Acquisition

9 Months Ended

Sep. 30, 2018

Note 3. Acquisition

On January 31, 2018, Black Diamond completed the Black Diamond Acquisition for approximately $638.5 million in cash. Noble Member and Greenfield Member each funded its share of the purchase price, approximately $319.9 million and $318.6 million, respectively, through contributions to Black Diamond. Noble Member funded its share of the purchase price through a combination of cash on hand and borrowings under its revolving credit facility. See Note 7. Long-Term Debt.

In addition to the payment to the Seller, Black Diamond, through an additional contribution from Greenfield Member, paid PDC Energy, Inc. (PDC Energy) approximately $24.1 million to expand PDC Energy’s acreage dedication as well as extend the duration of the acreage dedication by five years. In accordance with the limited liability company agreement of Black Diamond, Noble Member is to receive a 54.4% equity ownership interest in Black Diamond and Greenfield Member is to receive a 45.6% equity ownership interest in Black Diamond. Noble Member’s agreed equity ownership interest includes a 4.4% equity ownership interest promote which will vest only after Noble Member is allocated an amount of gross revenue equal to the contributions by Greenfield Member in excess of their agreed equity ownership interest.

We serve as the operator of the Black Diamond system. We acquired a large-scale integrated gathering system located in the DJ Basin with approximately 160 miles of pipeline in operation and delivery capacity of approximately 300 MBbl/d as well as approximately 141,000 dedicated acres from six customers under fixed-fee arrangements.

In connection with the Black Diamond Acquisition, we have incurred acquisition and integration costs of $7.5 million during the nine months ended September 30, 2018. Our acquisition and integration costs include consulting, advisory, legal, transition services and other fees. All acquisition and integration costs were expensed and are included in general and administrative expense in our consolidated statements of operations.

Purchase Price Allocation The transaction has been accounted for as a business combination, using the acquisition method. The following table represents the preliminary allocation of the total Black Diamond Acquisition purchase price to the assets acquired and the liabilities assumed based on the fair value at the acquisition date, with any excess of the purchase price over the estimated fair value of the identifiable net assets acquired recorded as goodwill.

Certain data necessary to complete the purchase price allocation is not yet available, and includes, but is not limited to, final appraisals of assets acquired and liabilities assumed. We expect to complete the purchase price allocation during the 12-month period following the acquisition date, during which time the value of the assets and liabilities, including any goodwill, may be revised as appropriate.

The following table sets forth our preliminary purchase price allocation:



(in thousands)
Cash Consideration	$	638,266
PDC Energy Payment	24,120
Current Liabilities Assumed	18,259
Total Purchase Price and Liabilities Assumed	$	680,645

Cash and Restricted Cash	$	12,518
Accounts Receivable	10,661
Other Current Assets	1,058
Property, Plant and Equipment	205,766
Intangible Assets⁽¹⁾	339,760
Fair Value of Identifiable Assets	569,763
Implied Goodwill ⁽²⁾	110,882
Total Asset Value	$	680,645


⁽¹⁾	See Note 6. Intangible Assets.


⁽²⁾	Based upon the preliminary purchase price allocation, we have recognized $110.9 million of goodwill, all of which is assigned to the Black Diamond reporting unit within the Gathering Systems reportable segment. As a result of the acquisition, we expect to realize certain synergies which may result from our operation of the Black Diamond system.

The results of operations attributable to Black Diamond are included in our consolidated statements of operations beginning on February 1, 2018. Revenues of $133.6 million and pre-tax net loss of $11.6 million from Black Diamond were generated from February 1, 2018 to September 30, 2018 and revenues of $57.1 million and pre-tax net loss of $2.3 million from Black Diamond were generated during the three months ended September 30, 2018.

Pro Forma Results The following pro forma consolidated financial information was derived from the historical financial statements of the Partnership and Saddle Butte and gives effect to the acquisition as if it had occurred on January 1, 2017. The pro forma results of operations do not include any cost savings or other synergies that may result from the Black Diamond Acquisition or any estimated costs that have been or will be incurred by us to integrate the acquired assets. The pro forma consolidated financial information has been included for comparative purposes and is not necessarily indicative of the results that might have actually occurred had the acquisition taken place on January 1, 2017; furthermore, the financial information is not intended to be a projection of future results.



	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per unit amounts)	2018		2017		2018		2017
Revenues	$	139,163	$	108,239	$	369,379	$	246,281
Net Income	48,703		41,158		129,796		96,638
Net Income Attributable to Noble Midstream Partners LP	$	44,617	$	39,316	$	118,896	$	83,497

Net Income Attributable to Limited Partners Per Limited Partner Common and Subordinated Unit
Basic	$	1.09	$	1.09	$	2.92	$	2.50
Diluted	$	1.09	$	1.09	$	2.92	$	2.50