Crestwood Equity Partners LP [CEQP] Filings

10-Q 1 ceqp-20220331.htm 10-Q ceqp-20220331

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 March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to .


(Exact name of registrant as specified in its charter)	Commission file number	State or other jurisdiction of incorporation or organization	(I.R.S. Employer Identification No.)
Crestwood Equity Partners LP	001-34664	Delaware	43-1918951
Crestwood Midstream Partners LP	001-35377	Delaware	20-1647837

811 Main Street

Suite 3400

Houston

Texas

77002

(Address of principal executive offices)

(Zip code)

(832) 519-2200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


	Title of each class	Trading Symbol	Name of each exchange on which registered
Crestwood Equity Partners LP	Common Units representing limited partnership interests	CEQP	New York Stock Exchange
Crestwood Equity Partners LP	Preferred Units representing limited partnership interests	CEQP-P	New York Stock Exchange
Crestwood Midstream Partners LP	None	None	None

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.

Crestwood Equity Partners LP

Yes

☒

☐

Crestwood Midstream Partners LP

Yes

☒

☐

(Explanatory Note: Crestwood Midstream Partners LP is currently a voluntary filer and is not subject to the filing requirements of the Securities Exchange Act of 1934. Although not subject to these filing requirements, Crestwood Midstream Partners LP 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.)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Crestwood Equity Partners LP

Yes

☒

☐

Crestwood Midstream Partners LP

Yes

☒

☐

Table of Contents

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.

Crestwood Equity Partners LP

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

Crestwood Midstream Partners LP

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.


Crestwood Equity Partners LP						☐
Crestwood Midstream Partners LP						☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Crestwood Equity Partners LP

Yes

☐

☒

Crestwood Midstream Partners LP

Yes

☐

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date (April 22, 2022).



Crestwood Equity Partners LP						97,966,187
Crestwood Midstream Partners LP						None

Crestwood Midstream Partners LP, as a wholly-owned subsidiary of a reporting company, meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this report with the reduced disclosure format as permitted by such instruction.

Table of Contents

CRESTWOOD EQUITY PARTNERS LP

CRESTWOOD MIDSTREAM PARTNERS LP

INDEX TO FORM 10-Q


			Page
Part I – Financial Information

Item 1. Financial Statements (Unaudited):

Crestwood Equity Partners LP

Consolidated Balance Sheets			4

Consolidated Statements of Operations			5

Consolidated Statements of Partners’ Capital			6

Consolidated Statements of Cash Flows			7

Crestwood Midstream Partners LP

Consolidated Balance Sheets			9

Consolidated Statements of Operations			10

Consolidated Statements of Partners’ Capital			11

Consolidated Statements of Cash Flows			12

Notes to Consolidated Financial Statements			14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			34

Item 3. Quantitative and Qualitative Disclosures About Market Risk			44

Item 4. Controls and Procedures			44

Part II – Other Information

Item 1. Legal Proceedings			45

Item 1A. Risk Factors			45

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			45

Item 3. Defaults Upon Senior Securities			45

Item 4. Mine Safety Disclosures			45

Item 5. Other Information			45

Item 6. Exhibits			46

Signature			49

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CRESTWOOD EQUITY PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(in millions, except unit information)


	March 31, 2022		December 31, 2021
	(unaudited)
Assets
Current assets:
Cash	$	11.9	$	13.3

Accounts receivable, less allowance for doubtful accounts of $0.5 million and $0.6 million at March 31, 2022 and December 31, 2021	485.6		378.0
Inventory	94.0		156.5
Assets from price risk management activities	25.5		42.1

Prepaid expenses and other current assets	42.4		14.8
Total current assets	659.4		604.7
Property, plant and equipment	5,047.0		3,771.5
Less: accumulated depreciation	1,046.6		992.1
Property, plant and equipment, net	4,000.4		2,779.4
Intangible assets	1,623.1		1,126.1
Less: accumulated amortization	412.7		393.2
Intangible assets, net	1,210.4		732.9
Goodwill	177.9		138.6
Operating lease right-of-use assets, net	20.3		27.4
Investments in unconsolidated affiliates	164.8		155.8
Other non-current assets	6.9		6.9
Total assets	$	6,240.1	$	4,445.7

