UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to_____

Commission file number: 001-37640

NOBLE MIDSTREAM PARTNERS LP

(Exact name of registrant as specified in its charter)



Delaware			47-3011449
(State or other jurisdiction of incorporation or organization)			(I.R.S. employer identification number)
1001 Noble Energy Way
Houston,	Texas		77070
(Address of principal executive offices)			(Zip Code)
(281)		872-3100
(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 Units, Representing Limited Partner Interests	NBLX	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 ☒ No ☐

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 ☒ No ☐

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

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of ~~July~~October 31, 2019, the registrant had ~~39,752,188~~39,707,343 Common Units outstanding.

Table of Contents



Part I. Financial Information	3

Item 1. Financial Statements	3

Consolidated Balance Sheets	3

Consolidated Statements of Operations and Comprehensive Income	4

Consolidated Statements of Cash Flows	5

Consolidated Statements of Changes in Equity	6

Notes to Consolidated Financial Statements	78

Note 1. Organization and Nature of Operations	78
Note 2. Basis of Presentation	89
Note 3. Acquisition	1112
Note 4. Transactions with Affiliates	13
Note 5. Property, Plant and Equipment	1314
Note 6. Debt	14
Note 7. Investments	1415
Note 8. Segment Information	15
Note 9. Leases	17
Note 10. Partnership Distributions	18
Note 11. Net Income per Limited Partner Unit	18
Note 12. Commitments and Contingencies	19

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3. Quantitative and Qualitative Disclosures About Market Risk	3233

Item 4. Controls and Procedures	3435

Part II. Other Information	3435

Item 1. Legal Proceedings	3435

Item 1A. Risk Factors	3435

Item 6. Exhibits	3536

Signatures	3637

Part I. Financial Information

Item 1. Financial Statements

Noble Midstream Partners LP

Consolidated Balance Sheets

(in thousands, unaudited)


	June 30, 2019			December 31, 2018			September 30, 2019			December 31, 2018
ASSETS
Current Assets
Cash and Cash Equivalents	$	9,388		$	10,740		$	17,571		$	10,740
Accounts Receivable — Affiliate	38,697			31,613			40,475			31,613
Accounts Receivable — Third Party	25,852			23,091			20,251			23,091
Other Current Assets	8,805			5,875			8,579			5,875
Total Current Assets	82,742			71,319			86,876			71,319
Property, Plant and Equipment
Total Property, Plant and Equipment, Gross	1,621,885			1,500,609			1,682,820			1,500,609
Less: Accumulated Depreciation and Amortization	(102,338		)	(79,357		)	(114,789		)	(79,357		)
Total Property, Plant and Equipment, Net	1,519,547			1,421,252			1,568,031			1,421,252
Intangible Assets, Net	294,184			310,202			286,042			310,202
Goodwill	109,734			109,734			109,734			109,734
Investments	487,383			82,317			565,387			82,317
Other Noncurrent Assets	4,941			3,093			6,696			3,093
Total Assets	$	2,498,531		$	1,997,917		$	2,622,766		$	1,997,917
LIABILITIES, MEZZANINE EQUITY AND EQUITY
Current Liabilities
Accounts Payable — Affiliate	$	534		$	2,778		$	2,568		$	2,778
Accounts Payable — Trade	101,094			92,756			100,157			92,756
Other Current Liabilities	8,144			9,217			10,238			9,217
Total Current Liabilities	109,772			104,751			112,963			104,751
Long-Term Liabilities
Long-Term Debt	870,047			559,021			948,907			559,021
Asset Retirement Obligations	19,009			17,330			19,268			17,330
Other Long-Term Liabilities	1,143			582			1,410			582
Total Liabilities	999,971			681,684			1,082,548			681,684
Mezzanine Equity
Redeemable Noncontrolling Interest, Net	99,616			—			102,830			—
Equity
Limited Partner
Common Units (39,753 and 23,759 units outstanding, respectively)	606,575			699,866
Common Units (39,712 and 23,759 units outstanding, respectively)							618,049			699,866
Subordinated Units (15,903 units outstanding as of December 31, 2018)	—			(130,207		)	—			(130,207		)
General Partner	4,640			2,421			5,820			2,421
Total Partners’ Equity	611,215			572,080			623,869			572,080
Noncontrolling Interests	787,729			744,153			813,519			744,153
Total Equity	1,398,944			1,316,233			1,437,388			1,316,233
Total Liabilities, Mezzanine Equity and Equity	$	2,498,531		$	1,997,917		$	2,622,766		$	1,997,917

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

Noble Midstream Partners LP

Consolidated Statements of Operations and Comprehensive Income

(in thousands, except per unit amounts, unaudited)


	Three Months Ended June 30,					Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018			2019			2018			2019			2018			2019			2018
Revenues
Midstream Services — Affiliate	$	85,882	$	66,924		$	177,878		$	131,187		$	100,846		$	73,136		$	278,724		$	204,323
Midstream Services — Third Party	20,597		13,469			43,691			24,829			19,607			19,934			63,298			44,763
Crude Oil Sales — Third Party	51,782		41,578			84,652			63,688			48,870			46,093			133,522			109,781
Total Revenues	158,261		121,971			306,221			219,704			169,323			139,163			475,544			358,867
Costs and Expenses
Cost of Crude Oil Sales	48,079		40,012			78,977			61,451			46,240			44,379			125,217			105,830
Direct Operating	27,697		18,393			55,134			35,541			22,524			23,955			77,677			59,496
Depreciation and Amortization	20,285		16,371			39,636			27,700			20,851			18,376			60,487			46,076
General and Administrative	4,838		4,980			8,861			15,422			4,129			4,204			12,990			19,626
Other Operating (Income) Expense												(469		)	—			(488		)	—
Total Operating Expenses	100,899		79,756			182,608			140,114			93,275			90,914			275,883			231,028
Operating Income	57,362		42,215			123,613			79,590			76,048			48,249			199,661			127,839
Other Expense (Income)
Interest Expense, Net of Amount Capitalized	2,325		1,681			7,555			2,714			3,952			3,506			11,507			6,220
Investment Loss (Income)	1,748		(4,091		)	(593		)	(6,959		)	5,621			(3,866		)	5,028			(10,825		)
Total Other Expense (Income)	4,073		(2,410		)	6,962			(4,245		)	9,573			(360		)	16,535			(4,605		)
Income Before Income Taxes	53,289		44,625			116,651			83,835			66,475			48,609			183,126			132,444
State Income Tax Provision	91		183			198			257			92			(94		)	290			163
Net Income	53,198		44,442			116,453			83,578			66,383			48,703			182,836			132,281
Less: Net Income Attributable to Noncontrolling Interests	16,789		7,858			36,485			7,633			25,751			4,086			62,236			11,719
Net Income Attributable to Noble Midstream Partners LP	36,409		36,584			79,968			75,945			40,632			44,617			120,600			120,562
Less: Net Income Attributable to Incentive Distribution Rights	4,640		1,134			8,147			1,953			5,820			1,462			13,967			3,415
Net Income Attributable to Limited Partners	$	31,769	$	35,450		$	71,821		$	73,992		$	34,812		$	43,155		$	106,633		$	117,147

Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic and Diluted
Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic
Common Units												$	0.88		$	1.09		$	2.65		$	2.96
Subordinated Units												$	—		$	1.09		$	2.89		$	2.96

Net Income Attributable to Limited Partners Per Limited Partner Unit — Diluted
Common Units	$	0.79	$	0.90		$	1.77		$	1.87		$	0.88		$	1.09		$	2.64		$	2.96
Subordinated Units	$	0.84	$	0.90		$	1.91		$	1.87		$	—		$	1.09		$	2.89		$	2.96

Weighted Average Limited Partner Units Outstanding — Basic
Common Units	32,090		23,686			27,916			23,684			39,604			23,688			31,855			23,686
Subordinated Units	7,514		15,903			11,685			15,903			—			15,903			7,747			15,903

Weighted Average Limited Partner Units Outstanding —Diluted
Common Units	32,121		23,700			27,944			23,699			39,624			23,704			31,879			23,701
Subordinated Units	7,514		15,903			11,685			15,903			—			15,903			7,747			15,903

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

Noble Midstream Partners LP

Consolidated Statements of Cash Flows

(in thousands, unaudited)


	Six Months Ended June 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Cash Flows From Operating Activities
Net Income	$	116,453		$	83,578		$	182,836		$	132,281
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Depreciation and Amortization	39,636			27,700			60,487			46,076
Loss (Income) from Equity Method Investees	2,083			(4,798		)	8,858			(7,569		)
Distributions from Equity Method Investees	6,944			3,520			8,655			3,520
Unit-Based Compensation	843			714			683			1,057
Other Adjustments for Noncash Items Included in Income	804			329			573			523
Changes in Operating Assets and Liabilities, Net of Assets Acquired and Liabilities Assumed
Increase in Accounts Receivable	(10,048		)	(4,874		)	(8,696		)	(14,054		)
Increase in Accounts Payable	19,364			3,241			16,886			7,173
Other Operating Assets and Liabilities, Net	(3,330		)	(4,338		)	(4,161		)	(1,071		)
Net Cash Provided by Operating Activities	172,749			105,072			266,121			167,936
Cash Flows From Investing Activities
Additions to Property, Plant and Equipment	(138,139		)	(409,059		)	(189,021		)	(540,991		)
Black Diamond Acquisition, Net of Cash Acquired	—			(650,131		)	—			(649,868		)
Additions to Investments	(414,587		)	(119		)	(501,344		)	(426		)
Distributions from Cost Method Investee and Other	588			715			856			1,020
Net Cash Used in Investing Activities	(552,138		)	(1,058,594		)	(689,509		)	(1,190,265		)
Cash Flows From Financing Activities
Distributions to Noncontrolling Interests	(11,985		)	(3,529		)	(17,973		)	(5,814		)
Contributions from Noncontrolling Interests	34,110			515,622			45,494			593,034
Borrowings Under Revolving Credit Facility	560,000			610,000			655,000			690,000
Repayment of Revolving Credit Facility	(250,000		)	(165,000		)	(665,000		)	(725,000		)
Proceeds from Term Loan Credit Facilities							400,000			500,000
Distributions to Unitholders	(53,459		)	(40,913		)	(83,517		)	(63,220		)
Proceeds from Preferred Equity, Net of Issuance Costs	99,450			—			97,198			—
Debt Issuance Costs and Other	(980		)	(1,987		)	(1,884		)	(3,050		)
Net Cash Provided by Financing Activities	377,136			914,193			429,318			985,950
Decrease in Cash, Cash Equivalents, and Restricted Cash	(2,253		)	(39,329		)
Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash							5,930			(36,379		)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period⁽¹⁾	11,691			55,531			11,691			55,531
Cash, Cash Equivalents, and Restricted Cash at End of Period⁽¹⁾	$	9,438		$	16,202		$	17,621		$	19,152


⁽¹⁾	See Note 2. Basis of Presentation for our reconciliation of total cash.

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

Noble Midstream Partners LP

Consolidated Statements of Changes in Equity

(in thousands, unaudited)

Partnership
Common Units Subordinated Units General Partner Noncontrolling Interests Total
December 31, 2017 $ 642,616
$ (168,136 ) $ 520
$ 141,230
$ 616,230
Net Income 23,058
15,484
819
(225 ) 39,136
Contributions from Noncontrolling Interests —
—
—
409,865
409,865
Distributions to Noncontrolling Interests —
—
—
(3,007 ) (3,007 )
Distributions to Unitholders (11,575 ) (7,765 ) (520 ) —
(19,860 )
Black Diamond Equity Ownership Promote Vesting⁽¹⁾
1,215
1,214

(2,429 ) —
Unit-Based Compensation and Other 288
—
—
—
288
March 31, 2018 655,602
(159,203 ) 819
545,434
1,042,652
Net Income 21,210
14,240
1,134
7,858
44,442
Contributions from Noncontrolling Interests —
—
—
105,757
105,757
Distributions to Noncontrolling Interests —
—
—
(522 ) (522 )
Distributions to Unitholders (12,108 ) (8,126 ) (819 ) —
(21,053 )
Black Diamond Equity Ownership Promote Vesting⁽¹⁾
2,731
1,833
—
(4,564 ) —
Unit-Based Compensation and Other 395
—
—
—
395
June 30, 2018 $ 667,830
$ (151,256 ) $ 1,134
$ 653,963
$ 1,171,671

December 31, 2018 $ 699,866
$ (130,207 ) $ 2,421
$ 744,153
$ 1,316,233
Net Income 23,967
16,085
3,507
19,696
63,255
Contributions from Noncontrolling Interests —
—
—
15,969
15,969
Distributions to Noncontrolling Interests —
—
—
(4,669 ) (4,669 )
Distributions to Unitholders (13,930 ) (9,316 ) (2,421 ) —
(25,667 )
Black Diamond Equity Ownership Promote Vesting⁽¹⁾
4,092
2,746
—
(6,838 ) —
Unit-Based Compensation and Other 470
—
—
—
470
March 31, 2019 714,465
(120,692 ) 3,507
768,311
1,365,591
Net Income 25,487
6,282
4,640
16,789
53,198
Contributions from Noncontrolling Interests —
—
—
18,141
18,141
Distributions to Noncontrolling Interests —
—
—
(7,316 ) (7,316 )
Distributions to Unitholders (14,534 ) (9,751 ) (3,507 ) —
(27,792 )
Black Diamond Equity Ownership Promote Vesting⁽¹⁾
8,196
—
—
(8,196 ) —
Conversion of Subordinated Units to Common Units ⁽²⁾
(124,161 ) 124,161
—
—
—
Preferred Equity Accretion (3,151 ) —
—
—
(3,151 )
Unit-Based Compensation and Other 273
—
—
—
273
June 30, 2019 $ 606,575
$ —
$ 4,640
$ 787,729
$ 1,398,944



	Partnership
	Common Units			Subordinated Units			General Partner			Noncontrolling Interests			Total
December 31, 2018	$	699,866		$	(130,207	)	$	2,421		$	744,153		$	1,316,233
Net Income	23,967			16,085			3,507			19,696			63,255
Contributions from Noncontrolling Interests	—			—			—			15,969			15,969
Distributions to Noncontrolling Interests	—			—			—			(4,669		)	(4,669		)
Distributions to Unitholders	(13,930		)	(9,316		)	(2,421		)	—			(25,667		)
Black Diamond Equity Ownership Promote Vesting⁽¹⁾	4,092			2,746			—			(6,838		)	—
Unit-Based Compensation and Other	470			—			—			—			470
March 31, 2019	714,465			(120,692		)	3,507			768,311			1,365,591
Net Income	25,487			6,282			4,640			16,789			53,198
Contributions from Noncontrolling Interests	—			—			—			18,141			18,141
Distributions to Noncontrolling Interests	—			—			—			(7,316		)	(7,316		)
Distributions to Unitholders	(14,534		)	(9,751		)	(3,507		)	—			(27,792		)
Black Diamond Equity Ownership Promote Vesting⁽¹⁾	8,196			—			—			(8,196		)	—
Conversion of Subordinated Units to Common Units ⁽²⁾	(124,161		)	124,161			—			—			—
Preferred Equity Accretion	(3,151		)	—			—			—			(3,151		)
Unit-Based Compensation and Other	273			—			—			—			273
June 30, 2019	606,575			—			4,640			787,729			1,398,944
Net Income	34,812			—			5,820			25,751			66,383
Contributions from Noncontrolling Interests	—			—			—			11,384			11,384
Distributions to Noncontrolling Interests	—			—			—			(5,988		)	(5,988		)
Distributions to Unitholders	(25,418		)	—			(4,640		)	—			(30,058		)
Black Diamond Equity Ownership Promote Vesting⁽¹⁾	5,357			—			—			(5,357		)	—
Preferred Equity Accretion	(3,114		)	—			—			—			(3,114		)
Unit-Based Compensation and Other	(163		)	—			—			—			(163		)
September 30, 2019	$	618,049		$	—		$	5,820		$	813,519		$	1,437,388


⁽¹⁾	See Note 2. Basis of Presentation for further discussion of the Black Diamond equity ownership promote vesting.


