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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

OR

o               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-35711

Lehigh Gas Partners LP

(Exact name of registrant as specified in its charter)

610-625-8000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  o  No  x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  o  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o  No  x

As of December 5, 2012, there were 7,525,000 common units and 7,525,000 subordinated units representing limited partner interests outstanding.

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LEHIGH GAS PARTNERS LP

FORM 10-Q

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Explanatory Note

Lehigh Gas Partners LP (the” Partnership”) initially filed a Registration Statement on Form S-1, as amended (File No. 333-181370), with the Securities and Exchange Commission (“SEC”) on May 11, 2012,  which was declared effective on October 24, 2012 (the “Registration Statement”). We are filing this Quarterly Report on Form 10-Q within 45 days after the effective date of the Registration Statement as required by Rule 13a-13(a) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Most, but not all of, the information contained in this report relates to periods that ended prior to the completion of the Offering (defined below), and prior to the effective dates of the agreements discussed herein. Consequently, the unaudited special purpose condensed combined financial statements and related discussion of financial condition and results of operations contained in this report pertain to the portion of the business of Lehigh Gas Corporation or “LGC” and its subsidiaries and affiliates (“Selected Lehigh Gas Entities”) which is the predecessor to the Partnership for accounting purposes.

On October 30, 2012 (the “Closing Date”), the Partnership completed its initial public offering of a total of 6,000,000 common units representing limited partner interests (“Common Units”), and on November 9, 2012 issued an additional 900,000 Common Units pursuant to the full exercise by the underwriters (the “Underwriters”) of their over-allotment option, all at a price of $20.00 per unit (the “Offering”). The Partnership received aggregate proceeds of $128.3 million from the sale, net of underwriting discounts and structuring fees, but before taking into account $6.0 million of estimated Offering expenses. As previously disclosed, of this amount the net proceeds of approximately $16.7 million, pursuant to the over-allotment option, were distributed to Joseph V. Topper, Jr., the Chief Executive Officer of the Partnership, and to certain of Mr. Topper’s affiliates and family trusts, and Joseph B. Reilly, III, a member of the board of directors of the general partner of the Partnership.

References in this Quarterly Report to “our Predecessor”, or “Predecessor Entity”, refer to the portion of the business of Lehigh Gas Corporation, or “LGC,” and its subsidiaries and affiliates that were contributed to Lehigh Gas Partners LP in connection with the Offering. Unless the context requires otherwise, references in this Quarterly Report to “Lehigh Gas Partners LP,” “we,” “our,” “us,” or like terms, when used in the context of the periods following the completion of the Offering refer to Lehigh Gas Partners LP and its subsidiaries and, when used in the context of the periods prior to the completion of the Offering, refer to the portion of the business of our Predecessor, the wholesale distribution business of Lehigh Gas—Ohio, LLC and real property and leasehold interests contributed to us in connection with the Offering by Joseph V. Topper, Jr., the Chief Executive Officer and the Chairman of the board of directors of our general partner and/or his affiliates.

References to “our General Partner” or “Lehigh Gas GP” refer to Lehigh Gas GP LLC, the General Partner of Lehigh Gas Partners LP and a wholly owned subsidiary of LGC. References to “LGO” refer to Lehigh Gas—Ohio, LLC, an entity managed by Joseph V. Topper, Jr, the Chief Executive Officer and the Chairman of the board of directors of our General Partner. All of LGO’s wholesale distribution business were contributed to us in connection with the Offering References to the “Topper Group” refer to Joseph V. Topper, Jr., collectively with those of his affiliates and family trusts that have ownership interests in our Predecessor. The Topper Group has a controlling ownership interest in LGC, and John B. Reilly, III, a member of the board of directors of our General Partner, has an interest in LGC. Together with LGC, the Topper Group will hold a majority of the limited partner interests in us. Through its controlling ownership interest in LGC, the Topper Group has an indirect, controlling ownership interest in our General Partner following the Offering.

References to “Lessee Dealers” refer to third parties who operate sites we own or lease and we, in turn, lease such third-party sites to the Lessee Dealers; “Independent Dealers” refer to third parties that own their sites or lease their sites from a landlord other than us; and “Sub-wholesalers” refer to third parties that elect to purchase motor fuels from us, on a wholesale basis, instead of purchasing directly from major integrated oil companies and refiners.

While management believes that the financial statements contained herein are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), and in compliance with the rules and regulations of the SEC, we do not believe that these financial statements are necessarily indicative of the financial results which will be reported by the Partnership for periods subsequent to the Offering and the other transactions consummated in connection therewith. The information contained in this report should be read in conjunction with the information contained in the Partnership’s prospectus dated October 24, 2012, as filed with the SEC on October 26, 2012 (the “Prospectus”).

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PART I — Financial Information

Item 1. Financial Statements

Lehigh Gas Partners LP

UNAUDITED CONSOLIDATED BALANCE SHEETS

As of September 30, 2012 and December 31, 2011

The accompanying notes are an integral part of these unaudited consolidated balance sheets

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Lehigh Gas Partners LP

UNAUDITED NOTES TO CONSOLIDATED BALANCE SHEETS

As of September 30, 2012

(Amounts in thousands)

1. Nature of Operations

The Partnership is a Delaware limited partnership formed in December 2011. The General Partner is a limited liability company formed in December 2011 to act as the General Partner of the Partnership.

In December 2011, LGC agreed to contribute $1,000 to the Partnership in exchange for a 100% limited partner interest. The agreement to contribute has been recorded as contributions receivable and are reflected in the accompanying consolidated balance sheets as reductions to partners’ capital.

There have been no other transactions involving the Partnership as of September 30, 2012. On the Closing Date, the Partnership received the transfer from the Selected Lehigh Gas Entities (the “Predecessor Entity”) of certain contributed assets, liabilities, operations and/or equity interests (the “Contributed Assets”).

In the Offering, the Partnership sold an aggregate of 6,900,000 Common Units. The Partnership issued Common Units and subordinated units representing limited partner interests (“Subordinated Units”)  to the shareholders (or their assigns) of the Predecessor Entity in consideration of their transfer of the Contributed Assets in connection with the Offering.

As a result of the acquisition of the Contributed Assets in connection with the Offering, the Partnership is engaged in substantially the same business and revenue generating activities as the Predecessor Entity, principally: (i) distributing motor fuels (using unrelated third-party transportation services providers)—on a wholesale basis to Sub-wholesalers, Independent Dealers, Lessee Dealers, LGO and other related entities, and others, and (ii) ownership interests in and/or leasehold ownership interests in gas stations and convenience stores (“Locations”) and, in turn, generating rental-fee income revenue from the lease or subleases of the Locations to third-party operators.

2. Basis of Presentation

Interim Financial Statements

The accompanying interim unaudited consolidated financial statements and related disclosures are unaudited and have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) on the same basis as the audited consolidated financial statements for the year ended December 31, 2011, and in the opinion of management, include all adjustments of a normal recurring nature considered necessary to present fairly the Partnership’s financial position as of September 30, 2012. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted under SEC rules and regulations for interim financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2011, which are included in the Prospectus.

