UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  December 10, 2013

AMERICAN MIDSTREAM PARTNERS, LP
(Exact name of registrant as specified in its charter)
Delaware    001-35257    27-0855785

				
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)	
1614 15th Street, Suite 300
Denver, Colorado  
 (Address of principal executive offices)	80202  
 (Zip Code)	
    
Registrant’s telephone number, including area code: (720) 457-6060

Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

		
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

		
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

		
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

		
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 
Item 1.01 Entry into a Material Definitive Agreement.

On December 10, 2013, American Midstream Partners, LP (the “Partnership”) entered into an Agreement and Plan of Merger (the “ Merger Agreement ”) with AL Blackwater, LLC, a Delaware limited liability company (“ ALB ”) an affiliate of ArcLight Capital Partners, LLC (“ArcLight”), Blackwater Midstream Holdings LLC, a Delaware limited liability company and a majority owned subsidiary of ALB (“ Blackwater ”), and Blackwater Merger Sub, LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of the Partnership (“ Merger Sub ”). Pursuant to the terms of the Merger Agreement, Blackwater, a developer and operator of petroleum, agricultural, and chemical liquid terminal storage facilities, will merge with Merger Sub, with Blackwater continuing as the surviving entity and an indirect wholly owned subsidiary of the Partnership (the “ Merger ”). Blackwater operates 1.59 million barrels of storage capacity across four terminal sites located in Westwego, Louisiana; Brunswick, Georgia; Harvey, Louisiana; and Salisbury, Maryland.

The aggregate purchase price for the merger is approximately $60 million, subject to certain purchase price adjustments (the “Consideration”), which will be paid in a combination of cash and approximately $3 million of Partnership common units (the “Rollover Units”).  The aggregate Consideration includes the payoff of existing indebtedness of Blackwater.

In addition to the Consideration, the Partnership has agreed to an earnout that is payable to ALB if, at any time during the five years following the consummation of the Merger, Blackwater Harvey, LLC, a Delaware limited liability company and a wholly owned subsidiary of Blackwater (“ BW Harvey ”), exceeds a trailing-twelve month “EBITDA” of $5,000,000 (the “ Target ”). In the event BW Harvey achieves the Target, the Partnership will pay ALB the lesser of (i) $5,000,000 and (ii) 50% of eight times BW Harvey’s trailing-twelve month “EBITDA” less its capital costs.
 
The Merger Agreement contains certain representations, warranties, and covenants. The closing of the Merger is subject to a financing condition for the Partnership and certain other customary conditions.

In connection with the Merger, ALB will indemnify the Partnership for damages resulting from, among other things, certain breaches of ALB’s or Blackwater’s representations and warranties set forth in the Merger Agreement. Additionally, the Partnership will indemnify ALB and its affiliates for damages resulting from, among other things, certain breaches of the Partnership’s or Merger Sub’s representations and warranties set forth in the Merger Agreement, as well for any damages arising from certain environmental claims relating to Blackwater’s operations. In connection with the Merger, ArcLight Energy Partners Fund V, L.P., a Delaware limited partnership and an affiliate of ArcLight, has agreed to guarantee the obligations of ALB under the Merger Agreement.

ArcLight is an affiliate of High Point Infrastructure Partners, LLC, which owns a 90% interest in American Midstream GP, LLC, our general partner. Accordingly, the conflicts committee of the general partner’s Board of Directors approved the Merger Agreement and the transactions contemplated thereby. The conflicts committee, a committee of independent members of the general partner’s Board of Directors, retained independent legal and financial advisors to assist it in evaluating the Merger Agreement and the transactions contemplated thereby.

The description of the Merger Agreement contained in this Item 1.01 is not complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 hereto and incorporated by reference herein. The Merger Agreement has been included as an exhibit hereto solely to provide unitholders with information regarding its terms. It is not intended to be a source of financial, business or operational information about the Partnership, Blackwater or their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement are made only for purposes of the Merger Agreement and are made as of specific dates; are solely for the benefit of the parties; may be subject to qualifications and limitations agreed upon by the parties in connection with negotiating the terms of the Merger Agreement, including being qualified by confidential disclosures made for the purpose of allocating contractual risk between the parties rather than establishing matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors or security holders. Unitholders should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of the Partnership, Blackwater or their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures.

In connection with the Merger Agreement, and because the Partnership considers the consummation of the merger contemplated thereby to be probable, the Partnership is filing (i) as Exhibit 99.2 hereto, audited consolidated financial statements of Blackwater as of and for the years ended March 31, 2013 and 2012, (ii) as Exhibit 99.3 hereto, unaudited combined financial statements of Blackwater as of September 30, 2013 and for the six months ended September 30, 2013 and 2012; and (iii) as Exhibit 99.4 hereto, the Partnership’s unaudited pro forma condensed consolidated balance sheet for the nine months ended September

30, 2013 and unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2013 and the year ended December 31, 2012.

Item 7.01 Regulation FD Disclosure.

In accordance with General Instruction B.2 of Form 8-K, the following information in this Current Report on Form 8-K (including the exhibit) is furnished pursuant to Item 7.01 and shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. This Current Report will not be deemed an admission as to the materiality of any information in the report that is required to be disclosed solely by Regulation FD.

The Partnership issued a press release on December 10, 2013 announcing the execution of the Merger agreement. A copy of the press release is being furnished and is attached as Exhibit 99.1 hereto and incorporated into this Item 7.01 by reference.

Item 9.01 Financial Statements and Exhibits
    
(a) Financial Statements of Businesses Acquired
    
The audited consolidated balance sheets as of March 31, 2013 and 2012, the audited consolidated statements of operations, statement of changes in stockholder's and members' equity and statement of cash flows for the two years ended March 31, 2013 of Blackwater, the related notes thereto, and report of independent registered public accounting firm related thereto with respect to audited financial statements, are filed as Exhibit 99.2 to this Current Report on Form 8-K and are incorporated herein by reference.
The unaudited consolidated balance sheets as of September 30, 2013, the unaudited consolidated statement of operations for the three and six months ended September 30, 2013 and 2012, and the unaudited statement of changes in stockholder's and member's equity and statement of cash flows for the six months ended September 30, 2013 of Blackwater, the related notes thereto, are filed as Exhibit 99.3 to this Current Report on Form 8-K and are incorporated herein by reference.
(b) Pro Forma Financial Information.
The Partnership’s unaudited pro forma condensed consolidated balance sheet as of September 30, 2013, and unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2013 and the year ended December 31, 2012 and the related notes thereto, are furnished as Exhibit 99.4 to this Current Report on Form 8-K and are incorporated herein by reference.     
(c) Not applicable
(d) Exhibits.
See “Index to Exhibits” attached to this Current Report on Form 8-K, which is incorporated by reference herein.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	

 	 	 	 	American Midstream Partners, LP	
 	 	 	 	
 	 	 	 	By :	 	American Midstream GP, LLC,	
 	 	 	 	 	 	its General Partner	
 	 	 	 	
Date: December 10, 2013	 	 	 	By:	 	/s/ Daniel C. Campbell	
 	 	 	 	Name:	 	Daniel C. Campbell	
 	 	 	 	Title:	 	Senior Vice President and Chief Financial Officer	

Exhibit Index

	

Exhibit
Number	  	Description	
 	 	
2.1	 	Agreement and Plan of Merger by and among Blackwater Marger Sub, LLC, Blackwater Midstream Holdings LLC, American Midstream Partners, LP and Blackwater Merger Sub, LLC, dated as of December 10, 2013	
23.1	 	Consent of MaloneBailey, LLP	
99.1	 	American Midstream Partners, LP press release dated December 10, 2013	
99.2	  	The Audited consolidated balance sheets as of March 31, 2013 and 2012, the audited consolidated statements of operations, statement of changes in stockholder's and member's equity and statement of cash flows for the two years ended March 31, 2013 of Blackwater, the related notes thereto, and report of independent registered public accounting firm related thereto with respect to audited financial statements	
99.3	 	The Unaudited consolidated balance sheets as of September 30, 2013, the unaudited consolidated statement of operations for the three and six months ended September 30, 2013 and 2012, the statement of changes in stockholder's and members' equity and statement of cash flows for the six months ended September 30, 2013 and 2012 of Blackwater, the related notes thereto	
99.4	 	Unaudited pro forma condensed consolidated balance sheet of American Midstream Partners, LP as of September 30, 2013, and unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2013 and the year ended December 31, 2012 and the related notes thereto	

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER 
 
by and among 
 
AL BLACKWATER, LLC 
 
BLACKWATER MIDSTREAM HOLDINGS LLC 
 
AMERICAN MIDSTREAM PARTNERS, LP 
 
and 
 
BLACKWATER MERGER SUB, LLC 
 
Dated as of December 10, 2013

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TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS 1

Section 1.1	Certain Defined Terms 1	
ARTICLE II THE MERGER 11

Section 2.1	The Merger 11	
		
Section 2.2	Closing; Effective Time 11	
		
Section 2.3	Effects of the Merger 12	
		
Section 2.4	Certificate of Formation; Limited Liability Company Agreement 12	
		
Section 2.5	Officers 12	
		
Section 2.6	Calculation of Closing Payments 12	
		
Section 2.7	Merger Consideration 12	
		
Section 2.8	Timing of Equity Rollover 13	
		
Section 2.9	Post-Closing Sale 13	
		
Section 2.10	Earnout 13	
		
Section 2.11	Payment of Additional Equity Consideration 15	
		
Section 2.12	Conduct of the Business 15	
ARTICLE III REPRESENTATIONS AND WARRANTIES OF AMID AND MERGER SUB 15

Section 3.1	Organization and Existence 15	
		
Section 3.2	Authority and Approval 15	
		
Section 3.3	No Conflict; Required Filings and Consents 16	
		
Section 3.4	Solvency 16	
		
Section 3.5	Ownership and Operations of Merger Sub 17	
		
Section 3.6	Common Units 17	
		
Section 3.7	Litigation 18	
		
Section 3.8	Brokers 18	
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF NEWCO AND BLACKWATER 18

Section 4.1	Organization and Existence 18	
		
Section 4.2	Authority and Approval 19	
		
Section 4.3	No Conflict; Required Filings and Consents 19	
		
Section 4.4	Capitalization; Title to Membership Interests in Blackwater 20	
		
Section 4.5	Subsidiaries and Joint Ventures 20	
		
Section 4.6	Financial Statements; Undisclosed Liabilities 21	
		
Section 4.7	Distributions and Cash Reserves 22	

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Section 4.8	Internal Control Over Financial Reporting 22	
		
Section 4.9	No Adverse Changes 22	
		
Section 4.10	Licenses; Permits 23	
		
Section 4.11	Litigation; Laws and Regulations 23	
		
Section 4.12	Properties 23	
		
Section 4.13	Intellectual Property 24	
		
Section 4.14	Tax Matters 24	
		
Section 4.15	Environmental Matters 25	
		
Section 4.16	Material Contracts 26	
		
Section 4.17	Employees 27	
		
Section 4.18	Employee Benefits 27	
		
Section 4.19	Insurance 29	
		
Section 4.20	Brokers 29	
ARTICLE V CERTAIN COVENANTS 29

Section 5.1	Conduct of Business 29	
		
Section 5.2	Access and Information 31	
		
Section 5.3	Reasonable Efforts; Additional Actions 31	
		
Section 5.4	No Shop 32	
		
Section 5.5	Public Announcements     32	
		
Section 5.6	Acknowledgements 32	
		
Section 5.7	Subsequent Actions 32	
		
Section 5.8	Tax Matters 33	
		
Section 5.9	Financial Statements 35	
ARTICLE VI CONDITIONS TO AMID’S OBLIGATION TO CLOSE 35

Section 6.1	Representations, Warranties and Covenants 35	
		
Section 6.2	No Blackwater Material Adverse Effect 36	
		
Section 6.3	Closing Certificates 36	
		
Section 6.4	Injunctions or Restraints 36	
		
Section 6.5	Closing Payment Calculations 36	
		
Section 6.6	Financing 36	
		
Section 6.7	Termination of 401(k) Plan 37	
		
Section 6.8	Employee Matters 37	
		
Section 6.9	Indebtedness 37	
		
Section 6.10	FIRPTA Certificate 37	
		
Section 6.11	ArcLight Guaranty 37	
		
Section 6.12	Ancillary Agreements 37	
ARTICLE VII CONDITIONS TO NEWCO’S AND BLACKWATER’S OBLIGATION TO CLOSE 37

Section 7.1	Representations, Warranties and Covenants 38	
		
Section 7.2	Closing Certificates 38	

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Section 7.3	Injunctions or Restraints 38	
		
Section 7.4	Governmental and Regulatory Approvals 38	
		
Section 7.5	Employee Matters 38	
ARTICLE VIII INDEMNIFICATION 39

Section 8.1	Survival 39	
		
Section 8.2	Indemnification 39	
		
Section 8.3	Limitations Regarding Indemnification 40	
		
Section 8.4	Indemnification Procedures 41	
ARTICLE IX TERMINATION 42

Section 9.1	Termination 42	
		
Section 9.2	Procedure and Effect of Termination 43	
ARTICLE X GENERAL PROVISIONS 43

Section 10.1	Fees and Expenses 43	
		
Section 10.2	Amendment and Modification 43	
		
Section 10.3	Extension 43	
		
Section 10.4	Waiver 43	
		
Section 10.5	Notices 44	
		
Section 10.6	Interpretation 45	
		
Section 10.7	Entire Agreement 45	
		
Section 10.8	No Third-Party Beneficiaries 45	
		
Section 10.9	Governing Law 45	
		
Section 10.10	Assignment; Successors 46	
		
Section 10.11	Enforcement 46	
		
Section 10.12	Currency 46	
		
Section 10.13	Severability 46	
		
Section 10.14	Waiver of Jury Trial 46	
		
Section 10.15	Counterparts 46	
		
Section 10.16	Electronic Signature 47	
		
Section 10.17	Time of Essence 47	
		
Section 10.18	No Presumption Against Drafting Party 47	

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Exhibit 2.1

TABLE OF EXHIBITS AND SCHEDULES

Exhibits

Exhibit A – Form of Certificate of Merger

Schedules

Schedule 2.5 – Officers
Schedule 2.7(a) – Rollover Consideration
Schedule 2.7(b) – Base Equity Consideration
Schedule 2.9(a) – Blackwater Maryland Consideration

Blackwater Disclosure Schedules
Schedule 4.1 – Organization and Existence
Schedule 4.3(a) – No Conflict; Required Filings and Consents
Schedule 4.3(b) – Consents
Schedule 4.4(c) – Capitalization; Title to Membership Interests in Blackwater
Schedule 4.5 – Subsidiaries and Joint Ventures
Schedule 4.6(a) – Audited Financial Statements
Schedule 4.6(b) – Blackwater Financial Statements
Schedule 4.6(d) - Indebtedness
Schedule 4.10(a) – Material Permits
Schedule 4.12 – Properties
Schedule 4.14 – Tax Matters
Schedule 4.16(b) – Material Customer/Supplier Contracts
Schedule 4.18(a) – Employee Benefit Plans
Schedule 4.18(g) – Liabilities Resulting from Contemplated Transactions
Schedule 4.18(h) – Post-Employment/Post-Reitrement Employee Benefits
Schedule 4.18(i) – Employee Benefits Resulting from Contemplated Transactions
Schedule 4.18(j) – Nonqualified Deferred Compensation Plans
Schedule 4.19 – Insurance

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Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), dated as of December 10, 2013, is by and among AL Blackwater, LLC, a Delaware limited liability company (“ Newco ”), Blackwater Midstream Holdings LLC, a Delaware limited liability company (“ Blackwater ”), American Midstream Partners, LP, a Delaware limited partnership (“ AMID ”), and Blackwater Merger Sub, LLC, a Delaware limited liability company and a wholly owned indirect subsidiary of AMID (“ Merger Sub ”).
RECITALS

A. AMID, as the sole member of American Midstream, LLC, which is the sole member of Merger Sub, and the members of Blackwater and the Board of Managers of Blackwater, have (i) determined that the merger of Merger Sub with and into Blackwater upon the terms and subject to the conditions set forth in this Agreement (the “ Merger ”) is advisable and fair to, and in the best interests of, the respective companies and their respective members, and (ii) approved this Agreement and the Merger upon the terms and subject to the conditions set forth in this Agreement, pursuant to the AMID Partnership Agreement (as defined below), Delaware Revised Uniform Limited Partnership Act (the “ DRULPA ”) and the Delaware Limited Liability Company Act (the “ DLLCA ”), as applicable.
B. Upon the consummation of the Merger, Blackwater will be the Surviving Company (as defined below) of the Merger.
C. The Conflicts Committee has previously (i) received a fairness opinion from its financial advisor as to the consideration to be paid by AMID to the members of Blackwater pursuant to the Merger and (ii) found the Merger to be fair and reasonable to, and in the best interest of, AMID and the public holders of Common Units, and recommended that the board of directors (the “ Board of Directors ”) of American Midstream GP, LLC (“ AMID GP ”), approve the Merger and this Agreement, and, subsequently, the Board of Directors has approved the Merger and this Agreement.
D. Certain members of management of Blackwater Midstream (the “ Management Holders ”) have agreed to enter into Rollover Agreements wherein they will contribute Class A Interests (as hereinafter defined) to AMID immediately prior to the Closing (as hereinafter defined) in exchange for Common Units of AMID.
AGREEMENT

In consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows:

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Section 1.1     
 DEFINITIONS
Section 1.2      Certain Defined Terms     . For purposes of this Agreement:
“ Additional Equity Consideration ” means the Blackwater Maryland Consideration and the Earnout Consideration.
“ Affiliate ” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person.
“ Aggregate Indemnity Threshold ” has the meaning set forth in Section 8.3(a) .
“ Agreement ” has the meaning set forth in the preamble.
“ AL Blackwater Note ” means that certain Promissory Note, dated as of October 7, 2013, by and between Blackwater and Newco.
“ AMID ” has the meaning set forth in the preamble.
“ AMID GP ” has the meaning set forth in the recitals.
“ AMID Material Adverse Effect ” means, a material adverse effect on or material adverse change in (i) the assets, liabilities, financial condition or results of operations of AMID or Merger Sub, taken as a whole or (ii) the ability of AMID or Merger Sub to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement.
“ AMID Partnership Agreement ” has the meaning set forth in Section 3.6(a) .
“ AMID Protected Parties ” has the meaning set forth in Section 8.2(a) .
“ Ancillary Agreements ” means all agreements, documents and instruments required to be delivered by any party hereto or its Affiliates pursuant to this Agreement in connection with this Agreement or the transactions contemplated hereby, including the ArcLight Guaranty, the Rollover Agreements and the Certificate of Merger and any customary closing certificates.
“ Applicable Law ” means any federal, state, local, municipal or other administrative rule, constitution, law, ordinance, Permit, principle of common law, regulation, statute or treaty or any judicial, administrative or arbitration order, award, judgment, writ, injunction, directive or decree that relates to a party in a particular context.
“ Arbitrating Accountant ” has the meaning set forth in Section 2.10(c) .

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Exhibit 2.1

“ ArcLight Guaranty ” means a guaranty provided by ArcLight Energy Partners Fund V, L.P. of Newco’s indemnification obligations set forth in Section 8.2(a) .
“ Audited Financial Statements ” has the meaning set forth in Section 4.6(a) .
“ Auditor ” has the meaning set forth in Section 5.9 .
“ Barclays Bridge Loan ” means that certain Credit Agreement dated as of October 7, 2013 among Newco, as Borrower, the lenders party thereto and Barclays Bank PLC, as Administrative Agent and Collateral Agent.
“ Base Equity Consideration ” means the Initial Merger Consideration less the value of the Rollover Consideration.
“ Blackwater ” has the meaning set forth in the preamble.
“ Blackwater Assets ” means the assets owned, leased, or operated on the Closing Date by any of the Blackwater Entities.
“ Blackwater Disclosure Schedules ” has the meaning set forth in Article IV .
“ Blackwater Employees ” means the employees of the Blackwater Entities who are employed as of immediately prior to the Closing.
“ Blackwater Entity ” means, all or any, as applicable, of Blackwater, Blackwater Investments, Inc., a Delaware close corporation, Blackwater Midstream, Blackwater New Orleans, L.L.C., a Louisiana limited liability company (“ Blackwater New Orleans ”), Blackwater Georgia, L.L.C., a Georgia limited liability company, Blackwater Maryland, L.L.C., a Maryland limited liability company (“ Blackwater Maryland ”), and Blackwater Harvey, LLC, a Delaware limited liability company (“ Blackwater Harvey ”).
“ Blackwater Financial Statements ” has the meaning set forth in Section 4.6(b) .
“ Blackwater Harvey Financial Statements ” has the meaning set forth in Section 2.10(a) .
“ Blackwater Maryland Consideration ” has the meaning set forth in Section 2.9(a) .
“ Blackwater Maryland Financial Statements ” has the meaning set forth in Section 2.9(b) .
“ Blackwater Material Adverse Effect ” means a material adverse effect on or material adverse change in (i) the assets, liabilities, financial condition or results of operations of the Blackwater Entities or the Blackwater Assets, taken as a whole or (ii) the ability of either Blackwater or Newco to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement.

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Exhibit 2.1

“ Blackwater Midstream ” means Blackwater Midstream Corp., a Nevada close corporation.
“ Blackwater Plans ” has the meaning set forth in Section 4.18(a) .
“ Board of Directors ” has the meaning set forth in the recitals.
“ Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Applicable Law to be closed in The City of New York.
“ Cancelled Interests ” has the meaning set forth in Section 2.3 .
“ Cash ” means cash and cash equivalents as determined in accordance with GAAP. For the avoidance of doubt, cash shall be calculated net of issued but uncleared checks and drafts and shall include checks and other wire transfers and drafts deposited or available for the account of such Person.
“ CERCLA ” means Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.
“ Certificate of Merger ” has the meaning set forth in Section 2.2 .
“ Claim Notice ” has the meaning set forth in Section 8.4(a) .
“ Claims ” means any and all claims, demands, suits, losses, arbitrations, causes of action, debts, obligations and other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether known or unknown, or due or to become due or otherwise), judgments, diminution in value, monetary damages, fines, fees, Taxes, Liens, assessments, penalties, interest obligations, deficiencies, losses and expenses (including amounts paid in settlement, interest, court costs, costs of investigators, reasonable fees and expenses of attorneys, accountants, financial advisors and other experts, and other actual out of pocket expenses incurred in investigating and preparing for or in connection with any Proceeding); however, excluding special, punitive, exemplary, consequential or indirect damages, except to the extent a party is required to pay such damages to a third party in connection with a matter for which such party is entitled to indemnification under Article VIII .
“ Class A Interests ” has the meaning set forth in the Amended and Restated Limited Liability Company Agreement of Blackwater, made and entered into on the 9th day of October 2012.
“ Class B Interests ” has the meaning set forth in the Amended and Restated Limited Liability Company Agreement of Blackwater, made and entered into on the 9th day of October 2012.
“ Closing ” has the meaning set forth in Section 2.2(a) .
“ Closing Date ” has the meaning set forth in Section 2.2(a) .

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Exhibit 2.1

“ Closing Balance Sheet ” has the meaning set forth in Section 2.6 .
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Commercially Reasonable Efforts ” means efforts which are commercially reasonable to enable a Person, directly or indirectly, to satisfy a condition to or otherwise assist in the consummation of a desired result and which do not require the performing Person to sell any assets, pursue any litigation, or pay, incur, convey, endure, or deliver any material monetary payments or other form of consideration, whether tangible or intangible, including any property, detriment, debt, right, license, obligation, waiver or release.
“ Commission ” means the United States Securities and Exchange Commission.
“ Common Units ” means common units representing limited partner interests in AMID.
“ Conflicts Committee ” means the Conflicts Committee of the Board of Directors of AMID GP.
“ Contract ” means any contract, agreement, commitment, arrangement or understanding, whether written or oral and whether express or implied.
“ Control ,” including the terms “ controlled by ” and “ under common control with ,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, as general partner or managing member, by Contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
“ Costs ” means the sum of the initial $2,500,000 purchase price and any capital expenditures associated with the development of the Blackwater Harvey site, including, without limitation, rehabilitation, clean-up, dock, and tank expenditures, but not including maintenance capital expenditures or ongoing operating expenses of the Blackwater Harvey site.
“ DLLCA ” has the meaning set forth in the recitals.
“ DRULPA ” has the meaning set forth in the recitals.
“ Earnout Consideration ” has the meaning set forth in Section 2.10(a) .
“ Earnout Period ” has the meaning set forth in Section 2.10(a) .
“ EBITDA ” means, with respect to the applicable calculation period, the net income before interest, income taxes, depreciation and amortization of Blackwater Harvey, in each case calculated in accordance with GAAP. In calculating EBITDA, no addition or deduction shall be taken for: (i) non-recurring expenses, including but not limited to those related to corporate transactions; (ii) non-cash expenses, including but not limited to equity-based

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Exhibit 2.1

compensation and asset retirement obligations; (iii) any gains resulting from any write-up of any assets or any loss resulting from any write-down or impairments; and (iv) hedging or other similar activities; provided , further and for the avoidance of doubt, in calculating EBITDA, the net income (or net loss) shall specifically include deductions for any general and administrative expenses and corporate overhead of any Blackwater Entity or any of their Affiliates that is allocated to or realized by Blackwater Harvey. The calculation of EBITDA, including deductions for any general and administrative expenses and corporate overhead allocated to Blackwater Harvey, will be subject to audit and review by Newco in accordance with the procedures set forth in Section 2.10(b).
“ EBITDA Calculations ” has the meaning set forth in Section 2.10(b) .
“ Effective Time ” has the meaning set forth in Section 2.2(b) .
“ Employment Agreement ” means, with respect to each Management Holder, that certain Employment Agreement, to be executed prior to the Closing, by and between such Management Holder and AMID GP.
“ End Date ” has the meaning set forth in Section 9.1(b) .
“ Environmental Laws ” means any Applicable Law of any Governmental Authority relating to (i) the protection, preservation or restoration of the environment or the protection of the public health and safety (including, air, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (ii) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, Release, or disposal of Hazardous Substances, in each case as in effect at the date hereof.
“ Environmental Liabilities ” shall mean any and all Claims, environmental response costs (including costs of clean-up, remediation, investigation and monitoring), damages, natural resource damages, costs and expenses (including any remedial, removal, response, abatement, clean-up, investigation, rights to contribution under CERCLA), breaches of statutory or implied warranties, nuisance or other tort actions, rights to punitive damages, common law rights of contribution and rights under any Contracts, monitoring costs, settlements, consulting fees, expenses, penalties, fines, orphan’s share, prejudgment and post-judgment interest, court costs, attorneys’ fees, and other liabilities arising out of, incurred, imposed (a) pursuant to any order, notice of responsibility, directive (including requirements embodied in Environmental Laws), injunction, judgment or similar act (including settlements) by any Governmental Authority to the extent arising out of non-compliance with or any violation of, or remedial obligation under, any Environmental Laws which are attributable to the ownership or operation of the Blackwater Assets prior to the Closing Date or (b) pursuant to any Claim or Proceeding by a Governmental Authority or any other Person for damages, personal injury, property damage, damage to natural resources, remediation, investigation, monitoring, response or compliance costs to the extent arising out of any Environmental Laws which is attributable to the ownership or operation of the Blackwater Assets prior to the Closing Date.

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“ Environmental Permits ” means all licenses, Permits, approvals, consents, orders, certificates, registrations and other authorizations issued or granted by or filed with Governmental Authorities under Environmental Laws.
“ ERISA ” has the meaning set forth in Section 4.18(c) .
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.
“ Fundamental Representations ” has the meaning set forth in Section 8.1(a) .
“ GAAP ” means United States generally accepted accounting principles and practices as in effect on the date hereof.
“ Governmental Authority ” means any United States or non-United States federal, national, supranational, state, provincial, local or similar government, governmental, regulatory or administrative authority, branch, agency or commission or any court, tribunal, or arbitral or judicial body (including any grand jury).
“ Hazardous Substance ” means any substance presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law. Hazardous Substance includes any substance to which exposure is regulated by any Governmental Authority or any Environmental Law including, any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste or petroleum or any derivative or byproduct thereof, radon, radioactive material, asbestos or asbestos containing material, urea formaldehyde, foam insulation or polychlorinated biphenyls.
“ Indebtedness ” means, without duplication: (i) indebtedness for borrowed money or indebtedness issued or incurred in substitution or exchange for indebtedness for borrowed money; (ii) amounts owing as deferred purchase price for property or services; (iii) indebtedness evidenced by any Lien, note, bond, debenture, mortgage or other debt instrument or debt security; (iv) obligations under any interest rate, currency or other hedging agreement; (v) obligations under any performance bond or letter of credit, but only to the extent drawn or called prior to the Closing Date; (vi) all capitalized lease obligations as determined under GAAP; (vii) guarantees with respect to any indebtedness of any other Person of a type described in clauses (i) through (vi) above; (viii) all obligations for any deferred compensation or accrued incentive compensation or under any severance plan, bonus plan, employment agreement or other plan, Contract or other arrangement with any other Person, including any obligations which are payable or become due as a result of the transactions contemplated herein; and (ix) for clauses (i) through (vii) above, all accrued but unpaid interest thereon, if any, and any termination fees, prepayment penalties, “breakage” cost or similar payments associated with the repayments of such Indebtedness on the Closing Date.
“ Indebtedness Payoff Amount ” means the amount required to extinguish all Indebtedness of the Blackwater Entities (except as set forth on Blackwater Disclosure Schedule 4.6(d)(ii)) as of the Closing Date.

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“ Indemnified Party ” has the meaning set forth in Section 8.1(c) .
“ Indemnifying Party ” has the meaning set forth in Section 8.1(c) .
“ Individual Indemnity Threshold ” has the meaning set forth in Section 8.3(a) .
“ Initial Merger Consideration ” means $30,744,290.04 plus (i) all interest, payments, fees, and expenses associated with the Barclays Bridge Loan and (ii) any scheduled amortization payments made on the Blackwater Entities’ Indebtedness with JPMorgan Chase Bank, N.A., in each case during the period from December 1, 2013 through the Closing Date, less all interest associated with the AL Blackwater Note from October 7, 2013 through the Closing Date.
“ Insurance Policies ” has the meaning set forth in Section 4.19 .
“ Intellectual Property ” means all intellectual or industrial property and rights therein, however denominated, throughout the world, whether or not registered, including all patent applications, patents, trademarks, service marks, trade styles or dress, mask works, copyrights (including copyrights in computer programs, software, computer code, documentation, drawings, specifications and data), works of authorship, moral rights of authorship, rights in designs, trade secrets, technology, inventions, invention disclosures, discoveries, improvements, know-how, proprietary rights, formulae, processes, methods, technical and business information, and confidential and proprietary information, and all other intellectual and industrial property rights, whether or not subject to statutory registration or protection and, with respect to each of the foregoing, all registrations and applications for registration, renewals, extensions, continuations, reexaminations, reissues, divisionals, improvements, modifications, derivative works, goodwill, and common law rights, and causes of action relating to any of the foregoing.
“ Knowledge ” means, in the case of AMID or Merger Sub, the actual knowledge of Stephen W. Bergstrom, Daniel Campbell, Matthew Rowland, and William Mathews, and, in the case of Newco or Blackwater, the actual knowledge of Michael D. Suder, Dale T. Chatagnier, Francis A. Marrocco, and Donald St. Pierre, in each case after reasonable inquiry.
“ Lien ” means any mortgage, deed of trust, lien, security interest, pledge, conditional sales contract, condition, charge, equitable interest, option, indenture, easement, or encumbrance of any kind, including any restriction on or transfer or other assignment, as security or otherwise, of or relating to use, quiet enjoyment, voting, transfer, receipt of income or exercise of any other attribute of ownership.
“ Loan Facilities ” means the following term loan facilities: (i) $5,800,000 revolving line of credit note dated July 10, 2013 between Blackwater Harvey and JPMorgan Chase Bank, N.A. and (ii) $2,800,000 revolving line of credit note dated July 10, 2013 between Blackwater New Orleans and JPMorgan Chase Bank, N.A.
“ MB Audited Financial Statements ” has the meaning set forth in Section 5.9 .

