NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1
– Organization and Business Description
Organization
The accompanying notes to the consolidated financial statements apply to Crestwood Equity Partners LP and Crestwood Midstream Partners LP, unless otherwise indicated. References in this report to “we,” “us,” “our,” “ours,” “our company,” the “partnership,” the “Company,” "Crestwood Equity," “CEQP,” and similar terms refer to either Crestwood Equity Partners LP itself or Crestwood Equity Partners LP and its consolidated subsidiaries, as the context requires. Unless otherwise indicated, references to "Crestwood Midstream" and "CMLP" refer to Crestwood Midstream Partners LP and its consolidated subsidiaries.
The accompanying consolidated financial statements and related notes should be read in conjunction with our
2016
Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 27, 2017. The financial information as of
September 30, 2017
, and for the
three and nine months ended
September 30, 2017
and
2016
, is unaudited. The consolidated balance sheets as of
December 31, 2016
, were derived from the audited balance sheets filed in our
2016
Annual Report on Form 10-K.
Business Description
Crestwood Equity is a publicly-traded (NYSE: CEQP) Delaware limited partnership that develops, acquires, owns or controls, and operates primarily fee-based assets and operations within the energy midstream sector. We provide broad-ranging infrastructure solutions across the value chain to service premier liquids-rich natural gas and crude oil shale plays across the United States. We own and operate a diversified portfolio of crude oil and natural gas gathering, processing, storage and transportation assets and connect fundamental energy supply with energy demand across North America. Crestwood Equity is a holding company and all of its consolidated operating assets are owned by or through its wholly-owned subsidiary, Crestwood Midstream, a Delaware limited partnership.
Note 2
– Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
Our consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and include the accounts of all consolidated subsidiaries after the elimination of all intercompany accounts and transactions. In management’s opinion, all necessary adjustments to fairly present our results of operations, financial position and cash flows for the periods presented have been made and all such adjustments are of a normal and recurring nature. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the SEC.
Significant Accounting Policies
There were no material changes in our significant accounting policies from those described in our
2016
Annual Report on Form 10-K. Below is an update of our accounting policies related to Goodwill and Unit-Based Compensation, and a description of Crestwood Equity's Long Term Incentive Plan.
Goodwill
. The goodwill impairments recorded during the first quarter of 2016 primarily resulted from increasing the discount rates utilized in determining the fair value of the reporting units considering the significant, sustained decrease in the market price of our common units and the continued decrease in commodity prices and its impact on the midstream industry and our customers during that period. We utilized the income approach to determine the fair value of our reporting units given the limited availability of comparable market-based transactions as of March 31, 2016, and we utilized discount rates ranging from
10%
to
19%
in applying the income approach to determine the fair value of our reporting units with goodwill as of March 31, 2016.
The following table summarizes goodwill impairments of certain of our reporting units recorded during the
nine months ended
September 30, 2016
(
in millions
):
|
|
|
|
|
Gathering and Processing
|
|
Marcellus
|
$
|
8.6
|
|
Storage and Transportation
|
|
COLT
|
13.7
|
|
Marketing, Supply and Logistics
|
|
Supply and Logistics
|
65.5
|
|
Storage and Terminals
|
14.1
|
|
Trucking
|
7.8
|
|
Total
|
$
|
109.7
|
|
Unit-Based Compensation
. Effective January 1, 2017, we adopted the provisions of Accounting Standards Update (ASU) 2016-09,
Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
, which simplifies several aspects of the accounting for share-based payment award transactions, including the classification of awards as either equity or liabilities and the presentation on the statement of cash flows. The adoption of this accounting standard did not have a material impact on our consolidated financial statements.
Crestwood Equity Long Term Incentive Plan
. As of September 30, 2017, Crestwood Equity had
404,847
performance units outstanding under the Crestwood Equity Partners LP Long Term Incentive Plan (Crestwood LTIP) that were issued in 2017. The performance units are designed to provide an incentive for continuous employment to certain key employees. The vesting of performance units is subject to the attainment of certain performance and market goals over a three-year period, and entitle a participant to receive common units of Crestwood Equity without payment of an exercise price upon vesting. As of
September 30, 2017
, we had total unamortized compensation expense of approximately
$7.6 million
related to these performance units, which we expect will be amortized during the next three years. We recognized compensation expense of approximately
$0.9 million
and
$2.9 million
under the Crestwood LTIP related to these performance units during the
three and nine months ended
September 30, 2017
, which is included in general and administrative expenses on our consolidated statements of operations.
New Accounting Pronouncements Issued But Not Yet Adopted
As of
September 30, 2017
, the following accounting standards had not yet been adopted by us:
In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09,
Revenue from Contracts with Customers,
which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. We anticipate utilizing the modified retrospective method to adopt the provisions of this standard effective January 1, 2018 and are currently applying the provisions of the standard to our aggregated listing of gathering and processing, storage and transportation, and marketing, supply and logistics revenue contracts that involve revenue generating activities that occur after January 1, 2018. We are also in the process of implementing appropriate changes to our processes, systems and controls to support the accounting and disclosure requirements of the new standard. We are currently evaluating the impact that this standard will have on our consolidated financial statements, and currently believe that the standard will require us to begin classifying certain capital expenditure reimbursements received from our customers as deferred revenue rather than as reductions of property, plant and equipment in our consolidated financial statements. We currently anticipate that approximately
$60 million
to
$70 million
of these net reimbursements will be reclassified to net deferred revenue on January 1, 2018, which would result in a
$15 million
to
$25 million
cumulative effect of accounting change being recorded as an increase to partners' capital on January 1, 2018. In addition, we currently believe that the standard will require us to begin classifying service revenues on certain of our gathering and processing contracts as reductions of costs of product sold prospectively beginning January 1, 2018. We continue to evaluate the impact that this standard will have on our consolidated financial statements, especially as it relates to non-cash consideration received under certain of our gathering, processing, storage and transportation contracts.
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842)
, which revises the accounting for leases by requiring certain leases to be recognized as assets and liabilities on the balance sheet, and requiring companies to disclose additional information about their leasing arrangements. We expect to adopt the provisions of this standard effective January 1, 2019 and are currently evaluating the impact that this standard will have on our consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15,
Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. We expect to adopt the provisions of this standard effective January 1, 2018 and are currently evaluating the impact that this standard may have on our consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04,
Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
, which changes the annual quantitative goodwill impairment test to eliminate the current two step method and replace it with a single test to determine if goodwill is impaired and the amount of any impairment. We are required to adopt the provisions of this standard by January 1, 2020 and are currently evaluating the impact that this standard may have on our consolidated financial statements.
Note 3
– Certain Balance Sheet Information
Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (
in millions
):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEQP
|
|
CMLP
|
|
September 30,
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Accrued expenses
|
$
|
40.6
|
|
|
$
|
46.9
|
|
|
$
|
39.9
|
|
|
$
|
45.5
|
|
Accrued property taxes
|
6.3
|
|
|
4.2
|
|
|
6.3
|
|
|
4.2
|
|
Accrued natural gas purchases
|
0.7
|
|
|
4.9
|
|
|
0.7
|
|
|
4.9
|
|
Tax payable
|
—
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
Interest payable
|
39.7
|
|
|
22.8
|
|
|
39.7
|
|
|
22.8
|
|
Accrued additions to property, plant and equipment
|
16.6
|
|
|
1.7
|
|
|
16.6
|
|
|
1.7
|
|
Capital leases
|
1.1
|
|
|
1.3
|
|
|
1.1
|
|
|
1.3
|
|
Deferred revenue
|
7.5
|
|
|
7.5
|
|
|
7.5
|
|
|
7.5
|
|
Total accrued expenses and other liabilities
|
$
|
112.5
|
|
|
$
|
90.5
|
|
|
$
|
111.8
|
|
|
$
|
87.9
|
|
Note 4
- Investments in Unconsolidated Affiliates
Crestwood Permian Basin Holdings LLC
In October 2016, Crestwood Infrastructure, our wholly-owned subsidiary, and an affiliate of First Reserve formed a joint venture, Crestwood Permian Basin Holdings LLC (Crestwood Permian), to fund and own the Nautilus gathering system (described below) and other potential investments in the Delaware Permian. As part of this transaction, we transferred to the Crestwood Permian joint venture
100%
of the equity interests of Crestwood Permian Basin LLC (Crestwood Permian Basin), which owns the Nautilus gathering system. We manage and account for our
50%
ownership interest in Crestwood Permian, which is a VIE, under the equity method of accounting as we exercise significant influence, but do not control Crestwood Permian and we are not its primary beneficiary due to First Reserve’s rights to exercise control over the entity.
Crestwood Permian Basin has a long-term agreement with SWEPI LP (SWEPI), a subsidiary of Royal Dutch Shell plc, to construct, own and operate a natural gas gathering system (the Nautilus gathering system) in SWEPI’s operated position in the Delaware Permian. SWEPI has dedicated to Crestwood Permian Basin approximately
100,000
acres and gathering rights for SWEPI’s gas production across a large acreage position in Loving, Reeves and Ward Counties, Texas. The Nautilus gathering system is designed to include
194
miles of low pressure gathering lines,
36
miles of high pressure trunklines and centralized compression facilities, which are expandable over time as production increases, providing gas gathering capacity of
approximately
250
MMcf/d. The initial build-out of the Nautilus gathering system was completed on June 6, 2017 and includes
20
receipt point meters,
60
miles of pipeline, a
24
-mile high pressure header system,
10,800
horsepower of compression and a high pressure delivery point. Crestwood Permian Basin provides gathering, dehydration, compression and liquids handling services to SWEPI on a fixed fee basis. In October 2017, Shell Midstream Partners L.P. (Shell Midstream), a subsidiary of Royal Dutch Shell plc, purchased a
50%
equity interest in Crestwood Permian Basin for approximately
$37.9 million
in cash.
CEQP issued a guarantee in conjunction with the Crestwood Permian Basin gas gathering agreement with SWEPI described above, under which CEQP has agreed to fund 100% of the costs to build the Nautilus gathering system (which is currently estimated to cost
$180 million
, of which approximately
$72.7 million
has been spent through September 30, 2017) if Crestwood Permian fails to do so. We do not believe this guarantee is probable of resulting in future losses based on our assessment of the nature of the guarantee, the financial condition of the guaranteed party and the period of time that the guarantee has been outstanding, and as a result, we have not recorded a liability on our balance sheet at
September 30, 2017
and
December 31, 2016
.
On June 21, 2017, we contributed to Crestwood Permian
100%
of the
equity interest of Crestwood New Mexico Pipeline LLC (Crestwood New Mexico), our wholly-owned subsidiary that owns our Delaware Basin assets located in Eddy County, New Mexico. This contribution was treated as a transaction between entities under common control (because of our relationship with First Reserve), and accordingly we deconsolidated Crestwood New Mexico and our investment in Crestwood Permian was increased by the historical book value of these assets of approximately
$69.4 million
. In conjunction with this contribution, First Reserve has agreed to contribute to Crestwood Permian the first
$151 million
of capital cost required to fund the expansion of the Delaware Basin assets, which includes a new processing plant located in Orla, Texas and associated pipelines (Orla processing plant).
