CORENERGY INFRASTRUCTURE TRUST, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto in this Report on Form 10-Q ("Report") of
CorEnergy Infrastructure, Inc. ("the Company," "CorEnergy," "we" or "us"). The
forward-looking statements included in this discussion and elsewhere in this
Report involve risks and uncertainties, including anticipated financial
performance, business prospects, industry trends, stockholder returns,
performance by our customers, and other matters, which reflect management's best
judgment based on factors currently known. See "Cautionary Statement Concerning
Forward-Looking Statements" which is incorporated herein by reference. Actual
results and experience could differ materially from the anticipated results and
other expectations expressed in our forward-looking statements as a result of a
number of factors, including but not limited to those discussed in Part I,
Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended
December 31, 2021, filed with the SEC on March 14, 2022, and in Part II, Item
1A, "Risk Factors", in this Report.

OVERVIEW

We are a publicly traded real estate investment trust ("REIT") focused on energy
infrastructure. Our business strategy is to own and operate critical energy
midstream infrastructure connecting the upstream and downstream sectors within
the industry. We currently generate revenue from the transportation, via
pipeline, of crude oil and natural gas for our customers in California and
Missouri. The pipelines are located in areas where it would be difficult to
replicate rights of way or transport crude oil or natural gas via non-pipeline
alternatives, resulting in our assets providing utility-like criticality in the
midstream supply chain for our customers. As primarily regulated assets, the
near to medium term value of our regulated pipelines is supported by revenue
derived from cost-of-service methodology. The cost-of-service methodology is
used to establish appropriate transportation rates based on several factors
including expected volumes, expenses, debt and return on equity. The regulated
nature of the majority of our assets provides a degree of support for our
profitability over the long-term, where the majority of our customers own the
products shipped on, or stored in, our facilities. We believe these
characteristics provide CorEnergy with the attractive attributes of other
globally listed infrastructure companies, including high barriers to entry and
predictable revenue streams, while mitigating risks and volatility experienced
by other companies engaged in the midstream energy sector. We also believe that
our strengths in the hydrocarbon midstream industry can be leveraged to
participate in energy transition, e.g., CO2 transportation for sequestration.

Prior to February 2021, we generated long-term contracted revenue from operators
of our assets, primarily under triple-net participating leases without direct
commodity price exposure.

For a description of our assets, see Part I, Item 2 of our 2021 Annual Report on Form 10-K.

HOW WE GENERATE REVENUE

We derive revenue from transporting or storing crude oil and natural gas for our customers. Our turnover is mainly generated on the basis of:

• Fixed costs per unit of goods transported during the period or

• Flat rate for reserved capacity.

Crimson Pipeline

Crimson Pipeline is an approximately 2,000-mile crude oil transportation
pipeline system, which includes approximately 1,100 active miles, with
associated storage facilities located in southern California and the San Joaquin
Valley. The pipeline network provides a critical link between California crude
oil production and California refineries. Revenue is primarily generated based
on a fixed-fee tariff paid on each barrel of crude oil transported on our
pipeline system. Our tariffs are regulated by the CPUC under a cost-of-service
methodology. While the majority of our Crimson pipeline volumes are not
contractually obligated to be transported on our pipelines, our pipelines have
provided transportation services to the same refineries for decades. Our
pipeline system provides a safe, reliable, environmentally sustainable and
economical method of transporting crude oil from the California crude oil
producers to the California refineries. Furthermore, we are generally the only
pipeline providing a connection between the producers and our customers, which
are the refineries we serve.

MoGas and Omega pipelines

MoGas pipeline ("MoGas") is a 263-mile interstate natural gas pipeline regulated
by the Federal Energy Regulatory Commission ("FERC"). Omega pipeline ("Omega")
is a 75-mile natural gas distribution system providing unregulated service
primarily to the U.S. Army's Fort Leonard Wood military post. MoGas and Omega
are part of a system that provides the critical link between natural gas
producing regions and local customers in Missouri. MoGas sources natural gas
from three
                                       33
--------------------------------------------------------------------------------
                               Table of Contents             Glossary of Defined Terms



major interstate pipelines, Panhandle Eastern pipeline ("EPL"), Rockies Express
pipeline ("REX") and Mississippi River Transmission pipeline ("MRT"). MoGas
connects to these three pipelines around the St. Louis area and transports the
natural gas to south-central Missouri where it connects to the Omega pipeline.
MoGas supplies several local natural gas distribution networks along its path.
The Omega pipeline system primarily serves as a local natural gas delivery
system for Fort Leonard Wood.

MoGas generates the majority of its revenue from take-or-pay transportation
contracts with investment-grade customers. The majority of MoGas' revenue is
under a long-term contract with a remaining term of approximately 8 years.
Omega's revenues are unregulated and are generated under a firm capacity
contract for which lease treatment has been applied. The remaining life of the
contract is approximately 4 years. Given the nature of the MoGas and Omega
contracts, the revenue generated by these assets is marginally dependent on the
actual volume transported.

HOW WE EVALUATE OUR OPERATIONS

Our management uses a variety of financial and operating metrics to analyze our
performance. These metrics, which are significant factors in assessing our
operating results and profitability, include: (i) volumes; (ii) revenue
(including pipeline loss allowance ("PLA")); (iii) total operating and
maintenance expenses (including maintenance capital expenses); (iv) Adjusted Net
Income; (v) Cash Available for Distribution ("CAD"); and (vi) Adjusted EBITDA.

