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• | The independent valuation firm prepares the valuations and the supporting analysis. |
• | The valuation report is reviewed and approved by senior management. |
• | The Audit Committee of the Board of Directors reviews the supporting analysis and accepts the valuations. |
• | Level 1 - quoted prices in active markets for identical investments |
• | Level 2 - other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.) |
• | Level 3 - significant unobservable inputs (including the Company's own assumptions in determining the fair value of investments) |
• | Lease revenue – Base rent related to the Company's leased property is recognized on a straight-line basis over the term of the lease when collectability is reasonably assured. Participating rent is recognized when it is earned, based on the achievement of specified performance criteria. Rental payments received in advance are classified as unearned revenue and included as a liability within the Consolidated Balance Sheets. Unearned revenue is amortized ratably over the lease period as revenue recognition criteria are met. Rental payments received in arrears are accrued and classified as deferred rent receivable and included in assets within the Consolidated Balance Sheets. |
• | Transportation and distribution revenue – This represents revenue related to natural gas transportation, distribution and supply. Transportation revenues are recognized by MoGas on firm contracted capacity over the contract period regardless of whether the contracted capacity is used. For interruptible or volumetric based transportation, revenue is recognized when physical deliveries of natural gas are made at the delivery point agreed upon by both parties. Distribution revenue is recognized by Omega based on agreed upon contractual terms over each annual period during the terms of the contract. Beginning February 1, 2016, due to changes that commenced under a new contract with the Department of Defense ("DOD"), gas sales and cost of gas sales are presented on a net basis in the transportation and distribution revenue line. |
• | Financing revenue – Historically, financing notes receivable have been considered a core product offering and therefore the related income is presented as a component of operating income. For increasing rate loans, base interest income is recorded ratably over the life of the loan, using the effective interest rate. The net amount of deferred loan origination income and costs are amortized on a straight-line basis over the life of the loan and reported as an adjustment to yield in financing revenue. Participating financing revenues are recorded when specific performance criteria have been met. |
• | Net distributions and dividend income from investments – Distributions and dividends from investments are recorded on their ex-dates and are reflected as other income within the accompanying Consolidated Statements of Income. Distributions received from the Company's investments are generally characterized as ordinary income, capital gains and distributions received from investment securities. The portion characterized as return of capital is paid by the Company's investees from their cash flow from operations. The Company records investment income, capital gains and distributions received from investment securities based on estimates made at the time such distributions are received. Such estimates are based on information available from each company and other industry sources. These estimates may subsequently be revised based on information received from the entities after their tax reporting periods are concluded, as the actual character of these distributions is not known until after the fiscal year end of the Company. |
• | Net realized and unrealized gain (loss) from investments – Securities transactions are accounted for on the date the securities are purchased or sold. Realized gains and losses are reported on an identified cost basis. The Company records investment income and return of capital based on estimates made at the time such distributions are received. Such estimates are based on information available from the portfolio company and other industry sources. These estimates may subsequently be revised based on information received from the portfolio company after their tax reporting periods are concluded, as the actual character of these distributions are not known until after the Company's fiscal year end. |
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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 | Zenith Energy 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(3) |
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(2) | $513,355 |
Estimated Useful Life | 27 years | 26 years | 30 years |
(1) Non-Controlling Interest Partner, Prudential, funded a portion of the original Pinedale LGS acquisition and, as a limited partner, held 18.95 percent of the economic interest in Pinedale LP. Pinedale LP I, a wholly-owned subsidiary of the Company, acquired Prudential's 18.95 percent economic interest on December 29, 2017. Pinedale GP, a wholly-owned subsidiary of the Company, holds the remaining 81.05 percent economic interest. | |||
(2) Monthly rent payments increased to $1,776,772 beginning January 1, 2018. | |||
(3) The lessee of the Portland Terminal Facility has a purchase option 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. |
Future Minimum Lease Receipts (1) | |||
Year Ending December 31, | Amount | ||
2018 | $ | 61,828,029 | |
2019 | 64,103,462 | ||
2020 | 71,264,921 | ||
2021 | 77,445,396 | ||
2022 | 76,553,434 | ||
Thereafter | 302,242,184 | ||
Total | $ | 653,437,426 | |
(1) Future minimum lease receipts include base rents for the Portland Terminal Facility through its initial 15-year term. |
As a Percentage of (1) | ||||||||||||||
Leased Properties | Lease Revenues | |||||||||||||
As of December 31, | For the Years Ended December 31, | |||||||||||||
2017 | 2016 | 2017 | 2016 | 2015 | ||||||||||
Pinedale LGS | 39.9 | % | 39.8 | % | 31.2 | % | 30.4 | % | 42.9 | % | ||||
Grand Isle Gathering System | 49.7 | % | 50.0 | % | 59.1 | % | 59.8 | % | 42.3 | % | ||||
Portland Terminal Facility | 10.1 | % | 9.9 | % | 9.6 | % | 9.7 | % | 13.3 | % | ||||
(1) Insignificant leases are not presented; thus percentages may not sum to 100%. |
For the Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Depreciation Expense | |||||||||||
GIGS | $ | 9,754,596 | $ | 8,605,506 | $ | 4,317,769 | |||||
Pinedale | 8,869,440 | 8,869,440 | 8,869,440 | ||||||||
Portland Terminal Facility | 1,275,660 | 843,084 | 1,235,369 | ||||||||
Eastern Interconnect Project | — | — | 569,670 | ||||||||
United Property Systems | 36,298 | 32,424 | 29,700 | ||||||||
Total Depreciation Expense | $ | 19,935,994 | $ | 18,350,454 | $ | 15,021,948 | |||||
Amortization Expense - Deferred Lease Costs | |||||||||||
GIGS | $ | 30,564 | $ | 30,564 | $ | 15,130 | |||||
Pinedale | 61,368 | 61,368 | 61,368 | ||||||||
Total Amortization Expense - Deferred Lease Costs | $ | 91,932 | $ | 91,932 | $ | 76,498 | |||||
ARO Accretion Expense | |||||||||||
GIGS | $ | 663,065 | $ | 726,664 | $ | 339,042 | |||||
Total ARO Accretion Expense | $ | 663,065 | $ | 726,664 | $ | 339,042 |
December 31, 2017 | December 31, 2016 | ||||||
Net Deferred Lease Costs | |||||||
GIGS | $ | 259,883 | $ | 290,447 | |||
Pinedale | 611,717 | 673,085 | |||||
Total Deferred Lease Costs, net | $ | 871,600 | $ | 963,532 |
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Deferred Tax Assets and Liabilities | |||||||
December 31, 2017 | December 31, 2016 | ||||||
Deferred Tax Assets: | |||||||
Net operating loss carryforwards | $ | 957,719 | $ | 1,144,818 | |||
Net unrealized loss on investment securities | — | 61,430 | |||||
Cost recovery of leased and fixed assets | — | 739,502 | |||||
Loan Loss Provision | 247,814 | 608,086 | |||||
Basis reduction of investment in partnerships | 261,549 | — | |||||
Other loss carryforwards | 2,965,321 | 3,187,181 | |||||
Sub-total | $ | 4,432,403 | $ | 5,741,017 | |||
Deferred Tax Liabilities: | |||||||
Basis reduction of investment in partnerships | $ | — | $ | (2,158,746 | ) | ||
Net unrealized gain on investment securities | (342,669 | ) | — | ||||
Cost recovery of leased and fixed assets | (1,845,105 | ) | (1,823,982 | ) | |||
Sub-total | $ | (2,187,774 | ) | $ | (3,982,728 | ) | |
Total net deferred tax asset | $ | 2,244,629 | $ | 1,758,289 |
Income Tax Expense (Benefit) | |||||||||||
For the Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Application of statutory income tax rate | $ | 12,231,838 | $ | 10,219,573 | $ | 3,630,325 | |||||
