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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from _______________ to _______________
|
Delaware
|
90-1006559
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification No.)
|
Large accelerated filer
þ
Accelerated filer
o
Non-accelerated filer
o
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Smaller reporting company
o
Emerging growth company
o
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Page
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September 30,
2018 |
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December 31,
2017 |
||||
|
|
|
|
||||||
ASSETS
|
|
(unaudited)
|
|
|
|||||
Current assets:
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
$
|
128,199
|
|
|
$
|
42,052
|
|
|
Receivables – related party
|
|
46,434
|
|
|
46,496
|
|
|||
Receivables
|
|
873
|
|
|
781
|
|
|||
Prepaid expenses and other
|
|
659
|
|
|
720
|
|
|||
Total current assets
|
|
176,165
|
|
|
90,049
|
|
|||
Property and equipment, at cost
|
|
2,014,049
|
|
|
1,969,233
|
|
|||
Accumulated depreciation
|
|
(599,611
|
)
|
|
(552,817
|
)
|
|||
Property and equipment, net
|
|
1,414,438
|
|
|
1,416,416
|
|
|||
Deferred charges and other assets, net
|
|
9,678
|
|
|
10,887
|
|
|||
Total assets
|
|
$
|
1,600,281
|
|
|
$
|
1,517,352
|
|
|
LIABILITIES AND PARTNERS’ CAPITAL
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|||||
Accounts payable
|
|
$
|
18,400
|
|
|
$
|
18,633
|
|
|
Accounts payable – related party
|
|
8,190
|
|
|
3,944
|
|
|||
Accrued liabilities
|
|
801
|
|
|
1,007
|
|
|||
Accrued liabilities – related party
|
|
304
|
|
|
1,128
|
|
|||
Accrued interest payable
|
|
7,326
|
|
|
2,558
|
|
|||
Accrued interest payable – related party
|
|
770
|
|
|
911
|
|
|||
Taxes other than income taxes payable
|
|
7,283
|
|
|
5,141
|
|
|||
Total current liabilities
|
|
43,074
|
|
|
33,322
|
|
|||
Debt
|
|
989,694
|
|
|
905,283
|
|
|||
Notes payable – related party
|
|
285,000
|
|
|
370,000
|
|
|||
Other long-term liabilities
|
|
3,382
|
|
|
2,950
|
|
|||
Commitments and contingencies
|
|
|
|
|
|
|
|||
Partners’ capital:
|
|
|
|
|
|||||
Limited partners:
|
|
|
|
|
|||||
Common unitholders – public
(22,493,484 and 22,487,586 units outstanding)
|
|
612,202
|
|
|
596,047
|
|
|||
Common unitholder – Valero
(46,768,586 and 46,768,586 units outstanding)
|
|
(328,500
|
)
|
|
(382,652
|
)
|
|||
General partner – Valero
(1,413,511 and 1,413,391 units outstanding)
|
|
(4,571
|
)
|
|
(7,598
|
)
|
|||
Total partners’ capital
|
|
279,131
|
|
|
205,797
|
|
|||
Total liabilities and partners’ capital
|
|
$
|
1,600,281
|
|
|
$
|
1,517,352
|
|
|
|
|
Three Months Ended September 30, 2018
|
||||||||||||||
|
|
|
Limited Partners
|
|
General
Partner Valero |
|
Total
|
||||||||||
|
|
|
Common
Unitholders Public |
|
Common
Unitholder Valero |
|
|
||||||||||
Balance as of June 30, 2018
|
|
$
|
607,611
|
|
|
$
|
(347,174
|
)
|
|
$
|
(5,045
|
)
|
|
$
|
255,392
|
|
|
Net income
|
|
16,929
|
|
|
35,217
|
|
|
18,203
|
|
|
70,349
|
|
|||||
Noncash capital contributions from Valero Energy Corporation
|
|
—
|
|
|
9,226
|
|
|
189
|
|
|
9,415
|
|
|||||
Cash distributions to unitholders and distribution equivalent right payments ($0.5510 per unit)
|
|
(12,394
|
)
|
|
(25,769
|
)
|
|
(17,918
|
)
|
|
(56,081
|
)
|
|||||
Unit-based compensation
|
|
56
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|||||
Balance as of September 30, 2018
|
|
$
|
612,202
|
|
|
$
|
(328,500
|
)
|
|
$
|
(4,571
|
)
|
|
$
|
279,131
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Three Months Ended September 30, 2017
|
||||||||||||||
|
|
|
Limited Partners
|
|
General
Partner Valero |
|
Total
|
||||||||||
|
|
|
Common
Unitholders Public |
|
Common
Unitholder Valero |
|
|
||||||||||
Balance as of June 30, 2017
|
|
$
|
579,002
|
|
|
$
|
(417,210
|
)
|
|
$
|
(8,651
|
)
|
|
$
|
153,141
|
|
|
Net income
|
|
14,690
|
|
|
29,862
|
|
|
13,037
|
|
|
57,589
|
|
|||||
Noncash capital contributions from Valero Energy Corporation
|
|
—
|
|
|
8,418
|
|
|
172
|
|
|
8,590
|
|
|||||
Cash distributions to unitholders and distribution equivalent right payments ($0.4550 per unit)
|
|
(10,231
|
)
|
|
(20,788
|
)
|
|
(11,092
|
)
|
|
(42,111
|
)
|
|||||
Unit-based compensation
|
|
51
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|||||
Other
|
|
(76
|
)
|
|
—
|
|
|
—
|
|
|
(76
|
)
|
|||||
Balance as of September 30, 2017
|
|
$
|
583,436
|
|
|
$
|
(399,718
|
)
|
|
$
|
(6,534
|
)
|
|
$
|
177,184
|
|
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||
|
|
|
Limited Partners
|
|
General
Partner Valero |
|
Total
|
||||||||||
|
|
|
Common
Unitholders Public |
|
Common
Unitholder Valero |
|
|
||||||||||
Balance as of December 31, 2017
|
|
$
|
596,047
|
|
|
$
|
(382,652
|
)
|
|
$
|
(7,598
|
)
|
|
$
|
205,797
|
|
|
Net income
|
|
47,921
|
|
|
99,691
|
|
|
52,835
|
|
|
200,447
|
|
|||||
Unit issuance
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|||||
Transfers to (from) partners
|
|
3,730
|
|
|
(2,396
|
)
|
|
(1,334
|
)
|
|
—
|
|
|||||
