GENESIS ENERGY LP [GEL] Filings

10-Q 1 gel-20230930.htm 10-Q gel-20230930

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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 September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-12295

GENESIS ENERGY, L.P.

(Exact name of registrant as specified in its charter)

Delaware

76-0513049

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

811 Louisiana, Suite 1200,

Houston

77002

(Address of principal executive offices)

(Zip code)

Registrant’s telephone number, including area code:

(713)

860-2500


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	GEL	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

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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 ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. There were 122,424,321 Class A Common Units and 39,997 Class B Common Units outstanding as of November 1, 2023.

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GENESIS ENERGY, L.P.

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		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022	3
	Unaudited Condensed Consolidated Statements of Operations	4
	Unaudited Condensed Consolidated Statements of Comprehensive Income	5
	Unaudited Condensed Consolidated Statements of Partners’ Capital	6
	Unaudited Condensed Consolidated Statements of Cash Flows	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
	1. Organization and Basis of Presentation and Consolidation	8
	2. Recent Accounting Developments	8
	3. Revenue Recognition	9
	4. Business Consolidation	10
	5. Lease Accounting	12
	6. Inventories	13
	7. Fixed Assets, Mineral Leaseholds, and Asset Retirement Obligations	14
	8. Equity Investees	15
	9. Intangible Assets	16
	10. Debt	17
	11. Partners’ Capital, Mezzanine Capital and Distributions	18
	12. Net Income Per Common Unit	21
	13. Business Segment Information	22
	14. Transactions with Related Parties	25
	15. Supplemental Cash Flow Information	25
	16. Derivatives	26
	17. Fair-Value Measurements	30
	18. Commitments and Contingencies	31

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	55
Item 4.	Controls and Procedures	55
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	57
SIGNATURES		58

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GENESIS ENERGY, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except units)


	September 30, 2023		December 31, 2022
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	21,101	$	7,930
Restricted cash	18,804		18,637
Accounts receivable - trade, net	871,298		721,567
Inventories	126,946		78,143

Other	53,396		26,770
Total current assets	1,091,545		853,047
FIXED ASSETS, at cost	6,248,511		5,865,038
Less: Accumulated depreciation	(1,925,879)		(1,768,465)
Net fixed assets	4,322,632		4,096,573
MINERAL LEASEHOLDS, net of accumulated depletion	541,866		545,122

EQUITY INVESTEES	270,294		284,486
INTANGIBLE ASSETS, net of amortization	141,703		127,320
GOODWILL	301,959		301,959
RIGHT OF USE ASSETS, net	229,785		125,277
OTHER ASSETS, net of amortization	38,658		32,208
TOTAL ASSETS	$	6,938,442	$	6,365,992
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Accounts payable - trade	$	660,577	$	427,961
Accrued liabilities	363,136		281,146

Total current liabilities	1,023,713		709,107
SENIOR SECURED CREDIT FACILITY	198,400		205,400
SENIOR UNSECURED NOTES, net of debt issuance costs and premium	3,011,386		2,856,312
ALKALI SENIOR SECURED NOTES, net of debt issuance costs and discount	394,320		402,442
DEFERRED TAX LIABILITIES	17,577		16,652
OTHER LONG-TERM LIABILITIES	541,373		400,617
Total liabilities	5,186,769		4,590,530

MEZZANINE CAPITAL:
Class A Convertible Preferred Units, 23,853,538 and 25,336,778 issued and outstanding at September 30, 2023 and December 31, 2022, respectively	839,695		891,909


PARTNERS’ CAPITAL:
Common unitholders, 122,464,318 and 122,579,218 units issued and outstanding at September 30, 2023 and December 31, 2022, respectively	547,622		567,277
Accumulated other comprehensive income	6,479		6,114
Noncontrolling interests	357,877		310,162
Total partners’ capital	911,978		883,553
TOTAL LIABILITIES, MEZZANINE CAPITAL AND PARTNERS’ CAPITAL	$	6,938,442	$	6,365,992

