Discontinued Operations

3 Months Ended

Mar. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

NW Holdings

On June 20, 2018, NWN Gas Storage, then a wholly-owned subsidiary of NW Natural, entered into a Purchase and Sale Agreement (the Agreement) that provides for the sale by NWN Gas Storage of all of the membership interests in Gill Ranch. Gill Ranch owns a 75% interest in the natural gas storage facility located near Fresno, California known as the Gill Ranch Gas Storage Facility. Pacific Gas and Electric Company (PG&E) owns the remaining 25% interest in the Gill Ranch Gas Storage Facility. The CPUC regulates Gill Ranch under a market-based rate model which allows for the price of storage services to be set by the marketplace.

The Agreement provides for an initial cash purchase price of $25.0 million (subject to a working capital adjustment), plus potential additional payments to NWN Gas Storage of up to $26.5 million in the aggregate if Gill Ranch achieves certain economic performance levels for the first three full gas storage years (April 1 of one year through March 31 of the following year) occurring after the closing and the remaining portion of the gas storage year during which the closing occurs.

The sale of Gill Ranch was approved by the CPUC in December 2019, and the transaction is subject to other customary closing conditions and covenants, including the requirement that all of the representations and warranties be true and correct as of the closing date except, as would not, in the case of certain representations and warranties, be reasonably expected to have a material adverse effect on Gill Ranch. The Agreement, as amended, was subject to termination by either party if the transaction had not closed by March 31, 2020. On March 20, 2020, NWN Gas Storage and the buyer amended the Agreement to change the date after which the Agreement would be subject to termination by either party from March 31, 2020 to May 15, 2020.

The following table presents the carrying amounts of the major components of Gill Ranch that are classified as discontinued operations assets and liabilities on the consolidated balance sheets:



	NW Holdings Discontinued Operations
	March 31,				December 31,
In thousands	2020		2019		2019
Assets:
Accounts receivable	$	514	$	1,277	$	333
Inventories	689		627		695
Other current assets	386		337		457
Property, plant, and equipment	13,349		12,033		13,291
Less: Accumulated depreciation	7		7		7
Operating lease right of use asset	118		118		118
Other non-current assets	247		247		247
Total discontinued operations assets - current assets ⁽¹⁾	$	15,296	$	14,632	$	15,134

Liabilities:
Accounts payable	$	717	$	1,102	$	1,250
Other current liabilities	553		359		848
Operating lease liabilities	110		111		116
Other non-current liabilities	11,421		11,710		11,495
Total discontinued operations liabilities - current liabilities ⁽¹⁾	$	12,801	$	13,282	$	13,709


⁽¹⁾	The total assets and liabilities of Gill Ranch are classified as current as of the periods presented above because it is probable that the sale will be completed within one year.

The following table presents the operating results of Gill Ranch, which was reported within the gas storage segment historically, and is presented net of tax on the consolidated statements of comprehensive income:




	Three Months Ended March 31,
In thousands, except per share data	2020			2019
Revenues	$	908		$	1,721
Expenses:
Operations and maintenance	1,580			1,613
General taxes	47			59
Depreciation and amortization	106			106
Other expenses and interest	231			237
Total expenses	1,964			2,015
Loss from discontinued operations before income taxes	(1,056		)	(294		)
Income tax benefit	(278		)	(77		)
Loss from discontinued operations, net of tax	$	(778	)	$	(217	)

Loss from discontinued operations per share of common stock:
Basic	$	(0.02	)	$	(0.01	)
Diluted	$	(0.02	)	$	(0.01	)