EQUITY METHOD INVESTMENTS

Our equity method investments consist of the following (in thousands):



	December 31,
	2016		2015
White Cliffs	$	281,734	$	297,109
NGL Energy	18,933		112,787
Glass Mountain	133,622		141,182
Total equity method investments	$	434,289	$	551,078

Our earnings from equity method investments consist of the following (in thousands):



	Year Ended December 31,
	2016		2015		2014
White Cliffs	$	69,007	$	70,238	$	57,378
NGL Energy⁽¹⁾	2,188		5,031		2,343
Glass Mountain	2,562		6,117		4,478
Total earnings from equity method investments	$	73,757	$	81,386	$	64,199

(1) Excluding loss on issuance of common units of $41.0 thousand for the year ended December 31, 2016, and gains on the issuance of common units of $6.4 million and $29.0 million for the years ended December 31, 2015 and 2014, respectively.

Cash distributions received from equity method investments consist of the following (in thousands):



	Year Ended December 31,
	2016		2015		2014
White Cliffs	$	88,839	$	86,845	$	66,768
NGL Energy	4,873		19,074		23,404
Glass Mountain	10,456		13,623		6,823
Total cash distributions received from equity method investments	$	104,168	$	119,542	$	96,995

White Cliffs

Certain summarized balance sheet information of White Cliffs is shown below (in thousands):



	December 31,
	2016		2015
Current assets	$	34,721	$	54,091
Property, plant and equipment, net	508,043		509,068
Goodwill	17,000		17,000
Other intangible assets, net	8,509		11,974
Total assets	$	568,273	$	592,133

Current liabilities	$	15,812	$	9,491
Members’ equity	552,461		582,642
Total liabilities and members’ equity	$	568,273	$	592,133

Certain summarized income statement information of White Cliffs for the years ended December 31, 2016, 2015 and 2014 is shown below (in thousands):



	Year Ended December 31,
	2016		2015		2014
Revenue	$	212,359	$	206,395	$	160,369
Cost of products sold	$	3,223	$	2,914	$	3,635
Operating, general and administrative expenses	$	35,672	$	30,370	$	19,431
Depreciation and amortization expense	$	35,439	$	34,105	$	23,257
Net income	$	138,032	$	139,000	$	114,045

The equity in earnings of White Cliffs for the years ended December 31, 2016, 2015 and 2014 reported in our consolidated statements of operations and comprehensive income (loss) is less than 51% of the net income of White Cliffs for the same period. This is primarily due to certain general and administrative expenses we incur in managing the operations of White Cliffs that the other members are not obligated to share. Such expenses are recorded by White Cliffs, and are allocated to our membership interests. White Cliffs recorded $1.6 million, $1.3 million and $1.6 million of such general and administrative expense for the years ended December 31, 2016, 2015 and 2014, respectively. In addition, our equity in earnings is also impacted by the elimination of revenue on the sale of inventory to White Cliffs. Revenue related to inventory transactions with White Cliffs is deferred until a sale of the inventory has been made with a third party.

The members of White Cliffs are required to contribute capital to White Cliffs to fund various projects. For the years ended December 31, 2016, 2015 and 2014, we contributed $2.2 million, $42.8 million and $53.3 million to White Cliffs capital projects.

Our membership interest in White Cliffs is significant as defined by Securities and Exchange Commission’s Regulation S-X Rule 1-02(w). Accordingly, as required by Regulation S-X Rule 3-09, we have included the audited financial statements of White Cliffs as of December 31, 2016 and 2015 and for each of the three years in the period ended December 31, 2016 as an exhibit to this Form 10-K.

NGL Energy

At December 31, 2016, we no longer own common units representing limited partner interests in NGL Energy. We continue to hold an 11.78% interest in the general partner of NGL Energy which is being accounted for under the equity method in accordance with ASC 323-30-S99-1, as our ownership is in excess of the 3 to 5 percent interest which is generally considered to be more than minor.

The general partner of NGL Energy is not a publicly traded company. The information below pertains to our general partner interest, and previously held limited partner interest, in NGL Energy.

Our policy is to record our equity in earnings of NGL Energy on a one-quarter lag, as we do not expect information on the earnings of NGL Energy to always be available in time to consistently record the earnings in the quarter in which they are generated. Accordingly, the equity in earnings from NGL Energy, which is reflected in our consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2016, 2015 and 2014 relates to the earnings of NGL Energy for the twelve months ended September 30, 2016, 2015 and 2014, respectively. NGL Energy's 10-K for its fiscal year ended March 31, 2016, restated prior periods to correct an error in those prior periods. The impact of NGL Energy's restatement was not material to SemGroup. The summarized financial statement information of NGL Energy below has been updated to reflect the impact of the restatement on their prior period financial information.