3. Subsequent events

On October 24, 2012, the Partnership’s Registration Statement was declared effective by the SEC, and on October 25, 2012, the Partnership’s Common Units began trading on the New York Stock Exchange (NYSE: LGP).

On the Closing Date, the Partnership completed its Offering of 6,000,000 Common Units at a price of $20.00 per unit, and on November 9, 2012, issued an additional 900,000 Common Units at a price of $20.00 per unit pursuant to the full exercise by the Underwriters of their over-allotment option. The Partnership received net proceeds of $128.3 million from the sale, net of underwriting discounts and structuring fees (but before $6.0 million of estimated Offering expenses). Of this amount the proceeds from the over-allotment option of approximately $16.7 million were distributed to Joseph V. Topper Jr., the Chairman of the board of directors and Chief Executive Officer of the General Partner of the Partnership, and to certain of Mr. Topper’s affiliates and family trusts, and to John B. Reilly, III, a member of the board of directors of the General Partner of the Partnership.

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The net proceeds retained by the Partnership were applied or will be applied to (a) the repayment of approximately $57.8 million of indebtedness outstanding under the New Credit Facility (as defined herein), which was drawn on the Closing Date and applied on that date to the repayment in full of the indebtedness then outstanding under our Predecessor’s prior credit facility; (b) the repayment in full of $14.3 million aggregate principal amount in outstanding mortgage notes; (c) the payment of $13.0 million to entities owned by adult children of Warren S. Kimber, Jr., a director of the General Partner, as consideration for the cancellation of mandatorily redeemable preferred equity of our Predecessor owned by these entities and to pay these entities for accrued but unpaid dividends on the mandatorily redeemable preferred equity of $0.5 million; (d) the distribution of an aggregate of $20.0 million cash to certain of the Topper Group Parties (as defined herein) as reimbursement for certain capital expenditures made by the Topper Group Parties with respect to the assets they contributed, and/or consideration for the purchase of all of the assets of one or more of the entities contributed to the Partnership in connection with the Offering.

Contribution Agreement

In connection with the closing of the Offering, pursuant to an agreement with the Selected Lehigh Gas Entities, the Selected Lehigh Gas Entities contributed the Contributed Assets to the Partnership. In consideration of the Contributed Assets, the Partnership issued and/or distributed to the Selected Lehigh Gas Entities an aggregate: 625,000 Common Units, representing 8.3% of the Common Units outstanding, and 7,525,000 Subordinated Units, representing 100.0% of the Subordinated Units outstanding, which comprise in the aggregate 54.2% of the total Common Units and Subordinated Units outstanding.

Omnibus Agreement

On the Closing Date, in connection with the closing of the Offering, the Partnership entered into an Omnibus Agreement (the “Omnibus Agreement”) by and among the Partnership, the General Partner, LGC, LGO and, for limited purposes, Joseph V. Topper, Jr. Mr. Topper is the Chief Executive Officer and Chairman of the board of directors of the General Partner.

Pursuant to the Omnibus Agreement, among other things, LGC will provide the Partnership and the General Partner with management, administrative and operating services. These services include accounting, tax, corporate record keeping and communication, legal, financial reporting, internal audit support, compliance, maintenance of internal controls, environmental compliance and remediation management oversight, treasury, tax reporting, information technology and other administrative staff functions, and arrange for administration of insurance programs. As the Partnership will not have any employees, LGC will provide the Partnership with personnel necessary to carry out the services to be provided under the Omnibus Agreement and any other services necessary to operate the Partnership’s business. The Partnership does not have any obligation to compensate the officers of the General Partner or employees of LGC. The initial term of the Omnibus Agreement is four years and will automatically renew for additional one-year terms unless any party provides written notice to the other parties 180 days prior to the end of the term of the Omnibus Agreement.  The Partnership has the right to terminate the Omnibus Agreement at any time during the initial term upon 180 days’ prior written notice.

The Partnership is required to pay LGC a management fee, which is initially an amount equal to (1) $420,000 per month plus (2) $0.0025 for each gallon of motor fuel the Partnership distributes per month. In addition, and subject to certain restrictions on LGC’s ability to incur third-party fees, costs, taxes and expenses, the Partnership is required to reimburse LGC and the General Partner for all reasonable out-of-pocket third-party fees, costs, taxes and expenses incurred by LGC or the General Partner on the Partnership’s behalf in connection with providing the services required to be provided by LGC under the Omnibus Agreement.

The Partnership also received a right of first refusal on any acquisition opportunities identified by Topper, LGC, LGO or their controlled affiliates in any business primarily engaged in the wholesale motor fuel distribution or retail gas station operation businesses for so long as Topper, LGC and LGO or their controlled affiliates, individually or as part of a group, control the General Partner.

The Partnership also received a right of first offer on any assets or businesses primarily engaged in the wholesale motor fuel distribution or retail gas station operation businesses that Topper, LGC, LGO or their controlled affiliates decides to attempt to sell for so long as Topper, LGC and LGO or their controlled affiliates, individually or as part of a group, control the General Partner.

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The Omnibus Agreement also provides for certain indemnification obligations between LGC and the Partnership, which is inclusive of the environmental liabilities.

Second Amended and Restated Credit Agreement

On the Closing Date, in connection with the Offering, the Partnership entered into a Second Amended and Restated Credit Agreement among the Partnership, as borrower, and a syndicate of banks including KeyBank National Association, as Administrative Agent, as Collateral Agent, as L/C Issuer, as Joint Lead Arranger and as Joint Book Runner (the “New Credit Agreement”).

The New Credit Agreement, maturing on October 30, 2015 consists of a $249 million senior secured revolving credit facility, a swingline loan up to $7.5 million and standby letters of credit up to an aggregate of $35 million.  The revolving credit facility can be increased from time to time upon the Partnership’s written request, subject to certain conditions, up to an additional $75 million.  All obligations under the New Credit Agreement are secured by substantially all of the Partnership’s assets and substantially all of the assets of the Partnership’s subsidiaries.

Borrowings under the revolving credit facility will bear interest, at the Partnership’s option, at (1) a rate equal to the London Interbank Offered Rate (“LIBOR”), for interest periods of one, two, three or six months, plus a margin of 2.25% to 3.50% per annum, depending on the Partnership’s Combined Leverage Ratio (as defined in the New Credit Agreement) or (2) (a) a base rate equal to the greatest of, (i) the federal funds rate, plus 0.5%, (ii) LIBOR for one month interest periods, plus 1.00% per annum or (iii) the rate of interest established by Agent, from time to time, as its prime rate, plus (b) a margin of 1.25% to 2.50% per annum depending on the Partnership’s Combined Leverage Ratio. In addition, the Partnership will incur a commitment fee based on the unused portion of the revolving credit facility at a rate of 0.375% to 0.50% per annum depending on the Partnership’s Combined Leverage Ratio.

