Acquisitions (Notes) | 9 Months Ended |
Sep. 30, 2014 |
Business Combinations [Abstract] | ' |
Acquisitions | ' |
ACQUISITIONS |
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QEP Field Services Acquisition |
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On October 19, 2014, we reached a definitive agreement to acquire the natural gas gathering, processing, treating and transportation and crude oil gathering business of QEP Field Services, LLC (“QEPFS”) with operations in Wyoming, Colorado, Utah and the Williston Basin in North Dakota (the “QEPFS Acquisition”). See Note M for additional discussion on the QEPFS Acquisition. |
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2014 Acquisition |
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On June 23, 2014, we entered into an agreement with Tesoro to acquire certain terminalling and pipeline assets owned by Tesoro and two of its subsidiaries, Tesoro Refining & Marketing Company LLC and Tesoro Alaska Company LLC. Under the terms of the agreement, TLLP acquired the West Coast Logistics Assets for total consideration of $270.0 million. The operations of the West Coast Logistics Assets are included in our Terminalling and Transportation segment. |
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On July 1, 2014, we closed on the purchase of the first portion of the West Coast Logistics Assets in exchange for consideration of $241.4 million, comprised of approximately $214.4 million in cash, financed with borrowings on our Revolving Credit Facility, the issuance of equity to Tesoro with a fair value of $27.0 million. The equity was comprised of 370,843 common units and 8,856 general partner units. |
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TLLP completed the second portion of this acquisition on September 30, 2014, upon receiving the required regulatory approval from the RCA, for cash consideration of $28.6 million, which was financed with borrowings on our Revolving Credit Facility. The assets consist of all of Tesoro’s membership interests in Tesoro Alaska Pipeline Company LLC, a wholly-owned subsidiary of Tesoro, which owns a refined products pipeline connecting Tesoro’s Kenai refinery to Anchorage, Alaska. |
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Tesoro retained any current assets and current liabilities related to the West Coast Logistics Assets as of the dates of acquisition. The only historical balance sheet item that transferred to the Partnership in the acquisition was property, plant and equipment, which was recorded by TLLP at historical cost. |
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We entered into throughput, use and storage agreements with Tesoro for the marketing and storage terminal facilities in connection with the closing of this transaction. The terminalling agreements include a minimum throughput commitment and the storage agreement requires Tesoro to pay a monthly storage services fee. In addition, Tesoro committed to a minimum volume throughput on the refined products pipeline. See Note C for additional information regarding commercial agreements and amendments to other agreements with related parties in connection with the acquisition. |
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2013 Acquisitions |
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Los Angeles Terminal Assets and Los Angeles Logistics Assets Acquisitions |
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We completed the Los Angeles Terminal Assets acquisition and the Los Angeles Logistics Assets acquisition in 2013 and entered into commercial agreements in connection with the acquisitions under which Tesoro commits to minimum monthly throughput volumes of crude oil and refined products. See our Annual Report on Form 10-K for the year ended December 31, 2013 for additional information regarding the Acquisitions from Tesoro and the commercial agreements executed in connection with these acquisitions. |
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We have not provided disclosure of pro forma revenues and earnings as if these acquisitions had occurred prior to 2013 for the nine months ended September 30, 2013. BP managed and operated the Los Angeles Terminal Assets and the Los Angeles Logistics Assets as part of its refining operations, and historical U.S. GAAP financial information specific to the assets is not available. As a result, preparing pro forma information was determined to be impracticable. |
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Northwest Products System Acquisition |
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On June 19, 2013, we purchased a regulated common carrier products pipeline system running from Salt Lake City, Utah to Spokane, Washington (“Northwest Products Pipeline”) and three refined products terminals in Boise and Pocatello, Idaho and Pasco, Washington (collectively, the “Northwest Products System”) from Chevron Pipe Line Company and Northwest Terminalling Company (collectively, “Chevron”). The total purchase price was $354.8 million. During the second quarter of 2014, we completed and finalized assessments of the fair values related to the acquisition. The purchase price allocation for the Northwest Products System acquisition is final and is based on estimated fair values of the assets acquired and liabilities assumed at the acquisition date. There were no material purchase price allocation adjustments recorded during 2014. |
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Pursuant to the regulatory review process associated with the Northwest Products System acquisition, we agreed to divest our legacy refined products terminal in Boise, Idaho (“Boise Terminal”). We completed the sale of the Boise Terminal on March 18, 2014. Net proceeds from the sale of the assets were $9.7 million, which resulted in a gain of $4.7 million recorded during the nine months ended September 30, 2014. |
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If the Northwest Products System acquisition had occurred prior to 2013, our pro forma revenues and net income would have been $234.0 million and $34.1 million, respectively, for the nine months ended September 30, 2013. |
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Financial Results |
