Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 15, 2017 | Jun. 30, 2016 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | TESORO CORP /NEW/ | ||
Entity Central Index Key | 50,104 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 8.8 | ||
Entity Common Stock, Shares Outstanding | 116,986,291 |
Statements of Consolidated Oper
Statements of Consolidated Operations - USD ($) shares in Millions, $ in Millions | 12 Months Ended | |||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Income Statement [Abstract] | ||||||
Revenues (a) | $ 24,582 | $ 28,711 | $ 40,633 | |||
Cost and Expenses: | ||||||
Cost of sales (excluding the lower of cost or market inventory valuation adjustment) (a) | 19,658 | 21,928 | 35,603 | |||
Lower of cost or market inventory valuation adjustment | (359) | 317 | 42 | |||
Operating expenses | 2,541 | 2,455 | 2,444 | |||
Selling, general and administrative expenses | 401 | 386 | 346 | |||
Depreciation and amortization expense | 851 | 756 | 562 | |||
Loss on asset disposals and impairments | 9 | 42 | 4 | |||
Operating Income | 1,481 | 2,827 | 1,632 | |||
Interest and financing costs, net | (274) | (217) | (235) | |||
Equity in earnings of equity method investments | 13 | 7 | 10 | |||
Other income, net | 57 | 13 | 57 | |||
Earnings Before Income Taxes | 1,277 | 2,630 | 1,464 | |||
Income tax expense | 427 | [1] | 936 | [2] | 547 | [2] |
Net Earnings from Continuing Operations | 850 | 1,694 | 917 | |||
Earnings (loss) from discontinued operations, net of tax | 10 | (4) | (29) | |||
Net Earnings | 860 | 1,690 | 888 | |||
Less: Net earnings from continuing operations attributable to noncontrolling interest | 126 | 150 | 45 | |||
Net Earnings Attributable to Tesoro Corporation | 734 | 1,540 | 843 | |||
Net Earnings (Loss) Attributable to Tesoro Corporation: | ||||||
Continuing operations | 724 | 1,544 | 872 | |||
Discontinued operations | 10 | (4) | (29) | |||
Total | $ (734) | $ (1,540) | $ (843) | |||
Net Earnings (Loss) Per Share - Basic: | ||||||
Continuing operations | $ 6.11 | $ 12.53 | $ 6.79 | |||
Discontinued operations | 0.08 | (0.03) | (0.23) | |||
Total | $ 6.19 | $ 12.50 | $ 6.56 | |||
Weighted average common shares outstanding - Basic | 118.5 | 123.2 | 128.5 | |||
Net Earnings (Loss) Per Share - Diluted: | ||||||
Continuing operations | $ 6.04 | $ 12.39 | $ 6.67 | |||
Discontinued operations | 0.08 | (0.03) | (0.23) | |||
Total | $ 6.12 | $ 12.36 | $ 6.44 | |||
Weighted average common shares outstanding - Diluted | 119.9 | 124.6 | 130.8 | |||
Dividends per Share | $ 2.10 | $ 1.85 | $ 1.10 | |||
Supplemental Information: | ||||||
(a) Includes excise taxes collected by our Marketing segment | $ 577 | $ 561 | $ 581 | |||
[1] | The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. | |||||
[2] | The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. |
Statements of Consolidated Comp
Statements of Consolidated Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Comprehensive Income | |||
Net Earnings | $ 860 | $ 1,690 | $ 888 |
Pension and other postretirement benefit liability adjustments | (65) | 0 | (159) |
Income tax benefit on pension and other postretirement benefit liability adjustments | 26 | 0 | 62 |
Total Comprehensive Income | 821 | 1,690 | 791 |
Less: Net earnings from continuing operations attributable to noncontrolling interest | 126 | 150 | 45 |
Comprehensive Income Attributable to Tesoro Corporation | $ 695 | $ 1,540 | $ 746 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents (TLLP: $688 and $16, respectively) | $ 3,295 | $ 942 |
Receivables, net of allowance for doubtful accounts | 1,108 | 792 |
Inventories, net of lower of cost or market valuation | 2,640 | 2,302 |
Prepayments and other current assets | 371 | 271 |
Total Current Assets | 7,414 | 4,307 |
Property, Plant, and Equipment, Net | ||
Property, plant and equipment, at cost | 13,472 | 12,562 |
Accumulated depreciation and amortization | (3,496) | (3,021) |
Property, Plant and Equipment, Net (TLLP: $3,444 and $3,681, respectively) | 9,976 | 9,541 |
Other Noncurrent Assets | ||
Acquired intangibles, net (TLLP: $947 and $976, respectively) | 1,277 | 1,211 |
Other, net (TLLP: $531 and $222, respectively) | 1,731 | 1,273 |
Total Other Noncurrent Assets | 3,008 | 2,484 |
Total Assets | 20,398 | 16,332 |
Current Liabilities | ||
Accounts payable | 2,032 | 1,568 |
Current maturities of debt | 465 | 6 |
Other current liabilities | 1,057 | 956 |
Total Current Liabilities | 3,554 | 2,530 |
Deferred Income Taxes | 1,428 | 1,222 |
Debt, Net of Current Maturities and Unamortized Issuance Costs | 6,468 | 4,067 |
Other Noncurrent Liabilities | 821 | 773 |
Total Liabilities | 12,271 | 8,592 |
Commitments and Contingencies | ||
Tesoro Corporation Stockholder’s Equity | ||
Common stock, par value $0.162/3; authorized 200,000,000 shares; 159,474,572 shares issued (158,457,663 in 2015) | 27 | 26 |
Additional paid-in capital | 1,473 | 1,391 |
Retained earnings | 6,437 | 5,954 |
Treasury stock, 42,574,625 common shares (39,064,342 in 2015), at cost | (2,284) | (2,009) |
Accumulated other comprehensive loss, net of tax | (188) | (149) |
Total Tesoro Corporation Stockholders’ Equity | 5,465 | 5,213 |
Noncontrolling Interest | 2,662 | 2,527 |
Total Equity | 8,127 | 7,740 |
Total Liabilities and Equity | $ 20,398 | $ 16,332 |
Consolidated Balance Sheets Con
Consolidated Balance Sheets Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Tesoro Corporation Stockholder’s Equity | ||
Common stock, pare value (dollar per share) | $ 0.167 | $ 0.167 |
Common stock, authorized shares (shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (shares) | 159,474,572 | 158,457,663 |
Treasury stock, common shares (shares) | 42,574,625 | 39,064,342 |
Cash and cash equivalents | $ 3,295 | $ 942 |
Property, Plant and Equipment, Net | 9,976 | 9,541 |
Acquired intangibles, net | 1,277 | 1,211 |
Other, net | 1,731 | 1,273 |
Debt, Net of Current Maturities and Unamortized Issuance Costs | 6,468 | 4,067 |
TLLP | ||
Tesoro Corporation Stockholder’s Equity | ||
Cash and cash equivalents | 688 | 16 |
Property, Plant and Equipment, Net | 3,444 | 3,681 |
Acquired intangibles, net | 947 | 976 |
Other, net | 531 | 222 |
Debt, Net of Current Maturities and Unamortized Issuance Costs | $ 4,053 | $ 2,844 |
Statements of Consolidated Equi
Statements of Consolidated Equity - USD ($) $ in Millions | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | |
Amount (shares) at Dec. 31, 2013 | (154,700,000) | (22,900,000) | ||||||
Amount at Dec. 31, 2013 | $ 5,485 | $ 26 | $ 1,186 | $ 3,940 | $ (798) | $ (52) | $ 1,183 | |
Net earnings | 888 | 0 | 0 | 843 | 0 | 0 | 45 | |
Purchases of common stock | (500) | 0 | 0 | 0 | $ (500) | 0 | 0 | |
Purchases of common stock (shares) | (8,400,000) | |||||||
Additional noncontrolling interest from Rockies Natural Gas Business | 432 | 0 | 0 | 0 | $ 0 | 0 | 432 | |
Net proceeds from issuance of Tesoro Logistics LP Common Units | 949 | 0 | (11) | 0 | 0 | 0 | 960 | |
Shares issued for equity-based compensation awards, net of tax | 3 | $ 0 | (19) | 0 | $ (22) | 0 | 0 | |
Stock Issued During Period, Shares, Share-based Compensation, Gross | 1,900,000 | (400,000) | ||||||
Excess tax benefits from stock-based compensation arrangements | 20 | $ 0 | 20 | 0 | $ 0 | 0 | 0 | |
Amortization of equity settled awards | 38 | 0 | 36 | 0 | 0 | 0 | 2 | |
Dividend payments | (141) | 0 | 0 | (141) | 0 | 0 | 0 | |
Distributions to noncontrolling interest | (96) | 0 | 0 | 0 | 0 | 0 | (96) | |
Other comprehensive loss, net of tax | (97) | $ 0 | 0 | 0 | 0 | (97) | 0 | |
Other, Common Stock shares | 0 | |||||||
Other | 1 | $ 0 | 5 | 0 | 0 | 0 | (4) | |
Amount at Dec. 31, 2014 | 6,976 | $ 26 | 1,255 | 4,642 | $ (1,320) | (149) | 2,522 | |
Amount (shares) end at Dec. 31, 2014 | (156,600,000) | (31,700,000) | ||||||
Net earnings | 1,690 | $ 0 | 0 | 1,540 | $ 0 | 0 | 150 | |
Purchases of common stock | (644) | 0 | 0 | 0 | $ (644) | 0 | 0 | |
Purchases of common stock (shares) | (6,900,000) | |||||||
Net proceeds from issuance of Tesoro Logistics LP Common Units | 99 | 0 | (2) | 0 | $ 0 | 0 | 101 | |
Shares issued for equity-based compensation awards, net of tax | 33 | $ 0 | (12) | 0 | $ (45) | 0 | 0 | |
Stock Issued During Period, Shares, Share-based Compensation, Gross | 1,800,000 | (500,000) | ||||||
Excess tax benefits from stock-based compensation arrangements | 37 | $ 0 | 37 | 0 | $ 0 | 0 | 0 | |
Amortization of equity settled awards | 46 | 0 | 42 | 0 | 0 | 0 | 4 | |
Noncontrolling Interest, Decrease from Deconsolidation | (23) | 0 | 47 | 0 | 0 | 0 | (70) | |
Dividend payments | (228) | 0 | 0 | (228) | 0 | 0 | 0 | |
Distributions to noncontrolling interest | (182) | $ 0 | 0 | 0 | 0 | 0 | (182) | |
Deconsolidation of RGS | 0 | |||||||
Other, Common Stock shares | 0 | |||||||
Other | 2 | $ 0 | 0 | 0 | 0 | 0 | 2 | |
Amount at Dec. 31, 2015 | 7,740 | $ 26 | 1,391 | 5,954 | $ (2,009) | (149) | 2,527 | |
Amount (shares) end at Dec. 31, 2015 | (158,400,000) | (39,100,000) | ||||||
Net earnings | 860 | $ 0 | 0 | 734 | $ 0 | 0 | 126 | |
Purchases of common stock | $ (250) | 0 | 0 | 0 | $ (250) | 0 | 0 | |
Purchases of common stock (shares) | 0 | (3,200,000) | ||||||
Net proceeds from issuance of Tesoro Logistics LP Common Units | $ 364 | 0 | (2) | 0 | $ 0 | 0 | 366 | |
Shares issued for equity-based compensation awards, net of tax | 23 | $ (1) | (1) | 0 | $ (25) | 0 | 0 | |
Stock Issued During Period, Shares, Share-based Compensation, Gross | 1,100,000 | (300,000) | ||||||
Amortization of equity settled awards | 48 | $ 0 | 43 | 0 | $ 0 | 0 | 5 | |
Noncontrolling Interest, Decrease from Deconsolidation | (28) | 0 | 41 | 0 | 0 | 0 | (69) | |
Dividend payments | (249) | 0 | 0 | (249) | 0 | 0 | 0 | |
Distributions to noncontrolling interest | (216) | 0 | 0 | 0 | 0 | 0 | (216) | |
Other comprehensive loss, net of tax | (39) | 0 | 0 | 0 | 0 | (39) | 0 | |
Deconsolidation of RGS | $ 295 | [1] | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ (84) |
Consolidation of Vancouver Energy | 8 | 0 | 0 | 0 | 0 | 0 | 8 | |
Other, Common Stock shares | 0 | |||||||
Other | $ (4) | $ 0 | $ (1) | $ (2) | $ 0 | $ 0 | $ (1) | |
Amount at Dec. 31, 2016 | $ 8,127 | $ 27 | $ 1,473 | $ 6,437 | $ (2,284) | $ (188) | $ 2,662 | |
Amount (shares) end at Dec. 31, 2016 | (159,500,000) | (42,600,000) | ||||||
[1] | The reassessment of the investments performed by TLLP resulted in the deconsolidation of RGS and the reporting of RGS as an equity method investment. TLLP recognized an increase of $295 million to equity method investments as of January 1, 2016 as a result of the deconsolidation. |
Statements of Consolidated Cash
Statements of Consolidated Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash Flows From (Used In) Operating Activities | |||
Net earnings | $ 860 | $ 1,690 | $ 888 |
Adjustments to reconcile net earnings to net cash from operating activities: | |||
Depreciation and amortization expense | 851 | 756 | 562 |
Lower of cost or market inventory valuation adjustment | (359) | 317 | 42 |
Amortization of debt issuance costs and discounts | 17 | 16 | 15 |
Debt redemption charges | 9 | 1 | 41 |
(Gain) loss related to Hawaii Business | (17) | 6 | 42 |
Loss on asset disposals and impairments | 9 | 42 | 4 |
Share-based Compensation | 35 | 75 | 55 |
Deferred income taxes | 203 | 65 | 246 |
Excess tax benefits from stock-based compensation arrangements | 0 | (38) | (20) |
Turnaround and branding charges | (388) | (342) | (256) |
Other non-cash operating activity | (16) | (12) | (45) |
Changes in current assets and current liabilities: | |||
Receivables | (259) | 638 | 10 |
Inventories | 40 | (179) | 107 |
Prepayments and other | (91) | (77) | (47) |
Accounts payable and other current liabilities | 427 | (863) | (298) |
Changes in noncurrent assets and noncurrent liabilities | (49) | 12 | (72) |
Net cash from operating activities | 1,304 | 2,131 | 1,364 |
Cash Flows From (Used In) Investing Activities | |||
Capital expenditures | (894) | (1,030) | (685) |
Acquisitions, net of cash | (413) | (97) | (2,496) |
Deposits for acquisitions | (33) | 0 | 0 |
Proceeds from asset sales | 25 | 0 | 18 |
Other investing activities | (2) | (2) | (9) |
Net cash used in investing activities | (1,317) | (1,129) | (3,172) |
Cash Flows From (Used In) Financing Activities | |||
Borrowings under revolving credit agreements | 1,451 | 476 | 646 |
Repayments on revolving credit agreements | (1,426) | (431) | (386) |
Borrowings under term loan credit agreement | 0 | 250 | 0 |
Proceeds from debt offerings | 3,051 | 0 | 1,600 |
Repayments of debt | (260) | (404) | (434) |
Dividend payments | (249) | (228) | (141) |
Proceeds from stock options exercised | 2 | 13 | 19 |
Net proceeds from issuance of Tesoro Logistics LP common units | 364 | 99 | 949 |
Distributions to noncontrolling interest | (216) | (182) | (96) |
Purchases of common stock | (250) | (644) | (500) |
Taxes paid related to net share settlement of equity awards | (25) | (45) | (22) |
Payments of debt issuance costs | (37) | (2) | (24) |
Excess tax benefits from stock-based compensation arrangements | 0 | 38 | 20 |
Other financing activities | (39) | 0 | (61) |
Net cash from (used in) financing activities | 2,366 | (1,060) | 1,570 |
Increase (Decrease) in Cash and Cash Equivalents | 2,353 | (58) | (238) |
Cash and Cash Equivalents, Beginning of Year | 942 | 1,000 | 1,238 |
Cash and Cash Equivalents, End of Year | $ 3,295 | $ 942 | $ 1,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION AND NATURE OF BUSINESS As used in this report, the terms “Tesoro,” the “Company,” “we,” “us” or “our” may refer to Tesoro Corporation, one or more of its consolidated subsidiaries or all of them taken as a whole. The words “we,” “us” or “our” generally include Tesoro Logistics LP (“TLLP”) and its subsidiaries as consolidated subsidiaries of Tesoro Corporation with certain exceptions where there are transactions or obligations between TLLP and Tesoro Corporation or its other subsidiaries. When used in descriptions of agreements and transactions, “TLLP” or the “Partnership” refers to TLLP and its consolidated subsidiaries. Tesoro was incorporated in Delaware in 1968. Based in San Antonio, Texas, we are one of the largest independent petroleum refining and marketing companies in the United States. Our subsidiaries, operating through three business segments, primarily transport crude oil and manufacture, transport and sell transportation fuels. Our refining operating segment (“Refining”), which owns and operates seven refineries in the western United States, refines crude oil and other feedstocks into transportation fuels, such as gasoline and gasoline blendstocks, jet fuel and diesel fuel, as well as other products, including heavy fuel oils, liquefied petroleum gas and petroleum coke for sale in bulk markets to a wide variety of customers within our markets. Our refineries have a combined crude oil capacity of approximately 895 Mbpd. Our logistics operating segment, which is comprised of TLLP’s assets and operations, includes certain crude oil and natural gas gathering assets, natural gas and NGLs processing assets, and crude oil and refined products terminalling, transportation and storage assets acquired from Tesoro and third parties. The TLLP financial and operational data presented include the historical results of all assets acquired from Tesoro prior to the dates they were acquired by TLLP. The historical results of operations of these assets have been retrospectively adjusted to conform to the current presentation. Our marketing operating segment (“Marketing”) sells transportation fuels in 16 states through a network of 2,492 retail stations under the ARCO ® , Shell ® , Exxon ® , Mobil ® , USA Gasoline TM , Rebel TM , Thrifty TM and Tesoro ® brands. Our unbranded, or wholesale, business includes volumes sold through agreements with third-party dealers. Our earnings, cash flows from operations and liquidity depend upon many factors, including producing and selling refined products at margins above fixed and variable expenses. The prices of crude oil and refined products fluctuate substantially and our financial results are significantly influenced by the timing of changes in crude oil costs and how quickly refined product prices adjust to reflect these changes. These price fluctuations depend on numerous factors beyond our control, including the global supply and demand for crude oil and refined products, which are subject to factors including changes in the global economy, the level of foreign and domestic production of crude oil and refined products, geo-political conditions, availability of crude oil and refined product imports, the infrastructure to transport crude oil and refined products, weather conditions, earthquakes and other natural disasters, seasonal variations, government regulations, threatened or actual terrorist incidents or acts of war, and local factors, including market conditions and the level of operations of other suppliers in our markets. Margin fluctuations resulting from these factors have a significant impact on our results of operations, cash flows, liquidity and financial position. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of Tesoro and its subsidiaries. All intercompany accounts and transactions have been eliminated. We have evaluated subsequent events through the filing of this Form 10-K. Any material subsequent events that occurred during this time have been properly recognized or disclosed in our financial statements. Certain reclassifications have been made to prior period presentations to conform to the current year. In the first quarter of 2016 , we revised the process by which we reclassify certain logistics costs, primarily recognized by TLLP, during consolidation from operating expenses and selling, general and administrative expense to costs of sales. This better reflects the distribution costs related to Tesoro’s sale of refined products during the ordinary course of business. This change in process did not impact current or prior segment operating results. However, we reclassified $221 million and $28 million from costs of sales and recognized $177 million and $24 million in operating expenses and $44 million and $4 million in selling, general and administrative expenses of the condensed statement of consolidated operations for the years ended December 31, 2015 and 2014 , respectively, to conform to current period presentation. Our consolidated financial statements include TLLP, a variable interest entity. Tesoro Logistics GP, LLC (“TLGP”), Tesoro’s fully consolidated subsidiary, serves as TLLP’s general partner. As the general partner of TLLP, we have the sole ability to direct the activities of TLLP that most significantly impact its economic performance. We are also considered to be the primary beneficiary for accounting purposes and are TLLP’s primary customer. Under our long-term transportation agreements with TLLP (discussed further below), transactions with us accounted for 59% , 55% and 83% of TLLP’s total revenues for the years ended December 31, 2016 , 2015 and 2014 , respectively. In the event TLLP incurs a loss, our operating results will reflect TLLP’s loss, net of intercompany eliminations, to the extent of our ownership interest in TLLP. All intercompany transactions with TLLP are eliminated upon consolidation. USE OF ESTIMATES We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which requires management to make estimates and assumptions that affect the reported amounts and disclosures of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. We review our estimates on an ongoing basis, based on currently available information. Changes in facts and circumstances may result in revised estimates and actual results could differ from those estimates. CASH AND CASH EQUIVALENTS Cash and cash equivalents include bank deposits and low-risk short-term investments with original maturities of three months or less at the time of purchase. Cash equivalents are stated at cost, which approximates market value. We place our cash deposits and temporary cash investments with high credit quality financial institutions. Our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limit. Approximately $1.8 billion of our cash and cash equivalents are held in money market funds and are valued at the net asset value (“NAV”) of the fund as determined by the fund manager, using fixed and floating NAVs as a practical expedient. These money market funds are invested in high quality, short-term securities, including obligations issued or guaranteed by the U.S. government or its agencies, floating and variable rate demand notes of U.S. and foreign corporations and other short-term obligations with minimal volatility in principal. Currently, there are no redemption notice requirements or penalties, however, the funds may impose a fee upon the sale of the investment or may temporarily suspend our ability to sell shares if the liquidity falls below required minimums because of market conditions or other factors. RECEIVABLES Our receivables primarily consist of customer accounts receivable. Open credit is extended based on an ongoing evaluation of our customers’ financial condition and other factors. In certain circumstances, we may require prepayments, letters of credit, guarantees, or other forms of collateral. Credit risk with respect to trade receivables is mitigated by the large number of customers comprising our customer base and their dispersion across various industries and geographic areas of operations. Our allowance for doubtful accounts is based on numerous factors including current sales amounts, historical charge-offs and specific accounts identified as high risk. After reasonable efforts to collect the amounts have been exhausted, balances are deemed uncollectible and are charged against the allowance for doubtful accounts. Write-offs were immaterial in 2016 , 2015 and 2014 . The Company does not have any off-balance-sheet credit exposure related to its customers. INVENTORIES Inventories are stated at the lower of cost or market. We use the last-in, first-out method to determine the cost of petroleum commodities, oxygenates and by-products held by our U.S. subsidiaries. We determine the carrying value of inventories of crude oil held by our foreign subsidiaries using the first-in, first-out cost method. We value merchandise along with materials and supplies at average cost. PROPERTY, PLANT AND EQUIPMENT We capitalize the cost of additions, major improvements and modifications to property, plant and equipment (“Property Assets”). The cost of repairs to, and normal maintenance of, Property Assets is expensed as incurred. Major improvements and modifications of Property Assets are those expenditures that extend the useful life, increase the capacity or improve the operating efficiency of the asset, or improve the safety of our operations. The cost of Property Assets constructed includes interest and certain overhead costs allocable to the construction activities. Capitalized interest totaled $31 million , $36 million and $25 million during 2016 , 2015 and 2014 , respectively, and is recorded as a reduction to net interest and financing costs in our statements of consolidated operations. We compute depreciation of Property Assets using the straight-line method, based on the estimated useful life and salvage value of each asset. The useful lives range from 3 to 28 years for Refining segment assets, 3 to 28 years for TLLP segment assets, 3 to 16 years for Marketing segment assets, and 3 to 25 years for corporate assets. We record Property Assets under capital leases at the lower of the present value of minimum lease payments using our incremental borrowing rate or the fair value of the leased property at the date of lease inception. We depreciate leasehold improvements and Property Assets acquired under capital leases over the lesser of the lease term or the economic life of the asset. Depreciation expense totaled $537 million , $491 million and $363 million for 2016 , 2015 and 2014 , respectively. ASSET RETIREMENT OBLIGATIONS. We record asset retirement obligations (“AROs”) at fair value in the period in which we have a legal obligation to incur costs, whether by government action or contractual arrangement, to retire a tangible asset and can make a reasonable estimate of the fair value of the liability. AROs are calculated based on the present value of the estimated removal and other closure costs using our credit-adjusted risk-free rate given an estimated settlement date for the obligation. We estimate settlement dates by considering our past practice, industry practice, management’s intent and estimated economic lives. We cannot currently estimate the fair value for certain potential AROs primarily because we cannot estimate settlement dates (or range of dates) associated with these assets. These AROs include, but are not limited to, the disposal of hazardous materials used in our production processes and the removal or dismantlement of refining and terminal facilities, pipelines and other buildings. We have not historically incurred significant AROs for hazardous materials disposal or other removal costs associated with asset retirements or replacements during scheduled maintenance projects. This precludes development of assumptions about the potential timing of settlement dates based on there being no plans to retire or dispose of the assets, our plans to extend the assets’ economic lives through scheduled maintenance and updating for technological advances, our history of rarely retiring similar assets in the past and industry practices for similar assets. As of December 31, 2016 and 2015 , we had $26 million and $30 million recorded for AROs, respectively. No material changes in AROs occurred in 2016 . During 2015 , as a result of our finalization of the purchase price allocation of TLLP’s Rockies Natural Gas Business Acquisition, we determined that majority of the AROs initially recognized were not estimable resulting in a $29 million reduction to our liability for AROs . ACQUIRED INTANGIBLES AND GOODWILL Acquired intangibles are recorded at fair value as of the date acquired and consist primarily of customer relationships, air emission credits, refinery permits, trade names and plans and a master franchise license for the ampm ® convenience store brand (“ampm ® License”). We amortize acquired intangibles with finite lives on a straight-line basis over estimated useful lives of 1 to 35 years , and we include the amortization of acquired intangibles in depreciation and amortization expense in our statements of consolidated operations. Our indefinite-lived intangible assets consist of the ARCO ® brand and associated registered trademarks for certain of our retail stations as well as perpetual emission credits. See Note 7 for further information on our amortization expense for acquired intangibles. Goodwill represents the amount the purchase price exceeds the fair value of net assets acquired in a business combination. We do not amortize goodwill or indefinite-lived intangible assets. We are required, however, to review goodwill and indefinite-lived intangible assets for impairment annually, or more frequently if events or changes in business circumstances indicate the book value of the assets may not be recoverable. In such circumstances, we record the impairment in loss on asset disposals and impairments in our statements of consolidated operations. We review the recorded value of goodwill for impairment on November 1 st of each year, or sooner if events or changes in circumstances indicate the carrying amount may exceed fair value using qualitative and/or quantitative assessments at the reporting level. Our review of goodwill is discussed further in Note 7. IMPAIRMENT OF LONG-LIVED ASSETS We review Property Assets and other long-lived assets, including acquired intangible assets with finite lives, for impairment whenever events or changes in business circumstances indicate the net book values of the assets may not be recoverable. Impairment is indicated when the undiscounted cash flows estimated to be generated by those assets are less than the assets’ net book value. If this occurs, an impairment loss is recognized for the difference between the fair value and net book value. Factors that indicate potential impairment include: a significant decrease in the market value of the asset, operating or cash flow losses associated with the use of the asset and a significant change in the asset’s physical condition or use. INVESTMENTS - EQUITY METHOD AND JOINT VENTURES For equity investments that are not required to be consolidated under the variable interest model, we evaluate the level of influence we are able to exercise over an entity’s operations to determine whether to use the equity method of accounting. Our judgment regarding the level of control over an equity method investment includes considering key factors such as our ownership interest, participation in policy-making and other significant decisions and material intercompany transactions. Amounts recognized for equity method investments are included in other noncurrent assets in our consolidated balance sheets and adjusted for our share of the net earnings or losses of the investee, which are presented separately in our statements of consolidated operations, capital contributions made and cash dividends received. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. An impairment loss is recorded in earnings in the current period to write down the carrying value of the investment to fair value if a decline in the value of an equity method investment is determined to be other than temporary. There were no impairments of our equity method investments during the years ended December 31, 2016 , 2015 and 2014 . OTHER NONCURRENT ASSETS We defer turnaround costs and the costs of certain catalysts (“Deferred Charges”) used in the refinery processing units that have a benefit period that exceeds one year and amortize these costs on a straight-line basis over the expected periods of benefit, normally ranging from 2 to 10 years . Deferred Charges are amortized over the period of time until the next planned turnaround of the processing unit. Amortization for Deferred Charges, which is included in depreciation and amortization expense in our statements of consolidated operations, amounted to $251 million , $222 million and $182 million in 2016 , 2015 and 2014 , respectively. ENVIRONMENTAL CREDITS AND ENVIRONMENTAL CREDIT OBLIGATIONS We are subject to extensive and frequently changing federal, state, regional and local laws, regulations and ordinances relating to the environment, including those governing emissions or discharges to land, air and water, the handling and disposal of solid and hazardous wastes and the remediation of contamination. In order to comply with certain of these regulations and ordinances, we are required to reduce our emissions or blend certain levels of biofuels. Otherwise, we are required to obtain allowances or credits (“environmental credits”) to offset the obligations created by our operations. Specific to the renewable identification numbers (“RINs”) required to comply with the second renewable fuels standard (“RFS2”) implemented by the U.S. Environmental Protection Agency (“EPA”) along with allowances and credits needed to comply with the cap-and-trade emission reduction program and low carbon fuel standard implemented by the state of California, we account for environmental credits using an inventory method of accounting. Environmental credits are recorded on our consolidated balance sheet at weighted average cost and expensed as cost of sales as they are used to offset obligations incurred by our operations. In determining the weighted average cost of environmental credits, we record environmental credits purchased from third parties at the price paid and environmental credits allocated to us by regulatory agencies or attached to commodities purchased for use in our operations at a cost of zero unless market data indicates an incremental price was paid for the acquisition of the environmental credit. Costs incurred to obtain allowances or credits necessary to comply with other federal, state or local regulations or ordinances are expensed as incurred. The amounts associated with these other regulations or ordinances are not material to our consolidated financial statements. We record obligations associated with RFS2 and the California programs as obligations are incurred. Our liabilities for environmental credit obligations is comprised of the weighted average cost of credits we hold but are required to be remitted for satisfaction of the obligation generated by our operations plus amounts recognized at fair value for any deficiency in environmental credits held compared to our obligation. Refer to Note 11 for amounts recognized at fair value for environmental credit obligations. DERIVATIVE INSTRUMENTS We use non-trading derivative instruments to manage exposure to commodity price risks associated with the purchase or sale of feedstocks, refined products and energy supplies to or from our refineries, terminals, marketing operations and customers. We also use non-trading derivative instruments to manage price risks associated with inventories above or below our target levels. These derivative instruments typically involve physical commodity forward purchase and sale contracts (“Forward Contracts”), exchange-traded futures (“Futures Contracts”), over-the-counter swaps, including those cleared on an exchange (“Swap Contracts”), options (“Options”) and over-the-counter options (“OTC Option Contracts”), most of which had remaining durations of less than one year as of December 31, 2016 . Our positions are monitored daily by our trading controls group to ensure compliance with our risk management policies. We mark-to-market our derivative instruments and recognize the changes in their fair values, realized or unrealized, in either revenues or cost of sales in our statements of consolidated operations, depending on the purpose for acquiring and holding the derivatives. All derivatives are recorded and carried at fair value in receivables, other current assets or accounts payable in our consolidated balance sheets. Margin deposits represent cash collateral paid between our counterparties and us to support our commodity contracts. We net our asset and liability positions associated with multiple derivative instruments that are executed with the same counterparty under master netting arrangements. FINANCIAL INSTRUMENTS The carrying value of certain of our financial instruments, including cash and cash equivalents, receivables, accounts payable and certain accrued liabilities approximate fair value primarily because of the short-term maturities of these instruments. The borrowings under the Tesoro Corporation revolving credit facility (our “Revolving Credit Facility”), the TLLP Revolving Credit Facility (the “TLLP Revolving Credit Facility”), and TLLP’s drop down credit facility agreement (the “TLLP Dropdown Facility”), which include variable interest rates, approximate fair value. We estimate the fair value for our fixed rate debt primarily using prices from recent trade activity. INCOME TAXES We record deferred tax assets and liabilities for future income tax consequences that are attributable to differences between the financial statement carrying amounts of assets and liabilities and their income tax bases. We base the measurement of deferred tax assets and liabilities on enacted tax rates that we expect will apply to taxable income in the year we expect to settle or recover those temporary differences. We recognize the effect on deferred tax assets and liabilities of any change in income tax rates in the period that includes the enactment date. We provide a valuation allowance for deferred tax assets if it is more likely than not that those items will either expire before we are able to realize their benefit or their future deductibility is uncertain. We recognize the financial statement effects of a tax position when it is more likely than not that the position will be sustained upon examination. We use the flow-through method to account for state investment tax credits earned on eligible capital expenditures. Under this method, the investment tax credits are recognized as a reduction to income tax expense in the year they are earned, except to the extent there is a continuing obligation. PENSION AND OTHER POSTRETIREMENT BENEFITS We recognize separately the overfunded or underfunded status of our pension and other postretirement plans as an asset or liability. A change in the funded status of our defined benefit retirement plan is recognized in other comprehensive income in the period the change occurs. The funded status represents the difference between the projected benefit obligation and the fair value of the plan assets. The projected benefit obligation is the present value of benefits earned to date by plan participants, including the effect of assumed future salary increases. Plan assets are measured at fair value. We use a December 31 st measurement date for plan assets and obligations for all of our plans. CONTINGENCIES ENVIRONMENTAL MATTERS. We are subject to extensive federal, state and local environmental laws and regulations. These laws, which change frequently, regulate the discharge of materials into the environment and may require us to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites, install additional controls or make other modifications to certain emission sources, equipment or facilities. We capitalize environmental expenditures that extend the life or increase the capacity of facilities as well as expenditures that prevent environmental contamination. We expense costs that relate to an existing condition caused by past operations and that do not contribute to current or future revenue generation. We record liabilities when environmental assessments and/or remedial efforts are probable and can be reasonably estimated. Cost estimates are based on the expected timing and extent of remedial actions required by governing agencies, experience gained from similar sites for which environmental assessments or remediation have been completed and the amount of our anticipated liability considering the proportional liability and financial abilities of other responsible parties. Usually, the timing of these accruals coincides with the completion of a feasibility or engineering study and or our commitment to a formal plan of action where a range of costs can be reliably estimated and supported. Estimated liabilities are not discounted to present value and environmental expenses are recorded primarily in operating expenses in our statements of consolidated operations. LEGAL MATTERS. In the ordinary course of business, we become party to lawsuits, administrative proceedings and governmental investigations. These matters may involve large or unspecified damages or penalties that may be sought from us and may require years to resolve. We record a liability related to a loss contingency attributable to such legal matters in accrued liabilities or other noncurrent liabilities on our consolidated balance sheet, depending on the classification as current or noncurrent if we determine the loss to be both probable and estimable. The liability is recorded for an amount that is management’s best estimate of the loss, or when a best estimate cannot be made, the minimum loss amount of a range of possible outcomes. ACQUISITIONS We use the acquisition method of accounting for the recognition of assets acquired and liabilities assumed with acquisitions at their estimated fair values as of the date of acquisition. Any excess consideration transferred over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. While we use our best estimates and assumptions to measure the fair value of the identifiable assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, not to exceed one year from the date of acquisition, any changes in the estimated fair values of the net assets recorded for the acquisitions will result in an adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our statements of consolidated operations. REVENUE RECOGNITION We recognize revenues upon delivery of goods or services to a customer. For goods, this is the point at which title is transferred and when payment has either been received or collection is reasonably assured. Revenues for services are recorded when the services have been provided. We record certain transactions in cost of sales in our statements of consolidated operations on a net basis. These transactions include nonmonetary crude oil and refined product exchange transactions used to optimize our refinery supply, and sale and purchase transactions entered into with the same counterparty that are deemed to be in contemplation with one another. We include transportation and processing fees charged to customers in revenues in our statements of consolidated operations, while the related costs are included in cost of sales. Federal excise and state motor fuel taxes, which are remitted to governmental agencies through our refining segment and collected from customers in our marketing segment, are included in both revenues and cost of sales in our statements of consolidated operations. These taxes were primarily related to sales of gasoline and diesel fuel from continuing operations and totaled $577 million , $561 million and $581 million in 2016 , 2015 and 2014 , respectively. STOCK-BASED COMPENSATION Our stock-based compensation includes stock appreciation rights (“SARs”), performance share awards, market stock units, stock options, restricted common stock, restricted stock units, and phantom stock options. The grant date fair value of performance share awards based on performance conditions, restricted common stock awards and restricted stock units are equal to the market price of our common stock on the date of grant. The fair values of market stock units and stock options are estimated using the Monte Carlo simulation and the Black-Scholes option-pricing model, respectively, on the date of grant. The fair values of our SARs, phantom stock options and certain performance share awards based on market conditions are remeasured at the end of each reporting period. SARs and phantom stock options are recorded in other current liabilities in our statement of financial position. We primarily amortize the fair value of our stock-based awards using the straight-line method over the vesting period. Our stock-based compensation expense includes estimates for forfeitures and volatility based on our historical experience. If actual forfeitures differ from our estimates, we adjust stock-based compensation expense accordingly. Expenses related to stock-based compensation are included in selling, general and administrative expenses in our statements of consolidated operations. EARNINGS PER SHARE We compute basic earnings per share by dividing net earnings attributable to Tesoro Corporation stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share include the effects of potentially dilutive shares, principally consisting of common stock options and unvested restricted stock, restricted stock units, market stock units and performance share awards outstanding during the period. Additionally, for the diluted earnings per share computation, net earnings attributable to Tesoro Corporation is reduced, where applicable, for the decrease in earnings from Tesoro’s limited partner unit ownership in TLLP that would have resulted assuming the incremental units related to TLLP’s equity incentive plans had been issued during the respective periods. NEW ACCOUNTING STANDARDS AND DISCLOSURES REVENUE RECOGNITION. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”) and has since amended the standard with ASU 2015-14, “Revenue from Contracts with Customers: Deferral of the Effective Date”, ASU 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, ASU 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing”, and ASU 2016-12, “Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients”. These standards replace existing revenue recognition rules with a single comprehensive model to use in accounting for revenue arising from contracts with customers. We are required to adopt ASU 2014-09 on January 1, 2018. We have been and continue to evaluate the impact of the standard’s revenue recognition model on our contracts with customers in the refining, marketing and TLLP segments. While we have made substantial progress in our review and documentation of the impact of the standard on our revenue agreements, we continue to assess the impact in certain other areas where industry consensus continues to be formed such as |
Acquisitions (Notes)
Acquisitions (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS 2016 ACQUISITIONS Individually and on an aggregate basis, the following acquisitions were immaterial to our consolidated financial statements. GREAT NORTHERN MIDSTREAM. On January 8, 2016 , we closed the acquisition of Great Northern Midstream LLC (“Great Northern Midstream”), a crude oil logistics provider which owns and operates a crude oil pipeline and gathering system, along with transportation, storage and rail loading facilities in the Williston Basin of North Dakota. The acquisition includes a crude oil pipeline, a proprietary gathering system in the core of the Bakken, and a facility for rail loading and storage in Fryburg, North Dakota. FLINT HILLS RESOURCES. On June 20, 2016 , we closed the acquisition of Flint Hills Resources’ (“FHR”) wholesale marketing and logistics assets in Anchorage and Fairbanks, Alaska. This acquisition includes all FHR’s wholesale fuel marketing contracts in Alaska and an Anchorage terminal with storage capacity, a truck rack, and rail loading capability. In addition, the acquisition includes a Fairbanks airport terminal that includes jet fuel storage and a truck rack, as well as a multi-year terminalling agreement at FHR’s North Pole terminal, which will provide efficient rail offload capabilities and provide access to Alaska’s interior. The terminalling and storage assets acquired were sold to TLLP during the third quarter of 2016. DAKOTA PRAIRIE REFINING. On June 28, 2016 , we acquired Dakota Prairie Refining, LLC, which owns a refinery near Dickinson, North Dakota, which we refer to as our Dickinson Refinery, with strategic access to advantaged Bakken crude oil and is located approximately 100 miles west of the Tesoro Mandan refinery. This acquired refinery produces ultra-low sulfur diesel, naphtha and atmospheric residuals. Tesoro plans to continue to market the ultra-low sulfur diesel to local customers and utilize the naphtha and atmospheric residuals in its integrated value chain system. VIRENT. On September 28, 2016 , we acquired Virent, Inc. (“Virent”), an innovative renewable fuels and chemicals company, to support Virent in bringing its biofuels technology to commercial scale. Virent's BioForming® technology can convert sugars and other biomass derived feedstocks into renewable gasoline blendstocks and aromatics, which are fully compatible with the nation's existing fuel infrastructure and current vehicle warranties. Virent's aromatics product can also be used for renewable chemicals, most notably paraxylene, a key component in polyester. OTHER TRANSACTIONS WESTERN REFINING. On November 16, 2016 , Tesoro entered into an Agreement and Plan of Merger with Western Refining, Inc. (“Western Refining”) and Tesoro’s wholly-owned subsidiaries Tahoe Merger Sub 1, Inc. and Tahoe Merger Sub 2, LLC (the “Merger”). Under the terms of the agreement, Western Refining’s shareholders can elect to receive 0.4350 shares of Tesoro for each share of Western Refining stock they own, or $37.30 in cash per share of Western Refining stock. Elections to receive cash will be subject to proration to the extent they exceed approximately 10.8 million shares (or approximately $404 million in the aggregate). Stock elections will not be subject to proration. Completion of the Merger is expected in the first half of 2017, subject to certain customary mutual conditions and regulatory approval. See Note 12 for further information about additional financing the Company obtained in 2016 in anticipation of the Merger. The aggregate proceeds of the debt financing, together with the available cash of the Company, will be sufficient for the Company to pay the aggregate cash consideration, refinance certain indebtedness of Western Refining and its subsidiaries and pay all related fees and expenses payable in connection with the Merger. |
Tesoro Logistics LP (Notes)
Tesoro Logistics LP (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Variable Interest Entity, Measure of Activity [Abstract] | |
