10. GOODWILL AND OTHER INTANGIBLES
Goodwill. Goodwill is recorded when the purchase price of a business acquired exceeds the fair market value of the tangible and separately measurable intangible net assets. The Partnership’s goodwill has been allocated to two reporting units: (i) gathering and processing and (ii) transportation. The Partnership recorded $348.5 million of goodwill in connection with the Aris acquisition (see Note 3). As of December 31, 2025, the carrying value of goodwill for the gathering and processing reporting unit was $348.5 million and goodwill allocated to the transportation reporting unit was $4.8 million. The Partnership’s annual goodwill impairment assessment indicated no impairment for the year ended December 31, 2025.
Other intangible assets. The other intangible assets balance on the consolidated balance sheets includes the fair value, net of amortization, primarily related to (i) contracts assumed in connection with processing plant acquisitions in 2011 that are part of the DJ Basin complex, which are being amortized on a straight-line basis over 38 years, (ii) contracts assumed in connection with the DBM acquisition in November 2014, which are being amortized on a straight-line basis over 30 years, and (iii) contracts assumed in connection with the Aris acquisition, which are being amortized on a straight-line basis over 19 years.
The Partnership assesses other intangible assets for impairment together with the related underlying long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. See Property, plant, and equipment and other intangible assets in Note 1 for further discussion of management’s process to evaluate potential impairment of long-lived assets.
The following table presents the gross carrying value and accumulated amortization of other intangible assets:
| | | | | | | | | | | | | | | |
| | | | | |
| | December 31, | |
| thousands | | 2025 | | 2024 | |
| Gross carrying value | | $ | 1,275,473 | | | $ | 976,629 | | |
| Accumulated amortization | | (361,715) | | | (326,889) | | |
| Other intangible assets | | $ | 913,758 | | | $ | 649,740 | | |
Amortization expense for intangible assets was $34.8 million, $31.7 million, and $31.7 million for the years ended December 31, 2025, 2024, and 2023, respectively. Intangible asset amortization to be recorded in each of the next five years is estimated to be $47.4 million per year.
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.