State income taxes, net of federal tax benefit | 352,708 | 26,215 | (134,597 | ) | |||||||
Income of Real Estate Investment Trust not subject to tax | (11,975,853 | ) | (10,663,371 | ) | (5,189,849 | ) | |||||
Tax reform impact | 1,262,444 | — | — | ||||||||
Other | 474,181 | (46,837 | ) | (253,432 | ) | ||||||
Total income tax expense (benefit) | $ | 2,345,318 | $ | (464,420 | ) | $ | (1,947,553 | ) |
Components of Income Tax Expense (Benefit) | |||||||||||
For the Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Current tax expense (benefit) | |||||||||||
Federal | $ | 2,498,363 | $ | (321,720 | ) | $ | 781,941 | ||||
State (net of federal tax benefit) | 333,295 | 8,613 | 140,069 | ||||||||
Total current tax expense (benefit) | $ | 2,831,658 | $ | (313,107 | ) | $ | 922,010 | ||||
Deferred tax expense (benefit) | |||||||||||
Federal | $ | (505,753 | ) | $ | (168,915 | ) | $ | (2,594,897 | ) | ||
State (net of federal tax benefit) | 19,413 | 17,602 | (274,666 | ) | |||||||
Total deferred tax benefit | $ | (486,340 | ) | $ | (151,313 | ) | $ | (2,869,563 | ) | ||
Total income tax expense (benefit), net | $ | 2,345,318 | $ | (464,420 | ) | $ | (1,947,553 | ) |
Aggregate Cost of Securities for Income Tax Purposes | |||||||
December 31, 2017 | December 31, 2016 | ||||||
Aggregate cost for federal income tax purposes | $ | 3,063,430 | $ | 4,327,077 | |||
Gross unrealized appreciation | 325,130 | 5,408,242 | |||||
Gross unrealized depreciation | — | — | |||||
Net unrealized appreciation | $ | 325,130 | $ | 5,408,242 |
2017 Common Stock Tax Information | ||||||||||||||||||||||||
Record Date | Ex-Dividend Date | Payable Date | Total Distribution per Share | Total Ordinary Dividends | Qualified Dividends | Capital Gain Distributions | Nondividend Distributions | |||||||||||||||||
2/13/2017 | 2/9/2017 | 2/28/2017 | $ | 0.7500 | $ | 0.5925 | $ | 0.0785 | $ | — | $ | 0.1575 | ||||||||||||
5/16/2017 | 5/12/2017 | 5/31/2017 | 0.7500 | 0.5925 | 0.0785 | — | 0.1575 | |||||||||||||||||
8/17/2017 | 8/15/2017 | 8/31/2017 | 0.7500 | 0.5925 | 0.0785 | — | 0.1575 | |||||||||||||||||
11/15/2017 | 11/14/2017 | 11/30/2017 | 0.7500 | 0.5925 | 0.0785 | — | 0.1575 | |||||||||||||||||
Total 2017 Distributions | $ | 3.0000 | $ | 2.3700 | $ | 0.3140 | $ | — | $ | 0.6300 |
2016 Common Stock Tax Information | ||||||||||||||||||||||||
Record Date | Ex-Dividend Date | Payable Date | Total Distribution per Share | Total Ordinary Dividends | Qualified Dividends | Capital Gain Distributions | Nondividend Distributions | |||||||||||||||||
02/12/2016 | 02/10/2016 | 02/29/2016 | $ | 0.7500 | $ | 0.2955 | $ | — | $ | — | $ | 0.4545 | ||||||||||||
05/13/2016 | 05/11/2016 | 05/31/2016 | 0.7500 | 0.2955 | — | — | 0.4545 | |||||||||||||||||
08/17/2016 | 08/15/2016 | 08/31/2016 | 0.7500 | 0.2955 | — | — | 0.4545 | |||||||||||||||||
11/15/2016 | 11/11/2016 | 11/30/2016 | 0.7500 | 0.2955 | — | — | 0.4545 | |||||||||||||||||
Total 2016 Distributions | $ | 3.0000 | $ | 1.1820 | $ | — | $ | — | $ | 1.8180 |
2015 Common Stock Tax Information | ||||||||||||||||||||||||
Record Date | Ex-Dividend Date | Payable Date | Total Distribution per Share | Total Ordinary Dividends | Qualified Dividends | Capital Gain Distributions | Nondividend Distributions | |||||||||||||||||
02/13/2015 | 02/11/2015 | 02/27/2015 | $ | 0.6500 | $ | 0.4680 | $ | 0.0126 | $ | — | $ | 0.1820 | ||||||||||||
05/15/2015 | 05/13/2015 | 05/29/2015 | 0.6750 | 0.4860 | 0.0131 | — | 0.1890 | |||||||||||||||||
08/17/2015 | 08/13/2015 | 08/31/2015 | 0.6750 | 0.4860 | 0.0131 | — | 0.1890 | |||||||||||||||||
11/13/2015 | 11/11/2015 | 11/30/2015 | 0.7500 | 0.5400 | 0.0146 | — | 0.2100 | |||||||||||||||||
Total 2015 Distributions | $ | 2.7500 | $ | 1.9800 | $ | 0.0534 | $ | — | $ | 0.7700 |
2017 Preferred Stock Tax Information | ||||||||||||||||||||||||
Record Date | Ex-Dividend Date | Payable Date | Total Distribution per Share | Total Ordinary Dividends | Qualified Dividends | Capital Gain Distributions | Nondividend Distributions | |||||||||||||||||
2/13/2017 | 2/9/2017 | 2/28/2017 | $ | 0.4609 | $ | 0.4609 | $ | 0.0611 | $ | — | $ | — | ||||||||||||
5/16/2017 | 5/12/2017 | 5/31/2017 | 0.4609 | 0.4609 | 0.0611 | — | — | |||||||||||||||||
8/17/2017 | 8/15/2017 | 8/31/2017 | 0.4609 | 0.4609 | 0.0611 | — | — | |||||||||||||||||
11/15/2017 | 11/14/2017 | 11/30/2017 | 0.4609 | 0.4609 | 0.0611 | — | — | |||||||||||||||||
Total 2017 Distributions | $ | 1.8436 | $ | 1.8436 | $ | 0.2444 | $ | — | $ | — |
2016 Preferred Stock Tax Information | ||||||||||||||||||||||||
Record Date | Ex-Dividend Date | Payable Date | Total Distribution per Share | Total Ordinary Dividends | Qualified Dividends | Capital Gain Distributions | Nondividend Distributions | |||||||||||||||||
02/12/2016 | 02/10/2016 | 02/29/2016 | $ | 0.4609 | $ | 0.4609 | $ | — | $ | — | $ | — | ||||||||||||
05/13/2016 | 05/11/2016 | 05/31/2016 | 0.4609 | 0.4609 | — | — | — | |||||||||||||||||
08/17/2016 | 08/15/2016 | 08/31/2016 | 0.4609 | 0.4609 | — | — | — | |||||||||||||||||
11/15/2016 | 11/11/2016 | 11/30/2016 | 0.4609 | 0.4609 | — | — | — | |||||||||||||||||
Total 2016 Distributions | $ | 1.8436 | $ | 1.8436 | $ | — | $ | — | $ | — |
2015 Preferred Stock Tax Information | ||||||||||||||||||||||||
Record Date | Ex-Dividend Date | Payable Date | Total Distribution per Share | Total Ordinary Dividends | Qualified Dividends | Capital Gain Distributions | Nondividend Distributions | |||||||||||||||||
05/15/2015 | 05/13/2015 | 06/01/2015 | $ | 0.6351 | $ | 0.6351 | $ | 0.0171 | $ | — | $ | — | ||||||||||||
08/17/2015 | 08/13/2015 | 08/31/2015 | 0.4609 | 0.4609 | 0.0124 | — | — | |||||||||||||||||
11/13/2015 | 11/11/2015 | 11/30/2015 | 0.4609 | 0.4609 | 0.0124 | — | — | |||||||||||||||||
Total 2015 Distributions | $ | 1.5569 | $ | 1.5569 | $ | 0.0419 | $ | — | $ | — |
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Property and Equipment | |||||||
December 31, 2017 | December 31, 2016 | ||||||
Land | $ | 580,000 | $ | 580,000 | |||
Natural gas pipeline | 124,303,315 | 124,288,156 | |||||
Vehicles and trailers | 650,634 | 570,267 | |||||
Office equipment and computers | 268,559 | 267,095 | |||||
Gross property and equipment | $ | 125,802,508 | $ | 125,705,518 | |||
Less: accumulated depreciation | (12,643,636 | ) | (9,292,712 | ) | |||
Net property and equipment | $ | 113,158,872 | $ | 116,412,806 |
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• | In order to ensure equitable application of the quarterly management fee provisions of the Management Agreement to the GIGS acquisition, which closed on June 30, 2015, the Manager waived any incremental management fee due as of the end of the second quarter of 2015 based on the net impact of the GIGS Acquisition as of June 30, 2015; |
• | In light of the provisions for loan losses recognized by the Company on certain of its energy infrastructure financing investments (collectively, the "Underperforming Loans") during 2015 and the first quarter of 2016, the Manager voluntarily recommended, and the Company agreed, that effective on and after the Company's March 31, 2016 balance sheet date, solely for the purpose of computing the value of the Company's Managed Assets in calculating the quarterly management fee under the terms of the Management Agreement, that portion of the Management Fee attributable to the Company's investment in the Underperforming Loans shall be based on the estimated net realizable value of such loans, which shall not exceed the amount invested in the Underperforming Loans as of the end of the quarter for which the Management Fee is to be calculated. This agreement superseded a similar prior agreement between the Company and the Manager, which was effective as of September 30, 2015, concerning valuation of the Black Bison Loans for purposes of calculating the Management Fee. |
• | In light of the provision for uncollectable interest recorded with respect to Black Bison loans as described in Note 4 ("Financing Notes Receivable"), the Manager voluntarily recommended, and the Company agreed, that the Manager would waive $133 thousand of the total $279 thousand incentive fee that would otherwise be payable under the provisions described above with respect to dividends paid on the Company's common stock during the year ended December 31, 2015, and accordingly the Manager received an incentive fee of $145 thousand for such period. |
• | During the year ended December 31, 2016, the Manager voluntarily recommended, and the Company agreed, that the Manager would waive $88 thousand of the total $595 thousand incentive fee that would have otherwise been payable under the provisions of the Management Agreement with respect to dividends paid on the Company's common stock. |
