UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 June 30, ~~2019~~2020



o☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission file number: 001-33292

CORENERGY INFRASTRUCTURE TRUST, INC.

(Exact name of registrant as specified in its charter)



Maryland		20-3431375
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)



1100 Walnut, Ste. 3350	Kansas City, MO	MO	64106
(Address of Registrant's Principal Executive Offices)				(Zip Code)



(816)	875-3705
(Registrant's telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol(s)	Name of Each Exchange On Which Registered
Common Stock, par value $0.001 per share	CORR	New York Stock Exchange
7.375% Series A Cumulative Redeemable Preferred Stock	CORRPrA	New York Stock Exchange

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. Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x☒ Noo☐

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 growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	o☐	Accelerated filer	x☒
Non-accelerated filer	o☐	Smaller reporting company	x☒
		Emerging growth company	o☐

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. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes o☐ No x☒

As of ~~July 31, 2019,~~August 3, 2020, the registrant had ~~12,828,152~~13,651,521 common shares outstanding.

CorEnergy Infrastructure Trust, Inc.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, ~~2019~~2020

TABLE OF CONTENTS


				Page No.				Page No.
Glossary of Defined Terms	Glossary of Defined Terms			4	Glossary of Defined Terms			4
Forward-Looking Statements	Forward-Looking Statements			7	Forward-Looking Statements			7
PART I	PART I	FINANCIAL INFORMATION		9	PART I	FINANCIAL INFORMATION		9
	Item 1.	Financial Statements (unaudited)		9	Item 1.	Financial Statements (unaudited)		9
		Consolidated Balance Sheets		9		Consolidated Balance Sheets		9
		Consolidated Statements of Income		10		Consolidated Statements of Operations		10
		Consolidated Statement of Equity		11		Consolidated Statements of Equity		11
		Consolidated Statements of Cash Flows		12		Consolidated Statements of Cash Flows		12
		Notes to Consolidated Financial Statements		13		Notes to Consolidated Financial Statements		13
		1.	Introduction and Basis of Presentation	13		1.	Introduction and Basis of Presentation	13
		2.	Recent Accounting Pronouncements	13		2.	Recent Accounting Pronouncements	13
		3.	Leased Properties and Leases	14		3.	Leased Properties and Leases	14
		4.	Transportation and Distribution Revenue	17		4.	Transportation and Distribution Revenue	19
		5.	Financing Notes Receivable	18		5.	Financing Notes Receivable	19
		6.	Income Taxes	19		6.	Income Taxes	20
		7.	Property and Equipment	20		7.	Property and Equipment	21
		8.	Management Agreement	20		8.	Management Agreement	21
		9.	Fair Value	20		9.	Fair Value	22
		10.	Debt	21		10.	Debt	23
		11.	Stockholders' Equity	23		11.	Stockholders' Equity	27
		12.	Earnings Per Share	24		12.	Earnings Per Share	28
		13.	Subsequent Events	24		13.	Subsequent Events	28
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		26	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		29
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		39	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		46
	Item 4.	Controls and Procedures		39	Item 4.	Controls and Procedures		46

PART II.	PART II.	OTHER INFORMATION		40	PART II.	OTHER INFORMATION		47
	Item 1.	Legal Proceedings		40	Item 1.	Legal Proceedings		47
	Item 1A.	Risk Factors		40	Item 1A.	Risk Factors		47
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		42	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		49
	Item 3.	Defaults Upon Senior Securities		42	Item 3.	Defaults Upon Senior Securities		50
	Item 4.	Mine Safety Disclosures		42	Item 4.	Mine Safety Disclosures		50
	Item 5.	Other Information		42	Item 5.	Other Information		50
	Item 6.	Exhibits		43	Item 6.	Exhibits		50
Signatures	Signatures			44	Signatures			51

This Report on Form 10-Q ("Report") should be read in its entirety. No one section of the Report deals with all aspects of the subject matter. It should be read in conjunction with the consolidated financial statements, related notes, and with the Management's Discussion & Analysis ("MD&A") included within, as well as provided in the Annual Report on Form 10-K, for the year ended December 31, ~~2018.~~2019.

The consolidated unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of Management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, ~~2019~~2020 are not necessarily indicative of the results that may be expected for the year ended December 31, ~~2019~~2020 or for any other interim or annual period. For further information, refer to the consolidated financial statements and footnotes thereto included in the CorEnergy Infrastructure Trust, Inc. Annual Report on Form 10-K, for the year ended December 31, ~~2018.~~2019.



Table of Contents	GLOSSARY OF DEFINED TERMS

Certain of the defined terms used in this Report are set forth below:

5.875% Convertible Notes: the Company's 5.875% Convertible Senior Notes due 2025.

7.00% Convertible Notes: the Company's 7.00% Convertible Senior Notes due 2020, which matured on June 15, 2020.

Accretion Expense: the expense recognized when adjusting the present value of the GIGS ARO for the passage of time.

Administrative Agreement: the Administrative Agreement dated December 1, 2011, as amended effective August 7, 2012, between the Company and Corridor.

Amended Pinedale Term Credit Facility: Pinedale LP's $41.0 million Second Amended and Restated Term Credit Agreement and Note Purchase Agreement with Prudential as lender, effective December 29, ~~2017.~~2017, which was extinguished on June 30, 2020.

~~Arc Logistics:~~ ~~Arc Logistics Partners LP, a wholly-owned subsidiary of Zenith Energy U.S., LP.~~

ARO: the Asset Retirement Obligation liabilities assumed with the acquisition of GIGS.

ASC: FASB Accounting Standards Codification.

ASU: FASB Accounting Standard Update.

Bbls: standard barrel containing 42 U.S. gallons.

CARES Act: the Coronavirus Aid, Relief, and Economic Security Act.

Company or CorEnergy: CorEnergy Infrastructure Trust, Inc. (NYSE: CORR).

Compass SWD: Compass SWD, LLC, the current borrower under the Compass REIT Loan.

Compass REIT Loan: the financing notes between Compass SWD and Four Wood Corridor.

Convertible Notes:collectively, the Company's 5.875% Convertible Notes and the Company's 7.00% Convertible ~~Senior Notes due 2020.~~Notes.

CorEnergy Credit Facility: the Company's upsized $160.0 million CorEnergy Revolver and the $1.0 million MoGas Revolver with Regions Bank.

CorEnergy Revolver: the Company's $160.0 million secured revolving line of credit facility with Regions Bank.

Corridor: Corridor InfraTrust Management, LLC, the Company's external manager pursuant to the Management Agreement.

Corridor MoGas: Corridor MoGas, Inc., a wholly-owned taxable REIT subsidiary of CorEnergy and the holding company of MoGas, United Property Systems and CorEnergy Pipeline Company, LLC.

Corridor Private: Corridor Private Holdings, Inc., an indirect wholly-owned taxable REIT subsidiary of CorEnergy.

COVID-19: Coronavirus disease of 2019; a pandemic affecting many countries globally.

Cox Acquiring Entity: MLCJR LLC, an affiliate of Cox Oil, LLC.

Cox Oil: Cox Oil, LLC.

CPI: Consumer Price Index.

Exchange Act: the Securities Exchange Act of 1934, as amended.

EGC: Energy XXI Ltd, the parent company (and guarantor) of our tenant on the Grand Isle Gathering System lease, emerged from a reorganization under Chapter 11 of the US Bankruptcy Code on December 30, 2016, with the succeeding company named Energy XXI Gulf Coast, Inc. Effective October 18, 2018, EGC became an indirect wholly-owned subsidiary of MLCJR LLC ("Cox Acquiring Entity"), an affiliate of Cox Oil, LLC, as a result of a merger transaction. Throughout this document, references to EGC will refer to both the pre- and post-bankruptcy entities and, for dates on and after October 18, 2018, to EGC as an indirect wholly-owned subsidiary of the Cox Acquiring Entity.

EGC Tenant: Energy XXI GIGS Services, LLC, a wholly-owned operating subsidiary of Energy XXI Gulf Coast, Inc. that is the tenant under Grand Isle Corridor's triple-net lease of the Grand Isle Gathering System.

~~FASB:~~ ~~Financial Accounting Standards Board.~~

~~FERC:~~ ~~Federal Energy Regulatory Commission.~~

~~Four Wood Corridor:~~ ~~Four Wood Corridor, LLC, a wholly-owned subsidiary of CorEnergy.~~

~~GAAP:~~ ~~U.S. generally accepted accounting principles.~~



Table of Contents	GLOSSARY OF DEFINED TERMS (Continued from previous page)

FASB: Financial Accounting Standards Board.

FERC: Federal Energy Regulatory Commission.

Four Wood Corridor: Four Wood Corridor, LLC, a wholly-owned subsidiary of CorEnergy.

GAAP: U.S. generally accepted accounting principles.

GIGS: the Grand Isle Gathering System, owned by Grand Isle Corridor, LP and triple-net leased to a wholly-owned subsidiary of Energy XXI Gulf Coast, Inc.

Grand Isle Corridor: Grand Isle Corridor, LP, an indirect wholly-owned subsidiary of the Company.

Grand Isle Gathering System: a subsea midstream pipeline gathering system located in the shallow Gulf of Mexico shelf and storage and onshore processing facilities.

Grand Isle Lease Agreement: the June 2015 agreement pursuant to which the Grand Isle Gathering System assets are triple-net leased to EGC Tenant.

IRS: Internal Revenue Service.

Lightfoot: collectively, Lightfoot Capital Partners LP and Lightfoot Capital Partners GP LLC.

Management Agreement: the current management agreement between the Company and Corridor entered into May 8, 2015, effective as of May 1, 2015.

MoGas: MoGas Pipeline LLC, an indirect wholly-owned subsidiary of CorEnergy.

MoGas Pipeline System: an approximately 263-mile interstate natural gas pipeline system in and around St. Louis and extending into central Missouri, owned and operated by MoGas.

MoGas Revolver: a $1.0 million secured revolving line of credit facility at the MoGas subsidiary level with Regions Bank.

Mowood: Mowood, LLC, an indirect wholly-owned subsidiary of CorEnergy and the holding company of Omega Pipeline Company, LLC.

Mowood/Omega Revolver: a $1.5 million revolving line of credit facility at the Mowood subsidiary level with Regions Bank.

NAREIT: National Association of Real Estate Investment Trusts.

Omega: Omega Pipeline Company, LLC, a wholly-owned subsidiary of Mowood, LLC.

Omega Pipeline: Omega's natural gas distribution system in south central Missouri.

OPEC: the Organization of the Petroleum Exporting Countries.

Pinedale LGS: the Pinedale Liquids Gathering System, a system consisting of approximately 150 miles of pipelines and four above-ground central gathering facilities located in the Pinedale Anticline in Wyoming, owned by Pinedale LP and triple-net leased to a wholly-owned subsidiary of Ultra ~~Petroleum.~~Petroleum until it was sold on June 30, 2020.

Pinedale Lease Agreement: the December 2012 agreement pursuant to which the Pinedale LGS assets ~~are~~were triple-net leased to a wholly owned subsidiary of Ultra ~~Petroleum.~~Petroleum, which terminated on June 30, 2020 upon sale of the Pinedale LGS.

Pinedale LP: Pinedale Corridor, LP, an indirect wholly-owned subsidiary of CorEnergy.

Pinedale GP: the general partner of Pinedale LP and a wholly-owned subsidiary of CorEnergy.

~~Portland Lease Agreement:~~PLR: the ~~January 2014 agreement pursuant~~Private Letter Ruling dated November 16, 2018 (PLR 201907001) issued to ~~which~~CorEnergy by the ~~Portland Terminal Facility was triple-net leased to Zenith Terminals, which terminated on December 21, 2018 upon sale of the facility.~~IRS.

~~Portland Terminal Facility:~~ ~~a petroleum products terminal located in Portland, Oregon sold on December 21, 2018 to Zenith Terminals.~~

Prudential: the Prudential Insurance Company of America.

REIT: real estate investment trust.

SEC: Securities and Exchange Commission.

Securities Act: the Securities Act of 1933, as amended.



Table of Contents	GLOSSARY OF DEFINED TERMS (Continued from previous page)

Series A Preferred Stock: the Company's 7.375% Series A Cumulative Redeemable Preferred Stock, par value $0.001 per share, of which there currently are outstanding approximately ~~50,197~~50,108 shares represented by ~~5,019,727~~5,010,814 depositary shares, each representing 1/100th of a whole share of Series A Preferred Stock.

~~SWD:~~ ~~SWD Enterprises, LLC, the previous debtor of the financing notes with Four Wood Corridor.~~

TRS: taxable REIT subsidiary.



~~Table of Contents~~	~~GLOSSARY OF DEFINED TERMS~~ (~~Continued from previous page~~)

UPL: Ultra Petroleum Corp.

Ultra Wyoming: Ultra Wyoming LGS LLC, an indirect wholly-owned subsidiary of Ultra Petroleum.

United Property Systems: United Property Systems, LLC, an indirect wholly-owned subsidiary of CorEnergy, acquired with the MoGas transaction in November 2014.

VIE: variable interest entity.

~~Zenith:~~ ~~Zenith Energy U.S., LP.~~

~~Zenith Terminals~~: Zenith Energy Terminals Holdings, LLC (f/k/a Arc Terminal Holdings, LLC), a wholly-owned operating subsidiary of Arc Logistics LP (and, subsequent to December 21, 2017, an indirect wholly-owned subsidiary of Zenith).

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements included or incorporated by reference in this Quarterly Report on Form 10-Q ("Report") may be deemed "forward-looking statements" within the meaning of the federal securities laws. In many cases, these forward-looking statements may be identified by the use of words such as "will," "may," "should," "could," "believes," "expects," "anticipates," "estimates," "intends," "projects," "goals," "objectives," "targets," "predicts," "plans," "seeks," or similar expressions.

Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, forward-looking statements are not guarantees of future performance or results and we can give no assurance that these expectations will be attained. Our actual results may differ materially from those indicated by these forward-looking statements due to a variety of known and unknown risks and uncertainties. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include:

Forward-looking statements speak only as of the date on which they are made. While we may update these statements from time to time, we are not required to do so other than pursuant to applicable laws. For a further discussion of these and other factors that could impact our future results and performance, see Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the SEC on February ~~28, 2019,~~27, 2020, and Part II, Item 1A, "Risk Factors", in this Report.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CorEnergy Infrastructure Trust, Inc.

CONSOLIDATED BALANCE SHEETS

CorEnergy Infrastructure Trust, Inc.

CONSOLIDATED STATEMENTS OF ~~INCOME~~ OPERATIONS (Unaudited)

CorEnergy Infrastructure Trust, Inc.

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF EQUITY

Preferred stock repurchases⁽¹⁾

Capital Stock
Preferred Stock
Additional
Paid-in
Capital
Retained
Earnings
Total

Shares
Amount
Amount

Balance at December 31, 2018 11,960,225
$ 11,960
$ 125,555,675
$ 320,295,969
$ 9,147,701
$ 455,011,305
Net income —
—
—
—
3,866,441
3,866,441
Series A preferred stock dividends —
—
—
—
(2,313,780 ) (2,313,780 )
Preferred stock repurchases⁽¹⁾
—
—
(62,500 ) 2,195
(245 ) (60,550 )
Common stock dividends —
—
—
—
(9,597,948 ) (9,597,948 )
Common stock issued upon exchange of convertible notes 837,040
837
—
28,868,672
—
28,869,509
Reinvestment of dividends paid to common stockholders 11,076
11
—
403,820
—
403,831
Balance at March 31, 2019 (Unaudited) 12,808,341
12,808
125,493,175
349,570,656
1,102,169
476,178,808
Net income —
—
—
—
9,824,926
9,824,926
Series A preferred stock dividends —
—
—
—
(2,313,780 ) (2,313,780 )
Common stock dividends —
—
—
(992,940 ) (8,613,315 ) (9,606,255 )
Common stock issued upon conversion of convertible notes 17,690
18
—
588,184
—
588,202
Balance at June 30, 2019 (Unaudited) 12,826,031
$ 12,826
$ 125,493,175
$ 349,165,900
$ —
$ 474,671,901
See accompanying Notes to Consolidated Financial Statements.
(1) In connection with the repurchases of Series A Preferred Stock during 2019, the addition to preferred dividends of $245 represents the premium in the repurchase price paid compared to the carrying amount derecognized.



	Capital Stock			Preferred Stock			Additional Paid-in Capital			Retained Deficit			Total
	Shares	Amount		Amount			Additional Paid-in Capital			Retained Deficit			Total
Balance at December 31, 2019	13,638,916	$	13,639	$	125,493,175		$	360,844,497		$	(9,611,872	)	$	476,739,439
Net loss	—	—		—			—			(162,042,368		)	(162,042,368		)
Series A preferred stock dividends	—	—		—			(2,313,780		)	—			(2,313,780		)
Preferred stock repurchases⁽¹⁾	—	—		(222,825		)	7,932			52,896			(161,997		)
Common stock dividends	—	—		—			(10,238,640		)	—			(10,238,640		)
Common stock issued upon exchange of convertible notes	12,605	13		—			419,116			—			419,129
Balance at March 31, 2020 (Unaudited)	13,651,521	$	13,652	$	125,270,350		$	348,719,125		$	(171,601,344	)	$	302,401,783
Net loss	—	—		—			—			(137,434,433		)	(137,434,433		)
Series A preferred stock dividends	—	—		—			(2,309,672		)	—			(2,309,672		)
Common stock dividends	—	—		—			(682,576		)	—			(682,576		)
Balance at June 30, 2020 (Unaudited)	13,651,521	$	13,652	$	125,270,350		$	345,726,877		$	(309,035,777	)	$	161,975,102
(1) In connection with the repurchase of Series A Preferred Stock during 2020, the deduction from preferred dividends of $52,896 represents the discount in the repurchase price paid compared to the carrying amount derecognized.
See accompanying Notes to Consolidated Financial Statements.

CorEnergy Infrastructure Trust, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, ~~2019~~2020

1.INTRODUCTION AND BASIS OF PRESENTATION

CorEnergy Infrastructure Trust, Inc. ("CorEnergy" or "the Company"), was organized as a Maryland corporation and commenced operations on December 8, 2005. The Company's common shares are listed on the New York Stock Exchange ("NYSE") under the symbol "CORR" and its depositary shares representing Series A Preferred Stock are listed on the NYSE under the symbol "CORR PrA".

The Company is primarily focused on acquiring and financing real estate assets within the U.S. energy infrastructure sector and entering into long-term triple-net participating leases with energy companies. The Company also may provide other types of capital, including loans secured by energy infrastructure assets. Targeted assets include pipelines, storage tanks, transmission lines, and gathering systems, among others. These sale-leaseback or real property mortgage transactions provide the energy company with a source of capital that is an alternative to other sources such as corporate borrowing, bond offerings, or equity offerings. Many of the Company's leases contain participation features in the financial performance or value of the underlying infrastructure real property asset. The triple-net lease structure requires that the tenant pay all operating expenses of the business conducted by the tenant, including real estate taxes, insurance, utilities, and expenses of maintaining the asset in good working order. CorEnergy considers its investments in these energy infrastructure assets to be a single business segment and reports them accordingly in its financial statements.

Basis of Presentation

The accompanying consolidated financial statements include CorEnergy accounts and the accounts of its wholly-owned subsidiaries and have been prepared in accordance with ~~GAAP~~ U.S. generally accepted accounting principles ("GAAP") set forth in the ~~ASC,~~Accounting Standards Codification ("ASC"), as published by the ~~FASB,~~Financial Accounting Standards Board ("FASB"), and with the ~~SEC~~Securities and Exchange Commission ("SEC") instructions to Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the Company's financial position, results of operations, and cash flows for the periods presented. There were no adjustments that, in the opinion of management, were not of a normal and recurring nature. All intercompany transactions and balances have been eliminated in consolidation.

The FASB issued ASU 2015-02 "Consolidations (Topic 810) - Amendments to the Consolidation Analysis" ("ASU 2015-02"), which amended previous consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. Under this analysis, limited partnerships and other similar entities are considered a variable interest entity ("VIE") unless the limited partners hold substantive kick-out rights or participating rights. Management determined that Pinedale LP and Grand Isle Corridor LP are VIEs under the amended guidance because the limited partners of both partnerships lack both substantive kick-out rights and participating rights. However, based on the general partners' roles and rights as afforded by the partnership agreements and its exposure to losses and benefits of each of the partnerships through its significant limited partner interests, management determined that CorEnergy is the primary beneficiary of both Pinedale LP and Grand Isle Corridor LP. Based upon this evaluation and the Company's 100 percent ownership of the limited partnership interest in both Pinedale LP and Grand Isle Corridor LP, the consolidated financial statements presented include full consolidation with respect to both partnerships.

Operating results for the three and six months ended June 30, ~~2019~~2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2019~~2020 or any other interim or annual period. These consolidated financial statements and Management's Discussion and Analysis of the Financial Condition and Results of Operations should be read in conjunction with CorEnergy's Annual Report on Form 10-K, for the year ended December 31, ~~2018,~~2019, filed with the SEC on February ~~28, 2019~~27, 2020 (the ~~"2018~~"2019 CorEnergy 10-K").

