2018 |
(Mark One) | ||||
[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
For the fiscal year ended | December 31, 2018 | |||
OR | ||||
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from | to | |||
Commission file number: 001-36011 |
Delaware | 38-3899432 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of each class | Name of each exchange on which registered | |
Common Units, Representing Limited Partnership Interests | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None | ||||
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | [X] Yes [ ] No | |||
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. | [ ] Yes [X] No | |||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | [X] Yes [ ] No | |||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). | [X] Yes [ ] No | |||
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. | [X] | |||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | ||||
Large accelerated filer [X] | Accelerated filer [ ] | Non-accelerated filer [ ] | Smaller reporting company [ ] | |
Emerging growth company [ ] | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | [ ] | |||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). | [ ] Yes [X] No |
TABLE OF CONTENTS | |
Item | Page |
System Name | State of Origination/Terminus | Commodity Handled | Interest | Length (Miles) | Gross Capacity (MBD) | Associated Phillips 66 Refinery | |||||||||
Billings Crude System | |||||||||||||||
Glacier | Montana | Crude Oil | 79 | % | 623 | 126 | Billings | ||||||||
Billings Products System | |||||||||||||||
Seminoe | Montana/Wyoming | Refined Petroleum Products | 100 | 342 | 33 | Billings | |||||||||
Borger Crude System | |||||||||||||||
Line O | Oklahoma/Texas | Crude Oil | 100 | 276 | 37 | Borger | |||||||||
New Mexico Crude | New Mexico/Texas | Crude Oil | 100 | 129 | 106 | Borger | |||||||||
West Texas Crude | Texas | Crude Oil | 100 | 699 | 156 | Borger | |||||||||
Borger Products System | |||||||||||||||
ATA Line | Texas/New Mexico | Refined Petroleum Products | 50 | 293 | 34 | Borger | |||||||||
Borger to Amarillo | Texas | Refined Petroleum Products | 100 | 93 | 76 | Borger | |||||||||
SAAL | Texas | Refined Petroleum Products | 33 | 102 | 33 | Borger | |||||||||
SAAL | Texas | Refined Petroleum Products | 54 | 19 | 30 | Borger | |||||||||
Clifton Ridge Crude System | Louisiana | Crude Oil | 100 | 10 | 260 | Lake Charles | |||||||||
Cross-Channel Connector Products System | Texas | Refined Petroleum Products | 100 | 5 | 180 | Sweeny | |||||||||
Eagle Ford Gathering System | Texas | Crude Oil | 100 | 28 | 54 | Sweeny | |||||||||
Gold Line Products System | |||||||||||||||
Gold Line Pipeline | Texas/Illinois | Refined Petroleum Products | 100 | 686 | 120 | Borger/Ponca City | |||||||||
Paola Products Pipeline | Kansas | Refined Petroleum Products | 100 | 106 | 96 | Borger/Ponca City | |||||||||
Hartford Connector Products System | |||||||||||||||
Hartford, Illinois to Explorer Pipeline | Illinois | Refined Petroleum Products | 100 | 1 | 430 | Wood River | |||||||||
Wood River Refinery to Hartford, Illinois | Illinois | Refined Petroleum Products | 100 | 3 | 80 | Wood River | |||||||||
Ponca Crude System | |||||||||||||||
CushPo | Oklahoma | Crude Oil | 100 | 62 | 130 | Ponca City | |||||||||
North Texas Crude | Texas | Crude Oil | 100 | 224 | 28 | Ponca City | |||||||||
Oklahoma Crude | Texas/Oklahoma | Crude Oil | 100 | 217 | 100 | Ponca City | |||||||||
Ponca Products System | |||||||||||||||
Brown Line | Oklahoma/Kansas | Natural Gas Liquids | 100 | 76 | 26 | Ponca City | |||||||||
Cherokee East | Oklahoma/Missouri | Refined Petroleum Products | 100 | 287 | 55 | Ponca City | |||||||||
Cherokee North | Oklahoma/Kansas | Refined Petroleum Products | 100 | 29 | 57 | Ponca City | |||||||||
Cherokee South | Oklahoma | Refined Petroleum Products | 100 | 98 | 46 | Ponca City | |||||||||
Medford | Oklahoma | Natural Gas Liquids | 100 | 42 | 10 | Ponca City | |||||||||
River Parish NGL System | Louisiana | Natural Gas Liquids | 100 | 510 | 133 | Alliance | |||||||||
Standish Pipeline | Oklahoma/Kansas | Refined Petroleum Products | 100 | 92 | 72 | Ponca City | |||||||||
Sweeny to Pasadena Products System | Texas | Refined Petroleum Products | 100 | 120 | 294 | Sweeny |
System Name | State of Origination/Terminus | Commodity Handled | Interest | Length (Miles) | Gross Capacity (MBD) | |||||||
Bakken Pipeline | North Dakota/Texas | Crude Oil | 25.00 | % | 1,915 | 525 | ||||||
Bayou Bridge Pipeline | Texas/Louisiana | Crude Oil | 40.00 | 49 | 480 | |||||||
Explorer Pipeline | Texas/Indiana | Refined Petroleum Products | 21.94 | 1,830 | 660 | |||||||
Sacagawea Pipeline | North Dakota | Crude Oil | 49.50 | 95 | 175 | |||||||
