Segment Information (Notes)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

4. Segment Information

Our operations are organized into two operating segments based on marketing criteria and the nature of our products and services and our types of customers. These segments are logistics and wholesale.

Logistics. Our pipeline and gathering assets are positioned to support crude oil supply for Western's El Paso and Gallup refineries as well as third parties and consist of crude oil pipelines and gathering assets located primarily in the Delaware Basin and in the Four Corners area of Northwestern New Mexico. These systems gather and transport crude oil by pipeline from various production locations to Western’s refineries utilizing 685 miles of pipeline; 33 crude oil storage tanks with a total combined active shell storage capacity of 959,000 barrels, eight truck loading and unloading locations and 15 pump stations.

Our terminalling, transportation and storage assets support crude oil supply and refined product distribution for Western's El Paso and Gallup refineries as well as third parties and primarily consist of storage tanks, terminals, transportation and other assets located in El Paso, Texas, Gallup, Bloomfield and Albuquerque, New Mexico and Phoenix and Tucson, Arizona. These assets include crude oil, feedstock, blendstock, refined product and asphalt storage tanks with a total combined shell storage capacity of 7.4 million barrels, truck loading racks, railcar loading racks, pump stations and pipeline and related logistics assets to service Western’s operations.

Wholesale. Our wholesale segment includes the operations of several lubricant and bulk petroleum distribution plants and a fleet of crude oil, refined product, asphalt and lubricant delivery trucks. Our wholesale segment distributes commercial wholesale petroleum products primarily in Arizona, California, Colorado, Nevada, New Mexico and Texas. The wholesale segment purchases petroleum fuels and lubricants from Western's refining segment and from third-party suppliers.

During the second quarter of 2016, we disposed of certain assets related to our lubricants sales in California. We currently intend to dispose of the remainder of those assets during the third quarter of 2016. In connection with this asset disposal, we reported employee severance costs of $0.4 million within direct operating expenses and selling, general and administrative expenses in our Condensed Consolidated Statement of Operations for the period ended June 30, 2016. Assets held for sale in our Condensed Consolidated Balance Sheet at June 30, 2016 included $4.1 million in property, plant and equipment and $1.5 million in inventories. A gain of $0.6 million has been included in gain on disposal of assets, net for the three and six months ended June 30, 2016 in the Condensed Consolidated Statements of Operations.

Segment Accounting Principles. Operating income for each segment consists of net revenues less cost of products sold; direct operating expenses; selling, general and administrative expenses; net impact of the disposal of assets and depreciation and amortization.

Activities of our business that are not included in the two segments mentioned above are included in the Other category. Other activities consist primarily of corporate staff operations and items that are not specific to the normal business of any one of our two operating segments.

The total assets of each segment consist primarily of cash and cash equivalents; inventories; net accounts receivable; net property, plant and equipment; net intangible assets and net other assets directly associated with the individual segment’s operations. Included in the total assets of the corporate operations are cash and cash equivalents, various net accounts receivable, prepaid expenses, other current assets and other long-term assets.

Disclosures regarding our reportable segments with reconciliations to consolidated totals for the three and six months ended June 30, 2016 and 2015, are presented below:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
	(In thousands)
Operating Results:
Logistics:
Revenues: Affiliate	$	43,053		$	36,279		$	83,969		$	71,054
Revenues: Third-party	677			679			1,367			1,302
Total revenues	$	43,730		$	36,958		85,336			72,356
Wholesale:
Revenues: Affiliate	$	137,437		$	175,762		245,978			319,236
Revenues: Third-party	397,435			523,184			715,327			951,708
Total revenues	$	534,872		$	698,946		961,305			1,270,944
Consolidated revenues	$	578,602		$	735,904		$	1,046,641		$	1,343,300
Operating income (loss):
Logistics	$	18,751		$	12,003		$	32,681		$	23,355
Wholesale	8,797			12,171			18,750			21,160
Other	(3,057		)	(3,143		)	(5,502		)	(5,923		)
Operating income from segments	24,491			21,031			45,929			38,592
Other income (expense), net	(6,400		)	(6,230		)	(13,570		)	(10,177		)
Consolidated income before income taxes	$	18,091		$	14,801		$	32,359		$	28,415
Depreciation and amortization:
Logistics	$	6,119		$	5,563		$	12,080		$	10,378
Wholesale	1,206			1,107			2,389			2,184
Consolidated depreciation and amortization	$	7,325		$	6,670		$	14,469		$	12,562
Capital expenditures:
Logistics	$	7,299		$	13,847		$	13,168		$	37,444
Wholesale	1,029			999			1,401			4,046
Consolidated capital expenditures	$	8,328		$	14,846		$	14,569		$	41,490
Total assets:
Logistics							$	309,137		$	297,566
Wholesale							156,067			185,523
Other							18,017			80,659
Consolidated total assets							$	483,221		$	563,748