Investments in Non-Controlled Entities

Our investments in non-controlled entities at June 30, 2017 were comprised of:



Entity		Ownership Interest
BridgeTex Pipeline Company, LLC (“BridgeTex”)		50%
Double Eagle Pipeline LLC (“Double Eagle”)		50%
HoustonLink Pipeline Company, LLC (“HoustonLink”)		50%
Powder Springs Logistics, LLC (“Powder Springs”)		50%
Saddlehorn Pipeline Company, LLC (“Saddlehorn”)		40%
Seabrook Logistics, LLC (“Seabrook”)		50%
Texas Frontera, LLC (“Texas Frontera”)		50%

We serve as operator of BridgeTex, HoustonLink, Powder Springs, Saddlehorn, Texas Frontera and the pipeline activities of Seabrook. We receive fees for management services as well as reimbursement or payment to us for certain direct operational payroll and other overhead costs. The management fees we have received are reported as affiliate management fee revenue on our consolidated statements of income. Cost reimbursements we receive from these entities in connection with our operating services are included as reductions to costs and expenses on our consolidated statements of income and totaled $1.0 million and $1.4 million during the three months ended June 30, 2016 and 2017, respectively, and $1.5 million and $2.4 million during the six months ended June 30, 2016 and 2017, respectively.

We recorded the following revenue from certain of these non-controlled entities in our consolidated statements of income (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2017		2016		2017
Transportation and terminals revenue:
BridgeTex, capacity lease	$	8.8	$	9.0	$	17.7	$	17.9
Double Eagle, throughput revenue	$	0.9	$	1.0	$	1.6	$	1.8
Saddlehorn, storage revenue	$	—	$	0.6	$	—	$	1.1

Our consolidated balance sheets reflected the following balances related to our investments in non-controlled entities (in millions):



	December 31, 2016				June 30, 2017
	Trade Accounts Receivable		Other Accounts Receivable		Trade Accounts Receivable		Other Accounts Receivable
Double Eagle	$	0.3	$	—	$	0.4	$	—
Powder Springs	$	—	$	—	$	—	$	1.0
Saddlehorn	$	—	$	0.1	$	—	$	0.1
BridgeTex	$	—	$	—	$	—	$	0.1

In addition to the transactions noted above, we incurred charges of $3.9 million for transportation of crude oil at published spot tariff rates on the BridgeTex pipeline during the three months ended June 30, 2017. We recorded these charges as cost of product sales in our consolidated statements of income. We recognized an affiliate payable to BridgeTex on our consolidated balance sheets as of June 30, 2017 in the amount of $1.9 million in connection with this activity.

In January 2017, we entered into an agreement to guarantee our 50% pro rata share, up to $50.0 million, of obligations under Powder Springs’ credit facility. At June 30, 2017, we recognized a $0.8 million other current liability and a corresponding increase in our investment in non-controlled entities on our consolidated balance sheet to reflect the fair value of this guarantee.

In February 2016, we transferred a 50% membership interest in Osage Pipe Line Company, LLC (“Osage”) to an affiliate of HollyFrontier Corporation. In conjunction with this transaction, we entered into several commercial agreements with affiliates of HollyFrontier Corporation, which we recorded at that time as a $43.7 million intangible asset and an $8.3 million other receivable on our consolidated balance sheets. The intangible asset will be amortized over the 20-year life of the contracts received. We recognized a $28.1 million non-cash gain in 2016 in relation to this transaction.

The financial results from Texas Frontera are included in our marine storage segment, the financial results from BridgeTex, Double Eagle, HoustonLink, Osage, Saddlehorn and Seabrook are included in our crude oil segment and the financial results from Powder Springs are included in our refined products segment, each as earnings of non-controlled entities.

A summary of our investments in non-controlled entities follows (in thousands):




Investments at December 31, 2016	$	931,255
Additional investment	56,085
Earnings of non-controlled entities:
Proportionate share of earnings	48,196
Amortization of excess investment and capitalized interest	(1,174		)
Earnings of non-controlled entities	47,022
Less:
Distributions of earnings from investments in non-controlled entities	46,754
Distributions in excess of earnings of non-controlled entities	11,152
Investments at June 30, 2017	$	976,456