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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
FORM 10-Q
 
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to_____
Commission file number: 001-37640
nblxupdatedlogoa53.jpg
NOBLE MIDSTREAM PARTNERS LP
(Exact name of registrant as specified in its charter)
Delaware
 
47-3011449
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. employer identification number)
1001 Noble Energy Way
 
 
Houston, Texas
 
77070
(Address of principal executive offices)
 
(Zip Code)
(281) 872-3100
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ý    No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company ” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ý
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o    No ý
Securities registered pursuant to section 12(b) of the Act:
 
 
 
 
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Units, Representing Limited Partner Interests
 
NBLX
 
New York Stock Exchange
As of April 30, 2019, the registrant had 23,875,065 Common Units and 15,902,584 Subordinated Units outstanding.




Table of Contents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 1A.  Risk Factors
 
 
Item 6.  Exhibits
 
 

2

Table of Contents

Part I. Financial Information
Item 1. Financial Statements
Noble Midstream Partners LP
Consolidated Balance Sheets
(in thousands, unaudited)
 
March 31, 2019
 
December 31, 2018
ASSETS
 
 
 
Current Assets
 
 
 
Cash and Cash Equivalents
$
9,506

 
$
10,740

Accounts Receivable — Affiliate
43,784

 
31,613

Accounts Receivable — Third Party
21,632

 
23,091

Other Current Assets
4,616

 
5,875

Total Current Assets
79,538

 
71,319

Property, Plant and Equipment
 
 
 
Total Property, Plant and Equipment, Gross
1,571,105

 
1,500,609

Less: Accumulated Depreciation and Amortization
(90,469
)
 
(79,357
)
Total Property, Plant and Equipment, Net
1,480,636

 
1,421,252

Intangible Assets, Net
302,237

 
310,202

Goodwill
109,734

 
109,734

Investments
346,998

 
82,317

Other Noncurrent Assets
3,319

 
3,093

Total Assets
$
2,322,462

 
$
1,997,917

LIABILITIES, MEZZANINE EQUITY AND EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts Payable — Affiliate
$
924

 
$
2,778

Accounts Payable — Trade
101,169

 
92,756

Other Current Liabilities
10,514

 
9,217

Total Current Liabilities
112,607

 
104,751

Long-Term Liabilities
 
 
 
Long-Term Debt
729,320

 
559,021

  Asset Retirement Obligations
17,553

 
17,330

Other Long-Term Liabilities
641

 
582

Total Liabilities
860,121

 
681,684

Mezzanine Equity
 
 
 
Redeemable Noncontrolling Interest, Net
96,750

 

Equity
 
 
 
Limited Partner
 
 
 
Common Units (23,882 and 23,759 units outstanding, respectively)
714,465


699,866

Subordinated Units (15,903 units outstanding)
(120,692
)
 
(130,207
)
General Partner
3,507

 
2,421

Total Partners’ Equity
597,280

 
572,080

Noncontrolling Interests
768,311

 
744,153

Total Equity
1,365,591

 
1,316,233

Total Liabilities, Mezzanine Equity and Equity
$
2,322,462

 
$
1,997,917

The accompanying notes are an integral part of these consolidated financial statements.

3

Table of Contents

Noble Midstream Partners LP
Consolidated Statements of Operations and Comprehensive Income
(in thousands, except per unit amounts, unaudited)
 
Three Months Ended March 31,
 
2019

2018
Revenues





Midstream Services — Affiliate
$
91,996


$
64,263

Midstream Services — Third Party
23,094


11,360

Crude Oil Sales — Third Party
32,870

 
22,110

Total Revenues
147,960


97,733

Costs and Expenses
 
 
 
Cost of Crude Oil Sales
30,898

 
21,439

Direct Operating
27,437


17,148

Depreciation and Amortization
19,351


11,329

General and Administrative
4,023


10,442

Total Operating Expenses
81,709


60,358

Operating Income
66,251


37,375

Other Expense (Income)
 
 
 
Interest Expense, Net of Amount Capitalized
5,230


1,033

Investment Income
(2,341
)
 
(2,868
)
Total Other Expense (Income)
2,889


(1,835
)
Income Before Income Taxes
63,362


39,210

State Income Tax Provision
107


74

Net Income
63,255


39,136

Less: Net Income (Loss) Attributable to Noncontrolling Interests
19,696

 
(225
)
Net Income Attributable to Noble Midstream Partners LP
43,559

 
39,361

Less: Net Income Attributable to Incentive Distribution Rights
3,507

 
819

Net Income Attributable to Limited Partners
$
40,052

 
$
38,542

 
 
 
 
Net Income Attributable to Limited Partners Per Limited Partner Common and Subordinated Unit
 
 
 
Basic
$
1.01

 
$
0.97

Diluted
$
1.01

 
$
0.97

 
 
 
 
Weighted Average Limited Partner Units Outstanding  Basic
 
 
 
Common Units
23,696

 
23,683

Subordinated Units
15,903

 
15,903

 
 
 
 
Weighted Average Limited Partner Units Outstanding Diluted
 
 
 
Common Units
23,721

 
23,698

Subordinated Units
15,903

 
15,903

The accompanying notes are an integral part of these consolidated financial statements.

4

Table of Contents

Noble Midstream Partners LP
Consolidated Statements of Cash Flows
(in thousands, unaudited)
 
Three Months Ended March 31,
 
2019
 
2018
Cash Flows From Operating Activities
 
 
 
Net Income
$
63,255

 
$
39,136

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
 
 
 
Depreciation and Amortization
19,351

 
11,329

Distributions from Equity Method Investees, Net of Income
5,632

 
393

Unit-Based Compensation
564

 
321

Other Adjustments for Noncash Items Included in Income
197

 
167

Changes in Operating Assets and Liabilities, Net of Assets Acquired and Liabilities Assumed
 
 
 
Increase in Accounts Receivable
(10,711
)
 
(2,520
)
Increase (Decrease) in Accounts Payable
3,081

 
(836
)
Other Operating Assets and Liabilities, Net
2,575

 
(2,387
)
Net Cash Provided by Operating Activities
83,944

 
45,603

Cash Flows From Investing Activities
 
 
 
Additions to Property, Plant and Equipment
(70,754
)
 
(161,509
)
Black Diamond Acquisition, Net of Cash Acquired

 
(650,131
)
Additions to Investments
(270,603
)
 

Distributions from Cost Method Investee
289

 
419

Net Cash Used in Investing Activities
(341,068
)
 
(811,221
)
Cash Flows From Financing Activities
 
 
 
Distributions to Noncontrolling Interests
(4,669
)
 
(3,007
)
Contributions from Noncontrolling Interests
15,969

 
409,865

Borrowings Under Revolving Credit Facility
345,000

 
405,000

Repayment of Revolving Credit Facility
(175,000
)
 
(55,000
)
Distributions to Unitholders
(25,667
)
 
(19,860
)
Proceeds from Preferred Equity, Net of Issuance Costs
99,450

 

Debt Issuance Costs and Other
(94
)
 
(1,987
)
Net Cash Provided by Financing Activities
254,989

 
735,011

Decrease in Cash, Cash Equivalents, and Restricted Cash
(2,135
)
 
(30,607
)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period (1)
11,691

 
55,531

Cash, Cash Equivalents, and Restricted Cash at End of Period (1)
$
9,556

 
$
24,924

(1) 
See Note 2. Basis of Presentation for our reconciliation of total cash.
The accompanying notes are an integral part of these consolidated financial statements.

