UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549  
_______________________________________________________ 

FORM 10-Q
ý
 
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the quarterly period ended September 30, 2014

OR
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
  For the transition period from ____________ to ____________
 
Commission File Number
000-50056
MARTIN MIDSTREAM PARTNERS L.P.
(Exact name of registrant as specified in its charter)
Delaware
 
05-0527861
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)
4200 Stone Road
Kilgore, Texas 75662
(Address of principal executive offices, zip code)

Registrant’s telephone number, including area code: (903) 983-6200

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
Yes   x
 
No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 
Yes  x
 
No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 Large accelerated filer                   x
Accelerated filer   o
Non-accelerated filer    o  (Do not check if a smaller reporting company)
Smaller reporting company   o

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 
Yes o
 
No x
 
The number of the registrant’s Common Units outstanding at October 29, 2014, was 35,349,699.
 


 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1


PART I – FINANCIAL INFORMATION
Item 1.
Financial Statements
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
 
September 30, 2014
 
December 31, 2013
 
(Unaudited)
 
(Audited)
Assets
 
 
 
Cash
$
3,006

 
$
16,542

Accounts and other receivables, less allowance for doubtful accounts of $1,608 and $2,492, respectively
132,839

 
163,855

Product exchange receivables
6,351

 
2,727

Inventories
120,369

 
94,902

Due from affiliates
14,581

 
12,099

Fair value of derivatives
879

 
—

Other current assets
10,256

 
7,353

Assets held for sale
700

 
—

Total current assets
288,981

 
297,478

 
 
 
 
Property, plant and equipment, at cost
1,359,620

 
929,183

Accumulated depreciation
(334,150
)
 
(304,808
)
Property, plant and equipment, net
1,025,470

 
624,375

 
 
 
 
Goodwill
23,802

 
23,802

Investment in unconsolidated entities
135,219

 
128,662

Debt issuance costs, net
13,833

 
15,659

Note receivable - Martin Energy Trading LLC
15,000

 
—

Other assets, net
86,431

 
7,943

 
$
1,588,736

 
$
1,097,919

 
 
 
 
Liabilities and Partners’ Capital
 

 
 

Trade and other accounts payable
$
120,037

 
$
142,951

Product exchange payables
18,860

 
9,595

Due to affiliates
11,713

 
2,596

Income taxes payable
1,002

 
1,204

Fair value of derivatives
542

 
—

Other accrued liabilities
13,041

 
20,242

Total current liabilities
165,195

 
176,588

 
 
 
 
Long-term debt
910,077

 
658,695

Other long-term obligations
3,174

 
2,219

Total liabilities
1,078,446

 
837,502

 
 
 
 
Commitments and contingencies


 


Partners’ capital
510,290

 
260,417

 
$
1,588,736

 
$
1,097,919


See accompanying notes to consolidated and condensed financial statements.


2
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per unit amounts)


 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Terminalling and storage  *
$
31,880

 
$
28,956

 
$
97,848

 
$
85,267

Marine transportation  *
24,282

 
24,217

 
69,845

 
74,694

Natural gas services
5,764

 
—

 
5,764

 
—

Sulfur services
3,037

 
3,001

 
9,112

 
9,003

Product sales: *
 
 
 
 
 
 
 
Natural gas services
230,294

 
204,296

 
812,232

 
650,605

Sulfur services
46,993

 
39,096

 
157,706

 
164,375

Terminalling and storage
47,735

 
60,050

 
153,451

 
167,546

 
325,022

 
303,442

 
1,123,389

 
982,526

Total revenues
389,985

 
359,616

 
1,305,958

 
1,151,490

 
 
 
 
 
 
 
 
Costs and expenses:
 

 
 

 
 

 
 

Cost of products sold: (excluding depreciation and amortization)
 

 
 

 
 

 
 

Natural gas services *
218,356

 
196,308

 
777,676

 
626,609

Sulfur services *
38,841

 
33,994

 
122,009

 
131,577

Terminalling and storage *
42,239

 
52,718

 
137,074

 
146,806

 
299,436

 
283,020

 
1,036,759

 
904,992

Expenses:
 

 
 

 
 

 
 

Operating expenses  *
48,391

 
43,444

 
140,543

 
129,839

Selling, general and administrative  *
10,302

 
7,211

 
27,653

 
20,624

Depreciation and amortization
16,743

 
13,698

 
45,329

 
37,944

Total costs and expenses
374,872

 
347,373

 
1,250,284

 
1,093,399

 
 
 
 
 
 
 
 
Impairment of long-lived assets
(3,445
)
 
—

 
(3,445
)
 
—

Other operating income
347

 
—

 
401

 
796

Operating income
12,015

 
12,243

 
52,630

 
58,887

 
 
 
 
 
 
 
 
Other income (expense):
 

 
 

 
 

 
 

Equity in earnings (loss) of unconsolidated entities
2,655

 
(577
)
 
4,297

 
(878
)
Interest expense, net
(11,459
)
 
(11,060
)
 
(34,351
)
 
(31,058
)
Debt prepayment premium
—

 
—

 
(7,767
)
 
—

Reduction in carrying value of investment in Cardinal due to the purchase of the controlling interest
(30,102
)
 
—

 
(30,102
)
 
—

Other, net
286

 
(111
)
 
169

 
(134
)
Total other expense
(38,620
)
 
(11,748
)
 
(67,754
)
 
(32,070
)
 
 
 
 
 
 
 
 
Net income (loss) before taxes
(26,605
)
 
495

 
(15,124
)
 
26,817

Income tax expense
(300
)
 
(303
)
 
(954
)
 
(910
)
Net income (loss)
(26,905
)
 
192

 
(16,078
)
 
25,907

Less general partner's interest in net (income) loss
539

 
(4
)
 
322

 
(518
)
Less (income) loss allocable to unvested restricted units
62

 
(1
)
 
33

 
(67
)
Limited partners' interest in net income (loss)
$
(26,304
)
 
$
187

 
$
(15,723
)
 
$
25,322

 
 
 
 
 
 
 
 
Net income (loss) per unit attributable to limited partners - basic
$
(0.82
)
 
$
0.01

 
$
(0.54
)
 
$
0.95

Weighted average limited partner units - basic
32,243

 
26,552

 
29,271

 
26,561

 
 
 
 
 
 
 
 
Net income (loss) per unit attributable to limited partners - diluted
$
(0.82
)
 
$
0.01

 
$
(0.54
)
 
$
0.95

Weighted average limited partner units - diluted
32,243

 
26,579

 
29,271

 
26,581

 
See accompanying notes to consolidated and condensed financial statements.

*Related Party Transactions Shown Below

3
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per unit amounts)



*Related Party Transactions Included Above
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Terminalling and storage
$
19,045

 
$
18,044

 
$
55,798

 
$
52,857

Marine transportation
6,076

 
5,943

 
18,340

 
18,828

Product Sales
883

 
964

 
6,484

 
4,012

Costs and expenses:
 

 
 

 
 

 
 

Cost of products sold: (excluding depreciation and amortization)
 

 
 

 
 

 
 

Natural gas services
9,908

 
7,799

 
29,169

 
23,391

Sulfur services
4,491

 
4,539

 
13,808

 
13,514

Terminalling and storage
9,174

 
13,488

 
25,571

 
39,638

Expenses:
 

 
 

 
 

 
 

Operating expenses
21,013

 
17,902

 
58,500

 
53,410

Selling, general and administrative
7,230

 
4,356

 
18,103

 
12,944


See accompanying notes to consolidated and condensed financial statements.







4
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL
(Unaudited)
(Dollars in thousands)



 
Partners’ Capital
 
 
 
Common Limited
 
General Partner Amount
 
 
 
Units
 
Amount
 
 
Total
Balances - January 1, 2013
26,566,776

 
$
349,490

 
$
8,472

 
$
357,962

Net income
—

 
25,389

 
518

 
25,907

Issuance of restricted units
63,750

 
—

 
—

 
—

Forfeiture of restricted units
(250
)
 
—

 
—

 
—

General partner contribution
—

 
—

 
37

 
37

Cash distributions
—

 
(61,902
)
 
(1,384
)
 
(63,286
)
Excess purchase price over carrying value of acquired assets
—

 
(301
)
 
—

 
(301
)
Unit-based compensation
—

 
737

 
—

 
737

Purchase of treasury units
(6,000
)
 
(250
)
 
—

 
(250
)
Balances - September 30, 2013
26,624,276

 
$
313,163

 
$
7,643

 
$
320,806

 
 
 
 
 
 
 
 
Balances - January 1, 2014
26,625,026

 
$
254,028

 
$
6,389

 
$
260,417

Net loss
—

 
(15,756
)
 
(322
)
 
(16,078
)
Issuance of common units
8,727,673

 
331,571

 
—

 
331,571

Issuance of restricted units
6,900

 
—

 
—

 
—

Forfeiture of restricted units
(3,500
)
 
—

 
—

 
—

General partner contribution
—

 
—

 
6,995

 
6,995

Cash distributions
—

 
(66,473
)
 
(1,506
)
 
(67,979
)
Unit-based compensation
—

 
589

 
—

 
589

Excess purchase price over carrying value of acquired assets
—

 
(4,948
)
 
—

 
(4,948
)
Purchase of treasury units
(6,400
)
 
(277
)
 
—

 
(277
)
Balances - September 30, 2014
35,349,699

 
$
498,734

 
$
11,556

 
$
510,290

 
See accompanying notes to consolidated and condensed financial statements.





5
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)


 
Nine Months Ended
 
September 30,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(16,078
)
 
$
25,907

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 

 
 

Depreciation and amortization
45,329

 
37,944

Amortization of deferred debt issuance costs
5,415

 
2,890

Amortization of debt discount
1,305

 
230

Amortization of premium on notes payable
(164
)
 
—

Gain on sale of property, plant and equipment
(54
)
 
(796
)
Impairment of long-lived assets
3,445

 
—

Equity in (earnings) loss of unconsolidated entities
(4,297
)
 
878

Reduction in carrying value of investment in Cardinal due to purchase of the controlling interest
30,102

 
—

Non-cash mark-to-market on derivatives
489

 
—

Unit-based compensation
589

 
737

Preferred dividends on MET investment
1,498

 
1,171

Return on investment
600

 
—

Other
—

 
7

Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
 

 
 

Accounts and other receivables
32,443

 
43,043

Product exchange receivables
(3,624
)
 
(219
)
Inventories
(25,223
)
 
(8,362
)
Due from affiliates
(2,482
)
 
(5,188
)
Other current assets
1,219

 
(6,358
)
Trade and other accounts payable
(29,600
)
 
(29,641
)
Product exchange payables
9,265

 
936

Due to affiliates
9,117

 
(525
)
Income taxes payable
(202
)
 
(440
)
Other accrued liabilities
(7,214
)
 
8,842

Change in other non-current assets and liabilities
1,123

 
(210
)
Net cash provided by continuing operating activities
53,001

 
70,846

Net cash used in discontinued operating activities
—

 
(8,678
)
Net cash provided by operating activities
53,001

 
62,168

Cash flows from investing activities:
 

 
 

Payments for property, plant and equipment
(58,522
)
 
(68,591
)
Acquisitions, less cash acquired
(100,046
)
 
(73,921
)
Payments for plant turnaround costs
(4,000
)
 
—

Proceeds from sale of property, plant and equipment
702

 
4,719

Proceeds from involuntary conversion of property, plant and equipment
2,475

 
—

Investment in unconsolidated entities
(134,413
)
 
—

Return of investments from unconsolidated entities
726

 
1,551

Contributions to unconsolidated entities
(3,386
)
 
(30,877
)
Net cash used in investing activities
(296,464
)
 
(167,119
)
Cash flows from financing activities:
 

 
 

Payments of long-term debt
(1,458,096
)
 
(518,000
)
Payments of notes payable and capital lease obligations
—

 
(251
)
Proceeds from long-term debt
1,426,250

 
691,000

Net proceeds from issuance of common units
331,571

 
—

General partner contribution
6,995

 
37

Purchase of treasury units
(277
)
 
(250
)
Payment of debt issuance costs
(3,589
)
 
(9,115
)
Excess purchase price over carrying value of acquired assets
(4,948
)
 
(301
)
Cash distributions paid
(67,979
)
 
(63,286
)
Net cash provided by financing activities
229,927

 
99,834

Net decrease in cash
(13,536
)
 
(5,117
)
Cash at beginning of period
16,542

 
5,162

Cash at end of period
$
3,006

 
$
45

Non-cash additions to property, plant and equipment
$
4,208

 
$
—

See accompanying notes to consolidated and condensed financial statements.

6
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)




(1)
General

Martin Midstream Partners L.P. (the “Partnership”) is a publicly traded limited partnership with a diverse set of operations focused primarily in the United States (“U.S.”) Gulf Coast region. Its four primary business lines include:  terminalling and storage services for petroleum products and by-products including the refining, blending and packaging of finished lubricants; natural gas services, including liquids distribution services and natural gas storage; sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and marine transportation services for petroleum products and by-products.
 
The Partnership’s unaudited consolidated and condensed financial statements have been prepared in accordance with the requirements of Form 10-Q and United States Generally Accepted Accounting Principles (“U.S. GAAP”) for interim financial reporting. Accordingly, these financial statements have been condensed and do not include all of the information and footnotes required by U.S. GAAP for annual audited financial statements of the type contained in the Partnership’s annual reports on Form 10-K. In the opinion of the management of the Partnership’s general partner, all adjustments and elimination of significant intercompany balances necessary for a fair presentation of the Partnership’s financial position, results of operations, and cash flows for the periods shown have been made. All such adjustments are of a normal recurring nature. Results for such interim periods are not necessarily indicative of the results of operations for the full year. These financial statements should be read in conjunction with the Partnership’s audited consolidated financial statements and notes thereto included in the Partnership’s annual report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2014, as amended by Amendment No. 1 on Form 10-K/A for the year ended December 31, 2013 filed on March 28, 2014.

Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated and condensed financial statements in conformity with U.S. GAAP.  Actual results could differ from those estimates.

Prior to August 30, 2013, Martin Resource Management owned 100% of the Partnership's general partner. On August 30, 2013, Martin Resource Management completed the sale of a 49% non-controlling voting interest ( 50% economic interest) in MMGP Holdings, LLC (“Holdings”), the newly-formed sole member of Martin Midstream GP LLC (“MMGP”), the general partner of the Partnership, to certain affiliated investment funds managed by Alinda Capital Partners (“Alinda”). Upon closing the transaction, Alinda appointed two representatives to serve as directors of the general partner. On October 29, 2014, Alinda appointed their third of three total representatives to serve as directors of the Partnership's general partner.

(2)
New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Partnership on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Partnership is evaluating the effect that ASU 2014-09 will have on its consolidated and condensed financial statements and related disclosures. The Partnership has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In April 2014, the FASB issued No. ASU 2014-08, Presentation of Financial Statements and Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity . The ASU changes the requirements for reporting discontinued operations. A discontinued operation may include a component of an entity or a group of components of an entity, or a business. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business or a major equity method investment. Additionally, the update requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations. This update is effective prospectively for the Partnership's fiscal year beginning January 1, 2015

7
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



and early adoption is permitted. The standard primarily involves presentation and disclosure and therefore is not expected to have a material impact on the Partnership's financial condition, results of operations or cash flows.
        
(3)
Acquisitions
 
Cardinal Gas Storage Partners LLC
On August 29, 2014, the Partnership acquired from Energy Capital Partners (“ECP”) all of ECP’s approximate 57.8% Category A membership interests in Cardinal Gas Storage Partners LLC (“Cardinal”) for cash consideration of approximately $120.0 million , subject to certain post-closing adjustments. Prior to the acquisition, the Partnership owned an approximate 42.2% interest in the Category A membership interests in Cardinal. Based on the application of purchase accounting, the Partnership reduced the carrying value of its existing investment in Cardinal at the acquisition date by $30,102 , which was recognized in the Partnership's Consolidated and Condensed Statements of Operations for the three and nine months ended September 30, 2014. Concurrent with the closing of the transaction, the Partnership retired all of the project level financing of various Cardinal subsidiaries. The Partnership funded the acquisition and repayment of the project financings with borrowings under its revolving credit facility and the use of restricted cash acquired.
The total purchase price is as follows:
Cash payment for 57.8% interest in Cardinal
$
119,973

Fair value of the Partnership's previously owned 42.2% interest in Cardinal
87,613

Total
$
207,586


Assets acquired and liabilities assumed were recorded in the Natural Gas Services segment at fair value in the following preliminary purchase price allocation:
Restricted cash
$
19,216

Other current assets
9,418

Property, plant and equipment
390,352

Intangible and other assets
77,995

Project level finance debt
(282,086
)
Other current liabilities
(6,714
)
Other non-current liabilities
(595
)
   Total
$
207,586


The Partnerships expects to complete the final purchase price allocation by December 31, 2014.
 
Intangible assets consist of above-market gas storage customer contracts which are amortized based upon the terms of the individual contracts. The weighted average life of these contracts, based upon contracted volumes, is 5.1 years .

The Partnership’s results of operations from the Cardinal acquisition include revenues of $5,764 and net income of $340 for the three and nine months ended September 30, 2014 . In the third quarter, the Partnership recorded a $30,102 non-recurring, non-cash charge to its net income reflecting the reduction in the Partnership's carrying value of its investment in Cardinal as a result of the Cardinal acquisition.

Natural Gas Liquids ("NGL") Storage Assets

On May 31, 2014, the Partnership acquired certain NGL storage assets from a subsidiary of Martin Resource Management for $7,388 . This acquisition is considered a transfer of net assets between entities under common control. The acquisition of these assets was recorded at the historical carrying value of the assets at the acquisition date. The Partnership recorded the purchase in the following allocation:

8
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



Property, plant and equipment
$
2,453

Current liabilities
(13
)
 
$
2,440


The excess of the purchase price over the carrying value of the assets of $4,948 was recorded as an adjustment to "Partners' capital." This transaction was funded with borrowings under the Partnership's revolving credit facility. As no individual line item of the historical financial statements of the assets was in excess of 3% of the Partnership's relative financial statement captions, the Partnership elected not to retrospectively recast the historical financial information of these assets.

West Texas LPG Pipeline Limited Partnership

On May 14, 2014, the Partnership acquired from a subsidiary of Atlas Pipeline Partners L.P. ("Atlas"), all of the outstanding membership interests in Atlas Pipeline NGL Holdings, LLC and Atlas Pipeline NGL Holdings II, LLC (collectively, "Atlas Holdings") for cash of approximately $134,400 . The purchase price was subsequently reduced $501 due to a post-closing working capital adjustment. This transaction was recorded in "Investments in unconsolidated entities" in the Partnership's Consolidated and Condensed Balance Sheet through a preliminary purchase price allocation. The final allocation is expected to be completed by December 31, 2014. Atlas Holdings owned a 19.8% limited partnership interest and a 0.2% general partnership interest in West Texas LPG Pipeline L.P. ("WTLPG"). WTLPG is operated by Chevron Pipe Line Company, which owns the remaining 80.0% interest. WTLPG owns an approximate 2,300 mile common-carrier pipeline system that transports NGLs from New Mexico and Texas to Mont Belvieu, Texas for fractionation. This acquisition will enable the Partnership to participate in the transportation of the growing NGL production of West Texas and other basins along the WTLPG pipeline route. This acquisition of the WTLPG business complements the Partnership's existing East Texas NGL pipeline that delivers Y-grade NGLs from East Texas production areas into Beaumont, Texas on a smaller scale. This transaction was funded with borrowings under the Partnership's revolving credit facility.

Pro Forma Financial Information for Cardinal and WTLPG
    
The following pro forma consolidated results of operations have been prepared as if the acquisition of Cardinal and WTLPG occurred at the beginning of fiscal 2013:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Revenue:
 
 
 
 
 
 
 
As reported
$
389,985

 
$
359,616

 
$
1,305,958

 
$
1,151,490

Pro forma
$
401,130

 
$
376,957

 
$
1,352,446

 
$
1,187,626

Net income (loss) attributable to limited partners:
 
 
 
 
 
 
 
As reported
$
(26,304
)
 
$
187

 
$
(15,723
)
 
$
25,322

Pro forma
$
136

 
$
(9,782
)
 
$
(5,784
)
 
$
455

Net income (loss) per unit attributable to limited partners - basic
 
 
 
 
 
 
 
As reported
$
(0.82
)
 
$
0.01

 
$
(0.54
)
 
$
0.95

Pro forma
$
—

 
$
(0.37
)
 
$
(0.20
)
 
$
0.02

Net income (loss) per unit attributable to limited partners - diluted
 
 
 
 
 
 
 
As reported
$
(0.82
)
 
$
0.01

 
$
(0.54
)
 
$
0.95

Pro forma
$
—

 
$
(0.37
)
 
$
(0.20
)
 
$
0.02


Marine Transportation Equipment Purchase

On September 30, 2013, the Partnership acquired two previously leased inland tank barges from Martin Resource Management for $7,100 . This acquisition is considered a transfer of net assets between entities under common control. The acquisition of these assets was recorded at the historical carrying value of the assets at the acquisition date. The Partnership recorded $ 6,799 to property, plant and equipment in the Marine Transportation segment and the excess of the purchase price

9
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



over the carrying value of the assets of $ 301 was recorded as an adjustment to "Partners' capital". This transaction was funded with borrowings under the Partnership's revolving credit facility.

Sulfur Production Facility

On August 5, 2013, the Partnership acquired a plant nutrient sulfur production facility in Cactus, Texas (“Cactus”) for $4,118 . The transaction was accounted for under the acquisition method of accounting in accordance with ASC 805 relating to business combinations. This transaction was funded by borrowings under the Partnership's revolving credit facility. Assets acquired and liabilities assumed were recorded in the Sulfur Services segment at fair value as follows:
    
Inventory
$
162

Property, plant and equipment
4,000

Current liabilities
(44
)
Total
$
4,118


The Partnership's results of operations from these assets included revenues of $590 and net income of $87 for the three months ended September 30, 2014 and revenues of $1,736 and net income of $321 for the nine months ended September 30, 2014 . The Partnership's results of operations from these assets included revenues of $104 and a net loss of $80 for both the three and nine months ended September 30, 2013.

NL Grease, LLC

On June 13, 2013, the Partnership acquired certain assets of NL Grease, LLC (“NLG”) for $12,148 . NLG is a Kansas City, Missouri based grease manufacturer that specializes in private-label packaging of commercial and industrial greases. The transaction was accounted for under the acquisition method of accounting in accordance with ASC 805 relating to business combinations. This transaction was funded by borrowings under the Partnership's revolving credit facility. The assets acquired by the Partnership were recorded in the Terminalling and Storage segment at fair value of $12,148 in the following purchase price allocation:
Inventory and other current assets
$
1,513

Property, plant and equipment
6,136

Other assets
5,113

Other accrued liabilities
(168
)
Other long-term obligations
(446
)
Total
$
12,148


The purchase price allocation resulted in the recognition of $5,113 in definite-lived intangible assets with no residual value, including $2,418 of technology, $2,218 attributable to a customer list, and $477 attributable to a non-compete agreement. The amounts assigned to technology, the customer list, and the non-compete agreement are amortized over the estimated useful life of ten years, three years, and five years, respectively. The weighted average life over which these acquired intangibles will be amortized is approximately six years.

The Partnership completed the purchase price allocation during the third quarter of 2013, which resulted in an adjustment to working capital from the preliminary purchase price allocation in the amount of $55 .

The Partnership's results of operations from the NLG acquisition included revenues of $3,150 and net income of $124 for the three months ended September 30, 2014 and revenues of $4,101 and net income of $166 for the three months ended September 30, 2013. Results of operations included revenues of $10,914 and net income of $254 for the nine months ended September 30, 2014 and revenues of $4,622 and net income of $10 for the nine months ended September 30, 2013 .


10
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



NGL Marine Equipment Purchase

On February 28, 2013, the Partnership purchased from affiliates of Florida Marine Transporters, Inc. six liquefied petroleum gas pressure barges and two commercial push boats for approximately $50,801 , of which the commercial push boats totaling $8,201 were allocated to property, plant and equipment in the Partnership's Marine Transportation segment and the six pressure barges totaling $42,600 were allocated to property, plant and equipment in the Partnership's Natural Gas Services segment. This transaction was funded with borrowings under the Partnership's revolving credit facility.     

(4)
Discontinued operations and divestitures

On July 31, 2012, the Partnership completed the sale of its East Texas and Northwest Louisiana natural gas gathering and processing assets owned by Prism Gas and other natural gas gathering and processing assets also owned by the Partnership to a subsidiary of CenterPoint Energy Inc. (NYSE: CNP) (“CenterPoint”). The Partnership received net cash proceeds from the sale of $273,269 .  The asset sale includes the Partnership’s 50% operating interest in Waskom Gas Processing Company (“Waskom”).  A subsidiary of CenterPoint owned the other 50% percent interest.  

Additionally, on September 18, 2012, the Partnership completed the sale of its interest in Matagorda Offshore Gathering System (“Matagorda”) and Panther Interstate Pipeline Energy LLC (“PIPE”) to a private investor group for $1,530 .  

Cash flows resulting from balances existing at December 31, 2012 were reported in the Consolidated and Condensed Statements of Cash Flows as discontinued operations for the nine months ended September 30, 2013.

(5)
Inventories

Components of inventories at September 30, 2014 and December 31, 2013 were as follows: 
 
September 30, 2014
 
December 31, 2013
Natural gas liquids
$
59,494

 
$
31,859

Sulfur
9,887

 
8,912

Sulfur based products
14,819

 
17,584

Lubricants
32,830

 
33,847

Other
3,339

 
2,700

 
$
120,369

 
$
94,902


(6)
Investments in Unconsolidated Entities and Joint Ventures

On August 29, 2014, the Partnership acquired ECP’s approximate 57.8% Category A interest in Cardinal. Prior to the acquisition, the Partnership owned an approximate 42.2% Category A interest in Cardinal which was accounted for by the equity method. See Note 3 for discussion of the acquisition of the remaining interests.

On May 14, 2014, the Partnership acquired from a subsidiary of Atlas, all of the outstanding membership interests in Atlas Holdings for cash of approximately $134,400 at closing. The purchase price was subsequently reduced $501 due to a post-closing working capital adjustment. Atlas Holdings owned a 19.8% limited partnership interest and a 0.2% general partnership interest in WTLPG. WTLPG is operated by Chevron Pipe Line Company, which owns the remaining 80.0% interest. WTLPG owns an approximate 2,300 mile common-carrier pipeline system that transports NGLs from New Mexico and Texas to Mont Belvieu, Texas for fractionation. At the acquisition date, the carrying value of the 20% interest in WTLPG exceeded the Partnership’s share of the underlying net assets of WTLPG by approximately $96,000 . The Partnership’s preliminary analysis determined that approximately $48,000 of the difference is attributable to property plant and equipment and the remaining $48,000 to equity method goodwill. The Partnership expects to complete its final analysis by December 31, 2014. The excess attributable to property, plant and equipment will be amortized over approximately 35 years . Such amortization amounted to $343 and $514 for the three and nine months ended September 30, 2014, respectively. The Partnership recognizes its 20% interest in WTLPG as "Investment in unconsolidated entities" on its Consolidated and Condensed Balance Sheets. The Partnership accounts for its ownership interest in WTLPG under the equity method of

11
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



accounting, with recognition of its ownership interest in the income of WTLPG as "Equity in earnings of unconsolidated entities" on its Consolidated and Condensed Statements of Operations.
    
During the fourth quarter of 2013, the Partnership sold its unconsolidated  50%  interest in Caliber Gathering, LLC (“Caliber”). As a result, there is no equity in earnings (loss) in the 2014 period.

During March 2013, the Partnership acquired 100% of the preferred interests in Martin Energy Trading LLC (“MET”), a subsidiary of Martin Resource Management, for $15,000 . On August 31, 2014, MET converted its preferred equity to subordinated debt. The resulting $15,000 note receivable from MET bears an annual interest rate of 15% and matures August 31, 2026. MET may prepay any or all of the note balance on or after September 1, 2016. See Note 12.

The following tables summarize the components of the investment in unconsolidated entities on the Partnership’s Consolidated and Condensed Balance Sheets and the components of equity in earnings of unconsolidated entities included in the Partnership’s Consolidated and Condensed Statements of Operations:
 
September 30, 2014
 
December 31, 2013
WTLPG
$
135,219

 
$
—

Cardinal
—

 
113,662

MET
—

 
15,000

    Total investment in unconsolidated entities
$
135,219

 
$
128,662


 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Equity in earnings of WTLPG
$
1,138

 
$
—

 
$
1,907

 
$
—

Equity in earnings (loss) of Cardinal
1,135

 
(984
)
 
892

 
(1,561
)
Equity in earnings of MET
382

 
577

 
1,498

 
1,171

Equity in loss of Caliber
—

 
(170
)
 
—

 
(488
)
    Equity in earnings of unconsolidated entities
$
2,655

 
$
(577
)
 
$
4,297

 
$
(878
)

Selected financial information for significant unconsolidated equity-method investees is as follows:
 
As of September 30,
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
Total
Assets
 
Members' Equity
 
Revenues
 
Net Income (Loss)
 
Revenues
 
Net Income (Loss)
2014
 
 
 
 
 
 
 
 
 
 
 
WTLPG
$
212,483

 
$
192,097

 
$
23,884

 
$
7,403

 
$
71,798

 
$
28,004

 
As of December 31,
 
 

 
 

 
 

 
 

2013
 

 
 

 
 

 
 

 
 

 
 

Cardinal
$
661,816

 
$
346,584

 
$
17,341

 
$
(2,300
)
 
$
36,136

 
$
(2,241
)

As of September 30, 2014 and December 31, 2013 , the Partnership’s interest in cash of the unconsolidated equity-method investees was $55 and $3,703 , respectively.

(7)
Derivative Instruments and Hedging Activities

The Partnership’s results of operations are materially impacted by changes in crude oil, natural gas and NGL prices and interest rates. In an effort to manage its exposure to these risks, the Partnership periodically enters into various derivative

12
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



instruments, including commodity and interest rate hedges. The Partnership is required to recognize all derivative instruments as either assets or liabilities at fair value on the Partnership’s Consolidated and Condensed Balance Sheets and to recognize certain changes in the fair value of derivative instruments on the Partnership’s Consolidated and Condensed Statements of Operations.

(a)    Commodity Derivative Instruments

The Partnership has from time to time used derivatives to manage the risk of commodity price fluctuation. Commodity risk is the adverse effect on the value of a liability or future purchase that results from a change in commodity price.  The Partnership has established a hedging policy and monitors and manages the commodity market risk associated with potential commodity risk exposure.  In addition, the Partnership has focused on utilizing counterparties for these transactions whose financial condition is appropriate for the credit risk involved in each specific transaction.     

The Partnership is exposed to commodity risk associated with the future purchase of natural gas.  The Partnership utilizes derivatives to manage exposure associated with commodity price risk by entering into call options to place a limit on the commodity price of the future purchase of base gas.  All derivatives and hedging instruments are included on the balance sheet as an asset or liability measured at fair value and changes in fair value are recognized currently in earnings.

As of September 30, 2014, the Partnership had a notional quantity of 3,631,740 MMBtu of natural gas call options with a strike price of $4.50 per MMBtu.  These options manage the purchase of base gas at Monroe Gas Storage Company, LLC for the portion of base gas that is currently leased with Credit Suisse and scheduled to be returned in January and February 2015.  The options settle in two increments of 2,345,498 MMBtu and 1,286,242 MMBtu on January 31, 2015 and February 28, 2015, respectively. 

For information regarding fair value amounts and gains and losses on natural gas call options, see “Tabular Presentation of Fair Value Amounts, and Gains and Losses on Derivative Instruments” below.

(b)    Interest Rate Derivative Instruments

The Partnership is exposed to market risks associated with interest rates. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We minimize this market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. The Partnership enters into interest rate swaps to manage interest rate risk associated with the Partnership’s variable rate credit facility and it's senior unsecured notes. All derivatives and hedging instruments are included on the balance sheet as an asset or a liability measured at fair value and changes in fair value are recognized currently in earnings.

As of September 30, 2014 , we had a combined notional principal amount of $250,000 of fixed-to-variable interest rate swap agreements, effectively converting the interest expense associated with a portion of the Partnership's 2021 senior unsecured notes from fixed rates to variable rates based on an interest rate of LIBOR plus a spread. Each of the Partnership's swap agreements have a termination date that corresponds to the maturity date of the 2021 senior unsecured notes. As of September 30, 2014 , the maximum length of time over which the Partnership has hedged a portion of its exposure to the variability in the value of this debt due to interest rate risk is through February of 2021.

For information regarding fair value amounts and gains and losses on interest rate derivative instruments, see “Tabular Presentation of Fair Value Amounts, and Gains and Losses on Derivative Instruments” below.

(c)    Tabular Presentation of Fair Value Amounts, and Gains and Losses on Derivative Instruments

The following table summarizes the fair values and classification of the Partnership’s derivative instruments in its Consolidated and Condensed Balance Sheet:

13
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



 
Fair Values of Derivative Instruments in the Consolidated Balance Sheet
 
Derivative Assets
Derivative Liabilities
 
 
Fair Values
 
Fair Values
 
  Balance Sheet Location
September 30, 2014
 
December 31, 2013
  Balance Sheet Location
September 30, 2014
 
December 31, 2013
Derivatives not designated as hedging instruments:
Current:
 
 
 
 
 
 
 
Commodity contracts
Fair value of derivatives
$
830

 
$
—

Fair value of derivatives
$
—

 
$
—

Interest rate contracts
Fair value of derivatives
49

 
—

Fair value of derivatives
542

 
—

Total derivatives not designated as hedging instruments
 
$
879

 
$
—

 
$
542

 
$
—


Effect of Derivative Instruments on the Consolidated and Condensed Statement of Operations
For the Three Months Ended September 30, 2014 and 2013
 
Location of Gain
Recognized in Income on
 Derivatives
Amount of Gain Recognized in
Income on Derivatives
 
 
2014
 
2013
Derivatives not designated as hedging instruments:
 
 
Commodity contracts
Other income
$
21

 
$
—

Interest rate contracts
Interest expense
63

 
—

Total derivatives not designated as hedging instruments
$
84

 
$
—


Effect of Derivative Instruments on the Consolidated and Condensed Statement of Operations
For the Nine Months Ended September 30, 2014 and 2013
 
Location of Gain
Recognized in Income on
 Derivatives
Amount of Gain Recognized in
Income on Derivatives
 
 
2014
 
2013
Derivatives not designated as hedging instruments:
 
 
Commodity contracts
Other income
$
21

 
$
—

Interest rate contracts
Interest expense
(2,864
)
 
—

Total derivatives not designated as hedging instruments
$
(2,843
)
 
$
—


On April 1, 2014, the Partnership entered into two fixed-to-variable interest rate swap agreements with an aggregate notional amount of $100,000 each to hedge its exposure to changes in the fair value of its senior unsecured notes.  On May 14, the Partnership terminated these swaps and received a termination benefit of $2,380 upon cancellation of these swap agreements. Additionally, subsequent to the termination on May 14, 2014, the Partnership entered into two fixed-to-variable interest rate swap agreements on May 14, 2014 with an aggregate notional amount of $100,000 each to hedge its exposure to changes in the fair value of its senior unsecured notes. In August 2014, the Partnership received a scheduled swap settlement related to these agreements totaling $976 . "This amount was recorded in Interest expense, net" for the three and nine months ended September 30, 2014.


14
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



On September 18, 2014, the Partnership entered into a fixed-to-variable interest rate swap agreement, with an aggregate notional amount of $50,000 , to hedge its exposure to changes in the fair value of its senior unsecured notes.

On October 9, 2014, the Partnership terminated each of its three outstanding swaps, receiving a termination benefit of $2,125 , which will be recorded in the Partnership's Consolidated Statement of Operations in the fourth quarter of 2014.

Subsequent to the termination on October 9, 2014, the Partnership entered into two fixed-to-variable interest rate swap agreements, each with an aggregate notional amount of $50,000 to hedge its exposure to changes in the fair value of its senior unsecured notes. On October 14, 2014, the Partnership terminated each of these two swaps, receiving a termination benefit of $500 , which will be recorded in the Partnership's Consolidated Statement of Operations in the fourth quarter of 2014.

Subsequent to the termination on October 14, 2014, the Partnership entered into two fixed-to-variable interest rate swap agreements, each with an aggregate notional amount of $50,000 to hedge its exposure to changes in the fair value of its senior unsecured notes. On October 14, 2014, the Partnership terminated each of these two swaps, receiving a termination benefit of $710 , which will be recorded in the Partnership's Consolidated Statement of Operations in the fourth quarter of 2014.

(8)
Fair Value Measurements

The Partnership follows the provisions of ASC 820 related to fair value measurements and disclosures, which established a framework for measuring fair value and expanded disclosures about fair value measurements. The adoption of this guidance had no impact on the Partnership’s financial position or results of operations.

ASC 820 applies to all assets and liabilities that are being measured and reported on a fair value basis. This statement enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value of each asset and liability carried at fair value into one of the following categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.

The following items are measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 at September 30, 2014 and December 31, 2013:
 
Fair Value Measurements at Reporting Date Using
 
 
 
Quoted Prices in
Active Markets for
Identical Assets
 
Significant Other
Observable Inputs
 
Significant
Unobservable
Inputs
Description
September 30, 2014
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
 
 
 
 
 
 
Interest rate contracts
$
49

 
$
—

 
$
49

 
$
—

Commodity contracts
830

 
—

 
830

 
—

Note receivable - Martin Energy Trading
15,748

 
—

 
—

 
15,748

Total assets
$
16,627

 
$
—

 
$
879

 
$
15,748

 
 
 
 
 
 
 
 
Liabilities
 

 
 

 
 

 
 

2021 Senior unsecured notes
$
420,874

 
$
—

 
$
420,874

 
$
—

Interest rate contracts
542

 
—

 
542

 
—

Total liabilities
$
421,416

 
$
—

 
$
421,416

 
$
—

            

15
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



 
Fair Value Measurements at Reporting Date Using
 
 
 
Quoted Prices in
Active Markets for
Identical Assets
 
Significant Other
Observable Inputs
 
Significant
Unobservable
Inputs
Description
December 31, 2013
 
(Level 1)
 
(Level 2)
 
(Level 3)
Liabilities
 

 
 

 
 

 
 

2018 Senior unsecured notes
$
185,816

 
$
—

 
$
185,816

 
$
—

2021 Senior unsecured notes
258,004

 
—

 
258,004

 
—

Total liabilities
$
443,820

 
$
—

 
$
443,820

 
$
—


FASB ASC 825-10-65, Disclosures about Fair Value of Financial Instruments, requires that the Partnership disclose estimated fair values for its financial instruments. Fair value estimates are set forth below for the Partnership’s financial instruments. The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

•
Accounts and other receivables, trade and other accounts payable, accrued interest payable, other accrued liabilities, income taxes payable and due from/to affiliates: The carrying amounts approximate fair value due to the short maturity and highly liquid nature of these instruments, and as such these have been excluded from the table above.

•
Long-term debt including current portion: The carrying amount of the revolving credit facility approximates fair value due to the debt having a variable interest rate and is in Level 2.  The estimated fair value of the senior unsecured notes is based on market prices of similar debt. The estimated fair value of the note receivable from Martin Energy Trading was determined by calculating the net present value of the interest payments over the life of the note. The note is considered Level 3 due to the lack of observable inputs for similar transactions between related parties.

(9)
Supplemental Balance Sheet Information

Components of "Other assets, net" were as follows:
 
September 30, 2014
 
December 31, 2013
Customer contracts and relationships
$
77,234

 
$
—

Other intangible assets
2,317

 
2,696

Other
6,880

 
5,247

 
$
86,431

 
$
7,943

    
Components of "Other accrued liabilities" were as follows:
 
September 30, 2014
 
December 31, 2013
Accrued interest
$
3,700

 
$
11,038

Property and other taxes payable
7,478

 
6,785

Accrued payroll
1,693

 
2,186

Other
170

 
233

 
$
13,041

 
$
20,242


(10)
Long-Term Debt

At September 30, 2014 and December 31, 2013, long-term debt consisted of the following:

16
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



 
September 30,
2014
 
December 31,
2013
$900,000 3  Revolving credit facility at variable interest rate (2.92% 1  weighted average at September 30, 2014), due March 2018 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in the Partnership’s operating subsidiaries and equity method investees
$
508,000

 
$
235,000

$200,000 2  Senior notes, 8.875% interest, net of unamortized discount of $0 and $1,305, respectively, issued March 2010 and due April 2018, unsecured
—

 
173,695

$400,000 Senior notes, 7.250% interest, including unamortized premium of $2,086 and $0, respectively, issued $250,000 February 2013 and $150,000 April 2014, due February 2021, unsecured 2
402,077

 
250,000

Total long-term debt
910,077

 
658,695

Less current installments
—

 
—

Long-term debt, net of current installments
$
910,077

 
$
658,695


      1 Interest rate fluctuates based on the LIBOR rate plus an applicable margin set on the date of each advance. The margin above LIBOR is set every three months. Indebtedness under the credit facility bears interest at LIBOR plus an applicable margin or the base prime rate plus an applicable margin. The applicable margin for revolving loans that are LIBOR loans ranges from 1.75% to 2.75% and the applicable margin for revolving loans that are base prime rate loans ranges from 0.75% to 1.75% .  The applicable margin for existing LIBOR borrowings at September 30, 2014 is 2.75% . The credit facility contains various covenants which limit the Partnership’s ability to make certain investments and acquisitions; enter into certain agreements; incur indebtedness; sell assets; and make certain amendments to the Partnership's omnibus agreement with Martin Resource Management (the "Omnibus Agreement"). The Partnership is permitted to make quarterly distributions so long as no event of default exists.