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“ MB Blackwater Financial Statements ” has the meaning set forth in Section 5.9 .
“ Management Holders ” has the meaning set forth in the recitals.
“ Material Contracts ” has the meaning set forth in Section 4.16(a) .
“ Material Customer/Supplier Contracts ” has the meaning set forth in Section 4.16(a) .
“ Membership Interests ” means all of the Class A Interests and Class B Interests issued and outstanding immediately prior to the Closing Date.
“ Merger ” has the meaning set forth in the recitals.
“ Merger Consideration ” means the Initial Merger Consideration, plus the Indebtedness Payoff Amount, plus the Additional Equity Consideration (if any).
“ Merger Sub ” has the meaning set forth in the preamble.
“ Net Cash ” means the aggregate amount of cash generated or loss incurred by Blackwater Maryland during the period between the Closing Date and the date of such Sale Transaction (which amount may be negative), as reflected on the Blackwater Maryland Financial Statements; provided, however, that if there is more than one Sale Transaction during the Post-Closing Sale Period, Net Cash for any subsequent Sale Transaction shall be calculated for the period between the previous Sale Transaction and such Sale Transaction.
“ Newco ” has the meaning set forth in the preamble.
“ Newco Protected Parties ” has the meaning set forth in Section 8.2(b) .
“ Notice ” has the meaning set forth in Section 10.5 .
“ Objection Notice ” has the meaning set forth in Section 2.10(b) .
“ Order ” means any order, judgment, writ, injunction, determination, award, or decree of or from any Governmental Authority.
“ Permits ” means any permit, approval, consent, authorization, license, variance or permission required by a Governmental Authority under any Applicable Law for the conduct of business as it is now being conducted by any party hereto.
“ Permitted Liens ” means all: (i) mechanics’, materialmen’s, repairmen’s, employees’, contractors’, operators’, carriers’, workmen’s or other like Liens or charges arising by operation of law, in the ordinary course of business or incident to the construction or improvement of any of the Blackwater Assets, in each case, for amounts not yet delinquent (including any amounts being withheld as provided by law) or which are being contested in good faith through appropriate proceedings and, for those existing on August 31, 2013, for which

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adequate reserves in accordance with GAAP are reflected on the Blackwater Financial Statements; (ii) immaterial defects and irregularities in title, exceptions and other matters that, singularly or in the aggregate, will not materially interfere with the ownership, use, value, operation or maintenance of the Blackwater Assets to which they pertain or Blackwater’s or Newco’s ability to perform its obligations hereunder; and (iii) Liens for Taxes that are not due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings and, for those existing on August 31, 2013, for which adequate reserves in accordance with GAAP are reflected on the Blackwater Financial Statements.
“ Person ” means an individual, corporation, partnership, limited partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization or other entity, including any Governmental Authority, and including any successor, by merger or otherwise, of any of the foregoing.
“ Post-Closing Period ” has the meaning given in Section 5.8(c) .
“ Post-Closing Sale Period ” means the period beginning on the Closing Date and ending on the second anniversary of the Closing Date.
“ Pre-Closing Period ” has the meaning given in Section 5.8(c) .
“ Proceeding ” or “ Proceedings ” means any action, suit, pending settlement, proceeding, audit, investigation or other legal proceeding of any kind or nature by or before any Governmental Authority, or any other arbitration, mediation or similar proceeding.
“ Producing Unit ” has the meaning set forth in Section 4.12(b)
“ Qualified EBITDA ” means (i) the product of 8 and the trailing twelve-month EBITDA less (ii) Costs (as defined above).
“ Release ” means any spill, effluent, emission, leaking, pumping, pouring, emptying, escaping, dumping, injection, deposit, disposal, discharge, dispersal, leaching, abandoning, adding, or migration of any Hazardous Substance into the indoor or outdoor environment, or into or out of any property or facility.
“ Representatives ” means, with respect to any Person, officers, directors, managers, members, general partners, principals, employees, advisors, auditors, agents, bankers and other representatives of such Person.
“ Rollover Agreement ” means, with respect to each Management Holder, that certain Contribution and Rollover Agreement, to be executed prior to the Closing, by and between such Management Holder and AMID, pursuant to which such Person has agreed to rollover all of such Person’s Class A Interests in Blackwater in exchange for equity in AMID rather than exchanging it for Cash.
“ Rollover Consideration ” means 125,500 Common Units.

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“ Sale Transaction ” has the meaning set forth in Section 2.9(a) .
“ Securities Act ” means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.
“ Solvent ” has the meaning set forth in Section 3.4 .
“ Straddle Period ” has the meaning set forth in Section 5.8(c) .
“ Subsidiary ” means, with respect to any Person, any other Person controlled by such first Person, directly or indirectly, through one or more intermediaries.
“ Surviving Company ” has the meaning set forth in Section 2.1 .
“ Target ” has the meaning set forth in Section 2.10(a) .
“ Tax ” means any and all U.S. federal, state, local or foreign net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, capital stock, profits, license, license fee, environmental, customs duty, unclaimed property or escheat payments, alternative fuels, mercantile, lease, service, withholding, payroll, employment, unemployment, social security, disability, excise, severance, registration, stamp, occupation, premium, property (real or personal), windfall profits, fuel, value added, alternative or add on minimum, estimated or other taxes, duties, levies, customs, tariffs, imposts or assessments (including public utility commission property tax assessments) of any kind whatsoever imposed by any Governmental Authority, together with any interest, penalties or additions thereto, whether disputed or not, payable to any Governmental Authority in respect thereof, and including any obligations to indemnify or otherwise assume or succeed to the liability therefor of any other Person.
“ Tax Return ” means any return, declaration, report, statement, election, claim for refund, information return or other written document, together with all attachments, amendments and supplements thereto, filed with or provided to, or required to be filed with or provided to, a Governmental Authority in respect of Taxes, including any amendment thereof.
“ Termination Agreement ” means, with respect to each Management Holder, that certain Agreement of Termination of Employment Agreement, to be executed prior to the Closing, by and between such Management Holder and Blackwater Midstream.
“ Transfer Taxes ” has the meaning set forth in Section 5.8(b) .
“ United States ” means the United States of America.
“ Westwego Property ” has the meaning set forth in Section 4.12(b) .
Section 1.3     
 THE MERGER

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Section 1.4      The Merger     . Upon the terms and subject to the conditions of this Agreement, at the Effective Time and in accordance with the DLLCA, Merger Sub shall be merged with and into Blackwater pursuant to which (a) the separate limited liability company existence of Merger Sub shall cease, (b) Blackwater shall be the surviving entity in the Merger (the “ Surviving Company ”) and shall continue its existence under the Applicable Law of the State of Delaware as a wholly owned Subsidiary of AMID, and (c) all of the properties, rights, privileges, powers and franchises of Blackwater and Merger Sub will vest in the Surviving Company, and all of the debts, liabilities, obligations and duties of Blackwater and Merger Sub will become the debts, liabilities, obligations and duties of the Surviving Company.
Section 1.5      Closing; Effective Time     .
(a)      The closing of the Merger and the transactions contemplated hereby (the “ Closing ”) will be held on the Business Day which is three (3) Business Days after each of the conditions precedent set forth in Article VI and Article VII have been satisfied or waived by the party or parties entitled to the benefit thereof, other than those conditions which by their nature are only capable of being satisfied at the Closing (the “ Closing Date ”).
(b)      As soon as practicable on the Closing Date, the parties hereto shall cause a certificate of merger substantially in the form attached hereto as Exhibit A to be executed and filed with the Secretary of State of the State of Delaware (the “ Certificate of Merger ”), executed in accordance with the relevant provisions of the DLLCA. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware or at such other time as the parties shall agree and as shall be specified in the Certificate of Merger. The time on the Closing Date when the Merger shall become effective is herein referred to as the “ Effective Time ”.
Section 1.6      Effects of the Merger     . The Merger shall have the effects provided for herein and in the applicable provisions of the DLLCA. At the Effective Time, by virtue of the Merger and without any action on the part of the holders of the Membership Interests or the holders of any interests in Merger Sub, the Membership Interests outstanding immediately prior to the Effective Time (other than the Cancelled Interests) shall be automatically converted into and shall thereafter represent the right to receive the Merger Consideration, payable without interest. Any Membership Interests acquired by AMID or Merger Sub pursuant to the Rollover Agreements (the “ Cancelled Interests ”) shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange for such cancellation and retirement.
Section 1.7      Certificate of Formation; Limited Liability Company Agreement     . From and after the Effective Time, (a) the certificate of formation attached to the Certificate of Merger, shall be the certificate of formation of the Surviving Company until amended in accordance with the provisions thereof and Applicable Law and (b) the limited liability company agreement of Merger Sub, as in effect immediately prior to the Effective Time, shall be the limited liability company agreement of the Surviving Company until amended in accordance with the provisions thereof and Applicable Law.

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Section 1.8      Officers     . From and after the Effective Time, the officers of the Surviving Company shall be the officers set forth on Schedule 2.5 until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.
Section 1.9      Calculation of Closing Payments . No later than one (1) Business Day before the Closing Date, Newco will deliver to AMID (i) its calculation of the estimated Initial Merger Consideration and (ii) the Indebtedness Payoff Amount. If AMID disputes the estimated Initial Merger Consideration or the Indebtedness Payoff Amount prior to the Closing Date, then AMID, Newco, and their respective representatives will negotiate in good faith to resolve any such dispute on or prior to the Closing Date.
Section 1.10      Merger Consideration     . The aggregate consideration to be paid by AMID in respect of the Merger shall be the Merger Consideration. On the Closing Date:
(a)      AMID shall pay the Rollover Consideration to the Management Holders by issuing the number of Common Units set forth on Schedule 2.7(a) to each such Management Holder;
(b)      AMID shall pay the Base Equity Consideration to the holders of Membership Interests in the amounts set forth on Schedule 2.7(b) by wire transfer in immediately available funds to the accounts specified by each such holder; and
(c)      AMID shall pay the Indebtedness Payoff Amount to Blackwater by wire transfer in immediately available funds to the account specified by Blackwater.
Section 1.11      Timing of Equity Rollover     . For the avoidance of doubt, except as provided in Section 5.8(e) , the parties hereto acknowledge and agree that the contribution of Membership Interests to AMID pursuant to the Rollover Agreements shall be deemed to occur immediately prior to the Effective Time and prior to any other above-described event.
Section 1.12      Post-Closing Sale     .
(a)      If AMID sells, conveys or otherwise transfers any of the assets or equity interests in Blackwater Maryland (a “ Sale Transaction ”) prior to the termination of the Post-Closing Sale Period, AMID shall pay additional consideration in an amount equal to the gross proceeds received by AMID in such Sale Transaction, plus (i) Net Cash, less (ii) the transaction costs and other expenses incurred by AMID or its Affiliates in connection with such Sale Transaction (the “ Blackwater Maryland Consideration ”). The Blackwater Maryland Consideration, if any, shall be paid to holders of Membership Interests in accordance with the percentages set forth on Schedule 2.9(a) .
(b)      In the event there is a Sale Transaction prior to the termination of the Post-Closing Sale Period, AMID shall prepare and deliver to Newco within 45 days after the closing of such Sale Transaction the balance sheet and related statements of income, retained earnings and cash flows of Blackwater Maryland for the period between the Closing Date and the date of such Sale

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Transaction (the “ Blackwater Maryland Financial Statements ”), together with AMID’s calculation of Net Cash and such documentation of transaction costs associated with such Sale Transaction as Newco may reasonably request. The Blackwater Maryland Financial Statements and Net Cash shall be computed in accordance with GAAP.
Section 1.13      Earnout     .
(a)      For five years following the Closing Date or until the Target is reached, if earlier (the “ Earnout Period ”), AMID shall prepare and deliver to Newco within 45 days after each month-end the balance sheet and related statements of income, retained earnings and cash flows of Blackwater Harvey for each trailing twelve-month period through December 31, 2018 (in each case, the “ Blackwater Harvey Financial Statements ”), together with a calculation of EBITDA for such period determined from the respective Blackwater Harvey Financial Statements for such period. The Blackwater Harvey Financial Statements and calculations of EBITDA shall be computed in accordance with GAAP. If the calculation of EBITDA for any trailing twelve-month period during the Earnout Period exceeds $5,000,000 (the “ Target ”), AMID shall prepare a calculation of Qualified EBITDA and pay additional consideration in an amount equal to the lesser of 50% of Qualified EBITDA or $5,000,000 (the “ Earnout Consideration ”). The Earnout Consideration, if any, shall be paid to Newco.
(b)      During the 30 days immediately following Newco’s receipt of each of the Blackwater Harvey Financial Statements and the corresponding calculation of EBITDA or Qualified EBITDA (as and if applicable, collectively, the “ EBITDA Calculations ”) and, if any item or amount with respect thereto is disputed pursuant to an Objection Notice (as defined below), until the Arbitrating Accountant (as defined below) makes its final decision pursuant to Section 2.10(c) , AMID shall, and shall cause Blackwater to, (i) assist Newco in the review of such Blackwater Harvey Financial Statements and the corresponding EBITDA Calculations and provide Newco and its representatives with reasonable access during normal business hours to the books, records (including work papers, schedules, memoranda and other documents), supporting data, facilities and employees of Blackwater for purposes of their review of such Blackwater Harvey Financial Statements and the corresponding EBITDA Calculations, and (ii) cooperate with Newco and its representatives in connection with such review, including providing on a timely basis all other information necessary or useful in connection with the review of such Blackwater Harvey Financial Statements and the corresponding EBITDA Calculations as is reasonably requested by Newco or its representatives. Newco may dispute the accuracy of any item or amount set forth in any of the Blackwater Harvey Financial Statements and the corresponding EBITDA Calculations once after each consecutive twelve-month period beginning the Closing Date (each such period, a “ Twelve-Month Period ”) by providing written notice to AMID within 30 days after AMID’s delivery to Newco of the Blackwater Harvey Financial Statements and the corresponding EBITDA Calculations for the last month of the applicable Twelve-Month Period (an “ Objection Notice ”). Each Objection Notice shall describe in reasonable detail the nature and amount of any item or amount disputed in the Objection Notice. Any item or amount with respect to which no dispute is properly raised in an Objection Notice pursuant to this Section 2.10(b) will be final, conclusive and binding on the parties hereto.

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(c)      In the event that Newco properly provides an Objection Notice in accordance with Section 2.10(b) and AMID and Newco cannot agree on the final Blackwater Harvey Financial Statements and the EBITDA Calculations subject to such Objection Notice for any period within 10 days after the delivery of such Objection Notice, AMID and Newco will submit their respective final calculations of the items in dispute (including any adjustments the parties wish to make as a result of negotiations up to the date of such submission) to (i) an arbitrating accountant mutually acceptable to AMID and Newco (the “ Arbitrating Accountant ”) or (ii) if AMID and Newco are unable to agree upon such accountant, then AMID and Newco shall each select one such accountant and those two accountants shall select a third arbitrating accountant, in which event “Arbitrating Accountant” shall mean such third arbitrating accountant. The Arbitrating Accountant will review such final calculations, and with respect to each disputed item, make a selection as to which of the disputed items presented to it is, in the aggregate, more accurate (selecting one of such items without interpolation or adjustment). The decision of the Arbitrating Accountant will be made in accordance with the terms of this Agreement. The decision of the Arbitrating Accountant will be made within 20 days after being engaged, or as soon thereafter as reasonably practicable, and will be final and binding on the parties hereto. The costs and expenses of the Arbitrating Accountant will be paid by the party whose proposed EBITDA Calculations for the applicable period is the furthest amount from such EBITDA Calculations as calculated by the Arbitrating Accountant. AMID and Newco will make available to the Arbitrating Accountant all reasonably relevant books and records relating to the calculations submitted and all other information reasonably requested by the Arbitrating Accountant.
Section 1.14      Payment of Additional Equity Consideration     . AMID may, in its sole discretion, make payments of Additional Equity Consideration due under Section 2.10 in cash or through the issuance Common Units, or a combination thereof. All payments of Additional Equity Consideration in cash will be made by wire transfer or delivery of other immediately available funds to the accounts designated in writing by Newco or the Management Holders, as applicable, within 30 days following the final determination of the amount of such Additional Equity Consideration.
Section 1.15      Conduct of the Business     . During the Earnout Period, AMID shall (and shall cause the Blackwater Entities to), in good faith, conduct the business of the Blackwater Entities in the ordinary course and AMID shall not act or cause its Affiliates to act in a manner primarily intended to reduce or avoid the payment of any Additional Equity Consideration.
Section 1.16     
 REPRESENTATIONS AND WARRANTIES
OF AMID AND MERGER SUB
AMID and Merger Sub each hereby represents and warrants to Newco and Blackwater as follows:
Section 1.17      Organization and Existence     . AMID is a limited partnership duly organized, validly existing and in good standing under the Applicable Law of the State of Delaware, and has full limited partnership power and authority to own, lease and operate its

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properties and assets and to carry on its business as it is now being conducted. Merger Sub is a limited liability company duly organized, validly existing and in good standing under the Applicable Law of the State of Delaware, and has full limited liability company power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted.
Section 1.18      Authority and Approval     .
(a)      Each of AMID and Merger Sub, as applicable, has full limited partnership or limited liability company power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by AMID and Merger Sub of this Agreement and the consummation by AMID and Merger Sub of the transactions contemplated hereby have been duly and validly authorized by all requisite limited partnership and limited liability company action on the part of AMID and Merger Sub, respectively. No other Proceedings on the part of AMID or Merger Sub are necessary to authorize their execution, delivery or performance of this Agreement or their consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by AMID and Merger Sub, and assuming this Agreement constitutes the valid and binding agreement of Newco and Blackwater, this Agreement constitutes the legal, valid and binding agreement of AMID and Merger Sub, enforceable against AMID and Merger Sub in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general application affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity, whether considered in a Proceeding at law or in equity, and any implied covenant of good faith and fair dealing.
(b)      The Board of Directors, at a meeting thereof duly called and held or by written consent in accordance with the DLLCA, (i) determined that this Agreement and the Merger are fair to and in the best interests of Merger Sub and AMID and (ii) submitted this Agreement and the Merger to AMID, as the sole member of American Midstream, LLC, which is the sole member of Merger Sub.
(c)      AMID GP, in its individual capacity and in its capacity as general partner of AMID, and in such latter capacity, for and on behalf of AMID, in its capacity as the sole member of Merger Sub, at a meeting duly called and held or by written consent in accordance with DLLCA, adopted this Agreement.
Section 1.19      No Conflict; Required Filings and Consents     .
(a)      The execution, delivery and performance by Merger Sub and AMID of this Agreement and the consummation of the transactions contemplated hereby do not and will not:
(i)      Violate, conflict with any of, result in any breach of, or require an unobtained consent of any Person under, the terms, conditions or provisions of the certificates of formation or limited partnership, limited liability company or limited

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partnership agreement, or equivalent governing instruments of Merger Sub or AMID, as applicable;
(ii)      Conflict with or violate any provision of any Applicable Law; or
(iii)      Conflict with, result in a breach of, constitute a default under (whether with notice or the lapse of time or both), or accelerate or permit the acceleration of the performance required by, or require any unobtained consent, authorization or approval under, any indenture, mortgage, Contract, commitment, license, concession, Permit, lease, joint venture or other instrument to which Merger Sub or AMID is a party or by which any of them is bound or to which any of their property is subject,
except in the case of clauses (ii) and (iii) for those items which, individually or in the aggregate, would not reasonably be expected to have an AMID Material Adverse Effect.
(b)      Other than in connection with or in compliance with the Exchange Act, neither Merger Sub nor AMID is required to file, seek or obtain any notice, authorization, approval, order, Permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by Merger Sub or AMID of this Agreement or the consummation of the transactions contemplated hereby or in order to prevent the termination of any right, privilege, license or qualification of Merger Sub or AMID, except for the filing of the Certificate of Merger with the Secretary of State of the State of Delaware.
Section 1.20      Solvency     . Assuming (a) satisfaction of the conditions to AMID’s obligation to consummate the Merger, and after giving effect to the transactions contemplated by this Agreement, including the payment of the aggregate Merger Consideration, (b) the accuracy of the representations and warranties of Newco and Blackwater set forth herein, (c) any estimates, projections or forecasts of the Blackwater Entities have been prepared in good faith based upon assumptions that were and continue to be reasonable, (d) payment of all amounts required to be paid in connection with the consummation of the transactions contemplated by this Agreement, and (e) payment of all related fees and expenses, each of AMID and Surviving Company will be Solvent as of the Closing Date and immediately after the consummation of the transactions contemplated by this Agreement. For the purposes of this Agreement, the term “Solvent” when used with respect to any Person, means that, as of any date of determination (a) the amount of the “fair saleable value” of the assets of such Person and its Subsidiaries on a consolidated basis will, as of such date, exceed (i) the value of all “liabilities of such Person, including contingent and other liabilities,” as such quoted terms are generally determined in accordance with Applicable Laws governing determinations of the insolvency of debtors, and (ii) the amount that will be required to pay the probable liabilities of such Person on its existing debts (including contingent and other liabilities) as such debts become absolute and mature, (b) such Person will not have, as of such date, an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged following such date, and (c) such Person will be able to pay its liabilities, including contingent and other liabilities, as they mature. For purposes of this definition, “not have an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged” and “able to pay its liabilities, including contingent and other liabilities, as they

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mature” means that such Person and its Subsidiaries on a consolidated basis will be able to generate enough cash from operations, asset dispositions or refinancing, or a combination thereof, to meet its obligations as they become due.
Section 1.21      Ownership and Operations of Merger Sub     . As of the date of this Agreement, all of the interests of Merger Sub are validly issued and outstanding, and, to the extent applicable, fully paid and nonassessable. All of the issued and outstanding interests of Merger Sub are, and on the Closing Date will be, owned indirectly by AMID. Merger Sub has not conducted any business other than incident to its formation and pursuant to this Agreement, the Merger and the other transactions contemplated hereby.
Section 1.22      Common Units     .
(a)      The issuance by AMID of the Common Units comprising the Rollover Consideration and the limited partner interests represented thereby: (i) has been duly authorized by AMID pursuant to the Fourth Amended and Restated Agreement of Limited Partnership of AMID, dated as of August 9, 2013 (the “ AMID Partnership Agreement ”); (ii) when issued and delivered in accordance with the terms of this Agreement and the AMID Partnership Agreement, will be validly issued, fully paid (to the extent required by the AMID Partnership Agreement) and, with respect to the limited partner interests, nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of the DRULPA); and (iii) will be free of any and all Liens and restrictions on transfer, other than restrictions on transfer under the (A) AMID Partnership Agreement, (B) DRULPA, (C) the Rollover Agreements and (D) under other applicable state and federal securities laws.
(b)      AMID’s currently outstanding Common Units are listed on the New York Stock Exchange, and AMID has not received any notice of delisting.
(c)      On the Closing Date, the Common Units issued as the Rollover Consideration will have those rights, preferences, privileges and restrictions governing the currently outstanding Common Units (as defined in the AMID Partnership Agreement), as applicable, as set forth in the AMID Partnership Agreement. The Common Units issued as Rollover Consideration will be evidenced by certificates, or a book-entry account maintained by AMID’s transfer agent, and will bear the legend or restrictive notation required by the Partnership Agreement, as well as the following legend or restrictive notation:
“These securities have not been registered under the Securities Act of 1933, as amended (the “ Securities Act ”). These securities may not be sold or offered for sale except pursuant to an effective registration statement under the Securities Act or pursuant to an exemption from registration thereunder, in each case in accordance with all applicable securities laws of the states or other jurisdictions, and in the case of a transaction exempt from registration, such securities may only be transferred if the transfer agent for such securities has received documentation satisfactory to it that such transaction does not require registration under the Securities Act.”

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Section 1.23      Litigation     . There are no civil, criminal or administrative actions, suits, Claims, hearings, arbitrations, investigations or Proceedings pending or, or to the Knowledge of Merger Sub or AMID, threatened that seek (a) to prevent or delay the consummation by Merger Sub or AMID of the transactions contemplated by this Agreement or (b) damages in connection with any such consummation.
Section 1.24      Brokers     . Neither Merger Sub nor AMID has entered (directly or indirectly) into any agreement with any Person that would obligate Merger Sub or AMID or any of its Affiliates to pay any commission, brokerage or “finder’s fee” or other similar fee in connection with this Agreement or the transactions contemplated hereby.
Section 1.25     
 REPRESENTATIONS AND WARRANTIES OF NEWCO AND BLACKWATER
All representations and warranties of Newco and Blackwater are made subject to the exceptions noted in the schedules delivered by Blackwater to AMID and Merger Sub concurrently herewith and identified by the parties as the “ Blackwater Disclosure Schedules .” Any references to dollar amounts, shall not be deemed to be an acknowledgement or representation that such items are material or required to be disclosed, to establish any standard of materiality, or to define further the meaning of such terms for purposes of this Agreement. Any disclosure set forth on any particular schedule with specific reference to the particular section or subsection of this Agreement to which the information set forth in the schedule relates shall be deemed disclosed with respect to other sections or subsections of this Agreement only if it is reasonably apparent from a reading of such disclosure that such disclosure (without further information) also relates to such other sections or subsections. Newco and Blackwater hereby represent and warrant to AMID and Merger Sub as follows:
Section 1.26      Organization and Existence     . Newco and each Blackwater Entity is an entity duly organized, validly existing and in good standing under the Applicable Law of the state that each such entity was incorporated, organized or otherwise formed, and has full power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted. Newco and each Blackwater Entity is duly qualified to do business and is in good standing in the states listed in Blackwater Disclosure Schedule 4.1 , such states being each jurisdiction in which the ownership of such entity’s properties or the conduct of such entity’s business requires such qualification, except where the failure to so qualify, individually or in the aggregate, could not reasonably be expected to result in a Blackwater Material Adverse Effect.
Section 1.27      Authority and Approval     .
(a)      Each of Newco and Blackwater has full limited liability company power and authority to execute and deliver this Agreement and to perform their obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by Newco or Blackwater of this Agreement and the consummation by Newco or Blackwater of the transactions contemplated hereby have been duly and validly authorized by all requisite limited liability company action on the part of Newco or Blackwater, respectively. No other limited

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liability company proceedings on the part of Newco or Blackwater are necessary to authorize their execution, delivery or performance of this Agreement or their consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Newco and Blackwater, and assuming this Agreement constitutes the valid and binding agreement of AMID and Merger Sub, this Agreement constitutes the legal, valid and binding agreement of Newco and Blackwater, enforceable against Newco and Blackwater in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general application affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity, whether considered in a Proceeding at law or in equity, and any implied covenant of good faith and fair dealing.
(b)      Each of the Board of Managers of Blackwater and the members of Blackwater, at a meeting thereof duly called and held or by written consent in accordance with the DLLCA, approved this Agreement and the Merger.
Section 1.28      No Conflict; Required Filings and Consents     .
(a)      Except as otherwise provided in Blackwater Disclosure Schedule 4.3(a) or Section 4.3(b) , the execution, delivery and performance by Newco and Blackwater of this Agreement, and the consummation of the transactions contemplated hereby do not and will not:
(i)      violate, conflict with any of, result in any breach of, or require the consent of any Person under, the terms, conditions or provisions of the certificate of formation, limited liability company agreement or equivalent governing instruments of Newco or any Blackwater Entity;
(ii)      conflict with or violate any provision of Applicable Law;
(iii)      conflict with, result in a breach of, constitute a default under (whether with notice or the lapse of time or both), or accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under, or result in the suspension, termination or cancellation of, or in a right of suspension, termination or cancellation of, any indenture, mortgage, Contract, license, concession, Permit, lease, joint venture or other instrument to which Newco or any Blackwater Entity is a party or by which they or any of the Blackwater Assets are bound; or
(iv)      result in the creation of any Lien on any of the Blackwater Assets under any such indenture, mortgage, Contract, license, concession, Permit, lease, joint venture or other instrument,
except in the case of clauses (ii), (iii), and (iv) for those items which, individually or in the aggregate, would not reasonably be expected to have a Blackwater Material Adverse Effect.
(b)      Blackwater Disclosure Schedule 4.3(b) sets forth each material notice, authorization, approval, order, Permit or consent of any Governmental Authority that each

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Blackwater Entity or Newco is required to file, seek or obtain in connection with the execution, delivery and performance by Blackwater or Newco of this Agreement or the consummation of the transactions contemplated hereby or in order to prevent the termination of any right, privilege, license or qualification of any Blackwater Entity or Newco, except for the filing of the Certificate of Merger with the Secretary of State of the State of Delaware.
Section 1.29      Capitalization; Title to Membership Interests in Blackwater     .
(a)      (i) Newco, (ii) Blackwater TMP LLC, a Delaware limited liability company, and (iii) the members of management of Blackwater who will be subject to the Rollover Agreements collectively own, beneficially and of record, all of the authorized, issued and outstanding Membership Interests of Blackwater, free and clear of all Liens.
(b)      Each issued and outstanding equity interest of Blackwater is duly authorized and validly issued and is fully paid and nonassessable and is free and clear of all Liens of any kind or nature whatsoever and was not issued in violation of any preemptive rights or federal or state securities laws.
(c)      Except as set forth in Blackwater Disclosure Schedule 4.4(c) , there are (i) no authorized or outstanding subscriptions, warrants, options, convertible securities or other rights (contingent or otherwise) to purchase or otherwise acquire from any Blackwater Entity any equity interests of or in any Blackwater Entity, (ii) no commitments on the part of any Blackwater Entity to issue limited liability company interests, subscriptions, warrants, options, convertible securities or other similar rights, and (iii) no equity securities of any Blackwater Entity reserved for issuance for any such purpose. Except as set forth in Blackwater Disclosure Schedule 4.4(c) , no Blackwater Entity has any obligation (contingent or other) to purchase, redeem or otherwise acquire any of its equity securities (including its limited liability company interests). Except for this Agreement and as set forth in Blackwater Disclosure Schedule 4.4(c) , there is no voting trust or agreement, stockholders agreement, pledge agreement, buy-sell agreement, right of first refusal, preemptive right or proxy relating to any equity securities of any Blackwater Entity (including its limited liability company interests).
Section 1.30      Subsidiaries and Joint Ventures     .
Blackwater Disclosure Schedule 4.5 , lists all Subsidiaries of Blackwater together with the jurisdiction of organization of each such Subsidiary. Blackwater does not have an interest in any joint venture. Except as provided in Blackwater Disclosure Schedule 4.5 , all the outstanding equity interests in each Subsidiary of Blackwater have been duly authorized and validly issued and are fully paid and nonassessable and are owned directly or indirectly by Blackwater free and clear of all Liens of any kind or nature whatsoever and were not issued in violation of any preemptive rights or federal or state securities laws. Other than the Subsidiaries, Blackwater does not own, directly or indirectly, any capital stock, voting securities or equity interests in any Person.
Section 1.31      Financial Statements; Undisclosed Liabilities     .

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(a)      The audited consolidated balance sheets of Blackwater Midstream and its subsidiaries as of March 31, 2012 and Blackwater and its subsidiaries as of March 31, 2013, and the related consolidated statements of income, shareholder’s equity and cash flow for the periods then ended and the notes thereto (collectively, the “ Audited Financial Statements ”), all certified by MaloneBailey LLP (i) are included on Blackwater Disclosure Schedule 4.6(a) , (ii) were prepared in accordance with GAAP consistently applied throughout the periods presented and (iii) present fairly in all material respects the financial position and the results of operations of Blackwater Midstream and its subsidiaries and Blackwater and its subsidiaries, respectively, as of the dates and for the periods indicated therein.
(b)      Blackwater Disclosure Schedule 4.6(b) sets forth a true and complete copy of the unaudited balance sheet as of September 30, 2013 and the related statement of income for Blackwater (the “ Blackwater Financial Statements ”). The Blackwater Financial Statements present fairly in all material respects the financial position of Blackwater as of the date thereof. The Blackwater Financial Statements have been prepared in accordance with GAAP consistently applied throughout the periods presented, except that the Blackwater Financial Statements do not include any notes. Except as required by GAAP, or as disclosed in the Blackwater Financial Statements, there were no changes in the method of application of Blackwater’s accounting policies or changes in the method of applying Blackwater’s use of estimates in the preparation of the Blackwater Financial Statements as compared with past practice.
(c)      There are no liabilities or obligations of any Blackwater Entity of any nature (whether known or unknown and whether accrued, absolute, contingent or otherwise) other than (i) liabilities or obligations reflected or reserved against in the Blackwater Financial Statements or the Audited Financial Statements, (ii) current liabilities incurred in the ordinary course of business since September 30, 2013, and (iii) liabilities or obligations (whether known or unknown and whether accrued, absolute, contingent or otherwise) that would not, individually or in the aggregate, reasonably be expected to have a Blackwater Material Adverse Effect.
(d)      Blackwater Disclosure Schedule 4.6(d) sets forth a true and complete list of the individual components (indicating the amount and to whom the Indebtedness is owed) of all Indebtedness outstanding with respect to the Blackwater Entities, other than unsecured trade payables incurred in the ordinary course of business.
Section 1.32      Distributions and Cash Reserves     . Since March 31, 2013, Blackwater has not declared, set aside, made or paid any dividend or other distribution (payable in Cash, stock, property or otherwise), or made any other payment, on or with respect to any of its Membership Interests.
Section 1.33      Internal Control Over Financial Reporting     . The system of internal controls over financial reporting to which Blackwater is subject is sufficient to provide reasonable assurance (a) that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP consistently applied, (b) that transactions are executed only in accordance with the authorization of management, and (c) regarding the prevention or timely detection of the unauthorized acquisition, use or disposition of the Blackwater Assets.

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Section 1.34      No Adverse Changes     .
(a)      Since March 31, 2013:
(i)      there have not been any facts, circumstances, events, changes, effects or occurrences that have had, individually or in the aggregate, a Blackwater Material Adverse Effect;
(ii)      no events occurred nor do any circumstances exist which, to Blackwater’s Knowledge, individually or in the aggregate, could reasonably be expected to result in a Blackwater Material Adverse Effect;
(iii)      the Blackwater Assets and the Blackwater Entities’ businesses have been operated and maintained, in all material respects, consistent with past practice in the ordinary course of business;
(iv)      no Blackwater Entity has authorized for issuance, issued sold, pledged, delivered or otherwise transferred any equity interests or any securities convertible into or exchangeable or exercisable for equity interests or redeemed, purchased or otherwise acquired any equity interests;
(v)      there have been no changes in any material respect of any accounting principles or the methods of applying such principles, other than changes required by GAAP or as disclosed in the Blackwater Financial Statements or the Audited Financial Statements; and
(vi)      there has not been any material damage, destruction or loss to any material portion of the Blackwater Assets, whether or not covered by insurance.
(b)      Since September 30, 2013, the Blackwater Entities have not incurred any capital expenditures related to the expansions at the Harvey and Westwego terminals other than with proceeds from the Loan Facilities.
Section 1.35      Licenses; Permits     .
(a)      Blackwater Disclosure Schedule 4.10(a) sets forth a list of each material Permit, including any Environmental Permit, that is necessary for the operations of each Blackwater Entity.
(b)      All material Permits are validly held by the appropriate Blackwater Entity and are in full force and effect.
(c)      Each Blackwater Entity has complied in all material respects with all terms and conditions of the material Permits applicable to such Blackwater Entity.

