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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Andeavor Logistics LP | NYSE:ANDX | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 32.17 | 0 | 01:00:00 |
|
☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Commission File Number
|
001-35143
|
Delaware
|
|
27-4151603
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
|
incorporation or organization)
|
Identification No.)
|
|
|
|
Title of Each Class
|
Trading Symbol
|
Name of Each Exchange on Which Registered
|
Common Units Representing Limited Partnership Interests
|
-
|
NONE
|
|
Large Accelerated Filer
|
☑
|
|
Accelerated Filer
|
☐
|
|
|
Non-Accelerated Filer
|
☐
|
|
Smaller Reporting Company
|
☐
|
|
|
|
|
|
Emerging Growth Company
|
☐
|
|
|
Table of Contents
|
2
|
|
|
|
|
|
|
Financial Statements
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018 (a)
|
||||||||
|
(In millions, except per unit amounts)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Affiliate
|
$
|
424
|
|
|
$
|
389
|
|
|
$
|
868
|
|
|
$
|
716
|
|
Third-party
|
177
|
|
|
180
|
|
|
363
|
|
|
399
|
|
||||
Total Revenues
|
601
|
|
|
569
|
|
|
1,231
|
|
|
1,115
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
||||||||
NGL expense (excluding items shown separately below)
|
33
|
|
|
45
|
|
|
92
|
|
|
93
|
|
||||
Operating expenses (excluding depreciation and amortization)
|
237
|
|
|
221
|
|
|
476
|
|
|
422
|
|
||||
Depreciation and amortization expenses
|
104
|
|
|
93
|
|
|
205
|
|
|
182
|
|
||||
General and administrative expenses
|
18
|
|
|
29
|
|
|
38
|
|
|
60
|
|
||||
Loss on asset disposals and impairments
|
2
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Operating Income
|
207
|
|
|
180
|
|
|
418
|
|
|
357
|
|
||||
Interest and financing costs, net
|
(63
|
)
|
|
(60
|
)
|
|
(124
|
)
|
|
(115
|
)
|
||||
Equity in earnings of equity method investments
|
9
|
|
|
10
|
|
|
16
|
|
|
18
|
|
||||
Other income, net
|
7
|
|
|
2
|
|
|
7
|
|
|
3
|
|
||||
Net Earnings
|
$
|
160
|
|
|
$
|
132
|
|
|
$
|
317
|
|
|
$
|
263
|
|
|
|
|
|
|
|
|
|
||||||||
Loss attributable to Predecessors
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
24
|
|
Net Earnings Attributable to Partners
|
160
|
|
|
148
|
|
|
317
|
|
|
287
|
|
||||
Preferred unitholders’ interest in net earnings
|
(10
|
)
|
|
(10
|
)
|
|
(20
|
)
|
|
(24
|
)
|
||||
Limited Partners’ Interest in Net Earnings
|
$
|
150
|
|
|
$
|
138
|
|
|
$
|
297
|
|
|
$
|
263
|
|
|
|
|
|
|
|
|
|
||||||||
Net earnings per limited partner unit:
|
|
|
|
|
|
|
|
||||||||
Common - basic
|
$
|
0.65
|
|
|
$
|
0.63
|
|
|
$
|
1.29
|
|
|
$
|
1.23
|
|
Common - diluted
|
$
|
0.65
|
|
|
$
|
0.63
|
|
|
$
|
1.29
|
|
|
$
|
1.23
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average limited partner units outstanding:
|
|
|
|
|
|
|
|
||||||||
Common units - basic
|
245.6
|
|
|
217.2
|
|
|
245.6
|
|
|
217.2
|
|
||||
Common units - diluted
|
245.7
|
|
|
217.3
|
|
|
245.7
|
|
|
217.3
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
|
|
June 30, 2019
|
3
|
Financial Statements
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
(In millions, except unit amounts)
|
||||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
25
|
|
|
$
|
10
|
|
Receivables, net of allowance for doubtful accounts
|
|
|
|
||||
Trade and other
|
202
|
|
|
195
|
|
||
Affiliate
|
323
|
|
|
279
|
|
||
Prepayments and other current assets
|
65
|
|
|
79
|
|
||
Total Current Assets
|
615
|
|
|
563
|
|
||
Property, Plant and Equipment, Net
|
|
|
|
||||
Property, plant and equipment, at cost
|
8,409
|
|
|
8,145
|
|
||
Accumulated depreciation
|
(1,480
|
)
|
|
(1,300
|
)
|
||
Property, Plant and Equipment, Net
|
6,929
|
|
|
6,845
|
|
||
Acquired Intangibles, Net
|
1,079
|
|
|
1,104
|
|
||
Goodwill
|
1,051
|
|
|
1,051
|
|
||
Equity Method Investments
|
605
|
|
|
602
|
|
||
Other Noncurrent Assets, Net
|
271
|
|
|
130
|
|
||
Total Assets
|
$
|
10,550
|
|
|
$
|
10,295
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Accounts payable
|
|
|
|
||||
Trade and other
|
$
|
196
|
|
|
$
|
214
|
|
Affiliate
|
277
|
|
|
252
|
|
||
Accrued interest and financing costs
|
41
|
|
|
41
|
|
||
Current maturities of debt
|
503
|
|
|
504
|
|
||
Other current liabilities
|
93
|
|
|
81
|
|
||
Total Current Liabilities
|
1,110
|
|
|
1,092
|
|
||
Debt, Net of Unamortized Issuance Costs
|
4,720
|
|
|
4,460
|
|
||
Other Noncurrent Liabilities
|
186
|
|
|
69
|
|
||
Total Liabilities
|
6,016
|
|
|
5,621
|
|
||
Commitments and Contingencies (Note 6)
|
|
|
|
|
|
||
Equity
|
|
|
|
||||
Preferred unitholders;
600,000
units issued and outstanding in 2019 and 2018
|
603
|
|
|
604
|
|
||
Common unitholders;
245,630,444
units issued and outstanding (245,493,184 in 2018)
|
3,931
|
|
|
4,070
|
|
||
Total Equity
|
4,534
|
|
|
4,674
|
|
||
Total Liabilities and Equity
|
$
|
10,550
|
|
|
$
|
10,295
|
|
4
|
|
|
|
|
|
|
Financial Statements
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018 (a)
|
||||
|
(In millions)
|
||||||
Cash Flows From (Used In) Operating Activities:
|
|
|
|
||||
Net earnings
|
$
|
317
|
|
|
$
|
263
|
|
Adjustments to reconcile net earnings to net cash from operating activities:
|
|
|
|
||||
Depreciation and amortization expenses
|
205
|
|
|
182
|
|
||
Loss on asset disposals and impairments
|
2
|
|
|
1
|
|
||
Other operating activities
|
18
|
|
|
12
|
|
||
Changes in current assets and liabilities
|
(45
|
)
|
|
100
|
|
||
Changes in noncurrent assets and liabilities
|
(14
|
)
|
|
(11
|
)
|
||
Net cash from operating activities
|
483
|
|
|
547
|
|
||
Cash Flows Used In Investing Activities:
|
|
|
|
||||
Capital expenditures
|
(252
|
)
|
|
(370
|
)
|
||
Acquisitions, net of cash
|
—
|
|
|
(378
|
)
|
||
Contributions to equity method investments
|
(13
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(265
|
)
|
|
(748
|
)
|
||
Cash Flows From (Used In) Financing Activities:
|
|
|
|
||||
Borrowings under revolving credit agreements
