SEMGROUP CORP, 10-K filed on 2/28/2019
Annual Report
v3.10.0.1
Document and Entity Information - USD ($)
12 Months Ended
Dec. 31, 2018
Jan. 31, 2019
Jun. 30, 2018
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2018    
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2018    
Entity Registrant Name SEMGROUP CORPORATION    
Entity Central Index Key 0001489136    
Current Fiscal Year End Date --12-31    
Entity Filer Category Large Accelerated Filer    
Entity Well-known Seasoned Issuer Yes    
Entity Public Float     $ 1,990,614,027
Entity Current Reporting Status No    
Entity Voluntary Filers No    
Entity Emerging Growth Company false    
Entity Small Business false    
Entity Shell Company false    
Class A [Member]      
Entity Common Stock, Shares Outstanding   79,155,214  
Class B      
Entity Common Stock, Shares Outstanding   0  
v3.10.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 86,655 $ 93,699
Accounts receivable (net of allowance of $2,244 and $2,628, respectively) 562,214 653,484
Receivable from affiliates 295 1,691
Inventories 49,397 101,665
Current assets held for sale 0 38,063
Other current assets 17,264 14,297
Total current assets 715,825 902,899
Property, plant and equipment (net of accumulated depreciation of $607,903 and $444,842, respectively) 3,457,326 3,315,131
Equity method investments 274,009 285,281
Goodwill 257,302 257,302
Other intangible assets (net of accumulated amortization of $90,014 and $56,409, respectively) 365,038 398,643
Other noncurrent assets, net 140,807 132,600
Noncurrent assets held for sale 0 84,961
Total assets 5,210,307 5,376,817
Current liabilities:    
Accounts payable 494,792 587,898
Payable to affiliates 3,715 6,971
Accrued liabilities 115,095 131,407
Deferred revenue 11,060 7,518
Current liabilities held for sale 0 23,847
Other current liabilities 6,495 3,395
Current portion of long-term debt 6,000 5,525
Total current liabilities 637,157 766,561
Long-term debt 2,278,834 2,853,095
Deferred income taxes 55,789 46,585
Other noncurrent liabilities 38,548 38,495
Noncurrent liabilities held for sale 0 13,716
Commitments and contingencies (Note 14)
Redeemable preferred stock, $0.01 par value, $367,360 liquidation preference (authorized - 4,000 shares; issued - 350 and 0 shares, respectively) 359,658 0
SemGroup Corporation owners’ equity:    
Common stock, $0.01 par value (authorized - 190,000 shares and 100,000 shares, respectively; issued - 79,270 and 79,708 shares, respectively) 786 786
Additional paid-in capital 1,615,969 1,770,117
Treasury stock, at cost (126 and 1,024 shares, respectively) 705 8,031
Accumulated deficit (73,971) (50,706)
Accumulated other comprehensive loss (51,247) (53,801)
Total SemGroup Corporation owners’ equity 1,490,832 1,658,365
Stockholders' Equity Attributable to Noncontrolling Interest 349,489 0
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest 1,840,321 1,658,365
Total liabilities and owners’ equity $ 5,210,307 $ 5,376,817
v3.10.0.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Allowance for Doubtful Accounts Receivable, Current $ 2,244 $ 2,628
Accumulated depreciation 607,903 444,842
Accumulated amortization on other intangible assets $ 90,014 $ 56,409
Preferred Stock, Par or Stated Value Per Share $ 0.01 $ 0.01
Preferred Stock, Liquidation Preference, Value $ 367,360 $ 0
Preferred Stock, Shares Authorized 4,000,000 4,000,000
Preferred Stock, Shares Issued 350,000 0
Common Stock, Par or Stated Value Per Share $ 0.01 $ 0.01
Common stock shares authorized 190,000,000 100,000,000
Common stock shares issued 79,270,000 79,708,000
Treasury Stock, Common, Shares 126,000 1,024,000
v3.10.0.1
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Revenues:                      
Direct Financing Lease, Revenue                 $ 17,549 $ 5,843 $ 0
Total Revenues $ 611,863 $ 633,996 $ 595,794 $ 661,609 $ 606,806 $ 545,922 $ 473,089 $ 456,100 2,503,262 2,081,917 1,332,164
Expenses:                      
Cost of Goods Sold, Excluding Depreciation, Depletion, and Amortization                 1,823,095 1,514,891 873,431
Operating                 284,769 254,764 212,099
General and administrative                 91,568 113,779 84,183
Depreciation and amortization                 209,254 158,421 98,804
Loss (gain) on disposal or impairment, net (1,438) (383) 1,824 (3,566) (30,468) 41,625 (234) 2,410 (3,563) 13,333 16,048
Total expenses 578,129 608,825 578,799 639,370 548,679 591,067 465,640 449,802 2,405,123 2,055,188 1,284,565
Earnings from equity method investments 16,179 14,528 14,351 12,614 15,120 17,367 17,753 17,091 57,672 67,331 73,757
Loss on issuance of common units by equity method investee                 0 0 (41)
Operating income (loss) 49,913 39,699 31,346 34,853 73,247 (27,778) 25,202 23,389 155,811 94,060 121,315
Other expenses (income):                      
Interest expense                 149,714 103,009 62,650
Loss on early extinguishment of debt                 0 19,930 0
Foreign currency transaction loss (gain)                 9,501 (4,709) 4,759
Loss on sale or impairment of non-operated equity method investment                 0 0 30,644
Other expense (income), net                 (2,380) (4,632) (1,269)
Total other expenses, net 40,410 33,935 37,685 44,805 39,487 28,574 11,966 33,571 156,835 113,598 96,784
Income (loss) from continuing operations before income taxes 9,503 5,764 (6,339) (9,952) 33,760 (56,352) 13,236 (10,182) (1,024) (19,538) 24,531
Income tax expense (benefit) 6,531 (2,697) (3,613) 23,083 31,141 (37,249) 3,625 95 23,304 (2,388) 11,268
Income (loss) from continuing operations                 (24,328) (17,150) 13,263
Income (loss) from discontinued operations, net of income taxes                 0 0 (1)
Net income (loss) 2,972 8,461 (2,726) (33,035) $ 2,619 $ (19,103) $ 9,611 $ (10,277) (24,328) (17,150) 13,262
Preferred Stock Dividends, Income Statement Impact 6,430 6,317 6,211 4,832         23,790 0 0
Net Income (Loss) Available to Common Stockholders, Basic (5,879) 2,144 (8,937) (37,867)         (50,539) (17,150) 2,095
Less: net income attributable to noncontrolling interests 2,421 0 0 0         2,421 0 11,167
Net income (loss) attributable to SemGroup $ 551 $ 8,461 $ (2,726) $ (33,035)         (26,749) (17,150) 2,095
Other comprehensive income (loss):                      
Currency translation adjustments                 5,198 20,411 (14,224)
Other, net of income taxes                 (2,644) (298) (1,128)
Total other comprehensive income (loss)                 2,554 20,113 (15,352)
Comprehensive income (loss)                 (21,774) 2,963 (2,090)
Less: comprehensive income attributable to noncontrolling interests                 2,421 0 11,167
Comprehensive income (loss) attributable to SemGroup                 $ (24,195) $ 2,963 $ (13,257)
Net income (loss) attributable to SemGroup per common share (Note 19):                      
Basic $ (0.08) $ 0.03 $ (0.11) $ (0.48) $ 0.03 $ (0.25) $ 0.15 $ (0.16) $ (0.65) $ (0.24) $ 0.04
Diluted $ (0.08) $ 0.03 $ (0.11) $ (0.48) $ 0.03 $ (0.25) $ 0.15 $ (0.16) $ (0.65) $ (0.24) $ 0.04
Product [Member]                      
Revenue from Contract with Customer, Excluding Assessed Tax                 $ 1,907,436 $ 1,621,918 $ 1,009,409
Service [Member]                      
Revenue from Contract with Customer, Excluding Assessed Tax                 518,764 391,266 265,030
Other revenue [Member]                      
Revenue from Contract with Customer, Excluding Assessed Tax                 $ 59,513 $ 62,890 $ 57,725
v3.10.0.1
Consolidated Statements of Changes in Owners' Equity - USD ($)
$ in Thousands
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Treasury Stock [Member]
Accumulated Deficit [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Noncontrolling Interest [Member]
Beginning Balance at Dec. 31, 2015 $ 1,196,356 $ 439 $ 1,217,255 $ (5,593) $ (38,012) $ (58,562) $ 80,829
Net income (loss) 13,262       2,095   11,167
Other comprehensive income (loss), net of income taxes (15,352)         (15,352)  
Issuance of common stock 228,546 86 228,460        
Acquisition of Rose Rock's noncontrolling interest 137,392 133 198,381       (61,122)
Distributions to noncontrolling interests (32,133)           (32,133)
Dividends (92,910)   (92,910)        
Unvested dividend equivalent rights 587   521       66
Non-cash equity compensation 9,945   8,752       1,193
Issuance of common stock under compensation plans 1,237 1 1,236        
Treasury Stock, Value, Acquired, Cost Method (965)     (965)      
Ending Balance at Dec. 31, 2016 1,445,965 659 1,561,695 (6,558) (35,917) (73,914) 0
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification 288   (2,073)   2,361    
Net income (loss) (17,150)       (17,150)    
Other comprehensive income (loss), net of income taxes 20,113 0       20,113  
Dividends (129,925)   (129,925)        
Unvested dividend equivalent rights (1,033)   (1,033)        
Non-cash equity compensation 10,066   10,066   0    
Stock Issued During Period, Value, Acquisitions 330,341 124 330,217   0    
Issuance of common stock under compensation plans 1,173 3 1,170        
Treasury Stock, Value, Acquired, Cost Method (1,473)     (1,473)      
Ending Balance at Dec. 31, 2017 1,658,365 786 1,770,117 (8,031) (50,706) (53,801) 0
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification 11,513       11,513    
Net income (loss) (24,328)       (26,749)   2,421
Other comprehensive income (loss), net of income taxes 2,554 0 0 0 0 2,554 0
Distributions to noncontrolling interests (2,932)           (2,932)
Dividends (165,842)   (165,842)        
Unvested dividend equivalent rights (728)   (728)        
Non-cash equity compensation 11,398   11,398        
Noncontrolling Interest, Increase from Subsidiary Equity Issuance 350,000           350,000
Issuance of common stock under compensation plans 1,026 2 1,024        
Treasury Stock, Retired, Cost Method, Amount   (2)   8,031 (8,029)    
Treasury Stock, Value, Acquired, Cost Method (705)     (705)      
Ending Balance at Dec. 31, 2018 $ 1,840,321 $ 786 $ 1,615,969 $ (705) $ (73,971) $ (51,247) $ 349,489
v3.10.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Cash flows from operating activities:      
Net income (loss) $ (24,328) $ (17,150) $ 13,262
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Depreciation and amortization 209,254 158,421 98,804
Loss on disposal or impairment, net (3,563) 13,333 16,048
Equity earnings from investments (57,672) (67,331) (73,757)
Loss on issuance of common units by equity method investee 0 0 41
Loss on sale or impairment of non-operated equity method investment 0 0 30,644
Distributions from equity investments 57,625 66,748 76,442
Amortization and write down of debt issuance costs 7,651 6,221 7,561
Loss on early extinguishment of debt 0 19,930 0
Deferred tax expense (benefit) 8,311 (9,829) 8,447
Non-cash compensation expense 11,522 10,253 10,216
Provision for uncollectible accounts receivable, net of recoveries 390 165 (527)
Gain on pension curtailment 0 (3,008) 0
Inventory valuation adjustment 5,200 455 0
Foreign currency transaction loss (gain) 9,501 (4,709) 4,759
Changes in operating assets and liabilities (Note 22) 45,813 (33,023) (21,966)
Net cash provided by operating activities 269,704 140,476 169,974
Cash flows from investing activities:      
Capital expenditures (390,734) (462,713) (312,456)
Proceeds from sale of equity method investment and other long-lived assets 1,958 314,821 151
Investments in non-consolidated subsidiaries (7,781) (26,444) (4,188)
Payments to acquire business, net of cash acquired 0 294,239 0
Proceeds from sale of common units of equity method investee 0 0 60,483
Proceeds from Divestiture of Businesses, Net of Cash Divested 147,787 0 0
Distributions from equity method investments in excess of equity in earnings 19,100 28,774 27,726
Net cash provided by (used in) investing activities (229,670) (439,801) (228,284)
Cash flows from financing activities:      
Debt issuance costs (4,720) (11,116) (7,728)
Borrowings on credit facilities and issuance of senior unsecured notes 1,258,500 1,525,377 382,500
Principal payments on debt and other obligations (1,839,894) (1,052,428) (396,890)
Debt extinguishment costs 0 (16,293) 0
Proceeds from Noncontrolling Interests 350,000 0 0
Distributions to noncontrolling interests (2,932) 0 (32,133)
Proceeds from Issuance of Preferred Stock and Preference Stock 342,299 0 0
Repurchase of common stock for payment of statutory taxes due on equity-based compensation (705) (1,473) (965)
Dividends paid (148,482) (129,925) (92,910)
Proceeds from issuance of common stock under employee stock purchase plan 930 1,114 1,010
Proceeds from issuance of common shares, net of offering costs 0 0 223,025
Net cash provided by (used in) financing activities (45,004) 315,256 75,909
Effect of exchange rate changes on cash and cash equivalents (2,074) 3,552 (1,479)
Change in cash and cash equivalents (7,044) 19,483 16,120
Cash and cash equivalents at beginning of period 93,699 74,216 58,096
Cash and cash equivalents at end of period $ 86,655 $ 93,699 $ 74,216
v3.10.0.1
Overview
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Overview OVERVIEW
SemGroup Corporation is a Delaware corporation headquartered in Tulsa, Oklahoma that provides diversified services for end-users and consumers of crude oil, natural gas, natural gas liquids and refined products.
The accompanying consolidated financial statements include the activities of SemGroup Corporation and its subsidiaries. The terms “we,” “our,” “us,” “the Company” and similar language used in these notes to consolidated financial statements refer to SemGroup Corporation and its subsidiaries.
At December 31, 2018, our operating and reportable segments include the following:
our U.S. Liquids segment operates crude oil pipelines, truck transportation, storage, terminals and marketing businesses in the U.S. Additionally, we store, blend and transport refinery products and refinery feedstocks via pipeline, barge, rail, truck and ship and operate a residual fuel oil storage terminal in the U.S. Gulf Coast;
our U.S. Gas segment provides natural gas gathering, processing and marketing services. U.S. Gas aggregates gas supplies from the wellhead and provides various services to producers that condition the wellhead gas production for downstream markets; and
our Canada segment provides natural gas gathering and processing services in Alberta, Canada and owns working interests in, and operates, a network of natural gas gathering and transportation pipelines and natural gas processing plants.
Additionally, we own an 11.78% interest in the general partner of NGL Energy Partners LP ("NGL Energy") (NYSE: NGL). See Note 4 for discussion of the disposal of our Mexican asphalt business and our U.K. operations during the year ended December 31, 2018.
v3.10.0.1
Consolidation And Basis Of Presentation
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Consolidation and Basis of Presentation CONSOLIDATION AND BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.
Consolidated subsidiaries
Our consolidated financial statements include the accounts of our controlled subsidiaries. All significant transactions between our consolidated subsidiaries have been eliminated. Outside ownership interests in consolidated subsidiaries are reported as noncontrolling interests in the consolidated financial statements.
Proportionally consolidated assets
Our Canada segment owns undivided interests in certain natural gas gathering and processing assets, for which we record only our proportionate share of the assets on the consolidated balance sheets. The net book value of the property, plant and equipment recorded by us associated with these undivided interests is approximately $570.8 million at December 31, 2018. We serve as operator of these facilities and incur the costs of operating the facilities (recorded as operating expenses in the consolidated statements of operations) and charge the other owners, which are also customers, for their proportionate share of the costs (recorded as other revenue in the consolidated statements of operations).
Equity method investments
We own a 51% interest in White Cliffs Pipeline, LLC ("White Cliffs"), which we account for under the equity method as the other owners have substantive rights to participate in its management. White Cliffs is included in our U.S. Liquids segment.
We own an 11.78% interest in the general partner of NGL Energy Partners LP (NYSE: NGL) ("NGL Energy") which we account for under the equity method. Our investment in NGL Energy is included in Corporate and Other for segment reporting.
v3.10.0.1
Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Summary of Signifcant Accounting Policies SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES—The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts and disclosures in the financial statements. Our significant estimates include, but are not limited to: (1) allowances for doubtful accounts receivable; (2) estimated useful lives of assets, which impact depreciation and amortization; (3) estimated fair values used in impairment tests; (4) fair values of derivative instruments; (5) valuation allowances for
deferred tax assets; and (6) accrual and disclosure of contingent losses. Although management believes these estimates are reasonable, actual results could differ materially from these estimates.
CASH AND CASH EQUIVALENTS—Cash includes currency on hand and demand and time deposits with banks or other financial institutions. Cash equivalents include highly liquid investments with maturities of three months or less at the date of purchase. Balances at financial institutions may exceed federally insured limits.
ACCOUNTS RECEIVABLE—Accounts receivable are reported net of the allowance for doubtful accounts. Our assessment of the allowance for doubtful accounts is based on several factors, including the overall creditworthiness of our customers, existing economic conditions, and the amount and age of past due accounts. We enter into netting arrangements with certain counterparties to help mitigate credit risk. Receivables subject to netting are presented as gross receivables (with the related accounts payable also presented gross) until such time as the balances are settled. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are written off against the allowance for doubtful accounts only after all collection attempts have been exhausted.
In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which introduces new guidance for estimating credit losses on certain types of financial instruments based on expected losses and the timing of the recognition of such losses. For public entities, this ASU is effective for annual periods beginning after December 15, 2019, and interim periods within those years and early adoption is permitted in the year prior to the effective date. We will adopt this guidance in the first quarter of 2020. The impact is not expected to be material.
INVENTORY—Inventory consists of crude oil and is valued at the lower of cost or net realizable value, with cost generally determined using the weighted-average method. The cost of inventory includes applicable transportation costs.
We enter into exchanges with third parties whereby we acquire products that differ in location, grade, or delivery date from products we have available for sale. These exchanges are valued at cost, and although a transportation, location or product differential may be recorded, generally no gain or loss is recognized.
During the year ended December 31, 2018 and 2017, our U.S. Liquids segment recorded non-cash charges of $5.2 million and $0.5 million, respectively, to write-down crude oil inventory to the lower of cost or net realizable value. Asphalt inventory related to our former Mexican operations of $15.6 million was classified as held for sale at December 31, 2017.
PROPERTY, PLANT AND EQUIPMENT—Property, plant and equipment is recorded at cost. We capitalize costs that extend or increase the future economic benefits of property, plant and equipment, and expense maintenance costs that do not. When assets are disposed of, their cost and related accumulated depreciation are removed from the balance sheet, and any resulting gain or loss is recorded as a gain or loss on disposal or impairment in the consolidated statements of operations and comprehensive income (loss).
Our Canada segment operates plants which periodically undergo planned major maintenance activities, typically occurring every four to five years.  Planned major maintenance projects that do not increase the overall life or capacity of the related assets are recorded in operating expense as incurred, whereas major maintenance activity costs that materially increase the life or capacity of the underlying assets are capitalized. When maintenance expenses are recoverable from the producers who use the plants, they are recorded as revenue, and typically include a 10% overhead fee. 
Depreciation is calculated primarily using the straight-line method over the following estimated useful lives:
Pipelines and related facilities
10 – 31 years
Storage and terminal facilities
10 – 25 years
Natural gas gathering and processing facilities
10 – 31 years
Trucking equipment and other
3 – 7 years
Office property and equipment
3 – 31 years


