Equity Method Investments

12 Months Ended

Dec. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

For each of the following investments, we have the ability to exercise significant influence over these investments based on certain governance provisions and our participation in the significant activities and decisions that impact the management and economic performance of the investments.

Equity method investments comprise the following as of the dates indicated:


	December 31,
	2019				2018
	Ownership	Amount		Ownership	Amount
Amberjack – Series A / Series B⁽¹⁾	75.0% / 50.0%	$	426	75.0% / 50.0%	$	458
Mars	71.5%	161		71.5%	169
Bengal	50.0%	88		50.0%	82
Permian Basin	50.0%	91		50.0%	72
LOCAP	41.48%	9		41.48%	8
Explorer ⁽²⁾	38.59%	88		12.62%	—
Poseidon	36.0%	—		36.0%	—
Colonial ⁽²⁾	16.125%	30		6.0%	—
Proteus	10.0%	15		10.0%	16
Endymion	10.0%	18		10.0%	18
		$	926		$	823

⁽¹⁾ We acquired an interest in Amberjack in the May 2018 Acquisition. The acquisition of this interest has been accounted for prospectively.

⁽²⁾As part of the June 2019 Acquisition, these interests have been accounted for prospectively. See below for additional information.

We acquired an additional 25.97% interest in Explorer and an additional 10.125% interest in Colonial in the June 2019 Acquisition. As a result, these investments now qualify for equity method accounting as we have the ability to exercise significant influence over these investments as of the acquisition date. Prior to the acquisition date, Explorer and Colonial were accounted for as Other investments without readily determinable fair values and were therefore carried at cost. Upon acquisition, we added our Parent’s historical carrying value of the equity interests transferred as a transaction between entities under common control, totaling $90 million, to the basis of our previously held interests of $60 million as this is the date these investments qualified for equity method accounting. Since the June 2019 Acquisition, we record distributions from these investments as reductions to the respective equity method investment balances for Explorer and Colonial as these amounts are no longer considered dividend income due to the change in the method of accounting. We recognize equity earnings for both Explorer and Colonial prospectively from the date of acquisition.

Unamortized differences in the basis of the initial investments and our interest in the separate net assets within the financial statements of the investees are amortized into net income over the remaining useful lives of the underlying assets. As of December 31, 2019, 2018 and 2017, the unamortized basis differences included in our equity method investments are $92 million, $40 million and $41 million, respectively. For the years ended 2019, 2018 and 2017, the net amortization expense was $6 million, $4 million and $4 million, respectively, which is included in Income from equity method investments.

During the first quarter of 2018, the investment amount for Poseidon was reduced to zero due to distributions received that were in excess of our investment balance and we, therefore, suspended the equity method of accounting. As we have no commitments to provide further financial support to Poseidon, we have recorded excess distributions of $33 million and $24 million in Other income for the years ended December 31, 2019 and 2018, respectively. Once our cumulative share of equity earnings becomes greater than the cumulative amount of distributions received, we will resume the equity method of accounting as long as the equity method investment balance remains greater than zero.

Income from our equity method investments were as follows during the periods indicated:


	For the Year Ended December 31,
	2019		2018		2017
Amberjack ⁽¹⁾	$	125	$	80	$	—
Mars⁽²⁾	126		108		122
Bengal	24		21		23
Explorer ⁽³⁾	41		—		—
Colonial ⁽³⁾	40		—		—
Poseidon ⁽⁴⁾	—		6		27
Other ⁽⁵⁾	17		20		15
	$	373	$	235	$	187

⁽¹⁾We acquired an interest in Amberjack in the May 2018 Acquisition. The acquisition of this interest has been accounted for prospectively.

⁽²⁾ We acquired an additional 22.9% interest in Mars in the December 2017 Acquisition. The acquisition of this interest was retrospectively adjusted for the incremental ownership acquired.

⁽³⁾ As stated above, we acquired additional interests in Explorer and Colonial in the June 2019 Acquisition. The acquisition of these interests has been accounted for prospectively.

⁽⁴⁾As stated above, the equity method of accounting has been suspended in 2018 for Poseidon and excess distributions are recorded in Other income.

⁽⁵⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion. We acquired a 41.48% interest in LOCAP in the December 2017 Acquisition.

The adoption of the revenue standard (as defined in Note 12 — Revenue Recognition) for the majority of our equity method investments followed the non-public business entity adoption date of January 1, 2019 for their stand-alone financial statements, with the exception of Mars and Permian Basin, which both adopted on January 1, 2018. As a result of adopting the revenue standard under the modified retrospective transition method on January 1, 2019 and 2018 by Amberjack and Mars, respectively, we recognized our proportionate share of each investment’s cumulative effect transition adjustment increasing the opening deficit in the amounts of $9 million and $7 million, respectively. The Amberjack adjustment is related to its dedication and transportation agreements, which contain tiered pricing arrangements resulting in a deferral of revenue. The Mars adjustment related to its transportation and dedication agreement and method of recognition as a stand-ready obligation, which resulted in a deferral of the recognition of revenue over the life of the contract, whereas under previous GAAP revenue was recognized upon physical delivery. The adoption of the revenue standard by our other equity method investments was not material.

