GEL. 9.30.2012 10-Q
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
 
 
 
 
Form 10-Q 
 
 
 
 
 

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2012
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-12295
 
 
 
 
 
GENESIS ENERGY, L.P.
(Exact name of registrant as specified in its charter)
 
 
 
 
 

Delaware
76-0513049
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
919 Milam, Suite 2100,
Houston, TX
77002
(Address of principal executive offices)
(Zip code)
Registrant’s telephone number, including area code: (713) 860-2500
 
 
 
 
 
 
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  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  x
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
 
Smaller reporting company  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2) of the Exchange Act).    Yes  ¨    No  ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Class A Common Units outstanding as of November 1, 2012 was 81,162,755.


Table of Contents

GENESIS ENERGY, L.P.
TABLE OF CONTENTS
 
 
 
Page
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2
Table of Contents

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except units)
 
 
September 30, 2012
 
December 31, 2011
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
15,461

 
$
10,817

Accounts receivable - trade, net
318,892

 
237,989

Inventories
67,298

 
101,124

Other
25,616

 
26,174

Total current assets
427,267

 
376,104

FIXED ASSETS, at cost
684,663

 
541,138

Less: Accumulated depreciation
(148,712
)
 
(124,213
)
Net fixed assets
535,951

 
416,925

NET INVESTMENT IN DIRECT FINANCING LEASES, net of unearned income
158,698

 
162,460

EQUITY INVESTEES
547,925

 
326,947

INTANGIBLE ASSETS, net of amortization
79,140

 
93,356

GOODWILL
325,046

 
325,046

OTHER ASSETS, net of amortization
33,128

 
30,006

TOTAL ASSETS
$
2,107,155

 
$
1,730,844

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable - trade
$
254,688

 
$
199,357

Accrued liabilities
63,691

 
50,071

Total current liabilities
318,379

 
249,428

SENIOR SECURED CREDIT FACILITY
483,000

 
409,300

SENIOR UNSECURED NOTES
350,924

 
250,000

DEFERRED TAX LIABILITIES
11,598

 
12,549

OTHER LONG-TERM LIABILITIES
15,321

 
16,929

COMMITMENTS AND CONTINGENCIES (Note 14)

 

PARTNERS’ CAPITAL:
 
 
 
Common unitholders, 81,202,752 and 71,965,062 units issued and outstanding at September 30, 2012 and December 31, 2011, respectively
927,933

 
792,638

TOTAL LIABILITIES AND PARTNERS’ CAPITAL
$
2,107,155

 
$
1,730,844

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.


3
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GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2012
 
2011
 
2012
 
2011
REVENUES:
 
 
 
 
 
 
 
Supply and logistics
$
875,193

 
$
765,714

 
$
2,597,809

 
$
2,091,854

Refinery services
47,977

 
48,392

 
144,342

 
145,301

Pipeline transportation services
19,164

 
16,094

 
55,794

 
45,633

Total revenues
942,334

 
830,200

 
2,797,945

 
2,282,788

COSTS AND EXPENSES:
 
 
 
 
 
 
 
Supply and logistics product costs
811,896

 
710,355

 
2,412,404

 
1,961,038

Supply and logistics operating costs
40,953

 
33,478

 
119,576

 
83,516

Refinery services operating costs
29,243

 
30,136

 
91,072

 
89,986

Pipeline transportation operating costs
5,911

 
3,988

 
15,995

 
12,414

General and administrative
10,375

 
8,905

 
29,934

 
25,339

Depreciation and amortization
14,838

 
14,706

 
45,447

 
43,100

Total costs and expenses
913,216

 
801,568

 
2,714,428

 
2,215,393

OPERATING INCOME
29,118

 
28,632

 
83,517

 
67,395

Equity in earnings (losses) of equity investees
3,432

 
(412
)
 
7,971

 
3,377

Interest expense
(9,873
)
 
(8,960
)
 
(30,697
)
 
(26,670
)
Income before income taxes
22,677

 
19,260

 
60,791

 
44,102

Income tax benefit (expense)
8,517

 
(172
)
 
8,591

 
(626
)
NET INCOME
$
31,194

 
$
19,088

 
$
69,382

 
$
43,476

NET INCOME PER COMMON UNIT:
 
 
 
 
 
 
 
Basic and Diluted
$
0.39

 
$
0.27

 
$
0.90

 
$
0.65

WEIGHTED AVERAGE OUTSTANDING COMMON UNITS:
 
 
 
 
 
 
 
Basic and Diluted
79,901

 
70,447

 
77,410

 
66,580

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.


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GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(In thousands)
 
 
Number of
Common Units
 
Partners’ Capital
 
2012
 
2011
 
2012
 
2011
Partners’ capital, January 1
71,965

 
64,615

 
$
792,638

 
$
669,264

Net income
—

 
—

 
69,382

 
43,476

Cash distributions
—

 
—

 
(104,008
)
 
(82,067
)
Issuance of common units for cash, net
5,750

 
7,350

 
169,421

 
184,969

Conversion of waiver units
3,476

 
—

 
—

 
—

Other
12

 
—

 
500

 
—

Partners' capital, September 30
81,203

 
71,965

 
$
927,933

 
$
815,642

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.