Pursuant to Crestwood Permian's limited liability company agreement, we will receive 100% of Crestwood New Mexico's available cash (as defined in the limited liability company agreement) until the earlier of the Orla processing plant in-service date or June 30, 2018, at which time the distributions will be based on the members respective ownership percentages. Because our ownership and distribution percentages will differ during this period, equity earnings from Crestwood Permian is determined using the Hypothetical Liquidation at Book Value (HLBV) method. Under the HLBV method, a calculation is prepared at each balance sheet date to determine the amount that we would receive if Crestwood Permian were to liquidate all of its assets, as valued in accordance with GAAP, and distribute that cash to the members. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is our share of the earnings or losses from the equity investment for the period, which approximates how earnings are allocated under the terms of the limited liability company agreement.
Stagecoach Gas Services LLC.
In June 2016, we contributed to Stagecoach Gas Services LLC (Stagecoach Gas) the entities owning the Northeast storage and transportation assets. Additionally, Con Edison Gas Pipeline Storage Northeast, LLC (CEGP), a wholly-owned subsidiary of Consolidated Edison, Inc., contributed
$945 million
to Stagecoach Gas in exchange for a
50%
equity interest in Stagecoach Gas, and Stagecoach Gas distributed to us the cash proceeds received (net of approximately
$3 million
of cash transferred to the joint venture) from CEGP. Pursuant to the Stagecoach Gas limited liability company agreement, we may be required to make payments of up to
$57 million
to CEGP after December 31, 2020 if certain criteria are not met by Stagecoach Gas by December 31, 2020, including achieving certain performance targets on growth capital projects. We do not believe that this provision is probable of resulting in future payments to CEGP, and as a result we have not recorded a liability on our balance sheet as of September 30, 2017 and December 31, 2016.
We deconsolidated the Northeast storage and transportation assets as a result of this transaction discussed above and began accounting for our
50%
equity interest in Stagecoach under the equity method of accounting. We recognized a loss on the deconsolidation of the Northeast storage and transportation assets of approximately
$32.9 million
.
Net Investments and Earnings
Our net investments in and earnings from our unconsolidated affiliates are as follows (
in millions, unless otherwise stated
):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
Earnings (Loss) from Unconsolidated Affiliates
|
|
September 30,
|
|
December 31,
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Stagecoach Gas Services LLC
(1)
|
$
|
854.3
|
|
|
$
|
871.0
|
|
|
$
|
6.4
|
|
|
$
|
6.8
|
|
|
$
|
19.0
|
|
|
$
|
9.1
|
|
Jackalope Gas Gathering Services, L.L.C.
(2)
|
186.2
|
|
|
197.2
|
|
|
1.5
|
|
|
5.5
|
|
|
5.5
|
|
|
16.5
|
|
Tres Palacios Holdings LLC
(3)
|
34.7
|
|
|
39.0
|
|
|
0.3
|
|
|
0.8
|
|
|
1.5
|
|
|
(0.7
|
)
|
Powder River Basin Industrial Complex, LLC
(4)
|
8.6
|
|
|
8.7
|
|
|
0.5
|
|
|
0.3
|
|
|
1.0
|
|
|
1.2
|
|
Crestwood Permian Basin Holdings LLC
(5)
|
114.7
|
|
|
(0.5
|
)
|
|
2.8
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
Total
|
$
|
1,198.5
|
|
|
$
|
1,115.4
|
|
|
$
|
11.5
|
|
|
$
|
13.4
|
|
|
$
|
29.2
|
|
|
$
|
26.1
|
|
|
|
(1)
|
As of
September 30, 2017
, our equity in the underlying net assets of Stagecoach Gas exceeded our investment balance by approximately
$51.4 million
. This excess amount is entirely attributable to goodwill and, as such, is not subject to amortization. Our Stagecoach Gas investment is included in our storage and transportation segment.
|
|
|
(2)
|
As of
September 30, 2017
, our equity in the underlying net assets of Jackalope Gas Gathering Services, L.L.C. (Jackalope) exceeded our investment balance by approximately
$0.8 million
. We amortize this amount over 20 years, which represents the life of Jackalope’s gathering agreement with Chesapeake Energy Corporation (Chesapeake), and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. Our Jackalope investment is included in our gathering and processing segment.
|
|
|
(3)
|
As of
September 30, 2017
, our equity in the underlying net assets of Tres Palacios Holdings LLC (Tres Holdings) exceeded our investment balance by approximately
$26.9 million
. We amortize this amount over the life of the Tres Palacios Gas Storage LLC (Tres Palacios) sublease agreement, and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. Our Tres Holdings investment is included in our storage and transportation segment.
|
|
|
(4)
|
As of
September 30, 2017
, our equity in the underlying net assets of Powder River Basin Industrial Complex, LLC (PRBIC) exceeded our investment balance by approximately
$6.5 million
. We amortize a portion of this amount over the life of PRBIC's property, plant and equipment and its agreement with Chesapeake, and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. During 2015, we recorded an impairment of our PRBIC equity investment as further discussed in our 2016 Annual Report on Form 10-K. For the year ended December 31, 2016, PRBIC recorded a
$41.3 million
impairment of its goodwill and long-lived assets and as a result, we adjusted our excess basis in PRBIC by approximately
$8.3 million
to reflect our proportionate share of the fair value of PRBIC's net assets. Our PRBIC investment is included in our storage and transportation segment.
|
|
|
(5)
|
As of
September 30, 2017
, our equity in the underlying net assets of Crestwood Permian exceeded our investment balance by approximately
$22.0 million
, which is entirely attributable to goodwill and, as such, is not subject to amortization. Our Crestwood Permian investment is included in our gathering and processing segment.
|
Summarized Financial Information of Unconsolidated Affiliates
Below is the summarized operating results for our significant unconsolidated affiliates (
in millions; amounts represent 100% of
unconsolidated affiliate information
):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
2017
|
|
2016
|
|
Operating Revenues
|
|
Operating Expenses
|
|
Net Income
|
|
Operating Revenues
|
|
Operating Expenses
|
|
Net Income
|
Stagecoach Gas
|
$
|
43.1
|
|
|
$
|
20.4
|
|
|
$
|
22.7
|
|
|
$
|
42.8
|
|
|
$
|
18.4
|
|
|
$
|
24.4
|
|
Other
(1)
|
78.3
|
|
|
66.4
|
|
|
11.9
|
|
|
30.1
|
|
|
18.4
|
|
|
11.7
|
|
Total
|
$
|
121.4
|
|
|
$
|
86.8
|
|
|
$
|
34.6
|
|
|
$
|
72.9
|
|
|
$
|
36.8
|
|
|
$
|
36.1
|
|
|
|
(1)
|
Includes our Jackalope, Tres Holdings, PRBIC and Crestwood Permian equity investments. We amortize the excess basis in certain of our equity investments as an increase in our earnings from unconsolidated affiliates. We recorded amortization of the excess basis in our Jackalope equity investment of less than
$0.1 million
for both the
three months ended
September 30, 2017
and
2016
. We recorded amortization of the excess basis in our Tres Holdings equity investment of approximately
$0.3 million
for both the
three months ended
September 30, 2017
and
2016
. We recorded amortization of the excess basis in our PRBIC equity investment of approximately
$0.2 million
and
$0.4 million
for the
three months ended
September 30, 2017
and
2016
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2017
|
|
2016
|
|
Operating Revenues
|
|
Operating Expenses
|
|
Net Income
|
|
Operating Revenues
|
|
Operating Expenses
|
|
Net Income
|
Stagecoach Gas
|
$
|
127.1
|
|
|
$
|
58.4
|
|
|
$
|
68.8
|
|
|
$
|
56.0
|
|
|
$
|
24.1
|
|
|
$
|
31.9
|
|
Other
(1)
|
124.6
|
|
|
103.7
|
|
|
20.8
|
|
|
90.3
|
|
|
60.6
|
|
|
29.6
|
|
Total
|
$
|
251.7
|
|
|
$
|
162.1
|
|
|
$
|
89.6
|
|
|
$
|
146.3
|
|
|
$
|
84.7
|
|
|
$
|
61.5
|
|
|
|
(1)
|
Includes our Jackalope, Tres Holdings, PRBIC and Crestwood Permian equity investments. We amortize the excess basis in certain of our equity investments as an increase in our earnings from unconsolidated affiliates. We recorded amortization of the excess basis in our Jackalope equity investment of less than
$0.1 million
for both the
nine months ended
September 30, 2017
and
2016
. We recorded amortization of the excess basis in our Tres Holdings equity investment of approximately
$0.9 million
for both the
nine months ended
September 30, 2017
and
2016
. We recorded amortization of the excess basis in our PRBIC equity investment of approximately
$0.5 million
and
$1.2 million
for the
nine months ended
September 30, 2017
and
2016
.
|
Distributions and Contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
|
|
Contributions
|
|
|
Nine Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Stagecoach Gas
(1)
|
|
$
|
35.7
|
|
|
$
|
3.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Jackalope
|
|
19.4
|
|
|
19.9
|
|
|
2.9
|
|
|
0.7
|
|
Tres Holdings
(1)
|
|
5.8
|
|
|
6.2
|
|
|
—
|
|
|
5.5
|
|
PRBIC
|
|
1.1
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
Crestwood Permian
(2)
|
|
—
|
|
|
—
|
|
|
113.0
|
|
|
—
|
|
Total
|
|
$
|
62.0
|
|
|
$
|
31.4
|
|
|
$
|
115.9
|
|
|
$
|
6.2
|
|
|
|
(1)
|
In October 2017, we received a cash distribution from Stagecoach Gas, Tres Holdings and Crestwood Permian of approximately
$11.6 million
,
$3.1 million
and
$4.5 million
, respectively.
|
|
|
(2)
|
On June 21, 2017, we contributed to Crestwood Permian
100%
of the equity interest of Crestwood New Mexico at our historical book value of approximately
$69.4 million
. This contribution was treated as a non-cash transaction between entities under common control.
|
Note 5
– Risk Management
We are exposed to certain market risks related to our ongoing business operations. These risks include exposure to changing commodity prices. We utilize derivative instruments to manage our exposure to fluctuations in commodity prices, which is discussed below. Additional information related to our derivatives is discussed in
Note 6
.
Commodity Derivative Instruments and Price Risk Management
Risk Management Activities
We sell NGLs and crude oil to energy related businesses and may use a variety of financial and other instruments including forward contracts involving physical delivery of NGLs, heating oil and crude oil. We periodically enter into offsetting positions to economically hedge against the exposure our customer contracts create. Certain of these contracts and positions are derivative instruments. We do not designate any of our commodity-based derivatives as hedging instruments for accounting purposes. Our commodity-based derivatives are reflected at fair value in the consolidated balance sheets, and changes in the fair value of these derivatives that impact the consolidated statements of operations are reflected in costs of product/services sold. During the
three and nine months ended
September 30, 2017
, the impact to our consolidated statements of operations related to our commodity-based derivatives reflected in costs of product/services sold was a loss of
$24.1 million
and
$22.6 million
. During the
three and nine months ended
September 30, 2016
, the impact to the statement of operations related to our commodity-based derivatives reflected in costs of product/services sold was a gain of
$2.1 million
and
$4.1 million
. We attempt to balance our contractual portfolio in terms of notional amounts and timing of performance and delivery obligations. This balance in the contractual portfolio significantly reduces the volatility in costs of product/services sold related to these instruments.
