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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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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
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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200 East Hardin Street, Findlay, Ohio 45840
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(Address of principal executive offices) (Zip Code)
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419-421-2414
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(Registrant’s telephone number, including area code)
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Large accelerated filer
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þ
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Emerging growth company
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o
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Title of Each Class
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Trading Symbol
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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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ANDX
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New York Stock Exchange
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Table of Contents
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2
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Financial Statements
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Three Months Ended
March 31, |
||||||
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2019
|
|
2018 (a)
|
||||
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(In millions, except per unit amounts)
|
||||||
Revenues:
|
|
|
|
||||
Affiliate
|
$
|
444
|
|
|
$
|
327
|
|
Third-party
|
186
|
|
|
219
|
|
||
Total Revenues
|
630
|
|
|
546
|
|
||
Costs and Expenses:
|
|
|
|
||||
NGL expense (excluding items shown separately below)
|
59
|
|
|
48
|
|
||
Operating expenses (excluding depreciation and amortization)
|
239
|
|
|
201
|
|
||
Depreciation and amortization expenses
|
101
|
|
|
89
|
|
||
General and administrative expenses
|
20
|
|
|
31
|
|
||
Operating Income
|
211
|
|
|
177
|
|
||
Interest and financing costs, net
|
(61
|
)
|
|
(55
|
)
|
||
Equity in earnings of equity method investments
|
7
|
|
|
8
|
|
||
Other income, net
|
—
|
|
|
1
|
|
||
Net Earnings
|
$
|
157
|
|
|
$
|
131
|
|
|
|
|
|
||||
Loss attributable to Predecessors
|
$
|
—
|
|
|
$
|
8
|
|
Net Earnings Attributable to Partners
|
157
|
|
|
139
|
|
||
Preferred unitholders’ interest in net earnings
|
(10
|
)
|
|
(14
|
)
|
||
Limited Partners’ Interest in Net Earnings
|
$
|
147
|
|
|
$
|
125
|
|
|
|
|
|
||||
Net earnings per limited partner unit:
|
|
|
|
||||
Common - basic
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$
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0.60
|
|
|
$
|
0.59
|
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Common - diluted
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$
|
0.60
|
|
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$
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0.59
|
|
|
|
|
|
||||
Weighted average limited partner units outstanding:
|
|
|
|
||||
Common units - basic
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245.5
|
|
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217.2
|
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||
Common units - diluted
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245.7
|
|
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217.4
|
|
(a)
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Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
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March 31, 2019
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3
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Financial Statements
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|
March 31,
2019 |
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December 31,
2018 |
||||
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(In millions, except unit amounts)
|
||||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
29
|
|
|
$
|
10
|
|
Receivables, net of allowance for doubtful accounts
|
|
|
|
||||
Trade and other
|
252
|
|
|
195
|
|
||
Affiliate
|
309
|
|
|
279
|
|
||
Prepayments and other current assets
|
58
|
|
|
79
|
|
||
Total Current Assets
|
648
|
|
|
563
|
|
||
Property, Plant and Equipment, Net
|
|
|
|
||||
Property, plant and equipment, at cost
|
8,267
|
|
|
8,145
|
|
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Accumulated depreciation
|
(1,385
|
)
|
|
(1,300
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)
|
||
Property, Plant and Equipment, Net
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6,882
|
|
|
6,845
|
|
||
Acquired Intangibles, Net
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1,091
|
|
|
1,104
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|
||
Goodwill
|
1,051
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|
|
1,051
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Equity Method Investments
|
602
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|
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602
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Other Noncurrent Assets, Net
|
260
|
|
|
130
|
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Total Assets
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$
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10,534
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$
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10,295
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|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
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Current Liabilities
|
|
|
|
||||
Accounts payable
|
|
|
|
||||
Trade and other
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$
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208
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|
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$
|
214
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Affiliate
|
274
|
|
|
252
|
|
||
Accrued interest and financing costs
|
69
|
|
|
41
|
|
||
Current maturities of debt
|
503
|
|
|
504
|
|
||
Other current liabilities
|
91
|
|
|
81
|
|
||
Total Current Liabilities
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1,145
|
|
|
1,092
|
|
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Debt, Net of Unamortized Issuance Costs
|
4,622
|
|
|
4,460
|
|
