þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to _______________ |
Delaware | 90-1006559 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
Large accelerated filer þ Accelerated filer o Non-accelerated filer o |
Smaller reporting company o Emerging growth company o |
Page | |
June 30, 2018 | December 31, 2017 | ||||||||
ASSETS | (unaudited) | ||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 100,094 | $ | 42,052 | |||||
Receivables – related party | 45,121 | 46,496 | |||||||
Receivables | 205 | 781 | |||||||
Prepaid expenses and other | 683 | 720 | |||||||
Total current assets | 146,103 | 90,049 | |||||||
Property and equipment, at cost | 1,997,162 | 1,969,233 | |||||||
Accumulated depreciation | (584,476 | ) | (552,817 | ) | |||||
Property and equipment, net | 1,412,686 | 1,416,416 | |||||||
Deferred charges and other assets, net | 10,059 | 10,887 | |||||||
Total assets | $ | 1,568,848 | $ | 1,517,352 | |||||
LIABILITIES AND PARTNERS’ CAPITAL | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 14,363 | $ | 18,633 | |||||
Accounts payable – related party | 7,640 | 3,944 | |||||||
Accrued liabilities | 885 | 1,007 | |||||||
Accrued liabilities – related party | 413 | 1,128 | |||||||
Accrued interest payable | 6,666 | 2,558 | |||||||
Accrued interest payable – related party | 827 | 911 | |||||||
Taxes other than income taxes payable | 5,134 | 5,141 | |||||||
Total current liabilities | 35,928 | 33,322 | |||||||
Debt | 989,380 | 905,283 | |||||||
Notes payable – related party | 285,000 | 370,000 | |||||||
Other long-term liabilities | 3,148 | 2,950 | |||||||
Commitments and contingencies | |||||||||
Partners’ capital: | |||||||||
Limited partners: | |||||||||
Common unitholders – public (22,493,484 and 22,487,586 units outstanding) | 607,611 | 596,047 | |||||||
Common unitholder – Valero (46,768,586 and 46,768,586 units outstanding) | (347,174 | ) | (382,652 | ) | |||||
General partner – Valero (1,413,511 and 1,413,391 units outstanding) | (5,045 | ) | (7,598 | ) | |||||
Total partners’ capital | 255,392 | 205,797 | |||||||
Total liabilities and partners’ capital | $ | 1,568,848 | $ | 1,517,352 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues – related party: | ||||||||||||||||
Revenues from lease contracts | $ | 108,251 | $ | 84,657 | $ | 213,577 | $ | 165,769 | ||||||||
Revenues from contracts with customer | 26,376 | 25,888 | 52,992 | 50,592 | ||||||||||||
Total revenues – related party | 134,627 | 110,545 | 266,569 | 216,361 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenues from lease contracts (excluding depreciation expense reflected below) (a) | 26,596 | 20,848 | 51,114 | 39,368 | ||||||||||||
Cost of revenues from contracts with customer (excluding depreciation expense reflected below) (b) | 6,758 | 6,207 | 13,541 | 11,232 | ||||||||||||
Depreciation expense associated with lease contracts | 15,849 | 9,450 | 31,438 | 18,480 | ||||||||||||
Depreciation expense associated with contracts with customer | 3,016 | 3,055 | 5,967 | 5,800 | ||||||||||||
General and administrative expenses (c) | 4,158 | 3,863 | 8,270 | 7,693 | ||||||||||||
Total costs and expenses | 56,377 | 43,423 | 110,330 | 82,573 | ||||||||||||
Operating income | 78,250 | 67,122 | 156,239 | 133,788 | ||||||||||||
Other income, net | 411 | 182 | 793 | 246 | ||||||||||||
Interest and debt expense, net of capitalized interest (d) | (14,271 | ) | (8,551 | ) | (26,179 | ) | (16,840 | ) | ||||||||
Income before income tax expense | 64,390 | 58,753 | 130,853 | 117,194 | ||||||||||||
Income tax expense | 371 | 310 | 755 | 614 | ||||||||||||
Net income | 64,019 | 58,443 | 130,098 | 116,580 | ||||||||||||
Less: General partner’s interest in net income | 18,077 | 11,419 | 34,632 | 20,886 | ||||||||||||
Limited partners’ interest in net income | $ | 45,942 | $ | 47,024 | $ | 95,466 | $ | 95,694 | ||||||||
Net income per limited partner common unit – basic and diluted | $ | 0.66 | $ | 0.69 | $ | 1.38 | $ | 1.41 | ||||||||
Weighted-average limited partner common units outstanding – basic and diluted | 69,251 | 68,157 | 69,250 | 67,912 | ||||||||||||
Cash distribution declared per unit | $ | 0.5510 | $ | 0.4550 | $ | 1.0785 | $ | 0.8825 | ||||||||
Supplemental information – each income statement line item reflected below includes costs of revenues, expenses, or financing activities provided by related party as follows: | ||||||||||||||||
(a) Cost of revenues from lease contracts (excluding depreciation expense) – related party | $ | 17,075 | $ | 14,369 | $ | 35,010 | $ | 28,715 | ||||||||
(b) Cost of revenues from contracts with customer (excluding depreciation expense) – related party | $ | 2,018 | $ | 1,767 | $ | 4,139 | $ | 3,053 | ||||||||
(c) General and administrative expenses – related party | $ | 3,361 | $ | 3,185 | $ | 6,722 | $ | 6,371 | ||||||||
(d) Interest and debt expense – related party | $ | 2,464 | $ | 2,343 | $ | 5,310 | $ | 4,450 |
Limited Partners | |||||||||||||||||
Common Unitholders Public | Common Unitholder Valero | General Partner Valero | Total | ||||||||||||||
Balance as of December 31, 2016 | $ | 548,619 | $ | (482,197 | ) | $ | (10,598 | ) | $ | 55,824 | |||||||
Net income | 31,311 | 64,383 | 20,886 | 116,580 | |||||||||||||
Unit issuance | 33,505 | — | 748 | 34,253 | |||||||||||||
Transfers to (from) partners | (16,097 | ) | 19,816 | (3,719 | ) | — | |||||||||||
Noncash capital contributions from Valero Energy Corporation | — | 18,890 | 386 | 19,276 | |||||||||||||
Cash distributions to unitholders and distribution equivalent right payments | (18,482 | ) | (38,102 | ) | (16,354 | ) | (72,938 | ) | |||||||||
Unit-based compensation | 146 | — | — | 146 | |||||||||||||
Balance as of June 30, 2017 | $ | 579,002 | $ | (417,210 | ) | $ | (8,651 | ) | $ | 153,141 | |||||||
Balance as of December 31, 2017 | $ | 596,047 | $ | (382,652 | ) | $ | (7,598 | ) | $ | 205,797 | |||||||
Net income | 30,992 | 64,474 | 34,632 | 130,098 | |||||||||||||
Unit issuance | — | — | 5 | 5 | |||||||||||||
Transfers to (from) partners | 3,730 | (2,396 | ) | (1,334 | ) | — | |||||||||||
Noncash capital contributions from Valero Energy Corporation | — | 21,872 | 445 | 22,317 | |||||||||||||
Cash distributions to unitholders and distribution equivalent right payments | (23,281 | ) | (48,406 | ) | (31,194 | ) | (102,881 | ) | |||||||||
Unit-based compensation | 123 | — | — | 123 | |||||||||||||
Other | — | (66 | ) | (1 | ) | (67 | ) | ||||||||||
Balance as of June 30, 2018 | $ | 607,611 | $ | (347,174 | ) | $ | (5,045 | ) | $ | 255,392 |
Six Months Ended June 30, | |||||||||
2018 | 2017 | ||||||||
Cash flows from operating activities: | |||||||||
Net income | $ | 130,098 | $ | 116,580 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Depreciation expense | 37,405 | 24,280 | |||||||
Changes in current assets and current liabilities | 6,101 | (734 | ) | ||||||
Changes in deferred charges and credits and other operating activities, net | 1,553 | 856 | |||||||
Net cash provided by operating activities | 175,157 | 140,982 | |||||||
Cash flows from investing activities: | |||||||||
Capital expenditures | (13,083 | ) | (15,240 | ) | |||||
Acquisition of undivided interest in Red River crude system | — | (71,793 | ) | ||||||
Other investing activities, net | 8 | 8 | |||||||
Net cash used in investing activities | (13,075 | ) | (87,025 | ) | |||||
Cash flows from financing activities: | |||||||||
Proceeds from issuance of senior notes | 498,300 | — | |||||||
Repayment of debt and note payable – related party | (495,000 | ) | — | ||||||
Payment of debt issuance costs | (4,464 | ) | (492 | ) | |||||
Proceeds from issuance of common units | — | 35,728 | |||||||
Proceeds from issuance of general partner units | 5 | 748 | |||||||
Payment of offering costs | — | (517 | ) | ||||||
Cash distributions to unitholders and distribution equivalent right payments | (102,881 | ) | (72,938 | ) | |||||
Net cash used in financing activities | (104,040 | ) | (37,471 | ) | |||||
Net increase in cash and cash equivalents | 58,042 | 16,486 | |||||||
Cash and cash equivalents at beginning of period | 42,052 | 71,491 | |||||||
Cash and cash equivalents at end of period | $ | 100,094 | $ | 87,977 |
1. | DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES |
2. | ACQUISITIONS |
3. | RELATED-PARTY TRANSACTIONS |
4. | DEBT AND NOTES PAYABLE – RELATED PARTY |
Maturity Date | June 30, 2018 | December 31, 2017 | |||||||
Revolver | November 2020 | $ | — | $ | 410,000 | ||||
Senior Notes, 4.375% | December 2026 | 500,000 | 500,000 | ||||||
Senior Notes, 4.5% | March 2028 | 500,000 | — | ||||||
Net unamortized discount and debt issuance costs | (10,620 | ) | (4,717 | ) | |||||
Debt | $ | 989,380 | $ | 905,283 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Interest and debt expense incurred | $ | 14,349 | $ | 8,653 | $ | 26,367 | $ | 17,045 | |||||||
Less: Capitalized interest | 78 | 102 | 188 | 205 | |||||||||||
Interest and debt expense, net of capitalized interest | $ | 14,271 | $ | 8,551 | $ | 26,179 | $ | 16,840 |
5. | REVENUES |
Pipeline Transportation | Terminaling | Storage and Other | Total | |||||||||||||
Three Months Ended June 30, 2018: | ||||||||||||||||
Revenues from lease contracts | $ | 17,635 | $ | 90,118 | $ | 498 | $ | 108,251 | ||||||||
Revenues from contracts with customer | 12,672 | 12,275 | 1,429 | 26,376 | ||||||||||||
Total revenues – related party | $ | 30,307 | $ | 102,393 | $ | 1,927 | $ | 134,627 | ||||||||
Three Months Ended June 30, 2017: | ||||||||||||||||
Revenues from lease contracts | $ | 11,832 | $ | 72,690 | $ | 135 | $ | 84,657 | ||||||||
Revenues from contracts with customer | 13,027 | 12,107 | 754 | 25,888 | ||||||||||||
Total revenues – related party | $ | 24,859 | $ | 84,797 | $ | 889 | $ | 110,545 | ||||||||
Six Months Ended June 30, 2018: | ||||||||||||||||
Revenues from lease contracts | $ | 35,882 | $ | 177,059 | $ | 636 | $ | 213,577 | ||||||||
Revenues from contracts with customer | 25,793 | 24,608 | 2,591 | 52,992 | ||||||||||||
Total revenues – related party | $ | 61,675 | $ | 201,667 | $ | 3,227 | $ | 266,569 | ||||||||
Six Months Ended June 30, 2017: | ||||||||||||||||
Revenues from lease contracts | $ | 22,182 | $ | 143,317 | $ | 270 | $ | 165,769 | ||||||||
Revenues from contracts with customer | 25,852 | 23,986 | 754 | 50,592 | ||||||||||||
Total revenues – related party | $ | 48,034 | $ | 167,303 | $ | 1,024 | $ | 216,361 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Minimum lease revenues | $ | 90,074 | $ | 69,823 | $ | 179,198 | $ | 138,271 | |||||||||
Contingent lease revenues | 18,177 | 14,834 | 34,379 | 27,498 | |||||||||||||
Revenues from lease contracts | $ | 108,251 | $ | 84,657 | $ | 213,577 | $ | 165,769 |
Lease Contracts | Contracts with Customer | |||||||
Remainder of 2018 | $ | 182,120 | $ | 40,924 | ||||
2019 | 361,282 | 81,215 | ||||||
2020 | 362,268 | 81,426 | ||||||
2021 | 361,282 | 81,215 | ||||||
2022 | 361,282 | 81,215 | ||||||
Thereafter | 2,914,596 | 116,994 | ||||||
Total | $ | 4,542,830 | $ | 482,989 |
6. | CASH DISTRIBUTIONS |
Quarterly Period Ended | Total Quarterly Distribution (per unit) | Total Cash Distribution (in thousands) | Declaration Date | Record Date | Distribution Date | ||||||||||
June 30, 2018 | $ | 0.5510 | $ | 56,081 | July 23, 2018 | August 3, 2018 | August 13, 2018 | ||||||||
March 31, 2018 | 0.5275 | 52,826 | April 19, 2018 | May 1, 2018 | May 9, 2018 | ||||||||||
