AMERICAN MIDSTREAM PARTNERS, LP - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations

Edgar Glimpses |
The following management's discussion and analysis of our financial condition
and results of operations should be read in conjunction with the unaudited
Condensed Consolidated Financial Statements and the related notes thereto
included elsewhere in this Quarterly Report on Form 10-Q ("Quarterly Report")
and the audited Consolidated Financial Statements and notes thereto and
management's discussion and analysis of financial condition and results of
operations as of and for the year ended  included in our Annual
Report on Form 10-K as filed with the Securities and Exchange Commission ("SEC")
on  ("2017 Form 10-K"). This discussion contains forward-looking
statements that reflect management's current views with respect to future events
and financial performance. Our actual results may differ materially from those
anticipated in these forward-looking statements or as a result of certain
factors such as those set forth below under the caption "Forward-Looking
Statements."

Forward-Looking Statements


Our reports, filings and other public announcements may from time to time
contain statements that do not directly or exclusively relate to historical
facts. Such statements are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). You can typically identify forward-looking statements by the
use of words such as "may," "could," "intend," "will," "would," "project,"
"believe," "anticipate," "expect," "estimate," "potential," "plan," "forecast"
and other similar words.

All statements that are not statements of historical facts, including statements
regarding our future financial position, business strategy, budgets, projected
costs and plans, and objectives of management for future operations, are
forward-looking statements.

These forward-looking statements reflect our intentions, plans, expectations,
assumptions and beliefs about future events and are subject to risks,
uncertainties and other factors, many of which are outside our control.
Important factors that could cause actual results to differ materially from the
expectations expressed or implied in the forward-looking statements include
known and unknown risks. These risks and uncertainties, many of which are beyond
our control, include, but are not limited to, the risks set forth in Item 1A -
Risk Factors of our 2017 Form 10-K as well as the following risks and
uncertainties:

• our ability to execute on our capital allocation strategy, including sales of

non-core assets, receipt of expected proceeds, distribution levels and

reduction in leverage;

• the impact of the unsolicited offer from Magnolia to acquire all common units

it and its affiliates do not already own and the process resulting therefrom;

• our ability to timely and successfully identify, consummate and integrate

acquisitions and organic growth projects, including the realization of all

anticipated benefits of any such transactions;

• our ability to refinance our credit facility before its scheduled maturity in

on terms acceptable to us, or at all, and the associated

costs;

• our ability to maintain compliance with financial covenants and ratios in our

revolving credit facility;

• any adverse impact of our doubt as to our ability to continue as a going

concern;

• our ability to generate sufficient cash from operations to pay distributions

to unitholders and our Board's discretionary determination as to the level of

cash distributions to unitholders;

• our ability to access capital to fund growth, including new and amended

credit facilities and access to the debt and equity markets, which will

depend on general market conditions;

• the demand for natural gas, refined products, condensate or crude oil and NGL

products by the petrochemical, refining or other industries;

• the performance of certain of our current and future projects and

unconsolidated affiliates that we do not control and disruptions to cash

flows from our joint ventures due to operational or other issues that are

beyond our control;

• severe weather and other natural phenomena, including their potential impact

on demand for the commodities we sell and the operation of company-owned and

third party-owned infrastructure;

• security threats such as terrorist attacks and cybersecurity breaches,

against, or otherwise impacting, our facilities and systems;

• general economic, market and business conditions, including industry changes

and the impact of consolidations and changes in competition;

• the level of creditworthiness of counterparties to transactions;

• the amount of collateral required to be posted from time to time in our

transactions;

• the level and success of natural gas and crude oil drilling around our assets

and our success in connecting natural gas and crude oil supplies to our

gathering and processing systems;

• the timing and extent of changes in natural gas, crude oil, NGLs and other

commodity prices, interest rates and demand for our services;

• our success in risk management activities, including the use of derivative

financial instruments to hedge commodity, interest rate and weather risks;




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• our dependence on a relatively small number of customers for a significant

portion of our gross margin;

• our ability to renew our gathering, processing, transportation and terminal

contracts;

• our ability to successfully balance our purchases and sales of natural gas;

• our ability to grow through contributions from affiliates, acquisitions and

internal growth projects;

• the impact or outcome of any legal proceedings;

• the level of support provided by our sponsor;

• the cost and effectiveness of our remediation efforts with respect to the

material weaknesses discussed in Part II, Item 9A - Controls and Procedures

of our 2017 Form 10-K; and

• costs associated with compliance with environmental, health and safety, and

    pipeline regulations.



Although we believe that the assumptions underlying our forward-looking
statements are reasonable, any of the assumptions could be inaccurate, and,
therefore, we cannot assure you that the forward-looking statements included in
this Quarterly Report will prove to be accurate. Some of these and other risks
and uncertainties that could cause actual results to differ materially from such
forward-looking statements are more fully described in Item 1A - Risk Factors of
our 2017 Form 10-K. Statements in this Quarterly Report speak as of the date of
this Quarterly Report. Except as may be required by applicable securities laws,
we undertake no obligation to publicly update or advise investors of any change
in any forward-looking statement, whether as a result of new information, future
events or otherwise.

Overview

We are a growth-oriented Delaware limited partnership formed in  to
own, operate, develop and acquire a diversified portfolio of midstream energy
assets. We provide critical midstream infrastructure that links producers of
natural gas, crude oil, NGLs, condensate and specialty chemicals to numerous
intermediate and end-use markets. Through our five reportable segments, (i) Gas
Gathering and Processing Services, (ii) Liquid Pipelines and Services, (iii)
Natural Gas Transportation Services, (iv) Offshore Pipelines and Services and
(v) Terminalling Services, we engage in the business of gathering, treating,
processing and transporting natural gas; gathering, transporting, storing,
treating and fractionating NGLs; gathering, storing and transporting crude oil
and condensates; and storing refined products.

Recent Developments

• On , the Board of Directors of our General Partner received

a non-binding proposal from Magnolia Infrastructure Holdings, LLC

("Magnolia"), an affiliate of ArcLight Capital Partners, LLC ("ArcLight"),

pursuant to which Magnolia would acquire all common units of the Partnership

that Magnolia and its affiliates do not already own in exchange for $6.10 per

common unit. If approved, it is currently expected that the transaction would

be effected through a merger of the Partnership with a subsidiary of

ArcLight. The transaction, as proposed, is subject to a number of

contingencies, including Magnolia's completion of due diligence, the approval

of the Conflicts Committee, the approval by holders of a majority of the

outstanding common units of the Partnership and the satisfaction of any

conditions to the consummation of a transaction set forth in any definitive

    agreement concerning the transaction. There can be no assurance that
    definitive documentation will be executed or that any transaction will
    materialize.


• During the first nine months of 2018, we entered into definitive agreements

for the sale of certain of our businesses as follows:



•         On , we entered into a definitive agreement for the
          sale of our refined products terminals (the "Refined Products") to DKGP
          Energy Terminals LLC ("DKGP"), for approximately $139 million in cash,
          subject to working capital adjustments. During , we were

notified that the Federal Trade Commission was requesting additional

information and documentary materials with respect to the planned sale.

On , we and DKGP announced the termination of the

agreement. We are continuing to market Refined Products and present the

          assets and liabilities of Refined Products as held for sale.


• On , we entered into a definitive agreement for the sale

of our marine products terminals (the "Marine Products") to

institutional investors for approximately $210 million in cash, subject

to working capital adjustments. The divestiture of Marine Products,

          including the Harvey and Westwego terminals located in the Port of New
          Orleans in Louisiana, and the Brunswick terminal located in the Port of

Brunswick in Georgia, is a continuation of the Partnership's previously

announced non-core asset divestiture program.




On , we completed the sale of Marine Products. Net proceeds from
this disposition were $208.6 million, exclusive of $5.7 million in advisory fees
and other costs, and were used to repay borrowings outstanding under our Credit
Agreement.


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• On , we, our General Partner, our wholly owned subsidiary,

    Cherokee Merger Sub LLC, Southcross Energy Partners, L.P. ("SXE") and
    Southcross Energy Partners GP, LLC, entered into an Agreement and Plan of
    Merger (the "SXE Merger Agreement"), and we, our General Partner and

Southcross Holdings LP ("Holdings LP") entered in to a Contribution Agreement

("Contribution Agreement"), for total consideration of $818 million. Under

the Merger Agreement and the Contribution Agreement, we would have acquired

SXE and substantially all the current subsidiaries of Holdings LP. The SXE

Merger Agreement and the Contribution Agreement originally provided for an

outside closing date of . On the parties to the

Merger Agreement and the Contribution Agreement agreed to extend such outside

closing date to (the "Outside Closing Date").




On , following the expiration of the Outside Closing Date, we
received notice of termination of the SXE Merger Agreement from SXE and notice
of termination of the Contribution Agreement from Holdings LP. The terms of the
Contribution Agreement required the payment to Holdings LP of a $17 million
termination fee in the event Holdings LP terminated the Contribution Agreement
after the Outside Closing Date due to our inability to obtain financing to close
the SXE Transactions on terms reasonably acceptable to us. The termination fee
serves as liquidated damages. The termination fee was paid in .

Financial Highlights

Financial highlights for the three months ended include the following:

• Net income attributable to the Partnership was $38.2 million for the three

       months ended  as compared to $55.9 million for the same
       period in 2017.

• Adjusted EBITDA was $35.2 million for the three months ended ,

       2018, a decrease of 17% compared to the third quarter of 2017.


•      Distributable cash flow was $4.5 million for the three months ended
       , compared to $22.1 million for the same period in 2017.


•      Total segment gross margin was $74.5 million for the three months ended

, an increase of 17% as compared to the third quarter of

       2017.



Adjusted EBITDA, distributable cash flow and total segment gross margin are each
non-GAAP measures. Please see Non-GAAP Financial Measures for a definition and
reconciliation to the most comparable GAAP measure.

Operational highlights for the three months ended , include the following:

•      Continued producer development across the Partnership's Eagle Ford
       gathering and processing assets contributed to a 30% increase in
       throughput volumes over the third quarter of 2017.

