ROSE ROCK MIDSTREAM, L.P., 10-Q filed on 11/12/2013
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2013
Oct. 31, 2013
Common Units [Member]
Oct. 31, 2013
Subordinated Units [Member]
Oct. 31, 2013
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
Sep. 30, 2013†
Amendment Flag
false†
Document Fiscal Year Focus
2013†
Document Fiscal Period Focus
Q3†
Current Fiscal Year End Date
--12-31†
Entity Filer Category
Accelerated Filer†
Entity Common Stock, Shares Outstanding
16,643,581†
8,389,709†
1,250,000†
Condensed Consolidated Balance Sheets†(USD $)
In Thousands, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Current assets:
Cash and cash equivalents
$†1,914†
$†108†
Accounts receivable
257,901†
222,862†
Receivable from affiliates
178†
57†
Inventories
32,720†
24,840†
Other current assets
1,587†
2,750†
Total current assets
294,300†
250,617†
Property, plant and equipment (net of accumulated depreciation)
313,193†
291,530†
Equity method investment
77,449†
0†
Goodwill
27,261†
0†
Other intangible assets (net of accumulated amortization)
5,760†
0†
Other assets, net
4,776†
2,579†
Total assets
722,739†
544,726†
Current liabilities:
Accounts payable
237,010†
220,791†
Payable to affiliates
6,298†
2,649†
Accrued liabilities
7,426†
4,681†
Other current liabilities
3,757†
3,722†
Total current liabilities
254,491†
231,843†
Long-term debt
85,043†
4,562†
Commitments and contingencies (Note 6)
  †
  †
Partners' capital:
General partner
7,935†
6,159†
Total partners' capital
383,205†
308,321†
Total liabilities and partners' capital
722,739†
544,726†
SemGroup [Member] |
Class A units [Member] |
Sem Group [Member]
Partners' capital:
Limited partners' capital
18,008†
0†
Subordinated Units [Member] |
SemGroup [Member]
Partners' capital:
Limited partners' capital
51,304†
135,036†
Common Units [Member] |
Public [Member]
Partners' capital:
Limited partners' capital
252,360†
129,134†
Common Units [Member] |
SemGroup [Member]
Partners' capital:
Limited partners' capital
$†53,598†
$†37,992†
Condensed Consolidated Balance Sheets (Parenthetical)†(USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Accounts receivable, allowance
$†0†
$†0†
Property, plant and equipment, accumulated depreciation
45,657†
34,580†
Other intangible assets, accumulated amortization
$†258†
$†0†
Common Units [Member] |
Public [Member]
Common units, issued
13,753,872†
7,000,000†
Common units, outstanding
13,753,872†
7,000,000†
SemGroup [Member] |
Subordinated Units [Member]
Subordinated units, issued
8,389,709†
8,389,709†
Subordinated units, outstanding
8,389,709†
8,389,709†
SemGroup [Member] |
Common Units [Member]
Common units, issued
2,889,709†
1,389,709†
Common units, outstanding
2,889,709†
1,389,709†
Capital Unit, Class A [Member] |
SemGroup [Member] |
Sem Group [Member]
Class A units, issued
1,250,000†
0†
Class A units, outstanding
1,250,000†
0†
Condensed Consolidated Statements of Income (Unaudited)†(USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Revenues, including revenues from affiliates (Note 9):
Product
$†166,050†
$†120,358†
$†473,594†
$†435,814†
Service
15,781†
11,196†
40,891†
32,932†
Other
0†
0†
0†
(59)
Total revenues
181,831†
131,554†
514,485†
468,687†
Expenses, including expenses from affiliates (Note 9):
Costs of products sold, exclusive of depreciation and amortization
157,550†
111,790†
446,507†
412,847†
Operating
9,248†
5,698†
20,473†
17,146†
General and administrative
3,146†
4,081†
9,961†
8,830†
Depreciation and amortization
4,130†
3,066†
11,327†
9,032†
Total expenses
174,074†
124,635†
488,268†
447,855†
Earnings from equity method investment
3,527†
0†
10,431†
0†
Operating income
11,284†
6,919†
36,648†
20,832†
Other expenses:
Interest expense
1,873†
450†
6,121†
1,407†
Other expense
0†
0†
(12)
72†
Total other expenses
1,873†
450†
6,109†
1,479†
Net income
9,411†
6,469†
30,539†
19,353†
Earnings Per Unit [Abstract]
Net income allocated to general partner
188†
129†
611†
387†
Net income allocated to limited partners
9,096†1
6,340†1
29,689†1
18,966†1
General Partner Interest [Member]
Earnings Per Unit [Abstract]
Net income allocated to general partner
315†
129†
850†
387†
Common Class A [Member]
Earnings Per Unit [Abstract]
Net income allocated to limited partners
(103)
0†
37†
0†
Earnings per limited partner unit, basic and diluted (Note 8)
$†(0.08)
$†0.00†
$†0.03†
$†0.00†
Basic weighted average number of limited partner units outstanding:
Basic weighted average number of limited partner units outstanding
1,250,000†
0†
1,200,000†
0†
Diluted weighted average number of limited partner units outstanding:
Diluted weighted average number of limited partner units outstanding
1,250,000†
0†
1,200,000†
0†
Common Units [Member]
Earnings Per Unit [Abstract]
Net income allocated to limited partners
6,116†
3,170†
18,329†
9,483†
Earnings per limited partner unit, basic (Note 8)
$†0.38†
$†1.13†
Net Income (Loss), Per Outstanding Limited Partnership Unit, Basic, Net of Tax
$†0.45†
$†0.38†
$†1.46†
$†1.13†
Net Income (Loss), Net of Tax, Per Outstanding Limited Partnership Unit, Diluted
$†0.45†
$†0.38†
$†1.45†
$†1.13†
Basic weighted average number of limited partner units outstanding:
Basic weighted average number of limited partner units outstanding
13,442,000†
8,390,000†
12,587,000†
8,390,000†
Diluted weighted average number of limited partner units outstanding:
Diluted weighted average number of limited partner units outstanding
13,479,000†
8,409,000†
12,621,000†
8,404,000†
Subordinated Units [Member]
Earnings Per Unit [Abstract]
Net income allocated to limited partners
$†3,083†
$†3,170†
$†11,323†
$†9,483†
Earnings per limited partner unit, basic and diluted (Note 8)
$†0.37†
$†0.38†
$†1.35†
$†1.13†
Basic weighted average number of limited partner units outstanding:
Basic weighted average number of limited partner units outstanding
8,390,000†
8,390,000†
8,390,000†
8,390,000†
Diluted weighted average number of limited partner units outstanding:
Diluted weighted average number of limited partner units outstanding
8,390,000†
8,390,000†
8,390,000†
8,390,000†
Condensed Consolidated Statements of Cash Flows (Unaudited)†(USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Partners' Capital Account, Unit-based Compensation
$†578†
Cash flows from operating activities:
Net income
30,539†
19,353†
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
11,327†
9,032†
Loss (gain) on disposition of assets
0†
56†
Amortization of debt issuance costs
631†
261†
Non-cash equity compensation
578†
218†
Net unrealized (gain) loss related to derivative instruments
(1,759)
(432)
Earnings from equity method investment
10,431†
0†
Changes in assets and liabilities:
Decrease (increase) in accounts receivable
(35,039)
(73,660)
Decrease (increase) in receivable from affiliates
(121)
2,093†
Decrease (increase) in inventories
(9,659)
(7,557)
Decrease (increase) in other current assets
1,888†
106†
Decrease (increase) in other assets
7†
(21)
Increase (decrease) in accounts payable and accrued liabilities
20,074†
83,408†
Increase (decrease) in payable to affiliates
3,649†
2,668†
Net cash provided by operating activities
22,115†
35,525†
Cash flows from investing activities:
Capital expenditures
(14,346)
(17,552)
Proceeds from sale of long-lived assets
0†
145†
Investments in non-consolidated affiliate
(78,156)
0†
Acquisition of Barcas Field Services
(49,969)
0†
Distributions in excess of equity earnings of affiliates
707†
0†
Net cash used in investing activities
(141,764)
(17,407)
Cash flows from financing activities:
Debt issuance costs
(2,827)
(239)
Borrowings on credit facility
349,000†
76,500†
Principal payments on credit facility
(268,500)
(76,500)
Principal payments on capital lease obligations
(18)
(16)
Proceeds from issuance of common limited partners units
