GENESIS ENERGY LP

2. Summary of Significant Accounting Policies

Basis of Consolidation and Presentation

The accompanying financial statements and related notes present our consolidated financial position as of December 31, 2025 and 2024 and our results of operations, statements of comprehensive income (loss), changes in partners’ capital and cash flows for the years ended December 31, 2025, 2024 and 2023. All intercompany balances and transactions have been eliminated. The accompanying Consolidated Financial Statements include Genesis Energy, L.P. and its subsidiaries.

On February 28, 2025, we completed the sale of the Alkali Business. We determined that the exit of the Alkali Business and its operations in Wyoming represented a strategic and geographic shift that met the criteria for discontinued operations (see Note 4 for further discussion). Accordingly, we have separately reported the operations from the Alkali Business in the Consolidated Statements of Operations and the related assets and liabilities of the Alkali Business in the Consolidated Balance Sheets as discontinued operations. These changes have been applied retrospectively to all periods presented. The disclosures included within the accompanying notes to the Consolidated Financial Statements are representative of our continuing operations.

Except per unit amounts, or as noted within the context of each footnote disclosure, the dollar amounts presented in the tabular data within these footnote disclosures are stated in thousands of dollars.

Joint Ventures

We participate in several joint ventures, including, in our offshore pipeline transportation segment, a 64% interest in Poseidon Oil Pipeline Company, L.L.C. (“Poseidon”), a 29% interest in Odyssey Pipeline L.L.C. (“Odyssey”), a 26.8% interest in Paloma Pipeline Company (“Paloma”), and a 25.7% interest in Neptune Pipeline Company, LLC, (“Neptune”). We account for our investments in these joint ventures by the equity method of accounting. See Note 9.

Noncontrolling interests

Noncontrolling interests represent any third party or affiliate interest in non-wholly owned entities that we consolidate. For financial reporting purposes, the assets and liabilities of these entities are consolidated with those of our own, with any third party or affiliate interest in our Consolidated Balance Sheets amounts shown as noncontrolling interests in partners’ capital. See Note 12 for additional discussion regarding our noncontrolling interests.

Use of Estimates

The preparation of our Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. We based these estimates and assumptions on historical experience and other information that we believed to be reasonable under the circumstances. Significant estimates that we make include: (1) estimated useful lives of our fixed and intangible assets for the use in calculating depreciation and amortization of long-lived assets and intangible assets, (2) estimates of future net cash flows from assets for purposes of determining whether impairment of our long-lived assets, intangible assets and goodwill has occurred, (3) estimates of variable consideration for revenue recognition, (4) liability and contingency accruals, including the estimates of future asset retirement obligations, and (5) estimated fair value of assets and liabilities acquired and identification of associated goodwill and intangible assets. While we believe these estimates are reasonable, actual results could differ from these estimates. Changes in facts and circumstances may result in revised estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of all demand deposits and funds invested in highly liquid instruments with original maturities of three months or less. We periodically assess the financial condition of the institutions where these funds are held and believe that our credit risk is minimal.

Accounts Receivable - trade, net

We review our outstanding accounts receivable balances on a regular basis and estimate an allowance for amounts that we expect will not be fully recovered. An allowance for credit losses is determined based upon historical collectability trends, recoveries, historical write-offs, and current market data for the partnership’s customers in order to estimate projected losses. Actual balances are not applied against the reserve until substantially all collection efforts have been exhausted.

Inventories

Our inventories are valued at the lower of cost and net realizable value.

Fixed Assets

Property and equipment are carried at cost. Depreciation of property and equipment is provided using the straight-line method over the respective estimated useful lives of the assets. Asset lives are primarily estimated to be 5 to 40 years for pipelines and related assets,20 to 30 years for marine vessels,3 to 30 years for machinery and equipment,3 to 7 years for transportation equipment, and 3 to 25 years for buildings and improvements, office equipment, furniture and fixtures and other equipment.

Interest is capitalized in connection with the construction of major facilities. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life.

Maintenance and repair costs are charged to expense as incurred. Costs incurred for major replacements and upgrades are capitalized and depreciated over the remaining useful life of the asset. Certain volumes of crude oil and refined products are classified in fixed assets, as they are necessary to ensure efficient and uninterrupted operations of our gathering businesses. These crude oil and refined products volumes are carried at their weighted average cost.

Long-lived assets are reviewed for impairment. An asset is tested for impairment when events or circumstances indicate that its carrying value may not be recoverable. The carrying value of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to be generated from the use and ultimate disposal of the asset. If the carrying value is determined to not be recoverable under this method, an impairment charge equal to the amount the carrying value exceeds the fair value is recognized. Fair value is generally determined from estimated discounted future net cash flows.

