Acquisitions and Divestiture

2017 Acquisitions and Divestiture

On December 1, 2017, we acquired a 100% interest in Triton, 41.48% of the issued and outstanding membership interest in LOCAP, an additional 22.9% interest in Mars, an additional 22.0% interest in Odyssey, and an additional 10.0% interest in Explorer from SPLC and SOPUS for $825.0 million in cash (the “December 2017 Acquisition”). As part of the December 2017 Acquisition, SOPUS contributed all but the working capital and certain environmental liabilities of Triton. The December 2017 Acquisition closed pursuant to a Purchase and Sale Agreement (the “December 2017 Purchase and Sale Agreement”) among the Operating Company, us, SPLC and SOPUS. SPLC and SOPUS are each wholly owned subsidiaries of Shell. As such, this acquisition is accounted for as a transaction between entities under common control and was recast for the periods of our Parent’s ownership prior to the transaction. We funded the cash consideration for the December 2017 Acquisition from $825.0 million in borrowings under the Five Year Revolver due December 2022 (as defined in Note 8—Related Party Debt) with STCW, an affiliate of Shell, and the Five Year Fixed Facility (as defined in Note 8—Related Party Debt) with STCW. Total transaction costs of $0.6 million were expensed as incurred. The terms of the December 2017 Acquisition were approved by the Board of Directors of our general partner (the “Board”) and by the conflicts committee of the Board, which consists entirely of independent directors. The conflicts committee engaged an independent financial advisor and legal counsel.

In connection with the December 2017 Acquisition we acquired the following:



Cost investment ⁽¹⁾	$	22.3
Equity method investments⁽²⁾	76.1
Property, plant and equipment, net⁽³⁾	118.2
Partners' capital⁽⁴⁾	3.2
December 2017 Acquisition	$	219.8

⁽¹⁾ Book Value of an additional 10.0% interest in Explorer contributed by SPLC.

⁽²⁾ Book Value of an additional 22.9% interest in Mars and a 41.48% interest in LOCAP contributed by SPLC.

⁽³⁾ Book Value of a 100% interest in the historical carrying value of property, plant and equipment, net contributed by SOPUS.

⁽⁴⁾ Book Value of an additional 22.0% interest in Odyssey contributed by SOPUS.

We recognized $605.2 million of consideration in excess of the book value of net assets acquired as a capital distribution to our general partner in accordance with our policy for common control transactions. For the period from closing through December 31, 2017, we recognized $7.7 million in revenues and $18.8 million of net earnings related to this acquisition.

On October 17, 2017, we acquired a 50.0% interest in Crestwood Permian Basin LLC (“Permian Basin”), which owns the Nautilus gathering system in the Permian Basin, for $49.9 million consideration and initial capital contributions (the “October 2017 Acquisition”). The October 2017 Acquisition closed pursuant to a Member Interest Purchase Agreement dated October 16, 2017 (the “October 2017 Purchase Agreement”), among the Operating Company and CPB Member LLC (a jointly owned subsidiary of Crestwood Equity Partners LP and First Reserve). We have determined we have significant influence over the financial and operating policies of Permian Basin and we therefore account for these investments under the equity method. We funded the October 2017 Acquisition with cash on hand. The terms of the October 2017 Acquisition were approved by the Board.

