3. Acquisitions

Interests in Gulf of Mexico Crude Oil Pipeline Systems

On January 3, 2012, we acquired from Marathon Oil Company interests in several Gulf of Mexico crude oil pipeline systems. The acquired pipeline interests include a 28% interest in Poseidon Oil Pipeline Company, L.L.C. (or “Poseidon”), a 100% interest in Marathon Offshore Pipeline, LLC (subsequently re-named GEL Offshore Pipeline, LLC, or “GOPL”) and a 29% interest in Odyssey Pipeline L.L.C. (or “Odyssey”). GOPL owns a 23% interest in the Eugene Island crude oil pipeline system and a 100% interest in two smaller offshore pipelines. The purchase price, net of post-closing adjustments, was $205.6 million. We funded the purchase price with cash available under our credit facility. We account for our interests in Poseidon and Odyssey under the equity method of accounting. We have recorded the assets acquired and liabilities assumed of GOPL in the Consolidated Financial Statements at their estimated fair values. Such fair values were developed by management.

The allocation of the purchase price is summarized as follows:



Property and equipment	$	28,456
Equity investees	182,993
Asset retirement obligation assumed	(5,873		)
Total allocation	$	205,576

Our Consolidated Financial Statements include the results of the acquired pipeline interests since the effective closing date of the acquisition in January 2012. The following table presents selected financial information included in our Consolidated Financial Statements for the year ended December 31, 2012:



	Year Ended December 31,
	2012
Revenues	$	5,508
Equity in earnings of equity investees	$	13,118
Net income	$	15,112

The table below presents selected unaudited pro forma financial information for the year ended December 31, 2011 incorporating the historical results of the acquired pipeline interests. The unaudited pro forma financial information below has been prepared as if the acquisition had been completed at the beginning of the prior year and is based upon assumptions deemed appropriate by us and may not be indicative of actual results.



	Year Ended December 31,
	2011
Pro forma earnings data:
Revenues	$	3,096,693
Equity in earnings of equity investees	$	14,770
Net income	$	58,349
Basic and diluted earnings per unit:
As reported net income per unit	$	0.75
Pro forma net income per unit	$	0.86
As reported units outstanding	67,938
Pro forma units outstanding	67,938

FMT Black Oil Barge Transportation Business

In August 2011, we completed the acquisition of the black oil barge transportation business of Florida Marine Transporters, Inc. and its affiliates (“FMT”). The purchase price was $143.5 million (including $2.5 million for fuel inventory and other costs). The acquired business was comprised of 30 barges (seven of which were initially sub-leased under terms similar to those of an existing FMT lease, which we subsequently purchased in February 2012 for $30.9 million) and 14 push/tow boats which transport heavy refined products, primarily serving refineries and storage terminals along the Gulf Coast, Intracoastal Canal and western river systems of the United States, including the Red, Ouachita and Mississippi Rivers. The August 2011 acquisition and related transaction costs were funded with a portion of the net proceeds from the July 2011 public offering of our common units, whereby we raised approximately $185 million in net proceeds of equity capital. The February 2012 vessels purchase was funded with cash available under our credit facility. See Note 11 for additional information regarding the common unit offering.

The financial results of the acquired business are included in the supply and logistics segment from the date of acquisition.

Wyoming Refinery and Pipeline Assets

In November 2011, we acquired a 90% interest in a 3,500 barrel per day refinery located in Converse County, Wyoming, including 300 miles of abandoned 3” to 6” pipeline. Those assets are located near the emerging Powder River Basin portion of the Niobrara Shale. The purchase price was $20 million, which included $1.3 million for product inventories. We funded the acquisition with cash available under our credit facility.

The financial results of the refinery assets are included in the supply and logistics segment and the pipeline assets have been included in the pipeline transportation segment from the date of acquisition.

CHOPS Investment

In November 2010, we acquired a 50% equity interest in CHOPS, a joint venture that owns and operates a crude oil pipeline system in the Gulf of Mexico. The purchase price was approximately $330 million plus approximately $2.5 million of purchase price adjustments.

The funding for this acquisition consisted of $330 million in cash from the issuance of 5,175,000 common units at $23.58 per common unit and the issuance of $250 million of senior unsecured notes. Total net proceeds from the common units offering, after deducting underwriting discounts and commissions and estimated offering expenses and including our general partner’s proportionate capital contribution to maintain its 2% general partner interest, were approximately $119 million.

CHOPS is a 380-mile 24- and 30-inch diameter pipeline constructed in 2004, with capacity to deliver up to 500,000 barrels per day of crude oil from developments in the Gulf of Mexico to major refining markets along the Texas Gulf Coast located in Port Arthur and Texas City. Enterprise Products Partners, L.P. indirectly owns the remaining 50% interest in, and operates, the joint venture.

The following table presents selected unaudited pro forma financial information incorporating the historical 50% equity interest in CHOPS. The effective closing date of our purchase of a 50% equity interest in CHOPS was November 23, 2010. As a result, our Consolidated Statements of Operations for the year ended December 31, 2010 includes our 50% equity investment in CHOPS for the last five weeks of 2010. The unaudited pro forma financial information has been prepared as if the acquisition had been completed on the first day of 2010 rather than the actual closing date. The unaudited pro forma financial information has been prepared based upon assumptions deemed appropriate by us and may not be indicative of actual results.



	Year Ended December 31,
	2010
Pro forma earnings data:
Equity in earnings of equity investees	$	15,322
Net loss attributable to Genesis Energy, L.P.	$	(55,001	)
Basic and diluted earnings per unit:
As reported net income per unit	$	0.49
Pro forma net income per unit	$	0.30
As reported units outstanding	40,560
Pro forma units outstanding	44,969

Acquisition of Remaining “Noncontrolling” Interest in DG Marine

In July 2010, we acquired from TD Marine, a related party, their 51% interest in DG Marine for $25.5 million in cash, resulting in DG Marine becoming wholly-owned by us. We funded the acquisition with proceeds from our credit agreement, including (i) paying off DG Marine’s stand-alone credit facility, which had an outstanding principal balance of $44.4 million, and (ii) settling DG Marine’s interest rate swaps, which resulted in $1.3 million being reclassified from Accumulated Other Comprehensive Loss (“AOCL”) to interest expense in the third quarter of 2010.

Prior to the acquisition, DG Marine was consolidated as a variable interest entity as certain of our voting rights were not proportional to our 49% economic interest. As a result of the acquisition, we reclassified the acquired noncontrolling interest in DG Marine of $21.3 million to Genesis Energy, L.P. partners’ capital. Additionally, we reduced our partners’ capital by $26.3 million for the costs related to the transaction ($25.5 million paid to TD Marine and $0.8 million in direct transaction costs associated with the acquisition). The net effect of Genesis Energy, L.P. partners’ capital in our Consolidated Balance Sheet for December 31, 2010 was a decrease of $5 million.