SEMGROUP CORP, 10-Q filed on 5/6/2016
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2016
Apr. 30, 2016
Common Class A [Member]
Apr. 30, 2016
Class B
Document Type
10-Q 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Mar. 31, 2016 
 
 
Document Fiscal Period Focus
Q1 
 
 
Document Fiscal Year Focus
2016 
 
 
Entity Registrant Name
SemGroup Corp 
 
 
Entity Central Index Key
0001489136 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
44,162,390 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Current assets:
 
 
Cash and cash equivalents
$ 72,489 
$ 58,096 
Restricted cash
32 
Accounts receivable (net of allowance of $3,114 and $3,019, respectively)
288,838 
326,713 
Receivable from affiliates
3,677 
5,914 
Inventories
65,344 
70,239 
Other current assets
18,754 
19,387 
Total current assets
449,102 
480,381 
Property, plant and equipment (net of accumulated depreciation of $343,535 and $319,769, respectively)
1,629,751 
1,566,821 
Equity method investments
503,914 
551,078 
Goodwill
35,008 
48,032 
Other intangible assets (net of accumulated amortization of $32,308 and $29,515, respectively)
159,496 
162,223 
Other noncurrent assets
24,561 
45,374 
Total assets
2,801,832 
2,853,909 
Current liabilities:
 
 
Accounts payable (including $193,885 and $243,548, respectively, attributable to Rose Rock)
215,751 
273,666 
Payable to affiliates (including $3,402 and $5,033, respectively, attributable to Rose Rock)
3,407 
5,033 
Accrued liabilities (including $20,243 and $22,240, respectively, attributable to Rose Rock)
85,688 
85,047 
Other current liabilities (including $3,436 and $4,246, respectively, attributable to Rose Rock)
11,880 
13,281 
Total current liabilities
316,726 
377,027 
Long-term debt, net (including $756,921 and $732,356, respectively, attributable to Rose Rock)
1,122,588 
1,057,816 
Deferred income taxes
180,599 
200,953 
Other noncurrent liabilities
23,551 
21,757 
Commitments and contingencies (Note 10)
   
   
SemGroup owners’ equity:
 
 
Common stock, $0.01 par value (authorized - 100,000 shares; issued - 45,104 and 44,863 shares, respectively)
441 
439 
Additional paid-in capital
1,200,744 
1,217,255 
Treasury stock, at cost (972 and 931 shares, respectively)
(6,400)
(5,593)
Accumulated deficit
(53,280)
(38,012)
Accumulated other comprehensive loss
(62,671)
(58,562)
Total SemGroup Corporation owners’ equity
1,078,834 
1,115,527 
Noncontrolling interests in consolidated subsidiaries
79,534 
80,829 
Total owners’ equity
1,158,368 
1,196,356 
Total liabilities and owners’ equity
$ 2,801,832 
$ 2,853,909 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Mar. 31, 2016
Dec. 31, 2015
Allowance for doubtful accounts
$ 3,114 
$ 3,019 
Accumulated depreciation
343,535 
319,769 
Accumulated amortization
32,308 
29,515 
Accounts Payable
215,751 
273,666 
Due to Related Parties
3,407 
5,033 
Accrued Liabilities
85,688 
85,047 
Other Liabilities, Current
11,880 
13,281 
Common stock, $0.01 par value
$ 0.01 
$ 0.01 
Common stock shares authorized
100,000 
100,000 
Common stock shares issued
45,104 
44,863 
Treasury stock shares
972 
931 
Variable Interest Entity, Primary Beneficiary [Member]
 
 
Accounts Payable
193,885 
243,548 
Due to Related Parties
3,402 
5,033 
Accrued Liabilities
20,243 
22,240 
Other Liabilities, Current
$ 3,436 
$ 4,246 
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Revenues:
 
 
Product
$ 236,896 
$ 220,131 
Service
64,073 
61,877 
Other
13,882 
16,302 
Total revenues
314,851 
298,310 
Expenses:
 
 
Costs of products sold, exclusive of depreciation and amortization shown below
196,947 
192,072 
Operating
50,192 
53,090 
General and administrative
21,060 
32,310 
Depreciation and amortization
24,047 
23,734 
Loss on disposal or impairment, net
13,307 
1,058 
Total expenses
305,553 
302,264 
Earnings from equity method investments
23,071 
20,559 
Loss on issuance of common units by equity method investee
(41)
Operating income
32,328 
16,605 
Other expenses (income), net:
 
 
Interest expense
18,935 
14,591 
Foreign currency transaction loss (gain)
1,469 
(519)
Loss (gain) on sale or impairment of equity method investment
39,764 
(7,894)
Other income, net
(187)
(91)
Total other expenses, net
59,981 
6,087 
Income (loss) from continuing operations before income taxes
(27,653)
10,518 
Income tax expense (benefit)
(21,407)
4,742 
Income (loss) from continuing operations
(6,246)
5,776 
Loss from discontinued operations, net of income taxes
(2)
Net income (loss)
(6,248)
5,776 
Less: net income attributable to noncontrolling interests
9,020 
4,310 
Net income (loss) attributable to SemGroup
(15,268)
1,466 
Other comprehensive loss, net of income taxes
(4,109)
(9,060)
Comprehensive loss
(10,357)
(3,284)
Less: comprehensive income attributable to noncontrolling interests
9,020 
4,310 
Comprehensive loss attributable to SemGroup
$ (19,377)
$ (7,594)
Net income (loss) attributable to SemGroup per common share (Note 12):
 
 
Basic
$ (0.35)
$ 0.03 
Diluted
$ (0.35)
$ 0.03 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Cash flows from operating activities:
 
 
Net income (loss)
$ (6,248)
$ 5,776 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
Net unrealized loss (gain) related to derivative instruments
(4,548)
2,645 
Depreciation and amortization
24,047 
23,734 
Loss on disposal or impairment, net
13,307 
1,058 
Earnings from equity method investments
(23,071)
(20,559)
Loss on issuance of common units by equity method investee
41 
Loss (gain) on sale or impairment of equity method investment
39,764 
(7,894)
Distributions from equity investments
25,712 
25,879 
Amortization of debt issuance costs
1,396 
1,066 
Deferred tax benefit
(22,642)
(682)
Non-cash equity compensation
2,874 
2,777 
Provision for uncollectible accounts receivable, net of recoveries
11 
383 
Currency loss (gain)
1,469 
(519)
Inventory valuation adjustment
1,187 
Changes in operating assets and liabilities (Note 13)
(4,572)
(16,307)
Net cash provided by operating activities
47,540 
18,544 
Cash flows from investing activities:
 
 
Capital expenditures
(73,520)
(84,327)
Proceeds from sale of long-lived assets
40 
117 
Contributions to equity method investments
(1,356)
(15,182)
Proceeds from sale of common units of equity method investee
29,012 
Distributions in excess of equity in earnings of affiliates
6,074 
5,201 
Net cash used in investing activities
(68,762)
(65,179)
Cash flows from financing activities:
 