Construction in process is reclassified to the fixed asset categories above and depreciation commences once the asset has been placed in-service.
LINEFILL—Pipelines and storage facilities generally require a minimum volume of product in the system to enable the system to operate. Such product, known as linefill, is generally not available to be withdrawn from the system. Linefill
owned by us in facilities operated by us is recorded at historical cost, is included in property, plant and equipment in the consolidated balance sheets, and is not depreciated. We also own linefill in third-party facilities, which is included in inventory on the consolidated balance sheets.
IMPAIRMENT OF LONG-LIVED ASSETS—We test long-lived asset groups for impairment when events or circumstances indicate that the net book value of the asset group may not be recoverable. We test an asset group for impairment by estimating the undiscounted cash flows expected to result from its use and eventual disposition. If the estimated undiscounted cash flows are lower than the net book value of the asset group, we then estimate the fair value of the asset group and record a reduction to the net book value of the assets and a corresponding impairment loss.
GOODWILL—We test goodwill for impairment on an annual basis, or more often if circumstances warrant, by estimating the fair value of the reporting unit to which the goodwill relates and comparing this fair value to the net book value of the reporting unit. If fair value is less than net book value, we reduce the book value accordingly and record a corresponding impairment loss. Our policy is to test goodwill for impairment on October 1 of each year.
FINITE-LIVED INTANGIBLE ASSETS—Finite-lived intangible assets are stated at cost, net of accumulated amortization, which is recorded on a straight-line or accelerated basis over the life of the asset. We review amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If such a review should indicate that the carrying amount of amortizable intangible assets is not recoverable, we reduce the carrying amount of such assets to fair value.
EQUITY METHOD INVESTMENTS—We account for an investment under the equity method when we have significant influence over, but not control of, the significant operating decisions of the investee. Under the equity method, we record in the consolidated statements of operations our share of the earnings or losses of the investee, with a corresponding adjustment to the investment balance on our consolidated balance sheet. When we receive a distribution from an equity method investee, we record a corresponding reduction to the investment balance. When an equity method investee issues additional ownership interests which dilute our ownership interest, we recognize a gain or loss in our consolidated statements of operations.
We assess our equity method investments for impairment when circumstances indicate that the carrying value may not be recoverable and record an impairment when a decline in value is considered to be other than temporary.
For equity method investments for which we do not expect financial information to be consistently available on a timely basis to apply the equity method currently, our policy is to apply the equity method consistently on a one-quarter lag.
DEBT ISSUANCE COSTS—Costs incurred in connection with the issuance of long-term debt are reported as a reduction to the carrying value of the associated debt instrument and are amortized to interest expense using the straight-line method over the term of the related debt. Use of the straight-line method of amortization does not differ materially from the “effective interest” method.
Capitalized loan fees related to our revolving credit facility are presented as other noncurrent assets.
COMMODITY DERIVATIVE INSTRUMENTS—We generally record the fair value of commodity derivative instruments on the consolidated balance sheets and the change in fair value as an increase or decrease to product revenue.
As shown in Note 10, the fair value of commodity derivatives at December 31, 2018 and 2017 are recorded to other current assets or other current liabilities on the consolidated balance sheets. Related margin deposits are recorded to other current assets or other current liabilities on the consolidated balance sheets. Margin deposits are not generally netted against derivative assets or liabilities.
The fair value of a derivative contract is determined based on the nature of the transaction and the market in which the transaction was executed. Quoted market prices, when available, are used to value derivative transactions. In situations where quoted market prices are not readily available, we estimate the fair value using other valuation techniques that reflect the best information available under the circumstances. Fair value measurements of derivative assets include consideration of counterparty credit risk. Fair value measurements of derivative liabilities include consideration of our creditworthiness.
We have elected “normal purchase” and “normal sale” treatment for certain commitments to purchase or sell petroleum products at future dates. This election is only available when a transaction that would ordinarily meet the definition of a derivative but instead is expected to result in physical delivery of product over a reasonable period in the normal course of business and is not expected to be net settled. Agreements accounted for under this election are not recorded at fair value; instead, the transaction is recorded when the product is delivered.
CONTINGENT LOSSES—We record a liability for a contingent loss when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. We record attorneys’ fees incurred in connection with a contingent loss at the time the fees are incurred. We do not record liabilities for attorneys’ fees that are expected to be incurred in the future.
ASSET RETIREMENT OBLIGATIONS—Asset retirement obligations include legal or contractual obligations associated with the retirement of long-lived assets, such as requirements to incur costs to dispose of equipment or to remediate the environmental impacts of the normal operation of the assets. We record liabilities for asset retirement obligations when a known obligation exists under current law or contract and when a reasonable estimate of the value of the liability can be made.
PREFERRED STOCK—Preferred stock is classified as debt, equity or mezzanine equity based on its redemption features. Preferred stock with redemption features outside of the control of the issuer, such as contingent redemption features, is classified as mezzanine equity. Preferred stock with mandatory redemption features is classified as debt. Preferred stock with no redemption features, or redemption features over which the issuer has control, is classified as equity.
REVENUE RECOGNITION—Product sales revenues are recognized at the time control of the product transfers to the purchaser, which typically occurs upon receipt of the product by the purchaser. Service revenues are generally recognized overtime as the service is performed. Certain revenue transactions are reported on a net basis, including certain buy/sell transactions (see “Purchases and Sales of Inventory with the Same Counterparty”). Other revenue primarily represents operating cost recovery from working interest owners, who are also customers, in certain processing plants and is recorded when earned in accordance with the terms of related agreements. Taxes collected from customers and remitted to governmental authorities are recorded on a net basis (excluded from revenue).
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, as amended, which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than were required under previous U.S. GAAP.
On January 1, 2018, we adopted the guidance of ASU 2014-09, codified as Accounting Standards Codification 606 - Revenue from Contracts with Customers (“ASC 606”), using a modified retrospective approach. Upon adoption, a reduction to accumulated deficit of $11.5 million was recorded to reflect the impact of adoption related to uncompleted contracts at the date of adoption. The impacts of adoption to the current period results are as follows (in thousands):
 