2.RECENT ACCOUNTING PRONOUNCEMENTS

In February 2016, the FASB issued ASU 2016-02 "Leases" ("ASU 2016-02" or "ASC 842"), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASC 842 is effective for fiscal years and interim periods beginning after December 15, 2018. The Company adopted ASC 842 effective January 1, 2019 using the modified retrospective approach by applying the transition provisions at the beginning of the period of adoption. The adoption of the new standard resulted in the recording of right-of-use

assets and lease liabilities of approximately $75 thousand each, included in prepaid expenses and other assets and accounts payable and other accrued liabilities, respectively, as of January 1, 2019. There was no difference between the right-of-use assets and lease liabilities resulting in an adjustment to retained earnings. The standard did not materially impact the Company's Consolidated Statements of Income and had no impact on the Consolidated Statements of Cash Flows. The Company will continue to apply legacy guidance in ASC 840, "Leases," ~~including its disclosure requirements, in the comparative periods presented in the year of adoption.~~

In accordance with ASC 842 transition disclosure requirements, the cumulative effect of changes made to the Consolidated Balance Sheets as of January 1, 2019 for the adoption of ASC 842 were as follows:

Balance Sheet Balance at December 31, 2018 Adjustments Due to ASC 842 Balance at
January 1, 2019
Assets
Prepaid expenses and other assets $ 668,584
$ 74,534
$ 743,118
Liabilities
Accounts payable and other accrued liabilities 3,493,490
74,534
3,568,024
Equity
Retained earnings 9,147,701
—
9,147,701

In adopting ASC 842, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the carry forward of historical lease classification. For the underlying lessee asset class related to single-use office space, the Company also elected the lessee separation and allocation practical expedient to not separate lease and non-lease components and instead to account for each separate lease component and non-lease component as a single lease component. For the underlying lessor asset class related to pipelines residing on military bases, the Company elected the lessor separation and allocation practical expedient to not separate lease and non-lease components and instead to account for each separate lease component and non-lease component as a single lease component if the non-lease components otherwise will be accounted for in accordance with ASC 606, and both the following criteria are met: (i) the timing and pattern of revenue recognition are the same for the non-lease component(s) and the related lease component and (ii) the lease component will be classified as an operating lease. Additionally, the Company elected the practical expedient related to land easements, allowing the carry forward of accounting treatment for land easements on existing agreements, which are currently accounted for within property, plant and equipment.

In June of 2016, the FASB issued ASU 2016-13 ~~"Financial~~"Financial Instruments - Credit ~~Losses"~~Losses" ("ASU 2016-13"), which introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. The new model, referred to as the current expected credit losses ("CECL model"), will apply to financial assets subject to credit losses and measured at

amortized cost, and certain off-balance sheet credit exposures. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. ~~Early application~~In November of 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Effective Dates, which deferred the effective dates of these standards for certain entities. Based on the guidance for smaller reporting companies, the effective date of ASU 2016-13 is deferred for the Company until fiscal year 2023 with early adoption permitted, and the Company has elected to defer adoption of this standard.

Although the Company has elected to defer adoption of ASU 2016-13, it will continue to evaluate the potential impact of the ~~guidance will be permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.~~standard on its consolidated financial statements. As part of its ongoing assessment work, the Company has formed an implementation team, completed training on the CECL model and ~~is undertaking a review~~has begun developing policies, processes and internal controls.

In March of 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)" ("ASU 2020-04"). In response to concerns about structural risks of interbank offered rates including the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable and less susceptible to manipulation. The provisions of ASU 2020-04 are elective and apply to all entities, subject to meeting certain criteria, that have debt or hedging contracts, among other contracts, that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04, among other things, provides optional expedients and exceptions for a limited period of time for applying U.S. GAAP to these contracts if certain criteria are met to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial ~~assets in scope.~~reporting. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The Company ~~believes~~is currently evaluating its contracts that ~~unless it acquires any additional financing receivables,~~reference LIBOR and the ~~impact would not be material.~~optional expedients and exceptions provided by the FASB.

3.LEASED PROPERTIES AND LEASES

The Company primarily acquires mid-stream and downstream assets in the U.S. energy sector such as pipelines, storage terminals, and gas and electric distribution systems and leases these assets to operators under triple-net leases. These leases typically include a contracted base rent with escalation clauses and participating rents that are tied to contract-specific criteria. Base rents under the Company's leases are structured on an estimated fair market value rent structure over the initial term, which includes assumptions related to the terminal value of the assets and expectations of tenant renewals. At the conclusion of the initial lease term, the Company's leases may contain fair market value repurchase options or fair market rent renewal terms. These clauses also act as safeguards against the Company's tenants pursuing activities which would undermine or degrade the value of the assets faster than the underlying reserves are depleted. Participating rents are structured to provide exposure to the successful commercial activity of the tenant, and as such, also provide protection in the event that the economic life of the assets is reduced based on accelerated production by the Company's tenants. While the Company is primarily a lessor, certain of its operating subsidiaries are lessees and have entered into lease agreements as discussed further below.

LESSOR - LEASED PROPERTIES

The Company's current leased properties are classified as operating leases and are recorded as leased property in the Consolidated Balance Sheets. Initial direct costs incurred in connection with the creation and execution of a lease prior to January 1, 2019 are capitalized and amortized over the lease term. The Company did not reassess initial indirect cost as it elected the package of practical expedients. Subsequent to January 1, 2019, initial direct costs under ASC 842 are incremental costs of a lease that would not have been incurred if the lease had not been obtained and may include commissions or payments made to an existing tenant as an incentive to terminate its lease. Base rent related to the Company's leased property is recognized on a straight-line basis over the term of the lease when ~~collectability~~collectibility is probable. Participating rent is recognized when it is earned, based on the achievement of specified performance criteria. Base and participating rent are recorded as lease revenue in the Consolidated Statements of ~~Income. Rental payments received in advance are classified as unearned revenue and included as a liability within~~Operations. The Company regularly evaluates the ~~Consolidated Balance Sheets. Unearned revenue is amortized ratably over the lease period as revenue recognition criteria are met. Rental payments received in arrears are accrued and classified as~~collectibility of any deferred rent receivable on a lease by lease basis. The evaluation primarily includes assessing the financial condition and ~~included in assets within the Consolidated Balance Sheets.~~

~~Under~~credit quality of the Company's ~~triple-net leases,~~tenants, changes in tenant's payment history and current economic factors. When the ~~tenant is required to pay property taxes and insurance directly to~~collectibility of the ~~applicable third-party provider. Consistent with guidance in ASC 842,~~deferred rent receivable or future lease payments are no longer probable, the Company will ~~present~~recognize a write-off of the ~~cost and the lessee's direct payment to the third-party under the triple-net leases on~~deferred rent receivable as a ~~net basis~~reduction of revenue in the Consolidated Statements of ~~Income.~~Operations.

As of June 30, ~~2019,~~2020, following the sale of the Pinedale LGS effective as of such date (refer to "Impairment and Sale of the Pinedale Liquids Gathering System" below), the Company had ~~two~~1 significant ~~properties~~property located in ~~Wyoming,~~ Louisiana and the Gulf of Mexico ~~which are~~ leased on a triple-net basis to a major ~~tenants,~~tenant, described in the table below. ~~These~~The major ~~tenants are~~tenant is responsible for the payment of all taxes, maintenance, repairs, insurance, and other operating expenses relating to the leased ~~properties.~~property. The Company's long-term, triple-net leases generally have an initial term ~~of 11 to 15 years~~ with options for renewals. Lease payments are scheduled to increase at varying intervals during the initial term of the ~~leases.~~lease. The following table summarizes the significant leased ~~properties,~~property, major ~~tenants~~tenant and lease ~~terms:~~term:



Summary of Leased ~~Properties,~~Property, Major ~~Tenants~~Tenant and Lease Terms
Property	Grand Isle Gathering System	~~Pinedale LGS~~
Location	Gulf of Mexico/Louisiana	~~Pinedale, WY~~
Tenant	Energy XXI GIGS Services, LLC	~~Ultra Wyoming LGS, LLC~~
Asset Description	Approximately ~~153~~137 miles of offshore pipeline with total capacity of 120 thousand Bbls/d, including a 16-acre onshore terminal and saltwater disposal system.	~~Approximately 150 miles of pipelines and four central storage facilities.~~
Date Acquired	June 2015	~~December 2012~~
Initial Lease Term	11 ~~years~~	15 years
Renewal Option	Equal to the lesser of 9-years or 75 percent of the remaining useful life	~~5-year terms~~
Current Monthly Rent Payments	7/1/~~2018 - 6/30/2019: $2,860,917~~ ~~7/1/~~2019 - 6/30/2020: $3,223,917	~~$1,812,307~~ 7/1/2020 - 6/30/2021: $4,033,583
~~Initial~~ Estimated Useful Life⁽¹⁾	~~27 years~~	2615 years

The Company also concluded that Omega's long-term contract with the Department of Defense ("DOD") to provide natural gas distribution to Fort Leonard Wood through Omega's pipeline distribution system on the military post meets the definition of a lease under ASC 842. Omega is the lessor in the contract and the lease is classified as an operating lease. The Company noted the non-lease component is the predominant component in the lease, and the timing and pattern of transfer of the lease component and the associated non-lease component are the same. As discussed in Note 2 ("Recent Accounting Pronouncements"), the Company elected a practical expedient that allows lessors to not separate lease and related non-lease components if the non-lease components otherwise would be accounted for in accordance with the revenue standard under ASC 606. With the election of this practical expedient, the Company continues to account for the DOD contract under the revenue standard.

In the second quarter of 2019, the Company started a system improvement project on Omega's pipeline distribution system, which is considered a "built to suit" transaction under ASC 842. The system improvement project is a separate lease component and the DOD is deemed to control the system improvement due to certain contract provisions. As a result, the Company is accounting for the costs of the system improvement as a financing arrangement, which is included in accounts and other receivables in the Consolidated Balance Sheets. The margin the Company earns on the system improvement project is a non-lease component accounted for under the revenue standard. Refer to Note 4 ("Transportation And Distribution Revenue") for further details.



~~Table~~(1) In conjunction with the impairment of ~~Contents~~		~~Glossary~~the Grand Isle Gathering System discussed below, the remaining estimated useful life of ~~Defined Terms~~ the GIGS asset was adjusted to approximately 15 years beginning in the second quarter of 2020. Additionally, the Company updated the useful life of its asset retirement obligation ("ARO") segments resulting in a change to the timing of the undiscounted cash flows. The timing change resulted in an increase to the ARO asset and liability of approximately $257 thousand.

~~The future contracted minimum rental receipts for all leases as of June 30, 2019, are as follows:~~

Future Minimum Lease Receipts
Years Ending December 31, Amount
2019 $ 30,267,595
2020 65,383,190
2021 71,345,190
2022 70,322,690
2023 67,274,690
Thereafter 193,639,760
Total $ 498,233,115

~~The table below displays the Company's individually significant leases as a percentage of total leased properties and total lease revenues for the periods presented:~~

As a Percentage of ⁽¹⁾
Leased Properties Lease Revenues
As of For the Three Months Ended For the Six Months Ended
June 30, 2019 December 31, 2018 June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Pinedale LGS⁽²⁾
44.4 % 44.5 % 38.8 % 35.3 % 38.9 % 34.1 %
Grand Isle Gathering System 55.3 % 55.2 % 61.1 % 55.6 % 61.0 % 56.7 %
Portland Terminal Facility⁽³⁾
— % — % — % 9.0 % — % 9.1 %
(1) Insignificant leases are not presented; thus, percentages may not sum to 100%.
(2) Pinedale LGS lease revenues include variable rent of $1.0 million and $2.1 million for the three and six months ended June 30, 2019, respectively, compared to $1.1 million and $1.5 million for the three and six months ended June 30, 2018, respectively.
(3) On December 21, 2018, the Portland Terminal Facility was sold to Zenith Terminals, terminating the Portland Lease Agreement.

~~The following table reflects the depreciation and amortization included in the accompanying Consolidated Statements of Income associated with the Company's leases and leased properties:~~

For the Three Months Ended For the Six Months Ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Depreciation Expense
GIGS $ 2,440,790
$ 2,751,272
$ 4,881,581
$ 5,502,544
Pinedale 2,217,360
2,217,360
4,434,720
4,434,720
Portland Terminal Facility⁽¹⁾
—
318,915
—
637,830
United Property Systems 9,831
9,120
19,455
18,242
Total Depreciation Expense $ 4,667,981
$ 5,296,667
$ 9,335,756
$ 10,593,336
Amortization Expense - Deferred Lease Costs
GIGS $ 7,641
$ 7,641
$ 15,282
$ 15,282
Pinedale 15,342
15,342
30,684
30,684
Total Amortization Expense - Deferred Lease Costs $ 22,983
$ 22,983
$ 45,966
$ 45,966
ARO Accretion Expense
GIGS $ 110,993
$ 127,928
$ 221,985
$ 255,856
Total ARO Accretion Expense $ 110,993
$ 127,928
$ 221,985
$ 255,856
(1) On December 21, 2018, the Portland Terminal Facility was sold to Zenith Terminals, terminating the Portland Lease Agreement.

~~The following table reflects the deferred costs that are included in the accompanying Consolidated Balance Sheets associated with the Company's leased properties:~~

June 30, 2019 December 31, 2018
Net Deferred Lease Costs
GIGS $ 214,037
$ 229,319
Pinedale 519,665
550,349
Total Deferred Lease Costs, net $ 733,702
$ 779,668



~~Table of Contents~~		~~Glossary of Defined Terms~~

LEASED PROPERITES AND TENANT INFORMATION

Substantially all of the lease tenants' financial results are driven by exploiting naturally occurring oil and natural gas hydrocarbon deposits beneath the Earth's surface. As a result, the tenants' financial results are highly dependent on the performance of the oil and natural gas industry, which is highly competitive and subject to volatility. During the terms of the leases, management monitors the credit quality of its tenants by reviewing their published credit ratings, if available, reviewing publicly available financial statements, or reviewing financial or other operating statements, monitoring news reports regarding the tenants and their respective businesses, and monitoring the timeliness of lease payments and the performance of other financial covenants under their leases.

~~Ultra Petroleum~~The COVID-19 pandemic-related reduction in energy demand and the uncertainty of production from OPEC members, US producers and other international suppliers caused significant disruptions and volatility in the global oil marketplace during the first and second quarters of 2020. In response to COVID-19, governments around the world have implemented increasingly stringent measures to help reduce the spread of the virus, including stay-at-home and shelter-in-place orders, travel restrictions and other measures. These measures have adversely affected the economies and financial markets of the U.S. and many other countries, resulting in an economic downturn that has negatively impacted global demand and prices for the products handled by the Company's pipelines, terminals and other facilities.

~~UPL is currently subject to~~The events and conditions described above adversely impacted the ~~reporting requirements~~Gulf of Mexico operations of the EGC Tenant, the tenant of the GIGS asset, under the ~~Exchange Act~~Grand Isle Gathering Lease as discussed under "Energy Gulf Coast/Cox Oil" and is required to file with the SEC annual reports containing audited financial statements and quarterly reports containing unaudited financial statements. Its SEC filings can be found at www.sec.gov. Its common stock will trade on the NASDAQ under the symbol UPL until August 8, 2019 at which time it will commence trading on the OTCQX marketplace under the symbol UPLC. The Company makes no representation as to the accuracy or completeness of the audited and unaudited financial statements of UPL but has no reason to doubt the accuracy or completeness of such information. In addition, UPL has no duty, contractual or otherwise, to advise the Company of any events that might have occurred subsequent to the date of such financial statements which could affect the significance or accuracy of such information. None of the information in the public reports of UPL that are filed with the SEC is incorporated by reference into, or in any way form, a part of this filing."Grand Isle Gathering System" below.

Energy Gulf Coast/Cox Oil

Prior to October 29, 2018, EGC was subject to the reporting requirements of the Exchange Act and was required to file with the SEC annual reports containing audited financial statements and quarterly reports containing unaudited financial statements. ~~Its~~So long as EGC remained a public reporting company, the Grand Isle Lease Agreement provided this requirement was fulfilled by EGC making its financial statements and reports publicly available through the SEC’s EDGAR system, in lieu of delivering such information directly to the Company. On October 18, 2018, EGC was acquired by an affiliate of privately-held Cox Oil. Upon the filing by EGC of a Form 15 with the SEC on October 29, 2018, EGC's SEC reporting obligations were suspended and it ceased to file such reports.

EGC's SEC filings prior to October 29, 2018 can be found at www.sec.gov. ~~Effective March 21, 2018, EGC changed its NASDAQ ticker symbol from EXXI to EGC.~~ The Company makes no representation as to the accuracy or completeness of the audited and unaudited financial statements of EGC but has no reason to doubt the accuracy or completeness of such information. In addition, EGC has no duty, contractual or otherwise, to advise the Company of any events that might have occurred subsequent to the date of such financial statements which could affect the significance or accuracy of such information. None of the information in the public reports of EGC that are filed with the SEC is incorporated by reference into, or in any way form, a part of this filing. Upon the filing by EGC of a Form 15 with the SEC on October 29, 2018, following the closing on October 18, 2018 of the previously announced acquisition of EGC by an affiliate of the privately-held Cox Oil, EGC's SEC reporting obligations were suspended and it ceased to file such reports.

The ~~Company believes the~~ terms of the Grand Isle Lease Agreement require ~~EGC and Cox Oil to provide the Company with~~copies of certain financial statement information ~~of EGC which must~~ be ~~filed~~provided that the Company is required to file pursuant to SEC Regulation ~~S-X.~~S-X, as described in Section 2340 of the SEC Financial Reporting Manual. When EGC's financial information ceased to be publicly available, the Company encouraged officials of EGC and Cox Oil and, through Company counsel, the legal counsel to such entities, to satisfy their obligations under the Grand Isle Lease Agreement to provide the required information to the Company for inclusion in its SEC reports. To date, EGC and Cox Oil have refused to fulfill these



Table of Contents		Glossary of Defined Terms

obligations. The Company ~~intends~~sought to enforce the obligations of EGC and Cox Oil and obtained a temporary restraining order ("TRO") from a Texas state court, mandating that they deliver the required EGC financial statements for the year ended December 31, 2018. ~~While the~~The TRO ~~has been~~was stayed pending an appeal by EGC and Cox Oil and, pursuant to its own terms, had lapsed by the time that appeal was denied on January 6, 2020. The case was remanded to the trial court for further proceedings. In May 2020, the trial court granted the Company's motion for summary judgment mandating the tenant deliver the required financial statements. The Company believes that it is entitled to such relief and will continue to pursue this litigation and all viable options to obtain and file the necessary financial statements. The Company expects to file the financial statement information that is required by Regulation S-X by amendment to its Annual Reports on Form 10-K for the year ended December 31, 2019, once such information is made available in accordance with the terms of the lease.

On April 1, 2020, the EGC Tenant, a wholly owned indirect subsidiary of Cox Oil, elected to cease paying rent due. EGC Tenant is contractually obligated to pay rent and rent continues to accrue whether or not oil is being shipped. EGC Tenant is a special purpose entity engaged solely in activities related to the lease, and it does not own or operate any wells. EGC, parent of the EGC Tenant, owns and operates wells, including those connected to GIGS, and is the guarantor of the EGC Tenant's obligations under the lease. Following EGC Tenant's failure to pay rent due for April of 2020, and following discussions with Cox Oil management concerning its various operations, the Company sent EGC Tenant and EGC a notice of non-payment. After the required two-day cure period, a default occurred under the lease.

The EGC Tenant also failed to make required rent payments for May, June, July and August of 2020. As a result, the Company initiated litigation in the State Court of Texas to recover the unpaid rent, plus interest, for April, May, June and July of 2020 from the EGC Tenant. Further, EGC filed an action to attempt to set aside the guarantee obligations of EGC under the lease. The Company intends to enforce its rights under the lease and expects to be able to enforce the guaranty.

Grand Isle Gathering System

The Company identified the EGC Tenant's nonpayment of rent discussed above along with the significant decline in the global oil market as indicators of impairment for the GIGS asset. As a result, the Company assessed the GIGS asset for impairment as of March 31, 2020. The Company performed a step 1 impairment assessment on the GIGS asset by estimating the undiscounted contractual cash flows relating to the lease using probability-weighted scenarios, which indicated that the GIGS asset's carrying value was not recoverable. As a result, the fair value of the GIGS asset was estimated through the use of probability-weighted discounted estimated cash flow scenarios to measure the impairment loss. The probability-weighted cash flows used to assess recoverability of the GIGS asset and measure its fair value were developed using assumptions related to the Grand Isle Lease Agreement and near-term crude oil and water price and volume projections reflective of the current environment and management's projections for long-term average prices and volumes. In addition to near and long-term price assumptions, other key assumptions include the timing and collectibility of lease payments, operating costs, timing of incurring such costs and the use of an appropriate discount rate. The Company believes its estimates and models used to determine fair value are similar to what a market participant would use.

The Company engaged specialists and other third-parties to assist with the valuation methodology and analysis of certain underlying assumptions. The fair value measurement of the GIGS asset was based, in part, on significant inputs not observable in the market (as discussed above) and thus represents a Level 3 measurement. The significant unobservable input used includes a discount rate based on an estimated weighted average cost of capital of a theoretical market participant. We utilized a weighted average discount rate of 10.0 percent when deriving the fair value of the GIGS asset impaired during the quarter. The weighted average discount rate reflects management's best estimate of inputs a market participant would utilize. For the six months ended June 30, 2020, the Company recognized a $140.3 million loss on impairment of leased property related to the GIGS asset in the Consolidated Statements of Operations. As of June 30, 2020, the carrying value of the GIGS asset is $66.0 million, which is included in leased properties on the Consolidated Balance Sheet.