Commodity Price and Credit Risk
Notional Amounts and Terms
The notional amounts and terms of our derivative financial instruments include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
|
Fixed Price
Payor
|
|
Fixed Price
Receiver
|
|
Fixed Price
Payor
|
|
Fixed Price
Receiver
|
Propane, crude and heating oil (MMBbls)
|
19.7
|
|
|
22.7
|
|
|
13.1
|
|
|
15.1
|
|
Natural gas (MMBTU’s)
|
0.9
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
Notional amounts reflect the volume of transactions, but do not represent the amounts exchanged by the parties to the financial instruments. Accordingly, notional amounts do not reflect our monetary exposure to market or credit risks.
All contracts subject to price risk had a maturity of
35 months
or less; however,
87%
of the contracted volumes will be delivered or settled within
12 months
.
Credit Risk
Inherent in our contractual portfolio are certain credit risks. Credit risk is the risk of loss from nonperformance by suppliers, customers or financial counterparties to a contract. We take an active role in managing credit risk and have established control procedures, which are reviewed on an ongoing basis. We attempt to minimize credit risk exposure through credit policies and periodic monitoring procedures as well as through customer deposits, letters of credit and entering into netting agreements that allow for offsetting counterparty receivable and payable balances for certain financial transactions, as deemed appropriate. The counterparties associated with our price risk management activities are primarily energy marketers and propane retailers, resellers and dealers.
Certain of our derivative instruments have credit limits that require us to post collateral. The amount of collateral required to be posted is a function of the net liability position of the derivative as well as our established credit limit with the respective counterparty. If our credit rating were to change, the counterparties could require us to post additional collateral. The amount of additional collateral that would be required to be posted would vary depending on the extent of change in our credit rating as well as the requirements of the individual counterparty. The aggregate fair value of all commodity derivative instruments with credit-risk-related contingent features that were in a liability position at
September 30, 2017
and
December 31, 2016
was
$30.1 million
and
$13.9 million
. At
September 30, 2017
and
December 31, 2016
, we posted less than
$0.1 million
of collateral for our commodity derivative instruments with credit-risk-related contingent features. In addition, at
September 30, 2017
and
December 31, 2016
, we had a New York Mercantile Exchange (NYMEX) related net derivative asset position of
$30.7 million
and
$14.3 million
, for which we posted
$25.2 million
and
$4.2 million
of cash collateral in the normal course of business. At
September 30, 2017
and
December 31, 2016
, we also received collateral of
$5.7 million
and
$4.3 million
in the normal course of business. All collateral amounts have been netted against the asset or liability with the respective counterparty and are reflected in our consolidated balance sheets as assets and liabilities from price risk management activities.
Note 6
– Fair Value Measurements
The accounting standard for fair value measurement establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:
|
|
•
|
Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed equities and US government treasury securities.
|
|
|
•
|
Level 2—Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various
|
assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange-traded derivatives such as over the counter (OTC) forwards, options and physical exchanges.
|
|
•
|
Level 3—Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
|
Cash, Accounts Receivable and Accounts Payable
As of
September 30, 2017
and
December 31, 2016
, the carrying amounts of cash, accounts receivable and accounts payable approximate fair value based on the short-term nature of these instruments.
Credit Facility
The fair value of the amounts outstanding under our CMLP credit facility approximates the carrying amounts as of
September 30, 2017
and
December 31, 2016
, due primarily to the variable nature of the interest rate of the instrument, which is considered a Level 2 fair value measurement.
Senior Notes
We estimate the fair value of our senior notes primarily based on quoted market prices for the same or similar issuances (representing a Level 2 fair value measurement). The following table reflects the carrying value (reduced for deferred financing costs associated with the respective notes) and fair value of our senior notes (
in millions
):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
2020 Senior Notes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
340.6
|
|
|
$
|
350.2
|
|
2022 Senior Notes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
429.3
|
|
|
$
|
447.3
|
|
2023 Senior Notes
|
$
|
691.7
|
|
|
$
|
724.7
|
|
|
$
|
690.6
|
|
|
$
|
722.6
|
|
2025 Senior Notes
|
$
|
492.1
|
|
|
$
|
511.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Financial Assets and Liabilities
As of
September 30, 2017
and
December 31, 2016
, we held certain assets and liabilities that are required to be measured at fair value on a recurring basis, which include our derivative instruments related to heating oil, crude oil, and NGLs. Our derivative instruments consist of forwards, swaps, futures, physical exchanges and options.
Our derivative instruments that are traded on the NYMEX have been categorized as Level 1.
Our derivative instruments also include OTC contracts, which are not traded on a public exchange. The fair values of these derivative instruments are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. These instruments have been categorized as Level 2.
Our OTC options are valued based on the Black Scholes option pricing model that considers time value and volatility of the underlying commodity. The inputs utilized in the model are based on publicly available information as well as broker quotes. These options have been categorized as Level 2.
Our financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.
The following tables set forth by level within the fair value hierarchy, our financial instruments that were accounted for at fair value on a recurring basis at
September 30, 2017
and
December 31, 2016
(
in millions
):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
|
|
Fair Value of Derivatives
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Gross Fair Value
|
|
Contract Netting
(1)
|
|
Collateral/Margin Received or Paid
|
|
Recorded in Balance Sheet
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets from price risk management
|
$
|
0.9
|
|
|
$
|
127.1
|
|
|
$
|
—
|
|
|
$
|
128.0
|
|
|
$
|
(94.2
|
)
|
|
$
|
(26.0
|
)
|
|
$
|
7.8
|
|
Suburban Propane Partners, L.P. units
(2)
|
3.7
|
|
|
—
|
|
|
—
|
|
|
3.7
|
|
|
—
|
|
|
—
|
|
|
3.7
|
|
Total assets at fair value
|
$
|
4.6
|
|
|
$
|
127.1
|
|
|
$
|
—
|
|
|
$
|
131.7
|
|
|
$
|
(94.2
|
)
|
|
$
|
(26.0
|
)
|
|
$
|
11.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities from price risk management
|
$
|
1.6
|
|
|
$
|
140.3
|
|
|
$
|
—
|
|
|
$
|
141.9
|
|
|
$
|
(94.2
|
)
|
|
$
|
4.9
|
|
|
$
|
52.6
|
|
Total liabilities at fair value
|
$
|
1.6
|
|
|
$
|
140.3
|
|
|
$
|
—
|
|
|
$
|
141.9
|
|
|
$
|
(94.2
|
)
|
|
$
|
4.9
|
|
|
$
|
52.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
Fair Value of Derivatives
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Gross Fair Value
|
|
Contract Netting
(1)
|
|
Collateral/Margin Received or Paid
|
|
Recorded in Balance Sheet
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets from price risk management
|
$
|
0.6
|
|
|
$
|
84.4
|
|
|
$
|
—
|
|
|
$
|
85.0
|
|
|
$
|
(67.8
|
)
|
|
$
|
(10.9
|
)
|
|
$
|
6.3
|
|
Suburban Propane Partners, L.P. units
(2)
|
4.3
|
|
|
—
|
|
|
—
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
4.3
|
|
Total assets at fair value
|
$
|
4.9
|
|
|
$
|
84.4
|
|
|
$
|
—
|
|
|
$
|
89.3
|
|
|
$
|
(67.8
|
)
|
|
$
|
(10.9
|
)
|
|
$
|
10.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities from price risk management
|
$
|
2.7
|
|
|
$
|
90.2
|
|
|
$
|
—
|
|
|
$
|
92.9
|
|
|
$
|
(67.8
|
)
|
|
$
|
3.5
|
|
|
$
|
28.6
|
|
Total liabilities at fair value
|
$
|
2.7
|
|
|
$
|
90.2
|
|
|
$
|
—
|
|
|
$
|
92.9
|
|
|
$
|
(67.8
|
)
|
|
$
|
3.5
|
|
|
$
|
28.6
|
|
|
|
(1)
|
Amounts represent the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions as well as cash collateral held or placed with the same counterparties.
|
|
|
(2)
|
Amount is reflected in other assets on CEQP's consolidated balance sheets.
|
Note 7
– Long-Term Debt
Long-term debt consisted of the following at
September 30, 2017
and
December 31, 2016
(
in millions
):
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
Credit Facility
|
$
|
444.1
|
|
|
$
|
77.0
|
|
2020 Senior Notes
|
—
|
|
|
338.8
|
|
Fair value adjustment of 2020 Senior Notes
|
—
|
|
|
1.8
|
|
2022 Senior Notes
|
—
|
|
|
436.4
|
|
2023 Senior Notes
|
700.0
|
|
|
700.0
|
|
2025 Senior Notes
|
500.0
|
|
|
—
|
|
Other
|
2.4
|
|
|
3.7
|
|
Less: deferred financing costs, net
|
30.2
|
|
|
34.0
|
|
Total debt
|
1,616.3
|
|
|
1,523.7
|
|
Less: current portion
|
0.9
|
|
|
1.0
|
|
Total long-term debt, less current portion
|
$
|
1,615.4
|
|
|
$
|
1,522.7
|
|
Credit Facility
At
September 30, 2017
, Crestwood Midstream had
$548.7 million
of available capacity under its credit facility considering the most restrictive debt covenants in its credit agreement. At
September 30, 2017
and
December 31, 2016
, Crestwood Midstream's outstanding standby letters of credit were
$63.6 million
and
$64.0 million
. Borrowings under the credit facility accrue interest at prime or Eurodollar based rates plus applicable spreads, which resulted in interest rates between
3.49%
and
5.50%
at
September 30, 2017
and
3.21%
and
5.25%
at
December 31, 2016
. The weighted-average interest rate as of
September 30, 2017
and
December 31, 2016
was
3.50%
and
3.23%
.
Crestwood Midstream is required under its credit agreement to maintain a net debt to consolidated EBITDA ratio (as defined in its credit agreement) of not more than
5.50
to 1.0, a consolidated EBITDA to consolidated interest expense ratio (as defined in its credit agreement) of not less than
2.50
to 1.0, and a senior secured leverage ratio (as defined in its credit agreement) of not more than
3.75
to 1.0. At
September 30, 2017
, the net debt to consolidated EBITDA was approximately
4.13
to 1.0, the consolidated EBITDA to consolidated interest expense was approximately
4.08
to 1.0, and the senior secured leverage ratio was
1.11
to 1.0.
The CMLP credit facility allows Crestwood Midstream to increase its available borrowings under the facility by
$350.0 million
, subject to lender approval and the satisfaction of certain other conditions, as described in the credit agreement.
Senior Notes
Repayments
.
