☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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73-1599053
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on
Which Registered
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Common Units
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MMP
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New York Stock Exchange
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Page
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PART I
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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PART II
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ITEM 5.
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ITEM 6.
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ITEM 7.
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ITEM 7A.
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ITEM 8.
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ITEM 9.
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ITEM 9A.
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ITEM 9B.
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PART III
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ITEM 10.
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ITEM 11.
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ITEM 12.
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ITEM 13.
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ITEM 14.
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PART IV
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ITEM 15.
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•
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overall demand for refined products, crude oil and liquefied petroleum gases;
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•
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price fluctuations for refined products, crude oil and liquefied petroleum gases and expectations about future prices for these products;
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•
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changes in the production of crude oil in the basins served by our pipelines;
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•
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changes in general economic conditions, interest rates and price levels;
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•
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changes in the financial condition of our customers, vendors, derivatives counterparties, lenders or joint venture co-owners;
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•
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our ability to secure financing in the credit and capital markets in amounts and on terms that will allow us to execute our business strategy, refinance our existing obligations when due and maintain adequate liquidity;
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•
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development of alternative energy sources, including but not limited to natural gas, solar power, wind power, electric and battery-powered engines and geothermal energy, increased use of biofuels such as ethanol and biodiesel, increased conservation or fuel efficiency, increased use of electric vehicles, as well as regulatory developments or other trends that could affect demand for our services;
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•
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changes in population in the markets served by our refined products pipeline system and changes in consumer preferences, driving patterns or rates of automobile ownership;
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•
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changes in the product quality, throughput or interruption in service of refined products or crude oil pipelines owned and operated by third parties and connected to our assets;
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•
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changes in demand for transportation or storage in our refined products, crude oil or marine terminals segments;
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•
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changes in supply and demand patterns for our facilities due to geopolitical events, the activities of the Organization of the Petroleum Exporting Countries, changes in U.S. trade policies or in laws governing the importing and exporting of petroleum products, technological developments or other factors;
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•
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our ability to manage interest rate and commodity price exposures;
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•
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changes in our tariff rates or other terms of service implemented by the Federal Energy Regulatory Commission (“FERC”) or state regulatory agencies;
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•
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shut-downs or cutbacks at refineries, oil wells, petrochemical plants or other customers or businesses that use or supply our services;
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•
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the effect of weather patterns and other natural phenomena, including climate change, on our operations and demand for our services;
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•
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an increase in the competition our operations encounter, including the effects of capacity over-build in the areas where we operate;
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•
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the occurrence of natural disasters, terrorism, sabotage, protests or activism, operational hazards, equipment failures, system failures or unforeseen interruptions;
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•
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our ability to obtain adequate levels of insurance at a reasonable cost, and the potential for losses to exceed the insurance coverage we do obtain;
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•
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the treatment of us as a corporation for federal or state income tax purposes or if we become subject to significant forms of other taxation or more aggressive enforcement or increased assessments under existing forms of taxation;
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•
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our ability to identify expansion projects with acceptable expected returns or to complete identified expansion projects on time and at projected costs;
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•
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our ability to make and integrate accretive acquisitions and joint ventures and successfully execute our business strategy;
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•
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uncertainty of estimates, including accruals and costs of environmental remediation;
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•
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our ability to cooperate with and rely on our joint venture co-owners;
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•
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actions by rating agencies concerning our credit ratings;
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•
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our ability to timely obtain and maintain all necessary approvals, consents and permits required to operate our existing assets and to construct, acquire and operate any new or modified assets;
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•
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our ability to promptly obtain all necessary services, materials, labor, supplies and rights-of-way required for construction of our growth projects, and to complete construction without significant delays, disputes or cost overruns;
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•
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risks inherent in the use and security of information systems in our business and implementation of new software and hardware;
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•
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changes in laws and regulations or the interpretations of such laws that govern our gas liquids blending activities, including the potential applicability of the Carmack Amendment, which broadly covers claims for damage or loss incurred to goods transported by a carrier in interstate commerce, to such activities, or changes regarding product quality specifications or renewable fuel obligations that impact our ability to produce gasoline volumes through our gas liquids blending activities or that require significant capital outlays for compliance;
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•
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changes in laws and regulations to which we or our customers are or could become subject, including tax withholding requirements, safety, security, employment, hydraulic fracturing, derivatives transactions, trade and environmental laws and regulations, including laws and regulations designed to address climate change;
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•
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the cost and effects of legal and administrative claims and proceedings against us, our subsidiaries or our joint ventures;
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•
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the amount of our indebtedness, which could make us vulnerable to general adverse economic and industry conditions, limit our ability to borrow additional funds, place us at competitive disadvantages compared to our competitors that have less debt or have other adverse consequences;
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•
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the effect of changes in accounting policies;
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•
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the potential that our internal controls may not be adequate, weaknesses may be discovered or remediation of any identified weaknesses may not be successful;
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•
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the ability and intent of our customers, vendors, lenders, joint venture co-owners or other third parties to perform on their contractual obligations to us;
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•
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petroleum product supply disruptions;
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•
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global and domestic repercussions from terrorist activities, including cyber attacks, and the government’s response thereto; and
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•
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other factors and uncertainties inherent in the transportation, storage and distribution of petroleum products and the operation, acquisition and construction of assets related to such activities.
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•
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our refined products segment, comprised of our approximately 9,800-mile refined products pipeline system with 53 terminals as well as 25 independent terminals not connected to our pipeline system;
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•
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our crude oil segment, comprised of approximately 2,200 miles of crude oil pipelines, a condensate splitter and 35 million barrels of aggregate storage capacity, of which approximately 23 million barrels are used for contract storage. Approximately 1,000 miles of these pipelines, the condensate splitter and 28 million barrels of this storage capacity (including 20 million barrels used for contract storage) are wholly-owned, with the remainder owned through joint ventures; and
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•
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our marine storage segment, consisting of six marine terminals located along coastal waterways with an aggregate storage capacity of approximately 31 million barrels. Approximately 25 million barrels of this storage capacity are wholly-owned, with the remainder owned through joint ventures.
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•
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refined products are the output from crude oil refineries that are primarily used as fuels by consumers. Refined products include gasoline, diesel fuel, aviation fuel, kerosene and heating oil. Diesel fuel, kerosene and heating oil are also referred to as distillates;
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•
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transmix is a mixture of refined products that forms when transported in pipelines. Transmix is fractionated and blended into usable refined products;
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•
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liquefied petroleum gases or LPGs are liquids produced as by-products of the crude oil refining process and in connection with natural gas production. LPGs include butane and propane;
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•
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blendstocks are products blended with refined products to change or enhance their characteristics such as increasing a gasoline’s octane or oxygen content. Blendstocks include alkylates, oxygenates and natural gasoline;
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•
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heavy oils and feedstocks are products used as burner fuels or feedstocks for further processing by refineries and petrochemical facilities. Heavy oils and feedstocks include No. 6 fuel oil and vacuum gas oil;
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•
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crude oil, which includes condensate, is a naturally occurring unrefined petroleum product recovered from underground that is used as feedstock by refineries, splitters and petrochemical facilities; and
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•
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biofuels, such as ethanol and biodiesel, are fuels derived from living materials and typically blended with other refined products as required by government mandates.
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Year Ended December 31,
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2017
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2018
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2019
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Percent of consolidated revenue
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72%
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72%
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69%
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Percent of consolidated operating margin
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58%
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58%
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55%
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Percent of consolidated total assets
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47%
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48%
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51%
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Year Ended December 31,
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2017
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2018
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2019
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Shipments (million barrels):
|
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Gasoline
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295.5
|
|
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286.9
|
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280.5
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Distillates
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166.2
|
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181.7
|
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184.6
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Aviation fuel
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26.5
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31.0
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41.1
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LPGs
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9.9
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11.0
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9.7
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Total shipments
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498.1
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510.6
|
|
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515.9
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Company
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Refinery Location
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CHS
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McPherson, KS
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CVR Energy
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Coffeyville, KS
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CVR Energy
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Wynnewood, OK
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Flint Hills Resources
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Pine Bend, MN
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HollyFrontier
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El Dorado, KS
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HollyFrontier
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Tulsa, OK
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HollyFrontier
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Cheyenne, WY
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Husky Energy
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Superior, WI
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Marathon
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St. Paul, MN
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Marathon
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El Paso, TX
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Marathon
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Galveston Bay, TX
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Par Pacific
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Newcastle, WY
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Phillips 66
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Ponca City, OK
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Sinclair
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Evansville, WY
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Suncor Energy
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Commerce City, CO
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Valero
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Ardmore, OK
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Valero
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Houston, TX
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Valero
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Texas City, TX
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Pipeline/Terminal
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Connection Location
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Source of Product
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BP
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Manhattan, IL
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Whiting, IN refinery
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CHS
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Fargo, ND
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Laurel, MT refinery
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Explorer
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Mt. Vernon, MO; Glenpool, OK; Dallas, TX; East Houston, TX; Pasadena, TX
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Various Gulf Coast refineries
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Holly Energy Partners
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Duncan, OK; El Paso, TX
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Big Spring, TX refinery, Artesia, NM refinery
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Kinder Morgan
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Galena Park and Pasadena, TX
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Various Gulf Coast refineries and imports
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Magellan
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Galena Park, TX
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Various Gulf Coast refineries and imports
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Mid-America (Enterprise)
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El Dorado, KS
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Conway, KS storage
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NuStar Energy
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Denver, CO; El Dorado, KS; Minneapolis, MN
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Various OK & KS refineries, Mandan, ND refinery, McKee, TX refinery
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ONEOK
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Des Moines, IA; Wayne, IL; Plattsburg, MO
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Bushton, KS storage and Chicago, IL area refineries
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Phillips 66
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Denver, CO; Kansas City, KS; Pasadena, TX; Casper, WY
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Borger, TX refinery, various Billings, MT area refineries, Sweeney, TX refinery
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Shell
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East Houston, TX
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Deer Park, TX refinery
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Year Ended December 31,
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2017
|
|
2018
|
|
2019
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Percent of consolidated revenue
|
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20%
|
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22%
|
|
24%
|
Percent of consolidated operating margin
|
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33%
|
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34%
|
|
37%
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Percent of consolidated total assets
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38%
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35%
|
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33%
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|
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Year Ended December 31,
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||||
|
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2017
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2018
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|
2019
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Percent of consolidated revenue
|
|
8%
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7%
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7%
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Percent of consolidated operating margin
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8%
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7%
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8%
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Percent of consolidated total assets
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12%
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14%
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14%
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•
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an increase in the use of alternative fuel sources, such as ethanol, biodiesel, natural gas, fuel cells, solar power, wind power, electric and battery-powered engines and geothermal energy. Several governments and some automobile manufacturers have announced plans to significantly reduce or eliminate the use of traditional petroleum fuel powered vehicles, and significant increases in the production of electric vehicles are widely expected. In addition, current U.S. laws require a significant increase in the quantity of ethanol and biodiesel used in transportation fuels each year until 2022. Increases in the use of such alternative fuels could have a material adverse impact on the volume of petroleum-based fuels transported on our pipelines or distributed through our terminals;
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•
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an increase in transportation fuel economy, whether as a result of a shift by consumers to more fuel-efficient vehicles, technological advances by manufacturers or federal, state or international regulations. Government regulations require increasing improvements in fuel economy standards. These standards are intended to reduce demand for petroleum products and could reduce demand for our services;
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•
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changes in population or changes in consumer preferences, rates of automobile ownership or driving patterns in the markets we serve;
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•
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an increase or decrease in the market prices of petroleum products, which may reduce supply or demand. Petroleum product prices have been volatile in recent years, and that volatility may continue in ways that we are unable to predict;
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•
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higher fuel taxes or other governmental or regulatory actions that increase the cost of the products we handle; and
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•
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lower exports of petroleum products to global markets resulting from weak economic conditions, regulatory changes, changing preferences for the type of petroleum products we export or preferences for alternative energy sources.
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•
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We were conducting business in a state but had not complied with that particular state’s partnership statute; or
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•
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Our unitholders’ rights to act with other unitholders to remove or replace the general partner, to approve some amendments to our partnership agreement or to take other actions under our partnership agreement constitute “control” of our business.
|
•
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provides that whenever our general partner is permitted or required to make a decision, in its capacity as our general partner, our general partner is permitted or required to make such a decision in good faith and will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation;
|
•
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provides that our general partner and its officers and directors will not be liable for monetary damages to us or our unitholders resulting from any act or omission of our general partner or its officers and directors, as the case may be, taken in good faith; and
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•
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provides that, in the absence of bad faith, our general partner will not be in breach of its obligations under our partnership agreement or its fiduciary duties to us or our unitholders if a transaction with an affiliate or the resolution of a conflict of interest is approved in accordance with, or otherwise meets the standards set forth in, our partnership agreement.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
12/31/2014
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12/31/2015
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12/31/2016
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12/31/2017
|
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12/31/2018
|
|
12/31/2019
|
MMP
|
|
$100
|
|
$86
|
|
$100
|
|
$98
|
|
$84
|
|
$98
|
AMZI
|
|
$100
|
|
$68
|
|
$81
|
|
$74
|
|
$65
|
|
$69
|
S&P 500
|
|
$100
|
|
$101
|
|
$114
|
|
$138
|
|
$132
|
|
$174
|
Item 6.
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Selected Financial Data
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Year Ended December 31,
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2015
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2016
|
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2017
|
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2018
|
|
2019
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(in thousands, except per unit amounts)
|
||||||||||||||||||
Income Statement Data:
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|
|
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Transportation and terminals revenue
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|
$
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1,544,746
|
|
|
$
|
1,591,119
|
|
|
$
|
1,731,775
|
|
|
$
|
1,878,988
|
|
|
$
|
1,970,630
|
|
Product sales revenue
|
|
629,836
|
|
|
599,602
|
|
|
758,206
|
|
|
927,220
|
|
|
736,092
|
|
|||||
Affiliate management fee revenue
|
|
13,871
|
|
|
14,689
|
|
|
17,680
|
|
|
20,365
|
|
|
21,190
|
|
|||||
Total revenue
|
|
2,188,453
|
|
|
2,205,410
|
|
|
2,507,661
|
|
|
2,826,573
|
|
|
2,727,912
|
|
|||||
Operating expenses
|
|
523,650
|
|
|
528,672
|
|
|
577,978
|
|
|
649,436
|
|
|
634,081
|
|
|||||
Cost of product sales
|
|
447,273
|
|
|
493,338
|
|
|
635,617
|
|
|
704,313
|
|
|
619,279
|
|
|||||
Subtotal
|
|
1,217,530
|
|
|
1,183,400
|
|
|
1,294,066
|
|
|
1,472,824
|
|
|
1,474,552
|
|
|||||
Other operating income (expense)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,975
|
|
|||||
Earnings of non-controlled entities
|
|
66,483
|
|
|
78,696
|
|
|
120,994
|
|
|
181,117
|
|
|
168,961
|
|
|||||
Operating margin
|
|
1,284,013
|
|
|
1,262,096
|
|
|
1,415,060
|
|
|
1,653,941
|
|
|
1,646,488
|
|
|||||
Depreciation, amortization and impairment expense
|
|
166,812
|
|
|
178,142
|
|
|
196,630
|
|
|
265,077
|
|
|
246,134
|
|
|||||
G&A expense
|
|
149,948
|
|
|
147,165
|
|
|
165,717
|
|
|
194,283
|
|
|
196,650
|
|
|||||
Operating profit
|
|
967,253
|
|
|
936,789
|
|
|
1,052,713
|
|
|
1,194,581
|
|
|
1,203,704
|
|
|||||
Interest expense, net
|
|
143,177
|
|
|
165,410
|
|
|
193,718
|
|
|
200,514
|
|
|
198,554
|
|
|||||
Gain on disposition of assets
|
|
—
|
|
|
(28,144
|
)
|
|
(18,505
|
)
|
|
(353,797
|
)
|
|
(28,966
|
)
|
|||||
Other (income) expense
|
|
2,618
|
|
|
(6,466
|
)
|
|
4,139
|
|
|
13,868
|
|
|
11,830
|
|
|||||
Income before provision for income taxes
|
|
821,458
|
|
|
805,989
|
|
|
873,361
|
|
|
1,333,996
|
|
|
1,022,286
|
|
|||||
Provision for income taxes
|
|
2,336
|
|
|
3,218
|
|
|
3,830
|
|
|
71
|
|
|
1,437
|
|
|||||
Net income
|
|
$
|
819,122
|
|
|
$
|
802,771
|
|
|
$
|
869,531
|
|
|
$
|
1,333,925
|
|
|
$
|
1,020,849
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic net income per common unit
|
|
$
|
3.60
|
|
|
$
|
3.52
|
|
|
$
|
3.81
|
|
|
$
|
5.84
|
|
|
$
|
4.46
|
|
Diluted net income per common unit
|
|
$
|
3.59
|
|
|
$
|
3.52
|
|
|
$
|
3.81
|
|
|
$
|
5.84
|
|
|
$
|
4.46
|
|
Balance Sheets Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital (deficit)(a)
|
|
$
|
(374,218
|
)
|
|
$
|
(111,262
|
)
|
|
$
|
(239,899
|
)
|
|
$
|
(30,213
|
)
|
|
$
|
(207,468
|
)
|
Total assets
|
|
$
|
6,041,567
|
|
|
$
|
6,772,073
|
|
|
$
|
7,394,375
|
|
|
$
|
7,747,537
|
|
|
$
|
8,437,729
|
|
Long-term debt, net
|
|
$
|
3,189,287
|
|
|
$
|
4,087,192
|
|
|
$
|
4,273,518
|
|
|
$
|
4,211,380
|
|
|
$
|
4,706,075
|
|
Partners’ capital
|
|
$
|
2,021,736
|
|
|
$
|
2,092,105
|
|
|
$
|
2,129,653
|
|
|
$
|
2,643,434
|
|
|
$
|
2,715,028
|
|
Cash Distribution Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash distributions declared per unit(b)
|
|
$
|
3.01
|
|
|
$
|
3.32
|
|
|
$
|
3.59
|
|
|
$
|
3.87
|
|
|
$
|
4.07
|
|
Cash distributions paid per unit(b)
|
|
$
|
2.92
|
|
|
$
|
3.25
|
|
|
$
|
3.52
|
|
|
$
|
3.79
|
|
|
$
|
4.04
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||
|
|
(in thousands, except operating statistics)
|
||||||||||||||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating margin:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Refined products
|
|
$
|
778,515
|
|
|
$
|
723,588
|
|
|
$
|
825,746
|
|
|
$
|
966,753
|
|
|
$
|
901,054
|
|
Crude oil
|
|
381,819
|
|
|
408,327
|
|
|
465,386
|
|
|
563,340
|
|
|
606,187
|
|
|||||
Marine storage
|
|
119,828
|
|
|
125,226
|
|
|
118,654
|
|
|
117,901
|
|
|
133,741
|
|
|||||
Allocated partnership depreciation costs(c)
|
|
3,851
|
|
|
4,955
|
|
|
5,274
|
|
|
5,947
|
|
|
5,506
|
|
|||||
Operating margin
|
|
$
|
1,284,013
|
|
|
$
|
1,262,096
|
|
|
$
|
1,415,060
|
|
|
$
|
1,653,941
|
|
|
$
|
1,646,488
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA and distributable cash flow:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
|
$
|
819,122
|
|
|
$
|
802,771
|
|
|
$
|
869,531
|
|
|
$
|
1,333,925
|
|
|
$
|
1,020,849
|
|
Interest expense, net
|
|
143,177
|
|
|
165,410
|
|
|
193,718
|
|
|
200,514
|
|
|
198,554
|
|
|||||
Depreciation, amortization and impairment(d)
|
|
174,683
|
|
|
189,332
|
|
|
210,000
|
|
|
272,522
|
|
|
240,874
|
|
|||||
Equity-based incentive compensation(e)
|
|
6,461
|
|
|
4,982
|
|
|
6,766
|
|
|
22,768
|
|
|
14,247
|
|
|||||
Gain on disposition of assets(f)
|
|
—
|
|
|
(28,144
|
)
|
|
(18,505
|
)
|
|
(351,215
|
)
|
|
(16,280
|
)
|
|||||
Commodity-related adjustments(g)
|
|
13,988
|
|
|
64,257
|
|
|
12,463
|
|
|
(101,987
|
)
|
|
88,223
|
|
|||||
Distributions received from operations of non-controlled entities in excess of earnings for the period
|
|
14,572
|
|
|
9,293
|
|
|
25,216
|
|
|
15,584
|
|
|
34,641
|
|
|||||
Other(h)
|
|
—
|
|
|
5,341
|
|
|
3,749
|
|
|
3,644
|
|
|
—
|
|
|||||
Adjusted EBITDA
|
|
1,172,003
|
|
|
1,213,242
|
|
|
1,302,938
|
|
|
1,395,755
|
|
|
1,581,108
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net, excluding debt issuance cost amortization(i)
|
|
(140,464
|
)
|
|
(162,251
|
)
|
|
(190,403
|
)
|
|
(197,274
|
)
|
|
(186,942
|
)
|
|||||
Maintenance capital(j)
|
|
(88,685
|
)
|
|
(103,507
|
)
|
|
(91,163
|
)
|
|
(88,736
|
)
|
|
(96,702
|
)
|
|||||
Distributable cash flow
|
|
$
|
942,854
|
|
|
$
|
947,484
|
|
|
$
|
1,021,372
|
|
|
$
|
1,109,745
|
|
|
$
|
1,297,464
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Refined products:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Transportation revenue per barrel shipped
|
|
$
|
1.439
|
|
|
$
|
1.473
|
|
|
$
|
1.495
|
|
|
$
|
1.556
|
|
|
$
|
1.616
|
|
Volume shipped (million barrels):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gasoline
|
|
268.1
|
|
|
275.4
|
|
|
295.5
|
|
|
286.9
|
|
|
280.5
|
|
|||||
Distillates
|
|
152.5
|
|
|
150.2
|
|
|
166.2
|
|
|
181.7
|
|
|
184.6
|
|
|||||
Aviation fuel
|
|
21.2
|
|
|
25.7
|
|
|
26.5
|
|
|
31.0
|
|
|
41.1
|
|
|||||
Liquefied petroleum gases
|
|
9.7
|
|
|
10.4
|
|
|
9.9
|
|
|
11.0
|
|
|
9.7
|
|
|||||
Total volume shipped
|
|
451.5
|
|
|
461.7
|
|
|
498.1
|
|
|
510.6
|
|
|
515.9
|
|
|||||
Crude oil:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Magellan 100%-owned assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Transportation revenue per barrel shipped(k)
|
|
$
|
1.118
|
|
|
$
|
1.321
|
|
|
$
|
1.348
|
|
|
$
|
1.208
|
|
|
$
|
0.939
|
|
Volume shipped (million barrels)(k)
|
|
209.9
|
|
|
187.0
|
|
|
196.4
|
|
|
242.8
|
|
|
317.2
|
|
|||||
Crude oil terminal average utilization (million barrels per month)
|
|
13.1
|
|
|
15.0
|
|
|
15.3
|
|
|
16.5
|
|
|
20.6
|
|
|||||
Select joint venture pipelines:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
BridgeTex - volume shipped (million barrels)(l)
|
|
75.2
|
|
|
79.0
|
|
|
98.4
|
|
|
138.2
|
|
|
156.3
|
|
|||||
Saddlehorn - volume shipped (million barrels)(m)
|
|
—
|
|
|
5.2
|
|
|
19.0
|
|
|
27.4
|
|
|
56.1
|
|
|||||
Marine storage:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Marine terminal average utilization (million barrels per month)
|
|
24.0
|
|
|
23.8
|
|
|
23.1
|
|
|
22.7
|
|
|
23.6
|
|
(a)
|
Working capital deficit at December 31, 2015 and 2017 included the current portion of long-term debt of approximately $250 million for each period.
