Our Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and the accompanying footnotes and Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Annual Report on Form 10-K. This report, including information included or incorporated by reference herein, contains forward-looking statements concerning the financial condition, results of operations, plans, objectives, future performance and business of our company and its subsidiaries. These forward-looking statements include: •statements that are not historical in nature, including, but not limited to: (i) our belief that anticipated cash from operations, cash distributions from entities that we control, and borrowing capacity under our credit facility will be sufficient to meet our anticipated liquidity needs for the foreseeable future; (ii) our belief that we do not have material potential liability in connection with legal proceedings that would have a significant financial impact on our consolidated financial condition, results of operations or cash flows; and (iii) our belief that our assets will continue to benefit from the development of unconventional shale plays as significant supply basins; and
• statements preceded, followed by or containing forward-looking terminology, including the words “believe”, “expect”, “may”, “will”, “should”, “could”, “anticipate”, “estimate” , “intend” or its negation, or similar expressions.
Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties and assumptions. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the following factors: •our ability to successfully implement our business plan for our assets and operations; •governmental legislation and regulations; •industry factors that influence the supply of and demand for crude oil, natural gas and NGLs; •industry factors that influence the demand for services in the markets (particularly unconventional shale plays) in which we provide services; •weather conditions; •outbreak of illness, pandemic or any other public health crisis, including the COVID-19 pandemic; •the availability of crude oil, natural gas and NGLs, and the price of those commodities, to consumers relative to the price of alternative and competing fuels; •the availability of storage for hydrocarbons; •the ability of members of theOrganization of Petroleum Exporting Countries (OPEC) and other oil-producing countries to agree and maintain oil price and production controls; •economic conditions; •costs or difficulties related to the integration of acquisitions and success of our joint ventures' operations; •environmental claims; •operating hazards and other risks incidental to the provision of midstream services, including gathering, compressing, treating, processing, fractionating, transporting and storing energy products (i.e., crude oil, NGLs and natural gas) and related products (i.e., produced water); •interest rates; •the price and availability of debt and equity financing, including our ability to raise capital through alternatives like joint ventures; and •the ability to sell or monetize assets, to reduce indebtedness, to repurchase our equity securities, to make strategic investments, or for other general partnership purposes.
For additional factors that could cause actual results to differ materially from those described in the forward-looking statements, see Part I, Section 1A. Risk factors from our 2021 Annual Report on Form 10-K.
Outlook and trends
Our business objective is to create long-term value for our unitholders. We
expect to create value for our investors by generating stable operating margins
and improving cash flows from our diversified midstream operations by prudently
financing investments in our assets and expansions of our portfolio, maximizing
throughput and optimizing services on our assets, and effectively controlling
our capital expenditures, operating and administrative costs.
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We have taken a number of strategic steps to better position the Company as a stronger, better capitalized company that can accretively grow cash flows and as an industry leader in Environmental, Social and Governance (ESG) efforts. We continue to drive our long-term growth strategy through disciplined capital investments utilizing our current financial flexibility, and onFebruary 1, 2022 , we acquiredOasis Midstream Partners LP (Oasis Midstream) in an equity and cash transaction valued at approximately$1.8 billion . Pursuant to the merger agreement, Oasis Petroleum Inc. (Oasis Petroleum) received$150 million in cash plus 20.9 million newly issued CEQP common units in exchange for its 33.8 million common units held in Oasis Midstream. In addition, Oasis Midstream's public unitholders received 12.9 million newly issued CEQP common units in exchange for the 14.8 million Oasis Midstream common units held by them. Additionally, under the merger agreement, Oasis Petroleum