NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in Thousands, except unit amounts)
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
ASSETS
|
|
|
|
CURRENT ASSETS:
|
|
|
|
Cash and cash equivalents
|
$
|
13,682
|
|
|
$
|
22,094
|
|
Accounts receivable-trade, net of allowance for doubtful accounts of $4,385 and $4,201, respectively
|
1,096,596
|
|
|
1,026,764
|
|
Accounts receivable-affiliates
|
8,824
|
|
|
4,772
|
|
Inventories
|
600,486
|
|
|
551,303
|
|
Prepaid expenses and other current assets
|
135,097
|
|
|
128,742
|
|
Assets held for sale
|
515,012
|
|
|
517,604
|
|
Total current assets
|
2,369,697
|
|
|
2,251,279
|
|
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $365,782 and $343,345, respectively
|
1,604,498
|
|
|
1,518,607
|
|
GOODWILL
|
1,262,971
|
|
|
1,204,607
|
|
INTANGIBLE ASSETS, net of accumulated amortization of $452,314 and $433,565, respectively
|
907,540
|
|
|
913,154
|
|
INVESTMENTS IN UNCONSOLIDATED ENTITIES
|
1,995
|
|
|
17,236
|
|
LOAN RECEIVABLE-AFFILIATE
|
2,135
|
|
|
1,200
|
|
OTHER NONCURRENT ASSETS
|
175,138
|
|
|
245,039
|
|
Total assets
|
$
|
6,323,974
|
|
|
$
|
6,151,122
|
|
LIABILITIES AND EQUITY
|
|
|
|
CURRENT LIABILITIES AND REDEEMABLE NONCONTROLLING INTEREST:
|
|
|
|
Accounts payable-trade
|
$
|
836,233
|
|
|
$
|
852,839
|
|
Accounts payable-affiliates
|
24,874
|
|
|
1,254
|
|
Accrued expenses and other payables
|
225,617
|
|
|
223,504
|
|
Advance payments received from customers
|
21,871
|
|
|
8,374
|
|
Current maturities of long-term debt
|
646
|
|
|
646
|
|
Liabilities and redeemable noncontrolling interest held for sale
|
55,824
|
|
|
42,580
|
|
Total current liabilities and redeemable noncontrolling interest
|
1,165,065
|
|
|
1,129,197
|
|
LONG-TERM DEBT, net of debt issuance costs of $19,340 and $20,645, respectively, and current maturities
|
3,032,383
|
|
|
2,679,740
|
|
OTHER NONCURRENT LIABILITIES
|
63,539
|
|
|
173,514
|
|
COMMITMENTS AND CONTINGENCIES (NOTE 9)
|
|
|
|
|
|
|
|
|
|
CLASS A 10.75% CONVERTIBLE PREFERRED UNITS, 19,942,169 and 19,942,169 preferred units issued and outstanding, respectively
|
91,559
|
|
|
82,576
|
|
|
|
|
|
EQUITY:
|
|
|
|
General partner, representing a 0.1% interest, 121,874 and 121,594 notional units, respectively
|
(50,919
|
)
|
|
(50,819
|
)
|
Limited partners, representing a 99.9% interest, 121,752,514 and 121,472,725 common units issued and outstanding, respectively
|
1,740,410
|
|
|
1,852,495
|
|
Class B preferred limited partners, 8,400,000 and 8,400,000 preferred units issued and outstanding, respectively
|
202,731
|
|
|
202,731
|
|
Accumulated other comprehensive loss
|
(257
|
)
|
|
(1,815
|
)
|
Noncontrolling interests
|
79,463
|
|
|
83,503
|
|
Total equity
|
1,971,428
|
|
|
2,086,095
|
|
Total liabilities and equity
|
$
|
6,323,974
|
|
|
$
|
6,151,122
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in Thousands, except unit and per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2018
|
|
2017
|
REVENUES:
|
|
|
|
|
Crude Oil Logistics
|
|
$
|
783,830
|
|
|
$
|
504,915
|
|
Water Solutions
|
|
76,145
|
|
|
46,967
|
|
Liquids
|
|
459,897
|
|
|
294,025
|
|
Refined Products and Renewables
|
|
4,524,407
|
|
|
2,884,637
|
|
Other
|
|
155
|
|
|
161
|
|
Total Revenues
|
|
5,844,434
|
|
|
3,730,705
|
|
COST OF SALES:
|
|
|
|
|
Crude Oil Logistics
|
|
748,245
|
|
|
469,470
|
|
Water Solutions
|
|
14,269
|
|
|
153
|
|
Liquids
|
|
440,515
|
|
|
287,285
|
|
Refined Products and Renewables
|
|
4,492,858
|
|
|
2,871,702
|
|
Other
|
|
269
|
|
|
73
|
|
Total Cost of Sales
|
|
5,696,156
|
|
|
3,628,683
|
|
OPERATING COSTS AND EXPENSES:
|
|
|
|
|
Operating
|
|
56,262
|
|
|
47,836
|
|
General and administrative
|
|
22,390
|
|
|
22,385
|
|
Depreciation and amortization
|
|
52,045
|
|
|
52,417
|
|
Loss (gain) on disposal or impairment of assets, net
|
|
101,335
|
|
|
(11,817
|
)
|
Revaluation of liabilities
|
|
800
|
|
|
—
|
|
Operating Loss
|
|
(84,554
|
)
|
|
(8,799
|
)
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
Equity in earnings of unconsolidated entities
|
|
104
|
|
|
1,816
|
|
Interest expense
|
|
(46,268
|
)
|
|
(49,104
|
)
|
Loss on early extinguishment of liabilities, net
|
|
(137
|
)
|
|
(3,281
|
)
|
Other (expense) income, net
|
|
(33,742
|
)
|
|
1,775
|
|
Loss From Continuing Operations Before Income Taxes
|
|
(164,597
|
)
|
|
(57,593
|
)
|
INCOME TAX EXPENSE
|
|
(651
|
)
|
|
(456
|
)
|
Loss From Continuing Operations
|
|
(165,248
|
)
|
|
(58,049
|
)
|
Loss From Discontinued Operations, net of Tax
|
|
(4,041
|
)
|
|
(5,658
|
)
|
Net Loss
|
|
(169,289
|
)
|
|
(63,707
|
)
|
LESS: NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
|
345
|
|
|
(52
|
)
|
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS
|
|
398
|
|
|
397
|
|
NET LOSS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP
|
|
$
|
(168,546
|
)
|
|
$
|
(63,362
|
)
|
|
|
|
|
|
NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS (Note 3)
|
|
$
|
(184,909
|
)
|
|
$
|
(68,099
|
)
|
NET LOSS FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS (Note 3)
|
|
$
|
(3,639
|
)
|
|
$
|
(5,256
|
)
|
NET LOSS ALLOCATED TO COMMON UNITHOLDERS
|
|
$
|
(188,548
|
)
|
|
$
|
(73,355
|
)
|
BASIC LOSS PER COMMON UNIT
|
|
|
|
|
Loss From Continuing Operations
|
|
$
|
(1.52
|
)
|
|
$
|
(0.56
|
)
|
Loss From Discontinued Operations, net of Tax
|
|
(0.03
|
)
|
|
(0.05
|
)
|
Net Loss
|
|
$
|
(1.55
|
)
|
|
$
|
(0.61
|
)
|
DILUTED LOSS PER COMMON UNIT
|
|
|
|
|
Loss From Continuing Operations
|
|
$
|
(1.52
|
)
|
|
$
|
(0.56
|
)
|
Loss From Discontinued Operations, net of Tax
|
|
(0.03
|
)
|
|
(0.05
|
)
|
Net Loss
|
|
$
|
(1.55
|
)
|
|
$
|
(0.61
|
)
|
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
|
|
121,544,421
|
|
|
120,535,909
|
|
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
|
|
121,544,421
|
|
|
120,535,909
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Comprehensive
Loss
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2018
|
|
2017
|
Net loss
|
|
$
|
(169,289
|
)
|
|
$
|
(63,707
|
)
|
Other comprehensive loss
|
|
(11
|
)
|
|
(375
|
)
|
Comprehensive loss
|
|
$
|
(169,300
|
)
|
|
$
|
(64,082
|
)
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statement of Changes in Equity
Three Months Ended June 30, 2018
(in Thousands, except unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited Partners
|
|
|
|
|
|
|
|
|
|
|
Class B Preferred
|
|
Common
|
|
Accumulated
Other
|
|
|
|
|
|
|
General
Partner
|
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
Comprehensive
(Income) Loss
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
BALANCES AT MARCH 31, 2018
|
|
$
|
(50,819
|
)
|
|
8,400,000
|
|
|
$
|
202,731
|
|
|
121,472,725
|
|
|
$
|
1,852,495
|
|
|
$
|
(1,815
|
)
|
|
$
|
83,503
|
|
|
$
|
2,086,095
|
|
Distributions to general and common unit partners and preferred unitholders (Note 10)
|
|
(82
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58,548
|
)
|
|
—
|
|
|
—
|
|
|
(58,630
|
)
|
Contributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
169
|
|
|
169
|
|
Sawtooth joint venture
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(63
|
)
|
|
—
|
|
|
63
|
|
|
—
|
|
Purchase of noncontrolling interest (Note 4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|
—
|
|
|
(3,927
|
)
|
|
(3,960
|
)
|
Redeemable noncontrolling interest valuation adjustment (Note 2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,300
|
)
|
|
—
|
|
|
—
|
|
|
(3,300
|
)
|
Repurchase of warrants (Note 10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,988
|
)
|
|
—
|
|
|
—
|
|
|
(14,988
|
)
|
Equity issued pursuant to incentive compensation plan (Note 10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,992
|
|
|
4,619
|
|
|
—
|
|
|
—
|
|
|
4,619
|
|
Warrants exercised (Note 10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
228,797
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Accretion of beneficial conversion feature of Class A convertible preferred units (Note 10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,983
|
)
|
|
—
|
|
|
—
|
|
|
(8,983
|
)
|
Net loss
|
|
(155
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(168,391
|
)
|
|
—
|
|
|
(345
|
)
|
|
(168,891
|
)
|
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
Cumulative effect adjustment for adoption of ASC 606 (Note 15)
|
|
139
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
139,167
|
|
|
—
|
|
|
—
|
|
|
139,306
|
|
Cumulative effect adjustment for adoption of ASU 2016-01
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,567
|
)
|
|
1,569
|
|
|
—
|
|
|
—
|
|
BALANCES AT JUNE 30, 2018
|
|
$
|
(50,919
|
)
|
|
8,400,000
|
|
|
$
|
202,731
|
|
|
121,752,514
|
|
|
$
|
1,740,410
|
|
|
$
|
(257
|
)
|
|
$
|
79,463
|
|
|
$
|
1,971,428
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2018
|
|
2017
|
OPERATING ACTIVITIES:
|
|
|
|
|
Net loss
|
|
$
|
(169,289
|
)
|
|
$
|
(63,707
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
|
Loss from discontinued operations, net of tax
|
|
4,041
|
|
|
5,658
|
|
Depreciation and amortization, including amortization of debt issuance costs
|
|
55,939
|
|
|
56,739
|
|
Loss on early extinguishment or revaluation of liabilities, net
|
|
937
|
|
|
3,281
|
|
Non-cash equity-based compensation expense
|
|
5,511
|
|
|
8,821
|
|
Loss (gain) on disposal or impairment of assets, net
|
|
101,335
|
|
|
(11,817
|
)
|
Provision for doubtful accounts
|
|
196
|
|
|
305
|
|
Net adjustments to fair value of commodity derivatives
|
|
52,685
|
|
|
(36,527
|
)
|
Equity in earnings of unconsolidated entities
|
|
(104
|
)
|
|
(1,816
|
)
|
Distributions of earnings from unconsolidated entities
|
|
—
|
|
|
1,426
|
|
Other
|
|
(206
|
)
|
|
3,857
|
|
Changes in operating assets and liabilities, exclusive of acquisitions:
|
|
|
|
|
Accounts receivable-trade and affiliates
|
|
(74,930
|
)
|
|
129,058
|
|
Inventories
|
|
(48,770
|
)
|
|
(3,963
|
)
|
Other current and noncurrent assets
|
|
15,967
|
|
|
28,176
|
|
Accounts payable-trade and affiliates
|
|
(30,328
|
)
|
|
(139,132
|
)
|
Other current and noncurrent liabilities
|
|
13,830
|
|
|
9,956
|
|
Net cash used in operating activities-continuing operations
|
|
(73,186
|
)
|
|
(9,685
|
)
|
Net cash provided by operating activities-discontinued operations
|
|
31,790
|
|
|
10,676
|
|
Net cash (used in) provided by operating activities
|
|
(41,396
|
)
|
|
991
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
Capital expenditures
|
|
(72,710
|
)
|
|
(27,645
|
)
|
Acquisitions, net of cash acquired
|
|
(116,592
|
)
|
|
(19,897
|
)
|
Settlements of commodity derivatives
|
|
(60,861
|
)
|
|
23,349
|
|
Proceeds from sales of assets
|
|
5,406
|
|
|
18,493
|
|
Proceeds from divestitures of businesses and investments
|
|
18,594
|
|
|
—
|
|
Investments in unconsolidated entities
|
|
(6
|
)
|
|
(5,250
|
)
|
Distributions of capital from unconsolidated entities
|
|
—
|
|
|
2,115
|
|
Repayments on loan for natural gas liquids facility
|
|
2,707
|
|
|
2,401
|
|
Loan to affiliate
|
|
(1,050
|
)
|
|
(500
|
)
|
Net cash used in investing activities-continuing operations
|
|
(224,512
|
)
|
|
(6,934
|
)
|
Net cash used in investing activities-discontinued operations
|
|
(23,008
|
)
|
|
(2,266
|
)
|
Net cash used in investing activities
|
|
(247,520
|
)
|
|
(9,200
|
)
|
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from borrowings under Revolving Credit Facility
|
|
962,000
|
|
|
299,500
|
|
Payments on Revolving Credit Facility
|
|
(605,500
|
)
|
|
(344,500
|
)
|
Repurchase of senior secured and senior unsecured notes
|
|
(5,069
|
)
|
|
(74,391
|
)
|
Payments on other long-term debt
|
|
(163
|
)
|
|
(159
|
)
|
Debt issuance costs
|
|
(771
|
)
|
|
(2,096
|
)
|
Contributions from noncontrolling interest owners, net
|
|
169
|
|
|
23
|
|
Distributions to general and common unit partners and preferred unitholders
|
|
(53,905
|
)
|
|
(53,399
|
)
|
Proceeds from sale of preferred units, net of offering costs
|
|
—
|
|
|
202,977
|
|
Repurchase of warrants
|
|
(14,988
|
)
|
|
(10,549
|
)
|
Payments for settlement and early extinguishment of liabilities
|
|
(1,195
|
)
|
|
(745
|
)
|
Other
|
|
8,708
|
|
|
8,831
|
|
Net cash provided by financing activities-continuing operations
|
|
289,286
|
|
|
25,492
|
|
Net cash used in financing activities-discontinued operations
|
|
(9,033
|
)
|
|
(9,999
|
)
|
Net cash provided by financing activities
|
|
280,253
|
|
|
15,493
|
|
Less cash flows from discontinued operations
|
|
(251
|
)
|
|
(1,589
|
)
|
Net (decrease) increase in cash and cash equivalents
|
|
(8,412
|
)
|
|
8,873
|
|
Cash and cash equivalents, beginning of period
|
|
22,094
|
|
|
7,826
|
|
Cash and cash equivalents, end of period
|
|
$
|
13,682
|
|
|
$
|
16,699
|
|
Supplemental cash flow information:
|
|
|
|
|
Cash interest paid
|
|
$
|
51,106
|
|
|
$
|
54,335
|
|
Income taxes paid (net of income tax refunds)
|
|
$
|
908
|
|
|
$
|
1,247
|
|
Supplemental non-cash investing and financing activities:
|
|
|
|
|
Distributions declared but not paid to Class B preferred unitholders
|
|
$
|
4,725
|
|
|
$
|
—
|
|
Accrued capital expenditures
|
|
$
|
12,657
|
|
|
$
|
1,389
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1
—Organization and Operations
NGL Energy Partners LP (“we,” “us,” “our,” or the “Partnership”) is
a Delaware limited partnership
.
NGL Energy Holdings LLC serves as our general partner.
At
June 30, 2018
,
our operations included:
|
|
•
|
Our Crude Oil Logistics segment purchases crude oil from producers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities, refineries, and other trade hubs, and provides storage, terminaling, trucking, marine and pipeline transportation services through its owned assets.
|
|
|
•
|
Our Water Solutions segment provides services for the treatment and disposal of wastewater generated from crude oil and natural gas production and for the disposal of solids such as tank bottoms, drilling fluids and drilling muds and performs truck and frac tank washouts. In addition, our Water Solutions segment sells the recovered hydrocarbons that result from performing these services and it also sells freshwater to producers for exploration and production activities.
|
|
|
•
|
Our Liquids segment supplies natural gas liquids to retailers, wholesalers, refiners, and petrochemical plants throughout the United States and in Canada using its leased underground storage and fleet of leased railcars, markets regionally through its
21
owned terminals throughout the United States, and provides terminaling and storage services at its salt dome storage facility joint venture in Utah.
|
|
|
•
|
Our Retail Propane segment sells propane, distillates, equipment and supplies to end users consisting of residential, agricultural, commercial, and industrial customers and to certain resellers in
21
states and the District of Columbia.
See below for a discussion of the sale of our Retail Propane segment.
|
|
|
•
|
Our Refined Products and Renewables segment conducts gasoline, diesel, ethanol, and biodiesel marketing operations, purchases refined petroleum and renewable products primarily in the Gulf Coast, Southeast and Midwest regions of the United States and schedules them for delivery at various locations throughout the country. In addition, in certain storage locations, our Refined Products and Renewables segment may also purchase unfinished gasoline blending components for subsequent blending into finished gasoline to supply our marketing business as well as third parties.
|
Recent Developments
On July 10, 2018, we completed the sale of virtually all of our Retail Propane segment to Superior Plus Corp. (“Superior”)
for total consideration of
$896.5 million
in cash after adjusting for estimated working capital. Accordingly, upon satisfaction of the significant closing conditions for this transaction during the month of June 2018, the assets, liabilities and redeemable noncontrolling interest of the Retail Propane segment were classified as held for sale in our unaudited condensed consolidated balance sheets. This sale included all
three
of the retail propane businesses we acquired during the three months ended June 30, 2018 (see
Note 4
). We retained our
50%
ownership interest in Victory Propane, LLC (“Victory Propane”) (see
Note 2
). This transaction, combined with the sale of a portion of our Retail Propane segment to DCC LPG (“DCC”) on March 30, 2018, represents a strategic shift in our operations and will have a significant effect on our operations and financial results going forward. Accordingly, the results of operations and cash flows related to the entire Retail Propane segment have been classified as discontinued operations for all periods presented and prior periods have been retrospectively adjusted in the unaudited condensed consolidated statements of operations and unaudited condensed consolidated statements of cash flows.
