American Midstream Partners Earnings 2019-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

10-Q 1 a2019q1form10-q.htm 10-Q Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019



¨	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: 001-35257

AMERICAN MIDSTREAM PARTNERS, LP

(Exact name of registrant as specified in its charter)



Delaware	27-0855785
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2103 CityWest Boulevard
Building #4, Suite 800
Houston, TX 77042	(346) 241-3400
(Address of principal executive offices) (zip code)	(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. ý 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). ý Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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	ý
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 ý No

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 Partnership Interests	AMID	New York Stock Exchange

There were 54,451,306 common units, 11,342,197 Series A Units and 9,514,330 Series C Units of American Midstream Partners, LP outstanding as of May 3, 2019.

Glossary of Terms

The following is a list of terms used throughout this report:

ASC Accounting Standards Codification.

Bbl Barrels: 42 U.S. gallons measured at 60 degrees Fahrenheit.


Condensate	Liquid hydrocarbons present in casing head gas that condense within the gathering system and are removed prior to delivery to the natural gas plant. This product is generally sold on terms more closely tied to crude oil pricing.


/d	Per day.

FASB Financial Accounting Standards Board.

FERC Federal Energy Regulatory Commission.

GAAP Accounting principles generally accepted in the United States of America.

Gal Gallons.

Mgal Thousand gallons.

Mcf Thousand cubic feet.

MMcf Million cubic feet.


NGL or NGLs	Natural gas liquid(s): The combination of ethane, propane, normal butane, isobutane and natural gasoline that, when removed from natural gas, become liquid under various levels of higher pressure and lower temperature.


Throughput	The volume transported or passing through a pipeline, plant, terminal or other facility during a particular period.

Table of Contents

TABLE OF CONTENTS



		Page
PART I. FINANCIAL INFORMATION		4
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018	4
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2019 and 2018	6
	Condensed Consolidated Statements of Changes in Equity and Partners’ Capital for the three months ended March 31, 2019 and 2018	7
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42
PART II. OTHER INFORMATION		43
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 5.	Other Information	43
Item 6.	Exhibits	44

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

American Midstream Partners, LP and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited, In thousands)



	March 31, 2019			December 31, 2018
Assets
Current assets
Cash and cash equivalents	$	12,273		$	9,069
Restricted cash	33,558			30,868
Accounts receivable, net of allowance for doubtful accounts of $511 and $591 as of March 31, 2019 and December 31, 2018, respectively	87,355			76,632
Inventory	8,924			1,186
Other current assets	21,728			26,236
Total current assets	163,838			143,991
Property, plant and equipment, net	995,755			997,708
Goodwill	51,723			51,723
Restricted cash-long term	5,281			5,083
Intangible assets, net	131,447			133,992
Investments in unconsolidated affiliates	321,760			337,796
Other assets, net	45,933			17,403
Total assets	$	1,715,737		$	1,687,696
Liabilities, Equity and Partners’ Capital
Current liabilities
Accounts payable	$	44,789		$	36,619
Accrued gas purchases	9,417			11,695
Accrued expenses and other current liabilities	68,448			78,612
Current portion of long-term debt	542,163			522,966
Total current liabilities	664,817			649,892
Asset retirement obligations	68,338			67,451
Other long-term liabilities	41,876			18,491
Long-term debt	501,836			500,739
Deferred tax liability	1,421			1,421
Total liabilities	1,278,288			1,237,994

Commitments and contingencies (Note 14)

Convertible preferred units	331,964			324,624
Equity and partners’ capital
General Partner interests (981 units issued and outstanding as of March 31, 2019 and December 31, 2018)	(66,528		)	(66,591		)
Limited Partner interests (54,212 and 54,017 units issued and outstanding as of March 31, 2019 and December 31, 2018, respectively)	158,122			177,861
Accumulated other comprehensive income	68			32
Total partners’ capital	91,662			111,302
Noncontrolling interests	13,823			13,776
Total equity and partners’ capital	105,485			125,078
Total liabilities, equity and partners’ capital	$	1,715,737		$	1,687,696

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

Table of Contents

American Midstream Partners, LP and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per unit amounts)



	Three months ended March 31,
	2019			2018
Revenue:
Commodity sales	$	137,529		$	158,863
Services	36,822			46,906
(Loss) gain on commodity derivatives, net	(1,521		)	60
Total revenue	172,830			205,829
Operating expenses:
Costs of sales	128,061			150,166
Direct operating expenses	17,978			23,446
Corporate expenses	19,401			22,692
Depreciation, amortization and accretion	21,180			21,997
Loss (gain) on sale of assets, net	55			(95		)
Impairment of long-lived assets	829			—
Total operating expenses	187,504			218,206
Operating loss	(14,674		)	(12,377		)
Other income (expense), net
Interest expense, net of capitalized interest	(24,363		)	(13,876		)
Other income, net	8			22
Earnings in unconsolidated affiliates	26,110			12,673
Loss before income taxes	(12,919		)	(13,558		)
Income tax expense	(218		)	(280		)
Net loss	(13,137		)	(13,838		)
Net income attributable to noncontrolling interests	(77		)	(45		)
Net loss attributable to the Partnership	$	(13,214	)	$	(13,883	)

