Equity (Notes) | 6 Months Ended |
Jun. 30, 2014 |
Equity [Abstract] | ' |
Equity | ' |
EQUITY |
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We had 35,350,338 common public units outstanding as of June 30, 2014. Additionally, Tesoro owned 19,110,714 of our common units and 1,110,282 of our general partner units (the 2% general partner interest) as of June 30, 2014, which together constitutes a 36% ownership interest in us. |
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Following payment of the cash distribution for the first quarter of 2014 and the attainment of necessary approvals, the requirements for the conversion of all subordinated units were satisfied under the partnership agreement. As a result, effective May 16, 2014, 15,254,890 subordinated units were converted into common units on a one-for-one basis and thereafter participate on terms equal with all other common units in distributions of available cash. The conversion of the subordinated units did not impact the amount of cash distributions paid by the Partnership or the total number of its outstanding units. |
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On June 25, 2014, we filed a prospectus supplement to our shelf registration statement filed with the SEC in 2012, authorizing the continuous issuance of up to an aggregate of $200.0 million of common units, in amounts, at prices and on terms to be determined by market conditions and other factors at the time of our offerings (such continuous offering program, or at-the-market program, referred to as our “ATM Program”). During the three months ended June 30, 2014, we issued an aggregate of 5,500 common units under our ATM Program, generating proceeds of approximately $0.4 million, net of offering costs. The net proceeds from these sales will be used for general partnership purposes. We paid fees of $7,903 related to the issuance of units under the ATM Program for the three months ended June 30, 2014. We issued an additional 193,900 common units under this program for net proceeds of $13.6 million (net of offering costs of $0.3 million) that settled in July 2014. |
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The table below summarizes changes in the number of units outstanding from December 31, 2013 through June 30, 2014 (in units): |
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| Partnership | | | | | | |
| Common | | Subordinated | | General Partner | | Total | | | | |
Balance at December 31, 2013 | 39,148,916 | | | 15,254,890 | | | 1,110,282 | | | 55,514,088 | | | | | |
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Issuance of units under ATM Program | 5,500 | | | — | | | — | | | 5,500 | | | | | |
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Unit-based compensation awards (a) | 51,746 | | | — | | | — | | | 51,746 | | | | | |
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Subordinated unit conversion | 15,254,890 | | | (15,254,890 | ) | | — | | | — | | | | | |
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Balance at June 30, 2014 | 54,461,052 | | | — | | | 1,110,282 | | | 55,571,334 | | | | | |
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(a) Unit-based compensation awards are presented net of 22,933 units withheld for taxes. |
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The summarized changes in the carrying amount of our equity are as follows (in thousands): |
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| Partnership | | |
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| Common | | Subordinated | | General Partner | | Total |
Balance at December 31, 2013 | $ | 459,261 | | | $ | (161,311 | ) | | $ | (52,598 | ) | | $ | 245,352 | |
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Equity offering under ATM Program, net of issuance costs | 379 | | | — | | | 8 | | | 387 | |
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Quarterly distributions (b) | (45,583 | ) | | (17,619 | ) | | (12,332 | ) | | (75,534 | ) |
Net income attributable to partners | 48,681 | | | 13,789 | | | 14,794 | | | 77,264 | |
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Other | 7,174 | | | (13 | ) | | 600 | | | 7,761 | |
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Subordinated unit conversion | (165,154 | ) | | 165,154 | | | — | | | — | |
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Balance at June 30, 2014 | $ | 304,758 | | | $ | — | | | $ | (49,528 | ) | | $ | 255,230 | |
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(b) Includes $0.3 million paid for distribution equivalent rights related to unit-based compensation awards vested during the six months ended June 30, 2014. |
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Allocations of Net Income |
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Our partnership agreement contains provisions for the allocation of net income and loss to the unitholders and the general partner. For purposes of maintaining partner capital accounts, the partnership agreement specifies that items of income and loss will be allocated among the partners in accordance with their respective percentage interest. Normal allocations according to percentage interests are made after giving effect, if any, to priority income allocations in an amount equal to incentive cash distributions fully allocated to the general partner. |
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The following table presents the allocation of the general partner’s interest in net income (in thousands, except percentage of ownership interest): |
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| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
Net income attributable to partners | $ | 32,766 | | | $ | 19,173 | | | $ | 77,264 | | | $ | 37,851 | |
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General partner’s IDRs | (7,452 | ) | | (1,627 | ) | | (13,520 | ) | | (2,813 | ) |
Net income available to partners | $ | 25,314 | | | $ | 17,546 | | | $ | 63,744 | | | $ | 35,038 | |
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General partner’s ownership interest | 2 | % | | 2 | % | | 2 | % | | 2 | % |
General partner’s allocated interest in net income | $ | 506 | | | $ | 351 | | | $ | 1,274 | | | $ | 701 | |
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General partner’s IDRs | 7,452 | | | 1,627 | | | 13,520 | | | 2,813 | |
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Total general partner’s interest in net income | $ | 7,958 | | | $ | 1,978 | | | $ | 14,794 | | | $ | 3,514 | |
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Cash Distributions |
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Our partnership agreement, as amended, sets forth the calculation to be used to determine the amount and priority of cash distributions that the common and subordinated unitholders and general partner will receive. The table below summarizes the quarterly distributions related to our quarterly financial results: |
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Quarter Ended | | Quarterly Distribution Per Unit | | Total Cash Distribution including general partner IDRs (in thousands) | | Date of Distribution | | Unitholders Record Date | | | |
31-Dec-13 | | $ | 0.565 | | | $ | 36,265 | | | February 13, 2014 | | February 3, 2014 | | | |
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31-Mar-14 | | $ | 0.59 | | | $ | 38,976 | | | May 15, 2014 | | May 5, 2014 | | | |
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June 30, 2014 (c) | | $ | 0.615 | | | $ | 42,132 | | | 14-Aug-14 | | 4-Aug-14 | | | |
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(c) This distribution was declared on July 24, 2014 and will be paid on the date of distribution. |
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The allocation of total quarterly cash distributions to general and limited partners is as follows for the three and six months ended June 30, 2014 and 2013 (in thousands). Our distributions are declared subsequent to quarter end; therefore, the table represents total cash distributions applicable to the period in which the distributions are earned. |
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| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
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General partner’s distributions: | | | | | | | |
General partner’s distributions | $ | 840 | | | $ | 522 | | | $ | 1,619 | | | $ | 1,002 | |
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General partner’s IDRs | 7,452 | | | 1,627 | | | 13,520 | | | 2,813 | |
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Total general partner’s distributions | 8,292 | | | 2,149 | | | 15,139 | | | 3,815 | |
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Limited partners’ distributions: | | | | | | | |
Common | 29,199 | | | 16,179 | | | 52,328 | | | 31,014 | |
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Subordinated | 4,641 | | | 7,780 | | | 13,641 | | | 15,255 | |
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Total limited partners’ distributions | 33,840 | | | 23,959 | | | 65,969 | | | 46,269 | |
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Total Cash Distributions | $ | 42,132 | | | $ | 26,108 | | | $ | 81,108 | | | $ | 50,084 | |
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