The Company previously recognized a deferred rent receivable for the Grand Isle Gathering Lease, which primarily represents timing differences between the straight-line revenue recognition and contractual lease receipts over the lease term. Given the EGC's Tenant's nonpayment of rent in the second quarter of 2020 and the Company's expectations surrounding the collectibility of the contractual lease payments under the lease, the Company does not currently expect the deferred rent receivable to be recoverable. Accordingly, the Company recognized a non-cash write-off of the deferred rent receivable of $30.1 million for the six months ended June 30, 2020. The non-cash write-off was recognized as a reduction of revenue in the Consolidated Statements of Operations.

Impairment and Sale of the Pinedale Liquids Gathering System

On April 14, 2020, UPL, the parent and guarantor of the lease obligations of the tenant and operator of the Company's Pinedale LGS, announced that its significant indebtedness and extremely challenging current market conditions raised a substantial doubt



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about its ability to continue as a going concern. The going concern qualification in UPL's financial statements filed in its 2019 10-K resulted in defaults under UPL's credit and term loan agreement. UPL also disclosed that it elected not to make interest payments on certain outstanding indebtedness, triggering a 30-day grace period. If such interest payments were not made by the end of the grace period, an event of default would occur, potentially causing its outstanding indebtedness to become immediately due and payable. UPL further disclosed that if it was unable to obtain sufficient additional capital to repay the outstanding indebtedness and sufficient liquidity to meet its operating needs, it may be necessary for UPL to seek protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.

On May 14, 2020, UPL filed a voluntary petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code. The filing includes Ultra Wyoming, the operator of the Pinedale LGS and tenant under the Pinedale Lease Agreement with the Company’s indirect wholly owned subsidiary Pinedale LP. The bankruptcy filing of both the guarantor, UPL, and the tenant constitute defaults under the terms of the Pinedale Lease Agreement. The bankruptcy filing imposed a stay of CorEnergy’s ability to exercise remedies for the foregoing defaults. Ultra Wyoming also filed a motion to reject the Pinedale Lease Agreement, with a request that such motion be effective June 30, 2020. Pending the effective date of the rejection, Section 365 of the Bankruptcy Code generally requires Ultra Wyoming to comply on a timely basis with the provisions of the Pinedale Lease Agreement, including the payment provisions. Accordingly, the Company received the rent payments due on the first day of April, May and June 2020.

Pinedale LP, along with Prudential, the lender under the Amended Pinedale Term Credit Facility discussed in Note 10 ("Debt"), commenced discussions with UPL which resulted in UPL presenting an initial offer to purchase the Pinedale LGS. The Amended Pinedale Term Credit Facility was secured by the Pinedale LGS and was not secured by any assets of CorEnergy or its other subsidiaries.

On June 5, 2020, Pinedale LP filed a motion with the U.S. Bankruptcy Court objecting to Ultra Wyoming's motion to reject the Pinedale Lease Agreement while continuing its negotiations with UPL. Pinedale LP and the Company agreed in principle to terms with Ultra Wyoming to sell the Pinedale LGS for $18.0 million cash as set forth in a non-binding term sheet that was filed with the U.S. Bankruptcy Court in UPL’s Chapter 11 case along with a motion for approval of the transaction on June 22, 2020. A copy of the draft definitive purchase and sale agreement was also filed with the motion. The closing of the sale was subject to the satisfaction of certain closing conditions, including but not limited to (i) a release of all liens under the Amended Pinedale Term Credit Facility, (ii) a release by Pinedale LP of all claims against UPL and Ultra Wyoming arising from the rejection or termination of the Pinedale Lease Agreement, (iii) the release by Ultra Wyoming of all claims against Pinedale LP and the Company and (iv) approval of the definitive purchase and sale agreement and the closing of the transaction by the bankruptcy court in UPL's Chapter 11 case.

On June 26, 2020, the U.S. Bankruptcy Court in UPL’s Chapter 11 case approved the sale of the Pinedale LGS. Following such approval, on June 29, 2020, Pinedale LP entered into the purchase and sale agreement (the "Sale Agreement") with Ultra Wyoming. On June 30, 2020, Pinedale LP closed on the sale of the Pinedale LGS to its tenant, Ultra Wyoming, for total cash consideration of $18.0 million, and the Pinedale Lease Agreement was terminated. The sale was completed pursuant to the terms of the Sale Agreement previously approved by the bankruptcy court as discussed above. In connection with the closing of the sale, the Company and Pinedale LP entered into a mutual release of all claims related to the Pinedale LGS and the Pinedale Lease Agreement with UPL and Ultra Wyoming, including a release by Pinedale LP of all claims against UPL and Ultra Wyoming arising from the rejection or termination of the Pinedale Lease Agreement.

In conjunction with the sale of the Pinedale LGS described above, Pinedale LP and the Company entered into a compromise and release agreement (the "Release Agreement") with Prudential related to the Amended Pinedale Term Credit Facility, which had an outstanding balance of approximately $32.0 million, net of $132 thousand of deferred debt issuance costs. Pursuant to the Release Agreement, the $18.0 million sale proceeds from the Sale Agreement were provided by Ultra Wyoming directly to Prudential. The Company also provided the remaining cash available at Pinedale LP of approximately $3.3 million (including $198 thousand for accrued interest) to Prudential in exchange for (i) the release of all liens on the Pinedale LGS and the other assets of Pinedale LP, (ii) the termination of the Company’s pledge of equity interests of the general partner of Pinedale LP, (iii) the termination and satisfaction in full of the obligations of Pinedale LP under the Amended Pinedale Term Credit Facility and (iv) a general release of any other obligations of Pinedale LP and/or the Company and their respective directors, officers, employees or agents pertaining to the Amended Pinedale Term Credit Facility.

During the negotiation and closing of the sale of the Pinedale LGS to Ultra Wyoming, the Company determined impairment indicators existed as the value to be received from the sale was less than the carrying value of the asset. As a result of these indicators and the sale of the Pinedale LGS, the Company recognized a loss on impairment and disposal of leased property in the Consolidated Statement of Operations of approximately $146.5 million for the three and six months ended June 30, 2020. Further, the sale of the Pinedale LGS resulted in the termination of the Pinedale Lease Agreement, and the Company recognized a loss on termination of lease of approximately $458 thousand for the three and six months ended June 30, 2020. These losses were partially offset by



Table of Contents		Glossary of Defined Terms

the settlement of the Amended Pinedale Term Credit Facility with Prudential (as discussed above and in Note 10 ("Debt")), which resulted in a gain on extinguishment of debt of $11.0 million for the three and six months ended June 30, 2020.

The table below displays the Company's individually significant leases as a percentage of total leased properties and total lease revenues for the periods presented:



	As a Percentage of ⁽¹⁾
	Leased Properties				Lease Revenues
	As of				For the Three Months Ended				For the Six Months Ended
	June 30, 2020		December 31, 2019		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Pinedale LGS⁽²⁾	—	%	44.4	%	99.6	%	38.8	%	52.1	%	38.9	%
Grand Isle Gathering System⁽³⁾	98.1	%	55.3	%	—	%	61.1	%	47.7	%	61.0	%
(1) Insignificant leases are not presented; thus, percentages may not sum to 100%.
(2) Pinedale LGS lease revenues include variable rent of $0 and $28 thousand for the three and six months ended June 30, 2020, respectively, compared to $1.0 million and $2.1 million for the three and six months ended June 30, 2019, respectively. The Pinedale LGS was sold to Ultra Wyoming and the Pinedale Lease Agreement was terminated on June 30, 2020, as discussed above.
(3) As of June 30, 2020, the Grand Isle Gathering System's percentage of leased properties increased as a result of the sale of the Pinedale LGS on June 30, 2020. For the six months ended June 30, 2020, the Grand Isle Gathering System's percentage of lease revenues is exclusive of the deferred rent receivable write-off discussed above.

The following table reflects the depreciation and amortization included in the accompanying Consolidated Statements of Operations associated with the Company's leases and leased properties:



	For the Three Months Ended				For the Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Depreciation Expense
GIGS	$	1,190,911	$	2,440,790	$	3,631,499	$	4,881,581
Pinedale	1,478,239		2,217,360		3,695,599		4,434,720
United Property Systems	9,831		9,831		19,662		19,455
Total Depreciation Expense	$	2,678,981	$	4,667,981	$	7,346,760	$	9,335,756
Amortization Expense - Deferred Lease Costs
GIGS	$	7,641	$	7,641	$	15,282	$	15,282
Pinedale	15,342		15,342		30,684		30,684
Total Amortization Expense - Deferred Lease Costs	$	22,983	$	22,983	$	45,966	$	45,966
ARO Accretion Expense
GIGS	$	116,514	$	110,993	$	228,685	$	221,985
Total ARO Accretion Expense	$	116,514	$	110,993	$	228,685	$	221,985

The following table reflects the deferred costs that are included in the accompanying Consolidated Balance Sheets associated with the Company's leased properties:



	June 30, 2020		December 31, 2019
Net Deferred Lease Costs
GIGS	$	183,473	$	198,755
Pinedale	—		488,981
Total Deferred Lease Costs, net	$	183,473	$	687,736

LESSEE - LEASED PROPERTIES

The Company's operating subsidiaries currently lease single-use office space ~~and equipment~~ with remaining lease terms of ~~less than~~approximately two years, some of which may include renewal options. These leases are classified as operating leases and immaterial to the consolidated financial statements. The Company recognizes lease expense in the Consolidated Statements of ~~Income~~Operations on a straight-line basis over the remaining lease term.



Table of Contents		Glossary of Defined Terms

4. TRANSPORTATION AND DISTRIBUTION REVENUE

The Company's contracts related to transportation and distribution revenue are primarily comprised of a mix of natural gas supply, transportation and distribution performance obligations, as well as limited performance obligations related to system maintenance and improvement. Based on the nature of the agreements, revenue for all but one of the Company's natural gas supply, transportation and distribution performance obligations is recognized on a right to invoice basis as the performance obligations are met, which represents what the Company expects to receive in consideration and is representative of value delivered to the customer. System maintenance and improvement contracts are specific and tailored to the customer's needs, have no alternative use and have an enforceable right to payment as the services are provided. Revenue is recognized on an input method, based on the actual cost of



~~Table of Contents~~		~~Glossary of Defined Terms~~

a service as a measure of the performance obligation satisfaction. Differences between amounts invoiced and revenue recognized under the input method are reflected as an asset or liability on the Consolidated Balance Sheets. ~~As discussed in Note 3 ("Leased Properties And Leases"), the~~The costs of system improvement projects are recognized as a financing arrangement in accordance with guidance in the lease standard while the margin is recognized in accordance with the revenue standard as discussed above.

The Company has a contract with Spire that has fixed pricing which varies over the contract term. For this specific contract, the transaction price has been allocated ratably over the contractual performance obligation. Based on a downward revision of the rate during the Company's long-term natural gas transportation contract with Spire, ASC 606 requires the Company to record the contractual transaction price, and therefore aggregate revenue, from the contract ratably over the term of the contract. Following the November 2018 rate decline, recognized performance obligations exceeded amounts invoiced and the contract liability began to decline at a rate of approximately $138 thousand per quarter and will continue to decline at the same rate through the end of the contract in October 2030. As of June 30, ~~2019,~~2020, the revenue allocated to the remaining performance obligation under this contract is approximately ~~$60.8~~$55.4 million.

The table below summarizes the Company's contract ~~asset and contract~~ liability ~~balances~~balance related to its transportation and distribution revenue contracts as of June 30, ~~2019:~~2020:



	Contract Liability⁽¹⁾
	June 30, 2020			December 31, 2019
Beginning Balance January 1	$	6,850,790		$	6,522,354
Unrecognized Performance Obligations	(10,222		)	887,916
Recognized Performance Obligations	(577,470		)	(559,480		)
Ending Balance	$	6,263,098		$	6,850,790
(1) The contract liability balance is included in unearned revenue in the Consolidated Balance Sheets.

Contract Asset⁽¹⁾

Contract Liability⁽²⁾
Beginning Balance January 1, 2019 $ 180,579
$ 6,522,354
Unrecognized Performance Obligations (231,916 ) 186,398
Recognized Performance Obligations 158,455
(275,592 )
Ending Balance June 30, 2019 $ 107,118
$ 6,433,160
(1) The contract asset balance is included in prepaid expenses and other assets in the Consolidated Balance Sheets.
(2) The contract liability balance is included in unearned revenue in the Consolidated Balance Sheets.
The Company's contract asset balance was $33 thousand and $206 thousand as of June 30, 2020 and December 31, 2019, respectively. The contract asset balance is included in prepaid expenses and other assets in the Consolidated Balance Sheets.

The following is a breakout of the Company's transportation and distribution revenue for the three and six months ended June 30, ~~2019~~2020 and ~~2018:~~2019:



	For the Three Months Ended				For the Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Natural gas transportation contracts	68.0	%	57.6	%	68.4	%	59.5	%
Natural gas distribution contracts	27.2	%	35.0	%	25.0	%	34.9	%

For the Three Months Ended For the Six Months Ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Natural gas transportation contracts 57.6 % 66.1 % 59.5 % 66.3 %
Natural gas distribution contracts 35.0 % 27.2 % 34.9 % 26.8 %

5. FINANCING NOTES RECEIVABLE

Financing notes receivable are presented at face value plus accrued interest receivable and deferred loan origination costs, and net of related direct loan origination income. Each quarter the Company reviews its financing notes receivable to determine if the balances are realizable based on factors affecting the collectability of those balances. Factors may include credit quality, timeliness of required periodic payments, past due status, and management discussions with obligors. The Company evaluates the collectability of both interest and principal of each of its loans to determine if an allowance is needed. An allowance will be recorded when, based on current information and events, the Company determines it is probable that it will be unable to collect all amounts due according to the existing contractual terms.

Four Wood Financing Note Receivable

On December 12, 2018, Four Wood Corridor granted SWD Enterprises, LLC, the previous debtor, approval to sell the assets securing the SWD loans to Compass SWD, LLC ("Compass SWD") in exchange for Compass SWD executing a new loan agreement with Four Wood Corridor for $1.3 million (the "Compass REIT Loan") and approximately $237 thousand in cash consideration, net of costs facilitating the close. The Compass REIT Loan was secured by real and personal property that provide saltwater disposal services for the oil and natural gas industry. The Compass REIT Loan was scheduled to mature on June 15, 2019 with interest accruing on the outstanding principal at an annual rate of LIBOR plus 6 percent. As a result of the transaction, SWD was released from the terms of their loans.

. On June 12, 2019, Four Wood Corridor entered into an



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amended and restated Compass REIT Loan. The amended note ~~has~~had a two-year term maturing on June 30, 2021 with monthly principal payments of approximately $11 thousand and interest accruing on the outstanding principal at an annual rate of 8.5 percent. The amended and restated Compass REIT Loan is secured by real and personal property that provides saltwater disposal services for the oil and natural gas industry and pledged ownership interests of Compass SWD members.

On May 22, 2020, the terms of the Compass REIT Loan were amended (i) to extend the maturity date from June 30, 2021 to November 30, 2024 and (ii) to reduce payments to interest only through December 31, 2020. Additionally, the amended Compass REIT Loan will continue to accrue interest at an annual rate of 8.5 percent through May 31, 2021. Subsequent to May 31, 2021 interest will accrue at an annual rate of 12.0 percent. Monthly principal payments of approximately $11 thousand will resume on January 1, 2021 and increase annually beginning on June 30, 2021 through the maturity date. As of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Compass REIT Loan was valued at ~~$1.3~~$1.2 million.



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6.INCOME TAXES

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting and tax purposes. Components of the Company's deferred tax assets and liabilities as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, are as follows:



Deferred Tax Assets and Liabilities
	June 30, 2020			December 31, 2019
Deferred Tax Assets:
Deferred contract revenue	$	1,458,883		$	1,529,473
Net operating loss carryforwards	6,138,726			5,622,052
Accrued liabilities	—			424,604
Capital loss carryforward	92,418			104,595
Other	6,184			6,184
Sub-total	$	7,696,211		$	7,686,908
Valuation allowance	(92,418		)	(104,595		)
Sub-total	$	7,603,793		$	7,582,313
Deferred Tax Liabilities:
Cost recovery of leased and fixed assets	$	(3,264,463	)	$	(2,953,319	)
Other	(44,294		)	(35,433		)
Sub-total	$	(3,308,757	)	$	(2,988,752	)
Total net deferred tax asset	$	4,295,036		$	4,593,561

Deferred Tax Assets and Liabilities
June 30, 2019 December 31, 2018
Deferred Tax Assets:
Deferred contract revenue $ 1,509,217
$ 1,691,899
Net operating loss carryforwards 4,900,518
5,424,671
Loan loss provision —
263,508
Basis reduction of investment in partnerships 332,660
—
Other 724,745
95,695
Sub-total $ 7,467,140
$ 7,475,773
Deferred Tax Liabilities:
Cost recovery of leased and fixed assets $ (2,648,651 ) $ (2,508,547 )
Other (26,576 ) (19,023 )
Sub-total $ (2,675,227 ) $ (2,527,570 )
Total net deferred tax asset $ 4,791,913
$ 4,948,203

As of June 30, ~~2019,~~2020, the total deferred tax assets and liabilities presented above relate to the Company's TRSs. The Company recognizes the tax benefits of uncertain tax positions only when the position is "more likely than not" to be sustained upon examination by the tax authorities based on the technical merits of the tax position. The Company's policy is to record interest and penalties on uncertain tax positions as part of tax expense. Tax years subsequent to the year ended December 31, ~~2014~~2015 remain open to examination by federal and state tax authorities.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating loss ("NOL") carryovers and carrybacks to offset 100 percent of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs originating in 2018, 2019 and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. Certain of the Company’s TRSs have NOLs totaling approximately $1.2 million that are eligible for carryback under the CARES Act. The benefit of these carrybacks has been recorded as an increase to income taxes receivable and a reduction to deferred tax assets. Certain NOLs which were initially measured at the current corporate income tax rate of 21 percent are being carried back to offset taxable income that was taxed at a pre-Tax Cuts and Jobs Act of 2017 rate of 34 percent. The benefit received from the rate differential is reflected in the income tax provision for the three and six months ended June 30, 2020.

For the year ended December 31, 2019, the Company generated a capital loss carryforward resulting from the liquidation of Lightfoot. The capital loss decreased upon receipt of the final 2019 K-1's in the first quarter of 2020. The amount of the carryforward for tax purposes was approximately $440 thousand and $500 thousand as of June 30, 2020 and December 31, 2019, respectively, and if not utilized, this carryforward will expire as of December 31, 2024. Management assessed the available evidence and determined that it is more likely than not that the capital loss carryforward will not be utilized prior to expiration. Due to the uncertainty of realizing this deferred tax asset, a valuation allowance of $92 thousand and $105 thousand was recorded equal to the amount of the tax benefit of this carryforward at June 30, 2020 and December 31, 2019, respectively. In the future, if the



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Company concludes, based on existence of sufficient evidence, that it should realize more or less of its deferred tax assets, the valuation allowance will be adjusted accordingly in the period such conclusion is made.

Total income tax expense (benefit) differs from the amount computed by applying the federal statutory income tax rate of 21 percent for the three and six months ended June 30, ~~2019~~2020 and ~~2018~~2019 to income (loss) from operations and other income and expense for the periods presented, as follows:



Income Tax Expense (Benefit)
	For the Three Months Ended						For the Six Months Ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Application of statutory income tax rate	$	(28,876,735	)	$	2,078,209		$	(62,910,824	)	$	2,984,102
State income taxes, net of federal tax expense	(9,298		)	7,538			25,211			523,564
Federal Tax Attributable to Income of Real Estate Investment Trust	28,811,858			(2,025,403		)	62,946,202			(2,941,388		)
Other	348			2,355			(159,138		)	(56,244		)
Total income tax expense (benefit)	$	(73,827	)	$	62,699		$	(98,549	)	$	510,034

Income Tax Expense (Benefit)
For the Three Months Ended For the Six Months Ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Application of statutory income tax rate $ 2,078,209
$ 1,511,160
$ 2,984,102
$ 3,036,365
State income taxes, net of federal tax expense (benefit) 7,538
(121,069 ) 523,564
(265,019 )
Federal Tax Attributable to Income of Real Estate Investment Trust (2,025,403 ) (2,004,940 ) (2,941,388 ) (3,819,436 )
Other 2,355
—
(56,244 ) (11,585 )
Total income tax expense (benefit) $ 62,699
$ (614,849 ) $ 510,034
$ (1,059,675 )

The components of income tax expense (benefit) include the following for the periods presented:



Components of Income Tax Expense (Benefit)
	For the Three Months Ended					For the Six Months Ended
	June 30, 2020			June 30, 2019		June 30, 2020			June 30, 2019
Current tax expense (benefit)
Federal	$	(2,431	)	$	—	$	(412,074	)	$	216,093
State (net of federal tax expense (benefit))	—			—		15,000			137,651
Total current tax expense (benefit)	$	(2,431	)	$	—	$	(397,074	)	$	353,744
Deferred tax expense (benefit)
Federal	$	(62,098	)	$	55,161	$	288,314		$	(229,623	)
State (net of federal tax expense (benefit))	(9,298		)	7,538		10,211			385,913
Total deferred tax expense (benefit)	$	(71,396	)	$	62,699	$	298,525		$	156,290
Total income tax expense (benefit), net	$	(73,827	)	$	62,699	$	(98,549	)	$	510,034

Components of Income Tax Expense (Benefit)
For the Three Months Ended For the Six Months Ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Current tax expense (benefit)
Federal $ —
$ (8,537 ) $ 216,093
$ (36,676 )
State (net of federal tax expense (benefit)) —
(2,248 ) 137,651
(9,658 )
Total current tax expense (benefit) $ —
$ (10,785 ) $ 353,744
$ (46,334 )
Deferred tax expense (benefit)
Federal $ 55,161
$ (485,243 ) $ (229,623 ) $ (757,981 )
State (net of federal tax expense (benefit)) 7,538
(118,821 ) 385,913
(255,360 )
Total deferred tax expense (benefit) $ 62,699
$ (604,064 ) $ 156,290
$ (1,013,341 )
Total income tax expense (benefit), net $ 62,699
$ (614,849 ) $ 510,034
$ (1,059,675 )



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7.PROPERTY AND EQUIPMENT

Property and equipment consist of the following:



Property and Equipment
	June 30, 2020			December 31, 2019
Land	$	605,070		$	605,070
Natural gas pipeline	124,759,339			124,614,696
Vehicles and trailers	695,502			671,962
Office equipment and computers	268,559			268,559
Gross property and equipment	$	126,328,470		$	126,160,287
Less: accumulated depreciation	(20,970,190		)	(19,304,610		)
Net property and equipment	$	105,358,280		$	106,855,677

Property and Equipment
June 30, 2019 December 31, 2018
Land $ 580,000
$ 580,000
Natural gas pipeline 124,313,519
124,306,175
Vehicles and trailers 690,497
696,164
Office equipment and computers 268,559
268,559
Gross property and equipment $ 125,852,575
$ 125,850,898
Less: accumulated depreciation (17,655,985 ) (15,969,346 )
Net property and equipment $ 108,196,590
$ 109,881,552

Depreciation expense was ~~$843~~$844 thousand and $1.7 million for ~~each of~~ the three and six months ended June 30, ~~2019~~2020, and ~~2018, respectively.~~$843 thousand and $1.7 million for the three and six months ended June 30, 2019.

