Segment Information (Notes)

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

4. Segment Information

Our operations are organized into two reportable segments based on marketing criteria, 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 and concluded that lubricants are not strategic to our core operations. We have taken steps to divest the remaining assets associated with our lubricant operations and have executed asset purchase agreements with third parties. We anticipate a completed sale within the second quarter of 2017. In connection with this asset disposal, we reported employee severance costs of $0.2 million within direct operating expenses and selling, general and administrative expenses in our Condensed Consolidated Statement of Operations for the three months ended March 31, 2017. Assets held for sale in our Condensed Consolidated Balance Sheet at March 31, 2017 and December 31, 2016, respectively, include $9.0 million and $10.1 million in inventories and $7.0 million 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 of approximately $20.0 million, which would result in a gain on disposal of assets; however, no amounts related to this anticipated transaction have been recorded in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2017.

During the second and third quarters of 2016, we disposed of certain assets related to our lubricant sales in California.

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 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 and other long-term assets.

Disclosures regarding our reportable segments with reconciliations to consolidated totals for the three months ended March 31, 2017 and 2016, are presented below.

	Three Months Ended
	March 31,
	2017			2016
	(In thousands)
Operating Results:
Logistics:
Revenues: Affiliate	$	49,637		$	40,916
Revenues: Third-party	619			690
Total revenues	50,256			41,606
Wholesale:
Revenues: Affiliate	140,907			108,541
Revenues: Third-party	413,529			317,892
Total revenues	554,436			426,433
Consolidated revenues	$	604,692		$	468,039
Operating income (loss):
Logistics	$	15,030		$	5,913
Wholesale	14,974			9,953
Other	(3,642		)	(2,678		)
Operating income from segments	26,362			13,188
Other income (expense), net	(6,586		)	(7,170		)
Consolidated income before income taxes	$	19,776		$	6,018
Depreciation and amortization:
Logistics	$	8,581		$	8,155
Wholesale	1,151			1,183
Consolidated depreciation and amortization	$	9,732		$	9,338
Capital expenditures:
Logistics	$	5,451		$	7,984
Wholesale	19			372
Consolidated capital expenditures	$	5,470		$	8,356
Total assets:
Logistics	$	411,214		$	417,212
Wholesale	145,445			151,323
Other	22,819			27,513
Consolidated total assets	$	579,478		$	596,048