Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
OR
For the quarterly period ended June 30, 2021

OR
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .


(Exact name of registrant as specified in its charter)Commission file numberState or other jurisdiction of incorporation or organization(I.R.S. Employer Identification No.)
Crestwood Equity Partners LP001-34664Delaware43-1918951
Crestwood Midstream Partners LP001-35377Delaware20-1647837


811 Main Street
Suite 3400
Houston, Texas
HoustonTexas77002
(Address of principal executive offices)(Zip code)
(832) 519-2200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Crestwood Equity Partners LPCommon Units representing limited partnership interestsCEQPNew York Stock Exchange
Crestwood Equity Partners LPPreferred Units representing limited partnership interestsCEQP-PNew York Stock Exchange
Crestwood Midstream Partners LPNoneNoneNone

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Crestwood Equity Partners LP
Yesx
☒No o☐
Crestwood Midstream Partners LP
Yesx
☒No o☐


(Explanatory Note: Crestwood Midstream Partners LP is currently a voluntary filer and is not subject to the filing requirements of the Securities Exchange Act of 1934. Although not subject to these filing requirements, Crestwood Midstream Partners LP has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.)


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Crestwood Equity Partners LP
Yesx
☒No o☐
Crestwood Midstream Partners LP
Yesx
☒No o☐



Table of Contents

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Crestwood Equity Partners LP
Large accelerated filerx
☒
Accelerated filero

☐
Non-accelerated filero
☐
Smaller reporting companyo
☐
Emerging growth companyo☐
Crestwood Midstream Partners LP
Large accelerated filero
☐
Accelerated filero
☐
Non-accelerated filerx
☒
Smaller reporting companyo
☐
Emerging growth companyo☐

Table of Contents



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange act.
Crestwood Equity Partners LPo☐
Crestwood Midstream Partners LPo☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Crestwood Equity Partners LP
Yeso
☐Nox☒
Crestwood Midstream Partners LP
Yeso
☐Nox☒


Indicate the number of shares outstanding of each of the issuer'sissuer’s classes of common stock, as of the latest practicable date (October 30, 2017)
(July 23, 2021).
Crestwood Equity Partners LP70,291,07162,901,947
Crestwood Midstream Partners LPNoneNaN


Crestwood Midstream Partners LP, as a wholly-owned subsidiary of a reporting company, meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this report with the reduced disclosure format as permitted by such instruction.






Table of Contents



CRESTWOOD EQUITY PARTNERS LP
CRESTWOOD MIDSTREAM PARTNERS LP
INDEX TO FORM 10-Q

Page
Page
Part I – Financial Information
Item 1. Financial Statements (Unaudited):
Crestwood Equity Partners LP
Consolidated Balance Sheets
4
Consolidated Statements of Operations
5
Consolidated Statements of Comprehensive Income
7
Consolidated StatementStatements of Partners’ Capital
8
Consolidated Statements of Cash Flows
9
Crestwood Midstream Partners LP
Consolidated Balance Sheets
10
Consolidated Statements of Operations
11
Consolidated StatementStatements of Partners’ Capital
1312
Consolidated Statements of Cash Flows
1413
Notes to Consolidated Financial Statements
1514
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
4238
Item 3. Quantitative and Qualitative Disclosures About Market Risk
5449
Item 4. Controls and Procedures
5449
Item 1. Legal Proceedings
5550
Item 1A. Risk Factors
5550
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
5551
Item 3. Defaults Upon Senior Securities
5551
Item 4. Mine Safety Disclosures
5551
Item 5. Other Information
5551
Item 6. Exhibits
5652
Signature
5854



3
Table of Contents



PART I - FINANCIAL INFORMATION


Item 1. Financial Statements



CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(in millions, except unit information)
 September 30,
2017		 December 31,
2016
 (unaudited)  
Assets   
Current assets:   
Cash$1.4
 $1.6
Accounts receivable, less allowance for doubtful accounts of $1.2 million and $1.9 million at September 30, 2017 and December 31, 2016345.0
 289.8
Inventory92.9
 66.0
Assets from price risk management activities7.8
 6.3
Prepaid expenses and other current assets5.2
 9.7
Total current assets452.3
 373.4
Property, plant and equipment2,599.6
 2,555.4
Less: accumulated depreciation and depletion547.5
 457.8
Property, plant and equipment, net2,052.1
 2,097.6
Intangible assets898.6
 898.6
Less: accumulated amortization281.4
 241.2
Intangible assets, net617.2
 657.4
Goodwill199.0
 199.0
Investments in unconsolidated affiliates1,198.5
 1,115.4
Other assets6.2
 6.1
Total assets$4,525.3
 $4,448.9
Liabilities and partners’ capital   
Current liabilities:   
Accounts payable$312.7
 $217.2
Accrued expenses and other liabilities112.5
 90.5
Liabilities from price risk management activities52.6
 28.6
Current portion of long-term debt0.9
 1.0
Total current liabilities478.7
 337.3
Long-term debt, less current portion1,615.4
 1,522.7
Other long-term liabilities48.2
 44.6
Deferred income taxes4.7
 5.3
Commitments and contingencies (Note 10)


 

Partners’ capital:   
Crestwood Equity Partners LP partners’ capital (70,551,614 and 69,499,741 common and subordinated units issued and outstanding at September 30, 2017 and December 31, 2016)1,566.4
 1,782.0
Preferred units (71,257,445 and 66,533,415 units issued and outstanding at September 30, 2017 and December 31, 2016)612.0
 564.5
Total Crestwood Equity Partners LP partners’ capital2,178.4
 2,346.5
Interest of non-controlling partners in subsidiaries199.9
 192.5
Total partners’ capital2,378.3
 2,539.0
Total liabilities and partners’ capital$4,525.3
 $4,448.9
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(in millions, except unit information)
June 30,
2021		December 31,
2020
 (unaudited) 
Assets
Current assets:
Cash$16.6 $14.0 
Accounts receivable, less allowance for doubtful accounts of $2.0 million and
     $0.9 million at June 30, 2021 and December 31, 2020
329.1 262.2 
Inventory148.1 89.1 
Assets from price risk management activities27.6 27.2 
Prepaid expenses and other current assets8.4 13.4 
Total current assets529.8 405.9 
Property, plant and equipment3,805.2 3,759.6 
Less: accumulated depreciation927.1 842.5 
Property, plant and equipment, net2,878.1 2,917.1 
Intangible assets1,126.1 1,126.1 
Less: accumulated amortization362.5 331.8 
Intangible assets, net763.6 794.3 
Goodwill138.6 138.6 
Operating lease right-of-use assets, net29.6 36.8 
Investments in unconsolidated affiliates782.9 943.7 
Other non-current assets7.6 7.3 
Total assets$5,130.2 $5,243.7 
Liabilities and capital
Current liabilities:
Accounts payable$302.4 $160.3 
Accrued expenses and other liabilities154.8 122.0 
Liabilities from price risk management activities150.1 76.3 
Contingent consideration, current portion19.0 19.0 
Current portion of long-term debt0.2 0.2 
Total current liabilities626.5 377.8 
Long-term debt, less current portion2,621.6 2,483.8 
Contingent consideration19.0 38.0 
Other long-term liabilities254.9 253.3 
Deferred income taxes2.6 2.7 
Total liabilities3,524.6 3,155.6 
Commitments and contingencies (Note 9)
00
Interest of non-controlling partner in subsidiary (Note 11)
433.5 432.7 
Crestwood Equity Partners LP partners’ capital (62,805,156 common units issued and outstanding at June 30, 2021 and 73,970,208 common and subordinated units issued and outstanding at December 31, 2020)560.1 1,043.4 
Preferred units (71,257,445 units issued and outstanding at both June 30, 2021 and December 31, 2020)612.0 612.0 
Total partners’ capital1,172.1 1,655.4 
Total liabilities and capital$5,130.2 $5,243.7 
See accompanying notes.

4
Table of Contents




CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per unit data)
(unaudited)

Three Months EndedSix Months Ended
 June 30,June 30,
 2021202020212020
Revenues:
Product revenues:
Gathering and processing$87.3 $30.5 $155.2 $133.2 
Marketing, supply and logistics733.4 220.5 1,596.1 717.0 
Related party (Note 15)
12.8 7.4 17.7 14.7 
833.5 258.4 1,769.0 864.9 
Services revenues:
Gathering and processing85.8 84.0 172.3 196.2 
Storage and transportation2.0 3.1 4.0 6.6 
Marketing, supply and logistics7.9 7.1 16.6 12.6 
Related party (Note 15)
0.4 0.1 0.4 0.3 
96.1 94.3 193.3 215.7 
Total revenues929.6 352.7 1,962.3 1,080.6 
Costs of product/services sold (exclusive of items shown separately below):
Product costs768.0 217.4 1,535.6 742.0 
Product costs - related party (Note 15)
25.4 3.6 66.5 6.8 
Service costs3.8 4.7 8.9 11.3 
Total costs of products/services sold797.2 225.7 1,611.0 760.1 
Operating expenses and other:
Operations and maintenance25.8 31.6 58.6 69.2 
General and administrative22.8 29.5 41.5 44.4 
Depreciation, amortization and accretion58.8 61.0 118.0 117.1 
(Gain) loss on long-lived assets, net(0.3)3.8 1.1 4.8 
Goodwill impairment0 0 0 80.3 
107.1 125.9 219.2 315.8 
Operating income25.3 1.1 132.1 4.7 
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except unit and per unit data)
(unaudited)
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Revenues:       
Product revenues:       
Gathering and processing$353.3
 $206.1
 $971.7
 $567.7
Marketing, supply and logistics502.0
 271.3
 1,353.7
 735.2
 855.3
 477.4
 2,325.4
 1,302.9
Services revenues:       
Gathering and processing80.6
 72.5
 235.0
 217.9
Storage and transportation6.2
 18.3
 24.7
 131.5
Marketing, supply and logistics13.0
 18.7
 47.5
 71.1
Related party (Note 11)
0.5
 0.7
 1.4
 2.1
 100.3
 110.2
 308.6
 422.6
Total revenues955.6
 587.6
 2,634.0
 1,725.5
        
Costs of product/services sold (exclusive of items shown separately below):       
Product costs:       
Gathering and processing374.9
 221.1
 1,038.1
 618.4
Marketing, supply and logistics468.4
 229.1
 1,185.6
 605.1
Related party (Note 11)
3.7
 5.0
 11.8
 13.7
 847.0
 455.2
 2,235.5
 1,237.2
Service costs:       
Gathering and processing—
 —
 —
 0.1
Storage and transportation0.2
 0.1
 0.3
 4.9
Marketing, supply and logistics11.3
 11.4
 35.8
 37.9
 11.5
 11.5
 36.1
 42.9
Total costs of products/services sold858.5
 466.7
 2,271.6
 1,280.1
        
Expenses:       
Operations and maintenance35.5
 33.1
 103.4
 119.9
General and administrative22.5
 18.3
 71.6
 70.2
Depreciation, amortization and accretion48.1
 50.3
 145.2
 177.0
 106.1
 101.7
 320.2
 367.1
Other operating expenses:       
Loss on long-lived assets, net(6.3) (2.1) (6.3) (34.8)
Goodwill impairment—
 —
 —
 (109.7)
Operating income (loss)(15.3) 17.1
 35.9
 (66.2)

5
Table of Contents




CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per unit data)
(unaudited)

Three Months EndedSix Months Ended
 June 30,June 30,
 2021202020212020
Earnings (loss) from unconsolidated affiliates, net(27.1)8.4 (130.8)13.9 
Interest and debt expense, net(35.1)(34.0)(71.1)(66.6)
Loss on modification/extinguishment of debt(1.2)0 (6.7)0 
Other income, net0.1 0.1 0.1 0.2 
Loss before income taxes(38.0)(24.4)(76.4)(47.8)
(Provision) benefit for income taxes(0.1)0.1 0 0.1 
Net loss(38.1)(24.3)(76.4)(47.7)
Net income attributable to non-controlling partner10.3 10.2 20.4 20.1 
Net loss attributable to Crestwood Equity Partners LP(48.4)(34.5)(96.8)(67.8)
Net income attributable to preferred units15.0 15.0 30.0 30.0 
Net loss attributable to partners$(63.4)$(49.5)$(126.8)$(97.8)
Net loss per limited partner unit: (Note 12)
Basic and Diluted$(1.00)$(0.68)$(1.85)$(1.34)
Weighted-average limited partners’ units outstanding:
Basic and Diluted63.5 73.2 68.4 73.0 
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(in millions, except unit and per unit data)
(unaudited)
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Earnings from unconsolidated affiliates, net11.5
 13.4
 29.2
 26.1
Interest and debt expense, net(24.2) (27.5) (74.8) (97.9)
Gain (loss) on modification/extinguishment of debt—
 —
 (37.7) 10.0
Other income, net0.2
 0.2
 0.4
 0.4
Income (loss) before income taxes(27.8) 3.2
 (47.0) (127.6)
Provision for income taxes(0.1) (0.2) —
 (0.2)
Net income (loss)(27.9) 3.0
 (47.0) (127.8)
Net income attributable to non-controlling partners6.4
 6.1
 18.8
 18.0
Net loss attributable to Crestwood Equity Partners LP(34.3) (3.1) (65.8) (145.8)
Net income attributable to preferred units16.2
 6.9
 47.5
 16.6
Net loss attributable to partners$(50.5) $(10.0) $(113.3) $(162.4)
        
Subordinated unitholders' interest in net loss$—
 $—
 $—
 $—
Common unitholders' interest in net loss$(50.5) $(10.0) $(113.3) $(162.4)
Net loss per limited partner unit:       
Basic$(0.72) $(0.14) $(1.63) $(2.35)
Diluted$(0.72) $(0.14) $(1.63) $(2.35)
Weighted-average limited partners’ units outstanding (in thousands):
      
Basic69,725
 69,050
 69,692
 69,002
Dilutive units—
 —
 —
 —
Diluted69,725
 69,050
 69,692
 69,002


See accompanying notes.

6
Table of Contents




CRESTWOOD EQUITY PARTNERS LP
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Net income (loss)$(27.9) $3.0
 $(47.0) $(127.8)
Change in fair value of Suburban Propane Partners, L.P. units0.3
 —
 (0.6) 1.3
Comprehensive income (loss)(27.6) 3.0
 (47.6) (126.5)
Comprehensive income attributable to non-controlling interest6.4
 6.1
 18.8
 18.0
Comprehensive loss attributable to Crestwood Equity Partners LP$(34.0) $(3.1) $(66.4) $(144.5)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)
(unaudited)
 Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Net loss$(38.1)$(24.3)$(76.4)$(47.7)
Change in fair value of Suburban Propane Partners, L.P. units0 0 0 (1.1)
Comprehensive loss(38.1)(24.3)(76.4)(48.8)
Comprehensive income attributable to non-controlling partner10.3 10.2 20.4 20.1 
Comprehensive loss attributable to Crestwood Equity Partners LP$(48.4)$(34.5)$(96.8)$(68.9)

See accompanying notes.



7
Table of Contents




CRESTWOOD EQUITY PARTNERS LP
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL
(in millions)
(unaudited)
 Preferred Partners    
 Units Capital Common Units Subordinated Units Capital 
Non-Controlling
Partners
 
Total Partners’
Capital
Balance at December 31, 201666.5
 $564.5
 69.1
 0.4
 $1,782.0
 $192.5
 $2,539.0
Distributions to partners4.8
 —
 —
 —
 (125.4) (11.4) (136.8)
Unit-based compensation charges—
 —
 0.9
 —
 18.9
 —
 18.9
Taxes paid for unit-based compensation vesting—
 —
 (0.2) —
 (5.3) —
 (5.3)
Change in fair value of Suburban Propane Partners, L.P. units—
 —
 —
 —
 (0.6) —
 (0.6)
Issuance of common units—
 —
 0.4
 —
 10.6
 —
 10.6
Other—
 —
 —
 —
 (0.5) —
 (0.5)
Net income (loss)—
 47.5
 —
 —
 (113.3) 18.8
 (47.0)
Balance at September 30, 201771.3
 $612.0
 70.2
 0.4
 $1,566.4
 $199.9
 $2,378.3
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(in millions)
(unaudited)

PreferredPartners
UnitsCapitalCommon UnitsSubordinated UnitsCapitalTotal Partners’
Capital
Balance at December 31, 202071.3 $612.0 73.6 0.4 $1,043.4 $1,655.4 
Crestwood Holdings Transactions (Note 11)
— — — — (273.2)(273.2)
Retirement of units (Note 11)
— — (11.5)(0.4)— — 
Distributions to partners— (15.0)— — (46.4)(61.4)
Unit-based compensation charges— — 1.1 — 3.7 3.7 
Taxes paid for unit-based compensation vesting— — (0.4)— (8.1)(8.1)
Other— — — — (0.4)(0.4)
Net income (loss)— 15.0 — — (63.4)(48.4)
Balance at March 31, 202171.3 612.0 62.8 0 655.6 1,267.6 
Distributions to partners— (15.0)— — (39.3)(54.3)
Unit-based compensation charges— — 0 — 7.6 7.6 
Taxes paid for unit-based compensation vesting— — 0 — (0.1)(0.1)
Other— — — — (0.3)(0.3)
Net income (loss)— 15.0 — — (63.4)(48.4)
Balance at June 30, 202171.3 $612.0 62.8 0 $560.1 $1,172.1 

PreferredPartners
UnitsCapitalCommon UnitsSubordinated UnitsCapitalTotal Partners’
Capital
Balance at December 31, 201971.3 $612.0 71.9 0.4 $1,320.8 $1,932.8 
Distributions to partners— (15.0)— — (45.3)(60.3)
Unit-based compensation charges— — 1.7 — 0.2 0.2 
Taxes paid for unit-based compensation vesting— — (0.5)— (15.1)(15.1)
Change in fair value of Suburban Propane Partners, L.P. units— — — — (1.1)(1.1)
Other— — 0.2 — 3.5 3.5 
Net income (loss)— 15.0 — — (48.3)(33.3)
Balance at March 31, 202071.3 612.0 73.3 0.4 1,214.7 1,826.7 
Distributions to partners— (15.0)— — (45.7)(60.7)
Unit-based compensation charges— — — — 13.6 13.6 
Taxes paid for unit-based compensation vesting— — (0.1)— (0.4)(0.4)
Other— — — — (0.1)(0.1)
Net income (loss)— 15.0 — — (49.5)(34.5)
Balance at June 30, 202071.3 $612.0 73.2 0.4 $1,132.6 $1,744.6 

See accompanying notes.


8
Table of Contents




CRESTWOOD EQUITY PARTNERS LP
CRESTWOOD EQUITY PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
 Nine Months Ended
 September 30,
 2017 2016
Operating activities   
Net loss$(47.0) $(127.8)
Adjustments to reconcile net loss to net cash provided by operating activities:   
Depreciation, amortization and accretion145.2
 177.0
Amortization of debt-related deferred costs5.4
 5.1
Unit-based compensation charges18.9
 13.4
Loss on long-lived assets, net6.3
 34.8
Goodwill impairment—
 109.7
(Gain) loss on modification/extinguishment of debt37.7
 (10.0)
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received(2.5) (3.9)
Deferred income taxes(0.7) (0.9)
Other(0.3) 0.3
Changes in operating assets and liabilities65.2
 46.8
Net cash provided by operating activities228.2
 244.5
Investing activities   
Purchases of property, plant and equipment(134.4) (79.3)
Investment in unconsolidated affiliates(46.5) (6.2)
Capital distributions from unconsolidated affiliates35.3
 9.2
Net proceeds from sale of assets1.3
 943.1
Net cash provided by (used in) investing activities(144.3) 866.8
Financing activities   
Proceeds from the issuance of long-term debt2,209.8
 1,364.0
Payments on long-term debt(2,159.2) (2,279.4)
Payments on capital leases(2.2) (1.5)
Payments for debt-related deferred costs(1.0) (3.4)
Distributions to partners(125.4) (178.4)
Distributions paid to non-controlling partners(11.4) (11.4)
Issuance of common units10.6
 —
Taxes paid for unit-based compensation vesting(5.3) (0.8)
Other—
 0.1
Net cash used in financing activities(84.1) (1,110.8)
Net change in cash(0.2) 0.5
Cash at beginning of period1.6
 0.5
Cash at end of period$1.4
 $1.0
Supplemental schedule of noncash investing and financing activities   
Net change to property, plant and equipment through accounts payable and accrued expenses$(15.4) $(9.4)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Six Months Ended
 June 30,
 20212020
Operating activities
Net loss$(76.4)$(47.7)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and accretion118.0 117.1 
Amortization of debt-related deferred costs3.4 3.2 
Unit-based compensation charges9.9 9.2 
Loss on long-lived assets, net1.1 4.8 
Goodwill impairment0 80.3 
Loss on modification/extinguishment of debt6.7 0 
(Earnings) loss from unconsolidated affiliates, net, adjusted for cash distributions received141.1 5.4 
Deferred income taxes(0.1)(0.3)
Other0.1 0 
Changes in operating assets and liabilities89.7 11.4 
Net cash provided by operating activities293.5 183.4 
Investing activities
Acquisitions, net of cash acquired (Note 3)
0 (162.3)
Purchases of property, plant and equipment(21.3)(143.2)
Investments in unconsolidated affiliates(10.2)(6.0)
Capital distributions from unconsolidated affiliates32.9 18.9 
Other0.5 (0.3)
Net cash provided by (used in) investing activities1.9 (292.9)
Financing activities
Proceeds from the issuance of long-term debt2,005.6 742.5 
Payments on long-term debt(1,866.8)(498.2)
Payments on finance leases(1.4)(1.6)
Payments for deferred financing costs(11.1)0 
Net proceeds from issuance of non-controlling interest0 2.8 
Payments for Crestwood Holdings Transactions(275.6)0 
Distributions to partners(85.7)(91.0)
Distributions to non-controlling partner(19.6)(18.5)
Distributions to preferred unitholders(30.0)(30.0)
Taxes paid for unit-based compensation vesting(8.2)(15.5)
Net cash provided by (used in) financing activities(292.8)90.5 
Net change in cash2.6 (19.0)
Cash at beginning of period14.0 25.7 
Cash at end of period$16.6 $6.7 
Supplemental schedule of noncash investing activities
Net change to property, plant and equipment through accounts payable and accrued expenses$(29.2)$35.9 

See accompanying notes.


9
Table of Contents





CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(in millions)
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(in millions)

September 30,
2017		 December 31,
2016		June 30,
2021		December 31,
2020
(unaudited)  (unaudited)
Assets   Assets
Current assets:   Current assets:
Cash$1.1
 $1.3
Cash$15.9 $13.7 
Accounts receivable, less allowance for doubtful accounts of $1.2 million and $1.9 million at September 30, 2017 and December 31, 2016344.7
 289.8
Accounts receivable, less allowance for doubtful accounts of $2.0 million and
$0.9 million at June 30, 2021 and December 31, 2020
Accounts receivable, less allowance for doubtful accounts of $2.0 million and
$0.9 million at June 30, 2021 and December 31, 2020
329.0 262.2 
Inventory92.9
 66.0
Inventory148.1 89.1 
Assets from price risk management activities7.8
 6.3
Assets from price risk management activities27.6 27.2 
Prepaid expenses and other current assets5.2
 9.7
Prepaid expenses and other current assets8.4 13.4 
Total current assets451.7
 373.1
Total current assets529.0 405.6 
Property, plant and equipment2,929.6
 2,885.5
Property, plant and equipment4,135.3 4,089.6 
Less: accumulated depreciation and depletion687.4
 587.1
Less: accumulated depreciationLess: accumulated depreciation1,120.0 1,028.3 
Property, plant and equipment, net2,242.2
 2,298.4
Property, plant and equipment, net3,015.3 3,061.3 
Intangible assets883.1
 883.1
Intangible assets1,126.1 1,126.1 
Less: accumulated amortization268.1
 230.2
Less: accumulated amortization362.5 331.8 
Intangible assets, net615.0
 652.9
Intangible assets, net763.6 794.3 
Goodwill199.0
 199.0
Goodwill138.6 138.6 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net29.6 36.8 
Investments in unconsolidated affiliates1,198.5
 1,115.4
Investments in unconsolidated affiliates782.9 943.7 
Other assets2.6
 1.8
Other non-current assetsOther non-current assets5.4 5.2 
Total assets$4,709.0
 $4,640.6
Total assets$5,264.4 $5,385.5 
Liabilities and partners’ capital   
Liabilities and capitalLiabilities and capital
Current liabilities:   Current liabilities:
Accounts payable$310.0
 $214.5
Accounts payable$302.4 $157.8 
Accrued expenses and other liabilities111.8
 87.9
Accrued expenses and other liabilities153.3 120.1 
Liabilities from price risk management activities52.6
 28.6
Liabilities from price risk management activities150.1 76.3 
Contingent consideration, current portionContingent consideration, current portion19.0 19.0 
Current portion of long-term debt0.9
 1.0
Current portion of long-term debt0.2 0.2 
Total current liabilities475.3
 332.0
Total current liabilities625.0 373.4 
Long-term debt, less current portion1,615.4
 1,522.7
Long-term debt, less current portion2,621.6 2,483.8 
Contingent considerationContingent consideration19.0 38.0 
Other long-term liabilities45.3
 42.0
Other long-term liabilities252.6 251.8 
Deferred income taxes0.7
 0.7
Deferred income taxes0.7 0.7 
Commitments and contingencies (Note 10)
   
Total liabilitiesTotal liabilities3,518.9 3,147.7 
Commitments and contingencies (Note 9)
Commitments and contingencies (Note 9)
00
Interest of non-controlling partner in subsidiary (Note 11)
Interest of non-controlling partner in subsidiary (Note 11)
433.5 432.7 
Partners’ capital2,372.4
 2,550.7
Partners’ capital1,312.0 1,805.1 
Interest of non-controlling partners in subsidiary199.9
 192.5
Total partners’ capital2,572.3
 2,743.2
Total liabilities and partners’ capital$4,709.0
 $4,640.6
Total liabilities and capitalTotal liabilities and capital$5,264.4 $5,385.5 



See accompanying notes.


10
Table of Contents




CRESTWOOD MIDSTREAM PARTNERS LP
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions)
(unaudited)
  Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Revenues:       
Product revenues:       
Gathering and processing$353.3
 $206.1
 $971.7
 $567.7
Marketing, supply and logistics502.0
 271.3
 1,353.7
 735.2
 855.3
 477.4
 2,325.4
 1,302.9
Service revenues:       
Gathering and processing80.6
 72.5
 235.0
 217.9
Storage and transportation6.2
 18.3
 24.7
 131.5
Marketing, supply and logistics13.0
 18.7
 47.5
 71.1
Related party (Note 11)
0.5
 0.7
 1.4
 2.1
 100.3
 110.2
 308.6
 422.6
Total revenues955.6
 587.6
 2,634.0
 1,725.5
        
Costs of product/services sold (exclusive of items shown separately below):       
Product costs:       
Gathering and processing374.9
 221.1
 1,038.1
 618.4
Marketing, supply and logistics468.4
 229.1
 1,185.6
 605.1
Related party (Note 11)
3.7
 5.0
 11.8
 13.7
 847.0
 455.2
 2,235.5
 1,237.2
Service costs:       
Gathering and processing—
 —
 —
 0.1
Storage and transportation0.2
 0.1
 0.3
 4.9
Marketing, supply and logistics11.3
 11.4
 35.8
 37.9
 11.5
 11.5
 36.1
 42.9
Total costs of product/services sold858.5
 466.7
 2,271.6
 1,280.1
        
Expenses:       
Operations and maintenance35.5
 33.6
 103.4
 116.7
General and administrative21.4
 17.3
 69.0
 67.5
Depreciation, amortization and accretion50.9
 53.2
 153.5
 185.2
 107.8
 104.1
 325.9
 369.4
Other operating expenses:       
Loss on long-lived assets, net(6.3) (2.1) (6.3) (34.8)
Goodwill impairment—
 —
 —
 (109.7)
Operating income (loss)(17.0) 14.7
 30.2
 (68.5)
CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions)
11
Table of Contents(unaudited)

  Three Months EndedSix Months Ended
June 30,June 30,
 2021202020212020
Revenues:
Product revenues:
Gathering and processing$87.3 $30.5 $155.2 $133.2 
Marketing, supply and logistics733.4 220.5 1,596.1 717.0 
Related party (Note 15)
12.8 7.4 17.7 14.7 
833.5 258.4 1,769.0 864.9 
Service revenues:
Gathering and processing85.8 84.0 172.3 196.2 
Storage and transportation2.0 3.1 4.0 6.6 
Marketing, supply and logistics7.9 7.1 16.6 12.6 
Related party (Note 15)
0.4 0.1 0.4 0.3 
96.1 94.3 193.3 215.7 
Total revenues929.6 352.7 1,962.3 1,080.6 
Costs of product/services sold (exclusive of items shown separately below):
Product costs768.0 217.4 1,535.6 742.0 
Product costs - related party (Note 15)
25.4 3.6 66.5 6.8 
Service costs3.8 4.7 8.9 11.3 
Total costs of product/services sold797.2 225.7 1,611.0 760.1 
Operating expenses and other:
Operations and maintenance25.8 31.6 58.6 69.2 
General and administrative19.7 28.4 36.9 41.9 
Depreciation, amortization and accretion62.2 64.6 125.0 124.2 
(Gain) loss on long-lived assets, net(0.3)3.8 1.1 4.8 
Goodwill impairment0 0 0 80.3 
107.4 128.4 221.6 320.4 
Operating income (loss)25.0 (1.4)129.7 0.1 
Earnings (loss) from unconsolidated affiliates, net(27.1)8.4 (130.8)13.9 
Interest and debt expense, net(35.1)(34.0)(71.1)(66.6)
Loss on modification/extinguishment of debt(1.2)0 (6.7)0 
Loss before income taxes(38.4)(27.0)(78.9)(52.6)
(Provision) benefit for income taxes(0.1)0.2 0 0.2 
Net loss(38.5)(26.8)(78.9)(52.4)
Net income attributable to non-controlling partner10.3 10.2 20.4 20.1 
Net loss attributable to Crestwood Midstream Partners LP$(48.8)$(37.0)$(99.3)$(72.5)

CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(in millions)
(unaudited)
  Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Earnings from unconsolidated affiliates, net11.5
 13.4
 29.2
 26.1
Interest and debt expense, net(24.2) (27.5) (74.8) (97.9)
Gain (loss) on modification/extinguishment of debt—
 —
 (37.7) 10.0
Income (loss) before income taxes(29.7) 0.6
 (53.1) (130.3)
Provision for income taxes(0.1) —
 —
 —
Net income (loss)(29.8) 0.6
 (53.1) (130.3)
Net income attributable to non-controlling partners6.4
 6.1
 18.8
 18.0
Net loss attributable to Crestwood Midstream Partners LP$(36.2) $(5.5) $(71.9) $(148.3)


See accompanying notes.