Note 2
—Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include our accounts and those of our controlled subsidiaries. Intercompany transactions and account balances have been eliminated in consolidation.
Investments we do not control, but can exercise significant influence over, are accounted for using the equity method of accounting.
We also own an undivided interest in a crude oil pipeline, and include our proportionate share of assets, liabilities, and expenses related to this pipeline in our unaudited condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Our unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim consolidated financial information in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, the unaudited condensed consolidated financial statements exclude certain information and notes required by GAAP for complete annual consolidated financial statements. However, we believe that the disclosures made are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements include all adjustments that we consider necessary for a fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed in this Quarterly Report. The unaudited condensed consolidated balance sheet at March 31, 2018 was derived from our audited consolidated financial statements for the fiscal
year ended March 31, 2018
included in our Annual Report on Form 10-K (“Annual Report”) filed with the SEC on May 30, 2018 and adjusted retrospectively for the Retail Propane segment disposition as previously described.
These interim unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report. Due to the seasonal nature of certain of our operations and other factors, the results of operations for interim periods are not necessarily indicative of the results of operations to be expected for future periods or for the full fiscal year ending
March 31, 2019
.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amount of assets and liabilities reported at the date of the consolidated financial statements and the amount of revenues and expenses reported during the periods presented.
Critical estimates we make in the preparation of our unaudited condensed consolidated financial statements include, among others, determining the fair value of assets and liabilities acquired in business combinations, the fair value of derivative instruments, the collectibility of accounts receivable, the recoverability of inventories, useful lives and recoverability of property, plant and equipment and amortizable intangible assets, the impairment of long-lived assets and goodwill, the fair value of asset retirement obligations, the value of equity-based compensation, accruals for environmental matters and estimating certain revenues. Although we believe these estimates are reasonable, actual results could differ from those estimates.
Significant Accounting Policies
Our significant accounting policies are consistent with those disclosed in Note 2 of our audited consolidated financial statements included in our Annual Report.
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value is based upon assumptions that market participants would use when pricing an asset or liability. We use the following fair value hierarchy, which prioritizes valuation technique inputs used to measure fair value into three broad levels:
|
|
•
|
Level 1: Quoted prices in active markets for identical assets and liabilities that we have the ability to access at the measurement date.
|
|
|
•
|
Level 2: Inputs (other than quoted prices included within Level 1) that are either directly or indirectly observable for the asset or liability, including (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in inactive markets, (iii) inputs other than quoted prices that are observable for the asset or liability, and (iv) inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 include non-exchange traded derivatives such as over-the-counter commodity price swap and option contracts and forward commodity contracts. We determine the fair value of all of our derivative financial instruments utilizing pricing models for similar instruments. Inputs to the pricing models include publicly available prices and forward curves generated from a compilation of data gathered from third parties.
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
|
|
•
|
Level 3: Unobservable inputs for the asset or liability including situations where there is little, if any, market activity for the asset or liability.
|
The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to a fair value measurement requires judgment, considering factors specific to the asset or liability.
Derivative Financial Instruments
We record all derivative financial instrument contracts at fair value in our unaudited condensed consolidated balance sheets except for certain contracts that qualify for the
normal purchase and normal sale election
.
Under this accounting policy election, we do not record the contracts at fair value at each balance sheet date; instead, we record the purchase or sale at the contracted value once the delivery occurs.
We have not designated any financial instruments as hedges for accounting purposes. All changes in the fair value of our commodity derivative instruments that do not qualify as normal purchases and normal sales (whether cash transactions or non-cash mark-to-market adjustments) are reported within cost of sales in our unaudited condensed consolidated statements of operations, regardless of whether the contract is physically or financially settled.
We utilize various commodity derivative financial instrument contracts to attempt to reduce our exposure to price fluctuations. We do not enter into such contracts for trading purposes. Changes in assets and liabilities from commodity derivative financial instruments result primarily from changes in market prices, newly originated transactions, and the timing of settlements. We attempt to balance our contractual portfolio in terms of notional amounts and timing of performance and delivery obligations. However, net unbalanced positions can exist or are established based on our assessment of anticipated market movements. Inherent in the resulting contractual portfolio are certain business risks, including commodity price risk and credit risk.
Commodity price risk is the risk that the market value of crude oil, natural gas liquids, or refined and renewables products will change, either favorably or unfavorably, in response to changing market conditions.
Credit risk is the risk of loss from nonperformance by suppliers, customers or financial counterparties to a contract.
Procedures and limits for managing commodity price risks and credit risks are specified in our market risk policy and credit policy, respectively.
Open commodity positions and market price changes are monitored daily and are reported to senior management and to marketing operations personnel.
Credit risk is monitored daily and exposure is minimized through customer deposits, restrictions on product liftings, letters of credit, and entering into master netting agreements that allow for offsetting counterparty receivable and payable balances for certain transactions.
Income Taxes
We qualify as a partnership for income tax purposes. As such, we generally do not pay United States federal income tax. Rather, each owner reports his or her share of our income or loss on his or her individual tax return. The aggregate difference in the basis of our net assets for financial and tax reporting purposes cannot be readily determined, as we do not have access to information regarding each partner’s basis in the Partnership.
We have certain taxable corporate subsidiaries in Canada, and our operations in Texas are subject to a state franchise tax that is calculated based on revenues net of cost of sales.
We evaluate uncertain tax positions for recognition and measurement in the unaudited condensed consolidated financial statements. To recognize a tax position, we determine whether it is more likely than not that the tax position will be sustained upon examination, including resolution of any related appeals or litigation, based on the technical merits of the position. A tax position that meets the more likely than not threshold is measured to determine the amount of benefit to be recognized in the unaudited condensed consolidated financial statements. We had no material uncertain tax positions that required recognition in our unaudited condensed consolidated financial statements at
June 30, 2018
or
March 31, 2018
.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Inventories
Our inventories are valued at the lower of cost or net realizable value, with cost determined using either the weighted-average cost or the first in, first out (FIFO) methods, including the cost of transportation and storage, and with net realizable value defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. In performing this analysis, we consider fixed-price forward commitments.
Inventories consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
(in thousands)
|
Crude oil
|
|
$
|
77,834
|
|
|
$
|
77,351
|
|
Natural gas liquids:
|
|
|
|
|
Propane
|
|
48,940
|
|
|
38,910
|
|
Butane
|
|
46,224
|
|
|
12,613
|
|
Other
|
|
8,265
|
|
|
6,515
|
|
Refined products:
|
|
|
|
|
Gasoline
|
|
289,021
|
|
|
253,286
|
|
Diesel
|
|
88,092
|
|
|
113,939
|
|
Renewables:
|
|
|
|
|
Ethanol
|
|
35,227
|
|
|
38,093
|
|
Biodiesel
|
|
6,883
|
|
|
10,596
|
|
Total
|
|
$
|
600,486
|
|
|
$
|
551,303
|
|
Amounts in the table above do not include inventory related to the Retail Propane segment, as these amounts have been classified as assets held for sale within our unaudited condensed consolidated balance sheets (see
Note 14
).
Investments in Unconsolidated Entities
Investments we do not control, but can exercise significant influence over, are accounted for using the equity method of accounting.
Investments in partnerships and limited liability companies, unless our investment is considered to be minor, and investments in unincorporated joint ventures are also accounted for using the equity method of accounting. Under the equity method, we do not report the individual assets and liabilities of these entities on our unaudited condensed consolidated balance sheets; instead, our ownership interests are reported within investments in unconsolidated entities on our unaudited condensed consolidated balance sheets. Under the equity method, the investment is recorded at acquisition cost, increased by our proportionate share of any earnings and additional capital contributions and decreased by our proportionate share of any losses, distributions paid, and amortization of any excess investment. Excess investment is the amount by which our total investment exceeds our proportionate share of the net assets of the investee.
Our investments in unconsolidated entities consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entity
|
|
Segment
|
|
Ownership
Interest (1)
|
|
Date Acquired
or Formed
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
|
|
|
|
|
|
(in thousands)
|
Water treatment and disposal facility (2)
|
|
Water Solutions
|
|
50%
|
|
August 2015
|
|
$
|
1,995
|
|
|
$
|
2,094
|
|
E Energy Adams, LLC (3)
|
|
Refined Products and Renewables
|
|
—%
|
|
December 2013
|
|
—
|
|
|
15,142
|
|
Victory Propane, LLC (4)
|
|
Corporate and Other
|
|
50%
|
|
April 2015
|
|
—
|
|
|
—
|
|
Total
|
|
|
|
|
|
|
|
$
|
1,995
|
|
|
$
|
17,236
|
|
|
|
(1)
|
Ownership interest percentages are at
June 30, 2018
.
|
|
|
(2)
|
This is an investment in an unincorporated joint venture.
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
|
|
(3)
|
On May 3, 2018, we sold our previously held
20%
interest in E Energy Adams, LLC for net proceeds of
$18.6 million
and recorded
a gain
on disposal of
$3.0 million
during the three months ended
June 30, 2018
within
loss (gain) on disposal or impairment of assets, net
in our unaudited condensed consolidated statement of operations.
|
|
|
(4)
|
As our investment is
$0
at
June 30, 2018
, our proportionate share of Victory Propane’s losses have been recorded against the loan receivable we have with Victory Propane. See
Note 13
for a further discussion.
|
Variable Interest Entity
Victory Propane was formed as a joint venture in April 2015 by us and an unrelated third party. The business purpose of Victory Propane is to acquire and/or develop retail propane operations in a defined geographic area. In conjunction with the formation of Victory Propane, we agreed to provide Victory Propane a revolving line of credit of
$5.0 million
to be used for working capital and/or acquisition funding. Victory Propane began using this revolving line of credit shortly after operations commenced. At
June 30, 2018
, we provided a majority of Victory Propane’s financing and have concluded that Victory Propane is a variable interest entity because the equity of Victory Propane is not sufficient to fund its activities without additional subordinated financial support. Each joint venture member has an equal ownership interest in Victory Propane and has equal representation on Victory Propane’s board of managers to make all significant decisions relating to the operations of Victory Propane. Therefore, we do not have the power to direct activities that significantly influence the economic performance of Victory Propane and have concluded that we are not the primary beneficiary. Our maximum exposure to loss related to Victory Propane is limited to the sum of our equity investment as shown in the table above and the outstanding loan receivable (see
Note 13
) at
June 30, 2018
.
Other Noncurrent Assets
Other noncurrent assets consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
(in thousands)
|
Loan receivable (1)
|
|
$
|
26,441
|
|
|
$
|
29,463
|
|
Line fill (2)
|
|
33,437
|
|
|
34,897
|
|
Tank bottoms (3)
|
|
44,148
|
|
|
42,044
|
|
Minimum shipping fees - pipeline commitments (4)
|
|
23,204
|
|
|
88,757
|
|
Other
|
|
47,908
|
|
|
49,878
|
|
Total
|
|
$
|
175,138
|
|
|
$
|
245,039
|
|
|
|
(1)
|
Represents the noncurrent portion of
a loan receivable associated with our financing of the construction of a natural gas liquids facility to be utilized by a third party
.
|
|
|
(2)
|
Represents minimum volumes of product we are required to leave on certain third-party owned pipelines under long-term shipment commitments. At
June 30, 2018
, line fill consisted of
335,069
barrels of crude oil and
262,000
barrels of propane. At
March 31, 2018
, line fill consisted of
360,425
barrels of crude oil and
262,000
barrels of propane. Line fill held in pipelines we own is included within property, plant and equipment (see
Note 5
).
|
|
|
(3)
|
Tank bottoms, which are product volumes required for the operation of storage tanks, are recorded at historical cost. We recover tank bottoms when the storage tanks are removed from service.
At
June 30, 2018
and
March 31, 2018
, tank bottoms held in third party terminals consisted of
389,737
barrels and
366,212
barrels of refined products, respectively. Tank bottoms held in terminals we own are included within property, plant and equipment (see
Note 5
).
|
|
|
(4)
|
Represents the minimum shipping fees paid in excess of volumes shipped, or deficiency credits, for
two
contracts with crude oil pipeline operators. This amount can be recovered when volumes shipped exceed the minimum monthly volume commitment (see
Note 9
). During the three months ended June 30, 2018, we entered into a definitive agreement, as described further in
Note 13
, in which we agreed to provide the benefit of our deficiency credit under
one
of these contracts. As a result of providing this benefit to the third party, we wrote off
$67.7 million
of these deficiency credits to
loss (gain) on disposal or impairment of assets, net
in our unaudited condensed consolidated statements of operation during the three months ended June 30, 2018. Under the remaining other contract for which we have the future benefit, we currently have
22 months
in which to ship the excess volumes.
|
Amounts in the table above do not include other noncurrent assets related to the Retail Propane segment, as these amounts have been classified as assets held for sale within our unaudited condensed consolidated balance sheets (see
Note 14
).
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Accrued Expenses and Other Payables
Accrued expenses and other payables consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
(in thousands)
|
Accrued compensation and benefits
|
|
$
|
16,600
|
|
|
$
|
18,033
|
|
Excise and other tax liabilities
|
|
33,982
|
|
|
40,829
|
|
Derivative liabilities
|
|
66,091
|
|
|
51,039
|
|
Accrued interest
|
|
32,758
|
|
|
39,947
|
|
Product exchange liabilities
|
|
13,911
|
|
|
11,842
|
|
Gavilon legal matter settlement (Note 9)
|
|
35,000
|
|
|
—
|
|
Deferred gain on sale of general partner interest in TLP (1)
|
|
—
|
|
|
30,113
|
|
Other
|
|
27,275
|
|
|
31,701
|
|
Total
|
|
$
|
225,617
|
|
|
$
|
223,504
|
|
|
|
(1)
|
See
Note 15
for a discussion of the accounting for the deferred gain upon adoption of ASU No. 2014-09 and ASU No. 2017-05.
|
Amounts in the table above do not include accrued expenses and other payables related to the Retail Propane segment, as these amounts have been classified as liabilities held for sale within our unaudited condensed consolidated balance sheets (see
Note 14
).
Noncontrolling Interests
Noncontrolling interests represent the portion of certain consolidated subsidiaries that are owned by third parties.
Amounts are adjusted by the noncontrolling interest holder’s proportionate share of the subsidiaries’ earnings or losses each period and any distributions that are paid. Noncontrolling interests are reported as a component of equity, unless the noncontrolling interest is considered redeemable, in which case the noncontrolling interest is recorded between liabilities and equity (mezzanine or temporary equity) in our unaudited condensed consolidated balance sheet. The redeemable noncontrolling interest is adjusted at each balance sheet date to its maximum redemption value if the amount is greater than the carrying value. The redeemable noncontrolling interest is included in liabilities and redeemable noncontrolling interest held for sale in our unaudited condensed consolidated balance sheets (see
Note 14
). The following table summarizes changes in our redeemable noncontrolling interest (in thousands):
|
|
|
|
|
|
Balance at March 31, 2018
|
|
$
|
9,927
|
|
Net loss attributable to redeemable noncontrolling interest
|
|
(398
|
)
|
Redeemable noncontrolling interest valuation adjustment
|
|
3,300
|
|
Balance at June 30, 2018
|
|
$
|
12,829
|
|
Business Combination Measurement Period
We record the assets acquired and liabilities assumed in a business combination at their acquisition date fair values. Pursuant to GAAP, an entity is allowed a reasonable period of time (not to exceed one year) to obtain the information necessary to identify and measure the fair value of the assets acquired and liabilities assumed in a business combination. As discussed in
Note 4
, certain of our acquisitions are still within this measurement period, and as a result, the acquisition date fair values we have recorded for the assets acquired and liabilities assumed are subject to change.
Also, as discussed in
Note 4
, we made certain adjustments during the
three months ended
June 30, 2018
to our estimates of the acquisition date fair values of assets acquired and liabilities assumed in business combinations that occurred during the fiscal
year ended March 31, 2018
.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments-Credit Losses.” The ASU requires a financial asset (or a group of financial assets) measured at amortized cost to be presented at the net amount expected to be collected, which would include accounts receivable. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The ASU is effective for the Partnership beginning April 1, 2020, and requires a modified retrospective method of adoption, although early adoption is permitted. We are currently in the process of assessing the impact of this ASU on our consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, “Leases.” The ASU will replace previous lease accounting guidance in GAAP. The ASU requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. The ASU retains a distinction between finance leases and operating leases. The ASU is effective for the Partnership beginning April 1, 2019, and requires a modified retrospective method of adoption. We are currently in the process of compiling a database of leases and analyzing each lease to assess the impact under this ASU on our consolidated financial statements.
On April 1, 2018, we adopted ASU No. 2014-09, “Revenue from Contracts with Customers,” using a modified retrospective approach of adoption. ASU No. 2014-09 supersedes previous revenue recognition requirements in Topic 605, “Revenue Recognition,” and includes a five-step revenue recognition model to depict the transfer of goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. To achieve this core principle, more judgment and estimates are required within the revenue recognition process than required under Topic 605. In addition, ASU No. 2014-09 requires significantly expanded disclosures related to the nature, timing, amount and uncertainty of revenue and cash flows arising from contracts with customers. See
Note 15
for a further discussion of the impact of adoption of ASU No. 2014-09 on our unaudited condensed consolidated financial statements and our revenue recognition policies.
On April 1, 2018, we adopted ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” One of the provisions of ASU No. 2016-01 was to supersede the guidance to classify equity securities with readily determinable fair value into different categories (that is, trading or available-for-sale) and require equity securities to be measured at fair value with changes in fair value recognized through net income. As a result of the adoption, we recorded a cumulative effect adjustment of
$1.6 million
, moving the unrealized loss out of accumulated other comprehensive income and to limited partners’ equity.