• | During the year ended December 31, 2017, the Manager voluntarily recommended, and the Company agreed, that the Manager would waive $100 thousand of the total $595 thousand 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. |
• | In order to ensure equitable application of the quarterly management fee provisions of the Management Agreement for the acquisition of Prudential's minority limited partner interest in Pinedale LP, which closed on December 29, 2017, the Manager waived any incremental management fee due as of the end of the fourth quarter of 2017 based on the net impact of the Pinedale LP acquisition. |
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December 31, 2017 | |||||||||||||||
Total | Fair Value | ||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | |||||||||||||||
Other equity securities | $ | 2,958,315 | $ | — | $ | — | $ | 2,958,315 | |||||||
Total Assets | $ | 2,958,315 | $ | — | $ | — | $ | 2,958,315 |
December 31, 2016 | |||||||||||||||
Total | 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 |
Level 3 Rollforward | ||||||||||||||||||||||||||||
For the Year Ended 2017 | Fair Value Beginning Balance | Acquisitions | Disposals | Total Realized and Unrealized Gains Included in Net Income | Return of Capital Adjustments Impacting Cost Basis of Securities | Fair Value Ending Balance | Changes in Unrealized Gains Included In Net Income, Relating to Securities Still Held (1) | |||||||||||||||||||||
Other equity securities | $ | 9,287,209 | $ | 1,161,034 | $ | (8,752,201 | ) | $ | 1,531,827 | $ | (269,554 | ) | $ | 2,958,315 | $ | 295,161 | ||||||||||||
Total | $ | 9,287,209 | $ | 1,161,034 | $ | (8,752,201 | ) | $ | 1,531,827 | $ | (269,554 | ) | $ | 2,958,315 | $ | 295,161 | ||||||||||||
For the Year Ended 2016 | ||||||||||||||||||||||||||||
Other equity securities | $ | 8,393,683 | $ | — | $ | — | $ | 781,154 | $ | 112,372 | $ | 9,287,209 | $ | 781,154 | ||||||||||||||
Total | $ | 8,393,683 | $ | — | $ | — | $ | 781,154 | $ | 112,372 | $ | 9,287,209 | $ | 781,154 | ||||||||||||||
(1) Located in Net realized and unrealized gain on other equity securities in the Consolidated Statements of Income |
Carrying and Fair Value Amounts | |||||||||||||||||
Level within fair value hierarchy | December 31, 2017 | December 31, 2016 | |||||||||||||||
Carrying Amount (1) | Fair Value | Carrying Amount (1) | Fair Value | ||||||||||||||
Financial Assets: | |||||||||||||||||
Cash and cash equivalents | Level 1 | $ | 15,787,069 | $ | 15,787,069 | $ | 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 | ||||||||||||
Derivative asset | Level 2 | — | — | 19,950 | 19,950 | ||||||||||||
Financial Liabilities: | |||||||||||||||||
Secured credit facilities | Level 2 | $ | 40,745,354 | $ | 40,745,354 | $ | 89,387,985 | $ | 89,387,985 | ||||||||
Unsecured convertible senior notes | Level 1 | 112,032,083 | 139,101,660 | 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. |
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Total Commitment or Original Principal | Quarterly Principal Payments | December 31, 2017 | December 31, 2016 | ||||||||||||||||||||
Maturity Date | Amount Outstanding | Interest Rate | Amount Outstanding | Interest Rate | |||||||||||||||||||
CorEnergy Secured Credit Facility: | |||||||||||||||||||||||
CorEnergy Revolver | $ | 160,000,000 | $ | — | 7/28/2022 | $ | — | 4.32 | % | $ | 44,000,000 | 3.76 | % | ||||||||||
CorEnergy Term Loan (1) | 45,000,000 | 1,615,000 | 12/15/2019 | — | — | % | 36,740,000 | 3.74 | % | ||||||||||||||
MoGas Revolver | 1,000,000 | — | 7/28/2022 | — | 4.32 | % | — | 3.77 | % | ||||||||||||||
Omega Line of Credit | 1,500,000 | — | 7/31/2018 | — | 5.57 | % | — | 4.77 | % | ||||||||||||||
Pinedale Secured Credit Facility: | |||||||||||||||||||||||
$58.5M Term Loan – related party (2) | 11,085,750 | 167,139 | 3/30/2021 | — | — | % | 8,860,577 | 8.00 | % | ||||||||||||||
Amended Pinedale Term Credit Facility | 41,000,000 | 882,000 | 12/29/2022 | 41,000,000 | 6.50 | % | — | — | % | ||||||||||||||
7.00% Unsecured Convertible Senior Notes | 115,000,000 | — | 6/15/2020 | 114,000,000 | 7.00 | % | 114,000,000 | 7.00 | % | ||||||||||||||
Total Debt | $ | 155,000,000 | $ | 203,600,577 | |||||||||||||||||||
Less: | |||||||||||||||||||||||
Unamortized deferred financing costs (3) | $ | 375,309 | $ | 381,531 | |||||||||||||||||||
Unamortized discount on 7.00% Convertible Senior Notes | 1,847,254 | 2,586,166 | |||||||||||||||||||||
Long-term debt, net of deferred financing costs | $ | 152,777,437 | $ | 200,632,880 | |||||||||||||||||||
Debt due within one year | $ | 3,528,000 | $ | 7,128,556 | |||||||||||||||||||
(1) The CorEnergy Term Loan was paid off during the third quarter of 2017 in connection with entering into the amended and restated CorEnergy Credit Facility discussed below. | |||||||||||||||||||||||
(2) $47.4 million of the original $58.5 million term loan was payable to CorEnergy under the same terms and eliminates in consolidation. The term loan was paid off during the fourth quarter of 2017 in connection with the Amended Pinedale Term Credit Facility discussed below. | |||||||||||||||||||||||
(3) Unamortized deferred financing costs related to our revolving credit facilities are included in Deferred Costs in the Assets section of the Consolidated Balance Sheets. Refer to the "Deferred Financing Costs" paragraph below. |
Deferred Financing Cost Amortization Expense (1)(2) | |||||||||||
For the Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
CorEnergy Credit Facility | $ | 873,601 | $ | 1,078,526 | $ | 926,930 | |||||
Pinedale Credit Facility | 392 | 156,330 | 500,326 | ||||||||
Total Deferred Debt Cost Amortization | $ | 873,993 | $ | 1,234,856 | $ | 1,427,256 | |||||
(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, refer to the Convertible Note Interest Expense table below. |
Year | Pinedale Credit Facility | |||
2018 | $ | 3,528,000 | ||
2019 | 3,528,000 | |||
2020 | 3,528,000 | |||
2021 | 3,528,000 | |||
2022 | 26,888,000 | |||
Thereafter | — | |||
Total | $ | 41,000,000 |
Convertible Note Interest Expense | |||||||||||
For the Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
7.00% Convertible Notes | $ | 7,980,000 | $ | 8,008,195 | $ | 4,069,722 | |||||
Discount Amortization | 738,912 | 744,081 | 380,653 | ||||||||
Deferred Debt Issuance Cost Amortization | 48,276 | 48,566 | 21,656 | ||||||||
Total | $ | 8,767,188 | $ | 8,800,842 | $ | 4,472,031 |
|
Asset Retirement Obligation | |||||||
For the Years Ended December 31, | |||||||
2017 | 2016 | ||||||
Beginning asset retirement obligation | $ | 11,882,943 | $ | 12,839,042 | |||
Liabilities assumed | — | — | |||||
ARO accretion expense | 663,065 | 726,664 | |||||
Revision in cash flow estimates | (3,375,515 | ) | (1,682,763 | ) | |||
Ending asset retirement obligation | $ | 9,170,493 | $ | 11,882,943 |
|
For the Years Ended December 31, | ||||||||||||
Derivatives in Cash Flow Hedging Relationship | 2017 | 2016 | 2015 | |||||||||
Amount of Loss on Derivatives Recognized in AOCI (Effective Portion) | $ | — | $ | (300,181 | ) | $ | (611,879 | ) | ||||
Amount of Loss on Derivatives Reclassified from AOCI (Effective Portion) Recognized in Net Income(1) | — | (50,964 | ) | (287,999 | ) | |||||||
Derivatives Not Designated as Hedging Instruments | ||||||||||||
Amount of Gain on Derivatives Recognized in Income(2) | $ | 25,842 | $ | 73,204 | $ | — | ||||||
(1) Included in "Interest Expense" on the face of the Consolidated Statements of Income and Comprehensive Income. | ||||||||||||
(2) The gain (loss) recognized in income on derivatives includes changes in fair value for derivatives subsequent to de-designation from hedge accounting. |
|
|
For the Fiscal 2017 Quarters Ended | |||||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||
Revenue | |||||||||||||||
Lease revenue | $ | 17,066,526 | $ | 17,050,092 | $ | 17,173,676 | $ | 17,513,510 | |||||||
Transportation and distribution revenue | 5,010,590 | 4,775,780 | 5,270,628 | 4,888,575 | |||||||||||
Total Revenue | 22,077,116 | 21,825,872 | 22,444,304 | 22,402,085 | |||||||||||
Expenses | |||||||||||||||
Transportation and distribution expenses | 1,335,570 | 1,362,980 | 2,384,182 | 1,646,975 | |||||||||||
General and administrative | 3,061,240 | 2,558,339 | 2,632,546 | 2,534,372 | |||||||||||
Depreciation, amortization and ARO accretion expense | 6,005,908 | 6,005,995 | 6,017,664 | 6,018,143 | |||||||||||
Total Expenses | 10,402,718 | 9,927,314 | 11,034,392 | 10,199,490 | |||||||||||
Operating Income | $ | 11,674,398 | $ | 11,898,558 | $ | 11,409,912 | $ | 12,202,595 | |||||||
Other Income (Expense) | |||||||||||||||