The New Credit Agreement contains two financial covenants. One requires the Partnership to maintain a Combined Leverage Ratio no greater than 4.40 to 1.00 (or 4.25 to 1.00 after December 31, 2013) measured quarterly on a trailing four quarters’ basis. The second requires the Partnership to maintain a Combined Interest Charge Coverage Ratio (as defined in the New Credit Agreement) of at least 3.00 to 1.00.

The New Credit Agreement prohibits the Partnership from making distributions to unitholders if any potential default or event of default occurs or would result from the distribution, the Partnership is not in compliance with its financial covenants or the Partnership has lost its status as a partnership for U.S. federal income tax purposes. In addition, the New Credit Agreement contains various covenants that may limit, among other things, the Partnership’s ability to grant liens; create, incur, assume or suffer to exist other indebtedness; or make any material change to the nature of the Partnership’s business, including mergers, liquidations and dissolutions; and make certain investments, acquisitions or dispositions.

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PMPA Franchise Agreement

In connection with the Offering, the Partnership, and LGO entered into a PMPA Franchise Agreement (the “Wholesale Supply Agreement”).  Pursuant to the Wholesale Supply Agreement, the Partnership will be the exclusive distributor of motor fuel to all sites operated by LGO for a period of 15 years.  The Partnership has the right to impose the brand of fuel that will be distributed to LGO under the Wholesale Supply Agreement. There are no minimum volume requirements that LGO is required to satisfy.  The Partnership will charge LGO the “dealer tank wagon” prices for each grade of product in effect at the time title to the product passes to LGO.

Long-term Incentive Plan

In connection with the Offering, the General Partner has adopted the Lehigh Gas Partners LP 2012 Incentive Award Plan (the “Plan”), a long-term incentive plan for employees, officers, consultants and directors of the General Partner and any of its affiliates, including LGC, who perform services for the Partnership which consists of restricted units, unit options, performance awards, phantom units, unit awards, unit appreciation rights, distribution equivalent rights and other unit-based awards. Various limits and restrictions are attached to these awards. The Plan will be administered by our board of directors or a committee thereof (the “Plan Administrator”). The board of directors of our General Partner has determined to grant up to 500,000 phantom units under the Plan to employees of LGC, other than the Chief Executive Officer of our General Partner, within 180 days after the closing of the Offering. The maximum number of Common Units that may be delivered with respect to awards under the Plan is 1,505,000.

The Plan Administrator may terminate or amend the Plan at any time with respect to any of our Common Units for which a grant has not yet been made. The Plan Administrator also has the right to alter or amend the Plan or any part of the Plan from time to time, including increasing the number of Common Units that may be granted, subject to unit holder approval as required by the exchange upon which our Common Units are listed at that time.

However, no change in any outstanding grant may be made that would adversely affect the rights of a participant with respect to awards granted to a participant prior to the effective date of such amendment or termination, except that the board of directors of our General Partner may amend any award to satisfy the requirements of Section 409A of the U.S. Internal Revenue Code. The Plan will expire on the tenth anniversary of its approval, when Common Units are no longer available under the Plan for grants or upon its termination by the Plan Administrator, whichever occurs first.

Underwriting Agreement

On October 24, 2012, the Partnership entered into an Underwriting Agreement (the “Underwriting Agreement”) by and among the Partnership, the General Partner, LGC, Topper, Lehigh Gas Wholesale LLC (“LG LLC”), Lehigh Gas Wholesale Services, Inc. (“LGW”), LGP Realty Holdings GP LLC (“LGP Realty GP”), LGP Realty Holdings LP (“LGP Realty” and, collectively with the Partnership, the General Partner, LGW, LG LLC, LGP Realty GP and LGP Realty, the “Partnership Parties”), LGO, Lehigh Gas Ohio II, LLC (“LGO Distributee”), Kwik Pik — Ohio Holdings, LLC (“KPO”), Kimber Petroleum Corporation (“KPC”), Kwik Pik — PA, LLC (“KPP” and, collectively with LGC, Topper, LGO, Lehigh Gas — Ohio Holdings, LLC, LGO Distributee, Energy Realty GP LLC, ERNJ, LLC, KPO, KPC and Joseph V. Topper, Jr. Family Trust (the “Topper Group Parties”) and Raymond James & Associates, Inc. (the “Representative”), as representative of the Underwriters, providing for the offer and sale by the Partnership, and the purchase by the Underwriters, of 6,000,000 Common Units at a price to the public of $20.00 per Common Unit ($18.70 per Common Unit, net of underwriting discounts, and before payment of a structuring fee). Pursuant to the Underwriting Agreement, the Partnership also granted the Underwriters an option for a period of 30 days to purchase up to an additional 900,000 Common Units on the same terms. The material terms of the Offering are described in the Prospectus.

Raymond James Bank, N.A., an affiliate of the Representative, is a lender under the New Credit Facility.

The Underwriting Agreement contains customary representations, warranties and agreements of the parties, and customary conditions to closing, obligations of the parties and termination provisions. The Partnership Parties and the Topper Group Parties, other than Topper, have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, and to contribute to payments the Underwriters may be required to make because of any of those liabilities.

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As a result of the Offering, the Partnership received proceeds (net of underwriting discounts and structuring fees, but before $6.0 million of estimated Offering expenses) from the Offering of approximately $128.3 million. Of this amount the proceeds of approximately $16.7 million related to the full exercise by the Underwriters of their over-allotment option was distributed to Joseph V. Topper, Jr., the Chairman of the board of directors and Chief Executive Officer of the General Partner of the Partnership, and to certain of Mr. Topper’s affiliates and family trusts, and to John B. Reilly, III, a member of the board of directors of the General Partner of the Partnership. As described in the Prospectus, the net proceeds from the Offering retained by the Partnership were applied on the Closing Date or will be applied to (a) the repayment of approximately $57.8 million of indebtedness outstanding under the New Credit Facility, which was drawn on the Closing Date and applied on that date to the repayment in full of the indebtedness then outstanding under our Predecessor’s prior credit facility; (b) the repayment in full of $14.3 million aggregate principal amount in outstanding mortgage notes; (c) the payment of $13.0 million to entities owned by adult children of Warren S. Kimber, Jr., a director of the General Partner, as consideration for the cancellation of mandatorily redeemable preferred equity of our Predecessor owned by these entities and to pay these entities for accrued but unpaid dividends on the mandatorily redeemable preferred equity of $0.5 million; (d) the distribution of an aggregate of $20.0 million cash to certain of the Topper Group Parties as reimbursement for certain capital expenditures made by the Topper Group Parties with respect to the assets they contributed, and/or consideration for the purchase of all of the assets of one or more of the entities contributed to the Partnership in connection with the Offering.

Offering Costs

In connection with the Offering, the Predecessor had incurred legal, accounting, and related costs, certain of  which will be reimbursed by the Partnership as a result of the consummation of the Offering. Certain of these costs have been deducted from the gross proceeds of the Offering. Offering costs have not been accrued because the Predecessor Entity did not have an obligation to reimburse its affiliates for such costs until the closing of the Offering. As of September 30, 2012, the Predecessor Entity had incurred costs in connection with the Offering of approximately $8.0 million.