Volumes and revenues

Our revenues are derived primarily from the transportation of crude oil or natural gas from a source of supply to an end customer. Our assets have been providing this service to the same customers for many decades.

Crimson Pipeline

The amount of revenue Crimson pipeline generates depends on the volume of crude
oil transported through our pipelines multiplied by the fixed-fee tariff
applicable for the specific movement. These volumes are dependent on crude oil
production in California since our assets are not directly connected to crude
oil import facilities. Our volumes can also be impacted by individual refinery
decisions around their specific crude oil sourcing. The fixed-fee tariff, or
transportation rate, is the other major determinate of our revenue. The majority
of our tariffs are regulated by the CPUC under a cost-of-service methodology
which provides long term support for our revenue.

In addition to the fixed-fee tariff, we also earn PLA for the majority of the
volume we transport. As is common in the pipeline transportation industry, as
crude oil is transported, Crimson receives between 0.1% and 0.25% of the
majority of crude oil volume transported as PLA to offset any measurement
uncertainty or actual volumes lost in transit. We receive either payment in kind
or cash at market value for the crude oil, with the majority of the payments
being in kind. For in-kind payments, we record the revenue as Transportation and
Distribution revenue at a net realizable market price for the crude oil and
place those volumes into inventory. The inventory is subsequently sold,
typically within 1 to 2 months, and recognized as PLA subsequent sales revenue
with an offsetting expense of PLA subsequent sales cost of revenue.

MoGas and Omega pipelines

The amount of revenue generated by MoGas and Omega is based on fixed payment contracts with our customers. These contracts are reservation fees that are not very dependent on the volumes actually transported.

Operating and maintenance expenses

Our pipelines have similar fixed and variable operating, maintenance and regulatory requirements. Our main operating and maintenance expenses consist of:

•  labor expenses;

• repair and maintenance costs;

• insurance costs (including liability and property coverage); and

• utility costs (including electricity and natural gas).

The majority of our costs remain stable over wide ranges of throughput volumes, but may vary depending on the level of planned and unplanned maintenance activity during particular reporting periods. The cost of utilities is the major expense that fluctuates with throughput volumes and with commodity prices.

                                       34
--------------------------------------------------------------------------------
                               Table of Contents             Glossary of Defined Terms



MoGas STL Interconnect

MoGas continues to monitor the regulatory activities relative to the Spire STL
Pipeline. On June 22, 2021, the U.S. Court of Appeals for the District of
Columbia Circuit issued an order vacating the Spire STL Pipeline's 2018
certificate, stating that the FERC found a market need for the pipeline despite
only one shipper, an affiliate of Spire STL Pipeline, committing to use it; and
remanding the proceeding back to the FERC. On April 18, 2022, the U.S. Supreme
Court let the lower court ruling stand. On December 3, 2021, FERC granted a
temporary certificate authorizing use until the FERC acts. There have been
filings with FERC from several impacted parties expressing concern over the
adverse effect to the area should FERC fail to reissue the Spire STL Pipeline's
certificate upon reconsideration following the court's ruling. While there is no
impairment at this time, if the STL Pipeline is taken out of service,
CorEnergy's financial condition and results of operations may be adversely
impacted by impairment of our interconnect assets, currently carried at
approximately $3.1 million as of June 30, 2022 and annualized revenues would be
reduced by approximately $4.0 million.

FACTORS AFFECTING THE COMPARABILITY OF OUR FINANCIAL RESULTS

The comparability of our current financial results, in relation to prior
periods, are affected by the recent transactions described below. As a result,
the usefulness of the corresponding period comparisons between the quarter and
year-to-date periods ended June 30, 2022 and the quarter and year-to-date
periods ended June 30, 2021 are limited. The financial results should be read in
connection with the financial information in Form 8-K filed February 10, 2021,
Form 8-K/A filed April 22, 2021, and Form 8-K/A filed September 3, 2021.

Elimination of the Grand Isle collection system

Efficient February 1, 2021the Grand Isle Gathering System was provided in partial consideration for the purchase of the Company’s interest in Crimson.

Crimson Transaction

Efficient February 1, 2021the Company acquired a 49.50% voting interest in Crimson, as described elsewhere in this report.

Internalization of the Manager

On July 6, 2021, following stockholder approval at the Company's 2021 Annual
Meeting, we completed the Internalization transaction whereby we acquired our
manager, Corridor InfraTrust Management, LLC. Pursuant to a Contribution
Agreement, we issued to the Contributors, based on each Contributor's percentage
ownership in Corridor, an aggregate of: (i) 1,153,846 shares of Common Stock,
(ii) 683,761 shares of the newly created Class B Common Stock, and (iii) 170,213
depositary shares of the Company's 7.375% Series A Cumulative Redeemable
Preferred Stock.

As a result of the insourcing transaction, we (i) now own all of Corridor’s material assets used in the conduct of the business, and (ii) are managed by officers and employees who previously worked for Corridor. Additional information about the insourcing transaction may be found in our current report on Form 8-K filed with the SECOND on July 12, 2021.

California Market Update

The supply disruptions in the global oil market have altered the historical
crude oil sourcing patterns for many of the California refineries. California
refineries typically source more than 50% of their crude oil from foreign
sources including Russia and Ecuador who are both experiencing significant
disruptions. This has altered the crude oil sourcing patterns of many of the
refineries around the world. This has resulted in more volatility in volumes on
Crimson's pipelines in California which is expected to persist until global
crude oil supply chains return to a more predictable state.