Net distributions and dividend income | $ | 43,462 | $ | 221,440 | $ | 213,040 | $ | 202,149 | |||||||
Net realized and unrealized gain (loss) on other equity securities | (544,208 | ) | 614,634 | 1,340,197 | 121,204 | ||||||||||
Interest expense | (3,454,397 | ) | (3,202,837 | ) | (2,928,036 | ) | (2,793,245 | ) | |||||||
Loss on extinguishment of debt | — | — | (234,433 | ) | (102,500 | ) | |||||||||
Total Other Expense | (3,955,143 | ) | (2,366,763 | ) | (1,609,232 | ) | (2,572,392 | ) | |||||||
Income before income taxes | 7,719,255 | 9,531,795 | 9,800,680 | 9,630,203 | |||||||||||
Taxes | |||||||||||||||
Current tax expense (benefit) | (33,760 | ) | 57,651 | 65,131 | 2,742,636 | ||||||||||
Deferred tax expense (benefit) | (298,846 | ) | 38,084 | 126,440 | (352,018 | ) | |||||||||
Income tax expense (benefit), net | (332,606 | ) | 95,735 | 191,571 | 2,390,618 | ||||||||||
Net Income | 8,051,861 | 9,436,060 | 9,609,109 | 7,239,585 | |||||||||||
Less: Net Income attributable to non-controlling interest | 382,383 | 435,888 | 431,825 | 483,730 | |||||||||||
Net Income attributable to CorEnergy Stockholders | $ | 7,669,478 | $ | 9,000,172 | $ | 9,177,284 | $ | 6,755,855 | |||||||
Preferred dividend requirements | 1,037,109 | 2,123,129 | 2,396,875 | 2,396,875 | |||||||||||
Net Income attributable to Common Stockholders | $ | 6,632,369 | $ | 6,877,043 | $ | 6,780,409 | $ | 4,358,980 | |||||||
Earnings Per Common Share: | |||||||||||||||
Basic | $ | 0.56 | $ | 0.58 | $ | 0.57 | $ | 0.37 | |||||||
Diluted | $ | 0.56 | $ | 0.58 | $ | 0.57 | $ | 0.37 |
For the Fiscal 2016 Quarters Ended | |||||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||
Revenue | |||||||||||||||
Lease revenue | $ | 16,996,072 | $ | 16,996,072 | $ | 16,996,155 | $ | 17,005,831 | |||||||
Transportation and distribution revenue | 5,099,451 | 5,064,680 | 5,119,330 | 5,810,651 | |||||||||||
Financing revenue | 162,344 | — | — | — | |||||||||||
Total Revenue | 22,257,867 | 22,060,752 | 22,115,485 | 22,816,482 | |||||||||||
Expenses | |||||||||||||||
Transportation and distribution expenses | 1,362,325 | 1,378,306 | 1,482,161 | 2,240,556 | |||||||||||
General and administrative | 3,289,852 | 2,773,240 | 3,021,869 | 3,185,419 | |||||||||||
Depreciation, amortization and ARO accretion expense | 5,296,818 | 5,737,025 | 5,744,266 | 5,744,762 | |||||||||||
Provision for loan loss and disposition | 4,645,188 | 369,278 | — | — | |||||||||||
Total Expenses | 14,594,183 | 10,257,849 | 10,248,296 | 11,170,737 | |||||||||||
Operating Income | $ | 7,663,684 | $ | 11,802,903 | $ | 11,867,189 | $ | 11,645,745 | |||||||
Other Income (Expense) | |||||||||||||||
Net distributions and dividend income | $ | 375,573 | $ | 214,169 | $ | 277,523 | $ | 273,559 | |||||||
Net realized and unrealized gain (loss) on other equity securities | (1,628,752 | ) | 1,199,665 | 1,430,858 | (177,289 | ) | |||||||||
Interest expense | (3,926,009 | ) | (3,540,812 | ) | (3,520,856 | ) | (3,430,162 | ) | |||||||
Total Other Expense | (5,179,188 | ) | (2,126,978 | ) | (1,812,475 | ) | (3,333,892 | ) | |||||||
Income before income taxes | 2,484,496 | 9,675,925 | 10,054,714 | 8,311,853 | |||||||||||
Taxes | |||||||||||||||
Current tax expense (benefit) | (677,731 | ) | 203,652 | 95,125 | 65,847 | ||||||||||
Deferred tax expense (benefit) | (577,395 | ) | 206,786 | 388,027 | (168,731 | ) | |||||||||
Income tax expense (benefit), net | (1,255,126 | ) | 410,438 | 483,152 | (102,884 | ) | |||||||||
Net Income | 3,739,622 | 9,265,487 | 9,571,562 | 8,414,737 | |||||||||||
Less: Net Income attributable to non-controlling interest | 348,501 | 310,960 | 340,377 | 328,370 | |||||||||||
Net Income attributable to CorEnergy Stockholders | $ | 3,391,121 | $ | 8,954,527 | $ | 9,231,185 | $ | 8,086,367 | |||||||
Preferred dividend requirements | 1,037,109 | 1,037,109 | 1,037,109 | 1,037,110 | |||||||||||
Net Income attributable to Common Stockholders | $ | 2,354,012 | $ | 7,917,418 | $ | 8,194,076 | $ | 7,049,257 | |||||||
Earnings Per Common Share: | |||||||||||||||
Basic | $ | 0.20 | $ | 0.66 | $ | 0.69 | $ | 0.59 | |||||||
Diluted | $ | 0.20 | $ | 0.66 | $ | 0.68 | $ | 0.59 |
|
|
CONDENSED BALANCE SHEETS | December 31, 2017 | December 31, 2016 | |||||
Assets | |||||||
Leased property, net of accumulated depreciation of $927,838 and $743,458 | $ | 3,865,818 | $ | 4,050,198 | |||
Investments | 479,840,250 | 451,603,448 | |||||
Cash and cash equivalents | 6,662,474 | 5,933,481 | |||||
Due from subsidiary | 7,302,678 | 9,770,878 | |||||
Note receivable from subsidiary | 83,250,000 | 128,244,591 | |||||
Deferred costs, net of accumulated amortization of $226,342 and $1,240,297 | 2,255,425 | 1,548,255 | |||||
Prepaid expenses and other assets | 197,211 | 178,168 | |||||
Total Assets | $ | 583,373,856 | $ | 601,329,019 | |||
Liabilities and Equity | |||||||
Secured credit facilities, net | — | 80,527,408 | |||||
Unsecured convertible senior notes, net of discount and debt issuance costs of $1,967,917 and $2,755,105 | 112,032,083 | 111,244,895 | |||||
Accounts payable and other accrued liabilities | 987,881 | 1,199,616 | |||||
Management fees payable | 1,748,426 | 1,735,024 | |||||
Due to affiliate | 153,640 | 153,640 | |||||
Total Liabilities | $ | 114,922,030 | $ | 194,860,583 | |||
Equity | |||||||
Series A Cumulative Redeemable Preferred Stock 7.375%, $130,000,000 and $56,250,000 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 52,000 and 22,500 issued and outstanding at December 31, 2017 and December 31, 2016, respectively | $ | 130,000,000 | $ | 56,250,000 | |||
Capital stock, non-convertible, $0.001 par value; 11,915,830 and 11,886,216 shares issued and outstanding at December 31, 2017 and December 31, 2016 (100,000,000 shares authorized) | 11,916 | 11,886 | |||||
Additional paid-in capital | 338,439,910 | 350,217,746 | |||||
Accumulated other comprehensive loss | — | (11,196 | ) | ||||
Total Equity | 468,451,826 | 406,468,436 | |||||
Total Liabilities and Equity | $ | 583,373,856 | $ | 601,329,019 | |||
See accompanying Schedule I Notes to Condensed Financial Statements. |
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | For the Years Ended December 31, | ||||||||||
2017 | 2016 | 2015 | |||||||||
Revenue | |||||||||||
Lease revenue | $ | — | $ | — | $ | 638,243 | |||||
Earnings from subsidiary | 36,222,221 | 32,856,338 | 10,894,003 | ||||||||
Total Revenue | 36,222,221 | 32,856,338 | 11,532,246 | ||||||||
Expenses | |||||||||||
General and administrative | 2,298,201 | 2,236,358 | 1,426,598 | ||||||||
Depreciation expense | 184,380 | 184,380 | 754,050 | ||||||||
Amortization expense | 5,316 | 5,316 | 5,316 | ||||||||
Total Expenses | 2,487,897 | 2,426,054 | 2,185,964 | ||||||||
Operating Income | $ | 33,734,324 | $ | 30,430,284 | $ | 9,346,282 | |||||
Other Income (Expense) | |||||||||||
Net distributions and dividend income | $ | 96,866 | $ | 12,963 | $ | 13,542 | |||||
Interest on loans to subsidiaries | 11,549,344 | 11,705,465 | 9,294,537 | ||||||||
Interest expense, net | (11,451,944 | ) | (12,485,510 | ) | (6,334,450 | ) | |||||
Loss on extinguishment of debt | (225,801 | ) | — | — | |||||||
Total Other Income (Expense) | (31,535 | ) | (767,082 | ) | 2,973,629 | ||||||
Net Income | $ | 33,702,789 | $ | 29,663,202 | $ | 12,319,911 | |||||
Other comprehensive income: | |||||||||||
Changes in fair value of qualifying hedges | 11,196 | (201,993 | ) | (262,505 | ) | ||||||
Total Comprehensive Income | $ | 33,713,985 | $ | 29,461,209 | $ | 12,057,406 | |||||
See accompanying Schedule I Notes to Condensed Financial Statements. |
CONDENSED STATEMENTS OF CASH FLOW | For the Years Ended December 31, | ||||||||||
2017 | 2016 | 2015 | |||||||||
Net cash provided by (used in) operating activities | $ | 1,661,123 | $ | (3,141,286 | ) | $ | 7,166,380 | ||||
Investing Activities | |||||||||||
Proceeds from sale of leased property held for sale | — | — | 7,678,246 | ||||||||
Issuance of note to subsidiary | — | (47,414,250 | ) | — | |||||||
Principal payments received from notes to subsidiaries | 40,092,095 | 11,899,659 | 2,570,000 | ||||||||
Investment in consolidated subsidiaries | (33,900,000 | ) | — | (250,703,944 | ) | ||||||
Cash distributions from consolidated subsidiaries | 46,774,111 | 39,139,897 | 23,392,442 | ||||||||
Net cash provided by (used in) investing activities | $ | 52,966,206 | $ | 3,625,306 | $ | (217,063,256 | ) | ||||
Financing Activities | |||||||||||
Debt financing costs | (1,360,241 | ) | (193,000 | ) | (1,439,929 | ) | |||||
Net offering proceeds on Series A preferred stock | 71,161,531 | — | 54,210,476 | ||||||||
Net offering proceeds on common stock | — | — | 73,184,679 | ||||||||
Net offering proceeds on convertible debt | — | — | 111,262,500 | ||||||||