Acquisitions

On November 19, 2012, the Partnership signed a long-term lease agreement with Getty Realty to lease 25 properties located in northern New Jersey.  The initial lease term is for 15 years with options for multiple renewal terms.

On November 30, 2012, the Partnership entered into an Asset Purchase Agreement (the “Initial Agreement”) with Dunmore Oil Company, Inc. and Jojo Oil Company, Inc. (together, the “Sellers”), and, for limited purposes, with Joseph Gentile, Jr., and an amendment thereto on December 4, 2012 ( together with the Initial Agreement, the “Purchase Agreement”), pursuant to which the Sellers will sell and assign to the Partnership all of the assets (the “Assets”) which are held or used by the Sellers in connection with their gasoline and diesel retail outlet business and their related convenience store business (the “Retail Business”). In connection with this transaction, the Partnership will acquire 24 motor fuel service stations, 23 of which will be fee simple interests and one of which will be a leasehold interest.

As part of transactions contemplated by the Purchase Agreement, LGO will operate the Retail Business and certain of the Assets and liabilities under the Purchase Agreement will be assigned by the Partnership to LGO. Following the consummation of the transactions contemplated by the Purchase Agreement (the “Dunmore Closing”), the Sellers will be permitted to continue to operate certain portions of its business relating to sales of heating oil, propane and unbranded motor fuels. Under the Purchase Agreement, as consideration for the Assets, the Partnership will pay $28.5 million in cash to the Sellers and $500,000 in cash to Mr. Gentile (collectively, the “Asset Purchase Price”). In addition to the Asset Purchase Price, it is contemplated that LGO will pay to the Sellers certain amounts for the Sellers’ inventory relating to the Retail Business as of the Dunmore Closing, as specified in the Purchase Agreement.

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Lehigh Gas Entities (Predecessor)

UNAUDITED CONDENSED COMBINED BALANCE SHEETS

As of September 30, 2012 and December 31, 2011

(Amounts in thousands)

The accompanying notes are an integral part of these unaudited condensed combined financial statements.

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Lehigh Gas Entities (Predecessor)

UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE (LOSS) INCOME

For the Three and Nine Months Ended September 30, 2012 and 2011

(Amounts in thousands)

The accompanying notes are an integral part of these unaudited condensed combined financial statements.

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Lehigh Gas Entities (Predecessor)

UNAUDITED CONDENSED COMBINED STATEMENTS OF OWNERS’ DEFICIT

(Amounts in thousands)

The accompanying notes are an integral part of these unaudited condensed combined financial statements.

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Lehigh Gas Entities (Predecessor)

UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2012 and 2011

(Amounts in thousands)

(Continued)

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Lehigh Gas Entities (Predecessor)

UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS (Continued)

For the Nine Months Ended September 30, 2012 and 2011

(Amounts in thousands)

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

The accompanying notes are an integral part of these unaudited condensed combined financial statements.

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Lehigh Gas Entities (Predecessor)

UNAUDITED NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2012 and 2011

(Amounts in thousands)

1. Organization and Basis of Presentation

The accompanying Predecessor Entity’s unaudited special purpose condensed combined financial statements represent the financial statement combination of certain entities under common control (LGC, Energy Realty OP LP, EROP-Ohio Holdings, LLC, Lehigh-Kimber Petroleum Corporation, Lehigh-Kimber Realty, LLC, Kwik Pik-Ohio LLC and Kwik Pik Realty-Ohio LLC

LGC, a Delaware corporation, is one of the entities that comprise the Predecessor Entity and is the entity that has been in operation and under common control for the entirety of the periods presented in the unaudited special purpose condensed combined financial statements. Accordingly, LGC is deemed to be the acquirer of the other entities included in the Predecessor Entity who were acquired during the periods presented in the unaudited special purpose condensed combined financial statements and are included in the unaudited special purpose combined financial statements. During the periods covered by the unaudited special purpose condensed combined financial statements, acquisitions have occurred of certain Locations and contractual rights to distribute motor fuels (“wholesale fuel supply agreements”) to Independent Dealers who own or lease their retail Locations from unrelated third-parties.

On the Closing Date, the Predecessor Entity Contributed Assets and certain liabilities to the Partnership. The Partnership issued Common Units and Subordinated Units to the shareholders or their assigns of the Predecessor Entity in consideration of their transfer of the Contributed Assets to the Partnership. An entity ultimately controlled by the majority shareholder of the Predecessor Entity controls the General Partner that manages the Partnership’s business. Accordingly, the accompanying unaudited special purpose condensed combined financial statements are presented in accordance with SEC requirements for predecessor financial statements. The management of the Partnership has determined the presentation of the accompanying unaudited special purpose condensed combined financial statements includes the most significant and relevant historical financial information representing the past performance of the Contributed Assets forming the Partnership and is therefore relevant financial information for its investors.

The accompanying unaudited special purpose condensed combined financial statements exclude certain affiliate entities under common control during the periods presented, including LGO and other entities owned and/or operated by the equity-holders of the Predecessor Entity. These entities’ assets, liabilities, operations and/or equity interests were not contributed to the Partnership. Additionally, certain liabilities, and certain assets and operations of the Predecessor Entity were also not contributed (“Non-Contributed Assets”) to the Partnership as they did not fit the strategic and geographic plans of the Partnership. However, the Non-Contributed Assets, liabilities and operations are not significant, and are included in the accompanying unaudited special purpose condensed combined financial statements.

The Predecessor Entity is principally engaged in the business of: (i) distributing motor fuels (using third-party transportation services providers)—on a wholesale basis to Sub-wholesalers, Independent Dealers, Lessee Dealers, LGO and other related entities, and others, and (ii) ownership or lease of Locations and, in turn, generating rental-fee income revenue from Lessee Dealers. As a result of acquiring the Contributed Assets in connection with the Offering, the Partnership is engaged in substantially the same business and revenue generating activities as the Predecessor Entity.

The accompanying unaudited special purpose condensed combined financial statements include the accounts of the Predecessor Entity. All significant intercompany balances and transactions have been eliminated in combination. The historical cost-based accounts of the Predecessor Entity, including revenues for rental income and contra-expense amounts for management fees, have been charged to other affiliated entities outside of the Predecessor Entity. Management has determined that the method of expense allocation used is reasonable and that these charges are reasonable. However, because of certain related-party relationships and transactions (Note 13), these unaudited special purpose condensed combined financial statements may not necessarily be indicative of the conditions that could have existed or results of operations that could have occurred if the Predecessor Entity had entered into similar arrangements with non-affiliated entities.

