OPERATING SEGMENTS | OPERATING SEGMENTS The Partnership’s operations consist of four operating segments: (i) asphalt terminalling services, (ii) crude oil terminalling services, (iii) crude oil pipeline services, and (iv) crude oil trucking and producer field services. ASPHALT TERMINALLING SERVICES —The Partnership provides asphalt product and residual fuel terminalling services, which includes storage, handling and blending services, at its 54 terminalling facilities located in 26 states. CRUDE OIL TERMINALLING SERVICES —The Partnership provides crude oil terminalling services, which includes storage, handling and blending services, at its terminalling facility located in Oklahoma. CRUDE OIL PIPELINE SERVICES —The Partnership owns and operates pipeline systems that gather crude oil purchased by its customers and transports it to refiners, to common carrier pipelines for ultimate delivery to refiners or to terminalling facilities owned by the Partnership and others. The Partnership refers to its pipeline system located in Oklahoma and the Texas Panhandle as the Mid-Continent system. The Partnership previously owned and operated the East Texas pipeline system, which is located in Texas. On April 18, 2017, the Partnership sold the East Texas system. See Note 5 for additional information. CRUDE OIL TRUCKING AND PRODUCER FIELD SERVICES — The Partnership uses its owned and leased tanker trucks to gather crude oil for its customers at remote wellhead locations generally not covered by pipeline and gathering systems and to transport the crude oil to aggregation points and storage facilities located along pipeline gathering and transportation systems. Crude oil producer field services consist of a number of producer field services, ranging from gathering condensates from natural gas companies to hauling produced water to disposal wells. The Partnership’s management evaluates performance based upon segment operating margin, which includes revenues from related parties and external customers less operating expenses, excluding depreciation and amortization. This measure forms the basis of the Partnership’s internal financial reporting and is used by its management in deciding how to allocate capital resources among segments. The Partnership believes that investors benefit from having access to the same financial measures being utilized by management. The non-GAAP measure of total operating margin, excluding depreciation and amortization, is presented in the following table. Total operating margin, excluding depreciation and amortization, is an important measure of the economic performance of the Partnership’s core operations. The Partnership computes the components of total operating margin by using amounts that are determined in accordance with GAAP. A reconciliation of total operating margin, excluding depreciation and amortization, to income before income taxes, which is its nearest comparable GAAP financial measure, is included in the following table. Income before income taxes, alternatively, includes expense items, such as depreciation and amortization, general and administrative expenses and interest expense, which management does not consider when evaluating the core profitability of the Partnership’s operations. The following table reflects certain financial data for each segment for the periods indicated (in thousands): Three Months ended Nine Months ended 2016 2017 2016 2017 Asphalt Terminalling Services Service revenue Third party revenue $ 25,217 $ 17,690 $ 60,656 $ 44,172 Related party revenue 242 14,464 800 41,301 Total revenue for reportable segment 25,459 32,154 61,456 85,473 Operating expense, excluding depreciation and amortization 6,467 11,608 19,737 35,864 Segment operating margin 18,992 20,546 41,719 49,609 Total assets (end of period) $ 114,703 $ 142,571 $ 114,703 $ 142,571 Crude Oil Terminalling Services Service revenue Third party revenue $ 3,444 $ 5,162 $ 10,631 $ 17,013 Related party revenue 2,344 — 7,747 — Total revenue for reportable segment 5,788 5,162 18,378 17,013 Operating expense, excluding depreciation and amortization 776 994 3,071 2,996 Segment operating margin 5,012 4,168 15,307 14,017 Total assets (end of period) $ 74,807 $ 68,985 $ 74,807 $ 68,985 Crude Oil Pipeline Services Service revenue Third party revenue $ 1,107 $ 2,196 $ 6,061 $ 7,520 Related party revenue 1,665 — 4,970 310 Product sales revenue Third party revenue 5,605 2,375 16,058 8,252 Total revenue for reportable segment 8,377 4,571 27,089 16,082 Operating expense, excluding depreciation and amortization 3,349 3,056 11,288 9,438 Operating expense (intersegment) 197 77 692 321 Cost of product sales 3,513 1,675 10,789 6,482 Cost of product sales (intersegment) — 150 426 150 Segment operating margin 1,318 (387 ) 3,894 (309 ) Total assets (end of period) $ 151,341 $ 116,720 $ 151,341 $ 116,720 Crude Oil Trucking and Producer Field Services Service revenue Third party revenue $ 5,832 $ 5,587 $ 19,363 $ 18,738 Related party revenue 1,483 — 5,088 — Intersegment revenue 197 77 692 321 Product sales revenue Third party revenue — — — 385 Intersegment revenue — 150 426 150 Total revenue for reportable segment 7,512 5,814 25,569 19,594 Operating expense, excluding depreciation and amortization 7,051 6,042 23,771 20,013 Segment operating margin 461 (228 ) 1,798 (419 ) Total assets (end of period) $ 13,155 $ 9,781 $ 13,155 $ 9,781 Three Months ended Nine Months ended 2016 2017 2016 2017 Total operating margin, excluding depreciation and amortization (1) $ 25,783 $ 24,099 $ 62,718 $ 62,898 Total segment revenues $ 47,136 $ 47,701 $ 132,492 $ 138,162 Elimination of intersegment revenues (197 ) (227 ) (1,118 ) (471 ) Consolidated revenues $ 46,939 $ 47,474 $ 131,374 $ 137,691 ____________________ (1) The following table reconciles segment operating margin, excluding depreciation and amortization, to income (loss) before income taxes (in thousands): Three Months ended Nine Months ended 2016 2017 2016 2017 Operating margin (excluding depreciation and amortization) $ 25,783 $ 24,099 $ 62,718 $ 62,898 Depreciation and amortization (7,624 ) (7,680 ) (22,447 ) (23,586 ) General and administrative expenses (4,865 ) (4,093 ) (14,447 ) (13,000 ) Asset impairment expense — — (22,845 ) (45 ) Gain (loss) on sale of assets 104 (107 ) 85 (986 ) Equity earnings in unconsolidated affiliate 305 — 1,086 61 Gain on sale of unconsolidated affiliate — 1,112 — 5,284 Interest expense (2,175 ) (3,500 ) (10,742 ) (10,795 ) Income (loss) before income taxes $ 11,528 $ 9,831 $ (6,592 ) $ 19,831 |