Noncash capital contributions from Valero Energy Corporation
|
|
—
|
|
|
31,098
|
|
|
634
|
|
|
31,732
|
|
|||||
Cash distributions to unitholders and distribution equivalent right payments ($1.586 per unit)
|
|
(35,675
|
)
|
|
(74,175
|
)
|
|
(49,112
|
)
|
|
(158,962
|
)
|
|||||
Unit-based compensation
|
|
179
|
|
|
—
|
|
|
—
|
|
|
179
|
|
|||||
Other
|
|
—
|
|
|
(66
|
)
|
|
(1
|
)
|
|
(67
|
)
|
|||||
Balance as of September 30, 2018
|
|
$
|
612,202
|
|
|
$
|
(328,500
|
)
|
|
$
|
(4,571
|
)
|
|
$
|
279,131
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||
|
|
|
Limited Partners
|
|
General
Partner
Valero
|
|
Total
|
||||||||||
|
|
|
Common
Unitholders Public |
|
Common
Unitholder Valero |
|
|
||||||||||
Balance as of December 31, 2016
|
|
$
|
548,619
|
|
|
$
|
(482,197
|
)
|
|
$
|
(10,598
|
)
|
|
$
|
55,824
|
|
|
Net income
|
|
46,001
|
|
|
94,245
|
|
|
33,923
|
|
|
174,169
|
|
|||||
Unit issuance
|
|
33,429
|
|
|
—
|
|
|
748
|
|
|
34,177
|
|
|||||
Transfers to (from) partners
|
|
(16,097
|
)
|
|
19,816
|
|
|
(3,719
|
)
|
|
—
|
|
|||||
Noncash capital contributions from Valero Energy Corporation
|
|
—
|
|
|
27,308
|
|
|
558
|
|
|
27,866
|
|
|||||
Cash distributions to unitholders and distribution equivalent right payments ($1.289 per unit)
|
|
(28,713
|
)
|
|
(58,890
|
)
|
|
(27,446
|
)
|
|
(115,049
|
)
|
|||||
Unit-based compensation
|
|
197
|
|
|
—
|
|
|
—
|
|
|
197
|
|
|||||
Balance as of September 30, 2017
|
|
$
|
583,436
|
|
|
$
|
(399,718
|
)
|
|
$
|
(6,534
|
)
|
|
$
|
177,184
|
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
|||||
Net income
|
|
$
|
200,447
|
|
|
$
|
174,169
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|||||
Depreciation expense
|
|
56,471
|
|
|
36,393
|
|
|||
Changes in current assets and current liabilities
|
|
4,862
|
|
|
7,988
|
|
|||
Changes in deferred charges and credits and other operating activities, net
|
|
2,448
|
|
|
1,269
|
|
|||
Net cash provided by operating activities
|
|
264,228
|
|
|
219,819
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|||||
Capital expenditures
|
|
(17,968
|
)
|
|
(24,297
|
)
|
|||
Acquisition of undivided interest in Red River crude system
|
|
—
|
|
|
(71,793
|
)
|
|||
Other investing activities, net
|
|
8
|
|
|
142
|
|
|||
Net cash used in investing activities
|
|
(17,960
|
)
|
|
(95,948
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|||||
Proceeds from issuance of senior notes
|
|
498,300
|
|
|
—
|
|
|||
Repayment of debt and note payable – related party
|
|
(495,000
|
)
|
|
—
|
|
|||
Payment of debt issuance costs
|
|
(4,464
|
)
|
|
(492
|
)
|
|||
Proceeds from issuance of common units
|
|
—
|
|
|
35,728
|
|
|||
Proceeds from issuance of general partner units
|
|
5
|
|
|
748
|
|
|||
Payment of offering costs
|
|
—
|
|
|
(542
|
)
|
|||
Cash distributions to unitholders and distribution equivalent right payments
|
|
(158,962
|
)
|
|
(115,049
|
)
|
|||
Net cash used in financing activities
|
|
(160,121
|
)
|
|
(79,607
|
)
|
|||
Net increase in cash and cash equivalents
|
|
86,147
|
|
|
44,264
|
|
|||
Cash and cash equivalents at beginning of period
|
|
42,052
|
|
|
71,491
|
|
|||
Cash and cash equivalents at end of period
|
|
$
|
128,199
|
|
|
$
|
115,755
|
|
1.
|
DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES
|
•
|
Transition Elections
. We expect to elect the package of practical expedients that permits us to not reassess under the new standard our prior conclusions about lease identification, lease classification, and initial direct costs, as well as the practical expedient that permits us to not assess existing land easements under the new standard.
|
•
|
Lessee Accounting Policy Elections.
We expect to elect the short-term lease recognition exemption whereby right-of-use (ROU) assets and lease liabilities will not be recognized for leasing arrangements with terms less than one year, and the practical expedient to not separate lease and non-lease components for all classes of underlying assets other than the real estate asset class.
|
•
|
Lessor Accounting Policy Election.
We expect to elect the practical expedient to account for lease and non-lease components in a contract as a single lease component for all classes of underlying assets.
|
2.
|
ACQUISITIONS
|
3.
|
RELATED-PARTY TRANSACTIONS
|
4.
|
DEBT AND NOTES PAYABLE
–
RELATED PARTY
|
|
Maturity
Date
|
|
September 30,
2018 |
|
December 31,
2017
|
||||
|
|
|
|||||||
Revolver
|
November 2020
|
|
$
|
—
|
|
|
$
|
410,000
|
|
Senior Notes, 4.375%
|
December 2026
|
|
500,000
|
|
|
500,000
|
|
||
Senior Notes, 4.5%
|
March 2028
|
|
500,000
|
|
|
—
|
|
||
Net unamortized discount and debt issuance costs
|
|
|
(10,306
|
)
|
|
(4,717
|
)
|
||
Debt
|
|
|
$
|
989,694
|
|
|
$
|
905,283
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Interest and debt expense incurred
|
$
|
14,442
|
|
|
$
|
8,912
|
|
|
$
|
40,809
|
|
|
$
|
25,957
|
|
Less: Capitalized interest
|
94
|
|
|
165
|
|
|
282
|
|
|
370
|
|
||||
Interest and debt expense, net of capitalized interest
|
$
|
14,348
|
|
|
$
|
8,747
|
|
|
$
|
40,527
|
|
|
$
|
25,587
|
|
5.
