10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______________ to _______________

Commission file number 1-36232

VALERO ENERGY PARTNERS LP

(Exact name of registrant as specified in its charter)

Delaware	90-1006559
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

One Valero Way
San Antonio, Texas		78249
(Address of principal executive offices)		(Zip Code)
	Registrant’s telephone number, including area code: (210) 345-2000

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

Smaller reporting company o Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The aggregate market value of the voting and non-voting common units held by non-affiliates was approximately $856.3 million based on the last sales price quoted as of June 29, 2018 on the New York Stock Exchange, the last business day of the registrant’s most recently completed second fiscal quarter.

The registrant had 46,768,586 common units and 1,413,511 general partner units outstanding as of January 31, 2019, all of which were held by wholly owned subsidiaries of Valero Energy Corporation, an affiliate of the registrant.

The registrant meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format pursuant to General Instruction (I)(2) of Form 10-K.

DOCUMENTS INCORPORATED BY REFERENCE

None

CONTENTS

		PAGE
PART I		1
Items 1 & 2.	Business and Properties	1
	Business	1
	Properties	6
Item 1A.	Risk Factors	6
Item 1B.	Unresolved Staff Comments	11
Item 3.	Legal Proceedings	11
Item 4.	Mine Safety Disclosures	11
PART II		12
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
Item 6.	Selected Financial Data	12
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 8.	Financial Statements and Supplementary Data	19
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	56
Item 9A.	Controls and Procedures	56
Item 9B.	Other Information	56
PART III		57
Item 10.	Directors, Executive Officers and Corporate Governance	57
Item 11.	Executive Compensation	57
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	57
Item 13.	Certain Relationships and Related Transactions, and Director Independence	57
Item 14.	Principal Accountant Fees and Services	57
PART IV		58
Item 15.	Exhibits and Financial Statement Schedules	58
Signature		61

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References in this report to “Partnership,” “we,” “our,” “us,” or similar terms refer to Valero Energy Partners LP, one or more of its subsidiaries, or all of them taken as a whole. References to our “general partner” refer to Valero Energy Partners GP LLC, an indirect wholly owned subsidiary of Valero Energy Corporation (VLO). References in this report to “Valero” refer collectively to VLO and its subsidiaries, other than Valero Energy Partners LP, any of its subsidiaries, or its general partner.

PART I

ITEMS 1 & 2. BUSINESS and PROPERTIES

BUSINESS

Overview

Valero Energy Partners LP is a Delaware limited partnership formed in July 2013 by Valero. On December 16, 2013, we completed our initial public offering of common units representing limited partner interests. Until January 10, 2019, our common units were listed on the New York Stock Exchange (NYSE) under the trading symbol “VLP.” Our offices are located at One Valero Way, San Antonio, Texas 78249.

Our website address is www.valeroenergypartners.com. Information on our website is not part of this report. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed with or furnished to the United States (U.S.) Securities and Exchange Commission (SEC) are available, free of charge, on our website (under Investor Relations > Financial Information > SEC Filings), soon after we file or furnish such information.

We were formed to own, operate, develop, and acquire crude oil and refined petroleum products pipelines, terminals, and other logistics assets. 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, which are described below under “—Our Commercial Agreements with Valero” and inNote 4 of Notes to Consolidated Financial Statements.

As of December 31, 2018, our assets consisted of crude oil and refined petroleum products pipeline and terminal systems in the U.S. Gulf Coast and U.S. Mid-Continent regions that are integral to the operations of ten of Valero’s refineries.

Recent Developments

On January 10, 2019, pursuant to that certain Agreement and Plan of Merger, dated as of October 18, 2018 (the Merger Agreement), by and among VLO, Forest Merger Sub, LLC, an indirect wholly owned subsidiary of VLO (Merger Sub), Valero Energy Partners LP, and Valero Energy Partners GP LLC, Merger Sub merged with and into the Partnership (the Merger), with the Partnership surviving and continuing to exist as a Delaware limited partnership.

Under the terms of the Merger Agreement, at the effective time of the Merger (the Effective Time), subject to the terms and conditions set forth in the Merger Agreement, each of the common units representing limited partner interests in the Partnership, other than common units owned by Valero, was converted into the right to receive $42.25 per common unit in cash without any interest thereon, and all such publicly traded common units were automatically canceled and ceased to exist. Upon completion of the Merger, Valero paid aggregate merger consideration of $950.0 million. The Partnership’s incentive distribution rights (IDRs), general partner interest, and common units owned by Valero were unaffected by the Merger and no consideration was delivered in respect thereof.

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On January 10, 2019, in connection with the completion of the Merger, the NYSE filed with the SEC a notification of removal from listing on Form 25 to delist and deregister the common units under Section 12(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act), and suspended trading of the common units on the NYSE prior to the opening of trading on January 10, 2019. On January 22, 2019, the Partnership filed with the SEC a Form 15 suspending the Partnership’s reporting obligations under Section 13 and Section 15(d) of the Exchange Act.

Our Commercial Agreements with Valero

Our commercial agreements with Valero prescribe rates, commitments, and other terms and conditions applicable to our pipelines and terminals. Under these commercial agreements, we provide transportation and terminaling services to Valero, and Valero pays us for minimum quarterly throughput volumes of crude oil and refined petroleum products, regardless of whether such volumes are physically delivered by Valero in any given quarter. These commercial agreements have initial 10-year terms from inception, and, with the exception of certain assets, Valero has the option to renew the agreements for one additional five-year term.

Our Assets and Operations

The following sections describe our assets and the related services that we provide. Our operations are conducted solely in the U.S. See Part II, Item 8., “Financial Statements and Supplementary Data” for financial information about our operations and assets.

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Pipelines

The following table summarizes information with respect to our pipelines:

Pipeline	Diameter (inches)	Length (miles)	Throughput Capacity (thousand barrels per day)	Commodity	Associated Valero Refinery	Significant Third-party System Connections
Ardmore logistics system
Hewitt segment of Red River crude oil pipeline	16	138	60(a)	crude oil	Ardmore	Plains Red River, Plains Cushing
Wynnewood refined products pipeline	12	30	90	refined petroleum products	Ardmore	Magellan Central
McKee logistics system
McKee crude system	multiple segments	145	72	crude oil	McKee	—
McKee products system
McKee to El Paso pipeline	10	408	21(b)	refined petroleum products	McKee	—
SFPP pipeline connection	16, 8	12	33(c)	refined petroleum products	McKee	Kinder Morgan SFPP System
Memphis logistics system(d)
Collierville crude system
Collierville pipeline	10-20	52	210	crude oil	Memphis	Capline; Diamond (e)
Memphis products system
Memphis Airport pipeline system	6	11	20	jet fuel	Memphis	Memphis International Airport
Shorthorn pipeline system	14, 12	9	120	refined petroleum products	Memphis	Exxon Memphis
Port Arthur logistics system
Lucas crude system
Lucas pipeline	30	12	400	crude oil	Port Arthur	Sunoco Logistics Nederland; Enterprise Beaumont; Cameron Highway; TransCanada Cushing MarketLink; Seaway
Nederland pipeline	32	5	600	crude oil	Port Arthur	Sunoco Logistics Nederland
Port Arthur products system
12-10 pipeline	12, 10	13	60	refined petroleum products	Port Arthur	Sunoco Logistics MagTex; Enterprise TE Products, Enterprise Beaumont
20-inch diesel pipeline	20	3	216	diesel	Port Arthur	Explorer; Colonial
20-inch gasoline pipeline	20	4	144	gasoline	Port Arthur	Explorer; Colonial
St.Charles logistics system
Parkway pipeline	16	140	110	refined petroleum products	St.Charles	Plantation; Colonial
Three Rivers logistics system
Three Rivers crude system	12	3	110	crude oil	Three Rivers	Harvest Arrowhead; Plains Gardendale; EOG Eagle Ford West

_______________________

(a) Capacity shown represents our 40 percent undivided interest in the pipeline segment. Total capacity for the pipeline segment is 150,000 barrels per day.

(b) Capacity shown represents our 33⅓ percent undivided interest in the pipeline. Total capacity for the pipeline is 63,000 barrels per day.

(c) Capacity shown represents our 33⅓ percent undivided interest in the pipeline connection. Total capacity for the pipeline connection is 98,400 barrels per day.

(d) Portions of our Memphis logistics system pipelines are owned by MLGW, but they are operated and maintained exclusively by us under long-term arrangements with MLGW.

(e) The Diamond pipeline is owned 50 percent by Valero and 50 percent by Plains All American Pipeline, L.P.

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Terminals

The following table summarizes information with respect to our terminals:

Terminal	Tank Storage Capacity (thousands of barrels)	Throughput Capacity (thousand barrels per day)	Commodity	Associated Valero Refinery	Significant Third-party System Connections
Ardmore logistics system
Hewitt Station tanks	300	—	crude oil	Ardmore	Plains Red River
Wynnewood terminal	180	—	refined petroleum products	Ardmore	Magellan Central
Corpus Christi logistics system
Corpus Christi East terminal	6,241	—	crude oil and refined petroleum products	Corpus Christi East	Eagle Ford Pipeline LLC; NuStar North Beach terminal, Eagle Ford pipelines & South Texas pipeline network
Corpus Christi West terminal	3,835	—	crude oil and refined petroleum products	Corpus Christi West	(same as Corpus Christi East terminal)
Houston logistics system
Houston terminal	3,642	—	crude oil and refined petroleum products	Houston	HFOTCO; Magellan crude; Seaway; Kinder Morgan Pasadena & Galena Park; Magellan East Houston & Galena Park
McKee logistics system
McKee crude system
Various terminals	240	—	crude oil	McKee	—
McKee products system
El Paso terminal	166 (a)	—	refined petroleum products	McKee	Kinder Morgan SFPP System
El Paso terminal truck rack	—	10 (b)	refined petroleum products	McKee	—
McKee terminal	4,400	—	crude oil and refined petroleum products	McKee	NuStar (several); NuStar/Phillips Denver
Memphis logistics system
Collierville crude system
Collierville terminal	975	—	crude oil	Memphis	Capline
St. James crude tank	330	—	crude oil	Memphis	Capline
Memphis products system
Memphis truck rack	8	110	refined petroleum products	Memphis	—
West Memphis terminal	1,080	—	refined petroleum products	Memphis	Exxon Memphis; Enterprise TE Products
West Memphis terminal dock	—	4 (c)	refined petroleum products	Memphis	—
West Memphis terminal truck rack	—	50	refined petroleum products	Memphis	—
Meraux logistics system
Meraux terminal	3,900	—	crude oil and refined petroleum products	Meraux	LOOP; CAM; Plantation; Colonial
____________________________
See footnotes on page 5.

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Terminal	Tank Storage Capacity (thousands of barrels)	Throughput Capacity (thousand barrels per day)	Commodity	Associated Valero Refinery	Significant Third-party System Connections
Port Arthur logistics system
Lucas crude system
Lucas terminal	1,915	—	crude oil	Port Arthur	Sunoco Logistics Nederland; Enterprise Beaumont; Cameron Highway; TransCanada Cushing MarketLink; Seaway
Seaway connection	—	750	crude oil	Port Arthur	Seaway
TransCanada connection	—	400	crude oil	Port Arthur	TransCanada Cushing MarketLink
Port Arthur products system
El Vista terminal	1,210	—	gasoline	Port Arthur	Explorer; Colonial
PAPS terminal	1,144	—	diesel	Port Arthur	Explorer; Colonial
Port Arthur terminal	8,500	—	crude oil and refined petroleum products	Port Arthur	Sunoco Logistics Nederland; Explorer; Colonial; Sunoco Logistics MagTex; Cameron Highway; TransCanada Cushing MarketLink; Enterprise Beaumont
St.Charles logistics system
St. Charles terminal	10,004	—	crude oil and refined petroleum products	St. Charles	LOOP; CAM; Plantation; Colonial
Diamond Green Diesel tank	180		renewable diesel	n/a	n/a
Three Rivers logistics system
Three Rivers terminal	2,250	—	crude oil and refined petroleum products	Three Rivers	NuStar South Texas; Harvest Arrowhead; Plains Gardendale; EOG Eagle Ford West

____________________________

(a) Capacity shown represents our 33⅓ percent undivided interest in the terminal. Total storage capacity is 499,000 barrels.

(b) Capacity shown represents our 33⅓ percent undivided interest in the truck rack. Total capacity is 30,000 barrels per day.

(c) Dock throughput is reflected in thousands of barrels per hour.

Our Relationship with Valero

Valero is an independent petroleum refiner and ethanol producer. Valero’s assets include 15 petroleum refineries located in the U.S., Canada, and the United Kingdom, with a combined total throughput capacity of approximately 3.1 million barrels per day and 14 ethanol plants located in the U.S. Mid-Continent region with a combined production capacity of approximately 1.73 billion gallons per year. Valero also has a substantial portfolio of transportation and logistics assets. For the years ended December 31, 2018, 2017, and 2016, Valero accounted for all of our revenues. Valero owns our general partner, all of our limited partner interests, and all of our IDRs.

Employees

We do not have any employees and our general partner does not have any employees. We are managed by the executive officers of our general partner under the oversight of our board of directors. All of the personnel that conduct our business are employed by Valero, and their services are provided to us pursuant to our omnibus agreement and services and secondment agreement with Valero.

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PROPERTIES

General

Our principal properties are described above under “—Our Assets and Operations,” and those descriptions are incorporated herein by reference. We believe that our properties and facilities are generally adequate for our operations and that our facilities are maintained in a good state of repair. As of December 31, 2018, we were the lessee under a number of cancelable and noncancelable leases for certain properties. Our leases are discussed in Notes 4 and 9 of Notes to Consolidated Financial Statements.

Utilization of Our Facilities

Operating highlights for our pipelines and terminals—including pipeline transportation revenues, pipeline transportation throughput volumes, terminaling revenues, terminaling throughput volumes, and storage revenues—are described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations,” which is incorporated herein by reference.

Item 1A. RISK FACTORS

Risks Related to Our Business

Valero accounts for all of our revenues. Therefore, we are subject to the business risks associated with Valero’s business. Furthermore, if Valero changes its business strategy, is unable for any reason, including financial or other limitations, to satisfy its obligations under our commercial agreements or significantly reduces the volumes transported through our pipelines or terminals, our revenues would decline as well as our financial condition, results of operations, and cash flows.

Valero accounts for all of our revenues. We expect to continue to derive a substantial amount of our revenues from Valero for the foreseeable future, and as a result, any event, whether in our areas of operation or elsewhere, that materially and adversely affects Valero’s business may adversely affect our financial condition, results of operations, and cash flows. Accordingly, we are indirectly subject to the operational and business risks of Valero, the most significant of which include the following:

• disruption of Valero’s ability to obtain crude oil;

• interruptions at Valero’s refineries and other facilities;

• any decision by Valero to temporarily or permanently curtail or shut down operations at one or more of its refineries or other facilities and reduce or terminate its obligations under our commercial agreements;

• competitors that produce their own supply of feedstocks, have more extensive retail outlets, or have greater financial resources may have a competitive advantage over Valero;

• the ability to obtain credit and financing on acceptable terms, which could also adversely affect the financial strength of business partners;

• the costs to comply with environmental laws and regulations;

• significant losses resulting from the hazards and risks of operations may not be fully covered by insurance, and could adversely affect Valero’s operations and financial results;

• large capital projects can take many years to complete, and market conditions could deteriorate significantly between the project approval date and the project startup date, negatively impacting project returns;

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• interruptions of supply and increased costs as a result of Valero’s reliance on third-party transportation of crude oil and refined petroleum products;

• potential losses from Valero’s derivative transactions; and

• the effects of changing commodity and refined product prices.

The volumes of crude oil and refined petroleum products that we transport and terminal depend substantially on Valero’s refining margins. Refining margins are dependent both upon the price of crude oil or other refinery feedstocks and refined petroleum products. These prices are affected by numerous factors beyond our or Valero’s control, including the global supply and demand for crude oil, gasoline and other refined petroleum products, competition from alternative energy sources, and the impact of new and more stringent regulations affecting the energy industry. A material decrease in the refining margins at Valero’s refineries supported by our assets could cause Valero to reduce the volumes we transport and terminal for Valero, which could materially and adversely affect our financial condition and results of operations.

Our and Valero’s operations are subject to many risks and operational hazards. If a significant accident or event occurs that results in a business interruption or shutdown for which we are not adequately insured, our financial condition, results of operations, and cash flows could be materially and adversely affected.

Our operations are subject to all of the risks and operational hazards inherent in transporting, terminaling, and storing crude oil and refined petroleum products, including:

• damages to facilities, equipment, and surrounding properties caused by third parties, severe weather, natural disasters, and acts of terrorism;

• maintenance, repairs, mechanical or structural failures at our or Valero’s facilities or at third-party facilities on which our or Valero’s operations are dependent, including electrical shortages, power disruptions, and power grid failures;

• damages to and loss of availability of interconnecting third-party pipelines, terminals, and other means of delivering crude oil, feedstocks, and refined petroleum products;

• disruption or failure of information technology systems and network infrastructure due to various causes, including unauthorized access or attack;

• curtailments of operations due to severe seasonal weather; and

• riots, work stoppages, slowdowns or strikes, as well as other industrial disturbances.

These risks could result in substantial losses due to personal injury and/or loss of life, severe damage to and destruction of property and equipment, and pollution or other environmental damage, as well as business interruptions or shutdowns of our facilities. Any such event or unplanned shutdown could have a material and adverse effect on our financial condition, results of operations, and cash flows. In addition, Valero’s refining operations supported by our assets, on which our operations are substantially dependent and over which we have no control, are subject to similar operational hazards and risks inherent in refining crude oil.

Our insurance policies do not cover all losses, costs, or liabilities that we may experience, and insurance companies that currently insure companies in the energy industry may cease to do so or substantially increase premiums.

We do not maintain insurance coverage against all potential losses and could suffer losses for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage. We maintain insurance policies for certain property damage, business interruption, and third-party liabilities, which includes pollution

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liabilities, and are subject to policy limits under these policies. The occurrence of an event that is not fully covered by insurance or failure by one or more insurers to honor its coverage commitments for an insured event could have a material and adverse effect on our financial condition, results of operations, and cash flows. Insurance companies may reduce the insurance capacity they are willing to offer or may demand significantly higher premiums or deductibles to cover these facilities. If significant changes in the number or financial solvency of insurance underwriters for the energy industry occur, we may be unable to obtain and maintain adequate insurance at a reasonable cost. We cannot provide assurance that our insurers will renew our insurance coverage on acceptable terms, if at all, or that we will be able to arrange for adequate alternative coverage in the event of non-renewal. The unavailability of full insurance coverage to cover events in which we suffer significant losses could have a material and adverse effect on our financial condition, results of operations, and cash flows.

We do not own all of the land on which our assets are located, which could result in disruptions to our operations.

We do not own all of the land on which our assets are located, and we are, therefore, subject to the possibility of more onerous terms and increased costs to retain necessary land use if we do not have valid leases or rights-of-way or if such rights-of-way lapse or terminate. We obtain the rights to construct and operate our assets on land owned by third parties and governmental agencies, and some of our agreements may grant us those rights for only a specific period of time. Our loss of these rights, through our inability to renew leases, right-of-way contracts or otherwise, could have a material and adverse effect on our financial condition, results of operations, and cash flows.

We are dependent upon third parties to operate some of our assets.

Certain of our assets are operated by third parties. Success in jointly owned assets depends in large part on whether our partners, over whom we may have little or no control, satisfy their contractual obligations. If such third parties fail to operate such assets in accordance with the terms of any applicable operating agreement with them or otherwise fail to meet their contractual obligations, such failures could result in our inability to meet our commitments to our customers, which in turn could result in a reduction in our revenues, or in us becoming liable to our customers for any losses they may sustain by reason of our failure to comply, which losses may not be recoverable by us. Differences in opinions or views between us and our partners can result in delayed decision-making or failure to agree on material issues that could adversely affect the business and operations of such assets. Additionally, the failure by a partner to comply with applicable laws, regulations, or client requirements could negatively impact our business.

Compliance with and changes in environmental and pipeline integrity and safety laws could adversely affect our performance.

The principal environmental risks associated with our operations are emissions into the air and releases into the soil, surface water, or groundwater. Our operations are subject to extensive environmental laws and regulations, including those relating to the discharge and remediation of materials in the environment, greenhouse gas emissions, waste management, species and habitat preservation, pollution prevention, pipeline integrity and other safety-related regulations, and characteristics and composition of fuels. Certain of these laws and regulations could impose obligations to conduct assessment or remediation efforts at our facilities or third-party sites where we take wastes for disposal or where our wastes migrated. Environmental laws and regulations also may impose liability on us for the conduct of third parties or for actions that complied with applicable requirements when taken, regardless of negligence or fault. If we violate or fail to comply with these laws and regulations, it could lead to administrative, civil, or criminal penalties or liability and the imposition of injunctions, operating restrictions, or the loss of permits.

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We may be unable to obtain or renew permits necessary for our operations, which could inhibit our ability to do business.

Our facilities operate under a number of federal and state permits, licenses, and approvals with terms and conditions containing a significant number of prescriptive limits and performance standards in order to operate. These permits, licenses, approval limits, and standards require a significant amount of monitoring, record keeping, and reporting in order to demonstrate compliance with the underlying permit, license, approval limit, or standard. Noncompliance or incomplete documentation of our compliance status may result in the imposition of fines, penalties, and injunctive relief. A decision by a government agency to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material and adverse effect on our ability to continue operations and on our financial condition, results of operations, and cash flows.

Many of our assets have been in service for many years and, as a result, our maintenance or repair costs may increase in the future. In addition, there could be service interruptions due to unknown events or conditions or increased downtime associated with our pipelines that could have a material and adverse effect on our financial condition, results of operations, and cash flows.

Our pipelines and terminals are generally long-lived assets, and many of them have been in service for many years. The age and condition of our assets could result in increased maintenance or repair expenditures in the future. Any significant increase in these expenditures could adversely affect our results of operations, financial position, or cash flows.

The tariff rates of our regulated assets are subject to review and possible adjustment by federal and state regulators, which could adversely affect our revenues.

We own pipeline assets in Texas, New Mexico, Tennessee, Louisiana, Mississippi, Arkansas, and Oklahoma, and we provide both interstate and intrastate transportation services for refined petroleum products and crude oil. Many of our pipelines are common carriers and may be required to provide service to any shipper that requests transportation services on our pipelines.

Many of our pipelines provide interstate transportation services that are subject to regulation by Federal Energy Regulatory Commission (FERC) under the Interstate Commerce Act (ICA). FERC uses prescribed rate methodologies for developing and changing regulated rates for interstate pipelines. Shippers may protest (and FERC may investigate) the lawfulness of existing, new, or changed tariff rates. FERC can suspend new or changed tariff rates for up to seven months and can allow new rates to be implemented subject to refund of amounts collected in excess of the rate ultimately found to be just and reasonable. If FERC finds a rate to be unjust and unreasonable, it may order payment of reparations for up to two years prior to the filing of a complaint or investigation, and FERC may prescribe new rates prospectively. We may also be required to respond to requests for information from government agencies, including compliance audits conducted by the FERC.

State agencies may regulate the rates, terms, and conditions of service for our pipelines offering intrastate transportation services, and such agencies could limit our ability to increase our rates or order us to reduce our rates and pay refunds to shippers. State agencies have generally not been aggressive in regulating common carrier pipelines, have generally not investigated the rates, terms, and conditions of service of intrastate pipelines in the absence of shipper complaints, and generally resolve complaints informally.

Under our commercial agreements, we and Valero have agreed to the base tariff rates for all of our pipelines and a mechanism to modify those rates during the term of the agreements. Valero has also agreed not to

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challenge the base tariff rates or changes to those rates during the term of the agreements, except to the extent such changes are inconsistent with the agreements. These agreements do not, however, prevent any other new or prospective shipper, FERC, or a state agency from challenging our tariff rates or our terms and conditions of service, and due to the complexity of rate making, the lawfulness of any rate is never assured. A successful challenge of any of our rates, or any changes to FERC’s approved rate or index methodologies, could adversely affect our revenues. Similarly, if state agencies in the states in which we offer intrastate transportation services change their policies or aggressively regulate our rates or terms and conditions of service, it could also materially and adversely affect our financial condition, results of operations, and cash flows.

The FERC’s ratemaking policies are subject to change and may impact the rates charged and revenues received on our interstate oil pipelines. The cost of service rates of any interstate liquids pipeline could be affected to the extent the FERC proposes new rates or changes its existing rates or if its rates are subject to complaint or are challenged by the FERC.

In addition, there is not always a clear boundary between interstate and intrastate pipeline transportation services, and such determinations are fact-dependent and made on a case-by-case basis. Our undivided interest in the McKee to El Paso pipeline currently provides transportation services pursuant to an intrastate tariff that is subject to regulation by the Texas Railroad Commission. Because a portion of this pipeline crosses New Mexico and our transportation services may be interstate in nature, we applied for a waiver of the tariff filing and reporting requirements of the ICA for our portion of the pipeline, which the FERC conditionally granted. The FERC’s conditions for granting the waiver include that we maintain all books and records in a manner consistent with the Uniform System of Accounts and that we immediately report any change in the circumstances on which the waiver was granted.

Terrorist or cyber-attacks and threats, or escalation of military activity in response to these attacks, could have a material and adverse effect on our financial condition, results of operations, and cash flows.

Terrorist attacks and threats, cyber-attacks, or escalation of military activity in response to these attacks, may have significant effects on general economic conditions, fluctuations in consumer confidence and spending, and market liquidity, each of which could materially and adversely affect our business. Strategic targets, such as energy-related assets and transportation assets, may be at greater risk of future terrorist or cyber-attacks than other targets in the U.S. We do not maintain specialized insurance for possible liability or loss resulting from a cyber-attack on our assets that may shut down all or part of our business. Instability in the financial markets as a result of terrorism or war could also affect our ability to raise capital including our ability to repay or refinance debt. It is possible that any of these occurrences, or a combination of them, could have a material and adverse effect on our financial condition, results of operations, and cash flows.

A significant interruption related to our information technology systems could adversely affect our business.

Our information technology systems and network infrastructure may be subject to unauthorized access or attack, which could result in a loss of intellectual property, proprietary information or employee, customer or vendor data; public disclosure of sensitive information; increased costs to prevent, respond to or mitigate cybersecurity events; systems interruption; or the disruption of our business operations. A breach could also originate from, or compromise, our customers’ and vendors’ or other third-party networks outside of our control. A breach may also result in legal claims or proceedings against us by our employees, customers and vendors. There can be no assurance that our infrastructure protection technologies and disaster recovery plans can prevent a technology systems breach or systems failure, which could have a material adverse effect on our financial position or results of operations. Furthermore, the continuing and evolving threat of cyber-

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attacks has resulted in increased regulatory focus on prevention. To the extent we face increased regulatory requirements, we may be required to expend significant additional resources to meet such requirements.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 3. LEGAL PROCEEDINGS

We incorporate by reference into this Item our disclosures made in Part II, Item 8 of this report included in Note 9 of Notes to Consolidated Financial Statements under the caption “Litigation Matters.”

Environmental Enforcement Matters

While it is not possible to predict the outcome of the following environmental proceedings, if any one or more of them were decided against us, we believe that there would be no material effect on our financial position, results of operations, or liquidity. We are reporting these proceedings to comply with the SEC regulations, which require us to disclose certain information about proceedings arising under federal, state, or local provisions regulating the discharge of materials into the environment or protecting the environment if we reasonably believe that such proceedings will result in monetary sanctions of $100,000 or more.

