ROSE ROCK MIDSTREAM, L.P., 10-Q filed on 8/8/2014
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2014
Jul. 31, 2014
Common Units [Member]
Jul. 31, 2014
Subordinated Units [Member]
Jul. 31, 2014
Common Class A [Member]
Entity Registrant Name
Rose Rock Midstream, L.P.†
Entity Central Index Key
0001527622†
Document Type
10-Q†
Document Period End Date
Jun. 30, 2014†
Amendment Flag
false†
Document Fiscal Year Focus
2014†
Document Fiscal Period Focus
Q2†
Current Fiscal Year End Date
--12-31†
Entity Filer Category
Accelerated Filer†
Entity Common Stock, Shares Outstanding
20,574,448†
8,389,709†
3,750,000†
Condensed Consolidated Balance Sheets†(USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Current assets:
Cash and cash equivalents
$†3,353†
$†15,459†
Accounts receivable
219,175†
217,213†
Proceeds receivable from senior note issuance
391,915†
0†
Receivable from affiliates
26,775†
56,220†
Inventories
27,911†
30,779†
Other current assets
3,236†
1,916†
Total current assets
672,365†
321,587†
Property, plant and equipment (net of accumulated depreciation of $63,362 and $56,533 at June 30, 2014 and December 31, 2013, respectively)
336,377†
311,616†
Equity method investment
271,187†
224,095†
Goodwill
46,059†
28,322†
Other intangible assets (net of accumulated amortization of $2,879 and $1,155 at June 30, 2014 and December 31, 2013, respectively)
8,460†
5,775†
Other noncurrent assets, net
14,089†
5,852†
Total assets
1,348,537†
897,247†
Current liabilities:
Accounts payable
204,892†
211,298†
Payable to affiliates
29,825†
69,274†
Accrued liabilities
7,951†
8,645†
Other current liabilities
5,009†
3,814†
Total current liabilities
247,677†
293,031†
Long-term debt
847,568†
245,088†
Commitments and contingencies (Note 6)
  †
  †
Partnersí capital:
General partner
6,086†
5,995†
Total Rose Rock Midstream, L.P. partners' capital
253,292†
280,571†
Noncontrolling interests in consolidated subsidiary
0†
78,557†
Total equity
253,292†
359,128†
Total liabilities and equity
1,348,537†
897,247†
Class A units [Member] |
Semgroup [Member]
Partnersí capital:
Limited partners' capital
75,327†
40,772†
Common Units [Member] |
Public [Member]
Partnersí capital:
Limited partners' capital
73,176†
159,961†
Common Units [Member] |
Semgroup [Member]
Partnersí capital:
Limited partners' capital
157,203†
79,218†
Subordinated Units [Member] |
Semgroup [Member]
Partnersí capital:
Limited partners' capital
$†(58,500)
$†(5,375)
Condensed Consolidated Balance Sheets (Parenthetical)†(USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Accounts receivable, allowance
$†0†
$†0†
Property, plant and equipment, accumulated depreciation
63,362†
56,533†
Other intangible assets, accumulated amortization
$†2,879†
$†1,155†
Subordinated Units [Member] |
Semgroup [Member]
Common units, issued
8,389,709†
8,389,709†
Common units, outstanding
8,389,709†
8,389,709†
Common Units [Member] |
Public [Member]
Common units, issued
13,759,739†
13,759,739†
Common units, outstanding
13,759,739†
13,759,739†
Common Units [Member] |
Semgroup [Member]
Common units, issued
6,814,709†
4,389,709†
Common units, outstanding
6,814,709†
4,389,709†
Class A units [Member] |
Semgroup [Member]
Common units, issued
3,750,000†
2,500,000†
Common units, outstanding
3,750,000†
2,500,000†
Condensed Consolidated Statements of Income (Unaudited)†(USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Revenues, including revenues from affiliates (Note 9):
Product
$†267,087†
$†148,816†
$†533,377†
$†307,544†
Service
23,345†
12,606†
47,978†
25,110†
Total revenues
290,432†
161,422†
581,355†
332,654†
Expenses, including expenses from affiliates (Note 9):
Costs of products sold, exclusive of depreciation and amortization
255,745†
140,506†
510,282†
288,957†
Operating
17,006†
5,807†
31,884†
11,225†
General and administrative
6,001†
3,254†
9,624†
6,815†
Depreciation and amortization
6,267†
3,690†
16,801†
7,197†
Total expenses
285,019†
153,257†
568,591†
314,194†
Earnings from equity method investment
12,291†
3,451†
23,371†
6,904†
Operating income
17,704†
11,616†
36,135†
25,364†
Other expenses, net:
Interest expense
2,595†
2,494†
4,867†
4,248†
Other income
(21)
(12)
(21)
(12)
Total other expenses, net
2,574†
2,482†
4,846†
4,236†
Net income
15,130†
9,134†
31,289†
21,128†
Less: net income attributable to noncontrolling interests
4,082†
0†
7,758†
0†
Net income attributable to Rose Rock Midstream, L.P.
11,048†
9,134†
23,531†
21,128†
Earnings Per Unit [Abstract]
Net income allocated to general partner
1,109†
255†
1,847†
535†
Net income allocated to limited partners
9,939†1
8,879†1
21,684†1
20,593†1
Common Units [Member]
Earnings Per Unit [Abstract]
Net income allocated to limited partners
7,513†
5,208†
15,619†
11,975†
Earnings per limited partner unit, basic (Note 8)
$†0.41†
$†0.44†
$†0.86†
$†1.02†
Earnings per limited partner unit, diluted (Note 8)
$†0.41†
$†0.44†
$†0.85†
$†1.02†
Basic weighted average number of limited partner units outstanding:
Basic weighted average number of limited partner units outstanding
18,336†
11,894†
18,243†
11,680†
Diluted weighted average number of limited partner units outstanding:
Diluted weighted average number of limited partner units outstanding
18,397†
11,933†
18,297†
11,710†
Subordinated Units [Member]
Earnings Per Unit [Abstract]
Net income allocated to limited partners
3,063†
3,674†
6,860†
8,447†
Earnings per limited partner unit, basic and diluted (Note 8)
$†0.37†
$†0.44†
$†0.82†
$†1.01†
Basic weighted average number of limited partner units outstanding:
Basic weighted average number of limited partner units outstanding
8,390†
8,390†
8,390†
8,390†
Diluted weighted average number of limited partner units outstanding:
Diluted weighted average number of limited partner units outstanding
8,390†
8,390†
8,390†
8,390†
Common Class A [Member]
Earnings Per Unit [Abstract]
Net income allocated to limited partners
$†(637)
$†(3)
$†(795)
$†171†
Earnings per limited partner unit, basic and diluted (Note 8)
$†(0.25)
$†0.00†
$†(0.31)
$†0.15†
Basic weighted average number of limited partner units outstanding:
Basic weighted average number of limited partner units outstanding
2,596†
1,250†
2,548†
1,174†
Diluted weighted average number of limited partner units outstanding:
Diluted weighted average number of limited partner units outstanding
2,596†
1,250†
2,548†
1,174†
Condensed Consolidated Statements of Cash Flows (Unaudited)†(USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Cash flows from operating activities:
Net income
$†31,289†
$†21,128†
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
16,801†
7,197†
Gain on disposal of long-lived assets, net
(61)
0†
Amortization of debt issuance costs
520†
399†
Non-cash equity compensation
390†
355†
Net unrealized gain related to derivative instruments
(245)
(1,295)
Changes in assets and liabilities, net of the effects of acquisitions:
Decrease (increase) in accounts receivable
(1,962)
71†
Decrease (increase) in receivable from affiliates
29,445†
(30)
Decrease (increase) in inventories
(3,526)
2,644†
Decrease (increase) in other current assets
(1,135)
434†
Decrease (increase) in other noncurrent assets
(6)
1†
Increase (decrease) in accounts payable and accrued liabilities
(8,016)
(8,205)
Increase (decrease) in payable to affiliates
(39,449)
612†
Net cash provided by operating activities
24,057†
23,309†
Cash flows from investing activities:
Capital expenditures
(12,392)
(11,370)
Proceeds from sale of long-lived assets
710†
0†
Contributions to equity method investment
(51,774)
(66,193)
Acquisitions
(133,993)
0†
Distributions from equity investment in excess of equity in earnings
4,681†
156†
Net cash used in investing activities
(192,768)
(77,407)
Cash flows from financing activities:
Debt issuance costs
(62)
(1,611)
Borrowings on revolving credit facility
296,000†
251,000†
Principal payments on revolving credit facility
(93,500)
(89,000)
Principal payments on capital lease obligations
(18)
(12)
Proceeds from common L.P. unit issuance, net of offering costs
0†
57,751†
Cash consideration in excess of historical cost of interest in SemCrude Pipeline, L.L.C.
(24,413)
(143,216)
Cash distributions to partners
(26,744)
(17,272)
Cash distributions to noncontrolling interests
(9,025)
0†
Contributions from noncontrolling interests
14,367†
0†
Net cash provided by financing activities
156,605†
57,640†
Net increase (decrease) in cash and cash equivalents
(12,106)
3,542†
Cash and cash equivalents at beginning of period
15,459†
108†
Cash and cash equivalents at end of period
$†3,353†
$†3,650†
Overview
OVERVIEW
OVERVIEW
Rose Rock Midstream, L.P. is a Delaware limited partnership. The general partner of Rose Rock Midstream, L.P. is Rose Rock Midstream GP, LLC, which is a wholly-owned subsidiary of SemGroup Corporation. SemGroup Corporation is a Delaware corporation headquartered in Tulsa, Oklahoma that provides diversified midstream services to the energy industry.
The terms “we,” “our,” “us,” “Rose Rock,” the “Partnership” and similar language used in these notes to the unaudited condensed consolidated financial statements refer to Rose Rock Midstream, L.P, and its subsidiaries. The term “SemGroup” refers to SemGroup Corporation and its controlled subsidiaries, including Rose Rock Midstream GP, LLC.
Basis of presentation
These condensed consolidated financial statements include the accounts of Rose Rock Midstream, L.P. and its controlled subsidiaries.
The condensed consolidated balance sheet at December 31, 2013, which is derived from audited financial statements and the unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules and regulations of the SEC. These condensed consolidated financial statements include all normal and recurring adjustments that, in the opinion of management, are necessary to present fairly the financial position of the Partnership and the results of its operations and its cash flows. All significant transactions between Rose Rock Midstream, L.P. and its consolidated subsidiaries have been eliminated.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts and disclosures in the financial statements. Although management believes these estimates are reasonable, actual results could differ materially from these estimates. The results of operations for the three months and six months ended June 30, 2014, are not necessarily indicative of the results to be expected for the full year ending December 31, 2014.
Pursuant to the rules and regulations of the SEC, the accompanying condensed consolidated financial statements do not include all of the information and notes normally included with financial statements prepared in accordance with accounting principles generally accepted in the United States. Certain reclassifications have been made to conform previously reported balances to the current presentation. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2013, which are included in our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC.
Our significant accounting policies are consistent with those described in our Annual Report on Form 10-K for the year ended December 31, 2013.
Recent accounting pronouncements
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers", which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP.
The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.
Equity Method Investment
Equity Method Investments Disclosure [Text Block]
EQUITY METHOD INVESTMENT
SemCrude Pipeline, L.L.C.
Prior to our December 16, 2013 acquisition of additional ownership interests in SemCrude Pipeline, L.L.C. ("SCPL") (Note 3), we accounted for our interest in SCPL under the equity method. Under the equity method, we did not report the individual assets and liabilities of SCPL on our consolidated balance sheets. Instead, our membership interest was reflected in one line as a noncurrent asset on our consolidated balance sheets. Subsequent to our acquisition of additional ownership interest, we consolidated SCPL and reported a noncontrolling interest for the ownership interest in SCPL which was retained by SemGroup. Subsequent to our June 23, 2014 acquisition of the remaining interest in SCPL, there is no longer a noncontrolling interest.
Prior to consolidation, for the three months and six months ended June 30, 2013, we recorded equity in earnings of SCPL of $3.5 million and $6.9 million, respectively. For the three months and six months ended June 30, 2013, we received cash distributions of $4.2 million and $7.1 million, respectively. Distributions are paid on a one-month lag. Accordingly, the cash distributions received for the three months and six months ended June 30, 2013 relate to earnings from March to May 2013 and January to May 2013, respectively.
SCPL's only substantial asset is a 51% interest in White Cliffs Pipeline, L.L.C. ("White Cliffs"), which is accounted for under the equity method.
White Cliffs Pipeline, L.L.C.
Under the equity method, we do not report the individual assets and liabilities of White Cliffs. Instead, our membership interest is reflected in one line as a noncurrent asset on our condensed consolidated balance sheets.
For the three months and six months ended June 30, 2014, we recorded equity in earnings of White Cliffs of $12.3 million and $23.4 million, respectively. For the three months and six months ended June 30, 2014, we received $14.5 million and $28.1 million of cash distributions, respectively, of which, prior to our June 23, 2014 acquisition of the remaining 33% interest in SCPL, approximately 33% was distributed to SemGroup related to their noncontrolling interest. Refer to Note 3 for further discussion of this acquisition.
Certain summarized income statement information of White Cliffs for the three months and six months ended June 30, 2014 and 2013 is shown below (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Revenues
$
34,533

