Operating Segments (Notes)

6 Months Ended

Jun. 30, 2019

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

Operating Segments

Operating Segments

Our revenues are derived from three operating segments: Terminalling and Transportation, Gathering and Processing, and Wholesale. We evaluate the performance of our segments based primarily on segment operating income and net earnings before interest, income taxes, depreciation and amortization expenses (“EBITDA”). For the purposes of our operating segment disclosure, we present operating income as it is the most comparable measure to the amounts presented in our condensed statements of consolidated operations. Segment operating income includes those revenues and expenses that are directly attributable to management of the respective segment. 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.

Our Terminalling and Transportation segment consists of pipeline systems, including regulated common carrier refined products pipeline systems and other pipelines, which transport products and crude oil primarily from Marathon’s refineries to nearby facilities, as well as crude oil and refined products terminals and storage facilities, marine terminals, stand-alone asphalt terminals as well as a 50% interest in PNAC, rail-car unloading facilities, an asphalt trucking operation and a petroleum coke handling and storage facility.

Our Gathering and Processing segment consists of crude oil, natural gas, NGLs and produced water gathering systems in the Bakken Shale/Williston Basin area of North Dakota and Montana, the Green River Basin, Uinta Basin, and Vermillion Basin in the states of Utah, Colorado and Wyoming, the Delaware Basin in the Permian Basin area of West Texas and Southern New Mexico, and in the San Juan Basin in the Four Corners area of Northwestern New Mexico. It also consists of the Great Northern Midstream and Fryburg pipelines, crude trucking operations and gas processing and fractionation complexes.

Our Wholesale segment includes the operations of several bulk petroleum distribution plants and a fleet of refined product delivery trucks that distribute commercial wholesale petroleum products primarily in Arizona, Colorado, Nevada, New Mexico and Texas. The refined product trucking business delivers a significant portion of the volumes sold by our Wholesale segment.

Segment Information (in millions)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018 (a)			2019			2018 (a)
Revenues
Terminalling and Transportation:
Terminalling	$	248		$	209		$	493		$	408
Pipeline transportation	47			40			93			71
Other revenues	2			1			4			3
Total Terminalling and Transportation	297			250			590			482
Gathering and Processing:
NGL sales	94			95			216			199
Gas gathering and processing	75			82			145			167
Crude oil and water gathering	79			80			176			155
Pass-thru and other	36			44			68			79
Total Gathering and Processing	284			301			605			600
Wholesale:
Fuel sales	17			15			29			24
Other wholesale	6			10			16			18
Total Wholesale	23			25			45			42
Intersegment wholesale revenues	(3		)	(7		)	(9		)	(9		)
Total Revenues	$	601		$	569		$	1,231		$	1,115
Segment Operating Income
Terminalling and Transportation	$	146		$	107		$	298		$	211
Gathering and Processing	59			69			122			146
Wholesale	12			11			17			15
Total Segment Operating Income	217			187			437			372
Unallocated general and administrative expenses	(10		)	(7		)	(19		)	(15		)
Operating Income	207			180			418			357
Interest and financing costs, net	(63		)	(60		)	(124		)	(115		)
Equity in earnings of equity method investments	9			10			16			18
Other income, net	7			2			7			3
Net Earnings	$	160		$	132		$	317		$	263

(a) Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018 (a)		2019		2018 (a)
Depreciation and Amortization Expenses
Terminalling and Transportation	$	38	$	37	$	74	$	70
Gathering and Processing	64		54		126		107
Wholesale	2		2		5		5
Total Depreciation and Amortization Expenses	$	104	$	93	$	205	$	182
Capital Expenditures
Terminalling and Transportation	$	26	$	33	$	51	$	79
Gathering and Processing	110		148		207		258
Wholesale	—		—		—		1
Total Capital Expenditures	$	136	$	181	$	258	$	338

(a)

Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.