Segment Information (Notes)

9 Months Ended

Sep. 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, Gallup and St. Paul Park refineries as well as third parties and consist of crude oil pipelines and gathering assets located primarily in the Delaware Basin, in the Four Corners area of Northwestern New Mexico and in the Upper Great Plains region. These systems gather and transport crude oil by pipeline from various production locations to Western’s refineries utilizing 692 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, Gallup and St. Paul Park 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; Phoenix and Tucson, Arizona and the Upper Great Plains region. These assets include crude oil, feedstock, blendstock, refined product and asphalt storage tanks with a total combined shell storage capacity of 11.4 million barrels; truck, railcar and barge loading racks; pump stations and pipeline and related logistics assets to service Western’s operations.

We recorded the purchase of the St. Paul Park Logistics Assets and the TexNew Mex Pipeline System assets at Western's historical book value as required by GAAP. We have retrospectively adjusted the financial information for WNRL, to include the historical results of the assets acquired, for periods prior to the effective date of the transactions.

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 and third quarters of 2016, we disposed of certain assets related to our lubricant sales in California. In connection with these asset disposals, 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 nine months ended September 30, 2016. A gain of $0.6 million has been included in gain on disposal of assets, net for the nine months ended September 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 nine months ended September 30, 2016 and 2015, are presented below. Prior-period financial information has been retrospectively adjusted for the St. Paul Park Logistics Transaction and the TexNew Mex Pipeline Transaction:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(In thousands)
Operating Results:
Logistics:
Revenues: Affiliate	$	42,319		$	46,669		$	126,288		$	117,723
Revenues: Third-party	814			787			2,181			2,089
Total revenues	43,133			47,456			128,469			119,812
Wholesale:
Revenues: Affiliate	140,835			170,290			386,813			489,526
Revenues: Third-party	385,293			462,924			1,100,620			1,414,632
Total revenues	526,128			633,214			1,487,433			1,904,158
Consolidated revenues	$	569,261		$	680,670		$	1,615,902		$	2,023,970
Operating income (loss):
Logistics	$	8,694		$	13,149		$	25,671		$	21,413
Wholesale	8,366			8,515			27,116			29,675
Other	(3,789		)	(3,240		)	(9,731		)	(9,634		)
Operating income from segments	13,271			18,424			43,056			41,454
Other expense, net	(6,131		)	(6,188		)	(19,701		)	(16,365		)
Consolidated income before income taxes	$	7,140		$	12,236		$	23,355		$	25,089
Depreciation and amortization:
Logistics	$	8,581		$	7,817		$	25,083		$	22,486
Wholesale	1,998			1,146			4,387			3,330
Consolidated depreciation and amortization	$	10,579		$	8,963		$	29,470		$	25,816
Capital expenditures:
Logistics	$	7,623		$	10,700		$	22,310		$	48,804
Wholesale	907			858			2,308			4,904
Consolidated capital expenditures	$	8,530		$	11,558		$	24,618		$	53,708
Total assets:
Logistics							$	413,135		$	410,419
Wholesale							152,578			158,680
Other							17,017			74,286
Consolidated total assets							$	582,730		$	643,385