SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except for the changes below, there have been no changes to our significant accounting policies since December 31, 2017.

Recent Accounting Pronouncements. Accounting standard setters frequently issue new or revised accounting rules. We review new pronouncements to determine the impact, if any, on our financial statements. Accounting standards that have or could possibly have a material effect on our financial statements are discussed below.

Recently Adopted Accounting Pronouncements. We have recently adopted the following accounting pronouncements:

• ASU No. 2014-09 Revenue from Contracts with Customers (“Topic 606”). We adopted Topic 606 with a date of initial application of January 1, 2018. We applied Topic 606 by recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of partners’ capital at January 1, 2018. The comparative information has not been adjusted and is reported under the accounting standards in effect for those periods.

For contracts where we perform gathering services and earn a per-unit fee which is recognized at a point in time, revenue is recognized over time as the service is performed and results in revenue recognition materially consistent with historical GAAP. In addition, our contracts generally contain forms of variable consideration, which will likely be constrained as the volumes are susceptible to factors outside of our control and influence. As a result of applying the constraint guidance, timing of revenue recognition will be materially consistent with historical GAAP.

Prior to the adoption of Topic 606, contributions in aid of construction were recognized as a reduction to our cost basis of property, plant and equipment and facility fees were recognized as revenue when the amounts were billed. Upon adoption of Topic 606, the contributions in aid of construction amounts previously received were capitalized to property, plant and equipment, net of any accumulated depreciation, and will be depreciated over the remaining useful lives. Any future contributions in aid of construction will be recognized as revenue over the remaining term of the respective contract in accordance with Topic 606. Additionally, facility fees will be deferred and recognized over the contract term.

There are certain percent-of-proceeds contracts within our Williston Basin reportable segment where we previously recognized revenue for services provided to producers in gathering services and related fees. Such amounts which were previously presented gross in gathering services and related fees are presented net within cost of natural gas and NGLs. This change did not have any impact on our net income (loss), cash flows, or the amount we present as segment adjusted EBITDA.

For contracts containing MVC arrangements with banking mechanisms we previously deferred revenue. Under Topic 606, the recognition of revenue was accelerated. This acceleration totaled $16.7 million and is included in the Topic 606 day one adjustment amounts below in deferred revenue.

The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of Topic 606 was as follows:

	Balance at December 31, 2017		Adjustments Due to Topic 606		Balance at January 1, 2018
	(In thousands)
Assets
Property, plant and equipment, net	$	1,795,129	$	33,123	$	1,828,252
Liabilities
Deferred revenue, current		4,000		6,088		10,088
Deferred revenue, noncurrent		12,707		22,821		35,528
Partners' Capital (1)		1,084,430		4,214		1,088,644

________

(1) Includes common limited partner capital and general partner interests.

Impact on financial statements

The following tables summarize the impact of Topic 606 adoption on our unaudited condensed consolidated financial statements.

Unaudited condensed consolidated balance sheet

	September 30, 2018
	As Reported		Balances Without Adoption of Topic 606		Effect of Change Increase / (Decrease)
	(In thousands)
Assets
Accounts receivable	$	85,458	$	76,656	$	8,802
Other noncurrent assets		18,566		12,566		6,000
Property, plant and equipment, net		1,911,630		1,874,388		37,242
Liabilities
Deferred revenue, current		11,152		4,071		7,081
Deferred revenue, noncurrent		39,624		10,065		29,559
Partners' Capital (1)		939,293		923,889		15,404

________

(1) Includes common limited partner capital and general partner interests.

Unaudited condensed consolidated statement of operations

	Three months ended September 30, 2018
	As Reported		Balances Without Adoption of Topic 606		Effect of Change Increase / (Decrease)
	(In thousands)
Revenues
Gathering services and related fees	$	86,427	$	83,351	$	3,076
Costs and expenses
Cost of natural gas and NGLs		26,879		30,307		(3,428	)
Depreciation and amortization		26,743		26,373		370

	Nine months ended September 30, 2018
	As Reported		Balances Without Adoption of Topic 606		Effect of Change Increase / (Decrease)
	(In thousands)
Revenues
Gathering services and related fees	$	260,373	$	255,546	$	4,827
Costs and expenses
Cost of natural gas and NGLs		71,549		81,468		(9,919	)
Depreciation and amortization		80,204		79,219		985

Unaudited condensed consolidated statement of cash flows

	Nine months ended September 30, 2018
	As Reported			Balances Without Adoption of Topic 606			Effect of Change Increase / (Decrease)
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	3,697		$	(10,064	)	$	13,761
Adjustments to reconcile net loss to net cash     provided by operating activities:
Depreciation and amortization		79,752			78,767			985
Changes in operating assets and liabilities:
Accounts receivable		(11,557	)		(2,755	)		(8,802	)
Other, net		(7,634	)		(1,634	)		(6,000	)
Deferred revenue, net		5,160			5,104			56

• ASU No. 2017-04 Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies the subsequent measurement of goodwill by, among other things, eliminating step two from the goodwill impairment test. ASU 2017-04 is effective for public companies for fiscal years beginning after December 15, 2019 and it specifies the amendments in ASU 2017-04 should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted the provisions of ASU 2017-04 effective January 1, 2018. The adoption of this standard had no impact on our consolidated financial statements.

Accounting Pronouncements Pending Adoption. We have not yet adopted the following accounting pronouncements as of September 30, 2018:

• ASU No. 2016-02 Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires that lessees recognize all leases on the balance sheet, with the exception of short-term leases. A lease liability will be recorded for the obligation of a lessee to make lease payments arising from a lease. A right-of-use asset will be recorded which represents the lessee’s right to use, or to control the use of, a specified asset for a lease term. ASU 2016-02 is effective for public companies for fiscal years beginning after December 15, 2018, and requires the modified retrospective approach for transition. We are currently evaluating the provisions of ASU 2016-02 to determine its impact on our financial statements and related disclosures and will adopt its provisions effective January 1, 2019. We expect to utilize certain practical expedients including (i) not being required to reassess whether any expired or existing contracts are or contain leases; (ii) not being required to reassess the lease classification for any expired or existing leases (that is, all existing leases that were classified as operating leases in accordance with Topic 840 will be classified as operating leases, and all existing leases that were classified as capital leases in accordance with Topic 840 will be classified as finance leases); and (iii) not being required to reassess initial direct costs for any existing leases.

• ASU No. 2018-01 Leases: Land Easement Practical Expedient for Transition to Topic 842 (“ASU 2018-01”). ASU 2018-01 provides an optional transition practical expedient to not evaluate existing or expired land easements that were not previously accounted for as leases under the current lease guidance in Topic 840. Upon adoption of Topic 842, an entity that elects this practical expedient should evaluate new or modified land easements under Topic 842 beginning at the date the entity adopts Topic 842. We expect to adopt the optional transition practical expedient of ASU 2018-01 effective January 1, 2019.

• ASU No. 2018-13 Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 updates the disclosure requirements on fair value measurements including new disclosures for the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 modifies existing disclosures including clarifying the measurement uncertainty disclosure. ASU 2018-13 removes certain existing disclosure

requirements including the amount and reasons for transfers between Level 1 and Level 2 fair value measurements and the policy for the timing of transfer between levels. We are currently evaluating the provisions of ASU 2018-13 to determine its impact on our financial statements and related disclosures and will adopt its provisions effective January 1, 2020.