 
$
30,112

 
$
67,807

 
$
60,785

Operating, general and administrative expenses
$
5,539

 
$
4,113

 
$
12,307

 
$
9,292

Depreciation and amortization expense
$
4,537

 
$
4,715

 
$
8,930

 
$
9,430

Net income
$
24,457

 
$
21,284

 
$
46,570

 
$
42,063


The equity in earnings of White Cliffs for the three months and six months ended June 30, 2014 and 2013 is less than 51% of the net income of White Cliffs for the same periods. This is due to certain general and administrative expenses incurred in managing the operations of White Cliffs that the other owners are not obligated to share. Such expenses are recorded by White Cliffs and are allocated to our ownership interest. White Cliffs recorded $0.4 million and $0.4 million of such general and administrative expense for the three months ended June 30, 2014 and 2013, respectively. White Cliffs recorded $0.8 million and $0.7 million of such general and administrative expense for the six months ended June 30, 2014 and 2013, respectively.
The members of White Cliffs are required to fund capital contribution requirements for an expansion project adding a 12-inch line from Platteville, Colorado to Cushing, Oklahoma. For the three months and six months ended June 30, 2014, we contributed $38.3 million and $51.0 million to White Cliffs, respectively. This expansion will increase the pipeline’s capacity to about 150,000 barrels per day and is expected to be fully operational in August 2014. Remaining contributions will be made in 2014 and are expected to total $2.3 million.
Acquisitions
Mergers, Acquisitions and Dispositions Disclosures [Text Block]
ACQUISITIONS

During the six months ended June 30, 2014, we completed the following acquisitions:

On June 23, 2014, we acquired the remaining 33% interest in SCPL from SemGroup for (i) cash of approximately $114.4 million, (ii) the issuance of 2.425 million common units, (iii) the issuance of 1.25 million Class A units, and (iv) an increase of the capital account of our general partner and a related issuance of general partner interest, to allow our general partner to maintain its 2% general partner interest in us. SCPL owns a 51% membership interest in White Cliffs. As the transaction was between entities under common control, we recorded our investment in SCPL based on SemGroup's historical cost. The purchase price in excess of historical cost was treated as an equity transaction with SemGroup, which reduced the partners' capital accounts of our general and limited partners on a pro-rata basis.

On June 24, 2014, we acquired crude oil trucking assets from a subsidiary of Chesapeake Energy Corporation ("Chesapeake") for $44.0 million in cash. Highlights of the transaction include:

124 trucks, 122 trailers and miscellaneous equipment; and
a long-term transportation agreement with Chesapeake Energy Marketing, Inc.
The results of operations of these assets from June 24, 2014 to June 30, 2014 have been included in our condensed consolidated statements of income and in our condensed consolidated balance sheet as of June 30, 2014. During the three months and six months ended June 30, 2014, our condensed consolidated statements of income did not include material amounts of revenue or operating income related to these assets. The proforma impact to comparative prior year periods, had the acquisition occurred at the beginning of the comparative prior year period, is not significant.
We are in the process of obtaining an independent appraisal of the fair value of the assets acquired from Chesapeake. The estimates of fair value reflected as of June 30, 2014, are subject to change and such changes could be material. We currently expect to complete the valuation process prior to filing our Form 10-K for the year ending December 31, 2014. We have preliminarily estimated the fair value of the assets acquired as follows (in thousands):
Property, plant and equipment
$
21,700

Customer contract intangible
4,459

Goodwill
17,835

Total assets acquired
$
43,994


Goodwill represents the excess of the estimated consideration paid for the acquired business over the fair value of the individual assets acquired. Goodwill primarily represents the value of synergies between the acquired entity and the Partnership, the opportunity to use the acquired business as a platform for growth and the acquired assembled workforce. We estimate that all of the goodwill will be deductible for federal income tax purposes.

The acquisition above accounted for the majority of the change in our goodwill during the six months ended June 30, 2014, as follows (in thousands):
Balance at December 31, 2013
$
28,322

Acquisition
17,835

Barcas Field Services, L.L.C. purchase price adjustment
(98
)
Balance at June 30, 2014
$
46,059



During the year ended December 31, 2013, we completed the following acquisitions:

On January 11, 2013, we acquired a 33% interest in SCPL from SemGroup for (i) cash of approximately $189.5 million, (ii) the issuance of 1.5 million common units, (iii) the issuance of 1.25 million Class A units, and (iv) an increase of the capital account of our general partner and a related issuance of general partner interest, to allow our general partner to maintain its 2% general partner interest in us. Subsequent to the transaction, our condensed consolidated financial statements reflected our ownership in SCPL on an equity method basis. As the transaction was between entities under common control, we recorded our investment in SCPL based on SemGroup's historical cost. The purchase price in excess of historical cost was treated as an equity transaction with SemGroup, which reduced the partners' capital accounts of our general and limited partners on a pro-rata basis.

