ACQUISITIONS

Crude oil trucking assets

On June 24, 2014, our consolidated subsidiary, Rose Rock, acquired crude oil trucking assets from a subsidiary of Chesapeake Energy Corporation ("Chesapeake") (NYSE: CHK) for $44.0 million in cash. Highlights of the transaction include:


•	124 trucks, 122 trailers and miscellaneous equipment; and


•	a long-term transportation agreement with Chesapeake Energy Marketing, Inc.

The results of operations of these assets from June 24, 2014 through December 31, 2014 have been included in our Crude segment in our consolidated statements of operations and comprehensive income and balance sheet as of December 31, 2014. During the year ended December 31, 2014, our consolidated statements of operation and comprehensive income did not include material amounts of revenue or operating income related to these assets. The proforma impact to comparative prior year periods, had the acquisition occurred at the beginning of the comparative prior year period, is not significant.

Fair values of the acquired assets were determined based on the cost, income and market approach methodologies. The trucks and equipment acquired were valued based on the cost approach, which considers the replacement cost of the assets adjusted for depreciation and physical deterioration, and the market approach, which considers the value of transactions for comparable assets. The value of the customer contract was determined based on the income approach using the excess earnings method over the remaining life of the contract and assuming a 95% probability of renewal.

We have recorded the fair value of the assets acquired as follows (in thousands):



Property, plant and equipment	$	19,092
Customer contract intangible	17,010
Goodwill	7,892
Total assets acquired	$	43,994

The above finalized purchase price allocation resulted in adjustments to previously reported estimates. Our preliminary estimate of the value of the acquired property, plant and equipment was reduced by $2.6 million and our estimate of the value of the intangible asset was increased by $12.6 million which resulted in a decrease in the value of the associated goodwill of $10.0 million.

Goodwill represents the excess of the estimated consideration paid for the acquired business over the fair value of the individual assets acquired. Goodwill primarily represents the value of the acquired business as a platform for growth and the acquired assembled workforce.

Mid-America Midstream Gas Services, L.L.C.

On August 1, 2013, our SemGas segment acquired the equity interest of Mid-America Midstream Gas Services, L.L.C. ("MMGS"), a wholly owned subsidiary of Chesapeake, which is the owner of gas gathering and processing assets in the Mississippi Lime play for approximately $314.0 million in cash. We incurred approximately $3.6 million in transaction related general and administrative expenses. The transaction was funded through the combination of a portion of the net proceeds from the sale of $300 million of 7.50% senior unsecured notes (Note 16) and a borrowing under the revolving credit facility under SemGroup's corporate credit agreement. Highlights of the acquisition include the following:


•	200 miles of gathering pipeline;


•	Rose Valley I plant - A 200 mmcf/d (million cubic feet per day) cryogenic processing plant, placed in operation in the first quarter of 2014;


•	Rose Valley II plant - A 200 mmcf/d cryogenic processing plant, expected to be in operation in mid-2015;


•	Approximately 540,000 net acre dedication in the core of the Mississippi Lime play, supported by a joint venture between Chesapeake and Sinopec International Petroleum Exploration and Production Corporation ("Sinopec"); and


•	A 20-year, 100% fee based, gas gathering and processing agreement with certain affiliates of Chesapeake and Sinopec.

Fair values of the acquired assets were determined based on the cost, income and market approach methodologies. The property, plant and equipment acquired were valued based on the cost approach, which considers the replacement cost of the assets adjusted for depreciation and physical deterioration, and the market approach, which considers the value of transactions for comparable assets. The value of the customer contract was determined based on the income approach using the excess earnings method over the remaining life of the contract and assuming no renewal.

We have recorded the fair value of the assets acquired as follows (in thousands):



Property, plant and equipment	$	136,949
Customer contract intangible	164,000
Goodwill	13,052
Total assets acquired	$	314,001

Based on the final purchase price allocation, the amounts above were adjusted from those reported at December 31, 2013 by a non-cash adjustment which decreased goodwill and customer contract intangible by $10.8 million and $2.3 million, respectively, with a corresponding increase to property, plant and equipment. In addition, we recorded $0.5 million of incremental payments for property, plant and equipment, which related to the period prior to close of the transaction.

Goodwill represents the excess of the estimated consideration paid for the acquired business over the fair value of the individual assets acquired. Goodwill primarily represents the value of operational efficiencies between the acquired entity and the Company's existing assets in the area and the opportunity to use the acquired business as a platform for growth.

Barcas Field Services, LLC

On September 1, 2013, our consolidated subsidiary, Rose Rock, completed the acquisition of the assets of Barcas Field Services, LLC ("Barcas") for $49.0 million in cash. Highlights of the acquisition include the following:


•	114 trucks, 120 trailers and miscellaneous equipment; and


•	a long-term take-or-pay customer transportation agreement.

Fair values of the acquired assets were determined based on the cost, income and market approach methodologies. The trucks and equipment acquired were valued based on the cost approach which considers the replacement cost of the assets adjusted for depreciation and physical deterioration. The value of the customer contract was determined based on the income approach using the excess earnings method over the remaining life of the contract and assuming a 50% probability of renewal. The market approach which considers the value of comparable transactions was used to value the acquired land.

We have recorded the following acquisition date fair values for the assets acquired (in thousands):



Property, plant and equipment	$	13,865
Customer contract intangible	6,880
Goodwill	28,234
Total assets acquired	$	48,979

Based on the final purchase price allocation, the amounts above differ from those reported at December 31, 2013 by a non-cash adjustment which decreased goodwill and other intangible assets and increased property, plant and equipment by $0.1 million.

Goodwill represents the excess of the consideration paid for the acquired business over the fair value of the individual assets acquired. Goodwill primarily represents cost savings due to the ability to transport using the acquired trucks rather than third-party trucks, the ability to bring more volume from the field into our pipelines, the opportunity to use the acquired business as a platform for growth and the acquired assembled workforce.

NGL Energy

On August 6, 2013, we completed the acquisition of approximately 5.36% of the general partner of NGL Energy, which increased our ownership of NGL Energy's general partner to 11.78%.

Glass Mountain

In September 2012, we acquired an additional 25% ownership interest in Glass Mountain, bringing our total ownership percentage in Glass Mountain to 50%. See Note 5 for additional information related to our equity method investment in Glass Mountain.