x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) | 20-8536826 (IRS Employer Identification No.) | |
201 NW 10th, Suite 200 Oklahoma City, Oklahoma 73103 (Address of principal executive offices, zip code) Registrant’s telephone number, including area code: (405) 278-6400 |
Large accelerated filer o | Accelerated filer x | |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o | |
Emerging growth company o |
Table of Contents | ||
Page | ||
FINANCIAL INFORMATION | ||
Unaudited Condensed Consolidated Financial Statements | ||
Condensed Consolidated Balance Sheets as of December 31, 2016 and March 31, 2017 | ||
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2016 and 2017 | ||
Condensed Consolidated Statement of Changes in Partners’ Capital for the Three Months Ended March 31, 2017 | ||
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2017 | ||
Notes to the Unaudited Condensed Consolidated Financial Statements | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
Quantitative and Qualitative Disclosures about Market Risk | ||
Controls and Procedures | ||
OTHER INFORMATION | ||
Legal Proceedings | ||
Risk Factors | ||
Exhibits |
BLUEKNIGHT ENERGY PARTNERS, L.P. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except unit data) | |||||||
As of | As of | ||||||
December 31, 2016 | March 31, 2017 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 3,304 | $ | 2,807 | |||
Accounts receivable, net of allowance for doubtful accounts of $49 and $41 at December 31, 2016 and March 31, 2017, respectively | 7,544 | 11,358 | |||||
Receivables from related parties, net of allowance for doubtful accounts of $0 at both dates | 1,860 | 1,557 | |||||
Prepaid insurance | 1,578 | 1,887 | |||||
Other current assets | 7,934 | 8,429 | |||||
Total current assets | 22,220 | 26,038 | |||||
Property, plant and equipment, net of accumulated depreciation of $292,117 and $298,782 at December 31, 2016 and March 31, 2017, respectively | 307,334 | 301,860 | |||||
Assets held for sale, net of accumulated depreciation of $3,041 and $3,392 at December 31, 2016 and March 31, 2017, respectively | 4,237 | 4,365 | |||||
Investment in unconsolidated affiliate | 20,561 | — | |||||
Investment in unconsolidated affiliate, held for sale (see Note 4) | — | 21,152 | |||||
Goodwill | 4,746 | 4,746 | |||||
Debt issuance costs, net | 2,050 | 1,715 | |||||
Intangibles and other assets, net | 14,515 | 14,191 | |||||
Total assets | $ | 375,663 | $ | 374,067 | |||
LIABILITIES AND PARTNERS’ CAPITAL | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 3,174 | $ | 4,348 | |||
Accounts payable to related parties | 1,053 | 1,810 | |||||
Accrued interest payable | 413 | 296 | |||||
Accrued property taxes payable | 2,531 | 1,811 | |||||
Unearned revenue | 2,350 | 2,878 | |||||
Unearned revenue with related parties | 383 | 4,194 | |||||
Accrued payroll | 6,358 | 2,986 | |||||
Other current liabilities | 4,279 | 3,856 | |||||
Total current liabilities | 20,541 | 22,179 | |||||
Long-term unearned revenue with related parties | 640 | 582 | |||||
Other long-term liabilities | 2,959 | 3,182 | |||||
Interest rate swap liabilities | 1,947 | 1,195 | |||||
Long-term debt | 324,000 | 330,000 | |||||
Commitments and contingencies (Note 14) | |||||||
Partners’ capital: | |||||||
Common unitholders (38,003,397 and 38,155,434 units issued and outstanding at December 31, 2016 and March 31, 2017, respectively) | 471,180 | 462,562 | |||||
Series A Preferred Units (35,125,202 units issued and outstanding at both dates) | 253,923 | 253,923 | |||||
General partner interest (1.7% and 1.6% interest at December 31, 2016 and March 31, 2017, respectively, with 1,225,409 general partner units outstanding at both dates) | (699,527 | ) | (699,556 | ) | |||
Total partners’ capital | 25,576 | 16,929 | |||||
Total liabilities and partners’ capital | $ | 375,663 | $ | 374,067 |
BLUEKNIGHT ENERGY PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per unit data) | ||||||||
Three Months ended March 31, | ||||||||
2016 | 2017 | |||||||
(unaudited) | ||||||||
Service revenue: | ||||||||
Third party revenue | $ | 30,255 | $ | 28,663 | ||||
Related party revenue | 7,009 | 13,642 | ||||||
Product sales revenue: | ||||||||
Third party revenue | 3,745 | 4,035 | ||||||
Total revenue | 41,009 | 46,340 | ||||||
Costs and expenses: | ||||||||
Operating | 27,760 | 31,906 | ||||||
Cost of product sales | 3,187 | 3,139 | ||||||
General and administrative | 4,745 | 4,585 | ||||||
Asset impairment expense | 271 | 28 | ||||||
Total costs and expenses | 35,963 | 39,658 | ||||||
Loss on sale of assets | (33 | ) | (125 | ) | ||||
Operating income | 5,013 | 6,557 | ||||||
Other income (expense): | ||||||||
Equity earnings in unconsolidated affiliate | 624 | 61 | ||||||
Interest expense (net of capitalized interest of $34 and $2, respectively) | (4,870 | ) | (3,030 | ) | ||||
Income before income taxes | 767 | 3,588 | ||||||
Provision for income taxes | 41 | 46 | ||||||
Net income | $ | 726 | $ | 3,542 | ||||
Allocation of net income for calculation of earnings per unit: | ||||||||
General partner interest in net income | $ | 144 | $ | 209 | ||||
Preferred interest in net income | $ | 5,391 | $ | 6,279 | ||||
Loss available to limited partners | $ | (4,809 | ) | $ | (2,946 | ) | ||
Basic and diluted net loss per common unit | $ | (0.14 | ) | $ | (0.08 | ) | ||
Weighted average common units outstanding - basic and diluted | 33,176 | 38,146 |
BLUEKNIGHT ENERGY PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’ CAPITAL (in thousands) | |||||||||||||||
Common Unitholders | Series A Preferred Unitholders | General Partner Interest | Total Partners’ Capital | ||||||||||||
(unaudited) | |||||||||||||||
Balance, December 31, 2016 | $ | 471,180 | $ | 253,923 | $ | (699,527 | ) | $ | 25,576 | ||||||
Net income (loss) | (2,958 | ) | 6,279 | 221 | 3,542 | ||||||||||
Equity-based incentive compensation | (124 | ) | — | (1 | ) | (125 | ) | ||||||||
Distributions | (5,620 | ) | (6,279 | ) | (353 | ) | (12,252 | ) | |||||||
Capital contributions | — | — | 104 | 104 | |||||||||||
Proceeds from sale of 24,538 common units pursuant to the Employee Unit Purchase Plan | 84 | — | — | 84 | |||||||||||
Balance, March 31, 2017 | $ | 462,562 | $ | 253,923 | $ | (699,556 | ) | $ | 16,929 |
BLUEKNIGHT ENERGY PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) | |||||||
Three Months ended March 31, | |||||||
2016 | 2017 | ||||||
(unaudited) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 726 | $ | 3,542 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Provision for uncollectible receivables from third parties | (13 | ) | (8 | ) | |||
Provision for uncollectible receivables from related parties | (225 | ) | — | ||||
Depreciation and amortization | 7,135 | 8,066 | |||||
Amortization of debt issuance costs | 220 | 342 | |||||
Unrealized loss (gain) related to interest rate swaps | 1,880 | (752 | ) | ||||
Asset impairment charge | 271 | 28 | |||||
Loss on sale of assets | 33 | 125 | |||||
Equity-based incentive compensation | 153 | (125 | ) | ||||
Equity earnings in unconsolidated affiliate | (624 | ) | (61 | ) | |||
Changes in assets and liabilities | |||||||
Increase in accounts receivable | (2,098 | ) | (3,806 | ) | |||
Decrease in receivables from related parties | 677 | 303 | |||||
Decrease in prepaid insurance | 487 | 441 | |||||
Decrease (increase) in other current assets | 114 | (610 | ) | ||||
Decrease in other assets | 34 | 3 | |||||
Increase (decrease) in accounts payable | 562 | (86 | ) | ||||
Increase in payables to related parties | — | 227 | |||||
Increase (decrease) in accrued interest payable | 38 | (117 | ) | ||||
Decrease in accrued property taxes | (233 | ) | (695 | ) | |||
Increase in unearned revenue | 309 | 794 | |||||
Increase (decrease) in unearned revenue from related parties | (20 | ) | 3,753 | ||||
Decrease in accrued payroll | (3,956 | ) | (3,372 | ) | |||
Decrease in other accrued liabilities | (823 | ) | (443 | ) | |||
Net cash provided by operating activities | 4,647 | 7,549 | |||||
Cash flows from investing activities: | |||||||
Acquisitions | (18,989 | ) | — | ||||
Capital expenditures | (4,269 | ) | (4,052 | ) | |||
Proceeds from sale of assets | 884 | 2,850 | |||||
Net cash used in investing activities | (22,374 | ) | (1,202 | ) | |||
Cash flows from financing activities: | |||||||
Payment on insurance premium financing agreement | (893 | ) | (773 | ) | |||
Debt issuance costs | — | (7 | ) | ||||
Borrowings under credit facility | 44,000 | 25,000 | |||||
Payments under credit facility | (16,000 | ) | (19,000 | ) | |||
Proceeds from equity issuance, net of offering costs | 154 | 84 | |||||
Capital contributions | — | 104 | |||||
Capital contribution related to profits interest | 37 | — | |||||
Distributions | (10,593 | ) | (12,252 | ) | |||
Net cash provided by (used in) financing activities | 16,705 | (6,844 | ) | ||||
Net decrease in cash and cash equivalents | (1,022 | ) | (497 | ) | |||
Cash and cash equivalents at beginning of period | 3,038 | 3,304 | |||||
Cash and cash equivalents at end of period | $ | 2,016 | $ | 2,807 | |||
Supplemental disclosure of non-cash financing and investing cash flow information: | |||||||
Increase in accounts payable related to purchase of property, plant and equipment | $ | 434 | $ | 1,790 | |||
Increase in accrued liabilities related to insurance premium financing agreement | $ | 750 | $ | 750 |
Three Months ended March 31, | |||||||
2016 | 2017 | ||||||
Beginning balance | $ | 1,565 | $ | 474 | |||
Charged to expense | — | — | |||||
Cash payments | 562 | 46 | |||||
Ending balance | $ | 1,003 | $ | 428 |
December 31, 2016 | March 31, 2017 | ||||||
Balance sheets | |||||||
Current assets | $ | 2,075 | $ | 1,420 | |||
Noncurrent assets | 89,065 | 87,811 | |||||
Total assets | $ | 91,140 | $ | 89,231 | |||
Current liabilities | 1,327 | 1,073 | |||||
Long-term liabilities | 20,910 | 19,067 | |||||
Member’s equity | 68,903 | 69,091 | |||||
Total liabilities and member’s equity | $ | 91,140 | $ | 89,231 |
Three Months ended March 31, | |||||||
2016 | 2017 | ||||||
Income statements | |||||||
Operating revenues | $ | 5,105 | $ | 3,150 | |||
Operating expenses | $ | 551 | $ | 465 | |||
Net income | $ | 2,404 | $ | 187 |
Estimated Useful Lives (Years) | December 31, 2016 | March 31, 2017 | |||||||
(dollars in thousands) | |||||||||
Land | N/A | $ | 25,863 | $ | 24,864 | ||||
Land improvements | 10-20 | 6,698 | 6,735 | ||||||
Pipelines and facilities | 5-30 | 165,293 | 165,100 | ||||||
Storage and terminal facilities | 10-35 | 347,656 | 349,873 | ||||||
Transportation equipment | 3-10 | 12,391 | 11,623 | ||||||
Office property and equipment and other | 3-20 | 35,578 | 34,953 | ||||||
Pipeline linefill and tank bottoms | N/A | 3,234 | 3,234 | ||||||
Construction-in-progress | N/A | 2,738 | 4,260 | ||||||
Property, plant and equipment, gross | 599,451 | 600,642 | |||||||
Accumulated depreciation | (292,117 | ) | (298,782 | ) | |||||
Property, plant and equipment, net | $ | 307,334 | $ | 301,860 |
• | requires that, to the extent (i) the Partnership’s consolidated total leverage ratio as of the end of the prior fiscal quarter was greater than 4.75 to 1.00 and (ii) the Partnership and its subsidiaries have cash and cash equivalents (subject to certain exceptions) exceeding $20.0 million for four consecutive business days, the Partnership prepay the Partnership’s outstanding obligations under the Partnership’s credit agreement in the amount of such excess; and |
• | restricts the Partnership from borrowing funds under the Partnership’s credit agreement if, after giving effect to such borrowing and the prompt use of the proceeds thereof, the Partnership and its subsidiaries would have cash and cash equivalents (subject to certain exceptions) exceeding $20.0 million. |
• | create, issue, incur or assume indebtedness; |
• | create, incur or assume liens; |
• | engage in mergers or acquisitions; |
• | sell, transfer, assign or convey assets; |
• | repurchase the Partnership’s equity, make distributions to unitholders and make certain other restricted payments; |
• | make investments; |
• | modify the terms of certain indebtedness, or prepay certain indebtedness; |
• | engage in transactions with affiliates; |
• | enter into certain hedging contracts; |
• | enter into certain burdensome agreements; |