General Partner’s interest in net loss	$	(170	)	$	(181	)
Limited Partners’ interest in net loss	$	(13,044	)	$	(13,702	)

Limited Partners’ net loss per common unit:
Basic and diluted:
Net loss per common unit	$	(0.38	)	$	(0.42	)

Weighted average number of common units outstanding:
Basic and diluted	54,082			52,769

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

Table of Contents

American Midstream Partners, LP and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited, in thousands)



	Three months ended March 31,
	2019			2018
Net loss	$	(13,137	)	$	(13,838	)
Unrealized (loss) gain related to postretirement benefit plan	36			(16		)
Comprehensive loss	(13,101		)	(13,854		)
Comprehensive income attributable to noncontrolling interests	(77		)	(45		)
Comprehensive loss attributable to the Partnership	$	(13,178	)	$	(13,899	)

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

Table of Contents

American Midstream Partners, LP and Subsidiaries

Condensed Consolidated Statements of Changes in Equity and Partners’ Capital

(Unaudited, in thousands)



	General Partner Interests			Limited Partner Interests			Accumulated Other Comprehensive Income (Loss)			Total Partners’ Capital			Non- controlling Interests			Total Equity and Partners’ Capital
Balances at December 31, 2017	$	(96,552	)	$	273,703		$	28		$	177,179		$	13,761		$	190,940
Cumulative effect of accounting change (Note 3)	(139		)	(10,552		)	—			(10,691		)	—			(10,691		)
Balances at January 1, 2018	(96,691		)	263,151			28			166,488			13,761			180,249
Net loss	(181		)	(13,702		)	—			(13,883		)	45			(13,838		)
Contributions	9,870			—			—			9,870			—			9,870
Distributions	(392		)	(29,728		)	—			(30,120		)	—			(30,120		)
Distributions to NCI owners	—			—			—			—			(20		)	(20		)
Distribution for acquisition of Trans-Union	(38		)	—			—			(38		)	—			(38		)
LTIP vesting	(2,328		)	2,328			—			—			—			—
Tax netting repurchase	—			(703		)	—			(703		)	—			(703		)
Equity compensation expense	1,014			—			—			1,014			—			1,014
Post-retirement benefit plan	—			—			(16		)	(16		)	—			(16		)
Balances at March 31, 2018	$	(88,746	)	$	221,346		$	12		$	132,612		$	13,786		$	146,398

Balances at December 31, 2018	$	(66,591	)	$	177,861		$	32		$	111,302		$	13,776		$	125,078
Net loss	(170		)	(13,044		)	—			(13,214		)	77			(13,137		)
Distributions	(95		)	(7,245		)	—			(7,340		)	—			(7,340		)
LTIP vesting	(698		)	698			—			—			—			—
Tax netting repurchase	—			(148		)	—			(148		)	—			(148		)
Equity compensation expense	1,026			—			—			1,026			—			1,026
Post-retirement benefit plan	—			—			36			36			—			36
Distributions to NCI owners	—			—			—			—			(33		)	(33		)
Contributions from NCI owners	—			—			—			—			3			3
Balances at March 31, 2019	$	(66,528	)	$	158,122		$	68		$	91,662		$	13,823		$	105,485

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

Table of Contents

American Midstream Partners, LP and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



	Three months ended March 31,
	2019			2018
Cash flows from operating activities
Net loss	$	(13,137	)	$	(13,838	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation, amortization and accretion	21,180			21,997
Amortization of operating leases	1,407			—
Amortization of debt issuance costs	2,549			1,316
Amortization of weather derivative premium	247			278
Unrealized (gain) loss on derivatives contracts, net	3,037			(5,112		)
Non-cash compensation expense	1,026			1,014
Loss (gain) on sale of assets	55			(95		)
Other non-cash items	7			(15		)
Impairment of long-lived assets	829			—
Earnings in unconsolidated affiliates	(26,110		)	(12,673		)
Distributions from unconsolidated affiliates	29,866			12,673
Bad debt (recovery) expense	(80		)	87
Deferred tax benefit	—			151
Changes in operating assets and liabilities:
Accounts receivable	(11,918		)	7,251
Inventory	(7,738		)	(3,399		)
Other current assets	1,312			(4,174		)
Other assets, net	(2,546		)	—
Accounts payable	8,170			11,200
Accrued gas and crude oil purchases	(2,278		)	(4,431		)
Accrued expenses and other current liabilities	(4,096		)	2,623
Asset retirement obligations	(569		)	(6		)
Other liabilities	(5,453		)	—
Net cash (used in) provided by operating activities	(4,240		)	14,847

Cash flows from investing activities
Contributions to unconsolidated affiliates	—			(987		)
Additions to property, plant and equipment and other	(18,761		)	(25,946		)
Proceeds from disposals of assets and business	—			8
Distributions from unconsolidated affiliates, return of capital	12,280			11,181
Net cash used in investing activities	(6,481		)	(15,744		)