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Interim Financial Statements

The accompanying interim unaudited special purpose condensed combined financial statements and related disclosures are unaudited and have been prepared in accordance with GAAP on the same basis as the audited special purpose combined financial statements for the year ended December 31, 2011 and, in the opinion of management, include all adjustments of a normal recurring nature considered necessary to present fairly the Predecessor Entity’s financial position as of September 30, 2012, and the results of its operations, and cash flows for the periods presented. Operating results for the three and nine months ended September 30, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, 2012, or any other future periods. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted under the SEC’s rules and regulations for interim financial statements. These unaudited special purpose condensed combined financial statements should be read in conjunction with the audited special purpose combined financial statements and accompanying notes for the year ended December 31, 2011, included in the Registration Statement.

Significant Accounting Policies

The Predecessor Entity’s significant accounting policies are disclosed in the audited special purpose combined financial statements for the year ended December 31, 2011, included in the Registration Statement.  Since the date of those financial statements, there have been no changes to the Predecessor Entity’s significant accounting policies.

Reclassification

Certain items in the December 31, 2011, Predecessor Entity’s unaudited special purpose condensed combined financial statements have been reclassified to conform to the September 30, 2012, presentation.  Such reclassifications had no effect on previously reported 2011 net income or combined owners’ deficit at December 31, 2011.

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Revenue Recognition

Revenues from wholesale fuel sales are recognized when fuel is delivered to the customer. Rental income is recognized on a straight-line basis over the term of the lease. Retail merchandise sales are recognized net of applicable provisions for discounts and allowances upon delivery, generally at the point of sale.

The amounts recorded for bad debts are generally based upon a specific analysis of aged accounts while also factoring in any new business conditions that might impact the historical analysis, such as market conditions and bankruptcies of particular customers. Bad debt provisions are included in selling, general and administrative expenses. The following table presents the Predecessor Entity’s products as a percentage of total sales for the three and nine months ended September 30:

Cost of Sales

The Predecessor Entity includes in cost of sales all costs incurred to acquire wholesale fuel, including the costs of purchasing and transporting inventory prior to delivery to our wholesale customers. Cost of sales does not include any depreciation of our property, plant and equipment. Depreciation is separately classified in the Predecessor Entity’s unaudited special purpose condensed combined statements of operations. Total cost of sales of suppliers who accounted for 10% or more of the Predecessor Entity’s total combined cost of sales during the three and nine months ended September 30:

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Recent Accounting Pronouncements

In December 2011, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” (“ASU 2011-12”). In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”). Both ASU’s are effective for interim reporting periods beginning after December 15, 2011. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in equity. In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive income or separately in consecutive statements of income and comprehensive income. ASU 2011-12 defers the changes in ASU 2011-05 that pertain to how, when and where reclassification adjustments are presented. The Predecessor Entity adopted this guidance as of January 1, 2012, retrospectively for the all periods presented. The adoption of this ASU did not have a material impact on the unaudited special purpose condensed combined financial statements.

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS” (“ASU 2011-04”). ASU 2011-04 provides a consistent definition of fair value to ensure that the fair value measurement and disclosure requirements are similar between GAAP and International Financial Reporting Standards (“IFRS”). This ASU changes certain fair value measurement principles and enhances the disclosure requirements and is effective for interim and annual periods beginning after December 15, 2011, and should be applied prospectively. The Predecessor Entity adopted this guidance as of January 1, 2012. The adoption of this ASU did not have a material impact on the unaudited special purpose condensed combined financial statements.

In July 2012, the FASB issued ASU 2012-02, “Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” (“ASU 2012-02”) on impairment testing for indefinite-lived intangible assets. ASU 2012-02 amends FASB Codification Topic 350, Intangibles-Goodwill and Other to allow, but not require, an entity, when performing its annual or more frequent indefinite-lived intangible asset impairment test, to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The Predecessor Entity is currently evaluating ASU 2012-02. The adoption of this ASU is not expected to have a significant impact on the Predecessor Entity’s unaudited special purpose condensed combined financial statements.

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2. Acquisitions

In evaluating potential acquisition candidates, the Predecessor Entity considers a number of factors, including strategic fit, desirability of location, purchase price, and the Predecessor Entity’s ability to improve the productivity and profitability of a location and/or wholesale supply agreement through the implementation of the Predecessor Entity’s operating strategy. The ability to create accretive financial results and/or operational efficiencies due to the relative operational scale and/or geographic concentration, among other strategic factors, may result in a purchase price in excess of the fair value of identifiable assets acquired and liabilities assumed, resulting in the recognition of goodwill. The Predecessor Entity strives to make its acquisitions accretive to owners’ equity and provide a reasonable long-term return on investment. Goodwill recorded in connection with the acquisitions is primarily attributable to the assembled workforce of the acquired businesses and the synergies expected to arise after the Predecessor Entity’s acquisitions of those businesses.

The Predecessor Entity concluded that the historical balance sheet and operating information concerning the acquisitions discussed below, would not be meaningful to investors of the Partnership because, among other reasons, the Predecessor Entity changed fundamentally the nature of the revenue producing assets acquired from the manner in which they were used by their respective sellers. Thus, presenting historical financial information regarding the acquisitions would mislead investors in the Partnership. Moreover, the sellers were unwilling to provide complete financial information for the acquisitions for periods prior to the closing date of the acquisition and, accordingly, the preparation of historical financial information is impracticable.

Shell Retail Gas Stations and Wholesale Fuel Supply Agreement Acquisition

The Predecessor Entity acquired from Motiva Enterprises, LLC (“Motiva”), an unrelated third-party, a total of 26 Shell Oil Company (“Shell”) branded gas stations and convenience stores (“Shell Locations”) located in the State of New Jersey under the terms of an Asset Purchase and Sale Agreement (the “Motiva Asset Agreement”) and also acquired 56 wholesale fuel supply agreements under the terms of an Agreement to Assign Retailer Instruments with Reversionary Rights (the “Motiva Assignment Agreement”). Taken together, the Motiva Asset Agreement and the Motiva Assignment Agreement are collectively referred to herein as the “Motiva Transaction”. The Motiva Transaction was accounted for as a business combination, in accordance with the guidance under Accounting Standards Codification 805, Business Combinations, for accounting purposes.

The Motiva Transaction acquisition closing dates were in May 2011 with respect to the acquisition of 14 Shell Locations and the wholesale fuel sale supply agreements and in August 2011 for the remaining 12 Shell Locations. The Predecessor Entity acquired fee simple interest in 21 of the Shell Locations and leasehold interests in the other 5 of the Shell Locations, with all of the Shell Locations considered company owned and independent dealer operated on the acquisition closing dates. The Motiva Transaction is expected to enhance the Predecessor Entity’s presence in the New Jersey marketplace by increasing market share, expanding and enhancing the geographical distribution of operations, and further increasing the wholesale supply business.

The Motiva Transaction aggregate purchase price consideration was $30,414 of cash consideration, funded with proceeds of $20,337 of borrowings under a credit agreement and the remaining balance from available cash-on-hand.