On September 1, 2013, we completed the acquisition of the assets of Barcas Field Services, L.L.C. for $49.0 million. During the six months ended June 30, 2014, we recorded a non-cash adjustment to the purchase price allocation which decreased goodwill and other intangible assets by $0.1 million, with an offsetting increase to property, plant and equipment.

On November 8, 2013, we acquired a 12-mile, 12-inch crude oil pipeline from Noble Energy, Inc. that extends from Platteville, Colorado to Tampa, Colorado for a purchase price of $8.2 million.

On December 16, 2013, we acquired an additional 33% interest in SCPL from SemGroup in exchange for (i) cash of approximately $173.1 million, (ii) the issuance of 1.5 million common units, (iii) the issuance of 1.25 million Class A units, and (iv) an increase of the capital account of our general partner and a related issuance of general partner interest, to allow our general partner to maintain its 2% general partner interest in us. Subsequent to the transaction, we consolidated SCPL and our condensed consolidated financial statements reflect our ownership of White Cliffs under the equity method. As the transaction was between entities under common control, we recorded our investment in White Cliffs based on SemGroup's historical cost. The purchase price in excess of historical cost was treated as an equity transaction with SemGroup, which reduced the partners' capital accounts of our general and limited partners on a pro-rata basis.
Financial Instruments
Financial Instruments Disclosure [Text Block]
FINANCIAL INSTRUMENTS
Commodity derivative contracts
Our results of operations and cash flows are impacted by changes in market prices for petroleum products. This exposure to commodity price risk is managed, in part, by entering into various commodity derivatives.
We seek to manage the price risk associated with our marketing operations by limiting our net open positions through (i) the concurrent purchase and sale of like quantities of crude oil to create back-to-back transactions that are intended to lock in positive margins based on the timing, location or quality of the crude oil purchased and delivered or (ii) derivative contracts. Our storage and transportation assets also can be used to mitigate location and time basis risk. All marketing activities are subject to our Comprehensive Risk Management Policy, which establishes limits in order to manage risk and mitigate financial exposure.
Our commodity derivatives can be comprised of crude oil and natural gas liquids forward contracts and futures contracts. These are defined as follows:
Forward contracts – Over the counter ("OTC") contracts to buy or sell a commodity at an agreed upon future date. The buyer and seller agree on specific terms (price, quantity, delivery period, and location) and conditions at the inception of the contract.
Futures contracts – Exchange traded contracts to buy or sell a commodity. These contracts are standardized by the exchange in terms of quality, quantity, delivery period and location for each commodity.
We record commodity derivative assets and liabilities at fair value at each balance sheet date with the exception of commitments which have been designated as normal purchases and sales. The table below summarizes the balances of these assets and liabilities at June 30, 2014 and December 31, 2013 (in thousands):
 
June 30, 2014
 
December 31, 2013
 
Level 1
 
Netting*
 
Total
 
Level 1
 
Netting*
 
Total
Assets
$
185

 
$

 
$
185

 
$
36

 
$
(36
)
 
$

Liabilities

 

 

 
96

 
(36
)
 
60

Net assets (liabilities) at fair value
$
185

 
$

 
$
185

 
$
(60
)
 
$

 
$
(60
)
* Relates primarily to exchange traded futures. Gain and loss positions on multiple contracts are settled net on a daily basis with the exchange.
“Level 1” measurements are based on inputs consisting of unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. These include commodity futures contracts that are traded on an exchange.
“Level 2” measurements are based on inputs consisting of market observable and corroborated prices for similar derivative contracts. Assets and liabilities classified as Level 2 include OTC traded physical fixed priced purchases and sales forward contracts.
“Level 3” measurements are based on inputs from a pricing service and/or internal valuation models incorporating observable and unobservable market data.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value levels. At June 30, 2014, all of our physical fixed price forward purchases and sales contracts were being accounted for as normal purchases and normal sales.
There were no financial assets or liabilities classified as Level 2 or Level 3 during the three months and six months ended June 30, 2014 and 2013, as such no rollforward of activity has been presented.
The following table sets forth the notional quantities for commodity derivative instruments entered into during the periods indicated (in thousands of barrels): 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Sales
1,135

 
720

 
1,950

 
1,330

Purchases
1,005

 
615

 
1,815

 
1,290

We have not designated any of our commodity derivative instruments as accounting hedges. We record the fair value of the derivative instruments on our condensed consolidated balance sheets in other current assets and other current liabilities. The fair value of our commodity derivative assets and liabilities recorded to other current assets and other current liabilities was as follows (in thousands):
 
June 30, 2014
 
December 31, 2013
 
Assets
 
Liabilities
 
Assets
 
Liabilities
Commodity contracts
$
185

 
$

 
$

 
$
60


We have posted margin deposits as collateral with brokers who have the right of set off associated with these funds. Our margin deposit balances were $1.1 million and $0.8 million as of June 30, 2014 and December 31, 2013, respectively. These margin account balances have not been offset against our net commodity derivative instrument (contract) positions. Had these margin account balances been netted against our net commodity derivative instrument (contract) positions as of June 30, 2014 and December 31, 2013, we would have had net asset positions of $1.3 million and $0.8 million, respectively.
Realized and unrealized gains (losses) from our commodity derivatives were recorded to product revenue in the following amounts (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Commodity contracts
$
(1,942
)
 
$
(233
)
 
$
(2,749
)
 
$
(777
)

Concentrations of risk
During the three months ended June 30, 2014, two third-party customers accounted for approximately 78% of our consolidated revenue. We purchased approximately $171 million of product from three third-party suppliers, which represented approximately 67% of our costs of products sold.
During the six months ended June 30, 2014, two third-party customers accounted for approximately 72% of our consolidated revenue. We purchased approximately $275 million of product from two third-party suppliers, which represented approximately 54% of our costs of products sold.
At June 30, 2014, three third-party customers and one related party accounted for 64% of our consolidated accounts receivable.
Long Term Debt
Long-term Debt
LONG-TERM DEBT
Senior unsecured notes
On June 27, 2014, Rose Rock and its wholly-owned subsidiary, Rose Rock Finance Corporation ("Finance Corp."), as co-issuer, agreed to sell $400 million of 5.625% senior unsecured notes due 2022 (the “Notes”) to certain initial purchasers for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons outside the United States pursuant to Regulation S of the Securities Act. The Notes are guaranteed by all of our existing subsidiaries other than Finance Corp. Such guarantees of the Notes are full and unconditional and constitute the joint and several obligations of the subsidiary guarantors.
The net proceeds from the offering of $391.9 million, after underwriters' fees and offering expenses, were received on July 2, 2014. As we entered into the agreement with the initial purchasers on June 27, 2014, we recorded the liability for the Notes on that date and recorded a receivable for the proceeds. We used the net proceeds from the offering to repay amounts borrowed under our revolving credit facility and for general partnership purposes.
The Notes are governed by an indenture between the Partnership, its subsidiary guarantors, Finance Corp. and Wilmington Trust, National Association, as trustee (the “Indenture”). The Indenture includes customary covenants, including limitations on our ability to incur additional indebtedness or issue certain preferred shares; pay dividends and make certain distributions, investments and other restricted payments; create certain liens; sell assets; enter into transactions with affiliates; merge, consolidate, sell or otherwise dispose of all or substantially all of our assets; and designate our subsidiaries as unrestricted under the Indenture.
The Indenture includes customary events of default. A default would permit the trustee or holders of at least 25% in aggregate principal amounts of the Notes then outstanding to declare all amounts owing under the Notes to be due and payable.
The Notes are effectively subordinated in right of payment to any of our, and the subsidiary guarantors', existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness.
The Partnership may issue additional Notes under the Indenture from time to time, subject to the terms of the Indenture.
Except as described below, the Notes are not redeemable at the Partnership's option prior to July 15, 2017. From and after July 15, 2017, the Partnership may redeem the Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if redeemed during the twelve-month period beginning on July 15 of each of the years indicated below:
Year
 