Repurchases of common stock | — | (2,041,851 | ) | — | |||||||
Repurchases of convertible debt | — | (899,960 | ) | — | |||||||
Dividends paid on Series A preferred stock | (8,227,734 | ) | (4,148,437 | ) | (3,503,125 | ) | |||||
Dividends paid on common stock | (34,731,892 | ) | (34,896,727 | ) | (28,528,224 | ) | |||||
Advances on revolving line of credit | 10,000,000 | 44,000,000 | 42,000,000 | ||||||||
Payments on revolving line of credit | (54,000,000 | ) | — | (74,000,000 | ) | ||||||
Proceeds from term debt | — | — | 45,000,000 | ||||||||
Principal payments on term debt | (36,740,000 | ) | (6,460,000 | ) | (1,800,000 | ) | |||||
Net cash provided by (used in) financing activities | $ | (53,898,336 | ) | $ | (4,639,975 | ) | $ | 216,386,377 | |||
Net Change in Cash and Cash Equivalents | $ | 728,993 | $ | (4,155,955 | ) | $ | 6,489,501 | ||||
Cash and Cash Equivalents at beginning of period | 5,933,481 | 10,089,436 | 3,599,935 | ||||||||
Cash and Cash Equivalents at end of period | $ | 6,662,474 | $ | 5,933,481 | $ | 10,089,436 | |||||
Supplemental Disclosure of Cash Flow Information | |||||||||||
Interest Paid | $ | 10,080,764 | $ | 11,335,654 | $ | 5,254,591 | |||||
Income taxes paid (net of refunds) | — | — | 314,728 | ||||||||
Non-Cash Investing Activities | |||||||||||
Conversion of note receivable from subsidiary to investments | 4,902,495 | — | — | ||||||||
Non-Cash Financing Activities | |||||||||||
Change in accounts payable and accrued expenses related to the issuance of equity | — | — | (72,685 | ) | |||||||
Change in accounts payable and accrued expenses related to debt financing costs | — | — | (30,607 | ) | |||||||
Reinvestment of distributions by common stockholders in additional common shares | 962,308 | 815,889 | 817,915 | ||||||||
See accompanying Schedule I Notes to Condensed Financial Statements. |
|
Initial Cost to Company | Costs Capitalized Subsequent to Acquisition | Gross Amount Carried at Close of Period 12/31/17 | ||||||||||||||||||||||||||||||||||||||||
Description | Location | Encumbrances | Land | Building & Fixtures | Improvements / Adjustments (4) | Land | Building & Fixtures | Total | Accumulated Depreciation | Investment in Real Estate, net, at 12/31/17 | Date Acquired | Life on which depreciation in latest income statement is computed | ||||||||||||||||||||||||||||||
Pinedale LGS (1)(6) | Pinedale, WY | $ | 41,000,000 | $ | 105,485,063 | $ | 125,119,062 | $ | — | $ | 105,485,063 | $ | 125,119,062 | $ | 230,604,125 | $ | 44,632,098 | $ | 185,972,027 | 2012 | 26 years | |||||||||||||||||||||
Portland Terminal Facility (2)(5) | Portland, OR | — | 13,700,000 | 27,961,956 | 10,000,000 | 13,700,000 | 37,961,956 | 51,661,956 | 4,744,350 | 46,917,606 | 2014 | 30 years | ||||||||||||||||||||||||||||||
United Property Systems (5) | St. Louis, MO | — | 210,000 | 1,188,000 | 75,022 | 210,000 | 1,263,022 | 1,473,022 | 101,434 | 1,371,588 | 2014 | 40 years | ||||||||||||||||||||||||||||||
Grand Isle Gathering System (3)(4)(5) | Gulf of Mexico | — | 960,000 | 258,471,397 | (5,058,280 | ) | 960,000 | 253,413,117 | 254,373,117 | 22,677,871 | 231,695,246 | 2015 | 27 years | |||||||||||||||||||||||||||||
$ | 41,000,000 | $ | 120,355,063 | $ | 412,740,415 | $ | 5,016,742 | $ | 120,355,063 | $ | 417,757,157 | $ | 538,112,220 | $ | 72,155,753 | $ | 465,956,467 | |||||||||||||||||||||||||
(1) In connection with the asset acquisition, CorEnergy and Pinedale LP incurred acquisition costs of $2,557,910, which are included in the total asset balance. | ||||||||||||||||||||||||||||||||||||||||||
(2) In connection with the asset acquisition, LCP Oregon Holdings incurred acquisition costs of $1,777,956, which are included in the total asset balance. | ||||||||||||||||||||||||||||||||||||||||||
(3) In connection with the asset acquisition, Grand Isle Gathering System incurred acquisition costs of $1,931,396, which are included in the total asset balance. | ||||||||||||||||||||||||||||||||||||||||||
(4) Initial costs associated with the GIGS asset include amounts capitalized related to an acquired asset retirement obligation (ARO). The negative subsequent adjustment relates to downward revisions of the ARO based on periodic reevaluation as required under FASB ASC 410-20. | ||||||||||||||||||||||||||||||||||||||||||
(5) These 3 properties serve as collateral under the CorEnergy Credit Facility. There are no amounts outstanding on the credit facility as of December 31, 2017. | ||||||||||||||||||||||||||||||||||||||||||
(6) The amount outstanding for the Amended Pinedale Term Credit Facility is $41,000,000, which was refinanced with Prudential on December 29, 2017. |
For the Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Investment in real estate: | |||||||||||
Balance, beginning of year | $ | 541,478,086 | $ | 543,095,478 | $ | 293,823,903 | |||||
Addition: Acquisitions and developments | 9,649 | 65,371 | 263,398,424 | ||||||||
Deduction: Dispositions and other(1) | (3,375,515 | ) | (1,682,763 | ) | (14,126,849 | ) | |||||
Balance, end of year | $ | 538,112,220 | $ | 541,478,086 | $ | 543,095,478 | |||||
Accumulated depreciation: | |||||||||||
Balance, beginning of year | $ | 52,219,717 | $ | 33,869,263 | $ | 25,295,958 | |||||
Addition: Depreciation | 19,936,036 | 18,350,454 | 15,021,908 | ||||||||
Deduction: Dispositions and other | — | — | (6,448,603 | ) | |||||||
Balance, end of year | $ | 72,155,753 | $ | 52,219,717 | $ | 33,869,263 | |||||
(1) The Grand Isle Gathering System had a change in estimate related to the ARO in 2017 and 2016. |
|
Description | Interest Rate | Final Maturity | Monthly Payment Amount (2) | Prior Liens | Face Value | Carrying Amount of Mortgage | Principal Amount of Loans Subject to Delinquent Principal or Interest | |||||||||||||||
First Mortgages | ||||||||||||||||||||||
Billings, Dunn and McKenzie Counties, North Dakota (Morlock Well) | 10.00% | 6/30/2026 | $ | 33,333 | None | $ | 4,000,000 | $ | 1,500,000 | (1) | $ | 4,000,000 | ||||||||||
Second Mortgages | ||||||||||||||||||||||
Billings, Dunn and McKenzie Counties, North Dakota (Morlock Well) | 13.00% | 12/31/2024 | $ | 10,833 | None | 1,000,000 | — | (1) | 1,000,000 | |||||||||||||
$ | 5,000,000 | $ | 1,500,000 | $ | 5,000,000 | |||||||||||||||||
(1) Due to decreased economic activity, a provision for loan loss was recorded for these loans. See Note 4 ("Financing Notes Receivable") for further information. | ||||||||||||||||||||||
(2) Loans currently in forbearance period and on non-accrual status. |
For the Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Beginning balance | $ | 1,500,000 | $ | 6,877,021 | $ | 20,435,170 | |||||
Additions: | |||||||||||
New loans | — | 100,000 | — | ||||||||
Net deferred costs | — | — | (8,211 | ) | |||||||
Interest receivable (1) | — | (95,114 | ) | 302,395 | |||||||
Total Additions | $ | — | $ | 4,886 | $ | 294,184 | |||||
Deductions: | |||||||||||
Principal repayments | $ | — | $ | — | $ | 100,000 | |||||
Foreclosures | — | 1,857,000 | — | ||||||||
Amortization of deferred costs | — | (2,025 | ) | (6,804 | ) | ||||||
Principal, Interest and Deferred Costs Write Down (2) | — | 3,526,932 | 13,759,137 | ||||||||
Total deductions | $ | — | $ | 5,381,907 | $ | 13,852,333 | |||||
Ending balance | $ | 1,500,000 | $ | 1,500,000 | $ | 6,877,021 | |||||
(1) In 2016, $100 thousand of interest receivable on the SWD Enterprises REIT note was converted to principal. | |||||||||||
(2) For 2016, the amount of provision for loan loss on the income statement also includes (a) $656 thousand of loan losses not related to mortgage loans and (b) $832 thousand of losses associated with the foreclosure and sale of Black Bison. For 2015, the amount of provision for loan loss on the Income Statement includes $25 thousand that relates to a write down of a prepaid asset relating to the Black Bison loans. |
|
• | The independent valuation firm prepares the valuations and the supporting analysis. |
• | The valuation report is reviewed and approved by senior management. |
• | The Audit Committee of the Board of Directors reviews the supporting analysis and accepts the valuations. |
• | Level 1 - quoted prices in active markets for identical investments |
• | Level 2 - other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.) |
• | Level 3 - significant unobservable inputs (including the Company's own assumptions in determining the fair value of investments) |