 
Debt issuance costs
(601)
Borrowings on credit facilities and issuance of senior unsecured notes, net of discount
174,000 
422,000 
Principal payments on credit facilities and other obligations
(110,011)
(162,012)
Rose Rock Midstream, L.P. equity issuance
89,119 
Distributions to noncontrolling interests
(10,833)
(8,953)
Repurchase of common stock for payment of statutory taxes due on equity-based compensation
(807)
(3,630)
Dividends paid
(19,887)
(14,846)
Proceeds from issuance of common stock under employee stock purchase plan
269 
313 
Net cash provided by financing activities
32,731 
321,390 
Effect of exchange rate changes on cash and cash equivalents
2,884 
172 
Change in cash and cash equivalents
14,393 
274,927 
Cash and cash equivalents at beginning of period
58,096 
40,598 
Cash and cash equivalents at end of period
$ 72,489 
$ 315,525 
Overview
OVERVIEW
OVERVIEW
SemGroup Corporation is a Delaware corporation headquartered in Tulsa, Oklahoma. The terms "we," "our," "us," "SemGroup," "the Company" and similar language used in these notes to the unaudited condensed consolidated financial statements refer to SemGroup Corporation and its subsidiaries.
Basis of presentation
The accompanying condensed consolidated balance sheet at December 31, 2015, which is derived from audited financial statements, and the unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules and regulations of the Securities and Exchange Commission ("SEC"). These financial statements include all normal and recurring adjustments that, in the opinion of management, are necessary to present fairly the financial position of the Company and the results of its operations and its cash flows.
Our condensed consolidated financial statements include the accounts of our controlled subsidiaries. All significant transactions between our consolidated subsidiaries have been eliminated.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts and disclosures in the financial statements. Although management believes these estimates are reasonable, actual results could differ materially from these estimates. The results of operations for the three months ended March 31, 2016, are not necessarily indicative of the results to be expected for the full year ending December 31, 2016.
Pursuant to the rules and regulations of the SEC, the accompanying condensed consolidated financial statements do not include all of the information and notes normally included with financial statements prepared in accordance with accounting principles generally accepted in the United States. Certain reclassifications have been made to conform previously reported balances to the current presentation. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2015, which are included in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC.
Our significant accounting policies are consistent with those described in our Annual Report on Form 10-K for the year ended December 31, 2015.
Recent accounting pronouncements
In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting'', which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. For public entities, this ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those years and early adoption is permitted. We will adopt this guidance in the first quarter of 2017. The impact is not expected to be material.
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)", which amends the existing lease guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by operating and finance leases and to disclose additional quantitative and qualitative information about leasing arrangements. This ASU also provides clarifications surrounding the presentation of the effects of leases in the income statement and statement of cash flows. For public entities, this ASU will be effective for annual periods beginning after December 15, 2018, and interim periods within those years. The new guidance shall be applied using a modified retrospective approach and early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements. We will adopt this guidance in the first quarter of 2019.
In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes", which requires all deferred tax assets and liabilities to be classified as noncurrent in the statement of financial position. For public entities, this ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those years. The new guidance may be applied prospectively or retrospectively and early adoption is permitted. We have not determined which method we will apply when we adopt the standard. We will adopt this guidance in the first quarter of 2017. The impact is not expected to be material.
In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory", which requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value rather than the lower of cost or market. The standard will be effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The new guidance shall be applied prospectively and early adoption is permitted. We will adopt this guidance in the first quarter of 2017. The impact is not expected to be material.
In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”, which is designed to simplify presentation of debt issuance costs. The standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU 2015-15, “Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting,” which amended the SEC paragraphs of ASC Subtopic 835-30 to include the language from the SEC Staff Announcement indicating that the SEC would not object to presenting deferred debt issuance costs related to line-of-credit agreements as assets and subsequently amortizing the deferred debt issuance costs ratably over the term of the agreement. The standards are effective for U.S. public companies for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The new guidance has been applied on a retrospective basis for all periods presented. We adopted this guidance in the first quarter of 2016. The impact was not material. For presentation purposes, $16.8 million of debt issuance costs which had previously been reported as other noncurrent assets were reclassified as a reduction of long-term debt on the December 31, 2015 balance sheet. Capitalized loan fees related to our revolving credit facilities continue to be presented as other noncurrent assets.
In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,” which adds requirements that limited partnerships must meet to qualify as voting interest entities and modifies the evaluation of whether limited partnerships are variable interest entities or voting interest entities. It also eliminates the presumption that a general partner should consolidate a limited partnership. This guidance is effective for public companies for fiscal years beginning after December 15, 2015. We adopted this guidance in the first quarter of 2016. The impact was not material.
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers," which supersedes nearly all existing revenue recognition guidance under accounting principles generally accepted in the United States ("U.S. GAAP"). The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard permits using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year. In March 2016, the FASB issued ASU 2016-08 which amended the principal-versus-agent implementation guidance set forth in ASU 2014-09. Among other things, ASU 2016-08 clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. In April 2016, the FASB issued ASU 2016-10 which amended certain aspects of the guidance related to identifying performance obligations and licensing implementation within ASU 2014-09. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard. We will adopt this guidance in the first quarter of 2018.
Rose Rock Midstream, L.P.
ROSE ROCK MIDSTREAM, L.P.
ROSE ROCK MIDSTREAM, L.P.
We control the operations of our consolidated subsidiary, Rose Rock Midstream, L.P. (NYSE: RRMS) ("Rose Rock"), through our ownership of the general partner interest. As of March 31, 2016, we own the 2% general partner interest and a 55.1% limited partner interest. Subsequent to the adoption of ASU 2015-02, Rose Rock is considered to be a variable interest entity due to the limited partners' lack of substantive kick-out rights or substantive participating rights. We will continue to consolidate Rose Rock as we are the primary beneficiary due to our general partner interest, majority limited partner interest and incentive distribution rights.
Rose Rock's assets are pledged as collateral under its senior secured revolving credit facility agreement. The credit agreement restricts Rose Rock’s ability to make certain types of payments relating to its units, including the declaration or payment of cash distributions; provided that Rose Rock may make quarterly distributions of available cash so long as no default under the agreement then exists or would result therefrom. The agreement is guaranteed by all of Rose Rock’s material domestic subsidiaries and secured by a lien on substantially all of the property and assets of Rose Rock and the guarantors, subject to customary exceptions. Rose Rock's creditors have no recourse to the credit of SemGroup.
As the general partner of Rose Rock, SemGroup may provide support for Rose Rock to maintain its expected quarterly distributions while maintaining its target distribution coverage ratio. However, SemGroup is not contractually obligated to do so.
Cash distributions
We receive distributions from Rose Rock on our common units, our 2% general partner interest and incentive distribution rights. Rose Rock intends to pay a minimum quarterly distribution of $0.3625 per unit, to the extent it has sufficient available cash, as defined in Rose Rock’s partnership agreement.  
The following table shows the cash distributions paid or declared during 2016 and 2015 (in thousands, except for per unit amounts):
 
Distribution
Per Unit
 
Distributions Paid/To Be Paid
Quarter Ended
SemGroup
Noncontrolling
Interest
Common Units
Total
Distributions
General
Partner
Incentive
Distributions
Common
Units
Subordinated
Units
December 31, 2014
$
0.6200

 
$
485

$
3,487

$
6,551

$
5,202

$
8,544

$
24,269

March 31, 2015
$
0.6350

 
$
568

$
4,450

$
13,148

$

$
10,213

$
28,379

June 30, 2015
$
0.6500

 
$
590

$
4,979

$
13,458

$

$
10,456

$
29,483

September 30, 2015
$
0.6600

 
$
604

$
5,333

$
13,665

$

$
10,619

$
30,221

December 31, 2015
$
0.6600

 
$
604

$
5,333

$
13,665

$

$
10,622

$
30,224

March 31, 2016
$
0.6600

*
$
605

$
5,338

$
13,665

$

$
10,643

$
30,251


*Expected distributions related to the quarter ended March 31, 2016, which will be paid on May 13, 2016 to unitholders of record as of May 3, 2016.

Summarized financial information
Certain summarized balance sheet information of Rose Rock is shown below (in thousands):
 
(Unaudited)
 
 
 
March 31,
2016
 
December 31,
2015
Cash
$
10,672

 
$
9,059

Other current assets
279,802

 
310,555

Property, plant and equipment, net
443,415

 
441,596

Equity method investments
433,572

 
438,291

Goodwill
26,628

 
26,628

Other noncurrent assets, net
18,748

 
19,461

Total assets
$
1,212,837

 
$
1,245,590

 
 
 
 
Current liabilities
$
229,164

 
$
283,029

Long-term debt
756,921

 
732,356

Partners’ capital attributable to SemGroup
147,218

 
149,376

Partners’ capital attributable to noncontrolling interests
79,534

 
80,829

Total liabilities and partners' capital
$
1,212,837

 
$
1,245,590


Certain summarized income statement information of Rose Rock for the three months ended March 31, 2016 and 2015 is shown below (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Revenue
$
203,951

 
$
134,693

Cost of products sold
$
151,391

 
$
96,237

Operating, general and administrative expenses
$
26,601

 
$
26,571

Depreciation and amortization expense
$
7,893

 
$
10,143

Earnings from equity method investments
$
20,839

 
$
20,864

Net income
$
26,468

 
$
14,600

Equity Method Investments
EQUITY METHOD INVESTMENTS
EQUITY METHOD INVESTMENTS

Our equity method investments consisted of the following (in thousands):
 
March 31, 2016
 
December 31, 2015
White Cliffs Pipeline, L.L.C.
$
293,811

 
$
297,109

NGL Energy Partners LP
70,342

 
112,787

Glass Mountain Pipeline, LLC
139,761

 
141,182

Total equity method investments
$
503,914

 
$
551,078


    
Our earnings from equity method investments consisted of the following (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
White Cliffs Pipeline, L.L.C.
$
19,780

 
$
19,090

NGL Energy Partners LP*
2,232

 
(305
)
Glass Mountain Pipeline, LLC
1,059

 
1,774

Total earnings from equity method investments
$
23,071

 
$
20,559


* Excluding loss on issuance of common units of $41.0 thousand for the three months ended March 31, 2016. Additionally, gains and losses on the disposal or impairment of equity investments are not reported within "earnings from equity method investments" in the condensed consolidated statements of operations and comprehensive income (loss).
Cash distributions received from equity method investments consisted of the following (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
White Cliffs Pipeline, L.L.C.
$
24,098