Certain unaudited summarized balance sheet information of NGL Energy is shown below (in thousands):



	(Unaudited) September 30,
	2016		2015
Current assets	$	1,250,299	$	1,276,919
Property plant and equipment, net	1,755,416		1,845,112
Goodwill	1,467,955		1,658,237
Intangible and other assets, net	1,600,248		1,820,788
Total assets	$	6,073,918	$	6,601,056

Current liabilities	$	798,853	$	857,639
Long-term debt	3,063,008		3,077,604
Other noncurrent liabilities	256,743		127,639
Equity	1,955,314		2,538,174
Total liabilities and equity	$	6,073,918	$	6,601,056

Certain unaudited summarized income statement information of NGL Energy for the twelve months ended September 30, 2016, 2015 and 2014 is shown below (in thousands):



	(Unaudited) Twelve Months Ended September 30,
	2016			2015		2014
Revenue	$	10,777,954		$	14,504,581	$	15,748,520
Costs of products sold	$	10,005,830		$	13,573,066	$	15,054,291
Operating, general and administrative expenses	$	523,902		$	576,805	$	436,959
Depreciation and amortization expense	$	211,841		$	221,067	$	162,443
Net income (loss)	$	(39,895	)	$	71,225	$	15,059

Other-than-temporary impairment of equity method investment in NGL Energy

During the fourth quarter of 2015, the market price of NGL Energy common units fell below our carrying value per unit and remained below our carrying value as of March 31, 2016. At December 31, 2015, in accordance with ASC 320-10-S99 “Investments - Debt and Equity Securities”, we assessed whether such decline in value was other-than-temporary. During this initial assessment, the decrease in value was determined not to be other-than-temporary. The evidence management considered in such assessment included the nature and volatility of such decline, as well as the latest public financial guidance, condition, and results of NGL Energy. Subsequently, we continued to monitor events and developments and, based on NGL Energy's April 21, 2016, announcement of a reduction in its quarterly distribution and lowering of financial performance guidance, we concluded that the decline in the value of our investment was other-than-temporary as of March 31, 2016. As such, we recorded an impairment of $39.8 million to our investment in the limited partner units of NGL Energy for the year ended December 31, 2016. The value of our limited partner investment in NGL Energy was written-down to the market price of $11.04 per share on December 31, 2015, the date through which we had recorded our equity in earnings. These units were subsequently sold in the second quarter of 2016, as detailed below.

Our investment in the general partner of NGL Energy is not considered to be impaired. There is no readily available market price for our general partner investment as these units are not publicly traded. Based on the relatively low book value of our general partner investment, the value of incentive distribution rights and comparable general partner transactions, we do not believe our investment in the general partner of NGL Energy is impaired.

NGL Energy unit issuances and sales of NGL Energy units

During the years ended December 31, 2015, 2014 and 2013, our limited partnership interest was diluted in connection with NGL Energy common unit issuances. Accordingly, we recorded a non-cash loss of $41.0 thousand for the year ended December 31, 2016, and non-cash gains of $6.4 million and $29.0 million for the years ended December 31, 2015 and 2014, respectively, related to these transactions, which are included in "gain (loss) on issuance of common units by equity method investee" in our consolidated statements of operations and comprehensive income (loss).

During the year ended December 31, 2016, we sold our remaining 4,652,568 NGL Energy limited partner units for $13.00 per unit, or $60.5 million, and recorded a $9.1 million gain on disposal. During the year ended December 31, 2015, we sold 1,999,533 of our NGL Energy common units for $56.3 million, net of related costs of $0.5 million. We recorded a net gain of $14.5 million. During the year ended December 31, 2014, we sold 2,481,308 of our NGL Energy common units for $88.8 million, net of related costs of $3.1 million. We recorded a net gain of $34.2 million. Gains on disposal of NGL Energy limited partner units are included in "loss (gain) on sale or impairment of equity method investment" in our consolidated statement of operations and comprehensive income (loss).

Subsequent to the sale of our limited partner interest, our ownership interest in NGL Energy is not significant as defined by Securities and Exchange Commission’s Regulation S-X Rule 1-02(w). Accordingly, no audited financial statements of NGL Energy pursuant to Regulation S-X 3-09 will be included as an exhibit to this Form 10-K.

Glass Mountain

We hold a 50% interest in Glass Mountain which we account for under the equity method.

The excess of the recorded amount of our investment over the book value of our share of the underlying net assets represents equity method goodwill and capitalized interest of $31.0 million and $3.6 million, respectively, at December 31, 2016. Capitalized interest is amortized as a reduction of earnings from equity method investments.

The equity in earnings of Glass Mountain for the years ended December 31, 2016, 2015 and 2014 reported in our consolidated statement of operations and comprehensive income (loss) is less than 50% of the net income of Glass Mountain for the same period due to amortization of capitalized interest for the period.

Certain summarized balance sheet information of Glass Mountain is shown below (in thousands):



	December 31,
	2016		2015
Current assets	$	6,136	$	7,856
Property, plant and equipment, net	193,179		205,920
Total assets	$	199,315	$	213,776

Current liabilities	$	1,286	$	1,036
Other liabilities	13		28
Members’ equity	198,016		212,712
Total liabilities and members’ equity	$	199,315	$	213,776

Certain summarized income statement information of Glass Mountain for the year ended December 31, 2016, 2015 and 2014 is shown below (in thousands):



	Year Ended December 31,
	2016		2015		2014
Revenue	$	29,502	$	38,526	$	30,398
Cost of Sales	$	463	$	3,392	$	757
Operating, general and administrative expenses	$	7,570	$	6,643	$	6,419
Depreciation and amortization expense	$	15,914	$	15,828	$	13,872
Net income	$	5,548	$	12,657	$	9,344

We invested $0.3 million, $2.7 million and $16.2 million in Glass Mountain for the years ended December 31, 2016, 2015 and 2014, respectively.

Our ownership interest in Glass Mountain is not significant as defined by Securities and Exchange Commission's Regulation S-X Rule 1-02(w). Accordingly, no audited financial statements of Glass Mountain pursuant to Regulation S-X 3-09 have been included as an exhibit to this Form 10-K.