December 31, 2017 | 0.5075 | 50,055 | January 24, 2018 | February 5, 2018 | February 13, 2018 | ||||||||||
September 30, 2017 | 0.4800 | 46,242 | October 19, 2017 | November 1, 2017 | November 9, 2017 | ||||||||||
June 30, 2017 | 0.4550 | 42,111 | July 19, 2017 | August 1, 2017 | August 10, 2017 | ||||||||||
March 31, 2017 | 0.4275 | 38,043 | April 20, 2017 | May 2, 2017 | May 11, 2017 | ||||||||||
December 31, 2016 | 0.4065 | 34,895 | January 20, 2017 | February 2, 2017 | February 10, 2017 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
General partner: | ||||||||||||||||
Distributions, excluding incentive distribution rights (IDRs) | $ | 1,122 | $ | 842 | $ | 2,178 | $ | 1,437 | ||||||||
IDRs | 16,796 | 10,250 | 32,030 | 18,557 | ||||||||||||
Total general partner’s distributions | 17,918 | 11,092 | 34,208 | 19,994 | ||||||||||||
Limited partners: | ||||||||||||||||
Common – public | 12,387 | 10,226 | 24,246 | 19,831 | ||||||||||||
Common – Valero | 25,769 | 20,788 | 50,440 | 40,319 | ||||||||||||
Total limited partners’ distributions | 38,156 | 31,014 | 74,686 | 60,150 | ||||||||||||
DERs | 7 | 5 | 13 | 10 | ||||||||||||
Total cash distributions | $ | 56,081 | $ | 42,111 | $ | 108,907 | $ | 80,154 |
7. | NET INCOME PER LIMITED PARTNER UNIT |
General Partner | Limited Partners Common Units | Restricted Units | Total | |||||||||||||
Three Months Ended June 30, 2018: | ||||||||||||||||
Allocation of net income to determine net income available to limited partners: | ||||||||||||||||
Distributions, excluding general partner’s IDRs | $ | 1,122 | $ | 38,156 | $ | — | $ | 39,278 | ||||||||
General partner’s IDRs | 16,796 | — | — | 16,796 | ||||||||||||
DERs | — | — | 7 | 7 | ||||||||||||
Distributions and DERs declared | 17,918 | 38,156 | 7 | 56,081 | ||||||||||||
Undistributed earnings | 159 | 7,778 | 1 | 7,938 | ||||||||||||
Net income available to limited partners – basic and diluted | $ | 18,077 | $ | 45,934 | $ | 8 | $ | 64,019 | ||||||||
Net income per limited partner common unit – basic and diluted: | ||||||||||||||||
Weighted-average units outstanding | 69,251 | |||||||||||||||
Net income per limited partner common unit – basic and diluted | $ | 0.66 |
Three Months Ended June 30, 2017: | ||||||||||||||||
Allocation of net income to determine net income available to limited partners: | ||||||||||||||||
Distributions, excluding general partner’s IDRs | $ | 842 | $ | 31,014 | $ | — | $ | 31,856 | ||||||||
General partner’s IDRs | 10,250 | — | — | 10,250 | ||||||||||||
DERs | — | — | 5 | 5 | ||||||||||||
Distributions and DERs declared | 11,092 | 31,014 | 5 | 42,111 | ||||||||||||
Undistributed earnings | 327 | 16,002 | 3 | 16,332 | ||||||||||||
Net income available to limited partners – basic and diluted | $ | 11,419 | $ | 47,016 | $ | 8 | $ | 58,443 | ||||||||
Net income per limited partner common unit – basic and diluted: | ||||||||||||||||
Weighted-average units outstanding | 68,157 | |||||||||||||||
Net income per limited partner common unit – basic and diluted | $ | 0.69 |
General Partner | Limited Partners Common Units | Restricted Units | Total | |||||||||||||
Six Months Ended June 30, 2018: | ||||||||||||||||
Allocation of net income to determine net income available to limited partners: | ||||||||||||||||
Distributions, excluding general partner’s IDRs | $ | 2,178 | $ | 74,686 | $ | — | $ | 76,864 | ||||||||
General partner’s IDRs | 32,030 | — | — | 32,030 | ||||||||||||
DERs | — | — | 13 | 13 | ||||||||||||
Distributions and DERs declared | 34,208 | 74,686 | 13 | 108,907 | ||||||||||||
Undistributed earnings | 424 | 20,764 | 3 | 21,191 | ||||||||||||
Net income available to limited partners – basic and diluted | $ | 34,632 | $ | 95,450 | $ | 16 | $ | 130,098 | ||||||||
Net income per limited partner common unit – basic and diluted: | ||||||||||||||||
Weighted-average units outstanding | 69,250 | |||||||||||||||
Net income per limited partner common unit – basic and diluted | $ | 1.38 |
Six Months Ended June 30, 2017: | ||||||||||||||||
Allocation of net income to determine net income available to limited partners: | ||||||||||||||||
Distributions, excluding general partner’s IDRs | $ | 1,437 | $ | 60,150 | $ | — | $ | 61,587 | ||||||||
General partner’s IDRs | 18,557 | — | — | 18,557 | ||||||||||||
DERs | — | — | 10 | 10 | ||||||||||||
Distributions and DERs declared | 19,994 | 60,150 | 10 | 80,154 | ||||||||||||
Undistributed earnings | 892 | 35,527 | 7 | 36,426 | ||||||||||||
Net income available to limited partners – basic and diluted | $ | 20,886 | $ | 95,677 | $ | 17 | $ | 116,580 | ||||||||
Net income per limited partner common unit – basic and diluted: | ||||||||||||||||
Weighted-average units outstanding | 67,912 | |||||||||||||||
Net income per limited partner common unit – basic and diluted | $ | 1.41 |
8. | PARTNERS’ CAPITAL |
Limited Partners | General Partner Valero | |||||||||||
Common Unitholders Public | Common Unitholder Valero | Total | ||||||||||
Balance as of December 31, 2016 | 21,738,692 | 45,687,271 | 1,375,721 | 68,801,684 | ||||||||
Unit-based compensation | 5,997 | — | — | 5,997 | ||||||||
Units issued under ATM Program | 742,897 | — | — | 742,897 | ||||||||
General partner units issued to maintain 2% interest | — | — | 15,602 | 15,602 | ||||||||
Balance as of June 30, 2017 | 22,487,586 | 45,687,271 | 1,391,323 | 69,566,180 | ||||||||
Balance as of December 31, 2017 | 22,487,586 | 46,768,586 | 1,413,391 | 70,669,563 | ||||||||
Unit-based compensation | 5,898 | — | — | 5,898 | ||||||||
General partner units issued to maintain 2% interest | — | — | 120 | 120 | ||||||||
Balance as of June 30, 2018 | 22,493,484 | 46,768,586 | 1,413,511 | 70,675,581 |
Units Issued | Total Proceeds | Offering Costs | Net Proceeds | ||||||||||||
Common – public | 742,897 | $ | 35,728 | $ | 517 | $ | 35,211 | ||||||||
General partner | 15,602 | 748 | — | 748 |
9. | SUPPLEMENTAL CASH FLOW INFORMATION |
Six Months Ended June 30, | |||||||||
2018 | 2017 | ||||||||
Decrease (increase) in current assets: | |||||||||
Receivables – related party | $ | 1,375 | $ | 1,450 | |||||
Receivables | 576 | (216 | ) | ||||||
Prepaid expenses and other | 37 | 366 | |||||||
Increase (decrease) in current liabilities: | |||||||||
Accounts payable | (2,763 | ) | 738 | ||||||
Accounts payable – related party | 3,696 | (655 | ) | ||||||
Accrued liabilities | (122 | ) | (118 | ) | |||||
Accrued liabilities – related party | (715 | ) | (3,171 | ) | |||||
Accrued interest payable | 4,108 | (304 | ) | ||||||
Accrued interest payable – related party | (84 | ) | 739 | ||||||
Taxes other than income taxes payable | (7 | ) | 437 | ||||||
Changes in current assets and current liabilities | $ | 6,101 | $ | (734 | ) |
Six Months Ended June 30, | |||||||||
2018 | 2017 | ||||||||
Interest paid | $ | 21,641 | $ | 16,044 | |||||
Income taxes paid | 918 | 695 |
Six Months Ended June 30, | |||||||||
2018 | 2017 | ||||||||
Decrease in accounts payable related to capital expenditures | $ | (1,718 | ) | $ | (1,721 | ) | |||
Noncash capital contributions from Valero for capital projects | 22,317 | 19,276 |
10. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
Fair Value Hierarchy | June 30, 2018 | December 31, 2017 | |||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||
Financial assets: | |||||||||||||||||||
Cash and cash equivalents | Level 1 | $ | 100,094 | $ | 100,094 | $ | 42,052 | $ | 42,052 | ||||||||||
Financial liabilities: | |||||||||||||||||||
Debt: | |||||||||||||||||||
Revolver | Level 2 | — | — | 410,000 | 410,000 | ||||||||||||||
Senior Notes | Level 2 | 989,380 | 986,930 | 495,283 | 523,800 | ||||||||||||||
Notes payable – related party | Level 2 | 285,000 | 285,000 | 370,000 | 370,000 |
• | the suspension, reduction, cessation, or termination of Valero’s obligation under our commercial agreements, omnibus agreement, and services and secondment agreement; |
• | changes in global economic conditions on Valero’s business and the business of its suppliers, customers, business partners, and credit lenders; |
• | a material decrease in Valero’s profitability; |
• | disruptions due to equipment interruption or failure at our facilities, Valero’s facilities, or third-party facilities on which our business or Valero’s business is dependent; |
• | the risk of contract cancellation, non-renewal, or failure to perform by Valero’s customers, and Valero’s inability to replace such contracts and/or customers; |
• | Valero’s and our ability to remain in compliance with the terms of its and our outstanding indebtedness; |
• | the timing and extent of changes in commodity prices and demand for Valero’s refined petroleum products; |
• | our ability to obtain credit and financing on acceptable terms in light of uncertainty and illiquidity in credit and capital markets; |
• | actions of customers and competitors; |
• | changes in our cash flows from operations; |
• | changes in state and federal policies and regulations relating to tariffs, environmental, economic, health and safety, energy, and other matters; |
• | legal or regulatory investigations, delays, or other factors beyond our control; |
• | operational hazards inherent in refining operations and in transporting and storing crude oil and refined petroleum products; |
• | earthquakes or other natural disasters affecting operations; |
• | changes in capital requirements or in execution of planned capital projects; |
• | the availability and costs of crude oil, other refinery feedstocks, and refined petroleum products; |
• | changes in the cost or availability of third-party vessels, pipelines, and other means of delivering and transporting crude oil, feedstocks, and refined petroleum products; |
• | direct or indirect effects on our business resulting from actual or threatened terrorist incidents or acts of war; |
• | weather conditions affecting our or Valero’s operations or the areas in which Valero markets its refined petroleum products; |
• | seasonal variations in demand for refined petroleum products; |
• | adverse rulings, judgments, or settlements in litigation or other legal or tax matters, including unexpected environmental remediation costs in excess of any accruals, which affect us or Valero; |
• | risks related to labor relations and workplace safety; |
• | changes in insurance markets impacting costs and the level and types of coverage available; |
• | political developments; and |
• | other factors generally described in the “Risk Factors” section included in our annual report on Form 10-K for the year ended December 31, 2017, and in our quarterly report on Form 10-Q for the quarterly period ended March 31, 2018, both of which are incorporated by reference herein. |
Three Months Ended June 30, | ||||||||||||
2018 | 2017 | Change | ||||||||||
Revenues – related party: | ||||||||||||
Revenues from lease contracts | $ | 108,251 | $ | 84,657 | $ | 23,594 | ||||||
Revenues from contracts with customer | 26,376 | 25,888 | 488 | |||||||||
Total revenues – related party | 134,627 | 110,545 | 24,082 | |||||||||
Costs and expenses: | ||||||||||||
Cost of revenues from lease contracts (excluding depreciation expense reflected below) | 26,596 | 20,848 | 5,748 | |||||||||
Cost of revenues from contracts with customer (excluding depreciation expense reflected below) | 6,758 | 6,207 | 551 | |||||||||
Depreciation expense associated with lease contracts | 15,849 | 9,450 | 6,399 | |||||||||
