Reportable Segments

12 Months Ended

Dec. 31, 2016

Reportable Segments

Reportable Segments

16. Reportable Segments

Our operations are located in the United States and are organized into three reportable segments: crude oil pipelines and storage; refined products terminals and storage; and NGL distribution and sales.

Crude oil pipelines and storage.  The crude oil pipelines and storage segment consists of a crude oil pipeline operation and a crude oil storage facility. The crude oil pipeline operates in the Permian Basin and consists of approximately 161 miles of high-pressure steel pipeline with throughput capacity of approximately 130,000 barrels per day and a related system of truck terminals, LACT bay facilities, crude oil receipt points and crude oil storage facilities with an aggregate of 140,000 barrels of storage capacity.  We also operate a crude oil storage facility that has an aggregate storage capacity of approximately 3,000,000 barrels in Cushing, Oklahoma.

The crude oil pipelines and storage segment also consists of crude oil supply activities and a fleet of crude oil gathering and transportation trucks. We conduct crude oil supply activities by purchasing crude oil for our own account from producers, aggregators and traders and selling crude oil to traders and refiners. We also own a fleet of crude oil gathering and transportation trucks operating in and around highly prolific drilling areas such as the Eagle Ford shale and the Permian Basin.

Refined products terminals and storage.  The refined products terminals and storage segment has aggregate storage capacity of 1.3 million barrels from two refined products terminals located in North Little Rock, Arkansas and Caddo Mills, Texas. The North Little Rock terminal has storage capacity of 550,000 barrels from 11 tanks and has eight loading lanes with automated truck loading equipment. The Caddo Mills terminal consists of 10 storage tanks with an aggregate capacity of approximately 770,000 barrels and has five loading lanes with automated truck loading equipment.  In the second quarter of 2016, we completed the connection of the North Little Rock terminal to Magellan’s Little Rock Pipeline. Following the connection, the North Little Rock terminal allows delivery from Enterprise TE Products Pipeline Company LLC and Magellan’s Little Rock Pipeline. The Caddo Mills terminal is primarily served by the Explorer Pipeline.  In the fourth quarter of 2016, we also completed our ethanol unit train expansion project at our North Little Rock terminal which significantly improved the terminal’s ethanol offloading efficiency and capacity, allowing for offloading of up to 108 car unit trains.

NGL distribution and sales.  The NGL distribution and sales segment consists of three businesses: (i) portable cylinder tank exchange (ii) NGL sales through our retail, commercial and wholesale distribution business and (iii) NGL gathering and transportation business. Currently, the cylinder exchange network covers 46 states through a network of approximately 20,000 locations, which includes grocery chains, pharmacies, convenience stores and hardware stores. Additionally, in seven states in the southwest region of the U.S., we sell NGLs to retailers, wholesalers, industrial end-users and commercial and residential customers. We also own a fleet of NGL gathering and transportation operations trucks operating in the Eagle Ford shale and the Permian Basin.

Corporate and other.  Corporate and other includes general partnership expenses associated with managing all of our reportable segments.

Our chief operating decision maker (“CODM”) evaluates the segments’ operating performance based on Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) plus (minus) interest expense (income), income tax expense (benefit), depreciation and amortization expense, asset impairments, (gains) losses on asset sales, certain non-cash charges such as non-cash equity compensation, non-cash vacation expense, non-cash (gains) losses on commodity derivative contracts (total (gain) loss on commodity derivatives less net cash flow associated with commodity derivatives settled during the period), corporate overhead support from our general partner (expenses incurred by us but absorbed by our general partner and not passed through to us) and selected (gains) charges and transaction costs that are unusual or non-recurring.

The following tables reflect certain financial data for each reportable segment for the years ended December 31, 2016, 2015 and 2014.

	Year ended December 31,
	2016		2015		2014
	(in thousands)
External Revenues:
Crude oil pipelines and storage	$	322,140	$	480,527	$	495,971
Refined products terminals and storage		28,168		23,227		23,287
NGL distribution and sales		143,652		176,831		206,896
Total revenues	$	493,960	$	680,585	$	726,154
Cost of Sales, excluding depreciation and amortization:
Crude oil pipelines and storage	$	284,747	$	445,027	$	459,183
Refined products terminals and storage		11,760		8,649		6,453
NGL distribution and sales		54,704		76,618		126,686
Amounts not included in segment Adjusted EBITDA		(1,024)		(2,818)		13,360
Total cost of sales, excluding depreciation and amortization	$	350,187	$	527,476	$	605,682
Operating Expenses:
Crude oil pipelines and storage	$	8,195	$	9,238	$	7,928
Refined products terminals and storage		2,428		2,980		4,602
NGL distribution and sales		53,278		57,200		52,109
Amounts not included in segment Adjusted EBITDA		236		(41)		945
Total operating expenses	$	64,137	$	69,377	$	65,584
Depreciation and Amortization:
Crude oil pipelines and storage	$	20,799	$	20,356	$	17,240
Refined products terminals and storage		6,664		6,830		5,911
NGLs distribution and sales		17,986		18,628		16,163
Corporate and other		1,702		1,038		916
Total depreciation and amortization	$	47,151	$	46,852	$	40,230
Adjusted EBITDA:
Crude oil pipelines and storage	$	26,405	$	23,119	$	25,339
Refined products terminals and storage		13,317		10,867		10,723
NGL distribution and sales		25,736		30,896		15,511
Total Adjusted EBITDA from reportable segments	$	65,458	$	64,882	$	51,573
Capital Expenditures:
Crude oil pipelines and storage	$	8,192	$	42,919	$	36,691
Refined products terminals and storage		6,028		8,002		2,489
NGLs distribution and sales		6,553		18,587		16,557
Corporate and other		3,945		1,503		1,141
Total capital expenditures	$	24,718	$	71,011	$	56,878

A reconciliation of Adjusted EBITDA to net loss from continuing operations is included in the table below.

	Year ended December 31,
	2016		2015		2014
	(in thousands)
Total Adjusted EBITDA from reportable segments	$	65,458	$	64,882	$	51,573
Other expenses not allocated to reportable segments		(12,762)		(19,226)		(24,924)
Depreciation and amortization		(47,151)		(46,852)		(40,230)
Goodwill impairment		(15,456)		(29,896)		—
Interest expense		(5,970)		(5,375)		(8,981)
Loss on extinguishment of debt		—		—		(1,634)
Loss on disposal of assets, net		(2,569)		(909)		(1,137)
Unit-based compensation		(2,024)		(1,217)		(1,658)
Total gain (loss) on commodity derivatives		385		(3,057)		(13,762)
Net cash payments for commodity derivatives settled during the period		639		14,821		1,071
Early settlement of commodity derivatives (1)		—		(8,745)		—
Corporate overhead support from general partner (2)		(9,000)		(5,500)		—
Transaction costs and other		(5,013)		(1,877)		(3,766)
Loss from continuing operations before income taxes	$	(33,463)	$	(42,951)	$	(43,448)

(1) Due to its non-recurring nature, we excluded this transaction in calculating Adjusted EBITDA.

(2) Represents expenses incurred by us that were absorbed by our general partner and not passed through to us.

Total assets from our reportable segments as of December 31 were as follows:

	December 31,		December 31,
	2016		2015
	(in thousands)
Crude oil pipelines and storage	$	383,056	$	408,304
Refined products terminals and storage		131,644		131,931
NGL distribution and sales		140,864		173,558
Corporate and other		18,866		12,092
Discontinued operations held for sale		—		9,374
Total assets	$	674,430	$	735,259