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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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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27‑4151603
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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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19100 Ridgewood Pkwy, San Antonio, Texas 78259-1828
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(Address of principal executive offices) (Zip Code)
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210-626-6000
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(Registrant’s telephone number, including area code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Units Representing Limited Partnership Interests
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New York Stock Exchange
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Large accelerated filer
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þ
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Emerging growth company
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Table of Contents
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Glossary of Terms
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Important Information Regarding Forward-Looking Statements
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Part I
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Item 1 Business
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Terminalling and Transportation
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Gathering and Processing
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Wholesale
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Rate and Other Regulations
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Environmental Regulations
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Item 1A Risk Factors
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Item 1B Unresolved Staff Comments
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Item 2 Properties
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Item 3 Legal Proceedings
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Item 4 Mine Safety Disclosures
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Part II
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Item 5 Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities
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Item 6 Selected Financial Data
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Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Business Strategy and Overview
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Results of Operations
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Capital Resources and Liquidity
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Accounting Standards
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Item 7A Quantitative and Qualitative Disclosures about Market Risk
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Item 8 Financial Statements and Supplementary Data
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Consolidated Statements of Operations
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Consolidated Balance Sheets
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Consolidated Statements of Partner’s Equity
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Consolidated Statements of Cash Flows
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Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A Controls and Procedures
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Part III
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Item 10 Directors, Executive Officers and Corporate Governance
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Item 11 Executive Compensation
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Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters
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Item 13 Certain Relationships and Related Transactions and Director Independence
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Item 14 Principal Accounting Fees and Services
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Glossary of Terms
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December 31, 2017
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1
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Glossary of Terms
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2
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Business
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changes in the expected value of and benefits derived from acquisitions, including any inability to successfully integrate acquisitions, realize expected synergies or achieve operational efficiency and effectiveness;
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changes in global economic conditions on our business, on the business of our key customers, including Andeavor, and on our customers’ suppliers, business partners and credit lenders;
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a material change in the crude oil and natural gas produced in the basins where we operate;
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the ability of our key customers, including Andeavor, to remain in compliance with the terms of their outstanding indebtedness;
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changes in insurance markets impacting costs and the level and types of coverage available;
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regulatory and other requirements concerning the transportation of crude oil, natural gas, NGLs and refined products, particularly in the areas where we operate;
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changes in the cost or availability of third-party vessels, pipelines and other means of delivering and transporting crude oil, feedstocks, natural gas, NGLs and refined products;
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the coverage and ability to recover claims under our insurance policies;
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the availability and costs of crude oil, other refinery feedstocks and refined products;
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the timing and extent of changes in commodity prices and demand for refined products, natural gas and NGLs;
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changes in our cash flow from operations;
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changes in our tax status;
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the ability of our largest customers to perform under the terms of our gathering agreements;
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the risk of contract cancellation, non-renewal or failure to perform by those in our supply and distribution chains, including Andeavor and Andeavor’s customers, and the ability to replace such contracts and/or customers;
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the suspension, reduction or termination of Andeavor’s obligations under our commercial agreements and our secondment agreement;
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a material change in profitability among our customers, including Andeavor;
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direct or indirect effects on our business resulting from actual or threatened terrorist or activist incidents, cyber-security breaches or acts of war;
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weather conditions, earthquakes or other natural disasters affecting operations by us or our key customers, including Andeavor, or the areas in which our customers operate;
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disruptions due to equipment interruption or failure at our facilities, Andeavor’s facilities or third-party facilities on which our key customers, including Andeavor, are dependent;
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our inability to complete acquisitions on economically acceptable terms or within anticipated timeframes;
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actions of customers and competitors;
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changes in our credit profile;
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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 in obtaining necessary approvals and permits, compliance costs or other factors beyond our control;
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operational hazards inherent in refining and natural gas processing operations and in transporting and storing crude oil, natural gas, NGLs and refined products;
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changes in capital requirements or in execution and benefits of planned capital projects;
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seasonal variations in demand for natural gas and refined products;
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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 Andeavor;
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risks related to labor relations and workplace safety;
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political developments; and
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the factors described in greater detail under “Competition,” “Pipeline, Terminal and Rail Safety,” “Rate and Other Regulations” and “Environmental Regulations” in Item 1 and “Risk Factors” in Item 1A, and our other filings with the SEC.
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December 31, 2017
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3
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Business
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Item 1.
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Business
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4
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Business
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705 miles of pipelines located in Permian Basin area of west Texas and southern New Mexico that gather and transport crude oil by pipeline, as well as by truck, from various production locations to Andeavor’s El Paso, Texas and Gallup, New Mexico refineries;
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12.4 million barrels of storage capacity, including approximately 11.4 million barrels of crude oil, feedstock, blendstock, refined product and asphalt storage tanks near Andeavor’s El Paso, Gallup and St. Paul Park, Minnesota refineries and approximately 1.0 million barrels of crude oil storage tanks located along the gathering pipeline systems discussed above; and
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Wholesale fuel distribution business that purchases, sells, and transports gasoline and diesel to Andeavor’s retail sites or third parties.
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December 31, 2017
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5
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Business
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6
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Business
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Asset
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Number of Terminals
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Location
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Key Products Handled
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Volume Source
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Terminalling Throughput Capacity (Mbpd)
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Storage Capacity (thousand barrels)
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Pipeline Mileage
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Land Terminals
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44
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AK, AZ, CA, ID, MN, NM, TX, UT, WA
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Crude Oil, Refined Products, Asphalt
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Andeavor, Third-Party
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1,263
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44,957
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—
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Marine Terminals
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6
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CA, WA
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Crude Oil, Refined Products
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Andeavor, Third-Party
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955
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2,900
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—
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Northwest Products System
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—
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ID, UT, WA
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Refined Products
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Andeavor, Third-Party
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—
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—
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1,201
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Southern California System
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—
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CA
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Crude Oil, Natural Gas, Refined Product
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Andeavor, Third-Party
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—
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—
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216
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Kenai Pipeline
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—
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AK
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Refined Products
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Andeavor
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—
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—
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74
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Salt Lake City Short-haul
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—
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UT
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Crude Oil, Refined Products
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Andeavor
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—
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—
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22
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Petroleum Coke Handling (a)
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1
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CA
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Petroleum Coke
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Andeavor
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—
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—
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—
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51
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2,218
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47,857
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1,513
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(a)
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Our Petroleum Coke handling facility has capacity of 2,600 metric tons per day.
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providing storage services;
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transporting refined products;
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delivering crude oil, refined products and intermediate feedstocks from vessels to refineries and terminals;
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loading and unloading crude oil transported by unit train to Andeavor’s Anacortes refinery;
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loading and unloading from marine vessels and barges;
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transferring refined products from terminals to trucks, barges, rail cars and pipelines;
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providing ancillary services, ethanol blending and additive injection; and
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handling petroleum coke for Andeavor’s Los Angeles refinery.
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Refined products terminals located in El Paso, Texas; Albuquerque, Bloomfield and Gallup, New Mexico; and St. Paul Park, Minnesota. The terminals distribute refined products supplied by an Andeavor refinery through truck loading racks, barge facilities, rail and other logistics assets;
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Storage facilities located in El Paso, Gallup and St. Paul Park. Each facility is located adjacent to an Andeavor refinery and provides storage and transfer services required to support the refinery’s operations; and
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Asphalt terminalling and processing services at our asphalt plant and terminal in El Paso, as well as at three stand-alone asphalt terminals in Albuquerque and Phoenix and Tucson, Arizona. Our El Paso asphalt plant is located adjacent to Andeavor’s El Paso refinery. We also operate a fleet of asphalt trucks, which are utilized to deliver asphalt to Andeavor's asphalt terminals and third-party customers.
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December 31, 2017
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7
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Business
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8
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Business
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System
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Location
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Key Products Handled
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Volume Source
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Processing Throughput Capacity (a)
(MMcf/d)
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Pipeline
Mileage (b) |
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High Plains
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MT, ND
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Crude Oil
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Andeavor, Third-Party
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—
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1,035
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Southwest
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NM, TX
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Crude Oil
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Andeavor, Third-Party
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—
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913
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North Dakota
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ND
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Crude Oil, Natural Gas, Produced Water
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Andeavor, Third-Party
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170
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780
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Uinta Basin
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UT
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Natural Gas
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Andeavor, Third-Party
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650
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635
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Green River
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WY
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Crude Oil, Natural Gas
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Andeavor, Third-Party
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850
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587
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Vermillion
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CO, UT, WY
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Natural Gas
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Third-Party
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57
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482
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1,727
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4,432
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(a)
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We have fractionation throughput capacity at our Blacks Fork complex, Robinson Lake complex and Belfield complex of
15.0
Mbpd,
11.5
Mbpd and
7.2
Mbpd, respectively.
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(b)
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The pipeline mileage associated with our equity method investments is not included in the table. Our equity method investments are discussed below.
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gathering and transporting crude oil, natural gas and produced water;
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operating storage facilities with tanks located in strategic areas;
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operating truck-based crude oil gathering; and
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processing gas under fee-based processing and percentage-of-proceeds agreements.
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RGS which operates the infrastructure that transports gas along 333 miles of pipeline from certain fields to several re-delivery points, including natural gas processing facilities that are owned by Andeavor Logistics or a third party;
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TRG which transports natural gas across 52 miles of pipeline to our natural gas processing facilities in the Uinta Basin; and
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UBFS which operates 78 miles of gathering pipeline and gas compression assets located in the southeastern Uinta Basin.
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Four Corners System
- A pipeline system which includes pipelines in Northwestern New Mexico that gather and transport crude oil and condensate produced in the Four Corners area and deliver it to Andeavor’s Gallup refinery or to the TexNew Mex pipeline system. This Four Corners area crude oil is received at our Bloomfield terminal and at crude oil stations we own located in Bisti, Lybrook, Pettigrew and Star Lake, New Mexico;
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Permian Basin System
- A pipeline system which includes the Delaware Basin system and other crude oil gathering assets in West Texas. It consists of 39 miles of pipelines located in Southeast New Mexico and West Texas and handles crude oil produced in the Delaware Basin. The system includes other crude gathering assets in West Texas that handle crude oil produced in the Permian Basin. The TexNew Mex pipeline extends 299 miles from our Four Corners system to the Delaware Basin; and
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Crude Trucking
- A fleet of crude oil trucks, which are utilized to gather, transport and deliver crude oil from collection points in Colorado, New Mexico and Utah to Andeavor’s El Paso and Gallup refineries and their interconnected pipelines.
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December 31, 2017
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9
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Business
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10
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Business
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pipelines operate as common carriers;
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access to transportation services and pipeline rates be non-discriminatory;
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transported crude oil volumes be apportioned without unreasonable discrimination if more crude oil is offered for transportation than can be transported immediately; and
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pipeline rates be just and reasonable.
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December 31, 2017
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11
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Business
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12
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Business
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December 31, 2017
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13
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Business
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14
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Business
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Item 1A.
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Risk Factors
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•
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damages to pipelines, plants and facilities, related equipment and surrounding properties caused by earthquakes, floods, fires, severe weather, explosions and other natural disasters as well as acts of terrorism;
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damage to pipelines and other assets from construction, farm and utility equipment;
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damage to third-party property or persons, including injury or loss of life;
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mechanical or structural failures on our pipelines, at our facilities or at third-party facilities on which our operations are dependent, including Andeavor’s facilities;
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ruptures, fires and explosions;
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leaks or losses of crude oil, natural gas, NGLs, refined products and other hydrocarbons or other regulated substances as a result of the malfunction of equipment or facilities;
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curtailments of operations relative to severe seasonal weather; and
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other hazards.
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December 31, 2017
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15
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Risk Factors
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16
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Risk Factors
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the volatility and uncertainty of regional pricing differentials;
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the availability of drilling rigs for producers;
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weather-related curtailment of operations by producers and disruptions to truck gathering operations;
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the nature and extent of governmental regulation and taxation, including regulations related to the exploration, production and transportation of shale oil and natural gas, including hydraulic fracturing and natural gas flaring and rail transportation;
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the development of third-party crude oil or natural gas gathering systems that could impact the price and availability of crude oil or natural gas in these areas; and
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the anticipated future prices of crude oil, refined products, NGLs and natural gas in surrounding markets.
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December 31, 2017
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17
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Risk Factors
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18
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Risk Factors
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December 31, 2017
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19
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Risk Factors
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20
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Risk Factors
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•
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the risk of contract cancellation, non-renewal or failure to perform by their customers;
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disruptions due to equipment interruption or failure at their facilities or at third-party facilities on which their business is dependent;
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the timing and extent of changes in commodity prices and demand for their refined products, natural gas and NGLs, and the availability and market price of crude oil and other refinery feedstocks;
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their ability to remain in compliance with the terms of their outstanding indebtedness;
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changes in the cost or availability of third-party pipelines, terminals and other means of delivering and transporting crude oil, natural gas and NGLs, feedstocks and refined products;
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state and federal environmental, economic, health and safety, energy and other policies and regulations and any changes in those policies and regulations;
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environmental incidents and violations and related remediation costs, fines and other liabilities; and
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changes in crude oil, natural gas, NGLs and refined product inventory levels and carrying costs.
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December 31, 2017
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21
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Risk Factors
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22
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Risk Factors
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•
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the volume of crude oil, natural gas, NGLs and refined products that we handle;
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the tariff rates with respect to volumes we transport on our pipelines (including whether such tariffs are for long-haul or short-haul segments);
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the terminalling, trucking, processing and storage fees with respect to non-pipeline volumes we handle;
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December 31, 2017
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23
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Risk Factors
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the mix of gathering, processing, transportation and storage services we provide; and
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prevailing economic conditions.
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the amount of our operating expenses and general and administrative expenses, including reimbursements to or from Andeavor with respect to those expenses and payment of an annual corporate services fee to Andeavor;
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the amount of our capital expenditures;
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the volatility in capital markets at the time of new debt or equity issuances;
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the timing of distributions on new unit issuances relating to acquisitions;
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the cost of acquisitions, if any;
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our debt service requirements and other liabilities;
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fluctuations in our working capital needs;
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our ability to borrow funds and access capital markets;
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restrictions contained in our credit facilities and other debt service requirements;
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an uninsured catastrophic loss;
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the amount of cash reserves established by our general partner; and
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other business risks impacting our cash levels.
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make certain cash distributions;
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incur certain indebtedness;
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incur certain liens;
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make certain investments;
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dispose of assets in excess of certain amounts;
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engage in certain mergers or consolidations and transfers of assets; and
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enter into certain transactions with affiliates.
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24
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Risk Factors
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the potential for unexpected costs, delays and challenges that may arise in integrating acquisitions into our existing business;
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limitations on our ability to realize the expected cost savings and synergies from an acquisition;
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challenges related to integrating acquired operations that have management teams and company cultures that differ from our own;
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challenges related to the integration of businesses that operate in new geographic areas, including difficulties in identifying and gaining access to customers in new markets;
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difficulties of managing operations outside of our existing core business, which may require development of additional skills and competencies; and
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discovery of previously unknown liabilities following an acquisition with the acquired business or assets for which we cannot receive reimbursement under applicable indemnification provisions.
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acts of God, fires, floods or storms;
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compliance with orders of courts or any governmental authority;
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explosions, wars, terrorist acts, riots, strikes, lockouts or other industrial disturbances;
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accidental disruption of service;
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breakdown of machinery, storage tanks or pipelines and inability to obtain or unavoidable delay in obtaining material or equipment; and
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similar events or circumstances, so long as such events or circumstances are beyond our reasonable control and could not have been prevented by our due diligence.
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December 31, 2017
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25
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Risk Factors
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•
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Neither our partnership agreement nor any other agreement requires Andeavor to pursue a business strategy that favors us or utilizes our assets, which could involve decisions by Andeavor to increase or decrease refinery production, connect our pipeline systems to third-party delivery points, shut down or reconfigure a refinery, or pursue and grow particular markets. Andeavor’s directors and officers have a fiduciary duty to make these decisions in the best interests of the stockholders of Andeavor;
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Andeavor, as our largest customer, may have an economic incentive to cause us to not seek higher tariff rates, trucking fees or terminalling fees, even if such higher rates or fees would reflect rates and fees that could be obtained in arm’s-length, third-party transactions;
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Andeavor may be constrained by the terms of its debt instruments from taking actions, or refraining from taking actions, that may be in our best interests;
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Our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limiting its liability and restricting the remedies available to our unitholders for actions that, without the limitations, might constitute breaches of fiduciary duty;
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Except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval;
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Our general partner determines the amount and timing of asset purchases and sales, borrowings, issuance of additional partnership securities and the creation, reduction or increase of cash reserves, each of which can affect the amount of cash that is distributed to our unitholders;
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Our general partner determines the amount and timing of many of our cash expenditures and whether a cash expenditure is classified as an expansion capital expenditure, which does not reduce operating surplus. This determination can affect the amount of cash that is distributed to our unitholders and to our general partner and the amount of adjusted operating surplus in any given period;
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Our general partner determines which costs incurred by it are reimbursable by us;
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Our general partner may cause us to borrow funds in order to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make incentive distributions;
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Our partnership agreement permits our general partner to classify up to $30 million as operating surplus, even if it is generated from asset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus;
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Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf;
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Our general partner has limited and may continue to limit its liability regarding our contractual and other obligations;
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Our general partner may exercise its right to call and purchase all of the common units not owned by it and its affiliates if it and its affiliates own more than 75% of the common units, which could require unitholders to sell their common units at an undesirable time and price, potentially resulting in no return on their investment or a tax liability on the sale of their units;
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Our general partner controls the enforcement of obligations owed to us by our general partner and its affiliates, including our commercial agreements with Andeavor; and
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Our general partner decides whether to retain separate counsel, accountants, or others to perform services for us.
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26
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Risk Factors
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•
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provides that whenever our general partner makes a determination or takes, or declines to take, any other action in its capacity as our general partner, our general partner is required to make such determination, or take or decline to take such other action, 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, or at equity;
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provides that our general partner will not have any liability to us or our unitholders for decisions made in its capacity as a general partner so long as it acted in good faith, which requires that it believed that the decision was in, or not opposed to, the best interest of our partnership;
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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 limited partners resulting from any act or omission unless there has been a final and nonappealable judgment entered by a court of competent jurisdiction determining that our general partner or its officers and directors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal;
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provides that our general partner will not be in breach of its obligations under the partnership agreement or its fiduciary duties to us or our limited partners if a transaction with an affiliate or the resolution of a conflict of interest is not approved by our conflicts committee or approved by a vote of a majority of outstanding common units, but is entered into in good faith by our general partner and is on terms no less favorable to us than those generally being provided to or available from unrelated third parties or fair and reasonable to us, taking into account the totality of the relationships among the parties involved; and
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provides that in resolving conflicts of interest, it is presumed that in making its decision the general partner acted in good faith and in any proceeding brought by or on behalf of any limited partner or us, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption.
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December 31, 2017
|
27
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Risk Factors
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•
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our unitholders’ proportionate ownership interest in us will decrease;
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the amount of cash available for distribution on each unit may decrease;
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the relative voting strength of each previously outstanding unit may be diminished; and
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•
|
the market price of our common units and Preferred Units may decline.
|
28
|
|
|
|
Risk Factors
|
•
|
any assets that were owned by Andeavor at the closing of our initial public offering (including replacements or expansions of those assets);
|
•
|
any assets acquired or constructed by Andeavor to replace one of our assets that no longer provides services to Andeavor due to the occurrence of a force majeure event under one of our commercial agreements with Andeavor that prevents us from providing services under such agreement;
|
•
|
any asset or business that Andeavor acquires or constructs that has a fair market value of less than $5 million; and
|
•
|
any asset or business that Andeavor acquires or constructs that has a fair market value of $5 million or more if we have been offered the opportunity to purchase the asset or business for fair market value not later than six months after completion of such acquisition or construction, and we decline to do so.
|
•
|
we were conducting business in a state but had not complied with that particular state’s partnership statute; or
|
•
|
his right 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.
|
|
|
December 31, 2017
|
29
|
Risk Factors
|
30
|
|
|
|
Risk Factors
|
|
|
December 31, 2017
|
31
|
Risk Factors
|
32
|
|
|
|
Risk Factors
|
Item 1B.
|
Unresolved Staff Comments
|
|
|
December 31, 2017
|
33
|
Properties, Legal Proceedings and Mine Safety Disclosures
|
Item 2.
|
Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
34
|
|
|
|
Market for Equity, Stockholder Matters and Purchases of Equity Securities
|
|
Item 5.
|
Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
Sales Prices per
|
|
Quarterly Cash Distribution per Unit (a)
|
|
Sales Prices per
|
|
Quarterly Cash Distribution per Unit (a)
|
||||||||||||||||
|
Common Unit
|
|
|
Common Unit
|
|
||||||||||||||||||
Quarter Ended
|
High
|
|
Low
|
|
|
High
|
|
Low
|
|
||||||||||||||
December 31
|
$
|
50.04
|
|
|
$
|
42.18
|
|
|
$
|
1.0000
|
|
|
$
|
51.87
|
|
|
$
|
43.00
|
|
|
$
|
0.9100
|
|
September 30
|
54.74
|
|
|
45.72
|
|
|
0.9852
|
|
|
50.70
|
|
|
44.55
|
|
|
0.8750
|
|
||||||
June 30 (b)
|
55.79
|
|
|
46.13
|
|
|
0.9710
|
|
|
51.35
|
|
|
41.22
|
|
|
0.8420
|
|
||||||
March 31
|
60.14
|
|
|
50.96
|
|
|
0.9400
|
|
|
51.43
|
|
|
35.18
|
|
|
0.8100
|
|
(a)
|
Represents cash distributions attributable to the quarter and declared and paid within
45
days of quarter end in accordance with our partnership agreement.
|
(b)
|
On July 25, 2017, WNRL declared a quarterly cash distribution of $0.4675 per unit, which was paid on August 18, 2017.
|
|
|
December 31, 2017
|
35
|
Market for Equity, Stockholder Matters and Purchases of Equity Securities
|
|
Item 6.
|
Selected Financial Data
|
•
|
crude oil, feedstock and refined products storage, the Anacortes marine terminal, a manifest rail facility and crude oil and refined products pipelines located in Anacortes, Washington on November 8, 2017;
|
•
|
logistic assets owned by WNRL, which consisted of pipelines, gathering, terminalling, storage, transportation and wholesale fuel distribution assets, and provides services to Andeavor’s refining segment effective October 30, 2017;
|
•
|
tankage, refined product storage, marine terminal terminalling and storage assets, pipelines, causeway and ancillary equipment located in Martinez, California, effective
November 21, 2016
;
|
•
|
all of the limited liability company interests in Tesoro Alaska Terminals, LLC, tankage, bulk tank farm, a truck rack and rail-loading facility, terminalling and other storage assets located in Kenai, Anchorage and Fairbanks, Alaska, completed in two stages on July 1, 2016 and September 16, 2016; and
|
•
|
a crude oil and refined products storage tank facility located at Andeavor’s Los Angeles refinery and a
50%
fee interest in a pipeline that transports jet fuel from Andeavor’s Los Angeles refinery to the Los Angeles International Airport, effective
November 12, 2015
.