Depreciation expense associated with contracts with customer | 3,016 | 3,055 | (39 | ) | ||||||||
General and administrative expenses | 4,158 | 3,863 | 295 | |||||||||
Total costs and expenses | 56,377 | 43,423 | 12,954 | |||||||||
Operating income | 78,250 | 67,122 | 11,128 | |||||||||
Other income, net | 411 | 182 | 229 | |||||||||
Interest and debt expense, net of capitalized interest | (14,271 | ) | (8,551 | ) | (5,720 | ) | ||||||
Income before income tax expense | 64,390 | 58,753 | 5,637 | |||||||||
Income tax expense | 371 | 310 | 61 | |||||||||
Net income | 64,019 | 58,443 | 5,576 | |||||||||
Less: General partner’s interest in net income | 18,077 | 11,419 | 6,658 | |||||||||
Limited partners’ interest in net income | $ | 45,942 | $ | 47,024 | $ | (1,082 | ) | |||||
Net income per limited partner common unit – basic and diluted | $ | 0.66 | $ | 0.69 | ||||||||
Weighted-average limited partner common units outstanding – basic and diluted | 69,251 | 68,157 |
Three Months Ended June 30, | ||||||||||||
2018 | 2017 | Change | ||||||||||
Operating highlights: | ||||||||||||
Pipeline transportation: | ||||||||||||
Pipeline transportation revenues | $ | 30,307 | $ | 24,859 | $ | 5,448 | ||||||
Pipeline transportation throughput (BPD) (a) | 1,032,687 | 1,003,320 | 29,367 | |||||||||
Average pipeline transportation revenue per barrel (b) | $ | 0.32 | $ | 0.27 | $ | 0.05 | ||||||
Terminaling: | ||||||||||||
Terminaling revenues | $ | 102,393 | $ | 84,797 | $ | 17,596 | ||||||
Terminaling throughput (BPD) | 3,561,961 | 2,852,182 | 709,779 | |||||||||
Average terminaling revenue per barrel (b) | $ | 0.32 | $ | 0.33 | $ | (0.01 | ) | |||||
Storage and other revenues | $ | 1,927 | $ | 889 | $ | 1,038 | ||||||
Total revenues – related party | $ | 134,627 | $ | 110,545 | $ | 24,082 | ||||||
Capital expenditures: | ||||||||||||
Maintenance | $ | 2,613 | $ | 1,335 | $ | 1,278 | ||||||
Expansion | 4,097 | 4,888 | (791 | ) | ||||||||
Total capital expenditures | $ | 6,710 | $ | 6,223 | $ | 487 | ||||||
Other financial information: | ||||||||||||
Distribution declared per unit | $ | 0.5510 | $ | 0.4550 | ||||||||
Distribution declared: | ||||||||||||
Limited partner units – public | $ | 12,394 | $ | 10,231 | ||||||||
Limited partner units – Valero | 25,769 | 20,788 | ||||||||||
General partner units – Valero | 17,918 | 11,092 | ||||||||||
Total distribution declared | $ | 56,081 | $ | 42,111 |
(a) | Represents the sum of volumes transported through each separately tariffed pipeline segment divided by the number of days in the period. |
(b) | Average revenue per barrel is calculated as revenue divided by throughput for the period. Throughput is derived by multiplying the throughput barrels per day (BPD) by the number of days in the period. |
• | Revenues from a terminal and pipeline system acquired from Valero in November 2017. We generated revenues of $15.8 million and $6.1 million in the second quarter of 2018 from the operations of our Port Arthur terminal and Parkway pipeline, respectively. The volumes handled at and transported through these assets were the primary contributors to the increase in our overall terminaling and pipeline transportation throughput in the second quarter of 2018 compared to the second quarter of 2017. Average pipeline transportation revenue per barrel was higher in the second quarter of 2018 compared to the second quarter of 2017 due primarily to higher revenue per barrel generated by our Parkway pipeline compared to the average revenue per barrel generated by our other pipelines. Average terminaling revenue per barrel was lower in the second quarter of 2018 compared to the second quarter of 2017 due primarily to lower revenue per barrel generated by our Port Arthur terminal compared to the average revenue per barrel generated by our other terminals. |
• | Incremental revenues from our DGD rail loading facility and storage tank placed in service in May 2017 and April 2018, respectively. Our DGD rail loading facility and new storage tank generated combined incremental revenues of $1.0 million in the second quarter of 2018 compared to the second quarter of 2017. |
• | Incremental throughput at our Red River crude system acquired in January 2017. We generated incremental revenues of $1.0 million due to higher throughput at our Red River crude system in the second quarter of 2018 compared to the second quarter of 2017. |
• | Incremental borrowings in connection with acquisitions. In connection with the acquisitions of the Port Arthur terminal and Parkway pipeline in November 2017, we borrowed $380.0 million under the Revolver. Interest expense on the incremental borrowings was $3.4 million in the second quarter of 2018. |
• | Incremental interest expense on the 4.5 percent Senior Notes. In March 2018, we issued $500.0 million of 4.5 percent Senior Notes. We used the gross proceeds of $498.3 million to repay the outstanding balance of $410.0 million under the Revolver and $85.0 million on a portion of the outstanding balance under one of the Loan Agreements with Valero. The interest rate on the 4.5 percent Senior Notes is higher than the interest rates on the Revolver and the Loan Agreements with Valero, thereby increasing our effective interest rate in 2018. Incremental interest expense resulting from the 4.5 percent Senior Notes was approximately $1.4 million in the second quarter of 2018. |
• | Higher interest rates in 2018. Borrowings under the Loan Agreements with Valero bear interest at variable rates. We incurred additional interest of $636,000 in the second quarter of 2018 on these borrowings due to higher interest rates in 2018 compared to 2017. |
Six Months Ended June 30, | ||||||||||||
2018 | 2017 | Change | ||||||||||
Revenues – related party: | ||||||||||||
Revenues from lease contracts | $ | 213,577 | $ | 165,769 | $ | 47,808 | ||||||
Revenues from contracts with customer | 52,992 | 50,592 | 2,400 | |||||||||
Total revenues – related party | 266,569 | 216,361 | 50,208 | |||||||||
Costs and expenses: | ||||||||||||
Cost of revenues from lease contracts (excluding depreciation expense reflected below) | 51,114 | 39,368 | 11,746 | |||||||||
Cost of revenues from contracts with customer (excluding depreciation expense reflected below) | 13,541 | 11,232 | 2,309 | |||||||||
Depreciation expense associated with lease contracts | 31,438 | 18,480 | 12,958 | |||||||||
Depreciation expense associated with contracts with customer | 5,967 | 5,800 | 167 | |||||||||
General and administrative expenses | 8,270 | 7,693 | 577 | |||||||||
Total costs and expenses | 110,330 | 82,573 | 27,757 | |||||||||
Operating income | 156,239 | 133,788 | 22,451 | |||||||||
Other income, net | 793 | 246 | 547 | |||||||||
Interest and debt expense, net of capitalized interest | (26,179 | ) | (16,840 | ) | (9,339 | ) | ||||||
Income before income tax expense | 130,853 | 117,194 | 13,659 | |||||||||
Income tax expense | 755 | 614 | 141 | |||||||||
Net income | 130,098 | 116,580 | 13,518 | |||||||||
Less: General partner’s interest in net income | 34,632 | 20,886 | 13,746 | |||||||||
Limited partners’ interest in net income | $ | 95,466 | $ | 95,694 | $ | (228 | ) | |||||
Net income per limited partner common unit – basic and diluted | $ | 1.38 | $ | 1.41 | ||||||||
Weighted-average limited partner common units outstanding – basic and diluted | 69,250 | 67,912 |
Six Months Ended June 30, | ||||||||||||
2018 | 2017 | Change | ||||||||||
Operating highlights: | ||||||||||||
Pipeline transportation: | ||||||||||||
Pipeline transportation revenues | $ | 61,675 | $ | 48,034 | $ | 13,641 | ||||||
Pipeline transportation throughput (BPD) (a) | 1,047,313 | 982,873 | 64,440 | |||||||||
Average pipeline transportation revenue per barrel (b) | $ | 0.33 | $ | 0.27 | $ | 0.06 | ||||||
Terminaling: | ||||||||||||
Terminaling revenues | $ | 201,667 | $ | 167,303 | $ | 34,364 | ||||||
Terminaling throughput (BPD) | 3,479,487 | 2,793,654 | 685,833 | |||||||||
Average terminaling revenue per barrel (b) | $ | 0.32 | $ | 0.33 | $ | (0.01 | ) | |||||
Storage and other revenues | $ | 3,227 | $ | 1,024 | $ | 2,203 | ||||||
Total revenues – related party | $ | 266,569 | $ | 216,361 | $ | 50,208 | ||||||
Capital expenditures: | ||||||||||||
Maintenance | $ | 4,925 | $ | 3,373 | $ | 1,552 | ||||||
Expansion | 8,158 | 11,867 | (3,709 | ) | ||||||||
Total capital expenditures | $ | 13,083 | $ | 15,240 | $ | (2,157 | ) | |||||
Other financial information: | ||||||||||||
Distribution declared per unit | $ | 1.0785 | $ | 0.8825 | ||||||||
Distribution declared: | ||||||||||||
Limited partner units – public | $ | 24,259 | $ | 19,841 | ||||||||
Limited partner units – Valero | 50,440 | 40,319 | ||||||||||
General partner units – Valero | 34,208 | 19,994 | ||||||||||
Total distribution declared | $ | 108,907 | $ | 80,154 |
(a) | Represents the sum of volumes transported through each separately tariffed pipeline segment divided by the number of days in the period. |
(b) | Average revenue per barrel is calculated as revenue divided by throughput for the period. Throughput is derived by multiplying the throughput barrels per day by the number of days in the period. |
• | Revenues from a terminal and pipeline system acquired from Valero in November 2017. We generated revenues of $31.2 million and $12.6 million in the first six months of 2018 from the operations of our Port Arthur terminal and Parkway pipeline, respectively. The volumes handled at and transported through these assets were the primary contributors to the increase in our overall terminaling and pipeline transportation throughput in the first six months of 2018 compared to the first six months of 2017. Average pipeline transportation revenue per barrel was higher in the first six months of 2018 compared to the first six months of 2017 due primarily to higher revenue per barrel generated by our Parkway pipeline compared to the average revenue per barrel generated by our other pipelines. Average terminaling revenue per barrel was lower in the first six months of 2018 compared to the first six months of 2017 due primarily to lower revenue per barrel generated by our Port Arthur terminal compared to the average revenue per barrel generated by our other terminals. |
• | Incremental revenues from our DGD rail loading facility and storage tank placed in service in May 2017 and April 2018, respectively. Our DGD rail loading facility and new storage tank generated combined incremental revenues of $2.2 million in the first six months of 2018 compared to the first six months of 2017. |
• | Incremental throughput at our Red River crude system acquired in January 2017. We generated incremental revenues of $2.9 million due to higher throughput at our Red River crude system in the first six months of 2018 compared to the first six months of 2017. |
• | Incremental borrowings in connection with acquisitions. In connection with the acquisitions of the Port Arthur terminal and Parkway pipeline in November 2017, we borrowed $380.0 million under the Revolver. Interest expense on the incremental borrowings was $6.3 million in the first six months of 2018. |
• | Incremental interest expense on the 4.5 percent Senior Notes. In March 2018, we issued $500.0 million of 4.5 percent Senior Notes. We used the gross proceeds of $498.3 million to repay the outstanding balance of $410.0 million under the Revolver and $85.0 million on a portion of the |