• Increased activity in the deep-water Gulf of Mexico drove a 23% increase

       in natural gas throughput volumes on the Partnership's consolidated
       offshore assets over the third quarter of 2017.

• Continued strength across the Partnership's natural gas transportation

       assets, with volumes increasing 71% from the same period in the prior
       year, driven by the acquisition of Trans-Union pipeline.

• Strong producer activity across the Partnership's East Texas and Permian

       assets contributed to an 18% increase in NGL production volumes over the
       third quarter of 2017.

• Active drilling programs in and around the Partnership's Bakken assets

       drove a 97% increase in throughput volumes over the second quarter of
       2018.

• Current production flows on Delta House are approximately 90 MBoe/d.




Non-GAAP Financial Measures

Total segment gross margin, operating margin, Adjusted EBITDA and Distributable
Cash Flow ("DCF") are performance measures that are non-GAAP financial measures.
Each has important limitations as an analytical tool because they exclude some,
but not all, items that affect the most directly comparable GAAP financial
measures. Management compensates for the limitations of these non-GAAP measures
as analytical tools by reviewing the comparable GAAP measures, understanding the
differences between the measures and incorporating these data points into
management's decision-making process.

You should not consider total segment gross margin, operating margin, Adjusted
EBITDA or DCF in isolation or as a substitute for, or more meaningful than
analysis of, our results as reported under GAAP. Total segment gross margin,
operating margin, Adjusted EBITDA and distributable cash flow may be defined
differently by other companies in our industry. Our definitions of

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these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Adjusted EBITDA


Adjusted EBITDA is a supplemental non-GAAP financial measure used by our
management and external users of our financial statements, such as investors,
commercial banks, research analysts and others, to assess: the financial
performance of our assets without regard to financing methods, capital structure
or historical cost basis; the ability of our assets to generate cash flow to
make cash distributions to our unitholders and our General Partner; our
operating performance and return on capital as compared to those of other
companies in the midstream energy sector, without regard to financing or capital
structure; and the attractiveness of capital projects and acquisitions and the
overall rates of return on alternative investment opportunities.

We define Adjusted EBITDA as net income (loss) attributable to the Partnership,
plus depreciation, amortization and accretion expense ("DAA") excluding
noncontrolling interest share of DAA, interest expense, net of capitalized
interest excluding unrealized gain (loss) on interest rate swaps, amortization
of deferred financing costs, debt issuance costs paid during the period,
unrealized gains (losses)  on derivatives, non-cash charges such as non-cash
equity compensation expense and charges that are unusual such as transaction
expenses primarily associated with our acquisitions, income tax expense,
distributions from unconsolidated affiliates and General Partner's contribution,
less earnings in unconsolidated affiliates, discontinued operations, gains
(losses) that are unusual, such as gain on revaluation of equity interest and
gain (loss) on sale of assets, net and other non-recurring items that impact our
business, such as construction and operating management agreement income
("COMA") and other post-employment benefits plan net periodic benefit.

The GAAP measure most directly comparable to our performance measure Adjusted EBITDA is Net income (loss) attributable to the Partnership.

Distributable Cash Flow


DCF is a significant performance metric used by us and by external users of the
Partnership's financial statements, such as investors, commercial banks and
research analysts, to compare basic cash flows generated by us to the cash
distributions we expect to pay the Partnership's unitholders. Using this metric,
management and external users of the Partnership's financial statements can
quickly compute the coverage ratio of estimated cash flows to planned cash
distributions. DCF is also an important financial measure for the Partnership's
unitholders since it serves as an indicator of the Partnership's success in
providing a cash return on investment. Specifically, this financial measure may
indicate to investors whether we are generating cash flow at a level that can
sustain the Partnership's quarterly distribution rates. DCF is also a
quantitative standard used throughout the investment community with respect to
publicly traded partnerships and limited liability companies because the value
of a unit of such an entity is generally determined by the unit's yield (which
in turn is based on the amount of cash distributions the entity pays to a
unitholder). DCF will not reflect changes in working capital balances.

We define DCF as Adjusted EBITDA less interest expense net of capitalized
interest excluding unrealized gain (loss) on interest rate swaps and letter of
credit fees, maintenance capital expenditures and distributions related to the
Series A, Series C and Series D convertible preferred units. The GAAP financial
measure most comparable to DCF is Net income (loss) attributable to the
Partnership.

Total Segment Gross Margin and Operating Margin

Total segment gross margin and operating margin are non-GAAP supplemental measures that we use to evaluate our performance.


For segments other than Terminalling Services, we define segment gross margin as
total revenue plus unconsolidated affiliate earnings less unrealized gains
(losses) on commodity derivatives, construction and operating management
agreement income and the cost of sales. Gross margin for Terminalling Services
also deducts direct operating expense which includes direct labor, general
materials and supplies, and direct overhead. We define operating margin as total
segment gross margin less other direct operating expenses. The GAAP measure most
directly comparable to total segment gross margin and operating margin is Net
income (loss) attributable to the Partnership. For a reconciliation of total
segment gross margin and operating margin to Net income (loss) attributable to
the Partnership, see Note About Non-GAAP Financial Measures below.

Total segment gross margin is useful to investors and the Partnership's
management in understanding our operating performance because it measures the
operating results of our segments before certain non-cash items, such as
depreciation and amortization, and certain expenses that are generally not
controllable by our business segment development managers (who are responsible
for

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revenue generation at the segment level), such as certain operating costs,
general and administrative expenses, interest expense and income taxes.
Operating margin is useful to investors and the Partnership's management for
similar reasons except that operating margin includes all direct operating
expenses, which allows the Partnership's management to assess the performance of
our consolidated operating managers (who are responsible for cost management at
the Partnership level). In addition, because these operating measures exclude
interest expense and income taxes, they are useful for investors because they
remove potential distortions between periods caused by factors such as financing
and capital structures and changes in tax laws and positions.

Note about Non-GAAP Financial Measures


Total segment gross margin, operating margin, Adjusted EBITDA and DCF are
performance measures that are non-GAAP financial measures. Each has important
limitations as an analytical tool because it excludes some, but not all, items
that affect the most directly comparable GAAP financial measures. Management
compensates for the limitations of these non-GAAP measures as analytical tools
by reviewing the comparable GAAP measures, understanding the differences between
the measures and incorporating these data points into management's
decision-making process.

You should not consider total segment gross margin, operating margin, Adjusted
EBITDA or DCF in isolation or as a substitute for, or more meaningful than
analysis of, our results as reported under GAAP. Total segment gross margin,
operating margin, Adjusted EBITDA and distributable cash flow may be defined
differently by other companies in our industry. Our definitions of these
non-GAAP financial measures may not be comparable to similarly titled measures
of other companies, thereby diminishing their utility.

The following tables reconcile the non-GAAP financial measures of total segment gross margin, operating margin, Adjusted EBITDA and DCF to its nearest GAAP measure, Net income (loss) attributable to the Partnership, (in thousands):

                                           Three months ended September 30,          Nine months ended September 30,
Reconciliation of Total Segment Gross
Margin to Net Income (Loss)
Attributable to the Partnership:               2018                 2017                2018                 2017

Gas Gathering and Processing Services
segment gross margin                    $        15,421       $        12,761     $       42,613       $       36,663
Liquid Pipelines and Services segment
gross margin                                      9,351                 7,808             24,365               21,209
Natural Gas Transportation Services
segment gross margin                              7,044                 5,356             27,384               17,106
Offshore Pipelines and Services
segment gross margin                             38,823                29,312             88,470               80,738
Terminalling Services segment gross
margin (1)                                        3,848                 8,509             20,753               30,429
Total segment gross margin                       74,487                63,746            203,585              186,145
Direct operating expenses                       (18,254 )             (17,274 )          (54,991 )            (47,316 )
Operating margin                                 56,233                46,472            148,594              138,829

Loss on commodity derivatives, net                 (234 )                (597 )             (530 )                (33 )
Corporate expenses                              (23,857 )             (27,083 )          (69,922 )            (84,570 )
Termination fee                                 (17,000 )                   -            (17,000 )                  -
Depreciation, amortization and
accretion expense                               (23,040 )             (26,781 )          (66,274 )            (78,834 )
Gain on sale of assets, net                      99,396                 4,061             99,491                4,064
Interest expense, net of capitalized
interest                                        (22,267 )             (17,759 )          (55,834 )            (51,037 )
Other income                                        160                34,224                587               31,926
Income tax expense                              (31,208 )                (731 )          (32,045 )             (2,611 )
Net income from discontinued
operations, net of tax                                -                44,696                  -               42,185
Net income attributable to
noncontrolling interests                            (25 )                (621 )              (83 )             (3,386 )
Net income (loss) attributable to the
Partnership                             $        38,158       $        55,881     $        6,984       $       (3,467 )


_______________________
(1) Segment Gross Margin for our Terminalling Services segment includes Direct
operating expenses. For additional information related to our operating
segments, as well as a reconciliation of Segment Gross Margin to Income from
continuing operations before income taxes, see Note 21 - Reportable Segments, to
our Condensed Consolidated Financial Statements.



