11. INVESTMENTS

In July 2016, we completed a transaction pursuant to which we acquired from Sanchez Energy a 50% interest in Carnero Gathering, a joint venture that is 50% owned and operated by Targa 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 acquisition date (the “Carnero Gathering Transaction”). During the three months ended March 31, 2018, the Partnership made approximately $0.1 million of capital contributions to Carnero Gathering. Prior to the sale, Sanchez Energy, through a wholly owned subsidiary, had invested approximately $26.0 million in Carnero Gathering. 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 a contract term of fifteen years and decreases earnings from Carnero Gathering.

As part of the Carnero Gathering Transaction, we are required to pay Sanchez Energy an earnout based on natural gas received above a threshold volume and tariff at Carnero Gathering’s delivery points from Sanchez Energy and other producers. See Note 5 “Fair Value Measurements” for further discussion of the earnout derivative.

As of March 31, 2018, the Partnership had paid approximately $46.4 million for the Carnero Gathering Transaction related to the initial payment and contributed capital. The Partnership has accounted for this investment using the equity method. 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 three months ended March 31, 2018, the Partnership recorded earnings of approximately $2.2 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 approximately $2.6 million were received during the three months ended March 31, 2018.

In November 2016, we completed a transaction pursuant to which we acquired from Sanchez Energy a 50% interest in Carnero Processing, LLC, a joint venture that is 50% owned and operated by Targa, for aggregate cash consideration of approximately $55.5 million and the assumption of remaining capital contribution commitments to Carnero Processing, estimated at approximately $24.5 million as of the date of acquisition (the “Carnero Processing Transaction”). During the three months ended March 31, 2018, the Partnership made approximately $0.2 million of capital contributions to the joint venture. Prior to the sale, Sanchez Energy, through a wholly owned subsidiary, had invested approximately $48.0 million in Carnero Processing.

As of March 31, 2018, the Partnership had paid approximately $74.9 million for the Carnero Processing Transaction related to the initial payment, acquisition costs and contributed capital. The Partnership has accounted for this investment using the equity method. Targa is the operator of the joint venture and has significant influence with respect to the normal day-to-day operating decisions. We have included the investment balance in the “Equity investments” caption in our consolidated balance sheet. The Partnership recorded earnings of approximately $2.3 million in the “Earnings from equity investments” line within our consolidated statements of operations for the three months ended March 31, 2018. Cash distributions of approximately $4.4 million were received during the three months ended March 31, 2018.

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


	Three Months Ended March 31,
	2018		2017
Sales	$	89,789	$	3,071
Total expenses		80,662		1,373
Net income	$	9,127	$	1,698


	March 31,		December 31,
	2018		2017
Current assets	$	35,888	$	38,344
Noncurrent assets		192,765		193,748
Current liabilities		25,601		24,710