Net Income Per Unit

6 Months Ended

Jun. 30, 2021

Basic net income per unit applicable to limited partners is computed by dividing limited partners' interest in net income by the weighted-average number of outstanding common units.

Prior to August 13, 2020, we had more than one class of participating securities and used the two class method to calculate the net income per unit applicable to the limited partners. The classes of participating units prior to August 13, 2020 consisted of limited partner units, general partner units and IDRs. Pursuant to the IDR Restructuring Transaction, the IDRs were eliminated and the 2% general partner economic interest was converted to a non-economic general partner interest. Effective August 13, 2020, the common limited partner units are the only participating security for cash distributions. Refer to Note 3 for additional details.

The two-class method was based on the weighted-average number of common units outstanding during the period. Basic net income per unit applicable to limited partners was computed by dividing limited partners’ interest in net income, after deducting our general partner’s 2% interest and IDRs, by the weighted-average number of outstanding common units. Our net income was allocated to our general partner and limited partners in accordance with their respective partnership percentages after giving effect to priority income allocations for IDRs, which were held by our general partner pursuant to our Prior Partnership Agreement. Earnings in excess of distributions were allocated to our general partner and limited partners based on their respective ownership interests. The IDRs were paid following the close of each quarter.

Pursuant to Amendment No. 2 to the Prior Partnership Agreement, an agreement was reached for a waiver of distributions in respect of the IDRs for the GP Additional Units associated with the 5.0 million Additional Units issued in connection with the Big Spring Gathering Assets Acquisition for at least two years, through at least the distribution for the quarter ending March 31, 2022. Refer to Note 3 for additional details.

Diluted net income per unit applicable to common limited partners includes the effects of potentially dilutive units on our common units. As of June 30, 2021, the only potentially dilutive units outstanding consist of unvested phantom units.

Our distributions earned with respect to a given period are declared subsequent to quarter end. Therefore, the table below represents total cash distributions applicable to the period in which the distributions are earned. The expected date of distribution for the distributions earned during the period ended June 30, 2021 is August 11, 2021. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per unit. The calculation of net income per unit is as follows (dollars in thousands, except units and per unit amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income attributable to partners	$	43,246	$	44,415	$	79,513	$	72,211
Less: General partner's distribution (including IDRs) (1)	—		9,479		—		18,618
Less: Limited partners' distribution	40,846		26,490		80,814		48,229
Earnings in excess (deficit) of distributions	$	2,400	$	8,446	$	(1,301)	$	5,364

General partner's earnings:
Distributions (including IDRs) (1)	$	—	$	9,479	$	—	$	18,618
Allocation of earnings in excess (deficit) of distributions	—		168		—		106
Total general partner's earnings	$	—	$	9,647	$	—	$	18,724

Limited partners' earnings on common units:
Distributions	$	40,846	$	26,490	$	80,814	$	48,229
Allocation of earnings in excess (deficit) of distributions	2,400		8,278		(1,301)		5,258
Total limited partners' earnings on common units	$	43,246	$	34,768	$	79,513	$	53,487

Weighted average limited partner units outstanding:
Common units - basic	43,445,222		29,427,298		43,444,284		26,953,934
Common units - diluted	43,460,366		29,430,555		43,453,806		26,956,523

Net income per limited partner unit:
Common units - basic	$	1.00	$	1.18	$	1.83	$	1.98
Common units - diluted (2)	$	1.00	$	1.18	$	1.83	$	1.98

(1) Prior to August 13, 2020, general partner distributions (including IDRs) consisted of the 2.0% general partner interest and IDRs, which represented the right of the general partner to receive increasing percentages of quarterly distributions of available cash from operating surplus in excess of 0.43125 per unit per quarter. In connection with the IDR Restructuring Transaction on August 13, 2020, the IDRs were eliminated and the general partner interest became a non-economic general partner interest.

(2) Outstanding common units totaling 3,662 and 1,841 were excluded from the diluted earnings per unit calculation for the three and six months ended June 30, 2021, respectively. Outstanding common units totaling 18,270 were excluded from the diluted earnings per unit calculation for both the three and six months ended June 30, 2020.