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Item 1A. Risk Factors

2021-06-03 compared with 2020-06-01 · 397 added, 289 removed, 348 unchanged (66% of the section changed)

Risks Related to Our Business

The spread of the novel strain of coronavirus (“COVID-19”), recent energy industry developments and the resulting impact on business and economic conditions may affect adversely our business, financial condition, results of operations and cash flows.

The spread of COVID-19 has led to global and regional economic disruption, volatility in the financial markets and a weakened commodity price environment.

It is possible that the continued spread of COVID-19 and efforts to contain the virus, such as quarantines, closures and reduced operations of businesses will have a continued adverse impact on global and regional economic conditions, which could further impact (i) the supply and demand for crude oil, refined petroleum and natural gas liquids, (ii) our ability to efficiently and effectively operate our business as our employees are subject to stay-at-home and social distancing restrictions, (iii) our suppliers of materials, equipment and services or (iv) our access to capital markets.

The spread of COVID-19 may also cause other unpredictable or unforeseen events that may affect adversely our business, financial condition, results of operations and cash flows.

Volatility in commodity prices may have an impact on many of our counterparties, which, in turn, could have a negative impact on their ability to meet their obligations to us.

For example, in March 2020, unsuccessful negotiations between the Organization of the Petroleum Exporting Countries (OPEC) and Russia regarding crude oil production cuts resulted in a price war between Saudi Arabia and Russia.

As a result, the global supply of crude oil significantly exceeded demand and led to a collapse in crude oil prices.

However, further negotiations in April 2020 resulted in an agreement to reduce production volumes.

Failure to abide by these agreed upon crude oil production cuts may further destabilize the global oil market, which is simultaneously experiencing a limitation on crude oil storage capacity and a dramatic decrease in demand due to COVID-19, and crude oil prices may continue to decline.

If adverse global or regional economic and market conditions remain uncertain or persist, spread or deteriorate further, we may experience a material adverse impact on our business, results of operations, financial position, cash flows and/or liquidity.

We may not have sufficient cash to enable us to pay the minimum quarterly distribution to our unitholders following the establishment of cash reserves by our general partner and the payment of costs and expenses, including reimbursement of expenses to our general partner.

We may not have sufficient cash to enable us to pay the minimum quarterly distribution.

These distributions may only be made from cash available for distribution after the preferred quarterly distribution to which our preferred units are entitled.

The amount of cash we can distribute on our units principally depends on the amount of cash we generate from our operations, which will fluctuate from quarter to quarter based on, among other things:

the cost of crude oil, natural gas liquids, gasoline, diesel, ethanol, and biodiesel that we buy for resale and whether we are able to pass along cost increases to our customers;

The nature of our business activities subjects us to a wide variety of hazards and risks.

The following is a summary and a description of the material risks relating to our business activities that we have identified.

In addition to the factors discussed elsewhere in this Annual Report, you should carefully consider the risks and uncertainties described below, which could have a material adverse effect on our business, financial condition or results of operations, including our ability to generate cash to fund our operations, repay indebtedness and pay distributions.

You should also consider the interrelationship and potential compounding effects if multiple risks are realized.

These risks are not the only risks that we face.

Our business could be impacted by additional risks and uncertainties not currently known or that we currently believe to be immaterial.

Risk Factor Summary

Risks Related to Liquidity and Financing

• We may not have sufficient cash, which depends on cash flow rather than profitability, to enable us to fund our operations, repay indebtedness or pay distributions.

• Our substantial indebtedness and restrictions contained in our debt and preferred unit agreements may limit our flexibility to obtain financing to pursue other business opportunities and restrict our current and future operations.

• The impact of increasing interest rates on our common unit price, distributions on our Class B Preferred Units (as defined herein) and Class C Preferred Units (as defined herein) and our ability to issue equity and incur debt.

Risks Related to the Operations of Our Business

• Our dependence on the ability and willingness of other parties to explore for and produce crude oil and natural gas.

• Declining demand for hydrocarbons, commodity prices and production volumes, inventory risk, the availability of transportation and storage capacity and increased transportation and leasing costs.

• Competition from other midstream, transportation, and terminaling and storage companies.

• Interruption of service at our principal storage facilities or on common carrier pipelines or railroads.

• Risk management procedures and the use of derivative financial instruments.

• Reduced demand for our products due to energy efficiency, new technologies and alternative energy sources.

• Our ability to successfully complete, integrate and operate accretive acquisitions and organic growth projects.

• Constructing new transportation systems and facilities subjects us to construction risks.

• Opposition from various groups to the operation of our pipelines and facilities.

• Our dependence on the leadership and involvement of key personnel.

Risks Related to Regulatory Compliance

• Impact of executive orders and federal, state, provincial and local laws and regulations with respect to environmental, including climate change, safety and other regulatory matters, including initiatives relating to our hydraulic fracturing customers and saltwater disposal wells.

• FERC (as defined herein) jurisdiction over our current and potential future operations.

• Governmental regulation and other legal obligations related to privacy, data protection, and data security.

• Regulations related to cross-border operations.

Risks Related to Our Partnership Structure and in an Investment in Us

• Our partnership agreement limits the fiduciary duties of our general partner to our unitholders and restricts the remedies available to our unitholders.

• Conflicts of interest by our general partner and its affiliates.

• Our unitholders have limited voting rights.

• Control of our general partner or the IDRs (as defined herein) may be transferred to a third party.

• Our general partner has a limited call right that may require our unitholders to sell their common units at an undesirable time or price.

• Our partnership agreement requires that we distribute all of our available cash.

• We may issue additional units without the approval of our unitholders.

• Our general partner may elect to cause us to issue common units while also maintaining its general partner interest in connection with a resetting of the target distribution levels related to its IDRs.

• Our unitholders liability may not be limited if a court finds that unitholder action constitutes control of our business.

• Our unitholders may have liability to repay distributions that were wrongfully distributed to them.

• The Preferred Units (as defined herein) give the holders thereof liquidation and distribution preferences over our common unitholders.

• The issuance of common units upon exercise of certain warrants would cause dilution to existing common unitholders.

Tax Risks to Our Unitholders

• Our tax treatment depends on our status as a partnership for federal income tax purposes.

• Our unitholders may be subject to limitation on their ability to deduct interest expense incurred by us.

• Additional entity-level taxation by individual states.

• The tax treatment of publicly traded partnerships could be subject to potential changes or interpretations.

• The IRS (as defined herein) may challenge certain income tax positions, methodologies or treatments that we have taken.

• The IRS may make audit adjustments to our income tax returns for tax years beginning after 2017.

• Our unitholders will be required to pay taxes on their share of our income even if they do not receive any cash distributions from us.

• Tax gain or loss on the disposition of our common units could be more or less than expected.

• Tax exempt entities and non-United States persons owning our common units face unique tax issues.

• We have subsidiaries that are treated as corporations for federal income tax purposes and subject to corporate level income taxes.

• A unitholder whose units are loaned to a “short seller” to effect a short sale of units may be considered as having disposed of those common units.

• There are limits on the deductibility of our losses that may adversely affect our unitholders.

• Purchasers of our common units may become subject to state and local taxes and return filing requirements in jurisdictions where we operate or own or acquire properties.

• Treatment of distributions on our Preferred Units as guaranteed payments for the use of capital creates a different tax treatment for the holders of Preferred Units than the holders of our common units.

General Risks

• The default by significant customers and counterparties or the loss of one or more significant customers.

• Failure to maintain an effective system of internal control, including internal control over financial reporting.

• Seasonal weather conditions, natural or man-made disasters, pandemics, terrorism and political unrest.

• Product liability claims and litigation.

• A failure in our operational systems or cyber security attacks on any of our facilities, or those of third parties.

Risks Related to Liquidity and Financing

We may not have sufficient cash to enable us to fund our operations, repay indebtedness or pay distributions to our unitholders following the establishment of cash reserves by our general partner and the payment of costs and expenses, including reimbursement of expenses to our general partner.

We may not have sufficient cash to enable us to fund our operations, repay indebtedness or pay distributions.

The distribution to our common unitholders may only be made from cash available for distribution after the preferred quarterly distribution to which our preferred units are entitled.

The amount of cash we need to fund our operations, repay indebtedness or pay distributions principally depends on the amount of cash we generate from our operations, not profitability, which will fluctuate from quarter to quarter based on, among other things:

• the cost of crude oil, natural gas liquids, gasoline, diesel, and biodiesel that we buy for resale and whether we are able to pass along cost increases to our customers;

• the volume of produced water delivered to our processing facilities;

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• prevailing economic conditions.

In addition, the actual amount of cash we will have available for distribution also depends on other factors, some of which are beyond our control, including:

In addition, the actual amount of cash we will have available to fund our operations, repay indebtedness or pay distributions also depends on other factors, some of which are beyond our control, including:

• the level of capital expenditures we make;

• the cost of acquisitions, if any;

restrictions contained in the credit agreement (the “Credit Agreement”), the term credit agreement (the “Term Credit Agreement”) the indentures governing our outstanding 7.50% senior notes due 2023, 6.125% senior notes due 2025 and 7.50% senior notes due 2026 (collectively, the “Indentures”) and other debt service requirements;

• restrictions contained in the ABL Facility and the indentures governing our outstanding 7.5% senior notes due 2023, 6.125% senior notes due 2025, 7.5% senior notes due 2026 and 2026 Senior Secured Notes (collectively, the “Indentures”) and other debt service requirements;

• restrictions contained in the agreements relating to our 9.00% Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”), 9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) and 9.00% Class D Preferred Units (“Class D Preferred Units”) (collectively the “Preferred Units”);

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• other business risks discussed in this Annual Report that may affect our cash levels.

The amount of cash we have available for distribution to our unitholders depends primarily on our cash flow rather than on our profitability, which may prevent us from making distributions, even during periods in which we realize net income.

The amount of cash we have available for distribution depends primarily on our cash flow and not solely on profitability, which will be affected by non-cash items.

As a result, we might make cash distributions during periods when we record net losses for financial accounting purposes and we might not make cash distributions during periods when we record net income for financial accounting purposes.

Our future financial performance and growth may be limited by our ability to successfully complete accretive acquisitions on economically acceptable terms.

Our ability to complete accretive acquisitions on economically acceptable terms may be limited by various factors, including, but not limited to:

increased competition for attractive acquisitions;

covenants in the Credit Agreement, Term Credit Agreement and Indentures that limit the amount and types of indebtedness that we may incur to finance acquisitions and which may adversely affect our ability to make distributions to our unitholders;

lack of available cash or external capital or limitations on our ability to issue equity to pay for acquisitions;

possible unwillingness of prospective sellers to accept our common units as consideration and the potential dilutive effect to our existing unitholders caused by an issuance of common units in an acquisition.

There can be no assurance that we will identify attractive acquisition candidates in the future, that we will be able to acquire such businesses on economically acceptable terms, that any acquisitions will not be dilutive to earnings and distributions or that any additional debt that we incur to finance an acquisition will not adversely affect our ability to make distributions to unitholders.