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The following table summarizes the fair values of the assets acquired and liabilities assumed:

The fair value of land, buildings, and equipment was determined using a cost approach, with the fair value of an asset estimated by reference to the replacement cost to obtain a substitute asset of comparable features and functionality, and is the amount a willing market participant would pay for such an asset, taking into consideration the asset condition as well as any physical deterioration, functional obsolescence, and/or economic obsolescence. The buildings and equipment are being depreciated on a straight-line basis, with estimated useful life of 20 years for buildings and 3 to 10 years for equipment. Land is not depreciated.

The fair value of the wholesale fuel supply agreements was determined using an income approach, with the fair value estimated to be the present value of incremental after-tax cash flows attributable solely to the wholesale fuel supply agreements over their estimated remaining useful life, using probability- weighted cash flows, generally assumed to extend through the term of the wholesale fuel supply contracts, and using discount rates considered appropriate given the inherent risks associated with this type of agreement. The Predecessor Entity believes the level and timing of cash flows represent relevant market participant assumptions. The wholesale fuel supply agreements are being amortized on a proportional basis corresponding to the average attrition rate of the wholesale fuel supply agreements over an estimated weighted average useful life of approximately 10 years.

Under the terms of a separate brand fee agreement with Shell Oil Company, the Predecessor Entity is entitled to operate the Shell Locations’ acquired in the Motiva Transaction under the Shell-branded trade name and related trade logos.

Other

During 2011 and 2012, as part of the Predecessor Entity’s effort to increase market share, expand and enhance the geographical distributions and further increase the wholesale supply business, the Predecessor Entity acquired 4 and 1 location(s), respectively, which individually and in the aggregate represented immaterial acquisitions for the periods presented.

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3. Discontinued Operations and Assets Held for Sale

Discontinued Operations

As part of certain sale transactions, the Predecessor Entity may continue to distribute motor fuels on a wholesale basis to a divested site. In addition, the Predecessor Entity has the right to monitor and, if necessary, impose conditions on the operations of a divested site to ensure that the purchaser is complying with the terms and conditions of the franchise agreement covering such site. Accordingly, the Predecessor Entity has the ability to exert significant influence over the divested site, and thus the Predecessor Entity has significant continuing involvement and the divested sites are not deemed to be discontinued operations. The Predecessor Entity classifies Locations as discontinued when operations and cash flows will be eliminated from the ongoing operations and the Predecessor Entity will not retain any significant continuing involvement in the operations after the respective sale transactions. For all periods presented, all of the operating results for these discontinued operations were removed from continuing operations and were presented separately as discontinued operations in the unaudited special purpose condensed combined statements of operations. The notes to the unaudited special purpose condensed combined financial statements were adjusted to exclude discontinued operations unless otherwise noted. The following operating results of the Locations are included in discontinued operations for the three and nine months ended September 30:

Discontinued operations have not been segregated in the unaudited special purpose condensed combined statements of cash flows.

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Assets of Operations Held for Sale

In addition to the discontinued operations disclosed above, the Predecessor Entity has classified 17 and two Locations as of September 30, 2012, and December 31, 2011, respectively, as held-for-sale. In connection with the classification as held-for-sale, the Predecessor Entity recognized a loss of $269 for the nine month period ended September 30, 2012, and this amount has been included in depreciation and amortization expense. The loss represents the impairment recognized to present value the held-for-sale Locations at the lower of cost or fair value, less costs to sell. The fair values, less costs to sell were determined based on negotiated amounts with unrelated third parties. No impairment was recognized to present the 2 Locations at the lower of cost or fair value at December 31, 2011. The Predecessor Entity expects to complete the sale of these Locations within the next twelve months. The losses, including the direct costs to transact a sale, for the held-for-sale Locations could differ from the ultimate sales price due to the fluidity of the negotiations, price volatility, changing interest rates, and future economic conditions.

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4. Inventory

Inventory consisted of the following at September 30, 2012 and December 31, 2011:

Inventory amounts in the table above are shown net of obsolescence. Our reserve for obsolescence is not material to the unaudited special purpose condensed combined balance sheets for any of the periods presented.  Effective July 1, 2012, all inventory was transferred to LGO, an affiliated entity that is not being contributed to the Partnership.

5. Property and Equipment, net

Property and equipment, net consisted of the following at September 30, 2012 and December 31, 2011:

Depreciation expense was approximately $3,164 and $2,416 for the three months ended September 30, 2012 and 2011, respectively, and approximately $10,211 and $6,867 for the nine months ended September 30, 2012 and 2011, respectively.

6. Goodwill and Intangible Assets

Intangible assets consist of the following:

The aggregate amortization expense was approximately $360 and $689 for the three months ended September 30, 2012, and 2011, respectively, and approximately $1,741 and $1,674 for the nine months ended September 30, 2012 and 2011, respectively.

Goodwill was $4,487 as of September 31, 2012 and December 31, 2011.

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7. Debt

Revolving Term Loan

On December 30, 2010, the Predecessor Entity entered into a $175,000 revolving term loan credit facility with a syndicate of lenders. The term loan portion of $135,000 is payable in quarterly principal amounts of $1,600, which payments commenced on September 30, 2011. The revolving facility had a borrowing capacity of $40,000 of which $15,000 may be drawn upon for operating purposes, $5,000 may be used for short term advances and $20,000 may be used to issue letters of credit. The Predecessor Entity is subject to an initial fee of 25 basis points of the stated amount for any letters of credit issued. The Predecessor Entity had approximately $19,150 and $11,200 in outstanding letters of credit as of September 30, 2012 and December 31, 2011, respectively.

Both the term and revolving portions of the credit facility mature on December 30, 2015. Pursuant to the terms of the credit facility, the Predecessor Entity may increase its borrowing capacity by $75,000 for acquisition related purposes. During 2011, the Predecessor Entity increased the borrowing capacity under its term loan by $20,000 in connection with the Shell acquisition as discussed in Note 2.

In February 2012, the Predecessor Entity increased the borrowing capacity of the revolving facility by $8,000 in order to pay off the Term Loan (as defined herein) discussed below. The initial proceeds used under the revolving term facility were used to refinance several credit facilities held by the Predecessor Entity. After these amendments, the term loan portion of the facility is $155,000 and the borrowing capacity of the revolving credit facility is $48,000. In addition, the quarterly principal amounts increased to $2,600. Borrowings under the revolving term loan credit facility bear interest at a floating rate which, at the Predecessor Entity’s option, may be determined by reference to a LIBOR rate or a base rate plus an applicable margin ranging from 1.25% to 3.00%. Short term advances bear interest at a base rate plus an applicable margin. The Predecessor Entity’s applicable margin is determined by certain combined leverage ratios at the time of borrowing as set forth in the credit agreement. The Predecessor Entity is subject to a commitment fee of 50 basis points for any excess borrowing capacity over the outstanding principal borrowings under the revolver portion of the credit facility. As of September 30, 2012 and December 31, 2011, the credit facility had an interest rate of 3.3% and 3.4%, respectively. Interest incurred for the three months ended September 30, 2012 and 2011 was approximately $1,555 and $1,291, respectively. Interest incurred for the nine months ended September 30, 2012 and 2011 was approximately $4,562 and $3,801, respectively.

