Discontinued Operations

12 Months Ended

Dec. 31, 2016

Discontinued Operations

Discontinued Operations

3. Discontinued Operations

Mid-Continent. On February 1, 2016, we sold certain trucking and marketing assets in the Mid-Continent area (the “Mid-Continent Business”) to JP Development, simultaneous with JP Development’s sale of its GSPP pipeline assets to a third party buyer. The sales price related to the Mid-Continent Business was $9,685,000, in cash, which included certain adjustments related to inventory and other working capital items. We recognized a loss on disposal of approximately $12,909,000 during the year ended December 31, 2015, which primarily relates to the goodwill and long-lived asset impairment charge associated with the Mid-Continent Business. As of December 31, 2015, the Mid-Continent Business met all the criteria to be classified as asset held for sale in accordance with ASC 360, therefore, we classified all the related assets and liabilities as held for sale in the consolidated balance sheets. In addition, we allocated $7,939,000 of goodwill to the Mid-Continent Business, which was based on the relative fair value of the disposed Mid-Continent Business and the portion of the crude oil supply and logistics reporting unit that was retained by us. The $7,939,000 was subsequently impaired and contributed to the overall net loss from discontinued operations. The operating results of the Mid-Continent Business have been classified as discontinued operations for all periods presented in the consolidated statements of operations. We combined the cash flows from the Mid-Continent Business with the cash flows from continuing operations for all periods presented in the consolidated statements of cash flows. The Mid-Continent Business will not generate any continuing cash flows subsequent to the date of disposition. Prior to the classification as discontinued operations, we reported the Mid-Continent Business in our crude oil pipelines and storage segment. The following table summarizes selected financial information related to the Mid-Continent Business’ operations in the years ended December 31, 2016, 2015 and 2014.

Consolidated Statements of Operations

The discontinued operations of the Mid-Continent Business are summarized below:

	Year Ended December 31,
	2016		2015		2014
	(in thousands)
REVENUES
Crude oil sales	$	11,493	$	429,716	$	967,359
Gathering, transportation and storage fees		—		16		31
Other revenues		2		52		90
Total revenues		11,495		429,784		967,480
COSTS AND EXPENSES
Cost of sales, excluding depreciation and amortization		11,687		426,886		961,428
Operating expense		172		1,402		1,930
General and administrative		31		867		936
Impairment of goodwill and assets held for sale		—		12,909		—
Depreciation and amortization		211		2,281		2,258
(Gain) loss on disposal of assets, net		(114)		119		229
Total costs and expenses		11,987		444,464		966,781
OPERATING (LOSS) INCOME		(492)		(14,680)		699
OTHER INCOME (EXPENSE)
Interest expense		(47)		(296)		(412)
Other income, net		—		25		46
(LOSS) INCOME FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES		(539)		(14,951)		333
Income tax expense		—		—		—
NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS	$	(539)	$	(14,951)	$	333

Consolidated Balance Sheets

The current and non-current assets and liabilities of the Mid-Continent Business are as follows:

	December 31,
	2015
	(in thousands)
ASSETS
Current assets
Inventory	$	2,692
Prepaid expenses and other current assets		38
Total Current assets of discontinued operations held for sale		2,730
Non-current assets
Property, plant and equipment, net		5,203
Intangible assets, net		1,138
Deferred financing costs and other assets, net		303
Total Non-current assets of discontinued operations held for sale		6,644
Total Assets of discontinued operations held for sale	$	9,374
LIABILITIES
Current liabilities
Accrued liabilities	$	640
Total Current liabilities of discontinued operations held for sale	$	640

The following table summarizes other selected financial information related to the Mid-Continent Business.

	Year Ended December 31,
	2016		2015		2014
	(in thousands)
Depreciation	$	115	$	1,127	$	1,104
Amortization		96		1,154		1,154
Capital expenditures		—		637		316
Other operating noncash items related to discontinued operations:
Impairment on goodwill and assets held for sale	$	—	$	12,909	$	—
Derivative valuation changes		—		630		—
(Gain) loss on disposal of assets		(114)		119		229
Non-cash inventory LCM adjustments		—		—		222
Investing noncash items related to discontinued operations:
Accrued capital expenditures	$	—	$	—	$	218

Bakken Business. On June 30, 2014, we (“Seller”) entered into and simultaneously closed an Asset Purchase Agreement with Gold Spur Trucking, LLC (“Buyer”), pursuant to which the Seller sold all the trucking and related assets and activities in North Dakota, Montana and Wyoming (the “Bakken Business”) to the Buyer for a purchase price of $9,100,000. As a result, we recognized a loss on this sale of approximately $7,288,000 during the second quarter of 2014, which primarily relates to the write-off of a customer contract associated with the Bakken Business. In addition, immediately prior to the sale, we allocated $1,984,000 of goodwill to the Bakken Business, which was based on the relative fair value of the disposed Bakken Business and the portion of the crude oil supply and logistics reporting unit that was retained by us. The $1,984,000 allocation contributed to the overall net loss from discontinued operations.

The Bakken Business operations have been classified as discontinued operations for the year ended December 31, 2014 in the consolidated statements of operations. We combined the cash flows from the Bakken Business with the cash flows from continuing operations for all periods presented in the consolidated statements of cash flows. The Bakken Business will not generate any continuing cash flows subsequent to the date of disposition. Prior to the classification as discontinued operations, we reported the Bakken Business in our crude oil pipelines and storage segment. The following table summarizes selected financial information related to the Bakken Business’s operations in the year ended December 31, 2014.

	Year Ended December 31, 2014
	(in thousands)
Revenues from discontinued operations	$	7,865
Net loss of discontinued operations, including loss on disposal of $7,288 in 2014		(9,608)