Edgar Filing: GENESIS ENERGY LP

form10q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

£ 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 jurisdictions 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

Securities registered pursuant to Section 12(g) of the Act:

NONE

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 R 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 £ 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 £

Accelerated filer R

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 R

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Units outstanding as of August 7, 2009: 39,479,774

GENESIS ENERGY, L.P.

Form 10-Q

INDEX

Item 1.	Financial Statements	Page
	Unaudited Consolidated Balance Sheets – June 30, 2009 and December 31, 2008	3
	Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2009 and 2008	4
	Unaudited Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2009 and 2008	5
	Unaudited Consolidated Statement of Partners’ Capital for the Six Months Ended June 30, 2009 and 2008	6
	Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008	7
	Notes to Unaudited Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45
Item 4.	Controls and Procedures	46

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults upon Senior Securities	47
Item 4.	Submission of Matters to a Vote of Security Holders	47
Item 5.	Other Information	47
Item 6.	Exhibits	47

SIGNATURES		48

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Index

GENESIS ENERGY, L.P.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands)

	June 30,			December 31,
	2009			2008

ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	6,929		$	18,985
Accounts receivable - trade, net of allowance for doubtful accounts of $1,554 and $1,132 at June 30, 2009 and December 31, 2008, respectively		118,325			112,229
Accounts receivable - related party		2,376			2,875
Inventories		38,594			21,544
Net investment in direct financing leases, net of unearned income -current portion - related party		3,975			3,758
Other		12,674			8,736
Total current assets		182,873			168,127

FIXED ASSETS, at cost		371,406			349,212
Less: Accumulated depreciation		(78,524	)		(67,107	)
Net fixed assets		292,882			282,105

NET INVESTMENT IN DIRECT FINANCING LEASES, net of unearned income - related party		175,163			177,203
CO2 ASSETS, net of amortization		22,350			24,379
EQUITY INVESTEES AND OTHER INVESTMENTS		20,857			19,468
INTANGIBLE ASSETS, net of amortization		152,989			166,933
GOODWILL		325,046			325,046
OTHER ASSETS, net of amortization		15,922			15,413

TOTAL ASSETS	$	1,188,082		$	1,178,674

LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable - trade	$	98,821		$	96,454
Accounts payable - related party		3,199			3,105
Accrued liabilities		23,415			26,713
Total current liabilities		125,435			126,272

LONG-TERM DEBT		399,400			375,300
DEFERRED TAX LIABILITIES		17,030			16,806
OTHER LONG-TERM LIABILITIES		3,169			2,834
COMMITMENTS AND CONTINGENCIES (Note 17)

PARTNERS' CAPITAL:
Common unitholders, 39,480 and 39,457 units issued and outstanding,respectively		603,263			616,971
General partner		16,364			16,649
Accumulated other comprehensive loss		(863	)		(962	)
Total Genesis Energy, L.P. partners' capital		618,764			632,658
Noncontrolling interests		24,284			24,804
Total partners' capital		643,048			657,462

TOTAL LIABILITIES AND PARTNERS' CAPITAL	$	1,188,082		$	1,178,674

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

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Index

GENESIS ENERGY, L.P.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
REVENUES:
Supply and logistics:
Unrelated parties	$	290,236		$	568,328		$	478,054		$	997,721
Related parties		1,128			1,149			2,372			1,874
Refinery services		34,594			55,727			82,888			99,639
Pipeline transportation, including natural gas sales:
Transportation services - unrelated parties		4,032			5,168			7,433			11,077
Transportation services - related parties		7,904			4,115			16,198			5,167
Natural gas sales revenues		519			1,603			1,232			2,927
CO2 marketing:
Unrelated parties		3,057			3,693			6,109			6,856
Related parties		734			757			1,411			1,464
Total revenues		342,204			640,540			595,697			1,126,725

COSTS AND EXPENSES:
Supply and logistics costs:
Product costs - unrelated parties		266,313			542,200			430,044			949,475
Product costs - related parties		41			-			1,754			-
Operating costs		17,921			17,785			35,190			34,367
Refinery services operating costs		21,218			38,111			56,551			68,435
Pipeline transportation costs:
Pipeline transportation operating costs		2,638			2,490			5,132			4,846
Natural gas purchases		470			1,568			1,124			2,854
CO2 marketing costs:
Transportation costs - related party		1,341			1,376			2,648			2,633
Other costs		15			15			31			30
General and administrative		8,306			9,166			17,060			17,690
Depreciation and amortization		16,133			16,721			31,552			33,510
Net loss (gain) on disposal of surplus assets		60			76			(158	)		94
Total costs and expenses		334,456			629,508			580,928			1,113,934
OPERATING INCOME		7,748			11,032			14,769			12,791

Equity in earnings (losses) of joint ventures		264			(16	)		2,170			162
Interest income		16			117			37			234
Interest expense		(3,389	)		(2,156	)		(6,445	)		(3,942	)
Income before income taxes		4,639			8,977			10,531			9,245
Income tax expense		(817	)		(1,648	)		(1,408	)		(271	)
NET INCOME		3,822			7,329			9,123			8,974

Noncontrolling interests		634			(1	)		623			(1	)

NET INCOME ATTRIBUTABLE TO GENESIS ENERGY, L.P.	$	4,456		$	7,328		$	9,746		$	8,973

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Index

GENESIS ENERGY, L.P.

