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 unaudited
consolidated financial statements and notes thereto included in this Report on
Form 10-Q ("Report") of CorEnergy Infrastructure, Inc. ("the Company,"
"CorEnergy," "we," "our" 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.

OVERVIEW

We are a publicly traded 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 our pipeline systems, of crude oil
and natural gas for our customers in California and Missouri, respectively.
These pipelines, consisting of our Crimson, MoGas and Omega Pipeline Systems,
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. We divested the remaining material leased assets on
February 4, 2021, as described further below.

For a description of our assets, see Part I, Item 2 of our Annual Report on Form 10-K for the year ended December 31, 2021.

HOW WE GENERATE REVENUES

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 System

Our Crimson Pipeline System 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 System volumes are not
contractually obligated to be transported on our pipelines, our pipelines have
provided transportation services to the same refineries for decades. We believe
that our Crimson 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 pipeline systems

Our MoGas Pipeline System is a 263-mile interstate natural gas pipeline
regulated by the FERC. Our Omega Pipeline System is a 75-mile natural gas
distribution system providing unregulated service primarily to the U.S. Army's
Fort Leonard Wood military post. Our MoGas and Omega Pipeline Systems are part
of a broader system that provides the critical link between
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natural gas producing regions and local customers in Missouri. Our MoGas
Pipeline System sources natural gas from three major interstate pipelines,
Panhandle Eastern pipeline ("PEPL"), Rockies Express pipeline ("REX") and
Mississippi River Transmission pipeline ("MRT"). Our MoGas Pipeline System
connects to these three pipelines around the St. Louis area and transports the
natural gas to south-central Missouri where it connects to our Omega Pipeline
System. Our MoGas Pipeline System supplies several local natural gas
distribution networks along its path. Our Omega Pipeline System primarily serves
as a local natural gas delivery system for Fort Leonard Wood.

Our MoGas Pipeline System generates the majority of its revenue from take-or-pay
transportation contracts with investment-grade customers. The majority of the
system's revenue is under a long-term contract with a remaining term of
approximately eight years. Omega Pipeline System'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 four years. Given
the nature of the MoGas and Omega Pipeline Systems' 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 (a non-GAAP financial measure); (v) Cash Available for Distribution
("CAD") (a non-GAAP financial measure); and (vi) Adjusted EBITDA (a non-GAAP
financial measure). For the definitions and further details on the calculations
of non-GAAP financial measures used in this Report, see the section below titled
"Non-GAAP Financial Measures."

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 System

The amount of our revenue Crimson Pipeline System 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 on this system. 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 one to two months, and recognized as PLA subsequent sales
revenue with an offsetting expense of PLA subsequent sales cost of revenue.

MoGas and Omega pipeline systems

The amount of revenue generated by our MoGas and Omega Pipeline Systems relies
on fixed-payment contracts with our customers. These contracts are reservation
charges with little dependence on actual volumes transported.

Operating and maintenance expenses

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

•  labor expenses;

•  repairs and maintenance expenses;

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

•  utility costs (including electricity and natural gas).
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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 commodity prices.

STL interconnection project

We continue to monitor the regulatory activities relative to the Spire STL
Pipeline, which is connected to our STL Interconnect Project. 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, there can be no
assurances that the STL Pipeline will not be taken out of service in future
periods as a result of these regulatory issues. 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 STL Interconnect Project, the assets of
which are currently carried at approximately $2.9 million as of September 30,
2022, and our 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 year-to-date
periods ended September 30, 2022 and the year-to-date periods ended
September 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. Additional information on the Internalization Transaction can
be found on our Current Report in Form 8-K filed with the SEC on July 12, 2021.

California Market Update

Crimson Midstream experienced an unexpected volume decline in the second
quarter, primarily due to supply disruptions in the global oil market resulting
in the California refineries altering their historical crude oil sourcing
patterns. However, the volume loss reversed beginning in the third quarter due
to operational issues in the crude oil supply chain unrelated to the Crimson
assets. The operational issue has not yet been resolved by the end of the third
quarter. We cannot predict with confidence when the operational issue will be
resolved, however upon such resolution it is possible that Crimson volumes
return to their prior destinations via other pipelines causing a loss of revenue
at that time. The level of volume volatility in 2022 is unusual compared to
historical patterns due to factors beyond our control, resulting in revenue
swings from quarter to quarter. We believe these conditions will persist until
the global oil markets return to a more normal state.