received a$10 million cash payment for its ownership of the general partner of Oasis Midstream. This transaction further solidifies Crestwood's competitive position in theWilliston Basin with exposure to approximately 1,200 drilling locations and 535,000 dedicated acres and expands the company's relationship with Oasis Petroleum. Additionally,Oasis Midstream's Wild Basin gathering and processing assets are highly complementary with our Arrow gathering system and Bear Den processing facility which provides for immediate opportunities to drive cost savings and commercial synergies and better utilization of available gas processing capacity. In addition to the merger with Oasis Midstream discussed above, we have also taken steps to (i) minimize capital expenditures to better align with development activity by our gathering and processing customers; (ii) realign our organization to reduce operating and administrative expenses; (iii) engage with our customers to maintain volumes across our asset portfolio; (iv) optimize our storage, transportation and marketing assets to take advantage of regional commodity price volatility; and (v) evaluate our debt and equity structure to preserve liquidity and ensure balance sheet strength. Given our efforts over the past few years to improve the partnership's competitive position in the businesses we operate, manage costs and improve margins and create a stronger balance sheet, we believe the Company is well positioned to execute its business plan. Recent Developments Bakken DAPL Matter. InJuly 2020 , aU.S. District Court (District Court) ordered the Dakota Access Pipeline (DAPL) to cease operation based on an alleged procedural permitting failure. OnAugust 5, 2020 , theU.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit ) stayed the DAPL shutdown, and subsequently issued an opinion upholding the District Court's decision on the merits, but not prohibiting DAPL's continued operation. The plaintiffs sought another injunction against DAPL's operation, which was denied by the District Court inMay 2021 . As required by the District Court, theU.S. Army Corps of Engineers is currently conducting an environmental impact statement, which is currently expected to be complete inSeptember 2022 . We expect DAPL will remain in operation while the environmental impact statement is being completed. The Arrow gathering system currently connects to the DAPL,Kinder Morgan Hiland , Tesoro and True Companies'Bridger Four Bears pipelines, providing significant downstream delivery capacity for our Arrow customers. Additionally, we can transport Arrow crude volumes to our COLT Hub facility by pipeline or truck, which mitigates the impact of any potential pipeline shut-downs to our producers with the ability to access multiple markets out of the basin.
Carbon management. One of the key initiatives related to our ESG efforts is our focus on managing our emissions intensity to reduce climate-related risks to our business.
InJanuary 2022 , we published our first carbon management plan (CMP), which outlines near-term emissions reduction and management activities that we intend to implement over the next three years. The CMP includes several core objectives, including (i) reducing emissions intensity of our assets; (ii) evaluating opportunities to reduce Scope 2 greenhouse gas (GHG) emissions while managing our operations' energy efficiency; (iii) enhancing our process by which we manage GHG emissions; (iv) piloting methane emission monitoring devices at certain of our facilities; (v) participating in the development of responsibly sourced gas standards for the midstream sector; (vi) investing in technology to better inventory and calculate emissions data and integrating the technology into our operations; and (vii) participating in and providing leadership to trade associations focused on climate-related risks. We currently believe that our carbon management efforts will help to mitigate the potential impact that emissions may have on our capital expenditures or results of operations in the future, although we currently anticipate that these efforts will not have a material impact on our capital expenditures or results of operations in 2022. 35
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How we evaluate our operations
We evaluate the overall performance of our businesses primarily on the basis of EBITDA and Adjusted EBITDA. We do not use depreciation and accretion expense in our primary metrics because we focus our performance management on generating cash flow and our assets have long useful lives.