|
1,631
|
|
|
520
|
|
||
Repayments under revolving credit agreements
|
(1,376
|
)
|
|
(278
|
)
|
||
Distributions to common unitholders
|
(480
|
)
|
|
(411
|
)
|
||
Distributions to preferred unitholders
|
(21
|
)
|
|
(8
|
)
|
||
Sponsor contributions of equity to the Predecessors
|
—
|
|
|
336
|
|
||
Capital contributions by affiliate
|
45
|
|
|
14
|
|
||
Other financing activities
|
(2
|
)
|
|
(3
|
)
|
||
Net cash (used in) from financing activities
|
(203
|
)
|
|
170
|
|
||
Increase (Decrease) in Cash and Cash Equivalents
|
15
|
|
|
(31
|
)
|
||
Cash and Cash Equivalents, Beginning of Period
|
10
|
|
|
75
|
|
||
Cash and Cash Equivalents, End of Period
|
$
|
25
|
|
|
$
|
44
|
|
|
|
June 30, 2019
|
5
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
6
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
|
June 30, 2019
|
7
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
8
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
Combined
|
|
Andeavor Logistics
|
|
Predecessors
|
|
Combined
|
|
Andeavor Logistics
|
|
Predecessors
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Affiliate
|
$
|
389
|
|
|
$
|
381
|
|
|
$
|
8
|
|
|
$
|
716
|
|
|
$
|
699
|
|
|
$
|
17
|
|
Third-party
|
180
|
|
|
176
|
|
|
4
|
|
|
399
|
|
|
393
|
|
|
6
|
|
||||||
Total Revenues
|
569
|
|
|
557
|
|
|
12
|
|
|
1,115
|
|
|
1,092
|
|
|
23
|
|
||||||
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NGL expense (exclusive of items shown separately below)
|
45
|
|
|
45
|
|
|
—
|
|
|
93
|
|
|
93
|
|
|
—
|
|
||||||
Operating expenses (exclusive of depreciation and amortization)
|
221
|
|
|
201
|
|
|
20
|
|
|
422
|
|
|
391
|
|
|
31
|
|
||||||
Depreciation and amortization expenses
|
93
|
|
|
83
|
|
|
10
|
|
|
182
|
|
|
163
|
|
|
19
|
|
||||||
General and administrative expenses
|
29
|
|
|
25
|
|
|
4
|
|
|
60
|
|
|
52
|
|
|
8
|
|
||||||
Loss on asset disposals and impairments
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
||||||
Operating Income (Loss)
|
180
|
|
|
202
|
|
|
(22
|
)
|
|
357
|
|
|
392
|
|
|
(35
|
)
|
||||||
Interest and financing costs, net
|
(60
|
)
|
|
(58
|
)
|
|
(2
|
)
|
|
(115
|
)
|
|
(112
|
)
|
|
(3
|
)
|
||||||
Equity in earnings of equity method investments
|
10
|
|
|
3
|
|
|
7
|
|
|
18
|
|
|
5
|
|
|
13
|
|
||||||
Other income, net
|
2
|
|
|
1
|
|
|
1
|
|
|
3
|
|
|
2
|
|
|
1
|
|
||||||
Net Earnings (Loss)
|
$
|
132
|
|
|
$
|
148
|
|
|
$
|
(16
|
)
|
|
$
|
263
|
|
|
$
|
287
|
|
|
$
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loss attributable to Predecessors
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
24
|
|
Net Earnings Attributable to Partners
|
148
|
|
|
148
|
|
|
—
|
|
|
287
|
|
|
287
|
|
|
—
|
|
||||||
Preferred unitholders’ interest in net earnings
|
(10
|
)
|
|
(10
|
)
|
|
—
|
|
|
(24
|
)
|
|
(24
|
)
|
|
—
|
|
||||||
Limited Partners’ Interest in Net Earnings
|
$
|
138
|
|
|
$
|
138
|
|
|
$
|
—
|
|
|
$
|
263
|
|
|
$
|
263
|
|
|
$
|
—
|
|
|
|
June 30, 2019
|
9
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018 (a)
|
||||||||
Revenues (b)
|
$
|
424
|
|
|
$
|
389
|
|
|
$
|
868
|
|
|
$
|
716
|
|
Operating expenses (c)
|
113
|
|
|
72
|
|
|
217
|
|
|
134
|
|
||||
General and administrative expenses
|
15
|
|
|
22
|
|
|
29
|
|
|
46
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
(b)
|
Represents
71%
and
68%
of our total revenues for the
three
months ended
June 30, 2019
and
2018
, respectively, and
71%
and
64%
of our total revenues for the
six
months ended
June 30, 2019
and
2018
, respectively.
|
(c)
|
Excludes reimbursements from our Sponsor pursuant to the Amended Omnibus Agreement, the Carson Assets Indemnity Agreement and other affiliate agreements of
$7 million
and
$3 million
for the
three
months ended
June 30, 2019
and
2018
, respectively, and
$10 million
for both the
six
months ended
June 30, 2019
and
2018
.
|
10
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
Lease Obligations
|
||||||
|
Operating
|
|
Finance
|
||||
2019
|
$
|
6
|
|
|
$
|
2
|
|
2020
|
18
|
|
|
3
|
|
||
2021
|
15
|
|
|
2
|
|
||
2022
|
12
|
|
|
2
|
|
||
2023
|
12
|
|
|
2
|
|
||
2024 and thereafter
|
102
|
|
|
4
|
|
||
Gross lease payments
|
165
|
|
|
15
|
|
||
Less: imputed interest
|
(45
|
)
|
|
(2
|
)
|
||
Total Lease Payments
|
$
|
120
|
|
|
$
|
13
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30
, 2019
|
||||
Operating lease cost
|
$
|
5
|
|
|
$
|
8
|
|
|
|
|
|
||||
Finance lease cost:
|
|
|
|
||||
Amortization of right-of-use assets
|
1
|
|
|
2
|
|
||
Interest on lease liabilities
|
1
|
|
|
1
|
|
||
Total finance lease cost
|
2
|
|
|
3
|
|
||
|
|
|
|
||||
Variable lease cost
|
2
|
|
|
3
|
|
||
Short-term lease cost
|
9
|
|
|
15
|
|
||
Total Lease Cost
|
$
|
18
|
|
|
$
|
29
|
|
|
|
June 30, 2019
|
11
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
June 30, 2019
|
||
Operating Leases
|
|
||
Right of use assets included in other noncurrent assets, net
|
$
|
121
|
|
|
|
||
Operating lease liabilities included in other current liabilities
|
$
|
12
|
|
Long-term operating lease liabilities included in other noncurrent liabilities
|
108
|
|
|
Total Operating Lease Liabilities
|
$
|
120
|
|
|
|
||
Weighted average remaining lease term
|
13 years
|
|
|
Weighted average discount rate
|
4.83
|
%
|
|
|
|
||
Finance Leases
|
|
||
Property, plant and equipment, gross
|
$
|
25
|
|
Accumulated depreciation
|
(14
|
)
|
|
Property, Plant and Equipment, Net
|
$
|
11
|
|
|
|
||
Debt due within one year
|
$
|
3
|
|
Long-term debt
|
10
|
|
|
Total Finance Lease Liabilities
|
$
|
13
|
|
|
|
||
Weighted average remaining lease term
|
5 years
|
|
|
Weighted average discount rate
|
5.88
|
%
|
|
June 30, 2019 (a)
|
||
2019
|
$
|
268
|
|
2020
|
535
|
|
|
2021
|
533
|
|
|
2022
|
533
|
|
|
2023
|
532
|
|
|
2024 and thereafter
|
6,292
|
|
|
Total Minimum Lease Revenue
|
$
|
8,693
|
|
(a)
|
Includes minimum future lease revenue assuming all renewal option periods for each agreement are exercised.