On May 10, 2017, we acquired a 100% interest in Delta, Na Kika and Refinery Gas Pipeline for $630.0 million in consideration (the “May 2017 Acquisition”). As part of the May 2017 Acquisition, SPLC and Shell GOM Pipeline Company LP (“Shell GOM”) contributed all but the working capital of Delta and Na Kika to Pecten, and Shell Chemical LP (“Shell Chemical”) contributed all but the working capital of Refinery Gas Pipeline to Sand Dollar. The May 2017 Acquisition closed pursuant to a Purchase and Sale Agreement dated May 4, 2017 (the “May 2017 Purchase and Sale Agreement”), among the Operating Company, us, Shell Chemical, Shell GOM and SPLC. Shell Chemical, Shell GOM and SPLC are each wholly owned subsidiaries of Shell. As such, this acquisition is accounted for as a transaction between entities under common control and was recast for the periods of our Parent’s ownership prior to the transaction. We funded the May 2017 Acquisition with $50.0 million of cash on hand, $73.1 million in borrowings under our Five Year Revolver due October 2019 (as defined in Note 8—Related Party Debt), and $506.9 million in borrowings under our Five Year Fixed Facility (as defined in Note 8—Related Party Debt) with STCW. Total transaction costs of $0.8 million were expensed as incurred. The terms of the May 2017 Acquisition were approved by the Board and by the conflicts committee of the Board, which consists entirely of independent directors. The conflicts committee engaged an independent financial advisor and legal counsel. In accordance with the May 2017 Purchase and Sale Agreement, Shell Chemical has agreed to reimburse us for costs and expenses incurred in connection with the conversion of a section of pipe from the Convent refinery to Sorrento from refinery gas service to butane service. The May 2017 Purchase and Sale Agreement contains other customary representations, warranties and covenants.

In connection with the May 2017 Purchase and Sale Agreement, we granted Shell Chemical a purchase option and right of first refusal with respect to Refinery Gas Pipeline and certain other related assets and the ownership interests in Sand Dollar. The purchase option may be triggered by, among other things, (i) a third party obtaining the right to use any or all of a Refinery Gas Pipeline; (ii) the loss of all volume on a Refinery Gas Pipeline that would result in it being permanently shutdown for two years or more; (iii) the termination of a transportation services agreement between Shell Chemical and Sand Dollar (“Refinery Gas Pipeline Agreement”); (iv) the expiration of the term of a Refinery Gas Pipeline Agreement; or (v) a change of control of our general partner; provided, however, that in the case of (i) through (iv), the purchase option would only be applicable to the Refinery Gas Pipeline impacted by such event. In addition, in the event that Sand Dollar receives an offer to sell all or a portion of the Refinery Gas Pipelines or the ownership interests in Sand Dollar from a third party, Shell Chemical has a right of first refusal with respect to such Refinery Gas Pipelines or ownership interests, as applicable, for so long as any Refinery Gas Pipeline Agreement between Shell Chemical and Sand Dollar is in effect.

In connection with the May 2017 Acquisition we acquired historical carrying value of property, plant and equipment, net and other assets under common control as follows:



Delta	$	40.1
Na Kika	26.0
Refinery Gas Pipeline	134.6
May 2017 Acquisition	$	200.7

We recognized $429.3 million of consideration in excess of the book value of net assets acquired as a capital distribution to our general partner in accordance with our policy for common control transactions. For the period from closing through December 31, 2017, we recognized $63.8 million in revenues and $29.3 million of net earnings related to this acquisition.

Retrospective adjusted information tables

The following tables present our financial position and our results of operations and of cash flows giving effect to the May 2017 Acquisition and the December 2017 Acquisition. The results of the May 2017 Acquisition and the December 2017 Acquisition prior to the closing date of the acquisition are included in the respective acquisition columns and the consolidated results are included in “Consolidated Results” within the tables below:



	December 31, 2016
	Shell Midstream Partners, L.P. ⁽¹⁾			May 2017 Acquisition ⁽²⁾		December 2017 Acquisition⁽³⁾			Consolidated Results
ASSETS
Current assets
Cash and cash equivalents	$	121.9		$	—	$	0.2		$	122.1
Accounts receivable – third parties, net	18.4			2.4		1.9			22.7
Accounts receivable – related parties	10.1			2.0		7.2			19.3
Allowance oil	9.0			2.7		—			11.7
Prepaid expenses	6.0			0.5		0.2			6.7
Total current assets	165.4			7.6		9.5			182.5
Equity method investments	262.4			—		62.3			324.7
Property, plant and equipment, net	398.0			212.6		123.1			733.7
Cost investments	39.8			—		22.3			62.1
Other assets	—			0.6		0.3			0.9
Total assets	$	865.6		$	220.8	$	217.5		$	1,303.9
LIABILITIES
Current liabilities
Accounts payable – third parties	$	1.5		$	2.6	$	3.1		$	7.2
Accounts payable – related parties	5.2			0.2		0.2			5.6
Deferred revenue – third parties	6.0			—		—			6.0
Deferred revenue – related parties	7.9			—		—			7.9
Accrued liabilities – third parties	5.6			1.3		5.3			12.2
Accrued liabilities – related parties	5.1			—		—			5.1
Total current liabilities	31.3			4.1		8.6			44.0
Noncurrent liabilities
Debt payable – related party	686.0			—		—			686.0
Lease liability – related party	24.9			—		—			24.9
Accrued liabilities – third party	—			—		6.3			6.3
Asset retirement obligations	1.4			—		5.0			6.4
Other unearned income	2.1			—		—			2.1
Total noncurrent liabilities	714.4			—		11.3			725.7
Total liabilities	745.7			4.1		19.9			769.7
Commitments and Contingencies (Note 13)
EQUITY
Common unitholders – public	2,485.7			—		—			2,485.7
Common unitholder – SPLC	(124.1		)	—		—			(124.1		)
Subordinated unitholder	(389.6		)	—		—			(389.6		)
General partner – SPLC	(1,873.7		)	—		—			(1,873.7		)
Total partners' capital	98.3			—		—			98.3
Noncontrolling interest	21.6			—		(0.1		)	21.5
Net parent investment	—			216.7		197.7			414.4
Total equity	119.9			216.7		197.6			534.2
Total liabilities and equity	$	865.6		$	220.8	$	217.5		$	1,303.9

⁽¹⁾As previously reported in our Annual Report on Form 10-K for 2016.

⁽²⁾The financial position of the May 2017 Acquisition as of December 31, 2016.

⁽³⁾The financial position of the December 2017 Acquisition as of December 31, 2016.



	Twelve Months Ended December 31, 2016
	Shell Midstream Partners, L.P.⁽¹⁾		May 2017 Acquisition ⁽²⁾		December 2017 Acquisition⁽³⁾			Consolidated Results

Revenue
Transportation, terminaling and storage services - third parties	$	201.5	$	33.0	$	17.0		$	251.5
Transportation, terminaling and storage services - related parties	89.8		26.8		71.7			188.3
Lease revenue - related parties	—		—		13.1			13.1
Total revenue	291.3		59.8		101.8			452.9
Costs and expenses
Operations and maintenance – third parties	46.9		13.3		16.7			76.9
Operations and maintenance – related parties	20.7		8.9		10.4			40.0
Loss on disposition of fixed assets	0.1		—		0.1			0.2
General and administrative – third parties	8.1		0.3		1.3			9.7
General and administrative – related parties	23.1		7.5		13.1			43.7
Depreciation, amortization and accretion	23.7		12.9		6.5			43.1
Property and other taxes	8.2		5.2		2.4			15.8
Total costs and expenses	130.8		48.1		50.5			229.4
Operating income	160.5		11.7		51.3			223.5
Income from equity investments	101.1		—		37.0			138.1
Dividend income from cost investments	16.1		—		12.2			28.3
Other loss	—		—		(0.1		)	(0.1		)
Investment, dividend and other loss	117.2		—		49.1			166.3
Interest expense, net	12.3		—		—			12.3
Income before income taxes	265.4		11.7		100.4			377.5
Income tax expense	—		—		—			—
Net income	265.4		11.7		100.4			377.5
Less: Net income attributable to Parent	—		11.7		90.6			102.3
Less: Net income attributable to noncontrolling interests	20.5		—		9.8			30.3
Net income attributable to the Partnership	$	244.9	$	—	$	—		$	244.9

⁽¹⁾As previously reported in our Annual Report on Form 10-K for 2016.

⁽²⁾Our Parent's results of the May 2017 Acquisition for the year ended December 31, 2016.

⁽³⁾Our Parent's results of the December 2017 Acquisition for the year ended December 31, 2016.



