Document Entity Information
Document Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 25, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-32225 | |
Entity Registrant Name | HOLLY ENERGY PARTNERS LP | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-0833098 | |
Entity Address, Address Line One | 2828 N. Harwood, Suite 1300 | |
Entity Address, City or Town | Dallas | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75201 | |
City Area Code | 214 | |
Local Phone Number | 871-3555 | |
Title of 12(b) Security | Common Limited Partner Units | |
Trading Symbol | HEP | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 105,440,201 | |
Entity Central Index Key | 0001283140 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 7,469 | $ 3,045 |
Accounts receivable: | ||
Trade | 16,182 | 12,332 |
Affiliates | 35,770 | 46,786 |
Total accounts receivable | 51,952 | 59,118 |
Prepaid and other current assets | 4,779 | 4,311 |
Total current assets | 64,200 | 66,474 |
Properties and equipment, net | 1,478,950 | 1,538,655 |
Operating lease right-of-use assets | 3,454 | 0 |
Net Investment in Lease, Noncurrent | 136,394 | 16,488 |
Intangible assets, net | 104,824 | 115,329 |
Goodwill | 270,336 | 270,336 |
Equity method investments | 82,884 | 83,840 |
Other assets | 13,233 | 11,418 |
Total assets | 2,154,275 | 2,102,540 |
Accounts payable: | ||
Trade | 12,608 | 16,435 |
Affiliates | 6,747 | 14,222 |
Total accounts payable | 19,355 | 30,657 |
Accrued interest | 5,884 | 13,302 |
Deferred revenue | 9,774 | 8,697 |
Accrued property taxes | 9,266 | 1,779 |
Current maturities of operating leases | 807 | 0 |
Current maturities of finance leases | 5,426 | 936 |
Other current liabilities | 2,926 | 2,526 |
Total current liabilities | 53,438 | 57,897 |
Long-term debt | 1,431,869 | 1,418,900 |
Noncurrent operating lease liabilities | 2,995 | 0 |
Noncurrent finance lease liabilities | 69,168 | 867 |
Other long-term liabilities | 12,902 | 14,440 |
Deferred revenue | 46,862 | 48,714 |
Class B unit | 48,557 | 46,161 |
Partners’ equity: | ||
Common unitholders (105,440,201 units issued and outstanding at September 30, 2019 and December 31, 2018) | 404,584 | 427,435 |
Noncontrolling interest | 83,900 | 88,126 |
Total Equity | 488,484 | 515,561 |
Total liabilities and equity | 2,154,275 | 2,102,540 |
Total partners’ equity | $ 404,584 | $ 427,435 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - shares | Sep. 30, 2019 | Dec. 31, 2018 |
Partners' Equity: | ||
Common units issued (in shares) | 105,440,201 | 105,440,201 |
Common units outstanding (in shares) | 105,440,201 | 105,440,201 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues: | ||||||||
Affiliates | $ 106,027 | $ 100,188 | $ 311,755 | $ 295,629 | ||||
Third Parties | 29,868 | 25,596 | 89,388 | 77,799 | ||||
Revenues | 135,895 | 125,784 | 401,143 | 373,428 | ||||
Operating costs and expenses: | ||||||||
Operations (exclusive of depreciation and amortization) | 44,924 | 35,996 | 123,045 | 106,731 | ||||
Depreciation and amortization | 24,121 | 24,367 | 72,192 | 74,117 | ||||
General and administrative | 2,714 | 2,498 | 7,322 | 8,293 | ||||
Total operating costs and expenses | 71,759 | 62,861 | 202,559 | 189,141 | ||||
Operating income | 64,136 | 62,923 | 198,584 | 184,287 | ||||
Other income (expense): | ||||||||
Equity in earnings of equity method investments | 1,334 | 1,114 | 5,217 | 4,127 | ||||
Interest expense | (18,807) | (18,042) | (57,059) | (53,249) | ||||
Interest income | 2,243 | 540 | 3,322 | 1,581 | ||||
Sales-type Lease, Selling Profit (Loss) | 35,166 | 0 | 35,166 | 0 | ||||
Gain (loss) on sale of assets and other | 142 | 38 | (57) | 71 | ||||
Total other income (expense) | 20,078 | (16,350) | (13,411) | (47,470) | ||||
Income before income taxes | 84,214 | 46,573 | 185,173 | 136,817 | ||||
State income tax benefit (expense) | (30) | (39) | (36) | (149) | ||||
Net Income | 84,184 | $ 47,159 | $ 53,794 | 46,534 | $ 41,499 | $ 48,635 | 185,137 | 136,668 |
Allocation of net income attributable to noncontrolling interests | (1,839) | (1,531) | (5,920) | (5,354) | ||||
Net income attributable to the partners | $ 82,345 | $ 45,003 | $ 179,217 | $ 131,314 | ||||
Limited partners’ per unit interest in earnings—basic and diluted (in dollars per share) | $ 0.78 | $ 0.43 | $ 1.70 | $ 1.25 | ||||
Weighted average limited partners’ units outstanding (in shares) | 105,440 | 105,440 | 105,440 | 104,908 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities | ||
Net income | $ 185,137 | $ 136,668 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 72,192 | 74,117 |
(Gain) loss on sale of assets | (19) | (196) |
Sales-type Lease, Selling Profit (Loss) | (35,166) | 0 |
Amortization of deferred charges | 2,307 | 2,278 |
Equity-based compensation expense | 1,774 | 2,259 |
Equity in earnings of equity method investments, net of distributions | 263 | 0 |
(Increase) decrease in operating assets: | ||
Accounts receivable – trade | (3,850) | 2,502 |
Accounts receivable – affiliates | 11,016 | 4,392 |
Prepaid and other current assets | 1,694 | (402) |
Increase (decrease) in operating liabilities: | ||
Accounts payable – trade | 2,622 | (1,209) |
Accounts payable – affiliates | (7,475) | (1,311) |
Accrued interest | (7,418) | (7,526) |
Deferred revenue | 413 | 5,218 |
Accrued property taxes | 7,487 | 2,746 |
Other current liabilities | 400 | (1,955) |
Other, net | (3,160) | (169) |
Net cash provided by operating activities | 228,217 | 217,412 |
Cash flows from investing activities | ||
Additions to properties and equipment | (23,828) | (34,270) |
Business and asset acquisitions | (6,841) | |
Proceeds from sale of assets | 265 | 210 |
Distributions in excess of equity in earnings of equity investments | 693 | 1,368 |
Net cash used for investing activities | (22,870) | (39,533) |
Cash flows from financing activities | ||
Borrowings under credit agreement | 269,500 | 256,000 |
Repayments of credit agreement borrowings | (257,000) | (347,000) |
Proceeds from Issuance of common units | 0 | 114,887 |
Distributions to HEP unitholders | (204,701) | (197,300) |
Distributions to noncontrolling interests | (7,750) | (5,500) |
Payments on finance leases | (780) | (929) |
Contributions from general partner | 182 | 614 |
Purchase of units for incentive grants | (255) | 0 |
Units withheld for tax withholding obligations | (119) | (58) |
Other | 0 | 6 |
Net cash used by financing activities | (200,923) | (179,280) |
Cash and cash equivalents | ||
Increase (decrease) for the period | 4,424 | (1,401) |
Beginning of period | 3,045 | 7,776 |
End of period | $ 7,469 | $ 6,375 |
Consolidated Statement of Equit
Consolidated Statement of Equity - USD ($) $ in Thousands | Total | Common Units | Noncontrolling Interest |
Balance, Beginning of Period at Dec. 31, 2017 | $ 485,065 | $ 393,959 | $ 91,106 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Issuance of common units | (114,376) | (114,376) | |
Distributions to HEP unitholders | (63,496) | (63,496) | |
Distributions to noncontrolling interest | (2,000) | (2,000) | |
Amortization of restricted and performance units | 837 | 837 | |
Class B unit accretion | (729) | (729) | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | 1,320 | 1,320 | |
Other | 240 | 240 | |
Net income | 48,635 | 46,897 | 1,738 |
Balance, End of Period at Mar. 31, 2018 | 584,248 | 493,404 | 90,844 |
Balance, Beginning of Period at Dec. 31, 2017 | 485,065 | 393,959 | 91,106 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Net income | 136,668 | ||
Balance, End of Period at Sep. 30, 2018 | 535,667 | 446,946 | 88,721 |
Balance, Beginning of Period at Mar. 31, 2018 | 584,248 | 493,404 | 90,844 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Issuance of common units | (524) | (524) | |
Distributions to HEP unitholders | (66,579) | (66,579) | |
Distributions to noncontrolling interest | (1,500) | (1,500) | |
Amortization of restricted and performance units | 713 | 713 | |
Class B unit accretion | (730) | (730) | |
Other | 193 | 193 | |
Net income | 41,499 | 40,872 | 627 |
Balance, End of Period at Jun. 30, 2018 | 558,368 | 468,397 | 89,971 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Issuance of common units | (61) | (61) | |
Distributions to HEP unitholders | (67,225) | (67,225) | |
Distributions to noncontrolling interest | (2,000) | (2,000) | |
Amortization of restricted and performance units | 709 | 709 | |
Class B unit accretion | (780) | (780) | |
Other | 122 | 122 | |
Net income | 46,534 | 45,784 | 750 |
Balance, End of Period at Sep. 30, 2018 | 535,667 | 446,946 | 88,721 |
Balance, Beginning of Period at Dec. 31, 2018 | 515,561 | 427,435 | 88,126 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Distributions to HEP unitholders | (67,975) | (67,975) | |
Distributions to noncontrolling interest | (3,000) | (3,000) | |
Amortization of restricted and performance units | 661 | 661 | |
Class B unit accretion | (780) | (780) | |
Other | 814 | 814 | |
Net income | 53,794 | 51,962 | 1,832 |
Balance, End of Period at Mar. 31, 2019 | 499,075 | 412,117 | 86,958 |
Balance, Beginning of Period at Dec. 31, 2018 | 515,561 | 427,435 | 88,126 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Net income | 185,137 | ||
Balance, End of Period at Sep. 30, 2019 | 488,484 | 404,584 | 83,900 |
Balance, Beginning of Period at Mar. 31, 2019 | 499,075 | 412,117 | 86,958 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Distributions to HEP unitholders | (68,232) | (68,232) | |
Distributions to noncontrolling interest | (2,250) | (2,250) | |
Amortization of restricted and performance units | 585 | 585 | |
Class B unit accretion | (781) | (781) | |
Other | (138) | (138) | |
Net income | 47,159 | 46,471 | 688 |
Balance, End of Period at Jun. 30, 2019 | 475,418 | 390,022 | 85,396 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Distributions to HEP unitholders | (68,493) | 68,493 | |
Distributions to noncontrolling interest | (2,500) | 2,500 | |
Amortization of restricted and performance units | 528 | 528 | |
Class B unit accretion | (835) | 835 | |
Other | 182 | 182 | |
Net income | 84,184 | 83,180 | 1,004 |
Balance, End of Period at Sep. 30, 2019 | $ 488,484 | $ 404,584 | $ 83,900 |
Description of Business and Pre
Description of Business and Presentation of Financial Statements | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Description of Business and Presentation of Financial Statements | Description of Business and Presentation of Financial Statements Holly Energy Partners, L.P. (“HEP”), together with its consolidated subsidiaries, is a publicly held master limited partnership. As of September 30, 2019 , HollyFrontier Corporation (“HFC”) and its subsidiaries own a 57% limited partner interest and the non-economic general partner interest in HEP. We commenced operations on July 13, 2004, upon the completion of our initial public offering. In these consolidated financial statements, the words “we,” “our,” “ours” and “us” refer to HEP unless the context otherwise indicates. On October 31, 2017, we closed on an equity restructuring transaction with HEP Logistics Holdings, L.P. (“HEP Logistics”), a wholly-owned subsidiary of HFC and the general partner of HEP, pursuant to which the incentive distribution rights ("IDRs") held by HEP Logistics were canceled, and HEP Logistics' 2% general partner interest in HEP was converted into a non-economic general partner interest in HEP. In consideration, we issued 37,250,000 of our common units to HEP Logistics. In addition, HEP Logistics agreed to waive $2.5 million of limited partner cash distributions for each of twelve consecutive quarters beginning with the first quarter the units issued as consideration were eligible to receive distributions. As a result of this transaction, no distributions were made on the general partner interest after October 31, 2017. On January 25, 2018, we entered into a common unit purchase agreement in which certain purchasers agreed to purchase in a private placement 3,700,000 common units representing limited partner interests, at a price of $29.73 per common unit. The private placement closed on February 6, 2018, and we received proceeds of approximately $110 million , which were used to repay indebtedness under our revolving credit facility. We own and operate petroleum product and crude oil pipelines, terminal, tankage and loading rack facilities and refinery processing units that support HFC’s refining and marketing operations in the Mid-Continent, Southwest and Northwest regions of the United States and Delek US Holdings, Inc.’s (“Delek”) refinery in Big Spring, Texas. Additionally, we own a 75% interest in UNEV Pipeline, LLC (“UNEV”), a 50% interest in Osage Pipe Line Company, LLC (“Osage”) and a 50% interest in Cheyenne Pipeline LLC. We operate in two reportable segments, a Pipelines and Terminals segment and a Refinery Processing Unit segment. Disclosures around these segments are discussed in Note 15. We generate revenues by charging tariffs for transporting petroleum products and crude oil through our pipelines, by charging fees for terminalling and storing refined products and other hydrocarbons, providing other services at our storage tanks and terminals and by charging fees for processing hydrocarbon feedstocks through our refinery processing units. We do not take ownership of products that we transport, terminal, store or process, and therefore, we are not exposed directly to changes in commodity prices. The consolidated financial statements included herein have been prepared without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The interim financial statements reflect all adjustments, which, in the opinion of management, are necessary for a fair presentation of our results for the interim periods. Such adjustments are considered to be of a normal recurring nature. Although certain notes and other information required by U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted, we believe that the disclosures in these consolidated financial statements are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2018 . Results of operations for interim periods are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2019 . Principles of Consolidation and Common Control Transactions The consolidated financial statements include our accounts and those of subsidiaries and joint ventures that we control. All significant intercompany transactions and balances have been eliminated. Most of our acquisitions from HFC occurred while we were a consolidated variable interest entity (“VIE”) of HFC. Therefore, as an entity under common control with HFC, we recorded these acquisitions on our balance sheets at HFC's historical basis instead of our purchase price or fair value. Accounting Pronouncements Adopted During the Periods Presented Goodwill Impairment Testing In January 2017, Accounting Standard Update (“ASU”) 2017-04, “Simplifying the Test for Goodwill Impairment,” was issued amending the testing for goodwill impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under this standard, goodwill impairment is measured as the excess of the carrying amount of the reporting unit over the related fair value. We adopted this standard effective in the second quarter of 2019, and the adoption of this standard had no effect on our financial condition, results of operations or cash flows. Leases In February 2016, ASU No. 2016-02, “Leases” (“ASC 842”) was issued requiring leases to be measured and recognized as a lease liability, with a corresponding right-of-use asset on the balance sheet. We adopted this standard effective January 1, 2019 using the optional transition method, whereby comparative prior period financial information will not be restated and will continue to be reported under the lease accounting standard in effect during those periods. We also elected practical expedients provided by the new standard, including the package of practical expedients whereby we did not reassess lease classification or initial indirect lease cost under the new standard. In addition, we elected to exclude short-term leases, which at inception have a lease term of 12 months or less, from the amounts recognized on our balance sheet. Upon adoption of this standard, we recognized $78.4 million of lease liabilities and corresponding right-of-use assets on our consolidated balance sheet. Initial adoption of this standard did not have a material impact on our results of operations or cash flows. See Notes 3 and 4 for additional information on our lease policies. Revenue Recognition In May 2014, an accounting standard update was issued requiring revenue to be recognized when promised goods or services are transferred to customers in an amount that reflects the expected consideration for these goods or services. This standard had an effective date of January 1, 2018, and we accounted for the new guidance using the modified retrospective implementation method, whereby a cumulative effect adjustment was recorded to retained earnings as of the date of initial application. In preparing for adoption, we evaluated the terms, conditions and performance obligations under our existing contracts with customers. Furthermore, we implemented policies to comply with this new standard. See Note 2 for additional information on our revenue recognition policies. Business Combinations In December 2014, an accounting standard update was issued to provide new guidance on the definition of a business in relation to accounting for identifiable intangible assets in business combinations. This standard had an effective date of January 1, 2018 and had no effect on our financial condition, results of operations or cash flows. Financial Assets and Liabilities In January 2016, an accounting standard update was issued requiring changes in the accounting and disclosures for financial instruments. This standard was effective beginning with our 2018 reporting year and had no effect on our financial condition, results of operations or cash flows. Accounting Pronouncements - Not Yet Adopted Credit Losses Measurement In June 2016, ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” was issued requiring measurement of all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This standard is effective January 1, 2020, and our preliminary review of historic and expected credit losses indicates the amount of expected credit losses upon adoption would not have a material impact on our financial condition, results of operations or cash flows. |
Investment in Joint Venture (No
Investment in Joint Venture (Notes) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Business Combination Disclosure [Text Block] | On October 2, 2019, HEP Cushing LLC (“HEP Cushing”), a wholly-owned subsidiary of HEP, and Plains Marketing, L.P. (“PMLP”), a wholly-owned subsidiary of Plains All American Pipeline, L.P. (“Plains”), formed a 50/50 joint venture, Cushing Connect Pipeline & Terminal LLC (the “Joint Venture”), for (i) the development and construction of a new 160,000 barrel per day common carrier crude oil pipeline (the “Pipeline”) that will connect the Cushing, Oklahoma crude oil hub to the Tulsa, Oklahoma refining complex owned by a subsidiary of HFC and (ii) the ownership and operation of 1.5 million barrels of crude oil storage in Cushing, Oklahoma (the “JV Terminal”). The JV Terminal is expected to be in service during the second quarter of 2020, and the Pipeline is expected to be in service during the first quarter of 2021. Long-term commercial agreements have been entered into to support the Joint Venture assets. The Joint Venture will contract with an affiliate of HEP to manage the construction and operation of the Pipeline and with an affiliate of Plains to manage the operation of the JV Terminal. The total Joint Venture investment will be shared proportionately among the partners, and HEP estimates its share of the cost of the JV Terminal contributed by Plains and Pipeline construction costs are approximately $65 million . |
Revenues