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Other Noncurrent Liabilities
|
177
|
|
|
69
|
|
||
Total Liabilities
|
5,944
|
|
|
5,621
|
|
||
Commitments and Contingencies (Note 6)
|
|
|
|
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|
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Equity
|
|
|
|
||||
Preferred unitholders;
600,000
units issued and outstanding in 2019 and 2018
|
593
|
|
|
604
|
|
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Common unitholders;
245,562,963
units issued and outstanding (245,493,184 in 2018)
|
3,997
|
|
|
4,070
|
|
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Total Equity
|
4,590
|
|
|
4,674
|
|
||
Total Liabilities and Equity
|
$
|
10,534
|
|
|
$
|
10,295
|
|
4
|
|
|
|
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Financial Statements
|
|
|
Three Months Ended
March 31, |
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2019
|
|
2018 (a)
|
||||
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(In millions)
|
||||||
Cash Flows From (Used In) Operating Activities:
|
|
|
|
||||
Net earnings
|
$
|
157
|
|
|
$
|
131
|
|
Adjustments to reconcile net earnings to net cash from operating activities:
|
|
|
|
||||
Depreciation and amortization expenses
|
101
|
|
|
89
|
|
||
Other operating activities
|
4
|
|
|
8
|
|
||
Changes in current assets and liabilities
|
(18
|
)
|
|
58
|
|
||
Changes in noncurrent assets and liabilities
|
(25
|
)
|
|
(20
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)
|
||
Net cash from operating activities
|
219
|
|
|
266
|
|
||
Cash Flows From (Used In) Investing Activities:
|
|
|
|
||||
Capital expenditures
|
(119
|
)
|
|
(155
|
)
|
||
Acquisitions, net of cash
|
—
|
|
|
(159
|
)
|
||
Deposits for acquisitions
|
—
|
|
|
(10
|
)
|
||
Net cash used in investing activities
|
(119
|
)
|
|
(324
|
)
|
||
Cash Flows From (Used In) Financing Activities:
|
|
|
|
||||
Borrowings under revolving credit agreements
|
1,133
|
|
|
150
|
|
||
Repayments under revolving credit agreements
|
(974
|
)
|
|
(130
|
)
|
||
Distributions to common unitholders
|
(238
|
)
|
|
(205
|
)
|
||
Distributions to preferred unitholders
|
(21
|
)
|
|
(8
|
)
|
||
Sponsor contributions of equity to the Predecessors
|
—
|
|
|
197
|
|
||
Capital contributions by affiliate
|
20
|
|
|
9
|
|
||
Other financing activities
|
(1
|
)
|
|
(3
|
)
|
||
Net cash (used in) from financing activities
|
(81
|
)
|
|
10
|
|
||
Increase (Decrease) in Cash and Cash Equivalents
|
19
|
|
|
(48
|
)
|
||
Cash and Cash Equivalents, Beginning of Period
|
10
|
|
|
75
|
|
||
Cash and Cash Equivalents, End of Period
|
$
|
29
|
|
|
$
|
27
|
|
|
|
March 31, 2019
|
5
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
6
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
|
March 31, 2019
|
7
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
8
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
Combined
|
|
Andeavor Logistics LP
|
|
Predecessors
|
||||||
Revenues
|
|
|
|
|
|
||||||
Affiliate
|
$
|
327
|
|
|
$
|
318
|
|
|
$
|
9
|
|
Third-party
|
219
|
|
|
217
|
|
|
2
|
|
|||
Total Revenues
|
546
|
|
|
535
|
|
|
11
|
|
|||
Costs and Expenses
|
|
|
|
|
|
||||||
NGL expense (exclusive of items shown separately below)
|
48
|
|
|
48
|
|
|
—
|
|
|||
Operating expenses (exclusive of depreciation and amortization)
|
201
|
|
|
190
|
|
|
11
|
|
|||
Depreciation and amortization expenses
|
89
|
|
|
80
|
|
|
9
|
|
|||
General and administrative expenses
|
31
|
|
|
27
|
|
|
4
|
|
|||
Operating Income (Loss)
|
177
|
|
|
190
|
|
|
(13
|
)
|
|||
Interest and financing costs, net
|
(55
|
)
|
|
(54
|
)
|
|
(1
|
)
|
|||
Equity in earnings of equity method investments
|
8
|
|
|
2
|
|
|
6
|
|
|||
Other income, net
|
1
|
|
|
1
|
|
|
—
|
|
|||
Net Earnings (Loss)
|
$
|
131
|
|
|
$
|
139
|
|
|
$
|
(8
|
)
|
|
|
|
|
|
|
||||||
Loss attributable to Predecessors
|
8
|
|
|
—
|
|
|
8
|
|
|||
Net Earnings Attributable to Partners
|
139
|
|
|
139
|
|
|
—
|
|
|||
Preferred unitholders’ interest in net earnings
|
(14
|
)
|
|
(14
|
)
|
|
—
|
|
|||
Limited Partners’ Interest in Net Earnings
|
$
|
125
|
|
|
$
|
125
|
|
|
$
|
—
|
|
|
|
March 31, 2019
|
9
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Revenues (a)
|
$
|
444
|
|
|
$
|
327
|
|
Operating expenses (b)
|
90
|
|
|
62
|
|
||
General and administrative expenses
|
30
|
|
|
24
|
|
(a)
|
Represents
70%
and
60%
of our total revenues for the
three
months ended
March 31, 2019
and
2018
, respectively.
|
(b)
|
Excludes reimbursements from our Sponsor pursuant to the Amended Omnibus Agreement, the Carson Assets Indemnity Agreement and other affiliate agreements of
$3 million
and
$7 million
for the
three
months ended
March 31, 2019
and
2018
, respectively.
|
10
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
Lease Obligations
|
||||||
|
Operating
|
|
Finance
|
||||
2019
|
$
|
10
|
|
|
$
|
3
|
|
2020
|
17
|
|
|
3
|
|
||
2021
|
14
|
|
|
3
|
|
||
2022
|
12
|
|
|
2
|
|
||
2023
|
12
|
|
|
2
|
|
||
2024 and thereafter
|
102
|
|
|
4
|
|
||
Gross lease payments
|
167
|
|
|
17
|
|
||
Less: imputed interest
|
(46
|
)
|
|
(3
|
)
|
||
Total Lease Payments
|
$
|
121
|
|
|
$
|
14
|
|
|
Three Months Ended March
31, 2019
|
||
Operating lease cost
|
$
|
3
|
|
Finance lease cost (a)
|
1
|
|
|
Variable lease cost
|
1
|
|
|
Short-term lease cost
|
6
|
|
|
Total Lease Cost
|
$
|
11
|
|
(a)
|
Components of finance lease costs are primarily amortization of right of use assets as the interest on lease liabilities was immaterial.
|
|
|
March 31, 2019
|
11
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
March 31, 2019
|
||
Operating Leases
|
|
||
Right of use assets included in other noncurrent assets, net
|
$
|
122
|
|
|
|
||
Operating lease liabilities included in other current liabilities
|
$
|
12
|
|
Long-term operating lease liabilities included in other noncurrent liabilities
|
109
|
|
|
Total Operating Lease Liabilities
|
$
|
121
|
|
|
|
||
Weighted average remaining lease term
|
14 years
|
|
|
Weighted average discount rate
|
4.82
|
%
|
|
|
|
||
Finance Leases
|
|
||
Property, plant and equipment, gross
|
$
|
17
|
|
Accumulated depreciation
|
(5
|
)
|
|
Property, Plant and Equipment, Net
|
$
|
12
|
|
|
|
||
Debt due within one year
|
$
|
4
|
|
Long-term debt
|
10
|
|
|
Total Finance Lease Liabilities
|
$
|
14
|
|
|
|
||
Weighted average remaining lease term
|
6 years
|
|
|
Weighted average discount rate
|
5.47
|
%
|
|
March 31, 2019 (a)
|
||
2019
|
$
|
412
|
|
2020
|
549
|
|
|
2021
|
549
|
|
|
2022
|
548
|
|
|
2023
|
546
|
|
|
2024 and thereafter
|
6,481
|
|
|
Total Minimum Lease Revenue
|
$
|
9,085
|
|
(a)
|
Includes minimum future lease revenue assuming all renewal option periods for each agreement are exercised.
