3. ACQUISITIONS AND DISPOSITION

Business Combinations

2013 Transaction

In December 2013, we acquired certain wholesale distribution contracts and 20 liquid petroleum products terminals with total storage capacity of approximately 39 million barrels from Hess Corporation (“Hess”) for $856.4 million, net of cash acquired (the “Hess Terminals Acquisition”). The 19 domestic terminals are located primarily in major metropolitan locations along the U.S. East Coast and have approximately 29 million barrels of aggregate liquid petroleum products storage capacity, including approximately 15 million barrels of capacity strategically located in New York Harbor. These terminals have access to products supplied by marine vessels and barges as well as pipelines. Excluding the Port Reading and Raritan Bay terminals, which are reported as part of our Global Marine Terminals segment, the operations of these domestic terminals acquired from Hess are reported in our Pipelines & Terminals segment. The terminal on St. Lucia in the Caribbean has approximately 10 million barrels of crude oil and refined petroleum products storage capacity with deep-water access, and its operations are reported in our Global Marine Terminals segment. The operations relating to the wholesale distribution contracts are reported in our Merchant Services segment. We allocated $6.3 million of goodwill resulting from the Hess Terminals Acquisition to the Pipelines & Terminals reporting unit due to expected growth opportunities from one of the domestic terminals with high throughput volumes. The remaining $2.9 million of goodwill was allocated to the Merchant Services reporting unit as it relates to the wholesale distribution contracts, which will enhance our wholesale distribution and racking business. The Hess Terminals Acquisition increases Buckeye’s total liquid petroleum storage capacity by approximately 53 percent to over 110 million barrels. Concurrent with this acquisition, we entered into multi-year storage and throughput commitments with Hess.

The acquisition cost has been allocated to assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with amounts exceeding the fair value recorded as goodwill, which represents both expected synergies from combining our operations from the Hess Terminals Acquisition with our existing operations and the economic value attributable to future expansion projects resulting from this acquisition. Fair values have been developed using recognized business valuation techniques and are subject to change pending final valuation analysis. The purchase price has been allocated to tangible and intangible assets acquired and liabilities assumed, on a preliminary basis, as follows (in thousands):

Current assets	$	16,533
Property, plant and equipment	801,603
Intangible assets	30,520
Goodwill	9,203
Current liabilities	(882		)
Environmental liabilities	(600		)
Allocated purchase price	$	856,377

Unaudited Pro forma Financial Results for Hess Terminals Acquisition

Our consolidated statements of operations do not include earnings from the terminals acquired from Hess (the “Hess Terminals”) prior to December 11, 2013, the effective date of the Hess Terminals Acquisition. The total revenue and net income for the Hess Terminals since the acquisition date of $8.7 million and $4.1 million, respectively, were included in our consolidated statement of operations for the year ended December 31, 2013. The preparation of unaudited pro forma financial information for the Hess Terminals Acquisition is impracticable due to the fact that Hess historically operated the domestic terminals primarily as part of its integrated distribution network and therefore, meaningful historical revenue information is not available. As such, we have not presented unaudited pro forma earnings information for the years ended December 31, 2013 and 2012.

2012 Transaction

In July 2012, we acquired a marine terminal facility for liquid petroleum products in New York Harbor (the “Perth Amboy Facility”) from Chevron U.S.A Inc. (“Chevron”) for $260.3 million in cash. The facility, which sits on approximately 250 acres on the Arthur Kill tidal strait in Perth Amboy, New Jersey, has 4.4 million barrels of tankage, four docks, and significant undeveloped land available for potential expansion. The Perth Amboy Facility has water, pipeline, rail, and truck access, and is located six miles from our Linden, New Jersey complex. The facility provides a link between our inland pipelines and terminals and our BORCO facility in The Bahamas and opportunities for improved service offerings to our customers. Concurrent with the acquisition, we entered into multi-year storage, blending, and throughput commitments with Chevron. The operations of the Perth Amboy Facility are reported in our Global Marine Terminals segment.

The acquisition cost has been allocated to assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with amounts exceeding the fair value recorded as goodwill, which represents both expected synergies from combining the Perth Amboy Facility with our existing operations and the economic value attributable to future expansion projects resulting from this acquisition. Fair values have been developed using recognized business valuation techniques. The purchase price has been allocated to tangible and intangible assets acquired and liabilities assumed as follows (in thousands):

Current assets	$	547
Property, plant and equipment	198,091
Intangible assets	13,350
Goodwill	59,197
Environmental liabilities	(10,873		)
Allocated purchase price	$	260,312

2011 Transactions

In July 2011, we acquired, from an affiliate of ExxonMobil Corporation (“ExxonMobil”) for $23.5 million in cash, a terminal in Bangor, Maine (“Bangor Terminal”) with approximately 140,000 barrels of storage capacity, a terminal in Portland, Maine (“South Portland Terminal”) with approximately 725,000 barrels of storage capacity through a 50/50 joint venture with Irving Oil Terminals Inc. and a 124-mile pipeline that connects the two terminals. We believe this acquisition represents our efforts to diversify into new geographic regions and to increase our marine terminals presence. The South Portland Terminal is operated by our Development & Logistics segment. We account for the South Portland Terminal using the equity method of accounting. See Note 10 for equity investment information. The pipeline, Bangor Terminal and equity investment are reported in the Pipelines & Terminals segment. The purchase price was allocated principally to property, plant, and equipment and equity method investment.