December 31, 2018
 
Under ASC 606
 
Under ASC 605
 
Increase/(Decrease)
Accounts receivable, net
$
562,214

 
$
562,057

 
$
157

Other noncurrent assets
$
140,807

 
$
119,911

 
$
20,896

Other current liabilities
$
6,495

 
$
6,538

 
$
(43
)
Deferred income taxes
$
55,789

 
$
50,045

 
$
5,744

Accumulated deficit
$
(73,971
)
 
$
(89,324
)
 
$
15,353

 
Year Ended December 31, 2018
 
Under ASC 606
 
Under ASC 605
 
Increase/(Decrease)
Revenue
$
2,503,262

 
$
2,483,962

 
$
19,300

Cost of sales
$
1,823,095

 
$
1,808,129

 
$
14,966

General and administrative expense
$
91,568

 
$
91,168

 
$
400

Income tax benefit
$
23,304

 
$
23,209

 
$
95

Net loss
$
(24,328
)
 
$
(28,167
)
 
$
3,839


Net loss attributable to common shareholders
$
(50,539
)
 
$
(54,378
)
 
$
3,839

Net loss per common share:
 
 
 
 

Basic
$
(0.65
)
 
$
(0.70
)
 
$
0.05

Diluted
$
(0.65
)
 
$
(0.70
)
 