Texas Commission on Environmental Quality (TCEQ) and Harris County Pollution Control Services Department (HCPCS) (Houston Terminal). We currently have a Notice of Enforcement from the TCEQ and a Violation Notice from the HCPCS alleging excess emissions from Tank 003 that occurred during Hurricane Harvey. We are working with the relevant governmental authorities to resolve these matters.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Unit Price and Cash Distributions

Our common units were listed on the NYSE under the trading symbol “VLP.” On January 10, 2019, the NYSE filed with the SEC a notification of removal from listing on Form 25 to delist and deregister the common units under Section 12(b) of the Exchange Act, and suspended trading of the common units on the NYSE prior to the opening of trading on January 10, 2019. As of January 31, 2019, there were 2 holders of record of our common units, both of which are wholly owned by Valero, and Valero owned all of our general partner units and IDRs. There is no established trading market for our general partner units or, following the closing of the Merger, our common units. Our common units represent limited partner interests in us that entitle the holders to the rights and privileges specified in our partnership agreement.

Securities Authorized for Issuance Under Equity Compensation Plans

On January 10, 2019, in connection with the completion of the Merger, the Partnership terminated the Valero Energy Partners LP 2013 Incentive Compensation Plan (2013 ICP). As a result of the termination of the 2013 ICP, from and after the Effective Time, no equity awards or other rights with respect to the common units will be granted or be outstanding under the 2013 ICP. On January 10, 2019, the Partnership filed a Post-Effective Amendment No. 1 to Form S-8 Registration Statement for the 2013 ICP (Registration Statement) to remove from registration any of the securities that had been registered for issuance and remained unsold under the Registration Statement.

ITEM 6. SELECTED FINANCIAL DATA

Information for this item has been omitted pursuant to the reduced disclosure format as set forth in General Instruction (I)(2)(a) of Form 10-K.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with Items 1 and 2., “Business and Properties,” Item 1A., “Risk Factors,” and Item 8., “Financial Statements and Supplementary Data,” included in this report.

Information for this item has been omitted pursuant to the reduced disclosure format as set forth in General Instruction (I)(2)(a) of Form 10-K.

CAUTIONARY STATEMENT FOR THE PURPOSE OF SAFE HARBOR PROVISIONS OF THE

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. You can identify our forward-looking statements by the words “anticipate,” “believe,” “expect,” “plan,” “intend,” “estimate,” “project,” “projection,” “predict,” “budget,” “forecast,” “goal,” “guidance,” “target,” “could,” “would,” “should,” “will,” “may,” and similar expressions.

Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results and trends to differ materially from those

12

made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to:

• 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;

• 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; and

• political developments.

Any one of these factors, or a combination of these factors, could materially affect our future results of operations and affect whether any forward-looking statements ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward-looking statements. We do not intend to update these statements unless we are required by the securities laws to do so.

13

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to publicly release any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

OVERVIEW

Recent Developments

Merger with Valero

On January 10, 2019, the Merger was completed, and we became a wholly owned subsidiary of Valero and ceased to be a publicly held partnership. Under the terms of the Merger Agreement, at the Effective Time, subject to the terms and conditions set forth in the Merger Agreement, each common unit representing limited partner interests in us, other than common units owned by Valero, was converted into the right to receive $42.25 per common unit in cash without any interest thereon, and all such publicly traded common units were automatically canceled and ceased to exist. Upon completion of the Merger, Valero paid aggregate merger consideration of $950.0 million. Our IDRs, general partner interest, and common units owned by Valero were unaffected by the Merger and no consideration was delivered in respect thereof.

In connection with the completion of the Merger, we entered into an agreement under which VLO unconditionally and irrevocably guaranteed the prompt payment, when due, of any amount owed to the holders of our 2028 Senior Notes (as defined below under “Senior Notes”) and 2026 Senior Notes as defined and discussed in Note 6 of Notes to Consolidated Financial Statements. We also terminated (i) our $750.0 million senior unsecured revolving credit facility agreement (Revolver) as discussed in Note 6 of Notes to Consolidated Financial Statements, (ii) our equity distribution agreement related to our ATM Program as defined and discussed in Note 11 of Notes to Consolidated Financial Statements, and (iii) our 2013 ICP as discussed in Note 12 of Notes to Consolidated Financial Statements.

Senior Notes

On March 29, 2018, we issued $500.0 million of 4.5 percent Senior Notes due March 15, 2028 (2028 Senior Notes). Gross proceeds from the debt issuance totaled $498.3 million before deducting the underwriting discount and other debt issuance costs. As discussed in Note 6 of Notes to Consolidated Financial Statements, we used the proceeds to repay the outstanding balance of $410.0 million under our Revolver and $85.0 million of the outstanding balance under one of the subordinated credit agreements with Valero (the Loan Agreements).

2018 Results

We reported net income of $264.1 million for the year ended December 31, 2018. This compares to net income of $238.4 million for the year ended December 31, 2017.

The increase in net income of $25.7 million was due primarily to a $43.5 million increase in operating income driven by contributions from our Port Arthur terminal and Parkway pipeline, which we acquired from Valero in November 2017, as described in Note 3 of Notes to Consolidated Financial Statements. The increase in operating income was partially offset by a $19.1 million increase in “interest and debt expense, net of capitalized interest” that resulted from incremental borrowings of $380.0 million used to fund a portion of the amount paid to acquire the Port Arthur terminal and Parkway pipeline, as well as a higher effective interest rate in 2018 due to higher interest rates on our variable rate debt.

Additional analysis of the changes in the components of net income is provided below under “RESULTS OF OPERATIONS.”

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RESULTS OF OPERATIONS

The following tables highlight our results of operations and our operating performance for the years ended December 31, 2018 and 2017. The narrative following these tables provides an analysis of our results of operations.

Results of Operations

(in thousands, except per unit amounts)

	Year Ended December 31,
	2018			2017			Change
Revenues – related party:
Revenues from lease contracts	$	436,609		$	351,532		$	85,077
Revenues from contracts with customer	109,818			100,473			9,345
Total revenues – related party	546,427			452,005			94,422
Costs and expenses:
Cost of revenues from lease contracts (excluding depreciation expense reflected below)	104,776			83,332			21,444
Cost of revenues from contracts with customer (excluding depreciation expense reflected below)	26,319			25,042			1,277
Depreciation expense associated with lease contracts	63,499			40,950			22,549
Depreciation expense associated with contracts with customer	12,629			11,525			1,104
Other operating expenses	—			577			(577		)
General and administrative expenses	20,702			15,549			5,153
Total costs and expenses	227,925			176,975			50,950
Operating income	318,502			275,030			43,472
Other income, net	2,214			753			1,461
Interest and debt expense, net of capitalized interest	(55,068		)	(36,015		)	(19,053		)
Income before income tax expense	265,648			239,768			25,880
Income tax expense	1,553			1,335			218
Net income	264,095			238,433			25,662
Less: General partner’s interest in net income	54,108			49,113			4,995
Limited partners’ interest in net income	$	209,987		$	189,320		$	20,667
Net income per limited partner common unit – basic and diluted	$	3.03		$	2.77
Weighted average limited partner common units outstanding –basic and diluted	69,250			68,220

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Operating Highlights and Other Financial Information

(in thousands, except throughput, per barrel, and per unit amounts)

	Year Ended December 31,
	2018		2017		Change
Operating highlights:
Pipeline transportation:
Pipeline transportation revenues	$	124,151	$	100,631	$	23,520
Pipeline transportation throughput (BPD) (a)	1,091,529		964,198		127,331
Average pipeline transportation revenue per barrel (b)	$	0.31	$	0.29	$	0.02
Terminaling:
Terminaling revenues	$	415,117	$	347,996	$	67,121
Terminaling throughput (BPD)	3,593,818		2,889,361		704,457
Average terminaling revenue per barrel (b)	$	0.32	$	0.33	$	(0.01	)
Storage and other revenues	$	7,159	$	3,378	$	3,781
Total revenues – related party	$	546,427	$	452,005	$	94,422
Capital expenditures:
Maintenance	$	10,739	$	8,954	$	1,785
Expansion	13,477		29,562		(16,085		)
Total capital expenditures	24,216		38,516		(14,300		)
Other financial information:
Distribution declared per unit	$	1.6295	$	1.8700
Distribution declared:
Limited partner units – public	$	36,653	$	42,051
Limited partner units – Valero	76,209		86,503
General partner units – Valero	52,126		47,897
Total distribution declared	$	164,988	$	176,451

______________

(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.

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Total revenues – related party increased$94.4 million, or 21 percent, in 2018 compared to 2017. The increase was due primarily to the following:

• Revenues and throughput from a terminal and pipeline acquired from Valero in November 2017. We generated incremental revenues of $53.1 million and $21.9 millionin 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 2018 compared to 2017. Average pipeline transportation revenue per barrel was higher in 2018 compared to 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 2018 compared to 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.

• Higher throughput volumes. We experienced a 4 percent and 6 percent increase in volumes handled at our other terminals and pipeline systems, respectively, in 2018 compared to 2017. The increase in volumes had a favorable impact to our operating revenues of $15.6 million.

• 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 $3.8 million in 2018 compared to 2017.

Total cost of revenues (excluding depreciation expense) increased$22.7 million, or 21 percent, in 2018 compared to 2017 due primarily to expenses of $13.6 million and $7.2 million related to the operations of our Port Arthur terminal and Parkway pipeline, respectively, which were acquired in November 2017.

Total depreciation expense increased$23.7 million, or 45 percent, in 2018 compared to 2017 due primarily to depreciation expense of $13.1 million and $6.8 million associated with the assets that compose our Port Arthur terminal and Parkway pipeline, respectively, which were acquired in November 2017.

Other operating expenses reflects the uninsured portion of our property damage losses and repair costs incurred in 2017 as a result of damages caused by Hurricane Harvey primarily at our Houston terminal and Port Arthur products system.

General and administrative expenses increased$5.2 million, or 33 percent, in 2018 compared to 2017 due primarily to professional fees of $3.9 million incurred in connection with the Merger; an increase of $685,000 in expenses associated with our ATM Program; and incremental costs of $575,000 related to the management fee charged to us by Valero for additional services provided to us as a result of our acquisitions of the Port Arthur terminal and Parkway pipeline, which were acquired in November 2017.

“Interest and debt expense, net of capitalized interest” increased$19.1 million in 2018 compared to 2017 due primarily to the following:

• 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 $11.0 million in 2018.

• Higher interest rates in 2018. Borrowings under the Loan Agreements with Valero bore interest at variable rates. We incurred additional interest of $3.4 million in 2018 on these borrowings due to higher interest rates in 2018 compared to 2017.

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• Incremental interest expense on the 2028Senior Notes. In March 2018, we issued $500.0 million of 2028 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 2028 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 2028 Senior Notes was approximately $3.3 million in 2018.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices. Because we do not take ownership of or receive any payments based on the value of the crude oil or refined petroleum products that we handle and do not engage in the trading of any commodities, we have no direct exposure to commodity price fluctuations.

Our commercial agreements with Valero are indexed to inflation to mitigate our exposure to increases in the cost of labor and materials used in our business.

The following table provides information about our debt obligations (dollars in thousands), the fair values of which are sensitive to changes in interest rates. Principal cash flows and related weighted-average interest rates by expected maturity dates are presented.

	December 31, 2018
	Expected Maturity Dates
	2019			2020			2021			2022			2023			There- after			Total (a)			Fair Value
Fixed rate	$	—		$	—		$	—		$	—		$	—		$	1,000,000		$	1,000,000		$	986,290
Average interest rate	—		%	—		%	—		%	—		%	—		%	4.44		%	4.44		%
Variable rate	$	—		$	285,000		$	—		$	—		$	—		$	—		$	285,000		$	285,000
Average interest rate	—		%	3.85		%	—		%	—		%	—		%	—		%	3.85		%

	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
Average interest rate	—		%	—		%	2.87		%	—		%	—		%	—		%	2.87		%
(a) Excludes unamortized discount and deferred issuance costs.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate “internal control over financial reporting” (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) for Valero Energy Partners LP. Our management evaluated the effectiveness of Valero Energy Partners LP’s internal control over financial reporting as of December 31, 2018. In its evaluation, management used the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management believes that as of December 31, 2018, our internal control over financial reporting was effective based on those criteria.

Our independent registered public accounting firm has issued an attestation report on the effectiveness of our internal control over financial reporting, which begins on page 21 of this report.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Unitholders of Valero Energy Partners LP and

the Board of Directors of Valero Energy Partners GP LLC:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Valero Energy Partners LP and subsidiaries (the Partnership) as of December 31, 2018 and 2017 , the related consolidated statements of income, partners’ capital, and cash flows for each of the years in the three-year period ended December 31, 2018, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control – IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our reportdated February 25, 2019 expressed an unqualified opinion on the effectiveness of the Partnership’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Partnership’s auditor since 2013.

San Antonio, Texas

February 25, 2019

20

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Unitholders of Valero Energy Partners LP and

the Board of Directors of Valero Energy Partners GP LLC:

Opinion on Internal Control Over Financial Reporting

We have audited Valero Energy Partners LP’s (the Partnership) internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control – IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2018 and 2017, the related consolidated statements of income, partners’ capital, and cash flows for each of the years in the three-year period ended December 31, 2018, and the related notes (collectively, the consolidated financial statements), and our report dated February 25, 2019 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

21

company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

San Antonio, Texas

February 25, 2019

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VALERO ENERGY PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31,
	2018			2017
ASSETS
Current assets:
Cash and cash equivalents	$	152,106		$	42,052
Receivables – related party	47,768			46,496
Receivables	805			781
Prepaid expenses and other	891			720
Total current assets	201,570			90,049
Property and equipment, at cost	2,026,390			1,969,233
Accumulated depreciation	(617,206		)	(552,817		)
Property and equipment, net	1,409,184			1,416,416
Deferred charges and other assets, net	8,855			10,887
Total assets	$	1,619,609		$	1,517,352
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable	$	14,406		$	18,633
Accounts payable – related party	13,730			3,944
Accrued liabilities	858			1,007
Accrued liabilities – related party	425			1,128
Accrued interest payable	7,474			2,558
Accrued interest payable – related party	884			911
Taxes other than income taxes payable	4,349			5,141
Total current liabilities	42,126			33,322
Debt	989,857			905,283
Notes payable – related party	285,000			370,000
Other long-term liabilities	3,923			2,950
Commitments and contingencies
Partners’ capital:
Limited partners:
Common unitholders – public (22,493,484 and 22,487,586 units outstanding)	620,137			596,047
Common unitholder – Valero (46,768,586 and 46,768,586 units outstanding)	(300,457		)	(382,652		)
General partner – Valero (1,413,511 and 1,413,391 units outstanding)	(20,977		)	(7,598		)
Total partners’ capital	298,703			205,797
Total liabilities and partners’ capital	$	1,619,609		$	1,517,352

See Notes to Consolidated Financial Statements.

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VALERO ENERGY PARTNERS LP

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per unit amounts)

	Year Ended December 31,
	2018			2017			2016
Revenues – related party:
Revenues from lease contracts	$	436,609		$	351,532		$	273,730
Revenues from contracts with customer	109,818			100,473			88,889
Total revenues – related party	546,427			452,005			362,619
Costs and expenses:
Cost of revenues from lease contracts (excluding depreciation expense reflected below) (a)	104,776			83,332			75,380
Cost of revenues from contracts with customer (excluding depreciation expense reflected below) (b)	26,319			25,042			20,735
Depreciation expense associated with lease contracts	63,499			40,950			33,961
Depreciation expense associated with contracts with customer	12,629			11,525			12,004
Other operating expenses	—			577			—
General and administrative expenses (c)	20,702			15,549			15,965
Total costs and expenses	227,925			176,975			158,045
Operating income	318,502			275,030			204,574
Other income, net	2,214			753			284
Interest and debt expense, net of capitalized interest (d)	(55,068		)	(36,015		)	(14,915		)
Income before income tax expense	265,648			239,768			189,943
Income tax expense	1,553			1,335			1,112
Net income	264,095			238,433			188,831
Less: Net loss attributable to Predecessor	—			—			(15,422		)
Net income attributable to partners	264,095			238,433			204,253
Less: General partner’s interest in net income	54,108			49,113			23,553
Limited partners’ interest in net income	$	209,987		$	189,320		$	180,700
Net income per limited partner unit – basic and diluted:
Common units	$	3.03		$	2.77		$	2.85
Subordinated units	$	—		$	—		$	2.38
Weighted-average limited partner units outstanding – basic and diluted:
Common units	69,250			68,220			48,817
Subordinated units	—			—			17,463
Supplemental information – each income statement line item reflected below includes expenses incurred for services or financing provided by related party as follows:
(a) Cost of revenues from lease contracts (excluding depreciation expense) – related party	$	70,930		$	59,953		$	56,138
(b) Cost of revenues from contracts with customer (excluding depreciation expense) – related party	$	8,313		$	7,114		$	5,511
(c) General and administrative expenses – related party	$	13,445		$	12,858		$	12,539
(d) Interest and debt expense – related party	$	10,693		$	9,658		$	6,608

See Notes to Consolidated Financial Statements.

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VALERO ENERGY PARTNERS LP

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(in thousands)

	Limited Partners
	Common Unitholders Public			Common Unitholder Valero			Subordinated Unitholder Valero			General Partner Valero			Net Investment			Total
Balance as of December 31, 2015	$	581,489		$	28,430		$	(313,961	)	$	(5,805	)	$	103,999		$	394,152
Net income (loss):
Attributable to Predecessor	—			—			—			—			(15,422		)	(15,422		)
Attributable to partners	58,688			76,690			45,322			23,553			—			204,253
Net transfers from Valero Energy Corporation	—			—			—			—			15,030			15,030
Allocation of Valero Energy Corporation’s net investment in acquisitions	—			67,800			32,758			3,049			(103,607		)	—
Acquisitions of businesses from Valero Energy Corporation:
Cash paid for carrying value of acquired businesses	—			(67,800		)	(32,758		)	(3,049		)	—			(103,607		)
Cash paid in excess of carrying value of acquired businesses	—			(246,759		)	(120,309		)	(9,325		)	—			(376,393		)
Conversion of subordinated units	—			(406,374		)	406,374			—			—			—
Unit issuance	11,091			—			—			198			—			11,289
Transfers to (from) partners	(72,452		)	76,584			—			(4,132		)	—			—
Noncash capital contributions from Valero Energy Corporation	—			22,730			12,084			918			—			35,732
Cash distributions to unitholders and distribution equivalent right payments ($1.41 per unit)	(30,393		)	(33,498		)	(29,510		)	(16,005		)	—			(109,406		)
Unit-based compensation	196			—			—			—			—			196
Balance as of December 31, 2016	548,619			(482,197		)	—			(10,598		)	—			55,824
Net income attributable to partners	62,014			127,306			—			49,113			—			238,433
Cash paid in excess of the carrying value of assets acquired from Valero Energy Corporation	—			(53,045		)	—			(1,573		)	—			(54,618		)
Unit issuance	33,428			—			—			748			—			34,176
Transfers to (from) partners	(8,773		)	15,957			—			(7,184		)	—			—
Noncash capital contributions from Valero Energy Corporation	—			90,666			—			2,341			—			93,007
Cash distributions to unitholders and distribution equivalent right payments ($1.769 per unit)	(39,507		)	(81,339		)	—			(40,445		)	—			(161,291		)
Unit-based compensation	266			—			—			—			—			266
Balance as of December 31, 2017	596,047			(382,652		)	—			(7,598		)	—			205,797
Net income attributable to partners	68,171			141,816			—			54,108			—			264,095
Unit issuance	—			—			—			5			—			5
Transfers to (from) partners	3,730			(2,396		)	—			(1,334		)	—			—
Noncash capital contributions from Valero Energy Corporation	—			42,785			—			873			—			43,658
Cash distributions to unitholders and distribution equivalent right payments ($2.137 per unit)	(48,069		)	(99,944		)	—			(67,030		)	—			(215,043		)
Unit-based compensation	258			—			—			—			—			258
Other	—			(66		)	—			(1		)	—			(67		)
Balance as of December 31, 2018	$	620,137		$	(300,457	)	$	—		$	(20,977	)	$	—		$	298,703

See Notes to Consolidated Financial Statements.

25

VALERO ENERGY PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31,
	2018			2017			2016
Cash flows from operating activities:
Net income	$	264,095		$	238,433		$	188,831
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	76,128			52,475			45,965
Changes in current assets and current liabilities	6,217			(3,730		)	(5,956		)
Changes in deferred charges and credits and other operating activities, net	4,102			1,753			1,054
Net cash provided by operating activities	350,542			288,931			229,894
Cash flows from investing activities:
Capital expenditures	(24,216		)	(38,516		)	(23,156		)
Acquisition of undivided interest in Red River crude system	—			(71,793		)	—
Acquisitions from Valero Energy Corporation	—			(407,844		)	(103,607		)
Other investing activities, net	8			302			31
Net cash used in investing activities	(24,208		)	(517,851		)	(126,732		)
Cash flows from financing activities:
Proceeds from debt borrowings	—			380,000			349,000
Proceeds from issuance of senior notes	498,300			—			499,795
Repayment of debt and capital lease obligations	(410,000		)	—			(494,913		)
Repayment of notes payable – related party	(85,000		)	—			—
Payment of debt issuance costs	(4,542		)	(492		)	(4,462		)
Proceeds from issuance of common units	—			35,728			9,724
Proceeds from issuance of general partner units	5			748			198
Payment of offering costs	—			(594		)	(883		)
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets	—			(54,618		)	(376,393		)
Cash distributions to unitholders and distribution equivalent right payments	(215,043		)	(161,291		)	(109,406		)
Net transfers from Valero Energy Corporation	—			—			14,886
Net cash provided by (used in) financing activities	(216,280		)	199,481			(112,454		)
Net increase (decrease) in cash and cash equivalents	110,054			(29,439		)	(9,292		)
Cash and cash equivalents at beginning of year	42,052			71,491			80,783
Cash and cash equivalents at end of year	$	152,106		$	42,052		$	71,491

See Notes to Consolidated Financial Statements.

26

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICES

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 (VLO), and “Valero” refers collectively to VLO and its subsidiaries, other than Valero Energy Partners LP, any of its subsidiaries, or its general partner.

We were formed by Valero in July 2013 to own, operate, develop, and acquire crude oil and refined petroleum products pipelines, terminals, and other logistics assets. See Note 2 regarding our merger with Valero that occurred on January 10, 2019. 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 services.

Basis of Presentation

General

These consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP) and with the rules and regulations of the U.S. Securities and Exchange Commission (SEC).

Acquisitions from Valero

Certain of our acquisitions from Valero, as described in Note 3, were accounted for as transfers of businesses between entities under the common control of Valero. Accordingly, we recorded these business acquisitions on our balance sheet at Valero’s carrying value as of the beginning of the period of transfer, and we retrospectively adjusted prior period financial statements and financial information to furnish comparative information. We refer to the historical results of the transferred businesses from Valero prior to their transfer to us as those of our “Predecessor.”

The combined financial statements of our Predecessor were derived from the consolidated financial statements and accounting records of Valero and reflect the combined historical financial position, results of operations, and cash flows of our Predecessor as if the acquisitions from Valero had been combined for periods prior to the effective dates of each acquisition.

There were no transactions between the operations of our Predecessor; therefore, there were no intercompany transactions or accounts to be eliminated in connection with the combination of those operations. In addition, our Predecessor’s statements of income include direct charges for the management and operation of our assets and certain expenses allocated by Valero for general corporate services, such as treasury, accounting, and legal services. These expenses were charged, or allocated, to our Predecessor based on the nature of the expenses. Prior to the acquisitions from Valero, our Predecessor transferred cash to Valero daily and Valero funded our Predecessor’s operating and investing activities as needed. Therefore, transfers of cash to and from Valero’s cash management system are reflected as a component of net investment and are reflected as a financing activity in our statements of cash flows. In addition, interest expense was not included on the net cash transfers from Valero.

27

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The acquisitions of Parkway Pipeline LLC (Parkway Pipeline) and the Port Arthur terminal (as defined in Note 3) 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.

The financial information presented for the periods after the effective dates of each acquisition represents the consolidated financial position, results of operations, and cash flows of the Partnership.

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 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 prior year amounts have been reclassified to conform to the 2018 presentation.

Significant Accounting Policies

Principles of Consolidation

Our consolidated financial statements include the accounts of the Partnership, our subsidiaries, and our Predecessor. All intercompany items and transactions have been eliminated.

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.

Cash Equivalents

Our cash equivalents are highly liquid investments that have a maturity of three months or less when acquired.

Receivables – Related Party

Receivables – related party include trade receivables from Valero for transportation and terminaling services provided under various agreements with Valero, as described in Note 4. These receivables are recorded at the original invoice amount.

Property and Equipment

The cost of property and equipment purchased or constructed, including betterments of property and equipment, is capitalized. However, the cost of repairs to and normal maintenance of property and equipment is expensed when incurred. Betterments of property and equipment are those that extend the useful lives of the property and equipment or improve the safety of our operations. The cost of property and equipment constructed includes interest and certain overhead costs allocable to the construction activities. Property and equipment also includes our undivided interest in certain assets.

28

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

When property and equipment are retired or replaced, the cost and related accumulated depreciation are eliminated, with any gain or loss reflected in depreciation expense, unless such amounts are reported separately due to materiality.

Depreciation of property and equipment is recorded on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful life of the related asset.

Impairment of Assets

Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. A long-lived asset is not recoverable if its carrying amount exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If a long-lived asset is not recoverable, an impairment loss is recognized for the amount by which the carrying amount of the long-lived asset exceeds its fair value, with fair value determined based on discounted estimated net cash flows or other appropriate methods.

Asset Retirement Obligations

We record a liability, which is referred to as an asset retirement obligation, at fair value for the estimated cost to retire a tangible long-lived asset at the time we incur that liability, which is generally when the asset is purchased, constructed, or leased. We record the liability when we have a legal obligation to incur costs to retire the asset and when a reasonable estimate of the fair value of the liability can be made. If a reasonable estimate cannot be made at the time the liability is incurred, we record the liability when sufficient information is available to estimate the liability’s fair value.

Environmental Matters

Liabilities for future remediation costs are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. Other than for assessments, the timing and magnitude of these accruals generally are based on the completion of investigations or other studies or a commitment to a formal plan of action. Amounts recorded for environmental liabilities have not been reduced by possible recoveries from third parties and have not been measured on a discounted basis.

Net Investment

Net investment represents Valero’s historical investment in our Predecessor, its accumulated net earnings after taxes, and the net effect of transactions and allocations between our Predecessor and Valero. There were no terms of settlement or interest charges associated with the net investment balance.

Revenue Recognition

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.

29

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The FASB issued Topic 606, which clarifies the principles for recognizing revenue and supersedes previous revenue recognition requirements under “Revenue Recognition (Topic605).” We adopted the provisions of Topic 606 on January 1, 2018 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 Topic606 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 January1, 2018. Additionally, there was no material impact to our financial position or results of operations as of and for the year endedDecember 31, 2018. See Note 7 for information on our revenues. As a result of our adoption of Topic 606, our revenue recognition accounting policy has been revised.

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.

30

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Income Taxes

Our operations are treated as a partnership for federal and state income tax purposes, with each partner being separately taxed on its share of taxable income. Therefore, we have excluded income taxes from these financial statements, except for state taxes that apply to partnerships, specifically the margin tax in Texas. Our Predecessor’s taxable income was included in the consolidated U.S. federal income tax returns of Valero and in certain consolidated state income tax returns.

Income taxes are accounted for under the asset and liability method, as if we were a separate taxpayer rather than a member of Valero’s consolidated tax return. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred amounts are measured using enacted tax rates expected to apply to taxable income in the year those temporary differences are expected to be recovered or settled.

We classify any interest expense and penalties related to the underpayment of income taxes in income tax expense.

Net Income per Limited Partner Unit

Basic and diluted net income per limited partner unit is determined pursuant to the two-class method for master limited partnerships as described in Note 10.

Comprehensive Income

We have not reported comprehensive income due to the absence of items of other comprehensive income in the years presented.