|
36
|
|
|
|
Selected Financial Data
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017 (a)
|
|
2016 (a)
|
|
2015 (a)
|
|
2014 (a)
|
|
2013 (a)
|
||||||||||
|
(In millions, except units and per unit amounts)
|
||||||||||||||||||
Statement of Operations Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues (b)
|
$
|
3,213
|
|
|
$
|
1,220
|
|
|
$
|
1,112
|
|
|
$
|
600
|
|
|
$
|
313
|
|
Net earnings
|
373
|
|
|
315
|
|
|
249
|
|
|
56
|
|
|
18
|
|
|||||
(Earnings) loss attributable to Predecessors
|
(24
|
)
|
|
24
|
|
|
43
|
|
|
46
|
|
|
62
|
|
|||||
Net earnings attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
(3
|
)
|
|
—
|
|
|||||
Net earnings attributable to partners
|
349
|
|
|
339
|
|
|
272
|
|
|
99
|
|
|
80
|
|
|||||
General partner’s interest in net earnings, including incentive distribution rights
|
79
|
|
|
152
|
|
|
73
|
|
|
43
|
|
|
12
|
|
|||||
Common unitholders’ interest in net earnings
|
267
|
|
|
187
|
|
|
199
|
|
|
43
|
|
|
46
|
|
|||||
Subordinated unitholders’ interest in net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
22
|
|
|||||
Net earnings per limited partner unit:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common - basic
|
$
|
2.11
|
|
|
$
|
1.87
|
|
|
$
|
2.33
|
|
|
$
|
0.96
|
|
|
$
|
1.48
|
|
Common - diluted
|
2.11
|
|
|
1.87
|
|
|
2.33
|
|
|
0.96
|
|
|
1.47
|
|
|||||
Subordinated - basic and diluted
|
—
|
|
|
—
|
|
|
—
|
|
|
0.62
|
|
|
1.35
|
|
|||||
Cash distribution per unit
|
3.8062
|
|
|
3.3070
|
|
|
2.8350
|
|
|
2.4125
|
|
|
2.0175
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As of December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015 (a)
|
|
2014 (a)
|
|
2013 (a)
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
8,169
|
|
|
$
|
5,860
|
|
|
$
|
5,131
|
|
|
$
|
4,955
|
|
|
$
|
1,560
|
|
Total debt, net of unamortized issuance costs
|
4,128
|
|
|
4,054
|
|
|
2,844
|
|
|
2,544
|
|
|
1,141
|
|
(a)
|
Includes the historical results related to Andeavor Logistics and Predecessors for years 2017, 2016, 2015 and 2014. For the year ended 2013, recasted amounts are not shown because management does not believe presentation of these impacts is material to an investor’s understanding of Andeavor Logistics’ current operations.
|
(b)
|
Other than WNRL and transportation regulated by the FERC and the Regulatory Commission of Alaska tariffs charged to Andeavor on the refined products pipeline included in the logistics assets acquired in 2014, our Predecessors did not record revenue for transactions with Andeavor for assets acquired in the Acquisitions from Andeavor prior to the effective date of each acquisition.
|
|
|
December 31, 2017
|
37
|
Management’s Discussion and Analysis
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
increasing our terminalling volumes by expanding capacity and growing our third-party services at certain of our terminals;
|
•
|
optimizing Andeavor volumes and growing third-party throughput at our Terminalling and Transportation assets; and
|
•
|
pursuing strategic assets in the western U.S.
|
38
|
|
|
|
Management’s Discussion and Analysis
|
•
|
further expanding capacity and capabilities as well as adding new origin and destination points for our common carrier pipelines in North Dakota and Montana;
|
•
|
expanding our crude oil, natural gas and water gathering and associated gas processing footprint in the Bakken Region to enhance and improve overall basin logistics efficiencies;
|
•
|
expanding our crude oil gathering footprint in the Permian Basin, principally in the Delaware basin where Andeavor has a strong logistics asset base, crude oil marketing capabilities and meaningful refining offtake; and
|
•
|
pursuing strategic assets across the western U.S. including potential acquisitions from Andeavor.
|
•
|
completed the merger of WNRL in a unit exchange further enhancing our existing segments and adding a wholesale business;
|
•
|
acquired crude oil, natural gas and produced water gathering systems and two natural gas processing facilities in North Dakota;
|
•
|
acquired logistics assets from Andeavor including storage, marine terminal, rail facility and pipelines near Andeavor’s Anacortes refinery;
|
•
|
concurrent with the WNRL Merger, completed the IDR/GP Transaction through issuing common units to Andeavor in exchange for the IDR and the economic interest of the general partner units;
|
•
|
achieved investment grade with Fitch Ratings assigning us a first-time Long-Term Issuer Default Rating of “BBB-” and S&P Global Ratings raising our corporate credit and senior unsecured issue ratings to "BBB-" with a stable outlook;
|
•
|
issued our inaugural investment grade offering with
$1.75 billion
of aggregate principal senior notes using the proceeds to refinance our higher interest rate senior notes; and
|
•
|
completed a Preferred Units offering using the proceeds to repay senior notes and Revolving Credit Facility borrowings.
|
|
|
December 31, 2017
|
39
|
Management’s Discussion and Analysis
|
•
|
Average terminalling revenue per barrel;
|
•
|
Average pipeline transportation revenue per barrel;
|
•
|
Average margin on NGL sales per barrel;
|
•
|
Average gas gathering and processing revenue per MMBtu;
|
•
|
Average crude oil and water gathering revenue per barrel; and
|
•
|
Average wholesale fuel sales margin per gallon.
|
40
|
|
|
|
Management’s Discussion and Analysis
|
•
|
increase throughput volumes on our gathering systems by making connections to existing or new third-party pipelines or rail loading facilities, which will be driven by the anticipated supply of and demand for additional crude oil produced in the regions we operate;
|
•
|
increase throughput volumes at our refined products terminals and provide additional ancillary services at those terminals, such as ethanol blending and additive injection;
|
•
|
increase throughput volumes on our natural gas system through the connection of new wells and addition of compression to existing wells; and
|
•
|
identify and execute organic expansion projects, and capture incremental Andeavor or third-party volumes.
|
|
|
December 31, 2017
|
41
|
Management’s Discussion and Analysis
|
•
|
Financial non-GAAP measure of EBITDA;
|
•
|
Financial non-GAAP measure of Segment EBITDA;
|
•
|
Liquidity non-GAAP measure of distributable cash flow, which is calculated as U.S. GAAP-based 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;
|
•
|
Liquidity non-GAAP measure of distributable cash flow attributable to common unitholders, which is calculated as distributable cash flow minus distributions associated with the Preferred Units;
|
•
|
Operating performance measure of average margin on NGL sales per barrel; and
|
•
|
Operating performance measure of average wholesale fuel sales margin per gallon.
|
•
|
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.
|
42
|
|
|
|
Management’s Discussion and Analysis
|
(a)
|
See “Non-GAAP Reconciliations” section below for further information regarding these non-GAAP measures.
|
|
|
December 31, 2017
|
43
|
Management’s Discussion and Analysis
|
44
|
|
|
|
Management’s Discussion and Analysis
|
|
|
December 31, 2017
|
45
|
Management’s Discussion and Analysis
|
(a)
|
See “Non-GAAP Reconciliations” section below for further information regarding this non-GAAP measure.
|
46
|
|
|
|
Management’s Discussion and Analysis
|
|
Year Ended December 31,
|
||||||||||
|
2017 (a)
|
|
2016 (a)
|
|
2015 (a)
|
||||||
Revenues
|
|
|
|
|
|
||||||
Terminalling
|
$
|
688
|
|
|
$
|
480
|
|
|
$
|
377
|
|
Pipeline transportation
|
130
|
|
|
125
|
|
|
118
|
|
|||
Other revenues
|
18
|
|
|
—
|
|
|
—
|
|
|||
Total Revenues
|
836
|
|
|
605
|
|
|
495
|
|
|||
Costs and Expenses
|
|
|
|
|
|
||||||
Operating expenses (b)
|
257
|
|
|
193
|
|
|
184
|
|
|||
Depreciation and amortization expenses
|
102
|
|
|
83
|
|
|
76
|
|
|||
General and administrative expenses
|
38
|
|
|
32
|
|
|
32
|
|
|||
(Gain) loss on asset disposals and impairments
|
(25
|
)
|
|
1
|
|
|
—
|
|
|||
Operating Income
|
$
|
464
|
|
|
$
|
296
|
|
|
$
|
203
|
|
Rates (c)
|
|
|
|
|
|
||||||
Average terminalling revenue per barrel
|
$
|
1.32
|
|
|
$
|
1.33
|
|
|
$
|
1.08
|
|
Average
pipeline
transportation revenue per barrel
|
$
|
0.40
|
|
|
$
|
0.39
|
|
|
$
|
0.39
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. Other than WNRL, our Predecessors did not record revenue for transactions with Andeavor in the Terminalling and Transportation segment prior to the effective date of each acquisition.
|
(b)
|
Operating expenses include net imbalance settlement gains of
$5 million
,
$3 million
and
$4 million
in the years ended
December 31, 2017
,
2016
and
2015
, respectively.
|
(c)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
|
|
December 31, 2017
|
47
|
Management’s Discussion and Analysis
|
(a)
|
See “Non-GAAP Reconciliations” section below for further information regarding this non-GAAP measure.
|
(a)
|
Volumes represent barrels sold in keep-whole arrangements, net barrels retained in POP arrangements and other associated products.
|
48
|
|
|
|
Management’s Discussion and Analysis
|
|
Year Ended December 31,
|
||||||||||
|
2017 (a)
|
|
2016
|
|
2015
|
||||||
Revenues
|
|
|
|
|
|
||||||
NGL sales (b)
|
$
|
369
|
|
|
$
|
103
|
|
|
$
|
99
|
|
Gas gathering and processing
|
333
|
|
|
264
|
|
|
274
|
|
|||
Crude oil and water gathering
|
228
|
|
|
133
|
|
|
123
|
|
|||
Pass-thru and other (c)
|
165
|
|
|
115
|
|
|
121
|
|
|||
Total Revenues
|
1,095
|
|
|
615
|
|
|
617
|
|
|||
Costs and Expenses
|
|
|
|
|
|
||||||
NGL expense (excluding items shown separately below) (b)(c)
|
265
|
|
|
2
|
|
|
—
|
|
|||
Operating expenses (d)
|
354
|
|
|
249
|
|
|
244
|
|
|||
Depreciation and amortization expenses
|
175
|
|
|
107
|
|
|
111
|
|
|||
General and administrative expenses
|
44
|
|
|
36
|
|
|
44
|
|
|||
Loss on asset disposals and impairments
|
—
|
|
|
3
|
|
|
1
|
|
|||
Operating Income
|
$
|
257
|
|
|
$
|
218
|
|
|
$
|
217
|
|
Rates (e)
|
|
|
|
|
|
||||||
Average margin on NGL sales per barrel (b)(c)(f)
|
$
|
34.77
|
|
|
$
|
36.59
|
|
|
$
|
34.38
|
|
Average gas gathering and processing revenue per MMBtu
|
$
|
0.95
|
|
|
$
|
0.82
|
|
|
$
|
0.69
|
|
Average crude oil and water gathering revenue per barrel
|
$
|
2.11
|
|
|
$
|
1.72
|
|
|
$
|
1.79
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
In 2017, we had
22.2
Mbpd of gross NGL sales under POP and keep-whole arrangements. We retained
8.3
Mbpd under these arrangements. The difference between gross sales barrels and barrels retained is reflected in NGL expense resulting from the gross presentation required for the POP arrangements associated with the North Dakota Gathering and Processing Assets.
|
(c)
|
Included in NGL expense for 2017 were approximately
$2 million
of costs related to crude oil volumes obtained in connection with the North Dakota Gathering and Processing Assets acquisition. The corresponding revenues were recognized in pass-thru and other revenue. As such, the calculation of the average margin on NGL sales per barrel excludes this amount.
|
(d)
|
Operating expenses include net imbalance settlement gains of
$8 million
,
$3 million
and
$2 million
in the years ended
December 31, 2017
,
2016
and
2015
, respectively.
|
(e)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
(f)
|
See “Non-GAAP Reconciliations” section below for further information regarding this non-GAAP measure.
|
|
|
December 31, 2017
|
49
|
Management’s Discussion and Analysis
|
|
Period Ended
|
||
|
December 31, 2017 (a)
|
||
Revenues
|
|
||
Fuel sales
|
$
|
1,267
|
|
Other wholesale
|
15
|
|
|
Total Revenues
|
1,282
|
|
|
Costs and Expenses
|
|
||
Cost of fuel and other (excluding items shown separately below)
|
1,244
|
|
|
Operating expenses (excluding depreciation and amortization)
|
15
|
|
|
Depreciation and amortization expenses
|
5
|
|
|
General and administrative expenses
|
3
|
|
|
Operating Income
|
$
|
15
|
|
|
|
||
Rates (b)
|
|
||
Fuel sales volumes (millions of gallons)
|
722
|
|
|
Average wholesale fuel sales margin per gallon (c)
|
|
3.0
|
¢
|
(a)
|
Adjusted to include the historical results of the Predecessors. The
2017
period only includes the results beginning June 1, 2017.
|
(b)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
(c)
|
See “Non-GAAP Reconciliations” section below for further information regarding this non-GAAP measure.
|
50
|
|
|
|
Management’s Discussion and Analysis
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
||||||||||||||
|
Terminalling and Transportation
|
Gathering and Processing
|
Wholesale
|
||||||||||||||||||||||||
Segment Operating Income
|
$
|
464
|
|
|
$
|
296
|
|
|
$
|
203
|
|
|
$
|
257
|
|
|
$
|
218
|
|
|
$
|
217
|
|
|
$
|
15
|
|
Depreciation and amortization expenses
|
102
|
|
|
83
|
|
|
76
|
|
|
175
|
|
|
107
|
|
|
111
|
|
|
5
|
|
|||||||
Equity in earnings of equity method investments
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
13
|
|
|
7
|
|
|
—
|
|
|||||||
Other income, net
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|||||||
Segment EBITDA
|
$
|
569
|
|
|
$
|
379
|
|
|
$
|
279
|
|
|
$
|
442
|
|
|
$
|
344
|
|
|
$
|
335
|
|
|
$
|
20
|
|
|
|
December 31, 2017
|
51
|
Management’s Discussion and Analysis
|
|
Year Ended December 31,
|
||||||||||
|
2017 (a)
|
|
2016 (a)
|
|
2015 (a)
|
||||||
Net Cash from Operating Activities
|
$
|
709
|
|
|
$
|
498
|
|
|
$
|
436
|
|
Changes in assets and liabilities
|
29
|
|
|
44
|
|
|
19
|
|
|||
Predecessors impact
|
(48
|
)
|
|
17
|
|
|
34
|
|
|||
Maintenance capital expenditures (b)
|
(99
|
)
|
|
(72
|
)
|
|
(54
|
)
|
|||
Reimbursement for maintenance capital expenditures (b)
|
31
|
|
|
28
|
|
|
9
|
|
|||
Net earnings attributable to noncontrolling interest (c)
|
—
|
|
|
—
|
|
|
(18
|
)
|
|||
Other adjustments for noncontrolling interest (d)
|
—
|
|
|
—
|
|
|
(21
|
)
|
|||
Adjustments for equity method investments (e)
|
2
|
|
|
2
|
|
|
(3
|
)
|
|||
Gain (loss) on sales of assets, net of proceeds
|
29
|
|
|
8
|
|
|
(1
|
)
|
|||
Other (f)
|
15
|
|
|
7
|
|
|
21
|
|
|||
Distributable Cash Flow
|
668
|
|
|
532
|
|
|
422
|
|
|||
Less: Preferred unit distributions (g)
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||
Distributable Cash Flow Attributable to Common Unitholders
|
$
|
665
|
|
|
$
|
532
|
|
|
$
|
422
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
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.
|
(c)
|
Excludes $2 million of undistributed QEP Midstream Partners, LP (“QEPM”) earnings prior to the closing of the merger of QEPM with Andeavor Logistics for the year ended December 31, 2015, that unitholders of QEPM were entitled to receive, but unitholders of Andeavor Logistics received as a result of the merger.
|
(d)
|
Adjustments represent cash distributions in excess of (or less than) our controlling interest in income and depreciation as well as other adjustments for depreciation and maintenance capital expenditures applicable to the noncontrolling interest obtained in the Rockies Natural Gas Business Acquisition.
|
(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 primarily include the exclusion of the non-cash gain of $6 million recognized relating to the settlement of the Questar Gas Company litigation for the year ended December 31, 2016 and the inclusion of $13 million for acquired deficiency revenue billings to customers for the year ended December 31, 2015.
|
(g)
|
Represents the cash distributions earned by the Preferred Units for the year ended
December 31, 2017
assuming a distribution is declared by the Board. Cash distributions to be paid to holders of the Preferred Units are not available to common unitholders.
|
52
|
|
|
|
Management’s Discussion and Analysis
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Segment Operating Income
|
$
|
257
|
|
|
$
|
218
|
|
|
$
|
217
|
|
Add back:
|
|
|
|
|
|
||||||
Operating expenses
|
354
|
|
|
249
|
|
|
244
|
|
|||
Depreciation and amortization expenses
|
175
|
|
|
107
|
|
|
111
|
|
|||
General and administrative expenses
|
44
|
|
|
36
|
|
|
44
|
|
|||
Loss on asset disposals and impairments
|
—
|
|
|
3
|
|
|
1
|
|
|||
Other commodity purchases (a)
|
2
|
|
|
—
|
|
|
—
|
|
|||
Subtract:
|
|
|
|
|
|
||||||
Gas gathering and processing revenues
|
(333
|
)
|
|
(264
|
)
|
|
(274
|
)
|
|||
Crude oil gathering revenues
|
(228
|
)
|
|
(133
|
)
|
|
(123
|
)
|
|||
Pass-thru and other revenues
|
(165
|
)
|
|
(115
|
)
|
|
(121
|
)
|
|||
Margin on NGL Sales
|
$
|
106
|
|
|
$
|
101
|
|
|
$
|
99
|
|
Divided by Total Volumes for the Period:
|
|
|
|
|
|
||||||
NGLs sales volumes (Mbpd)
|
8.3
|
|
|
7.5
|
|
|
7.9
|
|
|||
Number of days in the period
|
365
|
|
|
366
|
|
|
365
|
|
|||
Total volumes for the period (thousands of barrels) (b)
|
3,030
|
|
|
2,745
|
|
|
2,884
|
|
|||
Average Margin on NGL Sales per Barrel (b)
|
$
|
34.77
|
|
|
$
|
36.59
|
|
|
$
|
34.38
|
|
(a)
|
Included in the NGL expense for the year ended
December 31, 2017
was approximately
$2 million
of costs related to crude oil volumes obtained and immediately sold in connection with the North Dakota Gathering and Processing Assets acquisition.
|
(b)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
|
Period Ended
|
||
|
December 31, 2017 (a)
|
||
Segment Operating Income
|
$
|
15
|
|
Add back:
|
|
||
Operating expenses (excluding depreciation and amortization)
|
15
|
|
|
Depreciation and amortization expenses
|
5
|
|
|
General and administrative expenses
|
3
|
|
|
Subtract:
|
|
||
Other wholesale revenues
|
(15
|
)
|
|
Wholesale Fuel Sales Margin
|
$
|
23
|
|
Divided by Total Volumes for the Period:
|
|
||
Fuel sales volumes (millions of gallons)
|
722
|
|
|
Average Wholesale Fuel Sales Margin per Gallon (b)
|
|
3.0
|
¢
|
(a)
|
Adjusted to include the historical results of the Predecessors. The
2017
period only includes the results beginning June 1, 2017.
|
(b)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
|
|
December 31, 2017
|
53
|
Management’s Discussion and Analysis
|
54
|
|
|
|
Management’s Discussion and Analysis
|
Quarter Ended
|
Total Quarterly Distribution Per Common Unit
|
|
Total Quarterly Distribution Per Common Unit, Annualized
|
|
Total Cash Distribution
(in millions)
|
|
Date of Distribution
|
||||||
December 31, 2017
|
$
|
1.0000
|
|
|
$
|
4.00
|
|
|
$
|
205
|
|
|
February 14, 2018
|
September 30, 2017
|
0.9852
|
|
|
3.94
|
|
|
201
|
|
|
November 14, 2017
|
|||
June 30, 2017 (a)
|
0.9710
|
|
|
3.88
|
|
|
147
|
|
|
August 14, 2017
|
|||
March 31, 2017
|
0.9400
|
|
|
3.76
|
|
|
140
|
|
|
May 15, 2017
|
|||
December 31, 2016
|
0.9100
|
|
|
3.64
|
|
|
140
|
|
|
February 14, 2017
|
|||
September 30, 2016
|
0.8750
|
|
|
3.50
|
|
|
131
|
|
|
November 14, 2016
|
|||
June 30, 2016
|
0.8420
|
|
|
3.37
|
|
|
123
|
|
|
August 12, 2016
|
|||
March 31, 2016
|
0.8100
|
|
|
3.24
|
|
|
108
|
|
|
May 13, 2016
|
(a)
|
On July 25, 2017, WNRL declared a quarterly cash distribution of $0.4675 per common unit, which was paid on August 18, 2017, in the amount of $33 million.
|
|
|
December 31, 2017
|
55
|
Management’s Discussion and Analysis
|
|
December 31,
|
||||||
Debt, including current maturities:
|
2017
|
|
2016
|
||||
Revolving Credit Facility
|
$
|
423
|
|
|
$
|
330
|
|
Dropdown Credit Facility
|
—
|
|
|
—
|
|
||
5.500% Senior Notes due 2019
|
500
|
|
|
500
|
|
||
5.875% Senior Notes due 2020 (a)
|
—
|
|
|
470
|
|
||
6.125% Senior Notes due 2021 (a)
|
—
|
|
|
800
|
|
||
3.500% Senior Notes due 2022 (b)
|
500
|
|
|
—
|
|
||
6.250% Senior Notes due 2022
|
300
|
|
|
800
|
|
||
6.375% Senior Notes due 2024
|
450
|
|
|
450
|
|
||
5.250% Senior Notes due 2025
|
750
|
|
|
750
|
|
||
4.250% Senior Notes due 2027 (b)
|
750
|
|
|
—
|
|
||
5.200% Senior Notes due 2047 (b)
|
500
|
|
|
—
|
|
||
Capital lease obligations and other
|
9
|
|
|
9
|
|
||
Total Debt
|
4,182
|
|
|
4,109
|
|
||
Unamortized Issuance Costs (a) (b)
|
(54
|
)
|
|
(55
|
)
|
||
Debt, Net of Unamortized Issuance Costs
|
$
|
4,128
|
|
|
$
|
4,054
|
|
(a)
|
Unamortized premiums of
$4 million
associated with these senior notes are included in unamortized issuance costs at
December 31, 2016
.
|
(b)
|
Unamortized discounts of
$5 million
associated with these senior notes are included in unamortized issuance costs at
December 31, 2017
.
|
56
|
|
|
|
Management’s Discussion and Analysis
|
Credit Facility
|
30 day Eurodollar (LIBOR) Rate at December 31, 2017
|
|
Eurodollar Margin
|
|
Base Rate
|
|
Base Rate Margin
|
|
Commitment Fee
(unused portion)
|
Revolving Credit Facility (a)
|
1.56%
|
|
1.50%
|
|
4.50%
|
|
0.50%
|
|
0.250%
|
Dropdown Credit Facility (a)
|
1.56%
|
|
1.51%
|
|
4.50%
|
|
0.51%
|
|
0.250%
|
(a)
|
We have the option to elect whether the borrowings will bear interest at either a Eurodollar rate, for the applicable period, plus the Eurodollar margin, or a base rate plus the base rate margin 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.