8.MANAGEMENT AGREEMENT

The Company pays its manager, Corridor, pursuant to a Management Agreement as described in the ~~2018~~2019 CorEnergy 10-K. During the three months ended March ~~31, 2019,~~31,2020, the Manager voluntarily recommended, and the Company agreed, that the Manager would waive ~~$45 thousand~~all of the ~~total $160~~$171 thousand incentive fee that would otherwise be payable under the provisions of the Management Agreement with respect to dividends paid on the Company's common stock.

During the three months ended June 30, ~~2019, the Manager voluntarily recommended, and~~2020, the Company ~~agreed, that~~did 0t earn the ~~Manager would waive $135 thousand of the total $160 thousand~~ incentive fee that would otherwise be payable under the provisions of the Management Agreement with respect to dividends paid on the Company's common stock.



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In reviewing the application of the quarterly management fee provisions of the Management Agreement to the net proceeds received from the offering of 5.875% Convertible Notes, which closed on August 12, 2019, the Manager waived any incremental management fee due as of the end of the first and second quarters of 2020 based on such proceeds (other than the cash portion of such proceeds that was utilized in connection with the exchange of the Company’s 7.00% Convertible Notes).

Further, in reviewing the application of the quarterly management fee provisions of the Management Agreement to the sale of the Pinedale LGS, termination of the Pinedale Lease Agreement and settlement of the Amended Pinedale Term Credit Facility, which occurred on June 30, 2020 (collectively, the "Pinedale Transaction"), the Manager and the Company agreed that the incremental management fee attributable to the assets involved in the Pinedale Transaction should be paid for the second quarter of 2020 as such assets were under management for all but the last day of the period.

Fees incurred under the Management Agreement for the three and six months ended June 30, ~~2019~~2020 were $1.6 million and $3.2 million compared to $1.7 million and $3.5 ~~million, respectively, compared to $1.9 million and $3.8~~ million for the three and six months ended June 30, ~~2018, respectively.~~2019. Fees incurred under the Management Agreement are reported in the general and administrative line item on the Consolidated Statements of ~~Income.~~Operations.

The Company pays its administrator, Corridor, pursuant to an Administrative Agreement. Fees incurred under the Administrative Agreement for the three and six months ended June 30, ~~2019~~2020 were $64 thousand and $128 thousand compared to $68 thousand and $136 ~~thousand, respectively, compared to $70 thousand and $139~~ thousand for the three and six months ended June 30, ~~2018, respectively.~~2019. Fees incurred under the Administrative Agreement are reported in the general and administrative line item on the Consolidated Statements of ~~Income.~~Operations.

9. FAIR VALUE

~~As a result of the sale or disposition of the Company's equity securities in 2018, there are no assets or liabilities measured at fair value on a recurring basis as of June 30, 2019.~~

Valuation Techniques and Unobservable Inputs

The following section describes the valuation methodologies used by the Company for estimating fair value for financial instruments not recorded at fair value, but fair value is included for disclosure purposes only, as required under disclosure guidance related to the fair value of financial instruments.

Cash and Cash Equivalents — The carrying value of cash, amounts due from banks, federal funds sold and securities purchased under resale agreements approximates fair value.

Financing Notes Receivable — The financing notes receivable are valued on a non-recurring basis. The financing notes receivable are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Financing notes with carrying values that are not expected to be recovered through future cash flows are written-down to their estimated net realizable value. Estimates of realizable value are determined based on unobservable inputs, including estimates of future cash flow generation and value of collateral underlying the notes.

Secured Credit Facilities — The fair value of the Company's long-term variable-rate and fixed-rate debt under its secured credit facilities approximates carrying value.



~~Table of Contents~~		~~Glossary of Defined Terms~~

Unsecured Convertible Senior Notes — The fair value of the unsecured convertible senior notes is estimated using quoted market ~~prices.~~prices from either active (Level 1) or generally active (Level 2) markets.



Carrying and Fair Value Amounts
	Level within fair value hierarchy	June 30, 2020				December 31, 2019
	Level within fair value hierarchy	Carrying Amount ⁽¹⁾		Fair Value		Carrying Amount ⁽¹⁾		Fair Value
Financial Assets:
Cash and cash equivalents	Level 1	$	113,713,646	$	113,713,646	$	120,863,643	$	120,863,643
Financing notes receivable (Note 5)	Level 3	1,196,338		1,196,338		1,235,000		1,235,000
Financial Liabilities:
Secured credit facilities	Level 2	$	—	$	—	$	33,785,930	$	33,785,930
7.00% Unsecured Convertible Senior Notes	Level 1	—		—		2,084,178		2,820,832
5.875% Unsecured Convertible Senior Notes	Level 2	114,679,280		82,141,551		116,239,318		122,508,000
(1) The carrying value of debt balances are presented net of unamortized original issuance discount and debt issuance costs.



Table of Contents		Glossary of Defined Terms

Carrying and Fair Value Amounts
Level within fair value hierarchy June 30, 2019 December 31, 2018

Carrying
Amount ⁽¹⁾
Fair Value
Carrying
Amount ⁽¹⁾
Fair Value
Financial Assets:
Cash and cash equivalents Level 1 $ 58,807,431
$ 58,807,431
$ 69,287,177
$ 69,287,177
Financing notes receivable (Note 5) Level 3 $ 1,309,217
$ 1,309,217
$ 1,300,000
$ 1,300,000
Financial Liabilities:
Secured Credit Facilities Level 2 $ 35,523,520
$ 35,523,520
$ 37,261,109
$ 37,261,109
Unsecured convertible senior notes Level 1 $ 69,113,639
$ 84,045,562
$ 112,777,271
$ 119,378,982
(1) The carrying value of debt balances are presented net of unamortized original issuance discount and debt issuance costs.

10. DEBT

The following is a summary of the Company's debt facilities and balances as of June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:



	Total Commitment or Original Principal		Quarterly Principal Payments			June 30, 2020				December 31, 2019
	Total Commitment or Original Principal		Quarterly Principal Payments		Maturity Date	Amount Outstanding		Interest Rate		Amount Outstanding		Interest Rate
CorEnergy Secured Credit Facility:
CorEnergy Revolver	$	160,000,000	$	—	7/28/2022	$	—	2.91	%	$	—	4.51	%
MoGas Revolver	1,000,000		—		7/28/2022	—		2.91	%	—		4.51	%
Omega Line of Credit	1,500,000		—		10/30/2020	—		4.16	%	—		5.76	%
Pinedale Secured Credit Facility:
Amended Pinedale Term Credit Facility ⁽¹⁾	41,000,000		882,000		12/29/2022	—		—	%	33,944,000		6.50	%
7.00% Unsecured Convertible Senior Notes	115,000,000		—		6/15/2020	—		7.00	%	2,092,000		7.00	%
5.875% Unsecured Convertible Senior Notes	120,000,000		—		8/15/2025	118,050,000		5.875	%	120,000,000		5.875	%
Total Debt						$	118,050,000			$	156,036,000
Less:
Unamortized deferred financing costs⁽²⁾						$	426,767			$	635,351
Unamortized discount on 7.00% Convertible Senior Notes						—				6,681
Unamortized discount on 5.875% Convertible Senior Notes						2,943,953				3,284,542
Total Debt, net of deferred financing costs						$	114,679,280			$	152,109,426
Debt due within one year						$	—			$	5,612,178
(1) The Amended Pinedale Term Credit Facility was settled during the second quarter of 2020 in connection with the sale of the Pinedale LGS asset. Refer to the "Amended Pinedale Term Credit Facility" section below.
(2) Unamortized deferred financing costs related to the Company's revolving credit facilities are included in Deferred Costs in the Assets section of the Consolidated Balance Sheets. Refer to the "Deferred Financing Costs" paragraph below.

Total Commitment
or Original Principal
Quarterly Principal Payments June 30, 2019 December 31, 2018

Maturity
Date
Amount Outstanding Interest
Rate Amount Outstanding Interest
Rate
CorEnergy Secured Credit Facility:
CorEnergy Revolver $ 160,000,000
$ —
7/28/2022 $ —
5.15 % $ —
5.25 %
MoGas Revolver 1,000,000
—
7/28/2022 —
5.15 % —
5.25 %
Omega Line of Credit 1,500,000
—
7/31/2020 —
6.40 % —
6.50 %
Pinedale Secured Credit Facility:
Amended Pinedale Term Credit Facility 41,000,000
882,000
12/29/2022 35,708,000
6.50 % 37,472,000
6.50 %
7.00% Unsecured Convertible Senior Notes 115,000,000
—
6/15/2020 69,592,000
7.00 % 113,958,000
7.00 %
Total Debt $ 105,300,000
$ 151,430,000

Less:
Unamortized deferred financing costs ⁽¹⁾
$ 213,807
$ 283,278

Unamortized discount on 7.00% Convertible Senior Notes 449,034
1,108,342

Total Debt, net of deferred financing costs $ 104,637,159
$ 150,038,380

Debt due within one year $ 72,641,639
$ 3,528,000

(1) Unamortized deferred financing costs related to the Company's revolving credit facilities are included in Deferred Costs in the Assets section of the Consolidated Balance Sheets. Refer to the "Deferred Financing Costs" paragraph below.

CorEnergy Credit Facility

On July 28, 2017, the Company entered into an amendment and restatement of the CorEnergy Credit Facility with Regions Bank, ~~(as~~as lender and administrative agent for other participating ~~lenders)~~lenders (collectively, with the Agent, the "Lenders"). The amended facility provides for borrowing commitments of up to $161.0 million, consisting of (i) $160.0 million on the CorEnergy Revolver, subject to borrowing base limitations, and (ii) $1.0 million on the MoGas Revolver.

The amended facility has a 5-year term maturing on July 28, 2022, and provides for a springing maturity on February 28, 2020, and thereafter, if the Company fails to meet certain liquidity requirements from the springing maturity date through the maturity of the Company's Convertible Notes on June 15, 2020. This springing maturity would be triggered on the first date on or after February 28, 2020 that both (i) the outstanding principal amount of the Convertible Notes exceeds $28,750,000 and (ii) the Company's unrestricted cash liquidity (including, for purposes of this calculation, the undrawn portion of the Borrowing Base that is then available for borrowing under the CorEnergy Credit Facility) is less than the sum of (x) the outstanding principal amount of the Convertible Notes plus (y) $5,000,000.

2022. Borrowings under the credit facility will generally bear interest on the outstanding principal amount using a LIBOR pricing grid that is expected to equal a LIBOR rate plus an applicable margin of 2.75 percent to 3.75 percent, based on the Company's senior secured recourse leverage ratio. Total availability is subject to a borrowing base. The CorEnergy Credit Facility contains, among other restrictions, certain financial covenants including the maintenance of certain financial ratios, as well as default and cross-default provisions customary for transactions of this nature (with applicable customary grace periods).

Effective May 14, 2020, the Company entered into a Limited Consent with the Lenders under the CorEnergy Revolver that is part of the CorEnergy Credit Facility, pursuant to which the Lenders agreed to extend the required date for delivery of the Company's financial statements for the fiscal quarter ended March 31, 2020 to coordinate with the Company's previously announced extension of the filing date for its first quarter Form 10-Q pursuant to applicable SEC relief (which filing and delivery occurred within the permitted extension period). The Limited Consent also documented notice previously provided by the Company to the Agent that certain events of default occurred under the Company’s lease for its GIGS asset, as a result of the tenant under the Grand Isle Lease Agreement having failed to pay the rent due for April and May 2020. The Limited Consent is subject to the Company’s continued compliance with all of the other terms of the CorEnergy Revolver, and includes the Company’s agreement with the Lenders that the borrowing base value of the GIGS asset for purposes of the CorEnergy Revolver shall be zero, effective as of the Company’s March 31, 2020 balance sheet date. The Company also provided written notification to the Lenders of the EGC Tenant's nonpayment of rent in June 2020.

As of June 30, ~~2019,~~2020, the Company was in compliance with all covenants of the CorEnergy Credit ~~Facility.~~



~~Table of Contents~~		~~Glossary of Defined Terms~~

~~As of June 30, 2019,~~Facility, and the Company had 0 borrowings outstanding. The Company had approximately ~~$123.2~~$55.0 million and $1.0 million of availability under the CorEnergy Revolver and MoGas Revolver, respectively.



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Amended Pinedale Term Credit Facility

On December 29, 2017, Pinedale LP entered into the Amended Pinedale Term Credit Facility with Prudential and a group of lenders affiliated with Prudential as the sole lenders and Prudential serving as administrative agent. Under the terms of the Amended Pinedale Term Credit Facility, Pinedale LP was provided with a 5-year $41.0 million term loan facility, bearing interest at a fixed rate of 6.5 percent, which ~~matures~~was scheduled to mature on December 29, 2022. Principal payments of $294 thousand, plus accrued interest, ~~are~~were payable monthly.

Outstanding balances under the facility ~~are~~were secured by the Pinedale LGS assets. ~~The~~

As previously discussed in Note 3 ("Leased Properties And Leases"), UPL's bankruptcy filing constituted a default under the terms of the Pinedale Lease Agreement with Pinedale LP. Such default under the Pinedale Lease Agreement was an event of default under the Amended Pinedale Term Credit Facility, ~~contains, among~~which was secured by the Pinedale LGS. Among other ~~restrictions, specific financial covenants including~~things, an event of default could give rise to a Cash Control Period (as defined in the ~~maintenance~~Amended Pinedale Term Credit Facility), which impacted Pinedale LP's ability to make distributions to the Company. During such a Cash Control Period, which was triggered May 14, 2020, by the bankruptcy filing of ~~certain financial coverage ratios~~Ultra Wyoming and ~~a minimum net worth requirement which, along with other provisions of the credit facility, limit cash dividends and loans~~its parent guarantor, UPL, distributions by Pinedale LP to the ~~Company. At June 30, 2019,~~Company were permitted to the extent required for the Company to maintain its REIT qualification, so long as Pinedale LP's obligations under the Amended Pinedale Term Credit Facility were not accelerated following an Event of Default (as defined in the Amended Pinedale Term Credit Facility).

Effective May 8, 2020, Pinedale LP entered into a Standstill Agreement with Prudential. The Standstill Agreement anticipated Pinedale LP’s notification to Prudential of two Events of Default under the Amended Pinedale Term Credit Facility (the “Specified Events of Default”) as a result of the occurrence of either (i) any bankruptcy filing by UPL or Ultra Wyoming and (ii) any resulting impact on Pinedale LP’s net worth covenant under the Amended Pinedale Term Credit Facility due to any accounting charge of assets of Pinedale LP triggered by any such bankruptcy filing of Ultra Wyoming. Under the Standstill Agreement, Prudential agreed to forbear through September 1, 2020, or the earlier occurrence of a separate Event of Default under the Amended Pinedale Term Credit Facility (the “Standstill Period”) from exercising any rights they may have had to accelerate and declare the outstanding balance under the credit facility immediately due and payable as a result of the occurrence of either of the Specified Events of Default, provided that there were ~~$134.4 million~~no other Events of Default and Pinedale LP ~~was in compliance with~~continued to meet its obligations under all of the ~~financial covenants~~other terms of the Amended Pinedale Term Credit Facility. The Standstill Agreement also required that Pinedale LP not make any distributions to the Company during the Standstill Period and that interest was to accrue and be payable from the effective date of such agreement at the Default Rate of interest provided for in the Amended Pinedale Term Credit Facility, which increased the effective interest rate to 8.50 percent.

As previously discussed in Note 3 ("Leased Properties And Leases"), Pinedale LP and the Company entered into the Release Agreement with Prudential related to the Amended Pinedale Term Credit Facility, which had an outstanding balance of approximately $32.0 million, net of $132 thousand of deferred debt issuance costs. Pursuant to the Release Agreement, the $18.0 million sale proceeds were provided by Ultra Wyoming directly to Prudential at closing of the Pinedale LGS sale transaction on June 30, 2020. The Company also provided all cash available at Pinedale LP of approximately $3.3 million (including $198 thousand for accrued interest) to Prudential in exchange for (i) the release of all liens on the Pinedale LGS and the other assets of Pinedale LP, (ii) the termination of the Company’s pledge of equity interests of the general partner of Pinedale LP, (iii) the termination and satisfaction in full of the obligations of Pinedale LP under the Amended Pinedale Term Credit Facility and (iv) a general release of any other obligations of Pinedale LP and/or the Company and their respective directors, officers, employees or agents pertaining to the Amended Pinedale Term Credit Facility. The Release Agreement resulted in a gain on extinguishment of debt of approximately $11.0 million for the three and six month ended June 30, 2020.

Deferred Financing Costs

A summary of deferred financing cost amortization expenses for the three and six months ended June 30, ~~2019~~2020 and ~~2018~~2019 is as follows:



	For the Three Months Ended				For the Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
CorEnergy Credit Facility	$	143,635	$	143,635	$	287,270	$	287,271
Amended Pinedale Term Credit Facility	13,205		13,205		26,410		26,411
Total Deferred Debt Cost Amortization Expense ⁽¹⁾⁽²⁾	$	156,840	$	156,840	$	313,680	$	313,682
(1) Amortization of deferred debt issuance costs is included in interest expense in the Consolidated Statements of Operations.
(2) For the amount of deferred debt cost amortization relating to the convertible notes included in the Consolidated Statements of Operations, refer to the Convertible Note Interest Expense table below.



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For the Three Months Ended For the Six Months Ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
CorEnergy Credit Facility $ 143,635
$ 143,635
$ 287,271
$ 287,270
Amended Pinedale Term Credit Facility 13,205
13,205
26,411
26,317
Total Deferred Debt Cost Amortization Expense ⁽¹⁾⁽²⁾
$ 156,840
$ 156,840
$ 313,682
$ 313,587
(1) Amortization of deferred debt issuance costs is included in interest expense in the Consolidated Statements of Income.
(2) For the amount of deferred debt cost amortization relating to the Convertible Notes included in the Consolidated Statements of Income, refer to the Convertible Note Interest Expense table below.

CorEnergy Credit Facilities

Prior to the July 28, 2017 credit facility amendment and restatement, previously existing deferred financing costs related to the CorEnergy Credit Facility were approximately $1.8 million, of which approximately $1.6 million continue to be deferred and amortized under the amended and restated facility. Additionally, the Company incurred approximately $1.3 million in new debt issuance costs which have been deferred and are being amortized over the term of the new facility. Total deferred financing costs of $2.9 million are being amortized on a straight-line basis over the 5-year term of the amended and restated CorEnergy Credit Facility.

~~Amended Pinedale Term Credit Facility~~

In connection with entering into the Amended Pinedale Term Credit Facility, Pinedale LP incurred approximately $367 thousand in new debt issuance costs, of which $264 thousand were deferred and are being amortized on a straight-line basis over the 5-year term of the Amended Pinedale Term Credit Facility.

~~Contractual Payments~~

~~The remaining contractual principal payments as of June 30, 2019 under the Amended Pinedale Term Credit Facility are as follows:~~

Year Amended Pinedale Term Credit Facility
2019 $ 1,764,000
2020 3,528,000
2021 3,528,000
2022 26,888,000
2023 —
Thereafter —
Total Remaining Contractual Payments $ 35,708,000



~~Table of Contents~~		~~Glossary of Defined Terms~~

Convertible Debt

7.00% Convertible Notes

On June 29, 2015, the Company completed a public offering of $115.0 million aggregate principal amount of 7.00% Convertible Senior Notes Due 2020 (the ~~"Convertible~~"7.00% Convertible Notes"). The 7.00% Convertible Notes ~~mature on~~had a maturity date of June 15, 2020 and ~~bear~~bore interest at a rate of 7.00 percent per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2015. ~~As of December 31, 2018, the Company had $114.0 million~~The 7.00% Convertible Notes ~~outstanding following certain repurchases and conversions. The conversion~~were convertible into common stock at a rate ~~for the Convertible Notes is~~of 30.3030 shares of common stock per $1,000 principal amount of 7.00% Convertible Notes, equivalent to a conversion price of $33.00 per share of common stock.

