Financing Notes Receivable |
12 Months Ended |
|---|---|
Dec. 31, 2018 | |
| Receivables [Abstract] | |
| FINANCING NOTES RECEIVABLE |
FINANCING NOTES RECEIVABLE
Four Wood Financing Note Receivable
On December 31, 2014, a subsidiary of the Company, Four Wood Corridor, LLC ("Four Wood Corridor"), entered into a Loan Agreement with SWD Enterprises, LLC ("SWD Enterprises"), a wholly-owned subsidiary of Four Wood Energy, pursuant to which Four Wood Corridor made a loan to SWD Enterprises for $4.0 million (the "REIT Loan"). Concurrently, the Company's TRS, Corridor Private entered into a TRS Loan Agreement with SWD Enterprises, pursuant to which Corridor Private made a loan to SWD Enterprises for $1.0 million (the "TRS Loan"). The proceeds of the REIT Loan and the TRS Loan were used by SWD Enterprises and its affiliates to finance the acquisition of real and personal property that provides saltwater disposal services for the oil and natural gas industry, and to pay related expenses. For the REIT Loan from Four Wood Corridor, interest initially accrued on the outstanding principal at an annual base rate of 12 percent. For the TRS Loan from Corridor Private, interest initially accrued on the outstanding principal at an annual base rate of 13 percent. The base rates of both loans were to increase by 2 percent of the current base rate per year. The REIT Loan and the TRS Loan are secured by the real property and equipment held by SWD Enterprises and the outstanding equity in SWD Enterprises and its affiliates. The REIT Loan and the TRS Loan are also guaranteed by all affiliates of SWD Enterprises.
As a result of the decreased economic activity by SWD Enterprises, the Company recorded a provision for loan loss with respect to the SWD loans. The Consolidated Statement of Income for the year ended December 31, 2016 reflects a provision for loan loss of $3.5 million, which includes $71 thousand of deferred origination income and $98 thousand of interest accrued under the original loan agreements. The loans were placed on non-accrual status during the first quarter of 2016. During the first quarter of 2018, the Company recorded an additional provision for loan loss on the SWD loans of $500 thousand. Prior to the sale of the real property and equipment securing the loans to a new third-party debtor in the fourth quarter of 2018 as discussed further below, the balance of the SWD loans was valued based on the enterprise value of SWD Enterprises, the collateral value supporting the loans, at $1.0 million during 2018 and $1.5 million as of December 31, 2017, respectively.
On December 12, 2018, Four Wood Corridor granted SWD Enterprises approval to sell the assets securing the REIT Loan and the TRS Loan, as described above, to Compass SWD, LLC ("Compass SWD") in exchange for Compass SWD executing a new loan agreement with Four Wood Corridor for $1.3 million (the "Compass REIT Loan") and approximately $237 thousand in cash consideration, net of costs facilitating the close. The Compass REIT Loan is scheduled to mature on June 15, 2019 and interest is accrued on the outstanding principal at an annual rate of LIBOR plus 6 percent. As of December 31, 2018, the Compass REIT Loan is valued at $1.3 million. As a result of the transaction, SWD Enterprises was released from the terms of the REIT Loan and the TRS Loan, and the Company recognized a provision for loan gain of $37 thousand in the Consolidated Statements of Income for the year ended December 31, 2018.
Black Bison Financing Notes
During 2014, the Company's wholly-owned subsidiaries, Corridor Bison and CorEnergy BBWS, entered into loan agreements with Black Bison Water Services, LLC ("Black Bison WS") totaling $12.0 million and $3.3 million, respectively (the "Black Bison WS Loan" and the "TRS Loan" and, together the "Black Bison Loans"). The purpose of the loans was to finance the acquisition and development of real property to provide water sourcing, water disposal, or water treating and recycling services for the oil and natural gas industry. The Black Bison Loans were set to mature on March 31, 2024, and were set to amortize by quarterly payments beginning on March 31, 2015. The Loans were secured by the real property and equipment held by Black Bison WS and the outstanding equity in Black Bison WS and its affiliates. The Black Bison Loans were also guaranteed by all affiliates of Black Bison WS and further secured by all assets of those guarantors.
Due to reduced drilling activity in the Black Bison area of operations, Black Bison WS requested, and the Company granted, certain temporary forbearance waivers in June 2015 and August 2015 that had the effect of excusing the borrower from full performance under the terms of the Black Bison Loans while such waivers were in effect. None of the granted forbearance agreements were deemed to be concessions. As a result of the continued inability of the borrower to perform under the terms of these loans, even as temporarily modified by the waivers, effective December 31, 2015, the Company recorded a provision for loan loss with respect to the Black Bison Loans of $13.8 million.
On February 29, 2016, the Company foreclosed on 100 percent of the equity of BB Intermediate, the borrower of the Black Bison financing notes, as well as all of the other collateral securing the Black Bison Loans. The foreclosure was accepted in satisfaction of the $2.0 million total outstanding loan balance. On June 16, 2016, the Company entered into an asset sale agreement with Expedition Water Solutions for the sale of specified disposal wells and related equipment as outlined in the sale agreement. Consideration received by the company included $748 thousand cash, net of fees, and the future right to royalty payments, which was recorded at its fair value of $450 thousand. The rights to future cash payments are tied to the future volumes of water disposed of in each of the wells sold. The Company did not record any financing revenue related to the Black Bison Loans for the year ended December 31, 2016 or any subsequent period. These notes were considered by the Company to be on non-accrual status and were reflected as such in the financial statements. For the year ended December 31, 2016, the Company recorded $832 thousand in provision for loan loss related to the Black Bison Loans.
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