Lease Accounting

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Lease Accounting

Lease Accounting

Lessee Arrangements

    We lease a variety of transportation equipment (including trucks, trailers, and railcars), terminals, land and facilities, and office space and equipment. Lease terms vary and can range from short term (under 12 months) to long term (greater than 12 months). A majority of our leases contain options to extend the life of the lease at our sole discretion. We considered these options when determining the lease terms used to derive our right of use asset and associated lease liability. Leases with a term of less than 12 months are not recorded on our Unaudited Condensed Consolidated Balance Sheets. Lease expenses are recognized on a straight line basis over the lease term.

    Our Right of Use Assets, net balance includes our unamortized initial direct costs associated with certain of our transportation equipment leases. Additionally, it includes our unamortized prepaid rents, our deferred rents, and our previously classified intangible asset associated with a favorable lease. Our lease liability includes our remaining provision for each period presented for our cease-use provision for railcars no longer in use. Our short-term and long-term lease liabilities are recorded within "Accrued liabilities" and "Other long-term liabilities," respectively, on our Unaudited Condensed Consolidated Balance Sheets.

Lessor Arrangements

    We have the following contracts in which we act as a lessor. We also, from time to time, sublease certain of our transportation and facilities equipment to third parties.

Operating Leases

    During the three and nine months ended September 30, 2020, we acted as a lessor in our revenue contract associated with our Free State pipeline system, included in our onshore facilities and transportation segment, and the M/T American Phoenix, included in our marine transportation segment. These revenues are recorded within its respective segment's revenues in the Unaudited Condensed Consolidated Statements of Operations. Our lease revenues for these arrangements (inclusive of fixed and variable consideration) are reflected in the table below for the three and nine months ended September 30, 2020 and 2019, respectively:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
M/T American Phoenix	$	6,787	$	6,808	$	20,164	$	20,202
Free State Pipeline	1,467		1,290		4,889		4,174

The following table details the fixed future lease payments we will receive for our lessor arrangements classified as operating leases as of September 30, 2020:    

Maturity of Lessor Receipts	Onshore Facilities and Transportation
Remainder of 2020	$	300
2021	1,200
2022	1,200
2023	1,200
2024	1,200
Thereafter	4,100
Total Lease Receipts	$	9,200

Direct Finance Lease

    Our direct finance lease includes a lease of the Northeast Jackson Dome ("NEJD") pipeline. Under the terms of the agreement, we are paid a quarterly payment, which commenced in August 2008. These payments are fixed at approximately $5.2 million per quarter during the lease term at an interest rate of 10.25%. At the end of the lease term in 2028, we will convey all of our interest in the NEJD pipeline to the lessee for a nominal payment. During the third quarter of 2020, our customer defaulted under the agreement and we exercised a letter of credit we had issued to us as beneficiary and collected approximately $41 million in cash. As of September 30, 2020, the present value of our lease receivables for our direct finance lease is $69.4 million, which is inclusive of our unamortized initial direct costs, and is presented as current on the Unaudited Condensed Consolidated Balance Sheet in accordance with the default terms under the arrangement.

Lease Accounting

Lease Accounting

Lessee Arrangements

    We lease a variety of transportation equipment (including trucks, trailers, and railcars), terminals, land and facilities, and office space and equipment. Lease terms vary and can range from short term (under 12 months) to long term (greater than 12 months). A majority of our leases contain options to extend the life of the lease at our sole discretion. We considered these options when determining the lease terms used to derive our right of use asset and associated lease liability. Leases with a term of less than 12 months are not recorded on our Unaudited Condensed Consolidated Balance Sheets. Lease expenses are recognized on a straight line basis over the lease term.

    Our Right of Use Assets, net balance includes our unamortized initial direct costs associated with certain of our transportation equipment leases. Additionally, it includes our unamortized prepaid rents, our deferred rents, and our previously classified intangible asset associated with a favorable lease. Our lease liability includes our remaining provision for each period presented for our cease-use provision for railcars no longer in use. Our short-term and long-term lease liabilities are recorded within "Accrued liabilities" and "Other long-term liabilities," respectively, on our Unaudited Condensed Consolidated Balance Sheets.

Lessor Arrangements

    We have the following contracts in which we act as a lessor. We also, from time to time, sublease certain of our transportation and facilities equipment to third parties.

Operating Leases

    During the three and nine months ended September 30, 2020, we acted as a lessor in our revenue contract associated with our Free State pipeline system, included in our onshore facilities and transportation segment, and the M/T American Phoenix, included in our marine transportation segment. These revenues are recorded within its respective segment's revenues in the Unaudited Condensed Consolidated Statements of Operations. Our lease revenues for these arrangements (inclusive of fixed and variable consideration) are reflected in the table below for the three and nine months ended September 30, 2020 and 2019, respectively:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
M/T American Phoenix	$	6,787	$	6,808	$	20,164	$	20,202
Free State Pipeline	1,467		1,290		4,889		4,174

The following table details the fixed future lease payments we will receive for our lessor arrangements classified as operating leases as of September 30, 2020:    

Maturity of Lessor Receipts	Onshore Facilities and Transportation
Remainder of 2020	$	300
2021	1,200
2022	1,200
2023	1,200
2024	1,200
Thereafter	4,100
Total Lease Receipts	$	9,200

Direct Finance Lease

    Our direct finance lease includes a lease of the Northeast Jackson Dome ("NEJD") pipeline. Under the terms of the agreement, we are paid a quarterly payment, which commenced in August 2008. These payments are fixed at approximately $5.2 million per quarter during the lease term at an interest rate of 10.25%. At the end of the lease term in 2028, we will convey all of our interest in the NEJD pipeline to the lessee for a nominal payment. During the third quarter of 2020, our customer defaulted under the agreement and we exercised a letter of credit we had issued to us as beneficiary and collected approximately $41 million in cash. As of September 30, 2020, the present value of our lease receivables for our direct finance lease is $69.4 million, which is inclusive of our unamortized initial direct costs, and is presented as current on the Unaudited Condensed Consolidated Balance Sheet in accordance with the default terms under the arrangement.