⁽²⁾	See Note 10. Partnership Distributions for further discussion of the conversion of Subordinated Units.

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

Noble Midstream Partners LP

Consolidated Statements of Changes in Equity

(in thousands, unaudited)



	Partnership
	Common Units			Subordinated Units			General Partner			Noncontrolling Interests			Total
December 31, 2017	$	642,616		$	(168,136	)	$	520		$	141,230		$	616,230
Net Income	23,058			15,484			819			(225		)	39,136
Contributions from Noncontrolling Interests	—			—			—			409,865			409,865
Distributions to Noncontrolling Interests	—			—			—			(3,007		)	(3,007		)
Distributions to Unitholders	(11,575		)	(7,765		)	(520		)	—			(19,860		)
Black Diamond Equity Ownership Promote Vesting⁽¹⁾	1,215			1,214						(2,429		)	—
Unit-Based Compensation and Other	288			—			—			—			288
March 31, 2018	655,602			(159,203		)	819			545,434			1,042,652
Net Income	21,210			14,240			1,134			7,858			44,442
Contributions from Noncontrolling Interests	—			—			—			105,757			105,757
Distributions to Noncontrolling Interests	—			—			—			(522		)	(522		)
Distributions to Unitholders	(12,108		)	(8,126		)	(819		)	—			(21,053		)
Black Diamond Equity Ownership Promote Vesting⁽¹⁾	2,731			1,833			—			(4,564		)	—
Unit-Based Compensation and Other	395			—			—			—			395
June 30, 2018	667,830			(151,256		)	1,134			653,963			1,171,671
Net Income	25,825			17,330			1,462			4,086			48,703
Contributions from Noncontrolling Interests	—			—			—			77,412			77,412
Distributions to Noncontrolling Interests	—			—			—			(2,285		)	(2,285		)
Distributions to Unitholders	(12,669		)	(8,504		)	(1,134		)	—			(22,307		)
Black Diamond Equity Ownership Promote Vesting ⁽¹⁾	3,389			2,275			—			(5,664		)	—
Unit-Based Compensation and Other	340			—			—			—			340
September 30, 2018	$	684,715		$	(140,155	)	$	1,462		$	727,512		$	1,273,534


⁽¹⁾	See Note 2. Basis of Presentation for further discussion of the Black Diamond equity ownership promote vesting.

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

Table of Contents

Noble Midstream Partners LP

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Organization and Nature of Operations

Organization Noble Midstream Partners LP (the Partnership, NBLX, we, us or our) is a growth-oriented Delaware master limited partnership formed in December 2014 by our sponsor, Noble Energy, Inc. (Noble or Parent), to own, operate, develop and acquire a wide range of domestic midstream infrastructure assets. Our current focus areas are the Denver-Julesburg Basin (DJ Basin) in Colorado and the Southern Delaware Basin position of the Permian Basin (Delaware Basin) in Texas.

Partnership Assets Our assets consist of ownership interests in certain development companies (DevCos) which serve specific areas and integrated development plan (IDP) areas and consist of the following:



DevCo	Areas Served	NBLX Dedicated Service	NBLX Ownership	Noncontrolling Interest ⁽¹⁾
Colorado River DevCo LP	Wells Ranch IDP (DJ Basin) East Pony IDP (DJ Basin) All Noble DJ Basin Acreage	Crude Oil Gathering Natural Gas Gathering Water Services Crude Oil Gathering Crude Oil Treating	100%	N/A
San Juan River DevCo LP	East Pony IDP (DJ Basin)	Water Services	25%	75%
Green River DevCo LP	Mustang IDP (DJ Basin)	Crude Oil Gathering Natural Gas Gathering Water Services	25%	75%
Laramie River DevCo LP	Greeley Crescent IDP (DJ Basin)	Crude Oil Gathering Water Services	100%	N/A
Laramie River DevCo LP	Black Diamond Dedication Area (DJ Basin)	Crude Oil Gathering Natural Gas Gathering	54.4%	45.6%
Blanco River DevCo LP	Delaware Basin	Crude Oil Gathering Natural Gas Gathering Produced Water Services	40%	60%
Gunnison River DevCo LP	Bronco IDP (DJ Basin)	Crude Oil Gathering Water Services	5%	95%
Trinity River DevCo LLC ⁽²⁾	Delaware Basin	Crude Oil Transmission Natural Gas Compression	100%	N/A
Dos Rios DevCo LLC ⁽³⁾	Delaware Basin	Crude Oil Transmission Y-Grade Transmission	100%	N/A


⁽¹⁾	The noncontrolling interest represents Noble’s retained ownership interest in each DevCo. The noncontrolling interest in Black Diamond Gathering LLC (Black Diamond) represents Greenfield Member’s interest in Black Diamond.


⁽²⁾	Our ownership interest in Advantage Pipeline Holdings, L.L.C. (the Advantage Joint Venture) is owned through Trinity River DevCo LLC. See Note 7. Investments.


⁽³⁾	Our ownership interests in Delaware Crossing LLC (the Delaware Crossing Joint Venture), EPIC Y-Grade, LP (EPIC Y-Grade) and EPIC Crude Holdings, LP (EPIC Crude) are owned through wholly-owned subsidiaries of Dos Rios DevCo LLC. See Note 7. Investments.

Nature of Operations Through our ownership interests in the DevCos, we operate and own interests in the following assets:

crude oil gathering systems;

natural gas gathering systems and compression units;

crude oil treating facilities;

produced water collection, gathering, and cleaning systems;

fresh water storage and delivery systems; and

investments in midstream entities that provide transportation services.

We generate revenues primarily by charging fees on a per unit basis for gathering crude oil and natural gas, delivering and storing fresh water, and collecting, cleaning and disposing of produced water. Additionally, we purchase and sell crude oil to customers at various delivery points on our gathering systems.

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Noble Midstream Partners LP

Notes to Consolidated Financial Statements (Unaudited)

Note 2. Basis of Presentation

Basis of Presentation and Consolidation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with 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 U.S. GAAP for complete financial statements. The accompanying consolidated financial statements at ~~June~~September 30, 2019 and December 31, 2018 and for the three and ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 contain all normally recurring adjustments considered necessary for a fair presentation of our financial position, results of operations, cash flows and equity for such periods.

In Note 8. Segment Information, we report a new Investments in Midstream Entities reportable segment and present prior period amounts on a comparable basis. Prior period segment information has been reclassified to conform to the current period presentation.

Operating results for the three and ~~six~~nine months ended ~~June~~September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. We have no items of other comprehensive income; therefore, our net income is identical to our comprehensive income.

Variable Interest Entities Our consolidated financial statements include our accounts and the accounts of the DevCos, each of which we control as general partner. All intercompany balances and transactions have been eliminated upon consolidation. We have determined that the partners with equity at risk in each of the DevCos lack the authority, through voting rights or similar rights, to direct the activities that most significantly impact their economic performance; therefore, each DevCo is considered a variable interest entity, or VIE. Through our 100% ownership interest in Noble Midstream Services, LLC, a Delaware limited liability company which owns controlling interests in each of the DevCos, we have the authority to direct the activities that most significantly affect economic performance and the obligation to absorb losses or the right to receive benefits that could be potentially significant to us. Therefore, we are considered the primary beneficiary and consolidate each of the DevCos in our financial statements. A substantial portion of the financial statement activity associated with our DevCos is captured within the Gathering Systems and Fresh Water Delivery reportable segments. Although our unconsolidated investments are owned through certain DevCos, all financial statement activity associated with our unconsolidated investments are captured within the Investments in Midstream Entities reportable segment. See Note 7. Investments and Note 8. Segment Information.

On January 31, 2018, Black Diamond, an entity formed by Black Diamond Gathering Holdings LLC (the Noble Member), a wholly-owned subsidiary of Noble Midstream Partners LP, and Greenfield Midstream, LLC (the Greenfield Member), completed the acquisition of all of the issued and outstanding limited liability company interests in Saddle Butte Rockies Midstream, LLC and certain affiliates (collectively, Saddle Butte) from Saddle Butte Pipeline II, LLC (Seller). The acquisition of Saddle Butte will be referred to as the Black Diamond Acquisition. See Note 3. Acquisition. Our consolidated financial statements include the accounts of Black Diamond, which we control. We have determined that the partners with equity at risk in Black Diamond lack the authority, through voting rights or similar rights, to direct the activities that most significantly impact their economic performance. Therefore, Black Diamond is considered a VIE. Through our majority representation on the Black Diamond company board of directors as well as our responsibility as operator of the acquired system, we have the authority to direct the activities that most significantly affect economic performance and the obligation to absorb losses or the right to receive benefits that could be potentially significant to us. Therefore, we are considered the primary beneficiary and consolidate Black Diamond in our financial statements.

Black Diamond Equity Ownership Promote Vesting In accordance with the limited liability company agreement of Black Diamond, Noble Member received an equity ownership promote. The capital accounts for Noble Member and Greenfield Member at June 30, 2019 do not equal their agreed equity ownership interests due to the funding structure of the total Black Diamond Acquisition purchase price. ~~See Note~~ ~~3. Acquisition~~.

~~The~~ limited liability company agreement of Black Diamond ~~requires~~required special allocations of gross income to balance the ratio of each member’s capital account to ~~their~~its agreed equity ownership interest over time. The special allocations ~~are~~were accounted for as equity transactions between the Partnership and a subsidiary with no gain or loss recognized. As of September 30, 2019, each member’s capital account agreed to its equity ownership interest and no further special allocations are required. See Note 3. Acquisition.

Noncontrolling Interests We present our consolidated financial statements with a noncontrolling interest section representing Noble’s retained ownership of our DevCos as well as Greenfield Member’s ownership of Black Diamond.

Redeemable Noncontrolling Interest On March 25, 2019, we, through Dos Rios Crude Intermediate LLC, a wholly-owned subsidiary of Dos Rios DevCo LLC, secured a $200 million equity commitment from GIP CAPS Dos Rios Holding Partnership, L.P. (GIP). Upon securing the equity commitment, we issued 100,000 preferred units, with a face value of $1,000 per preferred unit (Preferred Equity). Proceeds from the Preferred Equity totaled $100 million and we incurred offering costs of ~~$3.5~~$3.4 million. The remaining $100 million equity commitment is available for a one-year period, subject to certain conditions

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~~Notes to Consolidated Financial Statements (Unaudited)~~

precedent. Proceeds from the Preferred Equity were utilized to repay a portion of outstanding borrowings under our revolving credit facility. See Note 6. Debt.

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Noble Midstream Partners LP

Notes to Consolidated Financial Statements (Unaudited)

We can redeem the Preferred Equity in whole or in part at any time for cash at a predetermined redemption price. The predetermined redemption price is based on the greater of a defined internal rate of return or the multiple on invested capital. GIP can request redemption of the Preferred Equity following the later of the sixth anniversary of the Preferred Equity closing or the fifth anniversary of the EPIC Crude pipeline completion date at a pre-determined base return. As GIP’s redemption right is outside of our control, the Preferred Equity is not considered to be a component of equity on the consolidated balance sheet, and such Preferred Equity is reported as mezzanine equity on the consolidated balance sheet. In addition, because the Preferred Equity was issued by a subsidiary of the Partnership and is held by a third party, it is considered a redeemable noncontrolling interest.

The Preferred Equity was recorded initially at fair value on the issuance date. Subsequent to issuance, we accrete changes in the redemption value of the Preferred Equity from the date of issuance to GIP’s earliest redemption date of the Preferred Equity. The Preferred Equity is perpetual and has a 6.5% annual dividend rate, payable quarterly in cash, with the ability to accrue unpaid dividends during the first two years following the closing. During any quarter in which a dividend is accrued, the accreted value of the Preferred Equity will be increased by the accrued but unpaid dividend (i.e., a paid-in-kind dividend). The dividends for the first ~~and second~~three quarters of 2019 were paid-in-kind. Accretion during the ~~six~~three and nine months ended ~~June~~September 30, 2019 was approximately ~~$3.2 million.~~$3.1 million and $6.3 million, respectively.

Accounting for Investments We use the equity method of accounting for our investments in the Advantage Joint Venture, the Delaware Crossing Joint Venture, EPIC Y-Grade and EPIC Crude, as we do not control, but do exert significant influence over their operations. We use the cost method of accounting for our investment in White Cliffs Pipeline L.L.C. (White Cliffs) as we have virtually no influence over its operations and financial policies. See Note 7. Investments.

Leases We determine whether an arrangement contains a lease based on the conveyed rights and obligations at the inception date. If an agreement contains a lease, at the commencement date, we record a right-of-use (ROU) asset and a corresponding lease liability based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate to determine the present value of lease payments, we use our hypothetical secured borrowing rate based on information available at lease commencement. The weighted average discount rate is 3.69% for operating leases and 2.80% for our finance lease.

Leases with an initial term of 12 months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one month to one year or more. Additionally, some of our leases include an option for early termination. We include renewal periods and exclude termination periods from our lease term if, at commencement, it is reasonably likely that we will exercise the option.

Additionally, we have lease agreements that include lease and non-lease components, which are generally accounted for as a single lease component. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. See Note 9. Leases

Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Management evaluates estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic and commodity price environment.

Intangible Assets Our intangible asset accumulated amortization totaled approximately ~~$29.6~~$53.7 million and ~~$45.6~~$29.6 million as of September 30, 2019 and December 31, 2018, ~~and June 30, 2019,~~ respectively. Intangible asset amortization expense totaled approximately $8.1 million for the three months ended ~~June~~September 30, 2019 and 2018 and ~~2019 and $13.3~~$24.2 million and ~~$16.0~~$21.4 million for the ~~six~~nine months ended ~~June~~September 30, ~~2018~~2019 and ~~2019,~~2018, respectively. The weighted average amortization period for our intangible assets is approximately 11 years.

Recently Adopted Accounting Standards

Leases In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02 (ASU 2016-02), which creates Topic 842 – Leases (ASC 842). The standard requires lessees to recognize a ROU asset and lease liability on the balance sheet for the rights and obligations created by leases. ASC 842 also requires disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases.

~~The new standard provided a number of optional practical expedients. We elected:~~

910

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Noble Midstream Partners LP

Notes to Consolidated Financial Statements (Unaudited)

The new standard provided a number of optional practical expedients. We elected:

the package of ‘practical expedients’, permitting us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs;

the practical expedient pertaining to land easements, allowing us to account for existing land easements under previous accounting policy; and

the practical expedient to not separate lease and non-lease components for the majority of our leases.

We adopted ASC 842 on January 1, 2019 using the modified retrospective approach. The standard did not materially impact our consolidated balance sheet or consolidated statement of operations and had no impact on our consolidated statement of cash flows. Prior period financial statements were not adjusted. See Note 9. Leases.

Recently Issued Accounting Standards

Financial Instruments: Credit Losses In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13): Financial Instruments – Credit Losses, which replaces the incurred loss impairment methodology ~~used for certain financial instruments~~ with a methodology that reflects current expected credit losses. The ~~current expected credit loss (CECL) model~~standard applies to a broad scope of financial instruments, including financial assets measured at amortized ~~cost. CECL also applies to~~cost and off-balance sheet credit exposures not accounted for as insurance, such as financial guarantees and other unfunded loan commitments. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption ~~permitted,~~permitted.