|
(b)
|
Cash distributions declared were determined based on DCF generated for each calendar year. Distributions were declared and paid within 45 days following the close of each quarter. Cash distributions paid represent cash payments for distributions during each of the periods presented.
|
(c)
|
Certain depreciation expense was allocated to our various business segments, which in turn recognized these allocated costs as operating expense, reducing segment operating margin by these amounts.
|
(d)
|
Prior year amounts have been reclassified to conform with the current year’s presentation. Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense.
|
(e)
|
Because we intend to satisfy vesting of unit awards under our equity-based long-term incentive compensation plan with the issuance of common units, expenses related to this plan generally are deemed non-cash and excluded for DCF purposes. The amounts above have been reduced by cash payments associated with the plan, which are primarily related to tax withholdings.
|
(f)
|
Gains on disposition of assets are excluded from DCF to the extent they are not related to our ongoing operations. The 2019 amounts above are net of gains on the disposition of residual assets from expansion projects, which are considered ongoing in nature, and as such are included in DCF.
|
(g)
|
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Distributable Cash Flow for a description of items included in our commodity-related adjustments.
|
(h)
|
Other adjustments in 2018 include a $3.6 million adjustment recorded to partners' capital as required by our adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers. The amount represents cash that we had previously received for deficiency payments but did not yet recognize in net income under the previous revenue recognition standard. Other adjustments in 2016 and 2017 include payments received from HollyFrontier Corporation in conjunction with the February 2016 Osage Pipe Line Company, LLC ("Osage") exchange transaction. These payments replaced distributions we would have received had the Osage transaction not occurred and are, therefore, included in our calculation of DCF.
|
(i)
|
Interest expense in 2019 includes $8.3 million of debt prepayment premiums, which are excluded from DCF as they are financing activities and are not related to our ongoing operations.
|
(j)
|
Maintenance capital expenditure projects maintain our existing assets and do not generate incremental DCF (i.e. incremental returns to our unitholders). For this reason, we deduct maintenance capital expenditures to determine DCF.
|
(k)
|
Volume shipped includes shipments related to our crude oil marketing activities. Revenues from those activities are reflected as product sales revenue in our consolidated financial statements. Transportation revenue per barrel shipped reflects average rates on third-party volume only.
|
(l)
|
These volumes reflect the total shipments for the BridgeTex pipeline, which was owned 50% by us through September 28, 2018 and 30% thereafter.
|
(m)
|
These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by us and began operations in September 2016.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
our refined products segment, comprised of our approximately 9,800-mile refined products pipeline system with 53 terminals as well as 25 independent terminals not connected to our pipeline system;
|
•
|
our crude oil segment, comprised of approximately 2,200 miles of crude oil pipelines, a condensate splitter and 35 million barrels of aggregate storage capacity, of which 23 million barrels are used for contract storage. Approximately 1,000 miles of these pipelines, the condensate splitter and 28 million barrels of this storage capacity (including 20 million barrels used for contract storage) are wholly-owned, with the remainder owned through joint ventures; and
|
•
|
our marine storage segment, consisting of six marine terminals located along coastal waterways with an aggregate storage capacity of approximately 31 million barrels. Approximately 25 million barrels of this storage capacity are wholly-owned, with the remainder owned through joint ventures.
|
Financial Highlights ($ in millions, except operating statistics)
|
|
Year Ended December 31,
|
|
Variance
Favorable (Unfavorable)
|
|||||||||||
|
|
2018
|
|
2019
|
|
$ Change
|
|
% Change
|
|||||||
Transportation and terminals revenue:
|
|
|
|
|
|
|
|
|
|||||||
Refined products
|
|
$
|
1,152.0
|
|
|
$
|
1,187.0
|
|
|
$
|
35.0
|
|
|
3
|
%
|
Crude oil
|
|
549.8
|
|
|
602.0
|
|
|
52.2
|
|
|
9
|
%
|
|||
Marine storage
|
|
180.9
|
|
|
187.0
|
|
|
6.1
|
|
|
3
|
%
|
|||
Intersegment eliminations
|
|
(3.7
|
)
|
|
(5.4
|
)
|
|
(1.7
|
)
|
|
(46
|
)%
|
|||
Total transportation and terminals revenue
|
|
1,879.0
|
|
|
1,970.6
|
|
|
91.6
|
|
|
5
|
%
|
|||
Affiliate management fee revenue
|
|
20.4
|
|
|
21.2
|
|
|
0.8
|
|
|
4
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Refined products
|
|
424.8
|
|
|
411.9
|
|
|
12.9
|
|
|
3
|
%
|
|||
Crude oil
|
|
166.2
|
|
|
164.2
|
|
|
2.0
|
|
|
1
|
%
|
|||
Marine storage
|
|
68.0
|
|
|
68.9
|
|
|
(0.9
|
)
|
|
(1
|
)%
|
|||
Intersegment eliminations
|
|
(9.6
|
)
|
|
(10.9
|
)
|
|
1.3
|
|
|
14
|
%
|
|||
Total operating expenses
|
|
649.4
|
|
|
634.1
|
|
|
15.3
|
|
|
2
|
%
|
|||
Product margin:
|
|
|
|
|
|
|
|
|
|||||||
Product sales revenue
|
|
927.2
|
|
|
736.1
|
|
|
(191.1
|
)
|
|
(21
|
)%
|
|||
Cost of product sales
|
|
704.3
|
|
|
619.3
|
|
|
85.0
|
|
|
12
|
%
|
|||
Product margin
|
|
222.9
|
|
|
116.8
|
|
|
(106.1
|
)
|
|
(48
|
)%
|
|||
Other operating income (expense)
|
|
—
|
|
|
3.0
|
|
|
3.0
|
|
|
n/a
|
|
|||
Earnings of non-controlled entities
|
|
181.1
|
|
|
169.0
|
|
|
(12.1
|
)
|
|
(7
|
)%
|
|||
Operating margin
|
|
1,654.0
|
|
|
1,646.5
|
|
|
(7.5
|
)
|
|
—
|
%
|
|||
Depreciation, amortization and impairment expense
|
|
265.1
|
|
|
246.1
|
|
|
19.0
|
|
|
7
|
%
|
|||
G&A expense
|
|
194.3
|
|
|
196.7
|
|
|
(2.4
|
)
|
|
(1
|
)%
|
|||
Operating profit
|
|
1,194.6
|
|
|
1,203.7
|
|
|
9.1
|
|
|
1
|
%
|
|||
Interest expense (net of interest income and interest capitalized)
|
|
200.5
|
|
|
198.6
|
|
|
1.9
|
|
|
1
|
%
|
|||
Gain on disposition of assets
|
|
(353.8
|
)
|
|
(29.0
|
)
|
|
(324.8
|
)
|
|
(92
|
)%
|
|||
Other (income) expense
|
|
13.9
|
|
|
11.8
|
|
|
2.1
|
|
|
15
|
%
|
|||
Income before provision for income taxes
|
|
1,334.0
|
|
|
1,022.3
|
|
|
(311.7
|
)
|
|
(23
|
)%
|
|||
Provision for income taxes
|
|
0.1
|
|
|
1.5
|
|
|
(1.4
|
)
|
|
(1,400
|
)%
|
|||
Net income
|
|
$
|
1,333.9
|
|
|
$
|
1,020.8
|
|
|
$
|
(313.1
|
)
|
|
(23
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Statistics
|
|
|
|
|
|
|
|
|
|||||||
Refined products:
|
|
|
|
|
|
|
|
|
|||||||
Transportation revenue per barrel shipped
|
|
$
|
1.556
|
|
|
$
|
1.616
|
|
|
|
|
|
|||
Volume shipped (million barrels):
|
|
|
|
|
|
|
|
|
|||||||
Gasoline
|
|
286.9
|
|
|
280.5
|
|
|
|
|
|
|||||
Distillates
|
|
181.7
|
|
|
184.6
|
|
|
|
|
|
|||||
Aviation fuel
|
|
31.0
|
|
|
41.1
|
|
|
|
|
|
|||||
Liquefied petroleum gases
|
|
11.0
|
|
|
9.7
|
|
|
|
|
|
|||||
Total volume shipped
|
|
510.6
|
|
|
515.9
|
|
|
|
|
|
|||||
Crude oil:
|
|
|
|
|
|
|
|
|
|||||||
Magellan 100%-owned assets:
|
|
|
|
|
|
|
|
|
|||||||
Transportation revenue per barrel shipped(a)
|
|
$
|
1.208
|
|
|
$
|
0.939
|
|
|
|
|
|
|||
Volume shipped (million barrels)(a)
|
|
242.8
|
|
|
317.2
|
|
|
|
|
|
|||||
Crude oil terminal average utilization (million barrels per month)
|
|
16.5
|
|
|
20.6
|
|
|
|
|
|
|||||
Select joint venture pipelines:
|
|
|
|
|
|
|
|
|
|||||||
BridgeTex - volume shipped (million barrels)(b)
|
|
138.2
|
|
|
156.3
|
|
|
|
|
|
|||||
Saddlehorn - volume shipped (million barrels)(c)
|
|
27.4
|
|
|
56.1
|
|
|
|
|
|
|||||
Marine storage:
|
|
|
|
|
|
|
|
|
|||||||
Marine terminal average utilization (million barrels per month)
|
|
22.7
|
|
|
23.6
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
•
|
an increase in refined products revenue of $35.0 million due to a higher average transportation rate per barrel. The average rate per barrel in the current year was favorably impacted by the 2018 and 2019 mid-year tariff adjustments. Volume increased slightly between periods as additional shipments associated with a recent connection near El Paso and our new East Houston-to-Hearne pipeline segment were mainly offset by less short-haul movements on the South Texas pipelines. These supply-driven barrels were also primarily responsible for fluctuations between periods in the product mix we transported;
|
•
|
an increase in crude oil revenue of $52.2 million primarily due to higher revenues from system storage that we provide to our customers in conjunction with new tanks at Cushing and Corpus Christi and increased system storage utilization at East Houston as well as storage capacity we lease from the Seabrook export facility. Higher transportation revenues from increased volumes on the Houston distribution system were partially offset by lower transportation revenue on our Longhorn pipeline as a result of lower average rates following long-term contract renewals in late 2018. Overall, the average crude oil transportation rate per barrel decreased between periods due to significantly higher volumes on our Houston distribution system, which move at a lower rate, and the lower average Longhorn rates; and
|
•
|
an increase in marine storage revenue of $6.1 million primarily due to additional fees from new dock capacity at our Galena Park facility and higher storage availability related to timing of maintenance work.
|
•
|
a decrease in refined products expenses of $12.9 million primarily due to lower asset integrity spending due to timing of maintenance work and lower compensation costs as a result of a pension valuation correction in 2018, partially offset by less favorable product overages (which reduce operating expenses) and higher property taxes;
|
•
|
a decrease in crude oil expenses of $2.0 million primarily due to more favorable product overages (which reduce operating expenses), lower environmental accruals and lower expenses related to asset retirements, largely offset by fees we now pay to Seabrook for contract storage and ancillary services that we utilize to provide services to our shippers; and
|
•
|
an increase in marine storage expenses of $0.9 million primarily due to higher operating taxes partially offset by lower expenses related to asset retirements.