Revenues | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Revenues are generally recognized as products are shipped through our pipelines and terminals, feedstocks are processed through our refinery processing units or other services are rendered. The majority of our contracts with customers meet the definition of a lease since (1) performance of the contracts is dependent on specified property, plant, or equipment and (2) it is remote that one or more parties other than the customer will take more than a minor amount of the output associated with the specified property, plant, or equipment. Prior to the adoption of the new lease standard (see Note 1), we bifurcated the consideration received between lease and service revenue. The new lease standard allows the election of a practical expedient whereby a lessor does not have to separate non-lease (service) components from lease components under certain conditions. The majority of our contracts meet these conditions, and we have made this election for those contracts. Under this practical expedient, we treat the combined components as a single performance obligation in accordance with Accounting Standards Codification (“ASC”) 606, which largely codified ASU 2014-09, if the non-lease (service) component is the dominant component. If the lease component is the dominant component, we treat the combined components as a lease in accordance with ASC 842, which largely codified ASU 2016-02. We adopted the new revenue recognition standard (see Note 1) using the modified retrospective method, whereby the cumulative effect of applying the new standard was recorded as an adjustment to the opening balance of partners’ equity as well as the carrying amounts of assets and liabilities as of January 1, 2018, which had no impact on our cash flows. The following table reflects the cumulative effect of adoption as of January 1, 2018: Prior to Adoption Increase (Decrease) As Adjusted (In thousands) Deferred revenue $ 9,598 $ (1,320 ) $ 8,278 Partners’ equity: Common unitholders $ 393,959 $ 1,320 $ 395,279 Several of our contracts include incentive or reduced tariffs once a certain quarterly volume is met. Revenue from the variable element of these transactions is recognized based on the actual volumes shipped as it relates specifically to rendering the services during the applicable quarter. The majority of our long-term transportation contracts specify minimum volume requirements, whereby, we bill a customer for a minimum level of shipments in the event a customer ships below their contractual requirements. If there are no future performance obligations, we will recognize these deficiency payments in revenue. In certain of these throughput agreements, a customer may later utilize such shortfall billings as credit towards future volume shipments in excess of its minimum levels within its respective contractual shortfall make-up period. Such amounts represent an obligation to perform future services, which may be initially deferred and later recognized as revenue based on estimated future shipping levels, including the likelihood of a customer’s ability to utilize such amounts prior to the end of the contractual shortfall make-up period. We recognize the service portion of these deficiency payments in revenue when we do not expect we will be required to satisfy these performance obligations in the future based on the pattern of rights exercised by the customer. During the three and nine months ended September 30, 2019 , we recognized $3.7 million and $10.4 million , respectively, of these deficiency payments in revenue, of which none and $0.6 million , respectively, related to deficiency payments billed in prior periods. As of September 30, 2019 , deferred revenue reflected in our consolidated balance sheet related to shortfalls billed was $0.8 million . A contract liability exists when an entity is obligated to perform future services to a customer for which the entity has received consideration. Since HEP may be required to perform future services for these deficiency payments received, the deferred revenues on our balance sheets were considered contract liabilities. A contract asset exists when an entity has a right to consideration in exchange for goods or services transferred to a customer. Our consolidated balance sheets included the contract assets and liabilities in the table below: September 30, December 31, (In thousands) Contract assets $ 5,479 $ 1,818 Contract liabilities $ (810 ) $ (1,821 ) The contract assets and liabilities include both lease and service components. We did not recognize any revenue during the three months ended September 30, 2019 , that was previously included in contract liability as of December 31, 2018 , and we recognized $0.6 million of revenue during the nine months ended September 30, 2019 , that was previously included in contract liability as of December 31, 2018. During the three and the nine months ended September 30, 2018 , we recognized $37 thousand and $2.6 million , respectively, that was previously included in contract liability as of January 1, 2018. During the three and the nine months ended September 30, 2019 , we also recognized $0.2 million and $3.7 million , respectively, of revenue included in contract assets at September 30, 2019 . As of September 30, 2019 , we expect to recognize $2.5 billion in revenue related to our unfulfilled performance obligations under the terms of our long-term throughput agreements and operating leases expiring in 2020 through 2036. These agreements generally provide for changes in the minimum revenue guarantees annually for increases or decreases in the Producer Price Index (“PPI”) or Federal Energy Regulatory Commission (“FERC”) index, with certain contracts having provisions that limit the level of the rate increases or decreases. We expect to recognize revenue for these unfulfilled performance obligations as shown in the table below (amounts shown in table include both service and lease revenues): Years Ending December 31, (In millions) Remainder of 2019 $ 96 2020 368 2021 358 2022 331 2023 295 Thereafter 1,082 Total $ 2,530 Payment terms under our contracts with customers are consistent with industry norms and are typically payable within 10 to 30 days of the date of invoice. Disaggregated revenues were as follows: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands) Pipelines $ 73,163 $ 69,735 $ 220,526 $ 207,443 Terminals, tanks and loading racks 42,454 36,469 119,121 109,036 Refinery processing units 20,278 19,580 61,496 56,949 $ 135,895 $ 125,784 $ 401,143 $ 373,428 During the three and nine months ended September 30, 2019 , lease revenues amounted to $97.5 million and $285.8 million , respectively, and service revenues amounted to $38.4 million and $115.3 million , respectively. Both of these revenues were recorded within affiliates and third parties revenues on our consolidated statement of income. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases We adopted ASC 842 effective January 1, 2019, and elected to adopt using the modified retrospective transition method and practical expedients, both of which are provided as options by the standard and further defined in Note 1. Lessee Accounting At inception, we determine if an arrangement is or contains a lease. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our payment obligation under the leasing arrangement. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our estimated incremental borrowing rate (“IBR”) to determine the present value of lease payments as most of our leases do not contain an implicit rate. Our IBR represents the interest rate which we would pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment. We use the implicit rate when readily determinable. As a lessee, we lease land, buildings, pipelines, transportation and other equipment to support our operations. These leases can be categorized into operating and finance leases. Operating leases are recorded in operating lease right-of-use assets and current and noncurrent operating lease liabilities on our consolidated balance sheet. Finance leases are included in properties and equipment, current finance lease liabilities and noncurrent finance lease liabilities on our consolidated balance sheet. When renewal options are defined in a lease, our lease term includes an option to extend the lease when it is reasonably certain we will exercise that option. Leases with a term of 12 months or less are not recorded on our balance sheet, and lease expense is accounted for on a straight-line basis. In addition, as a lessee, we separate non-lease components that are identifiable and exclude them from the determination of net present value of lease payment obligations. Our leases have remaining terms of 1 to 26 years , some of which include options to extend the leases for up to 10 years . Finance Lease Obligations We have finance lease obligations related to vehicle leases with initial terms of 33 to 48 months. The total cost of assets under finance leases was $6.7 million and $5.8 million as of September 30, 2019 and December 31, 2018 , respectively, with accumulated depreciation of $4.9 million and $4.3 million as of September 30, 2019 and December 31, 2018 , respectively. We include depreciation of finance leases in depreciation and amortization in our consolidated statements of income. In addition, we have a finance lease obligation related to a pipeline lease with an initial term of 10 years with one remaining subsequent renewal option for an additional 10 years. The right of use asset associated with this obligation was derecognized as discussed under the lessor accounting disclosures below. Supplemental balance sheet information related to leases was as follows (in thousands, except for lease term and discount rate): September 30, 2019 Operating leases: Operating lease right-of-use assets, net $ 3,454 Current operating lease liabilities 807 Noncurrent operating lease liabilities 2,995 Total operating lease liabilities $ 3,802 Finance leases: Properties and equipment $ 6,741 Accumulated amortization (4,858 ) Properties and equipment, net $ 1,883 Current finance lease liabilities $ 5,426 Noncurrent finance lease liabilities 69,168 Total finance lease liabilities $ 74,594 Weighted average remaining lease term (in years) Operating leases 6.6 Finance leases 17.4 Weighted average discount rate Operating leases 5% Finance leases 6% Supplemental cash flow and other information related to leases were as follows: Nine Months Ended (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows on operating leases $ 5,467 Operating cash flows on finance leases $ 75 Financing cash flows on finance leases $ 780 Maturities of lease liabilities were as follows: September 30, 2019 Operating Finance (In thousands) 2019 $ 237 $ 1,856 2020 897 7,305 2021 853 6,856 2022 509 6,711 2023 423 6,755 2024 and thereafter 1,534 86,738 Total lease payments 4,453 116,221 Less: Imputed interest (651 ) (41,627 ) Total lease obligations 3,802 74,594 Less: Current obligations (807 ) (5,426 ) Long-term lease obligations $ 2,995 $ 69,168 The components of lease expense were as follows: Three Months Ended Nine Months Ended (In thousands) Operating lease costs $ 1,852 $ 5,420 Finance lease costs Amortization of assets 213 711 Interest on lease liabilities 24 75 Variable lease cost 41 112 Total net lease cost $ 2,130 $ 6,318 Lessor Accounting As discussed in Note 2, the majority of our contracts with customers meet the definition of a lease. See Note 2 for further discussion of the impact of adoption of this standard on our activities as a lessor. Customer contracts that contain leases are generally classified as either operating leases, direct finance leases or sales-type leases. We consider inputs such as the lease term, fair value of the underlying asset and residual value of the underlying assets when assessing the classification. Substantially all of the assets supporting contracts meeting the definition of a lease have long useful lives, and we believe these assets will continue to have value when the current agreements expire due to our risk management strategy for protecting the residual fair value of the underlying assets by performing ongoing maintenance during the lease term. HFC generally has the option to purchase assets located within HFC refinery boundaries, including refinery tankage, truck racks and refinery processing units, at fair market value when the related agreements expire. One of our throughput agreements with HFC was renewed during the three months ending September 30, 2019. Certain components of this agreement met the criteria of sales-type leases since the underlying assets are not expected to have an alternative use at the end of the lease term to anyone besides HFC. Under sales-type lease accounting, at the commencement date, the lessor recognizes a net investment in the lease and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease. Therefore, we recognized a gain on sales-type leases during the three months ending September 30, 2019 composed of the following: (In thousands) Net investment in leases $ 122,800 Properties and equipment, net (15,031 ) Operating lease right-of-use assets, net (72,603 ) Gain on sales-type leases $ 35,166 This sales-type lease transaction, including the related gain, was a non-cash transaction. Lease income recognized was as follows: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands) Operating lease revenues $ 94,459 $ 71,297 $ 282,747 $ 209,850 Direct financing lease interest income $ 539 $ 510 $ 1,558 $ 1,513 Gain on sales-type leases $ 35,166 $ — $ 35,166 $ — Sales-type lease interest income $ 1,675 $ — $ 1,675 $ — Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable $ 3,075 $ — $ 3,075 $ — For our sales-type leases, we included customer obligations related to minimum volume requirements in guaranteed minimum lease payments. Portions of our minimum guaranteed pipeline tariffs for assets subject to sales-type lease accounting are recorded as interest income with the remaining amounts recorded as a reduction in net investment in leases. We recognized any billings for throughput volumes in excess of minimum volume requirements as variable lease payments, and these variable lease payments were recorded in lease revenues. As discussed in Note 2, prior to the adoption of ASC 842, contract consideration was bifurcated between operating lease and service revenues. Annual minimum undiscounted lease payments under our leases were as follows as of September 30, 2019 : Operating Finance Sales-type Years Ending December 31, (In thousands) Remainder of 2019 $ 81,025 $ 526 $ 2,375 2020 309,604 2,112 9,501 2021 304,857 2,128 9,501 2022 303,454 2,145 9,501 2023 272,954 2,162 9,501 Thereafter 963,783 42,966 52,255 Total $ 2,235,677 $ 52,039 $ 92,634 Net investments in leases recorded on our balance sheet were composed of the following: September 30, 2019 December 31, 2018 Sales-type Leases Direct Financing Leases Sales-type Leases Direct Financing Leases (In thousands) (In thousands) Lease receivables (1) $ 70,426 $ 16,522 $ — $ 16,549 Unguaranteed residual assets 51,674 — — — Net investment in leases $ 122,100 $ 16,522 $ — $ 16,549 (1) Current portion of lease receivables included in prepaid and other current assets on the balance sheet. |
Leases | Leases We adopted ASC 842 effective January 1, 2019, and elected to adopt using the modified retrospective transition method and practical expedients, both of which are provided as options by the standard and further defined in Note 1. Lessee Accounting At inception, we determine if an arrangement is or contains a lease. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our payment obligation under the leasing arrangement. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our estimated incremental borrowing rate (“IBR”) to determine the present value of lease payments as most of our leases do not contain an implicit rate. Our IBR represents the interest rate which we would pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment. We use the implicit rate when readily determinable. As a lessee, we lease land, buildings, pipelines, transportation and other equipment to support our operations. These leases can be categorized into operating and finance leases. Operating leases are recorded in operating lease right-of-use assets and current and noncurrent operating lease liabilities on our consolidated balance sheet. Finance leases are included in properties and equipment, current finance lease liabilities and noncurrent finance lease liabilities on our consolidated balance sheet. When renewal options are defined in a lease, our lease term includes an option to extend the lease when it is reasonably certain we will exercise that option. Leases with a term of 12 months or less are not recorded on our balance sheet, and lease expense is accounted for on a straight-line basis. In addition, as a lessee, we separate non-lease components that are identifiable and exclude them from the determination of net present value of lease payment obligations. Our leases have remaining terms of 1 to 26 years , some of which include options to extend the leases for up to 10 years . Finance Lease Obligations We have finance lease obligations related to vehicle leases with initial terms of 33 to 48 months. The total cost of assets under finance leases was $6.7 million and $5.8 million as of September 30, 2019 and December 31, 2018 , respectively, with accumulated depreciation of $4.9 million and $4.3 million as of September 30, 2019 and December 31, 2018 , respectively. We include depreciation of finance leases in depreciation and amortization in our consolidated statements of income. In addition, we have a finance lease obligation related to a pipeline lease with an initial term of 10 years with one remaining subsequent renewal option for an additional 10 years. The right of use asset associated with this obligation was derecognized as discussed under the lessor accounting disclosures below. Supplemental balance sheet information related to leases was as follows (in thousands, except for lease term and discount rate): September 30, 2019 Operating leases: Operating lease right-of-use assets, net $ 3,454 Current operating lease liabilities 807 Noncurrent operating lease liabilities 2,995 Total operating lease liabilities $ 3,802 Finance leases: Properties and equipment $ 6,741 Accumulated amortization (4,858 ) Properties and equipment, net $ 1,883 Current finance lease liabilities $ 5,426 Noncurrent finance lease liabilities 69,168 Total finance lease liabilities $ 74,594 Weighted average remaining lease term (in years) Operating leases 6.6 Finance leases 17.4 Weighted average discount rate Operating leases 5% Finance leases 6% Supplemental cash flow and other information related to leases were as follows: Nine Months Ended (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows on operating leases $ 5,467 Operating cash flows on finance leases $ 75 Financing cash flows on finance leases $ 780 Maturities of lease liabilities were as follows: September 30, 2019 Operating Finance (In thousands) 2019 $ 237 $ 1,856 2020 897 7,305 2021 853 6,856 2022 509 6,711 2023 423 6,755 2024 and thereafter 1,534 86,738 Total lease payments 4,453 116,221 Less: Imputed interest (651 ) (41,627 ) Total lease obligations 3,802 74,594 Less: Current obligations (807 ) (5,426 ) Long-term lease obligations $ 2,995 $ 69,168 The components of lease expense were as follows: Three Months Ended Nine Months Ended (In thousands) Operating lease costs $ 1,852 $ 5,420 Finance lease costs Amortization of assets 213 711 Interest on lease liabilities 24 75 Variable lease cost 41 112 Total net lease cost $ 2,130 $ 6,318 Lessor Accounting As discussed in Note 2, the majority of our contracts with customers meet the definition of a lease. See Note 2 for further discussion of the impact of adoption of this standard on our activities as a lessor. Customer contracts that contain leases are generally classified as either operating leases, direct finance leases or sales-type leases. We consider inputs such as the lease term, fair value of the underlying asset and residual value of the underlying assets when assessing the classification. Substantially all of the assets supporting contracts meeting the definition of a lease have long useful lives, and we believe these assets will continue to have value when the current agreements expire due to our risk management strategy for protecting the residual fair value of the underlying assets by performing ongoing maintenance during the lease term. HFC generally has the option to purchase assets located within HFC refinery boundaries, including refinery tankage, truck racks and refinery processing units, at fair market value when the related agreements expire. One of our throughput agreements with HFC was renewed during the three months ending September 30, 2019. Certain components of this agreement met the criteria of sales-type leases since the underlying assets are not expected to have an alternative use at the end of the lease term to anyone besides HFC. Under sales-type lease accounting, at the commencement date, the lessor recognizes a net investment in the lease and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease. Therefore, we recognized a gain on sales-type leases during the three months ending September 30, 2019 composed of the following: (In thousands) Net investment in leases $ 122,800 Properties and equipment, net (15,031 ) Operating lease right-of-use assets, net (72,603 ) Gain on sales-type leases $ 35,166 This sales-type lease transaction, including the related gain, was a non-cash transaction. Lease income recognized was as follows: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands) Operating lease revenues $ 94,459 $ 71,297 $ 282,747 $ 209,850 Direct financing lease interest income $ 539 $ 510 $ 1,558 $ 1,513 Gain on sales-type leases $ 35,166 $ — $ 35,166 $ — Sales-type lease interest income $ 1,675 $ — $ 1,675 $ — Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable $ 3,075 $ — $ 3,075 $ — For our sales-type leases, we included customer obligations related to minimum volume requirements in guaranteed minimum lease payments. Portions of our minimum guaranteed pipeline tariffs for assets subject to sales-type lease accounting are recorded as interest income with the remaining amounts recorded as a reduction in net investment in leases. We recognized any billings for throughput volumes in excess of minimum volume requirements as variable lease payments, and these variable lease payments were recorded in lease revenues. As discussed in Note 2, prior to the adoption of ASC 842, contract consideration was bifurcated between operating lease and service revenues. Annual minimum undiscounted lease payments under our leases were as follows as of September 30, 2019 : Operating Finance Sales-type Years Ending December 31, (In thousands) Remainder of 2019 $ 81,025 $ 526 $ 2,375 2020 309,604 2,112 9,501 2021 304,857 2,128 9,501 2022 303,454 2,145 9,501 2023 272,954 2,162 9,501 Thereafter 963,783 42,966 52,255 Total $ 2,235,677 $ 52,039 $ 92,634 Net investments in leases recorded on our balance sheet were composed of the following: September 30, 2019 December 31, 2018 Sales-type Leases Direct Financing Leases Sales-type Leases Direct Financing Leases (In thousands) (In thousands) Lease receivables (1) $ 70,426 $ 16,522 $ — $ 16,549 Unguaranteed residual assets 51,674 — — — Net investment in leases $ 122,100 $ 16,522 $ — $ 16,549 (1) Current portion of lease receivables included in prepaid and other current assets on the balance sheet. |
