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Fair Value Disclosures

12 Months Ended

Dec. 31, 2022

Fair Value Methods and Assumptions

We used the following methods and assumptions in estimating the fair value of our assets and liabilities:

•Commodity derivatives contracts. These include exchange-traded and over-the-counter derivative contracts related to petroleum products. These contracts are carried at fair value in our consolidated balance sheets. The exchange-traded contracts are valued based on quoted prices in active markets, while the over-the-counter contracts are valued based on observable market data inputs including published commodity pricing data. See Note 14 – Derivative Financial Instruments for further disclosures regarding these contracts.

•Long-term receivables. These include payments receivable under a sales-type leasing arrangement and cost reimbursement agreements. These receivables were recorded at fair value in our consolidated balance sheets, using then-current market rates to estimate the present value of future cash flows.

•Contractual obligations. These primarily include a long-term contractual obligation we entered into in connection with the 2020 sale of three marine terminals to Buckeye. This obligation requires us to perform certain environmental remediation work on Buckeye’s behalf at the New Haven, Connecticut terminal. This contractual obligation was recorded at fair value in our consolidated balance sheets upon initial recognition and was calculated using our best estimate of potential outcome scenarios to determine our liability for the remediation costs required in this agreement.

•Investment in Double Eagle. In December 2022, as a result of the non-renewal on existing terms of customer commitments that expire in 2023 and reduced demand for transportation of condensate from the Eagle Ford basin, we evaluated our investment in Double Eagle for an other-

than-temporary impairment. The fair value was measured using an income approach and discounted cash flow analysis, which resulted in us recording a $58.4 million charge to earnings to adjust the carrying value of our investment to fair value.

•Debt. The fair value of our publicly traded notes was based on the prices of those notes at December 31, 2021 and 2022; however, where recent observable market trades were not available, prices were determined using adjustments to the last traded value for that debt issuance or by adjustments to the prices of similar debt instruments of peer entities that are actively traded. The carrying amount of borrowings, if any, under our revolving credit facility and our commercial paper program approximates fair value due to the frequent repricing of these obligations.

Fair Value Measurements

The following tables summarize the carrying amounts, fair values and fair value measurements recorded or disclosed as of December 31, 2021 and 2022, based on the three levels established by ASC 820; Fair Value Measurements and Disclosures (in millions):


					Fair Value Measurements as of December 31, 2021 using:
Assets (Liabilities)	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Commodity derivatives contracts	$	(17.2)	$	(17.2)	$	(18.6)	$	1.4	$	—


Long-term receivables	$	10.1	$	10.1	$	—	$	—	$	10.1
Contractual obligations	$	(11.3)	$	(11.3)	$	—	$	(1.5)	$	(9.8)
Debt	$	(5,088.8)	$	(5,711.5)	$	—	$	(5,711.5)	$	—


					Fair Value Measurements as of December 31, 2022 using:
Assets (Liabilities)	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Commodity derivatives contracts	$	(8.9)	$	(8.9)	$	1.4	$	(10.3)	$	—



Long-term receivables	$	8.3	$	8.3	$	—	$	—	$	8.3
Contractual obligations	$	(9.6)	$	(9.6)	$	—	$	—	$	(9.6)
Investment in Double Eagle	$	11.8	$	11.8	$	—	$	—	$	11.8
Debt	$	(5,015.0)	$	(4,232.5)	$	—	$	(4,232.5)	$	—

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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