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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GENESIS ENERGY, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2023		2022			2023		2022
REVENUES:
Offshore pipeline transportation	$	106,297	$	89,805		$	289,151	$	239,958
Soda and sulfur services	423,575		312,681			1,331,078		916,963
Marine transportation	80,220		77,795			240,789		209,889
Onshore facilities and transportation	197,526		240,967			541,874		708,110
Total revenues	807,618		721,248			2,402,892		2,074,920
COSTS AND EXPENSES:
Onshore facilities and transportation product costs	171,142		213,680			469,627		630,985
Onshore facilities and transportation operating costs	17,648		17,697			52,867		50,276
Marine transportation operating costs	53,371		63,074			162,955		165,726
Soda and sulfur services operating costs	344,963		235,308			1,123,850		699,847
Offshore pipeline transportation operating costs	23,651		25,410			71,515		74,785
General and administrative	16,770		17,038			48,253		52,825
Depreciation, depletion and amortization	68,379		73,946			209,966		217,125
Gain on sale of asset	—		—			—		(40,000)

Total costs and expenses	695,924		646,153			2,139,033		1,851,569
OPERATING INCOME	111,694		75,095			263,859		223,351
Equity in earnings of equity investees	17,242		13,236			49,606		40,252
Interest expense	(61,580)		(57,710)			(184,057)		(168,773)
Other expense	—		(21,388)			(1,812)		(10,758)
Income from operations before income taxes	67,356		9,233		—	127,596		84,072
Income tax expense	(574)		(660)			(1,748)		(1,535)


NET INCOME	66,782		8,573			125,848		82,537
Net income attributable to noncontrolling interests	(8,712)		(5,188)			(20,078)		(18,612)
Net income attributable to redeemable noncontrolling interests	—		—			—		(30,443)
NET INCOME ATTRIBUTABLE TO GENESIS ENERGY, L.P.	$	58,070	$	3,385		$	105,770	$	33,482
Less: Accumulated distributions and returns attributable to Class A Convertible Preferred Units	(22,308)		(18,684)			(69,220)		(56,052)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON UNITHOLDERS	$	35,762	$	(15,299)		$	36,550	$	(22,570)
NET INCOME (LOSS) PER COMMON UNIT (Note 12):


Basic and Diluted	$	0.29	$	(0.12)		$	0.30	$	(0.18)
WEIGHTED AVERAGE OUTSTANDING COMMON UNITS:
Basic and Diluted	122,521		122,579			122,559		122,579

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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GENESIS ENERGY, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income	$	66,782	$	8,573	$	125,848	$	82,537
Other comprehensive income:
Decrease in benefit plan liability	122		122		365		365
Total Comprehensive income	66,904		8,695		126,213		82,902
Comprehensive income attributable to noncontrolling interests	(8,712)		(5,188)		(20,078)		(18,612)
Comprehensive income attributable to redeemable noncontrolling interests	—		—		—		(30,443)
Comprehensive income attributable to Genesis Energy, L.P.	$	58,192	$	3,507	$	106,135	$	33,847

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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GENESIS ENERGY, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(In thousands)


	Number of Common Units	Partners’ Capital		Noncontrolling Interests		Accumulated Other Comprehensive Income		Total
Partners’ capital, June 30, 2023	122,579	$	531,291	$	334,225	$	6,357	$	871,873
Repurchase of Class A common units	(115)	(1,044)		—		—		(1,044)
Net income	—	58,070		8,712		—		66,782
Cash distributions to partners	—	(18,387)		—		—		(18,387)
Cash distributions to noncontrolling interests	—	—		(10,980)		—		(10,980)
Cash contributions from noncontrolling interests	—	—		25,920		—		25,920
Other comprehensive income	—	—		—		122		122
Distributions and returns attributable to Class A Convertible Preferred unitholders	—	(22,308)		—		—		(22,308)


Partners’ capital, September 30, 2023	122,464	$	547,622	$	357,877	$	6,479	$	911,978

	Number of Common Units	Partners’ Capital		Noncontrolling Interests		Accumulated Other Comprehensive Loss		Total
Partners’ capital, June 30, 2022	122,579	$	596,059	$	299,846	$	(5,364)	$	890,541
Net income	—	3,385		5,188		—		8,573
Cash distributions to partners	—	(18,387)		—		—		(18,387)