• | Lease revenue – Base rent related to the Company's leased property is recognized on a straight-line basis over the term of the lease when collectability is reasonably assured. Participating rent is recognized when it is earned, based on the achievement of specified performance criteria. Rental payments received in advance are classified as unearned revenue and included as a liability within the Consolidated Balance Sheets. Unearned revenue is amortized ratably over the lease period as revenue recognition criteria are met. Rental payments received in arrears are accrued and classified as deferred rent receivable and included in assets within the Consolidated Balance Sheets. |
• | Transportation and distribution revenue – This represents revenue related to natural gas transportation, distribution and supply. Transportation revenues are recognized by MoGas on firm contracted capacity over the contract period regardless of whether the contracted capacity is used. For interruptible or volumetric based transportation, revenue is recognized when physical deliveries of natural gas are made at the delivery point agreed upon by both parties. Distribution revenue is recognized by Omega based on agreed upon contractual terms over each annual period during the terms of the contract. Beginning February 1, 2016, due to changes that commenced under a new contract with the Department of Defense ("DOD"), gas sales and cost of gas sales are presented on a net basis in the transportation and distribution revenue line. |
• | Financing revenue – Historically, financing notes receivable have been considered a core product offering and therefore the related income is presented as a component of operating income. For increasing rate loans, base interest income is recorded ratably over the life of the loan, using the effective interest rate. The net amount of deferred loan origination income and costs are amortized on a straight-line basis over the life of the loan and reported as an adjustment to yield in financing revenue. Participating financing revenues are recorded when specific performance criteria have been met. |
• | Net distributions and dividend income from investments – Distributions and dividends from investments are recorded on their ex-dates and are reflected as other income within the accompanying Consolidated Statements of Income. Distributions received from the Company's investments are generally characterized as ordinary income, capital gains and distributions received from investment securities. The portion characterized as return of capital is paid by the Company's investees from their cash flow from operations. The Company records investment income, capital gains and distributions received from investment securities based on estimates made at the time such distributions are received. Such estimates are based on information available from each company and other industry sources. These estimates may subsequently be revised based on information received from the entities after their tax reporting periods are concluded, as the actual character of these distributions is not known until after the fiscal year end of the Company. |
• | Net realized and unrealized gain (loss) from investments – Securities transactions are accounted for on the date the securities are purchased or sold. Realized gains and losses are reported on an identified cost basis. The Company records investment income and return of capital based on estimates made at the time such distributions are received. Such estimates are based on information available from the portfolio company and other industry sources. These estimates may subsequently be revised based on information received from the portfolio company after their tax reporting periods are concluded, as the actual character of these distributions are not known until after the Company's fiscal year end. |
|
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 | Zenith Energy 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(3) |
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(2) | $513,355 |
Estimated Useful Life | 27 years | 26 years | 30 years |
(1) Non-Controlling Interest Partner, Prudential, funded a portion of the original Pinedale LGS acquisition and, as a limited partner, held 18.95 percent of the economic interest in Pinedale LP. Pinedale LP I, a wholly-owned subsidiary of the Company, acquired Prudential's 18.95 percent economic interest on December 29, 2017. Pinedale GP, a wholly-owned subsidiary of the Company, holds the remaining 81.05 percent economic interest. | |||
(2) Monthly rent payments increased to $1,776,772 beginning January 1, 2018. | |||
(3) The lessee of the Portland Terminal Facility has a purchase option 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. |
Future Minimum Lease Receipts (1) | |||
Year Ending December 31, | Amount | ||
2018 | $ | 61,828,029 | |
2019 | 64,103,462 | ||
2020 | 71,264,921 | ||
2021 | 77,445,396 | ||
2022 | 76,553,434 | ||
Thereafter | 302,242,184 | ||
Total | $ | 653,437,426 | |
(1) Future minimum lease receipts include base rents for the Portland Terminal Facility through its initial 15-year term. |
As a Percentage of (1) | ||||||||||||||
Leased Properties | Lease Revenues | |||||||||||||
As of December 31, | For the Years Ended December 31, | |||||||||||||
2017 | 2016 | 2017 | 2016 | 2015 | ||||||||||
Pinedale LGS | 39.9 | % | 39.8 | % | 31.2 | % | 30.4 | % | 42.9 | % | ||||
Grand Isle Gathering System | 49.7 | % | 50.0 | % | 59.1 | % | 59.8 | % | 42.3 | % | ||||
Portland Terminal Facility | 10.1 | % | 9.9 | % | 9.6 | % | 9.7 | % | 13.3 | % | ||||
(1) Insignificant leases are not presented; thus percentages may not sum to 100%. |
For the Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Depreciation Expense | |||||||||||
GIGS | $ | 9,754,596 | $ | 8,605,506 | $ | 4,317,769 | |||||
Pinedale | 8,869,440 | 8,869,440 | 8,869,440 | ||||||||
Portland Terminal Facility | 1,275,660 | 843,084 | 1,235,369 | ||||||||
Eastern Interconnect Project | — | — | 569,670 | ||||||||
United Property Systems | 36,298 | 32,424 | 29,700 | ||||||||
Total Depreciation Expense | $ | 19,935,994 | $ | 18,350,454 | $ | 15,021,948 | |||||
Amortization Expense - Deferred Lease Costs | |||||||||||
GIGS | $ | 30,564 | $ | 30,564 | $ | 15,130 | |||||
Pinedale | 61,368 | 61,368 | 61,368 | ||||||||
Total Amortization Expense - Deferred Lease Costs | $ | 91,932 | $ | 91,932 | $ | 76,498 | |||||
ARO Accretion Expense | |||||||||||
GIGS | $ | 663,065 | $ | 726,664 | $ | 339,042 | |||||
Total ARO Accretion Expense | $ | 663,065 | $ | 726,664 | $ | 339,042 |
December 31, 2017 | December 31, 2016 | ||||||
Net Deferred Lease Costs | |||||||
GIGS | $ | 259,883 | $ | 290,447 | |||
Pinedale | 611,717 | 673,085 | |||||
Total Deferred Lease Costs, net | $ | 871,600 | $ | 963,532 |
|
Deferred Tax Assets and Liabilities | |||||||
December 31, 2017 | December 31, 2016 | ||||||
Deferred Tax Assets: | |||||||
Net operating loss carryforwards | $ | 957,719 | $ | 1,144,818 | |||
Net unrealized loss on investment securities | — | 61,430 | |||||
Cost recovery of leased and fixed assets | — | 739,502 | |||||
Loan Loss Provision | 247,814 | 608,086 | |||||
Basis reduction of investment in partnerships | 261,549 | — | |||||
Other loss carryforwards | 2,965,321 | 3,187,181 | |||||
Sub-total | $ | 4,432,403 | $ | 5,741,017 | |||
Deferred Tax Liabilities: | |||||||
Basis reduction of investment in partnerships | $ | — | $ | (2,158,746 | ) | ||
Net unrealized gain on investment securities | (342,669 | ) | — | ||||
Cost recovery of leased and fixed assets | (1,845,105 | ) | (1,823,982 | ) | |||
Sub-total | $ | (2,187,774 | ) | $ | (3,982,728 | ) | |
Total net deferred tax asset | $ | 2,244,629 | $ | 1,758,289 |
Income Tax Expense (Benefit) | |||||||||||
For the Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Application of statutory income tax rate | $ | 12,231,838 | $ | 10,219,573 | $ | 3,630,325 | |||||
State income taxes, net of federal tax benefit | 352,708 | 26,215 | (134,597 | ) | |||||||
Income of Real Estate Investment Trust not subject to tax | (11,975,853 | ) | (10,663,371 | ) | (5,189,849 | ) | |||||
Tax reform impact | 1,262,444 | — | — | ||||||||
Other | 474,181 | (46,837 | ) | (253,432 | ) | ||||||
Total income tax expense (benefit) | $ | 2,345,318 | $ | (464,420 | ) | $ | (1,947,553 | ) |
Components of Income Tax Expense (Benefit) | |||||||||||
For the Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Current tax expense (benefit) | |||||||||||
Federal | $ | 2,498,363 | $ | (321,720 | ) | $ | 781,941 | ||||
State (net of federal tax benefit) | 333,295 | 8,613 | 140,069 | ||||||||
Total current tax expense (benefit) | $ | 2,831,658 | $ | (313,107 | ) | $ | 922,010 | ||||
Deferred tax expense (benefit) | |||||||||||
Federal | $ | (505,753 | ) | $ | (168,915 | ) | $ | (2,594,897 | ) | ||
State (net of federal tax benefit) | 19,413 | 17,602 | (274,666 | ) | |||||||