210,226†
0†
Contribution from general partner
3,242†
0†
Cash consideration in excess of historical cost in common control transaction
(143,216)
0†
Cash distributions to partners
(26,452)
(14,074)
Net cash provided by (used in) financing activities
121,455†
(14,329)
Net increase (decrease) in cash and cash equivalents
1,806†
3,789†
Cash and cash equivalents at beginning of period
108†
9,709†
Cash and cash equivalents at end of period
$†1,914†
$†13,498†
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. SemGroup Corporation is the successor entity of SemGroup, L.P., which was an Oklahoma limited partnership.
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, SemGroup, L.P., and their other 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.
These condensed consolidated 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.
These condensed consolidated financial statements are unaudited. The condensed consolidated balance sheet at December 31, 2012, is derived from audited financial statements.
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 nine months ended September 30, 2013, are not necessarily indicative of the results to be expected for the full year ending December 31, 2013.
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, 2012, which are included in our Annual Report on Form 10-K for the year ended December 31, 2012, 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, 2012.
Recent accounting pronouncements
On January 31, 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2013-01, "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities," which clarifies the scope of the offsetting disclosure requirements in ASU 2011-11, "Disclosures About Offsetting Assets and Liabilities." Under ASU 2013-01, the disclosure requirements apply to derivative instruments accounted for in accordance with Accounting Standards Codification ("ASC") 815, "Derivatives and Hedging," including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending arrangements that are either offset on the balance sheet or subject to an enforceable master netting arrangement or similar agreement. ASU 2013-01 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those years. Retrospective application is required for all comparative periods presented. We adopted this guidance in the first quarter of 2013. The impact of adoption was not material.
On February 28, 2013, the FASB issued ASU 2013-04, "Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force)." The ASU requires entities to “measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the following:
the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors; and
any additional amount the reporting entity expects to pay on behalf of its co-obligors.”
Required disclosures include a description of the joint and several arrangement and the total outstanding amount of the obligation for all joint parties. The ASU permits entities to aggregate disclosures (as opposed to providing separate disclosures for each joint and several obligation). These disclosure requirements are incremental to the existing related-party disclosure requirements in ASC 850, "Related Party Disclosures." The ASU is effective for public entities for all prior periods in fiscal years beginning on or after December 15, 2013 (and interim reporting periods within those years). We will adopt this guidance in the first quarter of 2014. The impact is not expected to be material.
Acquisitions
Mergers, Acquisitions and Dispositions Disclosures [Text Block]
ACQUISITIONS
SemCrude Pipeline, L.L.C
Contribution Agreement
On January 8, 2013, we entered into a Contribution Agreement (the “Contribution Agreement”) with SemGroup and certain of its subsidiaries. Pursuant to the terms of the Contribution Agreement, on January 11, 2013, we acquired a 33% interest in SemCrude Pipeline, L.L.C. (“SCPL”) from SemGroup in exchange 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 two percent general partner interest in us. SCPL owns a 51% membership interest in White Cliffs Pipeline, L.L.C. ("White Cliffs"), which owns a 527-mile pipeline system ("the White Cliffs Pipeline") that transports crude oil from Platteville, Colorado in the Denver-Julesburg Basin to Cushing, Oklahoma.
The Class A units are not entitled to receive any distributions of available cash (other than upon liquidation) prior to the first day of the month immediately following the first month for which the average daily throughput volume on the White Cliffs Pipeline for such month is 125,000 barrels per day or greater. Upon such date, the Class A units will automatically convert into common units.
The cash consideration was funded through a borrowing under our credit facility of approximately $130.3 million and the sale of 2.0 million common units through a private placement, as described below. The 1.5 million common units were valued at $29.63 per unit, or $44.4 million, based on the sales price to third-parties in the private placement. The Class A units were valued at $29.63 per unit discounted for the expected forbearance of distributions, or $30.5 million. The contribution to the general partner's capital account was made in the amount of $2.7 million.
We incurred $3.7 million of cost, of which $1.6 million of equity issuance costs were offset against proceeds, $1.6 million was related to the borrowing and was deferred, and $0.5 million was expensed as general and administrative expenses in the condensed consolidated statement of income.
We own a 33% interest in SCPL, which is effectively a 17% interest in White Cliffs. We account for our membership in SCPL as an equity method investment. 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.
As part of the transaction, we are required to fund 33% of SCPL's capital contribution requirements for White Cliffs related to an expansion project adding a 12-inch line from Platteville, Colorado to Cushing, Oklahoma. For the three months and nine months ended September 30, 2013, we contributed $12.0 million and $31.8 million, respectively. Remaining contributions will be made in 2014 and are expected to total $17.8 million.
Common Unit Purchase Agreement
On January 8, 2013, we entered into a Common Unit Purchase Agreement with certain purchasers (the “Purchasers”), pursuant to which, on January 11, 2013, 2.0 million common units were issued and sold to the Purchasers in a private placement at a price of $29.63 per common unit for aggregate consideration of approximately $59.3 million (the “Private Placement”). The Partnership used the net proceeds from the Private Placement to fund a portion of the purchase of a 33% interest in SCPL.
Registration Rights Agreement
In connection with the closing of the Private Placement on January 11, 2013, we entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Purchasers. Pursuant to the terms of the Registration Rights Agreement, within 30 days following the closing of the Private Placement, we were required to prepare and file a registration statement (the “Registration Statement”) to permit the public resale of the common units sold to the Purchasers in the Private Placement.
On February 5, 2013, we filed the Registration Statement with the SEC. The Registration Statement was declared effective by the SEC at 9:00 a.m. (Washington, D.C. time) on February 13, 2013. If the Purchasers become prohibited from using the Registration Statement under certain circumstances, or if the Registration Statement ceases to be effective or unusable for certain periods of time, we could be liable to the Purchasers for liquidated damages calculated in accordance with a formula, and subject to the limitations set forth in the Registration Rights Agreement.

