CORENERGY INFRASTRUCTURE TRUST, INC., 10-Q filed on 5/3/2017
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2017
Apr. 30, 2017
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
CorEnergy Infrastructure Trust, Inc. 
 
Entity Central Index Key
0001347652 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2017 
 
Amendment Flag
false 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q1 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
11,894,028 
Consolidated Balance Sheets (USD $)
Mar. 31, 2017
Dec. 31, 2016
Assets
 
 
Leased property, net of accumulated depreciation of $57,203,700 and $52,219,717
$ 484,274,386 
$ 489,258,369 
Property and equipment, net of accumulated depreciation of $10,131,025 and $9,292,712
115,574,493 
116,412,806 
Financing notes and related accrued interest receivable, net of reserve of $4,100,000 and $4,100,000
1,500,000 
1,500,000 
Other equity securities, at fair value
8,563,297 
9,287,209 
Cash and cash equivalents
11,375,702 
7,895,084 
Accounts and other receivables
20,585,073 
19,415,666 
Deferred costs, net of accumulated amortization of $2,537,722 and $2,261,151
2,855,478 
3,132,050 
Prepaid expenses and other assets
841,936 
354,230 
Deferred tax asset
2,057,135 
1,758,289 
Goodwill
1,718,868 
1,718,868 
Total Assets
649,346,368 
650,732,571 
Liabilities and Equity
 
 
Secured credit facilities, net (including $8,061,844 and $8,860,577 with related party)
86,992,738 
89,387,985 
Unsecured convertible senior notes, net of discount and debt issuance costs of $2,558,308 and $2,755,105
111,441,691 
111,244,895 
Asset retirement obligation
12,043,572 
11,882,943 
Accounts payable and other accrued liabilities
4,349,149 
2,416,283 
Management fees payable
1,745,294 
1,735,024 
Unearned revenue
513,355 
155,961 
Total Liabilities
217,085,799 
216,823,091 
Equity
 
 
Series A Cumulative Redeemable Preferred Stock 7.375%, $56,250,000 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 22,500 issued and outstanding at March 31, 2017, and December 31, 2016
56,250,000 
56,250,000 
Capital stock, non-convertible, $0.001 par value; 11,893,146 and 11,886,216 shares issued and outstanding at March 31, 2017, and December 31, 2016 (100,000,000 shares authorized)
11,893 
11,886 
Additional paid-in capital
348,182,779 
350,217,746 
Accumulated other comprehensive loss
(8,224)
(11,196)
Total CorEnergy Equity
404,436,448 
406,468,436 
Non-controlling Interest
27,824,121 
27,441,044 
Total Equity
432,260,569 
433,909,480 
Total Liabilities and Equity
$ 649,346,368 
$ 650,732,571 
Consolidated Balance Sheets (Parenthetical) (USD $)
3 Months Ended 12 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Accumulated depreciation, leased property
$ 57,203,700 
$ 52,219,717 
Accumulated depreciation, property and equipment
10,131,025 
9,292,712 
Reserve for financing notes and related accrued interest receivable
4,100,000 
4,100,000 
Accumulated amortization, Deferred costs
2,537,722 
2,261,151 
Secured debt, related party
8,061,844 
8,860,577 
Capital stock non-convertible, par value (in dollars per share)
$ 0.001 
$ 0.001 
Capital stock non-convertible, shares issued
11,893,146 
11,886,216 
Capital stock non-convertible, shares outstanding
11,893,146 
11,886,216 
Capital stock non-convertible, shares authorized
100,000,000 
100,000,000 
Series A Cumulative Redeemable Preferred Stock [Member]
 
 
Preferred stock interest rate
7.375% 
7.375% 
Preferred Stock, Liquidation Preference
56,250,000 
56,250,000 
Preferred Stock, Liquidation Preference (in dollars per share)
$ 2,500 
$ 2,500 
Preferred stock, par value (in dollars per share)
$ 0.001 
$ 0.001 
Preferred stock, shares authorized
10,000,000 
10,000,000 
Preferred stock, shares issued
22,500 
22,500 
Preferred stock, shares outstanding
22,500 
22,500 
Convertible Debt [Member]
 
 
Discount and debt issuance costs
$ 2,558,308 
$ 2,755,105 
Consolidated Statements of Income and Comprehensive Income (Unaudited) (USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Revenue
 
 
Lease revenue
$ 17,066,526 
$ 16,996,072 
Transportation and distribution revenue
5,010,590 
5,099,451 
Financing revenue
162,344 
Total Revenue
22,077,116 
22,257,867 
Expenses
 
 
Transportation and distribution expenses
1,335,570 
1,362,325 
General and administrative
3,061,240 
3,289,852 
Depreciation, amortization and ARO accretion expense
6,005,908 
5,296,818 
Provision for loan loss and disposition
4,645,188 
Total Expenses
10,402,718 
14,594,183 
Operating Income
11,674,398 
7,663,684 
Other Income (Expense)
 
 
Net distributions and dividend income
43,462 
375,573 
Net realized and unrealized loss on other equity securities
(544,208)
(1,628,752)
Interest expense
(3,454,397)
(3,926,009)
Total Other Expense
(3,955,143)
(5,179,188)
Income before income taxes
7,719,255 
2,484,496 
Taxes
 
 
Current tax benefit
(33,760)
(677,731)
Deferred tax benefit
(298,846)
(577,395)
Income tax benefit
(332,606)
(1,255,126)
Net Income
8,051,861 
3,739,622 
Less: Net Income attributable to non-controlling interest
382,383 
348,501 
Net Income attributable to CorEnergy Stockholders
7,669,478 
3,391,121 
Preferred dividend requirements
1,037,109 
1,037,109 
Net Income attributable to Common Stockholders
6,632,369 
2,354,012 
Other comprehensive income (loss):
 
 
Changes in fair value of qualifying hedges / AOCI attributable to CorEnergy stockholders
2,972 
(211,076)
Changes in fair value of qualifying hedges / AOCI attributable to non-controlling interest
694 
(49,350)
Net Change in Other Comprehensive Income (Loss)
3,666 
(260,426)
Total Comprehensive Income
8,055,527 
3,479,196 
Less: Comprehensive income attributable to non-controlling interest
383,077 
299,151 
Comprehensive Income attributable to CorEnergy Stockholders
$ 7,672,450 
$ 3,180,045 
Earnings Per Common Share:
 
 
Basic (in dollars per share)
$ 0.56 
$ 0.20 
Diluted (in dollars per share)
$ 0.56 
$ 0.20 
Weighted Average Shares of Common Stock Outstanding:
 
 
Basic (in shares)
11,888,681 
11,943,938 
Diluted (in shares)
11,888,681 
11,943,938 
Dividends declared per share (in dollars per share)
$ 0.75 
$ 0.75 
Consolidated Statement of Equity (USD $)
Total
Capital Stock [Member]
Preferred Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income [Member]
Retained Earnings [Member]
Non-Controlling Interest [Member]
Beginning balance at Dec. 31, 2016
$ 433,909,480 
$ 11,886 
$ 56,250,000 
$ 350,217,746 
$ (11,196)
$ 0 
$ 27,441,044 
Beginning balance, shares at Dec. 31, 2016
11,886,216 
11,886,216 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Net income
8,051,861 
 
 
 
 
7,669,478 
382,383 
Amortization related to de-designated cash flow hedges
3,666 
 
 
 
2,972 
 
694 
Total Comprehensive Income
8,055,527 
 
 
 
2,972 
7,669,478 
383,077 
Series A preferred stock dividends
(1,037,109)
 
 
 
 
(1,037,109)
 
Common stock dividends
(8,914,662)
 
 
(2,282,293)
 
(6,632,369)
 
Reinvestment of dividends paid to common stockholders (in shares)
 
6,930 
 
 
 
 
 
Reinvestment of dividends paid to common stockholders
247,333 
 
247,326 
 
 
 
Ending balance at Mar. 31, 2017
$ 432,260,569 
$ 11,893 
$ 56,250,000 
$ 348,182,779 
$ (8,224)
$ 0 
$ 27,824,121 
Ending balance, shares at Mar. 31, 2017
11,893,146 
11,893,146 
 
 
 
 
 
Consolidated Statements of Cash Flows (Unaudited) (USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Operating Activities
 
 
Net Income
$ 8,051,861 
$ 3,739,622 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Deferred income tax, net
(298,846)
(577,395)
Depreciation, amortization and ARO accretion
6,474,779 
5,945,501 
Provision for loan loss
4,645,188 
Net distributions and dividend income, including recharacterization of income
148,649 
(117,004)
Net realized and unrealized loss on other equity securities
544,208 
1,628,751 
Unrealized gain on derivative contract
(27,073)
(71,363)
Changes in assets and liabilities:
 
 
Increase in accounts and other receivables
(1,169,407)
(3,240,409)
Decrease in financing note accrued interest receivable
95,114 
Increase in prepaid expenses and other assets
(99,573)
(161,354)
Increase in management fee payable
10,270 
130,365 
Increase in accounts payable and other accrued liabilities
1,932,866 
1,935,402 
Increase in unearned revenue
2,761,202 
Net cash provided by operating activities
15,567,734 
16,713,620 
Investing Activities
 
 
Purchases of property and equipment, net
(101,919)
Proceeds from asset foreclosure and sale
223,451 
Increase in financing notes receivable
(202,000)
Return of capital on distributions received
31,055 
1,165 
Net cash provided (used) by investing activities
31,055 
(79,303)
Financing Activities
 
 
Debt financing costs
(224,586)
Dividends paid on Series A preferred stock
(1,037,109)
(1,037,109)
Dividends paid on common stock
(8,667,329)
(8,795,460)
Advances on revolving line of credit
44,000,000 
Principal payments on credit facility
(2,413,733)
(52,346,250)
Net cash used by financing activities
(12,118,171)
(18,403,405)
Net Change in Cash and Cash Equivalents
3,480,618 
(1,769,088)
Cash and Cash Equivalents at beginning of period
7,895,084 
14,618,740 
Cash and Cash Equivalents at end of period
11,375,702 
12,849,652 
Supplemental Disclosure of Cash Flow Information
 
 
Interest paid
1,047,357 
1,398,422 
Income taxes paid (net of refunds)
10,683 
Non-Cash Investing Activities
 
 
Net change in Assets Held for Sale, Property and equipment, Prepaid expenses and other assets, Accounts payable and other accrued liabilities and Liabilities held for sale
(1,776,549)
Non-Cash Financing Activities
 