Deferred Charges on Marine Transportation Assets

Our marine vessels are required by US Coast Guard regulations to be re-certified after a certain period of time, usually every five years. The US Coast Guard states that vessels must meet specified “seaworthiness” standards to maintain required operating certificates. To meet such standards, vessels must undergo regular inspection, monitoring, and maintenance, referred to as “dry-docking.” Typical dry-docking costs include costs incurred to comply with regulatory and vessel classification inspection requirements, blasting and steel coating, and steel replacement. We defer these inspection costs to “Other assets, net of amortization” and amortize these costs to “Marine transportation operating costs” over the length of time that the certification is expected to last.

Asset Retirement Obligations

Some of our assets have contractual or regulatory obligations to perform dismantlement and removal activities, and in some instances remediation, when the assets are abandoned. In general, our asset retirement obligations (“AROs”) relate to future costs associated with the disconnecting or removing of our crude oil and natural gas pipelines (or at times, abandonment in place) and platforms, barge decommissioning, removal of equipment and facilities from leased acreage and land restoration. The estimated fair value of an ARO is recorded in the period in which it is incurred, discounted to its present value using our credit adjusted risk-free interest rate, and a corresponding amount is capitalized by increasing the carrying amount of the related long-lived asset. The capitalized cost is depreciated over the useful life of the related asset. An ongoing expense is recognized for changes in fair value of the liability as a result of the passage of time, which is recorded as accretion expense and included within operating costs in the Consolidated Statements of Operations. See Note 8 for additional information.

Lease Accounting

We enter into operating lease contracts for the right to use certain transportation equipment, facilities and equipment, and office space. For contracts that contain a lease and extend for a period greater than 12 months, we recognize a right of use asset and a corresponding lease liability on our Consolidated Balance Sheets. The present value of each lease is based on the future minimum lease payments in accordance with ASC 842 and is determined by discounting these payments using an incremental borrowing rate. From time to time, we enter into agreements in which we are lessors of our property or equipment. For operating leases, revenue is recognized upon the satisfaction of the respective performance obligation. Refer to Note 5 for additional information.

Intangible and Other Assets

Intangible assets with finite useful lives are amortized over their respective estimated useful lives on a straight-line basis. If an intangible asset has a finite useful life, but the precise length of that life is not known, that intangible asset shall be amortized over the best estimate of its useful life. At a minimum, we will assess the useful lives and residual values of all intangible assets on an annual basis to determine if adjustments are required.

We test intangible assets periodically to determine if impairment has occurred. An impairment loss is recognized for intangibles if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its fair value. Refer to Note 10 for additional information.

Costs incurred in connection with our credit facility have historically been capitalized and amortized using the straight-line method over the term of the related debt. Use of the straight-line method does not differ materially from the “effective interest” method of amortization.

Goodwill

Goodwill represents the excess of purchase price over fair value of net assets acquired. We evaluate, and test if necessary, goodwill for impairment annually at October 1, and more frequently if indicators of impairment are present. During the evaluation, we may perform a qualitative assessment of relevant events and circumstances to determine the likelihood of goodwill impairment. If it is deemed more likely than not that the fair value of the reporting unit is less than its carrying amount, we calculate the fair value of the reporting unit. Otherwise, further testing is not necessary. We may also elect to exercise our unconditional option to bypass this qualitative assessment, in which case we would also calculate the fair value of the reporting unit. If the calculated fair value of the reporting unit exceeds its carrying value including associated goodwill amounts, no impairment charge is required. If the fair value of the reporting unit is less than its carrying value including associated goodwill amounts, the goodwill of that reporting unit is considered to be impaired and a charge to earnings must be recorded. The impact to earnings is the excess amount of carrying value over fair value, however the charge is not to exceed the total amount of goodwill allocated to the reporting unit under evaluation. See Note 10 for further information.

Environmental Liabilities

We provide for the estimated costs of environmental contingencies when liabilities are probable to occur and a reasonable estimate of the associated costs can be made. Ongoing environmental compliance costs, including maintenance and monitoring costs, are charged to expense as incurred.

Equity-Based Compensation

The phantom units issued under our 2010 and 2018 Long-Term Incentive Plans result in the payment of cash to our non-employee directors of our general partner upon exercise or vesting of the related award. The fair value of our phantom units is equal to the market price of our common units. See Note 17 for more information.

Revenue Recognition

We recognize revenue across our operating segments upon the satisfaction of their respective performance obligations. Refer to Note 3 for additional details on what constitutes a performance obligation in each of our businesses.