Segment Reporting

Our operations consist of one reportable segment. All of our operations are conducted and all of our assets are located in the U.S.

Financial Instruments

Our financial instruments include cash and cash equivalents, receivables, receivables – related party, accounts payable, accounts payable – related party, debt, and notes payable – related party. The estimated fair values of these financial instruments approximate their carrying amounts, except for certain debt as discussed in Note 15.

Business Combinations

We adopted the provisions of Accounting Standards Update (ASU) No. 2017-01, “Business Combinations (Topic 805),” issued by the FASB, on January 1, 2017. This ASU provides a more robust framework to evaluate whether transactions should be accounted for as acquisitions (dispositions) of assets or businesses. Our adoption of this ASU resulted in the acquisitions of Parkway Pipeline and the Port Arthur terminal being accounted for as acquisitions of assets, which are discussed in Note 3. In addition, more of our future acquisitions may be accounted for as acquisitions of assets in accordance with this ASU.

Accounting Pronouncement Adopted on January1, 2019

In February 2016, the FASB issued Topic 842 “Leases” (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

31

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

periods beginning after December 15, 2018, and interim reporting periods within those annual reporting periods, with early adoption permitted. We adopted this new standard on January 1, 2019 using the optional transition method; however, we did not have a cumulative-effect adjustment to the opening balance of partners’ capital at the date of adoption. The adoption of this standard did not have a material affect on our financial position.

The new standard provides a number of optional practical expedients and we elected the following:

• Transition Elections. We elected the package of practical expedients that permits us to not reassess our prior conclusions about lease identification, lease classification, and initial direct costs under the new standard, as well as the practical expedient that permits us to not assess existing land easements under the new standard.

• Lessee Accounting Policy Elections. We elected the short-term lease recognition exemption whereby right-of-use assets and lease liabilities will not be recognized for leasing arrangements with terms less than one year, and the practical expedient to not separate lease and non-lease components for all classes of underlying assets other than the real estate asset class.

• Lessor Accounting Policy Election. We elected the practical expedient to account for lease and non-lease components in a contract as a single lease component for all classes of underlying assets.

2. MERGER WITH VALERO

On January 10, 2019, pursuant to that certain Agreement and Plan of Merger, dated as of October 18, 2018 (the Merger Agreement), by and among VLO, Forest Merger Sub, LLC, an indirect wholly owned subsidiary of VLO (Merger Sub), Valero Energy Partners LP, and Valero Energy Partners GP LLC, Merger Sub merged with and into the Partnership (the Merger), with the Partnership surviving and continuing to exist as a Delaware limited partnership.

Under the terms of the Merger Agreement, at the effective time of the Merger (the Effective Time), subject to the terms and conditions set forth in the Merger Agreement, each of the common units representing limited partner interests in the Partnership, other than common units owned by Valero, was converted into the right to receive $42.25 per common unit in cash without any interest thereon, and all such publicly traded common units were automatically canceled and ceased to exist. Upon completion of the Merger, Valero paid aggregate merger consideration of $950.0 million. The Partnership’s incentive distribution rights (IDRs), general partner interest, and common units owned by Valero were unaffected by the Merger and no consideration was delivered in respect thereof.

On January 10, 2019, in connection with the completion of the Merger, the New York Stock Exchange (NYSE) filed with the SEC a notification of removal from listing on Form 25 to delist and deregister the publicly traded common units under Section 12(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act), and suspended trading of the common units on the NYSE prior to the opening of trading on January 10, 2019. On January 22, 2019, the Partnership filed with the SEC a Form 15 suspending the Partnership’s reporting obligations under Section 13 and Section 15(d) of the Exchange Act.

32

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In connection with the completion of the Merger, we entered into an agreement under which VLO unconditionally and irrevocably guaranteed the prompt payment, when due, of any amount owed to the holders of our 2026 Senior Notes and 2028 Senior Notes as defined and discussed in Note 6. We also terminated (i) our Revolver as defined and discussed in Note 6, (ii) our equity distribution agreement related to our ATM Program as defined and discussed in Note 11, and (iii) our 2013 ICP as defined and discussed in Note 12.

3. ACQUISITIONS

 In connection with the following acquisitions, we entered into various agreements with Valero, including additional schedules to our commercial agreements, an amended and restated omnibus agreement, an amended and restated services and secondment agreement, and lease agreements. See Note 4 for a summary of the terms of these agreements.

Acquisitions in 2017

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) two150,000 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 available 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, 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 Valero cash consideration of $200.0 million for Parkway Pipeline. We funded the cash distribution with $82.0 million of our cash on hand and $118.0 million of borrowings under the Revolver (as defined in Note 6). This acquisition was accounted for as a transfer of assets between entities under the common control of Valero.

33

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

Acquisitions in 2016

McKee Terminal Services Business

On April 1, 2016, we acquired from Valero a subsidiary that owns and operates a crude oil, intermediates, and refined petroleum products terminal supporting Valero’s McKee Refinery for total consideration of $240.0 million, which consisted of (i) a cash distribution of $204.0 million and (ii) the issuance of 728,775 common units and 14,873 general partner units to Valero having an aggregate value of $36.0 million. We funded the cash distribution with $65.0 million of our cash on hand and $139.0 million of borrowings under the Revolver. This acquisition was accounted for as a transfer of a business between entities under the common control of Valero. See Note 1 regarding the accounting and basis of presentation of this acquisition.

Meraux and Three Rivers Terminal Services Business

On September 1, 2016, we acquired from Valero two subsidiaries that own and operate crude oil, intermediates, and refined petroleum products terminals supporting Valero’s Meraux and Three Rivers Refineries for total consideration of $325.0 million which consisted of (i) a cash distribution of $276.0 million and (ii) the issuance of 1,149,905 common units and 23,467 general partner units to Valero having an aggregate value of $49.0 million. We funded the cash distribution with $66.0 million of our cash on hand and $210.0 million of borrowings under the Revolver. This acquisition was accounted for as a transfer of a business between entities under the common control of Valero. See Note 1 regarding the accounting and basis of presentation of this acquisition.

34

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. RELATED-PARTY AGREEMENTS AND TRANSACTIONS

Predecessor Transactions

Our Predecessor was part of the consolidated operations of Valero and all of our operating revenues were derived from transactions with Valero. The crude oil and refined petroleum products pipeline transportation and terminaling services we provided to Valero were settled through net parent investment, and payables and receivables related to these transactions were included as a component of net investment.

Prior to the dates of each of our business acquisitions from Valero, our operating and general and administrative expenses included charges to our Predecessor for the management of our operations and the allocation of certain overhead and shared services expenses by Valero. These charges and allocations included such items as management oversight, information technology, legal, human resources, and other financial and administrative services. These allocations do not fully reflect the expenses that would have been incurred had we been a stand-alone limited partnership. Our management believes the charges allocated to our Predecessor were a reasonable reflection of the utilization of services provided, but they cannot be presumed to be carried out on an arm’s-length basis as the requisite conditions of competitive, free-market dealings may not have existed.

Agreements with Valero

Commercial Agreements

We have transportation services agreements and a terminal services agreement (collectively, the commercial agreements) with Valero. Under these commercial agreements, we provide transportation and terminaling services to Valero and Valero pays us for minimum quarterly throughput volumes of crude oil and refined petroleum products, regardless of whether such volumes are physically delivered by Valero in any given quarter. In connection with our initial public offering (IPO) and subsequent acquisitions, we entered into schedules under these commercial agreements. Each schedule generally has an initial term of ten years, provides Valero an option to renew for one additional five-year term, and contains minimum throughput requirements and inflation escalators.

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 services 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.

Amended and Restated Omnibus Agreement

We have an amended and restated omnibus agreement with Valero, certain of its subsidiaries, and our general partner that addresses our payment of an annual administrative fee and our obligation to reimburse Valero for certain direct or allocated costs and expenses incurred by Valero on our behalf. This agreement also addresses, but is not limited to, indemnification rights of Valero and us for certain environmental and other liabilities related to our assets. As of December 31, 2018, the annual administrative fee was $13.2 million.

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VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

So long as Valero controls our general partner, the amended and restated omnibus agreement will remain in full force and effect. If Valero ceases to control our general partner, either party may terminate the amended and restated omnibus agreement, provided that the indemnification obligations will remain in full force and effect in accordance with their terms.

Amended and Restated Services and Secondment Agreement

Under the terms of an amended and restated services and secondment agreement, including its amended and restated exhibits, employees of Valero are seconded to our general partner to provide operational and maintenance services for certain of our pipelines and terminals, and we reimburse our general partner for these costs. During their period of secondment, the seconded employees are under the management and supervision of our general partner.

This agreement has an initial term of ten years from the Service Date (as defined in the agreement) with respect to each acquisition and will automatically extend for successive renewal terms of one year each, unless terminated by either party upon at least 30 days’ prior written notice before the end of the initial term or any renewal term. In addition, our general partner may terminate the agreement or reduce the level of services under the agreement at any time upon 30 days’ prior written notice.

Lease Agreements

We have lease agreements with Valero with respect to the land on which certain terminals are located. Generally, each lease agreement has an initial term of ten years with four automatic successive renewal periods of five years each. Either party may terminate each lease agreement after the initial term by providing written notice. We also have a ground lease agreement with an initial term of twenty years and no renewal periods. Initial base rent under these lease agreements is subject to annual inflation escalators, and we are required to pay Valero a customary expense reimbursement for taxes, utilities, and similar costs incurred by Valero related to the leased premises. See Note 9 regarding our lease commitments with Valero.

Tax Sharing Agreement

Under our tax sharing agreement with Valero, we are required to reimburse Valero for our share of state and local income and other taxes incurred by Valero as a result of our tax items and attributes being included in a combined or consolidated state tax return filed by Valero with respect to taxable periods including or beginning on or after the closing date of the IPO. The amount of any such reimbursement will be limited to any entity-level tax that we would have paid directly had we not been included in a combined group with Valero. While Valero may use its tax attributes to cause its combined or consolidated group, of which we may be a member for this purpose, to owe no tax, we are nevertheless required to reimburse Valero for the tax we would have owed had the attributes not been available or used for our benefit, even though Valero had no cash expense for that period.

Subordinated Credit Agreements

As of December 31, 2018, we had subordinated credit agreements with Valero as described in Note 6.

Summary of Transactions

Revenues – Related Party

Revenues – related party include revenues from lease contracts and revenues from contracts with our customer as described in Note 7.

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VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

Insurance Recoveries

During 2017, we experienced property damage losses and repair costs associated with Hurricane Harvey primarily at our Houston terminal and Port Arthur products system. As a result of these losses, we submitted claims under our insurance policies with Valero. The amount shown in our statements of income as other operating expenses reflects the uninsured portion of our losses. For the year ended December 31, 2017, we recognized $2.7 million of insurance recoveries, which were recorded as a reduction to other operating expenses.

Net Investment

The following is a reconciliation of the amounts presented as net transfers from Valero on our statement of partners’ capital and statement of cash flows for the year ended December 31, 2016 (in thousands):

Net transfers from Valero per statements of partners’ capital	$	15,030
Less: Noncash transfers from Valero	144
Net transfers from Valero per statements of cash flows	$	14,886

See Note 14 for additional information related to our noncash transfers from (to) Valero.

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.

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VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. PROPERTY AND EQUIPMENT

Our property and equipment includes non-leased assets and assets under operating leases for which we are the lessor under U.S. GAAP. Major classes of property and equipment consisted of the following (in thousands):

	December 31, 2018
	Non-Leased Assets			Assets Leased to Valero			Total
Land	$	4,672		$	—		$	4,672
Pipelines and related assets	225,413			386,596			612,009
Terminals and related assets	138,981			1,227,451			1,366,432
Other	14,138			—			14,138
Construction in progress	29,139			—			29,139
Property and equipment, at cost	412,343			1,614,047			2,026,390
Accumulated depreciation	(137,651		)	(479,555		)	(617,206		)
Property and equipment, net	$	274,692		$	1,134,492		$	1,409,184

	December 31, 2017
	Non-Leased Assets			Assets Leased to Valero			Total
Land	$	4,672		$	—		$	4,672
Pipelines and related assets	225,184			385,855			611,039
Terminals and related assets	134,362			1,162,718			1,297,080
Other	14,019			—			14,019
Construction in progress	42,423			—			42,423
Property and equipment, at cost	420,660			1,548,573			1,969,233
Accumulated depreciation	(127,136		)	(425,681		)	(552,817		)
Property and equipment, net	$	293,524		$	1,122,892		$	1,416,416

38

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. DEBT AND NOTES PAYABLE – RELATED PARTY

Debt

Debt, at stated values, consisted of the following (in thousands):

	Maturity Date	December 31,
		2018			2017
Revolver	November 2020	$	—		$	410,000
2026 Senior Notes, 4.375%	December 2026	500,000			500,000
2028 Senior Notes, 4.5%	March 2028	500,000			—
Net unamortized discount and debt issuance costs		(10,143		)	(4,717		)
Debt		$	989,857		$	905,283

Revolver

As of December 31, 2018, we had a $750.0 million senior unsecured revolving credit facility agreement (the Revolver) that was scheduled to mature in November 2020.

Outstanding borrowings under the Revolver bore interest, at our option, at either (a) the adjusted LIBO rate (as defined in the Revolver) for the applicable interest period in effect from time to time plus the applicable margin or (b) the alternate base rate (as defined in the Revolver) plus the applicable margin.As of December 31, 2017, the variable rate was 2.875 percent.Accrued interest was payable in arrears on each Interest Payment Date (as defined in the Revolver) and on the maturity date. The Revolver also required payments for customary fees, including commitment fees, letter of credit participation fees, and administrative agent fees.

The Revolver contained certain restrictive covenants, including a covenant that required us to maintain a ratio of total debt to EBITDA (as defined in the Revolver) for the prior four fiscal quarters of not greater than 5.0 to 1.0 as of the last day of each fiscal quarter (5.5to1.0 during the specified period following certain acquisitions). The Revolver contained representations and warranties, affirmative and negative covenants, and events of default that are usual and customary for an agreement of this type. As a result of the Partnership obtaining an investment grade rating with respect to the issuance of its senior notes (described below) in December 2016,our directly owned subsidiary, Valero Partners Operating Co. LLC, was released of its guarantee under the Revolver.

During the year ended December 31, 2018, we repaid the outstanding balance of $410.0 million on the Revolver as discussed below under “2028 Senior Notes.” During the year ended December 31, 2017, we borrowed $118.0 million and $262.0 million under the Revolver in connection with the acquisitions of Parkway Pipeline and the Port Arthur terminal, respectively, as described in Note 3. During the year ended December 31, 2016, we borrowed $139.0 million and $210.0 million under the Revolver in connection with the acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business, respectively, as described in Note 3, and repaid $494.0 million under the Revolver as discussed below under “2026 Senior Notes.”

As of December 31, 2018 and 2017, we had no letters of credit outstanding and we incurred no debt issuance costs in connection with the Revolver.

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VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On January 10, 2019, in connection with the completion of the Merger, we terminated our Revolver.

Senior Notes

2028Senior Notes

During the year ended December 31, 2018, we issued in a public offering $500.0 million aggregate principal amount of 4.5 percent Senior Notes due March 15, 2028 (2028 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 (as defined below) with Valero. Interest is payable semi-annually on March 15 and September 15.

The 2028 Senior Notes are unsecured and contain various customary restrictive covenants that, among other things, limit our ability and the ability of our subsidiaries 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 are subject to a number of important qualifications and limitations. As of December 31, 2018, the 2028 Senior Notes were not guaranteed by any of our subsidiaries.

2026Senior Notes

During the year ended December 31, 2016, we issued in a public offering $500.0 million aggregate principal amount of our 4.375 percent Senior Notes due December 15, 2026 (2026 Senior Notes). Gross proceeds from this debt issuance totaled $499.8 million before deducting the underwriting discount and other debt issuance costs totaling $4.5 million. We used the proceeds to repay $494.0 million under the Revolver. Interest is payable semi-annually on June 15 and December 15.

The 2026 Senior Notes are unsecured and contain various customary restrictive covenants that, among other things, limit our ability and the ability of our subsidiaries 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 are subject to a number of important qualifications and limitations. As of December 31, 2018, the 2026 Senior Notes were not guaranteed by any of our subsidiaries.

Guarantee of Senior Notes

On January 10, 2019, in connection with the completion of the Merger, VLO unconditionally and irrevocably guaranteed the prompt payment, when due, of any amount owed to the holders of our 2026 Senior Notes and 2028 Senior Notes, thereby suspending our Section 15(d) reporting obligation pursuant to Rule 12h-5 of the Exchange Act.

Notes Payable – Related Party

As of December 31, 2018, we had two subordinated credit agreements with Valero (the Loan Agreements), under which we had outstanding loans. The loans were scheduled to mature on March 1 and October 1, 2020, respectively, and were permitted to be prepaid at any time without penalty. We were not permitted to reborrow amounts. The loans bore interest at the LIBO Rate (as defined in the Loan Agreements) plus the applicable margin. As of December 31, 2018 and 2017, this variable rate was3.84925percent and 2.86069 percent, respectively. Accrued interest was payable in arrears on each Interest Payment Date (as defined in the Loan Agreements) and on each maturity date. As a result of obtaining an investment grade rating with respect to

40

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the issuance of our 2026 Senior Notes in December 2016, our directly owned subsidiary, Valero Partners Operating Co. LLC, was released of its guarantee under the Loan Agreements.

During the year ended December 31, 2018, we paid down $85.0 million under one of the Loan Agreements. There was no activity under the Loan Agreements for the years ended December 31, 2017 and 2016. The outstanding balance of these Loan Agreements was $285.0 million and $370.0 million as of December 31, 2018 and 2017, respectively.

On January 19, 2019, we paid $185.0 million to completely settle one of the Loan Agreements. Effective February 1, 2019, the remaining Loan Agreement, which had an outstanding balance of $100.0 million, was converted to a capital contribution from Valero.

Other Disclosures

Interest and debt expense, net of capitalized interest was as follows (inthousands):

	Year Ended December 31,
	2018		2017		2016
Interest and debt expense incurred	$	55,475	$	36,634	$	14,997
Less: Capitalized interest	407		619		82
Interest and debt expense, net of capitalized interest	$	55,068	$	36,015	$	14,915

Principal maturities of our debt obligations and notes payable – related party as of December 31, 2018 were $285.0 millionin 2020, $500.0 million in 2026, and $500.0 million in 2028.

41

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. REVENUES

Disaggregation of Revenues

Revenues – related party disaggregated by activity type were as follows (inthousands):

	Pipeline Transportation		Terminaling		Storage and Other		Total
Year Ended December 31, 2018:
Revenues from lease contracts	$	70,606	$	364,363	$	1,640	$	436,609
Revenues from contracts with customer	53,545		50,754		5,519		109,818
Total revenues – related party	$	124,151	$	415,117	$	7,159	$	546,427
Year Ended December 31, 2017:
Revenues from lease contracts	$	49,474	$	301,512	$	546	$	351,532
Revenues from contracts with customer	51,157		46,484		2,832		100,473
Total revenues – related party	$	100,631	$	347,996	$	3,378	$	452,005
Year ended December 31, 2016:
Revenues from lease contracts	$	31,268	$	241,922	$	540	$	273,730
Revenues from contracts with customer	47,183		41,706		—		88,889
Total revenues – related party	$	78,451	$	283,628	$	540	$	362,619

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):

	Year Ended December 31,
	2018		2017		2016
Minimum lease revenues	$	361,316	$	292,034	$	232,211
Contingent lease revenues	75,293		59,498		41,519
Revenues from lease contracts	$	436,609	$	351,532	$	273,730

Receivables from Contracts with Customer

Our receivables from contracts with our customer are included in receivables – related party. These balances were $10.0 million and $8.3 million as of December 31, 2018 and January 1, 2018, respectively.

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VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Future Minimum Rentals and Remaining Performance Obligations

As of December 31, 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):

	Lease Contracts		Contracts with Customer
2019	$	361,282	$	81,215
2020	362,268		81,426
2021	361,282		81,215
2022	361,282		81,215
2023	361,076		77,834
Thereafter	2,553,520		39,159
Total	$	4,360,710	$	442,064

Our lease contracts and our contracts with our customer contain annual inflation escalation clauses that are (i) deemed contingent rentals and variable consideration, respectively, and (ii) applied to the remainder of the contracts. The amounts presented above exclude any estimates for future rate changes due to these inflation rate escalations as prescribed by the contracts.

8. ASSET RETIREMENT OBLIGATIONS

We have asset retirement obligations with respect to certain of our leased pipelines and terminals that require us to perform under law or contract once the asset is retired from service, and we have recognized obligations to restore these leased properties to substantially the same condition as when such property was delivered to us or to its improved condition as prescribed by the lease agreements. With respect to all other property and equipment, it is our practice and current intent to maintain these other property assets and continue to make improvements as warranted. As a result, we believe that these other property assets have indeterminate lives for purposes of estimating asset retirement obligations because dates or ranges of dates upon which we would retire these assets cannot reasonably be estimated at this time; therefore, no asset retirement obligations have been recorded for these other property assets as of December 31, 2018 and 2017. We will recognize a liability at such time when sufficient information exists to estimate a range of potential settlement dates that is needed to employ a present value technique to estimate fair value.

Changes in our asset retirement obligations were as follows (inthousands):

	December 31,
	2018		2017		2016
Balance as of beginning of year	$	1,099	$	1,069	$	1,021
Accretion expense	32		30		48
Balance as of end of year	$	1,131	$	1,099	$	1,069

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VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We do not expect any short-term spending and, as a result, there is no current liability reported for asset retirement obligations as of December 31, 2018 and 2017. Accretion expense is reflected in depreciation expense.

There are no assets that are legally restricted for purposes of settling our asset retirement obligations.

9. COMMITMENTS AND CONTINGENCIES

Operating Leases – Lessee

We have long-term operating lease commitments for pipelines and land used in the terminaling and transportation of crude oil and refined petroleum products. Certain leases contain escalation clauses and renewal options that allow for the same rental payment over the lease term or a revised rental payment based on fair rental value or negotiated value. Currently, one of our leases with Valero does not contain a renewal option. We expect our leases will be renewed or replaced by other leases in the normal course of business.

As of December 31, 2018, our future minimum rental payments for leases having initial or remaining noncancelable lease terms in excess of one year were as follows (inthousands):

	Agreements With
	Related Party		Others		Total
2019	$	792	$	1,132	$	1,924
2020	765		1,127		1,892
2021	739		1,106		1,845
2022	739		1,106		1,845
2023	739		1,106		1,845
Thereafter	13,958		23,525		37,483
Total minimum rental payments	$	17,732	$	29,102	$	46,834

Minimum rental expenses for all operating leases were as follows (inthousands):

	Year Ended December 31,
	2018		2017(a)		2016(a)
Minimum rental expenses – related party	$	740	$	656	$	515
Minimum rental expenses – others	1,228		1,384		807
Total minimum rental expenses	$	1,968	$	2,040	$	1,322
(a) These amounts have been retrospectively adjusted to exclude non-lease components (i.e., purchase obligations), which had previously been included in minimum rental expenses.

Contingent rental expenses for all operating leases were as follows (inthousands):

	Year Ended December 31,
	2018		2017		2016
Contingent rental expenses – related party	$	19	$	7	$	—
Contingent rental expenses – others	210		119		—
Total contingent rental expenses	$	229	$	126	$	—

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VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Purchase Obligations

We have purchase obligations under our amended and restated (i) omnibus agreement, (ii) services and secondment agreement, and (iii) lease and access agreements with Valero. See Note 4 for additional information regarding our agreements with Valero. Our purchase obligations are determined based on contractual, fixed-rate fees for periods that are reasonably assured based on current market conditions. None of these obligations are associated with suppliers’ financing arrangements. These purchase obligations are not reflected as liabilities.

Litigation Matters

From time to time, we may be party to claims and legal proceedings arising in the ordinary course of business. We also may be required by existing laws and regulations to report the release of hazardous substances and begin a remediation study. We have not recorded a loss contingency liability as there are no matters for which a loss has been incurred. We re-evaluate and update our loss contingency liabilities as matters progress over time, and we believe that any changes to the recorded liabilities will not be material to our financial position, results of operations, or liquidity.

10. CASH DISTRIBUTIONS AND NET INCOME PER LIMITED PARTNER UNIT

Cash Distributions

Our partnership agreement prescribes the amount and priority of cash distributions that the 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, 2016:

Quarterly Period Ended	Total Quarterly Distribution (Per Unit)		Total Cash Distribution (InThousands)		Declaration Date	Record Date	Distribution Date
September 30, 2018	$	0.5510	$	56,081	October 18, 2018	November 1, 2018	November 9, 2018
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
September 30, 2016	0.3850		32,175		October 24, 2016	November 3, 2016	November 10, 2016
June 30, 2016	0.3650		28,912		July 21, 2016	August 1, 2016	August 9, 2016
March 31, 2016	0.3400		25,608		April 21, 2016	May 2, 2016	May 10, 2016
December 31, 2015	0.3200		22,711		January 25, 2016	February 4, 2016	February 11, 2016

The Merger Agreement provides that prior to the closing of the Merger, our general partner may not declare, and we may not pay, any distribution other than the distribution of $0.551 per common unit that we declared for the third quarter of 2018 without the prior written consent of Valero. See Note 2 for a discussion of the Merger. Our board of directors determined that no distribution shall be paid with respect to the quarter ended December 31, 2018.

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VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 the general partner’s IDRs and awards under our 2013 ICP (as defined in Note 12) that receive distribution equivalent right (DER) payments, as discussed in Note 12. 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.

Net losses of our Predecessor are allocated to the general partner. Subsequent to the effective dates of the acquisitions from Valero, we calculate net income available to limited partners based on the methodology described above.

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 years ended December 31, 2018, 2017, and 2016, 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 years ended December 31, 2018, 2017, and 2016.

Effective August 10, 2016, all of our subordinated units, which were owned by Valero, were converted on a one-for-one basis into common units. The subordinated units were only allocated earnings generated by us through the conversion date. See Note 11 regarding the conversion of subordinated units.