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Our historical financial statements have been retrospectively adjusted to reflect the results of operations, financial position, cash flows and equity attributable to the West Coast Logistics Assets as if we owned the assets for all periods presented. The results of the West Coast Logistics Assets are included in the Terminalling and Transportation segment. The West Coast Logistics Assets acquisition was not material to our condensed combined consolidated financial statements. |
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The results of the West Coast Logistics Assets operations, prior to the West Coast Logistics Assets respective acquisition dates on July 1, 2014 and September 30, 2014, and the results of the Los Angeles Logistics Assets operations, for the period of June 1, 2013 through September 30, 2013, have been included in the Predecessors’ results in the tables below. The results of the West Coast Logistics Assets and the Los Angeles Logistics Assets, subsequent to each respective acquisition date, have been included in TLLP’s results. |
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The following tables present our financial position, results of operations, the effect of including the results of the Predecessors and the adjusted total amounts included in our condensed combined consolidated financial statements. |
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Condensed Combined Consolidated Balance Sheet as of December 31, 2013 |
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| Tesoro Logistics LP | | | Predecessors | | 31-Dec-13 |
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| (Dollars in thousands) |
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ASSETS |
CURRENT ASSETS | | | | | | |
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Cash and cash equivalents | $ | 23,203 | | | | $ | — | | | $ | 23,203 | |
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Receivables, net | | | | | | |
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Trade | 9,125 | | | | — | | | 9,125 | |
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Affiliate | 42,369 | | | | 598 | | | 42,967 | |
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Other | 14,000 | | | | — | | | 14,000 | |
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Current assets held for sale | 4,903 | | | | — | | | 4,903 | |
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Prepayments and other | 2,110 | | | | 81 | | | 2,191 | |
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Total Current Assets | 95,710 | | | | 679 | | | 96,389 | |
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NET PROPERTY, PLANT AND EQUIPMENT | 1,368,301 | | | | 30,028 | | | 1,398,329 | |
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GOODWILL | 8,738 | | | | — | | | 8,738 | |
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OTHER NONCURRENT ASSETS | 29,563 | | | | — | | | 29,563 | |
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Total Assets | $ | 1,502,312 | | | | $ | 30,707 | | | $ | 1,533,019 | |
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LIABILITIES AND EQUITY |
CURRENT LIABILITIES | | | | | | |
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Accounts payable | | | | | | |
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Trade | $ | 21,412 | | | | $ | 390 | | | $ | 21,802 | |
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Affiliate | 13,851 | | | | 58 | | | 13,909 | |
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Deferred revenue - affiliate | 2,346 | | | | — | | | 2,346 | |
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Accrued interest and financing costs | 22,895 | | | | — | | | 22,895 | |
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Accrued environmental liabilities | 19,741 | | | | — | | | 19,741 | |
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Other current liabilities | 6,863 | | | | 1,043 | | | 7,906 | |
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Total Current Liabilities | 87,108 | | | | 1,491 | | | 88,599 | |
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OTHER NONCURRENT LIABILITIES | 5,832 | | | | — | | | 5,832 | |
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DEBT | 1,164,020 | | | | — | | | 1,164,020 | |
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EQUITY | | | | | | |
Equity of predecessors | — | | | | 29,216 | | | 29,216 | |
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Common unitholders | 459,261 | | | | — | | | 459,261 | |
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Subordinated unitholders | (161,311 | ) | | | — | | | (161,311 | ) |
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General partner | (52,598 | ) | | | — | | | (52,598 | ) |
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Total Equity | 245,352 | | | | 29,216 | | | 274,568 | |
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Total Liabilities and Equity | $ | 1,502,312 | | | | $ | 30,707 | | | $ | 1,533,019 | |
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Condensed Statement of Combined Consolidated Operations for the Three Months Ended September 30, 2014 |
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| Tesoro Logistics LP | | | Predecessors | | Three Months Ended |
30-Sep-14 |
REVENUES | (Dollars in thousands) |
Affiliate | $ | 127,638 | | | | $ | 2,352 | | | $ | 129,990 | |
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Third-party | 20,364 | | | | — | | | 20,364 | |
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Total Revenues | 148,002 | | | | 2,352 | | | 150,354 | |
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COSTS AND EXPENSES | | | | | | |
Operating and maintenance expenses | 62,119 | | | | 2,050 | | | 64,169 | |
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Imbalance settlement gains | (9,417 | ) | | | — | | | (9,417 | ) |
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General and administrative expenses | 16,470 | | | | 83 | | | 16,553 | |
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Depreciation and amortization expenses | 18,091 | | | | 133 | | | 18,224 | |
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Loss on asset disposals and impairments | 204 | | | | — | | | 204 | |
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Total Costs and Expenses | 87,467 | | | | 2,266 | | | 89,733 | |
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OPERATING INCOME | 60,535 | | | | 86 | | | 60,621 | |
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Interest and financing costs, net | (28,220 | ) | | | — | | | (28,220 | ) |