American Midstream Partners, LP and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

(Unaudited, in thousands)



	Three months ended March 31,
	2019			2018
Cash flows from financing activities
Contributions	—			9,870
Distributions	—			(22,035		)
Contribution from noncontrolling interest owners	3			—
Distributions to noncontrolling interests owners	(33		)	(20		)
LTIP tax netting unit repurchase	(148		)	(703		)
Payments of financing leases	(268		)	—
Payment of debt issuance costs	(61		)	(1,085		)
Payment of long-term debt	(559		)	(507		)
Payment of 3.97% Senior Notes	(451		)	(439		)
Payments of other debt	(1,576		)	(1,893		)
Payments of credit agreement	(33,000		)	(119,700		)
Borrowings on credit agreement	52,500			134,400
Other	406			338
Net cash provided by (used in) financing activities	16,813			(1,774		)

Net increase (decrease) in cash, cash equivalents and restricted cash	6,092			(2,671		)
Cash, cash equivalents and restricted cash, beginning of period	45,020			34,179
Cash, cash equivalents and restricted cash, end of period	$	51,112		$	31,508

Cash, cash equivalents and restricted cash, beginning of period
Cash and cash equivalents	$	9,069		$	8,782
Restricted cash - current	30,868			20,352
Restricted cash - non-current	5,083			5,045
Total cash, cash equivalents and restricted cash, beginning of period	$	45,020		$	34,179

Cash, cash equivalents and restricted cash, end of period
Cash and cash equivalents	$	12,273		$	8,191
Restricted cash - current	33,558			18,269
Restricted cash - non-current	5,281			5,048
Total cash, cash equivalents and restricted cash, end of period	$	51,112		$	31,508

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

American Midstream Partners, LP and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(1) Organization and Basis of Presentation

Organization

American Midstream Partners, LP (together with its consolidated subsidiaries, the “Partnership,” “we,” “us” or “our”) is a Delaware limited partnership that was formed in August 2009 to own, operate, develop and acquire a diversified portfolio of midstream energy assets. The Partnership’s general partner, American Midstream GP, LLC (the “General Partner”), is 86% directly owned by High Point Infrastructure Partners, LLC (“HPIP”) and 14% indirectly owned by Magnolia Infrastructure Holdings, LLC (“Magnolia”), both of which are affiliates of ArcLight Capital Partners, LLC (“ArcLight”). Our capital accounts consist of notional General Partner units and units representing limited partner interests.

We provide critical midstream infrastructure that links producers of natural gas, crude oil, NGLs, condensate and specialty chemicals to numerous intermediate and end-use markets through our four reportable segments, (1) Gas Gathering and Processing Services, (2) Liquid Pipelines and Services, (3) Natural Gas Transportation Services and (4) Offshore Pipelines and Services.

On March 17, 2019, as recommended by the conflicts committee (the “Conflicts Committee”) of the board of directors (the “Board”) of our General Partner, the Partnership and our General Partner entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Anchor Midstream Acquisition, LLC, a Delaware limited liability company (“Proposed Parent”), Anchor Midstream Merger Sub, LLC, a Delaware limited liability company (“Proposed Merger Sub”), and HPIP, pursuant to which Proposed Merger Sub will merge with and into the Partnership, with the Partnership surviving as a direct wholly owned subsidiary of our General Partner and Proposed Parent (the “Pending Merger”). For further information regarding the Merger Agreement, see our Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Form 10-K”).

On June 16, 2018, we entered into a definitive agreement for the sale of our marine liquids terminals (“Marine Products”) which was completed on July 31, 2018. On November 15, 2018, we entered into a definitive agreement for the sale of our refined products terminals (“Refined Products”) which was completed on December 20, 2018. Subsequent to the disposition of Refined Products, we eliminated our Terminalling Services segment. For further discussion of all changes made to our reporting segments in 2018, see our 2018 Form 10-K.

Basis of presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with Article 10 of Regulation S-X for interim financial information. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. In the opinion of our management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair statement have been included. The results of operations for interim periods are not necessarily indicative of results of operations for a full year. These condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our 2018 Form 10-K.

Going Concern Assessment and Management’s Plans

Pursuant to FASB ASC 205-40, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern, we are required to assess our ability to continue as a going concern for a period of one year from the date of the issuance of these condensed consolidated financial statements. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year from the financial statement issuance date. The Credit Agreement matures on September 5, 2019 and has not been renewed as of the date of the issuance of these condensed consolidated financial statements.

On September 27, 2018, the Board received a non-binding proposal from Magnolia, an affiliate of ArcLight to acquire the common units that it does not already own. On March 17, 2019, we entered into the Merger Agreement and expect the Pending Merger to close by the outside date under the Merger Agreement of July 31, 2019. As the Merger Agreement is subject to customary closing conditions and because the Pending Merger may affect how, or if, the Partnership elects to obtain a maturity extension, management has deferred addressing the Credit Agreement.