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GENESIS ENERGY, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
 
Nine Months Ended
September 30,
 
2012
 
2011
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
69,382

 
$
43,476

Adjustments to reconcile net income to net cash provided by operating activities -
 
 
 
Depreciation and amortization
45,447

 
43,100

Amortization of debt issuance costs and premium
2,655

 
2,102

Amortization of unearned income and initial direct costs on direct financing leases
(12,641
)
 
(12,968
)
Payments received under direct financing leases
16,389

 
16,389

Equity in earnings of investments in equity investees
(7,971
)
 
(3,377
)
Cash distributions of earnings of equity investees
16,151

 
6,725

Non-cash effect of equity-based compensation plans
4,617

 
(1,505
)
Deferred and other tax liabilities
(9,156
)
 
(27
)
              Unrealized gains on derivative transactions
(1,251
)
 
(4,370
)
Other, net
438

 
339

Net changes in components of operating assets and liabilities (Note 11)
18,878

 
(50,738
)
Net cash provided by operating activities
142,938

 
39,146

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Payments to acquire fixed and intangible assets
(116,702
)
 
(15,157
)
Cash distributions received from equity investees - return of investment
10,918

 
8,577

Investments in equity investees
(57,072
)
 
(194
)
Acquisitions
(205,576
)
 
(143,489
)
Proceeds from asset sales
667

 
4,444

Other, net
(1,012
)
 
129

Net cash used in investing activities
(368,777
)
 
(145,690
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Borrowings on senior secured credit facility
1,407,000

 
571,700

Repayments on senior secured credit facility
(1,333,300
)
 
(563,800
)
Proceeds from issuance of senior unsecured notes, including premium
101,000

 
—

Debt issuance costs
(7,109
)
 
(3,018
)
Issuance of common units for cash, net
169,421

 
184,969

Distributions to common unitholders
(104,008
)
 
(82,067
)
Other, net
(2,521
)
 
(2,626
)
Net cash provided by financing activities
230,483

 
105,158

Net increase (decrease) in cash and cash equivalents
4,644

 
(1,386
)
Cash and cash equivalents at beginning of period
10,817

 
5,762

Cash and cash equivalents at end of period
$
15,461

 
$
4,376

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.


6
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1. Organization and Basis of Presentation and Consolidation
Organization
We are a limited partnership focused on the midstream segment of the oil and gas industry in the Gulf Coast region of the United States, primarily Texas, Louisiana, Arkansas, Mississippi, Alabama, Florida and in the Gulf of Mexico. We have a diverse portfolio of assets, including pipelines, refinery-related plants, storage tanks and terminals, barges and trucks. We were formed in 1996 and are owned 100% by our limited partners. Genesis Energy, LLC, our general partner, is a wholly-owned subsidiary. Our general partner has sole responsibility for conducting our business and managing our operations. We conduct our operations and own our operating assets through our subsidiaries and joint ventures. We manage our businesses through the following three divisions that constitute our reportable segments:
•
Pipeline transportation of interstate, intrastate and offshore crude oil, and, to a lesser extent, carbon dioxide (or "CO2");
•
Refinery services involving processing of high sulfur (or “sour”) gas streams for refineries to remove the sulfur and selling the related by-product, sodium hydrosulfide (or “NaHS”, commonly pronounced "nash"); and
•
Supply and logistics services, which include terminaling, blending, storing, marketing, and transporting crude oil and petroleum products and, on a smaller scale, CO2.
Basis of Presentation and Consolidation
The accompanying Unaudited Condensed Consolidated Financial Statements include Genesis Energy, L.P. and its subsidiaries, including Genesis Energy, LLC, our general partner.
Our results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. The Condensed Consolidated Financial Statements included herein have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they reflect all adjustments (which consist solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial results for interim periods. Certain information and notes normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading when read in conjunction with the information contained in the periodic reports we file with the SEC pursuant to the Securities Exchange Act of 1934, including the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011.
Except per unit amounts, or as noted within the context of each footnote disclosure, the dollar amounts presented in the tabular data within these footnote disclosures are stated in thousands of dollars.

2. Acquisitions
Interests in Gulf of Mexico Crude Oil Pipeline Systems
On January 3, 2012, we acquired from Marathon Oil Company interests in several Gulf of Mexico crude oil pipeline systems. The acquired pipeline interests include a 28% interest in Poseidon Oil Pipeline Company, L.L.C. (or “Poseidon”), a 100% interest in Marathon Offshore Pipeline, LLC (subsequently re-named GEL Offshore Pipeline, LLC, or “GOPL”) and a 29% interest in Odyssey Pipeline L.L.C. (or “Odyssey”). GOPL owns a 23% interest in the Eugene Island crude oil pipeline system and a 100% interest in two smaller offshore pipelines. The purchase price, net of post-closing adjustments, was $205.6 million. We funded the purchase price with cash available under our credit facility. We account for our interests in Poseidon and Odyssey under the equity method of accounting. We have recorded the assets acquired and liabilities assumed of GOPL in the Unaudited Condensed Consolidated Financial Statements at their estimated fair values on a preliminary basis. Management developed these preliminary fair values and we do not expect any material adjustments to these preliminary purchase price allocations as a result of the final valuation.

7
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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The preliminary allocation of the purchase price is summarized as follows:
Property and equipment
$
28,456

Equity investees
182,993

Asset retirement obligation assumed
(5,873
)
Total allocation
$
205,576

The Poseidon pipeline system is comprised of a 367-mile network of crude oil pipelines, varying in diameter from 16 to 24 inches, with capacity to deliver approximately 400,000 barrels per day of crude oil from developments in the central and western offshore Gulf of Mexico to other pipelines and terminals onshore and offshore Louisiana. The Eugene Island pipeline system is primarily comprised of a 183-mile network of crude oil pipelines, the main pipeline of which is 20 inches in diameter, with capacity to deliver approximately 200,000 barrels per day of crude oil from developments in the central Gulf of Mexico to other pipelines and terminals onshore Louisiana. The Odyssey pipeline system is comprised of a 120-mile network of crude oil pipelines, varying in diameter from 12 to 20 inches, with capacity to deliver up to 300,000 barrels per day of crude oil from developments in the eastern Gulf of Mexico to other pipelines and terminals onshore Louisiana.
Our Unaudited Condensed Consolidated Financial Statements include the results of the acquired pipeline interests since the effective closing date of the acquisition in January 2012. The following table presents selected financial information included in our Unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2012:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2012
Revenues
$
1,180

 
$
4,334

Equity in earnings of equity investees
$
3,497

 
$
9,194

Net income
$
3,950

 
$
11,128


The table below presents selected unaudited pro forma financial information for the three and nine months ended September 30, 2011 incorporating the historical results of the acquired pipeline interests. The pro forma financial information below has been prepared as if the acquisition had been completed at the beginning of the prior year and is based upon assumptions deemed appropriate by us and may not be indicative of actual results.
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2011
Pro forma earnings data:
 