	Twelve Months Ended December 31, 2015
	Shell Midstream Partners, L.P.⁽¹⁾			May 2017 Acquisition ⁽²⁾		December 2017 Acquisition⁽³⁾		Consolidated Results

Revenue
Transportation, terminaling and storage services - third parties	$	222.8		$	29.0	$	16.6	$	268.4
Transportation, terminaling and storage services - related parties	103.7			34.2		79.2		217.1
Total revenue	326.5			63.2		95.8		485.5
Costs and expenses
Operations and maintenance – third parties	46.3			18.9		19.6		84.8
Operations and maintenance – related parties	18.5			8.3		12.2		39.0
Loss on disposition of fixed assets	—			—		0.3		0.3
General and administrative – third parties	10.2			1.8		1.4		13.4
General and administrative – related parties	24.6			5.5		12.4		42.5
Depreciation, amortization and accretion	21.6			10.2		6.1		37.9
Property and other taxes	7.5			5.0		2.5		15.0
Total costs and expenses	128.7			49.7		54.5		232.9
Operating income	197.8			13.5		41.3		252.6
Income from equity investments	70.1			—		34.6		104.7
Dividend income from cost investments	9.2			—		11.4		20.6
Other income	—			0.3		—		0.3
Investment, dividend and other income	79.3			0.3		46.0		125.6
Interest expense, net	4.3			—		—		4.3
Income before income taxes	272.8			13.8		87.3		373.9
Income tax benefit	(0.1		)	—		—		(0.1		)
Net income	272.9			13.8		87.3		374.0
Less: Net income attributable to Parent	39.3			13.8		80.7		133.8
Less: Net income attributable to noncontrolling interests	66.5			—		6.6		73.1
Net income attributable to the Partnership	$	167.1		$	—	$	—	$	167.1

⁽¹⁾As previously reported in our Annual Report on Form 10-K for 2015.

⁽²⁾Our Parent's results of the May 2017 Acquisition for the year ended December 31, 2015.

⁽³⁾Our Parent's results of the December 2017 Acquisition for the year ended December 31, 2015.



	Twelve Months Ended December 31, 2016
	Shell Midstream Partners, L.P.⁽¹⁾			May 2017 Acquisition ⁽²⁾			December 2017 Acquisition⁽³⁾			Consolidated Results

Cash flows from operating activities
Net income	$	265.4		$	11.7		$	100.4		$	377.5
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, amortization and accretion	23.7			12.9			6.5			43.1
Loss on disposition of fixed asset	0.1			—			0.1			0.2
Non-cash interest expense	2.7			—			—			2.7
Undistributed equity earnings	1.8			—			2.3			4.1
Changes in operating assets and liabilities
Accounts receivable	0.1			0.7			(0.5		)	0.3
Allowance oil	(4.8		)	0.8			—			(4.0		)
Prepaid expenses and other assets	(1.0		)	0.9			—			(0.1		)
Accounts payable	(1.5		)	1.1			0.7			0.3
Deferred revenue	8.2			(0.3		)	—			7.9
Accrued liabilities	(1.7		)	—			(1.1		)	(2.8		)
Net cash provided by operating activities	293.0			27.8			108.4			429.2
Cash flows from investing activities
Capital expenditures	(28.3		)	(7.7		)	(9.8		)	(45.8		)
Acquisitions from Parent	(172.8		)	—			—			(172.8		)
Third party acquisitions	(42.0		)	—			—			(42.0		)
Return of investment	15.0			—			0.8			15.8
Net cash used in investing activities	(228.1		)	(7.7		)	(9.0		)	(244.8		)
Cash flows from financing activities
Net proceeds from public offerings	818.1			—			—			818.1
Borrowing under credit facility	638.7			—			—			638.7
Contributions from general partner	9.8			—			—			9.8
Repayment of credit facilities	(410.0		)	—			—			(410.0		)
Capital distributions to general partner	(896.3		)	—			—			(896.3		)
Distributions to noncontrolling interest	(20.3		)	—			(9.9		)	(30.2		)
Distributions to unitholders and general partner	(179.9		)	—			—			(179.9		)
Other contribution from Parent	4.6			9.8			—			14.4
Credit facility issuance costs	(0.6		)	—			—			(0.6		)
Net distributions to Parent	—			(29.9		)	(90.1		)	(120.0		)
Capital lease payments	(0.1		)	—			—			(0.1		)
Net cash used in financing activities	(36.0		)	(20.1		)	(100.0		)	(156.1		)
Net increase in cash and cash equivalents	28.9			—			(0.6		)	28.3
Cash and cash equivalents at beginning of the period	93.0			—			0.8			93.8
Cash and cash equivalents at end of the period	$	121.9		$	—		$	0.2		$	122.1