UNAUDITED CONSOLIDATED STATEMENTS

OF OPERATIONS - CONTINUED

(In thousands, except per unit amounts)

	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008

NET INCOME ATTRIBUTABLE TO GENESIS ENERGY, L.P.
PER COMMON UNIT:
BASIC	$	0.13	$	0.17	$	0.29	$	0.20
DILUTED	$	0.13	$	0.17	$	0.29	$	0.20

WEIGHTED AVERAGE OUTSTANDING
COMMON UNITS:
BASIC		39,464		38,675		39,460		38,464
DILUTED		39,618		38,731		39,592		38,514

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

GENESIS ENERGY, L.P.

UNAUDITED CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

(In thousands)

	Three Months Ended June 30,					Six Months Ended June 30,
	2009			2008		2009			2008

Net income	$	3,822		$	7,329	$	9,123		$	8,974
Change in fair value of derivatives:
Current period reclassification to earnings		158			-		290			-
Changes in derivative financial instruments - interest rate swaps		43			-		(85	)		-
Comprehensive income		4,023			7,329		9,328			8,974
Comprehensive income attributable to noncontrolling interests		(103	)		-		(106	)		-
Comprehensive income attributable to Genesis Energy, L.P.	$	3,920		$	7,329	$	9,222		$	8,974

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

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GENESIS ENERGY, L.P.

UNAUDITED CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL

(In thousands)

	Partners' Capital
									Accumulated
	Number of								Other			Non-
	Common		Common			General			Comprehensive			Controlling			Total
	Units		Unitholders			Partner			Loss			Interests			Capital

Partners' capital, January 1, 2009		39,457	$	616,971		$	16,649		$	(962	)	$	24,804		$	657,462
Comprehensive income:
Net income				12,051			(2,305	)					(623	)		9,123
Interest rate swap losses reclassified to interest expense										142			148			290
Interest rate swap loss										(43	)		(42	)		(85	)
Cash contributions							6									6
Cash distributions				(26,338	)		(2,485	)					(3	)		(28,826	)
Contribution for executive compensation (See Note 12)							4,499									4,499
Unit based compensation expense		23		579												579
Partners' capital, June 30, 2009		39,480	$	603,263		$	16,364		$	(863	)	$	24,284		$	643,048

	Partners' Capital
									Accumulated
	Number of								Other			Non-
	Common		Common			General			Comprehensive			Controlling			Total
	Units		Unitholders			Partner			Loss			Interests			Capital

Partners' capital, January 1, 2008		38,253	$	615,265		$	16,539		$	-		$	570		$	632,374
Comprehensive income:
Net income				8,045			928			-			1			8,974
Cash contributions							510			-			5			515
Cash distributions				(22,378	)		(1,131	)		-			(2	)		(23,511	)
Issuance of units		1,199		25,000			-			-			-			25,000
Partners' capital, June 30, 2008		39,452	$	625,932		$	16,846		$	-		$	574		$	643,352

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

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Index

GENESIS ENERGY, L.P.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Six Months Ended June 30,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	9,123		$	8,974
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization		31,552			33,510
Amortization of credit facility issuance costs		961			535
Amortization of unearned income and initial direct costs on direct financing leases		(9,092	)		(1,772	)
Payments received under direct financing leases		10,927			594
Equity in earnings of investments in joint ventures		(2,170	)		(162	)
Distributions from joint ventures - return on investment		800			815
Non-cash effect of unit-based compensation plans		5,988			(619	)
Deferred and other tax liabilities		1,087			(926	)
Other non-cash items		(1,270	)		(19	)
Net changes in components of operating assets and liabilities (See Note 13)		(28,840	)		(18,234	)
Net cash provided by operating activities		19,066			22,696

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments to acquire fixed and intangible assets		(26,597	)		(9,543	)
CO2 pipeline transactions and related costs		-			(228,833	)
Distributions from joint ventures - return of investment		-			438
Investments in joint ventures and other investments		(21	)		(2,210	)
Other, net		578			(846	)
Net cash used in investing activities		(26,040	)		(240,994	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Bank borrowings		130,300			344,100
Bank repayments		(106,200	)		(105,100	)
General partner contributions		6			510
Net noncontrolling interest (distributions) contributions		(3	)		3
Distributions to common unitholders		(26,338	)		(22,378	)
Distributions to general partner interest		(2,485	)		(1,131	)
Other, net		(362	)		(370	)
Net cash (used in) provided by financing activities		(5,082	)		215,634

Net decrease in cash and cash equivalents		(12,056	)		(2,664	)
Cash and cash equivalents at beginning of period		18,985			11,851

Cash and cash equivalents at end of period	$	6,929		$	9,187

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

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Index

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation and Consolidation

Organization

We are a growth-oriented limited partnership focused on the midstream segment of the oil and gas industry in the Gulf Coast area of the United States. We conduct our operations through our operating subsidiaries and joint ventures. We manage our businesses through four divisions:

Pipeline transportation of crude oil and carbon dioxide;

Refinery services involving processing of high sulfur (or “sour”) gas streams for refineries to remove the sulfur, and sale of the related by-product, sodium hydrosulfide (or NaHS, commonly pronounced nash);

Supply and logistics services, which includes terminaling, blending, storing, marketing, and transporting by trucks and barges of crude oil and petroleum products; and

Industrial gas activities, including wholesale marketing of CO2 and processing of syngas through a joint venture.

Our 2% general partner interest is held by Genesis Energy, LLC, a Delaware limited liability company and an indirect subsidiary of Denbury Resources Inc. Denbury and its subsidiaries are hereafter referred to as Denbury. Our general partner and its affiliates also own 10.2% of our outstanding common units.

