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Discontinued Operations | 9 Months Ended
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Sep. 30, 2018
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | 4. Discontinued Operations Spin-off of Exterran Corporation In 2015 we completed the Spin-off. In order to effect the Spin-off and govern our relationship with Exterran Corporation after the Spin-off, we entered into several agreements with Exterran Corporation, which include but are not limited to the separation and distribution agreement, the tax matters agreement and the supply agreement. Certain terms of these agreements are described as follows:
• | The separation and distribution agreement specifies our right to promptly receive payments from a subsidiary of Exterran Corporation based on a notional amount corresponding to payments received by Exterran Corporation’s subsidiaries from PDVSA Gas, in respect of the sale of Exterran Corporation’s subsidiaries’ and joint ventures’ previously nationalized assets after such amounts are collected by Exterran Corporation’s subsidiaries. During the nine months ended September 30, 2017, we rece ived $19.7 million from Exterran Corporation pursuant to this term of the separation and distribution agreement. Exterran Corporation was due to receive the remaining principal amount as of September 30, 2018 of approximately $20.9 million. The separation and distribution agreement also specifies our right to receive a $25.0 million cash payment from a subsidiary of Exterran Corporation promptly following the occurrence of a qualified capital raise as defined in the Exterran Corporation credit agreement. Such a qualified capital raise occurred on April 4, 2017 and we received a cash payment of $25.0 million on April 11, 2017.
Generally, the separation and distribution agreement provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of Exterran Corporation’s business with Exterran Corporation. Pursuant to the separation and distribution agreement, we and Exterran Corporation generally release the other party from all claims arising prior to the Spin-off that relate to the other party’s business.
• | The tax matters agreement governs the respective rights, responsibilities and obligations of Exterran Corporation and us with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and certain other matters regarding taxes. Subject to the provisions of this agreement Exterran Corporation and we agreed to indemnify the primary obligor of any return for tax periods beginning before and ending before or after the Spin-off (including any ongoing or future amendments and audits for these returns) for the portion of the tax liability (including interest and penalties) that relates to their respective operations reported in the filing. As of September 30, 2018, we classified $6.4 million of unrecognized tax benefits (including interest and penalties) as long-term liability associated with discontinued operations since it relates to operations of Exterran Corporation prior to the Spin-off. We have also recorded an offsetting $6.4 million indemnification asset related to this reserve as long-term assets associated with discontinued operations.
• | The supply agreement, which expired November 2017, set forth the terms under which Exterran Corporation provided manufactured equipment, including the design, engineering, manufacturing and sale of natural gas compression equipment, on an exclusive basis to us and the Partnership, subject to certain exceptions. For the nine months ended September 30, 2017, we purchased $115.3 million of newly-manufactured compression equipment from Exterran Corporation.
Other Discontinued Operations Activity In December 2013, we abandoned our contract water treatment business as part of our continued emphasis on simplification and focus on our core businesses. The abandonment of this business meets the criteria established for recognition as discontinued operations under GAAP. Therefore certain deferred tax assets related to our contract water treatment business have been reported as discontinued operations in our condensed consolidated balance sheets. This business was previously included in our contract operations segment. The following table summarizes the balance sheet data for discontinued operations (in thousands):
| September 30, 2018 |  | December 31, 2017
| Exterran Corporation |  | Exterran Corporation |  | Contract Water Treatment Business |  | Total
Other current assets | $ | 300 |  |  | $ | 300 |  |  | $ | — |  |  | $ | 300 |
Total current assets associated with discontinued operations | 300 |  |  | 300 |  |  | — |  |  | 300 |
Other assets, net | 6,421 |  |  | 6,421 |  |  | — |  |  | 6,421 |
Deferred income taxes (1) | — |  |  | — |  |  | 6,842 |  |  | 6,842 |
Total assets associated with discontinued operations | $ | 6,721 |  |  | $ | 6,721 |  |  | $ | 6,842 |  |  | $ | 13,563 |
Other current liabilities | $ | 297 |  |  | $ | 297 |  |  | $ | — |  |  | $ | 297 |
Total current liabilities associated with discontinued operations | 297 |  |  | 297 |  |  | — |  |  | 297 |
Deferred income taxes | 6,421 |  |  | 6,421 |  |  | — |  |  | 6,421 |
Total liabilities associated with discontinued operations | $ | 6,718 |  |  | $ | 6,718 |  |  | $ | — |  |  | $ | 6,718 |
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(1) | Reduced by $0.9 million for current period tax amortization and $5.9 million for a valuation allowance recorded as a result of the Merger, whereby we assessed the available positive and negative evidence and concluded, based on the weight of the evidence, that a valuation allowance was required on our resulting net deferred tax asset position, with an offsetting increase to additional paid-in capital in our condensed consolidated balance sheet as of September 30, 2018. See Note 17 (“Equity”) for further details of the Merger.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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