5. Acquisitions and Dispositions

2015 Acquisitions

Acquisition of Southern Propane Inc. On May 8, 2015, we acquired substantially all of the assets of Southern Propane Inc. (“Southern”), a Houston-based industrial and commercial propane distribution and logistics company. The acquisition expanded the asset base and market share of our NGL distribution and sales segment, specifically the acceleration of our entry into the Houston, Texas market, as well as expansion of our industrial, non-seasonal customers. The total purchase price of $16,292,000 consisted of a $12,475,000 cash payment that was paid on the acquisition date, and which was funded through the use of borrowings from our revolving credit facility, a $108,000 cash payment to the seller as the final working capital adjustment, the issuance of 266,951 common units valued at $3,442,000 and a contingent earn-out liability with a value of $267,000 that is subject to the achievement of certain gross profit targets at Southern. The earn-out period covers the period from June 2015 through December 2016, and the maximum earn-out that could be earned was $1,250,000. The common units issued with this acquisition were issued in a private offering conducted in accordance with the exemption from the registration requirements of Section 4(a)(2) of the Securities Act of 1933, as amended, as such units were issued to the owners of a business acquired in a privately negotiated transaction not involving any public offering or solicitation.

The fair value of the contingent earn-out liability was estimated by applying an expected present value technique based on the probability-weighted average of possible outcomes that would occur should certain financial metrics be reached. That measure is based on significant inputs that are not observable in the market, which ASC 820 refers to as Level 3 inputs. The contingent earn-out was established at the time of the acquisition and is revalued at each reporting period. Based on the actual post-acquisition performance results and revised projections, we estimated the fair value of the Southern contingent earn-out liability to be $243,000 as of December 31, 2015, which is recorded in Other long-term liabilities in the consolidated balance sheets. As of December 31, 2016, the Southern contingent earn-out liability was written off and we recognized a $243,000 gain for the year ended December 31, 2016. For the year ended December 31, 2015, we recorded $24,000 in income related to the changes in the fair value of the contingent earn-out liability. Changes in fair value of the Southern contingent earn-out is included in Other income, net, in our consolidated statements of operations.

The following table represents our allocation of the total purchase price of this acquisition to the assets acquired (in thousands):


Accounts receivable	$	932
Inventory		24
Total current assets		956
Property, plant and equipment		2,962
Intangible assets:
Customer relationships		6,163
Noncompete agreements		292
Trade names		113
Total identifiable net assets acquired		10,486
Goodwill		5,806
Net assets acquired	$	16,292

Goodwill associated with the Southern acquisition principally results from synergies expected from integrated operations. The fair values of the acquired intangible assets were estimated by applying the income approach. That measure is based on significant inputs that are not observable in the market, which ASC 820 refers to as Level 3 inputs. Trade names are amortized over an estimated useful life of one year, customer relationships are amortized over a weighted average useful life of 12 years, and non-compete agreements are amortized over a weighted average useful life of 5 years.

Revenues attributable to Southern included in the consolidated statements of operations totaled $5,766,000 for the year ended December 31, 2016 and $3,849,000 for the period from May 8, 2015 to December 31, 2015. We do not account for the operations of Southern on a stand-alone basis, therefore, it is impracticable to report the amounts of net income of Southern included in the consolidated statements of operations related to the post-acquisition periods.

Disposition of crude oil supply and logistics assets. On September 30, 2015, we entered into an asset purchase agreement pursuant to which we sold certain crude oil supply and logistics assets for a sales price of $1,914,000. We closed the transaction on November 2, 2015 and recognized a gain on disposal of $1,046,000 for the year ended December 31, 2015.