Our general partner manages our operations and activities and employs our officers and personnel, who devote 100% of their efforts to our management.

Basis of Presentation and Consolidation

Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end and the 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 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 financial statements prepared in accordance with generally accepted accounting principles 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, 2008.

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.

The accompanying unaudited consolidated financial statements and related notes present our consolidated financial position as of June 30, 2009 and December 31, 2008 and our results of operations and changes in comprehensive income for the three and six months ended June 30, 2009 and 2008, and cash flows and changes in partners’ capital for the six months ended June 30, 2009 and 2008. Intercompany transactions have been eliminated. The accompanying unaudited consolidated financial statements include Genesis Energy, L.P. and its operating subsidiaries, Genesis Crude Oil, L.P. and Genesis NEJD Holdings, LLC, and their subsidiaries.

We participate in three joint ventures: DG Marine Transportation, LLC (DG Marine), T&P Syngas Supply Company (T&P Syngas) and Sandhill Group, LLC (Sandhill). We acquired our interest in DG Marine in July 2008, and, since then DG Marine has been consolidated in our financial statements. We account for our 50% investments in T&P Syngas and Sandhill by the equity method of accounting.

Our general partner owns a 0.01% general partner interest in Genesis Crude Oil, L.P. and TD Marine, LLC (TD Marine), a related party, owns the remaining 51% economic interest in DG Marine. The net interest of our general partner and TD Marine in our results of operations and financial position are reflected in our financial statements as noncontrolling interests.

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GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Subsequent Events

We have considered subsequent events through August 7, 2009, the date of issuance, in preparing the consolidated financial statements and notes thereto.

2. Recent Accounting Developments

Implemented

SFAS 165

In May 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 165, “Subsequent Events”. SFAS 165 establishes the accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. See “Subsequent Events” included in “Note 1 – Organization and Basis of Presentation and Consolidation” for the related disclosure. The provisions of SFAS 165 are being applied prospectively beginning in the second quarter of 2009 and did not have a material impact on our consolidated financial statements.

FASB Staff Position No 107-1 and APB 28-1

In April 2009, the FASB issued FASB Staff Position No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP 107-1”). FSP 107-1 requires fair value disclosures on an interim basis for financial instruments that are not reflected in the consolidated balance sheets at fair value. Prior to the issuance of FSP 107-1, the fair values of those financial instruments were only disclosed on an annual basis. We adopted FSP 107-1for our quarter ended June 30, 2009, and it did not have a material impact on our consolidated financial statements.

SFAS 141(R)

In December 2007, the FASB issued SFAS No. 141(R) “Business Combinations.” SFAS 141(R) replaces FASB Statement No. 141, “Business Combinations.” This statement retains the purchase method of accounting used in business combinations but replaces SFAS 141 by establishing principles and requirements for the recognition and measurement of assets, liabilities and goodwill, including the requirement that most transaction costs and restructuring costs be charged to expense as incurred. In addition, the statement requires disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) will apply to acquisitions we make after December 31, 2008. The impact to us will be dependent on the nature of the business combination.

SFAS 160

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51” (SFAS 160). This statement establishes accounting and reporting standards for noncontrolling interests, which have been referred to as minority interests in prior literature. A noncontrolling interest is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent company. This new standard requires, among other things, that (i) ownership interests of noncontrolling interests be presented as a component of equity on the balance sheet (i.e. elimination of the mezzanine “minority interest” category); (ii) elimination of minority interest expense as a line item on the statement of operations and, as a result, that net income be allocated between the parent and the noncontrolling interests on the face of the statement of operations; and (iii) enhanced disclosures regarding noncontrolling interests. SFAS 160 is effective for fiscal years beginning after December 15, 2008. We adopted SFAS 160 on January 1, 2009. SFAS 160 changed the presentation of the interests in Genesis Crude Oil, L.P. held by our general partner and the interests in DG Marine held by our joint venture partner in our consolidated financial statements. Amounts for prior periods have been changed to be consistent with the presentation required by SFAS 160.

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GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SFAS 161

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No.133” (SFAS 161). This Statement requires enhanced disclosures about our derivative and hedging activities. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. We adopted SFAS No. 161 on January 1, 2009, and have included the enhanced disclosures in Note 15.

EITF 07-4

In March 2008, the FASB ratified the consensus reached by the Emerging Issues Task Force (or EITF) of the FASB in issue EITF 07-4, “Application of the Two-Class Method under FASB Statement No. 128, Earnings per Share, to Master Limited Partnerships.” Under this consensus, the computation of earnings per unit will be affected by the incentive distribution rights (“IDRs”) we are contractually obligated to distribute at the end of the current reporting period. In periods when earnings are in excess of cash distributions, we will reduce net income or loss for the current reporting period (for purposes of calculating earnings or loss per unit) by the amount of available cash that will be distributed to our limited partners and general partner for its general partner interest and incentive distribution rights for the reporting period, and the remainder will be allocated to the limited partner and general partner in accordance with their ownership interests. When cash distributions exceed current-period earnings, net income or loss (for purposes of calculating earnings or loss per unit) will be reduced (or increased) by cash distributions, and the resulting excess of distributions over earnings will be allocated to the general partner and limited partner based on their respective sharing of losses. EITF 07-4 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We adopted EITF 07-4 on January 1, 2009 and have reflected the calculation of earnings per unit for the three and six months ended June 30, 2009 and 2008 in accordance with its provisions. See Note 9.