|
12
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
March 31,
2019 |
|
December 31, 2018
|
||||
Terminal and related assets
|
$
|
778
|
|
|
$
|
778
|
|
Pipelines
|
110
|
|
|
110
|
|
||
Land and leasehold improvements
|
28
|
|
|
28
|
|
||
Construction in progress
|
19
|
|
|
15
|
|
||
Property, plant and equipment, at cost
|
935
|
|
|
931
|
|
||
Accumulated depreciation
|
(247
|
)
|
|
(238
|
)
|
||
Property, Plant and Equipment, Net
|
$
|
688
|
|
|
$
|
693
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Total debt
|
$
|
5,167
|
|
|
$
|
5,010
|
|
Unamortized issuance costs
|
(42
|
)
|
|
(46
|
)
|
||
Current maturities
|
(503
|
)
|
|
(504
|
)
|
||
Debt, Net of Current Maturities and Unamortized Issuance Costs
|
$
|
4,622
|
|
|
$
|
4,460
|
|
|
Total Capacity
|
|
Amount Borrowed as of March 31, 2019
|
|
Outstanding
Letters of Credit
|
|
Available Capacity as of March 31, 2019
|
|
Weighted Average Interest Rate
|
|
Expiration
|
|||||||||
Revolving Credit Facility
|
$
|
1,100
|
|
|
$
|
999
|
|
|
$
|
—
|
|
|
$
|
101
|
|
|
4.24
|
%
|
|
January 29, 2021
|
Dropdown Credit Facility
|
1,000
|
|
|
405
|
|
|
—
|
|
|
595
|
|
|
4.52
|
%
|
|
January 29, 2021
|
||||
MPC Loan Agreement
|
500
|
|
|
—
|
|
|
—
|
|
|
500
|
|
|
—
|
%
|
|
December 21, 2023
|
||||
Total Credit Facilities
|
$
|
2,600
|
|
|
$
|
1,404
|
|
|
$
|
—
|
|
|
$
|
1,196
|
|
|
|
|
|
|
|
March 31, 2019
|
13
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
Three Months Ended March
31, 2019
|
||||||||||
|
Common
|
|
Preferred
|
|
Total
|
||||||
Balance at December 31, 2018
|
$
|
4,070
|
|
|
$
|
604
|
|
|
$
|
4,674
|
|
Distributions to common and preferred unitholders (a)
|
(240
|
)
|
|
(21
|
)
|
|
(261
|
)
|
|||
Net earnings attributable to partners
|
147
|
|
|
10
|
|
|
157
|
|
|||
Contributions (b)
|
19
|
|
|
—
|
|
|
19
|
|
|||
Other
|
1
|
|
|
—
|
|
|
1
|
|
|||
Balance at March 31, 2019
|
$
|
3,997
|
|
|
$
|
593
|
|
|
$
|
4,590
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||
|
Equity of Predecessors (c)
|
|
Andeavor Logistics
|
|
Total
|
||||||||||
|
|
Common
|
|
Preferred
|
|
||||||||||
Balance at December 31, 2017
|
$
|
1,292
|
|
|
$
|
2,925
|
|
|
$
|
589
|
|
|
$
|
4,806
|
|
Sponsor contributions of assets to the Predecessors
|
197
|
|
|
—
|
|
|
—
|
|
|
197
|
|
||||
Loss attributable to the Predecessors
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
||||
Distributions to common and preferred unitholders (a)
|
—
|
|
|
(205
|
)
|
|
(8
|
)
|
|
(213
|
)
|
||||
Net earnings attributable to partners
|
—
|
|
|
125
|
|
|
14
|
|
|
139
|
|
||||
Contributions (b)
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||
Cumulative effect of accounting standard adoption
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
(22
|
)
|
||||
Other
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Balance at March 31, 2018
|
$
|
1,481
|
|
|
$
|
2,839
|
|
|
$
|
594
|
|
|
$
|
4,914
|
|
(a)
|
Represents cash distributions declared and paid during the
three
months ended
March 31, 2019
and 2018.
|
(b)
|
Includes Marathon and TLGP contributions to us primarily related to reimbursements for capital spending pursuant predominantly to the Amended Omnibus Agreement and the Carson Assets Indemnity Agreement.
|
(c)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
Quarter Ended
|
Quarterly Distribution Per Common Unit
|
|
Total Cash Distribution
(in millions)
|
|
Date of Distribution
|
|
Unitholders Record Date
|
||||
December 31, 2018 (a)
|
$
|
1.03
|
|
|
$
|
238
|
|
|
February 14, 2019
|
|
February 5, 2019
|
March 31, 2019 (a)(b)
|
1.03
|
|
|
240
|
|
|
May 15, 2019
|
|
May 9, 2019
|
(a)
|
This distribution is net of
$12.5 million
waived with respect to units held by our Sponsor and its affiliates for the
three
months ended
March 31, 2019
and
$15 million
for the three months ended December 31, 2018. These distribution waivers were instituted in 2017 under the terms of our partnership agreement. Units held by our Sponsor or its affiliates will remain subject to a
$12.5 million
quarterly distribution waiver through the quarterly period ending December 31, 2019.
|
(b)
|
This distribution was declared on
April 29, 2019
and will be paid on the date of distribution.
|
14
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018 (a)
|
||||
Net earnings
|
$
|
157
|
|
|
$
|
131
|
|
Distributions on Preferred Units (b)
|
(10
|
)
|
|
(10
|
)
|
||
Net earnings attributable to common units
|
147
|
|
|
121
|
|
||
Limited partners’ distributions on common units
|
(240
|
)
|
|
(205
|
)
|
||
Distributions on common units greater than earnings
|
$
|
(93
|
)
|
|
$
|
(84
|
)
|
General partner’s earnings:
|
|
|
|
||||
Allocation of distributions greater than earnings (c)
|
$
|
—
|
|
|
$
|
(8
|
)
|
Total general partner’s earnings
|
$
|
—
|
|
|
$
|
(8
|
)
|
Limited partners’ earnings on common units:
|
|
|
|
||||
Distributions (d)
|
$
|
240
|
|
|
$
|
205
|
|
Allocation of distributions greater than earnings
|
(93
|
)
|
|
(76
|
)
|
||
Total limited partners’ earnings on common units
|
$
|
147
|
|
|
$
|
129
|
|
|
|
|
|
||||
Weighted average limited partner units outstanding:
|
|
|
|
||||
Common units - basic
|
245.5
|
|
|
217.2
|
|
||
Common units - diluted (e)
|
245.7
|
|
|
217.4
|
|
||
Net earnings per limited partner unit: (f)
|
|
|
|
||||
Common - basic
|
$
|
0.60
|
|
|
$
|
0.59
|
|
Common - diluted
|
$
|
0.60
|
|
|
$
|
0.59
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
(b)
|
The Preferred Units entitle unitholders to receive preferred distributions on a semi-annual basis.