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VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net income per unit was computed as follows (inthousands, except per unit amounts):

	Year Ended December 31, 2018
	General Partner Valero		Limited Partners Common Units						Restricted Units
			Public		Valero		Total				Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	3,300	$	36,634	$	76,209	$	112,843	$	—	$	116,143
General partner’s IDRs	48,826		—		—		—		—		48,826
DERs	—		—		—		—		19		19
Distributions and DERs declared	52,126		36,634		76,209		112,843		19		164,988
Undistributed earnings	1,982		31,525		65,583		97,108		17		99,107
Net income available to limited partners – basic and diluted	$	54,108	$	68,159	$	141,792	$	209,951	$	36	$	264,095
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							$	3.03

	Year Ended December 31, 2017
	General Partner Valero		Limited Partners Common Units						Restricted Units
			Public		Valero		Total				Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	3,363	$	42,029	$	86,503	$	128,532	$	—	$	131,895
General partner’s IDRs	44,534		—		—		—		—		44,534
DERs	—		—		—		—		22		22
Distributions and DERs declared	47,897		42,029		86,503		128,532		22		176,451
Undistributed earnings	1,216		19,922		40,834		60,756		10		61,982
Net income available to limited partners – basic and diluted	$	49,113	$	61,951	$	127,337	$	189,288	$	32	$	238,433
Net income per limited partner common unit – basic and diluted:
Weighted-average units outstanding							68,220
Net income per limited partner common unit – basic and diluted							$	2.77

47

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Year Ended December 31, 2016
	General Partner Valero		Limited Partners Common Units						Limited Partners Subordinated Units		Restricted Units
			Public		Valero		Total						Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	2,294	$	32,362	$	47,263	$	79,625	$	20,297	$	—	$	102,216
General partner’s IDRs	19,354		—		—		—		—		—		19,354
DERs	—		—		—		—		—		20		20
Distributions and DERs declared	21,648		32,362		47,263		79,625		20,297		20		121,590
Undistributed earnings	1,905		26,322		33,130		59,452		21,289		17		82,663
Net income available to limited partners – basic and diluted	$	23,553	$	58,684	$	80,393	$	139,077	$	41,586	$	37	$	204,253
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding							48,817		17,463
Net income per limited partner unit – basic and diluted							$	2.85	$	2.38

48

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. PARTNERS’ CAPITAL

Unit Activity

Activity in the number of units was as follows:

	Limited Partners				General Partner Valero
	Common Unitholders Public	Common Unitholder Valero	Subordinated Unitholder Valero			Total
Balance as of December 31, 2015	21,509,651	15,018,602	28,789,989		1,332,829	66,651,071
Unit-based compensation	5,958	—	—		—	5,958
Units issued in connection with acquisitions (see Note 3)	—	1,878,680	—		38,340	1,917,020
Conversion of subordinated units	—	28,789,989	(28,789,989	)	—	—
Unit issuance under ATM Program	223,083	—	—		—	223,083
General partner units issued to maintain 2% interest	—	—	—		4,552	4,552
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 in connection with acquisitions (see Note 3)	—	1,081,315	—		22,068	1,103,383
Units issued under ATM Program	742,897	—	—		—	742,897
General partner units issued to maintain 2% interest	—	—	—		15,602	15,602
Balance as of December 31, 2017	22,487,586	46,768,586	—		1,413,391	70,669,563
Unit-based compensation (see Note 12)	5,898	—	—		—	5,898
General partner units issued to maintain 2% interest	—	—	—		120	120
Balance as of December 31, 2018	22,493,484	46,768,586	—		1,413,511	70,675,581

ATM Program

On September 16, 2016, we entered into an equity distribution agreement that permitted us to 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 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 December 31, 2018, we had sold common units having an aggregate value of $45.5 million under our ATM Program, resulting in $304.5 million remaining available.

49

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

There were no issuances of common units under our ATM Program for the year ended December 31, 2018. The following table 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 (in thousands, except unit amounts):

	Units Issued	Total Proceeds		Offering Costs		Net Proceeds
Year Ended December 31, 2017:
Common – public	742,897	$	35,728	$	594	$	35,134
General partner	15,602	748		—		748
Year Ended December 31, 2016:
Common – public	223,083	9,724		107		9,617
General partner	4,552	198		—		198

On January 10, 2019, in connection with the completion of the Merger, we terminated the equity distribution agreement. As a result, from and after the Effective Time, there will be no further sales of common units under our ATM Program. See Note 2 regarding the Merger with Valero.

Subordinated Unit Conversion

The requirements under our partnership agreement for the conversion of all of our outstanding subordinated units into common units were satisfied upon the payment of our quarterly cash distribution on August 9, 2016. Therefore, effective August 10, 2016, all of our subordinated units, which were owned by Valero, were converted on a one-for-one basis into common units. The conversion of the subordinated units does not impact the amount of cash distributions paid or the total number of outstanding units.

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. The transfers to (from) partners resulted from the issuance of equity (i) to Valero in connection with our acquisitions from Valero as described in Note 3 and (ii) under our ATM Program as described above.

50

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. UNIT-BASED COMPENSATION

Overview

Our general partner maintained the Valero Energy Partners LP 2013 Incentive Compensation Plan (2013 ICP) under which various unit and unit-based awards could be granted to employees and non-employee directors. Awards under the 2013 ICP included restricted units that vested over a period determined by the plan. The 2013 ICP was approved by the board of directors and the sole member of our general partner on November 26, 2013. As of December 31, 2018, 2,972,496 common units were available to be awarded under the 2013 ICP.

On January 10, 2019, in connection with the completion of the Merger, we terminated our 2013 ICP. As a result, from and after the Effective Time, no equity awards or other rights with respect to common units or other partnership interests will be granted or be outstanding thereunder. See Note 2 regarding the Merger with Valero.

Restricted Units

Restricted units were granted to each of our three independent directors (i.e., participants) in tandem with an equal number of DERs. The restricted units were scheduled to vest in accordance with individual written agreements between the participants and us in equal one-third increments on each anniversary of the restricted units’ grant date. The DERs entitled the participant to a cash payment equal to the cash distribution per unit paid on our outstanding common units and was paid to the participant in cash as of each record payment date during the period the restricted units were outstanding.

Unit-based compensation expense associated with these restricted units was $258,000,$266,000, and $196,000 for the years ended December 31, 2018, 2017, and 2016, respectively, and is recorded within general and administrative expenses on our statements of income.

Under the terms of Merger Agreement, immediately prior to the completion of the Merger, all restricted units outstanding received immediate and full acceleration of vesting and the associated DERs were canceled and ceased to exist. As a result, 11,880 restricted units became fully vested and $271,000 of previously unrecognized compensation cost will be recognized during 2019. Each holder of a restricted unit received $42.25 per unit with respect to each restricted unit that became vested, along with any corresponding accrued but unpaid distributions with the respect to the DERs related to such restricted unit. See Note 2 for a discussion of the Merger Agreement.

13. INCOME TAXES

Components of income tax expense were as follows (inthousands):

	Year Ended December 31,
	2018		2017		2016
Current U.S. state	$	1,177	$	942	$	704
Deferred U.S. state	376		393		408
Income tax expense	$	1,553	$	1,335	$	1,112

51

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We are not a taxable entity for U.S. federal income tax purposes or for the majority of states that impose an income tax. Taxes on our net income generally are borne by our partners through the allocation of taxable income. Our income tax expense results from state laws that apply to entities organized as partnerships, specifically in the state of Texas. The difference between income tax expense recorded by us and income taxes computed by applying the statutory federal income tax rate (21 percent for 2018 and 35 percent for 2017 and 2016) to income before income tax expense is due to the fact that our income is not subject to federal income tax at the entity level as described above.

As of December 31, 2018 and 2017, we had no liability reported for unrecognized tax benefits. We did not have any interest or penalties related to income taxes during the years ended December 31, 2018, 2017, and 2016.

14. 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 (inthousands):

	Year Ended December 31,
	2018			2017			2016
Decrease (increase) in current assets:
Receivables – related party	$	(1,272	)	$	(9,607	)	$	(10,786	)
Receivables	(24		)	(781		)	—
Prepaid expenses and other	(171		)	277			(365		)
Increase (decrease) in current liabilities:
Accounts payable	(5,347		)	7,411			586
Accounts payable – related party	9,786			(3,404		)	(667		)
Accrued liabilities	(149		)	137			34
Accrued liabilities – related party	(703		)	(2,589		)	3,436
Accrued interest payable	4,916			1,278			1,054
Accrued interest payable – related party	(27		)	864			(429		)
Taxes other than income taxes payable	(792		)	2,684			1,181
Changes in current assets and current liabilities	$	6,217		$	(3,730	)	$	(5,956	)

Cash flows related to interest and income taxes paid were as follows (in thousands):

	Year Ended December 31,
	2018		2017		2016
Interest paid	$	49,051	$	33,355	$	13,873
Income taxes paid	904		719		505

52

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents our investing and financing cash outflows in connection with our acquisitions from Valero as described in Note 3 (inthousands). Of the cash consideration paid, the portion attributed to Valero’s historical carrying value of each acquisition was reflected as an investing cash outflow and the excess purchase price paid over the carrying value of each acquisition was reflected as a financing cash outflow.

	Investing Cash Outflow		Financing Cash Outflow		Total Cash Outflow
Year ended December 31, 2017:
Parkway Pipeline	$	200,249	$	—	$	200,249
Port Arthur terminal	207,595		54,618		262,213
	$	407,844	$	54,618	$	462,462
Year ended December 31, 2016:
McKee Terminal Services Business	$	51,361	$	152,639	$	204,000
Meraux and Three Rivers Terminal Services Business	52,246		223,754		276,000
	$	103,607	$	376,393	$	480,000

Noncash investing and financing activities that affected recognized assets or liabilities were as follows (in thousands):

	Year Ended December 31,
	2018		2017		2016
Transfer (from) to Valero for:
Deferred income taxes	$	—	$	—	$	(190	)
Change in accrued capital expenditures	—		—		46
Noncash capital contributions from Valero:
Excess of carrying value over purchase price paid for acquisition of Parkway Pipeline (see Note 3)	—		51,702		—
Capital projects	43,658		41,305		35,732
Increase in accounts payable related to capital expenditures	1,120		570		904
Units issued to Valero in connection with acquisitions (see Note 3)	—		46,000		85,000
Units issued under ATM Program included in receivables	—		—		1,682

53

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In addition to the activities in the preceding table, noncash financing activities included:

• the transfers to (from) partners to reflect the impact of ownership changes occurring as a result of the issuance of equity (i) to Valero in connection with our acquisitions from Valero as described in Note 3 and (ii) under our ATM Program as described in Note 11 for the years ended December 31, 2018, 2017, and 2016; and

• the conversion of all of our outstanding subordinated units into common units having an aggregate value of $406.4 million as described in Note 11 for the year ended December 31, 2016.

15. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments that we recognize in our balance sheets at their carrying amounts are shown in the following table along with their associated fair values (in thousands):

	Fair Value Hierarchy	December31, 2018				December31, 2017
		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	Level 1	$	152,106	$	152,106	$	42,052	$	42,052
Financial liabilities:
Debt:
Revolver	Level 2	—		—		410,000		410,000
Senior Notes	Level 2	989,857		986,290		495,283		523,800
Notes payable – related party	Level 2	285,000		285,000		370,000		370,000

54

VALERO ENERGY PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables summarize quarterly financial data for the years ended December 31, 2018 and 2017 (in thousands, except per unit amounts):

	2018 Quarter Ended
	March 31		June 30		September 30		December 31
Total revenues – related party	$	131,942	$	134,627	$	140,590	$	139,268
Gross profit (a)	82,101		82,408		88,595		86,100
Operating income	77,989		78,250		84,513		77,750
Net income	66,079		64,019		70,349		63,648
Net income attributable to partners	66,079		64,019		70,349		63,648
Limited partners’ interest in net income	49,524		45,942		52,146		62,375
Net income per limited partner common unit – basic and diluted	0.72		0.66		0.75		0.90

	2017 Quarter Ended
	March 31		June 30		September 30		December 31
Total revenues – related party	$	105,816	$	110,545	$	109,340	$	126,304
Gross profit (a)	70,496		70,985		70,749		78,926
Operating income	66,666		67,122		66,347		74,895
Net income	58,137		58,443		57,589		64,264
Net income attributable to partners	58,137		58,443		57,589		64,264
Limited partners’ interest in net income	48,670		47,024		44,552		49,074
Net income per limited partner common unit – basic and diluted	0.72		0.69		0.65		0.71
(a) Gross profit is calculated as total revenues – related party less cost of revenues (excluding depreciation expense) and depreciation expense.

55

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that our disclosure controls and procedures were effective as of December 31, 2018.

Internal Control over Financial Reporting

(a) Management’s Report on Internal Control over Financial Reporting

The management report on the Partnership’s internal control over financial reporting required by Item 9A appears in Item 8 on page 19 of this report, and is incorporated herein by reference.

(b) Attestation Report of the Independent Registered Public Accounting Firm

KPMG LLP’s report on the Partnership’s internal control over financial reporting appears in Item 8 beginning on page 21 of this report, and is incorporated herein by reference.

(c) Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

56

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information for this item has been omitted pursuant to the reduced disclosure format as set forth in General Instruction (I)(2)(c) of Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

Information for this item has been omitted pursuant to the reduced disclosure format as set forth in General Instruction (I)(2)(c) of Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information for this item has been omitted pursuant to the reduced disclosure format as set forth in General Instruction (I)(2)(c) of Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information for this item has been omitted pursuant to the reduced disclosure format as set forth in General Instruction (I)(2)(c) of Form 10-K.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

Fees for professional services rendered by our independent auditor, KPMG LLP, for 2018 and 2017 are presented in the following table (in thousands).

Category	2018		2017
Audit fees (a)	$	1,470	$	1,502
Audit-related fees	—		—
Tax fees	—		—
All other fees	—		—
Total	$	1,470	$	1,502

(a) Represents fees for professional services rendered for the audit of the annual financial statements included in our annual reports on Form 10-K, review of our interim financial statements included in our quarterly reports on Form 10-Q, the audit of the effectiveness of our internal control over financial reporting, audits of acquired businesses, and services that are normally provided by the principal auditor (e.g., comfort letters, statutory audits, attest services, consents, and assistance with and review of documents filed with the SEC).

Prior to the closing of the Merger, we had an audit committee that adopted a pre-approval policy for the pre-approval of certain services rendered to us by KPMG LLP. That policy was effective from January 1, 2016 through December 31, 2018. None of the services provided by KPMG LLP were approved by the audit committee under the pre-approval waiver provisions of paragraph (c)(7)(i)(C) of Rule 2-01 of SEC Regulation S-K.

57

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)    1. Financial Statements.

	Page
Management’s report on internal control over financial reporting	19
Report of independent registered public accounting firm	20
Consolidated balance sheets as of December 31, 2018 and 2017	23
Consolidated statements of income for the years ended December 31, 2018, 2017, and 2016	24
Consolidated statements of partners’ capital for the years ended December 31, 2018, 2017, and 2016	25
Consolidated statements of cash flows for the years ended December 31, 2018, 2017, and 2016	26
Notes to consolidated financial statements	27

2. Financial Statement Schedules and Other Financial Information. No financial statement schedules are submitted because either they are inapplicable or because the required information is included in the consolidated financial statements or notes thereto.

3. Exhibits. Filed as part of this Form 10-K are the following exhibits:

2.01	—	Agreement and Plan of Merger, dated as of October 18, 2018, by and among Valero Energy Corporation, Forest Merger Sub, LLC, Valero Energy Partners LP, and Valero Energy Partners GP LLC–incorporated by reference to Exhibit 2.1 to the Partnership’s Current Report on Form 8-K dated and filed October 18, 2018 (SEC File No. 1-36232).
3.01	—	Certificate of Limited Partnership of Valero Energy Partners LP–incorporated by reference to Exhibit 3.1 to the Partnership’s Registration Statement on Form S-1 filed September 19, 2013 (SEC File No. 333-191259).
3.02	—	First Amended and Restated Agreement of Limited Partnership of Valero Energy Partners LP dated December 16, 2013–incorporated by reference to Exhibit 3.1 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
3.03	—	Amendment No. 1 to First Amended and Restated Agreement of Limited Partnership of Valero Energy Partners LP, dated December 19, 2017–incorporated by reference to Exhibit 3.01 to the Partnership’s Current Report on Form 8-K dated and filed December 19, 2017 (SEC File No. 1-36232).
3.04	—	Certificate of Formation of Valero Energy Partners GP LLC–incorporated by reference to Exhibit 3.3 to the Partnership’s Registration Statement on Form S-1 filed September 19, 2013 (SEC File No. 333-191259).
3.05	—	First Amended and Restated Limited Liability Company Agreement of Valero Energy Partners GP LLC dated December 16, 2013–incorporated by reference to Exhibit 3.2 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
4.01	—	Indenture dated November 30, 2016, between Valero Energy Partners LP and U.S. Bank National Association, as trustee–incorporated by reference to Exhibit 4.1 to the Partnership’s Post-Effective Amendment No. 1 to Registration Statement on Form S-3 (Reg. No. 333-208052) filed November 30, 2016.
4.02	—	Terms and Form of 4.375% Senior Notes due 2026–incorporated by reference to Exhibit 4.2 to the Partnership’s Current Report on Form 8-K dated and filed December 9, 2016 (SEC File No. 1-36232).

58

4.03	—	Terms and Form of 4.500% Senior Notes due 2028–incorporated by reference to Exhibit 4.2 to the Partnership’s Current Report on Form 8-K dated March 26, 2018, and filed March 29, 2018.
4.04	—	First Supplemental Indenture, dated as of January 10, 2019, among Valero Energy Partners LP, as issuer, Valero Energy Corporation, as parent guarantor, and U.S. Bank National Association, as trustee–incorporated by reference to Exhibit 4.2 to the Partnership’s Current Report on Form 8-K dated and filed January 10, 2019 (SEC File No. 1-36232).
10.01	—	Amended and Restated Omnibus Agreement dated July 1, 2014, by and among Valero Energy Corporation, Valero Marketing and Supply Company, Valero Terminaling and Distribution Company, The Premcor Refining Group Inc., The Premcor Pipeline Co., Valero Energy Partners LP, Valero Energy Partners GP LLC, Valero Partners Operating Co. LLC, Valero Partners EP, LLC, Valero Partners Lucas, LLC, Valero Partners Memphis, LLC, Valero Partners North Texas, LLC, Valero Partners South Texas, LLC, and Valero Partners Wynnewood, LLC–incorporated by reference to Exhibit 10.2 to the Partnership’s Current Report on Form 8-K dated and filed July 1, 2014 (SEC File No. 1-36232).
10.02	—	Amendment and Restatement of Schedules to Amended and Restated Omnibus Agreement, dated November 1, 2017, by and among the parties thereto–incorporated by reference to Exhibit 10.04 to the Partnership’s Current Report on Form 8-K dated November 1, 2017 and filed November 2, 2017 (SEC File No. 1-36232).
10.03	—	Amended and Restated Services and Secondment Agreement, dated March 1, 2015, by and among Valero Services, Inc., Valero Refining Company-Tennessee, L.L.C., Valero Refining-Texas, L.P., and Valero Energy Partners GP LLC–incorporated by reference to Exhibit 10.04 to the Partnership’s Current Report on Form 8-K dated March 1, 2015, and filed March 5, 2015 (SEC File No. 1-36232).
10.04	—	Amendment and Restatement of Exhibits to Amended and Restated Services and Secondment Agreement, dated November 1, 2017, by and among Valero Services, Inc., Valero Refining Company-Tennessee, L.L.C., Valero Refining-Texas, L.P., and Valero Energy Partners GP LLC–incorporated by reference to Exhibit 10.06 to the Partnership’s Current Report on Form 8-K dated November 1, 2017 and filed November 2, 2017 (SEC File No. 1-36232).
10.05	—	Tax Sharing Agreement dated December 16, 2013 by and between Valero Energy Partners LP and Valero Energy Corporation–incorporated by reference to Exhibit 10.3 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
10.06	—	Master Transportation Services Agreement dated December 16, 2013 by and between Valero Partners Operating Co. LLC and Valero Marketing and Supply Company–incorporated by reference to Exhibit 10.6 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
10.07	—	Master Terminal Services Agreement dated December 16, 2013 by and between Valero Partners Operating Co. LLC and Valero Marketing and Supply Company–incorporated by reference to Exhibit 10.7 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
10.08	—	Amended and Restated Subordinated Credit Agreement, dated as of November 12, 2015, by and between Valero Energy Partners LP and Valero Energy Corporation and the parties named therein (amending and restating that certain $160 million Subordinated Credit Agreement dated March 2, 2015)–incorporated by reference to Exhibit 10.29 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2015 (SEC File No. 1-36232).
10.09	—	Amended and Restated Subordinated Credit Agreement, dated as of November 12, 2015, by and between Valero Energy Partners LP and Valero Energy Corporation and the parties named therein (amending and restating that certain $395 million Subordinated Credit Agreement dated October 1, 2015)–incorporated by reference to Exhibit 10.30 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2015 (SEC File No. 1-36232).
*24.01	—	Power of Attorney dated February 25, 2019 (on the signature page of this Form 10-K).
*31.01	—	Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer.
*31.02	—	Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer.

59

**32.01	—	Section 1350 Certifications (under Section 906 of the Sarbanes-Oxley Act of 2002).
***101	—	Interactive Data Files

______________

* Filed herewith.

** Furnished herewith.

*** Submitted electronically herewith.

60

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

VALERO ENERGY PARTNERS LP
(Registrant)
by:	Valero Energy Partners GP LLC
	its general partner
by:	/s/ Joseph W. Gorder
	Joseph W. Gorder
	Chief Executive Officer

Date: February 25, 2019

61

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Joseph W. Gorder and Donna M. Titzman, or any of them, each with power to act without the other, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all subsequent amendments and supplements to this Annual Report on Form 10-K, and to file the same, or cause to be filed the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby qualifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Joseph W. Gorder	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	February 25, 2019
(Joseph W. Gorder)
/s/ Donna M. Titzman	Executive Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer)	February 25, 2019
(Donna M. Titzman)
/s/ Richard F. Lashway	President, Chief Operating Officer and Director	February 25, 2019
(Richard F. Lashway)
/s/ R. Lane Riggs	Director	February 25, 2019
(R. Lane Riggs)

62

EX-31.01

Exhibit 31.01

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph W. Gorder, certify that:

1.    I have reviewed this annual report on Form 10-K of Valero Energy Partners LP;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 25, 2019

/s/ Joseph W. Gorder

Joseph W. Gorder

Chief Executive Officer, Valero Energy Partners GP LLC

(the general partner of Valero Energy Partners LP)

EX-31.02

Exhibit 31.02

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Donna M. Titzman, certify that:

1.    I have reviewed this annual report on Form 10-K of Valero Energy Partners LP;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 25, 2019

/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)

EX-32.01

Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Valero Energy Partners LP (the Company) on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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)

February 25, 2019

A signed original of the written statement required by Section 906 has been provided to Valero Energy Partners LP and will be retained by Valero Energy Partners LP and furnished to the Securities and Exchange Commission or its staff upon request.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Valero Energy Partners LP (the Company) on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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)

February 25, 2019

A signed original of the written statement required by Section 906 has been provided to Valero Energy Partners LP and will be retained by Valero Energy Partners LP and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Jan. 31, 2019	Jun. 29, 2018
Entity Information
Entity Registrant Name	VALERO ENERGY PARTNERS LP
Entity Central Index Key	0001583103
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 856.3
Limited Partner Common Units [Member]
Entity Information
Entity Common Stock, Units Outstanding		46,768,586
General Partner Valero [Member]
Entity Information
Entity Common Stock, Units Outstanding		1,413,511

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 152,106	$ 42,052
Receivables – related party	47,768	46,496
Receivables	805	781
Prepaid expenses and other	891	720
Total current assets	201,570	90,049
Property and equipment, at cost	2,026,390	1,969,233
Accumulated depreciation	(617,206)	(552,817)
Property and equipment, net	1,409,184	1,416,416
Deferred charges and other assets, net	8,855	10,887
Total assets	1,619,609	1,517,352
Current liabilities:
Accounts payable	14,406	18,633
Accounts payable – related party	13,730	3,944
Accrued liabilities	858	1,007
Accrued liabilities – related party	425	1,128
Accrued interest payable	7,474	2,558
Accrued interest payable – related party	884	911
Taxes other than income taxes payable	4,349	5,141
Total current liabilities	42,126	33,322
Debt	989,857	905,283
Notes payable – related party	285,000	370,000
Other long-term liabilities	3,923	2,950
Commitments and contingencies
Partners’ capital:
Total partners’ capital	298,703	205,797
Total liabilities and partners’ capital	1,619,609	1,517,352
Limited Partner [Member] | Common Unitholders Public [Member]
Partners’ capital:
Common unitholders	620,137	596,047
Total partners’ capital	620,137	596,047
Limited Partner [Member] | Common Unitholder Valero [Member]
Partners’ capital:
Common unitholders	(300,457)	(382,652)
Total partners’ capital	(300,457)	(382,652)
General Partner Valero [Member]
Partners’ capital:
General partner – Valero	(20,977)	(7,598)
Total partners’ capital	$ (20,977)	$ (7,598)

XML

Consolidated Balance Sheets (Parenthetical) - shares	Dec. 31, 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

XML

Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands		12 Months Ended
		Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenues – related party:
Revenues from lease contracts		$ 436,609	$ 351,532	$ 273,730
Revenues from contracts with customer		109,818	100,473	88,889
Total revenues – related party		546,427	452,005	362,619
Costs and expenses:
Cost of revenues from lease contracts (excluding depreciation expense reflected below)	[1]	104,776	83,332	75,380
Depreciation expense associated with lease contracts		63,499	40,950	33,961
Other operating expenses		0	577	0
General and administrative expenses	[2]	20,702	15,549	15,965
Total costs and expenses		227,925	176,975	158,045
Operating income		318,502	275,030	204,574
Other income, net		2,214	753	284
Interest and debt expense, net of capitalized interest	[3]	(55,068)	(36,015)	(14,915)
Income before income tax expense		265,648	239,768	189,943
Income tax expense		1,553	1,335	1,112
Net income		264,095	238,433	188,831
Less: Net loss attributable to Predecessor		0	0	(15,422)
Net income attributable to partners		264,095	238,433	204,253
Less: General partner’s interest in net income		54,108	49,113	23,553
Limited partners’ interest in net income		$ 209,987	$ 189,320	$ 180,700
Net income per limited partner unit – basic and diluted:
Common units (in dollars per unit)		$ 3.03	$ 2.77	$ 2.85
Subordinated units (in dollars per unit)		$ 0.00	$ 0.00	$ 2.38
Weighted-average limited partner units outstanding – basic and diluted:
Common units (units)		69,250	68,220	48,817
Subordinated units (units)		0	0	17,463
Services [Member]
Revenues – related party:
Revenues from contracts with customer		$ 109,818	$ 100,473	$ 88,889
Costs and expenses:
Cost of revenues from contracts with customer (excluding depreciation expense reflected below)	[4]	26,319	25,042	20,735
Depreciation expense associated with contracts with customer		$ 12,629	$ 11,525	$ 12,004

[1] Includes cost of revenues from lease contracts (excluding depreciation expense) – related party of $70,930 thousand, $59,953 thousand, and $56,138 thousand for the years ended December 31, 2018, 2017, and 2016, respectively.

[2] Includes general and administrative expenses – related party of $13,445 thousand, 12,858 thousand, and $12,539 thousand for the years ended December 31, 2018, 2017, and 2016, respectively.

[3] Includes interest and debt expense – related party of $10,693 thousand, $9,658 thousand, and $6,608 thousand for the years ended December 31, 2018, 2017, and 2016, respectively.

[4] Includes cost of revenues from contracts with customer (excluding depreciation expense) – related party of $8,313 thousand, $7,114 thousand, and $5,511 thousand for the years ended December 31, 2018, 2017, and 2016, respectively.