On January 16, 2019, the Company agreed with three holders of its 7.00% Convertible Notes, pursuant to privately negotiated agreements, to exchange $43.8 million face amount of such notes for an aggregate of 837,040 shares of the Company's common stock, par value $0.001 per share, plus aggregate cash consideration of $19.8 million, including $315 thousand of interest expense. The Company's agent and lenders under the CorEnergy Credit Facility provided a consent for the convertible note exchange. The Company recorded a loss on extinguishment of debt of approximately $5.0 million in the Consolidated Statements of ~~Income~~Operations for the ~~six months ended June 30,~~first quarter of 2019. The loss on extinguishment of debt included the write-off of a portion of the underwriter's discount and deferred debt costs of $409 thousand and $27 thousand, respectively.

On August 15, 2019, the Company used a portion of the net proceeds from the offering of the 5.875% Convertible Notes discussed further below, together with shares of its common stock, to exchange $63.9 million face amount of its 7.00% Convertible Notes pursuant to privately negotiated agreements with three holders. The ~~remaining~~total cash and stock consideration for the exchange was valued at approximately $93.2 million. This included an aggregate of 703,432 shares of common stock plus cash consideration of approximately $60.2 million, including $733 thousand of interest expense. The Company recorded a loss on extinguishment of debt of approximately $28.9 million in the Consolidated Statements of Operations for the third quarter of 2019. The loss on extinguishment of debt included the write-off of a portion of the underwriter's discount and deferred debt costs ~~continue to be amortized over~~of $360 thousand and $24 thousand, respectively. Collectively, for the ~~remaining term~~two exchange transactions described above, the Company recorded a loss on extinguishment of debt of $34.0 million for the ~~Convertible Notes.~~year ended December 31, 2019.

~~During~~Additionally, during the ~~three~~six months ended June 30, ~~2019,~~2020, certain holders elected to convert ~~$584~~(i) $416 thousand of 7.00% Convertible Notes for approximately ~~17,690~~12,605 shares of ~~CorEnergy~~ common stock. ~~Subsequent~~On June 12, 2020, the Company paid $1.7 million in aggregate principal and $59 thousand in accrued interest upon maturity of the 7.00% Convertible Notes to ~~June 30,~~extinguish the remaining debt outstanding.

5.875% Convertible Notes

On August 12, 2019, the Company completed a private placement offering of $120.0 million aggregate principal amount of 5.875% Convertible Senior Notes due 2025 (the "5.875% Convertible Notes") to the initial purchasers of such notes for cash in reliance on an ~~additional $70 thousand~~exemption from registration provided by Section 4(a)(2) of the Securities Act. The initial purchasers then resold the 5.875% Convertible Notes for cash equal to 100 percent of the aggregate principal amount thereof to qualified institutional buyers, as defined in Rule 144A under the Securities Act, in reliance on an exemption from registration provided by Rule 144A. The 5.875% Convertible Notes mature on August 15, 2025 and bear interest at a rate of 5.875 percent per annum, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2020.

The 5.875% Convertible Notes were ~~converted~~issued with an initial purchasers' discount of $3.5 million, which is being amortized over the life of the notes. The Company also incurred approximately $508 thousand of deferred debt costs in issuing the 5.875% Convertible Notes, which are also being amortized over the life of the notes.

Holders may convert all or any portion of their 5.875% Convertible Notes into shares of the Company's common stock at their option at any time prior to the close of business on the business day immediately preceding the maturity date. The initial conversion rate for the 5.875% Convertible Notes is 20.0 shares of common stock per $1,000 principal amount of the 5.875% Convertible



Table of Contents		Glossary of Defined Terms

Notes, equivalent to an initial conversion price of $50.00 per share of the Company's common stock. Such conversion rate will be subject to adjustment in certain events as specified in the Indenture.

The Indenture for the 5.875% Convertible Notes specifies events of default, including default by the Company or any of its subsidiaries with respect to any debt agreements under which there may be outstanding, or by which there may be secured or evidenced, any debt in excess of $25.0 million in the aggregate of the Company and/or any such subsidiary, resulting in such indebtedness becoming or being declared due and payable prior to its stated maturity.

On April 29, 2020, the Company repurchased approximately $2.0 million face amount of its 5.875% Convertible Notes for approximately ~~2,121 shares~~$1.3 million, including $24 thousand of ~~CorEnergy common stock.~~accrued interest. The repurchase resulted in a gain on extinguishment of debt of $576 thousand for the three and six months ended June 30, 2020. Subsequent to the transaction, the Company has $118.1 million aggregate principal amount of 5.875% Convertible Notes outstanding.

Convertible Note Interest Expense

The following is a summary of the impact of ~~Convertible Notes~~convertible notes on interest expense for the three and six months ended June 30, ~~2019~~2020 and ~~2018:~~2019:



Convertible Note Interest Expense
	For the Three Months Ended				For the Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
7.00% Convertible Notes:
Interest Expense	$	24,116	$	1,226,580	$	55,331	$	2,633,437
Discount Amortization	3,036		117,139		6,681		250,049
Deferred Debt Issuance Amortization	519		7,650		1,141		16,331
Total 7.00% Convertible Notes	$	27,671	$	1,351,369	$	63,153	$	2,899,817

5.875% Convertible Notes:
Interest Expense	$	1,742,770	$	—	$	3,505,270	$	—
Discount Amortization	144,345		—		290,325		—
Deferred Debt Issuance Amortization	20,925		—		42,087		—
Total 5.875% Convertible Notes	$	1,908,040	$	—	$	3,837,682	$	—
Total Convertible Note Interest Expense	$	1,935,711	$	1,351,369	$	3,900,835	$	2,899,817

Convertible Note Interest Expense
For the Three Months Ended For the Six Months Ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
7.00% Convertible Notes $ 1,226,580
$ 1,995,000
$ 2,633,437
$ 3,990,000
Discount Amortization 117,139
184,728
250,049
369,456
Deferred Debt Issuance Amortization 7,650
12,069
16,331
24,138
Total Convertible Note Interest Expense $ 1,351,369
$ 2,191,797
$ 2,899,817
$ 4,383,594

~~The Convertible Notes were initially issued with an underwriters' discount of $3.7 million, a portion of which is being amortized over the life of the Convertible Notes as discussed above.~~ Including the impact of the convertible debt discount and related deferred debt issuance costs, (i) the effective interest rate on the 7.00% Convertible Notes is approximately 7.9 percent for each of the three and six months ended June 30, 2020 and 7.7 percent for each of the three and six months ended June 30, 2019, respectively and ~~2018, respectively.~~(ii) the effective interest rate on the 5.875% Convertible Notes is approximately 6.4 percent for each of the three and six months ended June 30, 2020.



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Debt Covenant Considerations

In accordance with GAAP, when preparing financial statements for each annual and interim reporting period, management evaluates whether there are conditions or events that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In making its assessment, management considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows and conditional and unconditional obligations due over the next twelve months. As discussed in this footnote, the Company was in compliance with its debt covenants under the CorEnergy Credit Facility as of June 30, 2020.

The Company has considered the projected impact of COVID-19 and the significant disruptions and volatility in the global energy markets on the ability of its EGC Tenant to pay rent, which represents a significant portion of the Company's lease revenues and operating cash flows. Based on its analysis of future compliance with its financial covenants, management has determined that the Company may violate certain financial covenants under the CorEnergy Credit Facility within the next twelve months if covenant waivers are not obtained. If the Company were to violate one or more financial covenants, the lenders could declare the Company in default and could accelerate the amounts due under a portion or all of the Company’s outstanding debt. Further, a default under one debt agreement could trigger cross-default provisions within certain of the Company's other debt agreements. While these conditions raise substantial doubt about our ability to continue as a going concern within one year after the financial statements are issued, management has concluded that such doubt is mitigated by the considerations discussed below, which lead to a conclusion that the Company will continue to be able to fund current obligations as they become due one year from the date of issuance of these financial statements.

The Company is in the process of working with its lenders and believes it will receive waivers with respect to the affected financial covenants before any covenants are violated. However, any waivers would be granted at the sole discretion of the lenders, and there can be no assurance that the Company will be able to obtain such waivers. Additionally, the Company currently has no borrowings or expected future borrowings on its CorEnergy Credit Facility, which mitigates the cross-default provision described above under the Company's 5.875% Convertible Notes. In any event, should negotiations with the Company's lenders concerning additional waivers prove unsuccessful, the Company would have sufficient liquidity to pay fees that would be due in connection with any termination of the CorEnergy Credit Facility, while also continuing to fund current obligations as they become due one year from the date of issuance of these financial statements. As a result, the accompanying unaudited consolidated financial statements and related notes have been prepared assuming that the Company will continue as a going concern.

11.STOCKHOLDERS' EQUITY

The Company's Board of Directors authorized a securities repurchase program for the Company to buy up to the remaining amount of its 7.00% Convertible Notes prior to maturity on June 15, 2020 and up to $5.0 million of its common stock and 7.375% Series A Preferred Stock, which commenced March 21, 2020. Purchases may be made through the program through August 20, 2020.

PREFERRED STOCK

As of June 30, ~~2019,~~2020, the Company has a total of ~~5,019,727~~5,010,814 depository shares outstanding, or approximately ~~50,197~~50,108 whole shares of its 7.375% Series A Preferred Stock. The Company's Board of Directors authorized a share repurchase program for the Company to buy up to $10.0 million of its preferred stock, which commenced August 6, 2018. Purchases may be made through the program through August 5, 2019. The Company is not obligated to repurchase any shares of stock under the program and may terminate the program at any time. On ~~January 9, 2019,~~March 30, 2020, the Company repurchased ~~2,500~~8,913 depository shares of Series A Preferred Stock for approximately ~~$61~~$162 thousand in cash.

See Note 13 ("Subsequent Events") for further information regarding the declaration of a dividend on the 7.375% Series A Preferred Stock.

COMMON STOCK

As of June 30, ~~2019,~~2020, the Company has ~~12,826,031~~13,651,521 of common shares issued and outstanding. See Note 13 ("Subsequent Events") for further information regarding the declaration of a dividend on the common stock.



~~Table of Contents~~		~~Glossary of Defined Terms~~

SHELF REGISTRATION STATEMENTS

On October 30, 2018, the Company filed a shelf registration statement with the SEC, pursuant to which it registered 1,000,000 shares of common stock for issuance under its dividend reinvestment plan. As of June 30, ~~2019,~~2020, the Company has issued 22,003 shares of common stock under its dividend reinvestment plan pursuant to the shelf, resulting in remaining availability (subject to the current limitation discussed below) of approximately 977,997 shares of common stock.

On November 9, 2018, the Company had a new shelf registration statement declared effective by the SEC replacing the Company's previously filed shelf registration statement, pursuant to which it may publicly offer additional debt or equity securities with an



Table of Contents		Glossary of Defined Terms

aggregate offering price of up to $600.0 million. As described elsewhere in this Report, EGC and Cox Oil have refused to provide the financial statement information concerning EGC required to be filed by the Company pursuant to SEC Regulation S-X. At least until it is able to file these EGC financial statements, the Company does not expect to be able to use this shelf registration statement, or the shelf registration statement filed for its dividend reinvestment plan, to sell its securities. As previously disclosed in the Company's Current Report on Form 8-K filed on April 24, 2019, the Company has suspended its dividend reinvestment plan.

The Company ishas engaged in dialogue with the staff of the SEC in an effort to shorten the period during which it does not use its registration statements. The Company does not expect this period to be shortened until the EGC financial statement information has been received and filed.

12. EARNINGS PER SHARE

Basic earnings (loss) per share data is computed based on the weighted-average number of shares of common stock outstanding during the periods. Diluted ~~EPS~~earnings (loss) per share data is computed based on the weighted-average number of shares of common stock outstanding, including all potentially issuable shares of common stock. Diluted ~~EPS~~earnings (loss) per share for the three and six months ended June 30, ~~2019~~2020 and ~~2018~~2019 excludes the impact to income and the number of shares outstanding from the conversion of the 7.00% Convertible ~~Senior~~ Notes and the 5.875% Convertible Notes, as applicable, because such impact is antidilutive. The remaining 7.00% Convertible Notes matured during the three months ended June 30, 2020.

Under the if converted method, ~~and after consideration of~~ the ~~common shares issued in the~~5.875% Convertible ~~Note exchange and subsequent conversions discussed in Note 10 ("Debt"), the 7.00% Convertible Senior~~ Notes would result in an additional ~~2,108,848~~2,361,000 common shares outstanding for the three and six months ended June 30, ~~2019.~~2020. For the three and six months ended June 30, ~~2018,~~2019, under the if-converted method, the 7.00% Convertible Notes would have resulted in an additional ~~3,454,545~~2,108,848 common shares outstanding.



	For the Three Months Ended					For the Six Months Ended
	June 30, 2020			June 30, 2019		June 30, 2020			June 30, 2019
Net Income (Loss) attributable to CorEnergy Stockholders	$	(137,434,433	)	$	9,824,926	$	(299,476,801	)	$	13,691,367
Less: preferred dividend requirements	2,309,672			2,313,780		4,570,465			4,627,908
Net Income (Loss) attributable to Common Stockholders	$	(139,744,105	)	$	7,511,146	$	(304,047,266	)	$	9,063,459
Weighted average shares - basic	13,651,521			12,811,171		13,649,907			12,708,626
Basic earnings (loss) per share	$	(10.24	)	$	0.59	$	(22.27	)	$	0.71

Net Income (loss) attributable to Common Stockholders (from above)	$	(139,744,105	)	$	7,511,146	$	(304,047,266	)	$	9,063,459
Add: After tax effect of convertible interest	—			—		—			—
Income (loss) attributable for dilutive securities	$	(139,744,105	)	$	7,511,146	$	(304,047,266	)	$	9,063,459
Weighted average shares - diluted	13,651,521			12,811,171		13,649,907			12,708,626
Diluted earnings (loss) per share	$	(10.24	)	$	0.59	$	(22.27	)	$	0.71

For the Three Months Ended For the Six Months Ended
June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Net income attributable to CorEnergy stockholders $ 9,824,926
$ 7,810,849
$ 13,691,367
$ 15,518,557
Less: preferred dividend requirements 2,313,780
2,396,875
4,627,908
4,793,750
Net income attributable to common stockholders $ 7,511,146
$ 5,413,974
$ 9,063,459
$ 10,724,807
Weighted average shares - basic 12,811,171
11,928,297
12,708,626
11,923,627
Basic earnings per share $ 0.59
$ 0.45
$ 0.71
$ 0.90

Net income attributable to common stockholders (from above) $ 7,511,146
$ 5,413,974
$ 9,063,459
$ 10,724,807
Add: After tax effect of convertible interest —
—
—
—
Income attributable for dilutive securities $ 7,511,146
$ 5,413,974
$ 9,063,459
$ 10,724,807
Weighted average shares - diluted 12,811,171
11,928,297
12,708,626
11,923,627
Diluted earnings per share $ 0.59
$ 0.45
$ 0.71
$ 0.90

13.SUBSEQUENT EVENTS

The Company performed an evaluation of subsequent events through the date of the issuance of these financial statements and determined that no additional items require recognition or disclosure, except for the following:

Common Stock Dividend Declaration

On July ~~24, 2019,~~28, 2020 the Company's Board of Directors declared a ~~2019~~2020 second quarter dividend of ~~$0.75~~$0.05 per share for CorEnergy common stock. The dividend is payable on August ~~30, 2019~~31, 2020 to stockholders of record on August ~~16, 2019.~~17, 2020. As previously disclosed in the Company's Current Report on Form 8-K filed on July ~~24, 2019,~~28, 2020, the Company will pay this quarter's common stock dividend entirely in cash.



~~Table of Contents~~		~~Glossary of Defined Terms~~

Preferred Stock Dividend Declaration

On July ~~24, 2019,~~28, 2020, the Company's Board of Directors also declared a dividend of $0.4609375 per depositary share for its 7.375% Series A Preferred Stock. The preferred stock dividend is payable on August ~~30, 2019~~31, 2020 to stockholders of record on August ~~16, 2019.~~17, 2020.



Table of Contents		Glossary of Defined Terms

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto in this Report on Form 10-Q ("Report") of CorEnergy Infrastructure, Inc. ("the Company," "CorEnergy," "we" or "us"). The forward-looking statements included in this discussion and elsewhere in this Report involve risks and uncertainties, including anticipated financial performance, business prospects, industry trends, stockholder returns, performance ofunder leases by tenants, performance on loans to customers, and other matters, which reflect management's best judgment based on factors currently known. See "Cautionary Statement Concerning Forward-Looking Statements" which is incorporated herein by reference. Actual results and experience could differ materially from the anticipated results and other expectations expressed in our forward-looking statements as a result of a number of factors, including but not limited to those discussed in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the SEC on February ~~28, 2019, and~~27, 2020, as supplemented by the disclosures contained in Part II, Item 1A, "Risk Factors", in this Report.

RECENT DEVELOPMENTS

The COVID-19 pandemic-related reduction in energy demand and the uncertainty of production from OPEC members, US producers and other international suppliers caused significant disruptions and volatility in the global oil marketplace during the first and second quarters of 2020, which have adversely affected our tenants. In response to COVID-19, governments around the world have implemented increasingly stringent measures to help reduce the spread of the virus, including stay-at-home and shelter-in-place orders, travel restrictions and other measures. These measures have adversely affected the economies and financial markets of the U.S. and many other countries, resulting in an economic downturn that has negatively impacted global demand and prices for the products handled by our pipelines, terminals and other facilities. There is significant uncertainty regarding how long these conditions will persist and the impact of the virus on the energy industry and potential impacts to our business. For further discussion, see Part II, Item 1A, "Risk Factors."

Events as described above resulted in decreases of current and expected long-term crude oil prices along with significant reductions to the market capitalization and bankruptcy filings of many oil and gas producing companies, including our tenants. Our tenant under the Grand Isle Lease Agreement was impacted by these economic events and ceased paying rent starting on April 1 and continuing into August of 2020. These events triggered our review of the carrying value of our long-lived GIGS asset as of March 31, 2020. Our evaluation resulted in the recognition of a $140.3 million impairment for our GIGS asset and a $30.1 million non-cash write-off of the deferred rent receivable for the Grand Isle Lease Agreement.

As a result of the bankruptcy filing of UPL and Ultra Wyoming, the guarantor and tenant (respectively) of the Pinedale Lease Agreement, the tenant's motion to reject the lease effective June 30, 2020 and the sale of the Pinedale LGS to Ultra Wyoming for $18.0 million on June 30, 2020, we recognized a loss from the Pinedale Transaction of approximately $136.0 million, net of a gain on extinguishment of related debt, for the three and six months ended June 30, 2020. For a further discussion of these matters, see Part I, Item 1, Note 3 ("Leased Properties And Leases"). The events and conditions surrounding COVID-19, volatility in the global energy markets, the nonpayment of rent by our EGC Tenant and the sale of the Pinedale LGS to Ultra Wyoming have impacted and are expected to continue to adversely impact our lease revenue and operating cash flows. Refer to "Dividends" and "Liquidity and Capital Resources" for further discussion.

BUSINESS OBJECTIVE

The Recent Developments affecting our assets have adversely impacted CorEnergy’s objective of providing a stable dividend with potential for long term growth. However, we are actively evaluating opportunities to deploy our cash into new dividend-generating assets. CorEnergy’s Private Letter Ruling ("PLR") discussed below enables us to invest in a broader set of revenue contracts within our REIT structure, including the opportunity to not only own but also operate infrastructure assets. Our decision to pay cash dividends based upon rents received and progress on potential acquisitions will continue to be reviewed quarterly. We expect to manage our liquidity carefully in light of our balance sheet obligations.

CorEnergy primarily owns and seeks to own assets in the U.S. energy sector that perform utility-like functions, such as pipelines, storage terminals, rail terminals and gas and electric transmission and distribution assets. Our objective ishas been to generate long-term contracted revenue from operators of our assets, primarily under triple-net participating leases without direct commodity price exposure. We believe our leadership team's energy and utility expertise provides CorEnergy with a competitive advantage to acquire, own and lease U.S. energy infrastructure assets in a tax-efficient, transparent and investor-friendly REIT. Our leadership team also utilizes a disciplined investment philosophy developed through an average of over 25 years of relevant industry experience.

We expect our leases to provide us with contracted base rent, plus participating rent based upon asset-specific criteria. The energy industry commonly employs contracts with participating features, and we provide exposure to both the risk and opportunity of



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utilization of our assets, which we believe is a hallmark of infrastructure assets of all types. Our participating triple-net leases require the operator to pay all expenses of the business including maintaining our assets in good working order.

The majority of our assets leased to tenants under triple-net leases are dependent upon the tenants' exploitation of hydrocarbon reserves in the fields where our assets are located. These reserves are depleted over time, and therefore, may economically diminish the value of our assets over the period that the underlying reserves are exploited. Accordingly, we expect the contracted base rents under these leases, including fair market renewal rent expectations, to provide for a return-on-capital, as well as a return of our invested capital, over the life of the asset. The portion of rents we believe to constitute a return of our invested capital are utilized for debt repayment and/or are reserved for capital reinvestment activities in order to maintain our long-term earnings and dividend paying capacity. The return-on-capital is that portion of rents which are available for distribution to our stockholders through dividend payouts.