 
Reinvestment of distributions by common stockholders in additional common shares
$ 247,333 
$ 159,313 
Introduction and Basis of Presentation
INTRODUCTION AND BASIS OF PRESENTATION
INTRODUCTION AND BASIS OF PRESENTATION
Introduction
CorEnergy Infrastructure Trust, Inc. ("CorEnergy" or "the Company"), was organized as a Maryland corporation and commenced operations on December 8, 2005. The Company's common shares are listed on the New York Stock Exchange under the symbol “CORR” and the depositary shares representing its Series A Preferred are listed on the New York Stock Exchange under the symbol "CORR PrA "
The Company is primarily focused on acquiring and financing real estate assets within the U.S. energy infrastructure sector and concurrently entering into long-term triple-net participating leases with energy companies. The Company also may provide other types of capital, including loans secured by energy infrastructure assets. Targeted assets include pipelines, storage tanks, transmission lines, and gathering systems, among others. These sale-leaseback or real property mortgage transactions provide the energy company with a source of capital that is an alternative to other sources such as corporate borrowing, bond offerings, or equity offerings. Many of the Company's leases contain participation features in the financial performance or value of the underlying infrastructure real property asset. The triple-net lease structure requires that the tenant pay all operating expenses of the business conducted by the tenant, including real estate taxes, insurance, utilities, and expenses of maintaining the asset in good working order. CorEnergy considers its investments in these energy infrastructure assets to be a single business segment and reports them accordingly in its financial statements.
In 2013 CorEnergy qualified, and in March 2014 elected (effective as of January 1, 2013), to be treated as a REIT for federal income tax purposes. Because certain of the Company's assets may not produce REIT-qualifying income or be treated as interests in real property, those assets are held in wholly-owned Taxable REIT Subsidiaries ("TRSs") in order to limit the potential that such assets and income could prevent the Company from qualifying as a REIT. The Company's use of TRSs enables it to continue to engage in certain businesses while complying with REIT qualification requirements and also allows it to retain income generated by these businesses for reinvestment without the requirement of distributing those earnings. In the future, the Company may elect to reorganize and transfer certain assets or operations from its TRSs to the Company or other subsidiaries, including qualified REIT subsidiaries. Taxable REIT subsidiaries hold the Company's securities portfolio, operating businesses and certain financing notes receivable.
Basis of Presentation and Use of Estimates
The accompanying consolidated financial statements include CorEnergy accounts and the accounts of its wholly owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) set forth in the Accounting Standards Codification ("ASC"), as published by the Financial Accounting Standards Board ("FASB"), and with the Securities and Exchange Commission (“SEC”) instructions to Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the Company's financial position, results of operations, and cash flows for the periods presented. There were no adjustments that, in the opinion of management, were not of a normal and recurring nature. All intercompany transactions and balances have been eliminated in consolidation, and the Company's net earnings are reduced by the portion of net earnings attributable to non-controlling interests.
Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 or any other interim or annual period. These consolidated financial statements and Management's Discussion and Analysis of the Financial Condition and Results of Operations should be read in conjunction with CorEnergy's Annual Report on Form 10-K, for the year ended December 31, 2016, filed with the SEC on March 2, 2017 (the "2016 CorEnergy 10-K").
RECENT ACCOUNTING PRONOUNCEMENTS
RECENT ACCOUNTING PRONOUNCEMENTS
RECENT ACCOUNTING PRONOUNCEMENTS
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09 "Revenue from Contracts with Customers", which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard was originally effective for interim and annual periods beginning after December 15, 2016 and permits the use of either the retrospective or cumulative effect transition method. On July 9, 2015, the FASB approved a one-year deferral of the effective date making the standard effective for interim and annual periods beginning after December 15, 2017. The Company is currently planning to use the modified retrospective transition method. However, it does not expect that adoption of the standard will have have a significant impact on its consolidated financial statements, as a substantial portion of its revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU 2014-09.
In January 2016, the FASB issued ASU 2016-01 "Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities," which will require entities to measure their investments at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicability exception. The practicability exception will be available for equity investments that do not have readily determinable fair values. The guidance is effective for fiscal years beginning after December 15, 2017. The Company is currently evaluating the impact that adopting the new standard, but does not believe that its adoption will have a material impact on its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02 "Leases" which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU No. 2016-02 is effective for fiscal years and interim periods beginning after December 31, 2018, with early adoption permitted. At adoption, the standard will be applied using a modified retrospective approach. Management is in the process of evaluating the impact of the standard on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU 2016-13 "Financial Instruments - Credit Losses" which introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. The new model, referred to as the current expected credit losses ("CECL model"), will apply to financial assets subject to credit losses and measured at amortized cost, and certain off-balance sheet credit exposures. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is currently evaluating the impact that adopting the new standard will have on the Company's consolidated financial statements but believes that, unless the Company acquires any additional financing receivables, the impact will not be material.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. This new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017 and will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. Management is currently evaluating the impact of the new standard but does not expect that its adoption will have a material impact.
In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business" which clarifies the definition of “a business” to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at a minimum, an input and a substantive process that contribute to an output to be considered a business. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is allowed for transactions where the acquisition (or subsidiary deconsolidation) occurs before the effective date of the amendments and the transaction has not been previously reported in the financial statements. Management is currently evaluating the impact and timing of adopting the new standard.
In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment", which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the amendments in ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The standard is effective for annual or interim tests performed in fiscal years beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. Effective January 1, 2017, Management has elected to early adopt this standard in connection with its goodwill impairment testing performed subsequent to January 1, 2017. As the standard will be applied prospectively, for measurement of goodwill impairment losses when an impairment is indicated, the impact of adoption to the financial statements will depend on various factors.  However, elimination of the second step will reduce the complexity and cost of measuring any such impairment.
Leased Properties and Leases
LEASED PROPERTIES AND LEASES
LEASED PROPERTIES AND LEASES
As of March 31, 2017, the Company had three significant leased properties located in Oregon, Wyoming, Louisiana, and the Gulf of Mexico, which are leased on a triple-net basis to major tenants, described in the table below. These major tenants are responsible for the payment of all taxes, maintenance, repairs, insurance, and other operating expenses relating to the leased properties. The long-term, triple-net leases generally have an initial term of 11 to 15 years with options for renewals. Lease payments are scheduled to increase at varying intervals during the initial terms of the leases. The following table summarizes the significant leased properties, major tenants and lease terms:
Summary of Leased Properties, Major Tenants and Lease Terms
Property
Grand Isle Gathering System
Pinedale LGS(1)
Portland Terminal Facility
Location
Gulf of Mexico/Louisiana
Pinedale, WY
Portland, OR
Tenant
Energy XXI GIGS Services, LLC
Ultra Wyoming LGS, LLC
Arc Terminals Holdings LLC
Asset Description
Approximately 153 miles of offshore pipeline with total capacity of 120 thousand Bbls/d, including a 16-acre onshore terminal and saltwater disposal system
Approximately 150 miles of pipelines and four central storage facilities
A 39-acre rail and marine facility property adjacent to the Willamette River with 84 tanks and total storage capacity of approximately 1.5 million barrels
Date Acquired
June 2015
December 2012
January 2014
Initial Lease Term
11 years
15 years
15 years
Renewal Option
equal to the lesser of 9-years or 75 percent of the remaining useful life
5-year terms
5-year terms
Current Monthly Rent Payments
7/1/16 - 6/30/17: $2,826,250
7/1/17 - 6/30/18: $2,854,667
$1,741,933
$513,355
Initial Estimated
Useful Life
27 years
26 years
30 years
(1) Non-Controlling Interest Partner, Prudential, funded a portion of the Pinedale LGS acquisition and, as a limited partner, holds 18.95 percent of the economic interest in Pinedale LP. The general partner, Pinedale GP, a wholly-owned subsidiary of the Company, holds the remaining 81.05 percent of the economic interest.

The future contracted minimum rental receipts for all leases as of March 31, 2017, are as follows:
Future Minimum Lease Receipts (1)
Years Ending December 31,
 
Amount
2017
 
$
45,937,056

2018
 
61,356,965

2019
 
63,750,535

2020
 
70,919,225

2021
 
77,101,146

Thereafter
 
376,854,030

Total
 
$
695,918,957

(1)Future minimum lease receipts include base rents for the Portland Terminal Facility through its initial 15-year term. The lessee has a purchase option on the facility beginning in February 2017, which it can exercise with 90-days notice, as well as lease termination options on the fifth and tenth anniversaries of the lease. If exercised, the purchase option and termination options are subject to additional payment provisions and termination fees prescribed under the lease.

The table below displays the Company's individually significant leases as a percentage of total leased properties and total lease revenues for the periods presented:
 
 
As a Percentage of (1)
 
 
Leased Properties
 
Lease Revenues
 
 
 
 
 
 
For the Three Months Ended
 
 
March 31, 2017
 
December 31, 2016
 
March 31, 2017
 
March 31, 2016
Pinedale LGS
 
39.8%
 
39.8%
 
30.6%
 
30.4%
Grand Isle Gathering System
 
50.1%
 
50.0%
 
59.6%
 
59.8%
Portland Terminal Facility
 
9.9%
 
9.9%
 
9.7%
 
9.7%
(1) Insignificant leases are not presented; thus percentages may not sum to 100%.

The following table reflects the depreciation and amortization included in the accompanying Consolidated Statements of Income associated with the Company's leases and leased properties:
 
For the Three Months Ended
 
March 31, 2017
 
March 31, 2016
Depreciation Expense
 
 
 
GIGS
$
2,438,649

 
$
2,143,722

Pinedale
2,217,360

 
2,217,360

Portland Terminal Facility
318,915

 
(113,659
)
United Property Systems
9,059

 
7,425

Total Depreciation Expense
$
4,983,983

 
$
4,254,848

Amortization Expense - Deferred Lease Costs
 
 
 
GIGS
$
7,641

 
$
7,641

Pinedale
15,342

 
15,342

Total Amortization Expense - Deferred Lease Costs
$
22,983

 
$
22,983

ARO Accretion Expense
 
 
 
GIGS
$
160,629

 
$
184,082

Total ARO Accretion Expense
$
160,629

 
$
184,082


The following table reflects the deferred costs that are included in the accompanying Consolidated Balance Sheets associated with the Company's leased properties:
 
March 31, 2017
 
December 31, 2016
Net Deferred Lease Costs
 
 
 
GIGS
$
282,806

 
$
290,447

Pinedale
657,743

 
673,085

Total Deferred Lease Costs, net
$
940,549

 
$
963,532


Substantially all of the lease tenants' financial results are driven by exploiting naturally occurring oil and natural gas hydrocarbon deposits beneath the Earth's surface. As a result, the tenants' financial results are highly dependent on the performance of the oil and natural gas industry, which is highly competitive and subject to volatility. During the terms of the leases, management monitors the credit quality of its tenants by reviewing their published credit ratings, if available, reviewing publicly available financial statements, or reviewing financial or other operating statements, monitoring news reports regarding the tenants and their respective businesses, and monitoring the timeliness of lease payments and the performance of other financial covenants under their leases.
Ultra Petroleum
On March 14, 2017, the bankruptcy court issued an order confirming its plan of reorganization and on April 12, 2017, Ultra Petroleum emerged from bankruptcy. Ultra Petroleum is currently subject to the reporting requirements under the Exchange Act and is required to file with the SEC annual reports containing audited financial statements and quarterly reports containing unaudited financial statements. Following emergence from bankruptcy, its stock is trading on the NASDAQ under the symbol UPL. Its SEC filings can be found at www.sec.gov (UPL). The Company makes no representation as to the accuracy or completeness of the audited and unaudited financial statements of Ultra Petroleum, but has no reason to doubt the accuracy or completeness of such information. In addition, Ultra Petroleum has no duty, contractual or otherwise, to advise the Company of any events that might have occurred subsequent to the date of such financial statements which could affect the significance or accuracy of such information. None of the information in the public reports of Ultra Petroleum that are filed with the SEC is incorporated by reference into, or in any way form, a part of this filing.
EXXI
EXXI is currently subject to the reporting requirements of the Exchange Act and is required to file with the SEC annual reports containing audited financial statements and quarterly reports containing unaudited financial statements. Following emergence from bankruptcy on December 30, 2016, the succeeding company continued to file Exchange Act reports with the SEC. Its SEC filings can be found at www.sec.gov (historical - EXXI; successor - Energy XXI Gulf Coast, Inc.). Its stock is currently trading on the NASDAQ under the symbol EXXI. The Company makes no representation as to the accuracy or completeness of the audited and unaudited financial statements of EXXI, but has no reason to doubt the accuracy or completeness of such information. In addition, EXXI has no duty, contractual or otherwise, to advise the Company of any events that might have occurred subsequent to the date of such financial statements which could affect the significance or accuracy of such information. None of the information in the public reports of EXXI that are filed with the SEC is incorporated by reference into, or in any way form, a part of this filing.
Arc Logistics
Arc Logistics is currently subject to the reporting requirements of the Exchange Act and is required to file with the SEC annual reports containing audited financial statements and quarterly reports containing unaudited financial statements. The audited financial statements and unaudited financial statements of Arc Logistics can be found on the SEC's web site at www.sec.gov (NYSE: ARCX). The Company makes no representation as to the accuracy or completeness of the audited and unaudited financial statements of Arc Logistics but has no reason to doubt the accuracy or completeness of such information. In addition, Arc Logistics has no duty, contractual or otherwise, to advise the Company of any events that might have occurred subsequent to the date of such financial statements which could affect the significance or accuracy of such information. None of the information in the public reports of Arc Logistics that are filed with the SEC is incorporated by reference into, or in any way form, a part of this filing.
Financing Notes Receivable
FINANCING NOTES RECEIVABLE
FINANCING NOTES RECEIVABLE
Financing notes receivable are presented at face value plus accrued interest receivable and deferred loan origination costs, and net of related direct loan origination income. Each quarter the Company reviews its financing notes receivable to determine if the balances are realizable based on factors affecting the collectability of those balances. Factors may include credit quality, timeliness of required periodic payments, past due status, and management discussions with obligors. The Company evaluates the collectability of both interest and principal of each of its loans to determine if an allowance is needed. An allowance will be recorded when, based on current information and events, the Company determines it is probable that it will be unable to collect all amounts due according to the existing contractual terms. If the Company does determine an allowance is necessary, the amount deemed uncollectable is expensed in the period of determination. An insignificant delay or shortfall in the amount of payments does not necessarily result in the recording of an allowance. Generally, when interest and/or principal payments on a loan become past due, or if management otherwise does not expect the borrower to be able to service its debt and other obligations, the Company will place the loan on non-accrual status and will generally cease recognizing financing revenue on that loan until all principal and interest have been brought current. Interest income recognition is resumed if and when the previously reserved-for financing notes become contractually current and performance has been demonstrated. Payments received subsequent to the recording of an allowance will be recorded as a reduction to principal.
Black Bison Financing Notes
On February 29, 2016, the Company foreclosed on 100 percent of the equity of BB Intermediate, the borrower of the Black Bison financing notes, as well as all of the other collateral securing the Black Bison Loans. The foreclosure was accepted in satisfaction of $2.0 million of the total outstanding loan balance. The real property assets were sold or disposed of during 2016, as further described in Note 7, Property And Equipment. The Company did not record any financing revenue related to the Black Bison Loans for the three-month period ended March 31, 2016 or any subsequent period. These notes were considered by the Company to be on non-accrual status and were reflected as such in the financial statements. For the three months ended March 31, 2016, the Company recorded $463 thousand in provision for loan losses related to the Black Bison Loans.
Four Wood Financing Note Receivable
As a result of the decreased economic activity by SWD, the Company recorded a provision for loan loss with respect to the SWD Loans. The income statement for the three months ended March 31, 2016 reflects a Provision for Loan Loss of $3.5 million, which includes $71 thousand of deferred origination income and $98 thousand of interest accrued under the original loan agreements. The loans were placed on non-accrual status during the first quarter of 2016.
Effective October 1, 2016, a portion of the financing notes with SWD were restructured. The interest rate on the $4.0 million REIT Loan was reduced to 10 percent and the required principal amortization was delayed until September 30, 2018. The Company is in the process of restructuring the remaining TRS Loan. The restructuring did not have a material impact to the consolidated financial statements. The balance of the loans, net of the reserve for loan loss, represents the amount expected to be received as of March 31, 2017. The balance of the loans has been valued based on the enterprise value of SWD Enterprises, and thus the value of the collateral supporting the loans, at $1.5 million as of March 31, 2017 and December 31, 2016.
Variable Interest Entities
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES
The FASB issued ASU 2015-02, "Consolidations (Topic 810) - Amendments to the Consolidation Analysis" (“ASU 2015-02”), which amended previous consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. Under this analysis, limited partnerships and other similar entities are considered a variable interest entity (“VIE”) unless the limited partners hold substantive kick-out rights or participating rights. Management determined that Pinedale LP and Grand Isle Corridor LP are VIEs under the amended guidance because the limited partners of both partnerships lack both substantive kick-out rights and participating rights. As such, management evaluated the qualitative criteria under FASB ASC Topic 810 - Consolidation in conjunction with ASU 2015-02 to make a determination whether these partnerships should be consolidated on the Company's financial statements. ASC Topic 810-10 requires the primary beneficiary of a variable interest entity's activities to consolidate the VIE. The primary beneficiary is identified as the enterprise that has a) the power to direct the activities of the VIE that most significantly impact the entity's economic performance and b) the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. The standard requires an ongoing analysis to determine whether the variable interest gives rise to a controlling financial interest in the VIE. Based upon the general partners’ roles and rights as afforded by the partnership agreements and its exposure to losses and benefits of each of the partnerships through its significant limited partner interests, management determined that CorEnergy is the primary beneficiary of both Pinedale LP and Grand Isle Corridor LP. Based upon that evaluation, the consolidated financial statements presented include full consolidation with respect to both of the partnerships.
Income Taxes
INCOME TAXES
INCOME TAXES
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting and tax purposes. Components of the Company’s deferred tax assets and liabilities as of March 31, 2017, and December 31, 2016, are as follows:
Deferred Tax Assets and Liabilities
 
