Related-Party Transactions | 3 Months Ended |
Mar. 31, 2014 |
Related-Party Transactions [Abstract] | ' |
Related-Party Transactions | ' |
6. Related-Party Transactions |
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Omnibus Agreement |
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At the closing of the IPO, we entered into an omnibus agreement with Cypress Holdings and other related parties that govern the following matters, among other things: |
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• our payment of an annual administrative fee initially in the amount of $4.0 million to be paid in quarterly installments (pro-rated in the first quarter of 2014 from IPO date) to Cypress Holdings for providing us with certain partnership overhead services, including for certain executive management services by certain officers of our general partner, and compensation expense (including equity-based compensation) for all employees required to manage and operate our business. This fee also includes the incremental general and administrative expenses we incur as a result of being a publicly traded partnership; |
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• limitations on the amount of indebtedness CEP-TIR may incur under our credit agreement and the allocation of certain interest expenses to the TIR Entities; and |
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• indemnification of us by Cypress Holdings for certain environmental and other liabilities, including events and conditions associated with our operation of assets that occurred prior to the closing of the IPO and our obligation to indemnify Cypress Holdings for events and conditions associated with the operation of our assets that occur after the closing of the IPO and for environmental liabilities related to our assets to the extent Cypress Holdings is not required to indemnify us. |
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So long as Cypress Holdings controls our general partner, the omnibus agreement will remain in full force and effect, unless we and Cypress Holdings agree to terminate it sooner. If Cypress Holdings ceases to control our general partner, either party may terminate the omnibus agreement, provided that the indemnification obligations will remain in full force and effect in accordance with their terms. |
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The pro-rated amount charged by Cypress Holdings for the period from the closing of the IPO through March 31, 2014 was $787 thousand and is reflected in general and administrative in the condensed consolidated statement of income. |
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Allocated Expenses |
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Prior to the IPO, the Partnership reimbursed certain affiliated entities for general and administrative expenses, primarily management labor expenses, totaling $60 thousand during the three months ended March 31, 2014. During the three months ended March 31, 2013, our predecessor allocated certain general and administrative expense to affiliates totaling $137 thousand which were recorded as a reduction of general and administrative expenses. |
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Distributions to / Advances from Parent |
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Prior to the IPO, our predecessor provided treasury and accounts payable services for Cypress Holdings and other affiliates. Amounts paid on behalf of Cypress Holdings and its affiliates, net of cash transfers from Cypress Holdings, are treated as a component of Parent Net Equity. Distributions to / Advances from Parent were $168 thousand and $197 thousand, respectively, for the three months ended March 31, 2014 and 2013. |
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Receivable from Affiliate |
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Subsequent to the IPO, the Partnership continued to fund certain payroll activities on behalf of Cypress Holdings. Net amounts receivable from Cypress Holdings related to these payroll activities were $852 thousand at March 31, 2014. In addition, the Partnership owes Cypress Holdings $787 related to the administrative fee under the omnibus agreement. The net amount due to Cypress Holdings is recorded in the condensed consolidated balance sheet as Receivables from affiliates. |
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Other Related Party Transactions |
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A current board member and business partner in North Dakota has an interest in several entities with which the Partnership does business including the following: |
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SBG Disposal, LLC- Prior to the acquisition of certain assets and management fee contracts by Cypress Energy Services, LLC (our 51% owned entity) effective October 1, 2013, SBG Disposal, LLC provided staffing, management and back office services for the Partnership’s SWD facilities. SBG Disposal, LLC is a wholly owned subsidiary of SBG Energy Services, LLC and provided services to our predecessor totaling $600 thousand for the three months ended March 31, 2013. These costs are included in Cost of services. |
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Rud Transportation, LLC (Rud) – Rud a wholly owned subsidiary of SBG Energy Services, LLC is a trucking company that has various energy company customers that retain their services to haul and dispose of produced water, and flowback water. The water is sometimes hauled to the energy customers own SWD facilities, as well as third party SWD facilities, including SWD facilities owned by the Partnership. Total revenue recognized by the Partnership from Rud was $626 thousand and $476 thousand for the three months ended March 31, 2014 and 2013, respectively. Accounts receivable from Rud was $626 thousand and $396 thousand at March 31, 2014 and December 31, 2013, respectively, and is included in Trade accounts receivable, net. |
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Effective October 1, 2013, the Partnership, through Cypress Energy Services, LLC, provides management services to its 25% owned investee company, Alati Arnegard, LLC (Arnegard). Management fee revenue earned from Arnegard totaled $141 thousand for the three months ended March 31, 2014. Accounts receivable from Arnegard totaled $141 thousand at March 31, 2014 and is included Trade accounts receivable, net in the condensed consolidated balance sheets. |