$
0.05


Changes to revenue primarily relate to the timing of recognition of deficiencies on take-or-pay agreements for which there is a contractual make-up period and a change to reporting certain gas gathering and processing fees as revenue rather than a reduction of cost of sales. Under ASC 605 - Revenue (“ASC 605”), revenue related to deficiencies with a make-up period was deferred until the contractual right to make-up a deficiency expired. Under ASC 606, we recognize all or a portion of revenue related to deficiencies before the make-up period expires if we determine that it is probable that the customer will not make-up all or some of its deficient volumes, for example if there is insufficient capacity to make up the deficient volumes. This may lead to earlier recognition of deficiency revenues under ASC 606 as compared with ASC 605.
Changes to cost of sales are due to how certain gathering and processing fees related to percentage of proceeds contracts are treated as revenues rather than reductions to purchase price of commodities (cost of sales).
Changes to accounts receivable, net and noncurrent receivables (included in other noncurrent assets on the condensed consolidated balance sheets) primarily relate to the timing of recognizing take-or-pay deficiencies with make-up rights as discussed above. Noncurrent receivables relate to contracts for which we do not have the right to bill the customer for deficiencies until the contract expiration date.
Changes to other noncurrent assets include success fee payments to third parties for certain contracts which were expensed as incurred under ASC 605, but which have been recognized as assets under ASC 606 and are amortized to general and administrative expense in the consolidated statement of operations and comprehensive income (loss).
Changes to deferred income taxes primarily relate to the deferred tax impact of adoption entries.
Changes to retained earnings are due to the impact of adoption at January 1, 2018, as described above, and cumulative differences in net income through December 31, 2018.
See Note 18 for additional information.
COSTS OF PRODUCTS SOLD—Costs of products sold consists of the cost to purchase the product, the cost to transport the product to the point of sale, and the cost to store the product until it is sold.
PURCHASES AND SALES OF INVENTORY WITH THE SAME COUNTERPARTY—We routinely enter into transactions to purchase inventory from, and sell inventory to, the same counterparty. Such transactions that are entered into in contemplation of one another are recorded on a net basis.
CURRENCY TRANSLATION—The consolidated financial statements are presented in U.S. dollars. Our segments operated in four countries, until the disposal of our U.K. and Mexican operations in early 2018, and each segment has identified a “functional currency,” which is the primary currency in the environment in which the segment operates. The functional currencies included the U.S. dollar, the Canadian dollar, the British pound sterling, and the Mexican peso. Subsequent to the disposal of our U.K. and Mexican operations, our functional currencies are the U.S. and Canadian dollars.
At the end of each reporting period, the assets and liabilities of each segment are translated from its functional currency to U.S. dollars using the exchange rate at the end of the month. The monthly results of operations of each segment are generally translated from its functional currency to U.S. dollars using the average exchange rate during the month. Changes in exchange rates result in currency translation gains and losses, which are recorded within other comprehensive income (loss).
Certain segments also enter into transactions in currencies other than their functional currencies. At the end of each reporting period, each segment re-measures the related receivables, payables, and cash to its functional currency using the exchange rate at the end of the period. Changes in exchange rates between the time the transactions were entered into and the end of the reporting period result in currency transaction gains or losses, which are recorded in the consolidated statements of operations.
INCOME TAXES—Deferred income taxes are accounted for under the liability method, which takes into account the differences between the basis of the assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes. We record valuation allowances on deferred tax assets when, in the opinion of management, it is more likely than not that the asset will not be recovered.
We monitor uncertain tax positions and we recognize tax benefits only when management believes the relevant tax positions would more likely than not be sustained upon examination. We record any interest and any penalties related to income taxes within income tax expense in the consolidated statements of operations.
In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”, which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. We adopted this guidance in the first quarter of 2018. The impact was not material.
In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. For public entities, this ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those years and early adoption is permitted in the year prior to the effective date. We adopted this guidance in the first quarter of 2019. We recorded a $10.9 million adjustment to retained earnings upon adoption.
RECLASSIFICATIONS—Certain reclassifications have been made to conform prior year balances to the current year presentation.
PENSION BENEFITS—Pension cost and obligations are actuarially determined and are affected by assumptions including expected return on plan assets, discount rates, compensation increases, and employee turnover rates. We evaluate our assumptions periodically and make adjustments to these assumptions and the recorded liability as necessary. Actuarial gains or losses are amortized on a straight-line basis over the expected remaining service life of employees in the pension plan.
In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost”, which requires that an employer disaggregate the service cost component from other components of net benefit cost. This ASU also provides explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allows only the service cost component of net benefit cost to be eligible for capitalization. We adopted this guidance retrospectively in the first quarter of 2018. For the years ended December 31, 2017 and 2016, we reclassified $3.2 million, of non-service pension gains and $0.3 million of non-service pension costs, respectively, from “general and administrative expense” to “other expense (income)”.
EQUITY-BASED COMPENSATION—We grant certain of our employees and non-managerial directors equity-based compensation awards which vest contingent on continued service of the recipient and, in some cases, on their achievement of specific performance targets or market conditions. We record compensation expense for these outstanding awards over applicable service or performance periods based on their grant date fair value with a corresponding increase to additional paid-in capital.
In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting”, to provide clarity and reduce diversity in practice in determining which changes to terms or conditions of a share-based payment award require an entity to apply modification accounting under Accounting Standards Codification Topic 718. We adopted this guidance in the first quarter of 2018. The impact was not material.
NONCONTROLLING INTEREST—Noncontrolling interests represents a 49% interest in our consolidated subsidiary, Maurepas Pipeline, LLC in the form of Class B shares of Maurepas Pipeline, LLC. The Class B shares provide for a monthly preference on Maurepas Pipeline, LLC distributions for the owners.
COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)—Comprehensive income (loss) is defined as a change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Our comprehensive income (loss) includes currency translation adjustments and changes in the funded status of pension benefit plans.
OTHER RECENT ACCOUNTING PRONOUNCEMENTS— On August 27, 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”, which modifies the disclosure requirements in Topic 820 by removing, adding or modifying certain fair value measurement disclosures. For public entities, this ASU is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted. We will adopt this guidance in the first quarter of 2020. The impact is not expected to be material.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)”, to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The update addresses eight different transaction types and clarifies how to classify each in the statement of cash flows, where previously there was unclear or no specific guidance. We adopted this guidance in the first quarter of 2018. The impact was not material.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, as amended, which amends the existing lease guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by operating and finance leases and to disclose additional quantitative and qualitative information about leasing arrangements. This ASU, as amended, also provides clarifications surrounding the presentation of the effects of leases in the income statement and statement of cash flows. For public entities, this ASU will be effective for annual periods beginning after December 15, 2018, and interim periods within those years. We have elected the package of practical expedients such that we will not reassess whether any expired or existing contracts contain leases, we will not reassess the lease classification for any expired or existing leases and we will not reassess initial direct costs for any leases. Additionally, we have elected the practical expedient not to reassess certain land easements. As such, certain storage tank, pipeline leases and land easements, which are not currently treated as leases, maybe become leases as these agreements are renewed or modified depending on the terms of the renewal or modification. Additionally, the classification for existing leases may change as agreements are renewed or modified. We adopted the standard at January 1, 2019, and recorded approximately $100 million of right of use assets and lease liabilities. We recognized a cumulative-effect adjustment to the opening balance of retained earnings of approximately $0.2 million as allowed by ASU 2018-11, “Leases (Topic 842): Targeted Improvements”.
v3.10.0.1
Disposals of Long-Lived Assets
12 Months Ended
Dec. 31, 2018
Disposals And Impairments Of Long-Lived Assets [Abstract]  
Disposals of Long-Lived Assets DISPOSALS OR IMPAIRMENTS OF LONG-LIVED ASSETS
Year ended December 31, 2018
On January 5, 2018, we entered into a definitive agreement to sell our Mexican asphalt business. The sale closed on March 15, 2018, for $70.7 million. We recorded a pre-tax gain on disposal of $1.6 million for the year ended December 31, 2018. The Mexican asphalt business contributed $2.3 million of pre-tax income for the year ended December 31, 2018, excluding the gain on disposal. At December 31, 2017, the assets and liabilities of the Mexican asphalt business were written down to net realizable value by recording an impairment of $13.5 million, including the impact of a deferred foreign currency translation loss of $30.9 million, and classified as held for sale. The Mexican asphalt business contributed a pre-tax loss of $8.2 million for the year ended December 31, 2017, including the write-down to net realizable value. At December 31, 2017, the Mexican assets and liabilities held for sale included $29.4 million of property, plant and equipment, $34.9 million of current assets and $19.4 million of current liabilities, prior to the write-down to net realizable value.
On February 23, 2018, we entered into an agreement to sell our U.K. operations, SemLogistics. The sale closed on April 12, 2018, for $73.1 million. We recorded a pre-tax gain on disposal of $0.4 million for the year ended December 31, 2018. The U.K. business contributed pre-tax income of $5.4 million for the year ended December 31, 2018, excluding the gain on disposal. At December 31, 2017, the assets and liabilities of the U.K. operations were written down to net realizable value by recording an impairment of $76.7 million, including the impact of a deferred foreign currency translation loss of $22.8 million, and classified as held for sale. The U.K. business contributed a pre-tax loss of $73.0 million for the year-ended December 31, 2017, including the write-down to net realizable value. At December 31, 2017, the U.K. assets and liabilities held for sale included $136.8 million of property, plant and equipment, $3.1 million of current assets and $4.4 million of current liabilities, prior to the write-down to net realizable value.
Year ended December 31, 2017
The following amounts are included in "loss on disposal or impairment, net" on our consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2017 (in thousands):
 