|
REVENUES
|
|
|
Pipeline
Transportation
|
|
Terminaling
|
|
Storage
and Other
|
|
Total
|
||||||||
Three Months Ended September 30, 2018:
|
|
|
|
|
|
|
||||||||||
Revenues from lease contracts
|
$
|
17,702
|
|
|
$
|
93,874
|
|
|
$
|
502
|
|
|
$
|
112,078
|
|
|
Revenues from contracts with customer
|
13,861
|
|
|
13,215
|
|
|
1,436
|
|
|
28,512
|
|
|||||
Total revenues – related party
|
$
|
31,563
|
|
|
$
|
107,089
|
|
|
$
|
1,938
|
|
|
$
|
140,590
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Three Months Ended September 30, 2017:
|
|
|
|
|
|
|
||||||||||
Revenues from lease contracts
|
$
|
11,197
|
|
|
$
|
74,476
|
|
|
$
|
138
|
|
|
$
|
85,811
|
|
|
Revenues from contracts with customer
|
11,845
|
|
|
10,681
|
|
|
1,003
|
|
|
23,529
|
|
|||||
Total revenues – related party
|
$
|
23,042
|
|
|
$
|
85,157
|
|
|
$
|
1,141
|
|
|
$
|
109,340
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Nine Months Ended September 30, 2018:
|
|
|
|
|
|
|
||||||||||
Revenues from lease contracts
|
$
|
53,584
|
|
|
$
|
270,933
|
|
|
$
|
1,138
|
|
|
$
|
325,655
|
|
|
Revenues from contracts with customer
|
39,654
|
|
|
37,823
|
|
|
4,027
|
|
|
81,504
|
|
|||||
Total revenues – related party
|
$
|
93,238
|
|
|
$
|
308,756
|
|
|
$
|
5,165
|
|
|
$
|
407,159
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Nine Months Ended September 30, 2017:
|
|
|
|
|
|
|
||||||||||
Revenues from lease contracts
|
$
|
33,379
|
|
|
$
|
217,793
|
|
|
$
|
408
|
|
|
$
|
251,580
|
|
|
Revenues from contracts with customer
|
37,697
|
|
|
34,667
|
|
|
1,757
|
|
|
74,121
|
|
|||||
Total revenues – related party
|
$
|
71,076
|
|
|
$
|
252,460
|
|
|
$
|
2,165
|
|
|
$
|
325,701
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Minimum lease revenues
|
|
$
|
91,059
|
|
|
$
|
70,588
|
|
|
$
|
270,257
|
|
|
$
|
208,859
|
|
|
Contingent lease revenues
|
|
21,019
|
|
|
15,223
|
|
|
55,398
|
|
|
42,721
|
|
|||||
Revenues from lease contracts
|
|
$
|
112,078
|
|
|
$
|
85,811
|
|
|
$
|
325,655
|
|
|
$
|
251,580
|
|
|
|
Lease
Contracts |
|
Contracts with
Customer
|
||||
Remainder of 2018
|
|
$
|
91,060
|
|
|
$
|
20,462
|
|
2019
|
|
361,282
|
|
|
81,215
|
|
||
2020
|
|
362,268
|
|
|
81,426
|
|
||
2021
|
|
361,282
|
|
|
81,215
|
|
||
2022
|
|
361,282
|
|
|
81,215
|
|
||
Thereafter
|
|
2,914,596
|
|
|
116,994
|
|
||
Total
|
|
$
|
4,451,770
|
|
|
$
|
462,527
|
|
6.
|
CASH DISTRIBUTIONS AND NET INCOME PER LIMITED PARTNER COMMON UNIT
|
Quarterly
Period
Ended
|
|
Total
Quarterly Distribution (per unit) |
|
Total Cash
Distribution (in thousands) |
|
Declaration
Date |
|
Record
Date |
|
Distribution
Date |
|||||
September 30, 2018
|
|
$
|
0.5510
|
|
|
$
|
56,081
|
|
|
October 18, 2018
|
|
November 1, 2018
|
|
November 9, 2018
|
|
June 30, 2018
|
|
0.5510
|
|
|
56,081
|
|
|
July 23, 2018
|
|
August 3, 2018
|
|
August 13, 2018
|
|||
March 31, 2018
|
|
0.5275
|
|
|
52,826
|
|
|
April 19, 2018
|
|
May 1, 2018
|
|
May 9, 2018
|
|||
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
|
|
|
Three Months Ended September 30, 2018
|
||||||||||||||||||||||
|
|
General
Partner |
|
Limited Partners
Common Units
|
|
Restricted
Units |
|
Total
|
||||||||||||||||
|
|
|
Public
|
|
Valero
|
|
Total
|
|
|
|||||||||||||||
Allocation of net income to determine net income available to limited partners:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Distributions, excluding general partner’s IDRs
|
|
$
|
1,122
|
|
|
$
|
12,388
|
|
|
$
|
25,769
|
|
|
$
|
38,157
|
|
|
$
|
—
|
|
|
$
|
39,279
|
|
General partner’s IDRs
|
|
16,796
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,796
|
|
||||||
DERs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
||||||
Distributions and DERs declared
|
|
17,918
|
|
|
12,388
|
|
|
25,769
|
|
|
38,157
|
|
|
6
|
|
|
56,081
|
|
||||||
Undistributed earnings
|
|
285
|
|
|
4,538
|
|
|
9,442
|
|
|
13,980
|
|
|
3
|
|
|
14,268
|
|
||||||
Net income available to limited partners – basic and diluted
|
|
$
|
18,203
|
|
|
$
|
16,926
|
|
|
$
|
35,211
|
|
|
$
|
52,137
|
|
|
$
|
9
|
|
|
$
|
70,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income per limited partner common unit – basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted-average units outstanding
|
|
|
|
|
|
|
|
69,251
|
|
|
|
|
|
|||||||||||
Net income per limited partner common unit – basic and diluted
|
|
|
|
|
|
|
|
$
|
0.75
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017
|
||||||||||||||||||||||
|
|
General
Partner |
|
Limited Partners
Common Units
|
|
Restricted
Units |
|
Total
|
||||||||||||||||
|
|
|
Public
|
|
Valero
|
|
Total
|
|
|
|||||||||||||||
Allocation of net income to determine net income available to limited partners:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Distributions, excluding general partner’s IDRs
|
|
$
|
925
|
|
|
$
|
10,789
|
|
|
$
|
22,449
|
|
|
$
|
33,238
|