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                                                Three months ended September 30,           Nine months ended September 30,
                                                    2018                 2017                 2018                 2017
Reconciliation of Net Income (Loss)
Attributable to the Partnership to
Adjusted EBITDA and DCF:
Net income (loss) attributable to the
Partnership                                  $        38,158       $        

55,881 $ 6,984 $ (3,467 ) Depreciation, amortization and accretion expense

                                               23,040                26,781              66,274                78,834
Noncontrolling interest share of
depreciation, amortization and accretion
expense                                                    -                   (96 )                 -                  (661 )
Interest expense, net of capitalized
interest                                              22,267                17,759              55,834                51,037
Amortization of deferred financing costs              (2,493 )              (1,154 )            (5,142 )              (3,610 )
Unrealized loss (gain) on interest rate
swaps                                                     33                (1,646 )             6,123                (3,658 )
Debt issuance costs paid                               1,959                   119               4,701                 2,235
Unrealized losses (gains) on derivatives,
net                                                       79                   325              (5,771 )               2,288
Non-cash equity compensation expense                   1,335                   835               3,529                 6,067
Transaction expenses                                   7,105                10,470              22,922                31,155
Termination fee                                       17,000                     -              17,000                     -
Income tax expense                                    31,209                   731              32,045                 2,611
Discontinued operations                                    -               (44,745 )                 -               (36,247 )
Distributions from unconsolidated
affiliates                                            19,705                20,582              64,260                58,976
General Partner contribution                               -                 9,870              17,732                34,614
Earnings in unconsolidated affiliates                (24,622 )             (16,827 )           (47,742 )             (49,781 )
COMA                                                    (167 )                 (91 )              (346 )                (257 )
Other income                                               5                     -                 (39 )                   -
Gain on revaluation of equity interest                     -               (32,383 )                 -               (32,383 )
Gain on sale of assets, net                          (99,396 )              (4,061 )           (99,491 )              (4,064 )
Adjusted EBITDA                              $        35,217       $        

42,350 $ 138,873 $ 133,689


Interest expense, net of capitalized
interest                                             (22,267 )             (17,759 )           (55,834 )             (51,037 )
Amortization of deferred financing costs               2,493                 1,154               5,142                 3,610
Unrealized (loss) gain on interest rate
swaps                                                    (33 )               1,646              (6,123 )               3,658
Letter of credit fees                                      -                   (11 )                21                   210
Maintenance capital                                   (2,553 )              (2,449 )            (9,631 )              (6,570 )
Preferred unit distributions                          (8,354 )              (2,870 )           (25,061 )             (16,311 )
Distributable cash flow                      $         4,503       $        

22,061 $ 47,387 $ 67,249

General Trends and Outlook


In , the Partnership announced a revised capital allocation strategy
that is intended to reduce leverage, provide capital for strategic growth
opportunities and create long-term value. As part of the revised capital
allocation strategy, the Partnership has determined the most prudent sources of
accretive growth capital are proceeds from the sale of non-core assets and the
retention of an increased portion of operating cash flow through the reduction
of its common unit distribution. Together, cash flow retention and asset sales
are expected to enable the Partnership to reallocate capital to meaningful
growth opportunities, while promoting balance sheet flexibility, substantially
reducing indebtedness and minimizing the need to raise external equity capital.

During the remainder of 2018, our business objectives will continue to focus on
maintaining stable cash flows from our existing assets, executing our capital
optimization strategy to simplify our business and redeploy capital from
non-core assets towards higher return and growth opportunities to increase our
long-term cash flows. We believe the key elements to stable cash flows are the
diversity of our asset portfolio and our fee-based business which represents a
significant portion of our expected gross margins.


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During 2018, we anticipate to incur between $14 million and $19 million for capital maintenance, and between $100 million and $120 million for capital expansion primarily including the East Texas NGL Value Chain consolidation, the build-out of the Lavaca system and other organic growth projects.


We expect our business to continue to be affected by the key trends, outlook and
developments discussed in this report and in our 2017 Form 10-K, to the extent
not superseded by information in this report, within Management's Discussion and
Analysis of Financial Condition and Results of Operations - General Trends and
Outlook. Our expectations are based on assumptions made by us and information
currently available to us. To the extent our underlying assumptions prove to be
incorrect, our actual results may vary materially from our expected results.

Results of Operations - Consolidated


To supplement our financial information presented in accordance with GAAP, our
management uses additional measures known as "non-GAAP financial measures", to
evaluate past performance and prospects for the future. Management views these
metrics as important factors in evaluating our profitability and reviews these
measurements at least monthly for consistency and trend analysis. These metrics
include throughput volumes, storage utilization, total segment gross margin,
operating margin, direct operating expenses on a segment basis, and Adjusted
EBITDA and DCF on a company-wide basis.

Three Months Ended Compared to Three Months Ended

The results of operations for the three months ended and 2017 are presented in the tables below (in thousands, except percentages):

                                                      Three months ended September 30,
                                                2018          2017         Change          %

Revenue                                      $ 202,346     $ 162,290     $  40,056         25  %
Operating expenses:
Cost of sales                                  150,274       112,398        37,876         34  %
Direct operating expenses                       20,407        20,705          (298 )       (1 )%
Corporate expenses                              23,857        27,083        (3,226 )      (12 )%
Termination fee                                 17,000             -        17,000          *
Depreciation, amortization and accretion
expense                                         23,040        26,781        (3,741 )      (14 )%
Gain on sale of assets, net                    (99,396 )      (4,061 )     (95,335 )        *
Total operating expenses                       135,182       182,906       (47,724 )      (26 )%
Operating income (loss)                         67,164       (20,616 )      87,780        426  %
Other income (expense), net
Interest expense, net of capitalized
interest                                       (22,267 )     (17,759 )      (4,508 )       25  %
Other income (expense), net                       (128 )      34,085       (34,213 )        *
Earnings in unconsolidated affiliates           24,622        16,827         7,795         46  %
Income from continuing operations before
income taxes                                    69,391        12,537        56,854       (453 )%
Income tax expense                             (31,208 )        (731 )     (30,477 )        *
Income from continuing operations               38,183        11,806        26,377        223  %
Income from discontinued operations,
including gain on sale                               -        44,696       (44,696 )        *
Net income                                      38,183        56,502       (18,319 )      (32 )%
Net income attributable to noncontrolling
interests                                          (25 )        (621 )      

596 96 % Net income attributable to the Partnership $ 38,158 $ 55,881 $ (17,723 ) (32 )%


Non-GAAP Financial Measures
Total Segment gross margin (1)               $  74,487     $  63,746     $  10,741         17  %
Adjusted EBITDA (2)                          $  35,217     $  42,350     $  (7,133 )      (17 )%

____________________________________

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* Not a meaningful percentage
(1) For reconciliation of Total Segment gross margin to its nearest GAAP
measure, Income from continuing operations before income taxes, see table in
Non-GAAP Financial Measures.
(2) See table in Non-GAAP Financial Measures for a reconciliation of Adjusted
EBITDA to its nearest GAAP measure.

Net income attributable to the Partnership for the three months ended  was $38.2 million, a decrease of $17.7 million, or 32%, from the same
period in the prior year, primarily due to:

• a $17.0 million termination fee from the termination of the SXE Merger

Agreement in 2018;

• a $34.2 million reduction in other income for the fair value adjustment

       recorded in 2017 from the acquisition of the remaining interests of MPOG;
       and


•      a $44.7 million reduction in income from discontinued operations,
       including gain on sale, which related to our Propane Business that was
       sold in the third quarter of 2017.


The above items, which negatively impacted Net income attributable to the Partnership between periods, was partially offset by:

• increased revenues from both commodity sales and services, partially

       offset by higher cost of sales associated with higher revenues and
       increased operating expenses; and

• the $99.4 million gain on sale of Marine Products in the third quarter of

       2018 offset by a $30.5 million increase in income tax expense for the
       period.



Total Segment gross margin for the three months ended  was
$74.5 million, an increase of $10.7 million, or 17%, from the same period in the
prior year. The increase was primarily due to higher segment gross margin in our
Natural Gas Transportation Services, Gas Gathering and Processing Services,
Offshore Pipelines and Services, and Liquid Pipelines and Services segments
offset by declines in our Terminalling Services segment.

Adjusted EBITDA for the three months ended  was $35.2 million,
a decrease of $7.1 million, or 17%, from the same period in the prior year. The
decrease in Adjusted EBITDA was primarily due to declines in Net income
attributable to the Partnership as discussed above.

We distributed $5.5 million to holders of our common units, or $0.1031 per common unit, during the three months ended , which represents the distribution for the second quarter of 2018.

Please see Results of Operations - Segment Results for a discussion of revenues, cost of sales, direct operating expenses and earnings in unconsolidated affiliates related to our segments.


Corporate expenses. Corporate expenses for the three months ended  were $23.9 million, a decrease of $3.2 million, or 12%, from the same
period in the prior year, primarily due to $4.5 million in lower transaction
related costs, offset by $0.9 million in higher accounting and financing costs
and $0.4 million increase in higher contractor and consultant costs.
Termination fee. The termination fee for the three months ended  was $17.0 million due to the termination of the SXE Merger Agreement.

Depreciation, amortization and accretion. Depreciation, amortization and
accretion expense for the three months ended  was $23.0
million, a decrease of $3.7 million, or 14%, from the same period in the prior
year, primarily due to $2.8 million in decreased amortization as a result of the
accelerated amortization of Cushing customer contracts in 2017, $2.7 million in
Marine and Refined Products terminals being classified as assets held for sale,
$1.4 million in decreased depreciation and amortization due to the 2017 year-end
impairments, and $1.0 million in decreased depreciation due to assets reaching
the end of their depreciable lives in 2017. This was partially offset by an
increase of $1.9 million due to the acquisition of Panther companies and
Trans-Union pipeline in the third and fourth quarters of 2017, and $2.3 million
due to the revision of the High Point ARO estimate at year-end 2017.

Interest expense, net of capitalized interest. Interest expense for the three
months ended  was $22.3 million, an increase of $4.5 million,
or 25%, from the same period in the prior year, primarily due to higher interest
of $3.4 million on the 8.50% Senior Notes, as a result of the $125.0 million
bond offering in the fourth quarter of 2017 and higher interest on our revolving
credit facility due to higher interest rates in 2018 compared to 2017.


                                       51
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Other income (expense), net. Other income (expense), net for the three months
ended  was $0.1 million, a decrease of $34.2 million, from the
same period in the prior year, primarily due to the fair value adjustment
recorded on the 2017 acquisition of the remaining interests of MPOG.

Income from discontinued operations. Income from discontinued operations for the
three months ended  was associated with our Propane Business
that was sold in .