 
 
Revenues
$
831,956

 
$
2,288,056

Equity in earnings of equity investees
$
2,605

 
$
11,963

Net income
$
20,903

 
$
48,941

Basic and diluted earnings per unit:
 
 
 
As reported net income per unit
$
0.27

 
$
0.65

Pro forma net income per unit
$
0.30

 
$
0.74

As reported units outstanding
70,447

 
66,580

Pro forma units outstanding
70,447

 
66,580


FMT Black Oil Barge Transportation Business
In August 2011, we completed the acquisition of the black oil barge transportation business of Florida Marine Transporters, Inc. and its affiliates (“FMT”). The purchase price was $143.5 million (including $2.5 million for fuel inventory and other costs). The acquired business was comprised of 30 barges (seven of which were initially sub-leased under terms similar to those of an existing FMT lease, which we subsequently purchased in February 2012 for $30.6 million) and 14 push/tow boats which transport heavy refined products, primarily serving refineries and storage terminals along the Gulf Coast,

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Intracoastal Canal and western river systems of the United States, including the Red, Ouachita and Mississippi Rivers. The August 2011 acquisition and related transaction costs were funded with a portion of the net proceeds from the July 2011 public offering of our common units, whereby we raised approximately $185 million in net proceeds of equity capital. The February 2012 vessels purchase was funded with cash available under our credit facility.
The financial results of the acquired business are included in our supply and logistics segment from the date of the acquisition.
3. Inventories
The major components of inventories were as follows:
 
September 30,
2012
 
December 31,
2011
Petroleum products
$
41,076

 
$
70,769

Crude oil
12,014

 
11,701

Caustic soda
6,829

 
11,312

NaHS
7,376

 
7,337

Other
3

 
5

Total
$
67,298

 
$
101,124

Inventories are valued at the lower of cost or market. At September 30, 2012 and December 31, 2011, market values of our inventories exceeded recorded costs.
4. Fixed Assets and Asset Retirement Obligations
Fixed Assets
Fixed assets consisted of the following:
 
 
September 30,
2012
 
December 31,
2011
Pipelines and related assets
$
218,155

 
$
167,865

Machinery and equipment
63,091

 
46,233

Transportation equipment
20,280

 
21,732

Marine vessels
297,416

 
262,216

Land, buildings and improvements
14,037

 
13,140

Office equipment, furniture and fixtures
4,487

 
3,778

Construction in progress
53,135

 
14,236

Other
14,062

 
11,938

Fixed assets, at cost
684,663

 
541,138

Less: Accumulated depreciation
(148,712
)
 
(124,213
)
Net fixed assets
$
535,951

 
$
416,925

Our depreciation expense for the periods presented was as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2012
 
2011
 
2012
 
2011
Depreciation expense
$
9,202

 
$
5,960

 
$
27,246

 
$
17,838


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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Asset Retirement Obligations
A reconciliation of our liability for asset retirement obligations is as follows:
December 31, 2011
$
5,900

Liabilities incurred and assumed in the current period
5,995

Accretion expense
600

September 30, 2012
$
12,495

We assumed asset retirement obligations of $5.9 million related to pipelines in connection with our acquisition of GOPL. See Note 2 for information related to our acquisitions.
5. Equity Investees
We account for our ownership in our joint ventures under the equity method of accounting. The price we pay to acquire an ownership interest in a company may exceed the underlying book value of the capital accounts we acquire. Such excess cost amounts are included within the carrying values of our equity investees. At September 30, 2012 and December 31, 2011, the unamortized excess cost amounts totaled $236.6 million and $97.8 million, respectively. We amortize the excess cost as a reduction in equity earnings in a manner similar to depreciation.

The following table presents information included in our Unaudited Condensed Consolidated Financial Statements related to our equity investees.
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2012
 
2011
 
2012
 
2011
Genesis’ share of operating earnings
$
5,978

 
$
729

 
$
15,611

 
$
6,800

Amortization of excess purchase price
(2,546
)
 
(1,141
)
 
(7,640
)
 
(3,423
)
Net equity in earnings (losses)
$
3,432

 
$
(412
)
 
$
7,971

 
$
3,377

Distributions received
$
9,045

 
$
3,289

 
$
27,069

 
$
15,302

The following tables present the combined unaudited balance sheet and income statement information (on a 100% basis) of our equity investees:
 
September 30,
2012
 
December 31,
2011
Balance Sheet Information:
 
 
 
Assets
 
 
 
Current assets
$
65,250

 
$
12,732

Fixed assets, net
760,788

 
441,894

Other assets
10,964

 
18,000

Total assets
$
837,002

 
$
472,626

Liabilities and equity
 
 
 
Current liabilities
$
53,667

 
$
5,891

Other liabilities
118,226

 
8,536

Equity
665,109

 
458,199

Total liabilities and equity
$
837,002

 
$
472,626

 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2012
 
2011
 
2012
 
2011
Income Statement Information:
 
 
 
 
 
 
 
Revenues
$
39,799

 
$
7,975

 
$
113,769

 
$
32,819

Operating income
$
19,810

 
$
576

 
$
53,597

 
$
11,768

Net income
$
19,196

 
$
576

 
$
51,553

 
$
11,778



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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


6. Intangible Assets
The following table summarizes the components of our intangible assets at the dates indicated:
 
 
September 30, 2012
 
December 31, 2011
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Carrying
Value
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Carrying
Value
Refinery Services:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
94,654

 
$
67,403

 
$
27,251

 
$
94,654

 
$
62,111

 
$
32,543

Licensing agreements
38,678

 
22,038

 
16,640

 
38,678

 
19,476

 
19,202

Supplier relationships
36,469

 
35,878

 
591

 
36,469

 
34,105

 
2,364

Segment total
169,801

 
125,319

 
44,482

 
169,801

 
115,692

 
54,109

Supply & Logistics:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
35,430

 
25,698

 
9,732

 
35,430

 
23,584

 
11,846

Intangibles associated with lease
13,260

 
2,447

 
10,813

 
13,260

 
2,092

 
11,168

Trade names
18,888

 
18,888

 
—

 
18,888

 
17,048

 
1,840

Segment total
67,578

 
47,033

 
20,545

 
67,578

 
42,724

 
24,854

Other
18,467

 
4,354

 
14,113

 
17,292

 
2,899

 
14,393

Total
$
255,846

 
$
176,706

 
$
79,140

 
$
254,671

 
$
161,315

 
$
93,356

Our amortization expense for the periods presented was as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2012
 