On November 2, 2022, a Kern County Superior Court ruling allowed the County to
resume issuing oil and gas drilling permits, which had been halted since October
2021. This may result in increased oil production and may mitigate decline
volumes on our KLM and San Pablo Bay pipelines.

On November 1, 2022, Phillips 66 reaffirmed its plans to convert its 140,000 bpd
San Francisco refinery in Rodeo, California to renewable transportation fuels,
with operations expected to commence in Q1 2024. Upon project completion, 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
system, 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 by
Phillips 66 from the San Joaquin Valley will need to be transported to another
refinery, which could provide additional growth opportunities for volumes
delivered on Crimson pipelines.
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On October 4, 2021, a pipeline ruptured off the coast of California which caused
an oil spill offshore near Huntington Beach, California. The pipeline is not
owned by the Company and the Company does not own or operate any affected
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 PLA, of approximately $98 thousand during that time. This
production has been shut in since the date of the rupture and the timing of its
return is uncertain, though repair work on the damaged pipeline has begun.

BASIS OF PRESENTATION

The unaudited consolidated financial statements include CorEnergy Infrastructure
Trust, Inc., as of September 30, 2022, and its direct and indirect wholly-owned
subsidiaries and consolidated VIEs. Effective February 1, 2021, CorEnergy
acquired a 49.50% voting interest in Crimson with the Grier Members holding the
remaining 50.50% 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 consolidates Crimson's financial results into
CorEnergy's financial statements. The Grier Members' equity ownership interest
is reflected as a non-controlling interest in the unaudited consolidated
financial statements as of September 30, 2022. All significant intercompany
accounts and transactions have been eliminated in consolidation.

RESULTS OF OPERATIONS

As permitted by SEC rules, we present a sequential quarterly analysis of the
Company's performance because we believe that comparing current quarter results
to those of the immediately preceding fiscal quarter is more useful in
identifying current business trends and provides a more relevant analysis of our
business results than comparing to the same period in the prior year.
Accordingly, we have compared our results of operations for the three months
ended September 30, 2022 to our results of operations for the three months ended
June 30, 2022, as applicable, throughout this Management's Discussion and
Analysis of Financial Condition and Results of Operations. For additional
information regarding the Company's results for the three months ended June 30,
2022, please refer to our second quarter Form 10-Q filed with the SEC on August
11, 2022.

The following data should be read in conjunction with our unaudited 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.
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                                             For the Three Months Ended                             For the Nine Months Ended
                                                                                                                                    September 30,          September 30,
                                  September 30, 2022         June 30, 2022                                                               2022                   2021
Revenue

Transportation and distribution $31,305,546 $28,112,834

                                                       $  89,179,734          $  83,681,876
Pipeline loss allowance
subsequent sales                         1,477,251              3,074,436                                                              7,283,450              6,115,836

Lease and other                            178,889                334,166                                                                892,289              2,568,246

Expenses

Transportation and distribution         17,647,673             14,263,677                                                             45,857,193        

41,795,421

Pipeline loss allowance
subsequent sales cost of revenue         1,385,028              2,438,987                                                              6,016,664              5,890,540
General and administrative               5,743,342              5,276,363                                                             16,162,570             20,374,534

Depreciation and amortization            4,028,800              3,992,314                                                             11,997,781        

10,337,639

Loss on impairment of goodwill          16,210,020                      -                                                             16,210,020                      -
Loss on impairment and terminated
lease                                            -                      -                                                                                     5,977,423

Total Expenses                          45,014,863             25,971,341                                                             96,244,228             84,375,557
Operating Income (loss)           $    (12,053,177)         $   5,550,095                                                          $   1,111,245          $   7,990,401

Interest expense                        (3,483,208)            (3,342,906)                                                            (9,972,969)            (9,578,677)
Loss on extinguishment of debt                   -                      -                                                                      -               (861,814)
Other income                                76,050                136,023                                                                332,615                366,859

Income tax expense, net                     41,369                173,086                                                                437,712                263,652

Net Income                        $    (15,501,704)         $   2,170,126                                                             (8,966,821)            (2,346,883)

Other Financial Data (1)
Adjusted EBITDA                   $      8,882,866          $  10,028,354                                                          $  30,922,851          $  31,358,078
Adjusted Net Income                      1,096,465              2,368,689                                                          $   8,130,006          $  11,138,110
Cash Available for Distribution         (1,006,756)                46,415                                                              1,225,664             (2,491,181)

Capital Expenditures:
Maintenance Capital               $      1,180,794          $   1,475,433                                                          $   4,098,777          $   5,381,708
Growth Capital                           1,188,767                473,463                                                              1,871,681              5,510,019
Volume:
Average quarterly volume (bpd) -
Crude oil                                  164,748                159,202                                                                166,556        

191,573

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

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

Revenue.