Sand Hills Pipeline | Texas | Natural Gas Liquids | 33.34 | 1,466 | 485 | |||||||
Southern Hills Pipeline | Oklahoma/Texas | Natural Gas Liquids | 33.34 | 941 | 192 | |||||||
STACK Pipeline | Oklahoma | Crude Oil | 50.00 | 149 | 250 |
Facility Name | Location | Commodity Handled | Gross Storage Capacity (MBbl) | Gross Loading Capacity (MBD) | Associated Phillips 66 Refinery | |||||||
Bayway Products System | ||||||||||||
Linden | New Jersey | Refined Petroleum Products | 360 | 121 | Bayway | |||||||
Tremley Point | New Jersey | Refined Petroleum Products | 1,701 | 25 | Bayway | |||||||
Bayway Rail Rack | New Jersey | Crude Oil | N/A | 75 | Bayway | |||||||
Billings Crude System | ||||||||||||
Buffalo Crude | Montana | Crude Oil | 303 | N/A | Billings | |||||||
Billings Crude | Montana | Crude Oil | 236 | N/A | Billings | |||||||
Cut Bank | Montana | Crude Oil | 315 | N/A | Billings | |||||||
Billings Products System | ||||||||||||
Casper | Wyoming | Refined Petroleum Products | 365 | 7 | Billings | |||||||
Sheridan | Wyoming | Refined Petroleum Products | 94 | 15 | Billings | |||||||
Borger Crude System | ||||||||||||
Buxton Crude | Oklahoma | Crude Oil | 400 | N/A | Borger | |||||||
Odessa Crude | Texas | Crude Oil | 521 | N/A | Borger | |||||||
Borger Products System | ||||||||||||
Albuquerque Products | New Mexico | Refined Petroleum Products | 274 | 18 | Borger | |||||||
Amarillo Products | Texas | Refined Petroleum Products | 296 | 29 | Borger | |||||||
Lubbock Products | Texas | Refined Petroleum Products | 182 | 17 | Borger | |||||||
Clemens Caverns | Texas | Natural Gas Liquids | 9,000 | N/A | N/A | |||||||
Clifton Ridge Crude System | ||||||||||||
Clifton Ridge | Louisiana | Crude Oil | 3,800 | N/A | Lake Charles | |||||||
Pecan Grove Storage | Louisiana | Crude Oil | 177 | N/A | Lake Charles | |||||||
Ferndale Rail Rack | Washington | Crude Oil | N/A | 30 | Ferndale | |||||||
Gold Line Products System | ||||||||||||
East St. Louis | Illinois | Refined Petroleum Products | 2,031 | 78 | Borger/ Ponca City | |||||||
Jefferson City | Missouri | Refined Petroleum Products | 103 | 16 | Borger/ Ponca City | |||||||
Kansas City | Kansas | Refined Petroleum Products | 1,410 | 66 | Borger/ Ponca City | |||||||
Paola | Kansas | Refined Petroleum Products | 978 | N/A | Borger/ Ponca City | |||||||
Wichita North | Kansas | Refined Petroleum Products | 769 | 19 | Borger/ Ponca City | |||||||
Hartford Connector Products System | ||||||||||||
Hartford | Illinois | Refined Petroleum Products | 1,468 | 25 | Wood River | |||||||
Medford Spheres | Oklahoma | Natural Gas Liquids | 70 | N/A | Ponca City | |||||||
Ponca Crude System | ||||||||||||
Cushing | Oklahoma | Crude Oil | 275 | N/A | Ponca City | |||||||
Ponca City | Oklahoma | Crude Oil | 1,299 | N/A | Ponca City | |||||||
Wichita Falls | Texas | Crude Oil | 225 | N/A | Ponca City | |||||||
Ponca Products System | ||||||||||||
Glenpool | Oklahoma | Refined Petroleum Products | 571 | 19 | Ponca City | |||||||
Mount Vernon Products | Missouri | Refined Petroleum Products | 365 | 46 | Ponca City | |||||||
Mount Vernon NGL | Missouri | Natural Gas Liquids | 105 | 16 | Ponca City | |||||||
Oklahoma City Products | Oklahoma | Refined Petroleum Products | 355 | 48 | Ponca City | |||||||
Ponca City Products | Oklahoma | Refined Petroleum Products | 51 | 23 | Ponca City | |||||||
Ponca City NGL | Oklahoma | Natural Gas Liquids | N/A | 6 | Ponca City | |||||||
Wichita South | Kansas | Refined Petroleum Products | 272 | N/A | Ponca City | |||||||
River Parish NGL System | Louisiana | Natural Gas Liquids | 1,500 | N/A | Alliance | |||||||
Sweeny to Pasadena Products System | ||||||||||||
Pasadena | Texas | Refined Petroleum Products | 3,234 | 65 | Sweeny |
System Name | Location | Commodity Handled | Interest | Gross Storage Capacity (MBbl) | Active Terminaling Capacity* (MBD) | ||||||||
Keene Terminal | North Dakota | Crude Oil | 50 | % | 503 | N/A | |||||||
Palermo Terminal | North Dakota | Crude Oil | 70 | 235 | 100 |
System Name | Location | Commodity Handled | Gross Loading Capacity (MBbl/h)* | Associated Phillips 66 Refinery | ||||
Clifton Ridge Crude System | ||||||||
Clifton Ridge Ship Dock | Louisiana | Crude Oil | 48 | Lake Charles | ||||
Pecan Grove Barge Dock | Louisiana | Crude Oil; Lubricant Base Stocks | 6 | Lake Charles | ||||
Hartford Connector Products System | ||||||||
Hartford Barge Dock | Illinois | Dyed Diesel; Naphtha; Lubricant Base Stocks | 3 | Wood River | ||||
Bayway Products System | ||||||||
Tremley Point | New Jersey | Refined Petroleum Products | 7 | Bayway |
Asset Name | Location | Commodity Handled | Gross Processing Capacity (MBD) | ||||
Merey Sweeny | |||||||
Delayed coker unit | Texas | Crude Oil Residuals | 70 | ||||