Nine Months Ended Compared to Nine Months Ended

The results of operations for the nine months ended and 2017 are presented in the tables below (in thousands, except percentages):

                                                    Nine months ended September 30,
                                         2018                 2017           Change         %

Revenue                               $ 628,390            $ 488,398       $ 139,992        29  %
Operating expenses:
Cost of sales                           461,948              342,886         119,062        35  %
Direct operating expenses                65,595               56,819           8,776        15  %
Corporate expenses                       69,922               84,570         (14,648 )     (17 )%
Termination fee                          17,000   17,000           -   -      17,000         *
Depreciation, amortization and
accretion                                66,274               78,834         (12,560 )     (16 )%
(Gain) on sale of assets, net           (99,491 )             (4,064 )       (95,427 )       *
Total operating expenses                581,248              559,045          22,203         4  %
Operating income (loss)                  47,142              (70,647 )       117,789       167  %
Other income (expense), net
Interest expense, net of capitalized
interest                                (55,834 )            (51,037 )        (4,797 )       9  %
Other income, net                            62               32,248         (32,186 )       *
Earnings in unconsolidated affiliates    47,742               49,781          (2,039 )      (4 )%
Income (loss) from continuing
operations before income taxes           39,112              (39,655 )        78,767       199  %
Income tax expense                      (32,045 )             (2,611 )       (29,434 )       *
Income (loss) from continuing
operations                                7,067              (42,266 )        49,333       117  %
Income from discontinued operations,
including gain on sale                        -               42,185         (42,185 )    (100 )%
Net income (loss)                         7,067                  (81 )         7,148         *
Net income attributable to
noncontrolling interests                    (83 )             (3,386 )         3,303        98  %
Net income (loss) attributable to the
Partnership                           $   6,984            $  (3,467 )     

$ 10,451 301 %


Non-GAAP Financial Measures
Total Segment gross margin (1)        $ 203,585            $ 186,145       $  17,440         9  %
Adjusted EBITDA (2)                   $ 138,873            $ 133,689       $   5,184         4  %

____________________________

* Not a meaningful percentage
(1) For reconciliation of Total Segment gross margin to its nearest GAAP
measure, Income from continuing operations before income taxes, see table in
Non-GAAP Financial Measures.
(2) See table in Non-GAAP Financial Measures for a reconciliation of adjusted
EBITDA to its nearest GAAP measure.

Net income (loss) attributable to the Partnership for the nine months ended was $7.0 million, an increase of $10.5 million, or 301%, from the same period in the prior year, primarily due to:

• increased revenues from both commodity sales and services, partially

       offset by higher cost of sales associated with higher revenues and
       increased operating expenses; and

• the $99.4 million gain on sale of Marine Products in the third quarter of

       2018 offset by a $29.4 million increase in income tax expense for the
       period.



                                       52
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The above items, which increased Net income attributable to the Partnership between periods, was partially offset by:

• a $17.0 million termination fee from the termination of the SXE Merger

Agreement in 2018;

• a $32.2 million reduction in other income for the fair value adjustment

recorded in 2017 from the acquisition of the remaining interests of MPOG;

       and


•      a $42.2 million reduction in income from discontinued operations,
       including gain on sale, which related to our Propane Business that was
       sold in the third quarter of 2017.



Total Segment gross margin for the nine months ended  was
$203.6 million, an increase of $17.4 million, or 9%, from the same period in the
prior year. The increase was primarily due to higher segment gross margin in our
Natural Gas Transportation Services, Gas Gathering and Processing Services,
Offshore Pipelines and Services, and Liquid Pipelines and Services segments
offset by declines in our Terminalling Services segment.

Adjusted EBITDA for the nine months ended  was $138.9 million,
an increase of $5.2 million, or 4%, from the same period in the prior year. The
increase in Adjusted EBITDA was primarily due to improvements in Net income
attributable to the Partnership as discussed above.

We distributed $49.1 million, or $0.9281 per common unit, during the nine months ended , which represents the distribution for the fourth quarter of 2017 and the first two quarters of 2018.

Please see Results of Operations - Segment Results for a discussion of revenues, cost of sales, direct operating expenses and earnings in unconsolidated affiliates.


Corporate expenses. Corporate expenses for the nine months ended  were $69.9 million, a decrease of $14.6 million, or 17%, from the same
period in the prior year, primarily due to reductions of $7.5 million in
transaction related costs, $2.7 million in legal fees, $2.3 million in office
expenses, $1.0 million in travel and entertainment expenses, $0.6 million in
environmental and safety costs and $0.5 million in insurance costs.

Termination fee. The termination fee for the nine months ended was $17.0 million due to the termination of the SXE Merger Agreement.


Depreciation, amortization and accretion. Depreciation, amortization and
accretion expense for the nine months ended  was
$66.3 million, a decrease of $12.6 million, or 16%, from the same period in the
prior year, primarily due to $9.9 million in decreased amortization as a result
of the accelerated amortization of Cushing customer contracts in 2017, $5.1
million in Marine and Refined Products terminals being classified as assets held
for sale and $4.0 million in decreased depreciation and amortization due to the
2017 year-end impairments. This was partially offset by an increase of $5.7
million due to the acquisition of Panther companies and Trans-Union pipeline in
the third and fourth quarters of 2017.

Interest expense, net of capitalized interest. Interest expense for the nine
months ended  was $55.8 million, an increase of $4.8 million,
or 9%, from the same period in the prior year, primarily due to the higher
interest charges of $9.7 million on the 8.50% Senior Notes, as a result of the
$125.0 million bond offering in the fourth quarter of 2017, higher interest
expense on our revolving credit facility of $6.3 million due to higher interest
rates in 2018 compared to 2017, offset by the favorable position of our interest
rate swaps in the amount of $10.9 million.

Other income, net. Other income, net for the nine months ended  was $0.1 million, a decrease of $32.2 million, from the same period in the
prior year, primarily due to the fair value adjustment recorded on the 2017
acquisition of the remaining interests of MPOG.

                                       53
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Results of Operations - Segment Results

Gas Gathering and Processing Services Segment

Three Months Ended Compared to Three Months Ended


The table below contains key segment performance indicators for the three months
ended  and 2017 related to our Gas Gathering and Processing
Services segment (in thousands except operating and percentages).
                                                           Three months 

ended ,

                                                      2018         2017        Change         %
Segment Financial and Operating Data:
Financial data:
Commodity sales                                    $ 42,369     $ 31,651     $ 10,718          34  %
Services                                             11,060        5,636        5,424          96  %
Revenue from operations                              53,429       37,287       16,142          43  %
Gain (loss) on commodity derivatives, net               (93 )        (65 )        (28 )        43  %
Segment revenue                                      53,336       37,222       16,114          43  %
Cost of sales                                        37,917       24,492       13,425          55  %
Direct operating expenses                             6,099        8,655       (2,556 )       (30 )%
Other financial data:
Segment gross margin (1)                           $ 15,421     $ 12,761     $  2,660          21  %
Operating data:
Average throughput (MMcf/d)                           183.3        201.0        (17.7 )        (9 )%
Average plant inlet volume (MMcf/d) (2)                46.2         94.9        (48.7 )       (51 )%
Average gross NGL production (Mgal/d) (2)             362.9        324.3         38.6          12  %
Average gross condensate production (Mgal/d) (2)      103.5         57.5    

46.0 80 %

_______________________

(1) See Note 21 - Reportable Segments for a reconciliation of Segment Gross Margin to Income from continuing operations before income taxes. (2) Excludes volumes and gross production under our elective processing arrangements.


Commodity sales. Commodity sales for the three months ended 
were $42.4 million, an increase of $10.7 million, or 34%, from the same period
in the prior year, as a result of the following:

• increased sales of NGLs, natural gas and condensate at the Longview Plant

for $12.2 million primarily due to higher prices partially offset by

slightly lower volumes;

• an NGL component cash out on our West Texas pipeline of $5.2 million;

• increase in sales at the Chatom-Bazor Ridge facility of approximately $2.4

million due to NGL deliveries from a new producer as well as increased NGL

and condensate pricing;

• increased sales of NGLs, natural gas and condensate at the Yellow Rose

facility in the amount of $1.4 million primarily as a result of new

marketing contracts; and

• the increases noted above were partially offset by a $10.3 million

reduction in Commodity Sales due to our adoption of Topic 606, in which we

determined that certain percentage of proceeds ("POP") contracts should be

recorded on a net basis instead of a gross basis.




Services. Services for the three months ended  were $11.1
million, an increase of $5.4 million, or 96%, from the same period in the prior
year, due to increased fee revenue on Chapel Hill, Yellow Rose and Lavaca of
$2.0 million. Additionally, as a result of our adoption of Topic 606, we have
determined that certain POP contracts should be recorded on a net basis,
resulting in a $3.9 million increase in Services revenue.

Cost of sales. Cost of sales for the three months ended  were
$37.9 million, an increase of $13.4 million, or 55%, from the same period in the
prior year, primarily due to increased sales of NGLs, natural gas and condensate
sales at the Longview, Yellow Rose and Chatom-Bazor Ridge facilities of $19.9
million, partially offset by $6.4 million due to the adoption of Topic 606 as
discussed above.


                                       54
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Direct operating expenses. Direct operating expenses for the three months ended
 were $6.1 million, a decrease of $2.6 million, or 30%, from
the same period in the prior year, mainly due to $2.1 million in lower operating
expenses at Longview and Lavaca facilities and $0.5 million in lower outside
services at Longview and Chapel Hill facilities.

Nine Months Ended Compared to Nine Months Ended


The table below contains key segment performance indicators for the nine months
ended  and 2017 related to our Gas Gathering and Processing
Services segment (in thousands except operating data and percentages).
                                                            Nine months 

ended ,

                                                      2018          2017        Change         %
Segment Financial and Operating Data:
Financial data:
Commodity sales                                    $ 107,132     $ 94,074     $ 13,058          14  %
Services                                              31,481       16,927       14,554          86  %
Revenue from operations                              138,613      111,001       27,612          25  %
Gain (loss) on commodity derivatives, net               (385 )       (170 )       (215 )       126  %
Segment revenue                                      138,228      110,831       27,397          25  %
Cost of sales                                         95,921       74,261       21,660          29  %
Direct operating expenses                             18,705       24,766       (6,061 )       (24 )%
Other financial data:
Segment gross margin (1)                           $  42,613     $ 36,663     $  5,950          16  %
Operating data:
Average throughput (MMcf/d)                            172.9        205.0        (32.1 )       (16 )%
Average plant inlet volume (MMcf/d) (2)                 44.8        100.0        (55.2 )       (55 )%
Average gross NGL production (Mgal/d) (2)              319.1        340.0        (20.9 )        (6 )%
Average gross condensate production (Mgal/d) (2)        84.7         73.0   

11.7 16 %

_______________________

(1) See Note 21 - Reportable Segments for a reconciliation of Segment Gross Margin to Income from continuing operations before income taxes. (2) Excludes volumes and gross production under our elective processing arrangements.