Non-cash investing activity
Increase in asset retirement obligation asset	—			—			(1.0		)	(1.0		)
Supplemental Cash Flow Information
Non-cash investing and financing transactions



Change in accrued capital expenditures	0.5		(3.0	)	1.4	(1.1	)
Other non-cash contributions from Parent	0.2		—		—	0.2
Other non-cash capital distributions to general partner	(7.1	)	—		—	(7.1	)
Other non-cash contribution from general partner	7.1		—		—	7.1

⁽¹⁾As previously reported in our Annual Report on Form 10-K for 2016.

⁽²⁾Our Parent's results of the May 2017 Acquisition for the year ended December 31, 2016.

⁽³⁾Our Parent's results of the December 2017 Acquisition for the year ended December 31, 2016.



	Twelve Months Ended December 31, 2015
	Shell Midstream Partners, L.P.⁽¹⁾			May 2017 Acquisition ⁽²⁾			December 2017 Acquisition⁽³⁾			Consolidated Results

Cash flows from operating activities
Net income	$	272.9		$	13.8		$	87.3		$	374.0
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, amortization and accretion	21.6			10.2			6.1			37.9
Loss on disposition of fixed asset	—			—			0.3			0.3
Allowance oil reduction to net realizable value	1.6			1.1			—			2.7
Undistributed equity earnings	(0.6		)	—			(3.7		)	(4.3		)
Changes in operating assets and liabilities
Accounts receivable	—			4.5			(1.1		)	3.4
Allowance oil	(2.8		)	(1.9		)	—			(4.7		)
Prepaid expenses and other assets	(1.2		)	(0.8		)	1.3			(0.7		)
Accounts payable	(4.5		)	(0.3		)	(2.9		)	(7.7		)
Deferred revenue	(13.8		)	(0.4		)	—			(14.2		)
Accrued liabilities	9.5			(0.1		)	(0.3		)	9.1
Net cash provided by operating activities	282.7			26.1			87.0			395.8
Cash flows from investing activities
Capital expenditures	(16.2		)	(23.7		)	(11.8		)	(51.7		)
Acquisitions	(179.8		)	—			—			(179.8		)
Return of investment	6.8			—			5.7			12.5
Payment of pre-IPO distributions from investments to SPLC	(11.9		)							(11.9		)
Net cash used in investing activities	(201.1		)	(23.7		)	(6.1		)	(230.9		)
Cash flows from financing activities
Net proceeds from private equity placement	297.4			—			—			297.4
Net proceeds from public offerings	296.8			—			—			296.8
Borrowing under credit facilities	458.2			—			—			458.2
Contributions from general partner	6.1			—			—			6.1
Capital distributions to general partner	(1,002.1		)	—			—			(1,002.1		)
Distributions to noncontrolling interest	(67.1		)	—			(6.1		)	(73.2		)
Distributions to unitholders and general partner	(96.5		)	—			—			(96.5		)
Other contributions from Parent	11.1			29.3			—			40.4
Credit facility issuance costs	(0.3		)	—			—			(0.3		)
Net distributions to Parent	(42.4		)	(31.7		)	(74.0		)	(148.1		)
Net cash used in financing activities	(138.8		)	(2.4		)	(80.1		)	(221.3		)
Net decrease in cash and cash equivalents	(57.2		)	—			0.8			(56.4		)
Cash and cash equivalents at beginning of the period	150.2			—			—			150.2
Cash and cash equivalents at end of the period	$	93.0		$	—		$	0.8		$	93.8




Non-cash investing activity
Increase in asset retirement obligation asset	—		—		(0.2	)	(0.2	)
Supplemental Cash Flow Information
Non-cash investing and financing transactions
Change in accrued capital expenditures	2.9		(9.1	)	(0.3	)	(6.5	)
Contribution of fixed assets from Parent	0.4		—		—		0.4
Commencement of capital lease	22.8		—		—		22.8
Other non-cash contribution from Parent	1.8		—		—		1.8
Net assets not contributed to Parent	(6.4	)	—		—		(6.4	)

⁽¹⁾As previously reported in our Annual Report on Form 10-K for 2015.