Barcas Field Services, LLC

On August 1, 2013, we executed a definitive agreement to acquire the assets of Barcas Field Services, LLC ("Barcas"), which owns and operates a crude oil trucking fleet for $50.0 million in cash. The transaction closed on September 1, 2013. Highlights of the acquisition include the following:

114 trucks, 120 trailers and miscellaneous equipment; and
a long-term take-or-pay customer transportation agreement.

We have included Barcas in our condensed consolidated financial statements as of September 1, 2013. During the three months and nine months ended September 30, 2013, our condensed consolidated statements of income did not include material amounts of revenue or operating income related to Barcas. 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 have received a preliminary independent appraisal of the fair value of the assets acquired in the Barcas acquisition. The estimates of fair value reflected as of September 30, 2013, 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, 2013. We have preliminarily estimated the fair value of the assets acquired as follows (in thousands):

Property, plant and equipment
$
16,690

Customer contract intangible
6,018

Goodwill
27,261

Total assets acquired
$
49,969



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 and will be amortized on a straight-line basis over 15 years.

Tampa Pipeline

On November 11, 2013, we announced the acquisition of 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 $8.3 million. The pipeline was recently constructed by Noble Energy, Inc. and placed into service with the acquisition. The pipeline connects our Platteville, Colorado crude oil terminal to the Tampa, Colorado crude oil market.
Investment in non-consolidated affiliate Investment in non-consolidated affiliate
Equity Method Investments Disclosure [Text Block]
INVESTMENT IN NON-CONSOLIDATED AFFILIATE
SemCrude Pipeline, L.L.C.
We account for our 33% interest in SCPL under the equity method. Under the equity method, we do not report the individual assets and liabilities of SCPL on our condensed consolidated balance sheets. Instead, our membership interest is reflected in one line as a noncurrent asset on our condensed consolidated balance sheets.
For the three months and nine months ended September 30, 2013, we recorded equity in earnings of SCPL of $3.5 million and $10.4 million, respectively. For the three months and nine months ended September 30, 2013, we received cash distributions of $4.1 million and $11.1 million, respectively. Distributions are paid on a one-month lag. Accordingly, the cash distributions received for the three months and nine months ended September 30, 2013 relate to earnings from June to August 2013 and January to August 2013, respectively.
SCPL's only substantial asset is a 51% interest in White Cliffs. Thus, our 33% interest in SCPL is effectively a 17% interest in White Cliffs.
Certain summarized income statement information of White Cliffs for the three months and nine months ended September 30, 2013 is shown below (in thousands):
 
Three Months Ended September 30, 2013
 
Nine Months Ended September 30, 2013
Revenue
$
31,453

 
$
92,238

Operating, general and administrative expenses
$
5,141

 
$
14,433

Depreciation and amortization expense
$
4,720

 
$
14,150

Net income
$
21,579

 
$
63,642


The equity in earnings of White Cliffs for the three months and nine months ended September 30, 2013, recorded by SCPL, is less than 51% of the net income of White Cliffs for the same period, which ultimately reduces our equity in earnings of SCPL such that our share of earnings is less than 17% of the net income of White Cliffs. This is due to certain general and administrative expenses SCPL incurs 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 SCPL's ownership interest. White Cliffs recorded $0.5 million and $1.2 million of such general and administrative expense for the three months and nine months ended September 30, 2013, respectively.
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 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 certain commodity derivative assets and liabilities at fair value at each balance sheet date. The tables below summarize the balances of these assets and liabilities at September 30, 2013 and December 31, 2012 (in thousands):
 
September 30, 2013
 
December 31, 2012
 
Level 1
 
Netting*
 
Total
 
Level 1
 
Netting*
 
Total
Assets
$
857

 
$
(132
)
 
$
725

 
$
22

 
$
(22
)
 
$

Liabilities
132

 
(132
)
 

 
1,056

 
(22
)
 
1,034

Net assets (liabilities) at fair value
$
725

 
$

 
$
725

 
$
(1,034
)
 
$

 
$
(1,034
)
* 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 use as inputs unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. These include futures contracts that are traded on an exchange.
“Level 2” measurements use as inputs market observable and corroborated prices for similar derivative contracts. Assets and liabilities classified as Level 2 include over-the-counter (“OTC”) traded physical fixed price purchases and sales forward contracts.
“Level 3” measurements use as inputs information from a pricing service and internal valuation models incorporating observable and unobservable market data. These include physical fixed price purchases and sales forward contracts for which there is not a highly liquid OTC market and, therefore, are not included in Level 1 or Level 2 above.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the measurement requires judgment, and may affect the valuation of assets and liabilities and their placement within the fair value levels. At September 30, 2013, 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 nine months ended September 30, 2013 and 2012, 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 September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Sales
695

 
470

 
2,025

 
1,153

Purchases
805

 
380

 
2,095

 
1,066

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):
 
September 30, 2013
 
December 31, 2012
 
Assets
 
Liabilities
 
Assets
 
Liabilities
Commodity contracts
$
725

 
$

 
$

 
$
1,034


We have posted margin deposits as collateral with brokers who have the right of set off associated with these funds. Our margin accounts were in a net liability position at September 30, 2013 of $0.1 million. At December 31, 2012, our margin deposit balance was $1.9 million. 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 September 30, 2013 and December 31, 2012, we would have had net asset positions of $0.6 million and $0.9 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 September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Commodity contracts
$
(1,652
)
 
$
(631
)
 