12
11
Table of Contents




CRESTWOOD MIDSTREAM PARTNERS LP
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(in millions)
(unaudited)

  Partners Non-Controlling Partners 
Total Partners’
Capital
Balance at December 31, 2016 $2,550.7
 $192.5
 $2,743.2
Distributions to partners (119.5) (11.4) (130.9)
Unit-based compensation charges 18.9
 —
 18.9
Taxes paid for unit-based compensation vesting (5.3) —
 (5.3)
Other (0.5) —
 (0.5)
Net income (loss) (71.9) 18.8
 (53.1)
Balance at September 30, 2017 $2,372.4
 $199.9
 $2,572.3
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(in millions)

(unaudited)
Total Partners’
Capital
Balance at December 31, 2020$1,805.1 
Distributions to partners(334.0)
Unit-based compensation charges2.3 
Taxes paid for unit-based compensation vesting(8.1)
Other(0.1)
Net loss(50.5)
Balance at March 31, 20211,414.7 
Distributions to partners(61.4)
Unit-based compensation charges7.6 
Taxes paid for unit-based compensation vesting(0.1)
Net loss(48.8)
Balance at June 30, 2021$1,312.0 

Total Partners’
Capital
Balance at December 31, 2019$2,099.3 
Distributions to partners(57.0)
Unit-based compensation charges(4.4)
Taxes paid for unit-based compensation vesting(15.1)
Other(1.1)
Net loss(35.5)
Balance at March 31, 20201,986.2 
Distributions to partners(62.0)
Unit-based compensation charges13.6 
Taxes paid for unit-based compensation vesting(0.4)
Other0.1 
Net loss(37.0)
Balance at June 30, 2020$1,900.5 

See accompanying notes.

12

13
Table of Contents




CRESTWOOD MIDSTREAM PARTNERS LP
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)

 Nine Months Ended
 September 30,
 2017 2016
Operating activities   
Net loss$(53.1) $(130.3)
Adjustments to reconcile net loss to net cash provided by operating activities:   
Depreciation, amortization and accretion153.5
 185.2
Amortization of debt-related deferred costs5.4
 5.1
Unit-based compensation charges18.9
 13.4
Goodwill impairment—
 109.7
Loss on long-lived assets6.3
 34.8
(Gain) loss on modification/extinguishment of debt37.7
 (10.0)
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received(2.5) (3.9)
Deferred income taxes0.1
 0.2
Other(0.3) 0.3
Changes in operating assets and liabilities66.9
 46.3
Net cash provided by operating activities232.9
 250.8
Investing activities   
Purchases of property, plant and equipment(134.4) (79.3)
Investment in unconsolidated affiliates(46.5) (6.2)
Capital distributions from unconsolidated affiliates35.3
 9.2
Net proceeds from sale of assets1.3
 943.1
Net cash provided by (used in) investing activities(144.3) 866.8
Financing activities   
Proceeds from the issuance of long-term debt2,209.8
 1,364.0
Payments on long-term debt(2,159.2) (2,279.2)
Payments on capital leases(2.2) (1.5)
Payments for debt-related deferred costs(1.0) (3.4)
Distributions to partners(130.9) (196.4)
Taxes paid for unit-based compensation vesting(5.3) (0.8)
Other—
 0.1
Net cash used in financing activities(88.8) (1,117.2)
Net change in cash(0.2) 0.4
Cash at beginning of period1.3
 0.1
Cash at end of period$1.1
 $0.5
Supplemental schedule of non-cash investing and financing activities   
Net change to property, plant and equipment through accounts payable and accrued expenses$(15.4) $(9.4)
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

Six Months Ended
 June 30,
 20212020
Operating activities
Net loss$(78.9)$(52.4)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and accretion125.0 124.2 
Amortization of debt-related deferred costs3.4 3.2 
Unit-based compensation charges9.9 9.2 
Loss on long-lived assets, net1.1 4.8 
Goodwill impairment0 80.3 
Loss on modification/extinguishment of debt6.7 0 
(Earnings) loss from unconsolidated affiliates, net, adjusted for cash distributions received141.1 5.4 
Deferred income taxes0 (0.1)
Other0.1 0 
Changes in operating assets and liabilities88.8 6.5 
Net cash provided by operating activities297.2 181.1 
Investing activities
Acquisitions, net of cash acquired (Note 3)
0 (162.3)
Purchases of property, plant and equipment(21.3)(143.2)
Investments in unconsolidated affiliates(10.2)(6.0)
Capital distributions from unconsolidated affiliates32.9 18.9 
Other0.5 (0.3)
Net cash provided by (used in) investing activities1.9 (292.9)
Financing activities
Proceeds from the issuance of long-term debt2,005.6 742.5 
Payments on long-term debt(1,866.8)(498.2)
Payments on finance leases(1.4)(1.6)
Payments for deferred financing costs(11.1)0 
Net proceeds from issuance of non-controlling interest0 2.8 
Distributions to partners(395.4)(119.0)
Distributions to non-controlling partner(19.6)(18.5)
Taxes paid for unit-based compensation vesting(8.2)(15.5)
Net cash provided by (used in) financing activities(296.9)92.5 
Net change in cash2.2 (19.3)
Cash at beginning of period13.7 25.4 
Cash at end of period$15.9 $6.1 
Supplemental schedule of noncash investing activities
Net change to property, plant and equipment through accounts payable and accrued expenses$(29.2)$35.9 


See accompanying notes.

13
14
Table of Contents



CRESTWOOD EQUITY PARTNERS LP
CRESTWOOD MIDSTREAM PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


Note 1 – Organization and Business Description

Organization


The accompanying notes to the consolidated financial statements apply to Crestwood Equity Partners LP (Crestwood Equity or CEQP) and Crestwood Midstream Partners LP (Crestwood Midstream or CMLP), unless otherwise indicated.

The accompanying consolidated financial statements and related notes should be read in conjunction with our 2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 26, 2021. The financial information as of June 30, 2021, and for the three and six months ended June 30, 2021 and 2020, is unaudited. The consolidated balance sheets as of December 31, 2020 were derived from the audited balance sheets filed in our 2020 Annual Report on Form 10-K.

References in this report to “we,” “us,” “our,” “ours,” “our company,” the “partnership,” the “Company,” "Crestwood“Crestwood Equity,"” “CEQP,” and similar terms refer to either Crestwood Equity Partners LP itself or Crestwood Equity Partners LP and its consolidated subsidiaries, as the context requires. Unless otherwise indicated, references to "Crestwood Midstream"“Crestwood Midstream” and "CMLP"“CMLP” refer to either Crestwood Midstream Partners LP itself or Crestwood Midstream Partners LP and its consolidated subsidiaries.


The accompanying consolidated financial statements and related notes should be read in conjunction with our 2016 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 27, 2017. The financial information as of September 30, 2017, and for the three and nine months ended September 30, 2017 and 2016, is unaudited. The consolidated balance sheets as of December 31, 2016, were derived from the audited balance sheets filed in our 2016 Annual Report on Form 10-K.Organization


Business Description

Crestwood Equity Partners LP. CEQP is a publicly-traded (NYSE: CEQP) Delaware limited partnership thatformed in March 2001. Crestwood Equity GP LLC (Crestwood Equity GP), which is indirectly owned by Crestwood Holdings LLC (Crestwood Holdings), owns our non-economic general partnership interest. Crestwood Holdings is substantially owned and controlled by First Reserve Management, L.P. (First Reserve).

Crestwood Midstream Partners LP. Crestwood Equity owns a 99.9% limited partnership interest in Crestwood Midstream and Crestwood Gas Services GP LLC (CGS GP), a wholly-owned subsidiary of Crestwood Equity, owns a 0.1% limited partnership interest in Crestwood Midstream. Crestwood Midstream GP LLC, a wholly-owned subsidiary of Crestwood Equity, owns the non-economic general partnership interest of Crestwood Midstream.

Crestwood Holdings Strategic Transactions. In March 2021, CEQP acquired approximately 11.5 million CEQP common units, 0.4 million subordinated units of CEQP and 100% of the equity interests of Crestwood Marcellus Holdings LLC and Crestwood Gas Services Holdings LLC (whose assets consisted solely of CEQP common and subordinated units and 1% of the limited partner interests in Crestwood Holdings LP) from Crestwood Holdings, and signed a definitive agreement to acquire the general partner and the remaining 99% limited partner interests of Crestwood Holdings LP (whose assets consist solely of its ownership interest in Crestwood Equity GP, which owns CEQP’s non-economic general partner interest) (collectively the Crestwood Holdings Transactions) for $268 million in cash. The acquisition of the general partner and limited partner interests of Crestwood Holdings LP will close on or before the 180th day after the date of the initial closing of the Crestwood Holdings Transactions. The purchase price was funded through borrowings under the Crestwood Midstream credit facility. CEQP retired the common and subordinated units acquired in the Crestwood Holdings Transactions.

The diagram below reflects a simplified version our ownership structure as of June 30, 2021 following the Crestwood Holdings Transactions.

14
Table of Contents

ceqp-20210630_g1.jpg
Business Description

Crestwood Equity develops, acquires, owns or controls, and operates primarily fee-based assets and operations within the energy midstream sector. We provide broad-ranging infrastructure solutions across the value chain to service premier liquids-rich natural gas and crude oil shale plays across the United States. We own and operate a diversified portfolio of natural gas liquids (NGLs), crude oil, and natural gas and produced water gathering, processing, storage, disposal and transportation assets and that
15
Table of Contents

connect fundamental energy supply with energy demand across North America.the United States. Crestwood Equity is a holding company and all of its consolidated operating assets are owned by or through its wholly-owned subsidiary, Crestwood Midstream, a Delaware limited partnership.Midstream.



Our financial statements reflect 3 operating and reporting segments described below.

•Gathering and Processing. Our gathering and processing operations provide natural gas, crude oil and produced water gathering, compression, treating, processing and disposal services to producers in multiple unconventional resource plays in some of the largest shale plays in the United States in which we have established footprints in the “core of the core” areas.

•Storage and Transportation. Our storage and transportation operations provide crude oil and natural gas storage and transportation services to producers, utilities and other customers.

•Marketing, Supply and Logistics. Our marketing, supply and logistics operations provide NGLs, crude oil and natural gas marketing, storage, terminal and transportation services to producers, refiners, marketers and other customers.


Note 2 – Basis of Presentation and Summary of Significant Accounting Policies


Basis of Presentation


Our consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and include the accounts of all consolidated subsidiaries after the elimination of all intercompany accounts and transactions. Certain amounts and footnote disclosures in the prior periods have been reclassified to conform to the current year presentation, none of which impacted our previously reported net income, earnings per unit or partners’ capital. In management’s opinion, all necessary adjustments to fairly present our results of operations, financial position and cash flows for the periods presented have been made and all such adjustments are of a normal and recurring nature. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the SEC.


Significant Accounting Policies


There were no material changes in our significant accounting policies from those described in our 20162020 Annual Report on Form 10-K. Below isDuring the six months ended June 30, 2020, we recorded an update$80.3 million full impairment of the goodwill associated with our accounting policies related to GoodwillPowder River Basin reporting unit based on events that occurred during 2020 which resulted in a significant decrease in the forecasted cash flows and Unit-Based Compensation, and a description of Crestwood Equity's Long Term Incentive Plan.

Goodwill. The goodwill impairments recorded during the first quarter of 2016 primarily resulted from increasing the discount rates utilized in determining the fair value of the reporting units considering the significant, sustained decrease in the market price of our common units and the continued decrease in commodity prices and its impact on the midstream industry and our customers during that period. We utilized the income approach to determine the fair value of our reporting units given the limited availability of comparable market-based transactions as of March 31, 2016, and we utilized discount rates ranging from 10% to 19% in applying the income approach to determine the fair value of our reporting units with goodwill as of March 31, 2016.




15
Table of Contents




The following table summarizes goodwill impairments of certain of our reporting units recorded during the nine months ended September 30, 2016 (in millions):

Gathering and Processing 
Marcellus$8.6
Storage and Transportation 
COLT13.7
Marketing, Supply and Logistics 
Supply and Logistics65.5
Storage and Terminals14.1
Trucking7.8
Total$109.7

Unit-Based Compensation. Effective January 1, 2017, we adopted the provisions of Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payment award transactions, including the classification of awards as either equity or liabilities and the presentation on the statement of cash flows. The adoptionunit. For a further discussion of this accounting standard did not have a material impactgoodwill impairment, see our 2020 Annual Report on Form 10-K.


Note 3 – Acquisition

In April 2020, we acquired several NGL storage and rail-to-truck terminals from Plains All American Pipeline, L.P. for approximately $162 million. The acquired assets include 7 MMBbls of NGL storage and 7 terminals. These assets are included in our consolidated financial statements.

Crestwood Equity Long Term Incentive Plan. As of September 30, 2017, Crestwood Equity had 404,847 performance units outstanding under the Crestwood Equity Partners LP Long Term Incentive Plan (Crestwood LTIP) that were issued in 2017.marketing, supply and logistics segment. The performance units are designed to provide an incentive for continuous employment to certain key employees. The vesting of performance units is subject to the attainment of certain performance and market goals over a three-year period, and entitle a participant to receive common units of Crestwood Equity without payment of an exercise price upon vesting. As of September 30, 2017, we had total unamortized compensation expense of approximately $7.6 milliontransaction costs related to these performance units, which we expect will be amortized during the next three years. We recognized compensation expense of approximately $0.9 million and $2.9 million under the Crestwood LTIP related to these performance unitsthis acquisition were not material during the three and ninesix months ended SeptemberJune 30, 2017, which is included in general and administrative expenses on our consolidated statements of operations.2020.


New Accounting Pronouncements Issued But Not Yet Adopted

As of September 30, 2017, the following accounting standards had not yet been adopted by us:

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. We anticipate utilizing the modified retrospective method to adopt the provisions of this standard effective January 1, 2018 and are currently applying the provisions of the standard to our aggregated listing of gathering and processing, storage and transportation, and marketing, supply and logistics revenue contracts that involve revenue generating activities that occur after January 1, 2018. We are also in the process of implementing appropriate changes to our processes, systems and controls to support the accounting and disclosure requirements of the new standard. We are currently evaluating the impact that this standard will have on our consolidated financial statements, and currently believe that the standard will require us to begin classifying certain capital expenditure reimbursements received from our customers as deferred revenue rather than as reductions of property, plant and equipment in our consolidated financial statements.  We currently anticipate that approximately $60 million to $70 million of these net reimbursements will be reclassified to net deferred revenue on January 1, 2018, which would result in a $15 million to $25 million cumulative effect of accounting change being recorded as an increase to partners' capital on January 1, 2018.  In addition, we currently believe that the standard will require us to begin classifying service revenues on certain of our gathering and processing contracts as reductions of costs of product sold prospectively beginning January 1, 2018.  We continue to evaluate the impact that this standard will have on our consolidated financial statements, especially as it relates to non-cash consideration received under certain of our gathering, processing, storage and transportation contracts.



16
Table of Contents



In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which revises the accounting for leases by requiring certain leases to be recognized as assets and liabilities on the balance sheet, and requiring companies to disclose additional information about their leasing arrangements. We expect to adopt the provisions of this standard effective January 1, 2019 and are currently evaluating the impact that this standard will have on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. We expect to adopt the provisions of this standard effective January 1, 2018 and are currently evaluating the impact that this standard may have on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which changes the annual quantitative goodwill impairment test to eliminate the current two step method and replace it with a single test to determine if goodwill is impaired and the amount of any impairment. We are required to adopt the provisions of this standard by January 1, 2020 and are currently evaluating the impact that this standard may have on our consolidated financial statements.


Note 34 – Certain Balance Sheet Information


Accrued Expenses and Other Liabilities


Accrued expenses and other liabilities consisted of the following (in millions):

CEQPCMLP
June 30,December 31,June 30,December 31,
2021202020212020
Accrued expenses$50.9 $48.3 $49.4 $46.4 
Accrued property taxes6.3 8.4 6.3 8.4 
Income tax payable0.2 0.2 0.2 0.2 
Interest payable32.4 24.9 32.4 24.9 
Accrued additions to property, plant and equipment39.8 12.3 39.8 12.3 
Operating leases12.0 14.7 12.0 14.7 
Finance leases2.7 2.9 2.7 2.9 
Deferred revenue10.5 10.3 10.5 10.3 
Total accrued expenses and other liabilities$154.8 $122.0 $153.3 $120.1 
Other Long-Term Liabilities

Other long-term liabilities consisted of the following (in millions):
CEQPCMLP
June 30,December 31,June 30,December 31,
2021202020212020
Contract liabilities$179.2 $172.2 $179.2 $172.2 
Operating leases23.3 28.5 23.3 28.5 
Asset retirement obligations35.1 34.1 35.1 34.1 
Other17.3 18.5 15.0 17.0 
Total other long-term liabilities$254.9 $253.3 $252.6 $251.8 


 CEQP CMLP
 September 30, December 31, September 30, December 31,
 2017 2016 2017 2016
Accrued expenses$40.6
 $46.9
 $39.9
 $45.5
Accrued property taxes6.3
 4.2
 6.3
 4.2
Accrued natural gas purchases0.7
 4.9
 0.7
 4.9
Tax payable—
 1.2
 —
 —
Interest payable39.7
 22.8
 39.7
 22.8
Accrued additions to property, plant and equipment16.6
 1.7
 16.6
 1.7
Capital leases1.1
 1.3
 1.1
 1.3
Deferred revenue7.5
 7.5
 7.5
 7.5
Total accrued expenses and other liabilities$112.5
 $90.5
 $111.8
 $87.9


Note 45 - Investments in Unconsolidated Affiliates


Variable Interest Entity

Crestwood Permian Basin Holdings LLC

In October 2016, (Crestwood Permian) is a joint venture owned by Crestwood Infrastructure Holdings LLC (Crestwood Infrastructure), our wholly-owned subsidiary, and an affiliate of First Reserve formed a joint venture, Crestwood Permian Basin Holdings LLC (Crestwood Permian), to fund and own the Nautilus gathering system (described below) and other potential investments in the Delaware Permian. As part of this transaction, we transferred to the Crestwood Permian joint venture 100% of the equity interests of Crestwood Permian Basin LLC (Crestwood Permian Basin), which owns the Nautilus gathering system.Reserve. We manage and account for our 50% ownership interest in Crestwood Permian, which is a VIE,variable interest entity, under the equity method of accounting as we exercise significant influence, but do not control Crestwood Permian and we are not its primary beneficiary due to First Reserve’s rights to exercise control over the entity.

17
Table of Contents
Crestwood Permian Basin has a long-term
Net Investments and Earnings (Loss)

Our net investments in and earnings (loss) from our unconsolidated affiliates are as follows (in millions):
InvestmentEarnings (Loss) from
Unconsolidated Affiliates		Earnings (Loss) from
Unconsolidated Affiliates
Three Months EndedSix Months Ended
June 30,December 31,June 30,June 30,
202120202021202020212020
Stagecoach Gas Services LLC(1)
$628.2 $792.5 $(28.0)$9.2 $(140.3)$18.4 
Tres Palacios Holdings LLC(2)
41.0 35.5 (0.1)0.1 9.2 0.1 
Powder River Basin Industrial Complex, LLC(3)
3.6 3.6 0 0.1 0.1 (4.4)
Crestwood Permian Basin Holdings LLC(4)
110.1 112.1 1.0 (1.0)0.2 (0.2)
Total$782.9 $943.7 $(27.1)$8.4 $(130.8)$13.9 

(1)As of June 30, 2021, our equity in the underlying net assets of Stagecoach Gas Services LLC (Stagecoach Gas) approximates the carrying value of our investment. During the six months ended June 30, 2021, we and the other 50% owner of Stagecoach Gas, Con Edison Gas Pipeline and Storage Northeast, LLC (CEGP) entered into an agreement with SWEPI LP (SWEPI),to sell Stagecoach Gas to a subsidiary of Royal Dutch Shell plc, to construct, ownKinder Morgan, Inc. (Kinder Morgan) in a series of transactions. Based on these anticipated transactions, we recorded our share of a loss on long-lived assets (including goodwill) recorded by our Stagecoach Gas equity investment associated with the anticipated sale. This eliminated our $51.3 million historical basis difference between our investment balance and operate a natural gas gathering system (the Nautilus gathering system) in SWEPI’s operated positionthe equity in the Delaware Permian. SWEPI has dedicatedunderlying net assets of Stagecoach Gas, and also resulted in a $35.5 million and $155.4 million reduction in our earnings from unconsolidated affiliates during the three and six months ended June 30, 2021. In addition, our earnings from unconsolidated affiliates during the three and six months ended June 30, 2021 were also reduced by our proportionate share of transaction costs of approximately $3.0 million related to the anticipated sale, which were paid by us in July 2021 on behalf of Stagecoach Gas. Our Stagecoach Gas investment is included in our storage and transportation segment.
(2)As of June 30, 2021, our equity in the underlying net assets of Tres Palacios Holdings LLC (Tres Holdings) exceeded the carrying value of our investment balance by approximately $22.1 million. During both the three and six months ended June 30, 2021 and 2020, we recorded amortization of approximately $0.3 million and $0.6 million, respectively, related to this excess basis, which is reflected as an increase in our earnings from unconsolidated affiliates in our consolidated statements of operations. Our Tres Holdings investment is included in our storage and transportation segment.
(3)As of June 30, 2021, our equity in the underlying net assets of Powder River Basin Industrial Complex, LLC (PRBIC) approximates the carrying value of our investment balance. During the first quarter of 2020, we recorded our share of a long-lived asset impairment recorded by our PRBIC equity investment, which eliminated our $5.5 million historical basis difference between our investment balance and the equity in the underlying net assets of PRBIC, and also resulted in a $4.5 million reduction in our earnings from unconsolidated affiliates during the six months ended June 30, 2020. Our PRBIC investment is included in our storage and transportation segment.
(4)As of June 30, 2021, our equity in the underlying net assets of Crestwood Permian Basin approximately 100,000 acresexceeded our investment balance by $7.7 million, and this excess amount is not subject to amortization. Our Crestwood Permian investment is included in our gathering rightsand processing segment.

Summarized Financial Information of Unconsolidated Affiliates

Below is the summarized operating results for SWEPI’s gas production across a large acreage position our significant unconsolidated affiliates (in Loving, Reevesmillions; amounts represent 100% of unconsolidated affiliate information):
Six Months Ended
June 30,
20212020
Operating RevenuesOperating ExpensesNet Income (Loss)Operating RevenuesOperating ExpensesNet Income (Loss)
Stagecoach Gas$77.5 $454.9 $(377.4)$75.6 $38.9 $36.8 
Other(1)
135.1 118.0 17.6 53.5 76.1 (21.6)
Total$212.6 $572.9 $(359.8)$129.1 $115.0 $15.2 

(1)Includes our Tres Holdings, PRBIC and Ward Counties, Texas. The Nautilus gathering system is designed to include 194 miles of low pressure gathering lines, 36 miles of high pressure trunklines and centralized compression facilities, which are expandable over time as production increases, providing gas gathering capacity ofCrestwood Permian equity investments.


17
18
Table of Contents



Distributions and Contributions
approximately 250 MMcf/d.
The initial build-out of the Nautilus gathering system was completed on June 6, 2017following table summarizes our distributions from and includes 20 receipt point meters, 60 miles of pipeline, a 24-mile high pressure header system, 10,800 horsepower of compressioncontributions to our unconsolidated affiliates (in millions):
Distributions(1)
Contributions
Six Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Stagecoach Gas$27.0 $30.0 $0 $0 
Tres Holdings10.6 1.4 6.9 6.0 
PRBIC0.1 0.1 0 0 
Crestwood Permian5.5 6.7 3.3 0 
Total$43.2 $38.2 $10.2 $6.0 

(1)    In July 2021, we received cash distributions from Tres Holdings and a high pressure delivery point. Crestwood Permian Basin provides gathering, dehydration, compressionof approximately $2.5 million and liquids handling services$3.4 million, respectively. In connection with the anticipated sale of Stagecoach Gas, in July 2021, Stagecoach Gas closed on the sale of certain of its wholly-owned subsidiaries to SWEPI on a fixed fee basis. In October 2017, Shell Midstream Partners L.P. (Shell Midstream), a subsidiary of Royal Dutch Shell plc, purchasedKinder Morgan and distributed to us approximately $613.9 million as our proportionate share of the gross proceeds received from the sale. We utilized approximately $3 million of these proceeds to pay transaction costs related to the sale described above, $40 million of these proceeds to pay our contingent consideration obligation and related accrued interest described below, and the remaining proceeds to repay a 50% equityportion of the amounts outstanding under the Crestwood Midstream credit facility.

Other

Contingent Consideration. Pursuant to the Stagecoach Gas limited liability company agreement, we are required to make $57 million of payments to CEGP because certain performance targets on growth capital projects were not achieved by December 31, 2020. During the six months ended June 30, 2021, we paid $19 million to CEGP related to this obligation. At June 30, 2021, our consolidated balance sheet reflects a $38 million liability related to this obligation, of which $19 million is classified as current. We accrued interest of approximately $2.1 million related to this obligation which is included in Crestwood Permian Basin for approximately $37.9 million in cash.accrued expenses and other liabilities on our consolidated balance sheet at June 30, 2021. In July 2021, we repaid all amounts, including accrued interest, related to this obligation.


Guarantee. CEQP issued a guarantee in conjunction with the Crestwood Permian Basin gas gathering agreement with SWEPI described above, under which CEQP has agreedwould be required to fund 100% of the costspay up to build the Nautilus gathering system (which is currently estimated to cost $180$10 million of which approximately $72.7 million has been spent through September 30, 2017) if Crestwood Permian fails to do so.honor its obligations to Crestwood Permian Basin LLC, a 50% equity investment of Crestwood Permian, in the event Crestwood Permian Basin LLC fails to satisfy its obligations under its gas gathering agreement with a third party. We do not believe that it is probable that this guarantee is probable of resultingwill result in future losses based on our assessment of the nature of the guarantee, the financial condition of the guaranteed party and the period of time that the guarantee has been outstanding, and as a result, we have not recorded a liability related to this guarantee on our consolidated balance sheetsheets at SeptemberJune 30, 20172021 and December 31, 2016.2020.


On June 21, 2017, we contributed to Crestwood Permian 100% of theequity interest of Crestwood New Mexico Pipeline LLC (Crestwood New Mexico), our wholly-owned subsidiary that owns our Delaware Basin assets located in Eddy County, New Mexico. This contribution was treated as a transaction between entities under common control (because of our relationship with First Reserve), and accordingly we deconsolidated Crestwood New Mexico and our investment in Crestwood Permian was increased by the historical book value of these assets of approximately $69.4 million. In conjunction with this contribution, First Reserve has agreed to contribute to Crestwood Permian the first $151 million of capital cost required to fund the expansion of the Delaware Basin assets, which includes a new processing plant located in Orla, Texas and associated pipelines (Orla processing plant).