Cash distributions to noncontrolling interests	—	—		(6,324)		—		(6,324)
Cash contributions from noncontrolling interests	—	—		10,440		—		10,440
Other comprehensive income	—	—		—		122		122
Distributions to Class A Convertible Preferred unitholders	—	(18,684)		—		—		(18,684)
Partners’ capital, September 30, 2022	122,579	$	562,373	$	309,150	$	(5,242)	$	866,281


	Number of Common Units	Partners’ Capital		Noncontrolling Interests		Accumulated Other Comprehensive Income		Total
Partners’ capital, December 31, 2022	122,579	$	567,277	$	310,162	$	6,114	$	883,553
Repurchase of Class A common units	(115)	(1,044)		—		—		(1,044)
Net income	—	105,770		20,078		—		125,848
Cash distributions to partners	—	(55,161)		—		—		(55,161)

Cash distributions to noncontrolling interests	—	—		(33,203)		—		(33,203)
Cash contributions from noncontrolling interests	—	—		60,840		—		60,840
Other comprehensive income	—	—		—		365		365
Distributions and returns attributable to Class A Convertible Preferred unitholders	—	(69,220)		—		—		(69,220)


Partners’ capital, September 30, 2023	122,464	$	547,622	$	357,877	$	6,479	$	911,978

	Number of Common Units	Partners’ Capital		Noncontrolling Interests		Accumulated Other Comprehensive Loss		Total
Partners’ capital, December 31, 2021	122,579	$	641,313	$	294,746	$	(5,607)	$	930,452
Net income	—	33,482		18,612		—		52,094
Cash distributions to partners	—	(55,161)		—		—		(55,161)
Adjustment to valuation of noncontrolling interest in subsidiary	—	(1,209)		1,209		—		—
Cash distributions to noncontrolling interests	—	—		(24,656)		—		(24,656)
Cash contributions from noncontrolling interests	—	—		19,239		—		19,239
Other comprehensive income	—	—		—		365		365
Distributions to Class A Convertible Preferred unitholders	—	(56,052)		—		—		(56,052)
Partners’ capital, September 30, 2022	122,579	$	562,373	$	309,150	$	(5,242)	$	866,281

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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GENESIS ENERGY, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Nine Months Ended September 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	125,848	$	82,537
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation, depletion and amortization	209,966		217,125

Gain on sale of asset	—		(40,000)

Amortization and write-off of debt issuance costs, premium and discount	8,206		7,110


Equity in earnings of investments in equity investees	(49,606)		(40,252)
Cash distributions of earnings of equity investees	48,625		41,496
Non-cash effect of long-term incentive compensation plans	15,236		10,835
Deferred and other tax liabilities	925		1,010
Unrealized losses on derivative transactions	17,721		15,726
Cancellation of debt income	—		(8,619)
Other, net	15,839		14,203
Net changes in components of operating assets and liabilities (Note 15)	3,604		(48,576)
Net cash provided by operating activities	396,364		252,595
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments to acquire fixed and intangible assets	(395,768)		(303,789)
Cash distributions received from equity investees - return of investment	19,600		14,737
Investments in equity investees	(4,463)		(5,441)


Proceeds from asset sales	307		40,281
Other, net	4,332		—
Net cash used in investing activities	(375,992)		(254,212)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on senior secured credit facility	829,776		697,000
Repayments on senior secured credit facility	(836,776)		(625,800)
Net proceeds from issuance of Alkali senior secured notes (Note 10)	—		408,000
Redemption of redeemable noncontrolling interests (Note 11)	—		(288,629)
Proceeds from issuance of 2030 Notes (Note 10)	500,000		—
Repayment of senior unsecured notes (Note 10)	(341,135)		(72,241)
Debt issuance costs	(14,675)		(6,019)
Contributions from noncontrolling interests	60,840		19,239
Distributions to noncontrolling interests	(33,203)		(24,656)
Distributions to common unitholders	(55,161)		(55,161)
Distributions to Class A Convertible Preferred unitholders	(71,333)		(56,052)
Redemption of Class A Convertible Preferred Units (Note 11)	(50,000)		—
Repurchase of Class A common units (Note 11)	(1,044)		—
Other, net	5,677		5,429
Net cash provided by (used in) financing activities	(7,034)		1,110
Net increase (decrease) in cash, cash equivalents and restricted cash	13,338		(507)
Cash, cash equivalents and restricted cash at beginning of period	26,567		24,992
Cash, cash equivalents and restricted cash at end of period	$	39,905	$	24,485