Liabilities and capital
Current liabilities:
Accounts payable	$	446.3	$	336.5
Accrued expenses and other liabilities	190.3		147.1
Liabilities from price risk management activities	107.6		114.6

Current portion of long-term debt	0.2		0.2
Total current liabilities	744.4		598.4
Long-term debt, less current portion	2,809.9		2,052.1

Other long-term liabilities	283.1		258.7
Deferred income taxes	2.2		2.3
Total liabilities	3,839.6		2,911.5
Commitments and contingencies (Note 9)
Interest of non-controlling partner in subsidiary	434.5		434.6
Crestwood Equity Partners LP partners’ capital (97,980,192 and 62,991,511 common units issued and outstanding at March 31, 2022 and December 31, 2021)	1,354.0		487.6
Preferred units (71,257,445 units issued and outstanding at both March 31, 2022 and December 31, 2021)	612.0		612.0
Total partners’ capital	1,966.0		1,099.6
Total liabilities and capital	$	6,240.1	$	4,445.7

See accompanying notes.

Table of Contents


CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per unit data) (unaudited)
	Three Months Ended
	March 31,
		2022		2021
Revenues:
Product revenues		$	1,390.5	$	930.6
Product revenues - related party (Note 15)		60.6		4.9
Service revenues		95.6		97.2
Service revenues - related party (Note 15)		37.1		—
Total revenues		1,583.8		1,032.7

Costs of product/services sold (exclusive of items shown separately below):
Product costs		1,290.8		767.6
Product costs - related party (Note 15)		68.5		41.1
Service costs		5.1		5.1
Total costs of products/services sold		1,364.4		813.8

Operating expenses and other:
Operations and maintenance		42.4		32.8
General and administrative		43.4		18.7
Depreciation, amortization and accretion		74.8		59.2
Loss on long-lived assets, net		3.8		1.4

		164.4		112.1
Operating income		55.0		106.8
Earnings (loss) from unconsolidated affiliates, net		3.0		(103.7)
Interest and debt expense, net		(36.1)		(36.0)
Loss on modification/extinguishment of debt		—		(5.5)
Other income, net		0.3		—
Income (loss) before income taxes		22.2		(38.4)
Benefit for income taxes		—		0.1
Net income (loss)		22.2		(38.3)
Net income attributable to non-controlling partner		10.2		10.1
Net income (loss) attributable to Crestwood Equity Partners LP		12.0		(48.4)
Net income attributable to preferred units		15.0		15.0
Net loss attributable to partners		$	(3.0)	$	(63.4)

Net loss per limited partner unit: (Note 12)
Basic and Diluted		$	(0.04)	$	(0.86)

Weighted-average limited partners’ units outstanding:
Basic and Diluted		86.0		74.1

See accompanying notes.

Table of Contents

CRESTWOOD EQUITY PARTNERS LP

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(in millions)

(unaudited)


	Preferred			Common
	Units	Capital		Units	Capital		Total Partners’ Capital
Balance at December 31, 2021	71.3	$	612.0	63.0	$	487.6	$	1,099.6
Distributions to partners	—	(15.0)		—	(60.9)		(75.9)
Issuance of common units (Note 3)				33.8	930.0		930.0
Unit-based compensation charges	—	—		1.6	13.0		13.0
Taxes paid for unit-based compensation vesting	—	—		(0.5)	(14.9)		(14.9)
Other	—	—		0.1	2.2		2.2
Net income (loss)	—	15.0		—	(3.0)		12.0
Balance at March 31, 2022	71.3	$	612.0	98.0	$	1,354.0	$	1,966.0