|
12
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
June 30,
2019 |
|
December 31, 2018
|
||||
Terminals and related assets
|
$
|
847
|
|
|
$
|
778
|
|
Pipelines
|
110
|
|
|
110
|
|
||
Land and leasehold improvements
|
29
|
|
|
28
|
|
||
Construction in progress
|
21
|
|
|
15
|
|
||
Property, plant and equipment, at cost
|
1,007
|
|
|
931
|
|
||
Accumulated depreciation
|
(262
|
)
|
|
(238
|
)
|
||
Property, Plant and Equipment, Net
|
$
|
745
|
|
|
$
|
693
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Total debt
|
$
|
5,263
|
|
|
$
|
5,010
|
|
Unamortized issuance costs
|
(40
|
)
|
|
(46
|
)
|
||
Current maturities
|
(503
|
)
|
|
(504
|
)
|
||
Debt, Net of Current Maturities and Unamortized Issuance Costs
|
$
|
4,720
|
|
|
$
|
4,460
|
|
|
Total Capacity
|
|
Amount Borrowed as of June 30, 2019
|
|
Outstanding
Letters of Credit
|
|
Available Capacity as of June 30, 2019
|
|
Weighted Average Interest Rate
|
|
Expiration
|
|||||||||
Revolving Credit Facility
|
$
|
1,100
|
|
|
$
|
1,070
|
|
|
$
|
—
|
|
|
$
|
30
|
|
|
3.90
|
%
|
|
January 29, 2021
|
Dropdown Credit Facility
|
1,000
|
|
|
430
|
|
|
—
|
|
|
570
|
|
|
3.92
|
%
|
|
January 29, 2021
|
||||
MPC Loan Agreement
|
500
|
|
|
—
|
|
|
—
|
|
|
500
|
|
|
—
|
%
|
|
December 21, 2023
|
||||
Total Credit Facilities
|
$
|
2,600
|
|
|
$
|
1,500
|
|
|
$
|
—
|
|
|
$
|
1,100
|
|
|
|
|
|
(a)
|
In conjunction with the MPLX Merger, on July 30, 2019, all outstanding borrowings and unpaid fees on our credit facilities were repaid and the agreements were terminated, including the MPC Loan Agreement.
|
|
|
June 30, 2019
|
13
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
Three and Six Months Ended June 30, 2019
|
||||||||||
|
Common
|
|
Preferred
|
|
Total
|
||||||
Balance at December 31, 2018
|
$
|
4,070
|
|
|
$
|
604
|
|
|
$
|
4,674
|
|
Distributions to common and preferred unitholders (a)
|
(240
|
)
|
|
(21
|
)
|
|
(261
|
)
|
|||
Net earnings attributable to partners
|
147
|
|
|
10
|
|
|
157
|
|
|||
Contributions (b)
|
19
|
|
|
—
|
|
|
19
|
|
|||
Other
|
1
|
|
|
—
|
|
|
1
|
|
|||
Balance at March 31, 2019
|
3,997
|
|
|
593
|
|
|
4,590
|
|
|||
Distributions to common unitholders (a)
|
(241
|
)
|
|
—
|
|
|
(241
|
)
|
|||
Net earnings attributable to partners
|
150
|
|
|
10
|
|
|
160
|
|
|||
Contributions (b)
|
25
|
|
|
—
|
|
|
25
|
|
|||
Balance at June 30, 2019
|
$
|
3,931
|
|
|
$
|
603
|
|
|
$
|
4,534
|
|
|
Three and Six Months Ended June 30, 2018
|
||||||||||||||
|
Equity of Predecessors (c)
|
|
Andeavor Logistics
|
|
Total
|
||||||||||
|
|
Common
|
|
Preferred
|
|
||||||||||
Balance at December 31, 2017
|
$
|
1,292
|
|
|
$
|
2,925
|
|
|
$
|
589
|
|
|
$
|
4,806
|
|
Sponsor contributions of assets to the Predecessors
|
197
|
|
|
—
|
|
|
—
|
|
|
197
|
|
||||
Loss attributable to the Predecessors
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
||||
Distributions to common and preferred unitholders (a)
|
—
|
|
|
(205
|
)
|
|
(8
|
)
|
|
(213
|
)
|
||||
Net earnings attributable to partners
|
—
|
|
|
125
|
|
|
14
|
|
|
139
|
|
||||
Contributions (b)
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||
Cumulative effect of accounting standard adoption
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
(22
|
)
|
||||
Other
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Balance at March 31, 2018
|
1,481
|
|
|
2,839
|
|
|
594
|
|
|
4,914
|
|
||||
Sponsor contributions of assets to the Predecessors
|
139
|
|
|
—
|
|
|
—
|
|
|
139
|
|
||||
Loss attributable to the Predecessors
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
||||
Distributions to common unitholders (a)
|
—
|
|
|
(206
|
)
|
|
—
|
|
|
(206
|
)
|
||||
Net earnings attributable to partners
|
—
|
|
|
138
|
|
|
10
|
|
|
148
|
|
||||
Contributions (b)
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||
Other
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Balance at June 30, 2018
|
$
|
1,604
|
|
|
$
|
2,779
|
|
|
$
|
604
|
|
|
$
|
4,987
|
|
(a)
|
Represents cash distributions declared and paid during the period.
|
(b)
|
Includes Marathon and TLGP contributions to us primarily related to reimbursements for capital spending pursuant predominantly to the Amended Omnibus Agreement and the Carson Assets Indemnity Agreement.
|
(c)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
Quarter Ended
|
Quarterly Distribution Per Common Unit
|
|
Total Cash Distribution
(in millions)
|
|
Date of Distribution
|
|
Unitholders Record Date
|
||||
December 31, 2018 (a)
|
$
|
1.03
|
|
|
$
|
238
|
|
|
February 14, 2019
|
|
February 5, 2019
|
March 31, 2019 (a)
|
1.03
|
|
|
240
|
|
|
May 15, 2019
|
|
May 9, 2019
|
(a)
|
This distribution is net of
$12.5 million
waived with respect to units held by our Sponsor and its affiliates for the
three
months ended March 31, 2019 and
$15 million
for the three months ended December 31, 2018. These distribution waivers were instituted in 2017 under the terms of our partnership agreement.
|
14
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018 (a)
|
||||||||
Net earnings
|
$
|
160
|
|
|
$
|
132
|
|
|
$
|
317
|
|
|
$
|
263
|
|
Distributions on Preferred Units (b)
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(20
|
)
|
||||
Net earnings attributable to common units
|
160
|
|
|
122
|
|
|
317
|
|
|
243
|
|
||||
Limited partners’ distributions on common units (c)
|
—
|
|
|
(209
|
)
|
|
(240
|
)
|
|
(414
|
)
|
||||
Distributions on common units less (greater) than earnings
|
$
|
160
|
|
|
$
|
(87
|
)
|
|
$
|
77
|
|
|
$
|
(171
|
)
|
General partner’s earnings:
|
|
|
|
|
|
|
|
||||||||
Allocation of distributions greater than earnings (d)
|
$
|
—
|
|
|
$
|
(16
|
)
|
|
$
|
—
|
|
|
$
|
(24
|
)
|
Total general partner’s loss
|
$
|
—
|
|
|
$
|
(16
|
)
|
|
$
|
—
|
|
|
$
|
(24
|
)
|
Limited partners’ earnings on common units:
|
|
|
|
|
|
|
|
||||||||
Distributions (c)(e)
|
$
|
—
|
|
|
$
|
209
|
|
|
$
|
240
|
|
|
$
|
414
|
|
Allocation of distributions less (greater) than earnings
|
160
|
|
|
(71
|
)
|
|
77
|
|
|
(147
|
)
|
||||
Total limited partners’ earnings on common units
|
$
|
160
|
|
|
$
|
138
|
|
|
$
|
317
|
|
|
$
|
267
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average limited partner units outstanding:
|
|
|
|
|
|
|
|
||||||||
Common units - basic
|
245.6
|
|
|
217.2
|
|
|
245.6
|
|
|
217.2
|
|
||||
Common units - diluted (f)
|
245.7
|
|
|
217.3
|
|
|
245.7
|
|
|
217.3
|
|
||||
Net earnings per limited partner unit: (g)
|
|
|
|
|
|
|
|
||||||||
Common - basic
|
$
|
0.65
|
|
|
$
|
0.63
|
|
|
$
|
1.29
|
|
|
$
|
1.23
|
|
Common - diluted
|
$
|
0.65
|
|
|
$
|
0.63
|
|
|
$
|
1.29
|
|
|
$
|
1.23
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
(b)
|
The Preferred Units entitle unitholders to receive preferred distributions on a semi-annual basis. Due to the MPLX Merger, we did not declare a distribution for the first half of 2019.