• | change the nature of the Partnership’s business; and |
• | make certain amendments to the Partnership’s partnership agreement. |
Fair Values of Liability Derivative Instruments | |||||||||||
December 31, 2016 | March 31, 2017 | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Derivatives not designated as hedging instruments: | |||||||||||
Interest rate swaps | Interest rate swap liabilities | $ | 1,947 | Interest rate swap liabilities | $ | 1,195 |
Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Net Income on Derivative | Amount of Gain (Loss) Recognized in Net Income on Derivative | ||||||||
Three Months ended March 31, | ||||||||||
2016 | 2017 | |||||||||
Interest rate swaps | Interest expense, net of capitalized interest | $ | (1,880 | ) | $ | 752 |
Three Months ended March 31, | |||||||
2016 | 2017 | ||||||
Net income | $ | 726 | $ | 3,542 | |||
General partner interest in net income | 144 | 209 | |||||
Preferred interest in net income | 5,391 | 6,279 | |||||
Loss available to limited partners | $ | (4,809 | ) | $ | (2,946 | ) | |
Basic and diluted weighted average number of units: | |||||||
Common units | 33,176 | 38,146 | |||||
Restricted and phantom units | 616 | 688 | |||||
Total units | 33,792 | 38,834 | |||||
Basic and diluted net loss per common unit | $ | (0.14 | ) | $ | (0.08 | ) |
Grant Date | Number of Units | Weighted Average Grant Date Fair Value(1) | Grant Date Total Fair Value | |||||||
(in thousands) | ||||||||||
December 2016 | 10,950 | $ | 6.85 | $ | 75 |
Grant Date | Number of Units | Weighted Average Grant Date Fair Value(1) | Grant Date Total Fair Value | |||||||
(in thousands) | ||||||||||
March 2015 | 266,076 | $ | 7.74 | $ | 2,059 | |||||
March 2016 | 416,131 | $ | 4.77 | $ | 1,985 | |||||
October 2016 | 9,960 | $ | 5.85 | $ | 58 | |||||
March 2017 | 323,339 | $ | 7.15 | $ | 2,312 |
Number of Units | Weighted Average Grant Date Fair Value | |||||
Nonvested at December 31, 2016 | 915,180 | $ | 6.61 | |||
Granted | 323,339 | 7.15 | ||||
Vested | 213,923 | 9.06 | ||||
Forfeited | — | — | ||||
Nonvested at March 31, 2017 | 1,024,596 | $ | 6.26 |
Level 1 | Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. |
Level 2 | Inputs other than quoted prices that are observable for these assets or liabilities, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
Level 3 | Unobservable inputs in which there is little market data, which requires the reporting entity to develop its own assumptions. |
Fair Value Measurements as of December 31, 2016 | |||||||||||||||
Description | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Liabilities: | |||||||||||||||
Interest rate swap liabilities | $ | 1,947 | $ | — | $ | 1,947 | $ | — | |||||||
Total | $ | 1,947 | $ | — | $ | 1,947 | $ | — |
Fair Value Measurements as of March 31, 2017 | |||||||||||||||
Description | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
Liabilities: | |||||||||||||||
Interest rate swap liabilities | $ | 1,195 | $ | — | $ | 1,195 | $ | — | |||||||
Total | $ | 1,195 | $ | — | $ | 1,195 | $ | — |
Three Months ended March 31, | ||||||||
2016 | 2017 | |||||||
Asphalt Terminalling Services | ||||||||
Service revenue | ||||||||
Third party revenue | $ | 17,306 | $ | 13,223 | ||||
Related party revenue | 302 | 13,332 | ||||||
Total revenue for reportable segments | 17,608 | 26,555 | ||||||
Operating expense (excluding depreciation and amortization) | 6,435 | 12,319 | ||||||
Segment operating margin | 11,173 | 14,236 | ||||||
Total assets (end of period) | $ | 118,140 | $ | 145,815 | ||||
Crude Oil Terminalling and Storage Services | ||||||||
Service revenue | ||||||||
Third party revenue | $ | 3,561 | $ | 6,125 | ||||
Related party revenue | 2,761 | — | ||||||
Total revenue for reportable segments | 6,322 | 6,125 | ||||||
Operating expense (excluding depreciation and amortization) | 1,160 | 1,011 | ||||||
Segment operating margin | 5,162 | 5,114 | ||||||
Total assets (end of period) | $ | 72,810 | $ | 70,518 | ||||
Crude Oil Pipeline Services | ||||||||
Service revenue | ||||||||
Third party revenue | $ | 2,252 | $ | 2,605 | ||||
Related party revenue | 2,317 | 310 | ||||||
Product sales revenue | ||||||||
Third party revenue | 3,745 | 3,650 | ||||||
Total revenue for reportable segments | 8,314 | 6,565 | ||||||
Operating expense (excluding depreciation and amortization) | 4,227 | 3,242 | ||||||
Operating expense (intersegment) | 260 | 170 | ||||||
Cost of product sales | 3,187 | 3,139 | ||||||
Segment operating margin | 640 | 14 | ||||||
Total assets (end of period) | $ | 177,858 | $ | 145,351 | ||||
Crude Oil Trucking and Producer Field Services | ||||||||
Service revenue | ||||||||
Third party revenue | $ | 7,136 | $ | 6,710 | ||||
Related party revenue | 1,629 | — | ||||||
Intersegment revenue | 260 | 170 | ||||||
Product sales revenue | ||||||||
Third party revenue | — | 385 | ||||||
Total revenue for reportable segments | 9,025 | 7,265 | ||||||
Operating expense (excluding depreciation and amortization) | 8,803 | 7,268 | ||||||
Segment operating margin | 222 | (3 | ) | |||||
Total assets (end of period) | $ | 12,463 | $ | 12,383 | ||||
Total operating margin (excluding depreciation and amortization)(1) | $ | 17,197 | $ | 19,361 | ||||
Three Months ended March 31, | ||||||||
2016 | 2017 | |||||||
Total Segment Revenues | $ | 41,269 | $ | 46,510 | ||||
Elimination of Intersegment Revenues | (260 | ) | (170 | ) | ||||
Consolidated Revenues | $ | 41,009 | $ | 46,340 |
Three Months ended March 31, | ||||||||
2016 | 2017 | |||||||
Operating margin (excluding depreciation and amortization) | $ | 17,197 | $ | 19,361 | ||||
Depreciation and amortization | (7,135 | ) | (8,066 | ) | ||||
General and administrative expenses | (4,745 | ) | (4,585 | ) | ||||
Asset impairment expense | (271 | ) | (28 | ) | ||||
Loss on sale of assets | (33 | ) | (125 | ) | ||||
Interest expense | (4,870 | ) | (3,030 | ) | ||||
Equity earnings in unconsolidated affiliate | 624 | 61 | ||||||
Income before income taxes | $ | 767 | $ | 3,588 |
Deferred tax assets | |||
Difference in bases of property, plant and equipment | $ | 822 | |
Deferred tax asset | 822 | ||
Less: valuation allowance | 822 | ||
Net deferred tax asset | $ | — |
• | taxable income projections in future years; |
• | whether the carryforward period is so brief that it would limit realization of tax benefits; |
• | future revenue and operating cost projections that will produce more than enough taxable income to realize the deferred tax asset based on existing service rates and cost structures; and |
• | our earnings history exclusive of the loss that created the future deductible amount coupled with evidence indicating that the loss is an aberration rather than a continuing condition. |
Operating Results | Three Months ended March 31, | Favorable/(Unfavorable) | |||||||||||||
(dollars in thousands) | 2016 | 2017 | $ | % | |||||||||||
Operating Margin, excluding depreciation and amortization: | |||||||||||||||
Asphalt terminalling services operating margin | $ | 11,173 | $ | 14,236 | $ | 3,063 | 27 | % | |||||||
Crude oil terminalling and storage operating margin | 5,162 | 5,114 | (48 | ) | (1 | )% | |||||||||
Crude oil pipeline services operating margin | 640 | 14 | (626 | ) | (98 | )% | |||||||||
Crude oil trucking and producer field services operating margin | 222 | (3 | ) | (225 | ) | (101 | )% | ||||||||
Total operating margin, excluding depreciation and amortization | 17,197 | 19,361 | 2,164 | 13 | % | ||||||||||
Depreciation and amortization | (7,135 | ) | (8,066 | ) | (931 | ) | (13 | )% | |||||||
General and administrative expense | (4,745 | ) | (4,585 | ) | 160 | 3 | % | ||||||||
Asset impairment expense | (271 | ) | (28 | ) | 243 | 90 | % | ||||||||
Loss on sale of assets | (33 | ) | (125 | ) | (92 | ) | (279 | )% | |||||||
Operating income | 5,013 | 6,557 | 1,544 | 31 | % | ||||||||||
Other income (expense): | |||||||||||||||
Equity earnings in unconsolidated entity | 624 | 61 | (563 | ) | (90 | )% | |||||||||
Interest expense | (4,870 | ) | (3,030 | ) | 1,840 | 38 | % | ||||||||
Income tax expense | (41 | ) | (46 | ) | (5 | ) | (12 | )% | |||||||
Net income | $ | 726 | $ | 3,542 | $ | 2,816 | 388 | % |
Operating results | Three Months ended March 31, | Favorable/(Unfavorable) | |||||||||||||
(dollars in thousands) | 2016 | 2017 | $ | % | |||||||||||
Service Revenue: | |||||||||||||||
Third Party Revenue | $ | 17,306 | $ | 13,223 | $ | (4,083 | ) | (24 | )% | ||||||
Related Party Revenue | 302 | 13,332 | 13,030 | 4,315 | % | ||||||||||
Total Revenue | 17,608 | 26,555 | 8,947 | 51 | % | ||||||||||
Operating Expense (excluding depreciation and amortization) | 6,435 | 12,319 | (5,884 | ) | (91 | )% | |||||||||
Operating Margin (excluding depreciation and amortization) | $ | 11,173 | $ | 14,236 | $ | 3,063 | 27 | % |
• | Overall revenues have increased for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016 primarily due to the acquisition of nine asphalt facilities from Ergon in October 2016 in addition to two asphalt terminals acquired in February 2016. Also in October 2016, Ergon acquired our general partner, resulting in all revenues generated from services provided to Ergon after October 5, 2016 being classified as related party revenues when they were previously classified as related party. |
• | Operating expenses increased for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016 primarily as a result of the acquisition of nine asphalt facilities from Ergon in October 2016. |
Operating results | Three Months ended March 31, | Favorable/(Unfavorable) | |||||||||||||
(dollars in thousands) | 2016 | 2017 | $ | % | |||||||||||
Service Revenue: | |||||||||||||||
Third Party Revenue | $ | 3,561 | $ | 6,125 | $ | 2,564 | 72 | % | |||||||
Related Party Revenue | 2,761 | — | (2,761 | ) | (100 | )% | |||||||||
Total Revenue | 6,322 | 6,125 | (197 | ) | (3 | )% | |||||||||
Operating Expense (excluding depreciation and amortization) | 1,160 | 1,011 | 149 | 13 | % | ||||||||||
Operating Margin (excluding depreciation and amortization) | $ | 5,162 | $ | 5,114 | $ | (48 | ) | (1 | )% | ||||||
Average crude oil stored per month at our Cushing terminal (in thousands of barrels) | 5,440 | 5,954 | 514 | 9 | % | ||||||||||
Average crude oil delivered to our Cushing terminal (in thousands of barrels per day) | 106 | 43 | (63 | ) | (59 | )% |
• | Revenues have moved from related party to third party due to Ergon acquiring our general partner in October 2016, at which time Vitol ceased to be a related party. Total revenues for the three months ended March 31, 2017 are consistent with the same period in 2016. |
• | Operating expenses for the three months ended March 31, 2017, decreased as compared to the three months ended March 31, 2016, primarily as a result of decreases in maintenance and repair expense. |
• | As of April 27, 2017, we had approximately 5.9 million barrels of crude oil storage under service contracts with remaining terms of up to 56 months, including 2.4 million barrels of crude oil storage contracts that expire in 2017 and an additional 2.8 million barrels of crude oil contracts that expire in 2018. Storage contracts with Vitol represent 2.4 million barrels of crude oil storage capacity under contract. |
Operating results | Three Months ended March 31, | Favorable/(Unfavorable) | |||||||||||||
(dollars in thousands) | 2016 | 2017 | $ | % | |||||||||||
Service revenue: | |||||||||||||||
Third Party Revenue | $ | 2,252 | $ | 2,605 | $ | 353 | 16 | % | |||||||
Related Party Revenue | 2,317 | 310 | (2,007 | ) | (87 | )% | |||||||||
Product sales revenue: | |||||||||||||||
Third Party Revenue | 3,745 | 3,650 | (95 | ) | (3 | )% | |||||||||
Total Revenue | 8,314 | 6,565 | (1,749 | ) | (21 | )% | |||||||||
Operating Expense (excluding depreciation and amortization) | 4,227 | 3,242 | 985 | 23 | % | ||||||||||
Operating Expense (intersegment) | 260 | 170 | 90 | 35 | % | ||||||||||
Cost of Product Sales | 3,187 | 3,139 | 48 | 2 | % | ||||||||||
Operating Margin (excluding depreciation and amortization) | $ | 640 | $ | 14 | $ | (626 | ) | (98 | )% | ||||||
Average throughput volume (in thousands of barrels per day) | |||||||||||||||
Mid-Continent | 40 | 22 | (18 | ) | (45 | )% | |||||||||
East Texas | 11 | 3 | (8 | ) | (73 | )% |
• | Revenues have moved from related party to third party due to Ergon’s acquisition of our general partner in October 2016, at which time Vitol ceased to be a related party. |