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation and Consolidation

Organization

We are a growth-oriented master limited partnership founded in Delaware in 1996 and focused on the midstream segment of the crude oil and natural gas industry as well as the production of natural soda ash. Our operations are primarily located in the Gulf of Mexico, Wyoming and in the Gulf Coast region of the United States. We provide an integrated suite of services to refiners, crude oil and natural gas producers and industrial and commercial enterprises. We have a diverse portfolio of assets, including pipelines, offshore hub and junction platforms, our trona and trona-based exploring, mining, processing, producing, marketing, logistics and selling business based in Wyoming (our “Alkali Business”), refinery-related plants, storage tanks and terminals, railcars, barges and other vessels and trucks. We are owned 100% by our limited partners. Genesis Energy, LLC, our general partner, is a wholly-owned subsidiary. Our general partner has sole responsibility for conducting our business and managing our operations. We conduct our operations and own our operating assets through our subsidiaries and joint ventures.

We currently manage our businesses through the following four divisions that constitute our reportable segments:

•Offshore pipeline transportation, which includes the transportation and processing of crude oil and natural gas in the Gulf of Mexico;

•Soda and sulfur services involving trona and trona-based exploring, mining, processing, soda ash production, marketing, logistics and selling activities, as well as processing of high sulfur (or “sour”) gas streams for refineries to remove the sulfur, and selling the related by-product, sodium hydrosulfide (or “NaHS,” commonly pronounced “nash”);

•Onshore facilities and transportation, which includes terminaling, blending, storing, marketing, and transporting crude oil and petroleum products; and

•Marine transportation to provide waterborne transportation of petroleum products (primarily fuel oil, asphalt and other heavy refined products) and crude oil throughout North America.

Basis of Presentation and Consolidation

The accompanying Unaudited Condensed Consolidated Financial Statements include Genesis Energy, L.P. and its subsidiaries.

Our results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. The Unaudited Condensed Consolidated Financial Statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they reflect all adjustments (which consist solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial results for interim periods. Certain information and notes normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading when read in conjunction with the information contained in the periodic reports we file with the SEC pursuant to the Securities Exchange Act of 1934, including the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 (our “Annual Report”).

Except per unit amounts, or as noted within the context of each footnote disclosure, the dollar amounts presented in the tabular data within these footnote disclosures are stated in thousands of dollars.

2. Recent Accounting Developments

We are currently evaluating new accounting pronouncements that have been issued, but are not yet effective. At this time, they are not expected to have a material impact on our financial positions or results of operations.

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GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. Revenue Recognition

Revenue from Contracts with Customers

The following tables reflect the disaggregation of our revenues by major category for the three months ended September 30, 2023 and 2022, respectively:


	Three Months Ended September 30, 2023
	Offshore Pipeline Transportation		Soda and Sulfur Services		Marine Transportation		Onshore Facilities and Transportation		Consolidated
Fee-based revenues	$	106,297	$	—	$	80,220	$	16,769	$	203,286
Product Sales	—		399,329		—		180,757		580,086
Refinery Services	—		24,246		—		—		24,246
	$	106,297	$	423,575	$	80,220	$	197,526	$	807,618


	Three Months Ended September 30, 2022
	Offshore Pipeline Transportation		Soda and Sulfur Services		Marine Transportation		Onshore Facilities & Transportation		Consolidated
Fee-based revenues	$	89,805	$	—	$	77,795	$	20,177	$	187,777
Product Sales	—		290,620		—		220,790		511,410
Refinery Services	—		22,061		—		—		22,061
	$	89,805	$	312,681	$	77,795	$	240,967	$	721,248

The following tables reflect the disaggregation of our revenues by major category for the nine months ended September 30, 2023 and 2022, respectively:


	Nine Months Ended September 30, 2023
	Offshore Pipeline Transportation		Soda and Sulfur Services		Marine Transportation		Onshore Facilities and Transportation		Consolidated
Fee-based revenues	$	289,151	$	—	$	240,789	$	44,850	$	574,790
Product Sales	—		1,262,454		—		497,024		1,759,478
Refinery Services	—		68,624		—		—		68,624
	$	289,151	$	1,331,078	$	240,789	$	541,874	$	2,402,892


	Nine Months Ended September 30, 2022
	Offshore Pipeline Transportation		Soda and Sulfur Services		Marine Transportation		Onshore Facilities and Transportation		Consolidated
Fee-based revenues	$	239,958	$	—	$	209,889	$	54,280	$	504,127
Product Sales	—		837,335		—		653,830		1,491,165
Refinery Services	—		79,628		—		—		79,628
	$	239,958	$	916,963	$	209,889	$	708,110	$	2,074,920

The Company recognizes revenue upon the satisfaction of its performance obligations under its contracts. The timing of revenue recognition varies for our different revenue streams. In general, the timing includes recognition of revenue over time as services are being performed as well as recognition of revenue at a point in time for delivery of products.

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GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Contract Assets and Liabilities

The table below depicts our contract asset and liability balances at December 31, 2022 and September 30, 2023:


	Contract Assets		Contract Liabilities
	Other Assets, net of amortization		Accrued Liabilities		Other Long-Term Liabilities
Balance at December 31, 2022	$	—	$	2,087	$	64,478
Balance at September 30, 2023	181		5,127		95,213

Transaction Price Allocations to Remaining Performance Obligations

We are required to disclose the aggregate amount of our transaction prices that are allocated to unsatisfied performance obligations as of September 30, 2023. However, we are permitted to utilize the following exemptions:

1)Performance obligations that are part of a contract with an expected duration of one year or less;

2)Revenue recognized from the satisfaction of performance obligations where we have a right to consideration in an amount that corresponds directly with the value provided to customers; and

3)Contracts that contain variable consideration, such as index-based pricing or variable volumes, that is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that is part of a series.

The majority of our contracts qualify for one of these exemptions. For the remaining contract types that involve revenue recognition over a long-term period and include long-term fixed consideration (adjusted for indexing as required), we determined our allocations of transaction price that relate to unsatisfied performance obligations. For our tiered pricing offshore transportation contracts, we provide firm capacity for both fixed and variable consideration over a long-term period. Therefore, we have allocated the remaining contract value to future periods.

The following chart depicts how we expect to recognize revenues for future periods related to these contracts:


	Offshore Pipeline Transportation		Onshore Facilities and Transportation
Remainder of 2023	$	25,591	$	1,800
2024	102,998		1,800
2025	116,730		—
2026	86,706		—
2027	50,006		—
Thereafter	174,416		—
Total	$	556,447	$	3,600

4. Business Consolidation

American Natural Soda Ash Corporation (“ANSAC”)

ANSAC is an organization whose purpose is to promote and market the use and sale of domestically produced natural soda ash in specified countries outside of the United States. Prior to 2023, our Alkali Business and another domestic soda ash producer were the two members of ANSAC. On January 1, 2023, we became the sole member of ANSAC and assumed 100% of the voting rights of the entity, and it became a wholly owned subsidiary of Genesis.

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We will continue to supply levels of our soda ash produced in the Green River Basin to ANSAC to utilize their logistical and marketing capabilities as an export vehicle for our Alkali Business. We determined that ANSAC meets the definition of a business and will account for our acquisition of ANSAC as a business combination. We have reflected the financial results of ANSAC within our soda and sulfur services segment from the date of acquisition, January 1, 2023. The purchase price has been allocated to the assets acquired and the liabilities assumed based on our estimated preliminary fair values. We expect to finalize the purchase price allocation by the end of 2023. There was no consideration transferred as a result of becoming the sole member of ANSAC.