Under the new lease standard (as defined in Note 9 — Leases), the adoption date for our equity method investments will follow the non-public business entity adoption date of January 1, 2020 or 2021 for their stand-alone financial statements, with the exception of Permian Basin, which adopted on January 1, 2019.

On October 23, 2019, we entered into a Settlement Agreement with SPLC (the “Settlement Agreement”) with respect to the storage revenue reimbursement provision contained in the Purchase and Sale Agreement entered into in 2016 under which we acquired an additional 20% interest in Mars. As a result of the Settlement Agreement, we received approximately $9 million during the fourth quarter of 2019 from SPLC that was recognized as an additional capital contribution. Pursuant to the Purchase and Sale Agreement, SPLC agreed to pay us up to $10 million if Mars inventory management fees do not meet certain levels for the calendar years 2017 through 2021.

Summarized Financial Information

The following tables present aggregated selected balance sheet and income statement data for our equity method investments on a 100% basis. However, during periods in which an acquisition occurs, the selected balance sheet and income statement data reflects activity from the date of the acquisition.


	For the Year Ended December 31, 2019
	Total revenues	Total operating expenses	Operating income	Net income
Statements of Income
Amberjack	315	73	242	243
Mars	282	104	178	179
Bengal	77	30	47	47
Explorer ⁽¹⁾	258	115	143	111
Colonial⁽²⁾	829	449	380	255
Poseidon	132	35	97	87
Other⁽³⁾	190	108	82	73


	As of December 31, 2019
	Current assets		Non-current assets		Total assets		Current liabilities		Non-current liabilities		Equity (deficit)		Total liabilities and equity (deficit)
Balance Sheets
Amberjack	$	56	$	804	$	860	$	4	$	32	$	824	$	860
Mars	57		173		230		8		22		200		230
Bengal	35		157		192		6		—		186		192
Explorer	93		530		623		44		442		137		623
Colonial	323		2,920		3,243		519		2,873		(149)		3,243
Poseidon	30		190		220		16		246		(42)		220
Other ⁽³⁾	60		917		977		73		469		435		977

⁽¹⁾Our interest in Explorer was acquired on June 6, 2019. Explorer total revenues, total operating expenses and operating income (on a 100% basis) was $443 million, $196 million and $247 million, respectively.

⁽²⁾Our interest in Colonial was acquired on June 6, 2019. Colonial total revenues, total operating expenses and operating income (on a 100% basis) was $1,437 million, $735 million and $702 million, respectively.

⁽³⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.


	For the Year Ended December 31, 2018
	Total revenues	Total operating expenses	Operating income	Net income
Statements of Income
Amberjack⁽¹⁾	204	47	157	157
Mars	241	87	154	154
Bengal	69	28	41	41
Poseidon	116	35	81	73
Other⁽²⁾	152	67	85	76


	As of December 31, 2018
	Current assets		Non-current assets		Total assets		Current liabilities		Non-current liabilities		Equity (deficit)		Total liabilities and equity (deficit)
Balance Sheets
Amberjack ⁽¹⁾	$	46	$	846	$	892	$	4	$	4	$	884	$	892
Mars	53		178		231		5		18		208		231
Bengal	27		156		183		9		—		174		183
Poseidon	19		203		222		16		243		(37)		222
Other ⁽²⁾	50		876		926		65		456		405		926

⁽¹⁾ Our interest in Amberjack was acquired on May 11, 2018. Amberjack total revenues, total operating expenses and operating income (on a 100% basis) was $295 million, $74 million and $221 million, respectively.

⁽²⁾Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.


	For the Year Ended December 31, 2017
	Total revenues	Total operating expenses	Operating income	Net income
Statements of Income
Mars	256	82	174	174
Bengal	73	28	45	45
Poseidon	117	33	84	79
Other ⁽¹⁾	124	46	78	66


	As of December 31, 2017
	Current assets		Non-current assets		Total assets		Current liabilities		Non-current liabilities		Equity (deficit)		Total liabilities and equity (deficit)
Balance Sheets
Mars	$	48	$	187	$	235	$	5	$	—	$	230	$	235
Bengal	25		157		182		11		—		171		182
Poseidon	19		218		237		18		237		(18)		237
Other ⁽¹⁾	92		625		717		99		245		373		717

⁽¹⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion. Interest in Permian Basin was acquired by us on October 17, 2017 and is pro rated in above table. For the year ended December 31, 2017, Permian Basin total revenue, total operating expenses and operating income (on a 100% basis) was $8 million, $5 million and $3 million, respectively.

Capital Contributions

We make capital contributions for our pro rata interest in Permian Basin to fund capital and other expenditures. We made capital contributions to Permian Basin of $25 million and $28 million in 2019 and 2018, respectively.