EQUITY METHOD INVESTMENTS

3 Months Ended

Mar. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

As of March 31, 2022, the Company owned investments in the following long-haul pipeline entities in the Permian Basin. These investments were accounted for using the equity method of accounting. For each equity method investment (“EMIs” or “EMI”) pipeline entity, the Company has the ability to exercise significant influence based on certain governance provisions and its participation in the significant activities and decisions that impact the management and economic performance of the EMI pipeline. The table below presents the ownership percentages and investment balances held by the Company for each entity:


		March 31,		December 31,
	Ownership	2022		2021

		(In thousands)
Gulf Coast Express Pipeline LLC	16.0%	$	465,028	$	—

Permian Highway Pipeline LLC(1)	53.3%	1,426,736		626,477
Breviloba, LLC (Shin Oak)	33.0%	469,557		—
		$	2,361,321	$	626,477

(1) Ownership for Permian Highway Pipeline LLC was 53.3% and 26.7% as of March 31, 2022 and December 31, 2021, respectively.

Additionally, as of March 31, 2022, the Company owned 15.0% of Epic Crude Holdings, LP (“EPIC”). However, no dollar value was assigned through the purchase price allocation as adjustment was made to eliminate equity in losses of EPIC. No additional contribution was made to EPIC and no distribution or equity income was received from EPIC during the three months ended March 31, 2022.

As of March 31, 2022, the unamortized basis differences included in the EMI pipelines balances were $418.3 million. There was no unamortized basis difference as of December 31, 2021. These amounts represent differences in the Company’s contributions to date and the Company’s underlying equity in the separate net assets within the financial statements of the respective entities. Unamortized basis differences will be amortized into equity income over the useful lives of the underlying pipeline assets. There was capitalized interest of $12.3 million and $12.8 million as of March 31, 2022 and December 31, 2021, respectively. Capitalized interest is amortized on a straight-line basis into equity income.

The following table presents the activity in the Company’s EMIs for the three months ended March 31, 2022:


	Gulf Coast Express Pipeline LLC		Permian Highway Pipeline LLC		Breviloba, LLC
							Total(2)


	(In thousands)
Balance at December 31, 2021	$	—	$	626,477	$	—		$	626,477
Acquisitions	470,000		815,000		470,000			1,755,000

Distributions	(8,412)		(35,998)		(3,663)			(48,073)


Equity income, net(1)	3,440		21,257		3,220			27,917

Balance at March 31, 2022	$	465,028	$	1,426,736	$	469,557		$	2,361,321

(1)Net of amortization of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $0.8 million from Gulf Cost Express, $1.3 million from Permian Highway Pipeline LLC and $0.1 million from Breviloba.

(2)The EMIs acquired in the Transaction are included in the results from February 22, 2022 to March 31, 2022, and this is also the case for the additional 26.67% of PHP that was acquired in the Transaction. The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the Form 10-Q basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies, for further information on the Company’s basis of presentation. Refer to the Form 10-Q basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies, for further information on the Company’s financial statement consolidations.

Summarized Financial Information

The following table represents selected income statement data for the Company’s EMI pipelines (on a 100 percent basis) for the three months ended March 31, 2022.


	Three Months Ended March 31,
	2022				2021

	Gulf Coast Express Pipeline LLC		Permian Highway Pipeline LLC		Breviloba, LLC		Gulf Coast Express Pipeline LLC(1)		Permian Highway Pipeline LLC(1)		Breviloba, LLC(1)



	(In thousands)
Revenues	$	89,973	$	97,856	$	48,521	$	88,369	$	97,848	$	34,529
Operating income	63,443		59,476		26,314		60,108		42,580		17,300
Net income	63,529		59,213		26,366		59,768		42,580		17,359

(1) For the three months ended March 31, 2021, the Company only had equity interest in Permian Highway Pipeline LLC.