Pursuant to Crestwood Permian's limited liability company agreement, we will receive 100% of Crestwood New Mexico's available cash (as defined in the limited liability company agreement) until the earlier of the Orla processing plant in-service date or June 30, 2018, at which time the distributions will be based on the members respective ownership percentages. Because our ownership and distribution percentages will differ during this period, equity earnings from Crestwood Permian is determined using the Hypothetical Liquidation at Book Value (HLBV) method. Under the HLBV method, a calculation is prepared at each balance sheet date to determine the amount that we would receive if Crestwood Permian were to liquidate all of its assets, as valued in accordance with GAAP, and distribute that cash to the members. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is our share of the earnings or losses from the equity investment for the period, which approximates how earnings are allocated under the terms of the limited liability company agreement.

Stagecoach Gas Services LLC. In June 2016, we contributed to Stagecoach Gas Services LLC (Stagecoach Gas) the entities owning the Northeast storage and transportation assets. Additionally, Con Edison Gas Pipeline Storage Northeast, LLC (CEGP), a wholly-owned subsidiary of Consolidated Edison, Inc., contributed $945 million to Stagecoach Gas in exchange for a 50% equity interest in Stagecoach Gas, and Stagecoach Gas distributed to us the cash proceeds received (net of approximately $3 million of cash transferred to the joint venture) from CEGP. Pursuant to the Stagecoach Gas limited liability company agreement, we may be required to make payments of up to $57 million to CEGP after December 31, 2020 if certain criteria are not met by Stagecoach Gas by December 31, 2020, including achieving certain performance targets on growth capital projects. We do not believe that this provision is probable of resulting in future payments to CEGP, and as a result we have not recorded a liability on our balance sheet as of September 30, 2017 and December 31, 2016.

We deconsolidated the Northeast storage and transportation assets as a result of this transaction discussed above and began accounting for our 50% equity interest in Stagecoach under the equity method of accounting. We recognized a loss on the deconsolidation of the Northeast storage and transportation assets of approximately $32.9 million.

18
Table of Contents


Net Investments and Earnings

Our net investments in and earnings from our unconsolidated affiliates are as follows (in millions, unless otherwise stated):
 Investment Earnings (Loss) from Unconsolidated Affiliates
 September 30, December 31, Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016 2017 2016
Stagecoach Gas Services LLC(1)
$854.3
 $871.0
 $6.4
 $6.8
 $19.0
 $9.1
Jackalope Gas Gathering Services, L.L.C.(2)
186.2
 197.2
 1.5
 5.5
 5.5
 16.5
Tres Palacios Holdings LLC(3)
34.7
 39.0
 0.3
 0.8
 1.5
 (0.7)
Powder River Basin Industrial Complex, LLC(4)
8.6
 8.7
 0.5
 0.3
 1.0
 1.2
Crestwood Permian Basin Holdings LLC(5)
114.7
 (0.5) 2.8
 —
 2.2
 —
Total$1,198.5
 $1,115.4
 $11.5
 $13.4
 $29.2
 $26.1
(1)As of September 30, 2017, our equity in the underlying net assets of Stagecoach Gas exceeded our investment balance by approximately $51.4 million. This excess amount is entirely attributable to goodwill and, as such, is not subject to amortization. Our Stagecoach Gas investment is included in our storage and transportation segment.
(2)As of September 30, 2017, our equity in the underlying net assets of Jackalope Gas Gathering Services, L.L.C. (Jackalope) exceeded our investment balance by approximately $0.8 million. We amortize this amount over 20 years, which represents the life of Jackalope’s gathering agreement with Chesapeake Energy Corporation (Chesapeake), and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. Our Jackalope investment is included in our gathering and processing segment.
(3)As of September 30, 2017, our equity in the underlying net assets of Tres Palacios Holdings LLC (Tres Holdings) exceeded our investment balance by approximately $26.9 million. We amortize this amount over the life of the Tres Palacios Gas Storage LLC (Tres Palacios) sublease agreement, and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. Our Tres Holdings investment is included in our storage and transportation segment.
(4)As of September 30, 2017, our equity in the underlying net assets of Powder River Basin Industrial Complex, LLC (PRBIC) exceeded our investment balance by approximately $6.5 million. We amortize a portion of this amount over the life of PRBIC's property, plant and equipment and its agreement with Chesapeake, and we reflect the amortization as an increase in our earnings from unconsolidated affiliates. During 2015, we recorded an impairment of our PRBIC equity investment as further discussed in our 2016 Annual Report on Form 10-K. For the year ended December 31, 2016, PRBIC recorded a $41.3 million impairment of its goodwill and long-lived assets and as a result, we adjusted our excess basis in PRBIC by approximately $8.3 million to reflect our proportionate share of the fair value of PRBIC's net assets. Our PRBIC investment is included in our storage and transportation segment.
(5)As of September 30, 2017, our equity in the underlying net assets of Crestwood Permian exceeded our investment balance by approximately $22.0 million, which is entirely attributable to goodwill and, as such, is not subject to amortization. Our Crestwood Permian investment is included in our gathering and processing segment.

Summarized Financial Information of Unconsolidated Affiliates

Below is the summarized operating results for our significant unconsolidated affiliates (in millions; amounts represent 100% of
unconsolidated affiliate information):

 Three Months Ended September 30,
 2017 2016
 Operating Revenues Operating Expenses Net Income Operating Revenues Operating Expenses Net Income
Stagecoach Gas$43.1
 $20.4
 $22.7
 $42.8
 $18.4
 $24.4
Other(1)
78.3
 66.4
 11.9
 30.1
 18.4
 11.7
Total$121.4
 $86.8
 $34.6
 $72.9
 $36.8
 $36.1
(1)Includes our Jackalope, Tres Holdings, PRBIC and Crestwood Permian equity investments. We amortize the excess basis in certain of our equity investments as an increase in our earnings from unconsolidated affiliates. We recorded amortization of the excess basis in our Jackalope equity investment of less than $0.1 million for both the three months ended September 30, 2017 and 2016. We recorded amortization of the excess basis in our Tres Holdings equity investment of approximately $0.3 million for both the three months ended September 30, 2017 and 2016. We recorded amortization of the excess basis in our PRBIC equity investment of approximately $0.2 million and $0.4 million for the three months ended September 30, 2017 and 2016.

19
Table of Contents


 Nine Months Ended September 30,
 2017 2016
 Operating Revenues Operating Expenses Net Income Operating Revenues Operating Expenses Net Income
Stagecoach Gas$127.1
 $58.4
 $68.8
 $56.0
 $24.1
 $31.9
Other(1)
124.6
 103.7
 20.8
 90.3
 60.6
 29.6
Total$251.7
 $162.1
 $89.6
 $146.3
 $84.7
 $61.5

(1)Includes our Jackalope, Tres Holdings, PRBIC and Crestwood Permian equity investments. We amortize the excess basis in certain of our equity investments as an increase in our earnings from unconsolidated affiliates. We recorded amortization of the excess basis in our Jackalope equity investment of less than $0.1 million for both the nine months ended September 30, 2017 and 2016. We recorded amortization of the excess basis in our Tres Holdings equity investment of approximately $0.9 million for both the nine months ended September 30, 2017 and 2016. We recorded amortization of the excess basis in our PRBIC equity investment of approximately $0.5 million and $1.2 million for the nine months ended September 30, 2017 and 2016.

Distributions and Contributions

  Distributions Contributions
  Nine Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Stagecoach Gas(1)
 $35.7
 $3.7
 $—
 $—
Jackalope 19.4
 19.9
 2.9
 0.7
Tres Holdings(1)
 5.8
 6.2
 —
 5.5
PRBIC 1.1
 1.6
 —
 —
Crestwood Permian(2) 
 —
 —
 113.0
 —
Total $62.0
 $31.4
 $115.9
 $6.2

(1)In October 2017, we received a cash distribution from Stagecoach Gas, Tres Holdings and Crestwood Permian of approximately $11.6 million, $3.1 million and $4.5 million, respectively.
(2)On June 21, 2017, we contributed to Crestwood Permian 100% of the equity interest of Crestwood New Mexico at our historical book value of approximately $69.4 million. This contribution was treated as a non-cash transaction between entities under common control.


Note 56 – Risk Management


We are exposed to certain market risks related to our ongoing business operations. These risks include exposure to changing commodity prices. We utilize derivative instruments to manage our exposure to fluctuations in commodity prices, which is discussed below. Additional information related to our derivatives is discussed in Note 6.7.

Commodity Derivative Instruments and Price Risk Management


Risk Management Activities


We sell NGLs (such as propane, ethane, butane and heating oil), crude oil and natural gas to energy relatedenergy-related businesses and may use a variety of financial and other instruments including forward contracts involving physical delivery of NGLs, heatingcrude oil and crude oil.natural gas. We periodically enter into offsetting positions to economically hedge against the exposure our customer contracts create. Certain of these contracts and positions are derivative instruments. We do not designate any of our commodity-based derivatives as hedging instruments for accounting purposes. Our commodity-based derivatives are reflected at fair value in theour consolidated balance sheets, and changes in the fair value of these derivatives that impact the consolidated statements of operations are reflected in costs of product/services sold. DuringOur commodity-based derivatives that are settled with physical commodities are reflected as an increase to product revenues, and the three and nine months ended September 30, 2017,commodity inventory that is utilized to satisfy those physical obligations is reflected as an increase to product costs in our consolidated statements of operations. The following table summarizes the impact to our consolidated statements of operations related to our commodity-based derivatives reflected in costs of product/services sold was a loss of $24.1 million and $22.6 million. Duringduring the three and ninesix months ended SeptemberJune 30, 2016, the impact to the statement2021 and 2020 (in millions):
19
Table of operations related to our commodity-based derivatives reflected in costs of product/services sold was a gain of $2.1 million and $4.1 million. Contents

Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Product revenues$52.7 $18.0 $167.5 $93.0 
Gain (loss) reflected in product costs$(33.3)$(6.8)$(41.4)$15.2 

We attempt to balance our contractual portfolio in terms of notional amounts and timing of performance and delivery obligations. This balance in the contractual portfolio significantly reduces the volatility in product costs of product/services sold related to these instruments.


20
Table of Contents


Commodity Price and Credit Risk


Notional Amounts and Terms


The notional amounts and terms of our derivative financial instruments include the following:
 June 30, 2021December 31, 2020
 Fixed Price
Payor		Fixed Price
Receiver		Fixed Price
Payor		Fixed Price
Receiver
Propane, ethane, butane, heating oil and crude oil (MMBbls)66.3 70.6 72.7 76.5 
Natural gas (Bcf)26.1 33.6 22.6 28.6 
 September 30, 2017 December 31, 2016
 
Fixed Price
Payor
 
Fixed Price
Receiver
 
Fixed Price
Payor
 
Fixed Price
Receiver
Propane, crude and heating oil (MMBbls)19.7
 22.7
 13.1
 15.1
Natural gas (MMBTU’s)0.9
 0.6
 —
 —


Notional amounts reflect the volume of transactions, but do not represent the amounts exchanged by the parties to the financial instruments. Accordingly, notional amounts do not reflect our monetary exposure to market or credit risks.

All contracts subject to price risk had a maturity of 3538 months or less; however, 87%85% of the contracted volumes will be delivered or settled within 12 months.


Credit Risk


Inherent in our contractual portfolio are certain credit risks. Credit risk is the risk of loss from nonperformance by suppliers, customers or financial counterparties to a contract. We take an active role in managing credit risk and have established control procedures, which are reviewed on an ongoing basis. We attempt to minimize credit risk exposure through credit policies and periodic monitoring procedures as well as through customer deposits, letters of credit and entering into netting agreements that allow for offsetting counterparty receivable and payable balances for certain financial transactions, as deemed appropriate. The counterparties associated with our price risk management activities are primarily energy marketers and propane retailers, resellers and dealers.


Certain of our derivative instruments have credit limits that require us to post collateral. The amount of collateral required to be posted is a function of the net liability position of the derivative as well as our established credit limit with the respective counterparty. If our credit rating were to change, the counterparties could require us to post additional collateral. The amount of additional collateral that would be required to be posted would vary depending on the extent of change in our credit rating as well as the requirements of the individual counterparty. The aggregate fair value of all commodityIn addition, we have variation margin requirements with a derivative instruments with credit-risk-related contingent features that were inclearing broker and a third party broker related to our net asset or liability position at September 30, 2017 and December 31, 2016 was $30.1 million and $13.9 million. At September 30, 2017 and December 31, 2016, we posted less than $0.1 million of collateral for our commodity derivative instruments with credit-risk-related contingent features. In addition, at September 30, 2017 and December 31, 2016, we had a New York Mercantile Exchange (NYMEX) related net derivative asset position of $30.7 million and $14.3 million, for which we posted $25.2 million and $4.2 million of cash collateral in the normal course of business. At September 30, 2017 and December 31, 2016, we also received collateral of $5.7 million and $4.3 million in the normal course of business.each respective broker. All collateral amounts have been netted against the asset or liability with the respective counterparty and are reflected in our consolidated balance sheets as assets and liabilities from price risk management activities.



The following table presents the fair value of our commodity derivative instruments with credit-risk related contingent features and their associated collateral (in millions):
June 30, 2021December 31, 2020
Aggregate fair value liability of derivative instruments with credit-risk-related contingent features(1)
$83.7 $38.5 
Variation margin-related net derivative asset position$124.7 $35.9 
Variation margin-related cash collateral received$99.5 $18.3 
Cash collateral received, net$8.5 $12.4 
(1)At June 30, 2021 and December 31, 2020, we posted less than $0.1 million of collateral associated with these derivatives.

20
Table of Contents

Note 67 – Fair Value Measurements


The accounting standard for fair value measurement establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:


•Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed equities and US government treasury securities.


•Level 2—Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various

21
Table of Contents


assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange-traded derivatives such as over the counter (OTC) forwards, options and physical exchanges.


•Level 3—Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Cash, Accounts Receivable and Accounts Payable

As of September 30, 2017 and December 31, 2016, the carrying amounts of cash, accounts receivable and accounts payable approximate fair value based on the short-term nature of these instruments.

Credit Facility

The fair value of the amounts outstanding under our CMLP credit facility approximates the carrying amounts as of September 30, 2017 and December 31, 2016, due primarily to the variable nature of the interest rate of the instrument, which is considered a Level 2 fair value measurement.

Senior Notes

We estimate the fair value of our senior notes primarily based on quoted market prices for the same or similar issuances (representing a Level 2 fair value measurement). The following table reflects the carrying value (reduced for deferred financing costs associated with the respective notes) and fair value of our senior notes (in millions):
 September 30, 2017 December 31, 2016
 
Carrying
 Amount
 
Fair
Value
 
Carrying
 Amount
 
Fair
Value
2020 Senior Notes$—
 $—
 $340.6
 $350.2
2022 Senior Notes$—
 $—
 $429.3
 $447.3
2023 Senior Notes$691.7
 $724.7
 $690.6
 $722.6
2025 Senior Notes$492.1
 $511.5
 $—
 $—


Financial Assets and Liabilities


As of SeptemberJune 30, 20172021 and December 31, 2016,2020, we held certain assets and liabilities that are required to be measured at fair value on a recurring basis, which include our derivative instruments related to heating oil, crude oil, NGLs and NGLs.natural gas. Our derivative instruments consist of forwards, swaps, futures, physical exchanges and options.


Our derivative instruments that are traded on the NYMEXNew York Mercantile Exchange have been categorized as Level 1.


Our derivative instruments also include OTC contracts, which are not traded on a public exchange. The fair values of these derivative instruments are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. These instruments have been categorized as Level 2.


Our OTC options are valued based on the Black Scholes option pricing model that considers time value and volatility of the underlying commodity. The inputs utilized in the model are based on publicly available information as well as broker quotes. These options have been categorized as Level 2.


Our financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.



22
21
Table of Contents



The following tables set forth by level within the fair value hierarchy, our financial instruments that were accounted for at fair value on a recurring basis at SeptemberJune 30, 20172021 and December 31, 20162020 (in millions):
June 30, 2021
Level 1Level 2Level 3Gross Fair Value
Contract Netting(1)
Collateral/Margin Received or PaidFair Value
Assets
Assets from price risk management$52.4 $948.3 $0 $1,000.7 $(873.3)$(99.8)$27.6 
Suburban Propane Partners, L.P. units(2)
2.2 0 0 2.2 — — 2.2 
Total assets at fair value$54.6 $948.3 $0 $1,002.9 $(873.3)$(99.8)$29.8 
Liabilities
Liabilities from price risk management$41.2 $974.0 $0 $1,015.2 $(873.3)$8.2 $150.1 
Total liabilities at fair value$41.2 $974.0 $0 $1,015.2 $(873.3)$8.2 $150.1 
December 31, 2020
Level 1Level 2Level 3Gross Fair Value
Contract Netting(1)
Collateral/Margin Received or PaidFair Value
Assets
Assets from price risk management$20.2 $480.5 $0 $500.7 $(455.0)$(18.5)$27.2 
Suburban Propane Partners, L.P. units(2)
2.1 0 0 2.1 — — 2.1 
Total assets at fair value$22.3 $480.5 $0 $502.8 $(455.0)$(18.5)$29.3 
Liabilities
Liabilities from price risk management$25.1 $494.0 $0 $519.1 $(455.0)$12.2 $76.3 
Total liabilities at fair value$25.1 $494.0 $0 $519.1 $(455.0)$12.2 $76.3 

(1)Amounts represent the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions.
(2)Amount is reflected in other non-current assets on CEQP’s consolidated balance sheets.

Cash, Accounts Receivable and Accounts Payable

As of June 30, 2021 and December 31, 2020, the carrying amounts of cash, accounts receivable and accounts payable approximate fair value based on the short-term nature of these instruments.

Credit Facility

The fair value of the amounts outstanding under our Crestwood Midstream credit facility approximates the carrying amounts as of June 30, 2021 and December 31, 2020, due primarily to the variable nature of the interest rate of the instrument, which is considered a Level 2 fair value measurement.

22
 September 30, 2017  
 Fair Value of Derivatives     
 Level 1 Level 2 Level 3 Gross Fair Value 
Contract Netting(1)
 Collateral/Margin Received or Paid Recorded in Balance Sheet
Assets             
Assets from price risk management$0.9
 $127.1
 $—
 $128.0
 $(94.2) $(26.0) $7.8
Suburban Propane Partners, L.P. units(2)
3.7
 —
 —
 3.7
 —
 —
 3.7
Total assets at fair value$4.6
 $127.1
 $—
 $131.7
 $(94.2) $(26.0) $11.5
              
Liabilities             
Liabilities from price risk management$1.6
 $140.3
 $—
 $141.9
 $(94.2) $4.9
 $52.6
Total liabilities at fair value$1.6
 $140.3
 $—
 $141.9
 $(94.2) $4.9
 $52.6
              
 December 31, 2016  
 Fair Value of Derivatives     
 Level 1 Level 2 Level 3 Gross Fair Value 
Contract Netting(1)
 Collateral/Margin Received or Paid Recorded in Balance Sheet
Assets             
Assets from price risk management$0.6
 $84.4
 $—
 $85.0
 $(67.8) $(10.9) $6.3
Suburban Propane Partners, L.P. units(2)
4.3
 —
 —
 4.3
 —
 —
 4.3
Total assets at fair value$4.9
 $84.4
 $—
 $89.3
 $(67.8) $(10.9) $10.6
              
Liabilities             
Liabilities from price risk management$2.7
 $90.2
 $—
 $92.9
 $(67.8) $3.5
 $28.6
Total liabilities at fair value$2.7
 $90.2
 $—
 $92.9
 $(67.8) $3.5
 $28.6

(1)Amounts represent the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions as well as cash collateral held or placed with the same counterparties.
(2)Amount is reflected in other assets on CEQP's consolidated balance sheets.



23
Table of Contents



Senior Notes

We estimate the fair value of our senior notes primarily based on quoted market prices for the same or similar issuances (representing a Level 2 fair value measurement). The following table represents the carrying amount (reduced for deferred financing costs associated with the respective notes) and fair value of our senior notes (in millions):
June 30, 2021December 31, 2020
Carrying
 Amount		Fair
Value		Carrying
 Amount		Fair
Value
2023 Senior Notes$0 $0 $683.8 $691.5 
2025 Senior Notes$496.0 $514.7 $495.5 $509.9 
2027 Senior Notes$593.7 $617.7 $593.2 $594.1 
2029 Senior Notes$690.2 $733.6 $0 $0 


Note 78 – Long-Term Debt


Long-term debt consisted of the following at SeptemberJune 30, 20172021 and December 31, 20162020 (in millions):
June 30,
2021		December 31,
2020
Credit Facility$848.6 $719.0 
2023 Senior Notes0 687.2 
2025 Senior Notes500.0 500.0 
2027 Senior Notes600.0 600.0 
2029 Senior Notes700.0 0 
Other(1)
0.4 0.4 
Less: deferred financing costs, net27.2 22.6 
Total debt2,621.8 2,484.0 
Less: current portion0.2 0.2 
Total long-term debt, less current portion$2,621.6 $2,483.8 
 September 30,
2017		 December 31,
2016
Credit Facility$444.1
 $77.0
2020 Senior Notes—
 338.8
Fair value adjustment of 2020 Senior Notes—
 1.8
2022 Senior Notes—
 436.4
2023 Senior Notes700.0
 700.0
2025 Senior Notes500.0
 —
Other2.4
 3.7
Less: deferred financing costs, net30.2
 34.0
Total debt1,616.3
 1,523.7
Less: current portion0.9
 1.0
Total long-term debt, less current portion$1,615.4
 $1,522.7


(1)Represents non-interest bearing obligations related to certain companies acquired in 2014 with payments due through 2022.

Credit Facility


At September 30, 2017,Crestwood Midstream’s five-year $1.25 billion revolving credit facility (the CMLP Credit Facility) is available to fund acquisitions, working capital and internal growth projects and for general partnership purposes. Contemporaneous with the Crestwood Holdings Transactions described in Note 1, Crestwood Midstream had $548.7 million of available capacity underentered into the Third Amendment to its credit facility consideringagreement in order to, among other things, permit the most restrictive debt covenants in its credit agreement. At September 30, 2017 and December 31, 2016, Crestwood Midstream's outstanding standby letters of credit were $63.6 million and $64.0 million. Borrowingsborrowings under the CMLP Credit Facility to fund the Crestwood Holdings Transactions and revise the definition of Change in Control in the CMLP Credit Agreement as it relates to the control of CEQP’s general partner). The other covenants and restrictive provisions under the amended credit facility accrue interest at prime or Eurodollar based rates plus applicable spreads, which resulted in interest rates between 3.49% and 5.50% at September 30, 2017 and 3.21% and 5.25%agreement are materially consistent with the covenants that existed at December 31, 2016. The weighted-average interest rate as of September 30, 2017 and December 31, 2016 was 3.50% and 3.23%.2020.


Crestwood Midstream is required under its credit agreement to maintain a net debt to consolidated EBITDA ratio (as defined in its credit agreement) of not more than 5.50 to 1.0, a consolidated EBITDA to consolidated interest expense ratio (as defined in its credit agreement) of not less than 2.50 to 1.0, and a senior secured leverage ratio (as defined in its credit agreement) of not more than 3.75 to 1.0. At SeptemberJune 30, 2017,2021, the net debt to consolidated EBITDA ratio was approximately 4.134.16 to 1.0, the consolidated EBITDA to consolidated interest expense ratio was approximately 4.084.84 to 1.0, and the senior secured leverage ratio was 1.111.33 to 1.0.


The CMLPAt June 30, 2021, Crestwood Midstream had $366.7 million of available capacity under its credit facility allowsconsidering the most restrictive debt covenants in its credit agreement. At June 30, 2021 and December 31, 2020, Crestwood Midstream to increase its available borrowingsMidstream’s outstanding standby letters of credit were $34.7 million and $23.9 million. Borrowings under the credit facility by $350.0 million, subject to lender approvalaccrue interest at prime or Eurodollar based rates plus applicable spreads, which resulted in interest rates between 2.33% and the satisfaction4.50% at June 30,
23
Table of certain other conditions,Contents

2021 and 2.40% and 4.50% at December 31, 2020. The weighted-average interest rate on outstanding borrowings as described in the credit agreement.of June 30, 2021 and December 31, 2020 was 2.38% and 2.45%.


Senior Notes


Repayments. During the nine months ended September 30, 2017,2029 Senior Notes.In January 2021, Crestwood Midstream paidissued $700 million of 6.00% unsecured senior notes due 2029 (the 2029 Senior Notes). The 2029 Senior Notes will mature on February 1, 2029, and interest is payable semi-annually in arrears on February 1 and August 1 of each year, beginning on August 1, 2021. The net proceeds from this offering of approximately $457.8$691.0 million were used to purchase, redeem and/or cancel allrepay a portion of the principal amount outstanding under the 20222023 Senior Notes and approximately $349.9to repay indebtedness under the CMLP Credit Facility.

2023 Senior Note Repayments. During the six months ended June 30, 2021, we redeemed $687.2 million to redeem all of the principal amount outstanding under the 2020our 2023 Senior Notes. Crestwood Midstream funded the repayments with a combination of net proceeds from the issuance of the 2025 Senior Notes described below and borrowings under the credit facility. In conjunction with these note repayments, Crestwood Midstream (i)the repayment of the notes, we recognized a loss on extinguishment of debt of approximately $37.7$1.2 million and $6.7 million during the ninethree and six months ended SeptemberJune 30, 2017 (including the write off of2021, and paid approximately $6.8 million of deferred financing costs associated with the 2022 Senior Notes); and (ii) paid $5.1 million and $1.0$8.6 million of accrued interest on the 20202023 Senior Notes and 2022 Senior Notes, respectively, on the datedates they were tendered.

In June 2016, Crestwood Midstream paid approximately $312.9 million to purchase and cancel approximately $161.2 million and $163.6 million ofrepurchased. We funded the principal amounts outstanding under its 2020 Senior Notes and 2022 Senior Notes, respectively, utilizingrepayment using a portion of the proceeds received from Stagecoach Gas, as further discussedthe issuance of the 2029 Senior Notes and borrowings under the CMLP Credit Facility.


Note 9 – Commitments and Contingencies

Legal Proceedings

Linde Lawsuit. On December 23, 2019, Linde Engineering North America Inc. (Linde) filed a lawsuit in Note 4.the District Court of Harris County, Texas alleging that Arrow Field Services, LLC, our consolidated subsidiary, and Crestwood Midstream recognizedbreached a gain on extinguishmentcontract entered into in March 2018 under which Linde was to provide engineering, procurement and construction services to us related to the completion of debtthe construction of approximately $10the Bear Den II cryogenic processing plant. Linde claims damages of $55 million in conjunctionunpaid invoices and other damages. This matter is not an insurable event based on our insurance policies, and we are unable to predict the outcome for this matter.

General. We are periodically involved in litigation proceedings. If we determine that a negative outcome is probable and the amount of loss is reasonably estimable, then we accrue the estimated amount. The results of litigation proceedings cannot be predicted with certainty. We could incur judgments, enter into settlements or revise our expectations regarding the early tenderoutcome of certain matters, and such developments could have a material adverse effect on our results of operations or cash flows in the period in which the amounts are paid and/or accrued. As of June 30, 2021 and December 31, 2020, we had approximately $36.3 million and $10.4 million accrued for outstanding legal matters. Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures for which we can estimate will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures.

Any loss estimates are inherently subjective, based on currently available information, and are subject to management’s judgment and various assumptions. Due to the inherently subjective nature of these notes.estimates and the uncertainty and unpredictability surrounding the outcome of legal proceedings, actual results may differ materially from any amounts that have been accrued.


2025 Senior Notes. Regulatory Compliance

In March 2017, Crestwood Midstream issued $500 millionthe ordinary course of 5.75% unsecured senior notes due 2025 (the 2025 Senior Notes) inour business, we are subject to various laws and regulations. In the opinion of our management, compliance with current laws and regulations will not have a private offering.material effect on our results of operations, cash flows or financial condition.