XML

Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Supplemental Information [Abstract]
Cost of revenues from lease contracts (excluding depreciation expense) – related party	$ 70,930	$ 59,953	$ 56,138
General and administrative expenses – related party	13,445	12,858	12,539
Interest and debt expense – related party	10,693	9,658	6,608
Services [Member]
Supplemental Information [Abstract]
Cost of revenues from contracts with customer (excluding depreciation expense) – related party	$ 8,313	$ 7,114	$ 5,511

XML

Consolidated Statements of Partners' Capital - USD ($) $ in Thousands	Total	Limited Partner [Member] Common Unitholders Public [Member]	Limited Partner [Member] Common Unitholder Valero [Member]	Limited Partner [Member] Subordinated Unitholder Valero [Member]	General Partner Valero [Member]	Net Investment [Member]
Beginning balance at Dec. 31, 2015	$ 394,152	$ 581,489	$ 28,430	$ (313,961)	$ (5,805)	$ 103,999
Net income (loss):
Net loss attributable to Predecessor	(15,422)					(15,422)
Net income attributable to partners	204,253	58,688	76,690	45,322	23,553
Net transfers from Valero Energy Corporation	15,030					15,030
Allocation of Valero Energy Corporation’s net investment in acquisitions and Other	0		67,800	32,758	3,049	(103,607)
Acquisitions of businesses from Valero Energy Corporation:
Cash paid for carrying value of acquired businesses	(103,607)		(67,800)	(32,758)	(3,049)
Cash paid in excess of carrying value of acquired businesses/assets acquired from Valero Energy Corporation	(376,393)		(246,759)	(120,309)	(9,325)
Conversion of subordinated units	0		(406,374)	406,374
Unit issuance	11,289	11,091			198
Transfers to (from) partners	0	(72,452)	76,584		(4,132)
Noncash capital contributions from Valero Energy Corporation	35,732		22,730	12,084	918
Cash distributions to unitholders and distribution equivalent right payments	(109,406)	(30,393)	(33,498)	(29,510)	(16,005)
Unit-based compensation	196	196
Ending balance at Dec. 31, 2016	55,824	548,619	(482,197)	0	(10,598)	0
Net income (loss):
Net loss attributable to Predecessor	0
Net income attributable to partners	238,433	62,014	127,306		49,113
Acquisitions of businesses from Valero Energy Corporation:
Cash paid in excess of carrying value of acquired businesses/assets acquired from Valero Energy Corporation	(54,618)		(53,045)		(1,573)
Unit issuance	34,176	33,428			748
Transfers to (from) partners	0	(8,773)	15,957		(7,184)
Noncash capital contributions from Valero Energy Corporation	93,007		90,666		2,341
Cash distributions to unitholders and distribution equivalent right payments	(161,291)	(39,507)	(81,339)		(40,445)
Unit-based compensation	266	266
Ending balance at Dec. 31, 2017	205,797	596,047	(382,652)	0	(7,598)	0
Net income (loss):
Net loss attributable to Predecessor	0
Net income attributable to partners	264,095	68,171	141,816		54,108
Allocation of Valero Energy Corporation’s net investment in acquisitions and Other	(67)		(66)		(1)
Acquisitions of businesses from Valero Energy Corporation:
Unit issuance	5				5
Transfers to (from) partners	0	3,730	(2,396)		(1,334)
Noncash capital contributions from Valero Energy Corporation	43,658		42,785		873
Cash distributions to unitholders and distribution equivalent right payments	(215,043)	(48,069)	(99,944)		(67,030)
Unit-based compensation	258	258
Ending balance at Dec. 31, 2018	$ 298,703	$ 620,137	$ (300,457)	$ 0	$ (20,977)	$ 0

XML

Consolidated Statements of Partners' Capital (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Partners' Capital [Abstract]
Cash distribution paid per unit (in dollars per unit)	$ 1.41	$ 1.769	$ 2.137

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities:
Net income	$ 264,095	$ 238,433	$ 188,831
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	76,128	52,475	45,965
Changes in current assets and current liabilities	6,217	(3,730)	(5,956)
Changes in deferred charges and credits and other operating activities, net	4,102	1,753	1,054
Net cash provided by operating activities	350,542	288,931	229,894
Cash flows from investing activities:
Capital expenditures	(24,216)	(38,516)	(23,156)
Other investing activities, net	8	302	31
Net cash used in investing activities	(24,208)	(517,851)	(126,732)
Cash flows from financing activities:
Proceeds from debt borrowings	0	380,000	349,000
Proceeds from issuance of senior notes	498,300	0	499,795
Repayment of debt and capital lease obligations	(410,000)	0	(494,913)
Repayment of notes payable – related party	(85,000)	0	0
Payment of debt issuance costs	(4,542)	(492)	(4,462)
Proceeds from issuance of common units	0	35,728	9,724
Proceeds from issuance of general partner units	5	748	198
Payment of offering costs	0	(594)	(883)
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets	0	(54,618)	(376,393)
Cash distributions to unitholders and distribution equivalent right payments	(215,043)	(161,291)	(109,406)
Net transfers from Valero Energy Corporation	0	0	14,886
Net cash provided by (used in) financing activities	(216,280)	199,481	(112,454)
Net increase (decrease) in cash and cash equivalents	110,054	(29,439)	(9,292)
Cash and cash equivalents at beginning of year	42,052	71,491	80,783
Cash and cash equivalents at end of year	152,106	42,052	71,491
Majority Shareholder [Member]
Cash flows from investing activities:
Acquisition of interest in crude system and acquisitions from Valero Energy Corporation	0	(407,844)	(103,607)
Cash flows from financing activities:
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets		(54,618)	(376,393)
Net transfers from Valero Energy Corporation			14,886
Red River Crude System [Member]
Cash flows from investing activities:
Acquisition of interest in crude system and acquisitions from Valero Energy Corporation	$ 0	$ (71,793)	$ 0

XML

Description of Business, Basis of Presentation, and Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES

1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICES

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 (VLO), and “Valero” refers collectively to VLO and its subsidiaries, other than Valero Energy Partners LP, any of its subsidiaries, or its general partner.

We were formed by Valero in July 2013 to own, operate, develop, and acquire crude oil and refined petroleum products pipelines, terminals, and other logistics assets. See Note 2 regarding our merger with Valero that occurred on January 10, 2019. 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 services.

Basis of Presentation

General

These consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP) and with the rules and regulations of the U.S. Securities and Exchange Commission (SEC).

Acquisitions from Valero

Certain of our acquisitions from Valero, as described in Note 3, were accounted for as transfers of businesses between entities under the common control of Valero. Accordingly, we recorded these business acquisitions on our balance sheet at Valero’s carrying value as of the beginning of the period of transfer, and we retrospectively adjusted prior period financial statements and financial information to furnish comparative information. We refer to the historical results of the transferred businesses from Valero prior to their transfer to us as those of our “Predecessor.”

The combined financial statements of our Predecessor were derived from the consolidated financial statements and accounting records of Valero and reflect the combined historical financial position, results of operations, and cash flows of our Predecessor as if the acquisitions from Valero had been combined for periods prior to the effective dates of each acquisition.

There were no transactions between the operations of our Predecessor; therefore, there were no intercompany transactions or accounts to be eliminated in connection with the combination of those operations. In addition, our Predecessor’s statements of income include direct charges for the management and operation of our assets and certain expenses allocated by Valero for general corporate services, such as treasury, accounting, and legal services. These expenses were charged, or allocated, to our Predecessor based on the nature of the expenses. Prior to the acquisitions from Valero, our Predecessor transferred cash to Valero daily and Valero funded our Predecessor’s operating and investing activities as needed. Therefore, transfers of cash to and from Valero’s cash management system are reflected as a component of net investment and are reflected as a financing activity in our statements of cash flows. In addition, interest expense was not included on the net cash transfers from Valero.

The acquisitions of Parkway Pipeline LLC (Parkway Pipeline) and the Port Arthur terminal (as defined in Note 3) 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.

The financial information presented for the periods after the effective dates of each acquisition represents the consolidated financial position, results of operations, and cash flows of the Partnership.

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 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 prior year amounts have been reclassified to conform to the 2018 presentation.

Significant Accounting Policies

Principles of Consolidation

Our consolidated financial statements include the accounts of the Partnership, our subsidiaries, and our Predecessor. All intercompany items and transactions have been eliminated.

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.

Cash Equivalents

Our cash equivalents are highly liquid investments that have a maturity of three months or less when acquired.

Receivables – Related Party

Receivables – related party include trade receivables from Valero for transportation and terminaling services provided under various agreements with Valero, as described in Note 4. These receivables are recorded at the original invoice amount.

Property and Equipment

The cost of property and equipment purchased or constructed, including betterments of property and equipment, is capitalized. However, the cost of repairs to and normal maintenance of property and equipment is expensed when incurred. Betterments of property and equipment are those that extend the useful lives of the property and equipment or improve the safety of our operations. The cost of property and equipment constructed includes interest and certain overhead costs allocable to the construction activities. Property and equipment also includes our undivided interest in certain assets.

When property and equipment are retired or replaced, the cost and related accumulated depreciation are eliminated, with any gain or loss reflected in depreciation expense, unless such amounts are reported separately due to materiality.

Depreciation of property and equipment is recorded on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful life of the related asset.

Impairment of Assets

Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. A long-lived asset is not recoverable if its carrying amount exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If a long-lived asset is not recoverable, an impairment loss is recognized for the amount by which the carrying amount of the long-lived asset exceeds its fair value, with fair value determined based on discounted estimated net cash flows or other appropriate methods.

Asset Retirement Obligations

We record a liability, which is referred to as an asset retirement obligation, at fair value for the estimated cost to retire a tangible long-lived asset at the time we incur that liability, which is generally when the asset is purchased, constructed, or leased. We record the liability when we have a legal obligation to incur costs to retire the asset and when a reasonable estimate of the fair value of the liability can be made. If a reasonable estimate cannot be made at the time the liability is incurred, we record the liability when sufficient information is available to estimate the liability’s fair value.

Environmental Matters

Liabilities for future remediation costs are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. Other than for assessments, the timing and magnitude of these accruals generally are based on the completion of investigations or other studies or a commitment to a formal plan of action. Amounts recorded for environmental liabilities have not been reduced by possible recoveries from third parties and have not been measured on a discounted basis.

Net Investment

Net investment represents Valero’s historical investment in our Predecessor, its accumulated net earnings after taxes, and the net effect of transactions and allocations between our Predecessor and Valero. There were no terms of settlement or interest charges associated with the net investment balance.

Revenue Recognition

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

The FASB issued Topic 606, which clarifies the principles for recognizing revenue and supersedes previous revenue recognition requirements under “Revenue Recognition (Topic605).” We adopted the provisions of Topic 606 on January 1, 2018 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 Topic606 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 January1, 2018. Additionally, there was no material impact to our financial position or results of operations as of and for the year endedDecember 31, 2018. See Note 7 for information on our revenues. As a result of our adoption of Topic 606, our revenue recognition accounting policy has been revised.

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.

Income Taxes

Our operations are treated as a partnership for federal and state income tax purposes, with each partner being separately taxed on its share of taxable income. Therefore, we have excluded income taxes from these financial statements, except for state taxes that apply to partnerships, specifically the margin tax in Texas. Our Predecessor’s taxable income was included in the consolidated U.S. federal income tax returns of Valero and in certain consolidated state income tax returns.

Income taxes are accounted for under the asset and liability method, as if we were a separate taxpayer rather than a member of Valero’s consolidated tax return. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred amounts are measured using enacted tax rates expected to apply to taxable income in the year those temporary differences are expected to be recovered or settled.

We classify any interest expense and penalties related to the underpayment of income taxes in income tax expense.

Net Income per Limited Partner Unit

Basic and diluted net income per limited partner unit is determined pursuant to the two-class method for master limited partnerships as described in Note 10.

Comprehensive Income

We have not reported comprehensive income due to the absence of items of other comprehensive income in the years presented.

Segment Reporting

Our operations consist of one reportable segment. All of our operations are conducted and all of our assets are located in the U.S.

Financial Instruments

Our financial instruments include cash and cash equivalents, receivables, receivables – related party, accounts payable, accounts payable – related party, debt, and notes payable – related party. The estimated fair values of these financial instruments approximate their carrying amounts, except for certain debt as discussed in Note 15.

Business Combinations

We adopted the provisions of Accounting Standards Update (ASU) No. 2017-01, “Business Combinations (Topic 805),” issued by the FASB, on January 1, 2017. This ASU provides a more robust framework to evaluate whether transactions should be accounted for as acquisitions (dispositions) of assets or businesses. Our adoption of this ASU resulted in the acquisitions of Parkway Pipeline and the Port Arthur terminal being accounted for as acquisitions of assets, which are discussed in Note 3. In addition, more of our future acquisitions may be accounted for as acquisitions of assets in accordance with this ASU.

Accounting Pronouncement Adopted on January1, 2019

In February 2016, the FASB issued Topic 842 “Leases” (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 reporting periods, with early adoption permitted. We adopted this new standard on January 1, 2019 using the optional transition method; however, we did not have a cumulative-effect adjustment to the opening balance of partners’ capital at the date of adoption. The adoption of this standard did not have a material affect on our financial position.

The new standard provides a number of optional practical expedients and we elected the following:

• Transition Elections. We elected the package of practical expedients that permits us to not reassess our prior conclusions about lease identification, lease classification, and initial direct costs under the new standard, as well as the practical expedient that permits us to not assess existing land easements under the new standard.

• Lessee Accounting Policy Elections. We elected the short-term lease recognition exemption whereby right-of-use assets and lease liabilities will not be recognized for leasing arrangements with terms less than one year, and the practical expedient to not separate lease and non-lease components for all classes of underlying assets other than the real estate asset class.

• Lessor Accounting Policy Election. We elected the practical expedient to account for lease and non-lease components in a contract as a single lease component for all classes of underlying assets.

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Merger With Valero

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

MERGER WITH VALERO

2. MERGER WITH VALERO

On January 10, 2019, pursuant to that certain Agreement and Plan of Merger, dated as of October 18, 2018 (the Merger Agreement), by and among VLO, Forest Merger Sub, LLC, an indirect wholly owned subsidiary of VLO (Merger Sub), Valero Energy Partners LP, and Valero Energy Partners GP LLC, Merger Sub merged with and into the Partnership (the Merger), with the Partnership surviving and continuing to exist as a Delaware limited partnership.

Under the terms of the Merger Agreement, at the effective time of the Merger (the Effective Time), subject to the terms and conditions set forth in the Merger Agreement, each of the common units representing limited partner interests in the Partnership, other than common units owned by Valero, was converted into the right to receive $42.25 per common unit in cash without any interest thereon, and all such publicly traded common units were automatically canceled and ceased to exist. Upon completion of the Merger, Valero paid aggregate merger consideration of $950.0 million. The Partnership’s incentive distribution rights (IDRs), general partner interest, and common units owned by Valero were unaffected by the Merger and no consideration was delivered in respect thereof.

On January 10, 2019, in connection with the completion of the Merger, the New York Stock Exchange (NYSE) filed with the SEC a notification of removal from listing on Form 25 to delist and deregister the publicly traded common units under Section 12(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act), and suspended trading of the common units on the NYSE prior to the opening of trading on January 10, 2019. On January 22, 2019, the Partnership filed with the SEC a Form 15 suspending the Partnership’s reporting obligations under Section 13 and Section 15(d) of the Exchange Act.

In connection with the completion of the Merger, we entered into an agreement under which VLO unconditionally and irrevocably guaranteed the prompt payment, when due, of any amount owed to the holders of our 2026 Senior Notes and 2028 Senior Notes as defined and discussed in Note 6. We also terminated (i) our Revolver as defined and discussed in Note 6, (ii) our equity distribution agreement related to our ATM Program as defined and discussed in Note 11, and (iii) our 2013 ICP as defined and discussed in Note 12.

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Acquisitions

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

ACQUISITIONS

3. ACQUISITIONS

 In connection with the following acquisitions, we entered into various agreements with Valero, including additional schedules to our commercial agreements, an amended and restated omnibus agreement, an amended and restated services and secondment agreement, and lease agreements. See Note 4 for a summary of the terms of these agreements.

Acquisitions in 2017

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) two150,000 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 available 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, 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 Valero cash consideration of $200.0 million for Parkway Pipeline. We funded the cash distribution with $82.0 million of our cash on hand and $118.0 million of borrowings under the Revolver (as defined in Note 6). 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.

Acquisitions in 2016

McKee Terminal Services Business

On April 1, 2016, we acquired from Valero a subsidiary that owns and operates a crude oil, intermediates, and refined petroleum products terminal supporting Valero’s McKee Refinery for total consideration of $240.0 million, which consisted of (i) a cash distribution of $204.0 million and (ii) the issuance of 728,775 common units and 14,873 general partner units to Valero having an aggregate value of $36.0 million. We funded the cash distribution with $65.0 million of our cash on hand and $139.0 million of borrowings under the Revolver. This acquisition was accounted for as a transfer of a business between entities under the common control of Valero. See Note 1 regarding the accounting and basis of presentation of this acquisition.

Meraux and Three Rivers Terminal Services Business

On September 1, 2016, we acquired from Valero two subsidiaries that own and operate crude oil, intermediates, and refined petroleum products terminals supporting Valero’s Meraux and Three Rivers Refineries for total consideration of $325.0 million which consisted of (i) a cash distribution of $276.0 million and (ii) the issuance of 1,149,905 common units and 23,467 general partner units to Valero having an aggregate value of $49.0 million. We funded the cash distribution with $66.0 million of our cash on hand and $210.0 million of borrowings under the Revolver. This acquisition was accounted for as a transfer of a business between entities under the common control of Valero. See Note 1 regarding the accounting and basis of presentation of this acquisition.

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Related-Party Agreements and Transactions

12 Months Ended

Dec. 31, 2018

Related Party Transactions [Abstract]

RELATED-PARTY AGREEMENTS AND TRANSACTIONS

4. RELATED-PARTY AGREEMENTS AND TRANSACTIONS

Predecessor Transactions

Our Predecessor was part of the consolidated operations of Valero and all of our operating revenues were derived from transactions with Valero. The crude oil and refined petroleum products pipeline transportation and terminaling services we provided to Valero were settled through net parent investment, and payables and receivables related to these transactions were included as a component of net investment.

Prior to the dates of each of our business acquisitions from Valero, our operating and general and administrative expenses included charges to our Predecessor for the management of our operations and the allocation of certain overhead and shared services expenses by Valero. These charges and allocations included such items as management oversight, information technology, legal, human resources, and other financial and administrative services. These allocations do not fully reflect the expenses that would have been incurred had we been a stand-alone limited partnership. Our management believes the charges allocated to our Predecessor were a reasonable reflection of the utilization of services provided, but they cannot be presumed to be carried out on an arm’s-length basis as the requisite conditions of competitive, free-market dealings may not have existed.

Agreements with Valero

Commercial Agreements

We have transportation services agreements and a terminal services agreement (collectively, the commercial agreements) with Valero. Under these commercial agreements, we provide transportation and terminaling services to Valero and Valero pays us for minimum quarterly throughput volumes of crude oil and refined petroleum products, regardless of whether such volumes are physically delivered by Valero in any given quarter. In connection with our initial public offering (IPO) and subsequent acquisitions, we entered into schedules under these commercial agreements. Each schedule generally has an initial term of ten years, provides Valero an option to renew for one additional five-year term, and contains minimum throughput requirements and inflation escalators.

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 services 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.

Amended and Restated Omnibus Agreement

We have an amended and restated omnibus agreement with Valero, certain of its subsidiaries, and our general partner that addresses our payment of an annual administrative fee and our obligation to reimburse Valero for certain direct or allocated costs and expenses incurred by Valero on our behalf. This agreement also addresses, but is not limited to, indemnification rights of Valero and us for certain environmental and other liabilities related to our assets. As of December 31, 2018, the annual administrative fee was $13.2 million.

So long as Valero controls our general partner, the amended and restated omnibus agreement will remain in full force and effect. If Valero ceases to control our general partner, either party may terminate the amended and restated omnibus agreement, provided that the indemnification obligations will remain in full force and effect in accordance with their terms.

Amended and Restated Services and Secondment Agreement

Under the terms of an amended and restated services and secondment agreement, including its amended and restated exhibits, employees of Valero are seconded to our general partner to provide operational and maintenance services for certain of our pipelines and terminals, and we reimburse our general partner for these costs. During their period of secondment, the seconded employees are under the management and supervision of our general partner.

This agreement has an initial term of ten years from the Service Date (as defined in the agreement) with respect to each acquisition and will automatically extend for successive renewal terms of one year each, unless terminated by either party upon at least 30 days’ prior written notice before the end of the initial term or any renewal term. In addition, our general partner may terminate the agreement or reduce the level of services under the agreement at any time upon 30 days’ prior written notice.

Lease Agreements

We have lease agreements with Valero with respect to the land on which certain terminals are located. Generally, each lease agreement has an initial term of ten years with four automatic successive renewal periods of five years each. Either party may terminate each lease agreement after the initial term by providing written notice. We also have a ground lease agreement with an initial term of twenty years and no renewal periods. Initial base rent under these lease agreements is subject to annual inflation escalators, and we are required to pay Valero a customary expense reimbursement for taxes, utilities, and similar costs incurred by Valero related to the leased premises. See Note 9 regarding our lease commitments with Valero.

Tax Sharing Agreement

Under our tax sharing agreement with Valero, we are required to reimburse Valero for our share of state and local income and other taxes incurred by Valero as a result of our tax items and attributes being included in a combined or consolidated state tax return filed by Valero with respect to taxable periods including or beginning on or after the closing date of the IPO. The amount of any such reimbursement will be limited to any entity-level tax that we would have paid directly had we not been included in a combined group with Valero. While Valero may use its tax attributes to cause its combined or consolidated group, of which we may be a member for this purpose, to owe no tax, we are nevertheless required to reimburse Valero for the tax we would have owed had the attributes not been available or used for our benefit, even though Valero had no cash expense for that period.

Subordinated Credit Agreements

As of December 31, 2018, we had subordinated credit agreements with Valero as described in Note 6.

Summary of Transactions

Revenues – Related Party

Revenues – related party include revenues from lease contracts and revenues from contracts with our customer as described in Note 7.

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.

Insurance Recoveries

During 2017, we experienced property damage losses and repair costs associated with Hurricane Harvey primarily at our Houston terminal and Port Arthur products system. As a result of these losses, we submitted claims under our insurance policies with Valero. The amount shown in our statements of income as other operating expenses reflects the uninsured portion of our losses. For the year ended December 31, 2017, we recognized $2.7 million of insurance recoveries, which were recorded as a reduction to other operating expenses.

Net Investment

The following is a reconciliation of the amounts presented as net transfers from Valero on our statement of partners’ capital and statement of cash flows for the year ended December 31, 2016 (in thousands):

Net transfers from Valero per statements of partners’ capital	$	15,030
Less: Noncash transfers from Valero	144
Net transfers from Valero per statements of cash flows	$	14,886

See Note 14 for additional information related to our noncash transfers from (to) Valero.

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.

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Property and Equipment

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

5. PROPERTY AND EQUIPMENT

Our property and equipment includes non-leased assets and assets under operating leases for which we are the lessor under U.S. GAAP. Major classes of property and equipment consisted of the following (in thousands):

	December 31, 2018
	Non-Leased Assets			Assets Leased to Valero			Total
Land	$	4,672		$	—		$	4,672
Pipelines and related assets	225,413			386,596			612,009
Terminals and related assets	138,981			1,227,451			1,366,432
Other	14,138			—			14,138
Construction in progress	29,139			—			29,139
Property and equipment, at cost	412,343			1,614,047			2,026,390
Accumulated depreciation	(137,651		)	(479,555		)	(617,206		)
Property and equipment, net	$	274,692		$	1,134,492		$	1,409,184

	December 31, 2017
	Non-Leased Assets			Assets Leased to Valero			Total
Land	$	4,672		$	—		$	4,672
Pipelines and related assets	225,184			385,855			611,039
Terminals and related assets	134,362			1,162,718			1,297,080
Other	14,019			—			14,019
Construction in progress	42,423			—			42,423
Property and equipment, at cost	420,660			1,548,573			1,969,233
Accumulated depreciation	(127,136		)	(425,681		)	(552,817		)
Property and equipment, net	$	293,524		$	1,122,892		$	1,416,416

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Debt and Notes Payable - Related Party

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

DEBT AND NOTES PAYABLE - RELATED PARTY

6. DEBT AND NOTES PAYABLE – RELATED PARTY

Debt

Debt, at stated values, consisted of the following (in thousands):

	Maturity Date	December 31,
		2018			2017
Revolver	November 2020	$	—		$	410,000
2026 Senior Notes, 4.375%	December 2026	500,000			500,000
2028 Senior Notes, 4.5%	March 2028	500,000			—
Net unamortized discount and debt issuance costs		(10,143		)	(4,717		)
Debt		$	989,857		$	905,283

Revolver

As of December 31, 2018, we had a $750.0 million senior unsecured revolving credit facility agreement (the Revolver) that was scheduled to mature in November 2020.

Outstanding borrowings under the Revolver bore interest, at our option, at either (a) the adjusted LIBO rate (as defined in the Revolver) for the applicable interest period in effect from time to time plus the applicable margin or (b) the alternate base rate (as defined in the Revolver) plus the applicable margin.As of December 31, 2017, the variable rate was 2.875 percent.Accrued interest was payable in arrears on each Interest Payment Date (as defined in the Revolver) and on the maturity date. The Revolver also required payments for customary fees, including commitment fees, letter of credit participation fees, and administrative agent fees.

The Revolver contained certain restrictive covenants, including a covenant that required us to maintain a ratio of total debt to EBITDA (as defined in the Revolver) for the prior four fiscal quarters of not greater than 5.0 to 1.0 as of the last day of each fiscal quarter (5.5to1.0 during the specified period following certain acquisitions). The Revolver contained representations and warranties, affirmative and negative covenants, and events of default that are usual and customary for an agreement of this type. As a result of the Partnership obtaining an investment grade rating with respect to the issuance of its senior notes (described below) in December 2016,our directly owned subsidiary, Valero Partners Operating Co. LLC, was released of its guarantee under the Revolver.

During the year ended December 31, 2018, we repaid the outstanding balance of $410.0 million on the Revolver as discussed below under “2028 Senior Notes.” During the year ended December 31, 2017, we borrowed $118.0 million and $262.0 million under the Revolver in connection with the acquisitions of Parkway Pipeline and the Port Arthur terminal, respectively, as described in Note 3. During the year ended December 31, 2016, we borrowed $139.0 million and $210.0 million under the Revolver in connection with the acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business, respectively, as described in Note 3, and repaid $494.0 million under the Revolver as discussed below under “2026 Senior Notes.”

As of December 31, 2018 and 2017, we had no letters of credit outstanding and we incurred no debt issuance costs in connection with the Revolver.

On January 10, 2019, in connection with the completion of the Merger, we terminated our Revolver.

Senior Notes

2028Senior Notes

During the year ended December 31, 2018, we issued in a public offering $500.0 million aggregate principal amount of 4.5 percent Senior Notes due March 15, 2028 (2028 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 (as defined below) with Valero. Interest is payable semi-annually on March 15 and September 15.

The 2028 Senior Notes are unsecured and contain various customary restrictive covenants that, among other things, limit our ability and the ability of our subsidiaries 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 are subject to a number of important qualifications and limitations. As of December 31, 2018, the 2028 Senior Notes were not guaranteed by any of our subsidiaries.

2026Senior Notes

During the year ended December 31, 2016, we issued in a public offering $500.0 million aggregate principal amount of our 4.375 percent Senior Notes due December 15, 2026 (2026 Senior Notes). Gross proceeds from this debt issuance totaled $499.8 million before deducting the underwriting discount and other debt issuance costs totaling $4.5 million. We used the proceeds to repay $494.0 million under the Revolver. Interest is payable semi-annually on June 15 and December 15.

The 2026 Senior Notes are unsecured and contain various customary restrictive covenants that, among other things, limit our ability and the ability of our subsidiaries 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 are subject to a number of important qualifications and limitations. As of December 31, 2018, the 2026 Senior Notes were not guaranteed by any of our subsidiaries.

Guarantee of Senior Notes

On January 10, 2019, in connection with the completion of the Merger, VLO unconditionally and irrevocably guaranteed the prompt payment, when due, of any amount owed to the holders of our 2026 Senior Notes and 2028 Senior Notes, thereby suspending our Section 15(d) reporting obligation pursuant to Rule 12h-5 of the Exchange Act.

Notes Payable – Related Party

As of December 31, 2018, we had two subordinated credit agreements with Valero (the Loan Agreements), under which we had outstanding loans. The loans were scheduled to mature on March 1 and October 1, 2020, respectively, and were permitted to be prepaid at any time without penalty. We were not permitted to reborrow amounts. The loans bore interest at the LIBO Rate (as defined in the Loan Agreements) plus the applicable margin. As of December 31, 2018 and 2017, this variable rate was3.84925percent and 2.86069 percent, respectively. Accrued interest was payable in arrears on each Interest Payment Date (as defined in the Loan Agreements) and on each maturity date. As a result of obtaining an investment grade rating with respect to the issuance of our 2026 Senior Notes in December 2016, our directly owned subsidiary, Valero Partners Operating Co. LLC, was released of its guarantee under the Loan Agreements.