$
(2,430
)
 
$
(342
)
Long Term Debt
Long-term Debt
LONG-TERM DEBT
Credit facility
On January 11, 2013, our credit facility capacity was increased to $385 million and we borrowed $133.5 million in connection with the purchase of a 33% interest in SCPL from SemGroup and to pay transaction related expenses. Approximately $1.6 million of related costs have been capitalized and will be amortized over the remaining life of the facility.
On September 20, 2013, the credit agreement was amended to extend the agreement to September 20, 2018, and permit the increase of the facility by not more than $200 million, subject to certain conditions. The amended agreement allows the Partnership to incur unsecured or subordinated debt without limitation, subject to certain conditions, and provides alternative financial performance covenants at our election after the issuance of $200 million or more unsecured or subordinated debt, in aggregate. Additionally, the interest rate and commitment fees related to the revolving facility were lowered.
At September 30, 2013, we had outstanding borrowings of $85.0 million on this facility, of which $55.0 million incurred interest at the alternate base rate ("ABR") plus an applicable margin, and $30 million incurred interest at the Eurodollar rate plus an applicable margin. The interest rate in effect at September 30, 2013, on $55.0 million of ABR borrowings was 4.50%. The interest rate in effect at September 30, 2013, on $30 million of Eurodollar rate borrowings was 2.53%.
We had $31.8 million in outstanding letters of credit at September 30, 2013 and the rate per annum was 2.25%. 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 September 30, 2013, we had $7.6 million of secured bilateral letters of credit outstanding. The interest rate in effect was 1.75% on $0.6 million and 2.0% on $7.0 million. Secured bilateral letters of credit are external to the facility and do not reduce revolver availability.
At September 30, 2013, we were in compliance with the terms of the credit agreement.
At September 30, 2013, $3.7 million in capitalized loan fees, net of accumulated amortization, was recorded in other noncurrent assets, which is being amortized over the life of the facility.
At September 30, 2013, we had $43 thousand ($69 thousand including current portion) of capital lease obligations reported as long-term debt on the consolidated balance sheet.
We estimate that the fair value of our long-term debt was not materially different than the reported values at September 30, 2013, 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 debt outstanding at September 30, 2013.

Shelf Registration Statement
On May 15, 2013, we filed a universal shelf registration statement with the SEC on Form S-3, which became effective on May 29, 2013. Pursuant to this registration statement, we may issue debt securities in one or more series, as to any of which Rose Rock Finance Corporation ("Rose Rock Finance") may be a co-issuer on a joint and several basis with Rose Rock. Rose Rock Finance was incorporated under the laws of the State of Delaware on May 6, 2013, and is 100 percent-owned by Rose Rock. Rose Rock Finance was organized for the purpose of co-issuing our debt securities and has no material assets or any liabilities.
Any debt securities that we offer under this registration statement will be direct, unsecured general obligations. The debt securities will be either senior debt securities or subordinated debt securities. As of September 30, 2013, no debt securities have been issued under this registration statement.
In the event that one or more of certain 100 percent-owned subsidiaries of Rose Rock (Rose Rock Midstream Operating, LLC, Rose Rock Midstream Energy GP, LLC and/or Rose Rock Midstream Crude, L.P.) guarantees such debt securities, when issued, such guarantees will be full and unconditional and will constitute the joint and several obligations of such subsidiaries. Rose Rock Midstream Operating, LLC, Rose Rock Midstream Energy GP, LLC and Rose Rock Midstream Crude, L.P. are our sole subsidiaries, other than Rose Rock Finance. We have no assets or operations independent of our subsidiaries, and there are no significant restrictions upon the ability of us, or any of our subsidiaries, to obtain funds from its respective subsidiaries by dividend or loan. None of the assets of our subsidiaries represent restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X under the Securities Act of 1933, as amended.
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. While SemGroup believes that this action is without merit and is vigorously defending this matter on appeal, an adverse ruling on this account could have a material adverse impact on us. We are indemnified by SemGroup against any loss in this matter pursuant to the terms of the omnibus agreement.
(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.
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 KDHE believed, based on their historical use, may have soil or groundwater contamination in excess of state standards. KDHE sought our agreement to undertake assessments of these sites to determine whether they are contaminated. SemGroup entered into a Consent Agreement and Final Order with KDHE to conduct environmental assessments on the sites and to pay KDHE’s costs associated with their oversight of this matter. 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.
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 she 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. Blueknight is resisting discovery and has asked for summary judgment against SemCrude and the other defendants for the entire terminal and pipeline system shortage. 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.
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 September 30, 2013, such commitments included the following (in thousands):
 
Volume
(Barrels)
 
Value
Fixed price purchases
202

 
$
20,324

Fixed price sales
330

 
$
34,749

Floating price purchases
18,015

 
$
1,781,247

Floating price sales
17,743

 
$
1,796,814


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, 2012 to September 30, 2013 (in thousands):
 
Common
Units -
Public
 
Common
Units -
SemGroup
 
Subordinated
Units
 
Class A Units
 
General
Partner
Interest
 
Total
Partners’
Capital
Balance at December 31, 2012
$
129,134

 
$
37,992

 
$
135,036

 
$

 
$
6,159

 
$
308,321

Net income
14,429

 
3,900

 
11,323

 
37

 
850

 
30,539

Equity issuance
210,226

 
44,445

 

 
30,543

 
5,986

 
291,200

Purchase price in excess of historical cost of interest in SemCrude Pipeline, L.L.C.
(90,516
)
 
(29,063
)
 
(84,379
)
 
(12,572
)
 
(4,418
)
 
(220,948
)
Unvested distribution equivalent rights
(33
)
 

 

 

 

 
(33
)
Cash distributions
(11,458
)
 
(3,676
)
 
(10,676
)
 

 
(642
)
 
(26,452
)
Non-cash equity compensation
578

 

 

 

 

 
578

Balance at September 30, 2013
$
252,360

 
$
53,598

 
$
51,304

 
$
18,008

 
$
7,935

 
$
383,205

 
Distribution rights
We intend to pay a minimum quarterly distribution of $0.3625 per unit, to the extent we have sufficient cash from operations after establishment of cash reserves and payment of fees and expenses, including payments to our general partner and its affiliates. We refer to this cash as “available cash,” and it is defined in our partnership agreement. Our ability to pay the minimum quarterly distribution is subject to various restrictions and other factors.
Our partnership agreement requires that we distribute all of our available cash each quarter in the following manner:
first, 98.0% to the holders of common units and 2.0% to our general partner, until each common unit has received the minimum quarterly distribution of $0.3625, plus any arrearages from prior quarters;
second, 98.0% to the holders of subordinated units and 2.0% to our general partner, until each subordinated unit has received the minimum quarterly distribution of $0.3625; and
third, 98.0% to all unitholders, pro rata, and 2.0% to our general partner, until each unit has received a distribution of $0.416875.
If cash distributions to our unitholders exceed $0.416875 per unit in any quarter, our general partner will receive, in addition to distributions on its 2.0% general partner interest, increasing percentages, up to 48.0%, of the cash we distribute in excess of that amount. We refer to these distributions as “incentive distributions.” The following table summarizes the incentive distribution levels:
 
