Acquisitions

2014 Acquisition

Crude Transportation Acquisition (Bakken)

On March 21, 2014, Crestwood Midstream purchased substantially all of the operating assets of Red Rock Transportation Inc. (Red Rock) for approximately $14.1 million, comprised of $12.1 million paid at closing plus deferred payments of $2.0 million. Red Rock is a trucking operation located in Watford City, North Dakota which provides crude oil and produced water hauling services to the oilfields of western North Dakota and eastern Montana. The acquired assets include a fleet of approximately 56 trailer tanks, 22 double bottom body tanks and 44 tractors with more than 25,000 barrels per day of crude hauling capacity. We allocated approximately $10.9 million of the purchase price to property, plant and equipment and intangible assets and approximately $3.2 million to goodwill. These assets are included in our NGL and crude services segment.

2013 Acquisitions

Crestwood Merger

As described in Note 2, the acquisition of Legacy Crestwood GP was accounted for as a reverse acquisition under the purchase method of accounting in accordance with the accounting standards for business combinations. This accounting treatment requires the accounting acquiree (CEQP) to have its assets and liabilities stated at fair value as well as any other purchase accounting adjustments as of June 19, 2013, the date of the acquisition. The fair value of CEQP was calculated based on the consolidated enterprise fair value of CEQP as of June 19, 2013. This consolidated enterprise fair value considered the discounted future cash flows of the Legacy Inergy and Inergy Midstream operations and the stock prices of CEQP and NRGM, the value of their outstanding senior notes based on quoted market prices for same or similar issuances and the value of their outstanding floating rate debt.

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



	Current Estimate		Preliminary Estimate (a)		Adjustment Based on Revised Valuation Report
Current assets	$	224.5	$	224.5	$	—
Property, plant and equipment	2,088.1		2,088.2		(0.1		)
Intangible assets	337.5		337.5		—
Other assets	12.7		12.7		—
Total identifiable assets acquired	2,662.8		2,662.9		(0.1		)

Current liabilities	207.6		207.5		0.1
Long-term debt	1,079.3		1,079.3		—
Other long-term liabilities	146.6		146.6		—
Total liabilities assumed	1,433.5		1,433.4		0.1

Net identifiable assets acquired	1,229.3		1,229.5		(0.2		)
Goodwill	2,139.8		2,149.9		(10.1		)
Net assets acquired	$	3,369.1	$	3,379.4	$	(10.3	)

(a) Preliminary amount recorded as of December 31, 2013.

The changes from the preliminary estimate were based on additional valuation information obtained on the components that comprise the enterprise fair value of Legacy Inergy as well as certain of our storage and transportation assets and obligations, primarily related to our Tres Palacios storage operations. The impact of these adjustments on depreciation and amortization expense was not material to our results of operations for the three months ended March 31, 2014. These revised estimates continue to be preliminary and are subject to material change pending the final valuation of these assets and liabilities.

Of the $2,139.8 million of goodwill, $1,411.2 million is reflected in our NGL and crude services segment and $728.6 million is reflected in our storage and transportation segment. Goodwill recognized relates primarily to synergies and new expansion opportunities expected to result from the combination of Legacy Crestwood and Inergy Midstream. The purchase price allocation has been prepared on a preliminary basis pending receipt of a final valuation report and is subject to material change.

Arrow Acquisition

On November 8, 2013, Crestwood Midstream acquired Arrow Midstream Holdings, LLC (Arrow) for approximately $750 million, subject to customary capital expenditure, working capital adjustments of approximately $12.8 million, representations, warranties and indemnifications. The acquisition was consummated by merging a wholly-owned subsidiary of Crestwood Midstream with and into Arrow (the Arrow Acquisition), with Arrow continuing as the surviving entity and a wholly-owned subsidiary of Crestwood Midstream. The base merger consideration consisted of $550 million in cash and 8,826,125 common units of Crestwood Midstream issued to the sellers, subject to adjustment for standard working capital provisions.

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



Current assets	$	191.1
Property, plant and equipment	400.2
Intangible assets	323.4
Other assets	19.5
Total identifiable assets acquired	934.2

Current liabilities	215.3
Assets retirement obligations	1.2
Other long-term liabilities	3.7
Total liabilities assumed	220.2

Net identifiable assets acquired	714.0
Goodwill	48.8
Net assets acquired	$	762.8

The $48.8 million of goodwill is reflected in our NGL and crude services segment. Goodwill recognized relates primarily to anticipated operating synergies between the assets acquired and our existing assets. During the three months ended March 31, 2014, we also recognized approximately $4.6 million of transaction-related fees primarily related to services provided in 2013 related to this acquisition. The purchase price allocation has been prepared on a preliminary basis pending receipt of a final valuation report and is subject to material change.

Unaudited Pro Forma Financial Information

The following table represents the pro forma consolidated statement of operations as if the Legacy Inergy reverse acquisition and the Arrow Acquisition had been included in our consolidated results for the three-month period ended March 31, 2013 (in millions, except per unit information):



Revenues	$	811.3
Net income	$	6.9

Net income per limited partner unit^(a):
Basic	$	0.06
Diluted	$	0.06

(a) Basic and diluted net income per limited partner unit for the three months ended March 31, 2013 were computed based on the presumption that the common and subordinated units issued to acquire Legacy Crestwood GP (the accounting predecessor) were outstanding for the entire period prior to the June 19, 2013 acquisition.

These amounts have been calculated after applying our accounting policies and adjusting the results of the acquisitions to reflect the depreciation and amortization that would have been charged assuming the preliminary fair value adjustments to property, plant and equipment and intangible assets had been made at the beginning of the respective reporting period. The purchase price allocation for the reverse acquisition of Legacy Inergy and the Arrow Acquisition has been prepared on a preliminary basis pending final asset valuation and asset rationalization, and changes are expected when additional information becomes available. Accordingly, the purchase accounting adjustments made in connection with the development of the unaudited pro forma are preliminary and subject to change.