
11.	REVENUES AND SEGMENT INFORMATION

Revenue from Contracts with Customers

Disaggregation of Revenue

Revenue is presented in the table below under “Segment Information” disaggregated by product because this is the level of disaggregation that management has determined to be beneficial to users of the financial statements.

Receivables from Contracts with Customers

Our receivables from contracts with customers are included in receivables, net and totaled $5.7 billion as of June 30, 2018 and January 1, 2018.

Remaining Performance Obligations

The majority of our contracts with customers are spot contracts and therefore have no remaining performance obligations. All of our remaining contracts with customers are primarily term contracts, the majority of which expire by 2020. The transaction price for these term contracts includes an immaterial fixed amount and variable consideration (i.e., a commodity price). The variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a distinct good that forms part of a single performance obligation; therefore, the variable consideration is not included in the remaining performance obligation. As of June 30, 2018, after excluding contracts with an original expected duration of one year or less, the aggregate amount of the transaction price allocated to our remaining performance obligations was immaterial as the transaction price for these contracts includes only an immaterial fixed amount.

Segment Information

We have three reportable segments – refining, ethanol, and VLP. Each segment is a strategic business unit that offers different products and services by employing unique technologies and marketing strategies and whose operations and operating performance are managed and evaluated separately. Operating performance is measured based on the operating income generated by the segment, which includes revenues and expenses that are directly attributable to the management of the respective segment. Intersegment sales are generally derived from transactions made at prevailing market rates. The following is a description of each segment’s business operations.

•

The refining segment includes the operations of our 15 petroleum refineries, the associated marketing activities, and certain logistics assets that support our refining operations that are not owned by VLP. The principal products manufactured by our refineries and sold by this segment include gasolines and blendstocks (e.g., conventional gasolines, premium gasolines, and gasoline meeting the specifications of the California Air Resources Board (CARB)), distillates (e.g., diesel, low-sulfur diesel, ultra-low-sulfur diesel, CARB diesel, jet fuel, and other distillates), and other products (e.g., asphalt, petrochemicals, lubricants, and other refined petroleum products).

•

The ethanol segment includes the operations of our 11 ethanol plants, the associated marketing activities, and logistics assets that support our ethanol operations. The principal products manufactured by our ethanol plants are ethanol and distillers grains. We sell some ethanol to our refining segment for blending into gasoline, which is sold to that segment’s customers as a finished gasoline product.


•	The VLP segment includes the results of VLP. VLP generates revenue from transportation and terminaling activities provided to our refining segment. All of VLP’s revenues are intersegment revenues that are generated under commercial agreements with our refining segment. Revenues generated under these agreements are eliminated in consolidation.

Operations that are not included in any of the reportable segments are included in the corporate category.

The following table reflects the components of operating income by reportable segment (in millions):



	Refining		Ethanol		VLP		Corporate and Eliminations			Total
Three months ended June 30, 2018:
Revenues:
Revenues from external customers	$	30,130	$	884	$	—	$	1		$	31,015
Intersegment revenues	1		42		135		(178		)	—
Total revenues	30,131		926		135		(177		)	31,015
Cost of sales:
Cost of materials and other	27,283		754		—		(177		)	27,860
Operating expenses (excluding depreciation and amortization expense reflected below)	969		109		33		(1		)	1,110
Depreciation and amortization expense	471		20		19		—			510
Total cost of sales	28,723		883		52		(178		)	29,480
Other operating expenses	21		—		—		—			21
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		248			248
Depreciation and amortization expense	—		—		—		13			13
Operating income by segment	$	1,387	$	43	$	83	$	(260	)	$	1,253

Three months ended June 30, 2017:
Revenues:
Revenues from external customers	$	21,415	$	839	$	—	$	—		$	22,254
Intersegment revenues	—		28		110		(138		)	—
Total revenues	21,415		867		110		(138		)	22,254
Cost of sales:
Cost of materials and other	19,037		710		—		(138		)	19,609
Operating expenses (excluding depreciation and amortization expense reflected below)	979		107		27		(2		)	1,111
Depreciation and amortization expense	454		19		12		—			485
Total cost of sales	20,470		836		39		(140		)	21,205
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		175			175
Depreciation and amortization expense	—		—		—		14			14
Operating income by segment	$	945	$	31	$	71	$	(187	)	$	860



	Refining		Ethanol		VLP		Corporate and Eliminations			Total
Six months ended June 30, 2018:
Revenues:
Revenues from external customers	$	55,691	$	1,761	$	—	$	2		$	57,454
Intersegment revenues	5		88		267		(360		)	—
Total revenues	55,696		1,849		267		(358		)	57,454
Cost of sales:
Cost of materials and other	50,471		1,503		—		(358		)	51,616
Operating expenses (excluding depreciation and amortization expense reflected below)	1,966		220		62		(2		)	2,246
Depreciation and amortization expense	919		38		38		—			995
Total cost of sales	53,356		1,761		100		(360		)	54,857
Other operating expenses	31		—		—		—			31
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		486			486
Depreciation and amortization expense	—		—		—		26			26
Operating income by segment	$	2,309	$	88	$	167	$	(510	)	$	2,054

Six months ended June 30, 2017:
Revenues:
Revenues from external customers	$	42,302	$	1,724	$	—	$	—		$	44,026
Intersegment revenues	—		88		216		(304		)	—
Total revenues	42,302		1,812		216		(304		)	44,026
Cost of sales:
Cost of materials and other	37,844		1,497		—		(304		)	39,037
Operating expenses (excluding depreciation and amortization expense reflected below)	1,970		216		51		(2		)	2,235
Depreciation and amortization expense	903		46		24		—			973
Total cost of sales	40,717		1,759		75		(306		)	42,245
General and administrative expenses (excluding depreciation and amortization expense reflected below)	—		—		—		367			367
Depreciation and amortization expense	—		—		—		26			26
Operating income by segment	$	1,585	$	53	$	141	$	(391	)	$	1,388

The following table provides a disaggregation of revenues by reportable segment (in millions). Refining and ethanol segment revenues are disaggregated for our principal products, and VLP segment revenues are disaggregated by activity type.



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Refining:
Gasolines and blendstocks	$	12,514		$	9,723		$	23,143		$	19,058
Distillates	14,459			9,736			27,117			19,432
Other product revenues	3,157			1,956			5,431			3,812
Total refining revenues	30,130			21,415			55,691			42,302
Ethanol:
Ethanol	696			712			1,397			1,462
Distillers grains	188			127			364			262
Total ethanol revenues	884			839			1,761			1,724
VLP:
Pipeline transportation	31			25			62			48
Terminaling	103			84			202			167
Storage and other	1			1			3			1
Total VLP revenues	135			110			267			216
Corporate – other revenues	1			—			2			—
Elimination of intersegment revenues	(135		)	(110		)	(267		)	(216		)
Revenues	$	31,015		$	22,254		$	57,454		$	44,026

Total assets by reportable segment were as follows (in millions):



	June 30, 2018		December 31, 2017
Refining	$	42,107	$	40,382
Ethanol	1,332		1,344
VLP	1,569		1,517
Corporate and eliminations	5,670		6,915
Total assets	$	50,678	$	50,158