Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 12, 2019 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Sanchez Midstream Partners LP | |
Entity Central Index Key | 0001362705 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 20,088,015 | |
Entity Current Reporting Status | Yes |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues | ||||
Gathering and transportation lease revenues | $ 14,135 | $ 13,148 | $ 46,361 | $ 38,634 |
Total revenues | 20,916 | 18,152 | 60,261 | 53,727 |
Operating expenses: | ||||
Lease operating expenses | 2,105 | 1,905 | 5,885 | 5,883 |
Transportation operating expenses | 2,752 | 3,061 | 8,476 | 8,979 |
Production taxes | 165 | 292 | 489 | 901 |
General and administrative expenses | 4,317 | 5,109 | 13,237 | 17,193 |
Unit-based compensation expense | 271 | 155 | 1,081 | 2,940 |
Gain on sale of assets | (238) | (2,626) | ||
Depreciation, depletion and amortization | 6,441 | 6,507 | 19,044 | 19,680 |
Accretion expense | 132 | 123 | 391 | 372 |
Total operating expenses | 16,183 | 16,914 | 48,603 | 53,322 |
Other (income) expense | ||||
Interest expense, net | 12,141 | 2,786 | 17,741 | 8,165 |
Earnings from equity investments | (780) | (2,313) | (3,013) | (9,696) |
Other (income) expense | (31) | 352 | (98) | 1,876 |
Total other (income) expenses | 11,330 | 825 | 14,630 | 345 |
Total expenses | 27,513 | 17,739 | 63,233 | 53,667 |
Income (loss) before income taxes | (6,597) | 413 | (2,972) | 60 |
Income tax expense | 213 | 335 | ||
Net income (loss) | (6,810) | 413 | (3,307) | 60 |
Preferred unit paid-in-kind distributions | (3,804) | (14,409) | (3,500) | |
Preferred unit distributions | (8,838) | (8,838) | (24,588) | |
Preferred unit amortization | (266) | (608) | (1,708) | (1,707) |
Deemed distribution | 103,773 | 103,773 | ||
Net income (loss) attributable to common unitholders - Basic | 92,893 | (9,033) | 75,511 | (29,735) |
Mark-to-market on warrant | 3,097 | 3,097 | ||
Net income (loss) attributable to common unitholders - Diluted | $ 95,990 | $ (9,033) | $ 78,608 | $ (29,735) |
Net income (loss) per unit | ||||
Common units - Basic | $ 4.99 | $ (0.59) | $ 4.31 | $ (1.97) |
Common units - Diluted | $ 4.54 | $ (0.59) | $ 4.13 | $ (1.97) |
Common units - Basic | 18,617,385 | 15,398,453 | 17,500,886 | 15,114,671 |
Common units - Diluted | 21,141,065 | 15,398,453 | 19,011,877 | 15,114,671 |
Common units | ||||
Other (income) expense | ||||
Net income (loss) | $ (6,810) | $ 413 | ||
Natural gas sales | ||||
Revenues | ||||
Revenues | 177 | 166 | $ 543 | $ 865 |
Oil sales | ||||
Revenues | ||||
Revenues | 4,769 | 2,848 | 7,841 | 7,894 |
Natural gas liquid product | ||||
Revenues | ||||
Revenues | 115 | 408 | 411 | 1,403 |
Gathering and transportation | ||||
Revenues | ||||
Revenues | $ 1,720 | $ 1,582 | $ 5,105 | $ 4,931 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 4,634 | $ 2,934 |
Accounts receivable | 183 | 277 |
Accounts receivable - related entities | 7,050 | 6,700 |
Prepaid expenses | 1,387 | 931 |
Fair value of commodity derivative instruments | 800 | 3,044 |
Total current assets | 14,054 | 13,886 |
Oil and natural gas properties and related equipment | ||
Oil and natural gas properties, equipment and facilities (successful efforts method) | 112,476 | 112,173 |
Gathering and transportation assets | 186,874 | 186,406 |
Less: accumulated depreciation, depletion, amortization and impairment | (109,136) | (100,245) |
Oil and natural gas properties and equipment, net | 190,214 | 198,334 |
Other assets | ||
Intangible assets, net | 148,611 | 158,706 |
Fair value of commodity derivative instruments | 176 | 876 |
Equity investments | 105,352 | 114,465 |
Other non-current assets | 318 | 418 |
Total assets | 458,725 | 486,685 |
Current liabilities | ||
Accounts payable and accrued liabilities | 5,044 | 4,678 |
Accounts payable and accrued liabilities - related entities | 4,720 | 5,641 |
Royalties payable | 359 | 359 |
Short-term debt, net of debt issuance costs | 161,245 | |
Fair value of commodity derivative instruments | 6 | |
Other liabilities | 146 | 125 |
Total current liabilities | 171,514 | 10,809 |
Other liabilities | ||
Asset retirement obligation | 6,763 | 6,200 |
Long-term debt, net of debt issuance costs | 178,582 | |
Class C preferred units | 262,113 | |
Other liabilities | 6,570 | 5,857 |
Total other liabilities | 275,446 | 190,639 |
Total liabilities | 446,960 | 201,448 |
Commitments and contingencies (See Note 12) | ||
Mezzanine equity | ||
Class B preferred units, 0 and 31,310,896 units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | 349,857 | |
Partners' deficit | ||
Common units, 20,089,827 and 16,486,239 units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | 11,765 | (64,620) |
Total partners' capital (deficit) | 11,765 | (64,620) |
Total liabilities and partners' capital | $ 458,725 | $ 486,685 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - shares | Sep. 30, 2019 | Dec. 31, 2018 |
Condensed Consolidated Balance Sheets | ||
Class B preferred units, issued | 0 | 31,310,896 |
Class B preferred units, outstanding | 0 | 31,310,896 |
Units, issued | 20,089,827 | 16,486,239 |
Units, outstanding | 20,089,827 | 16,486,239 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (3,307) | $ 60 |
Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||
Depreciation, depletion and amortization | 8,949 | 9,585 |
Amortization of debt issuance costs | 872 | 498 |
Accretion of Class C discount | 5,050 | |
Class C distribution accrual | 7,575 | |
Accretion expense | 391 | 372 |
Distributions from equity investments | 12,368 | 18,572 |
Equity earnings in affiliate | (3,013) | (9,696) |
Gain on sale of assets | (2,626) | |
Mark-to-market on warrant | (3,097) | |
Net loss on commodity derivative contracts | 2,272 | 8,083 |
Net cash settlements received (paid) on commodity derivative contracts | 813 | (1,306) |
Unit-based compensation | 1,081 | 2,940 |
(Gain) loss on earnout derivative | (94) | 1,876 |
Amortization of intangible assets | 10,095 | 10,095 |
Changes in Operating Assets and Liabilities: | ||
Accounts receivable | (23) | 196 |
Accounts receivable - related entities | (354) | 6,364 |
Prepaid expenses | (456) | 1,669 |
Other assets | 62 | 62 |
Accounts payable and accrued liabilities | 6,034 | 10,307 |
Accounts payable and accrued liabilities- related entities | (925) | (4,932) |
Other long-term liabilities | 53 | (1) |
Net cash provided by operating activities | 44,346 | 52,118 |
Cash flows from investing activities: | ||
Development of oil and natural gas properties | (131) | (169) |
Proceeds from sale of assets | 6,209 | |
Construction of gathering and transportation assets | (955) | (1,959) |
Purchases of and contributions to equity affiliates | (242) | (2,838) |
Net cash used in investing activities | (1,328) | 1,243 |
Cash flows from financing activities: | ||
Payments for offering costs | (50) | |
Proceeds from issuance of debt | 2,000 | |
Repayment of debt | (18,000) | (7,000) |
Distributions to common unitholders | (5,216) | (20,815) |
Class B preferred unit cash distributions | (17,675) | (24,500) |
Units tendered by SOG employees for tax withholdings | (218) | |
Debt issuance costs | (209) | (1,006) |
Net cash used in financing activities | (41,318) | (51,371) |
Net increase (decrease) in cash and cash equivalents | 1,700 | 1,990 |
Cash and cash equivalents, beginning of period | 2,934 | 321 |
Cash and cash equivalents, end of period | 4,634 | 2,311 |
Supplemental disclosures of cash flow information: | ||
Change in accrued capital expenditures | 467 | 450 |
Cash paid during the period for income taxes | 129 | |
Cash paid during the period for interest | $ 7,404 | $ 7,316 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Partners’ Capital - USD ($) $ in Thousands | Common units | Total |
Partner's Deficit at Dec. 31, 2017 | $ (29,308) | $ (29,308) |
Partner's Deficit (in shares) at Dec. 31, 2017 | 14,965,134 | |
Unit-based compensation programs | $ 738 | 738 |
Unit-based compensation programs (in shares) | (4,166) | |
Issuance of common units, net of offering costs | $ 2,292 | 2,292 |
Issuance of common units, net of offering costs (in shares) | 210,978 | |
Cash distributions to common unit holders | $ (6,746) | (6,746) |
Distributions - Class B preferred units | (9,281) | (9,281) |
Net (loss) income | 1,442 | 1,442 |
Partner's Capital (Deficit) at Mar. 31, 2018 | $ (40,863) | (40,863) |
Partner's Capital (Deficit) (in shares) at Mar. 31, 2018 | 15,171,946 | |
Partner's Deficit at Dec. 31, 2017 | $ (29,308) | (29,308) |
Partner's Deficit (in shares) at Dec. 31, 2017 | 14,965,134 | |
Net (loss) income | 60 | |
Partner's Capital (Deficit) at Sep. 30, 2018 | $ (69,700) | (69,700) |
Partner's Capital (Deficit) (in shares) at Sep. 30, 2018 | 16,195,816 | |
Partner's Deficit at Mar. 31, 2018 | $ (40,863) | (40,863) |
Partner's Deficit (in shares) at Mar. 31, 2018 | 15,171,946 | |
Unit-based compensation programs | $ 2,047 | 2,047 |
Unit-based compensation programs (in shares) | 608,394 | |
Issuance of common units, net of offering costs | $ 2,280 | 2,280 |
Issuance of common units, net of offering costs (in shares) | 220,214 | |
Cash distributions to common unit holders | $ (6,868) | (6,868) |
Distributions - Class B preferred units | (11,068) | (11,068) |
Net (loss) income | (1,795) | (1,795) |
Partner's Capital (Deficit) at Jun. 30, 2018 | $ (56,267) | (56,267) |
Partner's Capital (Deficit) (in shares) at Jun. 30, 2018 | 16,000,554 | |
Unit-based compensation programs | $ 155 | 155 |
Unit-based compensation programs (in shares) | (29,080) | |
Issuance of common units, net of offering costs | $ 2,646 | 2,646 |
Issuance of common units, net of offering costs (in shares) | 224,342 | |
Cash distributions to common unit holders | $ (7,201) | (7,201) |
Distributions - Class B preferred units | (9,446) | (9,446) |
Net (loss) income | 413 | 413 |
Partner's Capital (Deficit) at Sep. 30, 2018 | $ (69,700) | (69,700) |
Partner's Capital (Deficit) (in shares) at Sep. 30, 2018 | 16,195,816 | |
Partner's Deficit at Dec. 31, 2018 | $ (64,620) | (64,620) |
Partner's Deficit (in shares) at Dec. 31, 2018 | 16,486,239 | |
Unit-based compensation programs | $ 815 | 815 |
Unit-based compensation programs (in shares) | 978,076 | |
Issuance of common units, net of offering costs | $ 1,355 | 1,355 |
Issuance of common units, net of offering costs (in shares) | 787,750 | |
Cash distributions to common unit holders | $ (2,471) | (2,471) |
Distributions - Class B preferred units | (9,535) | (9,535) |
Net (loss) income | (374) | (374) |
Partner's Capital (Deficit) at Mar. 31, 2019 | $ (75,011) | (75,011) |
Partner's Capital (Deficit) (in shares) at Mar. 31, 2019 | 18,252,065 | |
Partner's Deficit at Dec. 31, 2018 | $ (64,620) | (64,620) |
Partner's Deficit (in shares) at Dec. 31, 2018 | 16,486,239 | |
Net (loss) income | (3,307) | |
Partner's Capital (Deficit) at Sep. 30, 2019 | $ 11,765 | 11,765 |
Partner's Capital (Deficit) (in shares) at Sep. 30, 2019 | 20,089,827 | |
Adoption of accounting standards | $ (181) | (181) |
Partner's Deficit at Mar. 31, 2019 | $ (75,011) | (75,011) |
Partner's Deficit (in shares) at Mar. 31, 2019 | 18,252,065 | |
Units tendered by SOG employees for tax withholding | $ (218) | (218) |
Units tendered by SOG employees for tax withholding (in shares) | (84,711) | |
Unit-based compensation programs | $ 175 | 175 |
Unit-based compensation programs (in shares) | 133,463 | |
Issuance of common units, net of offering costs | $ 2,034 | 2,034 |
Issuance of common units, net of offering costs (in shares) | 887,269 | |
Cash distributions to common unit holders | $ (2,745) | (2,745) |
Distributions - Class B preferred units | (11,350) | (11,350) |
Net (loss) income | 3,877 | 3,877 |
Partner's Capital (Deficit) at Jun. 30, 2019 | $ (83,238) | (83,238) |
Partner's Capital (Deficit) (in shares) at Jun. 30, 2019 | 19,188,086 | |
Preferred unit exchange | $ 103,773 | 103,773 |
Unit-based compensation programs | 271 | 271 |
Issuance of common units, net of offering costs | $ 1,839 | 1,839 |
Issuance of common units, net of offering costs (in shares) | 901,741 | |
Class A Preferred Units converted to common units | $ 103,773 | 103,773 |
Distributions - Class B preferred units | (4,070) | (4,070) |
Net (loss) income | (6,810) | (6,810) |
Partner's Capital (Deficit) at Sep. 30, 2019 | $ 11,765 | $ 11,765 |
Partner's Capital (Deficit) (in shares) at Sep. 30, 2019 | 20,089,827 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Partners’ Capital (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 |
Consolidated Statements of Changes in Partners’ Capital | |||
Offering costs | $ 0.1 | $ 0.1 | $ 0.1 |
Organization And Business
Organization And Business | 9 Months Ended |
Sep. 30, 2019 | |
Organization And Business | |
Organization And Business | 1. ORGANIZATION AND BUSINESS Organization We are a growth-oriented publicly-traded limited partnership focused on the acquisition, development, ownership and operation of midstream and other energy-related assets in North America. We have ownership stakes in oil and natural gas gathering systems, natural gas pipelines and natural gas processing facilities, all located in the Western Eagle Ford in South Texas. We also own production assets in Texas and Louisiana. We have entered into a shared services agreement (the “Services Agreement”) with Manager, pursuant to which Manager provides services we require to conduct our business, including overhead, technical, administrative, marketing, accounting, operational, information systems, financial, compliance, insurance, acquisition, disposition and financing services. On June 2, 2017, we changed our name to Sanchez Midstream Partners LP from Sanchez Production Partners LP. Manager owns our general partner and all of our incentive distribution rights. Our common units are currently listed on the NYSE American under the symbol “SNMP.” |
Basis Of Presentation And Summa
Basis Of Presentation And Summary Of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Basis Of Presentation And Summary Of Significant Accounting Policies | |