 
$
24,154

NGL Energy Partners LP
4,873

 
5,015

Glass Mountain Pipeline, LLC
2,815

 
1,911

Total cash distributions received from equity method investments
$
31,786

 
$
31,080


White Cliffs Pipeline, L.L.C.
Certain unaudited summarized income statement information of White Cliffs Pipeline, L.L.C. ("White Cliffs") for the three months ended March 31, 2016 and 2015 is shown below (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Revenue
$
58,056

 
$
54,614

Operating, general and administrative expenses
$
9,852

 
$
8,353

Depreciation and amortization expense
$
8,963

 
$
8,538

Net income
$
39,247

 
$
37,723


The equity in earnings of White Cliffs for the three months ended March 31, 2016 and 2015 is less than 51% of the net income of White Cliffs for the same periods. This is due to certain general and administrative expenses we incur in managing the operations of White Cliffs that the other owners are not obligated to share. Such expenses are recorded by White Cliffs and are allocated to our ownership interest. White Cliffs recorded $0.5 million and $0.3 million of such general and administrative expense for the three months ended March 31, 2016 and 2015, respectively.
The members of White Cliffs are required to contribute capital to White Cliffs to fund various projects. For the three months ended March 31, 2016, we contributed $0.5 million for an expansion project adding approximately 65,000 barrels per day of capacity. Remaining contributions related to the expansion project will be paid in 2016 and are expected to total $1.7 million. The project is expected to be completed during the first half of 2016.
NGL Energy Partners LP
At March 31, 2016, we owned 4,652,568 common units representing limited partner interests in NGL Energy Partners LP (NYSE: NGL) ("NGL Energy"), which represents approximately 4.4% of the total 105,383,639 limited partner units of NGL Energy outstanding at December 31, 2015, and an 11.78% interest in the general partner of NGL Energy.
At March 31, 2016, the fair market value of our 4,652,568 common unit investment in NGL Energy was $35.0 million, based on a March 31, 2016 closing price of $7.52 per common unit. This does not reflect our 11.78% interest in the general partner of NGL Energy. The fair value of our limited partner investment in NGL Energy is categorized as a Level 1 measurement, as it is based on quoted market prices.
See Note 4 for discussion of the other-than-temporary impairment of our common unit investment in NGL Energy.
Our policy is to record our equity in earnings of NGL Energy on a one-quarter lag, as we do not expect information on the earnings of NGL Energy to always be available in time to consistently record the earnings in the quarter in which they are generated. Accordingly, the equity in earnings from NGL Energy, which is reflected in our condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2016 and 2015, relates to the earnings of NGL Energy for the three months ended December 31, 2015 and 2014, respectively.
During the three months ended December 31, 2015, NGL issued common units which diluted our limited partnership interest. As we record activity on a one-quarter lag, we recognized a non-cash loss of $41.0 thousand associated with these issuances for the three months ended March 31, 2016.
During the three months ended March 31, 2015, we sold 999,533 of our NGL Energy common units for $29.0 million, net of related costs of $0.4 million. We recorded a net gain related to these sales of $7.9 million in our condensed consolidated statement of operations and comprehensive income (loss) for the three months ended March 31, 2015.
On April 27, 2016, we sold all of our NGL Energy limited partner units for $13.00 per unit. We expect to record a gain of approximately $9.1 million in the second quarter related to this transaction.
Certain unaudited summarized income statement information of NGL Energy for the three months ended December 31, 2015 and 2014 is shown below (in thousands):
 
Three Months Ended December 31,
 
2015
 
2014
Revenue
$
2,685,006

 
$
4,552,146

Cost of sales
$
2,433,500

 
$
4,311,668

Operating, general and administrative expenses
$
131,146

 
$
172,064

Depreciation and amortization expense
$
59,180

 
$
50,335

Net income (loss)
$
29,621

 
$
(5,269
)
 
Glass Mountain Pipeline, LLC
We own a 50% interest in Glass Mountain Pipeline, LLC ("Glass Mountain"), which we account for under the equity method. The excess of the recorded amount of our investment over the book value of our share of the underlying net assets represents equity method goodwill and capitalized interest at March 31, 2016. Capitalized interest is amortized as a reduction of earnings from equity method investments.
Certain unaudited summarized income statement information of Glass Mountain for the three months ended March 31, 2016 and 2015 is shown below (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Revenue
$
8,572

 
$
11,121

Cost of sales
$
565

 
$
1,982

Operating, general and administrative expenses
$
1,845

 
$
1,438

Depreciation and amortization expense
$
3,936

 
$
4,044

Net income
$
2,225

 
$
3,655


The equity in earnings of Glass Mountain for the three months ended March 31, 2016 reported in our condensed consolidated statement of operations and comprehensive income (loss) is less than 50% of the net income of Glass Mountain for the same period due to amortization of capitalized interest for the period.
For the three months ended March 31, 2016, we contributed $0.3 million to Glass Mountain related to capital projects.
Impairments
Asset Impairment Charges [Text Block]
IMPAIRMENTS
SemGas goodwill impairment

In March 2016, our SemGas segment revised the volume forecast for its northern Oklahoma system based on revised volume forecasts provided by certain producers who have been impacted by the Oklahoma Corporation Commission's Regional Earthquake Response Plan (the "OCC Plan"). The OCC Plan curtails the amount of volume that can be injected into disposal wells which reduces producers' ability to develop new wells.
Based on the reduction to our forecast, we tested our SemGas segment's long-lived assets, finite-lived intangible and goodwill for impairment at March 31, 2016. No impairment was indicated for SemGas' long-lived assets and finite-lived intangible assets based on an undiscounted cash flow analysis. However, we did record an impairment of SemGas' goodwill for the entire balance of $13.1 million.
To test the goodwill for impairment, we used an income approach, supplemented by a market approach to calculate the fair value of the reporting unit. Under the income approach, we utilized a discounted cash flow model to determine the fair value of our SemGas operations. Significant judgments and assumptions included the discount rate, anticipated revenue and volume growth rates, estimated operating expenses and capital expenditures, which were based on our operating and capital budgets as well as our strategic plans. A significant underlying assumption is that commodity prices will eventually improve, water injection issues will be resolved and production volumes will begin to increase. If production does not increase in the future or the production takes longer than anticipated to return, this would negatively affect our key assumptions and potentially lead to finite-lived intangible and long-lived asset impairments in the future. We considered the market approach by comparing the revenue and earnings multiples implied by our income approach to those of comparable companies for reasonableness.
Other-than-temporary impairment of equity method investment in NGL Energy
During the fourth quarter of 2015, the market price of NGL Energy common units fell below our carrying value per unit and remained below our carrying value as of March 31, 2016. At December 31, 2015, in accordance with ASC 320-10-S99 “Investments - Debt and Equity Securities” we assessed whether such decline in value was other than temporary. During this initial assessment, the decrease in value was determined not to be other-than-temporary. The evidence management considered in such assessment included the nature and volatility of such decline, as well as the latest public financial guidance, condition, and results of NGL Energy. Subsequently, we continued to monitor events and developments and, based on NGL Energy's April 21, 2016 announcement of a reduction in its quarterly distribution and lowering of financial performance guidance for the most recent quarter, we concluded that the decline in the value of our investment is other-than-temporary as of March 31, 2016. As such, we recorded an impairment of $39.8 million to our investment in the limited partner units of NGL Energy for the three months ended March 31, 2016. The value of our limited partner investment in NGL Energy was written-down to the market price of $11.04 on December 31, 2015, which is the date through which we have recorded our equity in earnings as discussed in Note 3. See Note 3 for discussion of the sale of our NGL Energy limited partner units on April 27, 2016.
Our investment in the general partner of NGL Energy is not considered to be impaired at March 31, 2016. There is no readily available market price for our general partner investment as these units are not publicly traded. Based on the relatively low book value of our general partner investment, the value of incentive distribution rights and comparable general partner transactions, we do not believe our investment in the general partner of NGL Energy is impaired.
Segments
SEGMENTS
SEGMENTS
Our businesses are organized based on the nature and location of the services they provide. Certain summarized information related to our reportable segments is shown in the tables below. None of the operating segments have been aggregated. Our equity investment in NGL Energy is included within the SemStream segment. Although Corporate and Other does not represent an operating segment, it is included in the tables below to reconcile segment information to that of the consolidated Company. Eliminations of transactions between segments are also included within Corporate and Other in the tables below.
During the year ended December 31, 2015, management made the decision to disaggregate certain activities and functions within the domestic crude oil business to provide additional granularity, both internally and externally, to our operating results. As such, the prior period results of the former Crude segment have been recast to reflect the resulting reportable segments: Crude Transportation, Crude Facilities and Crude Supply and Logistics. Certain amounts formerly included in the Crude segment have been included in Corporate and Other in the current presentation. No other segments were impacted. Additionally, current year activity includes intersegment revenues generated by our Crude Transportation and Crude Facilities segments for services provided to our Crude Supply and Logistics segment. With the exception of intersegment trucking revenues of our Crude Transportation segment, these intersegment charges did not exist in the prior year.
The accounting policies of each segment are the same as the accounting policies of the consolidated Company. Transactions between segments are generally recorded based on prices negotiated between the segments. Certain general and administrative and interest expenses incurred at the corporate level were allocated to the segments based on our allocation policies in effect at the time.
Our results by segment are presented in the tables below (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Revenues:
 
