Genesis Energy Earnings 2020-03-31

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

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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 March 31, 2020

☐ 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.)

919 Milam, Suite 2100,
	Houston	,	TX		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 ¨

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.

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Large Accelerated Filer	x	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 122,539,221 Class A Common Units and 39,997 Class B Common Units outstanding as of May 6, 2020.

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GENESIS ENERGY, L.P.

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		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Unaudited Condensed Consolidated Balance Sheets	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	9
	3. Revenue Recognition	9
	4. Lease Accounting	10
	5. Inventories	12
	6. Fixed Assets, Mineral Leaseholds, and Asset Retirement Obligations	13
	7. Equity Investees	14
	8. Intangible Assets	15
	9. Debt	16
	10. Partners' Capital, Mezzanine Capital and Distributions	17
	11. Net Income (Loss) Per Common Unit	20
	12. Business Segment Information	21
	13. Transactions with Related Parties	22
	14. Supplemental Cash Flow Information	24
	15. Derivatives	24
	16. Fair-Value Measurements	27
	17. Commitments and Contingencies	29
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	50
Item 4.	Controls and Procedures	50
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	52
SIGNATURES		54

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GENESIS ENERGY, L.P.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except units)



	March 31, 2020			December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	18,137		$	29,128
Restricted cash	23,372			27,277
Accounts receivable - trade, net	315,645			417,002
Inventories	70,161			65,137
Other	69,565			54,530
Total current assets	496,880			593,074
FIXED ASSETS, at cost	5,567,710			5,540,596
Less: Accumulated depreciation	(1,311,219		)	(1,246,121		)
Net fixed assets	4,256,491			4,294,475
MINERAL LEASEHOLDS, net of accumulated depletion	554,862			555,825
NET INVESTMENT IN DIRECT FINANCING LEASES, net of unearned income	105,251			107,702
EQUITY INVESTEES	327,942			334,523
INTANGIBLE ASSETS, net of amortization	136,071			138,927
GOODWILL	301,959			301,959
RIGHT OF USE ASSETS, net	175,889			177,071
OTHER ASSETS, net of amortization	79,113			94,085
TOTAL ASSETS	$	6,434,458		$	6,597,641
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Accounts payable - trade	$	151,868		$	218,737
Accrued liabilities	172,941			196,758
Total current liabilities	324,809			415,495
SENIOR SECURED CREDIT FACILITY	977,400			959,300
SENIOR UNSECURED NOTES, net of debt issuance costs	2,463,171			2,469,937
DEFERRED TAX LIABILITIES	12,125			12,640
OTHER LONG-TERM LIABILITIES	366,281			393,850
Total liabilities	4,143,786			4,251,222

MEZZANINE CAPITAL:
Class A Convertible Preferred Units, 25,336,778 issued and outstanding at March 31, 2020 and December 31, 2019	790,115			790,115
Redeemable noncontrolling interests, 130,000 preferred units issued and outstanding at March 31, 2020 and December 31, 2019, respectively	129,219			125,133

PARTNERS’ CAPITAL:
Common unitholders, 122,579,218 units issued and outstanding at March 31, 2020 and December 31, 2019	1,382,126			1,443,320
Accumulated other comprehensive loss	(8,431		)	(8,431		)
Noncontrolling interests	(2,357		)	(3,718		)
Total partners' capital	1,371,338			1,431,171
TOTAL LIABILITIES, MEZZANINE CAPITAL AND PARTNERS’ CAPITAL	$	6,434,458		$	6,597,641

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, except per unit amounts)



