INVESTMENT IN UNCONSOLIDATED ENTITIES AND JOINT VENTURES

12 Months Ended

Dec. 31, 2011

INVESTMENT IN UNCONSOLIDATED ENTITIES AND JOINT VENTURES [Abstract]

INVESTMENT IN UNCONSOLIDATED ENTITIES AND JOINT VENTURES

(11)	INVESTMENT IN UNCONSOLIDATED ENTITIES AND JOINT VENTURES

The Partnership's Prism Gas subsidiary owns an unconsolidated 50% interest in Waskom, the Matagorda and PIPE.

In accounting for the acquisition of the interests in Waskom, Matagorda and PIPE, the carrying amount of these investments exceeded the underlying net assets by approximately $46,176. The difference was attributable to property and equipment of $11,872 and equity method goodwill of $34,304. The excess investment relating to property and equipment is being amortized over an average life of 20 years, which approximates the useful life of the underlying assets. Such amortization amounted to $594 for the years ended December 31, 2011, 2010 and 2009, respectively, and has been recorded as a reduction of equity in earnings of unconsolidated equity method investees. The remaining unamortized excess investment relating to property and equipment was $8,310, $8,903 and $9,497 at December 31, 2011, 2010 and 2009, respectively. The equity-method goodwill is not amortized; however, it is analyzed for impairment annually or if changes in circumstance indicate that a potential impairment exists. No impairment was recorded in 2011, 2010 or 2009.

As a partner in Waskom, the Partnership receives distributions in kind of natural gas liquids (“NGLs”) that are retained according to Waskom's contracts with certain producers. The NGLs are valued at prevailing market prices. In addition, cash distributions are received and cash contributions are made to fund operating and capital requirements of Waskom.

The Partnership and Martin Resource Management formed Redbird, a natural gas storage joint venture formed to invest in Cardinal. The Partnership owns 2.07% of the Class A equity interests and all the Class B equity interests in Redbird. Redbird owns an unconsolidated 40.08% interest in Cardinal. Redbird utilized the investments by the Partnership to invest in Cardinal to fund projects for natural gas storage facilities.

These investments are accounted for by the equity method.

Activity related to these investment accounts is as follows:

	Waskom			PIPE			Matagorda			Redbird			Total
Investment in unconsolidated entities, December 31, 2009	$	75,844		$	1,401		$	3,337		$	-		$	80,582

Distributions in kind		(10,545	)		-			-			-			(10,545	)
Contributions to unconsolidated entities:
Cash contributions		-			-			-			-			-
Contributions to unconsolidated entities for operations		628			120			-			-			748
Cash contributions to fund asset acquisition		20,110			-			-			-			20,110
Return of investments		(2,100	)		(30	)		(340	)		-			(2,470	)
Equity in earnings:
Equity in earnings (losses) from operations		10,381			(165	)		170			-			10,386
Amortization of excess investment		(550	)		(15	)		(29	)		-			(594	)

Investment in unconsolidated entities, December 31, 2010	$	93,768		$	1,311		$	3,138		$	-		$	98,217

Distributions in kind		(12,704	)		-			-			-			(12,704	)
Contributions to unconsolidated entities:
Cash contributions (See Note 5)		-			-			-			59,319			59,319
Contributions to unconsolidated entities for operations		13,889			25			170			4,937			19,021
Return of investments		(1,200	)		-			(260	)		(1,432	)		(2,892	)
Equity in earnings:
Equity in earnings (losses) from operations		9,693			(30	)		343			124			10,130
Amortization of excess investment		(550	)		(15	)		(29	)		-			(594	)

Investment in unconsolidated entities, December 31, 2011	$	102,896		$	1,291		$	3,362		$	62,948		$	170,497

Select financial information for significant unconsolidated equity method investees is as follows:

	As of December 31,				Years ended December 31,
	Total Assets		Partners' Capital		Revenues		Net Income
2011
Waskom	$	146,655	$	126,863	$	129,119	$	19,385
2010
Waskom	$	122,057	$	, 107,508	$	124,122	$	20,762
2009
Waskom	$	79,604	$	70,561	$	71,044	$	13,867

As of December 31, 2011 and December 31, 2010, the amount of the Partnership's consolidated retained earnings that represents undistributed earnings related to the unconsolidated equity method investees is $47,152 and $40,509, respectively. There are no material restrictions to transfer funds in the form of dividends, loans or advances related to the equity method investees.

As of December 31, 2011 and 2010, the Partnership's interest in cash of the unconsolidated equity method investees is $565 and $789, respectively.

- Definition

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

+ References+ Details