Significant Accounting Policy (Policies)

9 Months Ended

Sep. 30, 2012

Policy Text Block [Abstract]

Basis of Presentation

(a) Basis of Presentation

The accompanying condensed consolidated financial statements are prepared in accordance with the instructions to Form 10-Q, are unaudited and do not include all the information and disclosures required by generally accepted accounting principles for complete financial statements. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to the consolidated financial statements for the prior year to conform to the current presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2011.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from these estimates.

Investment in Limited Liability Company

(b) Investment in Limited Liability Company

On June 22, 2011, the Partnership entered into a limited liability agreement with Howard Energy Partners (“HEP”) for an initial capital contribution of $35.0 million in exchange for an individual ownership interest in HEP. In 2012, the Partnership made an additional capital contribution of $52.3million to HEP related to HEP's acquisition of substantially all of Meritage Midstream Services' natural gas gathering assets in south Texas. HEP owns midstream assets and provides midstream and construction services to Eagle Ford Shale producers. The Partnership owns 30.6 percent of HEP and accounts for this investment under the equity method of accounting. This investment is reflected on the balance sheet as “Investment in limited liability company.” The Partnership's proportional share of earnings is recorded as an increase to this investment account and recorded as equity in earnings of limited liability company.

Potential Changes

(c) Potential Change in use of Sabine Plant during 2012

Currently, the Partnership's Sabine plant has a contract with a third-party to fractionate the raw-make NGLs produced by the Sabine plant. The primary term of the contract expired in March 2012 and is currently renewed on a month-to-month basis. The Partnership anticipates that operations will cease in early 2013 because it is likely that this third-party fractionation agreement will be terminated. During the three months ended September 30, 2012, the Partnership revised the useful life of these assets and began accelerating depreciation and amortization for the estimated non-recoverable costs associated with the plant totaling $26.4 million. Depreciation and amortization expense for the three months ended September 30, 2012 includes $8.8 million associated with such non-recoverable costs, and the Partnership will recognize additional depreciation and amortization expense of $8.8 million in the fourth quarter of 2012 and the first quarter of 2013. The net book value for the plant, excluding these non-recoverable costs, is $19.0 million as of September 30, 2012. Although the Partnership does not have specific plans at this time to relocate the Sabine plant if it is idled, the Partnership may utilize it elsewhere in its operations.