TESORO LOGISTICS LP | TESORO LOGISTICS LP TLLP is a publicly traded limited partnership that was formed to own, operate, develop and acquire logistics assets. Its assets are integral to the success of Tesoro’s refining and marketing operations and are used to gather crude oil and natural gas, process natural gas and distribute, transport and store crude oil and refined products. TLLP provides us with various pipeline transportation, trucking, terminal distribution, storage and petroleum-coke handling services under long-term, fee-based commercial agreements. Each of these agreements, with the exception of the storage and transportation services agreement, contain minimum volume commitments. We do not provide financial or equity support through any liquidity arrangements or financial guarantees to TLLP. At December 31, 2016 , assets consisted of: • crude oil and refined products terminals and storage facilities in the western and midwestern U.S. that are supplied by Tesoro-owned and third-party pipelines, trucks and barges; • crude oil, feedstock and refined product storage and marine terminals in California that load and unload vessels; • pipelines, which transport products and crude oil from Tesoro’s refineries to nearby facilities in Salt Lake City and Los Angeles and a 50% fee interest in a pipeline that transports jet fuel from Tesoro’s Los Angeles refinery to the Los Angeles International Airport; • a regulated common carrier products pipeline running from Salt Lake City, Utah to Spokane, Washington and a jet fuel pipeline to the Salt Lake City International Airport; • a rail car unloading facility in Washington that receives crude oil transported on unit trains leased by Tesoro; • a petroleum coke handling and storage facility in Los Angeles that handles and stores petroleum coke from Tesoro’s Los Angeles refinery; and • a regulated common carrier refined products pipeline system connecting our Kenai refinery terminals to terminals in Anchorage, Alaska. TLGP, our wholly-owned subsidiary, serves as the general partner of TLLP. We held an approximate 34% interest in TLLP at December 31, 2016 , including a 2% general partner interest and all the incentive distribution rights. This interest at December 31, 2016 includes 34,055,042 common units and 2,100,900 general partner units. 2016 ACQUISITIONS ALASKA STORAGE AND TERMINALLING ASSETS. Effective July 1, 2016 , TLLP entered into an agreement to purchase certain terminalling and storage assets owned by Tesoro for total consideration of $444 million and was completed in two phases (“Alaska Storage and Terminalling Assets Acquisition”). On July 1, 2016, TLLP completed the acquisition of the first phase consisting of tankage, related equipment and ancillary facilities used for the operations at Tesoro’s Kenai refinery. The second phase was completed on September 16, 2016 and consisted of refined product terminals in Anchorage and Fairbanks. Consideration paid for the first phase was $266 million , comprised of approximately $240 million in cash, financed with borrowings under the TLLP Dropdown Credit Facility and TLLP’s issuance of equity to Tesoro with a fair value of $26 million . Consideration for the second phase was $178 million , comprised of approximately $160 million in cash, financed with borrowings under the TLLP Dropdown Credit Facility and TLLP issuing equity securities with a fair value of approximately $18 million . NORTHERN CALIFORNIA TERMINALLING AND STORAGE ASSETS. Effective November 21, 2016 , the Partnership acquired certain terminalling and storage assets owned by Tesoro (“Northern California Terminalling and Storage Assets Acquisition”) for total consideration of $400 million comprised of $360 million of cash financed with borrowings on TLLP’s Dropdown Credit Facility and $40 million of common and general partner units to Tesoro. The assets purchased consisted of tankage with crude oil, feedstock, and refined product storage capacity at Tesoro’s Martinez refinery along with a marine terminal capable of handling feedstock and refined product throughput. 2015 ACQUISITIONS LA STORAGE AND HANDLING ASSETS. On November 12, 2015 , TLLP purchased crude oil and refined product storage and pipeline assets in Los Angeles, California owned by Tesoro for a total consideration of $500 million (the “LA Storage and Handling Asset Acquisition”). Assets included in the transaction consisted of a crude oil, feedstock, and refined product storage tank facility and a 50% fee interest in a pipeline that transports jet fuel from Tesoro’s Los Angeles refinery to the Los Angeles International Airport. The acquisition price of $500 million included cash of approximately $250 million , funded in part from a TLLP unsecured term loan facility and the issuance of common and general partner units to Tesoro, valued at approximately $250 million . 2014 ACQUISITIONS WEST COAST LOGISTICS ASSETS. During the year ended December 31, 2014, TLLP purchased certain terminalling and pipeline assets owned by Tesoro and two of our subsidiaries for total consideration of $270 million . On July 1, 2014 , TLLP closed on the purchase of the first portion consisting of marketing terminals and a storage facility in exchange for consideration of $241 million , comprised of approximately $214 million in cash financed with borrowings under TLLP’s revolving credit facility, and the issuance of equity to us with a fair value of $27 million . On September 30, 2014 , TLLP completed the second portion by acquiring Tesoro Alaska Pipeline Company LLC, which owns a refined products pipeline located in Alaska, for total cash consideration of $29 million , financed with borrowings under TLLP’s revolving credit facility. ROCKIES NATURAL GAS BUSINESS. On December 2, 2014, the TLLP acquired all of the limited liability company interests of QEP Field Services, LLC (“QEPFS”) for an aggregate purchase price of approximately $2.5 billion , which includes environmental obligations, existing legal obligations and $230 million QEP Midstream Partners, LP (“QEPM”) debt. QEPFS is the direct or indirect owner of assets related to, and entities engaged in, natural gas gathering, transportation and processing in or around the Green River Basin located in Wyoming and Colorado, the Uinta Basin located in eastern Utah, and the portion of the Williston Basin located in North Dakota. During 2015, TLLP recorded measurement period adjustments, which reduced goodwill by $34 million , after obtaining additional information regarding, among other things, asset valuations and liabilities assumed. On July 22, 2015 , TLLP and QEPM completed the transaction in which TLLP Merger Sub LLC merged with and into QEPM, with QEPM surviving the merger as a wholly-owned subsidiary of TLLP (the “QEPM Merger”). TLLP issued additional TLLP Common Units to QEPM unitholders as a result of the QEPM Merger. There was no impact to the purchase price allocation as a result of the QEPM Merger. During the years ended December 31, 2015 and 2014, we incurred transaction costs of $2 million and $33 million , respectively, related to the Rockies Natural Gas Business Acquisition directly attributable to the transaction. These costs are included in general and administrative expenses and interest and financing costs, net in our combined consolidated statements of operations. OTHER TRANSACTIONS NORTH DAKOTA GATHERING AND PROCESSING ASSETS. On November 21, 2016 , TLLP agreed to acquire crude oil, natural gas and produced water gathering systems and two natural gas processing facilities from Whiting Oil and Gas Corporation, GBK Investments, LLC and WBI Energy Midstream, LLC (the "North Dakota Gathering and Processing Assets") for total consideration of approximately $700 million . The North Dakota Gathering and Processing Assets include crude oil, natural gas and produced water gathering pipelines, natural gas processing and fractionation capacity in the Sanish and Pronghorn fields of the Williston Basin in North Dakota. The acquisition, which was subject to customary closing conditions including regulatory approval, closed January 1, 2017. Given the acquisition date, it was impracticable for TLLP to develop an initial estimate for the fair value of identifiable assets acquired, residual goodwill or pro forma information for disclosure in these financial statements. ADDITIONAL EQUITY ISSUANCES UNIT ISSUANCE. TLLP closed a registered public offering of 6.3 million common units representing limited partner interests, including the over-allotment option exercised by the underwriter for the purchase of an additional 825 thousand common units, at a public offering price of $47.13 per unit on June 10, 2016 . The net proceeds of $293 million were used for general partnership purposes, including debt repayment, acquisitions, capital expenditures and additions to working capital. ATM PROGRAM. On August 24, 2015 , TLLP filed a prospectus supplement to its shelf registration statement filed with the Securities and Exchange Commission (“SEC”) on August 6, 2015 , authorizing the continuous issuance of up to an aggregate of $750 million of common units, in amounts, at prices and on terms to be determined by market conditions and other factors at the time of its offerings (such continuous offering program, or at-the-market program, referred to as the “2015 ATM Program”). Prior to then, TLLP issued shares under a June 25, 2014 filed prospectus supplement to its shelf registration statement filed with the SEC in 2012 (the “2014 ATM Program”). During the years ended December 31, 2016 and 2015 , TLLP issued under both the 2015 ATM Program and the 2014 ATM Program an aggregate of 1,492,637 and 1,912,996 common units, respectively, generating proceeds of approximately $72 million and $103 million , respectively, before issuance costs. In 2014, under the 2014 ATM Program, TLLP issued 199,400 common units generating proceeds of approximately $14 million before issuance costs. The net proceeds from issuances under these programs were used for general partnership purposes, which included debt repayment, future acquisitions, capital expenditures and additions to working capital. COMMERCIAL AGREEMENTS WITH TLLP TLLP generates revenue by charging fees for gathering crude oil and natural gas, processing natural gas and for distributing, transporting and storing crude oil and refined products. We do not provide financial or equity support through any liquidity arrangements or financial guarantees to TLLP. In connection with the acquisitions between Tesoro and TLLP, we entered into long-term, fee-based storage and throughput and use agreements. TLLP provides us with various pipeline transportation, trucking, terminal distribution, gas processing, storage and coke-handling services under long-term, fee-based commercial agreements expiring 2017 through 2026 . These include ten -year use and throughput agreements and ten -year transportation agreements. Each of these agreements, with the exception of the storage and transportation services agreement, contain minimum volume commitments. Each agreement has fees that are indexed for inflation and provides us options to renew for two additional five -year term. OTHER AGREEMENTS WITH TLLP THIRD AMENDED AND RESTATED OMNIBUS AGREEMENT. We entered into an omnibus agreement with TLLP at the closing of TLLP’s initial public offering in April 2011 (the “Initial Offering”). The omnibus agreement, most recently amended on November 21, 2016 (the “Third Amended Omnibus Agreement”) in connection with TLLP’s purchase of certain terminalling and pipeline assets owned by Tesoro and two of our subsidiaries, contains the following key provisions: • Non-compete clause between us and TLLP effective under certain circumstances; • Right of first offer to TLLP for certain of our retained logistics assets, including certain terminals, pipelines, docks, storage facilities and other related assets located in California, Alaska and Washington; • Payment of an annual fee to us for the provision of various general and administrative services; • Reimbursement to TLLP for certain maintenance and expansion capital expenditures; and • Indemnification to TLLP for certain matters, including pre-Initial Offering environmental, title and tax matters. Additional acquisitions of assets by TLLP from us are governed by the Third Amended Omnibus Agreement, with the exception of the indemnifications for the acquisition of the six marketing and storage terminal facilities (the “Los Angeles Terminal Assets”) and the acquisition of the remaining logistics assets (the “Los Angeles Logistics Assets”) initially acquired by us as part of the Los Angeles Acquisition in Southern California (the “Los Angeles Logistics Assets Acquisition”), which are covered by the Carson Assets Indemnity Agreement. CARSON ASSETS INDEMNITY AGREEMENT. We entered into the Carson Assets Indemnity Agreement with TLLP at the closing of the Los Angeles Logistics Assets Acquisition effective December 6, 2013 . The Carson Assets Indemnity Agreement establishes indemnification to TLLP for certain matters including known and unknown environmental liabilities arising out of the use or operation of the Los Angeles Terminal Assets and the Los Angeles Logistics Assets prior to the respective acquisition dates. SECONDMENT AND LOGISTICS SERVICES AGREEMENT. In connection with TLLP’s purchase of certain terminalling and pipeline assets owned by Tesoro and two of our subsidiaries on July 1, 2014, TLLP terminated the operational services agreement entered into at the closing of the Initial Offering and entered into the Secondment and Logistics Services Agreement (the “Secondment Agreement”) with Tesoro to govern the provision of seconded employees to or from Tesoro, TLLP, and its subsidiaries, as applicable. The Secondment Agreement, as amended as recently as November 2016, also governs the use of certain facilities of the parties by the various entities. The services to be provided by such seconded employees, along with the fees for such services, will be provided on the service schedules attached to the Secondment Agreement. Specialized services and the use of various facilities, along with the fees for such services, will be provided for in service orders to be executed by parties requesting and receiving the service. All fees to be paid pursuant to the Secondment Agreement are indexed for inflation. KEEP-WHOLE COMMODITY AGREEMENT. TLLP processes gas for certain producers under “keep-whole” processing agreements. Under a keep-whole agreement, a producer transfers title to the NGLs produced during gas processing, and the processor, in exchange, delivers to the producer natural gas with a BTU content equivalent to the NGLs removed. The operating margin for these contracts is typically determined by the spread between NGLs sales prices and the price paid to purchase the replacement natural gas (“Shrink Gas”). TLLP entered into a five-year agreement with Tesoro, which transfers the commodity risk exposure associated with these keep-whole processing agreements from TLLP to Tesoro (the “Keep-Whole Commodity Agreement”). Under the Keep-Whole Commodity Agreement with Tesoro, Tesoro pays TLLP a fee to process NGLs related to keep-whole agreements and delivers Shrink Gas to the producers on behalf of TLLP. TLLP pays Tesoro a marketing fee in exchange for assuming the commodity risk. As of 2016, pricing under this agreement is subject to a tiered pricing structure with pricing for a base level of NGLs production and pricing for incremental volumes over 315,000 gallons per day. The pricing for both the base and incremental volumes are subject to revision each year. INCENTIVE DISTRIBUTION RIGHTS. Concurrent with the close of the Northern California Terminalling and Storage Assets Acquisition and the announcement of the North Dakota Gathering and Processing Assets transaction, TLGP has agreed to waive $100 million of general partner incentive distributions with respect to 2017 and 2018, or $12.5 million per quarter, to support the balanced growth of the general and limited partners’ interests and maintain strong financial metrics. ENVIRONMENTAL LIABILITIES In September 2013 , the Partnership responded to the release of crude oil in a rural field northeast of Tioga, North Dakota (the “Crude Oil Pipeline Release”). The environmental liabilities related to the Crude Oil Pipeline Release include amounts estimated for remediation activities that will be conducted during the next few years to restore the site for agricultural use. We accrued an additional $7 million during the year ended December 31, 2016 to reflect improved scope definition and estimates, which resulted in an increase in the total estimated cost associated with the project. This incident was covered by our pollution liability insurance policy, subject to a $1 million deductible and a $25 million loss limit in place at that time. Pursuant to this policy, there were no insurance recovery receivables related to the Crude Oil Pipeline Release at both December 31, 2016 and 2015. The estimated remediation costs of $73 million exceeded our policy loss limit by $48 million as of December 31, 2016 . We received no insurance proceeds for the year ended December 31, 2016 , and $18 million and $7 million in reimbursement of costs incurred during the years ended December 31, 2015 and 2014 , respectively. On October 7, 2015, TLLP received an offer to settle a Notice of Violation (“NOV”) from the North Dakota Department of Health (“NDDOH”). The NOV was issued on March 21, 2015, and alleges violations of water pollution regulations as a result of a release of crude oil that occurred near Tioga, North Dakota on our gathering and transportation pipeline system in September 2013. TLLP is currently negotiating the settlement of this matter with the NDDOH. The ultimate resolution of the matter will not have a material impact on our liquidity, financial position, or results of operations. |
Note 4 - Discontinued Operation
Note 4 - Discontinued Operations Discontinued Operations (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS On September 25, 2013 , we completed the sale of all our interest in Tesoro Hawaii, LLC, (the “Hawaii Business”). We received gross proceeds of $539 million , including $75 million from the sale of assets and $464 million from the sale of inventory and other net working capital. Additional contingent consideration includes an earnout arrangement payable over three years for an aggregate amount of up to $40 million based on consolidated gross margins. Any income related to the earnout arrangement will not be recorded until it is considered realizable. During the year ended December 31, 2016 , we received $1 million and $15 million related to the 2014 and 2015 calendar year earnout periods, respectively. These amounts were recorded as a gain on the sale of the Hawaii Business when received. We have also agreed to indemnify the purchaser for up to $15 million of environmental remediation costs related to the Hawaii Business, subject to limitations described in the purchase agreement, and retained responsibility for the resolution of certain Clean Air Act allegations described in Note 15. The results of operations for this business have been presented as discontinued operations in the statements of consolidated operations for the years ended December 31, 2016 , 2015 and 2014 . REVENUES AND EARNINGS (LOSS), BEFORE AND AFTER TAX FROM THE DISCONTINUED HAWAII BUSINESS (in millions) Years Ended December 31, 2016 2015 2014 Earnings (loss) from discontinued operations, before tax (a) $ 17 $ (6 ) $ (46 ) Less: income tax expense (benefit) 7 (2 ) (17 ) Earnings (loss) from discontinued operations, net of tax $ 10 $ (4 ) $ (29 ) (a) Includes charges totaling $6 million and $42 million for the years ended December 31, 2015 and 2014 , respectively, related to regulatory improvements we are obligated to make at the at the Hawaii refinery to resolve the Clean Air Act matters discussed in Note 15. There were no additional charges during the year ended December 31, 2016 . Cash flows related to the Hawaii Business have been combined with the cash flows from continuing operations in the statements of consolidated cash flows for all three years presented. Cash flows from operating activities were $6 million for the year ended December 31, 2016 . Cash flows used in operating activities were $5 million and $3 million for the years ended December 31, 2015 and 2014 , respectively. |
Receivables (Notes)
Receivables (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Receivables And Inventories [Abstract] | |
RECEIVABLES AND INVENTORIES | RECEIVABLES AND INVENTORIES RECEIVABLES COMPONENTS OF RECEIVABLES (in millions) December 31, 2016 2015 Trade receivables $ 1,092 $ 778 Tax receivables 21 22 Other receivables 2 5 Allowance for doubtful accounts (a) (7 ) (13 ) Total Receivables, Net $ 1,108 $ 792 (a) Allowances for doubtful accounts of $7 million and $13 million at December 31, 2016 and 2015 , respectively, relate to estimated uncollectible amounts on our trade receivables. INVENTORIES COMPONENTS OF INVENTORIES (in millions) December 31, 2016 2015 Domestic crude oil and refined products $ 2,099 $ 2,142 Foreign subsidiary crude oil 310 325 Materials and supplies 149 140 Oxygenates and by-products 81 54 Merchandise 1 — Less: Lower of cost or market reserve — (359 ) Total Inventories, Net $ 2,640 $ 2,302 The replacement cost of our crude oil and refined product inventories exceeded carrying value by approximately $107 million at December 31, 2016 . We recorded a lower of cost or market reserve of $359 million at December 31, 2015 to cost of sales for our crude oil, refined products, oxygenates and by-product inventories to adjust the carrying value of our inventories to reflect replacement cost. We reverse any lower of cost or market reserve in the subsequent period because the inventories are sold or used and then perform a complete lower of cost or market assessment of ending inventories at the end of each reporting period to determine if a reserve is required. |
Property, Plant and Equipment (
Property, Plant and Equipment (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT PROPERTY, PLANT AND EQUIPMENT (in millions) December 31, 2016 2015 Refining $ 8,067 $ 7,189 TLLP 4,059 4,162 Marketing 934 915 Corporate 412 296 Property, Plant and Equipment, at Cost 13,472 12,562 Accumulated depreciation (3,496 ) (3,021 ) Property, Plant and Equipment, Net $ 9,976 $ 9,541 |
Acquired Intangibles and Goodwi
Acquired Intangibles and Goodwill (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
ACQUIRED INTANGIBLES AND GOODWILL | ACQUIRED INTANGIBLES AND GOODWILL ACQUIRED INTANGIBLES NET BOOK VALUE FOR EACH MAJOR CLASS OF ACQUIRED INTANGIBLE ASSETS, EXCLUDING GOODWILL (in millions) December 31, 2016 December 31, 2015 Historical Cost Accumulated Amortization Net Book Value Historical Cost Accumulated Amortization Net Book Value Business relationships (a) $ 1,071 $ 81 $ 990 $ 1,008 $ 32 $ 976 Refining operating permits, emissions credits and other 331 137 194 283 128 155 Trade names 49 17 32 49 15 34 ampm ® license 31 4 27 31 3 28 Marketing supply network 45 29 16 46 28 18 Intellectual property 18 — 18 — — — Total $ 1,545 $ 268 $ 1,277 $ 1,417 $ 206 $ 1,211 (a) In connection with the Rockies Natural Gas Business acquisition in 2014, TLLP recognized $1.0 billion of business relationships associated with the acquired natural gas processing and gathering operations. The value for the identified business relationships consists of cash flows expected from existing contracts and future arrangements from the existing customer base. The amounts and useful lives associated with these business relationships were finalized within TLLP’s measurement period of the purchase price allocation. In addition, during 2016 , we recognized $44 million and $19 million of business relationships associated with the FHR and Great Northern Midstream acquisitions, respectively. All of our acquired intangible assets are subject to amortization with the exception of certain indefinite-lived intangible assets totaling $62 million and $14 million at December 31, 2016 and 2015 , respectively. These indefinite-lived intangible assets relate to the ARCO ® brand included in the trade names category and perpetual emission credits within the refining operating permits, emissions credits and other category. Amortization expense of acquired intangible assets was $63 million , $43 million and $17 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. As of December 31, 2016, our estimated amortization expense is expected to be $46 million for 2017 and $45 million for each of the next four years thereafter. In accordance with our policies, we performed an impairment assessment on our indefinite-lived intangible assets and no impairments were recognized during the years ended December 31, 2016 , 2015 and 2014 . GOODWILL Goodwill in our Refining segment was $47 million and $31 million at December 31, 2016 and 2015 , respectively, reflecting acquisitions in the year. See Note 2 for further details regarding our acquisitions. TLLP’s goodwill was $117 million and $130 million at December 31, 2016 and 2015 , respectively, reflecting the deconsolidation of RGS. In our Marketing segment, goodwill was $26 million and $27 million at December 31, 2016 and 2015 , respectively. For 2016, we elected to perform our annual goodwill impairment using a two-step quantitative assessment process on TLLP’s goodwill and the qualitative assessment process on our Refining segment’s goodwill and our Marketing segment’s goodwill. Factors utilized in the qualitative assessments performed on goodwill in our Refining and Marketing segments include, among other things, macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, company specific operating results and other relevant entity-specific events affecting individual reporting units. As part of our two-step quantitative goodwill impairment process for TLLP, we engaged a third party appraisal firm to assist in the determination of estimated fair value for each reporting unit. This determination includes estimating the fair value of each TLLP reporting unit using both the income and market approaches. The income approach requires management to estimate a number of factors for each reporting unit, including projected future operating results, economic projections, anticipated future cash flows and discount rates. The market approach estimates fair value using comparable marketplace fair value data from within a comparable industry grouping. The determination of the fair value of the reporting units requires us to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to, the selection of appropriate peer group companies, control premiums appropriate for acquisitions in the industries in which we compete, the discount rates, terminal growth rates, and forecasts of revenue, operating income, depreciation and amortization and capital expenditures. We determined that no impairment charges resulted from our November 1, 2016 goodwill impairment assessments. Furthermore, the fair value of each of TLLP’s five reporting units tested in step one of the goodwill impairment test exceeded the carrying value such that we were not required to perform step two. There were no impairments of goodwill during the years ended December 31, 2016 , 2015 and 2014 . |
Note 8 - Investments - Equity M
Note 8 - Investments - Equity Method and Joint Ventures Investments - Equity Method and Joint Ventures (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENTS - EQUITY METHOD AND JOINT VENTURES | INVESTMENTS - EQUITY METHOD AND JOINT VENTURES For each of the following investments, we have the ability to exercise significant influence over each of these investments through our participation in the management committees, which make all significant decisions. However, since we have equal or proportionate influence over each committee as a joint interest partner and all significant decisions require consent of the other investor(s) without regard to our economic interest, we have determined that these entities should not be consolidated and apply the equity method of accounting with respect to our investments in each entity. • WATSON COGENERATION COMPANY (“Watson”). We own a 51% interest in Watson, which produces steam and electricity at a facility located at our Los Angeles refinery. Our transactions with Watson, which do not have intra-entity profits requiring elimination, consist of sales of fuel gas and water, purchases of steam and electricity and charges for general and administrative support. • RENDEZVOUS GAS SERVICES, L.L.C. (“RGS”). TLLP has a 78% interest in RGS, which owns and operates the infrastructure that transports gas from certain fields to several re-delivery points in southwestern Wyoming, including natural gas processing facilities that are owned by TLLP or a third party. Prior to 2016, Tesoro and TLLP consolidated RGS, however, upon the reassessment performed in conjunction with the adoption of ASU 2015-02 as of January 1, 2016, we determined RGS represented a variable interest entity to TLLP for which we are not the primary beneficiary. Under the limited liability company agreement, we do not have voting rights commensurate with our economic interest due to veto rights available to our partner in RGS. Certain business decisions, including, but not limited to, decisions with respect to significant expenditures or contractual commitments, annual budgets, material financings, dispositions of assets or amending the members’ gas servicing agreements, require unanimous approval of the members. • THREE RIVERS GATHERING, LLC (“TRG”). TLLP owns a 50% interest in TRG which operates natural gas gathering assets within the southeastern Uinta Basin and is primarily supported by long-term, fee-based gas gathering agreements with minimum volume commitments. • UINTAH BASIN FIELD SERVICES, L.L.C. (“UBFS”). TLLP owns a 38% interest in UBFS which owns and operates the natural gas gathering infrastructure located in the southeastern Uinta Basin and is supported by long-term, fee-based gas gathering agreements that contain firm throughput commitments, which generate fees whether or not the capacity is used, and is operated by TLLP. EQUITY METHOD INVESTMENTS (in millions) Watson Vancouver Energy TLLP RGS TRG UBFS Total Balance at December 31, 2014 $ 103 $ 9 $ — $ 40 $ 18 $ 170 Investments — 1 — 3 (b) — (b) 4 Equity in earnings (loss) 1 (1 ) — 5 2 7 Distributions received (12 ) — — (6 ) (4 ) (22 ) Balance at December 31, 2015 (a) 92 9 — 42 16 159 Effect of deconsolidation (c) — — 295 — — 295 Effect of consolidation (d) — (8 ) — — — (8 ) Equity in earnings (loss) 1 (1 ) 8 2 3 13 Distributions received (10 ) — (22 ) (4 ) (3 ) (39 ) Balance at December 31, 2016 (a) $ 83 $ — $ 281 $ 40 $ 16 $ 420 (a) The carrying amount of our investments in Watson, RGS, TRG and UBFS exceeded the underlying equity in net assets by $65 million , $135 million , $16 million and $7 million , respectively, at December 31, 2016 . The carrying amount of our investments in Watson, TRG and UBFS exceeded the underlying equity in net assets by $68 million , $17 million and $8 million , respectively, at December 31, 2015 . The carrying amounts of our investments that exceed the underlying equity in net assets are amortized over the useful life of the underlying fixed assets and included in equity in earnings (loss). (b) Includes the final fair value adjustment resulting from measurement period changes related to TLLP’s Rockies Natural Gas Business in 2015. (c) The reassessment of the investments performed by TLLP resulted in the deconsolidation of RGS and the reporting of RGS as an equity method investment. TLLP recognized an increase of $295 million to equity method investments as of January 1, 2016 as a result of the deconsolidation. (d) Effective September 1, 2016 , we became majority owner of our venture with Savage Companies to construct, own and operate a unit train unloading and marine loading terminal at Port of Vancouver, USA (the “Vancouver Energy” terminal). As a result, Vancouver Energy was consolidated. |
Other Assets and Liabilities (
Other Assets and Liabilities (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Other Liabilities [Abstract] | |
OTHER ASSETS AND LIABILITIES | OTHER ASSETS AND LIABILITIES OTHER NONCURRENT ASSETS COMPONENTS OF NONCURRENT ASSETS (in millions) December 31, 2016 2015 Deferred charges, net of amortization $ 743 $ 650 Investments - equity method and joint ventures 420 159 Goodwill 190 188 Deferred branding costs, net of amortization 160 95 Environmental credits 89 97 Other assets, net of amortization 129 84 Total Other Noncurrent Assets $ 1,731 $ 1,273 OTHER LIABILITIES COMPONENTS OF OTHER CURRENT LIABILITIES AND OTHER NONCURRENT LIABILITIES (in millions) December 31, 2016 2015 Other Current Liabilities: Taxes other than income taxes $ 288 $ 320 Employee costs 229 298 RINs liabilities 126 40 Environmental credit obligations 123 — Interest 62 46 Environmental liabilities 60 64 Income taxes payable 38 — Current liabilities related to discontinued operations 22 22 Pension and other postretirement benefits 11 10 Asset retirement obligations 6 5 Legal costs 2 5 Other 90 146 Total Other Current Liabilities $ 1,057 $ 956 Other Noncurrent Liabilities: Pension and other postretirement benefits $ 430 $ 401 Environmental liabilities 167 191 Employee costs, excluding pension and other postretirement benefits 50 35 Environmental credit obligations 42 10 Deferred income 39 37 Asset retirement obligations 20 25 Liability for unrecognized tax benefits, including interest and penalties 8 7 Noncurrent liabilities related to discontinued operations 1 19 Other 64 48 Total Other Noncurrent Liabilities $ 821 $ 773 |
Derivative Instruments (Notes)
Derivative Instruments (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS In the ordinary course of business, our profit margins, earnings and cash flows are impacted by the timing, direction and overall change in pricing for commodities used throughout our operations. We use non-trading derivative instruments to manage our exposure to the following: • price risks associated with the purchase or sale of feedstocks, refined products and energy supplies related to our refineries, terminals, marketing fuel inventory and customers; • price risks associated with inventories above or below our target levels; • future emission credit requirements; and • exchange rate fluctuations on our purchases of Canadian crude oil. Our accounting for derivative instruments depends on whether the underlying commodity will be used or sold in the normal course of business. For contracts where the crude oil or refined products are expected to be used or sold in the normal course of business, we apply the normal purchase normal sale exception and follow the accrual method of accounting. All other derivative instruments are recorded at fair value using mark-to-market accounting. Our derivative instruments can include Forward Contracts, Futures Contracts, over-the-counter swaps, including swap Contracts, Options, and OTC Option Contracts. Forward Contracts are agreements to buy or sell the commodity at a predetermined price at a specified future date. Futures Contracts are standardized agreements, traded on a futures exchange, to buy or sell the commodity at a predetermined price at a specified future date. Options provide the right, but not the obligation to buy or sell the commodity at a specified price in the future. Swap Contracts and OTC Option Contracts require cash settlement for the commodity based on the difference between a contracted fixed or floating price and the market price on the settlement date. Certain of these contracts require cash collateral to be received or paid if our asset or liability position, respectively, exceeds specified thresholds. We believe that we have minimal credit risk with respect to our counterparties. The following table presents the fair value of our derivative instruments as of December 31, 2016 and 2015 . The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under the terms of our master netting arrangements including cash collateral on deposit with, or received from, brokers. We offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements when a legal right of offset exists. As a result, the asset and liability amounts below will not agree with the amounts presented in our consolidated balance sheets. DERIVATIVE ASSETS AND LIABILITIES (in millions) Derivative Assets Derivative Liabilities Balance Sheet Location December 31, December 31, December 31, December 31, Commodity Futures Contracts Prepayments and other current assets $ 821 $ 711 $ 871 $ 673 Commodity Swap Contracts Prepayments and other current assets 11 15 13 14 Commodity Swap Contracts Receivables — 7 — — Commodity Swap Contracts Accounts payable — — 2 — Commodity Option Contracts Prepayments and other current assets 1 — — — Commodity Forward Contracts Receivables 6 2 — — Commodity Forward Contracts Accounts payable — — 2 4 Total Gross Mark-to-Market Derivatives 839 735 888 691 Less: Counterparty Netting and Cash Collateral (a) (744 ) (675 ) (832 ) (687 ) Total Net Fair Value of Derivatives $ 95 $ 60 $ 56 $ 4 (a) Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of December 31, 2016 and December 31, 2015 , we had provided cash collateral amounts of $88 million and $12 million , respectively, related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. GAIN (LOSSES) ON MARK-TO-MARKET DERIVATIVES (in millions) Years Ended December 31, 2016 2015 2014 Commodity Contracts $ (67 ) $ 279 $ 482 Foreign Currency Forward Contracts (a) — (6 ) (5 ) Total Gain (Loss) Mark-to-Market Derivatives $ (67 ) $ 273 $ 477 (a) Losses for our foreign currency forward contracts are located in other income, net in our statements of consolidated operations. INCOME STATEMENT LOCATION OF GAINS (LOSSES) ON MARK-TO-MARKET DERIVATIVES (in millions) Years Ended December 31, 2016 2015 2014 Revenues $ (4 ) $ 67 $ 26 Cost of sales (63 ) 212 456 Other income, net — (6 ) (5 ) Total Gain (Loss) on Mark-to-Market Derivatives $ (67 ) $ 273 $ 477 We did not designate any of our derivatives for hedge accounting during the years ended December 31, 2016 , 2015 and 2014 . OPEN LONG (SHORT) POSITIONS OUTSTANDING COMMODITY AND OTHER CONTRACTS (units in thousands) Contract Volumes by Year of Maturity Mark-to-Market Derivative Instrument 2017 2018 Unit of Measure Crude oil, refined products and blending products: Futures - short (6,457 ) — Barrels Futures - long — 15 Barrels Swap Contracts - long 467 — Barrels Forwards - short (261 ) — Barrels Environmental credits: Futures - long 1,000 — Tons Corn: Futures - short (6,310 ) — Bushels At December 31, 2016 , we had open Forward Currency Contracts to purchase CAD $16 million that matured on January 24, 2017 . |
Fair Value Measurements (Notes)
Fair Value Measurements (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS RECURRING FAIR VALUE MEASUREMENTS We classify financial assets and liabilities according to the fair value hierarchy. Financial assets and liabilities classified as level 1 instruments are valued based on quoted prices in active markets for identical assets and liabilities. Level 2 instruments are valued based on quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices, such as liquidity, that are observable for the asset or liability. Our level 2 instruments include derivatives valued using market quotations from independent price reporting agencies, third-party brokers and commodity exchange price curves that are corroborated with market data. Level 3 instruments are valued using significant unobservable inputs that are not supported by sufficient market activity. We do not have any financial assets or liabilities classified as level 3 at December 31, 2016 or December 31, 2015 . Our financial assets and liabilities measured at fair value on a recurring basis include derivative instruments. Additionally, our financial liabilities include obligations for RINs and cap and trade emission credits for the state of California (together with RINs, our “Environmental Credit Obligations”). See Note 10 for further information on our derivative instruments. Amounts presented below for Environmental Credit Obligations represent the estimated fair value amount at each balance sheet date for which we do not have sufficient RINs and California cap and trade credits to satisfy our obligations to the EPA and the state of California, respectively. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE (in millions) December 31, 2016 Level 1 Level 2 Level 3 Netting and Collateral (a) Total Assets: Commodity Futures Contracts $ 821 $ — $ — $ (733 ) $ 88 Commodity Swap Contracts — 11 — (11 ) — Commodity Option Contracts 1 — — — 1 Commodity Forward Contracts — 6 — — 6 Total Assets $ 822 $ 17 $ — $ (744 ) $ 95 Liabilities: Commodity Futures Contracts $ 870 $ 1 $ — $ (821 ) $ 50 Commodity Swap Contracts — 15 — (11 ) 4 Commodity Forward Contracts — 2 — — 2 Environmental Credit Obligations — 79 — — 79 Total Liabilities $ 870 $ 97 $ — $ (832 ) $ 135 December 31, 2015 Level 1 Level 2 Level 3 Netting and Collateral (a) Total Assets: Commodity Futures Contracts $ 711 $ — $ — $ (660 ) $ 51 Commodity Swap Contracts — 22 — (15 ) 7 Commodity Forward Contracts — 2 — — 2 Total Assets $ 711 $ 24 $ — $ (675 ) $ 60 Liabilities: Commodity Futures Contracts $ 673 $ — $ — $ (673 ) $ — Commodity Swap Contracts — 14 — (14 ) — Commodity Forward Contracts — 4 — — 4 Environmental Credit Obligations — 40 — — 40 Total Liabilities $ 673 $ 58 $ — $ (687 ) $ 44 (a) Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of December 31, 2016 and December 31, 2015 , we had provided cash collateral amounts of $88 million and $12 million , respectively, related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. We believe the carrying value of our other financial instruments, including cash and cash equivalents, receivables, accounts payable and certain accrued liabilities approximate fair value. Our fair value assessment incorporates a variety of considerations, including the short-term duration of the instruments and the expected future insignificance of bad debt expense, which includes an evaluation of counterparty credit risk. The borrowings under the Revolving Credit Facility, the TLLP Revolving Credit Facility, TLLP Unsecured Term Loan Facility and our Term Loan Credit Facility, which include variable interest rates, approximate fair value. The fair value of our fixed rate debt is based on prices from recent trade activity and is categorized in level 2 of the fair value hierarchy. The carrying and fair values of our debt were approximately $7.0 billion and $7.3 billion at December 31, 2016 , respectively, and approximately $4.1 billion for both the carrying and fair values at December 31, 2015 . These carrying and fair values of our debt do not consider the unamortized issuance costs, which are netted against our total debt. NONRECURRING FAIR VALUE MEASUREMENTS Except as discussed in Note 2 and Note 3 related to our purchase price allocations associated with the Rockies Natural Gas Business acquisition, the Great Northern Midstream acquisition, the FHR acquisition, the Dickinson Refinery acquisition and the Virent acquisition, no other nonrecurring asset and liability fair value measurements were performed during the years ended December 31, 2016 and 2015 . |
Debt (Notes)
Debt (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT TOTAL DEBT COMPOSITION (in millions) December 31, 2016 2015 Revolving credit facilities: Tesoro Corporation Revolving Credit Facility $ — $ — TLLP Revolving Credit Facility 330 305 TLLP Dropdown Credit Facility — — Tesoro debt: Term Loan Facility 64 — 4.250% Senior Notes due 2017 450 450 5.375% Senior Notes due 2022 475 475 4.750% Senior Notes due 2023 850 — 5.125% Senior Notes due 2024 300 300 5.125% Senior Notes due 2026 750 — TLLP debt: TLLP Unsecured Term Loan Facility — 250 TLLP 5.500% Senior Notes due 2019 500 500 TLLP 5.875% Senior Notes due 2020 (a) 470 470 TLLP 6.125% Senior Notes due 2021 (a) 800 550 TLLP 6.250% Senior Notes due 2022 800 800 TLLP 6.375% Senior Notes due 2024 450 — TLLP 5.250% Senior Notes due 2025 750 — Capital lease obligations and other 53 47 Total Debt 7,042 4,147 Unamortized issuance costs (a) (b) (109 ) (74 ) Current maturities, net of unamortized issuance costs (465 ) (6 ) Debt, Net of Current Maturities and Unamortized Issuance Costs $ 6,468 $ 4,067 (a) Unamortized premiums of $4 million associated with these senior notes are included in unamortized issuance costs at both December 31, 2016 and 2015 . (b) Unamortized debt issuance costs of $113 million and $78 million are recorded as a reduction to debt on the balance sheet at December 31, 2016 and 2015 , respectively. The aggregate maturities of our debt, including capital leases, for each of the five years following December 31, 2016 , are as follows: 2017 — $465 million ; 2018 — $17 million ; 2019 — $526 million ; 2020 — $488 million ; and 2021 — $1.2 billion . REVOLVING CREDIT FACILITIES AVAILABLE CAPACITY UNDER CREDIT FACILITIES (in millions) Total Capacity Amount Borrowed as of December 31, 2016 Outstanding Letters of Credit Available Capacity Expiration Tesoro Corporation Revolving Credit Facility (a) $ 2,000 $ — $ 4 $ 1,996 September 30, 2020 TLLP Revolving Credit Facility 600 330 — 270 January 29, 2021 TLLP Dropdown Credit Facility 1,000 — — 1,000 January 29, 2021 Letter of Credit Facilities 975 — 22 953 Total Credit Facilities $ 4,575 $ 330 $ 26 $ 4,219 (a) The $2.0 billion total capacity does not include the additional $1.0 billion related to the incremental revolving facility, as discussed further below. EXPENSES AND FEES OF OUR CREDIT FACILITIES Credit Facility 30 day Eurodollar (LIBOR) Rate Eurodollar Margin Base Rate Base Rate Margin Commitment Fee (unused portion) Tesoro Corporation Revolving Credit Facility 0.77% 1.75% 3.75% 0.75% 0.300% TLLP Revolving Credit Facility ($600 million) 0.77% 2.00% 3.75% 1.00% 0.375% TLLP Dropdown Credit Facility ($1.0 billion) 0.77% 2.01% 3.75% 1.01% 0.375% TESORO CORPORATION REVOLVING CREDIT FACILITY. On September 30, 2016 , we entered into a new senior revolving credit agreement (the “Revolving Credit Agreement”) with a syndicate of banks and financial institutions that provides for a total available revolving capacity of $2.0 billion . The credit availability is not subject to borrowing base redetermination and is scheduled to mature on September 30, 2020 . Once certain conditions are satisfied, the Revolving Credit Agreement allows Tesoro to request an increase in capacity to $2.3 billion prior to an investment grade credit rating from either Moody's Investors Service or S&P Global Ratings and up to $3.0 billion afterward, subject to receiving increased commitments from lenders. We had unused credit availability of approximately 100% of the borrowing capacity at December 31, 2016 . The Revolving Credit Agreement replaced Tesoro’s Sixth Amended and Restated Credit Agreement dated January 4, 2013, which was terminated on September 30, 2016. Borrowings bear interest at either a base rate ( 3.75% at December 31, 2016 ), plus the applicable spread, or a Eurodollar rate ( 0.77% at December 31, 2016 (1M LIBOR)), plus the applicable spread. The applicable spread at December 31, 2016 was 0.75% in the case of the base rate and 1.75% in the case of the Eurodollar rate but will vary generally based on the credit ratings in effect on Tesoro’s senior, unsecured, non-credit enhanced long-term debt. The commitment fee for the unused portion of the facility was 0.30% at December 31, 2016 . On December 13, 2016, in connection with the Merger with Western Refining, Tesoro entered into an amendment to the Revolving Credit Agreement (the “Amendment Agreement”) with the banks which provides for an incremental revolving facility in an aggregate principal amount of $1.0 billion (the “Incremental Revolver”) and increases the aggregate commitments from $2.0 billion to $3.0 billion . Subject to certain conditions, the Incremental Revolver may be initially borrowed to fund the potential cash consideration payable in connection with the Company’s acquisition of Western Refining, the repayment and redemption of certain outstanding indebtedness of Western Refining and its subsidiaries in connection with the Merger and the payment of fees and expenses associated with the foregoing. Following the initial borrowing of the Incremental Revolver and subject to certain conditions, the Incremental Revolver will convert into a single tranche with the existing commitments and will be available for working capital and general corporate purposes. Following the conversion of the Incremental Revolver, the Company will have a single tranche of $3.0 billion of commitments under the Amendment Agreement. The availability of the Incremental Revolver is subject to customary conditions, including the completion of the Merger. The Amendment Agreement also amends certain provisions to, among other things permit the consummation of the Merger, permit the incurrence of additional unsecured indebtedness in an aggregate principal amount not to exceed $2.2 billion , permit the incurrence of certain pre-existing debt of Western Refining and its subsidiaries pursuant to the terms of the Merger Agreement, and exclude Western Refining Logistics, LP and its subsidiaries from any requirement to guarantee or secure the Amendment Agreement. Other than with respect to the amendments, the terms of the Amendment Agreement are substantially the same as the terms of the Revolving Credit Agreement. The Revolving Credit Agreement includes certain negative, affirmative and financial covenants, a number of which will either no longer apply or become less restrictive if an investment grade rating from either Moody's Investors Service or S&P Global Ratings is achieved, that may limit or restrict the ability of Tesoro and its subsidiaries to: • pay dividends and make other distributions with respect to our capital stock and purchase, redeem or retire our capital stock; • enter into certain hedging agreements; • incur additional indebtedness; • sell assets unless the proceeds from those sales are used to repay debt or are reinvested in our business; • incur liens on assets to secure certain debt; • engage in certain business activities; • make certain payments and distributions from our subsidiaries; • engage in certain investments, mergers or consolidations and transfers of assets; and • enter into non-arm’s length transactions with affiliates. At present, the Revolving Credit Facility is guaranteed by substantially all of Tesoro’s active domestic subsidiaries, excluding TLGP, TLLP and its subsidiaries, certain foreign subsidiaries and other specified subsidiaries and is secured by substantially all of Tesoro’s active domestic subsidiaries’ crude oil and refined product inventories, cash and receivables, other than those of the excluded subsidiaries. If Tesoro achieves an investment grade credit rating from either Moody's Investors Service or S&P Global Ratings, the guarantees and collateral shall be released and the facility will become unsecured. The Revolving Credit Facility allows us to obtain letters of credit under separate letter of credit agreements for foreign crude oil purchases. Our uncommitted letter of credit agreements had $22 million outstanding as of December 31, 2016 . Letters of credit outstanding under these agreements incur fees ranging from 0.45% to 0.90% and are secured by the crude oil inventories for which they are issued. Capacity under these letter of credit agreements is available on an uncommitted basis and can be terminated by either party at any time. TLLP REVOLVING CREDIT FACILITY AND DROPDOWN CREDIT FACILITY. The TLLP Revolving Credit Facility provided for total loan availability of $600 million as of December 31, 2016 , and TLLP may request that the loan availability be increased up to an aggregate of $1.6 billion , subject to receiving increased commitments from the lenders. The TLLP Revolving Credit Facility is non-recourse to Tesoro, except for TLGP, and is guaranteed by all of TLLP’s subsidiaries, with the exception of certain non-wholly owned subsidiaries acquired in the Rockies Natural Gas Business acquisition and secured by substantially all of TLLP’s assets. Borrowings are available under the TLLP Revolving Credit Facility up to the total loan availability of the facility. As of December 31, 2016 , there was $330 million in borrowings outstanding under the TLLP Revolving Credit Facility, which had unused credit availability of approximately 45% of the borrowing capacity. The weighted average interest rate for borrowings under TLLP Revolving Credit Facility was 2.76% at December 31, 2016 . On January 29, 2016 , TLLP amended its existing secured TLLP Revolving Credit Facility to improve key terms related to pricing and financial covenants and decreased the aggregate available facility limit from $900 million to $600 million . Additionally, on January 29, 2016 , TLLP syndicated a new $1.0 billion secured TLLP Dropdown Credit Facility. The primary use of proceeds under this facility will be to fund asset acquisitions. The terms, covenants and restrictions under this facility are substantially the same as the amended secured TLLP Revolving Credit Facility. The secured TLLP Revolving Credit Facility and the secured Dropdown Credit Facility ratably share collateral comprised primarily of TLLP property, plant and equipment and both facilities mature on January 29, 2021 . In addition, upon an upgrade of TLLP’s corporate family rating to investment grade, certain covenants and restrictions under each facility will automatically be eliminated or improved. TESORO DEBT 4.250% SENIOR NOTES DUE 2017 . In September 2012 , we issued $450 million aggregate principal amount of senior notes due in October 2017 (the “ 2017 Notes”) at 4.250% , which approximates the effective interest rate. The 2017 Notes have a five -year maturity and are subject to optional redemption by Tesoro at any time prior to September 1, 2017 at a make-whole price plus accrued and unpaid interest, and par thereafter, plus accrued and unpaid interest. The 2017 Notes contain terms, events of default and covenants that are customary for notes of this nature and of non-investment grade securities. These notes are unsecured obligations and guaranteed by certain of our domestic subsidiaries, excluding TLGP and TLLP and its subsidiaries. 5.375% SENIOR NOTES DUE 2022 . In September 2012 , the Company issued $475 million aggregate principal amount of senior notes due in 2022 (“ 2022 Notes”) at 5.375% , which approximates the effective interest rate. The 2022 Notes have a ten-year maturity and are subject to optional redemption by Tesoro at any time prior to October 1, 2017, at a make-whole price plus any accrued and unpaid interest. On or after October 1, 2017, the 2022 Notes may be redeemed at premiums of 2.688% through September 30, 2018; 1.792% through September 30, 2019; 0.896% through September 30, 2020; and at par thereafter, plus accrued and unpaid interest. These notes are unsecured obligations and guaranteed by certain of our domestic subsidiaries, excluding TLGP and TLLP and its subsidiaries, and contain customary terms, events of default and covenants for an issuance of non-investment grade securities. 