Note 8—Investments in Unconsolidated Entities

Investments in entities over which we have significant influence but not control are accounted for by the equity method. We do not consolidate any part of the assets or liabilities of our equity investees. Our share of net income or loss is reflected as one line item on our Consolidated Statements of Operations entitled “Equity earnings in unconsolidated entities” and will increase or decrease, as applicable, the carrying value of our investments in unconsolidated entities on the balance sheet. In addition, as applicable, we include a proportionate share of our equity method investees’ unrealized gains and losses in other comprehensive income on our Consolidated Balance Sheet. We also adjust our investment balances in these investees by the like amount. We evaluate our equity investments for impairment in accordance with FASB guidance with respect to the equity method of accounting for investments in common stock. An impairment of an equity investment results when factors indicate that the investment’s fair value is less than its carrying value and the reduction in value is other than temporary in nature.

We consider distributions received from unconsolidated entities as returns on investment in those entities to the extent of cumulative net operating cash flows, and therefore classify these distributions as cash flows from operating activities in our Consolidated Statement of Cash Flows. We define cumulative net operating cash flows as cumulative net income adjusted for certain non-cash items such as depreciation and amortization expense. Other distributions received from unconsolidated entities would be considered a return of the investment and classified as cash flows from investing activities on the Consolidated Statement of Cash Flows. Our contributions to these entities will increase the carrying value of our investments and are reflected in our Consolidated Statements of Cash Flows in investing activities. During the years ended December 31, 2014, 2013 and 2012, we made cash contributions to Eagle Ford Pipeline LLC and White Cliffs Pipeline, LLC to support construction and expansion activities of such entities.

Our investments in the following entities are accounted for under the equity method of accounting:

Entity	Type of Operation	Our Ownership Interest
Settoon Towing, LLC	Barge Transportation Services	50	%
BridgeTex Pipeline Company, LLC	Crude Oil Pipeline	50	%
Eagle Ford Pipeline LLC	Crude Oil Pipeline	50	%
White Cliffs Pipeline, LLC	Crude Oil Pipeline	36	%
Butte Pipe Line Company	Crude Oil Pipeline	22	%
Frontier Pipeline Company	Crude Oil Pipeline	22	%

In August 2012, we formed Eagle Ford Pipeline LLC with Enterprise Products Partners L.P. (“Enterprise”) for the purpose of developing a crude oil pipeline system in the Eagle Ford Area of South Texas. In conjunction with the formation, we and Enterprise contributed fixed assets with estimated book values of $134 million and $15 million, respectively. In addition, Enterprise contributed cash of $59 million, which we received from Eagle Ford Pipeline LLC.

On November 14, 2014, we acquired a 50% interest in BridgeTex from Oxy. BridgeTex owns a 300,000 barrel-per-day crude oil pipeline that extends from Colorado City in West Texas to a crude oil terminal in East Houston, which we believe is complementary to our existing West Texas assets. We paid cash of $1.088 billion, including working capital adjustments of $13 million, for our interest in BridgeTex.

Our investments in unconsolidated entities exceeded our share of the underlying equity in the net assets of such entities by $763 million and $78 million at December 31, 2014 and 2013, respectively. Such basis differences are included in the carrying values of our investments on our Consolidated Balance Sheets. The portion of the basis differences attributable to depreciable or amortizable assets is amortized on a straight-line basis over the estimated useful life of the related assets, which reduces “Equity earnings in unconsolidated entities” on our Consolidated Statements of Operations. The portion of the basis differences attributable to goodwill is not amortized. The increase in basis differences in 2014 was primarily due to our acquisition of an interest in BridgeTex.

Summarized Financial Information of Unconsolidated Entities

Combined summarized financial information for all of our unconsolidated entities is shown in the tables below (in millions):

	December 31,
	2014		2013
Current assets	$	184	$	177
Noncurrent assets	$	2,303	$	1,067
Current liabilities	$	142	$	57
Noncurrent liabilities	$	222	$	211

	Year Ended December 31,
	2014		2013		2012
Revenues	$	531	$	344	$	257
Operating income	$	301	$	181	$	132
Net income	$	285	$	172	$	118