During the year ended December 31, 2018, we paid down $85.0 million under one of the Loan Agreements. There was no activity under the Loan Agreements for the years ended December 31, 2017 and 2016. The outstanding balance of these Loan Agreements was $285.0 million and $370.0 million as of December 31, 2018 and 2017, respectively.

On January 19, 2019, we paid $185.0 million to completely settle one of the Loan Agreements. Effective February 1, 2019, the remaining Loan Agreement, which had an outstanding balance of $100.0 million, was converted to a capital contribution from Valero.

Other Disclosures

Interest and debt expense, net of capitalized interest was as follows (inthousands):

	Year Ended December 31,
	2018		2017		2016
Interest and debt expense incurred	$	55,475	$	36,634	$	14,997
Less: Capitalized interest	407		619		82
Interest and debt expense, net of capitalized interest	$	55,068	$	36,015	$	14,915

Principal maturities of our debt obligations and notes payable – related party as of December 31, 2018 were $285.0 millionin 2020, $500.0 million in 2026, and $500.0 million in 2028.

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Revenues

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

REVENUES

7. REVENUES

Disaggregation of Revenues

Revenues – related party disaggregated by activity type were as follows (inthousands):

	Pipeline Transportation		Terminaling		Storage and Other		Total
Year Ended December 31, 2018:
Revenues from lease contracts	$	70,606	$	364,363	$	1,640	$	436,609
Revenues from contracts with customer	53,545		50,754		5,519		109,818
Total revenues – related party	$	124,151	$	415,117	$	7,159	$	546,427
Year Ended December 31, 2017:
Revenues from lease contracts	$	49,474	$	301,512	$	546	$	351,532
Revenues from contracts with customer	51,157		46,484		2,832		100,473
Total revenues – related party	$	100,631	$	347,996	$	3,378	$	452,005
Year ended December 31, 2016:
Revenues from lease contracts	$	31,268	$	241,922	$	540	$	273,730
Revenues from contracts with customer	47,183		41,706		—		88,889
Total revenues – related party	$	78,451	$	283,628	$	540	$	362,619

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):

	Year Ended December 31,
	2018		2017		2016
Minimum lease revenues	$	361,316	$	292,034	$	232,211
Contingent lease revenues	75,293		59,498		41,519
Revenues from lease contracts	$	436,609	$	351,532	$	273,730

Receivables from Contracts with Customer

Our receivables from contracts with our customer are included in receivables – related party. These balances were $10.0 million and $8.3 million as of December 31, 2018 and January 1, 2018, respectively.

Future Minimum Rentals and Remaining Performance Obligations

As of December 31, 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):

	Lease Contracts		Contracts with Customer
2019	$	361,282	$	81,215
2020	362,268		81,426
2021	361,282		81,215
2022	361,282		81,215
2023	361,076		77,834
Thereafter	2,553,520		39,159
Total	$	4,360,710	$	442,064

Our lease contracts and our contracts with our customer contain annual inflation escalation clauses that are (i) deemed contingent rentals and variable consideration, respectively, and (ii) applied to the remainder of the contracts. The amounts presented above exclude any estimates for future rate changes due to these inflation rate escalations as prescribed by the contracts.

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Asset Retirement Obligations

12 Months Ended

Dec. 31, 2018

Asset Retirement Obligation Disclosure [Abstract]

ASSET RETIREMENT OBLIGATIONS

8. ASSET RETIREMENT OBLIGATIONS

We have asset retirement obligations with respect to certain of our leased pipelines and terminals that require us to perform under law or contract once the asset is retired from service, and we have recognized obligations to restore these leased properties to substantially the same condition as when such property was delivered to us or to its improved condition as prescribed by the lease agreements. With respect to all other property and equipment, it is our practice and current intent to maintain these other property assets and continue to make improvements as warranted. As a result, we believe that these other property assets have indeterminate lives for purposes of estimating asset retirement obligations because dates or ranges of dates upon which we would retire these assets cannot reasonably be estimated at this time; therefore, no asset retirement obligations have been recorded for these other property assets as of December 31, 2018 and 2017. We will recognize a liability at such time when sufficient information exists to estimate a range of potential settlement dates that is needed to employ a present value technique to estimate fair value.

Changes in our asset retirement obligations were as follows (inthousands):

	December 31,
	2018		2017		2016
Balance as of beginning of year	$	1,099	$	1,069	$	1,021
Accretion expense	32		30		48
Balance as of end of year	$	1,131	$	1,099	$	1,069

We do not expect any short-term spending and, as a result, there is no current liability reported for asset retirement obligations as of December 31, 2018 and 2017. Accretion expense is reflected in depreciation expense.

There are no assets that are legally restricted for purposes of settling our asset retirement obligations.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

9. COMMITMENTS AND CONTINGENCIES

Operating Leases – Lessee

We have long-term operating lease commitments for pipelines and land used in the terminaling and transportation of crude oil and refined petroleum products. Certain leases contain escalation clauses and renewal options that allow for the same rental payment over the lease term or a revised rental payment based on fair rental value or negotiated value. Currently, one of our leases with Valero does not contain a renewal option. We expect our leases will be renewed or replaced by other leases in the normal course of business.

As of December 31, 2018, our future minimum rental payments for leases having initial or remaining noncancelable lease terms in excess of one year were as follows (inthousands):

	Agreements With
	Related Party		Others		Total
2019	$	792	$	1,132	$	1,924
2020	765		1,127		1,892
2021	739		1,106		1,845
2022	739		1,106		1,845
2023	739		1,106		1,845
Thereafter	13,958		23,525		37,483
Total minimum rental payments	$	17,732	$	29,102	$	46,834

Minimum rental expenses for all operating leases were as follows (inthousands):

	Year Ended December 31,
	2018		2017(a)		2016(a)
Minimum rental expenses – related party	$	740	$	656	$	515
Minimum rental expenses – others	1,228		1,384		807
Total minimum rental expenses	$	1,968	$	2,040	$	1,322
(a) These amounts have been retrospectively adjusted to exclude non-lease components (i.e., purchase obligations), which had previously been included in minimum rental expenses.

Contingent rental expenses for all operating leases were as follows (inthousands):

	Year Ended December 31,
	2018		2017		2016
Contingent rental expenses – related party	$	19	$	7	$	—
Contingent rental expenses – others	210		119		—
Total contingent rental expenses	$	229	$	126	$	—

Purchase Obligations

We have purchase obligations under our amended and restated (i) omnibus agreement, (ii) services and secondment agreement, and (iii) lease and access agreements with Valero. See Note 4 for additional information regarding our agreements with Valero. Our purchase obligations are determined based on contractual, fixed-rate fees for periods that are reasonably assured based on current market conditions. None of these obligations are associated with suppliers’ financing arrangements. These purchase obligations are not reflected as liabilities.

Litigation Matters

From time to time, we may be party to claims and legal proceedings arising in the ordinary course of business. We also may be required by existing laws and regulations to report the release of hazardous substances and begin a remediation study. We have not recorded a loss contingency liability as there are no matters for which a loss has been incurred. We re-evaluate and update our loss contingency liabilities as matters progress over time, and we believe that any changes to the recorded liabilities will not be material to our financial position, results of operations, or liquidity.

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Cash Distributions and Net Income Per Limited Partner Unit

12 Months Ended

Dec. 31, 2018

Earnings Per Share and Partners' Capital [Abstract]

CASH DISTRIBUTIONS AND NET INCOME PER LIMITED PARTNER UNIT

10. CASH DISTRIBUTIONS AND NET INCOME PER LIMITED PARTNER UNIT

Cash Distributions

Our partnership agreement prescribes the amount and priority of cash distributions that the 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, 2016:

Quarterly Period Ended	Total Quarterly Distribution (Per Unit)		Total Cash Distribution (InThousands)		Declaration Date	Record Date	Distribution Date
September 30, 2018	$	0.5510	$	56,081	October 18, 2018	November 1, 2018	November 9, 2018
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
September 30, 2016	0.3850		32,175		October 24, 2016	November 3, 2016	November 10, 2016
June 30, 2016	0.3650		28,912		July 21, 2016	August 1, 2016	August 9, 2016
March 31, 2016	0.3400		25,608		April 21, 2016	May 2, 2016	May 10, 2016
December 31, 2015	0.3200		22,711		January 25, 2016	February 4, 2016	February 11, 2016

The Merger Agreement provides that prior to the closing of the Merger, our general partner may not declare, and we may not pay, any distribution other than the distribution of $0.551 per common unit that we declared for the third quarter of 2018 without the prior written consent of Valero. See Note 2 for a discussion of the Merger. Our board of directors determined that no distribution shall be paid with respect to the quarter ended December 31, 2018.

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 the general partner’s IDRs and awards under our 2013 ICP (as defined in Note 12) that receive distribution equivalent right (DER) payments, as discussed in Note 12. 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.

Net losses of our Predecessor are allocated to the general partner. Subsequent to the effective dates of the acquisitions from Valero, we calculate net income available to limited partners based on the methodology described above.

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 years ended December 31, 2018, 2017, and 2016, 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 years ended December 31, 2018, 2017, and 2016.

Effective August 10, 2016, all of our subordinated units, which were owned by Valero, were converted on a one-for-one basis into common units. The subordinated units were only allocated earnings generated by us through the conversion date. See Note 11 regarding the conversion of subordinated units.

Net income per unit was computed as follows (inthousands, except per unit amounts):

	Year Ended December 31, 2018
	General Partner Valero		Limited Partners Common Units						Restricted Units
			Public		Valero		Total				Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	3,300	$	36,634	$	76,209	$	112,843	$	—	$	116,143
General partner’s IDRs	48,826		—		—		—		—		48,826
DERs	—		—		—		—		19		19
Distributions and DERs declared	52,126		36,634		76,209		112,843		19		164,988
Undistributed earnings	1,982		31,525		65,583		97,108		17		99,107
Net income available to limited partners – basic and diluted	$	54,108	$	68,159	$	141,792	$	209,951	$	36	$	264,095
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							$	3.03

	Year Ended December 31, 2017
	General Partner Valero		Limited Partners Common Units						Restricted Units
			Public		Valero		Total				Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	3,363	$	42,029	$	86,503	$	128,532	$	—	$	131,895
General partner’s IDRs	44,534		—		—		—		—		44,534
DERs	—		—		—		—		22		22
Distributions and DERs declared	47,897		42,029		86,503		128,532		22		176,451
Undistributed earnings	1,216		19,922		40,834		60,756		10		61,982
Net income available to limited partners – basic and diluted	$	49,113	$	61,951	$	127,337	$	189,288	$	32	$	238,433
Net income per limited partner common unit – basic and diluted:
Weighted-average units outstanding							68,220
Net income per limited partner common unit – basic and diluted							$	2.77

	Year Ended December 31, 2016
	General Partner Valero		Limited Partners Common Units						Limited Partners Subordinated Units		Restricted Units
			Public		Valero		Total						Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	2,294	$	32,362	$	47,263	$	79,625	$	20,297	$	—	$	102,216
General partner’s IDRs	19,354		—		—		—		—		—		19,354
DERs	—		—		—		—		—		20		20
Distributions and DERs declared	21,648		32,362		47,263		79,625		20,297		20		121,590
Undistributed earnings	1,905		26,322		33,130		59,452		21,289		17		82,663
Net income available to limited partners – basic and diluted	$	23,553	$	58,684	$	80,393	$	139,077	$	41,586	$	37	$	204,253
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding							48,817		17,463
Net income per limited partner unit – basic and diluted							$	2.85	$	2.38

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Partners' Capital

12 Months Ended

Dec. 31, 2018

Partners' Capital Notes [Abstract]

PARTNERS' CAPITAL

11. PARTNERS’ CAPITAL

Unit Activity

Activity in the number of units was as follows:

	Limited Partners				General Partner Valero
	Common Unitholders Public	Common Unitholder Valero	Subordinated Unitholder Valero			Total
Balance as of December 31, 2015	21,509,651	15,018,602	28,789,989		1,332,829	66,651,071
Unit-based compensation	5,958	—	—		—	5,958
Units issued in connection with acquisitions (see Note 3)	—	1,878,680	—		38,340	1,917,020
Conversion of subordinated units	—	28,789,989	(28,789,989	)	—	—
Unit issuance under ATM Program	223,083	—	—		—	223,083
General partner units issued to maintain 2% interest	—	—	—		4,552	4,552
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 in connection with acquisitions (see Note 3)	—	1,081,315	—		22,068	1,103,383
Units issued under ATM Program	742,897	—	—		—	742,897
General partner units issued to maintain 2% interest	—	—	—		15,602	15,602
Balance as of December 31, 2017	22,487,586	46,768,586	—		1,413,391	70,669,563
Unit-based compensation (see Note 12)	5,898	—	—		—	5,898
General partner units issued to maintain 2% interest	—	—	—		120	120
Balance as of December 31, 2018	22,493,484	46,768,586	—		1,413,511	70,675,581

ATM Program

On September 16, 2016, we entered into an equity distribution agreement that permitted us to 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 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 December 31, 2018, we had 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 year ended December 31, 2018. The following table 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 (in thousands, except unit amounts):

	Units Issued	Total Proceeds		Offering Costs		Net Proceeds
Year Ended December 31, 2017:
Common – public	742,897	$	35,728	$	594	$	35,134
General partner	15,602	748		—		748
Year Ended December 31, 2016:
Common – public	223,083	9,724		107		9,617
General partner	4,552	198		—		198

On January 10, 2019, in connection with the completion of the Merger, we terminated the equity distribution agreement. As a result, from and after the Effective Time, there will be no further sales of common units under our ATM Program. See Note 2 regarding the Merger with Valero.

Subordinated Unit Conversion

The requirements under our partnership agreement for the conversion of all of our outstanding subordinated units into common units were satisfied upon the payment of our quarterly cash distribution on August 9, 2016. Therefore, effective August 10, 2016, all of our subordinated units, which were owned by Valero, were converted on a one-for-one basis into common units. The conversion of the subordinated units does not impact the amount of cash distributions paid or the total number of outstanding units.

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. The transfers to (from) partners resulted from the issuance of equity (i) to Valero in connection with our acquisitions from Valero as described in Note 3 and (ii) under our ATM Program as described above.

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Unit-based Compensation

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

UNIT-BASED COMPENSATION

12. UNIT-BASED COMPENSATION

Overview

Our general partner maintained the Valero Energy Partners LP 2013 Incentive Compensation Plan (2013 ICP) under which various unit and unit-based awards could be granted to employees and non-employee directors. Awards under the 2013 ICP included restricted units that vested over a period determined by the plan. The 2013 ICP was approved by the board of directors and the sole member of our general partner on November 26, 2013. As of December 31, 2018, 2,972,496 common units were available to be awarded under the 2013 ICP.

On January 10, 2019, in connection with the completion of the Merger, we terminated our 2013 ICP. As a result, from and after the Effective Time, no equity awards or other rights with respect to common units or other partnership interests will be granted or be outstanding thereunder. See Note 2 regarding the Merger with Valero.

Restricted Units

Restricted units were granted to each of our three independent directors (i.e., participants) in tandem with an equal number of DERs. The restricted units were scheduled to vest in accordance with individual written agreements between the participants and us in equal one-third increments on each anniversary of the restricted units’ grant date. The DERs entitled the participant to a cash payment equal to the cash distribution per unit paid on our outstanding common units and was paid to the participant in cash as of each record payment date during the period the restricted units were outstanding.

Unit-based compensation expense associated with these restricted units was $258,000,$266,000, and $196,000 for the years ended December 31, 2018, 2017, and 2016, respectively, and is recorded within general and administrative expenses on our statements of income.

Under the terms of Merger Agreement, immediately prior to the completion of the Merger, all restricted units outstanding received immediate and full acceleration of vesting and the associated DERs were canceled and ceased to exist. As a result, 11,880 restricted units became fully vested and $271,000 of previously unrecognized compensation cost will be recognized during 2019. Each holder of a restricted unit received $42.25 per unit with respect to each restricted unit that became vested, along with any corresponding accrued but unpaid distributions with the respect to the DERs related to such restricted unit. See Note 2 for a discussion of the Merger Agreement.

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Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

13. INCOME TAXES

Components of income tax expense were as follows (inthousands):

	Year Ended December 31,
	2018		2017		2016
Current U.S. state	$	1,177	$	942	$	704
Deferred U.S. state	376		393		408
Income tax expense	$	1,553	$	1,335	$	1,112

We are not a taxable entity for U.S. federal income tax purposes or for the majority of states that impose an income tax. Taxes on our net income generally are borne by our partners through the allocation of taxable income. Our income tax expense results from state laws that apply to entities organized as partnerships, specifically in the state of Texas. The difference between income tax expense recorded by us and income taxes computed by applying the statutory federal income tax rate (21 percent for 2018 and 35 percent for 2017 and 2016) to income before income tax expense is due to the fact that our income is not subject to federal income tax at the entity level as described above.

As of December 31, 2018 and 2017, we had no liability reported for unrecognized tax benefits. We did not have any interest or penalties related to income taxes during the years ended December 31, 2018, 2017, and 2016.

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Supplemental Cash Flow Information

12 Months Ended

Dec. 31, 2018

Supplemental Cash Flow Information [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

14. 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 (inthousands):

	Year Ended December 31,
	2018			2017			2016
Decrease (increase) in current assets:
Receivables – related party	$	(1,272	)	$	(9,607	)	$	(10,786	)
Receivables	(24		)	(781		)	—
Prepaid expenses and other	(171		)	277			(365		)
Increase (decrease) in current liabilities:
Accounts payable	(5,347		)	7,411			586
Accounts payable – related party	9,786			(3,404		)	(667		)
Accrued liabilities	(149		)	137			34
Accrued liabilities – related party	(703		)	(2,589		)	3,436
Accrued interest payable	4,916			1,278			1,054
Accrued interest payable – related party	(27		)	864			(429		)
Taxes other than income taxes payable	(792		)	2,684			1,181
Changes in current assets and current liabilities	$	6,217		$	(3,730	)	$	(5,956	)

Cash flows related to interest and income taxes paid were as follows (in thousands):

	Year Ended December 31,
	2018		2017		2016
Interest paid	$	49,051	$	33,355	$	13,873
Income taxes paid	904		719		505

The following table presents our investing and financing cash outflows in connection with our acquisitions from Valero as described in Note 3 (inthousands). Of the cash consideration paid, the portion attributed to Valero’s historical carrying value of each acquisition was reflected as an investing cash outflow and the excess purchase price paid over the carrying value of each acquisition was reflected as a financing cash outflow.

	Investing Cash Outflow		Financing Cash Outflow		Total Cash Outflow
Year ended December 31, 2017:
Parkway Pipeline	$	200,249	$	—	$	200,249
Port Arthur terminal	207,595		54,618		262,213
	$	407,844	$	54,618	$	462,462
Year ended December 31, 2016:
McKee Terminal Services Business	$	51,361	$	152,639	$	204,000
Meraux and Three Rivers Terminal Services Business	52,246		223,754		276,000
	$	103,607	$	376,393	$	480,000

Noncash investing and financing activities that affected recognized assets or liabilities were as follows (in thousands):

	Year Ended December 31,
	2018		2017		2016
Transfer (from) to Valero for:
Deferred income taxes	$	—	$	—	$	(190	)
Change in accrued capital expenditures	—		—		46
Noncash capital contributions from Valero:
Excess of carrying value over purchase price paid for acquisition of Parkway Pipeline (see Note 3)	—		51,702		—
Capital projects	43,658		41,305		35,732
Increase in accounts payable related to capital expenditures	1,120		570		904
Units issued to Valero in connection with acquisitions (see Note 3)	—		46,000		85,000
Units issued under ATM Program included in receivables	—		—		1,682

In addition to the activities in the preceding table, noncash financing activities included:

• the transfers to (from) partners to reflect the impact of ownership changes occurring as a result of the issuance of equity (i) to Valero in connection with our acquisitions from Valero as described in Note 3 and (ii) under our ATM Program as described in Note 11 for the years ended December 31, 2018, 2017, and 2016; and

• the conversion of all of our outstanding subordinated units into common units having an aggregate value of $406.4 million as described in Note 11 for the year ended December 31, 2016.

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Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

15. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments that we recognize in our balance sheets at their carrying amounts are shown in the following table along with their associated fair values (in thousands):

	Fair Value Hierarchy	December31, 2018				December31, 2017
		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	Level 1	$	152,106	$	152,106	$	42,052	$	42,052
Financial liabilities:
Debt:
Revolver	Level 2	—		—		410,000		410,000
Senior Notes	Level 2	989,857		986,290		495,283		523,800
Notes payable – related party	Level 2	285,000		285,000		370,000		370,000

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

QUARTERLY FINANCIAL DATA (UNAUDITED)

16. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables summarize quarterly financial data for the years ended December 31, 2018 and 2017 (in thousands, except per unit amounts):

	2018 Quarter Ended
	March 31		June 30		September 30		December 31
Total revenues – related party	$	131,942	$	134,627	$	140,590	$	139,268
Gross profit (a)	82,101		82,408		88,595		86,100
Operating income	77,989		78,250		84,513		77,750
Net income	66,079		64,019		70,349		63,648
Net income attributable to partners	66,079		64,019		70,349		63,648
Limited partners’ interest in net income	49,524		45,942		52,146		62,375
Net income per limited partner common unit – basic and diluted	0.72		0.66		0.75		0.90

	2017 Quarter Ended
	March 31		June 30		September 30		December 31
Total revenues – related party	$	105,816	$	110,545	$	109,340	$	126,304
Gross profit (a)	70,496		70,985		70,749		78,926
Operating income	66,666		67,122		66,347		74,895
Net income	58,137		58,443		57,589		64,264
Net income attributable to partners	58,137		58,443		57,589		64,264
Limited partners’ interest in net income	48,670		47,024		44,552		49,074
Net income per limited partner common unit – basic and diluted	0.72		0.69		0.65		0.71
(a) Gross profit is calculated as total revenues – related party less cost of revenues (excluding depreciation expense) and depreciation expense.

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Description of Business, Basis of Presentation, and Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

General

These consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP) and with the rules and regulations of the U.S. Securities and Exchange Commission (SEC).

Acquisitions from Valero

Certain of our acquisitions from Valero, as described in Note 3, were accounted for as transfers of businesses between entities under the common control of Valero. Accordingly, we recorded these business acquisitions on our balance sheet at Valero’s carrying value as of the beginning of the period of transfer, and we retrospectively adjusted prior period financial statements and financial information to furnish comparative information. We refer to the historical results of the transferred businesses from Valero prior to their transfer to us as those of our “Predecessor.”

The combined financial statements of our Predecessor were derived from the consolidated financial statements and accounting records of Valero and reflect the combined historical financial position, results of operations, and cash flows of our Predecessor as if the acquisitions from Valero had been combined for periods prior to the effective dates of each acquisition.

There were no transactions between the operations of our Predecessor; therefore, there were no intercompany transactions or accounts to be eliminated in connection with the combination of those operations. In addition, our Predecessor’s statements of income include direct charges for the management and operation of our assets and certain expenses allocated by Valero for general corporate services, such as treasury, accounting, and legal services. These expenses were charged, or allocated, to our Predecessor based on the nature of the expenses. Prior to the acquisitions from Valero, our Predecessor transferred cash to Valero daily and Valero funded our Predecessor’s operating and investing activities as needed. Therefore, transfers of cash to and from Valero’s cash management system are reflected as a component of net investment and are reflected as a financing activity in our statements of cash flows. In addition, interest expense was not included on the net cash transfers from Valero.

The acquisitions of Parkway Pipeline LLC (Parkway Pipeline) and the Port Arthur terminal (as defined in Note 3) 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.

The financial information presented for the periods after the effective dates of each acquisition represents the consolidated financial position, results of operations, and cash flows of the Partnership.

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 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 prior year amounts have been reclassified to conform to the 2018 presentation.

Principles of Consolidation

Principles of Consolidation

Our consolidated financial statements include the accounts of the Partnership, our subsidiaries, and our Predecessor. All intercompany items and transactions have been eliminated.

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.

Cash Equivalents

Cash Equivalents

Our cash equivalents are highly liquid investments that have a maturity of three months or less when acquired.

Receivables - Related Party

Receivables – Related Party

Receivables – related party include trade receivables from Valero for transportation and terminaling services provided under various agreements with Valero, as described in Note 4. These receivables are recorded at the original invoice amount.

Property and Equipment

Property and Equipment

The cost of property and equipment purchased or constructed, including betterments of property and equipment, is capitalized. However, the cost of repairs to and normal maintenance of property and equipment is expensed when incurred. Betterments of property and equipment are those that extend the useful lives of the property and equipment or improve the safety of our operations. The cost of property and equipment constructed includes interest and certain overhead costs allocable to the construction activities. Property and equipment also includes our undivided interest in certain assets.

When property and equipment are retired or replaced, the cost and related accumulated depreciation are eliminated, with any gain or loss reflected in depreciation expense, unless such amounts are reported separately due to materiality.

Depreciation of property and equipment is recorded on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful life of the related asset.

Impairment of Assets

Impairment of Assets

Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. A long-lived asset is not recoverable if its carrying amount exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If a long-lived asset is not recoverable, an impairment loss is recognized for the amount by which the carrying amount of the long-lived asset exceeds its fair value, with fair value determined based on discounted estimated net cash flows or other appropriate methods.

Asset Retirement Obligations

Asset Retirement Obligations

We record a liability, which is referred to as an asset retirement obligation, at fair value for the estimated cost to retire a tangible long-lived asset at the time we incur that liability, which is generally when the asset is purchased, constructed, or leased. We record the liability when we have a legal obligation to incur costs to retire the asset and when a reasonable estimate of the fair value of the liability can be made. If a reasonable estimate cannot be made at the time the liability is incurred, we record the liability when sufficient information is available to estimate the liability’s fair value.

Environmental Matters

Environmental Matters

Liabilities for future remediation costs are recorded when environmental assessments and/or remedial efforts are probable and the costs can be reasonably estimated. Other than for assessments, the timing and magnitude of these accruals generally are based on the completion of investigations or other studies or a commitment to a formal plan of action. Amounts recorded for environmental liabilities have not been reduced by possible recoveries from third parties and have not been measured on a discounted basis.

Net Investment

Net Investment

Net investment represents Valero’s historical investment in our Predecessor, its accumulated net earnings after taxes, and the net effect of transactions and allocations between our Predecessor and Valero. There were no terms of settlement or interest charges associated with the net investment balance.

Revenue Recognition

Revenue Recognition

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

The FASB issued Topic 606, which clarifies the principles for recognizing revenue and supersedes previous revenue recognition requirements under “Revenue Recognition (Topic605).” We adopted the provisions of Topic 606 on January 1, 2018 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 Topic606 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 January1, 2018. Additionally, there was no material impact to our financial position or results of operations as of and for the year endedDecember 31, 2018. See Note 7 for information on our revenues. As a result of our adoption of Topic 606, our revenue recognition accounting policy has been revised.

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.

Income Taxes

Income Taxes

Our operations are treated as a partnership for federal and state income tax purposes, with each partner being separately taxed on its share of taxable income. Therefore, we have excluded income taxes from these financial statements, except for state taxes that apply to partnerships, specifically the margin tax in Texas. Our Predecessor’s taxable income was included in the consolidated U.S. federal income tax returns of Valero and in certain consolidated state income tax returns.

Income taxes are accounted for under the asset and liability method, as if we were a separate taxpayer rather than a member of Valero’s consolidated tax return. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred amounts are measured using enacted tax rates expected to apply to taxable income in the year those temporary differences are expected to be recovered or settled.

We classify any interest expense and penalties related to the underpayment of income taxes in income tax expense.

Net Income per Limited Partner Unit

Net Income per Limited Partner Unit

Basic and diluted net income per limited partner unit is determined pursuant to the two-class method for master limited partnerships as described in Note 10.