⁽²⁾Our Parent's results of the May 2017 Acquisition for the year ended December 31, 2015.

⁽³⁾Our Parent's results of the December 2017 Acquisition for the year ended December 31, 2015.

On April 28, 2017, Zydeco divested a small segment of its pipeline system (the “April 2017 Divestiture”) to SOPUS as part of the Motiva JV separation. The April 2017 Divestiture closed pursuant to a Pipeline Sale and Purchase Agreement (the “April 2017 Pipeline Sale and Purchase Agreement”) dated April 28, 2017 among Zydeco and SOPUS. We received $21.0 million in cash consideration for this sale, of which $19.4 million is attributable to the Partnership. The cash consideration represents $0.8 million for the book value of net assets divested, and $20.2 million in excess proceeds received from our Parent. The April 2017 Pipeline Sale and Purchase Agreement contained customary representations and warranties and indemnification by SOPUS.

2016 Acquisitions

On December 27, 2016, we acquired the following: (a) a 10.0% interest in Endymion from Mardi Gras Endymion Oil Pipeline Company, LLC, (b) a 10.0% interest in Proteus from Mardi Gras Transportation System Inc. ("Mardi Gras") and (c) a 1.0% interest in Cleopatra from Mardi Gras. Each acquisition closed pursuant to their respective purchase agreements for an aggregate purchase price of $42.0 million (the “December 2016 Acquisition”). We have determined we have significant influence over the financial and operating policies of Proteus and Endymion and we therefore account for these investments under the equity method. We do not have control or significant influence over Cleopatra and therefore account for this investment under the cost method. We funded the December 2016 Acquisition with borrowings under the Five Year Revolver due October 2019 (as defined in Note 8—Related Party Debt). The terms of the December 2016 Acquisition were approved by the Board.

In connection with the December 2016 Acquisition we acquired the following:



Cost investments ⁽¹⁾	$	2.1
Equity method investments ⁽²⁾	39.9
December 2016 Acquisition	$	42.0


⁽¹⁾	$2.1 million purchase price of 1.0% in Cleopatra.


⁽²⁾	$20.8 million purchase price of 10.0% in Endymion and $19.1 million purchase price of 10.0% interest in Proteus.

On October 3, 2016, we acquired a 49.0% interest in Odyssey from Shell Oil Products US (“SOPUS”) and an additional 20.0% interest in Mars from SPLC for $350.0 million (the “October 2016 Acquisition”). The October 2016 Acquisition closed pursuant to a purchase and sale agreement dated September 27, 2016 (“Odyssey and Mars Purchase and Sale Agreement”) among us, the Operating Company, SPLC and SOPUS, and is accounted for as a transaction between entities under common control on a prospective basis as an asset acquisition. We funded the October 2016 Acquisition with $50.0 million of cash on hand and $300.0 million in borrowings under the Five Year Revolver due October 2019 (as defined in Note 8—Related Party Debt) with STCW, an affiliate of Shell. The terms of the October 2016 Acquisition were approved by the Board and by the conflicts committee of the Board, which consists entirely of independent directors. The conflicts committee engaged an independent financial advisor and legal counsel. In accordance with the Odyssey and Mars Purchase and Sale Agreement, SPLC has agreed to pay us up to $10.0 million if Mars inventory management fees do not meet certain levels in aggregate for the calendar years ending 2017 through 2021. At this time there is no estimate of the amount, if any, to be received.

In connection with the October 2016 Acquisition, we acquired net assets under common control and recorded at their historical carrying value as follows:



Equity method investments ^{(1) (2)}	$	54.3
October 2016 Acquisition	$	54.3


⁽¹⁾	$51.3 million historical carrying value of 20.0% additional interest in Mars contributed by SPLC.


⁽²⁾	$3.0 million historical carrying value of 49.0% interest in Odyssey contributed by SOPUS.