Percentage
2017
 
104.219%
2018
 
102.813%
2019
 
101.406%
2020 and thereafter
 
100.000%

Prior to July 15, 2017, the Partnership may, at its option, on one or more occasions, redeem up to 35% of the sum of the original aggregate principal amount of the Notes at a redemption price equal to 105.625% of the aggregate principal amount thereof, plus accrued and unpaid interest, with the net cash proceeds of one or more equity offerings of the Partnership, or the parent of the Partnership to the extent such net proceeds are contributed to the Partnership, subject to certain conditions.
Prior to July 15, 2017, the Partnership may also redeem all or part of the Notes at a price equal to the principal plus a premium equal to the greater of 1% of the principal or the excess of the present value of the July 15, 2017 redemption price from the table above plus all required interest payments due through July 15, 2017, computed using a discount rate based on a published United States Treasury Rate plus 50 basis points, over the principal value of such Note.
In the event of a change of control, the Partnership is required to offer to repurchase the Notes at an amount equal to 101% of the principal plus accrued and unpaid interest.
The Notes are also subject to a Registration Rights Agreement which requires the Partnership to file a registration statement with the SEC and to use commercially reasonable efforts to consummate such exchange offer within one year of settlement date of the Notes so that holders of the Notes can exchange the Notes and related guarantees for registered notes (the "Exchange Notes") and guarantees that have substantially identical terms as the Notes and related guarantees. The guarantees of the Exchange Notes will be full and unconditional and will constitute the joint and several obligations of the subsidiary guarantors. Failure to meet the terms of the Registration Rights Agreement will require the Partnership to pay incremental interest of 0.25% per annum, increased by an additional 0.25% per annum for each 90-day period for which registration default continues (up to a maximum of 1.0% per annum).
Each of the subsidiary guarantors is 100% owned by the Partnership. The Partnership has no assets or operations independent of its subsidiaries and there are no significant restrictions upon the ability of the Partnership, or any of its subsidiaries, to obtain fund from its respective subsidiaries by dividend or loan. None of the assets of the Partnership's subsidiaries represent restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X under the Securities Act.
Interest on the Notes is payable in arrears on January 15th and July 15th to holders of record on January 1st and July 1st each year until maturity. At June 30, 2014, we had $8.7 million of unamortized debt issuance costs related to the Notes included in other noncurrent assets on our consolidated balance sheet.
At June 30, 2014, we were in compliance with the terms of the Notes.

Revolving credit facility
At June 30, 2014, we had outstanding borrowings of $447.5 million on our $585 million revolving credit facility, which incurred interest at the alternate base rate ("ABR") plus an applicable margin. The interest rate in effect at June 30, 2014, on ABR borrowings was 4.0%. On July 2, 2014, the proceeds from the Notes were used to pay down the revolving credit facility balance.
We had $30.0 million in outstanding letters of credit at June 30, 2014, and the rate per annum was 1.75%. In addition, a fronting fee of 0.25% is charged on outstanding letters of credit.
A commitment fee that ranges from 0.375% to 0.50%, depending on a leverage ratio specified in the credit agreement, is charged on any unused capacity of the revolving credit facility.
At June 30, 2014, we had $54.6 million of secured bilateral letters of credit outstanding. The interest rate in effect was 1.75%. Secured bilateral letters of credit are external to the facility and do not reduce availability for borrowing on our revolving credit facility.
At June 30, 2014, we were in compliance with the terms of the credit agreement.
At June 30, 2014, $4.3 million in capitalized loan fees, net of accumulated amortization, related to the revolving credit facility was recorded in other noncurrent assets, which is being amortized over the life of the facility.
At June 30, 2014, we had $39 thousand ($107 thousand including current portion) of capital lease obligations reported as long-term debt on the consolidated balance sheet.
Fair value
We estimate the fair value of our senior unsecured notes to be $405 million at June 30, 2014, based on unadjusted, transacted market prices, which is categorized as a Level 1 measurement. We estimate that the fair value of our revolving long-term debt was not materially different than the reported values at June 30, 2014, and is categorized as a Level 3 measurement. It is our belief that neither the market interest rates nor our credit profile have changed significantly enough to have had a material impact on the fair value of our revolving debt outstanding at June 30, 2014.
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES
Bankruptcy matters
On July 22, 2008 (the “Petition Date”), SemGroup, L.P., SemCrude, L.P. (“SemCrude”), the predecessor of Rose Rock, and Eaglwing, L.P. (“Eaglwing”) filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. While in bankruptcy, SemGroup, L.P. filed a plan of reorganization with the court, which was confirmed on October 28, 2009 (the “Plan of Reorganization”). The Plan of Reorganization determined, among other things, how pre-Petition Date obligations would be settled, the equity structure of the reorganized company upon emergence and the financing arrangements upon emergence. SemGroup, SemCrude, and Eaglwing emerged from bankruptcy protection on November 30, 2009 (the “Emergence Date”).
(a)
Confirmation order appeal
Luke Oil appeal. On October 21, 2009, Luke Oil Company, C&S Oil/Cross Properties, Inc., Wayne Thomas Oil and Gas and William R. Earnhardt Company (collectively, “Luke Oil”) filed an objection to the Plan of Reorganization “to the extent that the Plan of Reorganization may alter, impair or otherwise adversely affect Luke Oil’s legal rights or other interests.” On October 28, 2009, the bankruptcy court overruled the Luke Oil objection and entered the confirmation order. On November 6, 2009, Luke Oil filed a Notice of Appeal. On December 23, 2009, Luke Oil’s appeal was docketed in the United States District Court for the District of Delaware. SemGroup filed a motion to dismiss the appeal as equitably moot. On May 21, 2012, the District Court entered an order granting SemGroup's motion to dismiss Luke Oil’s appeal of the confirmation order. On June 18, 2012, Luke Oil filed its Notice of Appeal, notifying the District Court and the parties to the lawsuit that it was appealing the decision of the District Court to the United States Court of Appeals for the Third Circuit. On August 27, 2013, the United States Court of Appeals for the Third Circuit issued an opinion, and on September 18, 2013, issued a judgment reversing the District Court’s dismissal of the confirmation order and remanding the case to the District Court for consideration on the merits of Luke Oil’s appeal of the confirmation order. On October 1, 2013, at the request of the parties, the District Court entered an order staying the case and referring it to a magistrate judge for mediation. On January 28, 2014, the parties reached agreement to settle all outstanding disputes. A settlement agreement was executed by the parties pursuant to which each party granted the other a release of claims and causes of action and on March 5, 2014, the appeal was dismissed. We are indemnified by SemGroup against any loss in this matter pursuant to the terms of the omnibus agreement with SemGroup.
(b)
Claims reconciliation process
A large number of parties have made claims against SemGroup for obligations alleged to have been incurred prior to the Petition Date. On September 15, 2010, the bankruptcy court entered an order estimating the contingent, unliquidated and disputed claims and authorizing distributions to holders of allowed claims. Pursuant to that order, SemGroup has begun making distributions to the claimants. SemGroup continues to attempt to settle unresolved claims.
 
Pursuant to the Plan of Reorganization, SemGroup committed to settle all pre-petition claims by paying a specified amount of cash, issuing a specified number of warrants and issuing a specified number of shares of SemGroup Corporation common stock. The resolution of most of the outstanding claims will not impact the total amount of consideration SemGroup will give to the claimants; instead, the resolution of the claims will impact the relative share of the total consideration that each claimant receives.
However, there is a specified group of claims for which SemGroup could be required to pay additional funds to settle. Pursuant to the Plan of Reorganization, SemGroup set aside a specified amount of restricted cash at the Emergence Date, which SemGroup expected to be sufficient to settle this group of claims. Since the Emergence Date, SemGroup has made significant progress in resolving these claims and continues to believe that the cash set aside at the Emergence Date will be sufficient to pay these claims. However, SemGroup has not yet reached a resolution of all of these claims and, if the total settlement amount of these claims exceeds the specified amount, SemGroup will be required to pay additional funds to these claimants and we could be required to share in this expense. We are indemnified by SemGroup against any loss in this matter pursuant to the terms of the omnibus agreement with SemGroup.
Environmental
We may, from time to time, experience leaks of petroleum products from our facilities and, as a result of which, we may incur remediation obligations or property damage claims. In addition, we are subject to numerous environmental regulations. Failure to comply with these regulations could result in the assessment of fines or penalties by regulatory authorities.
The Kansas Department of Health and Environment (“KDHE”) initiated discussions during SemGroup’s bankruptcy proceeding regarding five of our sites in Kansas that the KDHE believed, based on their historical use, may have soil or groundwater contamination in excess of state standards. The KDHE sought our agreement to undertake assessments of these sites to determine whether they are contaminated. SemGroup entered into a Consent Agreement and Final Order with the KDHE to conduct environmental assessments on the sites and to pay the KDHE’s costs associated with their oversight of this matter. SemGroup has conducted Phase II investigations at all sites. Three of the five sites have limited amounts of soil contamination that will be excavated and/or remediated on site. Three of the five sites appear to have ground water contamination that may require further delineation and/or on-going monitoring. Work plans have been submitted to, and approved by, the KDHE. SemGroup does not anticipate any penalties or fines for these historical sites. We are indemnified by SemGroup against any loss in this matter pursuant to the terms of the omnibus agreement with SemGroup.
Blueknight claim
Blueknight Energy Partners, L.P. (“Blueknight”), which was formerly a subsidiary of SemGroup, together with other entities related to Blueknight, entered into a Shared Services Agreement on April 7, 2009, with SemCrude and SemManagement, L.L.C. (which are currently subsidiaries of SemGroup). The services provided by SemCrude to Blueknight under this agreement included assisting Blueknight with movement of crude oil belonging to Blueknight’s customers and with the operation of Blueknight’s Oklahoma pipeline system and its Cushing, Oklahoma terminal. Under the subsequent amendments to the agreements beginning in May 2010, certain of these services were phased out and Blueknight began to perform all services necessary for the movement of its crude oil and the operation of its Cushing terminal without SemCrude's assistance.
In a letter dated August 18, 2011, Blueknight claimed that SemCrude owes Blueknight approximately 141,000 barrels of crude oil. SemGroup responded to Blueknight’s letter denying their charges and requesting documentation from Blueknight of its claim. On February 14, 2012, after months of interaction between the parties through which Blueknight was requested to substantiate its claim, Blueknight filed suit against SemGroup and other related companies in the District Court of Oklahoma County, Oklahoma. On May 1, 2012, the case was transferred to Tulsa County, Oklahoma. On July 2, 2012, the Tulsa County District Court appointed a Special Master to review terminal operations accounting records and determine whether 141,000 barrels of crude oil owned by Blueknight is missing after three months of operations in April through June, 2010. On June 11, 2013, the Special Master’s Report was filed with the District Court finding a shortage in Blueknight’s Cushing terminal and Oklahoma pipeline system of 148,000 barrels. However, after a review of all records created during that three month time period, the Special Master was unable to determine how the shortage might have occurred and was unable to determine the ownership of the potential shortage.
We are currently seeking discovery in the District Court of documentation and testimony on the potential cause and the impact, if any, of the shortage found by the Special Master. On February 20, 2014, the District Court issued an order denying all requests for summary judgment and ordering discovery to go forward. SemGroup will continue to defend its position; however, we cannot predict the outcome. We are indemnified by SemGroup against any loss in this matter pursuant to the terms of the omnibus agreement with SemGroup.
Other matters
We are party to various other claims, legal actions and complaints arising in the ordinary course of business. In the opinion of our management, the ultimate resolution of these claims, legal actions and complaints, after consideration of amounts accrued, insurance coverage and other arrangements, will not have a material effect on our consolidated financial position, results of operations or cash flows. However, the outcome of such matters is inherently uncertain and estimates of our consolidated liabilities may change materially as circumstances develop.
Asset retirement obligations
We may be subject to removal and restoration costs upon retirement of our facilities. However, we are unable to predict when, or if, our pipelines, storage tanks and related facilities would become completely obsolete and require decommissioning. Accordingly, we have not recorded a liability or corresponding asset, as both the amount and timing of such potential future costs are indeterminable.
Purchase and sale commitments
We routinely enter into agreements to purchase and sell petroleum products at specified future dates. We create a margin for these purchases by entering into various types of physical and financial sales and exchange transactions through which we seek to maintain a position that is substantially balanced between purchases on the one hand and sales and future delivery obligations on the other. We account for derivatives at fair value with the exception of commitments which have been designated as normal purchases and sales, for which we do not record assets or liabilities related to these agreements until the product is purchased or sold. At June 30, 2014, such commitments included the following (in thousands):
 