On October 4, 2021, a pipeline ruptured off the coast of California which caused
the oil spill offshore near Huntington Beach, California. The pipeline is not
owned by the CorEnergy and the Company does not own or operate any offshore
platforms or pipelines. The Company has historically received barrels
transported by the affected pipeline, at an average of approximately 4,600 bpd
over the four months prior to the incident, which generated average monthly
revenue, including pipeline loss allowance, of approximately $98 thousand during
that time. Currently, this production has been shut in and the timing of its
return is uncertain. Regardless of the outcome, we do not expect this event to
affect our common dividend outlook, which is subject to board approval.

On October 6, 2021, the Superior Court of California, County of Kern ordered
Kern County to stop issuing new oil and gas drilling permits pending review of a
new environmental impact report (EIR) process. A ruling was issued on June 7,
2022 noting continued deficiencies in the revised EIR. Kern County has announced
a process to address the identified deficiencies. Judge set hearing for
September 28, 2022 to hear proposed remedies.
                                       35
--------------------------------------------------------------------------------
                               Table of Contents             Glossary of Defined Terms



On July 29, 2022, Phillips 66 announced its final investment decision,
confirming plans to convert its 140,000 bpd San Francisco refinery in Rodeo,
California to renewable transportation fuels in early 2024. As a result, the
refinery will no longer process crude oil. Currently, the refinery sources a
significant portion of their crude oil, via a dedicated Phillips 66 pipeline,
from the San Joaquin Valley which is the same source of volumes for the
Company's pipelines. Following the conversion, the crude oil being consumed from
the San Joaquin Valley will need to be transported to another refinery, which
could provide additional growth opportunities for volumes delivered to Crimson
pipelines.

BASIS OF PRESENTATION

The consolidated financial statements include CorEnergy Infrastructure Trust,
Inc., as of June 30, 2022, and its direct and indirect wholly-owned
subsidiaries. Effective February 1, 2021, CorEnergy's subsidiaries include a
49.50 percent voting interest in Crimson with John D. Grier and certain
affiliated trusts of Grier (collectively with Grier, the "Grier Members")
holding the remaining 50.50 percent voting interest. Crimson is a VIE as the
legal entity is structured with non-substantive voting rights. CorEnergy was
determined to be the entity "most closely associated" with the VIE. Therefore,
CorEnergy is the primary beneficiary and will consolidate Crimson. The Grier
Member's 50.62 percent equity ownership interest is reflected as a
non-controlling interest in the consolidated financial statements as of June 30,
2022. All significant intercompany accounts and transactions have been
eliminated in consolidation.

RESULTS OF OPERATIONS

In November 2020, the U.S. Securities and Exchange Commission (the "SEC")
adopted the final rule under SEC Release No. 33-10890, Management's Discussion
and Analysis, Selected Financial Data, and Supplementary Financial Information,
which modernized and simplified certain disclosure requirements of Regulation
S-K. The update to Item 303 of Regulation S-K, allows registrants the option, in
discussing any material changes in our results of operations for the most
recently completed quarter, of using as the basis for comparison either the
corresponding quarter for the preceding fiscal year or, in the alternative, the
immediately preceding sequential quarter. Beginning with this filing for the
quarter ended June 30, 2022, we have elected the latter alternative, as
management believes that comparing current quarter results to those of the
immediately preceding quarter is more useful in identifying current business
trends and will provide a more meaningful comparison to investors going forward.
Additionally, in the first filing after the change in the basis of comparison,
we are required to disclose a comparison of the results for the current quarter
and the corresponding quarter of the preceding fiscal year. Accordingly, we have
compared the results for the three months ended June 30, 2022 with the results
for the three months ended March 31, 2022, and June 30, 2021, where applicable,
throughout this Management's Discussion and Analysis.

The following data should be read in conjunction with our consolidated financial
statements and the notes thereto included in Part I, Item 1 of this Report. All
information in Part I, Item 2 "Management's Discussion and Analysis of Financial
Condition and Results of Operations," except for balance sheet data as of
December 31, 2021, is unaudited.

                                       36
--------------------------------------------------------------------------------
                               Table of Contents             Glossary of Defined Terms



                                                                For the Three Months Ended
                                              June 30, 2022           March 31, 2022           June 30, 2021

Revenue

Transportation and distribution             $   28,112,834          $    29,761,354          $   28,100,343
Pipeline loss allowance subsequent sales         3,074,436                2,731,763               2,915,533

Lease and other                                    334,166                  379,234               1,280,702

Expenses

Transportation and distribution                 14,263,677               13,945,843              15,363,410
Pipeline loss allowance subsequent sales
cost of revenue                                  2,438,987                2,192,649               2,223,646
General and administrative                       5,276,363                5,142,865               5,381,654

Depreciation and amortization                    3,992,314                3,976,667               3,748,453

Operating Income (loss)                     $    5,550,095          $     7,614,327          $    5,579,415

Interest expense                                (3,342,906)              (3,146,855)             (3,295,703)

Other income                                       136,023                  120,542                 299,293

Income tax expense, net                            173,086                  223,257                 155,596

Net Income                                  $    2,170,126          $     4,364,757          $    2,427,409

Other Financial Data (1)
Adjusted EBITDA                             $   10,028,354          $    12,011,631          $    9,965,109
Adjusted Net Income                              2,368,689                4,664,852          $    3,026,061
Cash Available for Distribution                     46,415                2,186,005              (1,005,387)

Capital Expenditures:
Maintenance Capital                         $    1,475,433          $     1,442,550          $    2,182,155
Growth Capital                                     473,463                  209,451               2,216,680

Volume:

Average quarterly volume (bpd) - Crude oil         159,202                  175,716                 188,634

(1) Refer to the “Non-GAAP Financial Measures” section of this Section 2 for further details.