Basis of Presentation and Significant Accounting Policies | 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Accounting policies used by us conform to accounting principles generally accepted in the United States of America (“GAAP”). These unaudited condensed consolidated financial statements include the accounts of us and our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Our business consists of two reportable segments: Production and Midstream. Our Midstream segment includes Western Catarina Midstream (defined in Note 10 “Intangible Assets”), the Carnero JV (defined in Note 11 “Investments”) and Seco Pipeline. Our Production segment consists of our oil and natural gas properties in Texas and Louisiana. Our management evaluates performance based on these two business segments. These unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the SEC. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with GAAP, have been condensed or omitted pursuant to those rules and regulations. We believe that the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the interim condensed consolidated financial statements have been included. The results of operations for the interim periods are not necessarily indicative of the results for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on March 7, 2019. Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13 “Fair Value Measurement (ASC 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements,” which modifies the disclosure requirements on fair value measurements. This ASU is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2019. We are currently in the process of evaluating the impact of adoption of this guidance on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07 “Compensation - Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of Topic 718, Compensation – Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. We adopted this ASU effective January 1, 2019, which resulted in the remeasurement of our outstanding unvested awards as of January 1, 2019 and will change the expense recorded for equity awards going forward. The adoption of this standard resulted in an approximately $0.2 million charge to retained earnings. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of losses. This ASU is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2019, and earlier adoption is permitted. We are currently in the process of evaluating the impact of adoption of this guidance on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842),” effective for annual and interim periods for public companies beginning after December 15, 2018. Additionally, in July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842 (Leases),” which provides narrow amendments to clarify how to apply certain aspects of ASU 2016-02. The Partnership elected the practical expedients disclosed in ASU 2018-10. The effective date in ASU 2018-10 is the same as that of ASU 2016-02. The standards update the previous lease guidance by requiring the recognition of a right-of-use asset and lease liability on the statement of financial position for those leases previously classified as operating leases under the old guidance. In addition, ASU 2016-02 updates the criteria for a lessee’s classification of a finance lease. The Partnership adopted this standard effective January 1, 2019. The adoption of this standard did not have a material impact on our condensed consolidated financial statements. Other accounting standards that have been issued by the FASB or other standards-setting bodies are not expected to have a material impact on the Partnership’s financial position, results of operations and cash flows. Estimates The condensed consolidated financial statements are prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes therein. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenues and expenses. The estimates that are particularly significant to our financial statements include estimates of our reserves of natural gas, NGLs and oil; future cash flows from oil and natural gas properties; depreciation, depletion and amortization; asset retirement obligations; certain revenues and operating expenses; fair values of derivatives; and fair values of assets and liabilities. As fair value is a market-based measurement, it is determined based on the assumptions that market participants would use. These estimates and assumptions are based on management’s best judgment using the data available. Management evaluates its estimates and assumptions on an on-going basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Such estimates and assumptions are adjusted when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from the estimates. Any changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2019 | |
Revenue Recognition | |
Revenue Recognition | 3. REVENUE RECOGNITION Revenue from Contracts with Customers We account for revenue from contracts with customers in accordance with ASC 606. The unit of account in ASC 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods or services) or a series of distinct goods or services provided over a period of time. ASC 606 requires that a contract’s transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when (point in time) or as (over time) the performance obligation is satisfied. Disaggregation of Revenue We disaggregate revenue based on type of revenue and product type. In selecting the disaggregation categories, we considered a number of factors, including disclosures presented outside the financial statements, such as in our earnings release and investor presentations, information reviewed internally for evaluating performance, and other factors used by the Partnership or the users of its financial statements to evaluate performance or allocate resources. We have concluded that disaggregating revenue by type of revenue and product type appropriately depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Midstream Segment The Seco Pipeline Transportation Agreement is the only contract that we account for under ASC 606. The Catarina Midstream Gathering Agreement is classified as an operating lease and is accounted for under ASC 842, Leases, and is reported as gathering and transportation lease revenue in our condensed consolidated statements of operations. Both of these contracts are further discussed in Note 13 “Related Party Transactions.” We account for income from our unconsolidated equity method investments as earnings from equity investments in our condensed consolidated statements of operations. Earnings from these equity method investments are further discussed in Note 11 “Investments.” Production Segment Our oil, natural gas and NGL revenue is marketed and sold on our behalf by the respective asset operators. We are not party to the contracts with the third-party customers. However, we are party to joint operating agreements, which we account for under ASC 808, and revenue for these arrangements is recognized based on the information provided to us by the operators. We additionally recognize and present changes in the fair value of our commodity derivative instruments within natural gas sales and oil sales in the condensed consolidated statements of operations. As this income is accounted for under ASC 815, Derivatives and Hedging, it is not subject to ASC 606. We recognized aggregate revenue of $20.9 million for the three months ended September 30, 2019. The following table displays revenue disaggregated by type of revenue and product type (in thousands): Three Months Ended September 30, 2019 Production Midstream Total Revenues: Natural gas sales $ 177 $ — $ 177 Oil sales 4,769 — 4,769 Natural gas liquid sales 115 — 115 Gathering and transportation sales — 1,720 1,720 Gathering and transportation lease revenues — 14,135 14,135 Total revenues $ 5,061 $ 15,855 $ 20,916 We recognized aggregate revenue of $60.3 million for the nine months ended September 30, 2019. The following table displays revenue disaggregated by type of revenue and product type (in thousands): Nine Months Ended September 30, 2019 Production Midstream Total Revenues: Natural gas sales $ 543 $ — $ 543 Oil sales 7,841 — 7,841 Natural gas liquid sales 411 — 411 Gathering and transportation sales — 5,105 5,105 Gathering and transportation lease revenues — 46,361 46,361 Total revenues $ 8,795 $ 51,466 $ 60,261 Performance Obligations We entered into a firm transportation service agreement with Sanchez Energy to transport certain quantities of Sanchez Energy’s natural gas on a firm basis through the Seco Pipeline for $0.22 per MMBtu delivered on or after September 1, 2017 (the “Seco Pipeline Transportation Agreement”). Each MMBtu of natural gas transported is distinct and the transportation services performed on each distinct molecule of product is substantially the same in nature. As such, we applied the series guidance and treat these services as a single performance obligation satisfied over time using volumes delivered as the measure of progress. The Seco Pipeline Transportation Agreement requires payment within 30 days following the calendar month of delivery. The Seco Pipeline Transportation Agreement contains variable consideration in the form of volume variability. As the distinct goods or services (rather than the series) are considered for the purpose of allocating variable consideration, we have taken the optional exception under ASC 606 which is available only for wholly unsatisfied performance obligations for which the criteria in ASC 606 have been met. Under this exception, neither estimation of variable consideration nor disclosure of the transaction price allocated to the remaining performance obligations is required. Revenue is alternatively recognized in the period that control is transferred to the customer and the respective variable component of the total transaction price is resolved. For forms of variable consideration that are not associated with a specific volume (such as late payment fees) and thus do not meet allocation exception, estimation is required. These fees, however, are immaterial to our condensed consolidated financial statements and have a low probability of occurrence. As significant reversals of revenue due to this variability are not probable, no estimation is required. Contract Balances Under our sales contracts, we invoice customers after performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 30, 2019 | |
Acquisitions and Divestitures | |
Acquisitions and Divestitures | 4. ACQUISITIONS AND DIVESTITURES Louisiana Divestiture In September 2018, we entered into a purchase and sale agreement to sell certain non-operated production assets located in Louisiana for cash consideration of approximately $1.3 million (the “Louisiana Divestiture”). The Louisiana Divestiture closed on October 22, 2018, and we recorded a gain of approximately $0.6 million on the sale. Briggs Divestiture In April 2018, we entered into a purchase and sale agreement to sell specified wellbores and related assets and interests in La Salle County Texas (the “Briggs Assets”) for cash consideration of approximately $4.2 million (the “Briggs Divestiture”). In addition, other than limited obligations that we retained, the buyer of the Briggs Assets agreed to assume all obligations relating to the Briggs Assets, including all plugging and abandonment costs that may arise on or after March 1, 2018. The Briggs Divestiture closed April 30, 2018, and we recorded a gain of approximately $1.8 million on the sale. Cola Divestiture In April 2018, we entered into multiple purchase and sale agreements to sell certain non-operated production assets located in Oklahoma for total cash consideration of approximately $1.0 million (collectively, the “Cola Divestiture”). Each of the divestitures closed by May 8, 2018, and we recorded a total gain of approximately $1.1 million on the sales. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | 5. FAIR VALUE MEASUREMENTS Measurements of fair value of derivative instruments are classified according to the fair value hierarchy, which prioritizes the inputs to the valuation techniques used to measure fair value. Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following categories: Level 1: Measured based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Active markets are considered those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Measured based on quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. Substantially all of these inputs are observable in the marketplace throughout the term of the instrument, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace. Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity). Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement . Management's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2019 (in thousands): Fair Value Measurements at September 30, 2019 Active Markets for Observable Identical Assets Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Fair Value Commodity derivative instrument Derivative assets $ — $ 976 $ — $ 976 Midstream derivative instrument Earnout derivative liability — — (5,762) (5,762) Other liabilities Warrant — (774) — (774) Total $ — $ 202 $ (5,762) $ (5,560) The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2018 (in thousands): Fair Value Measurements at December 31, 2018 Active Markets for Observable Identical Assets Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Fair Value Commodity derivative instrument Derivative assets $ — $ 3,914 $ — $ 3,914 Midstream derivative instrument Earnout derivative liability — — (5,856) (5,856) Total $ — $ 3,914 $ (5,856) $ (1,942) As of September 30, 2019 and December 31, 2018, the estimated fair value of cash and cash equivalents, accounts receivable, other current assets and current liabilities approximated their carrying value due to their short-term nature. Fair Value on a Non-Recurring Basis The Partnership follows the provisions of Topic 820-10 for nonfinancial assets and liabilities measured at fair value on a non-recurring basis. The fair value measurements of assets acquired and liabilities assumed are based on inputs that are not observable in the market and therefore represent Level 3 inputs under the fair value hierarchy. We periodically review oil and natural gas properties and related equipment for impairment when facts and circumstances indicate that their carrying values may not be recoverable. A reconciliation of the beginning and ending balances of the Partnership’s asset retirement obligations is presented in Note 9 “Asset Retirement Obligation.” Class C Preferred Units – As part of the Exchange (defined in Note 16 “Partners’ Capital”), Stonepeak exchanged all of the issued and outstanding Class B Preferred Units for newly issued Class C Preferred Units and the Warrant in a privately negotiated transaction. The Class C Preferred Units were measured using valuation techniques that convert a future obligation to a single discounted amount. We have therefore classified the fair value measurements of the Class C Preferred units as Level 2 and are presented within Class C Preferred Units on the condensed consolidated balance sheets. We had no non-recurring fair value measurements of our assets as of September 30, 2019 and December 31, 2018. Fair Value of Financial Instruments The estimated fair value amounts of financial instruments have been determined using available market information and valuation methodologies described below. We prioritize the use of the highest level inputs available in determining fair value such that fair value measurements are determined using the highest and best use as determined by market participants and the assumptions that they would use in determining fair value. Credit Agreement – We believe that the carrying value of our Credit Agreement (defined in Note 7 “Debt”) approximates its fair value because the interest rates on the debt approximate market interest rates for debt with similar terms. The debt is classified as a Level 2 input in the fair value hierarchy and represents the amount at which the instrument could be valued in an exchange during a current transaction between willing parties. The Credit Agreement is discussed further in Note 7 “Debt.” Derivative Instruments – The income valuation approach, which involves discounting estimated cash flows, is primarily used to determine recurring fair value measurements of our derivative instruments classified as Level 2 inputs. Our commodity derivatives are valued using the terms of the individual derivative contracts with our counterparties, expected future levels of oil and natural gas prices and an appropriate discount rate. Our interest rate derivatives are valued using the terms of the individual derivative contracts with our counterparties, expected future levels of the LIBOR interest rates and an appropriate discount rate. We did not have any interest rate derivatives as of September 30, 2019. Warrant – As part of the Exchange, the Partnership issued to Stonepeak the Warrant which entitles the holder to receive junior securities representing ten percent of junior securities deemed outstanding when exercised. The Warrant expires on the later of August 2, 2026 or 30 days following the full redemption of the Class C Preferred Units. There is no strike price associated with the exercise of the Warrant. The Warrant is valued using ten percent of the junior securities deemed outstanding and the common unit price as of the balance sheet date. We have therefore classified the fair value measurements of the Warrant as Level 2 and is presented within other liabilities on the condensed consolidated balance sheets. Earnout Derivative – As part of the Carnero Gathering Transaction (defined in Note 11 “Investments”), we are required to pay Sanchez Energy an earnout based on natural gas received above a threshold volume and tariff at designated delivery points from Sanchez Energy and other producers. The earnout derivative was valued through the use of a Monte Carlo simulation model which utilized observable inputs such as the earnout price and volume commitment, as well as unobservable inputs related to the weighted probabilities of various throughput scenarios. We have therefore classified the fair value measurements of the earnout derivative as Level 3 and is presented within other liabilities on the condensed consolidated balance sheets. The following table sets forth a reconciliation of changes in the fair value of the Partnership’s earnout derivative liability classified as Level 3 in the fair value hierarchy (in thousands): Nine Months Ended Year Ended September 30, 2019 December 31, 2018 Beginning balance $ (5,856) $ (6,402) Gain on earnout derivative 94 546 Ending balance $ (5,762) $ (5,856) Gain included in earnings related to derivatives still held as of September 30, 2019 and December 31, 2018, respectively $ 94 $ 546 |