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2019
|
||||
Net income
|
|
$
|
1,333.9
|
|
|
$
|
1,020.8
|
|
Interest expense, net
|
|
200.5
|
|
|
198.6
|
|
||
Depreciation, amortization and impairment(1)
|
|
272.5
|
|
|
240.9
|
|
||
Equity-based incentive compensation(2)
|
|
22.8
|
|
|
14.2
|
|
||
Gain on disposition of assets(3)
|
|
(351.2
|
)
|
|
(16.3
|
)
|
||
Commodity-related adjustments:
|
|
|
|
|
||||
Derivative (gains) losses recognized in the period associated with future transactions(4)
|
|
(71.5
|
)
|
|
29.7
|
|
||
Derivative gains (losses) recognized in previous periods associated with transactions completed in the period(4)
|
|
(39.6
|
)
|
|
71.2
|
|
||
Inventory valuation adjustments(5)
|
|
9.2
|
|
|
(12.7
|
)
|
||
Total commodity-related adjustments
|
|
(101.9
|
)
|
|
88.2
|
|
||
Distributions received from operations of non-controlled entities in excess of earnings
|
|
15.6
|
|
|
34.7
|
|
||
Other(6)
|
|
3.6
|
|
|
—
|
|
||
Adjusted EBITDA
|
|
1,395.8
|
|
|
1,581.1
|
|
||
Interest expense, net, excluding debt issuance cost amortization(7)
|
|
(197.3
|
)
|
|
(186.9
|
)
|
||
Maintenance capital(8)
|
|
(88.7
|
)
|
|
(96.7
|
)
|
||
DCF
|
|
$
|
1,109.8
|
|
|
$
|
1,297.5
|
|
|
|
|
|
|
(1)
|
Prior year amounts have been reclassified to conform with the current year’s presentation. Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense.
|
(2)
|
Because we intend to satisfy vesting of unit awards under our equity-based long-term incentive compensation plan with the issuance of common units, expenses related to this plan generally are deemed non-cash and excluded for DCF purposes. The amounts above have been reduced by cash payments associated with the plan, which are primarily related to tax withholdings.
|
(3)
|
Gains on disposition of assets are excluded from DCF to the extent they are not related to our ongoing operations. The 2019 amounts above are net of gains on the disposition of residual assets from expansion projects, which are considered ongoing in nature, and as such are included in DCF.
|
(4)
|
Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. We exclude the net impact of these derivatives from our determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF.
|
(5)
|
We adjust DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuations of short positions recognized each period as these are non-cash items. In subsequent periods when we physically sell or purchase the related products, we adjust DCF for the valuation adjustments previously recognized.
|
(6)
|
Other adjustments in 2018 include a $3.6 million adjustment recorded to partners’ capital as required by our adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers. The amount represents cash that we had previously received for deficiency payments but did not yet recognize in net income under the previous revenue recognition standard.
|
(7)
|
Interest expense in 2019 includes $8.3 million of debt prepayment premiums that are excluded from DCF as they are financing activities and are not related to our ongoing operations.
|
(8)
|
Maintenance capital expenditures maintain our existing assets and do not generate incremental DCF (i.e. incremental returns to our unitholders). For this reason, we deduct maintenance capital expenditures to determine DCF.
|
•
|
Maintenance capital expenditures. These capital expenditures include costs required to maintain equipment reliability and safety and to address environmental and other regulatory requirements rather than to generate incremental DCF; and
|
•
|
Expansion capital expenditures. These expenditures are undertaken primarily to generate incremental DCF and include costs to acquire or construct additional assets to grow our business and to expand or upgrade our existing facilities and to construct new assets, which we refer to collectively as organic growth projects. Organic growth projects include, for example, capital expenditures that increase storage or throughput volumes or develop pipeline connections to new supply sources.
|
|
|
Total
|
|
< 1 year
|
|
1-3 years
|
|
4-5 years
|
|
> 5 years
|
||||||||||
Long-term debt obligations(1)
|
|
$
|
4,750.0
|
|
|
$
|
—
|
|
|
$
|
550.0
|
|
|
$
|
—
|
|
|
$
|
4,200.0
|
|
Interest obligations(1)
|
|
4,177.2
|
|
|
216.7
|
|
|
388.4
|
|
|
384.2
|
|
|
3,187.9
|
|
|||||
Operating lease obligations
|
|
195.3
|
|
|
32.3
|
|
|
60.1
|
|
|
52.3
|
|
|
50.6
|
|
|||||
Storage contract commitments(2)
|
|
19.3
|
|
|
7.4
|
|
|
10.2
|
|
|
0.6
|
|
|
1.1
|
|
|||||
Pipeline capacity commitments(3)
|
|
66.6
|
|
|
10.8
|
|
|
21.6
|
|
|
21.6
|
|
|
12.6
|
|
|||||
Right-of-way obligations(4)
|
|
13.3
|
|
|
1.8
|
|
|
3.5
|
|
|
3.3
|
|
|
4.7
|
|
|||||
Pension and postretirement medical obligations(5)
|
|
147.2
|
|
|
33.0
|
|
|
82.6
|
|
|
21.9
|
|
|
9.7
|
|
|||||
Purchase commitments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product purchase commitments(6)
|
|
62.4
|
|
|
62.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Utility purchase commitments
|
|
15.9
|
|
|
8.0
|
|
|
4.5
|
|
|
3.3
|
|
|
0.1
|
|
|||||
Derivative instruments(7)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Equity-based incentive awards(8)
|
|
52.1
|
|
|
31.0
|
|
|
21.1
|
|
|
—
|
|
|
—
|
|
|||||
Capital project purchase obligations
|
|
154.6
|
|
|
152.4
|
|
|
2.2
|
|
|
—
|
|
|
—
|
|
|||||
Maintenance obligations
|
|
113.8
|
|
|
113.2
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
|
10.2
|
|
|
4.9
|
|
|
5.3
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
9,777.9
|
|
|
$
|
673.9
|
|
|
$
|
1,150.1
|
|
|
$
|
487.2
|
|
|
$
|
7,466.7
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
At December 31, 2019, we had no borrowings outstanding under our revolving credit facility or commercial paper program. For purposes of this table, we have reflected no assumed borrowings under our revolving credit facility or commercial paper program for any periods presented. We have included interest obligations based on the stated amounts of our fixed-rate obligations.
|
(2)
|
Includes product storage we have contracted from third parties. The cost of storage services is recognized in cost of product sales on our consolidated statements of income.
|
(3)
|
Includes pipeline capacity we have contracted from third parties. The cost of these commitments is recognized in operating expense on our consolidated statements of income.
|
(4)
|
Represents right-of-way agreements with a contractual maturity date over one year. The cost of these obligations is recognized in operating expense on our consolidated statements of income.
|
(5)
|
Represents the projected benefit obligation of our pension and postretirement medical plans less the fair value of plan assets.
|
(6)
|
Includes product purchase commitments for which the price provisions are indexed based on the date of delivery. We have estimated the value of these commitments using the related index price curve as of December 31, 2019. Also, we have excluded certain product purchase agreements for which there is no specified or minimum quantity.
|
(7)
|
As of December 31, 2019, we had entered into exchange-traded futures contracts representing 3.2 million barrels of petroleum products that we expect to sell in the future and 0.7 million barrels of gas liquids we expect to purchase in the future. At December 31, 2019, we had recorded a net liability of $10.2 million and made margin deposits of $27.4 million. We have excluded from this table the future net cash outflows, if any, under these futures contracts and the amounts of future margin deposit requirements because those amounts are uncertain.
|
(8)
|
Settlements of our LTIP awards will differ from these reported amounts primarily due to differences between actual and current estimates of payout percentages and completion of the remaining portion of the requisite service periods.
|
|
|
Benefit Expense
|
|
Benefit Obligation
|
||||||||||||||||
|
|
1% Increase
|
|
1% Decrease
|
|
1% Increase
|
|
1% Decrease
|
||||||||||||
Pension benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
$
|
(5,313
|
)
|
|
|
$
|
6,552
|
|
|
|
$
|
(44,374
|
)
|
|
|
$
|
55,404
|
|
|
Expected long-term rate of return on plan assets
|
|
$
|
(2,572
|
)
|
|
|
$
|
2,572
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
Rate of compensation increase
|
|
$
|
5,051
|
|
|
|
$
|
(5,047
|
)
|
|
|
$
|
27,444
|
|
|
|
$
|
(27,465
|
)
|
|
|
|
1% Increase
|
|
1% Decrease
|
||||
Rate of compensation increase
|
|
$
|
600
|
|
|
$
|
(599
|
)
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
Total
|
|
< 1 Year
|
|
1 – 3 Years
|
||||||
Forward purchase contracts – notional value
|
$
|
62.4
|
|
|
$
|
62.4
|
|
|
$
|
—
|
|
Forward purchase contracts – barrels
|
1.5
|
|
|
1.5
|
|
|
—
|
|
|||
Forward sales contracts – notional value
|
$
|
16.0
|
|
|
$
|
16.0
|
|
|
$
|
—
|
|
Forward sales contracts – barrels
|
0.2
|
|
|
0.2
|
|
|
—
|
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
|
By:
|
/S/ MICHAEL N. MEARS
|
|
Chairman of the Board, President, Chief Executive Officer and Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
|
By:
|
/S/ JEFF HOLMAN
|
|
Senior Vice President, Chief Financial Officer and Treasurer of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
|
Defined Benefit Pension Obligation
|
Description of the Matter
|
|
At December 31, 2019, the Partnership’s defined benefit pension obligation was $381 million and exceeded the fair value of pension plan assets of $249 million, resulting in a net pension obligation of $132 million. As discussed in Note 11 to the consolidated financial statements, the Partnership updates the estimates used to measure the defined benefit pension obligation and plan assets annually or upon a remeasurement event to reflect the actual return on plan assets and updated actuarial assumptions.
Auditing the pension obligation was complex due to the judgmental nature of certain actuarial assumptions used in the measurement process, including the discount rate, mortality rates, retirement rate and future compensation levels. The projected benefit obligation was sensitive to these assumptions.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Partnership’s review of the defined benefit pension obligation calculations, the significant actuarial assumptions and the data inputs provided to the third-party actuary.
To test the defined benefit pension obligation, our audit procedures included, among others, evaluating the methodology used, the significant actuarial assumptions discussed above and the underlying data used in the measurement process. We compared the actuarial assumptions used by management to historical trends and evaluated the change in the defined benefit pension obligation from the prior year resulting from the change in service cost, interest cost, actuarial gains and losses, benefit payments, contributions and other activities. In addition, we involved our actuarial specialists to assist with our procedures including, among others, evaluating management’s methodology for determining the discount rate that reflects the maturity and duration of the benefit payments and is used to measure the defined benefit pension obligation. As part of this assessment, we compared the projected cash flows used in the current year measurement of the pension obligation to those in the prior year and compared the current year benefits paid to the prior year projected payments. To evaluate the future mortality rates, retirement rate and future compensation levels, we assessed whether the information is consistent with publicly available information, and whether any market data adjusted for entity-specific adjustments were applied. We also tested the completeness and accuracy of the underlying data, including the participant data used in the actuarial calculations.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2018
|
|
2019
|
||||||
Transportation and terminals revenue
|
|
$
|
1,731,775
|
|
|
$
|
1,878,988
|
|
|
$
|
1,970,630
|
|
Product sales revenue
|
|
758,206
|
|
|
927,220
|
|
|
736,092
|
|
|||
Affiliate management fee revenue
|
|
17,680
|
|
|
20,365
|
|
|
21,190
|
|
|||
Total revenue
|
|
2,507,661
|
|
|
2,826,573
|
|
|
2,727,912
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
||||||
Operating
|
|
577,978
|
|
|
649,436
|
|
|
634,081
|
|
|||
Cost of product sales
|
|
635,617
|
|
|
704,313
|
|
|
619,279
|
|
|||
Depreciation, amortization and impairment
|
|
196,630
|
|
|
265,077
|
|
|
246,134
|
|
|||
General and administrative
|
|
165,717
|
|
|
194,283
|
|
|
196,650
|
|
|||
Total costs and expenses
|
|
1,575,942
|
|
|
1,813,109
|
|
|
1,696,144
|
|
|||
Other operating income (expense)
|
|
—
|
|
|
—
|
|
|
2,975
|
|
|||
Earnings of non-controlled entities
|
|
120,994
|
|
|
181,117
|
|
|
168,961
|
|
|||
Operating profit
|
|
1,052,713
|
|
|
1,194,581
|
|
|
1,203,704
|
|
|||
Interest expense
|
|
210,698
|
|
|
220,979
|
|
|
221,123
|
|
|||
Interest capitalized
|
|
(15,565
|
)
|
|
(17,455
|
)
|
|
(19,284
|
)
|
|||
Interest income
|
|
(1,415
|
)
|
|
(3,010
|
)
|
|
(3,285
|
)
|
|||
Gain on disposition of assets
|
|
(18,505
|
)
|
|
(353,797
|
)
|
|
(28,966
|
)
|
|||
Other (income) expense
|
|
4,139
|
|
|
13,868
|
|
|
11,830
|
|
|||
Income before provision for income taxes
|
|
873,361
|
|
|
1,333,996
|
|
|
1,022,286
|
|
|||
Provision for income taxes
|
|
3,830
|
|
|
71
|
|
|
1,437
|
|
|||
Net income
|
|
$
|
869,531
|
|
|
$
|
1,333,925
|
|
|
$
|
1,020,849
|
|
|
|
|
|
|
|
|
||||||
Basic net income per common unit
|
|
$
|
3.81
|
|
|
$
|
5.84
|
|
|
$
|
4.46
|
|
|
|
|
|
|
|
|
||||||
Diluted net income per common unit
|
|
$
|
3.81
|
|
|
$
|
5.84
|
|
|
$
|
4.46
|
|
|
|
|
|
|
|
|
||||||
Weighted average number of common units outstanding used for basic net income per unit calculation
|
|
228,176
|
|
|
228,377
|
|
|
228,658
|
|
|||
|
|
|
|
|
|
|
||||||
Weighted average number of common units outstanding used for diluted net income per unit calculation
|
|
228,338
|
|
|
228,573
|
|
|
228,842
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Net income
|
$
|
869,531
|
|
|
$
|
1,333,925
|
|
|
$
|
1,020,849
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Derivative activity:
|
|
|
|
|
|
||||||
Net gain (loss) on cash flow hedges
|
(1,937
|
)
|
|
4,317
|
|
|
(25,216
|
)
|
|||
Reclassification of net loss on cash flow hedges to income
|
2,958
|
|
|
2,958
|
|
|
2,736
|
|
|||
Changes in employee benefit plan assets and benefit obligations recognized in other comprehensive income:
|
|
|
|
|
|
||||||
Net actuarial loss
|
(46,008
|
)
|
|
(2,323
|
)
|
|
(27,351
|
)
|
|||
Amortization of prior service credit
|
(181
|
)
|
|
(181
|
)
|
|
(181
|
)
|
|||
Amortization of actuarial loss
|
6,371
|
|
|
10,352
|
|
|
5,820
|
|
|||
Settlement cost
|
2,460
|
|
|
1,964
|
|
|
2,606
|
|
|||
Total other comprehensive income (loss)
|
(36,337
|
)
|
|
17,087
|
|
|
(41,586
|
)
|
|||
Comprehensive income
|
$
|
833,194
|
|
|
$
|
1,351,012
|
|
|
$
|
979,263
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2019
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
218,283
|
|
|
$
|
58,030
|
|
Trade accounts receivable
|
|
104,164
|
|
|
125,440
|
|
||
Other accounts receivable
|
|
25,007
|
|
|
23,887
|
|
||
Inventory
|
|
185,735
|
|
|
184,399
|
|
||
Commodity derivatives contracts, net
|
|
55,011
|
|
|
—
|
|
||
Commodity derivatives deposits
|
|
—
|
|
|
27,415
|
|
||
Other current assets
|
|
58,143
|
|
|
40,237
|
|
||
Total current assets
|
|
646,343
|
|
|
459,408
|
|
||
Property, plant and equipment
|
|
7,628,592
|
|
|
8,431,227
|
|
||
Less: accumulated depreciation
|
|
1,830,411
|
|
|
2,027,193
|
|
||
Net property, plant and equipment
|
|
5,798,181
|
|
|
6,404,034
|
|
||
Investments in non-controlled entities
|
|
1,076,306
|
|
|
1,240,551
|
|
||
Right-of-use asset, operating leases
|
|
—
|
|
|
171,868
|
|
||
Long-term receivables
|
|
20,844
|
|
|
20,782
|
|
||
Goodwill
|
|
53,260
|
|
|
53,260
|
|
||
Other intangibles (less accumulated amortization of $2,979 and $6,255 at December 31, 2018 and 2019, respectively)
|
|
51,174
|
|
|
47,898
|
|
||
Restricted cash
|
|
90,978
|
|
|
26,569
|
|
||
Other noncurrent assets
|
|
10,451
|
|
|
13,359
|
|
||
Total assets
|
|
$
|
7,747,537
|
|
|
$
|
8,437,729
|
|
|
|
|
|
|
||||
LIABILITIES AND PARTNERS’ CAPITAL
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
138,735
|
|
|
$
|
150,992
|
|
Accrued payroll and benefits
|
|
70,276
|
|
|
75,511
|
|
||
Accrued interest payable
|
|
63,258
|
|
|
64,276
|
|
||
Accrued taxes other than income
|
|
53,093
|
|
|
66,007
|
|
||
Deferred revenue
|
|
121,085
|
|
|
109,654
|
|
||
Accrued product liabilities
|
|
75,482
|
|
|
90,788
|
|
||
Commodity derivatives contracts, net
|
|
—
|
|
|
10,222
|
|
||
Commodity derivatives deposits
|
|
37,328
|
|
|
—
|
|
||
Current portion of operating lease liability
|
|
—
|
|
|
26,221
|
|
||
Current portion of long-term debt, net
|
|
59,489
|
|
|
—
|
|
||
Other current liabilities
|
|
57,810
|
|
|
73,205
|
|
||
Total current liabilities
|
|
676,556
|
|
|
666,876
|
|
||
Long-term operating lease liability
|
|
—
|
|
|
144,023
|
|
||
Long-term debt, net
|
|
4,211,380
|
|
|
4,706,075
|
|
||
Long-term pension and benefits
|
|
122,580
|
|
|
145,992
|
|
||
Other noncurrent liabilities
|
|
93,587
|
|
|
59,735
|
|
||
Commitments and contingencies
|
|
|
|
|
||||
Partners’ capital:
|
|
|
|
|
|
|||
Common unitholders (228,195 units and 228,403 units outstanding at December 31, 2018 and 2019, respectively)
|
|
2,763,925
|
|
|
2,877,105
|
|
||
Accumulated other comprehensive loss
|
|
(120,491
|
)
|
|
(162,077
|
)
|
||
Total partners’ capital
|
|
2,643,434
|
|
|
2,715,028
|
|
||
Total liabilities and partners’ capital
|
|
$
|
7,747,537
|
|
|
$
|
8,437,729
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2018
|
|
2019
|
||||||
Operating Activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
869,531
|
|
|
$
|
1,333,925
|
|
|
$
|
1,020,849
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation, amortization and impairment expense
|
|
196,630
|
|
|
265,077
|
|
|
246,134
|
|
|||
Gain on sale and retirement of assets
|
|
(5,135
|
)
|
|
(328,055
|
)
|
|
(28,966
|
)
|
|||
Earnings of non-controlled entities
|
|
(120,994
|
)
|
|
(181,117
|
)
|
|
(168,961
|
)
|
|||
Distributions from operations of non-controlled entities