While we intend to renew or extend the terms of the Credit Agreement, until such time as we have executed an agreement to refinance or extend the maturity of the Credit Agreement, we cannot conclude that it is probable we will do so, and accordingly, this raises substantial doubt about our ability to continue as a going concern.

American Midstream Partners, LP and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(2) Recent Accounting Pronouncements and Critical Accounting Policies

Standards Adopted in 2019

Leases (Topic 842) - In February 2016, the FASB issued ASU No. 2016-02 (“Topic 842”) Leases , which supersedes the lease recognition requirements in ASC 840, Leases. Under the new guidance, for leases with a term longer than 12 months, a lessee should recognize a lease liability and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term. Topic 842 retains a classification distinction between finance leases and operating leases, with the classification affecting the pattern of expense recognition in the income statement. This ASU also requires enhanced disclosures.

In 2018, the FASB issued ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842 and ASU No. 2018-11, Targeted Improvements. Under these updates, optional transition practical expedients are available (1) whereby existing or expired land easements that were not previously accounted for as leases under ASC 840 are not required to be evaluated under Topic 842 and (2) lease and associated non-lease components are not required to be separated within lessor arrangements if certain criteria are met. The FASB also issued ASUs 2018-10 and 2018-20, Codification Improvements to Topic 842 and Narrow Scope Improvements for Lessors, respectively, to alleviate unintended consequences from applying Topic 842. The amendments do not make substantive changes to the core provisions or principles of Topic 842 and did not significantly impact our implementation process.

We adopted the new standard on its effective date, January 1, 2019 using the modified retrospective approach. We elected the package of practical expedients permitted under the transition guidance within Topic 842 which, among other things, allows us to carry forward the historical lease classification. As such, we did not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We also elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment of ROU assets.

Additionally, we elected certain practical expedients on an ongoing basis, including the practical expedient for short-term leases pursuant to which a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize a lease liability and ROU asset for leases (1) with a term of 12 months or less and (2) that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Instead, we will recognize the lease payments for short-term leases within profit and loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. Substantially all leases where we are a lessee are classified as operating leases under Topic 842. Topic 842 did not have a material effect on our condensed consolidated financial statements from a lessor perspective.

On adoption, we recognized ROU assets and additional lease liabilities of approximately $29.1 million and $33.4 million, respectively.

Standards Not Yet Adopted

Financial Instruments - In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This guidance will become effective for interim and annual periods beginning after December 15, 2019. We expect to adopt ASU 2016-13 on January 1, 2020, and we are currently evaluating the effect that adopting this guidance will have on our consolidated financial position, results of operations and cash flows.

Fair Value Measurement - In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). This guidance eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies certain disclosure requirements. The FASB developed the amendments to Topic 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. This guidance will become effective for interim and annual periods beginning after December 15, 2019. We expect to adopt ASU 2018-13 on January 1, 2020, and we are currently evaluating the impact, if any, that adopting this guidance will have on our disclosures.

Cloud Computing Arrangements - In August 2018, the FASB issued ASU No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract ("ASU 2018-15"). The ASU aligns the requirements

American Midstream Partners, LP and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

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 capitalized implementation costs of a hosting arrangement that is a service contract will be expensed over the term of the hosting arrangement. ASU 2018-15 is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period. The amendments can be applied either retrospectively or prospectively to all implementation costs incurred after the adoption date. We expect to adopt ASU 2018-15 on January 1, 2020, and we are currently evaluating the effect that adopting this guidance will have on our consolidated financial position, results of operations and cash flows.

(3) Revenue Recognition

Disaggregated Revenue

The following table presents our segment revenues from contracts with customers disaggregated by type of activity (in thousands):



	Three months ended March 31, 2019
	Gas Gathering and Processing Services		Liquid Pipelines and Services		Natural Gas Transportation Services		Offshore Pipelines and Services		Terminalling Services		Total
Commodity sales:
Natural gas	$	1,576	$	—	$	6,407	$	2,286	$	—	$	10,269
NGLs	13,901		—		—		—		—		13,901
Condensate	8,776		—		—		131		—		8,907
Crude oil	—		104,322		—		—		—		104,322
Other sales	83		—		1		46		—		130
	24,336		104,322		6,408		2,463		—		137,529
Services:
Gathering and processing	4,059		—		—		300		—		4,359
Transportation	332		2,311		8,714		9,042		—		20,399
Terminalling and storage	—		150		—		—		—		150
Other services ⁽¹⁾	744		44		65		5,041		—		5,894
	5,135		2,505		8,779		14,383		—		30,802

Revenues from contracts with customers	$	29,471	$	106,827	$	15,187	$	16,846	$	—	$	168,331

American Midstream Partners, LP and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)



	Three months ended March 31, 2018
	Gas Gathering and Processing Services		Liquid Pipelines and Services		Natural Gas Transportation Services		Offshore Pipelines and Services		Terminalling Services		Total
Commodity sales:
Natural gas	$	1,906	$	—	$	6,637	$	2,437	$	—	$	10,980
NGLs	21,150		—		—		38		—		21,188
Condensate	5,648		—		—		34		—		5,682
Crude oil	—		115,782		—		—		—		115,782
Other sales	184		—		4		39		5,004		5,231
	28,888		115,782		6,641		2,548		5,004		158,863
Services:
Gathering and processing	2,365		—		—		866		—		3,231
Transportation	630		3,062		9,412		8,663		—		21,767
Terminalling and storage	—		1,440		—		—		10,393		11,833
Other services ⁽¹⁾	434		402		10		4,613		562		6,021
	3,429		4,904		9,422		14,142		10,955		42,852

Revenues from contracts with customers	$	32,317	$	120,686	$	16,063	$	16,690	$	15,959	$	201,715

^{_________________________}

⁽¹⁾Other services in our Offshore Pipelines and Services segment include asset management services.