The preliminary allocation of the purchase price, as presented within our Unaudited Condensed Consolidated Balance Sheet as of September 30, 2023 is summarized as follows:


Cash and cash equivalents	$	4,332
Accounts receivable - trade, net	231,797
Inventories	19,522
Other current assets	14,203
Fixed assets, at cost	4,000
Right of use assets, net	93,208
Intangible assets, net of amortization	14,992
Other Assets, net of amortization	400
Accounts payable - trade(1)	(228,106)
Accrued liabilities	(75,224)
Other long-term liabilities	(79,124)

Net Assets	$	—

(1)The “Accounts payable - trade” balance above includes $133.4 million of payables to Genesis at December 31, 2022 that eliminated upon consolidation in our Unaudited Condensed Consolidated Balance Sheet.

Inventories principally relate to finished goods (soda ash) that have been supplied by current or former members of ANSAC. “Fixed assets, at cost” relate to leasehold improvements, and “Intangible assets, net of amortization” relate to our assets supporting our logistical and marketing footprint, and both have an estimated useful life of ten years, which is consistent with the term of our primary lease facilitating our logistics operations. Right of use assets, net and our corresponding lease liabilities, which are recorded within “Accrued liabilities” and “Other long-term liabilities,” respectively, are associated with our right to use certain assets to store and load finished goods, the vessels we utilize to ship finished goods to distributors and end users, as well as office space.

Our Unaudited Condensed Consolidated Statement of Operations include the results of ANSAC since January 1, 2023. The following table presents selected financial information included in our Unaudited Consolidated Statement of Operations for the period presented:


	Three Months Ended September 30, 2023		Nine Months Ended September 30, 2023
Revenues	$	92,399	$	321,853
Net Income Attributable to Genesis Energy, L.P.	5,373		10,644

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The following unaudited pro forma financial information was prepared from our historical financial statements that have been adjusted to give the effect of the consolidation of ANSAC as though we had become the sole member on January 1, 2022. It is based upon assumptions deemed appropriate by us and may not be indicative of actual results. This pro forma information was prepared using financial data of ANSAC and reflects certain estimates and assumptions made by our management. Our unaudited pro forma financial information is not necessarily indicative of what our consolidated financial results would have been had we become the sole member on January 1, 2022. Pro forma net income (loss) attributable to common unitholders includes the effects of distributions attributable to our Class A Preferred Units. The dilutive effect of our preferred units is calculated using the if-converted method.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Pro forma consolidated financial operating results:
Revenues	$	807,618	$	813,647	$	2,402,892	$	2,396,773
Net Income Attributable to Genesis Energy, L.P.	58,070		8,758		105,770		44,126
Net Income (Loss) Attributable to Common Unitholders	35,762		(9,926)		36,550		(11,926)
Basic and diluted earnings (loss) per common unit:
As reported net income (loss) per common unit	$	0.29	$	(0.12)	$	0.30	$	(0.18)
Pro forma net income (loss) per common unit	$	0.29	$	(0.08)	$	0.30	$	(0.10)

5. Lease Accounting

Lessee Arrangements

We lease a variety of transportation equipment (primarily railcars), terminals, land and facilities, and office space and equipment. Lease terms vary and can range from short term (not greater than 12 months) to long term (greater than 12 months). A majority of our leases contain options to extend the life of the lease at our sole discretion. We considered these options when determining the lease terms used to derive our right of use assets and associated lease liabilities. Leases with a term of 12 months or fewer are not recorded on our Unaudited Condensed Consolidated Balance Sheets, and we recognize lease expense for these leases on a straight-line basis over the lease term.

Our “Right of Use Assets, net” balance includes our unamortized initial direct costs associated with certain of our transportation equipment leases as well as our unamortized prepaid rents, our deferred rents, and our previously classified intangible asset associated with a favorable lease. Current and non-current lease liabilities are recorded within “Accrued liabilities” and “Other long-term liabilities,” respectively, on our Unaudited Condensed Consolidated Balance Sheets.

Lessor Arrangements

We have certain contracts discussed below in which we act as a lessor. We also, from time to time, sublease certain of our transportation and facilities equipment to third parties.

Operating Leases

During the three and nine months ended September 30, 2023 and 2022, we acted as a lessor in a revenue contract associated with the M/T American Phoenix, included in our marine transportation segment. Our lease revenues for this arrangement were $6.0 million and $17.7 million for the three and nine months ended September 30, 2023, respectively, and $1.8 million and $10.5 million for the three and nine months ended September 30, 2022, respectively.