FASB Staff Position No. 142-3

In April 2008, the FASB issued FASB Staff Position No. 142-3, “Determination of the Useful Life of Intangible Assets” (FSP 142-3). This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of an intangible asset under Statement of Financial Accounting Standards No. 142, “Goodwill and other Intangible Assets.” The purpose of this FSP is to develop consistency between the useful life assigned to intangible assets and the cash flows from those assets. FSP 142-3 is effective for fiscal years beginning after December 31, 2008. We adopted FSP 142-3 on January 1, 2009 and adoption had no effect on our consolidated financial statements.

SFAS 157

We adopted SFAS No. 157, “Fair Value Measurements” (SFAS 157), on January 1, 2008. On February 12, 2008 the FASB issued Staff Position No. 157-2, “Effective Date of FASB Statement No. 157” (FSP 157-2) which amends SFAS 157 to delay the effective date for all non-financial assets and non-financial liabilities, except for those that are recognized at fair value in the financial statements on a recurring basis, to January 1, 2009. Non-recurring non-financial assets and non-financial liabilities for which we did not apply the provisions of SFAS 157 included those measured at fair value in goodwill impairment testing and asset retirement obligations initially measured at fair value. We adopted the deferred provisions as of January 1, 2009. SFAS 157 does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. The adoption of FSP 157-2 as described above had no material impact on us. See Note 16 for further information regarding fair-value measurements.

3. Consolidated Joint Venture – DG Marine

DG Marine is a joint venture we formed with TD Marine. TD Marine owns (indirectly) a 51% economic interest in DG Marine, and we own (directly and indirectly) a 49% economic interest. This joint venture gives us the capability to provide transportation services of petroleum products by barge and complements our other supply and logistics operations.

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GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

We have entered into a subordinated loan agreement with DG Marine whereby we may (at our sole discretion) lend up to $25 million to DG Marine. The loan agreement provides for DG Marine to pay us interest on any loans at a rate to be determined which is expected to be the prime rate plus 4%. Those loans will mature on January 31, 2012. Under that subordinated loan agreement, DG Marine is required to make monthly payments to us of principal and interest to the extent DG Marine has any available cash that otherwise would have been distributed to the owners of DG Marine in respect of their equity interest. DG Marine also has a revolving credit facility with a syndicate of financial institutions that includes restrictions on DG Marine’s ability to make specified payments under our subordinated loan agreement and distributions in respect of our equity interest. At June 30, 2009, $13 million was outstanding under the subordinated loan agreement; however this amount was eliminated in consolidation. At December 31, 2008, there were no amounts outstanding under the subordinated loan agreement.

At June 30, 2009 and December 31, 2008, our unaudited consolidated balance sheets included the following amounts related to DG Marine:

	June 30, 2009			December 31, 2008
Cash	$	-		$	623
Accounts receivable - trade		2,753			2,812
Other current assets		94			859
Fixed assets, at cost		125,211			110,214
Accumulated depreciation		(6,001	)		(3,084	)
Intangible assets, net		1,983			2,208
Other assets		1,749			2,178
Total assets	$	125,789		$	115,810

Accounts payable	$	1,025		$	1,072
Accrued liabilities		9,779			9,258
Long-term debt		53,100			55,300
Other long-term liabilities		976			1,393
Total liabilities	$	64,880		$	67,023

4. Inventories

Inventories are valued at the lower of cost or market. The costs of inventories did not exceed market values at June 30, 2009. The costs of inventories at December 31, 2008 exceeded market values by approximately $1.2 million, and are reflected below at those market values. The major components of inventories were as follows:

	June 30, 2009		December 31, 2008
Crude oil		17,606		1,878
Petroleum products		15,528		5,589
Caustic soda		2,371		7,139
NaHS		3,067		6,923
Other		22		15
Total inventories	$	38,594	$	21,544

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Index

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

5. Fixed Assets and Asset Retirement Obligations

Fixed assets consisted of the following:

	June 30, 2009			December 31, 2008
Land, buildings and improvements	$	13,609		$	13,549
Pipelines and related assets		152,598			139,184
Machinery and equipment		24,553			22,899
Transportation equipment		33,173			32,833
Barges and push boats		123,847			96,865
Office equipment, furniture and fixtures		4,616			4,401
Construction in progress		6,361			27,906
Other		12,649			11,575
Subtotal		371,406			349,212
Accumulated depreciation and impairment		(78,524	)		(67,107	)
Total	$	292,882		$	282,105

Depreciation expense was $7.8 million and $15.2 million for the three and six months ended June 30, 2009 and 2008, respectively. For the three and six months ended June 30, 2008, depreciation expense was $5.1 million and $10.3 million, respectively.

Asset Retirement Obligations

The following table summarizes the changes in our asset retirement obligations for the six months ended June 30, 2009.

Asset retirement obligations as of December 31, 2008	$	1,430
Liabilities incurred and assumed in the period		726
Liabilities settled in the period		(75	)
Accretion expense		49
Asset retirement obligations as of June 30, 2009		2,130
Less current portion included in accrued liabilities		(150	)
Long-term asset retirement obligations as of June 30, 2009	$	1,980

Certain of our unconsolidated affiliates have asset retirement obligations recorded at June 30, 2009 and December 31, 2008 relating to contractual agreements. These amounts are immaterial to our financial statements.

