Operating Segments (Notes)

6 Months Ended

Jun. 30, 2017

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

Segment Disclosures

OPERATING SEGMENTS

We changed our operating segment presentation in the first quarter of 2017 to reflect our expanded gathering and processing assets and operations and how our chief operating decision maker (“CODM”) manages our business. With the completion of the North Dakota Gathering and Processing Assets acquisition on January 1, 2017, our gathering and processing assets and operations expanded significantly and enhanced our ability to offer integrated gathering and processing services to our customers. Given the business’s focus on providing integrated services along with the revised reporting structure implemented by management to assess performance and make resource allocation decisions, we have determined our operating segments, which are the same for reporting purposes, are the (i) Gathering and Processing segment and (ii) Terminalling and Transportation segment. Comparable prior period information for the newly presented Gathering and Processing segment has been recast to reflect our current presentation. No changes were deemed necessary to our Terminalling and Transportation segment.

In addition, as part of the CODM’s reevaluation of how it monitors and evaluates the business and allocates resources, management revised its methodology for the allocation of corporate general and administrative expenses which resulted in additional corporate costs being allocated to our Gathering and Processing segment for certain administrative activities associated with our gathering and processing business in the Rockies region. The change to our Terminalling and Transportation segment was not material. Comparable prior period segment information has been recast to reflect our revised allocation methodology.

Our Gathering and Processing segment consists of crude oil, natural gas and produced water gathering systems and natural gas processing assets in the Bakken Shale/Williston Basin area of North Dakota and Montana and the Green River Basin, Uinta Basin and Vermillion Basin in the states of Utah, Colorado and Wyoming as well as gas processing complexes and fractionation facilities. Our Terminalling and Transportation segment consists of crude oil and refined products terminals and marine terminals, storage facilities for crude oil, refined products and petroleum coke handling, rail-car unloading facilities and pipelines, which transport products and crude oil.

Our revenues are generated from commercial contracts we have entered into with Andeavor and with third-party contracts under which we are paid fees for gathering crude oil, natural gas and produced water, processing natural gas and distributing, transporting and storing crude oil, refined products, natural gas and natural gas liquids. The commercial agreements with Andeavor are described in Note 3 to our Annual Report on Form 10-K for the year ended December 31, 2016. We do not have any foreign operations.

Our operating segments are strategic business units that offer different services in various 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.

SEGMENT INFORMATION (in millions)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenues
Gathering and Processing:
NGL sales	$	81		$	27		$	164		$	54
Gas gathering and processing	87			63			167			131
Crude oil and water gathering	34			32			73			67
Pass-thru and other	31			28			74			60
Total Gathering and Processing	233			150			478			312
Terminalling and Transportation:
Terminalling	147			112			292			220
Pipeline transportation	33			31			63			61
Total Terminalling and Transportation	180			143			355			281
Total Segment Revenues	$	413		$	293		$	833		$	593
Segment Operating Income
Gathering and Processing	$	51		$	55		$	113		$	119
Terminalling and Transportation	121			68			219			131
Total Segment Operating Income	172			123			332			250
Unallocated general and administrative expenses	(6		)	(5		)	(16		)	(13		)
Interest and financing costs, net	(59		)	(45		)	(119		)	(89		)
Equity in earnings of equity method investments	3			3			5			7
Other income, net	—			—			—			6
Net Earnings	$	110		$	76		$	202		$	161
Capital Expenditures
Gathering and Processing	$	21		$	29		$	39		$	59
Terminalling and Transportation	24			31			51			61
Total Capital Expenditures	$	45		$	60		$	90		$	120

TOTAL IDENTIFIABLE ASSETS BY OPERATING SEGMENT (in millions)

	June 30, 2017		December 31, 2016
Identifiable Assets
Gathering and Processing	$	4,035	$	3,392
Terminalling and Transportation	1,778		1,768
Other (a)	26		700
Total Identifiable Assets	$	5,839	$	5,860

(a) Other consists mainly of $688 million in cash and cash equivalents as of December 31, 2016, of which $673 million was used to fund the acquisition of the North Dakota Gathering and Processing Assets on January 1, 2017, increasing the Gathering and Processing segment’s identifiable assets as of June 30, 2017.