5

Table of Contents

Noble Midstream Partners LP
Consolidated Statements of Changes in Equity
(in thousands, unaudited)
 
Partnership
 
 
 
Common Units
Subordinated Units
General Partner
Noncontrolling Interests
Total
December 31, 2017
$
642,616

$
(168,136
)
$
520

$
141,230

$
616,230

Net Income
23,058

15,484

819

(225
)
39,136

Contributions from Noncontrolling Interests



409,865

409,865

Distributions to Noncontrolling Interests



(3,007
)
(3,007
)
Distributions to Unitholders
(11,575
)
(7,765
)
(520
)

(19,860
)
Black Diamond Equity Ownership Promote Vesting (1)
1,215

1,214



(2,429
)

Unit-Based Compensation
321




321

Other
(33
)



(33
)
March 31, 2018
$
655,602

$
(159,203
)
$
819

$
545,434

$
1,042,652

 
 
 
 
 
 
December 31, 2018
$
699,866

$
(130,207
)
$
2,421

$
744,153

$
1,316,233

Net Income
23,967

16,085

3,507

19,696

63,255

Contributions from Noncontrolling Interests



15,969

15,969

Distributions to Noncontrolling Interests



(4,669
)
(4,669
)
Distributions to Unitholders
(13,930
)
(9,316
)
(2,421
)

(25,667
)
Black Diamond Equity Ownership Promote Vesting (1)
4,092

2,746


(6,838
)

Unit-Based Compensation
564




564

Other
(94
)



(94
)
March 31, 2019
$
714,465

$
(120,692
)
$
3,507

$
768,311

$
1,365,591


(1) 
See Note 2. Basis of Presentation for further discussion of the Black Diamond equity ownership promote vesting.
The accompanying notes are an integral part of these consolidated financial statements.

6

Table of Contents
Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Note 1. Organization and Nature of Operations
Organization Noble Midstream Partners LP (the Partnership, NBLX, we, us or our) is a growth-oriented Delaware master limited partnership formed in December 2014 by our sponsor, Noble Energy, Inc. (Noble or Parent), to own, operate, develop and acquire a wide range of domestic midstream infrastructure assets. Our current focus areas are the Denver-Julesburg Basin (DJ Basin) in Colorado and the Southern Delaware Basin position of the Permian Basin (Delaware Basin) in Texas.
Partnership Assets Our assets consist of ownership interests in certain development companies (DevCos) which serve specific areas and integrated development plan (IDP) areas and consist of the following:
DevCo
Areas Served
NBLX Dedicated Service
NBLX Ownership
Noncontrolling Interest (1)
Colorado River DevCo LP

Wells Ranch IDP (DJ Basin)


East Pony IDP (DJ Basin)

All Noble DJ Basin Acreage
Crude Oil Gathering
Natural Gas Gathering
Water Services

Crude Oil Gathering

Crude Oil Treating
100%
N/A
San Juan River DevCo LP
East Pony IDP (DJ Basin)
Water Services
25%
75%
Green River DevCo LP
Mustang IDP (DJ Basin)
Crude Oil Gathering
Natural Gas Gathering
Water Services
25%
75%
Laramie River DevCo LP
Greeley Crescent IDP (DJ Basin)
Crude Oil Gathering
Water Services
100%
N/A
Black Diamond Dedication Area (DJ Basin)
Crude Oil Gathering
Natural Gas Gathering
54.4%
45.6%
Blanco River DevCo LP
Delaware Basin
Crude Oil Gathering
Natural Gas Gathering
Produced Water Services
40%
60%
Gunnison River DevCo LP
Bronco IDP (DJ Basin)
Crude Oil Gathering
Water Services
5%
95%
Trinity River DevCo LLC (2)
Delaware Basin
Crude Oil Transmission
Natural Gas Compression
100%
N/A
Dos Rios DevCo LLC (3)
Delaware Basin
Crude Oil Transmission
Y-Grade Transmission
100%
N/A
(1) 
The noncontrolling interest represents Noble’s retained ownership interest in each DevCo. The noncontrolling interest in Black Diamond Gathering LLC (Black Diamond) represents Greenfield Member’s interest in Black Diamond.
(2) 
Our ownership interest in Advantage Pipeline Holdings, L.L.C. (the Advantage Joint Venture) is owned through Trinity River DevCo LLC. See Note 7. Investments.
(3) 
Our ownership interests in Delaware Crossing LLC (the Delaware Crossing Joint Venture), EPIC Y-Grade, LP (EPIC Y-Grade) and EPIC Crude Holdings, LP (EPIC Crude) are owned through wholly-owned subsidiaries of Dos Rios DevCo LLC. See Note 7. Investments.
Nature of Operations Through our ownership interests in the DevCos, we operate and own interests in the following assets:
crude oil gathering systems;
natural gas gathering systems and compression units;
crude oil treating facilities;
produced water collection, gathering, and cleaning systems;
fresh water storage and delivery systems; and
investments in midstream entities that provide transportation services.
We generate revenues primarily by charging fees on a per unit basis for gathering crude oil and natural gas, delivering and storing fresh water, and collecting, cleaning and disposing of produced water. Additionally, we purchase and sell crude oil to customers at various delivery points on our gathering systems.