Note 3—
Loss
Per Common Unit
The following table presents our calculation of basic and diluted weighted average common units outstanding for the periods indicated:
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
2018
|
|
2017
|
Weighted average common units outstanding during the period:
|
|
|
|
Common units - Basic
|
121,544,421
|
|
|
120,535,909
|
|
Common units - Diluted
|
121,544,421
|
|
|
120,535,909
|
|
For the
three months ended
June 30, 2018
and
2017
, the Performance Awards (as defined herein), warrants, Service Awards (as defined herein) and the Class A Preferred Units (as defined herein) were considered antidilutive.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Our
loss
per common unit is as follows for the periods indicated:
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
2018
|
|
2017
|
|
(in thousands, except unit and per unit amounts)
|
Loss from continuing operations
|
$
|
(165,248
|
)
|
|
$
|
(58,049
|
)
|
Less: Continuing operations loss (income) attributable to noncontrolling interests
|
345
|
|
|
(52
|
)
|
Net loss from continuing operations attributable to NGL Energy Partners LP
|
(164,903
|
)
|
|
(58,101
|
)
|
Less: Distributions to preferred unitholders (1)
|
(20,157
|
)
|
|
(9,684
|
)
|
Less: Continuing operations loss allocated to general partner (2)
|
151
|
|
|
35
|
|
Less: Repurchase of warrants (3)
|
—
|
|
|
(349
|
)
|
Net loss from continuing operations allocated to common unitholders
|
$
|
(184,909
|
)
|
|
$
|
(68,099
|
)
|
|
|
|
|
Loss from discontinued operations attributable to NGL Energy Partners, net of tax
|
$
|
(4,041
|
)
|
|
$
|
(5,658
|
)
|
Less: Discontinued operations loss attributable to redeemable noncontrolling interests
|
398
|
|
|
397
|
|
Less: Discontinued operations loss allocated to general partner (2)
|
4
|
|
|
5
|
|
Net loss from discontinued operations allocated to common unitholders
|
$
|
(3,639
|
)
|
|
$
|
(5,256
|
)
|
|
|
|
|
Net loss allocated to common unitholders
|
$
|
(188,548
|
)
|
|
$
|
(73,355
|
)
|
|
|
|
|
Basic loss per common unit
|
|
|
|
Loss from continuing operations
|
$
|
(1.52
|
)
|
|
$
|
(0.56
|
)
|
Loss from discontinued operations, net of tax
|
(0.03
|
)
|
|
(0.05
|
)
|
Net loss
|
$
|
(1.55
|
)
|
|
$
|
(0.61
|
)
|
Diluted loss per common unit
|
|
|
|
Loss from continuing operations
|
$
|
(1.52
|
)
|
|
$
|
(0.56
|
)
|
Loss from discontinued operations, net of tax
|
(0.03
|
)
|
|
(0.05
|
)
|
Net loss
|
$
|
(1.55
|
)
|
|
$
|
(0.61
|
)
|
Basic weighted average common units outstanding
|
121,544,421
|
|
|
120,535,909
|
|
Diluted weighted average common units outstanding
|
121,544,421
|
|
|
120,535,909
|
|
|
|
(1)
|
This amount includes the distribution to preferred unitholders as well as the accretion for the beneficial conversion, as discussed further in
Note 10
.
|
|
|
(2)
|
Net loss allocated to the general partner includes distributions to which it is entitled as the holder of incentive distribution rights.
|
|
|
(3)
|
This amount represents the excess of the repurchase price over the fair value of the warrants, as discussed further in
Note 10
.
|
Note 4
—Acquisitions
The following summarizes our acquisitions during the
three months ended
June 30, 2018
:
Water Pipeline Company
On April 24, 2018, we acquired the remaining
18.375%
interest in NGL Water Pipelines, LLC operating in the Delaware Basin portion of the Permian Basin in West Texas for total consideration of approximately
$4.0 million
. The acquisition of the remaining interest was accounted for as an equity transaction, no gain or loss was recorded, and the carrying value of the noncontrolling interest was adjusted to reflect the change in ownership interest of the subsidiary. As of the date of the transaction, the
18.375%
interest had a carrying value of
$3.9 million
.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Saltwater Water Solutions Facilities
During the three months ended
June 30, 2018
, we acquired
five
saltwater disposal facilities (including
13
wells)
for total consideration of approximately
$98.4 million
. The agreements for these acquisitions contemplate post-closing payments for certain working capital items. We are accounting for these transactions as business combinations.
The following table summarizes the preliminary estimates of the fair values as of
June 30, 2018
, for the assets acquired and liabilities assumed (in thousands):
|
|
|
|
|
Property, plant and equipment
|
$
|
29,419
|
|
Goodwill
|
51,756
|
|
Intangible assets
|
17,207
|
|
Current liabilities
|
(250
|
)
|
Fair value of net assets acquired
|
$
|
98,132
|
|
As of
June 30, 2018
, the allocation of the purchase price is considered preliminary as we are continuing to gather additional information to (i) finalize the fair values of the property, plant and equipment and intangible assets, (ii) calculate any asset retirement obligations and (iii) determine if the leases we assumed are considered to be favorable or unfavorable to market.
Goodwill represents the excess of the consideration paid for the acquired businesses over the fair value of the individual assets acquired, net of liabilities assumed. Goodwill represents a premium paid to expand the number of our disposal sites in an oilfield production basin currently serviced by us, thereby enhancing our competitive position as a provider of disposal services in this oilfield production basin. We expect that all of the goodwill will be deductible for federal income tax purposes.
The operations of these water solutions facilities have been included in our unaudited condensed consolidated statement of operations since their acquisition date. Our unaudited condensed consolidated statement of operations for the
three months ended
June 30, 2018
includes revenues of
$1.5 million
and operating income of
$0.5 million
that were generated by the operations of these water solutions facilities. We incurred
$0.2 million
of transaction costs related to these acquisitions during the
three months ended
June 30, 2018
. These amounts are recorded within general and administrative expenses in our unaudited condensed consolidated statement of operations.
During the
three months ended
June 30, 2018
, we also acquired
two
disposal wells for total consideration of
$9.1 million
, which we are accounting for as an acquisition of assets.
Freshwater Water Solutions Facilities
During the three months ended
June 30, 2018
, we acquired
four
freshwater facilities (including
16
wells)
and a right-of-way that can be used for pipelines for total consideration of approximately
$14.5 million
. The agreement for this acquisition contemplates post-closing payments for certain working capital items. We are accounting for this transaction as a business combination.
The following table summarizes the preliminary estimates of the fair values as of
June 30, 2018
, for the assets acquired and liabilities assumed (in thousands):
|
|
|
|
|
Property, plant and equipment
|
$
|
3,052
|
|
Goodwill
|
6,608
|
|
Intangible assets
|
4,840
|
|
Fair value of net assets acquired
|
$
|
14,500
|
|
As of
June 30, 2018
, the allocation of the purchase price is considered preliminary as we are continuing to gather additional information to (i) finalize the fair values of the property, plant and equipment and intangible assets, (ii) calculate any asset retirement obligations, (iii) calculate any contingent consideration liabilities and (iv) determine if the leases we assumed are considered to be favorable or unfavorable to market.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Goodwill represents the excess of the consideration paid for the acquired businesses over the fair value of the individual assets acquired, net of liabilities assumed. Goodwill represents a premium paid to expand our service offerings in an oilfield production basin currently serviced by us, thereby enhancing our competitive position as a provider of disposal and other services in this oilfield production basin. We expect that all of the goodwill will be deductible for federal income tax purposes.
The operations of these water solutions facilities have been included in our unaudited condensed consolidated statement of operations since their acquisition date. Our unaudited condensed consolidated statement of operations for the
three months ended
June 30, 2018
includes revenues of
$0.5 million
and operating income of
$0.4 million
that were generated by the operations of these water solutions facilities. We incurred
$0.2 million
of transaction costs related to these acquisitions during the
three months ended
June 30, 2018
. These amounts are recorded within general and administrative expenses in our unaudited condensed consolidated statement of operations.
Retail Propane Businesses
During the
three months ended
June 30, 2018
, we acquired
three
retail propane businesses for total consideration of approximately
$19.1 million
. We are accounting for these transactions as business combinations. The assets and liabilities are included in current assets and current liabilities held for sale in our unaudited condensed consolidated balance sheet (see
Note 14
).
Note 5
—Property, Plant and Equipment
Our property, plant and equipment consists of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Estimated
Useful Lives
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
|
|
(in thousands)
|
Natural gas liquids terminal and storage assets
|
|
2–30 years
|
|
$
|
238,561
|
|
|
$
|
238,487
|
|
Pipeline and related facilities
|
|
30–40 years
|
|
243,616
|
|
|
243,616
|
|
Refined products terminal assets and equipment
|
|
15–25 years
|
|
6,736
|
|
|
6,736
|
|
Vehicles and railcars
|
|
3–25 years
|
|
122,649
|
|
|
121,159
|
|
Water treatment facilities and equipment
|
|
3–30 years
|
|
632,707
|
|
|
601,139
|
|
Crude oil tanks and related equipment
|
|
2–30 years
|
|
215,367
|
|
|
218,588
|
|
Barges and towboats
|
|
5–30 years
|
|
97,366
|
|
|
92,712
|
|
Information technology equipment
|
|
3–7 years
|
|
31,153
|
|
|
30,749
|
|
Buildings and leasehold improvements
|
|
3–40 years
|
|
147,847
|
|
|
147,442
|
|
Land
|
|
|
|
56,257
|
|
|
51,816
|
|
Tank bottoms and line fill (1)
|
|
|
|
20,118
|
|
|
20,118
|
|
Other
|
|
3–20 years
|
|
11,797
|
|
|
11,794
|
|
Construction in progress
|
|
|
|
146,106
|
|
|
77,596
|
|
|
|
|
|
1,970,280
|
|
|
1,861,952
|
|
Accumulated depreciation
|
|
|
|
(365,782
|
)
|
|
(343,345
|
)
|
Net property, plant and equipment
|
|
|
|
$
|
1,604,498
|
|
|
$
|
1,518,607
|
|
|
|
(1)
|
Tank bottoms, which are product volumes required for the operation of storage tanks, are recorded at historical cost. We recover tank bottoms when the storage tanks are removed from service.
Line fill, which represents our portion of the product volume required for the operation of the proportionate share of a pipeline we own, is recorded at historical cost.
|
Amounts in the table above do not include property, plant and equipment and accumulated depreciation related to the Retail Propane segment, as these amounts have been classified as assets held for sale within our unaudited condensed consolidated balance sheets (see
Note 14
).
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes depreciation expense and capitalized interest expense for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
|
(in thousands)
|
Depreciation expense
|
|
$
|
24,729
|
|
|
$
|
24,782
|
|
Capitalized interest expense
|
|
$
|
149
|
|
|
$
|
—
|
|
The table above does not include amounts related to the Retail Propane segment, as these amounts has been classified within discontinued operations in our unaudited condensed consolidated statements of operations (see
Note 14
).
We record losses (gains) from the sales of property, plant and equipment and any write-downs in value due to impairment within loss (gain) on disposal or impairment of assets, net in our unaudited condensed consolidated statements of operations. The following table summarizes losses (gains) on the disposal or impairment of property, plant and equipment by segment for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
|
(in thousands)
|
Crude Oil Logistics
|
|
$
|
(2,041
|
)
|
|
$
|
(3,632
|
)
|
Water Solutions
|
|
2,475
|
|
|
524
|
|
Liquids
|
|
(10
|
)
|
|
—
|
|
Total
|
|
$
|
424
|
|
|
$
|
(3,108
|
)
|
Note 6
—Goodwill
The following table summarizes changes in goodwill by segment during the
three months ended
June 30, 2018
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil
Logistics
|
|
Water
Solutions
|
|
Liquids
|
|
Refined
Products and
Renewables
|
|
Total
|
|
|
(in thousands)
|
Balances at March 31, 2018
|
|
$
|
579,846
|
|
|
$
|
424,465
|
|
|
$
|
149,169
|
|
|
$
|
51,127
|
|
|
$
|
1,204,607
|
|
Acquisitions (Note 4)
|
|
—
|
|
|
58,364
|
|
|
—
|
|
|
—
|
|
|
58,364
|
|
Balances at June 30, 2018
|
|
$
|
579,846
|
|
|
$
|
482,829
|
|
|
$
|
149,169
|
|
|
$
|
51,127
|
|
|
$
|
1,262,971
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Note 7
—Intangible Assets
Our intangible assets consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
Description
|
|
Amortizable Lives
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
|
|
|
(in thousands)
|
Amortizable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
3–20 years
|
|
$
|
727,042
|
|
|
$
|
(336,778
|
)
|
|
$
|
390,264
|
|
|
$
|
718,763
|
|
|
$
|
(328,666
|
)
|
|
$
|
390,097
|
|
Customer commitments
|
|
10 years
|
|
310,000
|
|
|
(51,667
|
)
|
|
258,333
|
|
|
310,000
|
|
|
(43,917
|
)
|
|
266,083
|
|
Pipeline capacity rights
|
|
30 years
|
|
161,785
|
|
|
(18,393
|
)
|
|
143,392
|
|
|
161,785
|
|
|
(17,045
|
)
|
|
144,740
|
|
Rights-of-way and easements
|
|
1–40 years
|
|
66,196
|
|
|
(3,769
|
)
|
|
62,427
|
|
|
63,995
|
|
|
(3,214
|
)
|
|
60,781
|
|
Executory contracts and other agreements
|
|
3–30 years
|
|
41,730
|
|
|
(14,993
|
)
|
|
26,737
|
|
|
42,919
|
|
|
(15,424
|
)
|
|
27,495
|
|
Non-compete agreements
|
|
2–32 years
|
|
8,538
|
|
|
(928
|
)
|
|
7,610
|
|
|
5,465
|
|
|
(706
|
)
|
|
4,759
|
|
Debt issuance costs
(1)
|
|
5 years
|
|
41,763
|
|
|
(25,786
|
)
|
|
15,977
|
|
|
40,992
|
|
|
(24,593
|
)
|
|
16,399
|
|
Total amortizable
|
|
|
|
1,357,054
|
|
|
(452,314
|
)
|
|
904,740
|
|
|
1,343,919
|
|
|
(433,565
|
)
|
|
910,354
|
|
Non-amortizable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade names
|
|
|
|
2,800
|
|
|
—
|
|
|
2,800
|
|
|
2,800
|
|
|
—
|
|
|
2,800
|
|
Total non-amortizable
|
|
|
|
2,800
|
|
|
—
|
|
|
2,800
|
|
|
2,800
|
|
|
—
|
|
|
2,800
|
|
Total
|
|
|
|
$
|
1,359,854
|
|
|
$
|
(452,314
|
)
|
|
$
|
907,540
|
|
|
$
|
1,346,719
|
|
|
$
|
(433,565
|
)
|
|
$
|
913,154
|
|
|
|
(1)
|
Includes debt issuance costs related to the Revolving Credit Facility (as defined herein). Debt issuance costs related to fixed-rate notes are reported as a reduction of the carrying amount of long-term debt.
|
Amounts in the table above do not include intangible assets and accumulated amortization related to the Retail Propane segment, as these amounts have been classified as assets held for sale within our unaudited condensed consolidated balance sheets (see
Note 14
).
The weighted-average remaining amortization period for intangible assets is approximately
13.4 years
.
Amortization expense is as follows for the periods indicated:
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
Recorded In
|
2018
|
|
2017
|
|
(in thousands)
|
Depreciation and amortization
|
$
|
27,316
|
|
|
$
|
27,635
|
|
Cost of sales
|
1,465
|
|
|
1,585
|
|
Interest expense
|
1,193
|
|
|
1,086
|
|
Total
|
$
|
29,974
|
|
|
$
|
30,306
|
|
Amounts in the table above do not include amortization expense related to the Retail Propane segment, as these amounts have been classified as part of discontinued operations within our unaudited condensed consolidated statements of operations (see
Note 14
).
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Expected amortization of our intangible assets is as follows (in thousands):
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
2019 (nine months)
|
$
|
87,171
|
|
2020
|
115,692
|
|
2021
|
103,519
|
|
2022
|
88,841
|
|
2023
|
78,746
|
|
Thereafter
|
430,771
|
|
Total
|
$
|
904,740
|
|
Note 8
—Long-Term Debt
Our long-term debt consists of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
Face
Amount
|
|
Unamortized
Debt Issuance
Costs (1)
|
|
Book
Value
|
|
Face
Amount
|
|
Unamortized
Debt Issuance
Costs (1)
|
|
Book
Value
|
|
|
(in thousands)
|
Revolving credit facility:
|
|
|
|
|
|
|
|
|
|
|
|
|
Expansion capital borrowings
|
|
$
|
265,500
|
|
|
$
|
—
|
|
|
$
|
265,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Working capital borrowings
|
|
1,060,500
|
|
|
—
|
|
|
1,060,500
|
|
|
969,500
|
|
|
—
|
|
|
969,500
|
|
Senior unsecured notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
5.125% Notes due 2019
|
|
353,424
|
|
|
(1,332
|
)
|
|
352,092
|
|
|
353,424
|
|
|
(1,653
|
)
|
|
351,771
|
|
6.875% Notes due 2021
|
|
367,048
|
|
|
(4,180
|
)
|
|
362,868
|
|
|
367,048
|
|
|
(4,499
|
)
|
|
362,549
|
|
7.500% Notes due 2023
|
|
610,947
|
|
|
(8,092
|
)
|
|
602,855
|
|
|
615,947
|
|
|
(8,542
|
)
|
|
607,405
|
|
6.125% Notes due 2025
|
|
389,135
|
|
|
(5,736
|
)
|
|
383,399
|
|
|
389,135
|
|
|
(5,951
|
)
|
|
383,184
|
|
Other long-term debt
|
|
5,815
|
|
|
—
|
|
|
5,815
|
|
|
5,977
|
|
|
—
|
|
|
5,977
|
|
|
|
3,052,369
|
|
|
(19,340
|
)
|
|
3,033,029
|
|
|
2,701,031
|
|
|
(20,645
|
)
|
|
2,680,386
|
|
Less: Current maturities
|
|
646
|
|
|
—
|
|
|
646
|
|
|
646
|
|
|
—
|
|
|
646
|
|
Long-term debt
|
|
$
|
3,051,723
|
|
|
$
|
(19,340
|
)
|
|
$
|
3,032,383
|
|
|
$
|
2,700,385
|
|
|
$
|
(20,645
|
)
|
|
$
|
2,679,740
|
|
|
|
(1)
|
Debt issuance costs related to the Revolving Credit Facility are reported within intangible assets, rather than as a reduction of the carrying amount of long-term debt.
|
Amounts in the table above do not include long-term debt related to the Retail Propane segment, as these amounts have been classified as liabilities held for sale within our unaudited condensed consolidated balance sheets (see
Note 14
).
