R
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ANNUAL 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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For the transition period from _______________ to _______________
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Delaware
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90-1006559
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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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One Valero Way
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78249
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San Antonio, Texas
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(Zip Code)
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(Address of principal executive offices)
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Registrant’s telephone number, including area code: (210) 345-2000
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Large accelerated filer
£
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Accelerated filer
£
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Non-accelerated filer
R
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Smaller reporting company
£
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PAGE
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Item 11
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•
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Lucas Terminal.
Our Lucas terminal is located 12 miles from Valero’s Port Arthur Refinery on 495 acres. The facility consists of seven storage tanks with an aggregate of
1.9 million
barrels of storage capacity. The Lucas terminal receives crude oil through our Nederland pipeline that connects to the Sunoco Logistics Partners L.P. marine terminal in Nederland, Texas, as well as through connections to the Cameron Highway crude oil pipeline and Oiltanking’s Beaumont marine terminal. The terminal will connect to TransCanada’s Cushing MarketLink pipeline via our TransCanada connection, as more fully described below. The Lucas terminal delivers crude oil to Valero’s Port Arthur Refinery through our Lucas pipeline.
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•
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Lucas Pipeline
. Our Lucas pipeline is a 12-mile, 30-inch pipeline with 400,000 barrels per day of capacity that delivers crude oil from our Lucas terminal to Valero’s Port Arthur Refinery.
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Nederland Pipeline.
Our Nederland pipeline is a five-mile, 32-inch pipeline with 600,000 barrels per day of capacity that delivers crude oil to our Lucas terminal from the Sunoco Logistics Nederland marine terminal.
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•
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TransCanada Connection.
Our TransCanada connection is currently under construction and is expected to be placed into service during the second quarter of 2014. The connection is expected to have
400,000
barrels per day of capacity and connect our Lucas terminal to TransCanada’s Cushing MarketLink pipeline, which began transporting crude oil from Cushing, Oklahoma to the U.S. Gulf Coast in early 2014. TransCanada is currently awaiting certain permits necessary to construct its Keystone XL pipeline, which is designed to provide connectivity from Alberta, Canada to the Cushing MarketLink origin point at Cushing.
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•
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Port Arthur Products Pipelines
. Our Port Arthur products pipelines consist of a
four
-mile, 20-inch pipeline with
144,000
barrels per day of capacity that delivers gasoline from Valero’s Port Arthur Refinery to our El Vista terminal and a
three
-mile, 20-inch pipeline with
216,000
barrels per day of capacity that delivers diesel from Valero’s Port Arthur Refinery to our Port Arthur Products Station
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•
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12-10 Pipeline
. Our 12-10 pipeline consists of 13 miles of 12-inch and 10-inch pipeline with 60,000 barrels per day of capacity that delivers refined petroleum products from Valero’s Port Arthur Refinery to the Enterprise TE Products pipeline connection, the Sunoco Logistics MagTex pipeline connection, and Oiltanking’s Beaumont marine terminal.
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•
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PAPS and El Vista Terminals
. Our PAPS and El Vista terminals consist of an aggregate 16 storage tanks with over two million barrels of storage capacity. Our PAPS terminal consists of eight tanks with 821,000 barrels of diesel storage capacity, and our El Vista terminal consists of eight tanks with 1.2 million barrels of gasoline storage capacity. Our PAPS terminal also contains storage tanks owned by Shell, who serves as the operator of both our PAPS and El Vista terminals. Each party owns its own tanks at the PAPS terminal and its own external pipelines connecting to the terminal, but certain equipment and improvements located at and serving the terminal are jointly owned. The El Vista terminal is owned exclusively by us.
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•
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McKee to El Paso Pipeline
. Our McKee to El Paso pipeline consists of 408 miles of 10-inch pipeline that delivers diesel and gasoline produced at Valero’s McKee Refinery to our El Paso terminal. The pipeline has a total capacity of 63,000 barrels per day (of which 21,000 barrels per day of capacity are allocable to our 33⅓ percent undivided interest).
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•
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SFPP Pipeline Connection
. Our SFPP pipeline connection consists of 12 miles of 16- and 8‑inch pipelines that deliver diesel and gasoline from our El Paso terminal to Kinder Morgan’s SFPP system. The SFPP pipeline connection has 98,400 barrels per day of capacity (of which 33,000 barrels per day of capacity are allocable to our 33⅓ percent undivided interest).
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•
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El Paso Terminal
. Our El Paso terminal is located on 117 acres and consists of 10 storage tanks with 499,000 barrels of storage capacity (of which 166,000
barrels of capacity are allocable to our 33⅓ percent undivided interest). The El Paso terminal receives refined petroleum products delivered to the terminal through our McKee to El Paso pipeline and delivers refined petroleum products to our four-bay truck rack at our El Paso terminal and to Kinder Morgan’s SFPP system through our SFPP pipeline connection. Our El Paso terminal truck rack has 30,000 barrels per day of capacity (of which 10,000 barrels per day of capacity are allocable to our 33⅓ percent undivided interest).
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Collierville Pipeline System
. Our Collierville pipeline system consists of 52 miles of 10- to 20-inch pipelines with 210,000 barrels per day of capacity that deliver crude oil to Valero’s Memphis Refinery.
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Collierville Terminal
. Our Collierville terminal is located in Byhalia, Mississippi on 60 acres. The facility consists of three storage tanks with 975,000 barrels of storage capacity. The Collierville terminal receives crude oil delivered to the terminal through the Capline pipeline.
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•
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St
.
James Crude Tank
. We own a 330,000 barrel crude oil storage tank in St. James, Louisiana located on land we lease from Shell. The tank is used to aggregate crude oil volumes to batch deliveries through the Capline pipeline to our Collierville terminal.
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Shorthorn Pipeline System
. Our Shorthorn pipeline system consists of seven miles of 14-inch pipeline that delivers diesel and gasoline produced at Valero’s Memphis Refinery to our West Memphis terminal and two miles of 12-inch pipeline that delivers diesel and gasoline from our West Memphis terminal and Valero’s Memphis Refinery to Exxon’s Memphis refined petroleum products terminal. The Shorthorn pipeline system has a total capacity of 120,000 barrels per day.
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Memphis Airport Pipeline System.
Our Memphis Airport pipeline system consists of a nine-mile, six-inch pipeline that delivers jet fuel produced at Valero’s Memphis Refinery to the Swissport Fueling, Inc. terminal located at the Memphis International Airport and a two-mile, six-inch pipeline that delivers jet fuel from Valero’s Memphis Refinery to the FedEx jet fuel terminal located at the Memphis International Airport. The Memphis Airport pipeline system has a total capacity of 20,000 barrels per day.
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•
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West Memphis Terminal
. Our West Memphis terminal is located in West Memphis, Arkansas on 75 acres. The facility consists of 18 storage tanks with over one million barrels of storage capacity, a truck rack, and a barge dock on the Mississippi River. Our West Memphis terminal receives refined petroleum products through our Shorthorn pipeline system and through a biodiesel truck unloading rack located at the terminal. The terminal delivers refined petroleum products to the five-bay, 50,000 barrels per day truck rack at the terminal, our two-berth, 4,000 barrels per hour barge dock on the Mississippi River and to our Shorthorn pipeline system for deliveries to Exxon’s Memphis terminal.
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Memphis Truck Rack
. Our Memphis truck rack is located on five acres of land adjacent to Valero’s Memphis Refinery. The facility consists of a high-capacity seven-bay truck rack and five biodiesel
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Pipeline
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Diameter
(inches)
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Length
(miles)
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Throughput Capacity
(thousand barrels
per day (MBPD))
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Commodity
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Associated
Valero
Refinery
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Significant
Third-party
System
Connections
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Port Arthur logistics system
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Lucas crude system
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Lucas pipeline
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30
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12
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400
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Crude oil
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Port Arthur
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Sunoco Logistics Nederland;
Oiltanking Beaumont;
Cameron Highway;
TransCanada Cushing
MarketLink
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Nederland pipeline
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32
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5
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600
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Crude oil
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Port Arthur
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Sunoco Logistics
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Port Arthur products system
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20-inch gasoline pipeline
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20
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4
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144
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Gasoline
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Port Arthur
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Explorer; Colonial
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20-inch diesel pipeline
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20
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3
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216
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Diesel
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Port Arthur
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Explorer; Colonial
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12-10 pipeline
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12, 10
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13
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60
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Refined
petroleum
products
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Port Arthur
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Sunoco Logistics MagTex;
Enterprise TE Products;
Oiltanking Beaumont
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McKee products system
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McKee to El Paso pipeline
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10
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408
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21
(1)
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Refined
petroleum
products
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McKee
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—
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SFPP pipeline connection
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16, 8
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12
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33
(2)
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Refined
petroleum
products
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McKee
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Kinder Morgan
SFPP System
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Memphis logistics system
(3)
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Collierville crude system
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Collierville pipeline
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10-20
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52
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210
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Crude oil
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Memphis
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Capline
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Memphis products system
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Shorthorn pipeline system
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14, 12
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9
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120
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Refined
petroleum
products
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Memphis
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Exxon Memphis
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Memphis Airport pipeline
system
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6
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11
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20
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Jet fuel
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Memphis
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Memphis International Airport
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(1)
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Capacity shown represents our 33⅓ percent undivided interest in the system. Total capacity for the system is 63,000 barrels per day.
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(2)
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Capacity shown represents our 33⅓ percent undivided interest in the system. Total capacity for the system is 98,400 barrels per day.
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(3)
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Portions of our Memphis logistics system pipelines are owned by Memphis Light, Gas and Water, a division of the City of Memphis (MLGW), but operated and maintained exclusively by us under long-term arrangements with MLGW.
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Terminal
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Tank
Storage
Capacity
(thousands of barrels (MBbls))
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Throughput
Capacity (MBPD) |
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Commodity
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Associated
Valero
Refinery
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Significant
Third-party
System
Connections
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Port Arthur logistics system
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Lucas crude system
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Lucas terminal
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1,915
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—
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Crude oil
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Port Arthur
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Sunoco Logistics Nederland;
Oiltanking Beaumont;
Cameron Highway;
TransCanada Cushing
MarketLink
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TransCanada connection
(1)
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—
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400
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Crude oil
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Port Arthur
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TransCanada Cushing
MarketLink
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Port Arthur products system
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PAPS terminal
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821
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—
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Diesel
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Port Arthur
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Explorer; Colonial
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El Vista terminal
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1,210
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—
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Gasoline
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Port Arthur
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Explorer; Colonial
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McKee products system
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El Paso terminal
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166
(2)
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—
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Refined
petroleum
products
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McKee
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Kinder Morgan
SFPP System
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El Paso terminal truck rack
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—
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10
(3)
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Refined
petroleum
products
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McKee
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—
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Memphis logistics system
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Collierville crude system
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Collierville terminal
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975
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—
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Crude oil
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Memphis
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Capline
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St. James crude tank
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330
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—
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Crude oil
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Memphis
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Capline
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Memphis products system
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West Memphis terminal
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1,080
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—
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Refined
petroleum
products
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Memphis
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Exxon Memphis;
Enterprise TE Products
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West Memphis terminal truck rack
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—
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50
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Refined
petroleum
products
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Memphis
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—
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West Memphis terminal dock
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—
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4
(4)
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Refined
petroleum
products
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Memphis
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—
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Memphis truck rack
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8
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110
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Refined
petroleum
products
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Memphis
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—
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(1)
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Our TransCanada connection is currently under construction and is expected to be placed into service during the second quarter of 2014.