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Index

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. Intangible Assets and Goodwill

Intangible Assets

The following table reflects the components of intangible assets being amortized at the dates indicated:

		June 30, 2009						December 31, 2008
	Weighted Amortization Period in Years	Gross Carrying Amount		Accumulated Amortization		Carrying Value		Gross Carrying Amount		Accumulated Amortization		Carrying Value

Customer relationships:
Refinery services	5	$	94,654	$	33,734	$	60,920	$	94,654	$	26,017	$	68,637
Supply and logistics	5		35,430		12,725		22,705		35,430		9,957		25,473
Supplier relationships -
Refinery services	2		36,469		26,517		9,952		36,469		24,483		11,986
Licensing Agreements -
Refinery services	6		38,678		9,428		29,250		38,678		7,176		31,502
Trade names -
Supply and logistics	7		18,888		4,281		14,607		18,888		3,118		15,770
Favorable lease -
Supply and logistics	15		13,260		908		12,352		13,260		671		12,589
Other	5		3,822		619		3,203		1,322		346		976
Total	5	$	241,201	$	88,212	$	152,989	$	238,701	$	71,768	$	166,933

We are recording amortization of our intangible assets based on the period over which the asset is expected to contribute to our future cash flows. Generally, the contribution to our cash flows of the customer and supplier relationships, licensing agreements and trade name intangible assets is expected to decline over time, such that greater value is attributable to the periods shortly after the acquisition was made. The favorable lease and other intangible assets are being amortized on a straight-line basis. Amortization expense on intangible assets was $8.3 million and $16.4 million for the three and six months ended June 30, 2009, respectively. Amortization expense on intangible assets was $11.6 million and $23.2 million for the three and six months ended June 30, 2008, respectively.

Estimated amortization expense for each of the five subsequent fiscal years is expected to be as follows:

Year Ended December 31	Amortization Expense to be Recorded
Remainder of 2009	$	16,656
2010	$	26,635
2011	$	21,918
2012	$	18,261
2013	$	14,264
2014	$	11,790

Goodwill

The carrying amount of goodwill by business segment at June 30, 2009 and December 31, 2008 was $302.0 million to refinery services and $23.1 million to supply and logistics.

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Index

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

7. Equity Investees and Other Investments

T&P Syngas Supply Company

We are accounting for our 50% ownership in T&P Syngas under the equity method of accounting. We received distributions from T&P Syngas of $0.8 million and $1.1 million during the six months ended June 30, 2009 and 2008, respectively. During the first quarter of 2009, “Equity in earnings of joint ventures” included $1.7 million of non-cash items related to T&P Syngas that increased earnings.

The tables below reflect summarized information for T&P Syngas:

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008

Revenues	$	986		$	1,224		$	2,151		$	2,433
Operating expenses and depreciation		(524	)		(365	)		(1,098	)		(732	)
Other income (expense)		5			22			13			15
Net income	$	467		$	881		$	1,066		$	1,716

	June 30, 2009		December 31, 2008

Current assets	$	3,468	$	3,131
Non-current assets		18,139		18,906
Total assets	$	21,607	$	22,037

Current liabilities	$	637	$	543
Non-current liabilities		208		198
Partners' capital		20,762		21,296
Total liabilities and partners' capital	$	21,607	$	22,037

8. Debt

At June 30, 2009, our obligations under credit facilities consisted of the following:

	June 30, 2009		December 31, 2008

Genesis Credit Facility	$	346,300	$	320,000
DG Marine Credit Facility		53,100		55,300
Total Long-Term Debt	$	399,400	$	375,300

Genesis Credit Facility

We have a $500 million credit facility, $100 million of which can be used for letters of credit, with a group of banks led by Fortis Capital Corp. and Deutsche Bank Securities Inc. Due to the revolving nature of loans under our credit facility, we may repay and re-borrow amounts until the maturity date of November 15, 2011. Our borrowing base is recalculated quarterly and at the time of material acquisitions. Our borrowing base represents the amount that we can borrow or utilize for letters of credit, and it is calculated based on our EBITDA (earnings before interest, taxes, depreciation and amortization), as defined in accordance with the provisions of our credit facility. Our borrowing base may be increased to the extent of pro forma additional EBITDA, (as defined in the credit agreement), attributable to acquisitions or internal growth projects with approval of the lenders.

As of June 30, 2009, our borrowing base exceeded $500 million, and we had $346.3 million borrowed and $4.4 million in letters of credit outstanding. Thus, our total remaining availability at June 30, 2009 was $149.3 million under our credit facility. Effective August 14, 2009, our borrowing base will decrease to $419 million as a result of changes in covenant requirements beginning in the period after the one-year anniversary of a material acquisition and changes in our EBITDA.

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Index

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DG Marine Credit Facility

DG Marine has a $90 million revolving credit facility with a syndicate of banks led by SunTrust Bank and BMO Capital Markets Financing, Inc. That facility, which matures on July 18, 2011, is secured by all of the equity interests issued by DG Marine and substantially all of DG Marine’s assets. Other than the pledge of our equity interest in DG Marine, that facility is non-recourse to us and TD Marine. At June 30, 2009, our Unaudited Consolidated Balance Sheet included $125.8 million of DG Marine’s assets in our total assets.

At June 30, 2009, DG Marine had $53.1 million outstanding under its credit facility. Although the total amount available for borrowings at June 30, 2009 was $36.9 million under this credit facility, we do not anticipate utilizing this availability for working capital needs.

In August 2008, DG Marine entered into a series of interest rate swap agreements to effectively fix the underlying LIBOR rate on $32.9 million of its borrowings under its credit facility through July 18, 2011. The fixed interest rates in the swap agreements range from the three-month interest rate of 3.37% in effect at June 30, 2009 to 4.68% at July 18, 2011.

