Segment Information

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

4. Segment Information

Our operations are organized into two reportable 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 705 miles of pipeline; 33 crude oil storage tanks with a total combined active shell storage capacity of approximately 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 St. Paul Park, Minnesota. 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.

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, 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 fourth quarter of 2016, we completed an evaluation of our lubricant operations. After careful consideration, having concluded that lubricants are not strategic to our core operations, we have taken steps to divest the remaining assets associated with this business. We anticipate a completed sale within the first half of 2017. Assets held for sale in our Consolidated Balance Sheet at December 31, 2016 include $10.1 million in inventories and $7.3 million in property, plant and equipment. These assets and associated results from operations are presented in our Wholesale segment. We expect proceeds from this divestiture to result in a gain on disposal of assets; however, no amounts related to this anticipated transaction have been recorded in the Consolidated Statements of Operations for the year ended December 31, 2016.

During 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 Consolidated Statement of Operations for the year ended December 31, 2016. A gain of $0.6 million has been included in gain on disposal of assets, net for the year ended December 31, 2016, in the 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. These activities consist primarily of corporate staff operations and other items that are not specific to the normal business of any one of our two reportable 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; net deferred income tax items; net property, plant and equipment and other long-term assets.

Disclosures regarding our reportable segments with reconciliations to consolidated totals for the three years ended December 31, 2016, are presented below:

	Year Ended
	December 31, 2016			December 31, 2015			December 31, 2014
	(In thousands)
Operating Results:
Logistics:
Revenues: Affiliate	$	178,600		$	161,536		$	137,986
Revenues: Third-party	2,911			2,771			2,718
Total revenues	181,511			164,307			140,704
Wholesale:
Revenues: Affiliate	523,557			624,787			873,589
Revenues: Third-party	1,517,650			1,810,773			2,487,595
Total revenues	2,041,207			2,435,560			3,361,184
Consolidated revenues	$	2,222,718		$	2,599,867		$	3,501,888
Operating income:
Logistics	$	43,863		$	30,880		$	19,332
Wholesale	39,384			38,159			28,234
Other	(13,152		)	(13,245		)	(11,959		)
Operating income	70,095			55,794			35,607
Other income (expense), net	(26,042		)	(23,041		)	(2,240		)
Consolidated income before income taxes	$	44,053		$	32,753		$	33,367
Depreciation and amortization:
Logistics	$	33,710		$	30,898		$	25,041
Wholesale	5,532			4,486			3,893
Consolidated depreciation and amortization	$	39,242		$	35,384		$	28,934
Capital expenditures:
Logistics	$	27,894		$	61,204		$	71,470
Wholesale	2,414			6,421			7,868
Consolidated capital expenditures	$	30,308		$	67,625		$	79,338
Total assets:
Logistics	$	412,551		$	413,847		$	385,918
Wholesale	151,669			147,597			160,158
Other	16,634			48,778			56,488
Consolidated total assets	$	580,854		$	610,222		$	602,564