In connection with obtaining the revolving term loan credit facility, the Predecessor Entity paid $4,226 in fees to the lenders and to third parties. In connection with the February 2012 amendment to the revolving portion of the facility, the Predecessor Entity paid $117 in lender fees.

Financing fees of $2,580 and $1,763 were recorded as discount to the carrying value of the debt and deferred financing fees, respectively. The debt discount and deferred financing fees are being amortized into interest expense over the terms of the related debt. Amortization of the debt discount and deferred financing fees were $323 and $212 for the three months ended September 30, 2012 and 2011, respectively and $1,057 and $725 for the nine months ended September 30, 2012 and 2011, respectively.

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Lehigh Gas Entities (Predecessor)

NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2012 and 2011

(Amounts in thousands)

The revolving term loan credit facility is secured by liens and security interests with first priority security interest in the Predecessor Entity’s assets, including its properties. All borrowers are jointly and severally liability for obligations under the facility. LGO, a related party, is a borrower under the revolving term loan facility. The revolving term loan facility contains covenants that, subject to specified exceptions, restrict the Predecessor Entity’s ability to, among other things, incur additional indebtedness, incur liens, liquidate or dissolve, sell, transfer, lease or dispose of assets, or make loans, investments or guarantees. The revolving term loan facility includes a number of affirmative and negative covenants, which could restrict the Predecessor Entity’s operations. If the Predecessor Entity were to be in default the lenders could accelerate the Predecessor Entity’s obligation to pay all outstanding amounts. The Predecessor Entity is subject to various financial covenant restrictions under the revolving term loan facility. In September 2012, the Predecessor Entity entered into an amendment to change certain financial covenants as of June 30, 2012 and through December 31, 2015 and each fiscal quarter thereafter.

As of the Closing Date, the Predecessor had $165 million outstanding under its Revolving Term Loan Credit Facility (the “Original Facility”) with a scheduled December 2015 maturity date.  On the Closing Date, the Partnership entered into the $249 million New Credit Agreement, which superseded and replaced the Original Facility. Upon closing of the New Credit Agreement, $165 million was drawn and subsequently applied on that date to the repayment, in full, of the indebtedness then outstanding under the Original Facility.

In addition, a portion of the Offering proceeds were applied to the repayment of approximately $57.8 million of indebtedness outstanding under the New Credit Agreement.  Accordingly, as of the Closing Date, the outstanding balance of the New Credit Agreement was $111.8 million.  The $57.8 million pay-down was done at the discretion of the Partnership and was not contractually required under the terms and conditions of the New Credit Agreement.

The Original Facility included a number of affirmative and negative financial covenants.  Had the Original Facility not been paid off in connection with the Offering, and not been replaced with the New Credit Agreement, the Predecessor Entity would have needed to determine its compliance with such financial covenants as of September 30, 2012. The Predecessor Entity would not have been in compliance with certain of these financial covenants.  In the event of this non-compliance, the lenders would have had the right to potentially demand repayment of the entire outstanding balance under the Original Facility.  However, the Original Facility lenders waived this right in connection with the execution of the New Credit Agreement.

As a result of the Original Facility lender’s waiver, the execution of the New Credit Agreement, and the expected probable compliance with new covenant compliance requirements contained in the New Credit Agreement, the Predecessor Entity has classified the Original Facility’s outstanding balance as long term in the accompanying unaudited special purpose condensed combined balance sheet as of September 30, 2012.

Term Loan

On December 30, 2009 in connection with the acquisition of Uni-Mart, the Predecessor Entity issued a promissory note. The Predecessor Entity made monthly installment payments of $53, which included components of principal and interest up to the December 30, 2014 maturity date of the term loan. Borrowings under the term loan facility bore interest at a floating rate, which were determined by reference to a base rate plus an applicable margin of 2.0%. As of December 31, 2011, the term loan had an interest rate of 5.25%. In February 2012, this term loan was paid in its entirety. Interest incurred for the three months ended September 30, 2012 and 2011 was $-0- and $87, respectively. Interest incurred for the nine months ended September 30, 2012 and 2011 was $44 and $268, respectively.

In connection with obtaining the term loan, the Predecessor Entity paid $101 in lender fees and recorded as discount to the carrying value of the debt. The debt discount was being amortized into interest expense over the term of the related debt. Upon paying the term loan in its entirety in February 2012, the unamortized portion of the discount was immediately expensed. Amortization of the debt discount was $0 and $6 for the three months ended September 30, 2012 and 2011, respectively and $52 and $17 for the nine months ended September 30, 2012 and 2011, respectively.

Mortgage Notes

In June and December of 2008, the Predecessor Entity entered into several mortgage notes with two lenders for an aggregate initial borrowing amount of $23,586. Pursuant to the terms of the mortgage notes, the Predecessor Entity makes monthly installment payments that are comprised of principal and interest through maturity dates of June 23, 2023 and December 23, 2023. Since the initial borrowing the Predecessor Entity has made additional principal payments. The balance outstanding at September 30, 2012 and December 31, 2011 is $13,950 and $15,128, respectively. The mortgage notes bear interest at a floating rate which may be determined by reference to an index rate plus an applicable margin not to exceed 5.0%. As of September 30, 2012 and December 31, 2011, the weighted average interest rate was 4.0% for both periods. Interest expense for the three months ended September 30, 2012 and 2011 was approximately $147 and $148, respectively. Interest expense for the nine months ended September 30, 2012 and 2011 was approximately $445 and $481, respectively. The mortgage notes are secured by a first priority security interest in certain properties of the Predecessor Entity. The mortgage notes contain a number of affirmative and negative covenants. The Predecessor Entity is also required to comply with certain financial covenants. In May 2012, the Predecessor Entity obtained a waiver to cure its violation of certain financial covenants as of December 31, 2011. In connection with obtaining the mortgage notes, the Predecessor Entity incurred $245 in related expenses that were recorded as deferred financing fees. The deferred financing fees are being amortized into interest expense over the terms of the related debt. Amortization of deferred financing for each of the three months ended September 30, 2012 and 2011 was $4 and $3, respectively. Amortization of deferred financing for the nine months ended September 30, 2012 and 2011 was $12 and $38, respectively.

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8. Getty Operating Leases and Capital Lease Obligation

In May 2012, the Predecessor Entity entered into a 15-year master lease agreement with renewal options of up to an additional 20 years. The Predecessor Entity agreed to lease buildings, improvements, equipment and real property located at 105 gas stations in the states of Massachusetts, New Hampshire and Maine. The Predecessor Entity will pay a maximum fixed annual rent of approximately $5,400 per year with rent escalators of 1.5% per year. In addition to this fixed annual rent, the Predecessor Entity will also pay, as additional rent, an amount equal to two cents per gallon of gasoline or other fuel delivered to the Locations during the lease term. During the initial 3-years of the lease, the Predecessor Entity is required to make capital expenditures to the Locations of at least $4,280 plus one cent per each gallon of gasoline sold at these Locations during the initial 3-year period. However, the Predecessor Entity is entitled to a rent credit equal to 50% of the capital expenditures up to a maximum of $2,140. This lease does not transfer ownership of the sites to the Predecessor Entity or contain a bargain purchase option, and the fair value of the land at the inception date has been estimated to represent 25% or more of the total fair value of the real property subject to the lease, the Predecessor Entity has considered the land, and the building and equipment components separately when making the 75% of economic life and 90% of fair value tests for the building and equipment. The Predecessor Entity has determined that the building and equipment components of the lease meet the criteria for classification as a capital lease and the land element has been classified as an operating lease. The annual minimum lease payments applicable to the land component were determined by multiplying the fair value of the land by the Predecessor Entity’s incremental borrowing rate. The balance of the minimum lease payments has been attributed to the building and equipment component.