2011
 
2012
 
2011
Amortization expense
$
4,520

 
$
7,721

 
$
15,390

 
$
22,367

We estimate that our amortization expense for the next five years will be as follows:
Remainder of
2012
$
4,520

 
2013
$
14,597

 
2014
$
12,297

 
2015
$
10,489

 
2016
$
9,028


7. Debt
Our obligations under debt arrangements consisted of the following:
 
September 30,
2012
 
December 31,
2011
Senior secured credit facility
$
483,000

 
$
409,300

7.875% senior unsecured notes (including unamortized premium of $924 and $0 in 2012 and 2011, respectively)
350,924

 
250,000

Total long-term debt
$
833,924

 
$
659,300

As of September 30, 2012, we were in compliance with the financial covenants contained in our credit agreement and senior unsecured notes indenture.

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Senior Secured Credit Facility
In July 2012, we amended and restated our senior secured credit facility with a syndicate of banks to, among other things, increase the committed amount from $775 million to $1 billion and the accordion feature from $225 million to $300 million, giving us the ability to expand the size of the facility up to an aggregate $1.3 billion for acquisitions or internal growth projects, subject to lender consent. The inventory financing sublimit tranche was increased from $125 million to $150 million, and the term of our credit facility was extended to July 25, 2017.
The key terms for rates under our credit facility, which are dependent on our leverage ratio (as defined in the credit agreement), are as follows:
•
The applicable margin varies from 1.75% to 2.75% on eurodollar borrowings and from 0.75% to 1.75% on alternate base rate borrowings.
•Letter of credit fees range from 1.75% to 2.75%.
•
The commitment fee on the unused committed amount will range from 0.375% to 0.50%.
At September 30, 2012, we had $483 million borrowed under our credit facility, with $48.6 million of the borrowed amount designated as a loan under the inventory sublimit. The credit agreement allows up to $100 million of the capacity to be used for letters of credit, of which $12.6 million was outstanding at September 30, 2012. Due to the revolving nature of loans under our credit facility, additional borrowings and periodic repayments and re-borrowings may be made until the maturity date. The total amount available for borrowings under our credit facility at September 30, 2012 was $504.4 million.
Senior Unsecured Notes Issuance
On February 1, 2012, we issued an additional $100 million of aggregate principal amount of senior unsecured notes under our existing 7.875% senior unsecured notes due 2018 indenture. The notes were issued at 101% of face value at an effective interest rate of 7.682%. The notes have the same terms and conditions as the notes previously issued under the indenture. The issuance increased the total aggregate principal amount under the indenture to $350 million. The net proceeds were used to repay borrowings under our credit facility.

8. Partners’ Capital and Distributions
On March 28, 2012, we issued 5,750,000 Class A common units in a public offering at a price of $30.80 per unit. We received proceeds, net of underwriting discounts and offering costs, of $169.4 million from the offering. The net proceeds were used for general corporate purposes, including the repayment of borrowings under our credit facility. At September 30, 2012, our outstanding common units consisted of 81,162,755 Class A units and 39,997 Class B units.
Waiver Units
Our waiver units are non-voting securities entitled to a minimal preferential quarterly distribution. At issuance our waiver units were comprised of four classes (designated Class 1, Class 2, Class 3 and Class 4) of 1,738,000 units. The waiver units in each class are convertible into Class A common units in the calendar quarter at a 1:1 conversion rate during which each of our common units receives a specified minimum quarterly distribution and our distribution coverage ratio (after giving effect to the then convertible waiver units) would be at least 1.1 times. The minimum distribution per common unit required for conversion is $0.43 (Class 1), $0.46 (Class 2), $0.49 (Class 3) and $0.52 (Class 4).
On February 14, 2012, our Class 1 waiver units became convertible as we paid a distribution of $0.44 per common unit and satisfied the conversion coverage ratio requirement. All Class 1 waiver units were converted into common units by March 31, 2012.
On August 14, 2012, our Class 2 waiver units became convertible as we paid a distribution of $0.46 per common unit and satisfied the conversion coverage ratio requirement. All Class 2 waiver units were converted into common units by September 30, 2012.
At September 30, 2012, we had 3,476,466 waiver units outstanding comprised of the last two classes.

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Distributions
We paid or will pay the following distributions in 2011 and 2012:
Distribution For
 
Date Paid
 
Per Unit
Amount
 
Total
Amount
2011
 
 
 
 
 
 
1st Quarter
 
May 13, 2011
 
$
0.4075

 
$
26,343

2nd Quarter
 
August 12, 2011
 
$
0.4150

 
$
29,878

3rd Quarter
 
November 14, 2011
 
$
0.4275

 
$
30,777

4th Quarter
 
February 14, 2012
 
$
0.4400

 
$
31,677

2012
 
 
 
 
 
 
1st Quarter
 
May 15, 2012
 
$
0.4500

 
$
35,759

2nd Quarter
 
August 14, 2012
 
$
0.4600

 
$
36,554

3rd Quarter
 
November 14, 2012
(1) 
$
0.4725

 
$
38,368

 
(1) This distribution will be paid to unitholders of record as of November 1, 2012.
9. Business Segment Information
Our operations consist of three operating segments:
(1)
Pipeline Transportation – interstate, intrastate and offshore crude oil, and to a lesser extent, CO2;
(2)
Refinery Services – processing high sulfur (or “sour”) gas streams as part of refining operations to remove the sulfur and selling the related by-product, NaHS and;
(3)
Supply and Logistics – terminaling, blending, storing, marketing, and transporting crude oil and petroleum products (primarily fuel oil, asphalt, and other heavy refined products) and, on a smaller scale, CO2.
Substantially all of our revenues are derived from, and substantially all of our assets are located in, the United States.
We define Segment Margin as revenues less product costs, operating expenses (excluding non-cash charges, such as depreciation and amortization), and segment general and administrative expenses, plus our equity in distributable cash generated by our equity investees. In addition, our Segment Margin definition excludes the non-cash effects of our stock appreciation rights plan and includes the non-income portion of payments received under direct financing leases.
Our chief operating decision maker (our Chief Executive Officer) evaluates segment performance based on a variety of measures including Segment Margin, segment volumes, where relevant, and capital investment.
 