2 Pursuant to the Indenture under which the Senior Notes due in 2018 were issued, the Partnership had the option to redeem up to 35% of the aggregate principal amount at a redemption price of 108.875% of the principal amount, plus accrued and unpaid interest with the proceeds of certain equity offerings.  On April 1, 2014, the Partnership redeemed the remaining $175,000  of the 8.875% senior unsecured notes due in 2018 from all holders.  On April 1, 2014, the Partnership completed a private placement add-on of $150,000 in aggregate principal amount of 7.250% senior unsecured notes due February 2021 to qualified institutional buyers under Rule 144A.  The Partnership filed with the SEC a registration statement to exchange these notes for substantially identical notes that are registered under the Securities Act and commenced an exchange offer on April 28, 2014. The exchange offer was completed during the second quarter of 2014. In conjunction with this redemption, the Partnership incurred a debt prepayment premium of $7,767 , recorded on the Partnership's Consolidated and Condensed Statement of Operations for the nine months ended September 30, 2014. Also in conjunction with the redemption, the Partnership expensed $2,643 and $1,228 of unamortized debt issuance costs and unamortized discount on notes payable, respectively, which is included in "Interest expense" on the Partnership's Consolidated and Condensed Statement of Operations for the nine months ended September 30, 2014.

3 On June 27, 2014, the Partnership increased the maximum amount of borrowings and letters of credit available under the Partnership's revolving credit facility from $637,500 to $900,000 .

The Partnership paid cash interest in the amount of $17,346 and $11,289 for the three months ended September 30, 2014 and 2013 , respectively.  The Partnership paid cash interest in the amount of $35,770 and $22,897 for the nine months ended September 30, 2014 and 2013 , respectively.  Capitalized interest was $234 and $326 for the three months ended September 30, 2014 and 2013 , respectively. Capitalized interest was $957 and $744 for the nine months ended September 30, 2014 and 2013, respectively.


17
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



(11)
Partners' Capital

As of  September 30, 2014 , partners’ capital consisted of  35,349,699  common limited partner units, representing a  98% partnership interest and a  2%  general partner interest. Martin Resource Management, through subsidiaries, owned 6,264,532  of the Partnership's common limited partnership units representing approximately  17.7%  of the Partnership's outstanding common limited partnership units. MMGP, the Partnership's general partner, owns the  2%  general partnership interest. Martin Resource Management controls the Partnership's general partner, by virtue of its 51% voting interest in Holdings, the sole member of the Partnership's general partner.

The partnership agreement of the Partnership (the “Partnership Agreement”) contains specific provisions for the allocation of net income and losses to each of the partners for purposes of maintaining their respective partner capital accounts.

Issuance of Common Units

On September 29, 2014, the Partnership completed a public offering of 3,450,000 common units at a price of $36.91 per common unit, before the payment of underwriters' discounts, commissions and offering expenses (per unit value is in dollars, not thousands). Total proceeds from the sale of the 3,450,000 common units, net of underwriters' discounts, commissions and offering expenses were $122,587 . The Partnership's general partner contributed $2,599 in cash to the Partnership in conjunction with the issuance in order to maintain its 2% general partner interest in the Partnership. All of the net proceeds were used to pay down outstanding amounts under the Partnership's revolving credit facility.

On August 29, 2014, the Partnership closed a private equity sale with Martin Resource Management, under which Martin Resource Management invested $45,000 in cash in exchange for 1,171,265 common units. The pricing of $38.42 per common unit was based on the 10 -day weighted average price of the Partnership's common units for the 10 trading days ending August 8, 2014. In connection with the issuance of these common units, the Partnership's general partner contributed $918 in order to maintain its 2% general partner interest in the Partnership. The proceeds from the common unit issuances were used to pay down outstanding amounts under the Partnership's revolving credit facility.

On May 12, 2014, the Partnership completed a public offering of 3,600,000 common units at a price of $41.51 per common unit, before the payment of underwriters' discounts, commissions and offering expenses (per unit value is in dollars, not thousands).  Total proceeds from the sale of the 3,600,000 common units, net of underwriters' discounts, commissions and offering expenses were $143,431 .  The Partnership's general partner contributed $3,049 in cash to the Partnership in conjunction with the issuance in order to maintain its 2% general partner interest in the Partnership.  All of the net proceeds were used to pay down outstanding amounts under the Partnership's revolving credit facility.

In March 2014, the Partnership entered into an equity distribution agreement with multiple underwriters (the “Sales Agents”) for the ongoing distribution of the Partnership's common units. Pursuant to this program, the Partnership offered and sold common unit equity through the Sales Agents for net proceeds of $3,467 and $20,551 during the three and nine months ended September 30, 2014 , respectively. The Partnership paid $71 and $332 in compensation to the Sales Agents for the three and nine months ended September 30, 2014, respectively. Under the the program, the Partnership issued 89,252 and 506,408 common units during the three and nine months ended September 30, 2014, respectively. Common units issued were at market prices prevailing at the time of the sale. The Partnership also received capital contributions from the general partner of $72 and $428 during the three and nine months ended September 30, 2014 , respectively, to maintain its 2.0% general partner interest in the Partnership. The net proceeds from the common unit issuances were used to pay down outstanding amounts under the Partnership's revolving credit facility.

Incentive Distribution Rights

The Partnership’s general partner, MMGP, holds a 2% general partner interest and certain incentive distribution rights (“IDRs”) in the Partnership. IDRs are a separate class of non-voting limited partner interest that may be transferred or sold by the general partner under the terms of the Partnership Agreement, and represent the right to receive an increasing percentage of cash distributions after the minimum quarterly distribution and any cumulative arrearages on common units once certain target distribution levels have been achieved. The Partnership is required to distribute all of its available cash from operating surplus, as defined in the Partnership Agreement. On October 2, 2012, the Partnership Agreement was amended to provide that the general partner shall forego the next $18,000 in incentive distributions that it would otherwise be entitled to receive.

18
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



Additionally, on May 5, 2014, the owner of our general partner agreed to forego an additional $3,000 in incentive distributions. No incentive distributions were allocated to the general partner from July 1, 2012 through September 30, 2014. As of September 30, 2014 , the amount of incentive distributions the general partner has foregone is $16,963 , resulting in an amount remaining of $4,037 .
 
The target distribution levels entitle the general partner to receive 2% of quarterly cash distributions up to $0.55 per unit, 15% of quarterly cash distributions in excess of $0.55 per unit until all unitholders have received $0.625 per unit, 25% of quarterly cash distributions in excess of $0.625 per unit until all unitholders have received $0.75 per unit and 50% of quarterly cash distributions in excess of $0.75 per unit.
 
Distributions of Available Cash

The Partnership distributes all of its available cash (as defined in the Partnership Agreement) within  45  days after the end of each quarter to unitholders of record and to the general partner. Available cash is generally defined as all cash and cash equivalents of the Partnership on hand at the end of each quarter less the amount of cash reserves its general partner determines in its reasonable discretion is necessary or appropriate to: (i) provide for the proper conduct of the Partnership’s business; (ii) comply with applicable law, any debt instruments or other agreements; or (iii) provide funds for distributions to unitholders and the general partner for any one or more of the next four quarters, plus all cash on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter.

Net Income per Unit

The Partnership follows the provisions of the FASB ASC 260-10 related to earnings per share, which addresses the application of the two-class method in determining income per unit for master limited partnerships having multiple classes of securities that may participate in partnership distributions accounted for as equity distributions. Undistributed earnings are allocated to the general partner and limited partners utilizing the contractual terms of the Partnership Agreement. Distributions to the general partner pursuant to the IDRs are limited to available cash that will be distributed as defined in the Partnership Agreement. Accordingly, the Partnership does not allocate undistributed earnings to the general partner for the IDRs because the general partner's share of available cash is the maximum amount that the general partner would be contractually entitled to receive if all earnings for the period were distributed. When current period distributions are in excess of earnings, the excess distributions for the period are to be allocated to the general partner and limited partners based on their respective sharing of losses specified in the Partnership Agreement. Additionally, as required under FASB ASC 260-10-45-61A, unvested share-based payments that entitle employees to receive non-forfeitable distributions are considered participating securities, as defined in FASB ASC 260-10-20, for earnings per unit calculations.

For purposes of computing diluted net income per unit, the Partnership uses the more dilutive of the two-class and if-converted methods. Under the if-converted method, the weighted-average number of subordinated units outstanding for the period is added to the weighted-average number of common units outstanding for purposes of computing basic net income per unit and the resulting amount is compared to the diluted net income per unit computed using the two-class method. The following is a reconciliation of net income allocated to the general partner and limited partners for purposes of calculating net income attributable to limited partners per unit:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Net income (loss) attributable to Martin Midstream Partners L.P.
$
(26,905
)
 
$
192

 
$
(16,078
)
 
$
25,907

Less general partner’s interest in net income:
 
 
 
 
 
 
 
Distributions payable on behalf of general partner interest
552

 
467

 
1,506

 
1,384

Distributions payable to the general partner interest in excess of earnings allocable to the general partner interest
(1,091
)
 
(463
)
 
(1,828
)
 
(866
)
Less income (loss) allocable to unvested restricted units
(62
)
 
1

 
(33
)
 
67

Limited partners’ interest in net income (loss)
$
(26,304
)
 
$
187

 
$
(15,723
)
 
$
25,322



19
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



The weighted average units outstanding for basic net income per unit were 32,242,571 and 29,271,205 for the three and nine months ended September 30, 2014 , respectively, and 26,552,028 and 26,561,406 for the three and nine months ended September 30, 2013 , respectively.  All outstanding units were included in the computation of diluted earnings per unit and weighted based on the number of days such units were outstanding during the period presented. All common unit equivalents were antidilutive for the three and nine months ended September 30, 2014 because the limited partners were allocated a net loss in these periods. For diluted net income per unit, the weighted average units outstanding were increased by 26,632 and 19,757 for the three and nine months ended September 30, 2013 , respectively, due to the dilutive effect of restricted units granted under the Partnership’s long-term incentive plan.

(12)
Related Party Transactions

As of September 30, 2014 , Martin Resource Management owned 6,264,532 of the Partnership’s common units representing approximately 17.7% of the Partnership’s outstanding limited partnership units.  Martin Resource Management controls the Partnership's general partner by virtue of its 51% voting interest in Holdings, the sole member of the Partnership's general partner. The Partnership’s general partner, MMGP, owns a 2.0% general partner interest in the Partnership and the Partnership’s IDRs.  The Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management’s ownership as of September 30, 2014 , of approximately 17.7% of the Partnership’s outstanding limited partnership units, effectively gives Martin Resource Management the ability to veto some of the Partnership’s actions and to control the Partnership’s management.
 
The following is a description of the Partnership’s material related party agreements and transactions:
 
Omnibus Agreement
 
       Omnibus Agreement .  The Partnership and its general partner are parties to the Omnibus Agreement dated November 1, 2002, with Martin Resource Management that governs, among other things, potential competition and indemnification obligations among the parties to the agreement, related party transactions, the provision of general administration and support services by Martin Resource Management and the Partnership’s use of certain Martin Resource Management trade names and trademarks. The Omnibus Agreement was amended on November 25, 2009, to include processing crude oil into finished products including naphthenic lubricants, distillates, asphalt and other intermediate cuts. The Omnibus Agreement was amended further on October 1, 2012, to permit the Partnership to provide certain lubricant packaging products and services to Martin Resource Management.

Non-Competition Provisions . Martin Resource Management has agreed for so long as it controls the general partner of the Partnership, not to engage in the business of:

•
providing terminalling and storage services for petroleum products and by-products including the refining, blending and packaging of finished lubricants;

• providing marine transportation of petroleum products and by-products;

• distributing NGLs; and

• manufacturing and selling sulfur-based fertilizer products and other sulfur-related products.

This restriction does not apply to:

•
the ownership and/or operation on the Partnership’s behalf of any asset or group of assets owned by it or its affiliates;

•
any business operated by Martin Resource Management, including the following:

◦
providing land transportation of various liquids;

◦
distributing fuel oil, sulfuric acid, marine fuel and other liquids;

◦
providing marine bunkering and other shore-based marine services in Alabama, Florida, Louisiana, Mississippi and Texas;


20
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



◦
operating a crude oil gathering business in Stephens, Arkansas;

◦
providing crude oil gathering, refining, and marketing services of base oils, asphalt, and distillate products in Smackover, Arkansas;

◦
operating an environmental consulting company;

◦
operating an engineering services company;

◦
supplying employees and services for the operation of the Partnership's business;

◦
operating a natural gas optimization business;

◦
operating, for its account and the Partnership's account, the docks, roads, loading and unloading facilities and other common use facilities or access routes at the Partnership's Stanolind terminal; and

◦
operating, solely for the Partnership's account, the asphalt facilities in Omaha, Nebraska, Port Neches, Texas and South Houston, Texas.

•
any business that Martin Resource Management acquires or constructs that has a fair market value of less than $5,000 ;

•
any business that Martin Resource Management acquires or constructs that has a fair market value of $5,000 or more if the Partnership has been offered the opportunity to purchase the business for fair market value and the Partnership declines to do so with the concurrence of the conflicts committee of the board of directors of the general partner of the Partnership (the "Conflicts Committee"); and

•
any business that Martin Resource Management acquires or constructs where a portion of such business includes a restricted business and the fair market value of the restricted business is $5,000 or more and represents less than 20% of the aggregate value of the entire business to be acquired or constructed; provided that, following completion of the acquisition or construction, the Partnership will be provided the opportunity to purchase the restricted business.
    
Services.   Under the Omnibus Agreement, Martin Resource Management provides the Partnership with corporate staff, support services, and administrative services necessary to operate the Partnership’s business. The Omnibus Agreement requires the Partnership to reimburse Martin Resource Management for all direct expenses it incurs or payments it makes on the Partnership’s behalf or in connection with the operation of the Partnership’s business. There is no monetary limitation on the amount the Partnership is required to reimburse Martin Resource Management for direct expenses.  In addition to the direct expenses, under the Omnibus Agreement, the Partnership is required to reimburse Martin Resource Management for indirect general and administrative and corporate overhead expenses.

Effective January 1, 2014, through December 31, 2014, the Conflicts Committee approved an annual reimbursement amount for indirect expenses of $12,535 .  The Partnership reimbursed Martin Resource Management for $3,134 and $2,655 of indirect expenses for the three months ended September 30, 2014 and 2013 , respectively.  The Partnership reimbursed Martin Resource Management for $9,401 and $7,966 of indirect expenses for the nine months ended September 30, 2014 and 2013 , respectively.  The Conflicts Committee will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.

These indirect expenses are intended to cover the centralized corporate functions Martin Resource Management provides for the Partnership, such as accounting, treasury, clerical, engineering, legal, billing, information technology, administration of insurance, general office expenses and employee benefit plans and other general corporate overhead functions the Partnership shares with Martin Resource Management retained businesses. The provisions of the Omnibus Agreement regarding Martin Resource Management’s services will terminate if Martin Resource Management ceases to control the general partner of the Partnership.

Related  Party Transactions . The Omnibus Agreement prohibits the Partnership from entering into any material agreement with Martin Resource Management without the prior approval of the Conflicts Committee. For purposes of the

21
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



Omnibus Agreement, the term material agreements means any agreement between the Partnership and Martin Resource Management that requires aggregate annual payments in excess of then-applicable agreed upon reimbursable amount of indirect general and administrative expenses. Please read “Services” above.

License Provisions. Under the Omnibus Agreement, Martin Resource Management has granted the Partnership a nontransferable, nonexclusive, royalty-free right and license to use certain of its trade names and marks, as well as the trade names and marks used by some of its affiliates.

Amendment and Termination. The Omnibus Agreement may be amended by written agreement of the parties; provided, however, that it may not be amended without the approval of the Conflicts Committee if such amendment would adversely affect the unitholders. The Omnibus Agreement was first amended on November 25, 2009, to permit the Partnership to provide refining services to Martin Resource Management.  The Omnibus Agreement was amended further on October 1, 2012, to permit the Partnership to provide certain lubricant packaging products and services to Martin Resource Management.  Such amendments were approved by the Conflicts Committee.  The Omnibus Agreement, other than the indemnification provisions and the provisions limiting the amount for which the Partnership will reimburse Martin Resource Management for general and administrative services performed on its behalf, will terminate if the Partnership is no longer an affiliate of Martin Resource Management.

Motor Carrier Agreement

Motor Carrier Agreement.   The Partnership is a party to a motor carrier agreement effective January 1, 2006 as amended, with Martin Transport, Inc., a wholly owned subsidiary of Martin Resource Management through which Martin Transport, Inc. operates its land transportation operations. Under the agreement, Martin Transport, Inc. agreed to transport the Partnership's NGLs as well as other liquid products.

Term and Pricing. The agreement has an initial term that expired in December 2007 but automatically renews for consecutive one year periods unless either party terminates the agreement by giving written notice to the other party at least 30 days prior to the expiration of the then-applicable term.  The Partnership has the right to terminate this agreement at any time by providing 90 days prior notice. These rates are subject to any adjustments which are mutually agreed upon or in accordance with a price index. Additionally, during the term of the agreement, shipping charges are also subject to fuel surcharges determined on a weekly basis in accordance with the U.S. Department of Energy’s national diesel price list.

Indemnification.   Martin Transport, Inc. has indemnified the Partnership against all claims arising out of the negligence or willful misconduct of Martin Transport, Inc. and its officers, employees, agents, representatives and subcontractors. The Partnership indemnified Martin Transport, Inc. against all claims arising out of the negligence or willful misconduct of us and our officers, employees, agents, representatives and subcontractors. In the event a claim is the result of the joint negligence or misconduct of Martin Transport, Inc. and the Partnership, our indemnification obligations will be shared in proportion to each party’s allocable share of such joint negligence or misconduct.

Marine Agreements

Marine Transportation Agreement. The Partnership is a party to a marine transportation agreement effective January 1, 2006, which was amended January 1, 2007, under which the Partnership provides marine transportation services to Martin Resource Management on a spot-contract basis at applicable market rates.  Effective each January 1, this agreement automatically renews for consecutive one year periods unless either party terminates the agreement by giving written notice to the other party at least 60 days prior to the expiration of the then applicable term. The fees the Partnership charges Martin Resource Management are based on applicable market rates.

Marine Fuel.   The Partnership is a party to an agreement with Martin Resource Management dated November 1, 2002 under which Martin Resource Management provides the Partnership with marine fuel from its locations in the Gulf of Mexico at a fixed rate in excess of the Platt’s U.S. Gulf Coast Index for #2 Fuel Oil.  Under this agreement, the Partnership agreed to purchase all of its marine fuel requirements that occur in the areas serviced by Martin Resource Management.


22
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



Terminal Services Agreements

Diesel Fuel Terminal Services Agreement.   The Partnership is a party to an agreement under which the Partnership provides terminal services to Martin Resource Management. This agreement was amended and restated as of October 27, 2004, and was set to expire in December 2006, but automatically renewed and will continue to automatically renew on a month-to-month basis until either party terminates the agreement by giving 60 days written notice.  The per gallon throughput fee the Partnership charges under this agreement may be adjusted annually based on a price index.

Miscellaneous Terminal Services Agreements.   The Partnership is a party to several terminal services agreements and from time to time the Partnership may enter into other terminal service agreements for the purpose of providing terminal services to related parties. Individually, each of these agreements is immaterial but when considered in the aggregate they could be deemed material. These agreements are throughput based with a minimum volume commitment. Generally, the fees due under these agreements are adjusted annually based on a price index.

Talen's Agreements . In connection with the Talen's Marine & Fuel LLC ("Talens") acquisition, three new agreements were executed, all with effective dates of December 31, 2012. Under the terms of these contracts, Talen's provides terminal services to Martin Resource Management. The terminal services agreements both have five -year terms and provide a per gallon throughput rate, which may be adjusted annually based on a price index.

Other Agreements

 Cross Tolling Agreement. The Partnership is a party to an amended and restated tolling agreement with Cross, dated October 28, 2014, under which the Partnership processes crude oil into finished products, including naphthenic lubricants, distillates, asphalt and other intermediate cuts for Cross.  The tolling agreement expires November 25, 2031.  Under this tolling agreement, Cross agreed to process a minimum of 6,500 barrels per day of crude oil at the facility at a fixed price per barrel.  Any additional barrels are processed at a modified price per barrel.  In addition, Cross agreed to pay a monthly reservation fee and a periodic fuel surcharge fee based on certain parameters specified in the tolling agreement.  All of these fees (other than the fuel surcharge) are subject to escalation annually based upon the greater of 3% or the increase in the Consumer Price Index for a specified annual period.  In addition, on the third, sixth and ninth anniversaries of the agreement, the parties can negotiate an upward or downward adjustment in the fees subject to their mutual agreement.

Sulfuric Acid Sales Agency Agreement . The Partnership is party to a second amended and restated sulfuric acid sales agency agreement dated August 5, 2013, under which Martin Resource Management purchases and markets the sulfuric acid produced by the Partnership’s sulfuric acid production plant at Plainview, Texas, that is not consumed by the Partnership’s internal operations.  This agreement, as amended, will remain in place until the Partnership terminates it by providing 180 days written notice.  Under this agreement, the Partnership sells all of its excess sulfuric acid to Martin Resource Management. Martin Resource Management then markets such acid to third parties and the Partnership shares in the profit of Martin Resource Management’s sales of the excess acid to such third parties.

Other Miscellaneous Agreements. From time to time the Partnership enters into other miscellaneous agreements with Martin Resource Management for the provision of other services or the purchase of other goods.

The tables below summarize the related party transactions that are included in the related financial statement captions on the face of the Partnership’s Consolidated and Condensed Statements of Operations. The revenues, costs and expenses reflected in these tables are tabulations of the related party transactions that are recorded in the corresponding caption of the consolidated and condensed financial statement and do not reflect a statement of profits and losses for related party transactions.

The impact of related party revenues from sales of products and services is reflected in the consolidated and condensed financial statements as follows:

23
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Terminalling and storage
$
19,045

 
$
18,044

 
$
55,798

 
$
52,857

Marine transportation
6,076

 
5,943

 
18,340

 
18,828

Product sales:
 
 
 
 
 
 
 
Natural gas services
—

 
—

 
3,046

 
9

Sulfur services
708

 
809

 
2,931

 
3,460

Terminalling and storage
175

 
155

 
507

 
543

 
883

 
964

 
6,484

 
4,012

 
$
26,004

 
$
24,951

 
$
80,622

 
$
75,697


The impact of related party cost of products sold is reflected in the consolidated and condensed financial statements as follows:
Cost of products sold:
 
 
 
 
 
 
 
Natural gas services
$
9,908

 
$
7,799

 
$
29,169

 
$
23,391

Sulfur services
4,491

 
4,539

 
13,808

 
13,514

Terminalling and storage
9,174

 
13,488

 
25,571

 
39,638

 
$
23,573

 
$
25,826

 
$
68,548

 
$
76,543


The impact of related party operating expenses is reflected in the consolidated and condensed financial statements as follows:
Operating Expenses:
 
 
 
 
 
 
 
Marine transportation
$
10,198

 
$
9,697

 
$
28,685

 
$
29,260

Natural gas services
1,510

 
542

 
2,914

 
1,496

Sulfur services
2,121

 
2,115

 
5,641

 
6,405

Terminalling and storage
7,184

 
5,548

 
21,260

 
16,249

 
$
21,013

 
$
17,902

 
$
58,500

 
$
53,410


The impact of related party selling, general and administrative expenses is reflected in the consolidated and condensed financial statements as follows:
Selling, general and administrative:
 
 
 
 
 
 
 
Marine transportation
$
8

 
$
15

 
$
23

 
$
45

Natural gas services
2,647

 
635

 
4,751

 
1,623

Sulfur services
840

 
748

 
2,503

 
2,360

Terminalling and storage
317

 
291

 
1,045

 
935

Indirect overhead allocation, net of reimbursement
3,418

 
2,667

 
9,781

 
7,981

 
$
7,230

 
$
4,356

 
$
18,103

 
$
12,944


Other Related Party Transactions

As discussed in Note 6, during March 2013, the Partnership acquired 100% of the preferred interests in MET, a subsidiary of Martin Resource Management, for $15,000 . On August 31, 2014, MET converted its preferred equity to subordinated debt. The resulting $15,000 note receivable from MET bears an annual interest rate of 15% and matures August 31, 2026. MET may prepay any or all of the note balance on or after September 1, 2016. The note is recorded in "Note receivable - Martin Energy Trading" on the Partnership's Consolidated and Condensed Balance Sheet. Interest income for the

24
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



three and nine months ended September 30, 2014 was $185 and is included in "Interest expense, net" in the Consolidated and Condensed Statements of Operations.

(13)
Income Taxes

The operations of the Partnership are generally not subject to income taxes because its income is taxed directly to its partners.
    
The Partnership is subject to the Texas margin tax which is included in income tax expense on the Consolidated and Condensed Statements of Operations. The Texas margin tax restructured the state business tax by replacing the taxable capital and earned surplus components of the existing franchise tax with a new “taxable margin” component. Since the tax base on the Texas margin tax is derived from an income-based measure, the margin tax is construed as an income tax and, therefore, the recognition of deferred taxes applies to the margin tax. The impact on deferred taxes as a result of this provision is immaterial.  State income taxes attributable to the Texas margin tax of $300 and $303 were recorded in income tax expense for the three months ended September 30, 2014 and 2013 , respectively. State income taxes attributable to the Texas margin tax of $954 and $910 were recorded in income tax expense for the nine months ended September 30, 2014 and 2013 , respectively.

(14)
Business Segments

The Partnership has four reportable segments: terminalling and storage, natural gas services, sulfur services and marine transportation. The Partnership’s reportable segments are strategic business units that offer different products and services. The operating income of these segments is reviewed by the chief operating decision maker to assess performance and make business decisions.

The accounting policies of the operating segments are the same as those described in Note 2 in the Partnership’s annual report on Form 10-K for the year ended December 31, 2013 , filed with the SEC on March 3, 2014, as amended, by Amendment No. 1 on Form 10-K/A for the year ended December 31, 2013 filed on March 28, 2014. The Partnership evaluates the performance of its reportable segments based on operating income. There is no allocation of administrative expenses or interest expense.    
 
Operating Revenues
 
Intersegment Revenues Eliminations
 
Operating Revenues after Eliminations
 
Depreciation and Amortization
 
Operating Income (Loss) after Eliminations
 
Capital Expenditures
Three Months Ended September 30, 2014
 
 
 
 
 
 
 
 
 
 
 
Terminalling and storage
$
80,948

 
$
(1,333
)
 
$
79,615

 
$
9,512

 
$
5,920

 
$
9,735

Natural gas services
236,058

 
—

 
236,058

 
2,684

 
7,484

 
4,611

Sulfur services
50,030

 
—

 
50,030

 
2,078

 
1,635

 
694

Marine transportation
25,859

 
(1,577
)
 
24,282

 
2,469

 
1,455

 
2,245

Indirect selling, general and administrative
—

 
—

 
—

 
—

 
(4,479
)
 
—

Total
$
392,895

 
$
(2,910
)
 
$
389,985

 
$
16,743

 
$
12,015

 
$
17,285


25
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



 
Operating Revenues
 
Intersegment Revenues Eliminations
 
Operating Revenues after Eliminations
 
Depreciation and Amortization
 
Operating Income (Loss) after Eliminations
 
Capital Expenditures
Three Months Ended September 30, 2013
 

 
 

 
 

 
 

 
 

 
 

Terminalling and storage
$
90,205

 
$
(1,199
)
 
$
89,006

 
$
8,532

 
$
7,350

 
$
33,563

Natural gas services
204,926

 
—

 
204,926

 
598

 
5,466

 
2,398

Sulfur services
42,097

 
—

 
42,097

 
2,024

 
(527
)
 
2,068

Marine transportation
24,751

 
(1,164
)
 
23,587

 
2,544

 
3,733

 
1,943

Indirect selling, general and administrative
—

 
—

 
—

 
—

 
(3,779
)
 
—

Total
$
361,979

 
$
(2,363
)
 
$
359,616

 
$
13,698

 
$
12,243

 
$
39,972

Nine Months Ended September 30, 2014
Operating Revenues
 
Intersegment Revenues Eliminations
 
Operating Revenues after Eliminations
 
Depreciation and Amortization
 
Operating Income (Loss) after Eliminations
 
Capital Expenditures
Terminalling and storage
$
255,162

 
$
(3,863
)
 
$
251,299

 
$
27,902

 
$
22,596

 
$
39,131

Natural gas services
818,361

 
—

 
818,361

 
3,863

 
22,764

 
5,185

Sulfur services
166,818

 
—

 
166,818

 
6,092

 
17,589

 
3,775

Marine transportation
73,255

 
(3,775
)
 
69,480

 
7,472

 
3,895

 
10,431

Indirect selling, general and administrative
—

 
—

 
—

 
—

 
(14,214
)
 
—

Total
$
1,313,596

 
$
(7,638
)
 
$
1,305,958

 
$
45,329

 
$
52,630

 
$
58,522

Nine Months Ended September 30, 2013
Operating Revenues
 
Intersegment Revenues Eliminations
 
Operating Revenues after Eliminations
 
Depreciation and Amortization
 
Operating Income (Loss) after Eliminations
 
Capital Expenditures
Terminalling and storage
$
256,320

 
$
(3,507
)
 
$
252,813

 
$
22,925

 
$
25,968

 
$
59,930

Natural gas services
653,080

 
—

 
653,080

 
1,444

 
18,858

 
2,513

Sulfur services
173,378

 
—

 
173,378

 
5,947

 
16,518

 
2,690

Marine transportation
75,004

 
(2,785
)
 
72,219

 
7,628

 
8,813

 
3,458

Indirect selling, general and administrative
—

 
—

 
—

 
—

 
(11,270
)
 
—

Total
$
1,157,782

 
$
(6,292
)
 
$
1,151,490

 
$
37,944

 
$
58,887

 
$
68,591


The "Impairment of long-lived assets" recorded on the Partnership's Consolidated and Condensed Statement of Operations for the three and nine months ended September 30, 2014 is included in results of operations for the Partnership's Marine Transportation segment results in the table above. The impairment is a reduction in the carrying value related to the recoverability of one offshore tow in the amount of $3,445 , which was related to the tow's ability to generate cash flows in recent quarters.
    
The Partnership's assets by reportable segment as of September 30, 2014 and December 31, 2013 , are as follows:

26
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



 
September 30, 2014
 
December 31, 2013
Total assets:
 
 
 
Terminalling and storage
$
463,509

 
$
461,160

Natural gas services
817,864

 
320,631

Sulfur services
148,162

 
151,982

Marine transportation
159,201

 
164,146

Total assets
$
1,588,736

 
$
1,097,919


(15)
Unit Based Awards

The Partnership recognizes compensation cost related to unit-based awards to employees in its consolidated financial statements in accordance with certain provisions of ASC 718. The Partnership recognizes compensation costs related to unit-based awards to directors under certain provisions of ASC 505-50-55 related to equity-based payments to non-employees. Amounts recognized in selling, general, and administrative expense in the consolidated and condensed financial statements with respect to these plans are as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Employees
$
145

 
$
181

 
$
429

 
$
533

Non-employee directors
56

 
76

 
160

 
204

   Total unit-based compensation expense
$
201

 
$
257

 
$
589

 
$
737


Long-Term Incentive Plans
    
      The Partnership's general partner has a long term incentive plan for employees and directors of the general partner and its affiliates who perform services for the Partnership.
  
The plan consists of two components, restricted units and unit options. The plan currently permits the grant of awards covering an aggregate of 725,000 common units, 241,667 of which may be awarded in the form of restricted units and 483,333 of which may be awarded in the form of unit options. The plan is administered by the compensation committee of the general partner’s board of directors (the "Compensation Committee").
  
Restricted Units.   A restricted unit is a unit that is granted to grantees with certain vesting restrictions. Once these restrictions lapse, the grantee is entitled to full ownership of the unit without restrictions. In addition, the restricted units will vest upon a change of control of the Partnership, the general partner or Martin Resource Management or if the general partner ceases to be an affiliate of Martin Resource Management. The Partnership intends the issuance of the common units upon vesting of the restricted units under the plan to serve as a means of incentive compensation for performance and not primarily as an opportunity to participate in the equity appreciation of the common units. Therefore, plan participants will not pay any consideration for the common units they receive, and the Partnership will receive no remuneration for the units. The restricted units issued to directors generally vest in equal annual installments over a four -year period. Restricted units issued to employees generally cliff vest after three years of service.
  
 The restricted units are valued at their fair value at the date of grant which is equal to the market value of common units on such date. A summary of the restricted unit activity for the nine months ended September 30, 2014 is provided below:

27
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



 
Number of Units
 
Weighted Average Grant-Date Fair Value Per Unit
Non-vested, beginning of period
72,998

 
$
33.08

   Granted
6,900

 
$
41.10

   Vested
(5,750
)
 
$
39.67

   Forfeited
(3,500
)
 
$
31.06

Non-Vested, end of period
70,648

 
$
33.42

 
 
 
 
Aggregate intrinsic value, end of period
$
2,634

 
 
  
A summary of the restricted units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) during the three and nine months ended September 30, 2014 and 2013 are provided below:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Aggregate intrinsic value of units vested
$
—

 
$
—

 
$
249

 
$
153

Fair value of units vested
$
—

 
$
—

 
$
247

 
$
157


As of September 30, 2014 , there was $1,201 of unrecognized compensation cost related to non-vested restricted units. That cost is expected to be recognized over a weighted-average period of 1.78  years.

Unit Options.   The plan currently permits the grant of options covering common units. As of September 30, 2014 , the Partnership has not granted any common unit options to directors or employees of the Partnership's general partner, or its affiliates. In the future, the Compensation Committee may determine to make grants under the plan to employees and directors containing such terms as the Compensation Committee shall determine. Unit options will have an exercise price that, in the discretion of the Compensation Committee, may not be less than the fair market value of the units on the date of grant. In addition, the unit options will become exercisable upon a change in control of the Partnership's general partner, Martin Resource Management or if the general partner ceases to be an affiliate of Martin Resource Management or upon the achievement of specified financial objectives.

(16)
Condensed Consolidating Financial Information

Martin Operating Partnership L.P. (the “Operating Partnership”), the Partnership’s wholly-owned subsidiary, has issued in the past, and may issue in the future, unconditional guarantees of senior or subordinated debt securities of the Partnership in the event that the Partnership issues such securities from time to time. The guarantees that have been issued are full, irrevocable and unconditional. In addition, the Operating Partnership may also issue senior or subordinated debt securities which, if issued, will be fully, irrevocably and unconditionally guaranteed by the Partnership.

The Partnership maintains as subsidiary guarantors the following entities: MOP Midstream Holdings LLC, Martin Midstream NGL Holdings, LLC and Martin Midstream NGL Holdings II, LLC, Cardinal Gas Storage Partners LLC, Perryville Gas Storage LLC, Arcadia Gas Storage, LLC, Cadeville Gas Storage LLC, and Monroe Gas Storage Company, LLC as subsidiary guarantors to its outstanding senior unsecured notes and has transferred substantially all of Talen's assets to certain of the Partnership's other subsidiary guarantors. Therefore, the Partnership no longer presents condensed consolidating financial information for any non-subsidiary guarantors.
    

28
MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
September 30, 2014
(Unaudited)



(17)
Commitments and Contingencies

From time to time, the Partnership is subject to various claims and legal actions arising in the ordinary course of business.  In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Partnership.

(18)
Subsequent Events

Cardinal/Redbird Merger. On October 27, 2014, Cardinal merged with and into Redbird Gas Storage LLC ("Redbird"), and Redbird subsequently changed its name to Cardinal Gas Storage Partners LLC.

Quarterly Distribution. On October 23, 2014, the Partnership declared a quarterly cash distribution of $0.8125 per common unit for the second quarter of 2014, or $3.25 per common unit on an annualized basis, which will be paid on November 14, 2014 to unitholders of record as of November 7, 2014.

Interest Rate Swaps. On October 9, 2014, the Partnership terminated its three interest rate swaps which were outstanding at September 30, 2014. In addition, the Partnership entered into and subsequently terminated four additional interest rate swaps in October 2014. The Partnership received aggregate termination benefits of $3,335 which will be recorded in the Partnership's Consolidated Statement of Operations in the fourth quarter of 2014. See Note 7 for additional discussion of these transactions.


29


Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

References in this quarterly report on Form 10-Q to “Martin Resource Management” refers to Martin Resource Management Corporation and its subsidiaries, unless the context otherwise requires. You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated and condensed financial statements and the notes thereto included elsewhere in this quarterly report.

Forward-Looking Statements

This quarterly report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements included in this quarterly report that are not historical facts (including any statements concerning plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto), including, without limitation, the information set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations, are forward-looking statements. These statements can be identified by the use of forward-looking terminology including “forecast,” “may,” “believe,” “will,” “expect,” “anticipate,” “estimate,” “continue,” or other similar words. These statements discuss future expectations, contain projections of results of operations or of financial condition or state other “forward-looking” information. We and our representatives may from time to time make other oral or written statements that are also forward-looking statements.

These forward-looking statements are made based upon management’s current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.

Because these forward-looking statements involve risks and uncertainties, actual results could differ materially from those expressed or implied by these forward-looking statements for a number of important reasons, including those discussed under “Item 1A. Risk Factors” of our Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2014, as amended, by Amendment No. 1 on Form 10-K/A for the year ended December 31, 2013 filed on March 28, 2014, and in this report.

Overview
 
We are a publicly traded limited partnership with a diverse set of operations focused primarily in the United States (“U.S.”) Gulf Coast region. Our four primary business lines include:

•
Terminalling and storage services for petroleum products and by-products including the refining, blending and packaging of finished lubricants;

•
Natural gas liquids distribution services and natural gas storage;

•
Sulfur and sulfur-based products gathering, processing, marketing, manufacturing and distribution; and

•
Marine transportation services for petroleum products and by-products.

The petroleum products and by-products we collect, transport, store and market are produced primarily by major and independent oil and gas companies who often turn to third parties, such as us, for the transportation and disposition of these products. In addition to these major and independent oil and gas companies, our primary customers include independent refiners, large chemical companies, fertilizer manufacturers and other wholesale purchasers of these products. We operate primarily in the U.S. Gulf Coast region. This region is a major hub for petroleum refining, natural gas gathering and processing, and support services for the exploration and production industry.

We were formed in 2002 by Martin Resource Management, a privately-held company whose initial predecessor was incorporated in 1951 as a supplier of products and services to drilling rig contractors. Since then, Martin Resource Management has expanded its operations through acquisitions and internal expansion initiatives as its management identified and capitalized on the needs of producers and purchasers of petroleum products and by-products and other bulk liquids. Martin Resource Management is an important supplier and customer of ours. As of September 30, 2014 , Martin Resource Management owned 17.7% of our total outstanding common limited partner units. Furthermore, Martin Resource Management

30

controls Martin Midstream GP LLC (“MMGP”), our general partner, by virtue of its 51% voting interest in MMGP Holdings, LLC (“Holdings”), the sole member of MMGP. MMGP owns a 2.0% general partner interest in us and all of our incentive distribution rights. Martin Resource Management directs our business operation through its ownership interests in and control of our general partner.

We entered into an omnibus agreement dated November 1, 2002, with Martin Resource Management (the “Omnibus Agreement”) that governs, among other things, potential competition and indemnification obligations among the parties to the agreement, related party transactions, the provision of general administration and support services by Martin Resource Management and our use of certain of Martin Resource Management’s trade names and trademarks. Under the terms of the Omnibus Agreement, the employees of Martin Resource Management are responsible for conducting our business and operating our assets.

The historical operation of our business segments by Martin Resource Management provides us with several decades of experience and a demonstrated track record of customer service across our operations.  Our current lines of business have been developed and systematically integrated over this period of more than 60 years, including natural gas services (1950s); sulfur (1960s); marine transportation (late 1980s); and terminalling and storage (early 1990s).  This development of a diversified and integrated set of assets and operations has produced a complementary portfolio of midstream services that facilitates the maintenance of long-term customer relationships and encourages the development of new customer relationships.

Recent Developments

We believe one of the rationales driving investment in master limited partnerships, including us, is the opportunity for distribution growth offered by the partnerships. Such distribution growth is a function of having access to liquidity in the financial markets used for incremental capital investment (development projects and acquisitions) to grow distributable cash flow.
 
We continually adjust our business strategy to focus on maximizing liquidity, maintaining a stable asset base which generates fee based revenues not sensitive to commodity prices, and improving profitability by increasing asset utilization and controlling costs. Over the past year, we have had access to the capital markets and have appropriate levels of liquidity and operating cash flows to adequately fund our growth. Over the next two years, we plan to increase expansion capital expenditures across our multiple business platforms.

Public Offering. On September 29, 2014, we completed a public offering of 3,450,000 common units at a price of $36.91 per common unit, before the payment of underwriters' discounts, commissions and offering expenses (per unit value is in dollars, not thousands).  Total proceeds from the sale of the 3,450,000 common units, net of underwriters' discounts, commissions and offering expenses were $122.6 million.  Our general partner contributed $2.6 million in cash to us in conjunction with the issuance in order to maintain its 2% general partner interest in us.  The net proceeds from the common unit issuances were used to pay down outstanding amounts under our revolving credit facility.

Private Placement of Common Units. On August 29, 2014, we closed a private equity sale with Martin Resource Management, under which Martin Resource Management invested $45.0 million in cash in exchange for 1,171,265 common units. The pricing of $38.42 per common unit was based on the 10-day weighted average price of our common units for the 10 trading days ending August 8, 2014. In connection with the issuance of these common units, our general partner contributed $0.9 million in order to maintain its 2% general partner interest in us. The proceeds from the common unit issuances were used to pay down outstanding amounts under our revolving credit facility.
    