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Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Note 2. Basis of Presentation
Basis of Presentation and Consolidation   The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying consolidated financial statements at March 31, 2019 and December 31, 2018 and for the three months ended March 31, 2019 and 2018 contain all normally recurring adjustments considered necessary for a fair presentation of our financial position, results of operations, cash flows and equity for such periods.
In Note 8. Segment Information, we report a new Investments in Midstream Entities reportable segment and present prior period amounts on a comparable basis. Prior period segment information has been reclassified to conform to the current period presentation.
Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. We have no items of other comprehensive income; therefore, our net income is identical to our comprehensive income.
Variable Interest Entities   Our consolidated financial statements include our accounts and the accounts of the DevCos, each of which we control as general partner. All intercompany balances and transactions have been eliminated upon consolidation. We have determined that the partners with equity at risk in each of the DevCos lack the authority, through voting rights or similar rights, to direct the activities that most significantly impact their economic performance; therefore, each DevCo is considered a variable interest entity, or VIE. Through our 100% ownership interest in Noble Midstream Services, LLC, a Delaware limited liability company which owns controlling interests in each of the DevCos, we have the authority to direct the activities that most significantly affect economic performance and the obligation to absorb losses or the right to receive benefits that could be potentially significant to us. Therefore, we are considered the primary beneficiary and consolidate each of the DevCos in our financial statements. A substantial portion of the financial statement activity associated with our DevCos is captured within the Gathering Systems and Fresh Water Delivery reportable segments. Although our unconsolidated investments are owned through certain DevCos, all financial statement activity associated with our unconsolidated investments are captured within the Investments in Midstream Entities reportable segment. See Note 7. Investments and Note 8. Segment Information.
On January 31, 2018, Black Diamond, an entity formed by Black Diamond Gathering Holdings LLC (the Noble Member), a wholly-owned subsidiary of Noble Midstream Partners LP, and Greenfield Midstream, LLC (the Greenfield Member), completed the acquisition of all of the issued and outstanding limited liability company interests in Saddle Butte Rockies Midstream, LLC and certain affiliates (collectively, Saddle Butte) from Saddle Butte Pipeline II, LLC (Seller). The acquisition of Saddle Butte will be referred to as the Black Diamond Acquisition. See Note 3. Acquisition. Our consolidated financial statements include the accounts of Black Diamond, which we control. We have determined that the partners with equity at risk in Black Diamond lack the authority, through voting rights or similar rights, to direct the activities that most significantly impact their economic performance. Therefore, Black Diamond is considered a VIE. Through our majority representation on the Black Diamond company board of directors as well as our responsibility as operator of the acquired system, we have the authority to direct the activities that most significantly affect economic performance and the obligation to absorb losses or the right to receive benefits that could be potentially significant to us. Therefore, we are considered the primary beneficiary and consolidate Black Diamond in our financial statements.
Black Diamond Equity Ownership Promote Vesting In accordance with the limited liability company agreement of Black Diamond, Noble Member received an equity ownership promote. The capital accounts for Noble Member and Greenfield Member at March 31, 2019 do not equal their agreed equity ownership interests due to the funding structure of the total Black Diamond Acquisition purchase price. See Note 3. Acquisition.
The limited liability company agreement of Black Diamond requires special allocations of gross income to balance the ratio of each member’s capital account to their agreed equity ownership interest over time. The special allocations are accounted for as equity transactions between the Partnership and a subsidiary with no gain or loss recognized.
Noncontrolling Interests We present our consolidated financial statements with a noncontrolling interest section representing Noble’s retained ownership of our DevCos as well as Greenfield Member’s ownership of Black Diamond.
Redeemable Noncontrolling Interest On March 25, 2019, we, through Dos Rios Crude Intermediate LLC, a wholly-owned subsidiary of Dos Rios DevCo LLC, secured a $200 million equity commitment from GIP CAPS Dos Rios Holding Partnership, L.P. (GIP). Upon securing the equity commitment, we issued 100,000 preferred units, with a face value of $1,000 per preferred unit (Preferred Equity). Proceeds from the Preferred Equity totaled $100 million and we incurred offering costs of $3.3 million. The remaining $100 million equity commitment is available for a one-year period, subject to certain conditions

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Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


precedent. Proceeds from the Preferred Equity were utilized to repay a portion of outstanding borrowings under our revolving credit facility. See Note 6. Debt.
We can redeem the Preferred Equity in whole or in part at any time for cash at a predetermined redemption price. The predetermined redemption price is based on the greater of a defined internal rate of return or the multiple on invested capital. GIP can request redemption of the Preferred Equity following the later of the sixth anniversary of the Preferred Equity closing or the fifth anniversary of the EPIC Crude pipeline completion date at a pre-determined base return. As GIP’s redemption right is outside of our control, the Preferred Equity is not considered to be a component of equity on the consolidated balance sheet, and such Preferred Equity is reported as mezzanine equity on the consolidated balance sheet. In addition, because the Preferred Equity was issued by a subsidiary of the Partnership and is held by a third party, it is considered a redeemable noncontrolling interest.
The Preferred Equity was recorded initially at fair value on the issuance date. Subsequent to issuance, we accrete changes in the redemption value of the Preferred Equity from the date of issuance to GIP’s earliest redemption date of the Preferred Equity. Accretion for first quarter 2019 was de minimis. The Preferred Equity is perpetual and has a 6.5% annual dividend rate, payable quarterly in cash, with the ability to accrue unpaid dividends during the first two years following the closing. During any quarter in which a dividend is accrued, the accreted value of the Preferred Equity will be increased by the accrued but unpaid dividend (i.e., a paid-in-kind dividend).
Accounting for Investments We use the equity method of accounting for our investments in the Advantage Joint Venture, the Delaware Crossing Joint Venture, EPIC Y-Grade and EPIC Crude, as we do not control, but do exert significant influence over their operations. We use the cost method of accounting for our investment in White Cliffs Pipeline L.L.C. (White Cliffs) as we have virtually no influence over its operations and financial policies. See Note 7. Investments.
Leases We determine whether an arrangement contains a lease based on the conveyed rights and obligations at the inception date. If an agreement contains a lease, at the commencement date, we record a right-of-use (ROU) asset and a corresponding lease liability based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate to determine the present value of lease payments, we use our hypothetical secured borrowing rate based on information available at lease commencement. The weighted average discount rate is 3.69% for operating leases and 2.80% for our finance lease.
Leases with an initial term of 12 months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one month to one year or more. Additionally, some of our leases include an option for early termination. We include renewal periods and exclude termination periods from our lease term if, at commencement, it is reasonably likely that we will exercise the option.
Additionally, we have lease agreements that include lease and non-lease components, which are generally accounted for as a single lease component. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. See Note 9. Leases
Use of Estimates   The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Management evaluates estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic and commodity price environment.
Intangible Assets Our intangible asset accumulated amortization totaled approximately $29.6 million and $37.5 million as of December 31, 2018 and March 31, 2019, respectively. Intangible asset amortization expense totaled approximately $5.3 million and $8.0 million for the three months ended March 31, 2018 and 2019, respectively. The weighted average amortization period for our intangible assets is approximately 11 years.
Recently Adopted Accounting Standards
Leases In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), which creates Topic 842 – Leases (ASC 842). The standard requires lessees to recognize a ROU asset and lease liability on the balance sheet for the rights and obligations created by leases. ASC 842 also requires disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases.
The new standard provided a number of optional practical expedients. We elected:
the package of ‘practical expedients’, permitting us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs;