|
(c)
|
We have revised the historical allocation of general partner earnings to include the Predecessors’ losses of
$8 million
for the three months ended
March 31, 2018
.
|
(d)
|
Distributions of earnings for limited partners’ common units for the
three
months ended
March 31, 2019
and
2018
is net of a
$12.5 million
and
$15 million
waiver, respectively, from our Sponsor.
|
(e)
|
Diluted net earnings per unit include the effects of potentially dilutive units on our common units, which consist of unvested phantom units.
|
(f)
|
Amounts may not recalculate due to rounding of dollar and unit information.
|
|
|
March 31, 2019
|
15
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018 (a)
|
||||
Net cash from operating activities:
|
|
|
|
||||
Interest paid (net of amounts capitalized)
|
$
|
30
|
|
|
$
|
23
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Payments on operating leases
|
4
|
|
|
—
|
|
||
Right of use assets obtained in exchange for new operating lease obligations included in accrued liabilities
|
10
|
|
|
—
|
|
||
Right of use assets obtained in exchange for new operating lease obligations included in other noncurrent liabilities
|
121
|
|
|
—
|
|
||
Net cash used in investing activities:
|
|
|
|
||||
Capital expenditures included in accounts payable
|
109
|
|
|
43
|
|
||
Net cash used in financing activities:
|
|
|
|
||||
Receivable from affiliate for capital expenditures
|
7
|
|
|
9
|
|
||
Principal payments under finance lease obligations
|
1
|
|
|
—
|
|
||
Right of use assets obtained in exchange for new operating lease obligations
|
1
|
|
|
—
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
16
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
March 31,
2019 |
|
December 31, 2018
|
||||
Other contract assets
|
$
|
14
|
|
|
$
|
32
|
|
Deferred income, current
|
23
|
|
|
24
|
|
||
Deferred income, noncurrent
|
56
|
|
|
57
|
|
|
|
March 31, 2019
|
17
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018 (a)
|
||||
Revenues
|
|
|
|
||||
Terminalling and Transportation:
|
|
|
|
||||
Terminalling
|
$
|
245
|
|
|
$
|
199
|
|
Pipeline transportation
|
46
|
|
|
31
|
|
||
Other revenues
|
2
|
|
|
2
|
|
||
Total Terminalling and Transportation
|
293
|
|
|
232
|
|
||
Gathering and Processing:
|
|
|
|
||||
NGL sales
|
122
|
|
|
104
|
|
||
Gas gathering and processing
|
70
|
|
|
85
|
|
||
Crude oil and water gathering
|
97
|
|
|
75
|
|
||
Pass-thru and other
|
32
|
|
|
35
|
|
||
Total Gathering and Processing
|
321
|
|
|
299
|
|
||
Wholesale:
|
|
|
|
||||
Fuel sales
|
12
|
|
|
9
|
|
||
Other wholesale
|
10
|
|
|
8
|
|
||
Total Wholesale
|
22
|
|
|
17
|
|
||
Intersegment wholesale revenues
|
(6
|
)
|
|
(2
|
)
|
||
Total Revenues
|
$
|
630
|
|
|
$
|
546
|
|
|
|
|
|
||||
Segment Operating Income
|
|
|
|
||||
Terminalling and Transportation
|
$
|
152
|
|
|
$
|
104
|
|
Gathering and Processing
|
63
|
|
|
77
|
|
||
Wholesale
|
5
|
|
|
4
|
|
||
Total Segment Operating Income
|
220
|
|
|
185
|
|
||
Unallocated general and administrative expenses
|
(9
|
)
|
|
(8
|
)
|
||
Operating Income
|
211
|
|
|
177
|
|
||
Interest and financing costs, net
|
(61
|
)
|
|
(55
|
)
|
||
Equity in earnings of equity method investments
|
7
|
|
|
8
|
|
||
Other income, net
|
—
|
|
|
1
|
|
||
Net Earnings
|
$
|
157
|
|
|
$
|
131
|
|
|
|
|
|
||||
Depreciation and Amortization Expenses
|
|
|
|
||||
Terminalling and Transportation
|
$
|
36
|
|
|
$
|
33
|
|
Gathering and Processing
|
62
|
|
|
53
|
|
||
Wholesale
|
3
|
|
|
3
|
|
||
Total Depreciation and Amortization Expenses
|
$
|
101
|
|
|
$
|
89
|
|
|
|
|
|
||||
Capital Expenditures
|
|
|
|
||||
Terminalling and Transportation
|
$
|
25
|
|
|
$
|
46
|
|
Gathering and Processing
|
97
|
|
|
110
|
|
||
Wholesale
|
—
|
|
|
1
|
|
||
Total Capital Expenditures
|
$
|
122
|
|
|
$
|
157
|
|
(a)
|
Adjusted to include the historical results of the Predecessors. See Note 1 for further discussion.
|
18
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
|
March 31, 2019
|
19
|
Management’s Discussion and Analysis
|
20
|
|
|
|
|
Management’s Discussion and Analysis
|
|
|
|
March 31, 2019
|
21
|
Management’s Discussion and Analysis
|
•
|
increasing our terminalling volumes by expanding capacity and growing our third-party services at certain terminals;
|
•
|
optimizing volumes and growing third-party throughput at our Terminalling and Transportation assets; and
|
•
|
pursuing strategic assets in the western and inland U.S.
|
•
|
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; and
|
•
|
pursuing strategic assets across the western and inland U.S.
