Intangible Assets

6 Months Ended

Jun. 30, 2018

Intangible Assets

Intangible Assets

10. INTANGIBLE ASSETS

Intangible assets are comprised of customer and marketing contracts. The intangible assets balance includes $165.4 million related to the Gathering Agreement (defined in Note 13 “Related Party Transactions”) with Sanchez Energy that was entered into as part of the acquisition of the Western Catarina gathering system (“Western Catarina Midstream”). Pursuant to the 15-year agreement, Sanchez Energy tenders all of its crude petroleum, natural gas and other hydrocarbon-based product volumes on 35,000 dedicated acres in the Western Catarina of the Eagle Ford Shale in Texas for processing and transportation through Western Catarina Midstream, with a right to tender additional volumes outside of the dedicated acreage.  These intangible assets are being amortized using the straight-line method over the 15-year life of the agreement.

Amortization expense for the six months ended June 30, 2018 and 2017 was $6.7 million and $6.8 million, respectively.  These costs are amortized to depreciation, depletion, and amortization expense in our condensed consolidated statement of operations. The following table is a reconciliation of changes in intangible assets (in thousands):

	Six Months Ended		Year Ended
	June 30, 2018		December 31, 2017
Beginning balance	$	172,166	$	185,766
Disposals		—		(32)
Amortization		(6,730)		(13,568)
Ending balance	$	165,436	$	172,166