Investments in Unconsolidated Affiliates

Stagecoach Gas Services LLC. In April 2016, Crestwood Northeast and CEGP entered into a definitive agreement to form the Stagecoach JV to own and further develop our NE S&T assets. Pursuant to the contribution agreement, we contributed to Stagecoach Gas the entities owning the NE S&T assets, CEGP contributed $945 million to Stagecoach Gas in exchange for a 50% equity interest in Stagecoach Gas, and Stagecoach Gas distributed to Crestwood Northeast the cash proceeds received (net of approximately $3 million of cash transferred to the joint venture) from CEGP. Effective June 3, 2016, we deconsolidated the NE S&T assets as a result of this transaction and began accounting for our 50% equity interest in Stagecoach Gas under the equity method of accounting. We reflected our investment in Stagecoach Gas at $844 million, which represented the fair value of our proportionate share of the assets at June 3, 2016 and is based on the forecasted discounted cash flows of the investment (which is a Level 3 fair value measurement). We recognized a loss on the deconsolidation of the NE S&T assets of approximately $32.9 million. See our 2015 Annual Report on Form 10-K for a description of our NE S&T assets.

Net Investments and Earnings

Our net investments in and earnings from our unconsolidated affiliates are as follows (in millions, unless otherwise stated):



	Ownership Percentage			Investment				Earnings (Loss) from Unconsolidated Affiliates
	September 30,			September 30,		December 31,		Three Months Ended September 30,				Nine Months Ended September 30,
	2016			2016		2015		2016		2015		2016			2015
Stagecoach Gas Services LLC⁽¹⁾	50.00	%		$	849.4	$	—	$	6.8	$	—	$	9.1		$	—
Jackalope Gas Gathering Services, L.L.C.⁽²⁾	50.00	%	⁽³⁾	199.7		202.4		5.5		2.0		16.5			5.6
Tres Palacios Holdings LLC⁽⁴⁾	50.01	%		35.4		36.8		0.8		0.6		(0.7		)	2.1
Powder River Basin Industrial Complex, LLC⁽⁵⁾	50.01	%		14.7		15.1		0.3		0.2		1.2			3.5
Total				$	1,099.2	$	254.3	$	13.4	$	2.8	$	26.1		$	11.2


(1)	As of September 30, 2016, our equity in the underlying net assets of Stagecoach Gas exceeded our investment balance by approximately $51.0 million. This excess amount is entirely attributable to goodwill and, as such, is not subject to amortization. Our Stagecoach Gas investment is included in our storage and transportation segment.

(2)

As of September 30, 2016, our equity in the underlying net assets of Jackalope Gas Gathering Services, L.L.C. (Jackalope) exceeded our investment balance by approximately $0.8 million. We amortize this amount over 20 years, which represents the life of Jackalope’s gathering agreement with Chesapeake Energy Corporation (Chesapeake), and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. We recorded amortization of less than $0.1 million for both the three and nine months ended September 30, 2016 and $0.8 million and $2.3 million for the three and nine months ended September 30, 2015. Our Jackalope investment is included in our gathering and processing segment.


(3)	Excludes non-controlling interests related to our investment in Jackalope. See Note 9 for a further discussion of our non-controlling interest related to our investment in Jackalope.

(4)

As of September 30, 2016, our equity in the underlying net assets of Tres Palacios Holdings LLC (Tres Holdings) exceeded our investment balance by approximately $28.2 million. We amortize this amount over the life of the Tres Palacios Gas Storage LLC (Tres Palacios) sublease agreement, and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. We recorded amortization of $0.3 million for the three months ended September 30, 2016 and 2015, and $0.9 million for the nine months ended September 30, 2016 and 2015. Our Tres Holdings investment is included in our storage and transportation segment.

(5)

As of September 30, 2016, our equity in the underlying net assets of Powder River Basin Industrial Complex, LLC (PRBIC) exceeded our investment balance by approximately $22.2 million. We amortize a portion of this amount over the life of PRBIC's property, plant and equipment and its agreement with Chesapeake, and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. Approximately $10.6 million of this excess amount relates to goodwill and, as such, is not subject to amortization. We recorded amortization of approximately $0.4 million and $1.2 million for the three and nine months ended September 30, 2016. During the three months ended June 30, 2015, we recorded additional equity earnings of approximately $3.2 million related to a gain associated with the adjustment of our member's capital account by our equity investee. Our PRBIC investment is included in our storage and transportation segment.

Distributions and Contributions

Stagecoach Gas. Stagecoach Gas is required, within 30 days following the end of each quarter, to distribute 65% and 35% of its available cash (as defined in its limited liability company agreement) to CEGP and us, respectively. Because our ownership and distribution percentages differ, we determine the equity earnings from Stagecoach Gas using the Hypothetical Liquidation at Book Value (HLBV) method. Under the HLBV method, a calculation is prepared at each balance sheet date to determine the amount that we would receive if Stagecoach Gas were to liquidate all of its assets, as valued in accordance with GAAP, and distribute that cash to the members. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is our share of the earnings or losses from the equity investment for the period, which approximates how earnings are allocated under the terms of the limited liability company agreement. During the three months ended September 30, 2016, we received a cash distribution of approximately $3.7 million from Stagecoach Gas. In October 2016, we received a cash distribution of approximately $12.3 million from Stagecoach Gas.

Jackalope. Jackalope is required, within 30 days following the end of each quarter, to make quarterly distributions of its available cash to its members based on their respective ownership percentage. During the nine months ended September 30, 2016 and 2015, we received cash distributions of approximately $19.9 million and $8.7 million from Jackalope. During the nine months ended September 30, 2016 and 2015, we contributed approximately $0.7 million and $25.4 million to Jackalope.

Tres Holdings. Tres Holdings is required, within 30 days following the end of each quarter, to make quarterly distributions of its available cash (as defined in its limited liability company agreement) to its members based on their respective ownership percentage. During the nine months ended September 30, 2016 and 2015, we received cash distributions of approximately $6.2 million and $4.0 million from Tres Holdings. In October 2016, we received a cash distribution of approximately $2.3 million from Tres Holdings. During the nine months ended September 30, 2016 and 2015, we contributed approximately $5.5 million and $5.7 million to Tres Holdings.

PRBIC. PRBIC is required to make quarterly distributions of its available cash to its members based on their respective ownership percentage. During the nine months ended September 30, 2016 and 2015, we received cash distributions of approximately $1.6 million and $1.3 million from PRBIC. In October 2016, we received a cash distribution of approximately $0.4 million from PRBIC. During the nine months ended September 30, 2015, we contributed approximately $8.7 million to PRBIC.