Commodity sales. Commodity sales for the nine months ended were $107.1 million, an increase of $13.1 million, or 14%, from the same period in the prior year, as a result of the following:

• increased sales of NGLs, natural gas and condensate at the Longview Plant

       of $17.0 million primarily due to higher prices partially offset by
       slightly lower volumes;


•      increased marketing activity of $11.0 million due to new contracts and
       higher prices entered into in 2018;

• an NGL component cash out on our West Texas pipeline of $5.2 million;

• increase in sales at the Chatom-Bazor Ridge facility of approximately $3.9

million due to NGL deliveries from a new producer as well as increased NGL

       and condensate pricing;


•      increased sales of NGLs, natural gas and condensate at the Yellow Rose

facility in the amount of $4.9 million primarily as a result of increased

       higher quality throughput and improved recoveries; and


•      the increases noted above were partially offset by a $28.3 million

reduction in Commodity Sales due to our adoption of Topic 606, in which we

determined that certain percentage of proceeds ("POP") contracts should be

recorded on a net basis instead of a gross basis.




Services. Services for the nine months ended  were $31.5
million, an increase of $14.6 million, or 86%, from the same period in the prior
year, due to increased fee revenue primarily on Yellow Rose and Lavaca of $3.3
million. Additionally, as a result of our adoption of Topic 606, we have
determined that certain POP contracts should be recorded on a net basis,
resulting in a $11.6 million increase in Services revenue.

Cost of sales. Cost of sales for the nine months ended  were $95.9 million, an increase of $21.7 million, or 29%, from the same
period in the prior year, primarily due to increased sales of NGLs, natural gas
and condensate sales at the Longview, Yellow Rose and Chatom-Bazor Ridge
facilities of $38.3 million These increases were partially offset by $15.5
million due to Topic 606 implementation as discussed above.


                                       55
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Direct operating expenses. Direct operating expenses for the nine months ended
 were $18.7 million, a decrease of $6.1 million, or 24%, from
the same period in the prior year, primarily due to $2.0 million in lower
operating expenses at Burns Point, Lavaca and Chatom-Bazor Ridge, $1.5 million
in lower outside services at Longview, Yellow Rose and Chapel Hill facilities,
$1.1 million in lower salaries and wages related to Chatom-Bazor Ridge and
Lavaca, and $1.0 million in lower leases and rent at Lavaca and Chatom-Bazor
Ridge and $0.5 million in lower environmental costs for Chapel Hill, Longview
and Chatom-Bazor Ridge facilities.

Liquid Pipelines and Services Segment

Three Months Ended Compared to Three Months Ended


The table below contains key segment performance indicators for the three months
ended  and 2017 related to our Liquid Pipelines and Services
segment (in thousands except operating data and percentages).
                                              Three months ended September 

30,

                                           2018          2017       Change  

%

Segment Financial and Operating Data:
Financial data:
Commodity sales                         $ 104,984     $ 82,948     $ 22,036     27  %
Services                                    4,575        4,074          501     12  %
Revenue from operations                   109,559       87,022       22,537     26  %
Loss on commodity derivatives, net           (141 )       (532 )        391    (73 )%
Earnings in unconsolidated affiliates       3,172        1,317        1,855    141  %
Segment revenue                           112,590       87,807       24,783     28  %
Cost of sales                             103,345       80,510       22,835     28  %
Direct operating expenses                   2,465        2,438           27      1  %
Other financial data:
Segment gross margin (1)                $   9,351     $  7,808     $  1,543     20  %
Operating data (2)
:
Average throughput Pipeline (Bbl/d)        37,542       35,403        2,139      6  %
Average throughput Truck (Bbl/d)            3,007        2,632          375 

14 %

_______________________

(1) See Note 21 - Reportable Segments for a reconciliation of Segment Gross Margin to Income from continuing operations before income taxes. (2) Excludes volumes from our equity investments.


Commodity sales. Commodity sales for the three months ended 
were $105.0 million, an increase of $22.0 million, or 27%, from the same period
in the prior year, primarily due to a $12.4 million increase on COSL as a result
of increased volumes and $20.5 million due to a higher favorable average price
increase of $11.35/Bbl in the third quarter of 2018 compared to the prior year
period. These increases were partially offset by $5.6 million as a result of
changing the recording of a contract from a gross to net basis and $5.6 million
as a result of lower volumes of sour crude being processed in 2018.

Services. Services for the three months ended  were $4.6
million, an increase of $0.5 million, or 12%, from the same period in the prior
year, due to higher trucking volumes offset by lower third-party dispatch fees
due to increased intercompany hauling.

Earnings in unconsolidated affiliates. Earnings in unconsolidated affiliates for
the three months ended  were $3.2 million, an increase of $1.9
million, or 141%, from the same period in the prior year, primarily due to our
50% interest in Cayenne Pipeline, which began operating in .

Cost of sales. Cost of sales for the three months ended  were
$103.3 million, an increase of $22.8 million, or 28%, from the same period in
the prior year, resulting from higher volumes and higher prices achieved on the
COSL assets of $33.0 million, partially offset by $5.3 million as a result of
lower volumes of sour crude being processed in 2018 and $5.6 million in lower
costs as a result of the adoption of Topic 606.


                                       56
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Nine Months Ended Compared to Nine Months Ended


The table below contains key segment performance indicators for the nine months
ended  and 2017 related to our Liquid Pipelines and Services
segment (in thousands except operating data and percentages).
                                                    Nine months ended 

,

                                               2018          2017        Change        %
Segment Financial and Operating Data:
Financial data:
Commodity sales                             $ 337,281     $ 241,459    $ 95,822       40  %
Services                                       12,666        12,131         535        4  %
Revenue from operations                       349,947       253,590      96,357       38  %
(Loss) gain on commodity derivatives, net        (145 )         137        (282 )   (206 )%
Earnings in unconsolidated affiliates           7,878         3,886       3,992      103  %
Segment revenue                               357,680       257,613     100,067       39  %
Cost of sales                                 333,342       236,896      96,446       41  %
Direct operating expenses                       7,603         7,137         466        7  %
Other financial data:
Segment gross margin (1)                    $  24,365     $  21,209    $  3,156       15  %
Operating data (2)
:
Average throughput Pipeline (Bbl/d)            36,621        33,837       2,784        8  %
Average throughput Truck (Bbl/d)                3,367         2,048       

1,319 64 %

_______________________

(1) See Note 21 - Reportable Segments for a reconciliation of Segment Gross Margin to Income from continuing operations before income taxes. (2) Excludes volumes from our equity investments.


Commodity sales. Commodity sales for the nine months ended 
were $337.3 million, an increase of $95.8 million, or 40%, from the same period
in the prior year, primarily due to an $21.0 million increase on COSL as a
result of increased volumes and $75.2 million due to a higher favorable average
price increase of $14.23/Bbl in the first nine months of 2018 compared to the
prior year period.

Services. Services for the nine months ended  were $12.7
million, an increase of $0.5 million, or 4%, from the same period in the prior
year, due to higher trucking volumes offset by lower third-party dispatch fees
due to increased intercompany hauling.

Earnings in unconsolidated affiliates. Earnings in unconsolidated affiliates for
the nine months ended  were $7.9 million, an increase of $4.0
million, or 103%, from the same period in the prior year, primarily due to our
50% interest in Cayenne Pipeline which began operating in .

Cost of sales. Cost of sales for the nine months ended  were $333.3 million, an increase of $96.4 million, or 41%, from the same
period in the prior year, primarily resulting from higher volumes and higher
prices achieved on the COSL assets of $92.7 million and increased trucking
volumes and related expenses of $3.8 million.

Direct operating expenses. Direct operating expenses for the nine months ended
 were $7.6 million, an increase of $0.5 million, or 7%, from
the same period in the prior year, mainly due to $0.3 million in higher outside
services and $0.2 million in higher leases and rents related to COSL West Texas
assets.


                                       57
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Natural Gas Transportation Services Segment

Three Months Ended Compared to Three Months Ended

The table below contains key segment performance indicators for the three months ended and 2017 related to our Natural Gas Transportation Services segment (in thousands except operating data and percentages).

                                             Three months ended September 

30,

                                           2018           2017      Change  

%

Segment Financial and Operating Data:
Financial data:
Commodity sales                       $   5,989         $ 6,175    $  (186 )    (3 )%
Services                                  6,721           4,956      1,765      36  %
Segment revenue                          12,710          11,131      1,579      14  %
Cost of sales                             5,502           5,692       (190 )    (3 )%
Direct operating expenses                 1,993           2,240       (247 )   (11 )%
Other financial data:
Segment gross margin (1)              $   7,044         $ 5,356    $ 1,688      32  %
Operating data:
Average throughput (MMcf/d)               679.7           396.2      283.5      72  %


 _______________________

(1) See Note 21 - Reportable Segments for a reconciliation of Segment Gross Margin to Income from continuing operations before income taxes.


Commodity sales. Commodity sales for the three months ended 
were $6.0 million, a decrease of $0.2 million, or 3%, from the same period in
the prior year, primarily due to lower market pricing related to the Magnolia
system.

Services. Services for the three months ended  were $6.7
million, an increase of $1.8 million, or 36%, from the same period in the prior
year, primarily due to our acquisition of Trans-Union in the fourth quarter of
2017.

Cost of sales. Cost of sales for the three months ended  were
$5.5 million, a decrease of $0.2 million, or 3%, from the same period in the
prior year, primarily attributed to lower market prices and volumes.

