Organization and Basis of Presentation

12 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Organization and Basis of Presentation

Organization and Basis of Presentation

Organization

Inergy Midstream, LLC was formed in September 2004 by Inergy, L.P. (“Inergy”) to acquire, develop, own and operate midstream energy assets. In connection with its initial public offering (“IPO”) of common units representing limited partnership interests, (i) Inergy Midstream, LLC converted into a Delaware limited partnership and changed its name to Inergy Midstream, L.P. (the “Company”) on November 14, 2011, and (ii) the Company transferred to Inergy 100% of its membership interest in two wholly owned subsidiaries (US Salt, LLC and Tres Palacios Gas Storage LLC) on November 25, 2011. The Company's common units began trading on the New York Stock Exchange (“NYSE”) on December 16, 2011 under the symbol “NRGM,” and the IPO closed on December 21, 2011.

The Company issued 18,400,000 common units in the IPO, including 2,400,000 common units issued under the underwriters' overallotment rights. No public market for the common units existed prior to the IPO. Upon completion of the offering, the public owned common units representing an approximate 24.8% limited partnership interest in the Company and Inergy owned common units representing an approximate 75.2% limited partnership interest in the Company. Inergy indirectly owns the Company's general partnership interest, which entitles the general partner to management but no economic rights in the Company.

Inergy owns all of the Company's Incentive Distribution Rights (“IDRs”) which entitle it to receive 50% of all distributions by the Company in excess of the initial quarterly distribution of $0.37 per unit. IDRs, which represent a limited partnership ownership interest in the Company, are considered to be participating securities because they have the right to participate in earnings with common equity holders. Under the Company's partnership agreement, IDRs participate in net income only to the extent of the amount of cash distributions actually declared, thereby excluding the IDRs from participating in undistributed earnings or losses. Accordingly, the undistributed net income is allocated to the other ownership interests on a pro-rata basis. Distributions declared in the quarters ended June 30, 2012 and September 30, 2012, were $0.01 and $0.015 greater, respectively, than the initial annualized distribution and therefore IDRs in the amount of $0.7 million and $1.2 million were earned in the quarters ended June 30, 2012 and September 30, 2012, respectively.

On May 14, 2012, the Company acquired 100% of the membership interests in US Salt, LLC (“US Salt”) from Inergy. Following the US Salt acquisition, Inergy owned an approximate 75.0% ownership interest in the Company. See Note 10 for a discussion of the US Salt acquisition.

NRGM GP, LLC Change of Control Event

In connection with the IPO, Inergy and Inergy Holdings GP, LLC (“Holdings GP”), the indirect owner of Inergy's general partner, entered into a membership interest purchase agreement under which, under certain circumstances, Holdings GP will be required to purchase from Inergy, and Inergy will be required to sell to Holdings GP, all of the membership interests in MGP GP, LLC, the entity that controls the Company's general partner, for nominal consideration. MGP GP, LLC is a wholly owned subsidiary of Inergy and the general partner of Inergy Midstream Holdings, L.P., which is the sole member of the Company's general partner and direct holder of all of its incentive distribution rights. Under the agreement, Holdings GP is required to purchase MGP GP, LLC in the event that (i) a change of control of Inergy occurs at a time when Inergy is entitled to receive less than 50% of all cash distributed with respect to the Company's limited partner interests and incentive distribution rights or (ii) through dilution or a distribution to the Inergy common unitholders of Inergy's interests in us. Inergy is entitled to receive less than 25% of all cash distributed with respect to the Company's limited partner interests and incentive distribution rights.

Nature of Operations

The Company's financial statements reflect two operating and reporting segments: storage and transportation operations and salt operations. The Company's storage and transportation operations are engaged primarily in the storage and transportation of natural gas and natural gas liquids (“NGLs”). Its operations are currently concentrated in the Northeast region of the United States. The Company's salt operations, which are located in New York, include the production and sale of salt products. US Salt is one of five major solution mined salt manufacturers in the United States, producing evaporated salt products for food, industrial, pharmaceutical and water conditioning uses.

The Company owns and operates the following storage facilities:

• Stagecoach, a 26.3 billion cf multi-cycle depleted reservoir natural gas storage facility located approximately 150 miles northwest of New York City in Tioga County, New York and Bradford County, Pennsylvania;

• Thomas Corners, a 7.0 billion cf multi-cycle depleted reservoir natural gas storage facility located in Steuben County, New York;

• Steuben, a 6.2 billion cf single-turn depleted reservoir natural gas storage facility located in Steuben County, New York;

• Seneca Lake, a 1.5 billion cf multi-cycle salt dome reservoir natural gas storage facility located in Schuyler County, New York; and

• Bath, a 1.5 million barrel NGL storage facility located near Bath, New York.

The Company also owns and operates natural gas transportation assets in the Northeast, including:

• the compression and appurtenant facilities installed to expand transportation capacity on the Stagecoach north and south laterals (the “North-South Facilities”), which provide 325 MMcf/d of interstate transportation service to shippers;

• the MARC I Pipeline, a 39-mile, 30-inch interstate natural gas pipeline that will upon completion extend from the Company's Stagecoach south lateral interconnect with Tennessee Gas Pipeline's 300 Line and Transco's Leidy Line, which will initially provide 450 MMcf/d of firm transportation service to shippers; and

• Inergy Pipeline East, a 37.5-mile, 12-inch diameter intrastate natural gas pipeline in New York.

In addition, the Company owns US Salt, a solution mined salt production facility located on the shores of Seneca Lake outside of Watkins Glen, New York. The solution mining process used by US Salt creates salt caverns that can be developed into usable natural gas and NGL storage capacity.

Basis of Presentation

On May 14, 2012, the Company acquired 100% of the membership interests in US Salt from Inergy (“US Salt Acquisition”). The US Salt Acquisition is reflected in the Company's consolidated financial statements based on the historical values, and periods prior to the acquisition have been retrospectively adjusted to include the historical balances of US Salt. This accounting treatment is similar to the pooling of interests and is required as the transaction is amongst entities under common control.

The accompanying consolidated financial statements include the accounts of Inergy Midstream, L.P. (formerly Inergy Midstream, LLC) and its wholly owned subsidiaries, Arlington Storage Company, LLC (“Arlington”), Central New York Oil And Gas Company, L.L.C. (“CNYOG”), Finger Lakes LPG Storage, LLC (“Finger Lakes”), Inergy Gas Marketing, LLC, Inergy Pipeline East, LLC, US Salt and Inergy Storage, Inc.  All significant intercompany transactions, including distribution income, and balances have been eliminated in consolidation.

Prior to the completion of the IPO on December 21, 2011 the Company was a wholly owned subsidiary of Inergy.  The consolidated financial statements that are presented for the periods prior to the IPO have been prepared to represent the net assets and related historical results of the Company as if it were a stand-alone entity with the exception that the operations of Tres Palacios Gas Storage LLC (which was assigned to Inergy on November 25, 2011) has been excluded from the historical results.  The general ledger of each entity owned by the Company (excluding Tres Palacios Gas Storage LLC) forms the primary basis for the accompanying financial statements.  Costs incurred by Inergy which benefit both the Company and Inergy's wholly owned subsidiaries, have been allocated in a manner described in “Allocation of Expenses” below.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.