|
|
146,211
|
|
|
196,686
|
|
|
203,602
|
|
|||
Equity-based incentive compensation expense
|
|
20,641
|
|
|
32,053
|
|
|
24,012
|
|
|||
Settlement cost, amortization of prior service credit and actuarial loss
|
|
8,650
|
|
|
12,135
|
|
|
8,245
|
|
|||
Debt prepayment costs
|
|
—
|
|
|
—
|
|
|
8,270
|
|
|||
Changes in components of operating assets and liabilities (Note 8)
|
|
15,695
|
|
|
22,246
|
|
|
7,994
|
|
|||
Net cash provided by operating activities
|
|
1,131,229
|
|
|
1,352,950
|
|
|
1,321,179
|
|
|||
Investing Activities:
|
|
|
|
|
|
|
||||||
Additions to property, plant and equipment, net(1)
|
|
(558,669
|
)
|
|
(552,257
|
)
|
|
(943,990
|
)
|
|||
Proceeds from sale and disposition of assets
|
|
44,392
|
|
|
576,568
|
|
|
65,366
|
|
|||
Investments in non-controlled entities
|
|
(134,828
|
)
|
|
(216,424
|
)
|
|
(212,380
|
)
|
|||
Distributions from returns of investments in non-controlled entities
|
|
55,931
|
|
|
1,786
|
|
|
8,494
|
|
|||
Deposits received from undivided joint interest third party
|
|
—
|
|
|
71,071
|
|
|
75,258
|
|
|||
Net cash used by investing activities
|
|
(593,174
|
)
|
|
(119,256
|
)
|
|
(1,007,252
|
)
|
|||
Financing Activities:
|
|
|
|
|
|
|
||||||
Distributions paid
|
|
(803,216
|
)
|
|
(865,431
|
)
|
|
(921,606
|
)
|
|||
Net commercial paper repayments
|
|
(49,986
|
)
|
|
—
|
|
|
—
|
|
|||
Borrowings under long-term notes
|
|
496,705
|
|
|
—
|
|
|
996,405
|
|
|||
Payments on notes
|
|
—
|
|
|
(250,000
|
)
|
|
(550,000
|
)
|
|||
Debt placement costs
|
|
(6,316
|
)
|
|
(404
|
)
|
|
(12,012
|
)
|
|||
Net receipt (payment) on financial derivatives
|
|
—
|
|
|
24,619
|
|
|
(33,342
|
)
|
|||
Payments associated with settlement of equity-based incentive compensation
|
|
(13,875
|
)
|
|
(9,285
|
)
|
|
(9,764
|
)
|
|||
Debt prepayment costs
|
|
—
|
|
|
—
|
|
|
(8,270
|
)
|
|||
Net cash used by financing activities
|
|
(376,688
|
)
|
|
(1,100,501
|
)
|
|
(538,589
|
)
|
|||
Change in cash, cash equivalents and restricted cash
|
|
161,367
|
|
|
133,193
|
|
|
(224,662
|
)
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
|
14,701
|
|
|
176,068
|
|
|
309,261
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
176,068
|
|
|
$
|
309,261
|
|
|
$
|
84,599
|
|
Supplemental non-cash investing and financing activities:
|
|
|
|
|
|
|
||||||
Contribution of property, plant and equipment to a non-controlled entity
|
|
$
|
97,638
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1) Additions to property, plant and equipment
|
|
$
|
(572,744
|
)
|
|
$
|
(562,296
|
)
|
|
$
|
(980,575
|
)
|
Changes in accounts payable and other current liabilities related to capital expenditures
|
|
14,075
|
|
|
10,039
|
|
|
36,585
|
|
|||
Additions to property, plant and equipment, net
|
|
$
|
(558,669
|
)
|
|
$
|
(552,257
|
)
|
|
$
|
(943,990
|
)
|
|
|
Common Unitholders
|
|
Accumulated Other Comprehensive Loss
|
|
Total Partners’ Capital
|
||||||||
Balance, January 1, 2017
|
|
$
|
2,193,346
|
|
|
|
$
|
(101,241
|
)
|
|
|
$
|
2,092,105
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
||||||
Net income
|
|
869,531
|
|
|
|
—
|
|
|
|
869,531
|
|
|||
Total other comprehensive income (loss)
|
|
—
|
|
|
|
(36,337
|
)
|
|
|
(36,337
|
)
|
|||
Total comprehensive income (loss)
|
|
869,531
|
|
|
|
(36,337
|
)
|
|
|
833,194
|
|
|||
Distributions
|
|
(803,216
|
)
|
|
|
—
|
|
|
|
(803,216
|
)
|
|||
Equity-based incentive compensation expense
|
|
20,641
|
|
|
|
—
|
|
|
|
20,641
|
|
|||
Issuance of common units in settlement of equity-based incentive plan awards
|
|
1,669
|
|
|
|
—
|
|
|
|
1,669
|
|
|||
Payments associated with settlement of equity-based incentive compensation
|
|
(13,875
|
)
|
|
|
—
|
|
|
|
(13,875
|
)
|
|||
Other
|
|
(865
|
)
|
|
|
—
|
|
|
|
(865
|
)
|
|||
Balance, December 31, 2017
|
|
2,267,231
|
|
|
|
(137,578
|
)
|
|
|
2,129,653
|
|
|||
Comprehensive income:
|
|
|
|
|
|
|
|
|
||||||
Net income
|
|
1,333,925
|
|
|
|
—
|
|
|
|
1,333,925
|
|
|||
Total other comprehensive income (loss)
|
|
—
|
|
|
|
17,087
|
|
|
|
17,087
|
|
|||
Total comprehensive income (loss)
|
|
1,333,925
|
|
|
|
17,087
|
|
|
|
1,351,012
|
|
|||
Distributions
|
|
(865,431
|
)
|
|
|
—
|
|
|
|
(865,431
|
)
|
|||
Equity-based incentive compensation expense
|
|
32,053
|
|
|
|
—
|
|
|
|
32,053
|
|
|||
Issuance of common units in settlement of equity-based incentive plan awards
|
|
120
|
|
|
|
—
|
|
|
|
120
|
|
|||
Payments associated with settlement of equity-based incentive compensation
|
|
(9,285
|
)
|
|
|
—
|
|
|
|
(9,285
|
)
|
|||
ASC 606 cumulative effect
|
|
5,975
|
|
|
|
—
|
|
|
|
5,975
|
|
|||
Other
|
|
(663
|
)
|
|
|
—
|
|
|
|
(663
|
)
|
|||
Balance, December 31, 2018
|
|
2,763,925
|
|
|
|
(120,491
|
)
|
|
|
2,643,434
|
|
|||
Comprehensive income:
|
|
|
|
|
|
|
|
|
||||||
Net income
|
|
1,020,849
|
|
|
|
—
|
|
|
|
1,020,849
|
|
|||
Total other comprehensive income (loss)
|
|
—
|
|
|
|
(41,586
|
)
|
|
|
(41,586
|
)
|
|||
Total comprehensive income (loss)
|
|
1,020,849
|
|
|
|
(41,586
|
)
|
|
|
979,263
|
|
|||
Distributions
|
|
(921,606
|
)
|
|
|
—
|
|
|
|
(921,606
|
)
|
|||
Equity-based incentive compensation expense
|
|
24,012
|
|
|
|
—
|
|
|
|
24,012
|
|
|||
Issuance of common units in settlement of equity-based incentive plan awards
|
|
480
|
|
|
|
—
|
|
|
|
480
|
|
|||
Payments associated with settlement of equity-based incentive compensation
|
|
(9,764
|
)
|
|
|
—
|
|
|
|
(9,764
|
)
|
|||
Other
|
|
(791
|
)
|
|
|
—
|
|
|
|
(791
|
)
|
|||
Balance, December 31, 2019
|
|
$
|
2,877,105
|
|
|
|
$
|
(162,077
|
)
|
|
|
$
|
2,715,028
|
|
•
|
our refined products segment, comprised of our approximately 9,800-mile refined products pipeline system with 53 terminals as well as 25 independent terminals not connected to our pipeline system;
|
•
|
our crude oil segment, comprised of approximately 2,200 miles of crude oil pipelines, a condensate splitter and 35 million barrels of aggregate storage capacity, of which approximately 23 million barrels are used for contract storage. Approximately 1,000 miles of these pipelines, the condensate splitter and 28 million barrels of this storage capacity (including 20 million barrels used for contract storage) are wholly-owned, with the remainder owned through joint ventures; and
|
•
|
our marine storage segment, consisting of six marine terminals located along coastal waterways with an aggregate storage capacity of approximately 31 million barrels. Approximately 25 million barrels of this storage capacity are wholly-owned, with the remainder owned through joint ventures.
|
•
|
refined products are the output from crude oil refineries that are primarily used as fuels by consumers. Refined products include gasoline, diesel fuel, aviation fuel, kerosene and heating oil. Diesel fuel, kerosene and heating oil are also referred to as distillate;
|
•
|
transmix is a mixture of refined products that forms when transported in pipelines. Transmix is fractionated and blended into usable refined products;
|
•
|
liquefied petroleum gases, or LPGs, are liquids produced as by-products of the crude oil refining process and in connection with natural gas production. LPGs include butane and propane;
|
•
|
blendstocks are products blended with refined products to change or enhance their characteristics such as increasing a gasoline’s octane or oxygen content. Blendstocks include alkylates, oxygenates and natural gasoline;
|
•
|
heavy oils and feedstocks are products used as burner fuels or feedstocks for further processing by refineries and petrochemical facilities. Heavy oils and feedstocks include No. 6 fuel oil and vacuum gas oil;
|
•
|
crude oil, which includes condensate, is a naturally occurring unrefined petroleum product recovered from underground that is used as feedstock by refineries, splitters and petrochemical facilities; and
|
•
|
biofuels, such as ethanol and biodiesel, are fuels derived from living materials and typically blended with other refined products as required by government mandates.
|
2.
|
Summary of Significant Accounting Policies
|
Revenue from Contracts with Customers
|
|
|
Property, Plant and Equipment
|
|
|
Goodwill and Other Intangible Assets
|
|
|
Investments in Non-Controlled Entities
|
|
|
Inventory
|
|
|
Leases
|
|
|
Pension and Postretirement Medical and Life Benefit Obligations
|
|
|
Equity-Based Incentive Compensation
|
|
|
Derivative Financial Instruments
|
|
|
Contingencies and Environmental
|
|
3.
|
Segment Disclosures
|
|
|
Year Ended December 31, 2017
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Refined Products
|
|
Crude Oil
|
|
Marine Storage
|
|
Intersegment
Eliminations
|
|
Total
|
||||||||||
Transportation and terminals revenue
|
|
$
|
1,096,040
|
|
|
$
|
458,455
|
|
|
$
|
180,683
|
|
|
$
|
(3,403
|
)
|
|
$
|
1,731,775
|
|
Product sales revenue
|
|
717,140
|
|
|
35,053
|
|
|
6,013
|
|
|
—
|
|
|
758,206
|
|
|||||
Affiliate management fee revenue
|
|
1,388
|
|
|
13,950
|
|
|
2,342
|
|
|
—
|
|
|
17,680
|
|
|||||
Total revenue
|
|
1,814,568
|
|
|
507,458
|
|
|
189,038
|
|
|
(3,403
|
)
|
|
2,507,661
|
|
|||||
Operating expenses
|
|
400,439
|
|
|
120,920
|
|
|
65,296
|
|
|
(8,677
|
)
|
|
577,978
|
|
|||||
Cost of product sales
|
|
586,751
|
|
|
41,325
|
|
|
7,541
|
|
|
—
|
|
|
635,617
|
|
|||||
(Earnings) losses of non-controlled entities
|
|
1,632
|
|
|
(120,173
|
)
|
|
(2,453
|
)
|
|
—
|
|
|
(120,994
|
)
|
|||||
Operating margin
|
|
825,746
|
|
|
465,386
|
|
|
118,654
|
|
|
5,274
|
|
|
1,415,060
|
|
|||||
Depreciation, amortization and impairment expense
|
|
109,434
|
|
|
48,796
|
|
|
33,126
|
|
|
5,274
|
|
|
196,630
|
|
|||||
G&A expenses
|
|
103,225
|
|
|
41,490
|
|
|
21,002
|
|
|
—
|
|
|
165,717
|
|
|||||
Operating profit
|
|
$
|
613,087
|
|
|
$
|
375,100
|
|
|
$
|
64,526
|
|
|
$
|
—
|
|
|
$
|
1,052,713
|
|
Additions to long-lived assets
|
|
$
|
269,369
|
|
|
$
|
168,306
|
|
|
$
|
127,012
|
|
|
|
|
$
|
564,687
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31, 2017
|
||||||||||||||||||
Segment assets
|
|
$
|
3,499,492
|
|
|
$
|
2,817,186
|
|
|
$
|
871,557
|
|
|
|
|
$
|
7,188,235
|
|
||
Corporate assets
|
|
|
|
|
|
|
|
|
|
206,140
|
|
|||||||||
Total assets
|
|
|
|
|
|
|
|
|
|
$
|
7,394,375
|
|
||||||||
Goodwill
|
|
$
|
38,369
|
|
|
$
|
12,082
|
|
|
$
|
2,809
|
|
|
|
|
$
|
53,260
|
|
||
Investments in non-controlled entities
|
|
$
|
29,578
|
|
|
$
|
961,032
|
|
|
$
|
91,901
|
|
|
|
|
$
|
1,082,511
|
|
|
|
Year Ended December 31, 2018
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Refined Products
|
|
Crude Oil
|
|
Marine Storage
|
|
Intersegment
Eliminations
|
|
Total
|
||||||||||
Transportation and terminals revenue
|
|
$
|
1,151,980
|
|
|
$
|
549,849
|
|
|
$
|
180,850
|
|
|
$
|
(3,691
|
)
|
|
$
|
1,878,988
|
|
Product sales revenue
|
|
872,144
|
|
|
46,767
|
|
|
8,309
|
|
|
—
|
|
|
927,220
|
|
|||||
Affiliate management fee revenue
|
|
1,512
|
|
|
14,832
|
|
|
4,021
|
|
|
—
|
|
|
20,365
|
|
|||||
Total revenue
|
|
2,025,636
|
|
|
611,448
|
|
|
193,180
|
|
|
(3,691
|
)
|
|
2,826,573
|
|
|||||
Operating expenses
|
|
424,851
|
|
|
166,213
|
|
|
68,010
|
|
|
(9,638
|
)
|
|
649,436
|
|
|||||
Cost of product sales
|
|
650,071
|
|
|
44,128
|
|
|
10,114
|
|
|
—
|
|
|
704,313
|
|
|||||
Earnings of non-controlled entities
|
|
(16,039
|
)
|
|
(162,233
|
)
|
|
(2,845
|
)
|
|
—
|
|
|
(181,117
|
)
|
|||||
Operating margin
|
|
966,753
|
|
|
563,340
|
|
|
117,901
|
|
|
5,947
|
|
|
1,653,941
|
|
|||||
Depreciation, amortization and impairment expense
|
|
168,954
|
|
|
54,318
|
|
|
35,858
|
|
|
5,947
|
|
|
265,077
|
|
|||||
G&A expenses
|
|
118,491
|
|
|
51,523
|
|
|
24,269
|
|
|
—
|
|
|
194,283
|
|
|||||
Operating profit
|
|
$
|
679,308
|
|
|
$
|
457,499
|
|
|
$
|
57,774
|
|
|
$
|
—
|
|
|
$
|
1,194,581
|
|
Additions to long-lived assets
|
|
$
|
298,502
|
|
|
$
|
142,108
|
|
|
$
|
65,744
|
|
|
|
|
$
|
506,354
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31, 2018
|
||||||||||||||||||
Segment assets
|
|
$
|
3,715,653
|
|
|
$
|
2,710,068
|
|
|
$
|
1,065,525
|
|
|
|
|
$
|
7,491,246
|
|
||
Corporate assets
|
|
|
|
|
|
|
|
|
|
256,291
|
|
|||||||||
Total assets
|
|
|
|
|
|
|
|
|
|
$
|
7,747,537
|
|
||||||||
Goodwill
|
|
$
|
38,369
|
|
|
$
|
12,082
|
|
|
$
|
2,809
|
|
|
|
|
$
|
53,260
|
|
||
Investments in non-controlled entities
|
|
$
|
37,574
|
|
|
$
|
783,486
|
|
|
$
|
255,246
|
|
|
|
|
$
|
1,076,306
|
|
|
|
Year Ended December 31, 2019
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Refined Products
|
|
Crude Oil
|
|
Marine Storage
|
|
Intersegment
Eliminations
|
|
Total
|
||||||||||
Transportation and terminals revenue
|
|
$
|
1,186,966
|
|
|
$
|
602,045
|
|
|
$
|
187,036
|
|
|
$
|
(5,417
|
)
|
|
$
|
1,970,630
|
|
Product sales revenue
|
|
699,766
|
|
|
28,280
|
|
|
8,046
|
|
|
—
|
|
|
736,092
|
|
|||||
Affiliate management fee revenue
|
|
1,747
|
|
|
14,471
|
|
|
4,972
|
|
|
—
|
|
|
21,190
|
|
|||||
Total revenue
|
|
1,888,479
|
|
|
644,796
|
|
|
200,054
|
|
|
(5,417
|
)
|
|
2,727,912
|
|
|||||
Operating expenses
|
|
411,849
|
|
|
164,236
|
|
|
68,919
|
|
|
(10,923
|
)
|
|
634,081
|
|
|||||
Cost of product sales
|
|
582,271
|
|
|
28,051
|
|
|
8,957
|
|
|
—
|
|
|
619,279
|
|
|||||
Other operating (income) expense
|
|
(2,555
|
)
|
|
7,213
|
|
|
(7,633
|
)
|
|
—
|
|
|
(2,975
|
)
|
|||||
Earnings of non-controlled entities
|
|
(4,140
|
)
|
|
(160,891
|
)
|
|
(3,930
|
)
|
|
—
|
|
|
(168,961
|
)
|
|||||
Operating margin
|
|
901,054
|
|
|
606,187
|
|
|
133,741
|
|
|
5,506
|
|
|
1,646,488
|
|
|||||
Depreciation, amortization and impairment expense
|
|
136,861
|
|
|
63,315
|
|
|
40,452
|
|
|
5,506
|
|
|
246,134
|
|
|||||
G&A expenses
|
|
117,291
|
|
|
53,310
|
|
|
26,049
|
|
|
—
|
|
|
196,650
|
|
|||||
Operating profit
|
|
$
|
646,902
|
|
|
$
|
489,562
|
|
|
$
|
67,240
|
|
|
$
|
—
|
|
|
$
|
1,203,704
|
|
Additions to long-lived assets
|
|
$
|
761,135
|
|
|
$
|
66,452
|
|
|
$
|
52,550
|
|
|
|
|
$
|
880,137
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31, 2019
|
||||||||||||||||||
Segment assets
|
|
$
|
4,302,945
|
|
|
$
|
2,791,035
|
|
|
$
|
1,212,673
|
|
|
|
|
$
|
8,306,653
|
|
||
Corporate assets
|
|
|
|
|
|
|
|
|
|
131,076
|
|
|||||||||
Total assets
|
|
|
|
|
|
|
|
|
|
$
|
8,437,729
|
|
||||||||
Goodwill
|
|
$
|
38,369
|
|
|
$
|
12,082
|
|
|
$
|
2,809
|
|
|
|
|
$
|
53,260
|
|
||
Investments in non-controlled entities
|
|
$
|
24,457
|
|
|
$
|
818,167
|
|
|
$
|
397,927
|
|
|
|
|
$
|
1,240,551
|
|
|
|
Year Ended December 31, 2018
|
||||||||||||||||||
|
|
Refined Products
|
|
Crude Oil
|
|
Marine Storage
|
|
Intersegment Eliminations
|
|
Total
|
||||||||||
Transportation
|
|
$
|
749,266
|
|
|
$
|
337,690
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,086,956
|
|
Terminalling
|
|
179,999
|
|
|
6,365
|
|
|
2,649
|
|
|
—
|
|
|
189,013
|
|
|||||
Storage
|
|
100,564
|
|
|
119,606
|
|
|
135,963
|
|
|
(3,691
|
)
|
|
352,442
|
|
|||||
Ancillary services
|
|
111,009
|
|
|
25,590
|
|
|
25,674
|
|
|
—
|
|
|
162,273
|
|
|||||
Lease revenue
|
|
11,142
|
|
|
60,598
|
|
|
16,564
|
|
|
—
|
|
|
88,304
|
|
|||||
Transportation and terminals revenue
|
|
1,151,980
|
|
|
549,849
|
|
|
180,850
|
|
|
(3,691
|
)
|
|
1,878,988
|
|
|||||
Product sales revenue
|
|
872,144
|
|
|
46,767
|
|
|
8,309
|
|
|
—
|
|
|
927,220
|
|
|||||
Affiliate management fee revenue
|
|
1,512
|
|
|
14,832
|
|
|
4,021
|
|
|
—
|
|
|
20,365
|
|
|||||
Total revenue
|
|
2,025,636
|
|
|
611,448
|
|
|
193,180
|
|
|
(3,691
|
)
|
|
2,826,573
|
|
|||||
Revenue not under the guidance of ASC 606:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease revenue(1)
|
|
(11,142
|
)
|
|
(60,598
|
)
|
|
(16,564
|
)
|
|
—
|
|
|
(88,304
|
)
|
|||||
(Gains) losses from futures contracts included in product sales revenue(2)
|
|
(85,643
|
)
|
|
632
|
|
|
—
|
|
|
—
|
|
|
(85,011
|
)
|
|||||
Affiliate management fee revenue
|
|
(1,512
|
)
|
|
(14,832
|
)
|
|
(4,021
|
)
|
|
—
|
|
|
(20,365
|
)
|
|||||
Total revenue from contracts with customers under ASC 606
|
|
$
|
1,927,339
|
|
|
$
|
536,650
|
|
|
$
|
172,595
|
|
|
$
|
(3,691
|
)
|
|
$
|
2,632,893
|
|
|
|
Year Ended December 31, 2019
|
||||||||||||||||||
|
|
Refined Products
|
|
Crude Oil
|
|
Marine Storage
|
|
Intersegment Eliminations
|
|
Total
|
||||||||||
Transportation
|
|
$
|
778,394
|
|
|
$
|
343,782
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,122,176
|
|
Terminalling
|
|
181,599
|
|
|
17,822
|
|
|
3,409
|
|
|
—
|
|
|
202,830
|
|
|||||
Storage
|
|
104,423
|
|
|
139,988
|
|
|
137,127
|
|
|
(5,417
|
)
|
|
376,121
|
|
|||||
Ancillary services
|
|
111,387
|
|
|
27,270
|
|
|
29,774
|
|
|
—
|
|
|
168,431
|
|
|||||
Lease revenue
|
|
11,163
|
|
|
73,183
|
|
|
16,726
|
|
|
—
|
|
|
101,072
|
|
|||||
Transportation and terminals revenue
|
|
1,186,966
|
|
|
602,045
|
|
|
187,036
|
|
|
(5,417
|
)
|
|
1,970,630
|
|
|||||
Product sales revenue
|
|
699,766
|
|
|
28,280
|
|
|
8,046
|
|
|
—
|
|
|
736,092
|
|
|||||
Affiliate management fee revenue
|
|
1,747
|
|
|
14,471
|
|
|
4,972
|
|
|
—
|
|
|
21,190
|
|
|||||
Total revenue
|
|
1,888,479
|
|
|
644,796
|
|
|
200,054
|
|
|
(5,417
|
)
|
|
2,727,912
|
|
|||||
Revenue not under the guidance of ASC 606:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease revenue(1)
|
|
(11,163
|
)
|
|
(73,183
|
)
|
|
(16,726
|
)
|
|
—
|
|
|
(101,072
|
)
|
|||||
(Gains) losses from futures contracts included in product sales revenue(2)
|
|
69,538
|
|
|
3,024
|
|
|
—
|
|
|
—
|
|
|
72,562
|
|
|||||
Affiliate management fee revenue
|
|
(1,747
|
)
|
|
(14,471
|
)
|
|
(4,972
|
)
|
|
—
|
|
|
(21,190
|
)
|
|||||
Total revenue from contracts with customers under ASC 606
|
|
$
|
1,945,107
|
|
|
$
|
560,166
|
|
|
$
|
178,356
|
|
|
$
|
(5,417
|
)
|
|
$
|
2,678,212
|
|
|
|
December 31, 2018
|
|
December 31, 2019
|
||||
Accounts receivable from contracts with customers
|
|
$
|
102,684
|
|
|
$
|
124,701
|
|
Contract assets
|
|
$
|
8,487
|
|
|
$
|
8,071
|
|
Contract liabilities
|
|
$
|
122,129
|
|
|
$
|
111,670
|
|
|
|
Refined Products
|
|
Crude Oil
|
|
Marine Storage
|
|
Total
|
||||||||
Balances at December 31, 2019
|
|
$
|
2,090,504
|
|
|
$
|
1,131,938
|
|
|
$
|
177,703
|
|
|
$
|
3,400,145
|
|
Remaining terms
|
|
1 - 19 years
|
|
|
1 - 10 years
|
|
|
1 - 5 years
|
|
|
|
|||||
Estimated revenues from UPOs to be recognized in the next 12 months
|
|
$
|
337,402
|
|
|
$
|
293,272
|
|
|
$
|
101,754
|
|
|
$
|
732,428
|
|
5.