Direct operating expenses. Direct operating expenses for the three months ended
 were $2.0 million, a decrease of $0.3 million, or 11%, from
the same period in the prior year, primarily due to lower operating expenses
related to Bamagas facilities.

                                       58
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Nine Months Ended Compared to Nine Months Ended

The table below contains key segment performance indicators for the nine months ended and 2017 related to our Natural Gas Transportation Services segment (in thousands except operating data and percentages).

                                            Nine months ended September 30,
                                         2018         2017        Change    

%

Segment Financial and Operating Data:
Financial data:
Commodity sales                       $   18,105    $ 19,485    $ (1,380 )   (7 )%
Services                                  26,234      15,481      10,753     69  %
Segment revenue                           44,339      34,966       9,373     27  %
Cost of sales                             16,628      17,630      (1,002 )   (6 )%
Direct operating expenses                  5,477       5,403          74      1  %
Other financial data:
Segment gross margin (1)              $   27,384    $ 17,106    $ 10,278     60  %
Operating data:
Average throughput (MMcf/d)                700.9       383.1       317.8     83  %


 _______________________

(1) See Note 21 - Reportable Segments for a reconciliation of Segment Gross Margin to Income from continuing operations before income taxes.


Commodity sales. Commodity sales for the nine months ended 
were $18.1 million, a decrease of $1.4 million, or 7%, from the same period in
the prior year, primarily due to a decrease in volumes and prices related to the
Magnolia system.

Services. Services for the nine months ended  were $26.2
million, an increase of $10.8 million, or 69%, from the same period in the prior
year, primarily due to an increase of $6.3 million resulting from our
Trans-Union acquisition in the fourth quarter of 2017, an increase in imbalance
activity of $1.8 million, an increase of $1.5 million due to our adoption of
Topic 606 and an increase in management fees of $1.2 million.

Cost of sales. Cost of sales for the nine months ended  were
$16.6 million, a decrease of $1.0 million, or 6%, from the same period in the
prior year, primarily due to lower volumes and prices related to the Magnolia
system.



                                       59
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Offshore Pipelines and Services Segment

Three Months Ended Compared to Three Months Ended


The table below contains key segment performance indicators for the three months
ended  and 2017 related to our Offshore Pipelines and Services
segment (in thousands except operating data and percentages).
                                              Three months ended September 

30,

                                            2018            2017       Change      %
Segment Financial and Operating Data:
Financial data:
Commodity sales                       $     2,623         $  2,182    $   441     20 %
Services                                   16,708           12,178      4,530     37 %
Revenue from operations                    19,331           14,360      4,971     35 %
Earnings in unconsolidated affiliates      21,450           15,510      5,940     38 %
Segment revenue                            40,781           29,870     10,911     37 %
Cost of sales                               1,959              558      1,401    251 %
Direct operating expenses                   7,698            3,940      3,758     95 %
Other financial data:
Segment gross margin (1)              $    38,823         $ 29,312    $ 9,511     32 %
Operating data (2):
Average throughput (MMcf/d)                 294.7            257.0         38     15 %


_______________________

(1) See Note 21 - Reportable Segments for a reconciliation of Segment Gross Margin to Income from continuing operations before income taxes. (2) Excludes volumes from our unconsolidated affiliates.


Commodity sales. Commodity sales for the three months ended 
were $2.6 million, an increase of $0.4 million, or 20%, from the same period in
the prior year, primarily due to increased sales from our acquisition of Panther
in the third quarter of 2017 partially offset by a reduction of sales from lower
volumes on our Gloria-Lafitte system due to less refinery load.

Services. Services for the three months ended  were $16.7
million, an increase of $4.5 million, or 37%, from the same period in the prior
year, primarily due to the impact of the adoption of Topic 606 of $5.0 million
and additional volumes due to product rerouted from the Williams system at High
Point Gas Gathering for $1.7 million. These increases were partially offset by
lower guaranteed revenue of $1.2 million on our American Panther system and
shipper imbalances on our Gloria-Lafitte system which reduced revenues by $0.8
million.

Earnings in unconsolidated affiliates. Earnings in unconsolidated affiliates for
the three months ended  were $21.5 million, an increase of
$5.9 million, or 38%, from the same period in the prior year. This increase was
primarily due to a 17% increase in equity ownership in Destin acquired in
 combined with an increase in production volumes between periods
from both Destin and Okeanos. Additionally, in , we acquired an
additional 15.5% equity interest in Delta House. The impact of the increase in
ownership in Delta House was partially offset by lower volumes in 2018 as
compared to the prior year from a temporary curtailment of production flows as
certain third-party owned upstream infrastructure required remediation work.

Cost of sales. Cost of sales for the three months ended  were
$2.0 million, an increase of $1.4 million, or 251%, from the same period in the
prior year, primarily due to increased costs from Panther, which was acquired in
the third quarter of 2017, of $1.0 million and shipper imbalances of $1.2
million. These increases in costs were partially offset by reductions from
decreased production on our Gloria-Lafitte system of $0.7 million.

Direct operating expenses. Direct operating expenses for the three months ended
 were $7.7 million, an increase of $3.8 million, or 95%, from
the same period in the prior year, primarily due to increases of $1.8 million in
reimbursable direct operating expenses that were grossed up due to the adoption
of Topic 606, $0.7 million in salaries and wages, $0.6 million in outside
services and other operating expenses, $0.5 million in lease and rent expenses,
and $0.2 million in repairs and maintenance costs related to the High Point
system, Panther companies and Gloria-Lafitte.


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Nine Months Ended Compared to Nine Months Ended


The table below contains key segment performance indicators for the nine months
ended  and 2017 related to our Offshore Pipelines and Services
segment (in thousands except operating data and percentages).
                                            Nine months ended September 30,
                                         2018         2017       Change     

%

Segment Financial and Operating Data:
Financial data:
Commodity sales                       $    7,879    $  8,385    $  (506 )    (6 )%
Services                                  46,832      32,945     13,887      42  %
Revenue from operations                   54,711      41,330     13,381      32  %
Earnings in unconsolidated affiliates     39,864      45,895     (6,031 )   (13 )%
Segment revenue                           94,575      87,225      7,350       8  %
Cost of sales                              6,105       6,487       (382 )    (6 )%
Direct operating expenses                 23,205      10,010     13,195     132  %
Other financial data:
Segment gross margin (1)              $   88,470    $ 80,738    $ 7,732      10  %
Operating data (2):
Average throughput (MMcf/d)                308.0       328.0      (20.0 )    (6 )%


_______________________

(1) See Note 21 - Reportable Segments for a reconciliation of Segment Gross Margin to Income from continuing operations before income taxes. (2) Excludes volumes from our unconsolidated affiliates.


Commodity sales. Commodity sales for the nine months ended 
were $7.9 million, a decrease of $0.5 million, or 6%, from the same period in
the prior year, primarily due to lower volumes at our Gloria-Lafitte system
partially offset by an increase in sales from the acquisition of Panther in the
third quarter of 2017.

Services. Services for the nine months ended  were $46.8
million, an increase of $13.9 million, or 42%, from the same period in the prior
year, primarily due to the impact of the adoption of Topic 606 of $8.9 million,
$1.4 million from the acquisitions in the third quarter of 2017 and additional
volumes due to product rerouted from the Williams system at High Point Gas
Gathering for $4.8 million. These increases were partially offset by shipper
imbalances on our Gloria-Lafitte system which reduced revenues by $0.8 million.

Earnings in unconsolidated affiliates. Earnings in unconsolidated affiliates for
the nine months ended  were $39.9 million, a decrease of $6.0
million, or 13%, from the same period in the prior year, primarily due to a
temporary curtailment of production flows on Delta House as certain third-party
owned upstream infrastructure required remediation work. The decrease in
earnings due to the production curtailment at Delta House was partially offset
by the acquisition of an additional 15.5% equity interest in Delta House in
, as well as a 17% increase in equity ownership in Destin which we
acquired in  combined with an increase in production volumes between
periods from both Destin and Okeanos.

Cost of sales. Cost of sales for the nine months ended  were
$6.1 million, a decrease of $0.4 million, or 6%, from the same period in the
prior year, primarily due to reductions from decreased production on our
Gloria-Lafitte system of $3.3 million, partially offset by increased costs from
Panther, which was acquired in the third quarter of 2017, of $3.0 million.

Direct operating expenses. Direct operating expenses for the nine months ended
 were $23.2 million, an increase of $13.2 million, or 132%,
from the same period in the prior year, primarily due to increases of $4.1
million in reimbursable direct operating expenses that were grossed up due to
the adoption of Topic 606, $2.3 million in salaries and wages, $1.8 million in
leases and rent costs, $1.7 million in insurance costs, $1.7 million in other
operating expenses, $0.9 million in outside services, and $0.7 million in
repairs and maintenance costs.


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Terminalling Services Segment

Three Months Ended Compared to Three Months Ended


The table below contains key segment performance indicators for the three months
ended  and 2017 related to our Terminalling Services segment
(in thousands except operating data and percentages).
                                                Three months ended 

,

                                         2018           2017           Change          %
Segment Financial and Operating Data:
Financial data:
Commodity sales                       $     852     $    1,094     $       (242 )    (22 )%
Services                                  6,699         11,993           (5,294 )    (44 )%
Segment revenue                           7,551         13,087           (5,536 )    (42 )%
Cost of sales                             1,551          1,146              405       35  %
Direct operating expenses                 2,152          3,432           (1,280 )    (37 )%
Other financial data:
Segment gross margin (1)              $   3,848     $    8,509     $     (4,661 )    (55 )%
Operating data:
Contracted capacity (Bbl)                 800,000      3,000,000     (2,200,000 )    (73 )%
Design capacity (Bbl) (2)(3)            3,000,000      3,000,000              -        -
Storage utilization (2)(3)                 26.7 %        100.0 %          (73.3 )%   (73 )%


__________________
(1) See Note 21 - Reportable Segments for a reconciliation of Segment Gross
Margin to Income from continuing operations before income taxes.
(2) Excludes terminals in our Refined Products as they have been classified as
assets held for sale.
(3) Excludes storage utilization associated with our Marine Products.

