 2020 2019
General and Administrative Expense Affiliate
$1,848
 $1,894
 $3,796
 $3,705
$4,107
 $2,178
 $6,782
 $4,456
General and Administrative Expense Third Party
2,990
 3,086
 5,065
 11,717
2,339
 2,993
 5,150
 5,076
Total General and Administrative Expense$4,838
 $4,980
 $8,861
 $15,422
$6,446
 $5,171
 $11,932
 $9,532

Omnibus AgreementOur omnibus agreement with Noble contractually requires us to pay a fixed annual fee to Noble for certain administrative and operational support services being provided to us. The omnibus agreement generally remains in full force and effect so long as Noble controls our general partner, Noble Midstream GP LLC (“General Partner”). The cap on the initial rate of $6.9 million expired in September 2019 and we completed the annual fee redetermination process during February 2020. The redetermined rate is $15.7 million and became effective March 1, 2020.
Note 5.4. Property, Plant and Equipment
Property, plant and equipment, at cost, is as follows:
(in thousands)June 30, 2019 December 31, 2018June 30, 2020 December 31, 2019
Crude Oil, Natural Gas and Produced Water Gathering Systems and Facilities$1,377,271
 $1,199,679
Gathering and Processing Systems$1,898,488
 $1,795,957
Fresh Water Delivery Systems80,791
 78,820
95,802
 96,004
Crude Oil Treating Facilities21,650
 20,027
Construction-in-Progress (1)
142,173
 202,083
62,592
 115,034
Total Property, Plant and Equipment, at Cost1,621,885
 1,500,609
2,056,882
 2,006,995
Accumulated Depreciation and Amortization(102,338) (79,357)(279,115) (244,038)
Property, Plant and Equipment, Net$1,519,547
 $1,421,252
$1,777,767
 $1,762,957
(1) 
Construction-in-progress at June 30, 20192020 primarily includes $115.1$49.0 million in gathering system projects $3.7 million in fresh water delivery system projects and $22.3$11.6 million in equipment for use in future projects. Construction-in-progress at December 31, 20182019 primarily includes $147.1$98.4 million in gathering system projects $21.6 million in fresh water delivery system projects and $32.8$15.4 million in equipment for use in future projects.

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Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Note 6.5. Debt
Debt consists of the following:
June 30, 2019 December 31, 2018June 30, 2020 December 31, 2019
(in thousands, except percentages)Debt Interest Rate Debt Interest RateDebt Interest Rate Debt Interest Rate
Revolving Credit Facility, due March 9, 2023(1)$370,000
 3.77% $60,000
 3.67%$735,000
 1.61% $595,000
 3.11%
Term Loan Credit Facility, due July 31, 2021500,000
 3.51% 500,000
 3.42%500,000
 1.36% 500,000
 2.85%
Finance Lease Obligation (1)
2,389
 % 3,231
 %
Term Loan Credit Facility, due August 23, 2022400,000
 1.24% 400,000
 2.74%
Finance Lease Obligation2,033
 % 2,005
 %
Total872,389
   563,231
  1,637,033
   1,497,005
  
Term Loan Credit Facility Unamortized Debt Issuance Costs(872)   (979)  
Unamortized Debt Issuance Costs(1,114)   (1,326)  
Total Debt871,517
   562,252
  1,635,919
   1,495,679
  
Finance Lease Obligation Due Within One Year (1)
(1,470)   (3,231)  
Finance Lease Obligation Due Within One Year
   
  
Long-Term Debt$870,047
   $559,021
  $1,635,919
   $1,495,679
  
(1) 
See Note 9. Leases.
Our revolving credit facility has a total borrowing capacity of $1.15 billion. As of June 30, 2020 and December 31, 2019, our revolving credit facility had $415 million and $555 million available for borrowing, respectively.
During the first six months of 2020, we borrowed a net $140 million under our revolving credit facility. Proceeds from our revolving credit facility were utilized to fund portions of our capital contributions to investments, capital program and for working capital purposes.
Compliance with Covenants The revolving credit facility and term loan credit facilityfacilities require us to comply with certain financial covenants as of the end of each fiscal quarter. We were in compliance with such covenants as of June 30, 2019.2020.
Fair Value of Long-Term Debt Our revolving credit facility and term loan credit facilityfacilities are variable-rate, non-public debt. The fair value of our revolving credit facility and term loan credit facilityfacilities approximates the carrying amount. The fair value is estimated based on observable inputs. As such, we consider the fair value of these facilities to be a Level 2 measurement on the fair value hierarchy.
Note 7.6. Investments
We have ownership interests in the following:following entities:
3.33% interest in White Cliffs;
50% interest in the Advantage Joint Venture;Advantage;
50% interest in the Delaware Crossing Joint Venture;Crossing;
15% interest in EPIC Y-Grade; and
30% interest in EPIC Crude.Crude;
15% interest in EPIC Propane; and
20% interest in Saddlehorn.
Delaware Crossing Joint Venture On February 7, 2019, we executed definitive agreements with Salt Creek Midstream LLC (Salt Creek) and completed the formation of the Delaware Crossing, Joint Venture to construct a crude oil pipeline system with a capacity of 160 MBbl/d in the Delaware Basin.Basin which began delivering crude oil into all connection points in April 2020. During the first six months of 2019,2020, we have made capital contributions of approximately $38.3$16.9 million.
EPIC Y-Grade On January 31, 2019, we exercised and closed ouran option with EPIC Midstream Holdings, LP (EPIC)(“EPIC”) to acquire an interest in EPIC Y-Grade.Y-Grade, which owns the EPIC Y-Grade is constructing an approximately 700-mile pipeline linking natural gas liquid (NGL) reservesfrom the Delaware Basin to Corpus Christi, Texas. Interim crude service on the EPIC Y-Grade mainline ended in March 2020. EPIC Y-Grade began the Permian Basintransition to NGL service in May 2020 and Eagle Ford Shale to Gulf Coast refiners, petrochemical companies, and export markets.completed construction of its first new build fractionator in June 2020. During the first six months of 2019,2020, we have made capital contributions of approximately $149.5$12.8 million.
EPIC Crude On January 31, 2019, we exercised ouran option with EPIC to acquire an interest in EPIC Crude. OnCrude, and on March 8, 2019, we closed ourthe option with EPIC to acquire the interest in EPIC Crude.interest. EPIC Crude is constructing an approximately 700-milehas been engaged in the construction of the EPIC crude oil pipeline with a capacity of 590 MBbl/d from the Delaware Basin to Corpus Christi, Texas. Construction of the Gulf Coast.EPIC Crude pipeline was completed, and the pipeline was commissioned in February 2020 and entered full service on April 1, 2020. During the first six months of 2019,2020, we have made capital contributions of approximately $216.2$30.0 million.

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Notes to Consolidated Financial Statements (Unaudited)


EPIC PropaneOn December 19, 2019, we exercised and closed an option with EPIC to acquire an interest in EPIC Propane, which is constructing a propane pipeline that will run from the EPIC Y-Grade Logistics, LP fractionator complex in Robstown, Texas to the Phillips 66 petrochemical facility in Sweeney, Texas, with additional connectivity to the Markham underground storage caverns. EPIC Propane completed construction of its first new build fractionator in June 2020. During the first six months of 2020, we made capital contributions of approximately $4.0 million.
Saddlehorn Pipeline On February 1, 2020, Black Diamond exercised and closed an option to acquire a 20% ownership interest in Saddlehorn for $160 million, or $87.0 million net to the Partnership. Greenfield Member contributed $73.0 million for its portion of the purchase price. Black Diamond purchased a 10% interest from each of Magellan Midstream Partners, L.P. (“Magellan”) and Plains All American Pipeline, L.P. (“Plains”). After the transaction, Magellan and Plains each own a 30% membership interest and Black Diamond and Western Midstream each own a 20% membership interest in Saddlehorn. Magellan continues to serve as operator of the Saddlehorn pipeline.
The following table presents our investments at the dates indicated:
(in thousands)June 30, 2019 December 31, 2018June 30, 2020 December 31, 2019
White Cliffs$10,187
 $9,373
$10,363
 $10,268
Advantage Joint Venture74,555
 72,944
Delaware Crossing Joint Venture37,288
 
Advantage72,651
 76,834
Delaware Crossing84,671
 68,707
EPIC Y-Grade150,399
 
163,244
 162,850
EPIC Crude214,954
 
362,912
 339,116
EPIC Propane7,028
 3,003
Saddlehorn159,948
 
Total Investments$487,383
 $82,317
$860,817
 $660,778

The following table presents our investment income (loss)loss (income) for the periods indicated:
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2019 2018 2019 20182020 2019 2020 2019
White Cliffs$841
 $973
 $1,889
 $1,804
$(549) $(841) $(1,264) $(1,889)
Advantage Joint Venture1,513
 2,936
 3,754
 4,798
Delaware Crossing Joint Venture(355) 
 (1,538) 
Advantage(1,311) (1,513) (3,387) (3,754)
Delaware Crossing752
 355
 1,472
 1,538
EPIC Y-Grade(1,024) 
 (1,054) 
7,977
 1,024
 13,595
 1,054
EPIC Crude(3,245) 
 (3,245) 
1,972
 3,245
 8,873
 3,245
EPIC Propane36
 
 61
 
Saddlehorn(5,712) 
 (10,338) 
Other (1)
522
 182
 787
 357
(435) (522) (873) (787)
Total Investment (Loss) Income$(1,748) $4,091
 $593
 $6,959
Total Investment Loss (Income)$2,730
 $1,748
 $8,139
 $(593)
(1) 
Represents income associated with our fee for serving as the operator of the Advantage Joint Venture and Delaware Crossing Joint Venture.Crossing.


Note 8.7. Segment Information
We manage our operations by the nature of the services we offer. Our reportable segments comprise the structure used to make key operating decisions and assess performance. As a result of our increased investment in midstream entities during first quarter 2019, we have established an Investments in Midstream Entities reportable segment. Our Investments in Midstream Entities reportable segment includes all activity associated with our unconsolidated investments. See Note 7. Investments.
We are now organized into the following reportable segments: Gathering Systems (crude(primarily includes crude oil gathering, natural gas gathering and processing, produced water gathering, crude oil treating, and crude oil sales), Fresh Water Delivery, Investments in Midstream Entities and Corporate. We often refer to the services of our Gathering Systems and Fresh Water Delivery reportable segments collectively as our midstream services. Prior period segment information has been reclassified to conform to the current period presentation.

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Notes to Consolidated Financial Statements (Unaudited)


Summarized financial information concerning our reportable segments is as follows:
(in thousands)
Gathering Systems (1)
 
Fresh Water Delivery (1)
 Investments in Midstream Entities 
Corporate (2)
 ConsolidatedGathering Systems Fresh Water Delivery Investments in Midstream Entities 
Corporate (1)
 Consolidated
Three Months Ended June 30, 2020         
Midstream Services — Affiliate$83,439
 $10,300
 $
 $
 $93,739
Midstream Services — Third Party21,186
 1,811
 
 
 22,997
Crude Oil Sales — Third Party29,214
 
 
 
 29,214
Total Revenues133,839
 12,111
 
 
 145,950
Income (Loss) Before Income Taxes58,392
 10,336
 (2,730) (15,266) 50,732
Additions to Long-Lived Assets4,849
 
 
 148
 4,997
Additions to Investments
 
 2,627
 
 2,627
         
Three Months Ended June 30, 2019                  
Midstream Services — Affiliate$67,515
 $18,367
 $
 $
 $85,882
$78,902
 $18,367
 $
 $
 $97,269
Midstream Services — Third Party18,143
 2,454
 
 
 20,597
19,155
 2,454
 
 
 21,609
Crude Oil Sales — Third Party51,782
 
 
 
 51,782
51,782
 
 
 
 51,782
Total Revenues137,440
 20,821
 
 
 158,261
149,839
 20,821
 
 
 170,660
Income (Loss) Before Income Taxes49,133
 13,621
 (1,748) (7,717) 53,289
52,668
 13,621
 (1,748) (8,047) 56,494
Additions to Long-Lived Assets55,850
 1,113
 
 240
 57,203
56,739
 1,113
 
 240
 58,092
Additions to Investments
 
 143,984
 
 143,984

 
 143,984
 
 143,984
                  
Three Months Ended June 30, 2018         
Six Months Ended June 30, 2020         
Midstream Services — Affiliate$47,850
 $19,074
 $
 $
 $66,924
$173,624
 $33,899
 $
 $
 $207,523
Midstream Services — Third Party10,368
 3,101
 
 
 13,469
44,910
 5,985
 
 
 50,895
Crude Oil Sales — Third Party41,578
 
 
 
 41,578
111,577
 
 
 
 111,577
Total Revenues99,796
 22,175
 
 
 121,971
330,111
 39,884
 
 
 369,995
Goodwill Impairment109,734
 
 
 
 109,734
Income (Loss) Before Income Taxes29,066
 18,434
 4,091
 (6,966) 44,625
17,174
 32,779
 (8,139) (28,449) 13,365
Additions to Long-Lived Assets149,571
 5,190
 
 
 154,761
52,468
 
 
 257
 52,725
Additions to Investments
 
 119
 
 119

 
 228,226
 
 228,226
                  
Six Months Ended June 30, 2019                  
Midstream Services — Affiliate$131,924
 $45,954
 $
 $
 $177,878
$155,118
 $45,954
 $
 $
 $201,072
Midstream Services — Third Party37,428
 6,263
 
 
 43,691
39,375
 6,263
 
 
 45,638
Crude Oil Sales — Third Party84,652
 
 
 
 84,652
84,652
 
 
 
 84,652
Total Revenues254,004
 52,217
 
 
 306,221
279,145
 52,217
 
 
 331,362
Income (Loss) Before Income Taxes
96,719
 36,830
 593
 (17,491) 116,651
106,328
 36,830
 593
 (18,157) 125,594
Additions to Long-Lived Assets130,656
 1,394
 
 511
 132,561
134,388
 1,394
 
 511
 136,293
Additions to Investments
 
 414,587
 
 414,587

 
 414,587
 
 414,587
                  
Six Months Ended June 30, 2018         
Midstream Services — Affiliate$91,829
 $39,358
 $
 $
 $131,187
Midstream Services — Third Party17,826
 7,003
 
 
 24,829
Crude Oil Sales — Third Party63,688
 
 
 
 63,688
Total Revenues173,343
 46,361
 
 
 219,704
Income (Loss) Before Income Taxes59,894
 35,937
 6,959
 (18,955) 83,835
Additions to Long-Lived Assets596,960
 12,552
 
 
 609,512
Additions to Investments
 
 119
 
 119
         
June 30, 2019         
June 30, 2020         
Total Assets$1,911,769
 $87,618
 $487,383
 $11,761
 $2,498,531
$2,019,477
 $92,823
 $860,817
 $35,230
 $3,008,347
                  
December 31, 2018         
December 31, 2019         
Total Assets$1,804,100
 $96,280
 $82,317
 $15,220
 $1,997,917
$2,160,026
 $91,840
 $660,778
 $13,438
 $2,926,082
(1)
A substantial portion of the financial statement activity associated with our DevCos is captured within the Gathering Systems and Fresh Water Delivery reportable segments. Although our unconsolidated investments are owned through certain DevCos, all financial statement activity associated with our unconsolidated investments is captured within the Investments in Midstream Entities reportable segment. As our DevCos represent VIEs, see the above reportable segments for our VIEs impact to the consolidated financial statements.
(2) 
The Corporate segment includes all general Partnership activity not attributable to our DevCos.operating subsidiaries.