|
|
$
|
—
|
|
|
$
|
34,163
|
|
General partner’s IDRs
|
|
12,074
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,074
|
|
||||||
DERs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||
Distributions and DERs declared
|
|
12,999
|
|
|
10,789
|
|
|
22,449
|
|
|
33,238
|
|
|
5
|
|
|
46,242
|
|
||||||
Undistributed earnings
|
|
38
|
|
|
3,666
|
|
|
7,641
|
|
|
11,307
|
|
|
2
|
|
|
11,347
|
|
||||||
Net income available to limited partners – basic and diluted
|
|
$
|
13,037
|
|
|
$
|
14,455
|
|
|
$
|
30,090
|
|
|
$
|
44,545
|
|
|
$
|
7
|
|
|
$
|
57,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income per limited partner common unit – basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted-average units outstanding
|
|
|
|
|
|
|
|
68,163
|
|
|
|
|
|
|||||||||||
Net income per limited partner common unit – basic and diluted
|
|
|
|
|
|
|
|
$
|
0.65
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||||
|
|
General
Partner |
|
Limited Partners
Common Units
|
|
Restricted
Units |
|
Total
|
||||||||||||||||
|
|
|
Public
|
|
Valero
|
|
Total
|
|
|
|||||||||||||||
Allocation of net income to determine net income available to limited partners:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Distributions, excluding general partner’s IDRs
|
|
$
|
3,300
|
|
|
$
|
36,634
|
|
|
$
|
76,209
|
|
|
$
|
112,843
|
|
|
$
|
—
|
|
|
$
|
116,143
|
|
General partner’s IDRs
|
|
48,826
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,826
|
|
||||||
DERs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
19
|
|
||||||
Distributions and DERs declared
|
|
52,126
|
|
|
36,634
|
|
|
76,209
|
|
|
112,843
|
|
|
19
|
|
|
164,988
|
|
||||||
Undistributed earnings
|
|
709
|
|
|
11,279
|
|
|
23,465
|
|
|
34,744
|
|
|
6
|
|
|
35,459
|
|
||||||
Net income available to limited partners – basic and diluted
|
|
$
|
52,835
|
|
|
$
|
47,913
|
|
|
$
|
99,674
|
|
|
$
|
147,587
|
|
|
$
|
25
|
|
|
$
|
200,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income per limited partner common unit – basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted-average units outstanding
|
|
|
|
|
|
|
|
69,250
|
|
|
|
|
|
|||||||||||
Net income per limited partner common unit – basic and diluted
|
|
|
|
|
|
|
|
$
|
2.13
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||||||
|
|
General
Partner |
|
Limited Partners
Common Units
|
|
Restricted
Units |
|
Total
|
||||||||||||||||
|
|
|
Public
|
|
Valero
|
|
Total
|
|
|
|||||||||||||||
Allocation of net income to determine net income available to limited partners:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Distributions, excluding general partner’s IDRs
|
|
$
|
2,362
|
|
|
$
|
30,620
|
|
|
$
|
62,768
|
|
|
$
|
93,388
|
|
|
$
|
—
|
|
|
$
|
95,750
|
|
General partner’s IDRs
|
|
30,631
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,631
|
|
||||||
DERs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||||
Distributions and DERs declared
|
|
32,993
|
|
|
30,620
|
|
|
62,768
|
|
|
93,388
|
|
|
15
|
|
|
126,396
|
|
||||||
Undistributed earnings
|
|
930
|
|
|
15,358
|
|
|
31,476
|
|
|
46,834
|
|
|
9
|
|
|
47,773
|
|
||||||
Net income available to limited partners – basic and diluted
|
|
$
|
33,923
|
|
|
$
|
45,978
|
|
|
$
|
94,244
|
|
|
$
|
140,222
|
|
|
$
|
24
|
|
|
$
|
174,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income per limited partner common unit – basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted-average units outstanding
|
|
|
|
|
|
|
|
67,997
|
|
|
|
|
|
|||||||||||
Net income per limited partner common unit – basic and diluted
|
|
|
|
|
|
|
|
$
|
2.06
|
|
|
|
|
|
7.
|
PARTNERS’ CAPITAL
|
|
|
Limited Partners
|
|
General
Partner Valero |
|
Total
|
||||||
|
|
Common
Unitholders
Public
|
|
Common
Unitholder
Valero
|
|
|
||||||
Balance as of December 31, 2017
|
|
22,487,586
|
|
|
46,768,586
|
|
|
1,413,391
|
|
|
70,669,563
|
|
Unit-based compensation
|
|
5,898
|
|
|
—
|
|
|
—
|
|
|
5,898
|
|
General partner units issued to maintain 2% interest
|
|
—
|
|
|
—
|
|
|
120
|
|
|
120
|
|
Balance as of September 30, 2018
|
|
22,493,484
|
|
|
46,768,586
|
|
|
1,413,511
|
|
|
70,675,581
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of December 31, 2016
|
|
21,738,692
|
|
|
45,687,271
|
|
|
1,375,721
|
|
|
68,801,684
|
|
Unit-based compensation
|
|
5,997
|
|
|
—
|
|
|
—
|
|
|
5,997
|
|
Units issued under ATM Program
|
|
742,897
|
|
|
—
|
|
|
—
|
|
|
742,897
|
|
General partner units issued to maintain 2% interest
|
|
—
|
|
|
—
|
|
|
15,602
|
|
|
15,602
|
|
Balance as of September 30, 2017
|
|
22,487,586
|
|
|
45,687,271
|
|
|
1,391,323
|
|
|
69,566,180
|
|
|
|
Units
Issued
|
|
Total
Proceeds
|
|
Offering
Costs
|
|
Net
Proceeds
|
|||||||
Common – public
|
|
742,897
|
|
|
$
|
35,728
|
|
|
$
|
542
|
|
|
$
|
35,186
|
|
General partner
|
|
15,602
|
|
|
748
|
|
|
—
|
|
|
748
|
|
8.