Base rents under our leases are structured on an estimated fair market value rent structure over the initial term, which includes assumptions related to the terminal value of our assets and expectations of tenant renewals. At the conclusion of the initial lease term, our leases may contain fair market value repurchase options or fair market rent renewal terms. These clauses also act as safeguards against our tenants pursuing activities which would undermine or degrade the value of our assets faster than the underlying reserves are depleted. Our participating rents are structured to provide exposure to the successful commercial activity of the tenant, and as such, also provide protection in the event that the economic life of our assets is reduced based on accelerated production by our tenants.

Our assets are predominately mission-critical to our customers, in that utilization of our assets is necessary for the business they seek to conduct and their rental payments are an essential operating expense. For example, our crude oil gathering system assets are necessary to the exploitation of upstream crude oil reserves, so the operators' lease of those assets is economically critical to their operations. Some of our assets are subject to rate regulation by FERC or state public utility commissions. Further, energy infrastructure assets are an essential and growing component of the U.S. economy that give us the opportunity to assist the capital expansion plans and meet the capital needs of various midstream and upstream participants.

On November 16, 2018, the IRS issued the second requested PLR to CorEnergy. The PLR provides to us assurance that fees we may receive for the usage of storage and pipeline capacity on assets we may own will qualify as rents from real property for purposes of our qualification as a REIT. As a result, the PLR grants us the opportunity to own and operate certain infrastructure assets under conditions set forth in the PLR. We can consider, and are considering, a broader set of investment opportunities than was available to us prior to issuance of the PLR. For example, prior to the PLR, we could own the Portland Terminal Facility, a petroleum products terminal that we previously leased to Zenith Terminals, but we were not then assured that we could operate such an asset and treat the revenues as rents from real property for purposes of the REIT income test. As a result of the PLR, we can now acquire and operate a storage terminal facility such as the Portland Terminal Facility.

We intend to distribute substantially all of our cash available for distribution, less prudent reserves, on a quarterly basis. We regularly assess our ability to pay and to grow our dividend to common ~~stockholders.~~stockholders, including the impact of events described under "Recent Developments" above. We ~~target~~are targeting long-term revenue ~~growth of 1-3 percent annually from existing contracts, through inflation escalations and participating rents, and additional~~ growth from acquisitions. There can be no assurance that any potential acquisition opportunities will result in consummated transactions. Our management contract includes incentive provisions, aligning our leadership team with our stockholders' ~~interests in raising the dividend only if we believe the rate is sustainable.~~



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interests.

We believe these characteristics align CorEnergy with the attractive attributes of other globally listed infrastructure companies, including high barriers to entry and contracts with predictable revenue streams, while mitigating risks and volatility experienced by other companies engaged in the midstream energy sector. Nonetheless, the Recent Developments discussed above demonstrate that while tenant-specific risks can be mitigated, they can not be eliminated by our lease revenue model.

Basis of Presentation

The consolidated financial statements include CorEnergy Infrastructure Trust, Inc., as of June 30, ~~2019,~~2020, and its direct and indirect wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.



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RESULTS OF OPERATIONS

The following table summarizes the financial data and key operating statistics for CorEnergy for the three and six months ended June 30, ~~2019~~2020 and ~~2018.~~2019. We believe the Operating Results detail presented below provides investors with information that will assist them in analyzing our operating performance. The following data should be read in conjunction with our consolidated financial statements and the notes thereto included in Part I, Item 1 of this Report. All information in Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations," except for balance sheet data as of December 31, ~~2018,~~2019, is unaudited.


	For the Three Months Ended						For the Six Months Ended						For the Three Months Ended						For the Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018			June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Revenue
Lease revenue	$	16,635,876		$	18,275,859		$	33,353,586		$	35,867,718		$	5,554,368		$	16,635,876		$	21,300,872		$	33,353,586
Deferred rent receivable write-off													—			—			(30,105,820		)	—
Transportation and distribution revenue	4,868,144			3,874,157			9,739,726			7,827,136			4,382,706			4,868,144			9,583,206			9,739,726
Financing revenue	27,989			—			61,529			—			29,913			27,989			56,220			61,529
Total Revenue	21,532,009			22,150,016			43,154,841			43,694,854			9,966,987			21,532,009			834,478			43,154,841
Expenses
Transportation and distribution expenses	1,246,755			1,534,524			2,749,898			3,107,420			1,222,135			1,246,755			2,597,364			2,749,898
General and administrative	2,739,855			3,107,776			5,610,262			5,834,833			4,325,924			2,739,855			7,402,067			5,610,262
Depreciation, amortization and ARO accretion expense	5,645,250			6,290,082			11,290,346			12,579,412			3,662,926			5,645,250			9,309,993			11,290,346
Provision for loan losses	—			—			—			500,000
Loss on impairment of leased property													—			—			140,268,379			—
Loss on impairment and disposal of leased property													146,537,547			—			146,537,547			—
Loss on termination of lease													458,297			—			458,297			—
Total Expenses	9,631,860			10,932,382			19,650,506			22,021,665			156,206,829			9,631,860			306,573,647			19,650,506
Operating Income	$	11,900,149		$	11,217,634		$	23,504,335		$	21,673,189
Operating Income (Loss)													$	(146,239,842	)	$	11,900,149		$	(305,739,169	)	$	23,504,335
Other Income (Expense)
Net distributions and other income	$	285,259		$	55,714		$	541,874		$	59,665		$	102,038		$	285,259		$	419,858		$	541,874
Net realized and unrealized loss on other equity securities	—			(881,100		)	—			(867,134		)
Interest expense	(2,297,783		)	(3,196,248		)	(4,805,077		)	(6,406,838		)	(2,920,424		)	(2,297,783		)	(5,806,007		)	(4,805,077		)
Loss on extinguishment of debt	—			—			(5,039,731		)	—
Total Other Expense	(2,012,524		)	(4,021,634		)	(9,302,934		)	(7,214,307		)
Income before income taxes	9,887,625			7,196,000			14,201,401			14,458,882
Gain (loss) on extinguishment of debt													11,549,968			—			11,549,968			(5,039,731		)
Total Other Income (Expense)													8,731,582			(2,012,524		)	6,163,819			(9,302,934		)
Income (Loss) before income taxes													(137,508,260		)	9,887,625			(299,575,350		)	14,201,401
Income tax expense (benefit), net	62,699			(614,849		)	510,034			(1,059,675		)	(73,827		)	62,699			(98,549		)	510,034
Net Income attributable to CorEnergy Stockholders	9,824,926			7,810,849			13,691,367			15,518,557
Net Income (Loss) attributable to CorEnergy Stockholders													(137,434,433		)	9,824,926			(299,476,801		)	13,691,367
Preferred dividend requirements	2,313,780			2,396,875			4,627,908			4,793,750			2,309,672			2,313,780			4,570,465			4,627,908
Net Income attributable to Common Stockholders	$	7,511,146		$	5,413,974		$	9,063,459		$	10,724,807
Net Income (Loss) attributable to Common Stockholders													$	(139,744,105	)	$	7,511,146		$	(304,047,266	)	$	9,063,459

Other Financial Data ⁽¹⁾
Adjusted EBITDAre	$	17,830,658		$	17,563,430		$	35,336,555		$	34,812,266		$	4,520,966		$	17,830,658		$	21,360,725		$	35,336,555
NAREIT FFO	13,022,420			11,553,145			20,085,854			23,002,397			10,775,168			13,022,420			(7,747,701		)	20,085,854
FFO	13,029,332			12,213,745			20,244,559			23,627,544			10,775,168			13,029,332			(7,897,286		)	20,244,559
AFFO	13,589,336			12,348,559			26,626,213			24,375,755			(291,172		)	13,589,336			11,837,157			26,626,213
(1) Refer to the "Non-GAAP Financial Measures" section that follows for additional details.

Three Months Ended June 30, ~~2019~~2020 Compared to the Three Months Ended June 30, ~~2018~~2019

Revenue. Consolidated revenues were $10.0 million for the three months ended June 30, 2020 compared to $21.5 million for the three months ended June 30, 2019, ~~compared to $22.2~~representing a decrease of $11.6 million. Lease revenue was $5.6 million for the three months ended June 30, ~~2018, representing a decrease of $618 thousand. Lease revenue was~~2020 compared to $16.6 ~~million and $18.3~~ million for the three months ended June 30, 2019, ~~and 2018, respectively, with the~~resulting in a decrease of approximately ~~$1.6~~$11.1 million from the prior-year period. The decrease in lease revenue was primarily driven ~~primarily~~by (i) the non-payment of rent due for the GIGS asset ($10.2 million) and (ii) the decrease in participating rent at Pinedale ($1.0 million). Refer to Part I, Item 1, Note 3 ("Leased Properties And Leases") for further discussion of the nonpayment of rent by the ~~sale of the Portland Terminal Facility and concurrent termination of the lease in December of 2018.~~ EGC Tenant.

Transportation and distribution revenue from our subsidiaries MoGas and Omega was ~~$4.9~~$4.4 million and ~~$3.9~~$4.9 million for the three months ended June 330, 2020 and 2019, respectively, representing a decrease of $485 thousand. The decrease was primarily driven by the FERC rate case settlement between MoGas and FERC, which was approved in August of 2019. The Company recorded



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~~0, 2019 and 2018, respectively. The increase primarily resulted from higher rates going into effect on December 1, 2018 related to~~ the ~~rate case filed by MoGas with FERC, net~~final refund liability adjustment upon settlement in the third quarter of 2019; therefore, the ~~estimated refund liability.~~revenue recognized for the three months ended June 30, 2020 is at the final settlement rates.

Transportation and Distribution Expenses. Transportation and distribution expenses ~~were~~remained relatively consistent at $1.2 ~~million and $1.5~~ million for the three months ended June 30, ~~2019~~2020 and ~~2018, respectively, representing a decrease of approximately $288 thousand. The decrease primarily relates to lower legal, consulting and maintenance costs at MoGas.~~2019.

General and Administrative Expenses. General and administrative expenses were $4.3 million for the three months ended June 30, 2020 compared to $2.7 million for the three months ended June 30, ~~2019 compared to $3.1 million for the three months ended June 30, 2018.~~2019. The most significant components of the variance from the prior-year period are outlined in the following table and explained below:


	For the Three Months Ended				For the Three Months Ended
	June 30, 2019		June 30, 2018		June 30, 2020		June 30, 2019
Management fees	$	1,723,238	$	1,893,774	$	1,597,742	$	1,723,238
Acquisition and professional fees	593,170		788,993		2,335,296		593,170
Other expenses	423,447		425,009		392,886		423,447
Total	$	2,739,855	$	3,107,776	$	4,325,924	$	2,739,855

Management fees are directly proportional to our asset base. For the three months ended June 30, ~~2019,~~2020, management fees decreased ~~$171~~$125 thousand compared to the prior-year period due to (i) a management fee waiver in the current period to exclude the net proceeds from the 5.875% Convertible Notes offering in August of 2019 (other than the cash portion of such proceeds utilized in connection with the exchange of the Company’s 7.00% Convertible Notes) and (ii) a decrease in the incentive fee, which was not earned in the current period. The management fee waiver to exclude the net proceeds from the 5.875% Convertible Notes offering in August of 2019 waived approximately $247 thousand of the management fee for the ~~Convertible Note exchange and a lower incentive~~three months ended June 30, 2020. In connection with the management fee ~~as a result of decreased revenue from~~waiver for the ~~sale~~three months ended June 30, 2020, we also agreed with the Manager that the incremental management fees paid for the quarter would include approximately $592 thousand for the assets involved in the Pinedale Transaction, which were under management for all but the last day of the ~~Portland Terminal in December 2018.~~period. See Part I, Item 1, Note 8 ("Management Agreement") for additional information.

Acquisition and professional fees for the three months ended June 30, ~~2019 decreased $196 thousand~~2020 increased $1.7 million from the prior-year ~~period. An~~period, primarily as a result of increased professional fees. The increase ~~in asset acquisition expenses of $64 thousand was more than offset by a $260 thousand decrease~~ in professional fees ~~during~~was attributable to (i) higher legal and consulting costs in the current-year ~~period. The increase in~~period related to the ongoing litigation with EGC/Cox Oil and the valuation of the GIGS asset and (ii) higher legal and consulting costs related to the UPL bankruptcy and the ultimate sale of our Pinedale LGS asset to Ultra Wyoming. Asset acquisition expenses ~~is primarily the result of increased focus on potential acquisition opportunities.~~remained relatively consistent period over period. Generally, we expect asset acquisition expenses to be repaid over time from income generated by acquisitions. However, any particular period may reflect significant expenses arising from third party legal, engineering, and consulting fees that are incurred in the early to mid-stages of due diligence. ~~The decrease in professional fees during~~

Depreciation, Amortization and ARO Accretion Expense. Depreciation, amortization and ARO accretion expense was $3.7 million and $5.6 million for the three months ended June 30, 2020 and 2019, respectively. This decrease was primarily ~~attributable~~related to ~~higher legal~~depreciation expense, which decreased approximately $2.0 million for the three months ended June 30, 2020 compared to the three months ended June 30, 2019. The decrease in depreciation expense was driven by (i) the impairment of the GIGS asset during the first quarter of 2020 which resulted in a reduced carrying value and ~~consulting costs~~a decrease in the ~~prior-year period~~remaining useful life of the GIGS asset beginning in the second quarter of 2020 and (ii) a partial quarter of depreciation for the Pinedale LGS as a result of impairment indicators triggered by the negotiation and closing of the sale of the asset to Ultra Wyoming.

Loss on Impairment and Disposal of Leased Property. For the three months ended June 30, 2020, we recognized a $146.5 million loss on impairment and disposal of leased property related to ~~monitoring~~ our ~~GIGS asset, partially offset~~Pinedale LGS asset. The impairment and sale of the Pinedale LGS was triggered by ~~legal and consulting costs incurred in~~ the ~~current-year period related to~~bankruptcy of the ~~ongoing litigation with EGC/Cox Oil.~~Pinedale LGS tenant, Ultra Wyoming, during the second quarter of 2020. Refer to Part I, Item 1, Note 3 ("Leased Properties And Leases") for ~~additional information.~~further discussion of the impairment and sale of the Pinedale LGS asset.

~~Depreciation, Amortization and ARO Accretion Expense.~~ ~~Depreciation, amortization and ARO accretion expense was $5.6 million for~~Loss on Termination of Lease. For the three months ended June 30, ~~2019 compared to $6.3 million for the three months ended June 30, 2018. This decrease was primarily~~2020, we recognized a $458 thousand loss on termination of lease related to ~~depreciation expense,~~the sale of our Pinedale LGS asset during the second quarter of 2020, which ~~decreased $628~~resulted in the termination of the Pinedale Lease Agreement. Refer to Part I, Item 1, Note 3 ("Leased Properties And Leases") for further discussion of the sale of the Pinedale LGS asset and lease termination.

Net Distributions and Other Income. Net distributions and other income was $102 thousand for the three months ended June 30, ~~2019~~2020 compared to the three months ended June 30, 2018. The decrease in depreciation expense was largely driven by (i) the sale of the Portland Terminal Facility in December of 2018 and (ii) updates made to the estimated useful lives of certain ARO segments of GIGS at the end of 2018.

~~Net Distributions and Other Income.~~ ~~Net distributions and other income was~~ $285 thousand for the three months ended June 30, ~~2019 compared to $56 thousand for the three months ended June 30, 2018.~~2019. This ~~increase~~decrease was primarily related to interest income, which ~~increased~~decreased approximately ~~$246~~$150 thousand from the prior-year period ~~as a result of a higher cash balance~~due to declining interest rates during the three months ended June 30, ~~2019.~~2020.

~~Net Realized and Unrealized Loss on Other Equity Securities~~.



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Interest Expense. For the three months ended June 30, 2018, we recorded a net loss on other equity securities of $881 thousand. The net loss recorded was directly related to fluctuations in the valuation of our investment in private securities. The net loss recorded in the prior-year period related to valuation considerations surrounding the arbitration award delivered to Eni USA2020 and ~~Gulf LNG. We no longer have an interest in other equity securities for the three months ended June 30,~~ 2019, ~~due to the sale or disposition of our equity securities during 2018.~~

~~Interest Expense.~~ ~~For the three months ended June 30, 2019 and 2018,~~ interest expense totaled approximately $2.9 million and $2.3 million, ~~and $3.2 million,~~ respectively. ~~This decrease~~The increase of $623 thousand was primarily attributable to additional interest expense incurred as a result of the 5.875% Convertible ~~Note exchange~~Notes Offering in August of 2019, partially offset by lower interest expense due to the exchanges completed during the first ~~quarter~~and third quarters of 2019 and ~~subsequent conversions that occurred~~maturity of the remaining outstanding 7.00% Convertible Notes during the second quarter of ~~2019.~~2020. For additional information, see Part I, Item 1, Note 10 ("Debt").

~~Income Tax Expense (Benefit)~~Gain on Extinguishment of Debt. For the three months ended June 30, 2020, a gain on extinguishment of debt of $11.5 million was recognized for (i) the release agreement entered into with Prudential for the Amended Pinedale Term Credit Facility in connection with the sale of the Pinedale LGS on June 30, 2020 ($11.0 million) and (ii) the repurchase of the 5.875% Convertible Notes completed in April of 2020 ($576 thousand). ~~Income tax expense~~For additional information, see Part I, Item 1, Note 10 ("Debt"). There was ~~$63 thousand~~no gain on extinguishment of debt recorded for the three months ended June 30, ~~2019, as compared to $615 thousand of income~~2019.

Income Tax Expense (Benefit). Income tax benefit was $74 thousand for the three months ended June 30, ~~2018.~~2020, as compared to income tax expense of $63 thousand for the three months ended June 30, 2019. The income tax benefit in the current year period is primarily the result of an increase in net operating loss carryforwards partially offset by certain fixed asset, deferred contract revenue and refund liability settlement activities. The income tax expense recorded in the ~~current-year~~prior-year period iswas primarily the result of the utilization of ~~NOLs~~net operating losses at certain of our TRS entities. ~~The~~

Net Income (Loss). Net income ~~tax benefit recorded in the prior-year period is the result of (i) higher losses generated by our TRS entities and (ii) an unrealized loss related to our Lightfoot investment.~~

~~Net Income.~~ ~~Net income~~(loss) attributable to CorEnergy stockholders was ~~$9.8~~$(137.4) million and ~~$7.8~~$9.8 million for the three months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. After deducting $2.3 ~~million and $2.4~~ million for the portion of preferred dividends that are allocable to ~~each~~both respective ~~period,~~periods, net income (loss) attributable to common stockholders for the three months ended June 30, ~~2019~~2020 was $(139.7) million, or $(10.24) per basic and diluted common share as compared to $7.5 million, or $0.59 per basic and diluted common share ~~as compared to $5.4 million, or $0.45 per basic and diluted common share~~ for the prior-year period.

Six Months Ended June 30, ~~2019~~2020 Compared to the Six Months Ended June 30, ~~2018~~2019

Revenue. Consolidated revenues were $834 thousand for the six months ended June 30, 2020 compared to $43.2 million for the six months ended June 30, ~~2019 compared~~2019. Lease revenue was $21.3 million and was fully offset by the non-cash write-off of the deferred rent receivable of $30.1 million related to ~~$43.7~~the Grand Isle Lease Agreement, resulting in a loss of $8.8 million for the six months ended June 30, ~~2018.~~2020. Lease revenue was $33.4 ~~million and $35.9~~ million for the six months ended June 30, 2019, ~~and 2018, respectively,~~ resulting in a decrease of ~~$2.5 million.~~approximately $42.2 million from the prior-year period. This decrease in lease revenue was driven primarily by (i) the ~~sale~~non-cash write-off of the ~~Portland Terminal Facility~~deferred rent receivable ($30.1 million), which was determined to be no longer probable of collection in the first quarter of 2020, (ii) the non-payment of rent due for the GIGS asset in the second quarter of 2020 ($10.2 million) and ~~was partially offset~~(iii) the decrease in participating rent at Pinedale ($2.1 million). Refer to Part I, Item 1, Note 3 ("Leased Properties And Leases") for further discussion of the impairment of the deferred rent receivable and nonpayment of rent by ~~(ii) an increase in variable rent collected on~~ the ~~Pinedale lease during the six months ended June 30, 2019.~~ EGC Tenant.

Transportation and distribution revenue from our subsidiaries MoGas and Omega ~~was $9.7~~remained relatively consistent at $9.6 million and ~~$7.8~~$9.7 million for the six months ended June 30, 2020 and 2019, ~~and 2018, respectively.~~respectively, representing a decrease of approximately $157 thousand. The ~~increase~~decrease was primarily ~~resulted from higher rates going into effect on December 1, 2018 related to~~driven by the FERC rate case ~~filed~~settlement between MoGas and FERC which was approved in August of 2019. The Company recorded the final refund liability adjustment upon settlement in the third quarter of 2019; therefore, the revenue recognized for the six months ended June 30, 2020 is at the final settlement rates. This decrease was partially offset by ~~MoGas with FERC, net of the estimated refund liability.~~increased system maintenance revenue at Omega.

Transportation and Distribution Expenses. Transportation and distribution expenses ~~were $2.7~~remained relatively consistent at $2.6 million and ~~$3.1~~$2.7 million for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, representing a decrease of ~~$358~~approximately $153 thousand. The decrease relates primarily to lower legal, consulting and maintenance costs at ~~MoGas.~~MoGas, partially offset by higher system maintenance expense at Omega.