|
(c)
|
We did not declare a distribution for the second quarter of 2019 due to the MPLX Merger.
|
(d)
|
We have revised the historical allocation of general partner earnings to include the Predecessors’ losses of
$16 million
and
$24 million
for the
three and six
months ended
June 30, 2018
, respectively.
|
(e)
|
Distributions of earnings for limited partners’ common units for the
three
months ended
June 30, 2018
is net of a
$15 million
waiver and the
six
months ended
June 30, 2019
and
2018
are net of a
$12.5 million
and
$30 million
waiver, respectively, from our Sponsor. There was
no
waiver for the three months ended
June 30, 2019
because we did not declare a distribution for the second quarter of 2019 due to the MPLX Merger.
|
(f)
|
Diluted net earnings per unit include the effects of potentially dilutive units on our common units, which consist of unvested phantom units.
|
(g)
|
Amounts may not recalculate due to rounding of dollar and unit information.
|
|
|
June 30, 2019
|
15
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018 (a)
|
||||
Net cash from operating activities:
|
|
|
|
||||
Interest paid (net of amounts capitalized)
|
$
|
117
|
|
|
$
|
78
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Payments on operating leases
|
8
|
|
|
—
|
|
||
Net cash used in investing activities:
|
|
|
|
||||
Capital expenditures included in accounts payable
|
113
|
|
|
87
|
|
||
Net cash used in financing activities:
|
|
|
|
||||
Receivable from affiliate for capital expenditures
|
8
|
|
|
2
|
|
||
Principal payments under finance lease obligations
|
2
|
|
|
—
|
|
||
Right of use assets obtained in exchange for new operating lease obligations
|
2
|
|
|
—
|
|
||
Right of use assets obtained in exchange for new financing lease obligations
|
1
|
|
|
—
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018 (a)
|
||||||||
Revenues from contracts with customers
|
$
|
469
|
|
|
$
|
478
|
|
|
$
|
963
|
|
|
$
|
937
|
|
Lease revenues
|
132
|
|
|
91
|
|
|
268
|
|
|
178
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
16
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
June 30,
2019 |
|
December 31, 2018
|
||||
Other contract assets
|
$
|
22
|
|
|
$
|
32
|
|
Deferred income, current
|
25
|
|
|
24
|
|
||
Deferred income, noncurrent
|
68
|
|
|
57
|
|
|
|
June 30, 2019
|
17
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018 (a)
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Terminalling and Transportation:
|
|
|
|
|
|
|
|
||||||||
Terminalling
|
$
|
248
|
|
|
$
|
209
|
|
|
$
|
493
|
|
|
$
|
408
|
|
Pipeline transportation
|
47
|
|
|
40
|
|
|
93
|
|
|
71
|
|
||||
Other revenues
|
2
|
|
|
1
|
|
|
4
|
|
|
3
|
|
||||
Total Terminalling and Transportation
|
297
|
|
|
250
|
|
|
590
|
|
|
482
|
|
||||
Gathering and Processing:
|
|
|
|
|
|
|
|
||||||||
NGL sales
|
94
|
|
|
95
|
|
|
216
|
|
|
199
|
|
||||
Gas gathering and processing
|
75
|
|
|
82
|
|
|
145
|
|
|
167
|
|
||||
Crude oil and water gathering
|
79
|
|
|
80
|
|
|
176
|
|
|
155
|
|
||||
Pass-thru and other
|
36
|
|
|
44
|
|
|
68
|
|
|
79
|
|
||||
Total Gathering and Processing
|
284
|
|
|
301
|
|
|
605
|
|
|
600
|
|
||||
Wholesale:
|
|
|
|
|
|
|
|
||||||||
Fuel sales
|
17
|
|
|
15
|
|
|
29
|
|
|
24
|
|
||||
Other wholesale
|
6
|
|
|
10
|
|
|
16
|
|
|
18
|
|
||||
Total Wholesale
|
23
|
|
|
25
|
|
|
45
|
|
|
42
|
|
||||
Intersegment wholesale revenues
|
(3
|
)
|
|
(7
|
)
|
|
(9
|
)
|
|
(9
|
)
|
||||
Total Revenues
|
$
|
601
|
|
|
$
|
569
|
|
|
$
|
1,231
|
|
|
$
|
1,115
|
|
|
|
|
|
|
|
|
|
||||||||
Segment Operating Income
|
|
|
|
|
|
|
|
||||||||
Terminalling and Transportation
|
$
|
146
|
|
|
$
|
107
|
|
|
$
|
298
|
|
|
$
|
211
|
|
Gathering and Processing
|
59
|
|
|
69
|
|
|
122
|
|
|
146
|
|
||||
Wholesale
|
12
|
|
|
11
|
|
|
17
|
|
|
15
|
|
||||
Total Segment Operating Income
|
217
|
|
|
187
|
|
|
437
|
|
|
372
|
|
||||
Unallocated general and administrative expenses
|
(10
|
)
|
|
(7
|
)
|
|
(19
|
)
|
|
(15
|
)
|
||||
Operating Income
|
207
|
|
|
180
|
|
|
418
|
|
|
357
|
|
||||
Interest and financing costs, net
|
(63
|
)
|
|
(60
|
)
|
|
(124
|
)
|
|
(115
|
)
|
||||
Equity in earnings of equity method investments
|
9
|
|
|
10
|
|
|
16
|
|
|
18
|
|
||||
Other income, net
|
7
|
|
|
2
|
|
|
7
|
|
|
3
|
|
||||
Net Earnings
|
$
|
160
|
|
|
$
|
132
|
|
|
$
|
317
|
|
|
$
|
263
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
18
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018 (a)
|
||||||||
Depreciation and Amortization Expenses
|
|
|
|
|
|
|
|
||||||||
Terminalling and Transportation
|
$
|
38
|
|
|
$
|
37
|
|
|
$
|
74
|
|
|
$
|
70
|
|
Gathering and Processing
|
64
|
|
|
54
|
|
|
126
|
|
|
107
|
|
||||
Wholesale
|
2
|
|
|
2
|
|
|
5
|
|
|
5
|
|
||||
Total Depreciation and Amortization Expenses
|
$
|
104
|
|
|
$
|
93
|
|
|
$
|
205
|
|
|
$
|
182
|
|
|
|
|
|
|
|
|
|
||||||||
Capital Expenditures
|
|
|
|
|
|
|
|
||||||||
Terminalling and Transportation
|
$
|
26
|
|
|
$
|
33
|
|
|
$
|
51
|
|
|
$
|
79
|
|
Gathering and Processing
|
110
|
|
|
148
|
|
|
207
|
|
|
258
|
|
||||
Wholesale
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Total Capital Expenditures
|
$
|
136
|
|
|
$
|
181
|
|
|
$
|
258
|
|
|
$
|
338
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
|
|
June 30, 2019
|
19
|
Management’s Discussion and Analysis
|
20
|
|
|
|
|
Management’s Discussion and Analysis
|
|
•
|
Average terminalling revenue per barrel - calculated as total terminalling revenue divided by terminalling throughput presented in thousands of barrels per day (“Mbpd”) multiplied by 1,000 and multiplied by the number of days in the period (91 days for both the
three
months ended
June 30, 2019
(the “
2019
Quarter”) and
2018
(the “
2018
Quarter”) and 181 days for both the
six
months ended
June 30, 2019
(the “
2019
Period”) and
2018
(the “
2018
Period”));
|
•
|
Average pipeline transportation revenue per barrel - calculated as total pipeline transportation revenue divided by pipeline transportation throughput presented in Mbpd multiplied by 1,000 and multiplied by the number of days in the period as outlined above;
|
•
|
Average margin on NGL sales per barrel - calculated as the difference between the NGL sales revenues and the amounts recognized as NGL expense divided by our NGL sales volumes in barrels presented in Mbpd multiplied by 1,000 and multiplied by the number of days in the period as outlined above;
|
•
|
Average gas gathering and processing revenue per Million British thermal units (“MMBtu”) - calculated as total gathering and processing fee-based revenue divided by gas gathering throughput presented in thousands of MMBtu per day (“MMBtu/d”) multiplied by 1,000 and multiplied by the number of days in the period as outlined above;
|
•
|
Average crude oil and water gathering revenue per barrel - calculated as total crude oil and water gathering fee-based revenue divided by crude oil and water gathering throughput presented in Mbpd multiplied by 1,000 and multiplied by the number of days in the period as outlined above; and
|
•
|
Wholesale fuel sales per gallon - calculated as wholesale fuel revenues divided by our total wholesale fuel sales volume in gallons.