Cardinal Gas Storage. On August 29, 2014, Redbird Gas Storage LLC (“Redbird”), a wholly owned subsidiary of the Partnership, completed the previously announced purchase of all of the outstanding Category A membership interests of Cardinal Gas Storage Partners LLC (“Cardinal”) from Energy Capital Partners I, LP, Energy Capital Partners I-A, LP, Energy Capital Partners I-B IP, LP and Energy Capital Partners I (Cardinal IP), LP (together, “ECP”) for cash of approximately $120.0 million, subject to certain post-closing adjustments. As a result of the acquisition, Redbird owns 100% of the Category A membership interests in Cardinal. Concurrent with the closing of the transaction, we retired all of the project level financing of various Cardinal subsidiaries. This transaction and repayment of the project financings was funded with borrowings under our revolving credit facility.

On October 27, 2014, Cardinal merged with and into Redbird, and Redbird subsequently changed its name to Cardinal.
    

31

Critical Accounting Policies and Estimates     

Our discussion and analysis of our financial condition and results of operations are based on the historical consolidated and condensed financial statements included elsewhere herein. We prepared these financial statements in conformity with United States generally accepted accounting principles (“U.S. GAAP” or “GAAP”). The preparation of these financial statements required us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We based our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. We routinely evaluate these estimates, utilizing historical experience, consultation with experts and other methods we consider reasonable in the particular circumstances. Our results may differ from these estimates, and any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Changes in these estimates could materially affect our financial position, results of operations or cash flows. You should also read Note 2, “Significant Accounting Policies” in Notes to Consolidated Financial Statements included within our Annual Report on Form 10-K for the year ended December 31, 2013. The following table evaluates the potential impact of estimates utilized during the periods ended September 30, 2014 and 2013 :

Description
 
Judgments and Uncertainties
 
Effect if Actual Results Differ from Estimates and Assumptions
Allowance for Doubtful Accounts
We evaluate our allowance for doubtful accounts on an ongoing basis and record adjustments when, in management's judgment, circumstances warrant. Reserves are recorded to reduce receivables to the amount ultimately expected to be collected.
 
We evaluate the collectability of our accounts receivable based on factors such as the customer's ability to pay, the age of the receivable and our historical collection experience. A deterioration in any of these factors could result in an increase in the allowance for doubtful accounts balance.
 
If actual collection results are not consistent with our judgments, we may experience increase in uncollectible receivables. A 10% increase in our allowance for doubtful accounts would result in a decrease in net income of approximately $0.2 million.
Depreciation
Depreciation expense is computed using the straight-line method over the useful life of the assets.
 
Determination of depreciation expense requires judgment regarding estimated useful lives and salvage values of property, plant and equipment. As circumstances warrant, estimates are reviewed to determine if any changes in the underlying assumptions are needed.
 
The lives of our fixed assets range from 3 - 50 years. If the depreciable lives of our assets were decreased by 10%, we estimate that annual depreciation expense would increase approximately $6.7 million, resulting in a corresponding reduction in net income.
Impairment of Long-Lived Assets
We periodically evaluate whether the carrying value of long-lived assets has been impaired when circumstances indicate the carrying value of the assets may not be recoverable. These evaluations are based on undiscounted cash flow projections over the remaining useful life of the asset. The carrying value is not recoverable if it exceeds the sum of the undiscounted cash flows. Any impairment loss is measured as the excess of the asset's carrying value over its fair value.
 
Our impairment analyses require management to use judgment in estimating future cash flows and useful lives, as well as assessing the probability of different outcomes.
 
Applying this impairment review methodology, we have recorded an impairment charge of $3.4 million in our Marine Transportation Segment during the three and nine months ended September 30, 2014 related to certain offshore marine assets. No impairment was recorded for the three and nine months ended September 30, 2013.
Impairment of Goodwill
Goodwill is subject to a fair-value based impairment test on an annual basis, or more frequently if events or changes in circumstances indicate that the fair value of any of our reporting units is less than its carrying amount.
 
We determine fair value using accepted valuation techniques, including discounted cash flow, the guideline public company method and the guideline transaction method. These analyses require management to make assumptions and estimates regarding industry and economic factors, future operating results and discount rates. We conduct impairment testing using present economic conditions, as well as future expectations.
 
We are in the process of completing the most recent annual review of goodwill as of August 31, 2014. Based on preliminary results of the evaluation, no impairment is indicated.

32

Purchase Price Allocations
We allocate the purchase price of an acquired business to its identifiable assets (including identifiable intangible assets) and liabilities based on their fair values at the date of acquisition. Any excess of purchase price in excess of amounts allocated to identifiable assets and liabilities is recorded as goodwill. As additional information becomes available, we may adjust the preliminary allocation for a period of up to one year.
 
The determination of fair values of acquired assets and liabilities requires a significant level of management judgment. Fair values are estimated using various methods as deemed appropriate. For significant transactions, third party assessments may be engaged to assist in the valuation process.
 
If subsequent factors indicate that estimates and assumptions used to allocate costs to acquired assets and liabilities differ from actual results, the allocation between goodwill, other intangible assets and fixed assets could significantly differ. Any such differences could impact future earnings through depreciation and amortization expense. Additionally, if estimated results supporting the valuation of goodwill or other intangible assets are not achieved, impairments could result.
Asset Retirement Obligations
Asset retirement obligations (“AROs”) associated with a contractual or regulatory remediation requirement are recorded at fair value in the period in which the obligation can be reasonably estimated and depreciated over the life of the related asset or contractual term. The liability is determined using a credit-adjusted risk-free interest rate and is accreted over time until the obligation is settled.
 
Determining the fair value of AROs requires management judgment to evaluate required remediation activities, estimate the cost of those activities and determine the appropriate interest rate.
 
If actual results differ from judgments and assumptions used in valuing an ARO, we may experience significant changes in ARO balances. The establishment of an ARO has no initial impact on earnings.
Environmental Liabilities
We estimate environmental liabilities using both internal and external resources. Activities include feasibility studies and other evaluations management considers appropriate. Environmental liabilities are recorded in the period in which the obligation can be reasonably estimated.
 
Estimating environmental liabilities requires significant management judgment as well as possible use of third party specialists knowledgeable in such matters.
 
Environmental liabilities have not adversely affected our results of operations or financial condition in the past, and we do not anticipate that they will in the future.

Our Relationship with Martin Resource Management
 
Martin Resource Management is engaged in the following principal business activities:
 
•
providing land transportation of various liquids using a fleet of trucks and road vehicles and road trailers;

•
distributing fuel oil, asphalt, sulfuric acid, marine fuel and other liquids;

•
providing marine bunkering and other shore-based marine services in Alabama, Louisiana, Florida, Mississippi and Texas;

•
operating a crude oil gathering business in Stephens, Arkansas;

•
providing crude oil gathering, refining, and marketing services of base oils, asphalt, and distillate products in Smackover, Arkansas;

•
operating an environmental consulting company;

•
operating an engineering services company;

•
supplying employees and services for the operation of our business;

•
operating a natural gas optimization business;


33

•
operating, for its account and our account, the docks, roads, loading and unloading facilities and other common use facilities or access routes at our Stanolind terminal; and

•
operating, solely for our account, the asphalt facilities in Omaha, Nebraska, Port Neches, Texas and South Houston, Texas.

We are and will continue to be closely affiliated with Martin Resource Management as a result of the following relationships.

Ownership

Martin Resource Management owns approximately 17.7% of the outstanding limited partner units. In addition, Martin Resource Management controls MMGP, our general partner, by virtue of its 51% voting interest in Holdings, the sole member of MMGP. MMGP owns a 2.0% general partner interest in us and all of our incentive distribution rights.

Management

Martin Resource Management directs our business operations through its ownership interests in and control of our general partner. We benefit from our relationship with Martin Resource Management through access to a significant pool of management expertise and established relationships throughout the energy industry. We do not have employees. Martin Resource Management employees are responsible for conducting our business and operating our assets on our behalf.

Related Party Agreements

The Omnibus Agreement requires us to reimburse Martin Resource Management for all direct expenses it incurs or payments it makes on our behalf or in connection with the operation of our business.  We reimbursed Martin Resource Management for $48.4 million of direct costs and expenses for the three months ended September 30, 2014 compared to $45.4 million for the three months ended September 30, 2013 .We reimbursed Martin Resource Management for $135.4 million of direct costs and expenses for the nine months ended September 30, 2014 compared to $134.9 million for the nine months ended September 30, 2013 . There is no monetary limitation on the amount we are required to reimburse Martin Resource Management for direct expenses.

In addition to the direct expenses, under the Omnibus Agreement, we are required to reimburse Martin Resource Management for indirect general and administrative and corporate overhead expenses.  For the three months ended September 30, 2014 and 2013 , the conflicts committee of our general partner (“Conflicts Committee”) approved reimbursement amounts of $3.1 million and $2.7 million , respectively, reflecting our allocable share of such expenses. For the nine months ended September 30, 2014 and 2013 , the Conflicts Committee approved reimbursement amounts of $9.4 million and $8.0 million, respectively. The Conflicts Committee of our general partner's board of directors will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.  These indirect expenses covered the centralized corporate functions Martin Resource Management provides for us, such as accounting, treasury, clerical, engineering, legal, billing, information technology, administration of insurance, general office expenses and employee benefit plans and other general corporate overhead functions we share with Martin Resource Management’s retained businesses.  The Omnibus Agreement also contains significant non-compete provisions and indemnity obligations.  Martin Resource Management also licenses certain of its trademarks and trade names to us under the Omnibus Agreement.

The agreements include, but are not limited to, motor carrier agreements, marine transportation agreements, terminal services agreements, a tolling agreement, a sulfuric acid agreement, and various other miscellaneous agreements. Pursuant to the terms of the Omnibus Agreement, we are prohibited from entering into certain material agreements with Martin Resource Management without the approval of the Conflicts Committee of our general partner’s board of directors.

For a more comprehensive discussion concerning the Omnibus Agreement and the other agreements that we have entered into with Martin Resource Management, please refer to “Item 13. Certain Relationships and Related Transactions – Agreements” set forth in our annual report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 3, 2014, as amended, by Amendment No. 1 on Form 10-K/A for the year ended December 31, 2013 filed on March 28, 2014.

Commercial

We have been and anticipate that we will continue to be both a significant customer and supplier of products and services offered by Martin Resource Management. Our motor carrier agreement with Martin Resource Management provides

34

us with access to Martin Resource Management’s fleet of road vehicles and road trailers to provide land transportation in the areas served by Martin Resource Management. Our ability to utilize Martin Resource Management’s land transportation operations is currently a key component of our integrated distribution network.

In the aggregate, the impact of related party transactions included in cost of products sold accounted for approximately 8% and 9% of our total cost of products sold during the three months ended September 30, 2014 and 2013 , respectively. In the aggregate, the impact of related party transactions included in cost of products sold accounted for approximately 7% and 8% of our total cost of products sold during the nine months ended September 30, 2014 and 2013 , respectively. We also purchase marine fuel from Martin Resource Management, which we account for as an operating expense.

In the aggregate, the impact of related party transactions included in revenues accounted for approximately 7% of our total revenues for both the three months ended September 30, 2014 and 2013 , respectively.  Our sales to Martin Resource Management accounted for approximately 6% and 7% of our total revenues for the nine months ended September 30, 2014 and 2013 , respectively. 

For a more comprehensive discussion concerning the agreements that we have entered into with Martin Resource Management, please refer to “Item 13. Certain Relationships and Related Transactions – Agreements” set forth in our annual report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 3, 2014, as amended, by Amendment No. 1 on Form 10-K/A for the year ended December 31, 2013 filed on March 28, 2014.

Approval and Review of Related Party Transactions

If we contemplate entering into a transaction, other than a routine or in the ordinary course of business transaction, in which a related person will have a direct or indirect material interest, the proposed transaction is submitted for consideration to the board of directors of our general partner or to our management, as appropriate. If the board of directors is involved in the approval process, it determines whether to refer the matter to the Conflicts Committee of our general partner's board of directors, as constituted under our limited partnership agreement. If a matter is referred to the Conflicts Committee, it obtains information regarding the proposed transaction from management and determines whether to engage independent legal counsel or an independent financial advisor to advise the members of the committee regarding the transaction.  If the Conflicts Committee retains such counsel or financial advisor, it considers such advice and, in the case of a financial advisor, such advisor’s opinion as to whether the transaction is fair and reasonable to us and to our unitholders.

How We Evaluate Our Operations

Our management uses a variety of financial and operational measurements other than our financial statements prepared in accordance with U.S. GAAP to analyze our performance. These include: (1) net income before interest expense, income tax expense, and depreciation and amortization (“EBITDA”), (2) adjusted EBITDA and (3) distributable cash flow. Our management views these measures as important performance measures of core profitability for our operations and the ability to generate and distribute cash flow, and as key components of our internal financial reporting. We believe investors benefit from having access to the same financial measures that our management uses.

EBITDA and Adjusted EBITDA . Certain items excluded from EBITDA and adjusted EBITDA are significant components in understanding and assessing an entity's financial performance, such as cost of capital and historic costs of depreciable assets. We have included information concerning EBITDA and adjusted EBITDA because they provide investors and management with additional information to better understand the following: financial performance of our assets without regard to financing methods, capital structure or historical cost basis; our operating performance and return on capital as compared to those of other similarly situated entities; and the viability of acquisitions and capital expenditure projects. Our method of computing adjusted EBITDA may not be the same method used to compute similar measures reported by other entities. The economic substance behind our use of adjusted EBITDA is to measure the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness and make distributions to our unit holders.

Distributable Cash Flow . Distributable cash flow is a significant performance measure used by our management and by external users of our financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions we expect to pay our unitholders. Distributable cash flow is also an important financial measure for our unitholders since it serves as an indicator of our success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not we are generating cash flow at a level that can sustain or support an increase in our quarterly distribution rates. Distributable cash flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity

35

is generally determined by the unit's yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder.

EBITDA, adjusted EBITDA and distributable cash flow should not be considered alternatives to, or more meaningful than, net income, cash flows from operating activities, or any other measure presented in accordance with U.S. GAAP. Our method of computing these measures may not be the same method used to compute similar measures reported by other entities.

Non-GAAP Financial Measures

The following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and nine months ended September 30, 2014 and 2013 .

Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
Net income (loss)
$
(26,905
)
 
$
192

 
$
(16,078
)
 
$
25,907

Adjustments:
 
 
 
 
 
 
 
Interest expense
11,459

 
11,060

 
34,351

 
31,058

Income tax expense
300

 
303

 
954

 
910

Depreciation and amortization
16,743

 
13,698

 
45,329

 
37,944

EBITDA
1,597

 
25,253

 
64,556

 
95,819

Adjustments:
 
 
 
 
 
 
 
Equity in (earnings) loss of unconsolidated entities
(2,655
)
 
577

 
(4,297
)
 
878

Gain on sale of property, plant and equipment
—

 
—

 
(54
)
 
(796
)
Impairment of long-lived assets
3,445

 
—

 
3,445

 
—

Reduction in carrying value of investment in Cardinal due to the purchase of the controlling interest 1
30,102

 
—

 
30,102

 
—

Debt prepayment premium
—

 
—

 
7,767

 
—

Distributions from unconsolidated entities
982

 
761

 
2,323

 
2,722

Unit-based compensation
201

 
257

 
589

 
737

Adjusted EBITDA
33,672

 
26,848

 
104,431

 
99,360

Adjustments:
 
 
 
 
 
 
 
Interest expense
(11,459
)
 
(11,060
)
 
(34,351
)
 
(31,058
)
Income tax expense
(300
)
 
(303
)
 
(954
)
 
(910
)
Amortization of debt discount
—

 
77

 
1,305

 
230

Amortization of debt premium
(82
)
 
—

 
(164
)
 
—

Amortization of deferred debt issuance costs
827

 
815

 
5,415

 
2,890

Non-cash mark-to-market on derivatives
1,036

 
—

 
489

 
—

Payments of installment notes payable and capital lease obligations
—

 
(91
)
 
—

 
(251
)
Payments for plant turnaround costs
(90
)
 
—

 
(4,000
)
 
—

Maintenance capital expenditures
(4,306
)
 
(2,973
)
 
(13,260
)
 
(7,473
)
Distributable Cash Flow
$
19,298

 
$
13,313

 
$
58,911

 
$
62,788


1 In the third quarter, we recorded a $30.1 million non-recurring, non-cash charge to our net income reflecting the reduction in our carrying value of our investment in Cardinal as a result of the Cardinal acquisition.

Results of Operations

36


The results of operations for the nine months ended September 30, 2014 and 2013 have been derived from our consolidated and condensed financial statements.

We evaluate segment performance on the basis of operating income, which is derived by subtracting cost of products sold, operating expenses, selling, general and administrative expenses, and depreciation and amortization expense from revenues.  The following table sets forth our operating revenues and operating income by segment for the three and nine months ended September 30, 2014 and 2013 .  The results of operations for these interim periods are not necessarily indicative of the results of operations which might be expected for the entire year.

Our consolidated and condensed results of operations are presented on a comparative basis below.  There are certain items of income and expense which we do not allocate on a segment basis.  These items, including equity in earnings (loss) of unconsolidated entities, interest expense, and indirect selling, general and administrative expenses, are discussed following the comparative discussion of our results within each segment.

Three Months Ended September 30, 2014 Compared to the Three Months Ended September 30, 2013
 
Operating Revenues
 
Intersegment Revenues Eliminations
 
Operating Revenues
 after Eliminations
 
Operating Income (Loss)
 
Operating Income Intersegment Eliminations
 
Operating
Income (Loss)
 after
Eliminations
Three Months Ended September 30, 2014
 
 
 
 
 
 
 
 
 
 
 
Terminalling and storage
$
80,948

 
$
(1,333
)
 
$
79,615

 
$
6,298

 
$
(378
)
 
$
5,920

Natural gas services
236,058

 
—

 
236,058

 
6,439

 
1,045

 
7,484

Sulfur services
50,030

 
—

 
50,030

 
3,357

 
(1,722
)
 
1,635

Marine transportation
25,859

 
(1,577
)
 
24,282

 
400

 
1,055

 
1,455

Indirect selling, general and administrative
—

 
—

 
—

 
(4,479
)
 
—

 
(4,479
)
Total
$
392,895

 
$
(2,910
)
 
$
389,985

 
$
12,015

 
$
—

 
$
12,015

Three Months Ended September 30, 2013
Operating Revenues
 
Intersegment Revenues Eliminations
 
Operating Revenues
 after Eliminations
 
Operating Income (Loss)
 
Operating Income Intersegment Eliminations
 
Operating
Income (Loss)
 after
Eliminations
Terminalling and storage
$
90,205

 
$
(1,199
)
 
$
89,006

 
$
8,052

 
$
(702
)
 
$
7,350

Natural gas services
204,926

 
—

 
204,926

 
4,590

 
876

 
5,466

Sulfur services
42,097

 
—

 
42,097

 
753

 
(1,280
)
 
(527
)
Marine transportation
24,751

 
(1,164
)
 
23,587

 
2,627

 
1,106

 
3,733

Indirect selling, general and administrative
—

 
—

 
—

 
(3,779
)
 
—

 
(3,779
)
Total
$
361,979

 
$
(2,363
)
 
$
359,616

 
$
12,243

 
$
—

 
$
12,243



37

Nine Months Ended September 30, 2014 Compared to the Nine Months Ended September 30, 2013
 
Operating Revenues
 
Intersegment Revenues Eliminations
 
Operating Revenues
 after Eliminations
 
Operating Income (Loss)
 
Operating Income Intersegment Eliminations
 
Operating
Income (Loss)
 after
Eliminations
Nine Months Ended September 30, 2014
 

 
 

 
 

 
 

 
 

 
 

Terminalling and storage
$
255,162

 
$
(3,863
)
 
$
251,299

 
$
24,505

 
$
(1,909
)
 
$
22,596

Natural gas services
818,361

 
—

 
818,361

 
19,899

 
2,865

 
22,764

Sulfur services
166,818

 
—

 
166,818

 
21,758

 
(4,169
)
 
17,589

Marine transportation
73,255

 
(3,775
)
 
69,480

 
682

 
3,213

 
3,895

Indirect selling, general and administrative
—

 
—

 
—

 
(14,214
)
 
—

 
(14,214
)
Total
$
1,313,596

 
$
(7,638
)
 
$
1,305,958

 
$
52,630

 
$
—

 
$
52,630


 
Operating Revenues
 
Intersegment Revenues Eliminations
 
Operating Revenues
 after Eliminations
 
Operating Income (Loss)
 
Operating Income Intersegment Eliminations
 
Operating
Income (Loss)
 after
Eliminations
Nine Months Ended September 30, 2013
 

 
 

 
 

 
 

 
 

 
 

Terminalling and storage
$
256,320

 
$
(3,507
)
 
$
252,813

 
$
27,657

 
$
(1,689
)
 
$
25,968

Natural gas services
653,080

 
—

 
653,080

 
17,254

 
1,604

 
18,858

Sulfur services
173,378

 
—

 
173,378

 
19,659

 
(3,141
)
 
16,518

Marine transportation
75,004

 
(2,785
)
 
72,219

 
5,587

 
3,226

 
8,813

Indirect selling, general and administrative
—

 
—

 
—

 
(11,270
)
 
—

 
(11,270
)
Total
$
1,157,782

 
$
(6,292
)
 
$
1,151,490

 
$
58,887

 
$
—

 
$
58,887

 

38

Terminalling and Storage Segment

Comparative Results of Operations for the Three Months Ended September 30, 2014 and 2013
 
Three Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands, except BBL per day)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
33,213

 
$
30,151

 
$
3,062

 
10%
Products
47,735

 
60,054

 
(12,319
)
 
(21)%
Total revenues
80,948

 
90,205

 
(9,257
)
 
(10)%
 
 
 
 
 
 
 
 
Cost of products sold
43,193

 
53,215

 
(10,022
)
 
(19)%
Operating expenses
21,506

 
19,427

 
2,079

 
11%
Selling, general and administrative expenses
786

 
979

 
(193
)
 
(20)%
Depreciation and amortization
9,512

 
8,532

 
980

 
11%
 
5,951

 
8,052

 
(2,101
)
 
(26)%
Other operating income
347

 
—

 
347

 

Operating income
$
6,298

 
$
8,052

 
$
(1,754
)
 
(22)%
 
 
 
 
 
 
 
 
Lubricant sales volumes (gallons)
8,193

 
10,638

 
(2,445
)
 
(23)%
Shore-based throughput volumes (gallons)
64,338

 
65,516

 
(1,178
)
 
(2)%
Smackover refinery throughput volumes (BBL per day)
7,123

 
6,878

 
245

 
4%
Corpus Christi crude terminal (BBL per day)
173,315

 
101,921

 
71,394

 
70%

Services revenues.  S ervices revenue increased primarily due to a $1.4 million increase at our crude terminal in Corpus Christi, Texas, which is attributable to volume increases. In addition, revenue at our Smackover refinery increased $0.8 million due to increased throughput fee and volume.
   
Products revenues. A 29% decrease in sales volumes at our blending and packaging facilities resulted in a $13.1 million decrease to product revenues. The decline in volumes resulted primarily from increased price competition. The average sales price from our blending and packaging assets increased 5%, resulting in a $2.3 million     increase in product revenues.

Cost of products sold.   A 29% decrease in sales volumes at our blending and packaging facilities resulted in an $11.6 million decrease. The average price per gallon increased 7%, resulting in a $2.6 million increase in cost of goods sold.

Operating expenses. Expenses at our specialty terminals increased $2.4 million, primarily due to a $1.0 million increase in pass-through expense, $0.8 million of additional repair and maintenance, and $0.3 million of increased utilities.

Selling, general and administrative expenses.   Selling, general and administrative expenses remained consistent.

Depreciation and amortization.   The increase in depreciation and amortization is due to the impact of recent capital expenditures.

Other operating income.  Other operating income increased primarily due to business interruption insurance proceeds received related to the Stanolind tank fire.


39

Comparative Results of Operations for the Nine Months Ended September 30, 2014 and 2013
 
Nine Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands, except BBL per day)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
101,711

 
$
88,770

 
$
12,941

 
15%
Products
153,451

 
167,550

 
(14,099
)
 
(8)%
Total revenues
255,162

 
256,320

 
(1,158
)
 
—%
 
 
 
 
 
 
 
 
Cost of products sold
139,028

 
148,624

 
(9,596
)
 
(6)%
Operating expenses
61,628

 
54,860

 
6,768

 
12%
Selling, general and administrative expenses
2,484

 
2,422

 
62

 
3%
Depreciation and amortization
27,902

 
22,925

 
4,977

 
22%
 
24,120

 
27,489

 
(3,369
)
 
(12)%
Other operating income
385

 
168

 
217

 
129%
Operating income
$
24,505

 
$
27,657

 
$
(3,152
)
 
(11)%
 
 
 
 
 
 
 
 
Lubricant sales volumes (gallons)
26,170

 
29,885

 
(3,715
)
 
(12)%
Shore-based throughput volumes (gallons)
186,956

 
207,533

 
(20,577
)
 
(10)%
Smackover refinery throughput volumes (BBL per day)
5,803

 
6,780

 
(977
)
 
(14)%
Corpus Christi crude terminal (BBL per day)
160,332

 
105,783

 
54,549

 
52%

Services revenues. Services revenue increased $12.9 million, including $8.2 million attributable specialty terminals. The Corpus Christi crude terminal expansion contributed $6.3 million of this increase. In addition, revenue at our Smackover refinery increased $4.5 million due to increased pipeline fee revenue.

Products revenues. A 17% decrease in sales volumes at our blending and packaging facilities resulted in a $20.2 million decrease to product revenues. The decline in volumes resulted primarily from increased price competition. The average sales price from our blending and packaging assets increased 6%, resulting in a $6.8 million increase in product revenues.
 
Cost of products sold.   A 17% decrease in sales volumes at our blending and packaging facilities resulted in an $18 million decrease. Average price per gallon increased 9%, resulting in an $8.6 million increase in cost of goods sold.

Operating expenses. Operating expenses at our Smackover refinery increased $2.7 million primarily due to increased compensation expense of $1.2 million and $1.4 million increase in pass-through expense. Operating expenses at our Corpus Christi crude terminal increased $4.5 million primarily as a result of increased wharfage and regulatory fees.
 
Selling, general and administrative expenses.    Selling, general and administrative expenses remained consistent.

Depreciation and amortization.   The increase in depreciation and amortization is due to the impact of recent capital expenditures.

Other operating income.  Other operating income increased primarily due to business interruption insurance proceeds received related to the Stanolind tank fire.


40

Natural Gas Services Segment

Comparative Results of Operations for the Three Months Ended September 30, 2014 and 2013
 
Three Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Marine transportation
$
—

 
$
630

 
$
(630
)
 
(100)%
Services
5,764

 
—

 
5,764

 

Products
230,294

 
204,296

 
25,998

 
13%
Total revenues
236,058

 
204,926

 
31,132

 
15%
 
 
 
 
 
 
 
 
Cost of products sold
218,882

 
196,719

 
22,163

 
11%
Operating expenses
4,546

 
1,863

 
2,683

 
144%
Selling, general and administrative expenses
3,507

 
1,156

 
2,351

 
203%
Depreciation and amortization
2,684

 
598

 
2,086

 
349%
Operating income
$
6,439

 
$
4,590

 
$
1,849

 
40%
 
 
 
 
 
 
 
 
Distributions from unconsolidated entities
$
982

 
$
761

 
$
221

 
29%
 
 
 
 
 
 
 
 
NGL sales volumes (Bbls)
3,737

 
3,162

 
575

 
18%
 
Revenues. The decrease in marine transportation revenue is the result of redeploying marine transportation assets acquired in February 2013. The assets were originally engaged in marine transportation activities but are being utilized for floating product storage at one of our terminal locations. Services revenue for the three months ended September 30, 2014 represents the natural gas storage revenue related to the acquisition of Cardinal which occurred August 29, 2014. Natural gas services sales volumes increased 18%, resulting in a positive impact on revenues of $35.4 million.  Our NGL average sales price per barrel decreased $2.98, or 5%, resulting in a decrease to revenue of $9.4 million.

Cost of products sold .  Our average cost per barrel decreased $3.64, or 6%.  Our margins increased $0.66 per barrel during the period, primarily as a result of improved market conditions in the Louisiana butane market during 2014.

Operating expenses .  Operating expenses increased $1.7 million due to the acquisition of Cardinal. The remaining increase is primarily a result of activity at our NGL marine facility in Corpus Christi, Texas.

Selling, general and administrative expenses .  Selling, general and administrative expenses increased $1.8 million due to the acquisition of Cardinal. The remaining increase is primarily a result of increased compensation expense.

Depreciation and amortization . The increase in depreciation and amortization is primarily due to the acquisition of Cardinal.

Distributions from unconsolidated entities. Distributions from West Texas LPG Pipeline L.P. ("WTLPG") were $0.6 million in the 2014. The investment in WTLPG was acquired in May 2014. Distributions from Martin Energy Trading LLC ("MET") and Cardinal decreased $0.2 million each in 2014.


41

Comparative Results of Operations for the Nine Months Ended September 30, 2014 and 2013
 
Nine Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Marine transportation
$
365

 
$
2,475

 
$
(2,110
)
 
(85)%
Services
5,764

 
—

 
5,764

 

Products
812,232

 
650,605

 
161,627

 
25%
Total revenues
818,361

 
653,080

 
165,281

 
25%
 
 
 
 
 
 
 
 
Cost of products sold
779,136

 
627,748

 
151,388

 
24%
Operating expenses
8,779

 
3,834

 
4,945

 
129%
Selling, general and administrative expenses
6,684

 
2,800

 
3,884

 
139%
Depreciation and amortization
3,863

 
1,444

 
2,419

 
168%
Operating income
$
19,899

 
$
17,254

 
$
2,645

 
15%
 
 
 
 
 
 
 
 
Distributions from unconsolidated entities
$
2,323

 
$
2,722

 
$
(399
)
 
(15)%
 
 
 
 
 
 
 
 
NGL sales volumes (Bbls)
12,734

 
9,883

 
2,851

 
29%

Revenues. The decrease in marine transportation revenue is the result of redeploying marine transportation assets acquired in February 2013. The assets were originally engaged in marine transportation activities but are being utilized for floating product storage at one of our terminal locations. Services revenue for the nine months ended September 30, 2014 represents the natural gas storage revenue related to the acquisition of Cardinal which occurred August 29, 2014. Natural gas services sales volumes increased 29%, positively impacting revenues $181.9 million.  The increase in volumes was a result of additional operations in the Louisiana butane market. Our NGL average sales price per barrel decreased $2.05, or 3%, resulting in a decrease to revenues of $20.2 million.

Cost of products sold .  Our average cost per barrel decreased $2.33, or 4%.  Our margins increased $0.29 per barrel during the period as a result of decreased market prices.

Operating expenses .  Operating expenses increased $1.7 million due to the acquisition of Cardinal. The remaining increase is primarily as a result of activity at our NGL marine facility in Corpus Christi, Texas.

Selling, general and administrative expenses .  Selling, general and administrative expenses increased $1.8 million due to the acquisition of Cardinal. The remaining increase is primarily as a result of increased compensation expense.
 
Depreciation and amortization. The increase in depreciation and amortization is primarily due to the acquisition of Cardinal as well as the addition of recent capital expenditures.

Distributions from unconsolidated entities. Distributions from WTLPG were $0.6 million in 2014. The investment in WTLPG was acquired in May 2014. Distributions from MET increased $0.3 million while distributions from Cardinal decreased $1.3 million.


42

Sulfur Services Segment

Comparative Results of Operations for the Three Months Ended September 30, 2014 and 2013
 
Three Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
3,037

 
$
3,001

 
$
36

 
1%
Products
46,993

 
39,096

 
7,897

 
20%
Total revenues
50,030

 
42,097

 
7,933

 
19%
 
 
 
 
 
 
 
 
Cost of products sold
38,932

 
34,085

 
4,847

 
14%
Operating expenses
4,497

 
4,166

 
331

 
8%
Selling, general and administrative expenses
1,166

 
1,069

 
97

 
9%
Depreciation and amortization
2,078

 
2,024

 
54

 
3%
Operating income
$
3,357

 
$
753

 
$
2,604

 
346%
 
 
 
 
 
 
 
 
Sulfur (long tons)
251.0

 
211.8

 
39.2

 
19%
Fertilizer (long tons)
52.1

 
44.8

 
7.3

 
16%
Total sulfur services volumes (long tons)
303.1

 
256.6

 
46.5

 
18%
 
Revenues.   Product revenues were positively impacted by rising market prices in our sulfur business. Revenues increased $7.2 million due to an 18% increase in sales volumes. Additionally, revenues increased $0.7 million as a result of a 2% increase in average sales price.

Cost of products sold.   A 3% decrease in prices reduced cost of products sold by $1.1 million. An 18% increase in volumes increased our costs by an additional $6.0 million. Margin per ton increased $7.07, or 36%, resulting in an increase in gross margin of $3.1 million.

Operating expenses.   Our operating expenses increased as a result of higher fuel expense.

Selling, general and administrative expenses.   Selling, general and administrative expenses increased as a result of higher employee benefit costs.

Depreciation and amortization.   The increase in depreciation and amortization is due to the impact of recent capital expenditures.


43

Comparative Results of Operations for the Nine Months Ended September 30, 2014 and 2013     
 
Nine Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands)
 
 
Revenues:
 
 
 
 
 
 
 
Services
$
9,112

 
$
9,003

 
$
109

 
1%
Products
157,706

 
164,375

 
(6,669
)
 
(4)%
Total revenues
166,818

 
173,378

 
(6,560
)
 
(4)%
 
 
 
 
 
 
 
 
Cost of products sold
122,281

 
131,849

 
(9,568
)
 
(7)%
Operating expenses
13,283

 
12,791

 
492

 
4%
Selling, general and administrative expenses
3,404

 
3,132

 
272

 
9%
Depreciation and amortization
6,092

 
5,947

 
145

 
2%
Operating income
$
21,758

 
$
19,659

 
$
2,099

 
11%
 
 
 
 
 
 
 
 
Sulfur (long tons)
645.5

 
614.9

 
30.6

 
5%
Fertilizer (long tons)
233.1

 
219.8

 
13.3

 
6%
Total sulfur services volumes (long tons)
878.6

 
834.7

 
43.9

 
5%

Revenues.   Product revenue declined $14.6 million attributable to a 9% decrease in prices. An increase in sales volumes resulted in increased revenue of $7.9 million.

Cost of products sold.   Cost of products sold decreased $15.7 million due to a 12% reduction in prices. An increase in volumes resulted in a $6.1 million increase in cost of products sold. Margin per ton increased $1.35, or 3%, resulting in an increase in gross margin of $2.9 million.

Operating expenses.   Our operating expenses increased primarily as a result of higher tank car lease expenses.

Selling, general and administrative expenses.   Selling, general and administrative expenses increased as a result of higher employee benefit costs.

Depreciation and amortization.   Depreciation and amortization remained consistent.

Marine Transportation Segment

Comparative Results of Operations for the Three Months Ended September 30, 2014 and 2013
 
Three Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands)
 
 
Revenues
$
25,859

 
$
24,751

 
$
1,108

 
4%
Operating expenses
19,181

 
19,352

 
(171
)
 
(1)%
Selling, general and administrative expenses
364

 
228

 
136

 
60%
Depreciation and amortization
2,469

 
2,544

 
(75
)
 
(3)%
 
3,845

 
2,627

 
1,218

 
46%
Impairment of long-lived assets
(3,445
)
 
—

 
(3,445
)
 

Operating income
$
400

 
$
2,627

 
$
(2,227
)
 
(85)%

Inland revenues .  A $0.5 million increase in inland revenues is primarily attributable to $0.2 million from increased utilization of the inland fleet. In addition, ancillary charges, primarily the rebill of fuel, increased $0.3 million.


44

Offshore revenues.  A $0.5 million increase in offshore revenue consists primarily of ancillary charges, related to the rebill of fuel.

Operating expenses .  Operating expenses decreased as a result of decreased repairs and maintenance expense of $0.7 million, outside towing of $0.3 million, and $0.2 million of property and liability premiums. Offsetting these decreases is an increase in pass-through ancillary expenses of $1.0 million.

Selling, general and administrative expenses . Selling, general and administrative expenses increased primarily due to an increase in legal fees.

Depreciation and amortization .  Depreciation and amortization decreased slightly as a result of certain marine assets becoming fully depreciated and the disposal of equipment, offset by increases in depreciable assets related to recent capital expenditures.

Impairment of long-lived assets.  Impairment of long-lived assets represents the write-down of one offshore tow.

Comparative Results of Operations for the Nine Months Ended September 30, 2014 and 2013
 
Nine Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands)
 
 
Revenues
$
73,255

 
$
75,004

 
$
(1,749
)
 
(2)%
Operating expenses
60,805

 
61,417

 
(612
)
 
(1)%
Selling, general and administrative expenses
867

 
1,000

 
(133
)
 
(13)%
Depreciation and amortization
7,472

 
7,628

 
(156
)
 
(2)%
 
4,111

 
4,959

 
(848
)
 
(17)%
Impairment of long-lived assets
(3,445
)
 
—

 
(3,445
)
 

Other operating income
16

 
628

 
(612
)
 
(97)%
Operating income
$
682

 
$
5,587

 
$
(4,905
)
 
(88)%
 

Inland revenues .  Inland revenues increased $1.6 million as a result of $2.0 million related to increased utilization of the inland fleet. Offsetting this increase was a reduction of $0.4 million in ancillary charges, primarily rebill expenses.

Offshore revenues. A decrease in offshore revenues of $3.8 million is primarily due to decreased utilization of the offshore fleet as a result of regulatory shipyard inspections and maintenance.

Operating expenses .  The decrease in operating expenses is a result of decreased outside towing of $1.4 million, group life and health insurance of $1.0 million, barge rental of $1.0 million, and property insurance premiums and claims of $0.2 million. Offsetting these decreases is an increase of repairs and maintenance of $3.0 million.
 
Selling, general and administrative expenses .  Selling, general and administrative expenses decreased primarily as a result of a decrease in consulting fees.

Depreciation and amortization .  Depreciation and amortization decreased slightly as a result of certain marine assets becoming fully depreciated and the disposal of equipment, offset by increases in depreciable assets related to recent capital expenditures.

Impairment of long-lived assets.  Impairment of long-lived assets represents the write-down of one offshore tow.
    
Other operating income.  Other operating income represents gains from the disposition of property, plant and equipment.


45

Equity in Earnings (Loss) of Unconsolidated Entities for the Three Months Ended September 30, 2014 and 2013
 
Three Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands)
 
 
Equity in earnings of WTLPG
$
1,138

 
$
—

 
1,138

 

Equity in earnings (loss) of Cardinal
1,135

 
(984
)
 
2,119

 
215%
Equity in earnings of MET
382

 
577

 
(195
)
 
(34)%
Equity in loss of Caliber
—

 
(170
)
 
170

 
100%
    Equity in earnings (loss) of unconsolidated entities
$
2,655

 
$
(577
)
 
$
3,232

 
(560)%

The investment in WTLPG was acquired in May 2014.    

The increase in equity in earnings of Cardinal is attributable to improved Cardinal results of operations primarily due to Cadeville Gas Storage, LLC ("Cadeville") and Perryville Gas Storage, LLC ("Perryville"), both of which were completed late in the second quarter of 2013. Cadeville and Perryville are subsidiaries of Cardinal. In addition, the 2013 period includes a $1.8 million one-time charge for employee severance and incentive payments for the completion of the Cadeville and Perryville projects ahead of schedule and under budget. On August 29, 2014, the Partnership acquired the approximate 57.8% Category A interest in Cardinal it did not previously own. Results of operations are included in the Natural Gas Services segment subsequent to that date.
    
Equity in earnings of MET, recorded initially in April 2013, represent dividends on our 100% investment in its preferred interests. During March 2013, the Partnership acquired 100% of the preferred interests in MET, a subsidiary of Martin Resource Management, for $15,000 . In August, 2014, MET converted its preferred equity to subordinated debt, resulting in a note receivable from MET.

The investment in Caliber Gathering, LLC (“Caliber”) was sold in November 2013. As a result, there is no equity in earnings (loss) in the 2014 period.

Equity in Earnings (Loss) of Unconsolidated Entities for the Nine Months Ended September 30, 2014 and 2013
 
Nine Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands)
 
 
Equity in earnings of WTLPG
$
1,907

 
$
—

 
$
1,907

 

Equity in earnings (loss) of Cardinal
892

 
(1,561
)
 
2,453

 
157%
Equity in earnings of MET
1,498

 
1,171

 
327

 
28%
Equity in loss of Caliber
—

 
(488
)
 
488

 
100%
   Equity in earnings (loss) of unconsolidated entities
$
4,297

 
$
(878
)
 
$
5,175

 
589%

The investment in WTLPG was acquired in May 2014.

The increase in equity in earnings of Cardinal is attributable to improved Cardinal results of operations primarily due to Cadeville and Perryville, both of which were completed late in the second quarter of 2013. Cadeville and Perryville are subsidiaries of Cardinal. In addition, the 2013 period includes a $1.8 million one-time charge for employee severance and incentive payments for the completion of the Cadeville and Perryville projects ahead of schedule and under budget. On August 29, 2014, the Partnership acquired the approximate 57.8% Category A interest in Cardinal it did not previously own.

Equity in earnings of MET, recorded initially in April 2013, represent dividends on our 100% investment in its preferred interests. During March 2013, the Partnership acquired 100% of the preferred interests in MET, a subsidiary of Martin Resource Management, for $15,000 . In August, 2014, MET converted its preferred equity to subordinated debt, resulting in a note receivable from MET.

The investment in Caliber was sold in November 2013. As a result, there is no equity in earnings (loss) in the 2014 period.