• | Overall revenues were negatively impacted by the suspended service on our Mid-Continent pipeline system due to pipeline exposure caused by heavy rains and the erosion of a riverbed in southern Oklahoma discovered in late April 2016. There was no damage to the pipe and no loss of product. In the second quarter of 2016, we took action to mitigate the service suspension and worked with customers to divert volumes, and, in certain circumstances, transported volumes to a third-party pipeline system via truck. In addition, the term of the throughput and deficiency agreement on our Eagle North system expired on June 30, 2016, and in July of 2016 we completed a connection of the southeastern most portion of our Mid-Continent pipeline system to our Eagle North system and concurrently reversed the Eagle North system. This enabled us to recapture diverted volumes and deliver those barrels to Cushing, Oklahoma. We are currently operating one Oklahoma mainline system, which is a combination of both the Mid-Continent and Eagle Pipeline systems instead of two separate systems providing us with a current capacity of approximately 20,000 to 25,000 Bpd. We are working to restore service of the second Oklahoma pipeline system and expect to put the line back in condensate service with a capacity of 20,000 Bpd during the second half of 2017. The ability to fully utilize the capacity of these systems may be impacted by the market price of crude oil and producers’ decisions to increase or decrease production in the areas we serve. |
• | Operating expenses have decreased as a result of decreases in maintenance and repair and compensation expenses primarily due to decreased volumes transported on the Mid-Continent and East Texas pipeline systems. On April 18, 2017, we sold the East Texas system. We received cash proceeds at closing of approximately $4.8 million and recorded a gain of less than $0.1 million. |
Operating results | Three Months ended March 31, | Favorable/(Unfavorable) | |||||||||||||
(dollars in thousands) | 2016 | 2017 | $ | % | |||||||||||
Service revenue: | |||||||||||||||
Third Party Revenue | $ | 7,136 | $ | 6,710 | $ | (426 | ) | (6 | )% | ||||||
Related Party Revenue | 1,629 | — | (1,629 | ) | (100 | )% | |||||||||
Intersegment Revenue | 260 | 170 | (90 | ) | (35 | )% | |||||||||
Product sales revenue: | |||||||||||||||
Third party revenue | — | 385 | 385 | N/A | |||||||||||
Total Revenue | 9,025 | 7,265 | (1,760 | ) | (20 | )% | |||||||||
Operating Expense (excluding depreciation and amortization) | 8,803 | 7,268 | 1,535 | 17 | % | ||||||||||
Operating Margin (excluding depreciation and amortization) | $ | 222 | $ | (3 | ) | $ | (225 | ) | (101 | )% | |||||
Average volume (in thousands of barrels per day) | 31 | 22 | (9 | ) | (29 | )% |
• | Service revenues and operating expenses have decreased as a result of declining crude oil prices and production volumes in the areas we serve. We continue to experience downward rate pressure in our trucking and producer field services business as producers and marketers attempt to renegotiate service rates to preserve their operating margins in the changing market. |
• | Revenues have moved from related party to third party due to Ergon’s acquisition of our general partner in October 2016, at which time Vitol ceased to be a related party. |
• | Product sales revenues for the three months ended March 31, 2017 are the result of a crude oil sales in our field services business. |
Three Months ended March 31, | |||||||
2016 | 2017 | ||||||
(in millions) | |||||||
Net cash provided by operating activities | $ | 4.6 | $ | 7.5 | |||
Net cash used in investing activities | $ | (22.4 | ) | $ | (1.2 | ) | |
Net cash provided by (used in) financing activities | $ | 16.7 | $ | (6.8 | ) |
• | maintenance capital expenditures, which are capital expenditures made to maintain the existing integrity and operating capacity of our assets and related cash flows, further extending the useful lives of the assets; and |
• | expansion capital expenditures, which are capital expenditures made to expand or to replace partially or fully depreciated assets or to expand the operating capacity or revenue of existing or new assets, whether through construction, acquisition or modification. |
BLUEKNIGHT ENERGY PARTNERS, L.P. | |||
By: | Blueknight Energy Partners, G.P., L.L.C | ||
its General Partner | |||
Date: | May 4, 2017 | By: | /s/ Alex G. Stallings |
Alex G. Stallings | |||
Chief Financial Officer and Secretary | |||
Date: | May 4, 2017 | By: | /s/ James R. Griffin |
James R. Griffin | |||
Chief Accounting Officer |
Exhibit Number | Exhibit Name | |
3.1 | Amended and Restated Certificate of Limited Partnership of the Partnership, dated November 19, 2009 but effective as of December 1, 2009 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed November 25, 2009 (Commission File No. 001-33503), and incorporated herein by reference). | |
3.2 | Fourth Amended and Restated Agreement of Limited Partnership of the Partnership, dated September 14, 2011 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed September 14, 2011, and incorporated herein by reference). | |
3.3 | Amended and Restated Certificate of Formation of the General Partner, dated November 20, 2009 but effective as of December 1, 2009 (filed as Exhibit 3.2 to the Partnership’s Current Report on Form 8-K, filed November 25, 2009 (Commission File No. 001-33503), and incorporated herein by reference). | |
3.4 | Second Amended and Restated Limited Liability Company Agreement of the General Partner, dated December 1, 2009 (filed as Exhibit 3.2 to the Partnership’s Current Report on Form 8-K, filed December 7, 2009 (Commission File No. 001-33503), and incorporated herein by reference). | |
4.1 | Registration Rights Agreement, dated October 5, 2016 by and among Blueknight Energy Partners, L.P., Ergon Asphalt & Emulsions, Inc., Ergon Terminaling, Inc. and Ergon Asphalt Holdings, LLC (filed as Exhibit 4.1 to the Partnership’s Current Report on Form 8-K, filed October 5, 2016, and incorporated herein by reference). | |
31.1# | Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2# | Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1# | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.” | |
101# | The following financial information from Blueknight Energy Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Document and Entity Information; (ii) Unaudited Condensed Consolidated Balance Sheets as of December 31, 2016 and March 31, 2017; (iii) Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and 2017; (iv) Unaudited Condensed Consolidated Statement of Changes in Partners’ Capital for the three months ended March 31, 2017; (v) Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2017; and (vi) Notes to Unaudited Condensed Consolidated Financial Statements. |
1. | I have reviewed this quarterly report on Form 10-Q of Blueknight Energy Partners, L.P.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | May 4, 2017 |
/s/ Mark Hurley | |
Mark Hurley | |
Chief Executive Officer | |
Blueknight Energy Partners, G.P., L.L.C., | |
general partner of Blueknight Energy Partners, L.P. |
1. | I have reviewed this quarterly report on Form 10-Q of Blueknight Energy Partners, L.P.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | May 4, 2017 |
/s/ Alex G. Stallings | |
Alex G. Stallings | |
Chief Financial Officer and Secretary of | |
Blueknight Energy Partners, G.P., L.L.C., | |
general partner of Blueknight Energy Partners, L.P. |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership. |
/s/ Mark Hurley |
Mark Hurley |
Chief Executive Officer of |
Blueknight Energy Partners G.P., L.L.C., |
general partner of Blueknight Energy Partners, L.P. |
May 4, 2017 |
/s/ Alex G. Stallings |
Alex G. Stallings |
Chief Financial Officer and Secretary of |
Blueknight Energy Partners G.P., L.L.C., |
general partner of Blueknight Energy Partners, L.P. |
May 4, 2017 |
* | A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report. |
Document And Entity Information - shares |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Apr. 27, 2017 |
Dec. 31, 2016 |
|
Entity Information [Line Items] | |||
Series A Preferred unitholders, units outstanding | 35,125,202 | 35,125,202 | |
Entity Registrant Name | Blueknight Energy Partners, L.P. | ||
Entity Central Index Key | 0001392091 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | Q1 | ||
Document Type | 10-Q | ||
Amendment Flag | false | ||
Document Period End Date | Mar. 31, 2017 | ||
Entity Common Stock, Shares Outstanding | 38,155,434 | ||
Subsequent Event [Member] | |||
Entity Information [Line Items] | |||
Series A Preferred unitholders, units outstanding | 35,125,202 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Current assets: | ||
Accounts receivable, allowance for doubtful accounts | $ 41 | $ 49 |
Receivables from related parties, allowance for doubtful accounts | 0 | 0 |
Accumulated depreciation | 298,782 | 292,117 |
Assets, Noncurrent [Abstract] | ||
Accumulated Depreciation, Assets held for sale | $ 3,392 | $ 3,041 |
Partners’ capital: | ||
Common unitholders, units issued | 38,155,434 | 38,003,397 |
Common unitholders, units outstanding | 38,155,434 | 38,003,397 |
Series A Preferred unitholders, units issued | 35,125,202 | 35,125,202 |
Series A Preferred unitholders, units outstanding | 35,125,202 | 35,125,202 |
General partner interest, units outstanding | 1,225,409 | 1,225,409 |
General partner percentage interest | 1.60% | 1.70% |
CONSOLIDATED STATEMENTS OF OPERATIONS CONSOLIDATED STATEMENT OF OPERATIONS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Statement [Abstract] | ||
Capitalized interest | $ 2 | $ 34 |
Diluted net loss per common unit | $ (0.08) | $ (0.14) |
Weighted average common units outstanding - diluted | 38,146 | 33,176 |
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands |
Total |
Limited Partner [Member] |
General Partner [Member] |
Preferred Partner [Member] |
---|---|---|---|---|
Balance at Dec. 31, 2016 | $ 25,576 | $ 471,180 | $ (699,527) | $ 253,923 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 3,542 | (2,958) | 221 | 6,279 |
Equity-based incentive compensation | (125) | (124) | (1) | |
Distributions | (12,252) | (5,620) | (353) | (6,279) |
Capital contributions | 104 | 104 | ||
Proceeds from sale of 24,538 common units pursuant to the Employee Unit Purchase Plan | 84 | 84 | ||
Balance at Mar. 31, 2017 | $ 16,929 | $ 462,562 | $ (699,556) | $ 253,923 |
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (PARENTHETICAL) |
Mar. 31, 2017
shares
|
---|---|
Changes in Partners Capital [Abstract] | |
Limited Partners' Capital Account, Units Issued | 24,538 |
ORGANIZATION AND NATURE OF BUSINESS |
3 Months Ended |
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Mar. 31, 2017 | |
ORGANIZATION AND NATURE OF BUSINESS [Abstract] | |