|
|
|
December 31, 2017
|
57
|
Management’s Discussion and Analysis
|
•
|
Lower Cost of Capital - We expect to realize incremental interest savings and lower new issuance costs;
|
•
|
Balance Sheet Flexibility - We have the ability to extend our maturity profile to increase duration and match asset life. This provides simplified and less restrictive covenants;
|
•
|
Financial and Operational Flexibility - We gain access to improved commercial terms that reduce the need for letters of credit. This enhances our financial standing with customers, suppliers and partners; and
|
•
|
Improved Market Access - We have the opportunity to a greater market depth and breadth that provides stability and reliable access. We now have access to subordinated debt and preferred equity markets.
|
58
|
|
|
|
Management’s Discussion and Analysis
|
|
Year Ended December 31,
|
||||||||||
|
2017 (a)
|
|
2016 (a)
|
|
2015 (a)
|
||||||
Cash Flows From (Used In):
|
|
|
|
|
|
||||||
Operating Activities
|
$
|
709
|
|
|
$
|
498
|
|
|
$
|
436
|
|
Investing Activities
|
(813
|
)
|
|
(318
|
)
|
|
(389
|
)
|
|||
Financing Activities
|
(509
|
)
|
|
492
|
|
|
(50
|
)
|
|||
Increase (Decrease) in Cash and Cash Equivalents
|
$
|
(613
|
)
|
|
$
|
672
|
|
|
$
|
(3
|
)
|
(a)
|
Includes the historical results related to the Partnership and Predecessors for the years ended
December 31, 2017
,
2016
and
2015
.
|
|
|
December 31, 2017
|
59
|
Management’s Discussion and Analysis
|
Major Projects
|
Total Project Expected Capital Expenditures
|
|
Actual 2017 Capital Expenditures
|
|||
Carson Crude Terminal Expansion Project (a)
|
$
|
140 - 160
|
|
$
|
1
|
|
North Dakota NGL Logistics Hub (b)
|
|
140 - 150
|
|
1
|
|
|
|
|
|
|
|
||
Andeavor Projects Expected to be Acquired
|
|
|
|
Total Project
Expected Spend
|
||
Conan Crude Gathering System (c)
|
|
|
|
$
|
225
|
|
Los Angeles Refinery Interconnect Pipeline System (d)
|
|
|
|
150
|
|
(a)
|
Andeavor Logistics intends to construct and operate two to three million barrels of additional crude oil storage capacity to better accommodate the unloading of marine vessels at our nearby marine terminal, which is expected to reduce transportation costs for Andeavor, such as port fees and demurrage.
|
(b)
|
Andeavor Logistics intends to transport mixed NGLs from a third party processing plant in McKenzie County, North Dakota to its Belfield gas processing plant for fractionation and then ship purity NGL products on manifest and unit trains from the Fryburg rail terminal.
|
(c)
|
The construction of the Conan crude gathering system provides connectivity to multiple long-haul pipelines. The initial capacity is planned to be approximately 250 Mpbd, which is expandable to 500 Mpbd. The initial storage capacity is estimated to be 720,000 barrels. This project is being funded by Andeavor and is expected to be transferred to Andeavor Logistics at cost plus capitalized interest.
|
(d)
|
The pipeline interconnect project at Andeavor’s Los Angeles refinery is designed to provide direct connectivity between Andeavor’s refining sites. This project is being funded by Andeavor and is expected to be transferred to Andeavor Logistics at cost plus capitalized interest.
|
60
|
|
|
|
Management’s Discussion and Analysis
|
Contractual Obligation
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Long-term debt obligations (a)
|
$
|
203
|
|
|
$
|
697
|
|
|
$
|
175
|
|
|
$
|
586
|
|
|
$
|
957
|
|
|
$
|
3,373
|
|
|
$
|
5,991
|
|
Capital lease obligations (b)
|
2
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
5
|
|
|
11
|
|
|||||||
Operating lease obligations (c)
|
16
|
|
|
14
|
|
|
13
|
|
|
11
|
|
|
10
|
|
|
100
|
|
|
164
|
|
|||||||
Purchase obligations (d)
|
2,193
|
|
|
2,193
|
|
|
2,194
|
|
|
2,170
|
|
|
2,132
|
|
|
3,840
|
|
|
14,722
|
|
|||||||
Capital expenditure obligations (e)
|
67
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|||||||
Total Contractual Obligations
|
$
|
2,481
|
|
|
$
|
2,905
|
|
|
$
|
2,383
|
|
|
$
|
2,768
|
|
|
$
|
3,100
|
|
|
$
|
7,318
|
|
|
$
|
20,955
|
|
(a)
|
Includes maturities of principal and interest payments. Amounts and timing may be different from our estimated commitments due to potential voluntary debt prepayments and borrowings.
|
(b)
|
Capital lease obligations include amounts classified as interest.
|
(c)
|
Minimum operating lease payments for operating leases having initial or remaining non-cancellable lease terms in excess of one year primarily related to our truck vehicle leases and leases for pipelines, terminals, pump stations and property leases.
|
(d)
|
Purchase obligations include enforceable and legally binding service agreement commitments that meet any of the following criteria: (1) they are non-cancellable, (2) we would incur a penalty if the agreement was canceled, or (3) we must make specified minimum payments even if we do not take delivery of the contracted products or services. If we can unilaterally terminate the agreement simply by providing a certain number of days’ notice or by paying a termination fee, we have included the termination fee or the amount that would be paid over the notice period. Contracts that can be unilaterally terminated without a penalty are not included. Future purchase obligations primarily include our fuel costs associated with our wholesale product supply agreement, NGLs transportation costs, fractionation fees, and fixed charges under the Amended Omnibus Agreement and the Secondment Agreement. Our Amended Omnibus Agreement remains in effect between the applicable parties until a change in control of the Partnership. As we are unable to estimate the termination of the omnibus agreement, we have included the fees for each of the five years following
December 31, 2017
for the Amended Omnibus Agreement for disclosure purposes in the table above.
|
(e)
|
Minimum contractual spending requirements for certain capital projects.
|
|
|
December 31, 2017
|
61
|
Management’s Discussion and Analysis
|
62
|
|
|
|
Management’s Discussion and Analysis
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
|
December 31, 2017
|
63
|
Quantitative and Qualitative Disclosure
|
64
|
|
|
|
Financial Statements
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
|
December 31, 2017
|
65
|
Financial Statements
|
|
|
Year Ended December 31,
|
||||||||||
|
Note
|
2017 (a)
|
|
2016 (a)
|
|
2015 (a)
|
||||||
|
|
(In millions, except per unit amounts)
|
||||||||||
Revenues:
|
|
|
|
|
|
|
||||||
Fee-based:
|
|
|
|
|
|
|
||||||
Affiliate
|
3
|
$
|
914
|
|
|
$
|
615
|
|
|
$
|
519
|
|
Third-party
|
|
648
|
|
|
502
|
|
|
494
|
|
|||
Product-based:
|
|
|
|
|
|
|
||||||
Affiliate
|
3
|
489
|
|
|
100
|
|
|
96
|
|
|||
Third-party
|
|
1,162
|
|
|
3
|
|
|
3
|
|
|||
Total Revenues
|
|
3,213
|
|
|
1,220
|
|
|
1,112
|
|
|||
Costs and Expenses:
|
|
|
|
|
|
|
||||||
Cost of fuel and other (excluding items shown separately below)
|
|
1,244
|
|
|
—
|
|
|
—
|
|
|||
NGL expense (excluding items shown separately below)
|
|
265
|
|
|
2
|
|
|
—
|
|
|||
Operating expenses (excluding depreciation and amortization)
|
|
626
|
|
|
442
|
|
|
428
|
|
|||
General and administrative expenses
|
|
139
|
|
|
95
|
|
|
103
|
|
|||
Depreciation and amortization expenses
|
|
282
|
|
|
190
|
|
|
187
|
|
|||
(Gain) loss on asset disposals and impairments
|
2
|
(25
|
)
|
|
4
|
|
|
1
|
|
|||
Operating Income
|
|
682
|
|
|
487
|
|
|
393
|
|
|||
Interest and financing costs, net
|
|
(322
|
)
|
|
(191
|
)
|
|
(150
|
)
|
|||
Equity in earnings of equity method investments
|
6
|
10
|
|
|
13
|
|
|
7
|
|
|||
Other income, net
|
|
3
|
|
|
6
|
|
|
—
|
|
|||
Earnings Before Income Taxes
|
|
373
|
|
|
315
|
|
|
250
|
|
|||
Income tax expense
|
|
—
|
|
|
—
|
|
|
1
|
|
|||
Net Earnings
|
|
$
|
373
|
|
|
$
|
315
|
|
|
$
|
249
|
|
|
|
|
|
|
|
|
||||||
(Earnings) loss attributable to Predecessors
|
|
$
|
(24
|
)
|
|
$
|
24
|
|
|
$
|
43
|
|
Net earnings attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|||
Net earnings attributable to partners
|
|
349
|
|
|
339
|
|
|
272
|
|
|||
Preferred unit distributions
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||
General partner’s interest in net earnings, including incentive distribution rights
|
|
(79
|
)
|
|
(152
|
)
|
|
(73
|
)
|
|||
Limited partners’ interest in net earnings
|
|
$
|
267
|
|
|
$
|
187
|
|
|
$
|
199
|
|
|
|
|
|
|
|
|
||||||
Net earnings per limited partner unit:
|
|
|
|
|
|
|
||||||
Common - basic
|
|
$
|
2.11
|
|
|
$
|
1.87
|
|
|
$
|
2.33
|
|
Common - diluted
|
|
$
|
2.11
|
|
|
$
|
1.87
|
|
|
$
|
2.33
|
|
|
|
|
|
|
|
|
||||||
Weighted average limited partner units outstanding:
|
|
|
|
|
|
|
||||||
Common units - basic
|
|
126.0
|
|
|
98.2
|
|
|
84.7
|
|
|||
Common units - diluted
|
|
126.1
|
|
|
98.2
|
|
|
84.8
|
|
|||
|
|
|
|
|
|
|
||||||
Cash distributions paid per unit
|
|
$
|
3.8062
|
|
|
$
|
3.3070
|
|
|
$
|
2.8350
|
|
(a)
|
All periods include the historical results of the Predecessors. See Notes 1 and 2 for further discussion.
|
66
|
|
|
|
Financial Statements
|
|
|
December 31,
|
||||||
|
Note
|
2017
|
|
2016
|
||||
|
|
(In millions, except unit amounts)
|
||||||
Assets
|
|
|
|
|
||||
Current Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
75
|
|
|
$
|
688
|
|
Receivables, net of allowance for doubtful accounts
|
|
|
|
|
||||
Trade and other
|
|
219
|
|
|
129
|
|
||
Affiliate
|
|
184
|
|
|
101
|
|
||
Prepayments and other current assets
|
|
27
|
|
|
20
|
|
||
Total Current Assets
|
|
505
|
|
|
938
|
|
||
Property, Plant, and Equipment, Net
|
4
|
5,413
|
|
|
3,444
|
|
||
Acquired Intangibles, Net
|
5
|
1,153
|
|
|
947
|
|
||
Goodwill
|
5
|
692
|
|
|
117
|
|
||
Equity Method Investments
|
6
|
320
|
|
|
337
|
|
||
Other Noncurrent Assets, Net
|
|
86
|
|
|
77
|
|
||
Total Assets
|
|
$
|
8,169
|
|
|
$
|
5,860
|
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
|
||||
Current Liabilities
|
|
|
|
|
||||
Accounts payable
|
|
|
|
|
||||
Trade and other
|
|
$
|
160
|
|
|
$
|
69
|
|
Affiliate
|
|
199
|
|
|
56
|
|
||
Accrued interest and financing costs
|
|
40
|
|
|
42
|
|
||
Other current liabilities
|
7
|
75
|
|
|
45
|
|
||
Total Current Liabilities
|
|
474
|
|
|
212
|
|
||
Debt, Net of Unamortized Issuance Costs
|
8
|
4,127
|
|
|
4,053
|
|
||
Other Noncurrent Liabilities
|
|
54
|
|
|
53
|
|
||
Total Liabilities
|
|
4,655
|
|
|
4,318
|
|
||
Commitments and Contingencies
|
10
|
|
|
|
|
|
||
Equity
|
|
|
|
|
||||
Preferred unitholders:
600,000
units issued and outstanding in 2017
|
|
589
|
|
|
—
|
|
||
Common unitholders:
217,097,057
units issued and outstanding (102,981,495 in 2016)
|
|
2,925
|
|
|
1,608
|
|
||
General partner:
2,202,880
units issued and outstanding (2,100,900 in 2016)
|
|
—
|
|
|
(66
|
)
|
||
Total Equity
|
11
|
3,514
|
|
|
1,542
|
|
||
Total Liabilities and Equity
|
|
$
|
8,169
|
|
|
$
|
5,860
|
|
|
|
December 31, 2017
|
67
|
Financial Statements
|
|
Equity of Predecessors (a)
|
|
Partnership
|
|
Non-controlling Interest
|
|
Total
|
||||||||||||||||
|
|
Common
|
|
Preferred
|
|
General Partner
|
|
|
|||||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Balance at December 31, 2014
|
$
|
168
|
|
|
$
|
1,474
|
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
|
$
|
435
|
|
|
$
|
2,058
|
|
Sponsor contributions of equity to the Predecessors
|
116
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
116
|
|
||||||
Loss attributable to Predecessors
|
(43
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(43
|
)
|
||||||
Net liabilities not assumed by Andeavor Logistics LP
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Allocation of net assets acquired by the unitholders
|
(39
|
)
|
|
37
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||||
Equity offering, net of issuance costs
|
—
|
|
|
95
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
99
|
|
||||||
Quarterly distributions to unitholders and general partner
|
—
|
|
|
(240
|
)
|
|
—
|
|
|
(68
|
)
|
|
(22
|
)
|
|
(330
|
)
|
||||||
Distributions to unitholders and general partner related to acquisitions
|
—
|
|
|
(235
|
)
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(250
|
)
|
||||||
Contributions
|
—
|
|
|
22
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
32
|
|
||||||
Net earnings excluding loss attributable to Predecessors
|
—
|
|
|
199
|
|
|
—
|
|
|
73
|
|
|
20
|
|
|
292
|
|
||||||
QEPM Merger
|
—
|
|
|
351
|
|
|
—
|
|
|
—
|
|
|
(351
|
)
|
|
—
|
|
||||||
Other
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
6
|
|
||||||
Balance at December 31, 2015
|
$
|
205
|
|
|
$
|
1,707
|
|
|
$
|
—
|
|
|
$
|
(13
|
)
|
|
$
|
84
|
|
|
$
|
1,983
|
|
Sponsor contributions of equity to the Predecessors
|
119
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
119
|
|
||||||
Loss attributable to Predecessors
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
||||||
Net liabilities not assumed by Andeavor Logistics LP
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
||||||
Allocation of net assets acquired by the unitholders
|
(322
|
)
|
|
310
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
||||||
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
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
|
(84
|
)
|
||||||
Quarterly distributions to unitholders and general partner
|
—
|
|
|
(324
|
)
|
|
—
|
|
|
(137
|
)
|
|
—
|
|
|
(461
|
)
|
||||||
Distributions to unitholders and general partner related to acquisitions
|
—
|
|
|
(679
|
)
|
|
—
|
|
|
(86
|
)
|
|
—
|
|
|
(765
|
)
|
||||||
Contributions
|
—
|
|
|
39
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
42
|
|
||||||
Net earnings excluding loss attributable to Predecessors
|
—
|
|
|
187
|
|
|
—
|
|
|
152
|
|
|
—
|
|
|
339
|
|
||||||
Other
|
—
|
|
|
4
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
7
|
|
||||||
Balance at December 31, 2016
|
$
|
—
|
|
|
$
|
1,608
|
|
|
$
|
—
|
|
|
$
|
(66
|
)
|
|
$
|
—
|
|
|
$
|
1,542
|
|
Sponsor contributions of net assets acquired to the Predecessors
|
1,722
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,722
|
|
||||||
Earnings attributable to the Predecessors
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
||||||
Allocation of net assets acquired by the unitholders
|
(1,713
|
)
|
|
1,713
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Proceeds from issuance of units, net of issuance costs
|
—
|
|
|
284
|
|
|
589
|
|
|
6
|
|
|
—
|
|
|
879
|
|
||||||
Unit-based compensation
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||||
Quarterly distributions to unitholders and general partner
|
(33
|
)
|
|
(501
|
)
|
|
—
|
|
|
(127
|
)
|
|
—
|
|
|
(661
|
)
|
||||||
Distributions to unitholders and general partner related to acquisitions
|
—
|
|
|
(401
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(401
|
)
|
||||||
Contributions
|
—
|
|
|
50
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
53
|
|
||||||
Net earnings excluding income attributable to Predecessors
|
—
|
|
|
229
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
349
|
|
||||||
General partner restructuring
|
—
|
|
|
(60
|
)
|
|
—
|
|
|
60
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
4
|
|
|
—
|
|
|
2
|
|
||||||
Balance at December 31, 2017
|
$
|
—
|
|
|
$
|
2,925
|
|
|
$
|
589
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,514
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Notes 1 and 2 for further discussion.
|
68
|
|
|
|
Financial Statements
|
|
Year Ended December 31,
|
||||||||||
|
2017 (a)
|
|
2016 (a)
|
|
2015 (a)
|
||||||
|
(In millions)
|
||||||||||
Cash Flows From (Used In) Operating Activities:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
373
|
|
|
$
|
315
|
|
|
$
|
249
|
|
Adjustments to reconcile net earnings to net cash from operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization expenses
|
282
|
|
|
190
|
|
|
187
|
|
|||
Amortization of debt issuance costs
|
10
|
|
|
9
|
|
|
8
|
|
|||
Debt redemption charges
|
77
|
|
|
—
|
|
|
—
|
|
|||
(Gain) loss on asset disposals and impairments
|
(25
|
)
|
|
4
|
|
|
1
|
|
|||
Unit-based compensation expense
|
9
|
|
|
6
|
|
|
6
|
|
|||
Distributions received in excess of equity in earnings of equity method investments
|
17
|
|
|
16
|
|
|
3
|
|
|||
Other non-cash operating activities
|
(5
|
)
|
|
2
|
|
|
1
|
|
|||
Changes in receivables
|
(59
|
)
|
|
(9
|
)
|
|
(21
|
)
|
|||
Changes in other current assets
|
—
|
|
|
(5
|
)
|
|
(9
|
)
|
|||
Changes in current liabilities
|
72
|
|
|
(22
|
)
|
|
(6
|
)
|
|||
Changes in other noncurrent assets and liabilities
|
(42
|
)
|
|
(8
|
)
|
|
17
|
|
|||
Net cash from operating activities
|
709
|
|
|
498
|
|
|
436
|
|
|||
Cash Flows From (Used In) Investing Activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(208
|
)
|
|
(260
|
)
|
|
(383
|
)
|
|||
Acquisitions, net of cash acquired
|
(652
|
)
|
|
(30
|
)
|
|
(6
|
)
|
|||
Proceeds from sale of assets
|
47
|
|
|
—
|
|
|
—
|
|
|||
Deposits for acquisitions
|
—
|
|
|
(33
|
)
|
|
—
|
|
|||
Increase in restricted cash
|
(14
|
)
|
|
—
|
|
|
—
|
|
|||
Use of restricted cash
|
14
|
|
|
—
|
|
|
—
|
|
|||
Other investing activities
|
—
|
|
|
5
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(813
|
)
|
|
(318
|
)
|
|
(389
|
)
|
|||
Cash Flows From (Used In) Financing Activities:
|
|
|
|
|
|
||||||
Proceeds from debt offering
|
1,750
|
|
|
1,451
|
|
|
250
|
|
|||
Proceeds from issuance of common units, net of issuance costs
|
284
|
|
|
364
|
|
|
95
|
|
|||
Proceeds from issuance of preferred units, net of issuance costs
|
589
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of general partner units, net of issuance costs
|
6
|
|
|
—
|
|
|
4
|
|
|||
Quarterly distributions to common unitholders
|
(530
|
)
|
|
(324
|
)
|
|
(240
|
)
|
|||
Quarterly distributions to general partner
|
(131
|
)
|
|
(137
|
)
|
|
(68
|
)
|
|||
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
(22
|
)
|
|||
Distributions in connection with acquisitions from Andeavor
|
(406
|
)
|
|
(760
|
)
|
|
(250
|
)
|
|||
Borrowings under revolving credit agreements
|
1,225
|
|
|
1,451
|
|
|
476
|
|
|||
Repayments under revolving credit agreements
|
(1,152
|
)
|
|
(1,426
|
)
|
|
(431
|
)
|
|||
Repayments of long-term debt including capital leases
|
(2,070
|
)
|
|
(251
|
)
|
|
—
|
|
|||
Premiums paid on debt redemption
|
(85
|
)
|
|
—
|
|
|
—
|
|
|||
Sponsor contributions of equity to the Predecessors
|
—
|
|
|
119
|
|
|
116
|
|
|||
Financing costs
|
—
|
|
|
(7
|
)
|
|
—
|
|
|||
Payments of debt issuance costs
|
(22
|
)
|
|
(21
|
)
|
|
(2
|
)
|
|||
Contribution from general partner
|
—
|
|
|
4
|
|
|
—
|
|
|||
Capital contributions by affiliate
|
34
|
|
|
29
|
|
|
22
|
|
|||
Other financing activities
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash from (used in) financing activities
|
(509
|
)
|
|
492
|
|
|
(50
|
)
|
|||
Increase (Decrease) in Cash and Cash Equivalents
|
(613
|
)
|
|
672
|
|
|
(3
|
)
|
|||
Cash and Cash Equivalents, Beginning of Year
|
688
|
|
|
16
|
|
|
19
|
|
|||
Cash and Cash Equivalents, End of Year
|
$
|
75
|
|
|
$
|
688
|
|
|
$
|
16
|
|
(a)
|
All periods include the historical results of the Predecessors. See Notes 1 and 2 for further discussion.
|
|
|
December 31, 2017
|
69
|
Notes to Consolidated Financial Statements
|
70
|
|
|
|
Notes to Consolidated Financial Statements
|
|
•
|
crude oil, feedstock and refined products storage, the Anacortes marine terminal, a manifest rail facility and crude oil and refined products pipelines located in Anacortes, Washington on November 8, 2017;
|
•
|
logistic assets owned by Western Refining Logistics, LP (“WNRL”), which consisted of pipelines, gathering, terminalling, storage, transportation and wholesale fuel distribution assets effective October 30, 2017;
|
•
|
tankage, refined product storage, marine terminal terminalling and storage assets, pipelines, causeway and ancillary equipment located in Martinez, California (the “Northern California Terminalling and Storage Assets”) effective
November 21, 2016
;
|
•
|
all of the limited liability company interests in Tesoro Alaska Terminals, LLC, tankage, bulk tank farm, a truck rack and rail-loading facility, terminalling and other storage assets located in Kenai, Anchorage and Fairbanks, Alaska (the “Alaska Storage and Terminalling Assets”) completed in two stages on July 1, 2016 and September 16, 2016; and
|
•
|
a crude oil and refined products storage tank facility located at Andeavor’s Los Angeles refinery and a
50%
fee interest in a pipeline that transports jet fuel from Andeavor’s Los Angeles refinery to the Los Angeles International Airport (the “LA Storage and Handling Assets”) effective
November 12, 2015
.