Other Items in Revenue

The following table presents the reconciliation of our revenues from contracts with customers to segment revenues and total revenues as disclosed in our Condensed Consolidated Statements of Operations (in thousands):



	Three months ended March 31, 2019
	Gas Gathering and Processing Services		Liquid Pipelines and Services			Natural Gas Transportation Services		Offshore Pipelines and Services		Terminalling Services		Total
Revenues from contracts with customers	$	29,471	$	106,827		$	15,187	$	16,846	$	—	$	168,331
Revenues generated through operating lease arrangements⁽¹⁾⁽²⁾	5,738		—			—		282		—		6,020
Loss on commodity derivatives, net	—		(1,521		)	—		—		—		(1,521		)
Total revenues of reportable segments	$	35,209	$	105,306		$	15,187	$	17,128	$	—	$	172,830



	Three months ended March 31, 2018
	Gas Gathering and Processing Services		Liquid Pipelines and Services		Natural Gas Transportation Services		Offshore Pipelines and Services		Terminalling Services		Total
Revenues from contracts with customers	$	32,317	$	120,686	$	16,063	$	16,690	$	15,959	$	201,715
Revenues generated through operating lease arrangements⁽¹⁾⁽²⁾	3,884		—		—		170		—		4,054
Gain on commodity derivatives, net	2		58		—		—		—		60
Total revenues of reportable segments	$	36,203	$	120,744	$	16,063	$	16,860	$	15,959	$	205,829

_________________________

⁽¹⁾When providing gathering or processing services to customers, specific facilities where one customer obtains substantially all of the economic benefits from the asset and has the right to direct the use of the asset are considered leased to the customer. Under the transition guidance with Topic 842, we have carried forward the historical classification of these arrangements as operating leases.

American Midstream Partners, LP and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

⁽²⁾Offshore Pipelines and Services includes approximately $0.2 million in 2019 and $0.1 million in 2018 in leasing revenues related to a platform arrangement with our unconsolidated affiliate, Delta House Oil & Gas Lateral LLC.

We may utilize derivative instruments in connection with contracts with customers. We purchase and take title to a portion of the NGLs and crude oil that we sell, which may expose us to changes in the price of these products in our sales markets. We do not take title to the natural gas we transport and therefore have no direct commodity price exposure to natural gas.

Contract Balances

Our contract assets and liabilities primarily relate to contracts where allocations of the transaction prices result in differences to the pattern and timing of revenue recognition as compared to contractual billings. Where payments are received in advance of recognition as revenue, contract liabilities are created. Where we have earned revenue and our right to invoice the customer is conditioned on something other than the passage of time, contract assets are created.

The following table presents the change in the contract assets and liability balances during the three months ended March 31, 2019 (in thousands):



	Contract Assets			Contract Liabilities
Balance at December 31, 2018	$	8,838		$	15,614
Amounts recognized as revenue	(109		)	(367		)
Additions	2,546			883
Balances at March 31, 2019	$	11,275		$	16,130

Current	$	252		$	606
Non-current	11,023			15,524
Balances at March 31, 2019	$	11,275		$	16,130

Remaining Performance Obligations

The following table as of March 31, 2019, represents only revenue expected to be recognized from contracts with customers where the price and quantity of the product or service are fixed:



	Remainder of 2019		2020		2021		2022		2023		Thereafter		Total
Gathering and processing based on minimum volume commitments	$	9,299	$	12,399	$	12,399	$	12,399	$	12,399	$	5,928	$	64,823
Transportation agreements	16,796		22,141		21,140		20,912		20,912		181,737		283,638
Other	1,225		1,560		—		—		—		—		2,785
Total	$	27,320	$	36,100	$	33,539	$	33,311	$	33,311	$	187,665	$	351,246

Due to the application of the practical expedients, the table above represents only a portion of the Partnership’s expected future consolidated revenues and it is not necessarily indicative of the expected trend in total revenues for the Partnership. Certain contracts have not been presented in the table above due to the term being one year or less and due to variability in the amount of performance obligation remaining, variability in the timing of recognition or variability in consideration. Acreage dedications do require us to perform future services but do not contain a minimum level of services and are therefore excluded from this presentation. Long-term supply and logistics arrangements contain variable timing, volumes and/or consideration and are excluded from this presentation. The table above also excludes revenue generated through operating lease arrangements.