Leases | Leases We adopted ASC 842 effective January 1, 2019, and elected to adopt using the modified retrospective transition method and practical expedients, both of which are provided as options by the standard and further defined in Note 1. Lessee Accounting At inception, we determine if an arrangement is or contains a lease. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our payment obligation under the leasing arrangement. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our estimated incremental borrowing rate (“IBR”) to determine the present value of lease payments as most of our leases do not contain an implicit rate. Our IBR represents the interest rate which we would pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment. We use the implicit rate when readily determinable. As a lessee, we lease land, buildings, pipelines, transportation and other equipment to support our operations. These leases can be categorized into operating and finance leases. Operating leases are recorded in operating lease right-of-use assets and current and noncurrent operating lease liabilities on our consolidated balance sheet. Finance leases are included in properties and equipment, current finance lease liabilities and noncurrent finance lease liabilities on our consolidated balance sheet. When renewal options are defined in a lease, our lease term includes an option to extend the lease when it is reasonably certain we will exercise that option. Leases with a term of 12 months or less are not recorded on our balance sheet, and lease expense is accounted for on a straight-line basis. In addition, as a lessee, we separate non-lease components that are identifiable and exclude them from the determination of net present value of lease payment obligations. Our leases have remaining terms of 1 to 26 years , some of which include options to extend the leases for up to 10 years . Finance Lease Obligations We have finance lease obligations related to vehicle leases with initial terms of 33 to 48 months. The total cost of assets under finance leases was $6.7 million and $5.8 million as of September 30, 2019 and December 31, 2018 , respectively, with accumulated depreciation of $4.9 million and $4.3 million as of September 30, 2019 and December 31, 2018 , respectively. We include depreciation of finance leases in depreciation and amortization in our consolidated statements of income. In addition, we have a finance lease obligation related to a pipeline lease with an initial term of 10 years with one remaining subsequent renewal option for an additional 10 years. The right of use asset associated with this obligation was derecognized as discussed under the lessor accounting disclosures below. Supplemental balance sheet information related to leases was as follows (in thousands, except for lease term and discount rate): September 30, 2019 Operating leases: Operating lease right-of-use assets, net $ 3,454 Current operating lease liabilities 807 Noncurrent operating lease liabilities 2,995 Total operating lease liabilities $ 3,802 Finance leases: Properties and equipment $ 6,741 Accumulated amortization (4,858 ) Properties and equipment, net $ 1,883 Current finance lease liabilities $ 5,426 Noncurrent finance lease liabilities 69,168 Total finance lease liabilities $ 74,594 Weighted average remaining lease term (in years) Operating leases 6.6 Finance leases 17.4 Weighted average discount rate Operating leases 5% Finance leases 6% Supplemental cash flow and other information related to leases were as follows: Nine Months Ended (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows on operating leases $ 5,467 Operating cash flows on finance leases $ 75 Financing cash flows on finance leases $ 780 Maturities of lease liabilities were as follows: September 30, 2019 Operating Finance (In thousands) 2019 $ 237 $ 1,856 2020 897 7,305 2021 853 6,856 2022 509 6,711 2023 423 6,755 2024 and thereafter 1,534 86,738 Total lease payments 4,453 116,221 Less: Imputed interest (651 ) (41,627 ) Total lease obligations 3,802 74,594 Less: Current obligations (807 ) (5,426 ) Long-term lease obligations $ 2,995 $ 69,168 The components of lease expense were as follows: Three Months Ended Nine Months Ended (In thousands) Operating lease costs $ 1,852 $ 5,420 Finance lease costs Amortization of assets 213 711 Interest on lease liabilities 24 75 Variable lease cost 41 112 Total net lease cost $ 2,130 $ 6,318 Lessor Accounting As discussed in Note 2, the majority of our contracts with customers meet the definition of a lease. See Note 2 for further discussion of the impact of adoption of this standard on our activities as a lessor. Customer contracts that contain leases are generally classified as either operating leases, direct finance leases or sales-type leases. We consider inputs such as the lease term, fair value of the underlying asset and residual value of the underlying assets when assessing the classification. Substantially all of the assets supporting contracts meeting the definition of a lease have long useful lives, and we believe these assets will continue to have value when the current agreements expire due to our risk management strategy for protecting the residual fair value of the underlying assets by performing ongoing maintenance during the lease term. HFC generally has the option to purchase assets located within HFC refinery boundaries, including refinery tankage, truck racks and refinery processing units, at fair market value when the related agreements expire. One of our throughput agreements with HFC was renewed during the three months ending September 30, 2019. Certain components of this agreement met the criteria of sales-type leases since the underlying assets are not expected to have an alternative use at the end of the lease term to anyone besides HFC. Under sales-type lease accounting, at the commencement date, the lessor recognizes a net investment in the lease and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease. Therefore, we recognized a gain on sales-type leases during the three months ending September 30, 2019 composed of the following: (In thousands) Net investment in leases $ 122,800 Properties and equipment, net (15,031 ) Operating lease right-of-use assets, net (72,603 ) Gain on sales-type leases $ 35,166 This sales-type lease transaction, including the related gain, was a non-cash transaction. Lease income recognized was as follows: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands) Operating lease revenues $ 94,459 $ 71,297 $ 282,747 $ 209,850 Direct financing lease interest income $ 539 $ 510 $ 1,558 $ 1,513 Gain on sales-type leases $ 35,166 $ — $ 35,166 $ — Sales-type lease interest income $ 1,675 $ — $ 1,675 $ — Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable $ 3,075 $ — $ 3,075 $ — For our sales-type leases, we included customer obligations related to minimum volume requirements in guaranteed minimum lease payments. Portions of our minimum guaranteed pipeline tariffs for assets subject to sales-type lease accounting are recorded as interest income with the remaining amounts recorded as a reduction in net investment in leases. We recognized any billings for throughput volumes in excess of minimum volume requirements as variable lease payments, and these variable lease payments were recorded in lease revenues. As discussed in Note 2, prior to the adoption of ASC 842, contract consideration was bifurcated between operating lease and service revenues. Annual minimum undiscounted lease payments under our leases were as follows as of September 30, 2019 : Operating Finance Sales-type Years Ending December 31, (In thousands) Remainder of 2019 $ 81,025 $ 526 $ 2,375 2020 309,604 2,112 9,501 2021 304,857 2,128 9,501 2022 303,454 2,145 9,501 2023 272,954 2,162 9,501 Thereafter 963,783 42,966 52,255 Total $ 2,235,677 $ 52,039 $ 92,634 Net investments in leases recorded on our balance sheet were composed of the following: September 30, 2019 December 31, 2018 Sales-type Leases Direct Financing Leases Sales-type Leases Direct Financing Leases (In thousands) (In thousands) Lease receivables (1) $ 70,426 $ 16,522 $ — $ 16,549 Unguaranteed residual assets 51,674 — — — Net investment in leases $ 122,100 $ 16,522 $ — $ 16,549 (1) Current portion of lease receivables included in prepaid and other current assets on the balance sheet. |
Leases | Leases We adopted ASC 842 effective January 1, 2019, and elected to adopt using the modified retrospective transition method and practical expedients, both of which are provided as options by the standard and further defined in Note 1. Lessee Accounting At inception, we determine if an arrangement is or contains a lease. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our payment obligation under the leasing arrangement. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our estimated incremental borrowing rate (“IBR”) to determine the present value of lease payments as most of our leases do not contain an implicit rate. Our IBR represents the interest rate which we would pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment. We use the implicit rate when readily determinable. As a lessee, we lease land, buildings, pipelines, transportation and other equipment to support our operations. These leases can be categorized into operating and finance leases. Operating leases are recorded in operating lease right-of-use assets and current and noncurrent operating lease liabilities on our consolidated balance sheet. Finance leases are included in properties and equipment, current finance lease liabilities and noncurrent finance lease liabilities on our consolidated balance sheet. When renewal options are defined in a lease, our lease term includes an option to extend the lease when it is reasonably certain we will exercise that option. Leases with a term of 12 months or less are not recorded on our balance sheet, and lease expense is accounted for on a straight-line basis. In addition, as a lessee, we separate non-lease components that are identifiable and exclude them from the determination of net present value of lease payment obligations. Our leases have remaining terms of 1 to 26 years , some of which include options to extend the leases for up to 10 years . Finance Lease Obligations We have finance lease obligations related to vehicle leases with initial terms of 33 to 48 months. The total cost of assets under finance leases was $6.7 million and $5.8 million as of September 30, 2019 and December 31, 2018 , respectively, with accumulated depreciation of $4.9 million and $4.3 million as of September 30, 2019 and December 31, 2018 , respectively. We include depreciation of finance leases in depreciation and amortization in our consolidated statements of income. In addition, we have a finance lease obligation related to a pipeline lease with an initial term of 10 years with one remaining subsequent renewal option for an additional 10 years. The right of use asset associated with this obligation was derecognized as discussed under the lessor accounting disclosures below. Supplemental balance sheet information related to leases was as follows (in thousands, except for lease term and discount rate): September 30, 2019 Operating leases: Operating lease right-of-use assets, net $ 3,454 Current operating lease liabilities 807 Noncurrent operating lease liabilities 2,995 Total operating lease liabilities $ 3,802 Finance leases: Properties and equipment $ 6,741 Accumulated amortization (4,858 ) Properties and equipment, net $ 1,883 Current finance lease liabilities $ 5,426 Noncurrent finance lease liabilities 69,168 Total finance lease liabilities $ 74,594 Weighted average remaining lease term (in years) Operating leases 6.6 Finance leases 17.4 Weighted average discount rate Operating leases 5% Finance leases 6% Supplemental cash flow and other information related to leases were as follows: Nine Months Ended (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows on operating leases $ 5,467 Operating cash flows on finance leases $ 75 Financing cash flows on finance leases $ 780 Maturities of lease liabilities were as follows: September 30, 2019 Operating Finance (In thousands) 2019 $ 237 $ 1,856 2020 897 7,305 2021 853 6,856 2022 509 6,711 2023 423 6,755 2024 and thereafter 1,534 86,738 Total lease payments 4,453 116,221 Less: Imputed interest (651 ) (41,627 ) Total lease obligations 3,802 74,594 Less: Current obligations (807 ) (5,426 ) Long-term lease obligations $ 2,995 $ 69,168 The components of lease expense were as follows: Three Months Ended Nine Months Ended (In thousands) Operating lease costs $ 1,852 $ 5,420 Finance lease costs Amortization of assets 213 711 Interest on lease liabilities 24 75 Variable lease cost 41 112 Total net lease cost $ 2,130 $ 6,318 Lessor Accounting As discussed in Note 2, the majority of our contracts with customers meet the definition of a lease. See Note 2 for further discussion of the impact of adoption of this standard on our activities as a lessor. Customer contracts that contain leases are generally classified as either operating leases, direct finance leases or sales-type leases. We consider inputs such as the lease term, fair value of the underlying asset and residual value of the underlying assets when assessing the classification. Substantially all of the assets supporting contracts meeting the definition of a lease have long useful lives, and we believe these assets will continue to have value when the current agreements expire due to our risk management strategy for protecting the residual fair value of the underlying assets by performing ongoing maintenance during the lease term. HFC generally has the option to purchase assets located within HFC refinery boundaries, including refinery tankage, truck racks and refinery processing units, at fair market value when the related agreements expire. One of our throughput agreements with HFC was renewed during the three months ending September 30, 2019. Certain components of this agreement met the criteria of sales-type leases since the underlying assets are not expected to have an alternative use at the end of the lease term to anyone besides HFC. Under sales-type lease accounting, at the commencement date, the lessor recognizes a net investment in the lease and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease. Therefore, we recognized a gain on sales-type leases during the three months ending September 30, 2019 composed of the following: (In thousands) Net investment in leases $ 122,800 Properties and equipment, net (15,031 ) Operating lease right-of-use assets, net (72,603 ) Gain on sales-type leases $ 35,166 This sales-type lease transaction, including the related gain, was a non-cash transaction. Lease income recognized was as follows: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands) Operating lease revenues $ 94,459 $ 71,297 $ 282,747 $ 209,850 Direct financing lease interest income $ 539 $ 510 $ 1,558 $ 1,513 Gain on sales-type leases $ 35,166 $ — $ 35,166 $ — Sales-type lease interest income $ 1,675 $ — $ 1,675 $ — Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable $ 3,075 $ — $ 3,075 $ — For our sales-type leases, we included customer obligations related to minimum volume requirements in guaranteed minimum lease payments. Portions of our minimum guaranteed pipeline tariffs for assets subject to sales-type lease accounting are recorded as interest income with the remaining amounts recorded as a reduction in net investment in leases. We recognized any billings for throughput volumes in excess of minimum volume requirements as variable lease payments, and these variable lease payments were recorded in lease revenues. As discussed in Note 2, prior to the adoption of ASC 842, contract consideration was bifurcated between operating lease and service revenues. Annual minimum undiscounted lease payments under our leases were as follows as of September 30, 2019 : Operating Finance Sales-type Years Ending December 31, (In thousands) Remainder of 2019 $ 81,025 $ 526 $ 2,375 2020 309,604 2,112 9,501 2021 304,857 2,128 9,501 2022 303,454 2,145 9,501 2023 272,954 2,162 9,501 Thereafter 963,783 42,966 52,255 Total $ 2,235,677 $ 52,039 $ 92,634 Net investments in leases recorded on our balance sheet were composed of the following: September 30, 2019 December 31, 2018 Sales-type Leases Direct Financing Leases Sales-type Leases Direct Financing Leases (In thousands) (In thousands) Lease receivables (1) $ 70,426 $ 16,522 $ — $ 16,549 Unguaranteed residual assets 51,674 — — — Net investment in leases $ 122,100 $ 16,522 $ — $ 16,549 (1) Current portion of lease receivables included in prepaid and other current assets on the balance sheet. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments | Fair Value Measurements Fair value is defined as 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. Fair value measurements are derived using inputs (assumptions that market participants would use in pricing an asset or liability) including assumptions about risk. GAAP categorizes inputs used in fair value measurements into three broad levels as follows: • (Level 1) Quoted prices in active markets for identical assets or liabilities. • (Level 2) Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data. • (Level 3) Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes valuation techniques that involve significant unobservable inputs. Financial Instruments Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and debt. The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. Debt consists of outstanding principal under our revolving credit agreement (which approximates fair value as interest rates are reset frequently at current interest rates) and our fixed interest rate senior notes. The carrying amounts and estimated fair values of our senior notes were as follows: September 30, 2019 December 31, 2018 Financial Instrument Fair Value Input Level Carrying Value Fair Value Carrying Value Fair Value (In thousands) Liabilities: 6% Senior Notes Level 2 496,369 523,220 495,900 488,310 Level 2 Financial Instruments Our senior notes are measured at fair value using Level 2 inputs. The fair value of the senior notes is based on market values provided by a third-party bank, which were derived using market quotes for similar type debt instruments. See Note 8 for additional information. Non-Recurring Fair Value Measurements |
Properties and Equipment
Properties and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Properties and Equipment | Properties and Equipment The carrying amounts of our properties and equipment are as follows: September 30, December 31, (In thousands) Pipelines, terminals and tankage $ 1,541,971 $ 1,571,338 Refinery assets 347,338 347,338 Land and right of way 86,095 86,298 Construction in progress 36,901 23,482 Other 41,198 41,250 2,053,503 2,069,706 Less accumulated depreciation (574,553 ) (531,051 ) $ 1,478,950 $ 1,538,655 We capitalized $24 thousand and $0.2 million during the nine months ended September 30, 2019 and 2018 , respectively, in interest attributable to construction projects. Depreciation expense was $61.7 million and $62.6 million for the nine months ended September 30, 2019 and 2018 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Intangible assets include transportation agreements and customer relationships that represent a portion of the total purchase price of certain assets acquired from Delek in 2005, from HFC in 2008 prior to HEP becoming a consolidated VIE of HFC, from Plains in 2017, and from other minor acquisitions in 2018. The carrying amounts of our intangible assets are as follows: Useful Life September 30, December 31, (In thousands) Delek transportation agreement 30 years $ 59,933 $ 59,933 HFC transportation agreement 10-15 years 75,131 75,131 Customer relationships 10 years 69,683 69,683 Other 50 50 204,797 204,797 Less accumulated amortization (99,973 ) (89,468 ) $ 104,824 $ 115,329 Amortization expense was $10.5 million and $11.0 million for the nine months ended September 30, 2019 and 2018 , respectively. We estimate amortization expense to be $14.0 million for each of the next three years, $9.9 million in 2023, and $9.1 million in 2024. We have additional transportation agreements with HFC resulting from historical transactions consisting of pipeline, terminal and tankage assets contributed to us or acquired from HFC. These transactions occurred while we were a consolidated VIE of HFC; therefore, our basis in these agreements is zero and does not reflect a step-up in basis to fair value. |
Employees, Retirement and Incen