|
•
|
Financial non-GAAP measure of EBITDA - calculated as U.S. GAAP-based net earnings before interest, income taxes and depreciation and amortization expense;
|
•
|
Financial non-GAAP measure of Segment EBITDA - calculated as a segment’s U.S. GAAP-based operating income before depreciation and amortization expense plus equity in earnings (loss) of equity method investments and other income (expense), net;
|
•
|
Financial non-GAAP measure of distributable cash flow - calculated as U.S. GAAP-based net cash flow from EBITDA adjusted for amounts spent on maintenance capital net of reimbursements and other adjustments;
|
•
|
Liquidity non-GAAP measure of distributable cash flow - calculated as U.S. GAAP-based net cash flow from operating activities adjusted for changes in working capital, amounts spent on maintenance capital net of reimbursements and other adjustments not expected to settle in cash;
|
•
|
Liquidity and financial non-GAAP measure of distributable cash flow attributable to common unitholders - calculated as distributable cash flow minus distributions associated with the Preferred Units; and
|
•
|
Operating performance measure of average margin on NGL sales per barrel - calculated as the difference between the NGL sales revenues and the amounts recognized as NGL expense divided by our NGL sales volumes in barrels presented in Mbpd multiplied by 1,000 and multiplied by the number of days in the period as previously outlined.
|
|
|
June 30, 2019
|
21
|
Management’s Discussion and Analysis
|
•
|
our operating performance as compared to publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or financing methods;
|
•
|
the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;
|
•
|
our ability to incur and service debt and fund capital expenditures; and
|
•
|
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding these non-GAAP measures.
|
22
|
|
|
|
|
Management’s Discussion and Analysis
|
|
|
|
June 30, 2019
|
23
|
Management’s Discussion and Analysis
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding these non-GAAP measures.
|
24
|
|
|
|
|
Management’s Discussion and Analysis
|
|
|
|
June 30, 2019
|
25
|
Management’s Discussion and Analysis
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
26
|
|
|
|
|
Management’s Discussion and Analysis
|
|
|
Three Months Ended
June 30, |
||||||
|
2019
|
|
2018 (a)
|
||||
Revenues
|
|
|
|
||||
Terminalling
|
$
|
248
|
|
|
$
|
209
|
|
Pipeline transportation
|
47
|
|
|
40
|
|
||
Other revenues
|
2
|
|
|
1
|
|
||
Total Revenues
|
297
|
|
|
250
|
|
||
Costs and Expenses
|
|
|
|
||||
Operating expenses (excluding depreciation and amortization)
|
107
|
|
|
95
|
|
||
Depreciation and amortization expenses
|
38
|
|
|
37
|
|
||
General and administrative expenses
|
5
|
|
|
10
|
|
||
Loss on asset disposals and impairments
|
1
|
|
|
1
|
|
||
Operating Income
|
$
|
146
|
|
|
$
|
107
|
|
Segment EBITDA (b)
|
$
|
195
|
|
|
$
|
151
|
|
Rates (c)
|
|
|
|
||||
Average terminalling revenue per barrel
|
$
|
1.53
|
|
|
$
|
1.25
|
|
Average pipeline transportation revenue per barrel
|
$
|
0.49
|
|
|
$
|
0.43
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
(c)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
|
|
June 30, 2019
|
27
|
Management’s Discussion and Analysis
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018 (a)
|
||||
Revenues
|
|
|
|
||||
Terminalling
|
$
|
493
|
|
|
$
|
408
|
|
Pipeline transportation
|
93
|
|
|
71
|
|
||
Other revenues
|
4
|
|
|
3
|
|
||
Total Revenues
|
590
|
|
|
482
|
|
||
Costs and Expenses
|
|
|
|
||||
Operating expenses (excluding depreciation and amortization)
|
208
|
|
|
180
|
|
||
Depreciation and amortization expenses
|
74
|
|
|
70
|
|
||
General and administrative expenses
|
9
|
|
|
20
|
|
||
Loss on asset disposals and impairments
|
1
|
|
|
1
|
|
||
Operating Income
|
$
|
298
|
|
|
$
|
211
|
|
Segment EBITDA (b)
|
$
|
386
|
|
|
$
|
294
|
|
Rates (c)
|
|
|
|
||||
Average terminalling revenue per barrel
|
$
|
1.53
|
|
|
$
|
1.26
|
|
Average pipeline transportation revenue per barrel
|
$
|
0.48
|
|
|
$
|
0.41
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
(c)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
28
|
|
|
|
|
Management’s Discussion and Analysis
|
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
(a)
|
Volumes represent barrels sold in keep-whole arrangements, net barrels retained in POP arrangements and other associated products.
|
|
|
June 30, 2019
|
29
|
Management’s Discussion and Analysis
|
|
Three Months Ended
June 30, |
||||||
|
2019
|
|
2018 (a)
|
||||
Revenues
|
|
|
|
||||
NGL sales (b)
|
$
|
94
|
|
|
$
|
95
|
|
Gas gathering and processing
|
75
|
|
|
82
|
|
||
Crude oil and water gathering
|
79
|
|
|
80
|
|
||
Pass-thru and other
|
36
|
|
|
44
|
|
||
Total Revenues
|
284
|
|
|
301
|
|
||
Costs and Expenses
|
|
|
|
||||
NGL expense (excluding items shown separately below) (b)
|
33
|
|
|
45
|
|
||
Operating expenses (excluding depreciation and amortization)
|
124
|
|
|
122
|
|
||
Depreciation and amortization expenses
|
64
|
|
|
54
|
|
||
General and administrative expenses
|
3
|
|
|
11
|
|
||
Loss on asset disposals and impairments
|
1
|
|
|
—
|
|
||
Operating Income
|
$
|
59
|
|
|
$
|
69
|
|
Segment EBITDA (c)
|
$
|
128
|
|
|
$
|
128
|
|
Rates (d)
|
|
|
|
||||
Average margin on NGL sales per barrel (b)(c)
|
$
|
93.51
|
|
|
$
|
59.77
|
|
Average gas gathering and processing revenue per MMBtu
|
$
|
1.16
|
|
|
$
|
1.16
|
|
Average crude oil and water gathering revenue per barrel
|
$
|
1.51
|
|
|
$
|
2.12
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
We had
33.4
Mbpd and
21.9
Mbpd of gross NGL sales under our agreements for POP and keep-whole arrangements for the
2019
Quarter and
2018
Quarter, respectively. We retained
7.2
Mbpd and
9.1
Mbpd under these arrangements, respectively. The difference between gross sales barrels and barrels retained is reflected in NGL expense resulting from the gross presentation required for the POP arrangements. The increase in average margin on NGL sales per barrel is driven by lower NGL sales volumes primarily due to ethane rejection position in the Rockies Region during the 2019 Quarter compared to ethane recovery position during the 2018 Quarter.