On August 9, 2016, we acquired a 2.62% equity interest in Explorer from SPLC (the “August 2016 Acquisition”) for $26.2 million. The August 2016 Acquisition was made in connection with SPLC’s right, as a current shareholder of Explorer, to acquire a portion of the equity interest being divested by another shareholder of Explorer. At that time SPLC separately owned a 35.97% equity interest in Explorer. The August 2016 Acquisition closed on August 9, 2016 pursuant to a Share Purchase and Sale Agreement among us, the Operating Company and SPLC, and is accounted for as a transaction between entities under common control on a prospective basis as an asset acquisition. We funded the August 2016 Acquisition with $26.3 million of cash on hand. Total transaction costs of $0.1 million were incurred. The terms of the August 2016 Acquisition were approved by the Board.

On May 23, 2016, we acquired an additional 30.0% interest in Zydeco, an additional 1.0% interest in Bengal and an additional 3.0% interest in Colonial for $700.0 million in consideration (the “May 2016 Acquisition”). The May 2016 Acquisition closed pursuant to a Contribution Agreement (the “May 2016 Contribution Agreement”) dated May 17, 2016 among us, the Operating Company and SPLC and became effective on April 1, 2016, and is accounted for as a transaction between entities under common control on a prospective basis as an asset acquisition. We funded the May 2016 Acquisition with $345.8 million from the net proceeds of a registered public offering of 10,500,000 common units representing limited partner interests in us (the “May 2016 Offering”), $50.4 million of cash on hand and $296.7 million in borrowings under the Five Year Revolver due October 2019 (as defined in Note 8—Related Party Debt) with STCW, an affiliate of Shell. The remaining $7.1 million in consideration consisted of an issuance of 214,285 general partner units to our general partner in order to maintain its 2% general partner interest in us. Total transaction costs of $0.4 million were incurred in association with the May 2016 Acquisition. The terms of the May 2016 Acquisition were approved by the Board and by the conflicts committee of the Board, which consists entirely of independent directors. The conflicts committee engaged an independent financial advisor and legal counsel. In accordance with the May 2016 Contribution Agreement, SPLC has agreed to reimburse us for our proportionate share of certain costs and expenses incurred by Zydeco after April 1, 2016 with respect to a directional drill project to address soil erosion over a two-mile section of our 22-inch diameter pipeline under the Atchafalaya River and Bayou Shaffer in Louisiana. Such reimbursements will be treated as an additional capital contribution from the general partner at the time of counter party payment. The May 2016 Contribution Agreement contained customary representations and warranties and indemnification by SPLC.

In connection with the May 2016 Acquisition, we acquired historical carrying value of net assets under common control as follows:



Cost investments⁽¹⁾	$	5.2
Equity method investments⁽²⁾	1.5
Partners' capital⁽³⁾	87.0
May 2016 Acquisition	$	93.7

⁽¹⁾Book value of 3.0% additional interest in Colonial contributed by SPLC.

⁽²⁾ Book value of 1.0% additional interest in Bengal contributed by SPLC.

⁽³⁾ Book value of 30.0% additional interest in Zydeco from SPLC’s noncontrolling interest.

We recognized $606.3 million of consideration in excess of the historical carrying value of net assets acquired as a capital distribution to our general partner in accordance with our policy for common control transactions. This capital distribution is comprised of $599.2 million in cash and $7.1 million in general partner units issued.

2015 Acquisitions

On November 17, 2015, we acquired from SPLC a 100% interest in Pecten, which holds Auger and Lockport, for $390.0 million (the “November 2015 Acquisition”). The November 2015 Acquisition closed pursuant to the contribution agreement (the “Pecten Contribution Agreement”) among use, the Operating Company and SPLC, and is accounted for as a transaction between entities under common control and was recast for the periods of our Parent’s ownership prior to the transaction. We funded the November 2015 Acquisition with $297.4 million from the net proceeds of the Offering, $49.4 million of cash on hand and $37.4 million in borrowings under our 364-Day Revolver (as defined below in Note 8—Related Party Debt). The remaining $6.1 million in consideration consisted of the issuance of 187,755 general partner units representing general partner interests to our general partner. Total transaction costs of $0.3 million were incurred in association with the November 2015 Acquisition. The terms of the November 2015 Acquisition were approved by the Board and by the conflicts committee of the Board, which consists entirely of independent directors. The Pecten Contribution Agreement contains customary representations, warranties and indemnification by SPLC, the Partnership and Operating Company.