|
•
|
Average terminalling revenue per barrel - calculated as total terminalling revenue divided by terminalling throughput presented in thousands of barrels per day (“Mbpd”) multiplied by 1,000 and multiplied by the number of days in the period (90 days for both the
three
months ended
March 31, 2019
(the “
2019
Quarter”) and
2018
(the “
2018
Quarter”));
|
•
|
Average pipeline transportation revenue per barrel - calculated as total pipeline transportation revenue divided by pipeline transportation throughput presented in Mbpd multiplied by 1,000 and multiplied by the number of days in the period as outlined above;
|
•
|
Average margin on NGL sales per barrel - calculated as the difference between the NGL sales revenues and the amounts recognized as NGL expense divided by our NGL sales volumes in barrels presented in Mbpd multiplied by 1,000 and multiplied by the number of days in the period as outlined above;
|
•
|
Average gas gathering and processing revenue per Million British thermal units (“MMBtu”) - calculated as total gathering and processing fee-based revenue divided by gas gathering throughput presented in thousands of MMBtu per day (“MMBtu/d”) multiplied by 1,000 and multiplied by the number of days in the period as outlined above;
|
•
|
Average crude oil and water gathering revenue per barrel - calculated as total crude oil and water gathering fee-based revenue divided by crude oil and water gathering throughput presented in Mbpd multiplied by 1,000 and multiplied by the number of days in the period as outlined above; and
|
•
|
Wholesale fuel sales per gallon - calculated as wholesale fuel revenues divided by our total wholesale fuel sales volume in gallons.
|
22
|
|
|
|
|
Management’s Discussion and Analysis
|
|
•
|
Financial non-GAAP measure of EBITDA - calculated as U.S. GAAP-based net earnings before interest, income taxes and depreciation and amortization expense;
|
•
|
Financial non-GAAP measure of Segment EBITDA - calculated as a segment’s U.S. GAAP-based operating income before depreciation and amortization expense plus equity in earnings (loss) of equity method investments and other income (expense), net;
|
•
|
Financial non-GAAP measure of distributable cash flow - calculated as U.S. GAAP-based net cash flow from EBITDA adjusted for amounts spent on maintenance capital net of reimbursements and other adjustments;
|
•
|
Liquidity non-GAAP measure of distributable cash flow - calculated as U.S. GAAP-based net cash flow from operating activities adjusted for changes in working capital, amounts spent on maintenance capital net of reimbursements and other adjustments not expected to settle in cash;
|
•
|
Liquidity and financial non-GAAP measure of distributable cash flow attributable to common unitholders - calculated as distributable cash flow minus distributions associated with the Preferred Units; and
|
•
|
Operating performance measure of average margin on NGL sales per barrel - calculated as the difference between the NGL sales revenues and the amounts recognized as NGL expense divided by our NGL sales volumes in barrels presented in Mbpd multiplied by 1,000 and multiplied by the number of days in the period as previously outlined.
|
•
|
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.
|
|
|
March 31, 2019
|
23
|
Management’s Discussion and Analysis
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding these non-GAAP measures.
|
24
|
|
|
|
|
Management’s Discussion and Analysis
|
|
|
|
March 31, 2019
|
25
|
Management’s Discussion and Analysis
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
26
|
|
|
|
|
Management’s Discussion and Analysis
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018 (a)
|
||||
Revenues
|
|
|
|
||||
Terminalling
|
$
|
245
|
|
|
$
|
199
|
|
Pipeline transportation
|
46
|
|
|
31
|
|
||
Other revenues
|
2
|
|
|
2
|
|
||
Total Revenues
|
293
|
|
|
232
|
|
||
Costs and Expenses
|
|
|
|
||||
Operating expenses (excluding depreciation and amortization)
|
101
|
|
|
85
|
|
||
Depreciation and amortization expenses
|
36
|
|
|
33
|
|
||
General and administrative expenses
|
4
|
|
|
10
|
|
||
Operating Income
|
$
|
152
|
|
|
$
|
104
|
|
Segment EBITDA (b)
|
$
|
191
|
|
|
$
|
143
|
|
Rates (c)
|
|
|
|
||||
Average terminalling revenue per barrel
|
$
|
1.53
|
|
|
$
|
1.26
|
|
Average pipeline transportation revenue per barrel
|
$
|
0.47
|
|
|
$
|
0.39
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
(c)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
|
|
March 31, 2019
|
27
|
Management’s Discussion and Analysis
|
(a)
|
See “Non-GAAP Reconciliations” section 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.
|
(b)
|
Adjusted to include the historical results of the Predecessors.
|
28
|
|
|
|
|
Management’s Discussion and Analysis
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018 (a)
|
||||
Revenues
|
|
|
|
||||
NGL sales (b)
|
$
|
122
|
|
|
$
|
104
|
|
Gas gathering and processing
|
70
|
|
|
85
|
|
||
Crude oil and water gathering
|
97
|
|
|
75
|
|
||
Pass-thru and other
|
32
|
|
|
35
|
|
||
Total Revenues
|
321
|
|
|
299
|
|
||
Costs and Expenses
|
|
|
|
||||
NGL expense (excluding items shown separately below) (b)
|
59
|
|
|
48
|
|
||
Operating expenses (excluding depreciation and amortization)
|
131
|
|
|
108
|
|
||
Depreciation and amortization expenses
|
62
|
|
|
53
|
|
||
General and administrative expenses
|
6
|
|
|
13
|
|
||
Operating Income
|
$
|
63
|
|
|
$
|
77
|
|
Segment EBITDA (c)
|
$
|
129
|
|
|
$
|
133
|
|
Rates (d)
|
|
|
|
||||
Average margin on NGL sales per barrel (b)(c)
|
$
|
103.76
|
|
|
$
|
53.22
|
|
Average gas gathering and processing revenue per MMBtu
|
$
|
1.11
|
|
|
$
|
1.13
|
|
Average crude oil and water gathering revenue per barrel
|
$
|
2.03
|
|
|
$
|
2.08
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
We had
29.7
Mbpd and
26.7
Mbpd of gross NGL sales under our agreements for POP and keep-whole arrangements for the
2019
Quarter and
2018
Quarter, respectively. We retained
6.8
Mbpd and
11.8
Mbpd under these arrangements, respectively. The difference between gross sales barrels and barrels retained is reflected in NGL expense resulting from the gross presentation required for the POP arrangements. The increase in average margin on NGL sales per barrel is driven by lower in NGL sales volumes primarily due to ethane rejection position in the Rockies region during the 2019 Quarter compared to ethane recovery position during the 2018 Quarter.