|
|
|
December 31, 2017
|
71
|
Notes to Consolidated Financial Statements
|
72
|
|
|
|
Notes to Consolidated Financial Statements
|
|
•
|
the short term duration of the instruments (approximately
1%
of our third-party receivables and approximately
8%
of trade payables 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.
|
|
|
December 31, 2017
|
73
|
Notes to Consolidated Financial Statements
|
74
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
December 31, 2017
|
75
|
Notes to Consolidated Financial Statements
|
76
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
December 31, 2017
|
77
|
Notes to Consolidated Financial Statements
|
Cash
|
$
|
22
|
|
Receivables
|
112
|
|
|
Inventories
|
11
|
|
|
Prepayments and Other Current Assets
|
25
|
|
|
Property, Plant and Equipment (a)
|
1,350
|
|
|
Goodwill
|
565
|
|
|
Acquired Intangibles
|
130
|
|
|
Other Noncurrent Assets
|
2
|
|
|
Accounts Payable
|
(167
|
)
|
|
Accrued Liabilities
|
(41
|
)
|
|
Debt
|
(347
|
)
|
|
Total purchase price
|
$
|
1,662
|
|
(a)
|
Estimated useful lives ranging from
3
to
22
years have been assumed based on the preliminary valuation.
|
78
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Revenues
|
$
|
4,250
|
|
|
$
|
3,440
|
|
Net earnings (a)
|
423
|
|
|
334
|
|
(a)
|
While many recurring adjustments impact the pro forma figures presented, the increase in pro forma net earnings compared to our net earnings presented on the consolidated statements of operations for the year ended
December 31, 2017
includes a significant non-recurring adjustment removing acquisition and integration costs from 2017 and reflects these costs in the first quarter of 2016, the period the acquisition was assumed to be completed for pro forma purposes.
|
Inventory
|
$
|
2
|
|
Property, Plant and Equipment
|
571
|
|
|
Intangibles (a)
|
122
|
|
|
Goodwill (b)
|
10
|
|
|
Total purchase price
|
$
|
705
|
|
(a)
|
The intangibles consist of customer contracts with a weighted average amortization period of
10.6 years
. Amortization of intangible assets for the year ended
December 31, 2017
was
$12 million
.
|
(b)
|
We evaluated several factors that contributed to the amount of goodwill presented above. These factors include the geographic proximity of the acquired assets to existing assets owned by the Partnership along with the improved overall basin logistics efficiencies we can leverage.
|
|
|
December 31, 2017
|
79
|
Notes to Consolidated Financial Statements
|
80
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
|
Termination Provisions
|
|
Commercial Agreement
|
Initiation Date
|
Term Years
|
Renewals
|
Refinery Shutdown Notice Period (a)
|
Force Majeure
|
Transportation Services Agreement (High Plains System)
|
April 2011
|
10
|
2 x 5 years
|
12 months
|
Andeavor Logistics can declare (unilateral)
|
Second Amended and Restated Master Terminalling Agreement
|
April 2011
|
10
|
2 x 5 years
|
||
Salt Lake City Storage Agreement
|
April 2011
|
10
|
2 x 5 years
|
||
Amended and Restated Transportation Services Agreement (Salt Lake City Short Haul Pipeline)
|
April 2011
|
10
|
2 x 5 years
|
||
Amorco Terminal Use and Throughput Agreement (Martinez Marine)
|
April 2012
|
10
|
2 x 5 years
|
||
Amended Anacortes Track Use and Throughput Agreement
|
November 2012
|
10
|
2 x 5 years
|
N/A
|
|
Terminalling Services Agreement for Northwest Products System
|
June 2013
|
1
|
Year to year
|
||
Southern California Terminalling Services Agreement
|
June 2013
|
10
|
2 x 5 years
|
||
Carson Storage Services Agreement Amended
|
June 2013
|
10
|
2 x 5 years
|
||
Southern California Dedicated Storage Agreement
|
June 2013
|
10
|
2 x 5 years
|
||
Terminalling, Transportation and Storage Services Agreement (WNRL)
|
October 2013
|
10
|
2 x 5 years
|
12 months
|
|
Amended Pipeline and Gathering Services Agreement (WNRL)
|
October 2013
|
10
|
2 x 5 years
|
||
Long Beach Storage Services Agreement
|
December 2013
|
10
|
2 x 5 years
|
N/A
|
|
Carson Coke Handling Service Agreement
|
December 2013
|
10
|
2 x 5 years
|
||
Long Beach Throughput Agreement (b)
|
December 2013
|
10
|
2 x 5 years
|
||
Transportation Services Agreement (SoCal Pipelines)
|
December 2013
|
10
|
2 x 5 years
|
||
Amended and Restated Long Beach Berth Access Use and Throughput Agreement
|
December 2013
|
10
|
2 x 5 years
|
||
BASH Storage - TRMC Tanks
|
April 2014
|
5
|
2 x 5 years
|
||
Terminalling Services Agreement - Martinez
|
July 2014
|
10
|
2 x 5 years
|
||
Storage Services Agreement - Anacortes
|
July 2014
|
10
|
2 x 5 years
|
||
Martinez Dedicated LPG Storage Agreement
|
July 2014
|
10
|
2 x 5 years
|
||
Terminalling Services Agreement - Anacortes
|
July 2014
|
10
|
2 x 5 years
|
||
THPP Reversal Open Season Northbound Commitment
|
September 2014
|
7
|
None
|
||
Tesoro Alaska Pipeline Throughput Agreement
|
September 2014
|
10
|
2 x 5 years
|
||
Transportation Services Agreement (LAR Short Haul Pipelines)
|
September 2014
|
10
|
2 x 5 years
|
||
Crude Oil Trucking Transportation Services Agreement (WNRL)
|
October 2014
|
10
|
None
|
||
Fuel Distribution and Supply Agreement (WNRL)
|
October 2014
|
10
|
None
|
||
Product Supply Agreement (WNRL)
|
October 2014
|
10
|
None
|
||
Keep-Whole Commodity Fee Agreement
|
December 2014
|
5
|
1 year auto
|
90 days prior to expiration
|
Bilateral
|
Carson Tank Farm Storage Agreement
|
November 2015
|
10
|
2 x 5 years
|
N/A
|
Andeavor Logistics can declare (unilateral)
|
Asphalt Trucking Transportation Services Agreement (WNRL)
|
May 2016
|
10
|
None
|
||
Kenai Storage Services Agreement
|
July 2016
|
10
|
2 x 5 years
|
||
Terminalling, Transportation and Storage Services Agreement (St. Paul Park)
|
September 2016
|
10
|
2 x 5 years
|
12 months
|
|
Alaska Terminalling Services Agreement
|
September 2016
|
10
|
2 x 5 years
|
N/A
|
|
Martinez Storage Services Agreement
|
November 2016
|
10
|
2 x 5 years
|
||
Asphalt and Propane Rack Loading Services Agreement
|
December 2016
|
10
|
2 x 5 years
|
||
Avon Marine Terminal Use and Throughput Agreement
|
January 2017
|
10
|
2 x 5 years
|
||
Transportation Services Agreement (Anacortes Short Haul Pipelines)
|
November 2017
|
10
|
2 x 5 years
|
||
Anacortes Manifest Rail Terminalling Services Agreement
|
November 2017
|
10
|
2 x 5 years
|
||
Anacortes Marine Terminal Operating Agreement
|
November 2017
|
17
|
None
|
||
Storage Services Agreement - Anacortes II
|
November 2017
|
10
|
2 x 5 years
|
(a)
|
Fixed minimum volumes remain in effect during routine turnarounds.
|
(b)
|
Agreement gives Andeavor the option to renew for two five-year terms, or Andeavor may modify the term of the agreements to a twenty-year term by providing notice in accordance with each agreement.
|
|
|
December 31, 2017
|
81
|
Notes to Consolidated Financial Statements
|
82
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
$
|
1,403
|
|
|
$
|
715
|
|
|
$
|
615
|
|
Operating expenses (exclusive of depreciation and amortization) (a)
|
186
|
|
|
190
|
|
|
177
|
|
|||
General and administrative expenses
|
82
|
|
|
69
|
|
|
72
|
|
(a)
|
Includes net imbalance settlement gains of
$12 million
,
$7 million
and
$8 million
in the years ended
December 31, 2017
,
2016
and
2015
, respectively. Also includes reimbursements primarily related to pressure testing and repairs and maintenance costs pursuant to the Amended Omnibus Agreement and the Carson Assets Indemnity Agreement of
$16 million
,
$17 million
and
$34 million
in the years ended
December 31, 2017
,
2016
and
2015
, respectively.
|
|
|
December 31, 2017
|
83
|
Notes to Consolidated Financial Statements
|
|
Estimated Useful Lives
|
|
December 31,
|
||||||
|
(Years)
|
|
2017
|
|
2016
|
||||
Terminals and tankage
|
10 - 28
|
|
$
|
3,035
|
|
|
$
|
2,163
|
|
Pipelines
|
16 - 28
|
|
2,585
|
|
|
1,250
|
|
||
Land and leasehold improvements
|
0 - 28
|
|
264
|
|
|
234
|
|
||
Buildings and improvements
|
6 - 28
|
|
80
|
|
|
55
|
|
||
Other
|
3 - 10
|
|
134
|
|
|
21
|
|
||
Construction in progress
|
—
|
|
197
|
|
|
336
|
|
||
Property, Plant and Equipment, at Cost (a)
|
|
|
6,295
|
|
|
4,059
|
|
||
Accumulated depreciation (a)
|
|
|
(882
|
)
|
|
(615
|
)
|
||
Property, Plant and Equipment, Net
|
|
|
$
|
5,413
|
|
|
$
|
3,444
|
|
(a)
|
Assets owned by us for which we are the lessor under operating leases were
$436 million
and
$385 million
before accumulated depreciation of
$148 million
and
$111 million
as of
December 31, 2017
and
2016
, respectively.
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Terminalling and Transportation
|
$
|
221
|
|
|
$
|
9
|
|
Gathering and Processing
|
382
|
|
|
108
|
|
||
Wholesale
|
89
|
|
|
—
|
|
||
Goodwill
|
$
|
692
|
|
|
$
|
117
|
|
84
|
|
|
|
Notes to Consolidated Financial Statements
|
|
•
|
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.
|
•
|
TRG -
We own a
50%
interest in TRG located in the southeastern Uinta Basin. TRG was formed with Ute Energy to transport natural gas gathered by UBFS and other third-party volumes to gas processing facilities. The Three Rivers Gathering system is primarily supported by long-term, fee-based gas gathering agreements with minimum volume commitments.
|
•
|
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 RGS deconsolidation (a)
|
295
|
|
|
—
|
|
|
—
|
|
|
295
|
|
||||
Equity in earnings
|
8
|
|
|
2
|
|
|
3
|
|
|
13
|
|
||||
Distributions received
|
(22
|
)
|
|
(4
|
)
|
|
(3
|
)
|
|
(29
|
)
|
||||
Balance at December 31, 2016 (b)
|
281
|
|
|
40
|
|
|
16
|
|
|
337
|
|
||||
Equity in earnings
|
6
|
|
|
2
|
|
|
2
|
|
|
10
|
|
||||
Distributions received
|
(19
|
)
|
|
(5
|
)
|
|
(3
|
)
|
|
(27
|
)
|
||||
Balance at December 31, 2017 (b)
|
$
|
268
|
|
|
$
|
37
|
|
|
$
|
15
|
|
|
$
|
320
|
|
(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.
|
(b)
|
The carrying amount of our investments in RGS, TRG and UBFS exceeded the underlying equity in net assets by
$130 million
,
$15 million
and
$6 million
, respectively, at
December 31, 2017
. The carrying amount of our investments in RGS, TRG and UBFS exceeded the underlying equity in net assets by
$135 million
,
$16 million
and
$7 million
, respectively, at
December 31, 2016
. The carrying amounts of our investments that exceed the underlying equity in net assets are amortized over the useful life of the underlying fixed assets and included in equity in earnings.
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Taxes other than income taxes
|
$
|
16
|
|
|
$
|
6
|
|
Accrued environmental liabilities
|
12
|
|
|
17
|
|
||
Asset retirement obligation
|
11
|
|
|
6
|
|
||
Employee costs
|
7
|
|
|
—
|
|
||
Other
|
29
|
|
|
16
|
|
||
Total Other Current Liabilities
|
$
|
75
|
|
|
$
|
45
|
|
|
|
December 31, 2017
|
85
|
Notes to Consolidated Financial Statements
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Revolving Credit Facility
|
$
|
423
|
|
|
$
|
330
|
|
Dropdown Credit Facility
|
—
|
|
|
—
|
|
||
5.500% Senior Notes due 2019
|
500
|
|
|
500
|
|
||
5.875% Senior Notes due 2020 (a)
|
—
|
|
|
470
|
|
||
6.125% Senior Notes due 2021 (a)
|
—
|
|
|
800
|
|
||
3.500% Senior Notes due 2022 (b)
|
500
|
|
|
—
|
|
||
6.250% Senior Notes due 2022
|
300
|
|
|
800
|
|
||
6.375% Senior Notes due 2024
|
450
|
|
|
450
|
|
||
5.250% Senior Notes due 2025
|
750
|
|
|
750
|
|
||
4.250% Senior Notes due 2027 (b)
|
750
|
|
|
—
|
|
||
5.200% Senior Notes due 2047 (b)
|
500
|
|
|
—
|
|
||
Capital lease obligations
|
9
|
|
|
9
|
|
||
Total Debt
|
4,182
|
|
|
4,109
|
|
||
Unamortized issuance costs (a)
|
(54
|
)
|
|
(55
|
)
|
||
Current maturities, net of unamortized issuance costs
|
(1
|
)
|
|
(1
|
)
|
||
Debt, Net of Current Maturities and Unamortized Issuance Costs
|
$
|
4,127
|
|
|
$
|
4,053
|
|
(a)
|
Unamortized premiums of
$4 million
associated with these senior notes are included in unamortized issuance costs at
December 31, 2016
.
|
(b)
|
Unamortized discounts of
$5 million
associated with these senior notes are included in unamortized issuance costs at
December 31, 2017
.
|
86
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
December 31, 2017
|
87
|
Notes to Consolidated Financial Statements
|
88
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
December 31, 2017
|
||
2018
|
$
|
2
|
|
2019
|
1
|
|
|
2020
|
1
|
|
|
2021
|
1
|
|
|
2022
|
1
|
|
|
Thereafter
|
5
|
|
|
Total minimum lease payments
|
11
|
|
|
Less amount representing interest
|
(2
|
)
|
|
Capital lease obligations
|
$
|
9
|
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Operating leases
|
$
|
16
|
|
|
$
|
14
|
|
|
$
|
13
|
|
|
$
|
11
|
|
|
$
|
10
|
|
|
$
|
100
|
|
|
$
|
164
|
|
Purchase obligations
|
2,193
|
|
|
2,193
|
|
|
2,194
|
|
|
2,170
|
|
|
2,132
|
|
|
3,840
|
|
|
14,722
|
|
|||||||
Total
|
$
|
2,209
|
|
|
$
|
2,207
|
|
|
$
|
2,207
|
|
|
$
|
2,181
|
|
|
$
|
2,142
|
|
|
$
|
3,940
|
|
|
$
|
14,886
|
|
|
|
December 31, 2017
|
89
|
Notes to Consolidated Financial Statements
|
90
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
Tioga Crude Oil Pipeline Release
|
|
Other Liabilities
|
|
Total
|
||||||
At December 31, 2015
|
$
|
27
|
|
|
$
|
6
|
|
|
$
|
33
|
|
Additions
|
7
|
|
|
1
|
|
|
8
|
|
|||
Expenditures
|
(18
|
)
|
|
(1
|
)
|
|
(19
|
)
|
|||
At December 31, 2016
|
16
|
|
|
6
|
|
|
22
|
|
|||
Additions
|
19
|
|
|
1
|
|
|
20
|
|
|||
Expenditures
|
(25
|
)
|
|
(1
|
)
|
|
(26
|
)
|
|||
At December 31, 2017
|
$
|
10
|
|
|
$
|
6
|
|
|
$
|
16
|
|
|
|
December 31, 2017
|
91
|
Notes to Consolidated Financial Statements
|
92
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net earnings
|
$
|
373
|
|
|
$
|
315
|
|
|
$
|
249
|
|
Net earnings attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(20
|
)
|
|||
Special allocation of net earnings (“Special Allocation”) (a)
|
1
|
|
|
3
|
|
|
—
|
|
|||
Net earnings, excluding noncontrolling interest and including special allocations
|
374
|
|
|
318
|
|
|
229
|
|
|||
Distributions on Preferred Units (b)
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||
Net earnings attributable to common units
|
371
|
|
|
318
|
|
|
229
|
|
|||
General partner’s distributions
|
(6
|
)
|
|
(10
|
)
|
|
(6
|
)
|
|||
General partner’s IDRs (c)
|
(75
|
)
|
|
(148
|
)
|
|
(69
|
)
|
|||
Limited partners’ distributions on common units
|
(611
|
)
|
|
(344
|
)
|
|
(259
|
)
|
|||
Distributions on common units greater than earnings
|
$
|
(321
|
)
|
|
$
|
(184
|
)
|
|
$
|
(105
|
)
|
General partner’s earnings:
|
|
|
|
|
|
||||||
Distributions
|
$
|
6
|
|
|
$
|
10
|
|
|
$
|
6
|
|
General partners IDRs (c)
|
75
|
|
|
148
|
|
|
69
|
|
|||
Allocation of distributions (greater) less than earnings (d)
|
23
|
|
|
(27
|
)
|
|
(44
|
)
|
|||
Total general partner’s earnings
|
$
|
104
|
|
|
$
|
131
|
|
|
$
|
31
|
|
Limited partners’ earnings on common units:
|
|
|
|
|
|
||||||
Distributions
|
$
|
611
|
|
|
$
|
344
|
|
|
$
|
259
|
|
Special allocation
|
(1
|
)
|
|
(3
|
)
|
|
—
|
|
|||
Allocation of distributions greater than earnings
|
(344
|
)
|
|
(157
|
)
|
|
(61
|
)
|
|||
Total limited partners’ earnings on common units
|
$
|
266
|
|
|
$
|
184
|
|
|
$
|
198
|
|
Weighted average limited partner units outstanding:
|
|
|
|
|
|
||||||
Common units - basic
|
126.0
|
|
|
98.2
|
|
|
84.7
|
|
|||
Common unit equivalents
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|||
Common units - diluted
|
126.1
|
|
|
98.2
|
|
|
84.8
|
|
|||
Net earnings per limited partner unit:
|
|
|
|
|
|
||||||
Common - basic
|
$
|
2.11
|
|
|
$
|
1.87
|
|
|
$
|
2.33
|
|
Common - diluted
|
$
|
2.11
|
|
|
$
|
1.87
|
|
|
$
|
2.33
|
|
(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.
|
(b)
|
The Preferred Units entitle unitholders to receive preferred distributions on a semi-annually basis.
|
(c)
|
IDRs entitled 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
$50 million
of IDRs for the year ended
December 31, 2017
and
$10 million
of IDRs for the year ended
December 31, 2015
waived by TLGP. See
Note 2
for further discussion of IDRs.
|
(d)
|
We have revised the historical allocation of general partner earnings to include the Predecessors’ earnings of
$24 million
for the year ended
December 31, 2017
and losses of
$24 million
and
$43 million
for the years ended
December 31, 2016
and
2015
, respectively.
|
|
|
December 31, 2017
|
93
|
Notes to Consolidated Financial Statements
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net earnings attributable to partners
|
$
|
349
|
|
|
$
|
339
|
|
|
$
|
272
|
|
Distributions on Preferred Units
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||
General partner’s IDRs
|
(75
|
)
|
|
(148
|
)
|
|
(69
|
)
|
|||
Special allocation
|
1
|
|
|
3
|
|
|
—
|
|
|||
Net earnings available to partners
|
$
|
272
|
|
|
$
|
194
|
|
|
$
|
203
|
|
General partner’s ownership interest (a)
|
—
|
%
|
|
2.0
|
%
|
|
2.0
|
%
|
|||
General partner’s allocated interest in net earnings (b)
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
4
|
|
General partner’s IDRs
|
75
|
|
|
148
|
|
|
69
|
|
|||
Allocation of Predecessors’ impact to general partner interest
|
24
|
|
|
(24
|
)
|
|
(43
|
)
|
|||
Total general partner’s interest in net earnings
|
$
|
103
|
|
|
$
|
128
|
|
|
$
|
30
|
|
(a)
|
In connection with the IDR/GP Transaction, our general partner units converted into non-economic general partner units.
|
(b)
|
Prior to the IDR/GP Transaction, we allocated net earnings to our general partner based on its ownership interest.
|
|
Common
|
|
Preferred
|
|
General Partner
|
|
Total
|
||||
At December 31, 2014
|
80.1
|
|
|
—
|
|
|
1.6
|
|
|
81.7
|
|
Issuances under ATM Program
|
1.9
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
Issuance in July 2015 to effect the QEPM Merger
|
7.1
|
|
|
—
|
|
|
—
|
|
|
7.1
|
|
Issuance in November 2015 in connection with the LA Storage and Handling Assets acquisition
|
4.3
|
|
|
—
|
|
|
0.3
|
|
|
4.6
|
|
Unit-based compensation awards
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
At December 31, 2015
|
93.5
|
|
|
—
|
|
|
1.9
|
|
|
95.4
|
|
Issuances under ATM Program
|
1.4
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
Issuance of units in June 2016 for cash
|
6.3
|
|
|
—
|
|
|
—
|
|
|
6.3
|
|
Issuance in July 2016 in connection with the Alaska Storage and Terminalling Assets acquisition
|
0.4
|
|
|
—
|
|
|
0.2
|
|
|
0.6
|
|
Issuance in September 2016 in connection with the Alaska Storage and Terminalling Assets acquisition
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
Issuance in November 2016 in connection with the Northern California Terminalling and Storage Assets acquisition
|
0.9
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
Unit-based compensation awards
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
At December 31, 2016
|
103.0
|
|
|
—
|
|
|
2.1
|
|
|
105.1
|
|
Issuances under ATM Program
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Issuance of units in February 2017 for cash
|
5.0
|
|
|
—
|
|
|
0.1
|
|
|
5.1
|
|
Issuance in October 2017 in connection with the WNRL Merger (a)
|
108.0
|
|
|
—
|
|
|
—
|
|
|
108.0
|
|
Issuance in November 2017 in connection with the
Anacortes Logistics Assets
acquisition (b)
|
1.0
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
Issuance of Preferred Units in December 2017 (c)
|
—
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
At December 31, 2017
|
217.1
|
|
|
0.6
|
|
|
2.2
|
|
|
219.9
|
|
(a)
|
In connection with the WNRL Merger, we issued
15,182,996
publicly held common units and
14,853,542
common units to subsidiaries of Andeavor. In addition, we issued
78.0 million
of our common units to TLGP in connection with the IDR/GP Transaction and converted our general partner units into non-economic general partner units.
|
(b)
|
On
November 8, 2017
, we issued common units to Andeavor in connection with the completion of the Anacortes Logistics Assets acquisition discussed in
Note 2
.
|
(c)
|
On December 1, 2017, we issued and sold
600,000
Preferred Units as discussed above.
|
94
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
Year Ended December 31,
|
||||||||||
|
2017 (a)
|
|
2016 (a)
|
|
2015 (a)
|
||||||
General partner’s distributions:
|
|
|
|
|
|
||||||
General partner’s distributions
|
$
|
(6
|
)
|
|
$
|
(10
|
)
|
|
$
|
(6
|
)
|
General partner’s IDRs (b)
|
(75
|
)
|
|
(148
|
)
|
|
(69
|
)
|
|||
Total general partner’s distributions
|
$
|
(81
|
)
|
|
$
|
(158
|
)
|
|
$
|
(75
|
)
|
|
|
|
|
|
|
||||||
Limited partners’ distributions:
|
|
|
|
|
|
||||||
Common
|
$
|
(611
|
)
|
|
$
|
(344
|
)
|
|
$
|
(259
|
)
|
Total limited partners’ distributions
|
(611
|
)
|
|
(344
|
)
|
|
(259
|
)
|
|||
Total Cash Distributions
|
$
|
(692
|
)
|
|
$
|
(502
|
)
|
|
$
|
(334
|
)
|
(a)
|
Our distributions are declared subsequent to quarter end; therefore, the following table represents total cash distributions applicable to the period in which the distributions are earned.
|
(b)
|
As a result of the IDR/GP Transaction that occurred on October 30, 2017, our general partner no longer receives IDRs.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Capital expenditures included in accounts payable at period end
|
$
|
50
|
|
|
$
|
30
|
|
|
$
|
54
|
|
Capital expenditures included in affiliate payable at period end
|
—
|
|
|
8
|
|
|
—
|
|
|||
Capital leases and other
|
—
|
|
|
2
|
|
|
—
|
|
|||
Predecessors’ net liabilities not assumed by Andeavor Logistics
|
—
|
|
|
22
|
|
|
3
|
|
|||
Receivable from affiliate for capital expenditures
|
4
|
|
|
4
|
|
|
6
|
|
|
|
December 31, 2017
|
95
|
Notes to Consolidated Financial Statements
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
|
|
|
|
|
||||||
Terminalling and Transportation:
|
|
|
|
|
|
||||||
Terminalling
|
$
|
688
|
|
|
$
|
480
|
|
|
$
|
377
|
|
Pipeline transportation
|
130
|
|
|
125
|
|
|
118
|
|
|||
Other revenues
|
18
|
|
|
—
|
|
|
—
|
|
|||
Total Terminalling and Transportation
|
836
|
|
|
605
|
|
|
495
|
|
|||
Gathering and Processing:
|
|
|
|
|
|
||||||
NGL sales
|
369
|
|
|
103
|
|
|
99
|
|
|||
Gas gathering and processing
|
333
|
|
|
264
|
|
|
274
|
|
|||
Crude oil and water gathering
|
228
|
|
|
133
|
|
|
123
|
|
|||
Pass-thru and other
|
165
|
|
|
115
|
|
|
121
|
|
|||
Total Gathering and Processing
|
1,095
|
|
|
615
|
|
|
617
|
|
|||
Wholesale (a):
|
|
|
|
|
|
||||||
Fuel sales
|
1,267
|
|
|
—
|
|
|
—
|
|
|||
Other wholesale
|
15
|
|
|
—
|
|
|
—
|
|
|||
Total Wholesale
|
1,282
|
|
|
—
|
|
|
—
|
|
|||
Total Segment Revenues
|
$
|
3,213
|
|
|
$
|
1,220
|
|
|
$
|
1,112
|
|
|
|
|
|
|
|
||||||
Segment Operating Income
|
|
|
|
|
|
||||||
Terminalling and Transportation
|
$
|
464
|
|
|
$
|
296
|
|
|
$
|
203
|
|
Gathering and Processing
|
257
|
|
|
218
|
|
|
217
|
|
|||
Wholesale (a)
|
15
|
|
|
—
|
|
|
—
|
|
|||
Total Segment Operating Income
|
736
|
|
|
514
|
|
|
420
|
|
|||
Unallocated general and administrative expenses
|
(54
|
)
|
|
(27
|
)
|
|
(27
|
)
|
|||
Interest and financing costs, net
|
(322
|
)
|
|
(191
|
)
|
|
(150
|
)
|
|||
Equity in earnings of equity method investments
|
10
|
|
|
13
|
|
|
7
|
|
|||
Other income, net
|
3
|
|
|
6
|
|
|
—
|
|
|||
Earnings Before Income Taxes
|
$
|
373
|
|
|
$
|
315
|
|
|
$
|
250
|
|
96
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Depreciation and Amortization Expense
|
|
|
|
|
|
||||||
Terminalling and Transportation
|
$
|
102
|
|
|
$
|
83
|
|
|
$
|
76
|
|
Gathering and Processing
|
175
|
|
|
107
|
|
|
111
|
|
|||
Wholesale (a)
|
5
|
|
|
—
|
|
|
—
|
|
|||
Total Depreciation and Amortization Expense
|
$
|
282
|
|
|
$
|
190
|
|
|
$
|
187
|
|
|
|
|
|
|
|
||||||
Capital Expenditures
|
|
|
|
|
|
||||||
Terminalling and Transportation
|
$
|
127
|
|
|
$
|
154
|
|
|
$
|
158
|
|
Gathering and Processing
|
110
|
|
|
119
|
|
|
228
|
|
|||
Total Capital Expenditures
|
$
|
237
|
|
|
$
|
273
|
|
|
$
|
386
|
|
(a)
|
The wholesale business was acquired by Andeavor Logistics as part of the WNRL Merger on October 30, 2017 and the results are only for the period of June 1, 2017 through the end of the period.
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Identifiable Assets
|
|
|
|
||||
Terminalling and Transportation
|
$
|
2,465
|
|
|
$
|
1,768
|
|
Gathering and Processing
|
5,250
|
|
|
3,392
|
|
||
Wholesale (a)
|
342
|
|
|
—
|
|
||
Other (b)
|
112
|
|
|
700
|
|
||
Total Identifiable Assets
|
$
|
8,169
|
|
|
$
|
5,860
|
|
(a)
|
The Wholesale business was acquired by Andeavor Logistics as part of the WNRL Merger on October 30, 2017.
|
(b)
|
Other consists mainly of cash and cash equivalents.
|
|
|
December 31, 2017
|
97
|
Notes to Consolidated Financial Statements
|
|
Quarters
|
|
|
||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total Year
|
||||||||||
2017
|
(In millions, except per unit amounts)
|
||||||||||||||||||
Revenues
|
$
|
420
|
|
|
$
|
607
|
|
|
$
|
1,084
|
|
|
$
|
1,102
|
|
|
$
|
3,213
|
|
Cost of fuel and other (a)
|
—
|
|
|
162
|
|
|
554
|
|
|
528
|
|
|
1,244
|
|
|||||
NGL expense (a)
|
59
|
|
|
56
|
|
|
64
|
|
|
86
|
|
|
265
|
|
|||||
Operating expenses
|
126
|
|
|
152
|
|
|
181
|
|
|
167
|
|
|
626
|
|
|||||
Operating income
|
150
|
|
|
169
|
|
|
171
|
|
|
192
|
|
|
682
|
|
|||||
Net earnings
|
92
|
|
|
111
|
|
|
111
|
|
|
59
|
|
|
373
|
|
|||||
Limited partners' interest in net earnings (b)
|
55
|
|
|
70
|
|
|
97
|
|
|
47
|
|
|
267
|
|
|||||
Net earnings per limited partner unit (b):
|
|
|
|
|
|
|
|
|
|
||||||||||
Common - basic
|
$
|
0.51
|
|
|
$
|
0.63
|
|
|
$
|
0.90
|
|
|
$
|
0.25
|
|
|
$
|
2.11
|
|
Common - diluted
|
$
|
0.51
|
|
|
$
|
0.63
|
|
|
$
|
0.90
|
|
|
$
|
0.25
|
|
|
$
|
2.11
|
|
2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
300
|
|
|
$
|
293
|
|
|
$
|
308
|
|
|
$
|
319
|
|
|
$
|
1,220
|
|
NGL expense (a)
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|||||
Operating expenses
|
110
|
|
|
106
|
|
|
106
|
|
|
120
|
|
|
442
|
|
|||||
Operating income
|
119
|
|
|
118
|
|
|
127
|
|
|
123
|
|
|
487
|
|
|||||
Net earnings
|
85
|
|
|
76
|
|
|
81
|
|
|
73
|
|
|
315
|
|
|||||
Limited partners' interest in net earnings
|
60
|
|
|
47
|
|
|
48
|
|
|
32
|
|
|
187
|
|
|||||
Net earnings per limited partner unit (b):
|
|
|
|
|
|
|
|
|
|
||||||||||
Common - basic
|
$
|
0.64
|
|
|
$
|
0.48
|
|
|
$
|
0.46
|
|
|
$
|
0.31
|
|
|
$
|
1.87
|
|
Common - diluted
|
$
|
0.64
|
|
|
$
|
0.48
|
|
|
$
|
0.46
|
|
|
$
|
0.31
|
|
|
$
|
1.87
|
|
(a)
|
Excludes direct operating expenses incurred across our operating segments and depreciation and amortization expenses.
|
(b)
|
The sum of four quarters may not equal annual results due to rounding or the quarterly number of units outstanding.
|
98
|
|
|
|
Changes and Disagreements with Accountants, Controls and Procedures and Other Information
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
|
|
December 31, 2017
|
99
|
Internal Control
|
100
|
|
|
|
Directors, Executive Officers and Corporate Governance
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
•
|
Leadership experience,
as directors with experience in significant leadership positions possess strong abilities to motivate and manage others and to identify and develop leadership qualities in others.
|
•
|
Knowledge of the energy industry,
particularly logistics operations, which is integral to understanding our business and strategy.
|
•
|
Operations experience,
as it gives directors a practical understanding of developing, implementing and assessing our business strategy and operating plan.
|
•
|
Risk management experience,
which is critical to the Board’s oversight of our risk assessment and risk management programs.
|
•
|
Financial/accounting experience,
particularly knowledge of finance and financial reporting processes, which is relevant to understanding and evaluating our capital structure and overseeing the preparation of our financial statements, and internal controls over financial reporting.
|
•
|
Government/regulatory experience,
as we operate in a heavily regulated industry that is directly affected by governmental requirements.
|
•
|
Strategic planning experience,
which is relevant to the Board’s review of our strategies and monitoring their implementation and results.
|
•
|
Talent management experience,
which is valuable in helping us attract, motivate and retain top candidates for management positions.
|
•
|
Public company board service,
as directors who have served on other public company boards have experience overseeing and providing insight and guidance to management.
|
|
|
December 31, 2017
|
101
|
Directors, Executive Officers and Corporate Governance
|
102
|
|
|
|
Directors, Executive Officers and Corporate Governance
|
|
|
December 31, 2017
|
103
|
Directors, Executive Officers and Corporate Governance
|
104
|
|
|
|
Directors, Executive Officers and Corporate Governance
|
|
|
December 31, 2017
|
105
|
Directors, Executive Officers and Corporate Governance
|
•
|
corporate accounting and financial reporting practices;
|
•
|
the quality and integrity of our financial statements;
|
•
|
the independent auditor’s qualifications, independence, and performance;
|
•
|
the performance of our internal audit function; and
|
•
|
our systems of disclosure controls and procedures and internal controls over financial reporting.
|
(1)
|
The Audit Committee has reviewed and discussed the audited financial statements with management.
|
(2)
|
The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by applicable PCAOB standards.
|
(3)
|
The Audit Committee has received the written disclosures and the letter from the independent auditors required by the PCAOB regarding the independent auditors’ communications with the Audit Committee concerning independence and has discussed with the independent auditors their independence.
|
(4)
|
Based on the review and discussions referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board, and the Board has approved, that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2017, for filing with the SEC.
|
106
|
|
|
|
Directors, Executive Officers and Corporate Governance
|
•
|
reviewing our executive compensation programs to ensure that they are adequate to attract, motivate and retain competent executive personnel and that they directly and materially relate to our short-term and long-term objectives and operating performance;
|
•
|
reviewing and approving all aspects of direct and indirect compensation other than retirement and benefits for our executive officers who do not also serve as executive officers of Andeavor; and
|
•
|
administering and granting awards to our officers and employees under our long-term incentive plan.
|
|
|
December 31, 2017
|
107
|
Executive Compensation
|
Item 11.
|
Executive Compensation
|
•
|
Gregory J. Goff, Chief Executive Officer and Chairman of the Board;
|
•
|
Steven M. Sterin, President, Chief Financial Officer and Director;
|
•
|
Don J. Sorensen, Senior Vice President, Operations;
|
•
|
Kim K. W. Rucker, Executive Vice President and General Counsel; and
|
•
|
Phillip M. Anderson, Former President and Director.
|
108
|
|
|
|
Executive Compensation
|
•
|
rewarding leaders for delivery of outstanding business results and driving a performance-oriented culture;
|
•
|
promoting and sustaining exceptional performance over time to generate long-term growth in unitholder value; and
|
•
|
leading by our guiding principles, which are core values, exceptional people, shared purpose, powerful collaboration and superior execution.
|
|
|
December 31, 2017
|
109
|
Executive Compensation
|
Compensation Element
|
Objective
|
|
Key Features
|
|
Performance-Based / At Risk?
|
Base Salary
|
Reflects executive responsibilities, job characteristics, seniority, experience and skill set
Designed to be competitive with those of comparable companies with which we compete for talent
|
|
Reviewed annually and subject to adjustment based on market factors, individual performance, experience and leadership
|
|
NO
|
Annual Cash
Incentive
|
Rewards executives’ contributions to the achievement of predetermined Andeavor corporate, business unit and individual goals
|
|
Establishes performance measures to best align performance relative to meeting financial and safety goals, ultimately driving unitholder value
|
|
YES - Pays out only based on achievement of established measurable goals
Does not pay out if established threshold goals are not achieved
|
Performance Phantom Units (Long-Term Equity Awards)
|
Correlates executives’ pay with relative increases (as compared to a peer group) in unitholder value over a three-year period
|
|
In periods of low relative performance, executives realize little or no value
In periods of high relative performance, executives may realize substantial value
|
|
YES - Pays out only based on increased relative unitholder value
May not vest depending upon unitholder return
|
110
|
|
|
|
Executive Compensation
|
Total ICP Bonus Payout
|
=
|
[
|
Bonus Eligible Earnings
|
x
|
Target Bonus %
|
x
|
% Overall
Performance Achieved
|
]
|
+/-
|
Individual Performance Adjustment
|
•
|
EBITDA was the most heavily weighted metric and is measured on a margin neutral basis, rather than a reported basis, by excluding fluctuations in commodity prices (and thereby fluctuations in margins) over which management has little influence. Adjustments were also made to account for Western Refining acquisition costs and synergies, marketing-related adjustments, benefit-related adjustments and asset impairment charges.
|
•
|
Cost management metric measures operating expenditures and administrative expenses less certain adjustments. The cost metric excludes refining energy costs, annual incentive compensation costs, stock-based compensation expense, non-controllable expenses for postretirement employee benefits (pension, medical, life insurance) and insurance costs (property, casualty and liability). Adjustments were made to account for Western Refining acquisition costs and synergies, and costs related to the acquisition of North Dakota gathering and processing assets.
|
•
|
Growth & productivity improvements include growth from income-generating capital improvements, margin improvement initiatives, organic growth initiatives and other smaller projects.
|
•
|
Process safety and environmental safety are critical to Andeavor’s success and reflect its ability to operate its assets in a safe and reliable manner. Because Andeavor believes in continuous improvement, each of the safety metrics is measured by improvement compared to the average incident rate for the prior three year period.
|
Corporate Goals
|
Weighting (%)
|
|
% Achieved
|
Margin-neutral EBITDA of $2.78 billion
|
50
|
|
52%
|
Management of costs to no more than $2.75 billion
|
15
|
|
193%
|
Growth & Productivity improvements of $420 million
|
20
|
|
200%
|
Process Safety Management improvement
|
7.5
|
|
75%
|
Environmental Safety improvement
|
7.5
|
|
—
|
Overall Andeavor Performance Achieved
|
|
|
101%
|
|
|
December 31, 2017
|
111
|
Executive Compensation
|
Name
|
|
Bonus Eligible Earnings (a)
|
|
Target Bonus
|
|
Overall Performance Achieved
|
|
Calculated Bonus Payout
|
|
Individual Performance Adjustments
|
|
Total Bonus Payout
|
||||||
Don J. Sorensen (b)
|
|
$
|
422,185
|
|
|
75%
|
|
96.8%
|
|
$
|
306,506
|
|
|
—
|
|
$
|
306,506
|
|
Phillip M. Anderson (c)
|
|
$
|
164,862
|
|
|
80%
|
|
99.3%
|
|
$
|
130,966
|
|
|
—
|
|
$
|
130,966
|
|
(a)
|
Bonus Eligible Earnings
is based on salary earned during the
2017
calendar year.
|
(b)
|
The numbers in this table show Mr. Sorensen’s full ICP payout for 2017. As discussed above, 90% of Mr. Sorensen’s cash compensation is allocated to us.
|
(c)
|
Mr. Anderson resigned as our President and as a Director, effective May 22, 2017, to focus on his new role at Andeavor. Accordingly, his eligible earnings shown represent only the portion of his eligible earnings, and his payout amounts represent only the portion of his ICP payout, for the time period from January 1, 2017 through May 22, 2017.
|
Relative Total Unitholder Return
|
|
Payout as a % of Target
|
90th percentile and above
|
|
200%
|
75th percentile
|
|
150%
|
50th percentile
|
|
100%
|
30th percentile
|
|
50%
|
Below 30th percentile
|
|
—
|
112
|
|
|
|
Executive Compensation
|
|
|
December 31, 2017
|
113
|
Executive Compensation
|
114
|
|
|
|
Executive Compensation
|
Name and Principal Position
|
|
Year
|
|
Salary
(a)
|
|
Unit Awards
(b)
|
|
Non-Equity Incentive Plan Compensation (c)
|
|
Change in Pension Value and Non-qualified Compensation Earnings
(d)
|
|
All Other Compensation
(e)
|
|
Total
|
||||||||||||
Gregory J. Goff (f)
Chairman and Chief Executive Officer
|
|
2017
|
|
$
|
—
|
|
|
$
|
2,812,571
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,812,571
|
|
|
2016
|
|
—
|
|
|
2,129,175
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,129,175
|
|
|||||||
|
2015
|
|
—
|
|
|
2,345,798
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,345,798
|
|
|||||||
Steven M. Sterin (f)
Executive Vice President, Chief Financial Officer and Director
|
|
2017
|
|
—
|
|
|
575,020
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
575,020
|
|
||||||
|
2016
|
|
—
|
|
|
431,919
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
431,919
|
|
|||||||
|
2015
|
|
—
|
|
|
410,558
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
410,558
|
|
|||||||
Don J. Sorensen
Senior Vice
President, Operations
|
|
2017
|
|
380,215
|
|
|
325,056
|
|
|
275,855
|
|
|
401,155
|
|
|
37,771
|
|
|
1,420,052
|
|
||||||
|
2016
|
|
366,404
|
|
|
243,345
|
|
|
297,281
|
|
|
269,017
|
|
|
387,525
|
|
|
1,563,572
|
|
|||||||
|
2015
|
|
342,000
|
|
|
234,633
|
|
|
318,745
|
|
|
153,939
|
|
|
281,277
|
|
|
1,330,594
|
|
|||||||
Kim K.W. Rucker (f)
Executive Vice President and General Counsel
|
|
2017
|
|
—
|
|
|
437,547
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
437,547
|
|
||||||
|
2016
|
|
—
|
|
|
324,444
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
324,444
|
|
|||||||
Phillip M. Anderson (g)
Former President and Director
|
|
2017
|
|
156,034
|
|
|
275,019
|
|
|
130,966
|
|
|
163,557
|
|
|
6,397
|
|
|
731,973
|
|
||||||
|
2016
|
|
378,365
|
|
|
202,820
|
|
|
340,235
|
|
|
250,421
|
|
|
11,341
|
|
|
1,183,182
|
|
|||||||
|
2015
|
|
361,700
|
|
|
211,123
|
|
|
380,586
|
|
|
196,615
|
|
|
26,247
|
|
|
1,176,271
|
|
(a)
|
As discussed above under “Compensation Decisions and Allocation of Executive Compensation,” Andeavor allocates a portion of the compensation expenses for Messrs. Sorensen and Anderson to us. Amounts in this column reflect the portion of the base salary expense allocated to us by Andeavor: 90% for Mr. Sorensen and 100% for Mr. Anderson through May 22, 2017, the date he ceased service as our executive officer.
|
(b)
|
Amounts in this column for
2017
reflect the aggregate grant date fair value of performance phantom units granted during the fiscal year, calculated in accordance with U.S. GAAP, as described in Note 1 to our consolidated financial statements in Item 8. The aggregate grant date fair value of these performance phantom units at the highest level of performance, resulting in 200% payout, would be as follows for
2017
: Mr. Goff - $5,625,142; Mr. Sterin - $1,150,040; Mr. Sorensen - $650,112; Ms. Rucker - $875,094; and Mr. Anderson - $550,038. For Messrs. Goff and Sterin and Ms. Rucker, this amount represents 25% of their
2017
long-term incentive values as recommended by the Andeavor compensation committee and awarded by the Board of our general partner. This column does not include grants of performance share awards or market stock units to the executive officers by Andeavor, which are not allocated to us.
|
(c)
|
Amounts in this column reflect the compensation expense allocated to us by Andeavor with respect to awards under Andeavor’s ICP: 90% for Mr. Sorensen and 100% for Mr. Anderson through May 22, 2017, the date he ceased service as our executive officer.
|
(d)
|
Amounts in this column reflect the portion of the change in pension value during the fiscal year allocated to us by Andeavor. For Mr. Sorensen, this amount is 90% for all periods shown. For Mr. Anderson, this amount is 100% for 2015 and 2016, and 39% for 2017 (for the period from January 1, 2017 through May 22, 2017, the date he ceased service as our executive officer).
|
(e)
|
Amounts in this column reflect the portion of other expenses allocated to us by Andeavor: 90% for Mr. Sorensen, and 100% for Mr. Anderson through May 22, 2017, the date he ceased service as our executive officer. For
2017
, these amounts reflect the following:
|
(1)
|
Andeavor Thrift Plan Contributions: Andeavor provides matching contributions dollar-for-dollar up to 6% of eligible earnings for all employees who participate in the Andeavor Thrift Plan. The portion of the matching contributions allocated to us for
2017
was $18,380 for Mr. Sorensen and $6,397 for Mr. Anderson. In addition, Andeavor provides a profit-sharing contribution to the Thrift Plan. This discretionary contribution, calculated as a percentage of employee’s base pay based on a pre-determined target for the calendar year, can range from 0% to 4% based on actual performance.
|
(2)
|
Andeavor Executive Deferred Compensation Contributions: Andeavor matches participants’ base salary contributions dollar-for-dollar up to 4% of eligible earnings above the IRS salary limitation ($270,000 for
2017
). The portion of the matching contributions allocated to us for
2017
was $19,391 for Mr. Sorensen.
|
(f)
|
As discussed above under “Compensation Decisions and Allocation of Executive Compensation,” no portion of the compensation or other benefits, other than equity awards granted under our LTIP, for Messrs. Goff and Sterin and Ms. Rucker is allocated to us. Accordingly, this table shows only the performance phantom units granted to them under our LTIP.
|
(g)
|
Mr. Anderson ceased service as our executive officer, effective May 22, 2017, to focus on his role at Andeavor. Amounts shown reflect the portion of his compensation allocated to us through May 22, 2017.
|
|
|
December 31, 2017
|
115
|
Executive Compensation
|
Name
|
|
Award Type
|
|
Grant Date
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
(a)
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards
(b)
|
|
Grant date fair value of unit awards (c)
|
|||||||||||||||||||
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|||||||||||||||||
Mr. Goff
|
|
Phantom Units
|
|
2/16/2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
19,027
|
|
|
38,054
|
|
|
76,108
|
|
|
$
|
2,812,571
|
|
Mr. Sterin
|
|
Phantom Units
|
|
2/16/2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,890
|
|
|
7,780
|
|
|
15,560
|
|
|
575,020
|
|
||||
Mr. Sorensen
|
|
Annual Incentive
|
|
N/A
|
|
142,487
|
|
|
284,975
|
|
|
569,949
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Phantom Units
|
|
2/16/2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,199
|
|
|
4,398
|
|
|
8,796
|
|
|
325,056
|
|
|||||
Ms. Rucker
|
|
Phantom Units
|
|
2/16/2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,960
|
|
|
5,920
|
|
|
11,840
|
|
|
437,547
|
|
||||
Mr. Anderson
|
|
Annual Incentive
|
|
N/A
|
|
65,945
|
|
|
131,889
|
|
|
263,778
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Phantom Units
|
|
2/16/2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,861
|
|
|
3,721
|
|
|
7,442
|
|
|
275,019
|
|
(a)
|
“Threshold” represents the minimum payout for the performance metrics under the ICP assuming that the minimum level of performance is attained. “Target” represents the amount payable if the performance metrics are reached. “Maximum” represents the maximum payout for the performance metrics un
der the I
CP assuming that the maximum level of performance is attained. See “Annual Performance Incentives” above for more information about awards under the ICP. Amounts in these columns reflect the range of compensation expense allocated to us by Andeavor with respect to awards under Andeavor’s ICP: 90% for Mr. Sorensen and 100% for Mr. Anderson for the period from January 1, 2017 through May 22, 2017, the date he ceased service as our executive officer. These columns do not show the ICP range for Messrs. Goff and Sterin or Ms. Rucker, as no portion of their ICP payout was allocated to us.
|
(b)
|
Amounts in these columns show the number of performance phantom units granted during 2017 under our LTIP as described under “Long-Term Incentive Awards” above. This award is contingent on our achievement of relative total unitholder return at the end of the performance period from February 16, 2017 through February 16, 2020. Actual payouts will vary based on relative total unitholder return, ranging from none of the units vesting, to a threshold vesting of 50% of the units, up to a maximum vesting of 200% of the units.
|
(c)
|
Amounts in this column show the grant date fair value of the awards computed in accordance with financial accounting standards.
|
116
|
|
|
|
Executive Compensation
|
|
|
Equity Awards
|
||||||||||||
Name
|
|
Grant Date
|
|
Number of Units That Have Not Vested
|
|
Market Value of Units That Have Not Vested ($)
|
|
Equity Incentive Plan Awards: Number of Unearned Units, Units or Other Rights That Have Not Vested
(a)
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Units, Units or Other Rights That Have Not Vested
($)(b)
|
||||
Mr. Goff
|
|
2/16/2017
|
|
—
|
|
|
—
|
|
|
38,054
|
|
|
1,867,926
|
|
|
2/9/2016
|
|
—
|
|
|
—
|
|
|
44,238
|
|
|
2,323,521
|
|
|
Mr. Sterin
|
|
2/16/2017
|
|
—
|
|
|
—
|
|
|
7,780
|
|
|
381,891
|
|
|
2/9/2016
|
|
—
|
|
|
—
|
|
|
8,974
|
|
|
471,343
|
|
|
Mr. Sorensen
|
|
2/16/2017
|
|
—
|
|
|
—
|
|
|
4,398
|
|
|
215,881
|
|
|
2/9/2016
|
|
—
|
|
|
—
|
|
|
5,056
|
|
|
265,557
|
|
|
Ms. Rucker
|
|
2/16/2017
|
|
—
|
|
|
—
|
|
|
5,920
|
|
|
290,590
|
|
|
3/14/2016
|
|
—
|
|
|
—
|
|
|
6,741
|
|
|
354,059
|
|
|
Mr. Anderson
|
|
2/16/2017
|
|
—
|
|
|
—
|
|
|
3,721
|
|
|
182,650
|
|
|
2/9/2016
|
|
—
|
|
|
—
|
|
|
4,214
|
|
|
221,333
|
|
(a)
|
These awards are performance phantom units, which provide the right to receive a number of common units at the end of the performance period depending upon our achievement of relative total unitholder return against a defined performance peer group. Each award will vest at the end of the relevant performance period, subject to performance, as set forth below. For each award, the number of unvested units and the payout values shown assume a payout at target. The payout value also includes any outstanding distribution equivalent rights (“DERs”) that will be paid once the award has vested and the payout results have been certified by our Board. The performance period for each outstanding award, as well as the value of outstanding DERs included in the payout value, is:
|
|
Performance Phantom Units
(Performance Period: 2/16/2017-2/16/2020) |
Performance Phantom Units
(Performance Period: 1/1/2016-12/31/2018) |
||||
Name
|
DERs ($) (b)
|
Grant Date
|
DERs ($) (b)
|
Grant Date
|
||
Mr. Goff
|
110,212
|
|
February 2017
|
280,168
|
|
February 2016
|
Mr. Sterin
|
22,532
|
|
February 2017
|
56,834
|
|
February 2016
|
Mr. Sorensen
|
12,737
|
|
February 2017
|
32,021
|
|
February 2016
|
Ms. Rucker
|
17,146
|
|
February 2017
|
42,692
|
|
March 2016
|
Mr. Anderson
|
10,777
|
|
February 2017
|
26,688
|
|
February 2016
|
(b)
|
The market value was calculated using the closing price of our common units on
December 29, 2017
($46.19).
|
|
|
Unit Awards
|
|||||
Name
|
|
Number of Units Acquired on Vesting (a)
|
|
Value Realized on Vesting (b)
|
|||
Mr. Goff
|
|
51,085
|
|
|
$
|
3,150,959
|
|
Mr. Sterin
|
|
8,941
|
|
|
551,487
|
|
|
Mr. Sorensen
|
|
5,110
|
|
|
315,188
|
|
|
Ms. Rucker
|
|
—
|
|
|
—
|
|
|
Mr. Anderson
|
|
4,598
|
|
|
283,609
|
|
(a)
|
Reflects the vesting and payout of the performance phantom units granted in 2015 to Messrs. Goff, Sterin, Sorensen and Anderson.
|
(b)
|
Calculated by multiplying the number of units granted by the performance payout factor approved by our Board on January 18, 2018, and then multiplied by the closing price of our common units on that date ($52.40). These amounts include the following amounts paid in DERs: Mr. Goff - $474,105; Mr. Sterin - $82,979; Mr. Sorensen - $47,424; and Mr. Anderson - $42,673.
|
|
|
December 31, 2017
|
117
|
Executive Compensation
|
Name
|
|
Plan Name
|
|
Years of Credited Service (a)
|
|
Present Value of Accumulated Benefit (b)
|
|
Payments During Last Fiscal Year
|
|||
Mr. Goff
|
|
— (c)
|
|
— (c)
|
|
|
$ — (c)
|
|
|
— (c)
|
|
Mr. Sterin
|
|
— (c)
|
|
— (c)
|
|
|
— (c)
|
|
|
— (c)
|
|
Mr. Sorensen
|
|
Andeavor Pension Plan
|
|
22
|
|
|
1,019,426
|
|
|
—
|
|
|
Restoration Plan
|
|
22
|
|
|
885,311
|
|
|
—
|
|
|
Ms. Rucker
|
|
— (c)
|
|
— (c)
|
|
|
— (c)
|
|
|
— (c)
|
|
Mr. Anderson
|
|
Andeavor Pension Plan
|
|
12
|
|
|
680,207
|
|
|
—
|
|
|
Restoration Plan
|
|
12
|
|
|
1,369,729
|
|
|
—
|
|
(a)
|
Due to a freeze of credited service as of December 31, 2010, credited service values for the Andeavor Pension Plan are less than actual service values. Credited service is used to calculate the Final Average Pay portion of the Pension Plan benefit. The Cash Balance portion of the retirement benefit that went into effect on January 1, 2011 does not utilize credited service.
|
(b)
|
The present values of the accumulated plan benefits are equal to the value of the retirement benefits at the earliest unreduced age for each plan using the assumptions as of
December 31, 2017
for financial reporting purposes. These assumptions include a discount rate of 3.65%, a cash balance interest crediting rate of 3.00%, the use of the RP-2017 Mortality Table with generational mortality improvements in accordance with Scale MP-2017 and for the Andeavor Pension Plan, that each employee will elect a lump sum payment at retirement using an interest rate of 3.65% and the PPA 2018 Mortality Table. We reimburse Andeavor for the pension expense that is allocated to us. During
2017
, a portion of the pension expense for Messrs. Sorensen and Anderson was allocated to us by Andeavor: 90% for Mr. Sorensen and 100% for Mr. Anderson for the period from January 1, 2017 through May 22, 2017, the date he ceased service as our executive officer. However, the amounts reflected in the table represent the full present value of the accumulated benefit for Messrs. Sorensen and Anderson.
|
(c)
|
As discussed above under “Compensation Decisions and Allocation of Executive Compensation,” no portion of the compensation expense for retirement benefits for Messrs. Goff and Sterin or Ms. Rucker is allocated to us.
|
118
|
|
|
|
Executive Compensation
|
Name
|
|
Executive Contributions in Last Fiscal Year
(a)
|
|
Registrant Contributions in Last Fiscal Year
(b)
|
|
Aggregate Earnings in Last Fiscal Year
(c)
|
|
Aggregate Withdrawals/Distributions
|
|
Aggregate Balance at Last Fiscal Year-End
|
||||||||||
Mr. Goff (d)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mr. Sterin (d)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Mr. Sorensen
|
|
178,584
|
|
|
23,068
|
|
|
49,789
|
|
|
—
|
|
|
813,682
|
|
|||||
Ms. Rucker (d)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Mr. Anderson
|
|
—
|
|
|
1,401
|
|
|
604
|
|
|
—
|
|
|
9,586
|
|
(a)
|
Amounts shown include amounts reflected in the base salary and Non-equity Incentive Plan Compensation columns of the Summary Compensation Table for Mr. Sorensen.
|
(b)
|
As discussed above under “Compensation Decisions and Allocation of Executive Compensation,” Andeavor allocates a portion of the compensation expenses for Messrs. Sorensen and Anderson to us. This table shows the full amounts of the contributions, earnings and year-end balances for each of Messrs. Sorensen and Anderson; the portion allocated to us is included in the All Other Compensation column of the Summary Compensation Table.
|
(c)
|
Amounts shown reflect the change in the market value pertaining to the investment funds in which the NEOs have chosen to invest their contributions and Andeavor’s contribution under the Andeavor Executive Deferred Compensation Plan.
|
(d)
|
As discussed above under “Compensation Decisions and Allocation of Executive Compensation,” no portion of the compensation expense for Messrs. Goff and Sterin or Ms. Rucker is allocated to us.
|
|
|
December 31, 2017
|
119
|
Executive Compensation
|
Name
|
Scenario
|
Severance ($)
|
Accelerated Equity Vesting ($)
|
Retirement Benefits ($)
|
Health Benefits ($)
|
Outplacement Services ($)
|
Total ($)
|
||||||
Mr. Goff (a)
|
w/o Cause or w/Good Reason
|
—
|
|
461,803
|
|
—
|
|
—
|
|
—
|
|
461,803
|
|
Term. after Change-in-Control
|
—
|
|
4,191,448
|
|
—
|
|
—
|
|
—
|
|
4,191,448
|
|
|
Retirement or Voluntary Term.
|
—
|
|
461,803
|
|
—
|
|
—
|
|
—
|
|
461,803
|
|
|
Death
|
—
|
|
461,803
|
|
—
|
|
—
|
|
—
|
|
461,803
|
|
|
Disability
|
—
|
|
461,803
|
|
—
|
|
—
|
|
—
|
|
461,803
|
|
|
w/Cause
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Mr. Sterin (a)
|
w/o Cause or w/Good Reason
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Term. after Change-in-Control
|
—
|
|
853,234
|
|
—
|
|
—
|
|
—
|
|
853,234
|
|
|
Retirement or Voluntary Term.
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Death
|
—
|
|
420,371
|
|
—
|
|
—
|
|
—
|
|
420,371
|
|
|
Disability
|
—
|
|
420,371
|
|
—
|
|
—
|
|
—
|
|
420,371
|
|
|
w/Cause
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Mr. Sorensen (b)
|
w/o Cause or w/Good Reason
|
1,036,803
|
|
—
|
|
—
|
|
25,716
|
|
34,830
|
|
1,097,349
|
|
Term. after Change-in-Control
|
1,336,860
|
|
481,438
|
|
—
|
|
30,859
|
|
—
|
|
1,849,157
|
|
|
Retirement or Voluntary Term.
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Death
|
—
|
|
237,039
|
|
—
|
|
—
|
|
—
|
|
237,039
|
|
|
Disability
|
—
|
|
237,039
|
|
—
|
|
—
|
|
—
|
|
237,039
|
|
|
w/Cause
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Ms. Rucker (a)
|
w/o Cause or w/Good Reason
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Term. after Change-in-Control
|
—
|
|
644,649
|
|
—
|
|
—
|
|
—
|
|
644,649
|
|
|
Retirement or Voluntary Term.
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Death
|
—
|
|
316,786
|
|
—
|
|
—
|
|
—
|
|
316,786
|
|
|
Disability
|
—
|
|
316,786
|
|
—
|
|
—
|
|
—
|
|
316,786
|
|
|
w/Cause
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Mr. Anderson (b)
|
w/o Cause or w/Good Reason
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Term. after Change-in-Control
|
596,700
|
|
157,553
|
|
110,572
|
|
16,980
|
|
—
|
|
881,805
|
|
|
Retirement or Voluntary Term.
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Death
|
—
|
|
77,355
|
|
—
|
|
—
|
|
—
|
|
77,355
|
|
|
Disability
|
—
|
|
77,355
|
|
—
|
|
—
|
|
—
|
|
77,355
|
|
|
w/Cause
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(a)
|
As discussed above under “Compensation Decisions and Allocation of Executive Compensation,” no portion of the compensation or other benefits, other than equity awards granted under our LTIP, for Messrs. Goff and Sterin and Ms. Rucker would be allocated to us. Accordingly, this table shows only the accelerated vesting of performance phantom units granted to them under our LTIP.
|
(b)
|
As discussed above under “Compensation Decisions and Allocation of Executive Compensation,” Andeavor allocates a portion of the compensation expenses for Messrs. Sorensen and Anderson to us. Amounts in this table reflect the portion of the severance payment or benefit that would be allocated to us by Andeavor: 90% for Mr. Sorensen and 100% for Mr. Anderson for the period from January 1, 2017 through May 22, 2017, the date he ceased service as our executive officer.
|
120
|
|
|
|
Executive Compensation
|
|
|
December 31, 2017
|
121
|
Executive Compensation
|
•
|
An appropriate pay philosophy and market comparisons support business objectives.
|
•
|
Programs appropriately balance fixed compensation with short-term and long-term variable compensation such that no single pay element would motivate employees to engage in excessive risk taking.
|
•
|
The characteristics of our annual incentive program design do not lend themselves to excessive risk taking because we base annual incentive awards on:
|
◦
|
corporate, business unit and individual performance goals, with a variety of pre-established performance conditions in each category, thus diversifying the risk associated with any single indicator of performance; and
|
◦
|
financial and non-financial performance targets that are objectively determined by measurable and verifiable results.
|
•
|
Our long-term incentive program encourages employees to focus on our long-term success by providing performance phantom units that only reward employees if we meet specified performance goals. These awards also incorporate pre-established caps to prevent over-payment.
|
122
|
|
|
|
Executive Compensation
|
Name
|
Fees Earned or Paid in Cash ($) (a)
|
|
Fair Value of Service Phantom Unit Awards ($) (b)
|
|
All Other Compensation
|
|
Total
|
||||
Raymond J. Bromark
|
133,000
|
|
|
82,782
|
|
|
—
|
|
|
215,782
|
|
Robert W. Goldman (c)
|
31,489
|
|
|
82,782
|
|
|
—
|
|
|
114,271
|
|
James H. Lamanna
|
115,000
|
|
|
82,782
|
|
|
—
|
|
|
197,782
|
|
Thomas C. O’Connor (d)
|
131,500
|
|
|
82,782
|
|
|
—
|
|
|
214,282
|
|
Jeff A. Stevens (e)
|
40,083
|
|
|
57,581
|
|
|
—
|
|
|
97,664
|
|
Michael E. Wiley
|
79,000
|
|
|
82,782
|
|
|
—
|
|
|
161,782
|
|
(a)
|
The amounts shown in this column include the portion of the annual retainer earned in
2017
, any individual retainers for serving as the chair of a committee earned in
2017
and the Board and committee meeting fees paid in
2017
.
|
(b)
|
The amounts shown in this column represent the aggregate grant date fair value of the directors’ portion of the annual retainer paid in service phantom units computed in accordance with U.S. GAAP. The following table shows the total service phantom units outstanding as of December 31,
2017
for each individual who served as a non-employee director during
2017
. No options or other equity-based awards have been granted to the non-employee directors.
|
Name
|
Service Phantom Units Outstanding
|
Raymond J. Bromark
|
1,400
|
Robert W. Goldman (c)
|
233
|
James H. Lamanna
|
1,400
|
Thomas C. O’Connor (d)
|
1,400
|
Jeff A. Stevens (e)
|
1,085
|
Michael E. Wiley
|
1,400
|
(c)
|
Mr. Goldman retired from the Board effective May 4, 2017. Per the terms of the award, upon Mr. Goldman’s retirement from the Board he received a pro-rated portion of his unvested award previously granted to him.
|
(d)
|
The amount shown reflects the full amount of the award; however, per the terms of the award agreement, this award was pro-rated to 1,167 outstanding service phantom units upon Mr. O’Connor’s retirement from the Board effective January 1, 2018.
|
(e)
|
Mr. Stevens joined the Board effective June 1, 2017.
|
|
|
December 31, 2017
|
123
|
Security Ownership and Related Stockholder Matters
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters
|
|
Aggregate Number of Common Units Beneficially Owned
|
|
Percent of Total Outstanding Common Units
|
||
Gregory J. Goff
|
131,480
|
|
|
*
|
|
Phillip M. Anderson
|
27,284
|
|
|
*
|
|
Raymond J. Bromark
|
13,970
|
|
(1
|
)
|
*
|
Sigmund L. Cornelius
|
1,308
|
|
|
*
|
|
Ruth I. Dreessen
|
—
|
|
|
*
|
|
James H. Lamanna
|
13,194
|
|
(1
|
)
|
*
|
Kim K.W. Rucker
|
—
|
|
|
*
|
|
Don J. Sorensen
|
4,941
|
|
|
*
|
|
Steven M. Sterin
|
16,391
|
|
|
*
|
|
Jeff A. Stevens
|
235,277
|
|
|
*
|
|
Michael E. Wiley
|
1,400
|
|
(1
|
)
|
*
|
All Current Directors and Executive Officers as a Group (12 individuals)
|
417,961
|
|
|
*
|
*
|
Less than 1% of the common units outstanding.
|
(1)
|
Includes
1,400 common units underlying phantom units that vest within 60 days of
February 15, 2018
.
|
124
|
|
|
|
Security Ownership and Related Stockholder Matters
|
|
Aggregate Number of Shares Beneficially Owned
|
|
Percent of Total Outstanding
|
Additional Information
|
||
Gregory J. Goff
|
764,170
|
|
|
*
|
Includes 151,513 shares underlying stock options and 620 shares under the Andeavor 401(k) Plan
|
|
Phillip M. Anderson
|
8,325
|
|
|
*
|
Includes 1,773 shares under the Andeavor 401(k) Plan
|
|
Raymond J. Bromark
|
—
|
|
|
*
|
|
|
Sigmund L. Cornelius
|
—
|
|
|
*
|
|
|
Ruth I. Dreessen
|
—
|
|
|
*
|
|
|
James H. Lamanna
|
—
|
|
|
*
|
|
|
Kim K.W. Rucker
|
—
|
|
|
*
|
|
|
Don J. Sorensen
|
14,349
|
|
|
*
|
|
|
Steven M. Sterin
|
36,126
|
|
|
*
|
|
|
Jeff A. Stevens
|
1,445,999
|
|
|
*
|
|
|
Michael E. Wiley
|
41,150
|
|
|
*
|
|
|
All Current Directors and Executive Officers as a Group (12 individuals)
|
2,306,645
|
|
(1
|
)
|
1.5%
|
|
*
|
Less than 1% of the outstanding common stock of Andeavor.
|
(1)
|
Includes 1,526 shares of restricted stock and 1,883 market stock units scheduled to vest within 60 days as well as 190 shares under the Andeavor 401(k) Plan.
|
|
Amount and Nature of Beneficial Ownership
|
|||
Name and Address of Beneficial Owner
|
Number of Common Units
|
|
Percent of Common Units
|
|
Andeavor (a)
19100 Ridgewood Parkway
San Antonio, TX 78259
|
127,889,386
|
|
|
58.9%
|
Tortoise Capital Advisors, LLC (b)
11550 Ash Street, Suite 300
Leawood, KS 66211
|
12,597,120
|
|
|
5.8%
|
(a)
|
As of
February 15, 2018
, Andeavor directly held 15,620,925 common units. Affiliates of Andeavor also held common and TexNew Mex units: Tesoro Refining & Marketing Company LLC directly held 8,219,002 common units, including 151,021 common units held through its wholly-owned subsidiary, Carson Cogeneration Company; Tesoro Alaska Company LLC directly held 571,065 common units; Western Refining Southwest, Inc. directly and indirectly held 14,853,542 common units and 80,000 TexNew Mex units; and Tesoro Logistics GP, LLC directly held 88,624,852 common units and the non-economic general partner interest. Andeavor is the ultimate parent company of each such entity and may, therefore, be deemed to beneficially own the units held by each such entity.
|
(b)
|
Based on Amendment No. 9 to a Schedule 13G/A filed with the SEC on February 13, 2018, Tortoise Capital Advisors has sole voting and dispositive power with respect to 279,036 common units, shared voting power with respect to 10,811,902 common units, and shared dispositive power with respect to 12,318,084 common units.
|
|
|
December 31, 2017
|
125
|
Security Ownership and Related Stockholder Matters
|
Plan Category
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)
|
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)
|
|
Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in the First Column) (c)
|
|||
Equity Compensation plans approved by security holders
|
362,546
|
|
|
—
|
|
|
1,078,798
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
362,546
|
|
|
—
|
|
|
1,078,798
|
|
(a)
|
The amounts in column (a) of this table reflect only phantom units that have been granted under the Andeavor Logistics LP 2011 Long-Term Incentive Plan, as amended and restated on October 4, 2016. No unit options have been granted. Each phantom unit shown in the table represents a right to receive (upon vesting and payout) a specified number of our common units. Vesting and payout may be conditioned upon achievement of pre-determined performance objectives (typically total unitholder return over a defined period) or conditioned only upon continued service with us and our affiliates. For illustrative purposes, the maximum payment (i.e., a 200% ratio) provided by the provisions of the award agreements has been assumed for vesting and payout of performance-related grants. Payment at target levels (i.e., a 100% ratio) would result in 237,809 units to be issued and 1,203,535 units remaining available for future issuance.
|
(b)
|
No value is shown in column (b) because the phantom units do not have an exercise, or strike, price.
|
(c)
|
For illustrative purposes, a maximum payment (i.e., a 200% ratio) has been assumed for vesting and payout of outstanding performance-related grants.
|
126
|
|
|
|
Certain Relationships and Related Transactions, and Director Independence
|
|
Item 13.
|
Certain Relationships and Related Transactions and Director Independence
|
•
|
payment of compensation by us to a related person for the related person’s service in the capacity or capacities that give rise to the person’s status as a related person;
|
•
|
transactions available to all employees or all unitholders on the same terms;
|
•
|
purchases from us in the ordinary course of business at the same price and on the same terms as offered to our other customers, regardless of whether the transactions are required to be reported in our filings with the SEC; and
|
•
|
transactions, or any series of similar transactions, between the related person and us that involve less than $120,000 during the fiscal year.
|
|
|
December 31, 2017
|
127
|
Certain Relationships and Related Transactions, and Director Independence
|
•
|
our obligation to pay Andeavor an annual corporate services fee, currently in the amount of approximately
$13 million
, for the provision by Andeavor and its subsidiaries of certain centralized corporate services, as well as our obligation to reimburse Andeavor for all other direct or allocated costs and expenses incurred by Andeavor or its affiliates on our behalf;
|
•
|
an agreement by Andeavor and certain of its affiliates not to compete with us under certain circumstances;
|
•
|
our right of first offer to acquire certain logistics assets from Andeavor and certain of its affiliates;
|
•
|
the indemnification obligations of the parties for certain claims, losses and expenses attributable to certain environmental, title, tax and other liabilities relating to assets contributed by Andeavor and its subsidiaries to us; and
|
•
|
the granting of a license from Andeavor to us with respect to use of the Andeavor name and trademark.
|
128
|
|
|
|
Certain Relationships and Related Transactions, and Director Independence
|
|
|
|
December 31, 2017
|
129
|
Certain Relationships and Related Transactions, and Director Independence
|
130
|
|
|
|
Certain Relationships and Related Transactions, and Director Independence
|
|
Item 14.
|
Principal Accounting Fees and Services
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Audit Fees (a)
|
$
|
2,369
|
|
|
$
|
1,210
|
|
Audit-Related Fees
|
—
|
|
|
—
|
|
||
Tax Fees
|
—
|
|
|
—
|
|
||
All Other Fees
|
—
|
|
|
—
|
|
||
Total
|
$
|
2,369
|
|
|
$
|
1,210
|
|
(a)
|
Audit Fees represent the aggregate fees for professional services rendered by EY in connection with its audits of our consolidated financial statements, including the audits of internal control over financial reporting, reviews of the consolidated financial statements included in our Quarterly Reports on Form 10-Q and services that were provided in connection with registration statements, comfort letters and accounting consultations.
|
|
|
December 31, 2017
|
131
|
Exhibits and Financial Statement Schedules
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
Page
|
Report of Independent Registered Public Accounting Firm (Ernst & Young LLP)
|
|
Consolidated Statements of Operations - Years Ended December 31, 2017, 2016 and 2015
|
|
Consolidated Balance Sheets - December 31, 2017 and 2016
|
|
Consolidated Statements of Partners’ Equity - Years Ended December 31, 2017, 2016 and 2015
|
|
Consolidated Statements of Cash Flows - Years Ended December 31, 2017, 2016 and 2015
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
Incorporated by Reference
(File No. 1-35143, unless otherwise indicated)
|
||||
Exhibit Number
|
|
Description of Exhibit
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
2.1
|
|
|
8-K
|
|
2.1
|
|
11/12/2015
|
|
|
|
|
|
|
|
|
|
|
2.2
|
|
|
8-K
|
|
2.1
|
|
7/7/2016
|
|
|
|
|
|
|
|
|
|
|
2.3
|
|
|
10-Q
|
|
2.2
|
|
11/2/2016
|
|
|
|
|
|
|
|
|
|
|
2.4
|
|
|
10-K
|
|
2.4
|
|
2/21/2017
|
|
|
|
|
|
|
|
|
|
|
2.5
|
|
|
8-K
|
|
2.1
|
|
11/8/2017
|
|
|
|
|
|
|
|
|
|
|
2.6
|
|
|
8-K
|
|
2.1
|
|
10/20/2014
|
|
|
|
|
|
|
|
|
|
|
2.7
|
|
|
8-K
|
|
2.2
|
|
12/8/2014
|
|
|
|
|
|
|
|
|
|
|
2.8
|
|
|
8-K
|
|
2.1
|
|
4/6/2015
|
|
|
|
|
|
|
|
|
|
|
‡
2.9
|
|
|
8-K
|
|
2.1
|
|
8/14/2017
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
8-K
|
|
3.1
|
|
8/1/2017
|
|
|
|
|
|
|
|
|
|
|
132
|
|
|
|
Exhibits and Financial Statement Schedules
|
|
|
|
|
Incorporated by Reference
(File No. 1-35143, unless otherwise indicated)
|
||||
Exhibit Number
|
|
Description of Exhibit
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
3.2
|
|
|
8-K
|
|
3.1
|
|
12/1/2017
|
|
|
|
|
|
|
|
|
|
|
3.3
|
|
|
S-1
(File No. 333-171525)
|
|
3.3
|
|
1/4/2011
|
|
|
|
|
|
|
|
|
|
|
3.4
|
|
|
8-K
|
|
3.1
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
3.5
|
|
|
8-K
|
|
3.1
|
|
9/30/2014
|
|
|
|
|
|
|
|
|
|
|
3.6
|
|
|
8-K
|
|
3.1
|
|
11/12/2015
|
|
|
|
|
|
|
|
|
|
|
3.7
|
|
|
10-Q
|
|
3.1
|
|
8/4/2016
|
|
|
|
|
|
|
|
|
|
|
3.8
|
|
|
8-K
|
|
3.1
|
|
9/22/2016
|
|
|
|
|
|
|
|
|
|
|
3.9
|
|
|
8-K
|
|
3.2
|
|
11/21/2016
|
|
|
|
|
|
|
|
|
|
|
3.10
|
|
|
8-K
|
|
3.1
|
|
11/8/2017
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
8-K
|
|
4.1
|
|
10/29/2014
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
|
8-K
|
|
4.3
|
|
5/12/2016
|
|
|
|
|
|
|
|
|
|
|
4.3
|
|
|
8-K
|
|
4.1
|
|
12/2/2016
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
|
8-K
|
|
4.1
|
|
11/28/2017
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
8-K
|
|
10.1
|
|
2/3/2016
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
|
8-K
|
|
10.1
|
|
11/13/2017
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
|
8-K
|
|
10.2
|
|
2/3/2016
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
|
8-K
|
|
10.2
|
|
11/13/2017
|
|
|
|
|
|
|
|
|
|
|
10.x
|
|
|
8-K
|
|
10.1
|
|
4/6/2015
|
|
|
December 31, 2017
|
133
|
Exhibits and Financial Statement Schedules
|
|
|
|
|
Incorporated by Reference
(File No. 1-35143, unless otherwise indicated)
|
||||
Exhibit Number
|
|
Description of Exhibit
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
10.5
|
|
|
8-K
|
|
10.1
|
|
11/8/2017
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
|
8-K
|
|
10.1
|
|
11/8/2017
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
|
8-K
|
|
10.3
|
|
10/31/2017
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
|
8-K
|
|
10.6
|
|
4/29/2011
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
|
8-K
|
|
10.1
|
|
4/1/2013
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
|
10-Q
|
|
10.2
|
|
5/8/2013
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
|
8-K
|
|
10.1
|
|
9/22/2016
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
|
8-K
|
|
10.10
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.13
|
|
|
10-K
|
|
10.21
|
|
2/29/2012
|
|
|
|
|
|
|
|
|
|
|
10.14
|
|
|
8-K
|
|
10.3
|
|
12/15/2014
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
|
8-K
|
|
10.10
|
|
4/29/2011
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
|
8-K
|
|
10.11
|
|
4/29/2011
|
|
|
|
|
|
|
|
|
|
|
10.17
|
|
|
8-K
|
|
10.4
|
|
4/3/2012
|
|
|
|
|
|
|
|
|
|
|
10.18
|
|
|
8-K
|
|
10.8
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.19
|
|
|
8-K
|
|
10.9
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.20
|
|
|
8-K
|
|
10.6
|
|
9/17/2012
|
|
|
|
|
|
|
|
|
|
|
10.21
|
|
|
8-K
|
|
10.11
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.22
|
|
|
8-K
|
|
10.13
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.23
|
|
|
8-K
|
|
10.7
|
|
9/17/2012
|
|
|
|
|
|
|
|
|
|
|
134
|
|
|
|
Exhibits and Financial Statement Schedules
|
|
|
|
|
Incorporated by Reference
(File No. 1-35143, unless otherwise indicated)
|
||||
Exhibit Number
|
|
Description of Exhibit
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
10.24
|
|
|
8-K
|
|
10.4
|
|
11/15/2012
|
|
|
|
|
|
|
|
|
|
|
10.25
|
|
|
8-K
|
|
10.3
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
10.26
|
|
|
8-K
|
|
10.5
|
|
11/15/2012
|
|
|
|
|
|
|
|
|
|
|
10.27
|
|
|
8-K
|
|
10.6
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
10.28
|
|
|
8-K
|
|
10.7
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
10.29
|
|
|
8-K
|
|
10.6
|
|
11/15/2012
|
|
|
|
|
|
|
|
|
|
|
10.30
|
|
|
8-K
|
|
10.3
|
|
9/22/2016
|
|
|
|
|
|
|
|
|
|
|
10.31
|
|
|
8-K
|
|
10.5
|
|
6/3/2013
|
|
|
|
|
|
|
|
|
|
|
10.32
|
|
|
8-K
|
|
10.2
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.33
|
|
|
8-K
|
|
10.2
|
|
11/12/2015
|
|
|
|
|
|
|
|
|
|
|
10.34
|
|
|
8-K
|
|
10.3
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.35
|
|
|
8-K
|
|
10.4
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.36
|
|
|
8-K
|
|
10.5
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.37
|
|
|
8-K
|
|
10.6
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.38
|
|
|
8-K
|
|
10.7
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.39
|
|
|
8-K
|
|
10.12
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.40
|
|
|
8-K
|
|
10.3
|
|
11/12/2015
|
|
|
|
|
|
|
|
|
|
|
10.41
|
|
|
8-K
|
|
10.14
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.42
|
|
|
8-K
|
|
10.19
|
|
12/9/2013
|
|
|
|
|
|
|
|
|
|
|
10.43
|
|
|
8-K
|
|
2.1
|
|
12/10/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
135
|
Exhibits and Financial Statement Schedules
|
|
|
|
|
Incorporated by Reference
(File No. 1-35143, unless otherwise indicated)
|
||||
Exhibit Number
|
|
Description of Exhibit
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
10.44
|
|
|
8-K
|
|
2.2
|
|
12/10/2013
|
|
|
|
|
|
|
|
|
|
|
10.45
|
|
|
8-K
|
|
10.4
|
|
11/12/2015
|
|
|
|
|
|
|
|
|
|
|
10.46
|
|
|
10-Q
|
|
10.1
|
|
8/1/2014
|
|
|
|
|
|
|
|
|
|
|
10.47
|
|
|
8-K
|
|
10.1
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
10.48
|
|
|
8-K
|
|
10.2
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
10.49
|
|
|
10-K
|
|
10.71
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
10.50
|
|
|
8-K
|
|
10.4
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
10.51
|
|
|
8-K
|
|
10.5
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
10.52
|
|
|
8-K
|
|
10.8
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
10.53
|
|
|
8-K
|
|
10.9
|
|
7/1/2014
|
|
|
|
|
|
|
|
|
|
|
10.54
|
|
|
8-K
|
|
10.1
|
|
12/8/2014
|
|
|
|
|
|
|
|
|
|
|
10.55
|
|
|
8-K
|
|
10.2
|
|
12/8/2014
|
|
|
|
|
|
|
|
|
|
|
10.56
|
|
|
8-K
|
|
10.3
|
|
12/8/2014
|
|
|
|
|
|
|
|
|
|
|
10.57
|
|
|
8-K
|
|
10.6
|
|
12/8/2014
|
|
|
|
|
|
|
|
|
|
|
10.58
|
|
|
8-K
|
|
10.9
|
|
12/8/2014
|
|
|
|
|
|
|
|
|
|
|
10.59
|
|
|
8-K
|
|
10.3
|
|
2/3/2016
|
|
|
|
|
|
|
|
|
|
|
10.60
|
|
|
10-K
|
|
10.82
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
10.61
|
|
|
8-K
|
|
10.1
|
|
7/7/2016
|
|
|
|
|
|
|
|
|
|
|
10.62
|
|
|
8-K
|
|
10.3
|
|
7/7/2016
|
|
|
|
|
|
|
|
|
|
|
10.63
|
|
|
8-K
|
|
10.2
|
|
9/22/2016
|
|
|
|
|
|
|
|
|
|
|
10.64
|
|
|
8-K
|
|
10.2
|
|
11/21/2016
|
|
|
|
|
|
|
|
|
|
|
136
|
|
|
|
Exhibits and Financial Statement Schedules
|
|
|
December 31, 2017
|
137
|
Exhibits and Financial Statement Schedules
|
|
|
|
|
Incorporated by Reference
(File No. 1-35143, unless otherwise indicated)
|
||||
Exhibit Number
|
|
Description of Exhibit
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
10.82
|
|
|
8-K
|
|
10.4
|
|
11/8/2017
|
|
|
|
|
|
|
|
|
|
|
10.83
|
|
|
8-K
|
|
10.5
|
|
11/8/2017
|
|
|
|
|
|
|
|
|
|
|
10.84
|
|
|
8-K
|
|
10.6
|
|
11/8/2017
|
|
|
|
|
|
|
|
|
|
|
10.85
|
|
|
8-K
|
|
10.7
|
|
11/8/2017
|
|
|
|
|
|
|
|
|
|
|
10.86
|
|
|
8-K
|
|
10.8
|
|
11/8/2017
|
|
|
|
|
|
|
|
|
|
|
10.87
|
|
|
8-K
|
|
10.9
|
|
11/8/2017
|
|
|
|
|
|
|
|
|
|
|
*†10.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
†10.89
|
|
|
S-1
(File No. 333-171525)
|
|
10.17
|
|
1/4/2011
|
|
|
|
|
|
|
|
|
|
|
*†10.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
†10.91
|
|
|
8-K
|
|
10.1
|
|
2/22/2017
|
|
|
|
|
|
|
|
|
|
|
†10.92
|
|
|
8-K
|
|
10.2
|
|
2/22/2017
|
|
|
|
|
|
|
|
|
|
|
†10.93
|
|
|
8-K
|
|
10.1
|
|
2/18/2015
|
|
|
|
|
|
|
|
|
|
|
†10.94
|
|
|
8-K
|
|
10.2
|
|
2/18/2015
|
|
|
|
|
|
|
|
|
|
|
†10.95
|
|
|
8-K
|
|
10.1
|
|
2/11/2016
|
|
|
|
|
|
|
|
|
|
|
†10.96
|
|
|
8-K
|
|
10.2
|
|
2/11/2016
|
|
|
|
|
|
|
|
|
|
|
†10.97
|
|
|
8-K
|
|
10.1
|
|
7/23/2015
|
|
|
|
|
|
|
|
|
|
|
†10.98
|
|
|
10-K
|
|
10.15
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
†10.99
|
|
|
10-K
|
|
10.20
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
*†10.100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*†10.101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
†10.102
|
|
|
S-1
(File No. 333-171525)
|
|
10.13
|
|
4/4/2011
|
|
|
|
|
|
|
|
|
|
|
†10.103
|
|
|
8-K
|
|
10.1
|
|
12/15/2014
|
|
|
|
|
|
|
|
|
|
|
†10.104
|
|
|
8-K
|
|
10.3
|
|
8/4/2008
|
|
|
|
|
|
|
|
|
|
|
*21.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*23.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138
|
|
|
|
Exhibits and Financial Statement Schedules
|
|
|
|
|
Incorporated by Reference
(File No. 1-35143, unless otherwise indicated)
|
||||
Exhibit Number
|
|
Description of Exhibit
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
*31.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*31.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*32.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*32.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**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
|
|
|
|
|
|
|
‡
|
Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Andeavor agrees to furnish a copy of such schedules, or any section thereof, to the SEC upon request.
|
Item 16.
|
Form 10-K Summary
|
|
|
December 31, 2017
|
139
|
|
|
Andeavor Logistics LP
|
|
|
|
|
|
|
|
By:
|
Tesoro Logistics GP, LLC
|
|
|
|
Its General Partner
|
|
|
|
|
|
|
By:
|
/s/ GREGORY J. GOFF
|
|
|
|
Gregory J. Goff
|
|
|
|
Chairman of the Board of Directors and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ GREGORY J. GOFF
|
|
Chairman of the Board of Directors and
|
|
February 21, 2018
|
Gregory J. Goff
|
|
Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ STEVEN M. STERIN
|
|
President, Chief Financial Officer and
|
|
February 21, 2018
|
Steven M. Sterin
|
|
Director
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ BLANE W. PEERY
|
|
Vice President and Controller
|
|
February 21, 2018
|
Blane W. Peery
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ RAYMOND J. BROMARK
|
|
Director
|
|
February 21, 2018
|
Raymond J. Bromark
|
|
|
|
|
|
|
|
|
|
/s/ SIGMUND L. CORNELIUS
|
|
Director
|
|
February 21, 2018
|
Sigmund L. Cornelius
|
|
|
|
|
|
|
|
|
|
/s/ RUTH I. DRESSEN
|
|
Director
|
|
February 21, 2018
|
Ruth I. Dressen
|
|
|
|
|
|
|
|
|
|
/s/ JAMES H. LAMANNA
|
|
Director
|
|
February 21, 2018
|
James H. Lamanna
|
|
|
|
|
|
|
|
|
|
/s/ JEFF A. STEVENS
|
|
Director
|
|
February 21, 2018
|
Jeff A. Stevens
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL E. WILEY
|
|
Director
|
|
February 21, 2018
|
Michael E. Wiley
|
|
|
|
|
140
|
|
|
|
SECTION 1.
|
Purpose of the Plan.
|
SECTION 2.
|
Definitions
.
|
SECTION 3.
|
Administration
.
|
SECTION 4.
|
Units
.
|
SECTION 5.
|
Eligibility
.
|
SECTION 6.
|
Awards
.
|
SECTION 7.
|
Amendment and Termination
.
|
SECTION 8.
|
General Provisions
.
|
SECTION 9.
|
Term of the Plan
.
|
1.1
|
"Affiliate"
means each entity that would be considered a single employer with the Company under Section 414(b) or Section 414(c) of the Code, except that the phrase "at least 50%" shall be substituted for the phrase "at least 80%" as used therein.
|
1.2
|
"Aggregated Plan"
means all agreements, methods, programs and other arrangements that are aggregated with this Plan under Section 1.409A-1(c) of the Regulations.
|
1.3
|
"Base Salary"
means the rate of base pay as in effect for a Participant on the effective date of such Participant’s eligibility for a benefit hereunder, as provided in Section II hereof.
|
1.4
|
"Board"
means the Board of Directors of the Company.
|
1.5
|
"Bonus"
means (i) for purposes of determining the amount of a Participant’s Change in Control Benefit, as provided in Section 3.1 hereof, the target bonus applicable to a Participant under the Company’s annual incentive program for the year in which such Participant’s employment terminates under conditions that result in the eligibility of such Participant for a Change in Control Benefit hereunder or (ii) for purposes of determining the amount of the Severance Benefit for each Participant other than the Chief Executive Officer, as provided in Section 3.2 hereof, the average of the actual bonuses paid under the Company’s annual incentive program during the three (3)-year period ending on the date of the Participant’s termination of employment under conditions that result in the eligibility of such Participant for a Severance Benefit hereunder; provided, however, in the event that the Participant has been employed for fewer than three (3) years from the date of his most recent employment to the date of such termination of employment, the Bonus will be calculated by adding the total amount of the annualized actual bonuses paid during the Participant’s most recent
|
1.6
|
"Cause"
means the conviction of or a plea of
nolo
contendere
to the charge of a felony (which, through lapse of time or otherwise, is not subject to appeal); a willful refusal without proper legal cause to perform, or gross negligence in performing, the Participant’s duties and responsibilities; a material breach of fiduciary duty to the Company through the misappropriation of Company funds or property; or the unauthorized absence of the Participant from work (other than for sick or approved disability leave or leave under the Family Medical Leave Act) for a period of thirty (30) or more working days out of a consecutive forty-five (45)-working day period.
|
1.7
|
"Change in Control"
means (i) there shall be consummated (A) any consolidation or merger of Company in which Company is not the continuing or surviving corporation or pursuant to which shares of Company's common stock would be converted into cash, securities or other property, other than a merger of Company where a majority of the board of directors of the surviving corporation are, and for a one-year period after the merger continue to be, persons who were directors of Company immediately prior to the merger or were elected as directors, or nominated for election as director, by a vote of at least two-thirds of the directors then still in office who were directors of Company immediately prior to the merger, or (B) any sale, lease, exchange or transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of Company, or (ii) the shareholders of Company shall approve any plan or proposal for the liquidation or dissolution of Company, or (iii) (A) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than Company or a Subsidiary thereof or any employee benefit plan sponsored by Company or a Subsidiary thereof, shall become the beneficial owner (within the meaning of Rule 13c-3 under the Securities Exchange Act of 1934) of securities of Company representing thirty-five percent (35%) or more of the combined voting power of Company's then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, and (B) at any time during a period of one-year thereafter, individuals who immediately prior to the beginning of such period constituted the Board shall cease for any reason to constitute at least a majority thereof, unless election or the nomination by the Board for election by Company's shareholders of each new director during such period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.
|
1.8
|
"Change in Control Benefit"
means the benefit payable under Section 3.1 hereof in the event of an involuntary termination of employment without Cause or a voluntary termination of employment for Good Reason following a Change in Control.
|
1.9
|
"Chief Executive Officer"
means the Chief Executive Officer of the Company.
|
1.10
|
"Code"
means the Internal Revenue Code of 1986, as amended from time to time.
|
1.11
|
"Committee"
means the Compensation Committee of the Board.
|
1.12
|
"Company"
means, prior to August 1, 2017, Tesoro Corporation, a Delaware corporation, and, effective August 1, 2017, Andeavor, a Delaware corporation, or any successor thereto.
|
1.13
|
"Compensation"
means a Participant’s Base Salary and Bonus.
