Equity Method Investments

9 Months Ended

Sep. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

EQUITY METHOD INVESTMENTS

EQUITY METHOD INVESTMENTS

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

	September 30, 2018		December 31, 2017
White Cliffs Pipeline, L.L.C.	$	258,098	$	266,362
NGL Energy Partners LP	18,923		18,919
Total equity method investments	$	277,021	$	285,281

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018		2017
White Cliffs Pipeline, L.L.C.	$	14,546		$	15,636		$	41,489	$	46,805
Glass Mountain Pipeline, LLC	—			1,736			—		5,402
NGL Energy Partners LP	(18		)	(5		)	4		4
Total earnings from equity method investments	$	14,528		$	17,367		$	41,493	$	52,211

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
White Cliffs Pipeline, L.L.C.	$	18,640	$	19,847	$	57,219	$	60,552
Glass Mountain Pipeline, LLC	—		3,410		—		10,350
Total cash distributions received from equity method investments	$	18,640	$	23,257	$	57,219	$	70,902

White Cliffs Pipeline, L.L.C.

We own a 51% interest in White Cliffs Pipeline, L.L.C. (“White Cliffs”), which we account for under the equity method. Certain unaudited summarized income statement information of White Cliffs for the three months and nine months ended September 30, 2018 and 2017, is shown below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenue	$	43,855		$	45,445		$	128,455		$	145,288
Cost of products sold, exclusive of depreciation and amortization	$	(107	)	$	(360	)	$	(138	)	$	8,091
Operating, general and administrative expenses	$	5,514		$	5,723		$	17,511		$	17,849
Depreciation and amortization expense	$	9,624		$	9,154		$	28,821		$	27,619
Net income	$	28,825		$	30,928		$	82,262		$	91,688

Our equity in earnings of White Cliffs for the three months and nine months ended September 30, 2018 and 2017, is less than 51% of the net income of White Cliffs for the same periods. This is due to certain general and administrative expenses we incur in managing the operations of White Cliffs that the other owners are not obligated to share.

The members of White Cliffs are required to contribute capital to White Cliffs to fund various projects. For the nine months ended September 30, 2018, we contributed $6.5 million for a project to convert one of White Cliff’s 12-inch pipelines from crude to natural gas liquids service. Remaining contributions related to the conversion project will be paid in 2018 and 2019 and are expected to total $27.2 million. The project is expected to be completed during the fourth quarter of 2019.

Glass Mountain Pipeline, LLC

On December 22, 2017, we completed the sale of our equity method investment in Glass Mountain Pipeline LLC (“Glass Mountain”) for $300 million, subject to working capital and other adjustments. Proceeds from the sale were used to repay borrowings on SemGroup’s revolving credit facility.

NGL Energy Partners LP

We own an 11.78% interest in the general partner of NGL Energy Partners LP (NYSE: NGL) (“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.