Acquisitions

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisitions and Divestitures

Acquisition

On October 25, 2021, we entered into a merger agreement to acquire Oasis Midstream Partners LP (Oasis Midstream) in an equity and cash transaction (the Merger). Oasis Midstream is a master limited partnership which operates a diversified portfolio of midstream assets located in the Williston and Delaware Basins and its operations include natural gas services (gathering, compression, processing and gas lift supply), crude oil services (gathering, terminalling and transportation), and water services (gathering and disposal of produced and flowback water and freshwater distribution).

On February 1, 2022, we completed the merger with Oasis Midstream, which was valued at approximately $1.8 billion. Pursuant to the merger agreement, Oasis Petroleum Inc. (Oasis Petroleum) received $150 million in cash plus approximately 20.9 million newly issued CEQP common units in exchange for its 33.8 million common units held in Oasis Midstream. In addition, Oasis Midstream’s public unitholders received approximately 12.9 million newly issued CEQP common units in exchange for the approximately 14.8 million Oasis Midstream common units held by them. Additionally, under the merger agreement Oasis Petroleum received a $10 million cash payment in exchange for its ownership of the general partner of Oasis Midstream.

We accounted for the Merger as a business combination using the acquisition method of accounting. In addition, the purchase accounting reflects the adoption of Accounting Standards Update 2021-08, Business Combinations (Topic 805) during the three months ended March 31, 2022. The financial results of Oasis Midstream’s Williston Basin operations are included in our gathering and processing north segment and Oasis Midstream’s Delaware Basin operations are included in our gathering and processing south segment from the date of acquisition. During the three months ended March 31, 2022, we recognized approximately $17 million of transaction costs related to the Merger, which are included in general and administrative expenses in our consolidated statements of operations.

The purchase price has been allocated to the assets acquired and liabilities assumed based on preliminary fair values. Certain preliminary fair values are Level 3 fair value measurements and were developed by management with the assistance of a third-party valuation firm. We estimated the fair value of the senior notes assumed based on quoted market prices for similar issuances which are considered Level 2 fair value measurements. The preliminary fair values were estimated primarily utilizing market related information and other projections on the performance of the assets acquired, including an analysis of discounted cash flows at a discount rate of approximately 12%. The preliminary fair values of property, plant and equipment, intangible assets and goodwill and their allocation to our segments are subject to change pending a final determination of the fair values as more information is received about their respective values. We expect to finalize the purchase price allocation for this transaction in 2022.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Cash	$	14.9
Other current assets	63.4
Property, plant and equipment	1,245.8
Intangible assets	497.0
Total assets acquired	1,821.1
Current liabilities	45.9
Long-term debt(1)	698.7
Other long-term liabilities(2)	25.8
Total liabilities assumed	770.4
Net assets acquired excluding goodwill	1,050.7
Goodwill	39.3
Net assets acquired	$	1,090.0

(1)    Consists of approximately $218 million outstanding borrowings under the Oasis Midstream revolver, which was immediately repaid upon the closing of the Merger and approximately $450 million of unsecured senior notes and the related fair value adjustment of approximately $30.7 million. For a further discussion of the long-term debt assumed in conjunction with the Merger, see Note 8.

(2)    Consists primarily of liabilities for asset retirement obligations of approximately $16.5 million.

The identifiable intangible assets primarily consist of customer accounts with Oasis Petroleum and other customers with a weighted-average remaining life of 20 years. The goodwill recognized relates primarily to the anticipated operating synergies between the assets acquired and our existing operations and is reflected in our gathering and processing north segment.

Our consolidated statement of operations for three months ended March 31, 2022 include the results of Oasis Midstream since February 1, 2022, the closing date of the Merger. During the three months ended March 31, 2022, we recognized approximately $66.8 million of revenues and $23.5 million of net income related to Oasis Midstream’s operations.

The table below presents selected unaudited pro forma information as if the Merger had occurred on January 1, 2021 (in millions). The pro forma information is not necessarily indicative of the financial results that would have occurred if the Merger had been completed as of the date indicated. The amounts were 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 reporting period. The pro forma net income (loss) also includes the net effects of interest expense on incremental borrowings, repayments of long-term debt and amortization of the fair value adjustment to long-term debt.

Crestwood Equity

	Three Months Ended March 31,
	2022		2021
Revenues	$	1,618.4	$	1,133.1
Net income (loss)	$	28.4	$	(15.2)
Net income (loss) per limited partner unit:
Basic and Diluted	$	0.03	$	(0.37)

Crestwood Midstream

	Three Months Ended March 31,
	2022		2021
Revenues	$	1,618.4	$	1,133.1
Net income (loss)	$	26.4	$	(17.3)