 
 
   Crude Transportation
 
 
 
External
$
17,196

 
$
20,327

Intersegment
7,213

 
3,721

   Crude Facilities
 
 
 
External
10,133

 
11,405

Intersegment
2,746

 

   Crude Supply and Logistics
 
 
 
External
176,622

 
102,961

   SemGas
 
 
 
External
43,520

 
60,276

Intersegment
2,746

 
5,981

   SemCAMS
 
 
 
External
30,866

 
29,724

   SemLogistics
 
 
 
External
6,380

 
5,152

   SemMexico
 
 
 
External
30,134

 
61,490

   Corporate and Other
 
 
 
External

 
6,975

Intersegment
(12,705
)
 
(9,702
)
Total Revenues
$
314,851


$
298,310

 
 
 
 
 
Three Months Ended March 31,
 
2016
 
2015
Earnings from equity method investments:
 
 
 
   Crude Transportation
$
20,839

 
$
20,864

   SemStream(1)
2,191

 
(305
)
Total earnings from equity method investments
$
23,030

 
$
20,559

(1) SemStream earnings from equity method investments includes gain (loss) on issuance of common units by equity method investee. Gains and losses on the disposal or impairment of equity investments are not reported within "earnings from equity method investments" in the condensed consolidated statements of operations and comprehensive income (loss).
 
 
 
 
 
Three Months Ended March 31,
 
2016
 
2015
Depreciation and amortization:
 
 
 
   Crude Transportation
$
5,859

 
$
8,618

   Crude Facilities
1,884

 
1,369

   Crude Supply and Logistics
40

 
39

   SemGas
8,922

 
7,138

   SemCAMS
3,951

 
3,066

   SemLogistics
1,960

 
2,040

   SemMexico
941

 
1,053

   Corporate and Other
490

 
411

Total depreciation and amortization
$
24,047


$
23,734

 
 
 
 
 
Three Months Ended March 31,
 
2016
 
2015
Income tax expense (benefit):
 
 
 
SemCAMS
$
965

 
$
551

SemLogistics
59

 
(369
)
SemMexico
607

 
990

Corporate and other
(23,038
)
 
3,570

Total income tax expense (benefit)
$
(21,407
)

$
4,742

 
 
 
 
 
Three Months Ended March 31,
 
2016
 
2015
Segment profit (1):
 
 
 
   Crude Transportation
$
25,418

 
$
24,524

   Crude Facilities
9,587

 
8,402

   Crude Supply and Logistics
9,093

 
5,181

   SemGas
(992
)
 
14,880

   SemCAMS
9,904

 
7,885

   SemStream
2,181

 
(308
)
   SemLogistics
2,659

 
861

   SemMexico
2,318

 
5,123

   Corporate and Other
(8,341
)
 
(23,564
)
Total segment profit
$
51,827


$
42,984

(1) Segment profit represents revenues excluding unrealized gains (losses) related to derivative instruments plus earnings from equity method investments less cost of sales excluding depreciation and amortization and less operating and general and administrative expenses.
 
 
 
 
 
Three Months Ended March 31,
 
2016
 
2015
Reconciliation of segment profit to net income:
 
 
 
   Total segment profit
$
51,827

 
$
42,984

     Less:
 
 
 
Net unrealized loss (gain) related to derivative instruments
(4,548
)
 
2,645

Depreciation and amortization
24,047

 
23,734

Interest expense
18,935

 
14,591

Foreign currency transaction gain (loss)
1,469

 
(519
)
Loss (gain) on sale or impairment of equity method investment
39,764

 
(7,894
)
Other income, net
(187
)
 
(91
)
Income tax expense
(21,407
)
 
4,742

Loss from discontinued operations, net of taxes
2

 

   Net income
$
(6,248
)

$
5,776

 
 
 
 
 
March 31,
2016
 
December 31,
2015
Total assets (excluding intersegment receivables):
 
 
 
   Crude Transportation
$
900,365

 
$
877,017

   Crude Facilities
152,361

 
155,186

   Crude Supply and Logistics
297,163

 
328,419

   SemGas
700,881

 
719,789

   SemCAMS
372,467

 
331,749

   SemLogistics
153,939

 
155,794

   SemMexico
86,453

 
89,608

   SemStream
70,342

 
112,787

   Corporate and Other
67,861

 
83,560

Total
$
2,801,832

 
$
2,853,909

 
 
 
 
 
March 31,
2016
 
December 31,
2015
Equity investments:
 
 
 
   Crude Transportation
$
433,572

 
$
438,291

   SemStream
70,342

 
112,787

Total equity investments
$
503,914

 
$
551,078

Inventories
Inventories
INVENTORIES
Inventories consist of the following (in thousands):
 
March 31,
2016
 
December 31,
2015
Crude oil
$
57,075

 
$
59,121

Asphalt and other
8,269

 
11,118

Total inventories
$
65,344

 
$
70,239



At March 31, 2015, our Crude Supply and Logistics segment recorded non-cash charges of $1.2 million to write-down crude oil inventory to the lower of cost or market. A lower of cost or market adjustment was not necessary at March 31, 2016.
Financial Instruments
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS
Fair value of financial instruments
We record certain financial assets and liabilities at fair value at each balance sheet date. The tables below summarize the balances of commodity derivative assets and liabilities at March 31, 2016 and December 31, 2015 (in thousands):

 
March 31, 2016
 
December 31, 2015
Derivatives subject to netting arrangements:
Level 1
 
Netting*
 
Total
 
Level 1
 
Netting*
 
Total
Commodity derivatives:
 
 
 
 

 
 
 
 
 

Assets
$
6,041

 
$
(1,832
)
 
$
4,209

 
$
131

 
$
(131
)
 
$

Liabilities
$
1,832

 
$
(1,832
)
 
$

 
$
470

 
$
(131
)
 
$
339

*Relates primarily to exchange traded futures. Gain and loss positions on multiple contracts are settled net on a daily basis with the exchange.
"Level 1" measurements are based on inputs consisting of unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. These include commodity futures contracts that are traded on an exchange.
"Level 2" measurements are based on inputs consisting of market observable and corroborated prices for similar derivative contracts. Assets and liabilities classified as Level 2 include over the counter ("OTC") traded physical fixed priced purchases and sales forward contracts.
"Level 3" measurements are based on inputs from a pricing service and/or internal valuation models incorporating observable and unobservable market data. These include commodity derivatives, such as forwards and swaps for which there is not a highly liquid market and therefore are not included in Level 2 above.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value levels. At March 31, 2016, all of our physical fixed price forward purchases and sales contracts were being accounted for as normal purchases and normal sales.
There were no financial assets or liabilities recorded at fair value which were classified as Level 2 or Level 3 during the three months ended March 31, 2016 and 2015. As such, no rollforward of Level 3 activity has been presented.
Commodity derivative contracts
Our consolidated results of operations and cash flows are impacted by changes in market prices for petroleum products. This exposure to commodity price risk is managed, in part, by entering into various commodity derivatives.
We seek to manage the price risk associated with our marketing operations by limiting our net open positions through (i) the concurrent purchase and sale of like quantities of petroleum products to create back-to-back transactions that are intended to lock in positive margins based on the timing, location or quality of the petroleum products purchased and delivered or (ii) derivative contracts. Our storage and transportation assets can also be used to mitigate location and time basis risk. All marketing activities are subject to our Comprehensive Risk Management Policy, which establishes limits in order to manage risk and mitigate financial exposure.
Our commodity derivatives can be comprised of swaps, futures contracts and forward contracts of crude oil, natural gas and natural gas liquids. These are defined as follows:
Swaps – OTC transactions where a floating price, basis or index is exchanged for a fixed (or a different floating) price, basis or index at a preset schedule in the future, according to an agreed-upon formula.
Futures contracts – Exchange traded contracts to buy or sell a commodity. These contracts are standardized by the exchange in terms of quality, quantity, delivery period and location for each commodity.
Forward contracts – OTC contracts to buy or sell a commodity at an agreed upon future date. The buyer and seller agree on specific terms (price, quantity, delivery period and location) and conditions at the inception of the contract.
The following table sets forth the notional quantities for commodity derivative instruments entered into (in thousands of barrels):
 