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Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


the practical expedient pertaining to land easements, allowing us to account for existing land easements under previous accounting policy; and
the practical expedient to not separate lease and non-lease components for the majority of our leases.
We adopted ASC 842 on January 1, 2019 using the modified retrospective approach. The standard did not materially impact our consolidated balance sheet or consolidated statement of operations and had no impact on our consolidated statement of cash flows. Prior period financial statements were not adjusted. See Note 9. Leases.
Recently Issued Accounting Standards
Intangibles—Goodwill and Other—Internal-Use Software In August 2018, the FASB issued Accounting Standards Update No. 2018-15 (ASU 2018-15): Intangibles—Goodwill and Other—Internal-Use Software, to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The amended standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the provisions of ASU 2018-15.
Financial Instruments: Credit Losses In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13): Financial Instruments – Credit Losses, which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more useful information about expected credit losses. The amended standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. From evaluation of our current credit portfolio, which includes receivables for commodity sales, joint interest billings due from partners and other receivables, historical credit losses have been de minimis and we believe that our expected future credit losses would not be significant. As such, we do not believe adoption of the standard will have a material impact on our financial statements.
Reconciliation of Total Cash We define total cash as cash, cash equivalents and restricted cash. Our restricted cash is included in other current assets in our consolidated balance sheets. The following table provides a reconciliation of total cash:
 
Three Months Ended March 31,
(in thousands)
2019
 
2018
Cash and Cash Equivalents at Beginning of Period
$
10,740

 
$
18,026

Restricted Cash at Beginning of Period (1) (2)
951

 
37,505

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period
$
11,691

 
$
55,531

 
 
 
 
Cash and Cash Equivalents at End of Period
$
9,506

 
$
24,924

Restricted Cash at End of Period (1)
50

 

Cash, Cash Equivalents, and Restricted Cash at End of Period
$
9,556

 
$
24,924

(1) 
Restricted cash represents the amount held as collateral at December 31, 2018 and March 31, 2019 for certain of our letters of credit.
(2) 
Restricted cash represents the amount held in escrow at December 31, 2017 for the Black Diamond Acquisition.
Revenue Recognition We recognize revenue at an amount that reflects the consideration to which we expect to be entitled in exchange for transferring goods or services to a customer, using a five-step process, in accordance with ASC 606 Revenue from Contracts with Customers (ASC 606).
Under ASC 606, remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied as of March 31, 2019. A certain fresh water delivery affiliate revenue agreement contains a minimum volume commitment for the delivery of fresh water for a fixed fee per barrel with annual percentage escalations. The following table includes estimated revenues, as of March 31, 2019, for the agreement. Our actual volumes delivered may exceed the future minimum volume commitment.
(in thousands)
Midstream Services — Affiliate
Remainder of 2019
$
22,582

2020
36,817

2021
37,635

Total
$
97,034




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Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


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 6. 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 received a 54.4% equity ownership interest in Black Diamond and Greenfield Member received 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.
Purchase Price Allocation The transaction has been accounted for as a business combination, using the acquisition method. The following table represents the final 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.
The following table sets forth our final 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
2,206

Property, Plant and Equipment
205,766

Intangible Assets  (1)
339,760

Fair Value of Identifiable Assets
570,911

Implied Goodwill (2)
109,734

Total Asset Value
$
680,645

(1) 
The customer contracts we acquired are long-term, fixed-fee contracts for the purchase and sale of crude oil. Fair value was calculated using the multi-period excess earnings method under the income approach for the existing customers. The fair value was determined using unobservable inputs and is considered to be a Level 3 measurement on the fair value hierarchy.
(2) 
Based upon the final purchase price allocation, we have recognized $109.7 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.

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Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


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, 2018. 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, 2018; furthermore, the financial information is not intended to be a projection of future results.
 
Three Months Ended March 31,
(in thousands, except per unit amounts)
2019 (1)
 
2018
Revenues
$
147,960

 
$
108,245

Net Income
63,255

 
36,747

Net Income Attributable to Noble Midstream Partners LP
43,559

 
37,815

 
 
 
 
Net Income Attributable to Limited Partners Per Limited Partner Common and Subordinated Unit
 
 
 
Basic
$
1.01

 
$
0.96

Diluted
$
1.01

 
$
0.96

(1) 
No pro forma adjustments were made for the period as Black Diamond operations are included in our results for the full period.
Note 4. Transactions with Affiliates
Revenues We derive a substantial portion of our revenues from commercial agreements with Noble. Revenues generated from commercial agreements with Noble and its affiliates consist of the following:
 
Three Months Ended March 31,
(in thousands)
2019
 
2018
Crude Oil, Natural Gas and Produced Water Gathering
$
63,573

 
$
43,024

Fresh Water Delivery
27,587

 
20,284

Other
836

 
955

    Total Midstream Services — Affiliate
$
91,996

 
$
64,263


Expenses General and administrative expense consists of the following:
 
Three Months Ended March 31,
(in thousands)
2019
 
2018
General and Administrative Expense Affiliate
$
1,948

 
$
1,811

General and Administrative Expense Third Party
2,075

 
8,631

    Total General and Administrative Expense
$
4,023

 
$
10,442



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Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Note 5. Property, Plant and Equipment
Property, plant and equipment, at cost, is as follows:
(in thousands)
March 31, 2019
 
December 31, 2018
Crude Oil, Natural Gas and Produced Water Gathering Systems and Facilities
$
1,238,924

 
$
1,199,679

Fresh Water Delivery Systems
78,598

 
78,820

Crude Oil Treating Facilities
20,858

 
20,027

Construction-in-Progress (1)
232,725

 
202,083

Total Property, Plant and Equipment, at Cost
1,571,105

 
1,500,609

Accumulated Depreciation and Amortization
(90,469
)
 
(79,357
)
Property, Plant and Equipment, Net
$
1,480,636

 
$
1,421,252

(1) 
Construction-in-progress at March 31, 2019 includes $181.6 million in gathering system projects, $24.6 million in fresh water delivery system projects and $26.5 million in equipment for use in future projects. Construction-in-progress at December 31, 2018 primarily includes $147.1 million in gathering system projects, $21.6 million in fresh water delivery system projects and $32.8 million in equipment for use in future projects.
Note 6. Debt
Debt consists of the following:
 
March 31, 2019
 
December 31, 2018
(in thousands, except percentages)
Debt
 
Interest Rate
 
Debt
 
Interest Rate
Revolving Credit Facility, due March 9, 2023
$
230,000

 
3.66
%
 
$
60,000

 
3.67
%
Term Loan Credit Facility, due July 31, 2021
500,000

 
3.41
%
 
500,000

 
3.42
%
Finance Lease Obligation (1)
2,373

 
%
 
3,231

 
%
Total
732,373

 
 