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(d)      There is no outstanding written notice, nor to Newco’s and Blackwater’s Knowledge, any other notice of suspension or cancellation of any material Permit held by any Blackwater Entity.
(e)      No Proceeding is pending or, to Newco’s and Blackwater’s Knowledge, threatened with respect to any alleged failure by any Blackwater Entity to have any material Permit necessary for the operation of any of their assets or the conduct of their business or to be in compliance therewith.
Section 1.36      Litigation; Laws and Regulations     .
(a)      There are no material (i) civil, criminal or administrative actions, suits, Claims, hearings, arbitrations, investigations or Proceedings pending or, to Newco’s and Blackwater’s Knowledge, threatened, against Blackwater, (ii) judgments, orders, decrees or injunctions of any Governmental Authority, whether at law or in equity, against Blackwater or (iii) pending or, to Newco’s and Blackwater’s Knowledge, threatened, investigations by any Governmental Authority against Blackwater.
(b)      Neither Newco nor any Blackwater Entity is in material violation of or in material default under any Applicable Law.
Section 1.37      Properties     .
(a)      The real property set forth on Blackwater Disclosure Schedule 4.12 constitutes all material real property (including all buildings, fixtures and other improvements thereto) used by the Blackwater Entities, such as are necessary to permit the Blackwater Entities to conduct their respective businesses as currently conducted and all such property has been maintained, repaired and replaced in the ordinary course of business and is in reasonably good repair and condition (ordinary wear and tear excepted). Except as would not have, individually or in the aggregate, a Blackwater Material Adverse Effect, each Blackwater Entity owns and has marketable title to all of its owned real property and good title to all its personal property and has valid leasehold interests in all of its leased properties free and clear of all Liens (except in all cases for Permitted Liens). Except as would not have, individually or in the aggregate, a Blackwater Material Adverse Effect, all leases under which a Blackwater Entity leases any real or personal property are valid and effective against such Blackwater Entity and, to Blackwater’s Knowledge, the counterparties thereto, in accordance with their respective terms, and there is not, under any of such leases, any existing default by a Blackwater Entity or, to Blackwater’s Knowledge, the counterparties thereto, or event which, with notice or lapse of time or both, would become a default by a Blackwater Entity or, to Blackwater’s Knowledge, the counterparties thereto. The representations and warranties set forth in this Section 4.12 shall not apply to Intellectual Property, which is the subject of Section 4.13 .
(b)      Since December 30, 2008, (i) no oil and gas drilling, reworking, or other production operations have been performed on the surface of any portion of the lands owned by Blackwater New Orleans (the “ Westwego Property ”); (ii) except for the .0694 acres included in the CIB O RA SUA created by Order No. 286-D of the Office of Conservation of the State of

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Louisiana in the Westwego Field, Jefferson Parish, Louisiana and the 8800 RB SUA as created by Order No. 286-B-1 of the Office of Conservation of the State of Louisiana in the Westwego Field, Jefferson Parish, Louisiana (the latter unit is referred to herein as the “ Producing Unit ”), no portion of the Westwego Property has been included in an oil and/or gas unit; (iii) Blackwater has received no royalties, delay rentals, or bonuses of any kind with respect to the Oil, Gas and Mineral Lease dated effective the 23rd day of January, 2001, executed by Support Terminals Operating Partnership, L.P. in favor of Merlin Oil and Gas, Inc., an extract of which Oil, Gas and Mineral Lease was recorded in Mineral Lease Book 137, folio 542, under Instrument No. 10127487, Jefferson Parish, Louisiana, as amended by Amendment to an Oil, Gas and Mineral Lease dated effective January 23, 2002; and (iv) no buildings, tanks, structures, or other improvements of any kind are located on the portion of the Westwego Property included in the Producing Unit.
Section 1.38      Intellectual Property     . Each Blackwater Entity owns or has the right to use all Intellectual Property necessary for or used in the conduct of such Blackwater Entity’s business as currently conducted by it, and the conduct of its business does not infringe upon, misappropriate or otherwise violate any Intellectual Property of any third party. All Intellectual Property owned by any Blackwater Entity, if any, is free and clear of all Liens (other than Permitted Liens). To the Knowledge of any Blackwater Entity, upon the consummation of the transactions contemplated herein, the Blackwater Entities shall own or have the right to use all Intellectual Property on the same terms and conditions as Blackwater and its Subsidiaries enjoyed prior to such transaction. There is no Intellectual Property-related Proceeding pending or threatened by any third party before any court or tribunal (including, the United States Patent and Trademark Office or equivalent authority anywhere in the world) relating to a Blackwater Entity or its operations, nor has any claim or demand been made by any third party that alleges any infringement, misappropriation or violation of any Intellectual Property of any third party, or unfair competition or trade practices by a Blackwater Entity. Each Blackwater Entity has taken reasonable measures to protect the confidentiality of all material trade secrets.
Section 1.39      Tax Matters     . Except as would not have, individually or in the aggregate, a Blackwater Material Adverse Effect, (i) each Blackwater Entity has prepared and timely filed (taking into account any valid extension of time within which to file) all Tax Returns required to be filed by such entity and all such Tax Returns are complete and accurate, (ii) each Blackwater Entity has timely paid all Taxes that are required to be paid by such entity (whether or not shown on any Tax Return), except with respect to matters contested in good faith and for which adequate reserves have been established on the financial statements of the Blackwater Entities in accordance with GAAP, (iii) all assessments for Taxes due with respect to completed and settled examinations or any concluded litigation have been fully paid, (iv) except as provided on Blackwater Disclosure Schedule 4.14 , there are no audits, examinations, investigations or other Proceedings pending or threatened in writing in respect of Taxes or Tax matters of any Blackwater Entity, (v) there are no Liens for Taxes on Blackwater Assets other than Permitted Liens, (vi) no Blackwater Entity has been a “controlled corporation” or a “distributing corporation” in any distribution that was purported or intended to be governed by Section 355 of the Code (or any similar provision of state, local or foreign law), (vii) each Blackwater Entity has timely withheld and paid all Taxes required to have been withheld and paid in connection with

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amounts paid or owing to any employee, creditor, independent contractor, stockholder or other third party, has correctly categorized each service provider as an employee or independent contractor and is in compliance with all applicable rules and regulations regarding the solicitation, collection and maintenance of any forms, certifications and other information required in connection therewith, (viii) no Blackwater Entity has been a party to or participated in any “reportable transaction” within the meaning of Treasury Regulation 1.6011-4(b)(1), (ix) no Blackwater Entity is a party to any agreement or arrangement relating to the apportionment, sharing, assignment or allocation of any Tax or Tax asset (other than an agreement or arrangement solely among members of a group the common parent of which is a Blackwater Entity) or has any liability for Taxes of any Person (other than a Blackwater Entity) under Treasury Regulation Section 1.1502-6 (or any predecessor or successor thereof or any analogous or similar provision of Law), by Contract, agreement or otherwise, (x) no waivers or extensions of any statute of limitations have been granted or requested with respect to any Taxes of any Blackwater Entity, (xi) no issue has been raised in writing by a taxing authority in any prior examination of any Blackwater Entity which, by application of the same or similar principles, could reasonably be expected to result in a deficiency for any subsequent taxable period, (xii) no claim has been in writing made by a taxing authority in a jurisdiction where any Blackwater Entity does not file Tax Returns such that it is or may be subject to taxation by that jurisdiction, and (xiii) no Blackwater Entity (A) is subject to any private letter ruling of the IRS or comparable rulings of any taxing authority with respect to Taxes (B) has executed or entered into a closing agreement pursuant to Section 7121 of the Code or any similar provision of Law, in each case, within the preceding three taxable years or that may otherwise be in effect at any time after the Closing Date of the Merger with respect to Taxes or (C) will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (I) change in method of accounting for a taxable period ending on or prior to the Closing Date; (II) intercompany transaction or any excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law); (III) installment sale or open transaction disposition made on or prior to the Closing Date; (IV) prepaid amount received on or prior to the Closing Date; or (V) election under Section 108(i) of the Code.
Section 1.40      Environmental Matters     . Except as would not reasonably be expected, individually or in the aggregate, to have a Blackwater Material Adverse Effect:
(a)      The Blackwater Entities and the Blackwater Assets, operations and business are in compliance with applicable Environmental Laws;
(b)      The Blackwater Entities and the Blackwater Assets, operations and business are not subject to any pending or, to the Knowledge of Newco and Blackwater, threatened, Proceeding under any Environmental Laws;
(c)      No Blackwater Entity has received any written communication that remains unresolved alleging either or both that (i) a Blackwater Entity may be in violation of any Environmental Law, or any Permit issued pursuant to Environmental Law (including any

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Environmental Permit), or (ii) a Blackwater Entity may have any liability under any Environmental Law;
(d)      All Environmental Permits required to be obtained or filed by a Blackwater Entity in connection with any Blackwater Assets, operations or business have been duly obtained or filed, are valid and currently in effect, and the Blackwater Entities and Blackwater Assets are in compliance with such Environmental Permits; and
(e)      There has been no Release of any Hazardous Substance by a Blackwater Entity or from any of the Blackwater Assets, or as a result of any operations or activities of the Blackwater Entities, in any manner or for which a Blackwater Entity would be responsible that could reasonably be expected to give rise to any remedial obligation, corrective action requirement or other liability of any kind under applicable Environmental Laws. To the Knowledge of Newco and Blackwater, no Hazardous Substance has been treated, stored, disposed of, Released or transported in violation of any applicable Environmental Law, or in a manner giving rise to any liability under Environmental Law, from any properties owned by a Blackwater Entity or as a result of any operations or activities of a Blackwater Entity. The Blackwater Entities have delivered to AMID or its Affiliates copies of all Environmental Permits, reports, studies, analyses or tests initiated by or in the possession of Blackwater Entities pertaining to the environmental condition of Hazardous Substances in, on, or under the Blackwater Assets or offsite disposal areas or concerning compliance by the Blackwater Entities under Environmental Laws.
Section 1.41      Material Contracts     .
(a)      None of the Blackwater Entities is a party to or bound by, as of the date hereof, and, subject to the consummation of the transactions contemplated hereby, as of the Closing Date, (i) any Contract which would qualify as a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the Securities Act) if such definition relating to a “registrant” were applied to the Blackwater Entity as a private company, (ii) a loan, guarantee of Indebtedness or credit agreement, note, bond, mortgage, indenture, Contract, lease, license or other binding commitment (other than those between Blackwater and a Blackwater Entity relating to Indebtedness or other obligation to make payment in an amount in excess of $100,000 individually, (iii) a Contract, which purports to materially limit the right of a Blackwater Entity to engage or compete in any line of business in which a Blackwater Entity is engaged or to compete with any Person or operate in any location, (iv) a Contract that creates a partnership or joint venture or similar arrangement with respect to any significant portion of the business of the Blackwater Entities taken as a whole or (v) settlement or similar Contract with any Governmental Authority or order or consent of a Governmental Authority to which a Blackwater Entity is subject involving future performance by a Blackwater Entity which is material to the a Blackwater Entities taken as a whole (all Contracts of the type described in this Section 4.16 , together with all Contracts with transportation suppliers and any revenue generating Contracts with customers of the Blackwater Entities (which supplier and customer Contracts are set forth in Blackwater Disclosure Schedule 4.16(b) (the “ Material Customer/Supplier Contracts ”)), being referred to herein as “ Material Contracts ”).

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(b)      Other than as a result of the expiration or termination of any Material Contract in accordance with its terms and except as would not have, either individually or in the aggregate, a Blackwater Material Adverse Effect, (i) each Material Contract is valid and binding on the Blackwater Entity that is a party thereto and in full force and effect, (ii) the Blackwater Entity has performed all obligations required to be performed by it to date under each Material Contract, and (iii) no Blackwater Entity has received notice of the existence of any event or condition which constitutes, or, after notice or lapse of time or both, will constitute, a material default on the part of a Blackwater Entity or its counterparties under any such Material Contract. Except as set forth on Blackwater Disclosure Schedule 4.16(b) , since March 31, 2013, no Blackwater Entity has received any written notice that any counterparty to a Material Customer/Supplier Contract (i) has reduced or will reduce the use of products or services of a Blackwater Entity, or (ii) has sought to terminate or amend the terms of a Material Customer/Supplier Contract, including in each case as a result of this Agreement or the transactions contemplated hereby.
Section 1.42      Employees     . Since October 9, 2012, each Blackwater Entity has complied in all material respects with all Applicable Law relating to the employment of labor at its facilities, including provisions thereof relating to wages, hours, equal opportunity and the payment of social security and other Taxes. No Blackwater Entity is a party to any collective bargaining agreement with respect to its employees.
Section 1.43      Employee Benefits     .
(a)      Blackwater Disclosure Schedule 4.18(a) sets forth a true and complete list of each employment, severance or similar Contract or arrangement and each material plan, policy, fund, program or Contract or arrangement (whether or not written) providing for compensation, bonus, profit-sharing, stock option, or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance coverage (including any self-insured arrangements) health or medical benefits, disability benefits, worker’s compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance or other benefits) maintained or contributed to (or with respect to which any obligation to contribute has been undertaken) by any Blackwater Entity for the benefit of current or former employees, officers, directors, or consultants of a Blackwater Entity (the “ Blackwater Plans ”).
(b)      With respect to each Blackwater Plan, Blackwater has made available to AMID true, correct and complete copies of the following documents: (i) all documents constituting the Blackwater Plans, including but not limited to trust agreements, insurance policies, service agreements, and formal and informal amendments thereto; (ii) the two most recent Forms 5500 and any financial statements attached thereto; (iii) the relevant IRS determination or opinion letter; and (iv) the most recent summary plan description.
(c)      Each Blackwater Plan has been established, maintained, and administered in material compliance with its terms and with Applicable Law, including with the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), the Code, the rules and regulations promulgated by the Department of Labor, the Pension Benefit Guaranty Corporation,

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and the Department of the Treasury pursuant to the provisions of ERISA and the Code, and any reporting, notice, and disclosure requirements, to the extent applicable thereto.
(d)      Except as would not have, individually or in the aggregate, a Blackwater Material Adverse Effect, each Blackwater Employee (including but not limited to independent contractors and leased employees) has been classified appropriately under the Blackwater Plans.
(e)      None of the Blackwater Plans is and no Blackwater Entity has or has ever had any liability with respect to: (i) a multiemployer plan (within the meaning of Section 3(37) of ERISA; (ii) a plan subject to Title IV of ERISA; (iii) a trust described in Section 501(c)(9) of the Code; or (iv) a plan subject to the minimum funding standards of Section 302 of ERISA or Section 412 of the Code.
(f)      There are no (i) Proceedings or Claims by, against, or relating to any Blackwater Plan that would, if successful, result in material Claims against any Blackwater Entity and (ii) no Proceedings or material Claims (other than Claims for benefits in the ordinary course) have been asserted, instituted or, to the Knowledge of Newco or Blackwater, threatened by, against, or relating to any Blackwater Plan, against the assets of any trust or other funding arrangement under any such Blackwater Plan, by or against any Blackwater Entity with respect to any Blackwater Plan, or by or against the plan administrator or any fiduciary of any Blackwater Plan, and Newco and Blackwater do not have Knowledge of any fact that could form the basis for any such Proceeding or material Claim. The Blackwater Plans are not presently under audit or examination (nor has notice been received of a potential audit or examination) by the IRS, the Department of Labor, or any other governmental agency or entity, and no matters are pending with respect to a Blackwater Plan under the IRS’s Employee Plans Compliance Resolution Program or the Department of Labor’s Delinquent Filer Program or Voluntary Fiduciary Compliance Program.
(g)      Except as disclosed on Blackwater Disclosure Schedule 4.18(g) , no Blackwater Plan contains any provision or is subject to any Applicable Law that would prohibit the transactions contemplated by this Agreement or any Ancillary Agreement or that would give rise to any vesting of benefits, severance, termination, or other payments or liabilities as a result of the transactions contemplated by this Agreement or any Ancillary Agreement.
(h)      Except as disclosed on Blackwater Disclosure Schedule 4.18(h) , no Blackwater Entity has any current or projected liability in respect of post-employment health or medical or life insurance benefits for retired, former or current employees, except as required under Applicable Law.
(i)      Other than as described on Blackwater Disclosure Schedule 4.18(i) , no employee or former employee of any Blackwater Entity will become entitled to any bonus, retirement, severance, job security or similar benefit or enhanced such benefit (including acceleration of vesting or exercise of an incentive award) as a result of the transactions contemplated hereby.

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(j)      Except as disclosed on Blackwater Disclosure Schedule 4.18(j) , no Blackwater Entity is a party to any Contract that is a “nonqualified deferred compensation plan” subject to Section 409A of the Code.
Section 1.44      Insurance     . Blackwater Disclosure Schedule 4.19 sets forth a list of the material insurance policies held by the Blackwater Entities (the “ Insurance Policies ”). Except as would not have, individually or in the aggregate, a Blackwater Material Adverse Effect: (a) the Blackwater Entities maintain, or are entitled to the benefits of, insurance covering their properties, operations, personnel and businesses against such losses and risks as are reasonably adequate to protect them and their businesses, (b) no Blackwater Entity has received notice from any insurer or agent of such insurer that substantial capital improvements or other expenditures will have to be made in order to continue the Insurance Policies, and all Insurance Policies are outstanding and duly in force on the date hereof and will be outstanding and duly in force on the Closing Date, and (c) no Blackwater Entity has taken any action which could permit termination or material modification of any Insurance Policies. No notice in writing of cancellation or termination has been received with respect to any Insurance Policies, and no such policy shall terminate or give rise to a right of cancellation by reason of the execution, delivery and performance of this Agreement.
Section 1.45      Brokers     . Neither Newco nor Blackwater has entered (directly or indirectly) into any agreement with any Person that would obligate Newco or Blackwater to pay any commission, brokerage or “finder’s fee” or other similar fee in connection with this Agreement or the transactions contemplated hereby.
Section 1.46     
 CERTAIN COVENANTS
Section 1.47      Conduct of Business     .
(a)      Except as expressly contemplated by this Agreement, during the period commencing on the date hereof and ending on the Closing Date, Newco shall cause each Blackwater Entity to, cause the operations of each Blackwater Entity to be conducted only in the ordinary course of business in a manner consistent with past practices, and, without limiting the generality of the foregoing, Newco shall cause each Blackwater Entity to:
(i)      not terminate, materially amend, execute or extend any contracts reasonably expected to generate gross revenues per year or to require expenditures per year in excess of $500,000, other than (A) the execution or extension of contracts terminable on ninety (90) days or shorter notice or (B) the automatic extension or renewal of any contract existing on the Closing Date in accordance with its terms;
(ii)      maintain the material Blackwater Assets in customary repair, order, and condition;

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(iii)      maintain the books, accounts, and records of the Blackwater Entities consistent with past practices and in accordance with the principles used in the preparation of the Audited Financial Statements;
(iv)      maintain, and cause their respective directors, officers, employees, agents and other representatives to maintain, all material Permits;
(v)      maintain the current insurance coverage levels upon the Blackwater Assets and with respect to the conduct of the Blackwater Entities; and
(vi)      maintain the organizational existence of the Blackwater Entities in good standing.
Requests for approval of any action restricted by this Section 5.1(a) shall be delivered to either of the following individuals, each of whom shall have full authority to grant or deny such requests for approval on behalf of AMID:
Stephen W. Bergstrom
Executive Chairman, President & CEO
Email:    sbergstrom@americanmidstream.com
Phone:    (713) 865-0381

AMID’s approval of any action restricted by this Section 5.1(a) shall not be unreasonably withheld or delayed and shall be considered granted within ten (10) days (unless a shorter time is reasonably required by the circumstances and such shorter time is specified in Newco’s notice) of Newco’s notice to AMID requesting such consent unless AMID notifies Newco to the contrary during that period. Notwithstanding the foregoing provisions of this Section 5.1(a) , in the event of an emergency, Newco may take, or cause such Blackwater Entity to take, such action as reasonably necessary and shall notify AMID of such action promptly thereafter.
(b)      Without limiting the generality of Section 5.1(a) , except as otherwise expressly provided in this Agreement or consented to in writing by AMID, Newco shall not permit any Blackwater Entity to:
(i)      amend its organizational documents;
(ii)      authorize for issuance, issue, sell, pledge, or deliver any of its equity interests or any securities convertible into or exchangeable or exercisable for its equity interests or redeem, purchase, or otherwise acquire any of its equity interests;
(iii)      increase the compensation, bonuses, or benefits payable or to become payable to any of their directors, officers, employees, independent contractors, agents, or representatives, other than in the ordinary course of business consistent with past practices or as required under any Material Contract;

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(iv)      enter into any employment agreement (other than one providing for employment at-will) with any Person or enter into any severance agreement with, or grant any severance or termination pay to, any of their officers, employers, or independent contractors;
(v)      make an equity investment in any other Person, or acquire by merger or consolidation or purchase of equity interests or material assets of any corporation, partnership, association or other business organization or division thereof;
(vi)      sell, assign, transfer, mortgage, or otherwise encumber or subject to any Lien (other than Permitted Liens) or otherwise dispose of any Blackwater Asset, except for (A) sales and dispositions in the ordinary course of business and (B) other sales and dispositions not exceeding, in the aggregate, $100,000;
(vii)      incur any capital expenditures related to the expansion of the Harvey and Westwego terminals with proceeds from debt other than the Loan Facilities;
(viii)      declare, make, or pay any dividend or other distribution; or
(ix)      agree to do any of the foregoing.
Requests for approval of any action restricted by this Section 5.1(b) shall be delivered to either of the following individuals, each of whom shall have full authority to grant or deny such requests for approval on behalf of AMID:
Stephen W. Bergstrom
Executive Chairman, President & CEO
Email:    sbergstrom@americanmidstream.com
Phone:    (713) 865-0381 
AMID’s approval of any action restricted by this Section 5.1(b) shall not be unreasonably withheld or delayed and shall be considered granted within ten (10) days (unless a shorter time is reasonably required by the circumstances and such shorter time is specified in Newco’s notice) of Newco’s notice to AMID requesting such consent unless AMID notifies Newco to the contrary during that period.
Section 1.48      Access and Information     . Between the date of this Agreement and the Closing Date, Newco shall cause each Blackwater Entity to, afford AMID and its authorized representatives reasonable access during normal business hours and upon reasonable prior notice to all of the properties, personnel, books, and records of the Blackwater Entities (including work papers of the Blackwater Entities’ outside auditors), and shall promptly deliver or make available to AMID such information concerning the business, properties, assets, and personnel of the Blackwater Entities as AMID or its authorized representatives may from time to time reasonably request. Notwithstanding the preceding sentence, Newco and each Blackwater Entity will not be required to grant access or furnish information to AMID or any of AMID’s representatives to the extent such information is subject to an attorney-client or attorney-work-product privilege.

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Section 1.49      Reasonable Efforts; Additional Actions     . Without limiting the generality of Section 5.1, during the period from the date of this Agreement and continuing to the earlier of the termination of this Agreement in accordance with Article IX and the Closing, except to the extent expressly contemplated by this Agreement, each of the parties hereto shall use commercially reasonable efforts to consummate the transactions contemplated by this Agreement, including using commercially reasonable efforts to:
(a)      defend any Claims, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby;
(b)      cause their respective representatives, including legal and accounting, to provide cooperation reasonably requested by AMID in connection with any financing of the transactions contemplated hereby; and
(c)      fulfill the conditions to Closing set forth in Article VI and Article VII .
Section 1.50      No Shop     . Neither Newco nor Newco’s Affiliates, including the Blackwater Entities, shall directly or indirectly, through any representative or otherwise, solicit or entertain offers from, provide any information to, negotiate with or in any manner encourage, discuss, accept or consider any proposal of any other Person relating to any acquisition of the equity of, or all or substantially all of the assets or businesses of, the Blackwater Entities (excluding Blackwater Maryland), whether directly or indirectly, through purchase, merger, consolidation or otherwise.
Section 1.51      Public Announcements     . The initial press release relating to this Agreement or the transactions contemplated hereby (including the Merger) will be a joint press release of Newco and AMID, and thereafter Newco and AMID each shall consult with the other prior to issuing any press releases or otherwise making public announcements with respect to this Agreement or the transactions contemplated hereby (including the Merger) and prior to making any filings with any third party or any Governmental Authority with respect thereto, except as may be required by Applicable Law or by obligations pursuant to any listing agreement with or rules of any securities exchange or securities market on which securities of AMID are listed or traded.
Section 1.52      Acknowledgements     . Each of AMID and Merger Sub, on the one hand, and Newco and Blackwater, on the other hand, acknowledges that they have relied on the representations and warranties of the other party expressly and specifically set forth in this Agreement or any Ancillary Agreement, including, in the case of AMID and Merger Sub, the Blackwater Disclosure Schedules. Such representations and warranties constitute the sole and exclusive representations and warranties of the parties hereto in connection with the transactions contemplated hereby, and the parties hereto understand, acknowledge and agree that all other representations and warranties of any kind or nature expressed or implied are specifically disclaimed.
Section 1.53      Subsequent Actions     .

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(a)      If, at any time after the Closing Date, the Surviving Company shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Company its right, title or interest in, to or under any of the rights, properties or assets of either Merger Sub or Blackwater acquired or to be acquired by the Surviving Company as a result of or in connection with the Merger or otherwise to carry out this Agreement, the officers of the Surviving Company shall be authorized to execute and deliver, in the name of and on behalf of either Merger Sub or Blackwater, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of such limited partnership or limited liability company, as applicable, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Company or otherwise to carry out this Agreement.
(b)      Subject to the terms and conditions of this Agreement and Applicable Law, the parties hereto shall use their respective commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement as soon as practicable, and Newco and its Affiliates shall coordinate and cooperate with the Surviving Company, and the other parties hereto in exchanging information and supplying such reasonable assistance as may be reasonably requested in connection with the matters contemplated by this Section 5.7 .
Section 1.54      Tax Matters     .
(a)      Assistance and Cooperation . AMID and Newco agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information (including access to books and records) and assistance relating to Blackwater as is reasonably requested by AMID, Newco or any Affiliate for the filing of any Tax Returns, for the preparation of any audit, and for the prosecution or defense of any Tax claim. AMID and Newco agree that each shall preserve and keep all books and records with respect to Taxes and Tax Returns of Blackwater in such party’s possession as of the Closing Date, or as later come into such party’s possession, until the expiration of the applicable statute of limitations. The party requesting assistance hereunder shall reimburse the other for reasonable out-of-pocket expenses incurred in providing such assistance. Any information obtained under this Section 5.8 shall be held confidential by the receiving party in the same manner as it holds confidential its own similar information, except (i) as may be otherwise necessary in connection with the filing of Tax Returns or claims for refund or in conducting an audit or other Proceeding (ii) as may be required by Applicable Law or by obligations pursuant to any listing agreement with or rules of any securities exchange or securities market on which securities of AMID are listed or traded or (iii) with the consent of AMID and Newco.
(b)      Transfer Taxes . All sales, use, transfer, gains, stamp, duties, recording, and similar Taxes (collectively, “ Transfer Taxes ”) incurred in connection with the Merger and the transfer of Merger Consideration pursuant thereto shall be borne equally by AMID and Newco.

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AMID and Newco shall cooperate in filing all necessary Tax Returns and timely pay all such Transfer Taxes as required by Applicable Law.
(c)      Tax Allocation and Indemnification . Except as provided in Section 5.8(b) , Newco shall retain responsibility for (and shall be entitled any refunds with respect to), and shall indemnify AMID for, all Taxes related to the Blackwater Assets or the Blackwater Entities attributable to taxable periods ending on or prior to the Closing Date (the “ Pre-Closing Period ”) and all Taxes related to payments made to the employees of the Blackwater Entities at or prior to Closing, and AMID shall assume responsibility for (and shall be entitled any refunds with respect to), and shall indemnify Newco for, all Taxes related to the Blackwater Assets or the Blackwater Entities attributable to taxable periods beginning after the Closing Date (the “ Post-Closing Period ”). In the case of any Taxes related to the Blackwater Assets or the Blackwater Entities (other than Taxes related to payments made to the employees of the Blackwater Entities at or prior to Closing) that are payable for any taxable period that begins before and ends after the Closing Date (any “ Straddle Period ”), the portion of such Taxes attributable to the period of time prior to the Closing Date (a) in the case of any property, ad valorem, or similar Taxes, shall be deemed to be the amount of such Tax for the entire Tax period multiplied by a fraction, the numerator of which is the number of days in the Tax period ending on (and including) the Closing Date and the denominator of which is the number of days in the Straddle Period, and (b) in the case of all other Taxes, shall be deemed equal to the amount which would be payable as computed on an interim closing-of-the-books basis if the relevant Tax period ended at the close of business on the Closing Date. Notwithstanding the foregoing, AMID shall assume responsibility for any payroll taxes associated with the payment of bonuses to be made to management and non-management Persons as described in Blackwater Disclosure Schedule 4.18(i) . Newco and AMID shall agree to the allocation of Taxes attributable to a Straddle Period at least 30 days prior to the date the Tax Return for such Straddle Period is due to be filed, and Newco shall pay its share of such Taxes to AMID within 15 days of such determination. The right of AMID or Newco to seek indemnification with respect to Taxes pursuant to this Section 5.8(c) is neither senior nor subordinate to such party’s right to seek indemnification pursuant to Article VIII , and such party may, in its sole discretion, seek such indemnification pursuant to either this Section 5.8(c) or Article VIII ; provided that (i) any recovery shall not be duplicative and (ii) the indemnification procedures set forth in Section 8.4 shall apply to any indemnification claim pursuant to this Section 5.8(c) .
(d)      Filing of Tax Returns; Payment of Taxes . Except as otherwise provided, regardless of which party is responsible for Taxes under this Section 5.8 , Newco shall handle payment to the appropriate Governmental Authority of all Taxes with respect to any Pre-Closing Period and all Taxes with respect to payments made to the employees of the Blackwater Entities at or prior to Closing (and shall file all such Tax Returns, which Tax Returns shall be prepared consistent with past practice), and AMID shall handle payment to the appropriate Governmental Authority of all Taxes with respect to any Post-Closing Period and any Straddle Period (and shall file all such Tax Returns). Newco shall deliver to AMID at least thirty (30) days prior to filing drafts of all Tax Returns to be filed by Newco after the Closing Date relating to the Blackwater Assets or the Blackwater Entities and any supporting documentation provided by Newco to taxing authorities. AMID shall review the draft Tax Returns and respond to Newco within ten

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(10) Business Days of receiving the draft Tax Returns with any proposed changes. Newco shall cooperate and work diligently to agree to final Tax Returns, taking into account all reasonable changes requested by AMID, to allow Newco to timely file such Tax Returns.
(e)      Tax Treatment . Pursuant to Treasury Regulation Section 1.708-1(c)(4), the Membership Interests held by Newco are being purchased for the portion of the Merger Consideration allocated to Newco (together with relief from any liabilities allocable to such Membership Interests under the principles of Section 752 of the Code), and Newco, concurrently with the execution and delivery of this Agreement, shall deliver documentation evidencing that ArcLight Energy Partners Fund V, L.P. consents for United States federal income tax purposes (and to the extent applicable, state or local income tax purposes) to treat such portion of the Merger Consideration (together with relief from any liabilities allocable to such Membership Interests under the principles of Section 752 of the Code) as received for a sale of the Membership Interests held by Newco. The parties hereto agree that Blackwater will make an election under Section 754 of the Code with respect to the transfer of Membership Interests pursuant to this Agreement. The remainder of the Merger Consideration (together with any relief from any non-qualified liabilities that is deemed to occur under Treasury Regulation Section 1.707-5) will be considered to be paid as consideration for a sale of Membership Interests to the extent that the transfer of such Membership Interests constitutes a “sale” under Treasury Regulation Section 1.707-3(a)(2).
Section 1.55      Financial Statements     . On AMID’s behalf, Newco has requested that MaloneBailey LLP, Blackwater’s outside auditor (“ Auditor ”), (i) perform an audit of the financial statements of Blackwater for the most recent fiscal year ending prior to the Closing Date and all notes and schedules related thereto (including a footnote satisfying the requirements of FAS 69) in accordance with the rules and regulations adopted by the Commission and Regulation S-X related to the transactions contemplated by this Agreement (collectively, the “ MB Blackwater Financial Statements ”) and issue its opinion with respect to such MB Blackwater Financial Statements for the period(s) specified by AMID (such MB Blackwater Financial Statements and related audit opinions being hereinafter referred to as the “ MB Audited Financial Statements ”) and (ii) provide its written consent for the use of its audit reports with respect to the MB Audited Financial Statements in any registration statement, report or other document filed by AMID or any of its Affiliates with the Commission. AMID shall bear all fees charged by Auditor pursuant to such engagement. Both Newco and AMID shall provide such information as may be reasonably requested from time to time by Auditor. Newco shall, and shall cause the Management Holders to, provide such assistance, information, certifications, auditor representation letters or other documentation related to the Blackwater Entities as may be reasonably requested by AMID and its Affiliates from time to time in connection with the preparation of any financial statements and the process of financial reporting, including preparation of audited, unaudited, and pro forma financial statements filed with the Commission.

