Acquisitions

12 Months Ended

Dec. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Delaware Gathering (formerly 3 Bear)

On April 8, 2022, DKL Delaware Gathering, LLC, a subsidiary of the Partnership ("Delaware Gathering"), entered into a Membership Interest Purchase Agreement (the “3 Bear Purchase Agreement”) with 3 Bear Energy – New Mexico LLC (the “Seller”) to purchase 100% of the limited liability company interests in 3 Bear Delaware Holding – NM, LLC (“3 Bear”) (subsequently renamed to DKL Delaware Holding - NM, LLC), related to the Seller’s crude oil and natural gas gathering, processing and transportation businesses, as well as water disposal and recycling operations, in the Delaware Basin of New Mexico (the “Delaware Gathering Acquisition”). We completed the Delaware Gathering Acquisition on June 1, 2022. The purchase price for the Delaware Gathering Acquisition was $628.3 million. The Delaware Gathering Acquisition was financed through a combination of cash on hand and borrowings under the DKL Credit Facility.

The Delaware Gathering Acquisition was accounted for using the acquisition method of accounting, whereby the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their fair values. The excess of the consideration paid over the fair value of the net assets acquired was recorded as goodwill.

Determination of Purchase Price

The table below presents the purchase price (in thousands):


Base purchase price:	$	624,700
Add: closing net working capital (as defined in the 3 Bear Purchase Agreement)	3,600
Less: closing indebtedness (as defined in the 3 Bear Purchase Agreement)	(80,618)
Cash paid for the adjusted purchase price	547,682
Cash paid to payoff 3 Bear credit agreement (as defined in the 3 Bear Purchase Agreement)	80,618
Purchase price	$	628,300

Purchase Price Allocation

The following table summarizes the final fair values of assets acquired and liabilities assumed in the Delaware Gathering Acquisition as of June 1, 2022 (in thousands):


Assets acquired:
Cash and cash equivalents	$	2,678
Accounts receivables, net	28,859
Inventories	1,836
Other current assets	986
Property, plant and equipment	382,799
Operating lease right-of-use assets	7,427
Goodwill	14,848
Customer relationship intangible, net	210,000
Rights-of-way	13,490
Other non-current assets	500
Total assets acquired	663,423

Liabilities assumed:
Accounts payable	8,020
Accrued expenses and other current liabilities	22,382

Current portion of operating lease liabilities	1,029
Asset retirement obligations	2,261
Operating lease liabilities, net of current portion	1,431
Total liabilities assumed	35,123
Fair value of net assets acquired	$	628,300