Revenue from Contract with Customer | Implementation of ASC Topic 606 As discussed in Note 2 – Summary of Significant Accounting Policies , we adopted the guidance in ASC Topic 606 effective January 1, 2018 using the modified retrospective method of adoption. As a result, revenue reported for the three months ended March 31, 2017 has not been revised. The following tables provide the impact of the guidance on our condensed consolidated balance sheet as of March 31, 2018 and the condensed consolidated statement of income for the three months ended March 31, 2018 : March 31, 2018 As currently reported Under previous guidance Impact of ASC Topic 606 (in thousands) Unconsolidated investments $ 950,587 $ 900,013 $ 50,574 (1) Three Months Ended March 31, 2018 As currently reported Under previous guidance Impact of ASC Topic 606 (in thousands) Revenues: Crude oil transportation services $ 84,738 $ 84,466 $ 272 (2) Sales of natural gas, NGLs, and crude oil $ 38,145 $ 39,245 $ (1,100 ) (3) Processing and other revenues $ 24,015 $ 25,525 $ (1,510 ) (1)(3) Cost of sales $ 26,351 $ 28,845 $ (2,494 ) (2)(3) Equity in earnings of unconsolidated investments $ 53,406 $ 45,698 $ 7,708 (1) Net income attributable to partners $ 107,884 $ 100,020 $ 7,864 Basic net income per common unit $ 0.91 $ 0.80 $ 0.11 Diluted net income per common unit $ 0.91 $ 0.80 $ 0.11 (1) Reflects the impact on our investment in Rockies Express and the management fee collected by NatGas of the cumulative effect adjustment at Rockies Express, which arose as a result of the allocation of the transaction price to a series of individual performance obligations in certain long-term transportation contracts with tiered-pricing arrangements. The adjustment increases the carrying amount of our investment in Rockies Express to reflect increased equity in earnings and establishes a receivable for the increased management fee revenue that would have been earned by NatGas. (2) Reflects the impact to revenue and cost of sales to value PLA barrels collected under certain crude oil transportation arrangements at their contract inception fair value in revenue and record an associated lower of cost or net realizable value adjustment in cost of sales. (3) Reflects the reclassification of certain gathering and processing fees collected under arrangements determined to be supply arrangements, rather than customer arrangements under ASC 606, to cost of sales and the reclassification of certain commodities retained as consideration for processing services to processing fee revenue. Disaggregated Revenue A summary of our revenue by line of business is as follows: Three Months Ended March 31, 2018 Natural Gas Transportation segment Crude Oil Transportation segment Gathering, Processing, & Terminalling segment Corporate and Other Total Revenue (in thousands) Crude oil transportation - committed shipper revenue $ — $ 84,738 $ — $ — $ 84,738 Natural gas transportation - firm service 33,334 — — (1,883 ) 31,451 Water business services — — 13,204 — 13,204 Natural gas gathering & processing fees — — 5,044 — 5,044 All other (1) 2,630 3,319 5,706 (6,088 ) 5,567 Total service revenue 35,964 88,057 23,954 (7,971 ) 140,004 Natural gas liquids sales — — 23,609 — 23,609 Natural gas sales 238 — 7,847 — 8,085 Crude oil sales — 1,909 247 — 2,156 Total commodity sales revenue 238 1,909 31,703 — 33,850 Total revenue from contracts with customers 36,202 89,966 55,657 (7,971 ) 173,854 Other revenue (2) — — 8,181 (2,941 ) 5,240 Total revenue (3) $ 36,202 $ 89,966 $ 63,838 $ (10,912 ) $ 179,094 (1) Includes revenue from crude oil terminal services, interruptible natural gas transportation and storage, and natural gas park and loan service. (2) Includes lease and derivative revenue not subject to ASC 606. (3) Excludes $230.1 million of revenue recognized at Rockies Express for the three months ended March 31, 2018 . See Note 7 – Investments in Unconsolidated Affiliates for additional information about our investment in Rockies Express. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC Topic 606. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation and are billed and collected monthly. All of our segments engage in commodity sales, in which our performance obligations include an obligation to deliver the specified volume of a commodity to the designated receipt point. Revenue from commodity sales is recognized at a point in time when the customer obtains control of the commodity, typically upon delivery to the designated delivery point when the customer accepts and takes possession of the commodity. In the Natural Gas Transportation segment, our performance obligations typically include an obligation to stand ready to provide natural gas transportation, storage, or an integrated transportation and storage service over the life of the contract, which is a series. These performance obligations are satisfied over time using each day of service to measure progress toward satisfaction of the performance obligation. In the Crude Oil Transportation segment, our performance obligations typically include an obligation to provide crude oil transportation services over the life of the contract, which is a series. These performance obligations are satisfied over time using barrels delivered to measure progress toward satisfaction of the performance obligation. In the Gathering, Processing & Terminalling segment, the performance obligations vary based on the operating asset and type of contract. In our natural gas gathering and processing arrangements, performance obligations typically