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Notes to Consolidated Financial Statements (Unaudited)


Note 9. Leases
In the normal course of business, we enter into lease agreements to support our operations. We lease field equipment as well as water and pipeline transportation assets.
Operating Leases Our operating leases consist of field equipment and transportation assets. Our field equipment leases have fixed monthly payments over a minimum term with options to extend the rental period on a month-to-month basis. Our leased transportation assets have variable monthly payments (price per barrel throughput) over a minimum term with the option to extend on a year-to-year basis. Our operating and variable lease expense is recorded in direct operating expense in our consolidated statement of operations and was de minimis for the three and six months ended June 30, 2019.
Finance Leases We lease water assets for use in the performance of our fresh water delivery services. The amount of the lease obligation is based on the discounted present value of future minimum lease payments, and therefore does not reflect future cash lease payments. Our finance lease expense is recorded in depreciation and amortization expense in our consolidated statement of operations and was de minimis for the three and six months ended June 30, 2019. Interest expense for our finance lease is recorded in interest expense in our consolidated statement of operations and was de minimis for the three and six months ended June 30, 2019.
Short Term Leases Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Short term lease expense is recorded in direct operating expense in our consolidated statement of operations and was de minimis for the three and six months ended June 30, 2019.
Balance Sheet Information ROU assets and lease liabilities are as follows:
(thousands)Balance Sheet LocationJune 30, 2019
Assets  
Operating (1)
Other Noncurrent Assets$2,024
Finance (2)
Total Property, Plant and Equipment, Net4,047
Total ROU Assets $6,071
Liabilities  
Current  
OperatingOther Current Liabilities$1,558
FinanceOther Current Liabilities1,470
Noncurrent  
OperatingOther Noncurrent Liabilities445
Finance (3)
Long-Term Debt919
Total Lease Liabilities $4,392
(1)
All of our operating leases mature in 2019 or 2020. Future operating lease payments of $0.9 million are due in 2019 and $1.1 million are due in 2020.
(2)
Finance lease assets are recorded net of accumulated amortization of $1.0 million as of June 30, 2019.
(3)
Our finance lease matures during 2020.

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Notes to Consolidated Financial Statements (Unaudited)


Note 10.8. Partnership Distributions
Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash to unitholders of record on the applicable record date. The following table details the distributions paid in respect of the periods presented below:
  
Distributions
(in thousands)
  
Distributions
(in thousands)
  Limited Partners   Limited Partners 
PeriodRecord DateDistribution DateDistribution per Limited Partner Unit
Common Unitholders(1)
Subordinated UnitholdersHolder of IDRsTotalRecord DateDistribution DateDistribution per Limited Partner Unit
Common Unitholders(1)
Subordinated Unitholders (2)
Holder of IDRs (3)
Total
Q4 2017February 5, 2018February 12, 2018$0.4883
$11,566
$7,765
$520
$19,851
Q1 2018May 7, 2018May 14, 2018$0.5110
$12,103
$8,126
$819
$21,048
Q4 2018February 4, 2019February 11, 2019$0.5858
$13,876
$9,316
$2,421
$25,613
February 4, 2019February 11, 2019$0.5858
$13,876
$9,316
$2,421
$25,613
Q1 2019May 6, 2019May 13, 2019$0.6132
$14,534
$9,751
$3,507
$27,792
May 6, 2019May 13, 2019$0.6132
$14,534
$9,751
$3,507
$27,792
Q2 2019August 5, 2019August 12, 2019$0.6418
$25,418
$
$4,640
$30,058
Q3 2019November 4, 2019November 12, 2019$0.6716
$26,598
$
$5,820
$32,418
Q4 2019February 4, 2020February 14, 2020$0.6878
$62,012
$
$
$62,012
Q1 2020May 8, 2020May 15, 2020$0.1875
$16,906
$
$
$16,906
(1) 
Distributions to common unitholders does not include distribution equivalent rights on units that vested under the Noble Midstream Partners LP 2016 Long-Term Incentive Plan (the LTIP)“LTIP”).
(2)
On May 14, 2019, all Subordinated Units were converted into Common Units.
(3)
In November 2019, we acquired all of Noble’s IDRs. See Note 2. Basis of Presentation.
Incentive Distribution RightsCash Distributions Noble currently holds Incentive Distribution Rights (IDRs) that entitle it to receive increasing percentages, up toOn July 24, 2020, the Board of Directors of our General Partner approved a maximum of 50%, of the available cash we distribute from operating surplus in excess of $0.4313 per unit per quarter. The maximumquarterly distribution of 50% does not include any distributions that Noble may receive on Common Units or Subordinated Units that it owns.
Conversion of Subordinated Units On April 25, 2019, the board of directors of our general partner declared a quarterly cash distribution of $0.6132 per unit for the quarter ended March 31, 2019. The distribution was paid on May 13, 2019 to unitholders of record as of the close of business on May 6, 2019. Upon payment of the distribution, the requirements for the conversion of all Subordinated Units were satisfied under our partnership agreement. As a result, on May 14, 2019, all 15,902,584 Subordinated Units, which were owned entirely by Noble, converted into Common Units on a one-for-one basis and thereafter will participate on terms equal with all other common units in distributions from available cash.
Cash Distributions On July 25, 2019, the board of directors of our general partner declared a quarterly cash distribution of $0.6418$0.1875 per unit. The distribution will be paid on August 12, 2019,14, 2020, to unitholders of record as of August 5, 2019. Also on August 12, 2019, a cash incentive distribution of $4.6 million will be made to Noble related to its IDRs, based upon the level of distribution paid per Common Unit.7, 2020.
Note 11.9. Net Income Per Limited Partner Unit
Our net income is attributed to limited partners, in accordance with their respective ownership percentages, and when applicable, giving effect to incentive distributions paid to Noble, the holder of our IDRs. The Common and Subordinated unitholders represent an aggregate 100% limited partner interest in us. Pursuant to our partnership agreement,Noble. For periods prior to the extent that the quarterly distributions exceed certain target levels, Noble, as the holderconversion of our IDRs, is entitled to receive certain incentive distributions that will result in more net income proportionately being allocated to Noble than to the holders of CommonSubordinated Units and Subordinated Units.
Becausesimplification of IDRs, we havehad more than one class of participating securities and we useutilized the two-class method when calculating the net income per unit applicable to limited partners. The classes of participating securities include Common Units, Subordinated Units and IDRs.
Basic and diluted net income per limited partner Common Unit and Subordinated Unit is computed by dividing the respective limited partners’ interest in net income for the period by the weighted-average number of Common Units and Subordinated Units outstanding for the period. Diluted net income per limited partner Common Unit and Subordinated Unit reflects the potential dilution that could occur if agreements to issue Common Units, such as awards under the LTIP, were settled or converted into Common Units. When it is determined that potential Common Units resulting from an award should be included in the diluted net income per limited partner Common and Subordinated Unit calculation, the impact is reflected by applying the treasury stock method.See Note 10. Partnership Distributions for further discussion of the conversion of Subordinated Units on May 14, 2019.

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Notes to Consolidated Financial Statements (Unaudited)


Our calculation of net income per limited partner Common and Subordinated Unit is as follows:
 Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except per unit amounts)2019 2018 2019 2018
Net Income Attributable to Noble Midstream Partners LP$36,409
 $36,584
 $79,968
 $75,945
Less: Net Income Attributable to Incentive Distribution Rights4,640
 1,134
 8,147
 1,953
Net Income Attributable to Limited Partners$31,769
 $35,450
 $71,821
 $73,992
        
Net Income Attributable to Common Units$25,487
 $21,210
 $49,454
 $44,268
Net Income Attributable to Subordinated Units6,282
 14,240
 22,367
 29,724
Net Income Attributable to Limited Partners$31,769
 $35,450
 $71,821
 $73,992
        
Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic and Diluted       
Common Units$0.79
 $0.90
 $1.77
 $1.87
Subordinated Units$0.84
 $0.90
 $1.91
 $1.87
        
Weighted Average Limited Partner Units Outstanding — Basic       
Common Units32,090
 23,686
 27,916
 23,684
Subordinated Units7,514
 15,903
 11,685
 15,903
        
Weighted Average Limited Partner Units Outstanding — Diluted       
Common Units32,121
 23,700
 27,944
 23,699
Subordinated Units7,514
 15,903
 11,685
 15,903
        
Antidilutive Restricted Units68
 27
 71
 21

 Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except per unit amounts)2020 2019 2020 2019
Net Income Attributable to Noble Midstream Partners LP$48,236
 $36,409
 $58,339
 $79,968
Less: Net Income Attributable to Incentive Distribution Rights
 4,640
 
 8,147
Net Income Attributable to Limited Partners$48,236
 $31,769
 $58,339
 $71,821
        
Net Income Attributable to Common Units$48,236
 $25,487
 $58,339
 $49,454
Net Income Attributable to Subordinated Units (1)

 6,282
 
 22,367
Net Income Attributable to Limited Partners$48,236
 $31,769
 $58,339
 $71,821
        
Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic and Diluted       
Common Units$0.53
 $0.79
 $0.65
 $1.77
Subordinated Units (1)
$
 $0.84
 $
 $1.91
        
Weighted Average Limited Partner Units Outstanding — Basic       
Common Units90,163
 32,090
 90,158
 27,916
Subordinated Units (1)

 7,514
 
 11,685
        
Weighted Average Limited Partner Units Outstanding — Diluted       
Common Units90,164
 32,121
 90,163
 27,944
Subordinated Units (1)

 7,514
 
 11,685
        
Antidilutive Restricted Units207
 68
 187
 71
(1)
On May 14, 2019, all Subordinated Units were converted into Common Units.
Note 12.10. Commitments and Contingencies
We may become involved in various legal proceedings in the ordinary course of business. These proceedings would be subject to the uncertainties inherent in any litigation, and we will regularly assess the need for accounting recognition or disclosure of these contingencies. We would expect to defend ourselves vigorously in all such matters. Based on currently available information, we believe it is unlikely that the outcome of known matters would have a material adverse impact on our combined financial condition, results of operations or cash flows.


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)(“MD&A”) is intended to provide a narrative about our business from the perspective of our management. Our MD&A is presented in the following major sections:
MD&A is our analysis of the Partnership’s financial performance and of significant trends that may affect future performance. It should be read in conjunction with the consolidated financial statements and notes appearing elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2018.2019. It contains forward-looking statements including, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions. The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions identify forward-looking statements. We do not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws. Readers are cautioned that such forward-looking statements should be read in conjunction with the our disclosures in Item 3 of this report under the heading: “Disclosure Regarding Forward-Looking Statements.”
EXECUTIVE OVERVIEW AND OPERATING OUTLOOK
The following discussion highlights the current operating environment, as well as significant operating and financial results for second quarter 2019.2020. This discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2018,2019, which includes disclosures regarding our critical accounting policies as part of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The impacts on our business of both the significant decline in commodity prices and the COVID-19 pandemic are unprecedented. We will continue to focus on our customer base and maintaining safe and reliable operations. We are continuing to work with our customers to further align activity and volume expectations.
Chevron Merger On July 20, 2020, Noble, our sponsor and majority unitholder, entered into the Chevron Merger Agreement with Chevron Corporation pursuant to which, and subject to the conditions of the agreement, all outstanding shares of Noble will be acquired by Chevron in an all-stock transaction. The transaction was approved by the Boards of Directors of both Noble and Chevron and is anticipated to close in fourth quarter 2020. The transaction is subject to Noble stockholder approval, regulatory approvals, and other customary closing conditions.
Second Quarter 2020 Significant Results
The following discussion highlightsoutlines significant operating, financial and transactional results for second quarter 2019.
Significant Operating Results Include:
average crude oil sales volumes of 10 MBbl/d, an increase of 38% as compared with second quarter 2018;
average crude oil gathering volumes of 217 MBbl/d, an increase of 44% as compared with second quarter 2018;
average natural gas gathering volumes of 537 BBtu/d, an increase of 100% as compared with second quarter 2018;
average produced water gathered volumes of 164 MBbl/d, an increase of 90% as compared with second quarter 2018; and
average fresh water delivered volumes of 179 MBbl/d, an increase of 12% as compared with second quarter 2018.2020.
Significant Financial Results Include:
Net Income Attributable to Limited Partnersof $48.2 million, an increase of 52% as compared with second quarter 2019;
net income of $53.2 million, an increase of 20% as compared with second quarter 2018;
netNet cash provided by operating activities of $88.8$101.1 million, an increase of 49%8% as compared with second quarter 2018;
declared a distribution of $0.6418 per unit, an increase of 20% above the second quarter 2018 distribution per unit;2019;
Adjusted EBITDA (non-GAAP financial measure) of $80.9$102.7 million, an increase of 25%27% as compared with second quarter 2018;
Adjusted EBITDA (non-GAAP financial measure) attributable to the Partnership of $55.6 million an increase of 13% as compared with second quarter 2018;2019; and
distributableDistributable cash flow (non-GAAP financial measure) of $40.6$79.7 million, an increase of 6%96% as compared with second quarter 2018.2019.
For additional information regarding our non-GAAP financial measures, please see — Adjusted EBITDA (Non-GAAP Financial Measure), Distributable Cash Flow (Non-GAAP Financial Measure) and Reconciliation of Non-GAAP Financial Measures, below.
COVID-19
Market ConditionsDuring second quarter 2020, continued containment measures and responsive actions to the COVID-19 pandemic continue to result in severe declines in general economic activity and energy demand. As a result, the global economy has experienced a slowing of economic growth, disruption of global manufacturing supply chains, stagnation of crude oil and natural gas consumption and interference with workforce continuity.