46


Interest Expense

Comparative Components of Interest Expense for the Three Months Ended September 30, 2014 and 2013
 
Three Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands)
 
 
Revolving loan facility
$
3,719

 
$
2,010

 
$
1,709

 
85%
8.875% Senior notes
—

 
3,883

 
(3,883
)
 
(100)%
7.250% Senior notes
7,251

 
4,531

 
2,720

 
60%
Amortization of deferred debt issuance costs
827

 
815

 
12

 
1%
Amortization of debt discount and premium
(82
)
 
77

 
(159
)
 
(206)%
Impact of interest rate derivative activity
63

 
—

 
63

 
 
Other
(85
)
 
70

 
(155
)
 
(221)%
Capitalized interest
(234
)
 
(326
)
 
92

 
28%
Total interest expense
$
11,459

 
$
11,060

 
$
399

 
4%

Comparative Components of Interest Expense for the Nine Months Ended September 30, 2014 and 2013     
 
Nine Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands)
 
 
Revolving loan facility
$
8,325

 
$
5,273

 
$
3,052

 
58%
8.875 % Senior notes
3,882

 
11,648

 
(7,766
)
 
(67)%
7.250 % Senior notes
19,002

 
11,530

 
7,472

 
65%
Amortization of deferred debt issuance costs
5,415

 
2,890

 
2,525

 
87%
Amortization of debt discount and premium
1,141

 
230

 
911

 
396%
Impact of interest rate derivative activity
(2,864
)
 
—

 
(2,864
)
 
 
Other
407

 
231

 
176

 
76%
Capitalized interest
(957
)
 
(744
)
 
(213
)
 
29%
Total interest expense
$
34,351

 
$
31,058

 
$
3,293

 
11%
    
Interest expense includes includes $2.6 million and $1.2 million, respectively, of non-cash charges for the write-off of unamortized debt issuance costs and unamortized discount on notes payable, respectively. These charges relate to the April 1, 2014 redemption of the entire $175.0 million balance of 8.875% senior unsecured notes due in 2018. In addition, we incurred a debt prepayment premium of $7.8 million related to the senior note redemption. This transaction is recorded as “Debt prepayment premium" in the Consolidated and Condensed Statement of Operations for the nine months ended September 30, 2014 .

Indirect Selling, General and Administrative Expenses

 
Three Months Ended September 30,
 
Variance
 
Percent Change
 
Nine Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
2014
 
2013
 
 
 
(In thousands)
 
 
 
(In thousands)
 
 
Indirect selling, general and administrative expenses
$
4,479

 
$
3,779

 
$
700

 
19%
 
$
14,214

 
$
11,270

 
$
2,944

 
26%

Indirect selling, general and administrative expenses increased primarily as a result of higher allocated overhead expenses from Martin Resource Management.


47

Martin Resource Management allocates to us a portion of its indirect selling, general and administrative expenses for services such as accounting, treasury, clerical billing, information technology, administration of insurance, engineering, general office expense and employee benefit plans and other general corporate overhead functions we share with Martin Resource Management retained businesses. This allocation is based on the percentage of time spent by Martin Resource Management personnel that provide such centralized services. GAAP also permits other methods for allocation of these expenses, such as basing the allocation on the percentage of revenues contributed by a segment. The allocation of these expenses between Martin Resource Management and us is subject to a number of judgments and estimates, regardless of the method used. We can provide no assurances that our method of allocation, in the past or in the future, is or will be the most accurate or appropriate method of allocation for these expenses. Other methods could result in a higher allocation of selling, general and administrative expense to us, which would reduce our net income.

Under the Omnibus Agreement, we are required to reimburse Martin Resource Management for indirect general and administrative and corporate overhead expenses. The Conflicts Committee of our general partner approved the following reimbursement amounts:
 
Three Months Ended September 30,
 
Variance
 
Percent Change
 
Nine Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
2014
 
2013
 
 
 
(In thousands)
 
 
 
(In thousands)
 
 
Conflicts Committee approved reimbursement amount
$
3,134

 
$
2,655

 
$
479

 
18%
 
$
9,401

 
$
7,966

 
$
1,435

 
18%

The amounts reflected above represent our allocable share of such expenses. The Conflicts Committee will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.

Liquidity and Capital Resources
 
General

Our primary sources of liquidity to meet operating expenses, pay distributions to our unitholders and fund capital expenditures are cash flows generated by our operations and access to debt and equity markets, both public and private.  We have recently completed several transactions that have improved our liquidity position, helping fund our acquisitions and organic growth projects.  

As a result of these financing activities, discussed in further detail below, management believes that expenditures for our current capital projects will be funded with cash flows from operations, current cash balances and our current borrowing capacity under the expanded revolving credit facility. However, it may be necessary to raise additional funds to finance our future capital requirements.

Our ability to satisfy our working capital requirements, to fund planned capital expenditures and to satisfy our debt service obligations will also depend upon our future operating performance, which is subject to certain risks. Please read “Item 1A. Risk Factors” of our Form 10-K for the year ended December 31, 2013, filed with the SEC on March 3, 2014, as amended, by Amendment No. 1 on Form 10-K/A for the year ended December 31, 2013 filed on March 28, 2014, as well as our updated risk factors contained in “Part II - Other Information, Item 1A. Risk Factors” set forth elsewhere herein, for a discussion of such risks.

Debt Financing Activities
 
In April 2014, we completed a $150.0 million private placement add-on of 7.250% senior unsecured notes due in 2021. We filed with the SEC a registration statement to exchange these notes for substantially identical notes that are registered under the Securities Act and commenced an exchange offer on April 28, 2014. The exchange offer was completed during the second quarter of 2014.

On April 1, 2014, we redeemed all $175.0 million of the 8.875% senior unsecured notes due in 2018 from their holders. 

On June 27, 2014, we increased the maximum amount of borrowings and letters of credit under our revolving credit facility from $637.5 million to $900.0 million utilizing the accordion feature of our revolving credit facility.

48


Equity Offerings

On September 29, 2014, we completed a public offering of 3,450,000 common units at a price of $36.91 per common unit, before the payment of underwriters' discounts, commissions and offering expenses (per unit value is in dollars, not thousands).  Total proceeds from the sale of the 3,450,000 common units, net of underwriters' discounts, commissions and offering expenses were $122.6 million.  Our general partner contributed $2.6 million in cash to us in conjunction with the issuance in order to maintain its 2% general partner interest in us.  The net proceeds from the common unit issuances were used to pay down outstanding amounts under our revolving credit facility.

On August 29, 2014, we closed a private equity sale with Martin Resource Management, under which Martin Resource Management invested $45.0 million in cash in exchange for 1,171,265 common units. The pricing of $38.42 per common unit was based on the 10-day weighted average price of our common units for the 10 trading days ending August 8, 2014. In connection with the issuance of these common units, our general partner contributed $0.9 million in order to maintain its 2% general partner interest in us. The proceeds from the common unit issuances were used to pay down outstanding amounts under our revolving credit facility.

On May 12, 2014, we completed a public offering of 3,600,000 common units at a price of $41.51 per common unit, before the payment of underwriters' discounts, commissions and offering expenses (per unit value is in dollars, not thousands).  Total proceeds from the sale of the 3,600,000 common units, net of underwriters' discounts, commissions and offering expenses were $143.4 million.  Our general partner contributed $3.1 million in cash to us in conjunction with the issuance in order to maintain its 2% general partner interest in us.  The net proceeds from the common unit issuances were used to pay down outstanding amounts under our revolving credit facility.
    
In March 2014, we entered into an equity distribution agreement with multiple underwriters (the “Sales Agents”) for the ongoing distribution of our common units. Pursuant to this program, we offered and sold common unit equity through the Sales Agents for aggregate proceeds of $3.5 million and $20.6 million during the three and nine months ended September 30, 2014, respectively. The Partnership paid $0.1 million and $0.3 million in compensation to the Sales Agents for the three and nine months ended September 30, 2014, respectively. Under the the program, we issued 89,252 and 506,408 common units during the three and nine months ended September 30, 2014, respectively. Common units issued were at market prices prevailing at the time of the sale. We also received capital contributions from our general partner of $0.4 million during the nine months ended September 30, 2014 related to these issuances to maintain its 2.0% general partner interest in us. The net proceeds from the common unit issuances were used to pay down outstanding amounts under our revolving credit facility.

Due to the foregoing, we believe that cash generated from operations and our borrowing capacity under our credit facility will be sufficient to meet our working capital requirements, anticipated maintenance capital expenditures and scheduled debt payments in 2014.

Finally, our ability to satisfy our working capital requirements, to fund planned capital expenditures and to satisfy our debt service obligations will depend upon our future operating performance, which is subject to certain risks.  Please read “Item 1A. Risk Factors” of our Form 10-K for the year ended December 31, 2013, filed with the SEC on March 3, 2014, as amended, by Amendment No. 1 on Form 10-K/A for the year ended December 31, 2013 filed on March 28, 2014, as well as our updated risk factors contained in “Part II - Other Information, Item 1A. Risk Factors” set forth elsewhere herein, for a discussion of such risks.

Cash Flows - Nine Months Ended September 30, 2014 Compared to Nine Months Ended September 30, 2013

The following table details the cash flow changes between the nine months ended September 30, 2014 and 2013 :
 
Nine Months Ended September 30,
 
Variance
 
Percent Change
 
2014
 
2013
 
 
 
(In thousands)
 
 
 
 
Net cash provided by (used in):
 
 
 
 
 
 
 
Operating activities
$
53,001

 
$
62,168

 
$
(9,167
)
 
(15)%
Investing activities
(296,464
)
 
(167,119
)
 
(129,345
)
 
(77)%
Financing activities
229,927

 
99,834

 
130,093

 
130%
Net decrease in cash and cash equivalents
$
(13,536
)
 
$
(5,117
)
 
$
(8,419
)
 
(165)%


49

Net cash provided by operating activities for the nine months ended September 30, 2014 decreased compared to the prior year period primarily due to an $18.4 million unfavorable variance in working capital. In addition, 2013 included $8.7 million of cash used in discontinued operating activities. There was no cash used in or provided by operating activities in 2014.
    
Net cash used in investing activities for the nine months ended September 30, 2014 increased compared to the prior year period due to a $134.4 million equity investment in WTLPG in 2014. In addition, cash paid for acquisitions increased $26.1 million in the 2014 period. Finally, contributions to unconsolidated entities decreased $27.5 million in 2014.

Net cash provided by financing activities for the nine months ended September 30, 2014 increased compared to the prior period due to $331.6 million in net proceeds from the issuance of common units during 2014 offset by a $204.8 million decrease in net long-term debt borrowings in the current period.

Capital Expenditures

Our operations require continual investment to upgrade or enhance operations and to ensure compliance with safety, operational, and environmental regulations. Our capital expenditures consist primarily of:

• maintenance capital expenditures made to maintain existing assets and operations

• expansion capital expenditures to acquire assets to grow our business, to expand existing facilities, such as projects that increase operating capacity, or to reduce operating costs

• plant turnaround costs made at our refinery to perform maintenance, overhaul and repair operations and to inspect, test and replace process materials and equipment.

The following table summarizes our capital expenditure activity, excluding amounts paid for acquisitions, for the periods presented:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(In thousands)
 
(In thousands)
Expansion capital expenditures
$
12,979

 
$
36,999

 
$
45,262

 
$
61,118

Maintenance capital expenditures
4,306

 
2,973

 
13,260

 
7,473

Plant turnaround costs
90

 
—

 
4,000

 
—

    Total
$
17,375

 
$
39,972

 
$
62,522

 
$
68,591


Expansion capital expenditures were made primarily in our Terminalling and Storage, Marine Transportation, and Natural Gas Services segments during the three and nine months ended September 30, 2014 . Within our Terminalling and Storage segment, expenditures were made primarily at our Corpus Christi crude terminal, Smackover refinery, and certain smaller organic growth projects ongoing in our specialty terminalling operations. Within our Marine Transportation segment, expenditures were made related to the construction of new barges. Within our Natural Gas Services segment, expenditures were made on ongoing organic growth projects. Maintenance capital expenditures were made primarily in our Marine Transportation, Terminalling and Storage, and Sulfur Services segments to maintain our existing assets and operations during the three and nine months ended September 30, 2014 . For the three and nine months ended September 30, 2014 , plant turnaround costs relate to our Smackover refinery.

Expansion capital expenditures were made primarily in our Terminalling and Storage segment during the three and nine months ended September 30, 2013 . Within our Terminalling and Storage segment, expenditures were made primarily at our Corpus Christi crude terminal and Smackover refinery. Maintenance capital expenditures were made primarily in our Terminalling and Storage and Marine Transportation segments to maintain our existing assets and operations during the three and nine months ended September 30, 2013 .

Capital Resources

Historically, we have generally satisfied our working capital requirements and funded our capital expenditures with cash generated from operations and borrowings. We expect our primary sources of funds for short-term liquidity will be cash flows from operations and borrowings under our credit facility.

50

 
As of September 30, 2014 , we had $910.1 million of outstanding indebtedness, consisting of outstanding borrowings of $402.1 million (including unamortized premium) under our Senior Notes due in 2021 and $508.0 million under our revolving credit facility.
 
Total Contractual Cash Obligations.   A summary of our total contractual cash obligations as of September 30, 2014 , is as follows: 
 
Payments due by period
Type of Obligation
Total
Obligation
 
Less than
One Year
 
1-3
Years
 
3-5
Years
 
Due
Thereafter
Revolving credit facility
$
508,000

 
$
—

 
$
—

 
$
508,000

 
$
—

2021 Senior unsecured notes
402,077

 
—

 
—

 
—

 
402,077

Throughput commitment
40,641

 
5,069

 
10,632

 
11,327

 
13,613

Operating leases
40,190

 
11,462

 
17,924

 
5,643

 
5,161

Interest expense: ¹
 

 
 

 
 

 
 

 
 

Revolving credit facility
51,660

 
14,812

 
29,624

 
7,224

 
—

2021 Senior unsecured notes
186,083

 
29,000

 
58,000

 
58,000

 
41,083

Total contractual cash obligations
$
1,228,651

 
$
60,343

 
$
116,180

 
$
590,194

 
$
461,934


¹Interest commitments are estimated using our current interest rates for the respective credit agreements over their remaining terms.

Letters of Credit .  At September 30, 2014 , we had outstanding irrevocable letters of credit in the amount of $10.6 million, which were issued under our revolving credit facility.

Off Balance Sheet Arrangements.   We do not have any off-balance sheet financing arrangements.
 
Description of Our Long-Term Debt

2021 Senior Notes

For a description of our 2021, 7.250% senior unsecured notes, see “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Description of Our Long-Term Debt” in our Annual Report on Form 10-K for the year ended December 31, 2013.

Revolving Credit Facility

On November 10, 2005, we entered into a $225.0 million multi-bank credit facility, which was subsequently amended most recently on June 27, 2014 when we increased our maximum amount of borrowings to $900.0 million utilizing the accordion feature of our revolving credit facility.

As of September 30, 2014 , we had $508.0 million outstanding under the revolving credit facility and $10.6 million of letters of credit issued, leaving a maximum available to be borrowed under our credit facility for future revolving credit borrowings and letters of credit of $381.4 million. Subject to the financial covenants contained in our credit facility and based on our existing EBITDA (as defined in our credit facility) calculations, as of September 30, 2014 , we have the ability to incur approximately $80.5 million of that amount.

The revolving credit facility is used for ongoing working capital needs and general partnership purposes, and to finance permitted investments, acquisitions and capital expenditures.  During the nine months ended September 30, 2014 , the level of outstanding draws on our credit facility has ranged from a low of $220.0 million to a high of $657.0 million.

The credit facility is guaranteed by substantially all of our subsidiaries. Obligations under the credit facility are secured by first priority liens on substantially all of our assets and those of the guarantors, including, without limitation, inventory, accounts receivable, bank accounts, marine vessels, equipment, fixed assets and the interests in our subsidiaries and certain of our equity method investees.


51

We may prepay all amounts outstanding under the credit facility at any time without premium or penalty (other than customary LIBOR breakage costs), subject to certain notice requirements. The credit facility requires mandatory prepayments of amounts outstanding thereunder with the net proceeds of certain asset sales, equity issuances and debt incurrences.

Indebtedness under the credit facility bears interest at our option at the Eurodollar Rate (the British Bankers Association LIBOR Rate) plus an applicable margin or the Base Rate (the highest of the Federal Funds Rate plus 0.50%, the 30-day Eurodollar Rate plus 1.0%, or the administrative agent’s prime rate) plus an applicable margin. We pay a per annum fee on all letters of credit issued under the credit facility, and we pay a commitment fee per annum on the unused revolving credit availability under the credit facility. The letter of credit fee, the commitment fee and the applicable margins for our interest rate vary quarterly based on our leverage ratio (as defined in the credit facility, being generally computed as the ratio of total funded debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) and are as follows:
 
Leverage Ratio
Base Rate Loans
 
Eurodollar
Rate
Loans
 
Letters of Credit
Less than 3.00 to 1.00
0.75
%
 
1.75
%
 
1.75
%
Greater than or equal to 3.00 to 1.00 and less than 3.50 to 1.00
1.00
%
 
2.00
%
 
2.00
%
Greater than or equal to 3.50 to 1.00 and less than 4.00 to 1.00
1.25
%
 
2.25
%
 
2.25
%
Greater than or equal to 4.00 to 1.00 and less than 4.50 to 1.00
1.50
%
 
2.50
%
 
2.50
%
Greater than or equal to 4.50 to 1.00
1.75
%
 
2.75
%
 
2.75
%
    
The applicable margin for revolving loans that are LIBOR loans ranges from 1.75% to 2.75% and the applicable margin for revolving loans that are base prime rate loans ranges from 0.75% to 1.75%. The applicable margin for LIBOR borrowings at September 30, 2014 is 2.75%.  

The credit facility includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted leverage ratio is 5.25 to 1.00 with a temporary springing provision to 5.50 to 1.00 under certain scenarios. The maximum permitted senior leverage ratio (as defined in the credit facility but generally computed as the ratio of total secured funded debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) is 3.50 to 1.00. The minimum interest coverage ratio (as defined in the credit facility but generally computed as the ratio of consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges to consolidated interest charges) is 2.50 to 1.00.

In addition, the credit facility contains various covenants, which, among other things, limit our and our subsidiaries’ ability to: (i) grant or assume liens; (ii) make investments (including investments in our joint ventures) and acquisitions; (iii) enter into certain types of hedging agreements; (iv) incur or assume indebtedness; (v) sell, transfer, assign or convey assets; (vi) repurchase our equity, make distributions and certain other restricted payments, but the credit facility permits us to make quarterly distributions to unitholders so long as no default or event of default exists under the credit facility; (vii) change the nature of our business; (viii) engage in transactions with affiliates; (ix) enter into certain burdensome agreements; (x) make certain amendments to the Omnibus Agreement and our material agreements; (xi) make capital expenditures; and (xii) permit our joint ventures to incur indebtedness or grant certain liens.

The credit facility contains customary events of default, including, without limitation, (i) failure to pay any principal, interest, fees, expenses or other amounts when due; (ii) failure to meet the quarterly financial covenants; (iii) failure to observe any other agreement, obligation, or covenant in the credit facility or any related loan document, subject to cure periods for certain failures; (iv) the failure of any representation or warranty to be materially true and correct when made; (v) our, or any of our subsidiaries’ default under other indebtedness that exceeds a threshold amount; (vi) bankruptcy or other insolvency events involving us or any of our subsidiaries; (vii) judgments against us or any of our subsidiaries, in excess of a threshold amount; (viii) certain ERISA events involving us or any of our subsidiaries, in excess of a threshold amount; (ix) a change in control (as defined in the credit facility); and (x) the invalidity of any of the loan documents or the failure of any of the collateral documents to create a lien on the collateral.

The credit facility also contains certain default provisions relating to Martin Resource Management. If Martin Resource Management no longer controls our general partner, the lenders under the credit facility may declare all amounts outstanding thereunder immediately due and payable. In addition, an event of default by Martin Resource Management under its credit facility could independently result in an event of default under our credit facility if it is deemed to have a material adverse effect on us.

52


If an event of default relating to bankruptcy or other insolvency events occurs with respect to us or any of our subsidiaries, all indebtedness under our credit facility will immediately become due and payable. If any other event of default exists under our credit facility, the lenders may terminate their commitments to lend us money, accelerate the maturity of the indebtedness outstanding under the credit facility and exercise other rights and remedies. In addition, if any event of default exists under our credit facility, the lenders may commence foreclosure or other actions against the collateral.
 
As of October 29, 2014, our outstanding indebtedness includes $500.0 million under our credit facility.
 
We are subject to interest rate risk on our credit facility due to the variable interest rate and may enter into interest rate swaps to reduce this variable rate risk.

Seasonality

A substantial portion of our revenues are dependent on sales prices of products, particularly NGLs and fertilizers, which fluctuate in part based on winter and spring weather conditions. The demand for NGLs is strongest during the winter heating season and the refinery blending season. The demand for fertilizers is strongest during the early spring planting season. However, our Terminalling and Storage and Marine Transportation segments and the molten sulfur business are typically not impacted by seasonal fluctuations. A significant portion of our net income is derived from our terminalling and storage, sulfur and marine transportation businesses. Therefore, we do not expect that our overall net income will be impacted by seasonality factors.  However, extraordinary weather events, such as hurricanes, have in the past, and could in the future, impact our Terminalling and Storage and Marine Transportation segments.

Impact of Inflation

Inflation did not have a material impact on our results of operations for the nine months ended September 30, 2014 or 2013 .  Although the impact of inflation has been insignificant in recent years, it is still a factor in the U.S. economy and may increase the cost to acquire or replace property, plant and equipment. It may also increase the costs of labor and supplies.  In the future, increasing energy prices could adversely affect our results of operations. Diesel fuel, natural gas, chemicals and other supplies are recorded in operating expenses.  An increase in price of these products would increase our operating expenses which could adversely affect net income. We cannot provide assurance that we will be able to pass along increased operating expenses to our customers.

Environmental Matters

Our operations are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdictions in which these operations are conducted. We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during the nine months ended September 30, 2014 or 2013 .

53


Item 3.
Quantitative and Qualitative Disclosures about Market Risk

Commodity Risk. The Partnership from time to time uses derivatives to manage the risk of commodity price fluctuation. Commodity risk is the adverse effect on the value of a liability or future purchase that results from a change in commodity price.  We have established a hedging policy and monitor and manage the commodity market risk associated with potential commodity risk exposure.  In addition, we focus on utilizing counterparties for these transactions whose financial condition is appropriate for the credit risk involved in each specific transaction.     

We are exposed to commodity risk associated with the future purchase of natural gas.  We utilize derivatives to manage exposure associated with commodity price risk by entering into call options to place a limit on the commodity price of the future purchase of base gas.  All derivatives and hedging instruments are included on the balance sheet as an asset or liability measured at fair value and changes in fair value are recognized currently in earnings.

As of September 30, 2014, we had a notional quantity of 3,631,740 MMBtu of natural gas call options with a strike price of $4.50 per MMBtu.  These options manage the purchase of base gas at Monroe Gas Storage Company, LLC for the portion of base gas that is currently leased with Credit Suisse scheduled to be returned in January and February 2015.  The options settle in two increments of 2,345,498 MMBtu and 1,286,242 MMBtu on January 31, 2015 and February 28, 2015, respectively. 
Commodity Derivative Contracts in Place
As of September 30, 2014
(Dollars in Thousands)
Date of Option
 
Counterparty
 
Settlement Date
 
Notional Amount (MMBTU)
 
Settlement
 
Pricing Terms
 
Fair Value Asset
 
Fair Value Liability
June 2012
 
RBC
 
January - February 2015
 
3,631,740

 
Fixed price of $4.50/MMBTU settled against Henry Hub Natural Gas Index
 
Fixed price of $4.50/MMBTU settled against Henry Hub Natural Gas Index
 
$
830

 
$
—

 
 
 
 
 
 
3,631,740

 
 
 
 
 
$
830

 
$
—


Interest Rate Risk. We are exposed to market risks associated with interest rates. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We minimize this market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. From time to time, we enter into interest rate swaps to manage interest rate risk associated with our variable rate credit facility.

We are exposed to variable interest rate risk as a result of borrowings under our revolving credit facility, which had a weighted-average interest rate of 2.92% as of September 30, 2014 .  Based on the amount of unhedged floating rate debt owed by us on September 30, 2014 , the impact of a 1% increase in interest rates on this amount of debt would result in an increase in interest expense and a corresponding decrease in net income of approximately $5.1 million annually.

We are not exposed to changes in interest rates with respect to our senior unsecured notes due in 2021 as these obligations are fixed rates.  The estimated fair value of our senior unsecured notes was approximately $420.9 million as of September 30, 2014 , based on market prices of similar debt at September 30, 2014 .  Market risk is estimated as the potential decrease in fair value of our long-term debt resulting from a hypothetical increase of 1% in interest rates. Such an increase in interest rates would result in approximately a $19.4 million decrease in fair value of our long-term debt at September 30, 2014 .

We have entered into interest rate swap agreements to reduce the amount of interest we pay on our senior unsecured notes due in February of 2021. Pursuant to the terms of these interest rate swap agreements, we pay a variable rate interest payment based on the three-month LIBOR and receive a fixed rate. The net difference to be paid or received from the counterparties under the interest rate swap agreement is settled semiannually and is recognized as an adjustment to interest expense. The risk associated with these interest rate swaps exposes us to an increase in interest rates which would result in an increase in interest expense and a corresponding decrease in net income. The impact of a 1% increase in interest rates would result in an decrease in the fair value of our interest rate swaps of $14.9 million.


54


At September 30, 2014 , we are a party to interest rate swap agreements as shown below:
Interest Rate Swaps
As of September 30, 2014
(Dollars in Thousands)
Date of Swap
 
Bank
 
Maturity
 
Notional Amount
 
Interest Rate We Pay
 
Interest Rate We Receive
 
Fair Value Asset
 
Fair Value Liability
May 2014
 
Wells Fargo
 
February 2021
 
$
100,000

 
3 MO LIBOR plus 4.925%
 
7.25%
 
$
—

 
$
271

May 2014
 
SunTrust
 
February 2021
 
100,000

 
3 MO LIBOR plus 4.925%
 
7.25%
 
—

 
271

September 2014
 
SunTrust
 
September 2019
 
50,000

 
3 MO LIBOR
 
2.09%
 
49

 
—

 
 

 

 
$
250,000

 

 
 
 
$
49

 
$
542

  



55


Item 4.
Controls and Procedures

E valuation of disclosure controls and procedures. In accordance with Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of our general partner, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of our general partner concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this report, to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There were no changes in our internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

56


PART II - OTHER INFORMATION

Item 1.
Legal Proceedings

From time to time, we are subject to certain legal proceedings claims and disputes that arise in the ordinary course of our business. Although we cannot predict the outcomes of these legal proceedings, we do not believe these actions, in the aggregate, will have a material adverse impact on our financial position, results of operations or liquidity. Information regarding legal proceedings is set forth in Note 17 in Part I of this Form 10-Q.

Item 1A.
Risk Factors

There have been no material changes to the risk factors disclosed in our annual report on Form 10-K filed with the SEC on March 3, 2014, as amended, by Amendment No. 1 on Form10-K/A for the year ended December 31, 2013 filed on March 28, 2014.

Item 6.
Exhibits

The information required by this Item 6 is set forth in the Index to Exhibits accompanying this quarterly report and is incorporated herein by reference.

57


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
Martin Midstream Partners L.P.
 
 
 
 
 
 
By:
Martin Midstream GP LLC
 
 
 
Its General Partner
 
 
 
 
 
Date: 10/29/2014
By:
/s/ Robert D. Bondurant
 
 
 
Robert D. Bondurant
 
 
 
Executive Vice President, Treasurer, Chief Financial Officer, and Principal Accounting Officer
 

58


INDEX TO EXHIBITS
Exhibit
Number
Exhibit Name
 
 
3.1
Certificate of Limited Partnership of Martin Midstream Partners L.P. (the “Partnership”), dated June 21, 2002 (filed as Exhibit 3.1 to the Partnership's Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference).
3.2
Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated November 25, 2009 (filed as Exhibit 10.1 to the Partnership's Amendment to Current Report on Form 8-K/A (SEC File No. 000-50056), filed January 19, 2010, and incorporated herein by reference).
3.3
Amendment No. 2 to the Second Amended and Restated Agreement of Limited Partnership of the Partnership dated January 31, 2011 (filed as Exhibit 3.1 to the Partnership's Current Report on Form 8-K (SEC File No. 000-50056), filed February 1, 2011, and incorporated herein by reference).
3.4
Amendment No. 3 to the Second Amended and Restated Agreement of Limited Partnership of the Partnership dated October 2, 2012 (filed as Exhibit 10.5 to the Partnership's Current Report on Form 8-K (SEC File No. 000-50056), filed October 9, 2012, and incorporated herein by reference).
3.5
Certificate of Limited Partnership of Martin Operating Partnership L.P. (the “Operating Partnership”), dated June 21, 2002 (filed as Exhibit 3.3 to the Partnership's Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference).
3.6
Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated November 6, 2002 (filed as Exhibit 3.2 to the Partnership's Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference).
3.7
Certificate of Formation of Martin Midstream GP LLC (the “General Partner”), dated June 21, 2002 (filed as Exhibit 3.5 to the Partnership's Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference).
3.8
Amended and Restated Limited Liability Company Agreement of the General Partner, dated August 30, 2013 (filed as Exhibit 3.1 to the Partnership's Current Report on Form 8-K (Reg. No. 000-50056), filed September 3, 2013, and incorporated herein by reference).
3.9
Certificate of Formation of Martin Operating GP LLC (the “Operating General Partner”), dated June 21, 2002 (filed as Exhibit 3.7 to the Partnership's Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference).
3.10
Limited Liability Company Agreement of the Operating General Partner, dated June 21, 2002 (filed as Exhibit 3.8 to the Partnership's Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference).
3.11*
Certificate of Formation of Arcadia Gas Storage, LLC, dated June 26, 2006.
3.12*
Company Agreement of Arcadia Gas Storage, LLC, dated December 27, 2006.
3.13*
Amendment to the Company Agreement of Arcadia Gas Storage, LLC, dated September 5, 2014.
3.14*
Certificate of Formation of Cadeville Gas Storage LLC, dated May 23, 2008.
3.15*
Limited Liability Company Agreement of Cadeville Gas Storage LLC, dated May 23, 2008.
3.16*
First Amendment to the Limited Liability Company Agreement of Cadeville Gas Storage LLC, dated April 16, 2012.
3.17*
Second Amendment to the Limited Liability Company Agreement of Cadeville Gas Storage LLC, dated September 5, 2014.
3.18*
Certificate of Formation of Monroe Gas Storage Company, LLC, dated June 14, 2006.
3.19*
Amended and Restated Limited Liability Company Agreement of Monroe Gas Storage Company, LLC, dated May 31, 2011.
3.20*
First Amendment to the Amended and Restated Limited Liability Company Agreement of Monroe Gas Storage Company, LLC, dated September 5, 2014.
3.21*
Certificate of Formation of Perryville Gas Storage LLC, dated May 23, 2008.
3.22*
Limited Liability Company Agreement of Perryville Gas Storage LLC, dated June 16, 2008.
3.23*
First Amendment to the Limited Liability Company Agreement of Perryville Gas Storage LLC, dated April 14, 2010.
3.24*
Second Amendment to the Limited Liability Company Agreement of Perryville Gas Storage LLC, dated September 5, 2014.
3.25*
Certificate of Formation of Cardinal Gas Storage Partners LLC, dated April 2, 2008.

59


3.26*
Third Amended and Restated Limited Liability Company Agreement of Cardinal Gas Storage Partners LLC (F/K/A Redbird Gas Storage LLC) dated October 27, 2014.
3.27*
Certificate of Merger of Cardinal Gas Storage Partners LLC with and into Redbird Gas Storage LLC, dated October 27, 2014.
4.1
Specimen Unit Certificate for Common Units (contained in Exhibit 3.2).
4.2
Specimen Unit Certificate for Subordinated Units (filed as Exhibit 4.2 to Amendment No. 4 to the Partnership's Registration Statement on Form S-1 (Reg. No. 333-91706), filed October 25, 2002, and incorporated herein by reference).
4.3
Indenture (including form of 7.250% Senior Notes due 2021), dated February 11, 2013, by and among the Partnership, Martin Midstream Finance Corp., the Guarantors named therein and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to the Partnership's Current Report on Form
8-K (SEC File No. 000-50056), filed February 12, 2013, and incorporated herein by reference).
4.4*
Second Supplemental Indenture, to the Indenture dated February 11, 2013 dated September 30, 2014, by and among the Partnership, Martin Midstream Finance Corp., the Guarantors named therein and Wells Fargo Bank National Association, as trustee.
4.5*
Third Supplemental Indenture, to the Indenture dated February 11, 2013 dated October 27, 2014, by and among the Partnership, Martin Midstream Finance Corp., the Guarantors named therein and Wells Fargo Bank National Association, as trustee.
10.1
Third Amendment to Third Amended and Restated Credit Agreement, dated June 27, 2014, among the Partnership, the Operating Partnership, Royal Bank of Canada and the other Lenders as set forth therein (filed as Exhibit 10.1 to the Partnership's Current Report on Form 8-K (SEC File No. 000-50056), filed July 1, 2014, and incorporated herein by reference).
10.2
Membership Interests Purchase Agreement, dated August 10, 2014, by and among Energy Capital Partners and its affiliated funds and Redbird Gas Storage LLC (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (Sec File No. 000-50056), filed August 12, 2014, and incorporated herein by reference).
10.3
Common Unit Purchase Agreement, dated August 20, 2014, by and between the Partnership and Martin Product Sales LLC (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (Sec File No. 000-50056), filed August 22, 2014, and incorporated herein by reference).
10.4
Amended and Restated Common Unit Purchase Agreement, dated August 29, 2014, by and between the Partnership and Martin Product Sales LLC (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (Sec File No. 000-50056), filed September 2, 2014, and incorporated herein by reference).
10.5*
2014 Amended and Restated Tolling Agreement, dated October 28, 2014, by and between the Operating Partnership and Cross Oil Refining & Marketing, Inc.
31.1*
Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
Certification of Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
32.2*
Certification of Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
101
Interactive Data: the following financial information from Martin Midstream Partners L.P.’s Quarterly Report on Form 10-Q for the fiscal quarter ended September, 2014, formatted in Extensible Business Reporting Language: (1) the Consolidated and Condensed Balance Sheets; (2) the Consolidated and Condensed Statements of Income; (3) the Consolidated and Condensed Statements of Cash Flows; (4) the Consolidated and Condensed Statements of Capital; (5) the Consolidated and Condensed Statements of Other Comprehensive Income; and (6) the Notes to Consolidated and Condensed Financial Statements.
* Filed or furnished herewith


60


Exhibit 3.11

Filed in the Office of the
Secretary of State of Texas
Filing #: 800673004 06/26/2006
Document #: 134455950002

CERTIFICATE OF FORMATION
OF
Arcadia Gas Storage, LLC

1.
The filing entity being formed is a limited liability company. The name of the entity is Arcadia Gas Storage, LLC.

2.
The initial registered agent is an individual resident of the state whose name is Chris Booth. The business address of the registered agent and the registered office address is 4200 Stone Road, Kilgore, TX 75662.

3.
The limited liability company is to be managed by managers. The names and addresses of the initial managers are as follows:
Name
Address
Ruben Martin
4200 Stone Road,
Kilgore, TX, USA 75662
Robert Bondurant
4200 Stone Road,
Kilgore, TX, USA 75662

4.
The purpose for which the company is organized is for the transaction of any and all lawful business for which limited liability companies may be organized under the Texas Business Organizations Code.

5.
The name and street address of the organizer is Chris Booth, #1 Gulf States Road, Beaumont TX 77701.

6.
This document becomes effective when the document is filed by the Secretary of State.



[ Signature Page Follows ]





The undersigned signs this document subject to the penalties imposed by law for the submission of a materially false or fraudulent instrument.



ORGANIZER

/s/ Chris Booth
Name: Chris Booth




Exhibit 3.12

COMPANY AGREEMENT
OF
ARCADIA GAS STORAGE LLC
December 27, 2006
THE MEMBERSHIP INTERESTS DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, THE TEXAS SECURITIES ACT OR THE SECURITIES LAWS OF ANY OTHER STATE. SUCH MEMBERSHIP INTERESTS MAY NOT BE TRANSFERRED UNLESS REGISTERED UNDER APPLICABLE SECURITIES LAWS OR EXEMPT FROM SUCH REGISTRATION AND THE COMPANY MAY REQUIRE SUCH EVIDENCE AS THE COMPANY DEEMS APPROPRIATE TO CONFIRM THAT ANY PROPOSED TRANSFER COMPLIES WITH SUCH REQUIREMENTS. THE COMPANY IS NOT OBLIGATED TO REGISTER ANY OF SUCH MEMBERSHIP INTERESTS OR TO MAINTAIN ANY INFORMATION ABOUT THE COMPANY PUBLICLY AVAILABLE.









COMPANY AGREEMENT
OF
ARCADIA GAS STORAGE LLC
This Company Agreement, is initially made and entered into this 27th day of December, 2006 as the COMPANY AGREEMENT OF ARCADIA GAS STORAGE LLC, a Texas limited liability company (the "Company"), by the undersigned Managers of the Company, and is as follows:
ARTICLE I.
DEFINITIONS
1.01     Certain Definitions . The following terms shall have the meanings specified below when used in this Agreement unless otherwise expressly specified herein to the contrary:

(a) " Accounting Year " means the Company's accounting year for accounting and tax purposes, which shall be the calendar year.

(b) " Law " means the Texas Limited Liability Company Law, as part of the Texas Business Organizations Code, as such statute may be amended from time to time. All references herein to the Law shall include any corresponding provision or provisions of succeeding law.

(c) " Additional Contribution " means the portion of the Agreed Contribution of a Member to the Company which is in excess of such Member's Initial Contribution.

(d) " Agreed Contribution " means the sum of a Member's Initial Contribution and Additional Contributions, if any, which such Member has agreed in writing to make to the Company.

(e) " Certificate " mean the Certificate of Formation of the Company filed with the Secretary of State of the State of Texas on the 26th day of June, 2006, as the same may be amended from time to time as provided in the Law and this Agreement.

(f) " Authorized Purposes " shall mean the purposes of the Company specified in the Certificate or authorized by a vote of a Super-Majority in Interest of all of the Members in accordance with the provisions of this Agreement.

(g) " Capital Account " means, with respect to any Member, the account maintained for such Member in accordance with Article V.C. of this Agreement.

(h) " Capital Contribution " means any Initial Contribution, Additional Contribution or Optional Contribution to the capital of the Company in cash or property when and as such contribution is actually made to the Company by a Member.

(i) " Code " means the Internal Revenue Code of 1986, as amended.

(j) " Company " means Arcadia Gas Storage LLC, a Texas limited liability company organized pursuant to the Law.

(k) " Distributable Cash " means the amount by which (1) the aggregate amount of all cash and other current funds on account from time to time held by the Company on hand or in bank accounts or




other temporary investments pending distribution, exceeds (2) the aggregate amount of all amounts paid or set aside by the Company for (A) all principal and interest payments on indebtedness of the Company and all other sums payable to lenders; (B) all cash expenditures incurred incident to the normal operations of the Company's business; and (C) such cash reserves as the Manager deems reasonably necessary to the proper operation of the Company's business.

(l) " Initial Contribution " means the initial Capital Contribution to the Company made by a Member.

(m) " Losses " means, for each Accounting Year (or portion thereof, as may be applicable), the losses and deductions of the Company determined in accordance with accounting principles consistently applied from year to year under the Company's Method of Accounting and as reported, separately or in the aggregate as appropriate, on the Company's information tax return filed for federal income tax purposes, plus any expenditures described in Section 705(a)(2)(B) of the Code.

(n) " Manager " means each individual named as such in the initial Certificate or any other person who succeeds such individual in such capacity and any other individual who is elected to act as a Manager of the Company as provided in this Agreement.

(o) " Managers " mean all persons at any time then acting in the capacity as a Manager of the Company (unless reference is made in specific instances to a smaller group of Managers).

(p) " Majority " means, with respect to any referenced group of Managers, a combination of any of such Managers constituting more than fifty percent (50%) of the number of Managers of such referenced group who are then elected and qualified.

(q) " Majority in Interest " means, with respect to any referenced group of Members, a combination of any of such Members who, in the aggregate, own more than fifty percent (50%) of the Membership Interests owned by all of such referenced group of Members.

(r) " Member " means each person designated as a Member of the Company on Schedule "A" which is attached hereto and hereby made a part hereof by reference for all purposes, any successor to all or any part of any such person's Membership Interest in the Company who has been duly admitted as a Member of the Company in accordance with this Agreement and any other person admitted as an additional Member of the Company in accordance with this Agreement.

(s) " Members " mean all Members of the Company collectively in their capacity as Members of the Company (unless reference is made in specific instances to a smaller group of Members).

(t) " Membership Interest " means the percentage of ownership interest of a Member of the Company at any particular time. The initial Membership Interests of the initial Members of the Company are specified in Schedule "A" attached hereto.

(u) " Method of Accounting " shall mean a cash basis method of accounting.

(v) " Optional Contribution " means a Capital Contribution by a Member which is in addition to such Member's Agreed Contribution.





(w) " Principal Office " means 4200 Stone Road, Kilgore, Texas 75663 or such other location within the State of Texas as may from time to time be determined by the Managers and specified by written notice from the Managers to the Members.

(x) " Profits " mean, for each Accounting Year (or portion thereof, as may be applicable), the income and gains of the Company determined in accordance with accounting principles consistently applied from year to year under the Company's Method of Accounting and as reported, separately or in the aggregate as appropriate, on the Company's information tax return filed for federal income tax purposes, plus any income described in Section 705(a)(1)(B) of the Code.

(y) " Registered Agent " means the registered agent for the Company specified in the Certificate, as such registered agent may be changed from time to time in accordance with the Law.