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Section 1.56     
 CONDITIONS TO AMID’S OBLIGATION TO CLOSE
The obligation of AMID to consummate the transactions contemplated by this Agreement is subject to the satisfaction at or before the Closing Date of each of the following conditions, any of which may be waived (to the extent permitted by law), in writing, by AMID:
Section 1.57      Representations, Warranties and Covenants     .
(a)      The representations and warranties of Newco and Blackwater in this Agreement will, in the aggregate, be true and correct in all material respects (other than Newco’s and Blackwater’s Fundamental Representations, which will be true and correct in all respects) as of the Closing Date as though such representations and warranties were made as of such time (except that any representation or warranty that by its terms was made with reference to a specific date will be true and correct as of such date), provided that for purposes of this Section 6.1(a) any such representation or warranty that is qualified by Blackwater Material Adverse Effect or any other materiality qualification will be read as if that language were not present.
(b)      Newco and the Blackwater Entities shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by them on or before the Closing Date; provided , that, with respect to the covenants, obligations and conditions that are qualified by Blackwater Material Adverse Effect or any other materiality qualification, Newco and the Blackwater Entities shall have performed such covenants, obligations and conditions as so qualified, in all respects.
Section 1.58      No Blackwater Material Adverse Effect . Since the date of this Agreement, there shall not have occurred any Blackwater Material Adverse Effect.
Section 1.59      Closing Certificates     .
(a)      Blackwater shall have provided AMID with a certificate executed by the Chief Executive and Chief Financial Officers or officers serving similar functions of Blackwater confirming the satisfaction of Section 6.1(a) , Section 6.1(b) , and Section 6.2 .
(b)      Blackwater shall have provided AMID with a certificate, dated as of the Closing Date, executed by the secretary of the Blackwater, certifying as of the Closing Date (i) true and complete copies of the organizational documents of each Blackwater Entity, (ii) a true and complete copy of the resolutions of authorizing the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby as contemplated in Section 4.2(b), (iii) the true signatures for each of the managers and officers authorized to sign this Agreement or any Ancillary Agreement and (iv) true and complete copies of the good standing certificates of each Blackwater Entity as of a reasonable time prior to the Closing Date from the Secretary of State of the jurisdiction of organization and from each jurisdiction where such Blackwater Entity is qualified to do business as a foreign entity.

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Section 1.60      Injunctions or Restraints     . No temporary restraining order, preliminary or permanent injunction or other Order issued by any Governmental Authority shall be in effect preventing the consummation of the transactions contemplated hereby or limiting in any way AMID’s conduct or operation of the businesses of the Blackwater Entities following the Closing Date; nor shall any Proceeding brought by any Governmental Authority seeking the foregoing be pending; nor shall there be any action taken by a Governmental Authority, or any Order or Applicable Law enacted, entered, enforced, or deemed applicable to the transactions contemplated hereby, which makes the consummation of the transactions contemplated hereby illegal; nor shall there be any other legal or regulatory restraint or prohibition in effect preventing the consummation of the transactions contemplated hereby or limiting AMID’s conduct or operation of the business of the Blackwater Entities following the Closing Date.
Section 1.61      Closing Payment Calculations . Newco and AMID shall have resolved any disputes related to the calculation of the Initial Merger Consideration and the Indebtedness Payoff Amount as described in Section 2.6 .
Section 1.62      Financing . AMID will have received all necessary financing to consummate the transactions contemplated by this Agreement, on commercially reasonable terms and conditions acceptable to AMID.
Section 1.63      Termination of 401(k) Plan . AMID shall have received evidence in form and substance reasonably satisfactory to AMID that Newco and Blackwater have taken all action necessary to officially terminate the Blackwater Midstream Corp. 401(k) Plan, effective prior to the Closing Date, in accordance with Applicable Laws.
Section 1.64      Employee Matters     .
(a)      Blackwater and each Management Holder shall have delivered to AMID a Termination Agreement executed by Blackwater and each Management Holder, and all Termination Agreements will be in full force and effect, and none of them shall have been amended or repudiated.
(b)      Each Management Holder shall have delivered to AMID an executed counterpart of such Management Holder’s Employment Agreement.
(c)      Each Management Holder shall have delivered to AMID (i) an executed counterpart of the Rollover Agreement, and (ii) any other documents and instruments as may be necessary or appropriate to vest in AMID good and marketable title in the Class A Interests rolled-over pursuant to such Rollover Agreement.
(d)      Blackwater shall have delivered to AMID resignations of each of the officers, directors and managers, as applicable, of each of the Blackwater Entities, if any.
Section 1.65      Indebtedness . Except as set forth in Blackwater Disclosure Schedule 4.6(d)(ii) , Newco and Blackwater shall have taken all actions and delivered all instruments and documents necessary to extinguish all Indebtedness of the Blackwater Entities and release any

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and all Liens (other than Permitted Liens) on the Blackwater Assets, including appropriate payoff letters and UCC financing statement amendments or termination statements, upon receipt of the Indebtedness Payoff Amount.
Section 1.66      FIRPTA Certificate     . ArcLight Energy Partners Fund V, L.P. and each of the Management Holders shall have provided AMID with a certificate, in form and substance reasonably satisfactory to AMID and duly executed, certifying any facts that would exempt the transactions contemplated hereby from withholding under Section 1445 of the Code.
Section 1.67      ArcLight Guaranty . ArcLight Energy Partners Fund V, L.P. shall have provided the ArcLight Guaranty.
Section 1.68      Ancillary Agreements . AMID will have received an executed copy or counterpart to any applicable Ancillary Agreement that is required to be delivered but is not otherwise accounted for in this Article VI .
Section 1.69     
 CONDITIONS TO NEWCO’S AND BLACKWATER’S OBLIGATION TO CLOSE
The obligation of Newco and Blackwater to consummate the transactions contemplated by this Agreement is subject to the satisfaction at or before the Closing Date of each of the following conditions, any of which may be waived (to the extent permitted by law), in writing, by Newco and Blackwater:
Section 1.70      Representations, Warranties and Covenants     
(a)      The representations and warranties of AMID and Merger Sub in this Agreement will, in the aggregate, be true and correct in all material respects (other than AMID’s Fundamental Representations, which will be true and correct in all respects) as of the Closing Date as though such representations and warranties were made as of such time (except that any representation or warranty that by its terms was made with reference to a specific date will be true and correct as of such date), provided that for purposes of this Section 7.1(a) any such representation or warranty that is qualified by AMID Material Adverse Effect or any other materiality qualification will be read as if that language were not present.
(b)      AMID and Merger Sub will have performed and complied in all material respects with all covenants, obligations, and conditions of this Agreement required to be performed and complied with by it as of the Closing Date; provided , that, with respect to the covenants, obligations and conditions that are qualified by AMID Material Adverse Effect or any other materiality qualification, AMID and Merger Sub shall have performed such covenants, obligations and conditions as so qualified, in all respects.
Section 1.71      Closing Certificates     . AMID shall have provided Newco and Blackwater with a certificate executed by AMID’s Chief Executive and Chief Financial Officers confirming the satisfaction of Section 7.1(a) and Section 7.1(b) .

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Section 1.72      Injunctions or Restraints     . No temporary restraining order, preliminary or permanent injunction, or other Order issued by any Governmental Authority shall be in effect preventing the consummation of the transactions contemplated hereby; nor shall any proceeding brought by any Governmental Authority seeking the foregoing be pending; nor shall there be any action taken by a Governmental Authority, or any Order or Applicable Law enacted, entered, enforced, or deemed applicable to the transactions contemplated hereby, which makes the consummation of the transactions contemplated hereby illegal; nor shall there be any other legal or regulatory restraint or prohibition in effect preventing the consummation of the transactions contemplated hereby.
Section 1.73      Governmental and Regulatory Approvals     . The parties shall have received all authorizations, consents, and approvals of Governmental Authorities required to be obtained in connection with the transactions contemplated hereby.
Section 1.74      Employee Matters     .
(a)      AMID shall have delivered to each Management Holder an executed counterpart of the Employment Agreement.
(b)      AMID shall have delivered to each Management Holder an executed counterpart of the Rollover Agreement.
Section 1.75     
 INDEMNIFICATION
Section 1.76      Survival     .
(a)      The representations and warranties contained in Section 3.1 (Organization and Existence), Section 3.2 (Authority and Approval), Section 3.3 (No Conflict; Required Filings and Consents), Section 3.8 (Brokers), Section 4.1 (Organization and Existence), Section 4.2 (Authority and Approval), Section 4.3 (No Conflict; Required Filings and Consents), Section 4.4 (Capitalization; Title to Membership Interests in Blackwater), Section 4.5 (Subsidiaries and Joint Ventures), Section 4.6(d) (Indebtedness), Section 4.9(b) (No Adverse Changes) and Section 4.20 (Brokers) (collectively, the “ Fundamental Representations ”) shall survive the Closing Date indefinitely. All other representations and warranties of Newco and AMID contained herein shall terminate on the fifteen-month anniversary of the Closing Date and shall no longer be of any force or effect thereafter, provided , however , that representations and warranties set forth in Section 4.14 (Taxes) shall survive until the sixtieth day following the expiration of the applicable statute of limitations with respect to the matters covered thereby.
(b)      The covenants made in this Agreement shall survive the Closing Date and remain operative and in full force and effect until they are fully performed.
(c)      Any indemnification obligation with respect to a Claim shall survive the time at which it would otherwise expire pursuant to this Section 8.1 if notice of such Claim is properly

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given by the party seeking indemnification (the “ Indemnified Party ”) to the party from which indemnification is sought (the “ Indemnifying Party ”) prior to such time.
Section 1.77      Indemnification     .
(a)      Indemnification by Newco . Subject to the limitations set forth in Section 8.3 , from and after the Closing Date, Newco shall indemnify, defend and hold harmless AMID from any and all Claims incurred by AMID, its Subsidiaries and their respective officers, directors, employees, owners, managers, partners, members, consultants and agents (the “ AMID Protected Parties ”), as a result of, or with respect to (i) any breach of any representation or warranty of Newco or Blackwater set forth in this Agreement (provided that any Claims arising out of any breach of a representation or warranty shall be determined without giving effect to any “materiality,” “Blackwater Material Adverse Effect” and similar qualifiers), (ii) any breach of any covenant or agreement of Newco or Blackwater contained in this Agreement, (iii) Claims related to or arising out of the ownership or use of the Blackwater Assets or any Blackwater Entity’s operations accruing or occurring from October 9, 2012 through the Closing Date (but excluding in all cases the matters set forth in Section 8.2(b)(v) ), and (iv) any Taxes for which Newco or any Blackwater Entity is otherwise liable under Section 5.8 .
(b)      Indemnification by AMID . Subject to the limitations set forth in Section 8.3 , from and after the Closing Date, AMID shall indemnify, defend and hold harmless Newco from any and all Claims incurred by Newco, its Affiliates (other than AMID, its Subsidiaries or any Blackwater Entity after the Closing Date) and their respective officers, directors, employees, owners, managers, partners, members, consultants and agents (the “ Newco Protected Parties ”), as a result of, or with respect to (i) all of the obligations and liabilities of Blackwater, with respect to the Blackwater Entities or the Blackwater Assets, accruing or occurring on or after the Closing Date, (ii) any breach of any representation or warranty of AMID or Merger Sub set forth in this Agreement (provided that any Claims arising out of any breach of a representation or warranty shall be determined without giving effect to any “materiality,” “AMID Material Adverse Effect” and similar qualifiers), (iii) any breach of any covenant or agreement of AMID or Merger Sub contained in this Agreement, (iv) any Taxes for which AMID or Merger Sub is otherwise liable under Section 5.8 and (v) all matters, events and conditions relating to and occurring either prior to or after the Closing Date, and arising out of or incident to, any violation of Environmental Laws, Environmental Liabilities or the release of Hazardous Substances in each case to the extent located on the Blackwater Assets, including rights to contribution under CERCLA, REGARDLESS OF FAULT. For the avoidance of doubt, nothing contained in this Section 8.2(b) (including Section 8.2(b)(v) ) will be deemed to limit, restrict or otherwise prohibit any AMID Protected Party from seeking indemnification pursuant to Section 8.2(a)(i) for any breach of any representation and warranty of Newco or Blackwater under Section 4.15 related to environmental matters.
(c)      ArcLight Guaranty . In connection with the closing, ArcLight Energy Partners Fund V, L.P. will provide the ArcLight Guaranty.

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(d)      Except as otherwise required by Applicable Law, all payments made by the parties hereto pursuant to this Article VIII shall be treated as a purchase price adjustment to the Base Equity Consideration.
Section 1.78      Limitations Regarding Indemnification     .
(a)      Neither Newco nor AMID shall have any liability for any indemnification under this Agreement, nor any liability for breach of any representations or warranties under this Agreement, until and unless (i) the amount of the liability for any individual Claim or series of Claims arising out of the same or similar set of facts, for which a Claim Notice is delivered by Newco or AMID, as applicable, exceeds $40,000 (the “ Individual Indemnity Threshold ”), and (ii) the aggregate amount of the liabilities for all Claims for which Claim Notices are delivered by Newco or AMID, as applicable, exceeds 1% of the Merger Consideration, and then only to the extent such damages exceed 1% of the Merger Consideration (the “ Aggregate Indemnity Threshold ”); provided that, the Individual Indemnity Threshold and the Aggregate Indemnity Threshold will not be applicable to any Claims arising out of or related to Section 5.8 (Tax Matters), any breach of the Fundamental Representations, Section 4.14 (Taxes), or fraud or intentional misrepresentation. In no event shall Newco be obligated to indemnify the AMID Protected Parties with respect to breaches of representations (other than for Taxes under Section 5.8 , breaches of the Fundamental Representations, Section 4.14 (Taxes), or fraud or intentional misrepresentation, for which there is no cap) for an aggregate amount in excess of 15% of the Merger Consideration.
(b)      In no event shall Newco be obligated to the AMID Protected Parties under Section 8.2(a) for any Claim to the extent (i) any insurance proceeds are realized by the AMID Protected Parties, such correlative benefit to be net of any incremental insurance premium that becomes due and payable by the AMID Protected Parties as a result of such claim, or (ii) any amounts are recovered by the AMID Protected Parties from third Persons.
(c)      In no event shall AMID be obligated to the Newco Protected Parties under Section 8.2(b) for any Claim to the extent (i) any insurance proceeds are realized by the Newco Protected Parties, such correlative benefit to be net of any incremental insurance premium that becomes due and payable by the Newco Protected Parties as a result of such claim, or (ii) any amounts are recovered by the Newco Protected Parties from third Persons.
Section 1.79      Indemnification Procedures     .
(a)      The Indemnified Party agrees that promptly after it becomes aware of facts giving rise to a claim for indemnification under this Article VIII , it will provide Notice thereof in writing to the Indemnifying Party, specifying the nature of and specific basis for such claim (a “ Claim Notice ”). Notwithstanding anything in this Article VIII to the contrary, a delay by the Indemnified Party in notifying the Indemnifying Party shall not relieve the Indemnifying Party of its obligations under this Article VIII , except to the extent that such failure shall have caused actual prejudice to the Indemnifying Party’s ability to defend against the applicable claim.

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(b)      The Indemnifying Party shall have the right to control all aspects of the defense of (and any counterclaims with respect to) any Claims brought against the Indemnified Party that are covered by the indemnification under this Article VIII , including the selection of counsel, the determination of whether to appeal any decision of any court and the settlement of any such matter or any issues relating thereto; provided , however , that no such settlement shall be entered into without the consent of the Indemnified Party (with the concurrence of the Conflicts Committee in the case of the AMID Protected Parties) unless it includes a full release of the Indemnified Party from such matter or issues, as the case may be, and does not include any admission of fault, culpability or a failure to act, by or on behalf of such Indemnified Party.
(c)      The Indemnified Party agrees to cooperate fully with the Indemnifying Party with respect to all aspects of the defense of any Claims covered by the indemnification under this Article VIII , including the prompt furnishing to the Indemnifying Party of any correspondence or other Notice relating thereto that the Indemnified Party may receive, permitting the name of the Indemnified Party to be utilized in connection with such defense, the making available to the Indemnifying Party of any files, records or other information of the Indemnified Party that the Indemnifying Party considers relevant to such defense and the making available to the Indemnifying Party, at no cost to the Indemnifying Party, of any employees of the Indemnified Party; provided , however , that in connection therewith the Indemnifying Party agrees to use commercially reasonable efforts to minimize the impact thereof on the operations of the Indemnified Party and further agrees to maintain the confidentiality of all files, records and other information furnished by the pursuant to this Section 8.4 . In no event shall the obligation of the Indemnified Party to cooperate with the Indemnifying Party as set forth in the immediately preceding sentence be construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel in connection with the defense of any Claims covered by the indemnification set forth in this Article VIII ; provided , however , that the Indemnified Party may, at its own option, cost and expense, hire and pay for counsel in connection with any such defense. The Indemnifying Party agrees to keep any such counsel hired by the Indemnified Party informed as to the status of any such defense, but the Indemnifying Party shall have the right to retain sole control over such defense. In addition, in no event shall an AMID Protected Party be required to file a claim against any of the AMID Protected Parties in order seek indemnification under Section 8.2(a) .
(d)      The date on which the Indemnifying Party receives notification of a claim for indemnification shall determine whether such claim is timely made.
(e)      NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN NO EVENT SHALL ANY PARTY’S INDEMNIFICATION OBLIGATION HEREUNDER COVER OR INCLUDE CONSEQUENTIAL, INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY, SPECIAL OR SIMILAR DAMAGES OR LOST PROFITS SUFFERED BY ANY OTHER PARTY ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT EXCEPT TO THE EXTENT RECOVERED IN A CLAIM BY A THIRD PARTY.
Section 1.80     
 TERMINATION

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Section 1.81      Termination     . This Agreement may be terminated at any time before the Closing Date:
(a)      by written agreement of AMID and Newco;
(b)      by AMID or Newco, if the transactions contemplated hereby have not been consummated on or before January 9, 2014 (as such date may be extended by written agreement of AMID and Newco, the “ End Date ”), provided that such failure is not due to the failure of AMID to comply in all material respects with its obligations under this Agreement (if AMID is seeking to terminate this Agreement) or due to the failure of Newco or Newco and its Affiliates failure to cause the Blackwater Entities to comply in all material respects with their obligations under this Agreement (if Newco is seeking to terminate this Agreement);
(c)      by AMID:
(i)      if any of the conditions set forth in Article VI have become impossible to fulfill on or prior to the End Date (provided that such failure is not due to the failure of AMID to comply in all material respects with its obligations under this Agreement), and such conditions have not been waived by AMID; or
(ii)      in the event of any breach in any material respect by Newco or the Blackwater Entities of any of Newco’s or the Blackwater Entities’ representations, warranties, covenants, or agreements contained in this agreement, and, in the case of breach of any covenant hereunder, either (i) such breach cannot be cured or (ii) if it can be cured, has not been cured prior to the first to occur of (A) 5:00 p.m. (Eastern time) on the date that is 10 days following receipt by the breaching party of written notice of such breach and (B) the End Date;
(d)      by Newco:
(i)      if any of the conditions set forth in Article VII have become impossible to fulfill on or prior to the End Date (provided that such failure is not due to the failure of Newco or Newco and its Affiliates failure to cause the Blackwater Entities to comply in all material respects with their obligations under this Agreement) and such conditions have not been waived by Newco; or
(ii)      in the event of any breach in any material respect by AMID of any of AMID’s representations, warranties, covenants, or agreements contained in this agreement, and, in the case of breach of any covenant hereunder, either (i) such breach cannot be cured or (ii) if it can be cured, has not been cured prior to the first to occur of (A) 5:00 p.m. (Eastern time) on the date that is 10 days following receipt by the breaching party of written notice of such breach and (B) the End Date.
Section 1.82      Procedure and Effect of Termination    . Upon termination of this Agreement by AMID or Newco under Section 9.1 , written notice thereof shall forthwith be given to the other parties, and this Agreement shall terminate without further action by any of the parties. If this

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Agreement is terminated as provided herein, no party shall have any liability or further obligation to any other party to this Agreement, except to the extent the termination is the result of a willful and material breach by the party of a representation, warranty, or covenant contained in this Agreement, in which case the non-breaching party may pursue any legal or equitable remedies to which it may be entitled.
Section 1.83     
 GENERAL PROVISIONS
Section 1.84      Fees and Expenses     . Except as otherwise provided herein and regardless of whether the transactions contemplated hereby are consummated, each party shall pay its own expenses incident to this Agreement and all actions taken in preparation for carrying this Agreement into effect.
Section 1.85      Amendment and Modification     . This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing, signed on behalf of each of the parties hereto at the time of the amendment, modification or supplement.
Section 1.86      Extension     . The parties hereto may, to the extent permitted by Applicable Law, extend the time for the performance of any of the obligations or other acts of the parties. Any agreement on the part of a party to any such extension shall be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such party.
Section 1.87      Waiver     . The parties hereto may, to the extent permitted by Applicable Law, (a) waive any inaccuracies in the representations and warranties of the other parties contained in this Agreement or any document delivered pursuant hereto or (b) subject to Applicable Law, waive compliance with any of the agreements or conditions of the other parties contained herein. Any agreement on the part of a party to any such waiver shall be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such party. No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder.
Section 1.88      Notices     . Any notice, request, instruction, correspondence or other document to be given hereunder by any party hereto to another party hereto (herein collectively called “ Notice ”) shall be in writing and delivered in person or by courier service requiring acknowledgment of receipt of delivery or by telecopier, as follows:
(a)      if to Newco or Blackwater, to:
AL Blackwater, LLC

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c/o ArcLight Capital Partners, LLC
200 Clarendon Street, 55th Floor
Boston, MA 02117
Attention: General Counsel
Telephone: (617) 531-6300
Facsimile: (617) 867-4698

with a copy (which shall not constitute notice) to:

Baker Botts L.L.P.
98 San Jacinto Blvd., Suite 1500
Austin, TX 78701
Attention: Laura Tyson
Facsimile: 512-322-2556

(b)      if to AMID or Merger Sub, to:
American Midstream Partners, LP
1614 15th Street, Suite 300
Denver, CO 80202
Attention: General Counsel
Telephone: (720) 457-6075
Facsimile: (720) 457-6040

and with a copy (which shall not constitute notice) to:

Holland & Hart LLP
555 17th Street, Suite 3200
Denver, CO 80202
Attention: Lucy Schlauch Stark
Facsimile: 303-291-9145
Email: mlstark@hollandhart.com

Notice given by personal delivery or courier service shall be effective upon actual receipt. Notice given by telecopier shall be confirmed by appropriate answer back and shall be effective upon actual receipt if received during the recipient’s normal business hours, or at the beginning of the recipient’s next Business Day after receipt if not received during the recipient’s normal business hours. Any party may change any address to which Notice is to be given to it by giving Notice as provided above of such change of address.
Section 1.89      Interpretation     . When a reference is made in this Agreement to a Section, Article or Exhibit such reference shall be to a Section, Article or Exhibit of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement or in any Exhibit are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed

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to be of such gender or number as the circumstances require. Any capitalized terms used in any Exhibit but not otherwise defined therein shall have the meaning as defined in this Agreement. All Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth herein. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise specified.
Section 1.90      Entire Agreement     . This Agreement (including the Exhibits and Schedules hereto), the Ancillary Agreements constitute the entire agreement, and supersede all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings among the parties hereto with respect to the subject matter hereof and thereof. Notwithstanding any oral agreement or course of action of the parties hereto or their Representatives to the contrary, no party to this Agreement shall be under any legal obligation to enter into or complete the transactions contemplated hereby unless and until this Agreement shall have been executed and delivered by each of the parties.
Section 1.91      No Third-Party Beneficiaries     . Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the parties hereto and their respective successors and permitted assigns, and the Conflicts Committee, any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement.
Section 1.92      Governing Law     .
(a)      This Agreement shall be construed and enforced in accordance with the Applicable Law of the State of Delaware without giving effect to the choice of law principles thereof. Each party hereto consents to personal jurisdiction in any action brought in any court, federal or state, within the State of Delaware having subject matter jurisdiction arising under this Agreement, and each of the parties hereto agrees that any action instituted by either of them against the other with respect to this Agreement will be instituted exclusively in a court, federal or state, within the State of Delaware.
(b)      Each party to this Agreement waives, to the fullest extent permitted by Applicable Law, any right it may have to receive damages from any other party based on any theory of liability for any special, indirect, consequential (including lost profits), exemplary or punitive damages (except to the extent that any such damages are included in indemnifiable losses resulting from a third party claim in accordance with this Agreement).
Section 1.93      Assignment; Successors     . Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by any party without the prior written consent of AMID (in the case of an assignment by Blackwater or Newco) or Newco (in the case of an assignment by AMID or Merger Sub), and any such assignment without such prior written consent shall be null and void; provided , however , that no assignment shall limit the assignor’s obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and assigns.

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Section 1.94      Enforcement     . The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each of the parties hereto shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any state or federal court in Delaware, this being in addition to any other remedy to which such party is entitled at law or in equity. Each of the parties hereto hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any law to post security as a prerequisite to obtaining equitable relief.
Section 1.95      Currency     . All references to “ dollars ” or “ $ ” or “ US$ ” in this Agreement or any Ancillary Agreement refer to United States dollars, which is the currency used for all purposes in this Agreement and any Ancillary Agreement.
Section 1.96      Severability     . Wherever possible, each provision hereof shall be interpreted in such a manner as to be effective and valid under Applicable Law. In case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision or provisions shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability, and the remainder of the provisions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto. Upon such a determination, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a reasonably acceptable manner so that the transactions contemplated hereby may be consummated as originally contemplated to the fullest extent possible.
Section 1.97      Waiver of Jury Trial     . EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 1.98      Counterparts     . This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other party.
Section 1.99      Electronic Signature     . This Agreement may be executed by facsimile, portable document format (.pdf) or similar technology signature, and such signature shall constitute an original for all purposes.
Section 1.100      Time of Essence     . Time is of the essence with regard to all dates and time periods set forth or referred to in this Agreement.

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Section 1.101      No Presumption Against Drafting Party     . Each of Newco, Blackwater, AMID and Merger Sub acknowledges that each party to this Agreement has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application and is expressly waived.
[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above.

AL BLACKWATER, LLC

By:    ArcLight Energy Partners Fund V, L.P.,
its sole member

By:    ArcLight PEF GP V, LLC,
its General Partner

By:    ArcLight Capital Holdings, LLC,
its Manager

By:     /s/ Daniel R. Revers    
Daniel R. Revers
Manager

BLACKWATER MIDSTREAM HOLDINGS LLC

By:     /s/ Daniel R. Revers    
Daniel R. Revers
President

Signature Page to Agreement and Plan of Merger

Exhibit 2.1

AMERICAN MIDSTREAM PARTNERS, LP

By:    American Midstream GP, LLC,
its general partner

By: /s/ William B. Mathews    
Name: William B. Mathews
Title: VP, General Counsel and Secretary

BLACKWATER MERGER SUB, LLC

By:    American Midstream, LLC
its sole member

By:    American Midstream Partners, LP,
its sole member

By:    American Midstream GP, LLC,
its general partner

By: /s/ Daniel C. Campbell    
Name: Daniel C. Campbell
Title: SVP and Chief Financial Officer

Signature Page to Agreement and Plan of Merger

Exhibit 2.1

EXHIBIT A

Form of Certificate of Merger

(See Attached)

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SCHEDULE 2.5

Officers

	
		
Title	Officer	
President and Chief Executive Officer	Michael D. Suder	
Executive Vice President	Stephen W. Bergstrom	
Executive Vice President	Matthew W. Rowland	
Executive Vice President	Daniel C. Campbell	
Vice President and Chief Operating Officer	Dale T. Chatagnier	
Vice President and Chief Commercial Officer	Francis A. Marrocco	
Director of Accounting and Chief Financial Officer	Donald St. Pierre	
Vice President of Commercial Services	Ryan Rupe	
Vice President of Legal Affairs, General Counsel and Secretary	William B. Mathews	
Vice President and Corporate Controller	Thomas L. Brock	
Assistant Secretary	Christine Miller	
Assistant Secretary	Mary Janiszewski	

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-183290 and 333-176438) of American Midstream Partners, LP of our report dated December 10, 2013 relating to the consolidated financial statements of Blackwater Midstream Holdings LLC, which appears in Exhibit 99.2 of American Midstream Partners, LP's Current Report on Form 8-K dated December 10, 2013.

/s/ MaloneBailey, LLP
MaloneBailey, LLP
www.malone-bailey.com
Houston, Texas

December 10, 2013

Exhibit 99.1

American Midstream Announces $60 Million Acquisition of 
 Blackwater Midstream From an Affiliate of ArcLight Capital Partners

Partnership Announces Management's Intent to Recommend 
 a Distribution Increase and Provides Initial 2014 Guidance

DENVER, CO – December 10, 2013 – American Midstream Partners, LP (NYSE: AMID) today announced the execution of a merger agreement to acquire Blackwater Midstream Holdings, LLC, a developer and operator of terminal storage facilities (“Blackwater”), from an affiliate of ArcLight Capital Partners, LLC (“ArcLight”) for an aggregate purchase price of $60 million, subject to certain purchase price adjustments. The purchase price is payable in a combination of cash and approximately $3.0 million of American Midstream common units, and the aggregate consideration includes the payoff of existing indebtedness of Blackwater. Blackwater generated annualized Adjusted EBITDA of approximately $7.7 million based on the quarter ended September 30, 2013, and the Partnership expects Blackwater’s annualized EBITDA to remain approximately the same in the fourth quarter of 2013 and increase in 2014 as a result of organic growth and new-build projects currently underway with new and existing customers. The acquisition includes Blackwater’s three operating terminal sites located in Westwego, Louisiana; Brunswick, Georgia; and Salisbury, Maryland. The sites are multimodal, with access to deepwater dock, barge, rail and truck transportation. The transaction also includes a brownfield development opportunity in Harvey, Louisiana, located near Blackwater’s Westwego terminal. The acquisition is expected to be immediately accretive to American Midstream’s current distribution and creates a strong and competitive position in a segment of the midstream industry that is characterized by fee-based contracts that are not directly subject to commodity price volatility. In addition, the merger agreement provides for American Midstream to pay an earnout of up to $5 million, if, during the next five years, the trailing-twelve month EBITDA from operations at the Harvey site exceeds $5 million.

The three operating terminals have a total of 1.3 million barrels of storage capacity and store a variety of products including chemical, agricultural, and petroleum liquid products. The revenues are fee-based and almost entirely derived from take-or-pay lease contracts. Both the Westwego and Brunswick sites are operating at capacity and have the potential for additional expansions. The Harvey development site is expected to commence operations in 2014, with the potential for up to two million barrels of capacity when fully developed, which would increase Blackwater’s total barrels of storage by more than 100 percent.

“The strategic acquisition of Blackwater Midstream provides an attractive platform for American Midstream in a growing segment of the midstream industry that is fee-based and not directly correlated to commodity prices,” stated Steve Bergstrom, Executive Chairman, President and Chief Executive Officer. “Blackwater is located near our assets in southern Louisiana, and we expect to leverage our customer relationships to benefit both Blackwater and our existing operations. Moreover, the transaction is accretive on a distributable cash flow per unit basis and provides access to several organic growth opportunities. Due to the increase in adjusted EBITDA and distributable cash flow that we expect from the Blackwater

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acquisition, management intends to recommend to the board of directors an increase in the quarterly distribution of approximately two percent beginning with the distribution for the first quarter 2014.”

“The Blackwater acquisition will mark the first drop-down from our sponsor ArcLight since the transformational transaction in April of this year wherein ArcLight acquired a controlling interest in our general partner and we acquired the High Point assets,” continued Mr. Bergstrom. “We believe the Blackwater transaction reflects the substantial value ArcLight adds as a partner and its commitment to supporting the long-term, sustainable growth of American Midstream.”

The transaction is expected to close in the fourth quarter 2013, subject to customary closing conditions.

2014 Adjusted EBITDA, DCF and Capital Expenditure Forecast

American Midstream forecasts 2014 Adjusted EBITDA in a range of $33 million to $36 million and distributable cash flow, or DCF, in a range of $13 million to $16 million, with both metrics including the benefit of the Blackwater acquisition and does not include other acquisitions, drop downs, or asset development projects the Partnership is pursuing. Growth capital expenditures in 2014, which exclude capital for maintenance, are forecasted to be in a range of $25 million to $30 million. 
About American Midstream Partners, LP
Denver-based American Midstream Partners is a growth-oriented limited partnership formed to own, operate, develop and acquire a diversified portfolio of midstream energy assets. The Partnership provides midstream services in the Gulf Coast and Southeast regions of the United States. For more information about American Midstream Partners, visit www.AmericanMidstream.com .
Forward Looking Statements

This press release includes forward-looking statements. These statements relate to, among other things, projections of a potential acquisition, operational volumetrics and improvements, growth projects, cash flows and capital expenditures. We have used the words "anticipate,” "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," "will," "potential," and similar terms and phrases to identify forward-looking statements in this press release. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors, which are described in greater detail in our filings with the SEC. The closing of the Blackwater acquisition is subject to conditions beyond our control. In addition, if we consummate the Blackwater acquisition, we face risks associated with the integration of the business, decreased liquidity, increased interest expense, assumption of potential liabilities, diversion of management’s attention, and other risks associated with acquisitions and growth.  Please see our Risk Factor disclosures included in our Annual Report on Form 10-K for the year ended December 31, 2012 filed on April 16, 2013 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 filed on November 13, 2013. All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. We undertake no obligation to update any information contained herein or to publicly release the results of any revisions to any forward-looking

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statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this press release.

