Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

(3) 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. For the years ended December 31, 2020, 2019, and 2018, we evaluated goodwill for impairment annually as of October 31 and whenever events or changes in circumstances indicated it is more likely than not that the fair value of a reporting unit was less than its carrying amount. We first assessed qualitative factors to evaluate whether it was more likely than not that the fair value of a reporting

unit was less than its carrying amount as the basis for determining whether it was necessary to perform a goodwill impairment test. We may have elected to perform a goodwill impairment test without completing a qualitative assessment.

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

The tables below provide a summary of our change in carrying amount of goodwill by segment (in millions) for the years ended December 31, 2020, 2019, and 2018 by assigned reporting unit.


	Permian		Louisiana		Oklahoma		North Texas		Corporate		Totals
Year Ended December 31, 2020
Balance, beginning of period	$	184.6	$	—	$	—	$	—	$	—	$	184.6
Impairment	(184.6)		—		—		—		—		(184.6)
Balance, end of period	$	—	$	—	$	—	$	—	$	—	$	—


	Permian		Louisiana		Oklahoma		North Texas		Corporate		Totals
Year Ended December 31, 2019
Balance, beginning of period	$	—	$	—	$	190.3	$	—	$	1,119.9	$	1,310.2
Goodwill allocation	184.6		186.5		623.1		125.7		(1,119.9)		—
Impairment	—		(186.5)		(813.4)		(125.7)		—		(1,125.6)
Balance, end of period	$	184.6	$	—	$	—	$	—	$	—	$	184.6


	Permian		Louisiana		Oklahoma		North Texas		Corporate		Totals
Year Ended December 31, 2018
Balance, beginning of period	$	29.3	$	—	$	190.3	$	202.7	$	1,119.9	$	1,542.2
Impairment	(29.3)		—		—		(202.7)		—		(232.0)
Balance, end of period	$	—	$	—	$	190.3	$	—	$	1,119.9	$	1,310.2

Goodwill Impairment Analysis for the Year Ended December 31, 2020

During the first quarter of 2020, we determined that a sustained decline in our unit price and weakness in the overall energy sector, driven by low commodity prices and lower consumer demand due to the COVID-19 pandemic, caused a change in circumstances warranting an interim impairment test. Based on these triggering events, we performed a quantitative goodwill impairment analysis on the remaining goodwill in the Permian reporting unit. Based on this analysis, a goodwill impairment loss for our Permian reporting unit in the amount of $184.6 million was recognized as an impairment loss on the consolidated statement of operations for the year ended December 31, 2020. As a result of this impairment loss, we have no goodwill remaining as of December 31, 2020.

Goodwill Impairment Analysis for the Year Ended December 31, 2019

During the first quarter of 2019, we recognized a $186.5 million goodwill impairment related to goodwill that had been reallocated from our Corporate reporting unit to our Louisiana reporting unit as a result of the Merger.

During the fourth quarter of 2019, we performed a quantitative analysis as of October 31, 2019 for our annual goodwill impairment test. Subsequent to October 31, 2019, we determined that due to a significant decline in our common unit price and the expected reduction in our cash distribution paid to common unitholders, which was announced in January 2020, a change in circumstances had occurred that warranted an additional quantitative impairment test. We recorded a goodwill impairment loss of $125.7 million and $813.4 million in our North Texas and Oklahoma reporting units, respectively. These amounts are included in impairments in the consolidated statement of operations for the year ended December 31, 2019. The goodwill for our North Texas and Oklahoma reporting units primarily related to the goodwill reallocated from our Corporate reporting unit as a result of the Merger in January 2019.

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 Permian and North Texas reporting units in the amounts of $29.3 million and $202.7 million, respectively, 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.

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, 2020
Customer relationships, beginning of period	$	1,795.8	$	(545.9)	$	1,249.9
Amortization expense	—		(123.5)		(123.5)
Retirements (1)	(1.6)		0.6		(1.0)
Customer relationships, end of period	$	1,794.2	$	(668.8)	$	1,125.4

Year Ended December 31, 2019
Customer relationships, beginning of period	$	1,795.8	$	(422.2)	$	1,373.6
Amortization expense	—		(123.7)		(123.7)
Customer relationships, end of period	$	1,795.8	$	(545.9)	$	1,249.9

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

____________________________

(1)Intangible assets retired as a result of the disposition of certain non-core assets.

The weighted average amortization period for intangible assets is 15.0 years. Amortization expense was $123.5 million, $123.7 million, and $123.5 million for the years ended December 31, 2020, 2019, and 2018, respectively.

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


2021	$	123.4
2022	123.4
2023	123.4
2024	123.4
2025	106.1
Thereafter	525.7
Total	$	1,125.4