• | Higher interest rates in 2018. Borrowings under the Revolver and the Loan Agreements with Valero bear interest at variable rates. We incurred additional interest of $1.4 million in the first six months of 2018 on these borrowings due to higher interest rates in 2018 compared to 2017. |
Facility Amount | Borrowings | Availability | ||||||||||
Revolver | $ | 750,000 | $ | — | $ | 750,000 | ||||||
Cash and cash equivalents | N/A | N/A | 100,094 | |||||||||
Total liquidity | $ | 850,094 |
Six Months Ended June 30, | |||||||||
2018 | 2017 | ||||||||
Cash flows provided by (used in): | |||||||||
Operating activities | $ | 175,157 | $ | 140,982 | |||||
Investing activities | (13,075 | ) | (87,025 | ) | |||||
Financing activities | (104,040 | ) | (37,471 | ) | |||||
Net increase (decrease) in cash and cash equivalents | $ | 58,042 | $ | 16,486 |
• | an increase in accrued interest payable of $4.1 million due primarily to interest expense incurred on our 4.5 percent Senior Notes, which is paid semi-annually on March 15 and September 15; |
• | an increase in accounts payable – related party of $3.7 million attributable primarily to the timing of invoices from Valero for services provided by Valero to our general partner under our services and secondment agreement; partially offset by |
• | a decrease in accounts payable of $2.8 million attributable primarily to liabilities assumed in connection with our acquisition of the Parkway pipeline in November 2017. |
• | make debt repayments of $495.0 million, of which $410.0 million and $85.0 million related to the Revolver and one of the Loan Agreements, respectively; |
• | pay $102.9 million in cash distributions to limited partners and our general partner; |
• | fund $13.1 million in capital expenditures; and |
• | pay $4.5 million in debt issuance costs. |
• | a decrease in accrued liabilities – related party of $3.2 million due primarily to Valero’s use of deficiency payments that it had paid to us in previous periods associated with its minimum volume commitments to us; partially offset by |
• | a decrease in accounts receivable – related party of $1.5 million due primarily to lower billings related to our Three Rivers terminal, which experienced lower volumes in the period as a result of planned maintenance at Valero’s Three Rivers Refinery; |
• | an increase in accrued interest payable – related party of $739,000 due primarily to higher interest rates in 2017 on our Loan Agreements with Valero, which bear interest at variable rates; and |
• | an increase in accounts payable of $738,000 due primarily to timing of project expenditures. |
• | pay $72.9 million in cash distributions to limited partners and our general partner; |
• | fund the $71.8 million acquisition of the Red River crude system; |
• | fund $15.2 million in capital expenditures; and |
• | pay $1.0 million in debt issuance and offering costs. |
Six Months Ended June 30, | |||||||||
2018 | 2017 | ||||||||
Maintenance | $ | 4,925 | $ | 3,373 | |||||
Expansion (a) | 8,158 | 11,867 | |||||||
Total capital expenditures | $ | 13,083 | $ | 15,240 | |||||
(a) This table excludes amounts paid for our acquisitions. See Note 2 of Condensed Notes to Consolidated Financial Statements for further discussion of our acquisitions. |
• | the construction of a new tank at our Meraux terminal; |
• | the construction of a new tank at the St. Charles terminal to be used by DGD; |
• | the construction of a new tank and improvement of assets at our Port Arthur products system; and |
• | the upgrade of certain pipelines at our Collierville crude system that will enhance the flexibility of crude oil receipts and shipments. |
• | the construction of the DGD rail loading facility and a new tank at the St. Charles terminal; and |
• | the construction of a new tank at our Port Arthur products system. |
June 30, 2018 | |||||||||||||||||||||||||||||||||
Expected Maturity Dates | |||||||||||||||||||||||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | There- after | Total (a) | Fair Value | ||||||||||||||||||||||||||
Fixed rate | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,000,000 | $ | 1,000,000 | $ | 986,930 | |||||||||||||||||
Average interest rate | — | % | — | % | — | % | — | % | — | % | 4.44 | % | 4.44 | % | |||||||||||||||||||
Variable rate | $ | — | $ | — | $ | 285,000 | $ | — | $ | — | $ | — | $ | 285,000 | $ | 285,000 | |||||||||||||||||
Average interest rate | — | % | — | % | 3.48 | % | — | % | — | % | — | % | 3.48 | % |
December 31, 2017 | |||||||||||||||||||||||||||||||||
Expected Maturity Dates | |||||||||||||||||||||||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | There- after | Total (a) | Fair Value | ||||||||||||||||||||||||||
Fixed rate | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 500,000 | $ | 500,000 | $ | 523,800 | |||||||||||||||||
Average interest rate | — | % | — | % | — | % | — | % | — | % | 4.38 | % | 4.38 | % | |||||||||||||||||||
Variable rate | $ | — | $ | — | $ | 780,000 | $ | — | $ | — | $ | — | $ | 780,000 | $ | 780,000 | |||||||||||||||||
Average interest rate | — | % | — | % | 2.87 | % | — | % | — | % | — | % | 2.87 | % | |||||||||||||||||||
(a) Excludes unamortized discount and deferred issuance costs. |
(a) | Evaluation of disclosure controls and procedures |
(b) | Changes in internal control over financial reporting |
Exhibit No. | Description | |
***101 | Interactive Data Files |
* | Filed herewith. |
** | Furnished herewith. |
*** | Submitted electronically herewith. |
VALERO ENERGY PARTNERS LP | ||
(Registrant) | ||
By: | Valero Energy Partners GP LLC | |
its general partner | ||
By: | /s/ Donna M. Titzman | |
Donna M. Titzman | ||
Executive Vice President and | ||
Chief Financial Officer | ||
(Duly Authorized Officer and Principal | ||
Financial and Accounting Officer) |
/s/ Joseph W. Gorder | ||
Joseph W. Gorder | ||
Chief Executive Officer, Valero Energy Partners GP LLC | ||
(the general partner of Valero Energy Partners LP) |
/s/ Donna M. Titzman | ||
Donna M. Titzman | ||
Executive Vice President and Chief Financial Officer, Valero Energy Partners GP LLC | ||
(the general partner of Valero Energy Partners LP) |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Joseph W. Gorder | ||
Joseph W. Gorder | ||
Chief Executive Officer | ||
Valero Energy Partners GP LLC | ||
(the general partner of Valero Energy Partners LP) | ||
August 3, 2018 |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Donna M. Titzman | ||
Donna M. Titzman | ||
Executive Vice President and Chief Financial Officer | ||
Valero Energy Partners GP LLC | ||
(the general partner of Valero Energy Partners LP) | ||
August 3, 2018 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 31, 2018 |
|
Entity Information | ||
Entity Registrant Name | VALERO ENERGY PARTNERS LP | |
Entity Central Index Key | 0001583103 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Limited Partner Common Units [Member] | ||
Entity Information | ||
Entity Common Stock, Units Outstanding | 69,262,070 | |
General Partner Valero [Member] | ||
Entity Information | ||
Entity Common Stock, Units Outstanding | 1,413,511 |
Consolidated Balance Sheets (unaudited) (Parenthetical) - shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Limited Partner [Member] | Common Unitholders Public [Member] | ||
Common unitholders, units outstanding (units) | 22,493,484 | 22,487,586 |
Limited Partner [Member] | Common Unitholder Valero [Member] | ||
Common unitholders, units outstanding (units) | 46,768,586 | 46,768,586 |
General Partner Valero [Member] | ||
General partner – Valero, units outstanding (units) | 1,413,511 | 1,413,391 |
Consolidated Statements of Income (unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
||||||||||
Revenues – related party: | |||||||||||||
Revenues from lease contracts | $ 108,251 | $ 84,657 | $ 213,577 | $ 165,769 | |||||||||
Revenues from contracts with customer | 26,376 | 25,888 | 52,992 | 50,592 | |||||||||
Total revenues – related party | 134,627 | 110,545 | 266,569 | 216,361 | |||||||||
Costs and expenses: | |||||||||||||
Cost of revenues from lease contracts (excluding depreciation expense reflected below) | [1] | 26,596 | 20,848 | 51,114 | 39,368 | ||||||||
Depreciation expense associated with lease contracts | 15,849 | 9,450 | 31,438 | 18,480 | |||||||||
General and administrative expenses | [2] | 4,158 | 3,863 | 8,270 | 7,693 | ||||||||
Total costs and expenses | 56,377 | 43,423 | 110,330 | 82,573 | |||||||||
Operating income | 78,250 | 67,122 | 156,239 | 133,788 | |||||||||
Other income, net | 411 | 182 | 793 | 246 | |||||||||
Interest and debt expense, net of capitalized interest | [3] | (14,271) | (8,551) | (26,179) | (16,840) | ||||||||
Income before income tax expense | 64,390 | 58,753 | 130,853 | 117,194 | |||||||||
Income tax expense | 371 | 310 | 755 | 614 | |||||||||
Net income | 64,019 | 58,443 | 130,098 | 116,580 | |||||||||
Less: General partner’s interest in net income | 18,077 | 11,419 | 34,632 | 20,886 | |||||||||
Limited partners’ interest in net income | $ 45,942 | $ 47,024 | $ 95,466 | $ 95,694 | |||||||||
Net income per limited partner common unit – basic and diluted: | |||||||||||||
Net income per limited partner common unit – basic and diluted (dollars per unit) | $ 0.66 | $ 0.69 | $ 1.38 | $ 1.41 | |||||||||
Weighted-average limited partner common units outstanding – basic and diluted: | |||||||||||||
Weighted-average limited partner common units outstanding – basic and diluted (units) | 69,251 | 68,157 | 69,250 | 67,912 | |||||||||
Cash distribution declared per unit (dollars per unit) | $ 0.551 | $ 0.455 | $ 1.0785 | $ 0.8825 | |||||||||
Services [Member] | |||||||||||||
Revenues – related party: | |||||||||||||
Revenues from contracts with customer | $ 26,376 | $ 25,888 | $ 52,992 | $ 50,592 | |||||||||
Costs and expenses: | |||||||||||||
Cost of revenues from contracts with customer (excluding depreciation expense reflected below) | [4] | 6,758 | 6,207 | 13,541 | 11,232 | ||||||||
Depreciation expense associated with contracts with customer | $ 3,016 | $ 3,055 | $ 5,967 | $ 5,800 | |||||||||
|
Consolidated Statements of Income (unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Cost of revenues from lease contracts (excluding depreciation expense) – related party | $ 17,075 | $ 14,369 | $ 35,010 | $ 28,715 |
General and administrative expenses – related party | 3,361 | 3,185 | 6,722 | 6,371 |
Interest and debt expense – related party | 2,464 | 2,343 | 5,310 | 4,450 |
Services [Member] | ||||
Cost of revenues from contracts with customer (excluding depreciation expense) – related party | $ 2,018 | $ 1,767 | $ 4,139 | $ 3,053 |
Consolidated Statements of Partners' Capital (unaudited) - USD ($) $ in Thousands |
Total |
Limited Partner [Member]
Common Unitholders Public [Member]
|
Limited Partner [Member]
Common Unitholder Valero [Member]
|
General Partner Valero [Member] |
---|---|---|---|---|
Beginning balance at Dec. 31, 2016 | $ 55,824 | $ 548,619 | $ (482,197) | $ (10,598) |
Increase (Decrease) in Partners' Capital Roll Forward | ||||
Net income | 116,580 | 31,311 | 64,383 | 20,886 |
Unit issuance | 34,253 | 33,505 | 748 | |
Transfers to (from) partners | (16,097) | 19,816 | (3,719) | |
Noncash capital contributions from Valero Energy Corporation | 19,276 | 18,890 | 386 | |
Cash distributions to unitholders and distribution equivalent right payments | (72,938) | (18,482) | (38,102) | (16,354) |
