11. Related Party Transactions

Member Distribution. In 2013, we made a leveraged distribution of approximately $200 million to our member.

Transaction Fee Agreement. Following the Acquisition, we were subject to a transaction fee agreement with certain of our Sponsors (the Service Providers) for the provision of certain structuring, financial, investment banking and other similar advisory services. At the time of the Acquisition, we paid one-time transaction fees of $71.5 million (recorded as general and administrative expense in our income statement) to the Service Providers in the aggregate in exchange for services rendered in connection with structuring, arranging the financing and performing other services. On December 20, 2013, the Transaction Fee Agreement was amended and restated in its entirety pursuant to which the requirement to pay an additional transaction fee to the Service Providers under the agreement was eliminated (and, as described below, an additional fee became payable under the amended and restated Management Fee Agreement). The amended and restated Transaction Fee Agreement terminated automatically in accordance with its terms upon the closing of our parent’s initial public offering

Management Fee Agreement. We entered into a management fee agreement with certain of our Sponsors to provide certain management consulting and advisory services which terminates on the twelve-year anniversary of the Acquisition (May 24, 2012), if not terminated earlier by mutual agreement of the parties, or upon a change in control or specified initial public offering transaction. Under the fee agreement, we paid a non-refundable annual management fee of $25 million at the beginning of each year. For the year ended December 31, 2013 we recognized approximately $26 million in general and administrative expense related to the management fee and other fees. Commencing in 2014, the management fee became payable in quarterly installments at the beginning of each calendar quarter, and on January 1, 2014, we paid $6.25 million for services to be rendered in that quarter. The management fee agreement terminated later in January 2014.

Affiliate Supply Agreement. In November 2012, we entered into a supply agreement with an Apollo affiliate through October 2014 to provide certain fracturing materials for our Eagle Ford drilling operations. As of December 31, 2013, we recorded approximately $120 million as capital expenditures for amounts provided under this agreement.

Related Party Transactions Prior to the Acquisition. At the time of the Acquisition, El Paso made total contributions of approximately $1.5 billion to the predecessor including a non-cash contribution of approximately $0.5 billion to satisfy its then current and deferred income tax balances and a cash contribution to facilitate repayment of approximately $960 million of then outstanding debt of the predecessor under its revolving credit facility. Additionally, prior to the completion of the Acquisition, the predecessor entered into transactions during the ordinary course of conducting its business with affiliates of El Paso, primarily related to the sale, transportation and hedging of its oil, natural gas and NGLs production.

The agreements noted below ceased on the date of Acquisition and included the following services:

· General. El Paso billed the predecessor directly for certain general and administrative costs and allocated a portion of its general and administrative costs. The allocation was based on the estimated level of resources devoted to its operations and the relative size of its earnings before interest and taxes, gross property and payroll. These expenses were primarily related to management, legal, financial, tax, consultative, administrative and other services, including employee benefits, pension benefits, annual incentive bonuses, rent, insurance, and information technology. El Paso also billed the predecessor directly for compensation expense related to certain stock-based compensation awards granted directly to the predecessor’s employees, and allocated to the predecessor a proportionate share of El Paso’s corporate compensation expense. Compensation cost associated with the acceleration of vesting as a result of the merger between El Paso and KMI was assumed by El Paso and KMI and is not reflected in the predecessor financial statements.

· Pension and Retirement Benefits. El Paso maintained a primary pension plan, the El Paso Corporation Pension Plan, a defined benefit plan covering substantially all of our employees prior to the Acquisition and providing benefits under a cash balance formula. El Paso also maintained a defined contribution plan covering all of our employees prior to the Acquisition. El Paso matched 75 percent of participant basic contributions up to 6 percent of eligible compensation and made additional discretionary matching contributions. El Paso was responsible for benefits accrued under these plans and allocated related costs.

· Other Post-Retirement Benefits. El Paso provided limited post-retirement life insurance benefits for current and retired employees prior to the Acquisition. El Paso was responsible for benefits accrued under its plan and allocated the related costs to its affiliates.

· Marketing. Prior to the completion of the Acquisition, the predecessor sold natural gas primarily to El Paso Marketing at spot market prices. The predecessor was also a party to a hedging contract with El Paso Marketing. Realized gains and losses on these hedges were included in operating revenues.

· Transportation and Related Services. Prior to the completion of the Acquisition, the predecessor contracted for services with El Paso’s regulated interstate pipelines that provided transportation and related services for natural gas production.

The following table shows revenues and charges to/from affiliates for the following predecessor periods (in millions):

	Predecessor
	January 1 to May 24, 2012		Year ended December 31, 2011

Operating revenues	$	143	$	634
Operating expenses	44		138
Reimbursements of operating expenses	—		3

· Income Taxes. Prior to the Acquisition, El Paso filed consolidated U.S. federal and certain state tax returns which included the predecessor’s taxable income. See Note 4 for additional information on income tax related matters.

· Cash Management Program. Prior to the Acquisition, our predecessor participated in El Paso’s cash management program which matched short-term cash surpluses and needs of its participating affiliates, thus minimizing total borrowings from outside sources.