þ
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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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San Antonio, Texas
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78249
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (210) 345-2000
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Large accelerated filer
þ
Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
o
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PAGE
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Item 11
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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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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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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. We lease an approximate 13 mile portion of this pipeline, which runs from the Mississippi
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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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St
.
James Crude Tank
. We own a 330,000 barrel crude oil storage tank in St. James, Louisiana located on land we lease from Marathon Pipe Line LLC. The tank can be used to aggregate crude oil volumes to batch deliveries through the Capline pipeline to our Collierville terminal.
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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. Both six-inch
pipelines are owned by MLGW and we have an agreement with MLGW under which we are the exclusive operator of both pipelines. Our agreement with MLGW automatically renews and MLGW does not have a right to terminate.
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•
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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. We lease the 14-inch pipeline from MLGW. The initial term of the lease, along with renewal periods available at our option, extend through 2046. The Shorthorn pipeline system has a total capacity of 120,000 barrels per day.
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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 storage tanks with
8,000
barrels of storage capacity. The truck rack has a capacity of 110,000 barrels per day.
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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 our Shorthorn pipeline system for deliveries to Exxon’s Memphis terminal.
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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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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, which 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 Enterprise’s Beaumont marine terminal. The terminal connects to TransCanada Cushing MarketLink pipeline via our TransCanada connection and to the Seaway crude oil pipeline via our Seaway connection. The Lucas terminal delivers crude oil to Valero’s Port Arthur Refinery through our Lucas pipeline.
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Seaway Connection
. Our Seaway connection has 750,000 barrels per day of capacity and connects our Lucas terminal to the Seaway crude oil pipeline.
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TransCanada Connection.
Our TransCanada connection has
400,000
barrels per day of capacity and connects our Lucas terminal to TransCanada’s Cushing MarketLink pipeline.
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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 Enterprise’s Beaumont marine terminal.
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Port Arthur Products Pipelines (PAPS
–
El Vista)
. 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 (PAPS) terminal.
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PAPS and El Vista Terminals
. Our PAPS terminal consists of nine tanks with 1,144,000 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 Colonial, which serves as the operator of our PAPS terminal. 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. We own all of the El Vista terminal assets.
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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)
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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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Ardmore logistics system
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Hewitt segment of Red River crude oil pipeline
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16
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138
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60
(a)
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crude oil
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Ardmore
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Plains Red River, Plains Cushing
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Wynnewood refined products pipeline
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12
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30
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90
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refined petroleum products
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Ardmore
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Magellan Central
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McKee logistics system
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McKee crude system
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multiple segments
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145
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72
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crude oil
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McKee
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—
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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
(b)
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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
(c)
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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
(d)
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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; Diamond
(e)
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Memphis products system
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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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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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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; Enterprise Beaumont; Cameron Highway; TransCanada Cushing MarketLink; Seaway
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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 Nederland
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Port Arthur products system
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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, Enterprise Beaumont
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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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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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St.
Charles logistics system
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Parkway pipeline
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16
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140
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110
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refined petroleum products
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St.
Charles
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Plantation; Colonial
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Three Rivers logistics system
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Three Rivers crude system
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12
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3
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110
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crude oil
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Three Rivers
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Harvest Arrowhead; Plains Gardendale; EOG Eagle Ford West
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(a)
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Capacity shown represents our 40 percent undivided interest in the pipeline segment. Total capacity for the pipeline segment is 150,000 barrels per day.
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(b)
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Capacity shown represents our 33⅓ percent undivided interest in the pipeline. Total capacity for the pipeline is 63,000 barrels per day.
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(c)
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Capacity shown represents our 33⅓ percent undivided interest in the pipeline connection. Total capacity for the pipeline connection is 98,400 barrels per day.
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(d)
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Portions of our Memphis logistics system pipelines are owned by MLGW, but they are operated and maintained exclusively by us under long-term arrangements with MLGW.
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(e)
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The Diamond pipeline is owned 50 percent by Valero and 50 percent by Plains All American Pipeline, L.P.
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Terminal
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Tank Storage
Capacity
(thousands of
barrels)
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Throughput
Capacity
(thousand
barrels
per day)
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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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Ardmore logistics system
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Hewitt Station tanks
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300
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—
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crude oil
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Ardmore
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Plains Red River
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Wynnewood terminal
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180
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—
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refined petroleum products
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Ardmore
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Magellan Central
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Corpus Christi logistics system
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Corpus Christi East terminal
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6,241
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—
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crude oil and refined petroleum products
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Corpus Christi East
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Eagle Ford Pipeline LLC; NuStar North Beach terminal, Eagle Ford pipelines & South Texas pipeline network
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Corpus Christi West terminal
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3,835
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—
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crude oil and refined petroleum products
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Corpus Christi West
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(same as Corpus Christi East terminal)
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Houston logistics system
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Houston terminal
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3,642
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—
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crude oil and refined petroleum products
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Houston
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HFOTCO; Magellan crude; Seaway; Kinder Morgan Pasadena & Galena Park; Magellan East Houston & Galena Park
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McKee logistics system
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McKee crude system
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Various terminals
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240
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—
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crude oil
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McKee
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—
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McKee products system
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El Paso terminal
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166
(a)
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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
(b)
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refined petroleum products
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McKee
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—
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McKee terminal
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4,400
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—
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crude oil and refined petroleum products
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McKee
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NuStar (several); NuStar/Phillips Denver
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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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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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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 dock
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—
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4
(c)
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refined petroleum products
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Memphis
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—
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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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Meraux logistics system
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Meraux terminal
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3,900
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—
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crude oil and refined petroleum products
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Meraux
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LOOP; CAM; Plantation; Colonial
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____________________________
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See footnotes on page 11.
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Terminal
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Tank Storage
Capacity
(thousands of
barrels)
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Throughput
Capacity
(thousand
barrels
per day)
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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; Enterprise Beaumont; Cameron Highway; TransCanada Cushing MarketLink; Seaway
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Seaway connection
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—
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750
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crude oil
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Port Arthur
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Seaway
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TransCanada connection
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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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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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PAPS terminal
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1,144
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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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Port Arthur terminal
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8,500
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—
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crude oil and refined petroleum products
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Port Arthur
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Sunoco Logistics Nederland; Explorer; Colonial; Sunoco Logistics MagTex; Cameron Highway; TransCanada Cushing MarketLink; Enterprise Beaumont
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St.
Charles logistics system
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St. Charles terminal
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10,004
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—
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crude oil and refined petroleum products
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St. Charles
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LOOP; CAM; Plantation; Colonial
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Three Rivers logistics system
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Three Rivers terminal
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2,250
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—
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crude oil and refined petroleum products
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Three Rivers
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NuStar South Texas; Harvest Arrowhead; Plains Gardendale; EOG Eagle Ford West
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(a)
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Capacity shown represents our 33⅓ percent undivided interest in the terminal. Total storage capacity is 499,000 barrels.
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(b)
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Capacity shown represents our 33⅓ percent undivided interest in the truck rack. Total capacity is 30,000 barrels per day.
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(c)
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Dock throughput is reflected in thousands of barrels per hour.
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disruption of Valero’s ability to obtain crude oil;
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•
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interruptions at Valero’s refineries and other facilities;
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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;
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•
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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;
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•
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the ability to obtain credit and financing on acceptable terms, which could also adversely affect the financial strength of business partners;
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•
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the costs to comply with environmental laws and regulations;
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•
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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;
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•
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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;
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•
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interruptions of supply and increased costs as a result of Valero’s reliance on third-party transportation of crude oil and refined petroleum products;
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potential losses from Valero’s derivative transactions; and
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•
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the effects of changing commodity and refined product prices.
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•
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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;
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•
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the amount and timing of capital expenditures and acquisitions we make;
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•
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our debt service requirements and other liabilities, and restrictions contained in our revolving credit facility and other debt agreements;
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•
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fluctuations in our working capital needs; and
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•
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the amount of cash reserves established by our general partner.
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•
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we are able to identify attractive acquisition candidates;
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we are able to negotiate acceptable purchase agreements;
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we are able to obtain financing for these acquisitions on economically acceptable terms; and
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•
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we are outbid by competitors.
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•
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damages to facilities, equipment, and surrounding properties caused by third parties, severe weather, natural disasters, and acts of terrorism;
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•
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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;
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•
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damages to and loss of availability of interconnecting third-party pipelines, terminals, and other means of delivering crude oil, feedstocks, and refined petroleum products;
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•
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disruption or failure of information technology systems and network infrastructure due to various causes, including unauthorized access or attack;
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•
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curtailments of operations due to severe seasonal weather; and
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•
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riots, work stoppages, slowdowns or strikes, as well as other industrial disturbances.
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•
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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;
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•
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Valero 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;
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•
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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;
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•
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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;
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•
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our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limiting 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;
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•
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except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval;
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•
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disputes may arise under our commercial agreements with Valero;
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•
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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;
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•
|
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;
|
•
|
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 incentive distributions;
|
•
|
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 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, 2018
, Valero owned
67.5
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 or the elimination of our 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. Any such action 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 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
|
|
Record
Date
|
|
Distribution
Date
|
||||||
2017:
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31
|
|
$
|
45.06
|
|
|
$
|
39.52
|
|
|
$
|
0.5075
|
|
|
February 5, 2018
|
|
February 13, 2018
|
September 30
|
|
47.50
|
|
|
40.00
|
|
|
0.4800
|
|
|
November 1, 2017
|
|
November 9, 2017
|
|||
June 30
|
|
48.90
|
|
|
41.15
|
|
|
0.4550
|
|
|
August 1, 2017
|
|
August 10, 2017
|
|||
March 31
|
|
51.00
|
|
|
44.21
|
|
|
0.4275
|
|
|
May 2, 2017
|
|
May 11, 2017
|
|||
2016:
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31
|
|
44.86
|
|
|
38.90
|
|
|
0.4065
|
|
|
February 2, 2017
|
|
February 10, 2017
|
|||
September 30
|
|
47.33
|
|
|
40.14
|
|
|
0.3850
|
|
|
November 3, 2016
|
|
November 10, 2016
|
|||
June 30
|
|
49.55
|
|
|
42.31
|
|
|
0.3650
|
|
|
August 1, 2016
|
|
August 9, 2016
|
|||
March 31
|
|
52.20
|
|
|
39.02
|
|
|
0.3400
|
|
|
May 2, 2016
|
|
May 10, 2016
|
•
|
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
|
•
|
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.
|
|
|
Total Quarterly
Distribution per Unit
Target Amount
|
|
Marginal Percentage
Interest in Distributions
|
||
|
|
|
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%
|
•
|
the suspension, reduction, or termination of Valero’s obligation under our commercial agreements and our services and secondment agreement;
|
•
|
changes in global economic conditions 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 and our ability to remain in compliance with the terms of its and our outstanding indebtedness;
|
•
|
the timing and extent of changes in commodity prices and demand for Valero’s refined petroleum products;
|
•
|
our ability to obtain credit and financing on acceptable terms in light of uncertainty and illiquidity in credit and capital markets;
|
•
|
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 petroleum 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 petroleum 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 petroleum 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,
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||
Operating revenues – related party
|
|
$
|
452,005
|
|
|
$
|
362,619
|
|
|
$
|
89,386
|
|
Costs and expenses:
|
|
|
|
|
|
|
||||||
Cost of revenues (excluding depreciation expense reflected below)
|
|
108,374
|
|
|
96,115
|
|
|
12,259
|
|
|||
Depreciation expense
|
|
52,475
|
|
|
45,965
|
|
|
6,510
|
|
|||
Other operating expenses
|
|
577
|
|
|
—
|
|
|
577
|
|
|||
General and administrative expenses
|
|
15,549
|
|
|
15,965
|
|
|
(416
|
)
|
|||
Total costs and expenses
|
|
176,975
|
|
|
158,045
|
|
|
18,930
|
|
|||
Operating income
|
|
275,030
|
|
|
204,574
|
|
|
70,456
|
|
|||
Other income, net
|
|
753
|
|
|
284
|
|
|
469
|
|
|||
Interest and debt expense, net of capitalized interest
|
|
(36,015
|
)
|
|
(14,915
|
)
|
|
(21,100
|
)
|
|||
Income before income tax expense
|
|
239,768
|
|
|
189,943
|
|
|
49,825
|
|
|||
Income tax expense
|
|
1,335
|
|
|
1,112
|
|
|
223
|
|
|||
Net income
|
|
238,433
|
|
|
188,831
|
|
|
49,602
|
|
|||
Less: Net loss attributable to Predecessor
|
|
—
|
|
|
(15,422
|
)
|
|
15,422
|
|
|||
Net income attributable to partners
|
|
238,433
|
|
|
204,253
|
|
|
34,180
|
|
|||
Less: General partner’s interest in net income
|
|
49,113
|
|
|
23,553
|
|
|
25,560
|
|
|||
Limited partners’ interest in net income
|
|
$
|
189,320
|
|
|
$
|
180,700
|
|
|
$
|
8,620
|
|
|
|
|
|
|
|
|
||||||
Net income per limited partner unit – basic and diluted:
|
|
|
|
|
||||||||
Common units
|
|
$
|
2.77
|
|
|
$
|
2.85
|
|
|
|
||
Subordinated units
|
|
$
|
—
|
|
|
$
|
2.38
|
|
|
|
||
|
|
|
|
|
|
|
||||||
Weighted average limited partner units outstanding – basic and diluted:
|
|
|
|
|
||||||||
Common units
|
|
68,220
|
|
|
48,817
|
|
|
|
||||
Subordinated units
|
|
—
|
|
|
17,463
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||
Operating highlights:
|
|
|
|
|
|
|
||||||
Pipeline transportation:
|
|
|
|
|
|
|
||||||
Pipeline transportation revenues
|
|
$
|
100,631
|
|
|
$
|
78,451
|
|
|
$
|
22,180
|
|
Pipeline transportation throughput (BPD)
(a)
|
|
964,198
|
|
|
829,269
|
|
|
134,929
|
|
|||
Average pipeline transportation revenue per barrel
(b)
|
|
$
|
0.29
|
|
|
$
|
0.26
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
||||||
Terminaling:
|
|
|
|
|
|
|
||||||
Terminaling revenues
|
|
$
|
347,996
|
|
|
$
|
283,628
|
|
|
$
|
64,368
|
|
Terminaling throughput (BPD)
|
|
2,889,361
|
|
|
2,265,150
|
|
|
624,211
|
|
|||
Average terminaling revenue per barrel
(b)
|
|
$
|
0.33
|
|
|
$
|
0.34
|
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
||||||
Storage and other revenues
|
|
$
|
3,378
|
|
|
$
|
540
|
|
|
$
|
2,838
|
|
|
|
|
|
|
|
|
||||||
Total operating revenues – related party
|
|
$
|
452,005
|
|
|
$
|
362,619
|
|
|
$
|
89,386
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures:
|
|
|
|
|
|
|
||||||
Maintenance
|
|
$
|
8,954
|
|
|
$
|
13,027
|
|
|
$
|
(4,073
|
)
|
Expansion
|
|
29,562
|
|
|
10,129
|
|
|
19,433
|
|
|||
Total capital expenditures
|
|
38,516
|
|
|
23,156
|
|
|
15,360
|
|
|||
Less: Capital expenditures attributable to Predecessor
|
|
—
|
|
|
3,394
|
|
|
(3,394
|
)
|
|||
Capital expenditures attributable to Partnership
|
|
$
|
38,516
|
|
|
$
|
19,762
|
|
|
$
|
18,754
|
|
|
|
|
|
|
|
|
||||||
Other financial information:
|
|
|
|
|
|
|
||||||
Distribution declared per unit
|
|
$
|
1.8700
|
|
|
$
|
1.4965
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Distribution declared:
|
|
|
|
|
|
|
||||||
Limited partner units – public
|
|
$
|
42,051
|
|
|
$
|
32,382
|
|
|
|
||
Limited partner units – Valero
|
|
86,503
|
|
|
67,560
|
|
|
|
||||
General partner units – Valero
|
|
47,897
|
|
|
21,648
|
|
|
|
||||
Total distribution declared
|
|
$
|
176,451
|
|
|
$
|
121,590
|
|
|
|
(a)
|
Represents the sum of volumes transported through each separately tariffed pipeline segment divided by the number of days in the period.
|
(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 (BPD) by the number of days in the period.
|
•
|
Incremental throughput from acquired businesses and assets.
We generated incremental terminaling revenues of $56.2 million in 2017 from our McKee, Meraux, Three Rivers, and Port Arthur terminals. The McKee terminal was acquired in April 2016, the Meraux and Three Rivers terminals were acquired in September 2016, and the Port Arthur terminal was acquired in November 2017. In addition, we generated incremental pipeline revenues of $14.6 million in 2017 from our Red River crude system and our Parkway pipeline, which were acquired in January 2017 and November 2017, respectively.
|
•
|
Higher throughput volumes.
We experienced an 8 percent and 10 percent increase in volumes handled at our other terminals and pipeline systems, respectively, in 2017 compared to 2016. The increase in volumes had a favorable impact to our operating revenues of $15.8 million.
|
•
|
Operating revenues from our DGD rail loading facility.
Our DGD rail loading facility, which was placed in service in May 2017, generated operating revenues of $2.8 million in 2017.
|
•
|
Incremental interest expense incurred on the Senior Notes.
In December 2016, we issued $500.0 million of 4.375 percent senior notes due December 2026 (Senior Notes). We used the proceeds of the Senior Notes to repay $494.0 million of outstanding borrowings under our revolving credit facility. The interest rate on the Senior Notes is higher than our revolving credit facility, thereby increasing the effective interest rate in 2017. Incremental interest expense resulting from the Senior Notes was approximately $8.9 million in 2017.
|
•
|
Incremental borrowings in connection with acquisitions.
In connection with the acquisition of the McKee, Meraux, Three Rivers, and Port Arthur terminals and the Parkway pipeline, we borrowed $729.0 million under our revolving credit facility. Interest expense on the incremental borrowings was approximately $6.1 million in 2017.
|
•
|
Higher interest rates in 2017.
Borrowings on our revolving credit facility and subordinated credit agreements with Valero bear interest at variable rates. We incurred additional interest of $5.1 million in 2017 on these borrowings due to higher interest rates in 2017 compared to 2016.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
Change
|
||||||
Operating highlights:
|
|
|
|
|
|
|
||||||
Pipeline transportation:
|
|
|
|
|
|
|
||||||
Pipeline transportation revenues
|
|
$
|
78,451
|
|
|
$
|
81,435
|
|
|
$
|
(2,984
|
)
|
Pipeline transportation throughput (BPD)
(a)
|
|
829,269
|
|
|
949,884
|
|
|
(120,615
|
)
|
|||
Average pipeline transportation revenue per barrel
(b)
|
|
$
|
0.26
|
|
|
$
|
0.23
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
||||||
Terminaling:
|
|
|
|
|
|
|
||||||
Terminaling revenues
|
|
$
|
283,628
|
|
|
$
|
161,649
|
|
|
$
|
121,979
|
|
Terminaling throughput (BPD)
|
|
2,265,150
|
|
|
1,340,407
|
|
|
924,743
|
|
|||
Average terminaling revenue per barrel
(b)
|
|
$
|
0.34
|
|
|
$
|
0.33
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
||||||
Storage and other revenues
|
|
$
|
540
|
|
|
$
|
540
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
||||||
Total operating revenues – related party
|
|
$
|
362,619
|
|
|
$
|
243,624
|
|
|
$
|
118,995
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures:
|
|
|
|
|
|
|
||||||
Maintenance
|
|
$
|
13,027
|
|
|
$
|
10,828
|
|
|
$
|
2,199
|
|
Expansion
|
|
10,129
|
|
|
27,281
|
|
|
(17,152
|
)
|
|||
Total capital expenditures
|
|
23,156
|
|
|
38,109
|
|
|
(14,953
|
)
|
|||
Less: Capital expenditures attributable to Predecessor
|
|
3,394
|
|
|
29,632
|
|
|
(26,238
|
)
|
|||
Capital expenditures attributable to Partnership
|
|
$
|
19,762
|
|
|
$
|
8,477
|
|
|
$
|
11,285
|
|
|
|
|
|
|
|
|
||||||
Other financial information:
|
|
|
|
|
|
|
||||||
Distribution declared per unit
|
|
$
|
1.4965
|
|
|
$
|
1.1975
|
|
|
|
||
|
|
|
|
|
|
|
||||||
Distribution declared:
|
|
|
|
|
|
|
||||||
Limited partner units – public
|
|
$
|
32,382
|
|
|
$
|
22,028
|
|
|
|
||
Limited partner units – Valero
|
|
67,560
|
|
|
51,566
|
|
|
|
||||
General partner units – Valero
|
|
21,648
|
|
|
5,003
|
|
|
|
||||
Total distribution declared
|
|
$
|
121,590
|
|
|
$
|
78,597
|
|
|
|
(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.
|
•
|
Incremental terminaling throughput from businesses acquired from Valero.
We experienced a 111 percent increase in terminaling revenues in 2016 compared to 2015 as a result of revenues generated from the operations of the McKee, Meraux, and Three Rivers terminals, which were acquired from Valero in 2016. The incremental throughput volumes at these terminals had a favorable impact to our operating revenues of $124.1 million in 2016.
|
•
|
Lower operating revenues at systems owned or acquired prior to 2015.
We estimate that a decrease in throughput volumes at our other pipelines and terminals had an unfavorable impact to our operating revenues of approximately $5.1 million. The decrease is due primarily to a decrease of 25 percent in pipeline transportation throughput volumes and 21 percent in terminaling throughput volumes at our Port Arthur logistics system in 2016 compared to 2015. The decrease in volumes was primarily a result of planned turnaround activity at Valero’s Port Arthur refinery in September and October 2016, during which time the refinery was largely shut down. In addition, we experienced a decrease of 26 percent in pipeline transportation throughput volumes at our McKee crude system in 2016 compared to 2015 due to decreased crude oil production in the region. Average pipeline transportation revenue per barrel was higher in 2016 compared to 2015 due primarily to the recognition of $2.2 million of deferred revenue associated with unused minimum volume credits by Valero.
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows provided by (used in):
|
|
|
|
|
|
||||||||
Operating activities
|
|
$
|
288,931
|
|
|
$
|
229,894
|
|
|
$
|
108,376
|
|
|
Investing activities
|
|
(517,851
|
)
|
|
(126,732
|
)
|
|
(428,171
|
)
|
||||
Financing activities
|
|
199,481
|
|
|
(112,454
|
)
|
|
163,999
|
|
||||
Net decrease in cash and cash equivalents
|
$
|
(29,439
|
)
|
|
$
|
(9,292
|
)
|
|
$
|
(155,796
|
)
|
•
|
an increase in receivables – related party of
$9.6 million
attributable primarily to billings related to our Red River crude system, Parkway pipeline, and the Port Arthur terminal, which were acquired in 2017; and
|
•
|
a decrease in accounts payable – related party of
$3.4 million
due primarily to the timing of invoices from Valero for services provided to our general partner under our amended and restated services and secondment agreement; partially offset by
|
•
|
an increase in accounts payable of
$7.4 million
attributable primarily to payables related to our Parkway pipeline, which was acquired in 2017; and
|
•
|
an increase in accrued interest payable of
$1.3 million
due primarily to interest expense incurred on the $380.0 million borrowed under the Revolver in connection with the acquisitions of the Parkway pipeline and the Port Arthur terminal.
|
•
|
fund $462.5 million in acquisitions from Valero consisting of the Parkway pipeline and the Port Arthur terminal;
|
•
|
pay
$161.3 million
in cash distributions to limited partners and our general partner;
|
•
|
fund the
$71.8 million
acquisition of the Red River crude system; and
|
•
|
fund
$38.5 million
in capital expenditures.
|
•
|
an increase in receivables – related party of
$10.8 million
attributable primarily to billings related to our newly acquired McKee, Meraux, and Three Rivers terminals; partially offset by
|
•
|
an increase in deferred revenue – related party of
$3.4 million
due to deficiency payments associated with minimum volume commitments.
|
•
|
fund $480.0 million in acquisitions from Valero consisting of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business;
|
•
|
make debt repayments of
$494.9 million
, of which $494.0 million related to the Revolver;
|
•
|
pay
$109.4 million
in cash distributions to limited partners and our general partner;
|
•
|
fund
$23.2 million
in capital expenditures; and
|
•
|
pay
$5.3 million
in debt issuance and offering costs.
|
•
|
an increase in receivables – related party of
$15.6 million
due primarily to activity related to our newly acquired Houston, St. Charles, and Corpus Christi terminals; partially offset by
|
•
|
an increase in accounts payable – related party of
$6.0 million
, also attributable primarily to activity related to our newly acquired terminals.
|
•
|
fund $966.2 million in acquisitions from Valero consisting of the Houston and St. Charles Terminal Services Business and the Corpus Christi Terminal Services Business;
|
•
|
make debt repayments of
$211.2 million
, of which
$185.0 million
related to the Loan Agreements and $25.0 million related to the Revolver;
|
•
|
pay
$71.7 million
in cash distributions to limited partners and our general partner;
|
•
|
fund
$38.1 million
in capital expenditures; and
|
•
|
pay
$3.0 million
in debt issuance and offering costs.
|
•
|
the construction of a new tank and improvement of assets at our Port Arthur products system;
|
•
|
the construction of the DGD rail loading facility and new tank at the St. Charles terminal; and
|
•
|
the expansion and improvement of assets at our Corpus Christi and Meraux terminals.
|
•
|
the construction of a connection to receive crude oil from the Seaway pipeline into our Lucas crude system;
|
•
|
the improvement of assets at our Meraux, Three Rivers, St. Charles, and Houston terminals to extend the useful lives of the tanks; and
|
•
|
the expansion of assets at our Port Arthur products system and St. Charles terminal.
|
•
|
the expansion and improvement of assets at our Corpus Christi, Meraux, and Three Rivers terminals;
|
•
|
the construction of a connection to receive crude oil from the Seaway pipeline into our Lucas crude system; and
|
•
|
the improvement of assets at our St. Charles terminal that will extend the useful lives of the tanks.
|
|
|
Payments Due by Period
|
|
|
||||||||||||||||||||||||
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Debt and notes payable – related party (a)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
780,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500,000
|
|
|
$
|
1,280,000
|
|
Operating lease obligations
|
|
14,097
|
|
|
14,289
|
|
|
14,258
|
|
|
14,215
|
|
|
14,214
|
|
|
301,606
|
|
|
372,679
|
|
|||||||
Purchase obligations
|
|
65,780
|
|
|
65,780
|
|
|
65,780
|
|
|
65,780
|
|
|
65,780
|
|
|
555,639
|
|
|
884,539
|
|
|||||||
Other long-term liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,203
|
|
|
1,203
|
|
|||||||
Total
|
|
$
|
79,877
|
|
|
$
|
80,069
|
|
|
$
|
860,038
|
|
|
$
|
79,995
|
|
|
$
|
79,994
|
|
|
$
|
1,358,448
|
|
|
$
|
2,538,421
|
|
(a)
|
Excludes amounts related to unamortized discount and debt issuance costs. These items are further described in
Note 5
of Notes to Consolidated Financial Statements.
|
Rating Agency
|
|
Rating
|
Moody’s Investors Service
|
|
Baa3 (stable outlook)
|
Standard & Poor’s Ratings Services
|
|
BBB- (stable outlook)
|
Fitch Ratings
|
|
BBB- (stable outlook)
|
|
|
|
December 31, 2017
|
||||||||||||||||||||||||||||||
|
|
|
Expected Maturity Dates
|
|
|
|
|
||||||||||||||||||||||||||
|
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
There-
after |
|
Total (a)
|
|
Fair
Value |
||||||||||||||||
Fixed rate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500,000
|
|
|
$
|
500,000
|
|
|
$
|
523,800
|
|
|
Average interest rate
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
4.38
|
%
|
|
4.38
|
%
|
|
|
||||||||||
Variable rate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
780,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
780,000
|
|
|
$
|
780,000
|
|
|
Average interest rate
|
|
—
|
%
|
|
—
|
%
|
|
2.87
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2.87
|
%
|
|
|
|
|
|
December 31, 2016
|
||||||||||||||||||||||||||||||
|
|
|
Expected Maturity Dates
|
|
|
|
|
||||||||||||||||||||||||||
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
There-
after |
|
Total (a)
|
|
Fair
Value |
||||||||||||||||
Fixed rate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500,000
|
|
|
$
|
500,000
|
|
|
$
|
506,670
|
|
|
Average interest rate
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
4.38
|
%
|
|
4.38
|
%
|
|
|
||||||||||
Variable rate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
400,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
|
Average interest rate
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2.27
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2.27
|
%
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(a) Excludes unamortized discount and deferred issuance costs.
|
|
|
|
December 31,
|
||||||
|
|
|
2017
|
|
2016
|
||||
ASSETS
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
$
|
42,052
|
|
|
$
|
71,491
|
|
|
Receivables – related party
|
|
46,496
|
|
|
36,889
|
|
|||
Receivables
|
|
781
|
|
|
1,682
|
|
|||
Prepaid expenses and other
|
|
720
|
|
|
997
|
|
|||
Total current assets
|
|
90,049
|
|
|
111,059
|
|
|||
Property and equipment, at cost
|
|
1,969,233
|
|
|
1,216,288
|
|
|||
Accumulated depreciation
|
|
(552,817
|
)
|
|
(351,208
|
)
|
|||
Property and equipment, net
|
|
1,416,416
|
|
|
865,080
|
|
|||
Deferred charges and other assets, net
|
|
10,887
|
|
|
3,118
|
|
|||
Total assets
|
|
$
|
1,517,352
|
|
|
$
|
979,257
|
|
|
LIABILITIES AND PARTNERS’ CAPITAL
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|||||
Accounts payable
|
|
$
|
18,633
|
|
|
$
|
10,652
|
|
|
Accounts payable – related party
|
|
3,944
|
|
|
7,348
|
|
|||
Accrued liabilities
|
|
1,007
|
|
|
870
|
|
|||
Accrued liabilities – related party
|
|
202
|
|
|
192
|
|
|||
Accrued interest payable
|
|
2,558
|
|
|
1,280
|
|
|||
Accrued interest payable – related party
|
|
911
|
|
|
47
|
|
|||
Taxes other than income taxes payable
|
|
5,141
|
|
|
2,457
|
|
|||
Deferred revenue – related party
|
|
926
|
|
|
3,525
|
|
|||
Total current liabilities
|
|
33,322
|
|
|
26,371
|
|
|||
Debt
|
|
905,283
|
|
|
525,355
|
|
|||
Notes payable – related party
|
|
370,000
|
|
|
370,000
|
|
|||
Other long-term liabilities
|
|
2,950
|
|
|
1,707
|
|
|||
Commitments and contingencies
|
|
|
|
|
|
|
|||
Partners’ capital:
|
|
|
|
|
|||||
Common unitholders – public
(22,487,586 and 21,738,692 units outstanding)
|
|
596,047
|
|
|
548,619
|
|
|||
Common unitholder – Valero
(46,768,586 and 45,687,271 units outstanding)
|
|
(382,652
|
)
|
|
(482,197
|
)
|
|||
General partner – Valero
(1,413,391 and 1,375,721 units outstanding)
|
|
(7,598
|
)
|
|
(10,598
|
)
|
|||
Total partners’ capital
|
|
205,797
|
|
|
55,824
|
|
|||
Total liabilities and partners’ capital
|
|
$
|
1,517,352
|
|
|
$
|
979,257
|
|
|
|
Partnership
|
|
|
|
|
||||||||||||||||||
|
|
Common
Unitholders
Public
|
|
Common
Unitholder Valero |
|
Subordinated
Unitholder
Valero |
|
General
Partner
Valero
|
|
Net
Investment
|
|
Total
|
||||||||||||
Balance as of December 31, 2014
|
$
|
374,954
|
|
|
$
|
58,844
|
|
|
$
|
146,804
|
|
|
$
|
4,617
|
|
|
$
|
484,375
|
|
|
$
|
1,069,594
|
|
|
Net income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Attributable to Predecessor
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(60,566
|
)
|
|
(60,566
|
)
|
|||||||
Attributable to partners
|
37,183
|
|
|
28,548
|
|
|
60,078
|
|
|
6,069
|
|
|
—
|
|
|
131,878
|
|
|||||||
Net transfers from Valero Energy Corporation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70,334
|
|
|
70,334
|
|
|||||||
Allocation of Valero Energy Corporation’s net investment in acquisitions
|
—
|
|
|
111,433
|
|
|
267,700
|
|
|
11,011
|
|
|
(390,144
|
)
|
|
—
|
|
|||||||
Acquisitions of businesses from Valero Energy Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash paid for carrying value of acquired businesses
|
—
|
|
|
(111,433
|
)
|
|
(267,700
|
)
|
|
(11,011
|
)
|
|
—
|
|
|
(390,144
|
)
|
|||||||
Cash paid in excess of carrying value of acquired businesses
|
—
|
|
|
(52,506
|
)
|
|
(505,985
|
)
|
|
(17,585
|
)
|
|
—
|
|
|
(576,076
|
)
|
|||||||
Unit issuance
|
188,915
|
|
|
—
|
|
|
—
|
|
|
4,011
|
|
|
—
|
|
|
192,926
|
|
|||||||
Noncash contributions from Valero Energy Corporation
|
—
|
|
|
8,898
|
|
|
18,063
|
|
|
787
|
|
|
—
|
|
|
27,748
|
|
|||||||
Cash distributions to unitholders and distribution equivalent right payments
|
(19,736
|
)
|
|
(15,354
|
)
|
|
(32,921
|
)
|
|
(3,704
|
)
|
|
—
|
|
|
(71,715
|
)
|
|||||||
Unit-based compensation
|
173
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
173
|
|
|||||||
Balance as of December 31, 2015
|
581,489
|
|
|
28,430
|
|
|
(313,961
|
)
|
|
(5,805
|
)
|
|
103,999
|
|
|
394,152
|
|
|||||||
Net income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Attributable to Predecessor
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,422
|
)
|
|
(15,422
|
)
|
|||||||
Attributable to partners
|
58,688
|
|
|
76,690
|
|
|
45,322
|
|
|
23,553
|
|
|
—
|
|
|
204,253
|
|
|||||||
Net transfers from Valero Energy Corporation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,030
|
|
|
15,030
|
|
|||||||
Allocation of Valero Energy Corporation’s net investment in acquisitions
|
—
|
|
|
67,800
|
|
|
32,758
|
|
|
3,049
|
|
|
(103,607
|
)
|
|
—
|
|
|||||||
Acquisitions of businesses from Valero Energy Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash paid for carrying value of acquired businesses
|
—
|
|
|
(67,800
|
)
|
|
(32,758
|
)
|
|
(3,049
|
)
|
|
—
|
|
|
(103,607
|
)
|
|||||||
Cash paid in excess of carrying value of acquired businesses
|
—
|
|
|
(246,759
|
)
|
|
(120,309
|
)
|
|
(9,325
|
)
|
|
—
|
|
|
(376,393
|
)
|
|||||||
Conversion of subordinated units
|
—
|
|
|
(406,374
|
)
|
|
406,374
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Unit issuance
|
11,091
|
|
|
—
|
|
|
—
|
|
|
198
|
|
|
—
|
|
|
11,289
|
|
|||||||
Transfers to (from) partners
|
(72,452
|
)
|
|
76,584
|
|
|
—
|
|
|
(4,132
|
)
|
|
—
|
|
|
—
|
|
|||||||
Noncash contributions from Valero Energy Corporation
|
—
|
|
|
22,730
|
|
|
12,084
|
|
|
918
|
|
|
—
|
|
|
35,732
|
|
|||||||
Cash distributions to unitholders and distribution equivalent right payments
|
(30,393
|
)
|
|
(33,498
|
)
|
|
(29,510
|
)
|
|
(16,005
|
)
|
|
—
|
|
|
(109,406
|
)
|
|||||||
Unit-based compensation
|
196
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
196
|
|
|||||||
Balance as of December 31, 2016
|
548,619
|
|
|
(482,197
|
)
|
|
—
|
|
|
(10,598
|
)
|
|
—
|
|
|
55,824
|
|
|||||||
Net income attributable to partners
|
62,014
|
|
|
127,306
|
|
|
—
|
|
|
49,113
|
|
|
—
|
|
|
238,433
|
|
|||||||
Cash paid in excess of the carrying value of assets acquired from Valero Energy Corporation
|
—
|
|
|
(53,045
|
)
|
|
—
|
|
|
(1,573
|
)
|
|
—
|
|
|
(54,618
|
)
|
|||||||
Unit issuance
|
33,428
|
|
|
—
|
|
|
—
|
|
|
748
|
|
|
—
|
|
|
34,176
|
|
|||||||
Transfers to (from) partners
|
(8,773
|
)
|
|
15,957
|
|
|
—
|
|
|
(7,184
|
)
|
|
—
|
|
|
—
|
|
|||||||
Noncash contributions from Valero Energy Corporation
|
—
|
|
|
90,666
|
|
|
—
|
|
|
2,341
|
|
|
—
|
|
|
93,007
|
|
|||||||
Cash distributions to unitholders and distribution equivalent right payments
|
(39,507
|
)
|
|
(81,339
|
)
|
|
—
|
|
|
(40,445
|
)
|
|
—
|
|
|
(161,291
|
)
|
|||||||
Unit-based compensation
|
266
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
266
|
|
|||||||
Balance as of December 31, 2017
|
$
|
596,047
|
|
|
$
|
(382,652
|
)
|
|
$
|
—
|
|
|
$
|
(7,598
|
)
|
|
$
|
—
|
|
|
$
|
205,797
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|||||||
Net income
|
|
$
|
238,433
|
|
|
$
|
188,831
|
|
|
$
|
71,312
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|||||||
Depreciation expense
|
|
52,475
|
|
|
45,965
|
|
|
45,678
|
|
||||
Changes in current assets and current liabilities
|
|
(3,730
|
)
|
|
(5,956
|
)
|
|
(8,973
|
)
|
||||
Changes in deferred charges and credits and other operating activities, net
|
|
1,753
|
|
|
1,054
|
|
|
359
|
|
||||
Net cash provided by operating activities
|
|
288,931
|
|
|
229,894
|
|
|
108,376
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|||||||
Capital expenditures
|
|
(38,516
|
)
|
|
(23,156
|
)
|
|
(38,109
|
)
|
||||
Acquisition of undivided interest in Red River crude system
|
|
(71,793
|
)
|
|
—
|
|
|
—
|
|
||||
Acquisitions from Valero Energy Corporation
|
|
(407,844
|
)
|
|
(103,607
|
)
|
|
(390,144
|
)
|
||||
Other investing activities, net
|
|
302
|
|
|
31
|
|
|
82
|
|
||||
Net cash used in investing activities
|
|
(517,851
|
)
|
|
(126,732
|
)
|
|
(428,171
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|||||||
Proceeds from debt borrowings
|
|
380,000
|
|
|
349,000
|
|
|
200,000
|
|
||||
Proceeds from issuance of senior notes
|
|
—
|
|
|
499,795
|
|
|
—
|
|
||||
Proceeds from notes payable – related party
|
|
—
|
|
|
—
|
|
|
555,000
|
|
||||
Repayment of debt and capital lease obligations
|
|
—
|
|
|
(494,913
|
)
|
|
(26,200
|
)
|
||||
Repayment of notes payable – related party
|
|
—
|
|
|
—
|
|
|
(185,000
|
)
|
||||
Payment of debt issuance costs
|
|
(492
|
)
|
|
(4,462
|
)
|
|
(2,322
|
)
|
||||
Proceeds from issuance of common units
|
|
35,728
|
|
|
9,724
|
|
|
189,683
|
|
||||
Proceeds from issuance of general partner units
|
|
748
|
|
|
198
|
|
|
4,011
|
|
||||
Payment of offering costs
|
|
(594
|
)
|
|
(883
|
)
|
|
(666
|
)
|
||||
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets
|
|
(54,618
|
)
|
|
(376,393
|
)
|
|
(576,076
|
)
|
||||
Cash distributions to unitholders and distribution equivalent right payments
|
|
(161,291
|
)
|
|
(109,406
|
)
|
|
(71,715
|
)
|
||||
Net transfers from Valero Energy Corporation
|
|
—
|
|
|
14,886
|
|
|
77,284
|
|
||||
Net cash provided by (used in) financing activities
|
|
199,481
|
|
|
(112,454
|
)
|
|
163,999
|
|
||||
Net decrease in cash and cash equivalents
|
|
(29,439
|
)
|
|
(9,292
|
)
|
|
(155,796
|
)
|
||||
Cash and cash equivalents at beginning of year
|
|
71,491
|
|
|
80,783
|
|
|
236,579
|
|
||||
Cash and cash equivalents at end of year
|
|
$
|
42,052
|
|
|
$
|
71,491
|
|
|
$
|
80,783
|
|
1.
|
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICES
|
2.
|
ACQUISITIONS
|
3.
|
RELATED-PARTY AGREEMENTS AND TRANSACTIONS
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Pipeline transportation revenues
|
|
$
|
100,631
|
|
|
$
|
78,451
|
|
|
$
|
81,435
|
|
Terminaling revenues
|
|
347,996
|
|
|
283,628
|
|
|
161,649
|
|
|||
Storage and other revenues
|
|
3,378
|
|
|
540
|
|
|
540
|
|
|||
Total operating revenues – related party
|
|
$
|
452,005
|
|
|
$
|
362,619
|
|
|
$
|
243,624
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Minimum rental revenues
|
|
$
|
292,034
|
|
|
$
|
232,211
|
|
|
$
|
128,468
|
|
|
Contingent rental revenues
|
|
59,498
|
|
|
41,519
|
|
|
22,949
|
|
||||
Total lease revenues
|
|
$
|
351,532
|
|
|
$
|
273,730
|
|
|
$
|
151,417
|
|
2018
|
|
$
|
359,842
|
|
2019
|
|
359,842
|
|
|
2020
|
|
360,828
|
|
|
2021
|
|
359,842
|
|
|
2022
|
|
359,842
|
|
|
Thereafter
|
|
2,899,476
|
|
|
Total minimum rental payments
|
|
$
|
4,699,672
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net transfers from Valero
per statements of partners’ capital |
|
$
|
—
|
|
|
$
|
15,030
|
|
|
$
|
70,334
|
|
|
Less: Noncash transfers from (to) Valero
|
|
—
|
|
|
144
|
|
|
(6,950
|
)
|
||||
Net transfers from Valero
per statements of cash flows |
|
$
|
—
|
|
|
$
|
14,886
|
|
|
$
|
77,284
|
|
4.
|
PROPERTY AND EQUIPMENT
|
|
|
December 31, 2017
|
|
||||||||||
|
|
Non-Leased
Assets
|
|
Assets
Leased
to Valero
|
|
Total
|
|
||||||
Land
|
|
$
|
4,672
|
|
|
$
|
—
|
|
|
$
|
4,672
|
|
|
Pipelines and related assets
|
|
225,184
|
|
|
385,855
|
|
|
611,039
|
|
|
|||
Terminals and related assets
|
|
134,362
|
|
|
1,162,718
|
|
|
1,297,080
|
|
|
|||
Other
|
|
14,019
|
|
|
—
|
|
|
14,019
|
|
|
|||
Construction in progress
|
|
42,423
|
|
|
—
|
|
|
42,423
|
|
|
|||
Property and equipment, at cost
|
|
420,660
|
|
|
1,548,573
|
|
|
1,969,233
|
|
|
|||
Accumulated depreciation
|
|
(127,136
|
)
|
|
(425,681
|
)
|
|
(552,817
|
)
|
|
|||
Property and equipment, net
|
|
$
|
293,524
|
|
|
$
|
1,122,892
|
|
|
$
|
1,416,416
|
|
|
|
|
|
December 31, 2016
|
|
||||||||||
|
|
|
Non-Leased
Assets
|
|
Assets
Leased
to Valero
|
|
Total
|
|
||||||
Land
|
|
|
$
|
4,672
|
|
|
$
|
—
|
|
|
$
|
4,672
|
|
|
Pipelines and related assets
|
|
224,656
|
|
|
47,366
|
|
|
272,022
|
|
|
||||
Terminals and related assets
|
|
112,614
|
|
|
793,765
|
|
|
906,379
|
|
|
||||
Other
|
|
9,538
|
|
|
—
|
|
|
9,538
|
|
|
||||
Construction in progress
|
|
23,677
|
|
|
—
|
|
|
23,677
|
|
|
||||
Property and equipment, at cost
|
|
375,157
|
|
|
841,131
|
|
|
1,216,288
|
|
|
||||
Accumulated depreciation
|
|
(115,538
|
)
|
|
(235,670
|
)
|
|
(351,208
|
)
|
|
||||
Property and equipment, net
|
|
$
|
259,619
|
|
|
$
|
605,461
|
|
|
$
|
865,080
|
|
|
5.
|
DEBT AND NOTES PAYABLE – RELATED PARTY
|
|
Final
Maturity
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
|||||
Revolving credit facility
|
2020
|
|
$
|
410,000
|
|
|
$
|
30,000
|
|
Senior Notes, 4.375%
|
2026
|
|
500,000
|
|
|
500,000
|
|
||
Net unamortized discount and debt issuance costs
|
|
|
(4,717
|
)
|
|
(4,645
|
)
|
||
Total debt
|
|
|
$
|
905,283
|
|
|
$
|
525,355
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Interest and debt expense incurred
|
$
|
36,634
|
|
|
$
|
14,997
|
|
|
$
|
6,144
|
|
Less: Capitalized interest
|
619
|
|
|
82
|
|
|
31
|
|
|||
Interest and debt expense, net of capitalized interest
|
$
|
36,015
|
|
|
$
|
14,915
|
|
|
$
|
6,113
|
|
6.
|
ASSET RETIREMENT OBLIGATIONS
|
|
|
|
December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance as of beginning of year
|
|
$
|
1,069
|
|
|
$
|
1,021
|
|
|
$
|
975
|
|
|
Accretion expense
|
|
30
|
|
|
48
|
|
|
46
|
|
||||
Balance as of end of year
|
|
$
|
1,099
|
|
|
$
|
1,069
|
|
|
$
|
1,021
|
|
7.
|
COMMITMENTS AND CONTINGENCIES
|
|
|
Agreements With
|
|
|
||||||||
|
|
Related Party
|
|
Others
|
|
Total
|
||||||
2018
|
|
$
|
13,241
|
|
|
$
|
856
|
|
|
$
|
14,097
|
|
2019
|
|
13,177
|
|
|
1,112
|
|
|
14,289
|
|
|||
2020
|
|
13,147
|
|
|
1,111
|
|
|
14,258
|
|
|||
2021
|
|
13,116
|
|
|
1,099
|
|
|
14,215
|
|
|||
2022
|
|
13,115
|
|
|
1,099
|
|
|
14,214
|
|
|||
Thereafter
|
|
276,967
|
|
|
24,639
|
|
|
301,606
|
|
|||
Total minimum rental payments
|
|
$
|
342,763
|
|
|
$
|
29,916
|
|
|
$
|
372,679
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Minimum rental expenses – related party
|
|
$
|
10,308
|
|
|
$
|
8,946
|
|
|
$
|
5,803
|
|
|
Minimum rental expenses – others
|
|
1,392
|
|
|
815
|
|
|
1,327
|
|
||||
Total minimum rental expenses
|
|
$
|
11,700
|
|
|
$
|
9,761
|
|
|
$
|
7,130
|
|
8.
|
CASH DISTRIBUTIONS
|
Quarterly
Period
Ended
|
|
Total
Quarterly
Distribution
(Per Unit)
|
|
Total Cash
Distribution
(In
Thousands)
|
|
Declaration
Date
|
|
Record
Date
|
|
Distribution
Date
|
|||||
December 31, 2017
|
|
$
|
0.5075
|
|
|
$
|
50,055
|
|
|
January 24, 2018
|
|
February 5, 2018
|
|
February 13, 2018
|
|
September 30, 2017
|
|
0.4800
|
|
|
46,242
|
|
|
October 19, 2017
|
|
November 1, 2017
|
|
November 9, 2017
|
|||
June 30, 2017
|
|
0.4550
|
|
|
42,111
|
|
|
July 19, 2017
|
|
August 1, 2017
|
|
August 10, 2017
|
|||
March 31, 2017
|
|
0.4275
|
|
|
38,043
|
|
|
April 20, 2017
|
|
May 2, 2017
|
|
May 11, 2017
|
|||
December 31, 2016
|
|
0.4065
|
|
|
34,895
|
|
|
January 20, 2017
|
|
February 2, 2017
|
|
February 10, 2017
|
|||
September 30, 2016
|
|
0.3850
|
|
|
32,175
|
|
|
October 24, 2016
|
|
November 3, 2016
|
|
November 10, 2016
|
|||
June 30, 2016
|
|
0.3650
|
|
|
28,912
|
|
|
July 21, 2016
|
|
August 1, 2016
|
|
August 9, 2016
|
|||
March 31, 2016
|
|
0.3400
|
|
|
25,608
|
|
|
April 21, 2016
|
|
May 2, 2016
|
|
May 10, 2016
|
|||
December 31, 2015
|
|
0.3200
|
|
|
22,711
|
|
|
January 25, 2016
|
|
February 4, 2016
|
|
February 11, 2016
|
|||
September 30, 2015
|
|
0.3075
|
|
|
20,164
|
|
|
October 15, 2015
|
|
November 2, 2015
|
|
November 10, 2015
|
|||
June 30, 2015
|
|
0.2925
|
|
|
18,456
|
|
|
July 24, 2015
|
|
August 3, 2015
|
|
August 11, 2015
|
|||
March 31, 2015
|
|
0.2775
|
|
|
17,266
|
|
|
April 21, 2015
|
|
May 1, 2015
|
|
May 12, 2015
|
|||
December 31, 2014
|
|
0.2660
|
|
|
15,829
|
|
|
January 26, 2015
|
|
February 5, 2015
|
|
February 12, 2015
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
General partner’s distributions:
|
|
|
|
|
|
|
|||||||
General partner’s distributions
|
|
$
|
3,363
|
|
|
$
|
2,294
|
|
|
$
|
1,572
|
|
|
General partner’s incentive distribution rights (IDRs)
|
|
44,534
|
|
|
19,354
|
|
|
3,431
|
|
||||
Total general partner’s distributions
|
|
47,897
|
|
|
21,648
|
|
|
5,003
|
|
||||
Limited partners’ distributions:
|
|
|
|
|
|
|
|||||||
Common – public
|
|
42,029
|
|
|
32,362
|
|
|
22,016
|
|
||||
Common – Valero
|
|
86,503
|
|
|
47,263
|
|
|
17,090
|
|
||||
Subordinated – Valero
|
|
—
|
|
|
20,297
|
|
|
34,476
|
|
||||
Total limited partners’ distributions
|
|
128,532
|
|
|
99,922
|
|
|
73,582
|
|
||||
DERs
|
|
22
|
|
|
20
|
|
|
12
|
|
||||
Total cash distributions, including DERs
|
|
$
|
176,451
|
|
|
$
|
121,590
|
|
|
$
|
78,597
|
|
9.
|
NET INCOME PER LIMITED PARTNER UNIT
|
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
|
General
Partner |
|
Limited
Partner
Common
Units |
|
Restricted
Units |
|
Total
|
||||||||
Allocation of net income to determine net income available to limited partners:
|
|
|
|
|
|
|
|
|
||||||||
Distributions, excluding general partner’s IDRs
|
|
$
|
3,363
|
|
|
$
|
128,532
|
|
|
$
|
—
|
|
|
$
|
131,895
|
|
General partner’s IDRs
|
|
44,534
|
|
|
—
|
|
|
—
|
|
|
44,534
|
|
||||
DERs
|
|
—
|
|
|
—
|
|
|
22
|
|
|
22
|
|
||||
Distributions and DERs declared
|
|
47,897
|
|
|
128,532
|
|
|
22
|
|
|
176,451
|
|
||||
Undistributed earnings
|
|
1,216
|
|
|
60,756
|
|
|
10
|
|
|
61,982
|
|
||||
Net income available to
limited partners – basic and diluted |
|
$
|
49,113
|
|
|
$
|
189,288
|
|
|
$
|
32
|
|
|
$
|
238,433
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per limited partner unit – basic and diluted:
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average units outstanding
|
|
|
|
68,220
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income per limited partner unit – basic and diluted
|
|
|
|
$
|
2.77
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||
|
|
|
|
Limited Partners
|
|
|
|
|
||||||||||||
|
|
General
Partner
|
|
Common
Units
|
|
Subordinated
Units
|
|
Restricted
Units
|
|
Total
|
||||||||||
Allocation of net income to determine net income available to limited partners:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Distributions, excluding general partner’s IDRs
|
|
$
|
2,294
|
|
|
$
|
79,625
|
|
|
$
|
20,297
|
|
|
$
|
—
|
|
|
$
|
102,216
|
|
General partner’s IDRs
|
|
19,354
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,354
|
|
|||||
DERs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
20
|
|
|||||
Distributions and DERs declared
|
|
21,648
|
|
|
79,625
|
|
|
20,297
|
|
|
20
|
|
|
121,590
|
|
|||||
Undistributed earnings
|
|
1,905
|
|
|
59,452
|
|
|
21,289
|
|
|
17
|
|
|
82,663
|
|
|||||
Net income available to
limited partners – basic and diluted
|
|
$
|
23,553
|
|
|
$
|
139,077
|
|
|
$
|
41,586
|
|
|
$
|
37
|
|
|
$
|
204,253
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per limited partner unit – basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted-average units outstanding
|
|
|
|
48,817
|
|
|
17,463
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per limited partner unit – basic and diluted
|
|
|
|
$
|
2.85
|
|
|
$
|
2.38
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
||||||||||||||||||
|
|
|
|
Limited Partners
|
|
|
|
|
||||||||||||
|
|
General
Partner
|
|
Common
Units
|
|
Subordinated
Units
|
|
Restricted
Units
|
|
Total
|
||||||||||
Allocation of net income to determine net income available to limited partners:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Distributions, excluding general partner’s IDRs
|
|
$
|
1,572
|
|
|
$
|
39,106
|
|
|
$
|
34,476
|
|
|
$
|
—
|
|
|
$
|
75,154
|
|
General partner’s IDRs
|
|
3,431
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,431
|
|
|||||
DERs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
12
|
|
|||||
Distributions and DERs declared
|
|
5,003
|
|
|
39,106
|
|
|
34,476
|
|
|
12
|
|
|
78,597
|
|
|||||
Undistributed earnings
|
|
1,066
|
|
|
27,162
|
|
|
25,045
|
|
|
8
|
|
|
53,281
|
|
|||||
Net income available to
limited partners – basic and diluted
|
|
$
|
6,069
|
|
|
$
|
66,268
|
|
|
$
|
59,521
|
|
|
$
|
20
|
|
|
$
|
131,878
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per limited partner unit – basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted-average units outstanding
|
|
|
|
31,222
|
|
|
28,790
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per limited partner unit – basic and diluted
|
|
|
|
$
|
2.12
|
|
|
$
|
2.07
|
|
|
|
|
|
10.
|
PARTNERS’ CAPITAL
|
|
|
|
Common
|
|
|
|
General
Partner
|
|
|
|||||||
|
|
|
Public
|
|
Valero
|
|
Subordinated
|
|
|
Total
|
||||||
Balance as of December 31, 2014
|
|
17,255,208
|
|
|
11,539,989
|
|
|
28,789,989
|
|
|
1,175,102
|
|
|
58,760,288
|
|
|
Unit-based compensation
|
|
4,443
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,443
|
|
|
Units issued in connection with acquisitions (see Note 2)
|
|
—
|
|
|
3,478,613
|
|
|
—
|
|
|
70,992
|
|
|
3,549,605
|
|
|
Unit issuance
|
|
4,250,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,250,000
|
|
|
General partner units issued to maintain 2% interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86,735
|
|
|
86,735
|
|
|
Balance as of December 31, 2015
|
|
21,509,651
|
|
|
15,018,602
|
|
|
28,789,989
|
|
|
1,332,829
|
|
|
66,651,071
|
|
|
Unit-based compensation
|
|
5,958
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,958
|
|
|
Units issued in connection with acquisitions (see Note 2)
|
|
—
|
|
|
1,878,680
|
|
|
—
|
|
|
38,340
|
|
|
1,917,020
|
|
|
Conversion of subordinated units
|
|
—
|
|
|
28,789,989
|
|
|
(28,789,989
|
)
|
|
—
|
|
|
—
|
|
|
Units issued under ATM Program
|
|
223,083
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
223,083
|
|
|
General partner units issued to maintain 2% interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,552
|
|
|
4,552
|
|
|
Balance as of December 31, 2016
|
|
21,738,692
|
|
|
45,687,271
|
|
|
—
|
|
|
1,375,721
|
|
|
68,801,684
|
|
|
Unit-based compensation (see Note 11)
|
|
5,997
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,997
|
|
|
Units issued in connection with acquisitions (see Note 2)
|
|
—
|
|
|
1,081,315
|
|
|
—
|
|
|
22,068
|
|
|
1,103,383
|
|
|
Units issued under ATM Program
|
|
742,897
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
742,897
|
|
|
General partner units issued to maintain 2% interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,602
|
|
|
15,602
|
|
|
Balance as of December 31, 2017
|
|
22,487,586
|
|
|
46,768,586
|
|
|
—
|
|
|
1,413,391
|
|
|
70,669,563
|
|
|
|
Units
Issued |
|
Total
Proceeds |
|
Offering
Costs |
|
Net
Proceeds |
|||||||
Year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|||||||
Common – public
|
|
742,897
|
|
|
$
|
35,728
|
|
|
$
|
594
|
|
|
$
|
35,134
|
|
General partner
|
|
15,602
|
|
|
748
|
|
|
—
|
|
|
748
|
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|||||||
Common – public
|
|
223,083
|
|
|
9,724
|
|
|
107
|
|
|
9,617
|
|
|||
General partner
|
|
4,552
|
|
|
198
|
|
|
—
|
|
|
198
|
|
11.
|
UNIT-BASED COMPENSATION
|
12.
|
INCOME TAXES
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current U.S. state
|
|
$
|
942
|
|
|
$
|
704
|
|
|
$
|
479
|
|
|
Deferred U.S. state
|
|
393
|
|
|
408
|
|
|
(228
|
)
|
||||
Income tax expense
|
|
$
|
1,335
|
|
|
$
|
1,112
|
|
|
$
|
251
|
|
13.
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Decrease (increase) in current assets:
|
|
|
|
|
|
|
||||||
Receivables – related party
|
|
$
|
(9,607
|
)
|
|
$
|
(10,786
|
)
|
|
$
|
(15,588
|
)
|
Receivables
|
|
(781
|
)
|
|
—
|
|
|
—
|
|
|||
Prepaid expenses and other
|
|
277
|
|
|
(365
|
)
|
|
95
|
|
|||
Increase (decrease) in current liabilities:
|
|
|
|
|
|
|
||||||
Accounts payable
|
|
7,411
|
|
|
586
|
|
|
(631
|
)
|
|||
Accounts payable – related party
|
|
(3,404
|
)
|
|
(667
|
)
|
|
5,999
|
|
|||
Accrued liabilities
|
|
137
|
|
|
34
|
|
|
(87
|
)
|
|||
Accrued liabilities – related party
|
|
10
|
|
|
40
|
|
|
21
|
|
|||
Accrued interest payable
|
|
1,278
|
|
|
1,054
|
|
|
226
|
|
|||
Accrued interest payable – related party
|
|
864
|
|
|
(429
|
)
|
|
476
|
|
|||
Taxes other than income taxes payable
|
|
2,684
|
|
|
1,181
|
|
|
511
|
|
|||
Deferred revenue
–
related party
|
|
(2,599
|
)
|
|
3,396
|
|
|
5
|
|
|||
Changes in current assets and current liabilities
|
|
$
|
(3,730
|
)
|
|
$
|
(5,956
|
)
|
|
$
|
(8,973
|
)
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Interest paid
|
|
$
|
33,355
|
|
|
$
|
13,873
|
|
|
$
|
5,367
|
|
|
Income taxes paid
|
|
719
|
|
|
505
|
|
|
441
|
|
|
|
Investing
Cash Outflow |
|
Financing
Cash Outflow |
|
Total
Cash Outflow |
||||||
Year ended December 31, 2017:
|
|
|
|
|
|
|
||||||
Parkway Pipeline
|
|
$
|
200,249
|
|
|
$
|
—
|
|
|
$
|
200,249
|
|
Port Arthur terminal
|
|
207,595
|
|
|
54,618
|
|
|
262,213
|
|
|||
|
|
$
|
407,844
|
|
|
$
|
54,618
|
|
|
$
|
462,462
|
|
Year ended December 31, 2016:
|
|
|
|
|
|
|
||||||
McKee Terminal Services Business
|
|
$
|
51,361
|
|
|
$
|
152,639
|
|
|
$
|
204,000
|
|
Meraux and Three Rivers Terminal Services Business
|
|
52,246
|
|
|
223,754
|
|
|
276,000
|
|
|||
|
|
$
|
103,607
|
|
|
$
|
376,393
|
|
|
$
|
480,000
|
|
Year ended December 31, 2015:
|
|
|
|
|
|
|
||||||
Houston and St. Charles Terminal Services Business
|
|
$
|
296,109
|
|
|
$
|
275,111
|
|
|
$
|
571,220
|
|
Corpus Christi Terminal Services Business
|
|
94,035
|
|
|
300,965
|
|
|
395,000
|
|
|||
|
|
$
|
390,144
|
|
|
$
|
576,076
|
|
|
$
|
966,220
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Transfer (from) to Valero for:
|
|
|
|
|
|
|
|||||||
Deferred income taxes
|
|
$
|
—
|
|
|
$
|
(190
|
)
|
|
$
|
(282
|
)
|
|
Change in accrued capital expenditures
|
|
—
|
|
|
46
|
|
|
7,232
|
|
||||
Noncash contributions from Valero:
|
|
|
|
|
|
|
|||||||
Excess of carrying value over purchase price paid for acquisition of Parkway Pipeline (see Note 2)
|
|
51,702
|
|
|
—
|
|
|
—
|
|
||||
Capital projects
|
|
41,305
|
|
|
35,732
|
|
|
27,748
|
|
||||
Increase in accounts payable related to capital expenditures
|
|
570
|
|
|
904
|
|
|
5,496
|
|
||||
Units issued to Valero in connection with acquisitions (see Note 2)
|
|
46,000
|
|
|
85,000
|
|
|
170,000
|
|
||||
Offering costs included in accounts payable
|
|
—
|
|
|
—
|
|
|
(102
|
)
|
||||
Units issued under ATM Program included in receivables
|
|
—
|
|
|
1,682
|
|
|
—
|
|
•
|
the transfers to (from) partners to reflect the impact of ownership changes occurring as a result of the issuance of equity (i) to Valero in connection with our acquisitions from Valero as described in
Note 2
and (ii) under our ATM Program as described in
Note 10
for the years ended
December 31, 2017
and
2016
; and
|
•
|
the conversion of all of our outstanding subordinated units into common units having an aggregate value of
$406.4 million
described in
Note 10
for the
year
ended
December 31, 2016
.
|
14.
|
FAIR VALUE OF FINANCIAL INSTRUMENTS
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents
|
$
|
42,052
|
|
|
$
|
42,052
|
|
|
$
|
71,491
|
|
|
$
|
71,491
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|||||||||
Debt:
|
|
|
|
|
|
|
|
|||||||||
Revolver
|
410,000
|
|
|
410,000
|
|
|
30,000
|
|
|
30,000
|
|
|||||
Senior Notes
|
495,283
|
|
|
523,800
|
|
|
495,355
|
|
|
506,670
|
|
|||||
Notes payable – related party
|
370,000
|
|
|
370,000
|
|
|
370,000
|
|
|
370,000
|
|
•
|
The fair value of cash and cash equivalents approximates the carrying value due to the low level of credit risk of these assets combined with their market interest rates. The fair value measurement for cash and cash equivalents is categorized as Level 1 in the fair value hierarchy. Fair values determined by Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets.
|
•
|
The fair values of our variable-rate debt, which includes our Revolver and notes payable – related party, approximate their carrying values as our borrowings bear interest based upon short-term floating market interest rates. The fair value of our fixed-rate
4.375
percent Senior Notes is determined primarily using the market approach based on quoted prices provided by vendor pricing services. The fair value measurement for these liabilities is categorized as Level 2 in the fair value hierarchy. Fair values determined by Level 2 utilize inputs that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
|
15.
|
QUARTERLY FINANCIAL DATA (UNAUDITED)
|
|
|
|
2017 Quarter Ended
|
||||||||||||||
|
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Operating revenues – related party
|
|
$
|
105,816
|
|
|
$
|
110,545
|
|
|
$
|
109,340
|
|
|
$
|
126,304
|
|
|
Gross profit (a)
|
|
70,496
|
|
|
70,985
|
|
|
70,749
|
|
|
78,926
|
|
|||||
Operating income
|
|
66,666
|
|
|
67,122
|
|
|
66,347
|
|
|
74,895
|
|
|||||
Net income
|
|
58,137
|
|
|
58,443
|
|
|
57,589
|
|
|
64,264
|
|
|||||
Net income attributable to partners
|
|
58,137
|
|
|
58,443
|
|
|
57,589
|
|
|
64,264
|
|
|||||
Limited partners’ interest in net income
|
|
48,670
|
|
|
47,024
|
|
|
44,552
|
|
|
49,074
|
|
|||||
Net income per limited partner unit – basic and diluted:
|
|
|
|
|
|
|
|
|
|||||||||
Common units
|
|
0.72
|
|
|
0.69
|
|
|
0.65
|
|
|
0.71
|
|
|
|
|
2016 Quarter Ended
|
||||||||||||||
|
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Operating revenues – related party
|
|
$
|
78,767
|
|
|
$
|
87,664
|
|
|
$
|
92,040
|
|
|
$
|
104,148
|
|
|
Gross profit (a)
|
|
42,969
|
|
|
51,757
|
|
|
56,632
|
|
|
69,181
|
|
|||||
Operating income
|
|
38,604
|
|
|
48,042
|
|
|
52,538
|
|
|
65,390
|
|
|||||
Net income
|
|
35,780
|
|
|
44,545
|
|
|
48,707
|
|
|
59,799
|
|
|||||
Net income attributable to partners
|
|
43,298
|
|
|
49,447
|
|
|
51,709
|
|
|
59,799
|
|
|||||
Limited partners’ interest in net income
|
|
39,794
|
|
|
44,234
|
|
|
45,075
|
|
|
51,597
|
|
|||||
Net income per limited partner unit – basic and diluted:
|
|
|
|
|
|
|
|
|
|||||||||
Common units
|
|
0.61
|
|
|
0.67
|
|
|
0.77
|
|
|
0.77
|
|
|||||
Subordinated units
|
|
0.61
|
|
|
0.67
|
|
|
0.29
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||
(a) Gross profit is calculated as operating revenues – related party less cost of revenues (excluding depreciation expense) and depreciation expense.
|
Name
|
|
Age *
|
|
Position with Valero Energy Partners GP LLC
|
Joseph W. Gorder
|
|
60
|
|
Chairman of the Board and Chief Executive Officer
|
Richard F. Lashway
|
|
54
|
|
Director, President and Chief Operating Officer
|
Donna M. Titzman
|
|
54
|
|
Director, Senior Vice President, Chief Financial Officer and Treasurer
|
Jay D. Browning
|
|
59
|
|
Executive Vice President and General Counsel
|
Robert S. Beadle
|
|
68
|
|
Director
|
Timothy J. Fretthold
|
|
68
|
|
Director
|
Randall J. Larson
|
|
60
|
|
Director
|
R. Lane Riggs
|
|
52
|
|
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,
|
•
|
Jay D. Browning, Executive Vice President and General Counsel, and
|
•
|
Donna M. Titzman, Senior Vice President, Chief Financial Officer and Treasurer.
|
|
|
Fees Earned or
Paid in Cash
|
|
Unit Awards (a)
|
|
Other Income (c)
|
|
Total
|
||||||||
Robert S. Beadle
|
|
$
|
75,000
|
|
|
$
|
90,035
|
|
|
$
|
—
|
|
|
$
|
165,035
|
|
Timothy J. Fretthold
|
|
75,000
|
|
|
90,035
|
|
|
11,769
|
|
|
176,804
|
|
||||
Joseph W. Gorder
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(b)
|
|
||||
Randall J. Larson
|
|
75,000
|
|
|
90,035
|
|
|
—
|
|
|
165,035
|
|
||||
Richard F. Lashway
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(b)
|
|
||||
R. Lane Riggs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(b)
|
|
||||
Donna M. Titzman
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(b)
|
|
(a)
|
The amounts shown represent the grant date fair value of awards granted in 2017, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation–Stock Compensation (FASB ASC Topic 718). In 2017, each of our independent directors who was serving on the Board on January 5, 2017, received a grant of 1,999 restricted common units. The following table presents the number of unvested restricted common units held by each independent director as of December 31, 2017.
|
Name
|
|
Unvested Restricted Units
|
|
Robert S. Beadle
|
|
3,816
|
|
Timothy J. Fretthold
|
|
3,816
|
|
Randall J. Larson
|
|
3,816
|
|
(b)
|
Mr. Gorder, Mr. Lashway, Mr. Riggs, and Ms. Titzman do not receive any compensation as directors of our general partner, and did not receive any compensation as directors of our general partner in 2017.
|
(c)
|
The amount presented for Mr. Fretthold represents Valero’s payment in 2017 to Mr. Fretthold under a severance agreement for prior service with a predecessor of Valero. This arrangement is described in Item 13., “Certain Relationships and Related Transactions, and Director Independence—Supplemental Death Benefit Agreements and Severance Agreement.”
|
Joseph W. Gorder
|
Richard F. Lashway
|
|
Robert S. Beadle
|
R. Lane Riggs
|
|
Timothy J. Fretthold
|
Donna M. Titzman
|
|
Randall J. Larson
|
|
|
*
|
We do not have a Compensation Committee. Accordingly, the Compensation Committee Report required by Item 407(e)(5) of Regulation S-K is given by the board of directors of our general partner.
|
Name of Beneficial Owner (a)
|
|
Common Units
|
|
General Partner Units
|
|
Total Partnership Interests
|
|||||||||
|
Number
|
|
Percent
|
|
Number
|
|
Percent
|
|
Percent
|
||||||
Valero Energy Corporation (b)
|
|
46,768,586
|
|
|
67.52
|
%
|
|
1,413,511
|
|
|
100.00
|
%
|
|
68.17
|
%
|
Tortoise Capital Advisors,
L.L.C. (c)
|
|
5,674,274
|
|
|
8.19
|
%
|
|
—
|
|
|
—
|
|
|
8.03
|
%
|
Goldman Sachs Asset
Management (d)
|
|
4,235,198
|
|
|
6.11
|
%
|
|
—
|
|
|
—
|
|
|
5.99
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Directors & Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|||||
Robert S. Beadle
|
|
19,168
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Jay D. Browning
|
|
5,500
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Timothy J. Fretthold
|
|
19,168
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Joseph W. Gorder
|
|
50,000
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Randall J. Larson
|
|
29,168
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Richard F. Lashway
|
|
10,000
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
R. Lane Riggs
|
|
5,500
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Donna M. Titzman
|
|
11,000
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
Directors and executive officers as a group (8 persons)
|
|
149,504
|
|
|
*
|
|
|
—
|
|
|
—
|
|
|
*
|
|
*
|
Less than 1 percent.
|
(a)
|
The address for the beneficial owners listed in this table is One Valero Way, San Antonio, Texas 78249.
|
(b)
|
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
|
|
General
Partner Units
|
||
Valero Energy Partners GP LLC
|
|
—
|
|
|
1,413,511
|
|
Valero Terminaling and Distribution Company
|
|
46,768,586
|
|
|
—
|
|
Total Valero subsidiaries
|
|
46,768,586
|
|
|
1,413,511
|
|
(c)
|
Tortoise Capital Advisors, L.L.C., 11550 Ash Street, Suite 300, Leawood, Kansas 66211, filed an amended Schedule 13G with the SEC on February 13, 2018, reporting that it or certain of its affiliates beneficially owned in the aggregate 5,674,274 Common Units, that it had sole voting and sole dispositive power over 131,568 of our Common Units, shared voting power over 4,746,908 of our Common Units, and shared dispositive power over 5,542,706 of our Common Units.
|
(d)
|
Goldman Sachs Asset Management, 200 West Street, New York, NY 10282, filed an amended Schedule 13G with the SEC on February 8, 2018, reporting that it or certain of its affiliates beneficially owned in the aggregate 4,235,198 Common Units, and that it had shared voting and dispositive power over those Common Units.
|
Name of Beneficial Owner (a)
|
|
Shares Held (b)
|
|
Shares Under
Options (c)
|
|
Total Shares of
Valero
Common Stock
|
|
Percent of
Class
|
|||
Robert S. Beadle
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
Jay D. Browning
|
|
218,512
|
|
|
34,766
|
|
|
253,278
|
|
|
*
|
Timothy J. Fretthold
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
Joseph W. Gorder
|
|
442,639
|
|
|
246,790
|
|
|
689,429
|
|
|
*
|
Randall J. Larson
|
|
—
|
|
|
—
|
|
|
—
|
|
|
*
|
Richard F. Lashway
|
|
42,828
|
|
|
2,333
|
|
|
45,161
|
|
|
*
|
R. Lane Riggs
|
|
146,820
|
|
|
2,667
|
|
|
149,487
|
|
|
*
|
Donna M. Titzman
|
|
186,780
|
|
|
35,123
|
|
|
221,903
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|||
All directors and executive officers as a group (8 persons)
|
|
1,037,579
|
|
|
321,679
|
|
|
1,359,258
|
|
|
*
|
*
|
Less than 1 percent.
|
(a)
|
The address for all beneficial owners in this table is One Valero Way, San Antonio, Texas 78249.
|
(b)
|
Includes shares allocated under Valero’s thrift plan and shares of restricted stock (and for Mr. Browning, shares owned by his spouse).
|
(c)
|
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
|
|
11,448
|
|
n/a
|
|
2,978,394
|
|
Category
|
|
2017
|
|
2016
|
||||
Audit fees
(a)
|
|
$
|
1,502
|
|
|
$
|
2,075
|
|
Audit-related fees
|
|
—
|
|
|
—
|
|
||
Tax fees
|
|
—
|
|
|
—
|
|
||
All other fees
|
|
—
|
|
|
—
|
|
||
Total
|
|
$
|
1,502
|
|
|
$
|
2,075
|
|
(a)
|
Represents fees for professional services rendered for the audit of the annual financial statements included in our annual reports on Form 10-K, review of our interim financial statements included in our quarterly reports on Form 10-Q, the audit of the effectiveness of our internal control over financial reporting, audits of acquired businesses, and services that are normally provided by the principal auditor (
e.g
., comfort letters, statutory audits, attest services, consents, and assistance with and review of documents filed with the SEC).
|
|
Page
|
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
|
|
|
—
|
||
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***101
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—
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Interactive Data Files
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*
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Filed herewith.
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**
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Furnished herewith.
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***
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Submitted electronically herewith.
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+
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Identifies management contracts or compensatory plans or arrangements required to be filed as an exhibit hereto.
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VALERO ENERGY PARTNERS LP
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(Registrant)
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by:
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Valero Energy Partners GP LLC
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its general partner
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by:
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/s/ Joseph W. Gorder
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Joseph W. Gorder
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Chief Executive Officer
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Signature
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Title
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Date
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/s/ Joseph W. Gorder
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Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
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February 22, 2018
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(Joseph W. Gorder)
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||
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/s/ Donna M. Titzman
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Senior Vice President, Chief Financial
Officer, Treasurer and Director
(Principal Financial and Accounting Officer)
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February 22, 2018
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(Donna M. Titzman)
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||
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/s/ Richard F. Lashway
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President, Chief Operating Officer and
Director
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February 22, 2018
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(Richard F. Lashway)
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||
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/s/ Robert S. Beadle
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Director
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February 22, 2018
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(Robert S. Beadle)
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/s/ Timothy J. Fretthold
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Director
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February 22, 2018
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(Timothy J. Fretthold)
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/s/ Randall J. Larson
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Director
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February 22, 2018
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(Randall J. Larson)
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/s/ R. Lane Riggs
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Director
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February 22, 2018
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(R. Lane Riggs)
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1.
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Award
. The Participant is awarded
1,966
Restricted Units under the Plan. The Restricted Units are granted hereunder in tandem with an equal number of Distribution Equivalent Rights (“
DERs
”).
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2.
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Restricted Period
. The Restricted Units granted hereunder are subject to a Restricted Period as follows. Except to the extent otherwise provided in the Plan, the Participant’s rights to and interest in the Restricted Units described herein shall vest and accrue to the Participant in the following increments: (i)
656
Restricted Units on
January
4, 2019
; (ii)
655
Restricted Units on
January
4, 2020
; and (iii)
655
Restricted Units on
January
4, 2021
. The restrictions may terminate prior to the expiration of such periods 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.
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3.
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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.
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4.
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Code Section 409A
. The issuance of Units 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 each quarter on the payment date prescribed by the board of directors of the Company for the quarterly distribution of the Partnership, if any, declared and paid in accordance with Section 6.3 of the Partnership’s First Amended and Restated Agreement of Limited 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.
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5.
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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.
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6.
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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.
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7.
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Governing Law
. This Agreement is governed by the laws of the State of Texas.
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VALERO ENERGY PARTNERS GP LLC
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Participant:
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by:
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Joseph W. Gorder
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Chief Executive Officer
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Year Ended December 31,
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||||||||||||||||||||||
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2017
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2016
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2015
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2014
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2013
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||||||||||
Earnings:
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||||||||||
Income (loss) before income tax expense
|
$
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239,768
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$
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189,943
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$
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71,563
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$
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(32,813
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)
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$
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(23,969
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)
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Add:
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||||||||||
Fixed charges
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40,534
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18,251
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8,521
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1,352
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714
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|||||
Amortization of capitalized interest
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15
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4
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1
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—
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—
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|||||
Less:
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||||||||||
Capitalized interest
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(619
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)
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(82
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)
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(31
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)
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—
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—
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|||||
Total earnings
|
$
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279,698
|
|
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$
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208,116
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$
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80,054
|
|
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$
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(31,461
|
)
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$
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(23,255
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)
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||||||||||
Fixed charges:
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||||||||||
Interest and debt expense, net
of capitalized interest
|
$
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36,015
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$
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14,915
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$
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6,113
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$
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872
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|
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$
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198
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Capitalized interest
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619
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82
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31
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—
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—
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|||||
Rental expense interest factor (a)
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3,900
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3,254
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2,377
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480
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516
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|||||
Total fixed charges
|
$
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40,534
|
|
|
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$
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18,251
|
|
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$
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8,521
|
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$
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1,352
|
|
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$
|
714
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||||||||||
Ratio of earnings to fixed charges
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6.9
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x
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11.4
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x
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9.4
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x
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(b)
|
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(b)
|
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(a)
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The interest portion of rental expense represents one-third of rents, which is deemed representative of the interest portion of rental expense.
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(b)
|
For the years ended December 31, 2014 and 2013, earnings were insufficient to cover fixed charges and the deficiency was $32.8 million and $24.0 million, respectively.
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Name of Entity
|
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State of Incorporation/Organization
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PARKWAY PIPELINE LLC
|
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Delaware
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VALERO MKS LOGISTICS, L.L.C.
|
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Delaware
|
VALERO PARTNERS CCTS, LLC
|
|
Delaware
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VALERO PARTNERS CORPUS EAST, LLC
|
|
Delaware
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VALERO PARTNERS CORPUS WEST, LLC
|
|
Delaware
|
VALERO PARTNERS EP, LLC
|
|
Delaware
|
VALERO PARTNERS HOUSTON, LLC
|
|
Delaware
|
VALERO PARTNERS LOUISIANA, LLC
|
|
Delaware
|
VALERO PARTNERS LUCAS, LLC
|
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Delaware
|
VALERO PARTNERS MCKEE, LLC
|
|
Delaware
|
VALERO PARTNERS MEMPHIS, LLC
|
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Delaware
|
VALERO PARTNERS MERAUX, LLC
|
|
Delaware
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VALERO PARTNERS NORTH TEXAS, LLC
|
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Delaware
|
VALERO PARTNERS OPERATING CO. LLC
|
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Delaware
|
VALERO PARTNERS PAPS, LLC
|
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Delaware
|
VALERO PARTNERS PORT ARTHUR, LLC
|
|
Delaware
|
VALERO PARTNERS SOUTH TEXAS, LLC
|
|
Delaware
|
VALERO PARTNERS THREE RIVERS, LLC
|
|
Delaware
|
VALERO PARTNERS WEST MEMPHIS, LLC
|
|
Delaware
|
VALERO PARTNERS WYNNEWOOD, LLC
|
|
Delaware
|
|
|
|
/s/ Joseph W. Gorder
|
|
|
Joseph W. Gorder
|
|
|
Chief Executive Officer, Valero Energy Partners GP LLC
|
|
|
(the general partner of Valero Energy Partners LP)
|
|
/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)
|
|
|
February 22, 2018
|
|
|
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)
|
|
|
February 22, 2018
|
|
|