Unit-based compensation | 146 | 146 | ||
Ending balance at Jun. 30, 2017 | 153,141 | 579,002 | (417,210) | (8,651) |
Beginning balance at Dec. 31, 2017 | 205,797 | 596,047 | (382,652) | (7,598) |
Increase (Decrease) in Partners' Capital Roll Forward | ||||
Net income | 130,098 | 30,992 | 64,474 | 34,632 |
Unit issuance | 5 | 0 | 5 | |
Transfers to (from) partners | 3,730 | (2,396) | (1,334) | |
Noncash capital contributions from Valero Energy Corporation | 22,317 | 21,872 | 445 | |
Cash distributions to unitholders and distribution equivalent right payments | (102,881) | (23,281) | (48,406) | (31,194) |
Unit-based compensation | 123 | 123 | ||
Other | (67) | (66) | (1) | |
Ending balance at Jun. 30, 2018 | $ 255,392 | $ 607,611 | $ (347,174) | $ (5,045) |
Description of Business, Basis of Presentation, and Significant Accounting Policies |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2018 | |||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES |
Description of Business As used in this report, the terms “Partnership,” “we,” “our,” or “us” refer to Valero Energy Partners LP, one or more of its subsidiaries, or all of them taken as a whole. Our “general partner” refers to Valero Energy Partners GP LLC, an indirect wholly owned subsidiary of Valero Energy Corporation, and “Valero” refers collectively to Valero Energy Corporation and its subsidiaries, other than Valero Energy Partners LP, any of its subsidiaries, or its general partner. We are a master limited partnership formed by Valero in July 2013 to own, operate, develop, and acquire crude oil and refined petroleum products pipelines, terminals, and other logistics assets. Our assets consist of crude oil and refined petroleum products pipeline and terminal systems in the United States (U.S.) Gulf Coast and U.S. Mid-Continent regions that are integral to the operations of ten of Valero’s refineries. We generate revenues from fee-based transportation and terminaling activities. Basis of Presentation General These unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The balance sheet as of December 31, 2017 has been derived from our audited financial statements as of that date. For further information, refer to our financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2017. Acquisitions from Valero The acquisitions of the Parkway pipeline and the Port Arthur terminal (both defined in Note 2) from Valero on November 1, 2017 were accounted for as transfers of assets between entities under the common control of Valero. Accordingly, we recorded these asset acquisitions on our balance sheet at Valero’s carrying value as of the acquisition date, and our prior period financial statements and financial information were not retrospectively adjusted for these acquisitions. Reclassifications In connection with our adoption of Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers,” (Topic 606) on January 1, 2018, which is more fully described below, we have separately reflected (i) revenues from lease contracts and (ii) revenues from contracts with our customer. Because of this presentation of our revenues, we have also separately reflected cost of revenues and depreciation expense associated with lease contracts and contracts with our customer and have reclassified prior period amounts to conform to the 2018 presentation. In addition, certain amounts reported for the six months ended June 30, 2017 and as of December 31, 2017 have been reclassified to conform to the 2018 presentation. Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. Revenue Recognition We adopted the provisions of Topic 606 on January 1, 2018, as described below in “Accounting Pronouncements Adopted on January 1, 2018.” Accordingly, our revenue recognition accounting policy has been revised to reflect the adoption of this standard. General We generate revenues from fee-based transportation and terminaling activities to transport and store crude oil and refined petroleum products using our pipelines and terminals under commercial agreements with Valero. Certain schedules under these agreements are classified as operating leases under existing lease accounting standards, with such revenues reflected as revenues from lease contracts on our statements of income. The remaining schedules under these agreements are service arrangements accounted for as revenues from contracts with our customer, and are reflected as revenues from contracts with customer on our statements of income. Revenue from Lease Contracts Lease revenues are recognized on a straight-line basis over the lease term. Contingent lease revenues are recognized for volumes in excess of minimum throughput commitments. Revenue from Contracts with Customer At contract inception, we assess the services promised in our contracts and identify a performance obligation for each promise to transfer to our customer a service (or bundle of services) that is distinct. Revenue from contracts with our customer is recognized over time at the amount of consideration we expect to receive as our performance obligation is satisfied. Our service primarily includes the delivery of crude oil and refined petroleum products that are ratably lifted by or delivered to our customer for its future use or future sale to its end customers. Under our transportation service agreements, the service provided is the delivery of crude oil and refined petroleum products to various points in our pipeline system. Although the products are delivered on a batch basis, we deliver a series of similar goods consecutively over time, therefore, the service is treated as a single performance obligation. Under our terminaling service agreement, the services provided for each terminal are the receipt, storage, and delivery of crude oil and refined petroleum products. These services are treated as a single performance obligation as we perform the service with the same pattern of transfer to our customer over time for which progress towards satisfying the performance obligation can be measured uniformly. The above performance obligations under the transportation service agreements and the terminaling service agreement are satisfied over time because (i) our customer simultaneously receives and consumes the benefits provided by our performance and (ii) another entity would not need to substantially reperform the work that we have completed to date. Our transaction price is based on a contractual rate, which may vary depending on volumes transported on a quarterly basis within each quarterly period. Some schedules contain a quarterly tier-pricing structure, whereby one rate is charged for volumes up to a certain number of average barrels per day and a reduced rate is charged for excess average barrels per day. For schedules that include such variable consideration, we estimate the factors driving the variable consideration to determine the transaction price. Our schedule with our customer states the final terms of the sale, including the description, quantity, and price of each service delivered. We invoice our customer the contractual rate based on the greater of throughput volumes or minimum throughput commitments. Payment is typically due in full within 10 days of receipt of billing, which occurs monthly. In the normal course of business, we do not have obligations for returns or refunds. Accounting Pronouncements Adopted on January 1, 2018 Topic 606 Effective January 1, 2018, we adopted the provisions of Topic 606, which clarifies the principles for recognizing revenue and supersedes previous revenue recognition requirements under “Revenue Recognition (Topic 605),” using the modified retrospective method of adoption as permitted by the standard. Under this method, the cumulative effect of initially applying the standard is recognized as an adjustment to the opening balance of partners’ capital, and revenues reported in the periods prior to the date of adoption are not changed. We elected to apply the transition guidance for Topic 606 to individual contracts with our customer that were not completed as of the date of adoption. There was no material impact to our financial position as a result of adopting Topic 606; therefore, there was no cumulative-effect adjustment to partners’ capital as of January 1, 2018. Additionally, there was no material impact to our financial position or results of operations as of and for the three and six months ended June 30, 2018. See “Revenue Recognition” above for a discussion of our accounting policy affected by our adoption of Topic 606. Also see Note 5 for further information on our revenues. We implemented new processes in order to monitor ongoing compliance with accounting and disclosure requirements. ASU No. 2016-01 In January 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10),” (ASU No. 2016-01) to enhance the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. Effective January 1, 2018, we adopted the provisions of ASU No. 2016-01 using the cumulative-effect method of adoption as required by the ASU. The adoption of this ASU did not affect our financial position or our results of operations as of or for the three and six months ended June 30, 2018, but it resulted in reduced disclosures as it eliminated the requirement to disclose the methods and significant assumptions used to estimate the fair value of financial instruments. Accounting Pronouncement Not Yet Adopted Topic 842 In February 2016, the FASB issued “Leases (Topic 842)” (Topic 842) to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This new standard is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within those annual periods, with early adoption permitted. We will adopt this new standard on January 1, 2019, and we expect to use the optional transition method, which allows us to recognize a cumulative-effect adjustment to the opening balance of partners’ capital at the date of adoption. We are enhancing our contracting and lease evaluation systems and related processes, and we are developing a new lease accounting system to capture our leases and support the required disclosures. During the remainder of 2018, we will continue to monitor the adoption process to ensure compliance with accounting and disclosure requirements. We also continue the integration of our lease accounting system with our general ledger, and we will make modifications to the related procurement and payment processes. We anticipate this standard will have a material impact on our financial position by increasing our assets and liabilities by equal amounts through the recognition of right-of-use assets and lease liabilities for our operating leases. However, we do not expect adoption to have a material impact on our results of operations or liquidity. |
Acquisitions |
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Business Combinations [Abstract] | |||||
ACQUISITIONS |