|
(c)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
(d)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
|
|
March 31, 2019
|
29
|
Management’s Discussion and Analysis
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Revenues
|
|
|
|
||||
Fuel sales
|
$
|
12
|
|
|
$
|
9
|
|
Other wholesale
|
10
|
|
|
8
|
|
||
Total Revenues
|
22
|
|
|
17
|
|
||
Costs and Expenses
|
|
|
|
||||
Operating expenses (excluding depreciation and amortization)
|
13
|
|
|
10
|
|
||
Depreciation and amortization expenses
|
3
|
|
|
3
|
|
||
General and administrative expenses
|
1
|
|
|
—
|
|
||
Operating Income
|
$
|
5
|
|
|
$
|
4
|
|
Segment EBITDA (a)
|
$
|
8
|
|
|
$
|
7
|
|
Volumes and Rates (b)
|
|
|
|
||||
Fuel sales volumes (millions of gallons)
|
326
|
|
|
286
|
|
||
Wholesale fuel sales per gallon
|
|
3.6
|
¢
|
|
|
3.1
|
¢
|
(a)
|
See “Non-GAAP Reconciliations” section for further information regarding this non-GAAP measure.
|
(b)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
30
|
|
|
|
|
Management’s Discussion and Analysis
|
|
Debt, including current maturities:
|
March 31, 2019
|
|
December 31, 2018
|
||||
Credit facilities
|
$
|
1,404
|
|
|
$
|
1,245
|
|
Senior notes
|
3,750
|
|
|
3,750
|
|
||
Finance lease obligations
|
13
|
|
|
—
|
|
||
Capital lease obligations
|
—
|
|
|
15
|
|
||
Total Debt
|
5,167
|
|
|
5,010
|
|
||
Unamortized Issuance Costs
|
(42
|
)
|
|
(46
|
)
|
||
Debt, Net of Unamortized Issuance Costs
|
5,125
|
|
|
4,964
|
|
||
Total Equity
|
4,590
|
|
|
4,674
|
|
||
Total Capitalization
|
$
|
9,715
|
|
|
$
|
9,638
|
|
Credit Facility
|
Total Capacity
|
|
Amount Borrowed as of March 31, 2019
|
|
Available Capacity as of March 31, 2019
|
|
Weighted Average Interest Rate
|
|
Expiration
|
|||||||
Revolving Credit Facility
|
$
|
1,100
|
|
|
$
|
999
|
|
|
$
|
101
|
|
|
4.24
|
%
|
|
January 29, 2021
|
Dropdown Credit Facility
|
1,000
|
|
|
405
|
|
|
595
|
|
|
4.52
|
%
|
|
January 29, 2021
|
|||
MPC Loan Agreement
|
500
|
|
|
—
|
|
|
500
|
|
|
—
|
%
|
|
December 21, 2023
|
|||
Total Credit Facilities
|
$
|
2,600
|
|
|
$
|
1,404
|
|
|
$
|
1,196
|
|
|
|
|
|
|
|
March 31, 2019
|
31
|
Management’s Discussion and Analysis
|
Credit Facility
|
30 Day Eurodollar (LIBOR) Rate at March 31, 2019
|
|
Eurodollar Margin
|
|
Base Rate
|
|
Base Rate Margin
|
|
Commitment Fee
(unused portion)
|
Revolving Credit Facility (a)
|
2.49%
|
|
1.75%
|
|
5.50%
|
|
0.75%
|
|
0.300%
|
Dropdown Credit Facility (a)
|
2.49%
|
|
1.76%
|
|
5.50%
|
|
0.76%
|
|
0.300%
|
MPC Loan Agreement
|
2.49%
|
|
1.75%
|
|
|
|
|
|
|
(a)
|
We have the option to elect whether our borrowings will bear interest at a base rate plus the base rate margin, or a Eurodollar rate, for the applicable period, plus the Eurodollar margin at the time of the borrowing. The applicable margin varies based upon a certain leverage ratio, as defined by the Revolving Credit Facility. We also incur commitment fees for the unused portion of the Revolving Credit Facility at an annual rate. Letters of credit outstanding under the Revolving Credit Facility incur fees at the Eurodollar margin rate.
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018 (a)
|
||||
Cash Flows From (Used in):
|
|
|
|
||||
Operating activities
|
$
|
219
|
|
|
$
|
266
|
|
Investing activities
|
(119
|
)
|
|
(324
|
)
|
||
Financing activities
|
(81
|
)
|
|
10
|
|
||
Increase (Decrease) in Cash and Cash Equivalents
|
$
|
19
|
|
|
$
|
(48
|
)
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
32
|
|
|
|
|
Management’s Discussion and Analysis
|
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018 (a)
|
|
2019
|
|
2018
|
||||||||||||
|
Terminalling and Transportation
|
|
Gathering and Processing
|
|
Wholesale
|
||||||||||||||||||
Segment Operating Income
|
$
|
152
|
|
|
$
|
104
|
|
|
$
|
63
|
|
|
$
|
77
|
|
|
$
|
5
|
|
|
$
|
4
|
|
Depreciation and amortization expenses
|
36
|
|
|
33
|
|
|
62
|
|
|
53
|
|
|
3
|
|
|
3
|
|
||||||
Equity in earnings of equity method investments
|
3
|
|
|
5
|
|
|
4
|
|
|
3
|
|
|
—
|
|
|
—
|
|
||||||
Other income, net
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Segment EBITDA
|
$
|
191
|
|
|
$
|
143
|
|
|
$
|
129
|
|
|
$
|
133
|
|
|
$
|
8
|
|
|
$
|
7
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
|
|
March 31, 2019
|
33
|
Management’s Discussion and Analysis
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018 (a)
|
||||
EBITDA
|
$
|
319
|
|
|
$
|
275
|
|
Predecessors impact
|
—
|
|
|
2
|
|
||
Maintenance capital expenditures (b)
|
(29
|
)
|
|
(22
|
)
|
||
Reimbursement for maintenance capital expenditures (b)
|
15
|
|
|
6
|
|
||
Changes in deferred revenue (c)
|
1
|
|
|
(3
|
)
|
||
Interest and financing costs, net
|
(61
|
)
|
|
(55
|
)
|
||
Amortized debt costs
|
2
|
|
|
3
|
|
||
Adjustments for equity method investments
|
7
|
|
|
3
|
|
||
Other (d)
|
11
|
|
|
—
|
|
||
Distributable Cash Flow
|
265
|
|
|
209
|
|
||
Less: Preferred unit distributions (e)
|
(10
|
)
|
|
(10
|
)
|
||
Distributable Cash Flow Attributable to Common Unitholders
|
$
|
255
|
|
|
$
|
199
|
|
(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)
|
Included in changes in deferred revenue are adjustments to remove the impact of the adoption of the new revenue recognition accounting standard on January 1, 2018 as well as the impact from the timing of recognition with certain of our contracts that contain minimum volume commitment with clawback provisions.