During the
nine months ended
September 30, 2017
, Crestwood Midstream paid approximately
$457.8 million
to purchase, redeem and/or cancel all of the principal amount outstanding under the 2022 Senior Notes and approximately
$349.9 million
to redeem all of the principal amount outstanding under the 2020 Senior Notes. Crestwood Midstream funded the repayments with a combination of net proceeds from the issuance of the 2025 Senior Notes described below and borrowings under the credit facility. In conjunction with these note repayments, Crestwood Midstream (i) recognized a loss on extinguishment of debt of approximately
$37.7 million
during the nine months ended
September 30, 2017
(including the write off of approximately
$6.8 million
of deferred financing costs associated with the 2022 Senior Notes); and (ii) paid
$5.1 million
and
$1.0 million
of accrued interest on the 2020 Senior Notes and 2022 Senior Notes, respectively, on the date they were tendered.
In June 2016, Crestwood Midstream paid approximately
$312.9 million
to purchase and cancel approximately
$161.2 million
and
$163.6 million
of the principal amounts outstanding under its 2020 Senior Notes and 2022 Senior Notes, respectively, utilizing a portion of the proceeds received from Stagecoach Gas, as further discussed in Note 4. Crestwood Midstream recognized a gain on extinguishment of debt of approximately
$10 million
in conjunction with the early tender of these notes.
2025 Senior Notes
. In March 2017, Crestwood Midstream issued
$500 million
of
5.75%
unsecured senior notes due 2025 (the 2025 Senior Notes) in a private offering. The 2025 Senior Notes will mature on April 1, 2025, and interest is payable
semiannually in arrears on April 1 and October 1 of each year, beginning October 1, 2017. The net proceeds from this offering of approximately
$492 million
were used to repay amounts outstanding under the 2020 Senior Notes and the 2022 Senior Notes.
In May 2017, Crestwood Midstream filed a registration statement with the SEC under which it offered to exchange new senior notes for any and all outstanding 2025 Senior Notes. Crestwood Midstream completed the exchange offer in July 2017. The terms of the exchange notes are substantially identical to the terms of the 2025 Senior Notes, except that the exchange notes are freely tradable.
At
September 30, 2017
, Crestwood Midstream was in compliance with all of its debt covenants applicable to the CMLP credit facility and its senior notes.
Note 8
- Earnings Per Limited Partner Unit
Our net income (loss) attributable to Crestwood Equity Partners is allocated to the subordinated and limited partner unitholders based on their ownership percentage after giving effect to net income attributable to the Preferred Units. We calculate basic net income per limited partner unit using the two-class method. Diluted net income per limited partner unit is computed using the treasury stock method, which considers the impact to net income attributable to Crestwood Equity Partners and limited partner units from the potential issuance of limited partner units.
We exclude potentially dilutive securities from the determination of diluted earnings per unit (as well as their related income statement impacts) when their impact on net income attributable to Crestwood Equity Partners per limited partner unit is anti-dilutive. During the
three and nine months ended
September 30, 2017
, we excluded a weighted-average of
7,125,744
and
6,968,210
common units (representing preferred units), a weighted-average of
7,277,340
common units in both periods (representing Crestwood Niobrara's preferred units), and a weighted-average of
438,789
common units in both periods (representing subordinated units). During the
three and nine months ended
September 30, 2016
, we excluded a weighted-average of
6,502,907
and
6,358,626
common units (representing preferred units), and a weighted-average of
8,669,633
common units in both periods (representing Crestwood Niobrara's preferred units) and a weighted-average of
438,789
common units in both periods (representing subordinated units). See
Note 9
for additional information regarding the potential conversion of our preferred units and Crestwood Niobrara's preferred units to common units.
Note 9
– Partners’ Capital
Preferred Units
Subject to certain conditions, the holders of the Preferred Units have the right to convert their Preferred Units into (i) common units on a 1-for-10 basis or (ii) a number of common units determined pursuant to a conversion ratio set forth in Crestwood Equity's partnership agreement upon the occurrence of certain events, such as a change in control. The Preferred Units have voting rights that are identical to the voting rights of the common units and will vote with the common units as a single class, with each Preferred Unit entitled to one vote for each common unit into which such Preferred Unit is convertible, except that the Preferred Units are entitled to vote as a separate class on any matter on which all unitholders are entitled to vote that adversely affects the rights, powers, privileges or preferences of the Preferred Units in relation to Crestwood Equity's other securities outstanding.
Common Units
On August 4, 2017, we entered into an equity distribution agreement with certain financial institutions (each, a Manager), under which we may offer and sell from time to time through one or more of the Managers, common units having an aggregate offering price of up to
$250 million
. Common units sold pursuant to this at-the-market (ATM) equity distribution program are issued under a registration statement that became effective on April 12, 2017. We will pay the Managers an aggregate fee of up to
2.0%
(which totaled
$0.2 million
during the three and nine months ended September 30, 2017) of the gross sales price per common unit sold under our ATM equity distribution program. The table below shows the units issued and the net proceeds from the issuances:
|
|
|
|
|
|
|
|
|
Issuance Dates
|
|
Common Units
|
|
Net Proceeds
(1)
(in millions)
|
Third Quarter 2017
|
|
437,518
|
|
|
$
|
10.6
|
|
|
|
(1)
|
The net proceeds from sales under the ATM program are used for general partnership purposes, which may include debt repayment and capital expenditures.
|
Distributions
Crestwood Equity
Limited Partners.
A summary of CEQP's limited partner quarterly cash distributions for the
nine months ended
September 30, 2017
and
2016
is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
Record Date
|
|
Payment Date
|
|
Per Unit Rate
|
|
Cash Distributions
(
in millions
)
|
2017
|
|
|
|
|
|
|
February 7, 2017
|
|
February 14, 2017
|
|
$
|
0.60
|
|
|
$
|
41.8
|
|
May 8, 2017
|
|
May 15, 2017
|
|
0.60
|
|
|
41.8
|
|
August 7, 2017
|
|
August 14, 2017
|
|
0.60
|
|
|
41.8
|
|
|
|
|
|
|
|
$
|
125.4
|
|
2016
|
|
|
|
|
|
|
February 5, 2016
|
|
February 12, 2016
|
|
$
|
1.375
|
|
|
$
|
95.6
|
|
May 6, 2016
|
|
May 13, 2016
|
|
0.60
|
|
|
41.4
|
|
August 5, 2016
|
|
August 12, 2016
|
|
0.60
|
|
|
41.4
|
|
|
|
|
|
|
|
$
|
178.4
|
|
On
October 19, 2017
,
we declared a distribution of
$0.60
per limited partner unit to be paid on
November 14, 2017
, to unitholders of record on
November 7, 2017
with respect to the third quarter of
2017
.
Preferred Unit Holders
.
We are required to make quarterly distributions to our preferred unitholders. During the
nine months ended
September 30, 2017
and
2016
, we issued
4,724,030
and
4,311,143
Preferred Units to our preferred unitholders in lieu of paying cash distributions of
$43.1 million
and
$39.3 million
, respectively. On
October 19, 2017
, the board of directors of our general partner authorized a cash distribution to our preferred unitholders of approximately
$15.0 million
for the quarter ended
September 30, 2017
in lieu of issuing additional preferred units, and beginning with the quarter ending December 31, 2017, we will be required to make all future quarterly distributions to our preferred unitholders in cash.
Crestwood Midstream
During the
nine months ended
September 30, 2017
and
2016
, Crestwood Midstream paid cash distributions of
$119.5 million
and
$185.0 million
to Crestwood Equity.
Non-Controlling Partners
Crestwood Niobrara issued a preferred interest to a subsidiary of General Electric Capital Corporation and GE Structured Finance, Inc. (collectively, GE) in conjunction with the acquisition of its investment in Jackalope, which is reflected as non-controlling interest in our consolidated financial statements. During the
three and nine months ended
September 30, 2017
, net income attributable to non-controlling partners was approximately
$6.4 million
and
$18.8 million
. During the
three and nine months ended
September 30, 2016
, net income attributable to non-controlling partners was approximately
$6.1 million
and
$18.0 million
. During both the
nine months ended
September 30, 2017
and
2016
, Crestwood Niobrara paid cash distributions of
$11.4 million
to GE. In October 2017, Crestwood Niobrara paid a cash distribution of
$3.8 million
to GE for the quarter ended
September 30, 2017
.
Note 10
– Commitments and Contingencies
Legal Proceedings
We are periodically involved in litigation proceedings. If we determine that a negative outcome is probable and the amount of loss is reasonably estimable, then we accrue the estimated amount. The results of litigation proceedings cannot be predicted with certainty. We could incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on our results of operations or cash flows in the period in which the amounts are paid and/or accrued. As of
September 30, 2017
and
December 31, 2016
, both CEQP and CMLP had less
than
$0.1 million
accrued for outstanding legal matters. Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures for which we can estimate will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures.
Any loss estimates are inherently subjective, based on currently available information, and are subject to management's judgment and various assumptions. Due to the inherently subjective nature of these estimates and the uncertainty and unpredictability surrounding the outcome of legal proceedings, actual results may differ materially from any amounts that have been accrued.
Regulatory Compliance
In the ordinary course of our business, we are subject to various laws and regulations. In the opinion of our management, compliance with current laws and regulations will not have a material effect on our results of operations, cash flows or financial condition.
Environmental Compliance
Our operations are subject to stringent and complex laws and regulations pertaining to worker health, safety, and the environment. We are subject to laws and regulations at the federal, state, regional and local levels that relate to air and water quality, hazardous and solid waste management and disposal and other environmental matters. The cost of planning, designing, constructing and operating our facilities must incorporate compliance with environmental laws and regulations and safety standards. Failure to comply with these laws and regulations may trigger a variety of administrative, civil and potentially criminal enforcement measures.
During 2014, we experienced
three
releases totaling approximately
28,000
barrels of produced water on our Arrow water gathering system located on the Fort Berthold Indian Reservation in North Dakota. We immediately notified the National Response Center, the Three Affiliated Tribes and numerous other regulatory authorities, and thereafter contained and cleaned up the releases completely and placed the impacted segments of these water lines back into service. In May 2015, we experienced a release of approximately
5,200
barrels of produced water on our Arrow water gathering system, immediately notified numerous regulatory authorities and other third parties, and thereafter contained and cleaned up the releases.
In October 2014, we received data requests from the Environmental Protection Agency (EPA) related to the 2014 water releases and we responded to the requests during the first half of 2015. In April 2015, the EPA issued a Notice of Potential Violation (NOPV) under the Clean Water Act relating to the largest of the 2014 water releases. We responded to the NOPV in May 2015, and in April 2017, we entered into an Administrative Order on Consent (the Order) with the EPA. The Order requires us to continue to remediate and monitor the impacted area for no less than four years unless all goals of the Order are satisfied earlier. The Order does not preclude the EPA from seeking to impose fines and penalties as a result of the water releases.