Segment
Loss/(Gain)
Write-down of Mexican asphalt business to net realizable value
Corporate and Other
$
13,511

Write-down U.K. operations to net realizable value
Corporate and Other
76,661

Sherman natural gas gathering and processing asset impairment
U.S. Gas
30,985

Crude oil trucking goodwill impairment (Note 9)
U.S. Liquids
26,628

Crude oil trucking intangible asset impairment (Note 9)
U.S. Liquids
12,087

Gain on sale of Glass Mountain Pipeline LLC (Note 6)
U.S. Liquids
(150,266
)
Other
 
3,727

Loss on disposal or impairment, net
 
$
13,333


At December 31, 2017, we recorded a $31.0 million impairment of our Sherman, Texas natural gas gathering and processing assets of our U.S. Gas segment. Evaluation of capital raising alternatives indicated that the carrying value of our Sherman, Texas assets might be in excess of fair value. We compared the forecasted undiscounted cash flows for the assets to the carrying value of the assets, which indicated that the carrying value of assets was impaired. We used an income approach, based on a discounted cash flow model, to estimate the fair value of the assets and recorded a non-cash impairment.
Impairments are based on unobservable inputs and considered to be Level 3 measurements. See Note 6 for discussion of the sale of our equity method investment in Glass Mountain Pipeline LLC ("Glass Mountain"). See Note 9 for discussion of impairment of goodwill and finite-lived intangible assets recorded by our U.S. Liquids segment.
Year ended December 31, 2016
There were no significant disposals or impairments of long-lived assets during the year ended December 31, 2016. See Note 6 for discussion of our sale of NGL Energy limited partner units accounted for under the equity method. See Note 9 for discussion of goodwill impairment related to our U.S. Gas segment.

v3.10.0.1
Acquisitions
12 Months Ended
Dec. 31, 2018
Acquisitions [Abstract]  
Business Combination Disclosure [Text Block] ACQUISITIONS
Year ended December 31, 2018
There were no significant acquisitions during the year ended December 31, 2018.
Year ended December 31, 2017
On July 17, 2017, we acquired Houston Fuel Oil Terminal Company (“HFOTCO”), one of the largest oil terminals in the U.S., for a purchase price paid in two payments. The first payment consisted of $297.8 million in cash funded from our revolving credit facility, the issuance of approximately 12.4 million shares of our Class A common stock with an acquisition date fair value of $330 million, and the assumption of existing HFOTCO debt of approximately $766 million. On April 17, 2018, we made the final payment related to the HFOTCO acquisition in the amount of $579.6 million. The payment was funded through revolving credit facility borrowings and cash on hand.
From the acquisition date through December 31, 2017, HFOTCO contributed $76.9 million of revenue and $2.4 million of net loss to our consolidated financial results. Our results for the year ended December 31, 2017, include $19.2 million of acquisition related expenses, which are included in "general and administrative expenses" in our consolidated statement of operations and comprehensive income (loss). Included in the results of HFOTCO for the post acquisition period is a gain of $3.0 million related to the curtailment of HFOTCO’s defined benefit pension plan. Subsequent to the acquisition, SemGroup closed the plan to new members and stopped the accrual of future benefits under the plan to better align HFOTCO with SemGroup’s compensation strategy. Accordingly, the pension liability assumed at acquisition of $10.0 million was reduced to $7.0 million as of December 31, 2017. HFOTCO is included in the U.S. Liquids segment.
Year ended December 31, 2016
On September 30, 2016, we completed the acquisition of the outstanding common limited partner interests of Rose Rock Midstream, L.P. ("Rose Rock") which we did not already own (the "Merger"). We issued 13.1 million common shares as consideration and recorded a reduction to equity for $5.3 million of fees associated with the issuance. In addition, we recorded a reduction to our deferred tax liabilities and offsetting increase to additional paid-in capital of $143.3 million associated with the transaction. This non-cash adjustment represents the deferred tax impact of the difference between the book value of the noncontrolling interests acquired and the tax basis which is stepped-up to the fair market value of the consideration, which includes the common shares issued and the assumption of liabilities associated with the noncontrolling interests.
We accounted for the Merger in accordance with FASB Accounting Standards Codification 810, Consolidation — Overall — Changes in a Parent’s Ownership Interest in a Subsidiary. As SemGroup controlled Rose Rock both before and after the Merger, the changes in SemGroup’s ownership interest in Rose Rock were accounted for as an equity transaction and no gain or loss was recognized in SemGroup’s consolidated statements of operations and comprehensive income (loss) as a result of the Merger. Subsequent to the Merger, Rose Rock was a wholly owned subsidiary of SemGroup.
Substantially all of Rose Rock's assets were pledged as collateral under its senior secured revolving credit facility agreement which was terminated following the Merger. Substantially all of Rose Rock's assets are now pledged as collateral under SemGroup's senior secured revolving credit facility. Rose Rock's senior unsecured notes were assumed by SemGroup.
v3.10.0.1
Equity Method Investments
12 Months Ended
Dec. 31, 2018
Equity Method Investments and Joint Ventures [Abstract]  
Equity Method Investments EQUITY METHOD INVESTMENTS
Our equity method investments consist of the following (in thousands):
 
December 31,
 
2018
 
2017
White Cliffs
$
255,043

 
$
266,362

NGL Energy
18,966

 
18,919

Total equity method investments
$
274,009

 
$
285,281


Our earnings from equity method investments consist of the following (in thousands):
 
Year Ended December 31,
 
2018
 
2017
 
2016
White Cliffs
$
57,625

 
$
59,851

 
$
69,007

Glass Mountain

 
7,494

 
2,562

NGL Energy(1)
47

 
(14
)
 
2,188

Total earnings from equity method investments
$
57,672

 
$
67,331

 
$
73,757

(1) Excluding a loss on issuance of common units of $41.0 thousand for the year ended December 31, 2016.
Cash distributions received from equity method investments consist of the following (in thousands):
 
Year Ended December 31,
 
2018
 
2017
 
2016
White Cliffs
$
76,725

 
$
77,511

 
$
88,839

Glass Mountain

 
18,011

 
10,456

NGL Energy

 

 
4,873

Total cash distributions received from equity method investments
$
76,725

 
$
95,522

 
$
104,168


White Cliffs
We own a 51% interest in White Cliffs, which we account for under the equity method. The equity in earnings of White Cliffs for the years ended December 31, 2018, 2017 and 2016, reported in our consolidated statements of operations and comprehensive income (loss), is less than 51% of the net income of White Cliffs for the same period. This is primarily due to certain general and administrative expenses we incur in managing the operations of White Cliffs that the other members are not obligated to share. In addition, our equity in earnings is also impacted by the elimination of revenue on the sale of inventory to White Cliffs. Revenue related to inventory transactions with White Cliffs is deferred until a sale of the inventory has been made with a third party.
The members of White Cliffs are required to contribute capital to White Cliffs to fund various projects. For the years ended December 31, 2018, 2017 and 2016, we contributed $6.5 million, $1.4 million and $2.2 million, respectively, to fund White Cliffs capital projects. In 2018, we announced that we will convert one of the White Cliffs 12-inch carrier pipelines from crude service to natural gas liquids service. Remaining contributions related to the conversion project will be paid in 2019 and are expected to total $27.2 million. The project is expected to be completed during the fourth quarter of 2019.
Our membership interest in White Cliffs is significant as defined by Securities and Exchange Commission’s Regulation S-X Rule 1-02(w). Accordingly, as required by Regulation S-X Rule 3-09, we have included the audited financial statements of White Cliffs as of December 31, 2018 and 2017 and for each of the three years in the period ended December 31, 2018 as an exhibit to this Form 10-K.
Glass Mountain
On December 22, 2017, we completed the sale of our equity method investment in Glass Mountain for $300 million, subject to working capital and other adjustments. For the year ended December 31, 2017, we recorded a pre-tax gain on disposal of $150.3 million, which was reported in "loss (gain) on disposal or impairment, net" in our consolidated statement of operations and comprehensive income (loss). Proceeds from the sale were used to repay borrowings on SemGroup's revolving credit facility. For the year ended December 31, 2018, we recorded an incremental gain of $1.1 million related to customary post-closing adjustments related to the prior year sale of our equity interest in Glass Mountain.
NGL Energy
At December 31, 2018, we held an 11.78% interest in the general partner of NGL Energy which is being accounted for under the equity method in accordance with ASC 323-30-S99-1, as our ownership is in excess of the 3 to 5 percent interest which is generally considered to be more than minor.
The general partner of NGL Energy is not a publicly traded company. The information below pertains to our general partner interest, and previously held limited partner interest, in NGL Energy.
NGL Energy unit issuance and sale of NGL Energy units
During the year ended December 31, 2016, we sold 4,652,568 NGL Energy limited partner units for $13.00 per unit, or $60.5 million, and recorded a $9.1 million gain on disposal. Subsequent to this disposal, we no longer hold a limited partner interest in NGL Energy. Gain on disposal of NGL Energy limited partner units is included in "loss on sale or impairment of non-operated equity method investment" in our consolidated statements of operations and comprehensive income (loss).
During the year ended December 31, 2016, our limited partnership interest was diluted in connection with an NGL Energy common unit issuance. Accordingly, we recorded a non-cash loss of $41.0 thousand for the year ended December 31, 2016 related to this transaction, which is included in "loss on issuance of common units by equity method investee" in our consolidated statements of operations and comprehensive income (loss).
Other-than-temporary impairment of equity method investment in NGL Energy
During the year ended 2016, we recorded an impairment of $39.8 million to our investment in the limited partner units of NGL Energy subsequent to NGL Energy's April 21, 2016 announcement of a reduction in its quarterly distribution and lowering of financial performance guidance. These units were subsequently sold in the second quarter of 2016. The impairment was included in "loss on sale or impairment of non-operated equity method investment" in our consolidated statements of operations and comprehensive income (loss).
v3.10.0.1
Other Assets
12 Months Ended
Dec. 31, 2018
Other Assets [Abstract]  
Other Assets
OTHER ASSETS
Other current assets consist of the following (in thousands):
 