 
March 31, 2017
 
December 31, 2016
Deferred Tax Assets:
 
 
 
 
Net operating loss carryforwards
 
$
1,209,892

 
$
1,144,818

Net unrealized loss on investment securities
 
272,474

 
61,430

Cost recovery of leased and fixed assets
 
705,505

 
739,502

Loan Loss Provision
 
608,086

 
608,086

Other loss carryforwards
 
3,536,701

 
3,187,181

Sub-total
 
$
6,332,658

 
$
5,741,017

Deferred Tax Liabilities:
 
 
 
 
Basis reduction of investment in partnerships
 
$
(2,195,747
)
 
$
(2,158,746
)
Cost recovery of leased and fixed assets
 
(2,079,776
)
 
(1,823,982
)
Sub-total
 
$
(4,275,523
)
 
$
(3,982,728
)
Total net deferred tax asset
 
$
2,057,135

 
$
1,758,289


As of March 31, 2017, the total deferred tax assets and liabilities presented above relates to the Company's TRSs. The Company recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. The Company’s policy is to record interest and penalties on uncertain tax positions as part of tax expense. Tax years subsequent to the year ended December 31, 2012, remain open to examination by federal and state tax authorities.
Total income tax expense/(benefit) differs from the amount computed by applying the federal statutory income tax rate of 35 percent for the three months ended March 31, 2017 and 2016, to income or loss from operations and other income and expense for the periods presented, as follows:
Income Tax Expense (Benefit)
 
 
For the Three Months Ended
 
 
March 31, 2017
 
March 31, 2016
Application of statutory income tax rate
 
$
2,567,905

 
$
747,599

State income taxes, net of federal tax (benefit)
 
(35,437
)
 
(83,260
)
Federal Tax Attributable to Income of Real Estate Investment Trust
 
(2,865,074
)
 
(1,919,465
)
Total income tax expense (benefit)
 
$
(332,606
)
 
$
(1,255,126
)

Total income taxes are computed by applying the federal statutory rate of 35 percent plus a blended state income tax rate. Corridor Public Holdings, Inc. and Corridor Private Holdings, Inc. had a blended state rate of approximately 3.78 percent for the three months ended March 31, 2017 and 2.82 percent for the three months ended March 31, 2016. CorEnergy BBWS, Inc. does not record a provision for state income taxes because it operates only in Wyoming, which does not have state income tax. Because Mowood Corridor, Inc. and Corridor MoGas, Inc. primarily only operate in the state of Missouri, a blended state income tax rate of 5 percent was used for the operations of both TRSs for the three months ended March 31, 2017 and 2016. For the three months ended March 31, 2017, all of the income tax benefit presented above relates to the assets and activities held in the Company's TRSs. The components of income tax expense/(benefit) include the following for the periods presented:
Components of Income Tax Expense (Benefit)
 
 
For the Three Months Ended
 
 
March 31, 2017
 
March 31, 2016
Current tax expense (benefit)
 
 
 
 
Federal
 
$
(30,469
)
 
$
(627,197
)
State (net of federal tax benefit)
 
(3,291
)
 
(50,534
)
Total current tax expense (benefit)
 
$
(33,760
)
 
$
(677,731
)
Deferred tax expense (benefit)
 
 
 
 
Federal
 
$
(266,700
)
 
$
(544,669
)
State (net of federal tax benefit)
 
(32,146
)
 
(32,726
)
Total deferred tax expense (benefit)
 
$
(298,846
)
 
$
(577,395
)
Total income tax expense (benefit), net
 
$
(332,606
)
 
$
(1,255,126
)

As of December 31, 2016, the TRSs had an aggregate net operating loss of $3.0 million. The net operating loss may be carried forward for 20 years. If not utilized, this net operating loss will expire as follows: $90 thousand, $804 thousand, $479 thousand and $1.7 million in the years ending December 31, 2033, 2034, 2035 and 2036 respectively. The amount of deferred tax asset for net operating losses as of March 31, 2017, includes amounts for the three months ended March 31, 2017. The aggregate cost of securities for federal income tax purposes and securities with unrealized appreciation and depreciation, were as follows:
Aggregate Cost of Securities for Income Tax Purposes (Unaudited)
 
 
March 31, 2017
 
December 31, 2016
Aggregate cost for federal income tax purposes
 
$
4,049,249

 
$
4,327,077

Gross unrealized appreciation
 
4,959,447

 
5,408,242

Gross unrealized depreciation
 

 

Net unrealized appreciation
 
$
4,959,447

 
$
5,408,242

Property and Equipment
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
Property and Equipment
 
 
March 31, 2017
 
December 31, 2016
Land
 
$
580,000

 
$
580,000

Natural gas pipeline
 
124,288,156

 
124,288,156

Vehicles and trailers
 
570,267

 
570,267

Office equipment and computers
 
267,095

 
267,095

Gross property and equipment
 
$
125,705,518

 
$
125,705,518

Less: accumulated depreciation
 
(10,131,025
)
 
(9,292,712
)
Net property and equipment
 
$
115,574,493

 
$
116,412,806



Depreciation of property and equipment is as follows:
 
For the Three Months Ended
 
March 31, 2017
 
March 31, 2016
Depreciation Expense
$
838,313

 
$
834,905


Assets and Liabilities Held for Sale
Effective February 29, 2016, the Company foreclosed on 100 percent of the equity of BB Intermediate, the holding company of BBWS, the borrower of the Black Bison financing notes. On June 16, 2016, the Company entered into an asset sale agreement with Expedition Water Solutions for the sale of specified disposal wells and related equipment as outlined in the sale agreement. Consideration received by the company included $748 thousand cash, net of fees, and the future right to royalty payments of up to $6.5 million, which was fair valued at $450 thousand. The rights to future cash payments are tied to the future volumes of water disposed in each of the wells sold.
There were no assets or liabilities held for sale at March 31, 2017 or December 31, 2016.
Management Agreement
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT
The Company pays Corridor as the Company's Manager pursuant to a Management Agreement as described in the 2016 CorEnergy 10-K. Effective March 31, 2017, the Manager voluntarily recommended, and the Company agreed, that the Manager would waive $9 thousand of the $149 thousand total incentive fee that would otherwise be payable under the provisions of the Management Agreement with respect to dividends paid on the Company's common stock during the three months ended March 31, 2017.
Fees incurred under the Management Agreement for each of the three months ended March 31, 2017 and 2016 were $1.8 million, and are reported in the General and Administrative line item on the income statement.
The Company pays Corridor, as the Company's Administrator pursuant to an Administrative Agreement. Fees incurred under the Administrative Agreement for each of the three months ended March 31, 2017 and 2016 were $67 thousand, and are reported in the General and Administrative line item on the income statement.
Fair Value
FAIR VALUE
FAIR VALUE
The following tables set forth the Company's assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of March 31, 2017, and December 31, 2016.
March 31, 2017
 
 
March 31, 2017
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Other equity securities
 
$
8,563,297

 
$

 
$

 
$
8,563,297

Interest Rate Swap Derivative
 
50,689

 

 
50,689

 

Total Assets
 
$
8,613,986

 
$

 
$
50,689

 
$
8,563,297

December 31, 2016
 
 
December 31, 2016
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Other equity securities
 
$
9,287,209

 
$

 
$

 
$
9,287,209

Interest Rate Swap Derivative
 
19,950

 

 
19,950

 

Total Assets
 
$
9,307,159

 
$

 
$
19,950

 
$
9,287,209

At March 31, 2017, the only assets and liabilities measured at fair value on a recurring basis are the Company's derivatives and its equity securities. On March 30, 2016, the Company terminated one of the cash flow hedges with a notional amount of $26.3 million concurrent with the assignment of the $70 million Pinedale Credit Facility. The remaining cash flow hedge was de-designated from hedge accounting as of March 30, 2016, and continues to be valued using a consistent methodology and therefore is classified as a Level 2 investment. Subsequent to de-designation, changes in the fair value are recognized in earnings in the period in which the changes occur.
The valuation of the interest rate swaps are determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including forward interest rate curves. The inputs used to value the derivatives fall primarily within Level 2 of the value hierarchy.
The changes for all Level 3 securities measured at fair value on a recurring basis using significant unobservable inputs for the three months ended March 31, 2017 and 2016, are as follows:
Level 3 Rollforward
For the Three Months Ended March 31, 2017
 
Fair Value Beginning Balance
 
Acquisitions
 
Disposals
 
Total Realized and Unrealized Gains/(Losses) Included in Net Income
 
Return of Capital Adjustments Impacting Cost Basis of Securities
 
Fair Value Ending Balance
 
Changes in Unrealized Losses, Included In Net Income, Relating to Securities Still Held (1)
Other equity securities
 
$
9,287,209

 
$

 
$

 
$
(544,208
)
 
$
(179,704
)
 
$
8,563,297

 
$
(544,208
)
Total
 
$
9,287,209

 
$

 
$

 
$
(544,208
)
 
$
(179,704
)
 
$
8,563,297

 
$
(544,208
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other equity securities
 
$
8,393,683

 
$

 
$

 
$
(1,672,081
)
 
$
115,840

 
$
6,837,442

 
$
(1,672,081
)
Total
 
$
8,393,683

 
$

 
$

 
$
(1,672,081
)
 
$
115,840

 
$
6,837,442

 
$
(1,672,081
)
(1) Located in Net realized and unrealized gain on other equity securities in the Consolidated Statements of Income

The Company utilizes the beginning of reporting period method for determining transfers between levels. There were no transfers between levels 1, 2 or 3 for the three months ended March 31, 2017 and 2016.
Valuation Techniques and Unobservable Inputs
The Company’s other equity securities, which represent securities issued by private companies, are classified as Level 3 assets. Significant judgment is required in selecting the assumptions used to determine the fair values of these investments.
As of March 31, 2017 and December 31, 2016, the Company’s investment in Lightfoot Capital Partners, LP and Lightfoot Capital Partners GP LLC, collectively, ("Lightfoot") is its only remaining significant private company investment. Lightfoot in turn owns a combination of public and private investments. Therefore, Lightfoot was valued using a combination of the following valuation techniques: (i) public share price of private companies' investments, and (ii) discounted cash flow analysis using an estimated discount rate of 15.9 percent to 17.9 percent and 15.3 percent to 17.3 percent as of March 31, 2017 and December 31, 2016, respectively. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investment may fluctuate from period to period. Additionally, the fair value of the Company’s investment may differ from the values that would have been used had a ready market existed for such investment and may differ materially from the values that the Company may ultimately realize.
As of both March 31, 2017 and December 31, 2016, the Company held a 6.6 percent and 1.5 percent equity interest in Lightfoot LP and Lightfoot GP, respectively. Lightfoot’s assets include an ownership interest in Gulf LNG, a 1.5 billion cubic feet per day (“bcf/d”) receiving, storage, and regasification terminal in Pascagoula, Mississippi, and common units and subordinated units representing an approximately 40 percent aggregate limited partner interest, and a noneconomic general partner interest, in Arc Logistics Partners LP (NYSE: ARCX). The Company holds observation rights on Lightfoot's Board of Directors.
Certain condensed combined unaudited financial information of the unconsolidated affiliate, Lightfoot, is presented in the following tables (in thousands):
 
 
March 31, 2017
 
December 31, 2016
 
 
(Unaudited)
 
(Unaudited)
Assets
 
 
 
 
Current assets
 
$
16,182

 
$
20,412

Noncurrent assets
 
696,341

 
698,745

Total Assets
 
$
712,523

 
$
719,157

Liabilities
 
 
 
 
Current liabilities
 
$
13,593

 
$
14,718

Noncurrent liabilities
 
268,891

 
268,805

Total Liabilities
 
$
282,484

 
$
283,523

 
 
 
 
 
Partner's equity
 
430,039

 
435,634

Total liabilities and partner's equity
 
$
712,523

 
$
719,157


 
 
For the Three Months Ended
 
 
(Unaudited)
 
 
March 31, 2017
 
March 31, 2016
Revenues
 
$
25,925

 
$
26,067

Operating expenses
 
22,471

 
22,072

Income (Loss) from Operations
 
$
3,454

 
$
3,995

Other income
 
1,910

 
2,374

Net Income
 
$
5,364

 
$
6,369

Less: Net Income attributable to non-controlling interests
 
(3,130
)
 
(4,007
)
Net Income attributable to Partner's Capital
 
$
2,234

 
$
2,362


The following section describes the valuation methodologies used by the Company for estimating fair value for financial instruments not recorded at fair value, but fair value is included for disclosure purposes only, as required under disclosure guidance related to the fair value of financial instruments.
Cash and Cash Equivalents — The carrying value of cash, amounts due from banks, federal funds sold and securities purchased under resale agreements approximates fair value.
Financing Notes Receivable — The financing notes receivable are valued on a non-recurring basis. The financing notes receivable are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Financing Notes with carrying values that are not expected to be recovered through future cash flows are written-down to their estimated net realizable value. Estimates of realizable value are determined based on unobservable inputs, including estimates of future cash flow generation and value of collateral underlying the notes.
Secured Credit Facilities — The fair value of the Company’s long-term variable-rate debt under its secured credit facilities approximates carrying value.
Unsecured Convertible Senior Notes — The fair value of the unsecured convertible senior notes is estimated using quoted market prices.
Carrying and Fair Value Amounts
 
