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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
OR
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
nblxupdatedlogoa56.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)
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

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  No 
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     No 
 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
Accelerated filer 
Non-accelerated filer 
Smaller reporting company
Emerging growth company 
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes     No
As of July 31, 2019, the registrant had 39,752,188 Common 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)
 
June 30, 2019
 
December 31, 2018
ASSETS
 
 
 
Current Assets
 
 
 
Cash and Cash Equivalents
$
9,388

 
$
10,740

Accounts Receivable — Affiliate
38,697

 
31,613

Accounts Receivable — Third Party
25,852

 
23,091

Other Current Assets
8,805

 
5,875

Total Current Assets
82,742

 
71,319

Property, Plant and Equipment
 
 
 
Total Property, Plant and Equipment, Gross
1,621,885

 
1,500,609

Less: Accumulated Depreciation and Amortization
(102,338
)
 
(79,357
)
Total Property, Plant and Equipment, Net
1,519,547

 
1,421,252

Intangible Assets, Net
294,184

 
310,202

Goodwill
109,734

 
109,734

Investments
487,383

 
82,317

Other Noncurrent Assets
4,941

 
3,093

Total Assets
$
2,498,531

 
$
1,997,917

LIABILITIES, MEZZANINE EQUITY AND EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts Payable — Affiliate
$
534

 
$
2,778

Accounts Payable — Trade
101,094

 
92,756

Other Current Liabilities
8,144

 
9,217

Total Current Liabilities
109,772

 
104,751

Long-Term Liabilities
 
 
 
Long-Term Debt
870,047

 
559,021

  Asset Retirement Obligations
19,009

 
17,330

Other Long-Term Liabilities
1,143

 
582

Total Liabilities
999,971

 
681,684

Mezzanine Equity
 
 
 
Redeemable Noncontrolling Interest, Net
99,616

 

Equity
 
 
 
Limited Partner
 
 
 
Common Units (39,753 and 23,759 units outstanding, respectively)
606,575


699,866

Subordinated Units (15,903 units outstanding as of December 31, 2018)

 
(130,207
)
General Partner
4,640

 
2,421

Total Partners’ Equity
611,215

 
572,080

Noncontrolling Interests
787,729

 
744,153

Total Equity
1,398,944

 
1,316,233

Total Liabilities, Mezzanine Equity and Equity
$
2,498,531

 
$
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 June 30,

Six Months Ended June 30,
 
2019

2018

2019

2018
Revenues











Midstream Services — Affiliate
$
85,882


$
66,924


$
177,878


$
131,187

Midstream Services — Third Party
20,597


13,469


43,691


24,829

Crude Oil Sales — Third Party
51,782

 
41,578

 
84,652

 
63,688

Total Revenues
158,261


121,971


306,221


219,704

Costs and Expenses
 
 
 
 
 
 
 
Cost of Crude Oil Sales
48,079

 
40,012

 
78,977

 
61,451

Direct Operating
27,697


18,393


55,134


35,541

Depreciation and Amortization
20,285


16,371


39,636


27,700

General and Administrative
4,838


4,980


8,861


15,422

Total Operating Expenses
100,899


79,756


182,608


140,114

Operating Income
57,362


42,215


123,613


79,590

Other Expense (Income)
 
 
 
 
 
 
 
Interest Expense, Net of Amount Capitalized
2,325


1,681


7,555


2,714

Investment Loss (Income)
1,748

 
(4,091
)
 
(593
)
 
(6,959
)
Total Other Expense (Income)
4,073


(2,410
)

6,962


(4,245
)
Income Before Income Taxes
53,289


44,625


116,651


83,835

State Income Tax Provision
91


183


198


257

Net Income
53,198


44,442


116,453


83,578

Less: Net Income Attributable to Noncontrolling Interests
16,789

 
7,858

 
36,485

 
7,633

Net Income Attributable to Noble Midstream Partners LP
36,409

 
36,584

 
79,968

 
75,945

Less: Net Income Attributable to Incentive Distribution Rights
4,640

 
1,134

 
8,147

 
1,953

Net Income Attributable to Limited Partners
$
31,769

 
$
35,450

 
$
71,821

 
$
73,992

 
 
 
 
 
 
 
 
Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic and Diluted
 
 
 
 
 
 
 
Common Units
$
0.79

 
$
0.90

 
$
1.77

 
$
1.87

Subordinated Units
$
0.84

 
$
0.90

 
$
1.91

 
$
1.87

 
 
 
 
 
 
 
 
Weighted Average Limited Partner Units Outstanding  Basic
 
 
 