	Preferred			Partners
	Units	Capital		Common Units	Subordinated Units	Capital		Total Partners’ Capital
Balance at December 31, 2020	71.3	$	612.0	73.6	0.4	$	1,043.4	$	1,655.4
Crestwood Holdings Transactions (Note 11)	—	—		—	—	(273.2)		(273.2)
Retirement of units (Note 11)	—	—		(11.5)	(0.4)	—		—
Distributions to partners	—	(15.0)		—	—	(46.4)		(61.4)
Unit-based compensation charges	—	—		1.1	—	3.7		3.7
Taxes paid for unit-based compensation vesting	—	—		(0.4)	—	(8.1)		(8.1)
Other	—	—		—	—	(0.4)		(0.4)
Net income (loss)	—	15.0		—	—	(63.4)		(48.4)
Balance at March 31, 2021	71.3	$	612.0	62.8	—	$	655.6	$	1,267.6

See accompanying notes.

Table of Contents


CRESTWOOD EQUITY PARTNERS LP CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)
	Three Months Ended
	March 31,
	2022		2021
Operating activities
Net income (loss)	$	22.2	$	(38.3)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and accretion	74.8		59.2
Amortization of debt-related deferred costs and fair value adjustment	0.8		1.7
Unit-based compensation charges	8.6		2.3
Loss on long-lived assets, net	3.8		1.4

Loss on modification/extinguishment of debt	—		5.5
(Earnings) loss from unconsolidated affiliates, net, adjusted for cash distributions received	(0.4)		103.8
Deferred income taxes	(0.1)		—
Other	(0.1)		0.1
Changes in operating assets and liabilities	112.9		122.8





Net cash provided by operating activities	222.5		258.5
Investing activities
Acquisition, net of cash acquired (Note 3)	(145.1)		—
Purchases of property, plant and equipment	(26.4)		(9.3)
Investments in unconsolidated affiliates	(14.5)		(10.2)
Capital distributions from unconsolidated affiliates	5.9		17.3
Net proceeds from sale of assets	0.4		0.2

Net cash used in investing activities	(179.7)		(2.0)
Financing activities
Proceeds from the issuance of long-term debt	919.1		1,126.3
Payments on long-term debt	(859.1)		(1,018.1)
Payments on finance leases	(0.8)		(0.7)
Payments for deferred financing costs	(1.7)		(11.1)




Payments for Crestwood Holdings Transactions	—		(271.8)
Distributions to partners	(60.9)		(46.4)
Distributions to non-controlling partner	(10.3)		(9.3)
Distributions to preferred unitholders	(15.0)		(15.0)

Taxes paid for unit-based compensation vesting	(14.9)		(8.1)
Other	(0.6)		—
Net cash used in financing activities	(44.2)		(254.2)
Net change in cash	(1.4)		2.3
Cash at beginning of period	13.3		14.0
Cash at end of period	$	11.9	$	16.3

Table of Contents

CRESTWOOD EQUITY PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in millions)

(unaudited)


	Three Months Ended
	March 31,
	2022		2021
Supplemental schedule of non-cash investing activities
Net change to property, plant and equipment through accounts payable and accrued expenses	$	3.8	$	(2.2)

Acquisition, net of cash acquired:
Current assets	$	63.4	$	—
Property, plant and equipment	1,245.8		—
Intangible assets	497.0		—
Goodwill	39.3		—
Current liabilities	(45.9)		—
Debt	(698.7)		—
Change in invested capital of Crestwood Equity Partners LP, net	(930.0)		—
Other liabilities	(25.8)		—
Total acquisition, net of cash acquired	$	145.1	$	—

See accompanying notes.