Amortization expense for debt issuance costs related to long-term debt in the table above was
$1.2 million
and
$1.7 million
during the
three months ended
June 30, 2018
and
2017
, respectively.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Expected amortization of debt issuance costs is as follows (in thousands):
|
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
|
2019 (nine months)
|
|
$
|
3,697
|
|
2020
|
|
4,018
|
|
2021
|
|
3,646
|
|
2022
|
|
3,064
|
|
2023
|
|
2,376
|
|
Thereafter
|
|
2,539
|
|
Total
|
|
$
|
19,340
|
|
Credit Agreement
We are party to a
$1.765 billion
credit agreement (the “Credit Agreement”) with a syndicate of banks. As of
June 30, 2018
, the Credit Agreement includes a revolving credit facility to fund working capital needs, which had a capacity of
$1.3 billion
for cash borrowings and letters of credit (the “Working Capital Facility”), and a revolving credit facility to fund acquisitions and expansion projects, which had a capacity of
$465.0 million
(the “Expansion Capital Facility,” and together with the Working Capital Facility, the “Revolving Credit Facility”). We had letters of credit of
$128.4 million
on the Working Capital Facility at
June 30, 2018
.
At
June 30, 2018
, the borrowings under the Credit Agreement had a weighted average interest rate of
4.79%
, calculated as the weighted average LIBOR rate of
2.09%
plus a margin of
2.50%
for LIBOR borrowings and the prime rate of
5.00%
plus a margin of
1.50%
on alternate base rate borrowings. At
June 30, 2018
, the interest rate in effect on letters of credit was
2.50%
. Commitment fees were charged at a rate ranging from
0.375%
to
0.50%
on any unused capacity.
On July 5, 2018, we amended our Credit Agreement.
In the amendment, the lenders consented to, subject to the consummation of the Retail Propane disposition, release Retail Propane, LLC and its wholly-owned subsidiaries from its guaranty and other obligations under the loan documents. In return, the Partnership agreed to use the net proceeds from the Retail Propane disposition to pay down existing indebtedness no later than five business days after the consummation of the Retail Propane disposition.
The following table summarizes the debt covenant levels specified in the Credit Agreement as of
June 30, 2018
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured
|
|
Interest
|
|
Total Leverage
|
Period Beginning
|
|
Leverage Ratio (1)
|
|
Leverage Ratio (1)
|
|
Coverage Ratio (2)
|
|
Indebtedness Ratio (1)
|
June 30, 2018
|
|
4.75
|
|
|
3.25
|
|
|
2.50
|
|
|
—
|
|
December 31, 2018
|
|
4.75
|
|
|
3.25
|
|
|
2.75
|
|
|
—
|
|
March 31, 2019 and thereafter
|
|
4.50
|
|
|
3.25
|
|
|
2.75
|
|
|
6.50
|
|
|
|
(1)
|
Represents the maximum ratio for the period presented.
|
|
|
(2)
|
Represents the minimum ratio for the period presented.
|
At
June 30, 2018
, our leverage ratio was approximately
4.50
to
1
, our senior secured leverage ratio was approximately
0.61
to
1
and our interest coverage ratio was approximately
2.71
to
1
.
At
June 30, 2018
,
we were in compliance with the covenants under the Credit Agreement.
Senior Unsecured Notes
Repurchases
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes repurchases of Senior Unsecured Notes for the periods indicated:
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
June 30,
|
|
|
2018
|
|
|
(in thousands)
|
2023 Notes
|
|
|
Notes repurchased
|
|
$
|
5,000
|
|
Cash paid (excluding payments of accrued interest)
|
|
$
|
5,069
|
|
Loss on early extinguishment of debt (1)
|
|
$
|
(137
|
)
|
|
|
(1)
|
Loss on the early extinguishment of debt for the 2023 Notes during the
three months ended
June 30, 2018
is inclusive of the write off of debt issuance costs of
$0.1 million
. The loss is reported within (loss) gain on early extinguishment of liabilities, net within our unaudited condensed consolidated statement of operations.
|
At
June 30, 2018
,
we were in compliance with the covenants under the indentures for all of the Senior Unsecured Notes
.
Other Long-Term Debt
We have other notes payable related to equipment financing. The interest rates on these instruments range from
4.13%
to
7.10%
per year and have an aggregate principal balance of
$5.8 million
at
June 30, 2018
.
Debt Maturity Schedule
The scheduled maturities of our long-term debt are as follows at
June 30, 2018
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
Revolving
Credit
Facility
|
|
Senior Unsecured Notes
|
|
Other
Long-Term
Debt
|
|
Total
|
|
|
(in thousands)
|
2019 (nine months)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
638
|
|
|
$
|
638
|
|
2020
|
|
—
|
|
|
353,424
|
|
|
648
|
|
|
354,072
|
|
2021
|
|
—
|
|
|
—
|
|
|
4,529
|
|
|
4,529
|
|
2022
|
|
1,326,000
|
|
|
367,048
|
|
|
—
|
|
|
1,693,048
|
|
2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Thereafter
|
|
—
|
|
|
1,000,082
|
|
|
—
|
|
|
1,000,082
|
|
Total
|
|
$
|
1,326,000
|
|
|
$
|
1,720,554
|
|
|
$
|
5,815
|
|
|
$
|
3,052,369
|
|
Amounts in the table above do not include long-term debt related to the Retail Propane segment, as these amounts have been classified as liabilities held for sale within our unaudited condensed consolidated balance sheets (see
Note 14
).
Note 9
—Commitments and Contingencies
Legal Contingencies
In August 2015, LCT Capital, LLC (“LCT”) filed a lawsuit against NGL Energy Holdings LLC (the “GP”) and the Partnership seeking payment for investment banking services relating to the purchase of TransMontaigne Inc. and related assets in July 2014. After pre-trial rulings, LCT was limited to pursuing claims of (i)
quantum meruit
(the value of the services rendered by LCT) and (ii) fraudulent misrepresentation against the defendants. Following a jury trial conducted in Delaware state court from July 23, 2018 through August 1, 2018, the jury returned a verdict consisting of an award of
$4.0 million
for
quantum meruit
and
$29.0 million
for fraudulent misrepresentation,
subject to statutory interest. The GP and the Partnership contend that
the jury verdict, at least in respect of fraudulent misrepresentation,
is not supportable by either
controlling law or
the evidentiary record. Both defendants have a pending motion for judgment as a matter of law on the fraudulent
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
misrepresentation claim and plan to file post-verdict motions as appropriate
before the trial court, and, if need be, will file an appeal to the Delaware Supreme Court. It is our position that the awards, even if they each stand, are not cumulative. Any allocation of the ultimate verdict award between the GP and the Partnership will be made by the Board of Directors once all information is available to it and after the post-trial and any
appellate process has run its course and the verdict is final as a matter of law. Because the Partnership is a named defendant in the suit, and any judgment ultimately awarded would be joint and several with the GP, we have determined that it is probable that the Partnership could be liable for a portion of this judgment. At this time, we believe the amount that could be allocated to the Partnership would not be material as it is estimated to be less than
$4.0 million
.
We are party to various other claims, legal actions, and complaints arising in the ordinary course of business. In the opinion of our management, the ultimate resolution of these other claims, legal actions, and complaints, after consideration of amounts accrued, insurance coverage, and other arrangements, is not expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, the outcome of such matters is inherently uncertain, and estimates of our liabilities may change materially as circumstances develop.
Environmental Matters
At
June 30, 2018
, we have an environmental liability, measured on an undiscounted basis, of
$2.6 million
, which is recorded within accrued expenses and other payables in our unaudited condensed consolidated balance sheet. Our operations are subject to extensive federal, state, and local environmental laws and regulations. Although we believe our operations are in substantial compliance with applicable environmental laws and regulations, risks of additional costs and liabilities are inherent in our business, and there can be no assurance that we will not incur significant costs. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies thereunder, and claims for damages to property or persons resulting from the operations, could result in substantial costs. Accordingly, we have adopted policies, practices, and procedures in the areas of pollution control, product safety, occupational health, and the handling, storage, use, and disposal of hazardous materials designed to prevent material environmental or other damage, and to limit the financial liability that could result from such events. However, some risk of environmental or other damage is inherent in our business.
In 2015, as previously disclosed, the U.S. Environmental Protection Agency (“EPA”) informed NGL Crude Logistics, LLC, formerly known as Gavilon, LLC (“Gavilon Energy”), of alleged violations that occurred in 2011 by Gavilon Energy of the Clean Air Act’s renewable fuel standards regulations (prior to its acquisition by us in December 2013). On October 4, 2016, the U.S. Department of Justice, acting at the request of the EPA, filed a civil complaint in the Northern District of Iowa against Gavilon Energy and one of its then suppliers, Western Dubuque Biodiesel LLC (“Western Dubuque”). Consistent with the earlier allegations by the EPA, the civil complaint related to transactions between Gavilon Energy and Western Dubuque and the generation of biodiesel renewable identification numbers (“RINs”) sold by Western Dubuque to Gavilon Energy in 2011. On December 19, 2016, we filed a motion to dismiss the complaint. On January 9, 2017, the EPA filed an amended complaint. The amended complaint seeks an order declaring Western Dubuque’s RINs invalid and requiring the defendants to retire an equivalent number of valid RINs and that the defendants pay statutory civil penalties. On January 23, 2017, we filed a motion to dismiss the amended complaint. On May 24, 2017, the court denied our motion to dismiss. Subsequently, the EPA filed a second amended complaint seeking an order declaring Western Dubuque’s RINs invalid, an order requiring us to retire an equivalent number of valid RINs and an award against us of statutory civil penalties. In May 2018, the parties completed briefing on cross-motions for summary judgment concerning liability issues in the case. On July 3, 2018, the Court denied our summary judgment motion and largely granted the plaintiff’s two summary judgment motions on liability. On July 19, 2018, Gavilon Energy reached an agreement in principle with the EPA regarding the terms of a settlement of the case. Such terms will result in Gavilon Energy incurring an estimated expense of up to
$35.0 million
over a twelve-month period, which we accrued as of June 30, 2018 and is included within accrued expenses and other payables in our unaudited condensed consolidated balance sheet and other (expense) income, net in our unaudited condensed consolidated statement of operations. The agreement is subject to the parties submitting a definitive consent decree to the Court for its approval. If ultimately approved by the Court, the consent decree will resolve all matters between Gavilon Energy and the EPA in connection with the above-described complaint.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Asset Retirement Obligations
We have contractual and regulatory obligations at certain facilities for which we have to perform remediation, dismantlement, or removal activities when the assets are retired. Our liability for asset retirement obligations is discounted to present value. To calculate the liability, we make estimates and assumptions about the retirement cost and the timing of retirement. Changes in our assumptions and estimates may occur as a result of the passage of time and the occurrence of future events. The following table summarizes changes in our asset retirement obligation, which is reported within other noncurrent liabilities in our unaudited condensed consolidated balance sheets (in thousands):
|
|
|
|
|
Balance at March 31, 2018
|
$
|
9,133
|
|
Accretion expense
|
152
|
|
Balance at June 30, 2018
|
$
|
9,285
|
|
In addition to the obligations described above, we may be obligated to remove facilities or perform other remediation upon retirement of certain other assets. However, the fair value of the asset retirement obligation cannot currently be reasonably estimated because the settlement dates are indeterminable. We will record an asset retirement obligation for these assets in the periods in which settlement dates are reasonably determinable.
Operating Leases
We have executed various noncancelable operating lease agreements for product storage, office space, vehicles, real estate, railcars, and equipment. The following table summarizes future minimum lease payments under these agreements at
June 30, 2018
(in thousands):
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
2019 (nine months)
|
$
|
97,269
|
|
2020
|
114,665
|
|
2021
|
98,920
|
|
2022
|
73,322
|
|
2023
|
55,750
|
|
Thereafter
|
48,566
|
|
Total
|
$
|
488,492
|
|
Amounts in the table above exclude leases related to the sale of the Retail Propane segment (see
Note 14
).
Rental expense relating to operating leases was
$27.9 million
and
$30.7 million
during the
three months ended
June 30, 2018
and
2017
, respectively. Amounts do not include rental expense associated with the Retail Propane segment, as these amounts have been classified as part of discontinued operations within our unaudited condensed consolidated statements of operations (see
Note 14
).
Pipeline Capacity Agreements
We have executed noncancelable agreements with crude oil pipeline operators, which guarantee us minimum monthly shipping capacity on the pipelines. As a result, we are required to pay the minimum shipping fees if actual shipments are less than our allotted capacity. Under certain agreements we have the ability to recover minimum shipping fees previously paid if our shipping volumes exceed the minimum monthly shipping commitment during each month remaining under the agreement, with some contracts containing provisions that allow us to continue shipping up to
six months
after the maturity date of the contract in order to recapture previously paid minimum shipping delinquency fees. We currently have an asset recorded in other noncurrent assets in our unaudited condensed consolidated balance sheet for minimum shipping fees paid in both the current and previous periods that are expected to be recovered in future periods by exceeding the minimum monthly volumes (see
Note 2
).
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes future minimum throughput payments under these agreements at
June 30, 2018
(in thousands):
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
2019 (nine months)
|
$
|
39,047
|
|
2020
|
42,456
|
|
Total
|
$
|
81,503
|
|
Of the total future minimum throughput payments in the table above, a third party has agreed to assume all rights and privileges and to be fully responsible for any minimum shipping fees due for actual shipments that are less than our allotted capacity related to
$21.5 million
of the fiscal year 2019 (nine months) amount and
$28.8 million
of the fiscal year 2020 amount under a definitive agreement we signed during the three months ended June 30, 2018 (see Note 13).
Sales and Purchase Contracts
We have entered into product sales and purchase contracts for which we expect the parties to physically settle and deliver the inventory in future periods.
At
June 30, 2018
, we had the following commodity purchase commitments (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil (1)
|
|
Natural Gas Liquids
|
|
|
Value
|
|
Volume
(in barrels)
|
|
Value
|
|
Volume
(in gallons)
|
Fixed-Price Commodity Purchase Commitments:
|
|
|
|
|
|
|
|
|
2019 (nine months)
|
|
$
|
52,180
|
|
|
789
|
|
|
$
|
22,490
|
|
|
28,875
|
|
|
|
|
|
|
|
|
|
|
Index-Price Commodity Purchase Commitments:
|
|
|
|
|
|
|
|
|
2019 (nine months)
|
|
$
|
1,199,591
|
|
|
18,097
|
|
|
$
|
736,389
|
|
|
766,672
|
|
2020
|
|
707,225
|
|
|
12,148
|
|
|
28,812
|
|
|
36,680
|
|
2021
|
|
506,754
|
|
|
9,354
|
|
|
—
|
|
|
—
|
|
2022
|
|
401,691
|
|
|
7,752
|
|
|
—
|
|
|
—
|
|
2023
|
|
278,162
|
|
|
5,482
|
|
|
—
|
|
|
—
|
|
Thereafter
|
|
204,050
|
|
|
4,110
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
3,297,473
|
|
|
56,943
|
|
|
$
|
765,201
|
|
|
803,352
|
|
|
|
(1)
|
Our crude oil index-price purchase commitments exceed our crude oil index-price sales commitments (presented below) due primarily to our long-term purchase commitments for crude oil that we purchase and ship on the Grand Mesa Pipeline. As these purchase commitments are deliver-or-pay contracts, we have not entered into corresponding long-term sales contracts for volumes we may not receive.
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
At
June 30, 2018
, we had the following commodity sale commitments (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil
|
|
Natural Gas Liquids
|
|
|
Value
|
|
Volume
(in barrels)
|
|
Value
|
|
Volume
(in gallons)
|
Fixed-Price Commodity Sale Commitments:
|
|
|
|
|
|
|
|
|
2019 (nine months)
|
|
$
|
53,333
|
|
|
794
|
|
|
$
|
92,537
|
|
|
96,100
|
|
2020
|
|
—
|
|
|
—
|
|
|
1,040
|
|
|
1,045
|
|
2021
|
|
—
|
|
|
—
|
|
|
59
|
|
|
60
|
|
Total
|
|
$
|
53,333
|
|
|
794
|
|
|
$
|
93,636
|
|
|
97,205
|
|
|
|
|
|
|
|
|
|
|
Index-Price Commodity Sale Commitments:
|
|
|
|
|
|
|
|
|
2019 (nine months)
|
|
$
|
1,060,547
|
|
|
14,873
|
|
|
$
|
922,685
|
|
|
822,251
|
|
2020
|
|
103,434
|
|
|
1,570
|
|
|
16,232
|
|
|
16,579
|
|
Total
|
|
$
|
1,163,981
|
|
|
16,443
|
|
|
$
|
938,917
|
|
|
838,830
|
|
We account for the contracts shown in the tables above using the
normal purchase and normal sale election
.
Under this accounting policy election, we do not record the contracts at fair value at each balance sheet date; instead, we record the purchase or sale at the contracted value once the delivery occurs.
Contracts in the tables above may have offsetting derivative contracts (described in
Note 11
) or inventory positions (described in
Note 2
).
Certain other forward purchase and sale contracts do not qualify for the normal purchase and normal sale election. These contracts are recorded at fair value in our unaudited condensed consolidated balance sheet and are not included in the tables above. These contracts are included in the derivative disclosures in
Note 11
, and represent
$71.3 million
of our prepaid expenses and other current assets and
$60.3 million
of our accrued expenses and other payables at
June 30, 2018
.
Note 10
—Equity
Partnership Equity
The Partnership’s equity consists of a
0.1%
general partner interest and a
99.9%
limited partner interest, which consists of common units. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its
0.1%
general partner interest. Our general partner is not required to guarantee or pay any of our debts and obligations.
General Partner Contributions
In connection with the issuance of common units for the vesting of restricted units and the warrants that were exercised for common units during the
three months ended
June 30, 2018
, we issued
280
notional units to our general partner for
less than $0.1 million
in order to maintain its
0.1%
interest in us.
Equity Issuances
On August 24, 2016, we entered into an equity distribution agreement in connection with an at-the-market program (the “ATM Program”) pursuant to which we may issue and sell up to
$200.0 million
of common units. We did not issue any common units under the ATM Program during the
three months ended
June 30, 2018
, and approximately
$134.7 million
remained available for sale under the ATM Program at
June 30, 2018
.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Our Distributions
The following table summarizes distributions declared on our common units during the last two quarters:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date Declared
|
|
Record Date
|
|
Date Paid/Payable
|
|
Amount Per Unit
|
|
Amount Paid/Payable to Limited Partners
|
|
Amount Paid/Payable to General Partner
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
(in thousands)
|
April 24, 2018
|
|
May 7, 2018
|
|
May 15, 2018
|
|
$
|
0.3900
|
|
|
$
|
47,374
|
|
|
$
|
82
|
|
July 24, 2018
|
|
August 8, 2018
|
|
August 14, 2018
|
|
$
|
0.3900
|
|
|
$
|
47,600
|
|
|
$
|
82
|
|
Class A Convertible Preferred Units
On April 21, 2016, we received net proceeds of
$235.0 million
(net of offering costs of
$5.0 million
) in connection with the issuance of
19,942,169
Class A Convertible Preferred Units (“Class A Preferred Units”) and
4,375,112
warrants.
