(4) Goodwill and Intangible Assets

Goodwill

Goodwill is the cost of an acquisition less the fair value of the net identifiable assets of the acquired business. The fair value of goodwill is based on inputs that are not observable in the market and thus represent Level 3 inputs.

The table below provides a summary of our change in carrying amount of goodwill (in millions) for the year ended December 31, 2016, by assigned reporting unit:



	Texas			Oklahoma		Crude and Condensate			Corporate			Totals
Year Ended December 31, 2016
Balance, beginning of period	$	703.5		$	190.3	$	93.2		$	1,426.9		$	2,413.9
Impairment	(473.1		)	—		(93.2		)	(307.0		)	(873.3		)
Acquisition adjustment	1.6			—		—			—			1.6
Balance, end of period	$	232.0		$	190.3	$	—		$	1,119.9		$	1,542.2

For the year ended December 31, 2017, there were no changes to the carrying amount of goodwill.

We evaluate goodwill for impairment annually as of October 31 and whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We first assess qualitative factors to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as the basis for determining whether it is necessary to perform a goodwill impairment test. We may elect to perform a goodwill impairment test without completing a qualitative assessment.

We perform our goodwill assessments at the reporting unit level for all reporting units. We use a discounted cash flow analysis to perform the assessments. Key assumptions in the analysis include the use of an appropriate discount rate, terminal year multiples and estimated future cash flows, including volume and price forecasts and estimated operating and general and administrative costs. In estimating cash flows, we incorporate current and historical market and financial information, among other factors. Impairment determinations involve significant assumptions and judgments, and differing assumptions regarding any of these inputs could have a significant effect on the various valuations. If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information, we may be exposed to goodwill impairment charges, which would be recognized in the period in which the carrying value exceeds fair value.

Prior to January 2017, if a goodwill impairment test was elected or required, we performed a two-step goodwill impairment test. The first step involved comparing the fair value of the reporting unit to its carrying amount. If the carrying amount of a reporting unit exceeded its fair value, the second step of the process involved comparing the implied fair value to the carrying value of the goodwill for that reporting unit. If the carrying value of the goodwill of a reporting unit exceeded the implied fair value of that goodwill, the excess of the carrying value over the implied fair value was recognized as an impairment loss.

Effective January 2017, we elected to early adopt ASU 2017-04, Intangibles—Goodwill and Other (Topic 350)— Simplifying the Test for Goodwill Impairment, which simplified the accounting for goodwill impairments by eliminating the requirement to compare the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test referenced in ASC 350. Therefore, our annual impairment test as of October 31, 2017 was performed according to ASU 2017-04.

Impairment Analysis for the Year Ended December 31, 2015

During the third quarter of 2015, we determined that sustained weakness in the overall energy sector, driven by low commodity prices together with a decline in our unit price, caused a change in circumstances warranting an interim impairment test. We also performed our annual impairment analysis during the fourth quarter of 2015. Although our established annual effective date for this goodwill analysis is October 31, we updated the effective date for this impairment analysis for the 2015 annual period to December 31, 2015 due to continued declines in commodity prices and our unit price during the fourth quarter of 2015.

Using the fair value approaches described above, in step one of the goodwill impairment test, we determined that the estimated fair values of our Louisiana, Texas and Crude and Condensate reporting units were less than their carrying amounts, primarily related to commodity prices, volume forecasts and discount rates. Based on that determination, we performed the second step of the goodwill impairment test by measuring the amount of impairment loss and allocating the estimated fair value of the reporting unit among all of the assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. Based on this analysis, a goodwill impairment loss for our Louisiana, Texas, and Crude and Condensate reporting units in the amount of $1,328.2 million was recognized for the year ended December 31, 2015 and is included as an impairment loss in the consolidated statement of operations.

We concluded that the fair value of goodwill for our Oklahoma reporting unit exceeded its carrying value, and the amount of goodwill disclosed on the consolidated balance sheet associated with this reporting unit was recoverable. Therefore, no goodwill impairment was identified or recorded for this reporting unit as a result of our annual goodwill assessment.

Impairment Analysis for the Year Ended December 31, 2016

During February 2016, we determined that continued further weakness in the overall energy sector, driven by low commodity prices together with a further decline in our unit price subsequent to year-end, caused a change in circumstances warranting an interim impairment test. Based on these triggering events, we performed a goodwill impairment analysis in the first quarter of 2016 on all reporting units. Based on this analysis, a goodwill impairment loss for our Texas, Crude and Condensate, and Corporate reporting units in the amount of $873.3 million was recognized in the first quarter of 2016 and is included as an impairment loss in the consolidated statement of operations for the year ended December 31, 2016.

We concluded that the fair value of our Oklahoma reporting unit exceeded its carrying value, and the amount of goodwill disclosed on the consolidated balance sheet associated with this reporting unit was recoverable. Therefore, no goodwill impairment was identified or recorded for this reporting unit as a result of our goodwill impairment analysis.

During our annual impairment test for 2016 performed as of October 31, 2016, we determined that no further impairments were required for the year ended December 31, 2016.

Impairment Analysis for the Year Ended December 31, 2017

During our annual impairment test for 2017 performed as of October 31, 2017, we determined that no impairments were required for the year ended December 31, 2017. The estimated fair value of our reporting units may be impacted in the future by a decline in our unit price or a prolonged period of lower commodity prices which may adversely affect our estimate of future cash flows, both of which could result in future goodwill impairment charges for our reporting units.

Intangible Assets

Intangible assets associated with customer relationships are amortized on a straight-line basis over the expected period of benefits of the customer relationships, which range from 10 to 20 years.

The following table represents our change in carrying value of intangible assets for the periods stated (in millions):



	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Year Ended December 31, 2017
Customer relationships, beginning of period	$	1,795.8	$	(171.6	)	$	1,624.2
Amortization expense	—		(127.1		)	(127.1		)
Customer relationships, end of period	$	1,795.8	$	(298.7	)	$	1,497.1

Year Ended December 31, 2016
Customer relationships, beginning of period	$	744.5	$	(54.6	)	$	689.9
Acquisitions	1,051.3		—			1,051.3
Amortization expense	—		(117.0		)	(117.0		)
Customer relationships, end of period	$	1,795.8	$	(171.6	)	$	1,624.2

For 2016 and 2015, we reviewed our various assets groups for impairment due to the triggering events described in the goodwill impairment analysis above. We utilized Level 3 fair value measurements in our impairment analysis, which included discounted cash flow assumptions by management consistent with those utilized in our goodwill impairment analysis. During 2016, the undiscounted cash flows of our assets exceeded their carrying values, and no impairment was recorded. During 2015, the undiscounted cash flows related to one of our asset groups in the Crude and Condensate segment were not in excess of its related carrying value. We estimated the fair value of this reporting unit and determined the fair values of certain intangible assets were not in excess of their carrying values. This resulted in a $223.1 million impairment of intangible assets in our Crude and Condensate segment, and this non-cash impairment charge was included as an impairment loss on the consolidated statement of operations for the year ended December 31, 2015. For the year ended December 31, 2017, we determined that no triggering events existed that would indicate an impairment of our intangibles assets.

The weighted average amortization period for intangible assets is 15.0 years. Amortization expense was approximately $127.1 million, $117.0 million, and $56.0 million for the years ended December 31, 2017, 2016 and 2015, respectively.

The following table summarizes our estimated aggregate amortization expense for the next five years and thereafter (in millions):



2018	$	123.4
2019	123.4
2020	123.4
2021	123.4
2022	123.4
Thereafter	880.1
Total	$	1,497.1