ORGANIZATION AND NATURE OF BUSINESS | ORGANIZATION AND NATURE OF BUSINESS Blueknight Energy Partners, L.P. and subsidiaries (collectively, the “Partnership”) is a publicly traded master limited partnership with operations in twenty-six states. The Partnership provides integrated terminalling, storage, processing, gathering, transportation and marketing services for companies engaged in the production, distribution and marketing of crude oil and asphalt products. The Partnership manages its operations through four operating segments: (i) asphalt terminalling services, (ii) crude oil terminalling and storage services, (iii) crude oil pipeline services and (iv) crude oil trucking and producer field services. The Partnership’s common units and preferred units, which represent limited partnership interests in the Partnership, are listed on the NASDAQ Global Market under the symbols “BKEP” and “BKEPP,” respectively. The Partnership was formed in February 2007 as a Delaware master limited partnership initially to own, operate and develop a diversified portfolio of complementary midstream energy assets. On October 5, 2016, the Partnership completed the following transactions (the “Ergon Transactions”): (i) a subsidiary of Ergon, Inc. (together with its subsidiaries, “Ergon”) purchased 100% of the outstanding voting stock of Blueknight GP Holding, L.L.C., which owns 100% of the capital stock of the Partnership’s general partner, Blueknight Energy Partners G.P., L.L.C., pursuant to a Membership Interest Purchase Agreement dated July 19, 2016 among CB-Blueknight, LLC, an indirect wholly-owned subsidiary of Charlesbank, Blueknight Energy Holding, Inc., an indirect wholly-owned subsidiary of Vitol Holding B.V. (together with its affiliates and subsidiaries “Vitol”), and Ergon Asphalt Holdings, LLC, a wholly-owned subsidiary of Ergon (the “Ergon Change of Control”); (ii) Ergon contributed nine asphalt terminals plus $22.1 million in cash in return for total consideration of approximately $144.7 million, which consisted of the issuance of 18,312,968 of Series A preferred units in a private placement; and (iii) Ergon acquired an aggregate of $5.0 million of common units for cash in a private placement, pursuant to a Contribution Agreement between the Partnership and Ergon. The Partnership’s acquisition of nine asphalt terminals from Ergon on October 5, 2016 was accounted for as a transaction among entities under common control. As a result, the Partnership recorded the acquired assets at Ergon’s historical cost of $31.3 million, net of accumulated depreciation of $63.0 million. The $91.3 million of consideration in excess of Ergon’s historical net book value was recorded as a deemed distribution to the Partnership’s general partner and is reflected as Consideration paid in excess of historical cost of assets acquired from Ergon on the Partnership’s consolidated statement of changes in partners’ capital. |
BASIS OF CONSOLIDATION AND PRESENTATION |
3 Months Ended |
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Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF CONSOLIDATION AND PRESENTATION | BASIS OF CONSOLIDATION AND PRESENTATION The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated statements of operations for the three months ended March 31, 2016 and 2017, the condensed consolidated statement of changes in partners’ capital for the three months ended March 31, 2017, the condensed consolidated statements of cash flows for the three months ended March 31, 2016 and 2017, and the condensed consolidated balance sheet as of March 31, 2017, are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments necessary to state fairly the financial position and results of operations for the respective interim periods. All adjustments are of a recurring nature unless otherwise disclosed herein. The 2016 year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership’s annual report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2017 (the “2016 Form 10-K”). Interim financial results are not necessarily indicative of the results to be expected for an annual period. The Partnership’s significant accounting policies are consistent with those disclosed in Note 3 of the Notes to Consolidated Financial Statements in its 2016 Form 10-K. The Partnership’s investment in Advantage Pipeline, L.L.C. (“Advantage Pipeline”), over which the Partnership has significant influence but not control, is accounted for by the equity method. The Partnership does not consolidate any part of the assets or liabilities of its equity investee. The Partnership’s share of net income or loss is reflected as one line item on the Partnership’s unaudited condensed consolidated statements of operations entitled “Equity earnings in unconsolidated affiliate” and will increase or decrease, as applicable, the carrying value of the Partnership’s “Investment in unconsolidated affiliate” on the unaudited condensed consolidated balance sheets. Distributions to the Partnership reduce the carrying value of its investment and, to the extent received, will be reflected in the Partnership’s unaudited condensed consolidated statements of cash flows in the line item “Distributions from unconsolidated affiliate.” Contributions will increase the carrying value of the Partnership’s investment and will be reflected in the Partnership’s unaudited condensed consolidated statements of cash flows in investing activities. On April 3, 2017, the Partnership sold its investment in Advantage Pipeline. See Note 17 for additional information. |
RESTRUCTURING CHARGES (Notes) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities Disclosure [Text Block] | RESTRUCTURING CHARGES During the fourth quarter of 2015, the Partnership recognized certain restructuring charges in our crude oil trucking and producer field services segment pursuant to an approved plan to exit the trucking market in West Texas. Changes in the accrued amounts pertaining to the restructuring charges are summarized as follows (in thousands):
The remaining accrued amounts relate to lease payments that will be paid over the remaining lease terms, which extend through July 2019. |
EQUITY METHOD INVESTMENT (Notes) |
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Schedule of Equity Method Investments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures Disclosure [Text Block] | EQUITY METHOD INVESTMENT The Partnership’s investment in Advantage Pipeline, over which the Partnership has significant influence but not control, is accounted for by the equity method. As of March 31, 2017, the Partnership’s investment represents a 30% ownership interest in Advantage Pipeline. On April 3, 2017, the Partnership sold its investment in Advantage Pipeline. See Note 17 for additional information. Summarized financial information for Advantage Pipeline is set forth in the tables below for the periods indicated (in thousands):
|
PROPERTY, PLANT AND EQUIPMENT |
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PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT
Depreciation expense for the three months ended March 31, 2016 and 2017 was $6.9 million and $7.7 million, respectively. On April 18, 2017, the Partnership sold its East Texas pipeline system, which was included in assets held for sale as of March 31, 2017. See Note 17 for additional information. |
DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT On June 28, 2013, the Partnership entered into an amended and restated credit agreement that consists of a $400.0 million revolving loan facility. The credit agreement has been amended twice to, among other things, increase the limit on material project adjustments to EBITDA (as defined in the credit agreement) and amend the maximum permitted consolidated total leverage ratio as discussed below. As of April 27, 2017, approximately $297.0 million of revolver borrowings and $1.5 million of letters of credit were outstanding under the credit agreement, leaving the Partnership with approximately $101.5 million available capacity for additional revolver borrowings and letters of credit under the credit agreement, although the Partnership’s ability to borrow such funds may be limited by the financial covenants in the credit agreement. The proceeds of loans made under the credit agreement may be used for working capital and other general corporate purposes of the Partnership. The credit agreement is guaranteed by all of the Partnership’s existing subsidiaries. Obligations under the credit agreement are secured by first priority liens on substantially all of the Partnership’s assets and those of the guarantors. The credit agreement includes procedures for additional financial institutions to become revolving lenders, or for any existing lender to increase its revolving commitment thereunder, subject to an aggregate maximum of $500.0 million for all revolving loan commitments under the credit agreement. The credit agreement will mature on June 28, 2018, and all amounts outstanding under the existing credit agreement will become due and payable on such date. The existing credit agreement requires mandatory prepayments of amounts outstanding thereunder with the net proceeds of certain asset sales, property or casualty insurance claims, and condemnation proceedings, unless the Partnership reinvests such proceeds in accordance with the credit agreement, but these mandatory prepayments will not require any reduction of the lenders’ commitments under the credit agreement. Borrowings under the credit agreement bears interest, at the Partnership’s option, at either the reserve-adjusted eurodollar rate (as defined in the credit agreement) plus an applicable margin that ranges from 2.0% to 3.0% or the alternate base rate (the highest of the agent bank’s prime rate, the federal funds effective rate plus 0.5%, and the 30-day eurodollar rate plus 1.0%) plus an applicable margin that ranges from 1.0% to 2.0%. The Partnership pays a per annum fee on all letters of credit issued under the credit agreement, which fee equals the applicable margin for loans accruing interest based on the eurodollar rate, and the Partnership pays a commitment fee ranging from 0.375% to 0.5% on the unused commitments under the credit agreement. The applicable margins for the Partnership’s interest rate, the letter of credit fee and the commitment fee vary quarterly based on the Partnership’s consolidated total leverage ratio (as defined in the credit agreement, being generally computed as the ratio of consolidated total debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges). The credit agreement includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. Prior to the date on which the Partnership issues qualified senior notes in an aggregate principal amount (when combined with all other qualified senior notes previously or concurrently issued) that equals or exceeds $200.0 million, the maximum permitted consolidated total leverage ratio is 4.75 to 1.00; provided that the maximum permitted consolidated total leverage ratio will be 5.25 to 1.00 for certain quarters based on the occurrence of a specified acquisition (as defined in the credit agreement, but generally being an acquisition for which the aggregate consideration is $15.0 million or more). The acquisition of the nine asphalt terminals from Ergon in October 2016 qualified as a specified acquisition. From and after the date on which the Partnership issues qualified senior notes in an aggregate principal amount (when combined with all other qualified senior notes previously or concurrently issued) that equals or exceeds $200.0 million, the maximum permitted consolidated total leverage ratio is 5.00 to 1.00; provided that from and after the fiscal quarter ending immediately preceding the fiscal quarter in which a specified acquisition occurs to and including the last day of the second full fiscal quarter following the fiscal quarter in which such acquisition occurred, the maximum permitted consolidated total leverage ratio will be 5.50 to 1.00. The maximum permitted consolidated senior secured leverage ratio (as defined in the credit agreement, but generally computed as the ratio of consolidated total secured debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) is 3.50 to 1.00, but this covenant is only tested from and after the date on which the Partnership issues qualified senior notes in an aggregate principal amount (when combined with all other qualified senior notes previously or concurrently issued) that equals or exceeds $200.0 million. The minimum permitted consolidated interest coverage ratio (as defined in the credit agreement, but generally computed as the ratio of consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges to consolidated interest expense) is 2.50 to 1.00. Furthermore, the credit agreement: •requires the Partnership and its subsidiaries execute certain account control agreements.
In addition,the credit agreement contains various covenants that, among other restrictions, limit the Partnership’s ability to:
At March 31, 2017, the Partnership’s consolidated total leverage ratio was 4.29 to 1.00 and the consolidated interest coverage ratio was 5.81 to 1.00. The Partnership was in compliance with all covenants of its credit agreement as of March 31, 2017. The credit agreement permits the Partnership to make quarterly distributions of available cash (as defined in the Partnership’s partnership agreement) to unitholders so long as no default or event of default exists under the credit agreement on a pro forma basis after giving effect to such distribution. The Partnership is currently allowed to make distributions to its unitholders in accordance with this covenant; however, the Partnership will only make distributions to the extent it has sufficient cash from operations after establishment of cash reserves as determined by the Board of Directors (the “Board”) of the general partner in accordance with the Partnership’s cash distribution policy, including the establishment of any reserves for the proper conduct of the Partnership’s business. See Note 8 for additional information regarding distributions. In addition to other customary events of default, the credit agreement includes an event of default if (i) the general partner ceases to own 100% of the Partnership’s general partner interest or ceases to control the Partnership or (ii) Ergon ceases to own and control 50.0% or more of the membership interests of the general partner. If an event of default relating to bankruptcy or other insolvency events occurs with respect to the general partner or the Partnership, all indebtedness under the credit agreement will immediately become due and payable. If any other event of default exists under the credit agreement, the lenders may accelerate the maturity of the obligations outstanding under the credit agreement and exercise other rights and remedies. In addition, if any event of default exists under the credit agreement, the lenders may commence foreclosure or other actions against the collateral. If any default occurs under the credit agreement, or if the Partnership is unable to make any of the representations and warranties in the credit agreement, the Partnership will be unable to borrow funds or to have letters of credit issued under the credit agreement. The Partnership capitalized no debt issuance costs during the three months ended March 31, 2016. The Partnership capitalized less than $0.1 million of debt issuance costs during the three months ended March 31, 2017. Debt issuance costs are being amortized over the term of the credit agreement. Interest expense related to debt issuance cost amortization for the three months ended March 31, 2016 and 2017 was $0.2 million and $0.3 million, respectively. During the three months ended March 31, 2016 and 2017, the weighted average interest rate under the Partnership’s credit agreement was 3.60% and 4.11%, respectively, resulting in interest expense of approximately $2.4 million and $3.3 million, respectively. As of March 31, 2017, borrowings under the Partnership’s credit agreement bore interest at a weighted average interest rate of 4.52%. During each of the three months ended March 31, 2016 and 2017, the Partnership capitalized interest of less than $0.1 million. The Partnership is exposed to market risk for changes in interest rates related to its credit facility. Interest rate swap agreements are used to manage a portion of the exposure related to changing interest rates by converting floating-rate debt to fixed-rate debt. In March 2014, the Partnership entered into two interest rate swap agreements with an aggregate notional amount of $200.0 million. The first agreement has a notional amount of $100.0 million, became effective June 28, 2014, and matures on June 28, 2018. Under the terms of the first interest rate swap agreement, the Partnership pays a fixed rate of 1.45% and receives one-month LIBOR with monthly settlement. The second agreement has a notional amount of $100.0 million, became effective January 28, 2015, and matures on January 28, 2019. Under the terms of the second interest rate swap agreement, the Partnership pays a fixed rate of 1.97% and receives one-month LIBOR with monthly settlement. During the three months ended March 31, 2016 and 2017, the Partnership recorded swap interest expense of $0.6 million and $0.5 million, respectively. The interest rate swaps do not receive hedge accounting treatment under ASC 815 - Derivatives and Hedging. The following provides information regarding the Partnership’s liabilities related to its interest rate swap agreements as of the periods indicated (in thousands):
Changes in the fair value of the interest rate swaps are reflected in the unaudited condensed consolidated statements of operations as follows (in thousands):
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NET INCOME PER LIMITED PARTNER UNIT |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME PER LIMITED PARTNER UNIT | NET INCOME PER LIMITED PARTNER UNIT For purposes of calculating earnings per unit, the excess of distributions over earnings or excess of earnings over distributions for each period are allocated to the Partnership’s general partner based on the general partner’s ownership interest at the time. The following sets forth the computation of basic and diluted net income per common unit (in thousands, except per unit data):
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PARTNERS' CAPITAL AND DISTRIBUTIONS |
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Mar. 31, 2017 | |
Partners' Capital Account, Distributions [Abstract] | |
PARTNERS' CAPITAL AND DISTRIBUTIONS | PARTNERS’ CAPITAL AND DISTRIBUTIONS On October 5, 2016, the Partnership issued 847,457 common units to Ergon in a private placement for $5.0 million. In addition, on October 5, 2016, the Partnership repurchased 6,667,695 Series A Preferred Units from each Vitol and Charlesbank for an aggregate purchase price of approximately $95.3 million. Vitol and Charlesbank each retained 2,488,789 Series A Preferred Units upon completion of these transactions. Also, on October, 5, 2016, the Partnership issued 18,312,968 Series A Preferred Units to Ergon for $144.7 million, as well as 97,654 general partner units to Ergon for $0.7 million. On July 26, 2016, the Partnership issued and sold 3,795,000 common units for a public offering price of $5.90 per unit, resulting in proceeds of approximately $20.9 million, net of underwriters’ discount and offering expenses of $1.5 million. On April 18, 2017, the Board approved a distribution of $0.17875 per preferred unit, or a total distribution of $6.3 million, for the quarter ending March 31, 2017. The Partnership will pay this distribution on the preferred units on May 15, 2017, to unitholders of record as of May 5, 2017. In addition, on April 18, 2017, the Board declared a cash distribution of $0.1450 per unit on its outstanding common units. The distribution will be paid on May 15, 2017, to unitholders of record on May 5, 2017. The distribution is for the three months ended March 31, 2017. The total distribution will be approximately $6.0 million, with approximately $5.5 million and $0.4 million to be paid to the Partnership’s common unitholders and general partner, respectively, and $0.1 million to be paid to holders of phantom and restricted units pursuant to awards granted under the Partnership’s long-term incentive plan. |
RELATED PARTY TRANSACTIONS |
3 Months Ended |
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Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS On October 5, 2016, Ergon purchased 100% of the Partnership’s general partner from Vitol and Charlesbank, resulting in Ergon being classified as a related party and Vitol and Charlesbank no longer being classified as related parties as of October 5, 2016. The Partnership leases facilities to Ergon and provides asphalt product and residual fuel terminalling, storage and blending services to Ergon. For the three months ended March 31, 2016 and 2017, the Partnership recognized total revenues of $3.5 million and $13.3 million, respectively, for services provided to Ergon. For the three months ended March 31, 2016, all of the revenues are classified as third party revenue, while revenues for the three months ended March 31, 2017 are classified as related party revenue. As of December 31, 2016 and March 31, 2017, the Partnership had receivables from Ergon of $1.7 million and $1.5 million, respectively, net of allowance for doubtful accounts. As of December 31, 2016 and March 31, 2017, the Partnership had unearned revenues from Ergon of $1.0 million and $4.8 million, respectively. The Partnership provides crude oil gathering, transportation, terminalling and storage services to Vitol. For the three months ended March 31, 2016, the Partnership recognized related party revenues of $6.6 million for services provided to Vitol. All revenue from services provided to Vitol for the three months ended March 31, 2017 is classified as third party. The Partnership provides operating and administrative services to Advantage Pipeline. For the three months ended March 31, 2016 and 2017, the Partnership earned revenues of $0.4 million and $0.3 million, respectively, for services provided to Advantage Pipeline. As of both December 31, 2016 and March 31, 2017, the Partnership had receivables from Advantage Pipeline of $0.1 million. On April 3, 2017, the Partnership sold its investment in Advantage Pipeline. See Note 17 for additional information. |
LONG-TERM INCENTIVE PLAN |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM INCENTIVE PLAN | LONG-TERM INCENTIVE PLAN In July 2007, the general partner adopted the Long-Term Incentive Plan (the “LTIP”). The compensation committee of the Board administers the LTIP. Effective April 29, 2014, the Partnership’s unitholders approved an amendment to the LTIP to increase the number of common units reserved for issuance under the incentive plan by 1,500,000 common units from 2,600,000 common units to 4,100,000 common units. The common units are deliverable upon vesting. Although other types of awards are contemplated under the LTIP, currently outstanding awards include “phantom” units, which convey the right to receive common units upon vesting, and “restricted” units, which are grants of common units restricted until the time of vesting. Certain of the phantom unit awards also include distribution equivalent rights (“DERs”). Subject to applicable earning criteria, a DER entitles the grantee to a cash payment equal to the cash distribution paid on an outstanding common unit prior to the vesting date of the underlying award. Recipients of restricted units are entitled to receive cash distributions paid on common units during the vesting period which distributions are reflected initially as a reduction of partners’ capital. Distributions paid on units which ultimately do not vest are reclassified as compensation expense. Awards granted to date are equity awards and, accordingly, the fair value of the awards as of the grant date is expensed over the vesting period. In connection with each anniversary of joining the Board, restricted common units are granted to the independent directors. The units vest in one-third increments over three years. The following table includes information on outstanding grants made to the directors under the LTIP:
_________________ (1) Fair value is the closing market price on the grant date of the awards. The Partnership also grants phantom units to employees. These grants are equity awards under ASC 718 – Stock Compensation, and, accordingly, the fair value of the awards as of the grant date is expensed over the vesting period. The following table includes information on the outstanding grants:
_________________ (1) Fair value is the closing market price on the grant date of the awards. The unrecognized estimated compensation cost of outstanding phantom units at March 31, 2017 was $3.4 million, which will be recognized over the remaining vesting period. In September 2012, Mr. Mark Hurley was granted 500,000 phantom units under the LTIP upon his employment as the Chief Executive Officer of the general partner. These grants are equity awards under ASC 718 – Stock Compensation, and, accordingly, the fair value of the awards as of the grant date is expensed over the vesting period. These units vest ratably over five years pursuant to the Employee Phantom Unit Agreement between Mr. Hurley and the general partner and do not include DERs. The weighted average grant date fair value for the units of $5.62 was determined based on the closing market price of the Partnership’s common units on the grant date of the award, less the present value of the estimated distributions to be paid to holders of an outstanding common unit prior to the vesting of the underlying award. The value of this award grant was approximately $2.8 million on the grant date, and the unrecognized estimated compensation cost at March 31, 2017 was $0.3 million and will be expensed over the remaining vesting period. The Partnership’s equity-based incentive compensation expense for each of the three months ended March 31, 2016 and 2017 was $0.5 million. Activity pertaining to phantom common units and restricted common unit awards granted under the Plan is as follows:
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EMPLOYEE BENEFIT PLAN |