 
 
 
 
 
 
Marginal Percentage
Interest in Distributions
 
 
Total Quarterly Distribution
Per Unit Target Amount
 
Unitholders
 
General
Partner
Interest
 
Incentive
Distribution
Rights
Minimum Quarterly Distribution
 
 
 
$0.3625
 
98.0
%
 
2.0
%
 
%
First Target Distribution
above
$0.3625
 
up to
$0.416875
 
98.0
%
 
2.0
%
 
%
Second Target Distribution
above
$0.416875
 
up to
$0.453125
 
85.0
%
 
2.0
%
 
13.0
%
Third Target Distribution
above
$0.453125
 
up to
$0.54375
 
75.0
%
 
2.0
%
 
23.0
%
Thereafter
 
 
 
above
$0.54375
 
50.0
%
 
2.0
%
 
48.0
%

The following table shows the cash distributions paid or declared per common limited partner unit during 2013 and 2012:
Quarter Ended
 
Record Date
 
Payment Date
 
Distribution Per Unit
 
December 31, 2011
 
February 3, 2012
 
February 13, 2012
 
$0.0670
*
March 31, 2012
 
May 7, 2012
 
May 15, 2012
 
$0.3725
 
June 30, 2012
 
August 6, 2012
 
August 14, 2012
 
$0.3825
 
September 30, 2012
 
November 5, 2012
 
November 14, 2012
 
$0.3925
 
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
 
* Calculated as the $0.3625 minimum quarterly distribution, prorated based on the length of time during the three months ended December 31, 2011, that was subsequent to our initial public offering.
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 have reserved 840,000 limited partner common units for issuance to non-management directors and employees under the Incentive Plan. We granted 43,392 restricted unit awards during the nine months ended September 30, 2013, with a weighted average grant date fair value of $34.22. At September 30, 2013, there are 83,620 unvested restricted unit awards that have been granted pursuant to the Incentive Plan. Generally, the awards vest three years after the date of grant for employees and one year after the date of grant for non-managerial directors, contingent upon the continued service of the recipients and may be subject to accelerated vesting in the event of involuntary terminations. We had vestings of 3,872 restricted unit awards for the nine months ended September 30, 2013.
The holders of restricted units granted in 2012 are entitled to equivalent distributions (“UUDs”) to be received upon vesting of the restricted unit awards. The distributions will be settled in common units, based on the market price of our limited partner common units as of the close of business on the vesting date. The UUDs are subject to the same forfeiture and acceleration conditions as the associated restricted units. Of the 3,872 restricted unit awards that vested for the nine months ended September 30, 2013, 140 were UUDs that vested. At September 30, 2013, the value of the UUDs related to unvested restricted units was approximately $93 thousand. This is equivalent to 2,904 common units, based on the quarter end close of business market price of our common units of $31.95 per unit. Distributions related to the 2013 restricted unit awards will be settled in cash upon vesting.
Equity issuance
On August 13, 2013, we issued 4,750,000 common limited partner units to the public for proceeds of $152.5 million, net of underwriting discounts and commissions of $6.4 million. Our general partner contributed $3.2 million to the Partnership to maintain its 2% ownership. Proceeds were used to repay borrowings on our credit facility.
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 nine months ended September 30, 2013 and 2012 (in thousands, except per unit data):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Net income
$
9,411

 
$
6,469

 
$
30,539

 
$
19,353

Less: General partner’s incentive distribution earned (*)
127

 

 
239

 

Less: General partner’s 2.0% ownership
188

 
129

 
611

 
387

Net income allocated to limited partners
$
9,096

 
$
6,340

 
$
29,689

 
$
18,966

Numerator for basic and diluted earnings per limited partner unit (**):
 
 
 
 
 
 
 
Allocation of net income among limited partner interests:
 
 
 
 
 
 
 
Net income allocable to common units
$
6,116

 
$
3,170

 
$
18,329

 
$
9,483

Net income allocable to subordinated units
3,083

 
3,170

 
11,323

 
9,483

Net income (loss) allocable to Class A units
(103
)
 

 
37

 

Net income allocated to limited partners
$
9,096

 
$
6,340

 
$
29,689

 
$
18,966

Denominator for basic and diluted earnings per limited partner unit:
 
 
 
 
 
 
 
Basic weighted average number of common units outstanding
13,442

 
8,390

 
12,587

 
8,390

Effect of non-vested restricted units
37

 
19

 
34

 
14

Diluted weighted average number of common units outstanding
13,479

 
8,409

 
12,621

 
8,404

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
1,250

 

 
1,200

 

Net income per limited partner unit:
 
 
 
 
 
 
 
Common units (basic)
$
0.45

 
$
0.38

 
$
1.46

 
$
1.13

Common units (diluted)
$
0.45


$
0.38


$
1.45


$
1.13

Subordinated units (basic and diluted)
$
0.37


$
0.38


$
1.35


$
1.13

Class A units (basic and diluted)
$
(0.08
)