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(2)
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Capacity shown represents our 33⅓ percent undivided interest in the system. Total storage capacity for the system is 499,000 barrels.
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(3)
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Capacity shown represents our 33⅓ percent undivided interest in the system. Total truck rack capacity for the system is 30,000 barrels per day.
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(4)
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Dock throughput is reflected in thousands of barrels per hour.
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Year Ended December 31,
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2013
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2012
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2011
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Pipelines (MBPD)
(1)
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Crude oil throughput
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Lucas crude system
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178
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158
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84
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Collierville crude system
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149
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144
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144
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Total crude oil throughput
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327
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302
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228
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Refined petroleum products throughput
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Port Arthur products system
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154
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117
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94
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McKee products system
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53
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52
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53
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Memphis products system
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56
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49
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37
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Total refined petroleum products throughput
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263
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218
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|
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184
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Total pipelines throughput
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590
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520
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412
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Terminals (MBPD)
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Crude oil terminaling throughput
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Lucas crude system
(2)
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179
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158
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84
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Refined petroleum products terminaling throughput
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Port Arthur products system
(3)
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123
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109
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84
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McKee products system
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43
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42
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43
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Memphis products system
(3)
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86
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78
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82
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Total refined petroleum products terminaling throughput
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252
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229
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209
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Total terminaling throughput
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431
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387
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293
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Leased storage capacity (MBbls)
(3)
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Port Arthur products system
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2,031
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2,031
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2,031
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Collierville crude system
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330
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330
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330
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Memphis products system
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975
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900
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853
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Total leased storage capacity
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3,336
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3,261
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3,214
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(1)
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Represents the sum of volumes transported through each separately tariffed pipeline segment.
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(2)
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Throughput volumes represent actual throughput volumes at our Lucas terminal. However, prior to the Offering, we did not charge a terminaling fee for throughput volumes at our Lucas terminal. Under our master terminal services agreement with Valero that became effective upon the closing of the Offering, we charge a terminaling fee for throughput volumes at our Lucas terminal.
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(3)
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Throughput volumes include actual throughput volumes at our PAPS, El Vista and West Memphis terminals. However, prior to the Offering, we charged a fee for leased storage capacity at these terminals. Under our master terminal services agreement with Valero that became effective upon the closing of the Offering, we charge a terminaling fee for throughput volumes at these terminals.
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Year Ended December 31,
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Pipeline System
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2013
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2012
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2011
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Port Arthur logistics system
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Lucas crude system
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55%
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55%
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36%
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Port Arthur products system
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50%
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46%
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43%
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McKee products system
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13%
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13%
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13%
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Memphis logistics system
|
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Collierville crude system
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92%
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96%
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100%
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Memphis products system
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68%
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68%
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66%
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Pipelines
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Minimum Quarterly
Throughput Commitment
(barrels per day (BPD))
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Tariff Rates
($ per Barrel)
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Port Arthur logistics system
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Lucas crude system
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Lucas pipeline
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150,000
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$0.176 up to 160,000 BPD then
$0.071 up to 200,000 BPD and $0.06 above 200,000 BPD |
Port Arthur products system
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20-inch gasoline pipeline
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127,000
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$0.1855 up to 127,000 BPD and
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20-inch diesel pipeline
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combined on
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$0.14 above 127,000 BPD
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12-10 pipeline
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all three lines
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combined on all three lines
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McKee products system
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McKee to El Paso pipeline
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17,836
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$1.302
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SFPP pipeline connection
|
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27,880
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$0.151
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Memphis logistics system
|
|
|
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Collierville crude system
(1)
|
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Collierville pipeline
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100,000
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$0.1557
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Memphis products system
|
|
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Shorthorn pipeline system
|
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43,300
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$0.1471 up to 43,300 BPD and
$0.12 above 43,300 BPD |
Memphis Airport pipeline system
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2,000
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$0.81 up to 2,000 BPD and
$0.45 above 2,000 BPD |
(1)
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Included within the tariff rate is the ability for Valero to use break-out tankage at our Collierville terminal and our St. James crude tank for staging crude oil into the Capline pipeline.
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Terminals
|
|
Minimum Quarterly
Throughput Commitment (BPD) |
|
Fees
($ per Barrel)
|
Port Arthur logistics system
|
|
|
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Lucas crude system
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Lucas terminal
(1)
|
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150,000
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|
$0.243 up to 160,000 BPD then
$0.071 up to 200,000 BPD and $0.06 above 200,000 BPD |
TransCanada connection
(2)
|
|
45,000
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|
$0.05
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Port Arthur products system
|
|
|
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PAPS and El Vista terminals
|
|
100,000
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$0.3165 up to 100,000 BPD and
$0.05 above 100,000 BPD |
McKee products system
|
|
|
|
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El Paso terminal
|
|
36,380
(3)
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|
$0.301
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Memphis logistics system
|
|
|
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Memphis products system
|
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|
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West Memphis terminal
(4)
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|
30,000
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|
$0.62 up to 30,000 BPD and
$0.24 above 30,000 BPD |
Memphis truck rack
|
|
51,100
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|
$0.252
|
(1)
|
Included in the Lucas terminal fee is the right to use our Nederland pipeline to transport crude oil from the Sunoco Logistics Nederland marine terminal to our Lucas terminal.
|
(2)
|
Our TransCanada connection is currently under construction and is expected to be placed into service during the second quarter of 2014. The minimum quarterly throughput commitment will not commence until the connection is in service; however, under our omnibus agreement with Valero, Valero has agreed to indemnify us for lost throughput fees based on minimum quarterly throughput commitments resulting from the connection not being in service (for any reason whatsoever, other than our gross negligence or willful misconduct) by March 1, 2014. In addition, if and when TransCanada’s Keystone XL pipeline is placed into service, the minimum quarterly throughput commitment with respect to our TransCanada connection will increase from 45,000 barrels per day to 150,000 barrels per day and the fee will reset to $0.015 per barrel.
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(3)
|
The El Paso terminal truck rack has a minimum quarterly throughput commitment of 8,500 barrels per day and the SFPP pipeline connection has a separate minimum quarterly throughput commitment of 27,880 barrels per day.
|
(4)
|
Includes all volumes delivered to our West Memphis terminal through pipeline, dock, or truck rack.
|
•
|
acts of God, fires, floods, or storms;
|
•
|
compliance with orders of courts or any governmental authorities;
|
•
|
explosions, wars, terrorist acts, or riots;
|
•
|
inability to obtain or unavoidable delays in obtaining material or equipment;
|
•
|
accidental disruptions of service;
|
•
|
disruptions of utilities or other services caused by events or circumstances beyond the reasonable control of the affected party;
|
•
|
strikes, lockouts, or other industrial disturbances; and
|
•
|
breakdowns of refinery facilities, machinery, storage tanks, or pipelines irrespective of the cause thereof.
|
•
|
Omnibus Agreement.
Under our omnibus agreement with Valero, Valero granted us a right of first offer with respect to certain of Valero’s transportation and logistics assets through December 16, 2018. The omnibus agreement requires us to reimburse Valero for certain general and administrative services, requires Valero to indemnify us for certain matters, including environmental, title and tax matters, and grants Valero a right of first refusal with respect to certain of our assets. Pursuant to the omnibus agreement, prior to making any distribution, we are required to pay all accrued monthly payments on our annual fee of
$7.9 million
to Valero for general and administrative services, and we are required to reimburse Valero for any out-of-pocket costs and expenses incurred by Valero in providing these services to us.
|
•
|
Services and Secondment Agreement
. Under our services and secondment agreement with Valero, employees of Valero are seconded to our general partner to provide operational and maintenance services with respect to certain of our pipelines and terminals, and our general partner is required to reimburse Valero for certain costs and expenses of the seconded employees, including their wages and benefits.
|
•
|
Tax Sharing Agreement.
Under our tax sharing agreement with Valero, we are required to reimburse Valero for our share of state and local income and other taxes incurred by Valero as a result of our tax items and attributes being included in a combined or consolidated state tax return filed by Valero
|
•
|
Ground Lease Agreement.
Under our ground lease with Valero, we lease the land on which the Memphis truck rack is located.
Initially, our base rent under the lease is $35,007 per year.
|
•
|
disruption of Valero’s ability to obtain crude oil;
|
•
|
the ability to obtain credit and financing on acceptable terms, which could also adversely affect the financial strength of business partners;
|
•
|
the costs to comply with environmental laws and regulations;
|
•
|
large capital projects can take many years to complete, and market conditions could deteriorate significantly between the project approval date and the project startup date, negatively impacting project returns;
|
•
|
interruptions of supply and increased costs as a result of Valero’s reliance on third-party transportation of crude oil and refined petroleum products;
|
•
|
significant losses resulting from the hazards and risks of operations may not be fully covered by insurance, and could adversely affect Valero’s operations and financial results;
|
•
|
competitors that produce their own supply of feedstocks, have more extensive retail outlets, or have greater financial resources may have a competitive advantage over Valero;
|
•
|
potential losses from Valero’s derivative transactions;
|
•
|
any decision by Valero to temporarily or permanently curtail or shut down operations at one or more of its refineries or other facilities and reduce or terminate its obligations under our commercial agreements; and
|
•
|
interruptions at Valero’s refineries and other facilities.
|
•
|
the amount of our operating expenses and general and administrative expenses, including reimbursements to Valero, which are not subject to any caps or other limits, in respect of those expenses;
|
•
|
the amount and timing of capital expenditures and acquisitions we make;
|
•
|
our debt service requirements and other liabilities, and restrictions contained in our revolving credit facility;
|
•
|
fluctuations in our working capital needs; and
|
•
|
the amount of cash reserves established by our general partner.
|
•
|
we are able to identify attractive acquisition candidates;
|
•
|
we are able to negotiate acceptable purchase agreements;
|
•
|
we are able to obtain financing for these acquisitions on economically acceptable terms; and
|
•
|
we are outbid by competitors.
|
•
|
damages to facilities, equipment, and surrounding properties caused by third parties, severe weather, natural disasters, and acts of terrorism;
|
•
|
maintenance, repairs, mechanical or structural failures at our or Valero’s facilities or at third-party facilities on which our or Valero’s operations are dependent, including electrical shortages, power disruptions, and power grid failures;
|
•
|
damages to and loss of availability of interconnecting third-party pipelines, terminals, and other means of delivering crude oil, feedstocks, and refined petroleum products;
|
•
|
disruption or failure of information technology systems and network infrastructure due to various causes, including unauthorized access or attack;
|
•
|
curtailments of operations due to severe seasonal weather; and
|
•
|
riots, strikes, lockouts, or other industrial disturbances.