Commodity sales. Commodity sales for the three months ended 
were $0.9 million, a decrease of $0.2 million, or 22%, from the same period in
the prior year, driven by lower prices and volumes at the North Little Rock
terminals, partially offset by increases at Caddo Mills.

Services. Services for the three months ended  were $6.7
million, a decrease of $5.3 million, or 44%, from the same period in the prior
year. The decline in services revenues were primarily driven by the sale of the
Blackwater assets during the third quarter of 2018 which experienced a $3.5
million reduction in services revenue between periods. Additionally, services
revenue was impacted by a $1.7 million reduction in storage and utilization at
our Cushing terminal due to tank maintenance and a new contract with lower
storage and rate terms.

Cost of sales. Cost of sales for the three months ended  were
$1.6 million, an increase of $0.4 million, or 35%, from the same period in the
prior year, primarily due to volumetric loss at the Cushing terminals.

Direct operating expenses. Direct operating expenses for the three months ended
 were $2.2 million, a decrease of $1.3 million, or 37%, from
the same period in the prior year, mainly due to the sale of Marine Products in
the third quarter of 2018.



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Nine Months Ended Compared to Nine Months Ended


The table below contains key segment performance indicators for the nine months
ended  and 2017 related to our Terminalling Services segment
(in thousands except operating data and percentages).

                                                Nine months ended September 

30,

                                         2018          2017           Change          %
Segment Financial and Operating Data:
Financial data:
Commodity sales                       $   9,526     $   8,644     $        882       10  %
Services                                 31,784        38,900           (7,116 )    (18 )%
Segment revenue                          41,310        47,544           (6,234 )    (13 )%
Cost of sales                             9,952         7,612            2,340       31  %
Direct operating expenses                10,605         9,503            1,102       12  %
Other financial data:
Segment gross margin (1)              $  20,753     $  30,429     $     (9,676 )    (32 )%
Operating data:
Contracted capacity (Bbl)               1,866,667     3,000,000     (1,133,333 )    (38 )%
Design capacity (Bbl) (2)(3)            3,000,000     3,000,000              -        -
Storage utilization (2)(3)                 62.2 %       100.0 %          (37.8 )%   (38 )%


__________________
(1) See Note 21 - Reportable Segments for a reconciliation of Segment Gross
Margin to Income from continuing operations before income taxes.
(2) Excludes terminals in our Refined Products as they have been classified as
assets held for sale.
(3) Excludes storage utilization associated with our Marine Products.

Commodity sales. Commodity sales for the nine months ended 
were $9.5 million, an increase of $0.9 million, or 10%, from the same period in
the prior year, driven by higher prices, partially offset by lower volumes at
the Caddo Mills and North Little Rock terminals.

Services. Services for the nine months ended  were $31.8
million, a decrease of $7.1 million, or 18%, from the same period in the prior
year. The decline in services revenues were primarily driven by a $6.1 million
reduction in storage and utilization at our Cushing terminal due to tank
maintenance and a new contract with lower storage and rate terms, combined with
the sale of the Blackwater assets during the third quarter of 2018 which
experienced a $3.3 million reduction in services revenue between periods. These
decreases were partially offset by $2.6 million increase due to the adoption of
Topic 606.

Cost of sales. Cost of sales for the nine months ended  were
$10.0 million, an increase of $2.3 million, or 31%, from the same period in the
prior year, primarily due to an increase in volumetric loss of $0.5 million at
the Cushing terminals and the adoption of Topic 606 which increased costs by
approximately $1.6 million.

Direct operating expenses. Direct operating expense for the nine months ended
 were $10.6 million, an increase of $1.1 million, or 12%, from
the same period in the prior year, primarily due $1.0 million in higher
reimbursable costs on Marine Products.

Liquidity and Capital Resources

Overview

Our business is capital intensive and requires significant investment for the maintenance of existing assets and the acquisition and development of new systems and facilities.

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Our primary sources of liquidity are:

• cash flows from operating activities;

• cash distributions from our unconsolidated affiliates;

• borrowings under our Credit Agreement;

• proceeds from private and public offerings of debt;

• issuances of letters of credit in lieu of prepayments;

• issuances of additional common units, preferred units or other securities;

• proceeds from asset rationalization; and

• cash and liquidity support from ArcLight and/or its affiliates.




Not all of these sources will be available to us at all times, or on terms
acceptable to us. However, we believe cash generated from these sources will be
sufficient to meet our short-term working capital requirements, medium-term
maintenance capital expenditure requirements and quarterly cash distributions
for the next twelve months. In the event these sources are not sufficient, we
would pursue other sources of cash funding, including, but not limited to,
additional forms of secured or unsecured debt or preferred equity financing, if
available. In addition, we would reduce non-essential capital expenditures,
controllable direct operating expenses and corporate expenses, as necessary, and
our Partnership Agreement allows us to reduce or eliminate quarterly
distributions on our common units. We plan to finance our growth capital
expenditures primarily from the sale of non-core assets and through additional
forms of debt or equity financing, if possible. Availability and terms of any
financing or asset sales depend on market and other conditions, many of which
are beyond our control. We may not be able to access financing or complete asset
sales as, and when, desired.

Changes in natural gas, crude oil, NGL and condensate prices and the terms of
our contracts may have a direct impact on our generation and use of cash from
operations due to their impact on net income (loss), along with the resulting
changes in working capital. In the past, we mitigated a portion of our
anticipated commodity price risk associated with the volumes from our gathering
and processing activities with fixed price commodity swaps. For additional
information regarding our derivative activities, see the information provided
under Part I, Item 3, Quantitative and Qualitative Disclosures about Market Risk
in our 2017 Form 10-K.

The counterparties to certain of our commodity swap contracts are
investment-grade rated financial institutions. Under these contracts, we may be
required to provide collateral to the counterparties in the event that our
potential payment exposure exceeds a predetermined collateral threshold.
Collateral thresholds are set by us and each counterparty, as applicable, in the
master contract that governs our financial transactions based on our and the
counterparty's assessment of creditworthiness. The assessment of our position
with respect to the collateral thresholds is determined on a counterparty by
counterparty basis and is impacted by the representative forward price curves
and notional quantities under our swap contracts. Due to the interrelation
between the representative natural gas and crude oil forward price curves, it is
not practical to determine a single pricing point at which our swap contracts
will meet the collateral thresholds as we may transact multiple commodities with
the same counterparty. Depending on daily commodity prices, the amount of
collateral posted can go up or down on a daily basis.

AMID Revolving Credit Agreement
On , we amended our revolving credit facility agreement, dated
 (the "Original Credit Agreement"), by entering into the First
Amendment to Second Amended and Restated Credit Agreement (the "Amendment" and,
the Original Credit Agreement as amended by the Amendment, the "Credit
Agreement"; capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Credit Agreement) with a syndicate of lenders
and Bank of America, N.A., as administrative agent.

The Amendment adds a required prepayment event in an amount equal to 100% of the
net cash proceeds received from Marine Products and Refined Products asset sales
and any other disposition greater than $5 million. On , we
completed the sale of Marine Products. Net proceeds from this disposition were
$208.6 million, exclusive of $5.7 million in advisory fees and other costs and
were used to pay down the Credit Agreement.

The Amendment also amends our borrowing capacity as follows:

• upon consummation of the Marine Products sale, the aggregate commitment under

the Credit Agreement was automatically reduced by $200 million, such that

total borrowing capacity under the Credit Agreement is now $700.0 million as

of ;

• upon consummation of the Refined Products sale, the aggregate commitment

under the Credit Agreement shall be automatically reduced by 50% of the net

    cash proceeds of such disposition; and



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• upon consummation of any disposition greater than $15 million, the aggregate

commitment under the Credit Agreement shall be automatically reduced by 25%

of the net cash proceeds of such disposition.




The Credit Agreement matures on , and is therefore being
presented as a current liability in our Condensed Consolidated Balance Sheet as
of . We expect to execute a new revolving credit facility
prior to the maturity of the Credit Agreement.
The Amendment adds a new pricing tier of LIBOR + 3.50% when Consolidated Total
Leverage Ratio equals or exceeds 5.0:1.0. The Credit Agreement includes the
following financial covenants, as amended by the Amendment and defined in the
Credit Agreement, which financial covenants will be tested on a quarterly basis,
for the fiscal quarter then ending:
                               Consolidated        Consolidated        Consolidated
                             Interest Coverage    Total Leverage     Secured Leverage
                                   Ratio               Ratio               Ratio
June 30, 2018                    2.50:1.00           6.15:1.00           4.00:1.00
September 30, 2018               2.00:1.00           6.25:1.00           3.75:1.00
December 31, 2018                1.75:1.00           5.50:1.00           3.50:1.00
March 31, 2019                   1.75:1.00         5.00:1.00 (1)         3.50:1.00
June 30, 2019 and thereafter     2.00:1.00         5.00:1.00 (1)         3.50:1.00


_________________________

(1) 5.50:1.00 during a Specified Acquisition Period

As of , we were in compliance with our Credit Agreement financial covenants, including those shown below:


Ratio                                  Actual
Consolidated Interest Coverage Ratio    2.37
Consolidated Total Leverage Ratio       5.65
Consolidated Secured Leverage Ratio     3.31



As of , we had $600 million of borrowings, $39.0 million of
letters of credit outstanding and $61.0 million of remaining borrowing capacity
under the Credit Agreement, of which $41.0 million is currently available. For
the nine months ended  and 2017, the weighted average interest
rate on borrowings under this facility was 6.23% and 4.85%, respectively.

On , we completed the previously announced sale of our Marine
Products terminalling business. Net proceeds from this disposition were
approximately $208.6 million, exclusive of $5.7 million in advisory fees and
other costs, and were used to repay borrowings outstanding under our Credit
Agreement. See Note 4 - Acquisitions and Dispositions for additional information
.