We have estimated the total fair value of our long-term debt under our credit agreement and the DG Marine credit facility to be approximately $384.3 million, or $15.1 million less than the carrying value of that debt.

9. Partners’ Capital and Distributions

Partners’ Capital

Partner’s capital at June 30, 2009 consists of 39,479,774 common units, including 4,028,096 units owned by our general partner and its affiliates, representing a 98% aggregate ownership interest in the Partnership and its subsidiaries (after giving effect to the general partner interest), and a 2% general partner interest.

Our general partner owns all of our general partner interest, our incentive distribution rights, and all of the 0.01% general partner interest in Genesis Crude Oil, L.P. (which is reflected as a noncontrolling interest in our Unaudited Consolidated Balance Sheets) and operates our business.

Without obtaining unitholder approval, we may issue an unlimited number of additional limited partner interests and other equity securities, the proceeds from which could be used to provide additional funds for acquisitions or other needs.

Distributions

We will distribute 100% of our available cash (as defined by our partnership agreement) within 45 days after the end of each quarter to unitholders of record and to our general partner. Available cash consists generally of all of our cash receipts less cash disbursements adjusted for net changes to reserves.

Pursuant to our partnership agreement, our general partner receives incremental incentive cash distributions when unitholders’ cash distributions exceed certain target thresholds. The allocations of distributions between our common unitholders and our general partner (including its general partner interest and the incentive distribution rights) are as follows:

		General
	Unitholders	Partner
Quarterly Cash Distribution per Common Unit:
Up to and including $0.25 per Unit	98.00%	2.00%
First Target - $0.251 per Unit up to and including $0.28 per Unit	84.74%	15.26%
Second Target - $0.281 per Unit up to and including $0.33 per Unit	74.53%	25.47%
Over Second Target - Cash distributions greater than $.033 per Unit	49.02%	50.98%

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Index

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

We paid or will pay the following distributions in 2008 and 2009:

Distribution For	Date Paid	Per Unit Amount		Limited Partner Interests Amount		General Partner Interest Amount		General Partner Incentive Distribution Amount		Total Amount

First quarter 2008	May 2008	$	0.3000	$	11,476	$	234	$	429	$	12,139
Second quarter 2008	August 2008	$	0.3150	$	12,427	$	254	$	633	$	13,314
Third quarter 2008	November 2008	$	0.3225	$	12,723	$	260	$	728	$	13,711
Fourth quarter 2008	February 2009	$	0.3300	$	13,021	$	266	$	823	$	14,110
First quarter 2009	May 2009	$	0.3375	$	13,317	$	271	$	1,125	$	14,713
Second quarter 2009	August 2009 (1)	$	0.3450	$	13,621	$	278	$	1,427	$	15,326

(1) This distribution will be paid on August 14, 2009 to our general partner and unitholders of record as of August 4, 2009.

Net Income Allocation to Partners

Net income is allocated to our partners in the Consolidated Statements of Partners’ Capital as follows:

To our general partner – income in the amount of the incentive distributions paid in the period.

To our general partner – expense in the amount of the executive compensation expense to be borne by our general partner (See Note 12).

To our limited partners and general partner – the remainder of net income in the ratio of 98% to the limited partners and 2% to our general partner.

Net Income Per Common Unit

Our net income is first allocated to our general partner based on the amount of incentive distributions to be paid for the quarter. The adoption of EITF 07-4 effective January 1, 2009 resulted in a change in the calculation of net income per common unit by changing the amount of the incentive distributions to be considered in the calculation from the distributions paid during the quarter to the distributions to be paid with respect to the quarter. As required by EITF 07-4, we have retrospectively applied the provisions of EITF 07-4 to the calculation of net income per common unit for the first quarter of 2008 in the table below. As a result, basic and diluted net income per common unit remained the same as compared to amounts previously reported for the three month ended June 30, 2008 and decreased by $0.01 from the amount previously reported for the six months ended June 30, 2008.

We then allocate to our general partner the expense related to the Class B Membership Awards to our executive officers, as our general partner will bear the cash cost of those awards. The remainder of our net income is then allocated 98% to our limited partners and 2% to our general partner. Basic net income per limited partner unit is determined by dividing net income attributable to limited partners by the weighted average number of outstanding limited partner units during the period. Diluted net income per common unit is calculated in the same manner, but also considers the impact to common units for the potential dilution from phantom units outstanding. (See Note 12 for discussion of phantom units.)

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Index

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the computation of basic and diluted net income per common unit.

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
Numerators for basic and diluted net income per common unit:

Net income attributable to Genesis Energy, L.P.	$	4,456		$	7,328		$	9,746		$	8,973
Less: General partner's incentive distribution to to be paid for the period		(1,427	)		(633	)		(2,552	)		(1,062	)
Add: Expense for Class B Membership Awards (Note 12)		2,353			-			4,499			-
Subtotal		5,382			6,695			11,693			7,911
Less: General partner 2% ownership		(108	)		(134	)		(234	)		(158	)
Income available for common unitholders	$	5,274		$	6,561		$	11,459		$	7,753

Denominator for basic per common unit:
Common Units		39,464			38,675			39,460			38,464

Denominator for diluted per common unit:
Common Units		39,464			38,675			39,460			38,464
Phantom Units		154			56			132			50
		39,618			38,731			39,592			38,514

Basic net income per common unit	$	0.13		$	0.17		$	0.29		$	0.20
Diluted net income per common unit	$	0.13		$	0.17		$	0.29		$	0.20

10. Business Segment Information

Our operations consist of four operating segments: (1) Pipeline Transportation – interstate and intrastate crude oil and 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; (3) Supply and Logistics – terminaling, blending, storing, marketing, gathering and transporting by truck and barge crude oil and petroleum products, and (4) Industrial Gases – the sale of CO2 acquired under volumetric production payments to industrial customers and our investment in a syngas processing facility. Substantially all of our revenues are derived from, and substantially all of our assets are located in the United States.