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Segment information for the periods presented below was as follows:
 
Pipeline
Transportation
 
Refinery
Services
 
Supply &
Logistics
 
Total
Three Months Ended September 30, 2012
 
 
 
 
 
 
 
Segment margin (a)
$
23,295

 
$
18,983

 
$
23,651

 
$
65,929

Capital expenditures (b)
$
21,764

 
$
1,025

 
$
14,410

 
$
37,199

Revenues:
 
 
 
 
 
 
 
External customers
$
16,190

 
$
50,378

 
$
875,766

 
$
942,334

Intersegment (c)
2,974

 
(2,401
)
 
(573
)
 
—

Total revenues of reportable segments
$
19,164

 
$
47,977

 
$
875,193

 
$
942,334

Three Months Ended September 30, 2011
 
 
 
 
 
 
 
Segment margin (a)
$
16,030

 
$
17,992

 
$
18,909

 
$
52,931

Capital expenditures (b)
$
1,582

 
$
852

 
$
146,999

 
$
149,433

Revenues:
 
 
 
 
 
 
 
External customers
$
12,658

 
$
50,982

 
$
766,560

 
$
830,200

Intersegment (c)
3,436

 
(2,590
)
 
(846
)
 
—

Total revenues of reportable segments
$
16,094

 
$
48,392

 
$
765,714

 
$
830,200

Nine Months Ended September 30, 2012
 
 
 
 
 
 
 
Segment margin (a)
$
69,427

 
$
53,510

 
$
66,075

 
$
189,012

Capital expenditures (b)
$
300,093

 
$
2,295

 
$
77,414

 
$
379,802

Revenues:
 
 
 
 
 
 
 
External customers
$
44,564

 
$
151,326

 
$
2,602,055

 
$
2,797,945

Intersegment (c)
11,230

 
(6,984
)
 
(4,246
)
 
—

Total revenues of reportable segments
$
55,794

 
$
144,342

 
$
2,597,809

 
$
2,797,945

Nine Months Ended September 30, 2011
 
 
 
 
 
 
 
Segment margin (a)
$
50,639

 
$
54,887

 
$
44,233

 
$
149,759

Capital expenditures (b)
$
3,264

 
$
1,321

 
$
149,126

 
$
153,711

Revenues:
 
 
 
 
 
 
 
External customers
$
37,302

 
$
151,899

 
$
2,093,587

 
$
2,282,788

Intersegment (c)
8,331

 
(6,598
)
 
(1,733
)
 
—

Total revenues of reportable segments
$
45,633

 
$
145,301

 
$
2,091,854

 
$
2,282,788

Total assets by reportable segment were as follows:
 
September 30,
2012
 
December 31,
2011
Pipeline transportation
$
870,966

 
$
594,728

Refinery services
413,888

 
426,993

Supply and logistics
774,002

 
659,576

Other assets
48,299

 
49,547

Total consolidated assets
$
2,107,155

 
$
1,730,844

 

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(a)
A reconciliation of Segment Margin to income before income taxes for the periods presented is as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2012
 
2011
 
2012
 
2011
Segment Margin
$
65,929

 
$
52,931

 
$
189,012

 
$
149,759

Corporate general and administrative expenses
(9,428
)
 
(8,194
)
 
(26,756
)
 
(23,267
)
Depreciation and amortization
(14,838
)
 
(14,706
)
 
(45,447
)
 
(43,100
)
Interest expense
(9,873
)
 
(8,960
)
 
(30,697
)
 
(26,670
)
Distributable cash from equity investees in excess of equity in earnings
(5,613
)
 
(3,701
)
 
(19,098
)
 
(11,925
)
Non-cash items not included in segment margin
(2,222
)
 
3,061

 
(2,475
)
 
2,729

Cash payments from direct financing leases in excess of earnings
(1,278
)
 
(1,171
)
 
(3,748
)
 
(3,424
)
Income before income taxes
$
22,677

 
$
19,260

 
$
60,791

 
$
44,102

 
(b)
Capital expenditures include maintenance and growth capital expenditures, such as fixed asset additions (including enhancements to existing facilities and construction of internal growth projects) as well as acquisitions of businesses and interests in equity investees. Capital spending in our pipeline transportation segment included $5.7 million and $57.1 million during the three and nine months ended September 30, 2012, respectively, representing capital contributions to our SEKCO equity investee to fund our share of the construction costs for its pipeline. For the nine months ended September 30, 2012, capital spending in our pipeline transportation segment also included $205.6 million for the acquisition of interests in several Gulf of Mexico pipelines. For the nine months ended September 30, 2012, capital spending in our supply and logistics segment also included $30.6 million for the purchase of barge assets.
(c)
Intersegment sales were conducted under terms that we believe were no more or less favorable than then-existing market conditions.

