Business Combinations and Asset Acquisitions (Notes)

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Business Combination Disclosure

Business Combinations and Asset Acquisition

Business Combinations.

2015 Business Combination. On May 1, 2015, we acquired a refined products terminal in Atlanta, Georgia for net cash consideration of $54.7 million. As this acquired business is not significant to our consolidated operating results and financial position, pro forma financial information and the purchase price allocation of acquired assets and liabilities have not been presented. The results of the acquired operations subsequent to the acquisition date have been included in the accompanying consolidated financial statements and in the tables below in our refined products operating segment.

2013 Business Combination. During 2013, we acquired certain refined petroleum products pipelines and terminals from Plains All American Pipeline, L.P. We have accounted for this acquisition as a business combination under the acquisition method of accounting in accordance with ASC 805, Business Combinations. The acquisition was completed in two parts, as follows:

• New Mexico/Texas System. In July 2013, we acquired approximately 250-miles of common carrier pipeline that transports refined petroleum products from El Paso, Texas north to Albuquerque, New Mexico and transports products south to the United States–Mexico border for delivery within Mexico via a third-party pipeline for $57.0 million. We funded this acquisition with cash on hand.

• Rocky Mountain System. In November 2013, we acquired approximately 550 miles of common carrier pipeline that distributes refined petroleum products in Colorado, South Dakota and Wyoming for $135.0 million. The system includes four terminals with nearly 1.7 million barrels of storage. We funded this acquisition primarily with proceeds from our $300.0 million debt offering we completed in October 2013.

The final purchase price and assessment of the fair value of the assets acquired and liabilities assumed in the business combination we completed during 2013 were as follows (in thousands):

Purchase price allocation:	$	192,000
Fair value of assets acquired (liabilities assumed):
Property, plant and equipment	$	192,422
Other current assets	2,048
Current environmental liabilities	(2,470		)
Total	$	192,000

The following amounts from this business combination were included in our operating results for the year ending December 31, 2013 (in thousands):

Revenue	$	12,661
Operating profit	$	6,400

These pro forma results are for comparative purposes only and may not be indicative of the results that would have occurred had this acquisition been completed on January 1, 2013 or the results that will be attained in the future (in thousands).

	Year Ended December 31, 2013
	As Reported		Pro Forma
Revenue	$	1,947,730	$	1,974,440
Net income	$	582,237	$	588,583

Significant pro forma adjustments include historical results of the acquired assets and our calculation of G&A expense, depreciation expense and interest expense on borrowings necessary to finance this acquisition. Acquisition and start-up costs related to the assets acquired totaling $2.8 million were recorded to operating expenses during 2013.

Goodwill resulting from a business combination is not subject to amortization.  During the years ended December 31, 2013, 2014 and 2015, we tested goodwill for impairment and concluded no change to the carrying amount of goodwill was required.

2014 Asset Acquisition.

In November 2014, in connection with Oxy's sale of its ownership interest in BridgeTex to a third party, we acquired from a subsidiary of Oxy its ownership interest in a 40-mile crude oil pipeline that extends from our East Houston, Texas terminal to Texas City, Texas, and 1.4 million barrels of crude oil tankage and related infrastructure at the East Houston, Texas terminal for $75.0 million. At the time of this acquisition, construction of the crude oil storage tankage was complete; however, only a portion of the pipeline construction from East Houston to Texas City, Texas had been completed. Following this transaction, our ownership in these assets was 100%. Concurrent with this transaction, BridgeTex entered into a long-term lease agreement for capacity on our Houston-area crude oil distribution system.