10. INVESTMENTS

On July 5, 2016, the Partnership purchased a 50% membership interest in Carnero Gathering from SN Midstream for an initial payment of approximately $37.0 million and the assumption of remaining capital commitments to Carnero Gathering, estimated at approximately $7.4 million as of the date of the acquisition. The remaining 50% membership interests of Carnero Gathering are owned by an affiliate of Targa. During the six months ended June 30, 2017, the Partnership made approximately $4.8 million of capital contributions to the joint venture. Prior to the sale, SN Midstream had invested approximately $26.0 million in the Carnero Gathering joint venture. The fair value of the intangible asset for the contractual customer relationship related to Carnero Gathering was valued at approximately $13.0 million. This amount is being amortized over the contract term of fifteen years and decrease earnings from Carnero Gathering. As part of the Carnero Gathering Transaction, the Partnership is required to pay SN Midstream a monthly earnout based upon gas received at Carnero Gathering’s receipt points from SN Catarina and gas delivered by other producers and processing by Carnero Processing. This earnout is considered as contingent consideration and its estimated fair value of $4.0 million was recorded on the balance sheet as a deferred liability as of June 30, 2017. No earnout payments were made in the three or six months ended June 30, 2017.

As of June 30, 2017, the Partnership had paid approximately $45.6 million for the Carnero Gathering Transaction related to the initial purchase price, acquisition costs and contributed capital to date. The Partnership has accounted for this investment as an equity method investment. Targa is the operator of the joint venture and has significant influence with respect to the normal day-to-day construction and operating decisions. We have included the investment balance in the “Equity investments” caption in our Condensed Consolidated Balance Sheet. For the six months ended June 30, 2017, the Partnership recorded earnings of approximately $2.6 million in equity investments from Carnero Gathering, which was offset by approximately $0.4 million related to the amortization of the contractual customer intangible asset. For the three months ended June 30, 2017, the Partnership recorded earnings of approximately $1.4 million in equity investments from Carnero Gathering, which was offset by approximately $0.2 million related to the amortization of the contractual customer intangible asset. We have included these equity method earnings in the “Earnings from equity investments” line within the Condensed Consolidated Statements of Operations. Cash distributions of $3.7 million were received during the six months ended June 30, 2017.

On November 22, 2016, the Partnership purchased a 50% membership interest in Carnero Processing from SN Midstream for an initial payment of approximately $55.5 million and the assumption of remaining capital commitments to Carnero Processing, estimated at approximately $24.5 million as of the date of the acquisition. The remaining 50% membership interests of Carnero Processing are owned by an affiliate of Targa. During the six months ended June 30, 2017, the Partnership made $3.5 million of capital contributions to the joint venture. Prior to the sale, SN Midstream had invested approximately $48.0 million in the Carnero Processing joint venture.

As of June 30, 2017, the Partnership had paid approximately $70.0 million for the Carnero Processing transaction related to the initial payment, acquisition costs and contributed capital. The Partnership has accounted for this investment as an equity method investment. Targa is the operator of the joint venture and has significant influence with respect to the normal day-to-day construction and operating decisions. We have included the investment balance in the “Equity investments” caption in our consolidated balance sheet. The Partnership recorded expenses of approximately $0.6 million in the “Earnings from equity investments” line within our consolidated statements of operations for the six months ended June 30, 2017 and $0.2 million for the three months ended June 30, 2017.

Summarized financial information of unconsolidated entities is as follows (in thousands):


	Six Months Ended
	June 30,
	2017
Sales	$	15,222
Total expenses		10,960
Net income	$	4,262


	June 30,		December 31,
	2017		2016
Current assets	$	21,780	$	27,779
Noncurrent assets		183,371		152,112
Current liabilities		12,078		16,577