(z) " Registered Office " means the registered office for the Company specified in the Certificate, as such registered office may be changed from time to time in accordance with the Law.

(aa) " Agreement " means this Agreement of the Company as originally made and as amended from time to time as herein provided.

(bb)    " Super-Majority " means, with respect to any referenced group of Managers, a combination of any of such Managers constituting more than two-thirds (2/3) of the number of Managers of such referenced group who are then elected and qualified.

(cc)    " Super-Majority in Interest " means, with respect to any referenced group of Members, a combination of any of such Members who, in the aggregate, own two-thirds (2/3) or more of the Membership Interests owned by all of such referenced group of Members.

(dd)    " Term " means the term of existence of the Company, which shall continue until its business and affairs are wound up as provided herein.

(ee)    " Treasury Regulations " means the regulations adopted from time to time by the U. S. Department of the Treasury under and pursuant to the Code.

1.02.     Additional Definitions . Additional terms which are defined in other provisions of this Agreement shall have the meanings assigned to such terms in such provisions.

ARTICLE II.
MEMBERS

2.01.     Place of Meetings of Members . All meetings of the Members shall be held at the Principal Office of the Company or at such other place within or without the State of Texas as may be determined by the Managers and set forth in the respective notice or waivers of notice of such meeting or other written consent of all persons entitled to vote at such meeting.

2.02.     Annual Meetings of Members . The annual meeting of the Members for the election of Managers and the transaction of such other business as may properly come before the meeting, shall be held at such time and on such date as shall be designated by the Managers from time to time and stated in the notice of the meeting. Annual meetings of the Members shall be called in the same manner as provided in this Agreement for calling special meetings of the Members, except that the purposes of such annual




meetings need not be stated in the notices of such annual meetings unless and to the extent otherwise required by applicable law with respect to such annual meetings.

2.03.     Special Meetings of Members . Special meetings of the Members may be called by the Managers or by Members owning, in the aggregate, thirty percent (30%) or more of the Membership Interests. Business transacted at all special meetings shall be confined to the purposes stated in the notices of such meetings.

2.04.     Notices of Meetings of Members . Written or printed notice stating the place, date and time of the meeting and, in the case of special meetings, the purpose or purposes for which such meeting is called, shall be delivered not less than ten (10) days nor more than sixty (60) days prior to the date of such meeting, either personally or by mail, by or at the direction of the Managers or the Members calling such meeting, to each Member of record entitled to vote at such meeting. If mailed, such notice shall be deemed to have been delivered when deposited in the United States mail, postage prepaid, addressed to the Member at the address of such Member as it appears on the transfer records of the Company.

2.05.     Waiver of Notice . Attendance of a Member at any meeting shall constitute a waiver of notice of such meeting, except where the Member attends a meeting for the express purpose of objecting to the transaction of business at such meeting on the ground that such meeting is not lawfully called or convened. Any member may waive notice of any meeting by signing a written waiver to such effect before or after such meeting and such waiver shall be effective for all purposes as satisfying all notice requirements of this Agreement or applicable law.

2.06.     Quorum of Members . A Super-Majority of Interest of all the Members shall constitute a quorum at all meetings of the Members, except as otherwise provided by law or the Certificate. Once a quorum is present at a meeting of the Members, the subsequent withdrawal from the meeting of any Member prior to adjournment or the refusal or any Member to vote shall not affect the presence of a quorum at the meeting. If, however, such quorum shall not be present at any meeting of the Members, the Members present and entitled to vote at such meeting shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until Members owning the requisite amount of Membership Interests shall be present or represented.

2.07.     Voting at Meetings of Members . At any meeting of the Members at which a quorum is present, the vote of the Members owning a Majority in Interest of the Members present in person or by proxy and entitled to vote at such meeting shall be the act of the Members, unless the vote of a greater percentage of the Membership Interests is required by law, the Certificate or this Agreement.

2.08.     Voting by Proxy . Each Member shall be authorized to vote by proxy at any meeting of the Members. Each proxy must be executed in writing by the Member or such Member's duly authorized attorney-in-fact. No proxy shall be valid more than eleven (11) months after the date of its execution. Each proxy shall be revocable unless the proxy form states conspicuously that the proxy is to be irrevocable and the proxy is coupled with an interest.

2.09.     Cumulative Voting . Commutative voting is not permitted.

2.10.     Record Date . For the purpose of determining Members entitled to notice of or to vote at any meeting of Members or any adjournment thereof, or entitled to receive any distribution by the Company, or in order to make a determination of Members for any other proper purpose, the Managers shall fix in advance a date as the record date for any such determination of Members. Such record date in any case shall




not be more than sixty (60) days, and in the case of a meeting of Members not less than ten (10) days, prior to the date on which the particular action requiring such determination of Members is to be taken. If a determination of Members entitled to vote at any meeting of Members has been made as provided in this Section 2.10, such determination shall apply to any adjournment thereof. The transfer book of the Company shall not be closed for the purpose of making a determination of Members under this Section 2.10.

2.11.     List of Members Entitled to Vote . The Managers shall make, at least ten (10) days before each meeting of Members, a complete list of the Members entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order by the surnames of the Members, which list shall contain the address of each such Member and the Membership Interest held by each such Member. Such list shall, for a period of ten (10) days prior to such meeting, be kept on file at the Registered Office of the Company and shall be subject to inspections by any Member at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection of any Member during the whole time of the meeting. The failure to comply with the provisions of this Section 2.11, however, shall not affect the validity of any action taken at any such meeting of the Members.

2.12.     Members of Record . The Company shall be entitled to treat the holder of record of any Membership Interest as the holder in fact of such Membership Interest for all purposes. Accordingly, the Company shall not be bound to recognize any equitable or other claim to or interest in any Membership Interest on the part of any other person which is not reflected on the transfer records of the Company, whether or not it shall have actual or other notice of such claim or interest, except as expressly provided to the contrary by this Agreement or applicable law.

2.13.     Actions by Members Without a Meeting . Any action required by the Law or this Agreement to be taken by the Members at a meeting may be taken by the Members without a meeting, without prior notice and without a vote, if a written consent or consents, setting forth the action so taken, shall be signed by members having not less than the minimum number of votes which would be necessary to take such action at a meeting at which all Members entitled to vote on the action were present and voted.

2.14.     Meetings by Conference Telephone . Subject to the provisions of this Agreement regarding notice and waiver thereof, annual and special meetings of the Members may be conducted by conference telephone call or other electronic means allowing all Members present at such meeting to communicate among themselves.

2.15.     Membership Certificates . Membership certificates in the form determined by the Managers shall be delivered representing all membership interest to which Members are entitled. Such membership certificates shall be consecutively numbered, and shall be entered in the books of the Company as they are issued. Each membership certificate shall state on the face thereof the holder's name, the membership interest, and such other matters as may be required by the laws of the State of Texas. They shall be signed by an officer of the Company, and may be sealed with the seal of the Company or a facsimile thereof if adopted. The signature of such officer upon the membership certificates may be facsimile.

2.16.     Replacement of Lost or Destroyed Membership Certificate . The Managers may direct a new membership certificate or certificates to be issued in place of any membership certificate or certificates theretofore issued by the Company alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the holder of record thereof, or his duly authorized attorney or legal representative who is claiming the membership certificate to be lost or destroyed.





2.17.     Transfer of Membership Interest . Upon surrender to the Company or the transfer agent of the Company of a membership certificate for membership interest duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Company to issue a new membership certificate to the person entitled thereto, cancel the old membership certificate and record the transaction upon its books. All transfers of Membership Interests shall be governed by Article VIII below.

2.18.     Preemptive Rights . No Member or any other person shall have any preemptive right whatsoever.

ARTICLE III.
RIGHTS AND DUTIES OF MANAGERS

3.01.     Management Powers of Managers . The powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under, its designated Manager or Managers. In addition to the powers and authorities expressly conferred by this Agreement upon the Managers, the Managers may exercise all such powers of the Company and do all such lawful acts and things as are not directed or required to be exercised or done by the Members by the Law, the Certificate or this Agreement, including, but not limited to, contracting for or incurring debts, liabilities and other obligations on behalf of the Company for Authorized Purposes.

3.02.     Number of Managers . The number of Managers shall be one (1). The number of Managers may be increased or decreased from time to time, but no increase or decrease in the number of Managers shall have the effect of shortening the term of any incumbent Manager.

3.03.     Qualification of Managers . Managers need not be residents of the State of Texas. Managers need not be Members of the Company.

3.04.     Election of Managers . At the first annual meeting of the Members and at each annual meeting thereafter, the Members shall elect the authorized number of Managers to hold office until the next succeeding annual meeting. Unless removed in accordance with this Agreement, each Manager shall hold office for the terms for which such Manager is elected and until such Manager's successor shall be elected and qualified.

3.05.     Removal of Managers . All or any lesser number of the Managers may be removed by the Members, with or without cause, by the affirmative vote of a Majority of all of the Membership Interests in the Company at a special meeting of the Members called for such purpose. Any such removal shall be effective immediately, regardless of whether a successor Manager is elected simultaneously.

3.06.     Vacancies . Except as otherwise stated below, any vacancy occurring in the Managers may be filled by the affirmative vote of a majority of the remaining Managers though less than a quorum of the Managers and any Manager elected to fill such a vacancy shall be elected for the unexpired term of such Manager's predecessor in office; provided, however, that any such vacancy which has not previously been filled by the remaining Managers may be filled by vote of the Members at any special meeting of the Members called for such purpose. In the event there are no Members and the sole Manager desires to resign from such position, the sole Manager may appoint one or more individuals to succeed him and serve in such capacity until a successor has been duly elected and qualified by the Members. Any vacancy in the Managers resulting from an increase in the authorized number of Managers shall be filled by vote of the Members at an annual meeting or a special meeting called for such purpose. Any vacancy in the Managers resulting from the removal




of a Manager shall be filled by vote of the Members at an annual meeting or a special meeting called for such purpose and need not be made concurrently with such removal.

3.07.     Place of Meetings of Managers . All meetings of the Managers may be held either within or without the State of Texas.

3.08     Annual Meetings of Managers . The annual meeting of the Managers shall be held, without further notice, immediately following the annual meeting of Members, and at the same place, or at such other time and place as shall be fixed with the consent of all the Managers.

3.09.     Regular Meetings of Managers . Regular meetings of the Managers may be held without notice at such time and place either within or without the State of Texas as shall from time to time be determined by the Managers.

3.10.     Special Meetings of Managers . Special meetings of the Managers may be called by any Manager on not less than three (3) days' notice to each Manager, personally or by mail, telephone, telegram or facsimile transmission.

3.11     Notices and Waivers of Notice . Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Managers need be specified in the notice or waiver of notice of such meeting. Attendance of a Manager at any meeting shall constitute a waiver of notice of such meeting, except where the Manager attends a meeting for the express purpose of objecting to the transaction of business at such meeting on the ground that such meeting is not lawfully called or convened. Any Manager may waive notice of any meeting by signing a written waiver to such effect before or after such meeting and such waiver shall be effective for all purposes as satisfying all notice requirements of this Agreement or applicable law.

3.12     Quorum of Managers . At all meetings of the Managers, the presence of a Majority of the Managers shall be necessary and sufficient to constitute a quorum for the transaction of all business unless a greater number is required by law. If a quorum shall not be present at any meeting of the Managers, the Managers present at the meeting may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

3.13.     Voting at Meetings of Managers . The act of a Majority of the Managers present at a meeting at which a quorum is present shall be the act of the Managers, except as otherwise provided by law.

3.14.     Compensation of Managers . Managers, as such, shall not receive any stated salary for their services, but shall receive such compensation for their services as may be from time to time be approved by vote of the Members at an annual meeting or a special meeting called for such purpose. Nothing in this Agreement shall be construed to preclude any Manager from serving the Company in any other capacity and receiving compensation for such purposes.

3.15.     Committees of Managers . The Managers may designate from among the Managers one or more committees, each of which shall be comprised of one or more Managers, and may designate one or more of the Managers as alternate members of any committee, who may, subject to any limitations imposed by the Managers, replace absent or disqualified Managers at any meeting of that committee. Any such committee shall have and may exercise all of the authority of the Managers to the extent delegated by the Managers to such committee subject to the limitations on such delegation set forth in the Law.





3.16.     Contracts and Obligations . Debts, liabilities and other obligations may be incurred, and contracts and other instruments may be executed, on behalf of the Company for any Authorized Purpose by any Manager only if, when and as such action is authorized by the affirmative vote of a Majority of the Managers present at any meeting at which there is a quorum.

ARTICLE IV.
OFFICERS

4.01.     President . The Managers shall be authorized to establish the position of President (herein so called) of the Company and to elect a President from among the Managers then elected and serving as such. Any such President who is elected by the Managers shall be responsible for supervising and conducting the day-to-day activities of the Company and presiding at meetings of the Managers and Members and shall perform such other duties and exercise such other authorities as may from time to time be designated by resolution of the Managers. Any such President who is elected shall serve until the next annual meeting of the Managers and until a successor President is elected and qualified.

4.02.     Secretary . The Managers shall be authorized to establish the position of Secretary (herein so called) of the Company and to elect a Secretary from among the Managers then elected and serving as such. Any such Secretary who is elected by the Managers shall be responsible for maintaining, or supervising the maintenance of, the books and records of the Company and recording minutes of all meetings of the Managers and Members and shall perform such other duties and exercise such other authorities as may from time to time be designated by resolution of the Managers. Any such Secretary who is elected shall serve until the next annual meeting of the Managers and until a successor Secretary is elected and qualified.

4.03.     Other Officers . The Managers shall be authorized to designate one or more persons as officers or agents of the Company, who may but are not required to be Managers. Any such officer so designated by the Managers shall perform such duties and exercise such authorities as may from time to time be designated by resolution of the Managers. Any such officer who is designated by the Managers shall serve until the next annual meeting of the Managers and until a successor officer is elected and qualified.

4.04.     Removal and Vacancies . Any President, Secretary or other officer of the Company shall be subject to removal, with or without cause, at any regular or special meeting of the Managers. Any vacancy in the position of President, Secretary or other officer of the Company resulting from removal, resignation or other event may be filled by the Managers at any regular or special meeting of the Managers.

4.05.     Compensation . The compensation of all officers and agents, if any, shall be fixed by the Managers.

4.06.     Power of Officers.

(a)    Every officer is an agent of the Company for the purpose of its business and the act of an officer, including the execution in the name of the Company of any instrument for apparently carrying on in the usual way the business of the Company binds the Company unless the officer so acting lacks the authority to act for the Company and the person with whom the officer is dealing has knowledge of the fact that the officer has no such authority.

(b)    Each officer shall have, subject to this Agreement, in addition to the duties and powers specifically set forth herein, such powers and duties as are commonly incident to his office and such duties and powers as the Managers shall from time to time designate. All officers shall perform their duties subject




to the directions and under the supervision of the Managers. The Managers may secure the fidelity of any and all officers by bond or otherwise.

4.07.     Delegation of Authority . In the case of the absence of any officer of the Company or any other reason that the Managers may deem sufficient, the Managers may delegate some or all of the powers or duties of such officer to any other officer or to any Manager, employee, Member or agent for whatever period of time seems desirable, providing that a majority of the Managers concurs therein.

4.08.     Resignations . Any officer may resign at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or, if no time be specified then at the time of its receipt by the Managers. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation.

ARTICLE V.
CONTRIBUTIONS TO CAPITAL

5.01.     Initial Contributions . Concurrently with the adoption of this Agreement, each Member shall contribute personal property or valuable services to the capital of the Company in the amount of the Initial Contribution of such Member described in Schedule "A" which is attached hereto. Such property shall be the Initial Contribution of each such Member and, upon the payment of such Initial Contribution each such Member shall receive such Member's Membership Interest as set forth in Schedule "A" hereto.

5.02.     Additional Contributions . If, at any time, the revenues and other funds of the Company are not adequate to meet its obligations, then the Managers may request the Members to approve a call for Additional Contributions in the amount of the funds required to defray such deficiency. Upon the unanimous approval of such call for Additional Contributions by all of the Members, then the Managers shall promptly request each Member to make an Additional Contribution to the Company in the amount of such Member's pro rata share of such call for Additional Contributions, determined in accordance with the Members' respective Membership Interests. Unless otherwise requested by the Managers, each Additional Contribution shall be due and payable within ten (10) days after the Managers give the Members such notice.

5.03.     Maintenance of Capital Accounts . A separate Capital Account shall be established and maintained for each Member and shall be increased and decreased in accordance with the following provisions:

(a)    Each Member's Capital Account will be increased by (i) the amount of money contributed by such Member to the Company; (ii) the fair market value of any property contributed by such Member to the Company; (iii) the amount of any liabilities of the Company that are assumed by the Member or that are secured by any property distributed by the Company to the Member; and (iv) the amount of Profits allocated to such Member.

(b)    Each Member's Capital Account will be decreased by (i) the amount of money distributed to such Member by the Company; (ii) the fair market value of any property distributed to such Member by the Company; (iii) the amount of any liabilities of such Member that are assumed by the Company or that are secured by any property contributed by such Member to the Company; and (iv) the amount of Losses allocated to such Member.

5.04     Compliance with Code and Treasury Regulations . The Members intend that the terms of this Agreement regarding the computation and maintenance of the Capital Accounts of the Members shall




comply in all respects with the provisions of Section 704(b) of the Code and Treasury Regulations Section 1.704-1(b)(2)(iv) and applicable provisions of succeeding law or regulations. The Company shall make such adjustments as may from time to time be necessary in order to effectuate the intent of the Members with respect to such compliance.

5.05     Effect of Transfers . In the event of a permitted sale or other disposition of a Membership Interest in the Company, the Capital Account of the transferor shall become the Capital Account of the transferee to the extent such Capital Account relates to the transferred portion of the Membership Interest.

5.06     No Interest on Contributions . No Member shall be entitled to receive any interest on such Member's Capital Contributions to the Company.

5.07     No Withdrawal of Contributions . No Member shall have the right to withdraw all or any part of such Member's Capital Contribution or to receive any return on or of any part of such Member's Capital Contribution, except as may otherwise be specified in this Agreement.

5.08     No Priority . No member shall have priority over any other Member, either as to the return of Capital Contributions or as to profits, Losses or distributions; provided, however, that this subsection shall not apply to loans which a Member has made to the Company with the approval of the Managers and a Majority in Interest of all of the Members.

5.09.     Negative Capital Accounts . No Member shall at any time have any liability to the Company or the other Members for any negative balance in such Capital Accounts except to the extent that such negative balance arose as the result of distributions in violation of this Agreement or applicable law.

5.10.     Limited Liability of Members . No Member shall be liable for the debts, obligations or liabilities of the Company beyond such Member's Agreed Contributions to the Company. No Member shall be required to make any Capital Contribution or loan to the Company beyond the amount of such Member's Agreed Contribution.

ARTICLE VI.
ALLOCATIONS AND DISTRIBUTIONS

6.01.     Allocations of Profits and Losses . The Profits and Losses of the Company for each Accounting Year (or portion thereof) shall be allocated among the Members in proportion to their respective Membership Interests in the Company. Any credit available for federal income tax purposes shall be allocated among the Members in the same manner.

6.02.     Interim Distributions . Interim distributions of Distributable Cash shall be made, not less often than annually and at such other times as shall be determined by the Managers, by the Company to the Members pro rata in accordance with their respective Membership Interests.

6.03.     Distributions on Withdrawal . A Member who withdraws from the Company, with the prior approval by affirmative vote of Members owning one hundred percent (100%) or more of all of the Membership Interests in the Company, without taking into account any vote of the withdrawing Member himself, shall receive an amount equal to the net book value of such Member's Membership Interest in the Company, determined under generally accepted accounting principles as of the end of the Accounting Year next preceding the effective date of such withdrawal adjusted for any distributions to or contributions made by such Member during the then current Accounting Year through the date of withdrawal; provided, however,




that all real property held by the Company shall be valued at its then current appraised value as determined by the local taxing authority disregarding any agricultural use exemptions or adjustments. Such amount shall be paid by the Company to such Member in cash without interest over a three year period in equal annual installments after the effective date of such withdrawal.

6.04.     Distributions on Termination . Upon the winding-up of the Company, its assets shall be distributed in the manner prescribed in Article IX.D. hereof.

6.05.     Limitation on Distributions . Any other provision hereof to the contrary notwithstanding, no interim distribution, withdrawal distribution or termination distribution to any Member shall be declared and paid unless, after the distribution is made, the fair market value of the assets of the Company is in excess of all liabilities of the Company other than liabilities to the Members on account of their Capital Contributions.

6.06.     Distributions in Kind . Regardless of the form of a Member's Capital Contribution to the Company, such Member shall not be entitled to demand or receive a distribution from the Company in any form other than cash.

ARTICLE VII.
ACCOUNTING AND TAX MATTERS

7.01.     Books and Records . At the expense of the Company, the Managers shall maintain full and complete book and records of the operations and expenditures of the Company at the Principal Office of the Company. Such books and records shall include, without limitation, the following:

(a)    A current list that states the name and mailing address of each Member and the Membership Interest in the Company owned by each such Member;

(b)    Copies of the federal, state and local information or income tax returns for each of the Company's five (5) most recent tax years;

(c)    A copy of the Certificate and this Agreement, together with all amendments or restatements thereof, executed copies of any powers of attorney and copies of any document that creates, in the manner provided by the Certificate or this Agreement, if any, classes or groups of Members;

(d)    Unless contained in the Certificate or this Agreement, a written statement of the following:

(1) The amount of the cash Capital Contribution and a description and statement or the agreed value of any other Capital Contribution made by each Member, and the amount of the cash Additional Contribution and a description and statement of the agreed value of any other Additional Contribution that the Member has agreed to make in the future;

(2) The times at which Additional Contributions are to be made or events requiring Additional Contributions to be made;

(3) The events requiring the Company to be terminated and its affairs wound up; and





(4) The date on which each Member in the Company became a Member; and

(e)    Correct and complete books and records of account of the Company maintained in accordance with its Method of Accounting.

7.02.     Tax Returns . The Managers shall cause the timely preparation and filing of all tax returns required to be filed by the Company pursuant to the Code and all other tax returns deemed necessary and required in each jurisdiction in which the Company does business.

Copies of such returns, or pertinent information therefrom, shall be furnished to the Members within seventy-five (75) days after the end of each Accounting Year of the Company.
7.03.     Tax Elections . All tax elections permitted to be made by the Company under federal, state or local laws shall be made by the Managers with the consent of a Majority in Interest of all of the Members.

7.04.     Tax Matters Partner . To the full extent permitted by the Code and/or other applicable law, the Members hereby designate Martin Underground Storage, Inc. as the "Tax Matters Partner" of the Company as that term is defined in Section 6231(a)(7) of the Code. The Tax Matters Partner shall be authorized to represent the Company and the Members in any administrative or judicial proceeding involving the federal income tax liabilities of the Members resulting from the activities of the Company. Costs and expenses incurred by the Tax Matters Partner in connection with any such proceeding, including without limitation legal and accounting fees and expenses, shall be borne by the Company.

ARTICLE VIII.
TRANSFERS OF MEMBERSHIP INTERESTS

8.01.     Assignment of Membership Interest . Unless otherwise provided by this Agreement:

(a)    A Membership Interest is assignable in whole or in part;

(b)    An assignment of a Membership Interest does not entitle the assignee to become, or to exercise rights or powers of, a Member;

(c)    An assignment entitles the assignee to receive distributions, to which the assignor was entitled, to the extent those items are assigned; and

(d)    Until the assignee becomes a Member, the assignor Member continues to be a Member and to have the power to exercise any rights or powers of a Member, except to the extent those rights or powers are assigned; provided, however, that the assignment of such rights or powers shall, except as otherwise expressly provided herein to the contrary, be binding only as between the assignor and the assignee, and the Company may continue to rely on the exercise of such rights and powers by the assignor as to the assigned interest until and unless the assignee becomes a Member in the manner herein prescribed with respect to the assigned interest. Except as otherwise provided in the preceding sentence, an assignor who has assigned all of the such assignor's Membership Interest shall cease to be a member of the Company.

8.02.     Admission of Assignee as Member.





(a)    No Assignor shall have the right to substitute an Assignee as a Member with respect to any Assigned Interest. Any such Assignee may be admitted as a Member of the Company with respect to the Assigned Interest only with the prior written consent of all of the other Members, which consent may be granted or withheld in the sole discretion of such other Members. The foregoing provisions to the contrary notwithstanding, however, any assignee who was a Member prior to and at the time of any Assignment shall automatically be entitled to exercise the rights of a Member with respect to the Assigned Interest without any further action on the part of the other Members.

(b)    It is the intent of this Agreement that the tax status of this Company be the same as for a partnership, and except as allowed by the Internal Revenue Code and any corresponding rules and regulations, it is intended that this Company shall not allow free transferability of interest, and to the extent possible, this Agreement shall be read and interpreted to prohibit the free transferability of interests of any Member.

(c)    An assignee who becomes a Member has, to the extent assigned, the rights and powers and is subject to the restrictions and liabilities of a Member under this Agreement and the Texas Limited Liability Law, as amended from time to time. Unless otherwise provided by this Agreement, an assignee who becomes a Member also is liable for the obligations of the assignor to make contributions but is not obligated for liabilities unknown to the assignee at the time the assignee became a Member and which could not be ascertained from this Agreement.

(d)    Whether or not an assignee of a Membership Interest becomes a Member, the assignor is not released from the assignor's liability to the Company; except with the written consent of all of the Members.

8.03.     Tax Restrictions on Transfers . Any other provision hereof to the contrary notwithstanding, no Member shall sell, transfer or assign any portion of such Member's Membership Interest without the prior written consent of all of the other Members if such sale, transfer or assignment:

(a)    Would, when added to the total of all other sales, transfers or assignments of Membership Interests effected within the preceding twelve (12) months, result in the Company being considered to have terminated for federal income tax purposes within the meaning of Section 708 of the Code; or

(b)    Would otherwise cause the Company to lose its status as a partnership for federal income tax purposes.

8.04.     Securities Restrictions on Transfers . The Membership Interests have been acquired for investment and have not been registered under the Securities Act of 1933, as amended (the "1933 Act"), or any state securities law and may not be transferred in violation of the 1933 Act or any applicable state securities law or any rule or regulation promulgated thereunder. Consequently, any other provision hereof to the contrary notwithstanding, no Membership Interest may at any time be sold, pledged or otherwise transferred until and unless either (i) such Membership Interest has been registered under the 1933 Act and all applicable state securities laws; or (ii) the Company has been provided with an opinion of counsel satisfactory to the Company in all respects that such registration is not required for such sale, pledge or other transfer. It is not anticipated that the Company will, and the Company shall at no time be obligated to, register any of the Membership Interests under the 1933 Act or any state securities laws or maintain any information regarding the Company publicly available for purposes of any provisions of 1933 Act or any state securities laws or any rule or regulation promulgated thereunder.




8.05     Termination of Member's Membership . Upon the death, withdrawal, bankruptcy, legal incapacity or dissolution of a Member or the occurrence of any other event (other than an assignment as herein provided) which terminates the continued membership in the Company of a Member, the liquidator, personal representative, trustee, receiver or other representative of the estate of such Member shall have all the rights of a Member for purposes of settling or managing such estate and such power as the Member possessed to assign all or any part of such Member's Membership Interest and to join with the assignee in satisfying conditions precedent to such assignee's becoming a substituted Member. The death, retirement, resignation, expulsion, bankruptcy, legal incapacity or dissolution of a Member or the occurrence of any other event which terminates the continued membership in the Company of a Member shall dissolve the Company except as otherwise provided in Section 9.01(c) hereof.

8.06     Assignment Procedures . Subject to the foregoing restrictions, all or part of a Member's Membership Interest (the "Assigned Interest") may be transferred by such assigning Member (the "Assignor") to the assignee (the "Assignee") named in a written instrument of assignment (the "Assignment") in the form and substance satisfactory to the Company and which otherwise complies with the provisions of this Agreement. An Assignment shall be duly executed and acknowledged by the Assignor and the Assignee (or their respective personal representatives or authorized agents) and shall contain (i) an agreement by the Assignee to be bound by all the terms of this Agreement and (ii) a representation by the Assignor and the Assignee that such transfer has been made in compliance with the 1933 Act and all applicable state securities laws as required by Section 8.04 hereof. The Assignment shall be delivered to the Company and shall be accompanied by such evidences of authority, such assurances of genuineness and effectiveness, such consents, approvals or waivers of governmental or other authorities and such other documentation as may reasonably be required by the Company. Such Assignment and other documentation shall be accompanied by a payment to the Company of such amount as shall be reasonably required as reimbursement by the Company for its costs and expenses paid or incurred in connection with such Assignment. Any such Assignment shall be effective, as to the Company, as of the later of (i) the effective date specified in such Assignment; or (ii) the date on which such Assignment has been determined by the Company to conform to the requirements of this Agreement and has been duly recorded in the books of the Company.

8.07     Admission of New Members . Any person may become a Member by purchasing a new Membership Interest from the Company on such terms and conditions as shall have been approved by the Managers and a Majority in Interest of all of the other Members.

8.08.     Withdrawal of Members . Any Member may withdraw as a Member of the Company with the prior approval by affirmative vote of Members owning one hundred percent (100%) or more of the membership interests of the Company, without taking into account any vote of the withdrawing Member himself, by giving not less than ninety (90) days' prior written notice of such withdrawal to the Company. See Article VI.C. for distribution to Members on withdrawal.

ARTICLE IX.
WINDING UP AND TERMINATION

9.01     Events Requiring Winding Up . The Company shall be wound up upon the earliest to occur of the following events:

(a)    The expiration of the Term of the Company;

(b)    Upon the election to wind up the Company by a Majority in Interest of all of the Members;





(c)    Upon the death, withdrawal, bankruptcy, legal incapacity or termination of any Member, or the occurrence of any other event which terminates the membership in the Company of any Member, unless there is at least one remaining Member and the business of the Company is continued by the consent of all of the remaining Members within ninety (90) days after the occurrence of such event; or

(d)    The entry of a final decree of judicial order to wind up the Company under Section 6.02 of the Law.

9.02.     Effect of Winding Up . In an event requiring the winding up of the Company, the Company shall cease to carry on its business, except insofar as may be necessary for the winding up thereof, and the assets of the Company shall be liquidated as herein provided. Winding up of the Company shall be effective as of the day on which the event occurs which results in such winding up, but the Company shall not terminate until there has been a winding-up of the Company's business and affairs and the assets of the Company have been liquidated and distributed as herein provided. Upon the winding up of the Company, the Company shall cause written notice of its intention to wind up to be mailed to each known creditor of and claimant against the Company in the manner required by the Law.

9.03.     Winding Up Procedures . Upon the winding up of the Company, the Company shall proceed to collect its assets; convey and dispose of such of its properties as are not to be distributed in kind to the Members; pay, satisfy and discharge its liabilities, or make adequate provision for payment and discharge thereof; and do all other acts required to liquidate its business and affairs. The Managers may cause any part or all of the assets of the Company to be sold in such manner as the Managers shall determine in an effort to obtain the best prices for such assets; provided, however, that the Managers shall be authorized to distribute assets of the Company in kind to the Members to the extent the Managers determine that such action would be in the best interest of the Members.

9.04.     Distribution of Assets Upon Winding Up . In settling the accounts of the Company after its winding up, the assets of the Company shall be applied and distributed in the following order of priority:

(a)    First, to the extent otherwise permitted by law, and in accordance with the priorities, if any, established by applicable law, to creditors in satisfaction of liabilities of the Company, including liabilities of the Company to Members who are creditors (other than for distributions and Capital Contributions), whether by payment or establishment of reserves; provided, however, that if the property and assets of the Company are not sufficient to satisfy or discharge all of the Company's liabilities and obligations, the Company shall apply its property and assets so far as they will go to the just and equitable payment of its liabilities and obligations;

(b)    Second, to the Members, amounts due and unpaid with respect to distributions to which such Members have previously become entitled;

(c)    Third, an amount equal to the then remaining positive balances, if any, in the Capital Accounts of the Members shall be distributed to the Members in proportion to the amounts of such positive balances; and

(d)    Fourth, any remaining amount shall be distributed to and among the Members pro rata in accordance with their respective Membership Interests.





9.05.     Distribution in Kind . If any assets of the Company are distributed in kind, such assets shall be distributed to the Members entitled thereto as tenants in common in the same proportions as the Members would have been entitled to cash distributions if such property has been sold for cash and the net proceeds thereof distributed to the Member. In the event that distributions in kind are made to the Members upon winding up and liquidation of the Company, the Capital Account balances of such Members shall be adjusted to reflect the Members' allocable share of gain or loss which would have resulted if the distributed property had been sold at its fair market value.

9.06.     Certificate of Termination . When all liabilities and obligations of the Company have been paid or discharged, or adequate provision has been made therefor, or in case its property and assets are not sufficient to satisfy and discharge all the Company's liabilities and obligations, then when all the property and assets of the Company have been applied so far as they will go to the just and equitable payment of the Company's liabilities and obligations, and all of the remaining property and assets of the Company have been distributed to its Members according to their respective rights and interests, then a Certificate of Termonation shall be executed on behalf of the Company by the Managers or an authorized Member and shall be filed with the Secretary of State of the State of Texas, and the Managers and the Members shall execute, acknowledge and file any and all other instruments necessary or appropriate to reflect the winding up and termination of the Company.

ARTICLE X.
MISCELLANEOUS PROVISIONS

10.01.     Notices . Any notice, demand or communication required or permitted to be given by any provision of this Agreement shall be made in writing, shall be sent or addressed as set forth below and shall be deemed to have been sufficiently given or served for all purposes (i) upon actual receipt thereof, if given by regular mail, personal delivery, courier service, telegram, telex, facsimile transmission or other commercially reasonable means; or (ii) upon the earlier of actual receipt or three (3) business days after being deposited in a receptacle for the deposit of mail regularly maintained by the U. S. Postal Service, if given by registered or certified mail, return receipt requested, with postage and charges prepaid. Notice and other communications to the Company shall be sent or addressed to its Principal Office and notices and other communications to the Members shall be sent or addressed to their last known address as it appears on the records of the Company. The Company and any Member shall be entitled to change any such address for notice purposes upon giving not less than ten (10) days' prior written notice of such change of address to the Company or the Member, as may be applicable.

10.02.     Governing Law . This Agreement and the construction, interpretation and application thereof, shall be governed exclusively by the Law and other applicable laws of the State of Texas.

10.03.     No Partition Action . No Member (or former Member) shall have any right to maintain any action for partition with respect to the property of the Company or with respect to any assets distributed to the Members in kind as tenants in common upon the dissolution of the Company.
        
10.04.     Captions and Headings . The captions and headings used in this Agreement are for convenience of reference only and shall not be taken into account in construing the meaning and/or intent of this Agreement.

10.05.     Amendment of Certificate . The Certificate may be amended, supplemented or restated in any manner permitted by applicable law and approved by the affirmative vote of members owning more than a Majority Interest of all of the members. Upon obtaining the approval of any such amendment,




supplement or restatement as to the Certificate, the Managers shall cause a Certificate of Amendment to be prepared, executed and filed in accordance with the Law.

10.06.     Amendment of Company Agreement . Except as herein otherwise expressly provided, this Agreement may be amended, supplemented or restated only by written consent of a Majority in Interest of all of the Members.

10.07.     Number and Gender . Where the context so indicates, the singular shall include the plural, the use of any gender shall include all other genders and any reference to the term "person" shall include an individual and a corporation, limited liability company, association, partnership, joint venture, estate, trust or any other entity.

10.08.     Binding Effect . Except as herein otherwise expressly provided, this Agreement shall be binding upon and shall inure to the benefit of the Managers and the Members and their respective heirs, legal representatives, executors, administrators, distributees, successors and assigns.

10.09     Severability . If any one or more of the provisions contained in this Agreement for any reason are held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions hereof and this Agreement shall be construed as if such invalid, illegal or unenforceable provisions had never been contained herein.

10.10.     Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed to be an original and shall be binding upon the Manager or Members who executed same, but all of such counterparts shall constitute the same Agreement and may be sufficiently evidenced by one counterpart.





IN WITNESS WHEREOF, the undersigned Manager has adopted and signed this Agreement as of the date first written above.

By:      /s/ Ruben S. Martin
Ruben S. Martin III, Manager


By:      /s/ Robert D. Bondurant          
Robert D. Bondurant, Manager







ARCADIA GAS STORAGE LLC
SCHEDULE "A" TO COMPANY AGREEMENT
Name                  Agreed Contributions              Membership Interests Percentage

Martin Underground            Contribution of                    100%
Storage, Inc.            undeveloped Real Property
Valued at $    







Exhibit 3.13

AMENDMENT TO
COMPANY AGREEMENT
This Amendment to the Company Agreement (this “ Amendment ”) of Arcadia Gas Storage LLC, a Texas limited liability company (the “ Company ”), is entered into effective as of September 5, 2014 (the “ Effective Date ”), by Cardinal Gas Storage Partners LLC, a Delaware limited liability company (“ Cardinal ”), in its capacity as the sole member of the Company.
WHEREAS, the managers of the Company entered into that certain Company Agreement, dated as of December 27, 2006 (the “ Company Agreement ”);
WHEREAS, immediately prior to the Merger (as defined below), Arcadia Gas Storage Holding LLC, a Delaware limited liability company and wholly-owned subsidiary of Cardinal (“ Arcadia Holding ”) was the sole member of the Company;
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of the date hereof, by and among Arcadia Holding and the Company, and the filing of the certificates of merger in connection therewith with the Secretary of State of the State of Delaware and the Secretary of State of the State of Texas, Arcadia Holding merged with and into the Company, with the Company as the surviving entity of such transaction (the “ Merger ”);
WHEREAS, following the Merger, Cardinal is the sole member of the Company;
WHEREAS, Section 2.15 of the Company Agreement contemplates the delivery of membership certificates to the members of the Company;
WHEREAS, membership certificates representing the issued and outstanding membership interests in the Company have not been issued to date; and
WHEREAS, in accordance with Section 10.06 of the Company Agreement, Cardinal, as the sole member of the Company desires to amend the Company Agreement to reflect the current ownership of the Company and to contemplate non-certificated membership interests.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Cardinal, as the sole member of the Company, agrees as follows:
1. Amendments .

(a) Section 2.15 of the Company Agreement is hereby amended and restated in its entirety and replaced with the following language:

“The Membership Interests authorized hereunder shall not be certificated unless the Managers approve otherwise, in such form and with such legends as the Managers shall determine.”




(b) Schedule “A” to the Company Agreement is hereby amended and restated in its entirety as shown in Exhibit 1 to this Amendment.

2. Miscellaneous .

(a) Ratification and Confirmation . Except as expressly amended by this Amendment, all other terms and provisions of the Company Agreement shall remain in full force and effect.

(b) Governing Law . This Amendment shall be construed in accordance with, and governed by, the laws of the State of Texas without giving effect to any choice or conflict of law provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas.

(c) Headings . The descriptive headings of the several sections of this Agreement are inserted for convenience only and shall not have any significance in the interpretation of this Amendment.

(d) Entire Agreement . This Amendment and the documents referred to herein set forth the entire understanding and agreement of the parties hereto regarding the subject matter hereof and supersede and replace all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.

[Signature Page Follows]
 





This Amendment was adopted effective as of the Effective Date first written above.
CARDINAL GAS STORAGE PARTNERS LLC

By: /s/ Robert D. Bondurant     
Name: Robert D. Bondurant
Title: Executive Vice President


 

 




EXHIBIT 1
ARCADIA GAS STORAGE LLC
SCHEDULE “A” TO COMPANY AGREEMENT
Name                          Membership Interests Percentage
Cardinal Gas Storage Partners LLC                        100%







Exhibit 3.14

State of Delaware
Secretary of State
Division of Corporations
Delivered 01:23 PM 05/23/2008
FILED 01:12 PM 05/23/2008
SRV 080596064 - 4551848 FILE

CERTIFICATE OF FORMATION
OF
CADEVILLE GAS STORAGE LLC


This Certificate of Formation of Cadeville Gas Storage LLC (the “Company”) is being executed and filed by the undersigned authorized person for the purpose of forming a limited liability company under the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et. seq. ).
Article One
The name of the Company is Cadeville Gas Storage LLC.

ARTICLE II
The address of the Company’s registered office in the State of Delaware is 1209 Orange Street, Wilmington, Delaware 19801. The name of its initial registered agent at such address is The Corporation Trust Company.


IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as of May 23, 2008.

CADEVILLE GAS STORAGE LLC


By: /s/ Jeff Ballew                 
Jeff Ballew, Authorized Person





EXHIBIT 3.15


LIMITED LIABILITY COMPANY AGREEMENT
OF
CADEVILLE GAS STORAGE LLC
(a Delaware Limited Liability Company)
This LIMITED LIABILITY COMPANY AGREEMENT OF CADEVILLE GAS STORAGE LLC (the “Agreement”), is executed as of May 23, 2008, by Cardinal Gas Storage Partners LLC, a Delaware limited liability company (the “Parent”), as the sole member of Cadeville Gas Storage LLC, a Delaware limited liability company (the “Company”).
WITNESSETH:
WHEREAS, Jeffery Ballew has executed the Certificate of Formation (the “Certificate”) of the Company and caused it to be filed in the office of the Secretary of State of the State of Delaware; and
WHEREAS, the Parent desires to complete and perfect the organization of the Company as a limited liability company under the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et. seq .) (the “Delaware Limited Liability Company Act”);
NOW THEREFORE, in consideration of the terms and provisions set forth herein, the mutual benefits to be gained by the performance thereof and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. General.

(a) Effective as of the date and time of filing of the Certificate in the office of the Secretary of State of the State of Delaware, the Company has been formed as a limited liability company under the Delaware Limited Liability Company Act. Except as expressly provided herein, the rights and obligations of the members in connection with the regulation and management of the Company shall be governed by the Delaware Limited Liability Company Act.