We allocated the net proceeds on a relative fair value basis to the Class A Preferred Units, which includes the value of a beneficial conversion feature, and warrants. Accretion for the beneficial conversion feature, recorded as a deemed distribution, was
$9.0 million
and
$3.2 million
during the
three months ended
June 30, 2018
and
2017
, respectively.
The holders of the warrants may exercise one-third of the warrants from and after the first anniversary of the original issue date, another one-third of the warrants from and after the second anniversary and the final one-third of the warrants from and after the third anniversary. The warrants have an exercise price of
$0.01
and an
eight
year term. We repurchased
1,229,575
unvested warrants for a total purchase price of
$15.0 million
on April 26, 2018. During the
three months ended
June 30, 2018
,
228,797
warrants were exercised for common units and we received proceeds of
less than $0.1 million
. As of
June 30, 2018
, we had
1,458,371
warrants outstanding.
We pay a cumulative, quarterly distribution in arrears at an annual rate of
10.75%
on the Class A Preferred Units to the extent declared by the board of directors of our general partner. The following table summarizes distributions declared on our Class A Preferred Units during the last two quarters:
|
|
|
|
|
|
|
|
|
|
|
|
Amount Paid/Payable to Class A
|
Date Declared
|
|
Date Paid/Payable
|
|
Preferred Unitholders
|
|
|
|
|
(in thousands)
|
April 24, 2018
|
|
May 15, 2018
|
|
$
|
6,449
|
|
July 24, 2018
|
|
August 14, 2018
|
|
$
|
6,449
|
|
Class B Preferred Units
On June 13, 2017, we issued
8,400,000
of our
9.00%
Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”) representing limited partner interests at a price of
$25.00
per unit for net proceeds of
$202.7 million
(net of the underwriters’ discount of
$6.6 million
and offering costs of
$0.7 million
).
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The current distribution rate for the Class B Preferred Units is 9.0% per year of the $25.00 liquidation preference per unit (equal to $2.25 per unit per year).
The following table summarizes distributions declared on our Class B Preferred Units during the last two quarters:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Paid to Class B
|
Date Declared
|
|
Record Date
|
|
Date Paid
|
|
Preferred Unitholders
|
|
|
|
|
|
|
(in thousands)
|
March 19, 2018
|
|
April 2, 2018
|
|
April 16, 2018
|
|
$
|
4,725
|
|
June 19, 2018
|
|
July 2, 2018
|
|
July 16, 2018
|
|
$
|
4,725
|
|
The distribution amount paid on
July 16, 2018
is included in accrued expenses and other payables in our unaudited condensed consolidated balance sheet at
June 30, 2018
.
Equity-Based Incentive Compensation
Our general partner has adopted a long-term incentive plan (“LTIP”), which allows for the issuance of equity-based compensation. Our general partner has granted certain restricted units to employees and directors, which vest in tranches, subject to the continued service of the recipients. The awards may also vest upon a change of control, at the discretion of the board of directors of our general partner.
No
distributions accrue to or are paid on the restricted units during the vesting period.
The restricted units include both awards that: (i) vest contingent on the continued service of the recipients through the vesting date (the “Service Awards”) and (ii) vest contingent both on the continued service of the recipients through the vesting date and also on the performance of our common units relative to other entities in the Alerian MLP Index (the “Index”) over specified periods of time (the “Performance Awards”).
The following table summarizes the Service Award activity during the
three months ended
June 30, 2018
:
|
|
|
|
|
Unvested Service Award units at March 31, 2018
|
|
2,278,875
|
|
Units granted
|
|
97,992
|
|
Units vested and issued
|
|
(50,992
|
)
|
Units forfeited
|
|
(57,250
|
)
|
Unvested Service Award units at June 30, 2018
|
|
2,268,625
|
|
The following table summarizes the scheduled vesting of our unvested Service Award units at
June 30, 2018
:
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
|
2019 (nine months)
|
|
933,975
|
|
2020
|
|
962,225
|
|
2021
|
|
370,925
|
|
2022
|
|
1,500
|
|
Total
|
|
2,268,625
|
|
Service Awards are valued at the closing price as of the grant date less the present value of the expected distribution stream over the vesting period using a risk-free interest rate. We record the expense for each Service Award on a straight-line basis over the requisite period for the entire award (that is, over the requisite service period of the last separately vesting portion of the award), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date value of the award that is vested at that date.
During the
three months ended
June 30, 2018
and
2017
, we recorded compensation expense related to Service Award units of
$2.8 million
and
$5.3 million
, respectively.
Of the restricted units granted and vested during the
three months ended
June 30, 2018
,
50,992
units were granted as a bonus for performance during the fiscal year ended
March 31, 2018
. The total amount of these bonus payments were
$0.6 million
, of which we had accrued
$0.6 million
as of
March 31, 2018
.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes the estimated future expense we expect to record on the unvested Service Award units at
June 30, 2018
(in thousands):
|
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
|
2019 (nine months)
|
|
$
|
9,516
|
|
2020
|
|
6,572
|
|
2021
|
|
2,072
|
|
2022
|
|
7
|
|
Total
|
|
$
|
18,167
|
|
During April 2015, our general partner granted Performance Award units to certain employees. The number of Performance Award units that will vest is contingent on the performance of our common units relative to the performance of the other entities in the Index. Performance will be calculated based on the return on our common units (including changes in the market price of the common units and distributions paid during the performance period) relative to the returns on the common units of the other entities in the Index. As of
June 30, 2018
, performance will be measured over the following periods:
|
|
|
|
Vesting Date of Tranche
|
|
Performance Period for Tranche
|
July 1, 2018
|
|
July 1, 2015 through June 30, 2018
|
July 1, 2019
|
|
July 1, 2016 through June 30, 2019
|
July 1, 2020
|
|
July 1, 2017 through June 30, 2020
|
The following table summarizes the Performance Award activity during the
three months ended
June 30, 2018
:
|
|
|
|
|
Unvested Performance Award units at March 31, 2018
|
|
917,000
|
|
Units forfeited
|
|
(36,000
|
)
|
Unvested Performance Award units at June 30, 2018
|
|
881,000
|
|
During the July 1, 2015 through June 30, 2018 performance period, the return on our common units was below the return of the
50th
percentile of our peer companies in the Index. As a result,
no
Performance Award units vested on July 1, 2018 and performance units with the July 1, 2018 vesting date will be forfeited.
The fair value of the Performance Awards is estimated using a Monte Carlo simulation at the grant date. We record the expense for each of the tranches of the Performance Awards on a straight-line basis over the period beginning with the grant date and ending with the vesting date of the tranche. Any Performance Awards that do not become earned Performance Awards will terminate, expire and otherwise be forfeited by the participants. During the
three months ended
June 30, 2018
and
2017
, we recorded compensation expense related to Performance Award units of
$1.3 million
and
$2.1 million
, respectively.
The following table summarizes the estimated future expense we expect to record on the unvested Performance Award units at
June 30, 2018
(in thousands):
|
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
|
2019 (nine months)
|
|
$
|
2,609
|
|
2020
|
|
1,904
|
|
2021
|
|
383
|
|
Total
|
|
$
|
4,896
|
|
At
June 30, 2018
, approximately
1.3 million
common units remain available for issuance under the LTIP.
Note 11
—Fair Value of Financial Instruments
Our cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other current assets and liabilities (excluding derivative instruments) are carried at amounts which reasonably approximate their fair values due to their short-term nature.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Commodity Derivatives
The following table summarizes the estimated fair values of our commodity derivative assets and liabilities reported in our unaudited condensed consolidated balance sheet at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
Derivative
Assets
|
|
Derivative
Liabilities
|
|
Derivative
Assets
|
|
Derivative
Liabilities
|
|
|
(in thousands)
|
Level 1 measurements
|
|
$
|
15,743
|
|
|
$
|
(38,212
|
)
|
|
$
|
5,093
|
|
|
$
|
(20,186
|
)
|
Level 2 measurements
|
|
71,253
|
|
|
(68,894
|
)
|
|
48,752
|
|
|
(54,410
|
)
|
|
|
86,996
|
|
|
(107,106
|
)
|
|
53,845
|
|
|
(74,596
|
)
|
|
|
|
|
|
|
|
|
|
Netting of counterparty contracts (1)
|
|
(13,141
|
)
|
|
13,141
|
|
|
(2,922
|
)
|
|
2,922
|
|
Net cash collateral (held) provided
|
|
(2,034
|
)
|
|
25,071
|
|
|
(1,762
|
)
|
|
17,263
|
|
Commodity derivatives
|
|
$
|
71,821
|
|
|
$
|
(68,894
|
)
|
|
$
|
49,161
|
|
|
$
|
(54,411
|
)
|
|
|
(1)
|
Relates to commodity derivative assets and liabilities that are expected to be net settled on an exchange or through a netting arrangement with the counterparty.
|
The following table summarizes the accounts that include our commodity derivative assets and liabilities in our unaudited condensed consolidated balance sheets at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
(in thousands)
|
Prepaid expenses and other current assets
|
|
$
|
71,814
|
|
|
$
|
49,161
|
|
Other noncurrent assets
|
|
7
|
|
|
—
|
|
Accrued expenses and other payables
|
|
(66,091
|
)
|
|
(51,039
|
)
|
Other noncurrent liabilities
|
|
(2,803
|
)
|
|
(3,372
|
)
|
Net commodity derivative asset (liability)
|
|
$
|
2,927
|
|
|
$
|
(5,250
|
)
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes our open commodity derivative contract positions at the dates indicated. We do not account for these derivatives as hedges.
|
|
|
|
|
|
|
|
|
|
|
Contracts
|
|
Settlement Period
|
|
Net Long
(Short)
Notional Units
(in barrels)
|
|
Fair Value
of
Net Assets
(Liabilities)
|
|
|
|
|
(in thousands)
|
At June 30, 2018:
|
|
|
|
|
|
|
Cross-commodity (1)
|
|
July 2018–March 2019
|
|
(57
|
)
|
|
$
|
740
|
|
Crude oil fixed-price (2)
|
|
July 2018–December 2019
|
|
(1,606
|
)
|
|
(18,566
|
)
|
Crude oil index (2)
|
|
July 2018–July 2018
|
|
(10
|
)
|
|
(74
|
)
|
Propane fixed-price (2)
|
|
July 2018–March 2019
|
|
175
|
|
|
1,643
|
|
Refined products fixed-price (2)
|
|
July 2018–January 2020
|
|
(5,928
|
)
|
|
(5,878
|
)
|
Refined products index (2)
|
|
July 2018–July 2018
|
|
(3
|
)
|
|
(24
|
)
|
Other
|
|
July 2018–March 2022
|
|
|
|
2,049
|
|
|
|
|
|
|
|
(20,110
|
)
|
Net cash collateral provided
|
|
|
|
|
|
23,037
|
|
Net commodity derivative asset
|
|
|
|
|
|
$
|
2,927
|
|
|
|
|
|
|
|
|
At March 31, 2018:
|
|
|
|
|
|
|
Cross-commodity (1)
|
|
April 2018–March 2019
|
|
155
|
|
|
$
|
(430
|
)
|
Crude oil fixed-price (2)
|
|
April 2018–December 2019
|
|
(1,376
|
)
|
|
(8,960
|
)
|
Crude oil index (2)
|
|
April 2018–April 2018
|
|
(10
|
)
|
|
(6
|
)
|
Propane fixed-price (2)
|
|
April 2018–February 2019
|
|
14
|
|
|
1,849
|
|
Refined products fixed-price (2)
|
|
April 2018–January 2020
|
|
(5,419
|
)
|
|
(17,081
|
)
|
Refined products index (2)
|
|
April 2018–April 2018
|
|
(4
|
)
|
|
(17
|
)
|
Other
|
|
April 2018–March 2022
|
|
|
|
3,894
|
|
|
|
|
|
|
|
(20,751
|
)
|
Net cash collateral provided
|
|
|
|
|
|
15,501
|
|
Net commodity derivative liability
|
|
|
|
|
|
$
|
(5,250
|
)
|
|
|
(1)
|
We may purchase or sell a physical commodity where the underlying contract pricing mechanisms are tied to different commodity price indices. These contracts are derivatives we have entered into as an economic hedge against the risk of one commodity price moving relative to another commodity price.
|
|
|
(2)
|
We may have fixed price physical purchases, including inventory, offset by floating price physical sales or floating price physical purchases offset by fixed price physical sales. These contracts are derivatives we have entered into as an economic hedge against the risk of mismatches between fixed and floating price physical obligations.
|
Amounts in the table above do not include commodity derivative contract positions related to the Retail Propane segment, as these amounts have been classified as assets held for sale within our unaudited condensed consolidated balance sheets (see
Note 14
).
During the
three months ended
June 30, 2018
, we recorded
a net loss
of
$52.7 million
and during the
three months ended
June 30, 2017
, we recorded
a net gain
of
$36.5 million
from our commodity derivatives to cost of sales in our unaudited condensed consolidated statements of operations.
Credit Risk
We have credit policies that we believe minimize our overall credit risk, including an evaluation of potential counterparties’ financial condition (including credit ratings), collateral requirements under certain circumstances, and the use of industry standard master netting agreements, which allow for offsetting counterparty receivable and payable balances for certain transactions.
At
June 30, 2018
,
our primary counterparties were retailers, resellers, energy marketers, producers,
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
refiners, and dealers.
This concentration of counterparties may impact our overall exposure to credit risk, either positively or negatively, as the counterparties may be similarly affected by changes in economic, regulatory or other conditions. If a counterparty does not perform on a contract, we may not realize amounts that have been recorded in our unaudited condensed consolidated balance sheets and recognized in our net income.
Interest Rate Risk
Our Revolving Credit Facility is variable-rate debt with interest rates that are generally indexed to bank prime or LIBOR interest rates.
At
June 30, 2018
,
we had
$1.3 billion
of outstanding borrowings under our Revolving Credit Facility at a weighted average interest rate of
4.79%
.
Fair Value of Fixed-Rate Notes
The following table provides fair value estimates of our fixed-rate notes at
June 30, 2018
(in thousands):
|
|
|
|
|
Senior Unsecured Notes:
|
|
5.125% Notes due 2019
|
$
|
354,312
|
|
6.875% Notes due 2021
|
$
|
373,013
|
|
7.500% Notes due 2023
|
$
|
618,966
|
|
6.125% Notes due 2025
|
$
|
369,557
|
|
For the Senior Unsecured Notes, the fair value estimates were developed based on publicly traded quotes and would be classified as Level 1 in the fair value hierarchy.
Note 12
—Segments
The following table summarizes revenues related to our segments. Revenues for reporting periods beginning after April 1, 2018 are presented under Topic 606 (see
Note 15
for a further discussion), while prior periods are not adjusted and continue to be reported under the accounting standard in effect for those periods. Transactions between segments are recorded based on prices negotiated between the segments. The “Corporate and Other” category in the table below includes certain corporate expenses that are not allocated to the reportable segments. The table below does not include amounts related to the Retail Propane segment, as these amounts has been classified within discontinued operations in our unaudited condensed consolidated statements of operations (see
Note 14
).
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2018
|
|
2017 (1)
|
|
|
(in thousands)
|
Revenues:
|
|
|
|
|
Crude Oil Logistics:
|
|
|
|
|
Topic 606 revenues
|
|
|
|
|
Crude oil sales
|
|
$
|
756,511
|
|
|
$
|
480,285
|
|
Crude oil transportation and other
|
|
28,546
|
|
|
26,986
|
|
Non-Topic 606 revenues
|
|
3,298
|
|
|
—
|
|
Elimination of intersegment sales
|
|
(4,525
|
)
|
|
(2,356
|
)
|
Total Crude Oil Logistics revenues
|
|
783,830
|
|
|
504,915
|
|
Water Solutions:
|
|
|
|
|
Topic 606 revenues
|
|
|
|
|
Disposal service fees
|
|
54,004
|
|
|
33,321
|
|
Sale of recovered hydrocarbons
|
|
20,378
|
|
|
9,960
|
|
Freshwater revenues
|
|
500
|
|
|
—
|
|
Other service revenues
|
|
1,251
|
|
|
3,686
|
|
Non-Topic 606 revenues
|
|
12
|
|
|
—
|
|
Total Water Solutions revenues
|
|
76,145
|
|
|
46,967
|
|
Liquids:
|
|
|
|
|
Topic 606 revenues
|
|
|
|
|
Propane sales
|
|
186,489
|
|
|
136,860
|
|
Butane sales
|
|
113,200
|
|
|
68,232
|
|
Other product sales
|
|
151,805
|
|
|
84,303
|
|
Service revenues
|
|
5,671
|
|
|
6,012
|
|
Non-Topic 606 revenues
|
|
4,397
|
|
|
—
|
|
Elimination of intersegment sales
|
|
(1,665
|
)
|
|
(1,382
|
)
|
Total Liquids revenues
|
|
459,897
|
|
|
294,025
|
|
Refined Products and Renewables:
|
|
|
|
|
Topic 606 revenues
|
|
|
|
|
Refined products sales
|
|
1,428,212
|
|
|
2,773,607
|
|
Renewables sales
|
|
—
|
|
|
110,966
|
|
Service fees and other revenues
|
|
—
|
|
|
118
|
|
Non-Topic 606 revenues
|
|
3,096,195
|
|
|
—
|
|
Elimination of intersegment sales
|
|
—
|
|
|
(54
|
)
|
Total Refined Products and Renewables revenues
|
|
4,524,407
|
|
|
2,884,637
|
|
Corporate and Other:
|
|
|
|
|
Non-Topic 606 revenues
|
|
376
|
|
|
161
|
|
Elimination of intersegment sales
|
|
(221
|
)
|
|
—
|
|
Total Corporate and Other revenues
|
|
155
|
|
|
161
|
|
Total revenues
|
|
$
|
5,844,434
|
|
|
$
|
3,730,705
|
|
|
|
(1)
|
We adopted ASC 606 as of April 1, 2018. Revenue reported in fiscal year 2018 is recorded under the ASC 605 guidance.