 
 
 
 
Common Units
32,090

 
23,686

 
27,916

 
23,684

Subordinated Units
7,514

 
15,903

 
11,685

 
15,903

 
 
 
 
 
 
 
 
Weighted Average Limited Partner Units Outstanding Diluted
 
 
 
 
 
 
 
Common Units
32,121

 
23,700

 
27,944

 
23,699

Subordinated Units
7,514

 
15,903

 
11,685

 
15,903

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

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Table of Contents

Noble Midstream Partners LP
Consolidated Statements of Cash Flows
(in thousands, unaudited)
 
Six Months Ended June 30,
 
2019
 
2018
Cash Flows From Operating Activities
 
 
 
Net Income
$
116,453

 
$
83,578

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
 
 
 
Depreciation and Amortization
39,636

 
27,700

Loss (Income) from Equity Method Investees
2,083

 
(4,798
)
Distributions from Equity Method Investees
6,944

 
3,520

Unit-Based Compensation
843

 
714

Other Adjustments for Noncash Items Included in Income
804

 
329

Changes in Operating Assets and Liabilities, Net of Assets Acquired and Liabilities Assumed
 
 
 
Increase in Accounts Receivable
(10,048
)
 
(4,874
)
Increase in Accounts Payable
19,364

 
3,241

Other Operating Assets and Liabilities, Net
(3,330
)
 
(4,338
)
Net Cash Provided by Operating Activities
172,749

 
105,072

Cash Flows From Investing Activities
 
 
 
Additions to Property, Plant and Equipment
(138,139
)
 
(409,059
)
Black Diamond Acquisition, Net of Cash Acquired

 
(650,131
)
Additions to Investments
(414,587
)
 
(119
)
Distributions from Cost Method Investee and Other
588

 
715

Net Cash Used in Investing Activities
(552,138
)
 
(1,058,594
)
Cash Flows From Financing Activities
 
 
 
Distributions to Noncontrolling Interests
(11,985
)
 
(3,529
)
Contributions from Noncontrolling Interests
34,110

 
515,622

Borrowings Under Revolving Credit Facility
560,000

 
610,000

Repayment of Revolving Credit Facility
(250,000
)
 
(165,000
)
Distributions to Unitholders
(53,459
)
 
(40,913
)
Proceeds from Preferred Equity, Net of Issuance Costs
99,450

 

Debt Issuance Costs and Other
(980
)
 
(1,987
)
Net Cash Provided by Financing Activities
377,136

 
914,193

Decrease in Cash, Cash Equivalents, and Restricted Cash
(2,253
)
 
(39,329
)
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)
$
9,438

 
$
16,202

(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.

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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 and Other
288




288

March 31, 2018
655,602

(159,203
)
819

545,434

1,042,652

Net Income
21,210

14,240

1,134

7,858

44,442

Contributions from Noncontrolling Interests



105,757

105,757

Distributions to Noncontrolling Interests



(522
)
(522
)
Distributions to Unitholders
(12,108
)
(8,126
)
(819
)

(21,053
)
Black Diamond Equity Ownership Promote Vesting (1)
2,731

1,833


(4,564
)

Unit-Based Compensation and Other
395




395

June 30, 2018
$
667,830

$
(151,256
)
$
1,134

$
653,963

$
1,171,671

 
 
 
 
 
 
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 and Other
470




470

March 31, 2019
714,465

(120,692
)
3,507

768,311

1,365,591

Net Income
25,487

6,282

4,640

16,789

53,198

Contributions from Noncontrolling Interests



18,141

18,141

Distributions to Noncontrolling Interests



(7,316
)
(7,316
)
Distributions to Unitholders
(14,534
)
(9,751
)
(3,507
)

(27,792
)
Black Diamond Equity Ownership Promote Vesting (1)
8,196



(8,196
)

Conversion of Subordinated Units to Common Units (2)
(124,161
)
124,161




Preferred Equity Accretion
(3,151
)



(3,151
)
Unit-Based Compensation and Other
273




273

June 30, 2019
$
606,575

$

$
4,640

$
787,729

$
1,398,944


(1) 
See Note 2. Basis of Presentation for further discussion of the Black Diamond equity ownership promote vesting.
(2) 
See Note 10. Partnership Distributions for further discussion of the conversion of Subordinated Units.
The accompanying notes are an integral part of these consolidated financial statements.