(b) The name of the Company shall be “Cadeville Gas Storage LLC”. The business of the Company shall be conducted under such name or any other name or names that the members shall determine from time to time.

(c) The address of the registered office of the Company in the State of Delaware shall be c/o The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801. The name and address of the registered agent for service of process on the Company in the State of Delaware shall be The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801. The registered office or registered agent of the Company may be changed from time to time by the members.

(d) The principal place of business of the Company shall be located at such place as the members shall determine from time to time.





(e) The period of duration of the Company shall be perpetual, unless it is earlier dissolved in accordance with the provisions of this Agreement.

(f) The execution of the Certificate by Jeffery Ballew and the filing thereof in the office of the Secretary of State of the State of Delaware are hereby ratified, confirmed and approved by Parent as the sole member of the Company.

SECTION 2. Purposes. The Company is formed for the object and purpose of, and the nature of the business to be conducted by the Company is engaging in any lawful act or activity for which limited liability companies may be formed under the Delaware Limited Liability Company Act.

SECTION 3. Powers. The Company shall have all powers necessary, appropriate or incidental to the accomplishment of its purposes and all other powers conferred upon a limited liability company pursuant to the Delaware Limited Liability Company Act.

SECTION 4. Management.

(a) Except as otherwise set forth herein or as required by applicable law, the powers of the Company shall at all times be exercised by or under the authority of, and the business and affairs of the Company shall be managed by, or under the direction of, the members.

(b) The act of members holding a majority of the outstanding Units (as hereinafter defined) shall be the act of the members for all purposes of this Agreement.

(c) The members shall be authorized to elect managers of the Company, who shall have such authority with respect to the management of the business and affairs of the Company as shall be specified by the member in the resolution or resolutions pursuant to which such managers were elected.

(d) The members or managers of the Company may elect officers of the Company, who will have powers and authority and will be governed by the terms and provisions set forth below.

(i) Each officer of the Company shall be a natural person. An officer need not be a resident of the State of Delaware, a member of the Company or a manager of the Company. An officer need not be an employee of the Company.

(ii) The officers of the Company shall have such powers and authority, subject to the direction and control of the members and, to the extent the members appoint any managers, to the managers, and shall perform such duties in connection with the management of the business and affairs of the Company as are provided in this Agreement, or as may be determined from time to time by resolution of the members or managers. In addition, except as otherwise expressly provided herein, each officer shall have such powers and authority as would be incident to his or her office if he or she served as a comparable officer of a Delaware corporation.

(iii) The officers of the Company shall consist of a President, a Secretary and a Treasurer, each of whom shall be elected by the members of the Company. In addition, the members of the Company shall have the authority to elect such other officers, including Vice Presidents and assistant officers, as it may from time to time determine. Any two or more offices may be held by the same person.





(iv) Any vacancy occurring in an office will be filled by the members.

(v) Any officer of the Company may be removed by the members whenever in their judgment the best interests of the Company will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the officer so removed. Election as an officer of the Company shall not of itself create any contract rights.

(vi) President . The President shall be under the direction and subject to the control of the members and the managers. The President in general shall supervise and control all of the business and affairs of the Company and shall see that all orders and resolutions of the members and managers are carried into effect. The President may execute any deeds, mortgages, bonds, contracts or other instruments that the members or managers have authorized to be executed and delivered, except in cases where the execution and delivery thereof shall be expressly and exclusively delegated to another officer of the Company by the members, the managers, or this Agreement, or where the execution and delivery thereof shall be required by law to be executed and delivered by another person. In general, the President shall perform all duties incident to the office of President, and such other duties as may be prescribed from time to time by the members or the managers.

(vii) Vice Presidents . Each Vice President, if there be any, shall report to the President. Each Vice President may perform the usual and customary duties that pertain to such office (but not unusual or extraordinary duties or the duties conferred by the members or the managers upon the President) and, under the direction and subject to the control of the members, the managers and the President, such other duties as may be assigned to him or her from time to time by the members, the managers or the President. Any Vice President may be designated by the members or the managers as an Executive Vice President.

(viii) Secretary . It shall be the duty of the Secretary to attend all meetings of the members and the managers and to record correctly the proceedings of such meetings and record all votes in a book suitable for such purposes. The Secretary shall give, or cause to be given, notice of all meetings of the members and the managers. It shall also be the duty of the Secretary to keep a register in which all transactions pertaining to limited liability company interests and other equity securities of the Company shall be correctly recorded. The Secretary shall also attest with his or her signature all deeds, conveyances or other instruments requiring the seal of the Company. The Secretary shall have full power and authority on behalf of the Company to execute any consents of shareholders, partners or members and to attend, and to act and to vote in person or by proxy at, any meetings of the shareholders, partners or members of any corporation, partnership or limited liability company in which the Company may own stock or other securities, and at any such meetings, the Secretary shall possess and may exercise any and all the rights and powers incident to the ownership of such securities that, as the owner thereof, the Company might have possessed and exercised if present. The Secretary shall keep in safe custody the seal of the Company. The Secretary shall also perform, under the direction and subject to the control of the members and managers, such other duties as may be assigned to him or her from time to time.

(ix) Treasurer . The Treasurer shall have the care and custody of all the funds and securities of the Company that may come into his or her hands as Treasurer. The Treasurer may endorse checks, drafts and other instruments for the payment of money for deposit or collection when necessary or proper and may deposit the same to the credit of the Company in such banks or depositories as the members or the managers may designate from time to time, and the Treasurer may endorse all commercial documents requiring endorsements for or on behalf of the Company. The




Treasurer may sign all receipts and vouchers for the payments made to the Company. The Treasurer shall render an account of his or her transactions to the members, the managers or the President as often as the members, the managers or the President shall require from time to time. The Treasurer shall enter regularly in the books to be kept by him or her for that purpose, a full and adequate account of all monies received and paid by him or her on account of the Company. The Treasurer shall also perform, under the direction and subject to the control of the members, the managers and the President, such other duties as may be assigned to him or her from time to time.

(x) Delegation of Authority . In the case of any absence of any officer of the Company or for any other reason that the members or the managers may deem sufficient, the members or the managers may delegate some or all of the powers or duties of such officer to any other officer for whatever period of time the members or the managers deem appropriate.

(xi) Initial Officers . The following persons shall be the initial officers of the Company and shall hold the offices set forth opposite to their names below, each of such officers to serve until their successors have been duly elected and qualified:
Name
Office
Jeffery A. Ballew
President, Chief Executive Officer and Chief Financial Officer
David L. Hayden
Senior Vice President, Chief Operating Officer and Secretary
Kenneth L. Beckman
Senior Vice President
Danny R. Burgess
Vice President of Operations

SECTION 5. Members.

(a) The members of the Company shall be the Parent, and such other persons as may be admitted pursuant to the provisions of this Agreement.

(b) The members shall not be liable for the debts, liabilities and obligations of the Company, including any debts, liabilities and obligations under a judgment, decree or order of a court.

(c) Neither a member nor any of its affiliates, partners, members, directors, managers, officers or employees shall be expressly or impliedly restricted or prohibited by virtue of this Agreement or the relationships created hereby from engaging in other activities or business ventures of any kind or character whatsoever. Except as otherwise agreed in writing, each of the members and its affiliates, partners, members, directors, managers, officers and employees shall have the right to conduct, or to possess a direct or indirect ownership interest in, activities and business ventures of every type and description, including activities and business ventures in direct competition with the Company.

SECTION 6. Limited Liability Company Interests . As of the date hereof, the Parent holds all outstanding units (the “Units”) of limited liability company interest in the Company.

SECTION 7. Distributions . The Company may from time to time distribute to the members such amounts in cash and other assets as shall be determined by the members. All such distributions shall be made among the members in proportion to the number of Units then held by them.

SECTION 8. Allocations . The profits and losses of the Company shall be allocated to the members in proportion to the number of Units held by them.





SECTION 9. Dissolution; Winding Up.

(a) The Company shall be dissolved upon (i) the adoption of a plan of dissolution by the members or (ii) the occurrence of any event required to cause the dissolution of the Company under the Delaware Limited Liability Company Act.

(b) Any dissolution of the Company shall be effective as of the date on which the event occurs giving rise to such dissolution, but the Company shall not terminate unless and until all its affairs have been wound up and its assets distributed in accordance with the provisions of the Delaware Limited Liability Company Act.

(c) Upon dissolution of the Company, the Company shall continue solely for the purposes of winding up its business and affairs as soon as reasonably practicable. Promptly after the dissolution of the Company, the members shall designate one or more persons (the “ Liquidating Trustees ”) to accomplish the winding up of the business and affairs of the Company. Upon their designation, the Liquidating Trustees shall immediately commence to wind up the affairs of the Company in accordance with the provisions of this Agreement and the Delaware Limited Liability Company Act. In winding up the business and affairs of the Company, the Liquidating Trustees may take any and all actions that they determine in their sole discretion to be in the best interests of the members, including, but not limited to, any actions relating to (i) causing written notice by registered or certified mail of the Company’s intention to dissolve to be mailed to each known creditor of and claimant against the Company, (ii) the payment, settlement or compromise of existing claims against the Company, (iii) the making of reasonable provisions for payment of contingent claims against the Company and (iv) the sale or disposition of the properties and assets of the Company. It is expressly understood and agreed that a reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the satisfaction of claims against the Company so as to enable the Liquidating Trustees to minimize the losses that may result from a liquidation.

SECTION 10. Transfer . A member shall not transfer (whether by sale, assignment, gift, pledge, hypothecation, mortgage, exchange or otherwise) all or any part of its limited liability company interest in the Company to any other person without the prior written consent of each of the other members.

SECTION 11. Admission of Additional Members . The admission of additional members to the Company shall be accomplished by amendment of this Agreement and, if required by the Delaware Limited Liability Company Act, by the filing of an appropriate amendment to the Certificate in the office of the Secretary of State of the State of Delaware.

SECTION 12. Tax Matters . For so long as there is only one member of the Company, the Company shall be disregarded as an entity separate from its owner for United States federal income tax purposes. If at any time there is more than one member of the Company, the members shall take such action as is necessary to cause the Company to be classified as a partnership for United States federal income tax purposes.

SECTION 13. Miscellaneous.

(a) The terms and provisions set forth in this Agreement may be amended, and compliance with any term or provision set forth herein may be waived, only by a written instrument executed by each of the members. No failure or delay on the part of any member in exercising any right, power or privilege granted hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right,




power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege granted hereunder.

(b) This Agreement shall be binding upon and inure to the benefit of the members and their respective successors and assigns.

(c) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (without regard to any conflicts of law principles that would require the application of the laws of any other jurisdiction).

(d) In the event that any provision contained in this Agreement shall be held to be invalid, illegal or unenforceable for any reason, the invalidity, illegality or unenforceability thereof shall not affect any other provision hereof.

(e) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.





IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed on the date first above written.
CARDINAL GAS STORAGE PARTNERS LLC
By:     /s/ Jeffery Ballew     
Name:    J. A. Ballew
Title:    President





EXHIBIT 3.16

FIRST AMENDMENT TO THE
LIMITED LIABILITY COMPANY AGREEMENT
OF
CADEVILLE GAS STORAGE LLC

This First Amendment to Limited Liability Company Agreement (this “ Amendment ”) of Cadeville Gas Storage LLC, a Delaware limited liability company (the “ Company ”), is entered into and effective as of April 16, 2012 (the “ Effective Date ”), by Cadeville Gas Storage Holding LLC, a Delaware limited liability company, as the sole member of the Company (“ Cadeville Holdco ”).
WHEREAS, Cardinal Gas Storage Partners LLC (“ Cardinal ”), as the original sole member of the Company, executed the Limited Liability Company Agreement of the Company on May 23, 2008 (the “ LLC Agreement ”). Capitalized terms used herein but not defined herein shall have the meanings set forth in the LLC Agreement.
WHEREAS, Cadeville Holdco is a direct wholly owned subsidiary of Cardinal.
WHEREAS, Cardinal contributed all of its membership interests in the Company to Cadeville Holdco, making Cadeville Holdco the new sole member of the Company.
WHEREAS, Cadeville Holdco desires to amend the LLC Agreement to reflect that Cadeville Holdco is the sole member of the Company.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Cadeville Holdco hereby agrees as follows:
1. Amendment to Reflect New Member . Each reference to “Cardinal Gas Storage Partners LLC” in the LLC Agreement is hereby deleted in its entirety and replaced with “Cadeville Gas Storage Holding LLC”.

2. Amendments to Section 6 . Section 6 of the LLC Agreement is hereby amended and restated in its entirety as follows:

“SECTION 6. Limited Liability Company Interests .

(a) As of the date hereof, the Parent holds all outstanding units of limited liability company interest (the “Units”) in the Company.

3. Miscellaneous .

(a) Ratification and Confirmation . Except as expressly amended hereby, the LLC Agreement is ratified and confirmed in all respects and shall remain in full force and effect in accordance with its terms.

(b) Governing Law . This Amendment shall be construed in accordance with, and governed by, the laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule




(whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

(c) Headings . The descriptive headings of the several sections of this Amendment are inserted for convenience only and shall not have any significance in the interpretation of this Amendment.

(d) Entire Agreement . This Amendment and the documents referred to herein set forth the entire understanding and agreement of the parties hereto regarding the subject matter hereof and supersede and replace all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.

(e) Counterparts . This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts (which counterparts may be delivered by facsimile or .pdf transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

[Signature Page Follows]













IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers or other duly authorized representatives as of the date first above written.
CADEVILLE GAS STORAGE HOLDING LLC
By:     /s/ Dan Hannon
Name:    Dan Hannon
Title:    CFO
Acknowledged and Agreed:
CADEVILLE GAS STORAGE LLC
By:     /s/ Dan Hannon
Name:    Dan Hannon
Title:    CFO

CARDINAL GAS STORAGE PARTNERS LLC
By:     /s/ Dan Hannon
Name:    Dan Hannon
Title:    CFO





EXHIBIT 3.17

SECOND AMENDMENT TO
LIMITED LIABILITY COMPANY AGREEMENT
This Second Amendment to the Limited Liability Company Agreement (this “ Amendment ”) of Cadeville Gas Storage LLC, a Delaware limited liability company (the “ Company ”), is entered into effective as of September 5, 2014 (the “ Effective Date ”), by Cardinal Gas Storage Partners LLC, a Delaware limited liability company (“ Cardinal ”), in its capacity as the sole member of the Company.
WHEREAS, the Company entered into that certain Limited Liability Company Agreement dated May 23, 2008, as amended on April 16, 2012 (the “ LLC Agreement ”);
WHEREAS, immediately prior to the Merger (as defined below), Cadeville Gas Storage Holding LLC, a Delaware limited liability company and wholly-owned subsidiary of Cardinal (“ Cadeville Holding ”), was the sole member of the Company;
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of the date hereof, by and among Cadeville Holding and the Company, and the filing of the certificate of merger in connection therewith with the Secretary of State of the State of Delaware, Perryville Holding merged with and into the Company, with the Company as the surviving entity of such transaction (the “ Merger ”); and
WHEREAS, following the Merger, Cardinal is the sole member of the Company and in such capacity desires to amend the LLC Agreement to reflect the current ownership of the Company.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Cardinal, as the sole member of the Company, agrees as follows:
1. Amendment . Each reference to “Cadeville Gas Storage Holding LLC” in the LLC Agreement is hereby deleted in its entirety and replaced with “Cardinal Gas Storage Partners LLC”.

2. Miscellaneous .

(a) Ratification and Confirmation . Except as expressly amended by this Amendment, all other terms and provisions of the LLC Agreement shall remain in full force and effect.

(b) Governing Law . This Amendment shall be construed in accordance with, and governed by, the laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

(c) Headings . The descriptive headings of the several sections of this Agreement are inserted for convenience only and shall not have any significance in the interpretation of this Amendment.

(d) Entire Agreement . This Amendment and the documents referred to herein set forth the entire understanding and agreement of the parties hereto regarding the subject matter hereof and supersede and replace all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.




This Amendment was adopted effective as of the Effective Date first written above.

CARDINAL GAS STORAGE PARTNERS LLC
By:     /s/ Robert D. Bondurant
Name:    Robert D. Bondurant
Title:    Executive Vice President





EXHIBIT 3.18

State of Delaware
Secretary of State
Division of Corporations
Delivered 12:24 PM 06/14/2006
FILED 12:21 PM 06/14/2006
SRV 060573759 - 4174828 FILE

STATE of DELAWARE
LIMITED LIABILITY COMPANY
CERTIFICATE OF FORMATION

•
First: The name of the limited liability company is Monroe Gas Storage Company, LLC

•
Second: The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of Wilmington, DE 19801. The name of its Registered agent at such address is The Corporation Trust Company.

•
Third: (Use this paragraph only if the company is to have a specific effective date of dissolution: “The latest date on which the limited liability company is to dissolve is ____________.”)

•
Fourth: (Insert any other matters the members determine to include herein.)
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

In Witness Whereof, the undersigned have executed this Certificate of Formation this 14th day of June, 2006.



By: /s/ Jody Ellis                 
Authorized Person
Name: Jody Ellis





EXHIBIT 3.19
            
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
MONROE GAS STORAGE COMPANY, LLC
(a Delaware Limited Liability Company)
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF MONROE GAS STORAGE COMPANY, LLC (this “ Agreement ”), is executed as of May 31, 2011, by MGS Holding LLC, a Delaware limited liability company (the “ Parent ”), as the sole member of MONROE GAS STORAGE COMPANY, LLC, a Delaware limited liability company (the “ Company ”).
WITNESSETH:
WHEREAS, the Company was organized as a limited liability company under the Delaware Limited Liability Company Act (6 Del. C . § 18-101, et. seq .) (the “ Delaware Limited Liability Company Act ”) pursuant to a Limited Liability Company Agreement dated September 29, 2006 (as amended from time to time, the “ Original LLC Agreement ”); and
WHEREAS, the Parent desires to amend and restate the Original LLC Agreement in its entirety; and
NOW THEREFORE, in consideration of the terms and provisions set forth herein, the mutual benefits to be gained by the performance thereof and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. General.

(a) Effective as of the date and time of filing of the Certificate in the office of the Secretary of State of the State of Delaware, the Company has been formed as a limited liability company under the Delaware Limited Liability Company Act. Except as expressly provided herein, the rights and obligations of the members in connection with the regulation and management of the Company shall be governed by the Delaware Limited Liability Company Act.

(b) The name of the Company shall be “ Monroe Gas Storage Company, LLC .” The business of the Company shall be conducted under such name or any other name or names that the members shall determine from time to time.

(c) The address of the registered office of the Company in the State of Delaware shall be Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The name and address of the registered agent for service of process on the Company in the State of Delaware shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The registered office or registered agent of the Company may be changed from time to time by the members.

(d) The principal place of business of the Company shall be located at such place as the members shall determine from time to time.





(e) The period of duration of the Company shall be perpetual, unless it is earlier dissolved in accordance with the provisions of this Agreement.

(f) The execution of the Certificate by any authorized person and the filing thereof in the office of the Secretary of State of the State of Delaware are hereby ratified, confirmed and approved by Parent as the sole member of the Company.

SECTION 2. Purposes. The Company is formed for the object and purpose of, and the nature of the business to be conducted by the Company is, engaging in any lawful act or activity for which limited liability companies may be formed under the Delaware Limited Liability Company Act.

SECTION 3. Powers. The Company shall have all powers necessary, appropriate or incidental to the accomplishment of its purposes and all other powers conferred upon a limited liability company pursuant to the Delaware Limited Liability Company Act.

SECTION 4. Management.

(a) Except as otherwise set forth herein or as required by applicable law, the powers of the Company shall at all times be exercised by or under the authority of, and the business and affairs of the Company shall be managed by, or under the direction of, the members. Notwithstanding the foregoing, it is acknowledged by the members that the Limited Liability Company Agreement of Cardinal Gas Storage Partners LLC (“ Cardinal ”) dated May 1, 2008 (as amended from time to time, the “ Cardinal LLC Agreement ”) requires the Company, as a Subsidiary of Cardinal, to obtain the consent of either the board of managers of Cardinal (the “ Cardinal Board ”) or of the Cardinal Category A Members to take certain actions. Neither the Company nor any manager, officer or agent of the Company may (a) take any action described in Section 5.7 (Actions Requiring Approval of the Board) of the Cardinal LLC Agreement that is applicable to a “Subsidiary” of Cardinal without first obtaining approval of the Cardinal Board, or (b) take any action described in Section 5.8 (Actions Requiring Consent of the Category A Members) of the Cardinal LLC Agreement that is applicable to a “Subsidiary” of Cardinal without the prior written consent of the requisite percentage of the Category A Members of Cardinal.

(b) The act of members holding a majority of the outstanding Units (as hereinafter defined) shall be the act of the members for all purposes of this Agreement.

(c) The members shall be authorized to elect managers of the Company, who shall have such authority, subject to the provisions of Section 4(a), with respect to the management of the business and affairs of the Company as shall be specified by the member in the resolution or resolutions pursuant to which such managers were elected.

(d) The members or managers of the Company may elect officers of the Company, who will have powers and authority and will be governed by the terms and provisions set forth below.

(i) Each officer of the Company shall be a natural person. An officer need not be a resident of the State of Delaware, a member of the Company or a manager of the Company. An officer need not be an employee of the Company.

(ii) The officers of the Company shall have such powers and authority, subject to the direction and control of the members and, to the extent the members appoint any managers, to




the managers, and shall perform such duties in connection with the management of the business and affairs of the Company as are provided in this Agreement, or as may be determined from time to time by resolution of the members or managers. In addition, except as otherwise expressly provided herein, each officer shall have such powers and authority as would be incident to his or her office if he or she served as a comparable officer of a Delaware corporation.

(iii) The officers of the Company shall consist of a President, a Secretary and a Treasurer, each of whom shall be elected by the members of the Company. In addition, the members of the Company shall have the authority to elect such other officers, including Vice Presidents and assistant officers, as it may from time to time determine. Any two or more offices may be held by the same person.

(iv) Any vacancy occurring in an office will be filled by the members.

(v) Any officer of the Company may be removed by the members whenever in their judgment the best interests of the Company will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the officer so removed. Election as an officer of the Company shall not of itself create any contract rights.

(vi) President . The President shall be under the direction and subject to the control of the members and the managers. The President in general shall supervise and control all of the business and affairs of the Company and shall see that all orders and resolutions of the members and managers are carried into effect. The President may execute any deeds, mortgages, bonds, contracts or other instruments that the members or managers have authorized to be executed and delivered, except in cases where the execution and delivery thereof shall be expressly and exclusively delegated to another officer of the Company by the members, the managers, or this Agreement, or where the execution and delivery thereof shall be required by law to be executed and delivered by another person. In general, the President shall perform all duties incident to the office of President, and such other duties as may be prescribed from time to time by the members or the managers.

(vii) Vice Presidents . Each Vice President, if there be any, shall report to the President. Each Vice President may perform the usual and customary duties that pertain to such office (but not unusual or extraordinary duties or the duties conferred by the members or the managers upon the President) and, under the direction and subject to the control of the members, the managers and the President, such other duties as may be assigned to him or her from time to time by the members, the managers or the President. Any Vice President may be designated by the members or the managers as an Executive Vice President.

(viii) Secretary . It shall be the duty of the Secretary to attend all meetings of the members and the managers and to record correctly the proceedings of such meetings and record all votes in a book suitable for such purposes. The Secretary shall give, or cause to be given, notice of all meetings of the members and the managers. It shall also be the duty of the Secretary to keep a register in which all transactions pertaining to limited liability company interests and other equity securities of the Company shall be correctly recorded. The Secretary shall also attest with his or her signature all deeds, conveyances or other instruments requiring the seal of the Company. The Secretary shall have full power and authority on behalf of the Company to execute any consents of shareholders, partners or members and to attend, and to act and to vote in person or by proxy at, any meetings of the shareholders, partners or members of any corporation, partnership or limited liability company in which the Company may own stock or other securities, and at any such meetings, the Secretary




shall possess and may exercise any and all the rights and powers incident to the ownership of such securities that, as the owner thereof, the Company might have possessed and exercised if present. The Secretary shall keep in safe custody the seal of the Company. The Secretary shall also perform, under the direction and subject to the control of the members and managers, such other duties as may be assigned to him or her from time to time.

(ix) Treasurer . The Treasurer shall have the care and custody of all the funds and securities of the Company that may come into his or her hands as Treasurer. The Treasurer may endorse checks, drafts and other instruments for the payment of money for deposit or collection when necessary or proper and may deposit the same to the credit of the Company in such banks or depositories as the members or the managers may designate from time to time, and the Treasurer may endorse all commercial documents requiring endorsements for or on behalf of the Company. The Treasurer may sign all receipts and vouchers for the payments made to the Company. The Treasurer shall render an account of his or her transactions to the members, the managers or the President as often as the members, the managers or the President shall require from time to time. The Treasurer shall enter regularly in the books to be kept by him or her for that purpose, a full and adequate account of all monies received and paid by him or her on account of the Company. The Treasurer shall also perform, under the direction and subject to the control of the members, the managers and the President, such other duties as may be assigned to him or her from time to time.

(x) Delegation of Authority . In the case of any absence of any officer of the Company or for any other reason that the members or the managers may deem sufficient, the members or the managers may delegate some or all of the powers or duties of such officer to any other officer for whatever period of time the members or the managers deem appropriate.

(xi) Initial Officers . The following persons shall be the initial officers of the Company and shall hold the offices set forth opposite to their names below, each such officer to serve until his/her successor has been duly elected and qualified:




Name
Office
Jeffery A. Ballew
President and Chief Executive Officer
 
 
Daniel N. Hannon
Senior Vice President, Chief Financial Officer and Secretary
 
 
David L. Hayden
Senior Vice President, Chief Operating Officer and Secretary
 
 
Paul T. Lanham
Senior Vice President of Engineering and Operations
 
 
Kenneth L. Beckman
Senior Vice President
 
 
Danny R. Burgess
Vice President of Operations
 
 
Kevin B. Holder
VP of Marketing and Business Development
 
 
J. Scott Wharton
Controller and Assistant Treasurer

SECTION 5. Members.

(a) The members of the Company shall be the Parent, and such other persons as may be admitted pursuant to the provisions of this Agreement.

(b) The members shall not be liable for the debts, liabilities and obligations of the Company, including any debts, liabilities and obligations under a judgment, decree or order of a court.

(c) Neither a member nor any of its affiliates, partners, members, directors, managers, officers or employees shall be expressly or impliedly restricted or prohibited by virtue of this Agreement or the relationships created hereby from engaging in other activities or business ventures of any kind or character whatsoever. Except as otherwise agreed in writing, each of the members and its affiliates, partners, members, directors, managers, officers and employees shall have the right to conduct, or to possess a direct or indirect ownership interest in, activities and business ventures of every type and description, including activities and business ventures in direct competition with the Company.






SECTION 6. Limited Liability Company Interests. As of the date hereof, the Parent holds all outstanding units (the “ Units ”) of limited liability company interest in the Company.

SECTION 7. Distributions.

(a) the Company may from time to time distribute to the members such amounts in cash and other assets as shall be determined by the members. All such distributions shall be made among the members in proportion to the number of Units then held by them.

(b) Notwithstanding Section 7(a) , the Company will make quarterly distributions, to the extent that sufficient funds are available, to its members in accordance with this Section 7(b) . Not later than 25 days alter the end of each calendar quarter, the Company will make a cash distribution to the members, in an amount equal to the Cash Available for Distribution; provided that if the Company does not have sufficient funds to make the foregoing payments in full, the amount that is available will be distributed in the same proportion as if the full amount were available.

(i) “ Cash Available for Distribution ” will be determined on a quarterly basis based on the report required under Section 7(b)(ii) of the Agreement and is defined, as determined in accordance with GAAP, as net income plus (x) the sum of:

A.
depreciation, depletion and amortization expense,
B.
any gain from the sale of assets not in the ordinary course of business,
C.
any loss as a result of a change in accounting principle,
D.
any non-cash losses or expenses, including asset impairments, amortization of debt discounts, premiums or issue costs, mark-to-market activity associated with hedging and with non-cash revaluation and/or fair valuation of assets or liabilities,
E.
losses from unconsolidated subsidiaries except to the extent of actual cash distributions received, and
F.
any acquisition-related expenses deducted from net income and associated with the acquisition;

less (y) the sum of:
G.
any loss from the sale of assets not in the ordinary course of business,
H.
any gain as a result of a change in accounting principles,
I.
any non-cash gains or items of income, including asset impairments, amortization of debt discounts, premiums or issue costs, mark-to-market activity associated with hedging and with non-cash revaluation and/or fair valuation of assets or liabilities, and
J.
earnings from unconsolidated subsidiaries except to the extent of actual cash distributions received.

(ii) As soon as practicable, but in no event later than 25 days after the close of each calendar quarter, the Company shall cause to be delivered to its members a detailed determination of Cash Available for Distribution calculated for the quarter in accordance with Section 7(b)(i).

SECTION 8. Allocations. The profits and losses of the Company shall be allocated to the members in proportion to the number of Units held by them.





SECTION 9. Dissolution; Winding Up.

(a) The Company shall be dissolved upon (i) the adoption of a plan of dissolution by the members or (ii) the occurrence of any event required to cause the dissolution of the Company under the Delaware Limited Liability Company Act.

(b) Any dissolution of the Company shall be effective as of the date on which the event occurs giving rise to such dissolution, but the Company shall not terminate unless and until all its affairs have been wound up and its assets distributed in accordance with the provisions of the Delaware Limited Liability Company Act.

(c) Upon dissolution of the Company, the Company shall continue solely for the purposes of winding up its business and affairs as soon as reasonably practicable. Promptly after the dissolution of the Company, the members shall designate one or more persons (the “ Liquidating Trustees ”) to accomplish the winding up of the business and affairs of the Company. Upon their designation, the Liquidating Trustees shall immediately commence to wind up the affairs of the Company in accordance with the provisions of this Agreement and the Delaware Limited Liability Company Act. In winding up the business and affairs of the Company, the Liquidating Trustees may take any and all actions that they determine in their sole discretion to be in the best interests of the members, including, but not limited to, any actions relating to (i) causing written notice by registered or certified mail of the Company’s intention to dissolve to be mailed to each known creditor of and claimant against the Company, (ii) the payment, settlement or compromise of existing claims against the Company, (iii) the making of reasonable provisions for payment of contingent claims against the Company and (iv) the sale or disposition of the properties and assets of the Company. It is expressly understood and agreed that a reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the satisfaction of claims against the Company so as to enable the Liquidating Trustees to minimize the losses that may result from a liquidation.

SECTION 10. Transfer . A member shall not transfer (whether by sale, assignment, gift, pledge, hypothecation, mortgage, exchange or otherwise) all or any part of its limited liability company interest in the Company to any other person without the prior written consent of each of the other members.

SECTION 11. Admission of Additional Members. The admission of additional members to the Company shall be accomplished by amendment of this Agreement.

SECTION 12. Tax Matters . For so long as there is only one member of the Company, the Company shall be disregarded as an entity separate from its owner for United States federal income tax purposes. If at any time there is more than one member of the Company, the members shall take such action as is necessary to cause the Company to be classified as a partnership for United States federal income tax purposes.

SECTION 13. Miscellaneous.

(a) The terms and provisions set forth in this Agreement may be amended, and compliance with any term or provision set forth herein may be waived, only by a written instrument executed by each of the members and Cardinal. No failure or delay on the part of any member in exercising any right, power or privilege granted hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege granted hereunder.





(b) This Agreement shall be binding upon and inure to the benefit of the members and their respective successors and assigns.

(c) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (without regard to any conflicts of law principles that would require the application of the laws of any other jurisdiction).

(d) In the event that any provision contained in this Agreement shall be held to be invalid, illegal or unenforceable for any reason, the invalidity, illegality or unenforceability thereof shall not affect any other provision hereof.

(e) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Remainder of page intentionally left blank.]
[Signature page follows.]











IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed on the date first above written.
MSG HOLDING LLC
By:     /s/ Jeffrey A. Ballew
Name:    Jeffery A. Ballew
Title:    President and Chief Executive Officer






EXHIBIT 3.20
    
FIRST AMENDMENT TO
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
This First Amendment to the Amended and Restated Limited Liability Company Agreement (this “ Amendment ”) of Monroe Gas Storage Company, LLC, a Delaware limited liability company (the “ Company ”), is entered into effective as of September 5, 2014 (the “ Effective Date ”), by Cardinal Gas Storage Partners LLC, a Delaware limited liability company (“ Cardinal ”), in its capacity as the sole member of the Company.
WHEREAS, the Company entered into that certain Amended and Restated Limited Liability Company Agreement dated May 31, 2011 (the “ LLC Agreement ”);
WHEREAS, immediately prior to the Merger (as defined below), MGS Holding, LLC, a Delaware limited liability company and wholly-owned subsidiary of Cardinal (“ MGS Holding ”) was the sole member of the Company;
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of the date hereof, by and among MGS Holding and the Company, and the filing of the certificate of merger in connection therewith with the Secretary of State of the State of Delaware, MGS Holding merged with and into the Company, with the Company as the surviving entity of such transaction (the “ Merger ”); and
WHEREAS, following the Merger, Cardinal is the sole member of the Company and in such capacity desires to amend the LLC Agreement to reflect the current ownership of the Company.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Cardinal, as the sole member of the Company, agrees as follows:
1. Each reference to “MGS Holdings, LLC” in the LLC Agreement is hereby deleted in its entirety and replaced with “Cardinal Gas Storage Partners LLC”.

2. Miscellaneous .

(a) Ratification and Confirmation . Except as expressly amended by this Amendment, all other terms and provisions of the LLC Agreement shall remain in full force and effect.

(b) Governing Law . This Amendment shall be construed in accordance with, and governed by, the laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

(c) Headings . The descriptive headings of the several sections of this Agreement are inserted for convenience only and shall not have any significance in the interpretation of this Amendment.





(d) Entire Agreement . This Amendment and the documents referred to herein set forth the entire understanding and agreement of the parties hereto regarding the subject matter hereof and supersede and replace all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.

[Signature Page Follows]












This Amendment was adopted effective as of the Effective Date first written above.
CARDINAL GAS STORAGE PARTNERS LLC
By:     /s/Robert D. Bondurant
Name:    Robert D. Bondurant
Title:    Executive Vice President





EXHIBIT 3.21

State of Delaware
Secretary of State
Division of Corporations
Delivered 01:23 PM 05/23/2008
FILED 01:14 PM 05/23/2008
SRV 080596090 - 4551854 FILE

CERTIFICATE OF FORMATION
OF
PERRYVILLE GAS STORAGE LLC


This Certificate of Formation of Perryville Gas Storage LLC (the “Company”) is being executed and filed by the undersigned authorized person for the purpose of forming a limited liability company under the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et. seq. ).
Article One
The name of the Company is Perryville Gas Storage LLC.

ARTICLE II
The address of the Company’s registered office in the State of Delaware is 1209 Orange Street, Wilmington, Delaware 19801. The name of its initial registered agent at such address is The Corporation Trust Company.


IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as of May 23, 2008.

PERRYVILLE GAS STORAGE LLC


By: /s/ Jeff Ballew                 
Jeff Ballew, Authorized Person








EXHIBIT 3.22


LIMITED LIABILITY COMPANY AGREEMENT
OF
PERRYVILLE GAS STORAGE LLC
(a Delaware Limited Liability Company)
This LIMITED LIABILITY COMPANY AGREEMENT OF PERRYVILLE GAS STORAGE LLC (the “Agreement”), is executed as of June 16, 2008, by Cardinal Gas Storage Partners LLC, a Delaware limited liability company (the “Parent”), as the sole member of Perryville Gas Storage LLC, a Delaware limited liability company (the “Company”).
W I T N E S S E T H:
WHEREAS, Jeffery Ballew has executed the Certificate of Formation (the “Certificate”) of the Company and caused it to be filed in the office of the Secretary of State of the State of Delaware; and
WHEREAS, the Parent desires to complete and perfect the organization of the Company as a limited liability company under the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et. seq .) (the “Delaware Limited Liability Company Act”);
NOW THEREFORE, in consideration of the terms and provisions set forth herein, the mutual benefits to be gained by the performance thereof and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. General.

(a) Effective as of the date and time of filing of the Certificate in the office of the Secretary of State of the State of Delaware, the Company has been formed as a limited liability company under the Delaware Limited Liability Company Act. Except as expressly provided herein, the rights and obligations of the members in connection with the regulation and management of the Company shall be governed by the Delaware Limited Liability Company Act.

(b) The name of the Company shall be “Perryville Gas Storage LLC”. The business of the Company shall be conducted under such name or any other name or names that the members shall determine from time to time.

(c) The address of the registered office of the Company in the State of Delaware shall be c/o The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801. The name and address of the registered agent for service of process on the Company in the State of Delaware shall be The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801. The registered office or registered agent of the Company may be changed from time to time by the members.

(d) The principal place of business of the Company shall be located at such place as the members shall determine from time to time.





(e) The period of duration of the Company shall be perpetual, unless it is earlier dissolved in accordance with the provisions of this Agreement.

(f) The execution of the Certificate by Jeffery Ballew and the filing thereof in the office of the Secretary of State of the State of Delaware are hereby ratified, confirmed and approved by Parent as the sole member of the Company.

SECTION 2. Purposes . The Company is formed for the object and purpose of, and the nature of the business to be conducted by the Company is engaging in any lawful act or activity for which limited liability companies may be formed under the Delaware Limited Liability Company Act.

SECTION 3. Powers . The Company shall have all powers necessary, appropriate or incidental to the accomplishment of its purposes and all other powers conferred upon a limited liability company pursuant to the Delaware Limited Liability Company Act.

SECTION 4. Management.

(a) Except as otherwise set forth herein or as required by applicable law, the powers of the Company shall at all times be exercised by or under the authority of, and the business and affairs of the Company shall be managed by, or under the direction of, the members.

(b) The act of members holding a majority of the outstanding Units (as hereinafter defined) shall be the act of the members for all purposes of this Agreement.

(c) The members shall be authorized to elect managers of the Company, who shall have such authority with respect to the management of the business and affairs of the Company as shall be specified by the member in the resolution or resolutions pursuant to which such managers were elected.

(d) The members or managers of the Company may elect officers of the Company, who will have powers and authority and will be governed by the terms and provisions set forth below.

(i) Each officer of the Company shall be a natural person. An officer need not be a resident of the State of Delaware, a member of the Company or a manager of the Company. An officer need not be an employee of the Company.

(ii) The officers of the Company shall have such powers and authority, subject to the direction and control of the members and, to the extent the members appoint any managers, to the managers, and shall perform such duties in connection with the management of the business and affairs of the Company as are provided in this Agreement, or as may be determined from time to time by resolution of the members or managers. In addition, except as otherwise expressly provided herein, each officer shall have such powers and authority as would be incident to his or her office if he or she served as a comparable officer of a Delaware corporation.

(iii) The officers of the Company shall consist of a President, a Secretary and a Treasurer, each of whom shall be elected by the members of the Company. In addition, the members of the Company shall have the authority to elect such other officers, including Vice Presidents and assistant officers, as it may from time to time determine. Any two or more offices may be held by the same person.





(iv) Any vacancy occurring in an office will be filled by the members.

(v) Any officer of the Company may be removed by the members whenever in their judgment the best interests of the Company will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the officer so removed. Election as an officer of the Company shall not of itself create any contract rights.

(vi) President . The President shall be under the direction and subject to the control of the members and the managers. The President in general shall supervise and control all of the business and affairs of the Company and shall see that all orders and resolutions of the members and managers are carried into effect. The President may execute any deeds, mortgages, bonds, contracts or other instruments that the members or managers have authorized to be executed and delivered, except in cases where the execution and delivery thereof shall be expressly and exclusively delegated to another officer of the Company by the members, the managers, or this Agreement, or where the execution and delivery thereof shall be required by law to be executed and delivered by another person. In general, the President shall perform all duties incident to the office of President, and such other duties as may be prescribed from time to time by the members or the managers.

(vii) Vice Presidents . Each Vice President, if there be any, shall report to the President. Each Vice President may perform the usual and customary duties that pertain to such office (but not unusual or extraordinary duties or the duties conferred by the members or the managers upon the President) and, under the direction and subject to the control of the members, the managers and the President, such other duties as may be assigned to him or her from time to time by the members, the managers or the President. Any Vice President may be designated by the members or the managers as an Executive Vice President.

(viii) Secretary . It shall be the duty of the Secretary to attend all meetings of the members and the managers and to record correctly the proceedings of such meetings and record all votes in a book suitable for such purposes. The Secretary shall give, or cause to be given, notice of all meetings of the members and the managers. It shall also be the duty of the Secretary to keep a register in which all transactions pertaining to limited liability company interests and other equity securities of the Company shall be correctly recorded. The Secretary shall also attest with his or her signature all deeds, conveyances or other instruments requiring the seal of the Company. The Secretary shall have full power and authority on behalf of the Company to execute any consents of shareholders, partners or members and to attend, and to act and to vote in person or by proxy at, any meetings of the shareholders, partners or members of any corporation, partnership or limited liability company in which the Company may own stock or other securities, and at any such meetings, the Secretary shall possess and may exercise any and all the rights and powers incident to the ownership of such securities that, as the owner thereof, the Company might have possessed and exercised if present. The Secretary shall keep in safe custody the seal of the Company. The Secretary shall also perform, under the direction and subject to the control of the members and managers, such other duties as may be assigned to him or her from time to time.