Non-GAAP Financial Measures 
This press release includes forecasted non-GAAP financial measures for American Midstream, including “Adjusted EBITDA” and “Distributable Cash Flow.” The GAAP measure most directly comparable to adjusted EBITDA and Distributable Cash Flow is net income (loss). Net loss attributable to the Partnership is forecasted to be approximately $2.1 million in 2014.

Adjusted EBITDA is calculated as net income (loss) attributable to the partnership plus interest expense, depreciation expense, certain non-cash charges such as non-cash equity compensation, unrealized losses on commodity derivative contracts and selected charges that are unusual or non-recurring including debt issuance costs, transaction costs, and losses on the impairment of property, plant and equipment, less interest income, unrealized gains on commodity derivative contracts, construction, operating and maintenance agreement (COMA) income, amortization of commodity put purchase costs and selected gains that are unusual or nonrecurring such as the benefit of our other post-employment benefit plan (OPEB), gains on the sale of assets, and gains on the involuntary conversion of property, plant and equipment.

Distributable cash flow is calculated as Adjusted EBITDA plus interest income, less cash paid for interest expense, normalized maintenance capital expenditures, and dividends related to the Series A convertible preferred units.

This press release also contains the non-GAAP financial measure “Adjusted EBITDA” related to Blackwater Midstream Holdings, LLC. The GAAP measure most directly comparable to Adjusted EBITDA is net income (loss). The table attached to this press release includes a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

3

Blackwater Midstream Holdings, LLC Adjusted EBITDA Reconciliation
(Unaudited, in thousands)

	

 	Three Months Ended, September 30,	 	
 	2013	 	
Net income (loss)	$	(174)	 	
Add:	 	 	
Depreciation and amortization expense	1,422	 	
Net interest expense	553	 	
One-time transaction-related expenses	310	 	
Discontinued operations depreciation and amortization	44	 	
Discontinued operations net interest expense	16	 	
Deduct:	 	 	
Income tax benefit	(214)	 	
Discontinued operations income tax benefit	(34)	 	
Adjusted EBITDA	$	1,923	 	
Annualized	$	7,692	 	

4

Exhibit 99.2
BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		
 	Page	
Report of Independent Registered Public Accounting Firm	2	
Consolidated balance sheets as of March 31, 2013 and 2012	3	
Consolidated statements of operations for the two years ended March 31, 2013 and 2012	4	
Consolidated statement of stockholder's and members' equity for the years ended March 31, 2013 and 2012	5	
Consolidated statements of cash flows for the two years ended March 31, 2013 and 2012	6	
Notes to consolidated financial statements	7	

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors
Blackwater Midstream Holdings, LLC
Westwego, LA
 
We have audited the accompanying consolidated balance sheets of Blackwater Midstream Holdings LLC (the “Company” or “Successor”) as of March 31, 2013 and the related consolidated statements of operations, members’ equity, and cash flows for the period from October 10, 2012 through March 31, 2013.  We have also audited the accompanying consolidated balance sheet of Blackwater Midstream Corp. (“Predecessor”) as of March 31, 2012 and the consolidated statements of operations, stockholders’ equity and cash flows for the period from April 1, 2012 through October 9, 2012 and for the year ended March 31, 2012.  These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
 
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Successor as of March 31, 2013 and the related consolidated results of its operations and its cash flows for the period from October 10, 2012 through March 31, 2013 in conformity with accounting principles generally accepted in the United States of America.  Further, in our opinion, the Predecessor financial statements referred to above present fairly, in all material respects, the consolidated financial position as of March 31, 2012 and the consolidated results of its operations and cash flows for the period from April 1, 2012 through October 9, 2012 and for the year ended March 31, 2012 in conformity with accounting principles generally accepted in the United States of America.
 
/s/ MaloneBailey, LLP
MaloneBailey, LLP
www.malone-bailey.com
Houston, Texas
 
December 10, 2013

BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
CONSOLIDATED BALANCE SHEETS

												
 	 	 	 	Successor	 	 	Predecessor	
 	 	 	 	March 31,	
 	 	 	 	2013	 	 	2012	
ASSETS:	 	 	 	 	
 	Current assets	 	 	 	 	
 	 	Cash and cash equivalents	$	306,528		 	 	$	185,717		
 	 	Restricted cash	165,002		 	 	—		
 	 	Receivables-trade	423,978		 	 	366,268		
 	 	Receivables-other	47,477		 	 	50,567		
 	 	Prepaid expenses and other current assets	386,841		 	 	152,040		
 	 	Current assets held for sale	158,678		 	 	320,971		
 	 	 	Total current assets	1,488,504		 	 	1,075,563		
 	Property and equipment, net	30,515,337		 	 	14,263,808		
 	Intangible assets, net	7,679,561		 	 	—		
 	Goodwill	16,917,602		 	 	—		
 	Deferred tax asset	5,672,423		 	 	—		
 	Noncurrent assets held for sale	2,229,709		 	 	2,256,760		
 	 	Total assets	$	64,503,136		 	 	$	17,596,131		
 	 	 	 	 	
LIABILITIES AND MEMBERS' EQUITY:	 	 	 	 	
 	Current liabilities	 	 	 	 	
 	 	Accounts payable	$	902,297		 	 	$	1,275,729		
 	 	Accounts payable-related parties	19,216		 	 	60,763		
 	 	Accrued liabilities	1,083,576		 	 	202,447		
 	 	Accrued payroll	243,055		 	 	—		
 	 	Deferred revenue	351,422		 	 	114,334		
 	 	Derivative liabilities of convertible debt loans	—		 	 	3,520,496		
 	 	Current portion of convertible promissory note to affiliate	20,000,000		 	 	—		
 	 	Current potion of long-term bank loans	1,957,040		 	 	1,311,864		
 	 	Current liability held for sale	381,360		 	 	286,711		
 	 	 	Total current liabilities	24,937,966		 	 	6,772,344		
 	Long-term liabilities	 	 	 	 	
 	 	Bank loans	3,721,581		 	 	2,030,868		
 	 	Related party convertible debt loans, net of discount of $0 and $620,291	—		 	 	54,709		
 	 	Convertible debt loans, net of discount of $0 and $3,745,668	—		 	 	330,365		
 	 	Deferred tax liability	11,381,354		 	 	—		
 	 	Long-term liability held for sale	1,180,288		 	 	1,360,000		
 	 	 	Total long-term liabilities	16,283,223		 	 	3,775,942		
 	 	 	Total liabilities	41,221,189		 	 	10,548,286		
 	Commitments and contingencies	 	 	 	 	
 	 	 	 	 	 	
 	Common stock - 200,000,000 shares authorized, $.001 par value: 56,476,186 issued, outstanding at March 31, 2012	—		 	 	56,476		
 	Additional paid-in-capital	—		 	 	8,398,943		
 	Accumulated deficit	—		 	 	(1,407,574	)	
 	Members' equity	23,281,947		 	 	—		
 	 	 	Total liabilities and members' equity	$	64,503,136		 	 	$	17,596,131		

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

  BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
CONSOLIDATED STATEMENTS OF OPERATIONS

	
														
 	 	Successor	 	 	Predecessor	
 	 	October 10, 2012 to March 31, 2013	 	 	Year ended March 31, 2012	 	April 1, 2012 to October 9, 2012	
 	 	 	 	 	 	 	 	
REVENUE	 	 	 	 	 	 	
 	Storage	$	4,136,298		 	 	$	7,483,073		 	$	4,212,043		
 	Packaging services	479,959		 	 	1,602,809		 	576,540		
 	Excess through-put services	34,238		 	 	438,094		 	175,231		
 	Other services	392,051		 	 	396,346		 	212,711		
 	Total revenue	5,042,546		 	 	9,920,322		 	5,176,525		
COSTS AND EXPENSES	 	 	 	 	 	 	
 	Operating expenses	1,104,850		 	 	2,552,107		 	1,171,990		
 	Depreciation and amortization	5,183,123		 	 	573,857		 	203,535		
 	Selling, general and administrative expenses	3,107,554		 	 	3,491,047		 	1,852,251		
 	Gain (loss) on disposal of assets	—		 	 	362,110		 	19,362		
 	Total costs and expenses	9,395,527		 	 	6,979,121		 	3,247,138		
 	Operating income (loss)	(4,352,981	)	 	 	2,941,201		 	1,929,387		
OTHER (EXPENSE)/INCOME	 	 	 	 	 	 	
 	Net interest expense	(1,009,809	)	 	 	(867,243	)	 	(4,633,995	)	
 	Gain on extinguishment of convertible debt loans	—		 	 	1,399,940		 	—		
 	Gain (loss) on change in fair market value of derivative liabilities	—		 	 	801,995		 	(577,492	)	
 	Other income and expenses, net	22,476		 	 	47,556		 	10		
 	Income (loss) from continuing operations before taxes	(5,340,314	)	 	 	4,323,449		 	(3,282,090	)	
 	Income (loss) from discontinued operations, net of tax	73,269		 	 	716,396		 	$	(340,585	)	
 	Income tax benefit	4,807,722		 	 	—		 	$	—		
 	Net income (loss)	$	(459,323	)	 	 	$	5,039,845		 	$	(3,622,675	)	

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

 
BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY AND
MEMBERS' EQUITY

	
																				
 	 	Predecessor Blackwater Midstream Corp. Common Stock	 	 	 	 	
 	 	Number of Common Shares	 	Par Value $.001	 	Additional Paid-in-Capital	 	Accumulated Deficit	 	Total	
Balance, March 31, 2011	54,792,114		 	$	54,792		 	$	8,011,658		 	$	(6,447,419	)	 	$	1,619,031		
 	Shares issued for services	325,500		 	325		 	388,644		 	—		 	388,969		
 	Shares issued upon option exercises	1,358,572		 	1,359		 	(1,359	)	 	—		 	—		
 	Net income	—		 	—		 	—		 	5,039,845		 	5,039,845		
Balance, March 31, 2012	56,476,186		 	56,476		 	8,398,943		 	(1,407,574	)	 	7,047,845		
 	Shares issued for services	—		 	—		 	137,860		 	—		 	137,860		
 	Shares issued upon conversion of convertible debt notes	11,877,580		 	11,878		 	4,739,155		 	—		 	4,751,033		
 	Write off subsidiary's remaining derivative balance of convertible debt loans	—		 	—		 	4,097,988		 	—		 	4,097,988		
 	Net income (loss) for Predecessor for period April 1, 2012 through October 9, 2012	—		 	—		 	—		 	(3,622,675	)	 	(3,622,675	)	
Balance, October 9, 2012	68,353,766		 	68,354		 	17,373,946		 	(5,030,249	)	 	12,412,051		
 	 	 	 	 	 	 	 	 	 	 	
 	 	Successor Blackwater Midstream Holdings LLC	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Members' Equity, October 10, 2012	 	 	 	 	 	 	 	 	$	43,741,270		
 	Distribution to Arclight Fund V treated as a loan	 	 	 	 	 	 	 	 	(20,000,000	)	
 	Net loss for Successor for period October 10, 2012 through March 31, 2013	 	 	 	 	 	 	 	 	(459,323	)	
Members' Equity, March 31, 2013	 	 	 	 	 	 	 	 	$	23,281,947		

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

 
BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
CONSOLIDATED STATEMENTS OF CASH FLOWS

	
															
 	 	 	Successor	 	 	Predecessor	
 	 	 	October 10, 2012 to March 31, 2013	 	 	Year ended March 31, 2012	 	April 1, 2012 to October 9, 2012	
 	 	 	 	 	 	 	 	 	
Cash flows from operating activities	 	 	 	 	 	 	
 	Net income (loss)	$	(459,323	)	 	 	$	5,039,845		 	$	(3,622,675	)	
 	Adjustments to reconcile net loss to net cash provided by operating activities:	 	 	 	 	 	 	
 	 	Depreciation and amortization	5,391,585		 	 	751,740		 	428,873		
 	 	Amortization of convertible loan discounts	—		 	 	273,473		 	4,365,959		
 	 	Net loss on disposal of assets	—		 	 	362,110		 	19,362		
 	 	Net gain on bargain purchase of assets	—		 	 	(970,000	)	 	—		
 	 	Net gain on extinguishment of convertible debt loans	—		 	 	(1,399,940	)	 	—		
 	 	Net gain on change in fair market value of derivative liabilities	—		 	 	(801,995	)	 	577,492		
 	 	Stock based compensation	—		 	 	388,969		 	137,860		
 	 	Deferred tax expense, net	(4,760,878	)	 	 	—		 	—		
 	Changes in operating assets and liabilities:	 	 	 	 	 	 	
 	 	Accounts receivable - trade	(101,511	)	 	 	(190,244	)	 	32,404		
 	 	Accounts receivable - other	(47,477	)	 	 	158,033		 	50,567		
 	 	Prepaid expenses	(82,649	)	 	 	(70,182	)	 	(108,295	)	
 	 	Inventory	8,615		 	 	23,934		 	(27,769	)	
 	 	Deferred revenue	168,371		 	 	(100,900	)	 	71,017		
 	 	Accounts payable and accruals	1,269,255		 	 	(1,021,742	)	 	(988,082	)	
 	 	     Net cash provided by operating activities	1,385,988		 	 	2,443,101		 	936,713		
Cash flows from investing activities:	 	 	 	 	 	 	
 	Proceeds from restricted cash	(165,002	)	 	 	—		 	—		
 	Purchase of Salisbury, MD Terminal	—		 	 	(1,600,000	)	 	—		
 	Purchase of property, plant and equipment	(1,960,362	)	 	 	(1,440,539	)	 	(2,346,553	)	
 	 	     Net cash flows used in investing activities	(2,125,364	)	 	 	(3,040,539	)	 	(2,346,553	)	
Cash flows from financing activities:	 	 	 	 	 	 	
 	Proceeds from bank loans	1,405,920		 	 	2,008,072		 	2,417,110		
 	Payment on bank loans	(884,932	)	 	 	(1,271,686	)	 	(666,932	)	
 	 	     Net cash flows provided by financing activities	520,988		 	 	736,386		 	1,750,178		
 	 	     Net increase in cash and cash equivalents	(218,388	)	 	 	138,948		 	340,338		
Cash and cash equivalents at beginning of period	530,672		 	 	51,386		 	190,334		
Cash and cash equivalents at end of period	$	312,284		 	 	$	190,334		 	$	530,672		
 	 	 	 	 	 	 	 	 	
Supplemental cash flow disclosures	 	 	 	 	 	 	
 	Cash paid for interest, net of amounts capitalized	$	101,645		 	 	$	611,081		 	$	290,006		
 	Cash paid for income taxes	—		 	 	—		 	—		

	
															
Non-cash investing and financing activities:	 	 	 	 	 	 	
 	Construction in process included in accounts payable	$	472,687		 	 	$	406,208		 	$	363,492		
 	Barge dock exchanged for accounts payable	$	—		 	 	$	115,000		 	$	—		
 	Shares issued in cashless exercise	$	—		 	 	$	1,139		 	$	—		
 	Debt discount related to derivative liabilities	$	—		 	 	$	4,516,240		 	$	—		
 	Shares issued upon conversion of debt	$	—		 	 	$	—		 	$	4,751,033		
 	Write off of derivatives due to conversion	$	—		 	 	$	—		 	$	4,097,988		
 	Transfer from construction in progress to property, plant and equipment	$	—		 	 	$	—		 	$	2,956,434		
 	Distribution to Arclight Fund V treated as loan	$	20,000,000		 	 	$	—		 	$	—		

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

BLACKWATER MIDSTREAM HOLDINGS LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2013 AND 2012

1.      ORGANIZATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
ORGANIZATION
 
Blackwater Midstream Corp. was incorporated in the State of Nevada, U.S.A., on March 23, 2004. On March 18, 2008, we changed our name to Blackwater Midstream Corp. (“BWMS”) from Laycor Ventures Corp.

On September 9, 2008, we formed Blackwater New Orleans, L.L.C. (“BWNO”), a Louisiana limited liability company, as a wholly-owned subsidiary of BWMS. On December 23, 2008, BWNO acquired an existing bulk liquid storage terminal in Westwego, LA (the “Westwego Terminal”) from NuStar Terminals Operations Partnership L.P.

On February 26, 2010, we formed Blackwater Georgia, L.L.C. (“BWGA”), a Georgia limited liability company, as a wholly-owned subsidiary of BWMS. On July 15, 2010, BWGA acquired an existing bulk liquid storage terminal in Brunswick, GA (the “Brunswick Terminal”) from NuStar Terminals Operations Partnership L.P.

On November 22, 2011, we formed Blackwater Maryland, L.L.C. (“BWMD”), a Maryland limited liability company, as a wholly-owned subsidiary of BWMS. On December 22, 2011, BWMD acquired an existing truck rack liquid storage terminal in Salisbury, MD (the “Salisbury Terminal”) from NuStar Terminals Operations Partnership L.P. (See Note 3)

On June 27, 2012, ArcLight Energy Partners Fund V, L.P. (“AL Fund V”) formed Blackwater Investments, Inc. (“BWI”), a Delaware close corporation.

Also on June 27, 2012 AL Fund V formed Blackwater Midstream Holdings LLC (“BWHD”), a Delaware limited liability company. BWHD owns 100% of the shares of BWI.

On June 27, 2012, AL Fund V formed Blackwater Acquisition Sub, Inc. (“BWAS”), a Nevada close corporation for the sole purpose of merging with and into Blackwater Midstream Corp. (“the Merger”) in accordance with the terms of an Agreement and Plan of Merger (the “Merger Agreement”) and the applicable provisions of the Nevada Revised Statues, in which BWMS would be the surviving corporation and become a wholly-owned subsidiary of Blackwater Investments, Inc. (“BWI”). Also at this time, BWAS filed its Bylaws; and as per the Merger Agreement, BWAS’ Bylaws became the Bylaws of BWMS upon the effective date of the merger.

On October 9, 2012, the effective date of the Merger and the acquisition date (the “Merger and Acquisition Date”) the purchase by BWI of all issued and outstanding shares of BWMS took place, (the “Acquisition”). In connection with the merger, management elected to apply push-down accounting. Under push-down accounting, the assets and liabilities are adjusted to fair value, thereby creating a new cost basis for the assets.

The consolidated financial statements for the Successor Company at March 31, 2013, and for the period October 10, 2012 to March 31, 2013, include the financial statements of Blackwater Midstream Holdings LLC, its 100% owned-subsidiary Blackwater Investments, Inc., its 100% owned-subsidiary Blackwater Midstream Corp. and all of its 100%-owned subsidiaries: Blackwater New Orleans, L.L.C., Blackwater Georgia, L.L.C., and Blackwater Maryland, L.L.C. (the asset held for sale).  Intercompany transactions and balances are eliminated in consolidation.

The consolidated financial statements for the Predecessor Company at March 31, 2012, and for the period April 1, 2012 to October 9, 2012, include the financial statements of Blackwater Midstream Corp. and all of its 100% owned subsidiaries: Blackwater New Orleans, L.L.C., Blackwater Georgia, L.L.C., and Blackwater Maryland, L.L.C. (the asset held for sale).  Intercompany transactions and balances are eliminated in consolidation.

Blackwater, we, our or the Company references herein are referring to consolidated information pertaining to Blackwater Midstream Holdings LLC, Blackwater Investments, Inc, Blackwater Midstream Corp., and its wholly-owned subsidiaries: Blackwater New Orleans, L.L.C.; Blackwater Georgia, L.L.C., and Blackwater Maryland, L.L.C and to Laycor Ventures, Corp.

CONSOLIDATION
 
The accompanying consolidated financial statements represent the consolidated operations of Blackwater Midstream Holdings LLC, Blackwater Investments, Inc., Blackwater Midstream Corp. and its wholly-owned subsidiaries: BWNO, BWGA and BWMD. Intercompany balances and transactions have been eliminated in consolidation.
 
USE OF ESTIMATES
 
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

CASH AND CASH EQUIVALENTS
 
Cash equivalents are all highly liquid investments with an original maturity of three months or less when acquired. The Company’s restricted cash as of March 31, 2013 totaled approximately $165,000, related to a customer contract requiring the customer to deposit with the Company three months of storage revenues, to be offset if the Customer fails to make timely payments, with any remaining amounts to apply to specific contract storage months. As of March 31, 2012, the Company did not have any unrestricted cash.
 
REVENUE RECOGNITION
 
Revenues for third-party terminals include storage tank lease fees, whereby a customer agrees to pay for a certain amount of tank storage over a certain period of time; and throughput fees, whereby a customer pays a fee based on volumes moving through the terminal.  At our terminals, we also offer and provide packaging, blending, handling, filtering and certain other ancillary services.  Revenue from storage tank lease fees are recognized ratably, which is typically monthly, over the term of the lease.  Occasionally, customers pay for tank lease fees in advance. Fees received in advance are deferred until the period they are earned. Revenue from throughput fees and ancillary fees are recognized as services are provided to the customer and when the fees are realizable.
 
ACCOUNTS RECEIVABLE
 
Accounts receivable represent valid claims against non-affiliated customers and are recognized when services are rendered. We extend credit terms to certain customers based on historical dealings and to other customers after review of various credit indicators, including the customer’s credit rating.

Outstanding customer receivable balances are regularly reviewed for possible non-payment indicators and allowances for doubtful accounts are recorded based upon management’s estimate of collectability at the time of their review.  Accounts receivable are written off when the account is deemed uncollectible. The Company has recorded no uncollectible allowance as of March 31, 2013 or March 31, 2012.

As of March 31, 2013, the Company had a receivable-other balance of $47,477 due from the State of Louisiana pertaining to a jobs incentive award grant. As of March 31, 2012, the Company had a receivable-other balance of $50,567 due mainly from the State of Louisiana pertaining to investment incentive rebates and job incentive award grants.
 
PROPERTY, PLANT AND EQUIPMENT
 
Property, plant and equipment, are comprised of real estate, buildings, warehouses, storage tanks, terminal assets, office equipment, computer software and heavy equipment and are stated at cost or the fair market value (“FMV”) as per the Merger consideration paid on October 9, 2012 for the shares of BWMS when acquired by BWI, less accumulated depreciation.
 
Assets are depreciated on a straight-line basis over their estimated useful lives, which range from 4 to 40 years. Repair and maintenance costs associated with existing assets that are minor in nature and do not extend the useful life of existing assets are charged to operating expenses as incurred.

CONSTRUCTION IN PROGRESS
 
Construction in progress is stated at cost, which includes the costs of construction and other direct costs attributable to the construction. No provision for depreciation is made on construction in progress until such time as the relevant assets are completed and put into use. Construction in progress at March 31, 2013 and March 31, 2012, represents facilities under installation and prepayments on assets being purchased.

GOODWILL AND INTANGIBLE ASSETS

Goodwill is the excess of the investment in the Company over the fair market value of the identifiable net assets and customer contracts acquired as of the Acquisition Date and the offset to the calculated Deferred Tax Benefit amount as of March 31, 2013. As of the year ended March 31, 2013, the Company recorded goodwill in the amount of approximately $16,917,600. The Company did not record any goodwill as of March 31, 2012.

Net intangible assets are related to existing customer contracts recorded as of the Acquisition Date and the acquisition of the Salisbury Terminal on December 22, 2011 (see Note 3). These customer contracts had estimated remaining contract periods ranging between five and thirty-five months and will be amortized over the same periods.

IMPAIRMENT OF LONG-LIVED AND INTANGIBLE ASSETS

We account for impairment of plant and equipment, and amortizable intangible assets in accordance with ASC 360-10-35 “Impairment or Disposal of Long-Lived Assets” which requires us to evaluate a long-lived asset for recoverability when there are events or circumstances that indicate the carrying value of the asset may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset or asset group is not recoverable (when carrying amount exceeds the gross, undiscounted cash flows from use and disposition) and is measured as the excess of the carrying amount over the asset’s (or asset group’s) fair value. No impairment losses were recorded during the years ended March 31, 2013 or 2012.

GOODWILL AND OTHER INDEFINITE INTANGIBLES

Goodwill and other intangibles with indefinite lives are not amortized but are reviewed for impairment at least annually or more frequently if an event or circumstance indicates that an impairment may have occurred. To test for impairment, the fair value of each reporting unit is compared to the related net book value, including goodwill. If the net book value of the reporting unit exceeds the fair value, an impairment loss is measured and recognized. An income approach is utilized to estimate the fair value of each reporting unit. The income approach is based on the projected debt-free cash flow, which is discounted to the present value using discount factors that consider the timing and risk of cash flows. As the Company recognized goodwill during the year ended March 31, 2013, it has not yet been tested for impairment.

DEFERRED FINANCING COSTS
 
Costs incurred for debt borrowing are capitalized as paid and amortized over the life of the associated debt instrument.  To the extent that debt is retired before its scheduled maturity date, any remaining deferred financing costs associated with that debt are written off.

ENVIRONMENTAL REMEDIATION COSTS
 
Environmental remediation costs are expensed and an associated accrual established when site restoration and environmental remediation and cleanup obligations are either known or considered probable and can be reasonably estimated. As of March 31, 2013, we are not aware of any environmental remediation costs associated with the acquisition of the Westwego Terminal, the Brunswick Terminal or the Salisbury Terminal.

INCOME TAXES

No provisions for federal and state income taxes have been made in the financial statements for Blackwater Midstream Holdings LLC’s activities during these reporting periods; as these taxes are the responsibilities of BWHD’s members under a limited liability corporation.

For Blackwater Investments, Inc. and Blackwater Midstream Corp. and its subsidiaries we follow Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting Standards

Codification (“ASC”) 740 - “Accounting for Income Taxes” (“ASC 740”). This standard requires the use of an asset and liability approach for financial accounting and reporting of income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.
 
CAPITALIZED INTEREST

The interest cost associated with major development and construction projects is capitalized and included in the cost of the project.

STOCK-BASED COMPENSATION

The Company follows SFAS 123(R) ASC 718 which requires all share-based payments to employees, including grants of employee stock options and restricted stock, to be recognized in the income statement based on their estimated fair values. The Company recognizes the expense on a straight-line basis over the requisite service period, which is normally the vesting period. On the Acquisition Date, the Company expensed all remaining employee stock-based compensation payments.
 
We account for non-employee share-based awards in accordance with EITF No. 96-18 ASC 505 “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquisition, or in Conjunction with Selling, Goods or Services.”
 
EMBEDDED CONVERSION FEATURE

The Company evaluates embedded conversion features within convertible debt and convertible preferred stock under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion features.

FAIR VALUE MEASURES
 
The Company follows ASC 820 “Fair Value Measurements and Statement No. 157, as amended, the fair value of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and the Company’s affiliate convertible promissory note approximates book value at March 31, 2013 and 2012 due to the short-term nature of these accounts.  The fair value of our debts with JP Morgan Chase Bank, N.A. also approximates book value due to the variable rate of interest charged.  The fair value of these loans does not materially differ from book value.  It is management’s opinion that we are not exposed to significant interest or credit risks arising from these financial instruments.  The fair value of these financial instruments approximates their carrying values. Occasionally, our cash deposits may exceed the FDIC insurable limit.

NEW ACCOUNTING PRONOUNCEMENTS

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

ASSETS HELD FOR SALE

In accordance with ASC 360, “Presentation of Financial Statements - Long-Lived Assets Held for Sale”, we reported our Maryland Terminal as an asset held for sale. The application of ASC 360 is discussed in Note 5 below.

2.       PROPERTY, PLANT AND EQUIPMENT
 
Property and equipment consisted of the following. The Estimated Useful Life figure presented in the table represents management’s determination as to the potential full useful life of the assets when new as of March 31, 2013 and 2012:

	
											
 	 	Estimated
Useful Life	 	Successor 2013 (1)	 	Predecessor 2012	
 	 	 	 	 	 	 	
Land	 	 	 	$	1,914,808		 	$	1,914,808		
Office buildings & warehouses	 	10-40	 	1,353,075		 	729,690		
Improvements	 	20-40	 	716,518		 	628,049		
Dock	 	20-40	 	7,942,337		 	3,675,065		
Tanks, truck rack and piping	 	20-40	 	20,187,333		 	9,696,197		
Equipment	 	5	 	38,028		 	16,119		
Office equipment, software, packing equip. & tools	 	5 - 7	 	613,717		 	408,993		
Construction in process	 	 	 	2,731,179		 	1,053,052		
Total property, plant and equipment	 	 	 	35,496,995		 	18,121,973		
Less: accumulated depreciation	 	 	 	(2,751,949	)	 	(1,648,299	)	
Property, plant and equipment, net	 	 	 	32,745,046		 	16,473,674		
Less: assets held for sale	 	 	 	(2,229,709	)	 	(2,209,866	)	
Property, plant and equipment less assets held for sale, net	 	 	 	$	30,515,337		 	$	14,263,808		

(1) - See Note 3 - Merger and Acquisition of the Company, for further explanation concerning the change in basis of the Company's assets due to purchase accounting as a result of the Company’s merger on October 9, 2012.

The Company’s remaining useful life of major assets acquired with the Westwego, Brunswick and the Salisbury Terminals was based on an appraiser’s determination of a percent of useful life remaining for major assets as of the acquisition date. Management applied this percentage to its determination as to the potential full useful life of each major asset to arrive at a useful life remaining. Above ground steel storage tanks are designed for long lives and it is common for a storage tank to provide useful service for a period of 40 years or longer.

A summary of the ranges of remaining useful lives calculated for the Westwego, Brunswick and Salisbury Terminal assets when acquired are as follows:
    
Office buildings & warehouses             2.5 - 26 years
Improvements                    4 - 20 years
Dock                        7 - 40 years
Tanks, racks and piping                4 - 40 years (2)
Equipment                    5 - 15 years
Office equipment, software, tools            5 years

(2) One storage tank was recorded with a remaining useful life of 37 years as it had been recently constructed as of December 2008 and the new ship dock and the three tanks constructed in late 2009 and early 2010 are recorded with a useful life of 40 years; as well as the tank placed in service during November 2012. The remainder of our tanks is recorded with a remaining useful life of between 6 and 12 years.

On April 14, 2011 the Company entered into an agreement with one of its vendors to transfer the Company’s barge dock and related equipment to the vendor in exchange for $115,000 to be offset against amounts currently owed by the Company to the vendor. As a result, the Company recorded a loss of $362,110 on the disposal of assets in April 2011.

On October 9, 2012, the effective date of the Merger, and the Acquisition Date, the Company evaluated the fair market value of its assets and customer contracts acquired and their current book value. The increase in the fair market value over the current book value was assigned to the assets, with the remaining value assigned to goodwill. See Note 4.

Construction in process projects as of the end of each fiscal year are recorded as assets when completed during the next current year. Two new 50,000 barrel storage tanks and existing storage tanks and piping improvements, along with other improvements were recorded as Construction in Process projects as of March 31, 2013, totaling approximately $2,731,000. Construction in Process projects as of March 31, 2012 totaled approximately $1,053,000 and consists of storage tank and piping improvements and a truck loading facility.

Depreciation and amortization expenses related to property, plant and equipment totaled approximately $574,000 during the period ending March 31, 2012; approximately $204,000 for the period April 1, 2012 through October 9, 2012; and approximately $5,183,000 for the period October 10, 2012 through March 31, 2013. Approximately $4,500,000 of the increase between the years ended March 31, 2012 and 2013 was due to the increase of the FMV of the assets due to the Merger. Depreciation and amortization expenses related to the discontinued operations were approximately $125,000 for the period ending March 31, 2012; approximately $225,000 for the period April 1, 2012 through October 9, 2012; and approximately $208,000 for the period October 10, 2012 through March 31, 2013.

The Company capitalizes interest cost while Construction in Process projects are under construction. During the year ended March 31, 2013 approximately $147,000 of interest was capitalized, and for the year ended March 31, 2012, approximately $61,200 of interest was capitalized.

3.       SALISBURY TERMINAL PURCHASE

Purchase of Salisbury, Maryland Terminal

On December 22, 2011, we acquired the 172,000 barrel Salisbury Terminal, including storage tanks and other improvements for $1,600,000. The terminal consists of fourteen leasable above ground storage tanks (ranging in size from 2,500-50,000 barrels), two office buildings, a three-bay covered truck loading rack, a barge dock and other site improvements situated on approximately 27 acres of land, located along the Wicomico River in Salisbury, Maryland.

The Salisbury Terminal when purchased in December 2011 included one employee, customer contracts, permits, licenses, offices, procedures, systems, storage tanks, truck racks, piping, etc. and processes that had the ability to produce outputs; thus meeting the definition of a business as per ASC Topic 805-10-55, paragraphs 4 through 9.

It was our understanding that the seller had earlier decided to exit from the truck rack terminal business in this particular market, and that there were a limited number of potential purchasers.

We commissioned and obtained a market valuation appraisal (the “Salisbury Terminal Appraisal”) from a third-party independent appraisal firm. The fair value of the terminal was determined using level 3 inputs. Significant appraisal inputs included a description of the property, an analysis of the highest and best use of the property, and a comparison of nearby and national terminal sales. Applying the Sales Comparison Approach, the Salisbury Terminal Appraisal concluded that the market value of the Salisbury Terminal as of June 30, 2011 was $2,570,000.

As per ASC Topic 805-30-25-4, we reassessed all identifiable assets acquired and liabilities assumed in the acquisition and subsequently valued the combined assets at the Salisbury Terminal at $2,570,000 and recorded a $970,000 “bargain purchase” gain for the difference, which is recorded in the Company’s consolidated statement of operations. The Company determined that the market value of the Salisbury Terminal did not change materially from the date of the appraisal on June 30, 2011 and the date of the acquisition on December 22, 2011.