|
•
|
neither our partnership agreement nor any other agreement requires Valero to pursue a business strategy that favors us or utilizes our assets, which could involve decisions by Valero to increase or decrease refinery production, shut down or reconfigure a refinery, shift the focus of its investment and growth to areas not served by our assets, or undertake acquisition opportunities for itself;
|
•
|
Valero, as our primary customer, has an economic incentive to cause us to not seek higher rates and fees, even if such higher rates and fees would reflect those that could be obtained in arm’s-length, third-party transactions;
|
•
|
Valero’s directors and officers have a fiduciary duty to make decisions beneficial to the stockholders of Valero, which may be contrary to our interests; in addition, many of the officers and directors of our general partner are also officers and/or directors of Valero and will owe fiduciary duties to Valero and its stockholders;
|
•
|
Valero 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;
|
•
|
our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limiting our general partner’s liabilities, and restricting the remedies available to our unitholders for actions that, without the limitations, might constitute breaches of fiduciary duty;
|
•
|
except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval;
|
•
|
disputes may arise under our commercial agreements with Valero;
|
•
|
our general partner will determine 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;
|
•
|
our general partner will determine the amount and timing of many of our capital expenditures and whether a capital expenditure is classified as an expansion capital expenditure, which would not reduce operating surplus, or a maintenance capital expenditure, which would reduce our operating surplus. This determination can affect the amount of cash that is distributed to our unitholders and the ability of the subordinated units to convert into common units;
|
•
|
our general partner will determine which costs incurred by it are reimbursable by us;
|
•
|
our general partner may cause us to borrow funds in order to permit the payment of distributions, even if the purpose or effect of the borrowing is to make a distribution on the subordinated units, to make incentive distributions or to accelerate expiration of the subordination period;
|
•
|
our partnership agreement permits us to classify up to $50 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. This cash may be used to fund distributions on our subordinated units or to our general partner in respect of the general partner units or the incentive distribution rights;
|
•
|
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;
|
•
|
our general partner intends to limit its liability regarding our contractual and other obligations;
|
•
|
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 80 percent of the common units. As of January 31, 2014, Valero owned 40.1 percent of our common units, and, as a result, Valero did not have the ability to exercise the limited call right;
|
•
|
our general partner controls the enforcement of obligations owed to us by our general partner and its affiliates, including under the omnibus agreement and our commercial agreements with Valero;
|
•
|
our general partner decides whether to retain separate counsel, accountants, or others to perform services for us; and
|
•
|
our general partner may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to our general partner’s incentive distribution rights without the approval of the conflicts committee of the board of directors of our general partner, which we refer to as our conflicts committee, or our unitholders. This election may result in lower distributions to our common unitholders in certain situations.
|
•
|
whenever our general partner (acting in its capacity as our general partner), the board of directors of our general partner, or any committee thereof (including the conflicts committee) makes a determination or takes, or declines to take, any other action in their respective capacities, our general partner, the board of directors of our general partner, and any committee thereof (including the conflicts committee), as applicable, is required to make such determination, or take or decline to take such other action, in good faith, meaning that it subjectively believed that the decision was not adverse to our best interests, and, except as specifically provided by our partnership agreement, 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;
|
•
|
our general partner is not liable to us or our unitholders for decisions made in its capacity as a general partner so long as such decisions are made in good faith;
|
•
|
our general partner and its officers and directors are not liable to us or our limited partners for monetary damages resulting from any act or omission unless there has been a final and non-appealable 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; and
|
•
|
our general partner is not in breach of its obligations under the partnership agreement (including any duties to us or our unitholders) if a transaction with an affiliate or the resolution of a conflict of interest is:
|
◦
|
approved by the conflicts committee of the board of directors of our general partner, although our general partner is not obligated to seek such approval;
|
◦
|
approved by the vote of a majority of our outstanding common units, excluding any common units owned by our general partner and its affiliates;
|
◦
|
determined by the board of directors of our general partner to be on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or
|
◦
|
determined by the board of directors of our general partner to be fair and reasonable to us, taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us.
|
•
|
our existing unitholders’ proportionate ownership interest in us will decrease;
|
•
|
the amount of cash we have available to distribute on each unit may decrease;
|
•
|
because a lower percentage of total outstanding units will be subordinated units, the risk that a shortfall in the payment of minimum quarterly distributions will be borne by our common unitholders will increase;
|
•
|
because the amount payable to holders of incentive distribution rights is based on a percentage of total available cash, the distributions to holders of incentive distribution rights will increase even if the per unit distribution on common units remains the same;
|
•
|
the ratio of taxable income to distributions may increase;
|
•
|
the relative voting strength of each previously outstanding unit may be diminished; and
|
•
|
the market price of our common units may decline.
|
•
|
how to allocate corporate opportunities among us and its other affiliates;
|
•
|
whether to exercise its limited call right;
|
•
|
whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the board of directors of our general partner;
|
•
|
how to exercise its voting rights with respect to the units it owns;
|
•
|
whether to exercise its registration rights;
|
•
|
whether to elect to reset target distribution levels;
|
•
|
whether to transfer the incentive distribution rights to a third party; and
|
•
|
whether or not to consent to any merger or consolidation of the partnership or amendment to the partnership agreement.
|
Quarter Ended
|
|
High
Sale
Price
|
|
Low
Sale
Price
|
|
Quarterly Cash
Distribution
per Unit
|
|
Distribution
Date
|
|
Record
Date
|
||||
December 31, 2013
|
|
$
|
34.45
|
|
|
$
|
29.16
|
|
|
n/a
|
|
n/a
|
|
n/a
|
•
|
less, the amount of cash reserves established by our general partner to:
|
◦
|
provide for the proper conduct of our business (including reserves for our future capital expenditures and anticipated future credit needs requirements and refunds of collected rates reasonably likely to be refunded as a result of a settlement or hearing related to FERC rate proceedings or rate proceedings under applicable law subsequent to that quarter);
|
◦
|
comply with applicable law, any of our or our subsidiaries’ debt instruments or other agreements; or
|
◦
|
provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters (provided that our general partner may not establish cash reserves for distributions if the effect of the establishment of such reserves will prevent us from paying the minimum quarterly distribution on all common units and any cumulative arrearages on such common units for the current quarter);
|
•
|
plus, if our general partner so determines, all or any portion of the cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made subsequent to the end of such quarter.
|
|
|
|
|
Marginal Percentage Interest in Distributions
|
||
|
|
Total Quarterly Distribution per Unit Target Amount
|
|
Unitholders
|
|
General Partner
|
Minimum Quarterly Distribution
|
|
$0.2125
|
|
98%
|
|
2%
|
First Target Distribution
|
|
Above $0.2125 up to $0.244375
|
|
98%
|
|
2%
|
Second Target Distribution
|
|
Above $0.244375 up to $0.265625
|
|
85%
|
|
15%
|
Third Target Distribution
|
|
Above $0.265625 up to $0.31875
|
|
75%
|
|
25%
|
Thereafter
|
|
$0.31875
|
|
50%
|
|
50%
|
•
|
distributions of available cash from operating surplus on each of the outstanding common units, subordinated units and general partner units equaled or exceeded $0.85 per unit (the annualized minimum quarterly distribution), for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date;
|
•
|
the adjusted operating surplus (as defined in our partnership agreement) generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of $0.85 (the annualized minimum quarterly distribution) on all of the outstanding common units, subordinated units and general partner units during those periods on a fully diluted basis; and
|
•
|
there are no arrearages in payment of the minimum quarterly distribution on the common units.
|
•
|
distributions of available cash from operating surplus on each of the outstanding common units, subordinated units and general partner units equaled or exceeded $1.275 (150 percent of the annualized minimum quarterly distribution), for the four-consecutive-quarter period immediately preceding that date;
|
•
|
the adjusted operating surplus generated during the four-quarter period immediately preceding that date equaled or exceeded the sum of (i) $1.275 per unit (150 percent of the annualized minimum quarterly distribution) on all of the outstanding common units, subordinated units and general partner units during that period on a fully diluted basis and (ii) the corresponding distributions on the incentive distribution rights; and
|
•
|
there are no arrearages in payment of the minimum quarterly distributions on the common units.
|
•
|
the subordinated units held by any person will immediately and automatically convert into common units on a one-for-one basis,
provided that
(i) neither such person nor any of its affiliates voted any of its units in favor of the removal and (ii) such person is not an affiliate of the successor general partner;
|
•
|
if all of the subordinated units convert pursuant to the foregoing, all cumulative common unit arrearages on the common units will be extinguished and the subordination period will end; and
|
•
|
our general partner will have the right to convert its general partner interest and its incentive distribution rights into common units or to receive cash in exchange for those interests.
