Lease Operations

12 Months Ended

Dec. 31, 2013

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 Marcellus 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. Other significant implicit leases relate to a natural gas processing agreement in the Marcellus segment and a natural gas processing agreement in the Northeast segment for which the Partnership earns minimum monthly fees for providing processing services to a single producer using a dedicated processing plant. The primary term of these natural gas processing agreements expire between 2023 and 2025.

        The Partnership's revenue from its implicit lease arrangements, excluding executory costs, totaled approximately $122.9 million, $84.0 million and $67.4 million for the years ended December 31, 2013, 2012 and 2011, respectively. The Partnership's implicit lease arrangements related to the processing facilities contain contingent rental provisions whereby the Partnership receives additional fees if the producer customer exceeds the monthly minimum processed volumes. During the years ended December 31, 2013 and 2012, the Partnership received approximately $16.9 million and $15.2 million in contingent lease payments, respectively. The following is a schedule of minimum future rentals on the non-cancellable operating leases as of December 31, 2013 (in thousands):

Year ending December 31,
2014	$	111,739
2015		110,025
2016		110,445
2017		110,445
2018		110,445
2019 and thereafter		504,779
Total minimum future rentals	$	1,057,878

        The following schedule provides an analysis of the Partnership's investment in assets held for operating lease by major classes as of December 31, 2013 and 2012 (in thousands):

	December 31, 2013			December 31, 2012
Natural gas gathering and NGL transportation pipelines and facilities	$	755,136		$	737,500
Natural gas processing facilities		374,312			123,076
Construction in progress		119,006			203,863
Property, plant and equipment		1,248,454			1,064,439
Less: accumulated depreciation		(130,041	)		(78,343	)
Total property, plant and equipment, net	$	1,118,413		$	986,096