EBITDA and Adjusted EBITDA - We believe that EBITDA and Adjusted EBITDA are widely accepted financial indicators of a company's operational performance and its ability to incur and service debt, fund capital expenditures and make distributions. We believe that EBITDA and Adjusted EBITDA are useful to our investors because it allows them to use the same performance measure analyzed internally by our management to evaluate the performance of our businesses and investments without regard to the manner in which they are financed or our capital structure. EBITDA is defined as income before income taxes, plus debt-related costs (interest and debt expense, net and loss on modification/extinguishment of debt) and depreciation, amortization and accretion expense. Adjusted EBITDA considers the adjusted earnings impact of our unconsolidated affiliates by adjusting our equity earnings or losses from our unconsolidated affiliates to reflect our proportionate share (based on the distribution percentage) of their EBITDA, excluding gains and losses on long-lived assets and other impairments. Adjusted EBITDA also considers the impact of certain significant items, such as unit-based compensation charges, gains or losses on long-lived assets, impairments of goodwill, third party costs incurred related to potential and completed acquisitions, certain environmental remediation costs, the change in fair value of commodity inventory-related derivative contracts, costs associated with the realignment and restructuring of our operations and corporate structure, and other transactions identified in a specific reporting period. The change in fair value of commodity inventory-related derivative contracts is considered in determining Adjusted EBITDA given that the timing of recognizing gains and losses on these derivative contracts differs from the recognition of revenue for the related underlying sale of inventory to which these derivatives relate. Changes in the fair value of other derivative contracts is not considered in determining Adjusted EBITDA given the relatively short-term nature of those derivative contracts. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, as they do not include deductions for items such as depreciation, amortization and accretion, interest and income taxes, which are necessary to maintain our business. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, operating cash flow or any other measure of financial performance presented in accordance with GAAP. EBITDA and Adjusted EBITDA calculations may vary among entities, so our computation may not be comparable to measures used by other companies. 36
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Operating results
The following tables summarize our operating results (in millions):
Crestwood Equity Crestwood Midstream
Three Months Ended Three Months Ended
March 31, March 31,
2022 2021 2022 2021
Revenues $ 1,583.8 $ 1,032.7 $ 1,583.8 $ 1,032.7
Costs of product/services sold 1,364.4 813.8 1,364.4 813.8
Operations and maintenance expense 42.4 32.8 42.4 32.8
General and administrative expense 43.4 18.7 41.7 17.2
Depreciation, amortization and accretion 74.8 59.2 78.2 62.8
Loss on long-lived assets, net 3.8 1.4 3.8 1.4
Operating income 55.0 106.8 53.3 104.7
Earnings (loss) from unconsolidated affiliates, net 3.0 (103.7) 3.0
(103.7)
Interest and debt expense, net (36.1) (36.0) (36.1) (36.0) Loss on modification/extinguishment of debt - (5.5) - (5.5) Other income, net 0.3 - - - Benefit for income taxes - 0.1 - 0.1 Net income (loss) 22.2 (38.3) 20.2 (40.4) Add: Interest and debt expense, net 36.1 36.0 36.1 36.0 Loss on modification/extinguishment of debt - 5.5 - 5.5 Benefit for income taxes - (0.1) - (0.1) Depreciation, amortization and accretion 74.8 59.2 78.2 62.8 EBITDA 133.1 62.3 134.5 63.8 Unit-based compensation charges 8.6 2.3 8.6 2.3 Loss on long-lived assets, net 3.8 1.4 3.8 1.4 (Earnings) loss from unconsolidated affiliates, net (3.0) 103.7 (3.0) 103.7 Adjusted EBITDA from unconsolidated affiliates, net 7.6 25.7 7.6 25.7
Change in fair value of derivative contracts related to raw material inventories
5.7 (30.5) 5.7
(30.5)
Significant transaction and environmental related costs and other items 17.0 0.5 17.0 0.3 Adjusted EBITDA$ 172.8 $ 165.4 $ 174.2 $ 166.7 37
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Crestwood Equity Crestwood Midstream
Three Months Ended Three Months Ended
March 31, March 31,
2022 2021 2022 2021
Net cash provided by operating activities $ 222.5 $ 258.5 $ 223.9 $ 259.2
Net changes in operating assets and
liabilities (112.9) (122.8) (112.8)
(122.0)
Amortization of debt-related deferred costs (0.8) (1.7) (0.8)
(1.7)
Interest and debt expense, net 36.1 36.0 36.1
36.0
Unit-based compensation charges (8.6) (2.3) (8.6)
(2.3)
Loss on long-lived assets, net (3.8) (1.4) (3.8)
(1.4)
Earnings (loss) from unconsolidated affiliates, net, adjusted for cash distributions received 0.4 (103.8) 0.4 (103.8) Deferred income taxes 0.1 - - - Benefit for income taxes - (0.1) - (0.1) Other non-cash income 0.1 (0.1) 0.1 (0.1) EBITDA 133.1 62.3 134.5 63.8 Unit-based compensation charges 8.6 2.3 8.6
2.3
Loss on long-lived assets, net 3.8 1.4 3.8
1.4