4.750% SENIOR NOTES DUE 2023 . In connection with the Western Refining acquisition, in December 2016 Tesoro completed its offering of $850 million aggregate principal amount of senior notes due in 2023 (the “ 2023 Notes”) at 4.750% , which approximates the effective interest rate, pursuant to a private placement transaction conducted under Rule 144A and Regulation S of the Securities Act of 1933, as amended. The 2023 Notes have a seven-year maturity and are subject to optional redemption by Tesoro at any time prior to October 15, 2023 at a redemption price equal to the greater of 100% of the principal amount of the notes to be redeemed or the sum of the present values of the remaining scheduled payment of principal and interest on the notes to be redeemed discounted to the date of redemption on a semiannual basis at the then-current treasury rate plus 50 basis points. If the notes are redeemed on or after October 15, 2023, the Company will pay a redemption price equal to 100% of the principal amount of the notes redeemed. In the event the Merger with Western Refining does not take place on or prior to November 30, 2017 or if the plan for the Merger is terminated, Tesoro will redeem all of the 2023 Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest. These notes are unsecured obligations and guaranteed by certain of our domestic subsidiaries, excluding TLGP and TLLP and its subsidiaries. Following the completion of the Merger, Western Refining and certain of its subsidiaries will also guarantee these notes. Tesoro agreed to complete a registered exchange offer to exchange the 2023 Notes for debt securities with substantially identical terms within 180 days of the closing date of the Merger. 5.125% SENIOR NOTES DUE 2024 . In March 2014, we issued $300 million aggregate principal amount of senior notes due in 2024 (the “ 2024 Notes”) at 5.125% , which approximates the effective interest rate. The 2024 Notes have a ten-year maturity and are subject to optional redemption by Tesoro any time on or after April 1, 2019 at premiums of 2.563% through March 31, 2020; 1.708% through March 31, 2021; 0.854% through March 31, 2022; and at par thereafter. Prior to April 1, 2019, the 2024 Notes may be redeemed at a make-whole price plus accrued and unpaid interest. In addition, at any time prior to April 1, 2017, we may redeem up to 35% of the aggregate principal amount at 105.125% of face value with proceeds from certain equity issuances. These notes are unsecured obligations and guaranteed by certain of our domestic subsidiaries, excluding TLGP and TLLP and its subsidiaries. 5.125% SENIOR NOTES DUE 2026 . In connection with the Western Refining acquisition, in December 2016 Tesoro completed its offering of $750 million aggregate principal amount of senior notes due in 2026 (the “ 2026 Notes”) at 5.125% , which approximates the effective interest rate, pursuant to a private placement transaction conducted under Rule 144A and Regulation S of the Securities Act of 1933, as amended. The 2026 Notes have a ten-year maturity and are subject to optional redemption by Tesoro at any time prior to September 15, 2026 at a redemption price equal to the greater of 100% of the principal amount of the notes to be redeemed or the sum of the present values of the remaining scheduled payment of principal and interest on the notes to be redeemed discounted to the date of redemption on a semiannual basis at the then-current treasury rate plus 50 basis points. If the notes are redeemed on or after September 15, 2026, the Company will pay a redemption price equal to 100% of the principal amount of the notes redeemed. In the event the Merger with Western Refining does not take place on or prior to November 30, 2017 or if the plan for the Merger is terminated, Tesoro will redeem all of the 2026 Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest. These notes are unsecured obligations and guaranteed by certain of our domestic subsidiaries, excluding TLGP and TLLP and its subsidiaries. Following the completion of the Merger, Western Refining and certain of its subsidiaries will also guarantee these notes. Tesoro agreed to complete a registered exchange offer to exchange the 2026 Notes for debt securities with substantially identical terms within 180 days of the closing date of the Merger. The terms of the 2023 Notes, 2024 Notes and 2026 Notes are generally less restrictive than those contained in our senior notes due in 2017 and 2022 , and exclude some limitations on restricted payments, asset sales and other transactions that are included in those senior notes. TLLP DEBT TLLP 5.500% SENIOR NOTES DUE 2019 . I n October 2014 , TLLP completed a private offering of $1.3 billion aggregate principal amount of senior notes pursuant to a private placement transaction conducted under Rule 144A and Regulation S of the Securities Act of 1933, as amended. The senior notes offering consisted of $500 million of senior notes due 2019 (the “TLLP 2019 Notes”) at 5.500% , which approximates the effective interest rate, and $800 million of 6.250% senior notes due in 2022 . The proceeds from the TLLP 2019 Notes were used to repay amounts outstanding under the TLLP Revolving Credit Facility related to the West Coast Logistics Asset Acquisition. The remaining net proceeds from the TLLP 2019 Notes were used to fund the Rockies Natural Gas Business acquisition. The TLLP 2019 Notes have no sinking fund requirements and TLLP may redeem some or all of the notes prior to September 15, 2019, at a make-whole price, and at par thereafter, plus accrued and unpaid interest. The TLLP 2019 Notes are unsecured and guaranteed by all of TLLP’s subsidiaries, with the exception of a certain non-wholly owned subsidiary acquired in the Rockies Natural Gas Business acquisition and Tesoro Logistics Finance Corp., the co-issuer, and are non-recourse to Tesoro, except for TLGP. The TLLP 2019 Notes contain customary terms, events of default and covenants for an issuance of non-investment grade securities. TLLP agreed to complete a registered exchange offer to exchange the TLLP 2019 Notes for debt securities with substantially identical terms within 18 months of the closing date of the senior notes offering. In April 2016, TLLP completed the exchange of all of the TLLP 2019 Notes. TLLP 5.875% SENIOR NOTES DUE 2020 . At December 31, 2016 , TLLP had $470 million of outstanding senior notes due in 2020 (the “TLLP 2020 Notes”) at 5.875% , which approximates the effective interest rate, excluding unamortized premiums of $4 million . These TLLP 2020 Notes were issued in two offerings, the initial offering of $350 million of unregistered notes effective September 2012 and the secondary offering of $250 million of unregistered notes effective December 2013 , which was issued at 102.25% of face value (together, the “Unregistered Notes”). In July 2014 , TLLP completed an offer to exchange these Unregistered Notes for notes registered under the Securities Act of 1933, as amended (the “Exchange Notes”). In accordance with the terms of the Exchange Notes, each holder of the Unregistered Notes was entitled to receive the Exchange Notes, which are identical in all material respects to the Unregistered Notes (including principal amount, interest rate, maturity and redemption rights), except that the Exchange Notes generally are not subject to transfer restrictions. The TLLP 2020 Notes have no sinking fund requirements and TLLP may redeem some or all of the notes through October 1, 2017 at premiums equal to 2.938% ; 1.469% through October 1, 2018; and at par thereafter, plus accrued and unpaid interest. The TLLP 2020 Notes are unsecured and guaranteed by all of TLLP’s subsidiaries, except Tesoro Logistics Finance Corp., the co-issuer, and any non-wholly owned subsidiary acquired in the Rockies Natural Gas Business acquisition, and are non-recourse to Tesoro, except for TLGP, and contain customary terms, events of default and covenants for an issuance of non-investment grade securities. On August 22, 2014 , TLLP completed a public offering of 2.1 million common units representing limited partner interests, at a price of $67.47 per unit. TLLP used the net proceeds for the redemption of $130 million of the TLLP 2020 Notes at a premium. TLLP recorded charges totaling $10 million as net interest and financing costs in our statement of consolidated operations for premiums paid due to the early redemption and expensing of unamortized debt issuance costs. We reimbursed TLLP through a capital contribution of $8 million related to the early debt redemption premiums. TLLP 6.125% SENIOR NOTES DUE 2021 . In August 2013 , TLLP completed a private offering which were exchanged for registered notes of $550 million aggregate principal amount of senior notes due in 2021 (the “TLLP 2021 Notes”) at 6.125% , which approximates the effective interest rate. The proceeds of this offering were used to repay the amounts outstanding under the TLLP Revolving Credit Facility, which were used to fund a significant portion of TLLP’s acquisition of the Los Angeles Terminal Assets, and to pay a portion of the fees and expenses related to the offering of the TLLP 2021 Notes. The TLLP 2021 Notes have no sinking fund requirements and TLLP may redeem some or all of the notes at premiums equal to 4.594% through October 15, 2017; 3.063% through October 15, 2018; 1.531% from October 15, 2018 through October 15, 2019; and at par thereafter, plus accrued and unpaid interest. The TLLP 2021 Notes are unsecured and guaranteed by all of TLLP’s subsidiaries, except Tesoro Logistics Finance Corp., the co-issuer, and any subsidiaries acquired with the Rockies Natural Gas Business acquisition, and are non-recourse to Tesoro, except for TLGP and contain customary terms, events of default and covenants for an issuance of non-investment grade securities. In May 2016, TLLP completed a registered offering of $250 million aggregate principal amount of senior notes due 2021 (“Supplemental TLLP 2021 Notes”) at 6.125% , which approximates the effective interest rate. The Partnership used the proceeds of the offering to repay amounts outstanding under TLLP’s Dropdown Credit Facility. The Supplemental TLLP 2021 Notes were issued under the same indenture governing the existing $550 million of the TLLP 2021 Notes and have the same terms. The Supplemental TLLP 2021 Notes have no sinking fund requirements and may be redeemed at premiums equal to 4.594% through October 15, 2017; 3.063% through October 15, 2018; 1.531% through October 15, 2019; and at par thereafter, plus accrued and unpaid interest. The Supplemental TLLP 2021 Notes are unsecured and guaranteed by all of TLLP’s subsidiaries, except Tesoro Logistics Finance Corp., the co-issuer, and are non-recourse to Tesoro, except for TLGP, and contain customary terms, events of default and covenants for an issuance of non-investment grade securities. TLLP 6.250% SENIOR NOTES DUE 2022 . In connection with TLLP’s Senior Notes Offering on October 29, 2014 , TLLP issued $800 million of senior notes due in 2022 (the “TLLP 2022 Notes”) at 6.250% , which approximates the effective interest rate. The proceeds from the TLLP 2022 Notes were used to fund a portion of the Rockies Natural Gas Business acquisition. The TLLP 2022 Notes have no sinking fund requirements and TLLP may redeem some or all of the notes prior to October 15, 2018, at a make-whole price, plus any accrued and unpaid interest. On or after October 15, 2018, the TLLP 2022 Notes may be redeemed at premiums equal to 3.125% through October 15, 2019; 1.563% through October 15, 2020; and at par thereafter, plus accrued and unpaid interest. TLLP will have the right to redeem up to 35% of the aggregate principal amount at 106.250% of face value with proceeds from certain equity issuances through October 15, 2017. The TLLP 2022 Notes are unsecured and guaranteed by all of TLLP’s subsidiaries, with the exception of a certain non-wholly owned subsidiary acquired in the Rockies Natural Gas Business acquisition and Tesoro Logistics Finance Corp., the co-issuer, and are non-recourse to Tesoro, except for TLGP, and contain customary terms, events of default and covenants for an issuance of non-investment grade securities. TLLP agreed to complete a registered exchange offer to exchange the TLLP 2022 Notes for debt securities with substantially identical terms within 18 months of the closing date of the senior notes offering. In April 2016, TLLP completed the exchange of substantially all of the TLLP 2022 Notes. TLLP 6.375% SENIOR NOTES DUE 2024 . In May 2016, TLLP completed a registered offering of $450 million aggregate principal amount of senior notes due in 2024 (the “TLLP 2024 Notes”) at 6.375% , which approximates the effective interest rate. The Partnership used the proceeds of the offering to repay amounts outstanding under the TLLP Revolving Credit Facility and for general partnership purposes. The TLLP 2024 Notes have no sinking fund requirements and TLLP may redeem some or all of the TLLP 2024 Notes, prior to May 1, 2019, at a make-whole price plus accrued and unpaid interest, if any. On or after May 1, 2019, the TLLP 2024 Notes may be redeemed at premiums equal to 4.781% through May 1, 2020; 3.188% through May 1, 2021; 1.594% through May 1, 2022; and at par thereafter, plus accrued and unpaid interest. The Partnership will have the right to redeem up to 35% of the aggregate principal amount at 106.375% face value with proceeds from certain equity issuances through May 1, 2019. The TLLP 2024 Notes are unsecured and guaranteed by all of TLLP’s subsidiaries, except Tesoro Logistics Finance Corp., the co-issuer, and are non-recourse to Tesoro, except for TLGP, and contain customary terms, events of default and covenants for an issuance of non-investment grade securities. TLLP 5.250% SENIOR NOTES DUE 2025 . In December 2016, TLLP completed a registered offering of $750 million aggregate principal amount of senior notes due in 2025 (the “TLLP 2025 Notes”) at 5.250% , which approximates the effective interest rate. The proceeds from this offering were used to repay amounts outstanding under TLLP’s Dropdown Credit Facility. The TLLP 2025 Notes have no sinking fund requirements and TLLP may redeem some or all of the notes prior to January 15, 2021, at a make-whole price, plus any accrued and unpaid interest. On or after January 15, 2021, the TLLP 2025 Notes may be redeemed at premiums equal to 2.625% through January 15, 2022; 1.313% through January 15, 2023; and at par thereafter, plus accrued and unpaid interest. The Partnership will have the right to redeem up to 35% of the aggregate principal amount at 105.250% of face value with proceeds from certain equity issuances through January 15, 2020. The TLLP 2025 Notes are unsecured and guaranteed by all of TLLP’s subsidiaries, except Tesoro Logistics Finance Corp., and are non-recourse to Tesoro, except for TLGP, and contain customary terms, events of default and covenants for an issuance of non-investment grade securities. DEBT REPAYMENTS 2016 DEBT REPAYMENT. In November 2015 , TLLP executed a $250 million unsecured term loan facility (the “TLLP Unsecured Term Loan Facility”) to fund a portion of the LA Storage and Handling Asset Acquisition. On February 3, 2016, TLLP repaid the full amount of the TLLP Unsecured Term Loan Facility, including accrued interest, with proceeds drawn from the TLLP Dropdown Credit Facility. All commitments under the TLLP Unsecured Term Loan Facility were terminated effective with the repayment. 2015 DEBT REPAYMENT. During August 2015 , we voluntarily repaid our obligation of $398 million under the Term Loan Facility in its entirety with available cash on hand. The Term Loan Facility originally funded a portion of The Los Angeles Acquisition and was scheduled to mature on May 30, 2016 . Amounts paid on the Term Loan Facility cannot be re-borrowed. 2014 DEBT REPAYMENT. We redeemed all outstanding 9.750% Senior Notes due 2019 during 2014, for approximately $329 million , including accrued interest and premiums. We incurred charges totaling $31 million comprised of premiums paid of $19 million and non-cash charges associated with the expensing of $8 million and $4 million of unamortized debt discount and issuance costs, respectively. Our debt redemption charges for the 2019 Notes are recorded in net interest and financing costs in our statements of consolidated operations. CAPITAL LEASE OBLIGATIONS Our capital lease obligations relate primarily to the lease of a marine terminal near our Los Angeles refinery that expires in 2023 , leases of facilities used for trucking operations in North Dakota with initial terms of 15 years, with five -year renewal options, and the lease of 25 retail stations with initial terms of 17 years , with four five -year renewal options. The total cost of assets under capital leases was $60 million and $55 million with accumulated amortization of $33 million and $28 million at December 31, 2016 and 2015 , respectively. We include amortization of the cost of assets under capital leases in depreciation and amortization expense. FUTURE MINIMUM ANNUAL LEASE PAYMENTS, INCLUDING INTEREST FOR CAPITAL LEASES (in millions) December 31, 2016 2017 $ 9 2018 10 2019 9 2020 6 2021 5 Thereafter 12 Total minimum lease payments 51 Less amount representing interest (8 ) Capital Lease Obligations $ 43 |
Income Taxes (Notes)
Income Taxes (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES COMPONENTS OF INCOME TAX EXPENSE FROM CONTINUING OPERATIONS (in millions) Years Ended December 31, 2016 2015 2014 Current: Federal $ 195 $ 697 $ 244 State 36 172 42 Deferred: Federal 167 76 212 State 29 (9 ) 49 Income Tax Expense $ 427 $ 936 $ 547 We record deferred tax assets and liabilities for future income tax consequences that are attributable to differences between the financial statement carrying amount of assets and liabilities and their income tax bases. DEFERRED TAX ASSETS AND LIABILITIES (in millions) December 31, 2016 2015 Deferred tax assets: Accrued pension and other postretirement benefits $ 152 $ 141 Accrued employee compensation liabilities 90 101 Accrued environmental remediation liabilities 79 87 Other accrued liabilities 34 50 Stock-based compensation 34 47 Net operating losses 23 — Tax credit carryforwards 8 8 Asset retirement obligations 6 12 Investment in partnerships — 20 Other 24 10 Total deferred tax assets 450 476 Less: valuation allowance (26 ) (7 ) Total deferred tax assets, net $ 424 $ 469 Deferred tax liabilities: Accelerated depreciation and property related items $ 1,357 $ 1,341 Deferred maintenance costs, including refinery turnarounds 248 224 Inventory 117 22 Investment in partnerships 61 — Amortization of intangible assets 59 64 Other 10 40 Total deferred tax liabilities 1,852 1,691 Deferred Tax Liabilities, Net $ 1,428 $ 1,222 With the acquisition of Virent, we acquired federal and state Net Operating Losses (“NOLs”), as well as federal and state credit carryforwards. We have recorded a valuation allowance as of December 31, 2016 for most of the federal NOLs, all of the state NOLs, and all of the acquired federal and state credit carryforwards due to certain tax restrictions placed on Virent’s carryovers after the change in control. Further, we continue to have a valuation allowance on other state credit carryforwards, which after estimating future taxable income in various jurisdictions, we believe will expire unused. The valuation allowance reduces the benefit of the credit carryforwards to the amount that will more likely than not be realized. The realization of our other deferred tax assets depends on Tesoro’s ability to generate future taxable income. Although realization is not assured, we believe it is more likely than not that we will realize those deferred tax assets. We adopted ASU 2016-09 as of January 1, 2016, which resulted in a $16 million reduction in our income tax provision for the year. See Note 1 for further discussion. RECONCILIATION OF INCOME TAX EXPENSE FROM CONTINUING OPERATIONS (in millions) Years Ended December 31, 2016 2015 2014 Income tax expense at U.S. federal statutory rate $ 447 $ 921 $ 512 Effect of: State income taxes, net of federal income tax effect 45 105 59 Manufacturing activities deduction (5 ) (43 ) (21 ) Earnings attributable to noncontrolling interest (44 ) (53 ) (16 ) Excess tax benefits from stock-based compensation arrangements (16 ) — — Other — 6 13 Income Tax Expense $ 427 $ 936 $ 547 INCOME TAX CREDIT AND LOSS CARRYFORWARDS AS OF DECEMBER 31, 2016 (in millions) Amount Expiration Federal NOLs $ 58 2027 - 2036 Federal income tax credits $ 1 2026 - 2033 State NOLs $ 53 2027 - 2036 State income tax credits $ 12 2017 - 2028 We are subject to income taxes in the U.S., multiple state jurisdictions, and a few foreign jurisdictions. Our unrecognized tax benefits totaled $182 million and $181 million as of December 31, 2016 and 2015 , respectively, of which $6 million and $5 million each year have been recognized as tax liabilities. Included in unrecognized tax benefits as of both December 31, 2016 and 2015 are $172 million (net of the tax benefit on state issues), which would reduce the effective tax rate if recognized. It is reasonably possible that unrecognized tax benefits could decrease by as much as $13 million in the next twelve months, related primarily to state apportionment matters, none of which is recognized as a liability. We had accrued $2 million at both December 31, 2016 and 2015 , respectively, for interest and penalties. We did not recognize an increase or reduction in interest and penalties associated with unrecognized tax benefits during the years ended December 31, 2016 , 2015 , or 2014 . For interest and penalties relating to income taxes we recognize accrued interest in net interest and financing costs and penalties in selling, general and administrative expenses in the statements of consolidated operations. The tax years 2009 forward remain open to examination by the Federal and State taxing authorities, except for California, which remains open from the year 2006 . RECONCILIATION OF UNRECOGNIZED TAX BENEFITS (in millions) Years Ended December 31, 2016 2015 2014 Balance as of beginning of year $ 181 $ 21 $ 28 Increases related to prior year tax positions — 159 5 Decreases related to prior year tax positions — — (2 ) Increases related to current year tax positions 1 1 1 Decreases related to settlements with taxing authorities — — (11 ) Balance as of end of year $ 182 $ 181 $ 21 Unrecognized tax benefits increased by $159 million in 2015 for tax positions taken on amended returns filed for 2009- 2010 . The positions taken exclude certain tax credits for blending biofuels into refined products from taxable income. These tax credits were received from the federal government during the years being amended. However, due to the complex and uncertain nature of the issue, we are unable to conclude that it is more likely than not that we will sustain the claims. Therefore, we have neither recognized a tax benefit, nor recorded a receivable for this item. |
Benefit Plans (Notes)
Benefit Plans (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
BENEFIT PLANS | BENEFIT PLANS BENEFITS SUMMARY We sponsor four defined benefit pension plans, including one qualified plan and three nonqualified plans, which are described below. • The funded qualified employee retirement plan (the “Retirement Plan”) provides benefits to all eligible employees. Benefits are determined based on final average compensation and years of service through December 31, 2010, and a cash balance account based formula for service beginning January 1, 2011. Although our funded employee retirement plan fully meets all of the funding requirements under applicable laws and regulations, we contributed $60 million each year during 2016 , 2015 and 2014 . • The unfunded nonqualified restoration retirement plan provides for the restoration of retirement benefits to certain senior level employees that are not provided under the qualified retirement plan due to limits imposed by the Internal Revenue Code. • The unfunded nonqualified executive security plan provides certain executive officers and other key personnel with supplemental pension benefits. These benefits are provided by a nonqualified, noncontributory plan and are based on years of service and compensation. We made payments of $15 million , $1 million and $5 million during 2016 , 2015 and 2014 , respectively, for current retiree obligations under the plan. • The unfunded nonqualified supplemental executive retirement plan provides eligible senior level executives a supplemental pension benefit in excess of those earned under the qualified retirement plan. Effective January 1, 2015, this plan was frozen to new participants. Tesoro provides health care benefits to retirees who met certain eligibility requirements and were participating in our group health insurance program at retirement. In addition, Tesoro sponsors a 401(k) plan which provides for eligible employees to make contributions, subject to certain limitations, into designated investment funds with a matching contribution by Tesoro. PENSION AND OTHER POSTRETIREMENT FINANCIAL INFORMATION CHANGES IN OBLIGATIONS AND FUNDED STATUS (in millions) Pension Benefits Other Postretirement Benefits 2016 2015 2016 2015 Change in projected benefit obligation: Projected benefit obligations at beginning of year $ 727 $ 767 $ 74 $ 77 Service cost 46 45 3 3 Interest cost 30 30 2 2 Actuarial loss (gain) 62 (44 ) — (2 ) Benefits paid (72 ) (71 ) (7 ) (6 ) Projected Benefit Obligation at End of Year $ 793 $ 727 $ 72 $ 74 Changes in plan assets: Fair value of plan assets at beginning of year $ 390 $ 413 $ — $ — Actual return on plan assets 30 (15 ) — — Employer contributions 76 63 7 6 Benefits paid (72 ) (71 ) (7 ) (6 ) Fair Value of Plan Assets at End of Year 424 390 — — Funded Status at End of Year $ (369 ) $ (337 ) $ (72 ) $ (74 ) The accumulated benefit obligation is the present value of benefits earned to date, assuming no future salary growth. The accumulated benefit obligation for our pension benefits at December 31, 2016 and 2015 was $704 million and $629 million , respectively. LIABILITY AMOUNTS RECOGNIZED IN THE BALANCE SHEET RELATED TO POSTRETIREMENT BENEFITS (in millions) Pension Benefits Other Postretirement Benefits 2016 2015 2016 2015 Other current liabilities $ 2 $ 2 $ 9 $ 8 Other noncurrent liabilities 367 335 63 66 Total Amount Recognized $ 369 $ 337 $ 72 $ 74 COMPONENTS OF PENSION AND OTHER POSTRETIREMENT BENEFIT EXPENSE (INCOME) (in millions) Pension Benefits Other Postretirement Benefits 2016 2015 2014 2016 2015 2014 Components of net periodic benefit expense (income): Service cost $ 46 $ 45 $ 44 $ 3 $ 3 $ 3 Interest cost 30 30 29 2 2 3 Expected return on plan assets (27 ) (27 ) (25 ) — — — Amortization of prior service cost (credit) — 1 1 (34 ) (34 ) (34 ) Recognized net actuarial loss 19 24 12 4 5 6 Recognized curtailment and settlement loss 5 — 1 — — — Net Periodic Benefit Expense (Income) $ 73 $ 73 $ 62 $ (25 ) $ (24 ) $ (22 ) WEIGHTED AVERAGE ASSUMPTIONS Pension Benefits Other Postretirement Benefits 2016 2015 2014 2016 2015 2014 Projected benefit obligation: Discount rate (a) 4.12 % 4.40 % 4.05 % 3.38 % 3.42 % 3.16 % Rate of compensation increase 4.33 % 4.25 % 4.25 % — — — Net periodic benefit expense: Discount rate (a) 4.40 % 4.05 % 4.96 % 3.42 % 3.16 % 3.69 % Rate of compensation increase 4.33 % 4.25 % 4.25 % — — — Expected long-term return on plan assets (b) 6.50 % 6.50 % 6.50 % — — — (a) We determine the discount rate primarily by reference to the effective yields on high quality corporate bonds that have a comparable cash flow pattern to the expected pension and other postretirement benefit payments to be made. (b) The expected return on plan assets reflects the weighted-average of the expected long-term rates of return for the broad categories of investments held for the Retirement Plan. The expected long-term rate of return is adjusted when there are fundamental changes in expected returns on the Retirement Plan’s investments. ASSUMED HEALTH CARE COST TREND RATES TO DETERMINE POSTRETIREMENT BENEFIT OBLIGATION December 31, 2016 2015 Health care cost trend rate assumed for next year 6.90 % 7.20 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 4.80 % 4.80 % Year that the rate reaches the ultimate trend rate 2024 2024 Assumed health care cost trend rates could have a significant effect on the amounts reported for the health care plans. However, at December 31, 2016 , a one-percentage-point change in assumed health care cost trend rates would have less than a million dollar effect on the service and interest cost components and on our postretirement benefit obligation. OTHER COMPREHENSIVE INCOME (LOSS) (in millions) Pension Benefits Other Postretirement Benefits Total 2016 2015 2016 2015 2016 2015 Net actuarial loss $ (323 ) $ (286 ) $ (46 ) $ (51 ) $ (369 ) $ (337 ) Prior service credit (cost) (2 ) (3 ) 62 96 60 93 Total Income (Loss) $ (325 ) $ (289 ) $ 16 $ 45 $ (309 ) $ (244 ) AMOUNTS RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS), BEFORE INCOME TAXES (in millions) Pension Benefits Other Postretirement Benefits 2016 2015 2014 2016 2015 2014 Net gain (loss) arising during the year: Net actuarial loss $ (60 ) $ 2 $ (144 ) $ 1 $ 2 $ 2 Prior service cost — — (2 ) — — — Curtailment and settlement loss 4 — — — — — Curtailment - prior service cost 1 — 1 — — — Net (gain) loss reclassified into income: Net actuarial loss 19 24 12 4 5 6 Prior service cost (credit) — 1 1 (34 ) (34 ) (35 ) Total Gain (Loss) Recognized In Other Comprehensive Income $ (36 ) $ 27 $ (132 ) $ (29 ) $ (27 ) $ (27 ) AMOUNTS INCLUDED IN AOCI, BEFORE INCOME TAXES, EXPECTED TO BE RECOGNIZED AS COMPONENT OF NET PERIODIC BENEFIT EXPENSE (INCOME) (in millions) Pension Benefits Other Postretirement Benefits Total Net actuarial (gain) loss $ 23 $ (34 ) $ (11 ) Prior service cost — 3 3 Total Included In Accumulated Other Comprehensive Income (Loss) $ 23 $ (31 ) $ (8 ) FUTURE CASH FLOWS. Our employee pension plan funding complies with all applicable laws and regulations. Our funding policy is generally to make no less than the minimum required contribution to the plan, nor more than the maximum deductible contribution for the plan year. We contributed $60 million each year during 2016 and 2015 , and continue to evaluate our funding strategy for 2017 . ESTIMATED FUTURE BENEFIT PAYMENTS (in millions) Pension Benefits Other Postretirement Benefits 2017 $ 62 $ 9 2018 66 8 2019 97 8 2020 71 8 2021 71 7 2022-2026 355 31 RETIREMENT PLAN ASSETS INVESTMENT POLICIES AND STRATEGIES. The assets supporting the Retirement Plan are invested using a total return investment approach (including dividends, interest, and realized and unrealized capital appreciation) whereby a mix of equity securities, fixed income securities and other investments are used to preserve asset values, diversify risk and achieve our target investment return. Plan assets are managed in a diversified portfolio comprised of two primary components: an equity portion and a fixed income portion. The expected role of the plan’s equity investments is to maximize the long-term real growth of plan assets, while the role of fixed income investments is to generate current income, lower funded status volatility, provide for more stable periodic returns and provide protection against a prolonged decline in the equity markets. Investment strategies and asset allocation decisions are based on careful consideration of risk tolerance, plan liabilities, the plan’s funded status and our financial condition. Our target allocation is as follows: 45% long duration fixed income, 30% equity and 25% other investments comprised primarily of assets that provide protection in inflationary periods and investments, which target a return regardless of market conditions. Our actual allocation of retirement plan assets at December 31, 2016 were 44% long duration fixed income, 33% equity and 23% other investments. FAIR VALUE OF PLAN ASSETS. We classify plan assets into three classifications or levels in the fair value hierarchy. Our level 1 investments include equity, fixed income and other mutual funds, which are based on market quotations from national securities exchanges. Level 2 investments include short-term investment funds and common/collective trust funds, which are valued at the net asset value of the fund as determined by the fund manager along with individual fixed income securities valued on the basis of evaluated prices from independent pricing services. When market prices are not readily available, the determination of fair value may rely on factors such as significant market activity or security specific events, changes in interest rates and credit quality, and developments in foreign markets. We did not hold any level 3 assets in our investments as of December 31, 2016 and 2015 . We do not believe that there are any significant concentrations of risk within our plan assets. RETIREMENT PLAN’S MAJOR ASSET CATEGORIES MEASURED AT FAIR VALUE (in millions) December 31, 2016 December 31, 2015 Asset Category Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Mutual funds (a) $ 332 $ — $ — $ 332 $ 103 $ 49 $ — $ 152 Common/collective trust funds (b) — 91 — 91 — 76 — 76 Fixed income (c) — — — — — 155 — 155 Short-term investment funds (d) — 2 — 2 — 7 — 7 Total $ 332 $ 93 $ — $ 425 $ 103 $ 287 $ — $ 390 (a) Mutual funds that invest primarily in domestic and international equity and fixed income securities. Fair values are based on market quotations from national securities exchanges. Absolute return and real return mutual funds consist of investments in mutual funds that invest in a broad set of asset classes designed to provide a target return regardless of market conditions or the potential for real returns in excess of U.S. inflation, respectively. The fixed income mutual funds provide diversified exposure to high credit quality, long-term and short-term, U.S. investment grade bonds. All mutual funds and a U.S. equity mutual fund are categorized as level 1 investments. (b) Common/collective trust funds that invest in primarily equity and fixed income securities. Fair values reflect the net asset value per share, as determined by the investment manager and derived from the quoted prices in active markets of the underlying securities. Common/collective trust funds are classified as level 2 investments. (c) Fixed income assets represent securities primarily invested in corporate, government-related, mortgage and asset-backed debt obligations with a primary focus on long duration securities. Individual fixed income securities are typically priced on the basis of evaluated prices from independent pricing services. (d) The short-term investment funds provide for safety of principal and daily liquidity and is valued using the net asset value per share. These assets are classified as level 2 investments. DEFINED CONTRIBUTION PLANS THRIFT PLAN. We sponsor an employee thrift 401(k) plan (the “Thrift Plan”) that provides for contributions, subject to certain limitations, by eligible employees into designated investment funds with a matching contribution by Tesoro. Employees may elect tax-deferred or Roth treatment in accordance with the provisions of Section 401(k) of the Internal Revenue Code. We match 100% of employee contributions, up to 6% of the employee’s eligible compensation (subject to applicable union collective bargaining agreements). We began a profit-sharing contribution to the Thrift Plan effective January 1, 2013. This discretionary contribution, calculated as a percentage of employee’s base pay based on a pre-determined target for the calendar year, can range from 0% to 4% based on actual performance. Contributions will normally be made following the performance year. All employees eligible for the Thrift Plan who are employed on December 31 st of the year the results are achieved are qualified to receive this contribution, even if they are not contributing to the Thrift Plan. Our contributions to the Thrift Plan amounted to $60 million , $57 million and $42 million in 2016 , 2015 and 2014 , respectively, of which $24 million were discretionary contributions accrued under the profit-sharing program for 2015 for payment in February 2016. There were no discretionary contributions accrued under the profit-sharing program for 2016 . Until September 2015, we sponsored a separate 401(k) savings plan for eligible retail store employees who met the plan’s eligibility requirements (the “Retail Savings Plan”). Eligible employees automatically received a non-elective employer contribution equal to 3% of eligible earnings, regardless of participation. On September 28, 2015, the remaining assets in the Retail Savings Plan were merged into the Thrift Plan. EXECUTIVE DEFERRED COMPENSATION PLAN We also sponsor a non-qualified executive deferred compensation plan, which provides eligible employees the opportunity for additional pre-tax deferrals and company contributions not provided under our Thrift Plan due to compensation and deferral limitations imposed under the Internal Revenue Code. |
Note 15 - Commitments and Conti
Note 15 - Commitments and Contingencies Commitments and Contingencies (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | COMMITMENTS AND CONTINGENCIES OPERATING LEASES, PURCHASE OBLIGATIONS AND OTHER COMMITMENTS We have various cancellable and noncancellable operating leases related to land, office and retail facilities, ship charters, tanks and equipment and other facilities used in the storage, transportation, and sale of crude oil, feedstocks and refined products. Rental expense for all operating leases, gross of sublease income, including leases with a term of one month or less, was $576 million in 2016 , $569 million in 2015 and $466 million in 2014 . The majority of our future operating lease payments relate to marine transportation, retail station and tank storage leases. As of December 31, 2016 , we had 14 ships on time charter used to transport crude oil and refined products. These ships have remaining time charters expiring between 2017 and 2021 , with options to renew. We also time charter tugs and product barges over varying terms ending in 2017 through 2018 , most with options to renew and some with rate escalation clauses. Our time charters contain initial terms up to five years. We have operating leases for most of our retail stations with primary remaining terms up to 37 years, most of which contain renewal options and escalation clauses. Our storage tank leases run primarily through 2017 . Tesoro’s contractual purchase commitments consist primarily of crude oil supply contracts for our refineries from several suppliers with noncancellable remaining terms ranging up to five years with renewal provisions. In addition to these purchase commitments, we also have minimum contractual capital spending commitments totaling approximately $459 million in 2017 . We have certain commitments or obligations for the transportation of crude oil refined products and NGLs as well as to purchase industrial gases, chemical processing services and utilities associated with the operation of our refineries. The minimum commitments extend as many as 10 years. We recognized expense of approximately $620 million , $687 million and $666 million in 2016 , 2015 and 2014 , respectively, under these take-or-pay contracts. MINIMUM ANNUAL PAYMENTS (in millions) Minimum Annual Lease Payments (a) Minimum Crude Oil Supply Commitments (b) Minimum Annual Take-or-Pay Payments 2017 $ 413 $ 3,225 $ 317 2018 323 886 241 2019 259 486 182 2020 227 395 143 2021 224 164 125 Thereafter 392 — 105 Total minimum lease payments $ 1,838 $ 5,156 $ 1,113 (a) Includes operating leases having initial or remaining noncancellable lease terms in excess of one year. (b) Prices under the term agreements fluctuate due to market-responsive and other contract-specific pricing provisions. To estimate our annual commitments under these contracts, we estimated crude oil prices using exchange-traded crude future prices by crude oil type as of December 31, 2016 , with prices ranging from $56 per barrel to $57 per barrel, and volumes based on the contract’s minimum purchase requirements over the term of the contract. ENVIRONMENTAL LIABILITIES We are incurring and expect to continue to incur expenses for environmental remediation liabilities at a number of currently and previously owned or operated refining, pipeline, terminal and retail station properties. We have accrued liabilities for these expenses and believe these accruals are adequate based on current information and projections that can be reasonably estimated. Additionally, we have recognized environmental remediation liabilities assumed in past acquisitions from the prior owners that include amounts estimated for site cleanup and monitoring activities arising from operations at refineries, certain terminals and pipelines, and retail stations prior to the dates of our acquisitions. Our environmental accruals are based on estimates including engineering assessments, and it is possible that our projections will change and that additional costs will be recorded as more information becomes available. CHANGES IN ENVIRONMENTAL LIABILITIES (in millions) December 31, 2016 2015 Balance at beginning of year (a) $ 255 $ 274 Additions, net 32 46 Liabilities assumed in acquisitions 5 2 Expenditures (65 ) (67 ) Balance at end of year (a) $ 227 $ 255 (a) Includes $22 million and $33 million of TLLP environmental liabilities at December 31, 2016 and 2015 , respectively. Our environmental liabilities include $170 million and $192 million as of December 31, 2016 and 2015 , respectively, related to amounts estimated for site cleanup activities arising from operations at our Martinez refinery and operations of assets acquired in the Los Angeles Acquisition prior to their respective acquisition dates. We are at various stages of remediation with respect to these assumed liabilities, which may require additional amounts to be recognized for remediation as more information becomes available in the future or changes in scope occur. The amounts recognized to date reflect management’s best estimate of amounts determined to be estimable based on facts known at this time. Future changes in amounts recognized for these assumed liabilities may have a material impact on our results of operations. Of the $170 million accrued at December 31, 2016 , approximately $36 million is subject to a cost-share agreement for the Martinez refinery where we are responsible for 75% of the expenditures. Our estimates for site cleanup activities reflect amounts for which we are responsible under applicable cost-sharing arrangements. On July 10, 2015, a federal court issued an order denying coverage pursuant to insurance policies for environmental remediation liabilities at our Martinez refinery and those liabilities are included in our accruals above. The insurer had filed a declaratory relief action challenging coverage of the primary policy assigned to us when we acquired the refinery. The policies provide for coverage up to $190 million for expenditures in excess of $50 million in self-insurance. We have not recognized possible insurance recoveries under the policies and have appealed the order. Refer to Note 3 for additional environmental matters relating to TLLP. LEGAL MATTERS In the ordinary course of business, we become party to lawsuits, administrative proceedings and governmental investigations, including environmental, regulatory and other matters. Large, and sometimes unspecified, damages or penalties may be sought from us in some matters. We have not established accruals for these matters unless a loss is probable, and the amount of loss is currently estimable. See current legal proceedings in Part I, Item 3. TAX We are subject to extensive federal, state and foreign tax laws and regulations. Newly enacted tax laws and regulations, and changes in existing tax laws and regulations, could result in increased expenditures in the future. Congress and the administration continue to explore options for reform of the domestic corporate tax code. Several of these options, if enacted into law, could have a significant impact on our tax liability. We are also subject to audits by federal, state and foreign taxing authorities in the normal course of business. It is possible that tax audits could result in claims against us in excess of recorded liabilities. However, we believe that resolution of any such claim(s) would not have a material impact on our liquidity, financial position, or results of operations. It is reasonably possible that unrecognized tax benefits may decrease by as much as $13 million in the next twelve months, related primarily to state apportionment matters. COMMITMENTS AND CONTINGENCIES OPERATING LEASES, PURCHASE OBLIGATIONS AND OTHER COMMITMENTS We have various cancellable and noncancellable operating leases related to land, office and retail facilities, ship charters, tanks and equipment and other facilities used in the storage, transportation, and sale of crude oil, feedstocks and refined products. Rental expense for all operating leases, gross of sublease income, including leases with a term of one month or less, was $576 million in 2016 , $569 million in 2015 and $466 million in 2014 . The majority of our future operating lease payments relate to marine transportation, retail station and tank storage leases. As of December 31, 2016 , we had 14 ships on time charter used to transport crude oil and refined products. These ships have remaining time charters expiring between 2017 and 2021 , with options to renew. We also time charter tugs and product barges over varying terms ending in 2017 through 2018 , most with options to renew and some with rate escalation clauses. Our time charters contain initial terms up to five years. We have operating leases for most of our retail stations with primary remaining terms up to 37 years, most of which contain renewal options and escalation clauses. Our storage tank leases run primarily through 2017 . Tesoro’s contractual purchase commitments consist primarily of crude oil supply contracts for our refineries from several suppliers with noncancellable remaining terms ranging up to five years with renewal provisions. In addition to these purchase commitments, we also have minimum contractual capital spending commitments totaling approximately $459 million in 2017 . We have certain commitments or obligations for the transportation of crude oil refined products and NGLs as well as to purchase industrial gases, chemical processing services and utilities associated with the operation of our refineries. The minimum commitments extend as many as 10 years. We recognized expense of approximately $620 million , $687 million and $666 million in 2016 , 2015 and 2014 , respectively, under these take-or-pay contracts. MINIMUM ANNUAL PAYMENTS (in millions) Minimum Annual Lease Payments (a) Minimum Crude Oil Supply Commitments (b) Minimum Annual Take-or-Pay Payments 2017 $ 413 $ 3,225 $ 317 2018 323 886 241 2019 259 486 182 2020 227 395 143 2021 224 164 125 Thereafter 392 — 105 Total minimum lease payments $ 1,838 $ 5,156 $ 1,113 (a) Includes operating leases having initial or remaining noncancellable lease terms in excess of one year. (b) Prices under the term agreements fluctuate due to market-responsive pricing provisions. To estimate our annual commitments under these contracts, we estimated crude oil prices using exchange-traded crude future prices by crude oil type as of December 31, 2016 , with prices ranging from $56 per barrel to $57 per barrel, and volumes based on the contract’s minimum purchase requirements over the term of the contract. OTHER MATTERS In the ordinary course of business, we become party to lawsuits, administrative proceedings and governmental investigations, including environmental, regulatory and other matters. Large, and sometimes unspecified, damages or penalties may be sought from us in some matters. We have not established accruals for these matters unless a loss is probable, and the amount of loss is currently estimable. See current legal proceedings in Part I, Item 3. TAX. We are subject to extensive federal, state and foreign tax laws and regulations. Newly enacted tax laws and regulations, and changes in existing tax laws and regulations, could result in increased expenditures in the future. Congress and the administration continue to explore options for reform of the domestic corporate tax code. Several of these options, if enacted into law, could have a significant impact on our tax liability. We are also subject to audits by federal, state and foreign taxing authorities in the normal course of business. It is possible that tax audits could result in claims against us in excess of recorded liabilities. However, we believe that resolution of any such claim(s) would not have a material impact on our liquidity, financial position, or results of operations. It is reasonably possible that unrecognized tax benefits may decrease by as much as $13 million in the next twelve months, related primarily to state apportionment matters. |
Stockholders' Equity (Notes)
Stockholders' Equity (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS ’ EQUITY NONCONTROLLING INTEREST CHANGES IN NONCONTROLLING INTEREST (in millions) December 31, 2016 2015 Balance at Beginning of Year $ 2,527 $ 2,522 Net earnings 126 150 Net proceeds from issuance of Tesoro Logistics LP Common Units 366 101 Distributions to noncontrolling interest (216 ) (182 ) Amortization of TLLP equity settled awards 5 4 Deconsolidation of RGS (84 ) — Consolidation of Vancouver Energy 8 — Transfers to (from) noncontrolling interest from (to) Tesoro related to: TLLP’s sale of common units (101 ) (114 ) Tesoro’s acquisition of TLLP common units (a) 32 44 Other (1 ) 2 Balance at End of Year $ 2,662 $ 2,527 (a) Includes the net impact of $32 million and $44 million for the years ended December 31, 2016 and 2015 , respectively, to noncontrolling interest for ownership changes occurring as a result of TLLP’s issuance of equity to the public and the issuance of TLLP common units to Tesoro for the Alaska Storage and Terminalling Assets Acquisition, the Northern California Terminalling and Storage Assets Acquisition and the LA Storage and Handling Asset Acquisition. SHARE CALCULATIONS (in millions) Years Ended December 31, 2016 2015 2014 Weighted average common shares outstanding 118.5 123.2 128.5 Common stock equivalents 1.4 1.4 2.3 Total Diluted Shares 119.9 124.6 130.8 Potentially dilutive common stock equivalents are excluded from the calculation of diluted earnings per share if the effect of including such securities in the calculation would have been anti-dilutive. Anti-dilutive securities were 0.1 million , 0.6 million and 0.1 million for the years ended December 31, 2016 , 2015 , and 2014 , respectively. SHARE REPURCHASES We are authorized by the Board of Directors (our “Board”) to purchase shares of our common stock in open market transactions at our discretion. The Board’s authorization has no time limit and may be suspended or discontinued at any time. Purchases of our common stock can also be made to offset the dilutive effect of stock-based compensation awards and to meet our obligations under employee benefit and compensation plans, including the exercise of stock options and vesting of restricted stock and to fulfill other stock compensation requirements. The current program initially authorized $1.0 billion in share repurchases. In October 2015, the Board authorized an additional $1.0 billion in share repurchases that became effective upon the full completion of the initial program. On November 16, 2016, the Board approved a further $1.0 billion of share repurchases. We purchased approximately 3.2 million and 6.9 million shares of our common stock in each year for approximately $250 million and $644 million during the years ended December 31, 2016 and 2015 , respectively. PREFERRED STOCK We have 5.0 million shares of preferred stock authorized with no par value per share. No shares of preferred stock were outstanding as of December 31, 2016 and 2015 . CASH DIVIDENDS On February 3, 2017 , our Board declared a cash dividend of $0.550 per share, payable on March 15, 2017 to shareholders of record on February 28, 2017 . CASH DIVIDENDS PAID 2016 2015 2014 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Annual cash dividends paid $249 million $228 million $141 million Quarterly per share amount declared $ 0.550 $ 0.550 $ 0.500 $ 0.500 $ 0.500 $ 0.500 $ 0.425 $ 0.425 $ 0.300 $ 0.300 $ 0.250 $ 0.250 |
Stock-Based Compensation (Notes