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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 June 30, 2019 and December 31, 2018 and for the three and six months ended June 30, 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 and six months ended June 30, 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 June 30, 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 $3.5 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. 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). The dividends for the first and second quarters of 2019 were paid-in-kind. Accretion during the six months ended June 30, 2019 was approximately $3.2 million.
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 $45.6 million as of December 31, 2018 and June 30, 2019, respectively. Intangible asset amortization expense totaled approximately $8.1 million for the three months ended June 30, 2018 and 2019 and $13.3 million and $16.0 million for the six months ended June 30, 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 Financial Accounting Standards Board (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:

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


the package of ‘practical expedients’, permitting us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs;
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
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 used for certain financial instruments with a methodology that reflects current expected credit losses. The current expected credit loss (CECL) model applies to a broad scope of financial instruments, including financial assets measured at amortized cost. CECL also applies to off-balance sheet credit exposures not accounted for as insurance, such as financial guarantees and other unfunded loan commitments. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted, and shall be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the adoption period.
The FASB subsequently issued Accounting Standards Update No. 2019-04 (ASU 2019-04): Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives, and Topic 825, Financial Instruments and Accounting Standards Update No. 2019-05 (ASU 2019-05): Financial Instruments-Credit Losses (Topic 326)-Targeted Transition Relief. ASU 2019-04 and ASU 2019-05 provide certain codification improvements related to CECL implementation and targeted transition relief consisting of an option to irrevocably elect the fair value option for eligible instruments.
From evaluation of our current credit portfolio, which includes receivables for midstream services and crude oil sales, historical credit losses have been de minimis and we believe that our expected future credit losses will not be significant. As such, we do not believe adoption of the standard will have a material impact on our financial statements. We have developed and are executing an implementation plan, which includes data collection, contract review and assessment, and evaluation of our systems, processes and internal controls. We will continue to monitor changes in our credit portfolio and off-balance sheet exposures as our implementation plan progresses.
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:
 
Six Months Ended June 30,
(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
$
9,388

 
$
16,202

Restricted Cash at End of Period (1)
50

 

Cash, Cash Equivalents, and Restricted Cash at End of Period
$
9,438

 
$
16,202

(1) 
Restricted cash represents the amount held as collateral at December 31, 2018 and June 30, 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).

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


Under ASC 606, remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied as of June 30, 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 June 30, 2019, for the agreement. Our actual volumes delivered may exceed the future minimum volume commitment.
(in thousands)
Midstream Services — Affiliate
Remainder of 2019
$
15,232

2020
36,817

2021
37,635

Total
$
89,684


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.

11

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


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.
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 June 30,
 
Six Months Ended June 30,
(in thousands, except per unit amounts)
2019 (1)
 
2018 (1)
 
2019 (1)
 
2018
Revenues
$
158,261

 
$
121,971

 
$
306,221

 
$
230,216

Net Income
53,198

 
44,442

 
116,453

 
81,092

Net Income Attributable to Noble Midstream Partners LP
36,409

 
36,584

 
79,968

 
74,279

 
 
 
 
 
 
 
 
Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic and Diluted
 
 
 
 
 
 
 
Common Units
$
0.79

 
$
0.90

 
$
1.77

 
$
1.83

Subordinated Units
$
0.84

 
$
0.90

 
$
1.91

 
$
1.83

(1) 
No pro forma adjustments were made for the period as Black Diamond operations are included in our results for the full period.

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


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 June 30,
 
Six Months Ended June 30,
(in thousands)
2019
 
2018
 
2019
 
2018
Crude Oil, Natural Gas and Produced Water Gathering
$
66,749

 
$
46,871

 
$
130,322

 
$
89,895

Fresh Water Delivery
18,367

 
19,074

 
45,954

 
39,358

Other
766

 
979

 
1,602

 
1,934

    Total Midstream Services — Affiliate
$
85,882

 
$
66,924

 
$
177,878

 
$
131,187


Expenses General and administrative expense consists of the following:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands)
2019
 
2018
 
2019
 
2018
General and Administrative Expense Affiliate
$
1,848

 
$
1,894

 
$
3,796

 
$
3,705

General and Administrative Expense Third Party
2,990

 
3,086

 
5,065

 
11,717

    Total General and Administrative Expense
$
4,838

 
$
4,980

 
$
8,861

 
$
15,422


Note 5. Property, Plant and Equipment
Property, plant and equipment, at cost, is as follows:
(in thousands)
June 30, 2019
 
December 31, 2018
Crude Oil, Natural Gas and Produced Water Gathering Systems and Facilities
$
1,377,271

 
$
1,199,679

Fresh Water Delivery Systems
80,791

 
78,820

Crude Oil Treating Facilities
21,650

 
20,027

Construction-in-Progress (1)
142,173

 
202,083

Total Property, Plant and Equipment, at Cost
1,621,885

 
1,500,609

Accumulated Depreciation and Amortization
(102,338
)
 
(79,357
)
Property, Plant and Equipment, Net
$
1,519,547

 
$
1,421,252

(1) 
Construction-in-progress at June 30, 2019 primarily includes $115.1 million in gathering system projects, $3.7 million in fresh water delivery system projects and $22.3 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.