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
|
2018
|
|
2017
|
||||
Decrease (increase) in current assets:
|
|
|
|
|
|||||
Receivables – related party
|
|
$
|
62
|
|
|
$
|
894
|
|
|
Receivables
|
|
(92
|
)
|
|
(225
|
)
|
|||
Prepaid expenses and other
|
|
61
|
|
|
512
|
|
|||
Increase (decrease) in current liabilities:
|
|
|
|
|
|||||
Accounts payable
|
|
(5,154
|
)
|
|
1,361
|
|
|||
Accounts payable – related party
|
|
4,246
|
|
|
1,433
|
|
|||
Accrued liabilities
|
|
(206
|
)
|
|
(283
|
)
|
|||
Accrued liabilities – related party
|
|
(824
|
)
|
|
(3,192
|
)
|
|||
Accrued interest payable
|
|
4,768
|
|
|
5,173
|
|
|||
Accrued interest payable – related party
|
|
(141
|
)
|
|
797
|
|
|||
Taxes other than income taxes payable
|
|
2,142
|
|
|
1,518
|
|
|||
Changes in current assets and current liabilities
|
|
$
|
4,862
|
|
|
$
|
7,988
|
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
|
2018
|
|
2017
|
||||
Interest paid
|
|
$
|
35,067
|
|
|
$
|
19,136
|
|
|
Income taxes paid
|
|
918
|
|
|
695
|
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
|
2018
|
|
2017
|
||||
Increase in accounts payable related to capital expenditures
|
|
$
|
4,921
|
|
|
$
|
2,424
|
|
|
Noncash capital contributions from Valero for capital projects
|
|
31,732
|
|
|
27,866
|
|
9.
|
FAIR VALUE OF FINANCIAL INSTRUMENTS
|
|
|
|
Fair
Value
Hierarchy
|
|
September 30, 2018
|
|
December
31, 2017
|
||||||||||||
|
|
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents
|
|
Level 1
|
|
$
|
128,199
|
|
|
$
|
128,199
|
|
|
$
|
42,052
|
|
|
$
|
42,052
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revolver
|
|
Level 2
|
|
—
|
|
|
—
|
|
|
410,000
|
|
|
410,000
|
|
|||||
Senior Notes
|
|
Level 2
|
|
989,694
|
|
|
983,810
|
|
|
495,283
|
|
|
523,800
|
|
|||||
Notes payable – related party
|
|
Level 2
|
|
285,000
|
|
|
285,000
|
|
|
370,000
|
|
|
370,000
|
|
•
|
the risk that the potential Merger Transaction is not consummated on the expected time frame, or at all;
|
•
|
failure of closing conditions, delays in the consummation of the potential Merger Transaction and changes to business plans, as circumstances warrant, and other factors, many of which are difficult to control or predict, that could affect Valero’s or our ability to consummate the Merger Transaction;
|
•
|
the diversion of management in connection with the Merger Transaction;
|
•
|
the occurrence of any event, change, or other circumstance that could give rise to the termination of the Merger Agreement;
|
•
|
the suspension, reduction, cessation, or termination of Valero’s obligation under our commercial agreements, omnibus agreement, and 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;
|
•
|
changes in state and federal policies and regulations relating to tariffs, environmental, economic, health and safety, energy, and other matters;
|
•
|
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;
|
•
|
political developments; and
|
•
|
other factors generally described in the “Risk Factors” section included in our annual report on Form 10-K for the year ended December 31,
2017
, in our quarterly report on Form 10-Q for the quarterly period ended March 31, 2018, and in this Form 10-Q, each of which are incorporated by reference herein.
|
|
|
Three Months Ended September 30,
|
||||||||||
|
|
2018
|
|
2017
|
|
Change
|
||||||
Revenues – related party:
|
|
|
|
|
|
|
||||||
Revenues from lease contracts
|
|
$
|
112,078
|
|
|
$
|
85,811
|
|
|
$
|
26,267
|
|
Revenues from contracts with customer
|
|
28,512
|
|
|
23,529
|
|
|
4,983
|
|
|||
Total revenues – related party
|
|
140,590
|
|
|
109,340
|
|
|
31,250
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
||||||
Cost of revenues from lease contracts (excluding depreciation expense reflected below)
|
|
26,753
|
|
|
20,202
|
|
|
6,551
|
|
|||
Cost of revenues from contracts with customer (excluding depreciation expense reflected below)
|
|
6,176
|
|
|
6,276
|
|
|
(100
|
)
|
|||
Depreciation expense associated with lease contracts
|
|
15,946
|
|
|
9,288
|
|
|
6,658
|
|
|||
Depreciation expense associated with contracts with customer
|
|
3,120
|
|
|
2,825
|
|
|
295
|
|
|||
Other operating expenses
|
|
—
|
|
|
537
|
|
|
(537
|
)
|
|||
General and administrative expenses
|
|
4,082
|
|
|
3,865
|
|
|
217
|
|
|||
Total costs and expenses
|
|
56,077
|
|
|
42,993
|
|
|
13,084
|
|
|||
Operating income
|
|
84,513
|
|
|
66,347
|
|
|
18,166
|
|
|||
Other income, net
|
|
610
|
|
|
300
|
|
|
310
|
|
|||
Interest and debt expense, net of capitalized interest
|
|
(14,348
|
)
|
|
(8,747
|
)
|
|
(5,601
|
)
|
|||
Income before income tax expense
|
|
70,775
|
|
|
57,900
|
|
|
12,875
|
|
|||
Income tax expense
|
|
426
|
|
|
311
|
|
|
115
|
|
|||
Net income
|
|
70,349
|
|
|
57,589
|
|
|
12,760
|
|
|||
Less: General partner’s interest in net income
|
|
18,203
|
|
|
13,037
|
|
|
5,166
|
|
|||
Limited partners’ interest in net income
|
|
$
|
52,146
|
|
|
$
|
44,552
|
|
|
$
|
7,594
|
|
|
|
|
|
|
|
|
||||||
Net income per limited partner common unit – basic and diluted