Employees, Retirement and Incentive Plans | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Employees, Retirement and Incentive Plans | Employees, Retirement and Incentive Plans Direct support for our operations is provided by Holly Logistic Services, L.L.C. (“HLS”), an HFC subsidiary, which utilizes personnel employed by HFC who are dedicated to performing services for us. Their costs, including salaries, bonuses, payroll taxes, benefits and other direct costs, are charged to us monthly in accordance with an omnibus agreement that we have with HFC (the “Omnibus Agreement”). These employees participate in the retirement and benefit plans of HFC. Our share of retirement and benefit plan costs was $1.8 million and $1.9 million for the three months ended September 30, 2019 and 2018 , respectively, and $5.4 million and $5.3 million for the nine months ended September 30, 2019 and 2018 , respectively. Under HLS’s secondment agreement with HFC (the “Secondment Agreement”), certain employees of HFC are seconded to HLS to provide operational and maintenance services for certain of our processing, refining, pipeline and tankage assets, and HLS reimburses HFC for its prorated portion of the wages, benefits, and other costs related to these employees. We have a Long-Term Incentive Plan for employees and non-employee directors who perform services for us. The Long-Term Incentive Plan consists of four components: restricted or phantom units, performance units, unit options and unit appreciation rights. Our accounting policy for the recognition of compensation expense for awards with pro-rata vesting (a significant proportion of our awards) is to expense the costs ratably over the vesting periods. As of September 30, 2019 , we had two types of incentive-based awards outstanding, which are described below. The compensation cost charged against income was $0.5 million and $0.7 million for the three months ended September 30, 2019 and 2018 , respectively, and $1.8 million and $2.1 million for the nine months ended September 30, 2019 and 2018 , respectively. We currently purchase units in the open market instead of issuing new units for settlement of all unit awards under our Long-Term Incentive Plan. As of September 30, 2019 , 2,500,000 units were authorized to be granted under our Long-Term Incentive Plan, of which 1,236,095 have not yet been granted, assuming no forfeitures of the unvested units and full achievement of goals for the unvested performance units. Restricted and Phantom Units Under our Long-Term Incentive Plan, we grant restricted units to non-employee directors and phantom units to selected employees who perform services for us, with most awards vesting over a period of one to three years. We previously granted restricted units to selected employees who perform services for us, which vest over a period of three years. Although full ownership of the units does not transfer to the recipients until the units vest, the recipients have distribution rights on these units from the date of grant, and the recipients of the restricted units have voting rights on the restricted units from the date of grant. The fair value of each restricted or phantom unit award is measured at the market price as of the date of grant and is amortized on a straight-line basis over the requisite service period for each separately vesting portion of the award. A summary of restricted and phantom unit activity and changes during the nine months ended September 30, 2019 , is presented below: Restricted and Phantom Units Units Weighted Average Grant-Date Fair Value Outstanding at January 1, 2019 (nonvested) 138,016 $ 31.35 Forfeited (18,008 ) 31.22 Outstanding at September 30, 2019 (nonvested) 120,008 $ 31.37 No restricted units were vested and transferred to recipients during the nine months ended September 30, 2019 . As of September 30, 2019 , there was $0.9 million of total unrecognized compensation expense related to unvested restricted and phantom unit grants, which is expected to be recognized over a weighted-average period of 1.1 years. Performance Units Under our Long-Term Incentive Plan, we grant performance units to selected officers who perform services for us. Performance units granted are payable in common units at the end of a three-year performance period based upon meeting certain criteria over the performance period. Under the terms of our performance unit grants, some awards are subject to the growth in our distributable cash flow per common unit over the performance period while other awards are subject to "financial performance" and "market performance." Financial performance is based on meeting certain earnings before interest, taxes, depreciation and amortization ("EBITDA") targets, while market performance is based on the relative standing of total unitholder return achieved by HEP compared to peer group companies. The number of units ultimately issued under these awards can range from 50% to 150% or 0% to 200%. As of September 30, 2019 , estimated unit payouts for outstanding nonvested performance unit awards ranged between 100% and 150% of the target number of performance units granted. We did not grant any performance units during the nine months ended September 30, 2019 . Although common units are not transferred to the recipients until the performance units vest, the recipients have distribution rights with respect to the common units from the date of grant. A summary of performance unit activity and changes for the nine months ended September 30, 2019 , is presented below: Performance Units Units Outstanding at January 1, 2019 (nonvested) 51,748 Vesting and transfer of common units to recipients (10,113 ) Forfeited (5,200 ) Outstanding at September 30, 2019 (nonvested) 36,435 The grant date fair value of performance units vested and transferred to recipients during the nine months ended September 30, 2019 and 2018 was $0.3 million and $0.1 million , respectively. Based on the weighted-average fair value of performance units outstanding at September 30, 2019 , of $1.2 million , there was $0.3 million of total unrecognized compensation expense related to nonvested performance units, which is expected to be recognized over a weighted-average period of 1.3 years. During the nine months ended September 30, 2019 , we paid $0.3 million for the purchase of our common units in the open market for the issuance and settlement of unit awards under our Long-Term Incentive Plan. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt Instruments [Abstract] | |
Debt | Debt Credit Agreement We have a $1.4 billion senior secured revolving credit facility (the “Credit Agreement”) expiring in July 2022. The Credit Agreement is available to fund capital expenditures, investments, acquisitions, distribution payments and working capital and for general partnership purposes. The Credit Agreement is also available to fund letters of credit up to a $50 million sub-limit, and it contains an accordion feature giving us the ability to increase the size of the facility by up to $300 million with additional lender commitments. Our obligations under the Credit Agreement are collateralized by substantially all of our assets, and indebtedness under the Credit Agreement is guaranteed by our material, wholly-owned subsidiaries. The Credit Agreement requires us to maintain compliance with certain financial covenants consisting of total leverage, senior secured leverage, and interest coverage. It also limits or restricts our ability to engage in certain activities. If, at any time prior to the expiration of the Credit Agreement, HEP obtains two investment grade credit ratings, the Credit Agreement will become unsecured and many of the covenants, limitations, and restrictions will be eliminated. We may prepay all loans at any time without penalty, except for tranche breakage costs. If an event of default exists under the Credit Agreement, the lenders will be able to accelerate the maturity of all loans outstanding and exercise other rights and remedies. We were in compliance with the covenants as of September 30, 2019 . Senior Notes We have $500 million in aggregate principal amount of 6% senior unsecured notes due in 2024 (the “6% Senior Notes”). The 6% Senior Notes are unsecured and impose certain restrictive covenants, including limitations on our ability to incur additional indebtedness, make investments, sell assets, incur certain liens, pay distributions, enter into transactions with affiliates and enter into mergers. We were in compliance with the restrictive covenants for the 6% Senior Notes as of September 30, 2019 . At any time when the 6% Senior Notes are rated investment grade by both Moody’s and Standard & Poor’s and no default or event of default exists, we will not be subject to many of the foregoing covenants. Additionally, we have certain redemption rights at varying premiums over face value under the 6% Senior Notes. Indebtedness under the 6% Senior Notes is guaranteed by all of our existing wholly-owned subsidiaries (other than Holly Energy Finance Corp. and certain immaterial subsidiaries). Long-term Debt The carrying amounts of our long-term debt was as follows: September 30, December 31, (In thousands) Credit Agreement Amount outstanding $ 935,500 $ 923,000 6% Senior Notes Principal 500,000 500,000 Unamortized premium and debt issuance costs (3,631 ) (4,100 ) 496,369 495,900 Total long-term debt $ 1,431,869 $ 1,418,900 Interest Expense and Other Debt Information Interest expense consists of the following components: Nine Months Ended September 30, 2019 2018 (In thousands) Interest on outstanding debt: Credit Agreement $ 30,959 $ 27,233 6% Senior Notes 22,500 22,500 Amortization of discount and deferred debt issuance costs 2,307 2,277 Commitment fees and other 1,317 1,450 Total interest incurred 57,083 53,460 Less capitalized interest 24 211 Net interest expense $ 57,059 $ 53,249 Cash paid for interest $ 62,195 $ 58,697 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions We serve HFC’s refineries under long-term pipeline, terminal and tankage throughput agreements, and refinery processing unit tolling agreements expiring from 2021 to 2036 , and revenues from these agreements accounted for 78% of our total revenues for the three and nine months ended September 30, 2019 . Under these agreements, HFC agrees to transport, store and process throughput volumes of refined product, crude oil and feedstocks on our pipelines, terminals, tankage, loading rack facilities and refinery processing units that result in minimum annual payments to us. These minimum annual payments or revenues are subject to annual rate adjustments on July 1st each year generally based on increases or decreases in PPI or the FERC index. As of September 30, 2019 , these agreements with HFC require minimum annualized payments to us of $349 million . If HFC fails to meet its minimum volume commitments under the agreements in any quarter, it will be required to pay us the amount of any shortfall in cash by the last day of the month following the end of the quarter. Under certain of these agreements, a shortfall payment may be applied as a credit in the following four quarters after its minimum obligations are met. Under certain provisions of the Omnibus Agreement, we pay HFC an annual administrative fee (currently $2.6 million ) for the provision by HFC or its affiliates of various general and administrative services to us. This fee does not include the salaries of personnel employed by HFC who perform services for us on behalf of HLS or the cost of their employee benefits, which are charged to us separately by HFC. Also, we reimburse HFC and its affiliates for direct expenses they incur on our behalf. Related party transactions with HFC are as follows: • Revenues received from HFC were $106.0 million and $100.2 million for the three months ended September 30, 2019 and 2018 , respectively, and $311.8 million and $295.6 million for the nine months ended September 30, 2019 and 2018 , respectively. • HFC charged us general and administrative services under the Omnibus Agreement of $0.7 million and $0.6 million for the three months ended September 30, 2019 and 2018 , respectively, and $1.9 million for each of the nine months ended September 30, 2019 and 2018 . • We reimbursed HFC for costs of employees supporting our operations of $13.7 million and $13.1 million for the three months ended September 30, 2019 and 2018 , respectively, and $40.5 million and $38.3 million for the nine months ended September 30, 2019 and 2018 , respectively. • HFC reimbursed us $4.6 million and $2.8 million for the three months ended September 30, 2019 and 2018 , respectively, for expense and capital projects, and $10.4 million and $6.9 million for the nine months ended September 30, 2019 and 2018 , respectively. • We distributed $37.6 million and $36.9 million in the three months ended September 30, 2019 and 2018 , respectively, and $112.4 million and $109.7 million for the nine months ended September 30, 2019 and 2018 , respectively, to HFC as regular distributions on its common units. • Accounts receivable from HFC were $35.8 million and $46.8 million at September 30, 2019 , and December 31, 2018 , respectively. • Accounts payable to HFC were $6.7 million and $14.2 million at September 30, 2019 , and December 31, 2018 , respectively. • Deferred revenue in the consolidated balance sheets at September 30, 2019 and December 31, 2018 , included $0.6 million and $1.7 million , respectively, relating to certain shortfall billings to HFC. • We received direct financing lease payments from HFC for use of our Artesia and Tulsa railyards of $0.5 million for each of the three months ended September 30, 2019 and 2018 , and $1.5 million for each of the nine months ended September 30, 2019 and 2018 . • We recorded a gain on sales-type leases of $35.2 million during the three months ended September 30, 2019 , and we received sales-type lease payments of $2.4 million that were not included in revenues for the three and nine months ended September 30, 2019 . |
Partners' Equity, Income Alloca
Partners' Equity, Income Allocations and Cash Distributions | 9 Months Ended |
Sep. 30, 2019 | |
Partners' Capital [Abstract] | |
Partners' Equity, Income Allocations and Cash Distributions | Partners’ Equity, Income Allocations and Cash Distributions As of September 30, 2019 , HFC held 59,630,030 of our common units, constituting a 57% limited partner interest in us, and held the non-economic general partner interest. On January 25, 2018, we entered into a common unit purchase agreement in which certain purchasers agreed to purchase in a private placement 3,700,000 common units representing limited partnership interests, at a price of $29.73 per common unit. The private placement closed on February 6, 2018, and we received proceeds of approximately $110 million , which were used to repay indebtedness under our Credit Agreement. Continuous Offering Program We have a continuous offering program under which we may issue and sell common units from time to time, representing limited partner interests, up to an aggregate gross sales amount of $200 million . For the nine months ended September 30, 2019 , HEP did not issue units under this program. As of September 30, 2019 , HEP has issued 2,413,153 units under this program, providing $82.3 million in gross proceeds. We intend to use our net proceeds for general partnership purposes, which may include funding working capital, repayment of debt, acquisitions and capital expenditures. Amounts repaid under the Credit Agreement may be reborrowed from time to time. Allocations of Net Income Net income attributable to HEP is allocated to the partners based on their weighted-average ownership percentage during the period. Cash Distributions On October 17, 2019 , we announced our cash distribution for the third quarter of 2019 of $0.6725 per unit. The distribution is payable on all common units and will be paid November 12, 2019 , to all unitholders of record on October 28, 2019 . However, HEP Logistics waived $2.5 million in limited partner cash distributions due to them as discussed in Note 1. Our regular quarterly cash distribution to the limited partners will be $68.5 million for the three months ended September 30, 2019 and was $67.7 million for the three months ended September 30, 2018 . For the nine months ended September 30, 2019 , the regular quarterly distribution to the limited partners will be $205.2 million and was $201.3 million for the nine months ended September 30, 2018 . Our distributions are declared subsequent to quarter end; therefore, these amounts do not reflect distributions paid during the respective period. As a master limited partnership, we distribute our available cash, which historically has exceeded our net income attributable to HEP because depreciation and amortization expense represents a non-cash charge against income. The result is a decline in our partners’ equity since our regular quarterly distributions have exceeded our quarterly net income attributable to HEP. Additionally, if the asset contributions and acquisitions from HFC had occurred while we were not a consolidated VIE of HFC, our acquisition cost, in excess of HFC’s historical basis in the transferred assets, would have been recorded in our financial statements at the time of acquisition as increases to our properties and equipment and intangible assets instead of decreases to our partners’ equity. |
Net Income per Limited Partner
Net Income per Limited Partner Unit | 9 Months Ended |
Sep. 30, 2019 | |
Net Income per Limited Partner Unit [Abstract] | |
Net Income Per Limited Partner Unit | Net Income Per Limited Partner Unit Net income per unit applicable to the limited partners is computed using the two-class method, since we have more than one participating security (common units and restricted units). To the extent net income attributable to the partners exceeds or is less than cash distributions, this difference is allocated to the partners based on their weighted-average ownership percentage during the period, after consideration of any priority allocations of earnings. Our dilutive securities, restricted units, are immaterial for all periods presented. For purposes of applying the two-class method, including the allocation of cash distributions in excess of earnings, net income per limited partner unit is computed as follows: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands) Net income attributable to the partners $ 82,345 $ 45,003 $ 179,217 $ 131,314 Limited partner’s distribution declared on common units (68,494 ) (67,669 ) (205,223 ) (201,310 ) Net income attributable to the partners in excess of (less than) distributions $ 13,851 $ (22,666 ) $ (26,006 ) $ (69,996 ) Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands, except per unit data) Net income attributable to the partners: Distributions declared $ 68,494 $ 67,669 205,223 201,310 Net income attributable to the partners in excess of (less than) distributions 13,851 (22,666 ) (26,006 ) (69,996 ) Net income attributable to the partners $ 82,345 $ 45,003 $ 179,217 $ 131,314 Weighted average limited partners' units outstanding 105,440 105,440 105,440 104,908 Limited partners' per unit interest in earnings - basic and diluted $ 0.78 $ 0.43 $ 1.70 $ 1.25 |
Environmental
Environmental | 9 Months Ended |
Sep. 30, 2019 | |
Accrual for Environmental Loss Contingencies [Abstract] | |
Environmental | Environmental We expensed $0.3 million for the three and nine months ended September 30, 2019 , for environmental remediation obligations, and we expensed $25 thousand and $0.4 million for the three and nine months ended September 30, 2018 , respectively. The accrued environmental liability, net of expected recoveries from indemnifying parties, reflected in our consolidated balance sheets was $5.8 million and $6.3 million at September 30, 2019 and December 31, 2018 , respectively, of which $3.8 million and $4.3 million , respectively, were classified as other long-term liabilities. These accruals include remediation and monitoring costs expected to be incurred over an extended period of time. Under the Omnibus Agreement and certain transportation agreements and purchase agreements with HFC, HFC has agreed to indemnify us, subject to certain monetary and time limitations, for environmental noncompliance and remediation liabilities associated with certain assets transferred to us from HFC and occurring or existing prior to the date of such transfers. Our consolidated balance sheets included additional accrued environmental liabilities of $0.5 million for HFC indemnified liabilities for both periods ending September 30, 2019 and December 31, 2018 , and other assets included equal and offsetting balances representing amounts due from HFC related to indemnifications for environmental remediation liabilities. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies We are a party to various legal and regulatory proceedings, none of which we believe will have a material adverse impact on our financial condition, results of operations or cash flows. |
Operating Segments