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
|||||||
Operating revenues – related party
|
|
$
|
94,529
|
|
|
$
|
86,804
|
|
|
$
|
73,136
|
|
Net income
|
|
50,151
|
|
|
42,285
|
|
|
25,836
|
|
|||
Net income per limited partner unit
(basic and diluted):
|
|
|
|
|
|
|
||||||
Common units
|
|
0.03
|
|
|
n/a
|
|
n/a
|
|||||
Subordinated units
|
|
0.03
|
|
|
n/a
|
|
n/a
|
|||||
Cash distribution declared per limited partner unit
|
|
0.037
|
|
|
n/a
|
|
n/a
|
|||||
Cash
|
|
375,118
|
|
|
—
|
|
|
—
|
|
|||
Total assets
|
|
656,442
|
|
|
272,506
|
|
|
278,988
|
|
|||
Capital lease obligations, net of current portion
|
|
3,079
|
|
|
5,405
|
|
|
6,952
|
|
•
|
the suspension, reduction, or termination of Valero’s obligation under our commercial agreements and our services and secondment agreement;
|
•
|
changes in global economic conditions and the effects of the global economic downturn on Valero’s business and the business of its suppliers, customers, business partners, and credit lenders;
|
•
|
a material decrease in Valero’s profitability;
|
•
|
disruptions due to equipment interruption or failure at our facilities, Valero’s facilities, or third-party facilities on which our business or Valero’s business is dependent;
|
•
|
the risk of contract cancellation, non-renewal, or failure to perform by Valero’s customers, and Valero’s inability to replace such contracts and/or customers;
|
•
|
Valero’s ability to remain in compliance with the terms of its outstanding indebtedness;
|
•
|
the timing and extent of changes in commodity prices and demand for Valero’s refined products;
|
•
|
actions of customers and competitors;
|
•
|
changes in our cash flows from operations;
|
•
|
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, or other factors beyond our control;
|
•
|
operational hazards inherent in refining operations and in transporting and storing crude oil and refined products;
|
•
|
earthquakes or other natural disasters affecting operations;
|
•
|
changes in capital requirements or in execution of planned capital projects;
|
•
|
the availability and costs of crude oil, other refinery feedstocks, and refined petroleum products;
|
•
|
changes in the cost or availability of third-party vessels, pipelines, and other means of delivering and transporting crude oil, feedstocks, and refined products;
|
•
|
direct or indirect effects on our business resulting from actual or threatened terrorist incidents or acts of war;
|
•
|
weather conditions affecting our or Valero’s operations or the areas in which Valero markets its refined products;
|
•
|
seasonal variations in demand for refined petroleum 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 Valero;
|
•
|
risks related to labor relations and workplace safety;
|
•
|
changes in insurance markets impacting costs and the level and types of coverage available; and
|
•
|
political developments.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Operating revenues – related party
|
|
$
|
94,529
|
|
|
$
|
86,804
|
|
|
$
|
73,136
|
|
Costs and expenses:
|
|
|
|
|
|
|
||||||
Operating expenses
|
|
24,751
|
|
|
26,249
|
|
|
26,373
|
|
|||
General and administrative expenses
|
|
5,478
|
|
|
5,016
|
|
|
4,351
|
|
|||
Depreciation expense
|
|
13,073
|
|
|
12,881
|
|
|
15,978
|
|
|||
Total costs and expenses
|
|
43,302
|
|
|
44,146
|
|
|
46,702
|
|
|||
Operating income
|
|
51,227
|
|
|
42,658
|
|
|
26,434
|
|
|||
Other income, net
|
|
309
|
|
|
337
|
|
|
142
|
|
|||
Interest expense
|
|
(198
|
)
|
|
(307
|
)
|
|
(429
|
)
|
|||
Income before income taxes
|
|
51,338
|
|
|
42,688
|
|
|
26,147
|
|
|||
Income tax expense
|
|
1,187
|
|
|
403
|
|
|
311
|
|
|||
Net income
|
|
50,151
|
|
|
$
|
42,285
|
|
|
$
|
25,836
|
|
|
Less: Net income attributable to Predecessor
|
|
48,110
|
|
|
|
|
|
|||||
Net income attributable to partners
|
|
2,041
|
|
|
|
|
|
|||||
Less: General partner’s interest in net income
|
|
41
|
|
|
|
|
|
|||||
Limited partners’ interest in net income
|
|
$
|
2,000
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||||
Net income per limited partner unit
(basic and diluted): |
|
|
|
|
|
|
||||||
Common units
|
|
$
|
0.03
|
|
|
|
|
|
||||
Subordinated units
|
|
$
|
0.03
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||||
Weighted average number of limited partner units
outstanding (basic and diluted): |
|
|
|
|
|
|
||||||
Common units – public
|
|
17,250
|
|
|
|
|
|
|||||
Common units – Valero
|
|
11,540
|
|
|
|
|
|
|||||
Subordinated units – Valero
|
|
28,790
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Operating highlights:
|
|
|
|
|
|
|
||||||
Pipeline transportation:
|
|
|
|
|
|
|
||||||
Pipeline transportation revenues
|
|
$
|
57,864
|
|
|
$
|
51,735
|
|
|
$
|
37,474
|
|
Pipeline transportation throughput (BPD)
(a)
|
|
589,970
|
|
|
520,180
|
|
|
414,128
|
|
|||
Average pipeline transportation revenue per barrel
(b)
|
|
$
|
0.27
|
|
|
$
|
0.27
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
||||||
Terminaling:
|
|
|
|
|
|
|
||||||
Terminaling revenues
|
|
$
|
18,478
|
|
|
$
|
16,650
|
|
|
$
|
17,512
|
|
Terminaling throughput (BPD)
|
|
144,820
|
|
|
121,416
|
|
|
128,788
|
|
|||
Average terminaling revenue per barrel
(b)
|
|
$
|
0.35
|
|
|
$
|
0.37
|
|
|
$
|
0.37
|
|
|
|
|
|
|
|
|
||||||
Storage revenues
(c)
|
|
$
|
18,187
|
|
|
$
|
18,419
|
|
|
$
|
18,150
|
|
|
|
|
|
|
|
|
||||||
Total operating revenues – related party
|
|
$
|
94,529
|
|
|
$
|
86,804
|
|
|
$
|
73,136
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures:
|
|
|
|
|
|
|
||||||
Maintenance
|
|
$
|
5,938
|
|
|
$
|
3,914
|
|
|
$
|
35,229
|
|
Expansion
|
|
7,893
|
|
|
3,736
|
|
|
825
|
|
|||
Total capital expenditures
|
|
$
|
13,831
|
|
|
$
|
7,650
|
|
|
$
|
36,054
|
|
|
|
|
|
|
|
|
||||||
Other financial information:
|
|
|
|
|
|
|
||||||
Quarterly distribution declared per unit
(d)
|
|
$
|
0.037
|
|
|
n/a
|
|
n/a
|
||||
|
|
|
|
|
|
|
||||||
Distribution declared:
|
|
|
|
|
|
|
||||||
Limited partner units – public
|
|
$
|
638
|
|
|
n/a
|
|
n/a
|
||||
Limited partner units – Valero
|
|
1,492
|
|
|
n/a
|
|
n/a
|
|||||
General partner units – Valero
|
|
44
|
|
|
n/a
|
|
n/a
|
|||||
Total distribution declared
|
|
$
|
2,174
|
|
|
n/a
|
|
n/a
|
(a)
|
Represents the sum of volumes transported through each separately tariffed pipeline segment.
|
(b)
|
Average revenue per barrel is calculated as revenue divided by throughput for the period. Throughput is derived by multiplying the throughput barrels per day by the number of days in the period.
|
(c)
|
Prior to the Offering, our Predecessor leased some of our refined petroleum products and crude oil storage capacity to Valero. Subsequent to the Offering, under our commercial agreements with Valero, these storage capacity lease agreements were replaced with terminaling fees.
|
(d)
|
The initial quarterly cash distribution was calculated as the minimum quarterly distribution of $0.2125 per unit prorated for the period from the date of the Offering (December 16, 2013) to December 31, 2013.
|
•
|
An increase of $3.3 million at our Lucas crude system primarily due to an increase in pipeline volumes. Pipeline volumes in 2013 increased by 13 percent compared to the volumes in 2012. The increase in volumes was due to increased crude oil throughput at Valero’s Port Arthur Refinery, resulting from refinery expansion projects and improved refinery operations. The increase is also attributable to our new commercial agreement with Valero, which now includes a terminal throughput fee at our Lucas crude system that generated $733 thousand of terminal revenue during the last 16 days of 2013.
|
•
|
An increase of $2.7 million primarily due to an increase in refined petroleum products volumes transported through our Port Arthur products system. Pipeline volumes in 2013 increased by 32 percent compared to the volumes in 2012. The increase in volumes was due to increased production at Valero’s Port Arthur Refinery, resulting from the new hydrocracker unit at the refinery, which was completed in December 2012, other refinery expansion projects, and improved refinery operations. The increase is also attributable to our new commercial agreement with Valero, which now includes a terminal throughput fee at our Port Arthur products system that generated $454 thousand of terminal revenue during the last 16 days of 2013.
|
•
|
An increase of $1.2 million due to an increase in refined petroleum products volumes transported through our Memphis products system due to increased production at Valero’s Memphis Refinery, resulting from improved refinery operations in 2013 compared to 2012.
|
Quarter Ended
(a)
|
|
Distribution
Per Unit
(a)
|
|
Total Cash
Distribution
(in thousands)
|
|
Date
of Distribution
|
||||
December 31, 2013
|
|
$
|
0.037
|
|
|
$
|
2,174
|
|
|
February 12, 2014
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Cash flows provided by (used in):
|
|
|
|
|
|
|||||||
Operating activities
|
|
$
|
60,687
|
|
|
$
|
54,980
|
|
|
$
|
41,448
|
|
Investing activities
|
|
(13,831
|
)
|
|
(7,650
|
)
|
|
(36,054
|
)
|
|||
Financing activities
|
|
328,262
|
|
|
(47,330
|
)
|
|
(5,394
|
)
|
|||
Increase in cash and cash equivalents
|
$
|
375,118
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Maintenance
|
|
$
|
5,938
|
|
|
$
|
3,914
|
|
|
$
|
35,229
|
|
Expansion
|
|
7,893
|
|
|
3,736
|
|
|
825
|
|
|||
Total capital expenditures
|
|
$
|
13,831
|
|
|
$
|
7,650
|
|
|
$
|
36,054
|
|
•
|
our connection to the TransCanada pipeline at our Lucas crude system;
|
•
|
biodiesel blending system improvements at our Memphis truck rack; and
|
•
|
the installation of a concrete driveway at our Memphis truck rack.
|
•
|
construction of our Lucas pipeline, which was completed in 2011;
|
•
|
fabrication and installation of flow-through scraper traps on our PAPS to El Vista pipeline;
|
•
|
biodiesel blending system improvements at our Memphis truck rack; and
|
•
|
installation of metering equipment on our Port Arthur products system pipelines and a pipeline connection to Oiltanking’s Beaumont marine terminal.
|
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
Total
|
||||||||||||
Capital lease obligations
|
|
$
|
1,414
|
|
|
$
|
1,414
|
|
|
$
|
963
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,791
|
|
Operating lease obligations
|
|
345
|
|
|
345
|
|
|
37
|
|
|
36
|
|
|
37
|
|
|
800
|
|
||||||
Other long-term liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
443
|
|
|
201
|
|
|
644
|
|
||||||
Total
|
|
$
|
1,759
|
|
|
$
|
1,759
|
|
|
$
|
1,000
|
|
|
$
|
479
|
|
|
$
|
238
|
|
|
$
|
5,235
|
|
|
|
December 31,
|
||||||
|
|
2013
|
|
2012
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
375,118
|
|
|
$
|
—
|
|
Receivables from related party
|
|
7,150
|
|
|
—
|
|
||
Prepaid expenses and other
|
|
276
|
|
|
268
|
|
||
Total current assets
|
|
382,544
|
|
|
268
|
|
||
Property and equipment, at cost
|
|
375,542
|
|
|
363,940
|
|
||
Accumulated depreciation
|
|
(103,358
|
)
|
|
(91,702
|
)
|
||
Property and equipment, net
|
|
272,184
|
|
|
272,238
|
|
||
Deferred charges and other assets, net
|
|
1,714
|
|
|
—
|
|
||
Total assets
|
|
$
|
656,442
|
|
|
$
|
272,506
|
|
LIABILITIES AND PARTNERS’ CAPITAL
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Current portion of capital lease obligations
|
|
$
|
1,048
|
|
|
$
|
1,111
|
|
Accounts payable
|
|
8,289
|
|
|
—