$


$
0.03


$


(*) Based on the amount of the distribution declared per common and subordinated unit related to earnings for the three months and nine months ended September 30, 2012, our general partner was not entitled to receive incentive distributions for those periods.
(**) 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 $2.3 million and $2.9 million during the three months ended September 30, 2013 and 2012, respectively, for direct employee costs. SemGroup charged us $8.3 million and $8.9 million during the nine months ended September 30, 2013 and 2012, respectively. 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 $1.6 million and $2.8 million during the three months ended September 30, 2013 and 2012, respectively, for such allocated costs. SemGroup charged us $4.6 million and $4.8 million during the nine months ended September 30, 2013 and 2012, respectively. These expenses were recorded to general and administrative expenses in our condensed consolidated statements of income.
NGL Energy Partners LP
SemGroup holds certain ownership interests in NGL Energy Partners LP (“NGL Energy”) and its general partner. During the three months ended September 30, 2013 and 2012, we made purchases of condensate at market prices from NGL Energy in the amounts of $8.0 million and $10.9 million, respectively. During the nine months ended September 30, 2013 and 2012, we made purchases from NGL Energy in the amounts of $8.0 million and $36.6 million, respectively. We received reimbursements from NGL Energy for transition services in the amounts of $56.0 thousand and $140.0 thousand for the three months and nine months ended September 30, 2013, respectively. There were no reimbursements from NGL Energy during the three months and the nine months ended September 30, 2012.
High Sierra Crude Oil and Marketing, LLC
We generated revenues from High Sierra Crude Oil and Marketing, LLC ("High Sierra"), which is a subsidiary of NGL Energy, of $15.7 million and $12.4 million for the three months ended September 30, 2013 and 2012, respectively. We generated revenues from High Sierra of $68.6 million and $23.4 million for the nine months ended September 30, 2013 and 2012, respectively. Purchases from High Sierra were $6.5 million and $16.3 million for the three months ended September 30, 2013 and 2012, respectively. Purchases from High Sierra were $34.7 million and $32.2 million for the nine months ended September 30, 2013 and 2012, respectively. Transactions with High Sierra primarily relate to transportation and marketing of crude oil and condensate. In accordance with ASC 845-10-15, these transactions were reported as revenue on a net basis in our condensed consolidated statements of operations and comprehensive income as the purchases of inventory and subsequent sales of the inventory were with the same counterparty.

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 $6.6 million and $2.3 million for the three months ended September 30, 2013 and 2012, respectively. Purchases from SemGas were $15.7 million and $7.5 million for the nine months ended September 30, 2013 and 2012, respectively.
White Cliffs
SemGroup owns 51% of White Cliffs and exercises significant influence over it. We indirectly own 17% of White Cliffs through our investment in SCPL subsequent to our January 2013 acquisition. We generated storage revenues from White Cliffs of $0.8 million and $0.6 million for the three months ended September 30, 2013 and 2012, respectively. We generated storage revenues from White Cliffs of $2.1 million and $1.8 million for the nine months ended September 30, 2013 and 2012, respectively.
Legal services
The law firm of Conner & Winters, LLP, of which Mark D. Berman is a partner, performs legal services for us. Mr. Berman is the spouse of Candice L. Cheeseman, General Counsel and Secretary. Mr. Berman does not perform any legal services for us. We paid $0.1 million and $0.1 million in legal fees and related expenses to this law firm during the three months ended September 30, 2013 and 2012, respectively. We paid $0.4 million and $0.4 million in legal fees and related expenses to this law firm during the nine months ended September 30, 2013 and 2012, respectively.
Supplemental Cash Flow Information Supplemental Cash Flow Information
Cash Flow, Supplemental Disclosures [Text Block]
10.
SUPPLEMENTAL CASH FLOW INFORMATION

Acquisition
In connection with the acquisition of a 33% interest in SCPL (Note 2), 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.
Other supplemental disclosures
We paid cash interest of $5.0 million and $0.8 million for the nine months ended September 30, 2013 and 2012, respectively.
No significant amounts were accrued for purchases of property, plant and equipment for the nine months ended September 30, 2013. We accrued $1.5 million for purchases of property, plant and equipment for the nine months ended September 30, 2012.
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. SemGroup Corporation is the successor entity of SemGroup, L.P., which was an Oklahoma limited partnership.
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, SemGroup, L.P., and their other 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.
These condensed consolidated 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.
These condensed consolidated financial statements are unaudited. The condensed consolidated balance sheet at December 31, 2012, is derived from audited financial statements.
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 nine months ended September 30, 2013, are not necessarily indicative of the results to be expected for the full year ending December 31, 2013.
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, 2012, which are included in our Annual Report on Form 10-K for the year ended December 31, 2012, 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, 2012.
Recent accounting pronouncements
On January 31, 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2013-01, "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities," which clarifies the scope of the offsetting disclosure requirements in ASU 2011-11, "Disclosures About Offsetting Assets and Liabilities." Under ASU 2013-01, the disclosure requirements apply to derivative instruments accounted for in accordance with Accounting Standards Codification ("ASC") 815, "Derivatives and Hedging," including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending arrangements that are either offset on the balance sheet or subject to an enforceable master netting arrangement or similar agreement. ASU 2013-01 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those years. Retrospective application is required for all comparative periods presented. We adopted this guidance in the first quarter of 2013. The impact of adoption was not material.
On February 28, 2013, the FASB issued ASU 2013-04, "Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force)." The ASU requires entities to “measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the following:
the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors; and
any additional amount the reporting entity expects to pay on behalf of its co-obligors.”
Required disclosures include a description of the joint and several arrangement and the total outstanding amount of the obligation for all joint parties. The ASU permits entities to aggregate disclosures (as opposed to providing separate disclosures for each joint and several obligation). These disclosure requirements are incremental to the existing related-party disclosure requirements in ASC 850, "Related Party Disclosures." The ASU is effective for public entities for all prior periods in fiscal years beginning on or after December 15, 2013 (and interim reporting periods within those years). We will adopt this guidance in the first quarter of 2014. The impact is not expected to be material.
Basis of presentation
These condensed consolidated financial statements include the accounts of Rose Rock Midstream, L.P. and its controlled subsidiaries.
These condensed consolidated 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.
These condensed consolidated financial statements are unaudited. The condensed consolidated balance sheet at December 31, 2012, is derived from audited financial statements.
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 nine months ended September 30, 2013, are not necessarily indicative of the results to be expected for the full year ending December 31, 2013.
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, 2012, which are included in our Annual Report on Form 10-K for the year ended December 31, 2012, 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, 2012.
Recent accounting pronouncements
On January 31, 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2013-01, "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities," which clarifies the scope of the offsetting disclosure requirements in ASU 2011-11, "Disclosures About Offsetting Assets and Liabilities." Under ASU 2013-01, the disclosure requirements apply to derivative instruments accounted for in accordance with Accounting Standards Codification ("ASC") 815, "Derivatives and Hedging," including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending arrangements that are either offset on the balance sheet or subject to an enforceable master netting arrangement or similar agreement. ASU 2013-01 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those years. Retrospective application is required for all comparative periods presented. We adopted this guidance in the first quarter of 2013. The impact of adoption was not material.
On February 28, 2013, the FASB issued ASU 2013-04, "Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force)." The ASU requires entities to “measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the following:
the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors; and
any additional amount the reporting entity expects to pay on behalf of its co-obligors.”
Required disclosures include a description of the joint and several arrangement and the total outstanding amount of the obligation for all joint parties. The ASU permits entities to aggregate disclosures (as opposed to providing separate disclosures for each joint and several obligation). These disclosure requirements are incremental to the existing related-party disclosure requirements in ASC 850, "Related Party Disclosures." The ASU is effective for public entities for all prior periods in fiscal years beginning on or after December 15, 2013 (and interim reporting periods within those years). We will adopt this guidance in the first quarter of 2014. The impact is not expected to be material.