(Earnings) loss from unconsolidated affiliates, net (3.0) 103.7 (3.0)
103.7
Adjusted EBITDA from unconsolidated affiliates, net 7.6 25.7 7.6
25.7
Change in fair value of commodity inventory-related derivative contracts 5.7 (30.5) 5.7
(30.5)
Significant transaction and environmental related costs and other items 17.0 0.5 17.0 0.3 Adjusted EBITDA$ 172.8 $ 165.4 $ 174.2 $ 166.7 Segment Results
The following table summarizes the EBITDA of our segments (in millions):
Three Months Ended Three Months Ended
March 31, 2022 March 31, 2021
Gathering and Gathering and Storage and Gathering and Gathering and Storage and
Processing North Processing South Logistics Processing North Processing South Logistics
Revenues $ 235.2 $ 30.7 $ 1,317.9 $ 129.8 $ 24.6 $ 878.3
Intersegment revenues 127.4 - (127.4) 105.3 - (105.3)
Costs of product/services
sold 205.6 (0.6) 1,159.4 116.2 0.3 697.3
Operations and maintenance
expenses 23.7 6.7 12.0 15.1 6.3 11.4
Gain (loss) on long-lived
assets, net - 0.2 (4.0) (0.2) (1.3) 0.1
Earnings (loss) from
unconsolidated affiliates,
net - 2.6 0.4 - (0.8) (102.9)
EBITDA $ 133.3 $ 27.4 $ 15.5 $ 103.6 $ 15.9 $ (38.5)
Below is a discussion of the factors that impacted EBITDA by segment for the three months ended
Collection and processing North
EBITDA for our gathering and processing north segment increased by approximately$29.7 million during the three months endedMarch 31, 2022 compared to the same period in 2021. OnFebruary 1, 2022 , we completed the merger with Oasis Midstream, and as a result, we began reflecting the financial results ofOasis Midstream's Williston Basin operations in our gathering and processing north segment. Our gathering and processing north segment's revenues increased by approximately$127.5 million during the three months endedMarch 31, 2022 compared to the same period in 2021, while our costs of product/services sold increased by 38
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approximately$89.4 million . During the three months endedMarch 31, 2022 , we recognized revenues and product costs of approximately$63.5 million and$19.3 million , respectively, related to our Oasis Midstream Williston operations. The remaining increases in our gathering and processing north segment's revenues and costs of product/services sold were primarily driven by our Arrow operations which experienced higher average commodity prices on its agreements under which it purchases and sells crude oil and natural gas, partially offset by lower volumes due to our customers shutting in production during early 2022 as a result of winter weather conditions. During the three months endedMarch 31, 2022 , Arrow's natural gas gathering and processing volumes decreased by 10% and its crude oil volumes decreased by 32% compared to the same period in 2021. Our gathering and processing north segment's operations and maintenance expenses increased by approximately$8.6 million during the three months endedMarch 31, 2022 compared to the same period in 2021, primarily due to our Oasis Midstream Williston operations.
Collection and processing South
EBITDA for our gathering and processing south segment increased by approximately$11.5 million during the three months endedMarch 31, 2022 compared to the same period in 2021. As described above, upon the completion of the merger with Oasis Midstream, we began reflecting the financial results ofOasis Midstream's Delaware Basin operations in our gathering and processing south segment. Our gathering and processing south segment's revenues increased by approximately$6.1 million during the three months endedMarch 31, 2022 compared to the same period in 2021. During the three months endedMarch 31, 2022 , we recognized revenues of approximately$3.3 million related to ourOasis Midstream Delaware Basin operations. The remaining variance in our gathering and processing south segment's revenues was primarily driven by higher commodity prices and a 16% increase in natural gas gathering volumes on our Barnett system. During the three months endedMarch 31, 2021 , gathering volumes on our Barnett system were lower due to the extreme winter weather conditions experienced during that period. Our gathering and processing south segment's operations and maintenance expenses increased by approximately$0.4 million during the three months endedMarch 31, 2022 compared to the same period in 2021, primarily due to ourOasis Midstream Delaware Basin operations. Our gathering and processing south segment's EBITDA was also impacted by an increase in equity earnings of approximately$3.4 million from our Crestwood Permian equity investment during the three months endedMarch 31, 2022 compared to the same period in 2021. During the three months endedMarch 31, 2022 , Crestwood Permian experienced an increase in its natural gas gathering and processing revenues primarily due to higher commodity prices and volumes compared to the same period in 2021.
