Property, Plant and Equipment and Intangible Assets |
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Property Plant And Equipment And Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment and Intangible Assets | Note 6 — Property, Plant and Equipment and Intangible Assets
Property, Plant and Equipment
Intangible Assets
Intangible assets consist of customer contracts and customer relationships acquired in the Permian and Flag City Acquisitions in 2017, the mergers with Atlas Energy L.P. and Atlas Pipeline Partners L.P. in 2015 (collectively, the “Atlas mergers”) and our Badlands acquisition in 2012. The fair values of these acquired intangible assets were determined at the date of acquisition based on the present values of estimated future cash flows. Key valuation assumptions include probability of contracts under negotiation, renewals of existing contracts, economic incentives to retain customers, past and future volumes, current and future capacity of the gathering system, pricing volatility and the discount rate. The intangible assets acquired in the Permian Acquisition were recorded at a preliminary fair value of $692.3 million pending completion of final valuations. For the purposes of preparing the accompanying financial statements (which include four months of amortization of these intangible assets), we are amortizing these intangible assets over a 15-year life using the straight-line method. The amortization method and lives for the Permian Acquisition intangibles will be reviewed and possibly revised as we finalize the valuations over the upcoming months. The intangible assets acquired in the Flag City Acquisition were recorded at a preliminary fair value of $8.5 million pending completion of the final valuation. For the purposes of preparing the accompanying financial statements (which include two months of amortization of these intangible assets), we are amortizing these intangible assets over a 10-year life using the straight-line method. The amortization method and lives for the Flag City Acquisition intangibles will be reviewed and possibly revised as we finalize the valuation. The intangible assets acquired in the Atlas mergers are being amortized over a 20-year life using the straight-line method, as a reliably determinable pattern of amortization could not be identified. Amortization expense attributable to our intangible assets related to the Badlands acquisition is recorded using a method that closely reflects the cash flow pattern underlying their intangible asset valuation over a 20-year life. The estimated annual amortization expense for intangible assets, including the provisional Permian and Flag City valuations is approximately $188.4 million, $182.7 million, $171.7 million, $159.5 million and $149.6 million for each of the years 2017 through 2021.
The changes in our intangible assets are as follows:
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