“Level 1” measurements use as inputs unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. These include futures contracts that are traded on an exchange.
“Level 2” measurements use as inputs market observable and corroborated prices for similar derivative contracts. Assets and liabilities classified as Level 2 include over-the-counter (“OTC”) traded physical fixed price purchases and sales forward contracts.
“Level 3” measurements use as inputs information from a pricing service and internal valuation models incorporating observable and unobservable market data. These include physical fixed price purchases and sales forward contracts for which there is not a highly liquid OTC market and, therefore, are not included in Level 1 or Level 2 above.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the measurement requires judgment, and may affect the valuation of assets and liabilities and their placement within the fair value levels. At September 30, 2013, all of our physical fixed price forward purchases and sales contracts were being accounted for as normal purchases and normal sales.
Financial Instruments Financial Instruments (Policies)
Fair Value Measurement, Policy [Policy Text Block]
“Level 1” measurements use as inputs unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. These include futures contracts that are traded on an exchange.
“Level 2” measurements use as inputs market observable and corroborated prices for similar derivative contracts. Assets and liabilities classified as Level 2 include over-the-counter (“OTC”) traded physical fixed price purchases and sales forward contracts.
“Level 3” measurements use as inputs information from a pricing service and internal valuation models incorporating observable and unobservable market data. These include physical fixed price purchases and sales forward contracts for which there is not a highly liquid OTC market and, therefore, are not included in Level 1 or Level 2 above.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the measurement requires judgment, and may affect the valuation of assets and liabilities and their placement within the fair value levels. At September 30, 2013, all of our physical fixed price forward purchases and sales contracts were being accounted for as normal purchases and normal sales.
Acquisitions Acquisitions (Tables)
Preliminary purchase price allocation
We have preliminarily estimated the fair value of the assets acquired as follows (in thousands):

Property, plant and equipment
$
16,690

Customer contract intangible
6,018

Goodwill
27,261

Total assets acquired
$
49,969

Investment in non-consolidated affiliate Investment in non-consolidated affiliate (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 nine months ended September 30, 2013 is shown below (in thousands):
 
Three Months Ended September 30, 2013
 
Nine Months Ended September 30, 2013
Revenue
$
31,453

 
$
92,238

Operating, general and administrative expenses
$
5,141

 
$
14,433

Depreciation and amortization expense
$
4,720

 
$
14,150

Net income
$
21,579

 
$
63,642

Financial Instruments (Tables)
We record certain commodity derivative assets and liabilities at fair value at each balance sheet date. The tables below summarize the balances of these assets and liabilities at September 30, 2013 and December 31, 2012 (in thousands):
 
September 30, 2013
 
December 31, 2012
 
Level 1
 
Netting*
 
Total
 
Level 1
 
Netting*
 
Total
Assets
$
857

 
$
(132
)
 
$
725

 
$
22

 
$
(22
)
 
$

Liabilities
132

 
(132
)
 

 
1,056

 
(22
)
 
1,034

Net assets (liabilities) at fair value
$
725

 
$

 
$
725

 
$
(1,034
)
 
$

 
$
(1,034
)
* Relates primarily to exchange traded futures. Gain and loss positions on multiple contracts are settled net on a daily basis with the exchange.
There were no financial assets or liabilities classified as Level 2 or Level 3 during the three months and nine months ended September 30, 2013 and 2012, 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 September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Sales
695

 
470

 
2,025

 
1,153

Purchases
805

 
380

 
2,095

 
1,066

The fair value of our commodity derivative assets and liabilities recorded to other current assets and other current liabilities was as follows (in thousands):
 
September 30, 2013
 
December 31, 2012
 
Assets
 
Liabilities
 
Assets
 
Liabilities
Commodity contracts
$
725

 
$

 
$

 
$
1,034

Realized and unrealized gains (losses) from our commodity derivatives were recorded to product revenue in the following amounts (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Commodity contracts
$
(1,652
)
 
$
(631
)
 
$
(2,430
)
 
$
(342
)
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 September 30, 2013, such commitments included the following (in thousands):
 
Volume
(Barrels)
 
Value
Fixed price purchases
202

 
$
20,324

Fixed price sales
330

 
$
34,749

Floating price purchases
18,015

 
$
1,781,247

Floating price sales
17,743

 
$
1,796,814

Partners' Capital and Distributions (Tables)
The following table shows the changes in our partners’ capital accounts from December 31, 2012 to September 30, 2013 (in thousands):
 
Common
Units -
Public
 
Common
Units -
SemGroup
 
Subordinated
Units
 
Class A Units
 
General
Partner
Interest
 
Total
Partners’
Capital
Balance at December 31, 2012
$
129,134

 
$
37,992

 
$
135,036

 
$

 
$
6,159

 
$
308,321

Net income
14,429

 
3,900

 
11,323

 
37

 
850

 
30,539

Equity issuance
210,226

 
44,445

 

 
30,543

 
5,986

 
291,200

Purchase price in excess of historical cost of interest in SemCrude Pipeline, L.L.C.
(90,516
)
 
(29,063
)
 
(84,379
)
 
(12,572
)
 
(4,418
)
 
(220,948
)
Unvested distribution equivalent rights
(33
)
 

 

 

 

 
(33
)
Cash distributions
(11,458
)
 
(3,676
)
 
(10,676
)
 

 
(642
)
 
(26,452
)
Non-cash equity compensation
578

 

 

 

 

 
578

Balance at September 30, 2013
$
252,360

 
$
53,598

 
$
51,304

 
$
18,008

 
$
7,935

 
$
383,205

The following table summarizes the incentive distribution levels:
 
 
 
 
 
 
 
Marginal Percentage
Interest in Distributions
 
 
Total Quarterly Distribution
Per Unit Target Amount
 
Unitholders
 
General
Partner
Interest
 
Incentive
Distribution
Rights
Minimum Quarterly Distribution
 
 
 
$0.3625
 
98.0
%
 
2.0
%
 
%
First Target Distribution
above
$0.3625
 
up to
$0.416875
 
98.0
%
 
2.0
%
 
%
Second Target Distribution
above
$0.416875
 
up to
$0.453125
 
85.0
%
 
2.0
%
 
13.0
%
Third Target Distribution
above
$0.453125
 
up to
$0.54375
 
75.0
%
 
2.0
%
 
23.0
%
Thereafter
 
 
 
above
$0.54375
 
50.0
%
 
2.0
%
 
48.0
%
The following table shows the cash distributions paid or declared per common limited partner unit during 2013 and 2012:
Quarter Ended
 
