Discontinued operations

9 Months Ended

Sep. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

The assets and liabilities of the Company's discontinued operations have been classified as held for sale and the results of operations are shown in income (loss) from discontinued operations, other than certain general and administrative costs and interest expense which do not meet the criteria for income (loss) from discontinued operations. At the time the assets were classified as held for sale, depreciation, depletion and amortization expense was no longer recorded.

Dakota Prairie Refining On June 24, 2016, WBI Energy entered into a membership interest purchase agreement with Tesoro to sell all of the outstanding membership interests in Dakota Prairie Refining to Tesoro. WBI Energy and Calumet each previously owned 50 percent of the Dakota Prairie Refining membership interests and were equal members in building and operating Dakota Prairie Refinery. To effectuate the sale, WBI Energy acquired Calumet’s 50 percent membership interest in Dakota Prairie Refining on June 27, 2016. The sale of the membership interests to Tesoro closed on June 27, 2016. The sale of Dakota Prairie Refining reduced the Company’s risk by decreasing exposure to commodity prices. As of September 30, 2018, the Company incurred no material exit and disposal costs related to the sale of Dakota Prairie Refining and does not expect to incur any future material exit and disposal costs.

At September 30, 2018, Centennial continued to guarantee certain debt obligations of Dakota Prairie Refining and Tesoro continued to indemnify Centennial for any losses and litigation expenses arising from the guarantee. On October 17, 2018, Centennial was released of any further liabilities or obligations under this guarantee. For more information related to the guarantee, see Note 17.

The carrying amounts of the major classes of assets and liabilities classified as held for sale, related to the operations of and activity associated with Dakota Prairie Refining, on the Consolidated Balance Sheets were as follows:



	September 30, 2018		September 30, 2017		December 31, 2017
	(In thousands)
Assets
Current assets:
Income taxes receivable (a)	$	1,640	$	8,444	$	1,778
Total current assets held for sale	1,640		8,444		1,778
Total assets held for sale	$	1,640	$	8,444	$	1,778
Liabilities
Noncurrent liabilities:
Deferred income taxes (b)	$	37	$	55	$	37
Total noncurrent liabilities held for sale	37		55		37
Total liabilities held for sale	$	37	$	55	$	37


(a)	On the Company's Consolidated Balance Sheets, these amounts were reclassified to taxes payable and are reflected in current liabilities held for sale.


(b)	On the Company's Consolidated Balance Sheets, these amounts were reclassified to deferred charges and other assets - deferred income taxes and are reflected in noncurrent assets held for sale.

Fidelity In the second quarter of 2015, the Company began the marketing and sale process of Fidelity with an anticipated sale to occur within one year. Between September 2015 and March 2016, the Company entered into purchase and sale agreements to sell substantially all of Fidelity's oil and natural gas assets. The completion of these sales occurred between October 2015 and April 2016. In July 2018, the Company completed the sale of a majority of the remaining property, plant and equipment. The sale of Fidelity was part of the Company's strategic plan to grow its capital investments in the remaining business segments and to focus on creating a greater long-term value.

The carrying amounts of the major classes of assets and liabilities classified as held for sale, related to the operations of Fidelity, on the Consolidated Balance Sheets were as follows:



	September 30, 2018		September 30, 2017		December 31, 2017
	(In thousands)
Assets
Current assets:
Receivables, net	$	571	$	304	$	479
Total current assets held for sale	571		304		479
Noncurrent assets:
Net property, plant and equipment	—		2,064		1,631
Deferred income taxes	1,711		62,163		2,637
Other	161		161		161
Total noncurrent assets held for sale	1,872		64,388		4,429
Total assets held for sale	$	2,443	$	64,692	$	4,908
Liabilities
Current liabilities:
Accounts payable	$	188	$	68	$	30
Taxes payable	7,463		11,745		10,857
Other accrued liabilities	1,948		2,380		2,884
Total current liabilities held for sale	9,599		14,193		13,771
Total liabilities held for sale	$	9,599	$	14,193	$	13,771

The Company's deferred tax assets included in assets held for sale were largely comprised of federal and state net operating loss carryforwards. The Company realized substantially all of the outstanding net operating loss carryforwards in 2017.

The Company has incurred $10.5 million of exit and disposal costs to date. As of September 30, 2018, the Company has incurred no exit and disposal costs for the year. As of September 30, 2017, the Company had incurred no exit and disposal costs for the year. The Company does not expect to incur any additional material exit and disposal costs related to the sale of Fidelity. The exit and disposal costs are associated with severance and other related matters.

Dakota Prairie Refining and Fidelity The reconciliation of the major classes of income and expense constituting pretax income (loss) from discontinued operations, which includes Dakota Prairie Refining and Fidelity, to the after-tax income (loss) from discontinued operations on the Consolidated Statements of Income was as follows:



	Three Months Ended							Nine Months Ended
	September 30,							September 30,
	2018			2017				2018			2017
	(In thousands)
Operating revenues	$	61		$	121			$	201		$	356
Operating expenses	216			384				825			(4,988		)
Operating income (loss)	(155		)	(263		)		(624		)	5,344
Other income (expense)	—			—				12			(13		)
Interest expense	—			—				575			239
Income (loss) from discontinued operations before income taxes	(155		)	(263		)		(1,187		)	5,092
Income taxes	(37		)	1,935			*	(1,272		)	8,794			*
Income (loss) from discontinued operations	$	(118	)	$	(2,198	)		$	85		$	(3,702	)


*	Includes the eliminations for the presentation of income tax adjustments between continuing and discontinued operations.

The Company retained certain liabilities of Dakota Prairie Refining. In the first quarter of 2017, the Company recorded a reversal of the previously accrued liability of $7.0 million ($4.3 million after tax) due to the resolution of a legal matter.