|
|
$
|
0.75
|
|
|
$
|
0.65
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Weighted-average limited partner common units outstanding – basic and diluted
|
|
69,251
|
|
|
68,163
|
|
|
|
|
|
Three Months Ended September 30,
|
||||||||||
|
|
2018
|
|
2017
|
|
Change
|
||||||
Operating highlights:
|
|
|
|
|
|
|
||||||
Pipeline transportation:
|
|
|
|
|
|
|
||||||
Pipeline transportation revenues
|
|
$
|
31,563
|
|
|
$
|
23,042
|
|
|
$
|
8,521
|
|
Pipeline transportation throughput (BPD) (a)
|
|
1,141,216
|
|
|
859,473
|
|
|
281,743
|
|
|||
Average pipeline transportation revenue per barrel (b)
|
|
$
|
0.30
|
|
|
$
|
0.29
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
||||||
Terminaling:
|
|
|
|
|
|
|
||||||
Terminaling revenues
|
|
$
|
107,089
|
|
|
$
|
85,157
|
|
|
$
|
21,932
|
|
Terminaling throughput (BPD)
|
|
3,766,632
|
|
|
2,693,788
|
|
|
1,072,844
|
|
|||
Average terminaling revenue per barrel (b)
|
|
$
|
0.31
|
|
|
$
|
0.34
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
||||||
Storage and other revenues
|
|
$
|
1,938
|
|
|
$
|
1,141
|
|
|
$
|
797
|
|
|
|
|
|
|
|
|
||||||
Total revenues – related party
|
|
$
|
140,590
|
|
|
$
|
109,340
|
|
|
$
|
31,250
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures:
|
|
|
|
|
|
|
||||||
Maintenance
|
|
$
|
2,726
|
|
|
$
|
921
|
|
|
$
|
1,805
|
|
Expansion
|
|
2,159
|
|
|
8,136
|
|
|
(5,977
|
)
|
|||
Total capital expenditures
|
|
$
|
4,885
|
|
|
$
|
9,057
|
|
|
$
|
(4,172
|
)
|
|
|
|
|
|
|
|
||||||
Other financial information:
|
|
|
|
|
|
|
||||||
Distribution declared per unit
|
|
$
|
0.5510
|
|
|
$
|
0.4800
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Distribution declared:
|
|
|
|
|
|
|
||||||
Limited partner common units – public
|
|
$
|
12,394
|
|
|
$
|
10,794
|
|
|
|
|
|
Limited partner common units – Valero
|
|
25,769
|
|
|
22,449
|
|
|
|
|
|||
General partner units – Valero
|
|
17,918
|
|
|
12,999
|
|
|
|
|
|||
Total distribution declared
|
|
$
|
56,081
|
|
|
$
|
46,242
|
|
|
|
|
(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.
|
•
|
Revenues from a terminal and pipeline system acquired from Valero in November 2017.
We generated revenues of $16.4 million and $6.8 million in the
third quarter
of
2018
from the operations of our Port Arthur terminal and Parkway pipeline, respectively. The volumes handled at and transported through these assets were the primary contributors to the increase in our overall terminaling and pipeline transportation throughput in the
third quarter
of
2018
compared to the
third quarter
of
2017
. Average pipeline transportation revenue per barrel was higher in the
third quarter
of
2018
compared to the
third quarter
of
2017
due primarily to higher revenue per barrel generated by our Parkway pipeline compared to the average revenue per barrel generated by our other pipelines. Average terminaling revenue per barrel was lower in the
third quarter
of
2018
compared to the
third quarter
of
2017
due primarily to lower revenue per barrel generated by our Port Arthur terminal compared to the average revenue per barrel generated by our other terminals.
|
•
|
Higher throughput volumes.
We experienced a 12 percent increase in volumes handled at our other terminals in the
third quarter
of
2018
compared to the
third quarter
of
2017
. The increase in volumes had a favorable impact to our operating revenues of $5.6 million in the
third quarter
of
2018
.
|
•
|
Incremental revenues from our DGD rail loading facility and storage tank placed in service in May 2017 and April 2018, respectively.
Our DGD rail loading facility and new storage tank generated combined incremental revenues of $800,000 in the
third quarter
of
2018
compared to the
third quarter
of
2017
.
|
•
|
Incremental borrowings in connection with acquisitions.
In connection with the acquisitions of the Port Arthur terminal and Parkway pipeline in November 2017, we borrowed $380.0 million under the Revolver. Interest expense on the incremental borrowings was $3.5 million in the
third quarter
of
2018
.
|
•
|
Incremental interest expense on the
4.5
percent Senior Notes.
In March 2018, we issued $500.0 million of
4.5
percent Senior Notes. We used the gross proceeds of
$498.3 million
to repay the outstanding balance of $410.0 million under the Revolver and $85.0 million on a portion of the outstanding balance under one of the Loan Agreements with Valero. The interest rate on the
4.5
percent Senior Notes is higher than the interest rates on the Revolver and the Loan Agreements with Valero, thereby increasing our effective interest rate in 2018. Incremental interest expense resulting from the
4.5
percent Senior Notes was approximately $1.1 million in the
third quarter
of
2018
.
|
•
|
Higher interest rates in 2018.
Borrowings under the Loan Agreements with Valero bear interest at variable rates. We incurred additional interest of $573,000 in the
third quarter
of
2018
on these borrowings due to higher interest rates in
2018
compared to
2017
.