 
563,231

 
 
Term Loan Credit Facility Unamortized Debt Issuance Costs
(925
)
 
 
 
(979
)
 
 
Total Debt
731,448

 
 
 
562,252

 
 
Finance Lease Obligation Due Within One Year (1)
(2,128
)
 
 
 
(3,231
)
 
 
Long-Term Debt
$
729,320

 
 
 
$
559,021

 
 
(1) 
See Note 9. Leases.
Compliance with Covenants The revolving credit facility and term loan credit facility require us to comply with certain financial covenants as of the end of each fiscal quarter. We were in compliance with such covenants as of March 31, 2019.
Fair Value of Long-Term Debt Our revolving credit facility and term loan credit facility are variable-rate, non-public debt. The fair value of our revolving credit facility and term loan credit facility approximates the carrying amount. The fair value is estimated based on significant other observable inputs. As such, we consider the fair value of these facilities to be a Level 2 measurement on the fair value hierarchy.
Subsequent Event We utilized borrowings under our revolving credit facility to fund capital contributions to certain of our investments subsequent to March 31, 2019. As of April 30, 2019, $370 million was outstanding under our revolving credit facility.

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Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Note 7. Investments
We have ownership interests in the following:
3.33% interest in White Cliffs;
50% interest in the Advantage Joint Venture;
50% interest in the Delaware Crossing Joint Venture;
15% interest in EPIC Y-Grade; and
30% interest in EPIC Crude.
Delaware Crossing Joint Venture On February 7, 2019, we executed definitive agreements with Salt Creek Midstream LLC (Salt Creek) and completed the formation of the Delaware Crossing Joint Venture to construct a crude oil pipeline system with a capacity of 160 MBbl/d in the Delaware Basin. During the first quarter of 2019, we have made capital contributions of approximately $38.3 million.
EPIC Y-Grade On January 31, 2019, we exercised and closed our option with EPIC Midstream Holdings, LP (EPIC) to acquire an interest in EPIC Y-Grade. EPIC Y-Grade will construct an approximately 700-mile pipeline linking natural gas liquid (NGL) reserves in the Permian Basin and Eagle Ford Shale to Gulf Coast refiners, petrochemical companies, and export markets. During the first quarter of 2019, we have made capital contributions of approximately $123.2 million.
EPIC Crude On January 31, 2019, we exercised our option to acquire an interest in EPIC Crude. On March 8, 2019, we closed our option with EPIC to acquire the interest in EPIC Crude. EPIC Crude will construct an approximately 700-mile pipeline with a capacity of 590 MBbl/d from the Delaware Basin to the Gulf Coast. During the first quarter of 2019, we have made capital contributions of approximately $103.7 million.
The following table presents our investments at the dates indicated:
(in thousands)
March 31, 2019
 
December 31, 2018
White Cliffs
$
9,698

 
$
9,373

Advantage Joint Venture
73,326

 
72,944

Delaware Crossing Joint Venture
37,086

 

EPIC Y-Grade
123,184

 

EPIC Crude
103,704

 

Total Investments
$
346,998

 
$
82,317


The following table presents our investment income for the periods indicated:
 
Three Months Ended March 31,
(in thousands)
2019
 
2018
White Cliffs
$
1,048

 
$
831

Advantage Joint Venture
2,241

 
1,862

Delaware Crossing Joint Venture
(1,183
)
 

EPIC Y-Grade
(30
)
 

EPIC Crude

 

Other (1)
265

 
175

Total Investment Income
$
2,341

 
$
2,868

(1) 
Represents income associated with our fee for serving as the operator of the Advantage Joint Venture and Delaware Crossing Joint Venture.
Note 8. Segment Information
We manage our operations by the nature of the services we offer. Our reportable segments comprise the structure used to make key operating decisions and assess performance. As a result of our increased investment in midstream entities during first quarter 2019, we have established an Investments in Midstream Entities reportable segment. Our Investments in Midstream Entities reportable segment includes all activity associated with our unconsolidated investments. See Note 7. Investments.
We are now organized into the following reportable segments: Gathering Systems (crude oil, natural gas, and produced water gathering, crude oil treating, and crude oil sales), Fresh Water Delivery, Investments in Midstream Entities and Corporate. We

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Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


often refer to the services of our Gathering Systems and Fresh Water Delivery reportable segments collectively as our midstream services. Prior period segment information has been reclassified to conform to the current period presentation.
Summarized financial information concerning our reportable segments is as follows:
(in thousands)
Gathering Systems (1)
 
Fresh Water Delivery (1)
 
Investments in Midstream Entities
 
Corporate (2)
 
Consolidated
Three Months Ended March 31, 2019
 
 
 
 
 
 
 
 
 
Midstream Services — Affiliate
$
64,409

 
$
27,587

 
$

 
$

 
$
91,996

Midstream Services — Third Party
19,285

 
3,809

 

 

 
23,094

Crude Oil Sales — Third Party
32,870

 

 

 

 
32,870

Total Revenues
116,564

 
31,396

 

 

 
147,960

Income (Loss) Before Income Taxes 
47,586

 
23,209

 
2,341

 
(9,774
)
 
63,362

Additions to Long-Lived Assets
72,333

 
2,756

 

 
269

 
75,358

Additions to Investments

 

 
270,603

 

 
270,603

 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018
 
 
 
 
 
 
 
 
 
Midstream Services — Affiliate
$
43,979

 
$
20,284

 
$

 
$

 
$
64,263

Midstream Services — Third Party
7,458

 
3,902

 

 

 
11,360

Crude Oil Sales — Third Party
22,110

 

 

 

 
22,110

Total Revenues
73,547

 
24,186

 

 

 
97,733

Income (Loss) Before Income Taxes
30,827

 
17,503

 
2,868

 
(11,988
)
 
39,210

Additions to Long-Lived Assets
447,389

 
7,632

 

 

 
455,021

 
 
 
 
 
 
 
 
 
 
March 31, 2019
 
 
 
 
 
 
 
 
 