The M/T American Phoenix is under contract through mid-2027, and for the remainder of 2023, 2024, 2025, 2026, and through the expiration of the contract in 2027, we expect to receive undiscounted cash flows from lease payments of $6.0 million, $25.9 million, $29.6 million, $30.7 million, and $15.2 million, respectively.

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6. Inventories

The major components of inventories were as follows:


	September 30, 2023		December 31, 2022
Petroleum products	$	—	$	56
Crude oil	31,495		6,673
Caustic soda	9,184		15,258
NaHS	12,676		7,085
Raw materials - Alkali Business	7,601		5,819
Work-in-process - Alkali Business	7,691		9,599
Finished goods, net - Alkali Business	41,205		18,772
Materials and supplies, net - Alkali Business	17,094		14,881

Total	$	126,946	$	78,143

Inventories are valued at the lower of cost or net realizable value. As of September 30, 2023 and December 31, 2022, the net realizable value of inventories were below cost by $0.1 million and $2.9 million, respectively, which triggered a reduction of the value of inventory in our Unaudited Condensed Consolidated Financial Statements by these amounts.

Materials and supplies include chemicals, maintenance supplies and spare parts which will be consumed in the mining of trona ore and production of soda ash processes.

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7. Fixed Assets, Mineral Leaseholds and Asset Retirement Obligations

Fixed Assets

Fixed assets consisted of the following:


	September 30, 2023		December 31, 2022
Crude oil and natural gas pipelines and related assets	$	2,848,810	$	2,844,288
Alkali facilities, machinery and equipment	787,040		701,313
Onshore facilities, machinery and equipment	270,676		269,949
Transportation equipment	25,652		22,340
Marine vessels	1,020,568		1,017,087
Land, buildings and improvements	238,697		231,651
Office equipment, furniture and fixtures	24,749		24,271
Construction in progress(1)	991,151		712,971
Other	41,168		41,168
Fixed assets, at cost	6,248,511		5,865,038
Less: Accumulated depreciation	(1,925,879)		(1,768,465)
Net fixed assets	$	4,322,632	$	4,096,573

(1)Construction in progress primarily relates to our Granger Optimization Project, which is expected to be completed in the fourth quarter of 2023, and our offshore growth capital projects, which are expected to be completed in 2024 and 2025.

Mineral Leaseholds

Our Mineral Leaseholds, relating to our Alkali Business, consist of the following:


	September 30, 2023		December 31, 2022
Mineral leaseholds	$	566,019	$	566,019
Less: Accumulated depletion	(24,153)		(20,897)
Mineral leaseholds, net of accumulated depletion	$	541,866	$	545,122

Our depreciation and depletion expense for the periods presented were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Depreciation expense	$	64,104	$	70,328	$	197,590	$	206,111
Depletion expense	1,107		896		3,256		2,830

Asset Retirement Obligations

We record asset retirement obligations (“AROs”) in connection with legal requirements to perform specified retirement activities under contractual arrangements and/or governmental regulations.

The following table presents information regarding our AROs since December 31, 2022:


ARO liability balance, December 31, 2022	$	228,573
Accretion expense	9,316
Changes in estimate	3,915


Settlements	(68)

ARO liability balance, September 30, 2023	$	241,736

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At September 30, 2023 and December 31, 2022, $26.1 million and $26.6 million are included as current in “Accrued liabilities” on our Unaudited Condensed Consolidated Balance Sheets, respectively. The remainder of the ARO liability as of September 30, 2023 and December 31, 2022 is included in “Other long-term liabilities” on our Unaudited Condensed Consolidated Balance Sheets.

Certain of our unconsolidated affiliates have AROs recorded at September 30, 2023 and December 31, 2022 relating to contractual agreements and regulatory requirements. In addition, certain entities that we consolidate have non-controlling interest owners that are responsible for their representative share of future costs of the related ARO liability. These amounts are immaterial to our Unaudited Condensed Consolidated Financial Statements.