Three Months Ended March 31,
 
2016
 
2015
Sales
10,420

 
5,731

Purchases
10,510

 
5,905


We have not designated any of our commodity derivative instruments as accounting hedges. We have recorded the fair value of our commodity derivative instruments on our condensed consolidated balance sheets in other current assets and other current liabilities in the following amounts (in thousands):
 
March 31, 2016
 
December 31, 2015
 
Assets
 
Liabilities
 
Assets
 
Liabilities
Commodity contracts
$
4,209

 
$

 
$

 
$
339


We have posted margin deposits as collateral with brokers who have the right of set off associated with these funds. Our margin accounts were in a net liability position as of March 31, 2016 of $1.0 million. At December 31, 2015, our margin deposit balance was an asset of $2.9 million. These margin account balances have not been offset against our net commodity derivative instrument (contract) positions. Had these margin deposits been netted against our net commodity derivative instrument (contract) positions as of March 31, 2016 and December 31, 2015, we would have had net asset positions of $3.2 million and $2.6 million, respectively.
Realized and unrealized gains (losses) from our commodity derivatives were recorded to product revenue in the following amounts (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Commodity contracts
$
3,354

 
$
(66
)

Concentrations of risk
During the three months ended March 31, 2016, one customer of our Crude Supply and Logistics segment accounted for more than 10% of our consolidated revenues at approximately 35%. We purchased approximately $27.9 million of product from one third-party supplier of our Crude Supply and Logistics segment, which represented approximately 14% of our costs of products sold.
At March 31, 2016, one third-party customer, primarily of our Crude Supply and Logistics segment, accounted for approximately 34% of our consolidated accounts receivable.
Income Taxes
INCOME TAXES
INCOME TAXES

The effective tax rate was 77% and 45% for the three months ended March 31, 2016 and 2015, respectively. Significant items that impacted the effective tax rate for each period, as compared to the U.S. federal statutory rate of 35%, include earnings in foreign jurisdictions taxed at lower rates and a non-controlling interest in Rose Rock for which taxes are not provided. Further, the foreign earnings are taxed in foreign jurisdictions as well as in the U.S., since they are disregarded entities for U.S. federal income tax purposes. These combined factors, and the magnitude of the permanent items impacting the tax rate relative to income from continuing operations before income taxes result in rates that are not comparable between the periods.
We have a valuation allowance on a small portion of our state net operating loss carryovers with shorter carryover periods and our foreign tax credit carryover. We have not released the valuation allowance on the foreign tax credits due to the foreign tax credit limitation and the relative subjectivity of forecasts of the relational magnitude of U.S. and foreign taxable income in future periods, as well as the shorter carryover period available for the credits. Deferred tax assets are reduced by a valuation allowance when a determination is made that it is more likely than not that some, or all, of the deferred tax assets will not be realized based on the weight of all available evidence. Evidence which is objectively verifiable carries a higher weight in the analysis. The ultimate realization of deferred tax assets is dependent upon the existence of sufficient taxable income of the appropriate character within the carryback and carryforward period available under the tax law. Sources of taxable income include future reversals of existing taxable temporary differences, future earnings and available tax planning strategies.
We have analyzed filing positions in all of the federal, state and foreign jurisdictions where we are required to file income tax returns and determined that no accruals related to uncertainty in tax positions are required. All income tax years of the Company ending after the emergence from bankruptcy remain open for examination in U.S. jurisdictions under general operation of the statute of limitations, including special provisions with regard to net operating loss carryovers. In foreign jurisdictions, all tax periods prior to the emergence from bankruptcy are closed. The statute of limitations has not been waived with respect to any foreign jurisdictions post emergence and tax periods are open for examination in accordance with the general statutes of each foreign jurisdiction. Currently, there are no examinations in progress for our federal, state or foreign jurisdictions.
Long-Term Debt
Long-Term Debt
LONG-TERM DEBT
Our long-term debt consisted of the following (in thousands):
 
March 31,
2016
 
December 31,
2015
SemGroup 7.50% senior unsecured notes due 2021
$
300,000

 
$
300,000

Unamortized debt issuance costs on SemGroup notes
(4,333
)
 
(4,540
)
SemGroup 7.50% senior unsecured notes due 2021, net
295,667

 
295,460




 


Rose Rock 5.625% senior unsecured notes due 2022
400,000

 
400,000

Unamortized debt issuance costs on Rose Rock 2022 notes
(6,709
)
 
(6,975
)
Rose Rock 5.625% senior unsecured notes due 2022, net
393,291

 
393,025

 
 
 
 
Rose Rock 5.625% senior unsecured notes due 2023
350,000

 
350,000

Unamortized discount on Rose Rock 2023 notes
(5,317
)
 
(5,455
)
Unamortized debt issuance costs on Rose Rock 2023 notes
(5,098
)
 
(5,266
)
Rose Rock 5.625% senior unsecured notes due 2023, net
339,585

 
339,279

 
 
 
 
SemGroup corporate revolving credit facility
70,000

 
30,000

Rose Rock revolving credit facility
24,000

 

SemMexico revolving credit facility

 