For additional information, see Note 13 - Debt Obligations to the accompanying
Condensed Consolidated Financial Statements and Note 14 - Debt Obligations in
our 2017 Form 10-K for additional information relating to our outstanding debt.

Acquisition Support and Reimbursement


During 2017, affiliates of ArcLight agreed and provided distribution support of
$25.0 million pursuant to the support agreement that was executed in conjunction
with the JPE Merger.  For further information related to the JPE Merger and
distribution support agreement see Note 3 - Acquisitions in our 2017 Form 10-K.
On , the Partnership and Magnolia, an affiliate of ArcLight,
entered into a Capital Contribution Agreement (the "Capital Contribution
Agreement") to provide additional capital and overhead support to us during the
first three quarters of 2018 in connection with temporary curtailment of
production flows at the Delta House platform ("Delta House").  Pursuant to the
Capital Contribution Agreement, Magnolia has agreed to provide quarterly capital
contributions, in an amount to be agreed, up to the difference between the
actual cash distribution received by us from Delta House and the quarterly cash
distribution expected to be received had the production flows to Delta House not
been curtailed. Subsequent to , in accordance with this agreement,
Magnolia agreed to an additional capital contribution of $9.4 million, which was
paid in the second quarter of 2018. Subsequent to , in accordance
with this agreement, Magnolia agreed to a capital contribution of $8.3 million,
which was paid in .

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Working Capital


Our working capital requirements are primarily driven by changes in accounts
receivable and accounts payable. These changes are impacted to a certain extent
by changes in the prices of commodities that we buy and sell. In general, our
working capital requirements increase in periods of rising commodity prices and
decrease in periods of declining commodity prices. However, our working capital
needs do not necessarily change at the same rate as commodity prices as both
accounts receivable and accounts payable are impacted by the same commodity
prices. In addition, the timing of payments received from our customers or paid
to our suppliers can also cause fluctuations in working capital as we settle
with most of our larger suppliers and customers on a monthly basis and often
near the end of the month. We expect that our future working capital
requirements will be impacted by these same factors.

We had a working capital deficit of $495.2 million as of  due
to the presentation of our revolving credit facility, which matures on , as a short term liability. As discussed above, we expect to execute a
new revolving credit facility prior to the maturity of our current agreement. As
of , we had working capital of $16.2 million.

Cash Flows


The following table reflects cash flows for the applicable periods (in
thousands):
                                                              Nine months ended September 30,
                                                                   2018              2017
Net cash provided by (used in):
Operating activities                                         $      12,944       $    15,005
Investing activities                                               151,848             1,986
Financing activities                                              (145,401 )        (315,106 )
Net decrease in cash, cash equivalents and restricted cash   $      19,391  

$ (298,115 )

Nine Months Ended Compared to Nine Months Ended


Operating Activities. During the nine months ended , cash
provided by operating activities was $12.9 million, a decrease of $2.1 million,
as compared to the same period last year. The decrease in cash flows from
operating activities resulted primarily from changes in operating assets and
liabilities during the periods presented.
Investing Activities. During the nine months ended , net cash
provided by investing activities was $151.8 million, an increase of $149.9
million as compared to the same period last year. The increase in cash flows
provided by investing activities was primarily from a reduction in acquisition
activity of $71.4 million, a reduction in cash contributions to our
unconsolidated affiliates of $44.0 million, an increase in proceeds from the
disposal of property, plant and equipment of $38.0 million, partially offset by
an increase in capital expenditures of $7.3 million.
Financing Activities. During the nine months ended , net cash
used in financing activities was $145.4 million, a decrease of $169.7 million as
compared to the same period last year. The decline in cash used in financing
activities was primarily driven by net reductions of our Credit Agreement of
$97.9 million in 2018 as compared to net reductions of $178.6 million in the
prior period, combined with a decrease in cash distributions to our General
Partner of $75.6 million from 2017 for common control transactions associated
with Delta House and a $22.4 million reduction in unitholder distributions
between periods.

Distributions to our unitholders


In accordance with our Partnership Agreement, after making distributions to
holders of our outstanding preferred units, we make distributions to our common
unitholders of record within 45 days following the end of each quarter. Such
distributions are determined each quarter by the Board based on the Board's
consideration of our financial position, earnings, cash flow, current and future
business needs and other relevant factors at that time. The amount of cash we
have available for distribution depends primarily upon our cash flow and not
solely on profitability, which will be affected by non-cash items. As a result,
we may make cash distributions during periods when we record net losses for
financial reporting purposes and may not make cash distributions during periods
when we record net income for financial reporting purposes. In , we
revised our capital allocation strategy, which included retaining an increased
portion of operating cash flow through the reduction of common unit
distributions.


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We intend to pay a quarterly distribution for the foreseeable future although we
do not have a legal obligation to make distributions except as provided in our
Partnership Agreement. We are, however, subject to business and operational
risks that could adversely affect our cash flow and ability to fund future
distributions. Please read Risk Factors - Risks Related to Our Business - We may
not have sufficient cash from operations to enable us to pay distributions to
holders of our common units in our 2017 Form 10-K.

Distributable cash flow is an important non-GAAP supplemental measure used to
compare basic cash flows generated by us in each period to the cash
distributions paid to unitholders with respect to such period. The following
displays our distribution coverage for the distributions paid with respect to
the periods presented (in thousands):
                                                    Three months ended
                                                       September 30,              Nine months ended September 30,
                                                    2018           2017              2018                 2017
Adjusted EBITDA                                 $  35,217       $  42,350     $       138,873       $       133,689

Interest expense, net of capitalized interest (22,267 ) (17,759 )

           (55,834 )             (51,037 )
Amortization of deferred financing costs            2,493           1,154               5,142                 3,610

Unrealized (loss) gain on interest rate swaps (33 ) 1,646

           (6,123 )               3,658
Letter of credit fees                                   -             (11 )                21                   210
Maintenance capital                                (2,553 )        (2,449 )            (9,631 )              (6,570 )
Preferred unit distributions                       (8,354 )        (2,870 )           (25,061 )             (16,311 )
Distributable cash flow                         $   4,503       $  22,061   

$ 47,387 $ 67,249


Limited Partner distributions                   $   5,463       $  21,345     $        49,061       $        67,648

Distribution coverage                                 0.8 x           1.0 x               1.0 x                 1.0 x



During the three months ended , we paid a total of $5.5
million of distributions to our unitholders associated with the second quarter
of 2018. This was made possible primarily by cash on hand plus distributions
received relating to our unconsolidated affiliates and distribution support
pursuant to our sponsor's agreement to offset the shortfall at Delta House.

To create long-term value and balance sheet flexibility, we continually evaluate
our capital allocation strategy.  In , we revised our capital
allocation strategy, which includes:
• continue to identify and sell non-core assets;


• use part of assets sales proceeds to deleverage the company;

• retain an increased portion of operating cash flow through the reduction

of common unit distribution;

• invest in assets core to our business; and

• continue to develop infrastructure along the Gulf Coast.

We believe cash flow retention and asset sales will enable us to reallocate capital to meaningful growth opportunities, promote balance sheet flexibility and reduce indebtedness. In addition, the improved financial metrics should reduce our borrowing costs.


On , we announced that the Board of Directors of our General
Partner declared a quarterly cash distribution of $0.1031 per common unit, or
$0.4125 per common unit annualized, with respect to the third quarter of 2018.
The distribution will be paid on  to unitholders of record as
of the close of business on . The quarterly cash distribution
for the third quarter of 2018 is consistent with our second quarter of 2018 per
common unit distribution. We and the Board of Directors of our General Partner
will continue to evaluate our distribution policy as we execute our plans for
growth, deleveraging and capital access.

Capital Requirements


For the three and nine months ended , capital expenditures
totaled $16.8 million and $73.3 million, respectively. This included expansion
capital expenditures of $13.8 million and $61.0 million, maintenance capital
expenditures of $2.6 million and $9.6 million, and reimbursable project
expenditures (capital expenditures for which we expect to be reimbursed for all
or part of the expenditures by a third party) of $0.5 million and $2.7 million,
respectively, for the three and nine months ended .

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Going Concern Assessment and Management's Plans


Pursuant to FASB ASC 205-40, we are required to assess our ability to continue
as a going concern for a period of one year from the date of the issuance of
these financial statements. Substantial doubt about an entity's ability to
continue as a going concern exists when relevant conditions and events,
considered in the aggregate, indicate that it is probable that the entity will
be unable to meet its obligations as they become due within one year from the
financial statement issuance date. As discussed above in "AMID Revolving Credit
Agreement", our Credit Agreement matures on  and has not been
renewed as of the date of the issuance of these financial statements.

As discussed in Note 19 - Related Party Transactions, on , the
Board of Directors of our General Partner received a non-binding proposal from
Magnolia, an affiliate of ArcLight to acquire the common units that it does not
already own. The transaction is currently in the due diligence phase and
requires approval of the Conflicts Committee of the Board of Directors. As a
result of this ongoing process, management has deferred finalization of a
renewal of the Credit Agreement. Until we have greater clarity regarding the
potential buyout offer from ArcLight, management has purposefully delayed
maturity extensions and other balance sheet modifications due to unreasonable
costs and burdens to the company. However, we expect to make any renewals,
extensions or appropriate capital structure adjustments necessary to maintain
adequate liquidity to conduct normal operations for the foreseeable future.

While the Partnership intends to renew or extend the terms of its Credit Agreement, until such time as we have executed an agreement to refinance or extend the maturity of our Credit Agreement, we cannot conclude that it is probable we will do so, and accordingly, this raises substantial doubt about our ability to continue as a going concern.

Critical Accounting Estimates


See Note 2 - Recent Accounting Pronouncements to the accompanying Condensed
Consolidated Financial Statements for a discussion of the potential impact of
recent accounting standards on our unaudited Condensed Consolidated Financial
Statements and an update to our critical accounting policy related to Goodwill.

For a discussion of the impact of our other critical accounting policies and estimates on our Consolidated Financial Statements, refer to Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations included in our 2017 Form 10-K.

Off-Balance Sheet Arrangements

There were no material changes to off-balance sheet arrangements during the nine months ended .

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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