 
Level within fair value hierarchy
 
March 31, 2017
 
December 31, 2016
 
 
 
Carrying
Amount (1)
 
Fair Value
 
Carrying
Amount
 
Fair Value
Financial Assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
Level 1
 
$
11,375,702

 
$
11,375,702

 
$
7,895,084

 
$
7,895,084

Financing notes receivable (Note 4)
 
Level 3
 
$
1,500,000

 
$
1,500,000

 
$
1,500,000

 
$
1,500,000

Financial Liabilities:
 
 
 
 
 
 
 
 
Secured Credit Facilities
 
Level 2
 
$
86,992,738

 
$
86,992,738

 
$
89,387,985

 
$
89,387,985

Unsecured convertible senior notes
 
Level 1
 
$
111,441,691

 
$
127,300,380

 
$
111,244,895

 
$
129,527,940

(1) The carrying value of debt balances are presented net of unamortized original issuance discount and debt issuance costs.
Credit Facilities
CREDIT FACILITIES
CREDIT FACILITIES
The following is a summary of the Company's debt facilities and balances as of March 31, 2017, and December 31, 2016:
 
Total Commitment
 or Original Principal
 
Quarterly Principal Payments
 
 
 
March 31, 2017
 
December 31, 2016
 
 
 
Maturity
Date
 
Amount Outstanding
 
Interest
Rate
 
Amount Outstanding
 
Interest
Rate
7% Unsecured Convertible Senior Notes
$
115,000,000

 
$

 
6/15/2020
 
$
114,000,000

 
7.00
%
 
$
114,000,000

 
7.00
%
CorEnergy Secured Credit Facility:
 
 
 
 
 
 
 
 
 
 
 
 
 
CorEnergy Revolver
$
105,000,000

 
$

 
12/15/2019
 
44,000,000

 
3.99
%
 
44,000,000

 
3.76
%
CorEnergy Term Loan
$
45,000,000

 
$
1,615,000

 
12/15/2019
 
35,125,000

 
3.98
%
 
36,740,000

 
3.74
%
MoGas Revolver
$
3,000,000

 
$

 
12/15/2019
 

 
3.98
%
 

 
3.77
%
Omega Line of Credit
$
1,500,000

 
$

 
7/31/2017
 

 
4.98
%
 

 
4.77
%
Pinedale Secured Credit Facility:
 
 
 
 
 
 
 
 
 
 
 
 
 
$58.5M Term Loan – related party (1)
$
11,085,750

 
$
167,139

 
3/30/2021
 
8,061,844

 
8.00
%
 
8,860,577

 
8.00
%
Total Debt
 
$
201,186,844

 
 
 
$
203,600,577

 
 
Less:
 
 
 
 
 
 
 
 
Unamortized deferred financing costs (2)
 
$
350,976

 
 
 
$
381,531

 
 
Unamortized discount on 7% Convertible Senior Notes
 
2,401,439

 
 
 
2,586,166

 
 
Long-term debt, net of deferred financing costs
 
$
198,434,429

 
 
 
$
200,632,880

 
 
Debt due within one year
 
$
7,128,556

 
 
 
$
7,128,556

 
 
(1) $47,414,250 of the original $58.5 million term loan is payable to CorEnergy under the same terms, and eliminates in consolidation.
(2) A portion of the unamortized deferred financing costs, related to our revolving credit facilities, are included in Deferred Costs in the Assets section of the Consolidated Balance Sheets. See the next table for deferred financing costs included in the Asset section of the Consolidated Balance Sheets.

Deferred Financing Costs, net (1)
 
 
March 31, 2017
 
December 31, 2016
CorEnergy Credit Facility
 
$
1,914,929

 
$
2,168,518

(1) This is the portion of deferred financing costs which relate to a revolving credit facility and are not presented as a reduction to Long-term debt but rather as Deferred Costs in the Asset section of the Consolidated Balance Sheets.

Deferred Financing Cost Amortization Expense(1)(2)
 
For the Three Months Ended
 
March 31, 2017
 
March 31, 2016
CorEnergy Credit Facility
$
272,074

 
$
262,302

Pinedale Credit Facility

 
156,330

Total Deferred Debt Cost Amortization
$
272,074

 
$
418,632

(1) Amortization of deferred debt issuance costs is included in interest expense in the Consolidated Statements of Income.
(2) For the amount of deferred debt costs amortization relating to the Convertible Notes included in the Consolidated Statements of Income, see the Convertible Debt footnote.

The remaining contractual principal payments as of March 31, 2017 under the CorEnergy and Pinedale credit facilities are as follows:
Total Remaining Contractual Payments
Year
 
CorEnergy
Revolver
 
CorEnergy Term Loan
 
Pinedale Credit Facility
 
Total
2017
 
$

 
$
4,845,000

 
$
501,416

 
$
5,346,416

2018
 

 
6,460,000

 
668,556

 
7,128,556

2019
 
44,000,000

 
23,820,000

 
668,556

 
68,488,556

2020
 

 

 
668,556

 
668,556

2021
 

 

 
5,554,760

 
5,554,760

Thereafter
 

 

 

 

Total
 
$
44,000,000

 
$
35,125,000

 
$
8,061,844

 
$
87,186,844


CorEnergy Credit Facilities
On March 30, 2016, the Company drew $44.0 million on the CorEnergy Revolver in conjunction with the refinancing of the Pinedale Credit Facility. See below for further details. As of March 31, 2017, the Company has approximately $53.3 million of available borrowing base capacity on the CorEnergy Revolver and was in compliance with all covenants under the CorEnergy Credit Facility. On April 18, 2017, the Company repaid the $44.0 million in outstanding borrowings on the CorEnergy Revolver with a portion of the proceeds from a follow-on offering of its 7.375% Series A Cumulative Redeemable Preferred Stock, as discussed further in Note 14, Subsequent Events.
Pinedale Credit Facility
On December 20, 2012, Pinedale LP closed on a $70 million secured term credit facility. Outstanding balances under the original facility generally accrued interest at a variable annual rate equal to LIBOR plus 3.25 percent. This credit facility was secured by the Pinedale LGS asset. The credit facility remained in effect until December 31, 2015, with an option to extend through December 31, 2016. Although the Company elected not to extend the facility for an additional one-year period it did amend the facility to extend the maturity date to March 30, 2016. During the extension period, the company made principal payments of $3.2 million and the credit facility bore interest on the outstanding principal amount at LIBOR plus 4.25 percent.
On March 4, 2016, the Company obtained a consent from its lenders under the CorEnergy Credit Facility, which permitted the Company to utilize the CorEnergy Revolving Credit Facility to refinance the Company's pro rata share of the remaining balance of the Pinedale secured term credit facility. On March 30, 2016, the Company and Prudential ("the Refinancing Lenders"), refinanced the remaining $58.5 million principal balance of the $70 million credit facility (on a pro rata basis equal to their respective equity interests in Pinedale LP, with the Company’s 81.05 percent share being approximately $47.4 million) and executed a series of agreements assigning the credit facility to CorEnergy Infrastructure Trust, Inc. as Agent for the Refinancing Lenders. The facility was further modified to extend the maturity date to March 30, 2021; to increase the LIBOR Rate to the greater of (i) 1.00 percent and (ii) the one-month LIBOR rate; and to increase the LIBOR Rate Spread to seven percent (7.00 percent) per annum. The Company's portion of the debt and interest is eliminated in consolidation and Prudential's portion of the debt is shown as a related-party liability. The Company also terminated one of two related interest rate swaps with a notional amount of $26.3 million.
The Company has provided to Prudential a guarantee against certain inappropriate conduct by or on behalf of Pinedale LP or us. The credit facility also requires that Pinedale LP maintain minimum net worth levels and certain leverage ratios, which along with other provisions of the credit facility limit cash dividends and loans to the Company. At March 31, 2017, the net assets of Pinedale LP were $146.3 million and Pinedale LP was in compliance with all of the financial covenants of the secured term credit facility.
Convertible Debt
CONVERTIBLE DEBT
CONVERTIBLE DEBT
On June 29, 2015, the Company completed a public offering of $115 million aggregate principal amount of 7.00% Convertible Senior Notes Due 2020 (the "Convertible Notes"). The Convertible Notes mature on June 15, 2020 and bear interest at a rate of 7.0 percent per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2015. On May 23, 2016, the Company repurchased $1 million of its convertible bonds on the open market.
The following is a summary of the impact of Convertible Notes on interest expense for the three months ended March 31, 2017 and 2016, respectively:
Convertible Note Interest Expense
 
 
For the Three Months Ended
 
 
March 31, 2017
 
March 31, 2016
7% Convertible Notes
 
$
1,995,000

 
$
2,012,500

Discount Amortization
 
184,728

 
188,235

Deferred Debt Issuance Amortization
 
12,069

 
12,255

Total
 
$
2,191,797

 
$
2,212,990


The Convertible Notes were initially issued with an underwriters' discount of $3.7 million which is being amortized over the life of the Convertible Notes. Including the impact of the convertible debt discount and related deferred debt issuance costs, the effective interest rate on the Convertible Notes is approximately 7.7 percent for each of the three months ended March 31, 2017 and 2016.
Stockholder's Equity
STOCKHOLDER'S EQUITY
STOCKHOLDER'S EQUITY
PREFERRED STOCK
As of March 31, 2017, the Company has 2,250,000 depositary shares, each representing 1/100th of a share of 7.375% Series A Cumulative Redeemable Preferred Stock ("Series A Preferred"), issued and outstanding. See Note 14, Subsequent Events, for further information regarding the April 18, 2017 follow on offering of additional Series A Preferred stock and declaration of dividends on outstanding shares.
COMMON STOCK
As of March 31, 2017, the Company has 11,893,146 of common shares issued and outstanding. See Note 14, Subsequent Events, for further information regarding the declaration of a dividend on the common stock.
SHELF REGISTRATION
On February 18, 2016, the Company had a new shelf registration statement declared effective by the SEC, pursuant to which we may publicly offer additional debt or equity securities with an aggregate offering price of up to $600 million.
As of March 31, 2017, the Company has issued 41,511 shares of common stock under the Company's dividend reinvestment plan pursuant to the February 18, 2016 shelf, reducing availability by approximately $1.1 million to approximately $598.9 million. Shelf availability was further reduced by $70 million on April 18, 2017 as a result of the follow on offering of additional 7.375% Series A Cumulative Redeemable Preferred Stock as discussed further in Note 14, Subsequent Events.
Earnings Per Share
EARNINGS PER SHARE
EARNINGS PER SHARE
Basic earnings per share data is computed based on the weighted average number of shares of common stock outstanding during the periods. Diluted EPS data is computed based on the weighted average number of shares of common stock outstanding, including all potentially issuable shares of common stock. Diluted EPS for the three months ended March 31, 2017 and 2016 excludes the impact to income and the number of shares outstanding from the conversion of the 7.00% Convertible Senior Notes, because such impact would be antidilutive.
Earnings Per Share
 
For the Three Months Ended
 
March 31, 2017
 
March 31, 2016
Net income attributable to CorEnergy stockholders
$
7,669,478

 
$
3,391,121

Less: preferred dividend requirements
1,037,109

 
1,037,109

Net income attributable to common stockholders
$
6,632,369

 
$
2,354,012

Weighted average shares - basic
11,888,681

 
11,943,938

Basic earnings (loss) per share
$
0.56

 
$
0.20

 
 
 
 
Net income attributable to common stockholders (from above)
$
6,632,369

 
$
2,354,012

Add: After tax effect of convertible interest (1)

 