Transportation and distribution. Transportation and distribution revenue
increased by $3.2 million during the three months ended September 30, 2022, as
compared to the three months ended June 30, 2022, due to higher crude oil
transportation volume and higher transportation rates. Crude oil transportation
volumes for the three months ended September 30, 2022 were 164,748 bpd as
compared to 159,202 bpd for the prior quarter. The increase in crude oil
transportation volume was primarily due to third-party operational issues, which
lasted through the end of the quarter, which have altered the sourcing patterns
of the refineries served by the Company. Additionally, the Company implemented
tariff adjustments on certain Crimson pipelines during the third quarter, which
also increased revenue. A tariff increase was initially filed for San Pablo but
was subsequently withdrawn due to volume variability and its impact on the cost
of service. MoGas and Omega transportation and distribution revenue relies on
fixed-payment contracts with our customers and did not materially change during
the referenced periods.

Pipeline loss allowance subsequent sales. Pipeline loss allowance subsequent
sales, which represents the revenue on sale of crude oil inventory decreased by
$1.6 million during the three months ended September 30, 2022, as compared to
the three months ended June 30, 2022. This is primarily due to a reduction in
PLA sales volumes and prices, with the total PLA sales of 14,000 bbls during the
three months ended September 30, 2022 at an average of $106 per bbl, compared to
total PLA sales of 27,000 bbls during the three months ended June 30, 2022 at an
average of $114 per bbl.

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Expenses.

Transportation and distribution. Transportation and distribution expenses
increased by $3.4 million during the three months ended September 30, 2022, as
compared to the three months ended June 30, 2022. The increase is primarily due
to increased pipeline release remediation costs of $881 thousand, utility costs
of $645 thousand, inventory lower-of-cost or market price adjustments of $417
thousand, maintenance expense of $417 thousand, outside services expense of $294
thousand, right of way costs of $237 thousand and the remainder comprised of
items such as increased labor and benefits, and regulatory compliance costs. The
three months ended September 30, 2022 contain total pipeline release remediation
costs of $950 thousand, which are higher than the average quarterly expense for
the six months ended June 30, 2022 of $13 thousand and the average quarterly
expense for the eleven months ended December 31, 2021 of $89 thousand. The costs
incurred for the three months ended September 30, 2022 are not expected to be
reflective of costs in future periods.

Pipeline loss allowance subsequent sales cost of revenue. Pipeline loss
allowance subsequent sales cost of revenue decreased by $1.1 million during the
three months ended September 30, 2022, as compared to the three months ended
June 30, 2022. This is primarily due to lower sales volumes, with 14,000 bbls
sold during the three months ended September 30, 2022, compared to 27,000 bbls
sold during the three months ended June 30, 2022.

General and administrative. General and administrative expenses increased by
$467 thousand during the three months ended September 30, 2022, as compared to
the three months ended June 30, 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
                                     September 30, 2022      June 30, 2022
Employee-related costs              $    2,615,094          $    2,508,457
Acquisition and professional fees        1,981,450               1,518,941
Other expenses                           1,146,798               1,248,965
Total                               $    5,743,342          $    5,276,363


Employee-related costs for the three months ended September 30, 2022 increased
by $107 thousand compared to the three months ended June 30, 2022, primarily due
to a full quarter of stock compensation expense in the current period, compared
to a partial quarter of expense in the prior quarter.

Acquisition and professional fees increased by $463 thousand during three months
ended September 30, 2022, as compared to the three months ended June 30, 2022,
due to an increase of $309 thousand for CPUC filings and $184 thousand for
acquisition expenses.

Other expenses decreased by $102 thousand during the three months ended
September 30, 2022, as compared to the three months ended June 30, 2022 due to
costs incurred in the prior quarter associated with the annual stockholders'
meeting that did not recur in the current quarter and costs associated with
ongoing software projects.

Goodwill impairment. Goodwill impairment expense increased by $16.2 million
during the three months ended September 30, 2022 due to impairment charges that
were recorded during the current period that were not present in the prior
period. Refer to a full discussion of the goodwill impairment within Part I,
Item I. Note 10 ("Goodwill").