Stock-Based Compensation (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Share-based Compensation [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION PLANS We issue stock-based awards as described below to employees under the 2011 Long-Term Incentive Plan (“2011 Plan”). We also have outstanding awards under our 2006 Long-Term Incentive Plan (“2006 Plan”), Amended and Restated Executive Long-Term Incentive Plan and Non-Employee Director Stock Plan. Tesoro had 3,073,672 shares available for future grants under our plans at December 31, 2016 , assuming a 200% payout of performance-based awards. Usually, when stock options are exercised or when restricted common stock is granted, we issue new shares rather than issuing treasury shares. Our plans are described below. • The 2011 Plan permits the grant of options, SARs, restricted common stock, restricted stock units and incentive bonuses (which may be paid in cash, stock or a combination thereof), any of which may be performance-based. The 2011 Plan became effective in May 2011 and no awards may be granted under the 2011 Plan on or after February 2021. Stock options may be granted at exercise prices not less than the fair market value on the date the options are granted. • The 2006 Plan permits the grant of options, restricted common stock, deferred stock units, performance stock awards, other stock-based awards and cash-based awards. The 2006 Plan became effective in May 2006. Stock options may be granted at exercise prices not less than the fair market value on the date the options are granted. Options granted become exercisable after one year in 33% annual increments and expire 10 years from the date of grant. No further awards may be granted under this plan. • The Amended and Restated Executive Long-Term Incentive Plan, which expired in May 2006, allowed grants in a variety of forms, including restricted stock, nonqualified stock options, SARs, performance share and performance unit awards. As of December 31, 2016 and 2015, we no longer have outstanding awards in this plan, although there were awards outstanding during 2015 which were all exercised. • The 1995 Non-Employee Director Stock Option Plan provided for the grant of nonqualified stock options over the life of the plan to eligible non-employee directors of Tesoro. These automatic, non-discretionary stock options were granted at an exercise price equal to the fair market value per share of Tesoro’s common stock at the date of grant. The term of each option is 10 years , and an option becomes exercisable six months after it is granted. The plan expired in February 2010 and no further options may be granted under this plan. TLGP maintains a unit-based compensation plan for officers and directors of TLGP and its affiliates. The TLLP 2011 Long-Term Incentive Plan, as amended and restated in October 2016, (“TLLP Plan”) permits the grant of options, restricted units, phantom units, unit appreciation rights, distribution equivalent rights, unit awards and other unit-based awards. Awards granted during 2016 under the TLLP Plan will be settled with TLLP units. Compensation expense for these awards was not material to our consolidated financial statements for the years ended December 31, 2016 , 2015 , or 2014 . STOCK-BASED COMPENSATION EXPENSE (BENEFIT) (in millions) Years Ended December 31, 2016 2015 2014 Stock appreciation rights $ (14 ) $ 25 $ 15 Performance share awards 10 11 17 Market stock units 29 27 17 Restricted common stock 5 4 3 Other 5 8 3 Total Stock-Based Compensation Expense $ 35 $ 75 $ 55 We have aggregated expenses for certain award types as they are not considered significant. The income tax effect recognized in the income statement for stock-based compensation was a benefit of $28 million , $28 million and $24 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. Included in the tax benefit of $28 million for the year ended December 31, 2016 was $16 million of tax benefit attributable to excess tax benefits from exercises and vestings that occurred during the year, the effects of which were recorded in the Statement of Consolidated Operations pursuant to ASU 2016-09. The reduction in current taxes payable recognized from tax deductions resulting from exercises and vestings under all of our stock-based compensation arrangements totaled $37 million , $75 million and $46 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. STOCK APPRECIATION RIGHTS A SAR entitles an employee to receive cash in an amount equal to the excess of the fair market value of one share of common stock on the date of exercise over the grant price of the SAR. Our SARs become exercisable after three years and expire seven years from the date of grant. The fair value of each SAR is estimated at the end of each reporting period using the Black-Scholes option-pricing model. We did not grant SARs to our employees during the years ended December 31, 2016 , 2015 or 2014 . We paid cash of $21 million , $44 million and $31 million to settle SARs exercised during 2016 , 2015 and 2014 , respectively. We had $6 million and $41 million recorded in other current liabilities associated with our SARs awards in our consolidated balance sheets at December 31, 2016 and 2015 , respectively. SAR ACTIVITY FOR THE YEAR (shares in thousands) Number of SARs Weighted Average Exercise Price Weighted Average Remaining Contractual Term Outstanding at January 1, 2016 463 $15.72 0.43 years Exercised (338 ) $16.44 Forfeited (37 ) $15.72 Outstanding at December 31, 2016 88 $12.93 0.34 years Vested or expected to vest at December 31, 2016 88 $12.93 0.34 years Exercisable at December 31, 2016 88 $12.93 0.34 years The expected life of SARs granted is based on historical data and represents the period of time that the awards are expected to be outstanding. Expected volatilities are based on the historical volatility of our stock. We use historical data to estimate SAR exercises and employee termination within the valuation model. Expected dividend yield is based on historical dividends paid. The risk-free rate of the award is based on the U.S. Treasury yield curve in effect at the date of valuation. WEIGHTED-AVERAGE ASSUMPTIONS USED TO VALUE SARS AND EXPENSE RECOGNIZED Years Ended December 31, 2016 2015 2014 Expected life from date of grant (years) 7 7 7 Expected volatility 40% 51% 57% Expected dividend yield 3% 2% 2% Risk-free interest rate 0.7% 0.4% 0.2% PERFORMANCE SHARE AWARDS PERFORMANCE CONDITIONS. We last granted performance condition performance share awards under the 2011 Plan in February 2014 and have not granted any since. A performance share award represents the right to receive shares of Tesoro common stock at the end of a 3 -year performance period depending on the Company’s achievement of pre-established performance measures. The performance share awards can range from 0% to 200% of the number of original shares granted. The value of the award ultimately paid will be based on return on capital employed, which is measured against the performance peer group over the performance period. The fair value of performance share awards tied to performance measures is estimated using the market price of our common stock on the grant date. The estimated fair value of these performance share awards is amortized over a 3 -year vesting period using the straight-line method. MARKET CONDITIONS. We granted market condition performance share awards under the 2011 Plan in February 2015 and January 2016. A market condition award represents the right to receive shares of Tesoro common stock at the end of a 3 -year performance period depending on the Company’s achievement of pre-established market conditions. The market condition awards can range from 0% to 200% of the number of original shares granted. The value of the award ultimately paid will be based on relative total shareholder return, which is measured against the performance peer group, XLE Energy Index and the S&P 500 Index over the performance period. The estimated fair value for performance share awards is estimated using a Monte Carlo simulation model as of the grant date and the related expense is amortized over a 3 -year vesting period using the straight-line method. Expected volatilities are based on the historical volatility over the most recent three-year period. Expected dividend yield is based on annualized dividends at the date of valuation. The risk-free rate is based on the U.S. Treasury yield curve in effect at the date of valuation. WEIGHTED AVERAGE ASSUMPTIONS USED TO MEASURE PERFORMANCE SHARE AWARDS Years Ended December 31, 2016 2015 2014 Expected volatility 35% 35% 43% Expected dividend yield —% —% —% Risk-free interest rate 1.0% 1.0% 0.6% Total unrecognized compensation cost related to all non-vested performance share awards totaled $11 million as of December 31, 2016 , which is expected to be recognized over a weighted average period of 1.6 years . The estimated weighted average payout percentage for these awards was approximately 111% as of December 31, 2016 . The weighted-average grant-date fair value per share of performance share awards granted during 2016 , 2015 and 2014 was $87.90 , $117.96 and $54.42 , respectively. SUMMARY OF PERFORMANCE SHARE AWARD ACTIVITY, ASSUMING 100% PAYOUT (shares in thousands) Number of Shares Weighted-Average Grant-Date Fair Value Intrinsic Value (in millions) Nonvested at January 1, 2016 431 $71.76 $45 Granted 157 $87.90 Vested (188 ) $55.20 Forfeited (22 ) $90.37 Nonvested at December 31, 2016 378 $83.53 $33 MARKET STOCK UNITS We granted market stock units under the 2011 Plan in February 2015 and January 2016. These market stock units represent the right to receive a target number of shares that will vest at the end of a 3 -year performance period. The number of shares ultimately issued will be based on Tesoro’s stock price changes over the performance period. The market stock units’ potential payout can range from 50% to 200% of the targeted award value, unless the average closing stock price at vesting has decreased more than 50% from the average closing stock price at the grant date, then no market stock units will be paid out. The fair value of each market stock unit is estimated on the grant date using a Monte Carlo simulation model. The estimated fair value of these market stock units is amortized over a 3 -year vesting period using the straight-line method. The estimated weighted average payout percentage for these awards was 130% as of December 31, 2016 . Total unrecognized compensation cost related to non-vested market stock units totaled $39 million as of December 31, 2016 , which is expected to be recognized over a weighted average period of 1.6 years . The weighted-average grant-date fair value per share of market stock units granted during 2016 , 2015 and 2014 was $84.84 , $114.57 and $57.60 , respectively. SUMMARY OF MARKET STOCK UNIT AWARD ACTIVITY, ASSUMING 100% PAYOUT (units in thousands) Number of Units Weighted-Average Grant-Date Fair Value Intrinsic Value (in millions) Nonvested at January 1, 2016 1,135 $78.99 $119 Granted 693 $84.84 Vested (711 ) $65.95 Forfeited (47 ) $89.79 Nonvested at December 31, 2016 1,070 $84.78 $94 Expected volatilities are based on the historical volatility of our stock. We use historical data to estimate employee termination within the valuation model. Expected dividend yield is based on annualized dividends at the date of grant. The risk-free rate for periods within the performance period is based on the U.S. Treasury yield curve in effect at the time of grant. WEIGHTED AVERAGE ASSUMPTIONS USED TO MEASURE MARKET STOCK UNITS GRANTED Years Ended December 31, 2016 2015 2014 Expected volatility 35% 35% 44% Expected dividend yield 2% 2% 2% Risk-free interest rate 1.1% 1.1% 0.7% RESTRICTED COMMON STOCK The fair value of each restricted share on the grant date is equal to the market price of our common stock on that date. The estimated fair value of our restricted common stock is amortized over the vesting period primarily using the straight-line method. These awards primarily vest in annual increments ratably over 3 years . The total fair value of restricted shares vested was $2 million , $4 million and $2 million in 2016 , 2015 and 2014 , respectively. The weighted-average grant-date fair value per share of restricted common stock granted during 2016 , 2015 and 2014 was $85.51 , $90.40 and $61.76 , respectively. Unrecognized compensation cost related to our non-vested restricted common stock totaled $4 million as of December 31, 2016 . This cost is expected to be recognized over a weighted-average period of 1.6 years . The fair value of non-vested restricted common stock, as of December 31, 2016 , totaled $10 million . SUMMARY OF RESTRICTED COMMON STOCK ACTIVITY (shares in thousands) Number of Restricted Shares Weighted-Average Grant-Date Fair Value Nonvested at January 1, 2016 105 $57.58 Granted 50 $85.51 Vested (44 ) $53.71 Forfeited — $— Nonvested at December 31, 2016 111 $71.45 STOCK OPTIONS Under the terms of our stock option plans, the exercise price of options granted is equal to the market price of our common stock on the date of grant. The fair value of each option is estimated on the grant date using the Black-Scholes option-pricing model. The estimated fair value of these stock options is amortized over the vesting period using the straight-line method. There were no options granted to our employees during 2016 , 2015 or 2014 . Our options primarily become exercisable after one year in 33% annual increments and expire 10 years from the date of grant. The total intrinsic value for options exercised during 2016 , 2015 and 2014 was $3 million , $19 million and $25 million , respectively. There were no non-vested stock options as of December 31, 2016 . The reduction in current taxes payable from tax deductions associated with stock options exercised during 2016 totaled $1 million . SUMMARY OF STOCK OPTION ACTIVITY FOR ALL PLANS (options in thousands) Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2016 344 $26.55 3.0 years $27 Exercised (70 ) $39.64 Forfeited or expired — $— Outstanding at December 31, 2016 274 $23.20 2.5 years $18 Vested or expected to vest at December 31, 2016 274 $23.20 2.5 years $18 Exercisable at December 31, 2016 274 $23.20 2.5 years $18 |
Note 18 - Supplemental Cash Flo
Note 18 - Supplemental Cash Flow Information Supplemental Cash Flow Information (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | SUPPLEMENTAL CASH FLOW INFORMATION SUPPLEMENTAL CASH FLOW DISCLOSURES (in millions) Years Ended December 31, 2016 2015 2014 Supplemental Cash Flow Disclosures: Interest paid, net of capitalized interest $ 199 $ 181 $ 129 Income taxes paid, net 136 882 309 Supplemental Disclosures of Non-cash Investing Activities: Capital expenditures included in accounts payable at end of period $ 191 $ 137 $ 161 |
Operating Segments (Notes)
Operating Segments (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
OPERATING SEGMENTS | OPERATING SEGMENTS The Company’s revenues are derived from three operating segments: Refining, TLLP and Marketing. Our Refining segment owns and operates seven petroleum refineries located in California, Washington, Alaska, North Dakota and Utah that manufacture gasoline and gasoline blendstocks, jet fuel, diesel fuel, residual fuel oil and other refined products. We sell these refined products, together with refined products purchased from third parties, to our Marketing segment through terminal facilities and other locations and opportunistically export refined products to foreign markets. TLLP’s assets and operations include certain crude oil gathering assets, natural gas gathering and processing assets and crude oil and refined products terminalling and transportation assets acquired from Tesoro and other third parties. Revenues from the TLLP segment are generated by charging fees for gathering crude oil and natural gas, for processing natural gas, and for terminalling, transporting and storing crude oil, and refined products. Tesoro’s marketing business supplies gasoline and diesel across 16 states through both branded and unbranded marketing channels. We utilize various operating models in the operation of our retail stations. Since we do not have significant operations in foreign countries, revenue generated and long-lived assets located in foreign countries are not material to our operations. We evaluate the performance of our segments based primarily on segment operating income. Segment operating income includes those revenues and expenses that are directly attributable to management of the respective segment. TLLP and marketing revenues include intersegment transactions with our Refining segment. Corporate depreciation and corporate general and administrative expenses are excluded from segment operating income. TLLP acquired certain assets from our Refining segment, and the associated liabilities and results of operations are collectively referred to as the “Predecessors.” The accompanying segment information presents certain financial information of the Predecessors at historical cost. The financial statements of the Predecessors have been prepared from the separate records maintained by Tesoro and may not necessarily be indicative of the conditions that would have existed or the results of operations if the Predecessors had been operated as a stand-alone business. The Predecessors did not record revenue for transactions with our Refining segment. SEGMENT INFORMATION RELATED TO CONTINUING OPERATIONS Years Ended December 31, 2016 2015 2014 Revenues (in millions) Refining: Refined products $ 21,213 $ 25,443 $ 37,365 Crude oil resales and other 1,043 946 1,456 TLLP: Gathering 339 339 135 Processing 276 278 23 Terminalling and transportation 605 495 442 Marketing: Fuel (a) 15,405 18,081 23,701 Other non-fuel 85 63 240 Intersegment sales (14,384 ) (16,934 ) (22,729 ) Total Revenues $ 24,582 $ 28,711 $ 40,633 Segment Operating Income Refining (b) $ 535 $ 1,871 $ 1,193 TLLP (c) 487 393 164 Marketing (b) 830 899 553 Total Segment Operating Income 1,852 3,163 1,910 Corporate and unallocated costs (371 ) (336 ) (278 ) Operating Income 1,481 2,827 1,632 Interest and financing costs, net (274 ) (217 ) (235 ) Equity in earnings of equity method investments 13 7 10 Other income, net 57 13 57 Earnings Before Income Taxes $ 1,277 $ 2,630 $ 1,464 Depreciation and Amortization Expense Refining $ 588 $ 504 $ 420 TLLP 190 187 85 Marketing 49 46 42 Corporate 24 19 15 Total Depreciation and Amortization Expense $ 851 $ 756 $ 562 Capital Expenditures Refining $ 519 $ 530 $ 423 TLLP 273 386 272 Marketing 34 34 54 Corporate 122 56 30 Total Capital Expenditures $ 948 $ 1,006 $ 779 (a) Federal and state motor fuel taxes on sales by our Marketing segment are included in both revenues and cost of sales in our statements of consolidated operations. These taxes totaled $577 million , $561 million and $581 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. (b) Our Refining segment uses RINs to satisfy its obligations under the Renewable Fuels Standard, in addition to physically blending required biofuels. At the end of 2014, given the price of RINs had become more transparent in the price of biofuels, we determined our intersegment pricing methodology should include the market value of RINs as a reduction to the price our Marketing segment pays to our Refining segment. We made this change effective January 1, 2015. We have not adjusted financial information presented for our Refining and Marketing segments for the year ended December 31, 2014 . Had we made this change effective January 1, 2014, operating income in our Refining segment would have been reduced by $125 million with a corresponding increase to operating income in our Marketing segment for the year ended December 31, 2014 . (c) We present TLLP’s segment operating income net of general and administrative expenses totaling $53 million , $54 million and $39 million representing TLLP’s corporate costs that are not allocated to TLLP’s operating segments for the years ended December 31, 2016 , 2015 and 2014 , respectively. IDENTIFIABLE ASSETS RELATED TO CONTINUING OPERATIONS (in millions; intersegment balances have been eliminated) December 31, 2016 2015 Refining $ 10,350 $ 8,878 TLLP 5,759 5,046 Marketing 1,295 1,167 Corporate 2,994 1,241 Total Assets $ 20,398 $ 16,332 |
Quarterly Financial Data (unaud
Quarterly Financial Data (unaudited) (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Data [Abstract] | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | QUARTERLY FINANCIAL DATA (UNAUDITED) SUMMARY OF QUARTERLY FINANCIAL DATA (in millions, except per share amounts) Quarters Total Year First Second Third Fourth 2016 Revenues $ 5,101 $ 6,285 $ 6,544 $ 6,652 $ 24,582 Cost of sales (excluding the lower of cost or market inventory valuation adjustment) 3,866 5,023 5,236 5,533 19,658 Lower of cost or market inventory valuation adjustment 147 (363 ) (20 ) (123 ) (359 ) Operating expenses 611 602 648 680 2,541 Operating income 179 718 360 224 1,481 Net earnings from continuing operations 98 449 202 101 850 Gain (loss) from discontinued operations, net of tax 11 — (1 ) — 10 Net earnings 109 449 201 101 860 Net earnings attributable to Tesoro Corporation 69 418 169 78 734 Net earnings per share (a): Basic $ 0.58 $ 3.50 $ 1.43 $ 0.67 $ 6.19 Diluted $ 0.57 $ 3.47 $ 1.42 $ 0.66 $ 6.12 2015 Revenues $ 6,463 $ 8,232 $ 7,743 $ 6,273 $ 28,711 Cost of sales (excluding the lower of cost or market inventory valuation adjustment) 5,310 6,357 5,433 4,828 21,928 Lower of cost or market inventory valuation adjustment (42 ) — 83 276 317 Operating expenses 574 596 636 649 2,455 Operating income 340 1,009 1,292 186 2,827 Net earnings from continuing operations 188 624 799 83 1,694 Loss from discontinued operations, net of tax — (4 ) — — (4 ) Net earnings 188 620 799 83 1,690 Net earnings attributable to Tesoro Corporation 145 582 759 54 1,540 Net earnings per share (a): Basic $ 1.17 $ 4.64 $ 6.19 $ 0.46 $ 12.50 Diluted $ 1.15 $ 4.59 $ 6.13 $ 0.45 $ 12.36 (a) Includes earnings attributable to Tesoro from continuing and discontinued operations. The sum of four quarters may not equal annual results due to rounding or the quarterly number of shares outstanding. |
Condensed Consolidating Financi
Condensed Consolidating Financial Information (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | CONDENSED CONSOLIDATING FINANCIAL INFORMATION Separate condensed consolidating financial information of Tesoro Corporation (the “Parent”), subsidiary guarantors and non-guarantors are presented below. At December 31, 2016 , Tesoro and certain subsidiary guarantors have fully and unconditionally guaranteed our 2017 Notes, 2022 Notes, 2023 Notes, 2024 Notes and 2026 Notes. TLLP, in which we had a 34% ownership interest as of December 31, 2016 , and other subsidiaries have not guaranteed these obligations. As a result of these guarantee arrangements, we are required to present the following condensed consolidating financial information, which should be read in conjunction with the accompanying consolidated financial statements and notes thereto. This information is provided as an alternative to providing separate financial statements for guarantor subsidiaries. Separate financial statements of Tesoro’s subsidiary guarantors are not included because the guarantees are full and unconditional and these subsidiary guarantors are 100% owned and are jointly and severally liable for Tesoro’s outstanding senior notes. The information is presented using the equity method of accounting for investments in subsidiaries. Certain intercompany and intracompany transactions between subsidiaries are presented gross and eliminated in the consolidating adjustments column. Additionally, the results of operations of the Hawaii Business have been reported as discontinued operations in these condensed consolidating statements of operations and comprehensive income for the years ended December 31, 2016 , 2015 and 2014 . CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2016 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated Revenues $ — $ 26,880 $ 3,654 $ (5,952 ) $ 24,582 Costs and Expenses Cost of sales (excluding the lower of cost or market inventory valuation adjustment) — 23,048 2,220 (5,610 ) 19,658 Lower of cost or market inventory valuation adjustment — (359 ) — — (359 ) Operating, selling, general and administrative expenses 9 2,573 702 (342 ) 2,942 Depreciation and amortization expense — 625 226 — 851 Loss on asset disposals and impairments — 6 3 — 9 Operating Income (Loss) (9 ) 987 503 — 1,481 Equity in earnings of subsidiaries 792 211 — (1,003 ) — Interest and financing costs, net (84 ) (61 ) (129 ) — (274 ) Equity in earnings of equity method investments — — 13 — 13 Other income, net 3 39 15 — 57 Earnings Before Income Taxes 702 1,176 402 (1,003 ) 1,277 Income tax expense (benefit) (a) (22 ) 353 96 — 427 Net Earnings from Continuing Operations 724 823 306 (1,003 ) 850 Earnings from discontinued operations, net of tax 10 — — — 10 Net Earnings 734 823 306 (1,003 ) 860 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 126 — 126 Net Earnings Attributable to Tesoro Corporation $ 734 $ 823 $ 180 $ (1,003 ) $ 734 Comprehensive Income Total Comprehensive Income $ 695 $ 823 $ 306 $ (1,003 ) $ 821 Less: Noncontrolling Interest in Comprehensive Income — — 126 — 126 Comprehensive Income Attributable to Tesoro Corporation $ 695 $ 823 $ 180 $ (1,003 ) $ 695 (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2015 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated Revenues $ — $ 31,645 $ 3,597 $ (6,531 ) $ 28,711 Costs and Expenses Cost of sales (excluding the lower of cost or market inventory valuation adjustment) — 25,753 2,415 (6,240 ) 21,928 Lower of cost or market inventory valuation adjustment — 317 — — 317 Operating, selling, general and administrative expenses 11 2,542 579 (291 ) 2,841 Depreciation and amortization expense — 565 191 — 756 Loss on asset disposals and impairments — 37 5 — 42 Operating Income (Loss) (11 ) 2,431 407 — 2,827 Equity in earnings of subsidiaries 1,590 96 — (1,686 ) — Interest and financing costs, net (45 ) (66 ) (106 ) — (217 ) Equity in earnings of equity method investments — — 7 — 7 Other income (expense), net 3 11 (1 ) — 13 Earnings Before Income Taxes 1,537 2,472 307 (1,686 ) 2,630 Income tax expense (benefit) (a) (7 ) 891 52 — 936 Net Earnings from Continuing Operations 1,544 1,581 255 (1,686 ) 1,694 Loss from discontinued operations, net of tax (4 ) — — — (4 ) Net Earnings 1,540 1,581 255 (1,686 ) 1,690 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 150 — 150 Net Earnings Attributable to Tesoro Corporation $ 1,540 $ 1,581 $ 105 $ (1,686 ) $ 1,540 Comprehensive Income Total Comprehensive Income $ 1,540 $ 1,581 $ 255 $ (1,686 ) $ 1,690 Less: Noncontrolling Interest in Comprehensive Income — — 150 — 150 Comprehensive Income Attributable to Tesoro Corporation $ 1,540 $ 1,581 $ 105 $ (1,686 ) $ 1,540 (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2014 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated Revenues $ — $ 45,898 $ 6,153 $ (11,418 ) $ 40,633 Costs and Expenses Cost of sales (excluding the lower of cost or market inventory valuation adjustment) — 41,288 5,479 (11,164 ) 35,603 Lower of cost or market inventory valuation adjustment — 42 — — 42 Operating, selling, general and administrative expenses 10 2,632 402 (254 ) 2,790 Depreciation and amortization expense — 472 90 — 562 (Gain) loss on asset disposals and impairments — 8 (4 ) — 4 Operating Income (Loss) (10 ) 1,456 186 — 1,632 Equity in earnings of subsidiaries 903 2 — (905 ) — Interest and financing costs, net (39 ) (126 ) (70 ) — (235 ) Equity in earnings of equity method investments — 9 1 — 10 Other income, net 2 55 — — 57 Earnings Before Income Taxes 856 1,396 117 (905 ) 1,464 Income tax expense (benefit) (a) (16 ) 525 38 — 547 Net Earnings from Continuing Operations 872 871 79 (905 ) 917 Loss from discontinued operations, net of tax (29 ) — — — (29 ) Net Earnings 843 871 79 (905 ) 888 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 45 — 45 Net Earnings Attributable to Tesoro Corporation $ 843 $ 871 $ 34 $ (905 ) $ 843 Comprehensive Income Total Comprehensive Income $ 746 $ 871 $ 79 $ (905 ) $ 791 Less: Noncontrolling Interest in Comprehensive Income — — 45 — 45 Comprehensive Income Attributable to Tesoro Corporation $ 746 $ 871 $ 34 $ (905 ) $ 746 (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2016 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated ASSETS Current Assets Cash and cash equivalents $ — $ 2,576 $ 719 $ — $ 3,295 Receivables, net of allowance for doubtful accounts 10 882 216 — 1,108 Short-term receivables from affiliates — 171 28 (199 ) — Inventories — 2,321 319 — 2,640 Prepayments and other current assets 50 298 23 — 371 Total Current Assets 60 6,248 1,305 (199 ) 7,414 Net Property, Plant and Equipment — 6,183 3,793 — 9,976 Investment in Subsidiaries 9,201 785 — (9,986 ) — Long-Term Receivables from Affiliates 3,326 — — (3,326 ) — Long-Term Intercompany Note Receivable — — 2,386 (2,386 ) — Other Noncurrent Assets: Acquired intangibles, net — 329 948 — 1,277 Other, net 46 1,138 549 (2 ) 1,731 Total Other Noncurrent Assets 46 1,467 1,497 (2 ) 3,008 Total Assets $ 12,633 $ 14,683 $ 8,981 $ (15,899 ) $ 20,398 LIABILITIES AND EQUITY Current Liabilities Accounts payable $ 6 $ 1,762 $ 264 $ — $ 2,032 Short-term payables to affiliates — 28 171 (199 ) — Current maturities of debt 450 14 1 — 465 Other current liabilities 99 853 106 (1 ) 1,057 Total Current Liabilities 555 2,657 542 (200 ) 3,554 Long-Term Payables to Affiliates — 3,074 252 (3,326 ) — Deferred Income Taxes 1,428 2 — (2 ) 1,428 Debt 2,321 94 4,053 — 6,468 Long-Term Intercompany Note Payable 2,386 — — (2,386 ) — Other Noncurrent Liabilities 479 289 53 — 821 Equity-Tesoro Corporation 5,464 8,567 1,419 (9,985 ) 5,465 Equity-Noncontrolling Interest — — 2,662 — 2,662 Total Liabilities and Equity $ 12,633 $ 14,683 $ 8,981 $ (15,899 ) $ 20,398 CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2015 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated ASSETS Current Assets Cash and cash equivalents $ — $ 895 $ 47 $ — $ 942 Receivables, net of allowance for doubtful accounts — 626 166 — 792 Short-term receivables from affiliates — 200 3 (203 ) — Inventories — 1,971 331 — 2,302 Prepayments and other current assets 116 140 16 (1 ) 271 Total Current Assets 116 3,832 563 (204 ) 4,307 Net Property, Plant and Equipment — 5,796 3,745 — 9,541 Investment in Subsidiaries 8,128 609 — (8,737 ) — Long-Term Receivables from Affiliates 1,522 — — (1,522 ) — Long-Term Intercompany Note Receivable — — 1,626 (1,626 ) — Other Noncurrent Assets: Acquired intangibles, net — 234 977 — 1,211 Other, net 33 1,018 227 (5 ) 1,273 Total Other Noncurrent Assets 33 1,252 1,204 (5 ) 2,484 Total Assets $ 9,799 $ 11,489 $ 7,138 $ (12,094 ) $ 16,332 LIABILITIES AND EQUITY Current Liabilities Accounts payable $ — $ 1,390 $ 178 $ — $ 1,568 Short-term payables to affiliates — 3 200 (203 ) — Current maturities of debt — 6 — — 6 Other current liabilities 91 756 110 (1 ) 956 Total Current Liabilities 91 2,155 488 (204 ) 2,530 Long-Term Payables to Affiliates — 1,293 229 (1,522 ) — Deferred Income Taxes 1,227 — — (5 ) 1,222 Debt 1,190 33 2,844 — 4,067 Long-Term Intercompany Note Payable 1,626 — — (1,626 ) — Other Noncurrent Liabilities 452 262 59 — 773 Equity-Tesoro Corporation 5,213 7,746 991 (8,737 ) 5,213 Equity-Noncontrolling Interest — — 2,527 — 2,527 Total Liabilities and Equity $ 9,799 $ 11,489 $ 7,138 $ (12,094 ) $ 16,332 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2016 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated Cash Flows From (Used in) Operating Activities Net cash from (used in) operating activities $ (33 ) $ 1,006 $ 637 $ (306 ) $ 1,304 Cash Flows From (Used in) Investing Activities Capital expenditures — (616 ) (278 ) — (894 ) Acquisitions — (67 ) (346 ) — (413 ) Deposits for acquisitions — — (33 ) — (33 ) Proceeds from asset sales 17 — 8 — 25 Investment in subsidiaries (321 ) (455 ) — 776 — Intercompany notes, net (1,453 ) — — 1,453 — Notes to general partner — — (760 ) 760 — Other investing activities — — (2 ) — (2 ) Net cash used in investing activities (1,757 ) (1,138 ) (1,411 ) 2,989 (1,317 ) Cash Flows From (Used in) Financing Activities Borrowings under revolving credit agreements — — 1,451 — 1,451 Repayments on revolving credit agreements — — (1,426 ) — (1,426 ) Proceeds from debt offerings 1,600 — 1,451 — 3,051 Repayments of debt — (9 ) (251 ) — (260 ) Dividend payments (249 ) — — — (249 ) Proceeds from stock options exercised 2 — — — 2 Net proceeds from issuance of TLLP common units — — 364 — 364 Notes from general partner 760 — — (760 ) — Distributions to noncontrolling interest — — (216 ) — (216 ) Purchases of common stock (250 ) — — — (250 ) Taxes paid related to net share settlement of equity awards (25 ) — — — (25 ) Contributions by parent — — 776 (776 ) — Net intercompany borrowings (repayments) — 1,822 (369 ) (1,453 ) — Distributions to TLLP unitholders and general partner — — (81 ) 81 — Distributions from TLLP and general partner to TSO — — (225 ) 225 — Payments of debt issuance costs (16 ) — (21 ) — (37 ) Other financing activities (32 ) — (7 ) — (39 ) Net cash from financing activities 1,790 1,813 1,446 (2,683 ) 2,366 Increase in Cash and Cash Equivalents — 1,681 672 — 2,353 Cash and Cash Equivalents, Beginning of Year — 895 47 — 942 Cash and Cash Equivalents, End of Year $ — $ 2,576 $ 719 $ — $ 3,295 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2015 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated Cash Flows From (Used in) Operating Activities Net cash from operating activities $ 11 $ 2,030 $ 293 $ (203 ) $ 2,131 Cash Flows From (Used in) Investing Activities Capital expenditures — (646 ) (384 ) — (1,030 ) Acquisitions — (91 ) (6 ) — (97 ) Intercompany notes, net 1,041 — — (1,041 ) — Notes to general partner — — (250 ) 250 — Other investing activities — (2 ) — — (2 ) Net cash from (used in) investing activities 1,041 (739 ) (640 ) (791 ) (1,129 ) Cash Flows From (Used in) Financing Activities Borrowings under revolving credit agreements — — 476 — 476 Repayments on revolving credit agreements — — (431 ) — (431 ) Borrowings under term loan credit agreements — — 250 — 250 Repayments of debt (398 ) (6 ) — — (404 ) Dividend payments (228 ) — — — (228 ) Proceeds from stock options exercised 13 — — — 13 Net proceeds from issuance of TLLP common units — — 99 — 99 Notes from general partner 250 — — (250 ) — Distributions to noncontrolling interest — — (182 ) — (182 ) Purchases of common stock (644 ) — — — (644 ) Taxes paid related to net share settlement of equity awards (45 ) — — — (45 ) Net intercompany borrowings (repayments) — (1,371 ) 330 1,041 — Distributions to TLLP unitholders and general partner — — (203 ) 203 — Payments of debt issuance costs — — (2 ) — (2 ) Excess tax benefits from stock-based compensation arrangements — 38 — — 38 Net cash from (used in) financing activities (1,052 ) (1,339 ) 337 994 (1,060 ) Decrease in Cash and Cash Equivalents — (48 ) (10 ) — (58 ) Cash and Cash Equivalents, Beginning of Year — 943 57 — 1,000 Cash and Cash Equivalents, End of Year $ — $ 895 $ 47 $ — $ 942 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2014 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated Cash Flows From (Used in) Operating Activities Net cash from (used in) operating activities $ (11 ) $ 1,270 $ 208 $ (103 ) $ 1,364 Cash Flows From (Used in) Investing Activities Capital expenditures — (443 ) (242 ) — (685 ) Acquisitions — (17 ) (2,479 ) — (2,496 ) Proceeds from asset sales — 4 14 — 18 Intercompany notes, net 441 — — (441 ) — Notes to general partner — — (243 ) 243 — Other investing activities — (5 ) (4 ) — (9 ) Net cash from (used in) investing activities 441 (461 ) (2,954 ) (198 ) (3,172 ) Cash Flows From (Used in) Financing Activities Borrowings under revolving credit agreements — — 646 — 646 Repayments on revolving credit agreements — — (386 ) — (386 ) Proceeds from debt offerings 300 — 1,300 — 1,600 Repayments of debt (300 ) (3 ) (131 ) — (434 ) Dividend payments (141 ) — — — (141 ) Proceeds from stock options exercised 19 — — — 19 Net proceeds from issuance of TLLP common units — — 949 — 949 Notes from general partner 243 — — (243 ) — Distributions to noncontrolling interest — — (96 ) — (96 ) Purchases of common stock (500 ) — — — (500 ) Taxes paid related to net share settlement of equity awards (22 ) — — — (22 ) Net intercompany borrowings (repayments) — (1,044 ) 603 441 — Distributions to TLLP unitholders and general partner — — (103 ) 103 — Payments of debt issuance costs (5 ) — (19 ) — (24 ) Excess tax benefits from stock-based compensation arrangements — 20 — — 20 Other financing activities (24 ) — (37 ) — (61 ) Net cash from (used in) financing activities (430 ) (1,027 ) 2,726 301 1,570 Decrease in Cash and Cash Equivalents — (218 ) (20 ) — (238 ) Cash and Cash Equivalents, Beginning of Year — 1,161 77 — 1,238 Cash and Cash Equivalents, End of Year $ — $ 943 $ 57 $ — $ 1,000 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation and Basis of Presentation, Consolidation Policy | The accompanying consolidated financial statements include the accounts of Tesoro and its subsidiaries. All intercompany accounts and transactions have been eliminated. We have evaluated subsequent events through the filing of this Form 10-K. Any material subsequent events that occurred during this time have been properly recognized or disclosed in our financial statements. Certain reclassifications have been made to prior period presentations to conform to the current year. In the first quarter of 2016 , we revised the process by which we reclassify certain logistics costs, primarily recognized by TLLP, during consolidation from operating expenses and selling, general and administrative expense to costs of sales. This better reflects the distribution costs related to Tesoro’s sale of refined products during the ordinary course of business. This change in process did not impact current or prior segment operating results. However, we reclassified $221 million and $28 million from costs of sales and recognized $177 million and $24 million in operating expenses and $44 million and $4 million in selling, general and administrative expenses of the condensed statement of consolidated operations for the years ended December 31, 2015 and 2014 , respectively, to conform to current period presentation. |
Principles of Consolidation and Basis of Presentation, VIE | Our consolidated financial statements include TLLP, a variable interest entity. Tesoro Logistics GP, LLC (“TLGP”), Tesoro’s fully consolidated subsidiary, serves as TLLP’s general partner. As the general partner of TLLP, we have the sole ability to direct the activities of TLLP that most significantly impact its economic performance. We are also considered to be the primary beneficiary for accounting purposes and are TLLP’s primary customer. Under our long-term transportation agreements with TLLP (discussed further below), transactions with us accounted for 59% , 55% and 83% of TLLP’s total revenues for the years ended December 31, 2016 , 2015 and 2014 , respectively. In the event TLLP incurs a loss, our operating results will reflect TLLP’s loss, net of intercompany eliminations, to the extent of our ownership interest in TLLP. All intercompany transactions with TLLP are eliminated upon consolidation. |
Use of Estimates | We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which requires management to make estimates and assumptions that affect the reported amounts and disclosures of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. We review our estimates on an ongoing basis, based on currently available information. Changes in facts and circumstances may result in revised estimates and actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and cash equivalents include bank deposits and low-risk short-term investments with original maturities of three months or less at the time of purchase. Cash equivalents are stated at cost, which approximates market value. We place our cash deposits and temporary cash investments with high credit quality financial institutions. Our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limit. Approximately $1.8 billion of our cash and cash equivalents are held in money market funds and are valued at the net asset value (“NAV”) of the fund as determined by the fund manager, using fixed and floating NAVs as a practical expedient. These money market funds are invested in high quality, short-term securities, including obligations issued or guaranteed by the U.S. government or its agencies, floating and variable rate demand notes of U.S. and foreign corporations and other short-term obligations with minimal volatility in principal. Currently, there are no redemption notice requirements or penalties, however, the funds may impose a fee upon the sale of the investment or may temporarily suspend our ability to sell shares if the liquidity falls below required minimums because of market conditions or other factors. |
Receivables | Our receivables primarily consist of customer accounts receivable. Open credit is extended based on an ongoing evaluation of our customers’ financial condition and other factors. In certain circumstances, we may require prepayments, letters of credit, guarantees, or other forms of collateral. Credit risk with respect to trade receivables is mitigated by the large number of customers comprising our customer base and their dispersion across various industries and geographic areas of operations. Our allowance for doubtful accounts is based on numerous factors including current sales amounts, historical charge-offs and specific accounts identified as high risk. After reasonable efforts to collect the amounts have been exhausted, balances are deemed uncollectible and are charged against the allowance for doubtful accounts. Write-offs were immaterial in 2016 , 2015 and 2014 . The Company does not have any off-balance-sheet credit exposure related to its customers. |
Inventories | Inventories are stated at the lower of cost or market. We use the last-in, first-out method to determine the cost of petroleum commodities, oxygenates and by-products held by our U.S. subsidiaries. We determine the carrying value of inventories of crude oil held by our foreign subsidiaries using the first-in, first-out cost method. We value merchandise along with materials and supplies at average cost. We reverse any lower of cost or market reserve in the subsequent period because the inventories are sold or used and then perform a complete lower of cost or market assessment of ending inventories at the end of each reporting period to determine if a reserve is required. |
Property, Plant and Equipment | We capitalize the cost of additions, major improvements and modifications to property, plant and equipment (“Property Assets”). The cost of repairs to, and normal maintenance of, Property Assets is expensed as incurred. Major improvements and modifications of Property Assets are those expenditures that extend the useful life, increase the capacity or improve the operating efficiency of the asset, or improve the safety of our operations. The cost of Property Assets constructed includes interest and certain overhead costs allocable to the construction activities. Capitalized interest totaled $31 million , $36 million and $25 million during 2016 , 2015 and 2014 , respectively, and is recorded as a reduction to net interest and financing costs in our statements of consolidated operations. We compute depreciation of Property Assets using the straight-line method, based on the estimated useful life and salvage value of each asset. The useful lives range from 3 to 28 years for Refining segment assets, 3 to 28 years for TLLP segment assets, 3 to 16 years for Marketing segment assets, and 3 to 25 years for corporate assets. We record Property Assets under capital leases at the lower of the present value of minimum lease payments using our incremental borrowing rate or the fair value of the leased property at the date of lease inception. We depreciate leasehold improvements and Property Assets acquired under capital leases over the lesser of the lease term or the economic life of the asset. Depreciation expense totaled $537 million , $491 million and $363 million for 2016 , 2015 and 2014 , respectively. ASSET RETIREMENT OBLIGATIONS. We record asset retirement obligations (“AROs”) at fair value in the period in which we have a legal obligation to incur costs, whether by government action or contractual arrangement, to retire a tangible asset and can make a reasonable estimate of the fair value of the liability. AROs are calculated based on the present value of the estimated removal and other closure costs using our credit-adjusted risk-free rate given an estimated settlement date for the obligation. We estimate settlement dates by considering our past practice, industry practice, management’s intent and estimated economic lives. We cannot currently estimate the fair value for certain potential AROs primarily because we cannot estimate settlement dates (or range of dates) associated with these assets. These AROs include, but are not limited to, the disposal of hazardous materials used in our production processes and the removal or dismantlement of refining and terminal facilities, pipelines and other buildings. We have not historically incurred significant AROs for hazardous materials disposal or other removal costs associated with asset retirements or replacements during scheduled maintenance projects. This precludes development of assumptions about the potential timing of settlement dates based on there being no plans to retire or dispose of the assets, our plans to extend the assets’ economic lives through scheduled maintenance and updating for technological advances, our history of rarely retiring similar assets in the past and industry practices for similar assets. As of December 31, 2016 and 2015 , we had $26 million and $30 million recorded for AROs, respectively. No material changes in AROs occurred in 2016 . During 2015 , as a result of our finalization of the purchase price allocation of TLLP’s Rockies Natural Gas Business Acquisition, we determined that majority of the AROs initially recognized were not estimable resulting in a $29 million reduction to our liability for AROs . |
Acquired Intangibles and Goodwill | Acquired intangibles are recorded at fair value as of the date acquired and consist primarily of customer relationships, air emission credits, refinery permits, trade names and plans and a master franchise license for the ampm ® convenience store brand (“ampm ® License”). We amortize acquired intangibles with finite lives on a straight-line basis over estimated useful lives of 1 to 35 years , and we include the amortization of acquired intangibles in depreciation and amortization expense in our statements of consolidated operations. Our indefinite-lived intangible assets consist of the ARCO ® brand and associated registered trademarks for certain of our retail stations as well as perpetual emission credits. See Note 7 for further information on our amortization expense for acquired intangibles. Goodwill represents the amount the purchase price exceeds the fair value of net assets acquired in a business combination. We do not amortize goodwill or indefinite-lived intangible assets. We are required, however, to review goodwill and indefinite-lived intangible assets for impairment annually, or more frequently if events or changes in business circumstances indicate the book value of the assets may not be recoverable. In such circumstances, we record the impairment in loss on asset disposals and impairments in our statements of consolidated operations. We review the recorded value of goodwill for impairment on November 1 st of each year, or sooner if events or changes in circumstances indicate the carrying amount may exceed fair value using qualitative and/or quantitative assessments at the reporting level. Our review of goodwill is discussed further in Note 7. |
Impairment of Long-Lived Assets | We review Property Assets and other long-lived assets, including acquired intangible assets with finite lives, for impairment whenever events or changes in business circumstances indicate the net book values of the assets may not be recoverable. Impairment is indicated when the undiscounted cash flows estimated to be generated by those assets are less than the assets’ net book value. If this occurs, an impairment loss is recognized for the difference between the fair value and net book value. Factors that indicate potential impairment include: a significant decrease in the market value of the asset, operating or cash flow losses associated with the use of the asset and a significant change in the asset’s physical condition or use. |
Investments - Equity Method and Joint Ventures | For equity investments that are not required to be consolidated under the variable interest model, we evaluate the level of influence we are able to exercise over an entity’s operations to determine whether to use the equity method of accounting. Our judgment regarding the level of control over an equity method investment includes considering key factors such as our ownership interest, participation in policy-making and other significant decisions and material intercompany transactions. Amounts recognized for equity method investments are included in other noncurrent assets in our consolidated balance sheets and adjusted for our share of the net earnings or losses of the investee, which are presented separately in our statements of consolidated operations, capital contributions made and cash dividends received. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. An impairment loss is recorded in earnings in the current period to write down the carrying value of the investment to fair value if a decline in the value of an equity method investment is determined to be other than temporary. |
Other Noncurrent Assets | We defer turnaround costs and the costs of certain catalysts (“Deferred Charges”) used in the refinery processing units that have a benefit period that exceeds one year and amortize these costs on a straight-line basis over the expected periods of benefit, normally ranging from 2 to 10 years . Deferred Charges are amortized over the period of time until the next planned turnaround of the processing unit. |
Derivative Instruments | We use non-trading derivative instruments to manage exposure to commodity price risks associated with the purchase or sale of feedstocks, refined products and energy supplies to or from our refineries, terminals, marketing operations and customers. We also use non-trading derivative instruments to manage price risks associated with inventories above or below our target levels. These derivative instruments typically involve physical commodity forward purchase and sale contracts (“Forward Contracts”), exchange-traded futures (“Futures Contracts”), over-the-counter swaps, including those cleared on an exchange (“Swap Contracts”), options (“Options”) and over-the-counter options (“OTC Option Contracts”), most of which had remaining durations of less than one year as of December 31, 2016 . Our positions are monitored daily by our trading controls group to ensure compliance with our risk management policies. We mark-to-market our derivative instruments and recognize the changes in their fair values, realized or unrealized, in either revenues or cost of sales in our statements of consolidated operations, depending on the purpose for acquiring and holding the derivatives. All derivatives are recorded and carried at fair value in receivables, other current assets or accounts payable in our consolidated balance sheets. Margin deposits represent cash collateral paid between our counterparties and us to support our commodity contracts. We net our asset and liability positions associated with multiple derivative instruments that are executed with the same counterparty under master netting arrangements. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. Our accounting for derivative instruments depends on whether the underlying commodity will be used or sold in the normal course of business. For contracts where the crude oil or refined products are expected to be used or sold in the normal course of business, we apply the normal purchase normal sale exception and follow the accrual method of accounting. All other derivative instruments are recorded at fair value using mark-to-market accounting. Our derivative instruments can include Forward Contracts, Futures Contracts, over-the-counter swaps, including swap Contracts, Options, and OTC Option Contracts. Forward Contracts are agreements to buy or sell the commodity at a predetermined price at a specified future date. Futures Contracts are standardized agreements, traded on a futures exchange, to buy or sell the commodity at a predetermined price at a specified future date. Options provide the right, but not the obligation to buy or sell the commodity at a specified price in the future. Swap Contracts and OTC Option Contracts require cash settlement for the commodity based on the difference between a contracted fixed or floating price and the market price on the settlement date. Certain of these contracts require cash collateral to be received or paid if our asset or liability position, respectively, exceeds specified thresholds. We believe that we have minimal credit risk with respect to our counterparties. |