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Mar. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE BENEFIT PLAN | EMPLOYEE BENEFIT PLANS Under the Partnership’s 401(k) Plan, which was instituted in 2009, employees who meet specified service requirements may contribute a percentage of their total compensation, up to a specified maximum, to the 401(k) Plan. The Partnership may match each employee’s contribution, up to a specified maximum, in full or on a partial basis. The Partnership recognized expense of $0.3 million for each of the three months ended March 31, 2016 and 2017, for discretionary contributions under the 401(k) Plan. The Partnership may also make annual lump-sum contributions to the 401(k) Plan irrespective of the employee’s contribution match. The Partnership may make a discretionary annual contribution in the form of profit sharing calculated as a percentage of an employee’s eligible compensation. This contribution is retirement income under the qualified 401(k) Plan. Annual profit sharing contributions to the 401(k) Plan are submitted to and approved by the Board. The Partnership recognized expense of $0.2 million for each of the three months ended March 31, 2016 and 2017, for discretionary profit sharing contributions under the 401(k) Plan. Under the Partnership’s Employee Unit Purchase Plan (the “Unit Purchase Plan”), which was instituted in January 2015, employees have the opportunity to acquire or increase their ownership of common units representing limited partner interests in the Partnership. Eligible employees who enroll in the Unit Purchase Plan may elect to have a designated whole percentage, up to a specified maximum, of their eligible compensation for each pay period withheld for the purchase of common units at a discount to the then current market value. A maximum of 1,000,000 common units may be delivered under the Unit Purchase Plan, subject to adjustment for a recapitalization, split, reorganization, or similar event pursuant to the terms of the Unit Purchase Plan. The Partnership recognized compensation expense of less than $0.1 million for each of the three months ended March 31, 2016 and 2017, in connection with the Unit Purchase Plan. |
FAIR VALUE MEASUREMENTS |
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FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Partnership uses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost) to value assets and liabilities required to be measured at fair value, as appropriate. The Partnership uses an exit price when determining the fair value. The exit price represents amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Partnership utilizes a three-tier fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
This hierarchy requires the use of observable market data, when available, to minimize the use of unobservable inputs when determining fair value. In periods in which they occur, the Partnership recognizes transfers into and out of Level 3 as of the end of the reporting period. There were no transfers during the three months ended March 31, 2017. Transfers out of Level 3 represent existing assets and liabilities that were classified previously as Level 3 for which the observable inputs became a more significant portion of the fair value estimates. Determining the appropriate classification of the Partnership’s fair value measurements within the fair value hierarchy requires management’s judgment regarding the degree to which market data is observable or corroborated by observable market data. The Partnership’s recurring financial assets and liabilities subject to fair value measurements and the necessary disclosures are as follows (in thousands):
Fair Value of Other Financial Instruments The following disclosure of the estimated fair value of financial instruments is made in accordance with accounting guidance for financial instruments. The Partnership has determined the estimated fair values by using available market information and valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. The use of different market assumptions or valuation methodologies may have a material effect on the estimated fair value amounts. At March 31, 2017, the carrying values on the unaudited condensed consolidated balance sheets for cash and cash equivalents (classified as Level 1), accounts receivable, and accounts payable approximate their fair value because of their short-term nature. Based on the borrowing rates currently available to the Partnership for credit agreement debt with similar terms and maturities and consideration of the Partnership’s non-performance risk, long-term debt associated with the Partnership’s credit agreement at March 31, 2017 approximates its fair value. The fair value of the Partnership’s long-term debt was calculated using observable inputs (LIBOR for the risk-free component) and unobservable company-specific credit spread information. As such, the Partnership considers this debt to be Level 3. |
OPERATING SEGMENTS |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OPERATING SEGMENTS | OPERATING SEGMENTS The Partnership’s operations consist of four operating segments: (i) asphalt terminalling services, (ii) crude oil terminalling and storage services, (iii) crude oil pipeline services, and (iv) crude oil trucking and producer field services. ASPHALT TERMINALLING SERVICES —The Partnership provides asphalt product and residual fuel terminalling, storage and blending services at its 54 terminalling and storage facilities located in 26 states. CRUDE OIL TERMINALLING AND STORAGE SERVICES —The Partnership provides crude oil terminalling and storage services at its terminalling and storage facilities located in Oklahoma and Texas. CRUDE OIL PIPELINE SERVICES —The Partnership owns and operates two pipeline systems, the Mid-Continent system, which includes the Eagle North system, and the East Texas system, that gather crude oil purchased by its customers and transports it to refiners, to common carrier pipelines for ultimate delivery to refiners or to terminalling and storage facilities owned by the Partnership and others. The Partnership refers to its pipeline system located in Oklahoma and the Texas Panhandle as the Mid-Continent system. The Mid-Continents system also includes the Eagle North system that originates in Cushing, Oklahoma and terminates in Ardmore, Oklahoma. It refers to its second pipeline system, which is located in Texas, as the East Texas system. Revenue for the sale of crude oil is recognized when title to the crude oil transfers to the customer and is based on contractual prices for the sale of crude oil. On April 18, 2017, the Partnership sold the East Texas system, which was included in assets held for sale as of March 31, 2017. See Note 17 for additional information. CRUDE OIL TRUCKING AND PRODUCER FIELD SERVICES — The Partnership uses its owned and leased tanker trucks to gather crude oil for its customers at remote wellhead locations generally not covered by pipeline and gathering systems and to transport the crude oil to aggregation points and storage facilities located along pipeline gathering and transportation systems. Crude oil producer field services consist of a number of producer field services, ranging from gathering condensates from natural gas companies to hauling produced water to disposal wells. The Partnership’s management evaluates performance based upon segment operating margin, which includes revenues from related parties and external customers less operating expenses excluding depreciation and amortization. This measure forms the basis of the Partnership’s internal financial reporting and is used by its management in deciding how to allocate capital resources among segments. The Partnership believes that investors benefit from having access to the same financial measures being utilized by management. The non-GAAP measure of total operating margin, excluding depreciation and amortization, is presented in the following table. Total operating margin, excluding depreciation and amortization, is an important measure of the economic performance of the Partnership’s core operations. The Partnership computes the components of total operating margin by using amounts that are determined in accordance with GAAP. A reconciliation of total operating margin, excluding depreciation and amortization, to income before income taxes, which is its nearest comparable GAAP financial measure, is included in the following table. Income before income taxes, alternatively, includes expense items, such as depreciation and amortization, general and administrative expenses and interest expense, which management does not consider when evaluating the core profitability of the Partnership’s operations. The following table reflects certain financial data for each segment for the periods indicated (in thousands):
____________________ (1)The following table reconciles segment operating margin (excluding depreciation and amortization) to income before income taxes (in thousands):
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COMMITMENTS AND CONTINGENCIES |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENT AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Partnership is from time to time subject to various legal actions and claims incidental to its business. Management believes that these legal proceedings will not have a material adverse effect on the financial position, results of operations or cash flows of the Partnership. Once management determines that information pertaining to a legal proceeding indicates that it is probable that a liability has been incurred and the amount of such liability can be reasonably estimated, an accrual is established equal to its estimate of the likely exposure. The Partnership may become the subject of additional private or government actions regarding these matters in the future. Litigation may be time-consuming, expensive and disruptive to normal business operations, and the outcome of litigation is difficult to predict. The defense of these lawsuits may result in the incurrence of significant legal expense, both directly and as the result of the Partnership’s indemnification obligations. The litigation may also divert management’s attention from the Partnership’s operations which may cause its business to suffer. An unfavorable outcome in any of these matters may have a material adverse effect on the Partnership’s business, financial condition, results of operations, cash flows, ability to make distributions to its unitholders, the trading price of the Partnership’s common units and its ability to conduct its business. All or a portion of the defense costs and any amount the Partnership may be required to pay to satisfy a judgment or settlement of these claims may or may not be covered by insurance. The Partnership has contractual obligations to perform dismantlement and removal activities in the event that some of its asphalt product and residual fuel oil terminalling and storage assets are abandoned. These obligations include varying levels of activity including completely removing the assets and returning the land to its original state. The Partnership has determined that the settlement dates related to the retirement obligations are indeterminate. The assets with indeterminate settlement dates have been in existence for many years and with regular maintenance will continue to be in service for many years to come. Also, it is not possible to predict when demands for the Partnership’s terminalling and storage services will cease, and the Partnership does not believe that such demand will cease for the foreseeable future. Accordingly, the Partnership believes the date when these assets will be abandoned is indeterminate. With no reasonably determinable abandonment date, the Partnership cannot reasonably estimate the fair value of the associated asset retirement obligations. Management believes that if the Partnership’s asset retirement obligations were settled in the foreseeable future the present value of potential cash flows that would be required to settle the obligations based on current costs are not material. The Partnership will record asset retirement obligations for these assets in the period in which sufficient information becomes available for it to reasonably determine the settlement dates. |