(4) Lessee Arrangements

We primarily lease real estate including land and buildings, equipment, and vehicles. Leases of real estate generally require us to pay property taxes, insurance, and maintenance. Substantially all of our leases are classified as operating leases. ROU assets and lease liabilities for operating leases are included in Other assets, net, Accrued expenses and other current liabilities, and Other long-term liabilities in our consolidated balance sheets, depending on timing of settlement. For finance leases, the ROU assets

American Midstream Partners, LP and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

and lease liabilities are included in Property, plant and equipment, net, Current portion of long-term debt, and Long-term debt in our condensed consolidated balance sheets, depending on timing of settlement.

An ROU asset represents our right to use an underlying asset for the lease term and the corresponding lease liability represents our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU asset also includes any lease prepayments and excludes lease incentives. Our lease contracts may include options to extend or terminate the lease which are included in the measurement of our lease liability when it is reasonably certain that we will exercise the option. Certain vehicle leases provide for guarantees of residual value; therefore, we estimate and include in the determination of lease payments any amount probable of being owed under these residual value guarantees.

We apply a portfolio approach by asset class to apply the provisions of ASC 842. Lease renewal terms vary from 30 days to 5 years for asset classes such as equipment and vehicles, and up to 15 years or more for real estate. Short term leases with an initial term of 12 months or less that do not include a purchase option are not recorded on the balance sheet. Lease expense for short-term leases are recognized on a straight-line basis over the lease term and amounts related to short-term leases are disclosed within our financial statements. We have variable lease payments, including adjustments to lease payments based on an index or rate; such as a consumer price index, fair value adjustments to lease payments, and common area maintenance, real estate taxes, and insurance payments in triple-net real estate leases.

The following table presents the components of lease cost (in thousands):



	Three months ended March 31, 2019
Finance lease cost
Amortization of right-of-use assets	$	206
Interest on lease liabilities	38
Total finance lease cost	$	244

Operating lease cost	$	1,780
Short-term and variable lease cost	2
Sublease income	(547		)
Total operating lease cost	$	1,235

Amounts reported in the Condensed Consolidated Balance Sheets for leases where we are the lessee were as follows (in thousands):

American Midstream Partners, LP and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)



	March 31, 2019
Operating leases
Other assets, net	$	26,628

Accrued expenses and other current liabilities	$	6,589
Other long-term liabilities	24,974
Total operating lease liabilities	$	31,563

Finance leases
Property, plant and equipment, net	$	2,428

Current portion of long-term debt	$	841
Long-term debt	1,629
Total finance lease liabilities	$	2,470

Weighted average remaining lease term
Operating leases	13.8 years
Finance leases	9.4 years

Weighted average discount rate
Operating leases	5.0		%
Finance leases	6.7		%

American Midstream Partners, LP and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)



Maturity of Lease Liabilities (thousands)	Operating Leases			Finance Leases			Total
2019	$	6,061		$	742		$	6,803
2020	6,559			844			7,403
2021	4,056			611			4,667
2022	2,451			372			2,823
2023	1,780			163			1,943
2024	1,696			—			1,696
Thereafter	22,853			15			22,868
Total lease payments	45,456			2,747			48,203
Imputed interest (a)	(13,893		)	(277		)	(14,170		)
Total lease liabilities (b)	$	31,563		$	2,470		$	34,033
___________________________
(a) Calculated using the interest rate for each lease.
(b) Includes the current portion of $6.6 million for operating leases and $0.8 million for finance leases

At December 31, 2018, our non-cancelable contractual commitments related to operating lease obligations totaled $36.8 million. Operating lease commitments over the next five years and thereafter were as follows: $7.3 million in 2019, $4.5 million in 2020, $3.0 million in 2021, $1.5 million in 2022, $1.0 million in 2023 and $19.5 million thereafter.



Other Information
	Three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for operating leases, including interest portion of finance leases	$	1,868
Cash paid for principal portion of finance leases	$	268
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	2,206
Finance leases	$	82

(5) Inventory

Inventory consists of the following (in thousands):



	March 31, 2019		December 31, 2018
Crude oil	$	8,526	$	830
NGLs	278		236
Materials, supplies and equipment	120		120
Total inventory	$	8,924	$	1,186

(6) Risk Management Activities

We are exposed to certain market risks related to the volatility of commodity prices and changes in interest rates. To monitor and manage these market risks, we have established comprehensive risk management policies and procedures. We do not enter into derivative instruments for any purpose other than hedging commodity price risk, interest rate risk and weather risk. We do not speculate using derivative instruments. For more information regarding our risk management activities, see Note 1. Organization, Basis of Presentation and Summary of Significant Accounting Policies and Note 8. Risk Management Activities in our 2018 Form 10-K.

American Midstream Partners, LP and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

The following table summarizes the net notional volumes of our outstanding commodity-related derivatives, excluding those contracts that qualified for the NPNS exception as of March 31, 2019 and December 31, 2018, none of which were designated as hedges for accounting purposes.