Derivative And Financial Instru
Derivative And Financial Instruments | 9 Months Ended |
Sep. 30, 2019 | |
Derivative And Financial Instruments | |
Derivative And Financial Instruments | 6. DERIVATIVE AND FINANCIAL INSTRUMENTS To reduce the impact of fluctuations in oil and natural gas prices on our revenues, we periodically enter into derivative contracts with respect to a portion of our projected oil and natural gas production through various transactions that fix or modify the future prices to be realized. These hedging activities are intended to support oil and natural gas prices at targeted levels and to manage exposure to oil and natural gas price fluctuations. It is never our intention to enter into derivative contracts for speculative trading purposes. Under Topic 815, “Derivatives and Hedging,” all derivative instruments are recorded on the condensed consolidated balance sheets at fair value as either short-term or long-term assets or liabilities based on their anticipated settlement date. We will net derivative assets and liabilities for counterparties where we have a legal right of offset. Changes in the derivatives’ fair values are recognized currently in earnings unless specific hedge accounting criteria are met. We have not elected to designate any of our current derivative contracts as hedges; however, changes in the fair value of all of our derivative instruments are recognized in earnings and included in natural gas sales and oil sales in the condensed consolidated statements of operations. As of September 30, 2019, we had the following derivative contracts in place for the periods indicated, all of which are accounted for as mark-to-market activities: Fixed Price Basis Swaps – West Texas Intermediate (WTI) Three Months Ended (volume in Bbls) March 31, June 30, September 30, December 31, Total Average Average Average Average Average Volume Price Volume Price Volume Price Volume Price Volume Price 2019 — $ — — $ — — $ — 54,824 $ 60.52 54,824 $ 60.52 2020 52,776 $ 53.50 50,960 $ 53.50 49,224 $ 53.50 47,624 $ 53.50 200,584 $ 53.50 255,408 Fixed Price Swaps – NYMEX (Henry Hub) Three Months Ended (volume in MMBtu) March 31, June 30, September 30, December 31, Total Average Average Average Average Average Volume Price Volume Price Volume Price Volume Price Volume Price 2019 — $ — — $ — — $ — 108,552 $ 2.85 108,552 $ 2.85 2020 105,104 $ 2.85 102,008 $ 2.85 99,136 $ 2.85 96,200 $ 2.85 402,448 $ 2.85 511,000 The following table sets forth a reconciliation of the changes in fair value of the Partnership’s commodity derivatives for the nine months ended September 30, 2019 and the year ended December 31, 2018 (in thousands): Nine Months Ended Year Ended September 30, 2019 December 31, 2018 Beginning fair value of commodity derivatives $ 3,914 $ 1,231 Net gains (losses) on crude oil derivatives (2,482) 1,400 Net gains (losses) on natural gas derivatives 210 (84) Net settlements paid (received) on derivative contracts: Oil (610) 1,330 Natural gas (56) 37 Ending fair value of commodity derivatives $ 976 $ 3,914 The effect of derivative instruments on our condensed consolidated statements of operations was as follows (in thousands): Location of Gain (Loss) Three Months Ended September 30, Nine Months Ended September 30, Derivative Type in Income 2019 2018 2019 2018 Commodity – Mark-to-Market Oil sales $ 1,195 $ (2,454) $ (2,482) $ (8,110) Commodity – Mark-to-Market Natural gas sales 57 23 210 27 $ 1,252 $ (2,431) $ (2,272) $ (8,083) Derivative instruments expose us to counterparty credit risk. Our commodity derivative instruments are currently contracted with three counterparties. We generally execute commodity derivative instruments under master agreements which allow us, in the event of default, to elect early termination of all contracts with the defaulting counterparty. If we choose to elect early termination, all asset and liability positions with the defaulting counterparty would be net cash settled at the time of election. We include a measure of counterparty credit risk in our estimates of the fair values of derivative instruments. As of September 30, 2019 and December 31, 2018, the impact of non-performance credit risk on the valuation of our derivative instruments was not significant. Earnout Derivative Refer to Note 5 “Fair Value Measurements.” |
Debt
Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt | |
Debt | 7. DEBT We have entered into a credit facility with Royal Bank of Canada, as administrative agent and collateral agent, and the lenders party thereto (“Credit Agreement”). The Credit Agreement provides a maximum commitment of $500.0 million and has a maturity date of March 31, 2020. Borrowings under the Credit Agreement are secured by various mortgages of oil and natural gas properties that we own, as well as various security and pledge agreements among us, certain of our subsidiaries and the administrative agent. Our Credit Agreement is a current liability that matures on March 31, 2020. We expect to refinance or extend the maturity of our Credit Agreement prior to its maturity date. However, we may not be able to refinance or extend the maturity of our Credit Agreement or, if we are able to refinance or extend the maturity, we may not be able to do so with borrowing and debt issue costs, terms, covenants, restrictions, commitment amount or a borrowing base favorable to us. The amount available for borrowing at any one time under the Credit Agreement is limited to the borrowing base for our midstream assets and our oil and natural gas properties. Borrowings under the Credit Agreement are available for direct investment in oil and natural gas properties, acquisitions and working capital and general business purposes. The Credit Agreement has a sub-limit of $15.0 million which may be used for the issuance of letters of credit. The initial borrowing base under the Credit Agreement was $200.0 million. The borrowing base for the credit available for the upstream oil and gas properties is re-determined semi-annually in the second and fourth quarters of the year, and may be re-determined at our request more frequently and by the lenders, in their sole discretion, based on reserve reports as prepared by petroleum engineers, using, among other things, the oil and natural gas pricing prevailing at such time. The borrowing base for the credit available for our midstream properties is re-determined in conjunction with the upstream borrowing base, and is generally equal to the rolling four quarter Adjusted EBITDA of our midstream operations, together with the amount of distributions received from the Carnero JV (defined in Note 11 “Investments”) multiplied by 4.5. Outstanding borrowings in excess of our borrowing base must be repaid or we must pledge other oil and natural gas properties as additional collateral. We may elect to pay any borrowing base deficiency in three equal monthly installments such that the deficiency is eliminated in a period of three months. Any increase in our borrowing base must be approved by all of the lenders. As of September 30, 2019, the borrowing base under the Credit Agreement was $282.0 million, with an elected commitment amount of $210.0 million, and w e had $162.0 million of debt outstanding under the facility, leaving us with $48.0 million in unused borrowing capacity. There were no letters of credit outstanding under our Credit Agreement as of September 30, 2019. At our election, interest for borrowings under the Credit Agreement are determined by reference to (i) the London interbank rate (“LIBOR”) plus an applicable margin between 2.25% and 3.25% per annum based on utilization or (ii) a domestic bank rate (“ABR”) plus an applicable margin between 1.25% and 2.25% per annum based on utilization plus (iii) a commitment fee of 0.500% per annum based on the unutilized borrowing base. Interest on the borrowings for ABR loans and the commitment fee are generally payable quarterly. Interest on the borrowings for LIBOR loans are generally payable at the applicable maturity date. The Credit Agreement contains various covenants that limit, among other things, our ability to incur certain indebtedness, grant certain liens, merge or consolidate, sell all or substantially all of our assets, make certain loans, acquisitions, capital expenditures and investments, and pay distributions. In addition, we are required to maintain the following financial covenants: · current assets to current liabilities ratio of at least 1.0 to 1.0 at all times; · senior secured net debt to consolidated Adjusted EBITDA ratio for the last twelve months, as of the last day of any fiscal quarter, of not greater than 4.5 to 1.0 if the Adjusted EBITDA of our midstream operations equals or exceeds one-third of total Adjusted EBITDA or 4.0 to 1.0 if the Adjusted EBITDA of our midstream operations is less than one-third of total Adjusted EBITDA; and · minimum interest coverage ratio of at least 2.5 to 1.0 if the Adjusted EBITDA of our midstream operations is greater than one-third of our total Adjusted EBITDA. The Credit Agreement also includes customary events of default, including events of default relating to non-payment of principal, interest or fees, inaccuracy of representations and warranties when made or when deemed to be made, violation of covenants, cross-defaults, bankruptcy and insolvency events, certain unsatisfied judgments, loan documents not being valid and a change in control. A change in control is generally defined as the occurrence of one of the following events: (i) our existing general partner ceases to be our sole general partner or (ii) certain specified persons shall cease to own more than 50% of the equity interests of our general partner or shall cease to control our general partner. If an event of default occurs, the lenders will be able to accelerate the maturity of the Credit Agreement and exercise other rights and remedies. The Credit Agreement limits our ability to pay distributions to unitholders. We have the ability to pay distributions to unitholders from available cash, including cash from borrowings under the Credit Agreement , as long as no event of default exists and provided that no distributions to unitholders may be made if the borrowings outstanding, net of available cash, under the Credit Agreement exceed 90% of the borrowing base, after giving effect to the proposed distribution. Our available cash is reduced by any cash reserves established by the Board for the proper conduct of our business and the payment of fees and expenses. At September 30, 2019, we were in compliance with the financial covenants contained in the Credit Agreement . We monitor compliance on an ongoing basis. If we are unable to remain in compliance with the financial covenants contained in our Credit Agreement or maintain the required ratios discussed above, the lenders could call an event of default and accelerate the outstanding debt under the terms of the Credit Agreement , such that our outstanding debt under the Credit Agreement could become then due and payable. We may request waivers of compliance for any violation of a financial covenant from the lenders, but there is no assurance that such waivers would be granted. Debt Issuance Costs As of September 30, 2019 and December 31, 2018 , our unamortized debt issuance costs were approximately $0.8 million and $1.4 million, respectively. These costs are amortized to interest expense in our condensed consolidated statements of operations over the life of our Credit Agreement. Amortization of debt issuance costs recorded during the three months ended September 30, 2019 and 2018 was approximately $0.3 million and $0.2 million, respectively. Amortization of debt issuance costs recorded during the nine months ended September 30, 2019 and 2018 was approximately $0.9 million and $0.5 million, respectively. |
Oil And Natural Gas Properties
Oil And Natural Gas Properties And Related Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Oil And Natural Gas Properties And Related Equipment. | |
Oil And Natural Gas Properties And Related Equipment | 8. OIL AND NATURAL GAS PROPERTIES AND RELATED EQUIPMENT Gathering and transportation assets consisted of the following (in thousands): September 30, December 31, 2019 2018 Gathering and transportation assets Midstream assets $ 186,874 $ 186,406 Less: Accumulated depreciation and amortization (40,547) (34,598) Total gathering and transportation assets, net $ 146,327 $ 151,808 Oil and natural gas properties and related equipment consisted of the following (in thousands): September 30, December 31, 2019 2018 Oil and natural gas properties and related equipment Proved property $ 112,476 $ 112,173 Less: Accumulated depreciation, depletion, amortization and impairments (68,589) (65,647) Total oil and natural gas properties and equipment, net $ 43,887 $ 46,526 Oil and Natural Gas Properties. We follow the successful efforts method of accounting for our oil and natural gas production activities. Under this method of accounting, costs relating to leasehold acquisition, property acquisition and the development of proved areas are capitalized when incurred. If proved reserves are found on an undeveloped property, leasehold cost is transferred to proved properties. Depreciation, Depletion and Amortization . Depreciation and depletion of producing oil and natural gas properties is recorded at the field level, based on the units-of-production method. Unit rates are computed for unamortized drilling and development costs using proved developed reserves and for unamortized leasehold costs using all proved reserves. All other properties, including the gathering and transportation assets, are stated at historical acquisition cost, net of any impairments, and are depreciated using the straight-line method over the useful lives of the assets, which range from 3 to 15 years for furniture and equipment, and up to 36 years for gathering facilities. Depreciation, depletion and amortization consisted of the following (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Depreciation, depletion and amortization of oil and natural gas-related assets $ 1,077 $ 1,202 $ 3,000 $ 3,816 Depreciation and amortization of gathering and transportation related assets 1,999 1,940 5,949 5,769 Amortization of intangible assets 3,365 3,365 10,095 10,095 Total Depreciation, depletion and amortization $ 6,441 $ 6,507 $ 19,044 $ 19,680 Impairment of Oil and Natural Gas Properties and Other Non-Current Assets. Oil and natural gas properties are reviewed for impairment on a field-by-field basis when facts and circumstances indicate that their carrying value may not be recoverable. We assess impairment of capitalized costs of proved oil and natural gas properties by comparing net capitalized costs to estimated undiscounted future net cash flows using expected prices. If net capitalized costs exceed estimated undiscounted future net cash flows, the measurement of impairment is based on estimated fair value, which would consider estimated future discounted cash flows. The cash flow estimates are based upon reserve reports using future expected oil and natural gas prices adjusted for basis differentials. Other significant inputs, besides reserves, used to determine the fair values of proved properties include estimates of: (i) future operating and development costs; (ii) future commodity prices; and (iii) a market-based weighted average cost of capital rate. These inputs require significant judgments and estimates by the Partnership’s management at the time of the valuation and are the most sensitive and subject to change. Cash flow estimates for impairment testing exclude derivative instruments. The recoverability of gathering and transportation assets is evaluated when facts or circumstances indicate that their carrying value may not be recoverable. Asset recoverability is measured by comparing the carrying value of the asset or asset group with its expected future pre-tax undiscounted cash flows. These cash flow estimates require us to make projections and assumptions for many years into the future for pricing, demand, competition, operating cost and other factors. If the carrying amount exceeds the expected future undiscounted cash flows, we recognize an impairment equal to the excess of net book value over fair value. The determination of the fair value using present value techniques requires us to make projections and assumptions regarding the probability of a range of outcomes and the rates of interest used in the present value calculations. Any changes we make to these projections and assumptions could result in significant revisions to our evaluation of recoverability of our gathering and transportation assets and the recognition of additional impairments. Upon disposition or retirement of gathering and transportation assets, any gain or loss is recorded to operations. For each of the three and nine months ended September 30, 2019 and 2018, we recorded no impairment charges. |