Vacuum distillation unit | Texas | Crude Oil Residuals | 125 | ||||
Sweeny Fractionator | Texas | Natural Gas Liquids | 100 |
• | A substantial change has occurred since enactment in either the economic circumstances or the nature of the services that were a basis for the rate. |
• | The complainant was contractually barred from challenging the rate prior to enactment of EPAct 1992 and filed the complaint within 30 days of the expiration of the contractual bar. |
• | A provision of the tariff is unduly discriminatory or preferential. |
• | The effects of changing commodity prices and refining, marketing and petrochemical margins. |
• | The ability of Phillips 66 to obtain credit and financing on acceptable terms in light of uncertainty and illiquidity in credit and capital markets, which could also adversely affect the financial strength of business partners. |
• | A deterioration in Phillips 66’s credit profile could increase Phillips 66’s costs of borrowing money and limit Phillips 66’s access to the capital markets and commercial credit, which could also trigger co-venturer rights under Phillips 66’s joint venture arrangements. |
• | The substantial capital expenditures and operating costs required to comply with existing and future environmental laws and regulations, including climate change regulations, could impact or limit Phillips 66’s current business plans and reduce product demand. |
• | The effects of domestic and worldwide political and economic developments could materially reduce Phillips 66’s profitability and cash flows. |
• | Large capital projects can take many years to complete, and market conditions could significantly deteriorate between the project approval date and the project startup date, negatively impacting Phillips 66’s project returns. |
• | Investments in joint ventures decrease Phillips 66’s ability to manage risk and may adversely affect the distributions that Phillips 66 receives from the joint ventures. |
• | Significant losses resulting from the hazards and risks of operations may not be fully covered by insurance and could adversely affect Phillips 66’s operations and financial results. |
• | Interruptions of supply and increased costs as a result of Phillips 66’s reliance on third-party transportation of crude oil, natural gas liquids (NGL) and refined petroleum products. |
• | Increased regulation of hydraulic fracturing could result in reductions or delays in domestic production of crude oil and natural gas, which could adversely impact Phillips 66’s results of operations. |
• | Competitors that produce their own supply of feedstocks, have more extensive retail outlets, or have greater financial resources may have a competitive advantage over Phillips 66. |
• | Potential losses from Phillips 66’s forward-contract and derivative transactions may have an adverse impact on its results of operations and financial condition. |
• | A significant interruption, including interruptions related to disruptions in information technology systems, in one or more of Phillips 66’s facilities could adversely affect its business. |
• | Any decision by Phillips 66 to temporarily or permanently curtail or shut down operations at one or more of its domestic refineries or other facilities and reduce or terminate its obligations under our commercial agreements. |
• | Indemnification of ConocoPhillips by Phillips 66 for various matters that may arise related to Phillips 66’s separation from ConocoPhillips may have an adverse impact on its results of operations and financial condition. |
• | The volume of NGL, crude oil and refined petroleum products we or our joint ventures transport and terminal, the volume of NGL we fractionate, and the volume of crude oil residuals we process. |
• | The fees and rates we charge with respect to volumes that we transport, store, terminal, process and fractionate. |
• | Changes in revenue we realize under the loss allowance provisions of our regulated tariffs resulting from changes in underlying commodity prices. |
• | Prevailing economic conditions, including commodity prices. |
• | The amount of our operating expenses and general and administrative expenses, including reimbursements to Phillips 66, which are not subject to any caps or other limits. |
• | Phillips 66’s application of credit amounts under our throughput and deficiency agreements, which may be applied towards deficiency payments in future periods. |
• | Phillips 66’s application of any remaining credit amounts to any volumes handled by our assets after the expiration or termination of our commercial agreements. |
• | The level of maintenance capital expenditures we make. |
• | Our debt service requirements and other liabilities. |
• | Our ability to borrow funds and access capital markets. |