|
Property, Plant and Equipment, Goodwill and Other Intangibles
|
6.
|
Investments in Non-Controlled Entities
|
Entity
|
|
Ownership Interest
|
BridgeTex Pipeline Company, LLC (“BridgeTex”)
|
|
30%
|
Double Eagle Pipeline LLC (“Double Eagle”)
|
|
50%
|
HoustonLink Pipeline Company, LLC (“HoustonLink”)
|
|
50%
|
MVP Terminalling, LLC (“MVP”)
|
|
50%
|
Powder Springs Logistics, LLC (“Powder Springs”)
|
|
50%
|
Saddlehorn Pipeline Company, LLC (“Saddlehorn”)
|
|
40%
|
Seabrook Logistics, LLC (“Seabrook”)
|
|
50%
|
Texas Frontera, LLC (“Texas Frontera”)
|
|
50%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2018
|
|
2019
|
||||||
Transportation and terminals revenue:
|
|
|
|
|
|
|
||||||
BridgeTex, capacity lease
|
|
$
|
36,129
|
|
|
$
|
39,596
|
|
|
$
|
41,806
|
|
Double Eagle, throughput revenue
|
|
$
|
4,673
|
|
|
$
|
5,250
|
|
|
$
|
6,213
|
|
Saddlehorn, storage revenue
|
|
$
|
2,126
|
|
|
$
|
2,180
|
|
|
$
|
2,234
|
|
Operating costs:
|
|
|
|
|
|
|
||||||
Seabrook, storage lease and ancillary services
|
|
$
|
—
|
|
|
$
|
10,572
|
|
|
$
|
25,851
|
|
MVP, sale of air emission reduction credits (reduction of operating costs)
|
|
$
|
—
|
|
|
$
|
(2,161
|
)
|
|
$
|
—
|
|
Product sales revenue:
|
|
|
|
|
|
|
||||||
Powder Springs, butane sales
|
|
$
|
—
|
|
|
$
|
4,899
|
|
|
$
|
—
|
|
Seabrook, product sales
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
328
|
|
Cost of product sales:
|
|
|
|
|
|
|
||||||
BridgeTex, transportation charges
|
|
$
|
14,450
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Powder Springs, butane purchases
|
|
$
|
—
|
|
|
$
|
410
|
|
|
$
|
—
|
|
Other income:
|
|
|
|
|
|
|
||||||
MVP, easement sale
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
289
|
|
|
|
December 31, 2018
|
||||||||||||||
|
|
Trade Accounts Receivable
|
|
Other Accounts Receivable
|
|
Other Accounts Payable
|
|
Long-Term Receivables
|
||||||||
BridgeTex
|
|
$
|
318
|
|
|
$
|
1,549
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Double Eagle
|
|
$
|
546
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
MVP
|
|
$
|
—
|
|
|
$
|
397
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Powder Springs
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,221
|
|
Saddlehorn
|
|
$
|
—
|
|
|
$
|
183
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Seabrook
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,140
|
|
|
$
|
—
|
|
|
|
December 31, 2019
|
||||||||||||||
|
|
Trade Accounts Receivable
|
|
Other Accounts Receivable
|
|
Other Accounts Payable
|
|
Long-Term Receivables
|
||||||||
BridgeTex
|
|
$
|
392
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Double Eagle
|
|
$
|
445
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
HoustonLink
|
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
MVP
|
|
$
|
—
|
|
|
$
|
418
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Powder Springs
|
|
$
|
161
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,006
|
|
Saddlehorn
|
|
$
|
—
|
|
|
$
|
126
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Seabrook
|
|
$
|
941
|
|
|
$
|
—
|
|
|
$
|
1,349
|
|
|
$
|
—
|
|
|
|
|
||
Investments at December 31, 2018
|
|
$
|
1,076,306
|
|
Additional investment
|
|
212,380
|
|
|
Indemnification settlement
|
|
(5,000
|
)
|
|
Earnings of non-controlled entities:
|
|
|
||
Proportionate share of earnings
|
|
170,814
|
|
|
Amortization of excess investment and capitalized interest
|
|
(1,853
|
)
|
|
Earnings of non-controlled entities
|
|
168,961
|
|
|
Less:
|
|
|
||
Distributions from operations of non-controlled entities
|
|
203,602
|
|
|
Distributions from returns of investments in non-controlled entities
|
|
8,494
|
|
|
Investments at December 31, 2019
|
|
$
|
1,240,551
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2019
|
||||
Current assets
|
|
$
|
258,698
|
|
|
$
|
260,033
|
|
Noncurrent assets
|
|
2,461,456
|
|
|
2,768,696
|
|
||
Total assets
|
|
$
|
2,720,154
|
|
|
$
|
3,028,729
|
|
Current liabilities
|
|
$
|
170,558
|
|
|
$
|
160,566
|
|
Noncurrent liabilities
|
|
73,700
|
|
|
60,886
|
|
||
Total liabilities
|
|
$
|
244,258
|
|
|
$
|
221,452
|
|
Equity
|
|
$
|
2,475,896
|
|
|
$
|
2,807,277
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2018
|
|
2019
|
||||||
Revenue
|
|
$
|
419,214
|
|
|
$
|
631,420
|
|
|
$
|
782,013
|
|
Net income
|
|
$
|
256,423
|
|
|
$
|
416,128
|
|
|
$
|
507,464
|
|
7.
|
Inventory
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2019
|
||||
Refined products
|
|
$
|
92,751
|
|
|
$
|
96,128
|
|
Liquefied petroleum gases
|
|
46,612
|
|
|
29,982
|
|
||
Transmix
|
|
28,497
|
|
|
39,546
|
|
||
Crude oil
|
|
11,220
|
|
|
12,714
|
|
||
Additives
|
|
6,655
|
|
|
6,029
|
|
||
Total inventory
|
|
$
|
185,735
|
|
|
$
|
184,399
|
|
8.
|
Consolidated Statements of Cash Flows
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2018
|
|
2019
|
||||||
Trade accounts receivable and other accounts receivable
|
|
$
|
(25,639
|
)
|
|
$
|
24,169
|
|
|
$
|
(20,156
|
)
|
Inventory
|
|
(47,967
|
)
|
|
(3,390
|
)
|
|
1,336
|
|
|||
Accounts payable
|
|
8,954
|
|
|
21,146
|
|
|
(1,237
|
)
|
|||
Accrued payroll and benefits
|
|
10,596
|
|
|
14,015
|
|
|
4,931
|
|
|||
Accrued interest payable
|
|
5,014
|
|
|
(7,399
|
)
|
|
1,018
|
|
|||
Accrued taxes other than income
|
|
1,177
|
|
|
1,750
|
|
|
12,914
|
|
|||
Deferred revenue
|
|
15,904
|
|
|
5,191
|
|
|
(11,431
|
)
|
|||
Accrued product liabilities
|
|
44,559
|
|
|
(20,677
|
)
|
|
15,306
|
|
|||
Other current and noncurrent assets and liabilities
|
|
3,097
|
|
|
(12,559
|
)
|
|
5,313
|
|
|||
Total
|
|
$
|
15,695
|
|
|
$
|
22,246
|
|
|
$
|
7,994
|
|
9.
|
Debt
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2019
|
||||
6.55% Notes due 2019(1)
|
|
$
|
550,000
|
|
|
$
|
—
|
|
4.25% Notes due 2021
|
|
550,000
|
|
|
550,000
|
|
||
3.20% Notes due 2025
|
|
250,000
|
|
|
250,000
|
|
||
5.00% Notes due 2026
|
|
650,000
|
|
|
650,000
|
|
||
6.40% Notes due 2037
|
|
250,000
|
|
|
250,000
|
|
||
4.20% Notes due 2042
|
|
250,000
|
|
|
250,000
|
|
||
5.15% Notes due 2043
|
|
550,000
|
|
|
550,000
|
|
||
4.20% Notes due 2045
|
|
250,000
|
|
|
250,000
|
|
||
4.25% Notes due 2046
|
|
500,000
|
|
|
500,000
|
|
||
4.20% Notes due 2047
|
|
500,000
|
|
|
500,000
|
|
||
4.85% Notes due 2049
|
|
—
|
|
|
500,000
|
|
||
3.95% Notes due 2050
|
|
—
|
|
|
500,000
|
|
||
Face value of long-term debt
|
|
4,300,000
|
|
|
4,750,000
|
|
||
Unamortized debt issuance costs(2)
|
|
(27,070
|
)
|
|
(35,263
|
)
|
||
Net unamortized debt discount(2)
|
|
(2,927
|
)
|
|
(8,662
|
)
|
||
Net unamortized amount of gains from historical fair value hedges(2)
|
|
866
|
|
|
—
|
|
||
Long-term debt, net, including current portion
|
|
4,270,869
|
|
|
4,706,075
|
|
||
Less: current portion of long-term debt, net(1)
|
|
59,489
|
|
|
—
|
|
||
Long-term debt, net
|
|
$
|
4,211,380
|
|
|
$
|
4,706,075
|
|
|
|
|
|
|
(1)
|
At December 31, 2018, we had the ability and the intent to refinance approximately $490.0 million of our long-term notes maturing in 2019. As a result, only the portion of our debt intended to be repaid with cash available as of December 31, 2018 was classified as current in our consolidated balance sheets.
|
(2)
|
Debt issuance costs, note discounts and premiums and realized gains and losses of historical fair value hedges are being amortized or accreted to the applicable notes over the respective lives of those notes.
|
10.
|
Leases
|
|
Third Party Leases
|
|
Seabrook Lease
|
|
All Leases
|
||||||
2020
|
$
|
18,607
|
|
|
$
|
13,735
|
|
|
$
|
32,342
|
|
2021
|
18,993
|
|
|
12,280
|
|
|
31,273
|
|
|||
2022
|
18,869
|
|
|
9,919
|
|
|
28,788
|
|
|||
2023
|
18,348
|
|
|
9,919
|
|
|
28,267
|
|
|||
2024
|
14,341
|
|
|
9,643
|
|
|
23,984
|
|
|||
Thereafter
|
19,748
|
|
|
30,858
|
|
|
50,606
|
|
|||
Total future minimum rental payments
|
108,906
|
|
|
86,354
|
|
|
195,260
|
|
|||
Present value discount
|
12,262
|
|
|
$
|
12,754
|
|
|
$
|
25,016
|
|
|
Total operating lease liability
|
$
|
96,644
|
|
|
$
|
73,600
|
|
|
$
|
170,244
|
|
|
|
Year Ended December 31, 2019
|
||||||||||
|
|
Third Party Leases
|
|
Seabrook Lease
|
|
All Leases
|
||||||
Fixed lease cost
|
|
$
|
19,171
|
|
|
$
|
10,834
|
|
|
$
|
30,005
|
|
Short-term lease cost
|
|
1,603
|
|
|
—
|
|
|
1,603
|
|
|||
Variable lease cost
|
|
3,058
|
|
|
15,017
|
|
|
18,075
|
|
|||
Total lease cost
|
|
$
|
23,832
|
|
|
$
|
25,851
|
|
|
$
|
49,683
|
|
|
|
|
|
|
|
|
|
|
As of and for the Year Ended December 31, 2019
|
||||||||||
|
|
Third Party Leases
|
|
Seabrook Lease
|
|
All Leases
|
||||||
Current lease liability
|
|
$
|
15,136
|
|
|
$
|
11,085
|
|
|
$
|
26,221
|
|
Long-term lease liability
|
|
$
|
81,508
|
|
|
$
|
62,515
|
|
|
$
|
144,023
|
|
Right-of-use asset
|
|
$
|
98,268
|
|
|
$
|
73,600
|
|
|
$
|
171,868
|
|
|
|
|
|
|
|
|
||||||
Operating cash flows for operating leases
|
|
$
|
23,253
|
|
|
25,870
|
|
|
$
|
49,123
|
|
|
Weighted average remaining lease term (years)
|
|
6
|
|
|
8
|
|
|
7
|
|
|||
Weighted-average discount rate
|
|
3.9%
|
|
4.0%
|
|
4.0%
|
||||||
|
|
|
|
|
|
|
2020
|
$
|
47,687
|
|
2021
|
48,497
|
|
|
2022
|
35,569
|
|
|
2023
|
18,557
|
|
|
2024
|
18,296
|
|
|
Thereafter
|
54,472
|
|
|
Total
|
$
|
223,078
|
|
|
|
December 31, 2018
|
|
December 31, 2019
|
||||
Total minimum lease payments receivable
|
|
$
|
17,468
|
|
|
$
|
15,721
|
|
Less: Unearned income
|
|
3,422
|
|
|
2,814
|
|
||
Recorded net investment in direct financing lease
|
|
$
|
14,046
|
|
|
$
|
12,907
|
|
|
|
December 31, 2018
|
|
December 31, 2019
|
||||
Other accounts receivable
|
|
$
|
1,138
|
|
|
$
|
1,190
|
|
Long-term receivables
|
|
12,908
|
|
|
11,717
|
|
||
Total
|
|
$
|
14,046
|
|
|
$
|
12,907
|
|
11.