Three months completed June 30, 2022 Compared to the three months ended March 31, 2022

Revenue.

Transportation and distribution. Transportation and distribution revenue
decreased by $1.6 million during the three months ended June 30, 2022, as
compared to the three months ended March 31, 2022, primarily due to lower crude
oil transportation volumes. Crude oil transportation volumes for the three
months ended June 30, 2022 were 159,202 bpd as compared to 175,716 bpd for the
three months ended March 31, 2022. The decrease in crude oil volume was
primarily due to recent supply disruptions in the global oil market which has
altered the sourcing patterns of many of the refineries around the world. The
amount of natural gas transportation and distribution revenue generated by MoGas
and Omega relies on fixed-payment contracts with our customers. These contracts
are reservation charges with little dependence on actual volumes transported.
MoGas and Omega transportation and distribution revenue did not materially
change during the periods shown.

Pipeline loss allowance subsequent sales. Pipeline loss allowance subsequent
sales, which represents the revenue on sale of crude oil inventory, was $343
thousand higher during the three months ended June 30, 2022, as compared to the
three months ended March 31, 2022. This is primarily due to an increase in PLA
sales prices during the three months ended June 30, 2022 at an average of
$113.87 per bbl, compared to an average of $91.06 per barrel during the three
months ended March 31, 2022.

Expenses.

Transportation and distribution. Transportation and distribution expenses
increased $317 thousand during the three months ended June 30, 2022, as compared
to the three months ended March 31, 2022. The increase is primarily due to
increased maintenance expense of $699 thousand, increased salary, wages and
overtime costs of $330 thousand, increased regulatory compliance costs of $170
thousand, partially offset by a decrease in utility costs of $944 thousand due
to crude oil transportation operational changes and lower volumes.

Pipeline Loss Allowance Cost of Subsequent Revenue Sales. Provision for pipeline loss Increase in cost of revenue from subsequent sales $246,000 in the three months ended June 30, 2022compared to the three months ended
March 31, 2022. This is primarily due to the cost basis associated with inventory sales. The average cost of inventory sold over the three months

                                       37
--------------------------------------------------------------------------------
                               Table of Contents             Glossary of Defined Terms


ended June 30, 2022 has been $90.33 per barrel, compared to $73.09 per barrel for the average cost of inventory sold during the three months ended March 31, 2022.

General and administrative. General and administrative expenses increased $74
thousand during the three months ended June 30, 2022, as compared to the three
months ended March 31, 2022. The most significant components of the variance
from the prior-quarter period are outlined in the following table and explained
below:

                                           For the Three Months Ended
                                       June 30, 2022         March 31, 2022
Employee-related costs              $    2,508,457          $     2,583,353
Acquisition and professional fees        1,518,941                1,653,045
Other expenses                           1,248,965                  906,467
Total                               $    5,276,363          $     5,142,865


Personnel costs for the three months ended June 30, 2022 decreases $75,000 compared to the three months ended March 31, 2022.

Acquisition and professional fees for the three months ended June 30, 2022
decreased $134 thousand from the three months ended March 31, 2022, primarily as
a result of timing of due diligence, professional consulting and legal related
activities.

Other expenses for the three months ended June 30, 2022 increased $342 thousand
compared to the three months ended March 31, 2022, due to costs associated with
the annual stockholders' meeting, other miscellaneous taxes and software related
projects. The increase in other expenses is also due to the inclusion of some
former management fee expenses such as office rent, utilities, travel, in
addition to insurance and directors stock-based compensation.

Interest charges. Interest expense for the three months ended June 30, 2022
increase $196,000 three months ended March 31, 2022mainly due to rising interest rates.

Three months completed June 30, 2022 Compared to the three months ended June 30, 2021

Revenue.

Transportation and distribution. Transportation and distribution revenue
increased $12 thousand during the three months ended June 30, 2022 as compared
to the three months ended June 30, 2021. Crude oil transportation volumes for
the three months ended June 30, 2022 were 159,202 bpd as compared to 188,634 bpd
for the three months ended June 30, 2021. The decrease in crude oil volume was
primarily due to recent supply disruptions in the global oil market which has
altered the sourcing patterns of many of the refineries around the world. The
amount of natural gas transportation and distribution revenue generated by MoGas
and Omega relies on fixed-payment contracts with our customers. These contracts
are reservation charges with little dependence on actual volumes transported.

Pipeline loss allowance subsequent sales. Pipeline loss allowance subsequent
sales, which represents the revenue on sale of crude oil inventory, was $159
thousand higher during the three months ended June 30, 2022, as compared to the
three months ended June 30, 2021. This is primarily due to an increase in higher
realized sales prices during the three months ended June 30, 2022. PLA sales for
the three months ended June 30, 2022 were realized at an average of $113.87 per
bbl, compared to an average of $64.52 per barrel during the three months ended
June 30, 2021.