• | Restrictions contained in our revolving credit facility and other debt service requirements. |
• | Damages to pipelines, terminals and facilities, related equipment and surrounding properties caused by earthquakes, tornados, hurricanes, floods, fires, severe weather, explosions and other natural disasters and acts of terrorism. |
• | Maintenance, repairs, or mechanical or structural failures at our or Phillips 66’s facilities or at third-party facilities on which our or Phillips 66’s operations are dependent, including electrical shortages, power disruptions and power grid failures. |
• | Damages to and loss of availability of interconnecting third-party pipelines, terminals and other means of delivering crude oil, feedstocks, NGL and refined petroleum products. |
• | Disruption or failure of information technology systems and network infrastructure due to various causes, including unauthorized access or attack. |
• | Curtailments of operations due to severe seasonal weather. |
• | Riots, strikes, lockouts or other industrial disturbances. |
• | Inadvertent damage to pipelines from construction, farm and utility equipment. |
• | The failure to realize expected profitability, growth or accretion. |
• | Environmental or regulatory compliance matters or liabilities. |
• | Title or permit issues. |
• | The diversion of management's attention from our existing businesses. |
• | The incurrence of significant charges, such as impairment of goodwill, or property, plant and equipment or restructuring charges. |
• | The incurrence of unanticipated liabilities and costs for which indemnification is unavailable or inadequate. |
• | Neither our partnership agreement nor any other agreement requires Phillips 66 to pursue a business strategy that favors us or utilizes our assets. For example, Phillips 66 could decide to increase or decrease refinery production, shut down or reconfigure a refinery, pursue and grow particular markets, or undertake acquisition or disposition opportunities, all without regard for the decisions’ impact on us. Phillips 66’s directors and officers have a fiduciary duty to make these decisions in the best interests of the stockholders of Phillips 66. |
• | Phillips 66, as our primary customer, has an economic incentive to cause us to not seek higher tariff rates, even if such higher rates or fees would reflect rates and fees that could be obtained in arm’s length, third-party transactions. |
• | Phillips 66 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. |
• | Our General Partner will determine the amount and timing of asset acquisitions 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. |
• | Our General Partner will determine the amount and timing of many of our cash expenditures and whether a cash 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 available cash from operating surplus that is distributed to our unitholders and to our General Partner and the amount of adjusted operating surplus generated in any given period. |
• | 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 cash distributions, even if the purpose or effect of the borrowing is to make incentive distributions. |
• | Our partnership agreement permits us to classify up to $60 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 interest 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 controls the enforcement of obligations owed to us by our General Partner and its affiliates, including our commercial agreements with Phillips 66. |
• | Our General Partner decides whether to retain separate counsel, accountants or others to perform services for us. |
• | 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 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. This election may result in lower distributions to our common unitholders in certain situations. |
• | Provides that whenever our General Partner makes a determination or takes, or declines to take, any other action in its capacity as our General Partner, our General Partner 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 determination or the decision to take or decline to take such action was in the best interests of the partnership, and 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. |
• | Provides that our General Partner will not have any liability to us or our unitholders for decisions made in its capacity as a general partner so long as it acted in good faith. |
• | Provides that our General Partner and its officers and directors will not be liable for monetary damages to us or our limited partners 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. |