Income attributable for dilutive securities
$
6,632,369

 
$
2,354,012

Weighted average shares - diluted
11,888,681

 
11,943,938

Diluted earnings (loss) per share
$
0.56

 
$
0.20

(1) The interest amounts in this line include the amortization of deferred costs and the amortization of the discount on the Convertible Notes. There is no income tax effect due to the Company's REIT status.
Subsequent Events
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS
The Company performed an evaluation of subsequent events through the date of the issuance of these financial statements and determined that no additional items require recognition or disclosure, except for the following:
Common Stock Dividend Declaration
On April 26, 2017, our Board of Directors declared the 2017 first quarter dividend of $0.75 per share for CorEnergy common stock. The dividend is payable on May 31, 2017, to shareholders of record on May 16, 2017.
Preferred Stock Dividend Declaration
On April 26, 2017, our Board of Directors also declared a cash dividend of $0.4609375 per depositary share for the Company’s 7.375% Series A Cumulative Redeemable Preferred Stock for the quarter ending March 31, 2017. The preferred stock dividend is payable on May 31, 2017, to shareholders of record on May 16, 2017.
Preferred Stock Offering
On April 18, 2017, the Company closed a follow-on, underwritten public offering of 2,800,000 depository shares, each representing 1/100th of a share of 7.375% Series A Cumulative Redeemable Preferred Stock at a price of $25.00 per depository share. Proceeds from the offering are estimated at $67.6 million, after deducting underwriter discounts and other offering expenses. Following the offering, the Company will have a total of 5,050,000 depository shares outstanding. A portion of the proceeds from the offering were utilized to repay $44.0 million in outstanding borrowings under the CorEnergy revolver.
RECENT ACCOUNTING PRONOUNCEMENTS (Policies)
Basis of Presentation and Use of Estimates
The accompanying consolidated financial statements include CorEnergy accounts and the accounts of its wholly owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) set forth in the Accounting Standards Codification ("ASC"), as published by the Financial Accounting Standards Board ("FASB"), and with the Securities and Exchange Commission (“SEC”) instructions to Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the Company's financial position, results of operations, and cash flows for the periods presented. There were no adjustments that, in the opinion of management, were not of a normal and recurring nature. All intercompany transactions and balances have been eliminated in consolidation, and the Company's net earnings are reduced by the portion of net earnings attributable to non-controlling interests.
Operating results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 or any other interim or annual period. These consolidated financial statements and Management's Discussion and Analysis of the Financial Condition and Results of Operations should be read in conjunction with CorEnergy's Annual Report on Form 10-K, for the year ended December 31, 2016, filed with the SEC on March 2, 2017 (the "2016 CorEnergy 10-K").
RECENT ACCOUNTING PRONOUNCEMENTS
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09 "Revenue from Contracts with Customers", which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard was originally effective for interim and annual periods beginning after December 15, 2016 and permits the use of either the retrospective or cumulative effect transition method. On July 9, 2015, the FASB approved a one-year deferral of the effective date making the standard effective for interim and annual periods beginning after December 15, 2017. The Company is currently planning to use the modified retrospective transition method. However, it does not expect that adoption of the standard will have have a significant impact on its consolidated financial statements, as a substantial portion of its revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU 2014-09.
In January 2016, the FASB issued ASU 2016-01 "Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities," which will require entities to measure their investments at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicability exception. The practicability exception will be available for equity investments that do not have readily determinable fair values. The guidance is effective for fiscal years beginning after December 15, 2017. The Company is currently evaluating the impact that adopting the new standard, but does not believe that its adoption will have a material impact on its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02 "Leases" which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU No. 2016-02 is effective for fiscal years and interim periods beginning after December 31, 2018, with early adoption permitted. At adoption, the standard will be applied using a modified retrospective approach. Management is in the process of evaluating the impact of the standard on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued ASU 2016-13 "Financial Instruments - Credit Losses" which introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. The new model, referred to as the current expected credit losses ("CECL model"), will apply to financial assets subject to credit losses and measured at amortized cost, and certain off-balance sheet credit exposures. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is currently evaluating the impact that adopting the new standard will have on the Company's consolidated financial statements but believes that, unless the Company acquires any additional financing receivables, the impact will not be material.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. This new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017 and will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. Management is currently evaluating the impact of the new standard but does not expect that its adoption will have a material impact.
In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business" which clarifies the definition of “a business” to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at a minimum, an input and a substantive process that contribute to an output to be considered a business. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is allowed for transactions where the acquisition (or subsidiary deconsolidation) occurs before the effective date of the amendments and the transaction has not been previously reported in the financial statements. Management is currently evaluating the impact and timing of adopting the new standard.
In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment", which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the amendments in ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The standard is effective for annual or interim tests performed in fiscal years beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. Effective January 1, 2017, Management has elected to early adopt this standard in connection with its goodwill impairment testing performed subsequent to January 1, 2017. As the standard will be applied prospectively, for measurement of goodwill impairment losses when an impairment is indicated, the impact of adoption to the financial statements will depend on various factors.  However, elimination of the second step will reduce the complexity and cost of measuring any such impairment.
Leased Properties and Leases (Tables)
The following table summarizes the significant leased properties, major tenants and lease terms:
Summary of Leased Properties, Major Tenants and Lease Terms
Property
Grand Isle Gathering System
Pinedale LGS(1)
Portland Terminal Facility
Location
Gulf of Mexico/Louisiana
Pinedale, WY
Portland, OR
Tenant
Energy XXI GIGS Services, LLC
Ultra Wyoming LGS, LLC
Arc Terminals Holdings LLC
Asset Description
Approximately 153 miles of offshore pipeline with total capacity of 120 thousand Bbls/d, including a 16-acre onshore terminal and saltwater disposal system
Approximately 150 miles of pipelines and four central storage facilities
A 39-acre rail and marine facility property adjacent to the Willamette River with 84 tanks and total storage capacity of approximately 1.5 million barrels
Date Acquired
June 2015
December 2012
January 2014
Initial Lease Term
11 years
15 years
15 years
Renewal Option
equal to the lesser of 9-years or 75 percent of the remaining useful life
5-year terms
5-year terms
Current Monthly Rent Payments
7/1/16 - 6/30/17: $2,826,250
7/1/17 - 6/30/18: $2,854,667
$1,741,933
$513,355
Initial Estimated
Useful Life
27 years
26 years
30 years
(1) Non-Controlling Interest Partner, Prudential, funded a portion of the Pinedale LGS acquisition and, as a limited partner, holds 18.95 percent of the economic interest in Pinedale LP. The general partner, Pinedale GP, a wholly-owned subsidiary of the Company, holds the remaining 81.05 percent of the economic interest.
The future contracted minimum rental receipts for all leases as of March 31, 2017, are as follows:
Future Minimum Lease Receipts (1)
Years Ending December 31,
 
Amount
2017
 
$
45,937,056

2018
 
61,356,965

2019
 
63,750,535

2020
 
70,919,225

2021
 
77,101,146

Thereafter
 
376,854,030

Total
 
$
695,918,957

(1)Future minimum lease receipts include base rents for the Portland Terminal Facility through its initial 15-year term. The lessee has a purchase option on the facility beginning in February 2017, which it can exercise with 90-days notice, as well as lease termination options on the fifth and tenth anniversaries of the lease. If exercised, the purchase option and termination options are subject to additional payment provisions and termination fees prescribed under the lease.
The table below displays the Company's individually significant leases as a percentage of total leased properties and total lease revenues for the periods presented:
 
 
As a Percentage of (1)
 
 
Leased Properties
 
Lease Revenues
 
 
 
 
 
 
For the Three Months Ended
 
 
March 31, 2017
 
December 31, 2016
 
March 31, 2017
 
March 31, 2016
Pinedale LGS
 
39.8%
 
39.8%
 
30.6%
 
30.4%
Grand Isle Gathering System
 
50.1%
 
50.0%
 
59.6%
 
59.8%
Portland Terminal Facility
 
9.9%
 
9.9%
 
9.7%
 
9.7%
(1) Insignificant leases are not presented; thus percentages may not sum to 100%.
The following table reflects the depreciation and amortization included in the accompanying Consolidated Statements of Income associated with the Company's leases and leased properties:
 
For the Three Months Ended
 
March 31, 2017
 
March 31, 2016
Depreciation Expense
 
 
 
GIGS
$
2,438,649

 
$
2,143,722

Pinedale
2,217,360

 
2,217,360

Portland Terminal Facility
318,915

 
(113,659
)
United Property Systems
9,059

 
7,425

Total Depreciation Expense
$
4,983,983

 
$
4,254,848

Amortization Expense - Deferred Lease Costs
 
 
 
GIGS
$
7,641

 
$
7,641

Pinedale
15,342

 
15,342

Total Amortization Expense - Deferred Lease Costs
$
22,983

 
$
22,983

ARO Accretion Expense
 
 
 
GIGS
$
160,629

 
$
184,082

Total ARO Accretion Expense
$
160,629

 
$
184,082

The following table reflects the deferred costs that are included in the accompanying Consolidated Balance Sheets associated with the Company's leased properties:
 
March 31, 2017
 
December 31, 2016
Net Deferred Lease Costs
 
 
 
GIGS
$
282,806

 
$
290,447

Pinedale
657,743

 
673,085

Total Deferred Lease Costs, net
$
940,549

 
$
963,532

Income Taxes (Tables)
Components of the Company’s deferred tax assets and liabilities as of March 31, 2017, and December 31, 2016, are as follows:
Deferred Tax Assets and Liabilities
 
 
March 31, 2017
 
December 31, 2016
Deferred Tax Assets:
 
 
 
 
Net operating loss carryforwards
 
$
1,209,892

 
$
1,144,818

Net unrealized loss on investment securities
 
272,474

 
61,430

Cost recovery of leased and fixed assets
 
705,505

 
739,502

Loan Loss Provision
 
608,086

 
608,086

Other loss carryforwards
 
3,536,701

 
3,187,181

Sub-total
 
$
6,332,658

 
$
5,741,017

Deferred Tax Liabilities:
 
 
 
 
Basis reduction of investment in partnerships
 
$
(2,195,747
)
 
$
(2,158,746
)
Cost recovery of leased and fixed assets
 
(2,079,776
)
 
(1,823,982
)
Sub-total
 
$
(4,275,523
)
 
$
(3,982,728
)
Total net deferred tax asset
 
$
2,057,135

 
$
1,758,289

Total income tax expense/(benefit) differs from the amount computed by applying the federal statutory income tax rate of 35 percent for the three months ended March 31, 2017 and 2016, to income or loss from operations and other income and expense for the periods presented, as follows:
Income Tax Expense (Benefit)
 
 
For the Three Months Ended
 
 
March 31, 2017
 
March 31, 2016
Application of statutory income tax rate
 
$
2,567,905

 
$
747,599

State income taxes, net of federal tax (benefit)
 
(35,437
)
 
(83,260
)
Federal Tax Attributable to Income of Real Estate Investment Trust
 
(2,865,074
)
 
(1,919,465
)
Total income tax expense (benefit)
 
$
(332,606
)
 
$
(1,255,126
)
The components of income tax expense/(benefit) include the following for the periods presented:
Components of Income Tax Expense (Benefit)
 
 
For the Three Months Ended
 
 
March 31, 2017
 
March 31, 2016
Current tax expense (benefit)
 
 
 
 
Federal
 
$
(30,469
)
 
$
(627,197
)
State (net of federal tax benefit)
 
(3,291
)
 
(50,534
)
Total current tax expense (benefit)
 
$
(33,760
)
 
$
(677,731
)
Deferred tax expense (benefit)
 
 
 
 
Federal
 
$
(266,700
)
 
$
(544,669
)
State (net of federal tax benefit)
 
(32,146
)
 
(32,726
)
Total deferred tax expense (benefit)
 
$
(298,846
)
 
$
(577,395
)
Total income tax expense (benefit), net
 
$
(332,606
)
 
$
(1,255,126
)

The aggregate cost of securities for federal income tax purposes and securities with unrealized appreciation and depreciation, were as follows:
Aggregate Cost of Securities for Income Tax Purposes (Unaudited)
 
 
March 31, 2017
 
December 31, 2016
Aggregate cost for federal income tax purposes
 
$
4,049,249

 
$
4,327,077

Gross unrealized appreciation
 
4,959,447

 
5,408,242

Gross unrealized depreciation
 

 

Net unrealized appreciation
 
$
4,959,447

 
$
5,408,242

Property and Equipment (Tables)
Property and Equipment
Property and equipment consists of the following:
Property and Equipment
 
 
March 31, 2017
 
December 31, 2016
Land
 
$
580,000

 
$
580,000

Natural gas pipeline
 
124,288,156

 
124,288,156

Vehicles and trailers
 
570,267

 
570,267

Office equipment and computers
 
267,095

 
267,095

Gross property and equipment
 
$
125,705,518

 
$
125,705,518

Less: accumulated depreciation
 
(10,131,025
)
 
(9,292,712
)
Net property and equipment
 
$
115,574,493

 
$
116,412,806



Depreciation of property and equipment is as follows:
 
For the Three Months Ended
 
March 31, 2017
 
March 31, 2016
Depreciation Expense
$
838,313

 
$
834,905

Fair Value (Tables)
The following tables set forth the Company's assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of March 31, 2017, and December 31, 2016.
March 31, 2017
 
 
March 31, 2017
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Other equity securities
 
$
8,563,297

 
$

 
$

 
$
8,563,297

Interest Rate Swap Derivative
 
50,689

 

 
50,689

 

Total Assets
 
$
8,613,986

 
$

 
$
50,689

 
$
8,563,297

December 31, 2016
 
 
December 31, 2016
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Other equity securities
 
$
9,287,209

 
$

 
$

 
$
9,287,209

Interest Rate Swap Derivative
 
19,950

 

 
19,950

 

Total Assets
 
$
9,307,159

 
$

 
$
19,950

 
$
9,287,209

The changes for all Level 3 securities measured at fair value on a recurring basis using significant unobservable inputs for the three months ended March 31, 2017 and 2016, are as follows:
Level 3 Rollforward
For the Three Months Ended March 31, 2017
 
Fair Value Beginning Balance
 
Acquisitions
 
Disposals
 
Total Realized and Unrealized Gains/(Losses) Included in Net Income
 
Return of Capital Adjustments Impacting Cost Basis of Securities
 
Fair Value Ending Balance
 
Changes in Unrealized Losses, Included In Net Income, Relating to Securities Still Held (1)
Other equity securities
 
$
9,287,209

 
$

 
$

 
$
(544,208
)
 
$
(179,704
)
 
$
8,563,297

 
$
(544,208
)
Total
 
$
9,287,209

 
$

 
$

 
$
(544,208
)
 
$
(179,704
)
 
$
8,563,297

 
$
(544,208
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other equity securities
 
$
8,393,683

 
$

 
$

 
$
(1,672,081
)
 
$
115,840

 
$
6,837,442

 
$
(1,672,081
)
Total
 
$
8,393,683

 
$

 
$

 
$
(1,672,081
)
 
$
115,840

 
$
6,837,442

 
$
(1,672,081
)
(1) Located in Net realized and unrealized gain on other equity securities in the Consolidated Statements of Income

Certain condensed combined unaudited financial information of the unconsolidated affiliate, Lightfoot, is presented in the following tables (in thousands):
 
 
March 31, 2017
 
December 31, 2016
 
 
(Unaudited)
 
(Unaudited)
Assets
 
 
 
 
Current assets
 
$
16,182

 
$
20,412

Noncurrent assets
 
696,341

 
698,745

Total Assets
 
$
712,523

 
$
719,157

Liabilities
 
 
 
 
Current liabilities
 
$
13,593

 
$
14,718

Noncurrent liabilities
 
268,891

 
268,805

Total Liabilities
 
$
282,484

 
$
283,523

 
 
 
 
 
Partner's equity
 
430,039

 
435,634

Total liabilities and partner's equity
 
$
712,523

 
$
719,157

 
 
For the Three Months Ended
 
 
(Unaudited)
 