Asset Retirement Obligation
Asset Retirement Obligation | 9 Months Ended |
Sep. 30, 2019 | |
Asset Retirement Obligation | |
Asset Retirement Obligation | 9. ASSET RETIREMENT OBLIGATION We recognize the fair value of a liability for an asset retirement obligation (“ARO”) in the period in which it is incurred if a reasonable estimate of fair value can be made. Each period, we accrete the ARO to its then present value. The associated asset retirement cost (“ARC”) is capitalized as part of the carrying amount of our oil and natural gas properties, equipment and facilities or gathering and transportation assets. Subsequently, the ARC is depreciated using the units-of-production method for production assets and the straight-line method for midstream assets. The AROs recorded by us relate to the plugging and abandonment of oil and natural gas wells and decommissioning of oil and natural gas gathering and other facilities. Inherent in the fair value calculation of ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions result in adjustments to the recorded fair value of the existing ARO, a corresponding adjustment is made to the ARC capitalized as part of the oil and natural gas properties, equipment and facilities or gathering and transportation assets. The following table is a reconciliation of changes in ARO for the nine months ended September 30, 2019 and the year ended December 31, 2018 (in thousands): Nine Months Ended Year Ended September 30, 2019 December 31, 2018 Asset retirement obligation, beginning balance $ 6,200 $ 6,074 Liabilities added from escalating working interests 172 288 Sales — (613) Revisions to cost estimates — (46) Accretion expense 391 497 Asset retirement obligation, ending balance $ 6,763 $ 6,200 Additional AROs increase the liability associated with new oil and natural gas wells and other facilities as these obligations are incurred. Abandonments of oil and natural gas wells and other facilities reduce the liability for AROs. During the nine months ended September 30, 2019 and the year ended December 31, 2018, there were no significant expenditures for abandonments and there were no assets legally restricted for purposes of settling existing AROs. During the year ended December 31, 2018, obligations were sold as part of the Briggs Divestiture, Louisiana Divestiture and Cola Divestiture. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Intangible Assets | |
Intangible Assets | 10. INTANGIBLE ASSETS Intangible assets are comprised of customer and marketing contracts. The intangible assets balance includes $148.6 million related to the Gathering Agreement (defined in Note 13 “Related Party Transactions”) with Sanchez Energy that was entered into as part of the acquisition of the Western Catarina gathering system. The Western Catarina gathering system (“Western Catarina Midstream”) is located on the western portion of Sanchez Energy’s approximately 106,000 net acres in Dimmit, La Salle and Webb counties, Texas (such net acreage is collectively “Sanchez Energy’s Catarina Asset” and the western portion of such net acreage “Western Catarina”). Pursuant to the 15-year agreement, Sanchez Energy tenders all of its crude petroleum, natural gas and other hydrocarbon-based product volumes on 35,000 dedicated acres in the Western Catarina area of the Eagle Ford Shale in Texas for processing and transportation through Western Catarina Midstream, with a right to tender additional volumes outside of the dedicated acreage. These intangible assets are being amortized using the straight-line method over the 15-year life of the agreement. Amortization expense for each of the nine months ended September 30, 2019 and 2018 was approximately $10.1 million. These costs are amortized to depreciation, depletion, and amortization expense in our condensed consolidated statements of operations. The following table is a reconciliation of changes in intangible assets (in thousands): September 30, December 31, 2019 2018 Beginning balance $ 158,706 $ 172,166 Amortization (10,095) (13,460) Ending balance $ 148,611 $ 158,706 |
Investments
Investments | 9 Months Ended |
Sep. 30, 2019 | |
Investments | |
Investments | 11. INVESTMENTS In July 2016, we completed a transaction pursuant to which we acquired from Sanchez Energy a 50% interest in Carnero Gathering, LLC (“Carnero Gathering”), a joint venture that was 50% owned and operated by Targa Resources Corp. (NYSE: TRGP) (“Targa”), for an initial payment of approximately $37.0 million and the assumption of remaining capital commitments to Carnero Gathering, estimated at approximately $7.4 million as of the acquisition date (the “Carnero Gathering Transaction”). The fair value of the intangible asset for the contractual customer relationship related to Carnero Gathering was valued at approximately $13.0 million. This amount is being amortized over a contract term of 15 years and decreases e arnings from equity investments in our condensed consolidated statements of operations. As part of the Carnero Gathering Transaction, we are required to pay Sanchez Energy an earnout based on natural gas received above a threshold volume and tariff at designated delivery points from Sanchez Energy and other producers. See Note 5 “Fair Value Measurements” for further discussion of the earnout derivative. In November 2016, we completed a transaction pursuant to which we acquired from Sanchez Energy a 50% interest in Carnero Processing, LLC (“Carnero Processing”), a joint venture that was 50% owned and operated by Targa, for aggregate cash consideration of approximately $55.5 million and the assumption of remaining capital contribution commitments to Carnero Processing, estimated at approximately $24.5 million as of the date of acquisition (the “Carnero Processing Transaction”). In May 2018, we executed a series of agreements with Targa and other parties pursuant to which, among other things: (1) the parties merged their respective 50% interests in Carnero Gathering and Carnero Processing (the “Carnero JV Transaction”) to form an expanded 50 / 50 joint venture in South Texas within Carnero G&P, LLC (the “Carnero JV”), (2) Targa contributed 100% of the equity interest in the Silver Oak II Gas Processing Plant (“Silver Oak II”), located in Bee County, Texas, to the Carnero JV, which expands the processing capacity of the Carnero JV from 260 MMcf/d to 460 MMcf/d, (3) Targa contributed certain capacity in the 45 miles of high pressure natural gas gathering pipelines owned by Carnero Gathering that connect Western Catarina Midstream to nearby pipelines and the Raptor Gas Processing Facility (the “Carnero Gathering Line”) to the Carnero JV resulting in the Carnero JV owning all of the capacity in the Carnero Gathering Line, which has a design limit (without compression) of 400 MMcf/d, (4) the Carnero JV received a new dedication from Sanchez Energy and its working interest partners of over 315,000 Comanche acres in the Western Eagle Ford pursuant to a new long-term firm gas gathering and processing agreement. The agreement with Sanchez Energy, which was approved by all of the unaffiliated Comanche working interest partners, establishes commercial terms for the gathering of gas on the Carnero Gathering Line and processing at the Raptor Gas Processing Facility and Silver Oak II. Prior to execution of the agreement, Comanche volumes were gathered and processed on an interruptible basis, with the processing capabilities of the Carnero JV limited by the capacity of the Raptor Gas Processing Facility. As a result of the Carnero JV Transaction, we now record our share of earnings and losses from the Carnero JV using the Hypothetical Liquidation at Book Value (“HLBV”) method of accounting. The HLBV is a balance-sheet approach that calculates the amount we would have received if the Carnero JV were liquidated at book value at the end of each measurement period. The change in our allocated amount during the period is recognized in our condensed consolidated statements of operations. In the event of liquidation of the Carnero JV, available proceeds are first distributed to any priority return and unpaid capital associated with Silver Oak II, and then to members in accordance with their capital accounts. As of September 30, 2019, the Partnership had paid approximately $124.1 million for its investment in the Carnero JV related to the initial payments and contributed capital. The Partnership has accounted for this investment using the equity method. Targa is the operator of the Carnero JV and has significant influence with respect to the normal day-to-day capital and operating decisions. We have included the investment balance in the equity investments caption on the condensed consolidated balance sheets. For the three months ended September 30, 2019, the Partnership recorded earnings of approximately $1.1 million in equity investments from the Carnero JV, which was offset by approximately $0.3 million related to the amortization of the contractual customer intangible asset. For the nine months ended September 30, 2019, the Partnership recorded earnings of approximately $3.9 million in equity investments from the Carnero JV, which was offset by approximately $0.9 million related to the amortization of the contractual customer intangible asset. We have included these equity method earnings in earnings from equity investments within the condensed consolidated statements of operations. Cash distributions of approximately $12.4 million were received during the nine months ended September 30, 2019. Summarized financial information of unconsolidated entities is as follows (in thousands): Nine Months Ended September 30, 2019 2018 Sales $ 130,588 $ 257,470 Total expenses 118,586 234,341 Net income $ 12,002 $ 23,129 |
Commitments And Contingencies
Commitments And Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments And Contingencies | |
Commitments And Contingencies | 12. COMMITMENTS AND CONTINGENCIES As part of the Carnero Gathering Transaction, we are required to pay Sanchez Energy an earnout based on natural gas received above a threshold volume and tariff at designated delivery points from Sanchez Energy and other producers. This earnout has an approximate value of $5.8 million and is recorded as other liabilities on the condensed consolidated balance sheet . For the nine months ended September 30, 2019, we paid Sanchez Energy $32.1 thousand related to the earnout. For the nine months ended September 30, 2018, the natural gas received at Carnero JV did not exceed the aforementioned threshold, which resulted in no payment to Sanchez Energy related to the earnout. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions | |
Related Party Transactions | 13. RELATED PARTY TRANSACTIONS Please read the disclosure under the headings “Sanchez-Related Agreements” and “Sanchez-Related Transactions” in Note 14 “Related Party Transactions” of our Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2018 for a more complete description of certain related party transactions that were entered into prior to 2019. The following is an update to such disclosure: In conjunction with the acquisition of Western Catarina Midstream, we entered into a 15-year gas gathering agreement with Sanchez Energy pursuant to which Sanchez Energy agreed to tender all of its crude petroleum, natural gas and other hydrocarbon-based product volumes on approximately 35,000 dedicated acres in the Western Catarina area of the Eagle Ford Shale in South Texas for processing and transportation through Western Catarina Midstream, with the potential to tender additional volumes outside of the dedicated acreage (the “Gathering Agreement”). On June 30, 2017, the Gathering Agreement was amended to add an incremental infrastructure fee to be paid by a subsidiary of Sanchez Energy based on water that is delivered through the gathering system through March 31, 2018. Subsequent to the conclusion of the incremental infrastructure fee amendment, the parties have agreed to continue the incremental infrastructure fee on a month-to-month basis. On January 1, 2019 and April 1, 2019, the Partnership increased the Western Catarina Midstream tariff rate for throughput volumes which are outside of the dedicated acreage under the Gathering Agreement. As of September 30, 2019 and December 31, 2018, the Partnership had a net receivable from related parties of approximately $7.0 million, and $6.7 million, respectively, which are included in accounts receivable – related entities on the condensed consolidated balance sheets. As of September 30, 2019 and December 31, 2018, the Partnership also had a net payable to related parties of approximately $4.7 million, and $5.6 million, respectively, which are included in accounts payable – related entities on the condensed consolidated balance sheets. The net receivable/payable as of September 30, 2019 and December 31, 2018 consist primarily of revenues receivable from oil and natural gas production and transportation, offset by costs associated with that production and transportation and obligations for general and administrative costs. |
Unit-Based Compensation
Unit-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Unit-Based Compensation | |
Unit-Based Compensation | 14. UNIT-BASED COMPENSATION The Sanchez Midstream Partners LP Long-Term Incentive Plan (the “LTIP”) allows for grants of restricted common units. Restricted common unit activity under the LTIP during the period is presented in the following table: Weighted Average Number of Grant Date Restricted Fair Value Units Per Unit Outstanding at December 31, 2018 513,694 $ 12.31 Granted 1,129,173 2.35 Vested (381,729) 8.49 Returned/Cancelled (102,345) 12.05 Outstanding at September 30, 2019 1,158,793 $ 3.88 In April 2019, the Partnership issued 137,613 restricted common units pursuant to the LTIP to certain directors of the Partnership’s general partner that vested immediately on the date of grant. In March 2019, the Partnership issued 991,560 restricted common units pursuant to the LTIP to certain officers and directors of the Partnership’s general partner that vest over three years from the date of grant. The unit based compensation expense for the awards was based on the fair value on the day before the grant date. As of September 30, 2019 838,446 common units remained available for future issuance to participants under the LTIP. |
Distributions To Unitholders
Distributions To Unitholders | 9 Months Ended |
Sep. 30, 2019 | |
Distributions To Unitholders | |