Included in the acquired assets was the tangible terminal assets described above; as well as four in-place customer contracts with a fair value of $287,766 and various prepaid permits and taxes with a fair value of $48,799. The fair value of the in-place customer contacts was determined using a discounted cash flow projection over the one-year life of the contracts and this amount was amortized over the useful life of one-year.

The following table sets forth the costs and final purchase price allocation related to the Salisbury Terminal acquisition:

	
				
Cost of the acquisition:	 	
Cash paid from the proceeds of debt	$	1,600,000		
Less: fair market value of identifiable assets acquired	(2,570,000	)	
Gain on bargain purchase of asset	$	(970,000	)	
 	 	
Purchase price allocation:	 		
Property, plant and equipment, net	$	2,233,435		
Intangible assets	336,565		
Identifiable assets	$	2,570,000		

Presented below are pro-forma consolidated statements of operations for the year ended March 31 2012, when considering the operating results of the Salisbury Terminal, if acquired as of April 1, 2011:

							
 	 	Actual Blackwater Midstream, Westwego, Brunswick &
Salisbury
Terminals	 	Salisbury Terminal Pro-Forma for Period 1/Apr/2011-21/Dec/2011	 	Consolidated
Pro-Forma	
Revenue	 	$9,990,611	 	$343,000	 	$10,333,611	
Net income	 	$5,039,845	 	$(984,075)	 	$4,055,770	

4.       MERGER AND ACQUISITION OF THE COMPANY

Merger and Acquisition of the Company

Prior to the merger and acquisition of the Company, our predecessor companies included Blackwater Midstream Corp. and all of its 100% owned subsidiaries: Blackwater New Orleans, L.L.C., Blackwater Georgia, L.L.C., and Blackwater Maryland, L.L.C. (the asset held for sale).  Intercompany transactions and balances are eliminated in consolidation.

On October 9, 2012, the effective date of the Merger and the Acquisition Date, all of BWMS’ issued and outstanding shares available were tendered for purchase by Blackwater Investments, Inc. (“BWI”). BWI paid $0.64 per common share of BWMS.

On October 9, 2012, Blackwater Acquisition Sub, Inc. (“BWAS”), a Nevada close corporation merged with and into the Company in accordance with the terms of an Agreement and Plan of Merger (the “Merger Agreement”) and the applicable provisions of the Nevada Revised Statues, in which BWMS became the surviving corporation and become a wholly-owned subsidiary of BWI. Also at this time BWAS, filed its Bylaws with the State of Nevada; and as per the Merger Agreement, and then BWAS’ Bylaws became the Bylaws of BWMS.

Since BWI purchased 100% of BWMS’ shares, push-down accounting was applied, therein establishing a new basis in BWMS’ assets and liabilities based on the purchase price paid.

As of the Merger Date, we evaluated the fair market value of the Company’s assets based on a third party’s recent Income Approach appraisal method, and we calculated the present value of the customer contracts in place at all of our terminals. The Company followed purchase accounting and allocated the preliminary purchase price based on the fair value. The fair value was determined using level 3 inputs.
  
The following table sets forth the costs and final purchase price allocation:

				
Cost of the acquisition:	 	
Acquisition price of BWMS stock	$	44,092,176		
Purchase price allocation:	 		
Current assets	$	1,086,889		
Property, plant and equipment, net (Westwego, LA Terminal)	32,311,850		
Intangible assets (customer contracts-all terminals)	12,480,067		
Current liabilities	(5,389,552	)	
Long-term debt	(2,798,046	)	
Deferred tax liability	(10,516,634	)	
Goodwill	16,917,602		
Net	$	44,092,176		

On October 9, 2012 members of management entered into the Contribution and Rollover Agreement (the “Rollover Agreement”) with Blackwater Midstream Holdings LLC (“BWHD”) wherein, effective immediately prior to the effective time of the Merger and Acquisition, BWHD acquired from each member of management some of the BWMS shares

owned by management (the “Rollover Shares”); as set forth below in exchange for an equal number of Class A Common Units of BWHD, in lieu of any Acquisition or Merger cash consideration.

The following table reflects the number of BWMS shares exchanged in the Merger:

			
Suder	1,132,965		
Chatagnier	1,057,105		
St. Pierre	464,263		
Marrocco	454,166		
Total	3,108,499		

5.       SALISBURY TERMINAL: ASSET HELD FOR SALE AND DISCONTINUED OPERATIONS

Potential Sale of Salisbury, Maryland Terminal

In May 2013, the Company entered into a one-year exclusive listing agreement with a Maryland commercial real estate broker to market the Maryland Terminal: its on-going business operations, its customer contracts, its assets and other intangibles. To date, we have not entered into a letter of intent to purchase with an interested party. However, we have prepared these financial reports showing the Maryland Terminal’s operating activities in a separate line item named, “Discontinued Operations” and on the balance sheets as “Asset held for sale”.

	
													
The following table summarizes the income (loss) from discontinued operations reported in the consolidated statement of operations:	
 	Successor	 	 	Predecessor	
 	for the Period	 	 	for the Year	 	For the Period	
 	October 10, 2012 to	 	 	Ended	 	April 1, 2012 to	
 	March 31, 2013	 	 	March 31, 2012	 	October 9, 2012	
Revenue	$	92,822		 	 $	$	70,289		 	$	102,228		
Cost of revenues	(87,797	)	 	 	(54,017	)	 	(86,501	)	
Depreciation and amortization expense	(208,462	)	 	 	(124,730	)	 	(225,338	)	
Selling, general and administrative expenses	(94,333	)	 	 	(126,766	)	 	(95,136	)	
Operating Loss	(297,770	)	 	 	(235,224	)	 	(304,747	)	
 	 	 	 	 	 	 	
Net interest expense	(32,486	)	 	 	(18,380	)	 	(35,838	)	
Gain on bargain purchase of assets	—		 	 	970,000		 	—		
Other income and expenses, net	450,369		 	 	—		 	—		
Income tax expense	(46,844	)	 	 	—		 	—		
Income (loss) from discontinued operations	$	73,269		 	 $	$	716,396		 	$	(340,585	)	
 	 	 	 	 	 	 	
A summarized report of the assets and liabilities of Asset Held for Sale (the Blackwater Maryland, LLC Terminal) is as follows:	
 	Successor	 	 	Predecessor	 	 		
 	as of	 	 	as of	 	 	
 	March 31, 2013	 	 	March 31, 2012	 	 	
Cash	$	5,756		 	 	$	4,617		 	 	
Receivables	31,797		 	 	20,400		 	 	
Current portion of intangible assets	15,964		 	 	210,214		 	 	
Prepaid expenses and other current assets	105,161		 	 	85,740		 	 	
Property, plant, equipment, net	2,229,709		 	 	2,209,866		 	 	
Intangible assets	0		 	 	46,894		 	 	
Total assets of asset held for sale	$	2,388,387		 	 	$	2,577,731		 	 	
 	 	 	 	 	 	 	
Accounts payable	$	7,227		 	 	$	46,711		 	 	
Current bank debt	371,833		 	 	240,000		 	 	
Long-term bank debt	1,133,444		 	 	1,360,000		 	 	
Deferred income tax liability	46,844		 	 	—		 	 	
Deferred revenue	2,300		 	 	—		 	 	
Total liabilities of asset held for sale	$	1,561,648		 	 	$	1,646,711		 	 	

6.      INTANGIBLE ASSETS, NET

Due to the merger and acquisition of the Company during the year ended March 31, 2013, the Company allocated $12,480,067 of the purchase price to intangible assets related to customer contracts in place at all terminals and $16,917,602 to goodwill.  See Note 4.

Intangible assets, net, consisted of the following as of March 31, 2013 and 2012:

	
								
 	2013	 	2012	
Customer contracts	$	12,480,067		 	$	336,565		
Goodwill	16,917,602		 	—		
Accumulated amortization	(4,784,291	)	 	(79,457	)	
Intangible assets, net	$	24,613,127		 	$	257,108		
Less: asset held for sale	(16,215	)	 	(257,108	)	
Intangible assets, less asset held for sale, net	$	24,597,163		 	$	—		

The customer contracts are amortized using the straight-line method over their estimated economic lives (between five and thirty-five months).  Goodwill is not amortized and is assessed for impairment at least annually or more frequently

if an event or circumstance indicates that an impairment may have occurred. As the Company recognized goodwill during the year ended March 31, 2013, it has not yet been tested for impairment.

For the years ended March 31, 2013 and 2012, amortization of intangible assets expense was $4,704,834 and $79,457, respectively.

Future estimated amortization for intangible assets as of March 31, 2013, for the next five years and the total amount thereafter are as follows:

				
 	2013	
2014	$	4,680,293		
2015	2,607,206		
2016	388,666		
2017	5,499		
2018	967		
Thereafter	13,145		
 	$	7,697,789		

7.      LOSS ON DISPOSAL OF ASSETS

For the year ended March 31, 2013, we recorded a non-cash net loss of $19,362 related to the disposal of a storage tank to make way for the construction of a larger storage tank; while retaining the tank’s foundation. During the fiscal year ended March 31, 2012, the Company entered into an agreement with its dock contractor to transfer the Company’s barge dock and related equipment to this vendor in exchange of $115,000 offsets against amounts owed to this vendor by the Company. As a result, the Company recorded a loss of $362,110 on the disposal.

8.      LONG-TERM DEBT, CONVERTIBLE DEBT NOTES AND RELATED PARTY NOTES AND PAYABLES

Summary of current and long-term debt at March 31st consists of the following:

								
 	Successor	 	Predecessor	
 	March 31, 2013	 	March 31,
2012	
The BWMS October 2009 convertible debt notes with various note holders totaled $3,001,033 with interest at the annual rate of 10%, payable quarterly beginning on January 15, 2010. The original maturity date of October 15, 2011 was amended and extended until October 15, 2013. The notes were convertible at any time into restricted shares of the Company’s common stock at $0.50 per share. The notes were amended to allow for conversion at $0.40 per share upon a change in control of the Company. On October 9, 2012, as per the Acquisition, all notes were converted at $0.40 per share into 7,502,582 common shares of the Company and subsequently converted into cash.	$	—		 	$	3,001,033		
The BWMS March 2010 convertible debt notes with various note holders totaled $1,750,000 with interest at the annual rate of 10%, payable quarterly beginning on June 30, 2010. The original maturity date of March 31, 2012 was amended and extended until September 30, 2013. The notes were convertible at any time into restricted shares of the Company’s common stock at $0.50 per share. The notes were amended to allow for conversion at $0.40 per share upon a change in control of the Company. On October 9, 2012, as per the Acquisition, all notes were converted at $0.40 per share into 4,375,000 common shares of the Company and subsequently converted into cash.	—		 	1,750,000		
The BWNO October 2010 note with JPM in the amount of $4,695,456 bears interest at the annual rate of 1.50% above the Prime Rate, subject to certain minimum rate requirements.  The October 2010 Note provides for consecutive monthly installments of principal in the amount of $97,822, plus interest, commencing October 31, 2010 and continuing until maturity on September 30, 2014; along with related interest.	1,760,796		 	2,934,660		

	
								
The BWMD January 2012 term loan with JPM in the amount of $1,600,000 bears interest at the annual fixed rate of 4.50%. Beginning on July 21, 2012 and continuing on the last day of each calendar month thereafter, BWMD will pay monthly principal installments of $26,667, plus interest. All unpaid principal and accrued and unpaid interest is finally due and payable on July 21, 2017.	1,360,000		 	1,600,000		
The BWGA February 2012 term loan with JPM in the amount of $1,380,000 bears interest at the annual fixed rate of 4.50%. Beginning on October 31, 2012 and continuing on the last day of each calendar month thereafter, BWGA will pay monthly principal installments of $23,000, plus interest. All unpaid principal and accrued and unpaid interest is finally due and payable on August 31, 2017.	1,242,000		 	408,072		
The BWNO June 2012 term loan with JPM in the amount of $2,300,000
bears interest at the JPM CB Prime Floating interest rate. Beginning on
January 31, 2013 and continuing on the last day of each calendar month thereafter, BWNO will pay monthly principal installments of principal and interest. All unpaid principal and accrued and unpaid interest is finally due and payable on December 31, 2017. In November 2012, this term note was increased to the amount of $2,800,000 and revised with principal payment of approximately $46,667, plus interest, commencing on June 30, 2013 and continuing on the last day of each calendar month thereafter. All unpaid principal and accrued unpaid interest is finally due and payable on May 31, 2018. As of March 31, 2013, $2,728,760 had been advanced on this loan.	2,728,760		 	—		
The BWNO March 2013 term loan with JPM in the amount of $1,348,000 bears interest at the JPM CB Prime Floating interest rate. Beginning on October 8, 2013 and continuing on the 8th day of each calendar month thereafter BWNO will pay monthly principal installments of approximately $22,467, plus interest. All unpaid principal and accrued and unpaid interest is finally due and payable on September 8, 2018. As of March 31, 2013, $92,342 had been advanced on this loan.	92,342		 	—		
The BWHD October 9, 2012 convertible promissory note with its affiliate, ArcLight Energy Partners Fund V, L.P., in the amount of $20,000,000 bears interest at the fixed annual rate of 10%. The principal and all accrued interest shall be payable on the maturity date of October 9, 2013.	20,000,000		 	—		
Total debt	27,183,898		 	9,693,765		
Less current maturities	(22,328,873	)	 	(1,551,864	)	
Total debt net of current maturities	4,855,025		 	8,141,901		
Less asset held for sale	(1,133,444	)	 	(1,360,000	)	
Total debt net of current maturities and asset held for sale	$	3,721,581		 	$	6,781,901		

Future minimum payments related to our JPM credit facilities and our affiliate convertible promissory note as of March 31, 2013, for the next five years and the total amount thereafter are as follows.

				
Fiscal year ending March 31,	 	
2014	$	22,328,873		
2015	1,742,932		
2016	1,156,000		
2017	1,156,000		
2018	778,000		
Thereafter	22,093		
 	$	27,183,898		

JP Morgan Chase Bank, N.A. (JPM) loan agreements

Acquisition of the Westwego Terminal and subsequent construction projects

In connection with the purchase of the Westwego Terminal on December 23, 2008, BWNO entered into a credit agreement (the “Credit Agreement”) and a $2,500,000 Term Note (the “Note”) with JPM to finance a portion of the purchase price of the storage terminal.  Beginning on April 30, 2009, we made monthly principal installments on the Note, plus accrued monthly interest.

The JPM Note is secured by a mortgage on the Westwego Terminal property. The Credit Agreement includes customary events of default including, but not limited to, the failure of BWNO to pay any principal or interest when due, the breach of any representation or warranty in any of JPM’s loan documents, or insolvency or bankruptcy. Upon the occurrence of an event of default, the JPM Note will become due and payable automatically and without notice.

Since the original Credit Agreement, BWNO and the Company have entered into the following agreements with JPM:

•	April 21, 2009, a letter agreement; temporarily modifying payment terms	
		
•	February 12, 2010 Note and the First Amendment to the Credit Agreement, in the amount of $2,150,000 to finance the construction of three new storage tanks and a ship dock at the Westwego Terminal	
		
•	June 22, 2010, an Amendment (Second) to the Credit Agreement, a Line of Credit in the amount of $100,000;	
		
•	September 27, 2010, the Third Amendment to the Credit Agreement, combining the outstanding balances of the December 2008 and the February 2010 Notes and the June 2010 Line of Credit	
		
•	October 29, 2010, the Fourth Amendment to the Credit Agreement, consolidating outstanding balances since the September 2010 agreement, plus an August 2010 Line of Credit in the amount of $131,500 and a new advance of $374,160	
		
•	June 22, 2012 Note and the Fifth Amendment to the Credit Agreement, in the amount of $2,300,000 to finance the construction of two new tanks and improvements at the Westwego and Salisbury Terminals	
		
•	November 28, 2012, the Sixth Amendment to the Credit Agreement, to add $500,000 to the June 2012 Note for additional improvements at the Westwego Terminal	
		
•	March 8, 2013 Note and the Seventh Amendment to the Credit Agreement, in the amount of $1,348,000 for improvements at the Westwego Terminal	

Acquisition of the Salisbury Terminal .

In connection with the purchase and acquisition of the Salisbury Terminal on December 22, 2011, BWMD entered into a term loan with JPM in the principal amount of $1,600,000 to finance the purchase price of the terminal.
 
The BWMD loan includes customary events of default including, but not limited to, the failure of BWMD to pay any principal or interest when due, the breach of any representation or warranty in any of JPM’s loan documents, or insolvency or bankruptcy. Upon the occurrence of an event of default, the BWMD loan will become due and payable automatically and without notice. The term note requires that if BWMD prepays all or any portion of the principal balance of the note prior to the scheduled payment due date and/or the stated maturity date set forth then BWMD agrees to pay to JPM prepayment charges as detailed in the term note. Additionally, in connection with the closing of the acquisition, BWMD entered into the following with JPM: a credit agreement, a continuing security agreement covering all of BWMD’s personal property, and a Subordination Agreement. As additional collateral for the BWMD loan, BWNO agreed to secure the BWMD loan with the existing collateral mortgage encumbering BWNO’s right, title and interest in the immovable property, buildings, structures, machinery, equipment and improvements on the premises located at 660 LaBauve Drive, Westwego, Jefferson Parish, Louisiana. Blackwater Midstream Corp. entered into a continuing guaranty and the Subordination Agreement with JPM, and guaranteed the obligations of BWMD under the terminal Purchase Agreement with NuStar.

Storage tank construction at the Brunswick Terminal

In connection with the construction of a 60,000 barrel storage tank at the Brunswick Terminal, on February 28, 2012, BWGA entered into a term loan with JPM in the principal amount of $1,380,000.

The BWGA loan includes customary events of default including, but not limited to, the failure of BWGA to pay any principal or interest when due, the breach of any representation or warranty in any of JPM’s loan documents, or insolvency or bankruptcy. Upon the occurrence of an event of default, the BWGA loan will become due and payable automatically and without notice. The term note requires that if BWMD prepays all or any portion of the principal balance of the note prior to the scheduled payment due date and/or the stated maturity date set forth then BWMD agrees to pay to JPM prepayment charges as detailed in the term note. Additionally, in connection with the closing of the loan, BWGA entered into the following with JPM: a credit agreement, a continuing security agreement covering all of BWGA’s personal property, and a Subordination Agreement. As additional collateral for the BWMD loan, BWNO agreed to secure the BWGA loan with the existing collateral mortgage encumbering BWNO’s right, title and interest in the immovable property, buildings, structures, machinery, equipment and improvements on the premises located at 660 LaBauve Drive, Westwego, Jefferson Parish, Louisiana. Blackwater Midstream Corp. entered into a continuing guaranty and the

Subordination Agreement with JPM, and guaranteed the obligations of BWGA under the terminal Purchase Agreement with NuStar.

Storage tank construction and other improvements at the Westwego and Salisbury Terminals

In connection with the construction of two new 50,000 barrel storage tank at the Westwego Terminal and tank system modifications at the Salisbury Terminal, on June 22, 2012, BWNO entered into a term loan with JPM in the principal amount of $2,300,000.

The BWNO loan includes customary events of default including, but not limited to, the failure of BWNO to pay any principal or interest when due, the breach of any representation or warranty in any of JPM’s loan documents, or insolvency or bankruptcy. Upon the occurrence of an event of default, the BWNO loan will become due and payable automatically and without notice.

Additionally, in connection with the closing of the loan, BWNO entered into the following with JPM: the Fifth Amendment to the Credit Agreement, an Allonge to the Collateral Mortgage Note, dated December 23, 2008, and a First Amendment to Collateral Mortgage, Assignment of Leases and Rents and Security Agreement, dated December 23, 2008.

BWMS entered into a continuing guaranty (the “Continuing Guaranty”), pursuant to which the Company guaranteed the obligations of BWNO to JPM.

On November 28, 2012, BWNO and JPM increased the June 22, 2012 term loan to $2,800,000 to finance improvements at the Westwego Terminal related to a new long-term customer storage contract. In connection with this change, BWNO entered into the Sixth Amendment to the Credit Agreement, the First Amendment to the BWMD Credit Agreement and the First Amendment to the BWGA Credit Agreement.

Storage tank improvements at the Westwego Terminals

In connection with two new long-term customer storage contracts at the Westwego Terminal, on March 8, 2013, BWNO entered into a term loan with JPM in the principal amount of $1,348,000.

The BWNO loan includes customary events of default including, but not limited to, the failure of BWNO to pay any principal or interest when due, the breach of any representation or warranty in any of JPM’s loan documents, or insolvency or bankruptcy. Upon the occurrence of an event of default, the BWNO loan will become due and payable automatically and without notice. Additionally, in connection with the closing of the loan, BWNO entered into the Seventh Amendment to the Credit Agreement with JPM.

Debt Covenants

There are two financial covenants related to the JPM outstanding notes as of March 31, 2013. First, the Company must maintain a fixed charge coverage ratio of at least 1.20 to 1.00. Second, the balance sheet leverage ratio cannot exceed 3.25 to 1.00. The Company was in compliance with both covenants as of March 31, 2013.

Convertible Notes

Relatives of the Company’s CEO and former members on the Company’s Board of Directors, together with others, participated in the private offering of convertible debt described below. As of March 31, 2013 and 2012, the outstanding balance of these loans to related parties was $0 and $675,000, respectively.

Private Offering of Convertible Debt.

October 2009 convertible debt offering

On October 15, 2009, we issued $3,001,033 of convertible notes (the “2009 Notes"). The convertible notes originally set a maturity date on October 15, 2011 (the date was later extended, see below) and have a stated annual interest rate of 10%. The principal is payable at maturity but interest is paid quarterly beginning January 15, 2010. The Company incurred interest expense of $158,239 and $300,104, respectively for the twelve-month periods ended March 31, 2013

and March 31, 2012. In addition, the notes are convertible at any time into restricted shares of the Company’s common stock at $0.50 per share.

Related party investors as of March 31, 2013 and March 31, 2012 accounted for $0 and $430,000, respectively of the aggregate amount of convertible debt funds collected. Due to the Merger and Acquisition on October 9, 2012, all of the 2009 Notes were converted into common shares of the Company. As of March 31, 2012, Philip Tracy and William Gore, held 2009 convertible debt notes in the amounts of $100,000 and $150,000, respectively. Gore and Tracy were elected to the Company’s Board of Directors in September 2011.

On March 28, 2011, the convertible note agreements were amended to reduce the conversion price to $0.40 per share upon a change in control of the Company. This change in the conversion feature was evaluated under ASC 815-40. As a result of the new provision, the conversion feature qualified for derivative accounting pursuant to ASC 815. (see Note 7)

In June 2011, the Company contacted the holders of the 2009 Notes to extend the note’s maturity date from October 15, 2011 to October 15, 2013. All of the 2009 Convertible Promissory Notes were amended to reflect the new maturity date. As per accounting standards, this change in the maturity date was evaluated under ASC 470 “EITF 96-19” “Debtor’s Accounting for Modification or Exchange of Debt Instruments.” As a result of the maturity date extension amendment, the convertible debt notes then qualified as a debt extinguishment and therefore were treated as if the Company settled the debt prior to the maturity date and then entered into an entirely new debt agreement after the amendment. (see Note 7)

In connection with the offering, we incurred cash fees of $265,103 and issued 700,000 shares of restricted common stock, valued at $203,000 based on the grant-date fair value of our common stock. These fees were included in the deferred financing costs in our consolidated balance sheet and were being amortized over the original term of the convertible notes using the effective interest rate method. During the twelve-month period ended March 31, 2013 and the twelve-month period ended March 31, 2012, we amortized $0 and $73,314, respectively, of deferred financing cost.

On June 24, 2011, as per ASC 815-40, we evaluated the fair value of the derivative liability (using the BWMS closing share price of $0.55) and recorded a net “non-cash” loss of $115,378, which represents the change in the fair value of the derivative from March 31, 2011 through June 24, 2011.

Per the applicable accounting standards, the amendment of the convertible debt notes was required to be treated as an extinguishment of the original convertible debt notes and related accounts, as of June 24, 2011. Therefore, we wrote off and expensed the remainder of the unamortized deferred financing asset of $61,449 and decreased the derivative liability by $820,800. These transactions resulted in a net “non-cash” gain of $759,351.

Additionally as per ASC 470, we evaluated the fair value of the derivative related to the amended convertible debt notes as of June 24, 2011 (using the BWMS closing share price of $0.55) and recorded a new derivative liability of $2,870,987. This amount was recorded as a discount to the debt and will be amortized over the new remaining life of the notes, until October 15, 2013.

As a result of the First Amendment to the BWNO Credit Agreement with JPM, the maturity and conversion dates of the convertible debt notes issued pursuant to the Company’s September 2009 Convertible Debt Offering were to be extended by certain intervals. As of June 24, 2011, the maturity and conversion dates have been extended until October 15, 2013 but still did not meet the maturity date of September 30, 2014, as requested by JPM. However, JPM was aware of the maturity date extension that was achieved and did not request any action from the Company.

As per ASC 815-40, we evaluated the fair value of the derivative liability as of June 30, 2012, September 30, 2012 and as of October 9, 2012 and recorded a net loss for the increase in the derivative liability for these periods in the amount of $364,431.

As per the Merger and Acquisition on October 9, 2012, all 2009 Notes were converted at the rate of $0.40 per share into 7,502,580 common shares of the Company’s stock. We offset the remaining derivative liability balance of $2,597,500 against paid in capital; and expensed to interest the remaining convertible debt note discount of $2,559,627.

March 2010 convertible debt offering

On March 31, 2010, we issued $1,750,000 of convertible notes (the “2010 Notes”). The convertible notes originally set a maturity date on March 31, 2012 (the date was later extended, see below) and have a stated annual interest rate of 10%. The principal is payable at maturity but interest is paid quarterly beginning June 30, 2010. The Company incurred interest expense of $92,175 and $175,000, respectively for the twelve-month periods ending March 31, 2013 and March 31, 2012. In addition, the notes are convertible at any time into restricted shares of the Company’s common stock at $0.50 per share.

Related party investors as of March 31, 2013 and March 31, 2012 accounted for $0 and $245,000, respectively of the aggregate amount of convertible debt funds collected. Due to the Merger and Acquisition on October 9, 2012, all of the 2010 Notes were converted into common shares of the Company. As of March 31, 2012 Philip Tracy and William Gore, held 2010 Notes in the amount of $100,000 and $75,000, respectively. Gore and Tracy were elected to the Company’s Board of Directors in September 2011.

On March 28, 2011, the convertible note agreement was amended to reduce the conversion price to $0.40 per share upon a change in control of the Company. This change in the conversion feature was evaluated under ASC 815-40. As a result of the new provision, the conversion feature now qualifies for derivative accounting pursuant to ASC 815. (see Note 7)

In June 2011, the Company contacted the holders of the Company’s 2010 Convertible Promissory Note to extend the note’s maturity date from March 31, 2012 to September 30, 2013. All of the 2010 Convertible Promissory Notes have been amended to reflect the new maturity date.

As per accounting standards, this change in the maturity date was evaluated under ASC 470 “EITF 96-19” “Debtor’s Accounting for Modification or Exchange of Debt Instruments.” As a result of the maturity date extension amendment, the convertible debt notes then qualified as a debt extinguishment and therefore were treated as if the Company settled the debt prior to the maturity date amendment and then entered into an entirely new debt agreement after the amendment. (see Note 7)

In connection with the offering, we incurred cash fees of $164,750 and issued 659,000 shares of restricted common stock, valued at $171,340 based on the grant-date fair value of our common stock. These fees were included in the deferred financing costs in our consolidated balance sheet and were being amortized over the original term of the convertible notes using the effective interest rate method. During the twelve-month period ended March 31, 2013 and the twelve-month period ended March 31, 2012, we amortized $0 and $49878, respectively, of deferred financing cost.

On June 24, 2011, as per ASC 815-40, we evaluated the fair value of the derivative liability (using the BWMS closing share price of $0.55) and recorded a net “non-cash” loss of $78,371, which represents the change in the fair value of the derivative from March 31, 2011 through June 24, 2011.

Per the applicable accounting standards, the amendment of the convertible debt notes was required to be treated as an extinguishment of the original convertible debt notes and related accounts, as of June 24, 2011. Therefore, we wrote off and expensed the remainder of the unamortized deferred financing asset of $130,271 and decreased the derivative liability by $770,860. These transactions resulted in a net “non-cash” gain of $640,589.

Additionally as per ASC 470, we evaluated the fair value of the derivative related to the amended convertible debt notes as of June 24, 2011 (using the BWMS closing share price of $0.55) and recorded a new derivative liability of $1,645,253. This amount will be amortized over the new remaining life of the notes, until September 30, 2013.

As per ASC 815-40, we evaluated the fair value of the derivative liability as of June 30, 2012, September 30, 2012 and as of October 9, 2012 and recorded a net loss for the increase in the derivative liability for these periods in the amount of $213,061.

As per the Merger and Acquisition on October 9, 2012, all 2010 Notes were converted at the rate of $0.40 per share into 4,375,000 common shares of the Company’s stock. We offset the remaining derivative liability balance of $1,500,488 against paid in capital; and expensed to interest the remaining discount of $1,390,797.

In summary, during the twelve-month period ending March 31, 2013, the Company recorded “non-cash” expenses of $4,527,916 related to the 2009 and 2010 Notes; approximately $577,492 related to changes in the fair market value of the convertible debt notes derivative liabilities and $3,950,424 for the write off of the remaining note discounts.

Related Party Note Payable:

ArcLight Energy Partners Fund V, L.P. Demand Loan Payable Loan

On December 21, 2012, the Company entered into a Demand Loan (the “AL Loan”) with ArcLight Energy Partners Fund V, L.P. (“AL Fund V”) in the amount of $617,993.20 to temporarily fund extraordinary on-time expenses, related to the Merger. AL Fund V is a related party to the Company, as it is the majority member of Blackwater Midstream Holdings LLC; which owns 100% of Blackwater Investments, Inc.; which owns 100% of the Company. The AL Loan bore interest at the rate of 3.25% annually. The AL Loan was paid back in full on March 8, 2013, along with interest of $4,237.

ArcLight Energy Partners Fund V, L.P. Convertible Promissory Note

On October 9, 2012, BWHD entered into a Convertible Promissory Note (the “BWHD Note”) with ArcLight Energy Partners Fund V, L.P. (“AL Fund V”) in the amount of $20,000,000 to partially fund the acquisition of BWMS’ shares, related to the Merger. AL Fund V is a related party to the Company, as it is the majority member of BWHD; which owns 100% of BWI; which owns 100% of BWMS. The BWHD Note bears interest at the rate of 10% annually and is payable, along with any accrued and unpaid interest, on the maturity date of October 9, 2013. AL Fund V, at any time, on or prior to the maturity date, may convert any portion of the BWHD Note into fully paid and nonassessable Class A units of BWHD at the fixed amount of $0.64 per unit.

9.      EMBEDDED DERIVATIVE LIABILITY

As described in Note 6, the Company issued convertible debt notes in October 2009 and March 2010. The notes are convertible at $0.50 per share, or $0.40 per share upon a change in control of the Company. Based on the alternative conversion options, the Company determined that the conversion options in the notes should be accounted for as derivatives. The Company used the Black-Scholes model to determine the fair value of each of the conversion options as of June 30, 2012, September 30, 2012 and immediately prior to the Merger and upon Acquisition date on October 9, 2012, assigning a probability of occurrence to each conversion option. The final fair value of each of the derivative liabilities considered the likelihood of conversion at the separate conversion prices.

On June 24, 2011 as per ASC 470 the Company amended the notes to extend the maturity date from October 15, 2011 to October 15, 2013 for the October 2009 Notes and from March 31, 2012 to September 30, 2013 for the March 2010 Notes. As a result of these changes to the maturity dates, the Company compared the fair values of the embedded derivative liabilities using the maturity dates immediately prior to and after the modification date to determine if the amendments should be accounted for as a debt extinguishment.

As per the Merger and Acquisition on October 9, 2012, both the October 2009 and the March 2010 Notes were converted at the rate of $0.40 per share into common shares of the Company’s stock. Also at this time, the Company evaluated the fair value of the derivative liabilities and then wrote off the remaining balance of $4,097,988 of the derivative liabilities, offsetting the Paid in Capital account.

October 2009 notes:
The table below summarizes the Black-Scholes Option Pricing Model range of inputs used to calculate the fair market values on the date of the amendment (June 24, 2011) and then at the end of each quarter afterwards and on October 9, 2012. As per the Merger and Acquisition on October 9, 2012, all 2009 Notes were converted at the rate of $0.40 per share into 7,502,580 common shares of the Company’s stock.

	
					
Value Date	Dividend	Stock	Risk Free	Expected	
Stock Price	Yield	Volatility	Rate	Term	
 $ 0.53-0.64	—%	105.75%-125.96%	0.18%-0.33%	12-18 Months	

March 2010 notes:
The table below summarized the Black-Scholes Option Pricing Model information used to calculate the fair market values on the date of the amendment (June 24, 2011) and then at the end of each quarter afterwards and on October 9, 2012. As per the Merger and Acquisition on October 9, 2012, all 2010 Notes were converted at the rate of $0.40 per share into 4,375,000 common shares of the Company’s stock.

	
					
Value Date	Dividend	Stock	Risk Free	Expected	
Stock Price	Yield	Volatility	Rate	Term	
 $ 0.53-0.64	—%	105.99%-125.63%	0.18%-0.33%	12-18 Months	

For the twelve-month period ended March 31, 2012, the Company recorded an aggregate gain of $801,995 as a result of these transactions and an aggregate loss of $577,492 for the twelve-month period ended March 31, 2013.

