Revenues and Accounts Receivable

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenues and Accounts Receivable

Revenues and Accounts Receivable

Revenue Recognition

We disaggregate our revenues by segment and type of activity under ASC Topic 606, Revenues from Contracts with Customers (“Topic 606”). These categories depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. See Note 3 to our Consolidated Financial Statements included in Part IV of our 2019 Annual Report on Form 10-K for additional information regarding our types of revenues and policies for revenue recognition.

The following tables present our Supply and Logistics, Transportation and Facilities segment revenues from contracts with customers disaggregated by type of activity (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Supply and Logistics segment revenues from contracts with customers
Crude oil transactions	$	5,394	$	7,185	$	15,644	$	21,716
NGL and other transactions	180		202		736		1,380
Total Supply and Logistics segment revenues from contracts with customers	$	5,574	$	7,387	$	16,380	$	23,096

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Transportation segment revenues from contracts with customers
Tariff activities:
Crude oil pipelines	$	442	$	532	$	1,360	$	1,504
NGL pipelines	26		25		77		75
Total tariff activities	468		557		1,437		1,579
Trucking	20		33		77		106
Total Transportation segment revenues from contracts with customers	$	488	$	590	$	1,514	$	1,685

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Facilities segment revenues from contracts with customers
Crude oil, NGL and other terminalling and storage	$	178	$	174	$	536	$	523
NGL and natural gas processing and fractionation	76		87		265		262
Rail load / unload	8		20		30		58
Total Facilities segment revenues from contracts with customers	$	262	$	281	$	831	$	843

Reconciliation to Total Revenues of Reportable Segments. The following tables present the reconciliation of our revenues from contracts with customers to segment revenues and total revenues as disclosed in our Condensed Consolidated Statements of Operations (in millions):

Three Months Ended September 30, 2020	Transportation		Facilities		Supply and Logistics		Total
Revenues from contracts with customers	$	488	$	262	$	5,574	$	6,324
Other items in revenues	6		9		(37)		(22)
Total revenues of reportable segments	$	494	$	271	$	5,537	$	6,302
Intersegment revenues							(469)
Total revenues							$	5,833
Three Months Ended September 30, 2019	Transportation		Facilities		Supply and Logistics		Total
Revenues from contracts with customers	$	590	$	281	$	7,387	$	8,258
Other items in revenues	7		10		155		172
Total revenues of reportable segments	$	597	$	291	$	7,542	$	8,430
Intersegment revenues							(544)
Total revenues							$	7,886
Nine Months Ended September 30, 2020	Transportation		Facilities		Supply and Logistics		Total
Revenues from contracts with customers	$	1,514	$	831	$	16,380	$	18,725
Other items in revenues	16		29		(9)		36
Total revenues of reportable segments	$	1,530	$	860	$	16,371	$	18,761
Intersegment revenues							(1,434)
Total revenues							$	17,327
Nine Months Ended September 30, 2019	Transportation		Facilities		Supply and Logistics		Total
Revenues from contracts with customers	$	1,685	$	843	$	23,096	$	25,624
Other items in revenues	27		37		384		448
Total revenues of reportable segments	$	1,712	$	880	$	23,480	$	26,072
Intersegment revenues							(1,557)
Total revenues							$	24,515

Minimum Volume Commitments. We have certain agreements that require counterparties to transport or throughput a minimum volume over an agreed upon period. At September 30, 2020 and December 31, 2019, counterparty deficiencies associated with contracts with customers and buy/sell arrangements that include minimum volume commitments for which we have remaining performance obligations and the customers still have the ability to meet their obligations totaled $82 million and $42 million, respectively. Billed counterparty deficiencies of $68 million and $22 million at September 30, 2020 and December 31, 2019, respectively, were recorded as a liability. Unbilled counterparty deficiencies of $14 million and $20 million at September 30, 2020 and December 31, 2019, respectively, were not reflected in our Condensed Consolidated Financial Statements.

Contract Balances. Our contract balances consist of amounts received associated with services or sales for which we have not yet completed the related performance obligation. The following table presents the change in the Topic 606 contract liability balance during the nine months ended September 30, 2020 (in millions):

	Contract Liabilities
Balance at December 31, 2019	$	354
Amounts recognized as revenue	(245)
Additions (1)	191
Balance at September 30, 2020	$	300

(1)Includes approximately $152 million associated with crude oil sales agreements that are entered into in conjunction with storage arrangements and future inventory exchanges. Such amount is expected to be recognized as revenue in the fourth quarter of 2020.

