ROSE ROCK MIDSTREAM, L.P.

We control the operations of our consolidated subsidiary, Rose Rock Midstream, L.P. (NYSE: RRMS) ("Rose Rock"), through our ownership of the general partner interest. As of March 31, 2016, we own the 2% general partner interest and a 55.1% limited partner interest. Subsequent to the adoption of ASU 2015-02, Rose Rock is considered to be a variable interest entity due to the limited partners' lack of substantive kick-out rights or substantive participating rights. We will continue to consolidate Rose Rock as we are the primary beneficiary due to our general partner interest, majority limited partner interest and incentive distribution rights.

Rose Rock's assets are pledged as collateral under its senior secured revolving credit facility agreement. The credit agreement restricts Rose Rock’s ability to make certain types of payments relating to its units, including the declaration or payment of cash distributions; provided that Rose Rock may make quarterly distributions of available cash so long as no default under the agreement then exists or would result therefrom. The agreement is guaranteed by all of Rose Rock’s material domestic subsidiaries and secured by a lien on substantially all of the property and assets of Rose Rock and the guarantors, subject to customary exceptions. Rose Rock's creditors have no recourse to the credit of SemGroup.

As the general partner of Rose Rock, SemGroup may provide support for Rose Rock to maintain its expected quarterly distributions while maintaining its target distribution coverage ratio. However, SemGroup is not contractually obligated to do so.

Cash distributions

We receive distributions from Rose Rock on our common units, our 2% general partner interest and incentive distribution rights. Rose Rock intends to pay a minimum quarterly distribution of $0.3625 per unit, to the extent it has sufficient available cash, as defined in Rose Rock’s partnership agreement.

The following table shows the cash distributions paid or declared during 2016 and 2015 (in thousands, except for per unit amounts):



	Distribution Per Unit			Distributions Paid/To Be Paid
Quarter Ended				SemGroup								Noncontrolling Interest Common Units		Total Distributions
Quarter Ended				General Partner		Incentive Distributions		Common Units		Subordinated Units		Noncontrolling Interest Common Units		Total Distributions
December 31, 2014	$	0.6200		$	485	$	3,487	$	6,551	$	5,202	$	8,544	$	24,269
March 31, 2015	$	0.6350		$	568	$	4,450	$	13,148	$	—	$	10,213	$	28,379
June 30, 2015	$	0.6500		$	590	$	4,979	$	13,458	$	—	$	10,456	$	29,483
September 30, 2015	$	0.6600		$	604	$	5,333	$	13,665	$	—	$	10,619	$	30,221
December 31, 2015	$	0.6600		$	604	$	5,333	$	13,665	$	—	$	10,622	$	30,224
March 31, 2016	$	0.6600	*	$	605	$	5,338	$	13,665	$	—	$	10,643	$	30,251

*Expected distributions related to the quarter ended March 31, 2016, which will be paid on May 13, 2016 to unitholders of record as of May 3, 2016.

Summarized financial information

Certain summarized balance sheet information of Rose Rock is shown below (in thousands):



	(Unaudited)
	March 31, 2016		December 31, 2015
Cash	$	10,672	$	9,059
Other current assets	279,802		310,555
Property, plant and equipment, net	443,415		441,596
Equity method investments	433,572		438,291
Goodwill	26,628		26,628
Other noncurrent assets, net	18,748		19,461
Total assets	$	1,212,837	$	1,245,590

Current liabilities	$	229,164	$	283,029
Long-term debt	756,921		732,356
Partners’ capital attributable to SemGroup	147,218		149,376
Partners’ capital attributable to noncontrolling interests	79,534		80,829
Total liabilities and partners' capital	$	1,212,837	$	1,245,590

Certain summarized income statement information of Rose Rock for the three months ended March 31, 2016 and 2015 is shown below (in thousands):



	Three Months Ended March 31,
	2016		2015
Revenue	$	203,951	$	134,693
Cost of products sold	$	151,391	$	96,237
Operating, general and administrative expenses	$	26,601	$	26,571
Depreciation and amortization expense	$	7,893	$	10,143
Earnings from equity method investments	$	20,839	$	20,864
Net income	$	26,468	$	14,600