10. Transactions with Related Parties
Sales, purchases and other transactions with affiliated companies, in the opinion of management, are conducted under terms no more or less favorable than then-existing market conditions. The transactions with related parties were as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2012
 
2011
 
2012
 
2011
Revenues:
 
 
 
 
 
 
 
Petroleum products sales to an affiliate of the Quintana Group (1)
$
6,376

 
$
5,948

 
$
21,142

 
$
27,202

Sales of CO2 to Sandhill Group, LLC (2)
838

 
946

 
2,111

 
1,921

Petroleum products sales to Davison family businesses (1)
326

 
737

 
1,012

 
1,224

Costs and expenses:
 
 
 
 
 
 
 
Marine operating fuel and expenses provided by an affiliate of the Quintana Group (1)
1,980

 
902

 
6,181

 
2,722

Amounts paid to our CEO in connection with the use of his aircraft
150

 
166

 
450

 
166

 
(1)
The Quintana Group, a private equity fund based in Houston, Texas, owned 10% of our Class A common units and 74% of our Class B common units at September 30, 2012. The Davison family owned 15% of our Class A common units at September 30, 2012. The Quintana Group monetized all of its remaining investment in us on October 5, 2012. Substantially in connection with that transaction, certain members of the Davison family, collectively, increased their investment in us to 17.2% of our Class A common units and 76.9% of our Class B units. Soley for financial statement disclosure purposes, we will continue to treat the Davison family and their affiliates as related parties.
(2)
We own a 50% interest in Sandhill Group, LLC.
Amounts due to and from Related Parties
At September 30, 2012 and December 31, 2011, an affiliate of the Quintana Group owed us $1.2 million and $1.9 million, respectively, for petroleum product sales. We owed such affiliate $0.1 million at September 30, 2012 and December 31, 2011, respectively, for marine related costs. Sandhill Group, LLC owed us $0.3 million and $0.2 million at September 30, 2012 and December 31, 2011, respectively, for purchases of CO2.

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


11. Supplemental Cash Flow Information
The following table provides information regarding the net changes in components of operating assets and liabilities.
 
 
Nine Months Ended
September 30,
 
2012
 
2011
(Increase) decrease in:
 
 
 
Accounts receivable
$
(80,789
)
 
$
(52,355
)
Inventories
33,826

 
(34,757
)
Other current assets
1,846

 
1,515

Increase (decrease) in:
 
 
 
Accounts payable
57,851

 
16,953

Accrued liabilities
6,144

 
17,906

Net changes in components of operating assets and liabilities
$
18,878

 
$
(50,738
)
Payments of interest and commitment fees were $24.4 million and $20.3 million for the nine months ended September 30, 2012 and 2011, respectively.
At September 30, 2012 and 2011, we had incurred liabilities for fixed and intangible asset additions totaling $4.8 million and $1.3 million, respectively, that had not been paid at the end of the third quarter, and, therefore, were not included in the caption “Payments to acquire fixed and intangible assets” under Cash Flows from Investing Activities in the Unaudited Condensed Consolidated Statements of Cash Flows.
At September 30, 2012, we had incurred liabilities for other asset additions totaling $0.6 million that had not been paid at the end of the third quarter, and, therefore, were not included in the caption "Other, net" under Cash Flows from Investing Activities in the Unaudited Condensed Consolidated Statements of Cash Flows.
12. Derivatives
Commodity Derivatives
We have exposure to commodity price changes related to our inventory and purchase commitments. We utilize derivative instruments (primarily futures and options contracts traded on the NYMEX) to hedge our exposure to commodity prices, primarily of crude oil, fuel oil and petroleum products. Our decision as to whether to designate derivative instruments as fair value hedges for accounting purposes relates to our expectations of the length of time we expect to have the commodity price exposure and our expectations as to whether the derivative contract will qualify as highly effective under accounting guidance in limiting our exposure to commodity price risk. Most of the petroleum products, including fuel oil that we supply, cannot be hedged with a high degree of effectiveness with derivative contracts available on the NYMEX; therefore, we do not designate derivative contracts utilized to limit our price risk related to these products as hedges for accounting purposes. Typically we utilize crude oil and other petroleum products futures and option contracts to limit our exposure to the effect of fluctuations in petroleum products prices on the future sale of our inventory or commitments to purchase petroleum products, and we recognize any changes in fair value of the derivative contracts as increases or decreases in our cost of sales. The recognition of changes in fair value of the derivative contracts not designated as hedges for accounting purposes can occur in reporting periods that do not coincide with the recognition of gain or loss on the actual transaction being hedged. Therefore we will, on occasion, report gains or losses in one period that will be partially offset by gains or losses in a future period when the hedged transaction is completed.
In accordance with NYMEX requirements, we fund the margin associated with our loss positions on commodity derivative contracts traded on the NYMEX. The amount of the margin is adjusted daily based on the fair value of the commodity contracts. The margin requirements are intended to mitigate a party’s exposure to market volatility and the associated contracting party risk. We offset fair value amounts recorded for our NYMEX derivative contracts against margin funding as required by the NYMEX in Current Assets - Other in our Unaudited Condensed Consolidated Balance Sheets.

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


At September 30, 2012, we had the following outstanding derivative commodity futures and options contracts that were entered into to economically hedge inventory or fixed price purchase commitments. We had no outstanding derivative contracts that were designated as hedges under accounting rules.
 
 
Sell (Short)
Contracts
 
Buy (Long)
Contracts
Not qualifying or not designated as hedges under accounting rules:
 
 
 
 
Crude oil futures:
 
 
 
 
Contract volumes (1,000 bbls)
 
59

 
25

Weighted average contract price per bbl
 
$
92.69

 
$
92.19

Crude oil LLS/WTI swap:
 
 
 
 
Contract volumes (1,000 bbls)
 
100

 
—

Weighted average contract price per bbl
 
$
18.63

 
$
—

Heating oil futures:
 
 
 
 
Contract volumes (1,000 bbls)
 
94

 
66

Weighted average contract price per gal
 
$
3.12

 
$
3.16

#6 Fuel oil futures:
 
 
 
 
Contract volumes (1,000 bbls)
 
640

 
200

Weighted average contract price per bbl
 
$
97.59

 
$
98.05

Crude oil options:
 
 
 
 
Contract volumes (1,000 bbls)
 
360

 
105

Weighted average premium received
 
$
1.69

 
$
0.54

Heating oil options:
 
 
 
 
Contract volumes (1,000 bbls)
 