Environmental Compliance

Our operations are subject to stringent and complex laws and regulations pertaining to worker health, safety, and the environment. We are subject to laws and regulations at the federal, state, regional and local levels that relate to air and water quality, hazardous and solid waste management and disposal, and other environmental matters. The 2025 Senior Notes will mature on April 1, 2025,cost of planning, designing, constructing and interest is payableoperating our facilities must incorporate compliance with environmental laws and regulations and

24
Table of Contents



safety standards. Failure to comply with these laws and regulations may trigger a variety of administrative, civil and potentially criminal enforcement measures.
semiannually
During 2019, we experienced produced water releases on our Arrow water gathering system located within the Fort Berthold Indian Reservation in arrearsNorth Dakota. In January 2021, we received a Notice of Violation and Opportunity to Confer from the Environmental Protection Agency (EPA) related to the water releases. In March 2021, we executed a Consent Agreement with the EPA and agreed to pay $0.1 million for penalties related to the water releases. The EPA provided the public a 30-day period to comment on April 1the Consent Agreement and October 1is currently reviewing the comments received. We expect to finalize and settle the Consent Agreement after the EPA completes its review and response, if necessary, to the comments received. We are also substantially complete with all remediation efforts related to the water releases and continue to monitor any remaining impacts. We will continue our remediation efforts to ensure that lands impacted by the produced water releases are fully remediated. In response to the water releases, we removed several miles of each year, beginning October 1, 2017.gathering pipeline from the system that remained in service and replaced those sections with a pipeline composed of higher capacity material that is more suitable to the environment and climate conditions in the Bakken. The net proceeds from this offeringreplaced pipeline increased water gathering capacity on the Arrow system and furthers our commitment to sustainability and environmental stewardship in the areas where we live and operate. We believe these events are insurable under our policies. We have not recorded an insurance receivable as of June 30, 2021.

At both June 30, 2021 and December 31, 2020, our accrual of approximately $492$1.3 million were usedwas based on our undiscounted estimate of amounts we will spend on compliance with environmental and other regulations, and any associated fines or penalties. We estimate that our potential liability for reasonably possible outcomes related to repay amounts outstanding under the 2020 Senior Notesour environmental exposures could range from approximately $1.3 million to $1.9 million at June 30, 2021.

Self-Insurance

We utilize third-party insurance subject to varying retention levels of self-insurance, which management considers prudent. Such self-insurance relates to losses and the 2022 Senior Notes.

In May 2017, Crestwood Midstream filed a registration statementliabilities primarily associated with the SEC under which it offered to exchange new senior notes for anymedical claims, workers’ compensation claims and all outstanding 2025 Senior Notes. Crestwood Midstream completed the exchange offer in July 2017. The termsgeneral, product, vehicle and environmental liability. Losses are accrued based upon management’s estimates of the exchange notesaggregate liability for claims incurred using certain assumptions followed in the insurance industry and based on past experience. The primary assumption utilized is actuarially determined loss development factors. The loss development factors are substantially identicalbased primarily on historical data. Our self insurance reserves could be affected if future claim developments differ from the historical trends. We believe changes in health care costs, trends in health care claims of our employee base, accident frequency and severity and other factors could materially affect the estimate for these liabilities. We continually monitor changes in employee demographics, incident and claim type and evaluate our insurance accruals and adjust our accruals based on our evaluation of these qualitative data points. We are liable for the development of claims for our previously disposed of retail propane operations, provided they were reported prior to August 1, 2012. The following table summarizes CEQP’s and CMLP’s self-insurance reserves at June 30, 2021 and December 31, 2020 (in millions):
 CEQPCMLP
 June 30,
2021		December 31, 2020June 30,
2021		December 31, 2020
Self-insurance reserves(1)
$6.6 $7.7 $5.7 $6.7 
(1)At June 30, 2021, CEQP and CMLP classified approximately $4.8 million and $4.1 million, respectively, of these reserves as other long-term liabilities on their consolidated balance sheets.

Guarantees and Indemnifications

We are involved in various joint ventures that sometimes require financial and performance guarantees. In a financial guarantee, we are obligated to make payments if the guaranteed party fails to make payments under, or violates the terms of, the 2025 Senior Notes, exceptfinancial arrangement. In a performance guarantee, we provide assurance that the exchange notesguaranteed party will execute on the terms of the contract. If they do not, we are freely tradable.required to perform on their behalf. We also periodically provide indemnification arrangements related to assets or businesses we have sold. For a further description of our guarantees associated with our joint ventures, see Note 5.


At SeptemberOur potential exposure under guarantee and indemnification arrangements can range from a specified amount to an unlimited dollar amount, depending on the nature of the claim, specificity as to duration, and the particular transaction. As of June 30, 2017, Crestwood Midstream was in compliance with all2021 and December 31, 2020, we have no amounts accrued for these guarantees.
25
Table of its debt covenants applicableContents

Note 10 - Leases

The following table summarizes the balance sheet information related to our operating and finance leases at June 30, 2021 and December 31, 2020 (in millions):
June 30,
2021		December 31, 2020
Operating Leases
Operating lease right-of-use assets, net$29.6 $36.8 
Accrued expenses and other liabilities$12.0 $14.7 
Other long-term liabilities23.3 28.5 
Total operating lease liabilities$35.3 $43.2 
Finance Leases
Property, plant and equipment$12.8 $13.3 
Less: accumulated depreciation9.0 7.9 
Property, plant and equipment, net$3.8 $5.4 
Accrued expenses and other liabilities$2.7 $2.9 
Other long-term liabilities0.7 1.9 
Total finance lease liabilities$3.4 $4.8 

Lease expense. Our operating lease expense, net totaled $4.3 million and $7.1 million for the CMLP credit facilitythree months ended June 30, 2021 and its senior notes.2020 and $9.1 million and $14.6 million for the six months ended June 30, 2021 and 2020. Our finance lease expense totaled $0.9 million and $1.1 million for the three months ended June 30, 2021 and 2020 and $1.8 million and $2.2 million for the six months ended June 30, 2021 and 2020.




Note 8 - Earnings Per Limited Partner Unit

Our net income (loss) attributable to Crestwood Equity Partners is allocated to the subordinated and limited partner unitholders based on their ownership percentage after giving effect to net income attributable to the Preferred Units. We calculate basic net income per limited partner unit using the two-class method. Diluted net income per limited partner unit is computed using the treasury stock method, which considers the impact to net income attributable to Crestwood Equity Partners and limited partner units from the potential issuance of limited partner units.
We exclude potentially dilutive securities from the determination of diluted earnings per unit (as well as their related income statement impacts) when their impact on net income attributable to Crestwood Equity Partners per limited partner unit is anti-dilutive. During the three and nine months ended September 30, 2017, we excluded a weighted-average of 7,125,744 and 6,968,210 common units (representing preferred units), a weighted-average of 7,277,340 common units in both periods (representing Crestwood Niobrara's preferred units), and a weighted-average of 438,789 common units in both periods (representing subordinated units). During the three and nine months ended September 30, 2016, we excluded a weighted-average of 6,502,907 and 6,358,626 common units (representing preferred units), and a weighted-average of 8,669,633 common units in both periods (representing Crestwood Niobrara's preferred units) and a weighted-average of 438,789 common units in both periods (representing subordinated units). See Note 9 for additional information regarding the potential conversion of our preferred units and Crestwood Niobrara's preferred units to common units.


Note 911 – Partners’ Capital and Non-Controlling Partner


PreferredCommon and Subordinated Units


Subject to certain conditions,In conjunction with the holders of the Preferred Units have the right to convert their Preferred Units into (i) common units on a 1-for-10 basis or (ii) a number of common units determined pursuant to a conversion ratio set forthCrestwood Holdings Transactions discussed in Crestwood Equity's partnership agreement upon the occurrence of certain events, such as a changeNote 1, in control. The Preferred Units have voting rights that are identical to the voting rights of theMarch 2021, CEQP acquired approximately 11.5 million CEQP common units and will vote with0.4 million subordinated units of CEQP from Crestwood Holdings for approximately $268 million. CEQP reflected the purchase price as a reduction to its common unitholders’ partners’ capital in its consolidated statement of partners’ capital during the first quarter of 2021. The Crestwood Holdings Transactions resulted in CEQP retiring the common and subordinated units acquired from Crestwood Holdings. Transaction costs related to the Crestwood Holdings Transactions of approximately $7.6 million are reflected as a single class, with each Preferred Unit entitled to one vote for eachreduction of CEQP’s common unit into which such Preferred Unit is convertible, except that the Preferred Units are entitled to vote as a separate class on any matter on which all unitholders are entitled to vote that adversely affects the rights, powers, privileges or preferencesunitholders’ partners’ capital in its consolidated statement of the Preferred Units in relation to Crestwood Equity's other securities outstanding.

Common Units

On August 4, 2017, we entered into an equity distribution agreement with certain financial institutions (each, a Manager), under which we may offer and sell from time to time through one or more of the Managers, common units having an aggregate offering price of up to $250 million. Common units sold pursuant to this at-the-market (ATM) equity distribution program are issued under a registration statement that became effective on April 12, 2017. We will pay the Managers an aggregate fee of up to 2.0% (which totaled $0.2 millionpartners’ capital during the three and nine months ended September 30, 2017)first quarter of the gross sales price per common unit sold under our ATM equity distribution program. The table below shows the units issued and the net proceeds from the issuances:2021.

26
Issuance Dates Common Units 
Net Proceeds(1)
(in millions)
Third Quarter 2017 437,518
 $10.6
(1)The net proceeds from sales under the ATM program are used for general partnership purposes, which may include debt repayment and capital expenditures.

25
Table of Contents



Distributions


Crestwood Equity


Limited Partners. A summary of CEQP'sCEQP’s limited partner quarterly cash distributions for the ninesix months ended SeptemberJune 30, 20172021 and 20162020 is presented below:
Record Date Payment Date Per Unit Rate 
Cash Distributions
(in millions)
2017      
February 7, 2017 February 14, 2017 $0.60
 $41.8
May 8, 2017 May 15, 2017 0.60
 41.8
August 7, 2017 August 14, 2017 0.60
 41.8
      $125.4
2016      
February 5, 2016 February 12, 2016 $1.375
 $95.6
May 6, 2016 May 13, 2016 0.60
 41.4
August 5, 2016 August 12, 2016 0.60
 41.4
      $178.4
Record DatePayment DatePer Unit Rate
Cash Distributions
(in millions)
2021
February 5, 2021February 12, 2021$0.625 $46.4 
May 7, 2021May 14, 2021$0.625 39.3 
$85.7 
2020
February 7, 2020February 14, 2020$0.625 $45.3 
May 8, 2020May 15, 2020$0.625 45.7 
$91.0 


On October 19, 2017,July 15, 2021,we declared a distribution of $0.60$0.625 per limited partner unit to be paid on November 14, 2017,August 13, 2021 to unitholders of record on November 7, 2017August 6, 2021 with respect to the third quarter of 2017.ended June 30, 2021.


Preferred Unit HoldersUnitholders. We are required to make quarterlyDuring the six months ended June 30, 2021 and 2020, we paid cash distributions to our preferred unitholders. During the nine months ended September 30, 2017 and 2016, we issued 4,724,030 and 4,311,143 Preferred Units to our preferred unitholders of approximately $30.0 million in lieu of paying cash distributions of $43.1 million and $39.3 million, respectively.both periods. On October 19, 2017,July 15, 2021, the board of directors of our general partner authorized a cash distribution to our preferred unitholders of approximately $15.0 million for the quarter ended SeptemberJune 30, 2017 in lieu of issuing additional preferred units, and beginning with the quarter ending December 31, 2017, we will be required to make all future quarterly distributions to our preferred unitholders in cash.2021.


Crestwood Midstream


During the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, Crestwood Midstream paid cash distributions of $119.5$395.4 million and $185.0$119.0 million to Crestwood Equity.its partners.


Non-Controlling PartnersPartner


Crestwood Niobrara issued a preferred interestinterests to a subsidiary of General Electric Capital Corporation and GE Structured Finance, Inc. (collectively, GE) in conjunction with the acquisition of its investment inCN Jackalope Holdings LLC (Jackalope Holdings), which isare reflected as non-controlling interest in subsidiary apart from partners’ capital (i.e., temporary equity) on our consolidated financial statements. Duringbalance sheets. We adjust the three and nine months ended September 30, 2017,carrying amount of our non-controlling interest to its redemption value each period through net income attributable to non-controlling partners was approximately $6.4 millionpartner.

The following table shows the change in our non-controlling interest in subsidiary at June 30, 2021 and $18.8 million. During the three and nine months ended September 30, 2016, net income attributable to non-controlling partners was approximately $6.1 million and $18.0 million. During both the nine months ended September 30, 2017 and 2016,2020 (in millions):

Balance at December 31, 2020$432.7 
Distributions to non-controlling partner(19.6)
Net income attributable to non-controlling partner20.4 
Balance at June 30, 2021$433.5 

Balance at December 31, 2019$426.2 
Contributions from non-controlling partner2.8 
Distributions to non-controlling partner(18.5)
Net income attributable to non-controlling partner20.1 
Balance at June 30, 2020$430.6 

In July 2021, Crestwood Niobrara paid cash distributions to Jackalope Holdings of $11.4approximately $10.3 million to GE. In October 2017, Crestwood Niobrara paid a cash distribution of $3.8 million to GE for the quarter ended SeptemberJune 30, 2017.2021.



27
Table of Contents

Other

In February 2021, Crestwood Equity issued 50,000 performance units under the Crestwood Equity Partners LP Long Term Incentive Plan (Crestwood LTIP). The performance units are designed to provide an incentive for continuous employment to certain key employees. The vesting of performance units is subject to the attainment of certain performance and market goals over a three-year period, and entitle a participant to receive common units of Crestwood Equity without payment of an exercise price upon vesting. As of June 30, 2021, we had total unamortized compensation expense of approximately $1.0 million related to these performance units, which we expect will be amortized during the next three years. During the three and six months ended June 30, 2021, we recognized compensation expense of less than $0.1 million and $0.1 million related to these performance units, which is included in general and administrative expenses on our consolidated statements of operations.


Note 10 – Commitments12 - Earnings Per Limited Partner Unit

We calculate basic net income per limited partner unit using the two-class method. Our income (loss) is allocated to our common units and Contingencies

Legal Proceedings

We are periodically involved in litigation proceedings. If we determine that a negative outcome is probable andother participating securities (i.e., subordinated units) based on the amount of dividends paid in the current period plus an allocation of the undistributed earnings or excess distributions over earnings to the extent that each security participates in income (loss) or excess distributions over income (loss). The dilutive effect of the stock-based compensation performance units is calculated using the treasury stock method which considers the impact to net income or loss is reasonably estimable, then we accrueattributable to Crestwood Equity Partners and limited partner units from the estimated amount.potential issuance of limited partner units. The resultsdilutive effect of litigation proceedings cannot be predictedthe Preferred units and Crestwood Niobrara preferred units are calculated using the if-converted method which assumes units are converted at the beginning of the period (beginning with certainty. We could incur judgments, enter into settlements or revise our expectations regardingtheir respective issuance date), and the outcomeresulting common units are included in the denominator of certain matters, and such developments could have a material adverse effect on our results of operations or cash flowsthe diluted net income per common unit calculation for the period being presented. Distributions declared in the period in whichand undeclared distributions that accumulated during the amountsperiod are paid and/or accrued. As of September 30, 2017 and December 31, 2016, both CEQP and CMLP had less

26
Table of Contents


than $0.1 million accrued for outstanding legal matters. Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures for which we can estimate will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures.

Any loss estimates are inherently subjective, based on currently available information, and are subject to management's judgment and various assumptions. Dueadded back to the inherently subjective naturenumerator for purposes of these estimatesthe if-converted calculation.

We exclude potentially dilutive securities from the determination of diluted earnings per unit (as well as their related income statement impacts) when their impact is anti-dilutive. The following table summarizes information regarding the weighted-average of common units excluded during the three and six months ended June 30, 2021 and 2020 (in millions):
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Preferred units (1)
7.1 7.1 7.1 7.1 
Crestwood Niobrara’s preferred units(1)
3.6 8.2 3.6 8.2 
Unit-based compensation performance units(1)
0.1 0.2 0.1 0.3 
Subordinated units(1)(2)
0 0.4 0.2 0.4 
(1)For additional information regarding the uncertainty and unpredictability surrounding the outcome of legal proceedings, actual results may differ materially from any amounts that have been accrued.

Regulatory Compliance

In the ordinary coursepotential conversion/redemption of our business, we are subjectpreferred units and Crestwood Niobrara’s preferred units to various lawsCEQP common units, and regulations. In the opinion of our management, complianceperformance units and subordinated units, see our 2020 Annual Report on Form 10-K.
(2)In conjunction with current laws and regulations will not have a material effect on our results of operations, cash flows or financial condition.

Environmental Compliance

Our operations are subject to stringent and complex laws and regulations pertaining to worker health, safety, and the environment. We are subject to laws and regulations atCrestwood Holdings Transactions, in March 2021, CEQP retired the federal, state, regional and local levels that relate to air and water quality, hazardous and solid waste management and disposal and other environmental matters. The cost of planning, designing, constructing and operating our facilities must incorporate compliance with environmental laws and regulations and safety standards. Failure to comply with these laws and regulations may trigger a variety of administrative, civil and potentially criminal enforcement measures.

During 2014, we experienced three releases totaling approximately 28,000 barrels of produced water on our Arrow water gathering system located onsubordinated units. For additional information regarding the Fort Berthold Indian Reservation in North Dakota. We immediately notified the National Response Center, the Three Affiliated Tribes and numerous other regulatory authorities, and thereafter contained and cleaned up the releases completely and placed the impacted segments of these water lines back into service. In May 2015, we experienced a release of approximately 5,200 barrels of produced water on our Arrow water gathering system, immediately notified numerous regulatory authorities and other third parties, and thereafter contained and cleaned up the releases. 

In October 2014, we received data requests from the Environmental Protection Agency (EPA) related to the 2014 water releases and we responded to the requests during the first half of 2015.  In April 2015, the EPA issued a Notice of Potential Violation (NOPV) under the Clean Water Act relating to the largestretirement of the 2014 water releases. subordinated units, see Note 1 and Note 11.

Note 13 – Segments

We responded to the NOPV in May 2015,have 3 operating and in April 2017, we entered into an Administrative Order on Consent (the Order) with the EPA. The Order requires us to continue to remediatereportable segments: (i) gathering and monitor the impacted area for no less than four years unlessprocessing; (ii) storage and transportation; and (iii) marketing, supply and logistics. Our corporate operations include all goals of the Ordergeneral and administrative expenses that are satisfied earlier. The Order does not preclude the EPA from seeking to impose fines and penalties as a result of the water releases.

On March 3, 2015, we received a grand jury subpoena from the United States Attorney’s Office in Bismarck, North Dakota, seeking documents and information relating to the largest of the three 2014 water releases. We provided the requested information during the second quarter of 2015 and key employees were interviewed by the United States’ Attorney in December 2015. On September 13, 2017, we received a notice from the United States Department of Justice that it completed the investigation with no charges being filed against us. In August 2015, we received a notice of violation from the Three Affiliated Tribes' Environmental Division relatedallocated to our 2014 produced water releases on the Fort Berthold Indian Reservation. The notice of violation imposes fines and requests reimbursements exceeding $1.1 million; however, the notice of violation was stayed on September 15, 2015, upon our posting of a performance bond for the amount contemplated by the notice and pending the outcome of ongoing settlement discussions with the regulatory agencies asserting jurisdiction over the 2014 produced water releases.

We will continue our remediation efforts to ensure the impacted lands are restored to their prior state. We believe these releases are insurable events under our policies, and we have notified our carriers of these events. We have not recorded an insurance receivable as of September 30, 2017.


27
Table of Contents


At September 30, 2017 and December 31, 2016, our accrual of approximately $2.7 million and $2.1 million is based on our undiscounted estimate of amounts we will spend on compliance with environmental and other regulations, and any associated fines or penalties. We estimate that our potential liability for reasonably possible outcomes related to our environmental exposures (including the Arrow water releases described above) could range from approximately $2.7 million to $4.2 million at September 30, 2017.

Self-Insurance

We utilize third-party insurance subject to varying retention levels of self-insurance, which management considers prudent. Such self-insurance relates to losses and liabilities primarily associated with medical claims, workers' compensation claims and general, product, vehicle and environmental liability. At September 30, 2017 and December 31, 2016, CEQP's self-insurance reserves were $15.8 million and $15.6 million. We estimate that $10.6 million of this balance will be paid subsequent to September 30, 2018. As such, CEQP has classified $10.6 million in other long-term liabilities on its consolidated balance sheet at September 30, 2017. At September 30, 2017 and December 31, 2016, CMLP's self insurance reserves were $12.9 million and $12.2 million. CMLP estimates that $8.0 million of this balance will be paid subsequent to September 30, 2018. As such, CMLP has classified $8.0 million in other long-term liabilities on its consolidated balance sheet at September 30, 2017.

Guarantees and Indemnifications. We are involved in various joint ventures that sometimes require financial and performance guarantees. In a financial guarantee, we are obligated to make payments if the guaranteed party fails to make payments under, or violates the terms of, the financial arrangement. In a performance guarantee, we provide assurance that the guaranteed party will execute on the terms of the contract. If they do not, we are required to perform on their behalf. We also periodically provide indemnification arrangements related to assets or businesses we have sold.reportable segments. For a further description of our guarantees associated with our joint ventures,operating and reporting segments, see Note 4, and for a further description1. We assess the performance of our guarantees associated withoperating segments based on EBITDA, which is defined as income before income taxes, plus debt-related costs (interest and debt expense, net and loss on modification/extinguishment of debt) and depreciation, amortization and accretion expense.

28
Table of Contents

Below is a reconciliation of CEQP’s and CMLP’s net loss to EBITDA (in millions):
CEQPCMLP
Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20212020202120202021202020212020
Net loss$(38.1)$(24.3)$(76.4)$(47.7)$(38.5)$(26.8)$(78.9)$(52.4)
Add:
Interest and debt expense, net35.1 34.0 71.1 66.6 35.1 34.0 71.1 66.6 
Loss on modification/extinguishment of debt1.2 0 6.7 0 1.2 0 6.7 0 
Provision (benefit) for income taxes0.1 (0.1)0 (0.1)0.1 (0.2)0 (0.2)
Depreciation, amortization and accretion58.8 61.0 118.0 117.1 62.2 64.6 125.0 124.2 
EBITDA$57.1 $70.6 $119.4 $135.9 $60.1 $71.6 $123.9 $138.2 

The following tables summarize CEQP’s and CMLP’s reportable segment data for the three and six months ended June 30, 2021 and 2020 (in millions). Intersegment revenues included in the following tables are accounted for as arms-length transactions that apply our assets or businesses we have sold, seerevenue recognition policy described in our 20162020 Annual Report on Form 10-K. Included in earnings (loss) from unconsolidated affiliates, net reflected in the tables below was approximately $48.1 million and $9.5 million of our proportionate share of interest expense, depreciation and amortization expense, goodwill impairments and gains (losses) on long-lived assets, net recorded by our equity investments for the three months ended June 30, 2021 and 2020 and $177.5 million and $23.3 million for the six months ended June 30, 2021 and 2020.


Segment EBITDA Information

Three Months Ended June 30, 2021
Gathering and ProcessingStorage and TransportationMarketing, Supply and LogisticsCorporateTotal
Crestwood Midstream
Revenues$173.3 $2.0 $754.3 $0 $929.6 
Intersegment revenues84.2 3.1 (87.3)0 — 
Costs of product/services sold120.6 (0.4)677.0 0 797.2 
Operations and maintenance expense14.7 1.0 10.1 0 25.8 
General and administrative expense0 0 0 19.7 19.7 
Gain on long-lived assets, net0.3 0 0 0 0.3 
Earnings (loss) from unconsolidated affiliates, net1.0 (28.1)0 0 (27.1)
Crestwood Midstream EBITDA$123.5 $(23.6)$(20.1)$(19.7)$60.1 
Crestwood Equity
General and administrative expense0 0 0 3.1 3.1 
Other income, net0 0 0 0.1 0.1 
Crestwood Equity EBITDA$123.5 $(23.6)$(20.1)$(22.7)$57.1 

29
Table of Contents

Three Months Ended June 30, 2020
Gathering and ProcessingStorage and TransportationMarketing, Supply and LogisticsCorporateTotal
Crestwood Midstream
Revenues$114.5 $3.1 $235.1 $0 $352.7 
Intersegment revenues14.3 2.4 (16.7)0 — 
Costs of product/services sold21.3 0.1 204.3 0 225.7 
Operations and maintenance expense19.3 0.7 11.6 0 31.6 
General and administrative expense0 0 0 28.4 28.4 
Loss on long-lived assets, net(3.6)0 (0.2)0 (3.8)
Earnings (loss) from unconsolidated affiliates, net(1.0)9.4 0 0 8.4 
Crestwood Midstream EBITDA$83.6 $14.1 $2.3 $(28.4)$71.6 
Crestwood Equity
General and administrative expense0 0 0 1.1 1.1 
Other income, net0 0 0 0.1 0.1 
Crestwood Equity EBITDA$83.6 $14.1 $2.3 $(29.4)$70.6 

Six Months Ended June 30, 2021
Gathering and ProcessingStorage and TransportationMarketing, Supply and LogisticsCorporateTotal
Crestwood Midstream
Revenues$327.7 $4.0 $1,630.6 $0 $1,962.3 
Intersegment revenues189.5 5.5 (195.0)0 — 
Costs of product/services sold237.1 0 1,373.9 0 1,611.0 
Operations and maintenance expense36.1 1.6 20.9 0 58.6 
General and administrative expense0 0 0 36.9 36.9 
Gain (loss) on long-lived assets, net(1.2)0 0.1 0 (1.1)
Earnings (loss) from unconsolidated affiliates, net0.2 (131.0)0 0 (130.8)
Crestwood Midstream EBITDA$243.0 $(123.1)$40.9 $(36.9)$123.9 
Crestwood Equity
General and administrative expense0 0 0 4.6 4.6 
Other income, net0 0 0 0.1 0.1 
Crestwood Equity EBITDA$243.0 $(123.1)$40.9 $(41.4)$119.4 

30
Table of Contents

Six Months Ended June 30, 2020
Gathering and ProcessingStorage and TransportationMarketing, Supply and LogisticsCorporateTotal
Crestwood Midstream
Revenues$329.4 $6.6 $744.6 $0 $1,080.6 
Intersegment revenues54.3 5.0 (59.3)0 — 
Costs of product/services sold129.6 0.3 630.2 0 760.1 
Operations and maintenance expense46.3 2.1 20.8 0 69.2 
General and administrative expense0 0 0 41.9 41.9 
Loss on long-lived assets, net(4.6)0 (0.2)0 (4.8)
Goodwill impairment(80.3)0 0 0 (80.3)
Earnings (loss) from unconsolidated affiliates, net(0.2)14.1 0 0 13.9 
Crestwood Midstream EBITDA$122.7 $23.3 $34.1 $(41.9)$138.2 
Crestwood Equity
General and administrative expense0 0 0 2.5 2.5 
Other income, net0 0 0 0.2 0.2 
Crestwood Equity EBITDA$122.7 $23.3 $34.1 $(44.2)$135.9 

Other Segment Information

CEQPCMLP
June 30, 2021December 31, 2020June 30, 2021December 31, 2020
Total Assets
Gathering and Processing$3,402.2 $3,464.6 $3,540.2 $3,609.7 
Storage and Transportation781.4 944.6 781.4 944.6 
Marketing, Supply and Logistics918.2 805.0 918.2 805.0 
Corporate28.4 29.5 24.6 26.2 
Total Assets$5,130.2 $5,243.7 $5,264.4 $5,385.5 


Note 14 - Revenues

Contract Assets and Contract Liabilities

Our potential exposurecontract assets and contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. Our receivables related to our revenue contracts accounted for under guaranteeAccounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) totaled $298.4 million and indemnification arrangements can range from a specified amount to an unlimited dollar amount, depending on the nature of the claim, specificity as to duration,$219.9 million for both CEQP and the particular transaction. As of SeptemberCMLP at June 30, 20172021 and December 31, 2016,2020, and are included in accounts receivable on our consolidated balance sheets. Our contract assets are included in other non-current assets on our consolidated balance sheets. Our contract liabilities primarily consist of current and non-current deferred revenues. On our consolidated balance sheets, our current deferred revenues are included in accrued expenses and other liabilities and our non-current deferred revenues are included in other long-term liabilities. The majority of revenues associated with our deferred revenues is expected to be recognized as the performance obligations under the related contracts are satisfied over the next 16 years.

31
Table of Contents

The following table summarizes our contract assets and contract liabilities (in millions):

June 30, 2021December 31, 2020
Contract assets (non-current)$1.5 $1.0 
Contract liabilities (current)(1)
$10.5 $10.3 
Contract liabilities (non-current)(1)
$179.2 $172.2 

(1)During the three and six months ended June 30, 2021, we recognized revenues of approximately $3.3 million and $6.4 million that were previously included in contract liabilities at December 31, 2020. The remaining change in our contract liabilities during the three and six months ended June 30, 2021, related to capital reimbursements associated with our revenue contracts and revenue deferrals associated with our contracts with increasing (decreasing) rates.