Capital leases
72

 
83

Total long-term debt, net
1,122,615

 
1,057,847

Less: current portion of long-term debt
27

 
31

Noncurrent portion of long-term debt, net
$
1,122,588

 
$
1,057,816


SemGroup senior unsecured notes due 2021
For the three months ended March 31, 2016 and 2015, we incurred $5.8 million and $5.8 million, respectively, of interest expense related to $300 million of 7.50% senior unsecured notes due 2021 (the "SemGroup Notes") including the amortization of debt issuance costs.
SemGroup corporate revolving credit facility
At March 31, 2016, we had $70.0 million of outstanding cash borrowings on our $500 million revolving credit facility of which $40.0 million incurred interest at the alternate base rate ("ABR") and $30.0 million incurred interest at the Eurodollar rate. The interest rate in effect at March 31, 2016 on ABR borrowings was 4.50%. The interest rate in effect at March 31, 2016 on Eurodollar rate borrowings was 2.62%.
At March 31, 2016, we had outstanding letters of credit under the facility of $5.3 million, for which the rate in effect was 2.0%.
We incurred interest expense related to the SemGroup revolving credit facility of $1.4 million and $1.0 million for the three months ended March 31, 2016 and 2015, respectively, including amortization of debt issuance costs.
Rose Rock senior unsecured notes due 2022
At March 31, 2016, Rose Rock had outstanding $400 million of 5.625% senior unsecured notes due 2022 (the "Rose Rock 2022 Notes"). For the three months ended March 31, 2016 and 2015, we incurred $5.9 million and $5.8 million, respectively, of interest expense related to the Rose Rock 2022 Notes including amortization of debt issuance costs.
Rose Rock senior unsecured notes due 2023
At March 31, 2016, Rose Rock had $350 million of 5.625% senior unsecured notes due 2023 (the “Rose Rock 2023 Notes”), which were issued on May 14, 2015. For the three months ended March 31, 2016, we incurred $5.2 million of interest expense related to the Rose Rock 2023 Notes including amortization of debt issuance costs.
Rose Rock revolving credit facility
At March 31, 2016, Rose Rock had $24.0 million of outstanding cash borrowings under the $585 million Rose Rock revolving credit facility, which incurred interest at the ABR rate. At March 31, 2016, the interest rate in effect on ABR borrowings was 5.0%.
At March 31, 2016, Rose Rock had $33.4 million in outstanding letters of credit, and the rate in effect was 2.50%.
Rose Rock had $33.5 million of secured bilateral letters of credit outstanding at March 31, 2016. The interest rate in effect was 1.75%. Secured bilateral letters of credit are external to the facility and do not reduce availability for borrowing on the revolving credit facility.
We incurred $1.5 million and $2.3 million of interest expense related to this facility during the three months ended March 31, 2016 and 2015, respectively, including letters of credit and amortization of debt issuance costs.
SemMexico revolving credit facility
At March 31, 2016, SemMexico had a $100 million Mexican pesos (U.S. $5.8 million at the March 31, 2016 exchange rate) revolving credit facility, which matures in May 2018. There were no outstanding borrowings on the facility at March 31, 2016. Borrowings are unsecured and bear interest at the bank prime rate in Mexico plus 1.50%.
At March 31, 2016, SemMexico had an outstanding letter of credit of $292.8 million Mexican pesos (U.S. $17.0 million at the March 31, 2016 exchange rate). The letter of credit was issued for a fee of 0.25%.
Capitalized interest
During the three months ended March 31, 2016 and 2015, we capitalized interest of $0.8 million and $0.3 million, respectively.
Fair value
We estimate the fair value of the SemGroup Notes, the Rose Rock 2022 Notes and the Rose Rock 2023 Notes to be $242 million, $270 million and $228 million, respectively, at March 31, 2016, based on unadjusted, transacted market prices near the measurement date, which are categorized as Level 2 measurements. We estimate that the fair value of our revolving long-term debt was not materially different than the reported values at March 31, 2016, and is categorized as a Level 2 measurement. It is our belief that neither the market interest rates nor our credit profile have changed significantly enough to have had a material impact on the fair value of our revolving debt outstanding at March 31, 2016.
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES
Bankruptcy matters
On July 22, 2008 (the "Petition Date"), SemGroup, L.P. and certain subsidiaries filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Also on July 22, 2008, SemGroup, L.P.'s Canadian subsidiaries filed for creditor protection in Canada. Later during 2008, certain other U.S. subsidiaries filed petitions for reorganization. While in bankruptcy, SemGroup, L.P. filed a plan of reorganization with the court, which was confirmed on October 28, 2009 (the "Plan of Reorganization"). The Plan of Reorganization determined, among other things, how pre-Petition Date obligations would be settled, the equity structure of the reorganized company upon emergence and the financing arrangements upon emergence. SemGroup Corporation emerged from bankruptcy protection on November 30, 2009 (the "Emergence Date").
Claims reconciliation process
A large number of parties made claims against us for obligations alleged to have been incurred prior to our predecessor's bankruptcy filing. We have resolved or settled all of these outstanding claims and have made all required distributions. The Plan of Reorganization has therefore been fully administered. On November 7, 2014, SemGroup Corporation and the other reorganized debtors moved for a final decree from the bankruptcy court closing the debtors’ bankruptcy cases. The United States Bankruptcy Court for the District of Delaware granted the request and entered its Order Granting Motion of Remaining Debtors for Entry of Final Decree on December 18, 2014. Accordingly, the bankruptcy cases for SemCrude, L.P., Eaglwing, L.P., SemCanada II, L.P., SemCanada L.P., SemGas, L.P., SemGroup, L.P., SemMaterials, L.P., and SemStream, L.P. have been closed. As part of its decree, the Court retained jurisdiction over certain on-going adversary proceedings, but the debtors have estimated and paid the claims associated with these remaining adversaries, leaving the non-debtor parties to the adversaries to resolve their remaining claims amongst themselves. On January 2, 2015, Bettina M. Whyte, the duly appointed Trustee of the SemGroup Litigation Trust (the “Litigation Trustee”), filed a notice of appeal of the Bankruptcy Court’s December 18, 2014 order closing the aforementioned bankruptcy cases. However, the Bankruptcy Court’s order of final decree was effective upon entry, and the appeal does not stay the effect of the order. The Litigation Trustee’s appeal to the United States District Court for the District of Delaware is currently pending and will be opposed by SemGroup Corporation and the other remaining reorganized debtors.
Dimmit County, TX claims
An employee of Rose Rock Midstream Field Services, LLC was involved in a tractor trailer accident on January 15, 2015 in Dimmit County, Texas.  A second accident followed resulting in six fatalities and multiple injuries.  Multiple lawsuits involving claims of wrongful death and personal injury were filed in Zavala County and Dimmit County, Texas.  These lawsuits have been consolidated and the trial will be held in the District Court, 293rd Judicial District, Zavala County, Texas.  The trial for cause number 15-01-13356-ZCV, Maribel Rodriguez and the Estate of David Rodriguez, et al., vs. Rose Rock Midstream Field Services, LLC, SemGroup Corporation, Rose Rock Midstream, L.P. and SemManagement LLC, et al., was set to begin on April 12, 2016, and has been postponed to June 13, 2016. Mediation including all parties is scheduled for the second week of May 2016.  Although the plaintiffs currently claim total damages in an amount in excess of our insurance coverage, we believe that any liability that may arise from this action will be within the limits covered by our insurance.  We will continue to defend our position, however we cannot predict the outcome.
Environmental
We may, from time to time, experience leaks of petroleum products from our facilities and, as a result of which, we may incur remediation obligations or property damage claims. In addition, we are subject to numerous environmental regulations. Failure to comply with these regulations could result in the assessment of fines or penalties by regulatory authorities.
The Kansas Department of Health and Environment ("the KDHE") initiated discussions during our bankruptcy proceeding regarding six of our sites in Kansas (five owned by Crude Transportation and one owned by SemGas) that KDHE believed, based on their historical use, may have had soil or groundwater contamination in excess of state standards. KDHE sought our agreement to undertake assessments of these sites to determine whether they are contaminated. We reached an agreement with KDHE on this matter and entered into a Consent Agreement and Final Order with KDHE to conduct environmental assessments on the sites and to pay KDHE’s costs associated with their oversight of this matter. We have conducted Phase II investigations at all sites. Four sites are in various stages of follow up investigation, remediation, monitoring, or closure under KDHE oversight.  The environmental work at these sites is being completed under consent orders between Rose Rock Midstream Crude, LP and the KDHE. Two of the remaining sites have limited impacts to shallow soil and groundwater and the groundwater is currently being monitored on a semi-annual basis until such time that closure can be granted by the KDHE.  No active remediation is anticipated for these two sites.  The final two sites have required additional investigation and soil and groundwater remediation may be necessary to achieve KDHE closure. We do not anticipate any penalties or fines for these historical sites.
We received a Notice of Probable Violation and Civil Penalty dated March 29, 2016 from the U.S. Department of Transportation (the “Notice”) for alleged violations of pipeline operation and maintenance regulations related to a 2014 crude oil release that occurred on our Blackwell to See pipeline segment located in Oklahoma.  This pipeline segment was idled in March 2016 when we initiated service on our new pipeline segment that transports Kansas crude volumes to our Cushing, Oklahoma terminal.  The Notice proposes a penalty of $600,200. We responded to the Notice in April 2016 with information that we believe warrants reduction of the amount of the proposed penalty.
Other matters
We are party to various other claims, legal actions, and complaints arising in the ordinary course of business. In the opinion of our management, the ultimate resolution of these claims, legal actions and complaints, after consideration of amounts accrued, insurance coverage and other arrangements, will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, the outcome of such matters is inherently uncertain, and estimates of our consolidated liabilities may change materially as circumstances develop.
Asset retirement obligations
We will be required to incur significant removal and restoration costs when we retire our natural gas gathering and processing facilities in Canada. At March 31, 2016, we have an asset retirement obligation liability of $17.6 million, which is included within other noncurrent liabilities on our condensed consolidated balance sheets. This amount was calculated using the $125.9 million cost we estimate we would incur to retire these facilities, discounted based on our risk-adjusted cost of borrowing and the estimated timing of remediation.
The calculation of the liability for an asset retirement obligation requires the use of significant estimates, including those related to the length of time before the assets will be retired, cost inflation over the assumed life of the assets, actual remediation activities to be required, and the rate at which such obligations should be discounted. Future changes in these estimates could result in material changes in the value of the recorded liability. In addition, future changes in laws or regulations could require us to record additional asset retirement obligations.
Our other segments may also be subject to removal and restoration costs upon retirement of their facilities. However, we are unable to predict when, or if, our pipelines, storage tanks and other facilities would become completely obsolete and require decommissioning. Accordingly, we have not recorded a liability or corresponding asset, as both the amount and timing of such potential future costs are indeterminable.
Purchase and sale commitments
We routinely enter into agreements to purchase and sell petroleum products at specified future dates. We account for derivatives at fair value with the exception of commitments which have been designated as normal purchases and sales for which we do not record assets or liabilities related to these agreements until the product is purchased or sold. At March 31, 2016, such commitments included the following (in thousands):
 
Volume
(Barrels)
 
Value
Fixed price purchases
2,459

 
$
86,203

Fixed price sales
3,613

 
$
128,923

Floating price purchases
15,214

 
$
579,964

Floating price sales
19,915

 
$
678,336


Certain of the commitments shown in the table above relate to agreements to purchase product from a counterparty and to sell a similar amount of product (in a different location) to the same counterparty. Many of the commitments shown in the table above are cancellable by either party, as long as notice is given within the time frame specified in the agreement (generally 30 to 120 days).
Our SemGas segment has a take or pay contractual obligation related to the fractionation of natural gas liquids through June 2023. At March 31, 2016, approximately $394 thousand was due under the contract. The approximate amount of future obligation is as follows (in thousands):
For year ending:
 