Lease and other. Lease and other revenue decreased $947 thousand for the three
months ended June 30, 2022 compared to the three months ended June 30, 2021. The
decrease was a result of crude oil storage contracts that expired and were not
renewed in the prior year and lower buy/sell revenue as compared to the three
months ended June 30, 2021.

Expenses.

Transportation and distribution. Transportation and distribution expenses
decreased $1.1 million during the three months ended June 30, 2022 as compared
to the three months ended June 30, 2021. The decrease is primarily due to lower
utility costs of $963 thousand due to crude oil transportation operational
changes and lower volumes, as well as decreased maintenance expense of $227
thousand.

Pipeline loss allowance subsequent sales cost of revenue. Pipeline loss
allowance subsequent sales cost of revenue increased $215 thousand during the
three months ended June 30, 2022 as compared to the three months ended June 30,
2021. This is primarily due to the cost basis associated with inventory sales.
The average cost of inventory sold during the three months ended June 30, 2022
was $90.33 per barrel, as compared to $59.46 per barrel for the average cost of
inventory sold during the three months ended June 30, 2021.
                                       38
--------------------------------------------------------------------------------
                               Table of Contents             Glossary of Defined Terms



General and Administrative. General and administrative expenses decreased $105
thousand during the three months ended June 30, 2022 as compared the three
months ended June 30, 2021. The most significant components of the variance from
the prior-year period are outlined in the following table and explained below:
                                                    For the Three Months Ended
                                                June 30, 2022         June 30, 2021
Management fees and employee-related costs   $    2,508,457          $    2,186,437
Acquisition and professional fees                 1,518,941               2,386,147
Other expenses                                    1,248,965                 809,070
Total                                        $    5,276,363          $    5,381,654


Employee-related costs for the three months ended June 30, 2022 increased $322
thousand compared to the prior-year period due to (i) increase in bonus accruals
due to higher targets in the current year and (ii) company wide salary increases
and the addition of several management positions. In the prior year these were
management fees paid to Corridor.

Management fees ended with the closing of the Internalization transaction on
July 6, 2021. In the prior year management fees consisted of $321 thousand for
the month of January 2021, paid under the terms of the pre-existing Management
Agreement before the First Amendment, a $1.0 million transaction bonus outlined
in the Contribution Agreement related to the Internalization, $1.3 million in
Crimson employee-related costs from the Crimson acquisition, the addition of
$914 thousand in Corridor employee compensation and office related expense
reimbursements under the First Amendment to the Management Agreement from April
1, 2021 to June 30, 2021 in connection with the Internalization.

In the three months ended June 20, 2021management fees total $1.6 million. After the closing of the internalization the July 6, 2021the Company assumed costs related to employees previously paid to Corridor.

Acquisition fees and professional fees for the three months ended June 30, 2022
decreases $867,000 compared to the prior year period, primarily due to lower accounting and legal services incurred as a result of the acquisition of Crimson.

Other expenses for the three months ended June 30, 2022 increased $440 thousand
from the prior-year period. The increase in other expenses is due to the
inclusion of some former management fee expenses such as office rent, utilities,
travel, an addition to insurance and directors stock-based compensation.

Interest Expense. Interest expense increased $47 thousand during the three
months ended June 30, 2022 as compared to the three months ended June 30, 2021.
Interest expense increased due to generally overall higher interest rates in the
current year.


                                       39
--------------------------------------------------------------------------------
                               Table of Contents             Glossary of Defined Terms



                                                                               For the Six Months Ended
                                                                                                                      June 30, 2022           June 30, 20211
Revenue
Transportation and distribution                                                                                      $  57,874,188          $    

49 395 482

Pipeline loss allowance subsequent sales                                                                                 5,806,199                3,991,255

Lease and other                                                                                                            713,400                1,950,339

Expenses

Transportation and distribution                                                                                         28,209,520               

25,706,007

Pipeline loss allowance subsequent sales cost of revenue                                                                 4,631,636                3,172,502
General and administrative                                                                                              10,419,228               15,218,447

Depreciation, amortization and ARO accretion                                                                             7,968,981                

6,646,783

Loss on impairment and terminated lease                                                                                          -                5,977,423

Total Expenses                                                                                                          51,229,365               56,721,162
Operating Income (loss)                                                                                              $  13,164,422          $    (1,384,086)

Interest expense                                                                                                        (6,489,761)              (6,226,710)
Loss on extinguishment of debt                                                                                                   -                 (861,814)
Other income                                                                                                               256,565                  362,819

Income tax expense, net                                                                                                    396,343                  157,063

Net Income (loss)                                                                                                        6,534,883               (8,266,854)

Other Financial Data2
Adjusted EBITDA                                                                                                      $  22,039,985          $    18,052,175
Adjusted Net Income                                                                                                      7,033,541                5,021,619
Cash Available for Distribution                                                                                          2,232,420               (5,652,732)

Capital Expenditures:
Maintenance Capital                                                                                                  $   2,917,983          $     3,624,358
Growth Capital                                                                                                             682,914                4,871,189
Volume:
Average quarterly volume (bpd) - Crude oil                                                                                 167,459                  

191,544

(1) The financial impacts of Crimson’s assets only represent the period February 1, 2021 at June 30, 2021. (2) Refer to the “Non-GAAP Financial Measures” section of this Section 2 for further details.

Semester completed June 30, 2022 Compared to the half-year ended June 30, 2021

Revenue.