Record Date
 
Payment Date
 
Distribution Per Unit
 
December 31, 2011
 
February 3, 2012
 
February 13, 2012
 
$0.0670
*
March 31, 2012
 
May 7, 2012
 
May 15, 2012
 
$0.3725
 
June 30, 2012
 
August 6, 2012
 
August 14, 2012
 
$0.3825
 
September 30, 2012
 
November 5, 2012
 
November 14, 2012
 
$0.3925
 
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
 
* Calculated as the $0.3625 minimum quarterly distribution, prorated based on the length of time during the three months ended December 31, 2011, that was subsequent to our initial public offering.
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 nine months ended September 30, 2013 and 2012 (in thousands, except per unit data):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Net income
$
9,411

 
$
6,469

 
$
30,539

 
$
19,353

Less: General partner’s incentive distribution earned (*)
127

 

 
239

 

Less: General partner’s 2.0% ownership
188

 
129

 
611

 
387

Net income allocated to limited partners
$
9,096

 
$
6,340

 
$
29,689

 
$
18,966

Numerator for basic and diluted earnings per limited partner unit (**):
 
 
 
 
 
 
 
Allocation of net income among limited partner interests:
 
 
 
 
 
 
 
Net income allocable to common units
$
6,116

 
$
3,170

 
$
18,329

 
$
9,483

Net income allocable to subordinated units
3,083

 
3,170

 
11,323

 
9,483

Net income (loss) allocable to Class A units
(103
)
 

 
37

 

Net income allocated to limited partners
$
9,096

 
$
6,340

 
$
29,689

 
$
18,966

Denominator for basic and diluted earnings per limited partner unit:
 
 
 
 
 
 
 
Basic weighted average number of common units outstanding
13,442

 
8,390

 
12,587

 
8,390

Effect of non-vested restricted units
37

 
19

 
34

 
14

Diluted weighted average number of common units outstanding
13,479

 
8,409

 
12,621

 
8,404

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
1,250

 

 
1,200

 

Net income per limited partner unit:
 
 
 
 
 
 
 
Common units (basic)
$
0.45

 
$
0.38

 
$
1.46

 
$
1.13

Common units (diluted)
$
0.45


$
0.38


$
1.45


$
1.13

Subordinated units (basic and diluted)
$
0.37


$
0.38


$
1.35


$
1.13

Class A units (basic and diluted)
$
(0.08
)

$


$
0.03


$

Acquisitions Acquisitions (Details)†(USD $)
In Thousands, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
Acquisitions [Abstract]
Property, plant, and equipment, preliminary purchase price allocation
$†16,690†
Intangible assets, preliminary purchase price allocation
6,018†
Goodwill, preliminary purchase price allocation
27,261†
0†
Assets acquired
$†49,969†
Acquisitions (Details Textual)†(USD $)
Share data in Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended 9 Months Ended 3 Months Ended 0 Months Ended 9 Months Ended 0 Months Ended 3 Months Ended 9 Months Ended 0 Months Ended 9 Months Ended
Nov. 13, 2013
Sep. 30, 2013
Width
Sep. 30, 2012
Jan. 11, 2013
Sep. 1, 2013
Barcas Field Services, LLC [Member]
Trailers
Trucks
Sep. 30, 2013
White Cliffs Pipeline L L C [Member]
mi
bbl
Mar. 31, 2013
SemCrude Pipeline [Member]
Jan. 11, 2013
Common Class A [Member]
Jan. 11, 2013
Common Units [Member]
Jan. 11, 2013
Revolving Credit Facility [Member]
Sep. 30, 2013
Revolving Credit Facility [Member]
Jan. 11, 2013
Limited Partner [Member]
Common Class A [Member]
Jan. 11, 2013
Limited Partner [Member]
Common Units [Member]
Aug. 14, 2013
General Partner [Member]
Jan. 11, 2013
General Partner [Member]
Sep. 30, 2013
White Cliffs Pipeline L L C [Member]
Sep. 30, 2013
White Cliffs Pipeline L L C [Member]
SemCrude Pipeline [Member]
Sep. 30, 2013
White Cliffs Pipeline L L C [Member]
SemCrude Pipeline [Member]
Sep. 30, 2013
SemCrude Pipeline [Member]
Sep. 30, 2013
SemCrude Pipeline [Member]
Jan. 11, 2013
Private Placement [Member]
Common Units [Member]
Jan. 11, 2013
SemCrude Pipeline [Member]
Line of Credit [Member]
Nov. 11, 2013
Subsequent Event [Member]
Tampa Pipeline [Member]
Sep. 30, 2013
Subsequent Event [Member]
Tampa Pipeline [Member]
mi
Width
Business Acquisition [Line Items]
Tax amortization period for goodwill
15 years†
Limited partner units issued in acquisition
1.25†
1.50†
Unit price
$†31.95†
$†29.63†
Value of common units issued as consideration
$†30,500,000†
$†44,400,000†
Proceeds from issuance of common limited partners units
152,500,000†
210,226,000†
0†
59,300,000†
Contribution from partner
3,200,000†
2,700,000†
12,000,000†
31,800,000†
Transaction related costs
3,700,000†
Limited partner unit issuance costs
1,600,000†
Debt issuance cost
1,600,000†
Acquisition related expenses
500,000†
Average daily throughput threshold in barrels for conversion of Class A units
125,000†
Equity method investment, ownership percentage
51.00%†
51.00%†
33.00%†
33.00%†
Payments to acquire equity method investments
78,156,000†
0†
189,500,000†
Width of pipeline in inches
12†
12†
Effective ownership interest in equity method investee
17.00%†
Expected Capital Funding Requirement Year Two
17,800,000†
17,800,000†
Length Of Pipeline Network
527†
12†
Proceeds from Lines of Credit
133,500,000†
130,300,000†
Common units sold in private placement
2.0†
Number of Days Following the Closing of the Private Placement Required to Prepare Registration Statement
30 days†
Payments to Acquire Businesses, Net of Cash Acquired
49,969,000†
0†
8,300,000†
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net
$†49,969,000†
Trucks purchased
114†
Trailers purchased
120†
Investment in non-consolidated affiliate Investment in non-consolidated affiliate (Details) (White Cliffs Pipeline L L C [Member], USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2013
White Cliffs Pipeline L L C [Member]
Equity Method Investment, Summarized Financial Information, Revenue
$†31,453†
$†92,238†