|
(d)
|
Other includes transaction costs related to recent acquisitions and non-cash legal reserves.
|
(e)
|
Represents the cash distributions earned by the Preferred Units for the
three
months ended
March 31, 2019
and
2018
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.
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018 (a)
|
||||
Net Cash from Operating Activities
|
$
|
219
|
|
|
$
|
266
|
|
Changes in assets and liabilities
|
43
|
|
|
(38
|
)
|
||
Predecessors impact
|
—
|
|
|
2
|
|
||
Maintenance capital expenditures (b)
|
(29
|
)
|
|
(22
|
)
|
||
Reimbursement for maintenance capital expenditures (b)
|
15
|
|
|
6
|
|
||
Changes in deferred revenue (c)
|
1
|
|
|
(3
|
)
|
||
Adjustments for equity method investments
|
7
|
|
|
(1
|
)
|
||
Other (d)
|
9
|
|
|
(1
|
)
|
||
Distributable Cash Flow
|
265
|
|
|
209
|
|
||
Less: Preferred unit distributions (e)
|
(10
|
)
|
|
(10
|
)
|
||
Distributable Cash Flow Attributable to Common Unitholders
|
$
|
255
|
|
|
$
|
199
|
|
(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)
|
Included in changes in deferred revenue are adjustments to remove the impact of the adoption of the new revenue recognition accounting standard on January 1, 2018 as well as the impact from the timing of recognition with certain of our contracts that contain minimum volume commitment with clawback provisions.
|
(d)
|
Other includes transaction costs related to recent acquisitions and non-cash legal reserves.
|
(e)
|
Represents the cash distributions earned by the Preferred Units for the
three
months ended
March 31, 2019
and
2018
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.
|
34
|
|
|
|
|
Management’s Discussion and Analysis
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018 (a)
|
||||
Segment Operating Income
|
$
|
63
|
|
|
$
|
77
|
|
Add back:
|
|
|
|
||||
Operating expenses
|
131
|
|
|
108
|
|
||
General and administrative expenses
|
6
|
|
|
13
|
|
||
Depreciation and amortization expenses
|
62
|
|
|
53
|
|
||
Subtract:
|
|
|
|
||||
Gas gathering and processing revenues
|
(70
|
)
|
|
(85
|
)
|
||
Crude oil gathering revenues
|
(97
|
)
|
|
(75
|
)
|
||
Pass-thru and other revenues
|
(32
|
)
|
|
(35
|
)
|
||
Margin on NGL Sales
|
$
|
63
|
|
|
$
|
56
|
|
Divided by Total Volumes for the Period:
|
|
|
|
||||
NGLs sales volumes (Mbpd)
|
6.8
|
|
|
11.8
|
|
||
Number of days in the period
|
90
|
|
|
90
|
|
||
Total volumes for the period (thousands of barrels) (b)
|
612
|
|
|
1,062
|
|
||
Average Margin on NGL Sales per Barrel (b)
|
$
|
103.76
|
|
|
$
|
53.22
|
|
(a)
|
Adjusted to include the historical results of the Predecessors.
|
(b)
|
Amounts may not recalculate due to rounding of dollar and volume information.
|
|
|
March 31, 2019
|
35
|
Management’s Discussion and Analysis
|
•
|
our ability to achieve expected coverage improvement and distributable cash growth;
|
•
|
our ability to execute a funding model with no additional equity issuances and limited parent support;
|
•
|
risks related to Marathon, including those related to Marathon’s acquisition of Andeavor or the proposed MPLX Merger;
|
•
|
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;
|
•
|
the effects of changes in global economic conditions on our business, on the business of our key customers, and on our customers’ suppliers, business partners and credit lenders;
|
•
|
a material change in the crude oil and natural gas produced in the basins where we operate;
|
•
|
the ability of our key customers to remain in compliance with the terms of their outstanding indebtedness;
|
•
|
changes in insurance markets impacting costs and the level and types of coverage available;
|
•
|
regulatory and other requirements concerning the transportation of crude oil, natural gas, NGLs and refined products, particularly in the areas where we operate;
|
•
|
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;
|
•
|
the coverage and ability to recover claims under our insurance policies;
|
•
|
the availability and costs of crude oil, other refinery feedstocks and refined products;
|
•
|
the timing and extent of changes in commodity prices and demand for refined products, natural gas and NGLs;
|
•
|
changes in our cash flow from operations;
|
•
|
changes in our tax status;
|
•
|
the ability of our largest customers to perform under the terms of our gathering agreements;
|
•
|
the risk of contract cancellation, non-renewal or failure to perform by those in our supply and distribution chains, and the ability to replace such contracts and/or customers;
|
•
|
the suspension, reduction or termination of Marathon’s obligations under our commercial agreements and our secondment agreements;
|
•
|
a material change in profitability among our customers;
|
•
|
direct or indirect effects on our business resulting from actual or threatened terrorist or activist incidents, cyber-security breaches or acts of war;
|
•
|
weather conditions, earthquakes or other natural disasters affecting operations by us or our key customers or the areas in which our customers operate;
|
•
|
disruptions due to equipment interruption or failure at our facilities, Marathon’s facilities or third-party facilities on which our key customers are dependent;
|
•
|
our inability to complete acquisitions on economically acceptable terms or within anticipated timeframes;
|
•
|
actions of customers and competitors;
|
•
|
changes in our credit profile;
|
•
|
changes to our capital budget;
|
•
|
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;
|
•
|
operational hazards inherent in refining and natural gas processing operations and in transporting and storing crude oil, natural gas, NGLs and refined products;
|
•
|
changes in capital requirements or in expected timing, execution and benefits of planned capital projects;
|
•
|
seasonal variations in demand for natural gas and refined products;
|
•
|
adverse rulings, judgments, or settlements in litigation or other legal or tax matters, including unexpected environmental remediation costs in excess of any accruals, which affect us or Marathon;
|
•
|
risks related to labor relations and workplace safety;
|
•
|
political developments; and
|
•
|
the factors described in greater detail under “Competition” and “Risk Factors” in Items 1 and 1A of our Annual Report on Form 10-K for the year ended
December 31, 2018
, in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q, and our other filings with the SEC.