Volume
(Barrels)
 
Value
Fixed price purchases
145

 
$
13,348

Fixed price sales
175

 
$
17,720

Floating price purchases
9,329

 
$
949,093

Floating price sales
9,603

 
$
986,856


Certain of the commitments shown in the table above relate to agreements to purchase product from a counterparty and to sell a similar amount of product (in a different location) to the same counterparty. Many of the commitments shown in the table above are cancellable by either party, as long as notice is given within the time frame specified in the agreement, generally 30 to 120 days.
See Note 2 for commitments related to the White Cliffs pipeline expansion.
Partners' Capital and Distributions
PARTNERS' CAPITAL AND DISTRIBUTIONS
PARTNERS’ CAPITAL AND DISTRIBUTIONS
Unaudited condensed consolidated statement of changes in partners’ capital
The following table shows the changes in our partners’ capital accounts from December 31, 2013 to June 30, 2014 (in thousands):
 
Common
Units -
Public
 
Common
Units -
SemGroup
 
Subordinated
Units
 
Class A Units
 
General
Partner
Interest
 
Non-controlling Interests
 
Total Equity
Balance at December 31, 2013
$
159,961

 
$
79,218

 
$
(5,375
)
 
$
40,772

 
$
5,995

 
$
78,557

 
$
359,128

Net income
11,250

 
4,369

 
6,860

 
(795
)
 
1,847

 
7,758

 
31,289

Cash distributions to noncontrolling interest in SCPL

 

 

 

 

 
(10,683
)
 
(10,683
)
Contributions from noncontrolling interest in SCPL

 

 

 

 

 
14,367

 
14,367

Purchase of remaining one-third interest in SCPL

 

 

 

 

 
(89,999
)
 
(89,999
)
Equity issuance

 
120,013

 

 
58,563

 
3,644

 

 
182,220

Purchase price in excess of historical cost of interest in SCPL
(85,173
)
 
(42,183
)
 
(51,931
)
 
(23,213
)
 
(4,133
)
 

 
(206,633
)
Unvested distribution equivalent rights
(43
)
 

 

 

 

 

 
(43
)
Cash distributions to partners
(13,209
)
 
(4,214
)
 
(8,054
)
 

 
(1,267
)
 

 
(26,744
)
Non-cash equity compensation
390

 

 

 

 

 

 
390

Balance at June 30, 2014
$
73,176

 
$
157,203

 
$
(58,500
)
 
$
75,327

 
$
6,086

 
$

 
$
253,292

 

The following table shows the cash distributions paid or declared per common unit during 2014 and 2013:
Quarter Ended
 
Record Date
 
Payment Date
 
Distribution Per Unit
December 31, 2012
 
February 4, 2013
 
February 14, 2013
 
$0.4025
March 31, 2013
 
May 6, 2013
 
May 15, 2013
 
$0.4300
June 30, 2013
 
August 5, 2013
 
August 14, 2013
 
$0.4400
September 30, 2013
 
November 5, 2013
 
November 14, 2013
 
$0.4500
December 31, 2013
 
February 4, 2014
 
February 14, 2014
 
$0.4650
March 31, 2014
 
May 5, 2014
 
May 15, 2014
 
$0.4950
June 30, 2014
 
August 4, 2014
 
August 14, 2014
 
$0.5350

Equity incentive plan
On December 8, 2011, the board of directors of our general partner adopted the Rose Rock Midstream Equity Incentive Plan (the “Incentive Plan”). We granted 42,036 restricted unit awards during the six months ended June 30, 2014, with a weighted average grant date fair value of $40.43. At June 30, 2014, there were 107,868 unvested restricted unit awards that have been granted pursuant to the Incentive Plan. There were no vestings of restricted unit awards during the six months ended June 30, 2014.
The holders of restricted units granted in 2012 are entitled to equivalent distributions (“UUDs”) to be received upon vesting of the restricted unit awards. At June 30, 2014, the value of these UUDs related to unvested restricted units was approximately $107 thousand. This is equivalent to 1,952 common units, based on the quarter end close of business market price of our common units of $54.64 per unit. Distributions related to the restricted unit awards granted subsequent to 2012 will be settled in cash upon vesting. At June 30, 2014, the value of these UUDs related to cash settled unvested restricted units was approximately $95 thousand.
Equity issuance
On June 27, 2014, we issued 2,425,000 common limited partner units, 1,250,000 Class A units and made a non-cash contribution to the general partner related to our acquisition of the remaining 33% interest in SCPL from SemGroup (Note 3).
Earnings Per Limited Partner Unit
EARNINGS PER LIMITED PARTNER UNIT
EARNINGS PER LIMITED PARTNER UNIT
Net income is allocated to the general partner and the limited partners in accordance with their respective partnership percentages, after giving effect to any priority income allocations, such as incentive distributions that are allocated to the general partner.
Basic and diluted earnings per limited partner unit is determined by dividing net income allocated to the limited partners by the weighted average number of limited partner units for such class outstanding during the period. Diluted earnings per limited partner unit reflects, where applicable, the potential dilution that could occur if securities or other agreements to issue additional units of a limited partner class, such as restricted unit awards, were exercised, settled or converted into such units.
The following table sets forth the computation of basic and diluted earnings per limited partner unit for the three months and six months ended June 30, 2014 and 2013 (in thousands, except per unit data):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Net income attributable to Rose Rock Midstream, L.P.
$
11,048

 
$
9,134

 
$
23,531

 
$
21,128

Less: General partner's incentive distribution earned
888

 
72

 
1,376

 
112

Less: General partner's 2.0% ownership
221

 
183

 
471

 
423

Net income allocated to limited partners
$
9,939

 
$
8,879

 
$
21,684

 
$
20,593

Numerator for basic and diluted earnings per limited partner unit (*):
 
 
 
 
 
 
 
Allocation of net income among limited partner interests:
 
 
 
 
 
 
 
Net income allocable to common units
$
7,513

 
$
5,208

 
$
15,619

 
$
11,975

Net income allocable to subordinated units
3,063

 
3,674

 
6,860

 
8,447

Net income (loss) allocable to Class A units
(637
)
 
(3
)
 
(795
)
 
171

Net income allocated to limited partners
$
9,939

 
$
8,879

 
$
21,684

 
$
20,593

Denominator for basic and diluted earnings per limited partner unit:
 