Financial Instruments | The carrying value of certain of our financial instruments, including cash and cash equivalents, receivables, accounts payable and certain accrued liabilities approximate fair value primarily because of the short-term maturities of these instruments. The borrowings under the Tesoro Corporation revolving credit facility (our “Revolving Credit Facility”), the TLLP Revolving Credit Facility (the “TLLP Revolving Credit Facility”), and TLLP’s drop down credit facility agreement (the “TLLP Dropdown Facility”), which include variable interest rates, approximate fair value. We estimate the fair value for our fixed rate debt primarily using prices from recent trade activity. We classify financial assets and liabilities according to the fair value hierarchy. Financial assets and liabilities classified as level 1 instruments are valued based on quoted prices in active markets for identical assets and liabilities. Level 2 instruments are valued based on quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices, such as liquidity, that are observable for the asset or liability. Our level 2 instruments include derivatives valued using market quotations from independent price reporting agencies, third-party brokers and commodity exchange price curves that are corroborated with market data. Level 3 instruments are valued using significant unobservable inputs that are not supported by sufficient market activity. We do not have any financial assets or liabilities classified as level 3 at December 31, 2016 or December 31, 2015 . Our financial assets and liabilities measured at fair value on a recurring basis include derivative instruments. Additionally, our financial liabilities include obligations for RINs and cap and trade emission credits for the state of California (together with RINs, our “Environmental Credit Obligations”). See Note 10 for further information on our derivative instruments. |
Income Taxes | We record deferred tax assets and liabilities for future income tax consequences that are attributable to differences between the financial statement carrying amounts of assets and liabilities and their income tax bases. We base the measurement of deferred tax assets and liabilities on enacted tax rates that we expect will apply to taxable income in the year we expect to settle or recover those temporary differences. We recognize the effect on deferred tax assets and liabilities of any change in income tax rates in the period that includes the enactment date. We provide a valuation allowance for deferred tax assets if it is more likely than not that those items will either expire before we are able to realize their benefit or their future deductibility is uncertain. We recognize the financial statement effects of a tax position when it is more likely than not that the position will be sustained upon examination. We use the flow-through method to account for state investment tax credits earned on eligible capital expenditures. Under this method, the investment tax credits are recognized as a reduction to income tax expense in the year they are earned, except to the extent there is a continuing obligation. For interest and penalties relating to income taxes we recognize accrued interest in net interest and financing costs and penalties in selling, general and administrative expenses in the statements of consolidated operations. |
Pension and Other Postretirement Benefits | We recognize separately the overfunded or underfunded status of our pension and other postretirement plans as an asset or liability. A change in the funded status of our defined benefit retirement plan is recognized in other comprehensive income in the period the change occurs. The funded status represents the difference between the projected benefit obligation and the fair value of the plan assets. The projected benefit obligation is the present value of benefits earned to date by plan participants, including the effect of assumed future salary increases. Plan assets are measured at fair value. We use a December 31 st measurement date for plan assets and obligations for all of our plans. |
Environmental Matters | ENVIRONMENTAL MATTERS. We are subject to extensive federal, state and local environmental laws and regulations. These laws, which change frequently, regulate the discharge of materials into the environment and may require us to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites, install additional controls or make other modifications to certain emission sources, equipment or facilities. We capitalize environmental expenditures that extend the life or increase the capacity of facilities as well as expenditures that prevent environmental contamination. We expense costs that relate to an existing condition caused by past operations and that do not contribute to current or future revenue generation. We record liabilities when environmental assessments and/or remedial efforts are probable and can be reasonably estimated. Cost estimates are based on the expected timing and extent of remedial actions required by governing agencies, experience gained from similar sites for which environmental assessments or remediation have been completed and the amount of our anticipated liability considering the proportional liability and financial abilities of other responsible parties. Usually, the timing of these accruals coincides with the completion of a feasibility or engineering study and or our commitment to a formal plan of action where a range of costs can be reliably estimated and supported. Estimated liabilities are not discounted to present value and environmental expenses are recorded primarily in operating expenses in our statements of consolidated operations. |
Asset Retirement Obligations | We record asset retirement obligations (“AROs”) at fair value in the period in which we have a legal obligation to incur costs, whether by government action or contractual arrangement, to retire a tangible asset and can make a reasonable estimate of the fair value of the liability. AROs are calculated based on the present value of the estimated removal and other closure costs using our credit-adjusted risk-free rate given an estimated settlement date for the obligation. We estimate settlement dates by considering our past practice, industry practice, management’s intent and estimated economic lives. We cannot currently estimate the fair value for certain potential AROs primarily because we cannot estimate settlement dates (or range of dates) associated with these assets. These AROs include, but are not limited to, the disposal of hazardous materials used in our production processes and the removal or dismantlement of refining and terminal facilities, pipelines and other buildings. We have not historically incurred significant AROs for hazardous materials disposal or other removal costs associated with asset retirements or replacements during scheduled maintenance projects. This precludes development of assumptions about the potential timing of settlement dates based on there being no plans to retire or dispose of the assets, our plans to extend the assets’ economic lives through scheduled maintenance and updating for technological advances, our history of rarely retiring similar assets in the past and industry practices for similar assets. |
Legal Liabilities | LEGAL MATTERS. In the ordinary course of business, we become party to lawsuits, administrative proceedings and governmental investigations. These matters may involve large or unspecified damages or penalties that may be sought from us and may require years to resolve. We record a liability related to a loss contingency attributable to such legal matters in accrued liabilities or other noncurrent liabilities on our consolidated balance sheet, depending on the classification as current or noncurrent if we determine the loss to be both probable and estimable. The liability is recorded for an amount that is management’s best estimate of the loss, or when a best estimate cannot be made, the minimum loss amount of a range of possible outcomes. |
Acquisitions | We use the acquisition method of accounting for the recognition of assets acquired and liabilities assumed with acquisitions at their estimated fair values as of the date of acquisition. Any excess consideration transferred over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. While we use our best estimates and assumptions to measure the fair value of the identifiable assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, not to exceed one year from the date of acquisition, any changes in the estimated fair values of the net assets recorded for the acquisitions will result in an adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our statements of consolidated operations. |
Revenue Recognition | We recognize revenues upon delivery of goods or services to a customer. For goods, this is the point at which title is transferred and when payment has either been received or collection is reasonably assured. Revenues for services are recorded when the services have been provided. We record certain transactions in cost of sales in our statements of consolidated operations on a net basis. These transactions include nonmonetary crude oil and refined product exchange transactions used to optimize our refinery supply, and sale and purchase transactions entered into with the same counterparty that are deemed to be in contemplation with one another. We include transportation and processing fees charged to customers in revenues in our statements of consolidated operations, while the related costs are included in cost of sales. Federal excise and state motor fuel taxes, which are remitted to governmental agencies through our refining segment and collected from customers in our marketing segment, are included in both revenues and cost of sales in our statements of consolidated operations. These taxes were primarily related to sales of gasoline and diesel fuel from continuing operations and totaled $577 million , $561 million and $581 million in 2016 , 2015 and 2014 , respectively. |
Stock-Based Compensation | Our stock-based compensation includes stock appreciation rights (“SARs”), performance share awards, market stock units, stock options, restricted common stock, restricted stock units, and phantom stock options. The grant date fair value of performance share awards based on performance conditions, restricted common stock awards and restricted stock units are equal to the market price of our common stock on the date of grant. The fair values of market stock units and stock options are estimated using the Monte Carlo simulation and the Black-Scholes option-pricing model, respectively, on the date of grant. The fair values of our SARs, phantom stock options and certain performance share awards based on market conditions are remeasured at the end of each reporting period. SARs and phantom stock options are recorded in other current liabilities in our statement of financial position. We primarily amortize the fair value of our stock-based awards using the straight-line method over the vesting period. Our stock-based compensation expense includes estimates for forfeitures and volatility based on our historical experience. If actual forfeitures differ from our estimates, we adjust stock-based compensation expense accordingly. Expenses related to stock-based compensation are included in selling, general and administrative expenses in our statements of consolidated operations. |
Earnings Per Share | We compute basic earnings per share by dividing net earnings attributable to Tesoro Corporation stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share include the effects of potentially dilutive shares, principally consisting of common stock options and unvested restricted stock, restricted stock units, market stock units and performance share awards outstanding during the period. Additionally, for the diluted earnings per share computation, net earnings attributable to Tesoro Corporation is reduced, where applicable, for the decrease in earnings from Tesoro’s limited partner unit ownership in TLLP that would have resulted assuming the incremental units related to TLLP’s equity incentive plans had been issued during the respective periods. |
New Accounting Standards and Disclosures | REVENUE RECOGNITION. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”) and has since amended the standard with ASU 2015-14, “Revenue from Contracts with Customers: Deferral of the Effective Date”, ASU 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, ASU 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing”, and ASU 2016-12, “Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients”. These standards replace existing revenue recognition rules with a single comprehensive model to use in accounting for revenue arising from contracts with customers. We are required to adopt ASU 2014-09 on January 1, 2018. We have been and continue to evaluate the impact of the standard’s revenue recognition model on our contracts with customers in the refining, marketing and TLLP segments. While we have made substantial progress in our review and documentation of the impact of the standard on our revenue agreements, we continue to assess the impact in certain other areas where industry consensus continues to be formed such as agreements with terms that include non-cash consideration and tiered pricing structures. At this time, we are unable to estimate the full impact of the standard until the industry reaches a consensus on certain industry specific issues, especially in relation to the TLLP segment. However, we do not expect the standard to have a material impact to the amount or timing of revenues recognized for the vast majority of our revenue arrangements in the Refining and Marketing segments. We are currently in early stages of our implementation plan and are evaluating the impact of the standard on our business processes, accounting systems, controls and financial statement disclosures. We preliminarily expect to transition to the new standard under the modified retrospective transition method, whereby a cumulative effect adjustment is recognized upon adoption and the guidance is applied prospectively. CONSOLIDATION. In February 2015, the FASB issued ASU 2015-02 “Amendments to the Consolidation Analysis” (“ASU 2015-02”). This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for interim and annual periods beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption. We adopted this guidance using the modified retrospective approach as of January 1, 2016 and performed the required reassessments outlined by the guidance. For further information on the results of the reassessments, refer to Note 8, Investments - Equity Method and Joint Ventures. BUSINESS COMBINATION. In September 2015, the FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments” (“ASU 2015-16”). The standard requires an acquirer to recognize the cumulative impact of adjustments to provisional purchase price amounts that are identified during the measurement period in the reporting period, in which the adjustment amounts are determined. The standard also requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provision amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for the interim and annual periods beginning after December 15, 2015, and must be applied prospectively to adjustments that occur after the effective date. Early application is permitted for financial statements that have not been issued. We adopted this guidance as of January 1, 2016 with no impact to our financial statements. LEASES. In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”), which amends existing accounting standards for lease accounting and adds additional disclosures about leasing arrangements. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement and presentation of cash flow in the statement of cash flows. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within those annual reporting periods. Early adoption is permitted and modified retrospective application is required. We are still evaluating the impact of ASU 2016-02 on our financial statements. SHARE-BASED COMPENSATION. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), which simplifies several aspects of the accounting for employee share-based payment transactions including accounting for income taxes, cash flow presentation of tax impacts, forfeitures, and liability versus equity accounting due to statutory tax withholding requirements. ASU 2016-09 is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. As of January 1, 2016, we early adopted ASU 2016-09 on a prospective basis and with respect to the guidance on forfeitures, we have elected to continue to estimate forfeitures on the date of grant to account for the estimated number of awards for which the requisite service period will not be rendered. The adoption of ASU 2016-09 had a $16 million impact for the year ended December 31, 2016 , resulting in a lower effective tax rate and immaterial changes to our cash flow presentation. CREDIT LOSSES. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which amends guidance on the impairment of financial instruments. The ASU estimates credit losses based on expected losses, modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, and interim reporting periods within those annual reporting periods. Early adoption is permitted for annual reporting periods beginning after December 15, 2018. While we are still evaluating the impact of ASU 2016-13, we do not expect the adoption of this standard to have a material impact on our financial statements. STATEMENT OF CASH FLOWS. In August 2016, the FASB issued ASU 2016-15, “Clarification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”), which eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. ASU 2016-15 is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. The amendments in this update should be applied retrospectively to all periods presented, unless deemed impracticable, in which case, prospective application is permitted. We early adopted this standard retrospectively as of December 31, 2016 , which did not have an impact on our financial statements. DEFINITION OF A BUSINESS. In January 2017, the FASB issued ASU 2017-01, “Clarifying the Definition of a Business” (“ASU 2017-01”), which revises the definition of a business and assists in the evaluation of when a set of transferred assets and activities is a business. ASU 2017-01 is effective for interim and annual reporting periods beginning after December 15, 2017, and should be applied prospectively on or after the effective date. Early adoption is permitted under certain circumstances. At this time, we are evaluating the potential impact of this standard on our financial statements. |
Note 5 - Receivables and Invent
Note 5 - Receivables and Inventories Inventories (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories are stated at the lower of cost or market. We use the last-in, first-out method to determine the cost of petroleum commodities, oxygenates and by-products held by our U.S. subsidiaries. We determine the carrying value of inventories of crude oil held by our foreign subsidiaries using the first-in, first-out cost method. We value merchandise along with materials and supplies at average cost. We reverse any lower of cost or market reserve in the subsequent period because the inventories are sold or used and then perform a complete lower of cost or market assessment of ending inventories at the end of each reporting period to determine if a reserve is required. |
Note 10 - Derivative Instrument
Note 10 - Derivative Instruments Derivative Instruments (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives, Policy | We use non-trading derivative instruments to manage exposure to commodity price risks associated with the purchase or sale of feedstocks, refined products and energy supplies to or from our refineries, terminals, marketing operations and customers. We also use non-trading derivative instruments to manage price risks associated with inventories above or below our target levels. These derivative instruments typically involve physical commodity forward purchase and sale contracts (“Forward Contracts”), exchange-traded futures (“Futures Contracts”), over-the-counter swaps, including those cleared on an exchange (“Swap Contracts”), options (“Options”) and over-the-counter options (“OTC Option Contracts”), most of which had remaining durations of less than one year as of December 31, 2016 . Our positions are monitored daily by our trading controls group to ensure compliance with our risk management policies. We mark-to-market our derivative instruments and recognize the changes in their fair values, realized or unrealized, in either revenues or cost of sales in our statements of consolidated operations, depending on the purpose for acquiring and holding the derivatives. All derivatives are recorded and carried at fair value in receivables, other current assets or accounts payable in our consolidated balance sheets. Margin deposits represent cash collateral paid between our counterparties and us to support our commodity contracts. We net our asset and liability positions associated with multiple derivative instruments that are executed with the same counterparty under master netting arrangements. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. Our accounting for derivative instruments depends on whether the underlying commodity will be used or sold in the normal course of business. For contracts where the crude oil or refined products are expected to be used or sold in the normal course of business, we apply the normal purchase normal sale exception and follow the accrual method of accounting. All other derivative instruments are recorded at fair value using mark-to-market accounting. Our derivative instruments can include Forward Contracts, Futures Contracts, over-the-counter swaps, including swap Contracts, Options, and OTC Option Contracts. Forward Contracts are agreements to buy or sell the commodity at a predetermined price at a specified future date. Futures Contracts are standardized agreements, traded on a futures exchange, to buy or sell the commodity at a predetermined price at a specified future date. Options provide the right, but not the obligation to buy or sell the commodity at a specified price in the future. Swap Contracts and OTC Option Contracts require cash settlement for the commodity based on the difference between a contracted fixed or floating price and the market price on the settlement date. Certain of these contracts require cash collateral to be received or paid if our asset or liability position, respectively, exceeds specified thresholds. We believe that we have minimal credit risk with respect to our counterparties. |
Fair Value Measurements (Polici
Fair Value Measurements (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments, Policy | The carrying value of certain of our financial instruments, including cash and cash equivalents, receivables, accounts payable and certain accrued liabilities approximate fair value primarily because of the short-term maturities of these instruments. The borrowings under the Tesoro Corporation revolving credit facility (our “Revolving Credit Facility”), the TLLP Revolving Credit Facility (the “TLLP Revolving Credit Facility”), and TLLP’s drop down credit facility agreement (the “TLLP Dropdown Facility”), which include variable interest rates, approximate fair value. We estimate the fair value for our fixed rate debt primarily using prices from recent trade activity. We classify financial assets and liabilities according to the fair value hierarchy. Financial assets and liabilities classified as level 1 instruments are valued based on quoted prices in active markets for identical assets and liabilities. Level 2 instruments are valued based on quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices, such as liquidity, that are observable for the asset or liability. Our level 2 instruments include derivatives valued using market quotations from independent price reporting agencies, third-party brokers and commodity exchange price curves that are corroborated with market data. Level 3 instruments are valued using significant unobservable inputs that are not supported by sufficient market activity. We do not have any financial assets or liabilities classified as level 3 at December 31, 2016 or December 31, 2015 . Our financial assets and liabilities measured at fair value on a recurring basis include derivative instruments. Additionally, our financial liabilities include obligations for RINs and cap and trade emission credits for the state of California (together with RINs, our “Environmental Credit Obligations”). See Note 10 for further information on our derivative instruments. |
Note 13 - Income Taxes Income T
Note 13 - Income Taxes Income Taxes (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | We record deferred tax assets and liabilities for future income tax consequences that are attributable to differences between the financial statement carrying amounts of assets and liabilities and their income tax bases. We base the measurement of deferred tax assets and liabilities on enacted tax rates that we expect will apply to taxable income in the year we expect to settle or recover those temporary differences. We recognize the effect on deferred tax assets and liabilities of any change in income tax rates in the period that includes the enactment date. We provide a valuation allowance for deferred tax assets if it is more likely than not that those items will either expire before we are able to realize their benefit or their future deductibility is uncertain. We recognize the financial statement effects of a tax position when it is more likely than not that the position will be sustained upon examination. We use the flow-through method to account for state investment tax credits earned on eligible capital expenditures. Under this method, the investment tax credits are recognized as a reduction to income tax expense in the year they are earned, except to the extent there is a continuing obligation. For interest and penalties relating to income taxes we recognize accrued interest in net interest and financing costs and penalties in selling, general and administrative expenses in the statements of consolidated operations. |
Note 15 - Commitments and Con34
Note 15 - Commitments and Contingencies Commitments and Contingencies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Regulatory Environmental Costs, Policy [Policy Text Block] | Our environmental accruals are based on estimates including engineering assessments, and it is possible that our projections will change and that additional costs will be recorded as more information becomes available. |
Note 4 - Discontinued Operati35
Note 4 - Discontinued Operations Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | REVENUES AND EARNINGS (LOSS), BEFORE AND AFTER TAX FROM THE DISCONTINUED HAWAII BUSINESS (in millions) Years Ended December 31, 2016 2015 2014 Earnings (loss) from discontinued operations, before tax (a) $ 17 $ (6 ) $ (46 ) Less: income tax expense (benefit) 7 (2 ) (17 ) Earnings (loss) from discontinued operations, net of tax $ 10 $ (4 ) $ (29 ) (a) Includes charges totaling $6 million and $42 million for the years ended December 31, 2015 and 2014 , respectively, related to regulatory improvements we are obligated to make at the at the Hawaii refinery to resolve the Clean Air Act matters discussed in Note 15. There were no additional charges during the year ended December 31, 2016 . |
Note 5 - Receivables and Inve36
Note 5 - Receivables and Inventories Receivables (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Receivables And Inventories [Abstract] | |
Schedule of Receivables | COMPONENTS OF RECEIVABLES (in millions) December 31, 2016 2015 Trade receivables $ 1,092 $ 778 Tax receivables 21 22 Other receivables 2 5 Allowance for doubtful accounts (a) (7 ) (13 ) Total Receivables, Net $ 1,108 $ 792 (a) Allowances for doubtful accounts of $7 million and $13 million at December 31, 2016 and 2015 , respectively, relate to estimated uncollectible amounts on our trade receivables. |
Schedule of Inventory, Current | COMPONENTS OF INVENTORIES (in millions) December 31, 2016 2015 Domestic crude oil and refined products $ 2,099 $ 2,142 Foreign subsidiary crude oil 310 325 Materials and supplies 149 140 Oxygenates and by-products 81 54 Merchandise 1 — Less: Lower of cost or market reserve — (359 ) Total Inventories, Net $ 2,640 $ 2,302 |
Property, Plant and Equipment37
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | PROPERTY, PLANT AND EQUIPMENT (in millions) December 31, 2016 2015 Refining $ 8,067 $ 7,189 TLLP 4,059 4,162 Marketing 934 915 Corporate 412 296 Property, Plant and Equipment, at Cost 13,472 12,562 Accumulated depreciation (3,496 ) (3,021 ) Property, Plant and Equipment, Net $ 9,976 $ 9,541 |
Note 7 - Acquired Intangibles a
Note 7 - Acquired Intangibles and Goodwill Acquired Intangibles and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Acquired Intangibles | NET BOOK VALUE FOR EACH MAJOR CLASS OF ACQUIRED INTANGIBLE ASSETS, EXCLUDING GOODWILL (in millions) December 31, 2016 December 31, 2015 Historical Cost Accumulated Amortization Net Book Value Historical Cost Accumulated Amortization Net Book Value Business relationships (a) $ 1,071 $ 81 $ 990 $ 1,008 $ 32 $ 976 Refining operating permits, emissions credits and other 331 137 194 283 128 155 Trade names 49 17 32 49 15 34 ampm ® license 31 4 27 31 3 28 Marketing supply network 45 29 16 46 28 18 Intellectual property 18 — 18 — — — Total $ 1,545 $ 268 $ 1,277 $ 1,417 $ 206 $ 1,211 (a) In connection with the Rockies Natural Gas Business acquisition in 2014, TLLP recognized $1.0 billion of business relationships associated with the acquired natural gas processing and gathering operations. The value for the identified business relationships consists of cash flows expected from existing contracts and future arrangements from the existing customer base. The amounts and useful lives associated with these business relationships were finalized within TLLP’s measurement period of the purchase price allocation. In addition, during 2016 , we recognized $44 million and $19 million of business relationships associated with the FHR and Great Northern Midstream acquisitions, respectively. |
Note 8 - Investments - Equity39
Note 8 - Investments - Equity Method and Joint Ventures Investment in Joint Ventures (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | EQUITY METHOD INVESTMENTS (in millions) Watson Vancouver Energy TLLP RGS TRG UBFS Total Balance at December 31, 2014 $ 103 $ 9 $ — $ 40 $ 18 $ 170 Investments — 1 — 3 (b) — (b) 4 Equity in earnings (loss) 1 (1 ) — 5 2 7 Distributions received (12 ) — — (6 ) (4 ) (22 ) Balance at December 31, 2015 (a) 92 9 — 42 16 159 Effect of deconsolidation (c) — — 295 — — 295 Effect of consolidation (d) — (8 ) — — — (8 ) Equity in earnings (loss) 1 (1 ) 8 2 3 13 Distributions received (10 ) — (22 ) (4 ) (3 ) (39 ) Balance at December 31, 2016 (a) $ 83 $ — $ 281 $ 40 $ 16 $ 420 (a) The carrying amount of our investments in Watson, RGS, TRG and UBFS exceeded the underlying equity in net assets by $65 million , $135 million , $16 million and $7 million , respectively, at December 31, 2016 . The carrying amount of our investments in Watson, TRG and UBFS exceeded the underlying equity in net assets by $68 million , $17 million and $8 million , respectively, at December 31, 2015 . The carrying amounts of our investments that exceed the underlying equity in net assets are amortized over the useful life of the underlying fixed assets and included in equity in earnings (loss). (b) Includes the final fair value adjustment resulting from measurement period changes related to TLLP’s Rockies Natural Gas Business in 2015. (c) The reassessment of the investments performed by TLLP resulted in the deconsolidation of RGS and the reporting of RGS as an equity method investment. TLLP recognized an increase of $295 million to equity method investments as of January 1, 2016 as a result of the deconsolidation. (d) Effective September 1, 2016 , we became majority owner of our venture with Savage Companies to construct, own and operate a unit train unloading and marine loading terminal at Port of Vancouver, USA (the “Vancouver Energy” terminal). As a result, Vancouver Energy was consolidated. |
Note 9 - Other Assets and Liabi
Note 9 - Other Assets and Liabilities Other Assets and Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Other Liabilities [Abstract] | |
Schedule of Other Assets, Noncurrent | COMPONENTS OF NONCURRENT ASSETS (in millions) December 31, 2016 2015 Deferred charges, net of amortization $ 743 $ 650 Investments - equity method and joint ventures 420 159 Goodwill 190 188 Deferred branding costs, net of amortization 160 95 Environmental credits 89 97 Other assets, net of amortization 129 84 Total Other Noncurrent Assets $ 1,731 $ 1,273 |
Schedule of Other Liabilities | COMPONENTS OF OTHER CURRENT LIABILITIES AND OTHER NONCURRENT LIABILITIES (in millions) December 31, 2016 2015 Other Current Liabilities: Taxes other than income taxes $ 288 $ 320 Employee costs 229 298 RINs liabilities 126 40 Environmental credit obligations 123 — Interest 62 46 Environmental liabilities 60 64 Income taxes payable 38 — Current liabilities related to discontinued operations 22 22 Pension and other postretirement benefits 11 10 Asset retirement obligations 6 5 Legal costs 2 5 Other 90 146 Total Other Current Liabilities $ 1,057 $ 956 Other Noncurrent Liabilities: Pension and other postretirement benefits $ 430 $ 401 Environmental liabilities 167 191 Employee costs, excluding pension and other postretirement benefits 50 35 Environmental credit obligations 42 10 Deferred income 39 37 Asset retirement obligations 20 25 Liability for unrecognized tax benefits, including interest and penalties 8 7 Noncurrent liabilities related to discontinued operations 1 19 Other 64 48 Total Other Noncurrent Liabilities $ 821 $ 773 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position | The following table presents the fair value of our derivative instruments as of December 31, 2016 and 2015 . The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under the terms of our master netting arrangements including cash collateral on deposit with, or received from, brokers. We offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements when a legal right of offset exists. As a result, the asset and liability amounts below will not agree with the amounts presented in our consolidated balance sheets. DERIVATIVE ASSETS AND LIABILITIES (in millions) Derivative Assets Derivative Liabilities Balance Sheet Location December 31, December 31, December 31, December 31, Commodity Futures Contracts Prepayments and other current assets $ 821 $ 711 $ 871 $ 673 Commodity Swap Contracts Prepayments and other current assets 11 15 13 14 Commodity Swap Contracts Receivables — 7 — — Commodity Swap Contracts Accounts payable — — 2 — Commodity Option Contracts Prepayments and other current assets 1 — — — Commodity Forward Contracts Receivables 6 2 — — Commodity Forward Contracts Accounts payable — — 2 4 Total Gross Mark-to-Market Derivatives 839 735 888 691 Less: Counterparty Netting and Cash Collateral (a) (744 ) (675 ) (832 ) (687 ) Total Net Fair Value of Derivatives $ 95 $ 60 $ 56 $ 4 (a) Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of December 31, 2016 and December 31, 2015 , we had provided cash collateral amounts of $88 million and $12 million , respectively, related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. |
Schedule of Mark-to-Market Derivatives | GAIN (LOSSES) ON MARK-TO-MARKET DERIVATIVES (in millions) Years Ended December 31, 2016 2015 2014 Commodity Contracts $ (67 ) $ 279 $ 482 Foreign Currency Forward Contracts (a) — (6 ) (5 ) Total Gain (Loss) Mark-to-Market Derivatives $ (67 ) $ 273 $ 477 (a) Losses for our foreign currency forward contracts are located in other income, net in our statements of consolidated operations. INCOME STATEMENT LOCATION OF GAINS (LOSSES) ON MARK-TO-MARKET DERIVATIVES (in millions) Years Ended December 31, 2016 2015 2014 Revenues $ (4 ) $ 67 $ 26 Cost of sales (63 ) 212 456 Other income, net — (6 ) (5 ) Total Gain (Loss) on Mark-to-Market Derivatives $ (67 ) $ 273 $ 477 |
Schedule of Open Long (Short) Positions | OUTSTANDING COMMODITY AND OTHER CONTRACTS (units in thousands) Contract Volumes by Year of Maturity Mark-to-Market Derivative Instrument 2017 2018 Unit of Measure Crude oil, refined products and blending products: Futures - short (6,457 ) — Barrels Futures - long — 15 Barrels Swap Contracts - long 467 — Barrels Forwards - short (261 ) — Barrels Environmental credits: Futures - long 1,000 — Tons Corn: Futures - short (6,310 ) — Bushels |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE (in millions) December 31, 2016 Level 1 Level 2 Level 3 Netting and Collateral (a) Total Assets: Commodity Futures Contracts $ 821 $ — $ — $ (733 ) $ 88 Commodity Swap Contracts — 11 — (11 ) — Commodity Option Contracts 1 — — — 1 Commodity Forward Contracts — 6 — — 6 Total Assets $ 822 $ 17 $ — $ (744 ) $ 95 Liabilities: Commodity Futures Contracts $ 870 $ 1 $ — $ (821 ) $ 50 Commodity Swap Contracts — 15 — (11 ) 4 Commodity Forward Contracts — 2 — — 2 Environmental Credit Obligations — 79 — — 79 Total Liabilities $ 870 $ 97 $ — $ (832 ) $ 135 December 31, 2015 Level 1 Level 2 Level 3 Netting and Collateral (a) Total Assets: Commodity Futures Contracts $ 711 $ — $ — $ (660 ) $ 51 Commodity Swap Contracts — 22 — (15 ) 7 Commodity Forward Contracts — 2 — — 2 Total Assets $ 711 $ 24 $ — $ (675 ) $ 60 Liabilities: Commodity Futures Contracts $ 673 $ — $ — $ (673 ) $ — Commodity Swap Contracts — 14 — (14 ) — Commodity Forward Contracts — 4 — — 4 Environmental Credit Obligations — 40 — — 40 Total Liabilities $ 673 $ 58 $ — $ (687 ) $ 44 (a) Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of December 31, 2016 and December 31, 2015 , we had provided cash collateral amounts of $88 million and $12 million , respectively, related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | TOTAL DEBT COMPOSITION (in millions) December 31, 2016 2015 Revolving credit facilities: Tesoro Corporation Revolving Credit Facility $ — $ — TLLP Revolving Credit Facility 330 305 TLLP Dropdown Credit Facility — — Tesoro debt: Term Loan Facility 64 — 4.250% Senior Notes due 2017 450 450 5.375% Senior Notes due 2022 475 475 4.750% Senior Notes due 2023 850 — 5.125% Senior Notes due 2024 300 300 5.125% Senior Notes due 2026 750 — TLLP debt: TLLP Unsecured Term Loan Facility — 250 TLLP 5.500% Senior Notes due 2019 500 500 TLLP 5.875% Senior Notes due 2020 (a) 470 470 TLLP 6.125% Senior Notes due 2021 (a) 800 550 TLLP 6.250% Senior Notes due 2022 800 800 TLLP 6.375% Senior Notes due 2024 450 — TLLP 5.250% Senior Notes due 2025 750 — Capital lease obligations and other 53 47 Total Debt 7,042 4,147 Unamortized issuance costs (a) (b) (109 ) (74 ) Current maturities, net of unamortized issuance costs (465 ) (6 ) Debt, Net of Current Maturities and Unamortized Issuance Costs $ 6,468 $ 4,067 (a) Unamortized premiums of $4 million associated with these senior notes are included in unamortized issuance costs at both December 31, 2016 and 2015 . (b) Unamortized debt issuance costs of $113 million and $78 million are recorded as a reduction to debt on the balance sheet at December 31, 2016 and 2015 , respectively. |
Credit Facility | |
Schedule of Line of Credit Facilities | AVAILABLE CAPACITY UNDER CREDIT FACILITIES (in millions) Total Capacity Amount Borrowed as of December 31, 2016 Outstanding Letters of Credit Available Capacity Expiration Tesoro Corporation Revolving Credit Facility (a) $ 2,000 $ — $ 4 $ 1,996 September 30, 2020 TLLP Revolving Credit Facility 600 330 — 270 January 29, 2021 TLLP Dropdown Credit Facility 1,000 — — 1,000 January 29, 2021 Letter of Credit Facilities 975 — 22 953 Total Credit Facilities $ 4,575 $ 330 $ 26 $ 4,219 (a) The $2.0 billion total capacity does not include the additional $1.0 billion related to the incremental revolving facility, as discussed further below. EXPENSES AND FEES OF OUR CREDIT FACILITIES Credit Facility 30 day Eurodollar (LIBOR) Rate Eurodollar Margin Base Rate Base Rate Margin Commitment Fee (unused portion) Tesoro Corporation Revolving Credit Facility 0.77% 1.75% 3.75% 0.75% 0.300% TLLP Revolving Credit Facility ($600 million) 0.77% 2.00% 3.75% 1.00% 0.375% TLLP Dropdown Credit Facility ($1.0 billion) 0.77% 2.01% 3.75% 1.01% 0.375% |
Capital Lease Obligations | FUTURE MINIMUM ANNUAL LEASE PAYMENTS, INCLUDING INTEREST FOR CAPITAL LEASES (in millions) December 31, 2016 2017 $ 9 2018 10 2019 9 2020 6 2021 5 Thereafter 12 Total minimum lease payments 51 Less amount representing interest (8 ) Capital Lease Obligations $ 43 |
Note 13 - Income Taxes Income44
Note 13 - Income Taxes Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense | COMPONENTS OF INCOME TAX EXPENSE FROM CONTINUING OPERATIONS (in millions) Years Ended December 31, 2016 2015 2014 Current: Federal $ 195 $ 697 $ 244 State 36 172 42 Deferred: Federal 167 76 212 State 29 (9 ) 49 Income Tax Expense $ 427 $ 936 $ 547 |
Schedule of Deferred Tax Assets and Liabilities | DEFERRED TAX ASSETS AND LIABILITIES (in millions) December 31, 2016 2015 Deferred tax assets: Accrued pension and other postretirement benefits $ 152 $ 141 Accrued employee compensation liabilities 90 101 Accrued environmental remediation liabilities 79 87 Other accrued liabilities 34 50 Stock-based compensation 34 47 Net operating losses 23 — Tax credit carryforwards 8 8 Asset retirement obligations 6 12 Investment in partnerships — 20 Other 24 10 Total deferred tax assets 450 476 Less: valuation allowance (26 ) (7 ) Total deferred tax assets, net $ 424 $ 469 Deferred tax liabilities: Accelerated depreciation and property related items $ 1,357 $ 1,341 Deferred maintenance costs, including refinery turnarounds 248 224 Inventory 117 22 Investment in partnerships 61 — Amortization of intangible assets 59 64 Other 10 40 Total deferred tax liabilities 1,852 1,691 Deferred Tax Liabilities, Net $ 1,428 $ 1,222 |
Schedule of Effective Income Tax Rate Reconciliation | RECONCILIATION OF INCOME TAX EXPENSE FROM CONTINUING OPERATIONS (in millions) Years Ended December 31, 2016 2015 2014 Income tax expense at U.S. federal statutory rate $ 447 $ 921 $ 512 Effect of: State income taxes, net of federal income tax effect 45 105 59 Manufacturing activities deduction (5 ) (43 ) (21 ) Earnings attributable to noncontrolling interest (44 ) (53 ) (16 ) Excess tax benefits from stock-based compensation arrangements (16 ) — — Other — 6 13 Income Tax Expense $ 427 $ 936 $ 547 |
Operating Loss Carryforwards [Line Items] | |
Summary of Tax Credit Carryforwards [Table Text Block] | INCOME TAX CREDIT AND LOSS CARRYFORWARDS AS OF DECEMBER 31, 2016 (in millions) Amount Expiration Federal NOLs $ 58 2027 - 2036 Federal income tax credits $ 1 2026 - 2033 State NOLs $ 53 2027 - 2036 State income tax credits $ 12 2017 - 2028 |
Schedule of Unrecognized Tax Benefits Roll Forward | RECONCILIATION OF UNRECOGNIZED TAX BENEFITS (in millions) Years Ended December 31, 2016 2015 2014 Balance as of beginning of year $ 181 $ 21 $ 28 Increases related to prior year tax positions — 159 5 Decreases related to prior year tax positions — — (2 ) Increases related to current year tax positions 1 1 1 Decreases related to settlements with taxing authorities — — (11 ) Balance as of end of year $ 182 $ 181 $ 21 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Schedule of Net Funded Status | CHANGES IN OBLIGATIONS AND FUNDED STATUS (in millions) Pension Benefits Other Postretirement Benefits 2016 2015 2016 2015 Change in projected benefit obligation: Projected benefit obligations at beginning of year $ 727 $ 767 $ 74 $ 77 Service cost 46 45 3 3 Interest cost 30 30 2 2 Actuarial loss (gain) 62 (44 ) — (2 ) Benefits paid (72 ) (71 ) (7 ) (6 ) Projected Benefit Obligation at End of Year $ 793 $ 727 $ 72 $ 74 Changes in plan assets: Fair value of plan assets at beginning of year $ 390 $ 413 $ — $ — Actual return on plan assets 30 (15 ) — — Employer contributions 76 63 7 6 Benefits paid (72 ) (71 ) (7 ) (6 ) Fair Value of Plan Assets at End of Year 424 390 — — Funded Status at End of Year $ (369 ) $ (337 ) $ (72 ) $ (74 ) |
Schedule of Amounts Recognized in Balance Sheet | LIABILITY AMOUNTS RECOGNIZED IN THE BALANCE SHEET RELATED TO POSTRETIREMENT BENEFITS (in millions) Pension Benefits Other Postretirement Benefits 2016 2015 2016 2015 Other current liabilities $ 2 $ 2 $ 9 $ 8 Other noncurrent liabilities 367 335 63 66 Total Amount Recognized $ 369 $ 337 $ 72 $ 74 |
Schedule of Net Benefit Costs | COMPONENTS OF PENSION AND OTHER POSTRETIREMENT BENEFIT EXPENSE (INCOME) (in millions) Pension Benefits Other Postretirement Benefits 2016 2015 2014 2016 2015 2014 Components of net periodic benefit expense (income): Service cost $ 46 $ 45 $ 44 $ 3 $ 3 $ 3 Interest cost 30 30 29 2 2 3 Expected return on plan assets (27 ) (27 ) (25 ) — — — Amortization of prior service cost (credit) — 1 1 (34 ) (34 ) (34 ) Recognized net actuarial loss 19 24 12 4 5 6 Recognized curtailment and settlement loss 5 — 1 — — — Net Periodic Benefit Expense (Income) $ 73 $ 73 $ 62 $ (25 ) $ (24 ) $ (22 ) |
Schedule of Assumptions Used | WEIGHTED AVERAGE ASSUMPTIONS Pension Benefits Other Postretirement Benefits 2016 2015 2014 2016 2015 2014 Projected benefit obligation: Discount rate (a) 4.12 % 4.40 % 4.05 % 3.38 % 3.42 % 3.16 % Rate of compensation increase 4.33 % 4.25 % 4.25 % — — — Net periodic benefit expense: Discount rate (a) 4.40 % 4.05 % 4.96 % 3.42 % 3.16 % 3.69 % Rate of compensation increase 4.33 % 4.25 % 4.25 % — — — Expected long-term return on plan assets (b) 6.50 % 6.50 % 6.50 % — — — (a) We determine the discount rate primarily by reference to the effective yields on high quality corporate bonds that have a comparable cash flow pattern to the expected pension and other postretirement benefit payments to be made. (b) The expected return on plan assets reflects the weighted-average of the expected long-term rates of return for the broad categories of investments held for the Retirement Plan. The expected long-term rate of return is adjusted when there are fundamental changes in expected returns on the Retirement Plan’s investments. |
Schedule of Health Care Cost Trend Rates | ASSUMED HEALTH CARE COST TREND RATES TO DETERMINE POSTRETIREMENT BENEFIT OBLIGATION December 31, 2016 2015 Health care cost trend rate assumed for next year 6.90 % 7.20 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 4.80 % 4.80 % Year that the rate reaches the ultimate trend rate 2024 2024 |
Schedule Of Accumulated Other Comprehensive Income (Loss) | OTHER COMPREHENSIVE INCOME (LOSS) (in millions) Pension Benefits Other Postretirement Benefits Total 2016 2015 2016 2015 2016 2015 Net actuarial loss $ (323 ) $ (286 ) $ (46 ) $ (51 ) $ (369 ) $ (337 ) Prior service credit (cost) (2 ) (3 ) 62 96 60 93 Total Income (Loss) $ (325 ) $ (289 ) $ 16 $ 45 $ (309 ) $ (244 ) |
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) | AMOUNTS RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS), BEFORE INCOME TAXES (in millions) Pension Benefits Other Postretirement Benefits 2016 2015 2014 2016 2015 2014 Net gain (loss) arising during the year: Net actuarial loss $ (60 ) $ 2 $ (144 ) $ 1 $ 2 $ 2 Prior service cost — — (2 ) — — — Curtailment and settlement loss 4 — — — — — Curtailment - prior service cost 1 — 1 — — — Net (gain) loss reclassified into income: Net actuarial loss 19 24 12 4 5 6 Prior service cost (credit) — 1 1 (34 ) (34 ) (35 ) Total Gain (Loss) Recognized In Other Comprehensive Income $ (36 ) $ 27 $ (132 ) $ (29 ) $ (27 ) $ (27 ) |
Schedule of Amounts in Accumulated Other Comprehensive Income (Loss) to be Recognized over Next Fiscal Year | AMOUNTS INCLUDED IN AOCI, BEFORE INCOME TAXES, EXPECTED TO BE RECOGNIZED AS COMPONENT OF NET PERIODIC BENEFIT EXPENSE (INCOME) (in millions) Pension Benefits Other Postretirement Benefits Total Net actuarial (gain) loss $ 23 $ (34 ) $ (11 ) Prior service cost — 3 3 Total Included In Accumulated Other Comprehensive Income (Loss) $ 23 $ (31 ) $ (8 ) |
Schedule of Expected Benefit Payments | ESTIMATED FUTURE BENEFIT PAYMENTS (in millions) Pension Benefits Other Postretirement Benefits 2017 $ 62 $ 9 2018 66 8 2019 97 8 2020 71 8 2021 71 7 2022-2026 355 31 |
Schedule of Allocation of Plan Assets | RETIREMENT PLAN’S MAJOR ASSET CATEGORIES MEASURED AT FAIR VALUE (in millions) December 31, 2016 December 31, 2015 Asset Category Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Mutual funds (a) $ 332 $ — $ — $ 332 $ 103 $ 49 $ — $ 152 Common/collective trust funds (b) — 91 — 91 — 76 — 76 Fixed income (c) — — — — — 155 — 155 Short-term investment funds (d) — 2 — 2 — 7 — 7 Total $ 332 $ 93 $ — $ 425 $ 103 $ 287 $ — $ 390 (a) Mutual funds that invest primarily in domestic and international equity and fixed income securities. Fair values are based on market quotations from national securities exchanges. Absolute return and real return mutual funds consist of investments in mutual funds that invest in a broad set of asset classes designed to provide a target return regardless of market conditions or the potential for real returns in excess of U.S. inflation, respectively. The fixed income mutual funds provide diversified exposure to high credit quality, long-term and short-term, U.S. investment grade bonds. All mutual funds and a U.S. equity mutual fund are categorized as level 1 investments. (b) Common/collective trust funds that invest in primarily equity and fixed income securities. Fair values reflect the net asset value per share, as determined by the investment manager and derived from the quoted prices in active markets of the underlying securities. Common/collective trust funds are classified as level 2 investments. (c) Fixed income assets represent securities primarily invested in corporate, government-related, mortgage and asset-backed debt obligations with a primary focus on long duration securities. Individual fixed income securities are typically priced on the basis of evaluated prices from independent pricing services. (d) The short-term investment funds provide for safety of principal and daily liquidity and is valued using the net asset value per share. These assets are classified as level 2 investments. |
Note 15 - Commitments and Con46
