Investment in Unconsolidated Affiliates

6 Months Ended

Jun. 30, 2011

Investment in Unconsolidated Affiliates (Textuals)[Abstract]


Note 4 —	Investments in Unconsolidated Affiliates

Our investments in unconsolidated affiliates consisted of the following at June 30, 2011:


		Ownership
Equity Method Investment	Structure	Percentage			Segment

Webb/Duval Gatherers (“Webb Duval”)	Texas general partnership		62.50	%	Texas
Eagle Ford Gathering LLC (“Eagle Ford Gathering”)	Delaware limited liability company		50.00	%	Texas
Liberty Pipeline Group, LLC (“Liberty Pipeline Group”)	Delaware limited liability company		50.00	%	Texas
Southern Dome, LLC (“Southern Dome”)	Delaware limited liability company		69.50	%⁽¹⁾	Oklahoma
Bighorn Gas Gathering, L.L.C. (“Bighorn”)	Delaware limited liability company		51.00	%	Rocky Mountains
Fort Union Gas Gathering, L.L.C. (“Fort Union”)	Delaware limited liability company		37.04	%	Rocky Mountains


(1)		Represents Copano’s right to distributions from Southern Dome

None of these entities’ respective partnership or operating agreements restrict their ability to pay distributions to their respective partners or members after consideration of current and anticipated cash needs, including debt service obligations. However, Fort Union’s credit agreement provides that it can distribute cash to its members only if its ratio of net operating cash flow to debt service is not less than 1.25 to 1.00 and it is not otherwise in default under its credit agreement. If Fort Union fails to comply with this covenant or otherwise defaults under its credit agreement, it would be prohibited from distributing cash. As of June 30, 2011, Fort Union is in compliance with this financial covenant.

Bighorn and Fort Union. Our investment in Bighorn totaled $337,592,000 as of June 30, 2011. During the six months ended June 30, 2011 and 2010, we made capital contributions to Bighorn of $432,000 and $630,000, respectively. Our investment in Fort Union totaled $214,696,000 as of June 30, 2011 and during the six months ended June 30, 2011 and 2010, we made capital contributions to Fort Union of $0 and $774,000, respectively.

The summarized financial information for our investments in Bighorn and Fort Union, which are accounted for using the equity method, is as follows (in thousands):


	As of and for the Six Months Ended June 30,
	2011						2010
	Bighorn			Fort Union			Bighorn			Fort Union
	(In thousands)

Operating revenue	$	13,903		$	27,104		$	15,973		$	28,009
Operating expenses		(4,589	)		(3,455	)		(5,961	)		(3,926	)
Depreciation and amortization		(2,587	)		(3,996	)		(2,549	)		(3,629	)
Interest income (expense) and other		42			(1,228	)		22			(2,332	)

Net income		6,769			18,425			7,485			18,122
Ownership %		51	%		37.04	%		51	%		37.04	%

		3,452			6,825			3,817			6,712
Priority allocation of earnings and other		254			—			195			—
Copano’s share of management fees charged		98			46			142			44
Amortization of difference between the carried investment and the underlying equity in net assets		(5,629	)		(3,212	)		(31,084	)		(3,212	)

Equity in (loss) earnings from unconsolidated affiliates	$	(1,825	)	$	3,659		$	(26,930	)	$	3,544

Distributions	$	4,956		$	7,408		$	5,497		$	5,371

Current assets	$	5,912		$	9,721		$	6,605		$	14,437
Noncurrent assets		86,667			200,270			90,891			208,624
Current liabilities		(1,084	)		(18,782	)		(1,238	)		(19,852	)
Noncurrent liabilities		(282	)		(66,779	)		(257	)		(81,565	)

Net assets	$	91,213		$	124,430		$	96,001		$	121,644

Other. The summarized financial information for our investments in other unconsolidated affiliates (Webb Duval, Eagle Ford Gathering, Liberty Pipeline Group and Southern Dome) is presented below in aggregate:


	As of and for the
	Six Months Ended June 30,
	2011			2010
	(In thousands)

Operating revenue	$	14,029		$	17,024
Operating expenses		(11,883	)		(14,173	)
Depreciation and amortization		(756	)		(759	)
Other income, net		3			5

Net income	$	1,393		$	2,097

Current assets	$	10,728		$	4,129
Noncurrent assets		215,259			21,198
Current liabilities		(25,111	)		(6,041	)
Noncurrent liabilities		(898	)		(60	)

Net assets	$	199,978		$	19,226

Our share of the equity earnings from our other unconsolidated affiliates was $1,173,000 and $1,549,000 for the six months ended June 30, 2011 and 2010, respectively.

We received total distributions from our other unconsolidated affiliates of $1,208,000 and $2,122,000 for the six months ended June 30, 2011 and 2010, respectively.

We made cash contributions to our other unconsolidated affiliates of $62,157,000 and $0 for the six months ended June 30, 2011 and 2010, respectively. Contributions for the six months ended June 30, 2011 were primarily made to Eagle Ford Gathering for the construction of gathering pipelines and to Liberty Pipeline Group for the construction of its NGL pipeline.