Operating Segments | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Operating Segments | Segment Information Although financial information is reviewed by our chief operating decision makers from a variety of perspectives, they view the business in two reportable operating segments: pipelines and terminals, and refinery processing units. These operating segments adhere to the accounting polices used for our consolidated financial statements. Pipelines and terminals have been aggregated as one reportable segment as both pipeline and terminals (1) have similar economic characteristics, (2) similarly provide logistics services of transportation and storage of petroleum products, (3) similarly support the petroleum refining business, including distribution of its products, (4) have principally the same customers and (5) are subject to similar regulatory requirements. We evaluate the performance of each segment based on its respective operating income. Certain general and administrative expenses and interest and financing costs are excluded from segment operating income as they are not directly attributable to a specific reportable segment. Identifiable assets are those used by the segment, whereas other assets are principally equity method investments, cash, deposits and other assets that are not associated with a specific reportable reportable segment. Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands) Revenues: Pipelines and terminals - affiliate $ 85,749 $ 80,608 $ 250,259 $ 238,680 Pipelines and terminals - third-party 29,868 25,596 89,388 77,799 Refinery processing units - affiliate 20,278 19,580 61,496 56,949 Total segment revenues $ 135,895 $ 125,784 $ 401,143 $ 373,428 Segment operating income: Pipelines and terminals $ 56,944 $ 56,531 $ 178,112 $ 167,748 Refinery processing units 9,906 8,890 27,794 24,832 Total segment operating income 66,850 65,421 205,906 192,580 Unallocated general and administrative expenses (2,714 ) (2,498 ) (7,322 ) (8,293 ) Interest and financing costs, net (16,564 ) (17,502 ) (53,737 ) (51,668 ) Equity in earnings of equity method investments 1,334 1,114 5,217 4,127 Gain on sales-type leases 35,166 — 35,166 — Gain (loss) on sale of assets and other 142 38 (57 ) 71 Income before income taxes $ 84,214 $ 46,573 $ 185,173 $ 136,817 Capital Expenditures: Pipelines and terminals $ 5,320 $ 9,389 $ 23,072 $ 34,128 Refinery processing units 756 142 756 142 Total capital expenditures $ 6,076 $ 9,531 $ 23,828 $ 34,270 September 30, 2019 December 31, 2018 (In thousands) Identifiable assets: Pipelines and terminals (1) $ 1,747,930 $ 1,694,101 Refinery processing units 308,311 312,888 Other 98,034 95,551 Total identifiable assets $ 2,154,275 $ 2,102,540 (1) Includes goodwill of $270.3 million as of September 30, 2019 and December 31, 2018 . |
Supplemental Guarantor _ Non-Gu
Supplemental Guarantor / Non-Guarantor Financial Information | 9 Months Ended |
Sep. 30, 2019 | |
Supplemental Guarantor / Non-Guarantor Financial Information [Abstract] | |
Supplemental Guarantor / Non-Guarantor Financial Information | Supplemental Guarantor/Non-Guarantor Financial Information Obligations of HEP (“Parent”) under the 6% Senior Notes have been jointly and severally guaranteed by each of its direct and indirect 100% owned subsidiaries (“Guarantor Subsidiaries”). These guarantees are full and unconditional, subject to certain customary release provisions. These circumstances include (i) when a Guarantor Subsidiary is sold or sells all or substantially all of its assets, (ii) when a Guarantor Subsidiary is declared “unrestricted” for covenant purposes, (iii) when a Guarantor Subsidiary’s guarantee of other indebtedness is terminated or released and (iv) when the requirements for legal defeasance or covenant defeasance or to discharge the senior notes have been satisfied. The following financial information presents condensed consolidating balance sheets, statements of comprehensive income, and statements of cash flows of the Parent, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. The information has been presented as if the Parent accounted for its ownership in the Guarantor Subsidiaries, and the Guarantor Restricted Subsidiaries accounted for the ownership of the Non-Guarantor Non-Restricted Subsidiaries, using the equity method of accounting. Condensed Consolidating Balance Sheet September 30, 2019 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 5,603 $ (1,043 ) $ 2,909 $ — $ 7,469 Accounts receivable — 46,995 5,218 (261 ) 51,952 Prepaid and other current assets 145 4,335 299 4,779 Total current assets 5,748 50,287 8,426 (261 ) 64,200 Properties and equipment, net — 1,144,873 334,077 — 1,478,950 Operating lease right-of-use assets 0 — 3,424 30 — 3,454 Net investment in leases — 136,394 — — 136,394 Investment in subsidiaries 1,829,611 251,700 — (2,081,311 ) — Intangible assets, net — 104,824 — — 104,824 Goodwill — 270,336 — — 270,336 Equity method investments — 82,884 — — 82,884 Other assets 7,334 5,899 — — 13,233 Total assets $ 1,842,693 $ 2,050,621 $ 342,533 $ (2,081,572 ) $ 2,154,275 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ — $ 18,055 $ 1,561 $ (261 ) $ 19,355 Accrued interest 5,884 — — — 5,884 Deferred revenue — 8,964 810 — 9,774 Accrued property taxes — 5,131 4,135 — 9,266 Current operating lease liabilities — 777 30 — 807 Current finance lease liabilities — 5,426 — — 5,426 Other current liabilities 96 2,830 — — 2,926 Total current liabilities 5,980 41,183 6,536 (261 ) 53,438 Long-term debt 1,431,869 — — — 1,431,869 Noncurrent operating lease liabilities — 2,995 — — 2,995 Noncurrent finance lease liabilities — 69,168 — — 69,168 Other long-term liabilities 260 12,245 397 — 12,902 Deferred revenue — 46,862 — — 46,862 Class B unit — 48,557 — — 48,557 Equity - partners 404,584 1,829,611 251,700 (2,081,311 ) 404,584 Equity - noncontrolling interest — — 83,900 — 83,900 Total liabilities and equity $ 1,842,693 $ 2,050,621 $ 342,533 $ (2,081,572 ) $ 2,154,275 Condensed Consolidating Balance Sheet December 31, 2018 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 2 $ — $ 3,043 $ — $ 3,045 Accounts receivable — 53,376 5,994 (252 ) 59,118 Prepaid and other current assets 217 3,542 552 — 4,311 Total current assets 219 56,918 9,589 (252 ) 66,474 Properties and equipment, net — 1,193,181 345,474 — 1,538,655 Net investment in leases — 16,488 — — 16,488 Investment in subsidiaries 1,850,416 264,378 — (2,114,794 ) — Intangible assets, net — 115,329 — — 115,329 Goodwill — 270,336 — — 270,336 Equity method investments — 83,840 — — 83,840 Other assets 9,291 2,127 — — 11,418 Total assets $ 1,859,926 $ 2,002,597 $ 355,063 $ (2,115,046 ) $ 2,102,540 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ — $ 30,325 $ 584 $ (252 ) $ 30,657 Accrued interest 13,302 — — — 13,302 Deferred revenue — 8,065 632 — 8,697 Accrued property taxes — 744 1,035 — 1,779 Current finance lease liabilities — 936 — — 936 Other current liabilities 29 2,493 4 — 2,526 Total current liabilities 13,331 42,563 2,255 (252 ) 57,897 Long-term debt 1,418,900 — — — 1,418,900 Noncurrent finance lease liabilities — 867 — — 867 Other long-term liabilities 260 13,876 304 — 14,440 Deferred revenue — 48,714 — — 48,714 Class B unit — 46,161 — — 46,161 Equity - partners 427,435 1,850,416 264,378 (2,114,794 ) 427,435 Equity - noncontrolling interest — — 88,126 — 88,126 Total liabilities and equity $ 1,859,926 $ 2,002,597 $ 355,063 $ (2,115,046 ) $ 2,102,540 Condensed Consolidating Statement of Comprehensive Income Three Months Ended September 30, 2019 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 99,482 $ 6,545 $ — $ 106,027 Third parties — 23,999 5,869 — 29,868 — 123,481 12,414 — 135,895 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 40,866 4,058 — 44,924 Depreciation and amortization — 19,757 4,364 — 24,121 General and administrative 569 2,145 — — 2,714 569 62,768 8,422 — 71,759 Operating income (loss) (569 ) 60,713 3,992 — 64,136 Other income (expense): Equity in earnings of subsidiaries 101,638 3,013 — (104,651 ) — Equity in earnings of equity method investments — 1,334 — — 1,334 Interest expense (18,945 ) 138 — — (18,807 ) Interest income — 2,243 — — 2,243 Gain on sales-type lease — 35,166 — — 35,166 Gain on sale of assets and other 221 (104 ) 25 — 142 82,914 41,790 25 (104,651 ) 20,078 Income before income taxes 82,345 102,503 4,017 (104,651 ) 84,214 State income tax expense — (30 ) — — (30 ) Net income 82,345 102,473 4,017 (104,651 ) 84,184 Allocation of net income attributable to noncontrolling interests — (835 ) (1,004 ) — (1,839 ) Net income attributable to the partners $ 82,345 $ 101,638 $ 3,013 $ (104,651 ) $ 82,345 Condensed Consolidating Statement of Comprehensive Income Three Months Ended September 30, 2018 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 94,270 $ 5,918 $ — $ 100,188 Third parties — 21,277 4,319 — 25,596 — 115,547 10,237 — 125,784 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 32,906 3,090 — 35,996 Depreciation and amortization — 20,198 4,169 — 24,367 General and administrative 698 1,800 — — 2,498 698 54,904 7,259 — 62,861 Operating income (loss) (698 ) 60,643 2,978 — 62,923 Other income (expense): Equity in earnings of subsidiaries 63,731 2,251 — (65,982 ) — Equity in earnings of equity method investments — 1,114 — — 1,114 Interest expense (18,030 ) (12 ) — — (18,042 ) Interest income — 540 — — 540 Gain (loss) on sale of assets and other — 14 24 — 38 45,701 3,907 24 (65,982 ) (16,350 ) Income before income taxes 45,003 64,550 3,002 (65,982 ) 46,573 State income tax expense — (39 ) — — (39 ) Net income 45,003 64,511 3,002 (65,982 ) 46,534 Allocation of net income attributable to noncontrolling interests — (780 ) (751 ) — (1,531 ) Net income attributable to the partners $ 45,003 $ 63,731 $ 2,251 $ (65,982 ) $ 45,003 Condensed Consolidating Statement of Comprehensive Income Nine Months Ended September 30, 2019 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 293,096 $ 18,659 $ — $ 311,755 Third parties — 69,764 19,624 — 89,388 — 362,860 38,283 — 401,143 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 111,644 11,401 — 123,045 Depreciation and amortization — 59,320 12,872 — 72,192 General and administrative 2,390 4,932 — — 7,322 2,390 175,896 24,273 — 202,559 Operating income (loss) (2,390 ) 186,964 14,010 — 198,584 Other income (expense): Equity in earnings (loss) of subsidiaries 238,368 10,572 — (248,940 ) — Equity in earnings of equity method investments — 5,217 — — 5,217 Interest expense (56,982 ) (77 ) — — (57,059 ) Interest income — 3,322 — — 3,322 Gain on sales-type lease — 35,166 — — 35,166 Gain (loss) on sale of assets 221 (364 ) 86 — (57 ) 181,607 53,836 86 (248,940 ) (13,411 ) Income (loss) before income taxes 179,217 240,800 14,096 (248,940 ) 185,173 State income tax expense — (36 ) — — (36 ) Net income (loss) 179,217 240,764 14,096 (248,940 ) 185,137 Allocation of net income attributable to noncontrolling interests — (2,396 ) (3,524 ) — (5,920 ) Net income attributable to the partners $ 179,217 $ 238,368 $ 10,572 $ (248,940 ) $ 179,217 Condensed Consolidating Statement of Comprehensive Income Nine Months Ended September 30, 2018 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 278,083 $ 17,546 $ — $ 295,629 Third parties — 60,795 17,004 — 77,799 — 338,878 34,550 — 373,428 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 97,064 9,667 — 106,731 Depreciation and amortization — 61,630 12,487 — 74,117 General and administrative 2,739 5,554 — — 8,293 2,739 164,248 22,154 — 189,141 Operating income (loss) (2,739 ) 174,630 12,396 — 184,287 Other income (expense): Equity in earnings (loss) of subsidiaries 187,349 9,344 — (196,693 ) — Equity in earnings of equity method investments — 4,127 — — 4,127 Interest expense (53,341 ) 92 — — (53,249 ) Interest income — 1,581 — — 1,581 Gain (loss) on sale of assets and other 45 (37 ) 63 — 71 134,053 15,107 63 (196,693 ) (47,470 ) Income (loss) before income taxes 131,314 189,737 12,459 (196,693 ) 136,817 State income tax expense — (149 ) — — (149 ) Net income (loss) 131,314 189,588 12,459 (196,693 ) 136,668 Allocation of net income attributable to noncontrolling interests — (2,239 ) (3,115 ) — (5,354 ) Net income attributable to the partners $ 131,314 $ 187,349 $ 9,344 $ (196,693 ) $ 131,314 Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2019 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Cash flows from operating activities $ (62,229 ) $ 271,657 $ 31,467 $ (12,678 ) $ 228,217 Cash flows from investing activities Additions to properties and equipment — (23,227 ) (601 ) — (23,828 ) Distributions from UNEV in excess of earnings — 10,572 — (10,572 ) — Proceeds from sale of assets — 265 — — 265 Distributions in excess of equity in earnings of equity investments — 693 — — 693 — (11,697 ) (601 ) (10,572 ) (22,870 ) Cash flows from financing activities Net borrowings under credit agreement 12,500 — — — 12,500 Net intercompany financing activities 260,362 (260,362 ) — — — Contribution from general partner 182 — — — 182 Distributions to HEP unitholders (204,701 ) — — — (204,701 ) Distributions to noncontrolling interests — — (31,000 ) 23,250 (7,750 ) Units withheld for tax withholding obligations (119 ) — — — (119 ) Purchase units for incentive grants (255 ) — — — (255 ) Payments on finance leases — (780 ) — — (780 ) Other (139 ) 139 — — — 67,830 (261,003 ) (31,000 ) 23,250 (200,923 ) Cash and cash equivalents Increase (decrease) for the period 5,601 (1,043 ) (134 ) — 4,424 Beginning of period 2 — 3,043 — 3,045 End of period $ 5,603 $ (1,043 ) $ 2,909 $ — $ 7,469 Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2018 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Cash flows from operating activities $ (58,326 ) $ 259,360 $ 25,722 $ (9,344 ) $ 217,412 Cash flows from investing activities Additions to properties and equipment — (28,057 ) (6,213 ) — (34,270 ) Business and asset acquisitions — (6,803 ) (38 ) — (6,841 ) Distributions from UNEV in excess of earnings — 7,156 — (7,156 ) — Proceeds from sale of assets — 210 — — 210 Distributions in excess of equity in earnings of equity investments — 1,368 — — 1,368 — (26,126 ) (6,251 ) (7,156 ) (39,533 ) Cash flows from financing activities Net repayments under credit agreement (91,000 ) — — — (91,000 ) Net intercompany financing activities 231,231 (231,231 ) — — — Proceeds from issuance of common units 114,839 48 — — 114,887 Distributions to HEP unitholders (197,300 ) — — — (197,300 ) Distributions to noncontrolling interests — — (22,000 ) 16,500 (5,500 ) Contributions from general partner 614 — — — 614 Units withheld for tax withholding obligations (58 ) — — — (58 ) Other — (923 ) — — (923 ) 58,326 (232,106 ) (22,000 ) 16,500 (179,280 ) Cash and cash equivalents Increase (decrease) for the period — 1,128 (2,529 ) — (1,401 ) Beginning of period 2 511 7,263 — 7,776 End of period $ 2 $ 1,639 $ 4,734 $ — $ 6,375 |
Description of Business and P_2
Description of Business and Presentation of Financial Statements (Policies) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Jan. 01, 2019 | |
Accounting Policies [Abstract] | ||
Consolidation | Principles of Consolidation and Common Control Transactions The consolidated financial statements include our accounts and those of subsidiaries and joint ventures that we control. All significant intercompany transactions and balances have been eliminated. Most of our acquisitions from HFC occurred while we were a consolidated variable interest entity (“VIE”) of HFC. Therefore, as an entity under common control with HFC, we recorded these acquisitions on our balance sheets at HFC's historical basis instead of our purchase price or fair value. | |
Goodwill Impairment Testing | Goodwill Impairment Testing In January 2017, Accounting Standard Update (“ASU”) 2017-04, “Simplifying the Test for Goodwill Impairment,” was issued amending the testing for goodwill impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under this standard, goodwill impairment is measured as the excess of the carrying amount of the reporting unit over the related fair value. We adopted this standard effective in the second quarter of 2019, and the adoption of this standard had no effect on our financial condition, results of operations or cash flows. | |
Lessee, Leases | Leases In February 2016, ASU No. 2016-02, “Leases” (“ASC 842”) was issued requiring leases to be measured and recognized as a lease liability, with a corresponding right-of-use asset on the balance sheet. We adopted this standard effective January 1, 2019 using the optional transition method, whereby comparative prior period financial information will not be restated and will continue to be reported under the lease accounting standard in effect during those periods. We also elected practical expedients provided by the new standard, including the package of practical expedients whereby we did not reassess lease classification or initial indirect lease cost under the new standard. In addition, we elected to exclude short-term leases, which at inception have a lease term of 12 months or less, from the amounts recognized on our balance sheet. Upon adoption of this standard, we recognized $78.4 million of lease liabilities and corresponding right-of-use assets on our consolidated balance sheet. Initial adoption of this standard did not have a material impact on our results of operations or cash flows. See Notes 3 and 4 for additional information on our lease policies. | |
Revenue Recognition | Revenue Recognition In May 2014, an accounting standard update was issued requiring revenue to be recognized when promised goods or services are transferred to customers in an amount that reflects the expected consideration for these goods or services. This standard had an effective date of January 1, 2018, and we accounted for the new guidance using the modified retrospective implementation method, whereby a cumulative effect adjustment was recorded to retained earnings as of the date of initial application. In preparing for adoption, we evaluated the terms, conditions and performance obligations under our existing contracts with customers. Furthermore, we implemented policies to comply with this new standard. See Note 2 for additional information on our revenue recognition policies. | |
Business Combinations Policy | Business Combinations In December 2014, an accounting standard update was issued to provide new guidance on the definition of a business in relation to accounting for identifiable intangible assets in business combinations. This standard had an effective date of January 1, 2018 and had no effect on our financial condition, results of operations or cash flows. | |
Fair Value of Financial Instruments | Financial Assets and Liabilities In January 2016, an accounting standard update was issued requiring changes in the accounting and disclosures for financial instruments. This standard was effective beginning with our 2018 reporting year and had no effect on our financial condition, results of operations or cash flows. | |
New Accounting Pronouncements | Accounting Pronouncements - Not Yet Adopted Credit Losses Measurement In June 2016, ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” was issued requiring measurement of all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This standard is effective January 1, 2020, and our preliminary review of historic and expected credit losses indicates the amount of expected credit losses upon adoption would not have a material impact on our financial condition, results of operations or cash flows. | |
Operating Lease, Liability | $ 3,802 | $ 78,400 |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Effect of Adoption of Revenue Recognition Standard | The following table reflects the cumulative effect of adoption as of January 1, 2018: Prior to Adoption Increase (Decrease) As Adjusted (In thousands) Deferred revenue $ 9,598 $ (1,320 ) $ 8,278 Partners’ equity: Common unitholders $ 393,959 $ 1,320 $ 395,279 |
Schedule of Contract Asset and Contract Liability Balances | Our consolidated balance sheets included the contract assets and liabilities in the table below: September 30, December 31, (In thousands) Contract assets $ 5,479 $ 1,818 Contract liabilities $ (810 ) $ (1,821 ) |
Schedule of Future Performance Obligations | We expect to recognize revenue for these unfulfilled performance obligations as shown in the table below (amounts shown in table include both service and lease revenues): Years Ending December 31, (In millions) Remainder of 2019 $ 96 2020 368 2021 358 2022 331 2023 295 Thereafter 1,082 Total $ 2,530 |
Schedule of Disaggregated Revenue | Disaggregated revenues were as follows: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands) Pipelines $ 73,163 $ 69,735 $ 220,526 $ 207,443 Terminals, tanks and loading racks 42,454 36,469 119,121 109,036 Refinery processing units 20,278 19,580 61,496 56,949 $ 135,895 $ 125,784 $ 401,143 $ 373,428 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases was as follows (in thousands, except for lease term and discount rate): September 30, 2019 Operating leases: Operating lease right-of-use assets, net $ 3,454 Current operating lease liabilities 807 Noncurrent operating lease liabilities 2,995 Total operating lease liabilities $ 3,802 Finance leases: Properties and equipment $ 6,741 Accumulated amortization (4,858 ) Properties and equipment, net $ 1,883 Current finance lease liabilities $ 5,426 Noncurrent finance lease liabilities 69,168 Total finance lease liabilities $ 74,594 Weighted average remaining lease term (in years) Operating leases 6.6 Finance leases 17.4 Weighted average discount rate Operating leases 5% Finance leases 6% |
Schedule of Supplemental Cash Flow Information and Components of Lease Expense | The components of lease expense were as follows: Three Months Ended Nine Months Ended (In thousands) Operating lease costs $ 1,852 $ 5,420 Finance lease costs Amortization of assets 213 711 Interest on lease liabilities 24 75 Variable lease cost 41 112 Total net lease cost $ 2,130 $ 6,318 Supplemental cash flow and other information related to leases were as follows: Nine Months Ended (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows on operating leases $ 5,467 Operating cash flows on finance leases $ 75 Financing cash flows on finance leases $ 780 |
Schedule of Operating Lease Maturities | Maturities of lease liabilities were as follows: September 30, 2019 Operating Finance (In thousands) 2019 $ 237 $ 1,856 2020 897 7,305 2021 853 6,856 2022 509 6,711 2023 423 6,755 2024 and thereafter 1,534 86,738 Total lease payments 4,453 116,221 Less: Imputed interest (651 ) (41,627 ) Total lease obligations 3,802 74,594 Less: Current obligations (807 ) (5,426 ) Long-term lease obligations $ 2,995 $ 69,168 |
Schedule of Sales-Type Lease Gain | Therefore, we recognized a gain on sales-type leases during the three months ending September 30, 2019 composed of the following: (In thousands) Net investment in leases $ 122,800 Properties and equipment, net (15,031 ) Operating lease right-of-use assets, net (72,603 ) Gain on sales-type leases $ 35,166 |