|
|
|
Nine Months Ended September 30,
|
||||||||||
|
|
2018
|
|
2017
|
|
Change
|
||||||
Revenues – related party:
|
|
|
|
|
|
|
||||||
Revenues from lease contracts
|
|
$
|
325,655
|
|
|
$
|
251,580
|
|
|
$
|
74,075
|
|
Revenues from contracts with customer
|
|
81,504
|
|
|
74,121
|
|
|
7,383
|
|
|||
Total revenues – related party
|
|
407,159
|
|
|
325,701
|
|
|
81,458
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
||||||
Cost of revenues from lease contracts (excluding depreciation expense reflected below)
|
|
77,867
|
|
|
59,570
|
|
|
18,297
|
|
|||
Cost of revenues from contracts with customer (excluding depreciation expense reflected below)
|
|
19,717
|
|
|
17,508
|
|
|
2,209
|
|
|||
Depreciation expense associated with lease contracts
|
|
47,384
|
|
|
27,768
|
|
|
19,616
|
|
|||
Depreciation expense associated with contracts with customer
|
|
9,087
|
|
|
8,625
|
|
|
462
|
|
|||
Other operating expenses
|
|
—
|
|
|
537
|
|
|
(537
|
)
|
|||
General and administrative expenses
|
|
12,352
|
|
|
11,558
|
|
|
794
|
|
|||
Total costs and expenses
|
|
166,407
|
|
|
125,566
|
|
|
40,841
|
|
|||
Operating income
|
|
240,752
|
|
|
200,135
|
|
|
40,617
|
|
|||
Other income, net
|
|
1,403
|
|
|
546
|
|
|
857
|
|
|||
Interest and debt expense, net of capitalized interest
|
|
(40,527
|
)
|
|
(25,587
|
)
|
|
(14,940
|
)
|
|||
Income before income tax expense
|
|
201,628
|
|
|
175,094
|
|
|
26,534
|
|
|||
Income tax expense
|
|
1,181
|
|
|
925
|
|
|
256
|
|
|||
Net income
|
|
200,447
|
|
|
174,169
|
|
|
26,278
|
|
|||
Less: General partner’s interest in net income
|
|
52,835
|
|
|
33,923
|
|
|
18,912
|
|
|||
Limited partners’ interest in net income
|
|
$
|
147,612
|
|
|
$
|
140,246
|
|
|
$
|
7,366
|
|
|
|
|
|
|
|
|
||||||
Net income per limited partner common unit – basic and diluted
|
|
$
|
2.13
|
|
|
$
|
2.06
|
|
|
|
||
|
|
|
|
|
|
|
||||||
Weighted-average limited partner common units outstanding – basic and diluted
|
|
69,250
|
|
|
67,997
|
|
|
|
|
|
Nine Months Ended September 30,
|
||||||||||
|
|
2018
|
|
2017
|
|
Change
|
||||||
Operating highlights:
|
|
|
|
|
|
|
||||||
Pipeline transportation:
|
|
|
|
|
|
|
||||||
Pipeline transportation revenues
|
|
$
|
93,238
|
|
|
$
|
71,076
|
|
|
$
|
22,162
|
|
Pipeline transportation throughput (BPD) (a)
|
|
1,078,958
|
|
|
941,289
|
|
|
137,669
|
|
|||
Average pipeline transportation revenue per barrel (b)
|
|
$
|
0.32
|
|
|
$
|
0.28
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
||||||
Terminaling:
|
|
|
|
|
|
|
||||||
Terminaling revenues
|
|
$
|
308,756
|
|
|
$
|
252,460
|
|
|
$
|
56,296
|
|
Terminaling throughput (BPD)
|
|
3,576,253
|
|
|
2,760,000
|
|
|
816,253
|
|
|||
Average terminaling revenue per barrel (b)
|
|
$
|
0.32
|
|
|
$
|
0.34
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
||||||
Storage and other revenues
|
|
$
|
5,165
|
|
|
$
|
2,165
|
|
|
$
|
3,000
|
|
|
|
|
|
|
|
|
||||||
Total revenues – related party
|
|
$
|
407,159
|
|
|
$
|
325,701
|
|
|
$
|
81,458
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures:
|
|
|
|
|
|
|
||||||
Maintenance
|
|
$
|
7,651
|
|
|
$
|
4,294
|
|
|
$
|
3,357
|
|
Expansion
|
|
10,317
|
|
|
20,003
|
|
|
(9,686
|
)
|
|||
Total capital expenditures
|
|
$
|
17,968
|
|
|
$
|
24,297
|
|
|
$
|
(6,329
|
)
|
|
|
|
|
|
|
|
||||||
Other financial information:
|
|
|
|
|
|
|
||||||
Distribution declared per unit
|
|
$
|
1.6295
|
|
|
$
|
1.3625
|
|
|
|
||
|
|
|
|
|
|
|
||||||
Distribution declared:
|
|
|
|
|
|
|
||||||
Limited partner common units – public
|
|
$
|
36,653
|
|
|
$
|
30,635
|
|
|
|
||
Limited partner common units – Valero
|
|
76,209
|
|
|
62,768
|
|
|
|
||||
General partner units – Valero
|
|
52,126
|
|
|
32,993
|
|
|
|
||||
Total distribution declared
|
|
$
|
164,988
|
|
|
$
|
126,396
|
|
|
|
(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 by the number of days in the period.
|
•
|
Revenues from a terminal and pipeline system acquired from Valero in November 2017.
We generated revenues of $47.5 million and $19.3 million in the
first nine months
of
2018
from the operations of our Port Arthur terminal and Parkway pipeline, respectively. The volumes handled at and transported through these assets were the primary contributors to the increase in our overall terminaling and pipeline transportation throughput in the
first nine months
of
2018
compared to the
first nine months
of
2017
. Average pipeline transportation revenue per barrel was higher in the
first nine months
of
2018
compared to the
first nine months
of
2017
due primarily to higher revenue per barrel generated by our Parkway pipeline compared to the average revenue per barrel generated by our other pipelines. Average terminaling revenue per barrel was lower in the
first nine months
of
2018
compared to the
first nine months
of
2017
due primarily to lower revenue per barrel generated by our Port Arthur terminal compared to the average revenue per barrel generated by our other terminals.
|
•
|
Higher throughput volumes.
We experienced a 3 percent increase in volumes handled at our other terminals in the
first nine months
of
2018
compared to the
first nine months
of
2017
. The increase in volumes had a favorable impact to our operating revenues of $8.8 million in the
first nine months
of
2018
.
|
•
|
Incremental revenues from our DGD rail loading facility and storage tank placed in service in May 2017 and April 2018, respectively.
Our DGD rail loading facility and new storage tank generated combined incremental revenues of $3.0 million in the
first nine months
of
2018
compared to the
first nine months
of
2017
.
|
•
|
Incremental borrowings in connection with acquisitions.
In connection with the acquisitions of the Port Arthur terminal and Parkway pipeline in November 2017, we borrowed $380.0 million under the Revolver. Interest expense on the incremental borrowings was $9.7 million in the
first nine months
of
2018
.
|
•
|
Incremental interest expense on the
4.5
percent Senior Notes.