OPERATING OUTLOOKCurrent and Future Expected Impact to the Partnership The virus continues to impact the global demand for commodities, a trend we expect to continue into the third quarter, and beyond. Additionally, the risks associated with COVID-19 have impacted our workforce and the way we meet our business objectives. In response to this, we executed the following actions:
Remote workforce Due to concerns over health and safety, the majority of our global workforce continues to work remotely until further notice. As of June 30, 2020, working remotely has not significantly impacted our ability to maintain operations, including use of financial reporting systems, nor has it significantly impacted our internal control environment. In addition, certain of our employees and contractors work in remote field locations. We have implemented various health and safety protocols including, among others, reduction of certain operational workloads to critical maintenance and personnel, mandating use of certain secure travel options, review of critical medical supplies and procedures and implementation of other safeguards to protect operational personnel. We have not incurred, and in the future do not expect to incur, significant expenses related to business continuity as employees work from home.
Mobilized a Crisis Management Team (“CMT”) Our corporate CMT is responsible for ensuring the organization implements our corporate Employee Health and Wellness plan elements pertaining to pandemic response. This plan follows the Centers for Disease Control and Prevention (“CDC”), national, state and local guidance in preparing and responding to COVID-19. The CMT implemented communication protocols should an employee become sick, and we continue to follow CDC guidance, which is subject to change in the future. To date, we have not experienced significant business or operational interruption due to workforce health or safety concerns pertaining to COVID-19.
The rapid and unprecedented decreases in energy demand have continued to impact certain elements of our distribution channels. We are also continuing to experience impacts from downstream markets, as certain pipelines have limited ability to transport production as refineries reduce activity or are declaring force majeure. Additionally, inventory surpluses have, at times, overwhelmed U.S. storage capacity, leading to a further strain on the supply chain. Certain of our customers, including Noble, temporarily shut-in production in response to decreases in energy demand and low commodity prices.
2019Commodity Prices
Market ConditionsThe COVID-19 pandemic has continued to cause unprecedented and prolonged declines in the global demand for crude oil and natural gas. While relaxing certain containment measures in order to resume economic activity resulted in increased demand and commodity prices in late second quarter 2020, demand continues to be significantly lower than levels experienced prior to the COVID-19 pandemic. Even as commodity prices began to improve in June 2020, additional outbreaks and/or a return of containment measures or further restrictions could negatively impact commodity prices in the near future. The continuing uncertainty regarding the longevity and severity of the impacts of COVID-19 to the crude oil and natural gas industry, including the reduced demand for crude oil and natural gas commodities and its resulting impact on commodity prices, may continue until a vaccine or alternative treatment is made widely available across the globe.
Contemporaneously with the COVID-19 pandemic, the crude oil and natural gas industry continues to be impacted by excess supply in the global marketplace. The Organization of Petroleum Exporting Countries (“OPEC”) and certain non-OPEC producers agreed to production cuts beginning in May 2020 which extend through first quarter 2022. While these production cuts have proven unable to sufficiently offset the ongoing decreases in demand caused by COVID-19, production from these producers has fallen to its lowest levels in decades.
These factors have caused a number of producers, including our customers, to reduce capital spending levels and shut-in production at certain fields. While these shut-ins have decreased operating cash flows for producers, they have also served to lower inventory levels and thereby alleviate some of the crude oil storage constraints experienced in the beginning of second quarter 2020.
In addition to the U.S. crude oil market, the U.S. domestic natural gas market continues to be oversupplied and has contributed to depressed pricing. We expect that if development activity remains at lower levels in the U.S. leading to reduced crude oil and associated natural gas production, U.S. domestic natural gas prices will adjust as supply and demand levels equalize.
Current and Future Expected Impact to the PartnershipThe sustained decline in commodity prices adversely affected shale producers in the U.S., including our customers. In response, certain of our customers have reduced their capital investment programs and voluntarily shut-in production. The actions by our customers have resulted in decreased throughput volumes on our gathering systems as compared with first quarter 2020 and significant decreases in fresh water deliveries due to decreases in well completion activity.
The commodity price environment is expected to remain depressed based on sustained decreases in demand, over-supply and global economic instability caused by COVID-19, discussed further below. In addition, we expect downstream capacity and storage constraints to continue to have a negative impact on the ability to transport production. If constraints continue such that storage becomes unavailable to our customers or commodity prices remain depressed, they may be forced or elect to further shut-in production and delay or discontinue drilling plans, which would result in a further decline in demand for our services.

In this market environment, we are focused on prioritizing free cash flow and protecting our balance sheet. In response, we executed the following in second quarter 2020:
Reduced 2020 capital program In May 2020, we reduced our organic capital program to a range of $60 to $80 million. In total, we have lowered capital expectations by more than 65% from our original February 2020 guidance. These reductions highlight our resiliency and ability to efficiently reallocate resources to align with customer activity.
Maintained our reduced quarterly distribution from first quarter 2020 The Board of Directors of our General Partner approved a 73% reduction of the quarterly distribution to $0.1875 per unit for first quarter 2020. Our second quarter 2020 distribution will also be $0.1875 per unit. We intend to utilize funds from our distribution reduction and maintenance to reduce our debt levels. Our Board of Directors of our General Partner will continue reviewing the quarterly distribution in context of market conditions.
Global Economic Instability
Market Conditions COVID-19, coupled with the drop in commodity prices, have contributed to equity market volatility and what experts have now concluded amounted to a recession in first quarter 2020. Estimated ranges of the duration of these impacts to equity markets and the global economy vary widely, especially given the continued impacts of COVID-19 are unknown. In recent months, the U.S. government has passed a series of stimulus packages which, collectively, have provided the largest relief packages in U.S. history. These packages include various provisions intended to provide relief to individuals and businesses in the form of tax changes, loans and grants, among others. At this time, we do not believe these stimulus measures will have a material impact on the Partnership; however, we do believe they could aid the economy by providing relief to certain individuals and smaller businesses.
Current and Future Expected Impact to the Partnership The decline in our unit price and corresponding reduction in our market capitalization were sustained throughout second quarter 2020, a condition that is consistent across our sector. We do not have any debt covenants or other lending arrangements that depend upon our unit price. As of June 30, 2020, we are in compliance with the covenants contained in our revolving credit facility and term loans, which provide that our consolidated leverage ratio as of the end of each fiscal quarter may not exceed 5.00 to 1.0, and our consolidated interest coverage ratio as of the end of each fiscal quarter to be no less than 3.00 to 1.0. The consolidated leverage ratio and consolidated interest coverage ratio are defined in the respective agreements.
As cities, states and countries continue relaxing confinement restrictions, the risk for the resurgence and recurrence of COVID-19 remains. The reinstatement of containment measures could potentially lead to an extended period of reduced demand for crude oil and natural gas commodities, as well as assert further pressure on the global economy.
Potential Future Impacts
Impairment testing involves uncertainties related to key assumptions such as expectations of our customers’ development and
capital spending plans, among others, and a significant number of interdependent variables are derived from these key
assumptions. There is a high degree of complexity in their application in determining use and value in recovery tests and fair
value determinations.
We performed impairment assessments as of March 31, 2020 and fully impaired our goodwill during first quarter 2020. See Item 1. Financial Statements – Note 2. Basis of Presentation. We performed impairment assessments as of June 30, 2020, including assessments of property, plant and equipment, customer-related intangible assets, and equity method investments. We did not identify any impairment indicators based on these procedures. As mentioned above, we are in compliance with the covenants contained in our revolving credit facility and term loan credit facilities.
Given the inherent volatility of the current market conditions driven by the COVID-19 pandemic and the oil and gas supply dynamics, the potential for future conditions to deviate from our current assumptions exists. For instance, further erosion in consumer energy demand, lower crude oil and natural gas development and production, or lower commodity prices could trigger future impairments of our assets or non-compliance with the financial covenants in our revolving credit facility and term loans.
Workforce Adjustments
As previously disclosed, the officers of our General Partner manage our operations and activities. All of the employees required to conduct and support our operations are employed by Noble and are subject to the operational services and secondment agreement and omnibus agreement that we entered into with Noble.
During second quarter 2020, Noble engaged in corporate restructuring activities, resulting in reductions in its employee and contractor work forces. Additionally, certain Noble employees are still participating in the furlough and part-time work programs implemented by Noble in first quarter 2020. Certain employees that support our operations were impacted by these activities. These programs are expected to continue into third quarter 2020 for the majority of impacted employees.

Additionally, Noble lowered executive leadership salaries by 10% to 20%. Certain officers of our General Partner were impacted by the salary reductions. These reductions are expected to extend through the end of 2020. The aforementioned actions by Noble have not significantly impacted our ability to maintain operations, including use of financial reporting systems, nor have they significantly impacted our internal control environment.
Organic Capital Program
We have revisedIn May 2020, we reduced our 20192020 organic capital program excluding investment capital, to accommodate a gross investment level of $285 to $315 million, with $140 to $160 million attributable to the Partnership. Our capital expenditures during the first six months of 2019 have been below the expectations set forth in our initial capital program primarily due to a consistent focus on cost saving initiatives and the timingrange of our customers’ activity.approximately $60 to $80 million. We will continue to evaluate the level of capital spending throughout the year based on the following factors, among others, and their effect on project financial returns:
pace of our customers’ development;development based on current commodity prices;
operating and construction costs and our ability to achieve material supplier price reductions;
impact of new laws and regulations on our business practices;practices, including those related to COVID-19;
indebtedness levels; and
availability of financing or other sources of funding.
We plan to fund our capital program with cash on hand, from cash generated from operations, borrowings under our revolving credit facility and, if necessary, the issuance of additional equity or debt securities.
Investment Capital Program
Delaware Crossing Joint Venture The Delaware Crossing Joint Venture is constructing a 95-mile pipeline system that will originate in Pecos County, Texas, and have additional connections in Reeves County and Winkler County, Texas. The project footprint will be served by a combination of in-field crude oil gathering lines and a trunkline to a hub in Wink, Texas. The project is underpinned by approximately 192,000 dedicated gross acres and nearly 100 miles of pipeline in Pecos, Reeves, Ward and Winkler Counties, Texas. The pipeline is expected to be operational in the first quarter of 2020. During the first six months of 2019, we made capital contributions of $38.3 million. Our total cash contributions are expected to be approximately $75 million to $85 million. We intend to fund our cash contributions with our revolving credit facility. Construction on the project is anticipated to be complete in early 2020.
EPIC Y-Grade EPIC Y-Grade is constructing an approximately 700-mile pipeline linking NGL reserves in the Permian Basin and Eagle Ford Shale to Gulf Coast refiners, petrochemical companies, and export markets. The pipeline will have a throughput capacity of approximately 440 MBbl/d with multiple origin points. During the first six months of 2019, we made capital contributions of $149.5 million. Our total cash contributions are expected to be approximately $165 million to $180 million, with substantially all of the cash contributions in 2019. We intend to fund our cash contributions with our revolving credit facility. Construction is nearing completion on the EPIC Y-Grade project, with anticipated interim crude service in the latter half of 2019.
EPIC Crude EPIC Crude is constructing an approximately 700-mile pipeline with a capacity of 590 MBbl/d from the Delaware Basin to the Gulf Coast. EPIC currently has a petition for declaratory order pending before the Federal Energy Regulatory Commission for approval of its rates and terms and conditions of its tariff. During the first six months of 2019, we made capital contributions of $216.2 million. Our total cash contributions are expected to be approximately $330 million to $350 million, with substantially all of the cash contributions in 2019. We intend to fund our cash contributions with our revolving credit facility and Preferred Equity. Construction on the project is anticipated to be complete in early 2020.
Colorado Senate Bill 19-181
For some time, initiatives have been underway in the State of Colorado to limit or ban crude oil and natural gas exploration, development or operations. During first quarter 2019, Senate Bill 19-181 (SB 181) was passed by the State Legislature. On April 16, 2019, the Governor signed the bill into law. The legislation makes sweeping changes in Colorado oil and gas law, including, among other matters, requiring the Colorado Oil and Gas Conservation Commission (Colorado Commission) to prioritize public health and environmental concerns in its decisions, instructing the Colorado Commission to adopt rules to minimize emissions of methane and other air contaminants, and delegating considerable new authority to local governments to regulate surface impacts. 
At this time, we are not aware of any significant changes to Noble’s or other third party customers’ development plans. For example, Noble has all necessary state approvals for more than 550 permits to drill wells over the next several years. The approved permits are for wells in multiple IDP areas, many of which are in the Mustang IDP area.  However, if additional regulatory measures are adopted, Noble and other third party customers in Colorado could experience delays and/or curtailment in the permitting or pursuit of their exploration, development, or production activities. Such compliance costs and delays, curtailments, limitations, or prohibitions in their development plans could result in decreased demand for our services, which could have a material adverse effect on our cash flows, results of operations, financial condition, and liquidity.