December 31, 2016
$
8,894

December 31, 2017
11,938

December 31, 2018
10,060

December 31, 2019
9,121

December 31, 2020
8,451

Thereafter
15,940

Total expected future payments
$
64,404


SemGas also enters into contracts under which we are responsible for marketing the majority of the gas and natural gas liquids produced by the counterparties to the agreements. The majority of SemGas’ revenues were generated from such contracts.
Rose Rock has a take-or-pay obligation with our equity method investee, White Cliffs, for approximately 5,000 barrels per day of space on White Cliffs' pipeline. The agreement became effective in October 2015 and has a term of 5 years. Annual payments to White Cliffs under the agreement are expected to be $9.4 million.
See Note 3 for capital contribution requirements related to the White Cliffs expansion.
Equity
EQUITY
EQUITY
Unaudited condensed consolidated statement of changes in owners’ equity
The following table shows the changes in our consolidated owners’ equity accounts from December 31, 2015 to March 31, 2016 (in thousands):
 
Common
Stock
Additional
Paid-in
Capital
Treasury
Stock
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
Owners’
Equity
Balance at December 31, 2015
$
439

$
1,217,255

$
(5,593
)
$
(38,012
)
$
(58,562
)
$
80,829

$
1,196,356

Net income (loss)



(15,268
)

9,020

(6,248
)
Other comprehensive loss, net of income taxes




(4,109
)

(4,109
)
Distributions to noncontrolling interests





(10,833
)
(10,833
)
Dividends paid

(19,887
)




(19,887
)
Unvested dividend equivalent rights

222




153

375

Non-cash equity compensation

2,466




365

2,831

Issuance of common stock under compensation plans
2

688





690

Repurchase of common stock


(807
)



(807
)
Balance at March 31, 2016
$
441

$
1,200,744

$
(6,400
)
$
(53,280
)
$
(62,671
)
$
79,534

$
1,158,368


Accumulated other comprehensive loss
The following table presents the changes in the components of accumulated other comprehensive loss from December 31, 2015 to March 31, 2016 (in thousands):
 
Currency
Translation
 
Employee
Benefit
Plans
 
Total
Balance at December 31, 2015
$
(57,201
)
 
$
(1,361
)
 
$
(58,562
)
Currency translation adjustment, net of income tax benefit of $2,508
(4,114
)
 

 
(4,114
)
Changes related to benefit plans, net of income tax expense of $2

 
5

 
5

Balance at March 31, 2016
$
(61,315
)
 
$
(1,356
)
 
$
(62,671
)

There were no significant items reclassified out of accumulated other comprehensive loss to net income for the three months ended March 31, 2016.
Common stock
During the three months ended March 31, 2016, we issued 30,718 shares under the Employee Stock Purchase Plan and 131,806 shares related to our equity based compensation awards.
Equity-based compensation
At March 31, 2016, there were 796,797 unvested shares that have been granted under our director and employee compensation programs. The par value of these shares is not reflected in common stock on the condensed consolidated balance sheet, as these shares have not yet vested. For certain of the awards, the number of shares that will vest is contingent upon our achievement of certain specified targets. If we meet the specified maximum targets, approximately 408,000 additional shares could vest.
The holders of certain restricted stock awards are entitled to equivalent dividends (“UDs”) to be received upon vesting of the related restricted stock awards and will be settled in cash. At March 31, 2016, the value of the UDs to be settled in cash related to unvested restricted stock awards was approximately $373 thousand.
During the three months ended March 31, 2016, we granted 517,303 restricted stock awards with a weighted average grant date fair value of $18.59 per award.
Dividends
The following table sets forth the quarterly dividends per share declared and/or paid to shareholders for the periods indicated:
Quarter Ending
 
Dividend Per Share
 
Date of Record
 
Date Paid
March 31, 2015
 
$
0.34

 
March 9, 2015
 
March 20, 2015
June 30, 2015
 
$
0.38

 
May 18, 2015
 
May 29, 2015
September 30, 2015
 
$
0.42

 
August 17, 2015
 
August 25, 2015
December 31, 2015
 
$
0.45

 
November 16, 2015
 
November 24, 2015
March 31, 2016
 
$
0.45

 
March 7, 2016
 
March 17, 2016
June 30, 2016
 
$
0.45

 
May 16, 2016
 
May 26, 2016
Earnings Per Share
EARNINGS PER SHARE
EARNINGS PER SHARE
Earnings per share is calculated based on income from continuing and discontinued operations less any income attributable to noncontrolling interests. Income attributable to noncontrolling interests represents third-party limited partner unitholders' interests in the earnings of our consolidated subsidiary, Rose Rock.  Rose Rock allocates net income to its limited partners based on the distributions pertaining to the current period's available cash as defined by Rose Rock's partnership agreement. After adjusting for the appropriate period's distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to Rose Rock's general partner, limited partners and participating securities in accordance with the contractual terms of Rose Rock's partnership agreement and as further prescribed under the two-class method. Incentive distribution rights do not participate in undistributed earnings.
Basic earnings per share is calculated based on the weighted average shares outstanding during the period. Diluted earnings per share includes the dilutive effect of unvested equity compensation awards.
The following summarizes the calculation of basic earnings per share for the three months ended March 31, 2016 and 2015 (in thousands, except per share amounts):
 
Three Months Ended March 31, 2016
 
Three Months Ended March 31, 2015
 
Continuing
Operations
 
Discontinued
Operations
 
Net
 
Continuing
Operations
 
Discontinued
Operations
 
Net
Income (loss)
$
(6,246
)
 
$
(2
)
 
$
(6,248
)
 
$
5,776

 
$

 
$
5,776

less: Income attributable to noncontrolling interests
9,020

 

 
9,020

 
4,310

 

 
4,310

Income (loss) attributable to SemGroup
$
(15,266
)
 
$
(2
)
 
$
(15,268
)
 
$
1,466

 
$

 
$
1,466

Weighted average common stock outstanding
43,870

 
43,870

 
43,870

 
43,717

 
43,717

 
43,717

Basic earnings (loss) per share
$
(0.35
)
 
$

 
$
(0.35
)
 
$
0.03

 
$

 
$
0.03

 

The following summarizes the calculation of diluted earnings per share for the three months ended March 31, 2016 and 2015 (in thousands, except per share amounts):

 
Three Months Ended March 31, 2016
 
Three Months Ended March 31, 2015
 
Continuing
Operations
 
Discontinued
Operations
 
Net
 
Continuing
Operations
 
Discontinued
Operations
 
Net
Income (loss)
$
(6,246
)
 
$
(2
)
 
$
(6,248
)
 
$
5,776

 
$

 
$
5,776

less: Income attributable to noncontrolling interests
9,020

 

 
9,020

 
4,310

 

 
4,310

Income (loss) attributable to SemGroup
$
(15,266
)
 
$
(2
)
 
$
(15,268
)
 
$
1,466

 
$

 
$
1,466

Weighted average common stock outstanding
43,870

 
43,870

 
43,870

 
43,717

 
43,717

 
43,717

Effect of dilutive securities

 

 

 
223

 
223

 
223

Diluted weighted average common stock outstanding
43,870

 
43,870

 
43,870

 
43,940

 
43,940

 
43,940

Diluted earnings (loss) per share
$
(0.35
)
 
$

 
$
(0.35
)
 
$
0.03

 
$

 
$
0.03


For the three months March 31, 2016, we experienced a net loss, as such the unvested equity compensation awards would have been antidilutive and, therefore, were not included in the computation of diluted earnings per share.

 
Supplemental Cash Flow Information
SUPPLEMENTAL CASH FLOW INFORMATION
SUPPLEMENTAL CASH FLOW INFORMATION
The following table summarizes the changes in the components of operating assets and liabilities shown on our condensed consolidated statements of cash flows (in thousands):

 
Three Months Ended March 31,
 
2016
 
2015
Decrease (increase) in restricted cash
$
32

 
$
342

Decrease (increase) in accounts receivable
40,535

 
56,863

Decrease (increase) in receivable from affiliates
2,237

 
1,663

Decrease (increase) in inventories
4,834

 
(25,857
)
Decrease (increase) in derivatives and margin deposits
3,914

 
(2,356
)
Decrease (increase) in other current assets
1,582

 
2,280

Decrease (increase) in other assets
12

 
(628
)
Increase (decrease) in accounts payable and accrued liabilities
(55,581
)
 
(51,435
)
Increase (decrease) in payable to affiliates
(1,626
)
 
2,728

Increase (decrease) in payables to pre-petition creditors

 
(2
)
Increase (decrease) in other noncurrent liabilities
(511
)
 
95

 
$
(4,572
)
 
$
(16,307
)
  
