(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, 2018, by assigned reporting unit. For the year ended December 31, 2017, there were no changes to the carrying amounts of goodwill.



	Texas			Oklahoma		Corporate		Totals
Year Ended December 31, 2018
Balance, beginning of period	$	232.0		$	190.3	$	1,119.9	$	1,542.2
Impairment	(232.0		)	—		—		(232.0		)
Balance, end of period	$	—		$	190.3	$	1,119.9	$	1,310.2

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. 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.

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.

Effective January 2017, we elected to early adopt ASU 2017-04, Intangibles—Goodwill and Other (Topic 350)— Simplifying the Test for Goodwill Impairment “ASU 2017-04”), 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, Intangibles—Goodwill and Other. Therefore, our annual impairment test as of October 31, 2017 was performed according to ASU 2017-04.

Goodwill Impairment Analysis for the Year Ended December 31, 2018

During our annual goodwill impairment test for 2018, which was performed as of October 31, 2018, we determined, based upon our qualitative assessment, that no impairments of goodwill were required as of that date. However, subsequent to October 31, 2018, we determined that due to a significant decline in our unit price, a change in circumstances had occurred that warranted a quantitative impairment test. Based on this triggering event, we performed a quantitative goodwill impairment analysis as of December 31, 2018. Based on this analysis, a goodwill impairment loss for our Texas reporting unit in the amount of $232.0 million was recognized in the fourth quarter of 2018 and is included in impairments in the consolidated statement of operations for the year ended December 31, 2018. Substantially all of the goodwill for our Texas reporting unit was recorded as a result of our Business Combination in March 2014.

We concluded that the fair value of our Oklahoma and Corporate reporting units exceeded their carrying values, and the amounts of goodwill disclosed on the consolidated balance sheet associated with these reporting units were recoverable. Therefore, no goodwill impairment was identified or recorded for these reporting units as a result of our quantitative impairment test.

Goodwill 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.

Goodwill Impairment Analysis for the Year Ended December 31, 2016

During February 2016, we determined that continued weakness in the overall energy sector, driven by low commodity prices together with a 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 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 impairments 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.

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 5 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, 2018
Customer relationships, beginning of period	$	1,795.8	$	(298.7	)	$	1,497.1
Amortization expense	—		(123.5		)	(123.5		)
Customer relationships, end of period	$	1,795.8	$	(422.2	)	$	1,373.6

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 the years ended December 31, 2018, 2017, and 2016, we reviewed our various assets groups for impairment during our annual impairment review process and determined that no impairment of our intangible assets occurred. 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.

The weighted average amortization period for intangible assets is 15.0 years. Amortization expense was $123.5 million, $127.1 million, and $117.0 million for the years ended December 31, 2018, 2017, and 2016, respectively.

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



2019	$	123.7
2020	123.7
2021	123.7
2022	123.7
2023	123.6
Thereafter	755.2
Total	$	1,373.6