	Three Months Ended March 31,
	2020			2019
REVENUES:
Offshore pipeline transportation	$	78,429		$	78,317
Sodium minerals and sulfur services	243,390			275,486
Marine transportation	62,346			56,650
Onshore facilities and transportation	155,758			209,556
Total revenues	539,923			620,009
COSTS AND EXPENSES:
Onshore facilities and transportation product costs	111,952			168,105
Onshore facilities and transportation operating costs	18,248			19,652
Marine transportation operating costs	42,937			43,733
Sodium minerals and sulfur services operating costs	205,233			218,708
Offshore pipeline transportation operating costs	18,661			18,458
General and administrative	9,373			11,686
Depreciation, depletion and amortization	74,357			77,638
Total costs and expenses	480,761			557,980
OPERATING INCOME	59,162			62,029
Equity in earnings of equity investees	14,159			12,997
Interest expense	(54,965		)	(55,701		)
Other income (expense)	10,258			(2,976		)
Income before income taxes	28,614			16,349
Income tax benefit (expense)	365			(402		)
NET INCOME	28,979			15,947
Net loss attributable to noncontrolling interests	16			7
Net income attributable to redeemable noncontrolling interests	(4,086		)	—
NET INCOME ATTRIBUTABLE TO GENESIS ENERGY, L.P.	$	24,909		$	15,954
Less: Accumulated distributions attributable to Class A Convertible Preferred Units	(18,684		)	(18,415		)
NET INCOME (LOSS) AVAILABLE TO COMMON UNITHOLDERS	$	6,225		$	(2,461	)
NET INCOME (LOSS) PER COMMON UNIT (Note 11):
Basic and Diluted	$	0.05		$	(0.02	)
WEIGHTED AVERAGE OUTSTANDING COMMON UNITS:
Basic and Diluted	122,579			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 March 31,
	2020			2019
Net income	$	28,979		$	15,947
Other comprehensive income:
Change in benefit plan liability	—			—
Total Comprehensive income	28,979			15,947
Comprehensive loss attributable to noncontrolling interests	16			7
Comprehensive income attributable to redeemable noncontrolling interests	$	(4,086	)	$	—
Comprehensive income attributable to Genesis Energy, L.P.	$	24,909		$	15,954

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 Interest			Accumulated Other Comprehensive Loss			Total
Partners’ capital, January 1, 2020	122,579	$	1,443,320		$	(3,718	)	$	(8,431	)	$	1,431,171
Net income (loss)	—	24,909			(16		)	—			24,893
Cash distributions to partners	—	(67,419		)	—			—			(67,419		)
Cash contributions from noncontrolling interests	—	—			1,377			—			1,377
Distributions to Class A Convertible Preferred unitholders	—	(18,684		)	—			—			(18,684		)
Partners' capital, March 31, 2020	122,579	$	1,382,126		$	(2,357	)	$	(8,431	)	$	1,371,338
	Number of Common Units	Partners’ Capital			Noncontrolling Interest			Accumulated Other Comprehensive Income			Total
Partners’ capital, January 1, 2019	122,579	$	1,690,799		$	(11,204	)	$	939		$	1,680,534
Net income (loss)	—	15,954			(7		)	—			15,947
Cash distributions to partners	—	(67,419		)	—			—			(67,419		)
Cash contributions from noncontrolling interests	—	—			610			—			610
Distributions to Class A Convertible Preferred unitholders	—	(18,020		)	—			—			(18,020		)
Partners' capital, March 31, 2019	122,579	$	1,621,314		$	(10,601	)	$	939		$	1,611,652

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)



	Three Months Ended March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	28,979		$	15,947
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation, depletion and amortization	74,357			77,638
Amortization and write-off of debt issuance costs and discount	11,527			2,682
Amortization of unearned income and initial direct costs on direct financing leases	(2,929		)	(3,139		)
Payments received under direct financing leases	5,167			5,167
Equity in earnings of investments in equity investees	(14,159		)	(12,997		)
Cash distributions of earnings of equity investees	13,505			12,400
Non-cash effect of long-term incentive compensation plans	(5,027		)	1,565
Deferred and other tax liabilities	(515		)	252
Unrealized (gains) losses on derivative transactions	(31,118		)	5,666
Other, net	2,231			5,640
Net changes in components of operating assets and liabilities (Note 14)	7,534			3,200
Net cash provided by operating activities	89,552			114,021
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments to acquire fixed and intangible assets	(38,001		)	(29,612		)
Cash distributions received from equity investees - return of investment	7,060			5,425
Proceeds from asset sales	61			358
Net cash used in investing activities	(30,880		)	(23,829		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on senior secured credit facility	393,500			187,500
Repayments on senior secured credit facility	(375,400		)	(215,600		)
Proceeds from issuance of senior unsecured notes due 2028	750,000			—
Repayment of senior unsecured notes due 2022	(750,000		)	—
Debt issuance costs	(13,295		)	—
Contributions from noncontrolling interests	1,377			610
Distributions to common unitholders	(67,419		)	(67,419		)
Distributions to preferred unitholders	(18,684		)	—
Other, net	6,353			5,621
Net cash used in financing activities	(73,568		)	(89,288		)
Net increase (decrease) in cash, restricted cash, and cash equivalents	(14,896		)	904
Cash, restricted cash and cash equivalents at beginning of period	56,405			10,300
Cash, restricted cash and cash equivalents at end of period	$	41,509		$	11,204