In connection with the following acquisitions, we entered into various agreements with Valero, including additional schedules to our commercial agreements, an omnibus agreement, a services and secondment agreement, and lease agreements for the use of land on which our assets are located. Red River Crude System On January 18, 2017, we acquired a 40 percent undivided interest in (i) the Hewitt segment of Plains All American Pipeline, L.P.’s (Plains) Red River pipeline (the Hewitt segment), (ii) two 150,000 shell barrel capacity tanks located at Hewitt Station in Hewitt, Oklahoma (the Hewitt Storage Tanks), and (iii) a pipeline connection from Hewitt Station to Wasson Station (the Wasson Interconnect) (collectively, the Red River crude system) for total cash consideration of $71.8 million, which we funded with our cash on hand. This acquisition was accounted for as an acquisition of assets. The Hewitt segment consists of an approximately 138-mile, 16-inch crude oil pipeline with 150,000 barrels per day of throughput capacity that originates at Plains Marketing L.P.’s Cushing, Oklahoma terminal and ends at Hewitt Station. The pipeline supports Valero’s Ardmore Refinery and began supplying crude oil to Valero in January 2017. We retain a right to participate in any future expansions of the pipeline. We also entered into a Joint Ownership Agreement (JOA) and an Operating and Administrative Services Agreement with Plains concurrent with this acquisition. The JOA provides us with access to the remaining 60 percent of the capacity of the Hewitt Storage Tanks and the Wasson Interconnect and continues until terminated by mutual agreement. This access arrangement is accounted for as an operating lease. The administrative agreement facilitates the day-to-day operations and management functions of the pipeline for an initial five-year term and automatically renews for successive five-year terms. Parkway Pipeline On November 1, 2017, we acquired Parkway Pipeline LLC, a subsidiary of Valero, that owns and operates an approximately 140-mile, 16-inch refined petroleum products pipeline (Parkway pipeline) with 110,000 barrels per day of capacity that transports refined petroleum products from Valero’s St. Charles Refinery, located in Norco, Louisiana, to Collins, Mississippi for supply into the Plantation and Colonial pipeline systems. We paid to Valero cash consideration of $200.0 million. We funded the cash distribution with $82.0 million of our cash on hand and $118.0 million of borrowings under the Revolver (defined in Note 4). This acquisition was accounted for as a transfer of assets between entities under the common control of Valero. Port Arthur Terminal On November 1, 2017, we acquired Valero Partners Port Arthur, LLC, a subsidiary of Valero that owns certain terminaling assets (Port Arthur terminal) that support Valero’s Port Arthur Refinery for total consideration of $308.0 million, which consisted of (i) a cash distribution of $262.0 million and (ii) the issuance of 1,081,315 common units and 22,068 general partner units to Valero having an aggregate value of $46.0 million. We funded the cash distribution with $262.0 million of borrowings under the Revolver. This acquisition was accounted for as a transfer of assets between entities under the common control of Valero. |
Related-Party Transactions |
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Related Party Transactions [Abstract] | |||||
RELATED-PARTY TRANSACTIONS |
Summary of Transactions Related-Party Agreements Effective March 31, 2017, we entered into a commercial agreement with Diamond Green Diesel Holdings LLC (DGD), a joint venture consolidated by Valero, to construct and operate a rail loading facility located at Valero’s St. Charles Refinery for the purpose of loading DGD’s renewable diesel onto railcars. The construction of the rail loading facility was completed in April 2017, and we began providing services to DGD in May 2017. In addition, we constructed a new 180,000 barrel storage tank and began leasing to DGD in April 2018. This commercial agreement, which includes both the rail loading facility and the storage tank, has an initial term that ends on June 30, 2033, and contains minimum commitments for DGD’s use of the assets. Revenues – Related Party Revenues – related party include revenues from lease contracts and revenues from contracts with our customer, as further described in Note 5. Related-Party Expenses The related-party expenses include costs of revenues, expenses, or financing activities provided to us by Valero and are reflected in the supplemental information disclosure on our statements of income. Concentration Risk All of our related-party balances resulted from transactions with Valero. Therefore, we are subject to the business risks associated with Valero’s business. |
Debt and Notes Payable - Related Party |
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DEBT AND NOTES PAYABLE - RELATED PARTY |
Debt Debt, at stated values consisted of the following (in thousands):
Revolver We have a $750.0 million senior unsecured revolving credit facility agreement (the Revolver) that matures in November 2020. We have the option to increase the aggregate commitments under the Revolver to $1.0 billion, subject to certain restrictions. The Revolver also provides for the issuance of letters of credit of up to $100.0 million. Borrowings under the Revolver bear interest at a variable rate. On March 29, 2018, we repaid the outstanding balance of $410.0 million on the Revolver as discussed below. There was no activity related to the Revolver during the six months ended June 30, 2017. Senior Notes On March 29, 2018, we issued in a public offering $500.0 million aggregate principal amount of 4.5 percent Senior Notes due March 15, 2028 (4.5 percent Senior Notes). Gross proceeds from this debt issuance totaled $498.3 million before deducting the underwriting discount and other debt issuance costs totaling $4.5 million. We used the proceeds to repay the outstanding balance of $410.0 million under the Revolver and a portion of the outstanding balance under one of our Loan Agreements (defined below) with Valero. The 4.5 percent Senior Notes are unsecured and contain various customary restrictive covenants that, among other things, limit our ability to create or permit to exist liens, or to enter into any sale and leaseback transactions, with respect to principal properties, and limit our ability to merge or consolidate with any other entity or transfer or dispose of all or substantially all of our assets. These covenants will be subject to a number of important qualifications and limitations. The 4.5 percent Senior Notes are not currently guaranteed by any of our subsidiaries. If in the future any of our subsidiaries becomes a borrower or guarantor under, or grants any lien to secure any obligations pursuant to, the Revolver, then we will cause such subsidiary to guarantee the 4.5 percent Senior Notes. Interest is payable semi-annually on March 15 and September 15, commencing on September 15, 2018. Notes Payable – Related Party We have two subordinated credit agreements with Valero (the Loan Agreements). Borrowings on the Loan Agreements bear interest at a variable rate, which was 3.48246 percent and 2.86069 percent as of June 30, 2018 and December 31, 2017, respectively. On March 29, 2018, we paid down $85.0 million under one of the Loan Agreements. There was no activity under the Loan Agreements for the six months ended June 30, 2017. The outstanding balance of these Loan Agreements was $285.0 million and $370.0 million as of June 30, 2018 and December 31, 2017, respectively. Other Disclosures Interest and debt expense, net of capitalized interest was as follows (in thousands):
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Revenues |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUES |
Disaggregation of Revenues Revenues – related party disaggregated by activity type were as follows (in thousands):
Operating Leases – Lessor As described in Note 1, certain schedules under our commercial agreements with Valero are considered operating leases under U.S. GAAP. These agreements contain minimum throughput commitments and escalation clauses to adjust transportation tariffs and terminaling and storage fees to reflect changes in price indices. Revenues from lease contracts are reflected separately on our statements of income. The components of our revenues from lease contracts were as follows (in thousands):
Receivables from Contracts with Customer Our receivables from contracts with our customer are included in receivables – related party. These balances were $8.4 million and $8.3 million as of June 30, 2018 and January 1, 2018, respectively. Future Minimum Rentals and Remaining Performance Obligations As of June 30, 2018, future minimum rentals to be received for operating leases (described above) having initial or remaining noncancelable lease terms in excess of one year are shown below under “Lease Contracts,” and future revenues expected to be recognized from our remaining performance obligations from contracts with our customer with an original expected duration of greater than one year are shown below under “Contracts with Customer” (in thousands):
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Cash Distributions |
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Partners' Capital [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CASH DISTRIBUTIONS |
Our partnership agreement prescribes the amount and priority of cash distributions that our limited partners and general partner will receive. Our distributions are declared subsequent to quarter end. The table below summarizes information related to our quarterly cash distributions that have been declared since January 1, 2017:
The following table reflects the allocation of total cash distributions to the general and limited partners and distribution equivalent right (DER) payments applicable to the period in which the distributions and DERs were earned (in thousands):
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Net Income Per Limited Partner Unit |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME PER LIMITED PARTNER UNIT |
We calculate net income available to limited partners based on the distributions pertaining to each period’s net income. After considering the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, limited partners, and other participating securities in accordance with the contractual terms of our partnership agreement and as prescribed under the two-class method. Participating securities include IDRs and awards under our Valero Energy Partners LP 2013 Incentive Compensation Plan that receive DERs. However, the terms of our partnership agreement limit the general partner’s incentive distribution to the amount of available cash, which, as defined in our partnership agreement, is net of reserves deemed appropriate. As such, IDRs are not allocated undistributed earnings or distributions in excess of earnings in the calculation of net income per limited partner unit. Basic net income per limited partner unit is determined pursuant to the two-class method for master limited partnerships. The two-class method is an earnings allocation formula that is used to determine earnings to our general partner, common unitholders, and participating securities according to (i) distributions pertaining to each period’s net income and (ii) participation rights in undistributed earnings. Diluted net income per limited partner unit is also determined using the two-class method, unless the treasury stock method is more dilutive. For the three and six months ended June 30, 2018 and 2017, we used the two-class method to determine diluted net income per limited partner unit. We did not have any potentially dilutive instruments outstanding during the three and six months ended June 30, 2018 and 2017. Net income per unit was computed as follows (in thousands, except per unit amounts):