The following table summarizes the transaction price allocated to our remaining performance obligations under certain contracts that have nonot been recognized as of June 30, 2021 (in millions):
Remainder of 2021$46.5 
202276.0 
202352.6 
202431.7 
Total$206.8 
Our remaining performance obligations presented in the table above exclude estimates of variable rate escalation clauses in our contracts with customers, and is generally limited to fixed-fee and percentage-of-proceeds service contracts which have fixed pricing and minimum volume terms and conditions. Our remaining performance obligations generally exclude, based on the following practical expedients that we elected to apply, disclosures for (i) variable consideration allocated to a wholly-unsatisfied promise to transfer a distinct service that forms part of the identified single performance obligation; (ii) unsatisfied performance obligations where the contract term is one year or less; and (iii) contracts for which we recognize revenues as amounts accruedare invoiced.

Disaggregation of Revenues

The following tables summarize our revenues from contracts with customers disaggregated by type of product/service sold and by commodity type for these guarantees.each of our segments for the three and six months ended June 30, 2021 and 2020 (in millions). We believe this summary best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors. Our non-Topic 606 revenues presented in the tables below primarily represents revenues related to our commodity-based derivatives.

32
Table of Contents


Three Months Ended June 30, 2021
Gathering and ProcessingStorage and TransportationMarketing, Supply and LogisticsIntersegment EliminationTotal
Topic 606 revenues
Gathering
Natural gas$33.3 $0 $0 $0 $33.3 
Crude oil18.4 0 0 0 18.4 
Water22.7 0 0 0 22.7 
Processing
Natural gas7.3 0 0 0 7.3 
Compression
Natural gas3.7 0 0 0 3.7 
Storage
Crude oil0.1 0.9 0 (0.9)0.1 
NGLs0 0 2.4 0 2.4 
Pipeline
Crude oil0 1.7 0 (1.1)0.6 
NGLs0 0 0.1 0 0.1 
Transportation
Crude oil0.4 0 0 0 0.4 
NGLs0 0 4.2 0 4.2 
Rail Loading
Crude oil0 2.3 0 (1.1)1.2 
Product Sales
Natural gas26.8 0 44.3 (26.8)44.3 
Crude oil101.7 0 344.4 (14.7)431.4 
NGLs42.9 0 304.8 (42.6)305.1 
Other0 0.2 0.6 (0.1)0.7 
Total Topic 606 revenues257.3 5.1 700.8 (87.3)875.9 
Non-Topic 606 revenues0.2 0 53.5 0 53.7 
Total revenues$257.5 $5.1 $754.3 $(87.3)$929.6 
33
Table of Contents

Three Months Ended June 30, 2020
Gathering and ProcessingStorage and TransportationMarketing, Supply and LogisticsIntersegment EliminationTotal
Topic 606 revenues
Gathering
Natural gas$33.2 $0 $0 $0 $33.2 
Crude oil17.9 0 0 0 17.9 
Water18.3 0 0 0 18.3 
Processing
Natural gas7.1 0 0 0 7.1 
Compression
Natural gas5.7 0 0 0 5.7 
Storage
Crude oil0.4 1.1 0 (0.8)0.7 
NGLs0 0 3.6 0 3.6 
Pipeline
Crude oil0 1.3 0 (0.4)0.9 
NGLs0 0 0.2 0 0.2 
Transportation
Crude oil1.5 0 0.3 0 1.8 
NGLs0 0 2.6 0 2.6 
Rail Loading
Crude oil0 2.9 0 (1.2)1.7 
Product Sales
Natural gas6.9 0 15.5 (6.8)15.6 
Crude oil34.8 0 102.0 (7.1)129.7 
NGLs3.0 0 92.4 (0.3)95.1 
Other0 0.2 0.2 (0.1)0.3 
Total Topic 606 revenues128.8 5.5 216.8 (16.7)334.4 
Non-Topic 606 revenues0 0 18.3 0 18.3 
Total revenues$128.8 $5.5 $235.1 $(16.7)$352.7 
Six Months Ended June 30, 2021
Gathering and ProcessingStorage and TransportationMarketing, Supply and LogisticsIntersegment EliminationTotal
Topic 606 revenues
Gathering
Natural gas$64.7 $0 $0 $0 $64.7 
Crude oil39.1 0 0 0 39.1 
Water44.7 0 0 0 44.7 
Processing
Natural gas14.3 0 0 0 14.3 
Compression
Natural gas8.4 0 0 0 8.4 
Storage
Crude oil0.2 1.5 0 (1.4)0.3 
NGLs0 0 6.1 0 6.1 
Pipeline
Crude oil0 3.0 0 (1.6)1.4 
NGLs0 0 0.1 0 0.1 
Transportation
Crude oil1.1 0 0 0 1.1 
NGLs0 0 8.4 0 8.4 
Rail Loading
Crude oil0 4.6 0 (2.4)2.2 
Product Sales
Natural gas69.6 0 139.9 (69.0)140.5 
Crude oil191.7 0 595.6 (37.4)749.9 
NGLs83.2 0 710.8 (82.9)711.1 
Other0 0.4 0.8 (0.3)0.9 
Total Topic 606 revenues517.0 9.5 1,461.7 (195.0)1,793.2 
Non-Topic 606 revenues0.2 0 168.9 0 169.1 
Total revenues$517.2 $9.5 $1,630.6 $(195.0)$1,962.3 

34
Table of Contents

Six Months Ended June 30, 2020
Gathering and ProcessingStorage and TransportationMarketing, Supply and LogisticsIntersegment EliminationTotal
Topic 606 revenues
Gathering
Natural gas$77.0 $0 $0 $0 $77.0 
Crude oil44.4 0 0 0 44.4 
Water41.3 0 0 0 41.3 
Processing
Natural gas17.3 0 0 0 17.3 
Compression
Natural gas12.0 0 0 0 12.0 
Storage
Crude oil0.9 1.7 0 (1.2)1.4 
NGLs0 0 5.2 0 5.2 
Pipeline
Crude oil0 2.9 0 (0.9)2.0 
NGLs0 0 0.2 0 0.2 
Transportation
Crude oil3.5 0 1.9 0 5.4 
NGLs0 0 4.3 0 4.3 
Rail Loading
Crude oil0 6.3 0 (2.6)3.7 
Product Sales
Natural gas18.9 0 33.8 (18.5)34.2 
Crude oil155.9 0 352.2 (23.4)484.7 
NGLs12.5 0 252.7 (12.2)253.0 
Other0 0.7 0.7 (0.5)0.9 
Total Topic 606 revenues383.7 11.6 651.0 (59.3)987.0 
Non-Topic 606 revenues0 0 93.6 0 93.6 
Total revenues$383.7 $11.6 $744.6 $(59.3)$1,080.6 

Note 1115 – Related Party Transactions


Crestwood Holdings indirectly owns both CEQP'sCEQP’s and CMLP'sCMLP’s general partner. The affiliates of Crestwood Holdings and its owners are considered CEQP'sCEQP’s and CMLP'sCMLP’s related parties, including Sabine Oil and Gas LLC (Sabine) and Arsenal Resources. CEQP and CMLPparties. We enter into transactions with theirour affiliates within the ordinary course of business, including gas gathering and processing services under long-term contracts, product purchases, marketing services and various operating agreements. We also enter into transactions with our affiliates related to services provided on our expansion projects. During the six months ended June 30, 2021 and 2020, we paid approximately $0.5 million and $2.9 million of capital expenditures to Applied Consultants, Inc., an affiliate of Crestwood Holdings.



28
35
Table of Contents



The following table shows transactions with our affiliates which are reflected in our consolidated statements of operations (in millions):. For a further description of our related party agreements, see our 2020 Annual Report on Form 10-K.
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Revenues at CEQP and CMLP(1)
$13.2 $7.5 $18.1 $15.0 
Costs of product/services sold at CEQP and CMLP(2)
$25.4 $3.6 $66.5 $6.8 
Operations and maintenance expenses charged by CEQP and CMLP(3)
$6.0 $5.5 $11.7 $11.7 
General and administrative expenses charged by CEQP to CMLP, net(4)
$6.6 $10.9 $12.5 $18.0 
General and administrative expenses at CEQP charged to (from) Crestwood Holdings, net(5)
$0 $(1.5)$4.8 $11.3 
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Gathering and processing revenues at CEQP and CMLP$0.5
 $0.7
 $1.4
 $2.1
Gathering and processing costs of product/services sold at CEQP and CMLP(1)
$3.7
 $5.0
 $11.8
 $13.7
Operations and maintenance expenses at CEQP and CMLP(2)
$6.6
 $1.8
 $16.4
 $3.5
General and administrative expenses charged by CEQP to CMLP, net(3)
$4.4
 $2.7
 $14.8
 $9.6
General and administrative expenses at CEQP charged from Crestwood Holdings, net(4)
$(0.2) $(0.5) $(0.4) $(0.6)


(1)Represents natural gas purchases from Sabine.
(2)
We have operating agreements with certain of our unconsolidated affiliates pursuant to which we charge them operations and maintenance expenses in accordance with their respective agreements. During the three and nine months ended September 30, 2017, we charged $2.0 million and $6.5 million to Stagecoach Gas, $0.8 million and $2.6 million to Tres Palacios, $3.7 million and $7.0 million to Crestwood Permian and $0.1 million and $0.3 million to Jackalope. During the three and nine months ended September 30, 2016, we charged $0.8 million and $2.2 million to Tres Palacios and $1.0 million and$1.3 million to Stagecoach Gas.
(3)Includes $5.2 million and $17.1 million of net unit-based compensation charges allocated from CEQP to CMLP for the three and nine months ended September 30, 2017 and $3.5 million and $11.9 million for the three and nine months ended September 30, 2016. In addition, CMLP shares common management, general and administrative and overhead costs with CEQP. During both the three and nine months ended September 30, 2017 and 2016, CMLP allocated $0.8 million and $2.3 million of general and administrative costs to CEQP.
(4)Includes less than $1.1 million and $1.9 million unit-based compensation charges allocated from Crestwood Holdings to CEQP and CMLP during the three and nine months ended September 30, 2017 and $0.6 million and $1.5 million during the three and nine months ended September 30, 2016.

(1)Primarily relates to the sale of NGLs to a subsidiary of Crestwood Permian.
(2)Includes (i) $14.8 million and $45.1 million during the three and six months ended June 30, 2021 and $3.2 million and $6.4 million during the three and six months ended June 30, 2020 related to purchases of natural gas and NGLs from a subsidiary of Crestwood Permian; (ii) $0.3 million and $11.1 million during the three and six months ended June 30, 2021 and $0.1 million during both the three and six months ended June 30, 2020 related to purchases of natural gas from a subsidiary of Tres Holdings and (iii) $10.3 million during both the three and six months ended June 30, 2021 and $0.3 million during both the three and six months ended June 30, 2020 related to purchases of NGLs from Ascent Resources - Utica, LLC, an affiliate of Crestwood Holdings.
(3)We have operating agreements with certain of our unconsolidated affiliates pursuant to which we charge them operations and maintenance expenses in accordance with their respective agreements, and these charges are reflected as a reduction of operations and maintenance expenses in our consolidated statements of operations. During the three and six months ended June 30, 2021, we charged $1.6 million and $3.3 million to Stagecoach Gas, $1.2 million and $2.4 million to Tres Holdings, and $3.2 million and $6.0 million to Crestwood Permian. During the three and six months ended June 30, 2020, we charged $1.6 million and $3.3 million to Stagecoach Gas, $1.1 million and $2.2 million to Tres Holdings, and $2.8 million and $6.2 million to Crestwood Permian.
(4)Includes $7.6 million and $14.5 million of unit-based compensation charges allocated from CEQP to CMLP for the three and six months ended June 30, 2021 and $11.9 million and $20.1 million for the three and six months ended June 30, 2020. In addition, includes $1.0 million and $2.0 million of CMLP’s general and administrative costs allocated to CEQP during the three and six months ended June 30, 2021 and $1.0 million and $2.1 million during the three and six months ended June 30, 2020.
(5)Includes $1.7 million of unit-based compensation charges allocated from Crestwood Holdings to CEQP and CMLP during the three months ended June 30, 2020. Also includes a $4.6 million and a $10.9 million reduction of unit-based compensation charges allocated from Crestwood Holdings to CEQP and CMLP during the six months ended June 30, 2021 and 2020. During the three months ended June 30, 2021, there were 0 unit-based compensation charges allocated from Crestwood Holdings to CEQP and CMLP. CEQP allocates a portion of its general and administrative costs to Crestwood Holdings and during the six months ended June 30, 2021, CEQP allocated $0.2 million of it’s general and administrative costs to Crestwood Holdings and approximately $0.2 million and $0.4 million of costs were allocated to Crestwood Holdings during the three and six months ended June 30, 2020. During the three months ended June 30, 2021, CEQP did not allocate any general and administrative costs to Crestwood Holdings.

The following table shows accounts receivable and accounts payable fromwith our affiliates (in millions):
June 30,
2021		December 31,
2020
Accounts receivable at CEQP and CMLP$7.0 $2.5 
Accounts payable at CEQP(1)
$11.3 $7.5 
Accounts payable at CMLP$11.3 $5.0 
 September 30,
2017		 December 31,
2016
Accounts receivable at CEQP and CMLP$9.8
 $5.6
Accounts payable at CEQP$9.7
 $2.5
Accounts payable at CMLP$7.2
 $—



(1)In conjunction with the Crestwood Holdings Transactions discussed in Note 12 – Segments

Financial Information

We have three operating and reportable segments: (i) gathering and processing operations; (ii) storage and transportation operations; and (iii) marketing, supply and logistics operations. Our corporate operations include all general and administrative expenses that are not allocated1, CEQP eliminated approximately $2.4 million of accounts payable to our reportable segments. We assess the performance of our operating segments based on EBITDA,Crestwood Holdings which is definedreflected as income before income taxes, plus debt-related costs (interest and debt expense, net and gain (loss) on modification/extinguishmentan increase to CEQP’s common unitholders’ partners’ capital in its consolidated statement of debt) and depreciation, amortization and accretion expense.partners’ capital during the first quarter of 2021.

Below is a reconciliation of CEQP's net income (loss) to EBITDA (in millions):
36
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Net income (loss)$(27.9) $3.0
 $(47.0) $(127.8)
Add:       
Interest and debt expense, net24.2
 27.5
 74.8
 97.9
(Gain) loss on modification/extinguishment of debt—
 —
 37.7
 (10.0)
Provision for income taxes0.1
 0.2
 —
 0.2
Depreciation, amortization and accretion48.1
 50.3
 145.2
 177.0
EBITDA$44.5
 $81.0
 $210.7
 $137.3

29
Table of Contents




The following tables summarize CEQP's reportable segment data for the three and nine months ended September 30, 2017 and 2016 (in millions). Intersegment revenues included in the following tables are accounted for as arms-length transactions that apply our revenue recognition policies described in our 2016 Annual Report on Form 10-K. Included in earnings from unconsolidated affiliates, net below was approximately $10.0 million and $8.3 million of depreciation and amortization expense and gains (losses) on long-lived assets, net related to our equity investments for the three months ended September 30, 2017 and 2016 and $25.7 million and $15.3 million for the nine months ended September 30, 2017 and 2016.
 Three Months Ended September 30, 2017
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$434.4
 $6.2
 $515.0
 $—
 $955.6
Intersegment revenues29.9
 1.2
 (31.1) —
 —
Costs of product/services sold378.6
 0.2
 479.7
 —
 858.5
Operations and maintenance expense16.2
 1.0
 18.3
 —
 35.5
General and administrative expense—
 —
 —
 22.5
 22.5
Gain (loss) on long-lived assets(3.9) —
 0.6
 (3.0) (6.3)
Earnings from unconsolidated affiliates, net4.3
 7.2
 —
 —
 11.5
Other income, net—
 —
 —
 0.2
 0.2
EBITDA$69.9
 $13.4
 $(13.5) $(25.3) $44.5
Goodwill$45.9
 $—
 $153.1
 $—
 $199.0
Total assets$2,452.2
 $1,049.9
 $1,002.3
 $20.9
 $4,525.3
 Three Months Ended September 30, 2016
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$279.3
 $18.3
 $290.0
 $—
 $587.6
Intersegment revenues24.8
 1.5
 (26.3) —
 —
Costs of product/services sold226.1
 0.1
 240.5
 —
 466.7
Operations and maintenance expense17.4
 2.5
 13.2
 —
 33.1
General and administrative expense—
 —
 —
 18.3
 18.3
Loss on long-lived assets(2.0) (0.1) —
 —
 (2.1)
Earnings from unconsolidated affiliates, net5.5
 7.9
 —
 —
 13.4
Other income, net—
 —
 —
 0.2
 0.2
EBITDA$64.1
 $25.0
 $10.0
 $(18.1) $81.0

30
Table of Contents


 Nine Months Ended September 30, 2017
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$1,208.1
 $24.7
 $1,401.2
 $—
 $2,634.0
Intersegment revenues94.3
 4.7
 (99.0) —
 —
Costs of product/services sold1,049.9
 0.3
 1,221.4
 —
 2,271.6
Operations and maintenance expense51.8
 3.4
 48.2
 —
 103.4
General and administrative expense—
 —
 —
 71.6
 71.6
Gain (loss) on long-lived assets(3.9) —
 0.6
 (3.0) (6.3)
Earnings from unconsolidated affiliates, net7.7
 21.5
 —
 —
 29.2
Other income, net—
 —
 —
 0.4
 0.4
EBITDA$204.5
 $47.2
 $33.2
 $(74.2) $210.7
Goodwill$45.9
 $—
 $153.1
 $—
 $199.0
Total assets$2,452.2
 $1,049.9
 $1,002.3
 $20.9
 $4,525.3

 Nine Months Ended September 30, 2016
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$787.7
 $131.5
 $806.3
 $—
 $1,725.5
Intersegment revenues75.9
 3.0
 (78.9) —
 —
Costs of product/services sold632.2
 4.9
 643.0
 —
 1,280.1
Operations and maintenance expense56.1
 18.2
 45.6
 —
 119.9
General and administrative expense—
 —
 —
 70.2
 70.2
Loss on long-lived assets(2.0) (32.8) —
 —
 (34.8)
Goodwill impairment(8.6) (13.7) (87.4) —
 (109.7)
Earnings from unconsolidated affiliates, net16.5
 9.6
 —
 —
 26.1
Other income, net—
 —
 —
 0.4
 0.4
EBITDA$181.2
 $74.5
 $(48.6) $(69.8) $137.3

Below is a reconciliation of CMLP's net income (loss) to EBITDA (in millions):

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Net income (loss)$(29.8) $0.6
 $(53.1) $(130.3)
Add:       
Interest and debt expense, net24.2
 27.5
 74.8
 97.9
(Gain) loss on modification/extinguishment of debt—
 —
 37.7
 (10.0)
Provision for income taxes0.1
 —
 —
 —
Depreciation, amortization and accretion50.9
 53.2
 153.5
 185.2
EBITDA$45.4
 $81.3
 $212.9
 $142.8


31
Table of Contents


The following tables summarize CMLP's reportable segment data for the three and nine months ended September 30, 2017 and 2016 (in millions). Intersegment revenues included in the following tables are accounted for as arms-length transactions that apply our revenue recognition policies described in our 2016 Annual Report on Form 10-K. Included in earnings from unconsolidated affiliates, net below was approximately $10.0 million and $8.3 million of depreciation and amortization expense and gains (losses) on long-lived assets, net related to our equity investments for the three months ended September 30, 2017 and 2016 and $25.7 million and $15.3 million for the nine months ended September 30, 2017 and 2016.
 Three Months Ended September 30, 2017
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$434.4
 $6.2
 $515.0
 $—
 $955.6
Intersegment revenues29.9
 1.2
 (31.1) —
 —
Costs of product/services sold378.6
 0.2
 479.7
 —
 858.5
Operations and maintenance expense16.2
 1.0
 18.3
 —
 35.5
General and administrative expense—
 —
 —
 21.4
 21.4
Gain (loss) on long-lived assets(3.9) —
 0.6
 (3.0) (6.3)
Earnings from unconsolidated affiliates, net4.3
 7.2
 —
 —
 11.5
EBITDA$69.9
 $13.4
 $(13.5) $(24.4) $45.4
Goodwill$45.9
 $—
 $153.1
 $—
 $199.0
Total assets$2,643.7
 $1,049.9
 $1,002.3
 $13.1
 $4,709.0
 Three Months Ended September 30, 2016
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$279.3
 $18.3
 $290.0
 $—
 $587.6
Intersegment revenues24.8
 1.5
 (26.3) —
 —
Costs of product/services sold226.1
 0.1
 240.5
 —
 466.7
Operations and maintenance expense17.4
 3.0
 13.2
 —
 33.6
General and administrative expense—
 —
 —
 17.3
 17.3
Loss on long-lived assets(2.0) (0.1) —
 —
 (2.1)
Earnings from unconsolidated affiliates, net5.5
 7.9
 —
 —
 13.4
EBITDA$64.1
 $24.5
 $10.0
 $(17.3) $81.3
 Nine Months Ended September 30, 2017
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$1,208.1
 $24.7
 $1,401.2
 $—
 $2,634.0
Intersegment revenues94.3
 4.7
 (99.0) —
 —
Costs of product/services sold1,049.9
 0.3
 1,221.4
 —
 2,271.6
Operations and maintenance expense51.8
 3.4
 48.2
 —
 103.4
General and administrative expense—
 —
 —
 69.0
 69.0
Gain (loss) on long-lived assets(3.9) —
 0.6
 (3.0) (6.3)
Earnings from unconsolidated affiliates, net7.7
 21.5
 —
 —
 29.2
EBITDA$204.5
 $47.2
 $33.2
 $(72.0) $212.9
Goodwill$45.9
 $—
 $153.1
 $—
 $199.0
Total assets$2,643.7
 $1,049.9
 $1,002.3
 $13.1
 $4,709.0


32
Table of Contents


 Nine Months Ended September 30, 2016
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Corporate Total
Revenues$787.7
 $131.5
 $806.3
 $—
 $1,725.5
Intersegment revenues75.9
 3.0
 (78.9) —
 —
Costs of product/services sold632.2
 4.9
 643.0
 —
 1,280.1
Operations and maintenance expense56.1
 15.0
 45.6
 —
 116.7
General and administrative expense—
 —
 —
 67.5
 67.5
Loss on long-lived assets(2.0) (32.8) —
 —
 (34.8)
Goodwill impairment(8.6) (13.7) (87.4) —
 (109.7)
Earnings from unconsolidated affiliates, net16.5
 9.6
 —
 —
 26.1
EBITDA$181.2
 $77.7
 $(48.6) $(67.5) $142.8


Note 13 – Condensed Consolidating Financial Information

Crestwood Midstream is a holding company (Parent) and owns no operating assets and has no significant operations independent of its subsidiaries. Obligations under Crestwood Midstream's senior notes and its credit facility are jointly and severally guaranteed by substantially all of its subsidiaries, except for Crestwood Infrastructure Holdings LLC, Crestwood Niobrara, Crestwood Pipeline and Storage Northeast LLC (Crestwood Northeast), PRBIC and Tres Holdings and their respective subsidiaries (collectively, Non-Guarantor Subsidiaries). Crestwood Midstream Finance Corp., the co-issuer of its senior notes, is Crestwood Midstream's 100% owned subsidiary and has no material assets, operations, revenues or cash flows other than those related to its service as co-issuer of the Crestwood Midstream senior notes.

The tables below present condensed consolidating financial statements for Crestwood Midstream as Parent on a stand-alone, unconsolidated basis, and Crestwood Midstream's combined guarantor and combined non-guarantor subsidiaries as of September 30, 2017 and December 31, 2016, and for the three and nine months ended September 30, 2017 and 2016.  The financial information may not necessarily be indicative of the results of operations, cash flows or financial position had the subsidiaries operated as independent entities.

The condensed consolidating financial statements for the three and nine months ended September 30, 2016 include reclassifications that were made to conform to the current year presentation, none of which impacted previously reported net income (loss) or partners’ capital. In particular, the condensed consolidating statement of operations was modified to consider the impact of net income (loss) attributable to non-controlling partners in subsidiaries in arriving at equity in net income (loss) of subsidiaries in the parent and eliminations columns of those statements.

33
Table of Contents


Crestwood Midstream Partners LP
Condensed Consolidating Balance Sheet
September 30, 2017
(in millions)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Assets         
Current assets:         
Cash$1.1
 $—
 $—
 $—
 $1.1
Accounts receivable—
 341.0
 3.7
 —
 344.7
Inventory—
 92.9
 —
 —
 92.9
Other current assets—
 13.0
 —
 —
 13.0
Total current assets1.1
 446.9
 3.7
 —
 451.7
          
Property, plant and equipment, net—
 2,242.2
 —
 —
 2,242.2
Goodwill and intangible assets, net—
 814.0
 —
 —
 814.0
Investment in consolidated affiliates4,025.8
 —
 —
 (4,025.8) —
Investment in unconsolidated affiliates—
 —
 1,198.5
 —
 1,198.5
Other assets—
 2.6
 —
 —
 2.6
Total assets$4,026.9
 $3,505.7
 $1,202.2
 $(4,025.8) $4,709.0
          
Liabilities and partners' capital         
Current liabilities:         
Accounts payable$—
 $310.0
 $—
 $—
 $310.0
Other current liabilities39.9
 125.4
 —
 —
 165.3
Total current liabilities39.9
 435.4
 —
 —
 475.3
          
Long-term liabilities:         
Long-term debt, less current portion1,614.6
 0.8
 —
 —
 1,615.4
Other long-term liabilities—
 45.3
 —
 —
 45.3
Deferred income taxes—
 0.7
 —
 —
 0.7
          
Partners' capital2,372.4
 3,023.5
 1,002.3
 (4,025.8) 2,372.4
Interest of non-controlling partners in subsidiaries—
 —
 199.9
 —
 199.9
Total partners' capital2,372.4
 3,023.5
 1,202.2
 (4,025.8) 2,572.3
Total liabilities and partners' capital$4,026.9
 $3,505.7
 $1,202.2
 $(4,025.8) $4,709.0

34
Table of Contents


Crestwood Midstream Partners LP
Condensed Consolidating Balance Sheet
December 31, 2016
(in millions)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Assets         
Current assets:         
Cash$1.3
 $—
 $—
 $—
 $1.3
Accounts receivable—
 289.3
 0.5
 —
 289.8
Inventory—
 66.0
 —
 —
 66.0
Other current assets—
 16.0
 —
 —
 16.0
Total current assets1.3
 371.3
 0.5
 —
 373.1
          
Property, plant and equipment, net—
 2,298.4
 —
 —
 2,298.4
Goodwill and intangible assets, net—
 851.9
 —
 —
 851.9
Investment in consolidated affiliates4,093.7
 —
 —
 (4,093.7) —
Investment in unconsolidated affiliates—
 —
 1,115.4
 —
 1,115.4
Other assets—
 1.8
 —
 —
 1.8
Total assets$4,095.0
 $3,523.4
 $1,115.9
 $(4,093.7) $4,640.6
          
Liabilities and partners' capital         
Current liabilities:         
Accounts payable$—
 $214.5
 $—
 $—
 $214.5
Other current liabilities23.1
 94.4
 —
 —
 117.5
Total current liabilities23.1
 308.9
 —
 —
 332.0
          
Long-term liabilities:         
Long-term debt, less current portion1,521.2
 1.5
 —
 —
 1,522.7
Other long-term liabilities—
 42.0
 —
 —
 42.0
Deferred income taxes—
 0.7
 —
 —
 0.7
          
Partners' capital2,550.7
 3,170.3
 923.4
 (4,093.7) 2,550.7
Interest of non-controlling partners in subsidiaries—
 —
 192.5
 —
 192.5
Total partners' capital2,550.7
 3,170.3
 1,115.9
 (4,093.7) 2,743.2
Total liabilities and partners' capital$4,095.0
 $3,523.4
 $1,115.9
 $(4,093.7) $4,640.6



35
Table of Contents


          
Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Three Months Ended September 30, 2017
(in millions)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Revenues$—
 $955.6
 $—
 $—
 $955.6
Costs of product/services sold—
 858.5
 —
 —
 858.5
Expenses:         
Operations and maintenance—
 35.5
 —
 —
 35.5
General and administrative15.2
 6.2
 —
 —
 21.4
Depreciation, amortization and accretion—
 50.9
 —
 —
 50.9
 15.2
 92.6
 —
 —
 107.8
Other operating expense:         
Loss on long-lived assets, net—
 (6.3) —
 —
 (6.3)
Operating loss(15.2) (1.8) —
 —
 (17.0)
Earnings from unconsolidated affiliates, net—
 —
 11.5
 —
 11.5
Interest and debt expense, net(24.2) —
 —
 —
 (24.2)
Equity in net income (loss) of subsidiaries3.2
 —
 —
 (3.2) —
Income (loss) before income taxes(36.2) (1.8) 11.5
 (3.2) (29.7)
Provision for income taxes—
 (0.1) —
 —
 (0.1)
Net income (loss)(36.2) (1.9) 11.5
 (3.2) (29.8)
Net income attributable to non-controlling partners in subsidiaries—
 —
 6.4
 —
 6.4
Net income (loss) attributable to Crestwood Midstream Partners LP$(36.2) $(1.9) $5.1
 $(3.2) $(36.2)