In June 2011, we acquired 33 refined petroleum products terminals with total storage capacity of over 10 million barrels and approximately 650 miles of refined petroleum products pipelines from BP Products North America Inc. (“BP”) for $166 million. The terminal and pipeline assets are located in the Midwestern, Southeastern and Western United States. BP entered into multiple commercial contracts with us concurrent with the acquisition relating to the continued usage of these assets. We believe the acquisition of these assets further extends our operations into new, key geographic markets. The operations of these acquired assets are reported in the Pipelines & Terminals segment. The purchase price has been allocated to tangible and intangible assets acquired and liabilities assumed as follows (in thousands):

Inventory	$	1,161
Property, plant and equipment	175,577
Intangible assets	8,940
Environmental liabilities	(19,702		)
Allocated purchase price	$	165,976

On January 18, 2011, we acquired certain interests in BORCO held by FRC Founders Corporation (“First Reserve”) through the acquisition by us of all of the interests in FR Borco Topco, L.P., which indirectly owned First Reserve’s 80% partnership interest in FRBCH, the indirect owner of BORCO, for $1.15 billion (the “BORCO Acquisition”). The BORCO Acquisition was financed through a combination of debt and equity, including the issuance of Class B Units and LP Units to First Reserve. At the time of acquisition, BORCO had an aggregate storage capacity of approximately 22 million barrels. The acquisition of this terminal facility allowed us to expand and diversify our operations by reaching beyond the continental United States and complemented our existing portfolio of assets. Vopak, which is based in The Netherlands, owned the remaining 20% interest in FRBCH. On February 16, 2011, Vopak sold its 20% interest in FRBCH to us for $276.5 million of cash and equity, which is a proportionate price and on the same terms and conditions as those in the sale and purchase agreement with First Reserve. In connection with the BORCO Acquisition, we repaid on January 18, 2011, all of BORCO’s outstanding indebtedness and settled BORCO’s interest rate derivative instruments, collectively representing $318.2 million.

The following table presents the aggregate consideration paid or issued to complete the BORCO acquisition (in thousands):

	First Reserve		Vopak		Combined
Cash consideration	$	644,049	$	164,616	$	808,665
Fair value of LP Units and Class B Units issued (1)	407,391		96,110		503,501
Cash paid on behalf of the sellers (2)	96,241		15,780		112,021
Consideration issued to effect the transaction	$	1,147,681	$	276,506	$	1,424,187

(1) On January 18, 2011 and February 16, 2011, we issued LP Units and Class B Units to First Reserve and Vopak, which represented a negotiated value of $400 million and $100 million of consideration, respectively. In accordance with accounting for business combinations, the fair values of the units issued to First Reserve and Vopak on their respective acquisition dates were determined to be $407.4 million and $96.1 million, respectively.

(2) $79.3 million was to be held in escrow related to Bahamian transfer taxes payable, $23.2 million was used to make certain payments to Vopak (BORCO’s operator) and to pay certain fees and expenses incurred by FRBCH and its affiliates in connection with the transaction and $9.5 million was used to pay bonuses to employees that became payable as a result of the transaction.

We recorded goodwill, which represents both expected synergies from combining this terminal facility with our existing operations and the economic value attributable to future expansion projects resulting from this acquisition. We allocated negative fair values to certain unfavorable storage contracts at the date of acquisition and recorded them as current and long-term liabilities in the consolidated balance sheet (see Note 13 and Note 15). The unfavorable storage contracts are being recognized to revenue based on the estimated realization of the fair value established on the acquisition date over the contractual life. Fair values have been developed using recognized business valuation methodology. The operations of this terminal facility are reported in the Global Marine Terminals segment. The purchase price has been allocated to tangible and intangible assets acquired and liabilities assumed as follows (in thousands):

Current Assets	$	40,842
Inventory	1,645
Property, plant and equipment	1,129,961
Intangible assets	191,000
Other assets	415
Goodwill	490,536
Current liabilities	(54,627		)
Debt	(318,167		)
Other liabilities	(57,418		)
Allocated purchase price	$	1,424,187

Other Acquisition

In April 2013, our operating subsidiary, Buckeye Pipe Line Holdings, L.P. (“BPH”), purchased an additional 10% ownership interest in WesPac Pipelines — Memphis LLC (“WesPac Memphis”) from Kealine LLC for $9.7 million and, as a result of the acquisition, our ownership interest in WesPac Memphis increased from 70% to 80%. Since BPH retains controlling interest in WesPac Memphis, this acquisition was accounted for as an equity transaction. Previously in September 2012, BPH had purchased an additional 20% ownership interest in WesPac Memphis from Kealine LLC for $17.3 million, increasing our ownership interest in WesPac Memphis from 50% to 70%. This acquisition was also accounted for as an equity transaction since BPH retained controlling interest in WesPac Memphis.

Disposition

On May 11, 2011, we sold our 20% interest in West Texas LPG Pipeline Limited Partnership (“WT LPG”) to affiliates of Atlas Pipeline Partners L.P. for $85 million. WT LPG owns approximately 2,300-miles of common-carrier pipeline system that transports natural gas liquids from points in New Mexico and Texas to Mont Belvieu, Texas for fractionation. Chevron Pipeline Company, which owns the remaining 80% interest, is the operator of WT LPG. The proceeds from the sale were used to fund a portion of our internal growth capital projects in 2011. We recognized a gain of $34.7 million on the sale of our interest in WT LPG.