|
|
||
Accrued liabilities
|
|
158
|
|
|
—
|
|
||
Taxes other than income taxes
|
|
734
|
|
|
—
|
|
||
Deferred revenue from related party
|
|
85
|
|
|
—
|
|
||
Total current liabilities
|
|
10,314
|
|
|
1,111
|
|
||
Capital lease obligations, net of current portion
|
|
3,079
|
|
|
5,405
|
|
||
Deferred income taxes
|
|
814
|
|
|
—
|
|
||
Other long-term liabilities
|
|
644
|
|
|
621
|
|
||
Commitments and contingencies
|
|
|
|
|
|
|
||
Partners’ capital:
|
|
|
|
|
||||
Common unitholders – public
(17,250,000 units issued and outstanding)
|
|
369,825
|
|
|
—
|
|
||
Common unitholder – Valero
(11,539,989 units issued and outstanding)
|
|
75,998
|
|
|
—
|
|
||
Subordinated unitholder – Valero
(28,789,989 units issued and outstanding)
|
|
189,601
|
|
|
—
|
|
||
General partner – Valero
(1,175,102 units issued and outstanding)
|
|
6,167
|
|
|
—
|
|
||
Net investment
|
|
—
|
|
|
265,369
|
|
||
Total partners’ capital
|
|
641,591
|
|
|
265,369
|
|
||
Total liabilities and partners’ capital
|
|
$
|
656,442
|
|
|
$
|
272,506
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Operating revenues – related party
|
|
$
|
94,529
|
|
|
$
|
86,804
|
|
|
$
|
73,136
|
|
Costs and expenses:
|
|
|
|
|
|
|
||||||
Operating expenses
|
|
24,751
|
|
|
26,249
|
|
|
26,373
|
|
|||
General and administrative expenses
|
|
5,478
|
|
|
5,016
|
|
|
4,351
|
|
|||
Depreciation expense
|
|
13,073
|
|
|
12,881
|
|
|
15,978
|
|
|||
Total costs and expenses
|
|
43,302
|
|
|
44,146
|
|
|
46,702
|
|
|||
Operating income
|
|
51,227
|
|
|
42,658
|
|
|
26,434
|
|
|||
Other income, net
|
|
309
|
|
|
337
|
|
|
142
|
|
|||
Interest expense
|
|
(198
|
)
|
|
(307
|
)
|
|
(429
|
)
|
|||
Income before income taxes
|
|
51,338
|
|
|
42,688
|
|
|
26,147
|
|
|||
Income tax expense
|
|
1,187
|
|
|
403
|
|
|
311
|
|
|||
Net income
|
|
50,151
|
|
|
$
|
42,285
|
|
|
$
|
25,836
|
|
|
Less: Net income attributable to Predecessor
|
|
48,110
|
|
|
|
|
|
|||||
Net income attributable to partners
|
|
2,041
|
|
|
|
|
|
|||||
Less: General partner’s interest in net income
|
|
41
|
|
|
|
|
|
|||||
Limited partners’ interest in net income
|
|
$
|
2,000
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||||
Net income per limited partner unit
(basic and diluted):
|
|
|
|
|
|
|
||||||
Common units
|
|
$
|
0.03
|
|
|
|
|
|
||||
Subordinated units
|
|
$
|
0.03
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||||
Weighted-average limited partner units outstanding
(basic and diluted):
|
|
|
|
|
|
|
||||||
Common units – public
|
|
17,250
|
|
|
|
|
|
|||||
Common units – Valero
|
|
11,540
|
|
|
|
|
|
|||||
Subordinated units – Valero
|
|
28,790
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
||||||
Cash distribution declared per unit
|
|
$
|
0.037
|
|
|
|
|
|
|
Partnership
|
|
|
|
|
||||||||||||||||||
|
Common
Unitholders
Public
|
|
Common
Unitholder Valero |
|
Subordinated
Unitholder
Valero |
|
General
Partner
Valero
|
|
Net
Investment
|
|
Total
|
||||||||||||
Balance as of December 31, 2010
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250,729
|
|
|
$
|
250,729
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,836
|
|
|
25,836
|
|
||||||
Net transfers to Valero
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,098
|
)
|
|
(6,098
|
)
|
||||||
Balance as of December 31, 2011
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
270,467
|
|
|
270,467
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42,285
|
|
|
42,285
|
|
||||||
Net transfers to Valero
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(47,383
|
)
|
|
(47,383
|
)
|
||||||
Balance as of December 31, 2012
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
265,369
|
|
|
265,369
|
|
||||||
Net income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Attributable to Predecessor
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,110
|
|
|
48,110
|
|
||||||
Attributable to partners
|
599
|
|
|
401
|
|
|
1,000
|
|
|
41
|
|
|
—
|
|
|
2,041
|
|
||||||
Net transfers to Valero
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(46,655
|
)
|
|
(46,655
|
)
|
||||||
Prefunding of capital projects by Valero
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,500
|
|
|
3,500
|
|
||||||
Allocation of net investment to unitholders
|
—
|
|
|
75,597
|
|
|
188,601
|
|
|
6,126
|
|
|
(270,324
|
)
|
|
—
|
|
||||||
Proceeds from initial public offering, net of offering costs
|
369,226
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
369,226
|
|
||||||
Balance as of December 31, 2013
|
$
|
369,825
|
|
|
$
|
75,998
|
|
|
$
|
189,601
|
|
|
$
|
6,167
|
|
|
$
|
—
|
|
|
$
|
641,591
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
50,151
|
|
|
$
|
42,285
|
|
|
$
|
25,836
|
|
Adjustments to reconcile net income to
net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation expense
|
|
13,073
|
|
|
12,881
|
|
|
15,978
|
|
|||
Amortization of debt issuance costs
|
|
13
|
|
|
—
|
|
|
—
|
|
|||
Amortization of fair value adjustment
related to capital leases
|
|
(417
|
)
|
|
(436
|
)
|
|
(436
|
)
|
|||
Deferred tax expense
|
|
814
|
|
|
—
|
|
|
—
|
|
|||
Changes in current assets and current liabilities
|
|
(2,947
|
)
|
|
250
|
|
|
70
|
|
|||
Net cash provided by operating activities
|
|
60,687
|
|
|
54,980
|
|
|
41,448
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Capital expenditures
|
|
(13,831
|
)
|
|
(7,650
|
)
|
|
(36,054
|
)
|
|||
Net cash used in investing activities
|
|
(13,831
|
)
|
|
(7,650
|
)
|
|
(36,054
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Repayments of capital lease obligations
|
|
(1,059
|
)
|
|
(970
|
)
|
|
(847
|
)
|
|||
Prefunding of capital projects by Valero
|
|
3,500
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from initial public offering, net of offering costs
|
|
372,449
|
|
|
—
|
|
|
—
|
|
|||
Debt issuance costs
|
|
(572
|
)
|
|
—
|
|
|
—
|
|
|||
Net transfers to Valero
|
|
(46,056
|
)
|
|
(46,360
|
)
|
|
(4,547
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
328,262
|
|
|
(47,330
|
)
|
|
(5,394
|
)
|
|||
Net increase in cash and cash equivalents
|
|
375,118
|
|
|
—
|
|
|
—
|
|
|||
Cash and cash equivalents at beginning of year
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Cash and cash equivalents at end of year
|
|
$
|
375,118
|
|
|
$
|
—
|
|
|
$
|
—
|
|
1.
|
BUSINESS, INITIAL PUBLIC OFFERING, AND BASIS OF PRESENTATION
|
•
|
Port Arthur Logistics System
.
The Port Arthur logistics system is a crude oil and refined petroleum products pipeline and terminal system that supports Valero’s Port Arthur Refinery in Port Arthur, Texas, and comprises the following:
|
◦
|
Lucas Crude System.
The Lucas crude system is a significant delivery system of crude oil to Valero’s Port Arthur Refinery.
|
◦
|
Port Arthur Products System.
This system, which is connected to third-party pipeline systems, serves as a significant distribution outlet for refined petroleum products at Valero’s Port Arthur Refinery.
|
•
|
McKee Products System.
The McKee products system is a refined petroleum products pipeline and terminal system that supports Valero’s McKee Refinery in Sunray, Texas. The system connects Valero’s McKee Refinery to our refined petroleum products terminal in El Paso, Texas and on to Kinder Morgan’s SFPP system for marketing destinations in Arizona. We own a
33⅓
percent undivided interest in these assets.
|
•
|
Memphis Logistics System
.
The Memphis logistics system is a crude oil and refined petroleum products pipeline and terminal system that supports Valero’s Memphis Refinery in Memphis, Tennessee, and comprises the following:
|
◦
|
Collierville Crude System.
The Collierville crude system is the primary source for delivery of crude oil to Valero’s Memphis Refinery.
|
◦
|
Memphis Products System.
The Memphis products system is the primary distribution outlet for refined petroleum products produced at Valero’s Memphis Refinery and comprises the Shorthorn pipeline system, the Memphis Airport pipeline system, the West Memphis terminal, and the Memphis truck rack.
|
•
|
11,539,989
common units and
28,789,989
subordinated units, representing an aggregate
68.6
percent limited partner interest;
|
•
|
all of the incentive distribution rights; and
|
•
|
1,175,102
general partner units, representing a
2.0
percent general partner interest.
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
3.
|
RELATED-PARTY AGREEMENTS AND TRANSACTIONS
|
•
|
our payment of an annual administrative fee, initially in the amount of
$7.9 million
(payable in equal monthly installments) for the management of our operations and general corporate services by Valero;
|
•
|
our obligation to reimburse Valero for certain direct or allocated costs and expenses incurred by Valero on our behalf;
|
•
|
our right of first offer to acquire certain of Valero’s transportation and logistics assets for a period of
five
years after the closing of the Offering;
|
•
|
Valero’s obligation to indemnify us for certain environmental and other liabilities and our obligation to indemnify Valero for certain environmental and other liabilities related to our assets to the extent Valero is not required to indemnify us;
|
•
|
Valero’s right of first refusal to acquire certain of our assets;
|
•
|
the granting of a license from Valero to us with respect to use of certain Valero trademarks and tradenames; and
|
•
|
the prefunding of
$3.5 million
by Valero for certain capital projects.
|
|
|
December 31,
|
||
|
|
2013
|
||
Trade receivables – related party
|
|
$
|
4,196
|
|
Due from related party
|
|
2,954
|
|
|
Receivables from related party
|
|
$
|
7,150
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Operating revenues – related party
|
|
$
|
94,529
|
|
|
$
|
86,804
|
|
|
$
|
73,136
|
|
Operating expenses
|
|
5,994
|
|
|
5,353
|
|
|
4,931
|
|
|||
General and administrative expenses
|
|
5,397
|
|
|
5,016
|
|
|
4,351
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Net transfers to Valero
per statements of partners’ capital |
|
$
|
(46,655
|
)
|
|
$
|
(47,383
|
)
|
|
$
|
(6,098
|
)
|
Less: Noncash transfers to Valero
|
|
(599
|
)
|
|
(1,023
|
)
|
|
(1,551
|
)
|
|||
Net transfers to Valero
per statements of cash flows |
|
$
|
(46,056
|
)
|
|
$
|
(46,360
|
)
|
|
$
|
(4,547
|
)
|
4.
|
PROPERTY AND EQUIPMENT
|
|
|
December 31,
|
||||||
|
|
2013
|
|
2012
|
||||
Pipelines and related assets
|
|
$
|
243,174
|
|
|
$
|
243,764
|
|
Terminals and related assets
|
|
111,740
|
|
|
107,588
|
|
||
Other
|
|
6,247
|
|
|
5,398
|
|
||
Land
|
|
3,088
|
|
|
3,832
|
|
||
Construction-in-progress
|
|
11,293
|
|
|
3,358
|
|
||
Property and equipment, at cost
|
|
375,542
|
|
|
363,940
|
|
||
Accumulated depreciation
|
|
(103,358
|
)
|
|
(91,702
|
)
|
||
Property and equipment, net
|
|
$
|
272,184
|
|
|
$
|
272,238
|
|
5.
|
OTHER LONG-TERM LIABILITIES
|
|
|
December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Balance as of beginning of year
|
|
$
|
536
|
|
|
$
|
514
|
|
|
$
|
429
|
|
Additions to accrual
|
|
—
|
|
|
—
|
|
|
67
|
|
|||
Accretion expense
|
|
23
|
|
|
22
|
|
|
18
|
|
|||
Balance as of end of year
|
|
$
|
559
|
|
|
$
|
536
|
|
|
$
|
514
|
|
6.
|
DEBT AND CAPITAL LEASE OBLIGATIONS
|
2014
|
$
|
1,414
|
|
2015
|
1,414
|
|
|
2016
|
963
|
|
|
Total minimum rental payments
|
3,791
|
|
|
Less interest expense
|
(631
|
)
|
|
Unamortized fair value adjustment
|
967
|
|
|
Capital lease obligations
|
$
|
4,127
|
|
7.
|
COMMITMENTS AND CONTINGENCIES
|
2014
|
$
|
345
|
|
2015
|
345
|
|
|
2016
|
37
|
|
|
2017
|
36
|
|
|
2018
|
37
|
|
|
Thereafter
|
616
|
|
|
Total minimum rental payments
|
$
|
1,416
|
|
8.
|
NET INCOME PER LIMITED PARTNER UNIT
|
|
|
December 16, 2013
through
December 31, 2013
|
||
Net income attributable to partners
|
|
$
|
2,041
|
|
Less:
|
|
|
||
Limited partners’ distribution declared on common units – public
|
|
638
|
|
|
Limited partner’s distribution declared on common units – Valero
|
|
427
|
|
|
Limited partner’s distribution declared on subordinated units – Valero
|
|
1,065
|
|
|
General partner’s distribution declared
(a)
|
|
44
|
|
|
Earnings less than distributions
|
|
$
|
(133
|
)
|
|
|
Limited
Partner
Common
Units –
Public
|
|
Limited
Partner Common Units – Valero |
|
Limited
Partner
Subordinated
Units –
Valero
|
|
General
Partner |
|
Total
|
||||||||||
Net income attributable to partners:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Distribution declared
(a)
|
|
$
|
638
|
|
|
$
|
427
|
|
|
$
|
1,065
|
|
|
$
|
44
|
|
|
$
|
2,174
|
|
Earnings less than distributions
|
|
(39
|
)
|
|
(26
|
)
|
|
(65
|
)
|
|
(3
|
)
|
|
(133
|
)
|
|||||
Net income attributable to partners
|
|
$
|
599
|
|
|
$
|
401
|
|
|
$
|
1,000
|
|
|
$
|
41
|
|
|
$
|
2,041
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted-average units outstanding:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted
|
|
17,250
|
|
|
11,540
|
|
|
28,790
|
|
|
1,175
|
|
|
58,755
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per limited partner unit:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
|
|
|
9.
|
INCOME TAXES
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Current U.S. state
|
|
$
|
373
|
|
|
$
|
403
|
|
|
$
|
311
|
|
Deferred U.S. state
|
|
814
|
|
|
—
|
|
|
—
|
|
|||
Income tax expense
|
|
$
|
1,187
|
|
|
$
|
403
|
|
|
$
|
311
|
|
10.
|
EMPLOYEE BENEFIT PLANS
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Pension and postretirement costs
|
|
$
|
661
|
|
|
$
|
599
|
|
|
$
|
469
|
|
Defined contribution plan costs
|
|
245
|
|
|
263
|
|
|
270
|
|
11.
|
STOCK-BASED COMPENSATION
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Stock-based compensation costs
|
|
$
|
105
|
|
|
$
|
103
|
|
|
$
|
64
|
|
12.
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Decrease (increase) in current assets:
|
|
|
|
|
|
|
||||||
Receivables from related party
|
|
$
|
(6,318
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Prepaid expenses and other
|
|
(9
|
)
|
|
250
|
|
|
70
|
|
|||
Increase (decrease) in current liabilities:
|
|
|
|
|
|
|
||||||
Accounts payable
|
|
2,403
|
|
|
—
|
|
|
—
|
|
|||
Accrued liabilities
|
|
158
|
|
|
—
|
|
|
—
|
|
|||
Taxes other than income taxes
|
|
734
|
|
|
—
|
|
|
—
|
|
|||
Deferred revenue from related party
|
|
85
|
|
|
—
|
|
|
—
|
|
|||
Changes in current assets and current liabilities
|
|
$
|
(2,947
|
)
|
|
$
|
250
|
|
|
$
|
70
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Receivables from related party:
|
|
|
|
|
|
|
||||||
Debt issuance costs owed to related party
|
|
$
|
1,071
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Offering costs owed to related party
|
|
3,223
|
|
|
—
|
|
|
—
|
|
|||
Amounts due from related party
|
|
(5,126
|
)
|
|
—
|
|
|
—
|
|
|||
Transfer (from) to Valero for:
|
|
|
|
|
|
|
||||||
Indemnification of environmental costs
|
|
(85
|
)
|
|
—
|
|
|
—
|
|
|||
Property and equipment, net
|
|
684
|
|
|
—
|
|
|
(1,165
|
)
|
|||
Change in accrued capital expenditures
|
|
—
|
|
|
1,023
|
|
|
2,716
|
|
|||
Capital expenditures included in accounts payable
|
|
(761
|
)
|
|
—
|
|
|
—
|
|
|||
Increase in property and equipment and
asset retirement obligation
|
|
—
|
|
|
—
|
|
|
67
|
|
|||
Reduction to property and equipment, net
due to capital lease obligation modification
|
|
913
|
|
|
—
|
|
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Interest paid
|
|
$
|
602
|
|
|
$
|
743
|
|
|
$
|
865
|
|
Income taxes paid
|
|
373
|
|
|
403
|
|
|
311
|
|
13.
|
QUARTERLY FINANCIAL DATA (UNAUDITED)
|
|
|
2013 Quarter Ended
|
||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Operating revenues – related party
|
|
$
|
23,478
|
|
|
$
|
22,865
|
|
|
$
|
23,600
|
|
|
$
|
24,586
|
|
Operating income
|
|
14,656
|
|
|
12,973
|
|
|
11,997
|
|
|
11,601
|
|
||||
Net income
|
|
14,520
|
|
|
11,613
|
|
|
11,924
|
|
|
12,094
|
|
||||
Net income attributable to partners
|
|
n/a
|
|
n/a
|
|
n/a
|
|
2,041
|
|
|||||||
Limited partners’ interest in net income
|
|
n/a
|
|
n/a
|
|
n/a
|
|
2,000
|
|
|||||||
Net income per limited partner unit
(basic and diluted): |
|
|
|
|
|
|
|
|
||||||||
Common units
|
|
n/a
|
|
n/a
|
|
n/a
|
|
0.03
|
|
|||||||
Subordinated units
|
|
n/a
|
|
n/a
|
|
n/a
|
|
0.03
|
|
|||||||
Cash distribution declared per unit
|
|
n/a
|
|
n/a
|
|
n/a
|
|
0.037
|
|
|
|
2012 Quarter Ended
|
||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Operating revenues – related party
|
|
$
|
19,953
|
|
|
$
|
20,457
|
|
|
$
|
22,526
|
|
|
$
|
23,868
|
|
Operating income
|
|
9,384
|
|
|
7,620
|
|
|
11,836
|
|
|
13,818
|
|
||||
Net income
|
|
9,310
|
|
|
7,468
|
|
|
11,681
|
|
|
13,826
|
|
|
|
|
|
|
Name
|
|
Age *
|
|
Position with Valero Energy Partners GP LLC
|
William R. Klesse
|
|
67
|
|
Chairman of the Board
|
Joseph W. Gorder
|
|
56
|
|
Director and Chief Executive Officer
|
Richard F. Lashway
|
|
50
|
|
Director, President and Chief Operating Officer
|
Donna M. Titzman
|
|
50
|
|
Director, Senior Vice President, Chief Financial Officer and Treasurer
|
Jay D. Browning
|
|
55
|
|
Senior Vice President and General Counsel
|
Robert S. Beadle
|
|
64
|
|
Director
|
Timothy J. Fretthold
|
|
64
|
|
Director
|
Randall J. Larson
|
|
56
|
|
Director
|
•
|
Governance Guidelines,
|
•
|
Code of Business Conduct and Ethics,
|
•
|
Code of Ethics for Senior Financial Officers, and
|
•
|
Audit Committee charter.
|
•
|
Joseph W. Gorder, Chief Executive Officer,
|
•
|
Richard F. Lashway, President and Chief Operating Officer, and
|
•
|
Donna M. Titzman, Senior Vice President, Chief Financial Officer and Treasurer.
|
Name of Beneficial Owner (1)
|
|
Common Units
|
|
Subordinated Units
|
|
General Partner Units
|
|
Total Partnership Interests
|
|||||||||||||
|
Number
|
|
Percent
|
|
Number
|
|
Percent
|
|
Number
|
|
Percent
|
|
Percent
|
||||||||
Valero Energy Corporation (2)
|
|
11,539,989
|
|
|
40.08
|
%
|
|
28,789,989
|
|
|
100.00
|
%
|
|
1,175,102
|
|
|
100.00
|
%
|
|
70.63
|
%
|
Tortoise Capital Advisors, L.L.C. (3)
|
|
2,497,961
|
|
|
8.67
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.25
|
%
|
FMR LLC (4)
|
|
1,818,775
|
|
|
6.32
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Directors & Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Robert S. Beadle
|
|
11,736
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Jay D. Browning
|
|
5,500
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Timothy J. Fretthold
|
|
6,736
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Joseph W. Gorder
|
|
50,000
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
William R. Klesse
|
|
100,000
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Randall J. Larson
|
|
16,736
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Richard F. Lashway
|
|
10,000
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Donna M. Titzman
|
|
11,000
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Directors and executive officers as a group (8 persons)
|
|
211,708
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
|
*
|
Less than 1 percent.
|
(1)
|
Unless otherwise noted, the address for the beneficial owners listed in this table is One Valero Way, San Antonio, Texas 78249.
|
(2)
|
Valero Energy Corporation directly or indirectly owns the following entities, which own the units listed below. Valero Energy Corporation may be deemed to beneficially own the units and interests held by each of the entities.
|
Name of Entity
|
|
Common
Units
|
|
Subordinated
Units
|
|
General
Partner Units
|
|||
Valero Energy Partners GP LLC
|
|
—
|
|
|
—
|
|
|
1,175,102
|
|
Valero Terminaling and Distribution Company
|
|
2,070,019
|
|
|
5,164,289
|
|
|
—
|
|
The Premcor Pipeline Co.
|
|
7,734,994
|
|
|
19,297,278
|
|
|
—
|
|
The Premcor Refining Group Inc.
|
|
719,502
|
|
|
1,795,015
|
|
|
—
|
|
Valero Refining Company-Tennessee, L.L.C.
|
|
1,015,474
|
|
|
2,533,407
|
|
|
—
|
|
Total Valero subsidiaries
|
|
11,539,989
|
|
|
28,789,989
|
|
|
1,175,102
|
|
(3)
|
Tortoise Capital Advisors, L.L.C., 11550 Ash Street, Suite 300, Leawood, Kansas 66211, filed a Schedule 13G with the SEC on February 11, 2014, reporting that it has sole voting or dispositive power over none of our Common Units, shared voting or dispositive power over 2,256,641 of our Common Units and shared investment power over 2,497,961 of our Common Units.
|
(4)
|
FMR LLC, 245 Summer Street, Boston, Massachusetts 02210, filed a Schedule 13G with the SEC on February 14, 2014, reporting that it or certain of its affiliates beneficially owned in the aggregate 1,818,775 Common Units, that it had sole voting power over none of our Common Units, and that it had sole dispositive power with respect to 1,818,775 Common Units.
|
Name of Beneficial Owner (1)
|
|
Shares Held (2)
|
|
Shares Under Options (3)
|
|
Total Shares
|
|
Percent of Class
|
|||
Directors and Named Executive Officers
|
|
|
|
|
|
|
|
|
|||
Robert S. Beadle
|
|
1,920
|
|
|
7,500
|
|
|
9,420
|
|
|
*
|
Jay D. Browning
|
|
136,991
|
|
|
10,638
|
|
|
147,629
|
|
|
*
|
Timothy J. Fretthold
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
Joseph W. Gorder
|
|
223,205
|
|
|
137,248
|
|
|
360,453
|
|
|
*
|
William R. Klesse
|
|
1,351,093
|
|
|
1,098,460
|
|
|
2,449,553
|
|
|
*
|
Randall J. Larson
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
Richard F. Lashway
|
|
19,615
|
|
|
1,551
|
|
|
21,166
|
|
|
*
|
Donna M. Titzman
|
|
164,380
|
|
|
95,131
|
|
|
259,511
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|||
All directors and executive officers as a group (8 persons)
|
|
1,897,204
|
|
|
1,350,528
|
|
|
3,247,732
|
|
|
*
|
*
|
Less than 1 percent.
|
(1)
|
The address for all beneficial owners in this table is One Valero Way, San Antonio, Texas 78249.
|
(2)
|
Includes shares allocated under Valero’s thrift plan and shares of restricted stock.
|
(3)
|
Represents shares of Valero’s common stock that may be acquired under stock options. Stock options that may be exercised only in the event of a change of control of Valero Energy Corporation are excluded.
|
Plan category
|
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
|
|
Weighted average
exercise price of
outstanding options,
warrants and rights
|
|
Number of securities
remaining available for
future issuance under
equity compensation
plans
|
|
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
Valero Energy Partners LP 2013 Incentive Compensation Plan
|
|
(1)
|
|
n/a
|
|
3,000,000
|
|
(1)
|
On January 20, 2014, our general partner granted 1,736 restricted common units to each of Messrs. Beadle, Fretthold, and Larson.
|
•
|
11,539,989 common units;
|
•
|
28,789,989 subordinated units;
|
•
|
1,175,102 general partner units; and
|
•
|
all of our incentive distribution rights.
|
•
|
our payment of an annual administrative fee, initially in the amount of approximately $7.9 million, for the provision of certain services by Valero;
|
•
|
our obligation to reimburse Valero for certain direct or allocated costs and expenses incurred by Valero on our behalf;
|
•
|
our right of first offer through December 16, 2018, to acquire certain of Valero’s transportation and logistics assets;
|
•
|
Valero’s obligation to indemnify us for certain environmental and other liabilities, and our obligation to indemnify Valero for certain environmental and other liabilities related to our assets to the extent Valero is not required to indemnify us;
|
•
|
Valero’s right of first refusal to acquire certain of our assets;
|
•
|
the granting of a license from Valero to us with respect to use of certain Valero trademarks and tradenames; and
|
•
|
the prefunding of certain projects by Valero.
|
•
|
to the extent Valero is notified of such matters prior to December 16, 2018, and subject to a one-time aggregate deductible of $200,000:
|
◦
|
our failure to own any valid and indefeasible easement rights or fee ownership or leasehold interests in and to the lands on which any of the assets contributed to us in connection with the Offering are located;
|
◦
|
our failure to have any consents, licenses or permits necessary to cross any lands, waterways, railroads and other areas upon which any pipelines contributed to us in connection with the Offering are located, or necessary for the transfer of the assets conveyed to us in connection with the Offering;
|
◦
|
events and conditions (other than environmental conditions) associated with the ownership or operation of our assets prior to the closing of the Offering; and
|
◦
|
the failure to have any consent, license, permit or approval (other than environmental and right-of-way consents, licenses, permits or approvals addressed in the other indemnities described above) necessary for us to own or operate the assets contributed to us in connection with the Offering in substantially the same manner described in this report;
|
•
|
events and conditions associated with any assets retained by Valero;
|
•
|
the consummation of the transactions contemplated by the contribution agreement;
|
•
|
certain scheduled environmental matters;
|
•
|
any losses we may suffer by reason of our TransCanada connection not being in service by March 1, 2014 for any reason other than our gross negligence or willful misconduct, calculated by multiplying 45,000 (representing Valero’s initial minimum quarterly throughput commitment, expressed as barrels per day, for the TransCanada connection) times the number of days from and including March 1, 2014 until the connection is placed in service, and then multiplying that product times the per barrel throughput fee of $0.05; and
|
•
|
all tax liabilities attributable to the ownership or the operation of the assets contributed to us in connection with the Offering and arising prior to the closing of the Offering and any such tax liabilities that may result from the formation of our general partner and us from the consummation of the transactions contemplated by our contribution agreement.
|
Category
|
|
2013
(1)
|
||
Audit fees
|
|
$
|
400,000
|
|
Audit-related fees
|
|
—
|
|
|
Tax fees
|
|
—
|
|
|
All other fees
|
|
—
|
|
|
Total
|
|
$
|
400,000
|
|
(1)
|
The board of directors and/or the Audit Committee of the board of directors of our general partner approved all fees and services paid to KPMG LLP for 2013 services. None of the services provided by KPMG LLP were approved by the Audit Committee under the pre-approval waiver provisions of paragraph (c)(7)(i)(C) of Rule 2-01 of SEC Regulation S-K.
|
|
Page
|
Report of independent registered public accounting firm
|
|
Consolidated balance sheets as of December 31, 2013 and 2012
|
|
Consolidated statements of income for the years ended December 31, 2013, 2012, and 2011
|
|
Consolidated statements of equity for the years ended December 31, 2013, 2012, and 2011
|
|
Consolidated statements of cash flows for the years ended December 31, 2013, 2012, and 2011
|
|
Notes to consolidated financial statements
|
|
|
|
3.01
|
--
|
Certificate of Limited Partnership of Valero Energy Partners LP - incorporated by reference to Exhibit 3.1 to the Partnership’s Registration Statement on Form S-1 filed September 19, 2013 (SEC File No. 333-191259).
|
|
|
|
3.02
|
--
|
First Amended and Restated Agreement of Limited Partnership of Valero Energy Partners LP dated December 16, 2013 - incorporated by reference to Exhibit 3.1 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No.1-36232).
|
|
|
|
3.03
|
--
|
Certificate of Formation of Valero Energy Partners GP LLC - incorporated by reference to Exhibit 3.3 to the Partnership’s Registration Statement on Form S-1 filed September 19, 2013 (SEC File No. 333-191259).
|
|
|
|
3.04
|
--
|
First Amended and Restated Limited Liability Company Agreement of Valero Energy Partners LP dated December 16, 2013 - incorporated by reference to Exhibit 302 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
|
|
|
|
10.01
|
--
|
Omnibus Agreement dated December 16, 2013, by and among Valero Energy Corporation Valero Energy Partners LP, Valero Energy Partners GP LLC, Valero Partners Operating Co. LLC, Valero Marketing and Supply Company, Valero Partners EP, LLC, Valero Partners Lucas, LLC, Valero Partners Memphis, LLC, Valero Terminaling and Distribution Company, The Shamrock Pipe Line Corporation, Valero Plains Company LLC, The Premcor Refining Group Inc., and The Premcor Pipeline Co. - incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
|
|
|
|
10.02
|
--
|
Services and Secondment Agreement dated December 16, 2013 by and among Valero Services, Inc. Valero Refining Company-Tennessee, L.L.C. and Valero Energy Partners GP LLC - incorporated by reference to Exhibit 10.2 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
|
|
|
|
10.03
|
--
|
Tax Sharing Agreement dated December 16, 2013 by and between Valero Energy Partners LP and Valero Energy Corporation - incorporated by reference to Exhibit 10.3 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
|
|
|
|
10.04
|
--
|
Ground Lease Agreement dated December 16, 2013 by and between Valero Refining Company-Tennessee, L.L.C. and Valero Partners Memphis, LLC - incorporated by reference to Exhibit 10.4 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
|
|
|
|
+10.05
|
--
|
Valero Energy Partners LP 2013 Incentive Compensation Plan - incorporated by reference to Exhibit 10.5 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
|
|
|
|
10.06
|
--
|
Master Transportation Services Agreement dated December 16, 2013 by and between Valero Partners Operating Co. LLC and Valero Marketing and Supply Company - incorporated by reference to Exhibit 10.6 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
|
|
|
|
10.07
|
--
|
Master Terminal Services Agreement dated December 16, 2013 by and between Valero Partners Operating Co. LLC and Valero Marketing and Supply Company - incorporated by reference to Exhibit 10.7 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
|
|
|
|
10.08
|
--
|
Contribution, Conveyance and Assumption Agreement dated December 16, 2013 by and among Valero Energy Partners LP, Valero Energy Partners GP LLC, Valero Partners Operating Co. LLC, Valero Energy Corporation, Valero Terminaling and Distribution Company, The Premcor Pipeline Co., The Premcor Refining Group Inc. and Valero Refining Company-Tennessee, L.L.C. - incorporated by reference to Exhibit 10.8 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
|
|
|
|
*+10.09
|
--
|
Form of Restricted Unit Award Agreement (for independent directors) under the Valero Energy Partners LP 2013 Incentive Compensation Plan.
|
|
|
|
10.10
|
--
|
Credit Agreement, dated as of November 14, 2013, by and among Valero Energy Partners LP, the guarantors party thereto, the lenders party thereto, JPMorgan Chase Bank as Administrative Agent - incorporated by reference to Exhibit 10.1 to Amendment No. 2 to the Partnership’s Registration Statement on Form S-1 filed November 15, 2013 (SEC File No. 333-191259).
|
|
|
|
*14.01
|
--
|
Code of Ethics for Senior Financial Officers.
|
|
|
|
*21.01
|
--
|
List of Subsidiaries of Valero Energy Partners LP.
|
|
|
|
*23.01
|
--
|
Consent of KPMG LLP dated March 7, 2014.
|
|
|
|
*24.01
|
--
|
Power of Attorney dated March 7, 2014 (on the signature page of this Form 10-K).
|
|
|
|
*31.01
|
--
|
Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer.
|
|
|
|
*31.02
|
--
|
Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer.
|
|
|
|
**32.01
|
--
|
Section 1350 Certifications (under Section 906 of the Sarbanes-Oxley Act of 2002).
|
|
|
|
*99.01
|
--
|
Audit Committee Pre-Approval Policy.
|
|
|
|
***101
|
--
|
Interactive Data Files
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
***
|
Submitted electronically herewith.
|
+
|
Identifies management contracts or compensatory plans or arrangements required to be filed as an exhibit hereto.
|
VALERO ENERGY PARTNERS LP
|
|
|
(Registrant)
|
|
|
|
|
|
by:
|
Valero Energy Partners GP LLC
|
|
|
its general partner
|
|
|
|
|
|
|
|
by:
|
/s/ Joseph W. Gorder
|
|
|
Joseph W. Gorder
|
|
|
Chief Executive Officer
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Joseph W. Gorder
|
|
Chief Executive Officer and
Director
(Principal Executive Officer)
|
|
March 7, 2014
|
(Joseph W. Gorder)
|
|
|
||
|
|
|
|
|
/s/ Donna M. Titzman
|
|
Senior Vice President, Chief Financial Officer, Treasurer and Director
(Principal Financial and Accounting Officer)
|
|
March 7, 2014
|
(Donna M. Titzman)
|
|
|
||
|
|
|
|
|
/s/ William R. Klesse
|
|
Chairman of the Board
|
|
March 7, 2014
|
(William R. Klesse)
|
|
|
||
|
|
|
|
|
/s/ Richard F. Lashway
|
|
President, Chief Operating Officer and Director
|
|
March 7, 2014
|
(Richard F. Lashway)
|
|
|
||
|
|
|
|
|
/s/ Robert S. Beadle
|
|
Director
|
|
March 7, 2014
|
(Robert S. Beadle)
|
|
|
||
|
|
|
|
|
/s/ Timothy J. Fretthold
|
|
Director
|
|
March 7, 2014
|
(Timothy J. Fretthold)
|
|
|
||
|
|
|
|
|
/s/ Randall J. Larson
|
|
Director
|
|
March 7, 2014
|
(Randall J. Larson)
|
|
|
||
|
|
|
|
|
1.
|
Award
. The Participant is awarded [______] Restricted Units under the Plan. The Restricted Units are granted hereunder in tandem with an equal number of Distribution Equivalent Rights (“
DERs
”).
|
2.
|
Restricted Period
. The Restricted Units granted hereunder are subject to a Restricted Period. The Restricted Period shall end, and the Restricted Units will vest and accrue to the Participant, on January 20, 2017. The restrictions may terminate prior to the expiration of such period as set forth in the Plan. Upon the vesting of each Restricted Unit awarded under this Agreement, the Participant will be entitled to receive an unrestricted common Unit of Valero Energy Partners LP.
|
3.
|
DERs
. DERs with respect to the Restricted Units will be paid to the Participant in cash as of each record payment date during the period such Restricted Units are outstanding. The DERs are subject to the same restrictions as the Restricted Units.
|
4.
|
Code Section 409A
. The issuance of shares under this Award shall be made on or as soon as reasonably practical following the applicable date of vesting, but in any event no later than the 15th day of the third month following the end of the year in which the applicable date of vesting occurs. With respect to the receipt of DERs, the cash payment made in connection therewith shall be made by the last day of the fiscal quarter during which cash distributions are made by the Partnership, but in any event by no later than the 15th day of the month following the end of the year in which the applicable cash distributions are made by the Partnership. This Agreement and the award evidenced hereby are intended to comply, and shall be administered consistently, in all respects with Section 409A of the Code and the regulations promulgated thereunder. If necessary in order to ensure such compliance, this Agreement may be reformed consistent with guidance issued by the Internal Revenue Service.
|
5.
|
Assignment/Encumbrance
. Neither this Award nor any right under this Agreement may be assigned, alienated, pledged, attached, sold, or otherwise transferred or encumbered by the Participant otherwise than by will or by the laws of descent and distribution. This Agreement shall be binding upon the parties hereto and their respective heirs, legal representatives, and successors.
|
6.
|
The Plan
. By accepting this Award, the Participant hereby accepts and agrees to be bound by all of the terms, provisions, conditions, and limitations of the Plan, and any subsequent amendment or amendments, as if the same had been set forth in this Agreement.
|
7.
|
Governing Law
. This Agreement shall be governed by the laws of the State of Texas.
|
VALERO ENERGY PARTNERS GP LLC
|
|
Participant:
|
|
|
|
|
|
by:
|
|
|
|
name: Joseph W. Gorder
|
|
|
|
title: Chief Executive Officer
|
|
|
1.
|
Public Disclosure Responsibilities
. The Senior Financial Officers are responsible for full, fair, accurate, timely and understandable disclosure in the periodic reports filed by the Partnership with the Securities and Exchange Commission. Accordingly, each Senior Financial Officer is responsible for promptly bringing to the attention of the Partnership’s Financial Reporting and Disclosure Committee (the “Disclosure Committee”) any material information that he or she becomes aware of that affects the disclosures made in the Partnership’s public filings. In addition, each Senior Financial Officer shall otherwise assist the Disclosure Committee in fulfilling its responsibilities for accurate and timely financial reporting and disclosure.
|
2.
|
Reporting Deficiencies in Internal Control over Financial Reporting and Fraud
. Each Senior Financial Officer shall promptly furnish to the Disclosure Committee and to the Audit Committee of the Board (the “Audit Committee”) any information that he or she may have concerning (a) any significant deficiencies in the design or operation of internal control over financial reporting that could adversely affect the Partnership’s ability to record, process, summarize and report financial data, or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Partnership’s internal control over financial reporting.
|
3.
|
Reporting Obligations with respect to Management and Certain Key Employees
. Each Senior Financial Officer shall promptly furnish to the Company’s chief legal officer or chief executive officer, and to the Chair of the Audit Committee, any information he or she may have with respect to (i) any person in the Company’s management, or (ii) any person who has a significant role in the Partnership’s internal control over financial reporting concerning (a) any violation of the Master Code, or (b) any actual or apparent conflict of interest between personal and professional relationships.
|
4.
|
Reporting of Violations
. Each Senior Financial Officer shall promptly furnish to the Company’s chief legal officer or chief executive officer, and to the Chair of the Audit Committee, any information he or she may have concerning evidence of a material violation by the Partnership Group or by any employee or agent thereof, of (a) any securities laws or other laws, rules or regulations applicable to the Partnership Group or the operation of its business, or (b) the Master Code or this Code.
|
5.
|
Disciplinary Action
. (i) The Board shall determine, or designate appropriate persons to determine, appropriate actions to be taken to address any violation of this Code or the Master Code by any Senior Financial Officer. Such disciplinary actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code and the Master Code, and shall include, in the Board’s discretion: (a) written notices to the individual involved that the Board has determined that there has been a violation, (b) censure by the Board, (c) demotion or re-assignment of the individual involved, (d) suspension with or without pay or benefits (as determined by the Board), and/or (e) termination of the individual’s employment.
|
Name of Entity
|
|
State of Incorporation/Organization
|
|
|
|
VALERO MKS LOGISTICS, L.L.C.
|
|
Delaware
|
VALERO PARTNERS EP, LLC
|
|
Delaware
|
VALERO PARTNERS LUCAS, LLC
|
|
Delaware
|
VALERO PARTNERS MEMPHIS, LLC
|
|
Delaware
|
VALERO PARTNERS OPERATING CO. LLC
|
|
Delaware
|
VALERO PARTNERS PAPS, LLC
|
|
Delaware
|
VALERO PARTNERS WEST MEMPHIS, LLC
|
|
Delaware
|
|
|
|
Date: March 7, 2014
|
|
|
|
|
|
/s/ Joseph W. Gorder
|
|
|
|
|
Joseph W. Gorder
|
|
|
|
|
Chief Executive Officer, Valero Energy Partners GP LLC
|
|
||
|
(the general partner of Valero Energy Partners LP)
|
|
Date: March 7, 2014
|
|
|
|
|
|
/s/ Donna M. Titzman
|
|
|
|
|
Donna M. Titzman
|
|
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer, Valero Energy Partners GP LLC
|
|||
|
(the general partner of Valero Energy Partners 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 Company.
|
/s/ Joseph W. Gorder
|
|
|
|
Joseph W. Gorder
|
|
|
|
Chief Executive Officer
|
|
|
|
Valero Energy Partners GP LLC
|
|
|
|
(the general partner of Valero Energy Partners LP)
|
|
||
March 7, 2014
|
|
|
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 Company.
|
/s/ Donna M. Titzman
|
|
|
|
Donna M. Titzman
|
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|||
Valero Energy Partners GP LLC
|
|
|
|
(the general partner of Valero Energy Partners LP)
|
|
||
March 7, 2014
|
|
|
•
|
the Audit Committee may pre-approve each particular service on a case-by-case basis (“
separate pre-approval
”), and
|
•
|
the Audit Committee may adopt a pre-approval policy that is detailed as to the particular types of services that may be provided by the independent auditor without consideration by the Audit Committee on a case-by-case basis (“
policy-based pre-approval
”).
|
•
|
Audit Services
|
•
|
Audit-Related Services
|
•
|
Tax Services
|
•
|
All Other Services
|
•
|
the annual financial statement audit, including all audits, reviews, procedures and other services required to be performed by the independent auditor to form an opinion on the Company’s consolidated financial statements, and
|
•
|
the annual audit of the Company’s internal control over financial reporting (when required), including all services required to be performed by the independent auditor to issue its report on the effectiveness of the Company’s internal control over financial reporting.
|
•
|
services associated with SEC registration statements (
e.g.
, comfort letters, consents), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings,
|
•
|
statutory audits or financial audits for subsidiaries or affiliates of the Company.
|
•
|
employee benefit plan audits, if any, and
|
•
|
due diligence services related to proposed mergers and acquisitions.
|
Service
|
assistance with and review of documents filed with the SEC including registration statements, reports on Forms 10-K and 10-Q, and other documents
|
services associated with other documents issued in connection with securities offerings (
e.g.
, comfort letters, consents)
|
assistance in responding to SEC comment letters
|
statutory audits (
e.g.
, FERC and insurance audits) and financial audits for subsidiaries of the Company, to include services normally provided by the Company’s independent auditor in connection with statutory and regulatory filings
|
certificates, letters and opinions issued to regulators, agencies and other third-parties (
e.g.
, insurance, banking, environmental) regarding the Company’s assets and/or operations that only the Company’s independent auditors reasonably can provide
|
consultations concerning principles of accounting and/or financial reporting treatment under standards or interpretations by the SEC, PCAOB, FASB or other regulatory or standard-setting bodies necessary to reach an audit judgment and/or opinion on the Company’s financial statements
|
Annual pre-approval fee limit for Audit Services (other than services pertaining to registration statements or prospectuses in connection with securities offerings)
$400,000
|
Annual pre-approval fee limit for Audit Services pertaining to registration statements or prospectuses in connection with securities offerings
$250,000
per registration statement or prospectus
|
Service
|
due diligence services pertaining to potential business acquisitions or dispositions
|
financial statement audits of employee benefit plans
|
accounting consultations and audits in connection with acquisitions
|
consultations concerning principles of accounting and/or financial reporting treatment under standards or interpretations by the SEC, PCAOB, FASB or other regulatory or standard-setting bodies
outside
those consultations necessary to perform an audit or review of Valero’s financial statements in accordance with generally accepted auditing standards
|
|
Annual pre-approval fee limit for Audit-Related Services
$ 0
|
Service
Note
: The following are subject to the terms of subsection C. of Section V. of this policy.
|
U.S. federal, state and local tax compliance, including the preparation of original and amended tax returns and claims for refunds
|
U.S. federal, state and local tax planning and advice, including assistance with tax audits and appeals (but expressly excluding advocacy or litigation services), tax advice related to mergers and acquisitions, tax advice relating to employee benefit plans, and requests for rulings or technical advice from taxing authorities
|
review of federal, state, local and international income, franchise, and other tax returns
|
|
Annual pre-approval fee limit for Tax Services
$ 0
|
Services
|
none
|
|
Annual pre-approval fee limit for All Other Services
$ 0
|
•
|
Bookkeeping or other services related to the accounting records or financial statements of the audit client*
|
•
|
Financial information systems design and implementation*
|
•
|
Appraisal or valuation services, fairness opinions or contribution-in-kind reports*
|
•
|
Actuarial services*
|
•
|
Internal audit outsourcing services*
|
•
|
Management functions
|
•
|
Human resources
|
•
|
Broker-dealer, investment adviser or investment banking services
|
•
|
Legal services
|
•
|
Expert services unrelated to the audit
|
*
|
Provision of these non-audit services may be permitted if it is reasonable to conclude that the results of these services will not be subject to audit procedures. Materiality is not an appropriate basis upon which to overcome the rebuttable presumption that prohibited services will be subject to audit procedures.
|