36
Table of Contents


Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Three Months Ended September 30, 2016
(in millions)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
��Eliminations Consolidated
Revenues$—
 $587.6
 $—
 $—
 $587.6
Costs of product/services sold—
 466.7
 —
 —
 466.7
Expenses:         
Operations and maintenance—
 33.6
 —
 —
 33.6
General and administrative13.3
 4.0
 —
 —
 17.3
Depreciation, amortization and accretion—
 53.2
 —
 —
 53.2
 13.3
 90.8
 —
 —
 104.1
Other operating expense:         
Loss on long-lived assets, net—
 (2.1) —
 —
 (2.1)
Operating income (loss)(13.3) 28.0
 —
 —
 14.7
Earnings from unconsolidated affiliates, net—
 —
 13.4
 —
 13.4
Interest and debt expense, net(27.5) —
 —
 —
 (27.5)
Equity in net income (loss) of subsidiaries35.3
 —
 —
 (35.3) —
Net income (loss)(5.5) 28.0
 13.4
 (35.3) 0.6
Net income attributable to non-controlling partners in subsidiaries—
 —
 6.1
 —
 6.1
Net income (loss) attributable to Crestwood Midstream Partners LP(5.5) 28.0
 7.3
 (35.3) (5.5)


37
Table of Contents


Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Nine Months Ended September 30, 2017
(in millions)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Revenues$—
 $2,634.0
 $—
 $—
 $2,634.0
Costs of product/services sold—
 2,271.6
 —
 —
 2,271.6
Expenses:         
Operations and maintenance—
 103.4
 —
 —
 103.4
General and administrative50.1
 18.9
 —
 —
 69.0
Depreciation, amortization and accretion—
 153.5
 —
 —
 153.5
 50.1
 275.8
 —
 —
 325.9
Other operating expense:         
Loss on long-lived assets, net—
 (6.3) —
 —
 (6.3)
Operating income (loss)(50.1) 80.3
 —
 —
 30.2
Earnings from unconsolidated affiliates, net—
 —
 29.2
 —
 29.2
Interest and debt expense, net(74.8) —
 —
 —
 (74.8)
Loss on modification/extinguishment of debt(37.7) —
 —
 —
 (37.7)
Equity in net income (loss) of subsidiaries90.7
 —
 —
 (90.7) —
Net income (loss)(71.9) 80.3
 29.2
 (90.7) (53.1)
Net income attributable to non-controlling partners in subsidiaries—
 —
 18.8
 —
 18.8
Net income (loss) attributable to Crestwood Midstream Partners LP$(71.9) $80.3
 $10.4
 $(90.7) $(71.9)

38
Table of Contents


Crestwood Midstream Partners LP
Condensed Consolidating Statement of Operations
Nine Months Ended September 30, 2016
(in millions)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Revenues$—
 $1,725.5
 $—
 $—
 $1,725.5
Costs of product/services sold—
 1,280.1
 —
 —
 1,280.1
Expenses:         
Operations and maintenance—
 116.7
 —
 —
 116.7
General and administrative54.2
 13.3
 —
 —
 67.5
Depreciation, amortization and accretion—
 185.2
 —
 —
 185.2
 54.2
 315.2
 —
 —
 369.4
Other operating expense:         
Loss on long-lived assets, net—
 (34.8) —
 —
 (34.8)
Goodwill Impairment—
 (109.7) —
 —
 (109.7)
Operating loss(54.2) (14.3) —
 —
 (68.5)
Earnings from unconsolidated affiliates, net—
 —
 26.1
 —
 26.1
Interest and debt expense, net(97.9) —
 —
 —
 (97.9)
Gain on modification/extinguishment of debt10.0
 —
 —
 —
 10.0
Equity in net income (loss) of subsidiaries(6.2) —
 —
 6.2
 —
Net income (loss)(148.3) (14.3) 26.1
 6.2
 (130.3)
Net income attributable to non-controlling partners in subsidiaries—
 —
 18.0
 —
 18.0
Net income (loss) attributable to Crestwood Midstream Partners LP$(148.3) $(14.3) $8.1
 $6.2
 $(148.3)

39
Table of Contents


Crestwood Midstream Partners LP
Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2017
(in millions)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Cash flows from operating activities:$(102.6) $312.0
 $23.5
 $—
 $232.9
          
Cash flows from investing activities:         
Purchases of property, plant and equipment(5.8) (128.6) —
 —
 (134.4)
Investment in unconsolidated affiliates—
 —
 (46.5) —
 (46.5)
Capital distributions from unconsolidated affiliates—
 —
 35.3
 —
 35.3
Net proceeds from sale of assets—
 1.3
 —
 —
 1.3
Capital distributions from consolidated affiliates0.9
 —
 —
 (0.9) —
Net cash used in investing activities(4.9) (127.3) (11.2) (0.9) (144.3)
          
Cash flows from financing activities:         
Proceeds from the issuance of long-term debt2,209.8
 —
 —
 —
 2,209.8
Payments on long-term debt(2,157.9) (1.3) —
 —
 (2,159.2)
Payments on capital leases—
 (2.2) —
 —
 (2.2)
Payments for debt-related deferred costs(1.0) —
 —
 —
 (1.0)
Distributions paid(119.5) —
 (11.4) —
 (130.9)
Distributions to parent—
 —
 (0.9) 0.9
 —
Taxes paid for unit-based compensation vesting—
 (5.3) —
 —
 (5.3)
Change in intercompany balances175.9
 (175.9) —
 —
 —
Net cash provided by (used in) financing activities107.3
 (184.7) (12.3) 0.9
 (88.8)
          
Net change in cash(0.2) —
 —
 —
 (0.2)
Cash at beginning of period1.3
 —
 —
 —
 1.3
Cash at end of period$1.1
 $—
 $—
 $—
 $1.1

40
Table of Contents


Crestwood Midstream Partners LP
Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 2016
(in millions)
 Parent 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations Consolidated
Cash flows from operating activities:$(140.4) $371.3
 $19.9
 $—
 $250.8
          
Cash flows from investing activities:         
Purchases of property, plant and equipment(1.6) (77.7) —
 —
 (79.3)
Investment in unconsolidated affiliates—
 —
 (6.2) —
 (6.2)
Capital distributions from unconsolidated affiliates—
 —
 9.2
 —
 9.2
Net proceeds from sale of assets

—
 943.1
 —
 —
 943.1
Capital distributions from consolidated affiliates11.5
 —
 —
 (11.5) —
Net cash provided by (used in) investing activities9.9
 865.4
 3.0
 (11.5) 866.8
          
Cash flows from financing activities:         
Proceeds from the issuance of long-term debt1,364.0
 —
 —
 —
 1,364.0
Payments on long-term debt(2,278.4) (0.8) —
 —
 (2,279.2)
Payments on capital leases—
 (1.5) —
 —
 (1.5)
Payments for debt-related deferred costs(3.4) —
 —
 —
 (3.4)
Distributions paid(185.0) —
 (11.4) —
 (196.4)
Distributions to parent—
 —
 (11.5) 11.5
 —
Taxes paid for unit-based compensation vesting—
 (0.8) —
 —
 (0.8)
Change in intercompany balances1,233.7
 (1,233.7) —
 —
 —
Other—
 0.1
 —
 —
 0.1
Net cash provided by (used in) financing activities130.9
 (1,236.7) (22.9) 11.5
 (1,117.2)
          
Net change in cash0.4
 —
 —
 —
 0.4
Cash at beginning of period0.1
 —
 —
 —
 0.1
Cash at end of period$0.5
 $—
 $—
 $—
 $0.5


Note 14– Subsequent Event

In October 2017, we entered into a Purchase Agreement with an affiliate of Kissner Group Holdings LP to sell 100% of our equity interests in US Salt, LLC (US Salt) for approximately $225 million. US Salt is a solution mining and salt production company located on the shores of Seneca Lake near Watkins Glen in Schuyler County, New York. US Salt is included in our marketing, supply and logistics segment. Subject to the terms and conditions of the Purchase Agreement (including customary closing conditions and purchase price adjustments), we expect to close the transaction during the fourth quarter of 2017. The impact of this transaction has not been reflected in this Quarterly Report on Form 10-Q as of and for the three and nine months ended September 30, 2017.



41
Table of Contents


Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and the accompanying footnotes and Part II, Item 7. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations in our 20162020 Annual Report on Form 10-K.


This report, including information included or incorporated by reference herein, contains forward-looking statements concerning the financial condition, results of operations, plans, objectives, future performance and business of our company and its subsidiaries. These forward-looking statements include:


•statements that are not historical in nature, including, but not limited to: (i) our belief that anticipated cash from operations, cash distributions from entities that we control, and borrowing capacity under our credit facility will be sufficient to meet our anticipated liquidity needs for the foreseeable future; and (ii) our belief that we do not have material potential liability in connection with legal proceedings that would have a significant financial impact on our consolidated financial condition, results of operations or cash flows; and (iii) our belief that our assets will continue to benefit from the development of unconventional shale plays as significant supply basins; and


•statements preceded by, followed by or that contain forward-looking terminology including the words “believe,” “expect,” “may,” “will,” “should,” “could,” “anticipate,” “estimate,” “intend” or the negation thereof, or similar expressions.


Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties and assumptions. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the following factors:


•our ability to successfully implement our business plan for our assets and operations;
•governmental legislation and regulations;
•industry factors that influence the supply of and demand for crude oil, natural gas and NGLs;
•industry factors that influence the demand for services in the markets (particularly unconventional shale plays) in which we provide services;
•weather conditions;
•outbreak of illness, pandemic or any other public health crisis, including the COVID-19 pandemic;
•the availability of crude oil, natural gas and NGLs, and the price of those commodities, to consumers relative to the price of alternative and competing fuels;
•the availability of storage for hydrocarbons;
•the ability of members of the Organization of Petroleum Exporting Countries (OPEC) and other oil-producing countries to agree and maintain oil price and production controls;
•economic conditions;
•costs or difficulties related to the integration of acquisitions and success of our existing businesses and acquisitions;joint ventures’ operations;
•environmental claims;
•operating hazards and other risks incidental to the provision of midstream services, including gathering, compressing, treating, processing, fractionating, transporting and storing energy products (i.e., crude oil, NGLs and natural gas) and related products (i.e., produced water);
•interest rates;
•the price and availability of debt and equity financing;financing, including our ability to raise capital through alternatives like joint ventures; and
•the ability to sell or monetize assets, in the current market, to reduce indebtedness, to repurchase our equity securities, to make strategic investments, or for other general partnership purposes.


For additional factors that could cause actual results to be materially different from those described in the forward-looking statements, see Part I, Item IA.1A. Risk Factors of our 20162020 Annual Report on Form 10-K.10-K and Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q.


Outlook and Trends


Our business objective is to create long-term value for our unitholders. We expect to create long-term value for our investors by consistently generating stable operating marginmargins and improvedimproving cash flows from our diversified midstream operations by prudently
37
Table of Contents

financing investments in our investments,assets and expansions of our portfolio, maximizing throughput and optimizing services on our assets, and effectively controlling our capital expenditures, operating and administrative costs. Our business strategy depends, in part, on our ability to provide increased services to our customers at competitive fees, including opportunities to expand our services resulting from expansions, organic growth projects and acquisitions that can be financed appropriately.


We have positioned the Company to generate consistent results intaken a low commodity price environment without sacrificing revenue upside. For example, manynumber of our G&P assets are supported by long-term, core acreage dedications in shale plays that are economic to varying degrees based upon natural gas, NGL and crude oil prices, the availability of infrastructure to flow production to market, and the operational and financial condition of our diverse customer base. We believe the diversity of our asset portfolio, the risk and cost sharing nature of our strategic joint ventures, the wide range of services provided by our

42
Table of Contents


investments, and our extensive customer portfolio collectively position us to be successful in the current market, which has been impacted by prolonged low commodity prices. In addition, a substantial portion of our midstream investments are based on fixed fee, take-or-pay or minimum volume commitment agreements that ensure a minimum level of cash flow regardless of actual commodity prices or volumetric throughput.

For the remainder of 2017 and beyond, we will continue to execute on our plansteps to better position the Company to emerge from this challenging market environment as a stronger, better capitalized company that can sustainably resume growingaccretively grow cash flows and as an industry leader in Environmental, Social and Governance (ESG) efforts.

In March 2021, CEQP acquired approximately 11.5 million CEQP common units, 0.4 million subordinated units of CEQP and 100% of the equity interests of Crestwood Marcellus Holdings LLC and Crestwood Gas Services Holdings LLC (whose assets consisted solely of CEQP common and subordinated units and 1% of the limited partner interests in Crestwood Holdings LP) from Crestwood Holdings, and signed a definitive agreement to acquire the general partner and the remaining 99% limited partner interests of Crestwood Holdings LP (whose assets consist solely of its distributions.ownership interest in Crestwood Equity GP LLC, which owns CEQP’s non-economic general partner interest) (collectively the Crestwood Holdings Transactions) for $268 million in cash. The acquisition of the general partner and limited partner interests of Crestwood Holdings LP will close on or before the 180th day after the date of the initial closing of the Crestwood Holdings Transactions. The purchase price was funded through borrowings under the Crestwood Midstream credit facility. The Crestwood Holdings Transactions resulted in CEQP retiring the common and subordinated units acquired from Crestwood Holdings.

The Crestwood Holdings Transactions were a significant step in our strategy to drive peer leading governance and set the stage for future growth by simplifying our organizational structure, increasing our public float and liquidity and enhancing our financial flexibility as we strive to generate long-term value for our unitholders. Additionally, in connection with the Crestwood Holdings Transactions, Crestwood Holdings repaid all of its outstanding debt which further enhances CEQP’s future flexibility around capital allocation priorities and eliminates any potential future risks around a change of control related to Crestwood Holdings’ debt as previously described in our Part I, Item 1A. Risk Factors of our 2020 Annual Report on Form 10-K. Once the Crestwood Holdings Transactions are fully closed, CEQP will transition to a traditional public company governance structure with a publicly elected board of directors which further ensures alignment between management and the Board of Directors with common unitholders and is consistent with our long-term ESG program.

To further enhance our financial flexibility and execute our long-term business strategy, in July 2021, Stagecoach Gas sold certain of its wholly-owned subsidiaries to a subsidiary of Kinder Morgan, Inc. (Kinder Morgan) for approximately $1.195 billion plus certain purchase price adjustments (Initial Closing) pursuant to a purchase and sale agreement dated as of May 31, 2021 between our wholly owned subsidiary, Crestwood Pipeline and Storage Northeast LLC (Crestwood Northeast), Con Edison Gas Pipeline and Storage Northeast, LLC (CEGP), a wholly owned subsidiary of Consolidated Edison, Inc., Stagecoach Gas and Kinder Morgan. Stagecoach Gas distributed to us approximately $614 million as our proportionate share of the gross proceeds received from the sale. Following the Initial Closing and subject to certain customary closing conditions, Crestwood Northeast and CEGP will sell each of their equity interests in Stagecoach Gas and its wholly-owned subsidiary, Twin Tier Pipeline LLC (Second Closing) to Kinder Morgan for approximately $30 million, subject to certain closing adjustments. We anticipate the Second Closing to occur in the first quarter of 2022. The Stagecoach Gas divestiture will remain focused on efficiently allocatingenable us to decrease the net debt to consolidated EBITDA ratio of our revolving credit facility to 3.6x, which should position us to utilize a greater portion of our cash flow going forward to increase returns to our unitholders through continued distributions, prudent capital investments around our higher-growth gathering and processing assets, and opportunistic repurchases of our preferred and common units under our approved $175 million unit repurchase program described below in “Liquidity and Sources of Capital.”

In addition to the strategic steps discussed above, we have also taken steps to (i) minimize capital expenditures eliminating costs (through increasedto better align with development activity by our gathering and processing customers; (ii) realign our organization to reduce operating efficiencies and cost discipline)administrative expenses; (iii) engage with our customers to maintain volumes across our asset portfolio; (iv) optimize our storage, transportation and strengtheningmarketing assets to take advantage of regional commodity price volatility; and (v) evaluate our debt and equity structure to preserve liquidity and ensure balance sheet. We expect to focus on expansion and greenfield opportunities in the Delaware Permian and the Bakken shale as further described in "Segment Highlights" below.

Regulatory Matters

Many aspects of the energy midstream sector, such as crude-by-rail activities and pipeline integrity, have experienced increased regulatory oversightsheet strength. Given our efforts over the past few years. Prioryears to improve the partnership’s competitive position in the businesses we operate, manage costs and improve margins and create a stronger balance sheet, we believe the Company is well positioned to execute its business plan.

Recent Developments

Bakken DAPL Matter. In July 2020, a U.S. District Court (District Court) ordered the Dakota Access Pipeline (DAPL) to cease operation based on an alleged procedural permitting failure. On August 5, 2020, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) stayed the DAPL shutdown, and set an expedited briefing schedule to determine the merits of the District Court’s decision. The D.C. Circuit issued an opinion on January 26, 2021, which upheld the District Court’s decision on the merits, but did not rule on whether DAPL should be prohibited from continued operation. The plaintiffs sought
38
Table of Contents

another injunction against DAPL’s continued operation, which was denied by the District Court in May 2021. The U.S. Army Corps of Engineers is currently conducting an environmental impact statement, which is expected to be complete in March 2022 and we expect that DAPL will remain in operation while the environmental impact statement is being completed.

The Arrow gathering system currently connects to the 2016 presidential election, we expected the trend of greater regulatory oversight to continueDAPL, Hiland, Tesoro and True Companies’ Bridger Four Bears pipelines, providing significant downstream delivery capacity for the foreseeable future, However, the election results and anticipated changes in policy could lessen the degree of regulatory scrutiny we face in the near term.

Segment Highlights

Below is a discussion of events that highlight our core business and financing activities.

Gathering and Processing

Bakken. In the Bakken, we are expanding and upgrading our Arrow system water handling facilities, increasing natural gas capacity on the system, and constructing a 30 million cubic feet per day (MMcf/d) natural gas processing facility and associated pipelines thatcustomers. Additionally, we expect to place into service in late 2017. We believe the installation of a gas processing solution on thecan transport Arrow system will, among other things, spur greater development activity around the Arrow system, allow us to provide greater flow assurancecrude volumes to our producer customers, and reduceCOLT Hub facility by pipeline or truck, which mitigates the downstream constraints currently experienced by producers on the Fort Berthold Indian Reservation. The anticipated cost of this natural gas processing facility and associated pipeline is approximately $115 million.In conjunction with this project, we are negotiating various amendments and extensions with several of our producer customers, and the impact of these contract negotiations is not expected to have a material impact to our 2017 resultsproducers with the ability to access multiple markets out of operations.the basin.

Delaware Permian. InRegulatory Matters

The Federal Energy Regulatory Commission (FERC) issued a Notice of Inquiry (NOI) on April 19, 2018 (2018 NOI) initiating a review of its policies on certification of natural gas pipelines, including an examination of its long-standing Policy Statement on Certification of New Interstate Natural Gas Pipeline Facilities (1999 Policy Statement), issued in 1999, that is used to determine whether to grant certificates for new pipeline projects. On February 18, 2021, the Delaware Permian, we have identified gatheringFERC issued another NOI (2021 NOI), reopening its review of the 1999 Policy Statement. Comments on the 2021 NOI were due on May 26, 2021, and processing and transportation opportunities in and around our existing assets, including our joint ventures. Through our Crestwood Permian joint venture,although the FERC has not taken any further action regarding the 2018 NOI or 2021 NOI, we are expanding bothunable to predict what, if any, changes may be proposed as a result of the NOIs that will affect our processing capacity in the region, which includes the construction of a 200 MMcf/d natural gas processing facility in Orla, Texas, and associated pipelines, as well as our interconnection capacity to accommodate greater takeaway options for residue gas and NGLs. The initial cost of the expansion project is expected to cost approximately $170 million with an in-service date in the second half of 2018. We are also developing a crude oil and condensate storage terminal near Orla, Texas that would offer condensate stabilization, truck loading/unloading options and connections to third party pipelines. In addition, we are developing a produced water gathering, disposal and recycling facility in the Delaware Permian. We continue to believe that we are positioned well to benefit from the continued build-out of this world-class resource.pipeline operations or when such proposals, if any, might become effective.

On June 21, 2017, we contributed to Crestwood Permian 100% of theequity interest of Crestwood New Mexico Pipeline LLC (Crestwood New Mexico), our wholly-owned subsidiary that owns our Delaware Basin assets located in Eddy County, New Mexico. This contribution was treated as a transaction between entities under common control, and accordingly we deconsolidated Crestwood New Mexico and our investment in Crestwood Permian was increased by the historical book value of these assets of approximately $69.4 million. In conjunction with this contribution, First Reserve has agreed to contribute to Crestwood Permian the first $151 million of capital costs required to fund the expansion of the Delaware Basin assets, which includes the Orla processing plant and associated pipelines. In October 2017, CPB Subsidiary Holdings LLC, a wholly-subsidiary of Crestwood Permian, entered into a credit agreement with certain lenders. The five year term credit agreement allows for revolving loans, letters of credit and swingline loans in an aggregate principal amount of up to $150 million. Borrowings under the credit agreement will be used to fund expansion projects and for general corporate purposes.

Crestwood Permian Basin has a long-term agreement with SWEPI to construct, own and operate a natural gas gathering system in SWEPI's operated position in the Delaware Permian. SWEPI has dedicated to Crestwood Permian Basin approximately 100,000 acres and gathering rights for SWEPI's gas production across a large acreage position in Loving, Reeves, Ward and Culberson Counties, Texas. The Nautilus gathering system is designed to include 194 miles of low pressure gathering lines, 36

43
Table of Contents


miles of high pressure trunklines and centralized compression facilities which are expandable over time as production increases, producing gas gathering capacity of approximately 250 MMcf/d. The initial build-out of the Nautilus gathering system was completed on June 6, 2017 and includes 20 receipt point meters, 60 miles of pipeline, a 24-mile high pressure header system, 10,800 horsepower of compression and a high pressure delivery point. Crestwood Permian Basin provides gathering, dehydration, compression and liquids handling services to SWEPI on a fixed fee basis. In October 2017, Shell Midstream purchased a 50% equity interest in Crestwood Permian Basin for approximately $37.9 million in cash. See Item 1. Financial Statements, Note 4 for additional information regarding Crestwood Permian Basin.

During the first half of 2017, we terminated an agreement with a large producer to develop a three-stream gathering system in Reeves County, Texas. We continue to work with this producer and other producers in the area for the potential development of future expansion projects.

Marketing, Supply and Logistics

During 2017, we commenced an in-depth assessment of our trucking and transportation operations to evaluate the markets in which our trucking and transportation business operates, its operating cost structure, customer service levels and organizational efficiencies. Based on this assessment, we, along with our Board of Directors, determined that our trucking and transportation operations should be realigned, including leadership changes, cost reductions, sizing of our fleet and the implementation of rate and profitability key performance indicators. Certain of these changes were implemented during 2017 and will continue throughout the remainder of the year, and we believe these changes will result in improved profitability for this business. Additionally, management plans to realign our trucking operations service capability to be more coordinated with our NGL, crude and water operations and less reliant on third party transportation services. This commercial realignment should allow us to optimize the use of available capacity and position us to reevaluate our trucking and transportation operations in future periods. We anticipate that these realignment efforts will be completed before the end of 2017, which includes the consolidation and relocation of our three corporate offices into two offices located in Houston and Kansas City.

In October 2017, we entered into a Purchase Agreement with an affiliate of Kissner Group Holdings LP to sell 100% of our equity interests in US Salt, LLC (US Salt) for approximately $225 million. US Salt is a solution mining and salt production company located on the shores of Seneca Lake near Watkins Glen in Schuyler County, New York. We intend to use the proceeds from the divestiture to reduce borrowings under the CMLP credit facility and reinvest in on-going organic growth projects in the Bakken and Delaware Basin discussed above in our Gathering and Processing Segment Highlights. Subject to the terms and conditions of the Purchase Agreement (including customary closing conditions and purchase price adjustments), we expect to close the transaction during the fourth quarter of 2017.

Through the execution of the strategic efforts described above, we expect to increase the stability and strength of the Company through a continued challenging and competitive market environment, which will position us to achieve our chief business objective to create long-term value for our unitholders.

Critical Accounting Estimates

Our critical accounting estimates are consistent with those described in our 2016 Annual Report on Form 10-K.


How We Evaluate Our Operations
 
We evaluate our overall business performance based primarily on EBITDA and Adjusted EBITDA. We do not utilize depreciation, amortization and accretion expense in our key measures because we focus our performance management on cash flow generation and our assets have long useful lives.


EBITDA and Adjusted EBITDA - We believe that EBITDA and Adjusted EBITDA are widely accepted financial indicators of a company'scompany’s operational performance and its ability to incur and service debt, fund capital expenditures and make distributions. We believe that EBITDA and Adjusted EBITDA are useful to our investors because it allows them to use the same performance measure analyzed internally by our management to evaluate the performance of our businesses and investments without regard to the manner in which they are financed or our capital structure. EBITDA is defined as income before income taxes, plus debt-related costs (interest and debt expense, net and gain (loss)loss on modification/extinguishment of debt) and depreciation, amortization and accretion expense. Adjusted EBITDA considers the adjusted earnings impact of our unconsolidated affiliates by adjusting our equity earnings or losses from our unconsolidated affiliates to reflect our proportionate share (based on the distribution percentage) of their EBITDA, excluding gains and losses on long-lived assets and other impairments. Adjusted EBITDA also considers the impact of certain significant items, such as unit-based compensation charges, gains or losses on long-lived assets, impairments of goodwill, third party costs incurred related to potential and completed acquisitions, certain environmental remediation costs, the change in fair value

44
Table of Contents


of commodity inventory-related derivative contracts, costs associated with our 2017the realignment and restructuring of our Marketing, Supply and Logistics operations and related consolidation and relocation of our corporate offices,structure, and other transactions identified in a specific reporting period. The change in fair value of commodity inventory-related derivative contracts is considered in determining Adjusted EBITDA given that the timing of recognizing gains and losses on these derivative contracts differs from the recognition of revenue for the related underlying sale of inventory to which these derivatives relate. Changes in the fair value of other derivative contracts is not considered in determining Adjusted EBITDA given the relatively short-term nature of those derivative contracts. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, as they do not include deductions for items such as depreciation, amortization and accretion, interest and income taxes, which are necessary to maintain our business. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, operating cash flow or any other measure of financial performance presented in accordance with GAAP. EBITDA and Adjusted EBITDA calculations may vary among entities, so our computation may not be comparable to measures used by other companies.
See our reconciliation of net income to EBITDA and Adjusted EBITDA in Results of Operations below.