include an obligation to provide an integrated processing service over the life of the contract, which is a series. These performance obligations are satisfied over time using each unit of gas processed to measure progress toward satisfaction of the performance obligation. In our freshwater supply arrangements, performance obligations typically include an obligation to deliver a specified volume of water to the designated receipt point. These performance obligations are satisfied at a point in time when the customer obtains control of the water. In our produced water gathering and disposal arrangements, performance obligations typically include an obligation to provide an integrated produced water gathering and disposal service over the life of the contract, which is a series. These performance obligations are satisfied over time using barrels disposed to measure progress toward satisfaction of the performance obligation. On March 31, 2018 , we had $1.7 billion of remaining performance obligations at our consolidated subsidiaries, which we refer to as total backlog. Total backlog includes performance obligations under long-term crude oil transportation contracts with committed shippers, natural gas firm transportation and firm storage contracts, and certain water business service contracts with minimum volume commitments, and excludes variable consideration that is not estimated at contract inception, as discussed further below. We expect to recognize the total backlog during the remainder of 2018 and future periods as follows (in thousands): Year Estimated Revenue 2018 $ 387,826 2019 488,919 2020 317,235 2021 138,686 2022 129,548 Thereafter 271,311 Total $ 1,733,525 Contract Estimates Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. These assumptions include the anticipated volumes of crude oil expected to be delivered by our customers for transport in future periods. The nature of our contracts gives rise to several types of variable consideration, including PLA, volumetric charges for actual volumes delivered, overrun charges, and other fees that are contingent on the actual volumes delivered by our customers. As the amount of variable consideration is allocable to each distinct performance obligation within the series of performance obligations that comprise the single performance obligation, we do not estimate the total variable consideration for the single overall performance obligation because the uncertainty related to the consideration is resolved each month as the distinct service is provided. Consequently, we are able to include in the transaction price each month the actual amount of variable consideration because no uncertainty exists surrounding the services provided that month. Certain of our contracts include provisions in which a portion of the consideration is noncash. In our Crude Oil Transportation segment, we collect PLA from our customers. As crude oil is transported, we earn, and take title to, a portion of the oil transported for our services. Any PLA that remains after replacing losses in transit can be sold. Where PLA is determined to be a component of compensation for the transportation services provided, crude oil retained is recognized in revenue at its contract inception fair value. In our Gathering, Processing & Terminalling segment, we retain commodity products as consideration under certain of our gathering and processing arrangements. Processing fee revenue is recorded when the performance obligation is completed based on the value of the product received at the time services are performed. At this time, the variability of the non-cash consideration related to both form (price) and other-than-form (volume and product mix), which are interrelated, is resolved. As a significant change in one or more of these estimates could affect the amount and timing of revenue recognized under our customer contracts, we review and update our contract-related estimates regularly. Contract Balances The timing of revenue recognition, billings, and cash collections may result in billed accounts receivable, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on our condensed consolidated balance sheets. Revenue is generally billed and collected monthly based on services provided or commodity volumes sold. In our Crude Oil Transportation segment, we recognize shipper deficiencies, or deferred revenue, for barrels committed by the customer to be transported in a month but not physically received by us for transport or delivered to the customers' agreed upon destination point. These shipper deficiencies are charged at the committed tariff rate per barrel and recorded as a contract liability until the barrels are physically transported and delivered, or when the likelihood that the customer will utilize the deficiency balance becomes remote. We also recognize contract liabilities, in the form of deferred revenue, under certain water business services contracts in the Gathering, Processing & Terminalling segment. Contract balances as of March 31, 2018 were as follows: March 31, 2018 January 1, 2018 (in thousands) Accounts receivable from contracts with customers $ 68,039 $ 61,888 Other accounts receivable 63,362 56,727 Accounts receivable, net $ 131,401 $ 118,615 Deferred revenue from contracts with customers (1) $ 99,922 $ 88,471 (1) Revenue recognized during the three months ended March 31, 2018 that was included in the deferred revenue balance at the beginning of the period was $3.1 million . This revenue primarily represented the utilization of shipper deficiencies at Pony Express. |