Total Assets
$
1,851,930

 
$
109,758

 
$
346,998

 
$
13,776

 
$
2,322,462

 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
Total Assets
$
1,804,100

 
$
96,280

 
$
82,317

 
$
15,220

 
$
1,997,917

(1) 
A substantial portion of the financial statement activity associated with our DevCos is captured within the Gathering Systems and Fresh Water Delivery reportable segments. Although our unconsolidated investments are owned through certain DevCos, all financial statement activity associated with our unconsolidated investments is captured within the Investments in Midstream Entities reportable segment. As our DevCos represent VIEs, see the above reportable segments for our VIEs impact to the consolidated financial statements.
(2) 
The Corporate segment includes all general Partnership activity not attributable to our DevCos.
Note 9. Leases
In the normal course of business, we enter into lease agreements to support our operations. We lease field equipment as well as water and pipeline transportation assets.
Operating Leases Our operating leases consist of field equipment and transportation assets. Our field equipment leases have fixed monthly payments over a minimum term with options to extend the rental period on a month-to-month basis. Our leased transportation assets have variable monthly payments (price per barrel throughput) over a minimum term with the option to extend on a year-to-year basis. Our operating and variable lease expense is recorded in direct operating expense in our consolidated statement of operations and was de minimis for the three months ended March 31, 2019.
Finance Leases We lease water assets for use in the performance of our fresh water delivery services. The amount of the lease obligation is based on the discounted present value of future minimum lease payments, and therefore does not reflect future cash lease payments. Our finance lease expense is recorded in depreciation and amortization expense in our consolidated statement of operations and was de minimis for the three months ended March 31, 2019. Interest expense for our finance lease is recorded in interest expense in our consolidated statement of operations and was de minimis for the three months ended March 31, 2019.

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Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Short Term Leases Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Short term lease expense is recorded in direct operating expense in our consolidated statement of operations and was de minimis for the three months ended March 31, 2019.
Balance Sheet Information ROU assets and lease liabilities are as follows:
(thousands)
Balance Sheet Location
March 31, 2019
Assets
 
 
Operating (1)
Other Noncurrent Assets
$
723

Finance (2)
Total Property, Plant and Equipment, Net
4,137

Total ROU Assets
 
$
4,860

Liabilities
 
 
Current
 
 
Operating
Other Current Liabilities
$
636

Finance
Other Current Liabilities
2,128

Noncurrent
 
 
Operating
Other Noncurrent Liabilities

Finance (3)
Long-Term Debt
245

Total Lease Liabilities
 
$
3,009

(1) 
All of our operating leases have a term that ends during 2019. The future minimum operating lease payments due in 2019 was $1.7 million as of December 31, 2018.
(2) 
Finance lease assets are recorded net of accumulated amortization of $0.9 million as of March 31, 2019.
(3) 
Our finance lease matures during 2020.
Note 10. Partnership Distributions
Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash to unitholders of record on the applicable record date. The following table details the distributions paid in respect of the periods presented below:
 
 
 
 
Distributions
(in thousands)
 
 
 
 
Limited Partners
 
 
Period
Record Date
Distribution Date
Distribution per Limited Partner Unit
Common Unitholders(1)
Subordinated Unitholders
Holder of IDRs
Total
Q4 2017
February 5, 2018
February 12, 2018
$
0.4883

$
11,566

$
7,765

$
520

$
19,851

Q4 2018
February 4, 2019
February 11, 2019
$
0.5858

$
13,876

$
9,316

$
2,421

$
25,613

(1) 
Distributions to common unitholders does not include distribution equivalent rights on units that vested under the Noble Midstream Partners LP 2016 Long-Term Incentive Plan (the LTIP).
Incentive Distribution Rights Noble currently holds Incentive Distribution Rights (IDRs) that entitle it to receive increasing percentages, up to a maximum of 50%, of the available cash we distribute from operating surplus in excess of $0.4313 per unit per quarter. The maximum distribution of 50% does not include any distributions that Noble may receive on Common Units or Subordinated Units that it owns.
Cash Distributions On April 25, 2019, the board of directors of Noble Midstream GP LLC (our general partner) declared a quarterly cash distribution of $0.6132 per unit. The distribution will be paid on May 13, 2019, to unitholders of record as of May 6, 2019. Also on May 13, 2019, a cash incentive distribution of $3.5 million will be made to Noble related to its IDRs, based upon the level of distribution paid per Common and Subordinated Unit.

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Noble Midstream Partners LP
Notes to Consolidated Financial Statements (Unaudited)


Note 11. Net Income Per Limited Partner Unit
Our net income is attributed to limited partners, in accordance with their respective ownership percentages, and when applicable, giving effect to incentive distributions paid to Noble, the holder of our IDRs. The Common and Subordinated unitholders represent an aggregate 100% limited partner interest in us. Pursuant to our partnership agreement, to the extent that the quarterly distributions exceed certain target levels, Noble, as the holder of our IDRs, is entitled to receive certain incentive distributions that will result in more net income proportionately being allocated to Noble than to the holders of Common Units and Subordinated Units.
Because we have more than one class of participating securities, we use the two-class method when calculating the net income per unit applicable to limited partners. The classes of participating securities include Common Units, Subordinated Units and IDRs.
Basic and diluted net income per limited partner Common Unit and Subordinated Unit is computed by dividing the respective limited partners’ interest in net income for the period by the weighted-average number of Common Units and Subordinated Units outstanding for the period. Diluted net income per limited partner Common Unit and Subordinated Unit reflects the potential dilution that could occur if agreements to issue Common Units, such as awards under the LTIP, were settled or converted into Common Units. When it is determined that potential Common Units resulting from an award should be included in the diluted net income per limited partner Common and Subordinated Unit calculation, the impact is reflected by applying the treasury stock method.
Our calculation of net income per limited partner Common and Subordinated Unit is as follows:
 
Three Months Ended March 31,
(in thousands, except per unit amounts)
2019
 
2018
Net Income Attributable to Noble Midstream Partners LP
$
43,559

 
$
39,361

Less: Net Income Attributable to Incentive Distribution Rights
3,507

 
819

Net Income Attributable to Limited Partners
$
40,052

 
$
38,542

 
 
 
 
Net Income Attributable to Common Units
$
23,967

 
$
23,058

Net Income Attributable to Subordinated Units
16,085

 
15,484

Net Income Attributable to Limited Partners
$
40,052

 
$
38,542

 
 
 
 
Net Income Attributable to Limited Partners Per Limited Partner Common and Subordinated Unit
 
 
 
Basic
$
1.01

 
$
0.97

Diluted
$
1.01

 
$
0.97

 
 
 
 
Weighted Average Limited Partner Units Outstanding — Basic
 
 
 
Common Units
23,696

 
23,683

Subordinated Units
15,903

 
15,903

 
 
 
 
Weighted Average Limited Partner Units Outstanding — Diluted
 
 
 
Common Units
23,721

 
23,698

Subordinated Units
15,903

 
15,903

 
 
 
 
Antidilutive Restricted Units
67

 
21


Note 12. Commitments and Contingencies
We may become involved in various legal proceedings in the ordinary course of business. These proceedings would be subject to the uncertainties inherent in any litigation, and we will regularly assess the need for accounting recognition or disclosure of these contingencies. We would expect to defend ourselves vigorously in all such matters. Based on currently available information, we believe it is unlikely that the outcome of known matters would have a material adverse impact on our combined financial condition, results of operations or cash flows.