Storage and Logistics
EBITDA for our storage and logistics segment increased by approximately$54.0 million during the three months endedMarch 31, 2022 compared to the same period in 2021. Our storage and logistics segment's EBITDA for the three months endedMarch 31, 2021 was impacted by a$119.9 million reduction to the equity earnings from ourStagecoach Gas equity method investment as a result of recording our proportionate share of a goodwill impairment recorded by the equity method investee further discussed below. Our storage and logistics segment's revenues increased by approximately$417.5 million during the three months endedMarch 31, 2022 compared to the same period in 2021, while our costs of product/services sold increased by approximately$462.1 million . Our NGL marketing and logistics operations experienced an increase in revenues and costs of product/services sold of approximately$289.6 million and$329.3 million , respectively, during the three months endedMarch 31,2022 compared to the same period in 2021. These increases were primarily driven by higher NGL prices during the three months endedMarch 31, 2022 as a result of overall increases in commodity prices during 2022 compared to the same period in 2021. In addition, we were able to capture additional opportunities to sell NGL inventory as a result of higher demand for NGLs during the the three months endedMarch 31, 2022 compared to the same period in 2021. Our NGL marketing and logistics operations' costs of product/services sold increased more than than its revenues primarily due to the impact of increasing commodity prices on our assets and liabilities from price risk management activities. Included in our costs of product/services sold was a loss of$47.6 39
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million and
Our crude oil and natural gas marketing operations experienced an increase in its revenues and product costs of approximately$128.9 million and$133.2 million , respectively, during the three months endedMarch 31, 2022 compared to the same period in 2021. These increases were driven primarily by higher crude oil purchases and sales as a result of increases in commodity prices during early 2022 compared to 2021, as well as an increase in marketing activity surrounding our natural gas-related operations driven by higher natural gas prices. During the three months endedMarch 31, 2021 , our natural gas marketing operations experienced higher revenues due to increased marketing activity as a result of the unusually cold weather during early 2021. Our storage and logistics segment's EBITDA during the three months endedMarch 31, 2022 was impacted by a loss on long-lived assets of approximately$4.0 million primarily due to the buyout of leases related to our exiting the crude oil railcar leasing business. For a further discussion of this matter, see Item 1, Financial Statements, Note 10. Our storage and transportation segment's EBITDA was also impacted by a net increase in earnings from unconsolidated affiliates of approximately$103.3 million . During the three months endedMarch 31, 2021 , we had a loss from unconsolidated affiliates of approximately$112.3 million from ourStagecoach Gas equity investment that was sold in mid-2021. This loss primarily related to a$119.9 million reduction to the equity earnings as a result of recording our proportionate share of a goodwill impairment recorded by the equity method investee. For a further discussion of this matter, see Item 1. Financial Statements, Note 5. During the three months endedMarch 31, 2022 , earnings from ourTres Holdings equity investment decreased by$8.7 million compared to the same period in 2021. During the three months endedMarch 31, 2021 ,Tres Holdings experienced higher revenues from natural gas inventory sales and an increase in demand for its storage and transportation services due to the unusually cold weather experienced during early 2021.
Other EBITDA results
General and Administrative Expenses. During the three months endedMarch 31, 2022 , our general and administrative expenses increased by approximately$25 million compared to the same period in 2021, primarily due to transaction costs incurred related to the merger with Oasis Midstream. In addition, we also experienced higher unit-based compensation charges during the three months endedMarch 31, 2022 compared to the same period in 2021, primarily driven by higher average awards outstanding under our long-term incentive plans.
