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Investments in Unconsolidated Affiliates

12 Months Ended

Dec. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Affiliates

Net Investments and Earnings (Loss)

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



	Ownership Percentage			Investment				Earnings (Loss) from Unconsolidated Affiliates
	December 31,			December 31,				Year Ended December 31,
	2019			2019		2018		2019			2018		2017
Stagecoach Gas Services LLC	50.00	%		$	814.4	$	830.4	$	34.2		$	29.3	$	25.3
Jackalope Gas Gathering Services, L.L.C.⁽¹⁾	—	%	⁽¹⁾	—		210.2		3.7			18.1		10.5
Crestwood Permian Basin Holdings LLC⁽²⁾	50.00	%		121.8		104.3		(5.8		)	4.4		8.4
Tres Palacios Holdings LLC	50.01	%		35.9		35.0		0.9			—		2.2
Powder River Basin Industrial Complex, LLC	50.01	%		8.3		8.3		(0.2		)	1.5		1.4
Total				$	980.4	$	1,188.2	$	32.8		$	53.3	$	47.8


(1)	On April 9, 2019, Crestwood Niobrara acquired Williams’ 50% equity interest in Jackalope and, as a result, Crestwood Niobrara controls and owns 100% of the equity interests in Jackalope. See Note 3 for a further discussion of this acquisition.


(2)	Pursuant to the Crestwood Permian limited liability company agreement, we were allocated 100% of Crestwood New Mexico’s earnings through June 30, 2018. Effective July 1, 2018, our equity earnings from Crestwood New Mexico is based on our ownership percentage of Crestwood Permian, which is currently 50%.

Description of Investments

Stagecoach Gas Services LLC

Crestwood Pipeline and Storage Northeast LLC, our wholly-owned subsidiary, owns a 50% equity interest in Stagecoach Gas Services LLC (Stagecoach Gas), and Con Edison Gas Pipeline and Storage Northeast, LLC (CEGP) owns the remaining 50% equity interest in Stagecoach Gas. We account for our 50% equity interest in Stagecoach Gas under the equity method of accounting. Our Stagecoach Gas investment is included in our storage and transportation segment.

Pursuant to the Stagecoach Gas limited liability company agreement, we may be required to make payments of up to $57 million to CEGP after December 31, 2020 if certain criteria are not met by Stagecoach Gas by December 31, 2020, including achieving certain performance targets on growth capital projects. These growth capital projects depend on the construction of other third-party expansion projects, and during 2017, those third-party projects experienced regulatory and other delays that caused Stagecoach Gas to delay its growth capital projects. As a result, our consolidated balance sheets reflect an other long-term liability of $57 million at December 31, 2019 and 2018, and our consolidated income statement for the year ended December 31, 2017 reflects a $57 million loss on contingent consideration related to this obligation.

Jackalope Gas Gathering Services, L.L.C.

On April 9, 2019, Crestwood Niobrara, our consolidated subsidiary, acquired Williams’ 50% equity interest in Jackalope and, as a result, Crestwood Niobrara controls and owns 100% of the equity interests in Jackalope. As a result of this transaction, we eliminated our historical equity investment in Jackalope of approximately $226.7 million as of April 9, 2019 and began consolidating Jackalope’s operations. Our Jackalope investment was included in our gathering and processing segment.

On January 1, 2018, Jackalope adopted the provisions of Topic 606, and we recorded a $9.5 million decrease to our equity method investment and a corresponding decrease to our partners’ capital to reflect our proportionate share of the cumulative effect of accounting change recorded by Jackalope related to the new standard. In addition, our earnings from unconsolidated affiliates decreased by approximately $9.7 million during the year ended December 31, 2018 to reflect our proportionate share of Jackalope’s deferred revenues related to the new standard.

Crestwood Permian Basin Holdings LLC

Crestwood Infrastructure, our wholly-owned subsidiary, owns a 50% equity interest in Crestwood Permian and an affiliate of First Reserve owns the remaining 50% equity interest in Crestwood Permian. We manage and account for our 50% ownership interest in Crestwood Permian, which is a VIE, under the equity method of accounting as we exercise significant influence, but do not control Crestwood Permian and we are not its primary beneficiary due to First Reserve’s rights to exercise control over the entity. Our Crestwood Permian investment is included in our gathering and processing segment.