In March 2018, we issued $500.0 million of
4.5
percent Senior Notes. We used the gross proceeds of
$498.3 million
to repay the outstanding balance of $410.0 million under the Revolver and $85.0 million on a portion of the outstanding balance under one of the Loan Agreements with Valero. The interest rate on the
4.5
percent Senior Notes is higher than the interest rates on the Revolver and the Loan Agreements with Valero, thereby increasing our effective interest rate in 2018. Incremental interest expense resulting from the
4.5
percent Senior Notes was approximately $2.5 million in the
first nine months
of
2018
.
|
•
|
Higher interest rates in 2018.
Borrowings under the Revolver and the Loan Agreements with Valero bear interest at variable rates. We incurred additional interest of $2.0 million in the
first nine months
of
2018
on these borrowings due to higher interest rates in 2018 compared to
2017
.
|
|
|
Facility
Amount
|
|
Borrowings
|
|
Availability
|
||||||
Revolver
|
|
$
|
750,000
|
|
|
$
|
—
|
|
|
$
|
750,000
|
|
Cash and cash equivalents
|
|
N/A
|
|
N/A
|
|
128,199
|
|
|||||
Total liquidity
|
|
|
|
|
|
$
|
878,199
|
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
|
2018
|
|
2017
|
||||
Cash flows provided by (used in):
|
|
|
|
|
|||||
Operating activities
|
|
$
|
264,228
|
|
|
$
|
219,819
|
|
|
Investing activities
|
|
(17,960
|
)
|
|
(95,948
|
)
|
|||
Financing activities
|
|
(160,121
|
)
|
|
(79,607
|
)
|
|||
Net increase in cash and cash equivalents
|
|
$
|
86,147
|
|
|
$
|
44,264
|
|
•
|
an increase in accrued interest payable of
$4.6 million
due primarily to interest expense incurred on $500.0 million of 4.375 percent notes due December 2026 (4.375 percent Senior Notes), which is paid semi-annually on June 15 and December 15;
|
•
|
an increase in accounts payable
–
related party of
$4.2 million
attributable primarily to the timing of invoices from Valero for services provided by Valero to our general partner under our services and secondment agreement; partially offset by
|
•
|
a decrease in accounts payable of
$5.2 million
attributable primarily to the timing of project expenditures and liabilities assumed in connection with our acquisition of the Parkway pipeline in November 2017.
|
•
|
make debt repayments of $495.0 million, of which
$410.0 million
and
$85.0 million
related to the Revolver and one of the Loan Agreements, respectively;
|
•
|
pay
$159.0 million
in cash distributions to limited partners and our general partner;
|
•
|
fund
$18.0 million
in capital expenditures; and
|
•
|
pay
$4.5 million
in debt issuance costs.
|
•
|
an increase in accrued interest payable of
$6.0 million
due primarily to the interest expense incurred on our 4.375 percent Senior Notes, which is paid semi-annually on June 15 and December 15;
|
•
|
an increase in accounts payable of
$1.4 million
due primarily to the timing of project expenditures;
|
•
|
an increase in accounts payable
–
related party of
$1.4 million
attributable 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
|
•
|
a decrease in accrued liabilities
–
related party of
$3.1 million
due to Valero’s use of deficiency payments that it had paid to us in previous periods associated with its minimum volume commitments to us.
|
•
|
pay
$115.0 million
in cash distributions to limited partners and our general partner;
|
•
|
fund the
$71.8 million
acquisition of the Red River crude system;
|
•
|
fund
$24.3 million
in capital expenditures; and
|
•
|
pay
$1.0 million
in debt issuance and offering costs.
|
•
|
the construction of a new tank at our Meraux terminal;
|
•
|
the construction of a new tank at the St. Charles terminal to be used by DGD;
|
•
|
the construction of a new tank and improvement of assets at our Port Arthur products system;
|
•
|
the upgrade of certain pipelines at our Collierville crude system that will enhance the flexibility of crude oil receipts and shipments; and
|
•
|
the improvement of assets at our Three Rivers terminal.
|
•
|
the construction of the DGD rail loading facility and a new tank at the St. Charles terminal;
|
•
|
the construction of a new tank at our Port Arthur products system; and
|
•
|
the improvement of assets at our Corpus Christi terminals.
|
|
|
|
September 30, 2018
|
||||||||||||||||||||||||||||||
|
|
|
Expected Maturity Dates
|
|
|
|
|
||||||||||||||||||||||||||
|
|
|
Remainder
of 2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
There-
after |
|
Total (a)
|
|
Fair
Value |
||||||||||||||||
Fixed rate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
|
$
|
983,810
|
|
|
Average interest rate
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
4.44
|
%
|
|
4.44
|
%
|
|
|
||||||||||
Variable rate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
285,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
285,000
|
|
|
$
|
285,000
|
|
|
Average interest rate
|
|
—
|
%
|
|
—
|
%
|
|
3.60
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
3.60
|
%
|
|
|
|
|
|
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
|
%
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(a) Excludes unamortized discount and deferred issuance costs.
|
(a)
|
Evaluation of disclosure controls and procedures
|
(b)
|
Changes in internal control over financial reporting
|
Exhibit
No.
|
|
Description
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
***101
|
|
Interactive Data Files
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
***
|
Submitted electronically herewith.
|
+
|
Certain schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Valero Energy Partners LP agrees to furnish supplementally a copy of any such omitted schedule to the SEC upon request
.
|
|
|
|
|
VALERO ENERGY PARTNERS LP
|
|
|
(Registrant)
|
|
|
|
|
|
By:
|
Valero Energy Partners GP LLC
|
|
|
its general partner
|
|
|
|
|
|
|
|
By:
|
/s/ Donna M. Titzman
|
|
|
Donna M. Titzman
|
|
|
Executive Vice President and
|
|
|
Chief Financial Officer
|
|
|
(Duly Authorized Officer and Principal
|
|
|
Financial and Accounting Officer)
|
/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
|
|
|
Executive Vice President and Chief Financial Officer, 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)
|
|
|
November 5, 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
|
|
|
Executive Vice President and Chief Financial Officer
|
||
Valero Energy Partners GP LLC
|
|
|
(the general partner of Valero Energy Partners LP)
|
|
|
November 5, 2018
|
|
|