Note 15 - Commitments and Contingencies Commitments and Contingencies(Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contractual Obligation, Fiscal Year Maturity Schedule [Table Text Block] | MINIMUM ANNUAL PAYMENTS (in millions) Minimum Annual Lease Payments (a) Minimum Crude Oil Supply Commitments (b) Minimum Annual Take-or-Pay Payments 2017 $ 413 $ 3,225 $ 317 2018 323 886 241 2019 259 486 182 2020 227 395 143 2021 224 164 125 Thereafter 392 — 105 Total minimum lease payments $ 1,838 $ 5,156 $ 1,113 (a) Includes operating leases having initial or remaining noncancellable lease terms in excess of one year. (b) Prices under the term agreements fluctuate due to market-responsive and other contract-specific pricing provisions. To estimate our annual commitments under these contracts, we estimated crude oil prices using exchange-traded crude future prices by crude oil type as of December 31, 2016 , with prices ranging from $56 per barrel to $57 per barrel, and volumes based on the contract’s minimum purchase requirements over the term of the contract. MINIMUM ANNUAL PAYMENTS (in millions) Minimum Annual Lease Payments (a) Minimum Crude Oil Supply Commitments (b) Minimum Annual Take-or-Pay Payments 2017 $ 413 $ 3,225 $ 317 2018 323 886 241 2019 259 486 182 2020 227 395 143 2021 224 164 125 Thereafter 392 — 105 Total minimum lease payments $ 1,838 $ 5,156 $ 1,113 (a) Includes operating leases having initial or remaining noncancellable lease terms in excess of one year. (b) Prices under the term agreements fluctuate due to market-responsive pricing provisions. To estimate our annual commitments under these contracts, we estimated crude oil prices using exchange-traded crude future prices by crude oil type as of December 31, 2016 , with prices ranging from $56 per barrel to $57 per barrel, and volumes based on the contract’s minimum purchase requirements over the term of the contract. |
Other Noncurrent Liabilities [Table Text Block] | CHANGES IN ENVIRONMENTAL LIABILITIES (in millions) December 31, 2016 2015 Balance at beginning of year (a) $ 255 $ 274 Additions, net 32 46 Liabilities assumed in acquisitions 5 2 Expenditures (65 ) (67 ) Balance at end of year (a) $ 227 $ 255 (a) Includes $22 million and $33 million of TLLP environmental liabilities at December 31, 2016 and 2015 , respectively. |
Note 16 - Stockholders' Equity
Note 16 - Stockholders' Equity Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Noncontrolling Interest | CHANGES IN NONCONTROLLING INTEREST (in millions) December 31, 2016 2015 Balance at Beginning of Year $ 2,527 $ 2,522 Net earnings 126 150 Net proceeds from issuance of Tesoro Logistics LP Common Units 366 101 Distributions to noncontrolling interest (216 ) (182 ) Amortization of TLLP equity settled awards 5 4 Deconsolidation of RGS (84 ) — Consolidation of Vancouver Energy 8 — Transfers to (from) noncontrolling interest from (to) Tesoro related to: TLLP’s sale of common units (101 ) (114 ) Tesoro’s acquisition of TLLP common units (a) 32 44 Other (1 ) 2 Balance at End of Year $ 2,662 $ 2,527 (a) Includes the net impact of $32 million and $44 million for the years ended December 31, 2016 and 2015 , respectively, to noncontrolling interest for ownership changes occurring as a result of TLLP’s issuance of equity to the public and the issuance of TLLP common units to Tesoro for the Alaska Storage and Terminalling Assets Acquisition, the Northern California Terminalling and Storage Assets Acquisition and the LA Storage and Handling Asset Acquisition. |
Note 16 - Stockholders' Equit48
Note 16 - Stockholders' Equity Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Shares Outstanding, Basic and Diluted | SHARE CALCULATIONS (in millions) Years Ended December 31, 2016 2015 2014 Weighted average common shares outstanding 118.5 123.2 128.5 Common stock equivalents 1.4 1.4 2.3 Total Diluted Shares 119.9 124.6 130.8 |
Note 16 - Stockholders' Equit49
Note 16 - Stockholders' Equity Cash Dividends Paid (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Statement of Stockholders' Equity [Abstract] | |
Dividends Declared [Table Text Block] | CASH DIVIDENDS PAID 2016 2015 2014 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Annual cash dividends paid $249 million $228 million $141 million Quarterly per share amount declared $ 0.550 $ 0.550 $ 0.500 $ 0.500 $ 0.500 $ 0.500 $ 0.425 $ 0.425 $ 0.300 $ 0.300 $ 0.250 $ 0.250 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Share-based Compensation [Abstract] | |
Summary of stock-based compensation expense | STOCK-BASED COMPENSATION EXPENSE (BENEFIT) (in millions) Years Ended December 31, 2016 2015 2014 Stock appreciation rights $ (14 ) $ 25 $ 15 Performance share awards 10 11 17 Market stock units 29 27 17 Restricted common stock 5 4 3 Other 5 8 3 Total Stock-Based Compensation Expense $ 35 $ 75 $ 55 |
Summary of stock appreciation rights activity | SAR ACTIVITY FOR THE YEAR (shares in thousands) Number of SARs Weighted Average Exercise Price Weighted Average Remaining Contractual Term Outstanding at January 1, 2016 463 $15.72 0.43 years Exercised (338 ) $16.44 Forfeited (37 ) $15.72 Outstanding at December 31, 2016 88 $12.93 0.34 years Vested or expected to vest at December 31, 2016 88 $12.93 0.34 years Exercisable at December 31, 2016 88 $12.93 0.34 years |
Summary of stock appreciation rights valuation assumptions | WEIGHTED-AVERAGE ASSUMPTIONS USED TO VALUE SARS AND EXPENSE RECOGNIZED Years Ended December 31, 2016 2015 2014 Expected life from date of grant (years) 7 7 7 Expected volatility 40% 51% 57% Expected dividend yield 3% 2% 2% Risk-free interest rate 0.7% 0.4% 0.2% |
Summary of performance share awards valuation assumptions | WEIGHTED AVERAGE ASSUMPTIONS USED TO MEASURE PERFORMANCE SHARE AWARDS Years Ended December 31, 2016 2015 2014 Expected volatility 35% 35% 43% Expected dividend yield —% —% —% Risk-free interest rate 1.0% 1.0% 0.6% |
Summary of performance share award activity | SUMMARY OF PERFORMANCE SHARE AWARD ACTIVITY, ASSUMING 100% PAYOUT (shares in thousands) Number of Shares Weighted-Average Grant-Date Fair Value Intrinsic Value (in millions) Nonvested at January 1, 2016 431 $71.76 $45 Granted 157 $87.90 Vested (188 ) $55.20 Forfeited (22 ) $90.37 Nonvested at December 31, 2016 378 $83.53 $33 |
Schedule of market stock unit activity | SUMMARY OF MARKET STOCK UNIT AWARD ACTIVITY, ASSUMING 100% PAYOUT (units in thousands) Number of Units Weighted-Average Grant-Date Fair Value Intrinsic Value (in millions) Nonvested at January 1, 2016 1,135 $78.99 $119 Granted 693 $84.84 Vested (711 ) $65.95 Forfeited (47 ) $89.79 Nonvested at December 31, 2016 1,070 $84.78 $94 |
Summary of market stock units valuation assumptions | WEIGHTED AVERAGE ASSUMPTIONS USED TO MEASURE MARKET STOCK UNITS GRANTED Years Ended December 31, 2016 2015 2014 Expected volatility 35% 35% 44% Expected dividend yield 2% 2% 2% Risk-free interest rate 1.1% 1.1% 0.7% |
Summary of restricted common stock activity | SUMMARY OF RESTRICTED COMMON STOCK ACTIVITY (shares in thousands) Number of Restricted Shares Weighted-Average Grant-Date Fair Value Nonvested at January 1, 2016 105 $57.58 Granted 50 $85.51 Vested (44 ) $53.71 Forfeited — $— Nonvested at December 31, 2016 111 $71.45 |
Summary of stock option activity | SUMMARY OF STOCK OPTION ACTIVITY FOR ALL PLANS (options in thousands) Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2016 344 $26.55 3.0 years $27 Exercised (70 ) $39.64 Forfeited or expired — $— Outstanding at December 31, 2016 274 $23.20 2.5 years $18 Vested or expected to vest at December 31, 2016 274 $23.20 2.5 years $18 Exercisable at December 31, 2016 274 $23.20 2.5 years $18 |
Note 18 - Supplemental Cash F51
Note 18 - Supplemental Cash Flow Information Supplemental Cash Flow Information(Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental cash flow disclosures | SUPPLEMENTAL CASH FLOW DISCLOSURES (in millions) Years Ended December 31, 2016 2015 2014 Supplemental Cash Flow Disclosures: Interest paid, net of capitalized interest $ 199 $ 181 $ 129 Income taxes paid, net 136 882 309 Supplemental Disclosures of Non-cash Investing Activities: Capital expenditures included in accounts payable at end of period $ 191 $ 137 $ 161 |
Operating Segments (Tables)
Operating Segments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | SEGMENT INFORMATION RELATED TO CONTINUING OPERATIONS Years Ended December 31, 2016 2015 2014 Revenues (in millions) Refining: Refined products $ 21,213 $ 25,443 $ 37,365 Crude oil resales and other 1,043 946 1,456 TLLP: Gathering 339 339 135 Processing 276 278 23 Terminalling and transportation 605 495 442 Marketing: Fuel (a) 15,405 18,081 23,701 Other non-fuel 85 63 240 Intersegment sales (14,384 ) (16,934 ) (22,729 ) Total Revenues $ 24,582 $ 28,711 $ 40,633 Segment Operating Income Refining (b) $ 535 $ 1,871 $ 1,193 TLLP (c) 487 393 164 Marketing (b) 830 899 553 Total Segment Operating Income 1,852 3,163 1,910 Corporate and unallocated costs (371 ) (336 ) (278 ) Operating Income 1,481 2,827 1,632 Interest and financing costs, net (274 ) (217 ) (235 ) Equity in earnings of equity method investments 13 7 10 Other income, net 57 13 57 Earnings Before Income Taxes $ 1,277 $ 2,630 $ 1,464 Depreciation and Amortization Expense Refining $ 588 $ 504 $ 420 TLLP 190 187 85 Marketing 49 46 42 Corporate 24 19 15 Total Depreciation and Amortization Expense $ 851 $ 756 $ 562 Capital Expenditures Refining $ 519 $ 530 $ 423 TLLP 273 386 272 Marketing 34 34 54 Corporate 122 56 30 Total Capital Expenditures $ 948 $ 1,006 $ 779 (a) Federal and state motor fuel taxes on sales by our Marketing segment are included in both revenues and cost of sales in our statements of consolidated operations. These taxes totaled $577 million , $561 million and $581 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. (b) Our Refining segment uses RINs to satisfy its obligations under the Renewable Fuels Standard, in addition to physically blending required biofuels. At the end of 2014, given the price of RINs had become more transparent in the price of biofuels, we determined our intersegment pricing methodology should include the market value of RINs as a reduction to the price our Marketing segment pays to our Refining segment. We made this change effective January 1, 2015. We have not adjusted financial information presented for our Refining and Marketing segments for the year ended December 31, 2014 . Had we made this change effective January 1, 2014, operating income in our Refining segment would have been reduced by $125 million with a corresponding increase to operating income in our Marketing segment for the year ended December 31, 2014 . (c) We present TLLP’s segment operating income net of general and administrative expenses totaling $53 million , $54 million and $39 million representing TLLP’s corporate costs that are not allocated to TLLP’s operating segments for the years ended December 31, 2016 , 2015 and 2014 , respectively. IDENTIFIABLE ASSETS RELATED TO CONTINUING OPERATIONS (in millions; intersegment balances have been eliminated) December 31, 2016 2015 Refining $ 10,350 $ 8,878 TLLP 5,759 5,046 Marketing 1,295 1,167 Corporate 2,994 1,241 Total Assets $ 20,398 $ 16,332 |
Quarterly Financial Data (una53
Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Data [Abstract] | |
Schedule of Quarterly Financial Data | SUMMARY OF QUARTERLY FINANCIAL DATA (in millions, except per share amounts) Quarters Total Year First Second Third Fourth 2016 Revenues $ 5,101 $ 6,285 $ 6,544 $ 6,652 $ 24,582 Cost of sales (excluding the lower of cost or market inventory valuation adjustment) 3,866 5,023 5,236 5,533 19,658 Lower of cost or market inventory valuation adjustment 147 (363 ) (20 ) (123 ) (359 ) Operating expenses 611 602 648 680 2,541 Operating income 179 718 360 224 1,481 Net earnings from continuing operations 98 449 202 101 850 Gain (loss) from discontinued operations, net of tax 11 — (1 ) — 10 Net earnings 109 449 201 101 860 Net earnings attributable to Tesoro Corporation 69 418 169 78 734 Net earnings per share (a): Basic $ 0.58 $ 3.50 $ 1.43 $ 0.67 $ 6.19 Diluted $ 0.57 $ 3.47 $ 1.42 $ 0.66 $ 6.12 2015 Revenues $ 6,463 $ 8,232 $ 7,743 $ 6,273 $ 28,711 Cost of sales (excluding the lower of cost or market inventory valuation adjustment) 5,310 6,357 5,433 4,828 21,928 Lower of cost or market inventory valuation adjustment (42 ) — 83 276 317 Operating expenses 574 596 636 649 2,455 Operating income 340 1,009 1,292 186 2,827 Net earnings from continuing operations 188 624 799 83 1,694 Loss from discontinued operations, net of tax — (4 ) — — (4 ) Net earnings 188 620 799 83 1,690 Net earnings attributable to Tesoro Corporation 145 582 759 54 1,540 Net earnings per share (a): Basic $ 1.17 $ 4.64 $ 6.19 $ 0.46 $ 12.50 Diluted $ 1.15 $ 4.59 $ 6.13 $ 0.45 $ 12.36 (a) Includes earnings attributable to Tesoro from continuing and discontinued operations. The sum of four quarters may not equal annual results due to rounding or the quarterly number of shares outstanding. |
Condensed Consolidating Finan54
Condensed Consolidating Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed Consolidating Statement of Operations and Comprehensive Income | CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2016 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated Revenues $ — $ 26,880 $ 3,654 $ (5,952 ) $ 24,582 Costs and Expenses Cost of sales (excluding the lower of cost or market inventory valuation adjustment) — 23,048 2,220 (5,610 ) 19,658 Lower of cost or market inventory valuation adjustment — (359 ) — — (359 ) Operating, selling, general and administrative expenses 9 2,573 702 (342 ) 2,942 Depreciation and amortization expense — 625 226 — 851 Loss on asset disposals and impairments — 6 3 — 9 Operating Income (Loss) (9 ) 987 503 — 1,481 Equity in earnings of subsidiaries 792 211 — (1,003 ) — Interest and financing costs, net (84 ) (61 ) (129 ) — (274 ) Equity in earnings of equity method investments — — 13 — 13 Other income, net 3 39 15 — 57 Earnings Before Income Taxes 702 1,176 402 (1,003 ) 1,277 Income tax expense (benefit) (a) (22 ) 353 96 — 427 Net Earnings from Continuing Operations 724 823 306 (1,003 ) 850 Earnings from discontinued operations, net of tax 10 — — — 10 Net Earnings 734 823 306 (1,003 ) 860 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 126 — 126 Net Earnings Attributable to Tesoro Corporation $ 734 $ 823 $ 180 $ (1,003 ) $ 734 Comprehensive Income Total Comprehensive Income $ 695 $ 823 $ 306 $ (1,003 ) $ 821 Less: Noncontrolling Interest in Comprehensive Income — — 126 — 126 Comprehensive Income Attributable to Tesoro Corporation $ 695 $ 823 $ 180 $ (1,003 ) $ 695 (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2015 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated Revenues $ — $ 31,645 $ 3,597 $ (6,531 ) $ 28,711 Costs and Expenses Cost of sales (excluding the lower of cost or market inventory valuation adjustment) — 25,753 2,415 (6,240 ) 21,928 Lower of cost or market inventory valuation adjustment — 317 — — 317 Operating, selling, general and administrative expenses 11 2,542 579 (291 ) 2,841 Depreciation and amortization expense — 565 191 — 756 Loss on asset disposals and impairments — 37 5 — 42 Operating Income (Loss) (11 ) 2,431 407 — 2,827 Equity in earnings of subsidiaries 1,590 96 — (1,686 ) — Interest and financing costs, net (45 ) (66 ) (106 ) — (217 ) Equity in earnings of equity method investments — — 7 — 7 Other income (expense), net 3 11 (1 ) — 13 Earnings Before Income Taxes 1,537 2,472 307 (1,686 ) 2,630 Income tax expense (benefit) (a) (7 ) 891 52 — 936 Net Earnings from Continuing Operations 1,544 1,581 255 (1,686 ) 1,694 Loss from discontinued operations, net of tax (4 ) — — — (4 ) Net Earnings 1,540 1,581 255 (1,686 ) 1,690 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 150 — 150 Net Earnings Attributable to Tesoro Corporation $ 1,540 $ 1,581 $ 105 $ (1,686 ) $ 1,540 Comprehensive Income Total Comprehensive Income $ 1,540 $ 1,581 $ 255 $ (1,686 ) $ 1,690 Less: Noncontrolling Interest in Comprehensive Income — — 150 — 150 Comprehensive Income Attributable to Tesoro Corporation $ 1,540 $ 1,581 $ 105 $ (1,686 ) $ 1,540 (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2014 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated Revenues $ — $ 45,898 $ 6,153 $ (11,418 ) $ 40,633 Costs and Expenses Cost of sales (excluding the lower of cost or market inventory valuation adjustment) — 41,288 5,479 (11,164 ) 35,603 Lower of cost or market inventory valuation adjustment — 42 — — 42 Operating, selling, general and administrative expenses 10 2,632 402 (254 ) 2,790 Depreciation and amortization expense — 472 90 — 562 (Gain) loss on asset disposals and impairments — 8 (4 ) — 4 Operating Income (Loss) (10 ) 1,456 186 — 1,632 Equity in earnings of subsidiaries 903 2 — (905 ) — Interest and financing costs, net (39 ) (126 ) (70 ) — (235 ) Equity in earnings of equity method investments — 9 1 — 10 Other income, net 2 55 — — 57 Earnings Before Income Taxes 856 1,396 117 (905 ) 1,464 Income tax expense (benefit) (a) (16 ) 525 38 — 547 Net Earnings from Continuing Operations 872 871 79 (905 ) 917 Loss from discontinued operations, net of tax (29 ) — — — (29 ) Net Earnings 843 871 79 (905 ) 888 Less: Net earnings from continuing operations attributable to noncontrolling interest — — 45 — 45 Net Earnings Attributable to Tesoro Corporation $ 843 $ 871 $ 34 $ (905 ) $ 843 Comprehensive Income Total Comprehensive Income $ 746 $ 871 $ 79 $ (905 ) $ 791 Less: Noncontrolling Interest in Comprehensive Income — — 45 — 45 Comprehensive Income Attributable to Tesoro Corporation $ 746 $ 871 $ 34 $ (905 ) $ 746 (a) The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. |
Condensed Consolidating Balance Sheet | CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2016 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated ASSETS Current Assets Cash and cash equivalents $ — $ 2,576 $ 719 $ — $ 3,295 Receivables, net of allowance for doubtful accounts 10 882 216 — 1,108 Short-term receivables from affiliates — 171 28 (199 ) — Inventories — 2,321 319 — 2,640 Prepayments and other current assets 50 298 23 — 371 Total Current Assets 60 6,248 1,305 (199 ) 7,414 Net Property, Plant and Equipment — 6,183 3,793 — 9,976 Investment in Subsidiaries 9,201 785 — (9,986 ) — Long-Term Receivables from Affiliates 3,326 — — (3,326 ) — Long-Term Intercompany Note Receivable — — 2,386 (2,386 ) — Other Noncurrent Assets: Acquired intangibles, net — 329 948 — 1,277 Other, net 46 1,138 549 (2 ) 1,731 Total Other Noncurrent Assets 46 1,467 1,497 (2 ) 3,008 Total Assets $ 12,633 $ 14,683 $ 8,981 $ (15,899 ) $ 20,398 LIABILITIES AND EQUITY Current Liabilities Accounts payable $ 6 $ 1,762 $ 264 $ — $ 2,032 Short-term payables to affiliates — 28 171 (199 ) — Current maturities of debt 450 14 1 — 465 Other current liabilities 99 853 106 (1 ) 1,057 Total Current Liabilities 555 2,657 542 (200 ) 3,554 Long-Term Payables to Affiliates — 3,074 252 (3,326 ) — Deferred Income Taxes 1,428 2 — (2 ) 1,428 Debt 2,321 94 4,053 — 6,468 Long-Term Intercompany Note Payable 2,386 — — (2,386 ) — Other Noncurrent Liabilities 479 289 53 — 821 Equity-Tesoro Corporation 5,464 8,567 1,419 (9,985 ) 5,465 Equity-Noncontrolling Interest — — 2,662 — 2,662 Total Liabilities and Equity $ 12,633 $ 14,683 $ 8,981 $ (15,899 ) $ 20,398 CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2015 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated ASSETS Current Assets Cash and cash equivalents $ — $ 895 $ 47 $ — $ 942 Receivables, net of allowance for doubtful accounts — 626 166 — 792 Short-term receivables from affiliates — 200 3 (203 ) — Inventories — 1,971 331 — 2,302 Prepayments and other current assets 116 140 16 (1 ) 271 Total Current Assets 116 3,832 563 (204 ) 4,307 Net Property, Plant and Equipment — 5,796 3,745 — 9,541 Investment in Subsidiaries 8,128 609 — (8,737 ) — Long-Term Receivables from Affiliates 1,522 — — (1,522 ) — Long-Term Intercompany Note Receivable — — 1,626 (1,626 ) — Other Noncurrent Assets: Acquired intangibles, net — 234 977 — 1,211 Other, net 33 1,018 227 (5 ) 1,273 Total Other Noncurrent Assets 33 1,252 1,204 (5 ) 2,484 Total Assets $ 9,799 $ 11,489 $ 7,138 $ (12,094 ) $ 16,332 LIABILITIES AND EQUITY Current Liabilities Accounts payable $ — $ 1,390 $ 178 $ — $ 1,568 Short-term payables to affiliates — 3 200 (203 ) — Current maturities of debt — 6 — — 6 Other current liabilities 91 756 110 (1 ) 956 Total Current Liabilities 91 2,155 488 (204 ) 2,530 Long-Term Payables to Affiliates — 1,293 229 (1,522 ) — Deferred Income Taxes 1,227 — — (5 ) 1,222 Debt 1,190 33 2,844 — 4,067 Long-Term Intercompany Note Payable 1,626 — — (1,626 ) — Other Noncurrent Liabilities 452 262 59 — 773 Equity-Tesoro Corporation 5,213 7,746 991 (8,737 ) 5,213 Equity-Noncontrolling Interest — — 2,527 — 2,527 Total Liabilities and Equity $ 9,799 $ 11,489 $ 7,138 $ (12,094 ) $ 16,332 |
Condensed Consolidating Statement of Cash Flows | CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2016 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated Cash Flows From (Used in) Operating Activities Net cash from (used in) operating activities $ (33 ) $ 1,006 $ 637 $ (306 ) $ 1,304 Cash Flows From (Used in) Investing Activities Capital expenditures — (616 ) (278 ) — (894 ) Acquisitions — (67 ) (346 ) — (413 ) Deposits for acquisitions — — (33 ) — (33 ) Proceeds from asset sales 17 — 8 — 25 Investment in subsidiaries (321 ) (455 ) — 776 — Intercompany notes, net (1,453 ) — — 1,453 — Notes to general partner — — (760 ) 760 — Other investing activities — — (2 ) — (2 ) Net cash used in investing activities (1,757 ) (1,138 ) (1,411 ) 2,989 (1,317 ) Cash Flows From (Used in) Financing Activities Borrowings under revolving credit agreements — — 1,451 — 1,451 Repayments on revolving credit agreements — — (1,426 ) — (1,426 ) Proceeds from debt offerings 1,600 — 1,451 — 3,051 Repayments of debt — (9 ) (251 ) — (260 ) Dividend payments (249 ) — — — (249 ) Proceeds from stock options exercised 2 — — — 2 Net proceeds from issuance of TLLP common units — — 364 — 364 Notes from general partner 760 — — (760 ) — Distributions to noncontrolling interest — — (216 ) — (216 ) Purchases of common stock (250 ) — — — (250 ) Taxes paid related to net share settlement of equity awards (25 ) — — — (25 ) Contributions by parent — — 776 (776 ) — Net intercompany borrowings (repayments) — 1,822 (369 ) (1,453 ) — Distributions to TLLP unitholders and general partner — — (81 ) 81 — Distributions from TLLP and general partner to TSO — — (225 ) 225 — Payments of debt issuance costs (16 ) — (21 ) — (37 ) Other financing activities (32 ) — (7 ) — (39 ) Net cash from financing activities 1,790 1,813 1,446 (2,683 ) 2,366 Increase in Cash and Cash Equivalents — 1,681 672 — 2,353 Cash and Cash Equivalents, Beginning of Year — 895 47 — 942 Cash and Cash Equivalents, End of Year $ — $ 2,576 $ 719 $ — $ 3,295 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2015 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated Cash Flows From (Used in) Operating Activities Net cash from operating activities $ 11 $ 2,030 $ 293 $ (203 ) $ 2,131 Cash Flows From (Used in) Investing Activities Capital expenditures — (646 ) (384 ) — (1,030 ) Acquisitions — (91 ) (6 ) — (97 ) Intercompany notes, net 1,041 — — (1,041 ) — Notes to general partner — — (250 ) 250 — Other investing activities — (2 ) — — (2 ) Net cash from (used in) investing activities 1,041 (739 ) (640 ) (791 ) (1,129 ) Cash Flows From (Used in) Financing Activities Borrowings under revolving credit agreements — — 476 — 476 Repayments on revolving credit agreements — — (431 ) — (431 ) Borrowings under term loan credit agreements — — 250 — 250 Repayments of debt (398 ) (6 ) — — (404 ) Dividend payments (228 ) — — — (228 ) Proceeds from stock options exercised 13 — — — 13 Net proceeds from issuance of TLLP common units — — 99 — 99 Notes from general partner 250 — — (250 ) — Distributions to noncontrolling interest — — (182 ) — (182 ) Purchases of common stock (644 ) — — — (644 ) Taxes paid related to net share settlement of equity awards (45 ) — — — (45 ) Net intercompany borrowings (repayments) — (1,371 ) 330 1,041 — Distributions to TLLP unitholders and general partner — — (203 ) 203 — Payments of debt issuance costs — — (2 ) — (2 ) Excess tax benefits from stock-based compensation arrangements — 38 — — 38 Net cash from (used in) financing activities (1,052 ) (1,339 ) 337 994 (1,060 ) Decrease in Cash and Cash Equivalents — (48 ) (10 ) — (58 ) Cash and Cash Equivalents, Beginning of Year — 943 57 — 1,000 Cash and Cash Equivalents, End of Year $ — $ 895 $ 47 $ — $ 942 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2014 (In millions) Parent Guarantor Non- Consolidating Adjustments Consolidated Cash Flows From (Used in) Operating Activities Net cash from (used in) operating activities $ (11 ) $ 1,270 $ 208 $ (103 ) $ 1,364 Cash Flows From (Used in) Investing Activities Capital expenditures — (443 ) (242 ) — (685 ) Acquisitions — (17 ) (2,479 ) — (2,496 ) Proceeds from asset sales — 4 14 — 18 Intercompany notes, net 441 — — (441 ) — Notes to general partner — — (243 ) 243 — Other investing activities — (5 ) (4 ) — (9 ) Net cash from (used in) investing activities 441 (461 ) (2,954 ) (198 ) (3,172 ) Cash Flows From (Used in) Financing Activities Borrowings under revolving credit agreements — — 646 — 646 Repayments on revolving credit agreements — — (386 ) — (386 ) Proceeds from debt offerings 300 — 1,300 — 1,600 Repayments of debt (300 ) (3 ) (131 ) — (434 ) Dividend payments (141 ) — — — (141 ) Proceeds from stock options exercised 19 — — — 19 Net proceeds from issuance of TLLP common units — — 949 — 949 Notes from general partner 243 — — (243 ) — Distributions to noncontrolling interest — — (96 ) — (96 ) Purchases of common stock (500 ) — — — (500 ) Taxes paid related to net share settlement of equity awards (22 ) — — — (22 ) Net intercompany borrowings (repayments) — (1,044 ) 603 441 — Distributions to TLLP unitholders and general partner — — (103 ) 103 — Payments of debt issuance costs (5 ) — (19 ) — (24 ) Excess tax benefits from stock-based compensation arrangements — 20 — — 20 Other financing activities (24 ) — (37 ) — (61 ) Net cash from (used in) financing activities (430 ) (1,027 ) 2,726 301 1,570 Decrease in Cash and Cash Equivalents — (218 ) (20 ) — (238 ) Cash and Cash Equivalents, Beginning of Year — 1,161 77 — 1,238 Cash and Cash Equivalents, End of Year $ — $ 943 $ 57 $ — $ 1,000 |
Summary of Significant Accoun55
Summary of Significant Accounting Policies (Details) bbl / d in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)statesrefineriesbbl / dsegments | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Equity Method Investment, Other than Temporary Impairment | $ 0 | $ 0 | |
Excess tax benefits from stock-based compensation arrangements | $ 16,000,000 | $ 0 | $ 0 |
Description and Nature of Business | |||
Number of operating segments (segments) | segments | 3 | ||
Percentage of TLLP's revenue derived from Tesoro | 59.00% | 55.00% | 83.00% |
Cash | $ 1,800,000,000 | ||
Property, Plant and Equipment | |||
Capitalized interest | 31,000,000 | $ 36,000,000 | $ 25,000,000 |
Depreciation expense | 537,000,000 | 491,000,000 | 363,000,000 |
Other Assets | |||
Amortization of deferred charges | 251,000,000 | 222,000,000 | 182,000,000 |
Revenue Recognition | |||
Excise and sales taxes | 577,000,000 | 561,000,000 | 581,000,000 |
Asset Retirement Obligation | 26,000,000 | 30,000,000 | |
Increase (Decrease) in Asset Retirement Obligations | $ 0 | (29,000,000) | |
Minimum | |||
Finite-Lived Intangible Assets | |||
Finite useful life for acquired intangibles (years) | 1 year | ||
Other Assets | |||
Deferred costs useful life (years) | 2 years | ||
Maximum | |||
Finite-Lived Intangible Assets | |||
Finite useful life for acquired intangibles (years) | 35 years | ||
Other Assets | |||
Deferred costs useful life (years) | 10 years | ||
Refining | |||
Description and Nature of Business | |||
Number of refineries (refineries) | refineries | 7 | ||
Throughput capacity (barrels per day) | bbl / d | 895 | ||
Refining | Minimum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life (years) | 3 years | ||
Refining | Maximum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life (years) | 28 years | ||
TLLP | Minimum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life (years) | 3 years | ||
TLLP | Maximum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life (years) | 28 years | ||
Marketing | |||
Description and Nature of Business | |||
Number of states with retail sites (states) | states | 16 | ||
Number of stations (stations) | 2,492 | ||
Marketing | Minimum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life (years) | 3 years | ||
Marketing | Maximum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life (years) | 16 years | ||
Corporate | Minimum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life (years) | 3 years | ||
Corporate | Maximum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life (years) | 25 years | ||
Cost of sales | |||
Description and Nature of Business | |||
Prior Period Reclassification Adjustment | 221,000,000 | 28,000,000 | |
Operating Expense [Member] | |||
Description and Nature of Business | |||
Prior Period Reclassification Adjustment | 177,000,000 | 24,000,000 | |
Selling, General and Administrative Expenses [Member] | |||
Description and Nature of Business | |||
Prior Period Reclassification Adjustment | $ 44,000,000 | $ 4,000,000 |
Note 2 - Acquisitions 2016 Acqu
Note 2 - Acquisitions 2016 Acquisitions (Details) | Sep. 28, 2016 | Jun. 28, 2016 | Jun. 20, 2016 | Jan. 08, 2016 |
Great Northern Midstream Acquisition [Member] | ||||
Date of acquisition | Jan. 8, 2016 | |||
Flint Hills Resources Acquisition [Member] | ||||
Date of acquisition | Jun. 20, 2016 | |||
Dakota Prairie Refining Acquisition [Member] | ||||
Date of acquisition | Jun. 28, 2016 | |||
Virent Acquisition [Member] | ||||
Date of acquisition | Sep. 28, 2016 |
Tesoro Logistics LP, Narrative
Tesoro Logistics LP, Narrative (Details) - shares | Nov. 12, 2015 | Dec. 31, 2016 |
Capital Unit | ||
Percent of fee interest | 50.00% | |
Percentage ownership | 34.00% | |
Limited partner common units outstanding (units) | 34,055,042 | |
General partner units outstanding (units) | 2,100,900 | |
TLGP | ||
Capital Unit | ||
Percentage ownership | 2.00% |
Note 2 - Acquisitions Other tra
Note 2 - Acquisitions Other transactions (Details) - Proposed Transaction [Member] | Nov. 16, 2016USD ($)shares |
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination | shares | 0.4350 |
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ | $ 37.30 |
Maximum | |
Business Combination, Consideration Transferred, Including Equity Interest in Acquiree Held Prior to Combination | shares | 10,800,000 |
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ | $ 404,000,000 |
Note 3 - Tesoro Logistics LP 20
Note 3 - Tesoro Logistics LP 2016 Acquisitions (Details) - USD ($) $ in Millions | Nov. 21, 2016 | Sep. 16, 2016 | Jul. 01, 2016 | Nov. 12, 2015 |
Business Acquisition | ||||
Purchase price consideration | $ 500 | |||
Whiting Assets [Domain] | ||||
Business Acquisition | ||||
Purchase price consideration | $ 700 | |||
Martinez Logistics Assets [Domain] | ||||
Business Acquisition | ||||
Purchase price consideration | 400 | |||
Payments to Acquire Businesses, Gross | 360 | |||
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ 40 | |||
Alaska Logistics Assets [Domain] | ||||
Business Acquisition | ||||
Purchase price consideration | $ 444 | |||
Alaska Logistics Assets [Domain] | Phase One | ||||
Business Acquisition | ||||
Purchase price consideration | 266 | |||
Payments to Acquire Businesses, Gross | 240 | |||
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ 26 | |||
Alaska Logistics Assets [Domain] | Phase Two | ||||
Business Acquisition | ||||
Purchase price consideration | $ 178 | |||
Payments to Acquire Businesses, Gross | 160 | |||
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ 18 |
Note 3 - Tesoro Logistics LP 60
Note 3 - Tesoro Logistics LP 2015 Acquisitions (Details) $ in Millions | Nov. 12, 2015USD ($) |
Percent of fee interest | 50.00% |
Purchase price consideration | $ 500 |
Cash | |
Purchase price consideration | 250 |
Equity Issued in Business Combination | |
Purchase price consideration | $ 250 |
Note 3 - Tesoro Logistics LP 61
Note 3 - Tesoro Logistics LP 2014 Acquisitions (Details) - USD ($) $ in Millions | Nov. 12, 2015 | Jul. 22, 2015 | Dec. 02, 2014 | Sep. 30, 2014 | Jul. 01, 2014 | Dec. 31, 2015 | Dec. 31, 2014 |
Purchase price consideration | $ 500 | ||||||
Goodwill, Purchase Accounting Adjustments | $ (34) | ||||||
Effective Date Of Merger Completion | Jul. 22, 2015 | ||||||
West Coast Logistics Assets Acquisition | |||||||
Purchase price consideration | $ 270 | ||||||
Rockies Natural Gas Business | |||||||
Purchase price consideration | $ 2,500 | ||||||
Business Combination, Contingent Consideration, Liability | $ 230 | ||||||
Transaction costs | $ 2 | $ 33 | |||||
Phase Two | West Coast Logistics Assets Acquisition | |||||||
Payments to Acquire Businesses, Gross | $ 29 | ||||||
Phase One | West Coast Logistics Assets Acquisition | |||||||
Purchase price consideration | $ 241 | ||||||
Payments to Acquire Businesses, Gross | 214 | ||||||
Equity, fair value | $ 27 |
Note 3 - Tesoro Logistics LP Ot
Note 3 - Tesoro Logistics LP Other Transactions (Details) - USD ($) $ in Millions | Nov. 21, 2016 | Nov. 12, 2015 | Sep. 30, 2014 | Jul. 01, 2014 | Dec. 31, 2014 |
Business Acquisition | |||||
Purchase price consideration | $ 500 | ||||
Whiting Assets [Domain] | |||||
Business Acquisition | |||||
Purchase price consideration | $ 700 | ||||
West Coast Logistics Assets Acquisition | |||||
Business Acquisition | |||||
Purchase price consideration | $ 270 | ||||
Phase One | West Coast Logistics Assets Acquisition | |||||
Business Acquisition | |||||
Purchase price consideration | $ 241 | ||||
Equity, fair value | 27 | ||||
Cash paid for acquisition | $ 214 | ||||
Phase Two | West Coast Logistics Assets Acquisition | |||||
Business Acquisition | |||||
Cash paid for acquisition | $ 29 |
Additional Equity Issuances (De
Additional Equity Issuances (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 10, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Aug. 24, 2015 | Aug. 22, 2014 |
Debt Instrument | ||||||
Limited Partners' Capital Account, Units Issued | 6,300,000 | |||||
Common Stock, Call or Exercise Features | 825,000 | |||||
Aggregate value of issuance program | $ 750 | |||||
Equity Instrument Regulatory Filing Date | Jun. 25, 2014 | |||||
Price per unit (dollars per unit) | $ 47.13 | |||||
Net proceeds from issuance of Tesoro Logistics LP common units | $ 364 | $ 99 | $ 949 | |||
Limited Partner | ||||||
Debt Instrument | ||||||
Price per unit (dollars per unit) | $ 67.47 | |||||
Net proceeds from issuance of Tesoro Logistics LP common units | $ 293 | |||||
2015 ATM Program | ||||||
Debt Instrument | ||||||
Common Unit, Issued | 1,912,996 | |||||
Proceeds from Sale of Interest in Partnership Unit | $ 103 | |||||
2014 ATM Program | ||||||
Debt Instrument | ||||||
Common Unit, Issued | 199,400 | |||||
Proceeds from Sale of Interest in Partnership Unit | $ 14 | |||||
2015 ATM Program | ||||||
Debt Instrument | ||||||
Partners' Capital Account, Units, Sale of Units | 1,492,637 | |||||
Partners' Capital Account, Public Sale of Units Net of Offering Costs | $ 72 |
Agreements with TLLP and Enviro
Agreements with TLLP and Environmental Liabilities (Details) | Dec. 06, 2013 | Dec. 31, 2016USD ($)optiongal | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Long-term Purchase Commitment | ||||
Estimated Insurance Recoveries | $ 0 | $ 0 | ||
managing member or general partner, subsequent distribution amount forfeited per quarter | $ 12,500,000 | |||
Time period covered by arrangement (years) | 15 years | |||
Related Party Transaction, pricing structure rate | gal | 315,000 | |||
Managing member or general partner, subsequent distribution amount forfeited, total next 2 years | $ 100,000,000 | |||
Environmental remediation expense | 73,000,000 | |||
Excess remediation costs over loss limit | 48,000,000 | |||
Accrual for Environmental Loss Contingencies | 7,000,000 | |||
Environmental Liability Insurance Deductible | 1,000,000 | |||
Environmental Liabilities Insurance Coverage Limit | 25,000,000 | |||
Insurance proceeds from environmental expenditures | $ 0 | $ 18,000,000 | $ 7,000,000 | |
Various pipeline transportation, trucking, terminal distribution and storage services agreement | ||||
Long-term Purchase Commitment | ||||
Long-term purchase commitment period duration | 2017 through 2026 | |||
Number of contract renewals (renewals) | option | 2 | |||
Contract renewal terms | ||||
Long-term Purchase Commitment | ||||
Time period covered by arrangement (years) | 5 years | |||
Use and throughput agreements | ||||
Long-term Purchase Commitment | ||||
Time period covered by arrangement (years) | 10 years | |||
Transportation Agreement | ||||
Long-term Purchase Commitment | ||||
Time period covered by arrangement (years) | 10 years | |||
Carson Assets Indemnity Agreement | ||||
Long-term Purchase Commitment | ||||
Investment contract settlement date | Dec. 6, 2013 |
Note 4 - Discontinued Operati65
Note 4 - Discontinued Operations Discontinued Operations (Details) - Hawaii Operations - USD ($) $ in Millions | Sep. 25, 2013 | Dec. 31, 2016 |
Discontinued Operations | ||
Disposal date | Sep. 25, 2013 | |
Sale price | $ 539 | |
Sale price, assets | 75 | |
Sale price, inventory and other net | $ 464 | |
Earnout arrangement period (years) | 3 years | |
Earnout arrangement, maximum amount | $ 40 | |
Indemnification for environmental remediation | $ 15 | |
2014 Earnout Period [Member] | ||
Discontinued Operations | ||
Earnouts received | $ 1 | |
2015 Earnout Period [Member] [Member] | ||
Discontinued Operations | ||
Earnouts received | $ 15 |
Note 4 - Discontinued Operati66
Note 4 - Discontinued Operations Revenues and earnings (loss), including gain on disposition, before and after tax from discontinued operations (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Discontinued Operations | ||||||||||||
Environmental remediation expense | $ 73 | |||||||||||
Revenues and earnings from discontinued operations | ||||||||||||
Earnings (loss) from discontinued operations, net of tax | $ 0 | $ (1) | $ 0 | $ 11 | $ 0 | $ 0 | $ (4) | $ 0 | 10 | $ (4) | $ (29) | |
Hawaii Operations | ||||||||||||
Discontinued Operations | ||||||||||||
Environmental remediation expense | 0 | 6 | 42 | |||||||||
Revenues and earnings from discontinued operations | ||||||||||||
Earnings (loss) from discontinued operations, before tax (a) | [1] | 17 | (6) | (46) | ||||||||
Less: income tax expense (benefit) | 7 | (2) | (17) | |||||||||
Earnings (loss) from discontinued operations, net of tax | 10 | (4) | (29) | |||||||||
Operating activities | $ 6 | $ (5) | $ (3) | |||||||||
[1] | Includes charges totaling $6 million and $42 million for the years ended December 31, 2015 and 2014, respectively, related to regulatory improvements we are obligated to make at the at the Hawaii refinery to resolve the Clean Air Act matters discussed in Note 15. There were no additional charges during the year ended December 31, 2016. |
Note 5 - Receivables and Inve67
Note 5 - Receivables and Inventories Receivables (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | |
Receivables [Abstract] | |||
Trade receivables | $ 1,092 | $ 778 | |
Tax receivables | 21 | 22 | |
Other receivables | 2 | 5 | |
Allowance for doubtful accounts (a) | [1] | (7) | (13) |
Total Receivables, Net | $ 1,108 | $ 792 | |
[1] | Allowances for doubtful accounts of $7 million and $13 million at December 31, 2016 and 2015, respectively, relate to estimated uncollectible amounts on our trade receivables. |
Note 5 - Receivables and Inve68
Note 5 - Receivables and Inventories Inventories (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Domestic crude oil and refined products | $ 2,099 | $ 2,142 |
Foreign subsidiary crude oil | 310 | 325 |
Materials and supplies | 149 | 140 |
Oxygenates and by-products | 81 | 54 |
Merchandise | 1 | 0 |
Less: Lower of cost or market reserve | 0 | (359) |
Total Inventories, Net | $ 2,640 | $ 2,302 |
Note 5 - Receivables and Inve69
Note 5 - Receivables and Inventories Inventories Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Excess of Replacement or Current Costs over Stated LIFO Value | $ 107 | |
Lower cost or market adjustment | $ 0 | $ (359) |
Property, Plant and Equipment70
Property, Plant and Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment | ||
Property, plant and equipment, at cost | $ 13,472 | $ 12,562 |
Accumulated depreciation | (3,496) | (3,021) |
Property, Plant and Equipment, Net | 9,976 | 9,541 |
Refining | ||
Property, Plant and Equipment | ||
Property, plant and equipment, at cost | 8,067 | 7,189 |
TLLP | ||
Property, Plant and Equipment | ||
Property, plant and equipment, at cost | 4,059 | 4,162 |
Marketing | ||
Property, Plant and Equipment | ||
Property, plant and equipment, at cost | 934 | 915 |
Corporate | ||
Property, Plant and Equipment | ||
Property, plant and equipment, at cost | $ 412 | $ 296 |
Note 7 - Acquired Intangibles71
Note 7 - Acquired Intangibles and Goodwill Acquired Intangibles (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible Assets | |||
Historical Cost | $ 1,545 | $ 1,417 | |
Accumulated Amortization | 268 | 206 | |
Net Book Value | 1,277 | 1,211 | |
Business relationships (a) | |||
Intangible Assets | |||
Historical Cost | [1] | 1,071 | 1,008 |
Accumulated Amortization | [1] | 81 | 32 |
Net Book Value | [1] | 990 | 976 |
Refining operating permits, emissions credits and other | |||
Intangible Assets | |||
Historical Cost | 331 | 283 | |
Accumulated Amortization | 137 | 128 | |
Net Book Value | 194 | 155 | |
Trade names | |||
Intangible Assets | |||
Historical Cost | 49 | 49 | |
Accumulated Amortization | 17 | 15 | |
Net Book Value | 32 | 34 | |
ampm® license | |||
Intangible Assets | |||
Historical Cost | 31 | 31 | |
Accumulated Amortization | 4 | 3 | |
Net Book Value | 27 | 28 | |
Marketing supply network | |||
Intangible Assets | |||
Historical Cost | 45 | 46 | |
Accumulated Amortization | 29 | 28 | |
Net Book Value | 16 | 18 | |
Intellectual property | |||
Intangible Assets | |||
Historical Cost | 18 | 0 | |
Accumulated Amortization | 0 | 0 | |
Net Book Value | 18 | $ 0 | |
Rockies Natural Gas Business | Business relationships (a) | |||
Intangible Assets | |||
Historical Cost | [1] | 1,000 | |
FHR Acquisition [Member] | Business relationships (a) | |||
Intangible Assets | |||
Historical Cost | [1] | 44 | |
Great Northern Midstream Acquisition [Member] | Business relationships (a) | |||
Intangible Assets | |||
Historical Cost | [1] | $ 19 | |
[1] | In connection with the Rockies Natural Gas Business acquisition in 2014, TLLP recognized $1.0 billion of business relationships associated with the acquired natural gas processing and gathering operations. The value for the identified business relationships consists of cash flows expected from existing contracts and future arrangements from the existing customer base. The amounts and useful lives associated with these business relationships were finalized within TLLP’s measurement period of the purchase price allocation. In addition, during 2016, we recognized $44 million and $19 million of business relationships associated with the FHR and Great Northern Midstream acquisitions, respectively. |
Note 7 - Acquired Intangibles72
Note 7 - Acquired Intangibles and Goodwill Acquired Intangibles Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Indefinite-Lived Intangible Assets | $ 62 | $ 14 | |
Amortization expense of acquired intangible assets | 63 | $ 43 | $ 17 |
Intangible Assets, Future Amortization Expense | |||
2,017 | 46 | ||
2,018 | 45 | ||
2,019 | 45 | ||
2,020 | 45 | ||
2,021 | $ 45 |
Note 7 - Acquired Intangibles73
Note 7 - Acquired Intangibles and Goodwill Goodwill (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Goodwill | |||
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill) | $ 0 | $ 0 | $ 0 |
Goodwill | 190 | 188 | |
Goodwill, impairment loss | 0 | ||
Refining | |||
Goodwill | |||
Goodwill | 47 | 31 | |
TLLP | |||
Goodwill | |||
Goodwill | $ 117 | 130 | |
Goodwill, impairment loss | 0 | $ 0 | |
TLLP reporting units | 5 | ||
Marketing | |||
Goodwill | |||
Goodwill | $ 26 | $ 27 |
Note 8 - Investments - Equity74
Note 8 - Investments - Equity Method and Joint Ventures Equity Method Investments and Joint Ventures, Narrative (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2016USD ($) | ||
Schedule of Equity Method Investments | ||
Deconsolidation of RGS | $ 295 | [1] |
Watson Cogeneration Company | ||
Schedule of Equity Method Investments | ||
Deconsolidation of RGS | $ 0 | |
Joint venture, ownership percentage | 51.00% | |
Vancouver Energy | ||
Schedule of Equity Method Investments | ||
Deconsolidation of RGS | $ 0 | |
Rendezvous Gas Services, L.L.C. [Domain] | ||
Schedule of Equity Method Investments | ||
Joint venture, ownership percentage | 78.00% | |
TRG | ||
Schedule of Equity Method Investments | ||
Joint venture, ownership percentage | 50.00% | |
UBFS | ||
Schedule of Equity Method Investments | ||
Joint venture, ownership percentage | 38.00% | |
[1] | The reassessment of the investments performed by TLLP resulted in the deconsolidation of RGS and the reporting of RGS as an equity method investment. TLLP recognized an increase of $295 million to equity method investments as of January 1, 2016 as a result of the deconsolidation. |
Note 8 - Investments - Equity75
Note 8 - Investments - Equity Method and Joint Ventures Equity Method Investments and Joint Ventures (Details) - USD ($) $ in Millions | 12 Months Ended | |||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Schedule of Equity Method Investments | ||||||
Balance at Beginning of Period | $ 159 | [1] | $ 170 | |||
Deconsolidation of RGS | [2] | 295 | ||||
Investments | 4 | |||||
Effect of consolidation (d) | [3] | (8) | ||||
Equity in earnings (loss) | 13 | 7 | $ 10 | |||
Distributions received | (39) | (22) | ||||
Balance at End of Period | 420 | [1] | 159 | [1] | 170 | |
Watson Cogeneration Company | ||||||
Schedule of Equity Method Investments | ||||||
Balance at Beginning of Period | 92 | [1] | 103 | |||
Deconsolidation of RGS | 0 | |||||
Investments | 0 | |||||
Effect of consolidation (d) | 0 | |||||
Equity in earnings (loss) | 1 | 1 | ||||
Distributions received | (10) | (12) | ||||
Balance at End of Period | 83 | [1] | 92 | [1] | 103 | |
Difference between carrying amount and underlying equity | 65 | 68 | ||||
Vancouver Energy | ||||||
Schedule of Equity Method Investments | ||||||
Balance at Beginning of Period | 9 | [1] | 9 | |||
Deconsolidation of RGS | 0 | |||||
Investments | 1 | |||||
Effect of consolidation (d) | [3] | (8) | ||||
Equity in earnings (loss) | (1) | (1) | ||||
Distributions received | 0 | 0 | ||||
Balance at End of Period | 0 | [1] | 9 | [1] | 9 | |
TLLP | Rendezvous Gas Services, L.L.C. [Domain] | ||||||
Schedule of Equity Method Investments | ||||||
Balance at Beginning of Period | 0 | 0 | ||||
Deconsolidation of RGS | [2] | 295 | ||||
Investments | 0 | |||||
Effect of consolidation (d) | 0 | |||||
Equity in earnings (loss) | 8 | 0 | ||||
Distributions received | (22) | 0 | ||||
Balance at End of Period | 281 | [1] | 0 | 0 | ||
Difference between carrying amount and underlying equity | 135 | |||||
TLLP | TRG | ||||||
Schedule of Equity Method Investments | ||||||
Balance at Beginning of Period | 42 | [1] | 40 | |||
Deconsolidation of RGS | 0 | |||||
Investments | [4] | 3 | ||||
Effect of consolidation (d) | 0 | |||||
Equity in earnings (loss) | 2 | 5 | ||||
Distributions received | (4) | (6) | ||||
Balance at End of Period | 40 | [1] | 42 | [1] | 40 | |
Difference between carrying amount and underlying equity | 16 | 17 | ||||
TLLP | UBFS | ||||||
Schedule of Equity Method Investments | ||||||
Balance at Beginning of Period | 16 | [1] | 18 | |||
Deconsolidation of RGS | 0 | |||||
Investments | [4] | 0 | ||||
Effect of consolidation (d) | 0 | |||||
Equity in earnings (loss) | 3 | 2 | ||||
Distributions received | (3) | (4) | ||||
Balance at End of Period | 16 | [1] | 16 | [1] | $ 18 | |
Difference between carrying amount and underlying equity | $ 7 | $ 8 | ||||
[1] | The carrying amount of our investments in Watson, RGS, TRG and UBFS exceeded the underlying equity in net assets by $65 million, $135 million, $16 million and $7 million, respectively, at December 31, 2016. The carrying amount of our investments in Watson, TRG and UBFS exceeded the underlying equity in net assets by $68 million, $17 million and $8 million, respectively, at December 31, 2015. The carrying amounts of our investments that exceed the underlying equity in net assets are amortized over the useful life of the underlying fixed assets and included in equity in earnings (loss). | |||||
[2] | The reassessment of the investments performed by TLLP resulted in the deconsolidation of RGS and the reporting of RGS as an equity method investment. TLLP recognized an increase of $295 million to equity method investments as of January 1, 2016 as a result of the deconsolidation. | |||||
[3] | Effective September 1, 2016, we became majority owner of our venture with Savage Companies to construct, own and operate a unit train unloading and marine loading terminal at Port of Vancouver, USA (the “Vancouver Energy” terminal). As a result, Vancouver Energy was consolidated. | |||||
[4] | Includes the final fair value adjustment resulting from measurement period changes related to TLLP’s Rockies Natural Gas Business in 2015. |
Note 9 - Other Assets and Lia76
Note 9 - Other Assets and Liabilities Other Noncurrent Assets (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Other Assets, Noncurrent Disclosure [Abstract] | ||
Deferred charges, net of amortization | $ 743 | $ 650 |
Investments - equity method and joint ventures | 420 | 159 |
Goodwill | 190 | 188 |
Deferred branding costs, net of amortization | 160 | 95 |
Environmental credits | 89 | 97 |
Other assets, net of amortization | 129 | 84 |
Total Other Noncurrent Assets | $ 1,731 | $ 1,273 |
Note 9 - Other Assets and Lia77
Note 9 - Other Assets and Liabilities Other Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Other Current Liabilities: | ||
Taxes other than income taxes | $ 288 | $ 320 |
Employee costs | 229 | 298 |
RINs liabilities | 126 | 40 |
Environmental credit obligations | 123 | 0 |
Interest | 62 | 46 |
Environmental liabilities | 60 | 64 |
Income taxes payable | 38 | 0 |
Current liabilities related to discontinued operations | 22 | 22 |
Pension and other postretirement benefits | 11 | 10 |
Asset retirement obligations | 6 | 5 |
Legal costs | 2 | 5 |
Other | 90 | 146 |
Total Other Current Liabilities | 1,057 | 956 |
Other Noncurrent Liabilities: | ||
Pension and other postretirement benefits | 430 | 401 |
Environmental liabilities | 167 | 191 |
Employee costs, excluding pension and other postretirement benefits | 50 | 35 |
Environmental credit obligations | 42 | 10 |
Deferred income | 39 | 37 |
Asset retirement obligations | 20 | 25 |
Liability for unrecognized tax benefits, including interest and penalties | 8 | 7 |
Noncurrent liabilities related to discontinued operations | 1 | 19 |
Other | 64 | 48 |
Total Other Noncurrent Liabilities | $ 821 | $ 773 |
Derivative Instruments, Derivat
Derivative Instruments, Derivative Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | |
Derivatives, Fair Value | |||
Gross derivative assets | $ 839 | $ 735 | |
Gross derivative liabilities | 888 | 691 | |
Derivative Asset, Collateral, Obligation to Return Cash, Offset | [1] | (744) | (675) |
Derivative Liability, Collateral, Right to Reclaim Cash, Offset | [1] | (832) | (687) |
Net derivative assets | 95 | 60 | |
Net derivative liabilities | 56 | 4 | |
Derivative, Collateral | |||
Counterparty cash collateral | 88 | 12 | |
Commodity Futures Contracts | |||
Derivatives, Fair Value | |||
Derivative Asset, Collateral, Obligation to Return Cash, Offset | [1] | (733) | (660) |
Derivative Liability, Collateral, Right to Reclaim Cash, Offset | [1] | 821 | (673) |
Net derivative assets | 88 | 51 | |
Net derivative liabilities | 50 | 0 | |
Commodity Futures Contracts | Prepayments and other current assets | |||
Derivatives, Fair Value | |||
Gross derivative assets | 821 | 711 | |
Gross derivative liabilities | 871 | 673 | |
Commodity Swap Contracts | |||
Derivatives, Fair Value | |||
Derivative Asset, Collateral, Obligation to Return Cash, Offset | [1] | (11) | (15) |
Derivative Liability, Collateral, Right to Reclaim Cash, Offset | [1] | 11 | (14) |
Net derivative assets | 0 | 7 | |
Net derivative liabilities | 4 | 0 | |
Commodity Swap Contracts | Prepayments and other current assets | |||
Derivatives, Fair Value | |||
Gross derivative assets | 11 | 15 | |
Gross derivative liabilities | 13 | 14 | |
Commodity Swap Contracts | Receivables | |||
Derivatives, Fair Value | |||
Gross derivative assets | 0 | 7 | |
Gross derivative liabilities | 0 | 0 | |
Commodity Swap Contracts | Accounts payable | |||
Derivatives, Fair Value | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | 2 | 0 | |