	March 31, 2019		December 31, 2018
Commodity Swaps	Volume	Maturity	Volume	Maturity
Crude Oil Basis (barrels)	100,000	May 2019	208,000	February 2019

Financial Instruments Measured at Fair Value on a Recurring Basis - The following table summarizes the fair values of our derivative contracts included in the Condensed Consolidated Balance Sheets (in thousands):



		Asset Derivatives				Liability Derivatives
Type	Balance Sheet Classification	March 31, 2019		December 31, 2018		March 31, 2019			December 31, 2018
Commodity derivatives	Accrued expenses and other current liabilities	—				(256		)	(2		)

Interest rate swaps	Other current assets	3,521		4,314		—			—
Interest rate swaps	Other assets, net	4,027		6,017		—			—

Weather derivatives	Other current assets	206		454		—			—
	Total	$	7,754	$	10,785	$	(256	)	$	(2	)

As of March 31, 2019, and December 31, 2018, we had a combined notional principal amount of $450.0 million and $550.0 million, respectively, of variable-to-fixed interest rate swap agreements. As of March 31, 2019, the maximum length of time over which we have hedged a portion of our exposure due to interest rate risk is through December 31, 2022.

The fair value of our interest rate swaps was estimated based upon forward interest rates and volatility curves as well as other relevant economic measures, if necessary. Discount factors may be utilized to extrapolate a forecast of future cash flows associated with long dated transactions. The inputs, which represent Level 2 inputs in the valuation hierarchy, are obtained from independent pricing services and we have made no adjustments to those prices. The carrying value of our weather derivative represents its fair value due to the short term nature of the underlying contract.

The carrying value of all nonderivative financial instruments included in current assets (including cash and cash equivalents, restricted cash and accounts receivable) and current liabilities (excluding current portion of long-term debt) approximates the applicable fair value due to the short maturity of those instruments.

For the three months ended March 31, 2019 and 2018, the realized and unrealized gains (losses) associated with our commodity, interest rate and weather derivative instruments were recorded in our Condensed Consolidated Statements of Operations as follows (in thousands):



	Three months ended March 31,
	Realized			Unrealized
2019
Loss on commodity derivatives, net	$	(1,267	)	$	(254	)
Interest expense, net of capitalized interest	807			(2,783		)
Direct operating expenses	(248		)	—
Total	$	(708	)	$	(3,037	)
2018
Gain (loss) on commodity derivatives, net	$	119		$	(59	)
Interest expense, net of capitalized interest	1,350			5,171
Direct operating expenses	(278		)	—
Total	$	1,191		$	5,112

American Midstream Partners, LP and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(7) Goodwill and Intangible Assets

Goodwill consists of the following (in thousands):



	March 31, 2019		December 31, 2018
Liquid Pipelines and Services	$	46,749	$	46,749
Offshore Pipelines and Services	4,974		4,974
Total	$	51,723	$	51,723

Intangible assets, net, consist of the following (in thousands):



	March 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	64,744	$	(17,775	)	$	46,969
Customer contracts	94,692		(54,402		)	40,290
Dedicated acreage	42,547		(7,935		)	34,612
Collaborative arrangements	11,884		(2,476		)	9,408
Other	198		(30		)	168
Total	$	214,065	$	(82,618	)	$	131,447

	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	64,744	$	(17,033	)	$	47,711
Customer contracts	94,692		(53,156		)	41,536
Dedicated acreage	42,547		(7,592		)	34,955
Collaborative arrangements	11,884		(2,264		)	9,620
Other	198		(28		)	170
Total	$	214,065	$	(80,073	)	$	133,992

These intangible assets have definite lives and are subject to amortization on a straight-line basis over their economic lives, currently ranging from approximately 5 years to 30 years.

Amortization expense related to our intangible assets totaled $2.5 million and $2.7 million for the three months ended March 31, 2019 and 2018, respectively. The estimated aggregate amortization expected to be recognized for the remainder of 2019 and each of the four succeeding fiscal years is $7.6 million, $10.2 million, $10.2 million, $9.3 million and $6.6 million, respectively.

(8) Investments in unconsolidated affiliates

The following table presents the activity in our equity method investments in unconsolidated affiliates (in thousands):



	Delta House ⁽¹⁾
	FPS^(2,4,5)			OGL^(2,4,5)			Destin⁽⁴⁾			Tri-States⁽³⁾			Okeanos⁽⁴⁾			Wilprise⁽³⁾			Cayenne⁽³⁾			Total
Ownership %	35.7%			35.7%			66.7%			16.7%			66.7%			25.3%			50.0%

Balances at January 1, 2019	$	91,466		$	41,815		$	114,351		$	51,329		$	20,641		$	4,507		$	13,687		$	337,796
Earnings in unconsolidated affiliates	10,488			4,456			5,693			1,132			2,177			200			1,964			26,110
Distributions	(15,521		)	(6,296		)	(10,095		)	(2,184		)	(5,278		)	(272		)	(2,500		)	(42,146		)
Balances at March 31, 2019	$	86,433		$	39,975		$	109,949		$	50,277		$	17,540		$	4,435		$	13,151		$	321,760

^{___________________________________________________}

⁽¹⁾ Represents direct and indirect ownership interests in Class A units and common units.