We are executing an implementation plan, which includes data collection, contract review and ~~shall be applied using a modified retrospective approach through a cumulative-effect adjustment~~assessment, and determination of necessary systems, processes and internal controls. We continue to ~~retained earnings as of the beginning of the adoption period.~~

~~The FASB subsequently issued Accounting Standards Update No. 2019-04 (ASU 2019-04):~~ ~~Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives, and Topic 825, Financial Instruments~~ ~~and Accounting Standards Update No. 2019-05 (ASU 2019-05):~~ ~~Financial Instruments-Credit Losses (Topic 326)-Targeted Transition Relief~~.evaluate ASU 2019-04 and ASU 2019-05 provide certain codification improvements related to CECL implementation and targeted transition relief consisting of an option to irrevocably elect the fair value option for eligible instruments.

~~From evaluation of~~2016-03; based on our current credit portfolio which includes receivables for midstream services and crude oil sales, historical credit losses have been de minimis and we believe that our expected future credit losses will not be significant. As such, we do not believe adoption of the standard will have a material impact on our financial statements. We have developed and are executing an implementation plan, which includes data collection, contract review and assessment, and evaluation of our systems, processes and internal controls. We will continue to monitor changes in our credit portfolio and off-balance sheet exposures as our implementation plan progresses.

Reconciliation of Total Cash We define total cash as cash, cash equivalents and restricted cash. Our restricted cash is included in other current assets in our consolidated balance sheets. The following table provides a reconciliation of total cash:


	Six Months Ended June 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Cash and Cash Equivalents at Beginning of Period	$	10,740	$	18,026	$	10,740	$	18,026
Restricted Cash at Beginning of Period^{(1) (2)}	951		37,505		951		37,505
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	$	11,691	$	55,531	$	11,691	$	55,531

Cash and Cash Equivalents at End of Period	$	9,388	$	16,202	$	17,571	$	18,201
Restricted Cash at End of Period⁽¹⁾	50		—		50		951
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	9,438	$	16,202	$	17,621	$	19,152


⁽¹⁾	Restricted cash represents the amount held as collateral at December 31, 2018 and ~~June~~September 30, 2019 for certain of our letters of credit.


⁽²⁾	Restricted cash represents the amount held in escrow at December 31, 2017 for the Black Diamond Acquisition.

Revenue Recognition We recognize revenue at an amount that reflects the consideration to which we expect to be entitled in exchange for transferring goods or services to a customer, using a five-step process, in accordance with ASC 606 – Revenue from Contracts with Customers (ASC 606).

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~~Notes to Consolidated Financial Statements (Unaudited)~~

Under ASC 606, remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied as of ~~June~~September 30, 2019. A certain fresh water delivery affiliate revenue agreement contains a minimum volume commitment for the delivery of fresh water for a fixed fee per barrel with annual percentage escalations. The following table includes estimated revenues, as of ~~June~~September 30, 2019, for the agreement. Our actual volumes delivered may exceed the future minimum volume commitment.


(in thousands)	Midstream Services — Affiliate		Midstream Services — Affiliate
Remainder of 2019	$	15,232	$	7,616
2020	36,817		36,817
2021	37,635		37,635
Total	$	89,684	$	82,068

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Noble Midstream Partners LP

Notes to Consolidated Financial Statements (Unaudited)

Note 3. Acquisition

On January 31, 2018, Black Diamond completed the Black Diamond Acquisition for approximately $638.5 million in cash. Noble Member and Greenfield Member each funded its share of the purchase price, approximately $319.9 million and $318.6 million, respectively, through contributions to Black Diamond. Noble Member funded its share of the purchase price through a combination of cash on hand and borrowings under its revolving credit facility. See Note 6. Debt.

In addition to the payment to the Seller, Black Diamond, through an additional contribution from Greenfield Member, paid PDC Energy, Inc. (PDC Energy) approximately $24.1 million to expand PDC Energy’s acreage dedication as well as extend the duration of the acreage dedication by five years. In accordance with the limited liability company agreement of Black Diamond, Noble Member received a 54.4% equity ownership interest in Black Diamond and Greenfield Member received a 45.6% equity ownership interest in Black Diamond. Noble Member’s agreed equity ownership interest ~~includes~~included a 4.4% equity ownership interest promote which ~~will~~was designed to vest only after Noble Member iswas allocated an amount of gross revenue equal to the contributions by Greenfield Member in excess of ~~their~~its agreed equity ownership interest. As of September 30, 2019, Noble Member has received the necessary allocations of gross revenue and the equity ownership interest promote has vested. See Note 2. Basis of Presentation.

We serve as the operator of the Black Diamond system. We acquired a large-scale integrated gathering system located in the DJ Basin with approximately 160 miles of pipeline in operation and delivery capacity of approximately 300 MBbl/d as well as approximately 141,000 dedicated acres from six customers under fixed-fee arrangements.

Purchase Price Allocation The transaction has been accounted for as a business combination, using the acquisition method. The following table represents the final allocation of the total Black Diamond Acquisition purchase price to the assets acquired and the liabilities assumed based on the fair value at the acquisition date, with any excess of the purchase price over the estimated fair value of the identifiable net assets acquired recorded as goodwill.

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~~Notes to Consolidated Financial Statements (Unaudited)~~

The following table sets forth our final purchase price allocation:



(in thousands)
Cash Consideration	$	638,266
PDC Energy Payment	24,120
Current Liabilities Assumed	18,259
Total Purchase Price and Liabilities Assumed	$	680,645

Cash and Restricted Cash	$	12,518
Accounts Receivable	10,661
Other Current Assets	2,206
Property, Plant and Equipment	205,766
Intangible Assets⁽¹⁾	339,760
Fair Value of Identifiable Assets	570,911
Implied Goodwill ⁽²⁾	109,734
Total Asset Value	$	680,645


⁽¹⁾	The customer contracts we acquired are long-term, fixed-fee contracts for the purchase and sale of crude oil. Fair value was calculated using the multi-period excess earnings method under the income approach for the existing customers. The fair value was determined using unobservable inputs and is considered to be a Level 3 measurement on the fair value hierarchy.


⁽²⁾	Based upon the final purchase price allocation, we have recognized $109.7 million of goodwill, all of which is assigned to the Black Diamond reporting unit within the Gathering Systems reportable segment. As a result of the acquisition, we expect to realize certain synergies which may result from our operation of the Black Diamond system.

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Noble Midstream Partners LP

Notes to Consolidated Financial Statements (Unaudited)

Pro Forma Results The following pro forma consolidated financial information was derived from the historical financial statements of the Partnership and Saddle Butte and gives effect to the acquisition as if it had occurred on January 1, 2018. The pro forma results of operations do not include any cost savings or other synergies that may result from the Black Diamond Acquisition or any estimated costs that have been or will be incurred by us to integrate the acquired assets. The pro forma consolidated financial information has been included for comparative purposes and is not necessarily indicative of the results that might have actually occurred had the acquisition taken place on January 1, 2018; furthermore, the financial information is not intended to be a projection of future results.


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per unit amounts)	2019 ⁽¹⁾		2018 ⁽¹⁾		2019 ⁽¹⁾		2018		2019 ⁽¹⁾		2018 ⁽¹⁾		2019 ⁽¹⁾		2018
Revenues	$	158,261	$	121,971	$	306,221	$	230,216	$	169,323	$	139,163	$	475,544	$	369,379
Net Income	53,198		44,442		116,453		81,092		66,383		48,703		182,836		129,796
Net Income Attributable to Noble Midstream Partners LP	36,409		36,584		79,968		74,279		40,632		44,617		120,600		118,896

Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic and Diluted
Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic
Common Units	$	0.79	$	0.90	$	1.77	$	1.83	$	0.88	$	1.09	$	2.65	$	2.92
Subordinated Units	$	0.84	$	0.90	$	1.91	$	1.83	$	—	$	1.09	$	2.89	$	2.92

Net Income Attributable to Limited Partners Per Limited Partner Unit — Diluted
Common Units									$	0.88	$	1.09	$	2.64	$	2.92
Subordinated Units									$	—	$	1.09	$	2.89	$	2.92


⁽¹⁾	No pro forma adjustments were made for the period as Black Diamond operations are included in our results for the full period.

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~~Notes to Consolidated Financial Statements (Unaudited)~~

Note 4. Transactions with Affiliates

Revenues We derive a substantial portion of our revenues from commercial agreements with Noble. Revenues generated from commercial agreements with Noble and its affiliates consist of the following:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018		2019		2018		2019		2018
Crude Oil, Natural Gas and Produced Water Gathering	$	66,749	$	46,871	$	130,322	$	89,895	$	79,208	$	54,674	$	209,530	$	144,569
Fresh Water Delivery	18,367		19,074		45,954		39,358		20,847		17,416		66,801		56,774
Other	766		979		1,602		1,934		791		1,046		2,393		2,980
Total Midstream Services — Affiliate	$	85,882	$	66,924	$	177,878	$	131,187	$	100,846	$	73,136	$	278,724	$	204,323

Expenses General and administrative expense consists of the following:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018		2019		2018		2019		2018
General and Administrative Expense — Affiliate	$	1,848	$	1,894	$	3,796	$	3,705	$	1,805	$	1,894	$	5,601	$	5,599
General and Administrative Expense — Third Party	2,990		3,086		5,065		11,717		2,324		2,310		7,389		14,027
Total General and Administrative Expense	$	4,838	$	4,980	$	8,861	$	15,422	$	4,129	$	4,204	$	12,990	$	19,626

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Noble Midstream Partners LP

Notes to Consolidated Financial Statements (Unaudited)

Note 5. Property, Plant and Equipment

Property, plant and equipment, at cost, is as follows:


(in thousands)	June 30, 2019			December 31, 2018			September 30, 2019			December 31, 2018
Crude Oil, Natural Gas and Produced Water Gathering Systems and Facilities	$	1,377,271		$	1,199,679		$	1,403,678		$	1,199,679
Fresh Water Delivery Systems	80,791			78,820			80,840			78,820
Crude Oil Treating Facilities	21,650			20,027			23,140			20,027
Construction-in-Progress ⁽¹⁾	142,173			202,083			175,162			202,083
Total Property, Plant and Equipment, at Cost	1,621,885			1,500,609			1,682,820			1,500,609
Accumulated Depreciation and Amortization	(102,338		)	(79,357		)	(114,789		)	(79,357		)
Property, Plant and Equipment, Net	$	1,519,547		$	1,421,252		$	1,568,031		$	1,421,252

⁽¹⁾

~~Construction-in-progress~~Construction-in-Progress at ~~June~~September 30, 2019 primarily includes ~~$115.1~~$146.7 million in gathering system projects, ~~$3.7~~$8.3 million in fresh water delivery system projects and ~~$22.3~~$18.8 million in equipment for use in future projects. ~~Construction-in-progress~~Construction-in-Progress at December 31, 2018 primarily includes $147.1 million in gathering system projects, $21.6 million in fresh water delivery system projects and $32.8 million in equipment for use in future projects.

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~~Notes to Consolidated Financial Statements (Unaudited)~~

Note 6. Debt

Debt consists of the following:


	June 30, 2019					December 31, 2018					September 30, 2019					December 31, 2018
(in thousands, except percentages)	Debt			Interest Rate		Debt			Interest Rate		Debt			Interest Rate		Debt			Interest Rate
Revolving Credit Facility, due March 9, 2023	$	370,000		3.77	%	$	60,000		3.67	%	$	50,000		3.45	%	$	60,000		3.67	%
Term Loan Credit Facility, due July 31, 2021	500,000			3.51	%	500,000			3.42	%
2018 Term Loan Credit Facility, due July 31, 2021											500,000			3.17	%	500,000			3.42	%
2019 Term Loan Credit Facility, due August 23, 2022											400,000			3.05	%	—			—	%
Finance Lease Obligation ⁽¹⁾	2,389			—	%	3,231			—	%	2,082			—	%	3,231			—	%
Total	872,389					563,231					952,082					563,231
Term Loan Credit Facility Unamortized Debt Issuance Costs	(872		)			(979		)			(1,432		)			(979		)
Total Debt	871,517					562,252					950,650					562,252
Finance Lease Obligation Due Within One Year ⁽¹⁾	(1,470		)			(3,231		)			(1,743		)			(3,231		)
Long-Term Debt	$	870,047				$	559,021				$	948,907				$	559,021


⁽¹⁾	See Note 9. Leases.

2019 Term Loan Credit Facility On August 23, 2019, we entered into a three-year senior unsecured term loan credit facility that permits aggregate borrowings of up to $400 million. Proceeds from the term loan were primarily used to repay a portion of the outstanding borrowings under our revolving credit facility and pay fees and expenses in connection with the term loan credit facility. We incurred approximately $0.6 million of fees and expenses.

The term loan credit facility contains usual and customary representations and warranties, affirmative and negative covenants, and events of default that are substantially the same as those contained in our revolving credit facility and the 2018 term loan credit facility. Upon the occurrence and during the continuation of an event of default under the term loan credit facility the lenders may declare all amounts outstanding under the term loan credit facility to be immediately due and payable and exercise other remedies as provided by applicable law.

Compliance with Covenants The revolving credit facility and term loan credit ~~facility~~facilities require us to comply with certain financial covenants as of the end of each fiscal quarter. We were in compliance with such covenants as of ~~June~~September 30, 2019.

Fair Value of Long-Term Debt Our revolving credit facility and term loan credit ~~facility~~facilities are variable-rate, non-public debt. The fair value of our revolving credit facility and term loan credit ~~facility~~facilities approximates the carrying amount. The fair value is estimated based on observable inputs. As such, we consider the fair value of these facilities to be a Level 2 measurement on the fair value hierarchy.

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Noble Midstream Partners LP

Notes to Consolidated Financial Statements (Unaudited)

Note 7. Investments

We have ownership interests in the ~~following:~~following entities:

3.33% interest in White Cliffs;

50% interest in the Advantage Joint Venture;

50% interest in the Delaware Crossing Joint Venture;

15% interest in EPIC Y-Grade; and

30% interest in EPIC Crude.

Delaware Crossing Joint Venture On February 7, 2019, we executed definitive agreements with Salt Creek Midstream LLC (Salt Creek) and completed the formation of the Delaware Crossing Joint Venture to construct a crude oil pipeline system with a capacity of 160 MBbl/d in the Delaware Basin. During the first ~~six~~nine months of 2019, we have made capital contributions of approximately ~~$38.3~~$51.5 million.

EPIC Y-Grade On January 31, 2019, we exercised and closed our option with EPIC Midstream Holdings, LP (EPIC) to acquire an interest in EPIC Y-Grade. EPIC Y-Grade is constructing an approximately 700-mile pipeline linking natural gas liquid (NGL) reserves in the Permian Basin and Eagle Ford Shale to Gulf Coast refiners, petrochemical companies, and export markets. During the first ~~six~~nine months of 2019, we have made capital contributions of approximately ~~$149.5~~$166.1 million.

EPIC Crude On January 31, 2019, we exercised our option to acquire an interest in EPIC Crude. On March 8, 2019, we closed our option with EPIC to acquire the interest in EPIC Crude. EPIC Crude is constructing an approximately 700-mile pipeline with a capacity of 590 MBbl/d from the Delaware Basin to the Gulf Coast. During the first ~~six~~nine months of 2019, we have made capital contributions of approximately ~~$216.2~~$268.7 million.

