Related-Party Transactions | 6 Months Ended |
Jun. 30, 2014 |
Related-Party Transactions [Abstract] | ' |
Related-Party Transactions | ' |
8. Related-Party Transactions |
|
Omnibus Agreement |
|
Effective, as of the closing of the IPO, we entered into an omnibus agreement with Holdings and other related parties that govern the following matters, among other things: |
|
| · | our payment of an annual administrative fee, initially in the amount of $4.0 million to be paid in quarterly installments (pro-rated in 2014 from the IPO date) to Holdings for providing certain partnership overhead services, including 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; |
|
| · | 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; |
|
| · | our right of first offer on Holdings’ and its subsidiaries’ assets used in, and entities primarily engaged in, providing SWD and other water and environmental services and pipeline inspection and integrity services, including the remaining interest in the TIR Entities; and |
|
| · | indemnification of us by Holdings for certain environmental and other liabilities, including events and conditions associated with the operation of assets that occurred prior to the closing of the IPO and our obligation to indemnify 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 Holdings is not required to indemnify us. |
|
So long as Holdings controls our General Partner, the omnibus agreement will remain in full force and effect, unless we and Holdings agree to terminate it sooner. If 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. We and Holdings may agree to amend the omnibus agreement; however, amendments that the General Partner determines are adverse to our unitholders will also require the approval of the Conflicts Committee of our Board of Directors. |
|
The amount charged by Holdings for the three and six months ended June 30, 2014 was $1.0 million and $1.8 million, respectively, and are reflected in General and administrative in the Condensed Consolidated Statements of Income. |
|
Allocated Expenses |
|
Prior to the IPO, the Partnership reimbursed certain affiliated entities for general and administrative expenses, primarily management labor expenses, totaling $0.1 million, which is reflected in General and administrative in the Condensed Consolidated Statements of Income for the six months ended June 30, 2014. During the three and six months ended June 30, 2013, our predecessor allocated certain general and administrative expense to affiliates totaling $0.2 million and $0.3 million, respectively, which were recorded as a reduction of General and administrative expenses. |
|
Distributions to / Advances from Parent |
|
Prior to the IPO, our predecessor provided treasury and accounts payable services for Holdings and other affiliates. Amounts paid on behalf of Holdings and its affiliates, net of cash transfers from Holdings, are treated as a component of Parent Net Equity. Net distributions to Parent were $0.2 million for the six months ended June 30, 2014. There were no net distributions / advances during the three months ended June, 30, 2014. Net distributions to Parent were $0.2 million for the six months ended June 30, 2013. There were no net distributions / advances during the three months ended June 30, 2013. |
|
Other Related Party Transactions |
|
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: |
|
| · | SBG Disposal, LLC (“SBG Disposal”) – Prior to the acquisition of certain assets and management fee contracts by CES LLC effective October 1, 2013, SBG Disposal provided staffing, management and back office services for a portion of the Partnership’s SWD facilities. SBG Disposal is a wholly owned subsidiary of SBG Energy and provided services to our predecessor totaling $0.6 million and $1.3 million for the three and six months ended June 30, 2013, respectively. These costs are included in Costs of services on the Condensed Consolidated Statements of Income. |
|
| · | Rud Transportation, LLC (“Rud”) – Rud, a wholly owned subsidiary of SBG Energy 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, third party SWD facilities and / or SWD facilities owned by the Partnership. Total revenue recognized by the Partnership from Rud was $0.8 million and $0.3 million for the three months ended June 30, 2014 and 2013, respectively, and $1.4 million and $0.8 million for the six months ended June 30, 2014 and 2013, respectively. Accounts receivable from Rud was $0.9 million and $0.4 million at June 30, 2014 and December 31, 2013, respectively, and is included in Trade accounts receivable, net. |
|
Effective October 1, 2013, the Partnership, through CES LLC, provides management services to its 25% owned investee company, Alati Arnegard, LLC (“Arnegard”). Management fee revenue earned from Arnegard totaled $0.2 million and $0.3 million for the three and six months ended June 30, 2014, respectively. Accounts receivable from Arnegard totaled $0.1 million at June 30, 2014 and December 31, 2013 and are included in Trade accounts receivable, net in the Condensed Consolidated Balance Sheets. |
|
CES LLC outsources employee management and related costs to an affiliated entity, Cypress Energy Management – Bakken Operations, LLC (“CEM-BO”). CEM-BO is owned 49% by an affiliate of SBG Energy. Total employee related costs paid to CEM-BO were $0.8 million and $1.5 million for the three and six month periods ended June 30, 2014. Included in Accounts payable on the Condensed Consolidated Balance Sheets was $0.2 million and $0.1 million at June 30, 2014 and December 31, 2013, respectively, related to this arrangement. |