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide a narrative about our business from the perspective of our management. Our MD&A is presented in the following major sections:
Executive Overview;
Operating Outlook;
Results of Operations; and
Liquidity and Capital Resources.
MD&A is our analysis of the Partnership’s financial performance and of significant trends that may affect future performance. It should be read in conjunction with the consolidated financial statements and notes appearing elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2018. It contains forward-looking statements including, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions. The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions identify forward-looking statements. We do not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws. Readers are cautioned that such forward-looking statements should be read in conjunction with the our disclosures in Item 3 of this report under the heading: “Disclosure Regarding Forward-Looking Statements.”
EXECUTIVE OVERVIEW
The following discussion highlights significant operating and financial results for first quarter 2019. This discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2018, which includes disclosures regarding our critical accounting policies as part of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Significant Results
The following discussion highlights significant operating, financial and transactional results for first quarter 2019.
Significant Operating Results Include:
average crude oil gathering volumes of 221 MBbl/d, an increase of 70% as compared with first quarter 2018;
average natural gas gathering volumes of 459 BBtu/d, an increase of 85% as compared with first quarter 2018;
average produced water gathered volumes of 142 MBbl/d, an increase of 203% as compared with first quarter 2018; and
average fresh water delivered volumes of 220 MBbl/d, an increase of 31% as compared with first quarter 2018.
Significant Financial Results Include:
net income of $63.3 million, an increase of 62% as compared with first quarter 2018;
net income attributable to the Partnership of $43.6 million, an increase of 11% as compared with first quarter 2018;
net cash provided by operating activities of $83.9 million, an increase of 84% as compared with first quarter 2018;
declared a distribution of $0.6132 per unit, an increase of 20% above the first quarter 2018 distribution per unit;
Adjusted EBITDA (non-GAAP financial measure) of $90.5 million, an increase of 55% as compared with first quarter 2018;
Adjusted EBITDA (non-GAAP financial measure) attributable to the Partnership of $62.9 million an increase of 14% as compared with first quarter 2018; and
distributable cash flow (non-GAAP financial measure) of $54.0 million, an increase of 13% as compared with first quarter 2018.
Significant Transactional Results Include:
completed the formation of the Delaware Crossing Joint Venture;
closed options to acquire interest in EPIC Y-Grade and EPIC Crude; and
secured equity commitment and issued Preferred Equity to GIP.
For additional information regarding our non-GAAP financial measures, please see — EBITDA (Non-GAAP Financial Measure), Distributable Cash Flow (Non-GAAP Financial Measure) and Reconciliation of Non-GAAP Financial Measures, below.

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OPERATING OUTLOOK
2019 Capital Investment Program
Our 2019 capital investment program, excluding acquisition capital, will accommodate a gross investment level of approximately $335 to $375 million, with $180 to $210 million attributable to the Partnership. We will evaluate the level of capital spending throughout the year based on the following factors, among others, and their effect on project financial returns: 
pace of our customers’ development;
operating and construction costs and our ability to achieve material supplier price reductions;
impact of new laws and regulations on our business practices;
indebtedness levels; and
availability of financing or other sources of funding.
We plan to fund our capital investment program with cash on hand, from cash generated from operations, borrowings under our revolving credit facility and, if necessary, the issuance of additional equity or debt securities.
Investment Capital Program
Delaware Crossing Joint Venture The Delaware Crossing Joint Venture will construct a 95-mile pipeline system that will originate in Pecos County, Texas, and have additional connections in Reeves County and Winkler County, Texas. The project footprint will be served by a combination of in-field crude oil gathering lines and a trunkline to a hub in Wink, Texas. The project is underpinned by approximately 192,000 dedicated gross acres and nearly 100 miles of pipeline in Pecos, Reeves, Ward and Winkler Counties, Texas. The pipeline is expected to be operational in the third quarter of 2019. During first quarter 2019, we made capital contributions of $38.3 million. Our total cash contributions are expected to be approximately $75 million to $85 million. We intend to fund our cash contributions with our revolving credit facility.
EPIC Y-Grade EPIC Y-Grade will construct an approximately 700-mile pipeline linking NGL reserves in the Permian Basin and Eagle Ford Shale to Gulf Coast refiners, petrochemical companies, and export markets. The pipeline will have a throughput capacity of approximately 440 MBbl/d with multiple origin points. During first quarter 2019, we made capital contributions of $123.2 million. Our total cash contributions are expected to be approximately $165 million to $180 million, with substantially all of the cash contributions in 2019. We intend to fund our cash contributions with our revolving credit facility.
EPIC Crude EPIC Crude will construct an approximately 700-mile pipeline with a capacity of 590 MBbl/d from the Delaware Basin to the Gulf Coast. EPIC currently has a petition for declaratory order pending before the Federal Energy Regulatory Commission for approval of its rates and terms and conditions of its tariff. During first quarter 2019, we made capital contributions of $103.7 million. Our total cash contributions are expected to be approximately $330 million to $350 million, with substantially all of the cash contributions in 2019. We intend to fund our cash contributions with our revolving credit facility and Preferred Equity.
Colorado Senate Bill 19-181
For some time, initiatives have been underway in the State of Colorado to limit or ban hydraulic fracturing statewide or other facets of crude oil and natural gas exploration, development or operations. During first quarter 2019, Senate Bill 19-181 (SB 181) was passed by the State Legislature. On April 16, 2019, the Governor signed the bill into law. The legislation makes sweeping changes in Colorado oil and gas law, including, among other matters, requiring the Colorado Oil and Gas Conservation Commission (Colorado Commission) to prioritize public health and environmental concerns in its decisions, instructing the Colorado Commission to adopt rules to minimize emissions of methane and other air contaminants, and delegating considerable new authority to local governments to regulate surface impacts. 
At this time, we are not aware of any significant changes to Noble’s or other third party customers’ development plans. For example, Noble has all necessary state approvals for more than 550 permits to drill wells over the next several years. The approved permits are for wells in multiple IDP areas, many of which are in the Mustang IDP area. 
However, if additional regulatory measures are adopted, Noble and other third party customers in Colorado could experience delays and/or curtailment in the permitting or pursuit of their exploration, development, or production activities. Such compliance costs and delays, curtailments, limitations, or prohibitions in their development plans could result in decreased demand for our services, which could have a material adverse effect on our cash flows, results of operations, financial condition, and liquidity.