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~~Noble Midstream Partners LP~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

The following table presents our investments at the dates indicated:


(in thousands)	June 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
White Cliffs	$	10,187	$	9,373	$	10,274	$	9,373
Advantage Joint Venture	74,555		72,944		74,711		72,944
Delaware Crossing Joint Venture	37,288		—		50,435		—
EPIC Y-Grade	150,399		—		166,491		—
EPIC Crude	214,954		—		263,476		—
Total Investments	$	487,383	$	82,317	$	565,387	$	82,317

The following table presents our investment ~~income (loss)~~loss (income) for the periods indicated:


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2019			2018		2019			2018		2019			2018			2019			2018
White Cliffs	$	841		$	973	$	1,889		$	1,804	$	(716	)	$	(912	)	$	(2,605	)	$	(2,716	)
Advantage Joint Venture	1,513			2,936		3,754			4,798		(1,867		)	(2,772		)	(5,621		)	(7,569		)
Delaware Crossing Joint Venture	(355		)	—		(1,538		)	—		512			—			2,050			—
EPIC Y-Grade	(1,024		)	—		(1,054		)	—		2,000			—			3,054			—
EPIC Crude	(3,245		)	—		(3,245		)	—		6,130			—			9,375			—
Other ⁽¹⁾	522			182		787			357		(438		)	(182		)	(1,225		)	(540		)
Total Investment (Loss) Income	$	(1,748	)	$	4,091	$	593		$	6,959
Total Investment Loss (Income)											$	5,621		$	(3,866	)	$	5,028		$	(10,825	)


⁽¹⁾	Represents income associated with our fee for serving as the operator of the Advantage Joint Venture and Delaware Crossing Joint Venture.

Note 8. Segment Information

We manage our operations by the nature of the services we offer. Our reportable segments comprise the structure used to make key operating decisions and assess performance. As a result of our increased investment in midstream entities during first quarter 2019, we have established an Investments in Midstream Entities reportable segment. Our Investments in Midstream Entities reportable segment includes all activity associated with our unconsolidated investments. See Note 7. Investments.

We are now organized into the following reportable segments: Gathering Systems (crude oil, natural gas, and produced water gathering, crude oil treating, and crude oil sales), Fresh Water Delivery, Investments in Midstream Entities and Corporate. We

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Noble Midstream Partners LP

Notes to Consolidated Financial Statements (Unaudited)

often refer to the services of our Gathering Systems and Fresh Water Delivery reportable segments collectively as our midstream services. Prior period segment information has been reclassified to conform to the current period presentation.

~~Table of Contents~~

~~Noble Midstream Partners LP~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

Summarized financial information concerning our reportable segments is as follows:


(in thousands)	Gathering Systems⁽¹⁾		Fresh Water Delivery⁽¹⁾		Investments in Midstream Entities			Corporate⁽²⁾			Consolidated		Gathering Systems⁽¹⁾		Fresh Water Delivery⁽¹⁾		Investments in Midstream Entities			Corporate⁽²⁾			Consolidated
Three Months Ended June 30, 2019
Three Months Ended September 30, 2019
Midstream Services — Affiliate	$	67,515	$	18,367	$	—		$	—		$	85,882	$	79,999	$	20,847	$	—		$	—		$	100,846
Midstream Services — Third Party	18,143		2,454		—			—			20,597		17,475		2,132		—			—			19,607
Crude Oil Sales — Third Party	51,782		—		—			—			51,782		48,870		—		—			—			48,870
Total Revenues	137,440		20,821		—			—			158,261		146,344		22,979		—			—			169,323
Income (Loss) Before Income Taxes	49,133		13,621		(1,748		)	(7,717		)	53,289		61,952		18,825		(5,621		)	(8,681		)	66,475
Additions to Long-Lived Assets	55,850		1,113		—			240			57,203		56,781		4,646		—			299			61,726
Additions to Investments	—		—		143,984			—			143,984		—		—		86,757			—			86,757

Three Months Ended June 30, 2018
Three Months Ended September 30, 2018
Midstream Services — Affiliate	$	47,850	$	19,074	$	—		$	—		$	66,924	$	55,720	$	17,416	$	—		$	—		$	73,136
Midstream Services — Third Party	10,368		3,101		—			—			13,469		14,005		5,929		—			—			19,934
Crude Oil Sales — Third Party	41,578		—		—			—			41,578		46,093		—		—			—			46,093
Total Revenues	99,796		22,175		—			—			121,971		115,818		23,345		—			—			139,163
Income (Loss) Before Income Taxes	29,066		18,434		4,091			(6,966		)	44,625		34,780		18,129		3,866			(8,166		)	48,609
Additions to Long-Lived Assets	149,571		5,190		—			—			154,761		72,948		6,159		—			—			79,107
Additions to Investments	—		—		119			—			119		—		—		307			—			307

Six Months Ended June 30, 2019
Nine Months Ended September 30, 2019
Midstream Services — Affiliate	$	131,924	$	45,954	$	—		$	—		$	177,878	$	211,923	$	66,801	$	—		$	—		$	278,724
Midstream Services — Third Party	37,428		6,263		—			—			43,691		54,903		8,395		—			—			63,298
Crude Oil Sales — Third Party	84,652		—		—			—			84,652		133,522		—		—			—			133,522
Total Revenues	254,004		52,217		—			—			306,221		400,348		75,196		—			—			475,544
Income (Loss) Before Income Taxes	96,719		36,830		593			(17,491		)	116,651		158,671		55,655		(5,028		)	(26,172		)	183,126
Additions to Long-Lived Assets	130,656		1,394		—			511			132,561		187,437		6,040		—			810			194,287
Additions to Investments	—		—		414,587			—			414,587		—		—		501,344			—			501,344

Six Months Ended June 30, 2018
Nine Months Ended September 30, 2018
Midstream Services — Affiliate	$	91,829	$	39,358	$	—		$	—		$	131,187	$	147,549	$	56,774	$	—		$	—		$	204,323
Midstream Services — Third Party	17,826		7,003		—			—			24,829		31,831		12,932		—			—			44,763
Crude Oil Sales — Third Party	63,688		—		—			—			63,688		109,781		—		—			—			109,781
Total Revenues	173,343		46,361		—			—			219,704		289,161		69,706		—			—			358,867
Income (Loss) Before Income Taxes	59,894		35,937		6,959			(18,955		)	83,835		94,674		54,066		10,825			(27,121		)	132,444
Additions to Long-Lived Assets	596,960		12,552		—			—			609,512		669,908		18,711		—			—			688,619
Additions to Investments	—		—		119			—			119		—		—		426			—			426

June 30, 2019
September 30, 2019
Total Assets	$	1,911,769	$	87,618	$	487,383		$	11,761		$	2,498,531	$	1,953,417	$	87,100	$	565,387		$	16,862		$	2,622,766

December 31, 2018
Total Assets	$	1,804,100	$	96,280	$	82,317		$	15,220		$	1,997,917	$	1,804,100	$	96,280	$	82,317		$	15,220		$	1,997,917

⁽¹⁾

A substantial portion of the financial statement activity associated with our DevCos is captured within the Gathering Systems and Fresh Water Delivery reportable segments. Although our unconsolidated investments are owned through certain DevCos, all financial statement activity associated with our unconsolidated investments is captured within the Investments in Midstream Entities reportable segment. As our DevCos represent VIEs, see the above reportable segments for our VIEs impact to the consolidated financial statements.


⁽²⁾	The Corporate segment includes all general Partnership activity not attributable to our DevCos.

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Noble Midstream Partners LP

Notes to Consolidated Financial Statements (Unaudited)

Note 9. Leases

In the normal course of business, we enter into lease agreements to support our operations. We lease field equipment as well as water and pipeline transportation assets.

Operating Leases Our operating leases consist of field equipment and transportation assets. Our field equipment leases have fixed monthly payments over a minimum term with options to extend the rental period on a month-to-month basis. Our leased transportation assets have variable monthly payments (price per barrel throughput) over a minimum term with the option to extend on a year-to-year basis. Our operating and variable lease expense is recorded in direct operating expense in our consolidated statement of operations and was de minimis for the three and ~~six~~nine months ended ~~June~~September 30, 2019.

Finance Leases We lease water assets for use in the performance of our fresh water delivery services. The amount of the lease obligation is based on the discounted present value of future minimum lease payments, and therefore does not reflect future cash lease payments. Our finance lease expense is recorded in depreciation and amortization expense in our consolidated statement of operations and was de minimis for the three and ~~six~~nine months ended ~~June~~September 30, 2019. Interest expense for our finance lease is recorded in interest expense in our consolidated statement of operations and was de minimis for the three and ~~six~~nine months ended ~~June~~September 30, 2019.

Short Term Leases Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Short term lease expense is recorded in direct operating expense in our consolidated statement of operations and was de minimis for the three and ~~six~~nine months ended ~~June~~September 30, 2019.

Balance Sheet Information ROU assets and lease liabilities are as follows:


(thousands)	Balance Sheet Location	June 30, 2019		Balance Sheet Location	September 30, 2019
Assets
Operating ⁽¹⁾	Other Noncurrent Assets	$	2,024	Other Noncurrent Assets	$	3,303
Finance ⁽²⁾	Total Property, Plant and Equipment, Net	4,047		Total Property, Plant and Equipment, Net	3,958
Total ROU Assets		$	6,071		$	7,261
Liabilities
Current
Operating	Other Current Liabilities	$	1,558	Other Current Liabilities	$	2,621
Finance	Other Current Liabilities	1,470		Other Current Liabilities	1,743
Noncurrent
Operating	Other Noncurrent Liabilities	445		Other Noncurrent Liabilities	667
Finance ⁽³⁾	Long-Term Debt	919		Long-Term Debt	339
Total Lease Liabilities		$	4,392		$	5,370


⁽¹⁾	All of our operating leases mature inbetween 2019 ~~or 2020.~~through 2021. Future operating lease payments of ~~$0.9~~$0.7 million are due in 2019, ~~and $1.1~~$2.5 million are due in ~~2020.~~2020 and $0.2 million are due in 2021.


⁽²⁾	Finance lease assets are recorded net of accumulated amortization of $1.0 million as of ~~June~~September 30, 2019.


⁽³⁾	Our finance lease matures during ~~2020.~~2021.

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Noble Midstream Partners LP

Notes to Consolidated Financial Statements (Unaudited)

Note 10. Partnership Distributions

Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash to unitholders of record on the applicable record date. The following table details the distributions paid in respect of the periods presented below:


					Distributions (in thousands)												Distributions (in thousands)
					Limited Partners												Limited Partners
Period	Record Date	Distribution Date	Distribution per Limited Partner Unit		Common Unitholders⁽¹⁾		Subordinated Unitholders		Holder of IDRs		Total		Record Date	Distribution Date	Distribution per Limited Partner Unit		Common Unitholders⁽¹⁾		Subordinated Unitholders		Holder of IDRs		Total
Q4 2017	February 5, 2018	February 12, 2018	$	0.4883	$	11,566	$	7,765	$	520	$	19,851	February 5, 2018	February 12, 2018	$	0.4883	$	11,566	$	7,765	$	520	$	19,851
Q1 2018	May 7, 2018	May 14, 2018	$	0.5110	$	12,103	$	8,126	$	819	$	21,048	May 7, 2018	May 14, 2018	$	0.5110	$	12,103	$	8,126	$	819	$	21,048
Q2 2018													August 6, 2018	August 13, 2018	$	0.5348	$	12,668	$	8,504	$	1,134	$	22,306
Q4 2018	February 4, 2019	February 11, 2019	$	0.5858	$	13,876	$	9,316	$	2,421	$	25,613	February 4, 2019	February 11, 2019	$	0.5858	$	13,876	$	9,316	$	2,421	$	25,613
Q1 2019	May 6, 2019	May 13, 2019	$	0.6132	$	14,534	$	9,751	$	3,507	$	27,792	May 6, 2019	May 13, 2019	$	0.6132	$	14,534	$	9,751	$	3,507	$	27,792
Q2 2019													August 5, 2019	August 12, 2019	$	0.6418	$	25,418	$	—	$	4,640	$	30,058


⁽¹⁾	Distributions to common unitholders does not include distribution equivalent rights on units that vested under the Noble Midstream Partners LP 2016 Long-Term Incentive Plan (the LTIP).

Incentive Distribution Rights Noble currently holds Incentive Distribution Rights (IDRs) that entitle it to receive increasing percentages, up to a maximum of 50%, of the available cash we distribute from operating surplus in excess of $0.4313 per unit per quarter. The maximum distribution of 50% does not include any distributions that Noble may receive on Common Units or Subordinated Units that it owns.

Conversion of Subordinated Units On April 25, 2019, the board of directors of our general partner declared a quarterly cash distribution of $0.6132 per unit for the quarter ended March 31, 2019. The distribution was paid on May 13, 2019 to unitholders of record as of the close of business on May 6, 2019. Upon payment of the distribution, the requirements for the conversion of all Subordinated Units were satisfied under our partnership agreement. As a result, on May 14, 2019, all 15,902,584 Subordinated Units, which were owned entirely by Noble, converted into Common Units on a one-for-one basis and thereafter will participate on terms equal with all other ~~common units~~Common Units in distributions from available cash.

Cash Distributions On ~~July 25,~~October 24, 2019, the board of directors of our general partner declared a quarterly cash distribution of ~~$0.6418~~$0.6716 per unit. The distribution will be paid on ~~August 12,~~November 11, 2019, to unitholders of record as of ~~August 5,~~November 4, 2019. Also on ~~August 12,~~November 11, 2019, a cash incentive distribution of ~~$4.6~~$5.8 million will be made to Noble related to its IDRs, based upon the level of distribution paid per Common Unit.

Note 11. Net Income Per Limited Partner Unit

Our net income is attributed to limited partners, in accordance with their respective ownership percentages, and when applicable, giving effect to incentive distributions paid to Noble, the holder of our IDRs. The Common and Subordinated unitholders represent an aggregate 100% limited partner interest in us. Pursuant to our partnership agreement, to the extent that the quarterly distributions exceed certain target levels, Noble, as the holder of our IDRs, is entitled to receive certain incentive distributions that will result in more net income proportionately being allocated to Noble than to the holders of Common Units and Subordinated Units.

Because we have more than one class of participating securities, we use the two-class method when calculating the net income per unit applicable to limited partners. The classes of participating securities include Common Units, Subordinated Units and IDRs.

Basic and diluted net income per limited partner Common Unit and Subordinated Unit is computed by dividing the respective limited partners’ interest in net income for the period by the weighted-average number of Common Units and Subordinated Units outstanding for the period. Diluted net income per limited partner Common Unit and Subordinated Unit reflects the potential dilution that could occur if agreements to issue Common Units, such as awards under the LTIP, were settled or converted into Common Units. When it is determined that potential Common Units resulting from an award should be included in the diluted net income per limited partner Common and Subordinated Unit calculation, the impact is reflected by applying the treasury stock method. See Note 10. Partnership Distributions for further discussion of the conversion of Subordinated Units on May 14, 2019.

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Noble Midstream Partners LP

Notes to Consolidated Financial Statements (Unaudited)

Our calculation of net income per limited partner Common and Subordinated Unit is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per unit amounts)	2019		2018		2019		2018		2019		2018		2019		2018
Net Income Attributable to Noble Midstream Partners LP	$	36,409	$	36,584	$	79,968	$	75,945	$	40,632	$	44,617	$	120,600	$	120,562
Less: Net Income Attributable to Incentive Distribution Rights	4,640		1,134		8,147		1,953		5,820		1,462		13,967		3,415
Net Income Attributable to Limited Partners	$	31,769	$	35,450	$	71,821	$	73,992	$	34,812	$	43,155	$	106,633	$	117,147

Net Income Attributable to Common Units	$	25,487	$	21,210	$	49,454	$	44,268	$	34,812	$	25,825	$	84,266	$	70,093
Net Income Attributable to Subordinated Units	6,282		14,240		22,367		29,724		—		17,330		22,367		47,054
Net Income Attributable to Limited Partners	$	31,769	$	35,450	$	71,821	$	73,992	$	34,812	$	43,155	$	106,633	$	117,147

Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic and Diluted
Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic
Common Units									$	0.88	$	1.09	$	2.65	$	2.96
Subordinated Units									$	—	$	1.09	$	2.89	$	2.96

Net Income Attributable to Limited Partners Per Limited Partner Unit — Diluted
Common Units	$	0.79	$	0.90	$	1.77	$	1.87	$	0.88	$	1.09	$	2.64	$	2.96
Subordinated Units	$	0.84	$	0.90	$	1.91	$	1.87	$	—	$	1.09	$	2.89	$	2.96

Weighted Average Limited Partner Units Outstanding — Basic
Common Units	32,090		23,686		27,916		23,684		39,604		23,688		31,855		23,686
Subordinated Units	7,514		15,903		11,685		15,903		—		15,903		7,747		15,903

Weighted Average Limited Partner Units Outstanding — Diluted
Common Units	32,121		23,700		27,944		23,699		39,624		23,704		31,879		23,701
Subordinated Units	7,514		15,903		11,685		15,903		—		15,903		7,747		15,903

Antidilutive Restricted Units	68		27		71		21		44		21		66		22

Note 12. Commitments and Contingencies

We may become involved in various legal proceedings in the ordinary course of business. These proceedings would be subject to the uncertainties inherent in any litigation, and we will regularly assess the need for accounting recognition or disclosure of these contingencies. We would expect to defend ourselves vigorously in all such matters. Based on currently available information, we believe it is unlikely that the outcome of known matters would have a material adverse impact on our combined financial condition, results of operations or cash flows.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide a narrative about our business from the perspective of our management. Our MD&A is presented in the following major sections:


•	Executive Overview;


•	Operating Outlook;


•	Results of Operations; and


•	Liquidity and Capital Resources.

MD&A is our analysis of the Partnership’s financial performance and of significant trends that may affect future performance. It should be read in conjunction with the consolidated financial statements and notes appearing elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2018. It contains forward-looking statements including, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions. The words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions identify forward-looking statements. We do not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws. Readers are cautioned that such forward-looking statements should be read in conjunction with ~~the~~ our disclosures in Item 3 of this report under the heading: “Disclosure Regarding Forward-Looking Statements.”

EXECUTIVE OVERVIEW

The following discussion highlights significant operating and financial results for ~~second~~third quarter 2019. This discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2018, which includes disclosures regarding our critical accounting policies as part of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Significant Results

The following discussion highlights significant operating, financial and transactional results for ~~second~~third quarter 2019.

Significant Operating Results Include:

average crude oil sales volumes of 10 MBbl/d, an increase of ~~38%~~32% as compared with ~~second~~third quarter 2018;

average crude oil gathering volumes of ~~217~~230 MBbl/d, an increase of ~~44%~~31% as compared with ~~second~~third quarter 2018;

average natural gas gathering volumes of ~~537~~618 BBtu/d, an increase of ~~100%~~91% as compared with ~~second~~third quarter 2018;

average produced water gathered volumes of ~~164~~180 MBbl/d, an increase of ~~90%~~48% as compared with ~~second~~third quarter 2018; and

average fresh water delivered volumes of ~~179~~135 MBbl/d, ~~an increase~~a decrease of ~~12%~~31% as compared with ~~second~~third quarter 2018.

Significant Financial Results Include:

net income of ~~$53.2~~$66.4 million, an increase of ~~20%~~36% as compared with ~~second~~third quarter 2018;

net cash provided by operating activities of ~~$88.8~~$93.4 million, an increase of 49% as compared with ~~second~~third quarter 2018;

declared a distribution of ~~$0.6418~~$0.6716 per unit, an increase of 20% above the ~~second~~third quarter 2018 distribution per unit;

Adjusted EBITDA (non-GAAP financial measure) of ~~$80.9~~$94.0 million, an increase of ~~25%~~31% as compared with ~~second quarter 2018;~~

~~Adjusted EBITDA (non-GAAP financial measure) attributable to the Partnership of $55.6 million an increase of 13% as compared with second~~third quarter 2018; and

distributable cash flow (non-GAAP financial measure) of ~~$40.6~~$50.3 million, an increase of 6%8% as compared with ~~second~~third quarter 2018.

For additional information regarding our non-GAAP financial measures, please see — EBITDA (Non-GAAP Financial Measure), Distributable Cash Flow (Non-GAAP Financial Measure) and Reconciliation of Non-GAAP Financial Measures, below.

OPERATING OUTLOOK

2019 Capital Program

We have revised our 2019 capital program, excluding investment capital, to accommodate a gross investment level of ~~$285~~$265 to ~~$315~~$275 million, with ~~$140~~$141 to ~~$160~~$151 million attributable to the Partnership. Our capital expenditures during the first ~~six~~nine months of 2019 have been below the expectations set forth in our initial capital program primarily due to a consistent focus on cost saving initiatives and the timing of our customers’ activity. We will continue to evaluate the level of capital spending throughout the year based on the following factors, among others, and their effect on project financial returns:

pace of our customers’ development;

operating and construction costs and our ability to achieve material supplier price reductions;

impact of new laws and regulations on our business practices;

indebtedness levels; and

availability of financing or other sources of funding.

We plan to fund our capital program with cash on hand, from cash generated from operations, borrowings under our revolving credit facility and, if necessary, ~~the issuance of additional~~ equity or debt ~~securities.~~offerings.

Investment Capital Program

Delaware Crossing Joint Venture The Delaware Crossing Joint Venture is constructing a 95-mile pipeline system that will originate in Pecos County, Texas, and have additional connections in Reeves County and Winkler County, Texas. The project footprint will be served by a combination of in-field crude oil gathering lines and a trunkline to a hub in Wink, Texas. The project is underpinned by approximately ~~192,000~~210,000 dedicated gross acres and nearly 100 miles of pipeline in Pecos, Reeves, Ward and Winkler Counties, Texas. The pipeline is expected to be operational in the first quarter of 2020. During the first ~~six~~nine months of 2019, we made capital contributions of ~~$38.3~~$51.5 million. Our total cash contributions are expected to be approximately $75 million to $85 million. We intend to fund our remaining cash contributions with our revolving credit facility. Construction on the project is anticipated to be complete in early 2020.

EPIC Y-Grade EPIC Y-Grade is constructing an approximately 700-mile pipeline linking NGL reserves in the Permian Basin and Eagle Ford Shale to Gulf Coast refiners, petrochemical companies, and export markets. The pipeline will have a throughput capacity of approximately 440 MBbl/d with multiple origin points. During the first ~~six~~nine months of 2019, we made capital contributions of ~~$149.5 million. Our total cash contributions are~~$166.1 million, which represents approximately 90% of our expected capital contributions. We intend to ~~be approximately $165 million to $180 million, with~~fund substantially all of the remaining cash contributions in ~~2019. We intend to fund our cash contributions with~~fourth quarter 2019 and will utilize our revolving credit facility. Construction is nearing completion on the EPIC Y-Grade ~~project, with anticipated interim~~project. Interim crude ~~service in~~services commenced during the ~~latter half~~third quarter of 2019.

EPIC Crude EPIC Crude is constructing an approximately 700-mile pipeline with a capacity of 590 MBbl/d from the Delaware Basin to the Gulf Coast. EPIC ~~currently has a~~Crude’s petition for declaratory order ~~pending before the Federal Energy Regulatory Commission for~~seeking approval of its rates and terms and conditions of its ~~tariff.~~tariff was approved by the Federal Energy Regulatory Commission. During the first ~~six~~nine months of 2019, we made capital contributions of ~~$216.2~~$268.7 million. Our total cash contributions are expected to be approximately $330 million to $350 million, with substantially all of the remaining cash contributions in fourth quarter 2019. We intend to fund our remaining cash contributions with our revolving credit ~~facility and Preferred Equity.~~facility. Construction on the project is anticipated to be complete in ~~early~~the first quarter of 2020.

Commercial Update

Black Diamond added a long-term oil gathering dedication from Verdad Resources LLC (Verdad Resources). The dedication from Verdad Resources increases Black Diamond dedicated acres by approximately 85,000 acres, or 54%.

Saddlehorn Transportation Commitment and Investment Option

Black Diamond entered into a strategic relationship with Saddlehorn Pipeline Company, LLC (Saddlehorn). Saddlehorn is jointly owned by affiliates of Magellan Midstream Partners, L.P. (Magellan), Plains All American Pipeline, L.P. (Plains) and Western Midstream Partners, LP (WES). The Saddlehorn pipeline is currently capable of transporting approximately 190 MBbl/d of crude oil and condensate from the DJ Basin and the Powder River Basin to storage facilities in Cushing, Oklahoma owned by Magellan and Plains. With the recent successful open season, the Saddlehorn pipeline will be expanded by 100 MBbl/d, to a new total capacity of 290 MBbl/d. The higher capacity is expected to be available in late 2020 following the addition of incremental pumping and storage capabilities.

As part of the strategic relationship, Black Diamond and Noble entered into long-term firm transportation commitments. Black Diamond received an option to acquire up to 20% ownership interest in Saddlehorn. Black Diamond’s investment option expires in April 2020.

Third Quarter 2019 Development Project Updates

Laramie River DevCo LP In the Greeley Crescent IDP area, we commenced construction on the trunk line extensions supporting future produced water gathering and fresh water delivery services. During the quarter, we connected 12 wells in Greeley Crescent IDP for two stream gathering services and delivered fresh water to 12 wells.

In the Black Diamond dedication area, we progressed with installing new oil gathering infrastructure for upcoming well connections from third-party producers. During the quarter, we connected 89 third-party wells to the Black Diamond gathering system.

Green River DevCo LP We extended infrastructure for crude oil, natural gas, and produced water gathering systems to facilitate further development in the Mustang IDP area and support future well connections. During the quarter, we connected 15 wells to the Mustang gathering system.

Colorado River DevCo LP During the quarter, we commenced construction on extensions of gathering infrastructure to support future well connections in the Wells Ranch IDP. We connected 23 wells in the Wells Ranch IDP and no wells were connected in the East Pony IDP. Fresh water was also delivered to 10 wells in the Wells Ranch IDP.

San Juan River DevCo LP During the quarter, fresh water was delivered to 15 wells in the East Pony IDP area.

Blanco River DevCo LP During the quarter, we connected 17 sponsored wells and 5 third-party wells to our gathering systems. We are now connected to 138 sponsor and 9 third-party wells, and we are actively preparing for additional well connections during the fourth quarter of 2019.

Colorado Senate Bill 19-181

For some time, initiatives have been underway in the State of Colorado to limit or ban crude oil and natural gas exploration, development or operations. During first quarter 2019, Senate Bill 19-181 (SB 181) was passed by the State Legislature. On April 16, 2019, the Governor signed the bill into law. The legislation makes sweeping changes in Colorado oil and gas law, including, among other matters, requiring the Colorado Oil and Gas Conservation Commission (Colorado Commission) to prioritize public health and environmental concerns in its decisions, instructing the Colorado Commission to adopt rules to minimize emissions of methane and other air contaminants, and delegating considerable new authority to local governments to regulate surface impacts. Some local communities have adopted additional restrictions for oil and gas activities, such as requiring greater setbacks, and other groups have sought a cessation of permit issuances entirely until the Colorado Commission publishes new rules in keeping with SB 181.

AtNevertheless, at this time, we are not aware of any significant changes to Noble’s or other third party customers’ development plans. For example, Noble has all necessary state approvals for more than 550 permits to drill wells over the next several years. The approved permits are for wells in multiple IDP areas, many of which are in the Mustang IDP area. However, if additional regulatory measures are adopted, Noble and other third party customers in Colorado could experience delays and/or curtailment in the permitting or pursuit of their exploration, development, or production activities. Such compliance costs and delays, curtailments, limitations, or prohibitions in their development plans could result in decreased demand for our services, which could have a material adverse effect on our cash flows, results of operations, financial condition, and liquidity.

~~Second Quarter 2019 Development Project Updates~~

~~Laramie River DevCo LP~~ ~~In the Greeley Crescent IDP area, we installed oil and produced water gathering infrastructure to support upcoming well connections.~~

In the Black Diamond dedication area, we progressed the Milton Phase I Terminal expansion project that increased outlet pumping capacity and installed oil gathering infrastructure for third-party well connections. During the quarter, we connected 64 third-party wells to the Black Diamond gathering system.

~~Green River DevCo LP~~ We extended infrastructure for crude oil, natural gas, and produced water gathering systems to facilitate further development in the Mustang IDP area and support future well connections. During the quarter, we connected 20 wells to the Mustang gathering system and delivered fresh water to 15 wells.

~~Colorado River DevCo LP~~ During the quarter, we commenced construction on oil gathering projects for well connections scheduled during the latter half of 2019 in the East Pony IDP. We connected 7 wells in the East Pony IDP and 9 wells in the Wells Ranch IDP. Fresh water was also delivered to 16 wells in the Wells Ranch IDP.

~~Blanco River DevCo LP~~ During the quarter, we connected 25 sponsored wells and 1 third-party well to our gathering systems. We are now connected to 4 third-party wells and are actively preparing for additional third-party gathering during the latter half of 2019.

RESULTS OF OPERATIONS

Results of operations were as follows:


	Three Months Ended June 30,					Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(thousands)	2019		2018			2019			2018			2019			2018			2019			2018
Revenues
Midstream Services — Affiliate	$	85,882	$	66,924		$	177,878		$	131,187		$	100,846		$	73,136		$	278,724		$	204,323
Midstream Services — Third Party	20,597		13,469			43,691			24,829			19,607			19,934			63,298			44,763
Crude Oil Sales — Third Party	51,782		41,578			84,652			63,688			48,870			46,093			133,522			109,781
Total Revenues	158,261		121,971			306,221			219,704			169,323			139,163			475,544			358,867
Costs and Expenses
Cost of Crude Oil Sales	48,079		40,012			78,977			61,451			46,240			44,379			125,217			105,830
Direct Operating	27,697		18,393			55,134			35,541			22,524			23,955			77,677			59,496
Depreciation and Amortization	20,285		16,371			39,636			27,700			20,851			18,376			60,487			46,076
General and Administrative	4,838		4,980			8,861			15,422			4,129			4,204			12,990			19,626
Other Operating (Income) Expense												(469		)	—			(488		)	—
Total Operating Expenses	100,899		79,756			182,608			140,114			93,275			90,914			275,883			231,028
Operating Income	57,362		42,215			123,613			79,590			76,048			48,249			199,661			127,839
Other Expense (Income)
Interest Expense, Net of Amount Capitalized	2,325		1,681			7,555			2,714			3,952			3,506			11,507			6,220
Investment Loss (Income)	1,748		(4,091		)	(593		)	(6,959		)	5,621			(3,866		)	5,028			(10,825		)
Total Other Expense (Income)	4,073		(2,410		)	6,962			(4,245		)	9,573			(360		)	16,535			(4,605		)
Income Before Income Taxes	53,289		44,625			116,651			83,835			66,475			48,609			183,126			132,444
State Income Tax Provision	91		183			198			257			92			(94		)	290			163
Net Income	53,198		44,442			116,453			83,578			66,383			48,703			182,836			132,281
Less: Net Income Attributable to Noncontrolling Interests	16,789		7,858			36,485			7,633			25,751			4,086			62,236			11,719
Net Income Attributable to Noble Midstream Partners LP	$	36,409	$	36,584		$	79,968		$	75,945		$	40,632		$	44,617		$	120,600		$	120,562

Adjusted EBITDA⁽¹⁾ Attributable to Noble Midstream Partners LP	$	55,621	$	49,297		$	118,471		$	104,278		$	59,504		$	59,930		$	177,976		$	164,208

Distributable Cash Flow⁽¹⁾ of Noble Midstream Partners LP	$	40,641	$	38,186		$	94,606		$	85,909		$	50,282		$	46,446		$	144,889		$	132,355

⁽¹⁾

Adjusted EBITDA and Distributable Cash Flow are not measures as determined by GAAP and should not be considered an alternative to, or more meaningful than, net income, net cash provided by operating activities or any other measure as reported in accordance with GAAP. For additional information regarding our non-GAAP financial measures, please see — EBITDA (Non-GAAP Financial Measure), Distributable Cash Flow (Non-GAAP Financial Measure) and Reconciliation of Non-GAAP Financial Measures, below.

Throughput and Crude Oil Sales Volumes

The amount of revenue we generate primarily depends on the volumes of crude oil, natural gas and water for which we provide midstream services as well as the crude oil volumes we sell to customers. Throughput and crude oil sales volumes related to our Gathering Systems and Fresh Water Delivery reportable segments were as follows:


	Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018	2019	2018	2019	2018
Colorado River DevCo LP (Wells Ranch IDP and East Pony IDP) ⁽¹⁾
Crude Oil Gathering Volumes (Bbl/d)	46,047	65,289	49,340	65,910	48,089	59,145	48,918	63,630
Natural Gas Gathering Volumes (MMBtu/d)	239,429	217,202	251,297	212,551	244,069	223,354	248,862	216,191
Produced Water Gathering Volumes (Bbl/d)	11,550	20,829	12,460	18,537	15,444	15,007	13,466	17,348
Fresh Water Delivery Volumes (Bbl/d)	78,925	1,116	46,715	51,219	38,880	72,216	44,075	58,295

San Juan River DevCo LP (East Pony IDP)⁽¹⁾
Fresh Water Delivery Volumes (Bbl/d)	—	—	20,007	—	68,819	—	36,456	—

Green River DevCo LP (Mustang IDP)⁽¹⁾
Crude Oil Gathering Volumes (Bbl/d)	28,929	108	26,042	54	35,808	5,657	29,333	1,942
Natural Gas Gathering Volumes (MMBtu/d)	156,854	172	124,075	87	195,544	9,062	148,160	3,111
Produced Water Gathering Volumes (Bbl/d)	16,999	236	13,761	119	14,936	8,123	14,157	2,816
Fresh Water Delivery Volumes (Bbl/d)	70,543	112,379	95,359	67,437	—	49,672	63,223	61,450

Blanco River DevCo LP (Delaware Basin)⁽¹⁾
Crude Oil Gathering Volumes (Bbl/d)	42,128	21,506	40,314	17,978	48,722	33,689	43,147	23,272
Natural Gas Gathering Volumes (MMBtu/d)	132,550	48,743	115,694	44,248	173,405	89,439	135,142	59,477
Produced Water Gathering Volumes (Bbl/d)	122,595	59,682	113,471	42,927	138,765	90,162	121,995	58,845

Laramie River DevCo LP (Greeley Crescent IDP and Black Diamond Dedication Area)⁽¹⁾
Crude Oil Sales Volumes (Bbl/d)	9,750	7,075	8,401	5,604	9,625	7,266	8,813	6,164
Crude Oil Gathering Volumes (Bbl/d)	99,509	63,686	102,946	56,183	97,589	77,736	101,141	73,766
Natural Gas Gathering Volumes (MMBtu/d)	8,099	1,970	6,942	1,489	4,935	1,227	6,266	1,319
Produced Water Gathering Volumes (Bbl/d)	13,282	5,665	13,727	5,222	11,127	8,919	12,851	6,468
Fresh Water Delivery Volumes (Bbl/d)	29,821	46,379	37,309	45,132	26,930	73,507	33,811	54,694

Total Gathering Systems
Crude Oil Sales Volumes (Bbl/d)	9,750	7,075	8,401	5,604	9,625	7,266	8,813	6,164
Crude Oil Gathering Volumes (Bbl/d)	216,613	150,589	218,642	140,125	230,208	176,227	222,539	162,610
Natural Gas Gathering Volumes (MMBtu/d)	536,932	268,087	498,008	258,375	617,953	323,082	538,430	280,098
Barrels of Oil Equivalent (Boe/d)	295,200	192,034	290,890	178,854	319,058	224,914	300,381	204,684
Produced Water Gathering Volumes (Bbl/d)	164,426	86,412	153,419	66,805	180,272	122,211	162,469	85,477

Total Fresh Water Delivery
Fresh Water Delivery Volumes (Bbl/d)	179,289	159,874	199,390	163,788	134,629	195,395	177,565	174,439


⁽¹⁾	See Item 1. Financial Statements – Note 1. Organization and Nature of Operations for our DevCo ownership interests.

Revenues

Revenues from our Gathering System and Fresh Water Delivery reportable segments were as follows:


(in thousands)	2019		2018		Increase (Decrease) From Prior Year		2019		2018		Increase (Decrease) From Prior Year
Three Months Ended June 30,
Three Months Ended September 30,
Crude Oil, Natural Gas and Produced Water Gathering — Affiliate	$	66,749	$	46,871	42	%	$	79,208	$	54,674	45	%
Crude Oil, Natural Gas and Produced Water Gathering — Third Party	16,851		9,767		73	%	16,196		12,459		30	%
Fresh Water Delivery — Affiliate	18,367		19,074		(4	)%	20,847		17,416		20	%
Fresh Water Delivery — Third Party	2,454		3,101		(21	)%	2,132		5,929		(64	)%
Crude Oil Sales — Third Party	51,782		41,578		25	%	48,870		46,093		6	%
Other — Affiliate	766		979		(22	)%	791		1,046		(24	)%
Other — Third Party	1,292		601		115	%	1,279		1,546		(17	)%
Total Revenues	$	158,261	$	121,971	30	%	$	169,323	$	139,163	22	%

Six Months Ended June 30,
Nine Months Ended September 30,
Crude Oil, Natural Gas and Produced Water Gathering — Affiliate	$	130,322	$	89,895	45	%	$	209,530	$	144,569	45	%
Crude Oil, Natural Gas and Produced Water Gathering — Third Party	35,147		16,337		115	%	51,344		28,796		78	%
Fresh Water Delivery — Affiliate	45,954		39,358		17	%	66,801		56,774		18	%
Fresh Water Delivery — Third Party	6,263		7,003		(11	)%	8,395		12,932		(35	)%
Crude Oil Sales — Third Party	84,652		63,688		33	%	133,522		109,781		22	%
Other — Affiliate	1,602		1,934		(17	)%	2,393		2,980		(20	)%
Other — Third Party	2,281		1,489		53	%	3,559		3,035		17	%
Total Revenues	$	306,221	$	219,704	39	%	$	475,544	$	358,867	33	%

Revenues Trend Analysis

Revenues increased during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018. The increases in revenues by reportable segment were as follows:

Gathering Systems Gathering Systems revenues increased by ~~$37.6~~$30.5 million during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018 due to the following:

an increase of ~~$14.7~~$15.0 million in crude oil, natural gas and produced water gathering services revenues due to an increase in the ~~commencement~~number of ~~services~~wells connected to our gathering system in the Mustang ~~IDP during second quarter 2018;~~IDP;

an increase of ~~$10.4~~$8.0 million in crude oil, natural gas and produced water gathering services revenues driven by an increase in throughput volumes in the Delaware Basin resulting from an increase in the number of wells connected to our gathering ~~systems and the commencement of services for a third party customer subsequent to second quarter 2018;~~systems;

an increase of ~~$10.2 million in crude oil sales due an increase in crude oil sales volumes; and~~

~~an increase of $4.7~~$3.3 million in gathering services revenues due to an increase in the number of wells connected to the Black Diamond ~~system subsequent to second quarter 2018;~~system; and

~~partially offset by:~~

~~a decrease~~an increase of ~~$6.6~~$2.8 million in crude oil ~~natural gas and produced water gathering services revenues~~sales due to ~~reduced activity~~an increase in ~~the Wells Ranch and East Pony IDPs.~~

crude oil sales volumes;

Fresh Water Delivery Fresh Water Delivery revenues decreased by ~~$1.4~~$0.4 million during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018 due to the following:

a decrease of ~~$9.2~~$11.7 million in fresh water delivery revenues due to a decrease in fresh water deliveries in the Wells Ranch, Greeley Crescent and Mustang IDP ~~area~~areas resulting from reduced well completion activity by ~~Noble;~~Noble and third party customers;

substantially offset by;

an increase of ~~$8.5~~$11.3 million in fresh water delivery revenues due to an increase in fresh water deliveries in the ~~Wells Ranch~~East Pony IDP area resulting from increased well completion activity by Noble.

Gathering Systems Gathering Systems revenues increased by ~~$80.7~~$111.2 million during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018 due to the following:

an increase of ~~$24.3~~$39.3 million in crude oil, natural gas and produced water gathering services revenues due to ~~the commencement~~a full nine months of services provided during 2019 as well as an increase in the number of wells connected to our gathering system in the Mustang ~~IDP during second quarter 2018;~~IDP;

an increase of ~~$21.4~~$29.3 million in crude oil, natural gas and produced water gathering services revenues driven by an increase in throughput volumes in the Delaware Basin resulting from an increase in the number of wells connected to our gathering ~~systems and the commencement of services for a third party customer subsequent to second quarter 2018;~~systems;

an increase of ~~$21.0~~$23.8 million in crude oil sales due to a full period of crude oil sales during 2019 due to the commencement of crude oil sales upon closing of the Black Diamond Acquisition as well as an increase in crude oil sales volumes during 2019; and

an increase of ~~$13.2~~$16.5 million in gathering services revenues due to increased sales volumes and a full ~~period~~nine months of ~~gathering services provided by~~activity, as sales activity commenced upon closing of the Black Diamond ~~system;~~Acquisition during first quarter 2018.

partially offset by:

a decrease of $6.2 million in crude oil, natural gas and produced water gathering services revenues due to the decreased activity in the Wells Ranch and East Pony IDPs.

Fresh Water Delivery Fresh Water Delivery revenues increased by ~~$5.9~~$5.5 million during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018 due to the following:

an increase of ~~$8.4~~$19.7 million in fresh water delivery revenues due to an increase in fresh water deliveries in the East Pony IDP;

partially offset by;

a decrease of ~~$2.5~~$14.2 million in fresh water delivery revenues due to a decrease in fresh water deliveries to our customers in the Wells Ranch ~~Mustang,~~ and Greeley Crescent IDP areas.

Costs and Expenses

Costs and expenses were as follows:



(in thousands)	2019			2018		Increase (Decrease) from Prior Year
Three Months Ended September 30,
Cost of Crude Oil Sales	$	46,240		$	44,379	4	%
Direct Operating	22,524			23,955		(6	)%
Depreciation and Amortization	20,851			18,376		13	%
General and Administrative	4,129			4,204		(2	)%
Other Operating (Income) Expense	(469		)	—		N/M
Total Operating Expenses	$	93,275		$	90,914	3	%

Nine Months Ended September 30,
Cost of Crude Oil Sales	$	125,217		$	105,830	18	%
Direct Operating	77,677			59,496		31	%
Depreciation and Amortization	60,487			46,076		31	%
General and Administrative	12,990			19,626		(34	)%
Other Operating (Income) Expense	(488		)	—		N/M
Total Operating Expenses	$	275,883		$	231,028	19	%

(in thousands) 2019 2018 Increase (Decrease) from Prior Year
Three Months Ended June 30,
Cost of Crude Oil Sales $ 48,079
$ 40,012
20 %
Direct Operating 27,697
18,393
51 %
Depreciation and Amortization 20,285
16,371
24 %
General and Administrative 4,838
4,980
(3 )%
Total Operating Expenses $ 100,899
$ 79,756
27 %

Six Months Ended June 30,
Cost of Crude Oil Sales $ 78,977
$ 61,451
29 %
Direct Operating 55,134
35,541
55 %
Depreciation and Amortization 39,636
27,700
43 %
General and Administrative 8,861
15,422
(43 )%
Total Operating Expenses $ 182,608
$ 140,114
30 %
N/M Amount is not meaningful

Costs and Expenses Trend Analysis

Cost of Crude Oil Sales Cost of crude oil sales is recorded within our Gathering Systems reportable segment. Cost of crude oil sales increased during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018 and during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. The increase during ~~second~~third quarter 2019 as compared to ~~second~~third quarter 2018 is primarily attributable to increased sales volumes. The increase during the first ~~six~~nine months of 2019 as compared to the first ~~six~~nine months of 2018 is primarily attributable to increased sales volumes and a full ~~six~~nine months of activity, as sales activity commenced upon closing of the Black Diamond Acquisition during first quarter 2018.

Direct Operating Direct operating expense ~~increased~~decreased during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018 and increased during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. The ~~increases~~changes in direct operating expense by reportable segment were as follows:

Gathering Systems Gathering Systems direct operating expense ~~increased~~decreased during ~~second~~third quarter 2019 as compared with ~~second~~third quarter ~~2018 and~~2018. Gathering Systems direct operating expense increased during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. The ~~increases were~~decrease during third quarter 2019 was primarily attributable to lower maintenance costs, contract services and rental expenses in the Delaware Basin.

The increase during the first nine months of 2019 was primarily attributable to operating expenses associated with the central gathering facilities (CGFs) in the Delaware Basin that were completed during 2018, operating expenses associated with increased volumes ~~resulting from the commencement of gathering services~~ in the Permian Basin, Mustang IDP, ~~area~~and East Pony IDP areas and a full ~~six~~nine months of gathering services provided by the Black Diamond system.

Fresh Water Delivery Fresh Water Delivery direct operating expense ~~increased~~remained consistent during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018 ~~and~~due to consistent well completion activity across quarters. Fresh Water Delivery direct operating expense increased during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. The ~~increases were~~increase was primarily attributable to operating expenses associated with increased volumes resulting from increased well completion activity by Noble.

Depreciation and Amortization Depreciation and amortization expense increased during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018 and during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. The increases in depreciation and amortization expenses by reportable segment were as follows:

Gathering Systems Gathering Systems depreciation and amortization expense increased during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018 and during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. The increases were due, in part, to assets placed in service after ~~June~~September 30, 2018. Assets placed in service after ~~June~~September 30, 2018 were primarily associated with the Mustang gathering system, the Delaware Basin CGFs, and the continued development of the

Black Diamond assets. Additionally, depreciation and amortization expense includes a full ~~six~~nine months of intangible asset amortization during the first ~~six~~nine months of 2019 associated with customer contracts and relationships acquired in the Black Diamond Acquisition.

Fresh Water Delivery Fresh Water Delivery depreciation and amortization expense remained consistent during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018 and during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. Fresh Water Delivery depreciation and amortization expense has remained consistent, as our fresh water delivery infrastructure was substantially complete prior to 2018.

General and Administrative Expense General and administrative expense is recorded within our Corporate reportable segment. General and administrative expense remained consistent during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018. The increase in legal and financial advisory transaction expenses incurred during second quarter 2018 in connection with the Black Diamond Acquisition were offset by an increase in miscellaneous general and administrative expenses during second quarter 2019. General and administrative expense decreased during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. The decrease was primarily attributable to legal and financial advisory transaction expenses associated with the Black Diamond Acquisition. Transaction expenses associated with the Black Diamond Acquisition during the first ~~six~~nine months of 2018 were approximately ~~$7.2~~$7.5 million.

Other (Income) Expense Trend Analysis


(in thousands)	2019			2018			Increase (Decrease) From Prior Year		2019			2018			Increase (Decrease) From Prior Year
Three Months Ended June 30,
Three Months Ended September 30,
Other (Income) Expense
Interest Expense	$	8,162		$	4,143		97	%	$	8,807		$	4,860		81	%
Capitalized Interest	(5,837		)	(2,462		)	137	%	(4,855		)	(1,354		)	259	%
Interest Expense, Net	2,325			1,681			38	%	3,952			3,506			13	%
Investment Income	1,748			(4,091		)	(143	)%
Investment Loss (Income)									5,621			(3,866		)	N/M
Total Other Expense (Income)	$	4,073		$	(2,410	)	(269	)%	$	9,573		$	(360	)	N/M

Six Months Ended June 30,
Nine Months Ended September 30,
Other (Income) Expense
Interest Expense	$	14,875		$	6,664		123	%	$	23,682		$	11,524		106	%
Capitalized Interest	(7,320		)	(3,950		)	85	%	(12,175		)	(5,304		)	130	%
Interest Expense, Net	7,555			2,714			178	%	11,507			6,220			85	%
Investment Income	(593		)	(6,959		)	(91	)%
Total Other (Income) Expense	$	6,962		$	(4,245	)	(264	)%
Investment Loss (Income)									5,028			(10,825		)	N/M
Total Other Expense (Income)									$	16,535		$	(4,605	)	N/M

Interest Expense, Net Interest expense is recorded within our Corporate reportable segment. Interest expense represents interest incurred in connection with our revolving credit facility and term loan credit ~~facility.~~facilities. Our interest expense includes interest on outstanding balances on the facilities and commitment fees on the undrawn portion of our revolving credit facility as well as the non-cash amortization of origination fees. A portion of the interest expense is capitalized based upon our construction-in-progress activity as well as our investments in equity method investees engaged in construction activities during the year. See Note 5. Property, Plant and Equipment for our Construction-in-Progress balances as of ~~June~~September 30, 2019 and December 31, 2018 and Note 7. Investments.

Interest expense increased during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018 and during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. The increase was primarily attributable to the increased outstanding long-term debt ~~and higher interest rates~~ during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018 and during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018.

Capitalized interest increased during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018 and during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. The increase is primarily attributable to capitalized interest associated with our capital contributions to the ~~the~~ Delaware Crossing Joint Venture, EPIC Y-Grade and EPIC ~~Crude as well as increased interest rates during 2019 as compared with 2018.~~Crude. The increase was partially offset by decreased construction-in-progress activity during ~~first~~third quarter 2019 and the first ~~six~~nine months of 2019 as compared with ~~first~~third quarter 2018 and the first ~~six~~nine months of 2018.

Investment Income Investment income is recorded within our Investments in Midstream Entities reportable segment. Investment income decreased during ~~second~~third quarter 2019 as compared with ~~second~~third quarter 2018 and during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. Earnings from the Advantage Joint Venture decreased during ~~second~~third quarter 2019 and during the first ~~six~~nine months of 2019 as compared with ~~second~~third quarter 2018 and during the first ~~six~~nine months of 2018

primarily due to a decrease in crude oil throughput volumes. Additionally, we had losses from the Delaware Crossing Joint Venture, EPIC Y-Grade and EPIC Crude investments primarily attributable to expenses incurred in connection with the formation of the entities as well as general and administrative expenses incurred prior to service commencement.

Adjusted EBITDA (Non-GAAP Financial Measure)

Adjusted EBITDA should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, our Adjusted EBITDA may not be comparable to similar measures of other companies in our industry.

For a reconciliation of Adjusted EBITDA to its most comparable measures calculated and presented in accordance with GAAP, see — Reconciliation of Non-GAAP Financial Measures, below.

As a result of our increased investment in midstream entities, we have refined our presentation of Adjusted EBITDA to adjust for certain items with respect to our equity method investments. We now define Adjusted EBITDA as net income before income taxes, net interest expense, depreciation and amortization, transaction expenses, unit-based compensation and certain other items that we do not view as indicative of our ongoing performance. Additionally, Adjusted EBITDA reflects the adjusted earnings impact of our equity method investments by adjusting our equity earnings or losses from our equity method investments to reflect our proportionate share of the EBITDA of such equity method investments. Prior period Adjusted EBITDA has been reclassified to conform to the current period presentation.

Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:

our operating performance as compared with those of other companies in the midstream energy industry, without regard to financing methods, historical cost basis or capital structure;

the ability of our assets to generate sufficient cash flow to make distributions to our partners;

our ability to incur and service debt and fund capital expenditures; and

the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

We believe that the presentation of Adjusted EBITDA provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA are net income and net cash provided by operating activities. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income, net cash provided by operating activities or any other measure as reported in accordance with GAAP.

Distributable Cash Flow (Non-GAAP Financial Measure)

Distributable cash flow should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable cash flow excludes some, but not all, items that affect net income or net cash provided by operating activities, and these measures may vary from those of other companies. As a result, our distributable cash flow may not be comparable to similar measures of other companies in our industry.

For a a reconciliation of distributable cash flow to its most comparable measures calculated and presented in accordance with GAAP, see — Reconciliation of Non-GAAP Financial Measures, below.

As a result of our increased investment in midstream entities, we have refined our presentation of distributable cash flow to adjust for certain items with respect to our equity method investments. We now define distributable cash flow as Adjusted EBITDA plus distributions received from our equity method investments less our proportionate share of Adjusted EBITDA from such equity method investments, estimated maintenance capital expenditures and cash interest paid. Prior period distributable cash flow has been reclassified to conform to the current period presentation.

Distributable cash flow does not reflect changes in working capital balances. Our partnership agreement requires us to distribute all available cash on a quarterly basis, and distributable cash flow is one of the factors used by the board of directors of our general partner to help determine the amount of cash that is available to our unitholders for a given period. Therefore, we believe distributable cash flow provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to distributable cash flow are net income and net cash provided by operating activities. Distributable cash flow should not be considered an alternative to, or more meaningful than, net income, net cash provided by operating activities or any other measure as reported in accordance with GAAP.

Reconciliation of Non-GAAP Financial Measures

The following tables present reconciliations of Adjusted EBITDA and distributable cash flow from net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018		2019			2018			2019		2018
Reconciliation from Net Income
Net Income	$	53,198	$	44,442	$	116,453	$	83,578	$	66,383		$	48,703		$	182,836	$	132,281
Add:
Depreciation and Amortization	20,285		16,371		39,636		27,700		20,851			18,376			60,487		46,076
Interest Expense, Net of Amount Capitalized	2,325		1,681		7,555		2,714		3,952			3,506			11,507		6,220
State Income Tax Provision	91		183		198		257		92			(94		)	290		163
Transaction and Integration Expenses	12		1,280		69		7,249		106			301			175		7,550
Proportionate Share of Equity Method Investment EBITDA Adjustments	4,570		638		6,573		1,342		3,257			579			9,830		1,921
Unit-Based Compensation and Other	466		393		1,011		714		(630		)	343			382		1,057
Adjusted EBITDA	80,947		64,988		171,495		123,554		94,011			71,714			265,507		195,268
Less:
Adjusted EBITDA Attributable to Noncontrolling Interests	25,326		15,691		53,024		19,276		34,507			11,784			87,531		31,060
Adjusted EBITDA Attributable to Noble Midstream Partners LP	55,621		49,297		118,471		104,278		59,504			59,930			177,976		164,208
Add:
Distributions from Equity Method Investments	285		1,265		6,944		3,520		1,711			—			8,655		3,520
Less:
Proportionate Share of Equity Method Investment Adjusted EBITDA	1,459		3,574		4,490		6,140
Proportionate Share of Equity Method Investment EBITDA									(3,518		)	3,350			972		9,490
Cash Interest Paid	7,991		4,030		14,549		6,437		8,662			4,728			23,211		11,165
Maintenance Capital Expenditures	5,815		4,772		11,770		9,312		5,789			5,406			17,559		14,718
Distributable Cash Flowof Noble Midstream Partners LP	$	40,641	$	38,186	$	94,606	$	85,909	$	50,282		$	46,446		$	144,889	$	132,355

Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA and Distributable Cash Flow


	Three Months Ended June 30,					Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2019			2018		2019			2018			2019			2018			2019			2018
Reconciliation from Net Cash Provided by Operating Activities
Net Cash Provided by Operating Activities	$	88,805		$	59,469	$	172,749		$	105,072		$	93,372		$	62,864		$	266,121		$	167,936
Add:
Interest Expense, Net of Amount Capitalized	2,325			1,681		7,555			2,714			3,952			3,506			11,507			6,220
Changes in Operating Assets and Liabilities	(11,041		)	228		(5,986		)	5,971			1,957			1,981			(4,029		)	7,952
Transaction and Integration Expenses	12			1,280		69			7,249			106			301			175			7,550
Equity Method Investment EBITDA Adjustments	1,174			2,309		(2,454		)	2,620			(5,229		)	3,350			(7,683		)	5,970
Other Adjustments	(328		)	21		(438		)	(72		)	(147		)	(288		)	(584		)	(360		)
Adjusted EBITDA	80,947			64,988		171,495			123,554			94,011			71,714			265,507			195,268
Less:
Adjusted EBITDA Attributable to Noncontrolling Interests	25,326			15,691		53,024			19,276			34,507			11,784			87,531			31,060
Adjusted EBITDA Attributable to Noble Midstream Partners LP	55,621			49,297		118,471			104,278			59,504			59,930			177,976			164,208
Add:
Distributions from Equity Method Investments	285			1,265		6,944			3,520			1,711			—			8,655			3,520
Less:
Proportionate Share of Equity Method Investment EBITDA	1,459			3,574		4,490			6,140			(3,518		)	3,350			972			9,490
Cash Interest Paid	7,991			4,030		14,549			6,437			8,662			4,728			23,211			11,165
Maintenance Capital Expenditures	5,815			4,772		11,770			9,312			5,789			5,406			17,559			14,718
Distributable Cash Flowof Noble Midstream Partners LP	$	40,641		$	38,186	$	94,606		$	85,909		$	50,282		$	46,446		$	144,889		$	132,355

LIQUIDITY AND CAPITAL RESOURCES

Financing Strategy

Our primary sources of liquidity are cash flows generated from operations based on commercial agreements with Noble and our third party customers. We expect our ongoing sources of liquidity to include cash generated from operations, borrowings under our revolving credit facility and equity or debt offerings. We believe that cash generated from these sources will be sufficient to meet our short-term working capital requirements and long-term capital expenditure requirements and to make quarterly cash distributions. We do not have any commitment from Noble or our general partner or any of their respective affiliates to fund our cash flow deficits or provide other direct or indirect financial assistance to us. Certain consolidated subsidiaries make distributions to or receive contributions from Noble in proportion to Noble’s ownership in the subsidiary.

Our partnership agreement requires that we distribute all of our available cash to our unitholders. As a result, we expect to rely primarily upon external financing sources, including our revolving credit facility and the issuance of debt and equity securities, to fund acquisitions and our expansion capital expenditures.

Available Liquidity

Information regarding liquidity was as follows:


(in thousands)	June 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
Cash, Cash Equivalents, and Restricted Cash ⁽¹⁾	$	9,438	$	11,691	$	17,621	$	11,691
Amount Available to be Borrowed Under Our Revolving Credit Facility ⁽²⁾	430,000		740,000		750,000		740,000
Available Liquidity	$	439,438	$	751,691	$	767,621	$	751,691


⁽¹⁾	See Item 1. Financial Statements – Note 2. Basis of Presentation.


⁽²⁾	There was no available borrowing capacity under our term loan credit ~~facility~~facilities as of ~~June~~September 30, 2019. See Item 1. Financial Statements – Note 6. Debt.

Revolving Credit Facility and Term Loan Credit Facilities

Our revolving credit facility is available to fund working capital requirements, acquisitions and expansion capital expenditures. We utilized a large portion of our revolving credit facility to fund our capital contributions for the Delaware Crossing Joint Venture, EPIC Y-Grade and EPIC Crude. We repaid a portion of our revolving credit facility with the proceeds from the Preferred Equity offering. As of ~~June~~September 30, 2019, ~~$370~~$50 million is outstanding under our revolving credit facility.See Item 1. Financial Statements – Note 6. Debt.

On August 23, 2019, we entered into a new term loan credit facility that permitted aggregate borrowings of up to $400 million. Upon closing, we drew $400 million under the term loan credit facility and the proceeds were primarily used to repay a portion of the outstanding borrowings under our revolving credit facility and pay fees and expenses in connection with the term loan credit facility transactions. See Item 1. Financial Statements – Note 6. Debt.

Preferred Equity

On March 25, 2019, we secured an equity commitment totaling $200 million from GIP. During 2019, Preferred Equity proceeds totaled $100 million and we incurred offering costs of ~~$3.5~~$3.4 million. The remaining $100 million equity commitment is available for a one-year period, subject to certain conditions precedent. Proceeds from the Preferred Equity were utilized to repay a portion of outstanding borrowings under our revolving credit facility. See Item 1. Financial Statements – Note 2. Basis of Presentation.

Cash Flows

The following table summarizes our total cash provided by (used in) operating, investing and financing activities:


	Six Months Ended June 30,						Nine Months Ended September 30,
(in thousands)	2019			2018			2019			2018
Operating Activities	$	172,749		$	105,072		$	266,121		$	167,936
Investing Activities	(552,138		)	(1,058,594		)	(689,509		)	(1,190,265		)
Financing Activities	377,136			914,193			429,318			985,950
Decrease in Cash, Cash Equivalents, and Restricted Cash	$	(2,253	)	$	(39,329	)
Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash							$	5,930		$	(36,379	)

Operating Activities Net cash provided by operating activities increased during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. The increase was primarily due to ~~an increase in net income. The increase in net income was driven by~~ an increase in revenues as well as a decrease in general and administrative expenses and was partially offset by an increase in direct operating expenses.

Investing Activities Cash used in investing activities decreased during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. The decrease was primarily due to the Black Diamond Acquisition during 2018 as well as

increased additions to property, plant and equipment during 2018 due to the construction of the Mustang gathering system and Delaware Basin CGFs. The decrease was partially offset by our additions to investments during 2019 due to our capital contributions to the Delaware Crossing Joint Venture, EPIC Y-Grade and EPIC Crude.

Financing Activities Cash provided by financing activities decreased during the first ~~six~~nine months of 2019 as compared with the first ~~six~~nine months of 2018. The decrease is primarily due to decreased net long-term debt borrowings, ~~and~~ decreased contributions from noncontrolling interest ~~owners.~~owners, increased distributions to noncontrolling interest owners and increased distributions to unitholders. The decrease was partially offset by net proceeds from the Preferred Equity.

Off-Balance Sheet Arrangements

We have not entered into any transactions, agreements or other contractual arrangements that would result in off-balance sheet liabilities.

Contractual Obligations

WeWith the exception of the three-year senior unsecured term loan credit facility we entered into on August 23, 2019, we have had no material changes in our contractual commitments and obligations from amounts listed under Item 7. Management's Discussion and Analysis of Financial Conditions and Results of Operations - Liquidity and Capital Resources - Contractual Obligations in our Annual Report on Form 10-K for the year ended December 31, 2018.

Capital Requirements

Capital Expenditures and Other Investing Activities

The midstream energy business is capital intensive, requiring the maintenance of existing gathering systems and other midstream assets and facilities and the acquisition or construction and development of new gathering systems and other midstream assets and facilities. Capital expenditures and other investing activities (on an accrual basis) were as follows:


	Six Months Ended June 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Gathering System Expenditures⁽¹⁾	$	130,656	$	596,960	$	187,437	$	669,908
Fresh Water Delivery System Expenditures	1,394		12,552		6,040		18,711
Other	511		—		810		—
Total Capital Expenditures	$	132,561	$	609,512	$	194,287	$	688,619

Additions to Investments	$	414,587	$	119	$	501,344	$	426


⁽¹⁾	Gathering system expenditures for the ~~six~~nine months ended ~~June~~September 30, 2018 include only the portion of the purchase price for the Black Diamond Acquisition allocated to Property, Plant and Equipment totaling $205.8 million.

For the ~~six~~nine months ended ~~June~~September 30, 2019, our gathering system expenditures were primarily associated with well connections in the Mustang IDP, Black Diamond dedication area and the Delaware Basin as well as expansion of the Mustang gathering system. Fresh water delivery system expenditures were primarily associated with the expansion of the Greeley Crescent fresh water delivery system.

For the ~~six~~nine months ended ~~June~~September 30, 2018, our gathering system expenditures were primarily associated with the construction of the Mustang gathering system and construction of central gathering facilities in the Delaware Basin. Additionally, our gathering system expenditures include the Black Diamond Acquisition as well as expenditures related to the connection of the acquired system to a major oil takeaway outlet in the DJ Basin. Fresh water delivery system expenditures were primarily associated with the construction of the ~~the~~ Mustang fresh water delivery system.

For the ~~six~~nine months ended ~~June~~September 30, 2019, additions to investments were primarily related to our capital contributions to the Delaware Crossing Joint Venture, EPIC Y-Grade and EPIC Crude. ~~See~~ See Item 1. Financial Statements – Note 7. Investments. For the ~~six~~nine months ended ~~June~~September 30, 2018, additions to investments were related to a capital call for our White Cliffs Interest.

Cash Distributions

Our partnership agreement requires that we distribute all of our available cash quarterly. Quarterly distributions, if any, will be made within 45 days after the end of each calendar quarter to holders of record on the applicable record date.

On ~~July 25,~~October 24, 2019, the board of directors of our general partner declared a quarterly cash distribution of ~~$0.6418~~$0.6716 per unit. The distribution will be paid on ~~August 12,~~November 11, 2019, to unitholders of record as of ~~August 5,~~November 4, 2019. Also on ~~August 12,~~November 11, 2019, a cash incentive distribution of ~~$4.6~~$5.8 million will be made to Noble related to its IDRs, based upon the level of distribution paid per Common Unit.

Upon payment of the distribution on May 13, 2019, the requirements for the conversion of all Subordinated Units were satisfied under our partnership agreement. As a result, on May 14, 2019, all 15,902,584 Subordinated Units, which were owned entirely by Noble, converted into Common Units. See Item 1. Financial Statements – Note 10. Partnership Distributions. For future quarters, the minimum quarterly distribution of $0.375 per unit equates to $14.9 million per quarter, or $59.4 million ~~million~~ per year, based on the number of Common Units outstanding as of ~~June~~September 30, 2019.

We expect that if we are successful in executing our business strategy, we will grow our business in a steady and sustainable manner and distribute to our unitholders a portion of any increase in our cash available for distribution resulting from such growth. We expect our general partner may cause us to establish reserves for specific purposes, such as major capital expenditures or debt service payments, or may choose to generally reserve cash in the form of excess distribution coverage from time to time for the purpose of maintaining stability or growth in our quarterly distributions. In addition, our general partner may cause us to borrow amounts to fund distributions in quarters when we generate less cash than is necessary to sustain or grow our cash distributions per unit. Our cash distribution policy reflects a judgment that our unitholders will be better served by our distributing rather than retaining our cash available for distribution. The board of directors of our general partner has considerable discretion to determine the amount of our available cash each quarter. In addition, the board of directors of our general partner may change our cash distribution policy at any time.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk

We currently generate a substantial portion of our revenues pursuant to fee-based commercial agreements under which we are paid based on the volumes of crude oil, natural gas and produced water that we gather and handle and fresh water services we provide, rather than the underlying value of the commodity.

We have indirect exposure to commodity price risk in that persistent low commodity prices may cause our customers and other potential customers to delay drilling or shut-in production, which would reduce the volumes available for gathering and processing by our infrastructure assets. If our customers delay drilling or completion activity, or temporarily shut-in production due to persistently low commodity prices or for any other reason, we are not assured a certain amount of revenue as our commercial agreements do not contain minimum volume commitments. Because of the natural decline in production from existing wells, our success, in part, depends on our ability to maintain or increase hydrocarbon and water throughput volumes on our midstream systems, which depends on our customers’ level of drilling and completion activity on our dedicated acreage.

We may acquire or develop additional midstream assets in a manner that increases our exposure to commodity price risk. Future exposure to the volatility of crude oil, natural gas and NGL prices could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to make cash distributions to our unitholders.

Interest Rate Risk

Our primary exposure to interest rate risk results from outstanding borrowings under our revolving credit facility and term loan credit ~~facility,~~facilities, which have variable interest rates. As of ~~June~~September 30, 2019, ~~$370~~$50 million and ~~$500~~$900 million were outstanding under our revolving credit facility and term loan credit ~~facility,~~facilities, respectively. A 1.0% increase in our interest rates would have resulted in an estimated ~~$3.9~~$6.3 million increase in interest expense for the ~~six~~nine months ended ~~June~~September 30, 2019. As a result, our results of operations, cash flows and financial condition and, as a further result, our ability to make cash distributions to our unitholders, could be adversely affected by significant increases in interest rates.

Credit Risk

We derive a substantial portion of our revenue from Noble and we expect to derive a substantial portion of our revenue from Noble for the foreseeable future. As a result, any event, whether in our area of operations or otherwise, that adversely affects Noble’s production, drilling schedule, financial condition, leverage, market reputation, liquidity, results of operations or cash flows may adversely affect our revenues and cash available for distribution.

Additionally, we are subject to the risk of non-payment or non-performance by our customers, including with respect to our commercial agreements, most of which do not contain minimum volume commitments. Furthermore, we cannot predict the extent to which our customers’ businesses would be impacted if conditions in the energy industry were to deteriorate nor can we

estimate the impact such conditions would have on our customers’ ability to execute their drilling and development plans on our dedicated acreage or to perform under our commercial agreements. Any material non-payment or non-performance by our customers under our commercial agreements would have a significant adverse impact on our business, financial condition, results of operations and cash flows and could therefore materially adversely affect our ability to make cash distributions to our unitholders at the minimum quarterly distribution rate or at all.

Seasonality

Demand for crude oil and natural gas generally decreases during the spring and fall months and increases during the summer and winter months. However, seasonal anomalies such as mild winters or mild summers sometimes lessen this fluctuation. In addition, certain crude oil and natural gas users utilize natural gas storage facilities and purchase some of their anticipated winter requirements during the summer. This can also lessen seasonal demand fluctuations. These seasonal anomalies can increase demand for crude oil and natural gas during the summer and winter months and decrease demand for crude oil and natural gas during the spring and fall months. With respect to our completed midstream systems, we do not expect seasonal conditions to have a material impact on our throughput volumes. Severe or prolonged winters may, however, impact our ability to complete additional well connections or construction projects, which may impact the rate of our growth. In addition, severe winter weather may also impact or slow the ability of Noble and our third party customers to execute their drilling and development plans.

Disclosure Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are predictive in nature, depend upon or refer to future events or conditions or include the words “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “on schedule”, “strategy” and other similar expressions that are predictions of or indicate future events and trends and that do not relate to historical matters. Our forward-looking statements may include statements about our business strategy, our industry, our future profitability, our expected capital expenditures and the impact of such expenditures on our performance, the costs of being a publicly traded partnership and our capital programs.

Forward-looking statements are not guarantees of future performance and are based on certain assumptions and bases, and subject to certain risks, uncertainties and other factors, many of which are beyond our control and difficult to predict, and not all of which can be disclosed in advance. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. You are cautioned not to place undue reliance on any forward-looking statements. 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:

the ability of our customers to meet their drilling and development plans;

changes in general economic conditions;

competitive conditions in our industry;

actions taken by third-party operators, gatherers, processors and transporters;

the demand for crude oil, natural gas and produced water gathering and processing services, crude oil treating and fresh water services;

our ability to successfully implement our business plan;

our ability to complete internal growth projects on time and on budget;

the price and availability of debt and equity financing;

the availability and price of crude oil and natural gas to the consumer compared to the price of alternative and competing fuels;

energy efficiency and technology trends;

operating hazards and other risks incidental to our midstream services;

natural disasters, weather-related delays, casualty losses and other matters beyond our control;

interest rates;

labor relations;

defaults by our customers under our agreements;

changes in availability and cost of capital;

changes in our tax status;

the effect of existing and future laws and government regulations;

the effects of future litigation;

interruption of the Partnership's operations due to social, civil or political events or unrest;

terrorist attacks or cyber threats;

any future acquisitions or dispositions of assets or the delay or failure of any such transaction to close; and

certain factors discussed elsewhere in this Form 10-Q.

You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to publicly

update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law. You should consider carefully the statements under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018, which describe factors that could cause our actual results to differ from those set forth in the forward-looking statements. Our Annual Report on Form 10-K for the year ended December 31, 2018 is available on our website at www.nblmidstream.com.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on the evaluation of our disclosure controls and procedures by our principal executive officer and our principal financial officer, as of the end of the period covered by this quarterly report, each of them has concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There were no changes in internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

Information regarding legal proceedings is set forth in Part I. Financial Information, Item 1. Financial Statements — Note 12. Commitments and Contingencies of this Form 10-Q, which is incorporated by reference into this Part II. Item 1.

Item 1A. Risk Factors

There have been no material changes ~~other than disclosed below,~~ from the risk factors disclosed in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2018 or disclosed in Item 1A. Risk Factors of our Quarterly Report on Form 10-Q for the period ended June 30, 2019, which are incorporated by reference into this Part II. Item 1A.

The tax treatment of publicly traded partnerships or an investment in our Common Units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.

The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our Common Units may be modified by administrative, legislative or judicial interpretation at any time. From time to time, members of Congress have proposed and considered substantive changes to the existing U.S. federal income tax laws that would affect publicly traded partnerships, including elimination of partnership tax treatment for publicly traded partnerships. For example, the “Clean Energy for America Act”, which is similar to legislation that was commonly proposed during the Obama Administration, was introduced in the Senate on May 2, 2019. If enacted, this proposal would, among other things, repeal the qualifying income exception for fossil fuel activities within Section 7704(d)(1)(E) of the Code, upon which we rely for our status as a partnership for U.S. federal income tax purposes.

In addition, the Treasury Department has issued, and in the future may issue, regulations interpreting those laws that affect publicly traded partnerships. There can be no assurance that there will not be further changes to U.S. federal income tax laws or the Treasury Department’s interpretation of the qualifying income rules in a manner that could impact our ability to qualify as a partnership in the future. We believe the income that we treat as qualifying satisfies the requirements under current regulations.

We are unable to predict whether any changes or proposals will ultimately be enacted. Any modification to the U.S. federal income tax laws and interpretations thereof may or may not be retroactively applied and could make it more difficult or impossible for us to meet the exception to be treated as a partnership for U.S. federal income tax purposes and could negatively impact the value of an investment in our Common Units.

You are urged to consult with your own tax advisor with respect to the status of regulatory or administrative developments and proposals and their potential effect on your investment in our Common Units.

Item 6. ~~Exhibits~~Exhibit



Exhibit Number		Exhibit

2.1		Member Interest Purchase and Sale Agreement, dated December 12, 2017, by and between Black Diamond Gathering LLC and Saddle Butte Pipeline II, LLC (filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K (Date of Event: December 12, 2017) filed December 12, 2017 and incorporated herein by reference).

3.1		Certificate of Limited Partnership of the Registrant (filed as Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-207560) filed October 22, 2015 and incorporated herein by reference).

3.2		Amendment to the Certificate of Limited Partnership of the Registrant (filed as Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-207560) filed October 22, 2015 and incorporated herein by reference).

3.3		Amendment to the Certificate of Limited Partnership of the Registrant (filed as Exhibit 3.3 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-207560) filed November 6, 2015 and incorporated herein by reference).

3.4		First Amended and Restated Agreement of Limited Partnership of the Registrant (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (Date of Event: September 14, 2016) filed September 20, 2016 and incorporated herein by reference).

3.5		Certificate of Formation of Noble Midstream GP LLC (filed as Exhibit 3.4 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-207560) filed October 22, 2015 and incorporated herein by reference).

3.6		Amendment to Certificate of Formation of Noble Midstream GP LLC (filed as Exhibit 3.5 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-207560) filed October 22, 2015 and incorporated herein by reference).

3.7		First Amended and Restated Limited Liability Company Agreement of Noble Midstream GP LLC (filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (Date of Event: September 14, 2016) filed September 20, 2016 and incorporated herein by reference).

10.1		~~Amendment to Limited Waiver to Omnibus~~Term Credit Agreement, dated ~~February 7,~~as of August 23, 2019, by and among ~~the Registrant,~~ Noble Midstream ~~GP LLC,~~Partners LP, as Parent, and Noble Midstream Services, LLC, ~~Noble Energy, Inc., Noble Energy Services, Inc.~~as Borrower, the subsidiaries of the Borrower identified therein, Bank of Montreal and ~~NBL Midstream LLC~~the other lenders party thereto (filed as Exhibit ~~10.3.3~~10.1 to the Registrant’s ~~Annual~~Current Report on Form ~~10-K for~~8-K (Date of Event: August 23, 2019) filed August 26, 2019 and incorporated herein by reference).

10.2		Guarantee Agreement, dated as of August 23, 2019, by and among Noble Midstream Services, LLC, as Borrower, Noble Midstream Partners LP and the ~~year ended December 31, 2018,~~other guarantors identified therein, and Bank of Montreal, as administrative agent (filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (Date of Event: August 23, 2019) filed ~~February, 19,~~August 26, 2019 and incorporated herein by reference).

31.1		Certification of the Company’s Chief Executive Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241), filed herewith.

31.2		Certification of the Company’s Chief Financial Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241), filed herewith.

32.1		Certification of the Company’s Chief Executive Officer Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), furnished herewith.

32.2		Certification of the Company’s Chief Financial Officer Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), furnished herewith.

~~101.INS~~101		~~Instance Document -~~The following materials from Noble Midstream Partners LP's Quarterly Report on Form 10-Q for the ~~instance document does not appear~~quarter ended September 30, 2019 formatted in ~~the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.~~iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Operations and Comprehensive Income; (ii) Consolidated Balance Sheets; (iii) Consolidated Statements of Cash Flows; (iv) Consolidated Statements of Changes in Equity; and (v) Notes to Consolidated Financial Statements.

~~101.SCH~~104		Cover Page Interactive Data File (formatted as Inline XBRL ~~Schema Document~~

~~101.CAL~~		~~XBRL Calculation Linkbase Document~~

~~101.LAB~~		~~XBRL Label Linkbase Document~~

~~101.PRE~~		~~XBRL Presentation Linkbase Document~~

~~101.DEF~~		~~XBRL Definition Linkbase Document~~and contained in Exhibit 101).

Signatures

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



		Noble Midstream Partners LP
		By: Noble Midstream GP, LLC, its General Partner

Date	~~August 2,~~November 7, 2019	By: /s/ Thomas W. Christensen
		Thomas W. Christensen Chief Financial Officer ~~and Chief Accounting Officer~~

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