9. EQUITY INVESTMENTS

The following table presents the activity in WES’s equity investments for the years ended December 31, 2017 and 2016:



	Equity Investments
thousands	Fort Union ⁽¹⁾			White Cliffs ⁽²⁾			Rendezvous ⁽³⁾			Mont Belvieu JV ⁽⁴⁾			TEG ⁽⁵⁾			TEP ⁽⁶⁾			FRP ⁽⁷⁾			Total
Balance at December 31, 2015	$	17,122		$	50,439		$	50,913		$	117,089		$	16,283		$	194,803		$	172,238		$	618,887
Investment earnings (loss), net of amortization	608			13,858			1,931			26,204			708			16,683			18,725			78,717
Contributions	—			441			—			—			166			(580		)	—			27
Distributions	(1,543		)	(13,277		)	(3,873		)	(26,243		)	(730		)	(16,934		)	(19,585		)	(82,185		)
Distributions in excess of cumulative earnings ⁽⁸⁾	(3,354		)	(4,142		)	(2,232		)	(4,245		)	(581		)	(4,778		)	(1,906		)	(21,238		)
Balance at December 31, 2016	$	12,833		$	47,319		$	46,739		$	112,805		$	15,846		$	189,194		$	169,472		$	594,208
Investment earnings (loss), net of amortization	3,821			12,547			1,144			29,444			3,350			17,387			17,501			85,194
Impairment expense ⁽⁹⁾	(3,110		)	—			—			—			—			—			—			(3,110		)
Contributions	—			277			—			—			—			107			—			384
Distributions	(4,217		)	(11,965		)	(3,085		)	(29,482		)	(3,317		)	(17,639		)	(17,675		)	(87,380		)
Distributions in excess of cumulative earnings ⁽⁸⁾	(2,297		)	(3,233		)	(2,270		)	(2,468		)	—			(10,074		)	(2,743		)	(23,085		)
Balance at December 31, 2017	$	7,030		$	44,945		$	42,528		$	110,299		$	15,879		$	178,975		$	166,555		$	566,211

⁽¹⁾

WES has a 14.81% interest in Fort Union, a joint venture that owns a gathering pipeline and treating facilities in the Powder River Basin. Anadarko is the construction manager and physical operator of the Fort Union facilities. Certain business decisions, including, but not limited to, decisions with respect to significant expenditures or contractual commitments, annual budgets, material financings, dispositions of assets or amending the owners’ firm gathering agreements, require 65% or unanimous approval of the owners.

⁽²⁾

WES has a 10% interest in White Cliffs, a limited liability company that owns a crude oil pipeline that originates in Platteville, Colorado and terminates in Cushing, Oklahoma. The third-party majority owner is the manager of the White Cliffs operations. Certain business decisions, including, but not limited to, approval of annual budgets and decisions with respect to significant expenditures, contractual commitments, acquisitions, material financings, dispositions of assets or admitting new members, require more than 75% approval of the members.

⁽³⁾

WES has a 22% interest in Rendezvous, a limited liability company that operates gas gathering facilities in Southwestern Wyoming. Certain business decisions, including, but not limited to, decisions with respect to significant expenditures or contractual commitments, annual budgets, material financings, dispositions of assets or amending the members’ gas servicing agreements, require unanimous approval of the members.

⁽⁴⁾

WES has a 25% interest in the Mont Belvieu JV, an entity formed to design, construct, and own two fractionation trains located in Mont Belvieu, Texas. A third party is the operator of the Mont Belvieu JV fractionation trains. Certain business decisions, including, but not limited to, decisions with respect to the execution of contracts, settlements, disposition of assets, or the creation, appointment, or removal of officer positions require 50% or unanimous approval of the owners.

⁽⁵⁾

WES has a 20% interest in TEG, which owns two NGL gathering systems that link natural gas processing plants to TEP. Midcoast Energy Partners, L.P., a wholly-owned subsidiary of Enbridge, Inc., is the operator of the two gathering systems. Certain business decisions, including, but not limited to, decisions with respect to the execution of contracts, settlements, disposition of assets, or the delegation, creation, appointment, or removal of officer positions require more than 50% approval of the members.