Cost of Sales and Operating Expenses

Offshore pipeline transportation operating costs consist primarily of power costs to operate pumping and platform equipment, personnel costs to operate the pipelines and platforms, insurance costs and costs associated with maintaining the integrity of our pipelines.

Marine operating costs consist primarily of employee and related costs to man the boats, barges, and vessels, maintenance and supply costs related to general upkeep of the boats, barges, and vessels, and fuel costs which are often rebillable and passed through to the customer.

Onshore transportation and services product and operating costs include the cost to acquire the product and the associated costs to transport it to our terminal facilities, including storing, or to a customer for sale. Other than the cost of the products, the most significant costs we incur relate to transportation utilizing our fleet of trucks, barges and other vessels, including personnel costs, fuel and maintenance of our equipment or third-party owned equipment as well as costs to operate NaHS processing plants located at various refineries, cost associated with caustic soda used in the process of processing the refiner’s sour gas, and the cost to transport and market the NaHS and caustic soda. Additionally, costs to operate and maintain the integrity of our onshore pipelines are included herein.

When we enter into buy/sell arrangements concurrently or in contemplation of one another with a single counterparty, we reflect the amounts of revenues and purchases for these transactions on a net basis in our Consolidated Statements of Operations as onshore transportation and services revenues.

Income Taxes

We are a limited partnership, organized as a pass-through entity for federal income tax purposes. As such, we do not directly pay federal income tax. Our taxable income or loss, which may vary substantially from the net income or net loss we report in our Consolidated Statements of Operations, is included in the federal income tax returns of each partner.

Some of our corporate subsidiaries pay U.S. federal, state, and foreign income taxes. Deferred income tax assets and liabilities for certain operations conducted through corporations are recognized for temporary differences between the assets and liabilities for financial reporting and tax purposes. Changes in tax legislation are included in the relevant computations in the period in which such changes are effective. Deferred tax assets are reduced by a valuation allowance for the amount of any tax benefit not expected to be realized. Penalties and interest related to income taxes will be included in income tax expense in the Consolidated Statements of Operations.

Derivative Instruments and Hedging Activities

We use derivative instruments to hedge exposure to commodity price volatility. Derivative transactions, which can include exchange-traded futures, option contracts, basis differentials and commodity price swap contracts, are recorded in the Consolidated Balance Sheets as assets and liabilities based on the derivative’s fair value. Changes in the fair value of derivative contracts are recognized currently in earnings unless specific hedge accounting criteria are met. We must formally designate the derivative as a hedge and document and assess the effectiveness of derivatives associated with transactions that receive hedge accounting. Accordingly, changes in the fair value of derivatives are included in earnings in the current period for (i) derivatives accounted for as fair value hedges; (ii) derivatives that do not qualify for hedge accounting and (iii) the portion of cash flow hedges that is not highly effective in offsetting changes in cash flows of hedged items. Changes in the fair value of cash flow hedges are deferred in Accumulated Other Comprehensive Income (“AOCI”) and reclassified into earnings when the underlying position affects earnings. As of December 31, 2025, 2024 and 2023, we did not have any cash flow hedges.

Gains and losses included in earnings associated with derivative transactions are presented as a component of cash flows from operating activities in the Consolidated Statements of Cash Flows. See Note 19 for further information on these items.

Fair Value of Current Assets and Current Liabilities

The carrying amount of other current assets and other current liabilities approximates their fair value due to their short-term nature.

Business Acquisitions

For acquired businesses, we apply the acquisition method and generally recognize the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their estimated fair values on the date of acquisition. The fair value of the assets acquired, liabilities assumed, or noncontrolling interest in the acquiree may be adjusted during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.

Recent Accounting Pronouncements

We have adopted guidance under ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”) for the year ended December 31, 2025, and applied the new disclosure requirements retrospectively. ASU 2023-09 enhanced the transparency and decision usefulness of income tax disclosures primarily through requiring the disclosure of specific categories in the rate reconciliation as well as disclosure of income taxes paid disaggregated by jurisdiction. The adoption of ASU 2023-09 did not have a material impact on our disclosures. Refer to Note 16 and Note 22 for details.

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures,” (“ASU 2024-03”), which requires additional disclosures of the specific types of expenses included in the expense captions presented on the face of the income statement. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements will be applied prospectively, with the option for retrospective application. Early adoption is permitted. We are currently evaluating the impact of this standard on our disclosures.

All other new accounting pronouncements that have been issued, but not yet effective, are currently being evaluated and, at this time, are not expected to have a material impact on our financial position or results of operations.