General and Administrative Expenses. General and administrative expenses were $7.4 million for the six months ended June 30, 2020 compared to $5.6 million for the six months ended June 30, ~~2019 compared to $5.8 million for the six months ended June 30, 2018~~.2019. The most significant components of the variance from the prior-year period are outlined in the following table and explained below:

Management fees are directly proportional to our asset base. For the six months ended June 30, ~~2019,~~2020, management fees decreased ~~$245~~$324 thousand compared to the prior-year period due to ~~cash utilized~~(i) a full waiver of the incentive fee for the ~~Convertible Note exchange and a lower~~first quarter of 2020, (ii) no incentive fee ~~due~~earned for the second quarter of 2020 and (iii) a management fee waiver in the current-year period to ~~decreased revenue~~exclude the net proceeds from the ~~sale~~5.875% Convertible Notes offering in August of 2019 (other than the cash portion of such proceeds utilized in connection with the exchange of the ~~Portland Terminal~~Company’s 7.00% Convertible Notes). The management fee waiver to exclude the net proceeds from the 5.875% Convertible Notes offering in ~~December 2018.~~August of 2019 waived approximately $502 thousand of the management fee for the six months ended June 30, 2020. In connection with the management fee waivers covering the six months ended June 30, 2020, we also agreed with the Manager that the incremental management fees paid for the second quarter would include approximately $592 thousand for the assets involved in the Pinedale Transaction, which were under management for all but the last day of the period. See Part I, Item 1, Note 8 ("Management Agreement") for additional information.

Acquisition and professional fees for the six months ended June 30, ~~2019 decreased $42 thousand~~2020 increased $2.2 million from the prior-year ~~period. An increase in asset acquisition expenses~~period primarily as a result of ~~$86 thousand was more than offset by a $128 thousand decrease in~~ professional fees, which increased approximately $2.1 million during the current-year period. The increase in professional fees was attributable to (i) higher legal and consulting costs in the current-year period related to the ongoing litigation with EGC/Cox Oil and valuation of the GIGS asset and (ii) higher legal and consulting costs related to the UPL bankruptcy and the ultimate sale of our Pinedale LGS asset to Ultra Wyoming. Asset acquisition expenses ~~is primarily the result~~increased approximately $56 thousand due to acquisition opportunities which had advanced into various stages of ~~increased focus on potential acquisition opportunities.~~due diligence, but which have not ultimately resulted in a transaction. Generally, we expect asset acquisition expenses to be repaid over time from income generated by acquisitions. However, any particular period may reflect significant expenses arising from third party legal, engineering, and consulting fees that are incurred in the early to mid-stages of due diligence. ~~The decrease in professional fees during~~

Depreciation, Amortization and ARO Accretion Expense. Depreciation, amortization and ARO accretion expense was $9.3 million for the six months ended June 30, ~~2019~~2020 compared to $11.3 million for the six months ended June 30, 2019. This decrease was primarily ~~attributable~~related to ~~higher legal~~depreciation expense, which decreased approximately $2.0 million for the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The decrease in depreciation expense was driven by (i) the impairment of the GIGS asset during the first quarter of 2020 which resulted in a reduced carrying value and ~~consulting costs~~a decrease in the ~~prior-year period~~remaining useful life of the GIGS asset beginning in the second quarter of 2020 and (ii) a partial quarter of depreciation for the Pinedale LGS in the second quarter of 2020 as a result of impairment indicators triggered by the negotiation and closing of the sale of the asset to Ultra Wyoming.

Loss on Impairment of Leased Property. For the six months ended June 30, 2020, we recognized a $140.3 million loss on impairment of leased property related to ~~monitoring~~ our GIGS ~~asset, partially offset~~asset. The impairment analysis was triggered by ~~legal~~the impacts of the COVID-19 pandemic and ~~consulting costs incurred~~significant decline in the ~~current-year period related to~~global energy markets, which adversely impacted the ~~ongoing litigation with EGC/Cox Oil.~~EGC Tenant under the Grand Isle Lease Agreement. Refer to Part I, Item 1, Note 3 ("Leased Properties And Leases") for ~~additional information.~~

~~Depreciation, Amortization and ARO Accretion Expense.~~ Depreciation, amortization and ARO accretion expense was $11.3 million for the six months ended June 30, 2019 compared to $12.6 million for the six months ended June 30, 2018. This decrease was primarily related to depreciation expense, which decreased $1.3 million for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. The decrease in depreciation expense was driven by (i) the salefurther discussion of the ~~Portland Terminal Facility in December~~impairment, including the valuation methodology used to determine the fair value of ~~2018~~the GIGS asset.

Loss on Impairment and ~~(ii) updates made to the estimated useful lives~~Disposal of ~~certain ARO segments of GIGS at the end of 2018.~~

~~Provision for loan losses.~~ Leased Property. For the six months ended June 30, ~~2018,~~2020, we ~~recorded~~recognized a ~~provision for loan losses~~$146.5 million loss on impairment and disposal of ~~approximately $500 thousand~~leased property related to ~~an additional write-down~~our Pinedale LGS asset. The impairment and sale of the Pinedale LGS was triggered by the bankruptcy of the Pinedale LGS tenant, Ultra Wyoming, during the second quarter of 2020. Refer to Part I, Item 1, Note 3 ("Leased Properties And Leases") for further discussion of the impairment and sale of the Pinedale LGS asset.

Loss on ~~the SWD loans. There were no loan loss provisions recorded for~~Termination of Lease. For the six months ended June 30, ~~2019.~~2020, we recognized a $458 thousand loss on termination of lease related to the sale of our Pinedale LGS asset during the second quarter of 2020, which resulted in the termination of the Pinedale Lease Agreement. Refer to Part I, Item 1, Note 3 ("Leased Properties And Leases") for further discussion of the sale of the Pinedale LGS asset and lease termination.

Net Distributions and Other Income. Net distributions and other income for the six months ended June 30, ~~2019~~2020 was ~~$542~~$420 thousand compared to ~~$60~~$542 thousand for the six months ended June 30, ~~2018.~~2019. The ~~change~~decrease was primarily related to interest income, which ~~increased~~decreased approximately ~~$499~~$89 thousand from the prior-year period due to ~~a higher cash balance~~declining interest rates during the six months ended June 30, ~~2019.~~2020.

~~Net Realized and Unrealized Loss on Other Equity Securities.~~ Interest Expense. For the six months ended June 30, 2018, we recorded a net loss on other equity securities of $867 thousand. The net loss recorded during the six months ended June 30, 2018 related to valuation considerations surrounding the arbitration award delivered to Eni USA2020 and ~~Gulf LNG. We no longer have an interest in other equity securities for the six months ended June 30,~~ 2019, ~~due to the sale or disposition of our equity securities during 2018.~~

~~Interest Expense.~~ ~~For the six months ended June 30, 2019 and 2018,~~ interest expense totaled approximately $5.8 million and $4.8 million, ~~and $6.4~~respectively. The increase of $1.0 million ~~respectively. This decrease~~ was primarily attributable to ~~a decrease in~~additional interest expense incurred as a result of the 5.875% Convertible ~~Note exchange and conversions that occurred~~Notes Offering in August of 2019, partially offset by lower interest expense due to the exchanges completed during the ~~six months ended June 30, 2019.~~first and third quarters of 2019 and maturity of the remaining outstanding 7.00% Convertible Notes during the second quarter of 2020. For additional information, see Part I, Item 1, Note 10 ("Debt").

Gain (Loss) on Extinguishment of Debt. For the six months ended June 30, 2020, a gain on extinguishment of debt of $11.5 million was recognized for (i) the release agreement entered into with Prudential for the Amended Pinedale Term Credit Facility in connection with the sale of the Pinedale LGS on June 30, 2020 ($11.0 million) and (ii) the repurchase of the 5.875% Convertible Notes completed in April of 2020 ($576 thousand). For the six months ended June 30, 2019, a loss on extinguishment of debt totaling approximately $5.0 million was recorded in connection with the 7.00% Convertible Note exchange entered into on January 16, 2019. For additional information, see Part I, Item 1, Note 10 ("Debt"). ~~There~~

Income Tax Expense (Benefit). Income tax benefit was ~~no loss on extinguishment~~$99 thousand for six months ended June 30, 2020, as compared to $510 thousand of ~~debt recorded~~income tax expense for the six months ended June 30, ~~2018.~~

~~Income Tax Expense (Benefit).~~ ~~Income tax expense was $510 thousand for six months ended June 30, 2019, as compared to $1.1 million of~~2019. The income tax benefit ~~for~~in the ~~six months ended June 30, 2018.~~current year period is primarily the result of net operating loss carrybacks allowed under the CARES Act enacted in March of 2020 and net operating loss carryforwards generated at certain of our TRS entities, partially offset by certain fixed asset, deferred contract revenue and refund liability settlement activities. The income tax expense recorded in the ~~current-year~~prior-year period iswas primarily the result of (i) a change in our state effective rate due to changes in state law and state operations by certain of our TRS entities and (ii) utilization of ~~NOLs~~net operating losses at certain of our TRS entities. ~~The~~

~~Net Income.~~ ~~Net income~~(loss) attributable to CorEnergy stockholders was ~~$13.7~~$(299.5) million and ~~$15.5~~$13.7 million for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. After deducting $4.6 ~~million and $4.8~~ million for the portion of preferred dividends that are allocable to ~~each~~both respective ~~period,~~periods, net income (loss) attributable to common stockholders for the six months ended June 30, ~~2019~~2020 was $(304.0) million, or $(22.27) per basic and diluted common share compared to $9.1 million, or $0.71 per basic and diluted common share ~~compared to $10.7 million, or $0.90 per basic and diluted common share~~ for the prior-year period.

Common Equity Attributable to CorEnergy Stockholders per Share

As of June 30, ~~2019,~~2020, our common equity ~~increased~~decreased by approximately ~~$19.7~~$314.5 million to ~~$349.2~~$36.7 million from ~~$329.5~~$351.2 million as of December 31, ~~2018.~~2019. This ~~increase~~decrease principally consists of: (i) ~~$29.5 million of common stock issued pursuant to~~ the ~~exchange and conversion of Convertible Notes, (ii) $404 thousand of common stock issued pursuant to reinvestment of dividends through the dividend reinvestment plan; and (iii)~~ net ~~income~~loss attributable to CorEnergy common stockholders of approximately ~~$9.1 million;~~$304.0 million, which was driven by the impairment of leased property for the Grand Isle Gathering System ($140.3 million), the impairment and disposal of leased property related to the Pinedale LGS ($146.5 million) and the deferred rent receivable write-off for the Grand Isle Lease Agreement ($30.1 million), partially offset by ~~(iv)~~gains on extinguishment of debt ($11.5 million) and (ii) dividends paid to our common stockholders of approximately ~~$19.2 million.~~$10.9 million, partially offset by (iii) $419 thousand of common stock issued pursuant to conversions of the 7.00% Convertible Notes. The decrease in the book value per common share as of June 30, 2020 was driven by accounting events calculated in accordance with U.S. GAAP.

NON-GAAP FINANCIAL MEASURES

We use certain financial measures that are not recognized under GAAP. The non-GAAP financial measures used in this Report include earnings before interest, taxes, depreciation and amortization as defined by the National Association of Real Estate Investment Trusts ("EBITDAre"); EBITDAre as adjusted in the manner described below ("Adjusted EBITDAre"); NAREIT funds from operations ("NAREIT FFO"); funds from operations adjusted for securities investments ("FFO"); and FFO as further adjusted in the manner described below ("AFFO"). These supplemental measures are used by our management team and are presented because we believe they help investors understand our business, performance and ability to earn and distribute cash to our stockholders by providing perspectives not immediately apparent from net ~~income.~~income (loss). The presentation of EBITDAre, Adjusted

EBITDAre, NAREIT FFO, FFO and AFFO are not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We offer these measures to assist the users of our financial statements in assessing our operating performance under U.S. GAAP, but these measures are non-GAAP measures and should not be considered measures of liquidity, alternatives to net income (loss) or indicators of any other performance measure determined in accordance with GAAP, nor are they indicative of funds available to fund our cash needs, including capital expenditures (if any), to make payments on our indebtedness or to make distributions. Our method of calculating these measures may be different from methods used by other companies and, accordingly, may not be comparable to similar measures as calculated by other companies. Investors should not rely on these measures as a substitute for any GAAP measure, including net income (loss), cash flows from operating activities or revenues.

EBITDAre and Adjusted EBITDAre are non-GAAP financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors and lenders may use to evaluate our ongoing operating results, including (i) the performance of our assets without regard to the impact of financing methods, capital structure or historical cost basis of our assets and (ii) the overall rates of return on alternative investment opportunities. EBITDAre, as established by NAREIT, is defined as net income (loss) (calculated in accordance with GAAP) excluding interest expense, income tax, depreciation and amortization, gains or losses on disposition of depreciated property (including gains or losses on change of control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity's pro rata share of EBITDAre of unconsolidated affiliates. Our presentation of Adjusted EBITDAre represents EBITDAre adjusted for ~~net realized and unrealized (gain) loss on securities, non-cash;~~deferred rent receivable write-off; (gain) loss on extinguishment of debt; provision for loan (gain) loss; and preferred dividend requirements.

We believe that the presentation of EBITDAre and Adjusted EBITDAre provides useful information to investors in assessing our financial condition and results of operations. Our presentation of EBITDAre is calculated in accordance with standards established by NAREIT, which may not be comparable to measures calculated by other companies that do not use the NAREIT definition of EBITDAre. In addition, although EBITDAre is a useful measure when comparing our results to other REITs, it may not be helpful to investors when comparing to non-REITs. Adjusted EBITDAre presented by other companies may not be comparable to our presentation, since each company may define these terms differently. EBITDAre and Adjusted EBITDAre should not be considered measures of liquidity and should not be considered as alternatives to operating income (loss), net income (loss) or other indicators of performance determined in accordance with GAAP.

The following table presents a reconciliation of Income (Loss) Attributable to Common Stockholders, as reported in the Consolidated Statements of ~~Income~~Operations to EBITDAre and Adjusted EBITDAre:

FFO is a widely used measure of the operating performance of real estate companies that supplements net income (loss) determined in accordance with GAAP. As defined by NAREIT, NAREIT FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment losses of depreciable properties, real estate-related depreciation and amortization (excluding amortization of deferred financing costs or loan origination costs) and other

adjustments for unconsolidated partnerships and non-controlling interests. Adjustments for non-controlling interests are calculated on the same basis. We define FFO attributable to common stockholders as defined above by NAREIT less dividends

on preferred stock. Our method of calculating FFO attributable to common stockholders may differ from methods used by other REITs and, as such, may not be comparable.

FFO ADJUSTED FOR SECURITIES INVESTMENTS (FFO)

Due to the legacy investments that we ~~hold,~~held, we have also historically presented a measure of FFO, to which we refer herein as FFO Adjusted for Securities Investments which is derived by further adjusting NAREIT FFO for distributions received from investment securities, income tax expense (benefit) from investment securities, net distributions and other income and net realized and unrealized gain or loss on other equity securities.

We present NAREIT FFO and FFO Adjusted for Securities Investments because we consider it an important supplemental measure of our operating performance and believe that it is frequently used by securities analysts, investors, and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is a key measure we use in assessing performance and in making resource allocation decisions.

Both NAREIT FFO and FFO Adjusted for Securities Investments are intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions, and that may also be the case with certain of the energy infrastructure assets in which we invest. NAREIT FFO and FFO Adjusted for Securities Investments exclude depreciation and amortization unique to real estate and gains and losses from property dispositions and extraordinary items. As such, these performance measures provide a perspective not immediately apparent from net income (loss) when compared to prior-year periods. These metrics reflect the impact to operations from trends in base and participating rents, company operating costs, development activities, and interest costs.

We calculate NAREIT FFO in accordance with standards established over time by the Board of Governors of the National Association of Real Estate Investment Trusts, as restated and approved in ~~its March 1995~~a December 2018 White Paper ~~(as amended in November 1999 and April 2002)~~ and FFO Adjusted for Securities Investment as NAREIT FFO with additional adjustments described above due to our legacy investments. This may differ from the methodology for calculating FFO utilized by other ~~equity~~ REITs and, accordingly may not be comparable to such other REITs. NAREIT FFO and FFO Adjusted for Securities Investments do not represent amounts available for management's discretionary use because of needed capital for replacement or expansion, debt service obligations, or other commitments and uncertainties. NAREIT FFO and FFO Adjusted for Securities Investments, as we have historically reported, should not be considered as an alternative to net income (loss) (computed in accordance with GAAP), as an indicator of our financial performance, or to cash flow from operating activities (computed in accordance with GAAP), as an indicator of our liquidity, or as an indicator of funds available for our cash needs, including our ability to make distributions or to service our indebtedness.

Management uses AFFO as a measure of long-term sustainable operational performance. AFFO in excess of dividends is used for debt repayment, capital reinvestment activities, funding our ARO liability, or other commitments and uncertainties which are necessary to sustain our dividend over the long term. AFFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP), as an indicator of our financial performance, or as an alternative to cash flow from operating activities (computed in accordance with GAAP), as an indicator of our liquidity, or as an indicator of funds available for our cash needs, including our ability to make distributions or service our indebtedness.

For completeness, the following table sets forth a reconciliation of our net income (loss) as determined in accordance with GAAP and our calculations of NAREIT FFO, FFO Adjusted for Securities Investments, and AFFO for the three and six months ended June 30, ~~2019~~2020 and ~~2018.~~2019. AFFO is a supplemental, non-GAAP financial measure which we define as FFO Adjusted for Securities Investment plus deferred rent receivable write-off, (gain) loss on extinguishment of debt, provision for loan (gain) loss, net of tax, transaction costs, amortization of debt issuance costs, amortization of deferred lease costs, accretion of asset retirement obligation, non-cash costs associated with derivative instruments, and certain costs of a nonrecurring nature, less maintenance, capital expenditures (if any), income tax (expense) benefit unrelated to securities investments, amortization of debt premium, and other adjustments as deemed appropriate by Management. Also presented is information regarding the weighted-average number of shares of our common stock outstanding used for the computation of per share data:

Our portfolio of real property assets and promissory notes generates cash flow ~~to us~~ from which we pay distributions to stockholders. For the period ended June 30, ~~2019,~~2020, the primary sources of our stockholder distributions include lease revenue, excluding the $30.1 million non-cash write-off of the deferred rent receivable related to the Grand Isle Lease Agreement, and transportation and distribution revenue from ~~our real property assets.~~MoGas and Omega. Deterioration in the cash flows generated by any of these sources ~~may~~would impact our ability to fund distributions to stockholders.

~~We believe that (i)~~As described elsewhere in this Report, our lease revenue and cash flows have been adversely impacted in the ~~accretion from our acquisition~~second quarter of ~~Prudential's 18.95 percent equity interest in Pinedale LP, (ii) revenue growth from existing contracts through inflation-based escalators and participating rents,~~2020 as ~~well as (iii) the results~~a result of the ~~MoGas FERC rate case proceedings, as discussed~~impacts of the COVID-19 pandemic and significant decline in the ~~"Asset Portfolio and Related Developments" section below, will adequately offset~~global energy markets, which resulted in our EGC Tenant's election to cease paying rent under the ~~lost~~Grand Isle Lease Agreement in the second quarter of 2020. The EGC's Tenant's nonpayment of rent resulted in reduced lease revenue ~~from~~cash flows of $9.7 million for the ~~step-down in rate associated with~~second quarter of 2020. If the ~~new Spire contract effective in November 2018. We also believe~~

EGC Tenant elects to continue to not pay rent contractually due per the terms of the Grand Isle Lease Agreement, our lease revenue cash flows will be reduced by $12.1 million during each of the third and fourth quarters of 2020. Additionally, the impairment of the Grand Isle Gathering System discussed in Part I, Item 1, Note 3 ("Leased Properties And Leases") established a new fair value for the GIGS asset as of March 31, 2020, which will be depreciated over a shorter useful life beginning in the second quarter of 2020. Depreciation expense for the remainder of 2020 is expected to be $1.2 million per quarter for the GIGS asset.

As discussed elsewhere in this Report, we sold the Pinedale LGS to Ultra Wyoming, which terminated the Pinedale Lease Agreement on June 30, 2020. As a result, our cash flows from lease revenue for the Pinedale Lease Agreement will be reduced by $5.5 million for each of the third and fourth quarters of 2020. The base Pinedale lease revenue represented approximately $22.0 million of our annual lease revenue. Depreciation and amortization expense related to the Pinedale LGS prior to the second quarter of 2020 was approximately $2.2 million quarterly or approximately $8.9 million annually.

Based on our asset base prior to the events and conditions described above, we targeted a ratio of AFFO to dividends of 1.5 times. We believe that this level of coverage provided a ~~number~~prudent reserve level to achieve dividend stability and growth over the long term. For the period ended June 30, 2020, we realized a negative ratio of ~~actions can be taken~~AFFO to ~~adequately offset~~dividends of (0.43) times, which is significantly below our target ratio. The significant decrease in our AFFO coverage ratio is due to the ~~lost~~loss of revenue from our GIGS asset due to the ~~sale~~EGC Tenant's nonpayment of rent and increased general and administrative costs for the ~~Portland Terminal, which include~~matters discussed in this Report related to the ~~combination of (i)~~GIGS and Pinedale LGS assets. We expect our AFFO coverage ratio in subsequent quarters to be adversely impacted until we can recover rent contractually due from the EGC Tenant under the Grand Isle Lease Agreement or engage in additional ~~investments in~~asset acquisitions to enhance our revenue generating ~~assets and (ii) deleveraging~~asset base. The Board of ~~the Company's balance sheet through actions such as preferred equity and debt repurchases, at attractive market prices. However, we regularly assess our ability~~Directors will continue to ~~pay and to grow~~evaluate our dividend ~~to common stockholders, and there~~payments on a quarterly basis. There is no assurance that we will continue to make regular dividend payments at current levels.