 
March 31, 2017
 
March 31, 2016
Revenues
 
$
25,925

 
$
26,067

Operating expenses
 
22,471

 
22,072

Income (Loss) from Operations
 
$
3,454

 
$
3,995

Other income
 
1,910

 
2,374

Net Income
 
$
5,364

 
$
6,369

Less: Net Income attributable to non-controlling interests
 
(3,130
)
 
(4,007
)
Net Income attributable to Partner's Capital
 
$
2,234

 
$
2,362

Carrying and Fair Value Amounts
 
 
Level within fair value hierarchy
 
March 31, 2017
 
December 31, 2016
 
 
 
Carrying
Amount (1)
 
Fair Value
 
Carrying
Amount
 
Fair Value
Financial Assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
Level 1
 
$
11,375,702

 
$
11,375,702

 
$
7,895,084

 
$
7,895,084

Financing notes receivable (Note 4)
 
Level 3
 
$
1,500,000

 
$
1,500,000

 
$
1,500,000

 
$
1,500,000

Financial Liabilities:
 
 
 
 
 
 
 
 
Secured Credit Facilities
 
Level 2
 
$
86,992,738

 
$
86,992,738

 
$
89,387,985

 
$
89,387,985

Unsecured convertible senior notes
 
Level 1
 
$
111,441,691

 
$
127,300,380

 
$
111,244,895

 
$
129,527,940

(1) The carrying value of debt balances are presented net of unamortized original issuance discount and debt issuance costs.
Credit Facilities (Tables)
The following is a summary of the Company's debt facilities and balances as of March 31, 2017, and December 31, 2016:
 
Total Commitment
 or Original Principal
 
Quarterly Principal Payments
 
 
 
March 31, 2017
 
December 31, 2016
 
 
 
Maturity
Date
 
Amount Outstanding
 
Interest
Rate
 
Amount Outstanding
 
Interest
Rate
7% Unsecured Convertible Senior Notes
$
115,000,000

 
$

 
6/15/2020
 
$
114,000,000

 
7.00
%
 
$
114,000,000

 
7.00
%
CorEnergy Secured Credit Facility:
 
 
 
 
 
 
 
 
 
 
 
 
 
CorEnergy Revolver
$
105,000,000

 
$

 
12/15/2019
 
44,000,000

 
3.99
%
 
44,000,000

 
3.76
%
CorEnergy Term Loan
$
45,000,000

 
$
1,615,000

 
12/15/2019
 
35,125,000

 
3.98
%
 
36,740,000

 
3.74
%
MoGas Revolver
$
3,000,000

 
$

 
12/15/2019
 

 
3.98
%
 

 
3.77
%
Omega Line of Credit
$
1,500,000

 
$

 
7/31/2017
 

 
4.98
%
 

 
4.77
%
Pinedale Secured Credit Facility:
 
 
 
 
 
 
 
 
 
 
 
 
 
$58.5M Term Loan – related party (1)
$
11,085,750

 
$
167,139

 
3/30/2021
 
8,061,844

 
8.00
%
 
8,860,577

 
8.00
%
Total Debt
 
$
201,186,844

 
 
 
$
203,600,577

 
 
Less:
 
 
 
 
 
 
 
 
Unamortized deferred financing costs (2)
 
$
350,976

 
 
 
$
381,531

 
 
Unamortized discount on 7% Convertible Senior Notes
 
2,401,439

 
 
 
2,586,166

 
 
Long-term debt, net of deferred financing costs
 
$
198,434,429

 
 
 
$
200,632,880

 
 
Debt due within one year
 
$
7,128,556

 
 
 
$
7,128,556

 
 
(1) $47,414,250 of the original $58.5 million term loan is payable to CorEnergy under the same terms, and eliminates in consolidation.
(2) A portion of the unamortized deferred financing costs, related to our revolving credit facilities, are included in Deferred Costs in the Assets section of the Consolidated Balance Sheets. See the next table for deferred financing costs included in the Asset section of the Consolidated Balance Sheets.
Deferred Financing Cost Amortization Expense(1)(2)
 
For the Three Months Ended
 
March 31, 2017
 
March 31, 2016
CorEnergy Credit Facility
$
272,074

 
$
262,302

Pinedale Credit Facility

 
156,330

Total Deferred Debt Cost Amortization
$
272,074

 
$
418,632

(1) Amortization of deferred debt issuance costs is included in interest expense in the Consolidated Statements of Income.
(2) For the amount of deferred debt costs amortization relating to the Convertible Notes included in the Consolidated Statements of Income, see the Convertible Debt footnote.
Deferred Financing Costs, net (1)
 
 
March 31, 2017
 
December 31, 2016
CorEnergy Credit Facility
 
$
1,914,929

 
$
2,168,518

(1) This is the portion of deferred financing costs which relate to a revolving credit facility and are not presented as a reduction to Long-term debt but rather as Deferred Costs in the Asset section of the Consolidated Balance Sheets.
The remaining contractual principal payments as of March 31, 2017 under the CorEnergy and Pinedale credit facilities are as follows:
Total Remaining Contractual Payments
Year
 
CorEnergy
Revolver
 
CorEnergy Term Loan
 
Pinedale Credit Facility
 
Total
2017
 
$

 
$
4,845,000

 
$
501,416

 
$
5,346,416

2018
 

 
6,460,000

 
668,556

 
7,128,556

2019
 
44,000,000

 
23,820,000

 
668,556

 
68,488,556

2020
 

 

 
668,556

 
668,556

2021
 

 

 
5,554,760

 
5,554,760

Thereafter
 

 

 

 

Total
 
$
44,000,000

 
$
35,125,000

 
$
8,061,844

 
$
87,186,844

Convertible Debt (Tables)
Components of convertible debt
The following is a summary of the impact of Convertible Notes on interest expense for the three months ended March 31, 2017 and 2016, respectively:
Convertible Note Interest Expense
 
 
For the Three Months Ended
 
 
March 31, 2017
 
March 31, 2016
7% Convertible Notes
 
$
1,995,000

 
$
2,012,500

Discount Amortization
 
184,728

 
188,235

Deferred Debt Issuance Amortization
 
12,069

 
12,255

Total
 
$
2,191,797

 
$
2,212,990

Earnings Per Share (Tables)
Computation of basic and diluted earnings per share
Diluted EPS for the three months ended March 31, 2017 and 2016 excludes the impact to income and the number of shares outstanding from the conversion of the 7.00% Convertible Senior Notes, because such impact would be antidilutive.
Earnings Per Share
 
For the Three Months Ended
 
March 31, 2017
 
March 31, 2016
Net income attributable to CorEnergy stockholders
$
7,669,478

 
$
3,391,121

Less: preferred dividend requirements
1,037,109

 
1,037,109

Net income attributable to common stockholders
$
6,632,369

 
$
2,354,012

Weighted average shares - basic
11,888,681

 
11,943,938

Basic earnings (loss) per share
$
0.56

 
$
0.20

 
 
 
 
Net income attributable to common stockholders (from above)
$
6,632,369

 
$
2,354,012

Add: After tax effect of convertible interest (1)

 

Income attributable for dilutive securities
$
6,632,369

 
$
2,354,012

Weighted average shares - diluted
11,888,681

 
11,943,938

Diluted earnings (loss) per share
$
0.56

 
$
0.20

(1) The interest amounts in this line include the amortization of deferred costs and the amortization of the discount on the Convertible Notes. There is no income tax effect due to the Company's REIT status.
Leased Properties and Leases (Details) (USD $)
3 Months Ended 12 Months Ended 3 Months Ended 3 Months Ended
Mar. 31, 2017
leased_property
Mar. 31, 2017
Minimum [Member]
Mar. 31, 2017
Maximum [Member]
Mar. 31, 2017
Grand Isle Gathering System [Member]
mi
acre
Jun. 30, 2018
Grand Isle Gathering System [Member]
Forecast [Member]
Jun. 30, 2017
Grand Isle Gathering System [Member]
Forecast [Member]
Mar. 31, 2017
Pinedale Liquids Gathering System [Member]
facility
mi
Mar. 31, 2017
Pinedale Liquids Gathering System [Member]
Prudential [Member]
Limited Partner [Member]
Mar. 31, 2017
Pinedale Liquids Gathering System [Member]
Pinedale LP [Member]
General Partner [Member]
Mar. 31, 2017
Portland Terminal Facility [Member]
acre
tank
bbl
Sale Leaseback Transaction [Line Items]
 
 
 
 
 
 
 
 
 
 
Number of significant leased properties
 
 
 
 
 
 
 
 
 
Initial Lease Term
 
11 years 
15 years 
11 years 
 
 
15 years 
 
 
15 years 
Length of offshore pipeline (in miles)
 
 
 
153 
 
 
150 
 
 
 
Pipeline capacity (in bbl/day)
 
 
 
120,000 
 
 
 
 
 
 
Number of acres in the onshore terminal and saltwater disposal system (in acres)
 
 
 
16 
 
 
 
 
 
 
Number of storage facilities
 
 
 
 
 
 
 
 
 
Acres owned (in acres)
 
 
 
 
 
 
 
 
 
39 
Number of tanks
 
 
 
 
 
 
 
 
 
84 
Crude oil and petroleum product storage capacity (in bbl)
 
 
 
 
 
 
 
 
 
1,500,000 
Renewal Option
 
 
 
9 years 
 
 
5 years 
 
 
5 years 
Renewal Term, percentage of remaining useful life
 
 
 
75.00% 
 
 
 
 
 
 
Current Monthly Rent Payments
 
 
 
 
$ 2,854,667 
$ 2,826,250 
$ 1,741,933 
 
 
$ 513,355 
Initial Estimated Useful Life
 
 
 
27 years 
 
 
26 years 
 
 
30 years 
Ownership percentage
 
 
 
 
 
 
 
18.95% 
81.05% 
 
Leased Properties and Leases - Future Minimum Lease Receipts (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Sale Leaseback Transaction [Line Items]
 
2017
$ 45,937,056 
2018
61,356,965 
2019
63,750,535 
2020
70,919,225 
2021
77,101,146 
Thereafter
376,854,030 
Total
$ 695,918,957 
Portland Terminal Facility [Member]
 
Sale Leaseback Transaction [Line Items]
 
Initial lease term
15 years 
Exercise period of purchase option
90 days 
Leased Properties and Leases - Significant Leases (Details)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Pinedale LGS [Member]
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Percentage of total leased properties
39.80% 
 
39.80% 
Percentage of leased property revenue
30.60% 
30.40% 
 
Grand Isle Gathering System [Member]
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Percentage of total leased properties
50.10% 
 
50.00% 
Percentage of leased property revenue
59.60% 
59.80% 
 
Portland Terminal Facility [Member]
 
 
 
Operating Leased Assets [Line Items]
 
 
 
Percentage of total leased properties
9.90% 
 
9.90% 
Percentage of leased property revenue
9.70% 
9.70% 
 
Leased Properties and Leases - Amortization and Depreciation Expense (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Sale Leaseback Transaction [Line Items]
 
 
 
Depreciation Expense
$ 838,313 
$ 834,905 
 
All Properties [Member]
 
 
 
Sale Leaseback Transaction [Line Items]
 
 
 
Depreciation Expense
4,983,983 
4,254,848 
 
Amortization Expense - Deferred Lease Costs
22,983 
22,983 
 
ARO Accretion Expense
160,629 
184,082 
 
Net Deferred Lease Costs
940,549 
 
963,532 
GIGS [Member]
 
 
 
Sale Leaseback Transaction [Line Items]
 
 
 
Depreciation Expense
2,438,649 
2,143,722 
 
Amortization Expense - Deferred Lease Costs
7,641 
7,641 
 
ARO Accretion Expense
160,629 
184,082 
 
Net Deferred Lease Costs
282,806 
 
290,447 
Pinedale [Member]
 
 
 
Sale Leaseback Transaction [Line Items]
 
 
 
Depreciation Expense
2,217,360 
2,217,360 
 
Amortization Expense - Deferred Lease Costs
15,342 
15,342 
 
Net Deferred Lease Costs
657,743 
 
673,085 
Portland Terminal Facility [Member]
 
 
 
Sale Leaseback Transaction [Line Items]
 
 
 
Depreciation Expense
318,915 
(113,659)
 
United Property Systems [Member]
 
 
 
Sale Leaseback Transaction [Line Items]
 
 
 
Depreciation Expense
$ 9,059 
$ 7,425 
 
Financing Notes Receivable (Details) (USD $)
3 Months Ended 3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
Loans Agreement [Member]
Subsidiaries [Member]
Mar. 31, 2017
SWD Enterprises [Member]
Mar. 31, 2016
BB Intermediate [Member]
Feb. 29, 2016
BB Intermediate [Member]
Oct. 1, 2016
SWD Enterprises [Member]
Oct. 1, 2016
SWD Enterprises [Member]
REIT Loan [Member]
Mar. 31, 2017
SWD Enterprises [Member]
TRS Loan [Member]
Dec. 31, 2016
SWD Enterprises [Member]
TRS Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
 
 
 
 
 
 
 
 
Provision for loan loss
$ 0 
$ 4,645,188 
 
$ 3,500,000 
$ 463,000 
 
 
 
 
 
Equity interest percentage
 
 
 
 
 
100.00% 
 
 
 
 
Outstanding loan balance
 
 
2,000,000 
 
 
 
 
 
 
 
Deferred origination costs
 
 
 
71,000 
 
 
 
 
 
 
Interest accrued
 
 
 
98,000 
 
 
 
 
 
 
Financing receivable
 
 
 
 
 
 
 
$ 4,000,000 
$ 1,500,000 
$ 1,500,000 
Reduction in interest rate
 
 
 
 
 
 
10.00% 
 
 
 
Income Taxes - Deferred Tax Assets and Liabilities (Details) (USD $)
Mar. 31, 2017
Dec. 31, 2016
Deferred Tax Assets:
 