On March 3, 2015, we received a grand jury subpoena from the United States Attorney’s Office in Bismarck, North Dakota, seeking documents and information relating to the largest of the three 2014 water releases. We provided the requested information during the second quarter of 2015 and key employees were interviewed by the United States’ Attorney in December 2015. On September 13, 2017, we received a notice from the United States Department of Justice that it completed the investigation with no charges being filed against us. In August 2015, we received a notice of violation from the Three Affiliated Tribes' Environmental Division related to our 2014 produced water releases on the Fort Berthold Indian Reservation. The notice of violation imposes fines and requests reimbursements exceeding
$1.1 million
; however, the notice of violation was stayed on September 15, 2015, upon our posting of a performance bond for the amount contemplated by the notice and pending the outcome of ongoing settlement discussions with the regulatory agencies asserting jurisdiction over the 2014 produced water releases.
We will continue our remediation efforts to ensure the impacted lands are restored to their prior state. We believe these releases are insurable events under our policies, and we have notified our carriers of these events. We have not recorded an insurance receivable as of
September 30, 2017
.
At
September 30, 2017
and
December 31, 2016
, our accrual of approximately
$2.7 million
and
$2.1 million
is based on our undiscounted estimate of amounts we will spend on compliance with environmental and other regulations, and any associated fines or penalties. We estimate that our potential liability for reasonably possible outcomes related to our environmental exposures (including the Arrow water releases described above) could range from approximately
$2.7 million
to
$4.2 million
at
September 30, 2017
.
Self-Insurance
We utilize third-party insurance subject to varying retention levels of self-insurance, which management considers prudent. Such self-insurance relates to losses and liabilities primarily associated with medical claims, workers' compensation claims and general, product, vehicle and environmental liability. At
September 30, 2017
and
December 31, 2016
, CEQP's self-insurance reserves were
$15.8 million
and $
15.6 million
. We estimate that
$10.6 million
of this balance will be paid subsequent to
September 30, 2018
. As such, CEQP has classified
$10.6 million
in other long-term liabilities on its consolidated balance sheet at
September 30, 2017
. At
September 30, 2017
and
December 31, 2016
, CMLP's self insurance reserves were
$12.9 million
and
$12.2 million
. CMLP estimates that
$8.0 million
of this balance will be paid subsequent to
September 30, 2018
. As such, CMLP has classified
$8.0 million
in other long-term liabilities on its consolidated balance sheet at
September 30, 2017
.
Guarantees and Indemnifications.
We are involved in various joint ventures that sometimes require financial and performance guarantees. In a financial guarantee, we are obligated to make payments if the guaranteed party fails to make payments under, or violates the terms of, the financial arrangement. In a performance guarantee, we provide assurance that the guaranteed party will execute on the terms of the contract. If they do not, we are required to perform on their behalf. We also periodically provide indemnification arrangements related to assets or businesses we have sold. For a further description of our guarantees associated with our joint ventures, see Note 4, and for a further description of our guarantees associated with our assets or businesses we have sold, see our 2016 Annual Report on Form 10-K.
Our potential exposure under guarantee and indemnification arrangements can range from a specified amount to an unlimited dollar amount, depending on the nature of the claim, specificity as to duration, and the particular transaction. As of
September 30, 2017
and
December 31, 2016
, we have no amounts accrued for these guarantees.
Note 11
– Related Party Transactions
Crestwood Holdings indirectly owns both CEQP's and CMLP's general partner. The affiliates of Crestwood Holdings and its owners are considered CEQP's and CMLP's related parties, including Sabine Oil and Gas LLC (Sabine) and Arsenal Resources. CEQP and CMLP enter into transactions with their affiliates within the ordinary course of business, including gas gathering and processing services under long-term contracts, product purchases and various operating agreements.
The following table shows transactions with our affiliates which are reflected in our consolidated statements of operations (
in millions
):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Gathering and processing revenues at CEQP and CMLP
|
$
|
0.5
|
|
|
$
|
0.7
|
|
|
$
|
1.4
|
|
|
$
|
2.1
|
|
Gathering and processing costs of product/services sold at CEQP and CMLP
(1)
|
$
|
3.7
|
|
|
$
|
5.0
|
|
|
$
|
11.8
|
|
|
$
|
13.7
|
|
Operations and maintenance expenses at CEQP and CMLP
(2)
|
$
|
6.6
|
|
|
$
|
1.8
|
|
|
$
|
16.4
|
|
|
$
|
3.5
|
|
General and administrative expenses charged by CEQP to CMLP, net
(3)
|
$
|
4.4
|
|
|
$
|
2.7
|
|
|
$
|
14.8
|
|
|
$
|
9.6
|
|
General and administrative expenses at CEQP charged from Crestwood Holdings, net
(4)
|
$
|
(0.2
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(0.6
|
)
|
|
|
(1)
|
Represents natural gas purchases from Sabine.
|
|
|
(2)
|
We have operating agreements with certain of our unconsolidated affiliates pursuant to which we charge them operations and maintenance expenses in accordance with their respective agreements. During the
three and nine months ended
September 30, 2017
, we charged
$2.0 million
and
$6.5 million
to Stagecoach Gas,
$0.8 million
and
$2.6 million
to Tres Palacios,
$3.7 million
and
$7.0 million
to Crestwood Permian and
$0.1 million
and
$0.3 million
to Jackalope. During the
three and nine months ended
September 30, 2016
, we charged
$0.8 million
and
$2.2 million
to Tres Palacios and
$1.0 million
and
$1.3 million
to Stagecoach Gas.
|
|
|
(3)
|
Includes
$5.2 million
and
$17.1 million
of net unit-based compensation charges allocated from CEQP to CMLP for the
three and nine months ended
September 30, 2017
and
$3.5 million
and
$11.9 million
for the
three and nine months ended
September 30, 2016
. In addition, CMLP shares common management, general and administrative and overhead costs with CEQP. During both the
three and nine months ended
September 30, 2017
and
2016
, CMLP allocated
$0.8 million
and
$2.3 million
of general and administrative costs to CEQP.
|
|
|
(4)
|
Includes less than
$1.1 million
and
$1.9 million
unit-based compensation charges allocated from Crestwood Holdings to CEQP and CMLP during the
three and nine months ended
September 30, 2017
and
$0.6 million
and
$1.5 million
during the
three and nine months ended
September 30, 2016
.
|
The following table shows accounts receivable and accounts payable from our affiliates (
in millions
):
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
Accounts receivable at CEQP and CMLP
|
$
|
9.8
|
|
|
$
|
5.6
|
|
Accounts payable at CEQP
|
$
|
9.7
|
|
|
$
|
2.5
|
|
Accounts payable at CMLP
|
$
|
7.2
|
|
|
$
|
—
|
|
Note 12
– Segments
Financial Information
We have
three
operating and reportable segments: (i) gathering and processing operations; (ii) storage and transportation operations; and (iii) marketing, supply and logistics operations. Our corporate operations include all general and administrative expenses that are not allocated to our reportable segments. We assess the performance of our operating segments based on EBITDA, which is defined as income before income taxes, plus debt-related costs (interest and debt expense, net and gain (loss) on modification/extinguishment of debt) and depreciation, amortization and accretion expense.
Below is a reconciliation of CEQP's net income (loss) to EBITDA (
in millions
):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net income (loss)
|
$
|
(27.9
|
)
|
|
$
|
3.0
|
|
|
$
|
(47.0
|
)
|
|
$
|
(127.8
|
)
|
Add:
|
|
|
|
|
|
|
|
Interest and debt expense, net
|
24.2
|
|
|
27.5
|
|
|
74.8
|
|
|
97.9
|
|
(Gain) loss on modification/extinguishment of debt
|
—
|
|
|
—
|
|
|
37.7
|
|
|
(10.0
|
)
|
Provision for income taxes
|
0.1
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
Depreciation, amortization and accretion
|
48.1
|
|
|
50.3
|
|
|
145.2
|
|
|
177.0
|
|
EBITDA
|
$
|
44.5
|
|
|
$
|
81.0
|
|
|
$
|
210.7
|
|
|
$
|
137.3
|
|
The following tables summarize CEQP's reportable segment data for the
three and nine months ended
September 30, 2017
and
2016
(
in millions
). Intersegment revenues included in the following tables are accounted for as arms-length transactions that apply our revenue recognition policies described in our 2016 Annual Report on Form 10-K. Included in earnings from unconsolidated affiliates, net below was approximately
$10.0 million
and
$8.3 million
of depreciation and amortization expense and gains (losses) on long-lived assets, net related to our equity investments for the
three months ended
September 30, 2017
and
2016
and
$25.7 million
and
$15.3 million
for the
nine months ended
September 30, 2017
and
2016
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017
|
|
Gathering and Processing
|
|
Storage and Transportation
|
|
Marketing, Supply and Logistics
|
|
Corporate
|
|
Total
|
Revenues
|
$
|
434.4
|
|
|
$
|
6.2
|
|
|
$
|
515.0
|
|
|
$
|
—
|
|
|
$
|
955.6
|
|
Intersegment revenues
|
29.9
|
|
|
1.2
|
|
|
(31.1
|
)
|
|
—
|
|
|
—
|
|
Costs of product/services sold
|
378.6
|
|
|
0.2
|
|
|
479.7
|
|
|
—
|
|
|
858.5
|
|
Operations and maintenance expense
|
16.2
|
|
|
1.0
|
|
|
18.3