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes depreciation and amortization expense and operating income (loss) by segment for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
|
(in thousands)
|
Depreciation and Amortization:
|
|
|
|
|
Crude Oil Logistics
|
|
$
|
19,229
|
|
|
$
|
20,835
|
|
Water Solutions
|
|
25,309
|
|
|
24,008
|
|
Liquids
|
|
6,468
|
|
|
6,330
|
|
Refined Products and Renewables
|
|
321
|
|
|
324
|
|
Corporate and Other
|
|
718
|
|
|
920
|
|
Total depreciation and amortization
|
|
$
|
52,045
|
|
|
$
|
52,417
|
|
|
|
|
|
|
Operating Income (Loss):
|
|
|
|
|
Crude Oil Logistics
|
|
$
|
(99,738
|
)
|
|
$
|
4,357
|
|
Water Solutions
|
|
969
|
|
|
(1,154
|
)
|
Liquids
|
|
2,623
|
|
|
(8,772
|
)
|
Refined Products and Renewables
|
|
29,022
|
|
|
14,496
|
|
Corporate and Other
|
|
(17,430
|
)
|
|
(17,726
|
)
|
Total operating loss
|
|
$
|
(84,554
|
)
|
|
$
|
(8,799
|
)
|
The following table summarizes additions to property, plant and equipment and intangible assets by segment for the periods indicated. This information has been prepared on the accrual basis, and includes property, plant and equipment and intangible assets acquired in acquisitions.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
|
(in thousands)
|
Crude Oil Logistics
|
|
$
|
8,382
|
|
|
$
|
7,058
|
|
Water Solutions
|
|
130,422
|
|
|
19,405
|
|
Liquids
|
|
992
|
|
|
542
|
|
Corporate and Other
|
|
331
|
|
|
269
|
|
Total
|
|
$
|
140,127
|
|
|
$
|
27,274
|
|
The following tables summarize long-lived assets (consisting of property, plant and equipment, intangible assets, and goodwill) and total assets by segment at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
(in thousands)
|
Long-lived assets, net:
|
|
|
|
|
Crude Oil Logistics
|
|
$
|
1,624,591
|
|
|
$
|
1,638,558
|
|
Water Solutions
|
|
1,416,901
|
|
|
1,256,143
|
|
Liquids (1)
|
|
495,767
|
|
|
501,302
|
|
Refined Products and Renewables
|
|
207,179
|
|
|
208,849
|
|
Corporate and Other
|
|
30,571
|
|
|
31,516
|
|
Total
|
|
$
|
3,775,009
|
|
|
$
|
3,636,368
|
|
|
|
(1)
|
Includes
$0.5 million
and
$0.6 million
of non-US long-lived assets at
June 30, 2018
and
March 31, 2018
, respectively.
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
(in thousands)
|
Total assets:
|
|
|
|
|
Crude Oil Logistics
|
|
$
|
2,241,828
|
|
|
$
|
2,285,813
|
|
Water Solutions
|
|
1,492,264
|
|
|
1,323,171
|
|
Liquids (1)
|
|
773,130
|
|
|
717,690
|
|
Refined Products and Renewables
|
|
1,231,926
|
|
|
1,204,633
|
|
Corporate and Other
|
|
69,814
|
|
|
102,211
|
|
Assets held for sale
|
|
515,012
|
|
|
517,604
|
|
Total
|
|
$
|
6,323,974
|
|
|
$
|
6,151,122
|
|
|
|
(1)
|
Includes
$36.6 million
and
$27.5 million
of non-US total assets at
June 30, 2018
and
March 31, 2018
, respectively.
|
Note 13
—Transactions with Affiliates
SemGroup Corporation (“SemGroup”) holds ownership interests in our general partner. We sell product to and purchase product from SemGroup, and these transactions are included within revenues and cost of sales, respectively, in our unaudited condensed consolidated statements of operations. We also lease crude oil storage from SemGroup.
We purchase ethanol from E Energy Adams, LLC, an equity method investee, in which we previously held an ownership interest. We sold our interest in E Energy Adams, LLC on May 3, 2018 (see
Note 2
). These transactions are reported within cost of sales in our unaudited condensed consolidated statements of operations.
The following table summarizes these related party transactions for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
|
(in thousands)
|
Sales to SemGroup
|
|
$
|
120
|
|
|
$
|
123
|
|
Purchases from SemGroup
|
|
$
|
1,020
|
|
|
$
|
1,017
|
|
Sales to equity method investees
|
|
$
|
—
|
|
|
$
|
98
|
|
Purchases from equity method investees
|
|
$
|
—
|
|
|
$
|
27,906
|
|
Sales to entities affiliated with management
|
|
$
|
5,280
|
|
|
$
|
83
|
|
Purchases from entities affiliated with management
|
|
$
|
76,534
|
|
|
$
|
197
|
|
Accounts receivable from affiliates consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
(in thousands)
|
Receivables from SemGroup
|
|
$
|
24
|
|
|
$
|
49
|
|
Receivables from NGL Energy Holdings LLC
|
|
5,795
|
|
|
4,693
|
|
Receivables from equity method investees
|
|
11
|
|
|
6
|
|
Receivables from entities affiliated with management
|
|
2,994
|
|
|
24
|
|
Total
|
|
$
|
8,824
|
|
|
$
|
4,772
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Accounts payable to affiliates consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
(in thousands)
|
Payables to SemGroup
|
|
$
|
22
|
|
|
$
|
—
|
|
Payables to equity method investees
|
|
—
|
|
|
8
|
|
Payables to entities affiliated with management
|
|
24,852
|
|
|
1,246
|
|
Total
|
|
$
|
24,874
|
|
|
$
|
1,254
|
|
At
June 30, 2018
and
March 31, 2018
, we had a loan receivable from Victory Propane, an equity method investee (see Note 2), of
$2.1 million
(net of our proportionate share of their cumulative losses since October 2017 of
$0.5 million
, as described in
Note 2
) and
$1.2 million
, respectively, with an initial maturity date of March 31, 2021, which can be extended for successive
one
-year periods unless one of the parties terminates the loan agreement.
Other Related Party Transactions
Repurchase of Warrants
On April 26, 2018, we repurchased outstanding warrants, as discussed further in
Note 10
, from funds managed by Oaktree Capital Management, L.P., who are represented on the board of directors of our general partner.
Agreement with WPX Energy Marketing, LLC (“WPX”)
During the three months ended June 30, 2018, we entered into a definitive agreement with WPX. Under this agreement, we agreed to provide WPX the benefit of our minimum shipping fees or deficiency credits (fees paid in previous periods that were in excess of the volumes actually shipped) totaling
$67.7 million
at the time of the transaction (as discussed further in
Note 2
), which can be utilized for volumes shipped that exceed the minimum monthly volume commitment in subsequent periods. As a result, we wrote-off these minimum shipping fees included within other noncurrent assets in our unaudited condensed consolidated balance sheet (see
Note 2
) and recorded a loss within
loss (gain) on disposal or impairment of assets, net
in our unaudited condensed consolidated statement of operations. We also agreed that we would only ship crude oil that we are required to purchase from WPX in utilizing our allotted capacity on these pipelines and they agreed to be fully responsible to us for all deficiency payments (money due when our actual shipments are less than our allotted capacity) for the remaining term of our contract, which totals
$50.3 million
(as discuss further in
Note 9
). As consideration for this transaction, we paid WPX a net
$35.3 million
, which we have recorded as a loss within
loss (gain) on disposal or impairment of assets, net
in our unaudited condensed consolidated statement of operations. A member of the board of directors of our general partner is also an executive of WPX.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Note 14
—Assets, Liabilities and Redeemable Noncontrolling Interest Held for Sale and Discontinued Operations
As discussed in
Note 1
, as of
June 30, 2018
, we met the criteria for classifying the assets, liabilities and redeemable noncontrolling interest of our Retail Propane segment as held for sale and the operations as discontinued.
The following table summarizes the major classes of assets, liabilities and redeemable noncontrolling interest classified as held for sale at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
March 31, 2018
|
|
|
(in thousands)
|
Assets Held for Sale
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
3,861
|
|
|
$
|
4,113
|
|
Accounts receivable-trade, net
|
|
23,726
|
|
|
45,924
|
|
Inventories
|
|
14,904
|
|
|
13,250
|
|
Prepaid expenses and other current assets
|
|
3,644
|
|
|
2,796
|
|
Property, plant and equipment, net
|
|
209,674
|
|
|
201,340
|
|
Goodwill
|
|
108,308
|
|
|
107,951
|
|
Intangible assets, net
|
|
149,205
|
|
|
141,328
|
|
Other assets
|
|
1,690
|
|
|
902
|
|
Total assets held for sale
|
|
$
|
515,012
|
|
|
$
|
517,604
|
|
|
|
|
|
|
Liabilities and Redeemable Noncontrolling Interest Held for Sale
|
|
|
|
|
Accounts payable-trade
|
|
$
|
9,676
|
|
|
$
|
7,790
|
|
Accrued expenses and other payables
|
|
5,024
|
|
|
6,583
|
|
Advance payments received from customers
|
|
20,497
|
|
|
12,842
|
|
Current maturities of long-term debt
|
|
2,912
|
|
|
2,550
|
|
Long-term debt, net
|
|
4,886
|
|
|
2,888
|
|
Redeemable noncontrolling interest
|
|
12,829
|
|
|
9,927
|
|
Total liabilities and redeemable noncontrolling interest held for sale
|
|
$
|
55,824
|
|
|
$
|
42,580
|
|
The following table summarizes the results of operations from discontinued operations related to the Retail Propane segment for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
|
(in thousands)
|
Revenues
|
|
$
|
66,673
|
|
|
$
|
67,080
|
|
Cost of sales
|
|
34,496
|
|
|
29,636
|
|
Operating expenses
|
|
24,502
|
|
|
28,641
|
|
General and administrative expense
|
|
2,396
|
|
|
2,606
|
|
Depreciation and amortization
|
|
8,706
|
|
|
11,462
|
|
(Gain) loss on disposal or impairment of assets, net
|
|
(11
|
)
|
|
603
|
|
Operating loss from discontinued operations
|
|
(3,416
|
)
|
|
(5,868
|
)
|
Interest expense
|
|
(125
|
)
|
|
(122
|
)
|
Other (expense) income, net
|
|
(500
|
)
|
|
335
|
|
Loss from discontinued operations before taxes (1)
|
|
(4,041
|
)
|
|
(5,655
|
)
|
Income tax expense
|
|
—
|
|
|
(3
|
)
|
Loss from discontinued operations, net of tax
|
|
$
|
(4,041
|
)
|
|
$
|
(5,658
|
)
|
|
|
(1)
|
Includes losses attributable to redeemable noncontrolling interest of
$0.4 million
and
$0.4 million
for the three months ended
June 30, 2018
and
2017
, respectively.
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Continuing Involvement
We have commitments to sell up to
104.4 million
gallons of propane, valued at
$106.5 million
(based on the contract price) to Superior and DCC, the purchasers of the Retail Propane segment, through April 2019. During the three months ended June 30, 2018, we received
$3.0 million
from DCC for propane sold to them during the period.
Note 15
—Revenue from Contracts with Customers
Impact of Adoption
We adopted Topic 606 on April 1, 2018, using the modified retrospective method. Revenues for reporting periods beginning after April 1, 2018 are presented under Topic 606, while prior periods are not adjusted and continue to be reported under the accounting standard in effect for those periods. We recorded an increase to the beginning balance of equity as of April 1, 2018, due to the cumulative impact of adopting the standard, as discussed further below.
Based on our evaluation, we anticipate that from time to time, differences in the timing of revenues earned and our right to invoice customers may create contract assets or liabilities. These differences in timing would be the result of contracts that contain minimum volume commitments and tiered pricing provisions, primarily within our Water Solutions segment. In addition, we completed the process of implementing appropriate changes to our business processes, systems and controls to support recognition and disclosure under this standard. Furthermore, under this standard we made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that we collect from a customer.
As discussed previously, we deferred a portion of the gain related to the sale of our general partner interest in TransMontaigne Partners L.P., of which the current portion was recorded in accrued expenses and other payables and the long-term portion was recorded in other noncurrent liabilities at March 31, 2018 within our unaudited condensed consolidated balance sheet. As this transaction was accounted for under the real estate guidance in ASC 360-20,
Property, Plant and Equipment,
we
had been amortizing the gain over the life of the related lease agreements. Upon adoption of ASU No. 2014-09 and ASU No. 2017-05, we determined that this transaction should be accounted for under the guidance of ASC 810-10-40 and utilizing the modified retrospective approach of adoption, the deferred gain as of March 31, 2018 of
$139.3 million
was recognized in the beginning balance of retained earnings as part of our cumulative effect adjustment at April 1, 2018.
The following tables summarize the impact of adoption on our unaudited condensed consolidated balance sheet and unaudited condensed consolidated statement of operations as of and for the three months ended June 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Condensed Consolidated Balance Sheet
|
|
|
June 30, 2018
|
|
|
As Reported
|
|
Balances Without Adoption of ASU No. 2014-09
|
|
Effect of Change Increase/(Decrease)
|
|
|
(in thousands)
|
Accrued expenses and other payables
|
|
$
|
225,617
|
|
|
$
|
30,113
|
|
|
$
|
195,504
|
|
Other noncurrent liabilities
|
|
$
|
63,539
|
|
|
$
|
101,665
|
|
|
$
|
(38,126
|
)
|
Equity:
|
|
|
|
|
|
|
General partner
|
|
$
|
(50,919
|
)
|
|
$
|
(51,058
|
)
|
|
$
|
139
|
|
Limited partners
|
|
$
|
1,740,410
|
|
|
$
|
1,601,243
|
|
|
$
|
139,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Condensed Consolidated Statement of Operations
|
|
|
Three Months Ended June 30, 2018
|
|
|
As Reported
|
|
Balances Without Adoption of ASU No. 2014-09
|
|
Effect of Change Increase/(Decrease)
|
|
|
(in thousands)
|
Loss (gain) on disposal or impairment of assets, net
|
|
$
|
101,335
|
|
|
$
|
93,807
|
|
|
$
|
7,528
|
|
Operating loss
|
|
$
|
(84,554
|
)
|
|
$
|
(77,026
|
)
|
|
$
|
(7,528
|
)
|
Net loss
|
|
$
|
(169,289
|
)
|
|
$
|
(161,761
|
)
|
|
$
|
(7,528
|
)
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Prior to April 1, 2018, we recognized revenue for services and products when all of the following criteria were met under Topic 605: (i) either services have been rendered or products have been delivered or sold; (ii) persuasive evidence of an arrangement existed; (iii) the price for services was fixed or determinable; and (iv) collectibility was reasonably assured. We recorded deferred revenue when we received amounts from our customers but had not yet met the criteria listed above. We recognized deferred revenue in our consolidated statement of operations when the criteria had been met and all services had been rendered.
Effective April 1, 2018, we recognize revenue for services and products under revenue contracts as our obligations to either perform services or deliver or sell products under the contracts are satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation in the contract and is recognized as revenue when, or as, the performance obligation is satisfied. Our revenue contracts in scope under ASU No. 2014-09 primarily have a single performance obligation. The evaluation of when performance obligations have been satisfied and the transaction price that is allocated to our performance obligations requires significant judgment and assumptions, including our evaluation of the timing of when control of the underlying good or service has transferred to our customers and the relative stand-alone selling price of goods and services provided to customers under contracts with multiple performance obligations. Actual results can vary from those judgments and assumptions. We do not have any material contracts with multiple performance obligations or under which we receive material amounts of non-cash consideration at March 31, 2018. Our costs to obtain or fulfill our revenue contracts were not material as of June 30, 2018.
The majority of our revenue agreements are within scope under ASU No. 2014-09 and the remainder of our revenue comes from contracts that are accounted for as derivatives under ASC 815 or that contain nonmonetary exchanges or leases and are in scope under Topics 845 and 840, respectively. See
Note 12
for a detail of disaggregated revenue.
Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to allow customers to secure the right to reserve the product or storage capacity to be received or used at a later date, not to receive financing from our customers or to provide customers with financing.
We report taxes collected from customers and remitted to taxing authorities, such as sales and use taxes, on a net basis. We include amounts billed to customers for shipping and handling costs in revenues in our unaudited condensed consolidated statements of operations.
Crude Oil Logistics Performance Obligations
Within the Crude Oil Logistics segment, revenue is disaggregated into two primary revenue streams that include revenue from the sale of commodities and service revenue. For sales of commodities, we are obligated to deliver a predetermined amount of product on a month-to-month basis to our customers. For these types of agreements, revenue is recognized at a point in time based on when the product is delivered and control is transferred to the customer.
For revenue received from services rendered, we are obligated to provide throughput services to move product via pipeline, truck, railcar, or marine vessel or to provide terminal maintenance services. In either case, the obligation is satisfied over time utilizing the output method based on each volume of product that is moved from the origination point to the final destination or based on the passage of time.
Water Solutions Performance Obligations
Within the Water Solutions segment, revenue is disaggregated into two primary revenue streams that include service revenue and commodity sales revenue. For contracts involving disposal services, we accept wastewater and solids for disposal at our facilities. In cases where we have agreed within a contract or are required by law to remove hydrocarbons from the wastewater, the skim oil will be valued as non-cash consideration. Ordinarily, it is required that the fair value of the skim oil is to be estimated at contract inception; however, due to variability of the form of the non-cash consideration, the amount and dollar value is unknown at the contract inception date. Accordingly, ASC 606-10-32-11 allows us to value the skim oil on the date in which the value becomes known.
The Water Solutions segment has certain disposal contracts that contain the following types of terms or pricing structures that involve significant judge that impacts the determination and timing of revenue.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
|
|
•
|
Minimum volume commitments.
We receive a shortfall fee if the customer does not deliver a certain amount of volume of wastewater over a specified period of time. At each reporting period, we make a determination as to the likelihood of us earning this fee. We recognize revenue from these contracts when (i) actual volumes are received; and (ii) when the likelihood of a customer exercising its remaining rights to make up the deficient volumes under minimum volume commitments becomes remote (also known as the breakage model).
|
|
|
•
|
Tiered pricing.
For contracts with tiered pricing provisions, the period in which the tiers are earned and settled (i.e. the “reset period”) may vary from monthly to over a period of multiple months. If the tiered pricing is based on a month, we allocate the fee to the distinct daily service to which it relates. If the tiered pricing spans across multiple reporting periods, we estimate the total transaction price at the beginning of each reset period, based on the expected volumes. We revise our estimates of variable consideration at each reporting date throughout each reset period.
|
|
|
•
|
Volume discount pricing.
Volume discount pricing is a form of variable consideration whereby the customer pays for the volumes delivered on a cumulative basis. Similar to tiered pricing, the period in which the cumulative volumes are earned and settled (i.e. the “reset period”) may vary from daily to over a period of multiple months. If the volume discount is based on a month, we allocate the fee to the distinct daily service to which it relates. If the volume discount period spans across multiple reporting periods, we estimate the total transaction price at the beginning of each reset period, based on the expected volumes. We revise the estimate of variable consideration at each reporting date.
|
For all of our disposal contracts within the Water Solutions segment, revenue will be recognized over time utilizing the output method based on the volume of wastewater or solids we accept from the customer. For contracts that involve the sale of recovered hydrocarbons and freshwater, we will recognize revenue at a point in time, based on when control of the product is transferred to the customer.