Second Quarter 2019 Development Project Updates
Laramie River DevCo LP DJ Basin
In the Greeley Crescent IDP area, we installed oilinfrastructure build out was put on hold due to changes in third party development plans with minimal activity during the quarter. We connected 24 wells in the Greeley Crescent IDP area and produceddelivered fresh water gathering infrastructure to support upcoming well connections.13 wells during the quarter.
In the Black Diamond dedication area, wethe joint venture progressed the Milton Phase I Terminal expansion project that increased outlet pumping capacity and installedwith installing new crude oil gathering infrastructure for upcoming well connections from third-party producers, as well connections.as facility expansion and upgrade projects. During the quarter, we connected 6460 third-party wells to the Black Diamond gathering system.
Green River DevCo LP We extendedIn the Mustang IDP area, we continued to extend infrastructure for crude oil, natural gas, and produced water gathering systems to facilitate further development, at a reduced pace due to a slowdown in the Mustang IDP area and support future well connections.customer activity levels. During the quarter, we connected 2016 affiliate wells to the Mustang gathering system and deliveredsystem; however, no fresh water was delivered.
In the Wells Ranch IDP area, we continued construction on extensions of gathering infrastructure to support future well connections. We did not deliver fresh water to 15 wells.
Colorado River DevCo LP During the quarter, we commenced construction on oil gathering projects for well connections scheduledany wells during the latter half of 2019 inquarter.
Delaware Basin
In the East Pony IDP. We connected 7 wells in the East Pony IDP and 9 wells in the Wells Ranch IDP. Fresh water was also delivered to 16 wells in the Wells Ranch IDP.
Blanco River DevCo LP During the quarter,Permian, we connected 25 sponsoredsix affiliate wells and 1one third-party well to our gathering systems. We are now connected to 4 third-party wells and are actively preparing for additional third-party gatheringsystems during the latter halfquarter. During the quarter, both affiliate and third-party activity levels slowed with the decline in commodity prices.
Investment Capital Program
Our 2020 investment capital program will accommodate a net investment level of $240 to $260 million. During the first six months of 2020, capital contributions to investments totaled approximately $224 million, or $151 million net to the Partnership. A substantial portion of the remaining spend will be for EPIC Y-Grade and EPIC Crude to support completion of the crude storage and marine terminal equipment as well as NGL fractionator commissioning.
Investment Project Updates
Delaware Crossing Delaware Crossing began delivering crude oil into all connection points in April 2020. Operational capacity is 135 MBbl/d with capability to expand to 200 MBbl/d. The Liberty Terminal in Reeves County Texas and the Wink Terminal in Winkler County Texas, which deliver into the EPIC Crude pipeline, were completed and placed in service during the second quarter of 2020. The pipeline gathers volumes from producers across approximately 200,000 acres in the southern Delaware Basin.
EPIC Y-Grade The pipeline was commissioned in February 2020. The clean out process and transition of the EPIC Y-Grade mainline from crude interim service to NGL service began during May 2020. In June 2020, the project completed construction of its first new build fractionator increasing capacity to 180 MBbl/d of NGLs from 70 MBbl/d in the first quarter 2020.
EPIC Crude Construction of the mainline and west dock of the marine terminal was completed in December 2019. The project entered full service on April 1, 2020.
EPIC Propane The EPIC Propane pipeline is currently under construction with anticipated completion in late 2020. In June 2020, the project completed construction of its first new build fractionator.

Saddlehorn The pipeline is currently undergoing expansion to increase crude oil capacity by 100 MBbl/d to a new total capacity of approximately 290 MBbl/d. The incremental capacity is expected to be available in late 2020.
RESULTS OF OPERATIONS
Results of operations were as follows:
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended June 30, Six Months Ended June 30,
(thousands)2019 2018 2019 20182020 2019 2020 2019
Revenues              
Midstream Services — Affiliate$85,882
 $66,924
 $177,878
 $131,187
$93,739
 $97,269
 $207,523
 $201,072
Midstream Services — Third Party20,597
 13,469
 43,691
 24,829
22,997
 21,609
 50,895
 45,638
Crude Oil Sales — Third Party51,782
 41,578
 84,652
 63,688
29,214
 51,782
 111,577
 84,652
Total Revenues158,261
 121,971
 306,221
 219,704
145,950
 170,660
 369,995
 331,362
Costs and Expenses              
Cost of Crude Oil Sales48,079
 40,012
 78,977
 61,451
29,104
 48,079
 108,963
 78,977
Direct Operating27,697
 18,393
 55,134
 35,541
20,039
 32,866
 46,889
 63,289
Depreciation and Amortization20,285
 16,371
 39,636
 27,700
26,354
 23,980
 52,285
 47,013
General and Administrative4,838
 4,980
 8,861
 15,422
6,446
 5,171
 11,932
 9,532
Goodwill Impairment
 
 109,734
 
Other Operating Expense2,576
 
 3,862
 
Total Operating Expenses100,899
 79,756
 182,608
 140,114
84,519
 110,096
 333,665
 198,811
Operating Income57,362
 42,215
 123,613
 79,590
61,431
 60,564
 36,330
 132,551
Other Expense (Income)              
Interest Expense, Net of Amount Capitalized2,325
 1,681
 7,555
 2,714
6,633
 2,322
 13,490
 7,550
Investment Loss (Income)1,748
 (4,091) (593) (6,959)2,730
 1,748
 8,139
 (593)
Other Non-Operating Expense1,336
 
 1,336
 
Total Other Expense (Income)4,073
 (2,410) 6,962
 (4,245)10,699
 4,070
 22,965
 6,957
Income Before Income Taxes53,289
 44,625
 116,651
 83,835
50,732
 56,494
 13,365
 125,594
State Income Tax Provision91
 183
 198
 257
Income Tax (Benefit) Expense(128) 731
 21
 2,040
Net Income53,198
 44,442
 116,453
 83,578
50,860
 55,763
 13,344
 123,554
Less: Net Income Attributable to Noncontrolling Interests16,789
 7,858
 36,485
 7,633
Less: Net Income Prior to the Drop-Down and Simplification Transaction
 2,565
 
 7,101
Net Income Subsequent to the Drop-Down and Simplification Transaction50,860
 53,198
 13,344
 116,453
Less: Net Income (Loss) Attributable to Noncontrolling Interests2,624
 16,789
 (44,995) 36,485
Net Income Attributable to Noble Midstream Partners LP$36,409
 $36,584
 $79,968
 $75,945
$48,236
 $36,409
 $58,339
 $79,968
              
Adjusted EBITDA(1) Attributable to Noble Midstream Partners LP
$55,621
 $49,297
 $118,471
 $104,278
$94,752
 $55,621
 $201,963
 $118,471
              
Distributable Cash Flow(1) of Noble Midstream Partners LP
$40,641
 $38,186
 $94,606
 $85,909
$79,681
 $40,641
 $173,401
 $94,606
(1) 
Adjusted EBITDA and Distributable Cash Flow are not measures as determined by GAAP and should not be considered an alternative to, or more meaningful than, net income, net cash provided by operating activities or any other measure as reported in accordance with GAAP. For additional information regarding our non-GAAP financial measures, please see — Adjusted EBITDA (Non-GAAP Financial Measure), Distributable Cash Flow (Non-GAAP Financial Measure) and Reconciliation of Non-GAAP Financial Measures, below.

Throughput and Crude Oil Sales Volumes
The amount of revenue we generate primarily depends on the volumes of crude oil, natural gas and water for which we provide midstream services as well as the crude oil volumes we sell to customers. Throughput and crude oil sales volumes related to our Gathering Systems and Fresh Water Delivery reportable segments were as follows:
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 20182020 2019 2020 2019
Colorado River DevCo LP (Wells Ranch IDP and East Pony IDP) (1)
       
DJ Basin       
Crude Oil Sales Volumes (Bbl/d)13,025
 9,750
 16,346
 8,401
Crude Oil Gathering Volumes (Bbl/d)176,184
 174,485
 179,645
 178,328
Natural Gas Gathering Volumes (MMBtu/d)468,971
 458,961
 484,088
 438,695
Natural Gas Processing Volumes (MMBtu/d)42,566
 51,167
 42,617
 51,755
Produced Water Gathering Volumes (Bbl/d)40,819
 41,830
 41,457
 39,948
Fresh Water Delivery Volumes (Bbl/d)30,335
 179,289
 128,636
 199,390
       
Delaware Basin       
Crude Oil Gathering Volumes (Bbl/d)46,047
 65,289
 49,340
 65,910
60,980
 45,501
 59,768
 43,840
Natural Gas Gathering Volumes (MMBtu/d)239,429
 217,202
 251,297
 212,551
174,845
 137,498
 178,564
 119,124
Produced Water Gathering Volumes (Bbl/d)11,550
 20,829
 12,460
 18,537
147,994
 137,584
 155,086
 130,818
Fresh Water Delivery Volumes (Bbl/d)78,925
 1,116
 46,715
 51,219
       
San Juan River DevCo LP (East Pony IDP) (1)
       
Fresh Water Delivery Volumes (Bbl/d)
 
 20,007
 
       
Green River DevCo LP (Mustang IDP) (1)
       
Crude Oil Gathering Volumes (Bbl/d)28,929
 108
 26,042
 54
Natural Gas Gathering Volumes (MMBtu/d)156,854
 172
 124,075
 87
Produced Water Gathering Volumes (Bbl/d)16,999
 236
 13,761
 119
Fresh Water Delivery Volumes (Bbl/d)70,543
 112,379
 95,359
 67,437
       
Blanco River DevCo LP (Delaware Basin) (1)
       
Crude Oil Gathering Volumes (Bbl/d)42,128
 21,506
 40,314
 17,978
Natural Gas Gathering Volumes (MMBtu/d)132,550
 48,743
 115,694
 44,248
Produced Water Gathering Volumes (Bbl/d)122,595
 59,682
 113,471
 42,927
       
Laramie River DevCo LP (Greeley Crescent IDP and Black Diamond Dedication Area) (1)
       
Crude Oil Sales Volumes (Bbl/d)9,750
 7,075
 8,401
 5,604
Crude Oil Gathering Volumes (Bbl/d)99,509
 63,686
 102,946
 56,183
Natural Gas Gathering Volumes (MMBtu/d)8,099
 1,970
 6,942
 1,489
Produced Water Gathering Volumes (Bbl/d)13,282
 5,665
 13,727
 5,222
Fresh Water Delivery Volumes (Bbl/d)29,821
 46,379
 37,309
 45,132
              
Total Gathering Systems              
Crude Oil Sales Volumes (Bbl/d)9,750
 7,075
 8,401
 5,604
13,025
 9,750
 16,346
 8,401
Crude Oil Gathering Volumes (Bbl/d)216,613
 150,589
 218,642
 140,125
237,164
 219,986
 239,413
 222,168
Natural Gas Gathering Volumes (MMBtu/d)536,932
 268,087
 498,008
 258,375
643,816
 596,459
 662,652
 557,819
Barrels of Oil Equivalent (Boe/d)295,200
 192,034
 290,890
 178,854
Barrels of Oil Equivalent (Boe/d) (1)
323,816
 300,594
 329,654
 298,190
Natural Gas Processing Volumes (MMBtu/d)42,566
 51,167
 42,617
 51,755
Produced Water Gathering Volumes (Bbl/d)164,426
 86,412
 153,419
 66,805
188,813
 179,414
 196,543
 170,766
              
Total Fresh Water Delivery              
Fresh Water Delivery Volumes (Bbl/d)179,289
 159,874
 199,390
 163,788
30,335
 179,289
 128,636
 199,390
(1) 
See Item 1. Financial Statements – Note 1. OrganizationIncludes crude oil sales volumes that are transported on our gathering systems and Nature of Operations for our DevCo ownership interests.
sold to third-party customers.

Revenues
Revenues from our Gathering System and Fresh Water Delivery reportable segments were as follows:
(in thousands)2019 2018 Increase (Decrease) From Prior Year2020 2019 Increase (Decrease) From Prior Year
Three Months Ended June 30,          
Crude Oil, Natural Gas and Produced Water Gathering Affiliate
$66,749
 $46,871
 42 %
Crude Oil, Natural Gas and Produced Water Gathering — Third Party16,851
 9,767
 73 %
Gathering and Processing Affiliate
$82,671
 $78,136
 6 %
Gathering and Processing — Third Party20,002
 17,863
 12 %
Fresh Water Delivery Affiliate
18,367
 19,074
 (4)%10,300
 18,367
 (44)%
Fresh Water Delivery — Third Party2,454
 3,101
 (21)%1,811
 2,454
 (26)%
Crude Oil Sales — Third Party51,782
 41,578
 25 %29,214
 51,782
 (44)%
Other — Affiliate766
 979
 (22)%768
 766
  %
Other — Third Party1,292
 601
 115 %1,184
 1,292
 (8)%
Total Revenues$158,261
 $121,971
 30 %$145,950
 $170,660
 (14)%
          
Six Months Ended June 30,          
Crude Oil, Natural Gas and Produced Water Gathering Affiliate
$130,322
 $89,895
 45 %
Crude Oil, Natural Gas and Produced Water Gathering — Third Party35,147
 16,337
 115 %
Gathering and Processing Affiliate
$171,969
 $153,516
 12 %
Gathering and Processing — Third Party41,970
 37,095
 13 %
Fresh Water Delivery Affiliate
45,954
 39,358
 17 %33,899
 45,954
 (26)%
Fresh Water Delivery — Third Party6,263
 7,003
 (11)%5,985
 6,263
 (4)%
Crude Oil Sales — Third Party84,652
 63,688
 33 %111,577
 84,652
 32 %
Other — Affiliate1,602
 1,934
 (17)%1,655
 1,602
 3 %
Other — Third Party2,281
 1,489
 53 %2,940
 2,280
 29 %
Total Revenues$306,221
 $219,704
 39 %$369,995
 $331,362
 12 %

Revenues Trend Analysis
Revenues increaseddecreased during second quarter 20192020 as compared with second quarter 2018.2019. The increasesdecreases in revenues by reportable segment were as follows:
Gathering Systems Gathering Systems revenues increaseddecreased by $37.6$16.0 million during second quarter 20192020 as compared with second quarter 20182019 due to the following:
an increasea decrease of $14.7$22.6 million in crude oil sales due to decreased commodity prices, which was partially offset by increased activity associated with the fulfillment of our transportation commitments;
a decrease of $3.3 million in crude oil, natural gas and produced water gathering services revenues due to the commencement of servicesdriven by shut-ins in the MustangWells Ranch IDP during second quarter 2018;area;
partially offset by;
an increase of $10.4$6.4 million in crude oil, natural gas and produced water gathering services revenues driven by an increase in throughput volumes in the Delaware Basin resulting from an increase in the number of wells connected to our gathering systems and the commencement of services for a third party customer subsequent toafter second quarter 2018;
an increase of $10.2 million in crude oil sales due an increase in crude oil sales volumes;2019; and
an increase of $4.7 million in gathering services revenues due to an increase in the number of wells connected to the Black Diamond system subsequent to second quarter 2018;
partially offset by:
a decrease of $6.6$4.4 million in crude oil, natural gas and produced water gathering services revenues due to reduced activitydriven by an increase in throughput volumes in the Wells Ranch and East Pony IDPs.