Furthermore, if we consummate any future acquisitions, our capitalization and results of operations may change significantly, and unitholders will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of these funds and other resources.

We may be subject to substantial risks in connection with the integration and operation of acquired businesses, in particular those businesses with operations that are distinct and separate from our existing operations.

Any acquisitions we make in pursuit of our growth strategy are subject to potential risks, including, but not limited to:

the inability to successfully integrate the operations of recently acquired businesses;

the assumption of known or unknown liabilities, including environmental liabilities;

limitations on rights to indemnity from the seller;

mistaken assumptions about the overall costs of equity, debt or synergies;

mistaken assumptions about sales volume, margin or operational expenses;

unforeseen difficulties operating in new geographic areas or in new business segments;

the diversion of management’s and employees’ attention from other business concerns;

customer or key employee loss from the acquired businesses;

a potential significant increase in our indebtedness and related interest expense.

We undertake due diligence efforts in our assessment of acquisitions, but may be unable to identify or fully plan for all issues and risks associated with a particular acquisition.

Even when an issue or risk is identified, we may be unable to obtain adequate contractual protection from the seller.

The realization of any of these risks could have a material adverse effect on the success of a particular acquisition or our consolidated financial position, results of operations or future growth.

As part of our growth strategy, we may expand our operations into businesses that differ from our existing operations.

Integration of new businesses is a complex, costly and time-consuming process and may involve assets with which we have limited operating experience.

Failure to timely and successfully integrate acquired businesses into our existing operations may have a material adverse effect on our business, consolidated financial position or results of operations.

In addition to the risks set forth above, new businesses will subject us to additional business and operating risks, such as the acquisitions not being accretive to our unitholders as a result of decreased profitability, increased interest expense related to debt we incur to make such acquisitions or an inability to successfully integrate those operations into our overall business operations.

The realization of any of these risks could have a material adverse effect on our consolidated financial position or results of operations.

The board of directors of our general partner recently decided to temporarily suspend all distributions in order to deleverage our balance sheet until we meet, among other things, the 4.75 to 1.00 total leverage ratio set forth within the indenture of the 2026 Senior Secured Notes.

This resulted in the suspension of the quarterly common unit distributions,

beginning with the quarter ended December 31, 2020, and all preferred unit distributions, beginning with the quarter ended March 31, 2021.

Our substantial indebtedness may limit our flexibility to obtain financing and to pursue other business opportunities.

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• our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms;

our funds available for operations, future business opportunities and distributions to unitholders will be reduced by that portion of our cash flow required to make principal and interest payments on our debt;

• our funds available for operations, future business opportunities will be reduced by that portion of our cash flow required to make principal and interest payments on our debt;

• making it more likely that a reduction in our borrowing base following a periodic redetermination could require us to repay a portion of our then-outstanding ABL Facility borrowings;

• we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally;

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Our ability to service our debt will depend on, among other things, our future financial and operating performance, which will be affected by prevailing economic and weather conditions, and financial, business, regulatory and other factors, some of which are beyond our control.

If our operating results are not sufficient to service our future indebtedness, we would be forced to take actions such as reducing distributions, reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets or seeking additional equity capital.

If our operating results are not sufficient to service our future indebtedness, we would be forced to take actions such as reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets or seeking additional equity capital.

We may be unable to effect any of these actions on satisfactory terms or at all.

The agreements governing our indebtedness permit us to incur additional debt under certain circumstances, and we will likely need to incur additional debt in order to implement our growth strategy.

The agreements governing our indebtedness permit us to incur additional debt under certain circumstances, and we may need to incur additional debt in order to implement our growth strategy.

We may experience adverse consequences from increased levels of debt.

Restrictions in the Credit Agreement, Term Credit Agreement and Indentures could adversely affect our business, financial position, results of operations, ability to make distributions to unitholders and the value of our common units.

The Credit Agreement, Term Credit Agreement and Indentures limit our ability to, among other things:

Restrictions in the ABL Facility and Indentures could adversely affect our business, financial position, results of operations, and the value of our common units.

The ABL Facility and Indentures limit our ability to, among other things:

• incur additional debt or issue letters of credit;

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• transfer or otherwise dispose of assets.

We are permitted to make distributions to our unitholders under the Credit Agreement, Term Credit Agreement and Indentures as long as no default or event of default exists both immediately before and after giving effect to the declaration and payment of the distribution and the distribution does not exceed available cash for the applicable quarterly period.

The Credit Agreement, Term Credit Agreement and Indentures also contain covenants requiring us to maintain certain financial ratios.

See Note 8 to our consolidated financial statements included in this Annual Report for a further discussion.

The provisions of the Credit Agreement, Term Credit Agreement and Indentures may affect our ability to obtain future financing and pursue attractive business opportunities and our flexibility in planning for, and reacting to, changes in business conditions.

In addition, a failure to comply with the provisions of the Credit Agreement and Term Credit Agreement could result in a covenant violation, default or an event of default that could enable our lenders, subject to the terms and conditions of the Credit Agreement and Term Credit Agreement, to declare the outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable.

We will be permitted to make distributions to our unitholders once we meet certain defined metrics and as long as no default or event of default exists both immediately before and after giving effect to the declaration and payment of the distribution and the distribution does not exceed available cash for the applicable quarterly period.

The provisions of the ABL Facility and Indentures may affect our ability to obtain future financing and pursue attractive business opportunities and our flexibility in planning for, and reacting to, changes in business conditions.

In addition, a failure to comply with the provisions of these agreements could result in a default or an event of default that could enable our lenders, subject to the terms and conditions, to declare the outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable.

If we were unable to repay the accelerated amounts, our lenders could proceed against the collateral we granted them to secure our debts.

If the payment of our debt is accelerated, defaults under our other debt instruments, if any then exist, may be triggered, and our assets may be insufficient to repay such debt in full, and our unitholders could experience a partial or total loss of their investment.

If the payment of our debt is accelerated, defaults under our other

debt instruments, if any then exist, may be triggered, and our assets may be insufficient to repay such debt in full, and our unitholders could experience a partial or total loss of their investment.

The consent we entered into with the holder of a majority of our Class D Preferred Units in connection with the 2026 Senior Secured Notes will restrict our current and future operations.

In connection with the offering of the 2026 Senior Secured Notes, we were required to obtain a consent (the “Class D Preferred Consent”) from the holder of the majority of our Class D Preferred Units (the “Class D Preferred Majority”) to, among other things, enable us to consummate the transaction.

The Class D Preferred Consent modifies certain voting and approval rights granted to the Class D Preferred Majority under our Amended and Restated Partnership Agreement.

Specifically, the Class D Preferred Consent requires us to obtain the approval of the Class D Preferred Majority for:

• incurrences of indebtedness, other than (i) under the ABL Facility, (ii) the issuance of the 2026 Senior Secured Notes and (iii) certain indebtedness outstanding as of the closing of the transaction;

• acquiring or disposing of any assets with an aggregate purchase price of greater than $50.0 million during any fiscal year;

• making investment capital expenditures or expansion capital expenditures in excess of $75.0 million in the aggregate during any fiscal year.

These approval rights supplement the existing approval rights in our Amended and Restated Partnership Agreement for the Class D Preferred Majority.

They became effective upon the closing of the transaction and will remain in effect until we are no longer in arrears on the Class D Preferred Unit distributions.

Because the 2026 Senior Secured Notes and the ABL Facility will restrict our ability to pay distributions on our Class D Preferred Unit distributions until we meet certain defined metrics, we cannot predict when such actions will no longer be subject to the approval of the Class D Preferred Consent, and there is no certainty that we will be able to obtain such consent.

As with other restrictions in the indenture to the 2026 Senior Secured Notes and the ABL Facility, these restrictions may affect our ability to grow in accordance with our long-term strategy.

Increases in interest rates could adversely impact our common unit price, our ability to issue equity or incur debt, and our ability to make cash distributions at our intended levels.

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As a result, interest rates on our existing and future credit facilities and debt offerings could be higher than current levels, causing our financing costs to increase accordingly.

As with other yield-oriented securities, our common unit price will be impacted by our level of cash distributions and implied distribution yield.

We also have exposure to increases in interest rates through variable rate provisions of our Class B Preferred Units and Class C Preferred Units.

In addition, the distribution rates on our Class B Preferred Units and Class C Preferred Units convert from fixed rates to floating rates, beginning on and after July 1, 2022, and on and after April 15, 2024, respectively.

Our results of operations, cash flows and financial position could be materially adversely affected by significant changes in interest rates.

Moreover, the market price of our common units, like with other yield-oriented securities, may be impacted by our level of cash distributions and implied distribution yield.

The distribution yield is often used by investors to compare and rank yield-oriented securities for investment decision-making purposes.

Therefore, changes in interest rates, either positive or negative, may affect the yield requirements of investors who invest in our common units, and a rising interest rate environment could have an adverse impact on our common unit price and our ability to issue equity or incur debt for acquisitions or other purposes and to make payments on our debt obligations and cash distributions at our intended levels.

Therefore, increases or decreases in interest rates may affect the yield requirements of investors who invest in our common units, and a rising interest rate environment could have an adverse impact on our common unit price and our ability to issue equity or incur debt for acquisitions or other purposes and to make payments on our debt obligations and cash distributions at our intended levels.

Risks Related to the Operations of Our Business

Our business depends on the availability of crude oil, natural gas liquids, and refined products in the United States and Canada, which is dependent on the ability and willingness of other parties to explore for and produce crude oil and natural gas.

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We depend on the ability and willingness of other entities to make operating and capital expenditures to explore for, develop, and produce crude oil and natural gas in the United States and Canada, and to extract natural gas liquids from natural gas as well as the availability of necessary pipeline transportation and storage capacity.

Customers’ expectations of lower market prices for crude oil and natural gas, as well as the availability of capital for operating and capital expenditures, may cause them to curtail spending, thereby reducing business opportunities and demand for our services and equipment.

Customers’ expectations of lower market prices for crude oil and natural gas, as well as the availability of capital for operating and capital expenditures, may

cause them to curtail spending, thereby reducing business opportunities and demand for our services and equipment.

Actual market conditions and producers’ expectations of market conditions for crude oil and natural gas liquids may also cause producers to curtail spending, thereby reducing business opportunities and demand for our services.

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if that occurs, the rate at which it returns to former levels, if ever, will be uncertain.

Prior adverse changes in the global economic

environment and capital markets and declines in prices for crude oil and natural gas have caused many customers to reduce capital budgets for future periods and have caused decreased demand for crude oil and natural gas.

Prior adverse changes in the global economic environment and capital markets and declines in prices for crude oil and natural gas have caused many customers to reduce capital budgets for future periods and have caused decreased demand for crude oil and natural gas.

Limitations on the availability of capital, or higher costs of capital, for financing expenditures have caused and may continue to cause customers to make additional reductions to capital budgets in the future even if commodity prices increase from current levels.

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In addition, certain of our customers could become unable to pay their suppliers, including us.