45
39
Table of Contents



Results of Operations


The following tables summarize our results of operations for the three and nine months ended September 30, 2017 and 2016 (in millions):
Crestwood EquityCrestwood Midstream
Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20212020202120202021202020212020
Revenues$929.6 $352.7 $1,962.3 $1,080.6 $929.6 $352.7 $1,962.3 $1,080.6 
Costs of product/services sold797.2 225.7 1,611.0 760.1 797.2 225.7 1,611.0 760.1 
Operations and maintenance expense25.8 31.6 58.6 69.2 25.8 31.6 58.6 69.2 
General and administrative expense22.8 29.5 41.5 44.4 19.7 28.4 36.9 41.9 
Depreciation, amortization and accretion58.8 61.0 118.0 117.1 62.2 64.6 125.0 124.2 
(Gain) loss on long-lived assets, net(0.3)3.8 1.1 4.8 (0.3)3.8 1.1 4.8 
Goodwill impairment— — — 80.3 — — — 80.3 
Operating income (loss)25.3 1.1 132.1 4.7 25.0 (1.4)129.7 0.1 
Earnings (loss) from unconsolidated affiliates, net(27.1)8.4 (130.8)13.9 (27.1)8.4 (130.8)13.9 
Interest and debt expense, net(35.1)(34.0)(71.1)(66.6)(35.1)(34.0)(71.1)(66.6)
Loss on modification/extinguishment of debt(1.2)— (6.7)— (1.2)— (6.7)— 
Other income, net0.1 0.1 0.1 0.2 — — — — 
(Provision) benefit for income taxes(0.1)0.1 — 0.1 (0.1)0.2 — 0.2 
Net loss(38.1)(24.3)(76.4)(47.7)(38.5)(26.8)(78.9)(52.4)
Add:
Interest and debt expense, net35.1 34.0 71.1 66.6 35.1 34.0 71.1 66.6 
Loss on modification/extinguishment of debt1.2 — 6.7 — 1.2 — 6.7 — 
Provision (benefit) for income taxes0.1 (0.1)— (0.1)0.1 (0.2)— (0.2)
Depreciation, amortization and accretion58.8 61.0 118.0 117.1 62.2 64.6 125.0 124.2 
EBITDA57.1 70.6 119.4 135.9 60.1 71.6 123.9 138.2 
Unit-based compensation charges7.6 13.6 9.9 9.2 7.6 13.6 9.9 9.2 
(Gain) loss on long-lived assets, net(0.3)3.8 1.1 4.8 (0.3)3.8 1.1 4.8 
Goodwill impairment— — — 80.3 — — — 80.3 
(Earnings) loss from unconsolidated affiliates, net27.1 (8.4)130.8 (13.9)27.1 (8.4)130.8 (13.9)
Adjusted EBITDA from unconsolidated affiliates, net21.0 17.9 46.7 37.2 21.0 17.9 46.7 37.2 
Change in fair value of commodity inventory-related derivative contracts32.6 21.5 2.1 15.7 32.6 21.5 2.1 15.7 
Significant transaction and environmental related costs and other items0.6 8.8 1.1 10.0 (1.4)8.8 (1.1)10.0 
Adjusted EBITDA$145.7 $127.8 $311.1 $279.2 $146.7 $128.8 $313.4 $281.5 
40
 Crestwood Equity Crestwood Midstream
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
 September 30, September 30, September 30, September 30,
 2017 2016 2017 2016 2017 2016 2017 2016
Revenues$955.6
 $587.6
 $2,634.0
 $1,725.5
 $955.6
 $587.6
 $2,634.0
 $1,725.5
Costs of product/services sold858.5
 466.7
 2,271.6
 1,280.1
 858.5
 466.7
 2,271.6
 1,280.1
Operations and maintenance expense35.5
 33.1
 103.4
 119.9
 35.5
 33.6
 103.4
 116.7
General and administrative expense22.5
 18.3
 71.6
 70.2
 21.4
 17.3
 69.0
 67.5
Depreciation, amortization and accretion48.1
 50.3
 145.2
 177.0
 50.9
 53.2
 153.5
 185.2
Loss on long-lived assets, net(6.3) (2.1) (6.3) (34.8) (6.3) (2.1) (6.3) (34.8)
Goodwill impairment—
 —
 —
 (109.7) —
 —
 —
 (109.7)
Operating income (loss)(15.3) 17.1
 35.9
 (66.2) (17.0) 14.7
 30.2
 (68.5)
Earnings from unconsolidated
     affiliates, net
11.5
 13.4
 29.2
 26.1
 11.5
 13.4
 29.2
 26.1
Interest and debt expense, net(24.2) (27.5) (74.8) (97.9) (24.2) (27.5) (74.8) (97.9)
Gain (loss) on modification/extinguishment of debt—
 —
 (37.7) 10.0
 —
 —
 (37.7) 10.0
Other income, net0.2
 0.2
 0.4
 0.4
 —
 —
 —
 —
Provision for income taxes(0.1) (0.2) —
 (0.2) (0.1) —
 —
 —
Net income (loss)(27.9) 3.0
 (47.0) (127.8) (29.8) 0.6
 (53.1) (130.3)
Add:               
Interest and debt expense, net24.2
 27.5
 74.8
 97.9
 24.2
 27.5
 74.8
 97.9
(Gain) loss on modification/extinguishment of debt—
 —
 37.7
 (10.0) —
 —
 37.7
 (10.0)
Provision for income taxes0.1
 0.2
 —
 0.2
 0.1
 —
 —
 —
Depreciation, amortization and accretion48.1
 50.3
 145.2
 177.0
 50.9
 53.2
 153.5
 185.2
EBITDA44.5
 81.0
 210.7
 137.3
 45.4
 81.3
 212.9
 142.8
Unit-based compensation charges6.2
 4.1
 18.9
 13.4
 6.2
 4.1
 18.9
 13.4
Loss on long-lived assets, net6.3
 2.1
 6.3
 34.8
 6.3
 2.1
 6.3
 34.8
Goodwill impairment—
 —
 —
 109.7
 —
 —
 —
 109.7
Earnings from unconsolidated
affiliates, net
(11.5) (13.4) (29.2) (26.1) (11.5) (13.4) (29.2) (26.1)
Adjusted EBITDA from unconsolidated affiliates, net21.5
 21.7
 54.9
 41.4
 21.5
 21.7
 54.9
 41.4
Change in fair value of commodity inventory-related derivative contracts27.4
 7.5
 12.5
 8.3
 27.4
 7.5
 12.5
 8.3
Significant transaction and environmental related costs and other items1.9
 0.5
 10.4
 11.2
 1.9
 0.5
 10.4
 11.2
Adjusted EBITDA$96.3
 $103.5
 $284.5
 $330.0
 $97.2
 $103.8
 $286.7
 $335.5

46
Table of Contents



Crestwood EquityCrestwood Midstream
Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20212020202120202021202020212020
Net cash provided by operating activities$35.0 $64.2 $293.5 $183.4 $38.0 $65.3 $297.2 $181.1 
Net changes in operating assets and liabilities33.1 (7.7)(89.7)(11.4)33.2 (7.7)(88.8)(6.5)
Amortization of debt-related deferred costs(1.7)(1.6)(3.4)(3.2)(1.7)(1.6)(3.4)(3.2)
Interest and debt expense, net35.1 34.0 71.1 66.6 35.1 34.0 71.1 66.6 
Unit-based compensation charges(7.6)(13.6)(9.9)(9.2)(7.6)(13.6)(9.9)(9.2)
Gain (loss) on long-lived assets, net0.3 (3.8)(1.1)(4.8)0.3 (3.8)(1.1)(4.8)
Goodwill impairment— — — (80.3)— — — (80.3)
Earnings (loss) from unconsolidated affiliates, net, adjusted for cash distributions received(37.3)(0.9)(141.1)(5.4)(37.3)(0.9)(141.1)(5.4)
Deferred income taxes0.1 0.1 0.1 0.3 — 0.1 — 0.1 
Provision (benefit) for income taxes0.1 (0.1)— (0.1)0.1 (0.2)— (0.2)
Other non-cash income— — (0.1)— — — (0.1)— 
EBITDA57.1 70.6 119.4 135.9 60.1 71.6 123.9 138.2 
Unit-based compensation charges7.6 13.6 9.9 9.2 7.6 13.6 9.9 9.2 
(Gain) loss on long-lived assets, net(0.3)3.8 1.1 4.8 (0.3)3.8 1.1 4.8 
Goodwill impairment— — — 80.3 — — — 80.3 
(Earnings) loss from unconsolidated affiliates, net27.1 (8.4)130.8 (13.9)27.1 (8.4)130.8 (13.9)
Adjusted EBITDA from unconsolidated affiliates, net21.0 17.9 46.7 37.2 21.0 17.9 46.7 37.2 
Change in fair value of commodity inventory-related derivative contracts32.6 21.5 2.1 15.7 32.6 21.5 2.1 15.7 
Significant transaction and environmental related costs and other items0.6 8.8 1.1 10.0 (1.4)8.8 (1.1)10.0 
Adjusted EBITDA$145.7 $127.8 $311.1 $279.2 $146.7 $128.8 $313.4 $281.5 
 Crestwood Equity Crestwood Midstream
 Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
 September 30, September 30, September 30, September 30,
 2017 2016 2017 2016 2017 2016 2017 2016
Net cash provided by operating activities$95.3
 $51.5
 $228.2
 $244.5
 $96.8
 $54.8
 $232.9
 $250.8
Net changes in operating assets and liabilities(63.6) 6.5
 (65.2) (46.8) (64.1) 4.0
 (66.9) (46.3)
Amortization of debt-related deferred costs(1.9) (1.7) (5.4) (5.1) (1.9) (1.7) (5.4) (5.1)
Interest and debt expense, net24.2
 27.5
 74.8
 97.9
 24.2
 27.5
 74.8
 97.9
Unit-based compensation charges(6.2) (4.1) (18.9) (13.4) (6.2) (4.1) (18.9) (13.4)
Loss on long-lived assets, net(6.3) (2.1) (6.3) (34.8) (6.3) (2.1) (6.3) (34.8)
Goodwill impairment—
 —
 —
 (109.7) —
 —
 —
 (109.7)
Earnings from unconsolidated affiliates, net, adjusted for cash distributions received3.0
 3.1
 2.5
 3.9
 3.0
 3.1
 2.5
 3.9
Deferred income taxes—
 0.3
 0.7
 0.9
 (0.1) —
 (0.1) (0.2)
Provision for income taxes0.1
 0.2
 —
 0.2
 0.1
 —
 —
 —
Other non-cash (income) expense(0.1) (0.2) 0.3
 (0.3) (0.1) (0.2) 0.3
 (0.3)
EBITDA44.5
 81.0
 210.7
 137.3
 45.4
 81.3
 212.9
 142.8
Unit-based compensation charges6.2
 4.1
 18.9
 13.4
 6.2
 4.1
 18.9
 13.4
Loss on long-lived assets, net6.3
 2.1
 6.3
 34.8
 6.3
 2.1
 6.3
 34.8
Goodwill impairment—
 —
 —
 109.7
 —
 —
 —
 109.7
Earnings from unconsolidated
affiliates, net
(11.5) (13.4) (29.2) (26.1) (11.5) (13.4) (29.2) (26.1)
Adjusted EBITDA from unconsolidated affiliates, net21.5
 21.7
 54.9
 41.4
 21.5
 21.7
 54.9
 41.4
Change in fair value of commodity inventory-related derivative contracts27.4
 7.5
 12.5
 8.3
 27.4
 7.5
 12.5
 8.3
Significant transaction and environmental related costs and other items1.9
 0.5
 10.4
 11.2
 1.9
 0.5
 10.4
 11.2
Adjusted EBITDA$96.3
 $103.5
 $284.5
 $330.0
 $97.2
 $103.8
 $286.7
 $335.5

47
Table of Contents




Segment Results


The following tables summarizetable summarizes the EBITDA of our segments (in millions):


Crestwood Equity
Three Months EndedThree Months Ended
June 30, 2021June 30, 2020
Gathering and ProcessingStorage and TransportationMarketing, Supply and LogisticsGathering and ProcessingStorage and TransportationMarketing, Supply and Logistics
Revenues$173.3 $2.0 $754.3 $114.5 $3.1 $235.1 
Intersegment revenues84.2 3.1 (87.3)14.3 2.4 (16.7)
Costs of product/services sold120.6 (0.4)677.0 21.3 0.1 204.3 
Operations and maintenance expenses14.7 1.0 10.1 19.3 0.7 11.6 
Gain (loss) on long-lived assets, net0.3 — — (3.6)— (0.2)
Earnings (loss) from unconsolidated affiliates, net1.0 (28.1)— (1.0)9.4 — 
EBITDA$123.5 $(23.6)$(20.1)$83.6 $14.1 $2.3 
41
 Three Months Ended Three Months Ended
 September 30, 2017 September 30, 2016
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Gathering and Processing Storage and Transportation Marketing, Supply and Logistics
Revenues$434.4
 $6.2
 $515.0
 $279.3
 $18.3
 $290.0
Intersegment revenues29.9
 1.2
 (31.1) 24.8
 1.5
 (26.3)
Costs of product/services sold378.6
 0.2
 479.7
 226.1
 0.1
 240.5
Operations and maintenance expenses16.2
 1.0
 18.3
 17.4
 2.5
 13.2
Gain (loss) on long-lived assets(3.9) —
 0.6
 (2.0) (0.1) —
Earnings from unconsolidated affiliates, net4.3
 7.2
 —
 5.5
 7.9
 —
EBITDA$69.9
 $13.4
 $(13.5) $64.1
 $25.0
 $10.0
 Nine Months Ended Nine Months Ended
 September 30, 2017 September 30, 2016
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Gathering and Processing Storage and Transportation Marketing, Supply and Logistics
Revenues$1,208.1
 $24.7
 $1,401.2
 $787.7
 $131.5
 $806.3
Intersegment revenues94.3
 4.7
 (99.0) 75.9
 3.0
 (78.9)
Costs of product/services sold1,049.9
 0.3
 1,221.4
 632.2
 4.9
 643.0
Operations and maintenance expenses51.8
 3.4
 48.2
 56.1
 18.2
 45.6
Goodwill impairment—
 —
 —
 (8.6) (13.7) (87.4)
Gain (loss) on long-lived assets(3.9) —
 0.6
 (2.0) (32.8) —
Earnings from unconsolidated affiliates, net7.7
 21.5
 —
 16.5
 9.6
 —
EBITDA$204.5
 $47.2
 $33.2
 $181.2
 $74.5
 $(48.6)

Crestwood Midstream
 Three Months Ended Three Months Ended
 September 30, 2017 September 30, 2016
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Gathering and Processing Storage and Transportation Marketing, Supply and Logistics
Revenues$434.4
 $6.2
 $515.0
 $279.3
 $18.3
 $290.0
Intersegment revenues29.9
 1.2
 (31.1) 24.8
 1.5
 (26.3)
Costs of product/services sold378.6
 0.2
 479.7
 226.1
 0.1
 240.5
Operations and maintenance expenses16.2
 1.0
 18.3
 17.4
 3.0
 13.2
Gain (loss) on long-lived assets(3.9) —
 0.6
 (2.0) (0.1) —
Earnings from unconsolidated affiliates, net4.3
 7.2
 —
 5.5
 7.9
 —
EBITDA$69.9
 $13.4
 $(13.5) $64.1
 $24.5
 $10.0

48
Table of Contents



Six Months EndedSix Months Ended
June 30, 2021June 30, 2020
Gathering and ProcessingStorage and TransportationMarketing, Supply and LogisticsGathering and ProcessingStorage and TransportationMarketing, Supply and Logistics
Revenues$327.7 $4.0 $1,630.6 $329.4 $6.6 $744.6 
Intersegment revenues189.5 5.5 (195.0)54.3 5.0 (59.3)
Costs of product/services sold237.1 — 1,373.9 129.6 0.3 630.2 
Operations and maintenance expenses36.1 1.6 20.9 46.3 2.1 20.8 
Gain (loss) on long-lived assets, net(1.2)— 0.1 (4.6)— (0.2)
Goodwill impairment— — — (80.3)— — 
Earnings (loss) from unconsolidated affiliates, net0.2 (131.0)— (0.2)14.1 — 
EBITDA$243.0 $(123.1)$40.9 $122.7 $23.3 $34.1 
 Nine Months Ended Nine Months Ended
 September 30, 2017 September 30, 2016
 Gathering and Processing Storage and Transportation Marketing, Supply and Logistics Gathering and Processing Storage and Transportation Marketing, Supply and Logistics
Revenues$1,208.1
 $24.7
 $1,401.2
 $787.7
 $131.5
 $806.3
Intersegment revenues94.3
 4.7
 (99.0) 75.9
 3.0
 (78.9)
Costs of product/services sold1,049.9
 0.3
 1,221.4
 632.2
 4.9
 643.0
Operations and maintenance expenses51.8
 3.4
 48.2
 56.1
 15.0
 45.6
Goodwill impairment—
 —
 —
 (8.6) (13.7) (87.4)
Gain (loss) on long-lived assets(3.9) —
 0.6
 (2.0) (32.8) —
Earnings from unconsolidated affiliates, net7.7
 21.5
 —
 16.5
 9.6
 —
EBITDA$204.5
 $47.2
 $33.2
 $181.2
 $77.7
 $(48.6)


Below is a discussion of the factors that impacted EBITDA by segment for the three and ninesix months ended SeptemberJune 30, 20172021 compared to the same periods in 2016.2020.


Gathering and Processing


EBITDA for our gathering and processing segment increased by approximately $5.8$39.9 million and $23.3$120.3 million for during the three and ninesix months ended SeptemberJune 30, 20172021 compared to the same periods in 2016.

During the three and nine months ended September 30, 2017, our2020.Our gathering and processing segment'ssegment’s EBITDA for the six months ended June 30, 2020 was impacted by an $80.3 million goodwill impairment related to our Jackalope operations (see Item 1. Financial Statements, Note 2 for a further discussion of this impairment).

Our gathering and processing segment’s revenues increased by approximately $160.2$128.7 million and $438.8$133.5 million during the three and six months ended June 30, 2021 compared to the same periods in 2016, partially offset by an increase in2020, while our costs of product/services sold ofincreased by approximately $152.5$99.3 million and $417.7$107.5 million. These during those same periods. The increases were primarily driven by higher volumes on our Arrow operations, which experiencedsystem (described below) and higher average prices (i.e., more than a $176.1 million and $442.3 million50% percent increase in revenues and a $166.1 million and $419.7 million increase in costs of product/services soldcommodity prices during the three and ninesix months ended SeptemberJune 30, 20172021 compared to the same periodsperiod in 2016. The increase in Arrow's revenues2020) that our gathering and costs was primarily driven by higher average pricesprocessing segment realized on Arrow'sits agreements under which it purchases and sells crude oil. In addition, our crude,oil, natural gas and waterNGLs during the three and six months ended June 30, 2021 compared to the same periods in 2020. During the three months ended June 30, 2021, Arrow’s natural gas gathering and processing volumes increased by 31%, 12%58% and 29%59%, respectively and during the ninesix months ended SeptemberJune 30, 20172021, Arrow’s natural gas gathering and processing volumes increased by 32% and 36%, respectively, compared to the same periods in 2020. Partially offsetting the increase in Arrow’s revenues and costs of product/services sold for the six months ended June 30, 2021 were lower revenues from our Jackalope operations, which were driven by a 19% and 15% decrease in natural gas gathering and processing volumes, respectively, primarily due to its major customer connecting fewer wells to our system during the first quarter of 2021 as a result of lower commodity prices, coupled with its major customer shutting in production during that period as a result of unusual winter weather conditions.

Our gathering and processing segment’s operations and maintenance expenses decreased by approximately $4.6 million and $10.2 million during the three and six months ended June 30, 2021 compared to the same periods in 2020, primarily due to the sale of our Fayetteville assets in October 2020 and efforts we undertook starting in the second quarter of 2020 to reduce costs in response to lower commodity prices during that period.

Our gathering and processing segment’s EBITDA for the three and six months ended June 30, 2020 was impacted by a loss on long-lived assets of approximately $3.6 million and $4.6 million, primarily related to the retirement of certain water gathering lines on our Arrow system.

Our gathering and processing segment’s EBITDA was also impacted by an increase in equity earnings of approximately $2.0 million and $0.4 million from our Crestwood Permian equity investment during the three and six months ended June 30, 2021 compared to the same periods in 2020. During the three months ended June 30, 2021, Crestwood Permian experienced an increase in its water gathering revenues and volumes compared to the same period in 2016,2020 primarily due to placing in-service its produced water gathering and disposal system in late second quarter of 2020. During the connection of 78 wells on our Arrow system during the ninesix months ended SeptemberJune 30, 2017 compared to 31 wells during the same period in 2016, and higher initial production rates2021, Crestwood Permian experienced on those connected wells in 2017 compared to 2016.

Partially offsetting thean increase in ourits gathering and processing segment's revenues and costs from our Arrow operations during the three months ended September 30, 2017volumes primarily due to increases in
42

commodity prices compared to the same period in 2016, were lower revenues and2020, partially offset by higher electricity costs of approximately $16.1 million and $11.4 million, respectively, from our Permian operations as a result of the deconsolidation of Crestwood New Mexico in June 2017 due to the contribution of these assets to Crestwood Permian. For a further discussion of this transaction, see Item 1. Financial Statements, Note 4.

Our gathering and processing segment's operations and maintenance expenses decreased approximately $1.2 million and $4.3 million during the three and nine months ended September 30, 2017 compared to the same periods in 2016 due to continued cost-reduction efforts undertaken in our operations and the deconsolidation of Crestwood New Mexico.

The comparability of our G&P segment's EBITDA was impacted by an $8.6 million goodwill impairment recordedexperienced during the first quarter of 2016 related to our Marcellus operations. For a further discussion of our goodwill impairments recorded during 2016, see Item 1. Financial Statements, Note 2.

Our gathering and processing segment's EBITDA was also impacted by a decrease in earnings from our unconsolidated affiliates of approximately $1.2 million and $8.8 million during the three and nine months ended September 30, 2017 compared2021 due to the same periods in 2016. The decrease was primarily driven by a reduction in revenues at our Jackalope equity investment as a result of the restructuring of its contracts with Chesapeake Energy Corporation (Chesapeake) effective January 1, 2017. Jackalope and Chesapeake replaced the cost-of-service based contract with a fixed-fee gathering and processing contractunusual winter weather conditions experienced during that includes minimum revenue guarantees for a five to seven year period. Partially offsetting the decrease in equity earnings from our Jackalope equity investment was an increase in equity earnings from our Crestwood Permian equity investment of approximately $2.8 million and $2.2 million during the three and nine months ended September 30, 2017 primarily due to the

49
Table of Contents


contribution of Crestwood New Mexico to Crestwood Permian in June 2017, and the Nautilus system coming online in June 2017.


Storage and Transportation


EBITDA for CMLP'sour storage and transportation segment decreased by approximately $11.1$37.7 million and $30.5$146.4 million for during the three and ninesix months ended SeptemberJune 30, 20172021 compared to the same periods in 2016. The comparability of our storage2020. Our EBITDA for the three and transportation segment's resultssix months ended June 30, 2021 was impacted by a $32.9 million loss recognized onreduction to the deconsolidation ofequity earnings from our Northeast storage and transportation assetsStagecoach Gas equity method investment as a result of recording our proportionate share of a loss on long-lived assets (including goodwill) recorded by the contribution of these assets to Stagecoach Gas in June 2016. The deconsolidation ofequity method investee as further discussed below.

During the Northeast storage and transportation assets resulted in lower revenues and costs of product/services sold of approximately $74.1 million and $4.6 million, respectively, during the ninesix months ended SeptemberJune 30, 20172021, COLT’s rail loading volumes decreased by 4% compared to the same period in 2016. We also experienced2020 due to lower demand for rail loading services which resulted in a decrease in revenues and operations and maintenance expenses of approximately $11.6$2.1 million and $0.5 million, respectively. Our storage and transportation segment’s revenues and operations and maintenance expenses were relatively flat during the ninethree months ended SeptemberJune 30, 20172021 compared to the same period in 2016, primarily as a result2020, and our costs of the deconsolidation of the Northeast storage and transportation assets.

Our storage and transportation segment's revenues was also impacted by lower revenues of approximately $11.6 million and $31.0 million from our COLT Hub operationsproduct/services sold were relatively flat during the three and ninesix months ended SeptemberJune 30, 20172021 compared to the same periods in 2016. The decrease was primarily due to a reduction in our rail throughput revenues resulting from lower rail loading volumes as a result of two rail loading contracts that expired in late 2016 and the in-service of the Dakota Access Pipeline system.2020.


The comparability of ourOur storage and transportation segment'ssegment’s EBITDA was also impacted by a $13.7net decrease in earnings from unconsolidated affiliates during both the three and six months ended June 30, 2021 compared to the same periods in 2020. During the three and six months ended June 30, 2021, we recorded a $35.5 million goodwill impairment and $155.4 million reduction to the equity earnings from our Stagecoach Gas equity method investment as a result of recording our proportionate share of a loss on long-lived assets (including goodwill) recorded by our Stagecoach Gas equity investment related to the anticipated sale of Stagecoach Gas to a subsidiary of Kinder Morgan. In addition, our earnings from unconsolidated affiliates during the first quartersix months ended June 30, 2021 were also reduced by our proportionate share of 2016transaction costs of approximately $3.0 million related to our COLT Hub operations.the anticipated sale of the Stagecoach Gas equity investment. For a further discussion of our goodwill impairments recorded during 2016,these matters, see Item 1. Financial Statements, Note 2.

Our storage and transportation segment's EBITDA was impacted by an increase in5. Aside from recording our proportionate share of this loss on long-lived assets, our earnings from our unconsolidated affiliates. As discussed above, in June 2016, we deconsolidated our Northeast storage and transportation assets as a result of the Stagecoach Gas transaction and began accounting for our 50% equity interest in Stagecoach Gas underinvestment were relatively flat. During the equity method of accounting. We recognized equity earnings from Stagecoach Gas of approximately $19.0 million during the ninesix months ended SeptemberJune 30, 2017. Earnings2021, earnings from our Tres Holdings equity investment increased by approximately $2.2$9.1 million during the nine months ended September 30, 2017 compared to the same period in 2016,2020, primarily due to property tax accruals recorded by Tres Holdings during 2016.

EBITDAhigher revenues from gas inventory sales and an increase in demand for CEQP'sits storage and transportation segment decreased by approximately $11.6 million and $27.3 millionservices due to the unusually cold weather experienced during early 2021 compared to 2020. During the three and ninesix months ended SeptemberJune 30, 20172021, earnings from our PRBIC equity investment increased by $4.5 million compared to the same periodsperiod in 2016. The change in CEQP's storage and transportation segment's EBITDA period over period was due to all2020. During the factors as discussed above for CMLP. In addition, in June 2016, the Matagorda County court issued a final judgment related to Tres Palacios' 2012 and 2013 property tax years which resulted in CEQP recording additional net property taxes (including interest and penalties) of approximately $2.9 million during the ninesix months ended SeptemberJune 30, 2016.2020, we recorded a $4.5 million reduction in earnings from PRBIC to reflect our proportionate share of a long-lived assets impairment recorded by our PRBIC equity investment.


Marketing, Supply and Logistics


EBITDA for our marketing, supply and logistics segment decreased by approximately $23.5$22.4 million forduring the three months ended SeptemberJune 30, 20172021 compared to the same period in 2016,2020, while we experienced an increase inour EBITDA of approximately $81.8 million duringfor the ninesix months ended SeptemberJune 30, 20172021 increased by approximately $6.8 million compared to the same period in 2016. The comparability of our2020. Our marketing supply and logistics segment's results was impactedsegment’s revenues increased by goodwill impairments of approximately $87.4$448.6 million recorded during 2016. For a further discussion of our goodwill impairments recordedand $750.3 million during the first quarterthree and six months ended June 30, 2021 compared to the same periods in 2020, while our costs of 2016, see Item 1. Financial Statements, Note 2.product/services sold increased by approximately $472.7 million and $743.7 million during those same periods.


Our supplyNGL marketing and logistics operations experienced an increase in revenues of approximately $105.3$214.2 million and $302.8$477.1 million during the three and ninesix months ended SeptemberJune 30, 20172021 compared to the same periods in 2016,2020, and an increase in its costs of product/services sold of approximately $117.8$235.7 million and $297.3$474.8 million during those same periods. During 2016, we experienced unseasonably warm weather which resulted in lower demand for NGLs compared to 2017. The costs of product/services sold increases include a loss of $24.1 million and $22.6 million on our commodity-based derivative contracts during the three and nine months ended September 30, 2017 and a $2.1 million and $4.1 million gain on commodity-based derivative contracts during the three and nine months ended September 30, 2016. The loss on our commodity-based derivative contracts during the three and nine months ended September 30, 2017 resulted from higher average NGL prices during the third quarter of 2017 compared to the prior periods, which resulted in an increase in our liabilities from price risk management activities associated with contracts that provide fixed prices on future sales of our NGL inventory.

50
Table of Contents



During the three and nine months ended September 30, 2017, our storage and terminals operations (including our West Coast operations) experienced a $39.0 million and $104.1 million increase in revenues compared to the same periods in 2016 and a $45.1 million and $109.4 million increase in costs of product/services sold during those same periods. These increases were primarily driven bydue to increases in NGL prices during the three months ended September 30, 2017,2021 compared to 2020 as a result of overall increases in commodity prices and the increaseunusually cold weather experienced during early 2021 compared to 2020. Our NGL marketing and logistics operations’ costs of product/services sold increased more than its revenues primarily due to the impact of increasing commodity prices on our assets and liabilities from price risk management activities. Included in our costs of product/services sold more than offset the increase in our revenues due to decreasing demand from our refinery customers primarily on the West Coast.

Revenues from our crude marketing operations increased by approximately $76.5was a loss of $33.3 million and $172.4$41.4 million during the three and ninesix months ended SeptemberJune 30, 20172021, and a loss of $6.8 million and a gain of $15.2 million during the three and six months ended June 30, 2020 related to our price risk management activities. Partially offsetting the impact of our price risk management activities was the impact of the operating results of the NGL assets acquired from Plains All American Pipeline, L.P. (Plains) in April 2020, which increased our ability to capture additional opportunities in the markets in which these assets operate.