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Partners' Capital |
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Partners' Capital Notes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PARTNERS' CAPITAL |
Unit Activity Activity in the number of units was as follows:
ATM Program On September 16, 2016, we entered into an equity distribution agreement pursuant to which we may offer and sell from time to time our common units having an aggregate offering price of up to $350.0 million based on amounts, at prices, and on terms to be determined by market conditions and other factors at the time of our offerings (such continuous offering program, or at-the-market program, referred to as our “ATM Program”). As of June 30, 2018, we have sold common units having an aggregate value of $45.5 million under our ATM Program, resulting in $304.5 million remaining available. There were no issuances of common units under our ATM Program for the six months ended June 30, 2018. The table below summarizes activities of the common units issued under our ATM Program and general partner units issued to maintain the 2.0 percent general partner interest in the Partnership for the six months ended June 30, 2017 (in thousands, except unit amounts):
Transfers to (from) Partners Subsequent to the expiration of the subordination period on August 10, 2016, all of our common units have equal rights, including rights to distributions and to our net assets in the event of liquidation. As a result, a reallocation of the carrying values of our public common unitholders’ interest in us and Valero’s common unitholder interest in us is required when a change in ownership occurs in order for the portion of those carrying values associated with activity subsequent to the subordination period to be equal to the respective unitholders’ ownership interests (in units) in us. |
Supplemental Cash Flow Information |
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Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION |
In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in thousands):
Cash flows related to interest and income taxes paid were as follows (in thousands):
Noncash investing and financing activities that affected recognized assets or liabilities were as follows (in thousands):
In addition to the activities in the preceding table, noncash financing activities for the six months ended June 30, 2018 and 2017 included the transfers to (from) partners to reflect the impact of ownership changes occurring as a result of the grant of restricted units made to each of our three independent directors and the issuance of equity under our ATM Program, respectively, as described in Note 8. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS |
Financial instruments that we recognize in our balance sheets at their carrying amounts are shown in the table below along with their associated fair values (in thousands):
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Description of Business, Basis of Presentation, and Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation General These unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The balance sheet as of December 31, 2017 has been derived from our audited financial statements as of that date. For further information, refer to our financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2017. Acquisitions from Valero The acquisitions of the Parkway pipeline and the Port Arthur terminal (both defined in Note 2) from Valero on November 1, 2017 were accounted for as transfers of assets between entities under the common control of Valero. Accordingly, we recorded these asset acquisitions on our balance sheet at Valero’s carrying value as of the acquisition date, and our prior period financial statements and financial information were not retrospectively adjusted for these acquisitions. |
Reclassifications | Reclassifications In connection with our adoption of Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers,” (Topic 606) on January 1, 2018, which is more fully described below, we have separately reflected (i) revenues from lease contracts and (ii) revenues from contracts with our customer. Because of this presentation of our revenues, we have also separately reflected cost of revenues and depreciation expense associated with lease contracts and contracts with our customer and have reclassified prior period amounts to conform to the 2018 presentation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates. |
Revenue Recognition | Revenue Recognition We adopted the provisions of Topic 606 on January 1, 2018, as described below in “Accounting Pronouncements Adopted on January 1, 2018.” Accordingly, our revenue recognition accounting policy has been revised to reflect the adoption of this standard. General We generate revenues from fee-based transportation and terminaling activities to transport and store crude oil and refined petroleum products using our pipelines and terminals under commercial agreements with Valero. Certain schedules under these agreements are classified as operating leases under existing lease accounting standards, with such revenues reflected as revenues from lease contracts on our statements of income. The remaining schedules under these agreements are service arrangements accounted for as revenues from contracts with our customer, and are reflected as revenues from contracts with customer on our statements of income. Revenue from Lease Contracts Lease revenues are recognized on a straight-line basis over the lease term. Contingent lease revenues are recognized for volumes in excess of minimum throughput commitments. Revenue from Contracts with Customer At contract inception, we assess the services promised in our contracts and identify a performance obligation for each promise to transfer to our customer a service (or bundle of services) that is distinct. Revenue from contracts with our customer is recognized over time at the amount of consideration we expect to receive as our performance obligation is satisfied. Our service primarily includes the delivery of crude oil and refined petroleum products that are ratably lifted by or delivered to our customer for its future use or future sale to its end customers. Under our transportation service agreements, the service provided is the delivery of crude oil and refined petroleum products to various points in our pipeline system. Although the products are delivered on a batch basis, we deliver a series of similar goods consecutively over time, therefore, the service is treated as a single performance obligation. Under our terminaling service agreement, the services provided for each terminal are the receipt, storage, and delivery of crude oil and refined petroleum products. These services are treated as a single performance obligation as we perform the service with the same pattern of transfer to our customer over time for which progress towards satisfying the performance obligation can be measured uniformly. The above performance obligations under the transportation service agreements and the terminaling service agreement are satisfied over time because (i) our customer simultaneously receives and consumes the benefits provided by our performance and (ii) another entity would not need to substantially reperform the work that we have completed to date. Our transaction price is based on a contractual rate, which may vary depending on volumes transported on a quarterly basis within each quarterly period. Some schedules contain a quarterly tier-pricing structure, whereby one rate is charged for volumes up to a certain number of average barrels per day and a reduced rate is charged for excess average barrels per day. For schedules that include such variable consideration, we estimate the factors driving the variable consideration to determine the transaction price. Our schedule with our customer states the final terms of the sale, including the description, quantity, and price of each service delivered. We invoice our customer the contractual rate based on the greater of throughput volumes or minimum throughput commitments. Payment is typically due in full within 10 days of receipt of billing, which occurs monthly. In the normal course of business, we do not have obligations for returns or refunds. |
New Accounting Pronouncements | Accounting Pronouncements Adopted on January 1, 2018 Topic 606 Effective January 1, 2018, we adopted the provisions of Topic 606, which clarifies the principles for recognizing revenue and supersedes previous revenue recognition requirements under “Revenue Recognition (Topic 605),” using the modified retrospective method of adoption as permitted by the standard. Under this method, the cumulative effect of initially applying the standard is recognized as an adjustment to the opening balance of partners’ capital, and revenues reported in the periods prior to the date of adoption are not changed. We elected to apply the transition guidance for Topic 606 to individual contracts with our customer that were not completed as of the date of adoption. There was no material impact to our financial position as a result of adopting Topic 606; therefore, there was no cumulative-effect adjustment to partners’ capital as of January 1, 2018. Additionally, there was no material impact to our financial position or results of operations as of and for the three and six months ended June 30, 2018. See “Revenue Recognition” above for a discussion of our accounting policy affected by our adoption of Topic 606. Also see Note 5 for further information on our revenues. We implemented new processes in order to monitor ongoing compliance with accounting and disclosure requirements. ASU No. 2016-01 In January 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10),” (ASU No. 2016-01) to enhance the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. Effective January 1, 2018, we adopted the provisions of ASU No. 2016-01 using the cumulative-effect method of adoption as required by the ASU. The adoption of this ASU did not affect our financial position or our results of operations as of or for the three and six months ended June 30, 2018, but it resulted in reduced disclosures as it eliminated the requirement to disclose the methods and significant assumptions used to estimate the fair value of financial instruments. Accounting Pronouncement Not Yet Adopted Topic 842 In February 2016, the FASB issued “Leases (Topic 842)” (Topic 842) to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This new standard is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within those annual periods, with early adoption permitted. We will adopt this new standard on January 1, 2019, and we expect to use the optional transition method, which allows us to recognize a cumulative-effect adjustment to the opening balance of partners’ capital at the date of adoption. We are enhancing our contracting and lease evaluation systems and related processes, and we are developing a new lease accounting system to capture our leases and support the required disclosures. During the remainder of 2018, we will continue to monitor the adoption process to ensure compliance with accounting and disclosure requirements. We also continue the integration of our lease accounting system with our general ledger, and we will make modifications to the related procurement and payment processes. We anticipate this standard will have a material impact on our financial position by increasing our assets and liabilities by equal amounts through the recognition of right-of-use assets and lease liabilities for our operating leases. However, we do not expect adoption to have a material impact on our results of operations or liquidity. |