During the fourth quarter of 2008, we revised the manner in which we internally evaluate our segment performance. As a result, we changed our definition of segment margin to include within segment margin all costs that are directly associated with the business segment. Segment margin now includes costs such as general and administrative expenses that are directly incurred by the business segment. Segment margin also includes all payments received under direct financing leases. In order to improve comparability between periods, we exclude from segment margin the non-cash effects of our stock-based compensation plans which are impacted by changes in the market price for our common units. Segment information for the three and six months ended June 30, 2008 has been retrospectively revised to conform to this segment presentation. We now define segment margin as revenues less cost of sales, 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 joint ventures. Our segment margin definition also excludes the non-cash effects of our stock-based compensation plans, 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 maintenance capital investment.

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Index

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Pipeline Transportation		Refinery Services			Supply & Logistics			Industrial Gases (a)		Total
Three Months Ended June 30, 2009
Segment margin (b)	$	10,347	$	13,190		$	6,600		$	2,869	$	33,006

Maintenance capital expenditures	$	476	$	51		$	947		$	-	$	1,474

Revenues:
External customers	$	10,883	$	35,923		$	291,607		$	3,791	$	342,204
Intersegment (d)		1,572		(1,329	)		(243	)		-		-
Total revenues of reportable segments	$	12,455	$	34,594		$	291,364		$	3,791	$	342,204

Three Months Ended June 30, 2008
Segment margin (b)	$	7,261	$	16,279		$	7,780		$	3,686	$	35,006

Maintenance capital expenditures	$	-	$	208		$	-		$	-	$	208

Revenues:
External customers	$	8,885	$	55,727		$	571,478		$	4,450	$	640,540
Intersegment (d)		2,001		-			(2,001	)		-		-
Total revenues of reportable segments	$	10,886	$	55,727		$	569,477		$	4,450	$	640,540

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Index

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Pipeline Transportation		Refinery Services			Supply & Logistics			Industrial Gases (a)		Total
Six Months Ended June 30, 2009
Segment margin (b)	$	20,572	$	25,949		$	12,556		$	5,892	$	64,969

Capital expenditures (c)	$	2,458	$	1,982		$	21,497		$	21	$	25,958

Maintenance capital expenditures	$	750	$	544		$	1,128		$	-	$	2,422

Revenues:
External customers	$	22,198	$	85,828		$	480,151		$	7,520	$	595,697
Intersegment (d)		2,665		(2,940	)		275			-		-
Total revenues of reportable segments	$	24,863	$	82,888		$	480,426		$	7,520	$	595,697

Six Months Ended June 30, 2008
Segment margin (b)	$	11,922	$	28,709		$	11,841		$	6,885	$	59,357

Capital expenditures (c)	$	78,524	$	1,710		$	4,603		$	2,210	$	87,047

Maintenance capital expenditures	$	165	$	489		$	330		$	-	$	984

Revenues:
External customers	$	15,673	$	99,639		$	1,003,093		$	8,320	$	1,126,725
Intersegment (d)		3,498		-			(3,498	)		-		-
Total revenues of reportable segments	$	19,171	$	99,639		$	999,595		$	8,320	$	1,126,725

Industrial gases includes our CO2 marketing operations and our equity income from our investments in T&P Syngas and Sandhill.

A reconciliation of segment margin to income before income taxes and noncontrolling interests for the periods presented is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008

Segment margin	$	33,006		$	35,006		$	64,969		$	59,357
Corporate general and administrative expenses		(7,576	)		(5,757	)		(15,077	)		(10,986	)
Depreciation and amortization		(16,133	)		(16,721	)		(31,552	)		(33,510	)
Net (loss) gain on disposal of surplus assets		(60	)		(76	)		158			(94	)
Interest expense, net		(3,373	)		(2,039	)		(6,408	)		(3,708	)
Non-cash expenses not included in segment margin		(126	)		(396	)		(842	)		(204	)
Other non-cash items affecting segment margin		(1,099	)		(1,040	)		(717	)		(1,610	)
Income before income taxes	$	4,639		$	8,977		$	10,531		$	9,245

Capital expenditures include fixed asset additions and acquisitions of businesses.

Intersegment sales were conducted on an arm’s length basis.

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Index

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

11. 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:

	Six Months Ended June 30,
	2009		2008

Truck transportation services provided to Denbury	$	1,982	$	1,220
Pipeline transportation services provided to Denbury	$	7,047	$	3,314
Payments received under direct financing leases from Denbury	$	10,927	$	594
Pipeline transportation income portion of direct financing lease fees	$	9,191	$	1,798
Pipeline monitoring services provided to Denbury	$	60	$	48
Directors' fees paid to Denbury	$	110	$	101
CO2 transportation services provided by Denbury	$	2,507	$	2,632
Crude oil purchases from Denbury	$	1,754	$	-
Operations, general and administrative services provided by our general partner	$	27,645	$	25,789
Distributions to our general partner on its limited partner units and general partner interest, including incentive distributions	$	4,374	$	2,786
Sales of CO2 to Sandhill	$	1,411	$	1,464
Petroleum products sales to Davison family businesses	$	390	$	654

Transportation Services

We provide truck transportation services to Denbury to move its crude oil from the wellhead to our Mississippi pipeline. Denbury pays us a fee for that trucking service which varies with the distance we haul its crude oil. Those fees are reflected in the Unaudited Consolidated Statements of Operations as supply and logistics revenues.