Any of these conditions or events could materially and adversely affect our consolidated results of operations.

Any of these conditions or events could materially and adversely affect our consolidated results of operations and in addition to impacting our business, financial condition and results of operations could require us to incur impairment charges against the associated assets or the write down of our goodwill.

Declining crude oil prices and crude production volumes could adversely impact our Water Solutions and Crude Oil Logistics businesses.

In March 2020, crude oil spot and forward prices experienced a substantial decline.

The structure of the market has moved from mild backwardation to significant contango.

The volume of water we process and crude oil we transport is driven in large part by the level of crude oil production.

The volume of water we process and crude oil we transport is driven in large part by the level of crude oil production in the areas in which we operate.

Lower crude oil prices provide the producers with less incentive to spend on capital expenditures, which results in few drilling rigs and lower amounts of production, which negatively impacts our disposal volumes.

In addition, a portion of our profitability in our Water Solutions business is generated from the sale of crude oil that we recover when processing produced water, and lower crude oil prices have an adverse impact on these profits if not hedged.

A further decline in crude oil prices or a prolonged period of low crude oil prices could have an adverse effect on our Water Solutions and Crude Oil Logistics businesses.

A further decline in crude oil prices or a prolonged period of low crude oil prices could have an adverse effect on our businesses.

Our profitability could be negatively impacted by price and inventory risk related to our business.

The Crude Oil Logistics and Liquids and Refined Products businesses are “margin-based” businesses in which our realized margins depend on the differential of sales prices over our total supply costs.

The Crude Oil Logistics and Liquids Logistics businesses are “margin-based” businesses in which our realized margins depend on the differential of sales prices over our total supply costs.

Our profitability is therefore sensitive to changes in product prices caused by changes in supply, pipeline transportation and storage capacity or other market conditions.

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Sudden and extended wholesale price increases could reduce our margins.

Conversely, a prolonged decline in product prices could potentially result in a reduction of the borrowing base under our working capital facility, and we could be required to liquidate inventory that we have already presold.

One of the strategies of our Liquids and Refined Products segment is to purchase refined products in the Gulf Coast and West Coast and transport the product on the third party pipelines for sale in the Southwest.

Conversely, a prolonged decline in product prices could potentially result in a reduction of the borrowing base under the ABL Facility, and we could be required to liquidate inventory that we have already presold.

One of the strategies of our Liquids Logistics segment is to purchase refined products in the Gulf Coast and West Coast and transport the product on the third-party pipelines for sale in the Southwest.

We are subject to the risk of a price decline between the time we purchase refined products and the time we sell the products.

We seek to mitigate this risk by entering into NYMEX futures contracts.

However, price changes in locations where we operate do not correspond directly with changes in prices in the NYMEX futures market, and as a result these futures contracts cannot be perfect hedges of our commodity price risk.

However, price changes in locations where we operate do not correspond directly with

changes in prices in the NYMEX futures market, and as a result these futures contracts cannot be perfect hedges of our commodity price risk.

We are affected by competition from other midstream, transportation, and terminaling and storage companies, some of which are larger and more firmly established and may have greater resources than we do.

We experience competition in all of our segments.

In our Liquids and Refined Products segment, we compete for natural gas liquids supplies and also for customers for our services.

In our Liquids Logistics segment, we compete for natural gas liquids supplies and also for customers for our services.

Our competitors include major integrated oil companies, interstate and intrastate pipelines and companies that gather, compress, treat, process, transport, store and market natural gas.

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Natural gas and natural gas liquids also compete with other forms of energy, including electricity, coal, fuel oil and renewable or alternative energy.

Our Liquids Logistics segment is also seeing increased competition for supply from international markets.

We also face significant competition for refined products supplies and also for customers for our services.

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If a competitor attempts to increase market share by reducing prices, we may lose customers, which would reduce our revenues.

Our business would be adversely affected if service at our principal storage facilities or on the common carrier pipelines or railroads we use is interrupted.

Our business would be adversely affected if service at our principal storage facilities or on common carrier pipelines or railroads we use is interrupted.

We use third-party common carrier pipelines to transport our products and we use third-party facilities to store our products.

Any significant interruption in the service at these storage facilities or on the common carrier pipelines we use would adversely affect our ability to obtain products.

We transport natural gas liquids, ethanol, and biodiesel by railcar.

Any significant interruption in the service at these storage facilities or on common carrier pipelines we use would adversely affect our ability to obtain products.

We transport natural gas liquids and biodiesel by railcar.

We do not own or operate the railroads on which these railcars are transported.

Any disruptions in the operations of these railroads could adversely impact our ability to deliver product to our customers.

The fees charged to customers under our agreements with them for the transportation and marketing of crude oil, condensate, natural gas liquids, gasoline , diesel, ethanol, and biodiesel may not escalate sufficiently to cover increases in costs and the agreements may be suspended in some circumstances, which would affect our profitability.

We lease certain facilities and equipment and therefore are subject to the possibility of increased costs to retain necessary land and equipment use.

We do not own all of the land on which our facilities are located, and we are therefore subject to the possibility of more onerous terms and/or increased costs to retain necessary land use if we do not have valid rights-of-way or if our facilities are not properly located within the boundaries of such rights-of-way.

Additionally, our loss of rights, through our inability to renew right-of-way contracts or otherwise, could materially and adversely affect our business, consolidated results of operations and financial position.

Additionally, certain facilities and equipment (or parts thereof) used by us are leased from third parties for specific periods, including many of our railcars.

Our inability to renew facility or equipment leases or otherwise maintain the right to utilize such facilities and equipment on acceptable terms, or the increased costs to maintain such rights, could have a material and adverse effect on our consolidated results of operations and cash flows.

Our operations depend on various forms of storage and transportation for receipt and delivery of crude oil, natural gas liquids and refined products.

We own natural gas liquids and crude oil terminals and lease storage capacity from third-party natural gas liquids and refined product terminals.

The facilities depend on pipelines, railroads, truck transports, and storage systems that are owned and operated by third parties.

Any interruption of service at the terminals, or on pipeline, railroad or lateral connections or adverse change in the terms and conditions of service could have a material adverse effect on our ability, and the ability of our customers, to transport product to and from our facilities and have a corresponding material adverse effect on our revenues.

In addition, the rates charged by the interconnected pipelines for transportation to and from our facilities impact the utilization and value of our terminals.

We have historically been able to pass through the costs of pipeline transportation to our customers.

However, if competing pipelines do not have similar annual tariff increases or service fee adjustments, such increases could affect our ability to compete, thereby adversely affecting our revenues.

The fees charged to customers under our agreements with them for the transportation and sale of crude oil, condensate, natural gas liquids, gasoline , diesel, and biodiesel may not escalate sufficiently to cover increases in costs and the agreements may be suspended in some circumstances, which would affect our profitability.

Our costs may increase more rapidly than the fees that we charge to customers pursuant to our contracts with them.

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If the escalation of fees is insufficient to cover increased costs, or if any customer suspends or terminates its contracts with us, our profitability could be materially and adversely affected.

Our sales of crude oil, condensate, natural gas liquids, gasoline , diesel, ethanol, and biodiesel and related transportation and hedging activities, and our processing of produced water, expose us to potential regulatory risks.

Risk management procedures, including the use of financial derivative contracts, cannot eliminate all commodity price risk, basis risk, or risk of adverse market conditions which can adversely affect our financial position and results of operations.

In addition, any non-compliance with our risk policy could result in significant financial losses.

Pursuant to the requirements of our market risk policy, we attempt to lock in a margin for a portion of the commodities we purchase by selling such commodities for physical delivery to our customers, such as independent refiners or major oil companies, or by entering into future delivery obligations under contracts for forward sale.

We also enter into financial derivative contracts, such as futures, to protect against commodity price risk and, as a component of our overall business strategy, we may increase or decrease from time to time our use of such financial derivative contracts in the future.

Our use of such financial derivative contracts could cause us to forego the economic benefits we would otherwise realize if commodity prices or interest rates were to change in our favor.

Through these transactions, we seek to maintain a position that is substantially balanced between purchases on the one hand, and sales or future delivery obligations on the other hand.

These policies and practices cannot, however, eliminate all risks.

Although we monitor such activities in our risk management processes and procedures, such activities could result in losses, which could adversely affect our consolidated results of operations and impair our ability to make payments on our debt obligations or distributions to our unitholders.

For example, any event that disrupts our anticipated physical supply of commodities could expose us to risk of loss resulting from the need to cover obligations required under contracts for forward sale.

Basis risk describes the inherent market price risk created when a commodity of certain grade or location is purchased, sold or exchanged as compared to a purchase, sale or exchange of a like commodity at a different time or place.

Transportation costs and timing differentials are components of timing risk.

In a backwardated market (when prices for future deliveries are lower than current prices), timing risk is created.

In these instances, physical inventory generally loses value as the price of such physical inventory declines over time.

Timing risk cannot be entirely eliminated, and basis exposure, particularly in backwardated or other adverse market conditions, can adversely affect our consolidated financial position and results of operations.

Competition from alternative energy sources, energy efficiency and new technology may reduce the demand for propane and adversely affect our operating results.

Propane competes with other sources of energy, some of which are less costly for equivalent energy value.

Competition from alternative energy sources, including electricity, natural gas and renewables, has increased from reduced regulation of many utilities.

The gradual expansion of the nation’s natural gas distribution systems has resulted in natural gas being available in areas that previously depended on propane.

In addition, the national trend toward increased conservation and technological advances, such as installation of improved insulation and the development of more efficient furnaces and other appliances, has adversely affected the demand for propane.

Future expansion of alternative energy sources, conservation measures or technological advances in appliance efficiency, power generation or other devices may reduce demand for propane and cause us to lose customers.

We cannot predict the effect that development of alternative energy sources, increased conservation or new technology may have on our operations, including whether subsidies of alternative energy sources by local, state, and federal governments might be expanded, or what impact this might have on the supply of or the demand for crude oil, natural gas, and natural gas liquids.

Reduced demand for refined products could have an adverse effect on our results of operations.

Any sustained decrease in demand for refined products in the markets we serve could reduce our cash flow.

Factors that could lead to a decrease in market demand include:

• a recession or other adverse economic condition that results in lower spending by consumers on gasoline, diesel, and travel;

• higher fuel taxes or other governmental or regulatory actions that increase, directly or indirectly, the cost of gasoline;

• an increase in automotive engine fuel economy, whether as a result of a shift by consumers to more fuel-efficient vehicles or technological advances by manufacturers;

• an increase in the market price of crude oil that leads to higher refined product prices, which may reduce demand for refined products and drive demand for alternative products;

• the increased use of alternative fuel sources, such as battery-powered engines.

Our future financial performance and growth may be limited by our ability to successfully complete accretive acquisitions on economically acceptable terms.