|
|
|
—
|
|
|
35.5
|
|
General and administrative expense
|
—
|
|
|
—
|
|
|
—
|
|
|
22.5
|
|
|
22.5
|
|
Gain (loss) on long-lived assets
|
(3.9
|
)
|
|
—
|
|
|
0.6
|
|
|
(3.0
|
)
|
|
(6.3
|
)
|
Earnings from unconsolidated affiliates, net
|
4.3
|
|
|
7.2
|
|
|
—
|
|
|
—
|
|
|
11.5
|
|
Other income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
EBITDA
|
$
|
69.9
|
|
|
$
|
13.4
|
|
|
$
|
(13.5
|
)
|
|
$
|
(25.3
|
)
|
|
$
|
44.5
|
|
Goodwill
|
$
|
45.9
|
|
|
$
|
—
|
|
|
$
|
153.1
|
|
|
$
|
—
|
|
|
$
|
199.0
|
|
Total assets
|
$
|
2,452.2
|
|
|
$
|
1,049.9
|
|
|
$
|
1,002.3
|
|
|
$
|
20.9
|
|
|
$
|
4,525.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2016
|
|
Gathering and Processing
|
|
Storage and Transportation
|
|
Marketing, Supply and Logistics
|
|
Corporate
|
|
Total
|
Revenues
|
$
|
279.3
|
|
|
$
|
18.3
|
|
|
$
|
290.0
|
|
|
$
|
—
|
|
|
$
|
587.6
|
|
Intersegment revenues
|
24.8
|
|
|
1.5
|
|
|
(26.3
|
)
|
|
—
|
|
|
—
|
|
Costs of product/services sold
|
226.1
|
|
|
0.1
|
|
|
240.5
|
|
|
—
|
|
|
466.7
|
|
Operations and maintenance expense
|
17.4
|
|
|
2.5
|
|
|
13.2
|
|
|
—
|
|
|
33.1
|
|
General and administrative expense
|
—
|
|
|
—
|
|
|
—
|
|
|
18.3
|
|
|
18.3
|
|
Loss on long-lived assets
|
(2.0
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
Earnings from unconsolidated affiliates, net
|
5.5
|
|
|
7.9
|
|
|
—
|
|
|
—
|
|
|
13.4
|
|
Other income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
EBITDA
|
$
|
64.1
|
|
|
$
|
25.0
|
|
|
$
|
10.0
|
|
|
$
|
(18.1
|
)
|
|
$
|
81.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2017
|
|
Gathering and Processing
|
|
Storage and Transportation
|
|
Marketing, Supply and Logistics
|
|
Corporate
|
|
Total
|
Revenues
|
$
|
1,208.1
|
|
|
$
|
24.7
|
|
|
$
|
1,401.2
|
|
|
$
|
—
|
|
|
$
|
2,634.0
|
|
Intersegment revenues
|
94.3
|
|
|
4.7
|
|
|
(99.0
|
)
|
|
—
|
|
|
—
|
|
Costs of product/services sold
|
1,049.9
|
|
|
0.3
|
|
|
1,221.4
|
|
|
—
|
|
|
2,271.6
|
|
Operations and maintenance expense
|
51.8
|
|
|
3.4
|
|
|
48.2
|
|
|
—
|
|
|
103.4
|
|
General and administrative expense
|
—
|
|
|
—
|
|
|
—
|
|
|
71.6
|
|
|
71.6
|
|
Gain (loss) on long-lived assets
|
(3.9
|
)
|
|
—
|
|
|
0.6
|
|
|
(3.0
|
)
|
|
(6.3
|
)
|
Earnings from unconsolidated affiliates, net
|
7.7
|
|
|
21.5
|
|
|
—
|
|
|
—
|
|
|
29.2
|
|
Other income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
0.4
|
|
EBITDA
|
$
|
204.5
|
|
|
$
|
47.2
|
|
|
$
|
33.2
|
|
|
$
|
(74.2
|
)
|
|
$
|
210.7
|
|
Goodwill
|
$
|
45.9
|
|
|
$
|
—
|
|
|
$
|
153.1
|
|
|
$
|
—
|
|
|
$
|
199.0
|
|
Total assets
|
$
|
2,452.2
|
|
|
$
|
1,049.9
|
|
|
$
|
1,002.3
|
|
|
$
|
20.9
|
|
|
$
|
4,525.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016
|
|
Gathering and Processing
|
|
Storage and Transportation
|
|
Marketing, Supply and Logistics
|
|
Corporate
|
|
Total
|
Revenues
|
$
|
787.7
|
|
|
$
|
131.5
|
|
|
$
|
806.3
|
|
|
$
|
—
|
|
|
$
|
1,725.5
|
|
Intersegment revenues
|
75.9
|
|
|
3.0
|
|
|
(78.9
|
)
|
|
—
|
|
|
—
|
|
Costs of product/services sold
|
632.2
|
|
|
4.9
|
|
|
643.0
|
|
|
—
|
|
|
1,280.1
|
|
Operations and maintenance expense
|
56.1
|
|
|
18.2
|
|
|
45.6
|
|
|
—
|
|
|
119.9
|
|
General and administrative expense
|
—
|
|
|
—
|
|
|
—
|
|
|
70.2
|
|
|
70.2
|
|
Loss on long-lived assets
|
(2.0
|
)
|
|
(32.8
|
)
|
|
—
|
|
|
—
|
|
|
(34.8
|
)
|
Goodwill impairment
|
(8.6
|
)
|
|
(13.7
|
)
|
|
(87.4
|
)
|
|
—
|
|
|
(109.7
|
)
|
Earnings from unconsolidated affiliates, net
|
16.5
|
|
|
9.6
|
|
|
—
|
|
|
—
|
|
|
26.1
|
|
Other income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
0.4
|
|
EBITDA
|
$
|
181.2
|
|
|
$
|
74.5
|
|
|
$
|
(48.6
|
)
|
|
$
|
(69.8
|
)
|
|
$
|
137.3
|
|
Below is a reconciliation of CMLP's net income (loss) to EBITDA (
in millions
):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net income (loss)
|
$
|
(29.8
|
)
|
|
$
|
0.6
|
|
|
$
|
(53.1
|
)
|
|
$
|
(130.3
|
)
|
Add:
|
|
|
|
|
|
|
|
Interest and debt expense, net
|
24.2
|
|
|
27.5
|
|
|
74.8
|
|
|
97.9
|
|
(Gain) loss on modification/extinguishment of debt
|
—
|
|
|
—
|
|
|
37.7
|
|
|
(10.0
|
)
|
Provision for income taxes
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Depreciation, amortization and accretion
|
50.9
|
|
|
53.2
|
|
|
153.5
|
|
|
185.2
|
|
EBITDA
|
$
|
45.4
|
|
|
$
|
81.3
|
|
|
$
|
212.9
|
|
|
$
|
142.8
|
|
The following tables summarize CMLP's reportable segment data for the
three and nine months ended
September 30, 2017
and
2016
(
in millions
). Intersegment revenues included in the following tables are accounted for as arms-length transactions that apply our revenue recognition policies described in our 2016 Annual Report on Form 10-K. Included in earnings from unconsolidated affiliates, net below was approximately
$10.0 million
and
$8.3 million
of depreciation and amortization expense and gains (losses) on long-lived assets, net related to our equity investments for the three months ended
September 30, 2017
and
2016
and
$25.7 million
and
$15.3 million
for the
nine months ended
September 30, 2017
and
2016
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017
|
|
Gathering and Processing
|
|
Storage and Transportation
|
|
Marketing, Supply and Logistics
|
|
Corporate
|
|
Total
|
Revenues
|
$
|
434.4
|
|
|
$
|
6.2
|
|
|
$
|
515.0
|
|
|
$
|
—
|
|
|
$
|
955.6
|
|
Intersegment revenues
|
29.9
|
|
|
1.2
|
|
|
(31.1
|
)
|
|
—
|
|
|
—
|
|
Costs of product/services sold
|
378.6
|
|
|
0.2
|
|
|
479.7
|
|
|
—
|
|
|
858.5
|
|
Operations and maintenance expense
|
16.2
|
|
|
1.0
|
|
|
18.3
|
|
|
—
|
|
|
35.5
|
|
General and administrative expense
|
—
|
|
|
—
|
|
|
—
|
|
|
21.4
|
|
|
21.4
|
|
Gain (loss) on long-lived assets
|
(3.9
|
)
|
|
—
|
|
|
0.6
|
|
|
(3.0
|
)
|
|
(6.3
|
)
|
Earnings from unconsolidated affiliates, net
|
4.3
|
|
|
7.2
|
|
|
—
|
|
|
—
|
|
|
11.5
|
|
EBITDA
|
$
|
69.9
|
|
|
$
|
13.4
|
|
|
$
|
(13.5
|
)
|
|
$
|
(24.4
|
)
|
|
$
|
45.4
|
|
Goodwill
|
$
|
45.9
|
|
|
$
|
—
|
|
|
$
|
153.1
|
|
|
$
|
—
|
|
|
$
|
199.0
|
|
Total assets
|
$
|
2,643.7
|
|
|
$
|
1,049.9
|
|
|
$
|
1,002.3
|
|
|
$
|
13.1
|
|
|
$
|
4,709.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2016
|
|
Gathering and Processing
|
|
Storage and Transportation
|
|
Marketing, Supply and Logistics
|
|
Corporate
|
|
Total
|
Revenues
|
$
|
279.3
|
|
|
$
|
18.3
|
|
|
$
|
290.0
|
|
|
$
|
—
|
|
|
$
|
587.6
|
|
Intersegment revenues
|
24.8
|
|
|
1.5
|
|
|
(26.3
|
)
|
|
—
|
|
|
—
|
|
Costs of product/services sold
|
226.1
|
|
|
0.1
|
|
|
240.5
|
|
|
—
|
|
|
466.7
|
|
Operations and maintenance expense
|
17.4
|
|
|
3.0
|
|
|
13.2
|
|
|
—
|
|
|
33.6
|
|
General and administrative expense
|
—
|
|
|
—
|
|
|
—
|
|
|
17.3
|
|
|
17.3
|
|
Loss on long-lived assets
|
(2.0
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
Earnings from unconsolidated affiliates, net
|
5.5
|
|
|
7.9
|
|
|
—
|
|
|
—
|
|
|
13.4
|
|
EBITDA
|
$
|
64.1
|
|
|
$
|
24.5
|
|
|
$
|
10.0
|
|
|
$
|
(17.3
|
)
|
|
$
|
81.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2017
|
|
Gathering and Processing
|
|
Storage and Transportation
|
|
Marketing, Supply and Logistics
|
|
Corporate
|
|
Total
|
Revenues
|
$
|
1,208.1
|
|
|
$
|
24.7
|
|
|
$
|
1,401.2
|
|
|
$
|
—
|
|
|
$
|
2,634.0
|
|
Intersegment revenues
|
94.3
|
|
|
4.7
|
|
|
(99.0
|
)
|
|
—
|
|
|
—
|
|
Costs of product/services sold
|
1,049.9
|
|
|
0.3
|
|
|
1,221.4
|
|
|
—
|
|
|
2,271.6
|
|
Operations and maintenance expense
|
51.8
|
|
|
3.4
|
|
|
48.2
|
|
|
—
|
|
|
103.4
|
|
General and administrative expense
|
—
|
|
|
—
|
|
|
—
|
|
|
69.0
|
|
|
69.0
|
|
Gain (loss) on long-lived assets
|
(3.9
|
)
|
|
—
|
|
|
0.6
|
|
|
(3.0
|
)
|
|
(6.3
|
)
|
Earnings from unconsolidated affiliates, net
|
7.7
|
|
|
21.5
|
|
|
—
|
|
|
—
|
|
|
29.2
|
|
EBITDA
|
$
|
204.5
|
|
|
$
|
47.2
|
|
|
$
|
33.2
|
|
|
$
|
(72.0
|
)
|
|
$
|
212.9
|
|
Goodwill
|
$
|
45.9
|
|
|
$
|
—
|
|
|
$
|
153.1
|
|
|
$
|
—
|
|
|
$
|
199.0
|
|
Total assets
|
$
|
2,643.7
|
|
|
$
|
1,049.9
|
|
|
$
|
1,002.3
|
|
|
$
|
13.1
|
|
|
$
|
4,709.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016
|
|
Gathering and Processing
|
|
Storage and Transportation
|
|
Marketing, Supply and Logistics
|
|
Corporate
|
|
Total
|
Revenues
|
$
|
787.7
|
|
|
$
|
131.5
|
|
|
$
|
806.3
|
|
|
$
|
—
|
|
|
$
|
1,725.5
|
|
Intersegment revenues
|
75.9
|
|
|
3.0
|
|
|
(78.9
|
)
|
|
—
|
|
|
—
|
|
Costs of product/services sold
|
632.2
|
|
|
4.9
|
|
|
643.0
|
|
|
—
|
|
|
1,280.1
|
|
Operations and maintenance expense
|
56.1
|
|
|
15.0
|
|
|
45.6
|
|
|
—
|
|
|
116.7
|
|
General and administrative expense
|
—
|
|
|
—
|
|
|
—
|
|
|
67.5
|
|
|
67.5
|
|
Loss on long-lived assets
|
(2.0
|
)
|
|
(32.8
|
)
|
|
—
|
|
|
—
|
|
|
(34.8
|
)
|
Goodwill impairment
|
(8.6
|
)
|
|
(13.7
|
)
|
|
(87.4
|
)
|
|
—
|
|
|
(109.7
|
)
|
Earnings from unconsolidated affiliates, net
|
16.5
|
|
|
9.6
|
|
|
—
|
|
|
—
|
|
|
26.1
|
|
EBITDA
|
$
|
181.2
|
|
|
$
|
77.7
|
|
|
$
|
(48.6
|
)
|
|
$
|
(67.5
|
)
|
|
$
|
142.8
|
|
Note 13
– Condensed Consolidating Financial Information
Crestwood Midstream is a holding company (Parent) and owns no operating assets and has no significant operations independent of its subsidiaries. Obligations under Crestwood Midstream's senior notes and its credit facility are jointly and severally guaranteed by substantially all of its subsidiaries, except for Crestwood Infrastructure Holdings LLC, Crestwood Niobrara, Crestwood Pipeline and Storage Northeast LLC (Crestwood Northeast), PRBIC and Tres Holdings and their respective subsidiaries (collectively, Non-Guarantor Subsidiaries). Crestwood Midstream Finance Corp., the co-issuer of its senior notes, is Crestwood Midstream's 100% owned subsidiary and has no material assets, operations, revenues or cash flows other than those related to its service as co-issuer of the Crestwood Midstream senior notes.
The tables below present condensed consolidating financial statements for Crestwood Midstream as Parent on a stand-alone, unconsolidated basis, and Crestwood Midstream's combined guarantor and combined non-guarantor subsidiaries as of
September 30, 2017
and
December 31, 2016
, and for the
three and nine months ended
September 30, 2017
and
2016
. The financial information may not necessarily be indicative of the results of operations, cash flows or financial position had the subsidiaries operated as independent entities.
The condensed consolidating financial statements for the
three and nine months ended
September 30, 2016
include reclassifications that were made to conform to the current year presentation, none of which impacted previously reported net income (loss) or partners’ capital. In particular, the condensed consolidating statement of operations was modified to consider the impact of net income (loss) attributable to non-controlling partners in subsidiaries in arriving at equity in net income (loss) of subsidiaries in the parent and eliminations columns of those statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crestwood Midstream Partners LP
|
Condensed Consolidating Balance Sheet
|
September 30, 2017
|
(in millions)
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.1
|
|
Accounts receivable
|
—
|
|
|
341.0
|
|
|
3.7
|
|
|
—
|
|
|
344.7
|
|
Inventory
|
—
|
|
|
92.9
|
|
|
—
|
|
|
—
|
|
|
92.9
|
|
Other current assets
|
—
|
|
|
13.0
|
|
|
—
|
|
|
—
|
|
|
13.0
|
|
Total current assets
|
1.1
|
|
|
446.9
|
|
|
3.7
|
|
|
—
|
|
|
451.7
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
—
|
|
|
2,242.2
|
|
|
—
|
|
|
—
|
|
|
2,242.2
|
|
Goodwill and intangible assets, net
|
—
|
|
|
814.0
|
|
|
—
|
|
|
—
|
|
|
814.0
|
|
Investment in consolidated affiliates
|
4,025.8
|
|
|
—
|
|
|
—
|
|
|
(4,025.8
|
)
|
|
—
|
|
Investment in unconsolidated affiliates
|
—
|
|
|
—
|
|
|
1,198.5
|
|
|
—
|
|
|
1,198.5
|
|
Other assets
|
—
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
Total assets
|
$
|
4,026.9
|
|
|
$
|
3,505.7
|
|
|
$
|
1,202.2
|
|
|
$
|
(4,025.8
|
)
|
|
$
|
4,709.0
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and partners' capital
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
|
$
|
310.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
310.0
|
|
Other current liabilities
|
39.9
|
|
|
125.4
|
|
|
—
|
|
|
—
|
|
|
165.3
|
|
Total current liabilities
|
39.9
|
|
|
435.4
|
|
|
—
|
|
|
—
|
|
|
475.3
|
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
Long-term debt, less current portion
|
1,614.6
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
1,615.4
|
|
Other long-term liabilities
|
—
|
|
|
45.3
|
|
|
—
|
|
|
—
|
|
|
45.3
|
|
Deferred income taxes
|
—
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
Partners' capital
|
2,372.4
|
|
|
3,023.5
|
|
|
1,002.3
|
|
|
(4,025.8
|
)
|
|
2,372.4
|
|
Interest of non-controlling partners in subsidiaries
|
—
|
|
|
—
|
|
|
199.9
|
|
|
—
|
|
|
199.9
|
|
Total partners' capital
|
2,372.4
|
|
|
3,023.5
|
|
|
1,202.2
|
|
|
(4,025.8
|
)
|
|
2,572.3
|
|
Total liabilities and partners' capital
|
$
|
4,026.9
|
|
|
$
|
3,505.7
|
|
|
$
|
1,202.2
|
|
|
$
|
(4,025.8
|
)
|
|
$
|
4,709.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crestwood Midstream Partners LP
|
Condensed Consolidating Balance Sheet
|
December 31, 2016
|
(in millions)
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
1.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.3
|
|
Accounts receivable
|
—
|
|
|
289.3
|
|
|
0.5
|
|
|
—
|
|
|
289.8
|
|
Inventory
|
—
|
|
|
66.0
|
|
|
—
|
|
|
—
|
|
|
66.0
|
|
Other current assets
|
—
|
|
|
16.0
|
|
|
—
|
|
|
—
|
|
|
16.0
|
|
Total current assets
|
1.3
|
|
|
371.3
|
|
|
0.5
|
|
|
—
|
|
|
373.1
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
—
|
|
|
2,298.4
|
|
|
—
|
|
|
—
|
|
|
2,298.4
|
|
Goodwill and intangible assets, net
|
—
|
|
|
851.9
|
|
|
—
|
|
|
—
|
|
|
851.9
|
|
Investment in consolidated affiliates
|
4,093.7
|
|
|
—
|
|
|
—
|
|
|
(4,093.7
|
)
|
|
—
|
|
Investment in unconsolidated affiliates
|
—
|
|
|
—
|
|
|
1,115.4
|
|
|
—
|
|
|
1,115.4
|
|
Other assets
|
—
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
Total assets
|
$
|
4,095.0
|
|
|
$
|
3,523.4
|
|
|
$
|
1,115.9
|
|
|
$
|
(4,093.7
|
)
|
|
$
|
4,640.6
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and partners' capital
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
—
|
|
|
$
|
214.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
214.5
|
|
Other current liabilities
|
23.1
|
|
|
94.4
|
|
|
—
|
|
|
—
|
|
|
117.5
|
|
Total current liabilities
|
23.1
|
|
|
308.9
|
|
|
—
|
|
|
—
|
|
|
332.0
|
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
Long-term debt, less current portion
|
1,521.2
|
|
|
1.5
|
|
|
—
|
|
|
—
|
|
|
1,522.7
|
|
Other long-term liabilities
|
—
|
|
|
42.0
|
|
|
—
|
|
|
—
|
|
|
42.0
|
|
Deferred income taxes
|
—
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
Partners' capital
|
2,550.7
|
|
|
3,170.3
|
|
|
923.4
|
|
|
(4,093.7
|
)
|
|
2,550.7
|
|
Interest of non-controlling partners in subsidiaries
|
—
|
|
|
—
|
|
|
192.5
|
|
|
—
|
|
|
192.5
|
|
Total partners' capital
|
2,550.7
|
|
|
3,170.3
|
|
|
1,115.9
|
|
|
(4,093.7
|
)
|
|
2,743.2
|
|
Total liabilities and partners' capital
|
$
|
4,095.0
|
|
|
$
|
3,523.4
|
|
|
$
|
1,115.9
|
|
|
$
|
(4,093.7
|
)
|
|
$
|
4,640.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crestwood Midstream Partners LP
|
Condensed Consolidating Statement of Operations
|
Three Months Ended September 30, 2017
|
(in millions)
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenues
|
$
|
—
|
|
|
$
|
955.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
955.6
|
|
Costs of product/services sold
|
—
|
|
|
858.5
|
|
|
—
|
|
|
—
|
|
|
858.5
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Operations and maintenance
|
—
|
|
|
35.5
|
|
|
—
|
|
|
—
|
|
|
35.5
|
|
General and administrative
|
15.2
|
|
|
6.2
|
|
|
—
|
|
|
—
|
|
|
21.4
|
|
Depreciation, amortization and accretion
|
—
|
|
|
50.9
|
|
|
—
|
|
|
—
|
|
|
50.9
|
|
|
15.2
|
|
|
92.6
|
|
|
—
|
|
|
—
|
|
|
107.8
|
|
Other operating expense:
|
|
|
|
|
|
|
|
|
|
Loss on long-lived assets, net
|
—
|
|
|
(6.3
|
)
|
|
—
|
|
|
—
|
|
|
(6.3
|
)
|
Operating loss
|
(15.2
|
)
|
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
|
(17.0
|
)
|
Earnings from unconsolidated affiliates, net
|
—
|
|
|
—
|
|
|
11.5
|
|
|
—
|
|
|
11.5
|
|
Interest and debt expense, net
|
(24.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24.2
|
)
|
Equity in net income (loss) of subsidiaries
|
3.2
|
|
|
—
|
|
|
—
|
|
|
(3.2
|
)
|
|
—
|
|
Income (loss) before income taxes
|
(36.2
|
)
|
|
(1.8
|
)
|
|
11.5
|
|
|
(3.2
|
)
|
|
(29.7
|
)
|
Provision for income taxes
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
Net income (loss)
|
(36.2
|
)
|
|
(1.9
|
)
|
|
11.5
|
|
|
(3.2
|
)
|
|
(29.8
|
)
|
Net income attributable to non-controlling partners in subsidiaries
|
—
|
|
|
—
|
|
|
6.4
|
|
|
—
|
|
|
6.4
|
|
Net income (loss) attributable to Crestwood Midstream Partners LP
|
$
|
(36.2
|
)
|
|
$
|
(1.9
|
)
|
|
$
|
5.1
|
|
|
$
|
(3.2
|
)
|
|
$
|
(36.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crestwood Midstream Partners LP
|
Condensed Consolidating Statement of Operations
|
Three Months Ended September 30, 2016
|
(in millions)
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenues
|
$
|
—
|
|
|
$
|
587.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
587.6
|
|
Costs of product/services sold
|
—
|
|
|
466.7
|
|
|
—
|
|
|
—
|
|
|
466.7
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Operations and maintenance
|
—
|
|
|
33.6
|
|
|
—
|
|
|
—
|
|
|
33.6
|
|
General and administrative
|
13.3
|
|
|
4.0
|
|
|
—
|
|
|
—
|
|
|
17.3
|
|
Depreciation, amortization and accretion
|
—
|
|
|
53.2
|
|
|
—
|
|
|
—
|
|
|
53.2
|
|
|
13.3
|
|
|
90.8
|
|
|
—
|
|
|
—
|
|
|
104.1
|
|
Other operating expense:
|
|
|
|
|
|
|
|
|
|
Loss on long-lived assets, net
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
Operating income (loss)
|
(13.3
|
)
|
|
28.0
|
|
|
—
|
|
|
—
|
|
|
14.7
|
|
Earnings from unconsolidated affiliates, net
|
—
|
|
|
—
|
|
|
13.4
|
|
|
—
|
|
|
13.4
|
|
Interest and debt expense, net
|
(27.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27.5
|
)
|
Equity in net income (loss) of subsidiaries
|
35.3
|
|
|
—
|
|
|
—
|
|
|
(35.3
|
)
|
|
—
|
|
Net income (loss)
|
(5.5
|
)
|
|
28.0
|
|
|
13.4
|
|
|
(35.3
|
)
|
|
0.6
|
|
Net income attributable to non-controlling partners in subsidiaries
|
—
|
|
|
—
|
|
|
6.1
|
|
|
—
|
|
|
6.1
|
|