Commodity Option Contracts | |||
Derivatives, Fair Value | |||
Derivative Asset, Collateral, Obligation to Return Cash, Offset | [1] | 0 | |
Net derivative assets | 1 | ||
Commodity Option Contracts | Prepayments and other current assets | |||
Derivatives, Fair Value | |||
Gross derivative assets | 1 | 0 | |
Gross derivative liabilities | 0 | 0 | |
Commodity Forward Contracts | |||
Derivatives, Fair Value | |||
Derivative Asset, Collateral, Obligation to Return Cash, Offset | [1] | 0 | 0 |
Derivative Liability, Collateral, Right to Reclaim Cash, Offset | [1] | 0 | 0 |
Net derivative assets | 6 | 2 | |
Net derivative liabilities | 2 | 4 | |
Commodity Forward Contracts | Receivables | |||
Derivatives, Fair Value | |||
Gross derivative assets | 6 | 2 | |
Gross derivative liabilities | 0 | 0 | |
Commodity Forward Contracts | Accounts payable | |||
Derivatives, Fair Value | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | $ 2 | $ 4 | |
[1] | Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of December 31, 2016 and December 31, 2015, we had provided cash collateral amounts of $88 million and $12 million, respectively, related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. |
Derivative Instruments, Deriv79
Derivative Instruments, Derivative Gains and Losses (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | $ (67) | $ 273 | $ 477 | |
Revenues | ||||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | (4) | 67 | 26 | |
Cost of sales | ||||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | (63) | 212 | 456 | |
Other income, net | ||||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | 0 | (6) | (5) | |
Commodity Contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | (67) | 279 | 482 | |
Foreign Currency Forward Contracts | ||||
Derivative Instruments, Gain (Loss) | ||||
Total Gain (Loss) on Mark-to-Market Derivatives | [1] | $ 0 | $ (6) | $ (5) |
[1] | Losses for our foreign currency forward contracts are located in other income, net in our statements of consolidated operations. |
Derivative Instruments, Open Po
Derivative Instruments, Open Positions (Details) CAD in Millions | 12 Months Ended |
Dec. 31, 2016CADbblTbu | |
Derivative | |
Foreign currency derivatives | CAD | CAD 16 |
Maturity date of foreign currency derivatives | Jan. 24, 2017 |
2017 | Short | Crude Oil Refined Products and Blending Products (in barrels) | Futures | |
Derivative | |
Contract volumes | (6,457,000) |
2017 | Short | Crude Oil Refined Products and Blending Products (in barrels) | Forwards | |
Derivative | |
Contract volumes | (261,000) |
2017 | Short | Corn (in bushels) | Futures | |
Derivative | |
Contract volumes | (6,310,000) |
2017 | Long | Crude Oil Refined Products and Blending Products (in barrels) | Futures | |
Derivative | |
Derivative, Nonmonetary Notional Amount | 0 |
2017 | Long | Crude Oil Refined Products and Blending Products (in barrels) | Swap Contracts | |
Derivative | |
Contract volumes | (467,000) |
2017 | Long | Environmental Credits (in tons) | Futures | |
Derivative | |
Contract mass | T | 1,000,000 |
2018 | Short | Crude Oil Refined Products and Blending Products (in barrels) | Futures | |
Derivative | |
Contract volumes | 0 |
2018 | Short | Crude Oil Refined Products and Blending Products (in barrels) | Forwards | |
Derivative | |
Contract volumes | 0 |
2018 | Short | Corn (in bushels) | Futures | |
Derivative | |
Contract volumes | bu | 0 |
2018 | Long | Crude Oil Refined Products and Blending Products (in barrels) | Futures | |
Derivative | |
Derivative, Nonmonetary Notional Amount | 15,000 |
2018 | Long | Crude Oil Refined Products and Blending Products (in barrels) | Swap Contracts | |
Derivative | |
Contract volumes | 0 |
2018 | Long | Environmental Credits (in tons) | Futures | |
Derivative | |
Contract mass | T | 0 |
Fair Value Measurements, Recurr
Fair Value Measurements, Recurring (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Measurements | |||
Gross derivative assets | $ 839 | $ 735 | |
Derivative Asset, Collateral, Obligation to Return Cash, Offset | [1] | (744) | (675) |
Net derivative assets | 95 | 60 | |
Gross derivative liabilities | 888 | 691 | |
Derivative Liability, Collateral, Right to Reclaim Cash, Offset | [1] | (832) | (687) |
Net derivative liabilities | 56 | 4 | |
Derivative liabilities and environmental credit obligations | 135 | 44 | |
Counterparty cash collateral | (88) | (12) | |
Carrying value of debt | 7,000 | 4,100 | |
Commodity Futures Contracts | |||
Fair Value Measurements | |||
Derivative Asset, Collateral, Obligation to Return Cash, Offset | [1] | (733) | (660) |
Net derivative assets | 88 | 51 | |
Derivative Liability, Collateral, Right to Reclaim Cash, Offset | [1] | 821 | (673) |
Net derivative liabilities | 50 | 0 | |
Commodity Swap Contracts | |||
Fair Value Measurements | |||
Derivative Asset, Collateral, Obligation to Return Cash, Offset | [1] | (11) | (15) |
Net derivative assets | 0 | 7 | |
Derivative Liability, Collateral, Right to Reclaim Cash, Offset | [1] | 11 | (14) |
Net derivative liabilities | 4 | 0 | |
Options Held [Member] | |||
Fair Value Measurements | |||
Derivative Asset, Collateral, Obligation to Return Cash, Offset | [1] | 0 | |
Net derivative assets | 1 | ||
Commodity Forward Contracts | |||
Fair Value Measurements | |||
Derivative Asset, Collateral, Obligation to Return Cash, Offset | [1] | 0 | 0 |
Net derivative assets | 6 | 2 | |
Derivative Liability, Collateral, Right to Reclaim Cash, Offset | [1] | 0 | 0 |
Net derivative liabilities | 2 | 4 | |
Environmental Credit Obligations | |||
Fair Value Measurements | |||
Derivative Liability, Collateral, Right to Reclaim Cash, Offset | [1] | 0 | (687) |
Environmental credit obligations | 79 | 40 | |
Level 1 | |||
Fair Value Measurements | |||
Gross derivative assets | 822 | 711 | |
Derivative liabilities and environmental credit obligations | 870 | 673 | |
Level 1 | Commodity Futures Contracts | |||
Fair Value Measurements | |||
Gross derivative assets | 821 | 711 | |
Gross derivative liabilities | 870 | 673 | |
Level 1 | Commodity Swap Contracts | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | 0 | 0 | |
Level 1 | Options Held [Member] | |||
Fair Value Measurements | |||
Gross derivative assets | 1 | ||
Level 1 | Commodity Forward Contracts | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | 0 | 0 | |
Level 1 | Environmental Credit Obligations | |||
Fair Value Measurements | |||
Environmental credit obligations | 0 | 0 | |
Level 2 | |||
Fair Value Measurements | |||
Gross derivative assets | 17 | 24 | |
Derivative liabilities and environmental credit obligations | 97 | 58 | |
Fair value of debt | 7,300 | 4,100 | |
Level 2 | Commodity Futures Contracts | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | 1 | 0 | |
Level 2 | Commodity Swap Contracts | |||
Fair Value Measurements | |||
Gross derivative assets | 11 | 22 | |
Gross derivative liabilities | 15 | 14 | |
Level 2 | Options Held [Member] | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | ||
Level 2 | Commodity Forward Contracts | |||
Fair Value Measurements | |||
Gross derivative assets | 6 | 2 | |
Gross derivative liabilities | 2 | 4 | |
Level 2 | Environmental Credit Obligations | |||
Fair Value Measurements | |||
Environmental credit obligations | 79 | 40 | |
Level 3 | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | 0 | |
Derivative liabilities and environmental credit obligations | 0 | 0 | |
Level 3 | Commodity Futures Contracts | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | 0 | 0 | |
Level 3 | Commodity Swap Contracts | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | 0 | 0 | |
Level 3 | Options Held [Member] | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | ||
Level 3 | Commodity Forward Contracts | |||
Fair Value Measurements | |||
Gross derivative assets | 0 | 0 | |
Gross derivative liabilities | 0 | 0 | |
Level 3 | Environmental Credit Obligations | |||
Fair Value Measurements | |||
Environmental credit obligations | $ 0 | $ 0 | |
[1] | Certain of our derivative contracts, under master netting arrangements, include both asset and liability positions. We offset both the fair value amounts and any related cash collateral amounts recognized for multiple derivative instruments executed with the same counterparty when there is a legally enforceable right and an intention to settle net or simultaneously. As of December 31, 2016 and December 31, 2015, we had provided cash collateral amounts of $88 million and $12 million, respectively, related to our unrealized derivative positions. Cash collateral amounts are netted with mark-to-market derivative assets. |
Debt, Total Debt (Details)
Debt, Total Debt (Details) - USD ($) $ in Millions | Aug. 22, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Oct. 29, 2014 | ||
Credit facility | $ 330 | ||||||
Capital lease obligations and other | 43 | ||||||
Total Debt | 7,042 | $ 4,147 | |||||
Unamortized issuance costs (a) (b) | [1],[2] | 109 | 74 | ||||
Current maturities, net of unamortized issuance costs | (465) | (6) | |||||
Debt, Net of Current Maturities and Unamortized Issuance Costs | 6,468 | 4,067 | |||||
Capital contribution | 0 | 0 | $ 0 | ||||
Maturities of Debt | |||||||
Aggregate maturities of debt due 2017 | 465 | ||||||
Aggregate maturities of debt due 2018 | 17 | ||||||
Aggregate maturities of debt due 2019 | 526 | ||||||
Aggregate maturities of debt due 2020 | 488 | ||||||
Aggregate maturities of debt due 2021 | 1,150 | ||||||
4.250% Senior Notes due 2017 | |||||||
Senior notes | $ 450 | 450 | |||||
Debt instrument, interest rate | 4.25% | ||||||
5.375% Senior Notes due 2022 | |||||||
Senior notes | $ 475 | 475 | |||||
Debt instrument, interest rate | 5.375% | ||||||
4.750% Senior Notes due 2023 | |||||||
Senior notes | $ 850 | 0 | |||||
Debt instrument, interest rate | 4.75% | ||||||
5.125% Senior Notes due 2024 | |||||||
Senior notes | $ 300 | 300 | |||||
Debt instrument, interest rate | 5.125% | ||||||
5.125% Senior Notes due 2026 | |||||||
Senior notes | $ 750 | 0 | |||||
Debt instrument, interest rate | 5.125% | ||||||
TLLP 5.500% Senior Notes due 2019 | |||||||
Debt instrument, interest rate | 5.50% | ||||||
TLLP 5.875% Senior Notes due 2020 (a) | |||||||
Debt instrument, unamortized premium | $ 4 | 4 | |||||
Debt instrument, interest rate | 5.875% | ||||||
Capital contribution | $ 8 | ||||||
TLLP 6.125% Senior Notes due 2021 (a) | |||||||
Debt instrument, interest rate | 6.125% | ||||||
TLLP 6.250% Senior Notes due 2022 | |||||||
Debt instrument, interest rate | 6.25% | ||||||
Capital lease obligations and other | |||||||
Capital lease obligations and other | $ 53 | 47 | |||||
Tesoro Corporation Revolving Credit Facility | |||||||
Credit facility | 0 | [3] | 0 | ||||
TLLP Dropdown Credit Facility | |||||||
Credit facility | 0 | 0 | |||||
Term Loan Facility | |||||||
Credit facility | 64 | 0 | |||||
TLLP Unsecured Term Loan Facility | |||||||
TLLP Unsecured Term Loan Facility | 0 | 250 | |||||
Tesoro Corporation Revolving Credit Facility | |||||||
Credit facility | 330 | 305 | |||||
TLLP 6.375% Senior Notes due 2024 | |||||||
Senior notes | 450 | 0 | |||||
TLLP 5.500% Senior Notes due 2019 | |||||||
Senior notes | 500 | 500 | |||||
TLLP 5.875% Senior Notes due 2020 (a) | |||||||
Senior notes | [1] | 470 | 470 | ||||
TLLP 6.250% Senior Notes due 2022 | |||||||
Senior notes | 800 | 800 | |||||
TLLP 6.125% Senior Notes due 2021 (a) | |||||||
Senior notes | [2] | 800 | 550 | ||||
Capital lease obligations and other | |||||||
Senior notes | 750 | 0 | |||||
New Accounting Pronouncement, Early Adoption, Effect [Member] | |||||||
Unamortized debt issuance costs | $ 113 | $ 78 | |||||
[1] | Unamortized debt issuance costs of $113 million and $78 million are recorded as a reduction to debt on the balance sheet at December 31, 2016 and 2015, respectively. | ||||||
[2] | Unamortized premiums of $4 million associated with these senior notes are included in unamortized issuance costs at both December 31, 2016 and 2015. | ||||||
[3] | The $2.0 billion total capacity does not include the additional $1.0 billion related to the incremental revolving facility, as discussed further below. |
Debt, Revolving Credit Faciliti
Debt, Revolving Credit Facilities (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2016 | Jan. 29, 2016 | Dec. 31, 2015 | |||
Credit Facility | |||||
Total capacity | $ 4,575,000,000 | $ 600,000,000 | $ 900,000,000 | ||
Credit facility | 330,000,000 | ||||
Outstanding Letters of Credit | 26,000,000 | ||||
Available Capacity | $ 4,219,000,000 | ||||
Tesoro Corporation Revolving Credit Facility | |||||
Credit Facility | |||||
Credit facility, collateral | Our Revolving Credit Facility is guaranteed by substantially all of Tesoro’s active domestic subsidiaries excluding TLGP, TLLP and its subsidiaries, and certain foreign subsidiaries, and is secured by substantially all of Tesoro’s active domestic subsidiaries’ crude oil and refined product inventories, cash and receivables. | ||||
Total capacity | [1] | $ 2,000,000,000 | |||
Credit facility | 0 | [1] | 0 | ||
Outstanding Letters of Credit | [1] | 4,000,000 | |||
Available Capacity | [1] | $ 1,996,000,000 | |||
Expiration | [1] | Sep. 30, 2020 | |||
Line of Credit Facility, Increase (Decrease), Net | $ 2,300,000,000 | ||||
Total available capacity | $ 3,000,000,000 | ||||
30 day Eurodollar (LIBOR) Rate | 0.77% | ||||
Eurodollar Margin | 1.75% | ||||
Base Rate | 3.75% | ||||
Base Rate Margin | 0.75% | ||||
Commitment Fee (unused portion) | 0.30% | ||||
Unused credit availability, percentage | 100.00% | ||||
Credit facility, borrowing capacity, description | Our Revolving Credit Facility provides for borrowings (including letters of credit) up to the lesser of the amount of a periodically adjusted borrowing base, which consists of Tesoro’s eligible cash and cash equivalents, receivables and petroleum inventories, net of the standard reserve as defined, or the Revolving Credit Facility’s total capacity of $3.0 billion. | ||||
Incremental Revolver [Member] | |||||
Credit Facility | |||||
Total capacity | [1] | $ 1,000,000,000 | |||
Total available capacity | 2,200,000,000 | ||||
Term Loan Facility | |||||
Credit Facility | |||||
Credit facility | $ 64,000,000 | 0 | |||
Debt instrument, collateral | The obligations under the Term Loan Facility are secured by all equity interests of Tesoro Refining & Marketing Company LLC and Tesoro Alaska Company LLC, the Tesoro and USA Gasoline trademarks and those trademarks containing the name “ARCO” acquired in the Los Angeles Acquisition, and junior liens on certain assets. | ||||
TLLP Revolving Credit Facility | |||||
Credit Facility | |||||
Credit facility, collateral | The TLLP Revolving Credit Facility is non-recourse to Tesoro, except for TLGP, and is guaranteed by all of TLLP’s subsidiaries, with the exception of certain non-wholly owned subsidiaries acquired in the Rockies Natural Gas Business Acquisition, and secured by substantially all of TLLP’s assets. | ||||
Total capacity | $ 1,600,000,000 | ||||
Outstanding Letters of Credit | 0 | ||||
Available Capacity | $ 270,000,000 | ||||
Expiration | Jan. 29, 2021 | ||||
30 day Eurodollar (LIBOR) Rate | 0.77% | ||||
Eurodollar Margin | 2.00% | ||||
Base Rate | 3.75% | ||||
Base Rate Margin | 1.00% | ||||
Commitment Fee (unused portion) | 0.375% | ||||
Unused credit availability, percentage | 45.00% | ||||
Weighted average interest rate | 2.76% | ||||
Credit facility, borrowing capacity, description | Borrowings are available under the TLLP Revolving Credit Facility up to the total available revolving capacity of the facility. | ||||
TLLP Dropdown Credit Facility | |||||
Credit Facility | |||||
Total capacity | $ 1,000,000,000 | ||||
Credit facility | 0 | 0 | |||
Outstanding Letters of Credit | 0 | ||||
Available Capacity | $ 1,000,000,000 | ||||
Expiration | Jan. 29, 2021 | ||||
Total available capacity | $ 1,000,000,000 | ||||
30 day Eurodollar (LIBOR) Rate | 0.77% | ||||
Eurodollar Margin | 2.01% | ||||
Base Rate | 3.75% | ||||
Base Rate Margin | 1.01% | ||||
Commitment Fee (unused portion) | 0.375% | ||||
Letter of Credit Facilities | |||||
Credit Facility | |||||
Total capacity | $ 975,000,000 | ||||
Credit facility | 0 | ||||
Outstanding Letters of Credit | 22,000,000 | ||||
Available Capacity | $ 953,000,000 | ||||
Minimum | Letter of Credit Facilities | |||||
Credit Facility | |||||
Letters of Credit outstanding fees | 0.45% | ||||
Maximum | Letter of Credit Facilities | |||||
Credit Facility | |||||
Letters of Credit outstanding fees | 0.90% | ||||
TLLP Revolving Credit Facility [Member] | |||||
Credit Facility | |||||
Total capacity | $ 600,000,000 | ||||
Credit facility | $ 330,000,000 | 305,000,000 | |||
Expiration | Jan. 29, 2021 | ||||
TLLP Dropdown Credit Facility | |||||
Credit Facility | |||||
Credit facility | $ 0 | ||||
New Accounting Pronouncement, Early Adoption, Effect [Member] | |||||
Credit Facility | |||||
Unamortized debt issuance costs | $ 113,000,000 | $ 78,000,000 | |||
[1] | The $2.0 billion total capacity does not include the additional $1.0 billion related to the incremental revolving facility, as discussed further below. |
Debt, Tesoro Debt (Details)
Debt, Tesoro Debt (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | May 09, 2016 | Jan. 29, 2016 | Oct. 29, 2014 | ||
Credit Facility | ||||||||
Line of Credit Facility, Current Borrowing Capacity | $ 900 | $ 4,575 | $ 900 | $ 600 | ||||
Repayments of debt | $ 398 | 260 | 404 | $ 434 | ||||
Debt instrument, face amount | $ 1,300 | |||||||
Debt redemption charges | $ 9 | $ 1 | 41 | |||||
Supplemental TLLP 2021 Notes [Member] | ||||||||
Credit Facility | ||||||||
Debt instrument, face amount | $ 250 | |||||||
4.250% Senior Notes due 2017 | ||||||||
Credit Facility | ||||||||
Debt instrument, collateral | These notes are unsecured obligations and guaranteed by certain of our domestic subsidiaries, excluding TLGP and TLLP and its subsidiaries. | |||||||
Debt instrument, interest rate | 4.25% | |||||||
Debt instrument, maturity date | Oct. 1, 2017 | |||||||
Debt instrument, face amount | $ 450 | |||||||
Term (years) | five | |||||||
5.125% Senior Notes due 2024 | ||||||||
Credit Facility | ||||||||
Debt instrument, interest rate | 5.125% | |||||||
Debt instrument, maturity date | Apr. 1, 2024 | |||||||
Debt instrument, face amount | $ 300 | |||||||
Term (years) | ten-year | |||||||
Percentage redemption with equity proceeds | 35.00% | |||||||
Debt redemption percentage | 105.125% | |||||||
5.125% Senior Notes due 2026 | ||||||||
Credit Facility | ||||||||
Debt instrument, interest rate | 5.125% | |||||||
Debt instrument, maturity date | Dec. 15, 2026 | |||||||
Debt instrument, face amount | $ 750 | |||||||
Debt redemption percentage | 101.00% | |||||||
5.375% Senior Notes due 2022 | ||||||||
Credit Facility | ||||||||
Debt instrument, collateral | These notes are unsecured obligations and guaranteed by certain of our domestic subsidiaries, excluding TLGP and TLLP and its subsidiaries, and contain customary terms, events of default and covenants for an issuance of non-investment grade securities. | |||||||
Debt instrument, interest rate | 5.375% | |||||||
Debt instrument, maturity date | Oct. 1, 2022 | |||||||
Debt instrument, face amount | $ 475 | |||||||
Term (years) | ten-year | |||||||
4.750% Senior Notes due 2023 | ||||||||
Credit Facility | ||||||||
Debt instrument, interest rate | 4.75% | |||||||
Debt instrument, maturity date | Dec. 15, 2023 | |||||||
Debt instrument, face amount | $ 850 | |||||||
Debt redemption percentage | 101.00% | |||||||
9.750% Senior Notes due 2019 | ||||||||
Credit Facility | ||||||||
Debt instrument, collateral | The notes are unsecured and are guaranteed by substantially all of our domestic subsidiaries. | |||||||
Debt instrument, interest rate | 9.75% | 9.75% | ||||||
Debt instrument, maturity date | Jun. 1, 2019 | |||||||
Debt Instrument, Repurchase Amount | 329 | |||||||
Debt redemption charges | 31 | |||||||
Debt instrument, premium paid | 19 | |||||||
Amortized debt discount | $ 8 | |||||||
Redemption Period One | 5.125% Senior Notes due 2024 | ||||||||
Credit Facility | ||||||||
Redemption premium percentage | 2.563% | |||||||
Redemption Period One | 5.375% Senior Notes due 2022 | ||||||||
Credit Facility | ||||||||
Redemption premium percentage | 2.688% | |||||||
Redemption Period Two | 5.125% Senior Notes due 2024 | ||||||||
Credit Facility | ||||||||
Redemption premium percentage | 1.708% | |||||||
Redemption Period Two | 5.375% Senior Notes due 2022 | ||||||||
Credit Facility | ||||||||
Redemption premium percentage | 1.792% | |||||||
Redemption Period Three | 5.125% Senior Notes due 2024 | ||||||||
Credit Facility | ||||||||
Redemption premium percentage | 0.854% | |||||||
Redemption Period Three | 5.375% Senior Notes due 2022 | ||||||||
Credit Facility | ||||||||
Redemption premium percentage | 0.896% | |||||||
Tesoro Corporation Revolving Credit Facility | ||||||||
Credit Facility | ||||||||
Line of Credit Facility, Current Borrowing Capacity | [1] | $ 2,000 | ||||||
[1] | The $2.0 billion total capacity does not include the additional $1.0 billion related to the incremental revolving facility, as discussed further below. |
Debt, TLLP Debt (Details)
Debt, TLLP Debt (Details) - USD ($) $ / shares in Units, shares in Millions | Oct. 29, 2014 | Aug. 22, 2014 | Aug. 01, 2013 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Jun. 10, 2016 | May 09, 2016 | Jan. 29, 2016 | Dec. 17, 2013 | Sep. 14, 2012 |
Debt Instrument | |||||||||||
Line of Credit Facility, Current Borrowing Capacity | $ 4,575,000,000 | $ 900,000,000 | $ 600,000,000 | ||||||||
Long-term Line of Credit | 330,000,000 | ||||||||||
Debt instrument, offering date | Oct. 29, 2014 | ||||||||||
Debt instrument, face amount | $ 1,300,000,000 | ||||||||||
Price per unit (dollars per unit) | $ 47.13 | ||||||||||
Debt redemption charges | $ 9,000,000 | 1,000,000 | $ 41,000,000 | ||||||||
Capital lease obligations and other | |||||||||||
Debt Instrument | |||||||||||
Debt instrument, interest rate | 5.25% | ||||||||||
Debt instrument, maturity date | Jan. 15, 2025 | ||||||||||
Debt instrument, face amount | $ 750,000,000 | ||||||||||
Percentage redemption with equity proceeds | 35.00% | ||||||||||
Debt redemption percentage | 105.25% | ||||||||||
TLLP 5.500% Senior Notes due 2019 | |||||||||||
Debt Instrument | |||||||||||
Debt instrument, interest rate | 5.50% | ||||||||||
Debt instrument, face amount | $ 500,000,000 | ||||||||||
TLLP 5.875% Senior Notes due 2020 | |||||||||||
Debt Instrument | |||||||||||
Debt instrument, interest rate | 5.875% | ||||||||||
Debt instrument, maturity date | Oct. 1, 2020 | ||||||||||
Debt instrument, face amount | $ 130,000,000 | $ 250,000,000 | $ 350,000,000 | ||||||||
Debt Instrument, issuance premium percentage | 102.25% | ||||||||||
Debt instrument, unamortized premium | $ 4,000,000 | $ 4,000,000 | |||||||||
Debt redemption charges | $ 10,000,000 | ||||||||||
Debt instrument, collateral | The TLLP 2020 Notes are unsecured and guaranteed by all of TLLP’s subsidiaries, except Tesoro Logistics Finance Corp., the co-issuer, and a certain non-wholly owned subsidiary acquired in the Rockies Natural Gas Business Acquisition and are non-recourse to Tesoro, except for TLGP. | ||||||||||
TLLP 6.125% Senior Notes due 2021 (a) | |||||||||||
Debt Instrument | |||||||||||
Debt instrument, interest rate | 6.125% | ||||||||||
Debt instrument, maturity date | Oct. 15, 2021 | ||||||||||
Debt instrument, face amount | $ 550,000,000 | ||||||||||
Debt instrument, collateral | The TLLP 2021 Notes are unsecured and guaranteed by all of TLLP’s domestic subsidiaries, except Tesoro Logistics Finance Corp., the co-issuer, and a certain non-wholly owned subsidiary acquired in the Rockies Natural Gas Business Acquisition and are non-recourse to Tesoro, except for TLGP. | ||||||||||
Supplemental TLLP 2021 Notes [Member] | |||||||||||
Debt Instrument | |||||||||||
Debt instrument, face amount | $ 250,000,000 | ||||||||||
TLLP 6.250% Senior Notes due 2022 | |||||||||||
Debt Instrument | |||||||||||
Debt instrument, interest rate | 6.25% | ||||||||||
Debt instrument, maturity date | Oct. 15, 2022 | ||||||||||
Debt instrument, face amount | $ 800,000,000 | ||||||||||
Percentage redemption with equity proceeds | 35.00% | ||||||||||
TLLP 6.375% Senior Notes due 2024 | |||||||||||
Debt Instrument | |||||||||||
Debt instrument, interest rate | 6.375% | ||||||||||
Debt instrument, maturity date | May 1, 2024 | ||||||||||
Debt instrument, face amount | $ 450,000,000 | ||||||||||
Percentage redemption with equity proceeds | 35.00% | ||||||||||
Debt redemption percentage | 106.375% | ||||||||||
9.750% Senior Notes due 2019 | |||||||||||
Debt Instrument | |||||||||||
Unamortized debt issuance costs | 4,000,000 | ||||||||||
Debt instrument, interest rate | 9.75% | ||||||||||
Debt instrument, maturity date | Jun. 1, 2019 | ||||||||||
Debt redemption charges | $ 31,000,000 | ||||||||||
Debt instrument, collateral | The notes are unsecured and are guaranteed by substantially all of our domestic subsidiaries. | ||||||||||
Redemption Period One | Capital lease obligations and other | |||||||||||
Debt Instrument | |||||||||||
Redemption premium percentage | 2.625% | ||||||||||
Redemption Period One | TLLP 6.250% Senior Notes due 2022 | |||||||||||
Debt Instrument | |||||||||||
Redemption premium percentage | 3.125% | ||||||||||
Redemption Period One | TLLP 6.375% Senior Notes due 2024 | |||||||||||
Debt Instrument | |||||||||||
Redemption premium percentage | 4.781% | ||||||||||
Redemption Period Two | Capital lease obligations and other | |||||||||||
Debt Instrument | |||||||||||
Redemption premium percentage | 1.313% | ||||||||||
Redemption Period Two | TLLP 5.875% Senior Notes due 2020 | |||||||||||
Debt Instrument | |||||||||||
Redemption premium percentage | 2.938% | ||||||||||
Redemption Period Two | TLLP 6.125% Senior Notes due 2021 (a) | |||||||||||
Debt Instrument | |||||||||||
Redemption premium percentage | 4.594% | ||||||||||
Redemption Period Two | TLLP 6.250% Senior Notes due 2022 | |||||||||||
Debt Instrument | |||||||||||
Redemption premium percentage | 1.563% | ||||||||||
Redemption Period Two | TLLP 6.375% Senior Notes due 2024 | |||||||||||
Debt Instrument | |||||||||||
Redemption premium percentage | 3.188% | ||||||||||
Redemption Period Three | TLLP 5.875% Senior Notes due 2020 | |||||||||||
Debt Instrument | |||||||||||
Redemption premium percentage | 1.469% | ||||||||||
Redemption Period Three | TLLP 6.125% Senior Notes due 2021 (a) | |||||||||||
Debt Instrument | |||||||||||
Redemption premium percentage | 3.063% | ||||||||||
Redemption Period Three | TLLP 6.250% Senior Notes due 2022 | |||||||||||
Debt Instrument | |||||||||||
Debt redemption percentage | 106.25% | ||||||||||
Redemption Period Three | TLLP 6.375% Senior Notes due 2024 | |||||||||||
Debt Instrument | |||||||||||
Redemption premium percentage | 1.594% | ||||||||||
Debt Instrument, Redemption, Period Four [Member] | TLLP 6.125% Senior Notes due 2021 (a) | |||||||||||
Debt Instrument | |||||||||||
Redemption premium percentage | 1.531% | ||||||||||
Limited Partner | |||||||||||
Debt Instrument | |||||||||||
Common units issued in offering (units) | 2.1 | ||||||||||
Price per unit (dollars per unit) | $ 67.47 | ||||||||||
Tesoro Corporation Revolving Credit Facility | |||||||||||
Debt Instrument | |||||||||||
Line of Credit Facility, Current Borrowing Capacity | $ 600,000,000 | ||||||||||
Long-term Line of Credit | $ 330,000,000 | $ 305,000,000 | |||||||||
Line of Credit Facility, Expiration Date | Jan. 29, 2021 | ||||||||||
TLLP 5.500% Senior Notes due 2019 | |||||||||||
Debt Instrument | |||||||||||
Senior notes | $ 500,000,000 | $ 500,000,000 | |||||||||
TLLP 5.500% Senior Notes due 2019 | TLLP 5.500% Senior Notes due 2019 | |||||||||||
Debt Instrument | |||||||||||
Debt instrument, maturity date | Oct. 15, 2019 |
Note 12 - Debt Capital Lease Ob
Note 12 - Debt Capital Lease Obligations (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2016USD ($)option | Dec. 31, 2015USD ($) | |
Capital Lease Obligations | ||
Time period covered by arrangement (years) | 15 years | |
Renewal term | 5 years | |
Cost of assets under capital leases | $ 60 | $ 55 |
Accumulated amortization of assets under capital leases | 33 | 28 |
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity | ||
2,017 | 9 | |
2,018 | 10 | |
2,019 | 9 | |
2,020 | 6 | |
2,021 | 5 | |
Thereafter | 12 | |
Total minimum lease payments | 51 | |
Less amount representing interest | (8) | |
Capital lease obligations | $ 43 | |
Capital lease obligations | ||
Capital Lease Obligations | ||
Time period covered by arrangement (years) | 17 years | |
Renewal term | 5 years | |
Number of contract renewals (renewals) | option | 4 | |
Number of stations (stations) | 25 | |
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity | ||
Capital lease obligations | $ 53 | $ 47 |
Note 13 - Income Taxes Componen
Note 13 - Income Taxes Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Millions | 12 Months Ended | |||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Current: | ||||||
Federal | $ 195 | $ 697 | $ 244 | |||
State | 36 | 172 | 42 | |||
Deferred: | ||||||
Federal | 167 | 76 | 212 | |||
State | 29 | (9) | 49 | |||
Income Tax Expense | $ 427 | [1] | $ 936 | [2] | $ 547 | [2] |
[1] | The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. | |||||
[2] | The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. |
Note 13 - Income Taxes Deferred
Note 13 - Income Taxes Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Deferred tax assets: | |||
Accrued pension and other postretirement benefits | $ 152 | $ 141 | |
Accrued employee compensation liabilities | 90 | 101 | |
Accrued environmental remediation liabilities | 79 | 87 | |
Other accrued liabilities | 34 | 50 | |
Stock-based compensation | 34 | 47 | |
Net operating losses | 23 | 0 | |
Tax credit carryforwards | 8 | 8 | |
Asset retirement obligations | 6 | 12 | |
Investment in partnerships | 0 | 20 | |
Other | 24 | 10 | |
Total deferred tax assets | 450 | 476 | |
Less: valuation allowance | (26) | (7) | |
Total deferred tax assets, net | 424 | 469 | |
Deferred tax liabilities: | |||
Accelerated depreciation and property related items | 1,357 | 1,341 | |
Deferred maintenance costs, including refinery turnarounds | 248 | 224 | |
Inventory | 117 | 22 | |
Investment in partnerships | 61 | 0 | |
Amortization of intangible assets | 59 | 64 | |
Other | 10 | 40 | |
Total deferred tax liabilities | 1,852 | 1,691 | |
Deferred Tax Liabilities, Net | 1,428 | 1,222 | |
Excess tax benefits from stock-based compensation arrangements | $ (16) | $ 0 | $ 0 |
Note 13 - Income Taxes Reconcil
Note 13 - Income Taxes Reconciliation of Income Tax Expense (Benefit) (Details) - USD ($) $ in Millions | 12 Months Ended | |||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||||
Income tax expense at U.S. federal statutory rate | $ 447 | $ 921 | $ 512 | |||
State income taxes, net of federal income tax effect | 45 | 105 | 59 | |||
Manufacturing activities deduction | (5) | (43) | (21) | |||
Earnings attributable to noncontrolling interest | (44) | (53) | (16) | |||
Excess tax benefits from stock-based compensation arrangements | (16) | 0 | 0 | |||
Other | 0 | 6 | 13 | |||
Income Tax Expense | $ 427 | [1] | $ 936 | [2] | $ 547 | [2] |
[1] | The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. | |||||
[2] | The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. |
Note 13 - Income Taxes Income90
Note 13 - Income Taxes Income Taxes, Tax Carryforwards Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Loss Carryforwards [Line Items] | |||
Accrued interest and penalties | $ 2,000,000 | $ 2,000,000 | |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | 0 | 0 | $ 0 |
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 172,000,000 | $ 0 | |
Domestic Tax Authority [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Operating Loss Carryforwards | 58 | ||
Income Tax Credits | 1 | ||
State Taxing Authorities | |||
Operating Loss Carryforwards [Line Items] | |||
Operating Loss Carryforwards | 53 | ||
Income Tax Credits | $ 12 |
Note 13 - Income Taxes Unrecogn
Note 13 - Income Taxes Unrecognized Tax Benefits Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Contingency | ||||
Unrecognized tax benefits | $ 182 | $ 181 | $ 21 | $ 28 |
Unrecognized tax benefits recognized as liabilities | 6 | 5 | ||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 172 | 0 | ||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | 13 | |||
Accrued interest and penalties | $ 2 | 2 | ||
Unrecognized tax benefits, period change | $ (159) | |||
Internal Revenue Service (IRS) | ||||
Income Tax Contingency | ||||
Open tax year | 2,009 | |||
State Taxing Authorities | ||||
Income Tax Contingency | ||||
Open tax year | 2,006 |
Note 13 - Income Taxes Unreco92
Note 13 - Income Taxes Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance as of beginning of year | $ 181 | $ 21 | $ 28 |
Increases related to prior year tax positions | 0 | 159 | 5 |
Decreases related to prior year tax positions | 0 | 0 | (2) |
Increases related to current year tax positions | 1 | 1 | 1 |
Decreases related to settlements with taxing authorities | 0 | 0 | (11) |
Balance as of end of year | $ 182 | $ 181 | $ 21 |
Benefit Plans, Plan Description
Benefit Plans, Plan Descriptions Narrative (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)pension_plans | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Long duration fixed income | |||
Defined Benefit Plan, Assets, Target Allocations | |||
Target plan asset allocations | 45.00% | ||
Actual plan asset allocations | 44.00% | ||
Equity | |||
Defined Benefit Plan, Assets, Target Allocations | |||
Target plan asset allocations | 30.00% | ||
Actual plan asset allocations | 33.00% | ||
Other investments | |||
Defined Benefit Plan, Assets, Target Allocations | |||
Target plan asset allocations | 25.00% | ||
Actual plan asset allocations | 23.00% | ||
Pension Benefits | |||
Defined Benefit Plan Disclosure | |||
Number of benefit plans (plans) | pension_plans | 4 | ||
Contributions by employer | $ 76,000 | $ 63,000 | |
Benefits paid | $ 72,000 | 71,000 | |
Qualified Plan | |||
Defined Benefit Plan Disclosure | |||
Number of benefit plans (plans) | pension_plans | 1 | ||
Contributions by employer | $ 60,000 | 60,000 | $ 60,000 |
Nonqualified Plan | |||
Defined Benefit Plan Disclosure | |||
Number of benefit plans (plans) | pension_plans | 3 | ||
Benefits paid | $ 15,000 | 1,450 | 5,000 |
Other Postretirement Benefits | |||
Defined Benefit Plan Disclosure | |||
Contributions by employer | 7,000 | 6,000 | |
Benefits paid | 7,000 | 6,000 | |
Thrift Plan | |||
Defined Benefit Plan Disclosure | |||
Employer contribution amount | 60,000 | 57,000 | $ 42,000 |
Defined Benefit Plan, Assets, Target Allocations | |||
Defined contribution plan employer discretionary contribution, accrual amount | $ 0 | $ 24,000 |
Projected Benefit Obligation (D
Projected Benefit Obligation (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Changes in plan assets: | ||||
Fair value of plan assets at beginning of year | $ 390 | |||
Fair value of plan assets at end of year | 425 | $ 390 | ||
Pension Benefits | ||||
Change in projected benefit obligation: | ||||
Projected benefit obligations at beginning of year | 727 | 767 | ||
Service cost | 46 | 45 | $ 44 | |
Interest cost | 30 | 30 | 29 | |
Actuarial loss (gain) | 62 | (44) | ||
Benefits paid | (72) | (71) | ||
Projected benefit obligation at end of year | 793 | 727 | 767 | |
Changes in plan assets: | ||||
Fair value of plan assets at beginning of year | 390 | 413 | ||
Actual return on plan assets | 30 | (15) | ||
Employer contributions | 76 | 63 | ||
Benefits paid | (72) | (71) | ||
Fair value of plan assets at end of year | 424 | 390 | $ 413 | |
Funded status of plan | ||||
Funded status at end of year | $ (369) | $ (337) | ||
Discount rate | [1] | 4.12% | 4.40% | 4.05% |
Recognized curtailment gain | $ (5) | $ 0 | $ (1) | |
Accumulated benefit obligation | 704 | 629 | ||
Other Postretirement Benefits | ||||
Change in projected benefit obligation: | ||||
Projected benefit obligations at beginning of year | 74 | 77 | ||
Service cost | 3 | 3 | 3 | |
Interest cost | 2 | 2 | 3 | |
Actuarial loss (gain) | 0 | (2) | ||
Benefits paid | (7) | (6) | ||
Projected benefit obligation at end of year | 72 | 74 | 77 | |
Changes in plan assets: | ||||
Fair value of plan assets at beginning of year | 0 | 0 | ||
Actual return on plan assets | 0 | 0 | ||
Employer contributions | 7 | 6 | ||
Benefits paid | (7) | (6) | ||
Fair value of plan assets at end of year | 0 | 0 | $ 0 | |
Funded status of plan | ||||
Funded status at end of year | $ (72) | $ (74) | ||
Discount rate | [1] | 3.38% | 3.42% | 3.16% |
Recognized curtailment gain | $ 0 | $ 0 | $ 0 | |
[1] | We determine the discount rate primarily by reference to the effective yields on high quality corporate bonds that have a comparable cash flow pattern to the expected pension and other postretirement benefit payments to be made. |
Note 14 - Benefit Plans Accumul
Note 14 - Benefit Plans Accumulated Benefit Obligation (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Pension and Other Postretirement Defined Benefit Plans, Liabilities | ||
Other current liabilities | $ 11 | $ 10 |
Pension Benefits | ||
Pension and Other Postretirement Defined Benefit Plans, Liabilities | ||
Other current liabilities | 2 | 2 |
Other noncurrent liabilities | 367 | 335 |
Total amount recognized | 369 | 337 |
Other Postretirement Benefits | ||
Pension and Other Postretirement Defined Benefit Plans, Liabilities | ||
Other current liabilities | 9 | 8 |
Other noncurrent liabilities | 63 | 66 |
Total amount recognized | $ 72 | $ 74 |
Net Periodic Benefit Expense In
Net Periodic Benefit Expense Income and Amounts Recognized in Other Comprehensive Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), before Tax | |||
Net actuarial (loss) | $ (369) | $ (337) | |
Prior service credit (cost) | 60 | 93 | |
Total income (loss) | (309) | (244) | |
Net gain (loss) reclassified into income: | |||
Total gain (loss) recognized in other comprehensive income | 65 | 0 | $ 159 |
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year | |||
Net actuarial loss | (11) | ||
Prior service cost (credit) | 3 | ||
Total included in accumulated other comprehensive income (loss) | (8) | ||
Pension Benefits | |||
Components of net periodic benefit expense (income): | |||
Service cost | 46 | 45 | 44 |
Interest cost | 30 | 30 | 29 |
Expected return on plan assets | (27) | (27) | (25) |
Amortization of prior service cost (credit) | 0 | 1 | 1 |
Recognized net actuarial loss | 19 | 24 | 12 |
Recognized curtailment loss (gain) | 5 | 0 | 1 |
Net periodic benefit expense (income) | 73 | 73 | 62 |
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), before Tax | |||
Net actuarial (loss) | (323) | (286) | |
Prior service credit (cost) | (2) | (3) | |
Total income (loss) | (325) | (289) | |
Net gain (loss) arising during the year: | |||
Net actuarial gain (loss) | (60) | 2 | (144) |
Prior service credit (cost) | 0 | 0 | (2) |
Curtailment loss | 4 | 0 | 0 |
Curtailment - prior service cost | 1 | 0 | 1 |
Net gain (loss) reclassified into income: | |||
Net actuarial loss | 19 | 24 | 12 |
Prior service cost (credit) | 0 | 1 | 1 |
Total gain (loss) recognized in other comprehensive income | (36) | 27 | (132) |
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year | |||
Net actuarial loss | 23 | ||
Prior service cost (credit) | 0 | ||
Total included in accumulated other comprehensive income (loss) | 23 | ||
Other Postretirement Benefits | |||
Components of net periodic benefit expense (income): | |||
Service cost | 3 | 3 | 3 |
Interest cost | 2 | 2 | 3 |
Expected return on plan assets | 0 | 0 | 0 |
Amortization of prior service cost (credit) | (34) | (34) | (34) |
Recognized net actuarial loss | 4 | 5 | 6 |
Recognized curtailment loss (gain) | 0 | 0 | 0 |
Net periodic benefit expense (income) | (25) | (24) | (22) |
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), before Tax | |||
Net actuarial (loss) | (46) | (51) | |
Prior service credit (cost) | 62 | 96 | |
Total income (loss) | 16 | 45 | |
Net gain (loss) arising during the year: | |||
Net actuarial gain (loss) | 1 | 2 | 2 |
Prior service credit (cost) | 0 | 0 | 0 |
Curtailment loss | 0 | 0 | 0 |
Curtailment - prior service cost | 0 | 0 | 0 |
Net gain (loss) reclassified into income: | |||
Net actuarial loss | 4 | 5 | 6 |
Prior service cost (credit) | (34) | (34) | (35) |
Total gain (loss) recognized in other comprehensive income | (29) | $ (27) | $ (27) |
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year | |||
Net actuarial loss | (34) | ||
Prior service cost (credit) | 3 | ||
Total included in accumulated other comprehensive income (loss) | $ (31) |
Benefit Plans, Assumptions and
Benefit Plans, Assumptions and Future Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Assumed health care cost trend rates | ||||
Health care cost trend rate assumed for next year | 6.90% | 7.20% | ||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 4.80% | 4.80% | ||
Year that the rate reaches the ultimate trend rate | 2,024 | 2,024 | ||
Direction and pattern of change for assumed health care cost trend rate | less than a million dollar | |||
Pension Benefits | ||||
Projected benefit obligation: | ||||
Discount rate | [1] | 4.12% | 4.40% | 4.05% |
Rate of compensation increase | 4.33% | 4.25% | 4.25% | |
Net periodic benefit expense: | ||||
Discount rate | [1] | 4.40% | 4.05% | 4.96% |
Rate of compensation increase | 4.33% | 4.25% | 4.25% | |
Expected long-term return on plan assets | [2] | 6.50% | 6.50% | 6.50% |
Estimated future benefit payments | ||||
2,017 | $ 62 | |||
2,018 | 66 | |||
2,019 | 97 | |||
2,020 | 71 | |||
2,021 | 71 | |||
2022-2026 | $ 355 | |||
Other Postretirement Benefits | ||||
Projected benefit obligation: | ||||
Discount rate | [1] | 3.38% | 3.42% | 3.16% |
Rate of compensation increase | 0.00% | 0.00% | 0.00% | |
Net periodic benefit expense: | ||||
Discount rate | [1] | 3.42% | 3.16% | 3.69% |
Rate of compensation increase | 0.00% | 0.00% | 0.00% | |
Expected long-term return on plan assets | [2] | 0.00% | 0.00% | 0.00% |
Estimated future benefit payments | ||||
2,017 | $ 9 | |||
2,018 | 8 | |||
2,019 | 8 | |||
2,020 | 8 | |||
2,021 | 7 | |||
2022-2026 | $ 31 | |||
[1] | We determine the discount rate primarily by reference to the effective yields on high quality corporate bonds that have a comparable cash flow pattern to the expected pension and other postretirement benefit payments to be made. | |||
[2] | The expected return on plan assets reflects the weighted-average of the expected long-term rates of return for the broad categories of investments held for the Retirement Plan. The expected long-term rate of return is adjusted when there are fundamental changes in expected returns on the Retirement Plan’s investments. |
Benefit Plans, Defined Contribu
Benefit Plans, Defined Contribution Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Thrift Plan | |||
Defined contribution plan employer matching percent | 100.00% | ||
Maximum percentage of employee contribution subject to match | 6.00% | ||
Employer contribution amount | $ 60 | $ 57 | $ 42 |
Defined contribution plan employer discretionary contribution, accrual amount | $ 0 | $ 24 | |
Thrift Plan | Minimum | |||
Discretionary contribution rate | 0.00% | ||
Thrift Plan | Maximum | |||
Discretionary contribution rate | 4.00% | ||
Retail Savings Plan | |||
Non-elective employer contribution | 3.00% |
Fair Value of Plan Assets (Deta
Fair Value of Plan Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | ||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | $ 425 | $ 390 | |||
Equity | |||||
Defined Benefit Plan Disclosure | |||||
Target plan asset allocations | 30.00% | ||||
Actual plan asset allocations | 33.00% | ||||
Mutual funds | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [1] | $ 332 | 152 | ||
Common/collective trust funds | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | 91 | [2] | 76 | ||
Fixed income | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [3] | 0 | 155 | ||
Short-term investment funds | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [4] | $ 2 | 7 | ||
Other investments | |||||
Defined Benefit Plan Disclosure | |||||
Target plan asset allocations | 25.00% | ||||
Actual plan asset allocations | 23.00% | ||||
Long duration fixed income | |||||
Defined Benefit Plan Disclosure | |||||
Target plan asset allocations | 45.00% | ||||
Actual plan asset allocations | 44.00% | ||||
Level 1 | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | $ 332 | 103 | |||
Level 1 | Mutual funds | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [1] | 332 | 103 | ||
Level 1 | Common/collective trust funds | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [2] | 0 | 0 | ||
Level 1 | Fixed income | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [3] | 0 | 0 | ||
Level 1 | Short-term investment funds | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [4] | 0 | 0 | ||
Level 2 | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | 93 | 287 | |||
Level 2 | Mutual funds | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [1] | 0 | 49 | ||
Level 2 | Common/collective trust funds | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [2] | 91 | 76 | ||
Level 2 | Fixed income | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [3] | 0 | 155 | ||
Level 2 | Short-term investment funds | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | 2 | 7 | [4] | ||
Level 3 | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | 0 | 0 | |||
Level 3 | Mutual funds | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [1] | 0 | 0 | ||
Level 3 | Common/collective trust funds | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [2] | 0 | 0 | ||
Level 3 | Fixed income | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | [3] | 0 | 0 | ||
Level 3 | Short-term investment funds | |||||
Defined Benefit Plan Disclosure | |||||
Total fair value of plan assets | $ 0 | $ 0 | [4] | ||
[1] | Mutual funds that invest primarily in domestic and international equity and fixed income securities. Fair values are based on market quotations from national securities exchanges. Absolute return and real return mutual funds consist of investments in mutual funds that invest in a broad set of asset classes designed to provide a target return regardless of market conditions or the potential for real returns in excess of U.S. inflation, respectively. The fixed income mutual funds provide diversified exposure to high credit quality, long-term and short-term, U.S. investment grade bonds. All mutual funds and a U.S. equity mutual fund are categorized as level 1 investments. | ||||
[2] | Common/collective trust funds that invest in primarily equity and fixed income securities. Fair values reflect the net asset value per share, as determined by the investment manager and derived from the quoted prices in active markets of the underlying securities. Common/collective trust funds are classified as level 2 investments. | ||||
[3] | Fixed income assets represent securities primarily invested in corporate, government-related, mortgage and asset-backed debt obligations with a primary focus on long duration securities. Individual fixed income securities are typically priced on the basis of evaluated prices from independent pricing services. | ||||
[4] | The short-term investment funds provide for safety of principal and daily liquidity and is valued using the net asset value per share. These assets are classified as level 2 investments. |
Note 15 - Commitments and Co100
Note 15 - Commitments and Contingencies Operating Leases, Purchase Obligations and Other Commitments(Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016USD ($)ships$ / bbl | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | ||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | $ 13 | |||
Time period covered by arrangement (years) | 15 years | |||
Operating Leases, Rent Expense, Minimum Rentals | $ 576 | $ 569 | $ 466 | |
Number Of Ships Time Charter | ships | 14 | |||
Operating Lease, Category One [Member] | Maximum | ||||
Time period covered by arrangement (years) | 5 years | |||
Operating Lease Subcategory Five [Member] | Maximum | ||||
Time period covered by arrangement (years) | 37 years | |||
Lease Agreements [Member] | ||||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | [1] | $ 413 | ||
Operating Leases, Future Minimum Payments, Due in Two Years | [1] | 323 | ||
Operating Leases, Future Minimum Payments, Due in Three Years | [1] | 259 | ||
Operating Leases, Future Minimum Payments, Due in Four Years | [1] | 227 | ||
Operating Leases, Future Minimum Payments, Due in Five Years | [1] | 224 | ||
Operating Leases, Future Minimum Payments, Due Thereafter | [1] | 392 | ||
Operating Leases, Future Minimum Payments Due | [1] | 1,838 | ||
Inventories [Member] | ||||
Unrecorded Unconditional Purchase Obligation, Due in Next Twelve Months | [2] | 3,225 | ||
Unrecorded Unconditional Purchase Obligation, Due within Two Years | [2] | 886 | ||
Unrecorded Unconditional Purchase Obligation, Due within Three Years | [2] | 486 | ||
Unrecorded Unconditional Purchase Obligation, Due within Four Years | [2] | 395 | ||
Unrecorded Unconditional Purchase Obligation, Due within Five Years | [2] | 164 | ||
Unrecorded Unconditional Purchase Obligation, Due after Five Years | [2] | 0 | ||
Unrecorded Unconditional Purchase Obligation | [2] | $ 5,156 | ||
Inventories [Member] | Maximum | ||||
Pricing Per Barrel | $ / bbl | 57 | |||
Time period covered by arrangement (years) | 5 years | |||
Inventories [Member] | Minimum | ||||
Pricing Per Barrel | $ / bbl | 56 | |||
Capital Addition Purchase Commitments [Member] | ||||
Unrecorded Unconditional Purchase Obligation, Due in Next Twelve Months | $ 459 | |||
Take Or Pay Obligations [Member] | ||||
Unrecorded Unconditional Purchase Obligation, Due in Next Twelve Months | 317 | |||
Unrecorded Unconditional Purchase Obligation, Due within Two Years | 241 | |||
Unrecorded Unconditional Purchase Obligation, Due within Three Years | 182 | |||
Unrecorded Unconditional Purchase Obligation, Due within Four Years | 143 | |||
Unrecorded Unconditional Purchase Obligation, Purchases | 620 | $ 687 | $ 666 | |
Unrecorded Unconditional Purchase Obligation, Due within Five Years | 125 | |||
Unrecorded Unconditional Purchase Obligation, Due after Five Years | 105 | |||
Unrecorded Unconditional Purchase Obligation | $ 1,113 | |||
Take Or Pay Obligations [Member] | Maximum | ||||
Time period covered by arrangement (years) | 10 years | |||
[1] | Includes operating leases having initial or remaining noncancellable lease terms in excess of one year | |||
[2] | Prices under the term agreements fluctuate due to market-responsive pricing provisions. To estimate our annual commitments under these contracts, we estimated crude oil prices using exchange-traded crude future prices by crude oil type as of December 31, 2016, with prices ranging from $56 per barrel to $57 per barrel, and volumes based on the contract’s minimum purchase requirements over the term of the contract. |
Note 15 - Commitments and Co101
Note 15 - Commitments and Contingencies Environmental Liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Accrual for Environmental Loss Contingencies | [1] | $ 227 | $ 255 | $ 274 |
Accrual for Environmental Loss Contingencies, Charges to Expense for New Losses | 32 | 46 | ||
Accrual for Environmental Loss Contingencies, Increase (Decrease) for Acquisitions and Divestitures | 5 | 2 | ||
Accrual for Environmental Loss Contingencies, Payments | $ (65) | (67) | ||
Cost Share Arrangement Percent | 75.00% | |||
Insurance Coverage Ceiling | $ 190 | |||
Self Insurance Deductible | 50 | |||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | 13 | |||
TLLP | ||||
Accrual for Environmental Loss Contingencies | 22 | 33 | ||
324110 Petroleum Refineries [Member] | ||||
Accrual for Environmental Loss Contingencies | 170 | $ 192 | ||
Liabilities Subject to Compromise, Environmental Contingencies | $ 36 | |||
[1] | Includes $22 million and $33 million of TLLP environmental liabilities at December 31, 2016 and 2015, respectively. |
Note 16 - Stockholders' Equi102
Note 16 - Stockholders' Equity Noncontrolling Interest (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Noncontrolling Interest [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 100,000 | 600,000 | 100,000 | |