Our ability to complete accretive acquisitions on economically acceptable terms may be limited by various factors, including, but not limited to:

• increased competition for attractive acquisitions;

• covenants in the ABL Facility and Indentures that limit the amount and types of indebtedness that we may incur to finance acquisitions;

• the approval of the Class D Preferred Majority;

• lack of available cash or external capital or limitations on our ability to issue equity to pay for acquisitions;

• possible unwillingness of prospective sellers to accept our common units as consideration and the potential dilutive effect to our existing unitholders caused by an issuance of common units in an acquisition.

We may be subject to substantial risks in connection with the integration and operation of acquired businesses, in particular, those businesses with operations that are distinct and separate from our existing operations.

Any acquisitions we make in pursuit of our growth strategy are subject to potential risks, including, but not limited to:

• the inability to successfully integrate the operations of recently acquired businesses;

• the assumption of known or unknown liabilities, including environmental liabilities;

• limitations on rights to indemnity from the seller;

• mistaken assumptions about the overall costs of equity, debt or synergies;

• mistaken assumptions about sales volume, margin or operational expenses;

• unforeseen difficulties operating in new geographic areas or in new business segments;

• the diversion of management’s and employees’ attention from other business concerns;

• customer or key employee loss from the acquired businesses;

• a potential significant increase in our indebtedness and related interest expense.

We undertake due diligence efforts in our assessment of acquisitions, but may be unable to identify or fully plan for all issues and risks associated with a particular acquisition.

Even when an issue or risk is identified, we may be unable to obtain adequate contractual protection from the seller.

The realization of any of these risks could have a material adverse effect on the success of a particular acquisition or our consolidated financial position, results of operations or future growth.

As part of our growth strategy, we may expand our operations into businesses that differ from our existing operations.

Integration of new businesses is a complex, costly and time-consuming process and may involve assets with which we have limited operating experience.

The realization of any of these risks could have a material adverse effect on our consolidated financial position or results of operations.

Growing our business by constructing new transportation systems and facilities subjects us to construction risks and risks that supplies for such systems and facilities will not be available upon completion thereof.

One of the ways we intend to grow our business is through the construction of additions to our systems and/or the construction of new terminaling, transportation, and produced water treatment facilities.

These expansion projects require the expenditure of significant amounts of capital, which may exceed our resources, and involve numerous regulatory, environmental, political and legal uncertainties, including political opposition by landowners, environmental activists and others.

There can be no assurance that we will complete these projects on schedule or at all or at the budgeted cost.

Our revenues may not increase upon the expenditure of funds on a particular project.

Moreover, we may undertake expansion projects to capture anticipated future growth in production in a region in which anticipated production growth does not materialize or for which we are unable to acquire new customers.

We may also rely on estimates of proved, probable or possible reserves in our decision to undertake expansion projects, which may prove to be inaccurate.

As a result, our new facilities and infrastructure may not be able to attract enough product to achieve our expected investment return, which could materially and adversely affect our consolidated results of operations and financial position.

We may face opposition to the operation of our pipelines and facilities from various groups.

We may face opposition to the operation of our pipelines and facilities from environmental groups, landowners, tribal groups, local groups and other advocates.

Such opposition could take many forms, including organized protests, attempts to block or sabotage our operations, intervention in regulatory or administrative proceedings involving our assets, or lawsuits or other actions designed to prevent, disrupt or delay the operation of our assets and business.

For example, repairing our pipelines often involves securing consent from individual landowners to access their property;

one or more landowners may resist our efforts to make needed repairs, which could lead to an interruption in the operation of the affected pipeline or facility for a period of time that is significantly longer than would have otherwise been the case.

In addition, acts of sabotage or eco-terrorism could cause significant damage or injury to people, property or the environment or lead to extended interruptions of our operations.

Any such event that interrupts the revenues generated by our operations, or which causes us to make significant expenditures not covered by insurance, could reduce our cash available for paying distributions to our unitholders and, accordingly, adversely affect our financial condition and the market price of our securities.

Our business plans are based upon the assumption that societal sentiment will continue to enable, and existing regulations will stay intact for, the future development, transportation and use of hydrocarbon-based fuels.

Policy decisions relating to the production, refining, transportation and sale of hydrocarbon-based fuels are subject to political pressures, the negative portrayal of the industry in which we operate by the media and others, and the influence and protests of environmental and other special interest groups.

Such negative sentiment regarding the hydrocarbon energy industry could influence consumer preferences and government or regulatory actions, which could, in turn, have an adverse impact on our business.

Recently, activists concerned about the potential effects of climate change have directed their attention towards sources of funding for hydrocarbon energy companies, which has resulted in certain financial institutions, funds and other sources of capital restricting or eliminating their investment in energy-related activities.

Ultimately, this could make it more difficult to secure funding for exploration and production activities or energy infrastructure related projects and ongoing operations, and consequently could both indirectly affect demand for our services and directly affect our ability to fund construction or other capital projects, as well as properly run our ongoing operations.

We depend on the leadership and involvement of key personnel for the success of our businesses.

We have certain key individuals in our senior management who we believe are critical to the success of our business.

The loss of leadership and involvement of those key management personnel could potentially have a material adverse impact on our business and possibly on the market value of our common units.

Risks Related to Regulatory Compliance

Our sales of crude oil, condensate, natural gas liquids, gasoline , diesel, and biodiesel and related transportation and hedging activities, and our processing of produced water, expose us to potential regulatory risks.

The FTC, the FERC, and the CFTC hold statutory authority to monitor certain segments of the physical and financial energy commodity markets.

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Our sales may also be subject to certain reporting and other requirements.

Additionally, some of our operations are currently subject to the FERC regulations obligating us to comply with the FERC’s regulations and policies applicable to those assets and operations.

Additionally, some of our operations are currently subject to FERC regulations obligating us to comply with the FERC’s regulations and policies applicable to those assets and operations.

Other of our operations may become subject to the FERC’s jurisdiction in the future (see “ – Some of our operations are subject to the jurisdiction of the FERC and other operations may become subject in the future,” below).

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Compliance with these state regulations could have a material and adverse effect on that portion of our business, consolidated results of operations and financial position.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) provides for statutory and regulatory requirements for derivative transactions, including crude oil, refined and renewable products, and natural gas hedging transactions.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) which was enacted on July 21, 2010, established federal oversight and regulation of the over-the-counter derivatives market and of entities, such as us, that participate in that market.

The Dodd-Frank Act requires the CFTC and the SEC to promulgate rules and regulations implementing the Dodd-Frank Act.

The Dodd-Frank Act provides for statutory and regulatory requirements for derivative transactions, including crude oil, refined and renewable products, and natural gas hedging transactions.

Certain transactions will be required to be cleared on exchanges and cash collateral will have to be posted.

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Since the Dodd-Frank Act mandates the CFTC to promulgate rules to define these terms, the full impact of the Dodd-Frank Act on our hedging activities is uncertain at this time.

The CFTC has also issued new rules, which became effective on March 15, 2021, that place limits on positions in certain core futures and equivalent swaps contracts for or linked to certain physical commodities, subject to exceptions for certain bona fide hedging transactions.

We do not expect the impact of those provisions to have a material effect on us.

However, new legislation and any new regulations could significantly increase the cost of derivative contracts (including through requirements to post collateral which could adversely affect our available liquidity), materially alter the terms of derivative contracts, reduce the availability of derivatives to protect against risks that we encounter, reduce our ability to monetize or restructure our existing derivative contracts, and increase our exposure to less creditworthy counterparties.

The Dodd-Frank Act may also materially affect our customers and materially and adversely affect the demand for our services.

We are subject to trucking safety regulations, which are enacted, reviewed and amended by the Federal Motor Carrier Safety Administration (“FMCSA”).

If our current DOT safety ratings are downgraded to “Unsatisfactory”, our business and results of our operations may be adversely affected.

All federally regulated carriers’ safety ratings are measured through a program implemented by the FMCSA known as the Compliance Safety Accountability (“CSA”) program.

The CSA program measures a carrier’s safety performance based on violations observed during roadside inspections as opposed to compliance audits performed by the FMCSA.

The quantity and severity of any violations are compared to a peer group of companies of comparable size and annual mileage.

If a company rises above a threshold established by the FMCSA, it is subject to action from the FMCSA.

There is a progressive intervention strategy that begins with a company providing the FMCSA with an acceptable plan of corrective action that the company will implement.

If the issues are not corrected, the intervention escalates to on-site compliance audits and ultimately an “unsatisfactory” rating and the revocation of the company’s operating authority by the FMCSA, which could result in a material adverse effect on our business, consolidated results of operations and financial position and ability to make cash distributions to our unitholders.

Our business is subject to federal, state, provincial and local laws and regulations with respect to environmental, safety and other regulatory matters and the cost of compliance with, violation of or liabilities under, such laws and regulations could adversely affect our profitability.

Our operations, including those involving crude oil, condensate, natural gas liquids, refined products, renewables, and crude oil and natural gas produced water, are subject to stringent federal, state, provincial and local laws and regulations relating to the protection of natural resources and the environment, health and safety, waste management, and transportation and disposal of such products and materials.

We face inherent risks of incurring significant environmental costs and liabilities due to handling of produced water and hydrocarbons, such as crude oil, condensate, natural gas liquids, gasoline, diesel, ethanol, and biodiesel.

For instance, our Water Solutions business carries with it environmental risks, including leakage from the treatment plants to surface or subsurface soils, surface water or groundwater, or accidental spills.

Our Crude Oil Logistics and Liquids and Refined Products businesses carry similar risks of leakage and sudden or accidental spills of crude oil, natural gas liquids, and hydrocarbons.

Liability under, or violation of, environmental laws and regulations could result in, among other things, the impairment or cancellation of operations, injunctions, fines and penalties, reputational damage, expenditures for remediation and liability for natural resource damages, property damage and personal injuries.

We use various modes of transportation to carry natural gas liquids, crude oil, refined and renewable products and water, including trucks, railcars, barges, and pipelines, each of which is subject to regulation.

For instance, our Water Solutions business carries with it environmental risks, including the risk of leakage from the treatment plants to surface or subsurface soils, surface water or groundwater, or accidental spills.

Our Crude Oil Logistics and Liquids Logistics businesses carry similar risks of leakage and sudden or accidental spills of crude oil, natural gas liquids, and hydrocarbons.

Liability under, or violation of, environmental laws and regulations could result in, among other things, the

impairment or cancellation of operations, injunctions, fines and penalties, reputational damage, expenditures for remediation and liability for natural resource damages, property damage and personal injuries.

We use various modes of transportation to carry natural gas liquids, crude oil, refined and renewable products and produced water, including trucks, railcars, barges, and pipelines, each of which is subject to regulation.

With respect to transportation by truck, we are subject to regulations promulgated under federal legislation, including the Federal Motor Carrier Safety Act and the Homeland Security Act of 2002, which cover the security and transportation of hazardous materials and are administered by the DOT.

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Additionally, in order to conduct our operations, we must obtain and maintain numerous permits, approvals and other authorizations from various federal, state, provincial and local governmental authorities relating to produced water handling, discharge and disposal, air emissions, transportation and other environmental matters.

These authorizations subject us to terms and conditions which may be onerous or costly to comply with, and that may require costly operational modifications to attain

and maintain compliance.