Net income (loss) attributable to Crestwood Midstream Partners LP
|
(5.5
|
)
|
|
28.0
|
|
|
7.3
|
|
|
(35.3
|
)
|
|
(5.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crestwood Midstream Partners LP
|
Condensed Consolidating Statement of Operations
|
Nine Months Ended September 30, 2017
|
(in millions)
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenues
|
$
|
—
|
|
|
$
|
2,634.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,634.0
|
|
Costs of product/services sold
|
—
|
|
|
2,271.6
|
|
|
—
|
|
|
—
|
|
|
2,271.6
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Operations and maintenance
|
—
|
|
|
103.4
|
|
|
—
|
|
|
—
|
|
|
103.4
|
|
General and administrative
|
50.1
|
|
|
18.9
|
|
|
—
|
|
|
—
|
|
|
69.0
|
|
Depreciation, amortization and accretion
|
—
|
|
|
153.5
|
|
|
—
|
|
|
—
|
|
|
153.5
|
|
|
50.1
|
|
|
275.8
|
|
|
—
|
|
|
—
|
|
|
325.9
|
|
Other operating expense:
|
|
|
|
|
|
|
|
|
|
Loss on long-lived assets, net
|
—
|
|
|
(6.3
|
)
|
|
—
|
|
|
—
|
|
|
(6.3
|
)
|
Operating income (loss)
|
(50.1
|
)
|
|
80.3
|
|
|
—
|
|
|
—
|
|
|
30.2
|
|
Earnings from unconsolidated affiliates, net
|
—
|
|
|
—
|
|
|
29.2
|
|
|
—
|
|
|
29.2
|
|
Interest and debt expense, net
|
(74.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(74.8
|
)
|
Loss on modification/extinguishment of debt
|
(37.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37.7
|
)
|
Equity in net income (loss) of subsidiaries
|
90.7
|
|
|
—
|
|
|
—
|
|
|
(90.7
|
)
|
|
—
|
|
Net income (loss)
|
(71.9
|
)
|
|
80.3
|
|
|
29.2
|
|
|
(90.7
|
)
|
|
(53.1
|
)
|
Net income attributable to non-controlling partners in subsidiaries
|
—
|
|
|
—
|
|
|
18.8
|
|
|
—
|
|
|
18.8
|
|
Net income (loss) attributable to Crestwood Midstream Partners LP
|
$
|
(71.9
|
)
|
|
$
|
80.3
|
|
|
$
|
10.4
|
|
|
$
|
(90.7
|
)
|
|
$
|
(71.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crestwood Midstream Partners LP
|
Condensed Consolidating Statement of Operations
|
Nine Months Ended September 30, 2016
|
(in millions)
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Revenues
|
$
|
—
|
|
|
$
|
1,725.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,725.5
|
|
Costs of product/services sold
|
—
|
|
|
1,280.1
|
|
|
—
|
|
|
—
|
|
|
1,280.1
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Operations and maintenance
|
—
|
|
|
116.7
|
|
|
—
|
|
|
—
|
|
|
116.7
|
|
General and administrative
|
54.2
|
|
|
13.3
|
|
|
—
|
|
|
—
|
|
|
67.5
|
|
Depreciation, amortization and accretion
|
—
|
|
|
185.2
|
|
|
—
|
|
|
—
|
|
|
185.2
|
|
|
54.2
|
|
|
315.2
|
|
|
—
|
|
|
—
|
|
|
369.4
|
|
Other operating expense:
|
|
|
|
|
|
|
|
|
|
Loss on long-lived assets, net
|
—
|
|
|
(34.8
|
)
|
|
—
|
|
|
—
|
|
|
(34.8
|
)
|
Goodwill Impairment
|
—
|
|
|
(109.7
|
)
|
|
—
|
|
|
—
|
|
|
(109.7
|
)
|
Operating loss
|
(54.2
|
)
|
|
(14.3
|
)
|
|
—
|
|
|
—
|
|
|
(68.5
|
)
|
Earnings from unconsolidated affiliates, net
|
—
|
|
|
—
|
|
|
26.1
|
|
|
—
|
|
|
26.1
|
|
Interest and debt expense, net
|
(97.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(97.9
|
)
|
Gain on modification/extinguishment of debt
|
10.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.0
|
|
Equity in net income (loss) of subsidiaries
|
(6.2
|
)
|
|
—
|
|
|
—
|
|
|
6.2
|
|
|
—
|
|
Net income (loss)
|
(148.3
|
)
|
|
(14.3
|
)
|
|
26.1
|
|
|
6.2
|
|
|
(130.3
|
)
|
Net income attributable to non-controlling partners in subsidiaries
|
—
|
|
|
—
|
|
|
18.0
|
|
|
—
|
|
|
18.0
|
|
Net income (loss) attributable to Crestwood Midstream Partners LP
|
$
|
(148.3
|
)
|
|
$
|
(14.3
|
)
|
|
$
|
8.1
|
|
|
$
|
6.2
|
|
|
$
|
(148.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crestwood Midstream Partners LP
|
Condensed Consolidating Statement of Cash Flows
|
Nine Months Ended September 30, 2017
|
(in millions)
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Cash flows from operating activities:
|
$
|
(102.6
|
)
|
|
$
|
312.0
|
|
|
$
|
23.5
|
|
|
$
|
—
|
|
|
$
|
232.9
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
(5.8
|
)
|
|
(128.6
|
)
|
|
—
|
|
|
—
|
|
|
(134.4
|
)
|
Investment in unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(46.5
|
)
|
|
—
|
|
|
(46.5
|
)
|
Capital distributions from unconsolidated affiliates
|
—
|
|
|
—
|
|
|
35.3
|
|
|
—
|
|
|
35.3
|
|
Net proceeds from sale of assets
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
Capital distributions from consolidated affiliates
|
0.9
|
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
Net cash used in investing activities
|
(4.9
|
)
|
|
(127.3
|
)
|
|
(11.2
|
)
|
|
(0.9
|
)
|
|
(144.3
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of long-term debt
|
2,209.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,209.8
|
|
Payments on long-term debt
|
(2,157.9
|
)
|
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
|
(2,159.2
|
)
|
Payments on capital leases
|
—
|
|
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
Payments for debt-related deferred costs
|
(1.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
Distributions paid
|
(119.5
|
)
|
|
—
|
|
|
(11.4
|
)
|
|
—
|
|
|
(130.9
|
)
|
Distributions to parent
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|
0.9
|
|
|
—
|
|
Taxes paid for unit-based compensation vesting
|
—
|
|
|
(5.3
|
)
|
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
Change in intercompany balances
|
175.9
|
|
|
(175.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
107.3
|
|
|
(184.7
|
)
|
|
(12.3
|
)
|
|
0.9
|
|
|
(88.8
|
)
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
Cash at beginning of period
|
1.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
Cash at end of period
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crestwood Midstream Partners LP
|
Condensed Consolidating Statement of Cash Flows
|
Nine Months Ended September 30, 2016
|
(in millions)
|
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Cash flows from operating activities:
|
$
|
(140.4
|
)
|
|
$
|
371.3
|
|
|
$
|
19.9
|
|
|
$
|
—
|
|
|
$
|
250.8
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
(1.6
|
)
|
|
(77.7
|
)
|
|
—
|
|
|
—
|
|
|
(79.3
|
)
|
Investment in unconsolidated affiliates
|
—
|
|
|
—
|
|
|
(6.2
|
)
|
|
—
|
|
|
(6.2
|
)
|
Capital distributions from unconsolidated affiliates
|
—
|
|
|
—
|
|
|
9.2
|
|
|
—
|
|
|
9.2
|
|
Net proceeds from sale of assets
|
—
|
|
|
943.1
|
|
|
—
|
|
|
—
|
|
|
943.1
|
|
Capital distributions from consolidated affiliates
|
11.5
|
|
|
—
|
|
|
—
|
|
|
(11.5
|
)
|
|
—
|
|
Net cash provided by (used in) investing activities
|
9.9
|
|
|
865.4
|
|
|
3.0
|
|
|
(11.5
|
)
|
|
866.8
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from the issuance of long-term debt
|
1,364.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,364.0
|
|
Payments on long-term debt
|
(2,278.4
|
)
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
(2,279.2
|
)
|
Payments on capital leases
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
Payments for debt-related deferred costs
|
(3.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.4
|
)
|
Distributions paid
|
(185.0
|
)
|
|
—
|
|
|
(11.4
|
)
|
|
—
|
|
|
(196.4
|
)
|
Distributions to parent
|
—
|
|
|
—
|
|
|
(11.5
|
)
|
|
11.5
|
|
|
—
|
|
Taxes paid for unit-based compensation vesting
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
Change in intercompany balances
|
1,233.7
|
|
|
(1,233.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Other
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Net cash provided by (used in) financing activities
|
130.9
|
|
|
(1,236.7
|
)
|
|
(22.9
|
)
|
|
11.5
|
|
|
(1,117.2
|
)
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
Cash at beginning of period
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Cash at end of period
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.5
|
|
Note 14
– Subsequent Event
In October 2017, we entered into a Purchase Agreement with an affiliate of Kissner Group Holdings LP to sell
100%
of our equity interests in US Salt, LLC (US Salt) for approximately
$225 million
. US Salt is a solution mining and salt production company located on the shores of Seneca Lake near Watkins Glen in Schuyler County, New York. US Salt is included in our marketing, supply and logistics segment. Subject to the terms and conditions of the Purchase Agreement (including customary closing conditions and purchase price adjustments), we expect to close the transaction during the fourth quarter of 2017. The impact of this transaction has not been reflected in this Quarterly Report on Form 10-Q as of and for the three and nine months ended September 30, 2017.