10

 
—

Weighted average premium received
 
$
0.08

 
$
—

Financial Statement Impacts
Unrealized gains are subtracted from net income and unrealized losses are added to net income in determining cash flows from operating activities. To the extent that we have fair value hedges outstanding, the offsetting change recorded in the fair value of inventory is also eliminated from net income in determining cash flows from operating activities. Changes in margin deposits necessary to fund unrealized losses also affect cash flows from operating activities.
The following tables reflect the estimated fair value gain (loss) position of our derivatives at September 30, 2012 and December 31, 2011:
Fair Value of Derivative Assets and Liabilities
 
 
Unaudited Condensed Consolidated Balance Sheets Location
 
Fair Value
 
 
September 30,
2012
 
December 31,
2011
 
Asset Derivatives:
 
 
 
 
 
  
Commodity derivatives - futures and call options:
 
 
 
 
 
 
Undesignated hedges
Current Assets - Other
 
$
178

 
$
306

  
Total asset derivatives
 
 
$
178

  
$
306

  
Liability Derivatives:
 
 
 
 
 
  
Commodity derivatives - futures and call options:
 
 
 
 
 
 
Undesignated hedges
Current Assets - Other
 
$
(1,440
)
(1) 
$
(2,820
)
(1) 
Total liability derivatives
 
 
$
(1,440
)
 
$
(2,820
)
 
 
(1) These derivative liabilities have been funded with margin deposits recorded in our Unaudited Condensed Consolidated Balance Sheets under Current Assets - Other.

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


 
Effect on Operating Results 
 
 
 
Amount of Gain (Loss) Recognized in Income
 
Unaudited Condensed Consolidated Statements of Operations Location
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2012
 
2011
 
2012
 
2011
Commodity derivatives - futures and call options:
 
 
 
 
 
 
 
 
 
Contracts designated as hedges under accounting guidance
Supply and logistics product costs
 
$
—

 
$
—

 
$
—

 
$
(173
)
Contracts not considered hedges under accounting guidance
Supply and logistics product costs
 
(5,817
)
 
2,587

 
(2,959
)
 
(11,050
)
Total commodity derivatives
 
 
$
(5,817
)
 
$
2,587

 
$
(2,959
)
 
$
(11,223
)
13. Fair-Value Measurements
We classify financial assets and liabilities into the following three levels based on the inputs used to measure fair value:
(1)
Level 1 fair values are based on observable inputs such as quoted prices in active markets;
(2)
Level 2 fair values are based on pricing inputs other than quoted prices in active markets and are either directly or indirectly observable as of the measurement date; and
(3)
Level 3 fair values are based on unobservable inputs in which little or no market data exists. As required by fair value accounting guidance, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Our assessment of the significance of a particular input to the fair value requires judgment and may affect the placement of assets and liabilities within the fair value hierarchy levels.
The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis at the dates indicated. 
 
 
Fair Value at
 
Fair Value at
 
 
September 30, 2012
 
December 31, 2011
Recurring Fair Value Measures
 
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Commodity derivatives:
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
$
178

 
$
—

 
$
—

 
$
306

 
$
—

 
$
—

Liabilities
 
$
(1,440
)
 
$
—

 
$
—

 
$
(2,820
)
 
$
—

 
$
—

Our commodity derivatives include exchange-traded futures and exchange-traded options contracts. The fair value of these exchange-traded derivative contracts is based on unadjusted quoted prices in active markets and is, therefore, included in Level 1 of the fair value hierarchy.
See Note 12 for additional information on our derivative instruments.
Nonfinancial Assets and Liabilities
We utilize fair value on a non-recurring basis to perform impairment tests as required on our property, plant and equipment, goodwill and intangible assets. Assets and liabilities acquired in business combinations are recorded at their fair value as of the date of acquisition. The inputs used to determine such fair value are primarily based upon internally developed cash flow models and would generally be classified in Level 3, in the event that we were required to measure and record such assets within our Unaudited Condensed Consolidated Financial Statements. Additionally, we use fair value to determine the inception value of our asset retirement obligations. The inputs used to determine such fair value are primarily based upon costs incurred historically for similar work, as well as estimates from independent third parties for costs that would be incurred to restore leased property to the contractually stipulated condition, and would generally be classified in Level 3.

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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Other Fair Value Measurements
We believe the debt outstanding under our credit facility approximates fair value as the stated rate of interest approximates current market rates for similar instruments with comparable maturities. At September 30, 2012, our senior unsecured notes had a carrying value of $351 million and a fair value of $371.4 million, compared to $250 million and $253.1 million, respectively, at December 31, 2011. The fair value of the senior unsecured notes is determined based on trade information in the financial markets of our public debt and is considered a Level 2 fair value measurement.
14. Contingencies
We are subject to various environmental laws and regulations. Policies and procedures are in place to monitor compliance and to detect and address any material releases of crude oil from our pipelines or other facilities; however, no assurance can be made that such environmental releases may not substantially affect our business.

We are subject to lawsuits in the normal course of business, as well as examinations by tax and other regulatory authorities. We do not expect such matters presently pending to have a material effect on our financial position, results of operations, or cash flows.
15. Income Taxes

In the third quarter of 2012, we reversed $8.2 million of uncertain tax positions and recognized an income tax benefit in the Unaudited Condensed Consolidated Statements of Operations as a result of tax audit settlements and the expiration of statutes of limitations. These uncertain tax positions were included in Other Long-Term Liabilities in our Unaudited Condensed Consolidated Balance Sheets.
16. Condensed Consolidating Financial Information
Our $350 million aggregate principal amount of senior unsecured notes co-issued by Genesis Energy, L.P. and Genesis Energy Finance Corporation are fully and unconditionally guaranteed jointly and severally by all of Genesis Energy, L.P.’s subsidiaries, except Genesis Free State Pipeline, LLC, Genesis NEJD Pipeline, LLC and certain other minor subsidiaries. Genesis NEJD Pipeline, LLC is 100% owned by Genesis Energy, L.P., the parent company. The remaining non-guarantor subsidiaries are owned by Genesis Crude Oil, L.P., a guarantor subsidiary. Genesis Energy Finance Corporation has no independent assets or operations. Each subsidiary guarantor and the subsidiary co-issuer are 100% owned, directly or indirectly, by Genesis Energy, L.P. See Note 7 for additional information regarding our consolidated debt obligations. The following is condensed consolidating financial information for Genesis Energy, L.P., the guarantor subsidiaries and the non-guarantor subsidiaries.