American Midstream Partners, LP and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

⁽²⁾ FPS denotes Floating Production System LLC whereas OGL denotes Oil & Gas Lateral LLC.

⁽³⁾ Included in our Liquid Pipelines and Services segment.

⁽⁴⁾ Included in our Offshore Pipelines and Services segment.

⁽⁵⁾Reflects a reclassification of investment of approximately $0.4 million between FPS and OGL as of January 1, 2019.

The difference between our carrying value and the underlying equity in the net assets of our equity investments are assigned to the investment's assets and liabilities based on an analysis of the factors giving rise to the basis difference. The amortization of the basis difference is included in Earnings from unconsolidated affiliates in our Consolidated Statements of Operations.

The following table represents the basis difference by unconsolidated affiliate (in thousands):



	Delta House
	FPS		OGL			Destin		Tri-States		Okeanos			Wilprise		Cayenne			Total
December 31, 2018	$	41,762	$	(8,424	)	$	826	$	30,587	$	(57,039	)	$	1,374	$	(3,666	)	$	5,420
March 31, 2019	$	41,343	$	(8,338	)	$	812	$	30,210	$	(56,164	)	$	1,346	$	(3,599	)	$	5,610

The following tables present the summarized combined financial information for our equity investments (amounts represent 100% of investee financial information) (in thousands):



Balance Sheets	March 31, 2019		December 31, 2018
Current assets	$	89,964	$	96,116
Non-current assets	1,233,777		1,239,733
Current liabilities	74,139		14,700
Non-current liabilities	486,320		542,047



	Three months ended March 31,
Statements of Operations:	2019		2018
Revenue	$	89,756	$	56,898
Operating expenses	6,905		6,292
Net income	67,784		32,845

(9) Debt Obligations

Price	1.00	EPS	6,980,000
Shares	-0	P/E	0
MCap	-0	P/FCF	0
Net Debt	451	EBIT	91
TEV	451	TEV/EBIT	5
TTM 2019-03-31, in MM, except price, ratios

10-Q	2019-03-31	Filed 2019-05-10
10-K	2018-12-31	Filed 2019-04-01
10-Q	2018-09-30	Filed 2018-11-09
10-Q	2018-06-30	Filed 2018-08-14
S-1	2018-04-20	Public Filing
10-Q	2018-03-31	Filed 2018-05-15
10-K	2017-12-31	Filed 2018-04-09
10-Q	2017-09-30	Filed 2017-11-09
10-Q	2017-06-30	Filed 2017-08-10
10-Q	2017-03-31	Filed 2017-05-15
10-K	2016-12-31	Filed 2017-03-28
10-Q	2016-09-30	Filed 2016-11-08
10-Q	2016-06-30	Filed 2016-08-08
10-Q	2016-03-31	Filed 2016-05-09
10-K	2015-12-31	Filed 2016-03-07
10-Q	2015-09-30	Filed 2015-11-09
10-Q	2015-06-30	Filed 2015-08-10
10-Q	2015-03-31	Filed 2015-05-11
10-K	2014-12-31	Filed 2015-03-10
10-Q	2014-09-30	Filed 2014-11-10
10-Q	2014-06-30	Filed 2014-08-11
10-Q	2013-12-31	Filed 2014-05-12
10-K	2013-12-31	Filed 2014-03-11
10-Q	2013-09-30	Filed 2013-11-13
10-Q	2013-06-30	Filed 2013-08-14
10-Q	2013-03-31	Filed 2013-05-14
10-Q	2012-09-30	Filed 2012-11-14
10-Q	2012-06-30	Filed 2012-08-14
10-Q	2012-03-31	Filed 2012-05-14
10-K	2011-12-31	Filed 2012-03-19
10-Q	2011-09-30	Filed 2011-11-14
10-Q	2011-06-30	Filed 2011-09-09

8-K	2019-07-26
8-K	2019-07-18
8-K	2019-06-28
8-K	2019-06-05
8-K	2019-05-25
8-K	2019-05-10
8-K	2019-04-24
8-K	2019-04-05
8-K	2019-04-01
8-K	2019-03-17
8-K	2018-12-27
8-K	2018-12-20
8-K	2018-12-10
8-K	2018-11-15
8-K	2018-11-08
8-K	2018-08-09
8-K	2018-07-31
8-K	2018-07-29
8-K	2018-06-29
8-K	2018-06-16
8-K	2018-06-01
8-K	2018-05-15
8-K	2018-05-03
8-K	2018-04-20
8-K	2018-04-10
8-K	2018-03-12
8-K	2018-03-11
8-K	2018-02-16
8-K	2018-01-25

EX-3.15	amidgpresolutions-amendno1.htm
EX-31.1	a2019q1exhibit311302certif.htm
EX-31.2	a2019q1exhibit312302certif.htm
EX-32.1	a2019q1exhibit321906certif.htm
EX-32.2	a2019q1exhibit322906certif.htm

AMID 10Q Quarterly Report

American Midstream Partners Earnings 2019-03-31