	June 30, 2019		December 31, 2018		June 30, 2020			December 31, 2019
Assets	(Unaudited)				(Unaudited)
Leased property, net of accumulated depreciation of $96,489,852 and $87,154,095	$	388,903,475	$	398,214,355
Property and equipment, net of accumulated depreciation of $17,655,985 and $15,969,346	108,196,590		109,881,552
Leased property, net of accumulated depreciation of $4,430,269 and $105,825,816					$	67,315,379		$	379,211,399
Property and equipment, net of accumulated depreciation of $20,970,190 and $19,304,610					105,358,280			106,855,677
Financing notes and related accrued interest receivable, net of reserve of $600,000 and $600,000	1,309,217		1,300,000		1,196,338			1,235,000
Note receivable	—		5,000,000
Cash and cash equivalents	58,807,431		69,287,177		113,713,646			120,863,643
Deferred rent receivable	29,106,481		25,942,755		—			29,858,102
Accounts and other receivables	4,533,117		5,083,243		2,926,765			4,143,234
Deferred costs, net of accumulated amortization of $1,623,473 and $1,290,236	2,505,206		2,838,443
Deferred costs, net of accumulated amortization of $1,827,781 and $1,956,710					1,380,436			2,171,969
Prepaid expenses and other assets	864,988		668,584		719,094			804,341
Deferred tax asset, net	4,791,913		4,948,203		4,295,036			4,593,561
Goodwill	1,718,868		1,718,868		1,718,868			1,718,868
Total Assets	$	600,737,286	$	624,883,180	$	298,623,842		$	651,455,794
Liabilities and Equity
Secured credit facilities, net of debt issuance costs of $184,480 and $210,891	$	35,523,520	$	37,261,109
Unsecured convertible senior notes, net of discount and debt issuance costs of $478,361 and $1,180,729	69,113,639		112,777,271
Secured credit facilities, net of debt issuance costs of $0 and $158,070					$	—		$	33,785,930
Unsecured convertible senior notes, net of discount and debt issuance costs of $3,370,720 and $3,768,504					114,679,280			118,323,496
Asset retirement obligation	8,178,328		7,956,343		8,529,551			8,044,200
Accounts payable and other accrued liabilities	5,030,229		3,493,490		5,494,411			6,000,981
Management fees payable	1,765,864		1,831,613		1,661,651			1,669,950
Unearned revenue	6,453,805		6,552,049		6,283,847			6,891,798
Total Liabilities	$	126,065,385	$	169,871,875	$	136,648,740		$	174,716,355
Equity
Series A Cumulative Redeemable Preferred Stock 7.375%, $125,493,175 and $125,555,675 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 50,197 and 50,222 issued and outstanding at June 30, 2019 and December 31, 2018, respectively	$	125,493,175	$	125,555,675
Capital stock, non-convertible, $0.001 par value; 12,826,031 and 11,960,225 shares issued and outstanding at June 30, 2019 and December 31, 2018 (100,000,000 shares authorized)	12,826		11,960
Series A Cumulative Redeemable Preferred Stock 7.375%, $125,270,350 and $125,493,175 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 50,108 and 50,197 issued and outstanding at June 30, 2020 and December 31, 2019, respectively					$	125,270,350		$	125,493,175
Capital stock, non-convertible, $0.001 par value; 13,651,521 and 13,638,916 shares issued and outstanding at June 30, 2020 and December 31, 2019 (100,000,000 shares authorized)					13,652			13,639
Additional paid-in capital	349,165,900		320,295,969		345,726,877			360,844,497
Retained earnings	—		9,147,701
Retained deficit					(309,035,777		)	(9,611,872		)
Total Equity	474,671,901		455,011,305		161,975,102			476,739,439
Total Liabilities and Equity	$	600,737,286	$	624,883,180	$	298,623,842		$	651,455,794
See accompanying Notes to Consolidated Financial Statements.


	For the Six Months Ended						For the Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2020			June 30, 2019
Operating Activities
Net Income	$	13,691,367		$	15,518,557
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	(299,476,801	)	$	13,691,367
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred income tax, net	156,290			(1,013,341		)	298,525			156,290
Depreciation, amortization and ARO accretion	11,870,408			13,286,595			9,963,908			11,870,408
Provision for loan losses	—			500,000
Loss on extinguishment of debt	5,039,731			—
Gain on sale of equipment	—			(3,724		)
Net realized and unrealized loss on other equity securities	—			867,134
Common stock issued under directors' compensation plan	—			37,500
Loss on impairment of leased property							140,268,379			—
Loss on impairment and disposal of leased property							146,537,547			—
Loss on termination of lease							458,297			—
Deferred rent receivable write-off, noncash							30,105,820			—
(Gain) loss on extinguishment of debt							(11,549,968		)	5,039,731
Gain on disposal of equipment							(3,542		)	—
Changes in assets and liabilities:
Increase in deferred rent receivable	(3,163,726		)	(3,709,202		)	(247,718		)	(3,163,726		)
Decrease in accounts and other receivables	550,126			412,434			1,216,469			550,126
Increase in financing note accrued interest receivable	(9,217		)	—			(4,671		)	(9,217		)
Increase in prepaid expenses and other assets	(196,684		)	(326,372		)
Increase (decrease) in management fee payable	(65,749		)	65,679
Increase in accounts payable and other accrued liabilities	1,541,221			433,853
Decrease in current income tax liability	—			(2,167,655		)
(Increase) decrease in prepaid expenses and other assets							85,197			(196,684		)
Decrease in management fee payable							(8,299		)	(65,749		)
Increase (decrease) in accounts payable and other accrued liabilities							(613,391		)	1,541,221
Decrease in unearned revenue	(98,244		)	(1,383,757		)	(607,951		)	(98,244		)
Net cash provided by operating activities	$	29,315,523		$	22,517,701		$	16,421,801		$	29,315,523
Investing Activities
Purchases of property and equipment	(26,553		)	(47,883		)
Purchases of property and equipment, net							(85,144		)	(26,553		)
Proceeds from sale of property and equipment	—			11,499			7,500			—
Principal payment on note receivable	5,000,000			—			—			5,000,000
Principal payment on financing note receivable							43,333			—
Net cash provided by (used in) investing activities	$	4,973,447		$	(36,384	)	$	(34,311	)	$	4,973,447
Financing Activities
Debt financing costs	—			(264,010		)
Repurchases of preferred stock	(60,550		)	—			(161,997		)	(60,550		)
Cash paid for extinguishment of convertible notes	(19,516,234		)	—
Dividends paid on Series A preferred stock	(4,627,560		)	(4,793,750		)	(4,623,452		)	(4,627,560		)
Dividends paid on common stock	(18,800,372		)	(17,270,766		)	(10,921,216		)	(18,800,372		)
Cash paid for extinguishment of convertible notes							(1,316,250		)	(19,516,234		)
Cash paid for maturity of convertible notes							(1,676,000		)	—
Cash paid for settlement of Pinedale Secured Credit Facility							(3,074,572		)	—
Principal payments on secured credit facilities	(1,764,000		)	(1,764,000		)	(1,764,000		)	(1,764,000		)
Net cash used in financing activities	$	(44,768,716	)	$	(24,092,526	)	$	(23,537,487	)	$	(44,768,716	)
Net Change in Cash and Cash Equivalents	$	(10,479,746	)	$	(1,611,209	)	$	(7,149,997	)	$	(10,479,746	)
Cash and Cash Equivalents at beginning of period	69,287,177			15,787,069			120,863,643			69,287,177
Cash and Cash Equivalents at end of period	$	58,807,431		$	14,175,860		$	113,713,646		$	58,807,431

Supplemental Disclosure of Cash Flow Information
Interest paid	$	4,361,760		$	5,546,660		$	5,392,894		$	4,361,760
Income taxes paid (net of refunds)	282,786			2,121,321			(466,407		)	282,786

Non-Cash Investing Activities
Proceeds from sale of leased property provided directly to secured lender							$	18,000,000		$	—
Purchases of property, plant and equipment in accounts payable and other accrued liabilities							110,000			—

Non-Cash Financing Activities
Change in accounts payable and accrued expenses related to debt financing costs	$	—		$	(255,037	)
Reinvestment of distributions by common stockholders in additional common shares	403,831			610,219			$	—		$	403,831
Common stock issued upon exchange and conversion of convertible notes	29,457,711			—			419,129			29,457,711
Proceeds from sale of leased property used in settlement of Pinedale Secured Credit Facility							(18,000,000		)	—
See accompanying Notes to Consolidated Financial Statements.



Contractual Obligations
	Notional Value		Less than 1 year		1-3 years		3-5 years		More than 5 years
Pinedale LP Debt	$	35,708,000	$	3,528,000	$	7,056,000	$	25,124,000	$	—
Interest payments on Pinedale LP Debt			2,204,294		3,755,278		885,434		—
Convertible Debt	69,592,000		69,592,000		—		—		—
Interest payments on Convertible Debt			4,871,440		—		—		—
Totals			$	80,195,734	$	10,811,278	$	26,009,434	$	—



Balance Sheet	Balance at December 31, 2018		Adjustments Due to ASC 842		Balance at January 1, 2019
Assets
Prepaid expenses and other assets	$	668,584	$	74,534	$	743,118
Liabilities
Accounts payable and other accrued liabilities	3,493,490		74,534		3,568,024
Equity
Retained earnings	9,147,701		—		9,147,701



Future Minimum Lease Receipts
Years Ending December 31,	Amount
2019	$	30,267,595
2020	65,383,190
2021	71,345,190
2022	70,322,690
2023	67,274,690
Thereafter	193,639,760
Total	$	498,233,115



	Contract Asset⁽¹⁾			Contract Liability⁽²⁾
Beginning Balance January 1, 2019	$	180,579		$	6,522,354
Unrecognized Performance Obligations	(231,916		)	186,398
Recognized Performance Obligations	158,455			(275,592		)
Ending Balance June 30, 2019	$	107,118		$	6,433,160
(1) The contract asset balance is included in prepaid expenses and other assets in the Consolidated Balance Sheets.
(2) The contract liability balance is included in unearned revenue in the Consolidated Balance Sheets.



Year	Amended Pinedale Term Credit Facility
2019	$	1,764,000
2020	3,528,000
2021	3,528,000
2022	26,888,000
2023	—
Thereafter	—
Total Remaining Contractual Payments	$	35,708,000

													Book Value Per Common Share
Analysis of Equity	June 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Series A Cumulative Redeemable Preferred Stock 7.375%, $125,493,175 and $125,555,675 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 50,197 and 50,222 issued and outstanding at June 30, 2019 and December 31, 2018, respectively	$	125,493,175		$	125,555,675
Capital stock, non-convertible, $0.001 par value; 12,826,031 and 11,960,225 shares issued and outstanding at June 30, 2019 and December 31, 2018 (100,000,000 shares authorized)	12,826			11,960
Series A Cumulative Redeemable Preferred Stock 7.375%, $125,270,350 and $125,493,175 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 50,108 and 50,197 issued and outstanding at June 30, 2020 and December 31, 2019, respectively							$	125,270,350		$	125,493,175
Capital stock, non-convertible, $0.001 par value; 13,651,521 and 13,638,916 shares issued and outstanding at June 30, 2020 and December 31, 2019 (100,000,000 shares authorized)							13,652			13,639
Additional paid-in capital	349,165,900			320,295,969			345,726,877			360,844,497
Accumulated retained earnings	—			9,147,701
Accumulated retained deficit							(309,035,777		)	(9,611,872		)
Total CorEnergy Stockholders' Equity	$	474,671,901		$	455,011,305		$	161,975,102		$	476,739,439
Subtract: 7.375% Series A Preferred Stock	(125,493,175		)	(125,555,675		)	(125,270,350		)	(125,493,175		)
Total CorEnergy Common Equity	$	349,178,726		$	329,455,630		$	36,704,752		$	351,246,264
Common shares outstanding	12,826,031			11,960,225			13,651,521			13,638,916
Book Value per Common Share	$	27.22		$	27.55		$	2.69		$	25.75

																									NAREIT FFO, FFO Adjusted for Securities Investment and AFFO Reconciliation
	For the Three Months Ended						For the Six Months Ended						For the Three Months Ended						For the Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018			June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Net Income attributable to CorEnergy Stockholders	$	9,824,926		$	7,810,849		$	13,691,367		$	15,518,557
Net Income (loss) attributable to CorEnergy Stockholders													$	(137,434,433	)	$	9,824,926		$	(299,476,801	)	$	13,691,367
Less:
Preferred Dividend Requirements	2,313,780			2,396,875			4,627,908			4,793,750			2,309,672			2,313,780			4,570,465			4,627,908
Net Income attributable to Common Stockholders	$	7,511,146		$	5,413,974		$	9,063,459		$	10,724,807
Net Income (loss) attributable to Common Stockholders													$	(139,744,105	)	$	7,511,146		$	(304,047,266	)	$	9,063,459
Add:
Depreciation	5,511,274			6,139,171			11,022,395			12,277,590			3,523,429			5,511,274			9,035,342			11,022,395
Loss on impairment of leased property													—			—			140,268,379			—
Loss on impairment and disposal of leased property													146,537,547			—			146,537,547			—
Loss on termination of lease													458,297			—			458,297			—
NAREIT funds from operations (NAREIT FFO)	$	13,022,420		$	11,553,145		$	20,085,854		$	23,002,397		$	10,775,168		$	13,022,420		$	(7,747,701	)	$	20,085,854
Add:
Distributions received from investment securities	285,259			55,714			541,874			59,665
Less:
Net distributions and other income	285,259			55,714			541,874			59,665
Net realized and unrealized loss on other equity securities	—			(881,100		)	—			(867,134		)
Income tax (expense) benefit from investment securities	(6,912		)	220,500			(158,705		)	241,987			—			(6,912		)	149,585			(158,705		)
Funds from operations adjusted for securities investments (FFO)	$	13,029,332		$	12,213,745		$	20,244,559		$	23,627,544		$	10,775,168		$	13,029,332		$	(7,897,286	)	$	20,244,559
Add:
Loss on extinguishment of debt	—			—			5,039,731			—
Provision for loan losses, net of tax	—			—			—			500,000
Deferred rent receivable write-off													—			—			30,105,820			—
(Gain) loss on extinguishment of debt													(11,549,968		)	—			(11,549,968		)	5,039,731
Transaction costs	88,611			24,615			142,581			56,896			92,293			88,611			198,990			142,581
Amortization of debt issuance costs	281,630			353,637			580,062			707,181			325,665			281,630			653,914			580,062
Amortization of deferred lease costs	22,983			22,983			45,966			45,966			22,983			22,983			45,966			45,966
Accretion of asset retirement obligation	110,993			127,928			221,985			255,856			116,514			110,993			228,685			221,985
Less:
Income tax (expense) benefit	(55,787		)	394,349			(351,329		)	817,688
Income tax expense (benefit)													(73,827		)	55,787			51,036			351,329
Adjusted funds from operations (AFFO)	$	13,589,336		$	12,348,559		$	26,626,213		$	24,375,755		$	(291,172	)	$	13,589,336		$	11,837,157		$	26,626,213

Weighted Average Shares of Common Stock Outstanding:
Basic	12,811,171			11,928,297			12,708,626			11,923,627			13,651,521			12,811,171			13,649,907			12,708,626
Diluted	14,934,886			15,382,843			14,988,429			15,378,172			13,651,521			14,934,886			13,649,907			14,988,429
NAREIT FFO attributable to Common Stockholders
Basic	$	1.02		$	0.97		$	1.58		$	1.93		$	0.79		$	1.02		$	(0.57	)	$	1.58
Diluted ⁽¹⁾	$	0.96		$	0.89		$	1.53		$	1.78		$	0.79		$	0.96		$	(0.57	)	$	1.53
FFO attributable to Common Stockholders
Basic	$	1.02		$	1.02		$	1.59		$	1.98		$	0.79		$	1.02		$	(0.58	)	$	1.59
Diluted ⁽¹⁾	$	0.96		$	0.94		$	1.54		$	1.82		$	0.79		$	0.96		$	(0.58	)	$	1.54
AFFO attributable to Common Stockholders
Basic	$	1.06		$	1.04		$	2.10		$	2.04		$	(0.02	)	$	1.06		$	0.87		$	2.10
Diluted ⁽²⁾	$	0.99		$	0.93		$	1.95		$	1.84		$	(0.02	)	$	0.99		$	0.87		$	1.95
(1) Diluted per share calculations include dilutive adjustments for convertible note interest expense, discount amortization and deferred debt issuance amortization. Refer to the Convertible Note Interest Expense table in Part I, Item 1, Note 10 ("Debt") for additional details.
(2) Diluted per share calculations include a dilutive adjustment for convertible note interest expense. Refer to the Convertible Note Interest Expense table in Part I, Item 1, Note 10 ("Debt") for additional details.
(1) For the three and six months ended June 30, 2019, diluted per share calculations include dilutive adjustments for convertible note interest expense, discount amortization and deferred debt issuance amortization. Refer to the Convertible Note Interest Expense table in Part I, Item 1, Note 10 ("Debt") for additional details.													(1) For the three and six months ended June 30, 2019, diluted per share calculations include dilutive adjustments for convertible note interest expense, discount amortization and deferred debt issuance amortization. Refer to the Convertible Note Interest Expense table in Part I, Item 1, Note 10 ("Debt") for additional details.
(2) For the three and six months ended June 30, 2019, diluted per share calculations include a dilutive adjustment for convertible note interest expense. Refer to the Convertible Note Interest Expense table in Part I, Item 1, Note 10 ("Debt") for additional details.													(2) For the three and six months ended June 30, 2019, diluted per share calculations include a dilutive adjustment for convertible note interest expense. Refer to the Convertible Note Interest Expense table in Part I, Item 1, Note 10 ("Debt") for additional details.

											Liquidity and Capitalization
	June 30, 2019		December 31, 2018		June 30, 2020			December 31, 2019
Cash and cash equivalents	$	58,807,431	$	69,287,177	$	113,713,646		$	120,863,643
Revolver availability	$	123,154,209	$	122,721,258	$	54,957,030		$	136,358,445

Revolving credit facility	$	—	$	—	$	—		$	—
Long-term debt (including current maturities)	104,637,159		150,038,380		114,679,280			152,109,426
Stockholders' equity:
Series A Preferred Stock 7.375%, $0.001 par value	125,493,175		125,555,675		125,270,350			125,493,175
Capital stock, non-convertible, $0.001 par value	12,826		11,960		13,652			13,639
Additional paid-in capital	349,165,900		320,295,969		345,726,877			360,844,497
Retained earnings	—		9,147,701
Retained deficit					(309,035,777		)	(9,611,872		)
CorEnergy equity	474,671,901		455,011,305		161,975,102			476,739,439
Total CorEnergy capitalization	$	579,309,060	$	605,049,685	$	276,654,382		$	628,848,865



Conversion Date	Principal Amount of Convertible Notes Converted		Number of Shares of Common Stock Issued
May 23, 2019	$	119,000	3,606
June 13, 2019	85,000		2,575
June 20, 2019	10,000		303
June 25, 2019	370,000		11,206
Total	$	584,000	$	17,690



Exhibit No.		Description of Document

~~10.1.2~~2.1		~~Amendment No. 1 to Dividend Reinvestment Plan~~Purchase and Sale Agreement between the Company and Ultra Wyoming LLC, dated June 28, 2020 (incorporated by reference to the Registrant's current report on Form 8-K, filed ~~April 24, 2019)~~July 7, 2020).
~~10.2.9~~10.2.12*		Letter Agreement, dated June 30, ~~2019,~~2020, concerning ~~Incentive~~Management Fee for June 30, ~~2019~~2020 under Management Agreement, dated May 8, 2015 and effective as of May 1, 2015, between Corridor InfraTrust Management, LLC and CorEnergy Infrastructure Trust, Inc.
~~31.1~~10.5.1*		Standstill Agreement, dated May 8, 2020, pursuant to Second Amended and Restated Term Credit Agreement and Note Purchase Agreement between Pinedale Corridor LP and Prudential Insurance Company of America (incorporated by reference to the Registrant's current report on Form 8-K, filed May 14, 2020).
10.5.2		Compromise and Release Agreement between the Company and Prudential, dated June 26, 2020 (incorporated by reference to the Registrant's current report on Form 8-K, filed July 7, 2020).
10.12.7		Limited Consent, dated May 14, 2020, pursuant to Second Amendment to Amended and Restated Revolving Credit Agreement, dated July 28, 2017, by and among the Company and Regions Bank, et al. (incorporated by reference to the Registrant's current report on Form 8-K, filed May 14, 2020).
31.1*		Certification by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification by Chief Accounting Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification by Chief Executive Officer and Chief Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101**		The following materials from CorEnergy Infrastructure Trust, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2019,~~2020, formatted in ~~XBRL (Extensible~~iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of ~~Income,~~Operations, (iii) the Consolidated ~~Statement~~Statements of Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*	Filed herewith.
**	Furnished herewith.



CORENERGY INFRASTRUCTURE TRUST, INC.
(Registrant)

By:		/s/ ~~Rebecca~~Kristin M. ~~Sandring~~Leitze
		~~Rebecca~~Kristin M. ~~Sandring~~Leitze
		Chief Accounting Officer ~~Treasurer and Secretary~~
		(Principal Accounting Officer and Principal Financial Officer)
		August ~~1, 2019~~4, 2020

By:		/s/ David J. Schulte
		David J. Schulte
		Chairman and Chief Executive Officer
		(Principal Executive Officer)
		August ~~1, 2019~~4, 2020