Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. QEP Midstream Partners, LP (1576044) 10-Q published on May 08, 2015 at 4:09 pm
Reporting Period: Mar 30, 2015
QEP Midstream Partners, LP (“the Partnership”) is a Delaware limited partnership formed in April 2013, to own, operate, acquire and develop midstream energy assets. The Partnership’s assets consist of ownership interests in four gathering systems and two Federal Energy Regulatory Commission (“FERC”) regulated pipelines through which we provide natural gas and crude oil gathering and transportation services in Colorado, North Dakota, Utah and Wyoming. In August 2013, the Partnership completed its initial public offering (the “IPO”). As part of the IPO, QEP Midstream Partners GP, LLC (our “General Partner”) and QEP Field Services Company (“QEPFSC”), collectively contributed to the Partnership a 100% ownership interest in each of QEP Midstream Partners Operating, LLC (the “Operating Company”), QEPM Gathering I, LLC and Rendezvous Pipeline Company, LLC (“Rendezvous Pipeline”), a 78% interest in Rendezvous Gas Services, L.L.C. (“Rendezvous Gas”), and a 50% equity interest in Three Rivers Gathering, L.L.C. (“Three Rivers Gathering”). In July 2014, the Partnership acquired a 40% interest in Green River Processing, LLC (“Green River Processing”). Refer to Note 2 for further detail.
On April 6, 2015, QEP Midstream entered into an Agreement and Plan of Merger (the “Merger Agreement”) with TLLP, Tesoro Logistics GP, LLC (“TLGP”), QEPFS, TLLP Merger Sub LLC (“Merger Sub”), and our General Partner. Subject to the satisfaction or waiver of certain conditions in the Merger Agreement, upon the later of the filing with the Secretary of State of the State of Delaware of a certificate of merger or the later date and time set forth in such certificate, Merger Sub will merge with and into QEP Midstream, with QEP Midstream surviving the merger as a wholly-owned subsidiary of TLLP (the “Merger”). Following the Merger, our General Partner will remain the general partner of QEP Midstream, and all outstanding common units representing limited partnership interests in QEP Midstream (the “QEP Midstream Common Units”) other than QEP Midstream Common Units held by QEPFS will be converted into the right to receive 0.3088 common units representing limited partnership interests in TLLP (the “TLLP Common Units”). No fractional TLLP Common Units will be issued in the Merger, and holders of QEP Midstream Common Units other than QEPFS will instead receive cash in lieu of fractional TLLP Common Units, if any.
Pushdown Accounting. The Securities and Exchange Commission (the “SEC”) released a Staff Accounting Bulletin in November 2014, overturning portions of the interpretive guidance regarding pushdown accounting. Effective November 18, 2014, the new bulletin aligns the existing guidance to the ASU issued by the FASB in October 2014. Under the new guidance, pushdown accounting can be applied in the separate financial statements of the acquired entity upon completion of the acquisition or in a subsequent period. This impacts the stand-alone financial statements of the subsidiary, but does not alter the existing reporting requirements for the parent company to record the acquired assets, liabilities, and non-controlling interests in consolidated financial statements. If pushdown accounting is not applied in the reporting period in which the change-in-control event occurs, an acquired entity will have the option to elect to apply pushdown accounting in a subsequent reporting period. If pushdown accounting is applied, that election is irrevocable. The SEC responded by rescinding its guidance on pushdown accounting, which had required registrants to apply pushdown accounting in certain circumstances. With regard to the Acquisition, TLLP elected not to apply pushdown accounting to the Partnership.
Debt Issuance Costs. In April 2015, the FASB issued ASU 2015-03 which will simplify the presentation of debt issuance costs. Under the new ASU, debt issuance costs related to a recognized debt liability will be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability. As a result, our balance sheet will reflect a reclassification of unamortized debt issuance costs from other noncurrent assets to debt. This ASU is effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. We have adopted this standard effective as of March 31, 2015 and will apply the changes retrospectively to prior periods presented. Adoption of this standard did not impact our financial statements or related disclosures for the periods presented, as there were no debt issuance costs recorded during these periods.
Separate condensed consolidating financial information of QEP Midstream Partners, LP (the “Parent”), subsidiary guarantors and non-guarantors are presented below. In January 2015, the Partnership and its consolidated subsidiaries, with the exception of Rendezvous Gas, were elected guarantors of TLLP’s registered 2020 Senior Notes and 2021 Senior Notes. At March 31, 2015, the outstanding principal on these debt obligations was $470 million and $550 million for the 2020 Senior Notes and 2021 Senior Notes, respectively. As a result of these arrangements, we are required to present the following condensed consolidating financial information, which should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto. This information is provided as an alternative to providing separate financial statements for TLLP guarantor subsidiaries. Separate financial statements of the Partnership’s consolidated subsidiary guarantors are not included because the guarantees are full and unconditional and these consolidated subsidiary guarantors are 100% owned and are jointly and severally liable for TLLP’s outstanding senior notes.