December 31,
 
2018
 
2017
Prepaid expenses
$
8,379


$
8,746

Other
8,885


5,551

Total other current assets
$
17,264


$
14,297



Other noncurrent assets consist of the following (in thousands):
 
December 31,
 
2018
 
2017
Capitalized loan fees
$
6,074

 
$
8,774

Net investment in direct financing lease
69,222

 
67,825

Deferred tax asset
25,307

 
33,792

Other
40,204

 
22,209

Total other noncurrent assets, net
$
140,807

  
$
132,600



Net investment in direct financing lease, included in the table above, relates to our HFOTCO operations' lease of certain land, tanks and a barge dock which are accounted for as a direct financing lease. The assets are leased through 2025. At December 31, 2018, minimum lease payments to be received for each of the five succeeding fiscal years and thereafter are as follows (in thousands):
For the year ending:
 
December 31, 2019
$
13,732

December 31, 2020
13,031

December 31, 2021
12,800

December 31, 2022
12,804

December 31, 2023
12,808

Thereafter
18,151

Total minimum lease payments
$
83,326

v3.10.0.1
Property, Plant and Equipment
12 Months Ended
Dec. 31, 2018
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following (in thousands):
 
December 31,
 
2018
 
2017
Land
$
308,166

 
$
273,168

Pipelines and related facilities
1,023,502

 
926,799

Storage and terminal facilities
1,247,115

 
1,111,001

Natural gas gathering and processing facilities
1,055,305

 
940,130

Linefill
27,972

 
25,747

Trucking equipment and other
45,567

 
45,162

Office property and equipment
69,498

 
63,052

Construction-in-progress
288,104

 
374,914

Property, plant and equipment, gross
4,065,229

 
3,759,973

Accumulated depreciation
(607,903
)
 
(444,842
)
Property, plant and equipment, net
$
3,457,326

 
$
3,315,131



Land in the table above includes $120.2 million and $106.2 million of rights-of-way at December 31, 2018 and 2017, respectively. The weighted average remaining useful life of rights-of-way at December 31, 2018, was approximately 19 years.

We recorded depreciation expense of $173.1 million, $126.3 million and $87.9 million for the years ended December 31, 2018, 2017 and 2016, respectively.
We include within the cost of property, plant and equipment interest costs incurred while an asset is being constructed. We capitalized $12.6 million, $18.4 million and $17.0 million of interest costs during the years ended December 31, 2018, 2017 and 2016, respectively.
v3.10.0.1
Goodwill and Other Intangible Assets
12 Months Ended
Dec. 31, 2018
Goodwill And Other Intangible Assets [Abstract]  
Goodwill and Other Intangible Assets GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Goodwill relates to our U.S Liquids segment. Changes in goodwill balances during the period from December 31, 2015 to December 31, 2018 are shown below (in thousands):
Balance, December 31, 2015
$
48,032

U.S. Gas impairment loss
(13,052
)
Currency translation adjustments
(750
)
Balance, December 31, 2016
34,230

U.S. Liquids - Crude oil trucking impairment loss
(26,628
)
Reclassification of Mexican asphalt business goodwill as held for sale (Note 4)
(7,808
)
U.S. Liquids - HFOTCO acquisition (Note 5)
257,302

Currency translation adjustments
206

Balance, December 31, 2017
257,302

Balance, December 31, 2018
$
257,302


For U.S. federal income tax purposes, goodwill is amortized on a straight-line basis over 15 years.
We assess our goodwill for impairment at least annually as of October 1. Testing goodwill for impairment requires estimation of future economic benefit based on management's judgment and assumptions about numerous variables including selling prices, costs, the level of activity and appropriate discount rates. Future results may be different from management's assumptions. No impairments were indicated as of October 1, 2018.
U.S. Liquids - Crude oil trucking goodwill impairment - 2017
Based on market conditions, in the third-quarter of 2017, management lowered the long range forecast for our crude oil trucking business unit, which provides truck transportation services as part of our U.S. Liquids segment. The decrease in the long range forecast for crude oil trucking is primarily due to the on-going challenging business environment. We viewed the decrease in the forecast as a triggering event that indicated a potential impairment and performed an interim impairment analysis on the business unit’s assets including goodwill and intangible assets.
We performed a recoverability test of our definite lived assets under ASC 360 whereby we compared the undiscounted cash flows of the asset group, which was determined to be the entire crude oil trucking reporting unit and included goodwill, to the carrying value of the assets at September 30, 2017. This test indicated that the assets were not fully recoverable. Therefore, we estimated the fair value of the definite lived assets using an income approach, supplemented by a market approach to measure impairment. We also performed an interim impairment test of our goodwill associated with the crude oil trucking reporting unit and determined the estimated fair value was less than the adjusted carrying value of the reporting unit resulting in impairment of goodwill. The cash flow models used to determine recoverability of our assets and to measure impairment expense involved using significant judgments and assumptions, which included the discount rate, anticipated revenue and volume growth rates, estimated operating expenses and capital expenditures, which were based on our operating and capital budgets as well as our strategic plans. We considered the market approach by comparing the revenue and earnings multiples implied by our income approach to those of comparable companies for reasonableness and for estimating the fair value of certain assets of our reporting unit.
We recorded a $26.6 million impairment of goodwill and a $12.1 million impairment of intangible assets, which are reflected in “loss (gain) on disposal or impairment, net” in our consolidated statements of operations and comprehensive income (loss).
U.S. Gas goodwill impairment - 2016
In March 2016, our U.S. Gas segment revised the volume forecast for its northern Oklahoma system based on revised volume forecasts provided by certain producers who have chosen to adjust plans for production following release of the Oklahoma Corporation Commission’s Regional Earthquake Response Plan that curtails the amount of volume that can be injected into disposal wells.  
Based on the reduction to our forecast, we tested our U.S. Gas segment's long-lived assets, finite-lived intangible assets and goodwill for impairment at March 31, 2016. No impairment was indicated for U.S. Gas' long-lived assets and finite-lived intangible assets based on an undiscounted cash flow analysis. However, we did record an impairment of U.S. Gas' goodwill for the entire balance of $13.1 million.
To test the goodwill for impairment, we used an income approach, supplemented by a market approach to calculate the fair value of the reporting unit. Under the income approach, we utilized a discounted cash flow model to determine the fair value of our U.S. Gas operations. Significant judgments and assumptions included the discount rate, anticipated revenue and volume growth rates, estimated operating expenses and capital expenditures, which were based on our operating and capital budgets as well as our strategic plans. A significant underlying assumption is that commodity prices will eventually improve, water disposal issues will be resolved and production volumes will begin to increase. If production does not increase in the future or the production takes longer than anticipated to return, this would negatively affect our key assumptions and potentially lead to finite-lived intangible and long-lived asset impairments in the future. We considered the market approach by comparing the revenue and earnings multiples implied by our income approach to those of comparable companies for reasonableness. See Note 4 for 2017 impairment of long-lived assets.
Other intangible assets
The gross carrying amount and accumulated amortization of intangible assets are shown below (in thousands):

 
December 31, 2018
 
December 31, 2017
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Customer relationships
$
424,000

 
$
(67,917
)
 
$
356,083

 
$
424,000

 
$
(49,717
)
 
$
374,283

Non-compete agreement
30,000

 
(21,250
)
 
8,750

 
30,000

 
(6,250
)
 
23,750

Trade names
52

 
(47
)
 
5

 
52

 
(42
)
 
10

Customer contract
1,000

 
(800
)
 
200

 
1,000

 
(400
)
 
600

Total other intangible assets
$
455,052

 
$
(90,014
)
 
$
365,038

 
$
455,052

 
$
(56,409
)
 
$
398,643


Changes in other intangible asset balances during the period from December 31, 2015 to December 31, 2018, are shown below (in thousands):
Balance, December 31, 2015
$
162,223

Amortization
(10,928
)
Currency translation adjustments
(317
)
Balance, December 31, 2016
150,978

U.S. Liquids - HFOTCO acquisition (Note 5)
291,000

U.S. Liquids - Crude oil trucking impairment
(12,087
)
Reclassification of Mexican asphalt assets as held for sale (Note 4)
(715
)
Amortization
(30,628
)
Currency translation adjustments
95