These authorizations subject us to terms and conditions which may be onerous or costly to comply with, and that may require costly operational modifications to attain and maintain compliance.

The renewal, amendment or modification of these permits, approvals and other authorizations may involve the imposition of even more stringent and burdensome terms and conditions with attendant higher costs and more significant effects upon our operations.

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Such an effect on our customers could materially and adversely affect our utilization and profitability by reducing demand for our services.

The adoption or implementation of any new regulations imposing additional reporting obligations on greenhouse gas emissions, or limiting greenhouse gas emissions from our equipment and operations, could require us to incur significant costs.

The adoption or implementation of any new regulations imposing additional reporting obligations on GHG emissions, or limiting GHG emissions from our equipment and operations, could require us to incur significant costs.

For example, the States of Colorado and New Mexico are considering air quality rules to reduce methane and volatile organic compound emissions from oil and gas facilities.

The Partnership does not currently expect the final rules to apply to its operations and otherwise have minimal impact to the Partnership’s operations, but the rulemaking is ongoing and the Partnership continues to monitor rule development in these states and others as applicable.

As is generally understood regarding the regulatory landscape, there can be no guarantee that these or future rules affecting our operations will not have

material effects on our consolidated results of operations and financial position.

Our, our customers’ and our suppliers’ operations are subject to a series of risks arising out of the threat of climate change that could result in increased operating costs, adversely impacting our results of operations and ability to make cash distributions to unitholders, limit the areas in which oil and natural gas production may occur, and reduce demand for the products and services we provide.

The threat of climate change continues to attract considerable attention in the United States and in foreign countries.

Numerous proposals have been made and could continue to be made at the international, national, regional and state levels of government to monitor and limit existing emissions of GHGs as well as to restrict or eliminate such future emissions.

As a result, our operations as well as the operations of our crude oil and natural gas exploration and production customers and suppliers are subject to a series of regulatory, political, litigation, and financial risks associated with the production and processing of fossil fuels and emission of GHGs.

In the United States, no comprehensive climate change legislation has been implemented at the federal level.

However, following the U.S.

Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, and together with the DOT, implement GHG emissions limits on vehicles manufactured for operation in the United States.

The regulation of methane from oil and gas facilities has been subject to uncertainty in recent years.

Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.

Internationally, the United Nations-sponsored “Paris Agreement” requires member states to individually determine and submit non-binding emissions reduction targets every five years after 2020.

Although the United States withdrew from the Paris Agreement on November 4, 2020, on January 20, 2021, President Biden signed executive orders recommitting the United States to the agreement and calling on the federal government to begin formulating the United States’ nationally determined emissions reduction targets under the agreement.

Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States, including climate change related pledges made by certain candidates recently elected to public office.

These have included promises to limit emissions and curtail the production of oil and gas, such as through the cessation of leasing public land for hydrocarbon development.

For example, on January 27, 2021, President Biden issued an Executive Order that commits to substantial action on climate change, calling for, among other things, the increased use of zero-emissions vehicles by the federal government, the elimination of subsidies provided to the fossil fuel industry, and increased emphasis on climate-related risk across governmental agencies and economic sectors.

Separately, on January 20, 2021, the Acting Secretary of the United States Department of the Interior issued an order that, among other things, imposed a 60-day moratorium on the issuance of fossil fuel authorizations, including leases and permits, on federal lands.

Although the order says it does not limit existing operations under valid leases, on January 27, 2021, President Biden signed an Executive Order indefinitely suspending new oil and gas leasing on federal lands, pending completion of a review of the federal government’s oil and gas permitting and leasing practices.

Other actions that could be pursued by the Biden Administration may include the imposition of more restrictive requirements for the establishment of pipeline infrastructure or the permitting of liquified natural gas export facilities.

Litigation risks are also increasing, as a number of cities and other local governments have sought to bring suit against the largest oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to climate change.

Suits have also been brought against such companies under shareholder and consumer production laws, alleging that the companies have been aware of the adverse effects of climate change but failed to adequately disclose those impacts.

There are also increasing financial risks for fossil fuel producers as shareholders currently invested in fossil-fuel energy companies may elect in the future to shift some or all of their investments into other related sectors.

Institutional lenders who provide financing to fossil-fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding for fossil-fuel energy companies.

There is also a risk that financial institutions will be required to adopt policies that have the effect of reducing the funding provided to the fossil fuel sector.

Recently, the Federal Reserve announced that it has applied to join the Network for Greening the Financial System, a consortium of financial regulators focused on addressing climate-related risks in the financial sector.

A material reduction in the capital available to the fossil fuel industry could make it more difficult to secure funding for exploration, development, production, transportation and processing activities, which could result in decreased demand for our services.

The adoption and implementation of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in

increased costs of compliance or costs of consuming, and thereby reduce demand for, oil and natural gas, which could reduce demand for our services and products.

Additionally, political, litigation and financial risks may result in our oil and natural gas customers restricting or canceling production activities, incurring liability for infrastructure damages as a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce demand for our services and products.

One or more of these developments could have a material adverse effect on our business, financial condition, results of operations and ability to make cash distributions to unitholders.

Finally, many scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, floods and other climatic events.

If any such effects were to occur, they could adversely affect our results of operations and ability to make cash distributions to unitholders.

In addition, while our consideration of changing weather conditions and inclusion of safety factors in design covers the uncertainties that climate change and other events may potentially introduce, our ability to mitigate the adverse impacts of these events depends in part on the effectiveness of our facilities and our disaster preparedness and response and business continuity planning, which may not have considered or be prepared for every eventuality.

State and federal legislation and regulatory initiatives relating to our hydraulic fracturing customers could harm our business.

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Jurisdiction and applicable regulatory requirements can vary depending on the location of the activity.

The process of hydraulic fracturing has come under considerable scrutiny from sections of the public as well as environmental and other groups asserting that chemicals used in the hydraulic fracturing process could adversely affect drinking water supplies.

The process of hydraulic fracturing has come under considerable scrutiny from sections of the public as well as environmental and other groups asserting that the practice could be responsible for incidents of induced seismicity and that chemicals used in the hydraulic fracturing process could adversely affect drinking water supplies.

New laws or regulations, or changes to existing laws or regulations in response to this perceived threat may adversely impact the oil and gas drilling industry.

Any current or proposed restrictions on hydraulic fracturing could lead to operational delays or increased operating costs and regulatory burdens that could make it more difficult or costly to perform hydraulic fracturing which would negatively impact our customer base resulting in an adverse effect on our profitability.

For example, on January 20, 2021, the Biden Administration placed a 60-day moratorium on new oil and gas leasing and drilling permits on federal lands, and on January 27, 2021, the United States Department of the Interior acting pursuant to an Executive Order from President Biden suspended the federal oil and gas leasing program indefinitely.

These actions could have a material adverse effect on us and our industry.

Federal and state legislation and regulatory initiatives relating to saltwater disposal wells could result in increased costs and additional operating restrictions or delays and could harm our business.

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However, any restrictions on water disposal could lead to operational delays or increased operating costs and regulatory burdens that could make it more difficult or costly to perform water disposal operations, which would negatively impact our profitability.

Seasonal weather conditions and natural or man-made disasters could severely disrupt normal operations and have an adverse effect on our business, financial position and results of operations.

We operate in various locations across the United States and Canada which may be adversely affected by seasonal weather conditions and natural or man-made disasters.

During periods of heavy snow, ice, rain or extreme weather conditions such as high winds, tornados and hurricanes or after other natural disasters such as earthquakes or wildfires, we may be unable

to move our trucks or railcars between locations and our facilities may be damaged, thereby reducing our ability to provide services and generate revenues.

In addition, hurricanes or other severe weather in the Gulf Coast region could seriously disrupt the supply of products and cause serious shortages in various areas, including the areas in which we operate.

These same conditions may cause serious damage or destruction to homes, business structures and the operations of customers.

Such disruptions could potentially have a material adverse impact on our business, consolidated financial position, results of operations and cash flows.

Risk management procedures cannot eliminate all commodity risk, basis risk, or risk of adverse market conditions which can adversely affect our financial position and results of operations.

In addition, any non-compliance with our risk policy could result in significant financial losses.

We also enter into financial derivative contracts, such as futures, to manage commodity price risk.

Through these transactions, we seek to maintain a position that is substantially balanced between purchases on the one hand, and sales or future delivery obligations on the other hand.

These policies and practices cannot, however, eliminate all risks.

Transportation costs and timing differentials are components of timing risk.

In a backwardated market (when prices for future deliveries are lower than current prices), timing risk is created.

In these instances, physical inventory generally loses value as the price of such physical inventory declines over time.

The counterparties to our commodity derivative and physical purchase and sale contracts may not be able to perform their obligations to us, which could materially affect our cash flows and results of operations.

We encounter risk of counterparty nonperformance in our businesses.

Disruptions in the supply of product and in the crude oil and natural gas liquids commodities sector overall for an extended or near term period of time could result in counterparty defaults on our derivative and physical purchase and sale contracts.

This could impair our ability to obtain supply to fulfill our sales delivery commitments or obtain supply at reasonable prices, which could result in decreased gross margins and profitability, thereby impairing our ability to make payments on our debt obligations or distributions to our unitholders.

Our use of derivative financial instruments could have an adverse effect on our results of operations.

We have used derivative financial instruments as a means to protect against commodity price risk and expect to continue to do so.

We may, as a component of our overall business strategy, increase or decrease from time to time our use of such derivative financial instruments in the future.

Our use of such derivative financial instruments could cause us to forego the economic benefits we would otherwise realize if commodity prices or interest rates were to change in our favor.

In addition, although we monitor such activities in our risk management processes and procedures, such activities could result in losses, which could adversely affect our consolidated results of operations and impair our ability to make payments on our debt obligations or distributions to our unitholders.

Some of our operations are subject to the jurisdiction of the FERC and other operations may become subject in the future.

The FERC regulates the transportation of crude oil and refined products on interstate pipelines, among other things.

Intrastate transportation and gathering pipelines that do not provide interstate services are not subject to regulation by the FERC.

The FERC’s jurisdiction over oil pipelines derives from a 1906 amendment to the Interstate Commerce Act making oil pipelines common carriers subject to federal regulation.

The FERC has regulated oil pipelines under this authority since 1977, when legislation transferred jurisdiction to the FERC from the Interstate Commerce Commission.

The Energy Policy Act of

1992 directed the Commission to establish a simplified and generally applicable ratemaking methodology for oil pipelines, keeping with the FERC’s statutory mandate to ensure that oil pipelines’ rates are just and reasonable.

Intrastate transportation and gathering pipelines that do not provide interstate services are not subject to regulation by state regulatory commissions, such as the Railroad Commission of Texas.

The distinction between the FERC-regulated interstate pipeline transportation on the one hand and intrastate pipeline transportation on the other hand, is a fact-based determination.

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If the FERC’s regulatory reach was expanded to our other facilities, or if we expand our operations into areas that are subject to the FERC’s regulation, we may have to commit substantial capital to comply with such regulations and such expenditures could have a material and adverse effect on our consolidated results of operations and cash flows.