10.      FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company measures fair value in accordance with a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities;

Level 2 - Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The table below sets forth a summary of the fair values of the Company’s financial assets and liabilities as of March 31, 2013:

	
												
 	Total	 	Level 1	 	Level 2	 	Level 3	
Convertible loan derivative liability at
March 31, 2011	1,397,911		 	—		 	—		 	1,397,911		
Change in fair market value from March 31, 2011 to March 31, 2012	2,122,585		 	—		 	—		 	2,122,585		
Convertible loan derivative liability at
March 31, 2012	3,520,496		 	—		 	—		 	3,520,496		
Change in fair market value from March 31, 2012 to October 9, 2012	577,492		 	—		 	—		 	577,492		
Settlement of convertible loan derivative liability due to Merger and Acquisition as of
October 9, 2012	(4,097,988	)	 	—		 	—		 	(4,097,988	)	
Convertible loan derivative liability at
March 31, 2013	—		 	—		 	—		 	—		
 
11.       STOCK-BASED COMPENSATION

In May and June 2008, we granted 821,036 shares of common stock for management services and legal services with a grant-date fair value of $1,726,160 and $200,000, respectively. The shares granted for legal services vested immediately and were expensed. The shares granted for management services initially vested over a period of twenty months. On December 8, 2009 the Board of Directors of the Company amended the restricted share grants to management, changing

the vesting date to January 1, 2012. On December 1, 2011 the Board again amended the restricted share grants to management revising the vesting date to January 1, 2015. Due to the immaterial amounts remaining to be expensed, the Company expensed the remaining amounts in December 2011. Related to these grants we expensed $20,962 for the year ended March 31, 2012 and $0.00 for the year ended March 31, 2013.

In January 2009, we granted 2,283,278 shares of common stock to certain managers as compensation. These shares were valued at $0.29 per share as of the January 2009 grant date and initially vested according to the following schedule: (i) 33.3% on January 1, 2010; and (ii) 8.3375% on the last calendar day of each subsequent calendar quarter, until all such shares have vested, provided; however, that such shares shall vest according to such schedule only if the officers are employed by us on such dates.  On December 8, 2009 the Board of Directors of the Company amended the restricted share grants to management, changing the vesting date to January 1, 2012. On December 1, 2011 the Board again amended the restricted share grants to management revising the vesting date to January 1, 2015. Due to the immaterial amounts remaining to be expensed, the Company expensed the remaining amounts in December 2011. Related to these grants we expensed $164,967 for the year ended March 31, 2012 and $0.00 for the year ended March 31, 2013.

In January 2009, we issued 150,000 shares of common stock to the Company’s Chief Financial Officer as compensation. The shares were valued at $0.29 per share as of the grant date and initially vested according to the following schedule: (i) 33.3% on January 1, 2010; and (ii) 8.3375% on the last calendar day of each subsequent calendar quarter, until all such shares have vested, provided; however, that such shares shall vest according to such schedule only if the Chief Financial Officer is employed by us on such dates. On December 8, 2009 the Board of Directors of the Company amended the restricted share grants to management, changing the vesting date to January 1, 2012. On December 1, 2011 the Board again amended the restricted share grants to management revising the vesting date to January 1, 2015. Due to the immaterial amounts remaining to be expensed, the Company expensed the remaining amounts in December 2011. Related to these grants we expensed $10,837 for the year ended March 31, 2012 and $0.00 for the year ended March 31, 2013.

In March 2009, we issued 3,000,000 shares of common stock to certain managers of the Company as compensation. The shares were valued at $0.11 per share as of the grant date and initially vested according to the following schedule: (i) 33.3% on January 1, 2010; and (ii) 8.3375% on the last calendar day of each subsequent calendar quarter, until all such shares have vested, provided; however, that such shares shall vest according to such schedule only if the officers are employed by us on such dates.  On December 8, 2009 the Board of Directors of the Company amended the restricted share grants to management, changing the vesting date to January 1, 2012. On December 1, 2011 the Board again amended the restricted share grants to management revising the vesting date to January 1, 2015. Due to the immaterial amounts remaining to be expensed, the Company expensed the remaining amounts in December 2011. Related to these grants we expensed $86,559 for the year ended March 31, 2012 and $0.00 for the year ended March 31, 2013.

On December 31, 2009, in connection with a private offering of $3,001,033 of convertible debt we issued 700,000 shares of restricted common stock valued at $203,000. These fees were included in the deferred financing costs in our consolidated balance sheet and were being amortized over the original term of the convertible notes using the effective interest rate method. During the twelve-month period ended March 31, 2012 we amortized $73,314 of deferred financing cost. The debt was extinguishment in June 2011; therefore, we made no related amortization during the twelve-month period ended March 31, 2013.

On March 31, 2010, in connection with a private offering of $1,750,000 of convertible debt we issued 659,000 shares of restricted common stock valued at $171,340. These fees are included in the deferred financing costs in the consolidated balance sheet as of March 31, 2010 and will be amortized over the term of the convertible notes using the effective interest rate method. During the twelve-month period ended March 31, 2012 we amortized $49,878 of deferred financing cost. The debt was extinguishment in June 2011; therefore, we made no related amortization during the twelve-month period ended March 31, 2013.

In September 2010, we issued 304,255 shares of common stock to certain managers and directors of the Company as compensation. The shares were valued at $0.30 per share as of the grant date and vested immediately for the directors; and for the managers, the initial vesting date was set to be January 1, 2012. For the year ended March 31, 2011 we expensed 100% of these grants for directors, $39,119. On December 1, 2011 the Board amended the restricted share grants to management revising the vesting date to January 1, 2015. Due to the immaterial amounts remaining to be expensed, the Company expensed the remaining amounts in December 2011. Related to these grants we expensed $29,339 for the year ended March 31, 2012 and $0.00 for the year ended March 31, 2013.

In November 2010, we issued 54,125 shares of common stock to certain managers of the Company as compensation. The shares were valued at $0.63 per share as of the grant date and the initial vesting date was set to be January 1, 2012. On December 1, 2011 the Board amended the restricted share grants to management revising the vesting date to January 1, 2015. Due to the immaterial amounts remaining to be expensed, the Company expensed the remaining amounts in December 2011. Related to these grants we expensed $22,902 for the year ended March 31, 2012 and $0.00 for the year ended March 31, 2013.

On May 19, 2010, the Company entered into an investor relations agreement with Malcolm McGuire & Associates, L.L.C. (“McGuire) and amended the agreement on June 11, 2010. These agreements require the Company to grant McGuire the option to purchase 100,000 shares of restricted common stock at an exercise price of $0.50 per share. The options vested on November 20, 2010 and may be exercised by McGuire at any time after vesting date and prior to November 20, 2015. Related to these options the Company recorded an expense of $60,854.  The agreement with McGuire also requires the Company, beginning in June 2010 and every month for a six month period, to issue 2,500 shares of the Company’s restricted common stock. The initial six-month time period was allowed to extend. The Company terminated the agreement with McGuire, effective February 29, 2012.

For the period May 2010 through March 31, 2011, McGuire received 25,000 shares of the Company’s restricted common stock, and the Company recorded an expense in the amount of $11,575. For the period April 2011 through February 29, 2012 (the date the contract was terminated), McGuire received 27,500 shares of the Company’s restricted common stock, and the Company recorded an expense in the amount of $12,463.

On May 10, 2011, former director Christopher Wilson gave notice to the Company of his intent to exercise the 705,882 options granted to him in 2009, in a cashless exercise transaction. This cashless option exercise transaction resulted in Mr. Wilson surrendering 196,722 shares; determined by the stated exercise amount of $120,000 (exercise per share price of $0.17 for the 705,882 options granted to him in 2009), divided by the value of the Company’s common stock share price on May 10, 2011 of $0.61, the date of exercise. After surrendering the 196,722 shares, Mr. Wilson received 509,160 common shares. The Company did not record any expenses related to this event.

On June 6, 2011, we issued 298,000 shares of common stock to certain managers of the Company as compensation. The shares were valued at $0.60 per share as of the grant date and the vesting date was set to be January 1, 2015. For the year ended March 31, 2012 we expensed $40,940 related to these grants and for the year ended March 31, 2013 we expensed $137,860 related to these grants.

On October 05, 2011, director Herbert Whitney gave notice to the Company of his intent to exercise 200,000 of the options granted to him in 2009, in a cashless exercise transaction. This cashless option exercise transaction resulted in Mr. Whitney surrendering 75,555 shares; determined by the stated exercise amount of $34,000 (exercise per share price of $0.17 for 200,000 of the options granted to him in 2009), divided by the value of the Company’s common stock share price on October 05, 2011 of $0.45, the date of exercise. After surrendering the 75,555 shares, Mr. Whitney received 124,445 common shares. The Company did not record any expenses related to this event.

On November 17, 2011, director Herbert Whitney gave notice to the Company of his intent to exercise 200,000 of the options granted to him in 2009, in a cashless exercise transaction. This cashless option exercise transaction resulted in Mr. Whitney surrendering 77,273 shares; determined by the stated exercise amount of $34,000 (exercise per share price of $0.17 for 200,000 of the options granted to him in 2009), divided by the value of the Company’s common stock share price on November 17, 2011 of $0.44, the date of exercise. After surrendering the 77,273 shares, Mr. Whitney received 122,727 common shares. The Company did not record any expenses related to this event.

On December 21, 2011, former director Mathijs von Houweninge gave notice to the Company of his intent to exercise 705,882 of the options granted to him in 2009, in a cashless exercise transaction. This cashless option exercise transaction resulted in Mr. Houweninge surrendering 285,714 shares; determined by the stated exercise amount of $120,000 (exercise per share price of $0.17 for the 705,882 options granted to him in 2009), divided by the value of the Company’s common stock share price on December 21, 2011 of $0.42, the date of exercise. After surrendering the 285,714 shares, Mr. Houweninge received 420,168 common shares. The Company did not record any expenses related to this event.

On December 22, 2011, director Herbert Whitney gave notice to the Company of his intent to exercise 305,882 of the options granted to him in 2009, in a cashless exercise transaction. This cashless option exercise transaction resulted in Mr. Whitney surrendering 123,810 shares; determined by the stated exercise amount of $52,000 (exercise per share price of $0.17 for 305,882 of the options granted to him in 2009), divided by the value of the Company’s common stock share

price on December 22, 2011 of $0.42, the date of exercise. After surrendering the 123,810 shares, Mr. Whitney received 182,072 common shares. The Company did not record any expenses related to this event.

As per the Merger and Acquisition on October 9, 2012, an effective change in control of the company occurred; therefore, all shares previously granted to management immediately vested. The 20,000 options issued on May 7, 2008 with an exercise price of $2.00 per share were forfeited. The 100,000 options issued on May 19, 2010 with an exercise price of $0.50 were exercised. The 705,882 options issued on May 4, 2009 with an exercise price of $0.17 were exercised.

On October 9, 2012 members of management entered into the Contribution and Rollover Agreement (the “Rollover Agreement”) with Blackwater Midstream Holdings, LLC (“BWHD”) wherein, effective immediately prior to the effective time of the Merger and Acquisition, BWHD acquired from each member of management some of the BWMS shares owned by management, in aggregate 3,108,499 common shares (the “Rollover Shares”) in exchange for an equal number of Class A Common Units of BWHD, in lieu of any Acquisition or Merger cash consideration.

As per the Merger and Acquisition on October 9, 2012, all 2009 Notes were converted at the rate of $0.40 per share into 7,502,580 common shares of BWMS’ stock.

As per the Merger and Acquisition on October 9, 2012, all 2010 Notes were converted at the rate of $0.40 per share into 4,375,000 common shares of BWMS’ stock.

After the contribution of the Rollover Shares, the conversion of the convertible notes into common shares of BWMS, and options exercised, all remaining shares of BWMS were eligible for conversion into cash at the stated merger consideration amount of $0.64 per share.

A summary of the status of BWMS’ common stock options awards is presented in the table below.

										
 	Number of
Shares	 	Weighted-Average
Exercise Price	 	Weighted-Average
Remaining Contractual Term (Years)	
 	 	 	 	 	 	
Outstanding at March 31, 2011	2,943,528		 	$	0.18		 	2.69		
Granted	—		 	—		 	—		
Exercised	(2,117,646	)	 	0.17		 	—		
Forfeited	—		 	—		 	—		
Outstanding at March 31, 2012	825,882		 	0.25		 	6.65		
Granted	—		 	—		 	—		
Exercised	(805,882	)	 	0.21		 	—		
Forfeited	(20,000	)	 	2.00		 	—		
Outstanding at March 31, 2013	—		 	$	—		 	—		

12.       CONCENTRATION OF RISK
 
Concentrations of customers in the terminalling industry may impact our overall exposure to credit risk, in that these customers may be similarly affected by changes in economic or other conditions. We market and sell our services to a broad base of customers and perform ongoing credit evaluations of our customers. 

As of March 31, 2013, the Company maintained its cash balances at one financial institution. Balances are insured by the Federal Deposit Insurance Corporation (the “FDIC”) up to $250,000 per institution. Occasionally, our cash deposits may exceed the FDIC insurable limit.

As of April 2013, one customer accounted for approximately 21% of total monthly storage revenue. In addition, for the year ended March 31, 2013, approximately 80% of our revenues were derived from five major customers. Our largest customer accounted for approximately 24% of our total 2012 revenues. Each of the other four customers accounted for 8% or more of our 2012 revenues.

13.       OTHER INCOME

In March 2013 the Company recorded a net gain of approximately $47,500 related to the Company’s award of a Louisiana incentive program related to employment increases at the Westwego Terminal. These funds are expected to be received during the fourth quarter of 2013. As of March 31, 2013, receivables related to these awards were recorded as Receivables-other in the consolidated balance sheet.

14.       INCOME TAXES

Earnings before taxes on income and details of the provision for taxes on income for the years ended March 31, 2013 and 2012 were as follows; only for the activities of Blackwater Investments, Inc and Blackwater Midstream Corp. and its subsidiaries. The activities for Blackwater Midstream Holdings LLC are not reported here as any federal and state income taxes due are the responsibility of the LLC’s members:

													
 	Successor	 	 	Predecessor	
 	for the Period	 	 	for the Year	 	for the Year	
 	October 10, 2012 to	 	 	Ended	 	April 1, 2012 to	
 	March 31, 2013	 	 	March 31, 2012	 	October 9, 2012	
Federal income tax expense (benefit) at statutory rate	$	(1,774,868	)	 	 	$	1,713,547		 	$	(1,232,050	)	
State and local tax expense (benefit)	(261,010	)	 	 	251,992		 	(181,184	)	
Increase (decrease) in valuation allowance	(2,725,000	)	 	 	(1,968,762	)	 	1,413,233		
Other	—		 	 	3,222		 	—		
 	 	 	 			 	 	
Income tax benefit	(4,760,878	)	 	 	—		 	—		
Tax provision from discontinued operations	(46,844	)	 	 	—		 	—		
Income tax benefit from continuing operations	$	(4,807,722	)	 	 	$	—		 	$	—		
 	 	 	 	 	 	 	
The income tax provision related to continuing operations consisted of the following:	
 	Successor	 	 	Predecessor	
 	for the Period	 	 	for the Year	 	for the Year	
 	October 10, 2012	 	 	Ended	 	April 1, 2012 to	
 	March 31, 2013	 	 	March 31, 2012	 	October 9, 2012	
 	 	 	 	 	 	 	
Current	$	—		 	 	$	—		 	$	—		
Deferred benefit	4,807,722		 	 	—		 	—		
 	 	 	 	 	 	 	
Effective tax rate	90	%	 	 	—	%	 	—	%	

Prior to the period ended March 31, 2013, the Company recorded a valuation allowance against its net deferred tax asset. The valuation reserve was reversed in full during the year ended March 31, 2013. The primary difference between the statutory rate and the effective tax rate is the change in the valuation allowance during the respective periods.

The Company follows the provisions of ASC 740 “Income Taxes”, which provides for recognition of deferred tax assets and liabilities for deductible temporary timing differences, operating loss carryforwards, statutory depletion carryforwards and tax credit carryforwards net of a valuation allowance for any asset for which it is more likely than not will not be realized in the Company’s tax return. An analysis of the Company’s deferred taxes follows:

	
								
 	2013	 	2012	
Deferred tax liabilities	 	 	 	
Fixed assets	$	6,623,441		 	$	2,534,792		
Intangible assets	4,757,913		 	9,696		
Discount on convertible loan	—		 	1,702,724		
 	11,381,354		 	4,247,212		
Deferred tax assets	 		 	 		
Stock-based compensation	—		 	962,920		
Accrued income and expenses	569,406		 	55,415		
Charitable contributions	3,416		 	1,728		
Derivative liability	—		 	1,372,993		
Net operating loss carryforwards	5,099,601		 	3,165,924		
 	5,672,423		 	5,558,980		
Valuation allowance	—		 	(1,311,768	)	
Deferred income taxes, net	$	(5,708,931	)	 	$	—		

At March 31, 2013, we had approximately $13.1 million of operating loss carryforwards. The net operating loss carryfowards would begin to expire in 2028.  Some of our net operating losses may be limited by section 382 of the Internal Revenue Code due to the change in control that occurred in March of 2008, and another change in control that occurred in October 2012. ASC 740 “Income Taxes” specifies that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion of the deferred tax asset will be realized. Accounting rules require that more restrictive criteria be used to consider the book value of deferred assets in instances in which a company has not demonstrated an ability to generate taxable income.  Realization of the deferred tax asset is dependent on generating sufficient taxable income prior to expiration of any net operating loss carryforwards.  Because there was some uncertainty as to the Company’s ability to generate future taxable income, net operating loss carryforwards were fully reserved for the fiscal year ended March 31, 2012. Based on projections of future taxable income and the existence of deferred tax liabilities, the Company has determined that a valuation allowance is no longer required as of March 31, 2013. The reversal of the valuation allowance results in a decrease of income tax expense of $1,311,767 in the fiscal year ended March 31, 2013.

Management assessed its various income tax positions and this assessment resulted in no adjustment to the tax asset or liability. The preparation of our various tax returns requires the use of estimates for federal and state income tax purposes. These estimates may be subjected to review by the respective taxing authorities. A revision, if any, to an estimate may result in an assessment of additional taxes, penalties and interest. At this time, a range in which our estimates may change is not quantifiable and a change, if any, is not expected to be material. We will account for interest and penalties relating to uncertain tax provisions in the current period income statement, as necessary. We have not recorded any adjustment to our financial statements as a result of this interpretation.  We have tax years 2009 through 2012 remaining subject to examination by various federal and state tax jurisdictions, as applicable.

15.       SUBSEQUENT EVENTS

Management has evaluated subsequent events through December 10, 2013

On July 10, 2013, BWNO entered into a $2,800,000 Non-Revolving Line of Credit Note and various other credit, guaranty and security agreements with JPM to finance the construction of two storage tanks and rail improvements at the Westwego, LA location.

Additionally, on July 10, 2013, the Company entered into a Continuing Pledge of Collateral Mortgage Note, Continuing Security Agreement, Continuing Guaranty, and a Subordination Agreement with JPM related to Blackwater Harvey, L.L.C.’s (“BWHV”) Non-Revolving Line of Credit Note in the amount of $5,800,000 to finance BWHV’s acquisition and renovation of a former industrial site in Harvey, LA to develop into a new bulk liquid storage terminal. BWHV is wholly-owned by Blackwater Midstream Holdings LLC.

On July 10, 2013, Blackwater Harvey, L.L.C. acquired and purchased from Chemtura Corporation approximately 56 acres of property and improvements located at 1805 Fourth Street in Harvey, LA for $2,500,000. The land is adjacent to the Mississippi River and the assets include dormant storage tanks, unoccupied buildings, a barge dock and other

improvements. As the site has not been in use for many years, BWHV intends to clear the site of debris, demolish some assets, improve other assets and build new assets to develop the site into a new bulk liquid storage terminal.

The Harvey assets when purchased did not include any employees, customer contracts, permits, licenses, offices, procedures, systems, or processes that had the ability to produce outputs; thus this asset purchase did not meet the definition of a business as per ASC Topic 805-10-55, paragraphs 4 through 9.

On July 18, 2013 the Managers of BWHD approved agreements named, “The Sale and Assignment of Class A Units in Blackwater Midstream Holdings LLC (“Sale of Class A Units”). The agreements, effective July 18, 2013, are between Fund V and Michael Suder (“Suder”), and between Fund V and Dale Chatagnier (“Chatagnier”). As per the Fund V and Suder Sale of Class A Units agreement, Fund V sold, transferred, conveyed and assigned 390,625 of its BWHD’s units and all commensurate rights to Suder for the consideration of $250,000. As per the Fund V and Chatagnier Sale of Class A Units agreement, Fund V sold, transferred, conveyed and assigned 78,125 of its BWHD’s units and all commensurate rights to Chatagnier for the consideration of $50,000.

On October 7, 2013, Blackwater New Orleans, LLC entered into a $12,000,000 Term Note, maturity date of December 31, 2013, along with the Ninth Amendment to the Credit Agreement; the Second Amendment to the Collateral Mortgage, Assignment of Leases and Rents and Security Agreement; and an Allonge to the Collateral Mortgage Note.
Proceeds of the note were used to pay (i) $9,315,000 of principal and $2,685,000 in accrued interest on the $27,000,000 promissory note issued by Blackwater Investments, Inc. to Blackwater Midstream Holdings LLC and (ii) $10,011,111 of principal and $1,988,889 in accrued interest on the $20,000,000 convertible promissory note issued by Blackwater Midstream Holdings LLC to ArcLight Energy Partners Fund V, L.P. (the “Fund V Loan”).

Additionally, on October 7, 2013, AL Blackwater, LLC, a wholly-owned entity of ArcLight Energy Partners Fund V, L.P., entered into a $30,000,000 a one year Credit Agreement with Barclays Bank PLC. Proceeds of the loan were used to pay certain fees and expenses, to pay Blackwater Midstream Holdings LLC’s remaining $9,988,889 of principal towards the Fund V Loan, and to partially reimburse ArcLight Energy Partners Fund V, L.P. for its initial equity contribution into Blackwater Midstream Holdings LLC.

On December 10, 2013, Blackwater Midstream Holdings LLC entered into an Agreement and Plan of Merger by and among AL Blackwater, LLC ("ALB"), Blackwater Midstream Holdings LLC, ArcLight Capital Partners, LLC, American Midstream Partners, LP (“AMID”) and Blackwater Merger Sub, LLC (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, Blackwater will merge with Merger Sub, with Blackwater continuing as the surviving entity and an indirect wholly owned subsidiary of AMID (the “Merger”). The aggregate purchase price for the merger is approximately $60 million, subject to certain purchase price adjustments (the “Consideration”), which will be paid in a combination of cash and approximately $3 million of Partnership common units (the “Rollover Units”).  The aggregate Consideration includes the payoff of existing indebtedness of Blackwater.

In addition to the Consideration, AMID has agreed to an earnout that is payable to ALB if, at any time during the five years following the consummation of the Merger, Blackwater Harvey, LLC, a Delaware limited liability company and a wholly owned subsidiary of Blackwater (“BW Harvey”), exceeds a trailing twelve month “EBITDA” of $5,000,000 (the “Target”). In the event BW Harvey achieves the Target, the Partnership will pay ALB the lesser of (i) $5,000,000 and (ii) 50% of eight times BW Harvey’s trailing-twelve month “EBITDA” less its capital costs.

BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	
		
 	Page	
Unaudited consolidated balance sheets as of September 30, 2013 and March 31, 2013	3	
Unaudited consolidated statements of operations for the three and six months ended September 30, 2013 and 2012	4	
Unaudited consolidated statement of stockholder's and members' equity for the six months ended September 30, 2013 and 2012	5	
Unaudited consolidated statements of cash flows for the six months ended September 30, 2013 and 2012	6	
Notes to unaudited consolidated financial statements	7	

BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
CONSOLIDATED BALANCE SHEETS
(unaudited)

											
 	 	 	 	September 30, 2013	 	March 31, 2013	
ASSETS:	 	 	 	
 	Current assets	 	 	 	
 	 	Cash and cash equivalents	$	2,397,260		 	$	306,528		
 	 	Restricted cash	165,127		 	165,002		
 	 	Receivables-trade	611,843		 	423,978		
 	 	Receivables-other	42,843		 	47,477		
 	 	Prepaid expenses and other current assets	488,528		 	386,841		
 	 	Current assets held for sale	105,471		 	158,678		
 	 	 	Total current assets	3,811,072		 	1,488,504		
 	Property and equipment, net	36,127,232		 	30,515,337		
 	Intangible assets, net	4,350,512		 	7,679,561		
 	Goodwill	16,917,602		 	16,917,602		
 	Deferred tax asset	5,315,029		 	5,246,788		
 	Noncurrent assets held for sale	2,153,613		 	2,229,709		
 	 	Total assets	$	68,675,060		 	$	64,077,501		
 	 	 	 	
LIABILITIES AND MEMBERS' EQUITY:	 	 	 	
 	Current liabilities	 	 	 	
 	 	Accounts payable	$	651,193		 	$	902,297		
 	 	Accounts payable-related parties	1,682		 	19,216		
 	 	Accrued liabilities	2,296,535		 	1,083,576		
 	 	Accrued payroll	24,452		 	243,055		
 	 	Deferred revenue	517,630		 	351,422		
 	 	Current portion of convertible promissory note to affiliate	20,000,000		 	20,000,000		
 	 	Current portion of long-term bank loans	7,123,921		 	1,957,040		
 	 	Current liability held for sale	368,375		 	381,360		
 	 	 	Total current liabilities	30,983,788		 	24,937,966		
 	Long-term liabilities	 	 	 	
 	 	Bank loans	3,852,873		 	3,721,581		
 	 	Deferred tax liability	10,713,617		 	11,381,354		
 	 	Long-term liability held for sale	986,542		 	1,133,444		
 	 	 	Total long-term liabilities	15,553,032		 	16,236,379		
 	 	 	Total liabilities	46,536,820		 	41,174,345		
 	Commitments and contingencies	 	 	 	
 	 	 	 	 	
 	Members' equity	22,138,240		 	22,903,156		
 	 	 	Total liabilities and members' equity	$	68,675,060		 	$	64,077,501		

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

  BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	
																			
 	 	Successor	 	 	Predecessor	 	Successor	 	 	Predecessor	
 	 	Three Months ended September 30,	 	Six Months ended September 30,	
 	 	2013	 	 	2012	 	2013	 	 	2012	
REVENUE	 	 	 	 	 	 	 	 	 	
 	Storage	$	2,748,875		 	 	$	2,099,008		 	$	5,182,877		 	 	$	4,212,043		
 	Packaging services	246,894		 	 	256,806		 	665,926		 	 	576,540		
 	Excess through-put services	23,786		 	 	—		 	203,773		 	 	174,282		
 	Other services	438,316		 	 	129,484		 	847,882		 	 	213,660		
 	Total revenue	3,457,871		 	 	2,485,298		 	6,900,458		 	 	5,176,525		
COSTS AND EXPENSES	 	 	 	 	 	 	 	 	 	
 	Operating expenses	630,307		 	 	557,966		 	1,382,645		 	 	1,156,414		
 	Depreciation and amortization	1,422,087		 	 	165,683		 	3,884,237		 	 	328,435		
 	Selling, general and administrative expenses	1,187,508		 	 	732,283		 	1,883,429		 	 	1,614,557		
 	Loss on disposal of assets	—		 	 	19,363		 	—		 	 	19,363		
 	Total costs and expenses	3,239,902		 	 	1,475,295		 	7,150,311		 	 	3,118,769		
 	Operating income (loss)	217,969		 	 	1,010,003		 	(249,853	)	 	 	2,057,756		
OTHER (EXPENSE)/INCOME	 	 	 	 	 	 	 	 	 	
 	Net interest expense	(553,122	)	 	 	(377,722	)	 	(1,084,236	)	 	 	(669,145	)	
 	Gain (loss) on change in fair market value of derivative liabilities	—		 	 	254,502		 	—		 	 	(747,470	)	
 	Other income and expenses, net	(655	)	 	 	10		 	42,843		 	 	10		
 	Income (loss) from continuing operations before taxes	(335,808	)	 	 	886,793		 	(1,291,246	)	 	 	641,151		
 	Loss from discontinued operations, net of tax	(52,764	)	 	 	(82,629	)	 	(127,885	)	 	 	(207,756	)	
 	Income tax benefit (expense)	214,213		 	 	(345,849	)	 	654,215		 	 	(241,032	)	
 	Net income (loss)	$	(174,359	)	 	 	$	458,315		 	$	(764,916	)	 	 	$	192,363		

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

 
BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY AND
MEMBERS' EQUITY
(unaudited)

	
																				
 	 	Predecessor Blackwater Midstream Corp. Common Stock	 	 	 	 	
 	 	Number of Common Shares	 	Par Value $.001	 	Additional Paid-in-Capital	 	Accumulated Deficit	 	Total	
Balance, March 31, 2012	56,476,186		 	$	56,476		 	$	8,398,943		 	$	(1,407,575	)	 	$	7,047,844		
 	Shares issued for services	—		 	—		 	12,533		 	—		 	12,533		
 	Net loss	—		 	—		 	—		 	(265,952	)	 	(265,952	)	
Balance, June 30, 2012	56,476,186		 	56,476		 	8,411,476		 	(1,673,527	)	 	6,794,425		
 	Shares issued for services	—		 	—		 	12,533		 	—		 	12,533		
 	Net income	—		 	—		 	—		 	458,315		 	458,315		
Balance, September 30, 2012	56,476,186		 	56,476		 	8,424,009		 	(1,215,212	)	 	7,265,273		
 	 	 	 	 	 	 	 	 	 	 	
 	 	Successor Blackwater Midstream Holdings LLC	 	 	 	 	
Members' Equity, March 31, 2013	 	 	 	 	 	 	 	 	$	22,903,156		
 	Net loss	 	 	 	 	 	 	 	 	(590,557	)	
Members' Equity, June 30, 2013	 	 	 	 	 	 	 	 	22,312,599		
 	Net loss	 	 	 	 	 	 	 	 	(174,359	)	
Members' Equity, September 30, 2013	 	 	 	 	 	 	 	 	$	22,138,240		

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

 
BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

											
 	 	 	Successor	 	 	Predecessor	
 	 	 	Six months ended September 30,	
 	 	 	2013	 	 	2012	
Cash flows from operating activities	 	 	 	 	
 	Net income (loss)	$	(764,916	)	 	 	$	192,363		
 	Adjustments to reconcile net loss to net cash provided by operating activities:	 	 	 	 	
 	 	Depreciation and amortization	3,979,645		 	 	553,773		
 	 	Loss on disposal of assets, net	—		 	 	19,362		
 	 	Amortization of convertible loan discounts	—		 	 	415,535		
 	 	Net gain on change in fair market value of derivative liabilities	—		 	 	747,470		
 	 	Stock based compensation	—		 	 	25,066		
 	 	Deferred tax expense (benefit), net	(735,978	)	 	 	108,204		
 	Changes in operating assets and liabilities:	 	 	 	 	
 	 	Accounts receivable - trade	(169,768	)	 	 	32,404		
 	 	Accounts receivable - other	4,634		 	 	50,567		
 	 	Prepaid expenses	(75,109	)	 	 	(28,838	)	
 	 	Inventory	(11,528	)	 	 	(27,769	)	
 	 	Deferred revenue	163,908		 	 	71,017		
 	 	Accounts payable and accruals	648,464		 	 	(988,532	)	
 	 	Net cash provided by operating activities	3,039,352		 	 	1,170,622		
Cash flows from investing activities:	 	 	 	 	
 	Proceeds from restricted cash	(125	)	 	 	—		
 	Purchase of property, plant and equipment	(6,081,082	)	 	 	(2,550,461	)	
 	 	Net cash flows used in investing activities	(6,081,207	)	 	 	(2,550,461	)	
Cash flows from financing activities:	 	 	 	 	
 	Proceeds from bank loans	6,200,242		 	 	2,387,110		
 	Payment on bank loans	(1,071,752	)	 	 	(666,932	)	
 	 	Net cash flows provided by financing activities	5,128,490		 	 	1,720,178		
 	 	Net increase in cash and cash equivalents	2,086,635		 	 	340,339		
Cash and cash equivalents at beginning of period	312,284		 	 	190,334		
Cash and cash equivalents at end of period	$	2,398,919		 	 	$	530,673		
 	 	 	 	 	 	 	
Supplemental cash flow disclosures	 	 	 	 	
 	Cash paid for interest, net of amounts capitalized	$	118,105		 	 	$	290,006		
 	 	 	 	 	 	 	
Non-cash investing and financing activities	 	 	 	 	
 	Construction in process included in accounts payable	$	89,348		 	 	$	363,942		

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

BLACKWATER MIDSTREAM HOLDINGS LLC
(FORMERLY BLACKWATER MIDSTREAM CORP.)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

1.          BASIS OF PRESENTATION.
 
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the US (US GAAP) for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. The accompanying consolidated financial statements at September 30, 2013 and December 31, 2012 and for the three and six months ended September 30, 2013 (Successor) and the three and six months ended September 30, 2012 (Predecessor) contain all normally recurring adjustments considered necessary for a fair presentation of our financial position, results of operations, cash flows and shareholders’ equity for such periods. Operating results for the 2013 interim periods are not necessarily indicative of the results that may be expected for the year ending March 31, 2014.

These financial statements should be read in conjunction with the March 31, 2013 audited financial statements and notes thereto.  The balance sheet at March 31, 2013 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by accepted accounting principles for complete financial statements.  Certain items in 2012 have been reclassified to conform to the 2013 financial statement presentation generally accepted in the United States of America.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s audited financial statements for the year ended March 31, 2013.  The results of operations for the six-month period ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year.