Table of Contents

CRESTWOOD MIDSTREAM PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(in millions)


	March 31, 2022		December 31, 2021
	(unaudited)
Assets
Current assets:
Cash	$	11.3	$	12.9

Accounts receivable, less allowance for doubtful accounts of $0.5 million and $0.6 million at March 31, 2022 and December 31, 2021	485.6		378.0
Inventory	94.0		156.5
Assets from price risk management activities	25.5		42.1

Prepaid expenses and other current assets	42.4		14.4
Total current assets	658.8		603.9
Property, plant and equipment	5,376.2		4,100.8
Less: accumulated depreciation	1,250.9		1,193.0
Property, plant and equipment, net	4,125.3		2,907.8
Intangible assets	1,623.1		1,126.1
Less: accumulated amortization	412.7		393.2
Intangible assets, net	1,210.4		732.9
Goodwill	177.9		138.6
Operating lease right-of-use assets, net	20.3		27.4
Investments in unconsolidated affiliates	164.8		155.8
Other non-current assets	4.6		4.8
Total assets	$	6,362.1	$	4,571.2
Liabilities and capital
Current liabilities:
Accounts payable	$	446.2	$	336.4
Accrued expenses and other liabilities	188.9		146.1
Liabilities from price risk management activities	107.6		114.6

Current portion of long-term debt	0.2		0.2
Total current liabilities	742.9		597.3
Long-term debt, less current portion	2,809.9		2,052.1

Other long-term liabilities	281.6		254.1
Deferred income taxes	0.8		0.8
Total liabilities	3,835.2		2,904.3
Commitments and contingencies (Note 9)
Interest of non-controlling partner in subsidiary	434.5		434.6
Partners’ capital	2,092.4		1,232.3



Total liabilities and capital	$	6,362.1	$	4,571.2

See accompanying notes.

Table of Contents

CRESTWOOD MIDSTREAM PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions)

(unaudited)


	Three Months Ended
	March 31,
		2022		2021
Revenues:
Product revenues		$	1,390.5	$	930.6
Product revenues - related party (Note 15)		60.6		4.9
Service revenues		95.6		97.2
Service revenues - related party (Note 15)		37.1		—
Total revenues		1,583.8		1,032.7

Costs of product/services sold (exclusive of items shown separately below):
Product costs		1,290.8		767.6
Product costs - related party (Note 15)		68.5		41.1
Service costs		5.1		5.1
Total costs of product/services sold		1,364.4		813.8

Operating expenses and other:
Operations and maintenance		42.4		32.8
General and administrative		41.7		17.2
Depreciation, amortization and accretion		78.2		62.8
Loss on long-lived assets, net		3.8		1.4

		166.1		114.2
Operating income		53.3		104.7
Earnings (loss) from unconsolidated affiliates, net		3.0		(103.7)
Interest and debt expense, net		(36.1)		(36.0)
Loss on modification/extinguishment of debt		—		(5.5)
Income (loss) before income taxes		20.2		(40.5)
Benefit for income taxes		—		0.1
Net income (loss)		20.2		(40.4)
Net income attributable to non-controlling partner		10.2		10.1
Net income (loss) attributable to Crestwood Midstream Partners LP		$	10.0	$	(50.5)

See accompanying notes.

Table of Contents

CRESTWOOD MIDSTREAM PARTNERS LP

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(in millions)

(unaudited)


	Total Partners’ Capital
Balance at December 31, 2021	$	1,232.3
Non-cash contribution from partner (Note 11)	1,075.1
Cash contribution from partner (Note 11)	14.9
Distributions to partners	(238.1)
Unit-based compensation charges	13.0
Taxes paid for unit-based compensation vesting	(14.9)
Other	0.1
Net income	10.0
Balance at March 31, 2022	$	2,092.4


	Total Partners’ Capital
Balance at December 31, 2020	$	1,805.1
Distributions to partners	(334.0)
Unit-based compensation charges	2.3
Taxes paid for unit-based compensation vesting	(8.1)
Other	(0.1)
Net loss	(50.5)
Balance at March 31, 2021	$	1,414.7

See accompanying notes.