Total deferred tax benefit | $ | (486,340 | ) | $ | (151,313 | ) | $ | (2,869,563 | ) | ||
Total income tax expense (benefit), net | $ | 2,345,318 | $ | (464,420 | ) | $ | (1,947,553 | ) |
Aggregate Cost of Securities for Income Tax Purposes | |||||||
December 31, 2017 | December 31, 2016 | ||||||
Aggregate cost for federal income tax purposes | $ | 3,063,430 | $ | 4,327,077 | |||
Gross unrealized appreciation | 325,130 | 5,408,242 | |||||
Gross unrealized depreciation | — | — | |||||
Net unrealized appreciation | $ | 325,130 | $ | 5,408,242 |
2017 Common Stock Tax Information | ||||||||||||||||||||||||
Record Date | Ex-Dividend Date | Payable Date | Total Distribution per Share | Total Ordinary Dividends | Qualified Dividends | Capital Gain Distributions | Nondividend Distributions | |||||||||||||||||
2/13/2017 | 2/9/2017 | 2/28/2017 | $ | 0.7500 | $ | 0.5925 | $ | 0.0785 | $ | — | $ | 0.1575 | ||||||||||||
5/16/2017 | 5/12/2017 | 5/31/2017 | 0.7500 | 0.5925 | 0.0785 | — | 0.1575 | |||||||||||||||||
8/17/2017 | 8/15/2017 | 8/31/2017 | 0.7500 | 0.5925 | 0.0785 | — | 0.1575 | |||||||||||||||||
11/15/2017 | 11/14/2017 | 11/30/2017 | 0.7500 | 0.5925 | 0.0785 | — | 0.1575 | |||||||||||||||||
Total 2017 Distributions | $ | 3.0000 | $ | 2.3700 | $ | 0.3140 | $ | — | $ | 0.6300 |
2016 Common Stock Tax Information | ||||||||||||||||||||||||
Record Date | Ex-Dividend Date | Payable Date | Total Distribution per Share | Total Ordinary Dividends | Qualified Dividends | Capital Gain Distributions | Nondividend Distributions | |||||||||||||||||
02/12/2016 | 02/10/2016 | 02/29/2016 | $ | 0.7500 | $ | 0.2955 | $ | — | $ | — | $ | 0.4545 | ||||||||||||
05/13/2016 | 05/11/2016 | 05/31/2016 | 0.7500 | 0.2955 | — | — | 0.4545 | |||||||||||||||||
08/17/2016 | 08/15/2016 | 08/31/2016 | 0.7500 | 0.2955 | — | — | 0.4545 | |||||||||||||||||
11/15/2016 | 11/11/2016 | 11/30/2016 | 0.7500 | 0.2955 | — | — | 0.4545 | |||||||||||||||||
Total 2016 Distributions | $ | 3.0000 | $ | 1.1820 | $ | — | $ | — | $ | 1.8180 |
2015 Common Stock Tax Information | ||||||||||||||||||||||||
Record Date | Ex-Dividend Date | Payable Date | Total Distribution per Share | Total Ordinary Dividends | Qualified Dividends | Capital Gain Distributions | Nondividend Distributions | |||||||||||||||||
02/13/2015 | 02/11/2015 | 02/27/2015 | $ | 0.6500 | $ | 0.4680 | $ | 0.0126 | $ | — | $ | 0.1820 | ||||||||||||
05/15/2015 | 05/13/2015 | 05/29/2015 | 0.6750 | 0.4860 | 0.0131 | — | 0.1890 | |||||||||||||||||
08/17/2015 | 08/13/2015 | 08/31/2015 | 0.6750 | 0.4860 | 0.0131 | — | 0.1890 | |||||||||||||||||
11/13/2015 | 11/11/2015 | 11/30/2015 | 0.7500 | 0.5400 | 0.0146 | — | 0.2100 | |||||||||||||||||
Total 2015 Distributions | $ | 2.7500 | $ | 1.9800 | $ | 0.0534 | $ | — | $ | 0.7700 |
2017 Preferred Stock Tax Information | ||||||||||||||||||||||||
Record Date | Ex-Dividend Date | Payable Date | Total Distribution per Share | Total Ordinary Dividends | Qualified Dividends | Capital Gain Distributions | Nondividend Distributions | |||||||||||||||||
2/13/2017 | 2/9/2017 | 2/28/2017 | $ | 0.4609 | $ | 0.4609 | $ | 0.0611 | $ | — | $ | — | ||||||||||||
5/16/2017 | 5/12/2017 | 5/31/2017 | 0.4609 | 0.4609 | 0.0611 | — | — | |||||||||||||||||
8/17/2017 | 8/15/2017 | 8/31/2017 | 0.4609 | 0.4609 | 0.0611 | — | — | |||||||||||||||||
11/15/2017 | 11/14/2017 | 11/30/2017 | 0.4609 | 0.4609 | 0.0611 | — | — | |||||||||||||||||
Total 2017 Distributions | $ | 1.8436 | $ | 1.8436 | $ | 0.2444 | $ | — | $ | — |
2016 Preferred Stock Tax Information | ||||||||||||||||||||||||
Record Date | Ex-Dividend Date | Payable Date | Total Distribution per Share | Total Ordinary Dividends | Qualified Dividends | Capital Gain Distributions | Nondividend Distributions | |||||||||||||||||
02/12/2016 | 02/10/2016 | 02/29/2016 | $ | 0.4609 | $ | 0.4609 | $ | — | $ | — | $ | — | ||||||||||||
05/13/2016 | 05/11/2016 | 05/31/2016 | 0.4609 | 0.4609 | — | — | — | |||||||||||||||||
08/17/2016 | 08/15/2016 | 08/31/2016 | 0.4609 | 0.4609 | — | — | — | |||||||||||||||||
11/15/2016 | 11/11/2016 | 11/30/2016 | 0.4609 | 0.4609 | — | — | — | |||||||||||||||||
Total 2016 Distributions | $ | 1.8436 | $ | 1.8436 | $ | — | $ | — | $ | — |
2015 Preferred Stock Tax Information | ||||||||||||||||||||||||
Record Date | Ex-Dividend Date | Payable Date | Total Distribution per Share | Total Ordinary Dividends | Qualified Dividends | Capital Gain Distributions | Nondividend Distributions | |||||||||||||||||
05/15/2015 | 05/13/2015 | 06/01/2015 | $ | 0.6351 | $ | 0.6351 | $ | 0.0171 | $ | — | $ | — | ||||||||||||
08/17/2015 | 08/13/2015 | 08/31/2015 | 0.4609 | 0.4609 | 0.0124 | — | — | |||||||||||||||||
11/13/2015 | 11/11/2015 | 11/30/2015 | 0.4609 | 0.4609 | 0.0124 | — | — | |||||||||||||||||
Total 2015 Distributions | $ | 1.5569 | $ | 1.5569 | $ | 0.0419 | $ | — | $ | — |
|
Property and Equipment | |||||||
December 31, 2017 | December 31, 2016 | ||||||
Land | $ | 580,000 | $ | 580,000 | |||
Natural gas pipeline | 124,303,315 | 124,288,156 | |||||
Vehicles and trailers | 650,634 | 570,267 | |||||
Office equipment and computers | 268,559 | 267,095 | |||||
Gross property and equipment | $ | 125,802,508 | $ | 125,705,518 | |||
Less: accumulated depreciation | (12,643,636 | ) | (9,292,712 | ) | |||
Net property and equipment | $ | 113,158,872 | $ | 116,412,806 |
|
December 31, 2017 | |||||||||||||||
Total | Fair Value | ||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | |||||||||||||||
Other equity securities | $ | 2,958,315 | $ | — | $ | — | $ | 2,958,315 | |||||||
Total Assets | $ | 2,958,315 | $ | — | $ | — | $ | 2,958,315 |
December 31, 2016 | |||||||||||||||
Total | 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 |
Level 3 Rollforward | ||||||||||||||||||||||||||||
For the Year Ended 2017 | Fair Value Beginning Balance | Acquisitions | Disposals | Total Realized and Unrealized Gains Included in Net Income | Return of Capital Adjustments Impacting Cost Basis of Securities | Fair Value Ending Balance | Changes in Unrealized Gains Included In Net Income, Relating to Securities Still Held (1) | |||||||||||||||||||||
Other equity securities | $ | 9,287,209 | $ | 1,161,034 | $ | (8,752,201 | ) | $ | 1,531,827 | $ | (269,554 | ) | $ | 2,958,315 | $ | 295,161 | ||||||||||||
Total | $ | 9,287,209 | $ | 1,161,034 | $ | (8,752,201 | ) | $ | 1,531,827 | $ | (269,554 | ) | $ | 2,958,315 | $ | 295,161 | ||||||||||||
For the Year Ended 2016 | ||||||||||||||||||||||||||||
Other equity securities | $ | 8,393,683 | $ | — | $ | — | $ | 781,154 | $ | 112,372 | $ | 9,287,209 | $ | 781,154 | ||||||||||||||
Total | $ | 8,393,683 | $ | — | $ | — | $ | 781,154 | $ | 112,372 | $ | 9,287,209 | $ | 781,154 | ||||||||||||||
(1) Located in Net realized and unrealized gain on other equity securities in the Consolidated Statements of Income |
Carrying and Fair Value Amounts | |||||||||||||||||
Level within fair value hierarchy | December 31, 2017 | December 31, 2016 | |||||||||||||||
Carrying Amount (1) | Fair Value | Carrying Amount (1) | Fair Value | ||||||||||||||
Financial Assets: | |||||||||||||||||
Cash and cash equivalents | Level 1 | $ | 15,787,069 | $ | 15,787,069 | $ | 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 | ||||||||||||
Derivative asset | Level 2 | — | — | 19,950 | 19,950 | ||||||||||||
Financial Liabilities: | |||||||||||||||||
Secured credit facilities | Level 2 | $ | 40,745,354 | $ | 40,745,354 | $ | 89,387,985 | $ | 89,387,985 | ||||||||
Unsecured convertible senior notes | Level 1 | 112,032,083 | 139,101,660 | 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. |
|
Total Commitment or Original Principal | Quarterly Principal Payments | December 31, 2017 | December 31, 2016 | ||||||||||||||||||||
Maturity Date | Amount Outstanding | Interest Rate | Amount Outstanding | Interest Rate | |||||||||||||||||||
CorEnergy Secured Credit Facility: | |||||||||||||||||||||||
CorEnergy Revolver | $ | 160,000,000 | $ | — | 7/28/2022 | $ | — | 4.32 | % | $ | 44,000,000 | 3.76 | % | ||||||||||
CorEnergy Term Loan (1) | 45,000,000 | 1,615,000 | 12/15/2019 | — | — | % | 36,740,000 | 3.74 | % | ||||||||||||||
MoGas Revolver | 1,000,000 | — | 7/28/2022 | — | 4.32 | % | — | 3.77 | % | ||||||||||||||
Omega Line of Credit | 1,500,000 | — | 7/31/2018 | — | 5.57 | % | — | 4.77 | % | ||||||||||||||
Pinedale Secured Credit Facility: | |||||||||||||||||||||||
$58.5M Term Loan – related party (2) | 11,085,750 | 167,139 | 3/30/2021 | — | — | % | 8,860,577 | 8.00 | % | ||||||||||||||
Amended Pinedale Term Credit Facility | 41,000,000 | 882,000 | 12/29/2022 | 41,000,000 | 6.50 | % | — | — | % | ||||||||||||||
7.00% Unsecured Convertible Senior Notes | 115,000,000 | — | 6/15/2020 | 114,000,000 | 7.00 | % | 114,000,000 | 7.00 | % | ||||||||||||||