Denbury is the only shipper (other than us) on our Mississippi pipeline, and we earn tariffs for transporting its oil. We earned fees from Denbury for the transportation of its CO2 on our Free State pipeline. We also earned fees from Denbury under the direct financing lease arrangements for the Olive and Brookhaven crude oil pipelines and the Brookhaven and NEJD CO2 pipelines and recorded pipeline transportation income from those arrangements.

We also provide pipeline monitoring services to Denbury. That revenue is included in pipeline revenues in our Unaudited Consolidated Statements of Operations.

Directors’ Fees

We paid Denbury for the services of each of four of Denbury’s officers who serve as directors of our general partner. The annual rate and rate for attendance at meetings are the same as the rates at which our other directors were paid.

CO2 Operations and Transportation

Denbury charges us a transportation fee of $0.16 per Mcf (adjusted for inflation) to deliver CO2 for us to our customers. In the first six months of 2009, the inflation-adjusted transportation fee averaged $0.1976 per Mcf.

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Index

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Operations, General and Administrative Services

We do not directly employ any persons to manage or operate our business. Those functions and personnel are provided by our general partner. We reimburse our general partner for all direct and indirect costs of those services, excluding any payments to our management team pursuant to their Class B Membership Interests. See Note 12.

Amounts due to and from Related Parties

At both June 30, 2009 and December 31, 2008, we owed Denbury $1.0 million for CO2 transportation charges and purchases of crude oil. Denbury owed us $1.6 million and $2.0 million for transportation services at June 30, 2009 and December 31, 2008, respectively. We owed our general partner $2.2 million and $2.1 million for administrative services at June 30, 2009 and December 31, 2008, respectively. At both June 30, 2009 and December 31, 2008, Sandhill owed us $0.7 million for purchases of CO2.

DG Marine Joint Venture

Our partner in the DG Marine joint venture is TD Marine, a joint venture consisting of three members of the Davison family. We acquired our refinery services segment as well as certain other businesses from the Davison family in 2007. In connection with that transaction, members of the Davison family, collectively, became our largest unitholder group.

Financing

Our credit facility is non-recourse to our general partner, except to the extent of its pledge of its 0.01% general partner interest in Genesis Crude Oil, L.P. Our general partner’s principal assets are its general and limited partnership interests in us. Our credit agreement obligations are not guaranteed by Denbury or any of its other subsidiaries.

We guarantee 50% of the obligation of Sandhill to a bank. At June 30, 2009, the total amount of Sandhill’s obligation to the bank was $3.0 million; therefore, our guarantee was for $1.5 million.

Approximately 14% of the outstanding common shares of Community Trust Bank are held by Davison family members. Community Trust Bank is a 17% participant in the DG Marine credit facility. James E. Davison, Jr., a member of our board of directors, also serves on the board of the holding company that owns Community Trust Bank.

As discussed in Note 12, we recorded a non-cash capital contribution from our general partner of $4.5 million for the six months ended June 30, 2009 related to the Class B Membership Awards for our executive management team.

12. Equity-Based Compensation

We recorded charges and credits related to our equity-based compensation plans and awards for three and six months ended June 30, 2009 and 2008 as follows:

Expense (Credits to Expense) Related to Equity-Based Compensation

	Three Months Ended June 30,				Six Months Ended June 30,
Statement of Operations	2009		2008		2009		2008
Pipeline operating costs	$	51	$	20	$	84	$	(296	)
Refinery services operating costs		74		34		150		23
Supply and logistics operating costs		219		74		429		(997	)
General and administrative expenses		2,821		277		5,331		(228	)
Total	$	3,165	$	405	$	5,994	$	(1,498	)

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Index

GENESIS ENERGY, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Stock Appreciation Rights Plan

The following table reflects rights activity under our plan during the six months ended June 30, 2009:

Stock Appreciation Rights	Rights			Weighted Average Exercise Price		Weighted Average Contractual Remaining Term (Yrs)		Aggregate Intrinsic Value

Outstanding at January 1, 2009		1,017,985		$	18.09
Granted during 2009		228,215		$	13.00
Exercised during 2009		(3,627	)	$	11.08
Forfeited or expired during 2009		(58,591	)	$	19.13
Outstanding at June 30, 2009		1,183,982		$	16.61		6.0	$	603
Exercisable at June 30, 2009		492,101		$	15.82		5.5	$	480

The weighted-average fair value at June 30, 2009 of rights granted during the first six months of 2009 was $2.41 per right, determined using the following assumptions:

Assumptions Used for Fair Value of Rights
Granted in First Half of 2009
Expected life of rights (in years)	6.00
Risk-free interest rate	3.04%
Expected unit price volatility	44.58%
Expected future distribution yield	8.50%

The total intrinsic value of rights exercised during the first six months of 2009 was less than $0.1 million, which was paid in cash to the participants.

At June 30, 2009, there was $0.9 million of total unrecognized compensation cost related to rights that we expect will vest under the plan. For the awards outstanding at June 30, 2009, the remaining cost will be recognized over a weighted average period of one year.

2007 Long Term Incentive Plan

The following table summarizes information regarding our non-vested Phantom Unit grants as of June 30, 2009:

Non-vested Phantom Unit Grants

Number of Units