GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price of an entity over the estimated fair value of the assets acquired and liabilities assumed. Our goodwill originated from our acquisition of the Casper terminal, which is included in our Terminalling services segment. As of September 30, 2016, the carrying amount of our goodwill was $34 million.

We test goodwill for impairment annually based on the carrying values of our reporting units on the first day of the third quarter of each year, or more frequently if events or changes in circumstances suggest that the fair value of a reporting unit is less than its carrying value. During the third quarter of 2016 we completed our impairment analysis of goodwill and determined that the fair value of the Casper terminal exceeded its carrying value at July 1, 2016. Even if our estimate of the fair value of goodwill had been reduced by 9% in our impairment analysis, no impairment charge would have resulted. The critical assumptions used in our analysis include the following:


(1)	A weighted average cost of capital of 10%;


(2)	A capital structure consisting of approximately 35% debt and 65% equity;


(3)	A range of EBITDA multiples derived from equity prices of public companies with similar operating and investment characteristics, from 9x to 10x; and


(4)	A range of EBITDA multiples for transactions based on actual sales and purchases of comparable businesses, from 8.5x to 9.5x.

We measured the fair value of our Casper terminal by using an income analysis, market analysis and transaction analysis with weightings of 50%, 25% and 25%, respectively. Our estimate of fair value required us to use significant unobservable inputs representative of a Level 3 fair value measurement, including assumptions related to the future performance of our Casper terminal. We have not observed any events or circumstances subsequent to our analysis that would suggest the fair value of our Casper terminal is below its carrying amount as of September 30, 2016.

Intangible Assets

Our intangible assets originated from our acquisition of the Casper terminal and consist of the following as of the dates indicated:



	September 30, 2016			December 31, 2015
	(in thousands)
Carrying amount:
Customer service agreements	$	125,960		$	125,960
Other	106			106
Total carrying amount	126,066			126,066
Accumulated amortization:
Customer service agreements	(10,987		)	(1,484		)
Other	(9		)	(1		)
Total accumulated amortization	(10,996		)	(1,485		)
Total intangible assets, net	$	115,070		$	124,581

Amortization expense associated with intangible assets totaled approximately $3.2 million and $9.5 million, respectively, for the three and nine months ended September 30, 2016.