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


Note 6. Debt
Debt consists of the following:
 
June 30, 2019
 
December 31, 2018
(in thousands, except percentages)
Debt
 
Interest Rate
 
Debt
 
Interest Rate
Revolving Credit Facility, due March 9, 2023
$
370,000

 
3.77
%
 
$
60,000

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

 
3.51
%
 
500,000

 
3.42
%
Finance Lease Obligation (1)
2,389

 
%
 
3,231

 
%
Total
872,389

 
 
 
563,231

 
 
Term Loan Credit Facility Unamortized Debt Issuance Costs
(872
)
 
 
 
(979
)
 
 
Total Debt
871,517

 
 
 
562,252

 
 
Finance Lease Obligation Due Within One Year (1)
(1,470
)
 
 
 
(3,231
)
 
 
Long-Term Debt
$
870,047

 
 
 
$
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 June 30, 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 observable inputs. As such, we consider the fair value of these facilities to be a Level 2 measurement on the fair value hierarchy.
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 six months 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 is constructing 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 six months of 2019, we have made capital contributions of approximately $149.5 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 is constructing an approximately 700-mile pipeline with a capacity of 590 MBbl/d from the Delaware Basin to the Gulf Coast. During the first six months of 2019, we have made capital contributions of approximately $216.2 million.

14

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


The following table presents our investments at the dates indicated:
(in thousands)
June 30, 2019
 
December 31, 2018
White Cliffs
$
10,187

 
$
9,373

Advantage Joint Venture
74,555

 
72,944

Delaware Crossing Joint Venture
37,288

 

EPIC Y-Grade
150,399

 

EPIC Crude
214,954

 

Total Investments
$
487,383

 
$
82,317


The following table presents our investment income (loss) for the periods indicated:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands)
2019
 
2018
 
2019
 
2018
White Cliffs
$
841

 
$
973

 
$
1,889

 
$
1,804

Advantage Joint Venture
1,513

 
2,936

 
3,754

 
4,798

Delaware Crossing Joint Venture
(355
)
 

 
(1,538
)
 

EPIC Y-Grade
(1,024
)
 

 
(1,054
)
 

EPIC Crude
(3,245
)
 

 
(3,245
)
 

Other (1)
522

 
182

 
787

 
357

Total Investment (Loss) Income
$
(1,748
)
 
$
4,091

 
$
593

 
$
6,959

(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 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.

15

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


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 June 30, 2019
 
 
 
 
 
 
 
 
 
Midstream Services — Affiliate
$
67,515

 
$
18,367

 
$

 
$

 
$
85,882

Midstream Services — Third Party
18,143

 
2,454

 

 

 
20,597

Crude Oil Sales — Third Party
51,782

 

 

 

 
51,782

Total Revenues
137,440

 
20,821

 

 

 
158,261

Income (Loss) Before Income Taxes
49,133

 
13,621

 
(1,748
)
 
(7,717
)
 
53,289

Additions to Long-Lived Assets
55,850

 
1,113

 

 
240

 
57,203

Additions to Investments

 

 
143,984

 

 
143,984

 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
Midstream Services — Affiliate
$
47,850

 
$
19,074

 
$

 
$

 
$
66,924

Midstream Services — Third Party
10,368

 
3,101

 

 

 
13,469

Crude Oil Sales — Third Party
41,578

 

 

 

 
41,578

Total Revenues
99,796

 
22,175

 

 

 
121,971

Income (Loss) Before Income Taxes
29,066

 
18,434

 
4,091

 
(6,966
)
 
44,625

Additions to Long-Lived Assets
149,571

 
5,190

 

 

 
154,761

Additions to Investments

 

 
119

 

 
119

 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2019
 
 
 
 
 
 
 
 
 
Midstream Services — Affiliate
$
131,924

 
$
45,954

 
$

 
$

 
$
177,878

Midstream Services — Third Party
37,428

 
6,263

 

 

 
43,691

Crude Oil Sales — Third Party
84,652

 

 

 

 
84,652

Total Revenues
254,004

 
52,217

 

 

 
306,221

Income (Loss) Before Income Taxes