Items not affecting EBITDA include the following items:
Depreciation, Amortization and Accretion Expense. During the three months endedMarch 31, 2022 , our depreciation, amortization and accretion expense increased by approximately$16 million compared to the same period in 2021, primarily due to the merger with Oasis Midstream. Interest and Debt Expense, Net. During the three months endedMarch 31, 2022 , interest expense and debt expense related to our senior notes increased due to theApril 2029 Senior Notes assumed in conjunction with the merger with Oasis Midstream. The following table provides a summary of interest and debt expense (in millions): Three Months Ended March 31, 2022 2021 Credit facility$ 3.4 $ 3.5 Senior notes 32.1 29.8 Other 0.9 2.9 Gross interest and debt expense 36.4 36.2 Less: capitalized interest 0.3 0.2 Interest and debt expense, net$ 36.1 $ 36.0 Loss on Extinguishment of Debt. During the three months endedMarch 31, 2021 , we recognized a loss on extinguishment of debt of approximately$5.5 million in conjunction with the redemption of our 2023 Senior Notes. 40
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Liquidity and sources of capital
Crestwood Equity is a holding company that derives all of its operating cash flow from its operating subsidiaries. Our principal sources of liquidity include cash generated by operating activities from our subsidiaries, distributions from our joint ventures, borrowings under theCrestwood Midstream credit facility, and sales of equity and debt securities. Our equity investments use cash from their respective operations and contributions from us to fund their operating activities, maintenance and growth capital expenditures, and service their outstanding indebtedness. We believe our liquidity sources and operating cash flows are sufficient to address our future operating, debt service and capital requirements. We make quarterly cash distributions to our common unitholders within approximately 45 days after the end of each fiscal quarter in an aggregate amount equal to our available cash for such quarter. We also pay quarterly cash distributions of approximately$15 million to our preferred unitholders and quarterly cash distributions of approximately$10 million toCrestwood Niobrara LLC's non-controlling partner. OnApril 14, 2022 , we declared a quarterly cash distribution of$0.655 per unit to our common unitholders with respect to the first quarter of 2022, which will be paid onMay 13, 2022 . Our Board of Directors evaluates the level of distributions to our common and preferred unitholders every quarter and considers a wide range of strategic, commercial, operational and financial factors, including current and projected operating cash flows. We believe our operating cash flows will exceed cash distributions to our partners, preferred unitholders and non-controlling partner, and as a result, we will have adequate operating cash flows as a source of liquidity for our growth capital expenditures. InMarch 2021 ,Crestwood Equity's board of directors authorized a$175 million common unit and preferred unit repurchase program effective throughDecember 31, 2022 . Pursuant to the program, we may purchase common and preferred units from time to time in the open market in accordance with applicable securities laws at current market prices. The timing and amount of purchases under the program will be determined based on growth capital opportunities, financial performance and outlook, and other factors, including acquisition opportunities and market conditions. The unit repurchase program does not obligate us to purchase any specific dollar amount or number of units and may be suspended or discontinued at any time. As ofMarch 31, 2022 , we had$931.2 million of available capacity under theCrestwood Midstream credit facility considering the most restrictive debt covenants in the credit agreement. Upon the closing of the merger with Oasis Midstream onFebruary 1, 2022 , theCrestwood Midstream credit facility was increased to$1.5 billion . As ofMarch 31, 2022 , we were in compliance with all of our debt covenants applicable to the credit facility and senior notes. See Part I, Item 1. Financial Statements, Note 8 for a description of the covenants related to our credit facility. We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Cash Flows The following table provides a summary ofCrestwood Equity's cash flows by category (in millions): Three Months EndedMarch 31, 2022 2021
Net cash flow generated by operating activities
Net cash used in investing activities
Net cash used in financing activities
Operational activities
Our operating cash flows decreased by approximately$36.0 million during the three months endedMarch 31, 2022 compared to the same period in 2021. The decrease was driven by higher general and administrative expenses of approximately$24.7 million primarily due to transaction costs related to the merger with Oasis Midstream. In addition, we experienced a decrease in net cash inflow from working capital of approximately$9.9 million primarily related to our storage and logistics operations. 41
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Investing activities
Acquisition. OnFebruary 1, 2022 , we completed the merger with Oasis Midstream, which was valued at approximately$1.8 billion . We paid cash consideration of$160 million , net of cash acquired of approximately$14.9 million and issued approximately 33.8 million units to Oasis Midstream's unitholders. See Item 1, Financial Statements, Note 3 for a further discussion of the Merger.
Capital expenditure. The intermediate energy sector is capital-intensive and requires significant investment for the acquisition or development of new facilities. We classify our capital expenditures as follows:
•growth capital expenditures, which are made to build additional assets, expand and modernize existing systems or acquire additional assets; or
•maintenance capital expenditures, which are made to replace partially or fully depreciated assets, to maintain the existing operating capacity of our assets, extend their useful lives or comply with regulatory requirements. Our growth capital expenditures during the year will increase the services we can provide to our customers and the operating efficiencies of our systems. We expect to finance our capital expenditures with a combination of cash generated by our operating subsidiaries, distributions received from our equity investments and borrowings under our credit facility. Additional commitments or expenditures will be made at our discretion, and any discontinuation of these construction projects could result in less future operating cash flows and earnings.
The following table summarizes our capital expenditures for the three months ended
Growth capital (1)$ 24.2 Maintenance capital 1.4 Other (2) 0.8 Purchases of property, plant and equipment$ 26.4
(1)Includes
(2)Represents purchases of property, plant and equipment redeemable by third parties.