Interest expense. Interest expense increased by $140 thousand during the three
months ended September 30, 2022 as compared to the three months ended June 30,
2022, primarily due to additional borrowings on the Company's revolving facility
and higher interest rates.

Nine month period ended September 30, 2022 Compared to the nine months ended September 30, 2021

Revenue.

Transportation and distribution. Transportation and distribution revenue
increased by $5.5 million during the nine months ended September 30, 2022, as
compared to the nine months ended September 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 acquisition on February 1, 2021.

Pipeline loss allowance subsequent sales. Pipeline loss allowance subsequent
sales, which represents the revenue on sale of crude oil inventory, increased by
$1.2 million during the nine months ended September 30, 2022, as compared to the
nine months ended September 30, 2021, primarily due to higher realized sales
prices, partially offset by lower PLA volumes sold during the nine months ended
September 30, 2022. PLA sales volumes were 71,000 bbls during the nine months
ended
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September 30, 2022 at an average price of $103 per bbl, compared to PLA sales
volumes of 92,000 bbls during the nine months ended September 30, 2021 at an
average price of $67 per bbl.

Lease and other. Lease and other revenue decreased by $1.7 million during the
nine months ended September 30, 2022, as compared to the nine months ended
September 30, 2021. The decrease was primarily the result of crude oil storage
contracts that expired in 2021 and were not renewed.

Expenses.

Transportation and Distribution. Transportation and distribution expense
increased by $4.1 million during the nine months ended September 30, 2022, as
compared to the nine months ended September 30, 2021, due to the inclusion of
the full nine months of Crimson in the current year, as compared to the prior
year, offset by lower asset maintenance expenses in the current year, compared
to the prior year. Crimson was acquired February 4, 2021, with an effective date
of the acquisition on February 1, 2021.

Pipeline loss allowance subsequent sales cost of revenue. Pipeline loss
allowance subsequent sales cost of revenue increased by $126 thousand during the
nine months ended September 30, 2022, as compared to the nine months ended
September 30, 2021, primarily due to lower sales volumes, offset by a higher
cost basis associated with inventory sales. PLA sales volumes were 71,000 bbls
during the nine months ended September 30, 2022 at an average cost basis of $85
per bbl, compared to PLA sales volumes of 92,000 bbls during the nine months
ended September 30, 2021 at an average price of $64 per bbl.

General and Administrative. General and administrative expenses decreased by
$4.2 million during the nine months ended September 30, 2022, as compared the
nine months ended September 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 nine months ended

                                                                                               September 30,
                                                                   September 30, 2022               2021
Management fees and employee-related costs                       $         7,706,904          $   7,528,705
Acquisition and professional fees                                          5,153,436             10,823,995
Other expenses                                                             3,302,230              2,021,834
Total                                                            $        16,162,570          $  20,374,534


Management fees and employee-related costs increased by $178 thousand for the
nine months ended September 30, 2022, as compared to the nine months ended
September 30, 2021. The change is the net result of the termination of a
reimbursement of $1.6 million of employee costs from related parties in the
prior year, the full nine months of Crimson activity in the current year, the
reduction in other expenses referred to below and stock compensation expense
that was a new program in the current year. The employee related costs for 2022
period should be reflective of expected costs in future periods as illustrated
by the quarter over quarter sequential comparison.

Acquisition and professional fees decreased by $5.7 million during the nine
months ended September 30, 2022, as compared to the nine months ended
September 30, 2021, primarily due to incremental costs incurred during the prior
year associated with the Crimson acquisition and Internalization transaction
that have not recurred during the current year.

Other expenses increased by $1.3 million during the nine months ended
September 30, 2022, as compared to the nine months ended September 30, 2021. The
increase in other expenses is due to the remapping of some former management fee
expenses such as office rent, utilities, travel, in addition to insurance,
directors stock-based compensation, and expenses incurred from the annual
stockholders' meeting that were previously included in management fees and
employee-related costs in the prior period, as well as the inclusion of Crimson
for the full nine months in the current year compared to eight months in the
prior year. The Other expenses should be reflective of expected costs in future
periods, as illustrated by the quarter over quarter sequential comparison.

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

Goodwill impairment. Goodwill impairment expense increased by $16.2 million
during the nine months ended September 30, 2022. due to impairment charges that
were recorded during the current period that were not present in the prior
period. Refer to a full discussion of the goodwill impairment within Part I,
Item I. Note 10 ("Goodwill").
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Interest Expense. Interest expense increased by $394 thousand during the nine
months ended September 30, 2022, as compared to the nine months ended
September 30, 2021 primarily 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 was recorded during the nine months ended September 30, 2021 and
did not recur during the nine months ended September 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 13 ("Debt").