Purchases of common stock (shares) | 0 | |||
Noncontrolling Interest | ||||
Balance at Beginning of Year | $ 2,527,000,000 | |||
Net earnings | 126,000,000 | $ 150,000,000 | $ 45,000,000 | |
Net proceeds from issuance of Tesoro Logistics LP Common Units | 364,000,000 | 99,000,000 | 949,000,000 | |
Distributions to noncontrolling interest | (216,000,000) | (182,000,000) | (96,000,000) | |
Amortization of TLLP equity settled awards | 48,000,000 | 46,000,000 | 38,000,000 | |
Deconsolidation of RGS | [1] | $ 295,000,000 | ||
Consolidation of Vancouver Energy | 8 | |||
Balance at End of Year | $ 2,662,000,000 | 2,527,000,000 | ||
Noncontrolling Interest | ||||
Noncontrolling Interest | ||||
Balance at Beginning of Year | 2,527,000,000 | 2,522,000,000 | ||
Net earnings | 126,000,000 | 150,000,000 | ||
Net proceeds from issuance of Tesoro Logistics LP Common Units | 366,000,000 | 101,000,000 | 960,000,000 | |
Distributions to noncontrolling interest | (216,000,000) | (182,000,000) | (96,000,000) | |
Amortization of TLLP equity settled awards | 5,000,000 | 4,000,000 | 2,000,000 | |
Deconsolidation of RGS | (84,000,000) | 0 | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Changes, Purchase of Interest by Parent | $ 8,000,000 | 0 | ||
Consolidation of Vancouver Energy | 8 | |||
TLLP’s sale of common units | $ (101,000,000) | (114,000,000) | ||
Tesoro’s acquisition of TLLP common units (a) | [2] | 32,000,000 | 44,000,000 | |
Other | (1,000,000) | 2,000,000 | ||
Balance at End of Year | $ 2,662,000,000 | $ 2,527,000,000 | $ 2,522,000,000 | |
[1] | The reassessment of the investments performed by TLLP resulted in the deconsolidation of RGS and the reporting of RGS as an equity method investment. TLLP recognized an increase of $295 million to equity method investments as of January 1, 2016 as a result of the deconsolidation. | |||
[2] | Includes the net impact of $32 million and $44 million for the years ended December 31, 2016 and 2015, respectively, to noncontrolling interest for ownership changes occurring as a result of TLLP’s issuance of equity to the public and the issuance of TLLP common units to Tesoro for the Alaska Storage and Terminalling Assets Acquisition, the Northern California Terminalling and Storage Assets Acquisition and the LA Storage and Handling Asset Acquisition. |
Note 16 - Stockholders' Equi103
Note 16 - Stockholders' Equity Earnings Per Share (Details) - shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share [Abstract] | |||
Weighted average common shares outstanding - Basic | 118.5 | 123.2 | 128.5 |
Common stock equivalents | 1.4 | 1.4 | 2.3 |
Weighted average common shares outstanding - Diluted | 119.9 | 124.6 | 130.8 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0.1 | 0.6 | 0.1 |
Note 16 - Stockholders' Equi104
Note 16 - Stockholders' Equity Shares Repurchases and Dividends (Details) - USD ($) $ / shares in Units, $ in Millions | Mar. 15, 2017 | Feb. 28, 2017 | Feb. 03, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Nov. 16, 2016 | Oct. 28, 2015 | Jul. 30, 2014 |
Annual cash dividends paid | $ 249 | $ 228 | $ 141 | ||||||||||||||||||
Dividends per Share | $ 0.550 | $ 0.550 | $ 0.500 | $ 0.500 | $ 0.500 | $ 0.500 | $ 0.425 | $ 0.425 | $ 0.300 | $ 0.300 | $ 0.250 | $ 0.250 | $ 2.10 | $ 1.85 | $ 1.10 | ||||||
Treasury Stock, Shares, Acquired | 0 | ||||||||||||||||||||
Treasury Stock, Value, Acquired, Cost Method | $ 250 | $ 644 | $ 500 | ||||||||||||||||||
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 | |||||||||||||||||||
Preferred Stock, Par or Stated Value Per Share | $ 0 | $ 0 | |||||||||||||||||||
Preferred Stock, Shares Issued | 0 | 0 | 0 | 0 | |||||||||||||||||
Share Repurchase Program [Member] | |||||||||||||||||||||
Stock Repurchase Program, Authorized Amount | $ 1,000 | ||||||||||||||||||||
Treasury Stock, Shares, Acquired | 3,200,000 | 6,900,000 | |||||||||||||||||||
Treasury Stock, Value, Acquired, Cost Method | $ 250 | $ 644 | |||||||||||||||||||
Share Repurchase Program Latest [Member] | |||||||||||||||||||||
Stock Repurchase Program, Authorized Amount | $ 1,000 | $ 1,000 | |||||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||||||
Dividends Payable, Date Declared | Feb. 3, 2017 | ||||||||||||||||||||
Dividends Payable, Date to be Paid | Mar. 15, 2017 | ||||||||||||||||||||
Dividends Payable, Date of Record | Feb. 28, 2017 |
Stock-Based Compensation, Summa
Stock-Based Compensation, Summary of Stock-Based Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-Based Compensation Arrangement by Share-based Payment Award | |||
Shares available for grant | 3,073,672 | ||
Payout percentage assumption | 200.00% | ||
Share-based Compensation | $ 35 | $ 75 | $ 55 |
Income tax benefit for stock-based compensation arrangements | 28 | 28 | 24 |
Excess tax benefits from stock-based compensation arrangements | (16) | 0 | 0 |
Tax benefit realized from exercise or vesting of stock-based compensation awards | 37 | 75 | 46 |
Stock appreciation rights | |||
Share-Based Compensation Arrangement by Share-based Payment Award | |||
Stock-based compensation expense | $ (14) | 25 | 15 |
Vesting period | 3 years | ||
Life of award (years) | 7 years | ||
Cash used to settle awards | $ 21 | 44 | $ 31 |
Amount recorded in other current liabilities | $ 6 | $ 41 | |
Stock-based compensation awards other than options, Outstanding | |||
Outstanding at January 1, 2016 | 463,000 | ||
Exercised | (338,000) | ||
Forfeited | (37,000) | ||
Outstanding at December 31, 2016 | 88,000 | 463,000 | |
Vested or expected to vest at December 31, 2016 | 88,000 | ||
Exercisable at December 31, 2016 | 88,000 | ||
Share-based compensation, other than options, additional disclosures | |||
Weighted average remaining contractual term, other than options outstanding at January 1, 2016 | 123 days | 158 days | |
Weighted average remaining contractual term, other than options outstanding at December 31, 2016 | 123 days | 158 days | |
Weighted average remaining contractual term, other than options vested or expected to vest | 123 days | ||
Weighted average remaining contractual term, other than options exercisable at December 31, 2016 | 123 days | ||
Stock-based compensation awards, options, outstanding | |||
Granted | 0 | 0 | 0 |
Share-based compensation awards, options, weighted average exercise price | |||
Weighted average stock option exercise price, outstanding at January 1, 2016 | $ 15.72 | ||
Weighted average stock option exercise price, exercised | 16.44 | ||
Weighted average stock option exercise price, forfeited or expired | 15.72 | ||
Weighted average stock option exercise price, outstanding at December 31, 2016 | 12.93 | $ 15.72 | |
Weighted average stock option exercise price, vested or expect to vest at December 31, 2016 | 12.93 | ||
Weighted average stock option exercise price, exercisable at December 31, 2016 | $ 12.93 | ||
Fair Value Assumptions and Methodology | |||
Expected life from date of grant (years) | 7 years | 7 years | 7 years |
Expected volatility | 40.00% | 51.00% | 57.00% |
Expected dividend yield | 3.00% | 2.00% | 2.00% |
Risk-free interest rate | 0.70% | 0.40% | 0.20% |
Performance share awards | |||
Share-Based Compensation Arrangement by Share-based Payment Award | |||
Stock-based compensation expense | $ 10 | $ 11 | $ 17 |
Vesting period | 3 years | ||
Performance period | 3 years | ||
Vesting percentage lower limit | 0.00% | ||
Vesting percentage upper limit | 200.00% | ||
Nonvested awards, total compensation cost not yet recognized | $ 11 | ||
Nonvested intrinsic value | $ 33 | $ 45 | |
Total compensation cost not yet recognized, period for recognition | 1 year 7 months | ||
Weighted average payout percentage | 111.00% | ||
Stock-based compensation awards other than options, Outstanding | |||
Outstanding at January 1, 2016 | 431,000 | ||
Granted | 157,000 | ||
Vested | (188,000) | ||
Forfeited | (22,000) | ||
Outstanding at December 31, 2016 | 378,000 | 431,000 | |
Share-based compensation awards other than options, weighted average fair value | |||
Weighted average grant date fair value, nonvested | $ 83.53 | $ 71.76 | |
Weighted average grant date fair value, granted | 87.90 | $ 117.96 | $ 54.42 |
Weighted average grant date fair value, vested | 55.20 | ||
Weighted average grant date fair value, forfeited | $ 90.37 | ||
Fair Value Assumptions and Methodology | |||
Expected volatility | 35.00% | 35.00% | 43.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 1.00% | 1.00% | 0.60% |
Market stock units | |||
Share-Based Compensation Arrangement by Share-based Payment Award | |||
Payout percentage assumption | 100.00% | ||
Stock-based compensation expense | $ 29 | $ 27 | $ 17 |
Vesting period | 3 years | ||
Performance period | 3 years | ||
Vesting percentage lower limit | 50.00% | ||
Vesting percentage upper limit | 200.00% | ||
Nonvested awards, total compensation cost not yet recognized | $ 39 | ||
Nonvested intrinsic value | $ 94 | $ 119 | |
Total compensation cost not yet recognized, period for recognition | 1 year 7 months | ||
Weighted average payout percentage | 130.00% | ||
Market Condition Market Stock Units | 50.00% | ||
Stock-based compensation awards other than options, Outstanding | |||
Outstanding at January 1, 2016 | 1,135,000 | ||
Granted | 693,000 | ||
Vested | (711,000) | ||
Forfeited | (47,000) | ||
Outstanding at December 31, 2016 | 1,070,000 | 1,135,000 | |
Share-based compensation awards other than options, weighted average fair value | |||
Weighted average grant date fair value, nonvested | $ 84.78 | $ 78.99 | |
Weighted average grant date fair value, granted | 84.84 | $ 114.57 | $ 57.60 |
Weighted average grant date fair value, vested | 65.95 | ||
Weighted average grant date fair value, forfeited | $ 89.79 | ||
Fair Value Assumptions and Methodology | |||
Expected volatility | 35.00% | 35.00% | 44.00% |
Expected dividend yield | 2.00% | 2.00% | 2.00% |
Risk-free interest rate | 1.10% | 1.10% | 0.70% |
Restricted common stock | |||
Share-Based Compensation Arrangement by Share-based Payment Award | |||
Stock-based compensation expense | $ 5 | $ 4 | $ 3 |
Performance period | 3 years | ||
Nonvested awards, total compensation cost not yet recognized | $ 4 | ||
Total compensation cost not yet recognized, period for recognition | 1 year 7 months | ||
Vested in period, total fair value | $ 2 | $ 4 | $ 2 |
Fair value of nonvested awards | $ 10 | ||
Stock-based compensation awards other than options, Outstanding | |||
Outstanding at January 1, 2016 | 105,000 | ||
Granted | 50,000 | ||
Vested | (44,000) | ||
Forfeited | 0 | ||
Outstanding at December 31, 2016 | 111,000 | 105,000 | |
Share-based compensation awards other than options, weighted average fair value | |||
Weighted average grant date fair value, nonvested | $ 71.45 | $ 57.58 | |
Weighted average grant date fair value, granted | 85.51 | $ 90.40 | $ 61.76 |
Weighted average grant date fair value, vested | 53.71 | ||
Weighted average grant date fair value, forfeited | $ 0 | ||
Stock options | |||
Share-Based Compensation Arrangement by Share-based Payment Award | |||
Annual vesting percentage | .33 | ||
Life of option (years) | 10 years | ||
Stock-based compensation awards, options, outstanding | |||
Outstanding at January 1, 2016 | 344,000 | ||
Granted | 0 | 0 | 0 |
Exercised | (70,000) | ||
Forfeited or expired | 0 | ||
Outstanding at December 31, 2016 | 274,000 | 344,000 | |
Vested or expected to vest at December 31, 2016 | 274,000 | ||
Exercisable at December 31, 2016 | 274,000 | ||
Share-based compensation awards, options, weighted average exercise price | |||
Weighted average stock option exercise price, outstanding at January 1, 2016 | $ 26.55 | ||
Weighted average stock option exercise price, exercised | 39.64 | ||
Weighted average stock option exercise price, forfeited or expired | 0 | ||
Weighted average stock option exercise price, outstanding at December 31, 2016 | 23.20 | $ 26.55 | |
Weighted average stock option exercise price, vested or expect to vest at December 31, 2016 | 23.20 | ||
Weighted average stock option exercise price, exercisable at December 31, 2016 | $ 23.20 | ||
Share-based compensation, options, additional disclosures | |||
Aggregate stock option intrinsic value, outstanding at January 1, 2016 | $ 27 | ||
Aggregate stock option intrinsic value, outstanding at December 31, 2016 | 18 | $ 27 | |
Aggregate stock option intrinsic value, vested or expected to vest at December 31, 2016 | 18 | ||
Aggregate stock option intrinsic value, exercisable at December 31, 2016 | $ 18 | ||
Weighted average remaining contractual term, stock options outstanding at January 1, 2016 | 2 years 6 months | 3 years | |
Weighted average remaining contractual term, stock options outstanding at December 31, 2016 | 2 years 6 months | 3 years | |
Weighted average remaining contractual term, stock options vested or expected to vest at December 31, 2016 | 2 years 6 months | ||
Weighted average remaining contractual term, stock options exercisable at December 31, 2016 | 2 years 6 months | ||
Total intrinsic value, stock options exercised | $ 3 | $ 19 | $ 25 |
Tax benefit from stock options exercised | 1 | ||
Other stock-based compensation | |||
Share-Based Compensation Arrangement by Share-based Payment Award | |||
Stock-based compensation expense | $ 5 | $ 8 | $ 3 |
Note 18 - Supplemental Cash 106
Note 18 - Supplemental Cash Flow Information Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Supplemental Cash Flow Disclosures | |||
Interest paid, net of capitalized interest | $ 199 | $ 181 | $ 129 |
Income taxes paid, net | 136 | 882 | 309 |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | |||
Capital expenditures included in accounts payable at end of period | $ 191 | $ 137 | $ 161 |
Operating Segments (Details)
Operating Segments (Details) | 12 Months Ended |
Dec. 31, 2016statesrefineriessegments | |
Segment Reporting Information | |
Number of operating segments (segments) | segments | 3 |
TLLP | |
Segment Reporting Information | |
Segment reporting description | TLLP’s assets and operations include certain crude oil gathering assets, natural gas gathering and processing assets and crude oil and refined products terminalling and transportation assets acquired from Tesoro and other third parties. Revenues from the TLLP segment are generated by charging fees for gathering crude oil and natural gas, for processing natural gas, and for terminalling, transporting and storing crude oil, and refined products. |
Refining | |
Segment Reporting Information | |
Number of refineries (refineries) | refineries | 7 |
Segment reporting description | Our Refining segment owns and operates seven petroleum refineries located in California, Washington, Alaska, North Dakota and Utah that manufacture gasoline and gasoline blendstocks, jet fuel, diesel fuel, residual fuel oil and other refined products. We sell these refined products, together with refined products purchased from third parties, to our Marketing segment through terminal facilities and other locations and opportunistically export refined products to foreign markets. |
Marketing | |
Segment Reporting Information | |
Number of states with retail sites (states) | states | 16 |
Segment reporting description | Tesoro’s marketing business supplies gasoline and diesel across 16 states through both branded and unbranded marketing channels. We utilize various operating models in the operation of our retail stations. Since we do not have significant operations in foreign countries, revenue generated and long-lived assets located in foreign countries are not material to our operations. |
Operating Segments, Results (De
Operating Segments, Results (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||
Segment Reporting Information, Operating Income | |||||||||||||
Revenues | $ 6,652 | $ 6,544 | $ 6,285 | $ 5,101 | $ 6,273 | $ 7,743 | $ 8,232 | $ 6,463 | $ 24,582 | $ 28,711 | $ 40,633 | ||
Operating Income | 224 | $ 360 | $ 718 | $ 179 | 186 | $ 1,292 | $ 1,009 | $ 340 | 1,481 | 2,827 | 1,632 | ||
Reconciliation of Operating Income from Segments to Consolidated | |||||||||||||
Total Segment Operating Income | 1,852 | 3,163 | 1,910 | ||||||||||
Corporate and unallocated costs | (371) | (336) | (278) | ||||||||||
Segment Reporting Information, Income (Loss) before Income Taxes | |||||||||||||
Interest and financing costs, net | (274) | (217) | (235) | ||||||||||
Equity in earnings of equity method investments | 13 | 7 | 10 | ||||||||||
Other income, net | 57 | 13 | 57 | ||||||||||
Earnings Before Income Taxes | 1,277 | 2,630 | 1,464 | ||||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||||||
Depreciation and amortization expense | 851 | 756 | 562 | ||||||||||
Capital Expenditures | 948 | 1,006 | 779 | ||||||||||
Identifiable Assets Related to Continuing Operations | 20,398 | 16,332 | 20,398 | 16,332 | |||||||||
Table Footnotes | |||||||||||||
Excise and sales taxes | 577 | 561 | 581 | ||||||||||
Change in accounting principle, effect of change on operating results | 125 | ||||||||||||
Processing [Member] | |||||||||||||
Segment Reporting Information, Operating Income | |||||||||||||
Revenue, Net | 276 | 278 | 23 | ||||||||||
Terminalling and Transportation Segment [Member] | |||||||||||||
Segment Reporting Information, Operating Income | |||||||||||||
Revenue, Net | $ 605 | 495 | 442 | ||||||||||
Refining | |||||||||||||
Segment Reporting Information | |||||||||||||
Segment reporting description | Our Refining segment owns and operates seven petroleum refineries located in California, Washington, Alaska, North Dakota and Utah that manufacture gasoline and gasoline blendstocks, jet fuel, diesel fuel, residual fuel oil and other refined products. We sell these refined products, together with refined products purchased from third parties, to our Marketing segment through terminal facilities and other locations and opportunistically export refined products to foreign markets. | ||||||||||||
Segment Reporting Information, Operating Income | |||||||||||||
Operating Income | $ 535 | 1,871 | 1,193 | [1] | |||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||||||
Depreciation and amortization expense | 588 | 504 | 420 | ||||||||||
Capital Expenditures | 519 | 530 | 423 | ||||||||||
Refining | Refined Products | |||||||||||||
Segment Reporting Information, Operating Income | |||||||||||||
Revenues | 21,213 | 25,443 | 37,365 | ||||||||||
Refining | Crude Oil Resales And Other | |||||||||||||
Segment Reporting Information, Operating Income | |||||||||||||
Revenues | 1,043 | 946 | 1,456 | ||||||||||
Refining | Continuing Operations | |||||||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||||||
Identifiable Assets Related to Continuing Operations | 10,350 | 8,878 | $ 10,350 | 8,878 | |||||||||
TLLP | |||||||||||||
Segment Reporting Information | |||||||||||||
Segment reporting description | TLLP’s assets and operations include certain crude oil gathering assets, natural gas gathering and processing assets and crude oil and refined products terminalling and transportation assets acquired from Tesoro and other third parties. Revenues from the TLLP segment are generated by charging fees for gathering crude oil and natural gas, for processing natural gas, and for terminalling, transporting and storing crude oil, and refined products. | ||||||||||||
Segment Reporting Information, Operating Income | |||||||||||||
Operating Income | [2] | $ 487 | 393 | 164 | |||||||||
Reconciliation of Operating Income from Segments to Consolidated | |||||||||||||
Corporate and unallocated costs | (53) | (54) | (39) | ||||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||||||
Depreciation and amortization expense | 190 | 187 | 85 | ||||||||||
Capital Expenditures | 273 | 386 | 272 | ||||||||||
TLLP | Continuing Operations | |||||||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||||||
Identifiable Assets Related to Continuing Operations | 5,759 | 5,046 | $ 5,759 | 5,046 | |||||||||
Marketing | |||||||||||||
Segment Reporting Information | |||||||||||||
Segment reporting description | Tesoro’s marketing business supplies gasoline and diesel across 16 states through both branded and unbranded marketing channels. We utilize various operating models in the operation of our retail stations. Since we do not have significant operations in foreign countries, revenue generated and long-lived assets located in foreign countries are not material to our operations. | ||||||||||||
Segment Reporting Information, Operating Income | |||||||||||||
Operating Income | $ 830 | 899 | 553 | [1] | |||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||||||
Depreciation and amortization expense | 49 | 46 | 42 | ||||||||||
Capital Expenditures | 34 | 34 | 54 | ||||||||||
Marketing | Fuel | |||||||||||||
Segment Reporting Information, Operating Income | |||||||||||||
Revenues | [3] | 15,405 | 18,081 | 23,701 | |||||||||
Marketing | Other non-fuel | |||||||||||||
Segment Reporting Information, Operating Income | |||||||||||||
Revenues | 85 | 63 | 240 | ||||||||||
Marketing | Continuing Operations | |||||||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||||||
Identifiable Assets Related to Continuing Operations | 1,295 | 1,167 | 1,295 | 1,167 | |||||||||
Intersegment sales | |||||||||||||
Segment Reporting Information, Operating Income | |||||||||||||
Revenues | (14,384) | (16,934) | (22,729) | ||||||||||
Corporate | |||||||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||||||
Depreciation and amortization expense | 24 | 19 | 15 | ||||||||||
Capital Expenditures | 122 | 56 | 30 | ||||||||||
Corporate | Continuing Operations | |||||||||||||
Segment Reporting, Disclosure of Other Information about Entity's Reportable Segments | |||||||||||||
Identifiable Assets Related to Continuing Operations | $ 2,994 | $ 1,241 | 2,994 | 1,241 | |||||||||
Crude Oil Gathering | |||||||||||||
Segment Reporting Information, Operating Income | |||||||||||||
Revenue, Net | $ 339 | $ 339 | $ 135 | ||||||||||
[1] | Our Refining segment uses RINs to satisfy its obligations under the Renewable Fuels Standard, in addition to physically blending required biofuels. At the end of 2014, given the price of RINs had become more transparent in the price of biofuels, we determined our intersegment pricing methodology should include the market value of RINs as a reduction to the price our Marketing segment pays to our Refining segment. We made this change effective January 1, 2015. We have not adjusted financial information presented for our Refining and Marketing segments for the year ended December 31, 2014. Had we made this change effective January 1, 2014, operating income in our Refining segment would have been reduced by $125 million with a corresponding increase to operating income in our Marketing segment for the year ended December 31, 2014. | ||||||||||||
[2] | We present TLLP’s segment operating income net of general and administrative expenses totaling $53 million, $54 million and $39 million representing TLLP’s corporate costs that are not allocated to TLLP’s operating segments for the years ended December 31, 2016, 2015 and 2014, respectively. | ||||||||||||
[3] | Federal and state motor fuel taxes on sales by our Marketing segment are included in both revenues and cost of sales in our statements of consolidated operations. These taxes totaled $577 million, $561 million and $581 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
Quarterly Financial Data (un109
Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |||||||||
Quarterly Financial Data [Abstract] | |||||||||||||||||||
Revenues | $ 6,652 | $ 6,544 | $ 6,285 | $ 5,101 | $ 6,273 | $ 7,743 | $ 8,232 | $ 6,463 | $ 24,582 | $ 28,711 | $ 40,633 | ||||||||
Cost of sales (excluding the lower of cost or market inventory valuation adjustment) (a) | 5,533 | 5,236 | 5,023 | 3,866 | 4,828 | 5,433 | 6,357 | 5,310 | 19,658 | 21,928 | 35,603 | ||||||||
Lower of cost or market inventory valuation adjustment | (123) | (20) | (363) | 147 | 276 | 83 | 0 | (42) | (359) | 317 | 42 | ||||||||
Operating expenses | 680 | 648 | 602 | 611 | 649 | 636 | 596 | 574 | 2,541 | 2,455 | 2,444 | ||||||||
Operating income | 224 | 360 | 718 | 179 | 186 | 1,292 | 1,009 | 340 | 1,481 | 2,827 | 1,632 | ||||||||
Net earnings from continuing operations | 101 | 202 | 449 | 98 | 83 | 799 | 624 | 188 | 850 | 1,694 | 917 | ||||||||
Gain (loss) from discontinued operations, net of tax | 0 | (1) | 0 | 11 | 0 | 0 | (4) | 0 | 10 | (4) | (29) | ||||||||
Net earnings | 101 | 201 | 449 | 109 | 83 | 799 | 620 | 188 | 860 | 1,690 | 888 | ||||||||
Net earnings attributable to Tesoro Corporation | $ 78 | $ 169 | $ 418 | $ 69 | $ 54 | $ 759 | $ 582 | $ 145 | $ 734 | $ 1,540 | $ 843 | ||||||||
Net earnings per share (a): | |||||||||||||||||||
Basic | $ 0.67 | [1] | $ 1.43 | [1] | $ 3.50 | [1] | $ 0.58 | [1] | $ 0.46 | [1] | $ 6.19 | [1] | $ 4.64 | [1] | $ 1.17 | [1] | $ 6.19 | $ 12.50 | $ 6.56 |
Diluted | $ 0.66 | [1] | $ 1.42 | [1] | $ 3.47 | [1] | $ 0.57 | [1] | $ 0.45 | [1] | $ 6.13 | [1] | $ 4.59 | [1] | $ 1.15 | [1] | $ 6.12 | $ 12.36 | $ 6.44 |
[1] | Includes earnings attributable to Tesoro from continuing and discontinued operations. The sum of four quarters may not equal annual results due to rounding or the quarterly number of shares outstanding. |
Condensed Consolidating Fina110
Condensed Consolidating Financial Information, Narrative (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Guarantor Information | |
Percentage ownership of Tesoro Logistics LP | 34.00% |
Percentage ownership of subsidiary guarantors | 100.00% |
4.250% Senior Notes due 2017 | |
Guarantor Information | |
Debt instrument, maturity date | Oct. 1, 2017 |
5.375% Senior Notes due 2022 | |
Guarantor Information | |
Debt instrument, maturity date | Oct. 1, 2022 |
4.750% Senior Notes due 2023 [Member] | |
Guarantor Information | |
Debt instrument, maturity date | Dec. 15, 2023 |
5.125% Senior Notes due 2024 | |
Guarantor Information | |
Debt instrument, maturity date | Apr. 1, 2024 |
5.125% Senior Notes due 2026 | |
Guarantor Information | |
Debt instrument, maturity date | Dec. 15, 2026 |
Condensed Consolidating Fina111
Condensed Consolidating Financial Information, Statement of Operations and Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Condensed Financial Statements, captions | ||||||||||||||
Revenues | $ 6,652 | $ 6,544 | $ 6,285 | $ 5,101 | $ 6,273 | $ 7,743 | $ 8,232 | $ 6,463 | $ 24,582 | $ 28,711 | $ 40,633 | |||
Costs and Expenses | ||||||||||||||
Cost of sales (excluding the lower of cost or market inventory valuation adjustment) (a) | 5,533 | 5,236 | 5,023 | 3,866 | 4,828 | 5,433 | 6,357 | 5,310 | 19,658 | 21,928 | 35,603 | |||
Lower of cost or market inventory valuation adjustment | (123) | (20) | (363) | 147 | 276 | 83 | 0 | (42) | (359) | 317 | 42 | |||
Operating, selling, general and administrative expenses | 2,942 | 2,841 | 2,790 | |||||||||||
Depreciation and amortization expense | 851 | 756 | 562 | |||||||||||
Loss on asset disposals and impairments | 9 | 42 | 4 | |||||||||||
Operating Income | 224 | 360 | 718 | 179 | 186 | 1,292 | 1,009 | 340 | 1,481 | 2,827 | 1,632 | |||
Equity in earnings of subsidiaries | 0 | 0 | 0 | |||||||||||
Interest and financing costs, net | 274 | 217 | 235 | |||||||||||
Equity in earnings of equity method investments | (13) | (7) | (10) | |||||||||||
Other income, net | 57 | 13 | 57 | |||||||||||
Earnings Before Income Taxes | 1,277 | 2,630 | 1,464 | |||||||||||
Income tax expense | 427 | [1] | 936 | [2] | 547 | [2] | ||||||||
Net Earnings from Continuing Operations | 101 | 202 | 449 | 98 | 83 | 799 | 624 | 188 | 850 | 1,694 | 917 | |||
Earnings (loss) from discontinued operations, net of tax | 0 | (1) | 0 | 11 | 0 | 0 | (4) | 0 | 10 | (4) | (29) | |||
Net Earnings | 101 | 201 | 449 | 109 | 83 | 799 | 620 | 188 | 860 | 1,690 | 888 | |||
Less: Net earnings from continuing operations attributable to noncontrolling interest | 126 | 150 | 45 | |||||||||||
Net Earnings Attributable to Tesoro Corporation | $ 78 | $ 169 | $ 418 | $ 69 | $ 54 | $ 759 | $ 582 | $ 145 | 734 | 1,540 | 843 | |||
Comprehensive Income | ||||||||||||||
Total Comprehensive Income | 821 | 1,690 | 791 | |||||||||||
Less: Noncontrolling interest in comprehensive income | 126 | 150 | 45 | |||||||||||
Comprehensive Income Attributable to Tesoro Corporation | 695 | 1,540 | 746 | |||||||||||
Parent | ||||||||||||||
Condensed Financial Statements, captions | ||||||||||||||
Revenues | 0 | 0 | 0 | |||||||||||
Costs and Expenses | ||||||||||||||
Cost of sales (excluding the lower of cost or market inventory valuation adjustment) (a) | 0 | 0 | 0 | |||||||||||
Lower of cost or market inventory valuation adjustment | 0 | 0 | 0 | |||||||||||
Operating, selling, general and administrative expenses | 9 | 11 | 10 | |||||||||||
Depreciation and amortization expense | 0 | 0 | 0 | |||||||||||
Loss on asset disposals and impairments | 0 | 0 | 0 | |||||||||||
Operating Income | (9) | (11) | (10) | |||||||||||
Equity in earnings of subsidiaries | 792 | 1,590 | 903 | |||||||||||
Interest and financing costs, net | 84 | 45 | 39 | |||||||||||
Equity in earnings of equity method investments | 0 | 0 | 0 | |||||||||||
Other income, net | 3 | 3 | 2 | |||||||||||
Earnings Before Income Taxes | 702 | 1,537 | 856 | |||||||||||
Income tax expense | (22) | [1] | (7) | [2] | (16) | [2] | ||||||||
Net Earnings from Continuing Operations | 724 | 1,544 | 872 | |||||||||||
Earnings (loss) from discontinued operations, net of tax | 10 | (4) | (29) | |||||||||||
Net Earnings | 734 | 1,540 | 843 | |||||||||||
Less: Net earnings from continuing operations attributable to noncontrolling interest | 0 | 0 | 0 | |||||||||||
Net Earnings Attributable to Tesoro Corporation | 734 | 1,540 | 843 | |||||||||||
Comprehensive Income | ||||||||||||||
Total Comprehensive Income | 695 | 1,540 | 746 | |||||||||||
Less: Noncontrolling interest in comprehensive income | 0 | 0 | 0 | |||||||||||
Comprehensive Income Attributable to Tesoro Corporation | 695 | 1,540 | 746 | |||||||||||
Guarantor Subsidiaries | ||||||||||||||
Condensed Financial Statements, captions | ||||||||||||||
Revenues | 26,880 | 31,645 | 45,898 | |||||||||||
Costs and Expenses | ||||||||||||||
Cost of sales (excluding the lower of cost or market inventory valuation adjustment) (a) | 23,048 | 25,753 | 41,288 | |||||||||||
Lower of cost or market inventory valuation adjustment | (359) | 317 | 42 | |||||||||||
Operating, selling, general and administrative expenses | 2,573 | 2,542 | 2,632 | |||||||||||
Depreciation and amortization expense | 625 | 565 | 472 | |||||||||||
Loss on asset disposals and impairments | 6 | 37 | 8 | |||||||||||
Operating Income | 987 | 2,431 | 1,456 | |||||||||||
Equity in earnings of subsidiaries | 211 | 96 | 2 | |||||||||||
Interest and financing costs, net | 61 | 66 | 126 | |||||||||||
Equity in earnings of equity method investments | 0 | 0 | (9) | |||||||||||
Other income, net | 39 | 11 | 55 | |||||||||||
Earnings Before Income Taxes | 1,176 | 2,472 | 1,396 | |||||||||||
Income tax expense | 353 | [1] | 891 | [2] | 525 | [2] | ||||||||
Net Earnings from Continuing Operations | 823 | 1,581 | 871 | |||||||||||
Earnings (loss) from discontinued operations, net of tax | 0 | 0 | 0 | |||||||||||
Net Earnings | 823 | 1,581 | 871 | |||||||||||
Less: Net earnings from continuing operations attributable to noncontrolling interest | 0 | 0 | 0 | |||||||||||
Net Earnings Attributable to Tesoro Corporation | 823 | 1,581 | 871 | |||||||||||
Comprehensive Income | ||||||||||||||
Total Comprehensive Income | 823 | 1,581 | 871 | |||||||||||
Less: Noncontrolling interest in comprehensive income | 0 | 0 | 0 | |||||||||||
Comprehensive Income Attributable to Tesoro Corporation | 823 | 1,581 | 871 | |||||||||||
Non- Guarantors | ||||||||||||||
Condensed Financial Statements, captions | ||||||||||||||
Revenues | 3,654 | 3,597 | 6,153 | |||||||||||
Costs and Expenses | ||||||||||||||
Cost of sales (excluding the lower of cost or market inventory valuation adjustment) (a) | 2,220 | 2,415 | 5,479 | |||||||||||
Lower of cost or market inventory valuation adjustment | 0 | 0 | 0 | |||||||||||
Operating, selling, general and administrative expenses | 702 | 579 | 402 | |||||||||||
Depreciation and amortization expense | 226 | 191 | 90 | |||||||||||
Loss on asset disposals and impairments | 3 | 5 | (4) | |||||||||||
Operating Income | 503 | 407 | 186 | |||||||||||
Equity in earnings of subsidiaries | 0 | 0 | 0 | |||||||||||
Interest and financing costs, net | 129 | 106 | 70 | |||||||||||
Equity in earnings of equity method investments | (13) | (7) | (1) | |||||||||||
Other income, net | 15 | (1) | 0 | |||||||||||
Earnings Before Income Taxes | 402 | 307 | 117 | |||||||||||
Income tax expense | 96 | [1] | 52 | [2] | 38 | [2] | ||||||||
Net Earnings from Continuing Operations | 306 | 255 | 79 | |||||||||||
Earnings (loss) from discontinued operations, net of tax | 0 | 0 | 0 | |||||||||||
Net Earnings | 306 | 255 | 79 | |||||||||||
Less: Net earnings from continuing operations attributable to noncontrolling interest | 126 | 150 | 45 | |||||||||||
Net Earnings Attributable to Tesoro Corporation | 180 | 105 | 34 | |||||||||||
Comprehensive Income | ||||||||||||||
Total Comprehensive Income | 306 | 255 | 79 | |||||||||||
Less: Noncontrolling interest in comprehensive income | 126 | 150 | 45 | |||||||||||
Comprehensive Income Attributable to Tesoro Corporation | 180 | 105 | 34 | |||||||||||
Consolidation, Eliminations [Member] | ||||||||||||||
Condensed Financial Statements, captions | ||||||||||||||
Revenues | (5,952) | (6,531) | (11,418) | |||||||||||
Costs and Expenses | ||||||||||||||
Cost of sales (excluding the lower of cost or market inventory valuation adjustment) (a) | (5,610) | (6,240) | (11,164) | |||||||||||
Lower of cost or market inventory valuation adjustment | 0 | 0 | 0 | |||||||||||
Operating, selling, general and administrative expenses | (342) | (291) | (254) | |||||||||||
Depreciation and amortization expense | 0 | 0 | 0 | |||||||||||
Loss on asset disposals and impairments | 0 | 0 | 0 | |||||||||||
Operating Income | 0 | 0 | 0 | |||||||||||
Equity in earnings of subsidiaries | (1,003) | (1,686) | (905) | |||||||||||
Interest and financing costs, net | 0 | 0 | 0 | |||||||||||
Equity in earnings of equity method investments | 0 | 0 | 0 | |||||||||||
Other income, net | 0 | 0 | 0 | |||||||||||
Earnings Before Income Taxes | (1,003) | (1,686) | (905) | |||||||||||
Income tax expense | 0 | [1] | 0 | [2] | 0 | [2] | ||||||||
Net Earnings from Continuing Operations | (1,003) | (1,686) | (905) | |||||||||||
Earnings (loss) from discontinued operations, net of tax | 0 | 0 | 0 | |||||||||||
Net Earnings | (1,003) | (1,686) | (905) | |||||||||||
Less: Net earnings from continuing operations attributable to noncontrolling interest | 0 | 0 | 0 | |||||||||||
Net Earnings Attributable to Tesoro Corporation | (1,003) | (1,686) | (905) | |||||||||||
Comprehensive Income | ||||||||||||||
Total Comprehensive Income | (1,003) | (1,686) | (905) | |||||||||||
Less: Noncontrolling interest in comprehensive income | 0 | 0 | 0 | |||||||||||
Comprehensive Income Attributable to Tesoro Corporation | $ (1,003) | $ (1,686) | $ (905) | |||||||||||
[1] | The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. | |||||||||||||
[2] | The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from corporate subsidiaries, but does include the tax effect of the corporate partners’ share of partnership income. |
Condensed Consolidating Fina112
Condensed Consolidating Financial Information, Balance Sheet (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Current Assets: | ||||
Cash and cash equivalents | $ 3,295 | $ 942 | $ 1,000 | $ 1,238 |
Receivables, net of allowance for doubtful accounts | 1,108 | 792 | ||
Short-term receivables from affiliates | 0 | 0 | ||
Inventories | 2,640 | 2,302 | ||
Prepayments and other current assets | 371 | 271 | ||
Total Current Assets | 7,414 | 4,307 | ||
Net Property, Plant and Equipment | 9,976 | 9,541 | ||
Investment in Subsidiaries | 0 | 0 | ||
Long-Term Receivables from Affiliates | 0 | 0 | ||
Long-Term Intercompany Note Receivable | 0 | 0 | ||
Other Noncurrent Assets: | ||||
Acquired intangibles, net | 1,277 | 1,211 | ||
Other, net | 1,731 | 1,273 | ||
Total Other Noncurrent Assets | 3,008 | 2,484 | ||
Total Assets | 20,398 | 16,332 | ||
CURRENT LIABILITIES | ||||
Accounts payable | 2,032 | 1,568 | ||
Short-term payables to affiliates | 0 | 0 | ||
Current maturities of debt | 465 | 6 | ||
Other current liabilities | 1,057 | 956 | ||
Total Current Liabilities | 3,554 | 2,530 | ||
Long-Term Payables to Affiliates | 0 | 0 | ||
Deferred Income Taxes | 1,428 | 1,222 | ||
Debt | 6,468 | 4,067 | ||
Long-Term Intercompany Note Payable | 0 | 0 | ||
Other Noncurrent Liabilities | 821 | 773 | ||
Equity-Tesoro Corporation | 5,465 | 5,213 | ||
Equity-Noncontrolling Interest | 2,662 | 2,527 | ||
Total Liabilities and Equity | 20,398 | 16,332 | ||
Parent | ||||
Current Assets: | ||||
Cash and cash equivalents | 0 | 0 | 0 | 0 |
Receivables, net of allowance for doubtful accounts | 10 | 0 | ||
Short-term receivables from affiliates | 0 | 0 | ||
Inventories | 0 | 0 | ||
Prepayments and other current assets | 50 | 116 | ||
Total Current Assets | 60 | 116 | ||
Net Property, Plant and Equipment | 0 | 0 | ||
Investment in Subsidiaries | 9,201 | 8,128 | ||
Long-Term Receivables from Affiliates | 3,326 | 1,522 | ||
Long-Term Intercompany Note Receivable | 0 | 0 | ||
Other Noncurrent Assets: | ||||
Acquired intangibles, net | 0 | 0 | ||
Other, net | 46 | 33 | ||
Total Other Noncurrent Assets | 46 | 33 | ||
Total Assets | 12,633 | 9,799 | ||
CURRENT LIABILITIES | ||||
Accounts payable | 6 | 0 | ||
Short-term payables to affiliates | 0 | 0 | ||
Current maturities of debt | 450 | 0 | ||
Other current liabilities | 99 | 91 | ||
Total Current Liabilities | 555 | 91 | ||
Long-Term Payables to Affiliates | 0 | 0 | ||
Deferred Income Taxes | 1,428 | 1,227 | ||
Debt | 2,321 | 1,190 | ||
Long-Term Intercompany Note Payable | 2,386 | 1,626 | ||
Other Noncurrent Liabilities | 479 | 452 | ||
Equity-Tesoro Corporation | 5,464 | 5,213 | ||
Equity-Noncontrolling Interest | 0 | 0 | ||
Total Liabilities and Equity | 12,633 | 9,799 | ||
Guarantor Subsidiaries | ||||
Current Assets: | ||||
Cash and cash equivalents | 2,576 | 895 | 943 | 1,161 |
Receivables, net of allowance for doubtful accounts | 882 | 626 | ||
Short-term receivables from affiliates | 171 | 200 | ||
Inventories | 2,321 | 1,971 | ||
Prepayments and other current assets | 298 | 140 | ||
Total Current Assets | 6,248 | 3,832 | ||
Net Property, Plant and Equipment | 6,183 | 5,796 | ||
Investment in Subsidiaries | 785 | 609 | ||
Long-Term Receivables from Affiliates | 0 | 0 | ||
Long-Term Intercompany Note Receivable | 0 | 0 | ||
Other Noncurrent Assets: | ||||
Acquired intangibles, net | 329 | 234 | ||
Other, net | 1,138 | 1,018 | ||
Total Other Noncurrent Assets | 1,467 | 1,252 | ||
Total Assets | 14,683 | 11,489 | ||
CURRENT LIABILITIES | ||||
Accounts payable | 1,762 | 1,390 | ||
Short-term payables to affiliates | 28 | 3 | ||
Current maturities of debt | 14 | 6 | ||
Other current liabilities | 853 | 756 | ||
Total Current Liabilities | 2,657 | 2,155 | ||
Long-Term Payables to Affiliates | 3,074 | 1,293 | ||
Deferred Income Taxes | 2 | 0 | ||
Debt | 94 | 33 | ||
Long-Term Intercompany Note Payable | 0 | 0 | ||
Other Noncurrent Liabilities | 289 | 262 | ||
Equity-Tesoro Corporation | 8,567 | 7,746 | ||
Equity-Noncontrolling Interest | 0 | 0 | ||
Total Liabilities and Equity | 14,683 | 11,489 | ||
Non- Guarantors | ||||
Current Assets: | ||||
Cash and cash equivalents | 719 | 47 | 57 | 77 |
Receivables, net of allowance for doubtful accounts | 216 | 166 | ||
Short-term receivables from affiliates | 28 | 3 | ||
Inventories | 319 | 331 | ||
Prepayments and other current assets | 23 | 16 | ||
Total Current Assets | 1,305 | 563 | ||
Net Property, Plant and Equipment | 3,793 | 3,745 | ||
Investment in Subsidiaries | 0 | 0 | ||
Long-Term Receivables from Affiliates | 0 | 0 | ||
Long-Term Intercompany Note Receivable | 2,386 | 1,626 | ||
Other Noncurrent Assets: | ||||
Acquired intangibles, net | 948 | 977 | ||
Other, net | 549 | 227 | ||
Total Other Noncurrent Assets | 1,497 | 1,204 | ||
Total Assets | 8,981 | 7,138 | ||
CURRENT LIABILITIES | ||||
Accounts payable | 264 | 178 | ||
Short-term payables to affiliates | 171 | 200 | ||
Current maturities of debt | 1 | 0 | ||
Other current liabilities | 106 | 110 | ||
Total Current Liabilities | 542 | 488 | ||
Long-Term Payables to Affiliates | 252 | 229 | ||
Deferred Income Taxes | 0 | 0 | ||
Debt | 4,053 | 2,844 | ||
Long-Term Intercompany Note Payable | 0 | 0 | ||
Other Noncurrent Liabilities | 53 | 59 | ||
Equity-Tesoro Corporation | 1,419 | 991 | ||
Equity-Noncontrolling Interest | 2,662 | 2,527 | ||
Total Liabilities and Equity | 8,981 | 7,138 | ||
Consolidation, Eliminations [Member] | ||||
Current Assets: | ||||
Cash and cash equivalents | 0 | 0 | $ 0 | $ 0 |
Receivables, net of allowance for doubtful accounts | 0 | 0 | ||
Short-term receivables from affiliates | (199) | (203) | ||
Inventories | 0 | 0 | ||
Prepayments and other current assets | 0 | (1) | ||
Total Current Assets | (199) | (204) | ||
Net Property, Plant and Equipment | 0 | 0 | ||
Investment in Subsidiaries | (9,986) | (8,737) | ||
Long-Term Receivables from Affiliates | (3,326) | (1,522) | ||
Long-Term Intercompany Note Receivable | (2,386) | (1,626) | ||
Other Noncurrent Assets: | ||||
Acquired intangibles, net | 0 | 0 | ||
Other, net | (2) | (5) | ||
Total Other Noncurrent Assets | (2) | (5) | ||
Total Assets | (15,899) | (12,094) | ||
CURRENT LIABILITIES | ||||
Accounts payable | 0 | 0 | ||
Short-term payables to affiliates | (199) | (203) | ||
Current maturities of debt | 0 | 0 | ||
Other current liabilities | (1) | (1) | ||
Total Current Liabilities | (200) | (204) | ||
Long-Term Payables to Affiliates | (3,326) | (1,522) | ||
Deferred Income Taxes | (2) | (5) | ||
Debt | 0 | 0 | ||
Long-Term Intercompany Note Payable | (2,386) | (1,626) | ||
Other Noncurrent Liabilities | 0 | 0 | ||
Equity-Tesoro Corporation | (9,985) | (8,737) | ||
Equity-Noncontrolling Interest | 0 | 0 | ||
Total Liabilities and Equity | $ (15,899) | $ (12,094) |
Condensed Consolidating Fina113
Condensed Consolidating Financial Information, Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash Flows From (Used in) Operating Activities | ||||
Net cash from (used in) operating activities | $ 1,304 | $ 2,131 | $ 1,364 | |
Cash Flows From (Used in) Investing Activities | ||||
Capital expenditures | (894) | (1,030) | (685) | |
Acquisitions, net of cash | (413) | (97) | (2,496) | |
Deposits for acquisitions | (33) | 0 | 0 | |
Proceeds from asset sales | 25 | 0 | 18 | |
Investment in subsidiaries | 0 | |||
Intercompany notes, net | 0 | 0 | 0 | |
Notes to general partner | 0 | 0 | 0 | |
Other investing activities | (2) | (2) | (9) | |
Net cash used in investing activities | (1,317) | (1,129) | (3,172) | |
Cash Flows From (Used in) Financing Activities | ||||
Borrowings under revolving credit agreements | 1,451 | 476 | 646 | |
Repayments on revolving credit agreements | (1,426) | (431) | (386) | |
Borrowings under term loan credit agreements | 250 | |||
Proceeds from debt offerings | 3,051 | 0 | 1,600 | |
Repayments of debt | $ (398) | (260) | (404) | (434) |
Dividend payments | (249) | (228) | (141) | |
Proceeds from stock options exercised | 2 | 13 | 19 | |
Net proceeds from issuance of Tesoro Logistics LP common units | 364 | 99 | 949 | |
Notes from general partner | 0 | 0 | 0 | |
Distributions to noncontrolling interest | (216) | (182) | (96) | |
Purchases of common stock | (250) | (644) | (500) | |
Taxes paid related to net share settlement of equity awards | (25) | (45) | (22) | |
Contributions by parent | 0 | |||
Net intercompany borrowings (repayments) | 0 | 0 | 0 | |
Distributions to TLLP unitholders and general partner | 0 | 0 | 0 | |
Distributions from general partner to TSO | 0 | |||
Payments of debt issuance costs | (37) | (2) | (24) | |
Excess tax benefits from stock-based compensation arrangements | 0 | 38 | 20 | |
Other financing activities | (39) | 0 | (61) | |
Net cash from (used in) financing activities | 2,366 | (1,060) | 1,570 | |
Increase (Decrease) in Cash and Cash Equivalents | 2,353 | (58) | (238) | |
Cash and Cash Equivalents, Beginning of Year | 942 | 1,000 | 1,238 | |
Cash and Cash Equivalents, End of Year | 942 | 3,295 | 942 | 1,000 |
Parent | ||||
Cash Flows From (Used in) Operating Activities | ||||
Net cash from (used in) operating activities | (33) | 11 | (11) | |
Cash Flows From (Used in) Investing Activities | ||||
Capital expenditures | 0 | 0 | 0 | |
Acquisitions, net of cash | 0 | 0 | 0 | |
Deposits for acquisitions | 0 | |||
Proceeds from asset sales | 17 | 0 | ||
Investment in subsidiaries | (321) | |||
Intercompany notes, net | (1,453) | 1,041 | 441 | |
Notes to general partner | 0 | 0 | 0 | |
Other investing activities | 0 | 0 | 0 | |
Net cash used in investing activities | (1,757) | 1,041 | 441 | |
Cash Flows From (Used in) Financing Activities | ||||
Borrowings under revolving credit agreements | 0 | 0 | 0 | |
Repayments on revolving credit agreements | 0 | 0 | 0 | |
Borrowings under term loan credit agreements | 0 | |||
Proceeds from debt offerings | 1,600 | 300 | ||
Repayments of debt | 0 | (398) | (300) | |
Dividend payments | (249) | (228) | (141) | |
Proceeds from stock options exercised | 2 | 13 | 19 | |
Net proceeds from issuance of Tesoro Logistics LP common units | 0 | 0 | 0 | |
Notes from general partner | 760 | 250 | 243 | |
Distributions to noncontrolling interest | 0 | 0 | 0 | |
Purchases of common stock | (250) | (644) | (500) | |
Taxes paid related to net share settlement of equity awards | (25) | (45) | (22) | |
Contributions by parent | 0 | |||
Net intercompany borrowings (repayments) | 0 | 0 | 0 | |
Distributions to TLLP unitholders and general partner | 0 | 0 | 0 | |
Distributions from general partner to TSO | 0 | |||
Payments of debt issuance costs | (16) | 0 | (5) | |
Excess tax benefits from stock-based compensation arrangements | 0 | 0 | ||
Other financing activities | (32) | (24) | ||
Net cash from (used in) financing activities | 1,790 | (1,052) | (430) | |
Increase (Decrease) in Cash and Cash Equivalents | 0 | 0 | 0 | |
Cash and Cash Equivalents, Beginning of Year | 0 | 0 | 0 | |
Cash and Cash Equivalents, End of Year | 0 | 0 | 0 | 0 |
Guarantor Subsidiaries | ||||
Cash Flows From (Used in) Operating Activities | ||||
Net cash from (used in) operating activities | 1,006 | 2,030 | 1,270 | |
Cash Flows From (Used in) Investing Activities | ||||
Capital expenditures | (616) | (646) | (443) | |
Acquisitions, net of cash | (67) | (91) | (17) | |
Deposits for acquisitions | 0 | |||
Proceeds from asset sales | 0 | 4 | ||
Investment in subsidiaries | (455) | |||
Intercompany notes, net | 0 | 0 | 0 | |
Notes to general partner | 0 | 0 | 0 | |
Other investing activities | 0 | (2) | (5) | |
Net cash used in investing activities | (1,138) | (739) | (461) | |
Cash Flows From (Used in) Financing Activities | ||||
Borrowings under revolving credit agreements | 0 | 0 | 0 | |
Repayments on revolving credit agreements | 0 | 0 | 0 | |
Borrowings under term loan credit agreements | 0 | |||
Proceeds from debt offerings | 0 | 0 | ||
Repayments of debt | (9) | (6) | (3) | |
Dividend payments | 0 | 0 | 0 | |
Proceeds from stock options exercised | 0 | 0 | 0 | |
Net proceeds from issuance of Tesoro Logistics LP common units | 0 | 0 | 0 | |
Notes from general partner | 0 | 0 | 0 | |
Distributions to noncontrolling interest | 0 | 0 | 0 | |
Purchases of common stock | 0 | 0 | 0 | |
Taxes paid related to net share settlement of equity awards | 0 | 0 | 0 | |
Contributions by parent | 0 | |||
Net intercompany borrowings (repayments) | 1,822 | (1,371) | (1,044) | |
Distributions to TLLP unitholders and general partner | 0 | 0 | 0 | |
Distributions from general partner to TSO | 0 | |||
Payments of debt issuance costs | 0 | 0 | 0 | |
Excess tax benefits from stock-based compensation arrangements | 38 | 20 | ||
Other financing activities | 0 | 0 | ||
Net cash from (used in) financing activities | 1,813 | (1,339) | (1,027) | |
Increase (Decrease) in Cash and Cash Equivalents | 1,681 | (48) | (218) | |
Cash and Cash Equivalents, Beginning of Year | 895 | 943 | 1,161 | |
Cash and Cash Equivalents, End of Year | 895 | 2,576 | 895 | 943 |
Non- Guarantors | ||||
Cash Flows From (Used in) Operating Activities | ||||
Net cash from (used in) operating activities | 637 | 293 | 208 | |
Cash Flows From (Used in) Investing Activities | ||||
Capital expenditures | (278) | (384) | (242) | |
Acquisitions, net of cash | (346) | (6) | (2,479) | |
Deposits for acquisitions | (33) | |||
Proceeds from asset sales | 8 | 14 | ||
Investment in subsidiaries | 0 | |||
Intercompany notes, net | 0 | 0 | 0 | |
Notes to general partner | (760) | (250) | (243) | |
Other investing activities | (2) | 0 | (4) | |
Net cash used in investing activities | (1,411) | (640) | (2,954) | |
Cash Flows From (Used in) Financing Activities | ||||
Borrowings under revolving credit agreements | 1,451 | 476 | 646 | |
Repayments on revolving credit agreements | (1,426) | (431) | (386) | |
Borrowings under term loan credit agreements | 250 | |||
Proceeds from debt offerings | 1,451 | 1,300 | ||
Repayments of debt | (251) | 0 | (131) | |
Dividend payments | 0 | 0 | 0 | |
Proceeds from stock options exercised | 0 | 0 | 0 | |
Net proceeds from issuance of Tesoro Logistics LP common units | 364 | 99 | 949 | |
Notes from general partner | 0 | 0 | 0 | |
Distributions to noncontrolling interest | (216) | (182) | (96) | |
Purchases of common stock | 0 | 0 | 0 | |
Taxes paid related to net share settlement of equity awards | 0 | 0 | 0 | |
Contributions by parent | 776 | |||
Net intercompany borrowings (repayments) | (369) | 330 | 603 | |
Distributions to TLLP unitholders and general partner | (81) | (203) | (103) | |
Distributions from general partner to TSO | 225 | |||
Payments of debt issuance costs | (21) | (2) | (19) | |
Excess tax benefits from stock-based compensation arrangements | 0 | 0 | ||
Other financing activities | (7) | (37) | ||
Net cash from (used in) financing activities | 1,446 | 337 | 2,726 | |
Increase (Decrease) in Cash and Cash Equivalents | 672 | (10) | (20) | |
Cash and Cash Equivalents, Beginning of Year | 47 | 57 | 77 | |
Cash and Cash Equivalents, End of Year | 47 | 719 | 47 | 57 |
Consolidation, Eliminations [Member] | ||||
Cash Flows From (Used in) Operating Activities | ||||
Net cash from (used in) operating activities | (306) | (203) | (103) | |
Cash Flows From (Used in) Investing Activities | ||||
Capital expenditures | 0 | 0 | 0 | |
Acquisitions, net of cash | 0 | 0 | 0 | |
Deposits for acquisitions | 0 | |||
Proceeds from asset sales | 0 | 0 | ||
Investment in subsidiaries | 776 | |||
Intercompany notes, net | 1,453 | (1,041) | (441) | |
Notes to general partner | 760 | 250 | 243 | |
Other investing activities | 0 | 0 | 0 | |
Net cash used in investing activities | 2,989 | (791) | (198) | |
Cash Flows From (Used in) Financing Activities | ||||
Borrowings under revolving credit agreements | 0 | 0 | 0 | |
Repayments on revolving credit agreements | 0 | 0 | 0 | |
Borrowings under term loan credit agreements | 0 | |||
Proceeds from debt offerings | 0 | 0 | ||
Repayments of debt | 0 | 0 | 0 | |
Dividend payments | 0 | 0 | 0 | |
Proceeds from stock options exercised | 0 | 0 | 0 | |
Net proceeds from issuance of Tesoro Logistics LP common units | 0 | 0 | 0 | |
Notes from general partner | (760) | (250) | (243) | |
Distributions to noncontrolling interest | 0 | 0 | 0 | |
Purchases of common stock | 0 | 0 | 0 | |
Taxes paid related to net share settlement of equity awards | 0 | 0 | 0 | |
Contributions by parent | (776) | |||
Net intercompany borrowings (repayments) | (1,453) | 1,041 | 441 | |
Distributions to TLLP unitholders and general partner | 81 | 203 | 103 | |
Distributions from general partner to TSO | (225) | |||
Payments of debt issuance costs | 0 | 0 | 0 | |
Excess tax benefits from stock-based compensation arrangements | 0 | 0 | ||
Other financing activities | 0 | 0 | ||
Net cash from (used in) financing activities | (2,683) | 994 | 301 | |
Increase (Decrease) in Cash and Cash Equivalents | 0 | 0 | 0 | |
Cash and Cash Equivalents, Beginning of Year | 0 | 0 | 0 | |
Cash and Cash Equivalents, End of Year | $ 0 | $ 0 | $ 0 | $ 0 |