The future minimum rent allocated to the land element of the Getty lease and classified as an operating lease is as follows as of September 30, 2012:

The total future minimum rent as presented does not include amounts that may be payable as additional rent as noted above.

The future minimum payments under this Getty capital lease obligation as of September 30, 2012 are as follows:

The aggregate interest expense recognized on the Getty capital lease obligations was $313 and $417 for the three and nine months ended September 30, 2012.

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Also, in May 2012, the Predecessor Entity entered into a 5-year unitary net lease and sublease agreement with renewal options of up to an additional 20 years. The Predecessor Entity agreed to lease buildings, improvements, equipment and real property located at 15 gas stations in the state of Pennsylvania. The Predecessor Entity will pay fixed annual rent of approximately $300 per year and such rent shall increase by 1.5% per year.

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9. Fair Value Measurements

The Predecessor Entity measures and reports certain financial and non-financial assets and liabilities on a fair value basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. The following is a description of the three hierarchy levels.

Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfer occurred. There were no significant transfers between any levels during the nine months ended September 30, 2012 or 2011.

Following are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation models, key inputs to those models and significant assumptions utilized.

Derivative instruments—The Predecessor Entity may enter into derivative contracts, such as interest rate swaps, as part of their overall risk management strategies. The majority of the Predecessor Entity’s derivatives outstanding are reported at fair value based upon market quotes that are deemed to be observable inputs in an active market for similar assets and liabilities and are considered Level 2 inputs for purposes of fair value disclosures. The Predecessor Entity has not changed its valuation techniques or inputs during the nine months ended September 30, 2012. At September 30, 2012 and December 31, 2011 the fair value of these derivative instruments was approximately $146 and $498, respectively, which were included in other liabilities in the unaudited special purpose condensed combined balance sheet.

For assets and liabilities measured on a non-recurring basis during the year, accounting guidance requires quantitative disclosures about the fair value measurements separately for each major category. See Note 2. Acquisitions for acquired assets and liabilities measured on a non-recurring basis for the nine months ended September 30, 2012. There were no other remeasured assets or liabilities at fair value on a non-recurring basis during the nine months ended September 30, 2012.

Financial Instruments

The fair value of the Predecessor Entity’s financial instruments consisting of accounts receivable, accounts payable and debt approximated their carrying value as of September 30, 2012 and December 31, 2011.

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10. Environmental Liabilities

The Predecessor Entity currently owns or leases properties where refined petroleum products are being or have been handled. These properties and the refined petroleum products handled thereon may be subject to federal and state environmental laws and regulations. Under such laws and regulations, the Predecessor Entity could be required to remove or remediate containerized hazardous liquids or associated generated wastes (including wastes disposed of or abandoned by prior owners or operators), to clean up contaminated property arising from the release of liquids or wastes into the environment, including contaminated groundwater, or to implement best management practices to prevent future contamination.

The Predecessor Entity maintains insurance of various types with varying levels of coverage that it considers adequate under the circumstances to cover its operations and properties. The insurance policies are subject to deductibles that the Predecessor Entity considers reasonable and not excessive. In addition, the Predecessor Entity has entered into indemnification and escrow agreements with various sellers in conjunction with several of its acquisitions. Allocation of environmental liability is an issue negotiated in connection with each of the Predecessor Entity’s acquisition transactions. In each case, the Predecessor Entity makes an assessment of potential environmental liability exposure based on available information. Based on that assessment and relevant economic and risk factors, the Predecessor Entity determines whether to, and the extent to which it will, assume liability for existing environmental conditions.

The following table presents a summary roll forward of the Predecessor Entity’s environmental liabilities, on an undiscounted basis, at September 30, 2012:

The Predecessor Entity’s estimates used in these reserves are based on all known facts at the time and its assessment of the ultimate remedial action outcomes. The Predecessor Entity will adjust loss accruals as further information becomes available or circumstances change. Among the many uncertainties that impact the Predecessor Entity’s estimates are the necessary regulatory approvals for, and potential modification of, its remediation plans, the amount of data available upon initial assessment of the impact of soil or water contamination, changes in costs associated with environmental remediation services and equipment and the possibility of existing legal claims giving rise to additional claims. Therefore, although the Predecessor Entity believes that these reserves are adequate, no assurances can be made that any costs incurred in excess of these reserves or outside of indemnifications or not otherwise covered by insurance would not have a material adverse effect on the Predecessor Entity’s financial condition, results of operations or cash flows. The Predecessor Entity utilizes the services of an environmental remediation firm and advances of $3,500 and $3,105 at September 30, 2012 and December 31, 2011, respectively, were included in other current assets in the unaudited special purpose condensed combined balance sheets.

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A significant portion of the environmental reserves above has a corresponding indemnification asset recorded in the accompanying unaudited special purpose condensed combined balance sheets. These indemnification assets consist primarily of third-party escrowed funds, state funds and insurance coverage. The breakdown of the indemnification assets is as follows at September 30, 2012 and December 31, 2011:

State funds represent probable state reimbursement amounts that would be payable to the Predecessor Entity under state funds. Reimbursement will depend upon the continued maintenance and solvency of the state. Insurance coverage represents amounts deemed probable of reimbursement under insurance policies.

11. Commitments and Contingencies

Legal Actions

In the normal course of business, the Predecessor Entity has and may become involved in legal actions relating to the ownership and operation of their properties and business. No provision has been made as management concluded that losses from outstanding legal actions are not reasonably probable. In management’s opinion, the resolutions of any such pending legal actions are not expected to have a material adverse effect on its unaudited special purpose condensed combined financial position, results of operations and cash flows. The Predecessor Entity maintains liability insurance on certain aspects of its businesses in amounts deemed adequate by management. However, the Predecessor Entity can provide no assurance that this insurance will be adequate to protect them from all material expenses related to potential future claims or these levels of insurance will be available in the future at economically acceptable prices.

12. Fuels Taxes Payable and Accrued Expenses and Other Current Liabilities

Fuels Taxes Payable

The motor fuels taxes collected on-behalf-of state, local and federal authorities are excluded from revenues and cost of goods sold. As of September 30, 2012 and December 31, 2011, the fuels taxes payable represent amounts due to various state, local and federal taxing authorities.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following at: