|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
27‑4151603
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
|
incorporation or organization)
|
Identification No.)
|
|
|
|
|
|
|
|
19100 Ridgewood Pkwy, San Antonio, Texas 78259-1828
|
||
(Address of principal executive offices) (Zip Code)
|
||
|
||
210-626-6000
|
||
(Registrant’s telephone number, including area code)
|
|
Large accelerated filer
|
þ
|
|
Accelerated filer
|
o
|
|
|
Non-accelerated filer
|
o
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
o
|
|
|
TABLE OF CONTENTS
|
PART I. FINANCIAL INFORMATION
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PART II. OTHER INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
2
|
Tesoro Logistics LP
|
|
|
FINANCIAL STATEMENTS
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016 (a)
|
|
2015 (a)
|
|
2016 (a)
|
|
2015 (a)
|
||||||||
|
(In millions, except per unit amounts)
|
||||||||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Affiliate
|
$
|
184
|
|
|
$
|
152
|
|
|
$
|
521
|
|
|
$
|
454
|
|
Third-party
|
124
|
|
|
130
|
|
|
380
|
|
|
366
|
|
||||
Total Revenues
|
308
|
|
|
282
|
|
|
901
|
|
|
820
|
|
||||
Costs and Expenses
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
110
|
|
|
113
|
|
|
332
|
|
|
323
|
|
||||
Imbalance settlement gains and reimbursements
|
(6
|
)
|
|
(10
|
)
|
|
(19
|
)
|
|
(29
|
)
|
||||
General and administrative expenses
|
24
|
|
|
28
|
|
|
70
|
|
|
81
|
|
||||
Depreciation and amortization expenses
|
45
|
|
|
45
|
|
|
134
|
|
|
133
|
|
||||
Loss on asset disposals and impairments
|
2
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Operating Income
|
133
|
|
|
106
|
|
|
381
|
|
|
312
|
|
||||
Interest and financing costs, net
|
(49
|
)
|
|
(37
|
)
|
|
(138
|
)
|
|
(112
|
)
|
||||
Equity in earnings of equity method investments
|
3
|
|
|
2
|
|
|
10
|
|
|
6
|
|
||||
Other income, net
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
Net Earnings
|
$
|
87
|
|
|
$
|
71
|
|
|
$
|
259
|
|
|
$
|
206
|
|
|
|
|
|
|
|
|
|
||||||||
Loss attributable to Predecessors
|
$
|
1
|
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
17
|
|
Net earnings attributable to noncontrolling interest
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(19
|
)
|
||||
Net Earnings Attributable to Partners
|
88
|
|
|
74
|
|
|
263
|
|
|
204
|
|
||||
General partner’s interest in net earnings, including incentive distribution rights
|
(40
|
)
|
|
(20
|
)
|
|
(108
|
)
|
|
(51
|
)
|
||||
Limited Partners’ Interest in Net Earnings
|
$
|
48
|
|
|
$
|
54
|
|
|
$
|
155
|
|
|
$
|
153
|
|
|
|
|
|
|
|
|
|
||||||||
Net Earnings per Limited Partner Unit
|
|
|
|
|
|
|
|
||||||||
Common - basic
|
$
|
0.46
|
|
|
$
|
0.62
|
|
|
$
|
1.58
|
|
|
$
|
1.85
|
|
Common - diluted
|
$
|
0.46
|
|
|
$
|
0.62
|
|
|
$
|
1.58
|
|
|
$
|
1.85
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Limited Partner Units Outstanding
|
|
|
|
|
|
|
|
||||||||
Common units - basic
|
101.4
|
|
|
86.6
|
|
|
96.7
|
|
|
82.5
|
|
||||
Common units - diluted
|
101.4
|
|
|
86.7
|
|
|
96.8
|
|
|
82.6
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash Distributions Paid Per Unit
|
$
|
0.8420
|
|
|
$
|
0.7225
|
|
|
$
|
2.4320
|
|
|
$
|
2.0850
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Notes 1 and 2 for further discussion.
|
|
|
September 30, 2016
|
3
|
FINANCIAL STATEMENTS
|
|
September 30,
2016 |
|
December 31, 2015 (a)
|
||||
|
(In millions, except unit amounts)
|
||||||
ASSETS
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
497
|
|
|
$
|
16
|
|
Receivables, net of allowance for doubtful accounts
|
|
|
|
||||
Trade
|
123
|
|
|
139
|
|
||
Affiliate
|
92
|
|
|
85
|
|
||
Prepayments and other current assets
|
31
|
|
|
12
|
|
||
Total Current Assets
|
743
|
|
|
252
|
|
||
Property, Plant and Equipment, Net
|
3,129
|
|
|
3,467
|
|
||
Acquired Intangibles, Net
|
955
|
|
|
976
|
|
||
Goodwill
|
117
|
|
|
130
|
|
||
Equity Method Investments
|
342
|
|
|
58
|
|
||
Other Noncurrent Assets, Net
|
33
|
|
|
26
|
|
||
Total Assets
|
$
|
5,319
|
|
|
$
|
4,909
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Accounts payable
|
|
|
|
||||
Trade
|
$
|
56
|
|
|
$
|
84
|
|
Affiliate
|
47
|
|
|
48
|
|
||
Accrued interest and financing costs
|
84
|
|
|
31
|
|
||
Other current liabilities
|
39
|
|
|
59
|
|
||
Total Current Liabilities
|
226
|
|
|
222
|
|
||
Debt, Net of Unamortized Issuance Costs
|
3,382
|
|
|
2,844
|
|
||
Other Noncurrent Liabilities
|
48
|
|
|
49
|
|
||
Total Liabilities
|
3,656
|
|
|
3,115
|
|
||
Commitments and Contingencies (Note 6)
|
|
|
|
|
|
||
Equity
|
|
|
|
||||
Equity of Predecessors
|
—
|
|
|
16
|
|
||
Common unitholders;
102,096,039
units issued and outstanding (93,478,326 in 2015)
|
1,729
|
|
|
1,707
|
|
||
General partner;
2,083,330
units issued and outstanding (1,900,515 in 2015)
|
(66
|
)
|
|
(13
|
)
|
||
Noncontrolling interest
|
—
|
|
|
84
|
|
||
Total Equity
|
1,663
|
|
|
1,794
|
|
||
Total Liabilities and Equity
|
$
|
5,319
|
|
|
$
|
4,909
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Notes 1 and 2 for further discussion.
|
4
|
Tesoro Logistics LP
|
|
|
FINANCIAL STATEMENTS
|
|
Nine Months Ended
September 30, |
||||||
|
2016 (a)
|
|
2015 (a)
|
||||
|
(In millions)
|
||||||
Cash Flows From (Used In) Operating Activities:
|
|
|
|
||||
Net earnings
|
$
|
259
|
|
|
$
|
206
|
|
Adjustments to reconcile net earnings to net cash from operating activities:
|
|
|
|
||||
Depreciation and amortization expenses
|
134
|
|
|
133
|
|
||
Other non-cash operating activities
|
27
|
|
|
12
|
|
||
Changes in current assets and current liabilities
|
9
|
|
|
(1
|
)
|
||
Changes in noncurrent assets and noncurrent liabilities
|
(4
|
)
|
|
(2
|
)
|
||
Net cash from operating activities
|
425
|
|
|
348
|
|
||
Cash Flows Used In Investing Activities:
|
|
|
|
||||
Capital expenditures
|
(132
|
)
|
|
(237
|
)
|
||
Acquisitions, net of cash
|
(30
|
)
|
|
—
|
|
||
Other investing activities
|
(4
|
)
|
|
(6
|
)
|
||
Net cash used in investing activities
|
(166
|
)
|
|
(243
|
)
|
||
Cash Flows From (Used In) Financing Activities:
|
|
|
|
||||
Borrowings under revolving credit agreements
|
761
|
|
|
346
|
|
||
Repayments under revolving credit agreements
|
(666
|
)
|
|
(326
|
)
|
||
Proceeds from debt offering
|
701
|
|
|
—
|
|
||
Repayment of term loan facility
|
(250
|
)
|
|
—
|
|
||
Proceeds from issuance of units, net of issuance costs
|
364
|
|
|
71
|
|
||
Quarterly distributions to unitholders
|
(234
|
)
|
|
(173
|
)
|
||
Quarterly distributions to general partner
|
(95
|
)
|
|
(48
|
)
|
||
Distributions to noncontrolling interest
|
—
|
|
|
(20
|
)
|
||
Distributions in connection with acquisitions
|
(400
|
)
|
|
—
|
|
||
Financing costs
|
(17
|
)
|
|
—
|
|
||
Contributions from general partner
|
4
|
|
|
—
|
|
||
Sponsor contributions of equity to the Predecessors
|
34
|
|
|
19
|
|
||
Capital contributions by affiliate
|
21
|
|
|
18
|
|
||
Other financing activities
|
(1
|
)
|
|
—
|
|
||
Net cash from (used in) financing activities
|
222
|
|
|
(113
|
)
|
||
Increase (Decrease) in Cash and Cash Equivalents
|
481
|
|
|
(8
|
)
|
||
Cash and Cash Equivalents, Beginning of Period
|
16
|
|
|
19
|
|
||
Cash and Cash Equivalents, End of Period
|
$
|
497
|
|
|
$
|
11
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Notes 1 and 2 for further discussion.
|
|
|
September 30, 2016
|
5
|
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
6
|
Tesoro Logistics LP
|
|
|
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
•
|
the short term duration of the instruments (less than
one percent
of our trade payables and approximately
one percent
of our trade receivables have been outstanding for greater than
90 days
); and
|
•
|
the expected future insignificance of bad debt expense, which includes an evaluation of counterparty credit risk.
|
|
|
September 30, 2016
|
7
|
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
8
|
Tesoro Logistics LP
|
|
|
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues (a)
|
$
|
184
|
|
|
$
|
152
|
|
|
$
|
521
|
|
|
$
|
454
|
|
Operating expenses
|
40
|
|
|
33
|
|
|
113
|
|
|
93
|
|
||||
Imbalance settlement gains and reimbursements
from Tesoro (b)
|
5
|
|
|
12
|
|
|
17
|
|
|
31
|
|
||||
General and administrative expenses
|
18
|
|
|
16
|
|
|
51
|
|
|
51
|
|
(a)
|
Tesoro accounted for
60%
and
54%
of our total revenues for the
three
months ended
September 30, 2016
and
2015
, respectively, and
58%
and
55%
of our total revenues for the
nine
months ended
September 30, 2016
and
2015
, respectively.
|
(b)
|
Includes imbalance settlement gains of
$2 million
and for both the
three
months ended
September 30, 2016
and
2015
, and
$5 million
and
$6 million
for the
nine
months ended
September 30, 2016
and
2015
, respectively. Also includes reimbursements from Tesoro pursuant predominantly to the Amended Omnibus Agreement and the Carson Assets Indemnity Agreement of
$3 million
and
$10 million
for the
three
months ended
September 30, 2016
and
2015
, respectively, and
$12 million
and
$25 million
for the
nine
months ended
September 30, 2016
and
2015
, respectively.
|
|
September 30,
2016 |
|
December 31, 2015
|
||||
Gathering (a)
|
$
|
1,379
|
|
|
$
|
1,700
|
|
Processing
|
573
|
|
|
565
|
|
||
Terminalling and Transportation (b)
|
1,690
|
|
|
1,629
|
|
||
Property, Plant and Equipment, at Cost
|
3,642
|
|
|
3,894
|
|
||
Accumulated depreciation (a) (b)
|
(513
|
)
|
|
(427
|
)
|
||
Property, Plant and Equipment, Net
|
$
|
3,129
|
|
|
$
|
3,467
|
|
(a)
|
We recognized a decrease of
$363 million
to net property, plant and equipment as of January 1, 2016 as a result of the deconsolidation of RGS. See Note 4 for further discussion of the deconsolidation of RGS.
|
(b)
|
Property, plant and equipment transferred to the Partnership in the Alaska Storage and Terminalling Assets acquisition was recorded at historical costs. TLLP recorded property, plant and equipment of
$77 million
and
$47 million
as of
September 30, 2016
and
December 31, 2015
, respectively, and accumulated depreciation of
$30 million
for both
September 30, 2016
and
December 31, 2015
.
|
|
|
September 30, 2016
|
9
|
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
•
|
RGS.
We have a
78%
interest in RGS, which owns and operates the infrastructure that transports gas from certain fields to several re-delivery points in southwestern Wyoming, including natural gas processing facilities that are owned by us or a third party. Prior to 2016, we consolidated RGS, however, upon our reassessment performed in conjunction with the adoption of ASU 2015-02 as of January 1, 2016, we determined RGS represents a variable interest entity to us for which we are not the primary beneficiary. Under the limited liability company agreement, we do not have voting rights commensurate with our economic interest due to veto rights available to our partner in RGS. Certain business decisions, including, but not limited to, decisions with respect to significant expenditures or contractual commitments, annual budgets, material financings, dispositions of assets or amending the members’ gas servicing agreements, require unanimous approval of the members. For amounts previously consolidated in our financial statements as of and for the year ended December 31, 2015, refer to the amounts shown in the Non-Guarantor column in the condensed consolidating financial information presented in Note 16 in our annual report on Form 10-K referenced herein.
|
•
|
THREE RIVERS GATHERING, LLC (“TRG”).
We own a
50%
interest in TRG which operates natural gas gathering assets within the southeastern Uinta Basin and is primarily supported by long-term, fee-based gas gathering agreements with minimum volume commitments.
|
•
|
UINTAH BASIN FIELD SERVICES, L.L.C. (“UBFS”).
We own a
38%
interest in UBFS which owns and operates the natural gas gathering infrastructure located in the southeastern Uinta Basin and is supported by long-term, fee-based gas gathering agreements that contain firm throughput commitments, which generate fees whether or not the capacity is used, and is operated by us.
|
|
RGS
|
|
TRG
|
|
UBFS
|
|
Total
|
||||||||
Balance at December 31, 2015
|
$
|
—
|
|
|
$
|
42
|
|
|
$
|
16
|
|
|
$
|
58
|
|
Effect of deconsolidation (a)
|
295
|
|
|
—
|
|
|
—
|
|
|
295
|
|
||||
Equity in earnings
|
6
|
|
|
2
|
|
|
2
|
|
|
10
|
|
||||
Distributions received
|
(16
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(21
|
)
|
||||
Balance at September 30, 2016
|
$
|
285
|
|
|
$
|
41
|
|
|
$
|
16
|
|
|
$
|
342
|
|
(a)
|
We recognized an increase of
$295 million
to equity method investments as of January 1, 2016 as a result of the deconsolidation of RGS in addition to a cumulative effect reduction to opening equity of
$2 million
related to the difference in earnings under the equity method of accounting in prior periods. The carrying amount of our investment in RGS exceeded the underlying equity in net assets by
$137 million
at
September 30, 2016
.
|
|
September 30,
2016 |
|
December 31, 2015
|
||||
Total debt
|
$
|
3,428
|
|
|
$
|
2,883
|
|
Unamortized issuance costs (a)
|
(46
|
)
|
|
(39
|
)
|
||
Debt, Net of Unamortized Issuance Costs
|
$
|
3,382
|
|
|
$
|
2,844
|
|
(a)
|
Includes unamortized premiums of
$4 million
associated with our senior notes at both
September 30, 2016
and
December 31, 2015
.
|
10
|
Tesoro Logistics LP
|
|
|
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
|
Total
Capacity
|
|
Amount Borrowed as of September 30, 2016
|
|
Outstanding
Letters of Credit
|
|
Available Capacity
|
|
Expiration
|
||||||||
TLLP Revolving Credit Facility
|
$
|
600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
600
|
|
|
January 29, 2021
|
TLLP Dropdown Credit Facility
|
1,000
|
|
|
400
|
|
|
—
|
|
|
600
|
|
|
January 29, 2021
|
||||
Total Credit Facilities
|
$
|
1,600
|
|
|
$
|
400
|
|
|
$
|
—
|
|
|
$
|
1,200
|
|
|
|
|
|
September 30, 2016
|
11
|
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
12
|
Tesoro Logistics LP
|
|
|
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
|
|
September 30, 2016
|
13
|
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
|
|
|
Partnership
|
|
|
|
|
||||||||||||
|
Equity of Predecessors (a)
|
|
Common
|
|
General Partner
|
|
Noncontrolling Interest
|
|
Total
|
||||||||||
Balance at December 31, 2015
|
$
|
16
|
|
|
$
|
1,707
|
|
|
$
|
(13
|
)
|
|
$
|
84
|
|
|
$
|
1,794
|
|
Sponsor contributions of equity to the Predecessors
|
34
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|||||
Loss attributable to the Predecessors
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||
Allocation of net assets acquired by the unitholders (b)
|
(46
|
)
|
|
40
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|||||
Equity offering under ATM Program, net of issuance costs
|
—
|
|
|
71
|
|
|
—
|
|
|
—
|
|
|
71
|
|
|||||
Proceeds from issuance of units, net of issuance costs
|
—
|
|
|
293
|
|
|
—
|
|
|
—
|
|
|
293
|
|
|||||
Effect of deconsolidation of RGS (c)
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(84
|
)
|
|
(86
|
)
|
|||||
Quarterly distributions to unitholders and general partner(d)
|
—
|
|
|
(234
|
)
|
|
(95
|
)
|
|
—
|
|
|
(329
|
)
|
|||||
Distributions to unitholders and general partner related to acquisitions (b)
|
—
|
|
|
(321
|
)
|
|
(79
|
)
|
|
—
|
|
|
(400
|
)
|
|||||
Net earnings attributable to partners
|
—
|
|
|
154
|
|
|
109
|
|
|
—
|
|
|
263
|
|
|||||
Contributions (e)
|
—
|
|
|
17
|
|
|
2
|
|
|
—
|
|
|
19
|
|
|||||
Other
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
8
|
|
|||||
Balance at September 30, 2016
|
$
|
—
|
|
|
$
|
1,729
|
|
|
$
|
(66
|
)
|
|
$
|
—
|
|
|
$
|
1,663
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
(b)
|
Distributions to unitholders and general partner include
$400 million
in cash payments for the Alaska Storage and Terminalling Assets acquisition from Tesoro. As an entity under common control with Tesoro, we record the assets that we acquire from Tesoro in our consolidated balance sheets at Tesoro’s historical book value instead of fair value, and any excess of cash paid over the historical book value of the assets acquired from Tesoro is recorded within equity. As a result of this accounting treatment, this transaction resulted in a net decrease of
$354 million
in our equity balance during the
nine
months ended
September 30, 2016
.
|
(c)
|
As a result of the reassessment performed, we deconsolidated RGS causing the derecognition of noncontrolling interest and an opening equity impact totaling
$86 million
. The cumulative effect to opening equity of
$2 million
related to the difference in earnings under the equity method of accounting in prior periods.
|
(d)
|
Represents cash distributions declared and paid during the
nine
months ended
September 30, 2016
relating to the fourth quarter of
2015
through the second quarter of
2016
.
|
(e)
|
Includes Tesoro and TLGP contributions to the Partnership primarily related to reimbursements for capital spending pursuant predominantly to the Amended Omnibus Agreement and the Carson Assets Indemnity Agreement.
|
14
|
Tesoro Logistics LP
|
|
|
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net earnings
|
$
|
87
|
|
|
$
|
71
|
|
|
$
|
259
|
|
|
$
|
206
|
|
Net earnings attributable to noncontrolling interest
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(19
|
)
|
||||
Special allocations of net earnings (“Special Allocations”) (a)
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Net earnings, excluding noncontrolling interest and including Special Allocations
|
89
|
|
|
68
|
|
|
261
|
|
|
187
|
|
||||
General partner’s distributions
|
(3
|
)
|
|
(1
|
)
|
|
(7
|
)
|
|
(4
|
)
|
||||
General partner’s IDRs (b)
|
(39
|
)
|
|
(19
|
)
|
|
(105
|
)
|
|
(47
|
)
|
||||
Limited partners’ distributions on common units
|
(89
|
)
|
|
(66
|
)
|
|
(250
|
)
|
|
(186
|
)
|
||||
Distributions greater than earnings
|
$
|
(42
|
)
|
|
$
|
(18
|
)
|
|
$
|
(101
|
)
|
|
$
|
(50
|
)
|
General partner’s earnings:
|
|
|
|
|
|
|
|
||||||||
Distributions
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
7
|
|
|
$
|
4
|
|
General partner’s IDRs (b)
|
39
|
|
|
19
|
|
|
105
|
|
|
47
|
|
||||
Allocation of distributions greater than earnings (c)
|
(2
|
)
|
|
(6
|
)
|
|
(6
|
)
|
|
(17
|
)
|
||||
Total general partner’s earnings
|
$
|
40
|
|
|
$
|
14
|
|
|
$
|
106
|
|
|
$
|
34
|
|
Limited partners’ earnings on common units:
|
|
|
|
|
|
|
|
||||||||
Distributions
|
$
|
89
|
|
|
$
|
66
|
|
|
$
|
250
|
|
|
$
|
186
|
|
Special Allocations (a)
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||
Allocation of distributions greater than earnings
|
(40
|
)
|
|
(12
|
)
|
|
(95
|
)
|
|
(33
|
)
|
||||
Total limited partners’ earnings on common units
|
$
|
47
|
|
|
$
|
54
|
|
|
$
|
153
|
|
|
$
|
153
|
|
Weighted average limited partner units outstanding:
|
|
|
|
|
|
|
|
||||||||
Common units - basic
|
101.4
|
|
|
86.6
|
|
|
96.7
|
|
|
82.5
|
|
||||
Common units - diluted
|
101.4
|
|
|
86.7
|
|
|
96.8
|
|
|
82.6
|
|
||||
Net earnings per limited partner unit:
|
|
|
|
|
|
|
|
||||||||
Common - basic
|
$
|
0.46
|
|
|
$
|
0.62
|
|
|
$
|
1.58
|
|
|
$
|
1.85
|
|
Common - diluted
|
$
|
0.46
|
|
|
$
|
0.62
|
|
|
$
|
1.58
|
|
|
$
|
1.85
|
|
(a)
|
Normal allocations according to percentage interests are made after giving effect, if any, to priority income allocations in an amount equal to incentive cash distributions fully allocated to the general partner and any special allocations. The adjustment reflects the special allocation to common units held by TLGP for the interest incurred in connection with borrowings on the Dropdown Credit Facility in lieu of using cash on hand to fund the Alaska Storage and Terminalling Assets acquisition during the
three
and
nine
months ended
September 30, 2016
.
|
(b)
|
IDRs entitle the general partner to receive increasing percentages, up to
50%
, of quarterly distributions in excess of
$0.3881
per unit per quarter. The amount above reflects earnings distributed to our general partner net of
$3 million
and
$8 million
of IDRs for the
three
and
nine
months ended
September 30, 2015
, respectively, waived by TLGP. See Note 12 of our Annual Report on Form 10-K for the year ended
December 31, 2015
, for further discussion related to IDRs.
|
(c)
|
We have revised the historical allocation of general partner earnings to include the Predecessors’ losses of
$1 million
and
$4 million
for the
three
and
nine
months ended
September 30, 2016
, respectively, and
$6 million
and
$17 million
for the
three
and
nine
months ended
September 30, 2015
, respectively.
|
|
|
September 30, 2016
|
15
|
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
Quarter Ended
|
Quarterly Distribution Per Unit
|
|
Total Cash Distribution including general partner IDRs (in millions)
|
|
Date of Distribution
|
|
Unitholders Record Date
|
||||
December 31, 2015
|
$
|
0.780
|
|
|
$
|
98
|
|
|
February 12, 2016
|
|
February 2, 2016
|
March 31, 2016
|
0.810
|
|
|
108
|
|
|
May 13, 2016
|
|
May 2, 2016
|
||
June 30, 2016
|
0.842
|
|
|
123
|
|
|
August 12, 2016
|
|
August 2, 2016
|
||
September 30, 2016 (a)
|
0.875
|
|
|
131
|
|
|
November 14, 2016
|
|
November 4, 2016
|
(a)
|
This distribution was declared on
October 18, 2016
and will be paid on the date of distribution.
|
16
|
Tesoro Logistics LP
|
|
|
NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Gathering:
|
|
|
|
|
|
|
|
||||||||
Affiliate
|
$
|
21
|
|
|
$
|
18
|
|
|
$
|
61
|
|
|
$
|
71
|
|
Third-party
|
61
|
|
|
69
|
|
|
194
|
|
|
182
|
|
||||
Total Gathering
|
82
|
|
|
87
|
|
|
255
|
|
|
253
|
|
||||
Processing:
|
|
|
|
|
|
|
|
||||||||
Affiliate
|
23
|
|
|
26
|
|
|
74
|
|
|
71
|
|
||||
Third-party
|
46
|
|
|
45
|
|
|
134
|
|
|
134
|
|
||||
Total Processing
|
69
|
|
|
71
|
|
|
208
|
|
|
205
|
|
||||
Terminalling and Transportation:
|
|
|
|
|
|
|
|
||||||||
Affiliate
|
140
|
|
|
108
|
|
|
386
|
|
|
312
|
|
||||
Third-party
|
17
|
|
|
16
|
|
|
52
|
|
|
50
|
|
||||
Total Terminalling and Transportation
|
157
|
|
|
124
|
|
|
438
|
|
|
362
|
|
||||
Total Segment Revenues
|
$
|
308
|
|
|
$
|
282
|
|
|
$
|
901
|
|
|
$
|
820
|
|
|
|
|
|
|
|
|
|
||||||||
Segment Operating Income
|
|
|
|
|
|
|
|
||||||||
Gathering
|
$
|
31
|
|
|
$
|
42
|
|
|
$
|
107
|
|
|
$
|
121
|
|
Processing
|
29
|
|
|
29
|
|
|
85
|
|
|
77
|
|
||||
Terminalling and Transportation
|
85
|
|
|
51
|
|
|
226
|
|
|
157
|
|
||||
Total Segment Operating Income
|
145
|
|
|
122
|
|
|
418
|
|
|
355
|
|
||||
Unallocated general and administrative expenses
|
(12
|
)
|
|
(16
|
)
|
|
(37
|
)
|
|
(43
|
)
|
||||
Interest and financing costs, net
|
(49
|
)
|
|
(37
|
)
|
|
(138
|
)
|
|
(112
|
)
|
||||
Equity in earnings of equity method investments
|
3
|
|
|
2
|
|
|
10
|
|
|
6
|
|
||||
Other income, net
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
Net Earnings
|
$
|
87
|
|
|
$
|
71
|
|
|
$
|
259
|
|
|
$
|
206
|
|
|
|
|
|
|
|
|
|
||||||||
Capital Expenditures
|
|
|
|
|
|
|
|
||||||||
Gathering
|
$
|
21
|
|
|
$
|
72
|
|
|
$
|
67
|
|
|
$
|
177
|
|
Processing
|
2
|
|
|
5
|
|
|
15
|
|
|
10
|
|
||||
Terminalling and Transportation
|
19
|
|
|
16
|
|
|
43
|
|
|
50
|
|
||||
Total Capital Expenditures
|
$
|
42
|
|
|
$
|
93
|
|
|
$
|
125
|
|
|
$
|
237
|
|
|
|
September 30, 2016
|
17
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
•
|
focus on opportunities to provide committed fee-based logistics services to Tesoro and third parties;
|
•
|
evaluate investment opportunities that may arise from the growth of Tesoro’s refining and marketing business or from increased third-party activity to make capital investments to expand our existing asset base;
|
•
|
pursue acquisitions of complementary assets from Tesoro as well as third parties; and
|
•
|
seek to enhance the profitability of our existing assets by pursuing opportunities to add Tesoro and third-party volumes, improve operating efficiencies and increase utilization.
|
18
|
Tesoro Logistics LP
|
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
•
|
expand our assets on our crude oil gathering and transportation system (the “High Plains System”), located in the Bakken Shale/Williston Basin area of North Dakota and Montana (the “Bakken Region”) in support of third-party demand for transportation services and Tesoro’s demand for Bakken crude oil in the mid-continent and west coast refining systems, including:
|
◦
|
further expanding crude oil storage and transportation capacity and capabilities of our High Plains Pipeline;
|
◦
|
expanding our gathering footprint in the Bakken Region, including crude oil, natural gas and water, to enhance and improve overall basin logistics efficiencies;
|
◦
|
adding other origin and destination points on the High Plains System to increase volumes; and
|
◦
|
pursuing strategic assets across the Western U.S. including potential acquisitions from Tesoro.
|
•
|
expand and optimize our natural gas gathering and processing assets located in the Green River Basin, Uinta Basin and Vermillion Basin in the states of Utah, Colorado and Wyoming (the “Rockies Region”) including:
|
◦
|
increasing compression on our systems in the Green River and Vermillion basins to enhance natural gas volumes recovered from existing wells and support potential new drilling activity; and
|
◦
|
expanding our gathering footprint and increase compression capabilities in the Uinta basin to increase volumes on our gathering systems and through our processing assets.
|
•
|
grow our terminalling and transportation business across the Western U.S. through:
|
◦
|
increasing our terminalling volumes by expanding capacity and growing our third-party services at certain of our terminals;
|
◦
|
optimizing Tesoro volumes and growing third-party throughput at our terminalling and transportation assets; and
|
◦
|
pursuing strategic assets in the Western U.S. such as our acquisition of Tesoro's terminalling assets and storage assets in Alaska.
|
|
|
September 30, 2016
|
19
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
•
|
Financial non-GAAP measure of EBITDA, as defined above; and
|
•
|
Liquidity non-GAAP measures:
|
◦
|
Distributable Cash Flow is derived from net cash flow from operating activities plus or minus changes in working capital, amounts spent on maintenance capital net of reimbursements and other adjustments not expected to settle in cash; and
|
◦
|
Pro Forma Distributable Cash Flow is Distributable Cash Flow plus or minus adjustments for the acquisition of noncontrolling interest in connection with the merger of QEP Midstream Partners, LP (“QEPM”) into TLLP completed in July 2015.
|
•
|
our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or financing methods;
|
•
|
the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;
|
•
|
our ability to incur and service debt and fund capital expenditures; and
|
•
|
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
|
20
|
Tesoro Logistics LP
|
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
|
|
September 30, 2016
|
21
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016 (a)
|
|
2015 (a)
|
|
2016 (a)
|
|
2015 (a)
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||
Gathering
|
$
|
82
|
|
|
$
|
87
|
|
|
$
|
255
|
|
|
$
|
253
|
|
Processing
|
69
|
|
|
71
|
|
|
208
|
|
|
205
|
|
||||
Terminalling and Transportation (b)
|
157
|
|
|
124
|
|
|
438
|
|
|
362
|
|
||||
Total Revenues
|
308
|
|
|
282
|
|
|
901
|
|
|
820
|
|
||||
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses (c)
|
104
|
|
|
103
|
|
|
313
|
|
|
294
|
|
||||
General and administrative expenses
|
24
|
|
|
28
|
|
|
70
|
|
|
81
|
|
||||
Depreciation and amortization expenses
|
45
|
|
|
45
|
|
|
134
|
|
|
133
|
|
||||
Loss on asset disposals and impairments
|
2
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Operating Income
|
133
|
|
|
106
|
|
|
381
|
|
|
312
|
|
||||
Interest and financing costs, net
|
(49
|
)
|
|
(37
|
)
|
|
(138
|
)
|
|
(112
|
)
|
||||
Equity in earnings of equity method investments
|
3
|
|
|
2
|
|
|
10
|
|
|
6
|
|
||||
Other income, net
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
Net Earnings
|
$
|
87
|
|
|
$
|
71
|
|
|
$
|
259
|
|
|
$
|
206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss attributable to Predecessors
|
$
|
1
|
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
17
|
|
Net earnings attributable to noncontrolling interest
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(19
|
)
|
||||
Net Earnings Attributable to Partners
|
88
|
|
|
74
|
|
|
263
|
|
|
204
|
|
||||
General partner’s interest in net earnings, including incentive distribution rights
|
(40
|
)
|
|
(20
|
)
|
|
(108
|
)
|
|
(51
|
)
|
||||
Limited Partners’ Interest in Net Earnings
|
$
|
48
|
|
|
$
|
54
|
|
|
$
|
155
|
|
|
$
|
153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Earnings per Limited Partner Unit
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common - basic
|
$
|
0.46
|
|
|
$
|
0.62
|
|
|
$
|
1.58
|
|
|
$
|
1.85
|
|
Common - diluted
|
$
|
0.46
|
|
|
$
|
0.62
|
|
|
$
|
1.58
|
|
|
$
|
1.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted Average Limited Partner Units Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common units - basic
|
101.4
|
|
|
86.6
|
|
|
96.7
|
|
|
82.5
|
|
||||
Common units - diluted
|
101.4
|
|
|
86.7
|
|
|
96.8
|
|
|
82.6
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
Our Predecessors did not record revenue for transactions with Tesoro in the Terminalling and Transportation segment for assets acquired in the acquisitions from Tesoro prior to the effective date of each acquisition.
|
(c)
|
Operating expenses include net imbalance settlement gains of
$2 million
for the
three
months ended
September 30, 2016
, and
$5 million
and
$4 million
for the
nine
months ended
September 30, 2016
and
2015
, respectively. There were
no
net imbalance settlement gains or losses for the
three
months ended
September 30, 2015
. Also includes reimbursements from Tesoro primarily related to pressure testing and repairs and maintenance costs pursuant to the Amended Omnibus Agreement of
$3 million
and
$10 million
for the
three
months ended
September 30, 2016
and
2015
, respectively, and
$12 million
and
$25 million
for the
nine
months ended
September 30, 2016
and
2015
, respectively.
|
22
|
Tesoro Logistics LP
|
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016 (a)
|
|
2015 (a)
|
|
2016 (a)
|
|
2015 (a)
|
||||||||
Reconciliation of Net Earnings to EBITDA:
|
|
|
|
|
|
|
|
|
|||||||
Net earnings
|
$
|
87
|
|
|
$
|
71
|
|
|
$
|
259
|
|
|
$
|
206
|
|
Depreciation and amortization expenses
|
45
|
|
|
45
|
|
|
134
|
|
|
133
|
|
||||
Interest and financing costs, net of capitalized interest
|
49
|
|
|
37
|
|
|
138
|
|
|
112
|
|
||||
EBITDA
|
$
|
181
|
|
|
$
|
153
|
|
|
$
|
531
|
|
|
$
|
451
|
|
|
|
|
|
|
|
|
|
||||||||
Reconciliation of Net Cash from Operating Activities to Distributable Cash Flow and Pro Forma Distributable Cash Flow:
|
|
|
|
|
|
|
|
||||||||
Net cash from operating activities (b)
|
$
|
176
|
|
|
$
|
137
|
|
|
$
|
425
|
|
|
$
|
348
|
|
Changes in assets and liabilities
|
(37
|
)
|
|
(18
|
)
|
|
(5
|
)
|
|
3
|
|
||||
Predecessors impact
|
1
|
|
|
4
|
|
|
3
|
|
|
17
|
|
||||
Maintenance capital expenditures (c)
|
(20
|
)
|
|
(12
|
)
|
|
(44
|
)
|
|
(37
|
)
|
||||
Reimbursement for maintenance capital expenditures (c)
|
6
|
|
|
1
|
|
|
20
|
|
|
4
|
|
||||
Net earnings attributable to noncontrolling interest (d)
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(17
|
)
|
||||
Other adjustments for noncontrolling interest (d)
|
—
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
||||
Adjustments for equity method investments (e)
|
4
|
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
||||
Other (f)
|
3
|
|
|
4
|
|
|
1
|
|
|
19
|
|
||||
Distributable Cash Flow
|
133
|
|
|
115
|
|
|
401
|
|
|
316
|
|
||||
Pro forma adjustment for acquisition of noncontrolling interest (g)
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
||||
Pro Forma Distributable Cash Flow
|
$
|
133
|
|
|
$
|
115
|
|
|
$
|
401
|
|
|
$
|
352
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
During the second quarter of
2016
, we revised our reconciliation of distributable cash flow and pro forma distributable cash flow by reconciling the liquidity measure from net cash from operating activities. There were no impacts to previously reported amounts as a result of this methodology change.
|
(c)
|
We adjust our reconciliation of distributable cash flows for maintenance capital expenditures, tank restoration costs and expenditures required to ensure the safety, reliability, integrity and regulatory compliance of our assets with an offset for any reimbursements received for such expenditures.
|
(d)
|
Prior to
2016
for noncontrolling interests associated with QEPM and RGS, we excluded
$2 million
of undistributed earnings along with other adjustments to reflect gross cash available for distribution net of noncontrolling interest impacts.
|
(e)
|
We adjust net cash from operating activities to reflect cash distributions received from equity method investments attributed to the period reported for the purposes of calculating distributable cash flow.
|
(f)
|
Other includes items that had a non-cash impact on our operations and should not be considered in distributable cash flow. Non-cash items for the
nine
months ended
September 30, 2016
and
2015
include primarily the exclusion of the non-cash gain of
$6 million
recognized relating the settlement of the Questar Gas Company litigation as discussed in Note 6 to our condensed combined consolidated financial statements and the inclusion of
$13 million
for acquired deficiency revenue billings to customers in
2015
.
|
(g)
|
Reflects the adjustment to include the noncontrolling interest in QEPM as controlling interest based on the pro forma assumption that the merger of QEPM with TLLP occurred on January 1, 2015.
|
|
|
September 30, 2016
|
23
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
24
|
Tesoro Logistics LP
|
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Gas gathering revenues
|
$
|
39
|
|
|
$
|
46
|
|
|
$
|
122
|
|
|
$
|
128
|
|
Crude oil gathering pipeline revenues
|
33
|
|
|
31
|
|
|
100
|
|
|
88
|
|
||||
Crude oil trucking revenues
|
9
|
|
|
10
|
|
|
27
|
|
|
37
|
|
||||
Other revenues
|
1
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
Total Revenues
|
82
|
|
|
87
|
|
|
255
|
|
|
253
|
|
||||
Costs and Expenses
|
|
|
|
|
|
|
|
||||||||
Operating expenses (a)
|
30
|
|
|
27
|
|
|
92
|
|
|
74
|
|
||||
General and administrative expenses
|
3
|
|
|
2
|
|
|
8
|
|
|
8
|
|
||||
Depreciation and amortization expenses
|
16
|
|
|
16
|
|
|
45
|
|
|
50
|
|
||||
Loss on asset disposals and impairments
|
2
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Gathering Segment Operating Income
|
$
|
31
|
|
|
$
|
42
|
|
|
$
|
107
|
|
|
$
|
121
|
|
Volumes
|
|
|
|
|
|
|
|
||||||||
Gas gathering throughput (thousands of MMBtu/d) (b)
|
887
|
|
|
1,115
|
|
|
881
|
|
|
1,069
|
|
||||
Average gas gathering revenue per MMBtu (b)
|
$
|
0.48
|
|
|
$
|
0.45
|
|
|
$
|
0.51
|
|
|
$
|
0.44
|
|
Crude oil gathering pipeline throughput (Mbpd)
|
206
|
|
|
199
|
|
|
210
|
|
|
182
|
|
||||
Average crude oil gathering pipeline revenue per barrel
|
$
|
1.71
|
|
|
$
|
1.71
|
|
|
$
|
1.73
|
|
|
$
|
1.77
|
|
Crude oil trucking volume (Mbpd)
|
32
|
|
|
34
|
|
|
30
|
|
|
42
|
|
||||
Average crude oil trucking revenue per barrel
|
$
|
3.25
|
|
|
$
|
3.14
|
|
|
$
|
3.26
|
|
|
$
|
3.24
|
|
(a)
|
Operating expenses include an imbalance settlement gains of
$1 million
and loss of
$1 million
for the
three
months ended
September 30, 2016
and
2015
, respectively, and gains of
$2 million
and
$1 million
for the
nine
months ended
September 30, 2016
and
2015
, respectively.
|
(b)
|
Prior to the deconsolidation of RGS as of January 1, 2016, fees paid by us to RGS were eliminated upon consolidation and third-party transactions, including revenue and throughput volumes, were included in our results of operations. Third-party volumes associated with RGS, included in gas gathering volume for the
three
and
nine
months ended
September 30, 2015
were
142 thousand
and
145 thousand
MMBtu/d, respectively, and reduced our average gas gathering revenue per MMBtu by
$0.05
for both periods.
|
|
|
September 30, 2016
|
25
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
NGLs processing revenues
|
$
|
23
|
|
|
$
|
26
|
|
|
$
|
74
|
|
|
$
|
71
|
|
Fee-based processing revenues
|
29
|
|
|
28
|
|
|
80
|
|
|
81
|
|
||||
Other processing revenues
|
17
|
|
|
17
|
|
|
54
|
|
|
53
|
|
||||
Total Revenues
|
69
|
|
|
71
|
|
|
208
|
|
|
205
|
|
||||
Costs and Expenses
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
29
|
|
|
31
|
|
|
89
|
|
|
91
|
|
||||
General and administrative expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Depreciation and amortization expenses
|
11
|
|
|
11
|
|
|
34
|
|
|
33
|
|
||||
Processing Segment Operating Income
|
$
|
29
|
|
|
$
|
29
|
|
|
$
|
85
|
|
|
$
|
77
|
|
Volumes
|
|
|
|
|
|
|
|
||||||||
NGLs processing throughput (Mbpd)
|
6.7
|
|
|
7.8
|
|
|
7.4
|
|
|
7.5
|
|
||||
Average keep-whole fee per barrel of NGLs
|
$
|
38.35
|
|
|
$
|
35.75
|
|
|
$
|
36.58
|
|
|
$
|
34.26
|
|
Fee-based processing throughput (thousands of MMBtu/d)
|
625
|
|
|
767
|
|
|
648
|
|
|
742
|
|
||||
Average fee-based processing revenue per MMBtu
|
$
|
0.50
|
|
|
$
|
0.39
|
|
|
$
|
0.45
|
|
|
$
|
0.40
|
|
26
|
Tesoro Logistics LP
|
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues (a)
|
|
|
|
|
|
|
|
||||||||
Terminalling revenues
|
$
|
125
|
|
|
$
|
93
|
|
|
$
|
345
|
|
|
$
|
275
|
|
Pipeline transportation revenues
|
32
|
|
|
31
|
|
|
93
|
|
|
87
|
|
||||
Total Revenues
|
157
|
|
|
124
|
|
|
438
|
|
|
362
|
|
||||
Costs and Expenses
|
|
|
|
|
|
|
|
||||||||
Operating expenses (b)
|
45
|
|
|
45
|
|
|
132
|
|
|
129
|
|
||||
General and administrative expenses
|
9
|
|
|
10
|
|
|
25
|
|
|
26
|
|
||||
Depreciation and amortization expenses
|
18
|
|
|
18
|
|
|
55
|
|
|
50
|
|
||||
Terminalling and Transportation Segment Operating Income
|
$
|
85
|
|
|
$
|
51
|
|
|
$
|
226
|
|
|
$
|
157
|
|
Volumes
|
|
|
|
|
|
|
|
||||||||
Terminalling throughput (Mbpd)
|
1,023
|
|
|
964
|
|
|
998
|
|
|
932
|
|
||||
Average terminalling revenue per barrel
|
$
|
1.33
|
|
|
$
|
1.05
|
|
|
$
|
1.27
|
|
|
$
|
1.08
|
|
Pipeline transportation throughput (Mbpd)
|
908
|
|
|
838
|
|
|
866
|
|
|
819
|
|
||||
Average pipeline transportation revenue per barrel
|
$
|
0.38
|
|
|
$
|
0.40
|
|
|
$
|
0.39
|
|
|
$
|
0.39
|
|
(a)
|
Our Predecessors did not record revenue for transactions with Tesoro in the Terminalling and Transportation segment prior to the effective date of the acquisitions of the LA Storage and Handling Assets and Alaska Storage and Terminalling Assets.
|
(b)
|
Operating expenses include imbalance settlement gains of
$1 million
for both the
three
months ended
September 30, 2016
and
2015
, and
$3 million
for both the
nine
months ended
September 30, 2016
and
2015
.
|
|
|
September 30, 2016
|
27
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
Debt principal, including current maturities:
|
September 30, 2016
|
|
December 31, 2015
|
||||
Credit Facilities
|
$
|
400
|
|
|
$
|
555
|
|
Senior Notes
|
3,020
|
|
|
2,320
|
|
||
Capital lease obligations
|
8
|
|
|
8
|
|
||
Total Debt
|
3,428
|
|
|
2,883
|
|
||
Unamortized Issuance Costs (a)
|
(46
|
)
|
|
(39
|
)
|
||
Debt, Net of Unamortized Issuance Costs
|
3,382
|
|
|
2,844
|
|
||
Total Equity
|
1,663
|
|
|
1,794
|
|
||
Total Capitalization
|
$
|
5,045
|
|
|
$
|
4,638
|
|
(a)
|
Includes unamortized premiums of
$4 million
associated with our senior notes at both
September 30, 2016
and
December 31, 2015
.
|
28
|
Tesoro Logistics LP
|
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
|
Total
Capacity
|
|
Amount Borrowed as of September 30, 2016
|
|
Available Capacity
|
|
Weighted Average Interest Rate
|
|
Expiration
|
|||||||
Revolving Credit Facility
|
$
|
600
|
|
|
$
|
—
|
|
|
$
|
600
|
|
|
—
|
%
|
|
January 29, 2021
|
Dropdown Credit Facility
|
1,000
|
|
|
400
|
|
|
600
|
|
|
2.54
|
%
|
|
January 29, 2021
|
|||
Total Credit Facilities
|
$
|
1,600
|
|
|
$
|
400
|
|
|
$
|
1,200
|
|
|
|
|
|
Credit Facility
|
30 day Eurodollar (LIBOR) Rate at September 30, 2016
|
|
Eurodollar Margin
|
|
Base Rate
|
|
Base Rate Margin
|
|
Commitment Fee
(unused portion)
|
Revolving Credit Facility (a)
|
0.53%
|
|
2.00%
|
|
3.50%
|
|
1.00%
|
|
0.38%
|
Dropdown Credit Facility (a)
|
0.53%
|
|
2.01%
|
|
3.50%
|
|
1.01%
|
|
0.38%
|
(a)
|
We have the option to elect if the borrowings will bear interest at either a base rate plus the base rate margin, or a Eurodollar rate, for the applicable period, plus the Eurodollar margin at the time of the borrowing. The applicable margin varies based upon a certain leverage ratio, as defined by the Revolving Credit Facility. We also incur commitment fees for the unused portion of the Revolving Credit Facility at an annual rate. Letters of credit outstanding under the Revolving Credit Facility incur fees at the Eurodollar margin rate.
|
|
|
September 30, 2016
|
29
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
|
Nine Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
Cash Flows From (Used In):
|
|
|
|
||||
Operating Activities
|
$
|
425
|
|
|
$
|
348
|
|
Investing Activities
|
(166
|
)
|
|
(243
|
)
|
||
Financing Activities
|
222
|
|
|
(113
|
)
|
||
Increase (Decrease) in Cash and Cash Equivalents
|
$
|
481
|
|
|
$
|
(8
|
)
|
30
|
Tesoro Logistics LP
|
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
Major Projects
|
Total Project Expected
Capital Expenditures
|
|
Actual 2016
Capital Expenditures
|
||||
Gathering Segment:
|
|
|
|
||||
Uinta Compression (a)
|
$
|
50
|
|
|
$
|
34
|
|
Bakken Area Storage Hub (b)
|
28
|
|
|
5
|
|
||
High Plains Pipeline Expansion (c)
|
20
|
|
|
7
|
|
||
Terminalling and Transportation Segment:
|
|
|
|
||||
Los Angeles Refinery Interconnect Pipeline System (d)
|
150-200
|
|
|
—
|
|
||
Terminal Expansions (e)
|
30
|
|
|
12
|
|
(a)
|
Projects to increase compression for our Uinta natural gas gathering systems and expand our gathering system in the Uinta basin. We expect incremental volumes through our processing system upon the completion of the project.
|
(b)
|
The construction of the second phase of the Bakken Area Storage Hub provides storage tanks located in two strategic areas of the basin. With its completion during the first quarter of 2016, storage capacity has grown to over 1 million barrels. Amounts shown above for capital expenditures represent actual amounts spent on this completed project.
|
(c)
|
Projects to expand crude oil gathering throughput capacity on the High Plains Pipeline in McKenzie County, North Dakota. The expansion project’s expected capital expenditures may be reduced as a result of Tesoro’s recent acquisition of Great Northern Midstream and associated BakkenLink pipeline.
|
(d)
|
The pipeline interconnect project at the Los Angeles refinery is designed to provide direct connectivity between Tesoro’s refining sites. The proposed project is subject to final Board of Directors approval, project scoping, engineering and regulatory approval.
|
(e)
|
Projects to increase the throughput capacity and service capabilities at our crude oil and refined products terminals.
|
Quarter Ended
|
Total Quarterly Distribution Per Unit
|
|
Total Quarterly Distribution Per Unit, Annualized
|
|
Total Cash Distribution including general partner incentive distribution rights
(in millions)
|
|
Date of Distribution
|
|
Unitholders Record Date
|
||||||
December 31, 2015
|
$
|
0.780
|
|
|
$
|
3.12
|
|
|
$
|
98
|
|
|
February 12, 2016
|
|
February 2, 2016
|
March 31, 2016
|
0.810
|
|
|
3.24
|
|
|
108
|
|
|
May 13, 2016
|
|
May 2, 2016
|
|||
June 30, 2016
|
0.842
|
|
|
3.37
|
|
|
123
|
|
|
August 12, 2016
|
|
August 2, 2016
|
|||
September 30, 2016 (a)
|
0.875
|
|
|
3.50
|
|
|
131
|
|
|
November 14, 2016
|
|
November 4, 2016
|
(a)
|
This distribution was declared on
October 18, 2016
and will be paid on the date of distribution.
|
|
|
September 30, 2016
|
31
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
•
|
changes in global economic conditions and the effects of a global economic downturn on our business, on the business of our key customers, including Tesoro, and on our customers’ suppliers, customers, business partners and credit lenders;
|
•
|
a material decrease in the crude oil and natural gas produced in the Bakken Shale/Williston Basin area of North Dakota and Montana;
|
•
|
a material decrease in the natural gas and crude oil produced in the Green River Basin, Uinta Basin and Vermillion Basin in the states of Utah, Colorado and Wyoming;
|
•
|
the ability of our key customers, including Tesoro, to remain in compliance with the terms of their outstanding indebtedness;
|
•
|
changes in insurance markets impacting costs and the level and types of coverage available;
|
•
|
changes in the cost or availability of third-party vessels, pipelines and other means of delivering and transporting crude oil, feedstocks, natural gas, natural gas liquids and refined products;
|
•
|
the coverage and ability to recover claims under our insurance policies;
|
•
|
the availability and costs of crude oil, other refinery feedstocks and refined products;
|
•
|
the timing and extent of changes in commodity prices and demand for refined products, natural gas and NGLs;
|
•
|
changes in our cash flow from operations;
|
•
|
impact of QEP Resources’ and Questar Gas Company’s failure to perform under the terms of our gathering agreements as they are our largest customers in TLLP’s natural gas business;
|
•
|
the risk of contract cancellation, non-renewal or failure to perform by those in our supply and distribution chains, including Tesoro and Tesoro’s customers, and the ability to replace such contracts and/or customers;
|
•
|
the suspension, reduction or termination of Tesoro’s obligation under our commercial agreements and our secondment agreement;
|
•
|
a material decrease in profitability among our customers, including Tesoro;
|
•
|
earthquakes or other natural disasters affecting operations;
|
•
|
direct or indirect effects on our business resulting from actual or threatened terrorist or activist incidents, cyber-security breaches or acts of war;
|
•
|
weather conditions affecting operations by us or our key customers, including Tesoro, or the areas in which the customers we serve operate;
|
•
|
disruptions due to equipment interruption or failure at our facilities, Tesoro’s facilities or third-party facilities on which our key customers, including Tesoro, are dependent;
|
•
|
changes in the expected value of and benefits derived from acquisitions;
|
•
|
actions of customers and competitors;
|
32
|
Tesoro Logistics LP
|
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
|
•
|
changes in our credit profile;
|
•
|
state and federal environmental, economic, health and safety, energy and other policies and regulations, including those related to climate change and any changes therein and any legal or regulatory investigations, delays, compliance costs or other factors beyond our control;
|
•
|
delays in obtaining necessary approvals and permits;
|
•
|
operational hazards inherent in refining operations and in transporting and storing crude oil, natural gas, NGLs and refined products;
|
•
|
changes in capital requirements or in execution and benefits of planned capital projects;
|
•
|
seasonal variations in demand for natural gas and refined products;
|
•
|
adverse rulings, judgments, or settlements in litigation or other legal or tax matters, including unexpected environmental remediation costs in excess of any accruals, which affect us or Tesoro;
|
•
|
risks related to labor relations and workplace safety; and
|
•
|
political developments.
|
|
|
September 30, 2016
|
33
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
34
|
Tesoro Logistics LP
|
|
|
LEGAL PROCEEDINGS, RISK FACTORS AND UNREGISTERED SHARES OF EQUITY SECURITIES
|
Exhibit Number
|
|
Description of Exhibit
|
2.1
|
|
Contribution, Conveyance and Assumption Agreement, dated as of July 1, 2016, among Tesoro Logistics LP, Tesoro Logistics GP, LLC, Tesoro Logistics Operations LLC, Tesoro Alaska Company LLC and Tesoro Corporation (incorporated by reference herein to Exhibit 2.1 to the Partnership’s Current Report on Form 8-K filed on July 7, 2016, File No. 1-35143).
|
|
|
|
*2.2
|
|
Revision to the Contribution, Conveyance and Assumption Agreement, dated as of July 27, 2016, among Tesoro Logistics LP, Tesoro Logistics GP, LLC, Tesoro Logistics Operations LLC, Tesoro Alaska Company LLC and Tesoro Corporation.
|
|
|
|
3.1
|
|
Corrected Amendment No. 3 to the Second Amended and Restated Limited Liability Company Agreement of Tesoro Logistics GP, LLC, dated as of July 1, 2016, between Tesoro Corporation, Tesoro Refining & Marketing Company LLC and Tesoro Alaska Company LLC (incorporated by reference herein to Exhibit 3.1 to the Partnership’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016, File No. 1-35143).
|
|
|
|
3.2
|
|
Amendment No. 4 to the Second Amended and Restated Limited Liability Company Agreement of Tesoro Logistics LP, LLC, dated as of September 16, 2016, between Tesoro Logistics GP, LLC, Tesoro Corporation, Tesoro Refining & Marketing Company, LLC and Tesoro Alaska Company LLC (incorporated by reference herein to Exhibit 3.1 to the Partnership’s Current Report on Form 8-K filed on September 22, 2016, File No. 1-35143).
|
|
|
|
4.1
|
|
Fifth Supplemental Indenture, dated as of May 12, 2016, among Tesoro Logistics LP, Tesoro Logistics Finance Corp., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 2021 Notes (incorporated by reference herein to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K filed on May 12, 2016, File No. 1-35143).
|
|
|
|
4.2
|
|
Indenture (including form of note), dated as of May 12, 2016, among Tesoro Logistics LP, Tesoro Logistics Finance Corp., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 2024 Notes (incorporated by reference herein to Exhibit 4.2 to the Partnership’s Current Report on Form 8-K filed on May 12, 2016, File No. 1-35143).
|
|
|
|
10.1
|
|
Ground Lease, dated as of July 1, 2016, between Tesoro Alaska Company LLC and Tesoro Logistics Operations LLC (incorporated by reference herein to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on July 7, 2016, File No. 1-35143).
|
|
|
|
10.2
|
|
Second Amended and Restated Schedules to the Third Amended and Restated Omnibus Agreement, dated as of July 1, 2016, among Tesoro Logistics LP, Tesoro Logistics GP, LLC, Tesoro Corporation, Tesoro Refining & Marketing Company LLC, Tesoro Alaska Company LLC and Tesoro Companies, Inc. (incorporated by reference herein to Exhibit 10.2 to the Partnership’s Current Report on Form 8-K filed on July 7, 2016, File No. 1-35143).
|
|
|
|
|
|
September 30, 2016
|
35
|
EXHIBITS
|
Exhibit Number
|
|
Description of Exhibit
|
10.3
|
|
Kenai Storage Services Agreement, dated as of July 1, 2016, among Tesoro Alaska Company LLC, Tesoro Logistics Operations LLC, Tesoro Logistics GP, LLC and Tesoro Logistics LP (incorporated by reference herein to Exhibit 10.3 to the Partnership’s Current Report on Form 8-K filed on July 7, 2016, File No. 1-35143).
|
|
|
|
10.4
|
|
Amendment No.1 to the Second Amended and Restated Master Terminalling and Service Agreement, dated as of September 16, 2016, among Tesoro Refining & Marketing Company, LLC, Tesoro Alaska Company LLC, and Tesoro Logistics Operations LLC (incorporated by reference herein to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on September 22, 2016, File No. 1-35143).
|
|
|
|
10.5
|
|
Alaska Terminalling Services Agreement, dated as of September 16, 2016, among Tesoro Alaska Company LLC, Tesoro Logistics Operations LLC, Tesoro Alaska Terminals, LLC, Tesoro Logistics GP, LLC, and Tesoro Logistics LP (incorporated by reference herein to Exhibit 10.2 to the Partnership’s Current Report on Form 8-K filed on September 22, 2016, File No. 1-35143).
|
|
|
|
10.6
|
|
Second Amended and Restated Representation and Services Agreement for Oil Spill Contingency Planning Response and Remediation, dated as of September 16, 2016, among Tesoro Companies, Inc., Tesoro Maritime Company, Tesoro Refining & Marketing Company LLC, Tesoro Alaska Company LLC, Kenai Pipe Line Company, Tesoro Alaska Pipeline Company LLC, Carson Cogeneration Company, Tesoro Great Plains Midstream LLC, Tesoro Great Plains Gathering & Marketing LLC, Bakkenlink Pipeline LLC, ND Land Holdings LLC, Tesoro Logistics Operations LLC, Tesoro High Plains Pipeline Company LLC, Tesoro Logistics Pipelines LLC, Tesoro Logistics Northwest Pipeline LLC, Tesoro SoCal Pipeline Company LLC, QEP Field Services, LLC, QEPM Gathering I, LLC, Green River Processing, LLC, Rendezvous Pipeline Company, LLC, and Tesoro Alaska Terminals, LLC (incorporated by reference herein to Exhibit 10.3 to the Partnership’s Current Report on Form 8-K filed on September 22, 2016, File No. 1-35143).
|
|
|
|
10.7
|
|
Third Amended and Restated Schedules to Third Amended and Restated Omnibus Agreement, dated as of September 16, 2016, among Tesoro Corporation, Tesoro Refining & Marketing Company LLC, Tesoro Companies, Inc., Tesoro Alaska Company LLC, Tesoro Logistics LP and Tesoro Logistics GP, LLP (incorporated by reference herein to Exhibit 10.4 to the Partnership’s Current Report on Form 8-K filed on September 22, 2016, File No. 1-35143).
|
|
|
|
*31.1
|
|
Certification by Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*31.2
|
|
Certification by Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*32.1
|
|
Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
*32.2
|
|
Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
**101.INS
|
|
XBRL Instance Document
|
|
|
|
**101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
**101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
**101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
**101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
**101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed herewith
|
**
|
Submitted electronically herewith
|
36
|
Tesoro Logistics LP
|
|
|
|
|
TESORO LOGISTICS LP
|
|
|
|
|
|
|
|
By:
|
Tesoro Logistics GP, LLC
|
|
|
|
Its general partner
|
|
|
|
|
Date:
|
November 1, 2016
|
By:
|
/s/ GREGORY J. GOFF
|
|
|
|
Gregory J. Goff
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date:
|
November 1, 2016
|
By:
|
/s/ STEVEN M. STERIN
|
|
|
|
Steven M. Sterin
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
|
|
September 30, 2016
|
37
|
Re:
|
Contribution, Conveyance and Assumption Agreement, dated as of July 1, 2016 (the “
Contribution Agreement
”), among Tesoro Logistics LP (the “
Partnership
”), Tesoro Logistics GP, LLC (the “
General Partner
”), Tesoro Logistics Operations LLC, Tesoro
Alaska Company LLC and Tesoro Corporation
|
TESORO CORPORATION
By:
/s/ GREGORY J. GOFF
Gregory J. Goff
President and Chief Executive Officer
|
TESORO ALASKA COMPANY LLC
By:
/s/ GREGORY J. GOFF
Gregory J. Goff
President
|
|
|
TESORO LOGISTICS GP, LLC
TESORO LOGISTICS OPERATIONS LLC
By:
/s/ PHILLIP M. ANDERSON
Phillip M. Anderson
President
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Tesoro Logistics LP;
|
2.
|
Based on my knowledge, this quarterly 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 quarterly report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;
|
4.
|
The registrant’s other certifying officer 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)) for the registrant and have:
|
(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 quarterly report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal controls 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;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
|
(d)
|
Disclosed in this quarterly 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 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
|
5.
|
The registrant’s other certifying officer 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
|
(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.
|
Date:
|
November 1, 2016
|
/s/ GREGORY J. GOFF
|
|
|
Gregory J. Goff
|
|
|
Chief Executive Officer of Tesoro Logistics GP, LLC
|
|
|
(the general partner of Tesoro Logistics LP)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Tesoro Logistics LP;
|
2.
|
Based on my knowledge, this quarterly 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 quarterly report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;
|
4.
|
The registrant’s other certifying officer 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)) for the registrant and have:
|
(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 quarterly report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal controls 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;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
|
(d)
|
Disclosed in this quarterly 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 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
|
5.
|
The registrant’s other certifying officer 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
|
(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.
|
Date:
|
November 1, 2016
|
/s/ STEVEN M. STERIN
|
|
|
Steven M. Sterin
|
|
|
Chief Financial Officer of Tesoro Logistics GP, LLC
|
|
|
(the general partner of Tesoro Logistics LP)
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
|
/s/ GREGORY J. GOFF
|
|||
Gregory J. Goff
|
|||
Chief Executive Officer of Tesoro Logistics GP, LLC
(the general partner of Tesoro Logistics LP)
|
|||
November 1, 2016
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
|
/s/ STEVEN M. STERIN
|
|||
Steven M. Sterin
|
|||
Chief Financial Officer of Tesoro Logistics GP, LLC
(the general partner of Tesoro Logistics LP)
|
|||
November 1, 2016
|