Investments in Unconsolidated Affiliates. During the three months endedMarch 31, 2022 and 2021, we contributed approximately$6.0 million and$6.9 million to ourTres Holdings equity investment for its operating purposes. During the three months endedMarch 31, 2022 and 2021, we contributed approximately$8.5 million and$3.3 million to our Crestwood Permian equity investment primarily to fund its expansion projects. Financing Activities
The following equity and debt transactions impacted our financing activities during the three months ended
Equity and debt transactions
•During the three months endedMarch 31, 2022 , distributions to our partners increased by approximately$14.5 million compared to the same period in 2021, primarily due to an increase in common units outstanding as a result of the units issued in conjunction with the merger with Oasis Midstream; •During the three months endedMarch 31, 2022 , our taxes paid for unit-based compensation vesting increased by approximately$6.8 million compared to the same period in 2021, primarily due to higher vesting of unit-based compensation awards; •During the three months endedMarch 31, 2022 , we borrowed amounts under our revolving credit facility to fund the$160.0 million of cash consideration paid to Oasis Petroleum in conjunction with the merger with Oasis Midstream and to repay approximately$218.4 million outstanding under the Oasis Midstream credit facility assumed in conjunction with the merger; and
• During the three months ended
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Summarized financial information of the guarantor
Crestwood Midstream andCrestwood Midstream Finance Corp. are issuers of our debt securities (the Issuers).Crestwood Midstream is a holding company and owns no operating assets and has no significant operations independent of its subsidiaries.Crestwood Midstream Finance Corp. isCrestwood Midstream's 100% owned subsidiary and has no material assets or operations other than those related to its service as co-issuer of our senior notes. Obligations underCrestwood Midstream's senior notes and its credit facility are jointly and severally guaranteed by substantially all of its subsidiaries (collectively, the Guarantor Subsidiaries), except forCrestwood Infrastructure Holdings LLC ,Crestwood Niobrara LLC ,Crestwood Pipeline and Storage Northeast LLC ,Powder River Basin Industrial Complex LLC , andTres Palacios Holdings LLC and their respective subsidiaries (collectively, Non-Guarantor Subsidiaries). The assets and credit of our Non-Guarantor Subsidiaries are not available to satisfy the debts of the Issuers or Guarantor Subsidiaries, and the liabilities of our Non-Guarantor Subsidiaries do not constitute obligations of the Issuers or Guarantor Subsidiaries. For additional information regarding our credit facility and senior notes and related guarantees, see our 2021 Annual Report on Form 10-K and Item 1. Financial Statements, Note 8 of this Quarterly Report on Form 10-Q. The following tables provide summarized financial information for the Issuers and Guarantor Subsidiaries (collectively, theObligor Group ) on a combined basis after elimination of significant intercompany balances and transactions between entities in theObligor Group . The investment balances in the Non-Guarantor Subsidiaries have been excluded from the supplemental summarized combined financial information. Transactions with other related parties, including the Non-Guarantor Subsidiaries, represent affiliate transactions and are presented separately in the summarized combined financial information below.
Summary information on the combined balance sheet (in millions)
March 31, 2022 December 31, 2021 Current assets $ 570.8 $ 574.3 Current assets - affiliates $ 58.4 $ 8.4 Property, plant and equipment, net$ 3,385.2 $ 2,161.5 Non-current assets$ 1,156.3 $ 642.3 Current liabilities $ 718.3 $ 578.9 Current liabilities - affiliates $ 19.1 $
14.7
Long-term debt, less current portion
$ 159.3 $ 138.7
Summary Combined Income Statement Information (in millions)
Three Months Ended March 31, 2022 Revenues $ 1,468.3 Revenues - affiliates $ 97.4 Cost of products/services sold $
1,287.3
Cost of products/services sold - affiliates $
68.5
Operations and maintenance expenses(1) $
37.3
General and administrative expenses(2) $ 41.7 Operating income $ 63.8 Net income $ 27.7 (1) We have operating agreements with certain of our affiliates pursuant to which we charge them operations and maintenance expenses in accordance with their respective agreements, and these charges are reflected as a reduction of operations and maintenance expenses in our consolidated statements of operations. During the three months endedMarch 31, 2022 , we charged$7.3 million to our affiliates under these agreements.
(2) Includes
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