Revenues (Notes)

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

We generate revenue by charging fees for gathering, transporting, offloading and storing crude oil; for storing intermediate products and feed stocks; for distributing, transporting and storing refined products; for marketing refined products output of Delek Holdings' Tyler and Big Spring refineries; and for wholesale marketing in the West Texas area. A significant portion of our revenue is derived from long-term commercial agreements with Delek Holdings, which provide for annual fee adjustments for increases or decreases in the CPI, PPI or FERC index (refer to Note 3 for a more detailed description of these agreements). In addition to the services we provide to Delek Holdings, we also generate substantial revenue from crude oil, intermediate and refined products transportation services for, and terminalling and marketing services to, third parties primarily in Texas, New Mexico, Tennessee and Arkansas. Certain of these services are provided pursuant to contractual agreements with third parties. Payment terms require customers to pay shortly after delivery and do not contain significant financing components.

The majority of our commercial agreements with Delek Holdings meet the definition of a lease because: (1) performance of the contracts is dependent on specified property, plant or equipment and (2) it is remote that one or more parties other than Delek Holdings will take more than a minor amount of the output associated with the specified property, plant or equipment. As part of our adoption of Accounting Standards Codification ("ASC") 842, Leases ("ASC 842"), we applied the permitted practical expedient to not separate lease and non-lease components under the predominance principle to designated asset classes associated with the provision of logistics services. We have determined that the predominant component of the related agreements currently in effect is the lease component. Therefore, the combined component is accounted for under the applicable lease accounting guidance. Of our $473.7 million net property, plant, and equipment balance as of June 30, 2020, $358.5 million is subject to operating leases under our commercial agreements. These agreements do not include options for the lessee to purchase our leasing equipment, nor do they include any material residual value guarantees or material restrictive covenants.

The following table represents a disaggregation of revenue for each reportable segment for the periods indicated (in thousands):

	Three Months Ended June 30, 2020
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	2,032	$	204	$	2,236
Product Revenue - Third Party	—		27,772		27,772
Product Revenue - Affiliate	—		6,720		6,720
Lease Revenue - Affiliate (1)	61,394		19,515		80,909
Total Revenue	$	63,426	$	54,211	$	117,637

⁽¹⁾ Net of $1.8 million of amortization expense for the three months ended June 30, 2020, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

	Three Months Ended June 30, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	7,477	$	184	$	7,661
Product Revenue - Third Party	—		85,763		85,763
Product Revenue - Affiliate	—		7,187		7,187
Lease Revenue - Affiliate (1)	36,731		18,000		54,731
Total Revenue	$	44,208	$	111,134	$	155,342

⁽¹⁾ Net of $1.8 million of amortization expense for the three months ended June 30, 2019, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

	Six Months Ended June 30, 2020
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	11,496	$	396	$	11,892
Product Revenue - Third Party	—		74,818		74,818
Product Revenue - Affiliate	—		58,222		58,222
Lease Revenue - Affiliate (1)	99,897		36,209		136,106
Total Revenue	$	111,393	$	169,645	$	281,038

⁽¹⁾ Net of $3.6 million of amortization expense for the six months ended June 30, 2020, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

	Six Months Ended June 30, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	11,451	$	304	$	11,755
Product Revenue - Third Party	—		171,187		171,187
Product Revenue - Affiliate	—		16,573		16,573
Lease Revenue - Affiliate (1)	73,390		34,920		108,310
Total Revenue	$	84,841	$	222,984	$	307,825

⁽¹⁾ Net of $3.6 million of amortization expense for the six months ended June 30, 2019, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

As of June 30, 2020, we expect to recognize $1.6 billion in lease revenues related to our unfulfilled performance obligations pertaining to the minimum volume commitments and capacity utilization under the non-cancelable terms of our commercial agreements with Delek Holdings. Most of these agreements have an initial term ranging from five to ten years, which may be extended for various renewal terms. We disclose information about remaining performance obligations that have original expected durations of greater than one year.

Our unfulfilled performance obligations as of June 30, 2020 were as follows (in thousands):

Remainder of 2020	134,043
2021	267,990
2022	249,850
2023	240,489
2024 and thereafter	$	733,292
Total expected revenue on remaining performance obligations	$	1,625,664