NON-GAAP FINANCIAL MEASURES

We use certain financial measures in this Report 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 loss on goodwill impairment, gain on sale of
equipment, and transaction-related costs. During the comparable periods of the
prior year, our presentation of Adjusted Net Income included adjustments for
loss on impairment and disposal of leased property, loss on termination of
lease, loss on extinguishment of debt, gain on the sale of equipment,
transaction-related costs, 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, transaction bonus, 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:
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                               Table of Contents             Glossary of Defined Terms



                                               For the Three Months Ended                           For the Nine Months Ended
                                                  Sequential Quarters                                 Corresponding Period
                                                                                                                        September 30,
                                       September 30, 2022           June 30, 2022           September 30, 2022               2021
Net Income (Loss)                    $       (15,501,704)         $    2,170,126          $        (8,966,821)         $  (2,346,883)
Add:

Loss on goodwill impairment                   16,210,020                       -                   16,210,020                      -
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                                405,149                 221,241                      926,485              5,625,772
Transaction bonus                                      -                       -                            -              1,036,492
Less:
Gain on the sale of equipment                     17,000                  22,678                       39,678                 16,508

Adjusted Net Income, excluding
special items                        $         1,096,465          $    

$2,368,689 8,130,006 $11,138,110
To add:

Depreciation, amortization and ARO
accretion (Cash Flows)                         4,440,858               4,404,174                   13,233,959             11,530,460
Stock-based compensation                         233,024                 151,359                      384,383                 22,500
Deferred tax expense                               6,182                  16,209                       94,604                222,339
Less:
Transaction costs                                405,149                 221,241                      926,485              5,625,772
Transaction bonus                                      -                       -                            -              1,036,492
Maintenance capital expenditures               1,180,794               1,475,433                    4,098,777              5,381,708
Preferred dividend requirements -
Series A                                       2,388,130               2,388,130                    7,164,390              7,033,626
Preferred dividend requirements -
Non-controlling interest                         809,212                 809,212                    2,427,636              2,326,992
Mandatory debt amortization                    2,000,000               2,000,000                    6,000,000              4,000,000
Cash Available for Distribution
(CAD)                                $        (1,006,756)         $       46,415          $         1,225,664          $  (2,491,181)


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                               Table of Contents             Glossary of Defined Terms


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

                                               For the Three Months Ended                              For the Nine Months Ended
                                                   Sequential Quarters                                   Corresponding Period
                                                                                              September 30,
                                        September 30, 2022          June 30, 2022                  2022               September 30, 2021
Net cash provided by operating
activities                            $         8,051,926          $  10,070,603             $  26,703,113          $        12,260,786
Changes in working capital                     (2,680,546)            (3,351,413)               (5,786,646)                   3,990,358

Maintenance capital expenditures               (1,180,794)            (1,475,433)               (4,098,777)                  (5,381,708)
Preferred dividend requirements                (2,388,130)            (2,388,130)               (7,164,390)                  (7,033,626)
Preferred dividend requirements -
non-controlling interest                         (809,212)              (809,212)               (2,427,636)                  (2,326,991)

Mandatory debt amortization included
in financing activities                        (2,000,000)            (2,000,000)               (6,000,000)                  (4,000,000)
Cash Available for Distribution (CAD) $        (1,006,756)         $      46,415             $   1,225,664          $        (2,491,181)

Other Special Items:
Transaction costs                     $           405,149          $     221,241             $     926,485          $         5,625,772
Transaction bonus                                       -                      -                         -                    1,036,492

Other cash flow information: Net cash used in investing activities ($3,275,513) $(857,208)

            $  (5,186,753)         $       (82,776,171)
Net cash used in financing activities            (752,405)            (4,749,222)              (12,236,575)                 (13,989,565)


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                               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 of the various investment opportunities.

Our presentation of Adjusted EBITDA for the current year periods represents net
income (loss) adjusted for items such as loss on impairment of goodwill, (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 included adjustments for loss on impairment
and disposal of leased property, loss on termination of lease, loss on
extinguishment of debt, transaction related costs, depreciation, amortization
and ARO accretion expense, a transaction bonus related to the Internalization
which did not recur in 2022, income tax expense (benefit), and interest expense.
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:

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