| Significant Leased Properties, Major Tenants and Lease Terms |
The following table summarizes the significant leased property, major tenant and lease term:
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Summary of Leased Property, Major Tenant and Lease Terms |
Property |
Grand Isle Gathering System |
Location |
Gulf of Mexico/Louisiana |
Tenant |
Energy XXI GIGS Services, LLC |
Asset Description |
Approximately 137 miles of offshore pipeline with total capacity of 120 thousand Bbls/d,
including a 16-acre onshore terminal and saltwater disposal system. |
Date Acquired |
June 2015 |
Initial Lease Term |
11 years |
Renewal Option |
Equal to the lesser of 9-years or 75 percent of the remaining useful life |
Current Monthly Rent Payments |
7/1/2019 - 6/30/2020: $3,223,917
7/1/2020 - 6/30/2021: $4,033,583 |
Estimated Useful Life(1)
|
15 years |
(1) In conjunction with the impairment of the Grand Isle Gathering System discussed below, the remaining estimated useful life of the GIGS asset was adjusted to approximately 15 years beginning in the second quarter of 2020. Additionally, the Company updated the useful life of its asset retirement obligation ("ARO") segments resulting in a change to the timing of the undiscounted cash flows. The timing change resulted in an increase to the ARO asset and liability of approximately $257 thousand. |
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| Schedule of Significant Leases |
The table below displays the Company's individually significant leases as a percentage of total leased properties and total lease revenues for the periods presented:
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As a Percentage of (1)
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Leased Properties |
|
Lease Revenues |
|
As of |
|
For the Three Months Ended |
|
For the Six Months Ended |
|
June 30, 2020 |
|
December 31, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
Pinedale LGS(2)
|
— |
% |
|
44.4 |
% |
|
99.6 |
% |
|
38.8 |
% |
|
52.1 |
% |
|
38.9 |
% |
Grand Isle Gathering System(3)
|
98.1 |
% |
|
55.3 |
% |
|
— |
% |
|
61.1 |
% |
|
47.7 |
% |
|
61.0 |
% |
(1) Insignificant leases are not presented; thus, percentages may not sum to 100%. |
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(2) Pinedale LGS lease revenues include variable rent of $0 and $28 thousand for the three and six months ended June 30, 2020, respectively, compared to $1.0 million and $2.1 million for the three and six months ended June 30, 2019, respectively. The Pinedale LGS was sold to Ultra Wyoming and the Pinedale Lease Agreement was terminated on June 30, 2020, as discussed above. |
(3) As of June 30, 2020, the Grand Isle Gathering System's percentage of leased properties increased as a result of the sale of the Pinedale LGS on June 30, 2020. For the six months ended June 30, 2020, the Grand Isle Gathering System's percentage of lease revenues is exclusive of the deferred rent receivable write-off discussed above. |
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| Schedule of Depreciation, Amortization and Accretion |
The following table reflects the depreciation and amortization included in the accompanying Consolidated Statements of Operations associated with the Company's leases and leased properties:
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For the Three Months Ended |
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For the Six Months Ended |
|
June 30, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
Depreciation Expense |
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|
|
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|
|
|
GIGS |
$ |
1,190,911 |
|
|
$ |
2,440,790 |
|
|
$ |
3,631,499 |
|
|
$ |
4,881,581 |
|
Pinedale |
1,478,239 |
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|
2,217,360 |
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|
3,695,599 |
|
|
4,434,720 |
|
United Property Systems |
9,831 |
|
|
9,831 |
|
|
19,662 |
|
|
19,455 |
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Total Depreciation Expense |
$ |
2,678,981 |
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|
$ |
4,667,981 |
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|
$ |
7,346,760 |
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|
$ |
9,335,756 |
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Amortization Expense - Deferred Lease Costs |
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|
|
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|
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|
GIGS |
$ |
7,641 |
|
|
$ |
7,641 |
|
|
$ |
15,282 |
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|
$ |
15,282 |
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Pinedale |
15,342 |
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|
15,342 |
|
|
30,684 |
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|
30,684 |
|
Total Amortization Expense - Deferred Lease Costs |
$ |
22,983 |
|
|
$ |
22,983 |
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|
$ |
45,966 |
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|
$ |
45,966 |
|
ARO Accretion Expense |
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GIGS |
$ |
116,514 |
|
|
$ |
110,993 |
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|
$ |
228,685 |
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|
$ |
221,985 |
|
Total ARO Accretion Expense |
$ |
116,514 |
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|
$ |
110,993 |
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|
$ |
228,685 |
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|
$ |
221,985 |
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| Schedule of Deferred Lease Costs |
The following table reflects the deferred costs that are included in the accompanying Consolidated Balance Sheets associated with the Company's leased properties:
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June 30, 2020 |
|
December 31, 2019 |
Net Deferred Lease Costs |
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|
|
GIGS |
$ |
183,473 |
|
|
$ |
198,755 |
|
Pinedale |
— |
|
|
488,981 |
|
Total Deferred Lease Costs, net |
$ |
183,473 |
|
|
$ |
687,736 |
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