|
(c)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
(d)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
30
|
|
|
|
|
Management’s Discussion and Analysis
|
|
(a)
|
Volumes represent barrels sold in keep-whole arrangements, net barrels retained in POP arrangements and other associated products.
|
|
|
June 30, 2019
|
31
|
Management’s Discussion and Analysis
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018 (a)
|
||||
Revenues
|
|
|
|
||||
NGL sales (b)
|
$
|
216
|
|
|
$
|
199
|
|
Gas gathering and processing
|
145
|
|
|
167
|
|
||
Crude oil and water gathering
|
176
|
|
|
155
|
|
||
Pass-thru and other
|
68
|
|
|
79
|
|
||
Total Revenues
|
605
|
|
|
600
|
|
||
Costs and Expenses
|
|
|
|
||||
NGL expense (excluding items shown separately below) (b)
|
92
|
|
|
93
|
|
||
Operating expenses (excluding depreciation and amortization)
|
255
|
|
|
230
|
|
||
Depreciation and amortization expenses
|
126
|
|
|
107
|
|
||
General and administrative expenses
|
9
|
|
|
24
|
|
||
Loss on asset disposals and impairments
|
1
|
|
|
—
|
|
||
Operating Income
|
$
|
122
|
|
|
$
|
146
|
|
Segment EBITDA (c)
|
$
|
257
|
|
|
$
|
261
|
|
Rates (d)
|
|
|
|
||||
Average margin on NGL sales per barrel (b)(c)
|
$
|
98.46
|
|
|
$
|
55.81
|
|
Average gas gathering and processing revenue per MMBtu
|
$
|
1.13
|
|
|
$
|
1.14
|
|
Average crude oil and water gathering revenue per barrel
|
$
|
1.76
|
|
|
$
|
2.11
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
We had
31.6
Mbpd and
24.3
Mbpd of gross NGL sales under our agreements for POP and keep-whole arrangements for the
2019
Period and
2018
Period, respectively. We retained
7.0
Mbpd and
10.4
Mbpd under these arrangements, respectively. The difference between gross sales barrels and barrels retained is reflected in NGL expense resulting from the gross presentation required for the POP arrangements. The increase in average margin on NGL sales per barrel is driven by lower NGL sales volumes primarily due to ethane rejection position in the Rockies Region during the 2019 Period compared to ethane recovery position during the 2018 Period.
|
(c)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
(d)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
32
|
|
|
|
|
Management’s Discussion and Analysis
|
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
|
Three Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Revenues
|
|
|
|
||||
Fuel sales
|
$
|
17
|
|
|
$
|
15
|
|
Other wholesale
|
6
|
|
|
10
|
|
||
Total Revenues
|
23
|
|
|
25
|
|
||
Costs and Expenses
|
|
|
|
||||
Operating expenses (excluding depreciation and amortization)
|
9
|
|
|
11
|
|
||
Depreciation and amortization expenses
|
2
|
|
|
2
|
|
||
General and administrative expenses
|
—
|
|
|
1
|
|
||
Operating Income
|
$
|
12
|
|
|
$
|
11
|
|
Segment EBITDA (a)
|
$
|
14
|
|
|
$
|
13
|
|
Volumes and Rates (b)
|
|
|
|
||||
Fuel sales volume (millions of gallons)
|
334
|
|
|
306
|
|
||
Wholesale fuel sales per gallon
|
|
5.0
|
¢
|
|
|
5.0
|
¢
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
(b)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
|
|
June 30, 2019
|
33
|
Management’s Discussion and Analysis
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Revenues
|
|
|
|
||||
Fuel sales
|
$
|
29
|
|
|
$
|
24
|
|
Other wholesale
|
16
|
|
|
18
|
|
||
Total Revenues
|
45
|
|
|
42
|
|
||
Costs and Expenses
|
|
|
|
||||
Operating expenses (excluding depreciation and amortization)
|
22
|
|
|
21
|
|
||
Depreciation and amortization expenses
|
5
|
|
|
5
|
|
||
General and administrative expenses
|
1
|
|
|
1
|
|
||
Operating Income
|
$
|
17
|
|
|
$
|
15
|
|
Segment EBITDA (a)
|
$
|
22
|
|
|
$
|
20
|
|
Volumes and Rates (b)
|
|
|
|
||||
Fuel sales volume (millions of gallons)
|
660
|
|
|
593
|
|
||
Wholesale fuel sales per gallon
|
|
4.3
|
¢
|
|
|
4.1
|
¢
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
(b)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
34
|
|
|
|
|
Management’s Discussion and Analysis
|
|
Debt, including current maturities:
|
June 30, 2019
|
|
December 31, 2018
|
||||
Credit facilities
|
$
|
1,500
|
|
|
$
|
1,245
|
|
Senior notes
|
3,750
|
|
|
3,750
|
|
||
Finance lease obligations
|
13
|
|
|
—
|
|
||
Capital lease obligations
|
—
|
|
|
15
|
|
||
Total Debt
|
5,263
|
|
|
5,010
|
|
||
Unamortized Issuance Costs
|
(40
|
)
|
|
(46
|
)
|
||
Debt, Net of Unamortized Issuance Costs
|
5,223
|
|
|
4,964
|
|
||
Total Equity
|
4,534
|
|
|
4,674
|
|
||
Total Capitalization
|
$
|
9,757
|
|
|
$
|
9,638
|
|
Credit Facility
|
Total Capacity
|
|
Amount Borrowed as of June 30, 2019
|
|
Available Capacity as of June 30, 2019
|
|
Weighted Average Interest Rate
|
|
Expiration
|
|||||||
Revolving Credit Facility
|
$
|
1,100
|
|
|
$
|
1,070
|
|
|
$
|
30
|
|
|
3.90
|
%
|
|
January 29, 2021
|
Dropdown Credit Facility
|
1,000
|
|
|
430
|
|
|
570
|
|
|
3.92
|
%
|
|
January 29, 2021
|
|||
MPC Loan Agreement
|
500
|
|
|
—
|
|
|
500
|
|
|
—
|
%
|
|
December 21, 2023
|
|||
Total Credit Facilities
|
$
|
2,600
|
|
|
$
|
1,500
|
|
|
$
|
1,100
|
|
|
|
|
|
(a)
|
In conjunction with the MPLX Merger, on July 30, 2019, all outstanding borrowings and unpaid fees on our credit facilities were repaid and the agreements were terminated, including the MPC Loan Agreement.
|
|
|
June 30, 2019
|
35
|
Management’s Discussion and Analysis
|
Credit Facility
|
30 Day Eurodollar (LIBOR) Rate at June 30, 2019
|
|
Eurodollar Margin
|
|
Base Rate
|
|
Base Rate Margin
|
|
Commitment Fee
(unused portion)
|
Revolving Credit Facility (a)
|
2.40%
|
|
1.50%
|
|
5.50%
|
|
0.50%
|
|
0.250%
|
Dropdown Credit Facility (a)
|
2.40%
|
|
1.51%
|
|
5.50%
|
|
0.51%
|
|
0.250%
|
MPC Loan Agreement
|
2.40%
|
|
1.75%
|
|
|
|
|
|
|
(a)
|
We have the option to elect whether our borrowings will bear interest at a base rate plus the base rate margin, or a Eurodollar rate, for the applicable period, plus the Eurodollar margin at the time of the borrowing. The applicable margin varies based upon a certain leverage ratio, as defined by the Revolving Credit Facility. We also incur commitment fees for the unused portion of the Revolving Credit Facility at an annual rate. Letters of credit outstanding under the Revolving Credit Facility incur fees at the Eurodollar margin rate.