Distributions To Unitholders | 15. DISTRIBUTIONS TO UNITHOLDERS The table below reflects the payment of cash distributions on common units related to the periods indicated. Distribution Date of Date of Date of Three months ended per unit declaration record distribution March 31, 2018 $ 0.4508 May 8, 2018 May 22, 2018 May 31, 2018 June 30, 2018 $ 0.4508 August 8, 2018 August 21, 2018 August 31, 2018 September 30, 2018 $ 0.1500 November 9, 2018 November 20, 2018 November 30, 2018 December 31, 2018 $ 0.1500 February 7, 2019 February 20, 2019 February 28, 2019 March 31, 2019 $ 0.1500 May 3, 2019 May 22, 2019 May 31, 2019 In connection with the second-quarter 2019 and the third-quarter 2019 distributions, the Board determined to establish a cash reserve to pay down a portion of the Partnership’s debt outstanding under the Credit Agreement. Following the establishment of the cash reserve, the Board determined that the Partnership did not have any available cash and, as a result, no cash distribution was declared for the common units with respect to either the second-quarter 2019 or the third-quarter 2019. The table below reflects the payment of distributions on Class B Preferred Units (defined below) related to the periods indicated. Cash distribution Date of Date of Date of Three months ended per unit declaration record distribution March 31, 2018 $ 0.28225 May 8, 2018 May 22, 2018 May 31, 2018 June 30, 2018 (a) $ August 8, 2018 August 21, 2018 August 31, 2018 September 30, 2018 $ 0.28225 November 9, 2018 November 20, 2018 November 30, 2018 December 31, 2018 $ 0.28225 February 7, 2019 February 20, 2019 February 28, 2019 March 31, 2019 $ 0.28225 May 3, 2019 May 22, 2019 May 31, 2019 (a) The Partnership elected to pay the second-quarter 2018 distribution on the Class B Preferred Units in part cash and part in Class B Preferred PIK Units. Accordingly, the Partnership declared a cash distribution of $0.22580 per Class B Preferred Unit and an aggregate distribution of 310,009 Class B Preferred PIK Units, each distribution was paid on August 31, 2018 to holders of record on August 21, 2018. On August 2, 2019, Stonepeak exchanged all of the issued and outstanding Class B Preferred Units for newly issued Class C Preferred Units (the “Class C Preferred Units”). As a result, no distribution was declared with respect to the Class B Preferred Units. The table below reflects the payment of distributions on Class C Preferred Units related to the periods indicated. Class C Preferred Date of Date of Date of Three months ended PIK distribution declaration record distribution June 30, 2019 939,327 August 8, 2019 August 20, 2019 August 30, 2019 September 30, 2019 1,007,820 October 30, 2019 November 29, 2019 November 20, 2019 |
Partners' Capital
Partners' Capital | 9 Months Ended |
Sep. 30, 2019 | |
Partners' Capital | |
Partners' Capital | 16. PARTNERS’ CAPITAL Outstanding Units As of September 30, 2019, we had no Class B Preferred Units outstanding, 32,250,223 Class C Preferred Units outstanding, and 20,089,827 common units outstanding which included 1,158,793 unvested restricted common units issued under the LTIP. Common Unit Issuances The following table shows the common units issued by the Partnership in 2018 and 2019 to Manager in connection with providing services under the Services Agreement: Common Date of Three months ended units issuance December 31, 2017 210,978 March 15, 2018 March 31, 2018 220,214 May 31, 2018 June 30, 2018 224,342 September 10, 2018 September 30, 2018 334,010 November 30, 2018 December 31, 2018 787,750 March 8, 2019 March 31, 2019 887,269 May 23, 2019 June 30, 2019 901,741 August 2, 2019 Class B Preferred Unit Offering On October 14, 2015, pursuant to the Class B Preferred Unit Purchase Agreement dated September 25, 2015 between the Partnership and Stonepeak Catarina Holdings LLC (“Stonepeak”), the Partnership sold and Stonepeak purchased 19,444,445 of the Partnership’s newly created Class B Preferred Units (the “Class B Preferred Units”) in a privately negotiated transaction for an aggregate cash purchase price of $18.00 per Class B Preferred Unit, which resulted in gross proceeds to the Partnership of approximately $350.0 million. The Partnership used the net proceeds to pay a portion of the consideration for the acquisition of Western Catarina Midstream, along with the payment to Stonepeak of a fee equal to 2.25% of the consideration paid for the Class B Preferred Units. On December 6, 2016 the Partnership issued an additional 9,851,996 Class B Preferred Units to Stonepeak. On January 25, 2017, the Partnership and Stonepeak entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”) to settle a dispute arising from the calculation of an adjustment to the number of Class B Preferred Units issued. Pursuant to the Settlement Agreement, the Partnership issued 1,704,446 Class B Preferred Units to Stonepeak in a privately negotiated transaction as partial consideration for the Settlement Agreement, with the “Class B Preferred Unit Price” being established at $11.29 per Class B Preferred Unit. The Class B Preferred Units were accounted for as mezzanine equity on the condensed consolidated balance sheets. The following table sets forth a reconciliation of the changes in mezzanine equity (in thousands): September 30, December 31, 2019 2018 Mezzanine equity, beginning balance $ 349,857 $ 343,912 Amortization of discount 1,708 2,358 Distributions 23,247 36,925 Distributions paid (17,675) (33,338) Class B Preferred Unit exchange (357,137) — Mezzanine equity, ending balance $ — $ 349,857 On August 2, 2019, Stonepeak exchanged all of the issued and outstanding Class B Preferred Units for newly issued Class C Preferred Units and a warrant exercisable for junior securities (the “Warrant”). Class C Preferred Units On August 2, 2019, Stonepeak exchanged all of the issued and outstanding Class B Preferred Units for newly issued Class C Preferred Units and the Warrant in a privately negotiated transaction (the “Exchange”). In connection with the Exchange, the Partnership entered into (i) the Third Amended and Restated Agreement of Limited Partnership of the Partnership (the “Amended Partnership Agreement) to set forth the terms of the Class C Preferred Units, (ii) the Amended and Restated Registration Rights Agreement with Stonepeak relating to the registered resale of common units issuable upon the exercise of the Warrant, and (iii) the Amended and Restated Board Representation and Standstill Agreement with Stonepeak. Under the terms of the Amended Partnership Agreement, commencing with the quarter ended on September 30, 2019, the holders of the Class C Preferred Units will receive a quarterly distribution of 12.5% per annum payable in cash. To the extent that Available Cash (as defined in the Amended Partnership Agreement) is insufficient to pay the distribution in cash, all or a portion of the distribution may be paid in Class C Preferred PIK Units. Commencing with the quarter ending March 31, 2022, the distribution rate will increase to 14% per annum. Distributions are to be paid on or about the last day of each of February, May, August and November following the end of each quarter and are charged to interest expense in our condensed consolidated statements of operations. The Exchange was accounted for as an extinguishment with the difference between the book value of the redeemed instrument and the fair value of the new instrument being considered a deemed contribution to common equity of approximately $103.8 million. The Class C Preferred Units are accounted for as a long-term liability on the condensed consolidated balance sheet consisting of the following (in thousands): September 30, 2019 Class C Preferred Units Private placement of Class C Preferred Units $ 353,500 Discount (104,012) Amortization of discount 5,050 Distributions 7,575 Class C Preferred Units, ending balance $ 262,113 Warrant On August 2, 2019 , in connection with the Exchange, the Partnership issued to Stonepeak the Warrant which entitles the holder to receive junior securities representing ten percent of junior securities deemed outstanding when exercised. The Warrant expires on the later of August 2, 2026 or 30 days following the full redemption of the Class C Preferred Units. There is no strike price associated with the exercise of the Warrant. The Warrant is accounted for as a liability in accordance with ASC 480 and is presented within other liabilities on the condensed consolidated balance sheet. Changes in the fair value of the Warrant are charged to interest expense in our condensed consolidated statements of operations. Earnings per Unit Net income (loss) per common unit for the period is based on any distributions that are made to the unitholders (common units) plus an allocation of undistributed net income (loss) based on provisions of the Amended Partnership Agreement , divided by the weighted average number of common units outstanding. The two-class method dictates that net income (loss) for a period be reduced by the amount of distributions and that any residual amount representing undistributed net income (loss) be allocated to common unitholders and other participating unitholders to the extent that each unit may share in net income (loss) as if all of the net income for the period had been distributed in accordance with the Amended Partnership Agreement . Unit-based awards granted but unvested are eligible to receive distributions. The underlying unvested restricted unit awards are considered participating securities for purposes of determining net income (loss) per unit. Undistributed income is allocated to participating securities based on the proportional relationship of the weighted average number of common units and unit-based awards outstanding. Undistributed losses (including those resulting from distributions in excess of net income) are allocated to common units based on provisions of the Amended Partnership Agreement . Undistributed losses are not allocated to unvested restricted unit awards as they do not participate in net losses. Distributions declared and paid in the period are treated as distributed earnings in the computation of earnings per common unit even though cash distributions are not necessarily derived from current or prior period earnings. The Partnership’s general partner does not have an economic interest in the Partnership and, therefore, does not participate in the Partnership’s net income. |
Reporting Segments
Reporting Segments | 9 Months Ended |
Sep. 30, 2019 | |
Reporting Segments | |
Reporting Segments | 17. REPORTING SEGMENTS “Midstream” and “Production” best describe the operating segments of the businesses that we separately report. The factors used to identify these reporting segments are based on the nature of the operations that are undertaken by each segment. The Midstream segment operates the gathering, processing and transportation of crude oil, natural gas and NGLs. The Production segment operates to produce crude oil and natural gas. These segments are broadly understood across the petroleum and petrochemical industries. These functions have been defined as the operating segments of the Partnership because they are the segments (1) that engage in business activities from which revenues are earned and expenses are incurred; (2) whose operating results are regularly reviewed by the Partnership’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and to assess its performance; and (3) for which discrete financial information is available. Operating segments are evaluated for their contribution to the Partnership’s consolidated results based on operating income, which is defined as segment operating revenues less expenses. The following tables present financial information for each operating segment for the periods indicated based on our operating segments (in thousands): Three Months Ended September 30, 2019 2018 Production Midstream Production Midstream Segment revenues Natural gas sales $ 177 $ — $ 166 $ — Oil sales 4,769 — 2,848 — Natural gas liquid sales 115 — 408 — Gathering and transportation sales — 1,720 — 1,582 Gathering and transportation lease revenues — 14,135 — 13,148 Total segment revenues 5,061 15,855 3,422 14,730 Segment operating costs Lease operating expenses 1,636 469 1,597 308 Transportation operating expenses — 2,752 — 3,061 Production taxes 165 — 292 — Gain on sale of assets — — (238) — Depreciation, depletion and amortization 1,077 5,364 1,202 5,305 Accretion expense 49 83 48 75 Total segment operating costs 2,927 8,668 2,901 8,749 Segment other income Earnings from equity investments — 780 — 2,313 Total segment other income — 780 — 2,313 Segment operating income $ 2,134 $ 7,967 $ 521 $ 8,294 Nine Months Ended September 30, 2019 2018 Production Midstream Production Midstream Segment revenues Natural gas sales $ 543 $ — $ 865 $ — Oil sales 7,841 — 7,894 — Natural gas liquid sales 411 — 1,403 — Gathering and transportation sales — 5,105 — 4,931 Gathering and transportation lease revenues — 46,361 — 38,634 Total segment revenues 8,795 51,466 10,162 43,565 Segment operating costs Lease operating expenses 4,643 1,242 4,993 890 Transportation operating expenses — 8,476 — 8,979 Production taxes 489 — 901 — Gain on sale of assets — — (2,626) — Depreciation, depletion and amortization 3,000 16,044 3,816 15,864 Accretion expense 149 242 151 221 Total segment operating costs 8,281 26,004 7,235 25,954 Segment other income Earnings from equity investments — 3,013 — 9,696 Total segment other income — 3,013 — 9,696 Segment operating income (loss) $ 514 $ 28,475 $ 2,927 $ 27,307 Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Reconciliation of segment operating income to net income (loss) Total production operating income $ 2,134 $ 521 $ 514 $ 2,927 Total midstream operating income 7,967 8,294 28,475 27,307 Total segment operating income 10,101 8,815 28,989 30,234 General and administrative expense (4,317) (5,109) (13,237) (17,193) Unit-based compensation expense (271) (155) (1,081) (2,940) Interest expense, net (12,141) (2,786) (17,741) (8,165) Other income (expense) 31 (352) 98 (1,876) Income tax expense (213) — (335) — Net income (loss) $ (6,810) $ 413 $ (3,307) $ 60 The following table summarizes the total assets by operating segment as of September 30, 2019 and December 31, 2018 and total capital expenditures for the nine months ended September 30, 2019 and the year ended December 31, 2018 (in thousands): September 30, 2019 Production Midstream Corporate (a) Total Other financial information Total assets $ 48,418 $ 404,967 $ 5,340 $ 458,725 Capital expenditures (b) $ 130 $ 728 $ — $ 858 December 31, 2018 Production Midstream Corporate (a) Total Other financial information Total assets $ 53,556 $ 429,523 $ 3,606 $ 486,685 Capital expenditures (b) $ 11 $ 4,856 $ — $ 4,867 (a) Corporate assets not reviewed by the CODM on a segment basis consists of cash, certain prepaid expenses, office furniture, and other assets. (b) Inclusive of capital contributions made to equity method investments. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2019 | |
Variable Interest Entities | |
Variable Interest Entities | 18. VARIABLE INTEREST ENTITIES The Partnership’s investment in the Carnero JV represents a variable interest entity (“VIE”) that could expose the Partnership to losses. The amount of losses the Partnership could be exposed to from the Carnero JV is limited to the capital investment of approximately $105.4 million. As of September 30, 2019, the Partnership had invested approximately $124.1 million in the Carnero JV and no debt has been incurred by the Carnero JV. We have included this VIE in other assets, equity investments on the balance sheet. Below is a tabular comparison of the carrying amounts of the assets and liabilities of the VIE and the Partnership’s maximum exposure to loss as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, 2019 2018 Acquisitions, earnout and capital investments $ 128,141 $ 127,899 Earnings in equity investments 26,157 23,144 Distributions received (48,946) (36,578) Maximum exposure to loss $ 105,352 $ 114,465 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events | |
Subsequent Events | 19. SUBSEQUENT EVENTS In October 2019, the Partnership paid $6.0 million in principal outstanding under the Credit Agreement resulting in debt outstanding of $156 million under the Credit Agreement. On October 30, 2019, the Board declared that after establishing a cash reserve for the payment of certain amounts outstanding under the Credit Agreement, the Partnership did not have any available cash and, as a result, there would be no cash distribution on the Partnership’s common units. As required by the Amended Partnership Agreement, the Board declared a third quarter distribution on the Class C Preferred Units payable 100% in Class C Preferred PIK Units. Accordingly, the Partnership declared an aggregate distribution of 1,007,820 Class C Preferred PIK Units, payable on November 29, 2019 to holders of record on November 20, 2019. |
Basis Of Presentation And Sum_2
Basis Of Presentation And Summary Of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Basis Of Presentation And Summary Of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation Accounting policies used by us conform to accounting principles generally accepted in the United States of America (“GAAP”). These unaudited condensed consolidated financial statements include the accounts of us and our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Our business consists of two reportable segments: Production and Midstream. Our Midstream segment includes Western Catarina Midstream (defined in Note 10 “Intangible Assets”), the Carnero JV (defined in Note 11 “Investments”) and Seco Pipeline. Our Production segment consists of our oil and natural gas properties in Texas and Louisiana. Our management evaluates performance based on these two business segments. These unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the SEC. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with GAAP, have been condensed or omitted pursuant to those rules and regulations. We believe that the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the interim condensed consolidated financial statements have been included. The results of operations for the interim periods are not necessarily indicative of the results for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on March 7, 2019. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13 “Fair Value Measurement (ASC 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements,” which modifies the disclosure requirements on fair value measurements. This ASU is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2019. We are currently in the process of evaluating the impact of adoption of this guidance on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07 “Compensation - Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of Topic 718, Compensation – Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. We adopted this ASU effective January 1, 2019, which resulted in the remeasurement of our outstanding unvested awards as of January 1, 2019 and will change the expense recorded for equity awards going forward. The adoption of this standard resulted in an approximately $0.2 million charge to retained earnings. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of losses. This ASU is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2019, and earlier adoption is permitted. We are currently in the process of evaluating the impact of adoption of this guidance on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842),” effective for annual and interim periods for public companies beginning after December 15, 2018. Additionally, in July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842 (Leases),” which provides narrow amendments to clarify how to apply certain aspects of ASU 2016-02. The Partnership elected the practical expedients disclosed in ASU 2018-10. The effective date in ASU 2018-10 is the same as that of ASU 2016-02. The standards update the previous lease guidance by requiring the recognition of a right-of-use asset and lease liability on the statement of financial position for those leases previously classified as operating leases under the old guidance. In addition, ASU 2016-02 updates the criteria for a lessee’s classification of a finance lease. The Partnership adopted this standard effective January 1, 2019. The adoption of this standard did not have a material impact on our condensed consolidated financial statements. Other accounting standards that have been issued by the FASB or other standards-setting bodies are not expected to have a material impact on the Partnership’s financial position, results of operations and cash flows. |
Use of Estimates | Estimates The condensed consolidated financial statements are prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes therein. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenues and expenses. The estimates that are particularly significant to our financial statements include estimates of our reserves of natural gas, NGLs and oil; future cash flows from oil and natural gas properties; depreciation, depletion and amortization; asset retirement obligations; certain revenues and operating expenses; fair values of derivatives; and fair values of assets and liabilities. As fair value is a market-based measurement, it is determined based on the assumptions that market participants would use. These estimates and assumptions are based on management’s best judgment using the data available. Management evaluates its estimates and assumptions on an on-going basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Such estimates and assumptions are adjusted when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from the estimates. Any changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue Recognition | |
Schedule of disaggregation of revenue | We recognized aggregate revenue of $20.9 million for the three months ended September 30, 2019. The following table displays revenue disaggregated by type of revenue and product type (in thousands): Three Months Ended September 30, 2019 Production Midstream Total Revenues: Natural gas sales $ 177 $ — $ 177 Oil sales 4,769 — 4,769 Natural gas liquid sales 115 — 115 Gathering and transportation sales — 1,720 1,720 Gathering and transportation lease revenues — 14,135 14,135 Total revenues $ 5,061 $ 15,855 $ 20,916 We recognized aggregate revenue of $60.3 million for the nine months ended September 30, 2019. The following table displays revenue disaggregated by type of revenue and product type (in thousands): Nine Months Ended September 30, 2019 Production Midstream Total Revenues: Natural gas sales $ 543 $ — $ 543 Oil sales 7,841 — 7,841 Natural gas liquid sales 411 — 411 Gathering and transportation sales — 5,105 5,105 Gathering and transportation lease revenues — 46,361 46,361 Total revenues $ 8,795 $ 51,466 $ 60,261 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Measurements | |
Schedule of fair value of assets and liabilities on a recurring basis | The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2019 (in thousands): Fair Value Measurements at September 30, 2019 Active Markets for Observable Identical Assets Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Fair Value Commodity derivative instrument Derivative assets $ — $ 976 $ — $ 976 Midstream derivative instrument Earnout derivative liability — — (5,762) (5,762) Other liabilities Warrant — (774) — (774) Total $ — $ 202 $ (5,762) $ (5,560) The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2018 (in thousands): Fair Value Measurements at December 31, 2018 Active Markets for Observable Identical Assets Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Fair Value Commodity derivative instrument Derivative assets $ — $ 3,914 $ — $ 3,914 Midstream derivative instrument Earnout derivative liability — — (5,856) (5,856) Total $ — $ 3,914 $ (5,856) $ (1,942) |
Schedule of reconciliation of changes in fair value of derivatives | The following table sets forth a reconciliation of changes in the fair value of the Partnership’s earnout derivative liability classified as Level 3 in the fair value hierarchy (in thousands): Nine Months Ended Year Ended September 30, 2019 December 31, 2018 Beginning balance $ (5,856) $ (6,402) Gain on earnout derivative 94 546 Ending balance $ (5,762) $ (5,856) Gain included in earnings related to derivatives still held as of September 30, 2019 and December 31, 2018, respectively $ 94 $ 546 |
Derivative And Financial Inst_2
Derivative And Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Derivative And Financial Instruments | |
Summary Of Derivative Contracts In Place | Fixed Price Basis Swaps – West Texas Intermediate (WTI) Three Months Ended (volume in Bbls) March 31, June 30, September 30, December 31, Total Average Average Average Average Average Volume Price Volume Price Volume Price Volume Price Volume Price 2019 — $ — — $ — — $ — 54,824 $ 60.52 54,824 $ 60.52 2020 52,776 $ 53.50 50,960 $ 53.50 49,224 $ 53.50 47,624 $ 53.50 200,584 $ 53.50 255,408 Fixed Price Swaps – NYMEX (Henry Hub) Three Months Ended (volume in MMBtu) March 31, June 30, September 30, December 31, Total Average Average Average Average Average Volume Price Volume Price Volume Price Volume Price Volume Price 2019 — $ — — $ — — $ — 108,552 $ 2.85 108,552 $ 2.85 2020 105,104 $ 2.85 102,008 $ 2.85 99,136 $ 2.85 96,200 $ 2.85 402,448 $ 2.85 511,000 |
Schedule Of Effect Of Derivative Instruments On Consolidated Statements Of Operations | Nine Months Ended Year Ended September 30, 2019 December 31, 2018 Beginning fair value of commodity derivatives $ 3,914 $ 1,231 Net gains (losses) on crude oil derivatives (2,482) 1,400 Net gains (losses) on natural gas derivatives 210 (84) Net settlements paid (received) on derivative contracts: Oil (610) 1,330 Natural gas (56) 37 Ending fair value of commodity derivatives $ 976 $ 3,914 The effect of derivative instruments on our condensed consolidated statements of operations was as follows (in thousands): Location of Gain (Loss) Three Months Ended September 30, Nine Months Ended September 30, Derivative Type in Income 2019 2018 2019 2018 Commodity – Mark-to-Market Oil sales $ 1,195 $ (2,454) $ (2,482) $ (8,110) Commodity – Mark-to-Market Natural gas sales 57 23 210 27 $ 1,252 $ (2,431) $ (2,272) $ (8,083) |
Oil And Natural Gas Propertie_2
Oil And Natural Gas Properties And Related Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Oil And Natural Gas Properties And Related Equipment. | |
Schedule of gathering and transportation assets | Gathering and transportation assets consisted of the following (in thousands): September 30, December 31, 2019 2018 Gathering and transportation assets Midstream assets $ 186,874 $ 186,406 Less: Accumulated depreciation and amortization (40,547) (34,598) Total gathering and transportation assets, net $ 146,327 $ 151,808 |
Schedule of oil and natural gas properties | September 30, December 31, 2019 2018 Gathering and transportation assets Midstream assets $ 186,874 $ 186,406 Less: Accumulated depreciation and amortization (40,547) (34,598) Total gathering and transportation assets, net $ 146,327 $ 151,808 Oil and natural gas properties and related equipment consisted of the following (in thousands): September 30, December 31, 2019 2018 Oil and natural gas properties and related equipment Proved property $ 112,476 $ 112,173 Less: Accumulated depreciation, depletion, amortization and impairments (68,589) (65,647) Total oil and natural gas properties and equipment, net $ 43,887 $ 46,526 |
Schedule of depreciation, depletion, and amortization | Depreciation, depletion and amortization consisted of the following (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Depreciation, depletion and amortization of oil and natural gas-related assets $ 1,077 $ 1,202 $ 3,000 $ 3,816 Depreciation and amortization of gathering and transportation related assets 1,999 1,940 5,949 5,769 Amortization of intangible assets 3,365 3,365 10,095 10,095 Total Depreciation, depletion and amortization $ 6,441 $ 6,507 $ 19,044 $ 19,680 |
Asset Retirement Obligation (Ta
Asset Retirement Obligation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Asset Retirement Obligation | |
Reconciliation of changes in asset retirement obligation | The following table is a reconciliation of changes in ARO for the nine months ended September 30, 2019 and the year ended December 31, 2018 (in thousands): Nine Months Ended Year Ended September 30, 2019 December 31, 2018 Asset retirement obligation, beginning balance $ 6,200 $ 6,074 Liabilities added from escalating working interests 172 288 Sales — (613) Revisions to cost estimates — (46) Accretion expense 391 497 Asset retirement obligation, ending balance $ 6,763 $ 6,200 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Intangible Assets | |
Schedule of Intangible assets | The following table is a reconciliation of changes in intangible assets (in thousands): September 30, December 31, 2019 2018 Beginning balance $ 158,706 $ 172,166 Amortization (10,095) (13,460) Ending balance $ 148,611 $ 158,706 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Investments | |
Summarized financial information of unconsolidated entities | Summarized financial information of unconsolidated entities is as follows (in thousands): Nine Months Ended September 30, 2019 2018 Sales $ 130,588 $ 257,470 Total expenses 118,586 234,341 Net income $ 12,002 $ 23,129 |
Unit-Based Compensation (Tables
Unit-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Unit-Based Compensation | |
Schedule of units activity | Weighted Average Number of Grant Date Restricted Fair Value Units Per Unit Outstanding at December 31, 2018 513,694 $ 12.31 Granted 1,129,173 2.35 Vested (381,729) 8.49 Returned/Cancelled (102,345) 12.05 Outstanding at September 30, 2019 1,158,793 $ 3.88 |
Distributions To Unitholders (T
Distributions To Unitholders (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Common units | |
Schedule of payment of cash distributions | Distribution Date of Date of Date of Three months ended per unit declaration record distribution March 31, 2018 $ 0.4508 May 8, 2018 May 22, 2018 May 31, 2018 June 30, 2018 $ 0.4508 August 8, 2018 August 21, 2018 August 31, 2018 September 30, 2018 $ 0.1500 November 9, 2018 November 20, 2018 November 30, 2018 December 31, 2018 $ 0.1500 February 7, 2019 February 20, 2019 February 28, 2019 March 31, 2019 $ 0.1500 May 3, 2019 May 22, 2019 May 31, 2019 |
Class B preferred units | |
Schedule of payment of cash distributions | Cash distribution Date of Date of Date of Three months ended per unit declaration record distribution March 31, 2018 $ 0.28225 May 8, 2018 May 22, 2018 May 31, 2018 June 30, 2018 (a) $ August 8, 2018 August 21, 2018 August 31, 2018 September 30, 2018 $ 0.28225 November 9, 2018 November 20, 2018 November 30, 2018 December 31, 2018 $ 0.28225 February 7, 2019 February 20, 2019 February 28, 2019 March 31, 2019 $ 0.28225 May 3, 2019 May 22, 2019 May 31, 2019 (a) The Partnership elected to pay the second-quarter 2018 distribution on the Class B Preferred Units in part cash and part in Class B Preferred PIK Units. Accordingly, the Partnership declared a cash distribution of $0.22580 per Class B Preferred Unit and an aggregate distribution of 310,009 Class B Preferred PIK Units, each distribution was paid on August 31, 2018 to holders of record on August 21, 2018. |
Class C preferred units | |
Schedule of payment of cash distributions | Class C Preferred Date of Date of Date of Three months ended PIK distribution declaration record distribution June 30, 2019 939,327 August 8, 2019 August 20, 2019 August 30, 2019 September 30, 2019 1,007,820 October 30, 2019 November 29, 2019 November 20, 2019 |
Partners' Capital (Tables)
Partners' Capital (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Partners' Capital | |
Schedule of common unit issuances | Common Date of Three months ended units issuance December 31, 2017 210,978 March 15, 2018 March 31, 2018 220,214 May 31, 2018 June 30, 2018 224,342 September 10, 2018 September 30, 2018 334,010 November 30, 2018 December 31, 2018 787,750 March 8, 2019 March 31, 2019 887,269 May 23, 2019 June 30, 2019 901,741 August 2, 2019 |
Schedule of Class B preferred units accounted for as mezzanine equity in the consolidated balance sheet | The Class B Preferred Units were accounted for as mezzanine equity on the condensed consolidated balance sheets. The following table sets forth a reconciliation of the changes in mezzanine equity (in thousands): September 30, December 31, 2019 2018 Mezzanine equity, beginning balance $ 349,857 $ 343,912 Amortization of discount 1,708 2,358 Distributions 23,247 36,925 Distributions paid (17,675) (33,338) Class B Preferred Unit exchange (357,137) — Mezzanine equity, ending balance $ — $ 349,857 |
Schedule of Class C preferred units | The Exchange was accounted for as an extinguishment with the difference between the book value of the redeemed instrument and the fair value of the new instrument being considered a deemed contribution to common equity of approximately $103.8 million. The Class C Preferred Units are accounted for as a long-term liability on the condensed consolidated balance sheet consisting of the following (in thousands): September 30, 2019 Class C Preferred Units Private placement of Class C Preferred Units $ 353,500 Discount (104,012) Amortization of discount 5,050 Distributions 7,575 Class C Preferred Units, ending balance $ 262,113 |
Reporting Segments (Tables)
Reporting Segments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Reporting Segments | |
Schedule of segment information | The following tables present financial information for each operating segment for the periods indicated based on our operating segments (in thousands): Three Months Ended September 30, 2019 2018 Production Midstream Production Midstream Segment revenues Natural gas sales $ 177 $ — $ 166 $ — Oil sales 4,769 — 2,848 — Natural gas liquid sales 115 — 408 — Gathering and transportation sales — 1,720 — 1,582 Gathering and transportation lease revenues — 14,135 — 13,148 Total segment revenues 5,061 15,855 3,422 14,730 Segment operating costs Lease operating expenses 1,636 469 1,597 308 Transportation operating expenses — 2,752 — 3,061 Production taxes 165 — 292 — Gain on sale of assets — — (238) — Depreciation, depletion and amortization 1,077 5,364 1,202 5,305 Accretion expense 49 83 48 75 Total segment operating costs 2,927 8,668 2,901 8,749 Segment other income Earnings from equity investments — 780 — 2,313 Total segment other income — 780 — 2,313 Segment operating income $ 2,134 $ 7,967 $ 521 $ 8,294 Nine Months Ended September 30, 2019 2018 Production Midstream Production Midstream Segment revenues Natural gas sales $ 543 $ — $ 865 $ — Oil sales 7,841 — 7,894 — Natural gas liquid sales 411 — 1,403 — Gathering and transportation sales — 5,105 — 4,931 Gathering and transportation lease revenues — 46,361 — 38,634 Total segment revenues 8,795 51,466 10,162 43,565 Segment operating costs Lease operating expenses 4,643 1,242 4,993 890 Transportation operating expenses — 8,476 — 8,979 Production taxes 489 — 901 — Gain on sale of assets — — (2,626) — Depreciation, depletion and amortization 3,000 16,044 3,816 15,864 Accretion expense 149 242 151 221 Total segment operating costs 8,281 26,004 7,235 25,954 Segment other income Earnings from equity investments — 3,013 — 9,696 Total segment other income — 3,013 — 9,696 Segment operating income (loss) $ 514 $ 28,475 $ 2,927 $ 27,307 |
Schedule of reconciliation of segment operating income to net income (loss) | Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Reconciliation of segment operating income to net income (loss) Total production operating income $ 2,134 $ 521 $ 514 $ 2,927 Total midstream operating income 7,967 8,294 28,475 27,307 Total segment operating income 10,101 8,815 28,989 30,234 General and administrative expense (4,317) (5,109) (13,237) (17,193) Unit-based compensation expense (271) (155) (1,081) (2,940) Interest expense, net (12,141) (2,786) (17,741) (8,165) Other income (expense) 31 (352) 98 (1,876) Income tax expense (213) — (335) — Net income (loss) $ (6,810) $ 413 $ (3,307) $ 60 |
Summary of assets and capital expenditures by operating segment | Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Reconciliation of segment operating income to net income (loss) Total production operating income $ 2,134 $ 521 $ 514 $ 2,927 Total midstream operating income 7,967 8,294 28,475 27,307 Total segment operating income 10,101 8,815 28,989 30,234 General and administrative expense (4,317) (5,109) (13,237) (17,193) Unit-based compensation expense (271) (155) (1,081) (2,940) Interest expense, net (12,141) (2,786) (17,741) (8,165) Other income (expense) 31 (352) 98 (1,876) Income tax expense (213) — (335) — Net income (loss) $ (6,810) $ 413 $ (3,307) $ 60 The following table summarizes the total assets by operating segment as of September 30, 2019 and December 31, 2018 and total capital expenditures for the nine months ended September 30, 2019 and the year ended December 31, 2018 (in thousands): September 30, 2019 Production Midstream Corporate (a) Total Other financial information Total assets $ 48,418 $ 404,967 $ 5,340 $ 458,725 Capital expenditures (b) $ 130 $ 728 $ — $ 858 December 31, 2018 Production Midstream Corporate (a) Total Other financial information Total assets $ 53,556 $ 429,523 $ 3,606 $ 486,685 Capital expenditures (b) $ 11 $ 4,856 $ — $ 4,867 (a) Corporate assets not reviewed by the CODM on a segment basis consists of cash, certain prepaid expenses, office furniture, and other assets. Inclusive of capital contributions made to equity method investments |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Variable Interest Entities | |
Schedule of carrying amounts of assets and liabilities of variable interest entity | Below is a tabular comparison of the carrying amounts of the assets and liabilities of the VIE and the Partnership’s maximum exposure to loss as of September 30, 2019 and December 31, 2018 (in thousands): September 30, December 31, 2019 2018 Acquisitions, earnout and capital investments $ 128,141 $ 127,899 Earnings in equity investments 26,157 23,144 Distributions received (48,946) (36,578) Maximum exposure to loss $ 105,352 $ 114,465 |
Basis Of Presentation And Sum_3
Basis Of Presentation And Summary Of Significant Accounting Policies (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019segment | Mar. 31, 2019USD ($) | |
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | ||
Number of business segments | segment | 2 | |
Adoption of accounting standard | $ 181 | |
Common units | ||
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | ||
Adoption of accounting standard | $ 181 |
Revenue Recognition (Disaggrega
Revenue Recognition (Disaggregation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Gathering and transportation lease revenues | $ 14,135 | $ 13,148 | $ 46,361 | $ 38,634 |
Total revenues | 20,916 | 18,152 | 60,261 | 53,727 |
Natural gas sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 177 | 166 | 543 | 865 |
Oil sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 4,769 | 2,848 | 7,841 | 7,894 |
Natural gas liquid product | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 115 | 408 | 411 | 1,403 |
Gathering and transportation | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,720 | 1,582 | 5,105 | 4,931 |
Production | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 5,061 | 3,422 | 8,795 | 10,162 |
Production | Natural gas sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 177 | 166 | 543 | 865 |
Production | Oil sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 4,769 | 2,848 | 7,841 | 7,894 |
Production | Natural gas liquid product | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 115 | 408 | 411 | 1,403 |
Midstream | ||||
Disaggregation of Revenue [Line Items] | ||||
Gathering and transportation lease revenues | 14,135 | 13,148 | 46,361 | 38,634 |
Total revenues | 15,855 | 14,730 | 51,466 | 43,565 |
Midstream | Gathering and transportation | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 1,720 | $ 1,582 | $ 5,105 | $ 4,931 |
Revenue Recognition (Contract B
Revenue Recognition (Contract Balances) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Revenue Recognition | ||
Payment term (in days) | 30 days | |
Receivables | $ 0.6 | $ 0.6 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Details) - USD ($) $ in Millions | Oct. 22, 2018 | Apr. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2018 |
Louisiana Divestiture | ||||
Business Acquisition [Line Items] | ||||
Proceeds from divestiture | $ 1.3 | |||
Gain on sale | $ 0.6 | |||
Briggs Divestiture | ||||
Business Acquisition [Line Items] | ||||
Proceeds from divestiture after purchase price adjustments | $ 4.2 | |||
Gain on sale | $ 1.8 | |||
Cola Divestiture | ||||
Business Acquisition [Line Items] | ||||
Proceeds from divestiture | $ 1 | |||
Gain on sale | $ 1.1 |
Fair Value Measurements (Recurr
Fair Value Measurements (Recurring) (Details) $ in Thousands | Sep. 30, 2019USD ($)derivative | Dec. 31, 2018USD ($) |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Number of interest rate derivatives | derivative | 0 | |
Recurring | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 3,914 | |
Derivative liability | $ 976 | (5,856) |
Earnout derivative liability | (5,762) | |
Other liabilities: Warrant | (774) | |
Total net assets | (5,560) | (1,942) |
Fair Value, Inputs, Level 2 | Recurring | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative assets | 3,914 | |
Derivative liability | 976 | |
Other liabilities: Warrant | (774) | |
Total net assets | 202 | 3,914 |
Fair Value, Inputs, Level 3 | Recurring | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liability | (5,856) | |
Earnout derivative liability | (5,762) | |
Total net assets | $ (5,762) | $ (5,856) |
Fair Value Measurements (Embedd
Fair Value Measurements (Embedded and Earnout Derivative) (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Fair Value Measurements | ||
Beginning Balance | $ (5,856) | $ (6,402) |
Gain on embedded derivative | 94 | 546 |
Ending Balance | $ (5,762) | $ (5,856) |
Derivative And Financial Inst_3
Derivative And Financial Instruments (Hedges In Place) (Details) | 9 Months Ended |
Sep. 30, 2019MMBTU$ / bbl$ / MMBTUbbl | |
West Texas Intermediate 2019 Swap Quarter 4 | |
Derivative [Line Items] | |
Volume (in Bbls) | bbl | 54,824 |
Average Price | $ / bbl | 60.52 |
West Texas Intermediate 2019 | |
Derivative [Line Items] | |
Volume (in Bbls) | bbl | 54,824 |
Average Price | $ / bbl | 60.52 |
West Texas Intermediate 2020 Swap Quarter 1 | |
Derivative [Line Items] | |
Volume (in Bbls) | bbl | 52,776 |
Average Price | $ / bbl | 53.50 |
West Texas Intermediate 2020 Swap Quarter 2 | |
Derivative [Line Items] | |
Volume (in Bbls) | bbl | 50,960 |
Average Price | $ / bbl | 53.50 |
West Texas Intermediate 2020 Swap Quarter 3 | |
Derivative [Line Items] | |
Volume (in Bbls) | bbl | 49,224 |
Average Price | $ / bbl | 53.50 |
West Texas Intermediate 2020 Swap Quarter 4 | |
Derivative [Line Items] | |
Volume (in Bbls) | bbl | 47,624 |
Average Price | $ / bbl | 53.50 |
West Texas Intermediate 2020 | |
Derivative [Line Items] | |
Volume (in Bbls) | bbl | 200,584 |
Average Price | $ / bbl | 53.50 |
West Texas Intermediate | |
Derivative [Line Items] | |
Volume (in Bbls) | bbl | 255,408 |
NYMEX 2019 Swap Quarter 4 | |
Derivative [Line Items] | |
Volume (in MMBtu) | MMBTU | 108,552 |
Average Price | $ / MMBTU | 2.85 |
NYMEX 2019 | |
Derivative [Line Items] | |
Volume (in MMBtu) | MMBTU | 108,552 |
Average Price | $ / MMBTU | 2.85 |
NYMEX 2020 Swap Quarter 1 | |
Derivative [Line Items] | |
Volume (in MMBtu) | MMBTU | 105,104 |
Average Price | $ / MMBTU | 2.85 |
NYMEX 2020 Swap Quarter 2 | |
Derivative [Line Items] | |
Volume (in MMBtu) | MMBTU | 102,008 |
Average Price | $ / MMBTU | 2.85 |
NYMEX 2020 Swap Quarter 3 | |
Derivative [Line Items] | |
Volume (in MMBtu) | MMBTU | 99,136 |
Average Price | $ / MMBTU | 2.85 |
NYMEX 2020 Swap Quarter 4 | |
Derivative [Line Items] | |
Volume (in MMBtu) | MMBTU | 96,200 |
Average Price | $ / MMBTU | 2.85 |
NYMEX 2020 | |
Derivative [Line Items] | |
Volume (in MMBtu) | MMBTU | 402,448 |
Average Price | $ / MMBTU | 2.85 |
NYMEX | |
Derivative [Line Items] | |
Volume (in MMBtu) | MMBTU | 511,000 |
Derivative And Financial Inst_4
Derivative And Financial Instruments (Changes In Fair Value) (Details) - Commodity Contract $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)item | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Derivative Instruments Gain Loss [Line Items] | |||||
Beginning fair value of commodity derivatives | $ 3,914 | $ 1,231 | $ 1,231 | ||
Net gains (losses) on derivatives | $ 1,252 | $ (2,431) | (2,272) | (8,083) | |
Ending fair value of commodity derivatives | 976 | $ 976 | 3,914 | ||
Number of counterparties | item | 3 | ||||
Oil reserves | |||||
Derivative Instruments Gain Loss [Line Items] | |||||
Net gains (losses) on derivatives | 1,195 | (2,454) | $ (2,482) | (8,110) | 1,400 |
Net settlements paid (received) on derivative contracts | 1,330 | ||||
Net settlements paid (received) on derivative contracts | (610) | ||||
Natural gas | |||||
Derivative Instruments Gain Loss [Line Items] | |||||
Net gains (losses) on derivatives | $ 57 | $ 23 | 210 | $ 27 | (84) |
Net settlements paid (received) on derivative contracts | $ 37 | ||||
Net settlements paid (received) on derivative contracts | $ (56) |
Derivative And Financial Inst_5
Derivative And Financial Instruments (Effect On Statement Of Operations) (Details) - Commodity Contract - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Embedded Derivative [Line Items] | |||||
Net gains (losses) on derivatives | $ 1,252 | $ (2,431) | $ (2,272) | $ (8,083) | |
Oil reserves | |||||
Embedded Derivative [Line Items] | |||||
Net gains (losses) on derivatives | 1,195 | (2,454) | (2,482) | (8,110) | $ 1,400 |
Natural gas | |||||
Embedded Derivative [Line Items] | |||||
Net gains (losses) on derivatives | $ 57 | $ 23 | $ 210 | $ 27 | $ (84) |
Debt (Details)
Debt (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | May 19, 2016USD ($) | |
Line of Credit Facility [Line Items] | ||||||
Letters of credit outstanding | $ 0 | $ 0 | ||||
Amortization of debt issuance costs | 300 | $ 200 | 872 | $ 498 | ||
Unamortized debt issue costs | 800 | 800 | $ 1,400 | |||
Credit Agreement | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | 282,000 | 282,000 | ||||
Credit agreement available | 48,000 | 48,000 | ||||
Sub-limit which may be used for issuance of letters of credit | 15,000 | $ 15,000 | ||||
Borrowing base amount | $ 200,000 | |||||
Commitment fee on unutilized borrowing base | 0.50% | |||||
Credit agreement, outstanding | $ 162,000 | $ 162,000 | ||||
Credit Agreement | Thereafter | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt to Adjusted EBITDA ratio | 4.5 | 4.5 | ||||
Credit Facility Maturing March 31, 2020 | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | $ 500,000 | $ 500,000 | ||||
Lender loan | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | $ 210,000 | $ 210,000 | ||||
Minimum | Credit Agreement | ||||||
Line of Credit Facility [Line Items] | ||||||
Consolidated current asset ratio | 1 | |||||
Required interest coverage ratio | 2.5 | |||||
Distribution limitation, credit facility excess over borrowing base (as a percent) | 90.00% | |||||
Ownership percentage by subsidiary | 50 | |||||
Minimum | Credit Agreement | Scenario One | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt to Adjusted EBITDA ratio | 4.5 | 4.5 | ||||
Minimum | Credit Agreement | Scenario Two | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt to Adjusted EBITDA ratio | 4 | 4 | ||||
Minimum | Credit Agreement | London Interbank Offered Rate (LIBOR) | ||||||
Line of Credit Facility [Line Items] | ||||||
Variable interest rate | 2.25% | |||||
Minimum | Credit Agreement | ABR | ||||||
Line of Credit Facility [Line Items] | ||||||
Variable interest rate | 1.25% | |||||
Maximum | Credit Agreement | London Interbank Offered Rate (LIBOR) | ||||||
Line of Credit Facility [Line Items] | ||||||
Variable interest rate | 3.25% | |||||
Maximum | Credit Agreement | ABR | ||||||
Line of Credit Facility [Line Items] | ||||||
Variable interest rate | 2.25% |
Oil And Natural Gas Propertie_3
Oil And Natural Gas Properties And Related Equipment (Gathering and Transportation Assets) (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Midstream assets | $ 186,874 | $ 186,406 |
Less: Accumulated depreciation and amortization | (68,589) | (65,647) |
Midstream | ||
Property, Plant and Equipment [Line Items] | ||
Midstream assets | 186,874 | 186,406 |
Less: Accumulated depreciation and amortization | (40,547) | (34,598) |
Total gathering and transportation assets, net | $ 146,327 | $ 151,808 |
Oil And Natural Gas Propertie_4
Oil And Natural Gas Properties And Related Equipment (Properties) (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Oil And Natural Gas Properties And Related Equipment. | ||
Proved property | $ 112,476 | $ 112,173 |
Less: Accumulated depreciation, depletion, amortization and impairments | (68,589) | (65,647) |
Oil and natural gas properties and equipment, net | $ 43,887 | $ 46,526 |
Oil And Natural Gas Propertie_5
Oil And Natural Gas Properties And Related Equipment (DDA and Impairments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Line Items] | ||||||||
Amortization of intangible assets | $ 3,365 | $ 3,365 | $ 10,095 | $ 10,095 | ||||
Depreciation, depletion and amortization | $ 8,949 | 9,585 | ||||||
Asset impairments | $ 0 | $ 0 | $ 0 | $ 0 | ||||
Gathering Facilities | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Useful lives | 36 years | |||||||
Oil and Natural Gas-Related Assets | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Depreciation, depletion and amortization | 1,077 | 1,202 | $ 3,000 | 3,816 | ||||
Gathering and Transportation Related Assets | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Depreciation, depletion and amortization | 1,999 | 1,940 | $ 5,949 | 5,769 | ||||
Gathering and Transportation Related Assets | Minimum | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Useful lives | 3 years | |||||||
Gathering and Transportation Related Assets | Maximum | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Useful lives | 15 years | |||||||
Oil and Natural Gas-Related Assets and Gathering and Transportation-Related Assets | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Depreciation, depletion and amortization | $ 6,441 | $ 6,507 | $ 19,044 | $ 19,680 |
Asset Retirement Obligation (De
Asset Retirement Obligation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Asset Retirement Obligation | |||||
Asset retirement obligation, beginning balance | $ 6,200 | $ 6,074 | $ 6,074 | ||
Liabilities added from escalating working interests | 172 | 288 | |||
Sales | (613) | ||||
Revisions to cost estimates | (46) | ||||
Accretion expense | $ 132 | $ 123 | 391 | $ 372 | 497 |
Asset retirement obligation, ending balance | 6,763 | 6,763 | 6,200 | ||
Legally restricted assets | $ 0 | $ 0 | $ 0 |
Intangible Assets (Details)
Intangible Assets (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019USD ($)a | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |||
Beginning balance | $ 158,706 | $ 172,166 | $ 172,166 |
Amortization | (10,095) | $ 10,100 | (13,460) |
Ending balance | $ 148,611 | $ 158,706 | |
Dimmit, La Salle And Webb Counties, Texas | Sanchez Energy | |||
Finite-Lived Intangible Assets [Line Items] | |||
Net acres | a | 106,000 | ||
Customer Contracts | |||
Finite-Lived Intangible Assets [Line Items] | |||
Agreement term (in years) | 15 years | ||
Dedicated acreage | a | 35,000 | ||
Useful life | 15 years |
Investments (Details)
Investments (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
May 31, 2018amiMMcf | Apr. 30, 2018MMcf | Nov. 30, 2016USD ($) | Jul. 31, 2016USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Schedule of Equity Method Investments [Line Items] | |||||||||
Acquisitions, earnout and capital investments | $ 128,141 | $ 128,141 | $ 127,899 | ||||||
Earnings (loss) from equity investments | 780 | $ 2,313 | 3,013 | $ 9,696 | |||||
Amortization of intangible assets | 3,365 | $ 3,365 | 10,095 | 10,095 | |||||
Distributions received | 12,368 | 18,572 | |||||||
Carnero Gathering, Joint Venture | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Ownership interest (as a percent) | 50.00% | ||||||||
Payments to acquire interest in joint venture | $ 37,000 | 124,100 | |||||||
Assumption of capital commitments in joint venture | 7,400 | ||||||||
Daily processing capacity | MMcf | 400 | ||||||||
Acres dedicated for gathering | a | 315,000 | ||||||||
Carnero Gathering, Joint Venture | Customer Relationships | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Intangible asset, fair value | $ 13,000 | ||||||||
Agreement term (in years) | 15 years | ||||||||
Carnero Processing, Joint Venture | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Ownership interest (as a percent) | 50.00% | ||||||||
Payments to acquire interest in joint venture | $ 55,500 | ||||||||
Assumption of capital commitments in joint venture | $ 24,500 | ||||||||
Carnero G&P, Joint Venture | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Ownership interest (as a percent) | 50.00% | ||||||||
Payments to acquire interest in joint venture | 124,100 | ||||||||
Daily processing capacity | MMcf | 460 | 260 | |||||||
Number of miles of high pressure natural gas gathering pipelines | mi | 45 | ||||||||
Earnings (loss) from equity investments | 1,100 | 3,900 | |||||||
Amortization of intangible assets | $ 300 | 900 | |||||||
Distributions received | 12,400 | ||||||||
Sanchez Energy | Carnero Gathering, Joint Venture | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Earnout payments | $ 32,100 | $ 0 | |||||||
Targa | Carnero Gathering, Joint Venture | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Ownership interest (as a percent) | 50.00% | ||||||||
Targa | Carnero Processing, Joint Venture | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Ownership interest (as a percent) | 50.00% | ||||||||
Targa | Carnero G&P, Joint Venture | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Ownership interest (as a percent) | 100.00% |
Investments (Unconsolidated Ent
Investments (Unconsolidated Entities) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Investments | ||
Sales | $ 130,588 | $ 257,470 |
Total expenses | 118,586 | 234,341 |
Net income | $ 12,002 | $ 23,129 |
Commitments And Contingencies (
Commitments And Contingencies (Details) - Carnero Gathering, Joint Venture - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Variable Interest Entity [Line Items] | ||
Earnout derivative liability | $ 5.8 | |
Sanchez Energy | ||
Variable Interest Entity [Line Items] | ||
Earnout payments | $ 32.1 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2019USD ($)a | Dec. 31, 2018USD ($) | |
Related Party Transaction [Line Items] | ||
Related parties, net receivable | $ 7 | $ 6.7 |
Related parties, net payable | $ 4.7 | $ 5.6 |
Western Catarina Midstream | Sanchez Energy | ||
Related Party Transaction [Line Items] | ||
Agreement term (in years) | 15 years | |
Acres dedicated for gathering | a | 35,000 |
Unit-Based Compensation (Restri
Unit-Based Compensation (Restricted Units Activity) (Details) - LTIP - $ / shares | 1 Months Ended | 9 Months Ended | |
Apr. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Units available for issuance | 838,446 | ||
Restricted Stock Units (RSUs) | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of Restricted Units, Outstanding | 513,694 | ||
Number of Restricted Units, Granted | 1,129,173 | ||
Number of Restricted Units, Vested | (381,729) | ||
Number of Restricted Units, Returned/Cancelled | (102,345) | ||
Number of Restricted Units, Outstanding | 1,158,793 | ||
Weighted Averaged Grant Date Fair Value Per Unit, Outstanding | $ 12.31 | ||
Weighted Averaged Grant Date Fair Value Per Unit, Granted | 2.35 | ||
Weighted Averaged Grant Date Fair Value Per Unit, Vested | 8.49 | ||
Weighted Averaged Grant Date Fair Value Per Unit, Returned/Cancelled | 12.05 | ||
Weighted Averaged Grant Date Fair Value Per Unit, Outstanding | $ 3.88 | ||
Restricted Stock Units (RSUs) | Director | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of Restricted Units, Granted | 137,613 | 991,560 |
Distributions To Unitholders (D
Distributions To Unitholders (Details) - $ / shares | Oct. 30, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 |
Common units | ||||||||
Distribution paid per unit | $ 0.1500 | $ 0.1500 | $ 0.1500 | $ 0.4508 | $ 0.4508 | |||
Class B preferred units | ||||||||
Distribution paid per unit | $ 0.28225 | $ 0.28225 | $ 0.28225 | $ 0.2258 | $ 0.28225 | |||
Aggregate distribution of units | 310,009 | |||||||
Class C preferred units | ||||||||
Paid-in-kind units distributed | 1,007,820 | 939,327 | ||||||
Class C preferred units | Subsequent event | ||||||||
Class C Preferred Units payable in Class C Preferred PIK Units (as a percent) | 100.00% |
Partners' Capital (Details)
Partners' Capital (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 25, 2017 | Oct. 14, 2015 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2019 | Dec. 06, 2016 |
Limited Partners' Capital Account [Line Items] | |||||||||||
Class B preferred units, outstanding | 31,310,896 | 0 | |||||||||
Common units, outstanding | 16,486,239 | 20,089,827 | |||||||||
Units, issued | 16,486,239 | 20,089,827 | |||||||||
Class B preferred units, issued | 31,310,896 | 0 | |||||||||
Class B preferred units | |||||||||||
Limited Partners' Capital Account [Line Items] | |||||||||||
Units sold (in units) | 19,444,445 | ||||||||||
Price per unit sold | $ 18 | ||||||||||
Proceeds from preferred units sold | $ 350 | ||||||||||
Percent of consideration paid | 2.25% | ||||||||||
Class B preferred units, issued | 9,851,996 | ||||||||||
Class B preferred units | Settlement Agreement with Stonepeak Catarina Holdings LLC | |||||||||||
Limited Partners' Capital Account [Line Items] | |||||||||||
Class B preferred units, issued | 1,704,446 | ||||||||||
Class B preferred units, unit price | $ 11.29 | ||||||||||
Class C preferred units | |||||||||||
Limited Partners' Capital Account [Line Items] | |||||||||||
Class B preferred units, outstanding | 32,250,223 | ||||||||||
Common units | |||||||||||
Limited Partners' Capital Account [Line Items] | |||||||||||
Common units, outstanding | 20,089,827 | ||||||||||
Units sold (in units) | 901,741 | 887,269 | 787,750 | 334,010 | 224,342 | 210,978 | 220,214 | ||||
Unvested restricted common units | LTIP | |||||||||||
Limited Partners' Capital Account [Line Items] | |||||||||||
Common units, outstanding | 1,158,793 |
Partners' Capital (Preferred Un
Partners' Capital (Preferred Units) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Mezzanine equity, beginning balance | $ 349,857 | |||
Distributions | 17,675 | $ 24,500 | ||
Mezzanine equity, ending balance | $ 349,857 | |||
Deemed contribution from exchange | $ 103,773 | 103,773 | ||
Class C preferred units, ending balance | 262,113 | 262,113 | ||
Class B preferred units | ||||
Mezzanine equity, beginning balance | 349,857 | $ 343,912 | 343,912 | |
Amortization of discount | 1,708 | 2,358 | ||
Distributions | 23,247 | 36,925 | ||
Distributions paid | (17,675) | (33,338) | ||
Class B Preferred Unit exchange | (357,137) | |||
Mezzanine equity, ending balance | $ 349,857 | |||
Class C preferred units | ||||
Deemed contribution from exchange | 103,800 | |||
Private placement of Class C Preferred Units | 353,500 | 353,500 | ||
Discount | (104,012) | (104,012) | ||
Amortization of discount | 5,050 | 5,050 | ||
Distributions | 7,575 | 7,575 | ||
Class C preferred units, ending balance | $ 262,113 | $ 262,113 | ||
Warrant exercise period | 30 days | |||
Class C preferred units | Distribution period commencing with the quarter ended on September 30, 2019 | ||||
Distributions (as a percent) | 12.50% | |||
Class C preferred units | Distribution period commencing with the quarter ending March 31, 2022 | ||||
Distributions (as a percent) | 14.00% |
Reporting Segments (Segment Inf
Reporting Segments (Segment Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Segment operating revenues: | |||||||||
Gathering and transportation lease revenues | $ 14,135 | $ 13,148 | $ 46,361 | $ 38,634 | |||||
Total revenues | 20,916 | 18,152 | 60,261 | 53,727 | |||||
Segment operating costs: | |||||||||
Lease operating expenses | 2,105 | 1,905 | 5,885 | 5,883 | |||||
Transportation operating expenses | 2,752 | 3,061 | 8,476 | 8,979 | |||||
Production taxes | 165 | 292 | 489 | 901 | |||||
Gain on sale of assets | (238) | (2,626) | |||||||
Depreciation, depletion and amortization | 6,441 | 6,507 | 19,044 | 19,680 | |||||
Asset impairments | $ 0 | $ 0 | $ 0 | $ 0 | |||||
Accretion expense | 132 | 123 | 391 | 372 | $ 497 | ||||
Total operating expenses | 16,183 | 16,914 | 48,603 | 53,322 | |||||
Segment other income (loss) | |||||||||
Earnings (loss) from equity investments | 780 | 2,313 | 3,013 | 9,696 | |||||
Segment operating income | 10,101 | 8,815 | 28,989 | 30,234 | |||||
Production | |||||||||
Segment operating revenues: | |||||||||
Total revenues | 5,061 | 3,422 | 8,795 | 10,162 | |||||
Segment operating costs: | |||||||||
Lease operating expenses | 1,636 | 1,597 | 4,643 | 4,993 | |||||
Production taxes | 165 | 292 | 489 | 901 | |||||
Gain on sale of assets | (238) | (2,626) | |||||||
Depreciation, depletion and amortization | 1,077 | 1,202 | 3,000 | 3,816 | |||||
Accretion expense | 49 | 48 | 149 | 151 | |||||
Total operating expenses | 2,927 | 2,901 | 8,281 | 7,235 | |||||
Segment other income (loss) | |||||||||
Segment operating income | 2,134 | 521 | 514 | 2,927 | |||||
Midstream | |||||||||
Segment operating revenues: | |||||||||
Gathering and transportation lease revenues | 14,135 | 13,148 | 46,361 | 38,634 | |||||
Total revenues | 15,855 | 14,730 | 51,466 | 43,565 | |||||
Segment operating costs: | |||||||||
Lease operating expenses | 469 | 308 | 1,242 | 890 | |||||
Transportation operating expenses | 2,752 | 3,061 | 8,476 | 8,979 | |||||
Depreciation, depletion and amortization | 5,364 | 5,305 | 16,044 | 15,864 | |||||
Accretion expense | 83 | 75 | 242 | 221 | |||||
Total operating expenses | 8,668 | 8,749 | 26,004 | 25,954 | |||||
Segment other income (loss) | |||||||||
Earnings (loss) from equity investments | 780 | 2,313 | 3,013 | 9,696 | |||||
Total segment other income (loss) | 780 | 2,313 | 3,013 | 9,696 | |||||
Segment operating income | 7,967 | 8,294 | 28,475 | 27,307 | |||||
Natural gas sales | |||||||||
Segment operating revenues: | |||||||||
Revenues | 177 | 166 | 543 | 865 | |||||
Natural gas sales | Production | |||||||||
Segment operating revenues: | |||||||||
Revenues | 177 | 166 | 543 | 865 | |||||
Oil sales | |||||||||
Segment operating revenues: | |||||||||
Revenues | 4,769 | 2,848 | 7,841 | 7,894 | |||||
Oil sales | Production | |||||||||
Segment operating revenues: | |||||||||
Revenues | 4,769 | 2,848 | 7,841 | 7,894 | |||||
Natural gas liquid product | |||||||||
Segment operating revenues: | |||||||||
Revenues | 115 | 408 | 411 | 1,403 | |||||
Natural gas liquid product | Production | |||||||||
Segment operating revenues: | |||||||||
Revenues | 115 | 408 | 411 | 1,403 | |||||
Gathering and transportation | |||||||||
Segment operating revenues: | |||||||||
Revenues | 1,720 | 1,582 | 5,105 | 4,931 | |||||
Gathering and transportation | Midstream | |||||||||
Segment operating revenues: | |||||||||
Revenues | $ 1,720 | $ 1,582 | $ 5,105 | $ 4,931 |
Reporting Segments - Reconcilia
Reporting Segments - Reconciliation of Segment Operating Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Reconciliation of segment operating income (loss) to net income (loss) | ||||||||
Segment operating income | $ 10,101 | $ 8,815 | $ 28,989 | $ 30,234 | ||||
General and administrative expense | (4,317) | (5,109) | (13,237) | (17,193) | ||||
Unit-based compensation expense | (271) | (155) | (1,081) | (2,940) | ||||
Interest expense, net | (12,141) | (2,786) | (17,741) | (8,165) | ||||
Other income (expense) | 31 | (352) | 98 | (1,876) | ||||
Income tax expense | (213) | (335) | ||||||
Net income (loss) | (6,810) | $ 3,877 | $ (374) | 413 | $ (1,795) | $ 1,442 | (3,307) | 60 |
Production | ||||||||
Reconciliation of segment operating income (loss) to net income (loss) | ||||||||
Segment operating income | 2,134 | 521 | 514 | 2,927 | ||||
Midstream | ||||||||
Reconciliation of segment operating income (loss) to net income (loss) | ||||||||
Segment operating income | $ 7,967 | $ 8,294 | $ 28,475 | $ 27,307 |
Reporting Segments (Assets by S
Reporting Segments (Assets by Segment) (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 458,725 | $ 486,685 |
Capital expenditures | 858 | 4,867 |
Production | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 48,418 | 53,556 |
Capital expenditures | 130 | 11 |
Midstream | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 404,967 | 429,523 |
Capital expenditures | 728 | 4,856 |
Corporate | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 5,340 | $ 3,606 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Jul. 31, 2016 | Sep. 30, 2019 | Dec. 31, 2018 | |
Variable Interest Entity [Line Items] | |||
Acquisitions, earnout and capital investments | $ 128,141 | $ 127,899 | |
Earnings in equity investments | 26,157 | 23,144 | |
Distributions received | (48,946) | (36,578) | |
Maximum exposure to loss | 105,352 | $ 114,465 | |
Carnero Gathering, Joint Venture | |||
Variable Interest Entity [Line Items] | |||
Payments to acquire interest in joint venture | $ 37,000 | 124,100 | |
Debt incurred | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event - USD ($) $ in Millions | Oct. 30, 2019 | Oct. 31, 2019 |
Subsequent Event [Line Items] | ||
Payment of principal | $ 6 | |
Outstanding debt on credit facility | $ 156 | |
Class C preferred units | ||
Subsequent Event [Line Items] | ||
Class C Preferred Units payable in Class C Preferred PIK Units (as a percent) | 100.00% | |
Class C Preferred Units declared (in shares) | 1,007,820 |