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First Quarter 2019 Development Project Updates
Laramie River DevCo LP In the Greeley Crescent IDP area, we extended our fresh water delivery system to serve future activity for our third-party producers and installed oil and produced water gathering infrastructure to support upcoming well connections.
In the Black Diamond dedication area, we progressed the Milton Phase I Terminal expansion project that increased outlet pumping capacity and installed oil gathering infrastructure for third-party well connections. During the quarter, we connected 88 third-party wells to the Black Diamond gathering system.
Green River DevCo LP We extended infrastructure for crude oil, natural gas, and produced water gathering systems to facilitate the further development in the Mustang IDP area. We also completed additional natural gas offload capacity to facilitate future growth from the area. During the quarter, we connected 21 wells to the Mustang gathering system.
Colorado River DevCo LP During the quarter, no new wells were connected to the Wells Ranch or East Pony gathering systems as the Mustang IDP area is the primary focus area in the DJ Basin for Noble.
Blanco River DevCo LP During the quarter, we connected 9 wells to our gathering systems. Additionally, we are now connected to 3 third-party wells and actively preparing for additional third-party gathering during 2019. We gained a new third-party customer with Noble’s Delaware Basin acreage divestiture during the first quarter.
RESULTS OF OPERATIONS
Results of operations were as follows:
 
Three Months Ended March 31,
(thousands)
2019
 
2018
Revenues
 
 
 
Midstream Services — Affiliate
$
91,996

 
$
64,263

Midstream Services — Third Party
23,094

 
11,360

Crude Oil Sales — Third Party
32,870

 
22,110

Total Revenues
147,960

 
97,733

Costs and Expenses
 
 
 
Cost of Crude Oil Sales
30,898

 
21,439

Direct Operating
27,437

 
17,148

Depreciation and Amortization
19,351

 
11,329

General and Administrative
4,023

 
10,442

Total Operating Expenses
81,709

 
60,358

Operating Income
66,251

 
37,375

Other Expense (Income)
 
 
 
Interest Expense, Net of Amount Capitalized
5,230

 
1,033

Investment Income
(2,341
)
 
(2,868
)
Total Other Expense (Income)
2,889

 
(1,835
)
Income Before Income Taxes
63,362

 
39,210

State Income Tax Provision
107

 
74

Net Income
63,255

 
39,136

Less: Net Income (Loss) Attributable to Noncontrolling Interests
19,696

 
(225
)
Net Income Attributable to Noble Midstream Partners LP
$
43,559

 
$
39,361

 
 
 
 
Adjusted EBITDA(1) Attributable to Noble Midstream Partners LP
$
62,850

 
$
54,981

 
 
 
 
Distributable Cash Flow(1) of Noble Midstream Partners LP
$
53,965

 
$
47,723

(1) 
Adjusted EBITDA and Distributable Cash Flow are not measures as determined by GAAP and should not be considered an alternative to, or more meaningful than, net income, net cash provided by operating activities or any other measure as reported in accordance with GAAP. For additional information regarding our non-GAAP financial measures, please see — EBITDA (Non-GAAP Financial Measure), Distributable Cash Flow (Non-GAAP Financial Measure) and Reconciliation of Non-GAAP Financial Measures, below.

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Throughput and Crude Oil Sales Volumes
The amount of revenue we generate primarily depends on the volumes of crude oil, natural gas and water for which we provide midstream services as well as the crude oil volumes we sell to customers. Throughput and crude oil sales volumes related to our Gathering Systems and Fresh Water Delivery reportable segments were as follows:
 
Three Months Ended March 31,
 
2019
 
2018
Colorado River DevCo LP (Wells Ranch IDP and East Pony IDP) (1) 
 
 
 
Crude Oil Gathering Volumes (Bbl/d)
52,668

 
66,537

Natural Gas Gathering Volumes (MMBtu/d)
263,298

 
207,848

Produced Water Gathering Volumes (Bbl/d)
13,380

 
16,220

Fresh Water Delivery Volumes (Bbl/d)
14,147

 
101,877

 
 
 
 
San Juan River DevCo LP (East Pony IDP) (1)
 
 
 
Fresh Water Delivery Volumes (Bbl/d)
40,236

 

 
 
 
 
Green River DevCo LP (Mustang IDP) (1)
 
 
 
Crude Oil Gathering Volumes (Bbl/d)
23,123

 

Natural Gas Gathering Volumes (MMBtu/d)
90,933

 

Produced Water Gathering Volumes (Bbl/d)
10,486

 

Fresh Water Delivery Volumes (Bbl/d)
120,451

 
21,995

 
 
 
 
Blanco River DevCo LP (Delaware Basin) (1)
 
 
 
Crude Oil Gathering Volumes (Bbl/d)
38,479

 
14,409

Natural Gas Gathering Volumes (MMBtu/d)
98,651

 
39,703

Produced Water Gathering Volumes (Bbl/d)
104,246

 
25,985

 
 
 
 
Laramie River DevCo LP (Greeley Crescent IDP and Black Diamond Dedication Area) (1)
 
 
 
Crude Oil Sales Volumes (Bbl/d)
7,029

 
4,696

Crude Oil Gathering Volumes (Bbl/d)
106,421

 
48,597

Natural Gas Gathering Volumes (MMBtu/d)
5,773

 

Produced Water Gathering Volumes (Bbl/d)
14,178

 
4,773

Fresh Water Delivery Volumes (Bbl/d)
44,880

 
43,871

 
 
 
 
Total Gathering Systems
 
 
 
Crude Oil Sales Volumes (Bbl/d)
7,029

 
4,696

Crude Oil Gathering Volumes (Bbl/d)
220,691

 
129,543

Natural Gas Gathering Volumes (MMBtu/d)
458,655

 
247,551

Barrels of Oil Equivalent (Boe/d)
286,522

 
165,976

Produced Water Gathering Volumes (Bbl/d)
142,290

 
46,978

 
 
 
 
Total Fresh Water Delivery
 
 
 
Fresh Water Delivery Volumes (Bbl/d)
219,714

 
167,743

(1) 
See Item 1. Financial Statements – Note 1. Organization and Nature of Operations for our DevCo ownership interests.

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Revenues
Revenues from our Gathering System and Fresh Water Delivery reportable segments were as follows:
(in thousands)
2019
 
2018
 
Increase (Decrease) From Prior Year
Three Months Ended March 31,
 
 
 
 
 
Crude Oil, Natural Gas and Produced Water Gathering Affiliate
$
63,573

 
$
43,024

 
48
 %
Crude Oil, Natural Gas and Produced Water Gathering — Third Party
18,296

 
6,570

 
178
 %
Fresh Water Delivery Affiliate
27,587

 
20,284

 
36
 %
Fresh Water Delivery — Third Party
3,809