INCOME TAXES |
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INCOME TAXES | INCOME TAXES The anticipated after-tax economic benefit of an investment in the Partnership’s units depends largely on the Partnership being treated as a partnership for federal income tax purposes. If less than 90% of the gross income of a publicly traded partnership, such as the Partnership, for any taxable year is “qualifying income” from sources such as the transportation, storage, marketing (other than to end users), or processing of crude oil, natural gas or products thereof, rents from real property leased to unrelated parties, interest, dividends or certain other specified sources, that partnership will be taxable as a corporation under Section 7704 of the Internal Revenue Code for federal income tax purposes for that taxable year and all subsequent years. If the Partnership were treated as a corporation for federal income tax purposes, then it would pay federal income tax on its income at the corporate tax rate, which is currently a maximum of 35%, and would likely pay state income tax at varying rates. Distributions would generally be taxed again to unitholders as corporate dividends and none of the Partnership’s income, gains, losses, deductions or credits would flow through to its unitholders. Because a tax would be imposed upon the Partnership as an entity, cash available for distribution to its unitholders would be substantially reduced. Treatment of the Partnership as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to unitholders and thus would likely result in a substantial reduction in the value of the Partnership’s units. The Partnership has entered into storage contracts with third party customers and leases with third party lessees with respect to all of its asphalt facilities. In the second quarter of 2009, the Partnership submitted a request for a ruling from the IRS that rental income from the leases constitutes “qualifying income.” In October 2009, the Partnership received a favorable ruling from the IRS to the effect that rental income received under the leases with third party lessees constitutes qualifying income. As part of this ruling, however, the Partnership agreed to transfer, and has transferred, certain of its asphalt processing assets and related fee income to a subsidiary taxed as a corporation. This transfer occurred in the first quarter of 2010. Such subsidiary’s income is subject to tax at the applicable federal, state and local income tax rates. Distributions from this subsidiary generally are taxed again to the Partnership’s unitholders as corporate distributions and none of the income, gains, losses, deductions or credits of this subsidiary will flow through to the Partnership’s unitholders. In relation to the Partnership’s taxable subsidiary, the tax effects of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts at March 31, 2017, are presented below (dollars in thousands):
The Partnership has considered the taxable income projections in future years, whether the carryforward period is so brief that it would limit realization of tax benefits, whether future revenue and operating cost projections will produce enough taxable income to realize the deferred tax asset based on existing service rates and cost structures, and the Partnership’s earnings history exclusive of the loss that created the future deductible amount for the Partnership’s subsidiary that is taxed as a corporation for purposes of determining the likelihood of realizing the benefits of the deferred tax assets. As a result of the Partnership’s consideration of these factors, the Partnership has provided a full valuation allowance against its deferred tax asset as of March 31, 2017. |
RECENTLY ISSUED ACCOUNTING STANDARDS |
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Mar. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENTLY ISSUED ACCOUNTING STANDARDS | RECENTLY ISSUED ACCOUNTING STANDARDS Except as discussed below and in the 2016 Annual Report on Form 10-K, there have been no new accounting pronouncements that have become effective or have been issued during the three months ended March 31, 2017 that are of significance or potential significance to the Partnership. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” The amendments in this update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers. In summary, the core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Throughout 2015 and 2016, the FASB has issued a series of subsequent updates to the revenue recognition guidance in Topic 606, including ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The amendments in ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20 are effective for public entities for annual reporting periods beginning after December 15, 2017, and for interim periods within that reporting period. Early application is permitted for annual reporting periods beginning after December 15, 2016. The Partnership is evaluating the impact of this standard, which will be adopted beginning with the Partnership’s quarterly report for the period ending March 31, 2018. The Partnership’s evaluation process includes a review of the contracts and transaction types across all of the business segments. In addition, the Partnership is currently evaluating the methods of adoption and analyzing the impact of the standard on its internal controls, accounting policies and financial statements and disclosures. In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740).” This update simplifies the presentation of deferred income taxes on the balance sheet. This update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. The Partnership adopted this update in the three month period ending March 31, 2016, and there was no impact on the Partnership’s financial position, results of operations or cash flow. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” This update introduces a new lease model that requires the recognition of lease assets and lease liabilities on the balance sheet and the disclosure of key information about leasing arrangements. This update is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. The Partnership is evaluating the impact of this guidance, which will be adopted beginning with the Partnership’s quarterly report for the period ending March 31, 2019. In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718).” This update is intended to simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. The Partnership adopted this update in the three month period ending March 31, 2017, and there was no impact on the Partnership’s financial position, results of operations or cash flow. In February 2017, the FASB issued ASU 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20).” This update clarifies the scope of Subtopic 610-20 and adds guidance for partial sales of nonfinancial assets. Subtopic 610-20, which was issued in May 2014 as a part of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. The amendments in ASU 2017-05 are effective for public entities for annual reporting periods beginning after December 15, 2017, and for interim periods within that reporting period. Early application is permitted for annual reporting periods beginning after December 15, 2016. The Partnership is evaluating the impact of this standard on us, which will be adopted beginning with the Partnership’s quarterly report for the period ending March 31, 2018. |
SUBSEQUENT EVENTS (Notes) |
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Subsequent Event [Line Items] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENTS Sale of Advantage Pipeline Investment On April 3, 2017, Advantage Pipeline was acquired by a joint venture formed by affiliates of Plains All American Pipeline, L.P. and Noble Midstream Partners LP. The Partnership received cash proceeds at closing from the sale of its approximate 30% equity ownership interest in Advantage Pipeline of approximately $25.3 million and recorded a gain on the sale of the investment of $4.2 million. Approximately 10% of the gross sale proceeds are currently being held in escrow, subject to certain post-closing settlement terms and conditions. The Partnership expects to receive its approximately 30% pro rata portion of the net escrow proceeds by the end of 2017. The Partnership’s initial net proceeds received at closing were used to prepay revolving debt (without a commitment reduction). The operating and administrative services agreement to which the Partnership and Advantage Pipeline were parties and under which the Partnership operated the 70-mile, 16-inch Advantage crude oil pipeline, located in the southern Delaware Basin in Texas, was terminated at closing. The Partnership and the Plains/Noble joint venture have entered into a short-term transition services agreement under which the Partnership will provide certain services. Sale of East Texas System On April 18, 2017, the Partnership sold the East Texas system, which was included in assets held for sale as of March 31, 2017. The Partnership received cash proceeds at closing of approximately $4.8 million and recorded a gain of less than $0.1 million. The Partnership used the proceeds received at closing to prepay revolving debt (without a commitment reduction). |
RESTRUCTURING CHARGES (Tables) |
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Crude Oil Trucking and Producer Field Services [Member] | West Texas Trucking Market Exit Plan [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Restructuring and Related Costs [Table Text Block] | Changes in the accrued amounts pertaining to the restructuring charges are summarized as follows (in thousands):
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EQUITY METHOD INVESTMENT (Tables) |
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Schedule of Equity Method Investments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments [Table Text Block] | Summarized financial information for Advantage Pipeline is set forth in the tables below for the periods indicated (in thousands):
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PROPERTY, PLANT AND EQUIPMENT (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property, Plant and Equipment |
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DEBT Fair Values of Derivative Instruments (Tables) |
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Fair Values of Derivative Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block] | The following provides information regarding the Partnership’s liabilities related to its interest rate swap agreements as of the periods indicated (in thousands):
Changes in the fair value of the interest rate swaps are reflected in the unaudited condensed consolidated statements of operations as follows (in thousands):
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NET INCOME PER LIMITED PARTNER UNIT (Tables) |
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Schedule of Basic and Diluted Net Income (Loss) Per Common and Subordinated Units | The following sets forth the computation of basic and diluted net income per common unit (in thousands, except per unit data):
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LONG-TERM INCENTIVE PLAN (Tables) |
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Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Restricted Stock Units, Vested and Expected to Vest [Table Text Block] | In connection with each anniversary of joining the Board, restricted common units are granted to the independent directors. The units vest in one-third increments over three years. The following table includes information on outstanding grants made to the directors under the LTIP:
_________________ (1) Fair value is the closing market price on the grant date of the awards. |
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Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block] | The Partnership also grants phantom units to employees. These grants are equity awards under ASC 718 – Stock Compensation, and, accordingly, the fair value of the awards as of the grant date is expensed over the vesting period. The following table includes information on the outstanding grants:
_________________ (1) Fair value is the closing market price on the grant date of the awards. |
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Schedule Of Phantom Common Units And Restricted Common Units Activity | Activity pertaining to phantom common units and restricted common unit awards granted under the Plan is as follows:
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FAIR VALUE MEASUREMENTS Fair Value Measurements (Tables) |
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Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping [Table Text Block] | The Partnership’s recurring financial assets and liabilities subject to fair value measurements and the necessary disclosures are as follows (in thousands):
|
OPERATING SEGMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table reflects certain financial data for each segment for the periods indicated (in thousands):
____________________ (1)The following table reconciles segment operating margin (excluding depreciation and amortization) to income before income taxes (in thousands):
|
INCOME TAXES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
Schedule of Deferred Tax Assets | In relation to the Partnership’s taxable subsidiary, the tax effects of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts at March 31, 2017, are presented below (dollars in thousands):
|
RESTRUCTURING CHARGES (Details) - West Texas Trucking Market Exit Plan [Member] - Crude Oil Trucking and Producer Field Services [Member] - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Reserve | $ 428 | $ 1,003 | $ 474 | $ 1,565 |
Charged to expense | 0 | 0 | ||
Cash payments | $ 46 | $ 562 |
DEBT Derivative Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, Notional Amount | $ 200,000 | ||
Interest Expense, Other | 500 | $ 600 | |
Interest rate swap liabilities | 1,195 | $ 1,947 | |
Unrealized loss (gain) related to interest rate swaps | (752) | $ 1,880 | |
Interest Rate Swap [Member] | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, Notional Amount | $ 100,000 | ||
Derivative, Fixed Interest Rate | 1.45% | ||
Interest Rate Swap Two [Member] | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, Notional Amount | $ 100,000 | ||
Derivative, Fixed Interest Rate | 1.97% |
NET INCOME PER LIMITED PARTNER UNIT (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Earnings Per Share [Abstract] | ||
Net income | $ 3,542 | $ 726 |
General partner interest in net income | 209 | 144 |
Preferred interest in net income | 6,279 | 5,391 |
Loss available to limited partners | $ (2,946) | $ (4,809) |
Basic and diluted weighted average number of units: | ||
Weighted average common units outstanding - basic | 38,146 | 33,176 |
Restricted and phantom units | 688 | 616 |
Total Weighted Average Limited Partnership Units Outstanding, Basic | 38,834 | 33,792 |
Weighted average common units outstanding - diluted | 38,146 | 33,176 |
Basic net loss per common unit | $ (0.08) | $ (0.14) |
Diluted net loss per common unit | $ (0.08) | $ (0.14) |
PARTNERS' CAPITAL AND DISTRIBUTIONS (Narrative) (Details) $ / shares in Units, $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
$ / shares
| |
Distribution Made to Member or Limited Partner, Cash Distributions Declared | $ 6.0 |
Limited Partner [Member] | |
Distribution Made to Member or Limited Partner, Distributions Declared (in dollars per unit) | $ / shares | $ 0.1450 |
Distribution Made to Member or Limited Partner, Cash Distributions Declared | $ 5.5 |
Preferred Partner [Member] | |
Distribution Made to Member or Limited Partner, Distributions Declared (in dollars per unit) | $ / shares | $ 0.17875 |
Distribution Made to Member or Limited Partner, Cash Distributions Declared | $ 6.3 |
Phantom Share Units and Restricted Units [Member] | |
Distribution Made to Limited Partner, Cash Distributions Paid | 0.1 |
General Partner [Member] | |
Distribution Made to Member or Limited Partner, Cash Distributions Declared | $ 0.4 |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
Oct. 05, 2016 |
|
Related Party Transaction [Line Items] | ||||
Revenues | $ 46,340 | $ 41,009 | ||
Related party revenue | 13,642 | 7,009 | ||
Receivables from related parties | 1,557 | $ 1,860 | ||
Ergon [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party revenue | 13,300 | |||
Receivables from related parties | 1,500 | 1,700 | ||
Due to Related Parties | 4,800 | 1,000 | ||
Vitol [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party revenue | 6,600 | |||
Advantage Pipeline, L.L.C. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party revenue | 300 | 400 | ||
Receivables from related parties | $ 100 | $ 100 | ||
Ergon [Member] | ||||
Related Party Transaction [Line Items] | ||||
Revenues | $ 3,500 | |||
Blueknight GP Holding, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% |
EMPLOYEE BENEFIT PLAN (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Defined Contribution Plan [Member] | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer discretionary contribution amount | $ 0.3 | $ 0.3 |
Deferred Profit Sharing [Member] | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer discretionary contribution amount | $ 0.2 | $ 0.2 |
EMPLOYEE BENEFIT PLAN EUPP (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
EUPP [Abstract] | ||
Employee Stock Ownership Plan (ESOP), Shares in ESOP | 1,000,000 | |
Employee Stock Ownership Plan (ESOP), Compensation Expense | $ 0.1 | $ 0.1 |
FAIR VALUE MEASUREMENTS Fair Value Measurements (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swap liabilities | $ 1,195 | $ 1,947 |
Total | 1,195 | 1,947 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swap liabilities | 0 | 0 |
Total | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swap liabilities | 1,195 | 1,947 |
Total | 1,195 | 1,947 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swap liabilities | 0 | 0 |
Total | $ 0 | $ 0 |
OPERATING SEGMENTS (Details) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017
USD ($)
Operating-segments
States
Terminalling_And_Storage_Facilities
Pipeline_Systems
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Segment Reporting Information [Line Items] | |||
Number of operating segments (in operating segments) | Operating-segments | 4 | ||
Service revenue | |||
Third party revenue | $ 28,663 | $ 30,255 | |
Related party revenue | 13,642 | 7,009 | |
Product sales revenue: | |||
Third party revenue | 4,035 | 3,745 | |
Total revenue for reportable segments | 46,340 | 41,009 | |
Cost of product sales | 3,139 | 3,187 | |
Operating margin (excluding depreciation and amortization) | 19,361 | 17,197 | |
Total assets (end of period) | 374,067 | $ 375,663 | |
Reconciles segment operating margin (excluding depreciation and amortization) to income before income taxes | |||
Operating margin (excluding depreciation and amortization) | 19,361 | 17,197 | |
Depreciation and amortization | (8,066) | (7,135) | |
General and administrative expenses | (4,585) | (4,745) | |
Asset impairment expense | (28) | (271) | |
Loss on sale of assets | (125) | (33) | |
Interest expense | (3,030) | (4,870) | |
Equity earnings in unconsolidated affiliate | 61 | 624 | |
Income before income taxes | $ 3,588 | 767 | |
Asphalt Services [Member] | |||
Segment Reporting Information [Line Items] | |||
Number of terminalling and storage facilities providing asphalt product and residual fuel terminalling storage and blending services (in terminalling and storage facilities) | Terminalling_And_Storage_Facilities | 54 | ||
Number of states where Asphalt terminalling and storage facilities are located | States | 26 | ||
Service revenue | |||
Third party revenue | $ 13,223 | 17,306 | |
Related party revenue | 13,332 | 302 | |
Product sales revenue: | |||
Total revenue for reportable segments | 26,555 | 17,608 | |
Operating expenses (excluding depreciation and amortization) | 12,319 | 6,435 | |
Operating margin (excluding depreciation and amortization) | 14,236 | 11,173 | |
Total assets (end of period) | 145,815 | 118,140 | |
Reconciles segment operating margin (excluding depreciation and amortization) to income before income taxes | |||
Operating margin (excluding depreciation and amortization) | 14,236 | 11,173 | |
Crude Oil Terminalling and Storage Services [Member] | |||
Service revenue | |||
Third party revenue | 6,125 | 3,561 | |
Related party revenue | 0 | 2,761 | |
Product sales revenue: | |||
Total revenue for reportable segments | 6,125 | 6,322 | |
Operating expenses (excluding depreciation and amortization) | 1,011 | 1,160 | |
Operating margin (excluding depreciation and amortization) | 5,114 | 5,162 | |
Total assets (end of period) | 70,518 | 72,810 | |
Reconciles segment operating margin (excluding depreciation and amortization) to income before income taxes | |||
Operating margin (excluding depreciation and amortization) | $ 5,114 | 5,162 | |
Crude Oil Pipeline Services [Member] | |||
Segment Reporting Information [Line Items] | |||
Number of pipelines systems owned and operated (in pipeline systems) | Pipeline_Systems | 2 | ||
Service revenue | |||
Third party revenue | $ 2,605 | 2,252 | |
Related party revenue | 310 | 2,317 | |
Product sales revenue: | |||
Third party revenue | 3,650 | 3,745 | |
Total revenue for reportable segments | 6,565 | 8,314 | |
Operating expenses (excluding depreciation and amortization) | 3,242 | 4,227 | |
Inter-segment Operating Expenses | 170 | 3,187 | |
Cost of product sales | 3,139 | ||
Inter-Segment Cost of Purchased Oil and Gas | 260 | ||
Operating margin (excluding depreciation and amortization) | 14 | 640 | |
Total assets (end of period) | 145,351 | 177,858 | |
Reconciles segment operating margin (excluding depreciation and amortization) to income before income taxes | |||
Operating margin (excluding depreciation and amortization) | 14 | 640 | |
Crude Oil Trucking and Producer Field Services [Member] | |||
Service revenue | |||
Third party revenue | 6,710 | 7,136 | |
Related party revenue | 0 | 1,629 | |
Intersegment Revenues | 170 | 260 | |
Product sales revenue: | |||
Third party revenue | 385 | 0 | |
Total revenue for reportable segments | 7,265 | 9,025 | |
Operating expenses (excluding depreciation and amortization) | 7,268 | 8,803 | |
Operating margin (excluding depreciation and amortization) | (3) | 222 | |
Total assets (end of period) | 12,383 | 12,463 | |
Reconciles segment operating margin (excluding depreciation and amortization) to income before income taxes | |||
Operating margin (excluding depreciation and amortization) | (3) | 222 | |
Operating Segments [Member] | |||
Service revenue | |||
Intersegment Revenues | (170) | (260) | |
Product sales revenue: | |||
Total revenue for reportable segments | $ 46,510 | $ 41,269 |
INCOME TAXES (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Income Tax Disclosure [Abstract] | |
Gross income of a partnership, for any taxable year is qualifying income will be taxable as a corporation for federal income tax purposes for that taxable year and all subsequent years, maximum (as a percent) | 90.00% |
Federal statutory income tax rate (as a percent) | 35.00% |
Valuation Allowance [Line Items] | |
Difference in bases of property, plant and equipment | $ 822 |
Deferred tax asset | 822 |
Less: valuation allowance | 822 |
Net deferred tax asset | $ 0 |
SUBSEQUENT EVENTS (Details) - USD ($) $ in Millions |
Apr. 18, 2017 |
Apr. 03, 2017 |
Mar. 31, 2017 |
---|---|---|---|
Advantage Pipeline, L.L.C. [Member] | |||
Subsequent Event [Line Items] | |||
Equity Method Investment, Ownership Percentage | 30.00% | ||
Advantage Pipeline, L.L.C. [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Equity Method Investment, Ownership Percentage | 30.00% | ||
Proceeds from Sale of Equity Method Investments | $ 25.3 | ||
Equity Method Investment, Realized Gain (Loss) on Disposal | $ 4.2 | ||
Proceeds from Sale of Equity Method Investments, Percent Held In Escrow | 10.00% | ||
Texas [Member] | Pipelines [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Proceeds from Sale of Property Held-for-sale | $ 4.8 | ||
Gain (Loss) on Disposition of Assets | $ 0.1 |
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