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NET INCOME | 32,315 | | | | 86 | | | 32,401 | |
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Income attributable to Predecessors | — | | | | (86 | ) | | (86 | ) |
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Net income attributable to partners | $ | 32,315 | | | | $ | — | | | $ | 32,315 | |
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Condensed Statement of Combined Consolidated Operations for the Three Months Ended September 30, 2013 |
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| Tesoro Logistics LP | | | Predecessors | | Three Months Ended |
30-Sep-13 |
REVENUES | (Dollars in thousands) |
Affiliate | $ | 78,958 | | | | $ | 2,257 | | | $ | 81,215 | |
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Third-party | 14,819 | | | | 691 | | | 15,510 | |
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Total Revenues | 93,777 | | | | 2,948 | | | 96,725 | |
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COSTS AND EXPENSES | | | | | | |
Operating and maintenance expenses | 41,004 | | | | 19,187 | | | 60,191 | |
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Imbalance settlement gains | (1,159 | ) | | | — | | | (1,159 | ) |
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General and administrative expenses | 7,554 | | | | 883 | | | 8,437 | |
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Depreciation and amortization expenses | 13,028 | | | | 3,340 | | | 16,368 | |
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Loss on asset disposals and impairments | 13 | | | | — | | | 13 | |
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Total Costs and Expenses | 60,440 | | | | 23,410 | | | 83,850 | |
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OPERATING INCOME (LOSS) | 33,337 | | | | (20,462 | ) | | 12,875 | |
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Interest and financing costs, net | (12,284 | ) | | | — | | | (12,284 | ) |
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NET INCOME (LOSS) | 21,053 | | | | (20,462 | ) | | 591 | |
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Loss attributable to Predecessors | — | | | | 20,462 | | | 20,462 | |
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Net income attributable to partners | $ | 21,053 | | | | $ | — | | | $ | 21,053 | |
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Condensed Statement of Combined Consolidated Operations for the Nine Months Ended September 30, 2014 |
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| Tesoro Logistics LP | | | Predecessors | | Nine Months Ended |
30-Sep-14 |
REVENUES | (Dollars in thousands) |
Affiliate | $ | 351,432 | | | | $ | 6,402 | | | $ | 357,834 | |
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Third-party | 51,944 | | | | — | | | 51,944 | |
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Total Revenues | 403,376 | | | | 6,402 | | | 409,778 | |
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COSTS AND EXPENSES | | | | | | |
Operating and maintenance expenses | 160,963 | | | | 8,974 | | | 169,937 | |
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Imbalance settlement gains | (14,534 | ) | | | — | | | (14,534 | ) |
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General and administrative expenses | 38,264 | | | | 481 | | | 38,745 | |
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Depreciation and amortization expenses | 50,076 | | | | 1,017 | | | 51,093 | |
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Gain on asset disposals and impairments | (4,412 | ) | | | — | | | (4,412 | ) |
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Total Costs and Expenses | 230,357 | | | | 10,472 | | | 240,829 | |
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OPERATING INCOME (LOSS) | 173,019 | | | | (4,070 | ) | | 168,949 | |
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Interest and financing costs, net | (63,440 | ) | | | — | | | (63,440 | ) |
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NET INCOME (LOSS) | 109,579 | | | | (4,070 | ) | | 105,509 | |
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Loss attributable to Predecessors | — | | | | 4,070 | | | 4,070 | |
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Net income attributable to partners | $ | 109,579 | | | | $ | — | | | $ | 109,579 | |
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Condensed Statement of Combined Consolidated Operations for the Nine Months Ended September 30, 2013 |
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| Tesoro Logistics LP | | | Predecessors | | Nine Months Ended |
30-Sep-13 |
REVENUES | (Dollars in thousands) |
Affiliate | $ | 180,952 | | | | $ | 6,072 | | | $ | 187,024 | |
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Third-party | 24,322 | | | | 921 | | | 25,243 | |
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Total Revenues | 205,274 | | | | 6,993 | | | 212,267 | |
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COSTS AND EXPENSES | | | | | | |
Operating and maintenance expenses | 84,728 | | | | 30,005 | | | 114,733 | |
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Imbalance settlement gains | (6,159 | ) | | | — | | | (6,159 | ) |
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General and administrative expenses | 20,211 | | | | 1,490 | | | 21,701 | |
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Depreciation and amortization expenses | 23,447 | | | | 5,102 | | | 28,549 | |
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Loss on asset disposals and impairments | 177 | | | | — | | | 177 | |
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Total Costs and Expenses | 122,404 | | | | 36,597 | | | 159,001 | |
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OPERATING INCOME (LOSS) | 82,870 | | | | (29,604 | ) | | 53,266 | |
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Interest and financing costs, net | (24,459 | ) | | | — | | | (24,459 | ) |
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Interest income | 493 | | | | — | | | 493 | |
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NET INCOME (LOSS) | 58,904 | | | | (29,604 | ) | | 29,300 | |
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Loss attributable to Predecessors | — | | | | 29,604 | | | 29,604 | |
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Net income attributable to partners | $ | 58,904 | | | | $ | — | | | $ | 58,904 | |
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