(ix) Treasurer . The Treasurer shall have the care and custody of all the funds and securities of the Company that may come into his or her hands as Treasurer. The Treasurer may endorse checks, drafts and other instruments for the payment of money for deposit or collection when necessary or proper and may deposit the same to the credit of the Company in such banks or depositories as the members or the managers may designate from time to time, and the Treasurer may endorse all commercial documents requiring endorsements for or on behalf of the Company. The




Treasurer may sign all receipts and vouchers for the payments made to the Company. The Treasurer shall render an account of his or her transactions to the members, the managers or the President as often as the members, the managers or the President shall require from time to time. The Treasurer shall enter regularly in the books to be kept by him or her for that purpose, a full and adequate account of all monies received and paid by him or her on account of the Company. The Treasurer shall also perform, under the direction and subject to the control of the members, the managers and the President, such other duties as may be assigned to him or her from time to time.

(x) Delegation of Authority . In the case of any absence of any officer of the Company or for any other reason that the members or the managers may deem sufficient, the members or the managers may delegate some or all of the powers or duties of such officer to any other officer for whatever period of time the members or the managers deem appropriate.

(xi) Initial Officers . The following persons shall be the initial officers of the Company and shall hold the offices set forth opposite to their names below, each of such officers to serve until their successors have been duly elected and qualified:
Name
Office
Jeffery A. Ballew
President, Chief Executive Officer and Chief Financial Officer
David L. Hayden
Senior Vice President, Chief Operating Officer and Secretary
Kenneth L. Beckman
Senior Vice President
Danny R. Burgess
Vice President of Operations

SECTION 5. Members.

(a) The members of the Company shall be the Parent, and such other persons as may be admitted pursuant to the provisions of this Agreement.

(b) The members shall not be liable for the debts, liabilities and obligations of the Company, including any debts, liabilities and obligations under a judgment, decree or order of a court.

(c) Neither a member nor any of its affiliates, partners, members, directors, managers, officers or employees shall be expressly or impliedly restricted or prohibited by virtue of this Agreement or the relationships created hereby from engaging in other activities or business ventures of any kind or character whatsoever. Except as otherwise agreed in writing, each of the members and its affiliates, partners, members, directors, managers, officers and employees shall have the right to conduct, or to possess a direct or indirect ownership interest in, activities and business ventures of every type and description, including activities and business ventures in direct competition with the Company.

SECTION 6. Limited Liability Company Interests. As of the date hereof, the Parent holds all outstanding units (the “Units”) of limited liability company interest in the Company.

SECTION 7. Distributions. The Company may from time to time distribute to the members such amounts in cash and other assets as shall be determined by the members. All such distributions shall be made among the members in proportion to the number of Units then held by them.

SECTION 8. Allocations . The profits and losses of the Company shall be allocated to the members in proportion to the number of Units held by them.





SECTION 9. Dissolution; Winding Up.

(a) The Company shall be dissolved upon (i) the adoption of a plan of dissolution by the members or (ii) the occurrence of any event required to cause the dissolution of the Company under the Delaware Limited Liability Company Act.

(b) Any dissolution of the Company shall be effective as of the date on which the event occurs giving rise to such dissolution, but the Company shall not terminate unless and until all its affairs have been wound up and its assets distributed in accordance with the provisions of the Delaware Limited Liability Company Act.

(c) Upon dissolution of the Company, the Company shall continue solely for the purposes of winding up its business and affairs as soon as reasonably practicable. Promptly after the dissolution of the Company, the members shall designate one or more persons (the “Liquidating Trustees”) to accomplish the winding up of the business and affairs of the Company. Upon their designation, the Liquidating Trustees shall immediately commence to wind up the affairs of the Company in accordance with the provisions of this Agreement and the Delaware Limited Liability Company Act. In winding up the business and affairs of the Company, the Liquidating Trustees may take any and all actions that they determine in their sole discretion to be in the best interests of the members, including, but not limited to, any actions relating to (i) causing written notice by registered or certified mail of the Company’s intention to dissolve to be mailed to each known creditor of and claimant against the Company, (ii) the payment, settlement or compromise of existing claims against the Company, (iii) the making of reasonable provisions for payment of contingent claims against the Company and (iv) the sale or disposition of the properties and assets of the Company. It is expressly understood and agreed that a reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the satisfaction of claims against the Company so as to enable the Liquidating Trustees to minimize the losses that may result from a liquidation.

SECTION 10. Transfer . A member shall not transfer (whether by sale, assignment, gift, pledge, hypothecation, mortgage, exchange or otherwise) all or any part of its limited liability company interest in the Company to any other person without the prior written consent of each of the other members.

SECTION 11. Admission of Additional Members . The admission of additional members to the Company shall be accomplished by amendment of this Agreement and, if required by the Delaware Limited Liability Company Act, by the filing of an appropriate amendment to the Certificate in the office of the Secretary of State of the State of Delaware.

SECTION 12. Tax Matters . For so long as there is only one member of the Company, the Company shall be disregarded as an entity separate from its owner for United States federal income tax purposes. If at any time there is more than one member of the Company, the members shall take such action as is necessary to cause the Company to be classified as a partnership for United States federal income tax purposes.

SECTION 13. Miscellaneous.

(a) The terms and provisions set forth in this Agreement may be amended, and compliance with any term or provision set forth herein may be waived, only by a written instrument executed by each of the members. No failure or delay on the part of any member in exercising any right, power or privilege granted hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right,




power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege granted hereunder.

(b) This Agreement shall be binding upon and inure to the benefit of the members and their respective successors and assigns.

(c) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (without regard to any conflicts of law principles that would require the application of the laws of any other jurisdiction).

(d) In the event that any provision contained in this Agreement shall be held to be invalid, illegal or unenforceable for any reason, the invalidity, illegality or unenforceability thereof shall not affect any other provision hereof.

(e) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.





IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed on the date first above written.
CARDINAL GAS STORAGE PARTNERS LLC
By:     /s/ Jeffery Ballew
Name:    J. A. Ballew
Title:    President





EXHIBIT 3.23

FIRST AMENDMENT TO
LIMITED LIABILITY COMPANY AGREEMENT
This First Amendment to Limited Liability Company Agreement (this “ Amendment ”) of Perryville Gas Storage LLC, a Delaware limited liability company (the “ Company ”), is entered into and effective as of April 14, 2010 (the “ Effective Date ”), by Perryville Gas Storage Holding LLC, a Delaware limited liability company, as the sole member of the Company (“ Perryville Holdco ”).
WHEREAS, Cardinal Gas Storage Partners LLC (“ Cardinal ”), as the original sole member of the Company, executed the Limited Liability Company Agreement of the Company on June 16, 2008 (the “ LLC Agreement ”). Capitalized terms used herein but not defined herein shall have the meanings set forth in the LLC Agreement.
WHEREAS, Perryville Holdco is a direct wholly owned subsidiary of Cardinal.
WHEREAS, Cardinal contributed all of its membership interests in the Company to Perryville Holdco, making Perryville Holdco the new sole member of the Company.
WHEREAS, Perryville Holdco desires to amend the LLC Agreement to (a) reflect that Perryville Holdco is the sole member of the Company and (b) provide for the issuance of certificates evidencing the membership interests in the Company.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Perryville Holdco hereby agrees as follows:
1. Amendment to Reflect New Member . Each reference to “Cardinal Gas Storage Partners LLC” in the LLC Agreement is hereby deleted in its entirety and replaced with “Perryville Gas Storage Holding LLC”.

2. Amendments to Section 6 . Section 6 of the LLC Agreement is hereby amended and restated in its entirety as follows:
“SECTION 6. Limited Liability Company Interests .
(a) As of the date hereof, the Parent holds all outstanding units of limited liability company interest (the “ Units ”) in the Company.

(b) Ownership of the Units shall be evidenced by Unit certificates substantially in the form of Exhibit A hereto. The Company shall issue one or more certificates to the members, which certificates need not bear a seal of the Company but shall be signed by any person authorized by the Parent to sign such certificates who shall certify the percentage of the Units represented by such certificate. The certificates shall be consecutively numbered and shall be entered in the books of the Company as they are issued and shall exhibit the holder’s name and percentage of the Units. The Parent may determine the conditions upon which a new certificate may be issued in place of a certificate that is alleged to have been lost, stolen or destroyed and may, in its discretion, require the owner of such certificate or its legal representative to give bond, with sufficient surety, to indemnify the Company and each transfer agent and registrar against any and all losses or claims that may arise by reason of the issuance of a new certificate in the place of the one so lost, stolen or destroyed. The




Company shall maintain books for the purpose of registering the transfer of limited liability company interests.

(c) In connection with a transfer in accordance with this Agreement of any Units, the certificate(s) evidencing such Units shall be delivered to the Company for cancellation, and the Company shall thereupon issue a new certificate to the transferee evidencing the Units that were transferred and, if applicable, the Company shall issue a new certificate to the transferor evidencing any Units registered in the name of the transferor that were not transferred. Each certificate shall




bear a legend thereof substantially in the following form in addition to any other legend required by law or by agreement with the Company:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD, UNLESS IT HAS BEEN REGISTERED UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE (AND, IN SUCH CASE, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SHALL HAVE BEEN DELIVERED TO THE COMPANY TO THE EFFECT THAT SUCH OFFER OR SALE IS NOT REQUIRED TO BE REGISTERED UNDER THE SECURITIES ACT).
(d) Each Unit in the Company shall constitute a “security” within the meaning of, and governed by, Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time to time in the State of Delaware or any other applicable jurisdiction.”

3. Exhibit A to LLC Agreement . The LLC Agreement is hereby amended to include Exhibit A attached hereto as a new Exhibit A to the LLC Agreement.

4. Miscellaneous .

(a) Ratification and Confirmation . Except as expressly amended hereby, the LLC Agreement is ratified and confirmed in all respects and shall remain in full force and effect in accordance with its terms.

(b) Governing Law . This Amendment shall be construed in accordance with, and governed by, the laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

(c) Headings . The descriptive headings of the several sections of this Amendment are inserted for convenience only and shall not have any significance in the interpretation of this Amendment.

(d) Entire Agreement . This Amendment and the documents referred to herein set forth the entire understanding and agreement of the parties hereto regarding the subject matter hereof and supersede and replace all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.

(e) Counterparts . This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts (which counterparts may be delivered by facsimile or .pdf transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

[Signature Page Follows]















IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers or other duly authorized representatives as of the date first above written.
PERRYVILLE GAS STORAGE HOLDING LLC
By:     /s/ Dan Hannon
Name:    Dan Hannon
Title:    CFO
Acknowledged and Agreed:
PERRYVILLE GAS STORAGE LLC
By:     /s/ Jeffery Ballew
Name.    J. A. Ballew
Title:    President
CARDINAL GAS STORAGE PARTNERS LLC
By:     /s/ Jeffery Ballew
Name.    J. A. Ballew
Title:    President











Unit Certificate
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD, UNLESS IT HAS BEEN REGISTERED UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE (AND, IN SUCH CASE, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SHALL HAVE BEEN DELIVERED TO THE COMPANY TO THE EFFECT THAT SUCH OFFER OR SALE IS NOT REQUIRED TO BE REGISTERED UNDER THE SECURITIES ACT).
Unit Certificate in Perryville Gas Storage LLC
Certificate No. 1                                        100% of Units
Perryville Gas Storage LLC, a Delaware limited liability company (the “ Company ”), hereby certifies that Perryville Gas Storage Holding LLC, a Delaware limited liability company (the “ Holder ”), is the registered owner of 100% of the Units in the Company (the “ Units ”). The rights, preferences and limitations of the Units are set forth in the Limited Liability Company Agreement of the Company, effective as of June 16, 2008 (as amended, supplemented or restated from time to time, the “ Agreement ”), a copy of which is on file at the principal office of the Company.
By acceptance of this Certificate, and as a condition to being entitled to any rights and/or benefits with respect to the Units evidenced hereby, the Holder is deemed to have agreed to comply with and be bound by all the terms and conditions of the Agreement. The Company will furnish a copy of the Agreement to the Holder without charge upon written request to the Company at its principal place of business. The Company maintains books for the purpose of registering the transfer of Interests.
Each Unit in the Company shall constitute a “security” within the meaning of, and governed by, Article 8 of the Uniform Commercial Code (including Section 8 102(a)(15) thereof) as in effect from time to time in the State of Delaware or any other applicable jurisdiction.
This Certificate shall be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of conflicts of laws.
IN WITNESS WHEREOF, the Company has caused this Certificate to be executed as of the date set forth below.
Dated: April 14, 2010                 PERRYVILLE GAS STORAGE LLC
By:     /s/ Dan Hannon
Name:    Dan Hannon
Title:    CFO





EXHIBIT 3.24

SECOND AMENDMENT TO
LIMITED LIABILITY COMPANY AGREEMENT
This Second Amendment to the Limited Liability Company Agreement (this “ Amendment ”) of Perryville Gas Storage LLC, a Delaware limited liability company (the “ Company ”), is entered into effective as of September 5, 2014 (the “ Effective Date ”), by Cardinal Gas Storage Partners LLC, a Delaware limited liability company (“ Cardinal ”), in its capacity as the sole member of the Company.
WHEREAS, the Company entered into that certain Limited Liability Company Agreement dated June 16, 2008, as amended on April 14, 2010 (the “ LLC Agreement ”);
WHEREAS, immediately prior to the Merger (as defined below), Perryville Gas Storage Holding LLC, a Delaware limited liability company and wholly-owned subsidiary of Cardinal (“ Perryville Holding ”), was the sole member of the Company;
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of the date hereof, by and among Perryville Holding and the Company, and the filing of the certificate of merger in connection therewith with the Secretary of State of the State of Delaware, Perryville Holding merged with and into the Company, with the Company as the surviving entity of such transaction (the “ Merger ”); and
WHEREAS, following the Merger, Cardinal is the sole member of the Company and in such capacity desires to amend the LLC Agreement to reflect the current ownership of the Company.
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Cardinal, as the sole member of the Company, agrees as follows:
1. Amendment . Each reference to “Perryville Gas Storage Holding LLC” in the LLC Agreement is hereby deleted in its entirety and replaced with “Cardinal Gas Storage Partners LLC”.

2. Miscellaneous .

(a) Ratification and Confirmation . Except as expressly amended by this Amendment, all other terms and provisions of the LLC Agreement shall remain in full force and effect.

(b) Governing Law . This Amendment shall be construed in accordance with, and governed by, the laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

(c) Headings . The descriptive headings of the several sections of this Agreement are inserted for convenience only and shall not have any significance in the interpretation of this Amendment.

(d) Entire Agreement . This Amendment and the documents referred to herein set forth the entire understanding and agreement of the parties hereto regarding the subject matter hereof and supersede and replace all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.




This Amendment was adopted effective as of the Effective Date first written above.
CARDINAL GAS STORAGE PARTNERS LLC
By:      /s/ Robert D. Bondurant
Name:      Robert D. Bondurant
Title:      Executive Vice President





EXHIBIT 3.25

State of Delaware
Secretary of State
Division of Corporations
Delivered 12:08 PM 04/02/2008
FILED 12:06 PM 04/02/2008
SRV 080385431 - 4525958 FILE

CERTIFICATE OF FORMATION
OF
CARDINAL GAS STORAGE PARTNERS LLC


This Certificate of Formation of Cardinal Gas Storage Partners LLC (the “Company”) is being executed and filed by the undersigned authorized person for the purpose of forming a limited liability company under the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et. seq. ).
Article One
The name of the Company is Cardinal Gas Storage Partners LLC.

ARTICLE II
The address of the Company’s registered office in the State of Delaware is 1209 Orange Street, Wilmington, Delaware 19801. The name of its initial registered agent at such address is The Corporation Trust Company.


IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as of April 2, 2008.

CARDINAL GAS STORAGE PARTNERS LLC


By: /s/ Jeff Ballew                 
Jeff Ballew, Authorized Person








EXHIBIT 3.26

THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CARDINAL GAS STORAGE PARTNERS LLC
(F/K/A REDBIRD GAS STORAGE LLC)
This Third Amended and Restated Limited Liability Company Agreement (this “Agreement”) of Cardinal Gas Storage Partners LLC f/k/a Redbird Gas Storage LLC (the “Company”), dated October 27, 2014, is made by its undersigned sole member (the “Member”):
A.      The Company was formed pursuant to a Certificate of Formation filed with the Secretary of State of the State of Delaware effective as of May 24, 2011 to hold membership interests in Cardinal Gas Storage Partners LLC, a Delaware limited liability company (“Cardinal”).
B.      The Company has been governed by that certain Limited Liability Company Agreement dated effective as of May 27, 2011, as amended and restated in that certain Amended and Restated Limited Liability Company Agreement dated effective as of September 11, 2011, and as further amended and restated in that certain Second Amended and Restated Limited Liability Company Agreement dated effective as of October 1, 2012.
C.      Martin Operating Partnership L.P. acquired all of the Class A membership interests of the Company on October 2, 2012.
D.      The Company and Energy Capital Partners I, LP, a Delaware limited partnership, Energy Capital Partners I-A, LP, a Delaware limited partnership, Energy Capital Partners I-B IP, LP, a Delaware limited partnership, and Energy Capital Partners I, LP, a Delaware limited partnership (the “ECP Companies”) entered into a Membership Interest Purchase Agreement dated as of August 10, 2014, pursuant to which the Company acquired all of the issued and outstanding Category A Membership Interests in Cardinal;.
E.      Pursuant to that certain Agreement and Plan of Merger, by and between the Company and Cardinal and the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, Cardinal merged with and into the Company, with the Company continuing to exist after such merger as the surviving entity under the name “Cardinal Gas Storage Partners LLC”.
F.      The Member now desires to amend and restate a limited liability company agreement to govern the operations of the Company.
Accordingly, the sole member of the Company hereby agrees as follows:
1. Name . The name of the Company is Cardinal Gas Storage Partners LLC. The business of the Company shall be conducted under such name or any other name or names that the sole member shall determine from time to time.

2. Purposes . The Company is formed for the object and purpose of, and the nature of the business to be conducted by the Company is, engaging in any lawful act or activity for which limited liability companies may be formed under the Act.




3. Powers . The Company shall have all powers necessary, appropriate or incidental to the accomplishment of its purposes and all other powers conferred upon a limited liability company pursuant to the Act.

4. Principal Business Office . The principal business office of the Company shall be located at such location as may hereafter be determined by the sole member.

5. Registered Office and Registered Agent . The name of the registered agent and the location of the registered office of the Company in the State of Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, Delaware 19801. The registered office or registered agent of the Company may be changed from time to time by the sole member.

6. Member . The sole member of the Company is Martin Operating Partnership L.P., a limited partnership organized under the laws of the State of Delaware.

7. Management . Except as otherwise set forth herein or as required by applicable law, the powers of the Company shall at all times be exercised by or under the authority of, and the business and affairs of the Company shall be managed by, or under the direction of, the sole member.

8. Officers . The sole member of the Company may elect officers of the Company, who will have powers and authority and will be governed by the terms and provisions set forth below.

(a) Natural Persons . Each officer of the Company shall be a natural person. An officer need not be a resident of the State of Delaware or a member or employee of the Company.

(b) Power and Authority . The officers of the Company shall have such powers and authority, subject to the direction and control of the sole member, and shall perform such duties in connection with the management of the business and affairs of the Company as are provided in this Agreement, or as may be determined from time to time by resolution of the sole member. In addition, except as otherwise expressly provided herein, each officer shall have such powers and authority as would be incident to his or her office if he or she served as a comparable officer of a Delaware corporation.

(c) Officer Titles . The officers of the Company shall consist of a President, a Secretary and a Treasurer, each of whom shall be elected by the sole member of the Company. In addition, the sole member of the Company shall have the authority to elect such other officers, including Vice Presidents and assistant officers, as it may from time to time determine. Any two or more offices may be held by the same person.

(d) Vacancies . Any vacancy occurring in an office will be filled by the sole member.

(e) Removal . Any officer of the Company may be removed by the sole member whenever in its judgment the best interests of the Company will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the officer so removed. Election as an officer of the Company shall not of itself create any contract rights.

(f) President . The President shall be under the direction and subject to the control of the sole member. The President in general shall supervise and control all of the business and affairs of the Company and shall see that all orders and resolutions of the sole member are carried into effect.




The President may execute any deeds, mortgages, bonds, contracts or other instruments that the sole member has authorized to be executed and delivered, except in cases where the execution and delivery thereof shall be expressly and exclusively delegated to another officer of the Company by the sole member or this Agreement, or where the execution and delivery thereof shall be required by law to be executed and delivered by another person. In general, the President shall perform all duties incident to the office of President, and such other duties as may be prescribed from time to time by the sole member.

(g) Vice Presidents . Each Vice President, if there be any, shall report to the President. Each Vice President may perform the usual and customary duties that pertain to such office (but not unusual or extraordinary duties or the duties conferred by the sole member upon the President) and, under the direction and subject to the control of the sole member and the President, such other duties as may be assigned to him or her from time to time by the sole member or the President. Any Vice President may be designated by the sole member as an Executive Vice President, Senior Vice President or any other additional designation.

(h) Secretary . It shall be the duty of the Secretary to attend all meetings of the sole member and to record correctly the proceedings of such meetings and record all votes in a book suitable for such purposes. The Secretary shall give, or cause to be given, notice of all meetings of the sole member. It shall also be the duty of the Secretary to keep a register in which all transactions pertaining to membership interests and other equity securities of the Company shall be correctly recorded. The Secretary shall also attest with his or her signature all deeds, conveyances or other instruments requiring the seal of the Company. The Secretary shall have full power and authority on behalf of the Company to execute any consents of shareholders, partners or members and to attend, and to act and to vote in person or by proxy at, any meetings of the shareholders, partners or members of any corporation, partnership or limited liability company in which the Company may own stock or other securities, and at any such meetings, the Secretary shall possess and may exercise any and all the rights and powers incident to the ownership of such securities that, as the owner thereof, the Company might have possessed and exercised if present. The Secretary shall keep in safe custody the seal of the Company. The Secretary shall also perform, under the direction and subject to the control of the sole member, such other duties as may be assigned to him or her from time to time.

(i) Treasurer . The Treasurer shall have the care and custody of all the funds and securities of the Company that may come into his or her hands as Treasurer. The Treasurer may endorse checks, drafts and other instruments for the payment of money for deposit or collection when necessary or proper and may deposit the same to the credit of the Company in such banks or depositories as the sole member may designate from time to time, and the Treasurer may endorse all commercial documents requiring endorsements for or on behalf of the Company. The Treasurer may sign all receipts and vouchers for the payments made to the Company. The Treasurer shall render an account of his or her transactions to the sole member or the President as often as the sole member or the President shall require from time to time. The Treasurer shall enter regularly in the books to be kept by him or her for that purpose, a full and adequate account of all monies received and paid by him or her on account of the Company. The Treasurer shall also perform, under the direction and subject to the control of the sole member and the President, such other duties as may be assigned to him or her from time to time.

(j) Delegation of Authority . In the case of any absence of any officer of the Company or for any other reason that the sole member may deem sufficient, the sole member may delegatesome




or all of the powers or duties of such officer to any other officer for whatever period of time the sole member deems appropriate.

(k) Current Officers . The officers of the Company as of the date hereof are as set forth below who shall serve until his or her successor shall be appointed by the sole member or until his or her earlier death, disability, resignation or removal:
Jeffery A. Ballew
President and Chief Executive Officer
Ruben S. Martin III
Executive Vice President
Robert D. Bondurant
Executive Vice President
Chris Booth
Executive Vice President, Chief Legal Officer, Secretary and General Counsel
Randall L. Tauscher
Executive Vice President
John Ben Blackburn
Assistant Secretary and Assistant General Counsel
Billie Ann Sweeney
Assistant Secretary
Robert B. Raines Jr.
Senior Vice President - Engineering & Operations
Tiffany Baumgartner
Controller

9. Limited Liability . Except as otherwise provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the sole member shall not be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a member of the Company.

10. Member Activities . Neither the sole member nor any of its affiliates, partners, members, directors, managers, officers or employees shall be expressly or impliedly restricted or prohibited by virtue of this Agreement or the relationships created hereby from engaging in other activities or business ventures of any kind or character whatsoever. The sole member and its affiliates, partners, members, directors, managers, officers and employees shall have the right to conduct, or to possess a direct or indirect ownership interest in, activities and business ventures of every type and description, including activities and business ventures in direct competition with the Company.

11. Membership Interest . The sole member owns 100% of the membership interests of the Company.

12. Admission of Additional Members . The admission of additional members to the Company shall be accomplished by amendment of this Agreement.

13. Distributions . The Company may from time to time distribute to the sole member such amounts in cash and other assets as shall be determined by the sole member.

14. Allocation of Profits and Losses . The Company’s profits and losses shall be allocated solely to the sole member.

15. Tax Matters . For so long as there is only one member of the Company, the Company shall be disregarded as an entity separate from its owner for United States federal income tax purposes. If at any time there is more than one member of the Company, the members shall take such action as is necessary to cause the Company to be classified as a partnership for United States federal income tax purposes.

16. Term and Dissolution . Unless sooner dissolved by the sole member or in accordance with law, the term of the Company shall be perpetual.





17. Entire Agreement . This Agreement constitutes the entire agreement of the sole member with respect to the subject matter of this Agreement.

18. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the sole member and its successors and assigns.

19. Construction . In the event that any provision contained in this Agreement shall be held to be invalid, illegal or unenforceable for any reason, the invalidity, illegality or unenforceability thereof shall not affect any other provision hereof.

20. Governing Law . This Agreement shall be governed by the laws of the State of Delaware (without regard to conflict of laws principles that would require the application of the laws of any other jurisdiction).





IN WITNESS WHEREOF, the undersigned, being the sole member of the Company, has duly executed this Agreement as of date first set forth above.
SOLE member:

MARTIN OPERATING PARTNERSHIP L.P.
By: Martin Operating GP, LLC, Its General Partner
         By: Martin Midstream Partners, L.P., Its Sole Member
By: Martin Midstream GP, LLC, Its General Partner



By:     /s/ Robert D. Bondurant
Name:    Robert D. Bondurant
Title:    Executive Vice President and Chief Financial Officer








EXHIBIT 3.27

State of Delaware
Secretary of State
Division of Corporations
Delivered 11:17 AM 10/27/2014
Filed 10:46 AM 10/27/2014
SRV 141335148 - 4982228 FILE

STATE OF DELAWARE
CERTIFICATE OF MERGER
OF

CARDINAL GAS STORAGE PARTNERS LLC
(a Delaware limited liability company)

WITH AND INTO

REDBIRD GAS STORAGE LLC
(a Delaware limited liability company)

Pursuant to Title 6, Section 18-209 of the Delaware Limited Liability Company Act, the undersigned limited liability company does hereby certify that:

FIRST:     The name and state of organization of each of the constituent limited liability companies that is a party to the Merger Agreement (as defined below) are:

Name of Entity
Type of Entity
State
Cardinal Gas Storage Partners LLC
Limited liability company
Delaware
Redbird Gas Storage LLC
Limited liability company
Delaware

SECOND :    An agreement and plan of merger (the “ Merger Agreement ”) has been approved, adopted, executed and acknowledged by each of the constituent limited liability companies as required by the laws of the State of Delaware and by its governing documents.

THIRD:     Pursuant to the Merger Agreement, Cardinal Gas Storage Partners LLC, a Delaware limited liability company (the “ Merging Entity ”), will merge with and into Redbird Gas Storage LLC, a Delaware limited liability company (the “ Surviving Entity ”). The Surviving Entity will continue to exist after the merger as the surviving limited liability company under the name “Cardinal Gas Storage Partners LLC”.

FOURTH:     The Certificate of Formation of the Surviving Entity is hereby amended to reflect a change in the name of the Surviving Entity. Therefore, the First Article of the Certificate of Formation of the Surviving Entity is hereby amended and restated in its entirety to read as follows:
“ FIRST: The name of the limited liability company (the “ LLC ”) is “Cardinal Gas Storage Partners LLC”.”
FIFTH :     The executed Merger Agreement is on file at the principal place of business of the Surviving Entity at 4200 B Stone Road, Kilgore, Texas 75662.





SIXTH :     A copy of the Merger Agreement will be furnished by the Surviving Entity, on request and without cost, to any member of the constituent limited liability companies.

SEVENTH :     The merger shall become effective upon the filing of this Certificate of Merger with the Secretary of State of the State of Delaware.

[ Signature Page Follows ]

IN WITNESS WHEREOF, the undersigned Surviving Entity has caused this Certificate of Merger to be executed effective as of the filing date.

                            
REDBIRD GAS STORAGE LLC
a Delaware limited liability company

By:      /s/ Robert D. Bondurant         
Name:      Robert D. Bondurant
Title:      Vice President





Exhibit 4.4

                                                





MARTIN MIDSTREAM PARTNERS L.P.

MARTIN MIDSTREAM FINANCE CORP.


and

the Guarantors named herein

                    

7 1 / 4 % SENIOR NOTES DUE 2021

                    


            

SECOND SUPPLEMENTAL INDENTURE

DATED AS OF SEPTEMBER 30, 2014

            

WELLS FARGO BANK, NATIONAL ASSOCIATION,

As Trustee







                                                    









This SECOND SUPPLEMENTAL INDENTURE, dated as of September 30, 2014, is among Martin Midstream Partners L.P., a Delaware limited partnership (the “Company”), Martin Midstream Finance Corp., a Delaware corporation (“Finance Corp.” and, together with the Company, the “Issuers”), each of the parties identified under the caption “Guarantors” on the signature page hereto (the “Guarantors”) and Wells Fargo Bank, National Association, a national banking association, as Trustee.

RECITALS

WHEREAS, the Issuers, the initial Guarantors and the Trustee entered into an Indenture, dated as of February 11, 2013 (the “Indenture”), pursuant to which the Company has issued $250,000,000 in the aggregate principal amount of 7 1 / 4 % Senior Notes due 2021 (the “Original Notes”) and has issued $150,000,000 of additional notes in the aggregate principal amount of 7 1 / 4 % Senior Notes due 2021 (the “Additional Notes”, and together with the Original Notes the “Notes”);

WHEREAS, the Issuers, the Guarantors identified on the signature page thereto, and the Trustee entered into the First Supplemental Indenture, dated as of July 21, 2014, pursuant to which the Company added Martin Midstream NGL Holdings, LLC and Martin Midstream NGL Holdings II, LLC as guarantors;

WHEREAS, Section 9.01(g) of the Indenture provides that the Issuers, the Guarantors and the Trustee may amend or supplement the Indenture in order to comply with Section 4.13 or 10.03 thereof, without the consent of the Holders of the Notes; and

WHEREAS, all acts and things prescribed by the Indenture, by law and by the Certificate of Incorporation and the Bylaws (or comparable constituent documents) of the Issuers, of the Guarantors and of the Trustee necessary to make this Second Supplemental Indenture a valid instrument legally binding on the Issuers, the Guarantors and the Trustee, in accordance with its terms, have been duly done and performed;

NOW, THEREFORE, to comply with the provisions of the Indenture and in consideration of the above premises, the Issuers, the Guarantors and the Trustee covenant and agree for the equal and proportionate benefit of the respective Holders of the Notes as follows:

ARTICLE 1

Section 1.01.      This Second Supplemental Indenture is supplemental to the Indenture and does and shall be deemed to form a part of, and shall be construed in connection with and as part of, the Indenture for any and all purposes.

Section 1.02.      This Second Supplemental Indenture shall become effective immediately upon its execution and delivery by each of the Issuers, the Guarantors and the Trustee.

ARTICLE 2

From this date, in accordance with Section 4.13 or 10.03 and by executing this Second Supplemental Indenture, the Guarantors whose signatures appear below are subject to the provisions of the Indenture to the extent provided for in Article 10 thereunder.





ARTICLE 3

Section 3.01. Except as specifically modified herein, the Indenture and the Notes are in all respects ratified and confirmed (mutatis mutandis) and shall remain in full force and effect in accordance with their terms with all capitalized terms used herein without definition having the same respective meanings ascribed to them as in the Indenture.

Section 3.02.      Except as otherwise expressly provided herein, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this Second Supplemental Indenture. This Second Supplemental Indenture is executed and accepted by the Trustee subject to all the terms and conditions set forth in the Indenture with the same force and effect as if those terms and conditions were repeated at length herein and made applicable to the Trustee with respect hereto.

Section 3.03.      THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 3.04.      The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of such executed copies together shall represent the same agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, all as of the date first written above.
TRUSTEE:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

By:      /s/ John Stohlmann                 
Name:      John Stohlmann                 
Title:      Vice President                     

ISSUERS:
MARTIN MIDSTREAM PARTNERS L.P.

By:      Martin Midstream GP LLC,
as general partner

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer

MARTIN MIDSTREAM FINANCE CORP.

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer
























GUARANTORS:

MARTIN OPERATING PARTNERSHIP L.P.

By:      Martin Operating GP LLC,
as general partner

By:      Martin Midstream Partners L.P.,
as sole member

By:      Martin Midstream GP LLC,
as general partner

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer

MARTIN OPERATING GP LLC

By:      Martin Midstream Partners L.P.,
as sole member

By:      Martin Midstream GP LLC,
as general partner

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer

REDBIRD GAS STORAGE LLC

By:      Martin Operating Partnership L.P.,
as sole member

By:      Martin Operating GP LLC,
as general partner

By:      Martin Midstream Partners L.P.,
as sole member

By:      Martin Midstream GP LLC,
as general partner

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer







MOP MIDSTREAM HOLDINGS LLC

By:      Martin Operating Partnership L.P.,
as sole member

By:      Martin Operating GP LLC,
as general partner

By:      Martin Midstream Partners L.P.,
as sole member

By:      Martin Midstream GP LLC,
as general partner

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer

MARTIN MIDSTREAM NGL HOLDINGS, LLC

By:      Martin Operating Partnership L.P.,
as sole member

By:      Martin Operating GP LLC,
as general partner

By:      Martin Midstream Partners L.P.,
as sole member

By:      Martin Midstream GP LLC,
as general partner

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer





MARTIN MIDSTREAM NGL HOLDINGS II, LLC

By:      Martin Operating Partnership L.P.,
as sole member

By:      Martin Operating GP LLC,
as general partner

By:      Martin Midstream Partners L.P.,
as sole member

By:      Martin Midstream GP LLC,
as general partner

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer

CARDINAL GAS STORAGE PARTNERS LLC

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President

PERRYVILLE GAS STORAGE LLC

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President

ARCADIA GAS STORAGE, LLC

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President

CADEVILLE GAS STORAGE LLC

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President

MONROE GAS STORAGE COMPANY, LLC

By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President






Exhibit 4.5



                                                    


MARTIN MIDSTREAM PARTNERS L.P.

MARTIN MIDSTREAM FINANCE CORP.


and

the Guarantors named herein

                    

7 1 / 4 % SENIOR NOTES DUE 2021

                    


            

THIRD SUPPLEMENTAL INDENTURE

DATED AS OF OCTOBER 27, 2014

            

WELLS FARGO BANK, NATIONAL ASSOCIATION,

As Trustee

                




    







This THIRD SUPPLEMENTAL INDENTURE, dated as of October 27, 2014, is among Martin Midstream Partners L.P., a Delaware limited partnership (the “Company”), Martin Midstream Finance Corp., a Delaware corporation (“Finance Corp.” and, together with the Company, the “Issuers”), each of the parties identified under the caption “Guarantors” on the signature page hereto (the “Guarantors”) and Wells Fargo Bank, National Association, a national banking association, as Trustee.
RECITALS
WHEREAS, the Issuers, the initial Guarantors and the Trustee entered into an Indenture, dated as of February 11, 2013 (the “Indenture”), pursuant to which the Company has issued $250,000,000 in the aggregate principal amount of 7 1 / 4 % Senior Notes due 2021 (the “Original Notes”) and has issued $150,000,000 of additional notes in the aggregate principal amount of 7 1 / 4 % Senior Notes due 2021 (the “Additional Notes”, and together with the Original Notes the “Notes”);
WHEREAS, the Issuers, the Guarantors identified on the signature page thereto, and the Trustee entered into the First Supplemental Indenture, dated as of July 21, 2014, pursuant to which the Company added Martin Midstream NGL Holdings, LLC and Martin Midstream NGL Holdings II, LLC as guarantors;
WHEREAS, the Issuers, the Guarantors identified on the signature page thereto, and the Trustee entered into the Second Supplemental Indenture, dated as of September 30, 2014, pursuant to which the Company added Cardinal Gas Storage Partners LLC (“Cardinal”), Perryville Gas Storage partners LLC, Arcadia Gas Storage Partners LLC, Cadeville Gas Storage Partners LLC and Monroe Gas Storage Company, LLC as guarantors;
WHEREAS, Section 10.03 - Guarantors May Consolidate, of the Indenture, provides that no Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person (other than the Company or another Guarantor), unless, the Person surviving any such consolidation or merger (if other than such Guarantor) unconditionally assumes all the obligations of such Guarantor, pursuant to a supplemental indenture;
WHEREAS, on October 27, 2014, Cardinal, currently a Guarantor, merged with and into Redbird Gas Storage LLC (“Redbird”, and together Redbird and Cardinal, the “Merging Guarantors”), currently a Guarantor, with Redbird surviving such merger;
WHEREAS, in connection with such merger, Redbird, the surviving entity, changed its name to Cardinal Gas Storage Partners LLC (the “Surviving Entity”);
WHEREAS, pursuant to the merger, the Surviving Entity unconditionally assumes all the obligations of the Merging Guarantors;
WHEREAS, all acts and things prescribed by the Indenture, by law and by the Certificate of Incorporation and the Bylaws (or comparable constituent documents) of the Issuers, of the Guarantors and of the Trustee necessary to make this Third Supplemental Indenture a valid instrument legally binding on the Issuers, the Guarantors and the Trustee, in accordance with its terms, have been duly done and performed;
NOW, THEREFORE, to comply with the provisions of the Indenture and in consideration of the above premises, the Issuers, the Guarantors and the Trustee covenant and agree for the equal and proportionate benefit of the respective Holders of the Notes as follows:




ARTICLE 1
Section 1.01.      This Third Supplemental Indenture is supplemental to the Indenture and does and shall be deemed to form a part of, and shall be construed in connection with and as part of, the Indenture for any and all purposes.
Section 1.02.      This Third Supplemental Indenture shall become effective immediately upon its execution and delivery by each of the Issuers, the Guarantors and the Trustee.
ARTICLE 2
From this date, in accordance with Section 10.03 and by executing this Third Supplemental Indenture, the Guarantors whose signatures appear below are subject to the provisions of the Indenture to the extent provided for in Article 10 thereunder.
ARTICLE 3
Section 3.01. Except as specifically modified herein, the Indenture and the Notes are in all respects ratified and confirmed (mutatis mutandis) and shall remain in full force and effect in accordance with their terms with all capitalized terms used herein without definition having the same respective meanings ascribed to them as in the Indenture.
Section 3.02.      Except as otherwise expressly provided herein, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this Third Supplemental Indenture. This Third Supplemental Indenture is executed and accepted by the Trustee subject to all the terms and conditions set forth in the Indenture with the same force and effect as if those terms and conditions were repeated at length herein and made applicable to the Trustee with respect hereto.
Section 3.03.      THIS THIRD SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 3.04.      The parties may sign any number of copies of this Third Supplemental Indenture. Each signed copy shall be an original, but all of such executed copies together shall represent the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, all as of the date first written above.
TRUSTEE:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee



By:      /s/ John Stohlmann                 
Name:      John Stohlmann                 
Title:      Vice President                     


ISSUERS:
MARTIN MIDSTREAM PARTNERS L.P.

By:      Martin Midstream GP LLC,
as general partner



By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer


MARTIN MIDSTREAM FINANCE CORP.



By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer







GUARANTORS:

MARTIN OPERATING PARTNERSHIP L.P.

By:      Martin Operating GP LLC,
as general partner

By:      Martin Midstream Partners L.P.,
as sole member

By:      Martin Midstream GP LLC,
as general partner



By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer


MARTIN OPERATING GP LLC

By:      Martin Midstream Partners L.P.,
as sole member

By:      Martin Midstream GP LLC,
as general partner



By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer







CARDINAL GAS STORAGE PARTNERS LLC

By:      Martin Operating Partnership L.P.,
as sole member

By:      Martin Operating GP LLC,
as general partner

By:      Martin Midstream Partners L.P.,
as sole member

By:      Martin Midstream GP LLC,
as general partner



By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer


MOP MIDSTREAM HOLDINGS LLC

By:      Martin Operating Partnership L.P.,
as sole member

By:      Martin Operating GP LLC,
as general partner

By:      Martin Midstream Partners L.P.,
as sole member

By:      Martin Midstream GP LLC,
as general partner



By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer








MARTIN MIDSTREAM NGL HOLDINGS, LLC

By:      Martin Operating Partnership L.P.,
as sole member

By:      Martin Operating GP LLC,
as general partner

By:      Martin Midstream Partners L.P.,
as sole member

By:      Martin Midstream GP LLC,
as general partner



By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer


MARTIN MIDSTREAM NGL HOLDINGS II, LLC

By:      Martin Operating Partnership L.P.,
as sole member

By:      Martin Operating GP LLC,
as general partner

By:      Martin Midstream Partners L.P.,
as sole member

By:      Martin Midstream GP LLC,
as general partner



By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President and Chief
Financial Officer






PERRYVILLE GAS STORAGE LLC


By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President

ARCADIA GAS STORAGE, LLC


By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President

CADEVILLE GAS STORAGE LLC


By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President

MONROE GAS STORAGE COMPANY, LLC


By:      /s/ Robert D. Bondurant             
Name:      Robert D. Bondurant
Title:      Executive Vice President





Exhibit 10.5

2014 AMENDED AND RESTATED TOLLING AGREEMENT

This 2013 Amended and Restated Tolling Agreement (“Agreement”), effective as of October 28, 2014, is made by and between Martin Operating Partnership L.P., a Delaware limited partnership (“Owner”), and Cross Oil Refining & Marketing, Inc., a Delaware corporation (“Customer”), sometimes referred to individually as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, Owner and Customer are parties to that certain Tolling Agreement dated November 25, 2009 (the “Original Agreement”), whereby Owner provides Customer with refining and storage of various quantities of crude oil supplied by Customer into various grades and quantities of naphthenic lubricants designated by Customer from time to time (all such services referred to herein as the “Refining Services”) at Owner’s naphthenic lubricant refinery located in Ouachita County and Union County, Arkansas (“Refinery”); and

WHEREAS, the Parties wish to enter into this Agreement for the purposes of amending the Original Agreement with respect to the foregoing matters.