Prior to October 2017, Crestwood Permian owned 100% of the equity interest of Crestwood Permian Basin LLC (Crestwood Permian Basin). Crestwood Permian Basin has a long-term agreement with SWEPI LP (SWEPI), a subsidiary of Royal Dutch Shell plc, to construct, own and operate a natural gas gathering system (the Nautilus gathering system) in SWEPI’s operated position in the Delaware Permian. In conjunction with the Crestwood Permian Basin’s agreement with SWEPI, Crestwood Permian granted Shell Midstream Partners L.P. (Shell Midstream), a subsidiary of Royal Dutch Shell plc, an option to purchase up to 50% equity interest in Crestwood Permian Basin. In October 2017, Shell Midstream exercised its option and purchased a 50% equity interest in Crestwood Permian Basin from Crestwood Permian for approximately $37.9 million in cash. Crestwood Permian distributed to us approximately $18.9 million of the cash proceeds received.

CEQP issued a guarantee in conjunction with the Crestwood Permian Basin gas gathering agreement with SWEPI described above, under which CEQP agreed to fund 100% of the costs to build the Nautilus gathering system if Crestwood Permian failed to do so. In conjunction with the expiration of that guarantee during 2019, a guarantee became effective that would require CEQP to pay up to $10 million if Crestwood Permian fails to honor its obligations to Crestwood Permian Basin in the event Crestwood Permian Basin fails to satisfy its obligations under its gas gathering agreement with SWEPI. We do not believe this guarantee is probable of resulting in future losses based on our assessment of the nature of the guarantee, the financial condition of the guaranteed party and the period of time that the guarantee has been outstanding, and as a result, we have not recorded a liability on our balance sheet at December 31, 2019 and 2018.

Tres Palacios Holdings LLC

Crestwood Midstream owns a 50.01% ownership interest in Tres Palacios Holdings LLC (Tres Holdings) and is the operator of Tres Palacios Gas Storage LLC (Tres Palacios) and its assets. Brookfield Infrastructure Group owns the remaining 49.99% ownership interest in Tres Holdings. We account for our investment in Tres Holdings under the equity method of accounting. Our Tres Holdings investment is included in our storage and transportation segment.

Powder River Basin Industrial Complex, LLC

Crestwood Crude Logistics LLC, our wholly-owned subsidiary, owns a 50% ownership interest in PRBIC which we account for under the equity method of accounting. Twin Eagle Powder River Basin, LLC owns the remaining 50% ownership interest in PRBIC. Our PRBIC investment is included in our storage and transportation segment

Summarized Financial Information of Unconsolidated Affiliates

Below is summarized financial information for our significant unconsolidated affiliates (in millions; amounts represent 100% of unconsolidated affiliate information):

Financial Position Data



	December 31,
	2019										2018
	Current Assets		Non-Current Assets		Current Liabilities		Non-Current Liabilities		Members’ Equity		Current Assets		Non-Current Assets		Current Liabilities		Non-Current Liabilities		Members’ Equity
Stagecoach⁽¹⁾	$	50.6	$	1,686.3	$	3.9	$	1.5	$	1,731.5	$	50.1	$	1,725.1	$	4.2	$	0.9	$	1,770.1
Crestwood Permian⁽²⁾	15.9		386.8		16.3		72.1		314.3		17.7		372.6		16.8		94.7		278.8
Other⁽³⁾	11.7		277.9		21.0		121.1		147.5		59.3		658.0		17.4		129.6		570.3
Total	$	78.2	$	2,351.0	$	41.2	$	194.7	$	2,193.3	$	127.1	$	2,755.7	$	38.4	$	225.2	$	2,619.2


(1)	As of December 31, 2019, our equity in the underlying net assets of Stagecoach Gas exceeded our investment balance by approximately $51.3 million. This excess amount is entirely attributable to goodwill and, as such, is not subject to amortization.


(2)	As of December 31, 2019, the difference of approximately $11.5 million between our equity in Crestwood Permian’s net assets and our investment balance is not subject to amortization.


(3)	Includes our Tres Holdings and PRBIC equity investments at December 31, 2019 and 2018, and our Jackalope equity investment at December 31, 2018. As of December 31, 2019, our equity in the underlying net assets of Tres Holdings and PRBIC exceeded our investment balance by approximately $24.0 million and $5.5 million, respectively.