Table of Contents

CRESTWOOD MIDSTREAM PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	Three Months Ended
	March 31,
	2022		2021
Operating activities
Net income (loss)	$	20.2	$	(40.4)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and accretion	78.2		62.8
Amortization of debt-related deferred costs and fair value adjustment	0.8		1.7
Unit-based compensation charges	8.6		2.3
Loss on long-lived assets, net	3.8		1.4

Loss on modification/extinguishment of debt	—		5.5
(Earnings) loss from unconsolidated affiliates, net, adjusted for cash distributions received	(0.4)		103.8

Other	(0.1)		0.1
Changes in operating assets and liabilities	112.8		122.0
Net cash provided by operating activities	223.9		259.2
Investing activities

Purchases of property, plant and equipment	(26.4)		(9.3)
Investments in unconsolidated affiliates	(14.5)		(10.2)
Capital distributions from unconsolidated affiliates	5.9		17.3
Net proceeds from sale of assets	0.4		0.2

Net cash used in investing activities	(34.6)		(2.0)
Financing activities
Proceeds from the issuance of long-term debt	919.1		1,126.3
Payments on long-term debt	(859.1)		(1,018.1)
Payments on finance leases	(0.8)		(0.7)
Payments for deferred financing costs	(1.7)		(11.1)

Contribution from partner	14.9		—
Distributions to partners	(238.1)		(334.0)
Distributions to non-controlling partner	(10.3)		(9.3)
Taxes paid for unit-based compensation vesting	(14.9)		(8.1)

Net cash used in financing activities	(190.9)		(255.0)
Net change in cash	(1.6)		2.2
Cash at beginning of period	12.9		13.7
Cash at end of period	$	11.3	$	15.9
Supplemental schedule of non-cash investing activities
Net change to property, plant and equipment through accounts payable and accrued expenses	$	3.8	$	(2.2)

Table of Contents

CRESTWOOD MIDSTREAM PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in millions)

(unaudited)


	Three Months Ended
	March 31,
	2022		2021
Supplemental schedule of non-cash financing activities
Non-cash contribution:
Current assets	$	63.4	$	—
Property, plant and equipment	1,245.8		—
Intangible assets	497.0		—
Goodwill	39.3		—
Current liabilities	(45.9)		—
Debt	(698.7)		—
Other liabilities	(25.8)		—
Total non-cash contribution	$	1,075.1	$	—

See accompanying notes.

Table of Contents

CRESTWOOD EQUITY PARTNERS LP

CRESTWOOD MIDSTREAM PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1 – Organization and Business Description

The accompanying notes to the consolidated financial statements apply to Crestwood Equity Partners LP (Crestwood Equity or CEQP) and Crestwood Midstream Partners LP (Crestwood Midstream or CMLP), unless otherwise indicated.

The accompanying consolidated financial statements and related notes should be read in conjunction with our 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 25, 2022. The financial information as of March 31, 2022, and for the three months ended March 31, 2022 and 2021, is unaudited. The consolidated balance sheets as of December 31, 2021 were derived from the audited balance sheets filed in our 2021 Annual Report on Form 10-K.

References in this report to “we,” “us,” “our,” “ours,” “our company,” the “partnership,” the “Company,” “Crestwood Equity,” “CEQP,” and similar terms refer to either Crestwood Equity Partners LP itself or Crestwood Equity Partners LP and its consolidated subsidiaries, as the context requires. Unless otherwise indicated, references to “Crestwood Midstream” and “CMLP” refer to either Crestwood Midstream Partners LP itself or Crestwood Midstream Partners LP and its consolidated subsidiaries.

Organization

Crestwood Equity Partners LP. CEQP is a publicly-traded (NYSE: CEQP) Delaware limited partnership formed in March 2001. Crestwood Equity GP LLC (Crestwood Equity GP), our wholly-owned subsidiary, owns our non-economic general partnership interest.

Crestwood Midstream Partners LP. Crestwood Equity owns a 99.9% limited partnership interest in Crestwood Midstream and Crestwood Gas Services GP LLC (CGS GP), a wholly-owned subsidiary of Crestwood Equity, owns a 0.1% limited partnership interest in Crestwood Midstream. Crestwood Midstream GP LLC, a wholly-owned subsidiary of Crestwood Equity, owns the non-economic general partnership interest of Crestwood Midstream.

