Revenue Recognition

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

The revenue standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The revenue standard requires entities to recognize revenue through the application of a five-step model, which includes: identification of the contract; identification of the performance obligations; determination of the transaction price; allocation of the transaction price to the performance obligations; and recognition of revenue as the entity satisfies the performance obligations.

Disaggregation of Revenue

The following table provides information about disaggregated revenue by service type and customer type:


	Three Months Ended March 31,
	2020		2019
Transportation services revenue – third parties	$	29	$	40
Transportation services revenue – related parties ⁽¹⁾	55		50
Storage services revenue – third parties	2		2
Storage services revenue – related parties	2		2

Terminaling services revenue – related parties ⁽²⁾	12		12
Product revenue – third parties⁽³⁾	—		1
Product revenue – related parties⁽³⁾	7		10
Total Topic 606 revenue	107		117
Lease revenue – related parties	14		14
Total revenue	$	121	$	131

⁽¹⁾ Transportation services revenue - related parties includes $1 million, respectively, of the non-lease service component in our transportation services contracts for the three months ended March 31, 2020 and March 31, 2019.

⁽²⁾ Terminaling services revenue - related parties is entirely comprised of the non-lease service component in our terminaling services contracts.

⁽³⁾Productrevenue is comprised of allowance oil sales.

Lease revenue

Certain of our long-term transportation and terminaling services contracts with related parties are accounted for as operating leases. These agreements have both a lease component and an implied operation and maintenance service component (“non-lease service component”). We allocate the arrangement consideration between the lease components and any non-lease service components based on the relative stand-alone selling price of each component. We estimate the stand-alone selling price of the lease and non-lease service components based on an analysis of service-related and lease-related costs for each contract, adjusted for a representative profit margin. The contracts have a minimum fixed monthly payment for both the lease and non-lease service components. We present the non-lease service components under the revenue standard within Transportation, terminaling and storage services – related parties in the unaudited consolidated statements of income.

Revenues from the lease components of these agreements are recorded within Lease revenue – related parties in the unaudited consolidated statements of income. Certain of these agreements were entered into for terms of ten years, with the option for the lessee to extend for two additional five-year terms, and we have additional agreements with an initial term of ten years with the option for the lessee to extend for up to ten additional one-year terms. As of March 31, 2020, future minimum payments of both the lease and service components to be received under the initial ten-year contract term of these operating leases were estimated to be:


	Total		Less than 1 year		Years 2 to 3		Years 4 to 5		More than 5 years
Operating leases	$	810	$	110	$	219	$	219	$	262

Contract Balances

The following table provides information about receivables and contract liabilities from contracts with customers:


	January 1, 2020		March 31, 2020
Receivables from contracts with customers – third parties	$	11	$	10
Receivables from contracts with customers – related parties	24		27
Deferred revenue – third parties	—		1
Deferred revenue – related party	—		1

Significant changes in the deferred revenue balances with customers during the period are as follows:


	December 31, 2019		Additions ⁽¹⁾		Reductions ⁽²⁾		March 31, 2020
Deferred revenue – third parties	$	—	$	1	$	—	$	1
Deferred revenue – related party	—		1		—		1

⁽¹⁾ Contract liability additions resulted from deficiency payments from minimum volume commitment contracts.

⁽²⁾ Contract liability reductions resulted from revenue earned through the actual or estimated use and expiration of deficiency credits.

We currently have no assets recognized from the costs to obtain or fulfill a contract as of both March 31, 2020 and December 31, 2019.

Remaining Performance Obligations

The following table includes revenue expected to be recognized in the future related to performance obligations exceeding one year of their initial terms that are unsatisfied or partially unsatisfied as of March 31, 2020:


	Total		Remainder of 2020		2021		2022		2023		2024 and beyond
Revenue expected to be recognized on multi-year committed shipper transportation contracts	$	553	$	81	$	63	$	63	$	63	$	283
Revenue expected to be recognized on other multi-year transportation service contracts ⁽¹⁾	39		4		6		6		6		17
Revenue expected to be recognized on multi-year storage service contracts	20		3		4		4		4		5
Revenue expected to be recognized on multi-year terminaling service contracts ⁽¹⁾	366		36		48		48		48		186
	$	978	$	124	$	121	$	121	$	121	$	491

⁽¹⁾Relates to the non-lease service components of certain of our long-term transportation and terminaling service contracts which are accounted for as operating leases.

As an exemption under ASC Topic 606, we do not disclose the amount of remaining performance obligations for contracts with an original expected duration of one year or less or for variable consideration that is allocated entirely to a wholly unsatisfied promise to transfer a distinct service that forms part of a single performance obligation.