NOW, THEREFORE, in consideration of the mutual promises contained in this Agreement, the Parties agree to the following terms and conditions relating to Owner’s provision of refining and storage services in favor or Customer at the Refinery.

Section 1.      Definitions.      In this Agreement, unless the context requires otherwise, the following terms will have the meanings indicated below:

“Affiliate” means, as to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to be controlled by any other Person if such other Person possesses, directly or indirectly, power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors, managing members, or managing general partners; or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

“Aggregate Quarterly Tolling Fee” means, for the applicable quarter an amount equal to the sum of (a) the Minimum Quarterly Tolling Fee, (b) the Monthly Reservation Fees paid with respect to such quarter (c) the Gas Surcharge (if any) and (d) the Excess Quarterly Tolling Fee (if any).

“Change of Control” has the meaning set forth in that certain Third Amended and Restated Credit Agreement dated as of June 27, 2014, among Owner, as borrower, Martin Midstream Partners L.P. ( " MMLP " ), as a guarantor, Royal Bank of Canada , as administrative agent, and the financial institutions party thereto, as lenders, as amended.

“Contribution Agreement” means that certain Amended and Restated Contribution Agreement dated November 4, 2009, among MRMC, Customer, owner and MMLP.

“Customer” has the meaning specified in the preamble paragraph to this Agreement.
    
“Effective Date” means November 25, 2009.





“Excess Tolling Fee” has the meaning set forth in Exhibit A.

“Excess Tolling Volume” means the number of barrels of Stock per fiscal quarter in excess of the product of (a) 6,500 multiplied by (b) the number of days in such fiscal quarter.

“Excess Quarterly Tolling Fee” means the following amounts determined for the applicable fiscal quarter in the aggregate if there is Excess Tolling Volume: an amount equal to the product of (a) the Excess Tolling Volume, multiplied by the Excess Tolling Fee.

“Force Majeure" means (i) acts of nature, landslides, severe lightning, earthquakes, fires, tornadoes, hurricanes, storms, and warnings for any of the foregoing which require the shut-down of wells, plants, pipelines, gathering systems, loading facilities or the Refinery or other related facilities, floods or other water conditions, washouts, severe lightning, freezing of machinery, equipment, wells or lines of pipe, inclement weather that necessitates extraordinary measures and expense to construct facilities or maintain operations, and other adverse weather conditions, (ii) explosions, breakage or accidents to equipment, machinery, plants, facilities or lines of pipe, the making of repairs or alterations to lines of pipe or plants, inability to secure labor or materials to do so, partial or entire failure of wells or gas supply, electric power shortages, accidents of navigation or breakdown or injury of vessels, or (iii) any other causes, whether of the kind enumerated above or otherwise, which were not reasonably foreseeable, and which are not within the control of the Party claiming suspension and which by the exercise of due diligence such Party is unable to prevent or overcome.

“Gas Surcharge” has the meaning set forth in Section 3.4.

“Minimum Daily Tolling Volume” means 6,500 barrels of Stock per day.

“Minimum Quarterly Tolling Fee” means an amount equal to the product of (a) the Minimum Daily Tolling Volume, multiplied by (b) the Tolling Fee, multiplied by (c) the number of days in the applicable fiscal quarter.

“Monthly Reservation Fee” has the meaning set forth in Exhibit A.

“Person” means any natural person, trustee, corporation, general partnership, limited partnership, limited liability company, joint stock company, trust, unincorporated organization, bank, business association, firm, joint venture, governmental authority, company or other entity

“Product” means naphthenic lubricants, distillates, asphalt flux and other intermediate cuts.

“Owner” has the meaning specified in the preamble paragraph to this Agreement.

“Refinery” has the meaning specified in the recitals to this Agreement.

“Refining Services” has the meaning specified in the recitals to this Agreement.

“Stock” means crude oil.

“Term” means twenty-two (22) years commencing on the Effective Date.

“Tolling Fee” has the meaning set forth in Exhibit A.
    
Section 2.      Refining Services, Statements, Documents and Records.





2.1      During the term of this Agreement, Owner agrees to provide all necessary Refining Services, including services relating to the receipt, storage and refining, in connection with the refinement of Customer’s inventories of Stock supplied by Customer to Owner from time to time into various grades and quantities of Product designated by Customer from time to time. Owner agrees that the facilities at the Refinery, together with the right to use the Retained Refinery Related Assets (as defined in The Contribution Agreement), are reasonably suited to perform such tasks. Those activities will be performed by Owner in a manner consistent with good operational procedures and safeguards and in compliance with applicable laws, rules, regulations and ordinances.

2.2      All inventories of Stock delivered by Customer to Owner hereunder shall be FOB to Owner at its designated internal point of delivery at the Refinery. All inventories of Product delivered by Owner to Customer hereunder shall be FOB to Customer at Owner’s designated internal point of delivery at the Refinery. Customer agrees to bear all freight and transportation charges relating to all inbound quantities of Stock and all outbound quantities of Product hereunder.

2.3      Owner will transmit to Customer a statement of receipts and deliveries of Stock to and Product from the Refinery on a daily basis no later than 10:00 a.m. local time at the Refinery for the immediately preceding business day; provided, however, that if a holiday precedes a business day, the statement with respect to the preceding business day shall not be due until 3:00 p.m. local time on the business day following such holiday. This statement will be transmitted to Customer by facsimile.

2.4      Owner will provide to Customer copies of individual tank gauging documents, tank truck loading rack bills of lading and scale tickets for receipts or deliveries as requested by Customer to verify the amount of Stock delivered to and Product received from the Refinery.

2.5      Each Party will maintain a true and correct set of records pertaining to its performance of this Agreement and all transactions related to such performance and will retain copies of all such records for a period of not less than one year following termination or cancellation of this Agreement. Upon reasonable prior notice, a Party or its authorized representative may, during the Term of this Agreement and for the aforesaid one-year period, audit such records of the other Party during normal business hours at the other Party’s place of business to verify the accuracy of any statement, charge, computation, or demand made under or pursuant to this Agreement. Each Party agrees to keep records and books of account in accordance with generally accepted accounting principles in the industry. Any statement shall be deemed accurate and final as to both Parties unless questioned within one year after payment thereof has been made.

Section 3.      Fees, Charges, Invoices and Taxes.

3.1      Concurrent with the execution of this Agreement, Customer shall pay to Owner the Monthly Reservation Fee, pro rated for the number of days remaining in the month on which this Agreement is executed. Thereafter, at least 10 days prior to first day of each calendar month, Customer shall pay Owner the Monthly Reservation Fee for such month. Within 30 days following the end of each fiscal quarter during the Term of this Agreement, Owner will submit to Customer statements recording the volume of Customer’s Stock received into and Product delivered from the Refinery during such fiscal quarter and shall submit an invoice to Customer in respect of Refining Services provided by Owner during such quarter reflecting an amount equal to the Aggregate Quarterly Tolling Fee for such Quarter, minus the Monthly Reservation Fees already paid with respect to such quarter (the “Quarterly Payment”). The Minimum Quarterly Tolling Fee for a particular fiscal quarter shall not be subject to any downward adjustment due to the failure of Customer to throughput at the Refinery the aggregate Minimum Daily Tolling Volume for the entirety of such quarter; provided, however , unless such failure is (a) a reasonable result of Customer’s breach of any aspect of the Contribution Agreement, or (b) due to Customer’s failure to provide sufficient Stock, or (c) the result of a




Force Majeure event, the effects of which are covered in Section 9 hereof, then the Minimum Quarterly Tolling Fee and the Monthly Reservation Fee for a particular quarter will be subject to a proportional downward adjustment to the extent that, due to Owner’s operational difficulties and/or downtime at, or the closing of any portion of, the Refinery, Owner is not able to refine for the entirety of such quarter a volume equal to the product of the aggregate Minimum Daily Tolling Volume multiplied by the number of days in such quarter. If the Monthly Reservation Fees paid with respect to such quarter have been subject the proportional downward adjustment, such proportionate reduction, to the extent already paid by Customer to Owner with respect to such quarter, shall be refunded to Customer within 30 days following the end of the applicable quarter.

The Tolling Fee and the Monthly Reservation Fee are subject to any applicable adjustment set forth in Section 3.3 below and adjustment set forth in Section 3.6 below.

3.2      All fees and charges reflected in Owner’s invoices are due and payable within ten days of the date of Owner’s invoice.

3.3      The Tolling Fee, Excess Tolling Fee and Monthly Reservation Fee, as specified in Exhibit “A” attached hereto and incorporated by reference, payable under this Agreement will each be increased annually on January 1st by an amount equal to the applicable fee in effect on the prior January 1st times the greater of (i) a 3% increase over the previous year or (ii) the annual percentage change (increase or decrease) in the Consumer Price Index For Urban Wage Earners and Clerical Workers (1967=100) specified for “All Items United States” compiled by the Bureau of Labor Statistics of the United States Department of Labor (“CPI”), by comparing the CPI for the months of October immediately prior to the commencement of the year for which the fee escalation is being calculated with the CPI for the same month in the preceding 12-month period. For example, if the year for which the adjusted fees are being calculated commences on January 1, 2015, the base months for determining the adjustment would be October 2014 and October 2013. In this example, assuming any CPI adjustment would be greater than 3%, the fees and charges would be adjusted, effective January 1, 2015, based upon the percentage increase in the CPI between that published for October 2013 and that published for October 2014. If the United States Government materially changes the manner of computing the CPI or ceases to publish the CPI at any time during the Term of this Agreement, the Parties will negotiate in good faith to agree upon a substitute index or methods of computing the index for purposes of escalating the fees and charges under this Agreement.

3.4      Owner may add a reasonable surcharge to reflect increased natural gas costs utilized in the refining of the Products (the “Gas Surcharge”), which shall be calculated for each fiscal quarter in accordance with the following formula:
(a)      The excess of (i) the average of the NYMEX Henry Hub daily closing prices of natural gas during the fiscal quarter (expressed in dollars per MMBTU), over (ii) $4.00 MMBTU; multiplied by
(b)      the total number of barrels of Stock refined during such fiscal quarter; multiplied by
(c)      0.57.
Direct natural gas costs will be based upon usage as determined by metering equipment that serves the Refinery.

3.5      During the term of this Agreement and in consideration of Owner’s agreement to provide Refining Services to Customer hereunder, in addition to the other amounts owed to the Owner hereunder,




Customer shall be responsible for all taxes, including ad valorem taxes, assessed against the Stock and the Products, including any sales and use tax.

3.6      On each of the third (3rd), sixth (6th), and ninth (9th) anniversaries of the Effective Date of this Agreement, a party may request a renegotiation of the Monthly Reservation Fee, if such party reasonably believes that the adjustments in Section 3.3 do not accurately reflect actual increases or decreases in operating costs. In such a case, the parties shall negotiate in good faith to reach mutual agreement on a revised Monthly Reservation Fee which the parties believe will more accurately operating costs for subsequent periods. Any such revised Monthly Reservation Fee that is mutually agreed to shall apply in quarterly periods beginning subsequent to the time of such mutual agreement. For the avoidance of doubt, no adjustments shall be made to the Monthly Reservation Fee to account for any differences between actual and projected operating costs previously incurred, i.e. there is no “true up” contemplated by the Parties.

Section 4.      Operations, Receipts and Deliveries.

4.1      Customer’s Stock may be delivered and its Product received by Owner at the Refinery via pipeline, rail or truck or on behalf of Customer free of any charge to Owner.

4.2      Receipts of Product by the Owner will be handled within the normal business hours of the Refinery, as may be established from time to time. Owner will not be responsible for the payment of any demurrage or costs incurred by Customer or its transportation carrier for any delay in receiving Stock or delivering the Product, and all such charges shall be the responsibility of the Customer.

4.3      Owner will notify Customer of changes to the normal business hours of the Refinery, in advance or as soon after implementation as is practicable.

4.4      Owner and Customer shall perform all activities specified herein in accordance with all applicable federal, state and local laws, rules, regulations, ordinances, decrees, orders, permits, licenses or other requirements having the force of law.

4.5      Customer must arrange for and pay all third party costs relating to the transportation, receipt, delivery and packaging of all Stock and Products of Customer which are delivered to and from the Refinery.

4.6      Within 45 days following termination of this Agreement, Customer, at its sole cost and expense, will remove and properly dispose of, or cause to be removed and properly disposed of all Stock, Product, residue, scale, non-merchantable bottoms, and any other accumulation from the Refinery which constitute property of Customer, including the storage tanks and clean the storage tanks’ interior to a condition suitable for the storage of Stock and Product as is typical for the Refinery. If Customer fails to comply with this requirement within the time period referenced, Customer authorizes Owner to either (i) take such action on Customer’s behalf, and Customer will reimburse Owner for all cost and expense reasonably incurred in taking such action, plus a 15% handling fee, and (ii) charge Customer for the cost of storage and handling of said Product at a rate of $0.02 per barrel per day storage in addition to any other fees and rates payable to Owner by Customer under this Agreement, which fees and rates will continue to apply if the Product has not been removed by Customer within the aforesaid 45-day period. Owner's remedies under this Section 4.6 are in addition to any other remedies that Owner may have at law, in equity or otherwise.

4.7      Owner will not be required to make any improvements, alterations or additions to the Refinery in connection with the provision of the Refining Services. If any federal, state or local governmental body requires installation of any improvement, alteration or addition to the Refinery for purposes of compliance with applicable law or regulation that would materially interfere with or change the nature or cost of providing




the Refining Services under this Agreement, Owner will notify Customer of (i) the cost of making any such improvement, alteration or addition, and (ii) when such improvement, alteration or addition must be completed. In the event such costs are $100,000 or less, Owner shall proceed to make such required improvements, alterations or additions. In the event such costs exceed $100,000, Owner and Customer agree to renegotiate the terms of this Agreement in good faith to effect a sharing of such costs. In addition, Owner may, in its discretion, make such improvements, alterations or additions to the Refinery as it may from time to time deem necessary, provided that such discretionary alterations due not interfere with the provision of Refining Services hereunder.

Section 5.      Product Quality Standards and Requirements.

5.1      Customer agree that Owner shall not be required to receive Stock into the Refinery that contains adulterants, which are not normally present in the Product, which pose a risk of damage to Owner’s equipment, or which contains any Hazardous Substance (other than petroleum or petroleum by-products).

5.2      Owner may sample any Stock delivered to the Refinery for the purpose of conducting an analysis of such Stock. The cost of such analysis will be borne by Owner. The Owner shall use reasonable efforts to keep the results of such analysis confidential.

Section 6.      Title, Custody and Loss of Product.

Title to Customer’s Stock and Product will remain with Customer at all times, subject to any lien in favor of Owner created pursuant to the terms of this Agreement or under applicable law. Owner will assume custody of the Stock and Product beginning when such Stock or Product passes to the internal point of delivery referred to in the first sentence of Section 2.2 and custody will pass back to Customer at the time such Stock or Product passes to the internal point of delivery referred to in the second sentence of Section 2.2.

Section 7.      Limitation of Liability and Damages.

Notwithstanding any other provision of this Agreement, Owner shall not be responsible for any lost or contaminated Stock or Product, nor liable for any loss, additional cost, lost profit or opportunity, or consequential damage arising therefrom.

Section 8.      Stock and Product Measurement.

8.1      Quantities of Stock received into and Product delivered from the Refinery will be determined for the applicable mode of receipt and delivery by either (i) shore tank or truck tank gauge reading taken before and after each receipt or delivery, (ii) loading rack meter readings, (iii) certified scales, (iv) pipeline meters or (v) other appropriate quantity measuring devices, as determined by Owner. Absent obvious error, the quantities of Stock and Products at the Refinery at any time will be determined from Refinery inventory records of receipts and deliveries. Inventory records of Stock and Product will be verified against the sum of the material at the Refinery as well as line charge. Gauging of Stock received, Product delivered and Stock or Product in storage will be taken jointly by representatives of the Parties; provided, that if Owner does not have representatives present for gauging, Customer’s gauging will be conclusive. Owner may use certified public inspectors at its own expense.

8.2      Refinery and loading facility meters will be calibrated periodically and upon each completion of repair or replacement of a meter, at Owner’s expense. Current calibration charts, licenses and inspection permits will be available at the Refinery for examination during normal business hours. If a meter is




determined by either Party to be defective or inoperative, such Party shall immediately notify the other Party, and it will be the responsibility of the Owner to promptly make repairs or replacements.

8.3      Unless indicated otherwise, quantity determinations will be based on barrels of Stock or Product.

Section 9.      Force Majeure; Cessation of Operations.

9.1      If either Party is rendered unable to perform or delayed in performing, wholly or in part, its obligations under this Agreement, other than the obligation to pay the Aggregate Quarterly Tolling Fee when due, which shall be payable irrespective of whether a Force Majeure event exists, as a result of a Force Majeure event, that Party may seek to be excused from such performance by giving the other Party prompt written notice of the Force Majeure event with reasonably full particulars of such event. The obligations of the Party giving notice, so far as they are affected by the Force Majeure event, will be suspended during, but not longer than, the continuance of the Force Majeure event. The affected Party must act with commercially reasonable diligence to resume performance and notify the other Party that the Force Majeure event no longer affects its ability to perform under the Agreement.

9.2      The requirement that any Force Majeure event be remedied with all reasonable dispatch will not require the settlement of strikes, lockouts, or other labor difficulty by the Party claiming excuse due to a Force Majeure event contrary to its wishes.

9.3      If either Party is rendered unable to perform by reason of Force Majeure for a period in excess of 120 days, and if the party seeking excused performance has not, within such 120 day period, sought to effect a solution to the inability to perform and thereafter diligently continued with such solution until the event has passed and the ability to act and perform is restored, then the other Party may terminate this Agreement upon written notice to the Party claiming excuse due a Force Majeure event.

9.4      If Owner is excused from providing service pursuant to this Agreement due to an event of Force Majeure that extends beyond a 120 consecutive day period, the fees hereunder that accrue after the expiration of such 120 day period, and the Quarterly Minimum Tolling Fee and the Monthly Reservation Fees with respect to such quarter, if any, that are directly affected by such Force Majeure event will be excused or proportionately reduced to the extent that such event of Force Majeure results in Owner being unable to refine for the entirety of such quarter a volume equal to the product of the aggregate Minimum Daily Tolling Volume multiplied by the number of days in such quarter. With respect to any reduction in the Monthly Reservation Fees, any such amount shall be refunded to Customer upon determination of the adjustments to be made pursuant to this Section 9.4.

9.5      Notwithstanding anything to the contrary contained in this Agreement, in the event that Owner cannot provide the services under this Agreement as a result of any breech of a representation, warranty or indemnity of Customer contained in the Contribution Agreement, there shall be no reduction in fees under this Agreement and Owner shall be entitled to receive the Aggregate Quarterly Tolling Fee with respect to the period for which services cannot be performed.
    




Section 10.      Inspection of and Access to Refinery.

10.1      Subject to Customer meeting Owner’s safety requirements and its other reasonable rules and regulations concerning activities in and around the site, Customer’s right and that of its authorized representatives to enter the Refinery in order to observe and verify Owner’s performance hereunder will be exercised in a way that will not interfere with or diminish Owner’s control over or its operation of the Refinery and will be subject to reasonable rules and regulations from time to time promulgated by Owner.

10.2      Customer acknowledges that any grant of the right of access to the Refinery under this Agreement or under any document related to this Agreement is a grant of merely a license and conveys no interest in or to the Refinery or any part of it, and may be withdrawn by Owner at its discretion at any time, subject to the terms of this Agreement.

Section 11.      Assignment.

(a) This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their permitted successors and assigns. Neither Party may assign this Agreement, directly or indirectly, without the express prior written consent of the other Party; provided, however , that either Party may assign this Agreement to a wholly-owned entity or to an entity that wholly-owns the assigning Party; and provided further , that Owner shall be permitted to pledge its rights under this Agreement to any current or future lenders of Owner and Martin Midstream Partners L.P. and Customer acknowledges that such lenders have the right to take an assignment of this Agreement if such pledge is foreclosed upon. For purposes of this Section, “assign” will be considered to include any Change of Control of a Party or an assignment by operation of law in connection with a merger, consolidation, reorganization, receivership, bankruptcy or similar event or by asset sale. In the event the non-assigning Party, upon request by the assigning Party, consents to such assignment, the rights of obligations of the assigning Party shall be binding upon the permitted assignees. The consent by a Party to any assignment, subletting, hypothecation, pledge, encumbrance, mortgage of this Agreement will not constitute a waiver of such Party’s right to withhold its consent to any other or further assignment, subletting, hypothecation, pledge, encumbrance, mortgage of the Agreement. The absolute and unconditional prohibitions contained in this Section are material inducements by the Parties to enter into this Agreement and any breach thereof by a Party will constitute a material default by such Party under this Agreement permitting the non-breaching Party to exercise all remedies provided for in this Agreement or by law.

(b) In the event that this Agreement is terminated as a result of Section 12.1(d), upon the written request of Customer, Owner will seek to cause any successor to negotiate a reasonably acceptable agreement with Customer to provide continued Refining Services to Customer. The obligations under this Section 11(b) shall terminate in the event that Customer’s secured credit facility agented by Regions Bank is terminated.

Section 12.      Termination .

12.1      This Agreement may be terminated as follows:

(a)      This Agreement may be terminated at any time by the mutual agreement of the Parties.

(b)      This Agreement may be terminated by a Party as a result of a breach by the other Party as provided in Section 15.





(c)      This Agreement may be terminated by a Party as a result of the other Party (including such Party’s assets) (i) filing for bankruptcy (whether voluntary or involuntary, including any petition under insolvency or similar laws), or being adjudicated insolvent or bankrupt, (ii) seeking dissolution or reorganization or the appointment of a receiver, trustee, custodian or liquidator for a substantial portion of its property, assets or business or to effect a plan or other arrangement with its creditors, (iii) making a general assignment for the benefit of its creditors, or consenting or acquiescing in the appointment of a receiver, trustee, custodian or liquidator for a substantial portion of its property, assets or business, or (iv) becoming subject of an involuntary petition for dissolution, reorganization or the appointment of a receiver, trustee, custodian or liquidator or becoming subject to any writ, judgment, warrant of attachment, execution or similar process which is not dismissed within 60 days.

(d)      This Agreement will automatically terminate in the event that the Owner or its permitted assignees hereunder no longer owns the Refinery.

(e)      This Agreement will automatically terminate in the event the Omnibus Agreement among Owner, Martin Midstream GP LLC Customer and MMLP, dated November 1, 2002, is terminated.

(f)      This Agreement is terminated at Owner’s sole and exclusive election in the event that either Customer or Martin Resource Management Corporation materially defaults under the Contribution Agreement and such default is not cured within the applicable cure period of such Contribution Agreement and the cure period provided in Section 15 of this Agreement; provided, however , that any Party that has claimed a dispute pursuant to the applicable provisions of this Contribution Agreement shall not be deemed to be in default until such dispute is resolved against such Party in accordance with the provisions of the Contribution Agreement.

Section 13.      Notice.

Any notice required under this Agreement must be in writing and will be deemed received when actually received and delivered by (i) United States mail, certified or registered, return receipt requested, (ii) confirmed overnight courier service, or (iii) confirmed facsimile transmission properly addressed or transmitted to the address of the Party indicated below or to such other address or facsimile number as a Party will provide to the other Party in accordance with this provision:

If to Customer:

Cross Oil Refining & Marketing, Inc.

Attn: Chris Booth
4200 Stone Road
Kilgore, Texas 75662
Telephone: (903) 988-6443
Telecopy: (903) 988-7915

If to Owner:

Martin Operating Partnership L.P.
Attn: Chris Booth
4200 Stone Road
Kilgore, Texas 75662
Telephone: (903) 988-6443
Telecopy: (903) 988-7915





with a copy to:
    
Mr. Byron Kelley     
14 Holley Ridge Drive
Kingwood, Texas 77339-3517
Telephone: (281) 360-7125

Section 14.      Compliance with Law and Safety.

14.1.      Customer warrants that the Stock delivered by it to the Refinery is produced, transported, and handled are in full compliance with all statutes, ordinances, rules, regulations, orders and directives of federal, state, or local authority (“laws”), including those applicable to environmental pollution, and all presidential proclamations that apply to either Party. Customer also warrants that the Product tendered to it by Owner at the Refinery is transported and handled in full compliance with all laws, including those applicable to environmental pollution, and all presidential proclamations that apply to either Party.

14.2.      Customer certifies, on behalf of itself, its employees, agents, and contractors that all vehicles and vessels used in connection with this Agreement will comply with all applicable federal, state, and local laws and that they will comply with Owner’s safety rules. Customer will furnish Owner with information (including Material Safety Data Sheet) concerning the safety and health aspects of each of the Products produced under this Agreement. Customer will communicate such information to all persons who may be exposed to or may handle such Products, including without limitation, Owner’s employees, agents and contractors.

14.3      Unless the Stock provided by Customer contained adulterants or Customer has breached its Pre-Closing Liabilities under the Contribution Agreement, Owner warrants that the Products produced are in full compliance with all statutes, ordinances, rules, regulations, orders and directives of federal, state, or local authority (“Laws”), including those applicable to environmental pollution, and all presidential proclamations that apply to either Party.

Section 15.      Default, Waiver and Remedies

A material breach of any of the terms and conditions of this Agreement by either Party will constitute a default. Upon default, the non-defaulting Party shall, within 30 calendar days of knowledge of such default, notify the defaulting Party of the particulars of such default and the defaulting Party has 30 calendar days thereafter to cure such default. Upon the defaulting Party’s failure to cure the default within the 30-day grace period, any and all obligations, including payments of fees due under this Agreement, will, at the option of the non-defaulting Party, become immediately due and payable and the non-defaulting Party may terminate this Agreement upon written notice to the defaulting Party. The waiver by the non-defaulting Party of any right under this Agreement will not operate to waive any other such right nor operate as waiver of that right at any future date upon another default by either Party under this Agreement and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise of that right, power, or privilege or the exercise of any other right, power, or privilege. Nothing in this Section is intended in any way to limit or prejudice any other rights or remedies the non-defaulting Party may have under this Agreement or the law. The remedies of Owner provided in this Agreement are not exclusive and, except as otherwise expressly limited by this Agreement, are in addition to all other remedies of Owner at law or in equity. Acceptance by Owner of any payment from Customer for any charge or service after termination of this Agreement shall not be deemed a renewal of this Agreement under any circumstances, nor a waiver of any rights Owner may have under this Agreement or otherwise.





Section 16.      Insurance.

16.1.      Coverage by Owner.

(A) During the term of this Agreement Owner will procure and maintain, at its sole expense, with solvent underwriters, policies of insurance in the minimum amounts outlined below:

(1) Commercial General Liability (Occurrence Form) for bodily injury and property damage, including the following coverage: premises/operations, independent contractors, blanket contractual liability, explosion, broad form property damage, products/completed operations, sudden and accidental pollution liability and, where appropriate, stop-gap coverage with total limits to all insureds for not less than $1 million for each occurrence and $2 million aggregate for each annual period;

(2) Excess Liability of $5 million in excess of the limits for all of the above insurance policy types to include a “drop down” provision in the event the underlying limits are exhausted;

(3) Workers’ Compensation complying with the laws and statutory minimum coverage of the state or states where performance under this Agreement takes place, whether or not such coverage its required by law, including, coverage for voluntary compensation and alternate employer and an “other states coverage” endorsement;

(4) Employer’s Liability with limits of $1 million (combined single limit) for each accident, including occupational disease coverage with a limit of $100,000 for each employee and a $1 million policy limit, including coverage under the Federal Longshoremen and Harbor Workers’ Act, the Jones Act, the Federal Death on the High Seas Act and general maritime remedies of seamen including transportation, wages, maintenance and cure whether the action is in rem or in personam;

(5) Pollution Legal Liability applicable to bodily injury, property damage, including loss of use of damaged property or loss of property that has not been physically injured or destroyed, cleanup costs and defense, including costs and expenses incurred in the investigation, defense or settlement of claims, and all such coverage to apply to sudden and non-sudden pollution conditions resulting from the escape or release of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids, or gases, waste materials, or other irritants, contaminants or pollutants, in an amount of $1 million per loss, with an annual aggregate of $2 million;

(6) Business Interruption applicable to the Refinery and its operations of $20,000,000 million; and

(7) Such other insurance, including Business Income and Extra Expense, Off Premise Services and Business Income for Dependent Properties, as reasonably determined to be necessary by Owner and Customer

16.2.      Certificates of Insurance. Prior to Customer commencing any performance under this Agreement and as a condition of exercising any rights under this Agreement, Owner will furnish to Customer, certificates of insurance, evidencing that proper insurance has been secured in accordance with the specific terms of this Agreement. Failure of Customer to require such certificate or to object to any such certificate it receives or to commence performance without first providing a conforming certificate or request copies of any policy will not be a waiver of Owner’s obligation to meet its insurance obligations under this Section, including, without limitation, its obligation to provide conforming certificates.





16.3.      Reports of Accidents. Owner and Customer will immediately provide written notice to each other of all accidents or occurrences resulting in injuries to employees or third parties, or damage to property arising out of or during the course of the performance under this Agreement and, as soon as practical, will furnish each other with a copy of all reports made by any insurance underwriter or reports to others of such accidents or occurrences.

Section 17.      Indemnity.

17.1.      To the extent permitted by law and except as otherwise specifically provided in this Agreement, Customer will defend and indemnify Owner from and against any liability, loss, damage, claim, suit, penalty, fine, judgment, cost or expense (including reasonable attorney fees and other costs of litigation) resulting from, associated with or arising out of (i) Customer’s failure to comply with applicable governmental or quasi-governmental laws, regulations or rules, (ii) bodily injury or death of any person, including, without limitation, Customer’s and Owner’s employees, agents and representatives, (iii) damage to natural resources or to property of any nature, including, without limitation, that involving the Stock and the Products and other property of Customer and the Refinery and other property of Owner, to the extent caused by the negligent or willful acts or omissions of Customer, its employees, agents, representatives or contractors, (iv) discharges, spills, or leaks of Stock or Products or any other substances, to the extent caused by the negligent or willful acts or omissions of Customer, its employees, agents, representatives or contractors in the exercise of any of the rights granted under this Agreement or in the operation, loading, or unloading of any motor vehicle, or any vessel owned or hired by Customer, its agents or contractors, (v) all product liability or similar claims relating to the Stock and the Products, or (vi) governmental proceedings relating to the operations at the Refinery, except to the extent any such loss, damage, claim, suit, liability, penalty, fine, judgment or expense is (a) finally determined to have resulted from the negligent or willful misconduct of Owner, or (b) covered by the following indemnity.

17.2.      To the extent permitted by law and as otherwise specifically provided in this Agreement, Owner will defend and indemnify Customer from and against any loss, damage, claim, suit, liability, penalty, fine, judgment or expense (including reasonable attorney fees and other costs of litigation) resulting from, associated with or arising out of (i) Owner’s failure to comply with applicable governmental or quasi-governmental laws, regulations or rules unless such failure is reasonably resulting from Customer’s failure to comply with its obligations, liabilities or indemnities in the Contribution Agreement, (ii) bodily injury or death of any person, including, without limitation, Customer’s and Owner’s employees, agents or representatives, (iii) damage to natural resources or to property of any nature, including, without limitation, that involving the Stock and the Products and other property of Customer and the Refinery and other property of Owner to the extent caused by the negligent or willful acts or omissions of Owner, its employees, agents, representatives or contractors, (iv) discharges, spills, or leaks of Stock or Products or any other substances, to the extent caused by the negligent or willful acts or omissions of Owner, its employees, agents, representatives or contractors in the exercise of any of the rights granted under this Agreement or in the operation, loading, or unloading of any motor vehicle, or any vessel owned or hired by Owner, its agents or contractors, and (v) governmental proceedings relating to the operations at the Refinery, except to the extent any such loss, damage, claim, suit liability, penalty, fine, judgment or expense is (a) finally determined to have resulted from negligent or willful misconduct of Customer, or (b) covered by the preceding indemnity.

17.3      Under the foregoing indemnities, where the personal injury to or death of any person, or loss of or damage to property is the result of the joint or concurrent negligence or willful acts or omissions of Owner and Customer, each Party’s duty of indemnification will be in proportion to its share of such joint or concurrent negligence, or willful misconduct.





17.4      To receive the foregoing indemnities, the Party seeking indemnification must notify the other in writing of a claim or suit promptly and provide reasonable cooperation (at the indemnifying Party’s expense) and full authority to defend or settle the claim or suit. Neither Party shall have any obligation to indemnify the other under any settlement made without its written consent.

17.5      In addition to and separate and apart from other insurance obligations that Customer may assume under the terms of this Agreement, insurance covering this indemnity agreement must be provided by Customer to the extent permitted by law. Further, by requiring insurance in this Agreement, Owner does not represent that the required insurance coverage and minimum limits will necessarily be adequate to protect Owner, and such insurance coverage and limits will not be deemed as a limitation on Customer’s liability under the indemnities granted to Owner in this Agreement.

Section 18.      Construction of Agreement.

18.1      Headings . The headings of the sections and subsections of this Agreement are for convenience only and will not be used in the interpretation of this Agreement.

18.2      Amendment or Waiver . This Agreement may not be amended, modified or waived except by written instrument executed by officers or duly authorized representatives of the respective Parties. In addition, as long as Owner is a party to this Agreement, the Conflicts Committee of MMLP shall be required to approve any amendment to this Agreement in accordance with its required procedures.

18.3      Severability of Provisions . If any provision of this Agreement is held to be unenforceable, this Agreement shall be considered divisible and such provision shall be deemed inoperative to the extent it is deemed unenforceable, and in all other respects this Agreement shall remain in full force and effect; provided, however, that if any such provision may be made enforceable by limitation or modification thereof, then such provision shall be deemed to be so limited or modified and shall be enforceable to the maximum extent provided by applicable law.

18.4      Entire Agreement . This Agreement (including the attachments) contains the entire and exclusive agreement between the Parties with respect to the subject matter hereof and supersedes and renders void all previous agreements, negotiations and representations between the Parties, whether written or oral. The terms of this Agreement may not be amended, contradicted, explained or supplanted by any usage of trade, course of dealing or course of performance.

Section 19.      Law.

This Agreement will be construed and governed by the laws of the State of Texas without regard to principles of conflict of laws.

Section 20.      Alternative Dispute Resolution.

20.1. Covered Disputes. Any dispute, controversy or claim (whether sounding in contract, tort or otherwise) arising out of or relating to this Agreement, including without limitation the meaning of its provisions, or the proper performance of any of its terms by either Party, its breach, termination or invalidity (“Dispute”) will be resolved in accordance with the procedures specified in this Section, which will be the sole and exclusive procedure for the resolution of any such Dispute, except that a Party, without prejudice to the following procedures, may file a complaint to seek preliminary injunctive or other provisional judicial relief, if in its sole judgment, that action is necessary to avoid irreparable damage or to preserve the status quo. Despite that action the Parties will continue, subject to Section 20.6, to participate in good faith in the procedures specified in this Section.





20.2 Initiation of Procedures. Either Party wishing to initiate the dispute resolution procedures set forth in this Section with respect to a Dispute not resolved in the ordinary course of business must give written notice of the Dispute to the other Party (“Dispute Notice”). The Dispute Notice will include (i) a statement of that Party’s position and a summary of arguments supporting that position, and (ii) the name and title of the executive who will represent that Party, and of any other person who will accompany the executive, in the negotiations under next subsection.

20.3 Negotiation Between Executives. If one Party has given a Dispute Notice under the preceding subsection, the Parties will attempt in good faith to resolve the Dispute within 45 calendar days of the notice by negotiation between executives who have authority to settle the Dispute and who are at a higher level of management than the persons with direct responsibility for administration of this Agreement or the matter in Dispute. Within 15 calendar days after delivery of the Dispute Notice, the receiving Party will submit to the other a written response. The response will include (i) a statement of that Party’s position and a summary of arguments supporting that position, and (ii) the name and title of the executive who will represent that Party and of any other person who will accompany the executive. Within 45 calendar days after delivery of the Dispute Notice, the executives of both Parties will meet at a mutually acceptable time and place, and thereafter, as often as they reasonably deem necessary, to attempt to resolve the Dispute. The Conflicts Committee of MMLP shall have the right to have a representative present at any such meeting.

20.4 Mediation. If the Dispute has not been resolved by negotiation under the preceding subsection within 45 calendar days of the Dispute Notice, and only in such event, either Party may initiate the mediation procedure of this subsection by giving written notice to the other Party (“Mediation Notice”). The Parties will endeavor to settle the Dispute by mediation within 90 calendar days of the Mediation Notice.

20.5 Arbitration. If the Dispute has not been resolved by mediation under the preceding subparagraph within 90 calendar days of the Mediation Notice, and only in such event, either Party may initiate the arbitration procedure of this subsection by giving written notice to the other Party (“Arbitration Notice”). The Dispute will be finally resolved by binding arbitration in accordance with the then current Arbitration Rules of the American Arbitration Association (“AAA”) by a single arbitrator, chosen by mutual agreement of both Parties. If the Parties cannot select an arbitrator within 30 calendar days of the Arbitration Notice, the AAA will select the arbitrator. The United States Arbitration Act, 9 U.S.C. Sec. 1-16 as amended (“the Act”), will govern the arbitration. Judgment upon the award rendered by the arbitrator may be entered by any court of any state having jurisdiction. The statute of limitations of the State of Texas for the commencement of a lawsuit will apply to the commencement of an arbitration under this Agreement, except that no defenses will be available based upon the passage of time during any negotiation or mediation called for by this Section. Each Party will assume its own costs of legal representation and expert witnesses and the Parties will share equally the other costs of the arbitration. The arbitrator will award pre-judgment interest in accordance with the law of Texas; however, the arbitrator may not award punitive damages. The arbitration will take place in Houston, Texas

20.6 Tolling and Performance. Except as indicated in the preceding subsection with regard to the commencement of arbitration, all applicable statutes of limitation and defenses based upon the passage of time will be tolled while the procedures specified in this Section are pending. The Parties will take any action required to effectuate that tolling. Each Party is required to continue to perform its obligations under this Agreement pending final resolution of any Dispute, unless to do so would be impossible or impracticable under the circumstances. Furthermore, notwithstanding the pendency of the mediation or arbitration, the Parties shall continue to perform under this Agreement to the extent that such performance does not exacerbate (other than with respect to monetary matters) the specific matter giving rise to the dispute, controversy or claim.




This Agreement has been executed by the authorized representatives of each Party as indicated below effective as of the Effective Date.

CROSS OIL REFINING & MARKETING, INC.


By: /s/ Robert D. Bondurant     
Robert D. Bondurant, Executive Vice President

MARTIN OPERATING PARTNERSHIP L.P.
By: Martin Operating GP LLC, Its General Partner
By: Martin Midstream Partners L.P., Its Sole Member
By: Martin Midstream GP LLC, Its General Partner
 

By: /s/ Ruben S. Martin     
Ruben S. Martin, President and Chief Executive Officer





Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Pursuant to 17 CFR 240.13a-14(a)/15d-14(a)
(Section 302 of the Sarbanes-Oxley Act of 2002)
 
I, Ruben S. Martin, certify that:
 
1.  I have reviewed this quarterly report on Form 10-Q of Martin Midstream Partners L.P.;
 
2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c.  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d.  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a.  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: 10/29/2014
 
 
 
/s/ Ruben S. Martin
 
Ruben S. Martin, President and
 
Chief Executive Officer of
 
Martin Midstream GP LLC,
 
the General Partner of Martin Midstream Partners L.P.
 




Exhibit 31.2
 
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Pursuant to 17 CFR 240.13a-14(a)/15d-14(a)
(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Robert D. Bondurant, certify that:
 
1.  I have reviewed this quarterly report on Form 10-Q of Martin Midstream Partners L.P.;
 
2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c.  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d.  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a.  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b.  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date: 10/29/2014
 
 
 
/s/ Robert D. Bondurant
 
Robert D. Bondurant, Executive Vice President, Treasurer, Chief Financial Officer and Principal Accounting Officer of
 
Martin Midstream GP LLC,
 
the General Partner of Martin Midstream Partners L.P.
 




Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C.  SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

In connection with the Quarterly Report of Martin Midstream Partners L.P., a Delaware limited partnership (the “Partnership”), on Form 10-Q for the quarter ended September 30, 2014, as filed with the Securities and Exchange Commission (the “Report”), I, Ruben S. Martin, Chief Executive Officer of Martin Midstream GP LLC, the general partner of the Partnership, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to my knowledge:

(1)          the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)          the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
 
 
/s/ Ruben S. Martin
 
 
Ruben S. Martin,
 
Chief Executive Officer
 
of Martin Midstream GP LLC,
 
the General Partner of Martin Midstream Partners L.P.
 
 
 
October 29, 2014

*A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request.




Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C.  SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

In connection with the Quarterly Report of Martin Midstream Partners L.P., a Delaware limited partnership (the “Partnership”), on Form 10-Q for the quarter ended September 30, 2014 as filed with the Securities and Exchange Commission (the “Report”), I, Robert D. Bondurant, Chief Financial Officer of Martin Midstream GP LLC, the general partner of the Partnership, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to my knowledge:

(1)           the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)           the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
 
 
/s/ Robert D. Bondurant
 
 
Robert D. Bondurant,
 
Chief Financial Officer
 
of Martin Midstream GP LLC,
 
the General Partner of Martin Midstream Partners L.P.
 
 
 
October 29, 2014

*A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request.