Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2019

(5) Goodwill and Intangible Assets

The Company evaluates goodwill for impairment annually during the fourth quarter and whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit with goodwill is less than its carrying amount. Significant assumptions used to estimate the reporting units’ fair value include the discount rate as well as estimates of future cash flows, which are impacted primarily by commodity prices and producer customers’ development plans (which impact volumes and capital requirements).

During the third quarter of 2019, the Company performed an interim impairment analysis of the goodwill recorded in connection with the Transactions due to the Company’s strategic evaluation of the Clearwater Facility. As a result of this evaluation, the Company incurred impairment charges to the goodwill and customer relationships intangible asset associated with the Clearwater Facility. See Note 4—Clearwater Facility Impairment.

The changes in the carrying amount in goodwill for the nine months ended September 30, 2019 were as follows (in thousands):


			Water
	Gathering and		Handling and		Consolidated
	Processing		Treatment		Total
Goodwill as of December 31, 2018	$	—		—		—
Goodwill acquired⁽¹⁾		587,629		358,907		946,536
Impairment of goodwill		—		(43,759)		(43,759)
Goodwill as of September 30, 2019	$	587,629		315,148		902,777

(1)	See Note 3—Business Combination.

All customer relationships are subject to amortization and will be amortized over a weighted-average period of 22 years. The changes in the carrying amount of customer relationships for the nine months ended September 30, 2019 were as follows (in thousands):


Customer relationships as of December 31, 2018	$	—
Customer relationships acquired⁽¹⁾		1,542,000
Accumulated amortization		(39,178)
Impairment		(5,871)
Customer relationships as of September 30, 2019	$	1,496,951

(1)	See Note 3—Business Combination.

Future amortization expense is as follows (in thousands):


Remainder of 2019	$	17,785
Year ending December 31, 2020		70,753
Year ending December 31, 2021		70,560
Year ending December 31, 2022		70,560
Year ending December 31, 2023		70,560
Year ending December 31, 2024		70,753
Thereafter		1,125,980
Total	$	1,496,951