Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2019

Acquisition

On April 9, 2019, Crestwood Niobrara LLC (Crestwood Niobrara), our consolidated subsidiary, acquired Williams Partners LP’s (Williams) 50% equity interest in Jackalope Gas Gathering Services, L.L.C. (Jackalope) for approximately $484.6 million (Jackalope Acquisition). The acquisition was funded through a combination of borrowings under the CMLP credit facility and the issuance of $235 million of new preferred units to CN Jackalope Holdings LLC (Jackalope Holdings) (see Note 12 for a further discussion of the issuance of the new preferred units). Prior to the Jackalope Acquisition, Crestwood Niobrara owned a 50% equity interest in Jackalope, which we accounted for under the equity method of accounting. As a result of this transaction, Crestwood Niobrara controls and owns 100% of the equity interests in Jackalope. The financial results of Jackalope are included in our gathering and processing segment from the date of the acquisition. Transaction costs related to the Jackalope Acquisition were approximately $2.8 million during the year ended December 31, 2019. These costs are included in operations and maintenance expenses in our consolidated statements of operations.

The fair values of the assets acquired and liabilities assumed were determined primarily utilizing market-related information and other projections on the performance of the assets acquired, including an analysis of the discounted cash flows at a discount rate of approximately 12%. Those fair values are Level 3 fair value measurements and were developed by management with the assistance of a third-party valuation firm.

The following table summarizes the final valuation of the assets acquired and liabilities assumed at the acquisition date (in millions):



Cash	$	22.5
Other current assets	30.9
Property, plant and equipment	532.9
Intangible assets	306.0
Goodwill	80.3
Current liabilities	(30.4		)
Other long-term liabilities	(21.5		)
Estimated fair value of 100% interest in Jackalope	920.7
Less:
Elimination of equity investment in Jackalope	226.7
Gain on acquisition of Jackalope	209.4
Total purchase price	$	484.6

The identifiable intangible assets primarily consists of a customer contract that has a weighted-average remaining life of 17 years. The goodwill recognized relates primarily to anticipated operating synergies between the assets acquired and our existing operations. The fair value of the assets acquired and liabilities assumed in the Jackalope Acquisition exceeded the sum of the cash consideration paid and the historical book value of our 50% equity interest in Jackalope (which was remeasured at fair value and derecognized) and, as a result, we recognized a gain of approximately $209.4 million. This gain is included in gain on acquisition in our consolidated statements of operations.

Our consolidated statements of operations include the results of Jackalope since April 9, 2019, the closing date of the acquisition. During the year ended December 31, 2019, we recognized approximately $70.1 million of revenues and $20.9 million of net income related to Jackalope’s operations.

The tables below presents selected unaudited pro forma information as if the Jackalope Acquisition had occurred on January 1, 2017 (in millions). The pro forma information is not necessarily indicative of the financial results that would have occurred if the transaction had been completed as of the dates indicated. The amounts have been calculated after applying our accounting policies and adjusting the results to reflect the depreciation, amortization and accretion expense that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been made at the beginning of the respective reporting period. The pro forma net income also includes the effects of interest expense on incremental borrowings and recognition of deferred revenue.

Crestwood Equity



	Year Ended December 31,
	2019		2018		2017
Revenues	$	3,202.6	$	3,729.5	$	3,935.4
Net income (loss)	$	313.5	$	45.0	$	(193.0	)

Crestwood Midstream



	Year ended December 31,
	2019		2018		2017
Revenues	$	3,202.6	$	3,729.5	$	3,935.4
Net income (loss)	$	304.2	$	36.6	$	(201.9	)

Divestitures

In October 2018, we sold our West Coast assets to a third party for proceeds of approximately $70.5 million. The West Coast assets included a gas gathering and processing system, fractionator, butamer and various rail and truck terminal and storage facilities located in California, Nevada, Wyoming and Utah. The sale of West Coast resulted in a decrease of $61.8 million of

property, plant and equipment, net, $9.0 million of goodwill and $26.6 million of other assets and liabilities, net. During the year ended December 31, 2018, we recognized a loss from the sale of approximately $26.9 million (including the goodwill write off discussed in Note 2), which is included in loss on long-lived assets, net in our consolidated statement of operations. Our West Coast assets were previously included in our MS&L segment.

In December 2017, we sold 100% of our equity interests in US Salt, a solution-mining and salt production company located on the shores of Seneca Lake near Watkins Glen in Schuyler County, New York, to an affiliate of Kissner Group Holdings LP, for net proceeds of approximately $223.6 million, and we recognized a gain from the sale of approximately $33.6 million, which is included in loss on long-lived assets, net in our consolidated statement of operations. US Salt was previously included in our MS&L segment.