|
1.14
|
"Death/Disability Benefit"
means the benefit payable under Section 3.3 hereof in the event of the Chief Executive Officer’s termination of employment by reason of death or Total Disability.
|
1.15
|
"Good Reason"
means the occurrence of any of the following:
|
(a)
|
without Participant's express written consent, the assignment to Participant of any duties inconsistent with the employment of Participant immediately prior to the Change in Control, or a significant diminution of Participant's positions, duties, responsibilities and status with the Company from those immediately prior to a Change in Control or a diminution in Participant's titles or offices as in effect immediately prior to a Change in Control, or any removal of Participant from, or any failure to reelect Participant to, any of such positions;
|
(b)
|
a material reduction by the Company in Participant's Base Salary, as in effect immediately prior to a Change in Control;
|
(c)
|
the failure by the Company to continue benefits, including but not limited to, 401(k), pension, life insurance, and health plans, substantially equal in value, in the aggregate, to those in which Participant is participating or is eligible to participate at the time of the Change in Control except as otherwise required by the terms of such plans as in effect at the time of any Change in Control;
|
(d)
|
the failure by the Company to continue in effect any incentive plan or arrangement in which Participant is participating at the time of a Change in Control (or to substitute and continue other plans or arrangements providing the Participant with substantially similar benefits), except as otherwise required by the terms of such plans as in effect at the time of any Change in Control;
|
(e)
|
the occurrence of an event that meets the criteria set forth under the Company's relocation policy, as in effect from time to time, with respect to which either (i) the
|
(f)
|
any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company;
|
1.16
|
"Participant"
means an individual who, on the date of his or her termination of employment under the circumstances described in Section II hereof, is either: (i) an officer of the Company or a Subsidiary with the title of Senior Vice President or above whose compensation is approved by the Committee or (ii) an officer of the Company or a Subsidiary with the title of Vice President who is approved for participation by the Chief Executive Officer, and, in each case, who is not otherwise entitled to a change in control or severance benefit, as applicable, under an employment agreement, management stability agreement, or similar type of agreement.
|
1.17
|
"Plan"
means, prior to August 1, 2017, the Tesoro Corporation Executive Severance and Change in Control Plan, effective May 1, 2013, and effective August 1, 2017, the Andeavor Executive Severance and Change in Control Plan, as may be amended from time to time.
|
1.18
|
"Regulations"
means the Treasury Regulations promulgated under the Code.
|
1.19
|
"Separation from Service"
means a termination of employment of a Participant under the circumstances described in Section II hereof that will result in a reasonably anticipated permanent reduction in the level of bona fide services performed by the Participant for the Company and its Affiliates to 20% or less of the average level of bona fide services performed by the Participant for the Company and its Affiliates (whether as an employee or an independent contractor) in the immediately preceding thirty-six (36) months (or the full period of service to the Company and its Affiliates if the Participant has been providing services to the Company and its Affiliates for fewer than thirty-six (36) months). The determination of whether a Separation from Service has occurred shall be made by the Committee in accordance with the provisions of Section 409A of the Code and the Regulations.
|
1.20
|
"Severance Benefit"
means the benefit payable under Section 3.2 hereof in the absence of a Change in Control but in the event of an involuntary termination of employment without Cause.
|
1.21
|
"Subsidiary"
means any entity in which the Company owns or otherwise controls, directly or indirectly, stock or other ownership interests having the voting power to elect a majority of the board of directors, or other governing group having functions similar to a board of directors, as determined by the Committee.
|
1.22
|
"Total Disability"
means the physical or mental incapacity of the Chief Executive Officer so as to render him incapable of performing his material, usual and customary duties, with or without reasonable accommodation as required by law, for six (6) consecutive months (even if such consecutive absence is interrupted by the Chief Executive Officer’s return to
|
2.1
|
Eligibility for Change in Control Benefit
. Each Participant is eligible to receive a Change in Control Benefit if, within the two-year period following a Change in Control, such Participant’s employment with the Company or a Subsidiary is terminated by reason of: (i) involuntary termination other than for Cause or by reason of death, or (ii) voluntary termination by the Participant for Good Reason. The determination of whether a termination of employment shall be for Cause or Good Reason shall be made in the sole and absolute discretion of the Committee. Such benefit shall commence as provided in Section 4.1 hereof, but shall be contingent upon the Committee’s prior receipt of a release executed by the Participant in the form determined by and in the manner prescribed by the Committee.
|
2.2
|
Eligibility for Severance Benefit
.
|
(a)
|
Chief Executive Officer
. Subject to paragraph (d) below, the Chief Executive Officer is eligible to receive a Severance Benefit if his employment with the Company or a Subsidiary is terminated in the absence of a Change in Control by reason of either: (i) involuntary termination other than for Cause or (ii) voluntary termination following the occurrence or failure of any of the following circumstances, without his express written consent: (A) a material adverse change in the governing body to which the Chief Executive Officer regularly reports, including a requirement that the Chief Executive Officer report to another corporate officer rather than to the Board; (B) a material adverse change in the Compensation plans, programs or arrangements in which the Chief Executive Officer is entitled to participate (the “Compensation Plans”) other than a material adverse change in the Compensation Plans that adversely affects other similarly situated executives in a manner proportionate to the material adverse effect of such change on the Chief Executive Officer; (C) Chief Executive Officer’s failure to be elected or reelected to the Board; or (D) the failure of any successor to the Company (whether direct or indirect and whether by merger, acquisition, consolidation or otherwise) to assume in a writing delivered to the Chief Executive Officer upon the successor becoming such, the obligations of the Company hereunder.
|
(b)
|
Executive Vice-Presidents
. Subject to paragraph (d) below, each Participant who is an Executive Vice-President of the Company is eligible to receive a Severance
|
(c)
|
Senior Vice Presidents
. Subject to paragraph (d) below, each Participant who is a Senior Vice President of the Company is eligible to receive a Severance Benefit if such Participant’s employment with the Company or a Subsidiary is terminated in the absence of a Change in Control by reason of involuntary termination other than for Cause or by reason of death.
|
(d)
|
Committee Discretion and Executed Release
. The determination of whether a termination of employment shall be for Cause or whether a material adverse change in the reporting relationship has occurred under Section 2.2 (a), (b) or (c) shall be made in the sole and absolute discretion of the Committee. Benefits payable hereunder shall commence as provided in Section 4.1 hereof, but shall be contingent upon the Committee’s prior receipt of a release executed by the Participant in the form determined by and in the manner prescribed by the Committee.
|
2.3
|
Eligibility for Death/Disability Benefit
. The Chief Executive Officer is eligible to receive a Death/Disability Benefit if his employment with the Company or a Subsidiary is terminated in the absence of a Change in Control by reason of his death or Total Disability. Such Death/Disability Benefit is mutually exclusive of any Severance Benefit or Change in Control Benefit hereunder.
|
3.1
|
Change in Control Benefit
. The Change in Control Benefit to which an eligible Participant shall be entitled shall be as follows:
|
(a)
|
Chief Executive Officer
. The Chief Executive Officer shall be entitled to a Change in Control Benefit, payable in cash, equal to three (3) times his Compensation. Furthermore, the Chief Executive Officer and his or her eligible dependents shall be entitled to participate in the Company's group medical plan (excluding dental and vision benefits) for the thirty (30)-month period commencing on the date of the Chief Executive Officer's Separation from Service.
|
(b)
|
Executive Vice-Presidents
. Each Executive Vice-President shall be entitled to a Change in Control Benefit, payable in cash, equal to two and one-half (2.5) times his Compensation. Furthermore, the Executive Vice-President and his or her eligible dependents shall be entitled to participate in the Company's group medical plan
|
(c)
|
Senior Vice-Presidents
. Each Senior Vice-President shall be entitled to a Change in Control Benefit, payable in cash, equal to two (2) times his Compensation. Furthermore, the Senior Vice-President and his or her eligible dependents shall be entitled to participate in the Company's group medical plan (excluding dental and vision benefits) for the twenty-four (24)-month period commencing on the date of the Senior Vice-President's Separation from Service.
|
(d)
|
Vice-Presidents
. Each Vice-President who is a Participant in this Plan shall be entitled to a Change in Control Benefit, payable in cash, equal to either one (1) times or one and one-half (1.5) times his Compensation, as determined by the Chief Executive Officer in his sole and absolute discretion. Furthermore, the Vice-President and his or her eligible dependents shall be entitled to participate in the Company's group medical plan (excluding dental and vision benefits) for a period of either twelve (12) or eighteen (18) months (as determined by the Chief Executive Officer in his sole and absolute discretion) commencing on the date of the Vice-President's Separation from Service.
|
3.2
|
Severance Benefit
. The Severance Benefit to which an eligible Participant shall be entitled shall be as follows:
|
(a)
|
Chief Executive Officer
. The Chief Executive Officer shall be entitled to a Severance Benefit, payable in cash, equal to two (2) times his Compensation, together with the benefits described in Section 3.2(d) (i) and (ii) hereof. Furthermore, except to the extent prohibited by law, and applicable only until May 1, 2015, the Chief Executive Officer shall be deemed vested under the Tesoro Corporation Amended and Restated Executive Security Plan ("ESP") (known as the Andeavor Executive Security Plan as of August 1, 2017) as of the date of the Chief Executive Officer’s eligibility for a Severance Benefit hereunder and the benefit to which the Chief Executive Officer is entitled under the ESP shall be calculated, to the extent applicable, by granting the Chief Executive Officer deemed years of age and service up to the earliest date on which the Chief Executive Officer would be eligible for an early retirement benefit, as determined under the Tesoro Corporation Retirement Plan (known as the Andeavor Pension Plan as of August 1, 2017).
|
(b)
|
Executive Vice-Presidents
. Each Executive Vice-President shall be entitled to a Severance Benefit, payable in cash, equal to one and three-fourths (1.75) times his Compensation, together with the benefits described in Section 3.2(d) (i) and (ii) hereof.
|
(c)
|
Senior Vice-Presidents
. Each Senior Vice-President shall be entitled to a Severance Benefit, payable in cash, equal to one and one-half (1.5) times his Compensation, together with the benefits described in Section 3.2(d) (i) and (ii) hereof.
|
(d)
|
Additional Benefits
. The foregoing eligible Participants set forth in this Section 3.2 shall be entitled to the following benefits, as applicable, in addition to the benefits described in (a), (b) and (c) above:
|
(i)
|
participation in the Company's medical plan (excluding dental and vision benefits) for a period of eighteen (18) months commencing on the date of the Participant’s Separation from Service;
|
(ii)
|
receipt of reasonable outplacement services, at no cost to the Participant, for up to twelve (12) months, such twelve (12)-month period to commence on the date of the Participant’s Separation from Service; and
|
(iii)
|
Chief Executive Officer and Chief Executive Officer’s spouse and eligible dependents shall continue to be eligible to participate in, and receive group health coverage under, the Company’s group health plans that provide group health coverage to active employees of the Company from time to time, but only to the extent such plans continue to be available to the Company’s employees and only until the earliest to occur of (A) two and one-half (2½) years after the date of termination of the Chief Executive Officer’s employment, (B) Chief Executive Officer’s death (or in the case of coverage for a qualified beneficiary of Chief Executive Officer, the death of that qualified beneficiary), or (C) the date on which Chief Executive Officer (or in the case of coverage for a qualified beneficiary of Executive, the qualified beneficiary) becomes eligible for coverage under any other group health plan of another employer providing comparable coverage (the “Continuation Coverage Period”); provided that the Company shall pay for one hundred percent (100%) of the premiums for such group health coverage, and the premiums that otherwise would be charged to the Chief Executive Officer for such coverage but for this Section 3.2(d)(iii) shall be included as imputed income; and provided further that the group health plan coverage benefits provided by the Company under this Section 3.2(d)(iii) during any taxable year of the Chief Executive Officer will not affect such benefits provided by the Company in another taxable year during the period of continued coverage and the right to the benefits provided under this Section 3.2(d)(iii) is not subject to liquidation or exchange for another benefit.
|
3.3
|
Death/Disability Benefit
. The Chief Executive Officer or, in the event of the Chief Executive Officer’s death, the estate of the Chief Executive Officer shall be entitled to a Death/Disability Benefit, payable in cash, equal to one (1) times his Base Salary. In the event of the Chief Executive Officer’s termination of employment on account of Total Disability, this benefit shall be reduced by any payments to the Chief Executive Officer under any long-term disability plan or arrangement of the Company.
|
4.1
|
Benefits payable in accordance with Section III as cash payments will be paid in a single lump sum payment on the first day of the seventh (7th) calendar month beginning after the Participant's Separation from Service. If a Participant who is entitled to continued coverage under the Company’s group medical plan elects to continue such participation, the Company shall pay the applicable premium for such coverage (which amount shall be the employer-subsidized portion of the premium that applies to active employees of the Company) in accordance with the Company's standard payroll practices for the period of coverage that applies under Section III hereof. The continued medical plan coverage described herein and the payment of the applicable premium in connection therewith may not affect the benefit to be provided in any other taxable year and may not be liquidated or exchanged for any other benefit.
|
4.2
|
The Company will be liable for all benefits due the Participants under the Plan.
|
4.3
|
The Plan is a general corporate commitment and each Participant must rely upon the general credit of the Company for the fulfillment of its obligations under the Plan. Under all circumstances the rights of Participants to any asset held by the Company shall be no greater than the rights expressed in this Plan. Nothing contained in this Plan shall constitute a guarantee by the Company that the assets of the Company will be sufficient to pay any benefits under the Plan or would place the Participant in a secured position ahead of general creditors and judgment creditors of the Company. Though the Company may establish or become a signatory to a rabbi trust to accumulate assets to help fulfill its obligations, the Plan and any trust created, shall not create any lien, claim, encumbrance, right, title or other interest of any kind in any Participant in any asset held by the Company, contributed to any trust created, or otherwise be designated to be used for payment of any of its obligations created in this agreement. No specific assets of the Company have been or will be set aside, or will be transferred to a trust or will be pledged for the performance of the Company's obligations under the Plan which would remove those assets from being subject to the general creditors and judgment creditors of the Company.
|
4.4
|
It is intended that this Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.
|
4.5
|
Notwithstanding any provision of this Section IV to the contrary, the benefits payable hereunder may, to the extent expressly provided in this Section 4.5, be paid prior to or later than the date on which they would otherwise be paid to the Participant.
|
(a)
|
Distribution in the Event of Income Inclusion Under Code Section 409A
. If any portion of a Participant's benefit hereunder is required to be included in income by the Participant prior to receipt due to a failure of this Plan or any Aggregated Plan to comply with the requirements of Section 409A of the Code or the Regulations, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the portion of his or her benefit required to be included
|
(b)
|
Distribution Necessary to Satisfy Applicable Tax Withholding
. If the Company is required to withhold amounts to pay the Participant’s portion of the Federal Insurance Contributions Act (FICA) tax imposed under Code Sections 3101, 3121(a) or 3121(v)(2) with respect to amounts that are or will be paid to the Participant under the Plan before they otherwise would be paid, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of: (i) the amount of the Participant's benefit hereunder or (ii) the aggregate of the FICA taxes imposed and the income tax withholding related to such amount.
|
(c)
|
Delay for Payments in Violation of Federal Securities Laws or Other Applicable Law
. In the event the Company reasonably anticipates that the payment of benefits as specified hereunder would violate Federal securities laws or other applicable law, the Committee may delay the payment of such benefit hereunder until the earliest date at which the Company reasonably anticipates that the making of such payment would not cause such violation.
|
(d)
|
Delay for Insolvency or Compelling Business Reasons.
In the event the Company determines that the making of any payment of benefits on the date specified hereunder would jeopardize the ability of the Company to continue as a going concern, the Committee may delay the payment of such benefits until the first calendar year in which the Company notifies the Committee that the payment of benefits would not have such effect.
|
(e)
|
Administrative Delay in Payment
. The payment of benefits hereunder shall begin at the date specified in accordance with the provisions of the foregoing paragraphs of this Section IV; provided that, in the case of administrative necessity, the payment of such benefits may be delayed up to the later of the last day of the calendar year in which payment would otherwise be made or the 15
th
day of the third calendar month following the date on which payment would otherwise be made. Further, if, as a result of events beyond the control of the Participant, it is not administratively practicable for the Committee to calculate the amount of benefits due to the Participant as of the date on which payment would otherwise be made, the payment may be delayed until the first calendar year in which calculation of the amount is administratively practicable.
|
5.1
|
Claims for Benefits
. The Committee shall determine the rights of any Participant to any benefits hereunder. Any Participant who believes that he has not received the benefits to which he is entitled under the Plan may file a claim in writing with the Committee. The Committee shall, no later than 90 days after the receipt of a claim (plus an additional period
|
(a)
|
the specific reasons for the denial;
|
(b)
|
specific reference to pertinent Plan provisions on which the denial is based;
|
(c)
|
a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and
|
(d)
|
an explanation of the claim review procedure and the time limits applicable to such procedures, including a statement of the claimant's right, if applicable, to bring a civil action under Section 502(a) of ERISA.
|
5.2
|
Appeal Provisions
. A claimant whose claim is denied (or his duly authorized representative) may within 60 days after receipt of denial of a claim file with the Committee a written request for a review of such claim. If the claimant does not file a request for review of his claim within such 60-day period, the claimant shall be deemed to have acquiesced in the original decision of the Committee on his claim, the decision shall become final and the claimant will not be entitled to bring a civil action under Section 502(a) of ERISA. If such an appeal is so filed within such 60-day period the Committee (or its delegate) shall conduct a full and fair review of such claim. During such review, the claimant (or the claimant's authorized representative) shall be given the opportunity to review all documents that are pertinent to his claim and to submit issues and comments in writing.
|
6.1
|
The Board, or its delegate, may, in its sole discretion, terminate, suspend or amend this Plan at any time, in whole or in part. However, the termination, amendment or suspension of this Plan will not operate to decrease the benefit to which a Participant has become entitled but which has not yet been paid. Notwithstanding the foregoing, the Plan shall automatically terminate, without further action of the Company, upon Insolvency of the Company. For
|
6.2
|
Notwithstanding any provision of the Plan to the contrary, the Committee may at any time (without the consent of any Participant) modify, amend or terminate any or all of the provisions of this Plan to the extent necessary to conform the provisions of the Plan with Section 409A of the Code, regardless of whether such modification, amendment or termination of this Plan shall adversely affect the rights of a Participant under the Plan.
|
6.3
|
Nothing contained herein will confer upon any Participant the right to be retained in the service of the Company, nor will it interfere with the right of the Company to discharge or otherwise deal with a Participant without regard to the existence of this Plan.
|
6.4
|
No benefit under this Plan shall be assignable or subject to any manner of alienation, sale, transfer, claims of creditors, pledge, attachment or encumbrances of any kind.
|
6.5
|
The Committee may adopt rules and regulations to assist it in the administration of the Plan and may delegate such of its duties hereunder as it may deem advisable.
|
6.6
|
This Plan is established under and will be construed according to the laws of the State of Texas, except to the extent preempted by federal law.
|
6.7
|
This amendment and restatement is signed this ______ day of _____, 2017, to be effective as of August 1, 2017.
|
|
ANDEAVOR
|
|
|
|
|
|
By:
|
|
|
|
Kim Rucker
|
|
|
Executive Vice President, General Counsel and Secretary
|
Subsidiary
|
|
Jurisdiction of Organization
|
Andeavor Field Services LLC
|
|
Delaware
|
Andeavor Gathering I LLC
|
|
Delaware
|
Andeavor Logistics LP
|
|
Delaware
|
Andeavor Midstream Partners GP LLC
|
|
Delaware
|
Andeavor Midstream Partners LP
|
|
Delaware
|
Andeavor Midstream Partners Operating LLC
|
|
Delaware
|
Green River Processing, LLC
|
|
Delaware
|
Rendezvous Pipeline Company, LLC
|
|
Colorado
|
Tesoro Alaska Pipeline Company LLC
|
|
Delaware
|
Tesoro Alaska Terminals LLC
|
|
Delaware
|
Tesoro High Plains Pipeline Company LLC
|
|
Delaware
|
Tesoro Logistics Finance Corp.
|
|
Delaware
|
Tesoro Logistics GP, LLC
|
|
Delaware
|
Tesoro Logistics Northwest Pipeline LLC
|
|
Delaware
|
Tesoro Logistics Operations LLC
|
|
Delaware
|
Tesoro Logistics Pipelines LLC
|
|
Delaware
|
Tesoro SoCal Pipeline Company LLC
|
|
Delaware
|
Western Refining Logistics GP, LLC
|
|
Delaware
|
Western Refining Logistics, LP
|
|
Delaware
|
Western Refining Pipeline, LLC
|
|
New Mexico
|
Western Refining Product Transport, LLC
|
|
Delaware
|
Western Refining Terminals, LLC
|
|
Delaware
|
Western Refining Wholesale, LLC
|
|
Delaware
|
WNRL Energy GP, LLC
|
|
Delaware
|
WNRL Energy, LLC
|
|
Delaware
|
WNRL Finance Corp.
|
|
Delaware
|
1)
|
Registration Statement (Form S-8 No. 333-173807) pertaining to the Tesoro Logistics LP 2011 Long-Term Incentive Plan
|
2)
|
Registration Statement (Form S-3 No. 333-206168) of Tesoro Logistics LP authorizing the continuous issuance of common units representing limited partner interests having an aggregate gross sales price of up to $750 million
|
3)
|
Registration Statement (Form S-3 No. 333-211863) of Tesoro Logistics LP
|
4)
|
Registration Statement (Form S-8 No. 333-214395) pertaining to the Tesoro Logistics LP 2011 Long-Term Incentive Plan
|
5)
|
Registration Statement (Form S-8 No. 333-221229) pertaining to the Western Refining Logistics, LP 2013 Long-Term Incentive Plan
|
6)
|
Registration Statement (Form S-3 No. 333-221549) of Andeavor Logistics LP for the registration of common units representing limited partner interests, senior debt securities and subsidiary guarantees of senior debt securities
|
1.
|
I have reviewed this annual Report on Form
10-K
of Andeavor Logistics LP;
|
2.
|
Based on my knowledge, this
annual
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
annual
report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this
annual
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
annual
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) 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
annual
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
annual
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
annual
report based on such evaluation; and
|
(d)
|
Disclosed in this
annual
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:
|
February 21, 2018
|
/s/ GREGORY J. GOFF
|
|
|
Gregory J. Goff
|
|
|
Chief Executive Officer of Tesoro Logistics GP, LLC
|
|
|
(the general partner of Andeavor Logistics LP)
|
1.
|
I have reviewed this annual Report on Form
10-K
of Andeavor Logistics LP;
|
2.
|
Based on my knowledge, this
annual
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
annual
report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this
annual
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
annual
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) 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
annual
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
annual
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
annual
report based on such evaluation; and
|
(d)
|
Disclosed in this
annual
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:
|
February 21, 2018
|
/s/ STEVEN M. STERIN
|
|
|
Steven M. Sterin
|
|
|
Chief Financial Officer of Tesoro Logistics GP, LLC
|
|
|
(the general partner of Andeavor 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
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Chief Executive Officer of Tesoro Logistics GP, LLC
(the general partner of Andeavor Logistics LP)
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February 21, 2018
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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/ STEVEN M. STERIN
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Steven M. Sterin
|
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Chief Financial Officer of Tesoro Logistics GP, LLC
(the general partner of Andeavor Logistics LP)
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February 21, 2018
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