Balance, December 31, 2017
398,643

Amortization
(33,605
)
Balance, December 31, 2018
$
365,038


Our other intangible assets consist primarily of customer relationships at our U.S. Liquids and U.S. Gas segments and a non-compete agreement at our U.S. Liquids segment. These assets may be subject to impairments in the future if we are unable to maintain the relationships with the customers to which the assets relate or if the cash flows associated with those relationships decrease.
We estimate that future amortization of other intangible assets will be as follows (in thousands):
For the year ending:
 
December 31, 2019
$
39,455

December 31, 2020
30,000

December 31, 2021
30,200

December 31, 2022
28,600

December 31, 2023
27,100

Thereafter
209,683

Total estimated amortization expense
$
365,038

v3.10.0.1
Financial Instruments and Concentrations of Risk
12 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Financial Instruments and Concentrations of Risk FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF RISK
Fair value of financial instruments
We record certain financial assets and liabilities at fair value at each balance sheet date. The table below summarizes the balances of commodity derivative assets and liabilities at December 31, 2018 and 2017 (in thousands):

 
December 31, 2018
 
Level 1
 
Level 2
 
Level 3
 
Netting(1)
 
Total
Assets:
 
 
 
 
 
 
 
 
 
Commodity derivatives (2)
$
4,658

 
$

 
$

 
$
(973
)
 
$
3,685

Total assets
4,658

 

 

 
(973
)
 
3,685

Liabilities:
 
 
 
 
 
 
 
 
 
Commodity derivatives
973

 

 

 
(973
)
 

Foreign currency forwards

 
2,985

 

 

 
2,985

Interest rate swaps

 

 
1,482

 

 
1,482

Total liabilities
973

 
2,985

 
1,482

 
(973
)
 
4,467

Net assets (liabilities) at fair value
$
3,685

 
$
(2,985
)
 
$
(1,482
)
 
$

 
$
(782
)
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
Level 1
 
Level 2
 
Level 3
 
Netting(1)
 
Total
Assets:
 
 
 
 
 
 
 
 
 
Commodity derivatives (2)
$
602

 
$

 
$

 
$
(602
)
 
$

Foreign currency forwards

 
2,564

 

 

 
$
2,564

Total assets
602

 
2,564

 

 
(602
)
 
2,564

Liabilities:
 
 
 
 
 
 
 
 
 
Commodity derivatives
1,970

 

 

 
(602
)
 
1,368

Interest rate swaps

 

 
1,228

 

 
1,228

Total liabilities
1,970

 

 
1,228

 
(602
)
 
2,596

Net assets (liabilities) at fair value
$
(1,368
)
 
$
2,564

 
$
(1,228
)
 
$

 
$
(32
)
(1)
Relates primarily to exchange traded futures. Gain and loss positions on multiple contracts are settled net on a daily basis with the exchange.
(2)
Commodity derivatives are subject to netting arrangements.

“Level 1” measurements are based on inputs consisting of unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. These include commodity futures contracts that are traded on an exchange.
“Level 2” measurements are based on inputs consisting of market observable and corroborated prices for similar derivative contracts. Assets and liabilities classified as Level 2 include over the counter (“OTC”) traded physical fixed priced purchases and sales forward contracts.
“Level 3” measurements are based on inputs from a pricing service and/or internal valuation models incorporating observable and unobservable market data. These could include commodity derivatives, such as forwards and swaps for which there is not a highly liquid market and therefore are not included in Level 2 above and interest rate swaps for which certain unobservable inputs are used in the valuation.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value levels. At December 31, 2018, all of our physical fixed price forward purchases and sales contracts were being accounted for as normal purchases and normal sales.
Our assessment of the significance of a particular input to the measurement requires judgment, and may affect the valuation of assets and liabilities and their placement within the fair value levels. The following table summarizes changes in the fair value of our net financial liabilities classified as Level 3 in the fair value hierarchy (in thousands):
 
Year Ended December 31, 2018
 
Year Ended December 31, 2017
Net liabilities - beginning balance
$
1,228

 
$

Interest rate swaps acquired through acquisition (Note 5)

 
3,275

Transfers out of Level 3

 

Realized/Unrealized (gain) loss included in earnings*
163

 
(1,124
)
Settlements
91

 
(923
)
Net liabilities - ending balance
$
1,482

 
$
1,228

*Gains and losses related to interest rate swaps are recorded in interest expense in the condensed consolidated statements of operations and comprehensive income (loss).
There were no financial assets or liabilities classified as Level 3 during the year ended December 31, 2016.
See Note 12 for fair value of debt instruments and Note 13 for fair value of benefit plan assets. The approximate fair value of cash and cash equivalents, accounts receivable and accounts payable is equal to book value due to the short-term nature of these items.
Commodity derivative contracts
Our consolidated results of operations and cash flows are impacted by changes in market prices for petroleum products. This exposure to commodity price risk is managed, in part, by entering into various commodity derivatives.
We seek to manage the price risk associated with our marketing operations by limiting our net open positions through (i) the concurrent purchase and sale of like quantities of petroleum products to create back-to-back transactions that are intended to lock in positive margins based on the timing, location or quality of the petroleum products purchased and delivered or (ii) derivative contracts. Our storage and transportation assets can also be used to mitigate time and location basis risks, respectively. All marketing activities are subject to our Comprehensive Risk Management Policy, a Delegation of Authority policy and their supporting policies and procedures, which establish limits in order to manage risk and mitigate financial exposure.
Our commodity derivatives can be comprised of swaps, futures contracts and forward contracts of crude oil, natural gas and natural gas liquids. These are defined as follows:
Swaps – OTC transactions where a floating price, basis or index is exchanged for a fixed (or a different floating) price, basis or index at a preset schedule in the future, according to an agreed-upon formula.
Futures contracts – Exchange traded contracts to buy or sell a commodity. These contracts are standardized by the exchange in terms of quality, quantity, delivery period and location for each commodity.
Forward contracts – OTC contracts to buy or sell a commodity at an agreed upon future date. The buyer and seller agree on specific terms (price, quantity, delivery period and location) and conditions at the inception of the contract.
The following table sets forth the notional quantities for derivative instruments entered into (in thousands of barrels):
 
Year Ended December 31,
 
2018
 
2017
 
2016
Sales
14,013

 
12,979

 
33,694

Purchases
13,417

 
13,430

 
33,819


We have not designated any of our commodity derivative instruments as accounting hedges. We have recorded the fair value of our commodity derivative instruments on our consolidated balance sheets in "other current assets" and "other current liabilities" in the following amounts (in thousands):

December 31, 2018
 
December 31, 2017
Other Current Assets
 
Other Current Liabilities
 
Other Current Assets
 
Other Current Liabilities
$
3,685

 
$

 
$

 
$
1,368

 
We have posted margin deposits as collateral with brokers who have the right of set off associated with these funds. Our margin deposit balances were $0.1 million and $1.9 million at December 31, 2018 and 2017, respectively. These margin account balances have not been offset against our net commodity derivative instrument (contract) positions. Had these margin account balances been netted against our net commodity derivative instrument (contract) positions as of December 31, 2018 and 2017, we would have had net asset positions of $3.8 million and $0.5 million, respectively.
Realized and unrealized gains (losses) from our commodity derivatives were recorded to product revenue in the following amounts (in thousands):
 
Year Ended December 31,
 
2018
 
2017
 
2016
Realized and unrealized gain (loss)
$
12,088

 
$
(2,193
)
 
$
(4,485
)

Interest rate swaps
We have interest rate swaps which allow us to limit exposure to interest rate fluctuations. The swaps only apply to a portion of our outstanding debt and provide only partial mitigation of interest rate fluctuations. We have not designated the swaps as hedges, as such changes in the fair value of the swaps are recorded through current period earnings as a component of interest expense. At December 31, 2018 and 2017, we had interest rate swaps with notional values of $524.3 million and $491.1 million, respectively. At December 31, 2018 and 2017, the fair value of our interest rate swaps was $1.5 million and $1.2 million, respectively, which was reported within "other current liabilities" and "other noncurrent liabilities” in our condensed consolidated balance sheet. For the year ended December 31, 2018, we recognized realized and unrealized losses of $0.2 million related to interest rate swaps. For the year ended December 31, 2017, we recognized realized and unrealized gains of $1.1 million related to interest rate swaps. We did not have any interest rate swaps during the year ended December 31, 2016.
Foreign currency forwards
We have foreign currency forwards primarily to purchase Canadian dollars to limit exposure to foreign currency rate fluctuations for capital contributions to our Canadian operations. We have not designated the forwards as hedges, as such changes in the fair value of the forwards are recorded through current period earnings as a component of foreign currency translation gain/loss. At December 31, 2018 and 2017, we had foreign currency forwards with notional values of $56.1 million and $197.7 million, respectively. At December 31, 2018 and 2017, the fair value of our foreign currency swaps was $3.0 million and $2.6 million, respectively, which is reported within "other current liabilities" and "other noncurrent assets, net", respectively, in our consolidated balance sheet. For the year ended December 31, 2018, we recognized realized and unrealized losses of $10.2 million, related to foreign currency forwards. For the year ended December 31, 2017, we recognized realized and unrealized gains of $2.8 million, related to foreign currency forwards. We did not have any foreign currency forwards during the year ended December 31, 2016.
Concentrations of risk
During the year ended December 31, 2018, one customer, primarily of our U.S. Liquids segment, accounted for more than 10% of our consolidated revenue with revenues of $645.0 million. One third-party supplier, primarily of our U.S. Liquids segment, accounted for more than 10% of our costs of products sold with purchases of $248.7 million. At December 31, 2018, two customers, primarily of our U.S. Liquids segment, accounted for approximately 28% of our consolidated accounts receivable.
Our U.S. Gas segment has a significant concentration of producers which account for a large portion of our U.S. Gas segment's volumes. During the year ended December 31, 2018, three producers accounted for approximately 89% of our total processed volumes. During the year ended December 31, 2018, two producers accounted for 83% of our total
gathered volumes. Additionally, all of the processing and gathering volumes from these customers are produced in the Northern Oklahoma region.
Our Canada segment's processing plants require a minimum rate of sulfur tonnage to operate, and to comply with the regulatory requirements for air emissions.  We have several large producers that provide significant sour gas to our plants.  If these producers shut in their sour gas production due to low commodity prices, it could result in regulatory non-compliance, as well as operating and financial impacts to our Canada segment.
Assets and liabilities of subsidiaries outside the United States
The following table summarizes the assets and liabilities (excluding affiliate balances) at December 31, 2018, of our subsidiaries outside the United States (in thousands):
 