Transportation and distribution. Transportation and distribution revenue
increased $8.5 million during the six months ended June 30, 2022 as compared to
the six months ended June 30, 2021, primarily due to the benefit of a full
year-to-date period with Crimson in 2022, offset by lower average daily volumes.
Crimson was acquired February 4, 2021, with an effective date of the transaction
on February 1, 2021.

Pipeline loss allowance subsequent sales. Pipeline loss allowance subsequent
sales, which represents the revenue on sale of crude oil inventory, was $1.8
million higher during the six months ended June 30, 2022, as compared to the six
months ended June 30, 2021. This increase is primarily due to an increase in PLA
sales volumes and higher realized sales prices during the six months ended
June 30, 2022 at an average of $101.86 per bbl, compared to an average of $64.04
per barrel during the six months ended June 30, 2021.

Lease and other. Lease and other revenue decreased $1.2 million during the six
months ended June 30, 2022 as compared to the six months ended June 30, 2021.
The decrease was a result of crude oil storage contracts that expired in 2021
and were not renewed.

Expenses.

Transportation and Distribution. Transport and distribution costs have increased $2.5 million in the six months ended June 30, 2022 compared to the half-year ended June 30, 2021. The increase is mainly due to the inclusion of the six

                                       40
--------------------------------------------------------------------------------
                               Table of Contents             Glossary of Defined Terms


months in 2022, compared to 2021. Crimson was acquired February 4, 2021with an effective acquisition date of February 1, 2021.

Pipeline loss allowance subsequent sales cost of revenue. Pipeline loss
allowance subsequent sales cost of revenue increased $1.5 million during the six
months ended June 30, 2022 as compared to the six months ended June 30, 2021.
This is primarily due to the cost basis associated with inventory sales. The
average cost of inventory sold during the six months ended June 30, 2022 was
$81.26 per barrel, as compared to $58.24 per barrel for the average cost of
inventory sold during the six months ended June 30, 2021.

General and administrative. General and administrative expenses decreased
$4.8 million in the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The most significant components of the variance from the prior year period are described in the following table and explained below:

                                                  For the Six Months Ended
                                              June 30, 2022      June 30, 

2021

Management fees and staff costs $5,091,810 $5,034,262
Acquisition costs and professional fees

                3,171,986          8,843,064
Other expenses                                   2,155,432          1,341,121
Total                                        $  10,419,228      $  15,218,447


Management fees and employee-related costs for the six months ended June 30,
2022 increased $58 thousand compared to the prior-year period. In the six months
ended June 30, 2022, salaries and benefits were $5.1 million consisting of
salaries from both CorEnergy and Crimson (including a full six months of
Crimson), including new hires and increased bonus accrual due to higher targeted
amounts.

In the prior year management fees consisted of $321 thousand for the month of
January 2021, paid under the terms of the pre-existing Management Agreement
before the First Amendment, a $1.0 million transaction bonus outlined in the
Contribution Agreement related to the Internalization, the addition of $2.2
million in Crimson employee-related costs from the Crimson acquisition and the
addition of $1.5 million in Corridor employee compensation and office related
expense reimbursements under the First Amendment to the Management Agreement
from February 1, 2021 to June 30, 2021 in connection with the Internalization.
Management fees ended with the closing of the Internalization transaction on
July 6, 2021.

During the six months ended June 30, 2021, management fees were $2.8 million.
After the closing of the Internalization on July 6, 2021, the Company assumed
employee related costs previously paid to Corridor.

Acquisition and professional fees for the six months ended June 30, 2022
decreased $5.7 million from the prior-year period, primarily as a result of (i)
a $2.7 million decrease in asset acquisition expenses due to the prior year
closing and due diligence costs associated with the Crimson acquisition and (ii)
a $1.9 million decrease in asset acquisition expenses due to the prior year
closing of the Internalization transaction, and (iii) $1.1 million decrease in
transaction costs incurred for accounting and legal services.

Other expenses for the six months ended June 30, 2022 increased $814 thousand
from the prior-year period. The increase in other expenses is due to the
inclusion of some former management fee expenses such as office rent, utilities,
travel, in addition to insurance, directors stock-based compensation, expenses
incurred from the annual stockholders' meeting, and the inclusion of Crimson for
the full six months in 2022.

Loss on Impairment and Terminated Lease. Loss on impairment and terminated lease
expense of $6.0 million was recorded during the six months ended June 30, 2021,
but did not recur during the six months ended June 30, 2022. This impairment was
primarily incurred in association with the contribution of the GIGS asset as
partial consideration to acquire our 49.50 percent voting interest in Crimson.
Refer to Part I, Item 1, Note 5 ("Leased Properties And Leases") for further
details.

Interest Expense. Interest expense increased $263 thousand during the six months
ended June 30, 2022 as compared to the six months ended June 30, 2021, due to
one additional month of interest incurred on the Crimson revolver and higher
interest rates.

Loss on Extinguishment of Debt. Loss on the extinguishment of debt expenses of
$862 thousand were recorded during the six months ended June 30, 2021 and did
not recur during the six months ended June 30, 2022. This expense was incurred
in connection with the Crimson acquisition, at which time the Company terminated
the CorEnergy Credit Facility with Regions Bank and eliminated the associated
deferred debt issuance costs of $862 thousand. For additional information, see
Part I, Item 1, Note 12 ("Debt").