Other supplemental disclosures
We paid cash interest of $13.3 million and $15.0 million for the three months ended March 31, 2016 and 2015, respectively.
We paid cash for income taxes (net of refunds received) of $1.1 million and $3.3 million for the three months ended March 31, 2016 and 2015, respectively.
We incurred liabilities for construction work in process that had not been paid of $7.3 million and $16.6 million as of March 31, 2016 and 2015, respectively. Such amounts are not included in capital expenditures on the consolidated statements of cash flows.
Related Party Transactions
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS
NGL Energy
As described in Note 3, we own interests in NGL Energy, which we account for under the equity method.
During the three months ended March 31, 2016 and 2015, we generated the following transactions with NGL Energy and its subsidiaries (in thousands):
 
Three Months Ended March 31,
 
2016
 
2015
Revenues
$
8,529

 
$
45,469

Purchases
$
6,830

 
$
35,234

Reimbursements from NGL Energy for services
$

 
$
42


Transactions with NGL Energy and its subsidiaries primarily relate to marketing, leased storage and transportation services of crude oil, including buy/sell transactions. In accordance with ASC 845-10-15, these transactions were reported as revenue on a net basis in our condensed consolidated statements of operations and comprehensive income (loss) because the purchases of inventory and subsequent sales of the inventory were with the same counterparty.
White Cliffs
During the three months ended March 31, 2016 and 2015, we generated storage revenue from White Cliffs of approximately $1.1 million and $1.0 million, respectively. We incurred $2.5 million and $0.7 million of cost for the three months ended March 31, 2016 and 2015, respectively, related to transportation fees for shipments on White Cliffs. We received $0.1 million and $0.1 million in management fees from White Cliffs for the three months ended March 31, 2016 and 2015, respectively.
Glass Mountain
We incurred $1.9 million and $0.5 million of cost for the three months ended March 31, 2016 and 2015, respectively, related to transportation fees for shipments on the Glass Mountain Pipeline. We received $0.2 million and $0.2 million in fees from Glass Mountain for the three months ended March 31, 2016 and 2015, respectively, related to support and administrative services associated with pipeline operations. We made purchases of crude oil of $0.4 million and $1.5 million from Glass Mountain during the three months ended March 31, 2016 and 2015, respectively.
Legal services
The law firm of Conner & Winters, LLP, of which Mark D. Berman is a partner, performs legal services for us. Mr. Berman is the spouse of Candice L. Cheeseman, Vice President and General Counsel. Mr. Berman does not perform any legal services for us. SemGroup paid $0.2 million and $0.3 million in legal fees and related expenses to this law firm during the three months ended March 31, 2016 and 2015, respectively.
Condensed Consolidating Guarantor Financial Statements (Notes)
Condensed Consolidating Guarantor Financial Statements [Text Block]
CONDENSED CONSOLIDATING GUARANTOR FINANCIAL STATEMENTS

Our SemGroup Notes are guaranteed by certain of our subsidiaries as follows: SemGas, L.P., SemMaterials, L.P., SemGroup Europe Holding, L.L.C., SemOperating G.P., L.L.C., SemMexico, L.L.C., SemDevelopment, L.L.C., Rose Rock Midstream Holdings, LLC and Mid-America Midstream Gas Services, L.L.C. (collectively, the "Guarantors").
Each of the Guarantors is 100% owned by SemGroup Corporation (the "Parent"). Such guarantees of the SemGroup Notes are full and unconditional and constitute the joint and several obligations of the Guarantors. There are no significant restrictions upon the ability of the Parent or any of the Guarantors to obtain funds from its respective subsidiaries by dividend or loan. None of the assets of the Guarantors represent restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X under the Securities Act.
In June 2015, SemCanada, L.P. and SemCanada II, L.P. were released as Guarantors and no longer guarantee our SemGroup Notes. Prior period comparative information has been recast to reflect SemCanada, L.P. and SemCanada II, L.P. as non-guarantors.
Unaudited condensed consolidating financial statements for the Parent, the Guarantors and non-guarantors as of March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and 2015 are presented on an equity method basis in the tables below (in thousands).
Intercompany receivable and payable balances, including notes receivable and payable, are capital transactions primarily to facilitate the capital needs of our subsidiaries. As such, subsidiary intercompany balances have been reported as a reduction to equity on the condensed consolidating Guarantor balance sheets. The Parent's net intercompany balance, including note receivable, and investments in subsidiaries have been reported in equity method investments on the condensed consolidating Guarantor balance sheets. Intercompany transactions, such as daily cash management activities, have been reported as financing activities within the condensed consolidating Guarantor statements of cash flows. The Parent's investing activities with subsidiaries, such as the drop down of WOT and Glass Mountain to Rose Rock in the first quarter of 2015, have been reflected as cash flows from investing activities. Quarterly cash distributions from Rose Rock representing a return on capital have been included in the Parent's cash flows from operations. These balances are eliminated through consolidating adjustments below.

Condensed Consolidating Guarantor Balance Sheets
 
 
March 31, 2016
 
 
Parent
 
Guarantors
 
Non-guarantors
 
Consolidating Adjustments
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
2,608

 
$

 
$
71,969

 
$
(2,088
)
 
$
72,489

Accounts receivable, net
 
703

 
14,561

 
273,574

 

 
288,838

Receivable from affiliates
 
2,209

 
881

 
3,742

 
(3,155
)
 
3,677

Inventories
 

 
122

 
65,222

 

 
65,344

Other current assets
 
8,323

 
161

 
10,270

 

 
18,754

Total current assets
 
13,843

 
15,725


424,777


(5,243
)

449,102

Property, plant and equipment, net
 
4,474

 
539,195

 
1,086,082

 

 
1,629,751

Equity method investments
 
1,553,273

 
495,139

 
433,574

 
(1,978,072
)
 
503,914

Goodwill
 

 

 
35,008

 

 
35,008

Other intangible assets, net
 
19

 
142,133

 
17,344

 

 
159,496

Other noncurrent assets
 
18,761

 
813

 
4,987

 

 
24,561

Total assets
 
$
1,590,370

 
$
1,193,005


$
2,001,772


$
(1,983,315
)

$
2,801,832

LIABILITIES AND OWNERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$
255

 
$
9,587

 
$
205,909

 
$

 
$
215,751

Payable to affiliates
 
73

 
25

 
6,464

 
(3,155
)
 
3,407

Accrued liabilities
 
10,370

 
13,341

 
61,976

 
1

 
85,688

Other current liabilities
 
321

 

 
11,559

 

 
11,880

Total current liabilities
 
11,019

 
22,953

 
285,908

 
(3,154
)
 
316,726

Long-term debt, net
 
365,667

 
7,125

 
773,421

 
(23,625
)
 
1,122,588

Deferred income taxes
 
132,249

 

 
48,350

 

 
180,599

Other noncurrent liabilities
 
2,601

 

 
20,950

 

 
23,551

Commitments and contingencies
 


 


 


 


 


Owners’ equity excluding noncontrolling interests in consolidated subsidiaries
 
1,078,834

 
1,162,927

 
793,609

 
(1,956,536
)
 
1,078,834

Noncontrolling interests in consolidated subsidiaries
 

 

 
79,534

 

 
79,534

Total owners’ equity
 
1,078,834

 
1,162,927


873,143


(1,956,536
)

1,158,368

Total liabilities and owners’ equity
 
$
1,590,370


$
1,193,005

 
$
2,001,772

 
$
(1,983,315
)
 
$
2,801,832


 
 
December 31, 2015
 
 
Parent
 
Guarantors
 
Non-guarantors
 
Consolidating Adjustments
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
4,559

 
$

 
$
55,101

 
$
(1,564
)
 
$
58,096

Restricted cash
 

 

 
32

 

 
32

Accounts receivable, net
 
640

 
20,015

 
306,058

 

 
326,713

Receivable from affiliates
 
1,616

 
1,119

 
6,141

 
(2,962
)
 
5,914

Inventories
 

 
(48
)
 
70,287

 

 
70,239

Other current assets
 
8,477

 
359

 
10,551

 

 
19,387

Total current assets
 
15,292

 
21,445


448,170


(4,526
)

480,381

Property, plant and equipment, net
 
4,335

 
536,628

 
1,025,858

 

 
1,566,821

Equity method investments
 
1,546,853

 
426,801

 
438,291

 
(1,860,867
)
 
551,078

Goodwill
 

 
13,052

 
34,980

 

 
48,032

Other intangible assets, net
 
20

 
144,183

 
18,020

 

 
162,223

Other noncurrent assets
 
39,358

 
881

 
5,135

 

 
45,374

Total assets
 
$
1,605,858

 
$
1,142,990


$
1,970,454


$
(1,865,393
)

$
2,853,909

LIABILITIES AND OWNERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$
734

 
$
11,221

 
$
261,711

 
$

 
$
273,666

Payable to affiliates
 
78

 
155

 
7,762

 
(2,962
)
 
5,033