Canada
Cash and cash equivalents
$
17,107

Other current assets
78,542

Noncurrent assets
590,714

Total assets
$
686,363

 
 
Current liabilities
$
69,798

Noncurrent liabilities
76,192

Total liabilities
145,990

Net assets
$
540,373


Employees
At December 31, 2018, we had approximately 880 employees, including approximately 265 employees in Canada. Approximately 55 of the employees in Canada are represented by labor unions and are subject to collective bargaining agreements governing their employment with us. This collective agreement expires on January 31, 2019. We have never had a labor related work stoppage and believe our employee relations are good.
v3.10.0.1
Income Taxes
12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Income tax expense (benefit)
Our consolidated income from continuing operations before income taxes was generated in the following jurisdictions (in thousands):
 
Year Ended December 31,
 
2018
 
2017
 
2016
U.S.
$
(53,517
)
 
$
(64,423
)
 
$
(766
)
Foreign
52,493

 
44,885

 
25,297

Consolidated
$
(1,024
)
 
$
(19,538
)
 
$
24,531


The following table summarizes income tax provision (benefit) from continuing operations by jurisdiction (in thousands):
 
Year Ended December 31,
 
2018
 
2017
 
2016
Current income tax provision:
 
 
 
 
 
Foreign
$
14,343

 
$
7,058

 
$
2,821

U.S. federal

 

 

U.S. state
650

 
383

 

 
14,993

 
7,441

 
2,821

Deferred income tax provision (benefit):
 
 
 
 
 
Foreign
9,610

 
5,318

 
4,071

U.S. federal
(664
)
 
(15,379
)
 
5,142

U.S. state
(635
)
 
232

 
(766
)
 
8,311

 
(9,829
)
 
8,447

Provision (benefit) for income taxes
$
23,304

 
$
(2,388
)
 
$
11,268


The following table reconciles income tax provision at the U.S. federal statutory rate to the consolidated provision (benefit) for income taxes (in thousands):
 
Year Ended December 31,
 
2018
 
2017
 
2016
Income from continuing operations before income taxes
$
(1,024
)
 
$
(19,538
)
 
$
24,531

U.S. federal statutory rate
21
%
 
35
%
 
35
%
Provision at statutory rate
(215
)
 
(6,838
)
 
8,586

State income taxes—net of federal benefit
13

 
401

 
(498
)
Effect of rates other than statutory
3,042

 
(3,842
)
 
(1,966
)
Effect of U.S. taxation on foreign branches
11,023

 
15,710

 
8,854

Noncontrolling interest
(508
)
 

 
(3,908
)
Foreign tax credit and offset to branch deferreds
1,447

 
45,245

 
(6,026
)
Effect of U.S. deduction of foreign tax
(3,012
)
 
(7,514
)
 

Impact of valuation allowance on deferred tax assets

 
(65,327
)
 
6,026

Foreign withholding taxes
10,187

 
858

 
18

Stock-based compensation
1,427

 
1,351

 

Effect of U.S. federal statutory rate reduction


17,638

 

Other, net
(100
)
 
(70
)
 
182

Provision (benefit) for income taxes
$
23,304

 
$
(2,388
)
 
$
11,268


For the years ended December 31, 2018, 2017 and 2016, the foreign subsidiaries are disregarded entities for U.S. federal income tax purposes. The foreign earnings are taxed in foreign jurisdictions as well as in the U.S. Foreign tax credits, subject to limitations, or foreign tax deductions are available to reduce U.S. taxes. The decision to deduct foreign taxes or claim the foreign tax credit is made with respect to each tax period.
Deferred tax positions
Deferred income taxes reflect the effects of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax purposes. Significant components of deferred tax assets and liabilities are as follows at December 31, 2018 and 2017 (in thousands):
 
December 31,
 
2018
 
2017

Deferred tax assets:
 
 
 
Net operating loss and other credit carryforwards
$
139,274

 
$
44,867

Compensation and benefits
5,480

 
7,156

Inventories
44

 
322

Intangible assets

 
16,714

Pension plan
813

 
1,760

Allowance for doubtful accounts
577

 
956

Deferred revenue
2,493

 
4,953

Foreign tax credit and offset to branch deferreds
55,272

 
56,719

Other
19,127

 
28,201

less: valuation allowance
(45,614
)
 
(45,682
)
Net deferred tax assets
177,466

 
115,966

Deferred tax liabilities:
 
 
 
Intangible assets
(12,849
)
 
(5,074
)
Prepaid expenses

 
(1,447
)
Property, plant and equipment
(189,529
)
 
(108,646
)
Equity investment in partnerships
(3,572
)
 
(24,315
)
Other
(2,010
)
 
(2,402
)
Total deferred tax liabilities
(207,960
)
 
(141,884
)
Net deferred tax liabilities
$
(30,494
)
 
$
(25,918
)

At December 31, 2018, we had a cumulative U.S. federal net operating loss of approximately $535.6 million that can be carried forward to apply against taxable income generated in future years. $350.4 million of this carryforward may be carried forward indefinitely and the remaining carryforward begins to expire in 2031. We had cumulative U.S. state net operating losses of approximately $371.0 million available for carryforward, which begin to expire in 2019. We had foreign net operating losses of $0.8 million available for carryforward, which begin to expire in 2025. We had foreign tax credits of approximately $44.6 million available for carryforward, which begin to expire in 2020. We had interest expense limitation of $31.8 million available for indefinite carryforward.
The valuation allowance decreased by $0.1 million during 2018. The change is primarily related to state net operating losses.
We have a valuation allowance on a small portion of our state net operating loss carryovers with shorter carryover periods, our foreign net operating loss carryovers and our foreign tax credit carryover. We have not released the valuation allowance on the foreign tax credits due to the foreign tax credit limitation and the relative subjectivity of forecasts of the relational magnitude of U.S. and foreign taxable income in future periods, as well as the shorter carryover period available for the credits. Deferred tax assets are reduced by a valuation allowance when a determination is made that it is more likely than not that some, or all, of the deferred tax assets will not be realized based on the weight of all available evidence. Evidence which is objectively verifiable carries a higher weight in the analysis. The ultimate realization of deferred tax assets is dependent upon the existence of sufficient taxable income of the appropriate character within the carryback and carryforward period available under the tax law. Sources of taxable income include future reversals of existing taxable temporary differences, future earnings and available tax planning strategies.
We have analyzed filing positions in all of the federal, state and foreign jurisdictions where we are required to file income tax returns and determined that no accruals related to uncertainty in tax positions are required. All income tax years of the Company ending after the emergence from bankruptcy remain open for examination in U.S. jurisdictions under general operation of the statute of limitations, including special provisions with regard to net operating loss carryovers. In foreign jurisdictions, all tax periods prior to the emergence from bankruptcy are closed. The statute of limitations has not been waived with respect to any foreign jurisdictions post emergence and tax periods are open for
examination in accordance with the general statutes of each foreign jurisdiction. Currently, there are no examinations in progress for our federal, state or foreign jurisdictions.
v3.10.0.1
Long-Term Debt
12 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
Long-Term Debt LONG-TERM DEBT
Our long-term debt consisted of the following (dollars in thousands):
 
Interest rate at December 31, 2018
 
December 31,
2018
 
December 31,
2017
Senior unsecured notes due 2022
5.625%
 
400,000

 
400,000

Senior unsecured notes due 2023
5.625%
 
350,000

 
350,000

Senior unsecured notes due 2025
6.375%
 
325,000

 
325,000

Senior unsecured notes due 2026
7.250%
 
300,000

 
300,000

SemGroup $1.0 billion corporate revolving credit facility (1)
 
 
 
 
 
Alternate base rate borrowings
7.250%
 
24,500

 

Eurodollar borrowings
5.156%
 
95,000

 
131,000

HFOTCO acquisition final payment 

 

 
565,868

HFOTCO term loan B (2)
5.280%
 
597,000