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 formed in Delaware in 1996 and focused on the midstream segment of the crude oil and natural gas industry in the Gulf Coast region of the United States and the Gulf of Mexico. We provide an integrated suite of services to refiners, crude oil and natural gas producers, and industrial and commercial enterprises and have a diverse portfolio of assets, including pipelines, offshore hub and junction platforms, our soda ash business (our "Alkali Business"), refinery-related plants, storage tanks and terminals, railcars, rail unloading facilities, 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 and processing of crude oil and natural gas in the Gulf of Mexico;


•	Sodium minerals and sulfur services involving trona and trona-based exploring, mining, processing, producing, marketing 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 include terminalling, blending, storing, marketing, and transporting crude oil, petroleum products, and CO₂; and


•	Marine transportation to provide waterborne transportation of petroleum 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, including our general partner, Genesis Energy, LLC.

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 Condensed Consolidated Financial Statements included herein have been prepared by us without audit 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, 2019 (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.

COVID-19 Update

In March 2020, the World Health Organization categorized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. Our operations, which fall within the energy, mining and transportation sectors, are considered critical and essential by the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency ("CISA") and we have continued to operate our assets during this pandemic.

We considered the impact of COVID-19 on the assumptions and estimates reflected in our financial statements. We noted, other than the impact of general macroeconomic conditions, there were no material adverse effects from the pandemic on our results for the three months ended March 31, 2020. See further discussion on COVID-19 in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

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GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Recent Accounting Developments

Recently Adopted

We have adopted guidance under ASC Topic 326, Financial Instruments - Credit Losses ("ASC 326"), as of January 1, 2020 . The standard changed the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities are required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. We performed an assessment at our adoption date, January 1, 2020, which consisted of reviewing current and historical information pertaining to our trade accounts receivable and existing contract assets. Our assessment resulted in an immaterial impact to our consolidated financial statements as of the adoption date and for the three months ended March 31, 2020.

During the first quarter of 2020, the SEC amended the financial disclosure requirements for guarantors and issuers of guaranteed securities registered or being registered in Rule 3-10 of Regulation S-X to go in effect January 4, 2021. The amendment simplifies the disclosure requirements and permits the amended disclosures to be provided outside the footnotes in audited annual or unaudited interim consolidated financial statements in all filings. As permitted by the amendment, we have early adopted the amendment and included the required summarized financial information in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

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 March 31, 2020 and 2019, respectively:



	Three Months Ended March 31, 2020
	Offshore Pipeline Transportation		Sodium Minerals & Sulfur Services		Marine Transportation		Onshore Facilities and Transportation		Consolidated
Fee-based revenues	$	78,429	$	—	$	62,346	$	40,990	$	181,765
Product Sales	—		215,366		—		114,768		330,134
Refinery Services	—		28,024		—		—		28,024
	$	78,429	$	243,390	$	62,346	$	155,758	$	539,923



	Three Months Ended March 31, 2019
	Offshore Pipeline Transportation		Sodium Minerals & Sulfur Services		Marine Transportation		Onshore Facilities & Transportation		Consolidated
Fee-based revenues	$	78,317	$	—	$	56,650	$	38,012	$	172,979
Product Sales	—		257,843		—		171,544		429,387
Refinery Services	—		17,643		—		—		17,643
	$	78,317	$	275,486	$	56,650	$	209,556	$	620,009

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, 2019 and March 31, 2020:



	Contract Assets				Contract Liabilities
	Current		Non-Current		Current		Non-Current
Balance at December 31, 2019	$	21,912	$	54,232	$	2,896	$	23,170
Balance at March 31, 2020	33,672		37,277		2,983		22,376

Transaction Price Allocations to Remaining Performance Obligations

We are required to disclose the amount of our transaction prices that are allocated to unsatisfied performance obligations as of March 31, 2020. We are exempted from disclosing performance obligations with a duration of one year or less, revenue recognized related to performance obligations where the consideration corresponds directly with the value provided to customers, and contracts with variable consideration that is allocated wholly to an unsatisfied performance obligation or promise to transfer a good or service that is part of a series in accordance with ASC 606.

The majority of our contracts qualify for one of these expedients or exemptions. For the remaining contract types that involve revenue recognition over a long-term period with 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 2020	$	54,873	$	43,220
2021	58,623		20,269
2022	69,134		4,283
2023	58,540		—
2024	52,812		—
Thereafter	154,899		—
Total	$	448,881	$	67,772

4. Lease Accounting

Lessee Arrangements

We lease a variety of transportation equipment (including trucks, trailers, and railcars), terminals, land and facilities, and office space and equipment. Lease terms vary and can range from short term (under 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 asset and associated lease liability. Leases with a term of less than 12 months are not recorded on our Unaudited Condensed Consolidated Balance Sheets. Lease expenses are recognized 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. Additionally, it includes our unamortized prepaid rents, our deferred rents, and our previously classified intangible asset associated with a favorable lease. Our lease liability includes our remaining provision for each period presented for our cease-use provision for railcars no longer in use.

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GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Lessor Arrangements

We have the following contracts 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

We act as a lessor in our revenue contracts associated with the M/T American Phoenix, within the marine transportation segment, and on our Free State pipeline system, included in our onshore facilities and transportation segment. These revenues are recorded within its respective segment's revenues in the Unaudited Condensed Consolidated Statements of Operations. Our lease revenues for these arrangements (inclusive of fixed and variable consideration) are reflected in the table below for the three months ended March 31, 2020 and 2019, respectively:



	Three Months Ended March 31,
	2020		2019
M/T American Phoenix	$	6,643	$	6,660
Free State Pipeline	1,923		1,634

Direct Finance Lease

Our direct finance lease includes a lease of the Northeast Jackson Dome ("NEJD") Pipeline. Under the terms of the agreement, we are paid a quarterly payment, which commenced in August 2008. These payments are fixed at approximately $5.2 million per quarter during the lease term at an interest rate of 10.25%. At the end of the lease term in 2028, we will convey all of our interest in the NEJD Pipeline to the lessee for a nominal payment.

The following table details the fixed lease payments we will receive for our lessor arrangements as of March 31, 2020:



	Operating Leases				Direct Financing Lease
Maturity of Lessor Receipts	Marine Transportation		Onshore Facilities and Transportation		Onshore Facilities and Transportation
Remainder of 2020	$	13,394	$	900	$	15,501
2021	—		1,200		20,668
2022	—		1,200		20,668
2023	—		1,200		20,668
2024	—		1,200		20,668
Thereafter	—		4,100		72,336
Total Lease Receipts	13,394		9,800		170,509
Less: Interest	—		—		(55,733		)
Total Net Lease Receipts	$	13,394	$	9,800	$	114,776

The present value of our lease receivables for our direct finance lease includes a current portion of $9.5 million, which is recorded in other current assets on the Unaudited Condensed Consolidated Balance Sheet as of March 31, 2020.

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GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. Inventories

The major components of inventories were as follows:



	March 31, 2020		December 31, 2019
Petroleum products	$	3,645	$	2,721
Crude oil	3,133		5,271
Caustic soda	5,821		5,965
NaHS	13,473		10,845
Raw materials - Alkali operations	5,999		6,238
Work-in-process - Alkali operations	8,399		8,579
Finished goods, net - Alkali operations	17,779		14,168
Materials and supplies, net - Alkali operations	11,912		11,350
Total	$	70,161	$	65,137

Inventories are valued at the lower of cost or net realizable value. The net realizable value of inventories was adjusted $3.5 million below cost as of March 31, 2020, with no such adjustment as of December 31, 2019.