 
Net operating loss carryforwards
$ 1,209,892 
$ 1,144,818 
Net unrealized loss on investment securities
272,474 
61,430 
Cost recovery of leased and fixed assets
705,505 
739,502 
Loan Loss Provision
608,086 
608,086 
Other loss carryforwards
3,536,701 
3,187,181 
Sub-total
6,332,658 
5,741,017 
Deferred Tax Liabilities:
 
 
Basis reduction of investment in partnerships
(2,195,747)
(2,158,746)
Cost recovery of leased and fixed assets
(2,079,776)
(1,823,982)
Sub-total
(4,275,523)
(3,982,728)
Total net deferred tax asset
$ 2,057,135 
$ 1,758,289 
Income Taxes (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Income Taxes (Textual) [Abstract]
 
 
 
Federal statutory income tax rate
35.00% 
35.00% 
 
NOL expiring in 2033 if not utilized
 
 
$ 90,000 
NOL expiring in 2034 if not utilized
 
 
804,000 
NOL expiring in 2035 if not utilized
 
 
479,000 
NOL expiring in 2036 if not utilized
1,700,000 
 
 
Subsidiaries [Member]
 
 
 
Income Taxes (Textual) [Abstract]
 
 
 
Net operating loss for federal income tax purposes
 
 
$ 3,000,000 
State [Member] |
Subsidiaries [Member]
 
 
 
Income Taxes (Textual) [Abstract]
 
 
 
Blended state tax rate
3.78% 
2.82% 
 
State [Member] |
MISSOURI |
Mowood LLC [Member]
 
 
 
Income Taxes (Textual) [Abstract]
 
 
 
Blended state tax rate
5.00% 
5.00% 
 
Income Taxes - Income Tax Expense(Benefit) (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Total income tax expense (benefit) differs from the amount computed by applying the federal statutory income tax rates net investment income and net realized and unrealized gains on investments
 
 
Application of statutory income tax rate
$ 2,567,905 
$ 747,599 
State income taxes, net of federal tax (benefit)
(35,437)
(83,260)
Federal Tax Attributable to Income of Real Estate Investment Trust
(2,865,074)
(1,919,465)
Income tax benefit
$ (332,606)
$ (1,255,126)
Income Taxes - Components of Income Tax Expense(Benefit) (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Current tax expense (benefit)
 
 
Federal
$ (30,469)
$ (627,197)
State (net of federal tax benefit)
(3,291)
(50,534)
Total current tax expense (benefit)
(33,760)
(677,731)
Deferred tax expense (benefit)
 
 
Federal
(266,700)
(544,669)
State (net of federal tax benefit)
(32,146)
(32,726)
Total deferred tax expense (benefit)
(298,846)
(577,395)
Income tax benefit
$ (332,606)
$ (1,255,126)
Income Taxes - Aggregate Cost of Securities for Income Tax Purposes (Details) (USD $)
Mar. 31, 2017
Dec. 31, 2016
Aggregate cost of securities for federal income tax purposes and securities with unrealized appreciation and depreciation
 
 
Aggregate cost for federal income tax purposes
$ 4,049,249 
$ 4,327,077 
Gross unrealized appreciation
4,959,447 
5,408,242 
Gross unrealized depreciation
Net unrealized appreciation
$ 4,959,447 
$ 5,408,242 
Property and Equipment (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Component of property and equipment
 
 
 
Gross property and equipment
$ 125,705,518 
 
$ 125,705,518 
Less: accumulated depreciation
(10,131,025)
 
(9,292,712)
Net property and equipment
115,574,493 
 
116,412,806 
Depreciation Expense
838,313 
834,905 
 
Land [Member]
 
 
 
Component of property and equipment
 
 
 
Gross property and equipment
580,000 
 
580,000 
Natural gas pipeline [Member]
 
 
 
Component of property and equipment
 
 
 
Gross property and equipment
124,288,156 
 
124,288,156 
Vehicles and trailers [Member]
 
 
 
Component of property and equipment
 
 
 
Gross property and equipment
570,267 
 
570,267 
Office equipment and computers [Member]
 
 
 
Component of property and equipment
 
 
 
Gross property and equipment
$ 267,095 
 
$ 267,095 
Property and Equipment - Additional Information (Details) (USD $)
3 Months Ended 0 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Jun. 16, 2016
Expedition Water Solutions [Member]
Wells and Related Equipment [Member]
Jun. 16, 2016
Expedition Water Solutions [Member]
Wells and Related Equipment [Member]
Accounts and Other Receivables [Member]
Feb. 29, 2016
BB Intermediate [Member]
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Equity interest percentage
 
 
 
 
100.00% 
Proceeds from disposal of assets
$ 0 
$ 223,451 
$ 748,000 
 
 
Future cash payments from sale of assets
 
 
6,500,000 
 
 
Fair value of future cash payments
 
 
 
$ 450,000 
 
Management Agreement (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
General and Administrative Expense |
Corridor Infra Trust Management
 
 
Management Agreement [Line Items]
 
 
Management fee
$ 1,800,000 
$ 1,800,000 
Administrative fee
67,000 
67,000 
New Management Agreement
 
 
Management Agreement [Line Items]
 
 
Incentive fees waived
9,000 
 
Payments for incentive fees
$ 149,000 
 
Fair Value - Assets and Liabilities Measured on a Recurring Basis (Details) (Fair Value, Measurements, Recurring [Member], USD $)
Mar. 31, 2017
Dec. 31, 2016
Assets:
 
 
Other equity securities
$ 8,563,297 
$ 9,287,209 
Total Assets
8,613,986 
9,307,159 
Interest Rate Swap [Member]
 
 
Assets:
 
 
Derivative asset
50,689 
19,950 
Level 1 [Member]
 
 
Assets:
 
 
Other equity securities
Total Assets
Level 1 [Member] |
Interest Rate Swap [Member]
 
 
Assets:
 
 
Derivative asset
Level 2 [Member]
 
 
Assets:
 
 
Other equity securities
Total Assets
50,689 
19,950 
Level 2 [Member] |
Interest Rate Swap [Member]
 
 
Assets:
 
 
Derivative asset
50,689 
19,950 
Level 3 [Member]
 
 
Assets:
 
 
Other equity securities
8,563,297 
9,287,209 
Total Assets
8,563,297 
9,287,209 
Level 3 [Member] |
Interest Rate Swap [Member]
 
 
Assets:
 
 
Derivative asset
$ 0 
$ 0 
Fair Value (Details) (USD $)
3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended
Mar. 31, 2017
Lightfoot Capital Partners LP [Member]
Dec. 31, 2016
Lightfoot Capital Partners LP [Member]
Mar. 31, 2017
Minimum [Member]
Lightfoot Capital Partners LP [Member]
Dec. 31, 2016
Minimum [Member]
Lightfoot Capital Partners LP [Member]
Mar. 31, 2017
Maximum [Member]
Lightfoot Capital Partners LP [Member]
Dec. 31, 2016
Maximum [Member]
Lightfoot Capital Partners LP [Member]
Mar. 30, 2016
Cash Flow Hedging [Member]
Instrument
Mar. 30, 2016
Pinedale Credit Facilities [Member]
Key Bank [Member]
Mar. 31, 2017
Lightfoot Capital Partners LP [Member]
Mar. 31, 2017
Lightfoot Capital Partners LP [Member]
Arc Logistics Partners LP [Member]
Schedule of Equity Method Investments [Line Items]
 
 
 
 
 
 
 
 
 
 
Number of instruments terminated
 
 
 
 
 
 
 
 
 
Notional amount
 
 
 
 
 
 
$ 26,300,000 
 
 
 
Maximum borrowing capacity
 
 
 
 
 
 
 
$ 70,000,000 
 
 
Discount rate percentage
 
 
15.90% 
15.30% 
17.90% 
17.30% 
 
 
 
 
Equity interest percentage
6.60% 
1.50% 
 
 
 
 
 
 
 
 
Receiving and regasification terminal, volume per day (bcf/d)
 
 
 
 
 
 
 
 
1.5 
 
Limited partner interest
 
 
 
 
 
 
 
 
 
40.00% 
Fair Value - Changes in Level 3 Securities (Details) (Level 3 [Member], USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair Value Beginning Balance
$ 9,287,209 
$ 8,393,683 
Acquisitions
Disposals
Total Realized and Unrealized Gains/(Losses) Included in Net Income
(544,208)
(1,672,081)
Return of Capital Adjustments Impacting Cost Basis of Securities
(179,704)
115,840 
Fair Value Ending Balance
8,563,297 
6,837,442 
Changes in Unrealized Losses, Included In Net Income, Relating to Securities Still Held
(544,208)
(1,672,081)
Other Equity Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair Value Beginning Balance
9,287,209 
8,393,683 
Acquisitions
Disposals
Total Realized and Unrealized Gains/(Losses) Included in Net Income
(544,208)
(1,672,081)
Return of Capital Adjustments Impacting Cost Basis of Securities
(179,704)
115,840 
Fair Value Ending Balance
8,563,297 
6,837,442 
Changes in Unrealized Losses, Included In Net Income, Relating to Securities Still Held
$ (544,208)
$ (1,672,081)
Fair Value - Balance Sheet of Unconsolidated Affiliate (Details) (USD $)
Mar. 31, 2017
Dec. 31, 2016
Assets
 
 
Total Assets
$ 649,346,368 
$ 650,732,571 
Liabilities
 
 
Total Liabilities
217,085,799 
216,823,091 
Reported Value Measurement [Member] |
Unconsolidated Affiliates [Member]
 
 
Assets
 
 
Current assets
16,182 
20,412 
Noncurrent assets
696,341 
698,745 
Total Assets
712,523 
719,157 
Liabilities
 
 
Current liabilities
13,593 
14,718 
Noncurrent liabilities
268,891 
268,805 
Total Liabilities
282,484 
283,523 
Partner's equity
430,039 
435,634 
Total liabilities and partner's equity
$ 712,523 
$ 719,157 
Fair Value - Income Statement of Unconsolidated Affiliate (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Schedule of Equity Method Investments [Line Items]
 
 
Revenues
$ 22,077,116 
$ 22,257,867 
Other income
(3,955,143)
(5,179,188)
Net Income
8,051,861 
3,739,622 
Less: Net Income attributable to non-controlling interests
(382,383)
(348,501)
Reported Value Measurement [Member] |
Unconsolidated Affiliates [Member]
 
 
Schedule of Equity Method Investments [Line Items]
 
 
Revenues
25,925 
26,067 
Operating expenses
22,471 
22,072 
Income (Loss) from Operations
3,454 
3,995 
Other income
1,910 
2,374 
Net Income
5,364 
6,369 
Less: Net Income attributable to non-controlling interests
(3,130)
(4,007)
Net Income attributable to Partner's Capital
$ 2,234 
$ 2,362 
Fair Value - Carrying and Fair Value Amounts (Details) (USD $)
Mar. 31, 2017
Dec. 31, 2016
Carrying Amount [Member] |
Level 1 [Member]
 
 
Financial Assets:
 
 
Cash and cash equivalents
$ 11,375,702 
$ 7,895,084 
Financial Liabilities:
 
 
Unsecured convertible senior notes
111,441,691 
111,244,895 
Carrying Amount [Member] |
Level 2 [Member]
 
 
Financial Liabilities:
 
 
Long-term debt
86,992,738 
89,387,985 
Carrying Amount [Member] |
Level 3 [Member]
 
 
Financial Assets:
 
 
Financing notes receivable
1,500,000 
1,500,000 
Fair Value [Member] |
Level 1 [Member]
 
 
Financial Assets:
 
 
Cash and cash equivalents
11,375,702 
7,895,084 
Financial Liabilities:
 
 
Unsecured convertible senior notes
127,300,380 
129,527,940 
Fair Value [Member] |
Level 2 [Member]
 
 
Financial Liabilities:
 
 
Long-term debt
86,992,738 
89,387,985 
Fair Value [Member] |
Level 3 [Member]
 
 
Financial Assets:
 
 
Financing notes receivable
$ 1,500,000 
$ 1,500,000 
Credit Facilities - Schedule of Debt (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Jun. 29, 2015
Debt Instrument [Line Items]
 
 
 
Amount Outstanding
$ 201,186,844 
$ 203,600,577 
 
Unamortized deferred financing costs
2,855,478 
3,132,050 
 
Total
198,434,429 
200,632,880 
 
Debt due within one year
7,128,556 
7,128,556 
 
7% Unsecured Convertible Senior Notes [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Unamortized discount
2,401,439 
2,586,166 
 
Convertible Debt and Line of Credit [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Unamortized deferred financing costs
350,976 
381,531 
 
Convertible Debt [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Unamortized discount
3,700,000 
 
 
Convertible Debt [Member] |
7% Unsecured Convertible Senior Notes [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Total Commitment or Original Principal
115,000,000 
 
115,000,000 
Quarterly Principal Payments
 
 
Amount Outstanding
114,000,000 
114,000,000 
 
Interest Rate
7.00% 
7.00% 
7.00% 
Line of Credit [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Total
87,186,844 
 
 
Line of Credit [Member] |
Revolving Credit Facility [Member] |
CorEnergy Revolver [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Total Commitment or Original Principal
105,000,000 
 
 
Quarterly Principal Payments
 
 
Amount Outstanding
44,000,000 
44,000,000 
 
Interest Rate
3.99% 
3.76% 
 
Total
44,000,000 
 
 
Line of Credit [Member] |
Revolving Credit Facility [Member] |
MoGas Revolver [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Total Commitment or Original Principal
3,000,000 
 
 
Quarterly Principal Payments
 
 
Amount Outstanding
 
Interest Rate
3.98% 
3.77% 
 
Line of Credit [Member] |
Revolving Credit Facility [Member] |
Omega Line of Credit [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Total Commitment or Original Principal
1,500,000 
 
 
Quarterly Principal Payments
 
 
Amount Outstanding
 
Interest Rate
4.98% 
4.77% 
 
Line of Credit [Member] |
Term Loan [Member] |
CorEnergy Term Loan [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Total Commitment or Original Principal
45,000,000 
 
