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 services. ASPHALT TERMINALLING SERVICES —The Partnership provides asphalt product and residual fuel terminalling, storage and blending services. As of July 26, 2018 , the Partnership has 53 terminalling and storage facilities located in 26 states. CRUDE OIL TERMINALLING SERVICES —The Partnership provides crude oil terminalling 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 pipeline system. The Partnership previously owned and operated the East Texas pipeline system, which was located in Texas. On April 17, 2017, the Partnership sold the East Texas pipeline system. See Note 6 for additional information. Crude oil product sales revenues consist of sales proceeds recognized for the sale of crude oil to third-party customers. CRUDE OIL TRUCKING 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. On April 24, 2018, the Partnership sold the producer field services business. As a result of the sale of the producer field services business, the Partnership changed the name of this operating segment to crude oil trucking services during the second quarter of 2018. See Note 6 for additional information. The Partnership’s management evaluates performance based upon operating margin, excluding amortization and depreciation, which includes revenues from related parties and external customers and operating expense, excluding depreciation and amortization. The non-GAAP measure of operating margin, excluding depreciation and amortization (in the aggregate and by segment) is presented in the following table. The Partnership computes the components of operating margin, excluding depreciation and amortization by using amounts that are determined in accordance with GAAP. The Partnership accounts for intersegment product sales as if the sales were to third parties, that is, at current market prices. A reconciliation of 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. The Partnership believes that investors benefit from having access to the same financial measures being utilized by management. Operating margin, excluding depreciation and amortization is an important measure of the economic performance of the Partnership’s core operations. 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. 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 Six Months ended 2017 2018 2017 2018 Asphalt Terminalling Services Service revenue: Third-party revenue $ 13,259 $ 6,639 $ 26,482 $ 11,771 Related-party revenue 13,505 5,981 26,837 12,302 Lease revenue: Third-party revenue — 10,016 — 19,473 Related-party revenue — 7,475 — 15,178 Total revenue for reportable segment 26,764 30,111 53,319 58,724 Operating expense, excluding depreciation and amortization 11,935 13,393 24,255 26,728 Operating margin, excluding depreciation and amortization $ 14,829 $ 16,718 $ 29,064 $ 31,996 Total assets (end of period) $ 147,832 $ 167,849 $ 147,832 $ 167,849 Crude Oil Terminalling Services Service revenue: Third-party revenue $ 5,726 $ 2,910 $ 11,851 $ 7,496 Intersegment revenue — 170 — 170 Lease revenue: Third-party revenue — 12 — 27 Total revenue for reportable segment 5,726 3,092 11,851 7,693 Operating expense, excluding depreciation and amortization 992 913 2,003 2,188 Operating margin, excluding depreciation and amortization $ 4,734 $ 2,179 $ 9,848 $ 5,505 Total assets (end of period) $ 69,834 $ 67,150 $ 69,834 $ 67,150 Crude Oil Pipeline Services Service revenue: Third-party revenue $ 2,720 $ 1,045 $ 5,324 $ 3,105 Related-party revenue — 82 310 82 Lease revenue: Third-party revenue — 177 — 412 Product sales revenue: Third-party revenue 2,227 45,612 5,877 49,120 Total revenue for reportable segment 4,947 46,916 11,511 52,719 Operating expense, excluding depreciation and amortization 3,142 2,542 6,383 5,327 Operating expense (intersegment) 74 1,156 244 1,599 Third-party cost of product sales 1,669 20,041 4,808 22,678 Related-party cost of product sales — 23,747 — 23,747 Operating margin, excluding depreciation and amortization $ 62 $ (570 ) $ 76 $ (632 ) Total assets (end of period) $ 117,222 $ 152,105 $ 117,222 $ 152,105 Three Months ended Six Months ended 2017 2018 2017 2018 Crude Oil Trucking Services Service revenue: Third-party revenue $ 6,440 $ 3,509 $ 13,151 $ 9,049 Intersegment revenue 74 986 244 1,429 Lease revenue: Third-party revenue — 32 — 129 Product sales revenue: Third-party revenue — 3 385 9 Total revenue for reportable segment 6,514 4,530 13,780 10,616 Operating expense, excluding depreciation and amortization 6,702 4,727 13,970 11,101 Operating margin, excluding depreciation and amortization $ (188 ) $ (197 ) $ (190 ) $ (485 ) Total assets (end of period) $ 11,208 $ 3,402 $ 11,208 $ 3,402 Total operating margin, excluding depreciation and amortization (1) $ 19,437 $ 18,130 $ 38,798 $ 36,384 Total segment revenues $ 43,951 $ 84,649 $ 90,461 $ 129,752 Elimination of intersegment revenues (74 ) (1,156 ) (244 ) (1,599 ) Consolidated revenues $ 43,877 $ 83,493 $ 90,217 $ 128,153 ____________________ (1) The following table reconciles segment operating margin (excluding depreciation and amortization) to income before income taxes (in thousands): Three Months ended Six Months ended 2017 2018 2017 2018 Operating margin, excluding depreciation and amortization $ 19,437 $ 18,130 $ 38,798 $ 36,384 Depreciation and amortization (7,839 ) (7,413 ) (15,905 ) (14,779 ) General and administrative expense (4,322 ) (4,486 ) (8,907 ) (8,707 ) Asset impairment expense (17 ) — (45 ) (616 ) Gain (loss) on sale of assets (754 ) 599 (879 ) 363 Interest expense (4,265 ) (5,024 ) (7,295 ) (8,593 ) Gain on sale of unconsolidated affiliate 4,172 — 4,172 2,225 Equity earnings in unconsolidated affiliate — — 61 — Income before income taxes $ 6,412 $ 1,806 $ 10,000 $ 6,277 |