12 .	RELATED-PARTY TRANSACTIONS

The Partnership leases facilities to Ergon and provides liquid asphalt terminalling services to Ergon. For the years ended

December 31, 2018

and

2019

, the Partnership recognized revenues of

$48.5

million and

$36.2

million, respectively, for services provided to Ergon. See additional discussion below regarding material asphalt operating lease contracts and storage, throughput and handling contracts. As of

December 31, 2018

and

2019

, the Partnership had receivables from Ergon of

$1.0

million and

$1.1

million, respectively.

May 2018,

the Partnership, along with Kingfisher Midstream and Ergon, announced the execution of definitive agreements to form Cimarron Express. Cimarron Express was planned to be a new

-inch diameter,

-mile crude oil pipeline running from northeastern Kingfisher County, Oklahoma to the Partnership’s Cushing, Oklahoma crude oil terminal, with an original anticipated in-service date in the

second

half of

2019.

Ergon formed a Delaware limited liability company, Ergon - Oklahoma Pipeline, LLC (“DEVCO”), which held Ergon’s

50%

membership interest in Cimarron Express. The Partnership and Ergon had an agreement (the “Agreement”) that gave each party certain rights to obligate the counterparty to either sell or purchase the outstanding membership interests in DEVCO for a purchase price computed by taking Ergon’s total investment in Cimarron Express plus interest, subject to certain terms and conditions as described in the Agreement.

December 2018,

the Partnership and Ergon were informed that Kingfisher Midstream made the decision to suspend future investments in Cimarron Express as Kingfisher Midstream determined that the anticipated volumes from the dedicated acreage, and the resultant project economics, did

not

support additional investment from Kingfisher Midstream. As of

December 31, 2018,

Cimarron Express had spent approximately

$30.6

million on the pipeline project, primarily related to the purchase of steel pipe and equipment, rights-of-way and engineering and design services. Cimarron Express recorded a

$20.9

million impairment charge in the

fourth

quarter of

2018

to reduce the carrying amount of its assets to their estimated fair value. Ergon recorded a

$10.0

million other-than-temporary impairment on its investment in Cimarron Express as of

December 31, 2018,

to reduce its investment to its estimated fair value. In

April 2019,

certain assets from the project were sold to a

third

party for approximately

$1.4

million over the fair market value that was estimated at

December 31, 2018.

The Partnership considered the SEC staff’s opinions outlined in SAB

107

Topic

5.T

Accounting for Expenses or Liabilities Paid by Principal Stockholders, and, as the Agreement was designed to have the Partnership, ultimately and from the onset, bear any risk of loss on the construction of the pipeline project and eventually own a

50%

interest in the pipeline, the Partnership recorded the impact of these transactions on a push-down basis based on Ergon’s

50%

interest in Cimarron Express. During the years ended

December 31, 2018

and

2019,

the Partnership recorded impairment expense of

$10.0

million and

$2.2

million related to the Agreement, respectively, as well as a related contingent liability payable to Ergon. The impairment for

2019

included a change in estimate and accrued interest.

Ergon’s interest in DEVCO included its capital contributions, its share of the cash received for the assets sale discussed above and internal Ergon labor costs, which brought its investment in DEVCO to approximately

$10.2

million through

December 31, 2019.

The Partnership’s contingent liability as of

December 31, 2019,

consists of Ergon’s

$10.2

million investment plus accrued interest of

$2.0

million. On

January 2, 2020,

Ergon exercised its right under the Agreement to require the Partnership to purchase the outstanding member interest in DEVCO, and the Partnership paid the amount in full on

January 3, 2020.

Effective

April 1, 2018,

the Partnership entered into an agreement with Ergon under which the Partnership purchases crude oil in connection with its crude oil marketing operations. For the years ended

December 31, 2018

and

2019,

the Partnership made purchases of crude oil under this agreement totaling

$108.8

million and

$133.5

million, respectively. As of

December 31, 2019

, the Partnership had payables to Ergon related to this agreement of

$11.8

million related to the

December

crude oil settlement cycle, and this balance was paid in full on

January 21, 2020.