Business Description

Crestwood Equity develops, acquires, owns or controls, and operates primarily fee-based assets and operations within the energy midstream sector. We provide broad-ranging infrastructure solutions across the value chain to service premier liquids-rich natural gas and crude oil shale plays across the United States. We own and operate a diversified portfolio of natural gas liquids (NGLs), crude oil, natural gas and produced water gathering, processing, storage, disposal and transportation assets that connect fundamental energy supply with energy demand across the United States. Crestwood Equity is a holding company and all of its consolidated operating assets are owned by or through its wholly-owned subsidiary, Crestwood Midstream.

See Note 13 for information regarding our operating and reporting segments.

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

Our consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and include the accounts of all consolidated subsidiaries after the elimination of all intercompany accounts and transactions. In management’s opinion, all necessary adjustments to fairly present our results of operations, financial position and cash flows for the periods presented have been made and all such adjustments are of a normal and recurring nature. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the SEC.

Table of Contents

Significant Accounting Policies

There were no material changes in our significant accounting policies from those described in our 2021 Annual Report on Form 10-K.

Note 3 – Acquisition

On October 25, 2021, we entered into a merger agreement to acquire Oasis Midstream Partners LP (Oasis Midstream) in an equity and cash transaction (the Merger). Oasis Midstream is a master limited partnership which operates a diversified portfolio of midstream assets located in the Williston and Delaware Basins and its operations include natural gas services (gathering, compression, processing and gas lift supply), crude oil services (gathering, terminalling and transportation), and water services (gathering and disposal of produced and flowback water and freshwater distribution).

On February 1, 2022, we completed the merger with Oasis Midstream, which was valued at approximately $1.8 billion. Pursuant to the merger agreement, Oasis Petroleum Inc. (Oasis Petroleum) received $150 million in cash plus approximately 20.9 million newly issued CEQP common units in exchange for its 33.8 million common units held in Oasis Midstream. In addition, Oasis Midstream’s public unitholders received approximately 12.9 million newly issued CEQP common units in exchange for the approximately 14.8 million Oasis Midstream common units held by them. Additionally, under the merger agreement Oasis Petroleum received a $10 million cash payment in exchange for its ownership of the general partner of Oasis Midstream.

We accounted for the Merger as a business combination using the acquisition method of accounting. In addition, the purchase accounting reflects the adoption of Accounting Standards Update 2021-08, Business Combinations (Topic 805) during the three months ended March 31, 2022. The financial results of Oasis Midstream’s Williston Basin operations are included in our gathering and processing north segment and Oasis Midstream’s Delaware Basin operations are included in our gathering and processing south segment from the date of acquisition. During the three months ended March 31, 2022, we recognized approximately $17 million of transaction costs related to the Merger, which are included in general and administrative expenses in our consolidated statements of operations.

The purchase price has been allocated to the assets acquired and liabilities assumed based on preliminary fair values. Certain preliminary fair values are Level 3 fair value measurements and were developed by management with the assistance of a third-party valuation firm. We estimated the fair value of the senior notes assumed based on quoted market prices for similar issuances which are considered Level 2 fair value measurements. The preliminary fair values were estimated primarily utilizing market related information and other projections on the performance of the assets acquired, including an analysis of discounted cash flows at a discount rate of approximately 12%. The preliminary fair values of property, plant and equipment, intangible assets and goodwill and their allocation to our segments are subject to change pending a final determination of the fair values as more information is received about their respective values. We expect to finalize the purchase price allocation for this transaction in 2022.

Table of Contents

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):


Cash	$	14.9
Other current assets	63.4
Property, plant and equipment	1,245.8
Intangible assets	497.0
Total assets acquired

Crestwood Equity Partners LP [CEQP] Filings

Crestwood Equity Partners LP [CEQP-P] Filings