Net income per limited partner unit | We calculate net income available to limited partners based on the distributions pertaining to each period’s net income. After considering the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, limited partners, and other participating securities in accordance with the contractual terms of our partnership agreement and as prescribed under the two-class method. Participating securities include IDRs and awards under our Valero Energy Partners LP 2013 Incentive Compensation Plan that receive DERs. However, the terms of our partnership agreement limit the general partner’s incentive distribution to the amount of available cash, which, as defined in our partnership agreement, is net of reserves deemed appropriate. As such, IDRs are not allocated undistributed earnings or distributions in excess of earnings in the calculation of net income per limited partner unit. Basic net income per limited partner unit is determined pursuant to the two-class method for master limited partnerships. The two-class method is an earnings allocation formula that is used to determine earnings to our general partner, common unitholders, and participating securities according to (i) distributions pertaining to each period’s net income and (ii) participation rights in undistributed earnings. Diluted net income per limited partner unit is also determined using the two-class method, unless the treasury stock method is more dilutive. |
Debt and Notes Payable - Related Party (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | Debt, at stated values consisted of the following (in thousands):
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest and debt expense, net of capitalized interest | Interest and debt expense, net of capitalized interest was as follows (in thousands):
|
Revenues (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of revenues | Revenues – related party disaggregated by activity type were as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessor disclosure of operating leases | The components of our revenues from lease contracts were as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future minimum rentals to be received for operating leases | As of June 30, 2018, future minimum rentals to be received for operating leases (described above) having initial or remaining noncancelable lease terms in excess of one year are shown below under “Lease Contracts,” and future revenues expected to be recognized from our remaining performance obligations from contracts with our customer with an original expected duration of greater than one year are shown below under “Contracts with Customer” (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Remaining performance obligations from contracts with customer | As of June 30, 2018, future minimum rentals to be received for operating leases (described above) having initial or remaining noncancelable lease terms in excess of one year are shown below under “Lease Contracts,” and future revenues expected to be recognized from our remaining performance obligations from contracts with our customer with an original expected duration of greater than one year are shown below under “Contracts with Customer” (in thousands):
|
Cash Distributions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Partners' Capital [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions made to unitholders | The table below summarizes information related to our quarterly cash distributions that have been declared since January 1, 2017:
The following table reflects the allocation of total cash distributions to the general and limited partners and distribution equivalent right (DER) payments applicable to the period in which the distributions and DERs were earned (in thousands):
|
Net Income Per Limited Partner Unit (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of net income per unit | Net income per unit was computed as follows (in thousands, except per unit amounts):
|
Partners' Capital (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Partners' Capital Notes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in the number of units | Activity in the number of units was as follows:
|
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Schedule of common units issued under ATM Program | The table below summarizes activities of the common units issued under our ATM Program and general partner units issued to maintain the 2.0 percent general partner interest in the Partnership for the six months ended June 30, 2017 (in thousands, except unit amounts):
|
Supplemental Cash Flow Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental cash flow disclosures | In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in thousands):
Cash flows related to interest and income taxes paid were as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental cash flow disclosures, noncash activities | Noncash investing and financing activities that affected recognized assets or liabilities were as follows (in thousands):
|
Fair Value of Financial Instruments (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial instruments recognized on balance sheet at carrying value | Financial instruments that we recognize in our balance sheets at their carrying amounts are shown in the table below along with their associated fair values (in thousands):
|
Description of Business, Basis of Presentation, and Significant Accounting Policies (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
refinery
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Payment typically due, period post receipt of billing | 10 days |
Related Party Transaction [Line Items] | |
Limited partnership formation date | Jul. 24, 2013 |
Majority Shareholder [Member] | |
Related Party Transaction [Line Items] | |
Number of Valero owned refineries | 10 |
Related-Party Transactions (Details) - Commercial Agreements [Member] - bbl bbl in Thousands |
6 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Jun. 30, 2018 |
|
Related Party Transaction [Line Items] | ||
Volume of storage tank (barrels) | 180 | |
Agreement expiration date, initial term | Jun. 30, 2033 |
Debt and Notes Payable - Related Party, Schedule of Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Mar. 29, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Net unamortized discount and debt issuance costs | $ (10,620) | $ (4,717) | |
Debt | 989,380 | 905,283 | |
Line of Credit [Member] | VLP Revolver [Member] | |||
Debt Instrument [Line Items] | |||
Debt, gross | 0 | 410,000 | |
Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Debt | $ 989,380 | 495,283 | |
Senior Notes [Member] | Senior Notes Due December 2026 [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes, stated rate (percent) | 4.375% | ||
Debt, gross | $ 500,000 | 500,000 | |
Senior Notes [Member] | Senior Notes Due March 2028 [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes, stated rate (percent) | 4.50% | 4.50% | |
Debt, gross | $ 500,000 | $ 0 |
Debt and Notes Payable - Related Party, Revolver (Details) - Line of Credit [Member] - USD ($) |
6 Months Ended | |
---|---|---|
Mar. 29, 2018 |
Jun. 30, 2018 |
|
Revolver [Member] | ||
Revolving Credit Facility (Textual) | ||
Line of credit facility, maximum borrowing capacity | $ 750,000,000 | |
Line of credit facility, expiration date | Nov. 20, 2020 | |
Line of credit facility, higher borrowing capacity option | $ 1,000,000,000 | |
Repayments on line of credit | $ 410,000,000 | |
Letter of Credit [Member] | ||
Revolving Credit Facility (Textual) | ||
Line of credit facility, maximum borrowing capacity | $ 100,000,000 |
Debt and Notes Payable - Related Party, Senior Notes (Details) - USD ($) |
6 Months Ended | ||
---|---|---|---|
Mar. 29, 2018 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Debt Instrument [Line Items] | |||
Proceeds from issuance of senior notes | $ 498,300,000 | $ 0 | |
Payment of debt issuance costs | $ 4,464,000 | $ 492,000 | |
Senior Notes [Member] | Senior Notes Due March 2028 [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes, face amount | $ 500,000,000 | ||
Senior notes, stated rate (percent) | 4.50% | 4.50% | |
Senior notes, maturity date | Mar. 15, 2028 | ||
Proceeds from issuance of senior notes | $ 498,300,000 | ||
Payment of debt issuance costs | 4,500,000 | ||
Line of Credit [Member] | Revolver [Member] | |||
Debt Instrument [Line Items] | |||
Repayments on line of credit | $ 410,000,000 |
Debt and Notes Payable - Related Party, Notes Payable - Related Party (Details) - USD ($) $ in Thousands |
Mar. 29, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Subordinated Credit Agreement (Textual) | |||
Notes payable – related party | $ 285,000 | $ 370,000 | |
Subordinated Debt [Member] | Majority Shareholder [Member] | |||
Subordinated Credit Agreement (Textual) | |||
Repayments under loan agreement | $ 85,000 | ||
Notes payable – related party | $ 285,000 | $ 370,000 | |
Subordinated Credit Agreements With Valero [Member] | Subordinated Debt [Member] | Majority Shareholder [Member] | |||
Subordinated Credit Agreement (Textual) | |||
Subordinated credit agreements, rate at period end (percent) | 3.48246% | 2.86069% |
Debt and Notes Payable - Related Party, Other Disclosures (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|||
Debt Disclosure [Abstract] | ||||||
Interest and debt expense incurred | $ 14,349 | $ 8,653 | $ 26,367 | $ 17,045 | ||
Less: Capitalized interest | 78 | 102 | 188 | 205 | ||
Interest and debt expense, net of capitalized interest | [1] | $ 14,271 | $ 8,551 | $ 26,179 | $ 16,840 | |
|
Revenues, Operating Leases - Lessor (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Operating Leases, Lease Revenue | ||||
Minimum lease revenues | $ 90,074 | $ 69,823 | $ 179,198 | $ 138,271 |
Contingent lease revenues | 18,177 | 14,834 | 34,379 | 27,498 |
Revenues from lease contracts | $ 108,251 | $ 84,657 | $ 213,577 | $ 165,769 |
Revenues, Receivables from Contracts with Customer (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Receivables from contracts with customer, included in receivables – related party | $ 45,121 | $ 46,496 | |
Revenue from Contracts with Customer [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Receivables from contracts with customer, included in receivables – related party | $ 8,400 | $ 8,300 |
Partners' Capital, ATM Program's Narrative (Details) - USD ($) |
6 Months Ended | 22 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Sep. 16, 2016 |
|
Partners’ capital: | ||||
Proceeds from common units issued, gross | $ 5,000 | $ 34,253,000 | ||
Majority Shareholder [Member] | ||||
Partners’ capital: | ||||
General partner ownership interest (percent) | 2.00% | |||
Public Offering [Member] | ||||
Partners’ capital: | ||||
Aggregate offering price of common units | $ 350,000,000 | |||
Proceeds from common units issued, gross | $ 45,500,000 | |||
Equity remaining available for issuance | $ 304,500,000 | $ 304,500,000 |
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