|
Employee Benefit Plans
|
|
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
Change in benefit obligations:
|
|
|
|
|
|
|
|
|
||||||||
Benefit obligations at beginning of year
|
|
$
|
297,856
|
|
|
$
|
308,949
|
|
|
$
|
12,760
|
|
|
$
|
12,080
|
|
Service cost
|
|
38,167
|
|
|
25,406
|
|
|
243
|
|
|
193
|
|
||||
Interest cost
|
|
14,907
|
|
|
12,163
|
|
|
416
|
|
|
507
|
|
||||
Plan participants’ contributions
|
|
—
|
|
|
—
|
|
|
357
|
|
|
564
|
|
||||
Actuarial (gain) loss
|
|
(21,375
|
)
|
|
54,171
|
|
|
(599
|
)
|
|
3,300
|
|
||||
Benefits paid
|
|
(14,356
|
)
|
|
(11,409
|
)
|
|
(1,097
|
)
|
|
(1,437
|
)
|
||||
Settlement payments
|
|
(6,250
|
)
|
|
(8,040
|
)
|
|
—
|
|
|
—
|
|
||||
Benefit obligations at end of year
|
|
308,949
|
|
|
381,240
|
|
|
12,080
|
|
|
15,207
|
|
||||
Change in plan assets:
|
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
|
198,686
|
|
|
197,590
|
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
|
31,717
|
|
|
31,630
|
|
|
740
|
|
|
873
|
|
||||
Plan participants’ contributions
|
|
—
|
|
|
—
|
|
|
357
|
|
|
564
|
|
||||
Actual (loss) return on plan assets
|
|
(12,207
|
)
|
|
39,522
|
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
|
(14,356
|
)
|
|
(11,409
|
)
|
|
(1,097
|
)
|
|
(1,437
|
)
|
||||
Settlement payments
|
|
(6,250
|
)
|
|
(8,040
|
)
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
|
197,590
|
|
|
249,293
|
|
|
—
|
|
|
—
|
|
||||
Funded status at end of year
|
|
$
|
(111,359
|
)
|
|
$
|
(131,947
|
)
|
|
$
|
(12,080
|
)
|
|
$
|
(15,207
|
)
|
Accumulated benefit obligations
|
|
$
|
208,840
|
|
|
$
|
274,353
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
Amounts recognized in consolidated balance sheets:
|
|
|
|
|
|
|
|
|
||||||||
Current accrued benefit cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
859
|
|
|
$
|
1,162
|
|
Long-term pension and benefits
|
|
111,359
|
|
|
131,947
|
|
|
11,221
|
|
|
14,045
|
|
||||
|
|
111,359
|
|
|
131,947
|
|
|
12,080
|
|
|
15,207
|
|
||||
Accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial loss
|
|
(91,669
|
)
|
|
(107,625
|
)
|
|
(5,409
|
)
|
|
(8,378
|
)
|
||||
Prior service credit
|
|
3,067
|
|
|
2,886
|
|
|
—
|
|
|
—
|
|
||||
|
|
(88,602
|
)
|
|
(104,739
|
)
|
|
(5,409
|
)
|
|
(8,378
|
)
|
||||
Net amount of liabilities and accumulated other comprehensive loss recognized in consolidated balance sheets
|
|
$
|
22,757
|
|
|
$
|
27,208
|
|
|
$
|
6,671
|
|
|
$
|
6,829
|
|
|
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||||||||||
|
|
2017
|
|
2018
|
|
2019
|
|
2017
|
|
2018
|
|
2019
|
||||||||||||
Components of net periodic pension and postretirement benefit expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
|
$
|
20,497
|
|
|
$
|
38,167
|
|
|
$
|
25,406
|
|
|
$
|
243
|
|
|
$
|
243
|
|
|
$
|
193
|
|
Interest cost
|
|
9,865
|
|
|
14,907
|
|
|
12,163
|
|
|
475
|
|
|
416
|
|
|
507
|
|
||||||
Expected return on plan assets
|
|
(10,266
|
)
|
|
(12,090
|
)
|
|
(9,401
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service credit
|
|
(181
|
)
|
|
(181
|
)
|
|
(181
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of actuarial loss
|
|
5,622
|
|
|
9,763
|
|
|
5,489
|
|
|
749
|
|
|
589
|
|
|
331
|
|
||||||
Settlement cost
|
|
2,460
|
|
|
1,964
|
|
|
2,606
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic expense
|
|
$
|
27,997
|
|
|
$
|
52,530
|
|
|
$
|
36,082
|
|
|
$
|
1,467
|
|
|
$
|
1,248
|
|
|
$
|
1,031
|
|
|
|
Pension Benefits
|
|
Other Postretirement Benefits
|
||||||||||||||||||||
|
|
2017
|
|
2018
|
|
2019
|
|
2017
|
|
2018
|
|
2019
|
||||||||||||
Beginning balance
|
|
$
|
(58,584
|
)
|
|
$
|
(97,226
|
)
|
|
$
|
(88,602
|
)
|
|
$
|
(7,881
|
)
|
|
$
|
(6,597
|
)
|
|
$
|
(5,409
|
)
|
Net actuarial gain (loss)
|
|
(46,543
|
)
|
|
(2,922
|
)
|
|
(24,051
|
)
|
|
535
|
|
|
599
|
|
|
(3,300
|
)
|
||||||
Amortization of prior service credit
|
|
(181
|
)
|
|
(181
|
)
|
|
(181
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of actuarial loss
|
|
5,622
|
|
|
9,763
|
|
|
5,489
|
|
|
749
|
|
|
589
|
|
|
331
|
|
||||||
Settlement cost
|
|
2,460
|
|
|
1,964
|
|
|
2,606
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amount recognized in other comprehensive loss
|
|
(38,642
|
)
|
|
8,624
|
|
|
(16,137
|
)
|
|
1,284
|
|
|
1,188
|
|
|
(2,969
|
)
|
||||||
Ending balance
|
|
$
|
(97,226
|
)
|
|
$
|
(88,602
|
)
|
|
$
|
(104,739
|
)
|
|
$
|
(6,597
|
)
|
|
$
|
(5,409
|
)
|
|
$
|
(8,378
|
)
|
|
|
December 31,
|
||
|
|
2018
|
|
2019
|
Discount rate—Salaried plan
|
|
3.99%
|
|
3.02%
|
Discount rate—USW plan
|
|
3.94%
|
|
2.96%
|
Discount rate—IUOE plan
|
|
4.12%
|
|
3.09%
|
Discount rate—Other Postretirement Benefits
|
|
4.08%
|
|
3.06%
|
Rate of compensation increase—Salaried plan
|
|
6.90%
|
|
4.72%
|
Rate of compensation increase—USW plan
|
|
3.50%
|
|
3.28%
|
Rate of compensation increase—IUOE plan
|
|
5.00%
|
|
4.78%
|
|
|
For the Year Ended December 31,
|
||||
|
|
2017
|
|
2018
|
|
2019
|
Discount rate—Salaried plan
|
|
4.21%
|
|
3.70%
|
|
3.99%
|
Discount rate—USW plan
|
|
4.04%
|
|
3.63%
|
|
3.73%
|
Discount rate—IUOE plan
|
|
4.41%
|
|
3.79%
|
|
4.12%
|
Discount rate—Other Postretirement Benefits
|
|
3.85%
|
|
3.43%
|
|
4.08%
|
Rate of compensation increase—Salaried plan
|
|
4% - 11%
|
|
6.80%
|
|
6.90%
|
Rate of compensation increase—USW plan
|
|
3.50%
|
|
3.50%
|
|
3.50%
|
Rate of compensation increase—IUOE plan
|
|
5.00%
|
|
5.00%
|
|
5.00%
|
Expected rate of return on plan assets—Salaried plan
|
|
6.00%
|
|
6.00%
|
|
4.60%
|
Expected rate of return on plan assets—USW plan
|
|
6.00%
|
|
6.00%
|
|
4.60%
|
Expected rate of return on plan assets—IUOE plan
|
|
6.00%
|
|
6.00%
|
|
4.70%
|
Asset Category
|
|
Total
|
|
Quoted Prices in Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Domestic Equity Securities(1):
|
|
|
|
|
|
|
|
|
||||||||
Small-cap fund
|
|
$
|
3,816
|
|
|
$
|
3,816
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mid-cap fund
|
|
3,811
|
|
|
3,811
|
|
|
—
|
|
|
—
|
|
||||
Large-cap fund
|
|
30,595
|
|
|
30,595
|
|
|
—
|
|
|
—
|
|
||||
International equity fund
|
|
19,471
|
|
|
19,471
|
|
|
—
|
|
|
—
|
|
||||
Fixed Income Securities(1):
|
|
|
|
|
|
|
|
|
||||||||
Short-term bond fund
|
|
9,242
|
|
|
9,242
|
|
|
—
|
|
|
—
|
|
||||
Intermediate-term bond fund
|
|
23,036
|
|
|
23,036
|
|
|
—
|
|
|
—
|
|
||||
Long-term investment grade bond funds
|
|
99,118
|
|
|
99,118
|
|
|
—
|
|
|
—
|
|
||||
Other:
|
|
|
|
|
|
|
|
|
||||||||
Short-term investment fund
|
|
8,312
|
|
|
8,312
|
|
|
—
|
|
|
—
|
|
||||
Group annuity contract
|
|
189
|
|
|
—
|
|
|
—
|
|
|
189
|
|
||||
Fair value of plan assets
|
|
$
|
197,590
|
|
|
$
|
197,401
|
|
|
$
|
—
|
|
|
$
|
189
|
|
|
|
|
|
|
|
|
|
|
Asset Category
|
|
Total
|
|
Quoted Prices in Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Domestic Equity Securities(1):
|
|
|
|
|
|
|
|
|
||||||||
Small-cap fund
|
|
$
|
5,087
|
|
|
$
|
5,087
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mid-cap fund
|
|
5,095
|
|
|
5,095
|
|
|
—
|
|
|
—
|
|
||||
Large-cap fund
|
|
40,884
|
|
|
40,884
|
|
|
—
|
|
|
—
|
|
||||
International equity fund
|
|
25,580
|
|
|
25,580
|
|
|
—
|
|
|
—
|
|
||||
Fixed Income Securities(1):
|
|
|
|
|
|
|
|
|
||||||||
Short-term bond fund
|
|
3,590
|
|
|
3,590
|
|
|
—
|
|
|
—
|
|
||||
Intermediate-term bond fund
|
|
29,485
|
|
|
29,485
|
|
|
—
|
|
|
—
|
|
||||
Long-term investment grade bond funds
|
|
132,096
|
|
|
132,096
|
|
|
—
|
|
|
—
|
|
||||
Other:
|
|
|
|
|
|
|
|
|
||||||||
Short-term investment fund
|
|
7,300
|
|
|
7,300
|
|
|
—
|
|
|
—
|
|
||||
Group annuity contract
|
|
176
|
|
|
—
|
|
|
—
|
|
|
176
|
|
||||
Fair value of plan assets
|
|
$
|
249,293
|
|
|
$
|
249,117
|
|
|
$
|
—
|
|
|
$
|
176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Category
|
|
Fund’s Investment Strategy
|
Domestic Equity Securities:
|
|
|
Small-cap fund
|
|
Seeks to track performance of the Center for Research in Security Prices (“CRSP”) US Small Cap Index
|
Mid-cap fund
|
|
Seeks to track performance of the CRSP US Mid Cap Index
|
Large-cap fund
|
|
Seeks to track performance of the Standard & Poor’s 500 Index
|
International equity fund
|
|
Seeks long-term growth of capital by investing 65% or more of assets in international equities
|
Fixed Income Securities:
|
|
|
Short-term bond fund
|
|
Seeks current income with limited price volatility through investment in primarily high quality bonds
|
Intermediate-term bond fund
|
|
Seeks moderate and sustainable level of current income by investing primarily in high quality fixed income securities with maturities from five to ten years
|
Long-term investment grade bond funds
|
|
Seek high and sustainable current income through investment primarily in long-term high grade bonds
|
Other:
|
|
|
Short-term investment fund
|
|
Invests in high quality short-term money market instruments issued by the U.S. Treasury
|
Group annuity contract
|
|
Earns interest quarterly equal to the effective yield of the 91-day U.S. Treasury bill
|
|
|
2018
|
|
2019
|
||||
|
|
Actual
|
|
Target
|
|
Actual
|
|
Target
|
Equity securities
|
|
29%
|
|
30%
|
|
30%
|
|
30%
|
Fixed income securities
|
|
67%
|
|
67%
|
|
67%
|
|
67%
|
Other
|
|
4%
|
|
3%
|
|
3%
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
Other
Postretirement
Benefits
|
||||
2020
|
|
$
|
15,943
|
|
|
$
|
1,163
|
|
2021
|
|
$
|
16,473
|
|
|
$
|
1,187
|
|
2022
|
|
$
|
18,981
|
|
|
$
|
1,141
|
|
2023
|
|
$
|
21,445
|
|
|
$
|
1,080
|
|
2024
|
|
$
|
23,621
|
|
|
$
|
938
|
|
2025 through 2029
|
|
$
|
136,931
|
|
|
$
|
4,069
|
|
12.
|
Long-Term Incentive Plan
|
|
|
Performance-Based Awards
|
|
Time-Based Awards
|
|
Total Awards
|
|||||||||||||||
|
|
Number of Unit
Awards
|
|
Weighted-Average Fair Value
|
|
Number of Unit
Awards
|
|
Weighted-Average Fair Value
|
|
Number of Unit
Awards
|
|
Weighted-Average Fair Value
|
|||||||||
Non-vested units - 1/1/2019
|
|
390,015
|
|
|
$
|
77.66
|
|
|
111,388
|
|
|
$
|
73.09
|
|
|
501,403
|
|
|
$
|
76.65
|
|
Units granted during 2019
|
|
182,834
|
|
|
$
|
63.65
|
|
|
195,031
|
|
|
$
|
62.91
|
|
|
377,865
|
|
|
$
|
63.27
|
|
Units vested during 2019
|
|
(173,842
|
)
|
|
$
|
82.31
|
|
|
(30,958
|
)
|
|
$
|
78.05
|
|
|
(204,800
|
)
|
|
$
|
81.67
|
|
Units forfeited during 2019
|
|
(19,103
|
)
|
|
$
|
70.69
|
|
|
(15,145
|
)
|
|
$
|
65.18
|
|
|
(34,248
|
)
|
|
$
|
68.25
|
|
Non-vested units - 12/31/19
|
|
379,904
|
|
|
$
|
69.14
|
|
|
260,316
|
|
|
$
|
63.92
|
|
|
640,220
|
|
|
$
|
67.02
|
|
Grant Date
|
|
Non-Vested Unit Awards
|
|
Adjustment to Unit Awards in Anticipation of Achieving Above- Target Financial Results
|
|
Total Unit Award Accrual
|
|
Vesting Date
|
|
Unrecognized Compensation Expense(a) (in millions)
|
|
|||||
Performance-Based Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2018 Awards
|
|
205,568
|
|
|
—
|
|
|
205,568
|
|
|
12/31/2020
|
|
$
|
4.9
|
|
|
2019 Awards
|
|
174,336
|
|
|
—
|
|
|
174,336
|
|
|
12/31/2021
|
|
7.3
|
|
|
|
Time-Based Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2020 Vesting Date
|
|
76,820
|
|
|
—
|
|
|
76,820
|
|
|
12/31/2020
|
|
1.9
|
|
|
|
2021 Vesting Date
|
|
180,162
|
|
|
—
|
|
|
180,162
|
|
|
12/31/2021
|
|
7.5
|
|
|
|
2022 Vesting Date
|
|
3,334
|
|
|
—
|
|
|
3,334
|
|
|
12/31/2022
|
|
0.2
|
|
|
|
Total
|
|
640,220
|
|
|
—
|
|
|
640,220
|
|
|
|
|
$
|
21.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-Based Awards
|
|
Time-Based Awards
|
||||||||||
|
|
Number of
Unit
Awards
|
|
Weighted-Average Fair Value
|
|
Number of Unit
Awards
|
|
Weighted-Average Fair Value
|
||||||
Units granted during 2017
|
|
189,544
|
|
|
$
|
82.34
|
|
|
30,604
|
|
|
$
|
79.10
|
|
Units granted during 2018
|
|
218,923
|
|
|
$
|
73.80
|
|
|
83,564
|
|
|
$
|
71.03
|
|
Units granted during 2019
|
|
182,834
|
|
|
$
|
63.65
|
|
|
195,031
|
|
|
$
|
62.91
|
|
Vesting Date
|
|
Vested
Common Units
|
|
Fair Value of Unit Awards on Vesting Date (in millions)
|
|
Intrinsic Value of Unit Awards on Vesting Date (in millions)
|
12/31/2017
|
|
266,028
|
|
$19.9
|
|
$18.9
|
12/31/2018
|
|
317,037
|
|
$22.1
|
|
$18.1
|
12/31/2019
|
|
436,629
|
|
$31.0
|
|
$27.5
|
|
|
|
|
|
|
|
Settlement Date
|
|
Number of Common Units Issued, Net of Tax Withholdings
|
|
Tax Withholdings and Other Cash Payments
(in millions)
|
|
Employer Taxes (in millions)
|
|
Total Cash Payments (in millions)
|
January 2017
|
|
216,679
|
|
$13.9
|
|
$1.2
|
|
$15.1
|
January 2018
|
|
168,913
|
|
$9.3
|
|
$1.1
|
|
$10.4
|
January 2019
|
|
199,792
|
|
$9.8
|
|
$0.9
|
|
$10.7
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2018
|
|
2019
|
||||||
Performance awards
|
|
$
|
17,823
|
|
|
$
|
28,728
|
|
|
$
|
17,920
|
|
Time-based awards
|
|
2,818
|
|
|
3,325
|
|
|
6,092
|
|
|||
Total
|
|
$
|
20,641
|
|
|
$
|
32,053
|
|
|
$
|
24,012
|
|
|
|
|
|
|
|
|
13.