In connection with the November 2015 Acquisition we acquired historical carrying value of net assets under common control which is included in our consolidated balance sheet, as follows:



Property, plant and equipment, net ⁽¹⁾	$	95.2
Asset retirement obligation ⁽²⁾	(1.3		)
November 2015 Acquisition	$	93.9


⁽¹⁾	Historical carrying value of property, plant and equipment, net contributed by SPLC.


⁽²⁾	Historical carrying value of asset retirement obligation assumed by us.

We recognized $290.0 million of consideration as a capital distribution to our general partner in accordance with our policy for common control transactions.

On July 1, 2015, SOPUS conveyed to us its 36.0% interest in Poseidon (the “July 2015 Acquisition”) for $350.0 million in cash. The July 2015 Acquisition closed pursuant to the contribution agreement dated July 1, 2015 (the “Poseidon Contribution Agreement”) among us, the Operating Company and SOPUS and is accounted for as a transaction between entities under common control. We have recorded this asset acquisition on a prospective basis. Poseidon is a Delaware limited liability company formed in February 1996 to design, construct, own and operate a non-FERC regulated crude oil pipeline system located offshore Louisiana in the central region of the Gulf of Mexico. The July 2015 Acquisition was funded with borrowings of $100.0 million under our 365-Day Revolver and $250.0 million under our Five-Year Revolver. For additional information regarding these credit facilities, see Note 8—Related Party Debt. We account for our interest in Poseidon using the equity method of accounting.

In connection with the July 2015 Acquisition we acquired historical carrying value of net assets under common control of $30.5 million which is included in Equity method investments in our consolidated balance sheet. We recognized $319.5 million of consideration in excess of the historical carrying value of net assets acquired as a capital distribution to our general partner in accordance with our policy for common control transactions.

On May 18, 2015, we acquired an additional 19.5% interest in Zydeco and an additional 1.388% interest in Colonial for $448.0 million in cash (the “May 2015 Acquisition”). The May 2015 Acquisition closed pursuant to a Purchase and Sale Agreement dated May 12, 2015 (“Purchase and Sale Agreement”) among us, the Operating Company and SPLC, and was accounted for as a transaction between entities under common control and was recast for the periods of our Parent’s ownership prior to the transaction. We funded the May 2015 Acquisition with $297.4 million from the Private Placement (as defined in Note 10—(Deficit)Equity), $80.0 million of cash on hand and $70.8 million in borrowings under our Five-Year Revolver with STCW (as defined below in Note 8—Related Party Debt). Total transaction costs of $0.5 million were incurred in association with the May 2015 Acquisition. The terms of the May 2015 Acquisition were approved by the Board and by the conflicts committee of the Board, which consists entirely of independent directors. The conflicts committee engaged an independent financial advisor and legal counsel. In accordance with the Purchase and Sale Agreement, SPLC agreed to reimburse us for our proportionate share of certain costs and expenses incurred by Zydeco after April 1, 2015 with respect to a directional drill project to address soil erosion over a two-mile section of our 22-inch diameter pipeline under the Atchafalaya River and Bayou Shaffer in Louisiana. Such reimbursements will be treated as an additional capital contribution from the general partner at the time of payment.

In connection with the May 2015 Acquisition we acquired historical carrying value of net assets under common control as follows:



Cost investments ⁽¹⁾	$	2.5
Partners' capital ⁽²⁾	52.9
May 2015 Acquisition	$	55.4


⁽¹⁾	Historical carrying value of 1.388% additional interest in Colonial contributed by SPLC.


⁽²⁾	Historical carrying value of 19.5% additional interest in Zydeco from SPLC’s noncontrolling interest.

We recognized $392.6 million of consideration in excess of the historical carrying value of net assets acquired as a capital distribution to our general partner in accordance with our policy for common control transactions.