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 the general partner’s IDRs and awards under our 2013 ICP (as defined in Note 12) that receive distribution equivalent right (DER) payments, as discussed in Note 12. 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.

Net losses of our Predecessor are allocated to the general partner. Subsequent to the effective dates of the acquisitions from Valero, we calculate net income available to limited partners based on the methodology described above.

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.

Comprehensive Income

Comprehensive Income

We have not reported comprehensive income due to the absence of items of other comprehensive income in the years presented.

Segment Reporting

Segment Reporting

Our operations consist of one reportable segment. All of our operations are conducted and all of our assets are located in the U.S.

Financial Instruments

Financial Instruments

Our financial instruments include cash and cash equivalents, receivables, receivables – related party, accounts payable, accounts payable – related party, debt, and notes payable – related party. The estimated fair values of these financial instruments approximate their carrying amounts, except for certain debt as discussed in Note 15.

Business Combinations

Business Combinations

We adopted the provisions of Accounting Standards Update (ASU) No. 2017-01, “Business Combinations (Topic 805),” issued by the FASB, on January 1, 2017. This ASU provides a more robust framework to evaluate whether transactions should be accounted for as acquisitions (dispositions) of assets or businesses. Our adoption of this ASU resulted in the acquisitions of Parkway Pipeline and the Port Arthur terminal being accounted for as acquisitions of assets, which are discussed in Note 3. In addition, more of our future acquisitions may be accounted for as acquisitions of assets in accordance with this ASU.

New Accounting Pronouncements

Accounting Pronouncement Adopted on January1, 2019

In February 2016, the FASB issued Topic 842 “Leases” (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 reporting periods, with early adoption permitted. We adopted this new standard on January 1, 2019 using the optional transition method; however, we did not have a cumulative-effect adjustment to the opening balance of partners’ capital at the date of adoption. The adoption of this standard did not have a material affect on our financial position.

The new standard provides a number of optional practical expedients and we elected the following:

• Transition Elections. We elected the package of practical expedients that permits us to not reassess our prior conclusions about lease identification, lease classification, and initial direct costs under the new standard, as well as the practical expedient that permits us to not assess existing land easements under the new standard.

• Lessee Accounting Policy Elections. We elected the short-term lease recognition exemption whereby right-of-use assets and lease liabilities will not be recognized for leasing arrangements with terms less than one year, and the practical expedient to not separate lease and non-lease components for all classes of underlying assets other than the real estate asset class.

• Lessor Accounting Policy Election. We elected the practical expedient to account for lease and non-lease components in a contract as a single lease component for all classes of underlying assets.

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Related-Party Agreements and Transactions (Tables)

12 Months Ended

Dec. 31, 2018

Related Party Transactions [Abstract]

Summary of related-party transactions

The following is a reconciliation of the amounts presented as net transfers from Valero on our statement of partners’ capital and statement of cash flows for the year ended December 31, 2016 (in thousands):

Net transfers from Valero per statements of partners’ capital	$	15,030
Less: Noncash transfers from Valero	144
Net transfers from Valero per statements of cash flows	$	14,886

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Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Major classes of property and equipment

Major classes of property and equipment consisted of the following (in thousands):

	December 31, 2018
	Non-Leased Assets			Assets Leased to Valero			Total
Land	$	4,672		$	—		$	4,672
Pipelines and related assets	225,413			386,596			612,009
Terminals and related assets	138,981			1,227,451			1,366,432
Other	14,138			—			14,138
Construction in progress	29,139			—			29,139
Property and equipment, at cost	412,343			1,614,047			2,026,390
Accumulated depreciation	(137,651		)	(479,555		)	(617,206		)
Property and equipment, net	$	274,692		$	1,134,492		$	1,409,184

	December 31, 2017
	Non-Leased Assets			Assets Leased to Valero			Total
Land	$	4,672		$	—		$	4,672
Pipelines and related assets	225,184			385,855			611,039
Terminals and related assets	134,362			1,162,718			1,297,080
Other	14,019			—			14,019
Construction in progress	42,423			—			42,423
Property and equipment, at cost	420,660			1,548,573			1,969,233
Accumulated depreciation	(127,136		)	(425,681		)	(552,817		)
Property and equipment, net	$	293,524		$	1,122,892		$	1,416,416

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Debt and Notes Payable - Related Party (Tables)

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Debt

Debt, at stated values, consisted of the following (in thousands):

	Maturity Date	December 31,
		2018			2017
Revolver	November 2020	$	—		$	410,000
2026 Senior Notes, 4.375%	December 2026	500,000			500,000
2028 Senior Notes, 4.5%	March 2028	500,000			—
Net unamortized discount and debt issuance costs		(10,143		)	(4,717		)
Debt		$	989,857		$	905,283

Interest and debt expense, net of capitalized interest

Interest and debt expense, net of capitalized interest was as follows (inthousands):

	Year Ended December 31,
	2018		2017		2016
Interest and debt expense incurred	$	55,475	$	36,634	$	14,997
Less: Capitalized interest	407		619		82
Interest and debt expense, net of capitalized interest	$	55,068	$	36,015	$	14,915

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Revenues (Tables)

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of revenues

Revenues – related party disaggregated by activity type were as follows (inthousands):

	Pipeline Transportation		Terminaling		Storage and Other		Total
Year Ended December 31, 2018:
Revenues from lease contracts	$	70,606	$	364,363	$	1,640	$	436,609
Revenues from contracts with customer	53,545		50,754		5,519		109,818
Total revenues – related party	$	124,151	$	415,117	$	7,159	$	546,427
Year Ended December 31, 2017:
Revenues from lease contracts	$	49,474	$	301,512	$	546	$	351,532
Revenues from contracts with customer	51,157		46,484		2,832		100,473
Total revenues – related party	$	100,631	$	347,996	$	3,378	$	452,005
Year ended December 31, 2016:
Revenues from lease contracts	$	31,268	$	241,922	$	540	$	273,730
Revenues from contracts with customer	47,183		41,706		—		88,889
Total revenues – related party	$	78,451	$	283,628	$	540	$	362,619

Lessor disclosure of operating leases

The components of our revenues from lease contracts were as follows (in thousands):

	Year Ended December 31,
	2018		2017		2016
Minimum lease revenues	$	361,316	$	292,034	$	232,211
Contingent lease revenues	75,293		59,498		41,519
Revenues from lease contracts	$	436,609	$	351,532	$	273,730

Future minimum rentals to be received for operating leases

As of December 31, 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):

	Lease Contracts		Contracts with Customer
2019	$	361,282	$	81,215
2020	362,268		81,426
2021	361,282		81,215
2022	361,282		81,215
2023	361,076		77,834
Thereafter	2,553,520		39,159
Total	$	4,360,710	$	442,064

As of December 31, 2018, our future minimum rental payments for leases having initial or remaining noncancelable lease terms in excess of one year were as follows (inthousands):

	Agreements With
	Related Party		Others		Total
2019	$	792	$	1,132	$	1,924
2020	765		1,127		1,892
2021	739		1,106		1,845
2022	739		1,106		1,845
2023	739		1,106		1,845
Thereafter	13,958		23,525		37,483
Total minimum rental payments	$	17,732	$	29,102	$	46,834

Remaining performance obligations from contracts with customer

As of December 31, 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):

	Lease Contracts		Contracts with Customer
2019	$	361,282	$	81,215
2020	362,268		81,426
2021	361,282		81,215
2022	361,282		81,215
2023	361,076		77,834
Thereafter	2,553,520		39,159
Total	$	4,360,710	$	442,064

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Asset Retirement Obligations (Tables)

12 Months Ended

Dec. 31, 2018

Asset Retirement Obligation Disclosure [Abstract]

Changes in asset retirement obligations

Changes in our asset retirement obligations were as follows (inthousands):

	December 31,
	2018		2017		2016
Balance as of beginning of year	$	1,099	$	1,069	$	1,021
Accretion expense	32		30		48
Balance as of end of year	$	1,131	$	1,099	$	1,069

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Future minimum rental payments for leases having initial or remaining noncancelable lease terms in excess of one year

As of December 31, 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):

	Lease Contracts		Contracts with Customer
2019	$	361,282	$	81,215
2020	362,268		81,426
2021	361,282		81,215
2022	361,282		81,215
2023	361,076		77,834
Thereafter	2,553,520		39,159
Total	$	4,360,710	$	442,064

As of December 31, 2018, our future minimum rental payments for leases having initial or remaining noncancelable lease terms in excess of one year were as follows (inthousands):

	Agreements With
	Related Party		Others		Total
2019	$	792	$	1,132	$	1,924
2020	765		1,127		1,892
2021	739		1,106		1,845
2022	739		1,106		1,845
2023	739		1,106		1,845
Thereafter	13,958		23,525		37,483
Total minimum rental payments	$	17,732	$	29,102	$	46,834

Minimum and contingent rental expenses for all operating leases

Minimum rental expenses for all operating leases were as follows (inthousands):

	Year Ended December 31,
	2018		2017(a)		2016(a)
Minimum rental expenses – related party	$	740	$	656	$	515
Minimum rental expenses – others	1,228		1,384		807
Total minimum rental expenses	$	1,968	$	2,040	$	1,322
(a) These amounts have been retrospectively adjusted to exclude non-lease components (i.e., purchase obligations), which had previously been included in minimum rental expenses.

Contingent rental expenses for all operating leases were as follows (inthousands):

	Year Ended December 31,
	2018		2017		2016
Contingent rental expenses – related party	$	19	$	7	$	—
Contingent rental expenses – others	210		119		—
Total contingent rental expenses	$	229	$	126	$	—

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Cash Distributions and Net Income Per Limited Partner Unit (Tables)

12 Months Ended

Dec. 31, 2018

Earnings Per Share and 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, 2016:

Quarterly Period Ended	Total Quarterly Distribution (Per Unit)		Total Cash Distribution (InThousands)		Declaration Date	Record Date	Distribution Date
September 30, 2018	$	0.5510	$	56,081	October 18, 2018	November 1, 2018	November 9, 2018
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
September 30, 2016	0.3850		32,175		October 24, 2016	November 3, 2016	November 10, 2016
June 30, 2016	0.3650		28,912		July 21, 2016	August 1, 2016	August 9, 2016
March 31, 2016	0.3400		25,608		April 21, 2016	May 2, 2016	May 10, 2016
December 31, 2015	0.3200		22,711		January 25, 2016	February 4, 2016	February 11, 2016

Computation of net income per unit

Net income per unit was computed as follows (inthousands, except per unit amounts):

	Year Ended December 31, 2018
	General Partner Valero		Limited Partners Common Units						Restricted Units
			Public		Valero		Total				Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	3,300	$	36,634	$	76,209	$	112,843	$	—	$	116,143
General partner’s IDRs	48,826		—		—		—		—		48,826
DERs	—		—		—		—		19		19
Distributions and DERs declared	52,126		36,634		76,209		112,843		19		164,988
Undistributed earnings	1,982		31,525		65,583		97,108		17		99,107
Net income available to limited partners – basic and diluted	$	54,108	$	68,159	$	141,792	$	209,951	$	36	$	264,095
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							$	3.03

	Year Ended December 31, 2017
	General Partner Valero		Limited Partners Common Units						Restricted Units
			Public		Valero		Total				Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	3,363	$	42,029	$	86,503	$	128,532	$	—	$	131,895
General partner’s IDRs	44,534		—		—		—		—		44,534
DERs	—		—		—		—		22		22
Distributions and DERs declared	47,897		42,029		86,503		128,532		22		176,451
Undistributed earnings	1,216		19,922		40,834		60,756		10		61,982
Net income available to limited partners – basic and diluted	$	49,113	$	61,951	$	127,337	$	189,288	$	32	$	238,433
Net income per limited partner common unit – basic and diluted:
Weighted-average units outstanding							68,220
Net income per limited partner common unit – basic and diluted							$	2.77

	Year Ended December 31, 2016
	General Partner Valero		Limited Partners Common Units						Limited Partners Subordinated Units		Restricted Units
			Public		Valero		Total						Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	2,294	$	32,362	$	47,263	$	79,625	$	20,297	$	—	$	102,216
General partner’s IDRs	19,354		—		—		—		—		—		19,354
DERs	—		—		—		—		—		20		20
Distributions and DERs declared	21,648		32,362		47,263		79,625		20,297		20		121,590
Undistributed earnings	1,905		26,322		33,130		59,452		21,289		17		82,663
Net income available to limited partners – basic and diluted	$	23,553	$	58,684	$	80,393	$	139,077	$	41,586	$	37	$	204,253
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding							48,817		17,463
Net income per limited partner unit – basic and diluted							$	2.85	$	2.38

XML

Partners' Capital (Tables)

12 Months Ended

Dec. 31, 2018

Partners' Capital Notes [Abstract]

Activity in the number of units

Activity in the number of units was as follows:

	Limited Partners				General Partner Valero
	Common Unitholders Public	Common Unitholder Valero	Subordinated Unitholder Valero			Total
Balance as of December 31, 2015	21,509,651	15,018,602	28,789,989		1,332,829	66,651,071
Unit-based compensation	5,958	—	—		—	5,958
Units issued in connection with acquisitions (see Note 3)	—	1,878,680	—		38,340	1,917,020
Conversion of subordinated units	—	28,789,989	(28,789,989	)	—	—
Unit issuance under ATM Program	223,083	—	—		—	223,083
General partner units issued to maintain 2% interest	—	—	—		4,552	4,552
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 in connection with acquisitions (see Note 3)	—	1,081,315	—		22,068	1,103,383
Units issued under ATM Program	742,897	—	—		—	742,897
General partner units issued to maintain 2% interest	—	—	—		15,602	15,602
Balance as of December 31, 2017	22,487,586	46,768,586	—		1,413,391	70,669,563
Unit-based compensation (see Note 12)	5,898	—	—		—	5,898
General partner units issued to maintain 2% interest	—	—	—		120	120
Balance as of December 31, 2018	22,493,484	46,768,586	—		1,413,511	70,675,581

The following table 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 (in thousands, except unit amounts):

	Units Issued	Total Proceeds		Offering Costs		Net Proceeds
Year Ended December 31, 2017:
Common – public	742,897	$	35,728	$	594	$	35,134
General partner	15,602	748		—		748
Year Ended December 31, 2016:
Common – public	223,083	9,724		107		9,617
General partner	4,552	198		—		198

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Components of income tax expense

Components of income tax expense were as follows (inthousands):

	Year Ended December 31,
	2018		2017		2016
Current U.S. state	$	1,177	$	942	$	704
Deferred U.S. state	376		393		408
Income tax expense	$	1,553	$	1,335	$	1,112

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Supplemental Cash Flow Information (Tables)

12 Months Ended

Dec. 31, 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 (inthousands):

	Year Ended December 31,
	2018			2017			2016
Decrease (increase) in current assets:
Receivables – related party	$	(1,272	)	$	(9,607	)	$	(10,786	)
Receivables	(24		)	(781		)	—
Prepaid expenses and other	(171		)	277			(365		)
Increase (decrease) in current liabilities:
Accounts payable	(5,347		)	7,411			586
Accounts payable – related party	9,786			(3,404		)	(667		)
Accrued liabilities	(149		)	137			34
Accrued liabilities – related party	(703		)	(2,589		)	3,436
Accrued interest payable	4,916			1,278			1,054
Accrued interest payable – related party	(27		)	864			(429		)
Taxes other than income taxes payable	(792		)	2,684			1,181
Changes in current assets and current liabilities	$	6,217		$	(3,730	)	$	(5,956	)

Cash flows related to interest and income taxes paid were as follows (in thousands):

	Year Ended December 31,
	2018		2017		2016
Interest paid	$	49,051	$	33,355	$	13,873
Income taxes paid	904		719		505

The following table presents our investing and financing cash outflows in connection with our acquisitions from Valero as described in Note 3 (inthousands). Of the cash consideration paid, the portion attributed to Valero’s historical carrying value of each acquisition was reflected as an investing cash outflow and the excess purchase price paid over the carrying value of each acquisition was reflected as a financing cash outflow.

	Investing Cash Outflow		Financing Cash Outflow		Total Cash Outflow
Year ended December 31, 2017:
Parkway Pipeline	$	200,249	$	—	$	200,249
Port Arthur terminal	207,595		54,618		262,213
	$	407,844	$	54,618	$	462,462
Year ended December 31, 2016:
McKee Terminal Services Business	$	51,361	$	152,639	$	204,000
Meraux and Three Rivers Terminal Services Business	52,246		223,754		276,000
	$	103,607	$	376,393	$	480,000

Supplemental cash flow disclosures, noncash activities

Noncash investing and financing activities that affected recognized assets or liabilities were as follows (in thousands):

	Year Ended December 31,
	2018		2017		2016
Transfer (from) to Valero for:
Deferred income taxes	$	—	$	—	$	(190	)
Change in accrued capital expenditures	—		—		46
Noncash capital contributions from Valero:
Excess of carrying value over purchase price paid for acquisition of Parkway Pipeline (see Note 3)	—		51,702		—
Capital projects	43,658		41,305		35,732
Increase in accounts payable related to capital expenditures	1,120		570		904
Units issued to Valero in connection with acquisitions (see Note 3)	—		46,000		85,000
Units issued under ATM Program included in receivables	—		—		1,682

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Fair Value of Financial Instruments Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Carrying amounts and estimated fair value of financial instruments

Financial instruments that we recognize in our balance sheets at their carrying amounts are shown in the following table along with their associated fair values (in thousands):

	Fair Value Hierarchy	December31, 2018				December31, 2017
		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	Level 1	$	152,106	$	152,106	$	42,052	$	42,052
Financial liabilities:
Debt:
Revolver	Level 2	—		—		410,000		410,000
Senior Notes	Level 2	989,857		986,290		495,283		523,800
Notes payable – related party	Level 2	285,000		285,000		370,000		370,000

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Schedule of quarterly financial data

The following tables summarize quarterly financial data for the years ended December 31, 2018 and 2017 (in thousands, except per unit amounts):

	2018 Quarter Ended
	March 31		June 30		September 30		December 31
Total revenues – related party	$	131,942	$	134,627	$	140,590	$	139,268
Gross profit (a)	82,101		82,408		88,595		86,100
Operating income	77,989		78,250		84,513		77,750
Net income	66,079		64,019		70,349		63,648
Net income attributable to partners	66,079		64,019		70,349		63,648
Limited partners’ interest in net income	49,524		45,942		52,146		62,375
Net income per limited partner common unit – basic and diluted	0.72		0.66		0.75		0.90

	2017 Quarter Ended
	March 31		June 30		September 30		December 31
Total revenues – related party	$	105,816	$	110,545	$	109,340	$	126,304
Gross profit (a)	70,496		70,985		70,749		78,926
Operating income	66,666		67,122		66,347		74,895
Net income	58,137		58,443		57,589		64,264
Net income attributable to partners	58,137		58,443		57,589		64,264
Limited partners’ interest in net income	48,670		47,024		44,552		49,074
Net income per limited partner common unit – basic and diluted	0.72		0.69		0.65		0.71
(a) Gross profit is calculated as total revenues – related party less cost of revenues (excluding depreciation expense) and depreciation expense.

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Description of Business, Basis of Presentation, and Significant Accounting Policies (Details)	12 Months Ended
	Dec. 31, 2018 refinery segment
Business and Basis of Presentation (Textual)
Limited partnership formation date	Jul. 24, 2013
Payment typically due, period post receipt of billing	10 days
Number of reportable segments | segment	1
Majority Shareholder [Member]
Business and Basis of Presentation (Textual)
Number of Valero owned refineries | refinery	10

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Merger With Valero (Details) - Subsequent Event [Member] - Valero [Member] - Valero Energy Partners LP [Member] $ / shares in Units, $ in Millions	Jan. 10, 2019 USD ($) $ / shares
Acquisition [Line Items]
Unit price to be paid in cash for each common unit (in dollars per unit) | $ / shares	$ 42.25
Aggregate merger consideration | $	$ 950.0

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Acquisitions (Details) bbl / d in Thousands, bbl in Thousands, $ in Thousands					12 Months Ended
	Nov. 01, 2017 USD ($) bbl / d shares	Jan. 18, 2017 USD ($) bbl / d property bbl	Sep. 01, 2016 USD ($) subsidiary shares	Apr. 01, 2016 USD ($) subsidiary shares	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($) shares	Dec. 31, 2016 USD ($) shares
Acquisitions (Textual)
Units issued in connection with acquisitions (units) | shares						1,103,383	1,917,020
Proceeds from debt borrowings					$ 0	$ 380,000	$ 349,000
Limited Partner [Member] | Common Unitholder Valero [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions (units) | shares						1,081,315	1,878,680
General Partner [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions (units) | shares						22,068	38,340
Revolver [Member] | McKee Terminal Services Business [Member]
Acquisitions (Textual)
Proceeds from debt borrowings				$ 139,000
Revolver [Member] | Meraux and Three Rivers Terminal Services Business [Member]
Acquisitions (Textual)
Proceeds from debt borrowings			$ 210,000
Majority Shareholder [Member]
Acquisitions (Textual)
Business acquisition, cash distribution						$ 462,462	$ 480,000
Majority Shareholder [Member] | McKee Terminal Services Business [Member]
Acquisitions (Textual)
Aggregate value of units issued				36,000
Business acquisition, effective date					Apr. 01, 2016
Business acquisition, total consideration for acquired businesses				240,000
Business acquisition, cash distribution				204,000			204,000
Business acquisition, payments to acquire businesses using cash on hand				$ 65,000
Number of subsidiaries acquired from Valero | subsidiary				1
Majority Shareholder [Member] | Meraux and Three Rivers Terminal Services Business [Member]
Acquisitions (Textual)
Aggregate value of units issued			49,000
Business acquisition, effective date					Sep. 01, 2016
Business acquisition, total consideration for acquired businesses			325,000
Business acquisition, cash distribution			276,000				$ 276,000
Business acquisition, payments to acquire businesses using cash on hand			$ 66,000
Number of subsidiaries acquired from Valero | subsidiary			2
Majority Shareholder [Member] | Limited Partner [Member] | Common Unitholder Valero [Member] | McKee Terminal Services Business [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions (units) | shares				728,775
Majority Shareholder [Member] | Limited Partner [Member] | Common Unitholder Valero [Member] | Meraux and Three Rivers Terminal Services Business [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions (units) | shares			1,149,905
Majority Shareholder [Member] | General Partner [Member] | McKee Terminal Services Business [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions (units) | shares				14,873
Majority Shareholder [Member] | General Partner [Member] | Meraux and Three Rivers Terminal Services Business [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions (units) | shares			23,467
Red River Crude System [Member] | Pipelines and related assets [Member]
Acquisitions (Textual)
Asset acquisition, effective date					Jan. 18, 2017
Undivided ownership interest in assets (percent)		40.00%
Number of properties acquired | property		2
Storage tank capacity (in shell barrels) | bbl		150
Asset acquisition, cash distribution		$ 71,800
Throughput capacity of assets acquired (in barrels per day) | bbl / d		150
Red River Crude System [Member] | Pipelines and related assets [Member] | Joint Ownership Agreement (JOA) and Operating and Administrative Services Agreement with Plains [Member]
Acquisitions (Textual)
Duration of agreement		5 years
Duration of renewal option		5 years
Red River Crude System [Member] | Pipelines and related assets [Member] | Joint Ownership Agreement (JOA) and Operating and Administrative Services Agreement with Plains [Member] | Plains All American Pipeline L.P.’s (Plains) [Member]
Acquisitions (Textual)
Undivided ownership interest in assets (percent)		60.00%
Parkway Pipeline [Member] | Majority Shareholder [Member]
Acquisitions (Textual)
Asset acquisition, cash distribution	$ 82,000
Business acquisition, cash distribution						200,249
Parkway Pipeline [Member] | Pipelines and related assets [Member] | Majority Shareholder [Member]
Acquisitions (Textual)
Asset acquisition, effective date					Nov. 01, 2017
Throughput capacity of assets acquired (in barrels per day) | bbl / d	110
Asset acquisition, total consideration for assets acquired	$ 200,000
Port Arthur Terminal [Member] | Majority Shareholder [Member]
Acquisitions (Textual)
Asset acquisition, cash distribution	262,000
Aggregate value of units issued	$ 46,000
Business acquisition, cash distribution						$ 262,213
Port Arthur Terminal [Member] | Majority Shareholder [Member] | Limited Partner [Member] | Common Unitholder Valero [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions (units) | shares	1,081,315
Port Arthur Terminal [Member] | Majority Shareholder [Member] | General Partner [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions (units) | shares	22,068
Port Arthur Terminal [Member] | Pipelines and related assets [Member] | Majority Shareholder [Member]
Acquisitions (Textual)
Asset acquisition, effective date					Nov. 01, 2017
Asset acquisition, total consideration for assets acquired	$ 308,000

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Related-Party Agreements and Transactions, Agreements (Details) bbl in Thousands, $ in Millions	1 Months Ended	12 Months Ended
	Apr. 30, 2018 bbl	Dec. 31, 2018 USD ($) renewal
Commercial Agreements [Member]
Related-Party Agreements and Transactions (Textual)
Storage tank capacity (in shell barrels) | bbl	180
Agreement maturity date		Jun. 30, 2033
Majority Shareholder [Member] | Commercial Agreements [Member]
Related-Party Agreements and Transactions (Textual)
Duration of agreement		10 years
Number of renewal options		1
Duration of renewal option		5 years
Majority Shareholder [Member] | Amended and Restated Omnibus Agreement [Member]
Related-Party Agreements and Transactions (Textual)
Annual administrative fee | $		$ 13.2
Majority Shareholder [Member] | Services and Secondment Agreement [Member]
Related-Party Agreements and Transactions (Textual)
Duration of agreement		10 years
Duration of renewal option		1 year
Prior written notice		30 days
Majority Shareholder [Member] | Lease Agreements [Member]
Related-Party Agreements and Transactions (Textual)
Duration of agreement		10 years
Number of renewal options		4
Duration of renewal period, lease agreement		5 years
Majority Shareholder [Member] | Ground Lease Agreement [Member]
Related-Party Agreements and Transactions (Textual)
Duration of agreement		20 years
Number of renewal options		0

XML

Related-Party Agreements and Transactions, Insurance Recoveries (Details) $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($)
Majority Shareholder [Member]
Related Party Transaction [Line Items]
Insurance recoveries	$ 2.7

XML

Related-Party Agreements and Transactions, Net Investment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Net transfers from Valero per statements of cash flows	$ 0	$ 0	$ 14,886
Majority Shareholder [Member]
Related Party Transaction [Line Items]
Net transfers from Valero per statements of partners’ capital			15,030
Less: Noncash transfers from Valero			144
Net transfers from Valero per statements of cash flows			$ 14,886

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Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Non-Leased Assets
Property and equipment excluding assets subject to operating lease, at cost	$ 412,343	$ 420,660
Accumulated depreciation, property and equipment, excluding assets subject to operating lease	(137,651)	(127,136)
Property and equipment excluding assets subject to operating lease, net	274,692	293,524
Assets Leased to Valero
Assets leased to Valero, at cost	1,614,047	1,548,573
Accumulated depreciation, assets leased to Valero	(479,555)	(425,681)
Assets leased to Valero, net	1,134,492	1,122,892
Total
Property and equipment, at cost	2,026,390	1,969,233
Accumulated depreciation	(617,206)	(552,817)
Property and equipment, net	1,409,184	1,416,416
Land [Member]
Non-Leased Assets
Property and equipment excluding assets subject to operating lease, at cost	4,672	4,672
Assets Leased to Valero
Assets leased to Valero, at cost	0	0
Total
Property and equipment, at cost	4,672	4,672
Pipelines and related assets [Member]
Non-Leased Assets
Property and equipment excluding assets subject to operating lease, at cost	225,413	225,184
Assets Leased to Valero
Assets leased to Valero, at cost	386,596	385,855
Total
Property and equipment, at cost	612,009	611,039
Terminals and related assets [Member]
Non-Leased Assets
Property and equipment excluding assets subject to operating lease, at cost	138,981	134,362
Assets Leased to Valero
Assets leased to Valero, at cost	1,227,451	1,162,718
Total
Property and equipment, at cost	1,366,432	1,297,080
Other [Member]
Non-Leased Assets
Property and equipment excluding assets subject to operating lease, at cost	14,138	14,019
Assets Leased to Valero
Assets leased to Valero, at cost	0	0
Total
Property and equipment, at cost	14,138	14,019
Construction in progress [Member]
Non-Leased Assets
Property and equipment excluding assets subject to operating lease, at cost	29,139	42,423
Assets Leased to Valero
Assets leased to Valero, at cost	0	0
Total
Property and equipment, at cost	$ 29,139	$ 42,423