Schedule of Finance Lease Maturities | Maturities of lease liabilities were as follows: September 30, 2019 Operating Finance (In thousands) 2019 $ 237 $ 1,856 2020 897 7,305 2021 853 6,856 2022 509 6,711 2023 423 6,755 2024 and thereafter 1,534 86,738 Total lease payments 4,453 116,221 Less: Imputed interest (651 ) (41,627 ) Total lease obligations 3,802 74,594 Less: Current obligations (807 ) (5,426 ) Long-term lease obligations $ 2,995 $ 69,168 |
Schedule of Lease Income | Lease income recognized was as follows: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands) Operating lease revenues $ 94,459 $ 71,297 $ 282,747 $ 209,850 Direct financing lease interest income $ 539 $ 510 $ 1,558 $ 1,513 Gain on sales-type leases $ 35,166 $ — $ 35,166 $ — Sales-type lease interest income $ 1,675 $ — $ 1,675 $ — Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable $ 3,075 $ — $ 3,075 $ — |
Schedule of Minimum Undiscounted Lease Payments | Annual minimum undiscounted lease payments under our leases were as follows as of September 30, 2019 : Operating Finance Sales-type Years Ending December 31, (In thousands) Remainder of 2019 $ 81,025 $ 526 $ 2,375 2020 309,604 2,112 9,501 2021 304,857 2,128 9,501 2022 303,454 2,145 9,501 2023 272,954 2,162 9,501 Thereafter 963,783 42,966 52,255 Total $ 2,235,677 $ 52,039 $ 92,634 |
Schedule of Net Investment in Leases | Net investments in leases recorded on our balance sheet were composed of the following: September 30, 2019 December 31, 2018 Sales-type Leases Direct Financing Leases Sales-type Leases Direct Financing Leases (In thousands) (In thousands) Lease receivables (1) $ 70,426 $ 16,522 $ — $ 16,549 Unguaranteed residual assets 51,674 — — — Net investment in leases $ 122,100 $ 16,522 $ — $ 16,549 (1) Current portion of lease receivables included in prepaid and other current assets on the balance sheet. |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Financial Instruments Measured on Recurring Basis | The carrying amounts and estimated fair values of our senior notes were as follows: September 30, 2019 December 31, 2018 Financial Instrument Fair Value Input Level Carrying Value Fair Value Carrying Value Fair Value (In thousands) Liabilities: 6% Senior Notes Level 2 496,369 523,220 495,900 488,310 |
Properties and Equipment (Table
Properties and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Properties and Equipment | The carrying amounts of our properties and equipment are as follows: September 30, December 31, (In thousands) Pipelines, terminals and tankage $ 1,541,971 $ 1,571,338 Refinery assets 347,338 347,338 Land and right of way 86,095 86,298 Construction in progress 36,901 23,482 Other 41,198 41,250 2,053,503 2,069,706 Less accumulated depreciation (574,553 ) (531,051 ) $ 1,478,950 $ 1,538,655 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets by Major Class | The carrying amounts of our intangible assets are as follows: Useful Life September 30, December 31, (In thousands) Delek transportation agreement 30 years $ 59,933 $ 59,933 HFC transportation agreement 10-15 years 75,131 75,131 Customer relationships 10 years 69,683 69,683 Other 50 50 204,797 204,797 Less accumulated amortization (99,973 ) (89,468 ) $ 104,824 $ 115,329 |
Employees, Retirement and Inc_2
Employees, Retirement and Incentive Plans (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Nonvested Restricted Stock Units Activity | A summary of restricted and phantom unit activity and changes during the nine months ended September 30, 2019 , is presented below: Restricted and Phantom Units Units Weighted Average Grant-Date Fair Value Outstanding at January 1, 2019 (nonvested) 138,016 $ 31.35 Forfeited (18,008 ) 31.22 Outstanding at September 30, 2019 (nonvested) 120,008 $ 31.37 |
Schedule of Nonvested Performance-based Units Activity | A summary of performance unit activity and changes for the nine months ended September 30, 2019 , is presented below: Performance Units Units Outstanding at January 1, 2019 (nonvested) 51,748 Vesting and transfer of common units to recipients (10,113 ) Forfeited (5,200 ) Outstanding at September 30, 2019 (nonvested) 36,435 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Instruments [Abstract] | |
Schedule of Long-term Debt Instruments | The carrying amounts of our long-term debt was as follows: September 30, December 31, (In thousands) Credit Agreement Amount outstanding $ 935,500 $ 923,000 6% Senior Notes Principal 500,000 500,000 Unamortized premium and debt issuance costs (3,631 ) (4,100 ) 496,369 495,900 Total long-term debt $ 1,431,869 $ 1,418,900 |
Schedule of Interest Expense and Other Debt Information | Interest expense consists of the following components: Nine Months Ended September 30, 2019 2018 (In thousands) Interest on outstanding debt: Credit Agreement $ 30,959 $ 27,233 6% Senior Notes 22,500 22,500 Amortization of discount and deferred debt issuance costs 2,307 2,277 Commitment fees and other 1,317 1,450 Total interest incurred 57,083 53,460 Less capitalized interest 24 211 Net interest expense $ 57,059 $ 53,249 Cash paid for interest $ 62,195 $ 58,697 |
Net Income per Limited Partne_2
Net Income per Limited Partner Unit (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Net Income per Limited Partner Unit [Abstract] | |
Schedule of Allocation to Limited Partner Interest in Net Income | For purposes of applying the two-class method, including the allocation of cash distributions in excess of earnings, net income per limited partner unit is computed as follows: Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands) Net income attributable to the partners $ 82,345 $ 45,003 $ 179,217 $ 131,314 Limited partner’s distribution declared on common units (68,494 ) (67,669 ) (205,223 ) (201,310 ) Net income attributable to the partners in excess of (less than) distributions $ 13,851 $ (22,666 ) $ (26,006 ) $ (69,996 ) |
Earnings per Unit by Type of Partner | Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands, except per unit data) Net income attributable to the partners: Distributions declared $ 68,494 $ 67,669 205,223 201,310 Net income attributable to the partners in excess of (less than) distributions 13,851 (22,666 ) (26,006 ) (69,996 ) Net income attributable to the partners $ 82,345 $ 45,003 $ 179,217 $ 131,314 Weighted average limited partners' units outstanding 105,440 105,440 105,440 104,908 Limited partners' per unit interest in earnings - basic and diluted $ 0.78 $ 0.43 $ 1.70 $ 1.25 |
Operating Segments (Tables)
Operating Segments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Three Months Ended Nine Months Ended 2019 2018 2019 2018 (In thousands) Revenues: Pipelines and terminals - affiliate $ 85,749 $ 80,608 $ 250,259 $ 238,680 Pipelines and terminals - third-party 29,868 25,596 89,388 77,799 Refinery processing units - affiliate 20,278 19,580 61,496 56,949 Total segment revenues $ 135,895 $ 125,784 $ 401,143 $ 373,428 Segment operating income: Pipelines and terminals $ 56,944 $ 56,531 $ 178,112 $ 167,748 Refinery processing units 9,906 8,890 27,794 24,832 Total segment operating income 66,850 65,421 205,906 192,580 Unallocated general and administrative expenses (2,714 ) (2,498 ) (7,322 ) (8,293 ) Interest and financing costs, net (16,564 ) (17,502 ) (53,737 ) (51,668 ) Equity in earnings of equity method investments 1,334 1,114 5,217 4,127 Gain on sales-type leases 35,166 — 35,166 — Gain (loss) on sale of assets and other 142 38 (57 ) 71 Income before income taxes $ 84,214 $ 46,573 $ 185,173 $ 136,817 Capital Expenditures: Pipelines and terminals $ 5,320 $ 9,389 $ 23,072 $ 34,128 Refinery processing units 756 142 756 142 Total capital expenditures $ 6,076 $ 9,531 $ 23,828 $ 34,270 September 30, 2019 December 31, 2018 (In thousands) Identifiable assets: Pipelines and terminals (1) $ 1,747,930 $ 1,694,101 Refinery processing units 308,311 312,888 Other 98,034 95,551 Total identifiable assets $ 2,154,275 $ 2,102,540 (1) Includes goodwill of $270.3 million as of September 30, 2019 and December 31, 2018 . |
Supplemental Guarantor _ Non-_2
Supplemental Guarantor / Non-Guarantor Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Supplemental Guarantor / Non-Guarantor Financial Information [Abstract] | |
Condensed Consolidating Balance Sheet | Condensed Consolidating Balance Sheet September 30, 2019 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 5,603 $ (1,043 ) $ 2,909 $ — $ 7,469 Accounts receivable — 46,995 5,218 (261 ) 51,952 Prepaid and other current assets 145 4,335 299 4,779 Total current assets 5,748 50,287 8,426 (261 ) 64,200 Properties and equipment, net — 1,144,873 334,077 — 1,478,950 Operating lease right-of-use assets 0 — 3,424 30 — 3,454 Net investment in leases — 136,394 — — 136,394 Investment in subsidiaries 1,829,611 251,700 — (2,081,311 ) — Intangible assets, net — 104,824 — — 104,824 Goodwill — 270,336 — — 270,336 Equity method investments — 82,884 — — 82,884 Other assets 7,334 5,899 — — 13,233 Total assets $ 1,842,693 $ 2,050,621 $ 342,533 $ (2,081,572 ) $ 2,154,275 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ — $ 18,055 $ 1,561 $ (261 ) $ 19,355 Accrued interest 5,884 — — — 5,884 Deferred revenue — 8,964 810 — 9,774 Accrued property taxes — 5,131 4,135 — 9,266 Current operating lease liabilities — 777 30 — 807 Current finance lease liabilities — 5,426 — — 5,426 Other current liabilities 96 2,830 — — 2,926 Total current liabilities 5,980 41,183 6,536 (261 ) 53,438 Long-term debt 1,431,869 — — — 1,431,869 Noncurrent operating lease liabilities — 2,995 — — 2,995 Noncurrent finance lease liabilities — 69,168 — — 69,168 Other long-term liabilities 260 12,245 397 — 12,902 Deferred revenue — 46,862 — — 46,862 Class B unit — 48,557 — — 48,557 Equity - partners 404,584 1,829,611 251,700 (2,081,311 ) 404,584 Equity - noncontrolling interest — — 83,900 — 83,900 Total liabilities and equity $ 1,842,693 $ 2,050,621 $ 342,533 $ (2,081,572 ) $ 2,154,275 Condensed Consolidating Balance Sheet December 31, 2018 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 2 $ — $ 3,043 $ — $ 3,045 Accounts receivable — 53,376 5,994 (252 ) 59,118 Prepaid and other current assets 217 3,542 552 — 4,311 Total current assets 219 56,918 9,589 (252 ) 66,474 Properties and equipment, net — 1,193,181 345,474 — 1,538,655 Net investment in leases — 16,488 — — 16,488 Investment in subsidiaries 1,850,416 264,378 — (2,114,794 ) — Intangible assets, net — 115,329 — — 115,329 Goodwill — 270,336 — — 270,336 Equity method investments — 83,840 — — 83,840 Other assets 9,291 2,127 — — 11,418 Total assets $ 1,859,926 $ 2,002,597 $ 355,063 $ (2,115,046 ) $ 2,102,540 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ — $ 30,325 $ 584 $ (252 ) $ 30,657 Accrued interest 13,302 — — — 13,302 Deferred revenue — 8,065 632 — 8,697 Accrued property taxes — 744 1,035 — 1,779 Current finance lease liabilities — 936 — — 936 Other current liabilities 29 2,493 4 — 2,526 Total current liabilities 13,331 42,563 2,255 (252 ) 57,897 Long-term debt 1,418,900 — — — 1,418,900 Noncurrent finance lease liabilities — 867 — — 867 Other long-term liabilities 260 13,876 304 — 14,440 Deferred revenue — 48,714 — — 48,714 Class B unit — 46,161 — — 46,161 Equity - partners 427,435 1,850,416 264,378 (2,114,794 ) 427,435 Equity - noncontrolling interest — — 88,126 — 88,126 Total liabilities and equity $ 1,859,926 $ 2,002,597 $ 355,063 $ (2,115,046 ) $ 2,102,540 |
Condensed Consolidating Statement of Comprehensive Income | Condensed Consolidating Statement of Comprehensive Income Three Months Ended September 30, 2019 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 99,482 $ 6,545 $ — $ 106,027 Third parties — 23,999 5,869 — 29,868 — 123,481 12,414 — 135,895 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 40,866 4,058 — 44,924 Depreciation and amortization — 19,757 4,364 — 24,121 General and administrative 569 2,145 — — 2,714 569 62,768 8,422 — 71,759 Operating income (loss) (569 ) 60,713 3,992 — 64,136 Other income (expense): Equity in earnings of subsidiaries 101,638 3,013 — (104,651 ) — Equity in earnings of equity method investments — 1,334 — — 1,334 Interest expense (18,945 ) 138 — — (18,807 ) Interest income — 2,243 — — 2,243 Gain on sales-type lease — 35,166 — — 35,166 Gain on sale of assets and other 221 (104 ) 25 — 142 82,914 41,790 25 (104,651 ) 20,078 Income before income taxes 82,345 102,503 4,017 (104,651 ) 84,214 State income tax expense — (30 ) — — (30 ) Net income 82,345 102,473 4,017 (104,651 ) 84,184 Allocation of net income attributable to noncontrolling interests — (835 ) (1,004 ) — (1,839 ) Net income attributable to the partners $ 82,345 $ 101,638 $ 3,013 $ (104,651 ) $ 82,345 Condensed Consolidating Statement of Comprehensive Income Three Months Ended September 30, 2018 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 94,270 $ 5,918 $ — $ 100,188 Third parties — 21,277 4,319 — 25,596 — 115,547 10,237 — 125,784 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 32,906 3,090 — 35,996 Depreciation and amortization — 20,198 4,169 — 24,367 General and administrative 698 1,800 — — 2,498 698 54,904 7,259 — 62,861 Operating income (loss) (698 ) 60,643 2,978 — 62,923 Other income (expense): Equity in earnings of subsidiaries 63,731 2,251 — (65,982 ) — Equity in earnings of equity method investments — 1,114 — — 1,114 Interest expense (18,030 ) (12 ) — — (18,042 ) Interest income — 540 — — 540 Gain (loss) on sale of assets and other — 14 24 — 38 45,701 3,907 24 (65,982 ) (16,350 ) Income before income taxes 45,003 64,550 3,002 (65,982 ) 46,573 State income tax expense — (39 ) — — (39 ) Net income 45,003 64,511 3,002 (65,982 ) 46,534 Allocation of net income attributable to noncontrolling interests — (780 ) (751 ) — (1,531 ) Net income attributable to the partners $ 45,003 $ 63,731 $ 2,251 $ (65,982 ) $ 45,003 Condensed Consolidating Statement of Comprehensive Income Nine Months Ended September 30, 2019 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 293,096 $ 18,659 $ — $ 311,755 Third parties — 69,764 19,624 — 89,388 — 362,860 38,283 — 401,143 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 111,644 11,401 — 123,045 Depreciation and amortization — 59,320 12,872 — 72,192 General and administrative 2,390 4,932 — — 7,322 2,390 175,896 24,273 — 202,559 Operating income (loss) (2,390 ) 186,964 14,010 — 198,584 Other income (expense): Equity in earnings (loss) of subsidiaries 238,368 10,572 — (248,940 ) — Equity in earnings of equity method investments — 5,217 — — 5,217 Interest expense (56,982 ) (77 ) — — (57,059 ) Interest income — 3,322 — — 3,322 Gain on sales-type lease — 35,166 — — 35,166 Gain (loss) on sale of assets 221 (364 ) 86 — (57 ) 181,607 53,836 86 (248,940 ) (13,411 ) Income (loss) before income taxes 179,217 240,800 14,096 (248,940 ) 185,173 State income tax expense — (36 ) — — (36 ) Net income (loss) 179,217 240,764 14,096 (248,940 ) 185,137 Allocation of net income attributable to noncontrolling interests — (2,396 ) (3,524 ) — (5,920 ) Net income attributable to the partners $ 179,217 $ 238,368 $ 10,572 $ (248,940 ) $ 179,217 Condensed Consolidating Statement of Comprehensive Income Nine Months Ended September 30, 2018 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 278,083 $ 17,546 $ — $ 295,629 Third parties — 60,795 17,004 — 77,799 — 338,878 34,550 — 373,428 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 97,064 9,667 — 106,731 Depreciation and amortization — 61,630 12,487 — 74,117 General and administrative 2,739 5,554 — — 8,293 2,739 164,248 22,154 — 189,141 Operating income (loss) (2,739 ) 174,630 12,396 — 184,287 Other income (expense): Equity in earnings (loss) of subsidiaries 187,349 9,344 — (196,693 ) — Equity in earnings of equity method investments — 4,127 — — 4,127 Interest expense (53,341 ) 92 — — (53,249 ) Interest income — 1,581 — — 1,581 Gain (loss) on sale of assets and other 45 (37 ) 63 — 71 134,053 15,107 63 (196,693 ) (47,470 ) Income (loss) before income taxes 131,314 189,737 12,459 (196,693 ) 136,817 State income tax expense — (149 ) — — (149 ) Net income (loss) 131,314 189,588 12,459 (196,693 ) 136,668 Allocation of net income attributable to noncontrolling interests — (2,239 ) (3,115 ) — (5,354 ) Net income attributable to the partners $ 131,314 $ 187,349 $ 9,344 $ (196,693 ) $ 131,314 |
Condensed Consolidating Statement of Cash Flows | Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2019 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Cash flows from operating activities $ (62,229 ) $ 271,657 $ 31,467 $ (12,678 ) $ 228,217 Cash flows from investing activities Additions to properties and equipment — (23,227 ) (601 ) — (23,828 ) Distributions from UNEV in excess of earnings — 10,572 — (10,572 ) — Proceeds from sale of assets — 265 — — 265 Distributions in excess of equity in earnings of equity investments — 693 — — 693 — (11,697 ) (601 ) (10,572 ) (22,870 ) Cash flows from financing activities Net borrowings under credit agreement 12,500 — — — 12,500 Net intercompany financing activities 260,362 (260,362 ) — — — Contribution from general partner 182 — — — 182 Distributions to HEP unitholders (204,701 ) — — — (204,701 ) Distributions to noncontrolling interests — — (31,000 ) 23,250 (7,750 ) Units withheld for tax withholding obligations (119 ) — — — (119 ) Purchase units for incentive grants (255 ) — — — (255 ) Payments on finance leases — (780 ) — — (780 ) Other (139 ) 139 — — — 67,830 (261,003 ) (31,000 ) 23,250 (200,923 ) Cash and cash equivalents Increase (decrease) for the period 5,601 (1,043 ) (134 ) — 4,424 Beginning of period 2 — 3,043 — 3,045 End of period $ 5,603 $ (1,043 ) $ 2,909 $ — $ 7,469 Condensed Consolidating Statement of Cash Flows Nine Months Ended September 30, 2018 Parent Guarantor Restricted Subsidiaries Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Cash flows from operating activities $ (58,326 ) $ 259,360 $ 25,722 $ (9,344 ) $ 217,412 Cash flows from investing activities Additions to properties and equipment — (28,057 ) (6,213 ) — (34,270 ) Business and asset acquisitions — (6,803 ) (38 ) — (6,841 ) Distributions from UNEV in excess of earnings — 7,156 — (7,156 ) — Proceeds from sale of assets — 210 — — 210 Distributions in excess of equity in earnings of equity investments — 1,368 — — 1,368 — (26,126 ) (6,251 ) (7,156 ) (39,533 ) Cash flows from financing activities Net repayments under credit agreement (91,000 ) — — — (91,000 ) Net intercompany financing activities 231,231 (231,231 ) — — — Proceeds from issuance of common units 114,839 48 — — 114,887 Distributions to HEP unitholders (197,300 ) — — — (197,300 ) Distributions to noncontrolling interests — — (22,000 ) 16,500 (5,500 ) Contributions from general partner 614 — — — 614 Units withheld for tax withholding obligations (58 ) — — — (58 ) Other — (923 ) — — (923 ) 58,326 (232,106 ) (22,000 ) 16,500 (179,280 ) Cash and cash equivalents Increase (decrease) for the period — 1,128 (2,529 ) — (1,401 ) Beginning of period 2 511 7,263 — 7,776 End of period $ 2 $ 1,639 $ 4,734 $ — $ 6,375 |
Description of Business and P_3
Description of Business and Presentation of Financial Statements - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 25, 2018 | Sep. 30, 2019 |
Other Ownership Interests [Line Items] | ||
Ownership percentage, controlling interest | 57.00% | |
Shares, Issued | 37,250,000 | |
Limited partner distribution | $ 2.5 | |
Partners' capital account, units, sold in private placement (in shares) | 3,700,000 | |
Sale of stock, price per share (in dollars per share) | $ 29.73 | |
Proceeds from issuance of private placement | $ 110 | |
UNEV Pipeline | ||
Other Ownership Interests [Line Items] | ||
Equity Method Investment, Ownership Percentage | 75.00% | |
Frontier Pipeline [Member] | ||
Other Ownership Interests [Line Items] | ||
Equity Method Investment, Ownership Percentage | 50.00% |
Investment in Joint Venture (De
Investment in Joint Venture (Details) $ in Millions | 3 Months Ended |
Sep. 30, 2019USD ($) | |
Business Acquisition [Line Items] | |
Payments to Acquire Interest in Joint Venture | $ 65 |
Revenues - Narrative (Details)
Revenues - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Deferred revenue | $ 9,774 | $ 9,774 | $ 8,697 | $ 8,278 | |||
Capital Units, Value | 404,584 | 404,584 | $ 427,435 | 395,279 | |||
Deferred revenue recognized | 3,700 | 10,400 | |||||
Deferred revenue recognized. billed prior period | $ 37 | 600 | $ 2,600 | ||||
Contract With Customer, Asset, Revenue Recognized | 200 | 3,700 | |||||
Services revenue | 135,895 | $ 125,784 | 401,143 | $ 373,428 | |||
Operating Lease, Lease Income | 97,500 | 285,800 | |||||
Shortfall Payments | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Deferred revenue shortfalls billed | 800 | 800 | |||||
Service, Other | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Services revenue | $ 38,400 | $ 115,300 | |||||
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Deferred revenue | $ 9,598 | ||||||
Capital Units, Value | $ 393,959 | ||||||
Accounting Standards Update 2014-09 [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Deferred revenue | (1,320) | ||||||
Capital Units, Value | $ 1,320 |
Revenues - Narrative, Remaining
Revenues - Narrative, Remaining Performance Obligation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Contract with Customer, Liability, Revenue Recognized | $ 3,700 | $ 10,400 | ||
Contract With Customer, Liability, Revenue Recognized, Billed Prior Period | $ 37 | 600 | $ 2,600 | |
Contract With Customer, Asset, Revenue Recognized | 200 | 3,700 | ||