Total Debt | $ | 155,000,000 | $ | 203,600,577 | |||||||||||||||||||
Less: | |||||||||||||||||||||||
Unamortized deferred financing costs (3) | $ | 375,309 | $ | 381,531 | |||||||||||||||||||
Unamortized discount on 7.00% Convertible Senior Notes | 1,847,254 | 2,586,166 | |||||||||||||||||||||
Long-term debt, net of deferred financing costs | $ | 152,777,437 | $ | 200,632,880 | |||||||||||||||||||
Debt due within one year | $ | 3,528,000 | $ | 7,128,556 | |||||||||||||||||||
(1) The CorEnergy Term Loan was paid off during the third quarter of 2017 in connection with entering into the amended and restated CorEnergy Credit Facility discussed below. | |||||||||||||||||||||||
(2) $47.4 million of the original $58.5 million term loan was payable to CorEnergy under the same terms and eliminates in consolidation. The term loan was paid off during the fourth quarter of 2017 in connection with the Amended Pinedale Term Credit Facility discussed below. | |||||||||||||||||||||||
(3) Unamortized deferred financing costs related to our revolving credit facilities are included in Deferred Costs in the Assets section of the Consolidated Balance Sheets. Refer to the "Deferred Financing Costs" paragraph below. |
Deferred Financing Cost Amortization Expense (1)(2) | |||||||||||
For the Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
CorEnergy Credit Facility | $ | 873,601 | $ | 1,078,526 | $ | 926,930 | |||||
Pinedale Credit Facility | 392 | 156,330 | 500,326 | ||||||||
Total Deferred Debt Cost Amortization | $ | 873,993 | $ | 1,234,856 | $ | 1,427,256 | |||||
(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, refer to the Convertible Note Interest Expense table below. |
Year | Pinedale Credit Facility | |||
2018 | $ | 3,528,000 | ||
2019 | 3,528,000 | |||
2020 | 3,528,000 | |||
2021 | 3,528,000 | |||
2022 | 26,888,000 | |||
Thereafter | — | |||
Total | $ | 41,000,000 |
Convertible Note Interest Expense | |||||||||||
For the Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
7.00% Convertible Notes | $ | 7,980,000 | $ | 8,008,195 | $ | 4,069,722 | |||||
Discount Amortization | 738,912 | 744,081 | 380,653 | ||||||||
Deferred Debt Issuance Cost Amortization | 48,276 | 48,566 | 21,656 | ||||||||
Total | $ | 8,767,188 | $ | 8,800,842 | $ | 4,472,031 |
|
Asset Retirement Obligation | |||||||
For the Years Ended December 31, | |||||||
2017 | 2016 | ||||||
Beginning asset retirement obligation | $ | 11,882,943 | $ | 12,839,042 | |||
Liabilities assumed | — | — | |||||
ARO accretion expense | 663,065 | 726,664 | |||||
Revision in cash flow estimates | (3,375,515 | ) | (1,682,763 | ) | |||
Ending asset retirement obligation | $ | 9,170,493 | $ | 11,882,943 |
|
For the Years Ended December 31, | ||||||||||||
Derivatives in Cash Flow Hedging Relationship | 2017 | 2016 | 2015 | |||||||||
Amount of Loss on Derivatives Recognized in AOCI (Effective Portion) | $ | — | $ | (300,181 | ) | $ | (611,879 | ) | ||||
Amount of Loss on Derivatives Reclassified from AOCI (Effective Portion) Recognized in Net Income(1) | — | (50,964 | ) | (287,999 | ) | |||||||
Derivatives Not Designated as Hedging Instruments | ||||||||||||
Amount of Gain on Derivatives Recognized in Income(2) | $ | 25,842 | $ | 73,204 | $ | — | ||||||
(1) Included in "Interest Expense" on the face of the Consolidated Statements of Income and Comprehensive Income. | ||||||||||||
(2) The gain (loss) recognized in income on derivatives includes changes in fair value for derivatives subsequent to de-designation from hedge accounting. |
|
For the Fiscal 2017 Quarters Ended | |||||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||
Revenue | |||||||||||||||
Lease revenue | $ | 17,066,526 | $ | 17,050,092 | $ | 17,173,676 | $ | 17,513,510 | |||||||
Transportation and distribution revenue | 5,010,590 | 4,775,780 | 5,270,628 | 4,888,575 | |||||||||||
Total Revenue | 22,077,116 | 21,825,872 | 22,444,304 | 22,402,085 | |||||||||||
Expenses | |||||||||||||||
Transportation and distribution expenses | 1,335,570 | 1,362,980 | 2,384,182 | 1,646,975 | |||||||||||
General and administrative | 3,061,240 | 2,558,339 | 2,632,546 | 2,534,372 | |||||||||||
Depreciation, amortization and ARO accretion expense | 6,005,908 | 6,005,995 | 6,017,664 | 6,018,143 | |||||||||||
Total Expenses | 10,402,718 | 9,927,314 | 11,034,392 | 10,199,490 | |||||||||||
Operating Income | $ | 11,674,398 | $ | 11,898,558 | $ | 11,409,912 | $ | 12,202,595 | |||||||
Other Income (Expense) | |||||||||||||||
Net distributions and dividend income | $ | 43,462 | $ | 221,440 | $ | 213,040 | $ | 202,149 | |||||||
Net realized and unrealized gain (loss) on other equity securities | (544,208 | ) | 614,634 | 1,340,197 | 121,204 | ||||||||||
Interest expense | (3,454,397 | ) | (3,202,837 | ) | (2,928,036 | ) | (2,793,245 | ) | |||||||
Loss on extinguishment of debt | — | — | (234,433 | ) | (102,500 | ) | |||||||||
Total Other Expense | (3,955,143 | ) | (2,366,763 | ) | (1,609,232 | ) | (2,572,392 | ) | |||||||
Income before income taxes | 7,719,255 | 9,531,795 | 9,800,680 | 9,630,203 | |||||||||||
Taxes | |||||||||||||||
Current tax expense (benefit) | (33,760 | ) | 57,651 | 65,131 | 2,742,636 | ||||||||||
Deferred tax expense (benefit) | (298,846 | ) | 38,084 | 126,440 | (352,018 | ) | |||||||||
Income tax expense (benefit), net | (332,606 | ) | 95,735 | 191,571 | 2,390,618 | ||||||||||
Net Income | 8,051,861 | 9,436,060 | 9,609,109 | 7,239,585 | |||||||||||
Less: Net Income attributable to non-controlling interest | 382,383 | 435,888 | 431,825 | 483,730 | |||||||||||
Net Income attributable to CorEnergy Stockholders | $ | 7,669,478 | $ | 9,000,172 | $ | 9,177,284 | $ | 6,755,855 | |||||||
Preferred dividend requirements | 1,037,109 | 2,123,129 | 2,396,875 | 2,396,875 | |||||||||||
Net Income attributable to Common Stockholders | $ | 6,632,369 | $ | 6,877,043 | $ | 6,780,409 | $ | 4,358,980 | |||||||
Earnings Per Common Share: | |||||||||||||||
Basic | $ | 0.56 | $ | 0.58 | $ | 0.57 | $ | 0.37 | |||||||
Diluted | $ | 0.56 | $ | 0.58 | $ | 0.57 | $ | 0.37 |
For the Fiscal 2016 Quarters Ended | |||||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||
Revenue | |||||||||||||||
Lease revenue | $ | 16,996,072 | $ | 16,996,072 | $ | 16,996,155 | $ | 17,005,831 | |||||||
Transportation and distribution revenue | 5,099,451 | 5,064,680 | 5,119,330 | 5,810,651 | |||||||||||
Financing revenue | 162,344 | — | — | — | |||||||||||
Total Revenue | 22,257,867 | 22,060,752 | 22,115,485 | 22,816,482 | |||||||||||
Expenses | |||||||||||||||
Transportation and distribution expenses | 1,362,325 | 1,378,306 | 1,482,161 | 2,240,556 | |||||||||||
General and administrative | 3,289,852 | 2,773,240 | 3,021,869 | 3,185,419 | |||||||||||
Depreciation, amortization and ARO accretion expense | 5,296,818 | 5,737,025 | 5,744,266 | 5,744,762 | |||||||||||
Provision for loan loss and disposition | 4,645,188 | 369,278 | — | — | |||||||||||
Total Expenses | 14,594,183 | 10,257,849 | 10,248,296 | 11,170,737 | |||||||||||
Operating Income | $ | 7,663,684 | $ | 11,802,903 | $ | 11,867,189 | $ | 11,645,745 | |||||||
Other Income (Expense) | |||||||||||||||
Net distributions and dividend income | $ | 375,573 | $ | 214,169 | $ | 277,523 | $ | 273,559 | |||||||
Net realized and unrealized gain (loss) on other equity securities | (1,628,752 | ) | 1,199,665 | 1,430,858 | (177,289 | ) | |||||||||
Interest expense | (3,926,009 | ) | (3,540,812 | ) | (3,520,856 | ) | (3,430,162 | ) | |||||||
Total Other Expense | (5,179,188 | ) | (2,126,978 | ) | (1,812,475 | ) | (3,333,892 | ) | |||||||
Income before income taxes | 2,484,496 | 9,675,925 | 10,054,714 | 8,311,853 | |||||||||||
Taxes | |||||||||||||||
Current tax expense (benefit) | (677,731 | ) | 203,652 | 95,125 | 65,847 | ||||||||||
Deferred tax expense (benefit) | (577,395 | ) | 206,786 | 388,027 | (168,731 | ) | |||||||||
Income tax expense (benefit), net | (1,255,126 | ) | 410,438 | 483,152 | (102,884 | ) | |||||||||
Net Income | 3,739,622 | 9,265,487 | 9,571,562 | 8,414,737 | |||||||||||
Less: Net Income attributable to non-controlling interest | 348,501 | 310,960 | 340,377 | 328,370 | |||||||||||
Net Income attributable to CorEnergy Stockholders | $ | 3,391,121 | $ | 8,954,527 | $ | 9,231,185 | $ | 8,086,367 | |||||||
Preferred dividend requirements | 1,037,109 | 1,037,109 | 1,037,109 | 1,037,110 | |||||||||||
Net Income attributable to Common Stockholders | $ | 2,354,012 | $ | 7,917,418 | $ | 8,194,076 | $ | 7,049,257 | |||||||
Earnings Per Common Share: | |||||||||||||||
Basic | $ | 0.20 | $ | 0.66 | $ | 0.69 | $ | 0.59 | |||||||
Diluted | $ | 0.20 | $ | 0.66 | $ | 0.68 | $ | 0.59 |
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