Volumes of crude oil recovered during the produced water treatment process can vary.

Any significant reduction in residual crude oil content in produced water we treat will affect our recovery of crude oil and, therefore, our profitability.

A portion of our profitability in our Water Solutions business is generated from the sale of crude oil that we recover when processing produced water .

Our ability to recover sufficient volumes of crude oil is dependent upon the residual crude oil content in the produced water we treat, which is, among other things, a function of water temperature.

Generally, where water temperature is higher, residual crude oil content is lower.

Thus, our crude oil recovery during the winter season is substantially higher than our recovery during the summer season.

Additionally, residual crude oil content will decrease if, among other things, producers begin recovering higher levels of crude oil in produced water prior to delivering such water to us for treatment.

Any reduction in residual crude oil content in the produced water we treat could materially and adversely affect our profitability.

Competition from alternative energy sources may cause us to lose customers, thereby negatively impacting our financial position and results of operations.

Propane competes with other sources of energy, some of which are less costly for equivalent energy value.

We compete for customers against suppliers of electricity, natural gas and fuel oil.

Competition from alternative energy sources, including electricity, natural gas and renewables, has increased as a result of reduced regulation of many utilities.

Electricity is a major competitor of propane, but propane in some regions has historically had a competitive price advantage over electricity.

Except for some industrial and commercial applications, propane is generally not competitive with natural gas in areas where natural gas pipelines already exist because such pipelines generally make it possible for the delivered cost of natural gas to be less expensive than the bulk delivery of propane.

The expansion of natural gas into traditional propane markets has historically been inhibited by the capital cost required to expand distribution and pipeline systems;

however, the gradual expansion of the nation’s natural gas distribution systems has resulted in natural gas being available in areas that previously depended on propane, which could cause us to lose customers, thereby reducing our revenues.

Although propane is similar to fuel oil in some applications and market demand, propane and fuel oil compete to a lesser extent primarily because of the cost of converting from one to the other.

We cannot predict the effect that development of alternative energy sources may have on our operations, including whether subsidies of alternative energy sources by local, state, and federal governments might be expanded, or what impact this might have on the supply of or the demand for crude oil, natural gas, and natural gas liquids.

Energy efficiency and new technology may reduce the demand for propane and adversely affect our operating results.

The national trend toward increased conservation and technological advances, such as installation of improved insulation and the development of more efficient furnaces and other appliances, has adversely affected the demand for propane and distillates by retail customers.

Future conservation measures or technological advances in appliance efficiency, power generation or other devices may reduce demand for propane.

In addition, if the price of propane increases, some of our customers may increase their conservation efforts and thereby decrease their consumption of propane.

Reduced demand for refined products could have an adverse effect our results of operations.

Any sustained decrease in demand for refined products in the markets we serve could reduce our cash flow.

Factors that could lead to a decrease in market demand include:

a recession or other adverse economic condition that results in lower spending by consumers on gasoline, diesel, and travel;

higher fuel taxes or other governmental or regulatory actions that increase, directly or indirectly, the cost of gasoline;

an increase in automotive engine fuel economy, whether as a result of a shift by consumers to more fuel-efficient vehicles or technological advances by manufacturers;

an increase in the market price of crude oil that leads to higher refined product prices, which may reduce demand for refined products and drive demand for alternative products;

the increased use of alternative fuel sources, such as battery-powered engines.

The expiration of tax credits could adversely impact the demand for biodiesel, which could adversely impact our results of operations.

The demand for biodiesel is supported by certain federal tax credits.

These tax credits have typically been granted for short durations, and on several occasions these tax credits have expired.

In December 2019, the federal government passed a law to reinstate the tax credit retroactively to January 1, 2018, with the credit expiring on December 31, 2022.

There can be no assurance that the federal government will grant such tax credits in the future.

If the federal government were to discontinue the practice of granting such tax credits, this would likely have an adverse effect on demand for biodiesel and on our biodiesel marketing operations.

A loss of one or more significant customers could materially or adversely affect our results of operations.

We expect to continue to depend on key customers to support our revenues for the foreseeable future.

The loss of key customers, failure to renew contracts upon expiration, or a sustained decrease in demand by key customers could result in a substantial loss of revenues and could have a material and adverse effect on our consolidated results of operations.

During the year ended March 31, 2020 , a significant portion of our revenues was dependent on key customers as summarized below:

77% of the revenues of our Crude Oil Logistics segment were generated from our ten largest customers of the segment ;

52% of the water treatment and disposal revenues of our Water Solutions segment were generated from our ten largest customers of the segment ;

22% of the revenues of our Liquids and Refined Products segment were generated from our ten largest customers of the segment .

Additionally, certain key customers of the Grand Mesa Pipeline contribute significantly to the cash flows and profitability of that asset.

Any loss of those customers or their contracts could have an adverse impact on our financial results.

Certain of our operations are conducted through joint ventures which have unique risks.

Certain of our operations are conducted through joint ventures.

With respect to our joint ventures, we share ownership and management responsibilities with partners that may not share our goals and objectives.

Differences in views among the partners may result in delayed decisions or failures to agree on major matters, such as large expenditures or contractual commitments, the construction or acquisition of assets or borrowing money, among others.

Delay or failure to agree may prevent action with respect to such matters, even though such action may serve our best interest or that of the joint venture.

Accordingly, delayed decisions and disagreements could adversely affect the business and operations of the joint ventures and, in turn, our business and operations.

From time to time, our joint ventures may be involved in disputes or legal proceedings which may negatively affect our investments.

Accordingly, any such occurrences could adversely affect our consolidated results of operations, financial position and cash flows.

There can be no assurance that we will complete these projects on schedule or at all or at the budgeted cost.

Our revenues may not increase upon the expenditure of funds on a particular project.

We may also rely on estimates of proved, probable or possible reserves in our decision to undertake expansion projects, which may prove to be inaccurate.

We may face opposition to the operation of our pipelines and facilities from various groups.

We may face opposition to the operation of our pipelines and facilities from environmental groups, landowners, tribal groups, local groups and other advocates.

For example, repairing our pipelines often involves securing consent from individual landowners to access their property;

In addition, acts of sabotage or eco-terrorism could cause significant damage or injury to people, property or the environment or lead to extended interruptions of our operations.

Any such event that interrupts the revenues generated by our operations, or which causes us to make significant expenditures not covered by insurance, could reduce our cash available for paying distributions to our partners and, accordingly, adversely affect our financial condition and the market price of our securities.

Product liability claims and litigation could adversely affect our business and results of operations.

Our operations are subject to all operating hazards and risks incident to handling, storing, transporting and providing customers with combustible liquids.

As a result, we are subject to product liability claims and litigation, including potential class actions, in the ordinary course of business.

Any product liability claim brought against us, with or without merit, could be costly to defend and could result in an increase of our insurance premiums.

Some claims brought against us might not be covered by our insurance policies.

In addition, we have self-insured retention amounts which we would have to pay in full before obtaining any insurance proceeds to satisfy a judgment or settlement and we may have insufficient reserves on our balance sheet to satisfy such self-retention obligations.

Furthermore, even where the claim is covered by our insurance, our insurance coverage might be inadequate and we would have to pay the amount of any settlement or judgment that is in excess of our policy limits.

Our failure to maintain adequate insurance coverage or successfully defend against product liability claims could materially and adversely affect our business, consolidated results of operations, financial position and cash flows.

A failure in our operational systems or cyber security attacks on any of our facilities, or those of third parties, may adversely affect our financial results.

Our business is dependent upon our operational systems to process a large amount of data and complex transactions.

If any of our financial or operational systems fail or have other significant shortcomings, our financial results could be adversely affected.

Our financial results could also be adversely affected if an employee causes our systems to fail, either as a result of inadvertent error or by deliberately tampering with or manipulating our systems.

In addition, dependence upon automated systems may further increase the risk related to operational system flaws, and employee tampering or manipulation of those systems will result in losses that are difficult to detect.

Due to increased technology advances, we have become more reliant on technology to increase efficiency in our business.

We use various systems in our financial and operations sectors, and this may subject our business to increased risks.

Any future cyber security attacks that affect our facilities, our customers and any financial data could have a material adverse effect on our business.

In addition, cyber attacks on our customer and employee data may result in a financial loss, including potential fines for failure to safeguard data, and may negatively impact our reputation.

Third-party systems on which we rely could also suffer operational system failure.

Any of these occurrences could disrupt our business, resulting in potential liability or reputational damage or otherwise have an adverse effect on our financial results.

We lease certain facilities and equipment and therefore are subject to the possibility of increased costs to retain necessary land and equipment use.

Additionally, certain facilities and equipment (or parts thereof) used by us are leased from third parties for specific periods, including many of our railcars.

If we fail to maintain an effective system of internal control, including internal control over financial reporting, we may be unable to report our financial results accurately or prevent fraud, which would likely have a negative impact on the market price of our common units.

We are subject to the public reporting requirements of the Securities Exchange Act of 1934, as amended.

We are also subject to the obligation under Section 404(a) of the Sarbanes Oxley Act of 2002 to annually review and report on our internal control over financial reporting, and to the obligation under Section 404(b) of the Sarbanes Oxley Act of 2002 to engage our independent registered public accounting firm to attest to the effectiveness of our internal control over financial reporting.

Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud, and operate successfully as a publicly traded partnership.

Our efforts to maintain our internal controls may be unsuccessful, and we may be unable to maintain effective internal control over financial reporting, including our disclosure controls.

Any failure to maintain effective internal control over financial reporting and disclosure controls could harm our operating results or cause us to fail to meet our reporting obligations.

These risks may be heightened after a business combination, during the phase when we are implementing our internal control structure over the recently acquired business.

Given the difficulties inherent in the design and operation of internal control over financial reporting, as well as future growth of our businesses, we can provide no assurance as to either our or our independent registered public accounting firm’s conclusions about the effectiveness of internal controls in the future, and we may incur significant costs in our efforts to comply with Section 404.

Ineffective internal controls could subject us to regulatory scrutiny and a loss of confidence in our reported financial information, which could have an adverse effect on our business and would likely have a negative effect on the market price of our common units.

An impairment of goodwill and long-lived assets could reduce our earnings.

At March 31, 2020 , we had goodwill and long-lived assets of $5.6 billion .

Such assets are subject to impairment reviews on an annual basis, or at an interim date if information indicates that such asset values have been impaired.

Any impairment we would be required to record in our financial statements would result in a charge to our income, which would reduce our earnings.

We recorded a goodwill impairment charge of $250.0 million during the year ended March 31, 2020 due to the current macroeconomic conditions, including the collapse of oil prices driven by both the decrease in demand caused by the COVID-19 pandemic and excess supply, as well as changing market conditions and expected lower crude oil production in certain regions, resulting in expected decreases in future cash flows for certain of our assets in our Water Solutions segment.

Our business requires extensive credit risk management that may not be adequate to protect against customer nonpayment.

