Segment Disclosures (Notes)

3 Months Ended

Mar. 31, 2014

Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]

Segment Disclosures

SEGMENT DISCLOSURES

Our revenues are derived from two operating segments: Crude Oil Gathering and Terminalling and Transportation. Our Crude Oil Gathering segment consists of a crude oil gathering system in the Bakken Shale/Williston Basin area of North Dakota and Montana. Our Terminalling and Transportation segment consists of:

• the Northwest Products Pipeline, which includes a regulated common carrier products pipeline running from Salt Lake City, Utah to Spokane, Washington and a jet fuel pipeline to the Salt Lake City International Airport;

• 20 crude oil and refined products terminals and storage facilities in the western and midwestern U.S.;

• four marine terminals in California;

• a rail-car unloading facility in Washington;

• a petroleum coke handling and storage facility in Los Angeles; and

• other pipelines which transport products and crude oil from Tesoro’s refineries to nearby facilities in Salt Lake City and Los Angeles.

Our revenues are generated from existing third-party contracts and from commercial agreements we have entered into with Tesoro under which Tesoro pays us fees for gathering crude oil and distributing, transporting and storing crude oil and refined products. We do not have any foreign operations.

Our operating segments are strategic business units that offer different services in different geographical locations. We evaluate the performance of each segment based on its respective operating income. Certain general and administrative expenses and interest and financing costs are excluded from segment operating income as they are not directly attributable to a specific operating segment. Identifiable assets are those used by the segment, whereas other assets are principally cash, deposits and other assets that are not associated with a specific operating segment.

Capital expenditures by operating segment were as follows (in thousands):

	Three Months Ended March 31,
	2014		2013
Capital Expenditures
Crude Oil Gathering	$	17,655	$	3,945
Terminalling and Transportation	8,829		6,291
Total Capital Expenditures	$	26,484	$	10,236

Identifiable assets by operating segment were as follows (in thousands):

Identifiable Assets	March 31, 2014		December 31, 2013
Crude Oil Gathering	$	173,993	$	154,583
Terminalling and Transportation	1,292,336		1,298,073
Other	69,857		49,656
Total Identifiable Assets	$	1,536,186	$	1,502,312

Segment information is as follows (in thousands):

	Three Months Ended March 31,
	2014			2013
REVENUES
Crude Oil Gathering:
Affiliate	$	23,251		$	21,377
Third-party	1,373			314
Total Crude Oil Gathering	24,624			21,691
Terminalling and Transportation:
Affiliate	86,329			26,515
Third-party	14,096			3,416
Total Terminalling and Transportation	100,425			29,931
Total Segment Revenues	$	125,049		$	51,622
OPERATING AND MAINTENANCE EXPENSES
Crude Oil Gathering	$	12,072		$	12,360
Terminalling and Transportation	33,026			7,129
Total Segment Operating and Maintenance Expenses	$	45,098		$	19,489
IMBALANCE SETTLEMENT GAINS
Crude Oil Gathering	$	(1,137	)	$	(1,396	)
Terminalling and Transportation	(1,280		)	(1,028		)
Total Segment Imbalance Settlement Gains	$	(2,417	)	$	(2,424	)
GENERAL AND ADMINISTRATIVE EXPENSES
Crude Oil Gathering	$	1,652		$	694
Terminalling and Transportation	4,515			1,042
Total Segment General and Administrative Expenses	$	6,167		$	1,736
DEPRECIATION AND AMORTIZATION EXPENSES
Crude Oil Gathering	$	1,023		$	1,006
Terminalling and Transportation	14,502			3,075
Total Segment Depreciation and Amortization Expenses	$	15,525		$	4,081
LOSS (GAIN) ON ASSET DISPOSALS AND IMPAIRMENTS
Crude Oil Gathering	$	—		$	—
Terminalling and Transportation	(4,748		)	164
Total Segment Loss (Gain) on Asset Disposals and Impairments	$	(4,748	)	$	164
OPERATING INCOME
Crude Oil Gathering	$	11,014		$	9,027
Terminalling and Transportation	54,410			19,549
Total Segment Operating Income	65,424			28,576
Unallocated general and administrative expenses	(3,179		)	(4,317		)
Interest and financing costs, net	(17,747		)	(5,604		)
Interest income	—			23
NET INCOME	$	44,498		$	18,678