⁽⁶⁾

WES has a 20% interest in TEP, which owns an NGL pipeline that originates in Skellytown, Texas and extends to Mont Belvieu, Texas. Enterprise Products Operating LLC (“Enterprise”) is the operator of TEP. Certain business decisions, including, but not limited to, decisions with respect to the execution of contracts, settlements, disposition of assets, or the creation, appointment, or removal of officer positions require more than 50% approval of the members.

⁽⁷⁾

WES has a 33.33% interest in FRP, which owns an NGL pipeline that extends from Weld County, Colorado to Skellytown, Texas. Enterprise is the operator of FRP. Certain business decisions, including, but not limited to, decisions with respect to the execution of contracts, settlements, disposition of assets, or the creation, appointment, or removal of officer positions require more than 50% approval of the members.


⁽⁸⁾	Distributions in excess of cumulative earnings, classified as investing cash flows in the consolidated statements of cash flows, are calculated on an individual investment basis.


⁽⁹⁾	Recorded in Impairments in the consolidated statements of operations.

9. EQUITY INVESTMENTS (CONTINUED)

The investment balance in Fort Union at December 31, 2017, is $3.1 million less than WES’s underlying equity in Fort Union’s net assets due to an impairment loss recognized by WES in the second quarter of 2017 for its investment in Fort Union. This investment was impaired to its estimated fair value of $8.5 million, using the income approach and Level 3 fair value inputs.

The investment balance in Rendezvous at December 31, 2017, includes $36.2 million for the purchase price allocated to the investment in Rendezvous in excess of the historic cost basis of Western Gas Resources, Inc. (“WGRI”), the entity that previously owned the interest in Rendezvous, which Anadarko acquired in August 2006. This excess balance is attributable to the difference between the fair value and book value of such gathering and treating facilities (at the time WGRI was acquired by Anadarko) and is being amortized over the remaining estimated useful life of those facilities.

The investment balance in White Cliffs at December 31, 2017, is $6.9 million less than WES’s underlying equity in White Cliffs’ net assets, primarily due to WES recording the acquisition of its initial 0.4% interest in White Cliffs at Anadarko’s historic carrying value. This difference is being amortized to Equity income, net – affiliates over the remaining estimated useful life of the White Cliffs pipeline.

An impairment loss was recognized by the operator of Fort Union during both the years ended December 31, 2016 and 2015. WES’s 14.81% share of the impairment loss was $3.0 million and $9.5 million for the years ended December 31, 2016 and 2015, respectively, recorded in Equity income, net – affiliates in the consolidated statements of operations.

Management evaluates its equity investments for impairment whenever events or changes in circumstances indicate that the carrying value of such investments may have experienced a decline in value that is other than temporary. When evidence of loss in value has occurred, management compares the estimated fair value of the investment to the carrying value of the investment to determine whether the investment has been impaired. Management assesses the fair value of equity investments using commonly accepted techniques, and may use more than one method, including, but not limited to, recent third-party comparable sales and discounted cash flow models. If the estimated fair value is less than the carrying value, the excess of the carrying value over the estimated fair value is recognized as an impairment loss.

The following tables present the summarized combined financial information for WES’s equity investments (amounts represent 100% of investee financial information):



	Year Ended December 31,
thousands	2017		2016		2015
Consolidated Statements of Income
Revenues	$	703,424	$	687,554	$	667,554
Operating income	435,735		428,454		359,899
Net income	434,749		427,511		359,443



	December 31,
thousands	2017		2016
Consolidated Balance Sheets
Current assets	$	137,957	$	118,472
Property, plant and equipment, net	2,512,214		2,626,466
Other assets	36,373		39,802
Total assets	$	2,686,544	$	2,784,740
Current liabilities	80,490		63,468
Non-current liabilities	7,447		6,662
Equity	2,598,607		2,714,610
Total liabilities and equity	$	2,686,544	$	2,784,740