Remaining Performance Obligations. Topic 606 requires a presentation of information about partially and wholly unsatisfied performance obligations under contracts that exist as of the end of the period. The information includes the amount of consideration allocated to those remaining performance obligations and the timing of revenue recognition of those remaining performance obligations. Certain contracts meet the requirements for the presentation as remaining performance obligations. These arrangements include a fixed minimum level of service, typically a set volume of service, and do not contain any variability other than expected timing within a limited range. These contracts are all within the scope of Topic 606. The following table presents the amount of consideration associated with remaining performance obligations for the population of contracts with external customers meeting the presentation requirements as of September 30, 2020 (in millions):

	Remainder of 2020		2021		2022		2023		2024		2025 and Thereafter
Pipeline revenues supported by minimum volume commitments and capacity agreements (1)	$	41	$	166	$	166	$	163	$	142	$	576
Storage, terminalling and throughput agreement revenues	101		332		270		205		173		433
Total	$	142	$	498	$	436	$	368	$	315	$	1,009

(1)Calculated as volumes committed under contracts multiplied by the current applicable tariff rate.

The presentation above does not include (i) expected revenues from legacy shippers not underpinned by minimum volume commitments, including pipelines where there are no or limited alternative pipeline transportation options, (ii) intersegment revenues and (iii) the amount of consideration associated with certain income generating contracts, which include a fixed minimum level of service, that are either not within the scope of Topic 606 or do not meet the requirements for presentation as remaining performance obligations under Topic 606. The following are examples of contracts that are not included in the table above because they are not within the scope of Topic 606 or do not meet the Topic 606 requirements for presentation:

•Minimum volume commitments on certain of our joint venture pipeline systems;

•Acreage dedications;

•Supply and Logistics buy/sell arrangements with future committed volumes;

•All other Supply and Logistics contracts, due to the election of practical expedients related to variable consideration and short-term contracts;

•Transportation and Facilities contracts that are short-term;

•Contracts within the scope of ASC Topic 842, Leases; and

•Contracts within the scope of ASC Topic 815, Derivatives and Hedging.

Trade Accounts Receivable and Other Receivables, Net

Our accounts receivable are primarily from purchasers and shippers of crude oil and, to a lesser extent, purchasers of NGL. During the first quarter of 2020, macroeconomic and geopolitical conditions including the collapse of oil prices driven by both the decrease in demand caused by the COVID-19 pandemic and excess supply has caused liquidity issues impacting many energy companies, which in turn has increased the potential credit risks associated with certain counterparties with which we do business. To mitigate credit risk related to our accounts receivable, we utilize a rigorous credit review process. We closely monitor market conditions and perform credit reviews of each customer to make a determination with respect to the amount, if any, of open credit to be extended to any given customer and the form and amount of financial performance assurances we require. Such financial assurances are commonly provided to us in the form of advance cash payments, standby letters of credit, credit insurance or parental guarantees. Additionally, in an effort to mitigate credit risk, a significant portion of our transactions with counterparties are settled on a net-cash basis. For a majority of these net-cash arrangements, we also enter into netting agreements (contractual agreements that allow us to offset receivables and payables with those counterparties against each other on our balance sheet).

Accounts receivable from the sale of crude oil are generally settled with counterparties on the industry settlement date, which is typically in the month following the month in which the title transfers. Otherwise, we generally invoice customers within 30 days of when the products or services were provided and generally require payment within 30 days of the invoice date. We review all outstanding accounts receivable balances on a monthly basis and record our receivables net of expected credit losses. We do not write-off accounts receivable balances until we have exhausted substantially all collection efforts. At September 30, 2020 and December 31, 2019, substantially all of our trade accounts receivable were less than 30 days past their scheduled invoice date. Our expected credit losses are immaterial. Although we consider our credit procedures to be adequate to mitigate any significant credit losses, given the sharp decline in demand for crude oil and the drop in prices, the actual amount of current and future credit losses could vary significantly from estimated amounts.

The following is a reconciliation of trade accounts receivable from revenues from contracts with customers to total Trade accounts receivable and other receivables, net as presented on our Condensed Consolidated Balance Sheets (in millions):

	September 30, 2020		December 31, 2019
Trade accounts receivable arising from revenues from contracts with customers	$	1,876	$	3,381
Other trade accounts receivables and other receivables (1)	2,577		3,576
Impact due to contractual rights of offset with counterparties	(2,300)		(3,343)
Trade accounts receivable and other receivables, net	$	2,153	$	3,614

(1)The balance is comprised primarily of accounts receivable associated with buy/sell arrangements that are not within the scope of Topic 606.