Variable Interest Entity

3 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entity

12. Variable Interest Entity

Mardi Gras is a Delaware limited liability company and a pass-through entity for U.S. federal and state income tax purposes. Mardi Gras holds equity interests in the Mardi Gras Joint Ventures and accounts for them as equity method investments. Mardi Gras does not have any other operations or activities. The remaining interests in each of the Mardi Gras Joint Ventures are owned by unaffiliated third-party investors. Each of the Mardi Gras Joint Ventures is managed by its respective management committee, and decisions made by these management committees require approval of two or more members that are not affiliates with equity interest holdings meeting certain thresholds.

We have 65% ownership interest and 100% managing member interest in Mardi Gras. The remainder of the economic interest in Mardi Gras was held 34% by BP Pipelines and 1% by an affiliate of BP. Through our managing member interest in Mardi Gras, we have the right to vote 100% of Mardi Gras’ interest in each of the Mardi Gras Joint Ventures. We determined that Mardi Gras is a variable interest entity because (i) we hold disproportional voting rights as compared to our economic interest in Mardi Gras, and (ii) substantially all of Mardi Gras’ activities involve or are conducted on behalf of our Parent, which holds disproportionately few voting rights.

The managing member interest in Mardi Gras provides us with the unilateral power to direct the activities of Mardi Gras that most significantly impact its economic performance including the right to exercise the voting rights of BP for each of the Mardi Gras Joint Ventures. In addition, our obligations to absorb the expected losses of and the right to receive the residual returns from Mardi Gras relative to our economic ownership is significant to Mardi Gras. As a result, we are the primary beneficiary of Mardi Gras and consolidate Mardi Gras.

We have the obligation to provide financial support to Mardi Gras if all members unanimously determine that additional capital contributions are necessary to fund Mardi Gras’ operations. The assets of Mardi Gras can only be used to satisfy its own

obligations, which were zero at June 30, 2020 and December 31, 2019. Under the current limited liability company agreement of Mardi Gras, creditors of Mardi Gras, if any, do not have any recourse to the general credit of the Partnership.

The financial position of Mardi Gras at June 30, 2020 and December 31, 2019, its financial performance for the three and six months ended June 30, 2020 and 2019 and cash flows for the six months ended June 30, 2020 and 2019, as reflected in the condensed consolidated financial statements, are as follows:

	June 30, 2020		December 31, 2019
Balance sheet
Equity method investments	$	386.6	$	391.3
Non-controlling interests	135.3		136.9

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Statement of operations
Income from equity method investments	$	13.7	$	13.9	$	30.3	$	23.8
Less: Net income attributable to non-controlling interests	4.8		4.8		10.6		8.3
Net impact on Net income attributable to the Partnership	$	8.9	$	9.1	$	19.7	$	15.5

	Six Months Ended June 30,
	2020		2019
Statement of cash flows
Cash flows from operating activities
Distributions of earnings received from equity method investments	$	29.8	$	23.7
Cash flows from investing activities
Distribution in excess of earnings from equity method investments	5.2		6.6
Cash flows from financing activities
Distributions to non-controlling interests	(12.2)		(10.6)
Net change on the Partnership's cash and cash equivalents	$	22.8	$	19.7