 
Quarterly Principal Payments
1,615,000 
 
 
Amount Outstanding
35,125,000 
36,740,000 
 
Interest Rate
3.98% 
3.74% 
 
Total
35,125,000 
 
 
Line of Credit [Member] |
Term Loan [Member] |
$58.5M Term Loan [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Total Commitment or Original Principal
58,500,000.0 
 
 
Term loan payable to CorEnergy
47,414,250 
47,414,250 
 
Line of Credit [Member] |
Term Loan [Member] |
$58.5M Term Loan - Related Party, Less Amount Payable to CorEnergy [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Total Commitment or Original Principal
11,085,750 
 
 
Quarterly Principal Payments
167,139 
 
 
Amount Outstanding
$ 8,061,844 
$ 8,860,577 
 
Interest Rate
8.00% 
8.00% 
 
Credit Facilities - Deferred Financing Costs (Details) (USD $)
Mar. 31, 2017
Dec. 31, 2016
Debt Instrument [Line Items]
 
 
Deferred debt financing costs, net
$ 2,855,478 
$ 3,132,050 
Deferred Costs, Assets [Member] |
Line of Credit [Member] |
CorEnergy Credit Facility [Member]
 
 
Debt Instrument [Line Items]
 
 
Deferred debt financing costs, net
$ 1,914,929 
$ 2,168,518 
Credit Facilities - Amortization of Deferred Financing Costs (Details) (Interest Expense [Member], Line of Credit [Member], USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Debt Instrument [Line Items]
 
 
Total Deferred Debt Cost Amortization
$ 272,074 
$ 418,632 
CorEnergy Credit Facility [Member]
 
 
Debt Instrument [Line Items]
 
 
Total Deferred Debt Cost Amortization
272,074 
262,302 
Pinedale Credit Facility [Member]
 
 
Debt Instrument [Line Items]
 
 
Total Deferred Debt Cost Amortization
$ 0 
$ 156,330 
Credit Facilities - Long Term Debt Maturities (Details) (USD $)
Mar. 31, 2017
Dec. 31, 2016
Debt Instrument [Line Items]
 
 
Total
$ 198,434,429 
$ 200,632,880 
Line of Credit [Member]
 
 
Debt Instrument [Line Items]
 
 
2017
5,346,416 
 
2018
7,128,556 
 
2019
68,488,556 
 
2020
668,556 
 
2021
5,554,760 
 
Thereafter
 
Total
87,186,844 
 
Line of Credit [Member] |
Revolving Credit Facility [Member] |
CorEnergy Revolver [Member]
 
 
Debt Instrument [Line Items]
 
 
2017
 
2018
 
2019
44,000,000 
 
2020
   
 
2021
 
Thereafter
 
Total
44,000,000 
 
Line of Credit [Member] |
Revolving Credit Facility [Member] |
Pinedale Credit Facility [Member]
 
 
Debt Instrument [Line Items]
 
 
2017
501,416 
 
2018
668,556 
 
2019
668,556 
 
2020
668,556 
 
2021
5,554,760 
 
Thereafter
 
Total
8,061,844 
 
Line of Credit [Member] |
Term Loan [Member] |
CorEnergy Term Loan [Member]
 
 
Debt Instrument [Line Items]
 
 
2017
4,845,000 
 
2018
6,460,000 
 
2019
23,820,000 
 
2020
   
 
2021
 
Thereafter
 
Total
$ 35,125,000 
 
Credit Facilities (Details) (USD $)
3 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Dec. 31, 2016
Mar. 31, 2017
Pinedale Liquids Gathering System [Member]
Mar. 30, 2016
Key Bank [Member]
Secured Debt [Member]
Mar. 31, 2017
Key Bank [Member]
Secured Debt [Member]
Dec. 20, 2012
Key Bank [Member]
Secured Debt [Member]
Dec. 20, 2012
LIBOR [Member]
Key Bank [Member]
Secured Debt [Member]
Mar. 31, 2017
LIBOR [Member]
Key Bank [Member]
Secured Debt [Member]
Mar. 30, 2016
Maximum [Member]
LIBOR [Member]
Key Bank [Member]
Secured Debt [Member]
Mar. 30, 2016
Line of Credit [Member]
Revolving Credit Facility [Member]
Mar. 31, 2017
Line of Credit [Member]
Revolving Credit Facility [Member]
Mar. 30, 2016
Line of Credit [Member]
Revolving Credit Facility [Member]
CorEnergy Revolver [Member]
Mar. 31, 2017
Line of Credit [Member]
Revolving Credit Facility [Member]
CorEnergy Revolver [Member]
Dec. 31, 2016
Line of Credit [Member]
Revolving Credit Facility [Member]
CorEnergy Revolver [Member]
Mar. 30, 2016
Pinedale Liquids Gathering System [Member]
Mar. 30, 2016
Pinedale Liquids Gathering System [Member]
Mar. 30, 2016
Pinedale Liquids Gathering System [Member]
Key Bank [Member]
Secured Debt [Member]
Mar. 30, 2016
Cash Flow Hedging [Member]
Instrument
Mar. 30, 2016
Interest Rate Swap [Member]
Cash Flow Hedging [Member]
Instrument
Mar. 31, 2017
Series A Cumulative Redeemable Preferred Stock [Member]
Preferred Stock [Member]
Jan. 27, 2015
Series A Cumulative Redeemable Preferred Stock [Member]
Preferred Stock [Member]
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Borrowed against the revolver
$ 0 
$ 44,000,000 
 
 
 
 
 
 
 
 
$ 44,000,000 
 
 
 
 
 
 
 
 
 
 
 
Available borrowing capacity
 
 
 
 
 
 
 
 
 
 
 
53,300,000 
 
 
 
 
 
 
 
 
 
 
Extinguishment of debt
 
 
 
 
 
 
 
 
 
 
 
 
44,000,000 
44,000,000 
 
 
 
 
 
 
 
 
Debt instrument coupon rate
 
 
 
 
 
 
 
 
 
 
 
 
 
3.99% 
3.76% 
 
 
 
 
 
7.375% 
7.375% 
Maximum borrowing capacity
 
 
 
 
 
 
70,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basis spread on variable rate
 
 
 
 
1.00% 
 
 
3.25% 
4.25% 
7.00% 
 
 
 
 
 
 
 
 
 
 
 
 
Principal payment through extension period
 
 
 
 
 
3,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal balance
86,992,738 
 
89,387,985 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
58,500,000 
 
 
 
 
Non controlling economic interest pinedale GP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
81.05% 
 
 
 
 
 
 
Value of economic interest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
47,400,000 
 
 
 
 
 
Number of instruments terminated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flow hedge terminated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26,300,000 
 
 
Total Assets
$ 649,346,368 
 
$ 650,732,571 
$ 146,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Convertible Debt (Details) (USD $)
0 Months Ended 3 Months Ended
May 23, 2016
Mar. 31, 2017
Convertible Senior Notes Due 2020 [Member]
Dec. 31, 2016
Convertible Senior Notes Due 2020 [Member]
Mar. 31, 2017
Convertible Debt [Member]
Mar. 31, 2016
Convertible Debt [Member]
Mar. 31, 2017
Convertible Debt [Member]
Convertible Senior Notes Due 2020 [Member]
Mar. 31, 2016
Convertible Debt [Member]
Convertible Senior Notes Due 2020 [Member]
Dec. 31, 2016
Convertible Debt [Member]
Convertible Senior Notes Due 2020 [Member]
Jun. 29, 2015
Convertible Debt [Member]
Convertible Senior Notes Due 2020 [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
Principal amount
 
 
 
 
 
$ 115,000,000 
 
 
$ 115,000,000 
Coupon rate percentage
 
 
 
 
 
7.00% 
 
7.00% 
7.00% 
Repurchases of convertible debt
1,000,000 
 
 
 
 
 
 
 
 
Interest expense
 
 
 
2,191,797 
2,212,990 
1,995,000 
2,012,500 
 
 
Discount amortization
 
 
 
184,728 
188,235 
 
 
 
 
Deferred debt issuance amortization
 
 
 
12,069 
12,255 
 
 
 
 
Amount of underwriter's discount
 
$ 2,401,439 
$ 2,586,166 
$ 3,700,000 
 
 
 
 
 
Effective percentage
 
 
 
7.70% 
7.70% 
 
 
 
 
Stockholder's Equity (Details) (USD $)
3 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended
Mar. 31, 2017
Dec. 31, 2016
Feb. 18, 2016
Mar. 31, 2017
Depositary Shares [Member]
Mar. 31, 2017
Preferred Stock [Member]
Series A Cumulative Redeemable Preferred Stock [Member]
Jan. 27, 2015
Preferred Stock [Member]
Series A Cumulative Redeemable Preferred Stock [Member]
Jan. 27, 2015
Underwritten Public Offering [Member]
Depositary Shares [Member]
Mar. 31, 2017
Dividend Reinvestment Plan [Member]
Apr. 18, 2017
Subsequent Event [Member]
Underwritten Public Offering [Member]
Depositary Shares [Member]
Apr. 18, 2017
Subsequent Event [Member]
Dividend Reinvestment Plan [Member]
Class of Stock [Line Items]
 
 
 
 
 
 
 
 
 
 
Shares sold in offering (in shares)
 
 
 
 
 
 
2,250,000 
 
2,800,000 
 
Percent equivalent of preferred shares
 
 
 
1.00% 
 
 
 
 
 
 
Coupon rate percentage
 
 
 
 
7.375% 
7.375% 
 
 
 
 
Shares of common stock offered (in shares)
11,893,146 
11,886,216 
 
 
 
 
 
 
 
 
Aggregate offering price of shelf registration
 
 
$ 600,000,000 
 
 
 
 
 
 
 
Reinvestment of distributions to stockholders (in shares)
 
 
 
 
 
 
 
41,511 
 
 
Reinvestment of dividends paid to common stockholders
247,333 
 
 
 
 
 
 
1,100,000 
 
70,000,000 
Shelf registration after dividend reinvestment plan reduction
 
 
 
 
 
 
 
$ 598,900,000 
 
 
Earnings Per Share (Details) (USD $)
3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Mar. 31, 2017
Convertible Debt [Member]
Convertible Senior Notes Due 2020 [Member]
Dec. 31, 2016
Convertible Debt [Member]
Convertible Senior Notes Due 2020 [Member]
Jun. 29, 2015
Convertible Debt [Member]
Convertible Senior Notes Due 2020 [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
 
 
 
 
 
Debt instrument coupon rate
 
 
7.00% 
7.00% 
7.00% 
Net income attributable to CorEnergy stockholders
$ 7,669,478 
$ 3,391,121 
 
 
 
Less: preferred dividend requirements
1,037,109 
1,037,109 
 
 
 
Net Income attributable to Common Stockholders
6,632,369 
2,354,012 
 
 
 
Weighted average shares - basic (in shares)
11,888,681 
11,943,938 
 
 
 
Basic earnings (loss) per share (in dollars per share)
$ 0.56 
$ 0.20 
 
 
 
Add: After tax effect of convertible interest
 
 
 
Income attributable for dilutive securities
$ 6,632,369 
$ 2,354,012 
 
 
 
Weighted average shares - diluted (in shares)
11,888,681 
11,943,938 
 
 
 
Diluted earnings (loss) per share (in dollars per share)
$ 0.56 
$ 0.20 
 
 
 
Subsequent Events (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 3 Months Ended
Mar. 31, 2017
Mar. 31, 2016
Apr. 26, 2017
Common Stock [Member]
Subsequent Event [Member]
Apr. 18, 2017
Depositary Shares [Member]
Subsequent Event [Member]
Mar. 31, 2017
Series A Cumulative Redeemable Preferred Stock [Member]
Dec. 31, 2016
Series A Cumulative Redeemable Preferred Stock [Member]
Apr. 26, 2017
Series A Cumulative Redeemable Preferred Stock [Member]
Depositary Shares [Member]
Subsequent Event [Member]
Mar. 31, 2017
Series A Cumulative Redeemable Preferred Stock [Member]
Preferred Stock [Member]
Jan. 27, 2015
Series A Cumulative Redeemable Preferred Stock [Member]
Preferred Stock [Member]
Jan. 27, 2015
Underwritten Public Offering [Member]
Depositary Shares [Member]
Apr. 18, 2017
Underwritten Public Offering [Member]
Depositary Shares [Member]
Subsequent Event [Member]
Apr. 18, 2017
Underwritten Public Offering [Member]
Depositary Shares [Member]
Subsequent Event [Member]
Mar. 30, 2016
Line of Credit [Member]
CorEnergy Revolver [Member]
Revolving Credit Facility [Member]
Mar. 31, 2017
Line of Credit [Member]
CorEnergy Revolver [Member]
Revolving Credit Facility [Member]
Dec. 31, 2016
Line of Credit [Member]
CorEnergy Revolver [Member]
Revolving Credit Facility [Member]
Subsequent Event [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per share (in dollars per share)
$ 0.75 
$ 0.75 
$ 0.75 
 
 
 
 
 
 
 
 
 
 
 
 
Depositary stock, dividends declared per share (in dollars per share)
 
 
 
 
 
 
$ 0.4609375 
 
 
 
 
 
 
 
 
Coupon rate percentage
 
 
 
 
 
 
 
7.375% 
7.375% 
 
 
 
 
3.99% 
3.76% 
Shares sold in offering (in shares)
 
 
 
 
 
 
 
 
 
2,250,000 
2,800,000 
 
 
 
 
Price of share sold (in dollars per share)
 
 
 
 
 
 
 
 
 
 
 
$ 25.00 
 
 
 
Proceeds from sale of stock
 
 
 
 
 
 
 
 
 
 
$ 67.6 
 
 
 
 
Preferred stock, shares outstanding
 
 
 
5,050,000 
22,500 
22,500 
 
 
 
 
 
 
 
 
 
Extinguishment of debt
 
 
 
 
 
 
 
 
 
 
 
 
$ 44.0 
$ 44.0