43
Table of Contents

Our crude and natural gas marketing operations experienced an increase in its revenues of approximately $234.4 million and $273.2 million during the three and six months ended June 30, 2021 compared to the same periods in 2016. In addition,2020, and an increase in its product costs of approximately $237.0 million and $268.9 million during those same periods. These increases were driven primarily driven by an increase in marketing activity surrounding our crude-related operations primarily in the Bakken as a result of higher commodity prices and an increase in marketing activity surrounding our natural-gas related operations driven by unusual winter weather conditions experience during early 2021.

Our marketing, supply and logistics operations and maintenance expenses decreased during the three months ended June 30, 2021 compared to the same period in 2020, while we experienced an increase in these expenses during the six months ended June 30, 2021 compared to the same period in 2020. In late 2020, we sold certain of our costs of product/services sold of approximately $76.0 millionBakken crude-related transportation assets which decreased our operations and $172.0 million. These increases were driven by higher crude marketing volumes due to increased marketing activity surrounding our crude-related operations.

Our NGL and crude trucking operations continued to experience a decline in demand for their services due to lower supply volumes, increased competition, excess trucking capacity in the marketplace and lower commodity pricesmaintenance expenses during the three and ninesix months ended SeptemberJune 30, 20172021 compared to the same periods in 2016, resulting2020. Offsetting the decrease during the six months ended June 30, 2021 compared to the same period 2020, was higher operations and maintenance expenses as a result of the acquisition of the NGL assets from Plains in a $2.8 million2020.

Other EBITDA Results

General and $12.3 million decrease in revenuesAdministrative Expenses. During the three and a $1.1six months ended June 30, 2021, Crestwood Midstream’s general and administrative expenses decreased by approximately $8.7 million and $5.0 million decrease in costs of product/services sold period over period.

Our marketing, supply and logistics segment's operations and maintenance expenses increased during the three and nine months ended September 30, 2017 compared to the same periods in 20162020, primarily due to a $3.1 million property tax refund received duringlower average awards outstanding under our long-term incentive plans and lower employee-related expenses due to our cost cutting efforts we undertook starting in the thirdsecond quarter of 2016 related to our West Coast operations.

Other EBITDA Results

General and Administrative Expenses. During the three and nine months ended September 30, 2017, our2020. Crestwood Equity’s general and administrative expenses increaseddecreased by approximately $6.7 million and $2.9 million during the three and six months ended June 30, 2021 compared to the same periods in 2016, primarily2020 due to an increase in unit-based compensation charges based on higher average awards outstanding in 2017 comparedthe factors discussed above for Crestwood Midstream, partially offset by additional transactional costs that were expensed related to 2016 and the impact of performance units granted during 2017 under the Crestwood Equity LTIP. For a further discussion of Crestwood Equity's Long Term Incentive Plan, seeHoldings Transactions discussed in Item 1. Financial Statements, Note 2. In addition, we incurred additional costs during the third quarter of 2017 as a result of the relocation of Crestwood's Houston corporate headquarters.1.


Items not affecting EBITDA include the following:


Depreciation, Amortization and Accretion Expense.Depreciation, During the three months ended June 30, 2021, our depreciation, amortization and accretion expense decreased during the nine months September 30, 2017by approximately $2 million compared to the same period in 2016,2020, primarily due to the deconsolidationsale of our Fayetteville assets in late 2020. During the six months ended June 30, 2021, our depreciation, amortization and accretion expense increased by approximately $1 million primarily due to the acquisition of the Northeast storageNGL assets from Plains in April 2020 and transportation assetsplacing in-service the expansion of our processing capacity at our Bucking Horse processing facility on our Powder River Basin system in June 2016 and Crestwood New Mexico operations in June 2017.early 2020.


Interest and Debt Expense, Net.Interest and debt expense, net decreasedincreased by approximately $3.3$1.1 million and $23.1$4.5 million during the three and ninesix months ended SeptemberJune 30, 20172021 compared to the same periods in 2016,2020, primarily due to the repaymentsissuance of $700 million unsecured senior notes in January 2021 and lower capitalized interest during these periods due to the timing of growth capital projects primarily in the Powder River Basin. Partially offsetting these increases was lower average outstanding balances on our Crestwood Midstream's 2020 Senior Notes and 2022 Senior Notes.Midstream credit facility.

The following table provides a summary of interest and debt expense (in millions):
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Credit facility$5.4 $6.1 $8.9 $12.5 
Senior notes27.0 26.5 56.8 53.1 
Other2.7 1.8 5.6 3.6 
Gross interest and debt expense35.1 34.4 71.3 69.2 
Less: capitalized interest— 0.4 0.2 2.6 
Interest and debt expense, net$35.1 $34.0 $71.1 $66.6 
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Credit facility$5.5
 $2.9
 $13.3
 $16.0
Senior notes18.2
 22.8
 58.3
 77.1
Other debt-related costs1.7
 1.9
 5.4
 5.4
Gross interest and debt expense25.4
 27.6
 77.0
 98.5
Less: capitalized interest1.2
 0.1
 2.2
 0.6
Interest and debt expense, net$24.2
 $27.5
 $74.8
 $97.9


Loss on Modification/Extinguishment of Debt.Debt. During the ninethree and six months ended SeptemberJune 30, 2017,2021, we recognized a loss on extinguishment of debt of approximately $37.7$1.2 million and $6.7 million in conjunction with the tenderredemption of the remaining principal amounts of Crestwood Midstream's 2020our 2023 Senior Notes and 2022 Senior Notes. During the nine months ended September 30, 2016, we


51
44
Table of Contents



recognized a gain of $10 million on the early tender of principal amounts under Crestwood Midstream's 2020 Senior Notes and 2022 Senior Notes. For a further discussion of these repayments, see Item 1. Financial Statements, Note 7.

Liquidity and Sources of Capital


Crestwood Equity is a holding company that derives all of its operating cash flow from its operating subsidiaries.  Our principal sources of liquidity include cash generated by operating activities from our subsidiaries, distributions from our joint ventures, borrowings under the CMLPCrestwood Midstream credit facility, and sales of equity and debt securities. Our operating subsidiariesequity investments use cash from their respective operations and contributions from us to fund their operating activities, maintenance and growth capital expenditures, and service their outstanding indebtedness. We believe our liquidity sources and operating cash flows are sufficient to address our future operating, debt service and capital requirements.

We make quarterly cash distributions to our common unitholders within approximately 45 days after the end of each fiscal quarter in an aggregate amount equal to our available cash for such quarter. On July 15, 2021, we declared a quarterly cash distribution of $0.625 per unit to our common unitholders, which will be paid on August 13, 2021 and was consistent with the distribution paid in May 2021. Based on our financial performance during the six months ended June 30, 2021, and our estimates of our financial performance for future quarters, we believe the current level of distributions is appropriate. As described above, the Crestwood Holdings Transactions resulted in Crestwood Equity acquiring and cancelling approximately 11.5 million common units, which decreased our anticipated annual distributions (at the current annual rate of $2.50 per unit) by approximately $29 million per year and eliminates any future consideration by our board of directors regarding the level of distributions to our unitholders of any risks created by Crestwood Holdings’ debt (which was fully repaid as of June 30, 2021). We also pay quarterly cash distributions of approximately $15 million to our preferred unitholders. In November 2017, we will pay the distribution related to the quarter ended September 30, 2017 to our preferred unitholders in cash in lieu of issuing additional preferred units, and beginning with the first quarter ending December 31, 2017,of 2021, we will be requiredpay quarterly cash distributions of approximately $10 million to make all future quarterly distributions to our preferred unitholders in cash.Crestwood Niobrara’s non-controlling partner. We believe our operating cash flows will well exceed our quarterly distributions at the current level and cash distributions to our partners, preferred unitholders.unitholders and non-controlling partner, and as a result, we will have adequate operating cash flows as a source of liquidity for our growth capital expenditures.


As describedIn March 2021, Crestwood Equity’s board of directors authorized a $175 million common unit and preferred unit repurchase program effective through December 31, 2022. Pursuant to the program, we may purchase common and preferred units from time to time in Segment Highlights - Marketing, Supplythe open market in accordance with applicable securities laws at current market prices. The timing and Logistics above, we have entered into an agreement to sell our US Salt operations for approximately $225 million. We intend to use the proceeds from the divestiture to reduce borrowingsamount of purchases under the CMLP credit facilityprogram will be determined based on growth capital opportunities, financial performance and reinvest in on-going organic growth projects in the Bakkenoutlook, and Delaware Basin discussed above in our Gatheringother factors, including acquisition opportunities and Processing Segment Highlights,market conditions. The unit repurchase program does not obligate us to purchase any specific dollar amount or number of units and we expect the proceeds from this divestiture will eliminate the need to access the equity capital markets to fund our current 2017 and 2018 capital programs.may be suspended or discontinued at any time.


As of SeptemberJune 30, 2017, Crestwood Midstream2021, we had $548.7$366.7 million of available capacity under itsthe Crestwood Midstream credit facility considering the most restrictive debt covenants in itsthe credit agreement. At SeptemberAs of June 30, 2017, Crestwood Midstream was2021, we were in compliance with all of itsour debt covenants applicable to itsthe credit facility and senior notes.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. During the six months ended June 30, 2021, we redeemed and cancelled approximately $687.2 million of principal outstanding under the 2023 Senior Notes, utilizing a portion of the proceeds from the issuance of the 2029 Senior Notes and borrowings under our Crestwood Midstream credit facility. In July 2021, Stagecoach Gas closed on the sale of certain of its wholly-owned subsidiaries to a subsidiary of Kinder Morgan and distributed to us approximately $614 million as our proportionate share of the gross proceeds received from the sale. We utilized approximately $3 million of these proceeds to pay transaction costs related to the sale described above, $40 million of these proceeds to pay our contingent consideration obligation and related accrued interest, and to repay a portion of the amounts outstanding under the Crestwood Midstream credit facility.


Cash Flows


The following table provides a summary of Crestwood Equity'sEquity’s cash flows by category (in millions):
Six Months Ended
June 30,
20212020
Net cash provided by operating activities$293.5 $183.4 
Net cash provided by (used in) investing activities$1.9 $(292.9)
Net cash provided by (used in) financing activities$(292.8)$90.5 

45
 Nine Months Ended
 September 30,
 2017 2016
Net cash provided by operating activities$228.2
 $244.5
Net cash provided by (used in) investing activities(144.3) 866.8
Net cash used in financing activities(84.1) (1,110.8)
Table of Contents


Operating Activities


Our operating cash flows decreasedincreased by approximately $16.3$110.1 million during the ninesix months ended SeptemberJune 30, 20172021 compared to the same period in 2016,2020. The increase was primarily driven by an increase in net cash inflow from working capital of approximately $78.3 million, driven mostly by the sale of higher levels of NGL inventory at the close of the winter season during the six months ended June 30, 2021 compared to the same period in 2020 due to increased activity primarily from the NGL assets acquired from Plains during the second quarter of 2020. Also contributing to the increase in our operating cash flows during the six months ended June 30, 2021 compared to the same period in 2020 was an increase in our operating revenues of approximately $881.7 million, partially offset by higher costs of product/services sold of approximately $964.8$850.9 million primarily from our gathering and processing and marketing, supply and logistics segments' operationssegment and gathering and processing segment as discussed above, partially offset by a $908.5 million increase in operating revenues from these segments' operations. In addition, we experienced lower operations and maintenance expensesResults of approximately $16.5 million primarily due to the deconsolidation of our Northeast storage and transportation assets in June 2016. The decrease in our net operating cash flows described above was partially offset by a $18.4 million net cash inflow from working capital primarily resulting from lesser working capital requirements from our NGL and crude trucking operations.Operations above.


52
Table of Contents



Investing Activities


Capital Expenditures. The energy midstream business is capital intensive, requiring significant investments for the acquisition or development of new facilities. We categorize our capital expenditures as either:


•growth capital expenditures, which are made to construct additional assets, expand and upgrade existing systems, or acquire additional assets; or


•maintenance capital expenditures, which are made to replace partially or fully depreciated assets, to maintain the existing operating capacity of our assets, extend their useful lives or comply with regulatory requirements.


We anticipate that ourOur growth capital expenditures forduring the remainder of 2017year will increase the services we can provide to our customers and the operating efficiencies of our systems and generate meaningful contributions to our results of operations beginning in 2018.systems. We expect to finance our growth and maintenance capital expenditures with a combination of cash generated by our operating subsidiaries, distributions received from our joint venturesequity investments and borrowings under the CMLPour credit facility.

We have identified additional growth capital project opportunities for each of our reporting segments. Additional commitments or expenditures will be made at our discretion, and any discontinuation of thethese construction of these projects will likelycould result in less future operating cash flows and earnings.

The following table summarizes our capital expenditures for the ninesix months ended SeptemberJune 30, 20172021 (in millions).:


Growth capital$11.9 
Maintenance capital8.3 
Other (1)
1.1 
Purchases of property, plant and equipment$21.3 
Growth capital$97.5
Maintenance capital16.1
Other (1)
20.8
Purchases of property, plant and equipment134.4
Reimbursements of property, plant and equipment(18.8)
Net$115.6


(1)Represents gross purchases of property, plant and equipment that are reimbursable by third parties.


Investments in Unconsolidated Affiliates. During the six months ended June 30, 2021 and 2020, we contributed approximately $6.9 million and $6.0 million to our Tres Holdings equity investment for its operating purposes. During the six months ended June 30, 2021, we contributed approximately $3.3 million to our Crestwood Permian equity investment primarily to fund its expansion projects.

Financing Activities


Significant items impactingThe following equity and debt transactions impacted our financing activities during the ninesix months endedSeptember June 30, 2017 and 2016, included the following:2021:


Equity and Debt Transactions


Beginning in 2016, we declared a decrease in distributions paid per limited partner unit from $1.375 to $0.60. This
reduction resulted in a decrease in distributions paid to partners of approximately $53.0 million during•During the ninesix months ended SeptemberJune 30, 20172021, CEQP paid approximately $275.6 million in conjunction with the Crestwood Holdings Transactions;

•During the six months ended June 30, 2021, distributions to our partners decreased by approximately $5.3 million compared to the same period in 2016;

$10.6 million of net proceeds from2020, primarily due to the issuances of CEQPdecrease in common units duringoutstanding as a result of the nineCrestwood Holdings Transactions;

•During the six months ended SeptemberJune 30, 2017; and

Increase in2021, taxes paid for unit-based compensation vesting ofdecreased by approximately $4.5$7.3 million primarily due to higher vesting of unit-based compensation awards during the nine months ended September 30, 2017 compared to the same period in 2016.2020, primarily due to lower vesting of unit-based compensation awards;

46
Table of Contents
Debt Transactions


•During the ninesix months ended SeptemberJune 30, 2017,2021, we paid approximately $690.5 million to repurchase and cancel approximately $687.2 million of our senior notes due 2023;

•During the six months ended June 30, 2021, we received net proceeds of approximately $691 million from the issuance of our senior notes due 2029; and

•During the six months ended June 30, 2021, our other debt-related transactions resulted in net proceeds of approximately $49.6$127.2 million compared to net repaymentsproceeds of $918.8$244.3 million during the same period in 2016. This variance2020.

Guarantor Summarized Financial Information

Crestwood Midstream and Crestwood Midstream Finance Corp. are issuers of our debt securities (the Issuers). Crestwood Midstream is primarily duea holding company and owns no operating assets and has no significant operations independent of its subsidiaries. Crestwood Midstream Finance Corp. is Crestwood Midstream’s 100% owned subsidiary and has no material assets or operations other than those related to repaymentsits service as co-issuer of amounts outstandingour senior notes. Obligations under Crestwood Midstream’s senior notes and its credit facility are jointly and severally guaranteed by substantially all of its subsidiaries (collectively, the Guarantor Subsidiaries), except for Crestwood Infrastructure Holdings LLC, Crestwood Niobrara LLC, Crestwood Pipeline and Storage Northeast LLC, Powder River Basin Industrial Complex LLC, and Tres Palacios Holdings LLC and their respective subsidiaries (collectively, Non-Guarantor Subsidiaries). The assets and credit of our Credit Facility withNon-Guarantor Subsidiaries are not available to satisfy the proceeds fromdebts of the Issuers or Guarantor Subsidiaries, and the liabilities of our Stagecoach Gas transactionNon-Guarantor Subsidiaries do not constitute obligations of the Issuers or Guarantor Subsidiaries. For additional information regarding our credit facility and repayments of Crestwood Midstream'ssenior notes and related guarantees, see our 2020 Senior NotesAnnual Report on Form 10-K and 2022 Senior Notes. For a further discussion of these transactions, see Item 1. Financial Statements, Notes 4Note 8.

The following tables provide summarized financial information for the Issuers and 7.Guarantor Subsidiaries (collectively, the Obligor Group) on a combined basis after elimination of significant intercompany balances and transactions between entities in the Obligor Group. The investment balances in the Non-Guarantor Subsidiaries have been excluded from the supplemental summarized combined financial information. Transactions with other related parties, including the Non-Guarantor Subsidiaries, represent affiliate transactions and are presented separately in the summarized combined financial information below.


Summarized Combined Balance Sheet Information (in millions)
June 30, 2021December 31, 2020
Current assets$488.2 $371.3 
Current assets - affiliates$6.3 $1.1 
Property, plant and equipment, net$2,266.3 $2,295.2 
Non-current assets$667.2 $696.2 
Current liabilities$584.0 $345.4 
Current liabilities - affiliates$12.6 $5.0 
Long-term debt, less current portion$2,621.6 $2,483.8 
Non-current liabilities$146.1 $157.4 

53
47
Table of Contents



Summarized Combined Statement of Operations Information (in millions)
Six Months Ended June 30, 2021
Revenues$1,905.3 
Revenues - affiliates$21.3 
Cost of products/services sold$1,543.2 
Cost of products/services sold - affiliates$66.5 
Operations and maintenance expenses(1)
$49.8 
General and administrative expenses, net(2)
$36.9 
Operating income$132.2 
Net income$56.5 

(1)    We have operating agreements with certain of our affiliates pursuant to which we charge them operations and maintenance expenses in accordance with their respective agreements, and these charges are reflected as a reduction of operations and maintenance expenses in our consolidated statements of operations. During the six months ended June 30, 2021, we charged $16.5 million to our affiliates under these agreements.
(2)    Includes $7.9 million of net general and administrative expenses that were charged by our affiliates to us.


Item 3.Quantitative and Qualitative Disclosures About Market Risk

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Our interest rate risk and commodity price, market and marketcredit risks are discussed in our 20162020 Annual Report on Form 10-K and there10-K. There have been no material changes in those exposures from December 31, 20162020 to SeptemberJune 30, 2017.2021.



Item 4.Controls and Procedures

Item 4.Controls and Procedures

Disclosure Controls and Procedures


As of SeptemberJune 30, 2017,2021, Crestwood Equity and Crestwood Midstream carried out an evaluation under the supervision and with the participation of their respective management, including the Chief Executive Officer and Chief Financial Officer of their General Partners, as to the effectiveness, design and operation of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (Exchange Act) Rules 13a-15(e) and 15d-15(e)). Crestwood Equity and Crestwood Midstream maintain controls and procedures designed to provide reasonable assurance that information required to be disclosed in their respective reports that are filed or submitted under the Exchange Act of 1934, as amended, are recorded, processed, summarized and reported within the time periods specified by the rules and forms of the SEC, and that information is accumulated and communicated to their respective management, including the Chief Executive Officer and Chief Financial Officer of their General Partners, as appropriate, to allow timely decisions regarding required disclosure. Such management, including the Chief Executive Officer and Chief Financial Officer of their General Partners, do not expect that the disclosure controls and procedures or the internal controls will prevent and/or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Crestwood Equity'sEquity’s and Crestwood Midstream'sMidstream’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and ourthe Chief Executive Officer and Chief Financial Officer of their General Partners concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of SeptemberJune 30, 2017.2021.


Changes in Internal Control over Financial Reporting


There were no changes to Crestwood Equity'sEquity’s or Crestwood Midstream'sMidstream’s internal control over financial reporting during the three months ended SeptemberJune 30, 20172021 that have materially affected, or are reasonably likely to materially affect Crestwood Equity'sEquity’s or Crestwood Midstream'sMidstream’s internal control over financial reporting.


54
48
Table of Contents



PART II – OTHER INFORMATION


Item 1.Legal Proceedings

Item 1.Legal Proceedings

Part I, Item 1. Financial Statements, Note 109 to the Consolidated Financial Statements, of this Form 10-Q is incorporated herein by reference.



Item 1A.Risk Factors

Item 1A.Risk Factors

Our business faces many risks. Any of the risks discussed below or elsewhere in this Form 10-Q or our other SEC filings could have a material impact on our business, financial position or results of operations. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. For a detailed discussion of the risk factors that should be understood by any investor contemplating investment in our common units, see Part I, Item 1A. Risk Factors in our 20162020 Annual Report on Form 10-K.10-K, as supplemented by the risk factors set forth below. There has been no material change in the risk factors set forth in our 2020 Annual Report on Form 10-K other than those set forth below.


Terrorist attacks or “cyber security” events, or the threat of them, may adversely affect our business.

The U.S. government has issued public warnings that indicate that pipelines and other assets might be specific targets for terrorist organizations or “cyber security” events.  These potential targets might include our pipeline systems or operating systems and may affect our ability to operate or control our pipeline assets or utilize our customer service systems. Also, destructive forms of protests and opposition by extremists and other disruptions, including acts of sabotage or eco-terrorism, against oil and natural gas development and production or midstream processing or transportation activities could potentially result in damage or injury to persons, property or the environment or lead to extended interruptions of our or our customers’ operations. Additionally, the oil and natural gas industry has become increasingly dependent on digital technologies to conduct certain processing and operational activities. At the same time, companies in our industry have been the targets of cyber-attacks and ransomware demands, and it is possible that the attacks in our industry will continue and grow in number. In addition, to assist in conducting our business, we rely on information technology systems and data hosting facilities, including systems and facilities that are hosted by third parties and with respect to which we have limited visibility and control. These systems and facilities may be vulnerable to a variety of evolving cyber security risks or information security breaches, including unauthorized access, denial-of-service attacks, malicious software, data privacy breaches by employees, insiders or others with authorized access, cyber or phishing-attacks, ransomware, malware, social engineering, physical breaches or other actions. These cyber security risks could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary, personal data and other information, or other disruption of our business operations. In addition, certain cyber incidents, such as advanced persistent threats, may remain undetected for an extended period. The occurrence of any of these events, including any attack or threat targeted at our pipelines and other assets, could cause a substantial decrease in revenues, increased costs or other financial losses, exposure or loss of customer information, damage to our reputation or business relationships, increased regulation or litigation, disruption of our operations and/or inaccurate information reported from our operations.  These developments may subject our operations to increased risks, as well as increased costs, and, depending on their ultimate magnitude, could have a material adverse effect on our business, results of operations and financial condition. Although we have adopted controls and systems, including updating our systems with recent patches and updates from our software providers and procuring limited insurance for certain cyber-related losses, that are designed to protect information and mitigate the risk of data loss and other cyber security events, such measures cannot entirely eliminate cyber security threats, particularly as these threats continue to evolve and grow. Furthermore the controls and systems we have installed may be breached or be inadequate to address a risk that arises. We are not aware of any cyber security events that impacted our company that have or could have resulted in a material loss; however there is no assurance that such a breach has not already occurred and we are unaware of it, and that we will not suffer such a loss in the future.

We are or may become subject to cyber security and data privacy laws, regulations, litigation and directives relating to our processing of personal data.

Several jurisdictions in which we operate throughout the United States may have laws governing how we must respond to a cyber incident that results in the unauthorized access, disclosure or loss of personal data. Additionally, new laws and regulations governing cybersecurity, data privacy and unauthorized disclosure of confidential information, including international comprehensive data privacy regulations and recent U.S. state legislation in California, Virginia and Colorado (some of which, among other things, provides for a private right of action), pose increasingly complex compliance challenges
49
Table of Contents

and could potentially elevate our costs over time. Our business involves collection, uses and other processing of personal data of our employees, contractors, suppliers and service providers. As legislation continues to develop and cyber incidents continue to evolve, we will likely be required to expend significant resources to continue to modify or enhance our protective measures to comply with such legislation and to detect, investigate and remediate vulnerabilities to cyber incidents and report any cyber incidents to the applicable regulatory authorities. In particular, in response to recent ransomware attacks, the Department of Homeland Security has issued a security directive to certain pipeline companies requiring the companies to appoint personnel, perform cybersecurity assessments, and report incidents and other information. Any failure by us, or a company we acquire, to comply with such laws and regulations could result in reputational harm, loss of goodwill, penalties, liabilities, and/or mandated changes in our business practices.


Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
None.

On March 30, 2021, Crestwood Gas Services Holdings LLC, a company controlled by an investment fund sponsored by First Reserve, closed on a private placement of six million common units representing limited partner interests of CEQP for gross proceeds of $132 million. CEQP did not sell any common units and did not receive any proceeds from the private placement.

The securities offered in the private placement were not registered under the Securities Act of 1933, as amended or any state securities laws, and were sold in reliance upon the exemption provided in Section 4(a)(7) of the Securities Act of 1933.

The table below presents the CEQP’s common unit repurchase activity for the six months ended June 30, 2021:

Total Number of Units Repurchased(1)
Weighted-Average Price Paid Per UnitUnits Purchased as Part of Publicly Announced Programs
Maximum Dollar Value That May Yet Be Repurchased Under the Program(2)
January 1, 2021 - January 31, 2021— $— — $— 
February 1, 2021 - February 28, 2021— — — — 
March 1, 2021 - March 31, 202111,469,911 22.49 — 175,000,000 
April 1, 2021 - April 30, 2021— — — — 
May 1, 2021 - May 31, 2021— — — — 
June 1, 2021 - June 30, 2021— — — — 
Totals / Weighted Average11,469,911 $22.49 — $175,000,000 
(1)All units repurchased during the six months ended June 30, 2021 were purchased pursuant to the Crestwood Holdings Transactions described in Part I, Item 1. Financial Statements, Note 1.
(2)On March 25, 2021, CEQP’s board of directors approved a plan to repurchase common and preferred units in one or more open-market transactions or in privately negotiated transactions, with an aggregate purchase price not to exceed $175 million exclusive of any fees, commissions or other expenses. The repurchase program expires December 31, 2022. No units have been purchased under the program during the six months ended June 30, 2021.


Item 3.Defaults Upon Senior Securities

Item 3.Defaults Upon Senior Securities

None.



Item 4.Mine Safety Disclosures

Item 4.Mine Safety Disclosures

Not applicable.



Item 5.Other Information

Item 5.Other Information

None.



55
50
Table of Contents



Item 6.Exhibits
Item 6.Exhibits
Exhibit

Number		Description
2.1
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.113.13
3.123.14
3.133.15
4.1
Indenture, dated as of March 14, 2017, among Crestwood Midstream Partners LP, Crestwood Midstream Finance Corp., the guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Crestwood Midstream’s Form 8- K filed on March 15, 2017)
4.2
Form of 5.75% Senior Note due 2025 (included in Exhibit 4.1)
4.3
Registration Rights Agreement, dated as of March 14, 2017, by and among Crestwood Midstream Partners LP, Crestwood Midstream Finance Corp., the guarantors named therein and J.P. Morgan Securities LLC, as representative of the several initial purchasers, with respect to the 5.75% Senior Notes due 2025 (incorporated by reference to Exhibit 4.3 to Crestwood Midstream’s Form 8- K filed on March 15, 2017)
*12.1
Computation of ratio of earnings to fixed charges - Crestwood Equity Partners LP
*12.2
Computation of ratio of earnings to fixed charges - Crestwood Midstream Partners LP

56
Table of Contents


*31.13.16
51
Table of Contents

*31.1
*31.2
*31.3
*31.4
*32.1
*32.2
*32.3
*32.4
**101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
**101.SCHInline XBRL Taxonomy Extension Schema Document
**101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
**101.LABInline XBRL Taxonomy Extension Label Linkbase Document
**101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
**101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
*Filed herewith
104Cover Page Interactive Data File (contained in Exhibit 101)
*Filed herewith
**Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.



57
52
Table of Contents



SIGNATURE


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


CRESTWOOD EQUITY PARTNERS LP
By:CRESTWOOD EQUITY GP LLC
(its general partner)
Date:July 29, 2021CRESTWOOD EQUITY PARTNERS LPBy:
By:CRESTWOOD EQUITY GP LLC
(its general partner)
Date:November 2, 2017By:/s/ ROBERT T. HALPIN
Robert T. Halpin
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
CRESTWOOD MIDSTREAM PARTNERS LP
By:CRESTWOOD MIDSTREAM GP LLC
(its general partner)
Date:November 2, 2017July 29, 2021By:/s/ ROBERT T. HALPIN
Robert T. Halpin
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)



58
53