RECLASSIFICATIONS

We have reclassified certain prior-year amounts to conform to the current year’s presentation.

2.     ASSETS HELD FOR SALE & DISCONTINUED OPERATIONS

In May 2013, the Company entered into a one-year exclusive listing agreement with a Maryland commercial real estate broker to market the Maryland Terminal: its on-going business operations, its customer contracts, its assets and other intangibles. To date, we have not entered into a letter of intent to purchase with an interested party. However, we have prepared these financial reports showing the Maryland Terminal’s operating activities as discontinued operations and the assets and liabilities as held for sale.

																		
The following table summarizes the income (loss) from discontinued operations reported in the consolidated statement of operations:	
 	Successor	 	 	Predecessor	 	Successor	 	 	Predecessor	
 	Three Months ended September 30,	 	Six Months ended September 30,	
 	2013	 	 	2012	 	2013	 	 	2012	
Revenue	$	39,814		 	 	$	74,439		 	$	84,583		 	 	$	102,228		
Cost of revenues	26,057		 	 	40,880		 	61,622		 	 	86,501		
Depreciation and amortization expense	43,608		 	 	112,670		 	95,408		 	 	225,338		
Selling, general and administrative expenses	40,512		 	 	39,178		 	105,364		 	 	95,136		
Operating Loss	(70,363	)	 	 	(118,289	)	 	(177,811	)	 	 	(304,747	)	
 	 	 	 	 	 	 	 	 	 	
Net interest expense	(16,135	)	 	 	(17,168	)	 	(31,837	)	 	 	(35,837	)	
Income tax benefit	33,734		 	 	52,828		 	81,763		 	 	132,828		
Loss from discontinued operations, net of tax	$	(52,764	)	 	 	$	(82,629	)	 	$	(127,885	)	 	 	$	(207,756	)	

	
									
A summarized report of the assets and liabilities of Asset Held for Sale (the Blackwater Maryland, LLC Terminal) is as follows:	
 	Successor	 	 	Successor	
 	as of	 	 	as of	
 	September 30, 2013	 	 	March 31, 2013	
Cash	$	1,659		 	 	$	5,756		
Receivables	13,700		 	 	31,797		
Intangible assets, net	—		 	 	15,964		
Prepaid expenses and other current assets	90,112		 	 	105,161		
Property, plant, equipment, net	2,153,613		 	 	2,229,709		
Total assets of asset held for sale	2,259,084		 	 	2,388,387		
 	 	 	 	 	
Accounts payable	19,323		 	 	7,227		
Current bank debt	349,052		 	 	371,833		
Long-term bank debt	986,542		 	 	1,133,444		
Deferred revenue	—		 	 	2,300		
Total liabilities of asset held for sale	$	1,354,917		 	 	$	1,514,804		

3.       HARVEY, LOUISIANA SITE PURCHASE

On July 10, 2013, Blackwater Harvey, L.L.C. (“BWHV”) acquired and purchased from Chemtura Corporation approximately 56 acres of property and improvements located at 1805 Fourth Street in Harvey, LA for $2,500,000. The land is adjacent to the Mississippi River and the assets include dormant storage tanks, unoccupied buildings, a barge dock and other improvements (“the Harvey assets”). As the site has not been in use for many years, BWHV intends to clear the site of debris, demolish some assets, improve other assets and build new assets to develop the site into a new bulk liquid storage terminal.

The Harvey assets when purchased did not include any employees, customer contracts, permits, licenses, offices, procedures, systems, or processes that had the ability to produce outputs; thus this asset purchase did not meet the definition of a business as per ASC Topic 805-10-55, paragraphs 4 through 9.

4.      LONG-TERM DEBT

Summary of current and long-term debt at September 30, 2013 and March 31, 2013:

	
								
 	September 30, 2013	 	March 31, 2013	
The BWNO October 2010 note with JPM in the amount of $4,695,456 bears interest at the annual rate of 1.50% above the Prime Rate, subject to certain minimum rate requirements.  The October 2010 Note provides for consecutive monthly installments of principal in the amount of $97,822, plus interest, commencing October 31, 2010 and continuing until maturity on September 30, 2014; along with related interest.	$	1,173,864		 	$	1,760,796		
The BWMD January 2012 term loan with JPM in the amount of $1,600,000 bears interest at the annual fixed rate of 4.50%. Beginning on July 21, 2012 and continuing on the last day of each calendar month thereafter, BWMD will pay monthly principal installments of $26,667, plus interest. All unpaid principal and accrued and unpaid interest is finally due and payable on July 21, 2017.	1,199,997		 	1,360,000		
The BWGA February 2012 term loan with JPM in the amount of $1,380,000 bears interest at the annual fixed rate of 4.50%. Beginning on October 31, 2012 and continuing on the last day of each calendar month thereafter, BWGA will pay monthly principal installments of $23,000, plus interest. All unpaid principal and accrued and unpaid interest is finally due and payable on August 31, 2017.	1,103,847		 	1,242,000		
The BWNO June 2012 term loan with JPM in the amount of $2,300,000 bears interest at the JPM CB Prime Floating interest rate. Beginning on January 31, 2013 and continuing on the last day of each calendar month thereafter, BWNO will pay monthly principal installments of principal and interest. All unpaid principal and accrued and unpaid interest is finally due and payable on December 31, 2017. In November 2012, this term note was increased to the amount of $2,800,000 and revised with principal payment of approximately $46,667, plus interest, commencing on June 30, 2013 and continuing on the last day of each calendar month thereafter. All unpaid principal and accrued unpaid interest is finally due and payable on May 31, 2018. As of September 30, 2013, $2,613,176 had been advanced on this loan.	2,613,176		 	2,728,760		
The BWNO March 2013 term loan with JPM in the amount of $1,348,000 bears interest at the JPM CB Prime Floating interest rate. Beginning on October 8, 2013 and continuing on the 8th day of each calendar month thereafter BWNO will pay monthly principal installments of approximately $22,467, plus interest. All unpaid principal and accrued and unpaid interest is finally due and payable on September 8, 2018. As of September 30, 2013, $1,348,000 had been advanced on this loan.	1,348,000		 	92,342		
The BWHD October 9, 2012 convertible promissory note with its affiliate, ArcLight Energy Partners Fund V, L.P., in the amount of $20,000,000 bears interest at the fixed annual rate of 10%. The principal and all accrued interest shall be payable on the maturity date of October 9, 2013.	20,000,000		 	20,000,000		
The BWNO July 2013 term loan with JPM in the amount of $2,800,000 bears interest at the JPM CB Prime Floating interest rate. Beginning on August 10, 2013 and continuing on the 10th day of each calendar month thereafter BWNO will pay monthly interest installments. All unpaid principal and accrued and unpaid interest is finally due and payable on July 10, 2014. As of September 30, 2013, $1,298,409 had been advanced on this loan.
	1,298,409		 	—		
The BWHV July 2013 term loan with JPM in the amount of $5,800,000 bears interest at the JPM CB Prime Floating interest rate. Beginning on August 10, 2013 and continuing on the 10th day of each calendar month thereafter BWHV will pay monthly interest installments. All unpaid principal and accrued and unpaid interest is finally due and payable on July 10, 2014. As of September 30, 2013, $3,575,095 had been advanced on this loan.	3,575,095		 	—		
Total debt	32,312,388		 	27,183,898		
Less current maturities	(27,472,973	)	 	(22,328,873	)	
Total debt net of current maturities	4,839,415		 	4,855,025		
Less asset held for sale	(986,542	)	 	(1,133,444	)	
Total debt net of current maturities and asset held for sale	$	3,852,873		 	$	3,721,581		

5.       INCOME TAXES

The Company’s provision for taxes on income varied from the statutory income tax rate for the quarter and six-months ended September 30, 2013 and 2012 due to the following:

																
 	Three months ended September 30,	 	Six months ended September 30,	
 	2013	 	2012	 	2013	 	2012	
Federal income tax at statutory rate	$	(143,584	)	 	$	255,454		 	$	(510,243	)	 	$	102,193		
State and local taxes	(21,115	)	 	37,567		 	(75,036	)	 	15,028		
Income not subject to corporate-level tax	(84,718	)	 	—	 	(152,247	)	 	—	
Other	937		 	—		 	1,547		 	(9,017	)	
Income tax expense (benefit)	(248,480	)	 	293,021		 	(735,979	)	 	108,204		
Tax benefit from discontinued operations	33,734		 	52,828		 	81,763		 	132,828		
Income tax expense (benefit) from continuing operations	$	(214,746	)	 	$	345,849		 	$	(654,216	)	 	$	241,032		

The income tax provision related to continuing operations consist of the following:

	
																
 	Three months ended September 30,	 	Six months ended September 30,	
 	2013	 	2012	 	2013	 	2012	
Current	$	—		 	$	—		 	$	—		 	$	—		
Deferred benefit (expense)	214,746		 	(345,849	)	 	654,216		 	(241,032	)	
 	 	 	 	 	 	 	 	
Effective rate	64	%	 	39	%	 	51	%	 	38	%	

Our effective tax rate for the periods ended September 2013 were higher than the statutory rate due to the inclusion in the financial statements of income of the parent company, which is not taxed at the corporate level.

6.       SUBSEQUENT EVENTS

Management has evaluated subsequent events through December 10, 2013.

On October 7, 2013, Blackwater New Orleans, LLC entered into a $12,000,000 Term Note, maturity date of December 31, 2013; along with the Ninth Amendment to the Credit Agreement; the Second Amendment to the Collateral Mortgage, Assignment of Leases and Rents and Security Agreement; and an Allonge to the Collateral Mortgage Note. Proceeds of the note were used to pay (i) $9,315,000 of principal and $2,685,000 in accrued interest on the $27,000,000 promissory note issued by Blackwater Investments, Inc. to Blackwater Midstream Holdings LLC and (ii) $10,011,111 of principal and $1,988,889 in accrued interest on the $20,000,000 convertible promissory note issued by Blackwater Midstream Holdings LLC to ArcLight Energy Partners Fund V, L.P. (the “Fund V Loan”).

Additionally, on October 7, 2013, AL Blackwater, LLC, a wholly-owned entity of ArcLight Energy Partners Fund V, L.P., entered into a $30,000,000 one year Credit Agreement with Barclays Bank PLC. Proceeds of the loan were used to pay certain fees and expenses, to pay Blackwater Midstream Holdings LLC’s remaining $9,988,889 of principal towards the Fund V Loan, and to partially reimburse ArcLight Energy Partners Fund V, L.P. for its initial equity contribution into Blackwater Midstream Holdings LLC.

On December 10, 2013, Blackwater Midstream Holdings LLC entered into an Agreement and Plan of Merger by and among AL Blackwater, LLC ("ALB"), Blackwater Midstream Holdings LLC, ArcLight Capital Partners, LLC, American Midstream Partners, LP (“AMID”) and Blackwater Merger Sub, LLC (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, Blackwater will merge with Merger Sub, with Blackwater continuing as the surviving entity and an indirect wholly owned subsidiary of AMID (the “Merger”). The aggregate purchase price for the merger is approximately $60 million, subject to certain purchase price adjustments (the “Consideration”), which will be paid in a combination of cash and approximately $3 million of Partnership common units (the “Rollover Units”).  The aggregate Consideration includes the payoff of existing indebtedness of Blackwater. In addition to the Consideration, AMID has

agreed to an earnout that is payable to ALB if, at any time during the five years following the consummation of the Merger, Blackwater Harvey, LLC, a Delaware limited liability company and a wholly owned subsidiary of Blackwater (“BW Harvey”), exceeds a trailing twelve month “EBITDA” of $5,000,000 (the “Target”). In the event BW Harvey achieves the Target, the Partnership will pay ALB the lesser of (i) $5,000,000 and (ii) 50% of eight times BW Harvey’s trailing-twelve month “EBITDA” less its capital costs.

Exhibit 99.4

Introduction to the Unaudited Pro forma
Condensed Consolidated Financial Statements of American Midstream Partners, LP

References to we, us or our refer to American Midstream Partners, LP and its consolidated subsidiaries (the “Partnership”). On December 10, 2013, the Partnership entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among AL Blackwater, LLC ("ALB"), Blackwater Midstream Holdings LLC, the Partnership and Blackwater Merger Sub, LLC providing for the acquisition by the Partnership of Blackwater Midstream Holdings LLC (“Blackwater”), a developer and operator of petroleum, agricultural and chemical liquid terminal storage facilities, from ArcLight Capital Partners ("ArcLight"). The aggregate purchase price for the merger is approximately $60 million, subject to certain purchase price adjustments (the “Consideration”), which will be paid in a combination of cash and approximately $3 million of Partnership common units (the “Rollover Units”).  The aggregate Consideration includes the payoff of existing indebtedness of Blackwater.

The acquisition includes Blackwater’s three operating terminal sites located in Westwego, Louisiana; Brunswick, Georgia; and Salisbury, Maryland. The sites are multimodal, with access to deepwater dock, barge, rail and truck transportation. The transaction also includes a brownfield development opportunity in Harvey, Louisiana, located near Blackwater’s Westwego terminal. ArcLight is an affiliate of High Point Infrastructure Partners, LLC, which owns a 90% interest in American Midstream GP, LLC, our general partner.

The unaudited pro forma condensed consolidated financial statements present the impact of the Blackwater acquisition on our results of operations and financial position.

The unaudited pro forma condensed consolidated balance sheet as of September 30, 2013 is based upon the historical consolidated financial statements of the Partnership and the historical financial statements of Blackwater. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2013 are based upon the historical consolidated financial statements of the Partnership, the High Point System, which was acquired effective April 15, 2013, and Blackwater, which were derived by combining Blackwater's historical unaudited financial statements for the three month period ended March 31, 2013 and the six month period ended September 30, 2013. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2012 are based upon the historical consolidated financial statements of the Partnership; the Chatom System, which was acquired effective July 1, 2012; the High Point System, which was acquired effective April 15, 2013; and Blackwater, which includes the year ended March 31, 2013.

As Blackwater has a fiscal year end of March 31, which is less than 93 days from the Partnership's year end of December 31, the Blackwater historical financial statements were not adjusted to account for this difference in fiscal year ends pursuant to Regulation S-X 11-2(c)(3). The unaudited pro forma condensed consolidated balance sheet as of September 30, 2013 has been prepared as if Blackwater were acquired on that date. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2013 and year ended December 31, 2012 have been prepared as if Blackwater were acquired on January 1, 2012. The unaudited pro forma condensed consolidated statements of operations have been prepared based on the assumption that the Partnership will continue to be treated as a partnership for U.S. federal and state income tax purposes and therefore will not be subject to U.S. federal income taxes or state income taxes with the exception of certain subsidiaries of Blackwater, which are treated as corporations for U.S. federal and state income tax purposes and subject to U.S. federal and state income taxes. However, the unaudited pro forma condensed consolidated statements of operations have been prepared based on those subsidiaries having, as of the year ending March 31, 2013, a consolidated net operating loss for federal tax purposes of approximately $13 million, which may be used, subject to certain limitations, to offset the taxable income of those subsidiaries. The unaudited pro forma condensed consolidated statement of operations have also been prepared based on certain pro forma adjustments, as described in Note 2 - Pro forma adjustments.

The following unaudited pro forma condensed consolidated statement of operations are qualified in their entirety by reference to and should be read in conjunction with such historical financial statements and related notes contained in those reports: (i) the Partnership's unaudited historical consolidated financial statements set forth in its Quarterly Report on Form 10-Q as of and for the three and nine months ended September 30, 2013, as filed with the Securities and Exchange Commission (“SEC”); (ii) the Partnership's audited historical consolidated financial statements set forth in its Annual Report on Form 10-K and related Form 8-K/A as of and for the year ended December 31, 2012 as filed with the SEC; (iii) Chatom Systems' audited historical financial statements set forth in Exhibit 99.1 of the Current Report on Form 8-K/A filed December 19, 2012 as of and for the two years ended December 31, 2011; (iv) High Point Systems' audited historical financial statements set forth in Exhibit 99.1 of the Current Report on Form 8-K/A filed June 28, 2013 as of and for the two years ended December 31, 2012; and (v) Blackwater's audited historical financial statements set forth in Exhibit 99.2 and unaudited interim historical financial statements set forth Exhibit 99.3 of this Current Report on Form 8-K.

The pro forma adjustments reflected in the unaudited pro forma condensed consolidated statement of operations are based upon currently available information and certain assumptions and estimates; therefore, the actual effects of these transactions will differ from the pro forma adjustments. However, the Partnership's management considers the applied estimates and assumptions to provide a reasonable

basis for the presentation of the significant effects of certain transactions that are expected to have a continuing impact on the Partnership. In addition, the Partnership's management considers the pro forma adjustments to be factually supportable and to appropriately represent the expected impact of items that are directly attributable to the acquisition of Blackwater by the Partnership.

The unaudited pro forma condensed consolidated statement of operations is not necessarily indicative of the results that would have occurred if the Partnership had acquired Blackwater or the High Point and Chatom Systems on the dates indicated nor are they indicative of the future operating results of the Partnership.

AMERICAN MIDSTREAM PARTNERS, LP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2013
(unaudited, in thousands except earnings per unit)

																		
 	 	 	Partnership Historical	 	Blackwater Historical	 	Pro Forma Adjustments	 	Partnership Pro Forma	
Assets	 	 	 	 	 	 			
 	Current assets	 	 	 	 	 	 			
 	 	Cash and cash equivalents	$	1,076		 	$	2,397		 	$	60,000		a	$	1,076		
 	 	 	 	 	 	 	(60,000	)	a	 	
 	 	 	 	 	 	 	(2,397	)	c	 	
 	 	Accounts receivable	4,992		 	655		 	—		 	5,647		
 	 	Unbilled revenue	24,927		 	—		 	—		 	24,927		
 	 	Risk management assets	1,050		 	—		 	—		 	1,050		
 	 	Other current assets	4,573		 	654		 	(46	)	b	5,181		
 	 	Current assets held for sale	—		 	105		 	—		 	105		
 	 	Total current assets	36,618		 	3,811		 	(2,443	)	 	37,986		
 	Property, plant and equipment, net	280,516		 	36,127		 	—		 	316,643		
 	Noncurrent assets held for sale, net	874		 	2,154		 	—		 	3,028		
 	Intangible assets, net	—		 	4,351		 	—		 	4,351		
 	Goodwill	—		 	16,917		 	—		 	16,917		
 	Deferred tax asset	—		 	5,315		 	—		 	5,315		
 	Other assets, net	6,202		 	—		 	—		 	6,202		
 	 	Total assets	$	324,210		 	$	68,675		 	$	(2,443	)	 	$	390,442		
Liabilities and Partners' Capital	 	 	 	 	 	 	 	
 	Current liabilities	 	 	 	 	 	 	 	
 	 	Accounts payable	$	1,595		 	$	653		 	$	—		 	$	2,248		
 	 	Accrued gas purchases	17,307		 	—		 	—		 	17,307		
 	 	Accrued expenses and other current liabilities	14,709		 	2,839		 	—		 	17,548		
 	 	Current portion of long-term debt	157		 	7,124		 	(7,124	)	c	157		
 	 	Current portion of loans to affiliate	—		 	20,000		 	(20,000	)	c	—		
 	 	Risk management liabilities	349		 	—		 	—		 	349		
 	 	Current liabilities held for sale	—		 	368		 	—		 	368		
 	 	Total current liabilities	34,117		 	30,984		 	(27,124	)	 	37,977		
 	 	Risk management liabilities	122		 	—		 	—		 	122		
 	 	Asset retirement obligations	34,440		 	—		 	—		 	34,440		
 	 	Other liabilities	215		 	—		 	—		 	215		
 	 	Long-term debt	121,035		 	3,853		 	(3,853	)	c	130,035		
 	 	 	 	 	 	 	9,000		a	 	
 	 	Deferred tax liability	—		 	10,714		 	—		 	10,714		
 	 	Long-term liabilities held for sale	—		 	986		 	—		 	986		
 	 	Total liabilities	189,929		 	46,537		 	(21,977	)	 	214,489		

	
																		
 	Commitments and contingencies	 	 	 	 	 	 	 	
 	Series A convertible preferred units	92,912		 	—		 	—		 	92,912		
 	Partners' capital	 	 	 	 	 	 	 	
 	 	General partner interest	12,106		 	—		 	—		 	12,106		
 	 	Limited partner interest	21,602		 	—		 	(9,328	)	d	63,274		
 	 	 	 	 	 	 	51,000		a	 	
 	 	Accumulated other comprehensive income	261		 	—		 	—		 	261		
 	 	Members' equity	—		 	22,138		 	(22,138	)	e	—		
 	 	Total partners' capital	33,969		 	22,138		 	19,534		 	75,641		
 	 	Noncontrolling interests	7,400		 	—		 	—		 	7,400		
 	 	Total liabilities and partners' capital	$	324,210		 	$	68,675		 	$	(2,443	)	 	$	390,442		

See accompanying notes to unaudited pro forma condensed consolidated financial statement.

AMERICAN MIDSTREAM PARTNERS, LP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2013
(unaudited, in thousands except earnings per unit)

																				
 	Partnership Historical	 	High Point Historical	 	Blackwater Historical	 	Pro Forma Adjustments	 	Partnership Pro Forma	
Total revenue	$	210,300		 	$	8,621		 	$	9,627		 	$	(1,246	)	k	$	227,302		
Operating expenses:	 	 	 	 	 	 	 	 	 	
Purchases of natural gas, NGLs and condensate	162,671		 	2,131		 	—		 	(1,246	)	k	163,556		
Direct operating expenses	19,637		 	1,317		 	1,949		 	—		 	22,903		
Selling, general and administrative expenses	11,982		 	2,206		 	2,998		 	(342	)	l	16,844		
Equity compensation expense	1,877		 	—		 	—		 	—		 	1,877		
Depreciation and accretion expense	18,802		 	1,456		 	8,774		 	—		 	29,032		
Total operating expenses	214,969		 	7,110		 	13,721		 	(1,588	)	 	234,212		
Gain on involuntary conversion of property, plant and equipment	343		 	—		 	—		 	—		 	343		
Loss on impairment of property, plant and equipment	(15,232	)	 	—		 	—		 	—		 	(15,232	)	
Operating (loss) income	(19,558	)	 	1,511		 	(4,094	)	 	342		 	(21,799	)	
Other expenses:	 	 	 	 	 	 	 	 	 	
Interest expense and other	(6,003	)	 	(54	)	 	(1,554	)	 	179		m	(6,103	)	
 	 	 	 	 	 	 	14		n	 	
 	 	 	 	 	 	 	1,619		f	 	
 	 	 	 	 	 	 	(304	)	g	 	
Net (loss) income from continuing operations before income taxes	(25,561	)	 	$	1,457		 	(5,648	)	 	1,850		 	(27,902	)	
Income tax benefit	—		 	 	 	4,975		 	(631	)	i	4,344		
Net (loss) income from continuing operations	(25,561	)	 	 	 	$	(673	)	 	$	1,219		 	(23,558	)	
Net income attributable to noncontrolling interests	533		 	 	 	 	 	 	 	533		
Continuing operations attributable to the Partnership	$	(26,094	)	 	 	 	 	 	 	 	$	(24,091	)	
General partner's interest in continuing operations	$	(479	)	 		 	 	 	 	 	$	(443	)	
Limited partners' interest in continuing operations	$	(25,615	)	 	 	 	 	 	 	 	$	(23,648	)	
 	 	 	 	 	 	 	 	 	 	
Limited partners' net loss from continuing operations per unit (basic and diluted)	$	(5.54	)	 	 	 	 	 	 	 	$	(4.06	)	
Weighted average number of units used in computation of limited partners’ net income (loss) per unit (basic and diluted)	8,334		 	 	 	 	 	 	j	10,873		
See accompanying notes to unaudited pro forma condensed consolidated financial statement.

AMERICAN MIDSTREAM PARTNERS, LP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2012
(unaudited, in thousands except earnings per unit)

																								
 	Partnership Historical	 	Chatom Historical	 	High Point Historical	 	Blackwater Historical	 	Pro Forma Adjustments	 	Partnership Pro Forma	
Total revenue	$	198,243		 	$	35,756		 	$	5,184		 	$	10,219		 	$	(437	)	k	$	248,965		
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	
Purchases of natural gas, NGLs and condensate	145,172		 	28,409		 	—		 	—		 	(437	)	k	173,144		
Direct operating expenses	16,798		 	2,734		 	698		 	2,277		 	—		 	22,507		
Selling, general and administrative expenses	14,309		 	896		 	4,419		 	4,960		 	(150	)	o	24,431		
 	 	 	 	 	 	 	 	 	(3	)	n	 	
Equity compensation expense	1,783		 	—		 	—		 	—		 	—		 	1,783		
Depreciation and accretion expense	21,284		 	254		 	1,242		 	5,387		 	506		p	28,673		
Total operating expenses	199,346		 	32,293		 	6,359		 	12,624		 	(84	)	 	250,538		
Gain (loss) on disposal of property, plant and equipment	123		 	—		 	—		 	(19	)	 	—		 	104		
Loss on involuntary conversion of property, plant and equipment	(1,021	)	 	—		 	—		 	—		 	—		 	(1,021	)	
Operating (loss) income	(2,001	)	 	3,463		 	(1,175	)	 	(2,424	)	 	(353	)	 	(2,490	)	
Other income (expenses):	 	 	 	 	 	 	 	 	 	 	 	
Interest expense	(4,570	)	 	—		 	(48	)	 	(5,622	)	 	(992	)	q	(4,768	)	
 	 	 	 	 	 	 	 	 	33		n	 	
 	 	 	 	 	 	 	 	 	578		m	 	
 	 	 	 	 	 	 	 	 	5,644		f	 	
 	 	 	 	 	 	 	 	 	(368	)	g	 	
Gain (loss) on change in fair market value of derivative liabilities	—		 	—		 	—		 	(577	)	 	577		h	—		
Structuring fees and other	—		 	—		 	(2,305	)	 	—		 	—		 	(2,305	)	
Net (loss) income from continuing operations before income tax	(6,571	)	 	$	3,463		 	$	(3,528	)	 	(8,623	)	 	5,119		 	(9,563	)	
Income tax benefit	—		 	 	 	 	 	4,808		 	(2,426	)	i	2,382		
Net (loss) income from continuing operations	(6,571	)	 	 	 	 	 	$	(3,815	)	 	2,693		 	(7,181	)	
Net income attributable to noncontrolling interests	256		 	 	 	 	 	 	 	436		r	692		
Continuing operations attributable to the Partnership	$	(6,827	)	 	 	 	 	 	 	 	$	2,257		 	$	(7,873	)	
General partner's interest in continuing operations	$	(135	)	 	 	 	 	 	 	 	 	 	$	(157	)	
Limited partners' interest in continuing operations	$	(6,692	)	 	 	 	 	 	 	 	 	 	$	(7,716	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Limited partners' net loss from continuing operations per unit (basic and diluted)	$	(0.73	)	 	 	 	 	 	 	 	 	 	$	(0.66	)	
Weighted average number of units used in computation of limited partners’ net loss per unit (basic and diluted)	9,113		 	 	 	 	 	 	 	 	j	11,652		

See accompanying notes to unaudited pro forma condensed consolidated financial statement.

Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements of
American Midstream Partners, LP
1. Basis of presentation
The unaudited pro forma condensed consolidated financial statements are based upon the historical consolidated financial statements of the Partnership and the historical financial statements of Blackwater, the High Point System and the Chatom System.
The Partnership has utilized Blackwater's audited historical financial statements for the year ended March 31, 2013, as such year end is within 93 days of the Partnership's audited financial statements for the year ended December 31, 2012. Further,the historical nine months ended September 30, 2013 of Blackwater were derived by combining their historical unaudited financial statements for the three and six month periods ended March 31, 2013 and September 30, 2013, respectively.
The unaudited pro forma condensed consolidated financial statements present the impact of the acquisitions of Blackwater, the High Point System and Chatom System, which were described in the introduction to the unaudited pro forma condensed consolidated financial statements, on the Partnership's results of operations and financial position. The contribution of Blackwater and the High Point System are being treated as a transaction between entities under common control, under which the net assets received are recorded at their historical book value as of date of transfer.
The historical consolidated financial statements of the Partnership include financial information of the High Point System and the Chatom System subsequent to April 15, 2013 and July 1, 2012, respectively.
2. Pro forma adjustments
The following adjustments for the Partnership have been prepared (i) as if the acquisition of Blackwater occurred on September 30, 2013 in the case of the unaudited pro forma condensed consolidated balance sheet as of September 30, 2013; (ii) as if the acquisition of Blackwater occurred on January 1, 2012 in the case of the unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2013 and the year ended December 31, 2012; (iii) as if the acquisition of the High Point System occurred on January 1, 2012 in the case of the unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2013 and the year ended December 31, 2012 and (iv) as if the acquisition of the Chatom System occurred on January 1, 2012 in the case of the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2012:
Blackwater
		
a.	The acquisition of Blackwater was funded by the issuance of Partnership units and borrowings from our credit facility, which resulted in net proceeds of approximately $60 million.	
		
b.	The elimination of Blackwater capitalized debt issuance costs associated with debt not acquired by the Partnership.	
		
c.	The elimination of long-term debt and the convertible promissory note not acquired by the Partnership. Blackwater's cash has also been eliminated as this will be utilized in the pay-down of its long-term debt as part of the transaction, resulting in no cash being acquired by the Partnership.	
		
d.	Fair value of cash consideration in excess of the Blackwater net assets received at carry-over basis by the Partnership.	
		
e.	The elimination of the Blackwater members' equity.	
		
f.	The elimination of interest expense and amortization of deferred financing costs related to the Blackwater debt not acquired by the Partnership.	
		
g.	The inclusion of interest expense on the Partnership's assumed borrowings of approximately $9 million under its revolving credit facility, which had a weighted average borrowing rate of 4.50% and 4.09%, for the nine months ended September 30, 2013 and the year ended December 31, 2012, respectively.	
		
h.	The elimination of unrealized loss on embedded derivatives within debt not acquired by the Partnership.	
		
i.	The elimination of the tax effect of pro forma adjustments associated with interest expense, amortization of deferred financing costs, and unrealized loss on embedded derivatives related to the Blackwater debt not acquired, which have been calculated using a statutory tax rate of 39% for all periods presented.	
		
j.	The weighted average number of units used in computation of limited partners’ net loss per unit (basic and diluted) on a pro forma basis have been adjusted to reflect the issuance of approximately 2.5 million common units.	
High Point System
		
k.	The elimination of transactions recorded as revenue and purchases of natural gas, NGLs and condensate between the Partnership and High Point.	

		
l.	The elimination of transaction costs related to the contribution of the High Point System.	
		
m.	The elimination of interest expense due to the pay down of approximately $14.1 million of borrowings under the Partnership's revolving credit facility which had a weighted average borrowing rate of 4.34% for the six months ended June 30, 2013 and 4.09% for the year ended December 31, 2012.	
		
n.	The elimination of interest expense and amortization of deferred financing costs related to the High Point credit facility not acquired by the Partnership.	
Chatom System
		
o.	The elimination of transaction costs included in the historical financial statements of the Partnership which were directly related to the acquisition of the Chatom System.	
		
p.	The inclusion of the estimated additional depreciation expense, calculated on a straight-line basis over useful lives of 10 to 40 years, associated with allocated purchase price of net asset acquired during the respective period.	
		
q.	The inclusion of interest expense on the Partnership's approximately $51.0 million of borrowings under the Partnership's revolving credit facility which bears a variable rate of 3.88% at June 30, 2012 to the finance the acquisition of the Chatom System.	
		
r.	To reflect the non-controlling interest holders' proportionate share of the equity of the Chatom System and proportionate share of the earnings of 12.6%.	
3. Pro forma net income (loss) per limited common and general partner unit
Net income (loss) attributable to the general partner and the limited partners (common and subordinated unit holders) is allocated in accordance with their respective ownership percentages, after giving effect to incentive distributions paid to the general partner. Basic net income per limited partner unit is computed based on the weighted average number of units outstanding during the period. Diluted net income per limited partner unit is computed based on the weighted average number of units plus the effect of dilutive potential units outstanding during the period.
The Preferred Units and unvested share-based payment awards that contain non-forfeitable rights to distributions (whether paid or unpaid) are classified as participating securities and are included in our computation of basic and diluted net income per limited partner unit. For the year ended December 31, 2012 and nine months ended September 30, 2013, 5,204,216 of the Preferred Units issued in connection with the contribution from HPIP were excluded from the diluted average shares due to an anti-dilutive effect.
We compute earnings per unit using the two-class method. The two-class method requires that securities that meet the definition of a participating security be considered for inclusion in the computation of basic earnings per unit. Under the two-class method, earnings per unit is calculated as if all of the earnings for the period were distributed under the terms of our agreement, regardless of whether the general partner has discretion over the amount of distributions to be made in any particular period, whether those earnings would actually be distributed during a particular period from an economic or practical perspective, or whether the general partner has other legal or contractual limitations on its ability to pay distributions that would prevent it from distributing all of the earnings for a particular period.
The two-class method does not impact our overall net income (loss) or other financial results; however, in periods in which aggregate net income exceeds our aggregate distributions for such period, it will have the impact of reducing net income per limited partner unit. This result occurs as a larger portion of our aggregate earnings, as if distributed, is allocated to the incentive distribution rights of the general partner, even though we make distributions on the basis of available cash and not earnings. In periods in which our aggregate net income does not exceed our aggregate distributions for such period, the two-class method does not have any impact on our calculation of earnings (losses) per limited partner unit.