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Debt and Notes Payable - Related Party, Schedule of Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Debt Instruments [Abstract]
Net unamortized discount and debt issuance costs	$ (10,143)	$ (4,717)
Debt	989,857	905,283
Line of Credit [Member] | VLP Revolver [Member]
Debt Instruments [Abstract]
Debt, gross	0	410,000
Senior Notes [Member]
Debt Instruments [Abstract]
Debt	989,857	495,283
Senior Notes [Member] | Senior Notes Due December 2026 [Member]
Debt Instruments [Abstract]
Interest rate of notes (percent)			4.375%
Debt, gross	$ 500,000	500,000
Senior Notes [Member] | Senior Notes Due March 2028 [Member]
Debt Instruments [Abstract]
Interest rate of notes (percent)	4.50%
Debt, gross	$ 500,000	$ 0

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Debt and Notes Payable - Related Party, Revolver and Senior Notes (Details)				12 Months Ended
	Nov. 01, 2017 USD ($)	Sep. 01, 2016 USD ($)	Apr. 01, 2016 USD ($)	Dec. 31, 2018 USD ($) quarter	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Credit Facility [Abstract]
Proceeds from long-term lines of credit				$ 0	$ 380,000,000	$ 349,000,000
Payments of debt issuance costs				4,542,000	492,000	4,462,000
Senior Notes [Abstract]
Proceeds from issuance of senior notes				498,300,000	0	499,795,000
Payments of debt issuance costs				4,542,000	$ 492,000	4,462,000
Revolver [Member] | McKee Terminal Services Business [Member]
Credit Facility [Abstract]
Proceeds from long-term lines of credit			$ 139,000,000
Revolver [Member] | Meraux and Three Rivers Terminal Services Business [Member]
Credit Facility [Abstract]
Proceeds from long-term lines of credit		$ 210,000,000
Line of Credit [Member] | Revolver [Member]
Credit Facility [Abstract]
Line of credit facility, maximum borrowing capacity				$ 750,000,000
Line of credit facility, maturity date				Nov. 20, 2020
Line of credit facility, interest rate at period end					2.875%
Number of prior quarterly reporting periods | quarter				4
Repayments of long-term lines of credit				$ 410,000,000		494,000,000
Payments of debt issuance costs				0	$ 0
Senior Notes [Abstract]
Payments of debt issuance costs				0	0
Repayments of long-term lines of credit				$ 410,000,000		494,000,000
Line of Credit [Member] | Revolver [Member] | McKee Terminal Services Business [Member]
Credit Facility [Abstract]
Proceeds from long-term lines of credit						139,000,000
Line of Credit [Member] | Revolver [Member] | Meraux and Three Rivers Terminal Services Business [Member]
Credit Facility [Abstract]
Proceeds from long-term lines of credit						210,000,000
Line of Credit [Member] | Revolver [Member] | Parkway Pipeline [Member]
Credit Facility [Abstract]
Proceeds from long-term lines of credit	$ 118,000,000
Line of Credit [Member] | Revolver [Member] | Port Arthur Terminal [Member]
Credit Facility [Abstract]
Proceeds from long-term lines of credit	$ 262,000,000
Line of Credit [Member] | Revolver [Member] | Maximum [Member]
Credit Facility [Abstract]
Debt to EBITDA ratio as per terms of revolver				5.0
Debt to EBITDA ratio following certain acquisitions as per terms of revolver				5.5
Line of Credit [Member] | Letters of Credit [Member]
Credit Facility [Abstract]
Long-term line of credit, noncurrent				$ 0	$ 0
Senior Notes [Member] | Senior Notes Due March 2028 [Member]
Credit Facility [Abstract]
Payments of debt issuance costs				4,500,000
Senior Notes [Abstract]
Aggregate principal amount of debt issued				$ 500,000,000
Interest rate of notes (percent)				4.50%
Long-term debt, maturity date				Mar. 15, 2028
Proceeds from issuance of senior notes				$ 498,300,000
Payments of debt issuance costs				$ 4,500,000
Senior Notes [Member] | Senior Notes Due December 2026 [Member]
Credit Facility [Abstract]
Payments of debt issuance costs						4,500,000
Senior Notes [Abstract]
Aggregate principal amount of debt issued						$ 500,000,000
Interest rate of notes (percent)						4.375%
Long-term debt, maturity date				Dec. 15, 2026
Proceeds from issuance of senior notes						$ 499,800,000
Payments of debt issuance costs						$ 4,500,000

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Debt and Notes Payable - Related Party, Notes Payable - Related Party (Details)			12 Months Ended
	Feb. 01, 2019 USD ($)	Jan. 19, 2019 USD ($)	Dec. 31, 2018 USD ($) loan_agreement	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Debt Instrument [Line Items]
Notes payable to related party, repayments			$ 85,000,000	$ 0	$ 0
Outstanding balance of Loan Agreements			285,000,000	370,000,000
Subordinated Debt [Member] | Majority Shareholder [Member]
Debt Instrument [Line Items]
Notes payable to related party, repayments			85,000,000	0	$ 0
Outstanding balance of Loan Agreements			$ 285,000,000	$ 370,000,000
Subordinated Debt [Member] | Majority Shareholder [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Notes payable to related party, repayments		$ 185,000,000
Outstanding balance of debt converted to capital contribution from Valero	$ 100,000,000
Subordinated Debt [Member] | Majority Shareholder [Member] | Houston and St. Charles Terminal Services Business [Member]
Debt Instrument [Line Items]
Notes to related party, maturity date			Mar. 01, 2020
Subordinated Debt [Member] | Majority Shareholder [Member] | Corpus Christi Terminal Services Business [Member]
Debt Instrument [Line Items]
Notes to related party, maturity date			Oct. 01, 2020
Subordinated Debt [Member] | Subordinated Credit Agreements With Valero [Member] | Majority Shareholder [Member]
Debt Instrument [Line Items]
Number of loan agreements | loan_agreement			2
Notes payable to related party, rate at period end (percent)			3.84925%	2.86069%

XML

Debt and Notes Payable - Related Party, Other Disclosures (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Interest Costs Incurred [Abstract]
Interest and debt expense incurred		$ 55,475	$ 36,634	$ 14,997
Less: Capitalized interest		407	619	82
Interest and debt expense, net of capitalized interest	[1]	55,068	$ 36,015	$ 14,915
Long-term Debt, Fiscal Year Maturity [Abstract]
Due in 2020		285,000
Due in 2026		500,000
Due in 2028		$ 500,000

[1] Includes interest and debt expense – related party of $10,693 thousand, $9,658 thousand, and $6,608 thousand for the years ended December 31, 2018, 2017, and 2016, respectively.

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Revenues, Disaggregation of Revenues (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Disaggregation of Revenue [Line Items]
Revenues from lease contracts									$ 436,609	$ 351,532	$ 273,730
Revenues from contracts with customer									109,818	100,473	88,889
Total revenues – related party	$ 139,268	$ 140,590	$ 134,627	$ 131,942	$ 126,304	$ 109,340	$ 110,545	$ 105,816	546,427	452,005	362,619
Pipeline Transportation [Member]
Disaggregation of Revenue [Line Items]
Revenues from lease contracts									70,606	49,474	31,268
Revenues from contracts with customer									53,545	51,157	47,183
Total revenues – related party									124,151	100,631	78,451
Terminaling [Member]
Disaggregation of Revenue [Line Items]
Revenues from lease contracts									364,363	301,512	241,922
Revenues from contracts with customer									50,754	46,484	41,706
Total revenues – related party									415,117	347,996	283,628
Storage and Other [Member]
Disaggregation of Revenue [Line Items]
Revenues from lease contracts									1,640	546	540
Revenues from contracts with customer									5,519	2,832	0
Total revenues – related party									$ 7,159	$ 3,378	$ 540

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Revenues, Operating Leases - Lessor (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Operating Leases, Lease Revenue
Minimum lease revenues	$ 361,316	$ 292,034	$ 232,211
Contingent lease revenues	75,293	59,498	41,519
Revenues from lease contracts	$ 436,609	$ 351,532	$ 273,730

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Revenues, Receivables from Contracts with Customer (Details) - USD ($) $ in Thousands	Dec. 31, 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	$ 47,768		$ 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	$ 10,000	$ 8,300

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Revenues, Future Minimum Rentals (Details) - Majority Shareholder [Member] $ in Thousands	Dec. 31, 2018 USD ($)
Future Minimum Rentals to be Received on Noncancelable Lease Agreements
2019	$ 361,282
2020	362,268
2021	361,282
2022	361,282
2023	361,076
Thereafter	2,553,520
Total minimum rental payments	$ 4,360,710

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Revenues, Remaining Performance Obligations (Details) - Majority Shareholder [Member] $ in Thousands	Dec. 31, 2018 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Future revenues expected to be recognized for our remaining performance obligations from contracts with our customer	$ 81,215
Expected timing of performance obligation satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Future revenues expected to be recognized for our remaining performance obligations from contracts with our customer	$ 81,426
Expected timing of performance obligation satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Future revenues expected to be recognized for our remaining performance obligations from contracts with our customer	$ 81,215
Expected timing of performance obligation satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Future revenues expected to be recognized for our remaining performance obligations from contracts with our customer	$ 81,215
Expected timing of performance obligation satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Future revenues expected to be recognized for our remaining performance obligations from contracts with our customer	$ 77,834
Expected timing of performance obligation satisfaction	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Future revenues expected to be recognized for our remaining performance obligations from contracts with our customer	$ 442,064
Expected timing of performance obligation satisfaction

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Asset Retirement Obligations (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Changes in Asset Retirement Obligations
Balance as of beginning of year	$ 1,099,000	$ 1,069,000	$ 1,021,000
Accretion expense	32,000	30,000	48,000
Balance as of end of year	1,131,000	1,099,000	$ 1,069,000
Current liability for asset retirement obligations	0	0
Assets that are legally restricted for purposes	$ 0	$ 0

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Commitments and Contingencies (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017		Dec. 31, 2016
Future Minimum Rentals on Operating Leases
2019	$ 1,924
2020	1,892
2021	1,845
2022	1,845
2023	1,845
Thereafter	37,483
Total minimum rental payments	46,834
Operating Leases, Rent Expense, Net [Abstract]
Minimum rental expense for operating leases	1,968	$ 2,040	[1]	$ 1,322	[1]
Contingent rental expenses for operating leases	229	126		0
Related Party [Member]
Future Minimum Rentals on Operating Leases
2019	792
2020	765
2021	739
2022	739
2023	739
Thereafter	13,958
Total minimum rental payments	17,732
Operating Leases, Rent Expense, Net [Abstract]
Minimum rental expense for operating leases	740	656	[1]	515	[1]
Contingent rental expenses for operating leases	19	7		0
Others [Member]
Future Minimum Rentals on Operating Leases
2019	1,132
2020	1,127
2021	1,106
2022	1,106
2023	1,106
Thereafter	23,525
Total minimum rental payments	29,102
Operating Leases, Rent Expense, Net [Abstract]
Minimum rental expense for operating leases	1,228	1,384	[1]	807	[1]
Contingent rental expenses for operating leases	$ 210	$ 119		$ 0

[1] These amounts have been retrospectively adjusted to exclude non-lease components (i.e., purchase obligations), which had previously been included in minimum rental expenses.

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Cash Distributions and Net Income Per Limited Partner Unit, Cash Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands	Nov. 09, 2018	Aug. 13, 2018	May 09, 2018	Feb. 13, 2018	Nov. 09, 2017	Aug. 10, 2017	May 11, 2017	Feb. 10, 2017	Nov. 10, 2016	Aug. 09, 2016	May 10, 2016	Feb. 11, 2016
Quarterly Cash Distributions
Total quarterly distribution (in dollars per unit)	$ 0.5510	$ 0.5510	$ 0.5275	$ 0.5075	$ 0.4800	$ 0.4550	$ 0.4275	$ 0.4065	$ 0.3850	$ 0.3650	$ 0.3400	$ 0.3200
Total cash distributions	$ 56,081	$ 56,081	$ 52,826	$ 50,055	$ 46,242	$ 42,111	$ 38,043	$ 34,895	$ 32,175	$ 28,912	$ 25,608	$ 22,711

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Cash Distributions and Net Income Per Limited Partner Unit, Net Income Per Limited Partner Common Unit (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs									$ 116,143	$ 131,895	$ 102,216
General partner’s IDRs									48,826	44,534	19,354
DERs									19	22	20
Distributions and DERs declared									164,988	176,451	121,590
Undistributed earnings									99,107	61,982	82,663
Net income available to limited partners – basic and diluted									$ 264,095	$ 238,433	$ 204,253
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding (units)									69,250	68,220	48,817
Net income per limited partner unit – basic and diluted (in dollars per unit)	$ 0.90	$ 0.75	$ 0.66	$ 0.72	$ 0.71	$ 0.65	$ 0.69	$ 0.72	$ 3.03	$ 2.77	$ 2.85
General Partner Valero [Member]
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs									$ 3,300	$ 3,363	$ 2,294
General partner’s IDRs									48,826	44,534	19,354
Distributions and DERs declared									52,126	47,897	21,648
Undistributed earnings									1,982	1,216	1,905
Net income available to limited partners – basic and diluted									54,108	49,113	23,553
Limited Partner [Member]
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs									112,843	128,532	79,625
Distributions and DERs declared									112,843	128,532	79,625
Undistributed earnings									97,108	60,756	59,452
Net income available to limited partners – basic and diluted									209,951	189,288	139,077
Limited Partner [Member] | Common Unitholders Public [Member]
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs									36,634	42,029	32,362
Distributions and DERs declared									36,634	42,029	32,362
Undistributed earnings									31,525	19,922	26,322
Net income available to limited partners – basic and diluted									$ 68,159	$ 61,951	$ 58,684
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding (units)									69,250	68,220	48,817
Net income per limited partner unit – basic and diluted (in dollars per unit)									$ 3.03	$ 2.77	$ 2.85
Limited Partner [Member] | Common Unitholder Valero [Member]
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs									$ 76,209	$ 86,503	$ 47,263
Distributions and DERs declared									76,209	86,503	47,263
Undistributed earnings									65,583	40,834	33,130
Net income available to limited partners – basic and diluted									141,792	127,337	80,393
Limited Partner [Member] | Subordinated Units [Member]
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs											20,297
Distributions and DERs declared											20,297
Undistributed earnings											21,289
Net income available to limited partners – basic and diluted											$ 41,586
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding (units)											17,463
Net income per limited partner unit – basic and diluted (in dollars per unit)											$ 2.38
Restricted Units [Member]
Allocation of net income to determine net income available to limited partners:
DERs									19	22	$ 20
Distributions and DERs declared									19	22	20
Undistributed earnings									17	10	17
Net income available to limited partners – basic and diluted									$ 36	$ 32	$ 37

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Partners' Capital Partners' Capital, Unit Activity (Details) - shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Partners' Capital Roll Forward (Units) [Abstract]
Beginning balance (units)	70,669,563	68,801,684	66,651,071
Unit-based compensation (units)	5,898	5,997	5,958
Units issued in connection with acquisitions (units)		1,103,383	1,917,020
Units issued under ATM program (units)		742,897	223,083
General partner units issued to maintain 2% interest (units)	120	15,602	4,552
Ending balance (units)	70,675,581	70,669,563	68,801,684
Limited Partner [Member] | Common Unitholders Public [Member]
Partners' Capital Roll Forward (Units) [Abstract]
Beginning balance (units)	22,487,586	21,738,692	21,509,651
Unit-based compensation (units)	5,898	5,997	5,958
Units issued under ATM program (units)		742,897	223,083
Ending balance (units)	22,493,484	22,487,586	21,738,692
Limited Partner [Member] | Common Unitholder Valero [Member]
Partners' Capital Roll Forward (Units) [Abstract]
Beginning balance (units)	46,768,586	45,687,271	15,018,602
Units issued in connection with acquisitions (units)		1,081,315	1,878,680
Conversion of subordinated units (units)			28,789,989
Ending balance (units)	46,768,586	46,768,586	45,687,271
Limited Partner [Member] | Subordinated Unitholder Valero [Member]
Partners' Capital Roll Forward (Units) [Abstract]
Beginning balance (units)	0	0	28,789,989
Conversion of subordinated units (units)			(28,789,989)
Ending balance (units)	0	0	0
General Partner Valero [Member]
Partners' Capital Roll Forward (Units) [Abstract]
Beginning balance (units)	1,413,391	1,375,721	1,332,829
Units issued in connection with acquisitions (units)		22,068	38,340
General partner units issued to maintain 2% interest (units)	120	15,602	4,552
Ending balance (units)	1,413,511	1,413,391	1,375,721

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Partners' Capital, ATM Program's Narrative (Details)		12 Months Ended			28 Months Ended
	Aug. 10, 2016	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2018 USD ($)	Sep. 16, 2016 USD ($)
Limited Partners' Capital Account [Line Items]
Proceeds from common units issued, gross		$ 5,000	$ 34,176,000	$ 11,289,000
Aggregate offering price of common units, remaining available		$ 304,500,000			$ 304,500,000
Subordinated units conversion to common units, ratio	1
Public Offering [Member]
Limited Partners' Capital Account [Line Items]
Aggregate offering price of common units						$ 350,000,000
Proceeds from common units issued, gross					$ 45,500,000
Valero [Member]
Limited Partners' Capital Account [Line Items]
General partner ownership interest (percent)		2.00%

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Partners' Capital, Schedule of Common Units Issued Under ATM Program (Details) - USD ($) $ in Thousands	12 Months Ended			28 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2018
Partners' Capital
Public offering of common units (units)		742,897	223,083
Proceeds from common units issued, gross	$ 5	$ 34,176	$ 11,289
Common units offering costs	$ 0	$ 594	$ 883
General partner units issued (units)	120	15,602	4,552
Proceeds from general partner units issued	$ 5	$ 748	$ 198
Public Offering [Member]
Partners' Capital
Proceeds from common units issued, gross				$ 45,500
Limited Partner [Member] | Common Unitholders Public [Member]
Partners' Capital
Public offering of common units (units)		742,897	223,083
Proceeds from common units issued, gross		$ 33,428	$ 11,091
Limited Partner [Member] | Common Unitholders Public [Member] | Public Offering [Member]
Partners' Capital
Public offering of common units (units)		742,897	223,083
Proceeds from common units issued, gross		$ 35,728	$ 9,724
Common units offering costs		594	107
Proceeds from common units issued, net		35,134	9,617
General Partner Valero [Member]
Partners' Capital
Proceeds from common units issued, gross	$ 5	$ 748	$ 198
General partner units issued (units)	120	15,602	4,552
General Partner Valero [Member] | General Partner Valero [Member]
Partners' Capital
General partner units issued (units)		15,602	4,552
Proceeds from general partner units issued		$ 748	$ 198

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Unit-based Compensation (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) shares	Dec. 31, 2018 USD ($) independent_director shares	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Jan. 10, 2019 $ / shares
Unit-based Compensation (Textual)
Number of non-employee directors | independent_director		3
Unit-based compensation		$ 258	$ 266	$ 196
Valero [Member] | Valero Energy Partners LP [Member] | Subsequent Event [Member]
Unit-based Compensation (Textual)
Unit price paid in cash for each restricted unit that became vested (in dollars per unit) | $ / shares					$ 42.25
VLP 2013 Incentive Compensation Plan [Member] | Incentive Compensation Plan [Member]
Unit-based Compensation (Textual)
Number of common units available to be awarded under the 2013 ICP (units) | shares		2,972,496
VLP 2013 Incentive Compensation Plan [Member] | Restricted Unit [Member]
Unit-based Compensation (Textual)
Unit-based compensation		$ 258	$ 266	$ 196
VLP 2013 Incentive Compensation Plan [Member] | Restricted Unit [Member] | Scenario, Forecast [Member]
Unit-based Compensation (Textual)
Unit-based compensation	$ 271
Units fully vested (in units) | shares	11,880
Vesting in 1st Anniversary of Grant Date [Member] | VLP 2013 Incentive Compensation Plan [Member] | Restricted Unit [Member]
Unit-based Compensation (Textual)
Restricted unit vesting schedule (percent)		33.00%
Vesting in 2nd Anniversary of Grant Date [Member] | VLP 2013 Incentive Compensation Plan [Member] | Restricted Unit [Member]
Unit-based Compensation (Textual)
Restricted unit vesting schedule (percent)		33.00%
Vesting in 3rd Anniversary of Grant Date [Member] | VLP 2013 Incentive Compensation Plan [Member] | Restricted Unit [Member]
Unit-based Compensation (Textual)
Restricted unit vesting schedule (percent)		33.00%

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Income Taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Components of Income Tax Expense
Current U.S. state	$ 1,177,000	$ 942,000	$ 704,000
Deferred U.S. state	376,000	393,000	408,000
Income tax expense	$ 1,553,000	$ 1,335,000	$ 1,112,000
Income Taxes (Textual)
Statutory federal income tax rate (percent)	21.00%	35.00%	35.00%
Liability for unrecognized tax benefits	$ 0	$ 0
Interest or penalties accrued	$ 0	$ 0	$ 0

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Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands			12 Months Ended
	Sep. 01, 2016	Apr. 01, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Decrease (increase) in current assets:
Receivables – related party			$ (1,272)	$ (9,607)	$ (10,786)
Receivables			(24)	(781)	0
Prepaid expenses and other			(171)	277	(365)
Increase (decrease) in current liabilities:
Accounts payable			(5,347)	7,411	586
Accounts payable – related party			9,786	(3,404)	(667)
Accrued liabilities			(149)	137	34
Accrued liabilities – related party			(703)	(2,589)	3,436
Accrued interest payable			4,916	1,278	1,054
Accrued interest payable – related party			(27)	864	(429)
Taxes other than income taxes payable			(792)	2,684	1,181
Changes in current assets and current liabilities			6,217	(3,730)	(5,956)
Cash Flows Related to Interest and Income Taxes
Interest paid			49,051	33,355	13,873
Income taxes paid			904	719	505
Investing and Financing Cash Outflows in Connection with Acquisitions
Financing cash outflow			0	54,618	376,393
Other Noncash Activities
Increase in accounts payable related to capital expenditures			1,120	570	904
Units issued under ATM Program included in receivables			0	0	1,682
Majority Shareholder [Member]
Investing and Financing Cash Outflows in Connection with Acquisitions
Investing cash outflow			0	407,844	103,607
Financing cash outflow				54,618	376,393
Investing and financing cash outflow, total				462,462	480,000
Transfer (from) to Valero for:
Deferred income taxes					(144)
Other Noncash Activities
Units issued to Valero in connection with acquisitions			0	46,000	85,000
Majority Shareholder [Member] | Limited Partner [Member] | Common Unitholder Valero [Member]
Other Noncash Activities
Noncash conversion of subordinated units issued					406,400
Majority Shareholder [Member] | Limited Partner [Member] | Subordinated Unitholder Valero [Member]
Other Noncash Activities
Noncash conversion of subordinated units converted					406,400
Majority Shareholder [Member] | Deferred Income Taxes [Member]
Transfer (from) to Valero for:
Deferred income taxes			0	0	(190)
Majority Shareholder [Member] | Construction in progress [Member]
Transfer (from) to Valero for:
Change in accrued capital expenditures			0	0	46
Majority Shareholder [Member] | McKee Terminal Services Business [Member]
Investing and Financing Cash Outflows in Connection with Acquisitions
Investing cash outflow					51,361
Financing cash outflow					152,639
Investing and financing cash outflow, total		$ 204,000			204,000
Majority Shareholder [Member] | Meraux and Three Rivers Terminal Services Business [Member]
Investing and Financing Cash Outflows in Connection with Acquisitions
Investing cash outflow					52,246
Financing cash outflow					223,754
Investing and financing cash outflow, total	$ 276,000				276,000
Majority Shareholder [Member] | Parkway Pipeline [Member]
Investing and Financing Cash Outflows in Connection with Acquisitions
Investing cash outflow				200,249
Financing cash outflow				0
Investing and financing cash outflow, total				200,249
Noncash capital contributions from Valero:
Excess of carrying value over purchase price paid for acquisition of Parkway Pipeline			0	51,702	0
Majority Shareholder [Member] | Port Arthur Terminal [Member]
Investing and Financing Cash Outflows in Connection with Acquisitions
Investing cash outflow				207,595
Financing cash outflow				54,618
Investing and financing cash outflow, total				262,213
Majority Shareholder [Member] | Capital Projects [Member]
Noncash capital contributions from Valero:
Capital projects			$ 43,658	$ 41,305	$ 35,732

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Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financial assets:
Cash and cash equivalents, at carrying amount	$ 152,106	$ 42,052	$ 71,491	$ 80,783
Financial liabilities:
Debt, at carrying amount	989,857	905,283
Notes payable to related party, at carrying amount	285,000	370,000
Senior Notes [Member]
Financial liabilities:
Debt, at carrying amount	989,857	495,283
Subordinated Debt [Member] | Majority Shareholder [Member]
Financial liabilities:
Notes payable to related party, at carrying amount	285,000	370,000
Revolver [Member] | Line of Credit [Member]
Financial liabilities:
Debt, at carrying amount	0	410,000
Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and cash equivalents, at fair value	152,106	42,052
Fair Value, Inputs, Level 2 [Member] | Senior Notes [Member]
Financial liabilities:
Debt, at fair value	986,290	523,800
Fair Value, Inputs, Level 2 [Member] | Subordinated Debt [Member] | Majority Shareholder [Member]
Financial liabilities:
Notes payable to related party, at fair value	285,000	370,000
Fair Value, Inputs, Level 2 [Member] | Revolver [Member] | Line of Credit [Member]
Financial liabilities:
Debt, at fair value	$ 0	$ 410,000

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Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended								12 Months Ended
		Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Quarterly Financial Data
Total revenues – related party		$ 139,268	$ 140,590	$ 134,627	$ 131,942	$ 126,304	$ 109,340	$ 110,545	$ 105,816	$ 546,427	$ 452,005	$ 362,619
Gross profit	[1]	86,100	88,595	82,408	82,101	78,926	70,749	70,985	70,496
Operating income		77,750	84,513	78,250	77,989	74,895	66,347	67,122	66,666	318,502	275,030	204,574
Net income		63,648	70,349	64,019	66,079	64,264	57,589	58,443	58,137	264,095	238,433	188,831
Net income attributable to partners		63,648	70,349	64,019	66,079	64,264	57,589	58,443	58,137	264,095	238,433	204,253
Limited partners’ interest in net income		$ 62,375	$ 52,146	$ 45,942	$ 49,524	$ 49,074	$ 44,552	$ 47,024	$ 48,670	$ 209,987	$ 189,320	$ 180,700
Net income per limited partner common unit – basic and diluted (in dollars per unit)		$ 0.90	$ 0.75	$ 0.66	$ 0.72	$ 0.71	$ 0.65	$ 0.69	$ 0.72	$ 3.03	$ 2.77	$ 2.85

[1] Gross profit is calculated as total revenues – related party less cost of revenues (excluding depreciation expense) and depreciation expense.