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GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Fixed Assets, Mineral Leaseholds, and Asset Retirement Obligations

Fixed Assets

Fixed assets, net consisted of the following:



	March 31, 2020			December 31, 2019
Crude oil pipelines and natural gas pipelines and related assets	$	2,892,342		$	2,891,489
Alkali facilities, machinery, and equipment	594,263			591,547
Onshore facilities, machinery, and equipment	641,135			640,376
Transportation equipment	19,662			19,864
Marine vessels	994,730			979,171
Land, buildings and improvements	238,992			238,451
Office equipment, furniture and fixtures	22,659			22,645
Construction in progress	122,036			115,162
Other	41,891			41,891
Fixed assets, at cost	5,567,710			5,540,596
Less: Accumulated depreciation	(1,311,219		)	(1,246,121		)
Net fixed assets	$	4,256,491		$	4,294,475

Mineral Leaseholds

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



	March 31, 2020			December 31, 2019
Mineral leaseholds	$	566,019		$	566,019
Less: Accumulated depletion	(11,157		)	(10,194		)
Mineral leaseholds, net of accumulated depletion	$	554,862		$	555,825

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



	Three Months Ended March 31,
	2020		2019
Depreciation expense	$	69,242	$	71,672
Depletion expense	963		1,319

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, 2019:



ARO liability balance, December 31, 2019	$	175,081
Accretion expense	2,233
Changes in estimate	(800		)
Settlements	(6,986		)
ARO liability balance, March 31, 2020	$	169,528

Table of Contents

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Of the ARO balances disclosed above, $13.8 million and $26.6 million is included as current in "Accrued liabilities" on our Unaudited Condensed Consolidated Balance Sheet as of March 31, 2020 and December 31, 2019, respectively. The remainder of the ARO liability as of March 31, 2020 and December 31, 2019 is included in "Other long-term liabilities" on our Unaudited Condensed Consolidated Balance Sheet.

With respect to our AROs, the following table presents our estimate of accretion expense for the periods indicated:



Remainder of	2020	$	7,029
	2021	$	9,402
	2022	$	9,412
	2023	$	10,075
	2024	$	10,786

Certain of our unconsolidated affiliates have AROs recorded at March 31, 2020 relating to contractual agreements and regulatory requirements. These amounts are immaterial to our Unaudited Condensed Consolidated Financial Statements.

7. Equity Investees

We account for our ownership in 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 March 31, 2020 and December 31, 2019, the unamortized excess cost amounts totaled $347.0 million and $350.9 million, respectively. We amortize the excess cost as a reduction in equity earnings.

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



	Three Months Ended March 31,
	2020			2019
Genesis’ share of operating earnings	$	18,032		$	16,870
Amortization of excess purchase price	(3,873		)	(3,873		)
Net equity in earnings	$	14,159		$	12,997
Distributions received	$	20,565		$	17,825

The following tables present the unaudited balance sheet and income statement information (on a 100% basis) for Poseidon Oil Pipeline Company, L.L.C. ("Poseidon") (which is our most significant equity investment):



	March 31, 2020			December 31, 2019
BALANCE SHEET DATA:
Assets
Current assets	$	20,112		$	30,307
Fixed assets, net	183,268			187,091
Other assets	2,014			2,113
Total assets	$	205,394		$	219,511
Liabilities and equity
Current liabilities	$	15,135		$	15,558
Other liabilities	236,659			245,976
Equity	(46,400		)	(42,023		)
Total liabilities and equity	$	205,394		$	219,511

Table of Contents

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



	Three Months Ended March 31,
	2020		2019
INCOME STATEMENT DATA:
Revenues	$	32,892	$	31,052
Operating income	$	23,606	$	22,305
Net income	$	21,583	$	19,850

Poseidon's Revolving Credit Facility

Borrowings under Poseidon’s revolving credit facility, which was amended and restated in March 2019, are primarily used to fund spending on capital projects. The March 2019 credit facility is non-recourse to Poseidon’s owners and secured by substantially all of Poseidon's assets and has a maturity date of March 2024. The March 2019 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.