Ergon

2017

Lubbock and Saginaw Storage and Handling Agreement

September 2016,

the Partnership and Ergon entered into a storage, throughput and handling agreement pursuant to which the Partnership provides Ergon storage and terminalling services at the Lubbock and Saginaw asphalt facilities. The term of this agreement commenced on

January 1, 2017,

and was to continue for

six

years. In

July 2018,

the Partnership sold the Lubbock and Saginaw facilities to Ergon and this agreement was terminated. The Board’s conflicts committee reviewed and approved this agreement in accordance with the Partnership’s procedures for approval of related-party transactions and the provisions of the partnership agreement. During the year ended

December 31, 2018,

the Partnership generated revenues under this agreement of

$6.7

million.

Ergon

2016

Storage and Handling Agreement

October 2016,

the Partnership and Ergon entered into a storage, throughput and handling agreement (the “Ergon

2016

Storage and Handling Agreement”) pursuant to which the Partnership provides Ergon storage and terminalling services at

nine

asphalt facilities. In

July 2018,

the Partnership sold

one

of the facilities to Ergon and the agreement was amended accordingly. The term of the Ergon

2016

Storage, Throughput and Handling Agreement commenced on

October 5, 2016,

and currently expires, as amended, on

December 31, 2025.

The Board’s conflicts committee reviewed and approved this agreement in accordance with the Partnership’s procedures for approval of related-party transactions and the provisions of the partnership agreement. During the years ended

December 31, 2018

and

2019

, the Partnership generated revenue under this agreement of

$24.8

million and

$20.0

million, respectively.

Ergon Fontana and Las Vegas Storage Throughput and Handling Agreement

October 2016,

the Partnership and Ergon entered into a storage, throughput and handling agreement (the “Ergon Fontana and Las Vegas Storage Throughput and Handling Agreement”) pursuant to which the Partnership provides Ergon storage and terminalling services at

two

asphalt facilities. The original Ergon Fontana and Las Vegas Master Facilities Lease Agreement commenced on

May 18, 2009,

and was a part of Ergon Master Facilities Lease and Sublease Agreement. See Ergon Master Facilities Lease and Sublease Agreement for additional detail regarding prior terms and conditions. The term of the Ergon Fontana and Las Vegas Storage Throughput and Handling Agreement commenced on

October 5, 2016,

and expired on

December 31, 2018.

A new agreement was executed in

March 2019

with an effective date of

January 1, 2019,

and currently expires, as amended, on

December 31, 2025.

The Board’s conflicts committee reviewed and approved these agreements in accordance with the Partnership’s procedures for approval of related-party transactions and the provisions of the partnership agreement. During the years ended

December 31, 2018

and

2019

, the Partnership generated revenues under this agreement of

$6.6

million and

$6.0

million, respectively.

Ergon Lessee Operated Facility Lease Agreement and Previous Agreements

March 2019,

the Partnership and Ergon entered into a facilities lease agreement (the “Ergon Lessee Operated Facility Lease Agreement”) covering

facilities. This agreement was effective

January 1, 2019,

and currently expires, as amended, on

December 31, 2025.

December 31, 2019,

the Partnership generated revenues under this agreement of

$8.3

million. The facilities covered by this agreement were previously accounted for under

two

separate agreements, the Ergon Master Facilities Lease and Sublease Agreement and the Ergon Master Facilities Sublease and Sublicense Agreement.

The Ergon Master Facilities Lease and Sublease Agreement, pursuant to which the Partnership leased Ergon certain facilities, was executed in

May 2009.

The original term of the Ergon Master Facilities Lease and Sublease Agreement commenced on

May 18, 2009,

for

two

years, until

December 31, 2011.

The Ergon Master Facilities Lease and Sublease Agreement was amended and extended several times and encompassed

eight

facilities through

June 2018.

July 2018,

the Partnership sold

one

of the facilities covered by this agreement and it was amended to remove that facility. This agreement expired on

December 31, 2018,

at which time the Ergon Lessee Operated Facility Lease Agreement was executed. During the year ended

December 31, 2018,

the Partnership generated revenues under the Ergon Master Facilities Lease and Sublease Agreement of

$5.3

million.

The Ergon Master Facilities Sublease and Sublicense Agreement was executed in

November 2010

and consolidated multiple sublease and sublicense agreements covering

five

facilities into

one

agreement. The original multiple agreements had original terms that commenced on

May 18, 2009,

for

two

years, until

December 31, 2011.

The Ergon Master Facilities Sublease and Sublicense Agreement was amended in

June 2015

and expired on

December 31, 2018,

at which time the Ergon Lessee Operated Facility Lease Agreement was executed. During the year ended

December 31, 2018,

the Partnership generated revenues under the Ergon Master Facilities Sublease and Sublicense Agreement of

$2.8

million.