Disposal of long-lived assets

9 Months Ended

Sep. 30, 2019

Disposal of long-lived assets [Line Items]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

DISPOSALS OR IMPAIRMENTS OF LONG-LIVED ASSETS

Our impairment tests of long-lived assets involve estimates of future cash flows for periods matching the estimated useful lives of our assets. Estimating future cash flows is inherently uncertain and is dependent upon several variables, including volume estimates and forecasted commodity prices for periods where market prices are not available. Volume estimates include assumptions regarding third party activity that can change over time with changing market conditions.  The inherent uncertainties in estimating future cash flows means that future revisions in those estimates may occur having potentially material impact to our impairment tests.

Nine months ended September 30, 2019

On July 30, 2019, we completed the sale of certain South Texas crude oil trucking assets for $5.5 million in cash and recorded a small gain on disposal.

On July 17, 2019, we completed the sale of our Sherman, Texas natural gas gathering and processing assets of our U.S. Gas segment, for $5.3 million in cash. During the nine months ended September 30, 2019, we recorded an impairment of $5.2 million to write down these assets and related liabilities to net realizable value.

During the nine months ended September 30, 2019, we recorded a $3.4 million impairment of our Nash, Oklahoma natural gas processing plant within our U.S. Gas segment. The impairment was triggered by the permanent idling of the Nash plant. We used a market approach to determine the fair value of the remaining assets based on assumptions of the equipment’s condition, marketability and salvage value.

On February 25, 2019, we contributed 100% of the issued and outstanding equity interests in our wholly owned subsidiary, SemCAMS ULC, an Alberta unlimited liability company, in exchange for 51% of the common shares of SemCAMS Midstream ULC (“SemCAMS Midstream”), cash, a potential payment contingent on positive final investment decision of a specific project by SemCAMS Midstream, and earnout consideration in the form of a special share in SemCAMS Midstream entitled to dividend payments if either or both of two specific projects proceed and EBITDA thresholds pertaining to those projects are achieved. No gain or loss was recorded on the contribution as we retained control of the contributed subsidiary. Certain deferred tax impacts of the transaction were recorded as an adjustment to Additional Paid-In Capital. Refer to Note 3 for further information.

Nine months ended September 30, 2018

On April 12, 2018, we completed the sale of our U.K. operations, SemLogistics, for $73.1 million. We recorded a pre-tax gain on disposal of $0.4 million for the nine months ended September 30, 2018. The U.K. business contributed $5.4 million of pre-tax income for the nine months ended September 30, 2018, excluding the gain on disposal.

On March 15, 2018, we completed the sale of our Mexican asphalt business for $70.7 million. We recorded a pre-tax gain on disposal of $1.6 million for the nine months ended September 30, 2018. The Mexican asphalt business contributed $2.3 million of pre-tax income for the nine months ended September 30, 2018, excluding the gain on disposal.