 
 
 
 
 
 
Basic weighted average number of common units outstanding
18,336

 
11,894

 
18,243

 
11,680

Effect of non-vested restricted units
61

 
39

 
54

 
30

Diluted weighted average number of common units outstanding
18,397

 
11,933

 
18,297

 
11,710

Basic and diluted weighted average number of subordinated units outstanding
8,390

 
8,390

 
8,390

 
8,390

Basic and diluted weighted average number of Class A units outstanding
2,596

 
1,250

 
2,548

 
1,174

Net income per limited partner unit:
 
 
 
 
 
 
 
Common unit (basic)
$
0.41

 
$
0.44

 
$
0.86

 
$
1.02

Common unit (diluted)
$
0.41


$
0.44


$
0.85


$
1.02

Subordinated unit (basic and diluted)
$
0.37


$
0.44


$
0.82


$
1.01

Class A unit (basic and diluted)
$
(0.25
)

$
0.00


$
(0.31
)

$
0.15


(*) We calculate net income allocated to limited partners based on the distributions pertaining to the current period’s available cash as defined by our partnership agreement. After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, limited partners and participating securities in accordance with the contractual terms of the partnership agreement and as further prescribed under the two-class method. Incentive distribution rights do not participate in undistributed earnings. Class A units do not participate in cash distributions, but are allocated a proportional share of undistributed earnings.
Related Party Transactions
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS
Direct employee expenses
We do not directly employ any persons to manage or operate our business. These functions are performed by employees of SemGroup. SemGroup charged us $7.8 million and $3.1 million during the three months ended June 30, 2014 and 2013, respectively, for direct employee costs. SemGroup charged us $14.0 million and $6.0 million during the six months ended June 30, 2014 and 2013, respectively, for such direct employee costs. These expenses were recorded to operating expenses and general and administrative expenses in our condensed consolidated statements of income.
Allocated expenses
SemGroup incurs expenses to provide certain indirect corporate general and administrative services to its subsidiaries. Such expenses include employee compensation costs, professional fees and rental fees for office space, among other expenses. SemGroup charged us $2.8 million and $1.7 million during the three months ended June 30, 2014 and 2013, respectively, for such allocated costs. SemGroup charged us $4.6 million and $3.0 million during the six months ended June 30, 2014 and 2013, respectively, for such allocated costs. These expenses were recorded to general and administrative expenses in our condensed consolidated statements of income.
NGL Energy Partners LP and subsidiaries (Gavilon, LLC and High Sierra Crude Oil and Marketing, LLC)
SemGroup holds limited partner common units and general partner ownership interests in NGL Energy Partners LP (“NGL Energy”). We generated revenues from NGL Energy of $99.5 million and $167.9 million for the three months ended June 30, 2014 and 2013, respectively. We made purchases of condensate at market prices from NGL Energy in the amount of $110.1 million and $145.5 million for the three months ended June 30, 2014 and 2013, respectively. We received reimbursements from NGL Energy for support services in the amount of $42.0 thousand and $42.0 thousand for the three months ended June 30, 2014 and 2013, respectively.
We generated revenues from NGL Energy of $233.6 million and $329.3 million for the six months ended June 30, 2014 and 2013, respectively. We made purchases of condensate at market prices from NGL Energy in the amount of $267.8 million and $285.4 million for the six months ended June 30, 2014 and 2013, respectively. We received reimbursements from NGL Energy for support services in the amount of $84.0 thousand and $84.0 thousand for the six months ended June 30, 2014 and 2013, respectively.
Transactions with NGL Energy and its subsidiaries primarily relate to marketing, leased storage and transportation services of crude oil, including buy/sell transactions. In accordance with ASC 845-10-15, these transactions were reported as revenue on a net basis in our condensed consolidated statements of income because the purchases of inventory and subsequent sales of the inventory were with the same counterparty. For comparability, prior year amounts above have been recast to include transactions with Gavilon, LLC, which was not a related party until December 2013.

SemGas, L.P.
We purchase condensate at market prices from SemGas, L.P. (“SemGas”), which is a wholly-owned subsidiary of SemGroup. Purchases from SemGas were $9.8 million and $5.0 million for the three months ended June 30, 2014 and 2013, respectively. Purchases from SemGas were $19.7 million and $9.1 million for the six months ended June 30, 2014 and 2013, respectively.
White Cliffs
We generated storage revenues from our equity investee, White Cliffs, of $0.7 million and $0.8 million for the three months ended June 30, 2014 and 2013, respectively. We generated storage revenues from White Cliffs of $1.5 million and $1.3 million for the six months ended June 30, 2014 and 2013, respectively. We incurred $0.8 million and $1.7 million of cost for the three months and six months ended June 30, 2014, respectively, related to transportation fees for shipments on White Cliffs.
Glass Mountain Pipeline, LLC
SemGroup holds a 50% interest in Glass Mountain Pipeline, LLC ("GMP" or "Glass Mountain"). We incurred $0.1 million of cost for the three months and six months ended June 30, 2014 related to transportation fees for shipments on Glass Mountain's pipeline. We received $0.1 million and $0.2 million in fees from Glass Mountain for the three months and six months ended June 30, 2014, respectively, related to support services associated with Glass Mountain's pipeline operations.
Legal services
The law firm of Conner & Winters, LLP, of which Mark D. Berman is a partner, performs legal services for us. Mr. Berman is the spouse of Candice L. Cheeseman, General Counsel and Secretary. Mr. Berman does not perform any legal services for us. We paid $42.1 thousand and $0.1 million in legal fees and related expenses to this law firm during the three months ended June 30, 2014 and 2013, respectively (of which $27.0 thousand was paid by White Cliffs during the three months ended June 30, 2014). We paid $0.1 million and $0.2 million in legal fees and related expenses to this law firm during the six months ended June 30, 2014 and 2013, respectively (of which $81.0 thousand was paid by White Cliffs during the six months ended June 30, 2014).
Supplemental Cash Flow Information Supplemental Cash Flow Information
Cash Flow, Supplemental Disclosures [Text Block]
SUPPLEMENTAL CASH FLOW INFORMATION