                                       41
--------------------------------------------------------------------------------
                               Table of Contents             Glossary of Defined Terms



NON-GAAP FINANCIAL MEASURES

We use certain financial measures that are not recognized under GAAP. The
non-GAAP financial measures used in this Report include Adjusted Net Income,
CAD, and Adjusted EBITDA. These supplemental measures are used by our management
team and are presented because we believe they help investors understand our
business, performance and ability to earn and distribute cash to our
stockholders, provide for debt repayments, provide for future capital
expenditures and provide for repurchases or redemptions of any series of our
preferred stock by providing perspectives not immediately apparent from GAAP
measures.

We offer these measures to assist the users of our financial statements in
assessing our operating performance under U.S. GAAP, but these measures are
non-GAAP measures and should not be considered measures of liquidity,
alternatives to net income (loss) or indicators of any other performance measure
determined in accordance with GAAP. Our method of calculating these measures may
be different from methods used by other companies and, accordingly, may not be
comparable to similar measures as calculated by other companies. Investors
should not rely on these measures as a substitute for any GAAP measure,
including net income (loss), cash flows from operating activities or revenues.
Management compensates for the limitations of Adjusted Net Income, CAD, and
Adjusted EBITDA as analytical tools by reviewing the comparable GAAP measures,
understanding the differences between non-GAAP measures compared to (as
applicable) operating income (loss), net income (loss) and net cash provided by
operating activities, and incorporating this knowledge into its decision-making
processes. We believe that investors benefit from having access to the same
financial measures that our management considers in evaluating our operating
results.

Adjusted net income and cash available for distribution

We believe Adjusted Net Income is an important performance measure of our
profitability as compared to other infrastructure owners and operators. Our
presentation of Adjusted Net Income for the current year periods represents net
income (loss) adjusted for gain on sale of equipment and transaction-related
costs. During the comparable periods of the prior year, our presentation of
Adjusted Net Income also included adjustments for loss on impairment and
disposal of leased property, loss on termination of lease, loss on
extinguishment of debt and a transaction bonus related to the Internalization
which did not recur in 2022. Adjusted Net Income presented by other companies
may not be comparable to our presentation, since each company may define these
terms differently.

Management considers CAD an important metric for assessing capital discipline,
cost efficiency and balance sheet strength. Although CAD is the metric used to
assess our ability to make dividends to stockholders and distributions to
non-controlling interest holders, this measure should not be viewed as
indicative of the actual amount of cash that is available for distributions or
planned for distributions for a given period. Instead, CAD should be considered
indicative of the amount of cash that is available for distributions after
mandatory debt repayments and other general corporate purposes. Our presentation
of CAD represents Adjusted Net Income adjusted for depreciation, amortization
and ARO accretion (cash flows), stock-based compensation and deferred tax
expense (benefit) less transaction-related costs; maintenance capital
expenditures; preferred dividend requirements and mandatory debt amortization.

Adjusted Net Income and CAD should not be considered a measure of liquidity and
should not be considered as an alternative to operating income (loss), net
income (loss), cash flows from operations or other indicators of performance
determined in accordance with GAAP. The following tables present a
reconciliation of Net Income (Loss), as reported in the Consolidated Statements
of Operations, to Adjusted Net Income and CAD:
                                       42
--------------------------------------------------------------------------------
                               Table of Contents             Glossary of Defined Terms



SEQUENTIAL QUARTERS

                                                                        For the Three Months Ended
                                                                  June 30, 2022             March 31, 2022
Net Income                                                     $    2,170,126             $     4,364,757
Add:

Transaction costs                                                     221,241                     300,095
Less:
Gain on the sale of equipment                                          22,678                           -

Adjusted Net Income, excluding special items                   $    2,368,689             $     4,664,852

To add:

Depreciation, amortization and ARO accretion (Cash Flows)           4,404,174                   4,388,927
Stock-based compensation                                              151,359                           -
Deferred tax expense                                                   16,209                      72,213
Less:
Transaction costs                                                     221,241                     300,095

Maintenance capital expenditures                                    1,475,433                   1,442,550
Preferred dividend requirements - Series A                          2,388,130                   2,388,130
Preferred dividend requirements - Non-controlling interest            809,212                     809,212
Mandatory debt amortization                                         2,000,000                   2,000,000
Cash Available for Distribution (CAD)                          $       46,415             $     2,186,005


CORRESPONDING PERIOD

                                           For the Three Months Ended                           For the Six Months Ended
                                      June 30, 2022          June 30, 2021                June 30, 2022          June 30, 2021
Net Income (loss)                   $    2,170,126          $   2,427,409                $   6,534,883          $  (8,266,854)
Add:

Loss on impairment and disposal of
leased property                                  -                      -                            -              5,811,779
Loss on termination of lease                     -                      -                            -                165,644

Loss on extinguishment of debt                   -                      -                            -                861,814

Transaction costs                          221,241                337,948                      521,336              5,412,744
Transaction bonus                                -                      -                            -              1,036,492
Less:
Gain on the sale of equipment               22,678                      -                       22,678                      -
Adjusted Net Income, excluding
special items                       $    2,368,689          $   2,765,357                $   7,033,541          $   5,021,619

To add:

Depreciation, amortization and ARO
accretion (Cash Flows)                   4,404,174              4,160,510                    8,793,101              7,427,544
Stock-based compensation                   151,359                      -                      151,359                      -
Deferred tax expense                        16,209                135,222                       88,422                108,822
Less:
Transaction costs                          221,241                337,948                      521,336              5,412,744
Transaction bonus                                -                      -                            -              1,036,492
Maintenance capital expenditures         1,475,433              2,182,155                    2,917,983              3,624,358
Preferred dividend requirements -
Series A                                 2,388,130              2,309,672                    4,776,260              4,619,344
Preferred dividend requirements -
Non-controlling interest                   809,212              1,517,779                    1,618,424              1,517,779
Mandatory debt amortization              2,000,000              2,000,000                    4,000,000              2,000,000
Cash Available for Distribution
(CAD)                               $       46,415          $  (1,286,465)               $   2,232,420          $  (5,652,732)



                                       43
--------------------------------------------------------------------------------
                               Table of Contents             Glossary of Defined Terms


The following tables reconcile the net cash provided by (used in) operating activities, as presented in the consolidated statements of cash flows, in Canadian dollars:

SEQUENTIAL QUARTERS

                                                                       For the Three Months Ended
                                                                 June 30, 2022           March 31, 2022
Net cash provided by operating activities                      $   10,070,603          $     8,580,584
Changes in working capital                                         (3,351,413)                 245,313

Maintenance capital expenditures                                   (1,475,433)              (1,442,550)
Preferred dividend requirements                                    (2,388,130)              (2,388,130)

Preferred dividend requirements – non-controlling interest (809,212)

                (809,212)

Mandatory debt amortization included in financing activities (2,000,000)

              (2,000,000)
Cash Available for Distribution (CAD)                          $       46,415          $     2,186,005

Other Special Items:
Transaction costs                                              $      221,241          $       300,095

Other Cash Flow Information:
Net cash used in investing activities                          $     (857,208)         $    (1,056,032)
Net cash used in financing activities                              (4,749,222)              (6,734,948)


CORRESPONDING PERIOD

                                     For the Three Months Ended           For the Six Months Ended
                                       June 30, 2022                June

30, 2021 June 30, 2022 June 30, 2021
Net cash flow generated by operating activities

                           $   10,070,603                $   

6,839,503 $18,651,187 $4,358,342
Changes in working capital

               (3,351,413)                    (116,362)            (3,106,100)             1,750,407

Maintenance capital expenditures         (1,475,433)                  (2,182,155)            (2,917,983)            (3,624,358)
Preferred dividend requirements          (2,388,130)                  (2,309,672)            (4,776,260)            (4,619,344)
Preferred dividend requirements -
non-controlling interest                   (809,212)                  (1,517,779)            (1,618,424)            (1,517,779)

Mandatory debt amortization included
in financing activities                  (2,000,000)                  (2,000,000)            (4,000,000)            (2,000,000)
Cash Available for Distribution
(CAD)                                $       46,415                $  (1,286,465)         $   2,232,420          $  (5,652,732)

Other Special Items:
Transaction costs                    $      221,241                $     337,948          $     521,336          $   5,412,744
Transaction bonus                                 -                            -                      -              1,036,492

Other Cash Flow Information:
Net cash used in investing
activities                           $     (857,208)               $  (5,519,635)         $  (1,913,240)         $ (78,067,217)
Net cash used in financing
activities                               (4,749,222)                  (2,464,404)           (11,484,170)            (8,192,574)


                                       44
--------------------------------------------------------------------------------
                               Table of Contents             Glossary of Defined Terms



Adjusted EBITDA

We believe the presentation of Adjusted EBITDA provides information useful to
investors in assessing our financial condition and results of operations and
that Adjusted EBITDA is a widely accepted financial indicator of a company's
ability to incur and service debt, fund capital expenditures, and make dividends
and distributions. Adjusted EBITDA is a supplemental financial measure that
management and external users of our consolidated financial statements, such as
industry analysts, investors, and commercial banks use, among other measures, to
assess the following:

• our operating performance relative to other midstream infrastructure owners and operators, regardless of historical financing methods, capital structure or cost base;

•the ability of our assets to generate cash flow to make distributions; and

•the viability of acquisitions and capital expenditures and the returns on investment from the various investment opportunities.

Our presentation of Adjusted EBITDA for the current year periods represents net
income (loss) adjusted for items such as (gain) on the sale of equipment,
transaction-related costs, depreciation, amortization and ARO accretion expense,
stock-based compensation, income tax expense (benefit) and interest expense.
During the comparable periods of the prior year, our presentation of Adjusted
EBITDA also included adjustments for loss on impairment and disposal of leased
property; loss on termination of lease; loss on extinguishment of debt; and a
transaction bonus related to the Internalization which did not recur in 2022.
Adjusted EBITDA presented by other companies may not be comparable to our
presentation, since each company may define these terms differently. Adjusted
EBITDA should not be considered a measure of liquidity and should not be
considered as an alternative to operating income (loss), net income (loss) or
other indicators of performance determined in accordance with GAAP. The
following tables present a reconciliation of Net Income (loss), as reported in
the Consolidated Statements of Operations, to Adjusted EBITDA:

© Edgar Online, source Previews

About Keith Tatum

Check Also

BHE GT&S Awards $115,000 in Grants to North Central West Virginia Charities at 25th Annual Golf Invitational | Harrison News

Country the United States of AmericaUS Virgin IslandsU.S. Minor Outlying IslandsCanadaMexico, United Mexican StatesBahamas, Commonwealth …