Operating Results Data



	Year Ended December 31,
	2019							2018						2017
	Operating Revenues		Operating Expenses		Net Income (Loss)			Operating Revenues		Operating Expenses		Net Income		Operating Revenues		Operating Expenses		Net Income
Stagecoach	$	163.8	$	83.6	$	80.6		$	171.4	$	79.3	$	92.1	$	168.6	$	77.7	$	91.1
Crestwood Permian	64.8		76.0		(11.1		)	82.2		81.3		5.7		87.3		74.1		14.1
Other⁽¹⁾	55.1		49.9		5.1			116.9		81.5		35.6		94.5		69.5		24.8
Total	$	283.7	$	209.5	$	74.6		$	370.5	$	242.1	$	133.4	$	350.4	$	221.3	$	130.0

(1)

Includes our Jackalope (prior to the acquisition of the remaining 50% interest from Williams in April 2019), Tres Holdings and PRBIC equity investments. We amortize the excess basis in certain of our equity investments as an increase in our earnings from unconsolidated affiliates. We recorded amortization of the excess basis in our Jackalope equity investment of less than $0.1 million for each of the years ended December 31, 2019, 2018 and 2017, which we amortized over the life of Jackalope’s gathering agreement with Chesapeake Energy Corporation (Chesapeake). We recorded amortization of the excess basis in our Tres Holdings equity investment of approximately $1.3 million for each of the years ended December 31, 2019, 2018 and 2017, which we amortize over the life of Tres Palacios’ sublease agreement. We recorded amortization of the excess basis in our PRBIC equity investment of approximately $0.4 million, $0.5 million and $0.6 million for the years ended December 31, 2019, 2018 and 2017, which we amortize over the life of PRBIC’s property, plant and equipment.

Distributions and Contributions



	Distributions						Contributions
	Year Ended December 31,						Year Ended December 31,
	2019		2018		2017		2019		2018		2017
Stagecoach Gas	$	52.3	$	48.7	$	47.3	$	2.1	$	—	$	0.8
Jackalope	11.6		32.4		26.3		24.4		49.1		3.5
Crestwood Permian⁽¹⁾	5.0		14.7		23.4		28.3		12.6		117.5
Tres Holdings⁽²⁾	6.3		5.3		9.0		6.3		2.5		5.6
PRBIC⁽³⁾	—		1.9		1.6		0.2		0.2		—
Total	$	75.2	$	103.0	$	107.6	$	61.3	$	64.4	$	127.4

(1) On June 21, 2017, we contributed to Crestwood Permian 100% of the equity interest of Crestwood New Mexico Pipeline LLC (Crestwood New Mexico) at our historical book value of approximately $69.4 million. This contribution was treated as a non-cash transaction between entities under common control.

(2) 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.

(3) PRBIC is required to make quarterly distributions of its available cash to its members based on their respective ownership percentage.

Stagecoach Gas. Stagecoach Gas is required, within 30 days following the end of each quarter, to distribute its available cash (as defined in its limited liability company agreement) to its members. Pursuant to the Stagecoach limited liability company agreement, our share of Stagecoach’s available cash increased from 40% to 50% effective July 1, 2019. Prior to July 1, 2019, Stagecoach Gas distributed 40% of its available cash to us and prior to July 1, 2018, Stagecoach Gas distributed 35% of its available cash to us. Because our ownership and distribution percentages differed prior to July 1, 2019, equity earnings from Stagecoach Gas were determined using the Hypothetical Liquidation at Book Value (HLBV) method. Under the HLBV method, a calculation is prepared at each balance sheet date to determine the amount of cash an equity investment would distribute to its members if the equity investment were to liquidate all of its assets, as valued in accordance with GAAP. 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 the members’ 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. In January 2020, we received a cash distribution from Stagecoach Gas of approximately $15.5 million.

Crestwood Permian. Crestwood Permian is required, within 30 days following the end of each quarter to distribute 100% of its available cash (as defined in its limited liability company agreement) to its members based on their respective ownership percentages. Pursuant to Crestwood Permian's limited liability company agreement, we received 100% of Crestwood New Mexico's available cash (as defined in the limited liability company agreement) through June 30, 2018, and subsequent to June 30, 2018, our distributions are based on the members respective ownership percentages. Because our ownership and distribution percentages differed prior to June 30, 2018, equity earnings from Crestwood Permian were determined using the HLBV method discussed above. In January 2020, we received a cash distribution from Crestwood Permian of approximately $3.8 million.