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018 (a)
|
||||
Cash Flows From (Used in):
|
|
|
|
||||
Operating activities
|
$
|
483
|
|
|
$
|
547
|
|
Investing activities
|
(265
|
)
|
|
(748
|
)
|
||
Financing activities
|
(203
|
)
|
|
170
|
|
||
Increase (Decrease) in Cash and Cash Equivalents
|
$
|
15
|
|
|
$
|
(31
|
)
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
36
|
|
|
|
|
Management’s Discussion and Analysis
|
|
|
|
June 30, 2019
|
37
|
Management’s Discussion and Analysis
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018
|
||||||||||||
|
Terminalling and Transportation
|
|
Gathering and Processing
|
|
Wholesale
|
||||||||||||||||||
Segment Operating Income
|
$
|
146
|
|
|
$
|
107
|
|
|
$
|
59
|
|
|
$
|
69
|
|
|
$
|
12
|
|
|
$
|
11
|
|
Depreciation and amortization expenses
|
38
|
|
|
37
|
|
|
64
|
|
|
54
|
|
|
2
|
|
|
2
|
|
||||||
Equity in earnings of equity method investments
|
4
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
||||||
Other income, net
|
7
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Segment EBITDA
|
$
|
195
|
|
|
$
|
151
|
|
|
$
|
128
|
|
|
$
|
128
|
|
|
$
|
14
|
|
|
$
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018
|
||||||||||||
|
Terminalling and Transportation
|
|
Gathering and Processing
|
|
Wholesale
|
||||||||||||||||||
Segment Operating Income
|
$
|
298
|
|
|
$
|
211
|
|
|
$
|
122
|
|
|
$
|
146
|
|
|
$
|
17
|
|
|
$
|
15
|
|
Depreciation and amortization expenses
|
74
|
|
|
70
|
|
|
126
|
|
|
107
|
|
|
5
|
|
|
5
|
|
||||||
Equity in earnings of equity method investments
|
7
|
|
|
10
|
|
|
9
|
|
|
8
|
|
|
—
|
|
|
—
|
|
||||||
Other income, net
|
7
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Segment EBITDA
|
$
|
386
|
|
|
$
|
294
|
|
|
$
|
257
|
|
|
$
|
261
|
|
|
$
|
22
|
|
|
$
|
20
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018 (a)
|
||||||||
EBITDA
|
$
|
327
|
|
|
$
|
285
|
|
|
$
|
646
|
|
|
$
|
560
|
|
Predecessors impact
|
—
|
|
|
9
|
|
|
—
|
|
|
11
|
|
||||
Maintenance capital expenditures (b)
|
(44
|
)
|
|
(22
|
)
|
|
(73
|
)
|
|
(44
|
)
|
||||
Reimbursement for maintenance capital expenditures (b)
|
21
|
|
|
6
|
|
|
36
|
|
|
12
|
|
||||
Changes in deferred revenue (c)
|
14
|
|
|
(2
|
)
|
|
15
|
|
|
(5
|
)
|
||||
Loss on assets disposals and impairments
|
2
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Interest and financing costs, net
|
(63
|
)
|
|
(60
|
)
|
|
(124
|
)
|
|
(115
|
)
|
||||
Amortized debt costs
|
3
|
|
|
2
|
|
|
5
|
|
|
5
|
|
||||
Adjustments for equity method investments
|
3
|
|
|
5
|
|
|
10
|
|
|
8
|
|
||||
Other (d)
|
(4
|
)
|
|
—
|
|
|
7
|
|
|
—
|
|
||||
Distributable Cash Flow
|
259
|
|
|
224
|
|
|
524
|
|
|
433
|
|
||||
Less: Preferred unit distributions (e)
|
(10
|
)
|
|
(10
|
)
|
|
(20
|
)
|
|
(20
|
)
|
||||
Distributable Cash Flow Attributable to Common Unitholders
|
$
|
249
|
|
|
$
|
214
|
|
|
$
|
504
|
|
|
$
|
413
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
We adjust our reconciliation of distributable cash flows for maintenance capital expenditures, tank restoration costs and expenditures required to ensure the safety, reliability, integrity and regulatory compliance of our assets with an offset for any reimbursements received for such expenditures.
|
(c)
|
Included in changes in deferred revenue are adjustments to remove the impact of the adoption of the new revenue recognition accounting standard on January 1, 2018 as well as the impact from the timing of recognition with certain of our contracts that contain minimum volume commitment with clawback provisions.
|
(d)
|
Other includes transaction costs related to recent acquisitions and non-cash legal reserves.
|
(e)
|
Represents the cash distributions earned by the Preferred Units for the three and
six
months ended
June 30, 2019
and
2018
assuming a distribution is declared by the Board, however, we did not declare a distribution for the first half of 2019 due to the MPLX Merger. Cash distributions to be paid to holders of the Preferred Units are not available to common unitholders.
|
38
|
|
|
|
|
Management’s Discussion and Analysis
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018 (a)
|
||||||||
Net Cash from Operating Activities
|
$
|
264
|
|
|
$
|
281
|
|
|
$
|
483
|
|
|
$
|
547
|
|
Changes in assets and liabilities
|
16
|
|
|
(51
|
)
|
|
59
|
|
|
(89
|
)
|
||||
Predecessors impact
|
—
|
|
|
9
|
|
|
—
|
|
|
11
|
|
||||
Maintenance capital expenditures (b)
|
(44
|
)
|
|
(22
|
)
|
|
(73
|
)
|
|
(44
|
)
|
||||
Reimbursement for maintenance capital expenditures (b)
|
21
|
|
|
6
|
|
|
36
|
|
|
12
|
|
||||
Changes in deferred revenue (c)
|
14
|
|
|
(2
|
)
|
|
15
|
|
|
(5
|
)
|
||||
Adjustments for equity method investments
|
(7
|
)
|
|
4
|
|
|
—
|
|
|
3
|
|
||||
Other (d)
|
(5
|
)
|
|
(1
|
)
|
|
4
|
|
|
(2
|
)
|
||||
Distributable Cash Flow
|
259
|
|
|
224
|
|
|
524
|
|
|
433
|
|
||||
Less: Preferred unit distributions (e)
|
(10
|
)
|
|
(10
|
)
|
|
(20
|
)
|
|
(20
|
)
|
||||
Distributable Cash Flow Attributable to Common Unitholders
|
$
|
249
|
|
|
$
|
214
|
|
|
$
|
504
|
|
|
$
|
413
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
We adjust our reconciliation of distributable cash flows for maintenance capital expenditures, tank restoration costs and expenditures required to ensure the safety, reliability, integrity and regulatory compliance of our assets with an offset for any reimbursements received for such expenditures.
|
(c)
|
Included in changes in deferred revenue are adjustments to remove the impact of the adoption of the new revenue recognition accounting standard on January 1, 2018 as well as the impact from the timing of recognition with certain of our contracts that contain minimum volume commitment with clawback provisions.