19
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GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Unaudited Condensed Consolidating Balance Sheet
September 30, 2012

 
Genesis
Energy, L.P.
(Parent and
Co-Issuer)
 
Genesis
Energy Finance
Corporation
(Co-Issuer)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Genesis
Energy, L.P.
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
11

 
$
—

 
$
14,753

 
$
697

 
$
—

 
$
15,461

Other current assets
744,217

 
—

 
387,772

 
38,521

 
(758,704
)
 
411,806

Total current assets
744,228

 
—

 
402,525

 
39,218

 
(758,704
)
 
427,267

Fixed assets, at cost
—

 
—

 
583,751

 
100,912

 
—

 
684,663

Less: Accumulated depreciation
—

 
—

 
(136,459
)
 
(12,253
)
 
—

 
(148,712
)
Net fixed assets
—

 
—

 
447,292

 
88,659

 
—

 
535,951

Goodwill
—

 
—

 
325,046

 
—

 
—

 
325,046

Other assets, net
19,152

 
—

 
257,694

 
158,875

 
(164,755
)
 
270,966

Equity investees
—

 
—

 
547,925

 
—

 
—

 
547,925

Investments in subsidiaries
1,007,650

 
—

 
100,005

 
—

 
(1,107,655
)
 
—

Total assets
$
1,771,030

 
$
—

 
$
2,080,487

 
$
286,752

 
$
(2,031,114
)
 
$
2,107,155

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$
9,173

 
$
—

 
$
1,047,542

 
$
19,987

 
$
(758,323
)
 
$
318,379

Senior secured credit facility
483,000

 
—

 
—

 
—

 
—

 
483,000

Senior unsecured notes
350,924

 
—

 
—

 
—

 
—

 
350,924

Deferred tax liabilities
—

 
—

 
11,598

 
—

 
—

 
11,598

Other liabilities
—

 
—

 
12,850

 
167,041

 
(164,570
)
 
15,321

Total liabilities
843,097

 
—

 
1,071,990

 
187,028

 
(922,893
)
 
1,179,222

Partners’ capital
927,933

 
—

 
1,008,497

 
99,724

 
(1,108,221
)
 
927,933

Total liabilities and partners’ capital
$
1,771,030

 
$
—

 
$
2,080,487

 
$
286,752

 
$
(2,031,114
)
 
$
2,107,155



20
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Unaudited Condensed Consolidating Balance Sheet
December 31, 2011
 
 
Genesis
Energy, L.P.
(Parent and
Co-Issuer)
 
Genesis
Energy Finance
Corporation
(Co-Issuer)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Genesis
Energy, L.P.
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
3

 
$
—

 
$
9,182

 
$
1,632

 
$
—

 
$
10,817

Other current assets
597,966

 
—

 
341,131

 
31,897

 
(605,707
)
 
365,287

Total current assets
597,969

 
—

 
350,313

 
33,529

 
(605,707
)
 
376,104

Fixed assets, at cost
—

 
—

 
444,262

 
96,876

 
—

 
541,138

Less: Accumulated depreciation
—

 
—

 
(114,655
)
 
(9,558
)
 
—

 
(124,213
)
Net fixed assets
—

 
—

 
329,607

 
87,318

 
—

 
416,925

Goodwill
—

 
—

 
325,046

 
—

 
—

 
325,046

Other assets, net
14,773

 
—

 
276,450

 
162,373

 
(167,774
)
 
285,822

Equity investees
—

 
—

 
326,947

 
—

 
—

 
326,947

Investments in subsidiaries
841,725

 
—

 
96,303

 
—

 
(938,028
)
 
—

Total assets
$
1,454,467

 
$
—

 
$
1,704,666

 
$
283,220

 
$
(1,711,509
)
 
$
1,730,844

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$
2,529

 
$
—

 
$
835,013

 
$
17,562

 
$
(605,676
)
 
$
249,428

Senior secured credit facility
409,300

 
—

 
—

 
—

 
—

 
409,300

Senior unsecured notes
250,000

 
—

 
—

 
—

 
—

 
250,000

Deferred tax liabilities
—

 
—

 
12,549

 
—

 
—

 
12,549

Other liabilities
—

 
—

 
14,673

 
169,842

 
(167,586
)
 
16,929

Total liabilities
661,829

 
—

 
862,235

 
187,404

 
(773,262
)
 
938,206

Partners’ capital
792,638

 
—

 
842,431

 
95,816

 
(938,247
)
 
792,638

Total liabilities and partners’ capital
$
1,454,467

 
$
—

 
$
1,704,666

 
$
283,220

 
$
(1,711,509
)
 
$
1,730,844


 



21
Table of Contents
GENESIS ENERGY, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Unaudited Condensed Consolidating Statement of Operations
Three Months Ended September 30, 2012
 
 
Genesis
Energy, L.P.
(Parent and
Co-Issuer)
 
Genesis
Energy Finance
Corporation
(Co-Issuer)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Genesis
Energy, L.P.
Consolidated
REVENUES:
 
 
 
 
 
 
 
 
 
 
 
Supply and logistics
$
—

 
$
—

 
$
869,726

 
$
31,113

 
$
(25,646
)
 
$
875,193

Refinery services
—

 
—

 
48,809

 
4,367

 
(5,199
)
 
47,977

Pipeline transportation services
—

 
—

 
12,596

 
6,568

 
—

 
19,164

Total revenues
—

 
—

 
931,131

 
42,048

 
(30,845
)
 
942,334

COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
Supply and logistics costs
—

 
—

 
852,009

 
26,488

 
(25,648
)
 
852,849

Refinery services operating costs
—

 
—

 
29,339

 
4,565

 
(4,661
)
 
29,243

Pipeline transportation operating costs
—

 
—

 
5,661

 
250

 
—

 
5,911

General and administrative
—

 
—

 
10,343

 
32

 
—

 
10,375

Depreciation and amortization