|
36
|
|
|
|
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
|
|
March 31, 2019
|
37
|
Legal Proceedings, Risk Factors and Unregistered Sales of Equity Securities
|
•
|
we will be required to pay our costs relating to the MPLX Merger, such as legal, accounting and financial advisory expenses, whether or not MPLX Merger is completed;
|
•
|
time and resources committed by our management to matters relating to MPLX Merger could otherwise have been devoted to pursuing other beneficial opportunities; and
|
•
|
the market price of our common units could decline to the extent that the current market price reflects a market assumption that the MPLX Merger will be completed.
|
38
|
|
|
|
|
Exhibits
|
Exhibit Number
|
|
|
|
Incorporated by Reference (File No. 1-35143, unless otherwise indicated)
|
||||
|
Description of Exhibit
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
2.1
|
|
|
8-K
|
|
2.1
|
|
8/7/2018
|
|
|
|
|
|
|
|
|
|
|
2.2
|
|
|
10-Q
|
|
2.5
|
|
11/7/2018
|
|
|
|
|
|
|
|
|
|
|
2.3†
|
|
|
8-K
|
|
2.1
|
|
5/8/2019
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
8-K
|
|
3.1
|
|
10/29/2018
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
8-K
|
|
3.1
|
|
12/1/2017
|
|
|
|
|
|
|
|
|
|
|
3.3
|
|
|
8-K
|
|
3.2
|
|
10/2/2018
|
|
|
|
|
|
|
|
|
|
|
*10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
|
8-K
|
|
10.1
|
|
2/5/2019
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
|
8.K
|
|
10.2
|
|
2/5/2019
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
|
10-K
|
|
10.147
|
|
2/28/2019
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
|
8-K
|
|
10.1
|
|
5/8/2019
|
|
|
|
|
|
|
|
|
|
|
*31.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*31.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*32.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*32.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
**101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
March 31, 2019
|
39
|
Exhibits
|
Exhibit Number
|
|
|
|
Incorporated by Reference (File No. 1-35143, unless otherwise indicated)
|
||||
|
Description of Exhibit
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
|
**101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
**101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
**101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
**101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
*
|
Filed herewith
|
**
|
Submitted electronically herewith
|
†
|
Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. MPLX LP hereby undertakes to furnish supplementally a copy of any omitted schedule upon request by the SEC.
|
40
|
|
|
|
|
|
|
Andeavor Logistics LP
|
|
|
|
|
|
|
|
By:
|
Tesoro Logistics GP, LLC
|
|
|
|
Its general partner
|
|
|
|
|
Date:
|
May 9, 2019
|
By:
|
/s/ BLANE W. PEERY
|
|
|
|
Blane W. Peery
|
|
|
|
Vice President, Accounting and Systems Integration
|
|
|
|
(Principal Accounting and Financial Officer and Duly Authorized Signatory)
|
|
|
March 31, 2019
|
41
|
2.
|
Vesting and Forfeiture of Phantom Units.
|
(i)
|
one-third of the Phantom Units shall vest on the first anniversary of the Grant Date;
|
(ii)
|
an additional one-third of the Phantom Units shall vest on the second anniversary of the Grant Date; and
|
(iii)
|
all remaining Phantom Units shall vest on the third anniversary of the Grant Date;
|
(i)
|
termination of the Participant’s Employment due to death;
|
(ii)
|
termination of the Participant’s Employment due to Mandatory Retirement; or
|
(iii)
|
the Participant’s Qualified Termination provided that as of such Qualified Termination the Participant has been in continuous Employment since the Grant Date.
|
7.
|
Forfeiture or Repayment Resulting from Forfeiture Event.
|
14.
|
Definitions.
For purposes of this Award Agreement:
|
TESORO LOGISTICS GP, LLC
|
|
|
|
By
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Authorized Officer
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1.
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I have reviewed this
Quarterly
Report on Form
10-Q
of Andeavor Logistics LP;
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2.
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Based on my knowledge, this
quarterly
report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
quarterly
report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this
quarterly
report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
quarterly
report;
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4.
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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:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
quarterly
report is being prepared;
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(b)
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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;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
quarterly
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
quarterly
report based on such evaluation; and
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(d)
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Disclosed in this
quarterly
report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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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):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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May 9, 2019
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/s/ GARY R. HEMINGER
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Gary R. Heminger
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Chief Executive Officer of Tesoro Logistics GP, LLC
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(the general partner of Andeavor Logistics LP)
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1.
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I have reviewed this
Quarterly
Report on Form
10-Q
of Andeavor Logistics LP;
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2.
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Based on my knowledge, this
quarterly
report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
quarterly
report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this
quarterly
report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
quarterly
report;
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4.
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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:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
quarterly
report is being prepared;
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(b)
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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;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
quarterly
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
quarterly
report based on such evaluation; and
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(d)
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Disclosed in this
quarterly
report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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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):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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May 9, 2019
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/s/ BLANE W. PEERY
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Blane W. Peery
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Principal Accounting and Financial Officer of Tesoro Logistics GP, LLC
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(the general partner of Andeavor Logistics LP)
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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/ GARY R. HEMINGER
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Gary R. Heminger
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Chief Executive Officer of Tesoro Logistics GP, LLC
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(the general partner of Andeavor Logistics LP)
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May 9, 2019
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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/ BLANE W. PEERY
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Blane W. Peery
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Principal Accounting and Financial Officer of Tesoro Logistics GP, LLC
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(the general partner of Andeavor Logistics LP)
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May 9, 2019
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