|
(d)
|
Other includes transaction costs related to recent acquisitions and non-cash legal reserves.
|
(e)
|
Represents the cash distributions earned by the Preferred Units for the three and
six
months ended
June 30, 2019
and
2018
assuming a distribution is declared by the Board, however, we did not declare a distribution for the first half of 2019 due to the MPLX Merger. Cash distributions to be paid to holders of the Preferred Units are not available to common unitholders.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018 (a)
|
||||||||
Segment Operating Income
|
$
|
59
|
|
|
$
|
69
|
|
|
$
|
122
|
|
|
$
|
146
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
124
|
|
|
122
|
|
|
255
|
|
|
230
|
|
||||
General and administrative expenses
|
3
|
|
|
11
|
|
|
9
|
|
|
24
|
|
||||
Depreciation and amortization expenses
|
64
|
|
|
54
|
|
|
126
|
|
|
107
|
|
||||
Loss on asset disposals and impairments
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Subtract:
|
|
|
|
|
|
|
|
||||||||
Gas gathering and processing revenues
|
(75
|
)
|
|
(82
|
)
|
|
(145
|
)
|
|
(167
|
)
|
||||
Crude oil gathering revenues
|
(79
|
)
|
|
(80
|
)
|
|
(176
|
)
|
|
(155
|
)
|
||||
Pass-thru and other revenues
|
(36
|
)
|
|
(44
|
)
|
|
(68
|
)
|
|
(79
|
)
|
||||
Margin on NGL Sales
|
$
|
61
|
|
|
$
|
50
|
|
|
$
|
124
|
|
|
$
|
106
|
|
Divided by Total Volumes for the Period:
|
|
|
|
|
|
|
|
||||||||
NGLs sales volumes (Mbpd)
|
7.2
|
|
|
9.1
|
|
|
7.0
|
|
|
10.4
|
|
||||
Number of days in the period
|
91
|
|
|
91
|
|
|
181
|
|
|
181
|
|
||||
Total volumes for the period (thousands of barrels) (b)
|
655
|
|
|
828
|
|
|
1,267
|
|
|
1,882
|
|
||||
Average Margin on NGL Sales per Barrel (b)
|
$
|
93.51
|
|
|
$
|
59.77
|
|
|
$
|
98.46
|
|
|
$
|
55.81
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
|
|
June 30, 2019
|
39
|
Management’s Discussion and Analysis
|
•
|
risks related to Marathon, including those related to the MPC Merger or the MPLX Merger;
|
•
|
changes in the expected value of and benefits derived from acquisitions, including any inability to successfully integrate acquisitions, realize expected synergies or achieve operational efficiency and effectiveness;
|
•
|
the effects of changes in global economic conditions on our business, on the business of our key customers, and on our customers’ suppliers, business partners and credit lenders;
|
•
|
a material change in the crude oil and natural gas produced in the basins where we operate;
|
•
|
the ability of our key customers to remain in compliance with the terms of their outstanding indebtedness;
|
•
|
changes in insurance markets impacting costs and the level and types of coverage available;
|
•
|
regulatory and other requirements concerning the transportation of crude oil, natural gas, NGLs and refined products, particularly in the areas where we operate;
|
•
|
changes in the cost or availability of third-party vessels, pipelines and other means of delivering and transporting crude oil, feedstocks, natural gas, NGLs and refined products;
|
•
|
the coverage and ability to recover claims under our insurance policies;
|
•
|
the availability and costs of crude oil, other refinery feedstocks and refined products;
|
•
|
the timing and extent of changes in commodity prices and demand for refined products, natural gas and NGLs;
|
•
|
changes in our cash flow from operations;
|
•
|
changes in our tax status;
|
•
|
the ability of our largest customers to perform under the terms of our gathering agreements;
|
•
|
the risk of contract cancellation, non-renewal or failure to perform by those in our supply and distribution chains, and the ability to replace such contracts and/or customers;
|
•
|
the suspension, reduction or termination of Marathon’s obligations under our commercial agreements and our secondment agreements;
|
•
|
a material change in profitability among our customers;
|
•
|
direct or indirect effects on our business resulting from actual or threatened terrorist or activist incidents, cyber-security breaches or acts of war;
|
•
|
weather conditions, earthquakes or other natural disasters affecting operations by us or our key customers or the areas in which our customers operate;
|
•
|
disruptions due to equipment interruption or failure at our facilities, Marathon’s facilities or third-party facilities on which our key customers are dependent;
|
•
|
our inability to complete acquisitions on economically acceptable terms or within anticipated timeframes;
|
•
|
actions of customers and competitors;
|
•
|
changes in our credit profile;
|
•
|
changes to our capital budget;
|
•
|
state and federal environmental, economic, health and safety, energy and other policies and regulations, including those related to climate change, and any changes therein, and any legal or regulatory investigations, delays in obtaining necessary approvals and permits, compliance costs or other factors beyond our control;
|
•
|
operational hazards inherent in refining and natural gas processing operations and in transporting and storing crude oil, natural gas, NGLs and refined products;
|
•
|
changes in capital requirements or in expected timing, execution and benefits of planned capital projects;
|
•
|
seasonal variations in demand for natural gas and refined products;
|
•
|
adverse rulings, judgments, or settlements in litigation or other legal or tax matters, including unexpected environmental remediation costs in excess of any accruals, which affect us or Marathon;
|
•
|
risks related to labor relations and workplace safety;
|
•
|
political developments; and
|
•
|
the factors described in greater detail under “Competition” and “Risk Factors” in Items 1 and 1A of our Annual Report on Form 10-K for the year ended
December 31, 2018
, in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q, and our other filings with the SEC.
|
40
|
|
|
|
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
|
|
June 30, 2019
|
41
|
Legal Proceedings, Risk Factors and Unregistered Sales of Equity Securities
|
42
|
|
|
|
|
Exhibits
|
Exhibit Number
|
|
|
|
Incorporated by Reference (File No. 1-35143, unless otherwise indicated)
|
||||
|
Description of Exhibit
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
|
2.1
|
|
|
8-K
|
|
2.1
|
|
8/7/2018
|
|
|
|
|
|
|
|
|
|
|
2.2
|
|
|
10-Q
|
|
2.5
|
|
11/7/2018
|
|
|
|
|
|
|
|
|
|
|
2.3†
|
|
|
8-K
|
|
2.1
|
|
5/8/2019
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
8-K
|
|
3.2
|
|
8/1/2019
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
8-K
|
|
3.4
|
|
8/1/2019
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
8-K
|
|
10.1
|
|
5/8/2019
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
|
8-K
|
|
10.1
|
|
8/1/2019
|
|
|
|
|
|
|
|
|
|
|
*31.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*31.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*32.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*32.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
The XBRL instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
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**101.DEF
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Inline XBRL Taxonomy Extension Definition Linkbase Document
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**101.LAB
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Inline XBRL Taxonomy Extension Label Linkbase Document
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**101.PRE
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Inline XBRL Taxonomy Extension Presentation Linkbase Document
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*
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Filed herewith.
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**
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Submitted electronically herewith.
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†
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Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Andeavor Logistics LP hereby undertakes to furnish supplementally a copy of any omitted schedule upon request by the SEC.
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June 30, 2019
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43
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Andeavor Logistics LP
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By:
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Andeavor Logistics GP LLC
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Its general partner
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Date:
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August 5, 2019
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By:
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/s/ BLANE W. PEERY
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Blane W. Peery
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Vice President, Accounting and Systems Integration
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(Principal Accounting and Financial Officer and Duly Authorized Signatory)
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44
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1 Year Andeavor Logistics Chart |
1 Month Andeavor Logistics Chart |
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