Liquids Performance Obligations
Within the Liquids segment, revenue is disaggregated into two primary revenue streams that include revenue from the sale of commodities and service revenue. For commodity sales, we are obligated to deliver a specified amount of product over a specified period of time. For these types of agreements, revenue is recognized at a point in time based on when the product is delivered and control is transferred to the customer. For revenue received from services rendered, we offer a variety of services which include: (i) storage services where product is commingled; (ii) railcar transportation services; (iii) transloading services; and (iv) logistics services. We are obligated to provide these services over a predetermined period of time. Revenue from service contracts is recognized at a point in time upon the transfer of control each month. All revenue from services is recognized over time utilizing the output method based on volumes stored or moved.
Refined Products and Renewables Performance Obligations
The Refined Products and Renewables segment has one distinct revenue stream, which is revenue from commodity sales. In these agreements, we are obligated to sell a predetermined amount of product over a specified period of time. Revenue for all commodity sales is recognized at a point in time once the customer has lifted the agreed-upon volumes.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Remaining Performance Obligations
Most of our service contracts are such that we have the right to consideration from a customer in an amount that corresponds directly with the value to the customer of our performance completed to date. Therefore, we are utilizing the practical expedient in ASC 606-10-55-18 under which we recognize revenue in the amount to which we have the right to invoice. Applying this practical expedient, we are not required to disclose the transaction price allocated to remaining performance obligations under these agreements. The following table summarizes the amount and timing of revenue recognition for such contracts (in thousands):
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
2019 (nine months)
|
$
|
98,428
|
|
2020
|
112,353
|
|
2021
|
110,461
|
|
2022
|
106,386
|
|
2023
|
104,063
|
|
Thereafter
|
322,019
|
|
Total
|
$
|
853,710
|
|
Many agreements are short-term in nature with a contract term of one year or less. For those contracts, we utilized the practical expedient in ASC 606-10-50 that exempts us from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. Additionally, for our product sales contracts, we have elected the practical expedient set out in ASC 606-10-50-14A, which states that we are not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under these agreements, each unit of product represents a separate performance obligation and therefore future volumes are wholly unsatisfied and disclosure of transaction price allocated to remaining performance obligations is not required. Under product sales contracts, the variability arises as both volume and pricing (typically index-based) are not known until the product is delivered.
Contract Assets and Liabilities
Amounts owed from our customers under our revenue contracts are typically billed as the service is being provided on a monthly basis and are due within 1-30 days of billing, and are classified as accounts receivable-trade on our unaudited condensed consolidated balance sheets. Under certain of our contracts, we recognize revenues in excess of billings, referred to as contract assets, within prepaid expenses and other current assets in our unaudited condensed consolidated balance sheets. Accounts receivable from contracts with customers are presented within accounts receivable-trade and accounts receivable-affiliates in our unaudited condensed consolidated balance sheets. Our contract asset balances primarily relate to our underground cavern storage contracts with multi-period contracts in which the fee escalates each year and the customer provides upfront payment at the beginning of the contract period. We did not record any contract assets during this period.
Under certain of our contracts we may be entitled to receive payments in advance of satisfying our performance obligations under the contract. We recognize a liability for these payments in excess of revenue recognized, referred to as deferred revenue or contract liabilities, within advance payments received from customers in our unaudited condensed consolidated balance sheets. Our deferred revenue primarily relates to:
|
|
•
|
Prepayments.
Some revenue contracts contain prepayment provisions within our Liquids business segment. Revenue received related to our underground cavern storage services is received up-front at the beginning of the contract period and deferred until services have been rendered. In some cases, we also received prepayments from customers purchasing commodities, which allows the customer to secure the right to receive their requested volumes in a future period. Revenue from these contracts is initially deferred, thus creating a contract liability.
|
|
|
•
|
Multi-period contract in which fee escalates each subsequent year of the contract.
Revenue from these contracts are recognized over time based on a weighted average of what is expected to be received over the life of the contract. As the actual amount billed and received from the customer differs from the amount of revenue recognized, a contract liability is recorded.
|
|
|
•
|
Tiered pricing and volume discount pricing.
As described above, we revise our estimates of variable consideration at each reporting date throughout each reset period. As the actual amount billed and received from the customer differs from the amount of revenue recognized, a contract liability is recorded.
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
|
|
•
|
Capital reimbursements.
Certain contracts in our Water Solutions segment require that our customers reimburse us for capital expenditures related to the construction of long-lived assets, such as water gathering pipelines and custody transfer points, utilized to provide services to them under the revenue contracts. Because we consider these amounts as consideration from customers associated with ongoing services to be provided to customers, we defer these upfront payments in deferred revenue and recognize the amounts in revenue over the life of the associated revenue contract as the performance obligations are satisfied under the contract.
|
Deferred revenue is included in advance payments received from customers on the unaudited condensed consolidated balance sheets as the performance obligations related to these revenues are expected to be satisfied within one year or less.
The following tables summarizes the balances of our contract assets and liabilities at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
April 1, 2018
|
|
June 30, 2018
|
|
|
(in thousands)
|
Accounts receivable from contracts with customers
|
|
$
|
677,095
|
|
|
$
|
705,594
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
(in thousands)
|
Contract liabilities balance at April 1
|
|
$
|
6,127
|
|
Payment received and deferred
|
|
25,864
|
|
Payment recognized in revenue
|
|
(12,367
|
)
|
Contract liabilities balance at June 30
|
|
$
|
19,624
|
|
Note 16
—Subsequent Events
Acquisitions
On July 9, 2018, and in conjunction with the sale of the Retail Propane segment (see
Note 1
), we acquired the remaining
40%
interest in Atlantic Propane, LLC, which was part of our Retail Propane segment, for total consideration of approximately
$12.8 million
. The acquisition of the remaining interest was accounted for as an equity transaction, no gain or loss was recorded, and the carrying value of the noncontrolling interest was adjusted to reflect the change in ownership interest of the subsidiary. Atlantic Propane was included in the sale to Superior, as discussed below.
On July 10, 2018, we completed the sale of virtually all of our Retail Propane segment to Superior, see
Note 1
and
Note 14
for a further discussion.
Note 17—Unaudited Condensed Consolidating Guarantor and Non-Guarantor Financial Information
Certain of our wholly owned subsidiaries have, jointly and severally, fully and unconditionally guaranteed the Senior Unsecured Notes (see
Note 8
). Pursuant to Rule 3-10 of Regulation S-X, we have presented in columnar format the unaudited condensed consolidating financial information for NGL Energy Partners LP (Parent), NGL Energy Finance Corp., the guarantor subsidiaries on a combined basis, and the non-guarantor subsidiaries on a combined basis in the tables below. NGL Energy Partners LP and NGL Energy Finance Corp. are co-issuers of the Senior Unsecured Notes. Since NGL Energy Partners LP received the proceeds from the issuance of the Senior Unsecured Notes, all activity has been reflected in the NGL Energy Partners LP (Parent) column in the tables below.
During the periods presented in the tables below, the status of certain subsidiaries changed, in that they either became guarantors of or ceased to be guarantors of the Senior Unsecured Notes. For purposes of the tables below, when the status of a subsidiary changes, all subsidiary activity is included in either the guarantor subsidiaries column or non-guarantor subsidiaries column based on the status of the subsidiary at the balance sheet date regardless of activity during the year.
There are no significant restrictions that prevent the parent or any of the guarantor subsidiaries from obtaining funds from their respective subsidiaries by dividend or loan. None of the assets of the guarantor subsidiaries (other than the investments in non-guarantor subsidiaries) are restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X under the Securities Act of 1933, as amended.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
For purposes of the tables below, (i) the unaudited condensed consolidating financial information is presented on a legal entity basis, (ii) investments in consolidated subsidiaries are accounted for as equity method investments, and (iii) contributions, distributions, and advances to (from) consolidated entities are reported on a net basis within net changes in advances with consolidated entities in the unaudited condensed consolidating statement of cash flow tables below.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Balance Sheet
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
5,314
|
|
|
$
|
—
|
|
|
$
|
1,319
|
|
|
$
|
7,049
|
|
|
$
|
—
|
|
|
$
|
13,682
|
|
Accounts receivable-trade, net of allowance for doubtful accounts
|
|
—
|
|
|
—
|
|
|
1,093,941
|
|
|
2,655
|
|
|
—
|
|
|
1,096,596
|
|
Accounts receivable-affiliates
|
|
—
|
|
|
—
|
|
|
8,824
|
|
|
—
|
|
|
—
|
|
|
8,824
|
|
Inventories
|
|
—
|
|
|
—
|
|
|
600,066
|
|
|
420
|
|
|
—
|
|
|
600,486
|
|
Prepaid expenses and other current assets
|
|
—
|
|
|
—
|
|
|
134,129
|
|
|
968
|
|
|
—
|
|
|
135,097
|
|
Assets held for sale
|
|
—
|
|
|
—
|
|
|
487,378
|
|
|
27,634
|
|
|
—
|
|
|
515,012
|
|
Total current assets
|
|
5,314
|
|
|
—
|
|
|
2,325,657
|
|
|
38,726
|
|
|
—
|
|
|
2,369,697
|
|
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation
|
|
—
|
|
|
—
|
|
|
1,457,799
|
|
|
146,699
|
|
|
—
|
|
|
1,604,498
|
|
GOODWILL
|
|
—
|
|
|
—
|
|
|
1,185,711
|
|
|
77,260
|
|
|
—
|
|
|
1,262,971
|
|
INTANGIBLE ASSETS, net of accumulated amortization
|
|
—
|
|
|
—
|
|
|
825,124
|
|
|
82,416
|
|
|
—
|
|
|
907,540
|
|
INVESTMENTS IN UNCONSOLIDATED ENTITIES
|
|
—
|
|
|
—
|
|
|
1,995
|
|
|
—
|
|
|
—
|
|
|
1,995
|
|
NET INTERCOMPANY RECEIVABLES (PAYABLES)
|
|
1,697,552
|
|
|
—
|
|
|
(1,707,202
|
)
|
|
9,650
|
|
|
—
|
|
|
—
|
|
INVESTMENTS IN CONSOLIDATED SUBSIDIARIES
|
|
2,015,546
|
|
|
—
|
|
|
245,072
|
|
|
—
|
|
|
(2,260,618
|
)
|
|
—
|
|
LOAN RECEIVABLE-AFFILIATE
|
|
—
|
|
|
—
|
|
|
2,135
|
|
|
—
|
|
|
—
|
|
|
2,135
|
|
OTHER NONCURRENT ASSETS
|
|
—
|
|
|
—
|
|
|
175,138
|
|
|
—
|
|
|
—
|
|
|
175,138
|
|
Total assets
|
|
$
|
3,718,412
|
|
|
$
|
—
|
|
|
$
|
4,511,429
|
|
|
$
|
354,751
|
|
|
$
|
(2,260,618
|
)
|
|
$
|
6,323,974
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES AND REDEEMABLE NONCONTROLLING INTEREST:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable-trade
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
835,909
|
|
|
$
|
324
|
|
|
$
|
—
|
|
|
$
|
836,233
|
|
Accounts payable-affiliates
|
|
1
|
|
|
—
|
|
|
24,873
|
|
|
—
|
|
|
—
|
|
|
24,874
|
|
Accrued expenses and other payables
|
|
33,673
|
|
|
—
|
|
|
190,308
|
|
|
1,636
|
|
|
—
|
|
|
225,617
|
|
Advance payments received from customers
|
|
—
|
|
|
—
|
|
|
16,104
|
|
|
5,767
|
|
|
—
|
|
|
21,871
|
|
Current maturities of long-term debt
|
|
—
|
|
|
—
|
|
|
646
|
|
|
—
|
|
|
—
|
|
|
646
|
|
Liabilities and redeemable noncontrolling interest held for sale
|
|
—
|
|
|
—
|
|
|
39,888
|
|
|
15,936
|
|
|
—
|
|
|
55,824
|
|
Total current liabilities and redeemable noncontrolling interest
|
|
33,674
|
|
|
—
|
|
|
1,107,728
|
|
|
23,663
|
|
|
—
|
|
|
1,165,065
|
|
LONG-TERM DEBT, net of debt issuance costs and current maturities
|
|
1,701,214
|
|
|
—
|
|
|
1,331,169
|
|
|
—
|
|
|
—
|
|
|
3,032,383
|
|
OTHER NONCURRENT LIABILITIES
|
|
—
|
|
|
—
|
|
|
56,986
|
|
|
6,553
|
|
|
—
|
|
|
63,539
|
|
CLASS A 10.75% CONVERTIBLE PREFERRED UNITS
|
|
91,559
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
91,559
|
|
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ equity
|
|
1,891,965
|
|
|
—
|
|
|
2,015,546
|
|
|
324,792
|
|
|
(2,340,081
|
)
|
|
1,892,222
|
|
Accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(257
|
)
|
|
—
|
|
|
(257
|
)
|
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79,463
|
|
|
79,463
|
|
Total equity
|
|
1,891,965
|
|
|
—
|
|
|
2,015,546
|
|
|
324,535
|
|
|
(2,260,618
|
)
|
|
1,971,428
|
|
Total liabilities and equity
|
|
$
|
3,718,412
|
|
|
$
|
—
|
|
|
$
|
4,511,429
|
|
|
$
|
354,751
|
|
|
$
|
(2,260,618
|
)
|
|
$
|
6,323,974
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Balance Sheet
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
16,915
|
|
|
$
|
—
|
|
|
$
|
3,329
|
|
|
$
|
1,850
|
|
|
$
|
—
|
|
|
$
|
22,094
|
|
Accounts receivable-trade, net of allowance for doubtful accounts
|
|
—
|
|
|
—
|
|
|
1,021,616
|
|
|
5,148
|
|
|
—
|
|
|
1,026,764
|
|
Accounts receivable-affiliates
|
|
—
|
|
|
—
|
|
|
4,772
|
|
|
—
|
|
|
—
|
|
|
4,772
|
|
Inventories
|
|
—
|
|
|
—
|
|
|
550,978
|
|
|
325
|
|
|
—
|
|
|
551,303
|
|
Prepaid expenses and other current assets
|
|
—
|
|
|
—
|
|
|
128,311
|
|
|
431
|
|
|
—
|
|
|
128,742
|
|
Assets held for sale
|
|
—
|
|
|
—
|
|
|
490,800
|
|
|
26,804
|
|
|
—
|
|
|
517,604
|
|
Total current assets
|
|
16,915
|
|
|
—
|
|
|
2,199,806
|
|
|
34,558
|
|
|
—
|
|
|
2,251,279
|
|
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation
|
|
—
|
|
|
—
|
|
|
1,371,495
|
|
|
147,112
|
|
|
—
|
|
|
1,518,607
|
|
GOODWILL
|
|
—
|
|
|
—
|
|
|
1,127,347
|
|
|
77,260
|
|
|
—
|
|
|
1,204,607
|
|
INTANGIBLE ASSETS, net of accumulated amortization
|
|
—
|
|
|
—
|
|
|
829,449
|
|
|
83,705
|
|
|
—
|
|
|
913,154
|
|
INVESTMENTS IN UNCONSOLIDATED ENTITIES
|
|
—
|
|
|
—
|
|
|
17,236
|
|
|
—
|
|
|
—
|
|
|
17,236
|
|
NET INTERCOMPANY RECEIVABLES (PAYABLES)
|
|
2,110,940
|
|
|
—
|
|
|
(2,121,741
|
)
|
|
10,801
|
|
|
—
|
|
|
—
|
|
INVESTMENTS IN CONSOLIDATED SUBSIDIARIES
|
|
1,703,327
|
|
|
—
|
|
|
244,109
|
|
|
—
|
|
|
(1,947,436
|
)
|
|
—
|