Acquisitions
In connection with the acquisition of the remaining 33% interest in SCPL (Note 3), we issued 2.425 million common units and 1.25 million Class A units, valued at $120.0 million and $58.6 million, respectively, as non-cash consideration to SemGroup. In addition, a non-cash contribution of $3.6 million was recorded to the general partner's capital account.
As the transaction occurred between parties under common control, the purchase price in excess of SemGroup's historical cost of the 33% interest in SCPL was treated as an equity transaction with SemGroup, which reduced the partners' capital accounts pro-rata based on ownership percentages. Of the $206.6 million of purchase price in excess of historical cost, $24.4 million represented cash consideration in excess of historical cost and the remaining $182.2 million reduction represented the non-cash portion of the transaction related to equity consideration.
In connection with this transaction, at June 30, 2014, we accrued a $1.7 million distribution to the non-controlling interest in SCPL. This amount represents the cash distribution to be paid to SemGroup in July related to the June earnings of SCPL. This amount is not reflected in the cash flow statement for the six months ended June 30, 2014.
In the first quarter of 2013, in connection with the acquisition of a 33% interest in SCPL (Note 3), we issued 1.5 million common units and 1.25 million Class A units, valued at $44.4 million and $30.5 million, respectively, as non-cash consideration to SemGroup. In addition, a non-cash contribution of $2.7 million was recorded to the general partner's capital account.
As the transaction occurred between parties under common control, the purchase price in excess of SemGroup's historical cost of the 33% interest in SCPL was treated as an equity transaction with SemGroup, which reduced the partners' capital accounts pro-rata based on ownership percentages. Of the $221.0 million of purchase price in excess of historical cost, $143.2 million represented cash consideration in excess of historical cost and the remaining $77.8 million reduction represented the non-cash portion of the transaction related to equity consideration.
Senior unsecured note issuance
On June 27, 2014, we agreed to sell $400 million of 5.625% senior unsecured notes due 2022 (Note 5). The net proceeds from the offering of $391.9 million, after underwriters' fees and offering expenses, were received on July 2, 2014, and were used to pay down the revolving credit facility balance. At June 30, 2014, we recorded a receivable for the proceeds and $8.7 million of debt issuance costs. These non-cash transactions have not been reflected in the cash flow statement for the six months ended June 30, 2014.
Other supplemental disclosures
We paid cash interest of $5.3 million and $3.0 million for the six months ended June 30, 2014 and 2013, respectively.
No significant amounts were accrued for purchases of property, plant and equipment for the six months ended June 30, 2014 or 2013.
Overview (Policies)
OVERVIEW
Rose Rock Midstream, L.P. is a Delaware limited partnership. The general partner of Rose Rock Midstream, L.P. is Rose Rock Midstream GP, LLC, which is a wholly-owned subsidiary of SemGroup Corporation. SemGroup Corporation is a Delaware corporation headquartered in Tulsa, Oklahoma that provides diversified midstream services to the energy industry.
The terms “we,” “our,” “us,” “Rose Rock,” the “Partnership” and similar language used in these notes to the unaudited condensed consolidated financial statements refer to Rose Rock Midstream, L.P, and its subsidiaries. The term “SemGroup” refers to SemGroup Corporation and its controlled subsidiaries, including Rose Rock Midstream GP, LLC.
Basis of presentation
These condensed consolidated financial statements include the accounts of Rose Rock Midstream, L.P. and its controlled subsidiaries.
The condensed consolidated balance sheet at December 31, 2013, which is derived from audited financial statements and the unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules and regulations of the SEC. These condensed consolidated financial statements include all normal and recurring adjustments that, in the opinion of management, are necessary to present fairly the financial position of the Partnership and the results of its operations and its cash flows. All significant transactions between Rose Rock Midstream, L.P. and its consolidated subsidiaries have been eliminated.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts and disclosures in the financial statements. Although management believes these estimates are reasonable, actual results could differ materially from these estimates. The results of operations for the three months and six months ended June 30, 2014, are not necessarily indicative of the results to be expected for the full year ending December 31, 2014.
Pursuant to the rules and regulations of the SEC, the accompanying condensed consolidated financial statements do not include all of the information and notes normally included with financial statements prepared in accordance with accounting principles generally accepted in the United States. Certain reclassifications have been made to conform previously reported balances to the current presentation. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2013, which are included in our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC.
Our significant accounting policies are consistent with those described in our Annual Report on Form 10-K for the year ended December 31, 2013.
Recent accounting pronouncements
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers", which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP.
The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.
Basis of presentation
These condensed consolidated financial statements include the accounts of Rose Rock Midstream, L.P. and its controlled subsidiaries.
The condensed consolidated balance sheet at December 31, 2013, which is derived from audited financial statements and the unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules and regulations of the SEC. These condensed consolidated financial statements include all normal and recurring adjustments that, in the opinion of management, are necessary to present fairly the financial position of the Partnership and the results of its operations and its cash flows. All significant transactions between Rose Rock Midstream, L.P. and its consolidated subsidiaries have been eliminated.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts and disclosures in the financial statements. Although management believes these estimates are reasonable, actual results could differ materially from these estimates. The results of operations for the three months and six months ended June 30, 2014, are not necessarily indicative of the results to be expected for the full year ending December 31, 2014.
Pursuant to the rules and regulations of the SEC, the accompanying condensed consolidated financial statements do not include all of the information and notes normally included with financial statements prepared in accordance with accounting principles generally accepted in the United States. Certain reclassifications have been made to conform previously reported balances to the current presentation. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2013, which are included in our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC.
Our significant accounting policies are consistent with those described in our Annual Report on Form 10-K for the year ended December 31, 2013.
Recent accounting pronouncements
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers", which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP.
The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.
Financial Instruments (Policies)
Fair Value Measurement, Policy [Policy Text Block]
“Level 1” measurements are based on inputs consisting of unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. These include commodity futures contracts that are traded on an exchange.
“Level 2” measurements are based on inputs consisting of market observable and corroborated prices for similar derivative contracts. Assets and liabilities classified as Level 2 include OTC traded physical fixed priced purchases and sales forward contracts.
“Level 3” measurements are based on inputs from a pricing service and/or internal valuation models incorporating observable and unobservable market data.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value levels. At June 30, 2014, all of our physical fixed price forward purchases and sales contracts were being accounted for as normal purchases and normal sales.
Equity Method Investment (Tables)
Schedule of Income Statement Information on Equity Method Investments [Table Text Block]
Certain summarized income statement information of White Cliffs for the three months and six months ended June 30, 2014 and 2013 is shown below (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Revenues
$
34,533

 
$
30,112

 
$
67,807

 
$
60,785

Operating, general and administrative expenses
$
5,539

 
$
4,113

 
$
12,307

 
$
9,292

Depreciation and amortization expense
$
4,537

 
$
4,715

 
$
8,930

 
$
9,430

Net income
$
24,457

 
$
21,284

 
$
46,570

 
$
42,063

Acquisitions (Tables)
We have preliminarily estimated the fair value of the assets acquired as follows (in thousands):
Property, plant and equipment
$
21,700

Customer contract intangible
4,459

Goodwill
17,835

Total assets acquired
$
43,994

The acquisition above accounted for the majority of the change in our goodwill during the six months ended June 30, 2014, as follows (in thousands):
Balance at December 31, 2013
$
28,322

Acquisition
17,835

Barcas Field Services, L.L.C. purchase price adjustment
(98
)
Balance at June 30, 2014
$
46,059

Financial Instruments (Tables)
The table below summarizes the balances of these assets and liabilities at June 30, 2014 and December 31, 2013 (in thousands):
 
June 30, 2014
 
December 31, 2013
 
Level 1
 
Netting*
 
Total
 
Level 1
 
Netting*
 
Total
Assets
$
185

 
$

 
$
185

 
$
36

 
$
(36
)
 
$

Liabilities

 

 

 
96

 
(36
)
 
60

Net assets (liabilities) at fair value
$
185

 
$

 
$
185

 
$
(60
)
 
$

 
$
(60
)
* Relates primarily to exchange traded futures. Gain and loss positions on multiple contracts are settled net on a daily basis with the exchange.
The following table sets forth the notional quantities for commodity derivative instruments entered into during the periods indicated (in thousands of barrels): 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Sales
1,135

 
720

 
1,950

 
1,330

Purchases
1,005

 
615

 
1,815

 
1,290

The fair value of our commodity derivative assets and liabilities recorded to other current assets and other current liabilities was as follows (in thousands):
 
June 30, 2014
 
December 31, 2013
 
Assets
 
Liabilities
 
Assets
 
Liabilities
Commodity contracts
$
185

 
$

 
$

 
$
60

Realized and unrealized gains (losses) from our commodity derivatives were recorded to product revenue in the following amounts (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Commodity contracts
$
(1,942
)
 
$
(233
)
 
$
(2,749
)
 
$
(777
)
Long Term Debt Long Term Debt (Tables)
Early Redemption Premium Percentages [Table Text Block]
Year
 
Percentage
2017
 
104.219%
2018
 
102.813%
2019
 
101.406%
2020 and thereafter
 
100.000%
Commitments and Contingencies (Tables)
Purchase and sale commitments
We account for derivatives at fair value with the exception of commitments which have been designated as normal purchases and sales, for which we do not record assets or liabilities related to these agreements until the product is purchased or sold. At June 30, 2014, such commitments included the following (in thousands):
 
Volume
(Barrels)
 
Value
Fixed price purchases
145

 
$
13,348

Fixed price sales
175

 
$
17,720

Floating price purchases
9,329

 
$
949,093

Floating price sales
9,603

 
$
986,856

Partners' Capital and Distributions (Tables)
The following table shows the changes in our partners’ capital accounts from December 31, 2013 to June 30, 2014 (in thousands):
 
Common
Units -
Public
 
Common
Units -
SemGroup
 
Subordinated
Units
 
Class A Units
 
General
Partner
Interest
 
Non-controlling Interests
 
Total Equity
Balance at December 31, 2013
$
159,961

 
$
79,218

 
$
(5,375
)
 
$
40,772

 
$
5,995

 
$
78,557

 
$
359,128

Net income
11,250

 
4,369

 
6,860

 
(795
)
 
1,847

 
7,758

 
31,289

Cash distributions to noncontrolling interest in SCPL

 

 

 

 

 
(10,683
)
 
(10,683
)
Contributions from noncontrolling interest in SCPL

 

 

 

 

 
14,367

 
14,367

Purchase of remaining one-third interest in SCPL

 

 

 

 

 
(89,999
)
 
(89,999
)
Equity issuance

 
120,013

 

 
58,563

 
3,644

 

 
182,220

Purchase price in excess of historical cost of interest in SCPL
(85,173
)
 
(42,183
)
 
(51,931
)
 
(23,213
)
 
(4,133
)
 

 
(206,633
)
Unvested distribution equivalent rights
(43
)
 

 

 

 

 

 
(43
)
Cash distributions to partners
(13,209
)
 
(4,214
)
 
(8,054
)
 

 
(1,267
)
 

 
(26,744
)
Non-cash equity compensation
390

 

 

 

 

 

 
390

Balance at June 30, 2014
$
73,176

 
$
157,203

 
$
(58,500
)
 
$
75,327

 
$
6,086

 
$

 
$
253,292

The following table shows the cash distributions paid or declared per common unit during 2014 and 2013:
Quarter Ended
 
Record Date
 
Payment Date
 
Distribution Per Unit
December 31, 2012
 
February 4, 2013
 
February 14, 2013
 
$0.4025
March 31, 2013
 
May 6, 2013
 
May 15, 2013
 
$0.4300
June 30, 2013
 
August 5, 2013
 
August 14, 2013
 
$0.4400
September 30, 2013
 
November 5, 2013
 
November 14, 2013
 
$0.4500
December 31, 2013
 
February 4, 2014
 
February 14, 2014
 
$0.4650
March 31, 2014
 
May 5, 2014
 
May 15, 2014
 
$0.4950
June 30, 2014
 
August 4, 2014
 
August 14, 2014
 
$0.5350

Earnings Per Limited Partner Unit (Tables)
Computation of basic and diluted earnings per unit
The following table sets forth the computation of basic and diluted earnings per limited partner unit for the three months and six months ended June 30, 2014 and 2013 (in thousands, except per unit data):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Net income attributable to Rose Rock Midstream, L.P.
$
11,048

