On August 1, 2021, we entered into an agreement (the Purchase Agreement) to sell the Eastern U.S. Terminal Operations to Sunoco LP for $250.0 million in cash. The Eastern U.S. Terminal Operations include terminals in the following locations; Jacksonville, Florida; Andrews Air Force Base, Maryland; Baltimore, Maryland; Piney Point, Maryland; Virginia Beach, Virginia; Paulsboro, New Jersey; and Blue Island, Illinois, as well as both Linden, New Jersey terminals. The Eastern U.S. Terminal Operations have an aggregate storage capacity of 14.8 million barrels and are included in the storage segment. We determined these assets were no longer synergistic with our core assets. During the third quarter of 2021, we also determined the Eastern U.S. Terminal Operations met the criteria to be classified as held for sale. Accordingly, the consolidated balance sheet reflects the assets and liabilities associated with the Eastern U.S. Terminal Operations as held for sale as of September 30, 2021. The Eastern U.S. Terminal Operations did not qualify for reporting as discontinued operations, as the sale did not represent a strategic shift that would have a major effect on our operations or financial results. We closed the sale on October 8, 2021 and used the proceeds from the sale to reduce debt.

Asset and Goodwill Impairments. The pending sale of the Eastern U.S. Terminal Operations was a triggering event that required us to evaluate the goodwill and long-lived assets associated with these terminals. Prior to entering the Purchase Agreement, the Eastern U.S. Terminal Operations were included in, and fully integrated with, the terminals reporting unit. We allocated goodwill of $34.1 million to the Eastern U.S. Terminal Operations based on its relative fair value to the terminals reporting unit. We compared the carrying value of the Eastern U.S. Terminal Operations, which includes the allocated goodwill, to its fair value. We concluded the expected sales price of $250.0 million provided reasonable indication of fair value since the pending sale was deemed to be an orderly transaction between market participants and thus falls within Level 2 of the fair value hierarchy. We measured the goodwill impairment as the excess of the disposal group’s carrying value over its fair value and recognized a goodwill impairment charge of $34.1 million in the third quarter of 2021 to reduce the goodwill to $0.

With respect to the long-lived assets of the Eastern U.S. Terminal Operations, we compared its carrying value as of September 30, 2021, after the goodwill impairment, to its fair value less costs to sell, and we recognized an asset impairment loss of $95.7 million in the third quarter of 2021, including $23.9 million related to intangible assets. The asset and goodwill impairment losses are reported in “Asset impairment losses” and “Goodwill impairment losses,” respectively, on the condensed consolidated statements of comprehensive loss for the three and nine months ended September 30, 2021.

Assets and Liabilities Held for Sale. The following table provides the carrying amounts of the major classes of the Eastern U.S. Terminal Operations assets and liabilities included in “Assets held for sale” and “Liabilities held for sale” on the consolidated balance sheet:


	September 30, 2021
	(Thousands of Dollars)
Property, plant and equipment, net of accumulated depreciation and impairment loss	$	247,881
Other long-term assets, net	1,875
Assets held for sale	$	249,756

Current portion of finance lease obligation	$	78
Accrued liabilities	2,456
Long-term debt, less current portion (finance lease obligation)	150
Other long-term liabilities	1,102
Liabilities held for sale	$	3,786

In the third quarter of 2021, we recorded a long-lived asset impairment charge of $59.2 million within our pipeline segment related to our refined product pipeline extending from Mt. Belvieu, Texas to Corpus Christi, Texas (the Houston Pipeline). During the third quarter of 2021, we identified an indication of impairment related to the southern section of the Houston Pipeline, specifically that its physical condition would now require significant repairs in order to pursue commercial opportunities. Consequently, we separated the pipeline into two distinct assets: the northern and southern sections. Our estimate of the undiscounted cash flows associated with the southern section indicated it was not recoverable. Due to the factors described above, we determined the carrying value of the southern section exceeded its fair value, and reduced its carrying value to $0. We recorded the asset impairment charge in “Asset impairment losses” on the condensed consolidated statement of comprehensive loss for the three and nine months ended September 30, 2021. We determined that the northern portion of the pipeline was not impaired.

In March 2020, the COVID-19 pandemic and actions taken by the Organization of Petroleum Exporting Countries and other oil-producing nations (OPEC+) resulted in severe disruptions in the capital and commodities markets, which led to significant decline in our unit price. As a result, our equity market capitalization fell significantly. The decline in crude oil prices and demand for petroleum products also led to a decline in expected earnings from some of our goodwill reporting units. These factors and others related to COVID-19 and OPEC+ caused us to conclude there were triggering events that occurred in March 2020 that required us to perform a goodwill impairment test as of March 31, 2020. We recognized a goodwill impairment charge of $225.0 million in the first quarter of 2020, which is reported in the pipeline segment. Our assessment did not identify any other reporting units at risk of a goodwill impairment.

We assess goodwill for impairment annually on October 1, or more frequently if events or changes in circumstances indicate it might be impaired, and completed our most recent quantitative assessment on October 1, 2020. Although we determined that no impairment charges resulted from our October 1, 2020 impairment assessment, the fair value of the crude oil pipelines reporting unit, which is included in the pipeline reporting segment, exceeded its carrying value by approximately 4.0%. The goodwill associated with the crude oil pipelines reporting unit totaled $308.6 million as of September 30, 2021 and October 1, 2020. Considering that the carrying value of the reporting unit was written down to its fair value with the first quarter of 2020 impairment charge discussed above, changes to certain assumptions used in our estimate could cause the fair value to be less than the carrying value of the crude oil pipelines reporting unit, resulting in an impairment. Other than the sale of the Eastern U.S. Terminal Operations, we did not identify any factors that warranted an interim goodwill impairment test as of September 30, 2021.

Management’s estimates are based on numerous assumptions about future operations and market conditions, which we believe to be reasonable but are inherently uncertain. The uncertainties underlying our assumptions and estimates, including uncertainty surrounding the COVID-19 pandemic, could differ significantly from actual results and lead to a different determination of the fair value of our assets.