|
LOAN RECEIVABLE-AFFILIATE
|
|
—
|
|
|
—
|
|
|
1,200
|
|
|
—
|
|
|
—
|
|
|
1,200
|
|
OTHER NONCURRENT ASSETS
|
|
—
|
|
|
—
|
|
|
245,039
|
|
|
—
|
|
|
—
|
|
|
245,039
|
|
Total assets
|
|
$
|
3,831,182
|
|
|
$
|
—
|
|
|
$
|
3,913,940
|
|
|
$
|
353,436
|
|
|
$
|
(1,947,436
|
)
|
|
$
|
6,151,122
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES AND REDEEMABLE NONCONTROLLING INTEREST:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable-trade
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
850,607
|
|
|
$
|
2,232
|
|
|
$
|
—
|
|
|
$
|
852,839
|
|
Accounts payable-affiliates
|
|
1
|
|
|
—
|
|
|
1,253
|
|
|
—
|
|
|
—
|
|
|
1,254
|
|
Accrued expenses and other payables
|
|
41,104
|
|
|
—
|
|
|
181,115
|
|
|
1,285
|
|
|
—
|
|
|
223,504
|
|
Advance payments received from customers
|
|
—
|
|
|
—
|
|
|
4,507
|
|
|
3,867
|
|
|
—
|
|
|
8,374
|
|
Current maturities of long-term debt
|
|
—
|
|
|
—
|
|
|
646
|
|
|
—
|
|
|
—
|
|
|
646
|
|
Liabilities and redeemable noncontrolling interest held for sale
|
|
—
|
|
|
—
|
|
|
30,066
|
|
|
12,514
|
|
|
—
|
|
|
42,580
|
|
Total current liabilities and redeemable noncontrolling interest
|
|
41,105
|
|
|
—
|
|
|
1,068,194
|
|
|
19,898
|
|
|
—
|
|
|
1,129,197
|
|
LONG-TERM DEBT, net of debt issuance costs and current maturities
|
|
1,704,909
|
|
|
—
|
|
|
974,831
|
|
|
—
|
|
|
—
|
|
|
2,679,740
|
|
OTHER NONCURRENT LIABILITIES
|
|
—
|
|
|
—
|
|
|
167,588
|
|
|
5,926
|
|
|
—
|
|
|
173,514
|
|
CLASS A 10.75% CONVERTIBLE PREFERRED UNITS
|
|
82,576
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
82,576
|
|
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ equity
|
|
2,002,592
|
|
|
—
|
|
|
1,704,896
|
|
|
327,858
|
|
|
(2,030,939
|
)
|
|
2,004,407
|
|
Accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
(1,569
|
)
|
|
(246
|
)
|
|
—
|
|
|
(1,815
|
)
|
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83,503
|
|
|
83,503
|
|
Total equity
|
|
2,002,592
|
|
|
—
|
|
|
1,703,327
|
|
|
327,612
|
|
|
(1,947,436
|
)
|
|
2,086,095
|
|
Total liabilities and equity
|
|
$
|
3,831,182
|
|
|
$
|
—
|
|
|
$
|
3,913,940
|
|
|
$
|
353,436
|
|
|
$
|
(1,947,436
|
)
|
|
$
|
6,151,122
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Statement of Operations
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,840,539
|
|
|
$
|
4,693
|
|
|
$
|
(798
|
)
|
|
$
|
5,844,434
|
|
COST OF SALES
|
|
—
|
|
|
—
|
|
|
5,696,990
|
|
|
(36
|
)
|
|
(798
|
)
|
|
5,696,156
|
|
OPERATING COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
—
|
|
|
—
|
|
|
54,172
|
|
|
2,090
|
|
|
—
|
|
|
56,262
|
|
General and administrative
|
|
—
|
|
|
—
|
|
|
22,048
|
|
|
342
|
|
|
—
|
|
|
22,390
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
49,131
|
|
|
2,914
|
|
|
—
|
|
|
52,045
|
|
Loss on disposal or impairment of assets, net
|
|
—
|
|
|
—
|
|
|
101,335
|
|
|
—
|
|
|
—
|
|
|
101,335
|
|
Revaluation of liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
800
|
|
|
—
|
|
|
800
|
|
Operating Loss
|
|
—
|
|
|
—
|
|
|
(83,137
|
)
|
|
(1,417
|
)
|
|
—
|
|
|
(84,554
|
)
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated entities
|
|
—
|
|
|
—
|
|
|
104
|
|
|
—
|
|
|
—
|
|
|
104
|
|
Interest expense
|
|
(29,500
|
)
|
|
—
|
|
|
(16,767
|
)
|
|
(12
|
)
|
|
11
|
|
|
(46,268
|
)
|
Loss on early extinguishment of liabilities, net
|
|
(137
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(137
|
)
|
Other expense, net
|
|
—
|
|
|
—
|
|
|
(33,546
|
)
|
|
—
|
|
|
(196
|
)
|
|
(33,742
|
)
|
Loss From Continuing Operations Before Income Taxes
|
|
(29,637
|
)
|
|
—
|
|
|
(133,346
|
)
|
|
(1,429
|
)
|
|
(185
|
)
|
|
(164,597
|
)
|
INCOME TAX EXPENSE
|
|
—
|
|
|
—
|
|
|
(651
|
)
|
|
—
|
|
|
—
|
|
|
(651
|
)
|
EQUITY IN NET LOSS FROM CONTINUING OPERATIONS OF CONSOLIDATED SUBSIDIARIES
|
|
(138,909
|
)
|
|
—
|
|
|
(1,647
|
)
|
|
—
|
|
|
140,556
|
|
|
—
|
|
Loss From Continuing Operations
|
|
(168,546
|
)
|
|
—
|
|
|
(135,644
|
)
|
|
(1,429
|
)
|
|
140,371
|
|
|
(165,248
|
)
|
Loss From Discontinued Operations, Net of Tax
|
|
—
|
|
|
—
|
|
|
(3,265
|
)
|
|
(961
|
)
|
|
185
|
|
|
(4,041
|
)
|
Net Loss
|
|
(168,546
|
)
|
|
—
|
|
|
(138,909
|
)
|
|
(2,390
|
)
|
|
140,556
|
|
|
(169,289
|
)
|
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
|
|
|
|
|
|
|
|
|
345
|
|
|
345
|
|
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS
|
|
|
|
|
|
|
|
|
|
398
|
|
|
398
|
|
NET LOSS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP
|
|
$
|
(168,546
|
)
|
|
$
|
—
|
|
|
$
|
(138,909
|
)
|
|
$
|
(2,390
|
)
|
|
$
|
141,299
|
|
|
$
|
(168,546
|
)
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Statement of Operations
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,729,220
|
|
|
$
|
1,889
|
|
|
$
|
(404
|
)
|
|
$
|
3,730,705
|
|
COST OF SALES
|
|
—
|
|
|
—
|
|
|
3,629,087
|
|
|
—
|
|
|
(404
|
)
|
|
3,628,683
|
|
OPERATING COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
—
|
|
|
—
|
|
|
47,225
|
|
|
611
|
|
|
—
|
|
|
47,836
|
|
General and administrative
|
|
—
|
|
|
—
|
|
|
22,304
|
|
|
81
|
|
|
—
|
|
|
22,385
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
51,490
|
|
|
927
|
|
|
—
|
|
|
52,417
|
|
Gain on disposal or impairment of assets, net
|
|
—
|
|
|
—
|
|
|
(11,817
|
)
|
|
—
|
|
|
—
|
|
|
(11,817
|
)
|
Operating (Loss) Income
|
|
—
|
|
|
—
|
|
|
(9,069
|
)
|
|
270
|
|
|
—
|
|
|
(8,799
|
)
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated entities
|
|
—
|
|
|
—
|
|
|
1,816
|
|
|
—
|
|
|
—
|
|
|
1,816
|
|
Interest expense
|
|
(38,371
|
)
|
|
—
|
|
|
(10,733
|
)
|
|
(11
|
)
|
|
11
|
|
|
(49,104
|
)
|
Loss on early extinguishment of liabilities, net
|
|
(3,281
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,281
|
)
|
Other income, net
|
|
—
|
|
|
—
|
|
|
1,960
|
|
|
18
|
|
|
(203
|
)
|
|
1,775
|
|
(Loss) Income From Continuing Operations Before Income Taxes
|
|
(41,652
|
)
|
|
—
|
|
|
(16,026
|
)
|
|
277
|
|
|
(192
|
)
|
|
(57,593
|
)
|
INCOME TAX EXPENSE
|
|
—
|
|
|
—
|
|
|
(456
|
)
|
|
—
|
|
|
—
|
|
|
(456
|
)
|
EQUITY IN NET LOSS FROM CONTINUING OPERATIONS OF CONSOLIDATED SUBSIDIARIES
|
|
(21,710
|
)
|
|
—
|
|
|
(371
|
)
|
|
—
|
|
|
22,081
|
|
|
—
|
|
(Loss) Income From Continuing Operations
|
|
(63,362
|
)
|
|
—
|
|
|
(16,853
|
)
|
|
277
|
|
|
21,889
|
|
|
(58,049
|
)
|
Loss From Discontinued Operations, Net of Tax
|
|
—
|
|
|
—
|
|
|
(4,857
|
)
|
|
(993
|
)
|
|
192
|
|
|
(5,658
|
)
|
Net Loss
|
|
(63,362
|
)
|
|
—
|
|
|
(21,710
|
)
|
|
(716
|
)
|
|
22,081
|
|
|
(63,707
|
)
|
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
|
|
|
|
|
|
|
|
|
(52
|
)
|
|
(52
|
)
|
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS
|
|
|
|
|
|
|
|
|
|
397
|
|
|
397
|
|
NET LOSS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP
|
|
$
|
(63,362
|
)
|
|
$
|
—
|
|
|
$
|
(21,710
|
)
|
|
$
|
(716
|
)
|
|
$
|
22,426
|
|
|
$
|
(63,362
|
)
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Statements of Comprehensive Income (Loss)
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
Net loss
|
|
$
|
(168,546
|
)
|
|
$
|
—
|
|
|
$
|
(138,909
|
)
|
|
$
|
(2,390
|
)
|
|
$
|
140,556
|
|
|
$
|
(169,289
|
)
|
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(10
|
)
|
|
—
|
|
|
(11
|
)
|
Comprehensive loss
|
|
$
|
(168,546
|
)
|
|
$
|
—
|
|
|
$
|
(138,910
|
)
|
|
$
|
(2,400
|
)
|
|
$
|
140,556
|
|
|
$
|
(169,300
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
Net loss
|
|
$
|
(63,362
|
)
|
|
$
|
—
|
|
|
$
|
(21,710
|
)
|
|
$
|
(716
|
)
|
|
$
|
22,081
|
|
|
$
|
(63,707
|
)
|
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
(364
|
)
|
|
(11
|
)
|
|
—
|
|
|
(375
|
)
|
Comprehensive loss
|
|
$
|
(63,362
|
)
|
|
$
|
—
|
|
|
$
|
(22,074
|
)
|
|
$
|
(727
|
)
|
|
$
|
22,081
|
|
|
$
|
(64,082
|
)
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Statement of Cash Flows
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities-continuing operations
|
|
$
|
(50,211
|
)
|
|
$
|
—
|
|
|
$
|
(22,043
|
)
|
|
$
|
(747
|
)
|
|
$
|
(185
|
)
|
|
$
|
(73,186
|
)
|
Net cash provided by operating activities-discontinued operations
|
|
—
|
|
|
—
|
|
|
26,327
|
|
|
5,463
|
|
|
—
|
|
|
31,790
|
|
Net cash (used in) provided by operating activities
|
|
(50,211
|
)
|
|
—
|
|
|
4,284
|
|
|
4,716
|
|
|
(185
|
)
|
|
(41,396
|
)
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(70,788
|
)
|
|
(1,922
|
)
|
|
—
|
|
|
(72,710
|
)
|
Acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(112,665
|
)
|
|
(3,927
|
)
|
|
—
|
|
|
(116,592
|
)
|
Settlements of commodity derivatives
|
|
—
|
|
|
—
|
|
|
(60,861
|
)
|
|
—
|
|
|
—
|
|
|
(60,861
|
)
|
Proceeds from sales of assets
|
|
—
|
|
|
—
|
|
|
5,406
|
|
|
—
|
|
|
—
|
|
|
5,406
|
|
Proceeds from divestitures of businesses and investments
|
|
—
|
|
|
—
|
|
|
18,594
|
|
|
—
|
|
|
—
|
|
|
18,594
|
|
Investments in unconsolidated entities
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
Repayments on loan for natural gas liquids facility
|
|
—
|
|
|
—
|
|
|
2,707
|
|
|
—
|
|
|
—
|
|
|
2,707
|
|
Loan to affiliate
|
|
—
|
|
|
—
|
|
|
(1,050
|
)
|
|
—
|
|
|
—
|
|
|
(1,050
|
)
|
Net cash used in investing activities-continuing operations
|
|
—
|
|
|
—
|
|
|
(218,663
|
)
|
|
(5,849
|
)
|
|
—
|
|
|
(224,512
|
)
|
Net cash used in investing activities-discontinued operations
|
|
—
|
|
|
—
|
|
|
(19,061
|
)
|
|
(3,947
|
)
|
|
—
|
|
|
(23,008
|
)
|
Net cash used in investing activities
|
|
—
|
|
|
—
|
|
|
(237,724
|
)
|
|
(9,796
|
)
|
|
—
|
|
|
(247,520
|
)
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings under Revolving Credit Facility
|
|
—
|
|
|
—
|
|
|
962,000
|
|
|
—
|
|
|
—
|
|
|
962,000
|
|
Payments on Revolving Credit Facility
|
|
—
|
|
|
—
|
|
|
(605,500
|
)
|
|
—
|
|
|
—
|
|
|
(605,500
|
)
|
Repurchase of senior unsecured notes
|
|
(5,069
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,069
|
)
|
Payments on other long-term debt
|
|
—
|
|
|
—
|
|
|
(163
|
)
|
|
—
|
|
|
—
|
|
|
(163
|
)
|
Debt issuance costs
|
|
—
|
|
|
—
|
|
|
(771
|
)
|
|
—
|
|
|
—
|
|
|
(771
|
)
|
Contributions from noncontrolling interest owners, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
169
|
|
|
—
|
|
|
169
|
|
Distributions to general and common unit partners and preferred unitholders
|
|
(53,905
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53,905
|
)
|
Repurchase of warrants
|
|
(14,988
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,988
|
)
|
Payments for settlement and early extinguishment of liabilities
|
|
—
|
|
|
—
|
|
|
(1,195
|
)
|
|
—
|
|
|
—
|
|
|
(1,195
|
)
|
Other
|
|
—
|
|
|
—
|
|
|
8,708
|
|
|
—
|
|
|
—
|
|
|
8,708
|
|
Net changes in advances with consolidated entities
|
|
112,572
|
|
|
—
|
|
|
(124,383
|
)
|
|
11,626
|
|
|
185
|
|
|
—
|
|
Net cash provided by financing activities-continuing operations
|
|
38,610
|
|
|
—
|
|
|
238,696
|
|
|
11,795
|
|
|
185
|
|
|
289,286
|
|
Net cash used in financing activities-discontinued operations
|
|
—
|
|
|
—
|
|
|
(7,159
|
)
|
|
(1,874
|
)
|
|
—
|
|
|
(9,033
|
)
|
Net cash provided by financing activities
|
|
38,610
|
|
|
—
|
|
|
231,537
|
|
|
9,921
|
|
|
185
|
|
|
280,253
|
|
Less cash flows from discontinued operations
|
|
—
|
|
|
—
|
|
|
107
|
|
|
(358
|
)
|
|
—
|
|
|
(251
|
)
|
Net (decrease) increase in cash and cash equivalents
|
|
(11,601
|
)
|
|
—
|
|
|
(2,010
|
)
|
|
5,199
|
|
|
—
|
|
|
(8,412
|
)
|
Cash and cash equivalents, beginning of period
|
|
16,915
|
|
|
—
|
|
|
3,329
|
|
|
1,850
|
|
|
—
|
|
|
22,094
|
|
Cash and cash equivalents, end of period
|
|
$
|
5,314
|
|
|
$
|
—
|
|
|
$
|
1,319
|
|
|
$
|
7,049
|
|
|
$
|
—
|
|
|
$
|
13,682
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Statement of Cash Flows
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities-continuing operations
|
|
$
|
(60,756
|
)
|
|
$
|
—
|
|
|
$
|
18,118
|
|
|
$
|
33,145
|
|
|
$
|
(192
|
)
|
|
$
|
(9,685
|
)
|
Net cash provided by (used in) operating activities-discontinued operations
|
|
—
|
|
|
—
|
|
|
11,584
|
|
|
(908
|
)
|
|
—
|
|
|
10,676
|
|
Net cash (used in) provided by operating activities
|
|
(60,756
|
)
|
|
—
|
|
|
29,702
|
|
|
32,237
|
|
|
(192
|
)
|
|
991
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(27,419
|
)
|
|
(226
|
)
|
|
—
|
|
|
(27,645
|
)
|
Acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(19,897
|
)
|
|
—
|
|
|
—
|
|
|
(19,897
|
)
|
Settlements of commodity derivatives
|
|
—
|
|
|
—
|
|
|
23,349
|
|
|
—
|
|
|
—
|
|
|
23,349
|
|
Proceeds from sales of assets
|
|
—
|
|
|
—
|
|
|
18,493
|
|
|
—
|
|
|
—
|
|
|
18,493
|
|
Investments in unconsolidated entities
|
|
—
|
|
|
—
|
|
|
(5,250
|
)
|
|
—
|
|
|
—
|
|
|
(5,250
|
)
|
Distributions of capital from unconsolidated entities
|
|
—
|
|
|
—
|
|
|
2,115
|
|
|
—
|
|
|
—
|
|
|
2,115
|
|
Repayments on loan for natural gas liquids facility
|
|
—
|
|
|
—
|
|
|
2,401
|
|
|
—
|
|
|
—
|
|
|
2,401
|
|
Loan to affiliate
|
|
—
|
|
|
—
|
|
|
(500
|
)
|
|
—
|
|
|
—
|
|
|
(500
|
)
|
Net cash used in investing activities-continuing operations
|
|
—
|
|
|
—
|
|
|
(6,708
|
)
|
|
(226
|
)
|
|
—
|
|
|
(6,934
|
)
|
Net cash used in investing activities-discontinued operations
|
|
—
|
|
|
—
|
|
|
(2,165
|
)
|
|
(101
|
)
|
|
—
|
|
|
(2,266
|
)
|
Net cash used in investing activities
|
|
—
|
|
|
—
|
|
|
(8,873
|
)
|
|
(327
|
)
|
|
—
|
|
|
(9,200
|
)
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings under Revolving Credit Facility
|
|
—
|
|
|
—
|
|
|
299,500
|
|
|
—
|
|
|
—
|
|
|
299,500
|
|
Payments on Revolving Credit Facility
|
|
—
|
|
|
—
|
|
|
(344,500
|
)
|
|
—
|
|
|
—
|
|
|
(344,500
|
)
|
Repurchase of senior secured and senior unsecured notes
|
|
(74,391
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(74,391
|
)
|
Payments on other long-term debt
|
|
—
|
|
|
—
|
|
|
(159
|
)
|
|
—
|
|
|
—
|
|
|
(159
|
)
|
Debt issuance costs
|
|
(294
|
)
|
|
—
|
|
|
(1,802
|
)
|
|
—
|
|
|
—
|
|
|
(2,096
|
)
|
Contributions from noncontrolling interest owners, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
Distributions to general and common unit partners and preferred unitholders
|
|
(53,399
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53,399
|
)
|
Proceeds from sale of preferred units, net of offering costs
|
|
202,977
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
202,977
|
|
Repurchase of warrants
|
|
(10,549
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,549
|
)
|
Payments for settlement and early extinguishment of liabilities
|
|
—
|
|
|
—
|
|
|
(745
|
)
|
|
—
|
|
|
—
|
|
|
(745
|
)
|
Other
|
|
—
|
|
|
—
|
|
|
8,953
|
|
|
(122
|
)
|
|
—
|
|
|
8,831
|
|
Net changes in advances with consolidated entities
|
|
2
|
|
|
—
|
|
|
32,093
|
|
|
(32,287
|
)
|
|
192
|
|
|
—
|
|
Net cash provided by (used in) financing activities-continuing operations
|
|
64,346
|
|
|
—
|
|
|
(6,660
|
)
|
|
(32,386
|
)
|
|
192
|
|
|
25,492
|
|
Net cash (used in) provided by financing activities-discontinued operations
|
|
—
|
|
|
—
|
|
|
(10,091
|
)
|
|
92
|
|
|
—
|
|
|
(9,999
|
)
|
Net cash provided by (used in) financing activities
|
|
64,346
|
|
|
—
|
|
|
(16,751
|
)
|
|
(32,294
|
)
|
|
192
|
|
|
15,493
|
|
Less cash flows from discontinued operations
|
|
—
|
|
|
—
|
|
|
(672
|
)
|
|
(917
|
)
|
|
—
|
|
|
(1,589
|
)
|
Net increase in cash and cash equivalents
|
|
3,590
|
|
|
—
|
|
|
4,750
|
|
|
533
|
|
|
—
|
|
|
8,873
|
|
Cash and cash equivalents, beginning of period
|
|
6,257
|
|
|
—
|
|
|
73
|
|
|
1,496
|
|
|
—
|
|
|
7,826
|
|
Cash and cash equivalents, end of period
|
|
$
|
9,847
|
|
|
$
|
—
|
|
|
$
|
4,823
|
|
|
$
|
2,029
|
|
|
$
|
—
|
|
|
$
|
16,699
|
|