Shortfall Payments | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Contract with Customer, Liability | 800 | 800 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Unfulfilled performance obligations | 96,000 | 96,000 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Unfulfilled performance obligations | 368,000 | 368,000 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Unfulfilled performance obligations | 358,000 | 358,000 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Unfulfilled performance obligations | 331,000 | 331,000 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Unfulfilled performance obligations | 295,000 | 295,000 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Unfulfilled performance obligations | 1,082,000 | 1,082,000 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Unfulfilled performance obligations | $ 2,530,000 | $ 2,530,000 |
Revenues - Schedule of Future P
Revenues - Schedule of Future Performance Obligations (Details) $ in Millions | Sep. 30, 2019USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligations | $ 96 |
Unfulfilled performance obligations, expected timing | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligations | $ 368 |
Unfulfilled performance obligations, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligations | $ 358 |
Unfulfilled performance obligations, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligations | $ 331 |
Unfulfilled performance obligations, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligations | $ 295 |
Unfulfilled performance obligations, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligations | $ 2,530 |
Unfulfilled performance obligations, expected timing |
Revenues - Schedule of Contract
Revenues - Schedule of Contract Asset and Liability Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |||||
Contract With Customer, Liability, Revenue Recognized, Billed Prior Period | $ 37 | $ 600 | $ 2,600 | ||
Contract assets | $ 5,479 | 5,479 | $ 1,818 | ||
Contract liabilities | (810) | (810) | $ (1,821) | ||
Contract With Customer, Asset, Revenue Recognized | $ 200 | $ 3,700 |
Revenues - Schedule of Disaggre
Revenues - Schedule of Disaggregated Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Disaggregated Revenue | $ 135,895 | $ 125,784 | $ 401,143 | $ 373,428 |
Pipelines | ||||
Disaggregation of Revenue [Line Items] | ||||
Disaggregated Revenue | 73,163 | 69,735 | 220,526 | 207,443 |
Terminals, tanks and loading racks | ||||
Disaggregation of Revenue [Line Items] | ||||
Disaggregated Revenue | 42,454 | 36,469 | 119,121 | 109,036 |
Refinery processing units | ||||
Disaggregation of Revenue [Line Items] | ||||
Disaggregated Revenue | $ 20,278 | $ 19,580 | $ 61,496 | $ 56,949 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Lessee, Lease, Description [Line Items] | ||
Finance lease term | 1 year | |
Operating lease renewal term | 10 years | |
Capital Leased Assets, Gross | $ 6.7 | $ 5.8 |
Capital Leases Accumulated Depreciation | $ 4.9 | $ 4.3 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease term | 26 years | |
Vehicles | Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease term | 33 months | |
Vehicles | Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease term | 48 months |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Operating leases: | |||
Operating lease right-of-use assets | $ 3,454 | $ 0 | |
Current operating lease liabilities | 807 | 0 | |
Long-term lease obligations | 2,995 | 0 | |
Total operating lease liabilities | 3,802 | $ 78,400 | |
Finance leases: | |||
Properties, plants and equipment | 6,741 | ||
Accumulated amortization | (4,858) | ||
Properties, plants and equipment, net | 1,883 | ||
Current finance lease liabilities | 5,426 | 936 | |
Noncurrent finance lease liabilities | 69,168 | $ 867 | |
Total finance lease liabilities | $ 74,594 | ||
Weighted average remaining lease term (in years) | |||
Operating leases | 6 years 7 months 6 days | ||
Finance leases | 17 years 4 months 24 days | ||
Weighted average discount rate | |||
Operating leases | 5.00% | ||
Finance leases | 6.00% |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating lease | $ 5,467 |
Operating cash flows from finance leases | 75 |
Financing cash flows from finance leases | $ 780 |
Leases - Operating and Finance
Leases - Operating and Finance Lease Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Operating | |||
2019 | $ 237 | ||
2020 | 897 | ||
2021 | 853 | ||
2022 | 509 | ||
2023 | 423 | ||
2024 and thereafter | 1,534 | ||
Total lease payments | 4,453 | ||
Less: Imputed interest | (651) | ||
Total operating lease liabilities | 3,802 | $ 78,400 | |
Less: Current obligations | (807) | $ 0 | |
Long-term lease obligations | 2,995 | 0 | |
Finance | |||
2019 | 1,856 | ||
2020 | 7,305 | ||
2021 | 6,856 | ||
2022 | 6,711 | ||
2023 | 6,755 | ||
2024 and thereafter | 86,738 | ||
Total lease payments | 116,221 | ||
Less: Imputed interest | (41,627) | ||
Total finance lease liabilities | 74,594 | ||
Less: Current obligations | (5,426) | (936) | |
Long-term lease obligations | $ 69,168 | $ 867 |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Operating lease costs | $ 1,852 | $ 5,420 |
Amortization of assets | 213 | 711 |
Interest on lease liabilities | 24 | 75 |
Variable Lease, Cost | 41 | 112 |
Total net lease cost | $ 2,130 | $ 6,318 |
Leases - Gain on Sales-Type Lea
Leases - Gain on Sales-Type Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Leases [Abstract] | ||||
Net investment in leases | $ 122,800 | $ 122,800 | ||
Properties and equipment, net | (15,031) | (15,031) | ||
Operating lease right-of-use assets, net | (72,603) | (72,603) | ||
Gain on sales-type leases | $ 35,166 | $ 0 | $ 35,166 | $ 0 |
Leases - Schedule of Lease Inco
Leases - Schedule of Lease Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Leases [Abstract] | ||||
Operating lease revenues | $ 94,459 | $ 71,297 | $ 282,747 | $ 209,850 |
Direct financing lease interest income | 539 | 510 | 1,558 | 1,513 |
Gain on sales-type leases | 35,166 | 0 | 35,166 | 0 |
Sales-type lease interest income | 1,675 | 0 | 1,675 | 0 |
Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable | $ 3,075 | $ 0 | $ 3,075 | $ 0 |
Leases - Schedule of Minimum Un
Leases - Schedule of Minimum Undiscounted Lease Payments (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Operating | |
Remainder of 2019 | $ 81,025 |
2020 | 309,604 |
2021 | 304,857 |
2022 | 303,454 |
2023 | 272,954 |
Thereafter | 963,783 |
Total | 2,235,677 |
Finance | |
Sales-type and Direct Financing Leases, Lease Receivable, Fiscal Year Maturity [Abstract] | |
Remainder of 2019 | 526 |
2020 | 2,112 |
2021 | 2,128 |
2022 | 2,145 |
2023 | 2,162 |
Thereafter | 42,966 |
Total | 52,039 |
Sales-type | |
Sales-type and Direct Financing Leases, Lease Receivable, Fiscal Year Maturity [Abstract] | |
Remainder of 2019 | 2,375 |
2020 | 9,501 |
2021 | 9,501 |
2022 | 9,501 |
2023 | 9,501 |
Thereafter | 52,255 |
Total | $ 92,634 |
Leases - Net Investments in Lea
Leases - Net Investments in Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | |
Lessor, Lease, Description [Line Items] | |||
Net investment in leases | $ 122,800 | ||
Sales-type Leases | |||
Lessor, Lease, Description [Line Items] | |||
Lease receivables | [1] | 70,426 | $ 0 |
Unguaranteed residual assets | 51,674 | 0 | |
Net investment in leases | 122,100 | 0 | |
Direct Financing Leases | |||
Lessor, Lease, Description [Line Items] | |||
Lease receivables | [1] | 16,522 | 16,549 |
Unguaranteed residual assets | 0 | 0 | |
Net investment in leases | $ 16,522 | $ 16,549 | |
[1] | Current portion of lease receivables included in prepaid and other current assets on the balance sheet. |
Financial Instruments - Narrati
Financial Instruments - Narrative (Details) - 6% Senior notes - Fair value inputs, Level 2 - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Carrying Value | ||
Debt Instrument [Line Items] | ||
Financial Liabilities Fair Value Disclosure | $ 496,369 | $ 495,900 |
Fair Value | ||
Debt Instrument [Line Items] | ||
Financial Liabilities Fair Value Disclosure | $ 523,220 | $ 488,310 |
Properties and Equipment - Sche
Properties and Equipment - Schedule of Properties and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Properties and equipment, gross | $ 2,053,503 | $ 2,069,706 |
Less accumulated depreciation | (574,553) | (531,051) |
Properties and equipment, net | 1,478,950 | 1,538,655 |
Pipelines, terminals and tankage | ||
Property, Plant and Equipment [Line Items] | ||
Properties and equipment, gross | 1,541,971 | 1,571,338 |
Refinery assets | ||
Property, Plant and Equipment [Line Items] | ||
Properties and equipment, gross | 347,338 | 347,338 |
Land and right of way | ||
Property, Plant and Equipment [Line Items] | ||
Properties and equipment, gross | 86,095 | 86,298 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Properties and equipment, gross | 36,901 | 23,482 |
Other | ||
Property, Plant and Equipment [Line Items] | ||
Properties and equipment, gross | $ 41,198 | $ 41,250 |
Properties and Equipment - Narr
Properties and Equipment - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Interest costs, capitalized during period | $ 24 | $ 211 |
Depreciation expense | $ 61,700 | $ 62,600 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Intangible assets, gross | $ 204,797 | $ 204,797 |
Less accumulated amortization | (99,973) | (89,468) |
Intangible assets, net | 104,824 | 115,329 |
Delek transportation agreement | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Intangible assets, gross | $ 59,933 | 59,933 |
Useful Life | 30 years | |
HFC transportation agreement | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Intangible assets, gross | $ 75,131 | 75,131 |
Customer relationships | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Intangible assets, gross | $ 69,683 | 69,683 |
Useful Life | 10 years | |
Other | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Intangible assets, gross | $ 50 | $ 50 |
Minimum | HFC transportation agreement | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Useful Life | 10 years | |
Maximum | HFC transportation agreement | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Useful Life | 15 years |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Finite-Lived Intangible Assets [Line Items] | ||
Estimated amortization expense, year five | $ 9.9 | |
Estimated amortization expense, after year five | 9.1 | |
Amortization expense | 10.5 | $ 11 |
Cost, Amortization | 14 | |
Estimated amortization expense, year two | 14 | |
Estimated amortization expense, year three | 14 | |
Estimated amortization expense, year four | $ 14 |
Employees, Retirement and Inc_3
Employees, Retirement and Incentive Plans Retirement and Benefit Plan Costs (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($)shares | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)Componentsshares | Sep. 30, 2018USD ($) | |
Share-based Compensation Arrangements | ||||
Employee benefits and share-based compensation | $ | $ 1.8 | $ 1.9 | $ 5.4 | $ 5.3 |
Long-term Incentive Plan, Components | Components | 4 | |||
Number of incentive-based award plans | 2 | 2 | ||
Compensation costs of incentive awards | $ | $ 0.5 | $ 0.7 | $ 1.8 | $ 2.1 |
Deferred Bonus | ||||
Share-based Compensation Arrangements | ||||
Units authorized under equity-based compensation plans (new) | shares | 2,500,000 | 2,500,000 | ||
Number of units available for grant | shares | 1,236,095 | 1,236,095 |
Employees, Retirement and Inc_4
Employees, Retirement and Incentive Plans Restricted Units (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Restricted and Phantom Units | ||
Share-based Compensation Arrangements | ||
Nonvested restricted units outstanding | 120,008 | 138,016 |
Weighted average grant date fair value | $ 31.37 | $ 31.35 |
Forfeitures | 18,008 | |
Weighted Average Grant Date Fair Value - Forfeitures | $ 31.22 | |
Total unrecognized compensation related to nonvested units | $ 0.9 | |
Weighted average remaining contractual term (years) | 1 year 1 month 6 days | |
Performance Shares [Member] | ||
Share-based Compensation Arrangements | ||
Nonvested restricted units outstanding | 36,435 | 51,748 |
Forfeitures | 5,200 | |
Total unrecognized compensation related to nonvested units | $ 0.3 | |
Weighted average remaining contractual term (years) | 1 year 3 months 18 days |
Employees, Retirement and Inc_5
Employees, Retirement and Incentive Plans Performance Units (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement Instruments [Roll Forward] | ||
Weighted Average Fair Value of Units Outstanding | $ 1.2 | |
Treasury Stock, Value, Acquired, Cost Method | $ 0.3 | |
Performance Shares [Member] | ||
Share-based Compensation Arrangements | ||
Estimated Share Payouts Unit Awards Minimum | 100.00% | |
Estimated Share Payouts Unit Awards Maximum | 150.00% | |
Share-based Compensation Arrangement Instruments [Roll Forward] | ||
Outstanding at January 1, 2019 (nonvested) | 51,748 | |
Vesting and transfer of common units to recipients | (10,113) | |
Forfeitures | (5,200) | |
Outstanding at September 30, 2019 (nonvested) | 36,435 | |
Fair value of vested units transferred to recipients | $ 0.3 | $ 0.1 |
Total unrecognized compensation related to nonvested units | $ 0.3 | |
Weighted average remaining contractual term (years) | 1 year 3 months 18 days | |
Restricted and Phantom Units | ||
Share-based Compensation Arrangement Instruments [Roll Forward] | ||
Outstanding at January 1, 2019 (nonvested) | 138,016 | |
Forfeitures | (18,008) | |
Outstanding at September 30, 2019 (nonvested) | 120,008 | |
Total unrecognized compensation related to nonvested units | $ 0.9 | |
Weighted average remaining contractual term (years) | 1 year 1 month 6 days |
Debt - Senior Notes (Details)
Debt - Senior Notes (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,400,000 | |
Line of Credit Facility, Capacity Available for Trade Purchases | 50,000 | |
Line of Credit Facility, Accordion Feature | 300,000 | |
6% Senior notes | ||
Debt Instrument [Line Items] | ||
Principal | $ 500,000 | $ 500,000 |
Stated interest rate, senior notes | 6.00% |
Debt Long-Term Debt (Details)
Debt Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Credit Agreement | $ 935,500 | $ 923,000 |
Total long-term debt | 1,431,869 | 1,418,900 |
6% Senior notes | ||
Debt Instrument [Line Items] | ||
Principal | 500,000 | 500,000 |
Unamortized discount | $ (3,631) | $ (4,100) |
Debt - Interest Rate Risk Manag
Debt - Interest Rate Risk Management (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Line of credit facility, amount outstanding | $ 935,500 | $ 923,000 |
Debt - Interest Expense and Oth
Debt - Interest Expense and Other Debt Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Debt Instrument [Line Items] | ||||
Interest expense, debt | $ 57,083 | $ 53,460 | ||
Less capitalized interest | 24 | 211 | ||
Interest expense | $ 18,807 | $ 18,042 | 57,059 | 53,249 |
Cash paid for interest | 62,195 | 58,697 | ||
Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest expense, debt | 30,959 | 27,233 | ||
Senior Notes [Member] | 6% Senior notes | ||||
Debt Instrument [Line Items] | ||||
Interest expense, debt | 22,500 | 22,500 | ||
Amortization discount and deferred debt issuance costs [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest expense, debt | 2,307 | 2,277 | ||
Commitment Fees and Other [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest expense, debt | $ 1,317 | $ 1,450 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019USD ($)yr | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)yr | Sep. 30, 2018USD ($) | |
Related Party Transaction [Line Items] | |||||
Sales-type Lease, Revenue | $ 2,400 | ||||
Administrative fee, related party | $ 2,600 | ||||
Revenue from related parties | 106,027 | $ 100,188 | 311,755 | $ 295,629 | |
Omnibus Agreement G & A expenses, related party | 1,900 | 700 | |||
Employee expenses reimbursed to related party | 13,700 | 13,100 | 40,500 | 38,300 | |
Reimbursements received from related parties | 4,600 | 2,800 | 10,400 | 6,900 | |
Accounts receivable due from HFC | 35,800 | $ 46,800 | 35,800 | ||
Due to Affiliate | 6,700 | 14,200 | 6,700 | ||
Lease Income | 500 | 1,500 | |||
Sales-type Lease, Selling Profit (Loss) | 35,166 | 0 | 35,166 | 0 | |
Affiliated Entity | |||||
Related Party Transaction [Line Items] | |||||
Minimum annualized payments | 349,000 | 349,000 | |||
Distributions to HEP unitholders | $ 37,600 | $ 36,900 | 112,400 | $ 109,700 | |
Shortfall Payments | |||||
Related Party Transaction [Line Items] | |||||
Shortfall billings deferred revenue | $ 1,700 | $ 600 | |||
Minimum | |||||
Related Party Transaction [Line Items] | |||||
Revenue service commitments expiration | yr | 2,021 | 2,021 | |||
Maximum | |||||
Related Party Transaction [Line Items] | |||||
Revenue service commitments expiration | yr | 2,036 | 2,036 | |||
Revenue Benchmark | HFC | |||||
Related Party Transaction [Line Items] | |||||
Concentration Risk, Percentage | 78.00% |
Partners' Equity, Income Allo_2
Partners' Equity, Income Allocations and Cash Distributions - Issuances (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 25, 2018 | Sep. 30, 2019 |
Partners' Capital [Abstract] | ||
Common units held by HFC (in shares) | 59,630,030 | |
Ownership percentage, controlling interest | 57.00% | |
Partners' capital account, units, sold in private placement (in shares) | 3,700,000 | |
Sale of stock, price per share (in dollars per share) | $ 29.73 | |
Proceeds from issuance of private placement | $ 110 | |
Common Unit Issuance Program | $ 200 | |
Partners' capital account, units, sale of units (in shares) | 2,413,153 | |
Gross proceeds from issuance of common units | $ 82.3 |
Partners' Equity, Income Allo_3
Partners' Equity, Income Allocations and Cash Distributions - Cash Distributions (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Oct. 17, 2019 | |
Distribution Payments [Line Items] | |||||
Distributions to limited partner, distributions waived | $ 2.5 | ||||
Distributions declared | $ 68.5 | $ 67.7 | $ 205.2 | $ 201.3 | |
Subsequent Event | |||||
Distribution Payments [Line Items] | |||||
Partners' capital, distribution amount per share (in dollars per share) | $ 0.6725 |
Net Income per Limited Partne_3
Net Income per Limited Partner Unit - Schedules of Computations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings per Unit by Type of Partner [Line Items] | ||||
Net income attributable to the partners | $ 82,345 | $ 45,003 | $ 179,217 | $ 131,314 |
Distribution Made to Limited Partner, Cash Distributions Declared | (68,494) | (67,669) | (205,223) | (201,310) |
Distributions in excess of net income attributable to the partners | $ 13,851 | $ (22,666) | $ (26,006) | $ (69,996) |
Weighted average limited partners’ units outstanding | 105,440 | 105,440 | 105,440 | 104,908 |
Limited partners’ per unit interest in earnings—basic and diluted: | $ 0.78 | $ 0.43 | $ 1.70 | $ 1.25 |
Limited Partner | ||||
Earnings per Unit by Type of Partner [Line Items] | ||||
Distributions in excess of net income attributable to the partners | $ 13,851 | $ (22,666) | $ (26,006) | $ (69,996) |
Net income attributable to partnership | $ 82,345 | $ 45,003 | $ 179,217 | $ 131,314 |
Environmental Environmental (De
Environmental Environmental (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Loss Contingencies [Line Items] | ||||
Environmental remediation expense | $ 25 | $ 300 | $ 400 | |
Accrued environmental expense | 5,800 | $ 6,300 | ||
Accrued environmental expense, noncurrent | 3,800 | $ 4,300 | ||
Affiliated Entity | ||||
Loss Contingencies [Line Items] | ||||
Accrued environmental expense | $ 500 |
Operating Segments - Schedule o
Operating Segments - Schedule of Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | ||
Segment Reporting Information [Line Items] | ||||||
Third Parties | $ 29,868 | $ 25,596 | $ 89,388 | $ 77,799 | ||
Revenue from Contract with Customer | 135,895 | 125,784 | 401,143 | 373,428 | ||
Operating Income (Loss) | 64,136 | 62,923 | 198,584 | 184,287 | ||
Segment operating profit | 66,850 | 65,421 | 205,906 | 192,580 | ||
Unallocated general and administrative | (2,714) | (2,498) | (7,322) | (8,293) | ||
Interest and financing costs, net | (16,564) | (17,502) | (53,737) | (51,668) | ||
Equity in earnings of unconsolidated affiliates | 1,334 | 1,114 | 5,217 | 4,127 | ||
Sales-type Lease, Selling Profit (Loss) | 35,166 | 0 | 35,166 | 0 | ||
Gain (loss) on sale of assets and other | 142 | 38 | (57) | 71 | ||
Income before income taxes | 84,214 | 46,573 | 185,173 | 136,817 | ||
Capital Expenditures | 6,076 | 9,531 | 23,828 | 34,270 | ||
Assets | 2,154,275 | 2,154,275 | $ 2,102,540 | |||
Goodwill | 270,336 | 270,336 | 270,336 | |||
Pipelines and terminal - affiliate | ||||||
Segment Reporting Information [Line Items] | ||||||
Third Parties | 85,749 | 80,608 | 250,259 | 238,680 | ||
Pipelines and terminals - third party | ||||||
Segment Reporting Information [Line Items] | ||||||
Third Parties | 29,868 | 25,596 | 89,388 | 77,799 | ||
Operating Income (Loss) | 56,944 | 56,531 | 178,112 | 167,748 | ||
Capital Expenditures | 5,320 | 9,389 | 23,072 | 34,128 | ||
Assets | [1] | 1,747,930 | 1,747,930 | 1,694,101 | ||
Refinery processing units | ||||||
Segment Reporting Information [Line Items] | ||||||
Third Parties | 20,278 | 19,580 | 61,496 | 56,949 | ||
Revenue from Contract with Customer | 20,278 | 19,580 | 61,496 | 56,949 | ||
Operating Income (Loss) | 9,906 | 8,890 | 27,794 | 24,832 | ||
Capital Expenditures | 756 | $ 142 | 756 | $ 142 | ||
Assets | 308,311 | 308,311 | 312,888 | |||
Other | ||||||
Segment Reporting Information [Line Items] | ||||||
Assets | $ 98,034 | $ 98,034 | $ 95,551 | |||
[1] | Includes goodwill of $270.3 million as of September 30, 2019 and December 31, 2018 . |