Mustang IDP area resulting from an increase in the number of wells connected to our gathering systems after second quarter 2019.
Fresh Water Delivery Fresh Water Delivery revenues decreased by $1.4$8.7 million during second quarter 20192020 as compared with second quarter 20182019 due to the following:
a decrease of $9.2 million in fresh water delivery revenues due to a decrease inminimal fresh water deliveries in the Mustang IDP areaDJ Basin resulting from reduced well completion activity by Noble;Noble.
substantially offset by;
an increaseRevenues increased during the first six months of $8.5 million2020 as compared with the first six months of 2019. The changes in fresh water delivery revenues due to an increase in fresh water deliveries in the Wells Ranch IDP area resulting from increased well completion activity by Noble.reportable segment were as follows:
Gathering Systems Gathering Systems revenues increased by $80.7$51.0 million during the first six months of 20192020 as compared with the first six months of 20182019 due to the following:

an increase of $24.3$26.9 million in crude oil natural gas and produced water gathering services revenuessales due to increased activity associated with the commencementfulfillment of services in the Mustang IDPour transportation commitments, which was partially offset by decreased commodity prices during second quarter 2018;2020;
an increase of $21.4$14.8 million in crude oil, natural gas and produced water gathering services revenues driven by an increase in throughput volumes in the Delaware Basin resulting from an increase in the number of wells connected to our gathering systems and the commencement of services for a third party customer subsequent to second quarter 2018;
an increase of $21.0 million in crude oil sales due to a full period of crude oil sales during 2019 due to the commencement of crude oil sales upon closing of the Black Diamond Acquisition as well as an increase in crude oil sales volumes during 2019;systems; and
an increase of $13.2 million in gathering services revenues due to a full period of gathering services provided by the Black Diamond system;
partially offset by:
a decrease of $6.2$8.9 million in crude oil, natural gas and produced water gathering services revenues due to the decreased activitydriven by an increase in throughput volumes resulting from an increase in the Wells Ranch and East Pony IDPs.number of wells connected to our gathering systems in the Mustang IDP area.
Fresh Water Delivery Fresh Water Delivery revenues increaseddecreased by $5.9$12.3 million during the first six months of 20192020 as compared with the first six months of 20182019 due to the following:
an increase of $8.4 million in fresh water delivery revenues due to an increase inminimal fresh water deliveries during second quarter 2020 in the East Pony IDP;DJ Basin resulting from reduced well completion activity by Noble.
partially offset by;
a decrease of $2.5 million in fresh water delivery revenues due to a decrease in fresh water deliveries to our customers in the Wells Ranch, Mustang, and Greeley Crescent IDP areas.

Costs and Expenses
Costs and expenses were as follows:
(in thousands)2019 2018 Increase (Decrease) from Prior Year2020 2019 
Increase (Decrease)
from Prior Year
Three Months Ended June 30,          
Cost of Crude Oil Sales$48,079
 $40,012
 20 %$29,104
 $48,079
 (39)%
Direct Operating27,697
 18,393
 51 %20,039
 32,866
 (39)%
Depreciation and Amortization20,285
 16,371
 24 %26,354
 23,980
 10 %
General and Administrative4,838
 4,980
 (3)%6,446
 5,171
 25 %
Other Operating Expense2,576
 
 N/M
Total Operating Expenses$100,899
 $79,756
 27 %$84,519
 $110,096
 (23)%
          
Six Months Ended June 30,          
Cost of Crude Oil Sales$78,977
 $61,451
 29 %$108,963
 $78,977
 38 %
Direct Operating55,134
 35,541
 55 %46,889
 63,289
 (26)%
Depreciation and Amortization39,636
 27,700
 43 %52,285
 47,013
 11 %
General and Administrative8,861
 15,422
 (43)%11,932
 9,532
 25 %
Goodwill Impairment109,734
 
 N/M
Other Operating Expense3,862
 
 N/M
Total Operating Expenses$182,608
 $140,114
 30 %$333,665
 $198,811
 68 %
N/M Amount is not meaningful
Costs and Expenses Trend Analysis
Cost of Crude Oil Sales Cost of crude oil sales is recorded within our Gathering Systems reportable segment. Cost of crude oil sales increaseddecreased during second quarter 20192020 as compared with second quarter 2018 and2019. The decrease was primarily attributable to the significant decline in commodity prices. Cost of crude oil sales increased during the first six months of 20192020 as compared with the first six months of 2018. The increase during second quarter 2019 as compared to second quarter 2018 is primarily attributabledue to increased sales volumes. The increase during the first six monthspurchases of 2019 as comparedcrude oil to the first six months of 2018 is primarily attributable to increased sales volumes and a full six months of activity, as sales activity commenced upon closing of the Black Diamond Acquisition during first quarter 2018.meet our crude oil transportation commitments.
Direct Operating Direct operating expense increaseddecreased during second quarter 20192020 as compared with second quarter 20182019 and during the first six months of 20192020 as compared with the first six months of 2018.2019. The increaseschanges in direct operating expense by reportable segment were as follows:
Gathering Systems Gathering Systems direct operating expense increaseddecreased $7.6 million during second quarter 20192020 as compared with second quarter 20182019 and $8.5 million during the first six months of 20192020 as compared with the first six months of 2018.2019. The increases were primarilydecreases in direct operating expense are attributable to operating expenses associated with the central gathering facilities (CGFs) in the Delaware Basin that were completed during 2018, operating expenses associated with increased volumes resulting from the commencement of gathering services in the Mustang IDP areaour ability to capture cost efficiencies as well as defer non-essential maintenance and a full six months of gathering services provided by the Black Diamond system.repair work due to COVID-19.
Fresh Water Delivery Fresh Water Delivery direct operating expense increaseddecreased $5.5 million during second quarter 20192020 as compared with second quarter 20182019 and $8.5 million during the first six months of 20192020 as compared with the first six months of 2018.2019. The increases weredecrease is primarily attributabledue to operating expenses associated with increased volumesthe decreased use of third-party providers for water logistics services in the East Pony IDP area resulting from increasedreduced well completion activity by Noble.

Depreciation and Amortization Depreciation and amortization expense increased during second quarter 20192020 as compared with second quarter 20182019 and during the first six months of 20192020 as compared with the first six months of 2018.2019. The increases in depreciation and amortization expenses by reportable segment were as follows:
Gathering Systems Gathering Systems depreciation and amortization expense increased $2.3 million during second quarter 20192020 as compared with second quarter 20182019 and $5.0 million during the first six months of 20192020 as compared with the first six months of 2018.2019. The increases wereincrease was due in part, to assets placed in service after June 30, 2018. Assets placed in service after June 30, 20182019 and were primarily associated with the Mustang gathering system, expansion of the Delaware Basin CGFs,infrastructure, and the continued development of the Black Diamond assets. Additionally, depreciation and amortization expense includes a full six months of intangible asset amortization during the first six months of 2019 associated with customer contracts and relationships acquired in the Black Diamond Acquisition.
Fresh Water Delivery Fresh Water Delivery depreciation and amortization expense remained consistent during second quarter 20192020 as compared with second quarter 20182019 and during the first six months of 20192020 as compared with the first six months of 2018.2019. Fresh Water Delivery depreciation and amortization expense has remained consistent, as our fresh water delivery infrastructure was substantially complete prior to 2018.2019.

General and Administrative Expense General and administrative expense is recorded within our Corporate reportable segment. General and administrative expense remained consistentincreased during second quarter 20192020 as compared with second quarter 2018. The increase in legal2019 and financial advisory transaction expenses incurred during second quarter 2018 in connection with the Black Diamond Acquisition were offset by an increase in miscellaneous general and administrative expenses during second quarter 2019. General and administrative expense decreased during the first six months of 20192020 as compared with the first six months of 2018.2019. The decreaseincrease was primarily attributable to legalthe increase in the fixed annual fee payable under our omnibus agreement with Noble which became effective March 1, 2020. See Item 1. Financial Statements – Note 3. Transactions with Affiliates.
Goodwill Impairment During first quarter 2020, we fully impaired our goodwill. See Item 1. Financial Statements – Note 2. Basis of Presentation and financial advisory transaction expenses associated withManagement's Discussion and Analysis of Financial Condition and Results of Operations - Executive Overview and Operating Outlook.
Other Operating Expense Other expense during second quarter 2020 is primarily related to the Black Diamond Acquisition. Transaction expenses associated with the Black Diamond Acquisition during the first six monthsnet loss of 2018 were approximately $7.2 million.$2.6 million on sale of assets.
Other (Income) Expense Trend Analysis
(in thousands)2019 2018 Increase (Decrease) From Prior Year2020 2019 Increase (Decrease) From Prior Year
Three Months Ended June 30,          
Other (Income) Expense          
Interest Expense$8,162
 $4,143
 97 %$6,808
 $8,165
 (17)%
Capitalized Interest(5,837) (2,462) 137 %(175) (5,843) (97)%
Interest Expense, Net2,325
 1,681
 38 %6,633
 2,322
 186 %
Investment Income1,748
 (4,091) (143)%
Investment Loss (Income)2,730
 1,748
 56 %
Other Non-Operating Expense1,336
 
 N/M
Total Other Expense (Income)$4,073
 $(2,410) (269)%$10,699
 $4,070
 163 %
          
Six Months Ended June 30,          
Other (Income) Expense          
Interest Expense$14,875
 $6,664
 123 %$18,668
 $14,890
 25 %
Capitalized Interest(7,320) (3,950) 85 %(5,178) (7,340) (29)%
Interest Expense, Net7,555
 2,714
 178 %13,490
 7,550
 79 %
Investment Income(593) (6,959) (91)%
Total Other (Income) Expense$6,962
 $(4,245) (264)%
Investment Loss (Income)8,139
 (593) N/M
Other Non-Operating Expense1,336
 
 N/M
Total Other Expense (Income)$22,965
 $6,957
 230 %
N/M Amount is not meaningful
Interest Expense, Net Interest expense is recorded within our Corporate reportable segment. Interest expense represents interest incurred in connection with our revolving credit facility and term loan credit facility.facilities. Our interest expense includes interest on outstanding balances on the facilities and commitment fees on the undrawn portion of our revolving credit facility as well as the non-cash amortization of origination fees. A portion of the interest expense is capitalized based upon our construction-in-progress activity as well as our investments in equity method investees engaged in construction activities during the year. See See Item 1. Financial Statements – Note 5.4. Property, Plant and Equipment for our Construction-in-Progress balances as of June 30, 20192020 and December 31, 20182019 and See Item 1. Financial Statements – Note 7.6. Investments.

Interest expense increaseddecreased $1.4 million during second quarter 20192020 as compared with second quarter 20182019. The decrease in interest expense is attributable to higher interest rates during second quarter 2019 and interest income associated with our loan to EPIC Y-Grade and was partially offset by higher outstanding long-term debt balances during the second quarter 2020.
Interest expense increased $3.8 million during the first six months of 2020 as compared with the first six months of 2019. The increase is primarily attributable to the increased outstanding long-term debt balance in 2020 as compared to the first six months of 2019 and was partially offset by higher interest rates during the first six months of 2019 as comparedwell as interest income associated with the first six months of 2018. The increase was primarily attributableour loan to the increased outstanding long-term debt and higherEPIC Y-Grade.
Capitalized interest ratesdecreased $5.7 million during second quarter 20192020 as compared with second quarter 20182019 and $2.2 million during the first six months of 20192020 as compared with the first six months of 2018.
Capitalized interest increased during second quarter 2019 as compared with second quarter 2018 and during the first six months of 2019 as compared with the first six months of 2018.2019. The increase isdecreases are primarily attributable to capitalized interest associated with our capital contributions to the the Delaware Crossing, Joint Venture, EPIC Y-Grade and EPIC Crude as well as increasedCrude. As the aforementioned investments have commenced planned, principal operations, we no longer capitalize interest rates during 2019 as comparedassociated with 2018. The increase was partially offset by decreased construction-in-progress activity during first quarter 2019 and the first six months of 2019 as compared with first quarter 2018 and the first six months of 2018.our capital contributions.
Investment Income Investment income is recorded within our Investments in Midstream Entities reportable segment. Investment income decreased $1.0 million during second quarter 20192020 as compared with second quarter 20182019. Our investment loss is driven by increased losses from the Delaware Crossing, EPIC Y-Grade and EPIC Crude investments. The losses are primarily attributable to expenses incurred prior to service commencement and the gradual ramp of throughput volumes. The losses were partially offset by earnings from our investment in Saddlehorn.
Investment income decreased $8.7 million during the first six months of 20192020 as compared with the first six months of 2018. Earnings from the Advantage Joint Venture decreased during second quarter 2019 and during the first six months of 2019 as compared with second quarter 2018 and during the first six months of 2018 primarily due to a2019. The decrease in crude oil throughput volumes. Additionally, we hadis driven by increased losses from the Delaware Crossing Joint Venture, EPIC Y-Grade and EPIC Crude investments and is primarily attributable to expenses incurred in connection with the formation of the entities as well as general and administrative expenses incurred prior to service commencement. The losses were partially offset by earnings from our investment in Saddlehorn.
Other Non-Operating Expense Other non-operating expense is recorded within our Corporate reportable segment. Other non-operating expense during second quarter 2020 is related to the $1.3 million allowance recorded for expected credit losses related to the loan to EPIC Y-Grade. See Item 1. Financial Statements – Note 2. Basis of Presentation.

Adjusted EBITDA (Non-GAAP Financial Measure)
Adjusted EBITDA should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, our Adjusted EBITDA may not be comparable to similar measures of other companies in our industry.
For a reconciliation of Adjusted EBITDA to its most comparable measures calculated and presented in accordance with GAAP, seeReconciliation of Non-GAAP Financial Measures, below.
As a result of our increased investment in midstream entities, we have refined our presentation of Adjusted EBITDA to adjust for certain items with respect to our equity method investments. We now define Adjusted EBITDA as net income before income taxes, net interest expense, depreciation and amortization transaction expenses, unit-based compensation and certain other items that we do not view as indicative of our ongoing performance. Additionally, Adjusted EBITDA reflects the adjusted earnings impact of our equity method investments by adjusting our equity earnings or losses from our equity method investments to reflect our proportionate share of the EBITDA of such equity method investments. Prior period Adjusted EBITDA has been reclassified to conform to the current period presentation.
Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
our operating performance as compared with those of other companies in the midstream energy industry, without regard to financing methods, historical cost basis or capital structure;
the ability of our assets to generate sufficient cash flow to make distributions to our partners;
our ability to incur and service debt and fund capital expenditures; and
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
We believe that the presentation of Adjusted EBITDA provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA are net income and net cash provided by operating activities. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income, net cash provided by operating activities or any other measure as reported in accordance with GAAP.
Distributable Cash Flow (Non-GAAP Financial Measure)
Distributable cash flow should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable cash flow excludes some, but not all, items that affect net income or net cash provided by operating activities, and these measures may vary from those of other companies. As a result, our distributable cash flow may not be comparable to similar measures of other

companies in our industry.
For a a reconciliation of distributable cash flow to its most comparable measures calculated and presented in accordance with GAAP, see Reconciliation of Non-GAAP Financial Measures, below.
As a result of our increased investment in midstream entities, we have refined our presentation of distributable cash flow to adjust for certain items with respect to our equity method investments. We now define distributable cash flow as Adjusted EBITDA plus distributions received from our equity method investments less our proportionate share of Adjusted EBITDA from such equity method investments, estimated maintenance capital expenditures and cash interest paid. Prior period distributable cash flow has been reclassified to conform to the current period presentation.
Distributable cash flow does not reflect changes in working capital balances. Our partnership agreement requires us to distribute all available cash on a quarterly basis, and distributable cash flow is one of the factors used by the boardBoard of directorsDirectors of our general partnerGeneral Partner to help determine the amount of cash that is available to our unitholders for a given period. Therefore, we believe distributable cash flow provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to distributable cash flow are net income and net cash provided by operating activities. Distributable cash flow should not be considered an alternative to, or more meaningful than, net income, net cash provided by operating activities or any other measure as reported in accordance with GAAP.
Reconciliation of Non-GAAP Financial Measures
The following tables present reconciliations of Adjusted EBITDA and distributable cash flow from net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2019 2018 2019 20182020 2019 2020 2019
Reconciliation from Net Income              
Net Income$53,198
 $44,442
 $116,453
 $83,578
$50,860
 $55,763
 $13,344
 $123,554
Add:              
Depreciation and Amortization20,285
 16,371
 39,636
 27,700
26,354
 23,980
 52,285
 47,013
Interest Expense, Net of Amount Capitalized2,325
 1,681
 7,555
 2,714
6,633
 2,322
 13,490
 7,550
State Income Tax Provision91
 183
 198
 257
Transaction and Integration Expenses12
 1,280
 69
 7,249
Proportionate Share of Equity Method Investment EBITDA Adjustments4,570
 638
 6,573
 1,342
14,537
 4,570
 23,449
 6,573
Unit-Based Compensation and Other466
 393
 1,011
 714
Goodwill Impairment
 
 109,734
 
Other4,333
 1,209
 5,179
 3,120
Adjusted EBITDA80,947
 64,988
 171,495
 123,554
102,717
 87,844
 217,481
 187,810
Less:       
Adjusted EBITDA Prior to Drop-Down and Simplification Transaction
 6,897
 
 16,315
Adjusted EBITDA Subsequent to Drop-Down and Simplification Transaction102,717
 80,947
 217,481
 171,495
Less:              
Adjusted EBITDA Attributable to Noncontrolling Interests25,326
 15,691
 53,024
 19,276
7,965
 25,326
 15,518
 53,024
Adjusted EBITDA Attributable to Noble Midstream Partners LP55,621
 49,297
 118,471
 104,278
94,752
 55,621
 201,963
 118,471
Add:              
Distributions from Equity Method Investments285
 1,265
 6,944
 3,520
Distributions from Equity Method Investments Attributable to Noble Midstream Partners LP7,276
 285
 13,690
 6,944
Less:              
Proportionate Share of Equity Method Investment Adjusted EBITDA1,459
 3,574
 4,490
 6,140
Proportionate Share of Equity Method Investment EBITDA Attributable to Noble Midstream Partners LP7,867
 1,459
 7,877
 4,490
Cash Interest Paid7,991
 4,030
 14,549
 6,437
7,092
 7,991
 18,641
 14,549
Maintenance Capital Expenditures5,815
 4,772
 11,770
 9,312
7,388
 5,815
 15,734
 11,770
Distributable Cash Flow of Noble Midstream Partners LP
$40,641
 $38,186
 $94,606
 $85,909
$79,681
 $40,641
 $173,401
 $94,606

Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA and Distributable Cash Flow
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2019 2018 2019 20182020 2019 2020 2019
Reconciliation from Net Cash Provided by Operating Activities              
Net Cash Provided by Operating Activities$88,805
 $59,469
 $172,749
 $105,072
$101,068
 $93,624
 $219,451
 $188,945
Add:              
Interest Expense, Net of Amount Capitalized2,325
 1,681
 7,555
 2,714
6,633
 2,322
 13,490
 7,550
Changes in Operating Assets and Liabilities(11,041) 228
 (5,986) 5,971
(5,742) (8,960) (8,638) (5,862)
Transaction and Integration Expenses12
 1,280
 69
 7,249
Equity Method Investment EBITDA Adjustments1,174
 2,309
 (2,454) 2,620
635
 1,174
 (5,646) (2,454)
Other Adjustments(328) 21
 (438) (72)
Other123
 (316) (1,176) (369)
Adjusted EBITDA80,947
 64,988
 171,495
 123,554
102,717
 87,844
 217,481
 187,810
Less:       
Adjusted EBITDA Prior to Drop-Down and Simplification Transaction
 6,897
 
 16,315
Adjusted EBITDA Subsequent to Drop-Down and Simplification Transaction102,717
 80,947
 217,481
 171,495
Less:              
Adjusted EBITDA Attributable to Noncontrolling Interests25,326
 15,691
 53,024
 19,276
7,965
 25,326
 15,518
 53,024
Adjusted EBITDA Attributable to Noble Midstream Partners LP55,621
 49,297
 118,471
 104,278
94,752
 55,621
 201,963
 118,471
Add:              
Distributions from Equity Method Investments285
 1,265
 6,944
 3,520
Distributions from Equity Method Investments Attributable to Noble Midstream Partners LP7,276
 285
 13,690
 6,944
Less:              
Proportionate Share of Equity Method Investment EBITDA1,459
 3,574
 4,490
 6,140
Proportionate Share of Equity Method Investment EBITDA Attributable to Noble Midstream Partners LP7,867
 1,459
 7,877
 4,490
Cash Interest Paid7,991
 4,030
 14,549
 6,437
7,092
 7,991
 18,641
 14,549
Maintenance Capital Expenditures5,815
 4,772
 11,770
 9,312
7,388
 5,815
 15,734
 11,770
Distributable Cash Flow of Noble Midstream Partners LP
$40,641
 $38,186
 $94,606
 $85,909
$79,681
 $40,641
 $173,401
 $94,606

LIQUIDITY AND CAPITAL RESOURCES
Financing StrategyRecent events, as further described in Management’s Discussion and Analysis of Financial Condition and Results of Operations - Executive Overview and Operating Outlook, have significantly impacted our financing strategy. We have taken actions to defer certain development projects to reflect updated producer forecasts in the DJ and Delaware Basins and reduce our quarterly distribution in order to preserve our financial liquidity.
Our primary sourcescapital structure and financing strategy are designed to provide sufficient liquidity to meet our short-term working capital requirements, long-term capital expenditure requirements and to make quarterly cash distributions. In the current commodity price and economic environment, the duration of which could be prolonged, we have reduced our long-term capital expenditure guidance to reflect updated producer forecasts in the DJ and Delaware Basins. Additionally, we have reduced our quarterly distribution to preserve cash and support the balance sheet. We expect these actions to strengthen our financial position and flexibility.
Our liquidity are cash flows generated from operations based on commercial agreementscould also be impacted by counterparty credit risk. We closely monitor the credit worthiness of third-party counterparties with Noble and our third party customers. whom we do business. When considered necessary, we obtain letters of credit or other credit enhancements to mitigate risks associated with certain counterparties.
We expect our ongoing sources of liquidity to include cash generated from operations, distributions from our investments and borrowings under our revolving credit facility and may seek to opportunistically access the capital markets from time to time through debt or equity or debt offerings. We believe that cash generated from these sources will be sufficient to meet our short-term working capital requirements and long-term capital expenditure requirements and to make quarterly cash distributions. We do not have any commitment from Noble or our general partnerGeneral Partner or any of their respective affiliates to fund our cash flow deficits or provide other direct or indirect financial assistance to us. Certain consolidated subsidiaries make distributions to or receive contributions from Noble in proportion to Noble’s ownership in the subsidiary.
Our partnership agreement requires that we distribute all of our available cash to our unitholders. As a result, we expect to rely primarily upon external financing sources, including our revolving credit facility and the issuance of debt and equity securities, to fund acquisitions and our expansion capital expenditures.

Available Liquidity
Information regarding liquidity was as follows:
(in thousands)June 30, 2019 December 31, 2018June 30, 2020 December 31, 2019
Cash, Cash Equivalents, and Restricted Cash (1)
$9,438
 $11,691
$12,729
 $12,726
Amount Available to be Borrowed Under Our Revolving Credit Facility (2)
430,000
 740,000
415,000
 555,000
Available Liquidity$439,438
 $751,691
$427,729
 $567,726
(1) 
(2) 
There was no available borrowing capacity under our term loan credit facility as of June 30, 2019. See Item 1. Financial Statements – Note 6.5. Debt.
Revolving Credit Facility and Term Loan Credit Facilities
OurDuring the first six months of 2020, we borrowed a net $140 million under our revolving credit facility is available to fund working capital requirements, acquisitions and expansion capital expenditures. We utilized a large portion offacility. Proceeds from our revolving credit facility were utilized to fund portions of our capital contributionsand investment programs as well as for the Delaware Crossing Joint Venture, EPIC Y-Grade and EPIC Crude. We repaid a portion of our revolving credit facility with the proceeds from the Preferred Equity offering.working capital purposes. As of June 30, 2019, $3702020, $735 million is outstanding under our revolving credit facility. See Item 1. Financial Statements – Note 6. Debt.
Preferred Equity
On March 25, 2019, we secured an equity commitment totaling $200 million from GIP. During 2019, Preferred Equity proceeds totaled $100 million and we incurred offering costs of $3.5 million. The remaining $100 million equity commitment is available for a one-year period, subject to certain conditions precedent. Proceeds from the Preferred Equity were utilized to repay a portion of outstanding borrowings under our revolving credit facility. See Item 1. Financial Statements – Note 2. Basis of Presentation.5. Debt.
Cash Flows
The following table summarizes our total cash provided by (used in) operating, investing and financing activities:
Six Months Ended June 30,Six Months Ended June 30,
(in thousands)2019 20182020 2019
Operating Activities$172,749
 $105,072
$219,451
 $188,945
Investing Activities(552,138) (1,058,594)(345,279) (555,715)
Financing Activities377,136
 914,193
125,831
 362,645
Decrease in Cash, Cash Equivalents, and Restricted Cash$(2,253) $(39,329)
Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash$3
 $(4,125)
Operating Activities Net cash provided by operating activities increased during the first six months of 20192020 as compared with the first six months of 2018.2019. The increase wasis primarily due to an increaseincreased revenues resulting from higher throughput volumes related to the expansion of existing systems and providing services to new areas and customers, decreased direct operating expenses due to cost efficiencies and increased cash distributions from equity method investees, primarily from our new investment in net income.Saddlehorn. The increase in net income was driven by an increase in revenues as well as a decrease in general and administrative expenses and was partially offset by anincreased general and administrative costs related to the increase in direct operating expenses.the fixed annual fee payable under our omnibus agreement and increased interest expense related to our increased debt balance during 2020 as compared to the first six months of 2019.
Investing Activities Cash used in investing activities decreased during the first six months of 20192020 as compared with the first six months of 2018.2019. The decrease wasis primarily due to the Black Diamond Acquisition during 2018decreased capital contributions to our equity method investments as well as

increased additions decreased capital expenditures in 2020. Our decreased capital contributions to property, plantDelaware Crossing, EPIC Crude and equipment during 2018 due to the construction of the Mustang gathering system and Delaware Basin CGFs. The decrease wasEPIC Y-Grade were partially offset by our additionscapital contribution to investments during 2019 dueSaddlehorn and the loan to our capital contributions to the Delaware Crossing Joint Venture, EPIC Y-Grade and EPIC Crude.Y-Grade.
Financing Activities Cash provided by financing activities decreased during the first six months of 20192020 as compared with the first six months of 2018.2019. The decrease is primarily due to the proceeds from the preferred equity issuance in first quarter 2019, as well as decreased net long-term debt borrowings under the revolving credit facility and decreased contributions from noncontrolling interest owners.increased distributions to unitholders during 2020. The decrease was partially offset by net proceedsincreased contributions from the Preferred Equity.Black Diamond.
Off-Balance Sheet Arrangements
WeAs of June 30, 2020, our material off-balance sheet arrangements that we have not entered into any transactions, agreements or other contractual arrangements that would result in off-balance sheet liabilities.include our transportation commitments and undrawn letters of credit.
Contractual Obligations
We have had no material changes in our contractual commitments and obligations from amounts listed under Item 7. Management'sManagement’s Discussion and Analysis of Financial Conditions and Results of Operations - Liquidity and Capital Resources - Contractual Obligations in our Annual Report on Form 10-K for the year ended December 31, 2018.2019.

Capital Requirements
Capital Expenditures and Other Investing Activities
The midstream energy business is capital intensive, requiring the maintenance of existing gathering systems and other midstream assets and facilities and the acquisition or construction and development of new gathering systems and other midstream assets and facilities. Capital expenditures and other investing activities (on an accrual basis) were as follows:
Six Months Ended June 30,Six Months Ended June 30,
(in thousands)2019 20182020 2019
Gathering System Expenditures (1)
$130,656
 $596,960
$52,468
 $134,388
Fresh Water Delivery System Expenditures1,394
 12,552

 1,394
Other511
 
257
 511
Total Capital Expenditures(1)$132,561
 $609,512
$52,725
 $136,293
      
Additions to Investments$414,587
 $119
Additions to Investments (1) (2)
$228,226
 $414,587
Loan to Equity Method Investee (3)
$22,500
 $
(1) 
Gathering systemTotal capital expenditures and additions to investments represent the consolidated expenditures of the Partnership and include the portion of expenditures funded by noncontrolling interest owners.
(2)
Additions to investments include $4.5 million of capitalized interest for both the six months ended June 30, 2018 include only the portion2020 and 2019.
(3)
Amount represents our loan to EPIC Y-Grade. See Item 1. Financial Statements – Note 2. Basis of the purchase price for the Black Diamond Acquisition allocated to Property, Plant and Equipment totaling $205.8 million.Presentation.
For the six months ended June 30, 2020, our gathering system expenditures were primarily associated with the expansion of gathering infrastructure in the Wells Ranch and Mustang IDP areas, well connections in the Black Diamond dedication area and the expansion of gathering infrastructure in the Delaware Basin.
For the six months ended June 30, 2019, our gathering system expenditures were primarily associated with well connections in the Mustang IDP area, Black Diamond dedication area and the Delaware Basin as well as expansion of the Mustang gathering system. Fresh water delivery system expenditures were primarily associated with the expansion of the Greeley Crescent fresh water delivery system.
For the six months ended June 30, 2018, our gathering system expenditures2020, additions to investments were primarily associated with the construction of the Mustang gathering system and construction of central gathering facilities in the Delaware Basin. Additionally,related to our gathering system expenditures include the Black Diamond Acquisitioncapital contributions to Saddlehorn as well as expenditures related to the connection of the acquired system to a major oil takeaway outlet in the DJ Basin. Fresh water delivery system expenditures were primarily associated with the construction of the the Mustang fresh water delivery system.
our other equity method investments. See Item 1. Financial Statements – Note 6. Investments. For the six months ended June 30, 2019, additions to investments were primarily related to our capital contributions to the Delaware Crossing, Joint Venture, EPIC Y-Grade and EPIC Crude. See See Item 1. Financial Statements – Note 7. Investments. For the six months ended June 30, 2018, additions to investments were related to a capital call for our White Cliffs Interest.
Cash Distributions
Our partnership agreement requires that we distribute all of our available cash quarterly. Quarterly distributions, if any, will be made within 45 days after the end of each calendar quarter to holders of record on the applicable record date.
On July 25, 2019,24, 2020, the boardBoard of directorsDirectors of our general partner declaredGeneral Partner approved a quarterly cash distribution of $0.6418$0.1875 per unit. The distribution will be paid on August 12, 2019,14, 2020, to unitholders of record as of August 5, 2019. Also on August 12, 2019, a cash incentive distribution of $4.6 million will be made to Noble related to its IDRs, based upon the level of distribution paid per Common Unit.

Upon payment of the distribution on May 13, 2019, the requirements for the conversion of all Subordinated Units were satisfied under our partnership agreement. As a result, on May 14, 2019, all 15,902,584 Subordinated Units, which were owned entirely by Noble, converted into Common Units. See Item 1. Financial Statements – Note 10. Partnership Distributions. For future quarters, the minimum quarterly distribution of $0.375 per unit equates to $14.9 million per quarter, or $59.4 million million per year, based on the number of Common Units outstanding as of June 30, 2019.
We expect that if we are successful in executing our business strategy, we will grow our business in a steady and sustainable manner and distribute to our unitholders a portion of any increase in our cash available for distribution resulting from such growth. We expect our general partner may cause us to establish reserves for specific purposes, such as major capital expenditures or debt service payments, or may choose to generally reserve cash in the form of excess distribution coverage from time to time for the purpose of maintaining stability or growth in our quarterly distributions. In addition, our general partner may cause us to borrow amounts to fund distributions in quarters when we generate less cash than is necessary to sustain or grow our cash distributions per unit. Our cash distribution policy reflects a judgment that our unitholders will be better served by our distributing rather than retaining our cash available for distribution. The board of directors of our general partner has considerable discretion to determine the amount of our available cash each quarter. In addition, the board of directors of our general partner may change our cash distribution policy at any time.7, 2020.
Item 3.    Quantitative and Qualitative Disclosures About Market Risk
Commodity Price Risk
We currently generate a substantial portion of our revenues pursuant to fee-based commercial agreements under which we are paid based on the volumes of crude oil, natural gas and produced water that we gather and handle and fresh water services we provide, rather than the underlying value of the commodity.
We have indirect exposure to commodity price risk in that persistent low commodity prices may cause our customers and other potential customers to delay drilling or shut-in production, which would reduce the volumes available for gathering and processing by our infrastructure assets. If our customers delay drilling or completion activity, or temporarily shut-in production due to persistently low commodity prices or for any other reason, we are not assured a certain amount of revenue as our commercial agreements do not contain minimum volume commitments. Because of the natural decline in production from existing wells, our success, in part, depends on our ability to maintain or increase hydrocarbon and water throughput volumes on our midstream systems, which depends on our customers’ level of drilling and completion activity on our dedicated acreage. As further described in Management’s Discussion and Analysis of Financial Condition and Results of Operations - Executive Overview and Operating Outlook, the commodity price environment is expected to remain depressed based on decreasing demand, over-supply and a potential global economic recession. We cannot predict whether or when commodity prices and economic activities will return to prior levels.

We may acquire or develop additional midstream assets in a manner that increases our exposure to commodity price risk. Future exposure to the volatility of crude oil and natural gas and NGL prices could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to make cash distributions to our unitholders.
Interest Rate Risk
Our primary exposure to interest rate risk results from outstanding borrowings under our revolving credit facility and term loan credit facility,facilities, which have variable interest rates. As of June 30, 2019, $3702020, $735 million and $500$900 million were outstanding under our revolving credit facility and term loan credit facility,facilities, respectively. A 1.0% increase in our interest rates would have resulted in an estimated $3.9$8.3 million increase in interest expense for the six months ended June 30, 2019.2020. As a result, our results of operations, cash flows and financial condition and, as a further result, our ability to make cash distributions to our unitholders, could be adversely affected by significant increases in interest rates.
Credit Risk
We derive a substantial portion of our revenue from Noble and we expect to derive a substantial portion of our revenue from Noble for the foreseeable future. As a result, any event, whether in our area of operations or otherwise, that adversely affects Noble’s production, drilling schedule, financial condition, leverage, market reputation, liquidity, results of operations or cash flows may adversely affect our revenues and cash available for distribution.
Additionally, we are subject to the risk of non-payment or non-performance by our customers, including with respect to our commercial agreements, most of which do not contain minimum volume commitments. Furthermore, we cannot predict the extent to which our customers’ businesses would be impacted if conditions in the energy industry were to deteriorate nor can we estimate the impact such conditions would have on our customers’ ability to execute their drilling and development plans on our dedicated acreage or to perform under our commercial agreements. Any material non-payment or non-performance by our customers under our commercial agreements would have a significant adverse impact on our business, financial condition, results of operations and cash flows and could therefore materially adversely affect our ability to make cash distributions to our unitholders at the minimum quarterly distribution rate or at all.

unitholders.
Seasonality
Demand for crude oil and natural gas generally decreases during the spring and fall months and increases during the summer and winter months. However, seasonal anomalies such as mild winters or mild summers sometimes lessen this fluctuation. In addition, certain crude oil and natural gas users utilize natural gas storage facilities and purchase some of their anticipated winter requirements during the summer. This can also lessen seasonal demand fluctuations. These seasonal anomalies can increase demand for crude oil and natural gas during the summer and winter months and decrease demand for crude oil and natural gas during the spring and fall months. With respect to our completed midstream systems, we do not expect seasonal conditions to have a material impact on our throughput volumes. Severe or prolonged winters may, however, impact our ability to complete additional well connections or construction projects, which may impact the rate of our growth. In addition, severe winter weather may also impact or slow the ability of Noble and our third party customers to execute their drilling and development plans.
Disclosure Regarding Forward-Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are predictive in nature, depend upon or refer to future events or conditions or include the words “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “on schedule”,schedule,” “strategy” and other similar expressions that are predictions of or indicate future events and trends and that do not relate to historical matters. Our forward-looking statements may include statements about our business strategy, our industry, our future profitability, our expected capital expenditures and the impact of such expenditures on our performance, the costs of being a publicly traded partnership and our capital programs. In addition, our forward-looking statements address the various risks and uncertainties associated with the extraordinary market environment and impacts resulting from the COVID-19 pandemic and the actions of foreign oil producers (most notably Saudi Arabia and Russia) to increase crude oil production and the expected impact on our businesses, operations, earnings and results.
Forward-looking statements are not guarantees of future performance and are based on certain assumptions and bases, and subject to certain risks, uncertainties and other factors, many of which are beyond our control and difficult to predict, and not all of which can be disclosed in advance. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include:

uncertainty regarding the length of time it will take for the U.S. and the rest of the world to slow the spread of the COVID-19 virus to the point where applicable authorities are comfortable easing current restrictions on various commercial and economic activities; such restrictions are designed to protect public health but also have the effect of significantly reducing demand for crude oil and natural gas;
the continuation of a swift and material decline in global crude oil demand and crude oil prices for an uncertain period of time that correspondingly may lead to a significant reduction of domestic crude oil and natural gas production, which in turn could result in significant declines in the actual or expected volumes transported through our pipelines and/or the reduction of commercial opportunities that might otherwise be available to us;
uncertainty regarding the future actions of foreign oil producers such as Saudi Arabia and Russia and the risk that they take actions that will prolong or exacerbate the current over-supply of crude oil;
uncertainty regarding the timing, pace and extent of an economic recovery in the U.S. and elsewhere, which in turn will likely affect demand for crude oil and natural gas and therefore the demand for the midstream services we provide and the commercial opportunities available to us;
the effect of an overhang of significant amounts of crude oil and natural gas inventory stored in the U.S. and elsewhere and the impact that such inventory overhang ultimately has on the timing of a return to market conditions that support increased drilling and production activities in the U.S.;
the ability of our customers to meet their drilling and development plans;
changes in general economic conditions;
competitive conditions in our industry;
actions taken by third-party operators, gatherers, processors and transporters;
the demand for crude oil, natural gas and produced water gathering and processing services, crude oil treating and fresh water services;
our ability to successfully implement our business plan;
our ability to complete internal growth projects on time and on budget;
the price and availability of debt and equity financing;
the availability and price of crude oil and natural gas to the consumer compared to the price of alternative and competing fuels;
energy efficiency and technology trends;
operating hazards and other risks incidental to our midstream services;
natural disasters, weather-related delays, casualty losses and other matters beyond our control;
interest rates;
labor relations;
defaults by or bankruptcy of our customers under our agreements;
our inability to perform our obligations under our contracts, whether due to non-performance by third parties, including our customers or other counterparties, market constraints, third-party constraints, legal constraints (including governmental orders or guidance), or other factors;
changes in availability and cost of capital;
changes in our tax status;
the effect of existing and future laws and government regulations;
the effects of future litigation;
interruption of the Partnership's operations due to social, civil or political events or unrest;
terrorist attacks or cyber threats;
any future acquisitions or dispositions of assets or the delay or failure of any such transaction to close;
the impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations;
the completion of the Chevron Merger; and
certain factors discussed elsewhere in this Form 10-Q.
You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to publicly

update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law. You should consider carefully the statements under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018,2019, in our quarterly report on Form 10-Q for the quarter ended March 31, 2020, and in this quarterly report on Form 10-Q for the quarter ended June 30, 2020, which describe factors that could cause our actual results to differ from those set forth in the forward-looking statements. Our Annual Report on Form 10-K for the year ended December 31, 2018 is2019 and quarterly report on Form 10-Q for the quarter ended March 31, 2020 are available on our website at www.nblmidstream.com.

Item 4.     Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on the evaluation of our disclosure controls and procedures by our principal executive officer and our principal financial officer, as of the end of the period covered by this quarterly report, each of them has concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There were no changes in internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II. Other Information
Item 1. Legal Proceedings
Information regarding legal proceedings is set forth in Part I. Financial Information, Item 1. Financial Statements — Note 12.10. Commitments and Contingencies of this Form 10-Q, which is incorporated by reference into this Part II. Item 1.
Item 1A. Risk Factors
There have been no material changes, other than disclosed below, from the risk factors disclosed in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2018.2019 and our quarterly report on Form 10-Q for the quarter ended March 31, 2020.
The tax treatmentOur General Partner is owned by Noble, which recently announced its entry into the Chevron Merger Agreement. If the Chevron Merger is completed, Chevron will own and control our General Partner. Chevron’s ownership of publicly traded partnershipsour General Partner may result in conflicts of interest.
Noble recently entered into the Chevron Merger Agreement. Following the completion of the Chevron Merger, the directors and officers of our General Partner and its affiliates will have duties to manage our General Partner in a manner that is beneficial to Chevron, who would be the owner of our General Partner. At the same time, our General Partner will have duties to manage us in a manner that is beneficial to our unitholders. Therefore, following the completion of the Chevron Merger, our General Partner’s duties to us may conflict with the duties of its officers and directors to Chevron in the future. As a result of these conflicts of interest following the Chevron Merger, our General Partner may favor its own interest or the interests of Chevron or its owners or affiliates over the interest of our unitholders.
Furthermore, we derive a substantial portion of our revenue from Noble. Following the completion of the Chevron Merger, our future prospects will depend upon Chevron’s growth strategy and drilling program, including the level of drilling and completion activity by Chevron on acreage dedicated to us. Additional conflicts may also arise in the future following the Chevron Merger associated with (1) the allocation of capital and the allocation of costs between Chevron and us, (2) the amount of time devoted by the officers and directors of Chevron to its business in relation to us and (3) future business opportunities that are pursued by Chevron and us.
We will be subject to business uncertainties while the Chevron Merger is pending, which could adversely affect our businesses.
Uncertainty about the effect of the Chevron Merger on employees and customers may have an investmentadverse effect on us. These uncertainties may impair Noble’s ability to attract, retain and motivate key personnel involved in our operations until the Chevron Merger is completed and for a period of time thereafter and could cause customers and others that deal with us to seek to change their existing business relationships with us. Employee retention at Noble may be challenging during the pendency of the Chevron Merger, as employees may experience uncertainty about their roles. In addition, the Chevron Merger Agreement restricts Noble and us from entering into certain corporate transactions, entering into certain material contracts, making certain changes to our capital budget, incurring certain indebtedness and taking other specified actions without the consent of Chevron, and generally requires us to continue our operations in the ordinary course of business during the pendency of the Chevron Merger. These restrictions may prevent us from pursuing attractive business opportunities or adjusting our capital plan prior to the completion of the Chevron Merger.
Noble may be subject to lawsuits relating to the Chevron Merger, which, because we are substantially dependent on Noble as our primary customer and the controlling party of our General Partner, could adversely affect our business, financial condition and operating results.
Noble, Chevron and/or their respective directors and officers, including certain of Noble’s officers that serve as members of the Board of Directors of our General Partner, may be subject to lawsuits relating to the Chevron Merger. Such litigation is

common in connection with acquisitions of public companies, regardless of any merits related to the underlying acquisition. While Noble will evaluate and defend against any actions vigorously, the costs of the defense of such lawsuits and other effects of such litigation could, because we are substantially dependent on Noble as our primary customer and the controlling party of our General Partner, have an adverse effect on our business, financial condition and operating results.
Completion of the Chevron Merger is subject to a number of conditions, and if these conditions are not satisfied or waived, the Chevron Merger will not be completed. Failure to complete, or significant delays in completing, the Chevron Merger could negatively affect the trading prices of our Common Units could beand our future business and financial results.
Completion of the Chevron Merger is subject to potential legislative, judicialsatisfaction or administrative changes and differing interpretations, possibly on a retroactive basis.
The present U.S. federal income tax treatmentwaiver of publicly traded partnerships,certain closing conditions, including us,(1) the adoption of the Chevron Merger Agreement by Noble stockholders, (2) the expiration or an investment in our Common Units may be modified by administrative, legislative or judicial interpretation at any time. From time to time, memberstermination of Congress have proposed and considered substantive changesthe waiting period under the Hart-Scott-Rodino Act, as amended, applicable to the existing U.S. federal income tax laws that would affect publicly traded partnerships, including eliminationChevron Merger and the receipt of partnership tax treatment for publicly traded partnerships. For example,other applicable customary regulatory approvals, (3) the “Clean Energy for America Act”, which is similar to legislation that was commonly proposed during the Obama Administration, was introduced in the Senate on May 2, 2019. If enacted, this proposal would, among other things, repeal the qualifying income exception for fossil fuel activities within Section 7704(d)(1)(E)absence of any order or law prohibiting consummation of the Code, uponChevron Merger, (4) the effectiveness of the Registration Statement on Form S-4 to be filed by Chevron pursuant to which we relythe shares of Chevron common stock to be issued in connection with the Chevron Merger will be registered with the Securities and Exchange Commission and (5) the authorization for our status as a partnership for U.S. federal income tax purposes.
In addition,listing on the Treasury Department hasNew York Stock Exchange of the shares of Chevron common stock to be issued and in connection with the future may issue, regulations interpreting those laws that affect publicly traded partnerships.Chevron Merger. There can be no assurance that there will not be further changesthe conditions to U.S. federal income tax laws or the Treasury Department’s interpretationcompletion of the qualifying income rulesChevron Merger will be satisfied or waived or that the Chevron Merger will be completed.
If the Chevron Merger is not completed, or if there are significant delays in completing the Chevron Merger, the trading prices of our Common Units and our future business and financial results could be negatively affected, and we may be subject to several risks, including the following:
negative reactions from the financial markets, including declines in the prices of our Common Units due to the fact that current prices may reflect a mannermarket assumption that the Chevron Merger will be completed; and
the attention of Noble’s management, including certain of Noble’s officers that serve as members of the Board of Directors of our General Partner, will have been diverted to the Chevron Merger rather than Noble’s operations and pursuit of other opportunities that could have been beneficial to Noble and to us.
The Chevron Merger Agreement limits Noble’s ability to pursue alternatives to the Chevron Merger.
The Chevron Merger Agreement contains provisions that may discourage a third party from submitting a competing proposal that might result in greater value to Noble’s stockholders, and ultimately our unitholders, than the Chevron Merger. These provisions include a general prohibition on Noble from soliciting or, subject to certain exceptions relating to the exercise of fiduciary duties by Noble's Board of Directors, entering into discussions with any third party regarding any competing proposal or offer for a competing transaction.
We may not generate sufficient distributable cash flow to enable us to make quarterly distributions to our unitholders at our current distribution rate.
We may not generate sufficient distributable cash flow to enable us to make quarterly distributions at our current distribution rate. For example, in response to the unprecedented impact on our business from the significant decline in commodity prices and the COVID-19 outbreak, on March 25, 2020, the Board of Directors of our General Partner approved a 73% reduction of the quarterly distribution to $0.1875 per unit for the first quarter 2020. We maintained the reduced quarterly distribution for second quarter 2020.
The amount of cash we can distribute on our units principally depends upon the amount of cash we generate from our operations, which will fluctuate from quarter to quarter based on, among other things:
the volumes of natural gas we gather or process, the volumes of crude oil we gather and sell, the volumes of produced water we collect, clean or dispose of and the volumes of fresh water we distribute and store and the number of wells that have access to our crude oil treating facilities;
continued volatility of market prices of crude oil, natural gas and NGLs and their effect on our customers’ drilling and development plans on our dedicated acreage and the volumes of hydrocarbons that are produced on our dedicated acreage and for which we provide midstream services;
our customers’ ability to fund their drilling and development plans on our dedicated acreage;
downstream processing and transportation capacity constraints and interruptions, including the failure of our customers to have sufficient contracted processing or transportation capacity;
the levels of our operating expenses, maintenance expenses and general and administrative expenses;
regulatory action affecting: (i) the supply of, or demand for, crude oil, natural gas, NGLs and water, (ii) the rates we can charge for our midstream services, (iii) the terms upon which we are able to contract to provide our midstream

services, (iv) our existing gathering and other commercial agreements or (v) our operating costs or our operating flexibility;
the rates we charge third parties for our midstream services;
prevailing economic conditions; and
adverse weather conditions.
In addition, the actual amount of distributable cash flow that we generate will also depend on other factors, some of which are beyond our control, including:
global or national health pandemics, epidemics or concerns, such as the recent COVID-19 outbreak, which has reduced and may further reduce demand for oil and natural gas and related products due to reduced global or national economic activity;
limited production cuts and freezes implemented by OPEC members and other large oil producers such as Russia;
the level and timing of our capital expenditures;
our debt service requirements and other liabilities;
our ability to qualifyborrow under our debt agreements to fund our capital expenditures and operating expenditures and to pay distributions;
fluctuations in our working capital needs;
restrictions on distributions contained in any of our debt agreements;
the cost of acquisitions, if any;
the fees and expenses of our General Partner and its affiliates (including Noble) that we are required to reimburse;
the amount of cash reserves established by our General Partner; and
other business risks affecting our cash levels.
Because of the natural decline in production from existing wells, our success, in part, depends on our ability to maintain or increase hydrocarbon throughput volumes on our midstream systems, which depends on our customers’ levels of development and completion activity on our dedicated acreage.
The level of crude oil and natural gas volumes handled by our midstream systems depends on the level of production from crude oil and natural gas wells dedicated to our midstream systems, which may be less than expected and which will naturally decline over time. In order to maintain or increase throughput levels on our midstream systems, we must obtain production from wells completed by Noble and any third-party customers on acreage dedicated to our midstream systems or execute agreements with other third parties in our areas of operation.
Factors that significantly affect our customers’ levels of development and completion activity on our dedicated acreage include: prices of crude oil and natural gas; the level of supply and demand for crude oil and natural gas, worldwide; governmental regulations, including the policies of governments regarding the exploration for and production and development of their crude oil and natural gas reserves. The recent announcement by Saudi Arabia of a significant reduction in its export prices as well as the expiration of previously agreed upon production cuts by Russia, coupled with the ongoing impacts of the COVID-19 pandemic have contributed to the unprecedented and significant recent decline in the price of crude oil.
The duration of the business disruption and related financial impact from COVID-19 and current commodity price environment cannot be reasonably estimated at this time. If the current environment continues for an extended period of time, it could materially adversely affect the demand for our services and our ability to operate our business in the manner and on the timelines previously planned.
We have no control over Noble’s or other producers’ levels of development and completion 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. In addition, we have no control over Noble or other producers or their exploration and development decisions, which may also be affected by the following, among other things:
the availability and cost of capital;
global or national health pandemics, epidemics or concerns, such as the recent COVID-19 outbreak, which has reduced and may further reduce demand for oil and natural gas and related products due to reduced global or national economic activity;
limited production cuts and freezes implemented by OPEC members and other large oil producers such as Russia;
increased volatility of prevailing and projected crude oil, natural gas and NGL prices;

demand for crude oil, natural gas and NGLs, which has recently been significantly depressed due to global economic conditions;
levels of reserves;
geologic considerations;
changes in the strategic importance our customers assign to development in the DJ Basin or the Delaware Basin as opposed to their other operations, which could adversely affect the financial and operational resources our customers are willing to devote to development of our dedicated acreage;
increased levels of taxation related to the exploration and production of crude oil, natural gas and NGLs in our areas of operation;
environmental or other governmental regulations, including prorationing, the availability of permits, the regulation of hydraulic fracturing and a governmental determination that multiple facilities are to be treated as a partnershipsingle source for air permitting purposes; and
the costs of producing crude oil, natural gas and NGLs and the availability and costs of drilling rigs and other equipment.
Due to these and other factors, even if reserves are known to exist in areas served by our midstream assets, producers, including Noble, may choose not to develop those reserves. If producers choose not to develop their reserves, or they choose to slow their development rate, in our areas of operation, utilization of our midstream systems will be below anticipated levels. Our inability to provide increased services resulting from reductions in development activity, coupled with the natural decline in production from our current dedicated acreage, would result in our inability to maintain the then-current levels of utilization of our midstream assets, which could materially adversely affect our business, financial condition, results of operations, cash flows and ability to make cash distributions.
Our exposure to commodity price risk may change over time and we cannot guarantee our customers will be able to abide by the terms of any existing agreements or that we will be able to secure similar terms in future agreements for our midstream services with our customers.
We currently generate the majority of our revenues pursuant to fee-based agreements under which we are paid based on volumes handled, rather than the underlying value of the commodity. Consequently, our existing operations and cash flows have little direct exposure to commodity price risk. However, our customers are exposed to commodity price risk, and extended reduction in commodity prices could reduce the production volumes available for our midstream services in the future.future below expected levels.
Historically, crude oil, natural gas and NGLs prices have been volatile and subject to wide fluctuations. For example, during 2019, the low price for both the New York Mercantile Exchange (“NYMEX”) West Texas Intermediate (“WTI”) oil futures and NYMEX Henry Hub gas futures was $45.41 per barrel and $2.07 per MMBtu, respectively. For the period from January 1, 2020 through July 24, 2020, however, prices for oil and natural gas declined significantly, reaching lows of -$37.63 per barrel for NYMEX WTI oil futures and $1.48 per MMBtu for NYMEX Henry Hub gas futures. Negative NYMEX WTI oil futures prices during April 2020 represented the impact of severe storage constraints as of the expiration date for front month oil purchase contracts. NYMEX WTI oil futures prices have since increased, with a closing price of $41.46 on July 28, 2020.
This recent significant decline in crude oil prices has largely been attributable to the recent actions of Saudi Arabia and Russia, which have resulted in a substantial decrease in crude oil and natural gas prices, and the global outbreak of COVID-19, which has reduced demand for crude oil and natural gas because of significantly reduced global and national economic activity. We cannot predict whether or when commodity prices and economic activities will return to normalized levels. Although we intend to maintain fee-based pricing terms on both new contracts and existing contracts for which prices have not yet been set, our efforts to negotiate such terms may not be successful, which could have a materially adverse effect on our business.
Events outside of our control, including a pandemic, epidemic or outbreak of an infectious disease, such as the recent global outbreak of COVID-19 and the potential global recession, could have a material adverse impact on our financial position, results of operations and cash flows.
The U.S. and other world economies are potentially in a recession due to the global outbreak of COVID-19, which began late in 2019. In March 2020, OPEC and non-OPEC producers failed to agree to production cuts, causing a significant drop in crude oil prices. In April 2020, members of OPEC agreed to certain production cuts. While these production cuts could
rebalance the market in the long-term, in the short-term, we do not believe they will be large enough to offset the incomesharp decrease in demand caused by COVID-19.These factors collectively have contributed to unprecedented negative global economic impacts, including a significant drop in hydrocarbon product demand, which could extend throughout 2020 and beyond.

A recession would likely extend the time for the current oil markets to absorb excess supplies and rebalance inventory resulting in decreased demand for our midstream services for a number of future quarters. Our profitability will likely be significantly affected by this decreased demand and could lead to material impairments of our long-lived assets, intangible assets and equity method investments. Additionally, these factors could lead to further reductions in our distributions to unitholders or may cause us to fall out of compliance with the covenants in our revolving credit facility and term loans. The global outbreak of COVID-19 and impact of lower commodity prices could lead to disruptions in our supply network, including, among other things, storage and pipeline constraints brought on by overproduction and decreased demand from refiners.
Our future access to capital, as well as that we treat as qualifying satisfiesof our partners and contractors, could be limited due to tightening capital markets that could delay or inhibit our capital projects.
The outbreak of COVID-19 could potentially further impact our workforce. The infection of key personnel, or the requirements under current regulations.infection of a significant amount of our workforce, could have a material adverse impact on our business, financial condition and results of operations.
The majority of our workforce is working remotely until the risks of COVID-19 are reduced. Additionally, in response to reduced development and activity levels stemming from the commodity price environment, Noble has placed a number of employees on furlough or part-time work programs. A remote workforce combined with workforce reduction programs could introduce risks to achieving business objectives and/or the ability to maintain our controls and procedures. For example, the technology required for the transition to remote work increases our vulnerability to cybersecurity threats, including threats of unauthorized access to sensitive information or to render data or systems unusable, the impact of which may have material adverse effects on our business and operations. See “Item 1A. Risk Factors-Risks Related to Our Business – A cyber incident could result in information theft, data corruption, operational disruption and/or financial loss” in our Annual Report on Form 10-K for the year ended December 31, 2019.
The impacts of COVID-19 and the significant drop in commodity prices has had an unprecedented impact on the global economy and our business. We are unable to predict whether any changesall potential impacts to our business, the severity of such impacts or proposals will ultimately be enacted. Any modification to the U.S. federal income tax laws and interpretations thereof may or may not be retroactively applied and could make it more difficult or impossible for us to meet the exception to be treated as a partnership for U.S. federal income tax purposes and could negatively impact the value of an investment in our Common Units.
You are urged to consult with your own tax advisor with respect to the status of regulatory or administrative developments and proposals and their potential effect on your investment in our Common Units.duration.

Item 6. ExhibitsExhibit

Exhibit Number Exhibit
   
2.12.1+ 
   
3.1 
   
3.2 
   
3.3 
   
3.4 
   
3.5 
   
3.6 
   
3.7 
   
10.14.1 
   
31.1 
   
31.2 
   
32.1 
   
32.2 
   
101.INS101 Instance Document -The following materials from Noble Midstream Partners LP’s Quarterly Report on Form 10-Q for the instance document does not appearquarter ended June 30, 2020 formatted in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Operations and Comprehensive Income; (ii) Consolidated Balance Sheets; (iii) Consolidated Statements of Cash Flows; (iv) Consolidated Statements of Changes in Equity; and (v) Notes to Consolidated Financial Statements.
   
101.SCH104 Cover Page Interactive Data File (formatted as Inline XBRL Schema Document
101.CALXBRL Calculation Linkbase Document
101.LABXBRL Label Linkbase Document
101.PREXBRL Presentation Linkbase Document
101.DEFXBRL Definition Linkbase Documentand contained in Exhibit 101).
+ Exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be furnished to the Securities and Exchange Commission upon request.

Signatures
 
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.
 
    Noble Midstream Partners LP
    
By: Noble Midstream GP, LLC,
       its General Partner
     
Date August 2, 20193, 2020 
By: /s/ Thomas W. Christensen
    
Thomas W. Christensen
Chief Financial Officer and Chief Accounting Officer


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