 
$
9,134

 
$
23,531

 
$
21,128

Less: General partner's incentive distribution earned
888

 
72

 
1,376

 
112

Less: General partner's 2.0% ownership
221

 
183

 
471

 
423

Net income allocated to limited partners
$
9,939

 
$
8,879

 
$
21,684

 
$
20,593

Numerator for basic and diluted earnings per limited partner unit (*):
 
 
 
 
 
 
 
Allocation of net income among limited partner interests:
 
 
 
 
 
 
 
Net income allocable to common units
$
7,513

 
$
5,208

 
$
15,619

 
$
11,975

Net income allocable to subordinated units
3,063

 
3,674

 
6,860

 
8,447

Net income (loss) allocable to Class A units
(637
)
 
(3
)
 
(795
)
 
171

Net income allocated to limited partners
$
9,939

 
$
8,879

 
$
21,684

 
$
20,593

Denominator for basic and diluted earnings per limited partner unit:
 
 
 
 
 
 
 
Basic weighted average number of common units outstanding
18,336

 
11,894

 
18,243

 
11,680

Effect of non-vested restricted units
61

 
39

 
54

 
30

Diluted weighted average number of common units outstanding
18,397

 
11,933

 
18,297

 
11,710

Basic and diluted weighted average number of subordinated units outstanding
8,390

 
8,390

 
8,390

 
8,390

Basic and diluted weighted average number of Class A units outstanding
2,596

 
1,250

 
2,548

 
1,174

Net income per limited partner unit:
 
 
 
 
 
 
 
Common unit (basic)
$
0.41

 
$
0.44

 
$
0.86

 
$
1.02

Common unit (diluted)
$
0.41


$
0.44


$
0.85


$
1.02

Subordinated unit (basic and diluted)
$
0.37


$
0.44


$
0.82


$
1.01

Class A unit (basic and diluted)
$
(0.25
)

$
0.00


$
(0.31
)

$
0.15

Equity Method Investment - Summarized Financial Information (Details) (White Cliffs Pipeline L L C [Member], USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
White Cliffs Pipeline L L C [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment, Summarized Financial Information, Revenue
$†34,533†
$†30,112†
$†67,807†
$†60,785†
Equity Method Investment, Summarized Financial Information, Operating, General and Administrative Expenses
5,539†
4,113†
12,307†
9,292†
Equity Method Investment, Summarized Financial Information, Depreciation and Amortization Expense
4,537†
4,715†
8,930†
9,430†
Equity Method Investment, Summarized Financial Information, Net Income (Loss)
$†24,457†
$†21,284†
$†46,570†
$†42,063†
Equity Method Investment (Details Textual)†(USD $)
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
White Cliffs Pipeline L L C [Member]
Jun. 30, 2013
White Cliffs Pipeline L L C [Member]
Jun. 30, 2014
White Cliffs Pipeline L L C [Member]
Jun. 30, 2013
White Cliffs Pipeline L L C [Member]
Jun. 30, 2014
White Cliffs Pipeline L L C [Member]
Jun. 30, 2014
White Cliffs Pipeline L L C [Member]
Jun. 30, 2014
White Cliffs Pipeline L L C [Member]
SemCrude Pipeline [Member]
Jun. 30, 2013
SemCrude Pipeline [Member]
Jun. 30, 2013
SemCrude Pipeline [Member]
Jun. 23, 2014
SemCrude Pipeline [Member]
Semgroup [Member]
Noncontrolling Interest [Member]
Jun. 30, 2014
Pipeline expansion [Member]
White Cliffs Pipeline L L C [Member]
Jun. 30, 2014
Pipeline expansion [Member]
White Cliffs Pipeline L L C [Member]
in
Aug. 1, 2014
Pipeline expansion [Member]
White Cliffs Pipeline L L C [Member]
bbl
Schedule of Equity Method Investments [Line Items]
Earnings from equity method investment
$†12,291,000†
$†3,451,000†
$†23,371,000†
$†6,904,000†
$†12,300,000†
$†23,400,000†
$†3,500,000†
$†6,900,000†
Cash distributions from equity method investment
14,500,000†
28,100,000†
4,200,000†
7,100,000†
Equity method investment, ownership percentage
51.00%†
33.00%†
General and administrative expense
6,001,000†
3,254,000†
9,624,000†
6,815,000†
400,000†
400,000†
800,000†
700,000†
Width of pipeline in inches
12†
Payments to acquire equity method investments
51,774,000†
66,193,000†
38,300,000†
51,000,000†
Pipeline capacity
150,000†
Estimated project contributions in year one
$†2,300,000†
$†2,300,000†
Acquisitions (Details)†(USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Business Acquisition [Line Items]
Goodwill
$†46,059†
$†28,322†
Chesapeake crude oil trucking assets [Member]
Business Acquisition [Line Items]
Property, plant and equipment
21,700†
Customer contract intangible
4,459†
Goodwill
17,835†
Total assets acquired
$†43,994†
Acquisitions - Goodwill Rollforward (Details)†(USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Goodwill, December 31, 2013
$†28,322†
Acquisition
17,835†
Barcas Field Services, L.L.C. purchase price adjustment
(98)
Goodwill, June 30, 2014
$†46,059†
Acquisitions (Details Textual)†(USD $)
6 Months Ended 0 Months Ended 0 Months Ended 6 Months Ended 0 Months Ended 6 Months Ended 0 Months Ended 0 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 24, 2014
Chesapeake crude oil trucking assets [Member]
Jun. 23, 2014
Chesapeake crude oil trucking assets [Member]
Trailers
Trucks
Sep. 3, 2013
Barcas Field Services, LLC [Member]
Nov. 8, 2013
Tampa Pipeline [Member]
Jun. 30, 2014
Tampa Pipeline [Member]
mi
in
Jan. 11, 2013
Common Class A [Member]
Initial Acquisition of 33% Interest in SemCrude Pipeline [Member]
Dec. 16, 2013
Common Class A [Member]
Second Acquisition of 33% Interest in SemCrude Pipeline [Member]
Jan. 11, 2013
Common Units [Member]
Initial Acquisition of 33% Interest in SemCrude Pipeline [Member]
Dec. 16, 2013
Common Units [Member]
Second Acquisition of 33% Interest in SemCrude Pipeline [Member]
Jun. 30, 2014
General Partner [Member]
Jun. 30, 2014
White Cliffs Pipeline L L C [Member]
SemCrude Pipeline [Member]
Jun. 23, 2014
SemCrude Pipeline [Member]
Acquisition of remaining 33% interest in SemCrude Pipeline [Member]
Jan. 11, 2013
SemCrude Pipeline [Member]
Initial Acquisition of 33% Interest in SemCrude Pipeline [Member]
Dec. 16, 2013
SemCrude Pipeline [Member]
Second Acquisition of 33% Interest in SemCrude Pipeline [Member]
Jun. 23, 2014
Noncontrolling Interest [Member]
SemCrude Pipeline [Member]
Semgroup [Member]
Jun. 23, 2014
Common Units [Member]
Acquisition of remaining 33% interest in SemCrude Pipeline [Member]
Jun. 23, 2014
Common Class A [Member]
Acquisition of remaining 33% interest in SemCrude Pipeline [Member]
Business Acquisition [Line Items]
Equity method investment, ownership percentage
51.00%†
33.00%†
33.00%†
33.00%†
Payments to acquire business
$†44,000,000†
$†49,000,000†
$†114,400,000†
$†173,100,000†
Units issued as consideration in acquisition
1,250,000†
1,250,000†
1,500,000†
1,500,000†
2,425,000†
1,250,000.00†
Percentage of ownership general partner interest
2.00%†
2.00%†
2.00%†
Trucks purchased
124†
Trailers purchased
122†
Payments to acquire equity method investments
51,774,000†
66,193,000†
189,500,000†
Barcas Field Services, L.L.C. purchase price adjustment
(98,000)
Length Of Pipeline Network
12†
Width of pipeline in inches
12†
Payments to acquire pipeline assets
$†12,392,000†
$†11,370,000†
$†8,200,000†
Financial Instruments - Summarized balance of assets and liabilities (Details)†(USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets
$†185†
$†0†
Liabilities
0†
60†
Derivative Assets (Liabilities), at Fair Value, Net
185†
(60)
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets
185†
36†
Liabilities
0†
96†
Derivative Assets (Liabilities), at Fair Value, Net
185†
(60)
Netting [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets
0†1
(36)1
Liabilities
0†1
(36)1
Derivative Assets (Liabilities), at Fair Value, Net
$†0†1