Supplemental Guarantor _ Non-_3
Supplemental Guarantor / Non-Guarantor Financial Information Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Current assets: | |||||
Cash and cash equivalents | $ 7,469 | $ 3,045 | $ 6,375 | $ 7,776 | |
Accounts receivable | 51,952 | 59,118 | |||
Prepaid and other current assets | 4,779 | 4,311 | |||
Total current assets | 64,200 | 66,474 | |||
Properties and equipment, net | 1,478,950 | 1,538,655 | |||
Net Investment in Lease, Noncurrent | 136,394 | 16,488 | |||
Operating lease right-of-use assets | 3,454 | 0 | |||
Net Investment in Lease | 136,394 | ||||
Investment in subsidiaries | 0 | 0 | |||
Intangible assets, net | 104,824 | 115,329 | |||
Goodwill | 270,336 | 270,336 | |||
Equity method investments | 82,884 | 83,840 | |||
Other assets | 13,233 | 11,418 | |||
Assets | 2,154,275 | 2,102,540 | |||
Current liabilities: | |||||
Accounts payable | 19,355 | 30,657 | |||
Due to Affiliate | 6,700 | 14,200 | |||
Accrued interest | 5,884 | 13,302 | |||
Deferred revenue | 9,774 | 8,697 | $ 8,278 | ||
Accrued property taxes | 9,266 | 1,779 | |||
Other Sundry Liabilities, Current | 2,526 | ||||
Current maturities of operating leases | 807 | 0 | |||
Current maturities of finance leases | 5,426 | 936 | |||
Other current liabilities | 2,926 | 2,526 | |||
Total current liabilities | 53,438 | 57,897 | |||
Long-term debt | 1,431,869 | 1,418,900 | |||
Noncurrent operating lease liabilities | 2,995 | 0 | |||
Noncurrent finance lease liabilities | 69,168 | 867 | |||
Other long-term liabilities | 12,902 | 14,440 | |||
Deferred revenue | 46,862 | 48,714 | |||
Class B unit | 48,557 | 46,161 | |||
Equity - partners | 404,584 | 427,435 | |||
Equity - noncontrolling interest | 83,900 | 88,126 | |||
Total liabilities and equity | 2,154,275 | 2,102,540 | |||
Parent | |||||
Current assets: | |||||
Cash and cash equivalents | 5,603 | 2 | 2 | 2 | |
Accounts receivable | 0 | 0 | |||
Prepaid and other current assets | 145 | 217 | |||
Total current assets | 5,748 | 219 | |||
Properties and equipment, net | 0 | 0 | |||
Net Investment in Lease, Noncurrent | 0 | ||||
Operating lease right-of-use assets | 0 | ||||
Net Investment in Lease | 0 | ||||
Investment in subsidiaries | 1,829,611 | 1,850,416 | |||
Intangible assets, net | 0 | 0 | |||
Goodwill | 0 | 0 | |||
Equity method investments | 0 | 0 | |||
Other assets | 7,334 | 9,291 | |||
Assets | 1,842,693 | 1,859,926 | |||
Current liabilities: | |||||
Accounts payable | 0 | 0 | |||
Accrued interest | 5,884 | 13,302 | |||
Deferred revenue | 0 | 0 | |||
Accrued property taxes | 0 | 0 | |||
Other Sundry Liabilities, Current | 29 | ||||
Current maturities of operating leases | 0 | ||||
Current maturities of finance leases | 0 | 0 | |||
Other current liabilities | 96 | ||||
Total current liabilities | 5,980 | 13,331 | |||
Long-term debt | 1,431,869 | 1,418,900 | |||
Noncurrent operating lease liabilities | 0 | ||||
Noncurrent finance lease liabilities | 0 | 0 | |||
Other long-term liabilities | 260 | 260 | |||
Deferred revenue | 0 | 0 | |||
Class B unit | 0 | 0 | |||
Equity - partners | 404,584 | 427,435 | |||
Equity - noncontrolling interest | 0 | 0 | |||
Total liabilities and equity | 1,842,693 | 1,859,926 | |||
Guarantor Restricted Subsidiaries | |||||
Current assets: | |||||
Cash and cash equivalents | (1,043) | 0 | 1,639 | 511 | |
Accounts receivable | 46,995 | 53,376 | |||
Prepaid and other current assets | 4,335 | 3,542 | |||
Total current assets | 50,287 | 56,918 | |||
Properties and equipment, net | 1,144,873 | 1,193,181 | |||
Net Investment in Lease, Noncurrent | 16,488 | ||||
Operating lease right-of-use assets | 3,424 | ||||
Net Investment in Lease | 136,394 | ||||
Investment in subsidiaries | 251,700 | 264,378 | |||
Intangible assets, net | 104,824 | 115,329 | |||
Goodwill | 270,336 | 270,336 | |||
Equity method investments | 82,884 | 83,840 | |||
Other assets | 5,899 | 2,127 | |||
Assets | 2,050,621 | 2,002,597 | |||
Current liabilities: | |||||
Accounts payable | 18,055 | 30,325 | |||
Accrued interest | 0 | 0 | |||
Deferred revenue | 8,964 | 8,065 | |||
Accrued property taxes | 5,131 | 744 | |||
Other Sundry Liabilities, Current | 2,493 | ||||
Current maturities of operating leases | 777 | ||||
Current maturities of finance leases | 5,426 | 936 | |||
Other current liabilities | 2,830 | ||||
Total current liabilities | 41,183 | 42,563 | |||
Long-term debt | 0 | 0 | |||
Noncurrent operating lease liabilities | 2,995 | ||||
Noncurrent finance lease liabilities | 69,168 | 867 | |||
Other long-term liabilities | 12,245 | 13,876 | |||
Deferred revenue | 46,862 | 48,714 | |||
Class B unit | 48,557 | 46,161 | |||
Equity - partners | 1,829,611 | 1,850,416 | |||
Equity - noncontrolling interest | 0 | 0 | |||
Total liabilities and equity | 2,050,621 | 2,002,597 | |||
Non-Guarantor Non-Restricted Subsidiaries | |||||
Current assets: | |||||
Cash and cash equivalents | 2,909 | 3,043 | 4,734 | 7,263 | |
Accounts receivable | 5,218 | 5,994 | |||
Prepaid and other current assets | 299 | 552 | |||
Total current assets | 8,426 | 9,589 | |||
Properties and equipment, net | 334,077 | 345,474 | |||
Net Investment in Lease, Noncurrent | 0 | ||||
Operating lease right-of-use assets | 30 | ||||
Net Investment in Lease | 0 | ||||
Investment in subsidiaries | 0 | 0 | |||
Intangible assets, net | 0 | 0 | |||
Goodwill | 0 | 0 | |||
Equity method investments | 0 | 0 | |||
Other assets | 0 | 0 | |||
Assets | 342,533 | 355,063 | |||
Current liabilities: | |||||
Accounts payable | 1,561 | 584 | |||
Accrued interest | 0 | 0 | |||
Deferred revenue | 810 | 632 | |||
Accrued property taxes | 4,135 | 1,035 | |||
Other Sundry Liabilities, Current | 4 | ||||
Current maturities of operating leases | 30 | ||||
Current maturities of finance leases | 0 | 0 | |||
Other current liabilities | 0 | ||||
Total current liabilities | 6,536 | 2,255 | |||
Long-term debt | 0 | 0 | |||
Noncurrent operating lease liabilities | 0 | ||||
Noncurrent finance lease liabilities | 0 | 0 | |||
Other long-term liabilities | 397 | 304 | |||
Deferred revenue | 0 | 0 | |||
Class B unit | 0 | 0 | |||
Equity - partners | 251,700 | 264,378 | |||
Equity - noncontrolling interest | 83,900 | 88,126 | |||
Total liabilities and equity | 342,533 | 355,063 | |||
Eliminations | |||||
Current assets: | |||||
Cash and cash equivalents | 0 | 0 | $ 0 | $ 0 | |
Accounts receivable | (261) | (252) | |||
Prepaid and other current assets | 0 | ||||
Total current assets | (261) | (252) | |||
Properties and equipment, net | 0 | 0 | |||
Net Investment in Lease, Noncurrent | 0 | ||||
Operating lease right-of-use assets | 0 | ||||
Net Investment in Lease | 0 | ||||
Investment in subsidiaries | (2,081,311) | (2,114,794) | |||
Intangible assets, net | 0 | 0 | |||
Goodwill | 0 | 0 | |||
Equity method investments | 0 | 0 | |||
Other assets | 0 | 0 | |||
Assets | (2,081,572) | (2,115,046) | |||
Current liabilities: | |||||
Accounts payable | (261) | (252) | |||
Accrued interest | 0 | 0 | |||
Deferred revenue | 0 | 0 | |||
Accrued property taxes | 0 | 0 | |||
Other Sundry Liabilities, Current | 0 | ||||
Current maturities of operating leases | 0 | ||||
Current maturities of finance leases | 0 | 0 | |||
Other current liabilities | 0 | ||||
Total current liabilities | (261) | (252) | |||
Long-term debt | 0 | 0 | |||
Noncurrent operating lease liabilities | 0 | ||||
Noncurrent finance lease liabilities | 0 | 0 | |||
Other long-term liabilities | 0 | 0 | |||
Deferred revenue | 0 | 0 | |||
Class B unit | 0 | 0 | |||
Equity - partners | (2,081,311) | (2,114,794) | |||
Equity - noncontrolling interest | 0 | 0 | |||
Total liabilities and equity | $ (2,081,572) | $ (2,115,046) |
Supplemental Guarantor _ Non-_4
Supplemental Guarantor / Non-Guarantor Financial Information Condensed Consolidating Statement of Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues: | ||||||||
Affiliates | $ 106,027 | $ 100,188 | $ 311,755 | $ 295,629 | ||||
Third Parties | 29,868 | 25,596 | 89,388 | 77,799 | ||||
Revenue from Contract with Customer | 135,895 | 125,784 | 401,143 | 373,428 | ||||
Operating costs and expenses [Abstract] | ||||||||
Operations (exclusive of depreciation and amortization) | 44,924 | 35,996 | 123,045 | 106,731 | ||||
Depreciation and amortization | 24,121 | 24,367 | 72,192 | 74,117 | ||||
General and administrative | 2,714 | 2,498 | 7,322 | 8,293 | ||||
Total operating costs and expenses | 71,759 | 62,861 | 202,559 | 189,141 | ||||
Operating Income (Loss) | 64,136 | 62,923 | 198,584 | 184,287 | ||||
Equity in earnings of subsidiaries | 0 | 0 | 0 | 0 | ||||
Equity in earnings of equity method investments | 1,334 | 1,114 | 5,217 | 4,127 | ||||
Interest expense | (18,807) | (18,042) | (57,059) | (53,249) | ||||
Interest income | 2,243 | 540 | 3,322 | 1,581 | ||||
Gain on sale of assets and other | 142 | 38 | (57) | 71 | ||||
Other Nonoperating Income (Expense) | 35,166 | 35,166 | ||||||
Nonoperating Income (Expense) | 20,078 | (16,350) | (13,411) | (47,470) | ||||
Income before income taxes | 84,214 | 46,573 | 185,173 | 136,817 | ||||
State income tax benefit (expense) | (30) | (39) | (36) | (149) | ||||
Net income | 84,184 | $ 47,159 | $ 53,794 | 46,534 | $ 41,499 | $ 48,635 | 185,137 | 136,668 |
Allocation of net income attributable to noncontrolling interests | (1,839) | (1,531) | (5,920) | (5,354) | ||||
Net income attributable to the partners | 82,345 | 45,003 | 179,217 | 131,314 | ||||
Parent | ||||||||
Revenues: | ||||||||
Affiliates | 0 | 0 | 0 | 0 | ||||
Third Parties | 0 | 0 | 0 | 0 | ||||
Revenue from Contract with Customer | 0 | 0 | 0 | 0 | ||||
Operating costs and expenses [Abstract] | ||||||||
Operations (exclusive of depreciation and amortization) | 0 | 0 | 0 | 0 | ||||
Depreciation and amortization | 0 | 0 | 0 | 0 | ||||
General and administrative | 569 | 698 | 2,390 | 2,739 | ||||
Total operating costs and expenses | 569 | 698 | 2,390 | 2,739 | ||||
Operating Income (Loss) | (569) | (698) | (2,390) | (2,739) | ||||
Equity in earnings of subsidiaries | 101,638 | 63,731 | 238,368 | 187,349 | ||||
Equity in earnings of equity method investments | 0 | 0 | 0 | 0 | ||||
Interest expense | (18,945) | (18,030) | (56,982) | (53,341) | ||||
Interest income | 0 | 0 | 0 | 0 | ||||
Gain on sale of assets and other | 221 | 0 | 221 | 45 | ||||
Other Nonoperating Income (Expense) | 0 | 0 | ||||||
Nonoperating Income (Expense) | 82,914 | 45,701 | 181,607 | 134,053 | ||||
Income before income taxes | 82,345 | 45,003 | 179,217 | 131,314 | ||||
State income tax benefit (expense) | 0 | 0 | 0 | 0 | ||||
Net income | 82,345 | 45,003 | 179,217 | 131,314 | ||||
Allocation of net income attributable to noncontrolling interests | 0 | 0 | 0 | 0 | ||||
Net income attributable to the partners | 82,345 | 45,003 | 179,217 | 131,314 | ||||
Guarantor Restricted Subsidiaries | ||||||||
Revenues: | ||||||||
Affiliates | 99,482 | 94,270 | 293,096 | 278,083 | ||||
Third Parties | 23,999 | 21,277 | 69,764 | 60,795 | ||||
Revenue from Contract with Customer | 123,481 | 115,547 | 362,860 | 338,878 | ||||
Operating costs and expenses [Abstract] | ||||||||
Operations (exclusive of depreciation and amortization) | 40,866 | 32,906 | 111,644 | 97,064 | ||||
Depreciation and amortization | 19,757 | 20,198 | 59,320 | 61,630 | ||||
General and administrative | 2,145 | 1,800 | 4,932 | 5,554 | ||||
Total operating costs and expenses | 62,768 | 54,904 | 175,896 | 164,248 | ||||
Operating Income (Loss) | 60,713 | 60,643 | 186,964 | 174,630 | ||||
Equity in earnings of subsidiaries | 3,013 | 2,251 | 10,572 | 9,344 | ||||
Equity in earnings of equity method investments | 1,334 | 1,114 | 5,217 | 4,127 | ||||
Interest expense | 138 | (12) | (77) | 92 | ||||
Interest income | 2,243 | 540 | 3,322 | 1,581 | ||||
Gain on sale of assets and other | (104) | 14 | (364) | (37) | ||||
Other Nonoperating Income (Expense) | 35,166 | 35,166 | ||||||
Nonoperating Income (Expense) | 41,790 | 3,907 | 53,836 | 15,107 | ||||
Income before income taxes | 102,503 | 64,550 | 240,800 | 189,737 | ||||
State income tax benefit (expense) | (30) | (39) | (36) | (149) | ||||
Net income | 102,473 | 64,511 | 240,764 | 189,588 | ||||
Allocation of net income attributable to noncontrolling interests | (835) | (780) | (2,396) | (2,239) | ||||
Net income attributable to the partners | 101,638 | 63,731 | 238,368 | 187,349 | ||||
Non-Guarantor Non-Restricted Subsidiaries | ||||||||
Revenues: | ||||||||
Affiliates | 6,545 | 5,918 | 18,659 | 17,546 | ||||
Third Parties | 5,869 | 4,319 | 19,624 | 17,004 | ||||
Revenue from Contract with Customer | 12,414 | 10,237 | 38,283 | 34,550 | ||||
Operating costs and expenses [Abstract] | ||||||||
Operations (exclusive of depreciation and amortization) | 4,058 | 3,090 | 11,401 | 9,667 | ||||
Depreciation and amortization | 4,364 | 4,169 | 12,872 | 12,487 | ||||
General and administrative | 0 | 0 | 0 | 0 | ||||
Total operating costs and expenses | 8,422 | 7,259 | 24,273 | 22,154 | ||||
Operating Income (Loss) | 3,992 | 2,978 | 14,010 | 12,396 | ||||
Equity in earnings of subsidiaries | 0 | 0 | 0 | 0 | ||||
Equity in earnings of equity method investments | 0 | 0 | 0 | 0 | ||||
Interest expense | 0 | 0 | 0 | 0 | ||||
Interest income | 0 | 0 | 0 | 0 | ||||
Gain on sale of assets and other | 25 | 24 | 86 | 63 | ||||
Other Nonoperating Income (Expense) | 0 | 0 | ||||||
Nonoperating Income (Expense) | 25 | 24 | 86 | 63 | ||||
Income before income taxes | 4,017 | 3,002 | 14,096 | 12,459 | ||||
State income tax benefit (expense) | 0 | 0 | 0 | 0 | ||||
Net income | 4,017 | 3,002 | 14,096 | 12,459 | ||||
Allocation of net income attributable to noncontrolling interests | (1,004) | (751) | (3,524) | (3,115) | ||||
Net income attributable to the partners | 3,013 | 2,251 | 10,572 | 9,344 | ||||
Eliminations | ||||||||
Revenues: | ||||||||
Affiliates | 0 | 0 | 0 | 0 | ||||
Third Parties | 0 | 0 | 0 | 0 | ||||
Revenue from Contract with Customer | 0 | 0 | 0 | 0 | ||||
Operating costs and expenses [Abstract] | ||||||||
Operations (exclusive of depreciation and amortization) | 0 | 0 | 0 | 0 | ||||
Depreciation and amortization | 0 | 0 | 0 | 0 | ||||
General and administrative | 0 | 0 | 0 | 0 | ||||
Total operating costs and expenses | 0 | 0 | 0 | 0 | ||||
Operating Income (Loss) | 0 | 0 | 0 | 0 | ||||
Equity in earnings of subsidiaries | (104,651) | (65,982) | (248,940) | (196,693) | ||||
Equity in earnings of equity method investments | 0 | 0 | 0 | 0 | ||||
Interest expense | 0 | 0 | 0 | 0 | ||||
Interest income | 0 | 0 | 0 | 0 | ||||
Gain on sale of assets and other | 0 | 0 | 0 | 0 | ||||
Other Nonoperating Income (Expense) | 0 | 0 | ||||||
Nonoperating Income (Expense) | (104,651) | (65,982) | (248,940) | (196,693) | ||||
Income before income taxes | (104,651) | (65,982) | (248,940) | (196,693) | ||||
State income tax benefit (expense) | 0 | 0 | 0 | 0 | ||||
Net income | (104,651) | (65,982) | (248,940) | (196,693) | ||||
Allocation of net income attributable to noncontrolling interests | 0 | 0 | 0 | 0 | ||||
Net income attributable to the partners | $ (104,651) | $ (65,982) | $ (248,940) | $ (196,693) |
Supplemental Guarantor _ Non-_5
Supplemental Guarantor / Non-Guarantor Financial Information Condensed Consolidating Statement of Cash Flows (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Condensed Financial Statements, Captions [Line Items] | ||
Net cash provided by operating activities | $ 228,217 | $ 217,412 |
Cash flows from investing activities | ||
Additions to properties and equipment | (23,828) | (34,270) |
Business and asset acquisitions | (6,841) | |
Distributions from UNEV in excess of earnings | 0 | 0 |
Proceeds from sale of assets | 265 | 210 |
Distributions in excess of equity in earnings of equity investments | 693 | 1,368 |
Net cash provided by (used for) investing activities | (22,870) | (39,533) |
Cash flows from financing activities | ||
Net borrowings (repayments) under credit agreement | 12,500 | (91,000) |
Net intercompany financing activities | 0 | 0 |
Proceeds from Issuance of common units | 0 | 114,887 |
Distributions to HEP unitholders | (204,701) | (197,300) |
Distributions to noncontrolling interests | (7,750) | (5,500) |
Contributions from general partner | 182 | 614 |
Units withheld for tax withholding obligations | (119) | (58) |
Purchase of units for incentive grants | (255) | 0 |
Payments on finance leases | (780) | (929) |
Other | 0 | 6 |
Other financing activities | 923 | |
Net cash provided by (used by) financing activities | (200,923) | (179,280) |
Increase (decrease) for the period | 4,424 | (1,401) |
Beginning of period | 3,045 | 7,776 |
End of period | 7,469 | 6,375 |
Parent | ||
Condensed Financial Statements, Captions [Line Items] | ||
Net cash provided by operating activities | (62,229) | (58,326) |
Cash flows from investing activities | ||
Additions to properties and equipment | 0 | 0 |
Business and asset acquisitions | 0 | 0 |
Distributions from UNEV in excess of earnings | 0 | 0 |
Proceeds from sale of assets | 0 | 0 |
Distributions in excess of equity in earnings of equity investments | 0 | 0 |
Net cash provided by (used for) investing activities | 0 | 0 |
Cash flows from financing activities | ||
Net borrowings (repayments) under credit agreement | 12,500 | (91,000) |
Net intercompany financing activities | 260,362 | 231,231 |
Proceeds from Issuance of common units | 114,839 | |
Distributions to HEP unitholders | (204,701) | (197,300) |
Distributions to noncontrolling interests | 0 | 0 |
Contributions from general partner | 182 | 614 |
Units withheld for tax withholding obligations | (119) | (58) |
Purchase of units for incentive grants | (255) | |
Payments on finance leases | 0 | |
Other | 139 | |
Other financing activities | 0 | |
Net cash provided by (used by) financing activities | 67,830 | 58,326 |
Increase (decrease) for the period | 5,601 | 0 |
Beginning of period | 2 | 2 |
End of period | 5,603 | 2 |
Guarantor Restricted Subsidiaries | ||
Condensed Financial Statements, Captions [Line Items] | ||
Net cash provided by operating activities | 271,657 | 259,360 |
Cash flows from investing activities | ||
Additions to properties and equipment | (23,227) | (28,057) |
Business and asset acquisitions | (6,803) | |
Distributions from UNEV in excess of earnings | 10,572 | (7,156) |
Proceeds from sale of assets | 265 | (210) |
Distributions in excess of equity in earnings of equity investments | 693 | 1,368 |
Net cash provided by (used for) investing activities | (11,697) | (26,126) |
Cash flows from financing activities | ||
Net borrowings (repayments) under credit agreement | 0 | 0 |
Net intercompany financing activities | (260,362) | (231,231) |
Proceeds from Issuance of common units | 48 | |
Distributions to HEP unitholders | 0 | 0 |
Distributions to noncontrolling interests | 0 | 0 |
Contributions from general partner | 0 | 0 |
Units withheld for tax withholding obligations | 0 | 0 |
Purchase of units for incentive grants | 0 | |
Payments on finance leases | (780) | |
Other | (139) | |
Other financing activities | 923 | |
Net cash provided by (used by) financing activities | (261,003) | (232,106) |
Increase (decrease) for the period | (1,043) | 1,128 |
Beginning of period | 0 | 511 |
End of period | (1,043) | 1,639 |
Non-Guarantor Non-Restricted Subsidiaries | ||
Condensed Financial Statements, Captions [Line Items] | ||
Net cash provided by operating activities | 31,467 | 25,722 |
Cash flows from investing activities | ||
Additions to properties and equipment | (601) | (6,213) |
Business and asset acquisitions | 38 | |
Distributions from UNEV in excess of earnings | 0 | 0 |
Proceeds from sale of assets | 0 | 0 |
Distributions in excess of equity in earnings of equity investments | 0 | 0 |
Net cash provided by (used for) investing activities | (601) | (6,251) |
Cash flows from financing activities | ||
Net borrowings (repayments) under credit agreement | 0 | 0 |
Net intercompany financing activities | 0 | 0 |
Proceeds from Issuance of common units | 0 | |
Distributions to HEP unitholders | 0 | 0 |
Distributions to noncontrolling interests | (31,000) | (22,000) |
Contributions from general partner | 0 | 0 |
Units withheld for tax withholding obligations | 0 | 0 |
Purchase of units for incentive grants | 0 | |
Payments on finance leases | 0 | |
Other | 0 | |
Other financing activities | 0 | |
Net cash provided by (used by) financing activities | (31,000) | (22,000) |
Increase (decrease) for the period | (134) | (2,529) |
Beginning of period | 3,043 | 7,263 |
End of period | 2,909 | 4,734 |
Eliminations | ||
Condensed Financial Statements, Captions [Line Items] | ||
Net cash provided by operating activities | (12,678) | (9,344) |
Cash flows from investing activities | ||
Additions to properties and equipment | 0 | 0 |
Business and asset acquisitions | 0 | |
Distributions from UNEV in excess of earnings | (10,572) | 7,156 |
Proceeds from sale of assets | 0 | 0 |
Distributions in excess of equity in earnings of equity investments | 0 | 0 |
Net cash provided by (used for) investing activities | (10,572) | (7,156) |
Cash flows from financing activities | ||
Net borrowings (repayments) under credit agreement | 0 | 0 |
Net intercompany financing activities | 0 | 0 |
Proceeds from Issuance of common units | 0 | |
Distributions to HEP unitholders | 0 | 0 |
Distributions to noncontrolling interests | 23,250 | 16,500 |
Contributions from general partner | 0 | 0 |
Units withheld for tax withholding obligations | 0 | 0 |
Purchase of units for incentive grants | 0 | |
Payments on finance leases | 0 | |
Other | 0 | |
Other financing activities | 0 | |
Net cash provided by (used by) financing activities | 23,250 | 16,500 |
Increase (decrease) for the period | 0 | 0 |
Beginning of period | 0 | 0 |
End of period | $ 0 | $ 0 |