|
Derivative Financial Instruments
|
Type of Contract/Accounting Methodology
|
|
Product Represented by the Contract and Associated Barrels
|
|
Maturity Dates
|
Futures - Economic Hedges
|
|
3.2 million barrels of refined products and crude oil
|
|
Between January and May 2020
|
Futures - Economic Hedges
|
|
0.7 million barrels of gas liquids
|
|
Between January and April 2020
|
|
|
Gross Amounts of Recognized Assets (Liabilities)
|
|
Gross Amounts of Assets (Liabilities) Offset in the Consolidated Balance Sheets
|
|
Net Amounts of Assets (Liabilities) Presented in the Consolidated Balance Sheets
|
|
Margin Deposit Amounts Not Offset in the Consolidated Balance Sheets
|
|
Net Asset Amount(1)
|
||||||||||
As of December 31, 2018
|
|
$
|
62,166
|
|
|
$
|
(7,155
|
)
|
|
$
|
55,011
|
|
|
$
|
(37,328
|
)
|
|
$
|
17,683
|
|
As of December 31, 2019
|
|
$
|
(11,033
|
)
|
|
$
|
811
|
|
|
$
|
(10,222
|
)
|
|
$
|
27,415
|
|
|
$
|
17,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
Derivative Gains (Losses) Included in AOCL
|
|
2017
|
|
2018
|
|
2019
|
||||||
Beginning balance
|
|
$
|
(34,776
|
)
|
|
$
|
(33,755
|
)
|
|
$
|
(26,480
|
)
|
Net gain (loss) on interest rate contract cash flow hedges
|
|
(1,937
|
)
|
|
4,317
|
|
|
(25,216
|
)
|
|||
Reclassification of net loss on cash flow hedges to income
|
|
2,958
|
|
|
2,958
|
|
|
2,736
|
|
|||
Ending balance
|
|
$
|
(33,755
|
)
|
|
$
|
(26,480
|
)
|
|
$
|
(48,960
|
)
|
|
|
Interest Rate Contracts
|
|||||||||||||
|
|
Amount of Gain (Loss) Recognized in AOCL on Derivatives
|
|
Location of Loss Reclassified from AOCL into Income
|
|
Amount of Loss Reclassified from AOCL into Income
|
|
||||||||
|
|
|
|
||||||||||||
Year Ended December 31, 2017
|
|
|
$
|
(1,937
|
)
|
|
|
Interest expense
|
|
|
$
|
(2,958
|
)
|
|
|
Year Ended December 31, 2018
|
|
|
$
|
4,317
|
|
|
|
Interest expense
|
|
|
$
|
(2,958
|
)
|
|
|
Year Ended December 31, 2019
|
|
|
$
|
(25,216
|
)
|
|
|
Interest expense
|
|
|
$
|
(2,736
|
)
|
|
|
|
|
|
|
Amount of Gain (Loss)
Recognized on Derivative |
||||||||||
|
|
|
|
Year Ended December 31,
|
||||||||||
Derivative Instrument
|
|
Location of Gain (Loss)
Recognized on Derivatives
|
|
2017
|
|
2018
|
|
2019
|
||||||
Futures contracts
|
|
Product sales revenue
|
|
$
|
(56,338
|
)
|
|
$
|
85,012
|
|
|
$
|
(72,562
|
)
|
Futures contracts
|
|
Cost of product sales
|
|
25,566
|
|
|
(15,947
|
)
|
|
(1,931
|
)
|
|||
Futures contracts
|
|
Operating expenses
|
|
3,002
|
|
|
—
|
|
|
—
|
|
|||
Basis derivative agreement
|
|
Other operating income (expense)
|
|
—
|
|
|
—
|
|
|
(10,252
|
)
|
|||
|
|
Total
|
|
$
|
(27,770
|
)
|
|
$
|
69,065
|
|
|
$
|
(84,745
|
)
|
|
|
December 31, 2018
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivative Instrument
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
Futures contracts
|
|
Commodity derivatives contracts, net
|
|
$
|
462
|
|
|
Commodity derivatives contracts, net
|
|
$
|
—
|
|
Interest rate contracts
|
|
Other noncurrent assets
|
|
312
|
|
|
Other noncurrent liabilities
|
|
8,438
|
|
||
|
|
Total
|
|
$
|
774
|
|
|
Total
|
|
$
|
8,438
|
|
|
|
December 31, 2018
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivative Instrument
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
Futures contracts
|
|
Commodity derivatives contracts, net
|
|
$
|
61,704
|
|
|
Commodity derivatives contracts, net
|
|
$
|
7,155
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
December 31, 2019
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivative Instrument
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
Futures contracts
|
|
Commodity derivatives contracts, net
|
|
$
|
811
|
|
|
Commodity derivatives contracts, net
|
|
$
|
11,033
|
|
Basis derivative agreement
|
|
Other current assets
|
|
—
|
|
|
Other current liabilities
|
|
8,457
|
|
||
Basis derivative agreement
|
|
Other noncurrent assets
|
|
—
|
|
|
Other noncurrent liabilities
|
|
8,847
|
|
||
|
|
Total
|
|
$
|
811
|
|
|
Total
|
|
$
|
28,337
|
|
14.
|
Fair Value Disclosures
|
•
|
Commodity derivatives contracts. These include exchange-traded futures contracts related to petroleum products. These contracts are carried at fair value on our consolidated balance sheets and are valued based on quoted prices in active markets. See Note 13 – Derivative Financial Instruments for further disclosures regarding these contracts.
|
•
|
Interest rate contracts. These include forward-starting interest rate swap agreements to hedge against the risk of variability of interest payments on future debt. These contracts are carried at fair value on our consolidated balance sheets and are valued based on an assumed exchange, at the end of each period, in an orderly transaction with a participant in the market in which the financial instrument is traded. The exchange value was calculated using present value techniques on estimated future cash flows based on forward interest rate curves. See Note 13 – Derivative Financial Instruments for further disclosures regarding these contracts.
|
•
|
Basis Derivative Agreement. During 2019, we entered into a basis derivative agreement with a joint venture co-owner’s affiliate, and, contemporaneously, that affiliate entered into an intrastate transportation services agreement with the joint venture. Settlements under the basis derivative agreement are determined based on the basis differential of crude oil prices at different market locations and a notional volume of 30,000 barrels per day (see Note 13 - Derivative Financial Instruments for further disclosures regarding this agreement). The fair value of this derivative was calculated based on observable market data inputs, including published commodity pricing data and market interest rates. The key inputs in the fair value calculation include the forward price curves for crude oil, the implied forward correlation in crude oil prices between West Texas and the Houston Gulf Coast, and the implied forward volatility for crude oil futures contracts.
|
•
|
Long-term receivables. These primarily include payments receivable under a sales-type leasing arrangement and cost reimbursement payments receivable. These receivables were recorded at fair value on our consolidated balance sheets, using then-current market rates to estimate the present value of future cash flows.
|
•
|
Guarantees. At December 31, 2018, these guarantees primarily included an indemnification agreement we entered into in connection with the partial sale of our interest in BridgeTex. This indemnification was recorded at fair value on our consolidated balance sheets upon initial recognition, using probability-weighted potential outcome scenarios to estimate our possible liability for specific events covered by this indemnification. In first quarter 2019, certain litigation subject to the indemnification agreement was settled, which resulted in our paying $5.0 million under the indemnification agreement and recognizing the reduction of the remaining $11.0 million liability as an additional gain on disposition of assets on our consolidated statements of income.
|
•
|
Debt. The fair value of our publicly traded notes was based on the prices of those notes at December 31, 2018 and 2019; however, where recent observable market trades were not available, prices were determined using adjustments to the last traded value for that debt issuance or by adjustments to the prices of similar debt instruments of peer entities that are actively traded. The carrying amount of borrowings, if any, under our revolving credit facility and our commercial paper program approximates fair value due to the frequent repricing of these obligations.
|
|
|
|
|
|
|
Fair Value Measurements as of
December 31, 2018 using:
|
||||||||||||||
Assets (Liabilities)
|
|
Carrying Amount
|
|
Fair Value
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||
Commodity derivatives contracts
|
|
$
|
55,011
|
|
|
$
|
55,011
|
|
|
$
|
55,011
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate contracts
|
|
$
|
(8,126
|
)
|
|
$
|
(8,126
|
)
|
|
$
|
—
|
|
|
$
|
(8,126
|
)
|
|
$
|
—
|
|
Long-term receivables
|
|
$
|
20,844
|
|
|
$
|
20,844
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,844
|
|
Guarantees
|
|
$
|
(16,409
|
)
|
|
$
|
(16,409
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(16,409
|
)
|
Debt
|
|
$
|
(4,270,869
|
)
|
|
$
|
(4,224,373
|
)
|
|
$
|
—
|
|
|
$
|
(4,224,373
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
Fair Value Measurements as of
December 31, 2019 using:
|
||||||||||||||
Assets (Liabilities)
|
|
Carrying Amount
|
|
Fair Value
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||
Commodity derivatives contracts
|
|
$
|
(10,222
|
)
|
|
$
|
(10,222
|
)
|
|
$
|
(10,222
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Basis derivative agreement
|
|
$
|
(17,304
|
)
|
|
$
|
(17,304
|
)
|
|
$
|
—
|
|
|
$
|
(17,304
|
)
|
|
$
|
—
|
|
Long-term receivables
|
|
$
|
20,782
|
|
|
$
|
20,782
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,782
|
|
Guarantees
|
|
$
|
(408
|
)
|
|
$
|
(408
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(408
|
)
|
Debt
|
|
$
|
(4,706,075
|
)
|
|
$
|
(5,192,685
|
)
|
|
$
|
—
|
|
|
$
|
(5,192,685
|
)
|
|
$
|
—
|
|
15.
|
Commitments and Contingencies
|
16.
|
Major Customers and Concentration of Risks
|
17.
|
Related Party Transactions
|
Common units outstanding on January 1, 2017
|
227,783,916
|
January 2017—Settlement of employee LTIP awards
|
216,679
|
During 2017—Other(a)
|
23,961
|
Common units outstanding on December 31, 2017
|
228,024,556
|
January 2018—Settlement of employee LTIP awards
|
168,913
|
During 2018—Other(a)
|
1,691
|
Common units outstanding on December 31, 2018
|
228,195,160
|
February 2019—Settlement of employee LTIP awards
|
199,792
|
During 2019—Other(a)
|
8,476
|
Common units outstanding on December 31, 2019
|
228,403,428
|
(a)
|
Common units issued to settle the equity-based retainer paid to independent directors of our general partner.
|
•
|
right to receive distributions of our available cash within 45 days after the end of each quarter;
|
•
|
right to elect the board members of our general partner;
|
•
|
right to remove Magellan GP, LLC as our general partner upon a 100% vote of outstanding unitholders;
|
•
|
right to transfer common unit ownership to substitute common unitholders;
|
•
|
right to receive an annual report, containing audited financial statements and a report on those financial statements by our independent public accountants, within 120 days after the close of the fiscal year end;
|
•
|
right to receive information reasonably required for tax reporting purposes within 90 days after the close of the calendar year;
|
•
|
right to vote according to the unitholder’s percentage interest in us at any meeting that may be called by our general partner; and
|
•
|
right to inspect our books and records at the unitholder’s own expense.
|
Payment Date
|
|
Per Unit Cash Distribution Amount
|
|
Total Cash Distribution
|
||||
2/14/2017
|
|
$
|
0.8550
|
|
|
$
|
194,961
|
|
5/15/2017
|
|
0.8725
|
|
|
198,951
|
|
||
8/14/2017
|
|
0.8900
|
|
|
202,942
|
|
||
11/14/2017
|
|
0.9050
|
|
|
206,362
|
|
||
Total
|
|
$
|
3.5225
|
|
|
$
|
803,216
|
|
|
|
|
|
|
||||
2/14/2018
|
|
$
|
0.9200
|
|
|
$
|
209,940
|
|
5/15/2018
|
|
0.9375
|
|
|
213,933
|
|
||
8/14/2018
|
|
0.9575
|
|
|
218,497
|
|
||
11/14/2018
|
|
0.9775
|
|
|
223,061
|
|
||
Total
|
|
$
|
3.7925
|
|
|
$
|
865,431
|
|
|
|
|
|
|
||||
2/14/2019
|
|
$
|
0.9975
|
|
|
$
|
227,832
|
|
5/15/2019
|
|
1.0050
|
|
|
229,545
|
|
||
8/14/2019
|
|
1.0125
|
|
|
231,258
|
|
||
11/14/2019
|
|
1.0200
|
|
|
232,971
|
|
||
Total
|
|
$
|
4.0350
|
|
|
$
|
921,606
|
|
|
|
|
|
|
2018
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Revenue
|
|
$
|
678,779
|
|
|
$
|
644,091
|
|
|
$
|
638,020
|
|
|
$
|
865,683
|
|
Total costs and expenses
|
|
$
|
441,323
|
|
|
$
|
420,433
|
|
|
$
|
396,242
|
|
|
$
|
555,111
|
|
Operating margin
|
|
$
|
370,429
|
|
|
$
|
373,077
|
|
|
$
|
399,190
|
|
|
$
|
511,245
|
|
Net income
|
|
$
|
210,910
|
|
|
$
|
214,409
|
|
|
$
|
594,534
|
|
|
$
|
314,072
|
|
Basic net income per common unit
|
|
$
|
0.92
|
|
|
$
|
0.94
|
|
|
$
|
2.60
|
|
|
$
|
1.38
|
|
Diluted net income per common unit
|
|
$
|
0.92
|
|
|
$
|
0.94
|
|
|
$
|
2.60
|
|
|
$
|
1.37
|
|
|
|
|
|
|
|
|
|
|
||||||||
2019
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
628,935
|
|
|
$
|
701,699
|
|
|
$
|
656,596
|
|
|
$
|
740,682
|
|
Total costs and expenses
|
|
$
|
422,985
|
|
|
$
|
436,718
|
|
|
$
|
385,927
|
|
|
$
|
450,514
|
|
Operating margin
|
|
$
|
352,012
|
|
|
$
|
415,655
|
|
|
$
|
428,262
|
|
|
$
|
450,559
|
|
Net income
|
|
$
|
207,663
|
|
|
$
|
253,703
|
|
|
$
|
273,038
|
|
|
$
|
286,445
|
|
Basic net income per common unit
|
|
$
|
0.91
|
|
|
$
|
1.11
|
|
|
$
|
1.19
|
|
|
$
|
1.25
|
|
Diluted net income per common unit
|
|
$
|
0.91
|
|
|
$
|
1.11
|
|
|
$
|
1.19
|
|
|
$
|
1.25
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
•
|
Director Election Proposal;
|
•
|
Executive Officers of our General Partner;
|
•
|
Section 16(a) Beneficial Ownership Reporting Compliance;
|
•
|
Code of Ethics;
|
•
|
Corporate Governance – Director Nominations; and
|
•
|
Corporate Governance – Board Committees.
|
Item 11.
|
Executive Compensation
|
•
|
Compensation of Directors and Executive Officers;
|
•
|
Corporate Governance – Compensation Committee – Interlocks and Insider Participation; and
|
•
|
Compensation of Directors and Executive Officers – Compensation Committee Report.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
•
|
Securities Authorized for Issuance Under Equity Compensation Plans; and
|
•
|
Security Ownership of Certain Beneficial Owners and Management.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
•
|
Transactions with Related Persons, Promoters and Certain Control Persons; and
|
•
|
Corporate Governance – Director Independence.
|
Item 14.
|
Principal Accountant Fees and Services
|
|
|
|
|
|
Page
|
Covered by reports of independent auditors:
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
Not covered by reports of independent auditors:
|
|
|
|
Exhibit No.
|
|
Description
|
|
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Exhibit 3
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*(a)
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*(b)
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*(c)
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*(d)
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*(e)
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*(f)
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*(g)
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*(h)
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Exhibit 4
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*(a)
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*(b)
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*(c)
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*(d)
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*(e)
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*(f)
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*(g)
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*(h)
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*(i)
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*(j)
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*(k)
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*(l)
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*(m)
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*(n)
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(o)
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Exhibit 10
|
|
|
|
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|
*(a)
|
|
|
|
|
|
(b)
|
|
|
|
|
*
|
Each such exhibit has heretofore been filed with the Securities and Exchange Commission as part of the filing indicated and is incorporated herein by reference.
|
MAGELLAN MIDSTREAM PARTNERS, L.P.
(Registrant)
|
||
|
|
|
By:
|
|
MAGELLAN GP, LLC, its general partner
|
|
|
|
By:
|
|
/s/ JEFF HOLMAN
|
|
|
Jeff Holman
Senior Vice President, Chief Financial Officer and Treasurer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ MICHAEL N. MEARS
|
|
Chairman of the Board and Principal Executive Officer of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 18, 2020
|
Michael N. Mears
|
|
|
|
|
|
|
|
||
/s/ JEFF HOLMAN
|
|
Principal Financial and Accounting Officer of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 18, 2020
|
Jeff Holman
|
|
|
|
|
|
|
|
||
/s/ WALTER R. ARNHEIM
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 18, 2020
|
Walter R. Arnheim
|
|
|
|
|
|
|
|
||
/s/ ROBERT G. CROYLE
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 18, 2020
|
Robert G. Croyle
|
|
|
|
|
|
|
|
||
/s/ LORI A. GOBILLOT
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 18, 2020
|
Lori A. Gobillot
|
|
|
|
|
|
|
|
|
|
/s/ EDWARD J. GUAY
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 18, 2020
|
Edward J. Guay
|
|
|
|
|
|
|
|
|
|
/s/ CHANSOO JOUNG
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 18, 2020
|
Chansoo Joung
|
|
|
|
|
|
|
|
||
/s/ STACY P. METHVIN
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 18, 2020
|
Stacy P. Methvin
|
|
|
|
|
|
|
|
||
/s/ JAMES R. MONTAGUE
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 18, 2020
|
James R. Montague
|
|
|
|
|
|
|
|
|
|
/s/ BARRY R. PEARL
|
|
Director of Magellan GP, LLC, General Partner of Magellan Midstream Partners, L.P.
|
|
February 18, 2020
|
Barry R. Pearl
|
|
|
|
|
|
•
|
|
surety bond premiums to replace lost or stolen certificates, taxes and other governmental charges;
|
|
•
|
|
special charges for services requested by a unitholder; and
|
|
•
|
|
other similar fees or charges.
|
|
•
|
|
all cash (and cash equivalents) on hand at the end of the quarter;
|
|
•
|
|
less the amount of cash that our general partner determines in its reasonable discretion is necessary or appropriate to:
|
|
•
|
|
provide for the proper conduct of our business, including reserves for future capital expenditures and for anticipated future credit needs;
|
|
•
|
|
comply with applicable law, any of our debt instruments, or other agreements; or
|
|
•
|
|
provide funds for distributions to our unitholders for any one or more of the next four quarters;
|
|
•
|
|
plus any additional amount of cash that our general partner determines to distribute with respect to such quarter.
|
|
•
|
|
serve as a partner or sole member of certain of our subsidiaries;
|
|
•
|
|
engage directly in, or enter into or form any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in, any business activity that our operating partnerships (entities treated as partnerships for federal income tax purposes that are majority owned and controlled by us) are permitted to engage in by their respective partnership agreements and, in connection therewith, to exercise all of the rights and powers given to us under the agreements relating to such business activity;
|
|
•
|
|
engage directly in, or enter into or form any corporation, partnership, joint venture, limited liability company or other entity or arrangement to engage indirectly in, any business activity that our general partner approves and which lawfully may be conducted by a limited partnership organized pursuant to the Delaware Act; and
|
|
•
|
|
do anything necessary or appropriate to the foregoing, including the making of capital contributions or loans to our operating partnerships or any subsidiary thereof.