Our credit management procedures may not fully eliminate the risk of nonpayment by our customers.

We manage our credit risk exposure through credit analysis, credit approvals, establishing credit limits, requiring prepayments (partially or wholly), requiring product deliveries over defined time periods, and credit monitoring.

While we believe our procedures are effective, we can provide no assurance that bad debt write-offs in the future may not be significant and any such nonpayment problems could impact our consolidated results of operations and potentially limit our ability to make payments on our debt obligations or distributions to our unitholders.

Our terminaling operations depend on various forms of transportation for receipt and delivery of crude oil, natural gas liquids and refined products.

We own natural gas liquids and crude oil terminals and lease refined products terminals.

The facilities depend on pipelines, railroads, truck transports, and storage systems that are owned and operated by third parties.

Any interruption of service on pipeline, railroad or lateral connections or adverse change in the terms and conditions of service could have a material adverse effect on our ability, and the ability of our customers, to transport product to and from our facilities and have a corresponding material adverse effect on our revenues.

In addition, the rates charged by the interconnected pipelines for transportation to and from our facilities impact the utilization and value of our terminals.

We have historically been able to pass through the costs of pipeline transportation to our customers.

However, if competing pipelines do not have similar annual tariff increases or service fee adjustments, such increases could affect our ability to compete, thereby adversely affecting our revenues.

Our marketing operations depend on the availability of transportation and storage capacity.

Our product supply is transported and stored in facilities owned and operated by third parties.

Any interruption of service on the pipeline or storage companies or adverse change in the terms and conditions of service could have a material adverse effect on our ability, and the ability of our customers, to transport products and have a corresponding material adverse effect on our revenues.

In addition, the rates charged by the interconnected pipelines for transportation affects the profitability of our operations.

The financial results of our natural gas liquids businesses are seasonal and generally lower in the first and second quarters of our fiscal year, which may require us to borrow money to make distributions to our unitholders during these quarters.

The natural gas liquids inventory we have presold to customers is highest during summer months, and our cash receipts are lowest during summer months.

As a result, our cash available for distribution for the summer is much lower than for the winter.

With lower cash flow during the first and second fiscal quarters, we may be required to borrow money to pay distributions to our unitholders during these quarters.

Any restrictions on our ability to borrow money could restrict our ability to pay the minimum quarterly distributions to our unitholders.

A significant increase in fuel prices may adversely affect our transportation costs.

Fuel is a significant operating expense for us in connection with the delivery of products to our customers.

A significant increase in fuel prices will result in increased transportation costs to us.

The price and supply of fuel is unpredictable and fluctuates based on events we cannot control, such as geopolitical developments, supply and demand for oil and gas, actions by oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and weather concerns.

As a result, any increases in these prices may adversely affect our profitability and competitiveness.

We are subject to governmental regulation and other legal obligations related to privacy, data protection, and data security.

Our actual or perceived failure to comply with such obligations could harm our business.

There are numerous laws and regulations regarding privacy and the storage, sharing, use, processing, transfer, disclosure and protection of personal data, the scope of which is changing, subject to differing interpretations, and may be inconsistent between states within a country or between countries.

For example, the California Consumer Privacy Act (“CCPA”), which went into effect on January 1, 2020, limits how we may collect and use personal data.

The effects of the CCPA potentially are far-reaching and may require us to modify our data processing practices and policies and incur compliance-related costs and expenses.

Further, in November 2020, California voters passed the California Privacy Rights and Enforcement Act (“CPRA”), which expands the CCPA with additional data privacy compliance requirements that may impact our business, and establishes a regulatory agency dedicated to enforcing those requirements.

It remains unclear how various provisions of the CCPA and CPRA will be interpreted and enforced.

These and other data privacy laws and their interpretations continue to develop and may be inconsistent from jurisdiction to jurisdiction.

Non-compliance with these laws could result in penalties or significant legal liability.

Although we take reasonable efforts to comply with all applicable laws and regulations, there can be no assurance that we will not be subject to regulatory action, including fines, in the event of an incident.

We or our third-party service providers could be adversely affected if legislation or regulations are expanded to require changes in our or our third-party service providers’ business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our or our third-party service providers’ business, results of operations or financial condition.

Some of our operations cross the United States/Canada border and are subject to cross-border regulation.

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Violations of these licensing, tariff and tax reporting requirements could result in the imposition of significant administrative, civil and criminal penalties.

The risk of terrorism and political unrest in various energy producing regions may adversely affect the economy and the price and availability of products.

An act of terror in any of the major energy producing regions of the world could potentially result in disruptions in the supply of crude oil and natural gas, which could have a material impact on both availability and price.

Terrorist attacks in the areas of our operations could negatively impact our ability to transport propane to our locations.

These risks could potentially negatively impact our consolidated results of operations.

We depend on the leadership and involvement of key personnel for the success of our businesses.

We have certain key individuals in our senior management who we believe are critical to the success of our business.

The loss of leadership and involvement of those key management personnel could potentially have a material adverse impact on our business and possibly on the market value of our common units.

Risks Inherent in an Investment in Us

Risks Related to Our Partnership Structure and in an Investment in Us

Our partnership agreement limits the fiduciary duties of our general partner to our unitholders and restricts the remedies available to our unitholders for actions taken by our general partner that might otherwise be breaches of fiduciary duty.

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Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units.

direct transferees and their indirect transferees approved by our general partner (which approval may be granted in its sole discretion) and persons who acquired such units with the prior approval of our general partner, cannot vote on any matter.

Unitholders’ voting rights are further restricted by a provision of our partnership agreement providing that any units held by a person that owns 20% or more of any class of units then outstanding, other than our general partner, its affiliates, their direct transferees and their indirect transferees approved by our general partner (which approval may be granted in its sole discretion) and persons who acquired such units with the prior approval of our general partner, cannot vote on any matter.

Our general partner interest or the control of our general partner may be transferred to a third party without the consent of our unitholders.

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The IDRs of our general partner may be transferred to a third party.

Prior to the first day of the first quarter beginning after the 10th anniversary of the closing date of our initial public offering (“IPO”), a transfer of IDRs by our general partner requires (except in certain limited circumstances) the consent of a majority of our outstanding common units (excluding common units held by our general partner and its affiliates).

Prior to the first day of the first quarter beginning after the tenth anniversary of the closing date of our initial public offering (“IPO”), a transfer of IDRs by our general partner requires (except in certain limited circumstances) the consent of a majority of our outstanding common units (excluding common units held by our general partner and its affiliates).

However, after the expiration of this period, our general partner may transfer its IDRs to a third party at any time without the consent of our unitholders.

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Our unitholders may also incur a tax liability upon a sale of their units.

Cost reimbursements to our general partner may be substantial and could reduce our cash available to make quarterly distributions to our unitholders.

Prior to making any distribution on the common units, we will reimburse our general partner and its affiliates for all expenses they incur on our behalf, which will be determined by our general partner in its sole discretion in accordance with the terms of our partnership agreement.

In determining the costs and expenses allocable to us, our general partner is subject to its fiduciary duty, as modified by our partnership agreement, to the limited partners, which requires it to act in good faith.

These expenses will include all costs incurred by our general partner and its affiliates in managing and operating us.

We are managed and operated by executive officers and directors of our general partner.

The reimbursement of expenses and payment of fees, if any, to our general partner and its affiliates, will reduce the amount of cash available for distribution to our unitholders.

Our partnership agreement requires that we distribute all of our available cash, which could limit our ability to grow and make acquisitions.

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The number of common units to be issued to our general partner will be equal to that number of common units that would have entitled their holder to an average aggregate quarterly cash distribution in the prior two quarters equal to the average of the distributions to our general partner on the IDRs in the prior two quarters.

We anticipate that our general partner would exercise this reset right to facilitate acquisitions or internal growth projects that would not be sufficiently accretive to cash distributions per common unit without such conversion.

We anticipate that our general partner would exercise this reset right to facilitate acquisitions or organic growth projects that would not be sufficiently accretive to cash distributions per common unit without such conversion.

It is possible, however, that our general partner could exercise this reset election at a time when it is experiencing, or expects to experience, declines in the cash distributions it receives related to its IDRs and may, therefore, desire to be issued common units rather than retain the right to receive distributions on its IDRs based on the initial target distribution levels.

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Delaware law provides that for a period of three years from the date of an impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the limited partnership for the distribution amount.

Substituted limited partners

are liable both for the obligations of the assignor to make contributions to the partnership that were known to the substituted limited partner at the time it became a limited partner and for those obligations that were unknown if the liabilities could have been determined from the partnership agreement.

Substituted limited partners are liable both for the obligations of the assignor to make contributions to the partnership that were known to the substituted limited partner at the time it became a limited partner and for those obligations that were unknown if the liabilities could have been determined from the partnership agreement.

Neither liabilities to partners on account of their partnership interests nor liabilities that are nonrecourse to the partnership are counted for purposes of determining whether a distribution is permitted.

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Subject to certain exceptions, as long as any Preferred Units remain outstanding, we may not declare any distribution on our common units unless all accumulated and unpaid distributions have been declared and paid on the Preferred Units.

In the event of our liquidation, winding-up or dissolution, the holders of the Preferred Units would have the right to receive proceeds from any such transaction before the holders of the common units.

In the event of our liquidation, winding-up or dissolution, the holders of the

Preferred Units would have the right to receive proceeds from any such transaction before the holders of the common units.

The payment of the liquidation preference could result in common unitholders not receiving any consideration if we were to liquidate, dissolve or wind up, either voluntarily or involuntarily.

Additionally, the existence of the liquidation preference may reduce the value of the common units, make it harder for us to sell common units in offerings in the future, or prevent or delay a change of control.

The issuance of common units upon exercise of the warrants may cause dilution to existing common unitholders and may place downward pressure on the trading price of our common units.

We currently have outstanding exercisable options to purchase 25,500,000 common units at exercise prices ranging from $13.56 to $17.45.

Any exercise of these warrants may cause dilution to existing common unitholders and may place downward pressure on the trading price of our common units.

The issuance of common units upon exercise of certain warrants would cause dilution to existing common unitholders and may place downward pressure on the trading price of our common units.

We currently have outstanding exercisable warrants to purchase 25,500,000 common units at exercise prices ranging from $13.56 per unit to $17.45 per unit.

Any exercise of these warrants would cause dilution to existing common unitholders and may place downward pressure on the trading price of our common units.

The warrants may be exercised from and after the first anniversary of the date of issuance.

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The warrants will not participate in cash distributions.

Tax Risks to Common Unitholders

Tax Risks to Our Unitholders

Our tax treatment depends on our status as a partnership for federal income tax purposes.

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For tax years beginning January 1, 2022 and thereafter, the calculation of adjusted taxable income will not add back depreciation or amortization.

Any disallowed business interest expense is then generally carried forward as a deduction in a succeeding taxable year at the partner level.

Any disallowed

business interest expense is then generally carried forward as a deduction in a succeeding taxable year at the partner level.

These limitations might cause interest expense to be deducted by our unitholders in a later period than recognized in the GAAP financial statements.