8. Intangible Assets

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



	March 31, 2020						December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Carrying Value		Gross Carrying Amount		Accumulated Amortization		Carrying Value
Marine contract intangibles	$	27,800	$	24,392	$	3,408	$	27,800	$	23,033	$	4,767
Offshore pipeline contract intangibles	158,101		38,832

Price	1.00	EPS	-50,630,000
Shares	-0	P/E	-0
MCap	-0	P/FCF	-0
Net Debt	2,443	EBIT	197
TEV	2,443	TEV/EBIT	12
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-03-31	Filed 2020-05-06
10-K	2019-12-31	Filed 2020-02-27
10-Q	2019-09-30	Filed 2019-11-06
10-Q	2019-06-30	Filed 2019-08-06
10-Q	2019-03-31	Filed 2019-05-03
10-K	2018-12-31	Filed 2019-02-28
10-Q	2018-09-30	Filed 2018-11-01
10-Q	2018-06-30	Filed 2018-08-08
10-Q	2018-03-31	Filed 2018-05-04
10-K	2017-12-31	Filed 2018-02-26
10-Q	2017-09-30	Filed 2017-11-03
10-Q	2017-06-30	Filed 2017-08-03
10-Q	2017-03-31	Filed 2017-05-04
10-K	2016-12-31	Filed 2017-02-27
10-Q	2016-09-30	Filed 2016-11-03
10-Q	2016-06-30	Filed 2016-08-03
10-Q	2016-03-31	Filed 2016-05-04
10-K	2015-12-31	Filed 2016-02-26
10-Q	2015-09-30	Filed 2015-11-06
10-Q	2015-06-30	Filed 2015-07-29
10-Q	2015-03-31	Filed 2015-04-29
10-K	2014-12-31	Filed 2015-02-27
10-Q	2014-09-30	Filed 2014-10-31
10-Q	2014-06-30	Filed 2014-08-06
10-Q	2014-03-31	Filed 2014-05-02
10-K	2013-12-31	Filed 2014-02-27
10-Q	2013-09-30	Filed 2013-11-01
10-Q	2013-06-30	Filed 2013-08-01
10-Q	2013-03-31	Filed 2013-05-02
10-K	2012-12-31	Filed 2013-02-26
10-Q	2012-09-30	Filed 2012-11-06
10-Q	2012-06-30	Filed 2012-08-03
10-Q	2012-03-31	Filed 2012-05-04
10-K	2011-12-31	Filed 2012-02-29
10-Q	2011-09-30	Filed 2011-11-08
10-Q	2011-06-30	Filed 2011-08-08
10-Q	2011-03-31	Filed 2011-05-10
10-K	2010-12-31	Filed 2011-03-16
10-Q	2010-09-30	Filed 2010-11-03
10-Q	2010-06-30	Filed 2010-08-06
10-Q	2010-03-31	Filed 2010-05-10
10-K	2009-12-31	Filed 2010-02-26

8-K	2020-07-24	Enter Agreement
8-K	2020-07-24	Enter Agreement
8-K	2020-07-24	Enter Agreement
8-K	2020-07-24	Enter Agreement
8-K	2020-05-06
8-K	2020-03-26
8-K	2020-02-19
8-K	2020-01-16
8-K	2020-01-09
8-K	2020-01-08
8-K	2019-12-19
8-K	2019-11-06
8-K	2019-09-23
8-K	2019-08-06
8-K	2019-06-06
8-K	2019-05-02
8-K	2019-03-01
8-K	2019-02-20
8-K	2018-11-01
8-K	2018-10-11
8-K	2018-08-28
8-K	2018-08-08
8-K	2018-05-04
8-K	2018-04-20
8-K	2018-02-15
8-K	2018-01-16
8-K	2018-01-10
8-K	2017-12-31

EX-10.1	gel03312020exhibit101.htm
EX-22.1	gel03312020exhibit221.htm
EX-31.1	gel03312020exhibit311.htm
EX-31.2	gel03312020exhibit312.htm
EX-32	gel03312020exhibit32.htm
EX-95	gel03312020exhibit95.htm

GEL 10Q Quarterly Report

Genesis Energy Earnings 2020-03-31