Lease Operations

12 Months Ended

Dec. 31, 2011

Lease Operations

Lease Operations

19. Lease Operations

        Based on the terms of certain natural gas gathering, transportation, and processing agreements, the Partnership is considered to be the lessor under several implicit operating lease arrangements in accordance with GAAP. The Partnership's primary implicit lease operations relate to a natural gas gathering agreement in the Liberty segment for which it earns a fixed-fee for providing gathering services to a single producer using a dedicated gathering system. As the gathering system is expanded the fixed-fee charged to the producer is adjusted to include the additional gathering assets in the lease. The primary term of the natural gas gathering arrangement expires in 2024 and will continue thereafter on a year to year basis until terminated by either party. Another significant implicit lease relates to natural gas processing agreement in the Northeast segment for which the Partnership earns a minimum monthly fee for providing processing services to a single producer using a dedicated processing plant. The primary term of the natural gas processing agreement expires in 2022 and may be extended at the option of the producer for up to two successive five year terms.

        The Partnership's revenue from its implicit lease arrangements, excluding executory costs, totaled approximately $67.4 million, $32.2 million and $14.9 million for the years ended December 31, 2011, 2010 and 2009, respectively. The Partnership's implicit lease arrangements do not contain any significant contingent rental provisions. The following is a schedule of minimum future rentals on the non-cancellable operating leases as of December 31, 2011 (in thousands):

Year ending December 31,
2012	$	61,081
2013		61,081
2014		61,081
2015		59,794
2016		59,794
2017 and thereafter		352,760
Total minimum future rentals	$	655,591

        The following schedule provides an analysis of the Partnership's investment in assets held for operating lease by major classes as of December 31, 2011 and 2010 (in thousands):

	December 31, 2011			December 31, 2010
Natural gas gathering and NGL transportation pipelines and facilities	$	479,567		$	264,669
Construction in progress		38,386			60,170
Property, plant and equipment		517,953			324,839
Less: accumulated depreciation		(46,006	)		(21,742	)
Total property, plant and equipment, net	$	471,947		$	303,097