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Although we are unable to predict whether any of these changes, or other proposals, will ultimately be enacted, any such changes could negatively impact the value of an investment in our common units.

Changes in tax laws could adversely affect our performance.

We are subject to extensive tax laws and regulations, with respect to federal, state and foreign income taxes and transactional taxes such as excise, sales/use, payroll, franchise and ad valorem taxes.

New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted that could result in increased tax expenditures in the future.

If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted and the cost of any IRS contest will reduce our cash available for distribution to our unitholders.

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Our unitholders may not receive cash distributions from us equal to their share of our taxable income or even equal to the actual tax liability that results from that income.

Certain actions that we may take, such as issuing additional units, may increase the federal income tax liability of unitholders.

In the event we issue additional units or engage in certain other transactions in the future, the allocable share of nonrecourse liabilities allocated to the unitholders will be recalculated to take into account our issuance of any additional units.

Any reduction in a unitholder’s share of our nonrecourse liabilities will be treated as a distribution of cash to that unitholder and will result in a corresponding tax basis reduction in a unitholder’s units.

A deemed cash distribution may, under certain circumstances, result in the recognition of taxable gain by a unitholder, to the extent that the deemed cash distribution exceeds such unitholder’s tax basis in its units.

In addition, the federal income tax liability of a unitholder could be increased if we dispose of assets or make a future offering of units and use the proceeds in a manner that does not produce substantial additional deductions, such as to repay indebtedness currently outstanding or to acquire property that is not eligible for depreciation or amortization for federal income tax purposes or that is depreciable or amortizable at a rate significantly slower than the rate currently applicable to our assets.

Tax gain or loss on the disposition of our common units could be more or less than expected.

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We may elect to conduct additional operations in corporate form in the future.

Our corporate subsidiaries will be subject to

corporate level tax, which will reduce the cash available for distribution to us and, in turn, to our unitholders.

Our corporate subsidiaries will be subject to corporate level tax, which will reduce the cash available for distribution to us and, in turn, to our unitholders.

If the IRS or other state or local jurisdictions were to successfully assert that our corporate subsidiaries have more tax liability than we anticipate or legislation was enacted that increased the corporate tax rate, our cash available for distribution to our unitholders would be further reduced.

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There are a number of limitations that may prevent unitholders from using their allocable share of our losses as a deduction against unrelated income.

In cases where our unitholders are subject to the passive loss rules (generally, individuals and closely held corporations), any losses generated by us will only be available to offset our future income and cannot be used to offset income from other activities, including other passive activities or investments.

to offset income from other activities, including other passive activities or investments.

Unused losses may be deducted when the unitholder disposes of its entire investment in us in a fully taxable transaction with an unrelated party.

A unitholder’s share of our net passive income may be offset by unused losses from us carried over from prior years but not by losses from other passive activities, including losses from other publicly traded partnerships.

Other limitations that may further restrict the

deductibility of our losses by a unitholder include the at-risk rules and the prohibition against loss allocations in excess of the unitholder’s tax basis in its units.

Other limitations that may further restrict the deductibility of our losses by a unitholder include the at-risk rules and the prohibition against loss allocations in excess of the unitholder’s tax basis in its units.

Purchasers of our common units may become subject to state and local taxes and return filing requirements in jurisdictions where we operate or own or acquire properties.

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As we make acquisitions or expand our business, we may own or control assets or conduct business in additional states that impose a personal income tax.

Treatment of distributions on our Preferred Units as guaranteed payments for the use of capital creates a different tax treatment for the holders of Preferred Units than the holders of our common units and such distributions will likely not be eligible for the 20% deduction for qualified publicly traded partnership income.

The tax treatment of distributions on our Preferred Units is uncertain.

We will treat the holders of Preferred Units as partners for tax purposes and will treat distributions on the Preferred Units as guaranteed payments for the use of capital that will generally be taxable to the holders of Preferred Units as ordinary income.

A holder of our Preferred Units could recognize taxable income from the accrual of such a guaranteed payment even in the absence of a contemporaneous distribution.

Otherwise, the holders of Preferred Units are generally not anticipated to share in our items of income, gain, loss or deduction, nor will we allocate any share of our nonrecourse liabilities to the holders of Preferred Units.

If the Preferred Units were treated as indebtedness for tax purposes, rather than as guaranteed payments for the use of capital, distributions likely would be treated as payments of interest by us to the holders of Preferred Units.

Although we expect that much of the income we earn is generally eligible for the 20% deduction for qualified publicly traded partnership income, recently issued Treasury Regulations, which are effective for our taxable years beginning on or after January 1, 2020, provide that a guaranteed payment for the use of capital is not eligible for the 20% deduction for qualified publicly traded partnership income.

As a result, income attributable to a guaranteed payment for the use of capital recognized by holders of Preferred Units is not eligible for the 20% deduction for qualified publicly traded partnership income.

All holders of our Preferred Units are urged to consult a tax advisor to determine whether they are eligible to receive the 20% deduction for qualified publicly traded partnership income with respect to their Preferred Units

A holder of Preferred Units will be required to recognize gain or loss on a sale of Preferred Units equal to the difference between the amount realized by such holder and such holder’s tax basis in the Preferred Units sold.

The amount realized generally will equal the sum of the cash and the fair market value of other property such holder receives in exchange for such Preferred Units.

Subject to general rules requiring a blended basis among multiple partnership interests, the tax basis of a Preferred Unit will generally be equal to the sum of the cash and the fair market value of other property paid by the holder of Preferred Units to acquire such Preferred Unit.

Gain or loss recognized by a holder of Preferred Units on the sale or exchange of a Preferred Unit held for more than one year generally will be taxable as long-term capital gain or loss.

Because holders of Preferred Units will generally not be allocated a share of our items of depreciation, depletion or amortization, it is not anticipated that such holders would be required to recharacterize any portion of their gain as ordinary income as a result of the recapture rules.

Investment in the Preferred Units by tax-exempt investors, such as employee benefit plans and IRAs, and non-U.S.

persons raises issues unique to them.

Distributions to non-U.S.

holders of Preferred Units will be subject to withholding taxes.

If the amount of withholding exceeds the amount of U.S.

federal income tax actually due, non-U.S.

holders of Preferred Units may be required to file U.S.

federal income tax returns in order to seek a refund of such excess.

The treatment of guaranteed payments for the use of capital to tax-exempt investors is not certain and such payments may be treated as unrelated business taxable income for U.S.

federal income tax purposes.

If you are a tax-exempt entity or a non-U.S.

person, you should consult your tax advisor with respect to the consequences of owning our Preferred Units.

All holders of our Preferred Units are urged to consult a tax advisor with respect to the consequences of owning our Preferred Units.

General Risks

The default by significant customers and counterparties or loss of one or more significant customers could materially or adversely affect our business, financial condition, results of operations and cash flows.

The deterioration in the financial condition of one or more of our significant customers or counterparties could result in their failure to perform under the terms of their agreement with us or default in the payment owed to us.

Our customers and counterparties include industrial customers, local distribution companies, crude oil and natural gas producers, financial institutions and marketers whose creditworthiness may be suddenly and disparately impacted by, among other factors, commodity price volatility, deteriorating energy market conditions, and public and regulatory opposition to energy producing activities.

While we manage our credit risk exposure through credit analysis, credit approvals, establishing credit limits, requiring prepayments (partially or wholly), requiring product deliveries over defined time periods, and credit monitoring, we are unable to completely eliminate the performance and credit risk to us associated with doing business with these parties.

In a low commodity price environment, certain of our customers have been or could be negatively impacted, causing them significant economic stress resulting, in some cases, in a customer bankruptcy filing or an effort to renegotiate our contracts.

The deterioration in the creditworthiness of our customers and the resulting increase in nonpayment and/or nonperformance by them could cause us to write down or write off accounts receivables or tangible and intangible assets.

Such write-downs or write-offs could negatively affect our operating results in the periods in which they occur, and, if significant, could materially or adversely affect our business, financial condition, results of operations, and cash flows.

We expect to continue to depend on key customers to support our revenues for the foreseeable future.

Additionally, certain key customers of the Grand Mesa Pipeline contribute significantly to the cash flows and profitability of that asset.

Any loss of those customers or their contracts could have an adverse impact on our financial results.

To the extent one or more of our key customers commences bankruptcy proceedings, our contracts with the customers may be subject to rejection under applicable provisions of the United States Bankruptcy Code or, if we so agree, may be renegotiated.

Further, during any such bankruptcy proceeding, prior to assumption, rejection or renegotiation of such contracts, the bankruptcy court may temporarily authorize the payment of value for our services less than contractually required, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The resolution of our outstanding claims against such a customer or counterparty is dependent on the terms of the plan of reorganization but may include our claims being converted to equity in the reorganized entity and in addition to impacting our business, financial condition and results of operations could require us to incur impairment charges against the associated assets or the write down of our goodwill.

We encounter risk of counterparty nonperformance in our businesses.

We are subject to the public reporting requirements of the Securities Exchange Act of 1934, as amended.

We are also subject to the obligation under Section 404(a) of the Sarbanes Oxley Act of 2002 (the “Sarbanes-Oxley Act”) to annually review and report on our internal control over financial reporting, and to the obligation under Section 404(b) of the Sarbanes Oxley Act to engage our independent registered public accounting firm to attest to the effectiveness of our internal control over financial reporting.

The Sarbanes-Oxley Act requires public companies to have and maintain effective disclosure controls and procedures to ensure timely disclosures of material information and to have management review the effectiveness of those controls on a quarterly basis.

The Sarbanes-Oxley Act also requires public companies to have and maintain effective internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial

statements and to have management review the effectiveness of those controls on an annual basis (and have the company’s independent auditors attest to the effectiveness of such internal controls).

Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud, and operate successfully as a publicly traded partnership.

Our efforts to maintain our internal controls may be unsuccessful, and we may be unable to maintain effective internal control over financial reporting, including our disclosure controls.

Any failure to maintain effective internal control over financial reporting and disclosure controls could harm our operating results or cause us to fail to meet our reporting obligations.

These risks may be heightened after a business combination, during the phase when we are implementing our internal control structure over the recently acquired business.

Seasonal weather conditions and natural or man-made disasters could severely disrupt normal operations and have an adverse effect on our business, financial position and results of operations.

We operate in various locations across the United States and Canada which may be adversely affected by seasonal weather conditions and natural or man-made disasters.

During periods of heavy snow, ice, rain or extreme weather conditions such as high winds, tornados and hurricanes or after other natural disasters such as earthquakes or wildfires, we may be unable to move our trucks or railcars between locations and our facilities may be damaged, thereby reducing our ability to provide services and generate revenues.

These same conditions may cause serious damage or destruction to homes, business structures and the operations of customers.

Such disruptions could potentially have a material adverse impact on our business, consolidated financial position, results of operations and cash flows.

The spread of COVID-19 and the resulting impact on business and economic conditions may affect adversely our business, financial condition, results of operations and cash flows.