8. Equity Investees

We account for our ownership in certain of our joint ventures under the equity method of accounting. The price we pay to acquire an ownership interest in a company may exceed or be less than the underlying book value of the capital accounts we acquire. Such excess cost amounts are included within the carrying values of our equity investees. At September 30, 2023 and December 31, 2022, the unamortized excess cost amounts totaled $294.9 million and $305.6 million, respectively. We amortize the differences in carrying value as changes in equity earnings.

The following table presents information included in our Unaudited Condensed Consolidated Financial Statements related to our equity investees:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Genesis’ share of operating earnings	$	20,908	$	16,802	$	60,304	$	50,950
Amortization of differences attributable to Genesis’ carrying value of equity investments	(3,566)		(3,566)		(10,698)		(10,698)
Net equity in earnings	$	17,242	$	13,236	$	49,606	$	40,252
Distributions received(1)	$	23,629	$	18,483	$	68,141	$	56,233

(1) Includes distributions attributable to the period and received during or within 15 days following the period.

The following tables present the unaudited balance sheets and statements of operations information (on a 100% basis) for Poseidon Oil Pipeline Company, L.L.C. (“Poseidon,” and its pipeline and associated assets, the “Poseidon pipeline”) (which we own 64% of and is our most significant equity investment):


	September 30, 2023		December 31, 2022
BALANCE SHEETS DATA:
Assets
Current assets	$	21,428	$	27,878
Fixed assets, net	143,258		147,505
Other assets	16,629		13,419
Total assets	$	181,315	$	188,802
Liabilities and equity
Current liabilities	$	8,854	$	10,087
Other liabilities	240,553		236,813
Equity (Deficit)	(68,092)		(58,098)
Total liabilities and equity	$	181,315	$	188,802


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
STATEMENTS OF OPERATIONS DATA:
Revenues	$	43,316	$	38,322	$	123,462	$	104,891
Operating income	$	33,213	$	27,731	$	94,216	$	75,540
Net income	$	29,117	$	25,502	$	83,106	$	70,850

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Poseidon’s Revolving Credit Facility

Borrowings under Poseidon’s revolving credit facility, which was amended and restated on June 1, 2023 (the “June 2023 credit facility”), are primarily used to fund spending on capital projects. The June 2023 credit facility, which matures on June 1, 2027, is non-recourse to Poseidon’s owners and secured by its assets. The June 2023 credit facility contains customary covenants such as restrictions on debt levels, liens, guarantees, mergers, sale of assets and distributions to owners. A breach of any of these covenants could result in acceleration of the maturity date of Poseidon’s debt. Poseidon was in compliance with the terms of its credit agreement for all periods presented in these Unaudited Condensed Consolidated Financial Statements.

9. Intangible Assets

The following table summarizes the components of our intangible assets at the dates indicated:


	September 30, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Carrying Value		Gross Carrying Amount		Accumulated Amortization		Carrying Value
Offshore pipeline contract intangibles	158,101		67,956		90,145		158,101		61,715		96,386
Other	68,280		16,722		51,558		45,191		14,257		30,934
Total	$	226,381	$	84,678	$	141,703	$	203,292	$	75,972	$	127,320

Our amortization of intangible assets for the periods presented was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Amortization of intangible assets	$	3,069	$	2,575	$	8,747	$	7,740

We estimate that our amortization expense for the next five years will be as follows:


Remainder of	2023	$	3,688
	2024	14,556
	2025	14,295
	2026	13,983
	2027	13,537

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10. Debt

Our obligations under debt arrangements consisted of the following:


	September 30, 2023						December 31, 2022
	Principal		Unamortized Premium, Discount and Debt Issuance Costs		Net Value		Principal		Unamortized Premium, Discount and Debt Issuance Costs		Net Value
Senior secured credit facility(1)	$	198,400	$	—	$	198,400	$	205,400	$	—	$	205,400
5.625% senior unsecured notes due 2024	—		—		—		341,135		1,249		339,886
6.500% senior unsecured notes due 2025	534,834		2,374		532,460		534,834		3,265		531,569
6.250% senior unsecured notes due 2026	339,310		1,929		337,381		339,310		2,481		336,829
8.000% senior unsecured notes due 2027	981,245		3,891		977,354		981,245		4,956		976,289
7.750% senior unsecured notes due 2028	679,360		6,496