Investment in Unconsolidated Affiliate

9 Months Ended

Sep. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

On February 1, 2022, the Company completed the OMP Merger and received 20,985,668 Crestwood common units. On September 12, 2022, the Company sold an aggregate of 16,000,000 common units in separate transactions and received net proceeds of $428.2 million. The Company recorded a gain on sale of $43.0 million which was recognized under net gain from investment in unconsolidated affiliate on the Condensed Consolidated Statements of Operations. The Company owns 4,985,668 common units of Crestwood, representing less than 5% of Crestwood’s issued and outstanding common units. The carrying amount of the Company’s investment in Crestwood is recorded to investment in unconsolidated affiliate on the Condensed Consolidated Balance Sheet. The fair value of the Company’s investment in Crestwood was $138.5 million as of September 30, 2022.

During the three and nine months ended September 30, 2022, the Company recorded an unrealized gain for the change in the fair value of its investment in Crestwood of $18.4 million and an unrealized loss of $44.6 million, respectively, and a realized gain for a cash distribution from Crestwood of $13.7 million and $40.6 million, respectively. The Company records changes in the fair value of its investment in Crestwood and cash distributions received from Crestwood to net gain from investment in unconsolidated affiliate on the Condensed Consolidated Statements of Operations.

The Company initially appointed two directors to the Board of Directors of Crestwood GP pursuant to a director nomination agreement executed in connection with the consummation of the OMP Merger. On September 15, 2022, in connection with the completion of the sale of Crestwood common units and pursuant to the terms of the previously executed director nomination agreement, both directors resigned from the Board of Directors of Crestwood GP. As a result of the Company’s sale of Crestwood common units and the subsequent resignation of two directors from the Board of Directors of Crestwood GP, the Company does not have the ability to exercise significant influence over Crestwood as of September 30, 2022.

Related Party Transactions

The Company has determined that Crestwood is a related party due to its ownership of Crestwood common units.

The following table presents the revenues, lease operating expenses and gathering, processing and transportation expenses (on a net basis) with Crestwood for the periods presented:


	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022

	(In thousands)
Revenues	$	11,286	$	11,286
Lease operating expenses	19,041		51,116
Gathering, processing and transportation expenses	17,812		40,719

As of September 30, 2022, amounts due from Crestwood were $7.8 million and amounts due to Crestwood were $66.6 million.