Equity Method Investments

3 Months Ended

Mar. 31, 2020

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:


	March 31, 2020				December 31, 2019
	Ownership	Investment Amount		Ownership	Investment Amount
Amberjack – Series A / Series B	75.0% / 50.0%	$	418	75.0% / 50.0%	$	426
Mars	71.5%	160		71.5%	161
Bengal	50.0%	87		50.0%	88
Permian Basin	50.0%	90		50.0%	91
LOCAP	41.48%	9		41.48%	9
Explorer	38.59%	85		38.59%	88
Poseidon	36.0%	—		36.0%	—
Colonial	16.125%	30		16.125%	30
Proteus	10.0%	15		10.0%	15
Endymion	10.0%	18		10.0%	18
		$	912		$	926

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 March 31, 2020 and December 31, 2019, the unamortized basis differences included in our equity investments are $90 million and $92 million, respectively. For the three months ended March 31, 2020 and March 31, 2019, the net amortization expense was $2 million and $1 million, respectively.

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. Further, we have no commitments to provide further financial support to Poseidon. As such, we have recorded excess distributions in Other income of $9 million and $8 million for the three months ended March 31, 2020 and March 31, 2019, respectively. Once our cumulative share of equity earnings becomes greater than the amount of distributions received, we will resume the equity method of accounting as long as the equity method investment balance remains greater than zero.

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


	Three Months Ended March 31,
	2020		2019
Amberjack	$	29	$	32
Mars	31		29
Bengal	5		5
Explorer ⁽¹⁾	14		—
Colonial ⁽¹⁾	27		—
Other⁽²⁾	6		4
	$	112	$	70

⁽¹⁾We acquired additional interests in Explorer and Colonial in June 2019. The acquisition of these interests has been accounted for prospectively.

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

The adoption of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, and all related accounting standards updates to such Topic (collectively, “the revenue standard”) 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 adopted on January 1, 2018. As a result of the adoption of the revenue standard on January 1, 2019, we recognized our proportionate share of Amberjack’s cumulative effect transition adjustments as a decrease to opening equity (deficit) in the amount of $9 million under the modified retrospective transition method.

Under ASC Topic 842, 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. There was no material impact on the Partnership's consolidated financial statements as a result of the adoption of the lease standard.

We assess our equity method investments for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred, if the loss is deemed to be other than temporary. Due to the change in market conditions, as of March 31, 2020, we evaluated whether an impairment indicator existed. Based on our current forecast and expectations of market conditions, we determined that there was no triggering event that required us to update our impairment evaluation of our equity method investments. However, if the facts and circumstances change in the near term and indicate a loss in value that is other than temporary, we will re-evaluate whether the carrying amount of our equity method investments may not be recoverable.

Summarized Financial Information

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


	Three Months Ended March 31, 2020
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack	$	76	$	19	$	57	$	57
Mars	72		28		44		44
Bengal	17		7		10		10
Explorer	96		47		49		38
Colonial	401		163		238		169
Poseidon	33		9		24		22
Other ⁽¹⁾	57		27		30		25

⁽¹⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.


	Three Months Ended March 31, 2019
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack	$	81	$	19	$	62	$	62
Mars	63		22		41		41
Bengal	18		7		11		11
Poseidon	31		9		22		20
Other⁽¹⁾	30		18		12		9

⁽¹⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

Capital Contributions

We make capital contributions for our pro-rata interest in Permian Basin to fund capital and other expenditures. For the three months ended March 31, 2020, we made no capital contribution, and for the three months ended March 31, 2019, we made capital contributions of $5 million