|
|
•
|
|
to elect the board of directors of our general partner;
|
|
•
|
|
to remove or replace our general partner;
|
|
•
|
|
to approve certain amendments to our partnership agreement; or
|
|
•
|
|
to take any other action under our partnership agreement,
|
|
(1)
|
the election of our general partner to dissolve us, if approved by the holders of a majority of our outstanding common units and, if our general partner is then an affiliate of The Williams Companies, Inc., after obtaining special approval;
|
|
(2)
|
the sale of all or substantially all of the assets and properties of us and our subsidiaries;
|
|
(3)
|
the entry of a decree of judicial dissolution; or
|
|
(4)
|
the withdrawal of our general partner or any other event that results in its ceasing to be the general partner other than by reason of a transfer of its general partner interest in accordance with the partnership agreement or withdrawal or removal following approval and admission of a successor.
|
|
•
|
|
our general partner;
|
|
•
|
|
any departing general partner;
|
|
•
|
|
any person who is or was an affiliate of our general partner or any departing general partner;
|
|
•
|
|
any person who is or was a member, partner, officer, director, employee, agent or trustee of our general partner, any departing general partner, or any affiliate of our general partner or any departing general partner; and
|
|
•
|
|
any person who is or was serving at the request of a general partner or any departing general partner or any affiliate of a general partner or any departing general partner as an officer, director, employee, member, partner, agent, fiduciary or trustee of another person.
|
|
•
|
|
a current list of the name and last known address of each limited partner;
|
|
•
|
|
a copy of our tax returns;
|
|
•
|
|
information as to the amount of cash, and a description and statement of the agreed value of any other property or services, contributed or to be contributed by each limited partner and the date on which each became a limited partner;
|
|
•
|
|
copies of our partnership agreement, certificate of limited partnership, related amendments and powers of attorney under which they have been executed;
|
|
•
|
|
information regarding the status of our business and financial condition; and
|
|
•
|
|
any other information regarding our affairs as is just and reasonable.
|
EBITDA less Maintenance Capital (including commodities)
|
The combined financial metrics will be reset to the greater of actual metric results or a Target level payout at results of $1,548 million or more.
|
Metrics
|
Weight
|
Threshold
|
Target
|
Stretch
|
EBITDA less Maintenance Capital (1) (2)
|
65%
|
$1,127
|
$1,237
|
$1,304
|
Commodities (1)(3)
|
10%
|
$164
|
$204
|
$244
|
Environmental & Safety Performance
|
25%
|
Discretionary
|
Discretionary
|
Discretionary
|
(1)
|
The overriding financial trigger will change the payout to at least a target level payout for the financial metrics when overall financial results have exceeded the trigger. The combined financial metrics will be reset to the greater of actual metric results or Target Level payouts when Magellan’s EBITDA less Maintenance Capital (including commodities) is $1,548 million or more.
|
(2)
|
EBITDA less Maintenance Capital includes any margin earned from crude oil marketing activities on the Longhorn or BridgeTex pipelines but excludes all other commodity-related activity.
|
(3)
|
Commodities exclude any margin earned from crude oil marketing activities on the Longhorn or BridgeTex pipelines.
|
|
Compensation
|
Timing of Payment(1)
|
Annual Board Retainer:(2)
Cash
Common Units
|
$80,000
$120,000(3)
|
Paid quarterly as of January 1st, April 1st, July 1st and October 1st
As of January 1st
|
Annual Chairman Retainer:(2)
Audit Committee
Compensation Committee
Conflicts Committee
Nominating and Governance Committee
Lead Director
|
$20,000
$15,000
$10,000
$15,000
$20,000
|
Paid quarterly as of January 1st, April 1st, July 1st and October 1st
|
Meeting Fees:
Board Meeting Fees
Committee Meeting Fees
|
$1,500 per meeting
$1,500 per meeting
|
Paid quarterly as of January 1st, April 1st, July 1st and October 1st
|
(1)
|
For newly elected directors or a newly appointed committee chairman, the annual board retainer and annual chairman retainer, if applicable, are payable pro-rata for the year of election.
|
(2)
|
Directors who resign from the board or relinquish their role of committee chairman after a payment date has occurred, but prior to the payment having been received, will receive a pro-rata annual board retainer and annual chairman retainer for the period of time between the payment date and the resignation/relinquishment.
|
(3)
|
The number of common units to be issued for the annual board retainer will be determined based on the closing price on the first business day immediately following the January 1st payment date.
|
1.
|
Grant of Phantom Units. The Company hereby grants to the Participant effective January 31, 2020 (the “Effective Date”), subject to the terms and conditions of the Magellan Midstream Partners Long-Term Incentive Plan, as amended and restated (the “Plan”), and this Agreement, the right to be eligible to receive a grant of [number of units] phantom units, with tandem distribution equivalent rights (“DERs”), of Magellan Midstream Partners, L.P. (the “Partnership”). These Units, including the tandem DERs, are referred to in this Agreement as “Phantom Units” during the Restricted Period (as defined in Section 4) and “Units” after the Restricted Period. The number of Units received at the end of the Restricted Period will be determined based on performance criteria, employment status at that time and any other relevant provisions of the Plan and this Agreement. Until the Phantom Units vest and are paid, the Participant shall have no rights as a unitholder of the Partnership with respect to the Phantom Units.
|
2.
|
Incorporation of Plan. The Plan is incorporated herein by reference, and all capitalized terms used herein, but not defined herein, shall have the meanings set forth in the Plan. The Participant acknowledges receipt of a copy of the Plan and hereby accepts the Phantom Units subject to all the terms and provisions of the Plan and this Agreement.
|
3.
|
Compensation Committee of the Board - Decisions and Interpretations. The Participant agrees to accept as binding, conclusive and final all decisions and interpretations of the Compensation Committee of the Board (the “Committee”) of the Company with respect to any questions arising under the Plan and this Agreement.
|
4.
|
Restricted Period of Phantom Units. The Restricted Period begins on the Effective Date and ends on the first of the following events to occur:
|
a.
|
December 31, 2022; or
|
b.
|
Your Termination of Affiliation (excluding any transfer to an Affiliate of the Company) with the Company, voluntarily for Good Reason, or involuntarily (other than due to Cause) within two years following a Change of Control as set forth in the Plan.
|
5.
|
Payment of Phantom Units and DERs.
|
a.
|
Eligibility. To be eligible to receive a payout of the Phantom Units at the end of the Restricted Period, the Participant must be employed by the Company or its Affiliates at the end of the Restricted Period, or must have terminated employment during the Restricted Period due to Retirement, death or Disability.
|
b.
|
Determination of Payout Amount. The final determination of the payout level of the Phantom Units will be based upon the performance metric outlined in Paragraph 7 and additional conditions outlined in Paragraph 8.
|
c.
|
DERs. At the end of the Restricted Period, the Company will pay to the Participant, or the Participant’s legal representative, the value of the DERs on the gross number of Units awarded to the Participant pursuant to the terms of this Agreement. The value of the DERs shall be the amount of all distributions per Unit that would have been earned and paid during the Restricted Period on the gross number of
|
d.
|
Timing of Payout. Subject to legal or contractual obligations, the Company will deliver to the Participant, or the Participant’s legal representative, as soon as practicable after the final determination of payout levels by the Committee, a number of Units equal in value to the number of Phantom Units calculated pursuant to Paragraphs 7 and 8, less the number of Units required to cover tax withholding requirements.
|
6.
|
Termination of Employment Due to Retirement, Death or Disability. In the event a Participant’s employment with the Company or its Affiliates terminates prior to the end of the Restricted Period due to Retirement, death or Disability, the initial target grant of Phantom Units will be prorated based upon the Participant’s months of employment between January 1, 2020 and December 31, 2022. Such prorated amount will continue to be restricted and subject to the terms of this Agreement until the Restricted Period ends as provided in Section 4.a above. All Phantom Units in excess of the prorated amount shall be forfeited.
|
7.
|
Performance Metric.
|
|
Payout Schedule
|
||||
|
Threshold
50%
Payout Level
|
|
Target
100%
Payout Level
|
|
Stretch
200%
Payout Level
|
2022 Distributable Cash Flow (“DCF”) per Unit
|
$X.XX
|
|
$X.XX
|
|
$X.XX
|
(including any margin earned from buy/sell transactions completed on the Longhorn or BridgeTex pipelines, but excluding all other commodity-related activity)
|
|
|
|
|
|
8.
|
Determination of Payout Level. The number of Units to be paid to the Participant will be determined based on performance relative to the performance metric payout schedule in Paragraph 7. No payout will occur for results below the 50% payout level. The payout for results achieved between each payout level will be interpolated.
|
9.
|
Other Provisions.
|
a.
|
The Participant understands and agrees that payments under this Agreement shall not be used for, or in the determination of, any other payment or benefit under any continuing agreement, plan, policy, practice or arrangement providing for the making of any payment or the provision of any benefits to or for the Participant or the Participant’s beneficiaries or representatives, including, without limitation, any employment agreement, any change of control severance protection plan or any employee benefit plan as defined in Section 3(3) of ERISA, including, but not limited to qualified and non-qualified retirement plans.
|
b.
|
Except as otherwise provided herein and in the Plan, in the event that the Participant’s employment with the Company or its Affiliates, or its or their successors, terminates prior to the vesting of the Phantom Units granted under this Agreement, such Phantom Units shall be forfeited.
|
c.
|
By signing this Agreement, the Participant represents and agrees that he or she will keep the terms, amount and fact of this Agreement completely confidential, and that, unless required to do so by law, he or she will not hereafter disclose any information concerning this Agreement to anyone including, but not limited to, any past, present or prospective employee or applicant for employment of the
|
d.
|
Neither the Phantom Units, nor the Participant’s interest in the Phantom Units, may be sold, assigned, transferred, pledged, hedged or otherwise disposed of or encumbered at any time prior to the vesting and payment of such Phantom Units under this Agreement.
|
e.
|
If the Participant at any time forfeits any or all of the Phantom Units pursuant to this Agreement, the Participant agrees that all of the Participant’s rights to and interest in the Phantom Units shall terminate upon forfeiture without payment of consideration.
|
f.
|
The Committee shall make the determination as to whether an event has occurred resulting in the forfeiture of the Phantom Units, in accordance with this Agreement and the Plan, and all determinations of the Committee shall be final and conclusive.
|
g.
|
With respect to the right to receive payment of the Phantom Units under this Agreement, nothing contained herein shall give the Participant any rights that are greater than those of a general creditor of the Company.
|
10.
|
Notices. All notices to the Company required hereunder shall be in writing and delivered by hand or by mail, addressed to Magellan GP, LLC, One Williams Center, Mail Drop 32, Tulsa, Oklahoma 74172, Attention: Compensation Department. Notices shall become effective upon their receipt by the Company if delivered in the forgoing manner.
|
1.
|
Grant of Phantom Units. The Company hereby grants to the Participant effective January 31, 2020 (the “Effective Date”), subject to the terms and conditions of the Magellan Midstream Partners Long-Term Incentive Plan, as amended and restated (the “Plan”), and this Agreement, the right to be eligible to receive a grant of [number of units] phantom units, with tandem distribution equivalent rights (“DERs”), of Magellan Midstream Partners, L.P. (the “Partnership”). These phantom units, including the tandem DERs, are referred to in this Agreement as “Phantom Units” during the Restricted Period (as defined in Section 4) and “Units” after the Restricted Period. Until the Phantom Units vest and are paid, the Participant shall have no rights as a unitholder of the Partnership with respect to the Phantom Units.
|
2.
|
Incorporation of Plan. The Plan is hereby incorporated herein by reference, and all capitalized terms used herein, but not defined herein, shall have the meanings set forth in the Plan. The Participant acknowledges receipt of a copy of the Plan and hereby accepts the Phantom Units subject to all the terms and provisions of the Plan and this Agreement.
|
3.
|
Compensation Committee of the Board - Decisions and Interpretations. The Participant agrees to accept as binding, conclusive and final all decisions and interpretations of the Compensation Committee of the Board (the “Committee”) of the Company with respect to any questions arising under the Plan and this Agreement.
|
4.
|
Restricted Period of Phantom Units. The Restricted Period begins on the Effective Date and ends on the first of the following events to occur:
|
a.
|
December 31, 2022; or
|
b.
|
Your Termination of Affiliation (excluding any transfer to an Affiliate of the Company) with the Company, voluntarily for Good Reason or involuntarily (other than due to Cause), within two years following a Change of Control as set forth in the Plan.
|
5.
|
Eligibility to Receive Units. The Participant will be eligible to receive a payout of the Phantom Units hereunder only if the Participant has been employed by the Company or its Affiliates, or its or their successors, continuously throughout the Restricted Period and continues to be so employed on the last day of the Restricted Period, unless the Participant terminates employment during the Restricted Period due to Retirement, death or Disability, in which case, the Phantom Units will vest as provided in Section 7 below.
|
6.
|
Payment of Units and DERs. Subject to legal or contractual obligations and Participant’s eligibility to receive a payout of the Phantom Units as set forth in Section 5, the Company will deliver to the Participant, or the Participant’s legal representative, as soon as practicable after the Restricted Period, a number of Units equal to the number of vested Phantom Units net of any Units used to satisfy all or part of tax withholding requirements. The number of Units required to cover tax withholding requirements will be based on the closing price of the Units on the last business day of the Restricted Period. In addition, as soon as practicable after the end of the Restricted Period, the Company will pay to the Participant, or the Participant’s legal representative, the value of the DERs on the gross number of Units awarded to the Participant pursuant to the terms of this Agreement. The value of the DERs shall be the amount of all distributions per Unit that would have been earned and paid during the Restricted Period on the gross number of Units awarded, and no interest shall be paid on such amount. Such payment of the DERs shall be in cash and subject to tax withholding requirements.
|
7.
|
Termination of Employment Due to Retirement, Death or Disability. In the event a Participant’s employment with the Company or its Affiliates terminates prior to the end of the Restricted Period due to Retirement, death or Disability and on the date of such termination due to Retirement, death or Disability the Participant would have met the eligibility requirements of Section 5, the initial target grant of Phantom Units will be prorated based upon the Participant’s months of employment between January 1, 2020 and December 31, 2022. Such prorated amount will continue to be restricted and subject to the terms of this Agreement until the Restricted Period ends. All Phantom Units in excess of the prorated amount shall be forfeited.
|
a.
|
The Participant understands and agrees that payments under this Agreement shall not be used for, or in the determination of, any other payment or benefit under any continuing agreement, plan, policy, practice or arrangement providing for the making of any payment or the provision of any benefits to or for the Participant or to the Participant’s beneficiaries or representatives, including, without limitation, any employment agreement, any change of control severance protection plan or any employee benefit plan as defined in Section 3(3) of ERISA, including, but not limited to qualified and non-qualified retirement plans.
|
b.
|
Except as otherwise provided herein, in the event that the Participant’s employment with the Company or its Affiliates, or its or their successors, terminates for any reason prior to the end of the Restricted Period, such Phantom Units shall be forfeited.
|
c.
|
By signing this Agreement, the Participant represents and agrees that he or she will keep the terms, amount and fact of this Agreement completely confidential, and that, unless required to do so by law, he or she will not hereafter disclose any information concerning this Agreement to anyone including, but not limited to, any past, present or prospective employee or applicant for employment of the Company or its Affiliates and any past, present or prospective customer of the Company, the Partnership or their Affiliates.
|
d.
|
Neither the Phantom Units, nor the Participant’s interest in the Phantom Units, may be sold, assigned, transferred, pledged, hedged or otherwise disposed of or encumbered at any time prior to the vesting and payment of such Phantom Units under this Agreement.
|
e.
|
If the Participant at any time forfeits any or all of the Phantom Units pursuant to this Agreement, the Participant agrees that all of the Participant’s rights to and interest in the forfeited Phantom Units, including the tandem DERs, shall terminate upon forfeiture without payment of consideration.
|
f.
|
The Committee shall make the determination as to whether an event has occurred resulting in the forfeiture of the Phantom Units, in accordance with this Agreement and the Plan, and all determinations of the Committee shall be final and conclusive.
|
g.
|
With respect to the right to receive payment of the Phantom Units under this Agreement, nothing contained herein shall give the Participant any rights that are greater than those of a general creditor of the Company.
|
9.
|
Notices. All notices to the Company required hereunder shall be in writing and delivered by hand or by mail, addressed to Magellan GP, LLC, One Williams Center, Mail Drop 32, Tulsa, Oklahoma 74172, Attention: Compensation Department. Notices shall become effective upon their receipt by the Company if delivered in the forgoing manner.
|
1.
|
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
|
2.
|
Full, fair, accurate, timely and understandable disclosure in reports and documents that the Partnership files with, or submits to, the U. S. Securities and Exchange Commission and in other public communications made by the Partnership;
|
3.
|
Compliance with applicable governmental laws, rules and regulations;
|
4.
|
The prompt internal reporting of violations to the Code to the Chairman of the Audit Committee of the Company; and
|
5.
|
Accountability for adherence to the Code.
|
1)
|
Registration Statement (Form S-3ASR No. 333-223097) of Magellan Midstream Partners, L.P. (the Partnership),
|
2)
|
Registration Statement (Form S-8 No. 333-212836) pertaining to the Long-Term Incentive Plan of the Partnership,
|
3)
|
Registration Statement (Form S-8 No. 333-176062) pertaining to the Long-Term Incentive Plan of the Partnership,
|
4)
|
Registration Statement (Form S-8 No. 333-71670) pertaining to the Long-Term Incentive Plan of the Partnership, as amended by Post-Effective Amendment No. 1, and
|
5)
|
Registration Statement (Form S-8 No. 333-147206) pertaining to the Long-Term Incentive Plan of the Partnership;
|
1.
|
I have reviewed this Annual Report on Form 10-K for the fiscal year ending December 31, 2019 (this “report”) of Magellan Midstream Partners, L.P. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Michael N. Mears
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Michael N. Mears, principal executive officer
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1.
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I have reviewed this Annual Report on Form 10-K for the fiscal year ending December 31, 2019 (this “report”) of Magellan Midstream Partners, L.P. (the “registrant”);
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Jeff Holman
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Jeff Holman, principal financial and accounting officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
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/s/ Michael N. Mears
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Michael N. Mears, Chief Executive Officer
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Date: February 18, 2020
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
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/s/ Jeff Holman
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Jeff Holman, Chief Financial Officer
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Date: February 18, 2020
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