Valero Energy Partners LP

9 Months Ended

Sep. 30, 2015


2.	VALERO ENERGY PARTNERS LP

Valero Energy Partners LP (VLP) is a publicly traded master limited partnership that we formed to own, operate, develop, and acquire crude oil and refined petroleum products pipelines, terminals, and other transportation and logistics assets. As of September 30, 2015, VLP’s assets included crude oil and refined products pipeline and terminal systems in the U.S. Gulf Coast and U.S. Mid-Continent regions that are integral to the operations of seven of our refineries.

Effective March 1, 2015, we contributed to VLP our Houston and St. Charles Terminal Services Business, which owns and operates crude oil, intermediates, and refined products terminals supporting our Houston and St. Charles Refineries. We received (i) cash consideration of $571 million and (ii) 1,908,100 common units representing limited partner interests in VLP and 38,941 general partner units representing general partner interests in VLP having an aggregate value of $100 million. A portion of the cash consideration was funded through a $200 million borrowing by VLP under its revolving credit facility. The remaining cash consideration was funded with $211 million of VLP’s cash on hand and a $160 million borrowing under a subordinated credit agreement between VLP and us, which is eliminated in consolidation as further described below.

The ownership of VLP consisted of the following:



	September 30, 2015		December 31, 2014
Valero:
Limited partner interest	69.6	%	68.6	%
General partner interest	2.0	%	2.0	%
Public:
Limited partner interest	28.4	%	29.4	%

We consolidate the financial statements of VLP into our financial statements and as such, VLP’s cash and temporary cash investments are included in our consolidated cash and temporary cash investments. However, VLP’s cash and temporary cash investments can only be used to settle its own obligations. VLP’s cash and temporary cash investments were $51 million and $237 million as of September 30, 2015 and December 31, 2014, respectively. In addition, VLP’s partnership capital attributable to the public’s ownership interest in VLP of $385 million and $375 million as of September 30, 2015 and December 31, 2014, respectively, is reflected in noncontrolling interests.

We have agreements with VLP that establish fees for certain general and administrative services, and operational and maintenance services provided by us. In addition, we have a master transportation services agreement and a master terminal services agreement with VLP under which VLP provides commercial pipeline transportation and terminaling services to us. These transactions are eliminated in consolidation.

Effective October 1, 2015, we contributed to VLP our Corpus Christi Terminal Services Business, which owns and operates crude oil, intermediates, and refined products terminals supporting our Corpus Christi East and West Refineries. We received (i) cash consideration of $395 million and (ii) 1,570,513 common units representing limited partner interests in VLP and 32,051 general partner units representing general partner interests in VLP having an aggregate value of $70 million. The cash consideration was funded with a $395 million borrowing under a subordinated credit agreement between VLP and us. Because we consolidate the financial statements of VLP into our financial statements, this transaction will be eliminated in consolidation and will not impact our consolidated financial position or cash flows.