• | Provides that our General Partner will not be in breach of its obligations under our partnership agreement or its fiduciary duties to us or our limited partners if a transaction with an affiliate or the resolution of a conflict of interest is approved in accordance with, or otherwise meets the standards set forth in, our partnership agreement. |
• | Our unitholders’ proportionate ownership interest in us will decrease. |
• | The amount of cash we have available to distribute on each unit may decrease. |
• | The ratio of taxable income to distributions may increase. |
• | The relative voting strength of each previously outstanding unit may be diminished. |
• | The market price of our common units may decline. |
• | Management of our business may no longer reside solely with our General Partner. |
• | Affiliates of the newly admitted general partner may compete with us, and neither that general partner nor such affiliates will have any obligation to present business opportunities to us. |
• | Limiting our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes. |
• | Reducing our funds available for operations, business opportunities and distributions to unitholders because of the amount of our cash flow required to make interest payments on our debt. |
• | Making us more vulnerable to competitive pressures or a downturn in our business or the economy, generally. |
• | Limiting our flexibility to respond to changing business and economic conditions. |
• | Provide for the proper conduct of our business (including reserves for our future capital expenditures, future acquisitions and future credit needs), |
• | Comply with applicable law or any of our debt instruments or other agreements, |
• | 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 distributions if the effect of the establishment of such reserves will prevent us from distributing the minimum quarterly distribution on all common units and any cumulative arrearages on such common units for the current quarter); |
Total Quarterly Distribution Per Unit Target Amount | Marginal Percentage Interest in Distributions | |||||||||
Common Unitholders | General Partner | |||||||||
Minimum Quarterly Distribution | $0.212500 | 98 | % | 2 | % | |||||
First Target Distribution | Above $0.212500 | 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 $0.318750 | 75 | % | 25 | % | ||||
Thereafter | Above $0.318750 | 50 | % | 50 | % |
Millions of Dollars Except Per Unit Amounts | ||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||
Statement of income data: | ||||||||||||||||
Operating revenues—related parties | $ | 1,012 | 894 | 727 | 582 | 531 | ||||||||||
Operating revenues—third parties | 33 | 40 | 31 | 30 | 24 | |||||||||||
Equity in earnings of affiliates | 439 | 223 | 114 | 77 | — | |||||||||||
Net income | 796 | 524 | 408 | 306 | 245 | |||||||||||
Net income attributable to the Partnership | 796 | 461 | 301 | 194 | 116 | |||||||||||
Limited partners’ interest in net income attributable to the Partnership | 519 | 292 | 209 | 153 | 108 | |||||||||||
Net income attributable to the Partnership per limited partner unit | ||||||||||||||||
Common units—basic | 4.22 | 2.60 | 2.20 | 2.02 | 1.48 | |||||||||||
Common units—diluted | 4.00 | 2.59 | 2.20 | 2.02 | 1.48 | |||||||||||
Subordinated units—Phillips 66—basic and diluted | — | — | — | 1.24 | 1.45 | |||||||||||
Cash distributions paid per limited partner unit | 2.9360 | 2.4050 | 1.9750 | 1.5380 | 1.1176 | |||||||||||
Balance sheet data: | ||||||||||||||||
Total assets | 5,819 | 5,334 | 4,109 | 3,662 | 2,034 | |||||||||||
Long-term debt | 2,998 | 2,920 | 2,396 | 1,091 | 18 | |||||||||||
Notes payable—related parties | — | — | — | 964 | 764 |
Item 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | The proportional share of equity affiliates’ net interest expense, income taxes and depreciation and amortization. |
• | Transaction costs associated with acquisitions. |
• | Certain other noncash items, including expenses indemnified by Phillips 66. |
• | Our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of EBITDA and adjusted EBITDA, financing methods. |
• | The ability of our business to generate sufficient cash to support our decision to make distributions to our unitholders. |
• | Our ability to incur and service debt and fund capital expenditures. |
• | The viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities. |
Millions of Dollars | |||||||||
Years Ended December 31 | 2018 | 2017 | 2016 | ||||||
Revenues and Other Income | |||||||||
Operating revenues—related parties | $ | 1,012 | 894 | 727 | |||||
Operating revenues—third parties | 33 | 40 | 31 | ||||||
Equity in earnings of affiliates | 439 | 223 | 114 | ||||||
Other income | 2 | 12 | 1 | ||||||
Total revenues and other income | 1,486 | 1,169 | 873 | ||||||
Costs and Expenses | |||||||||
Operating and maintenance expenses | 354 | 321 | 216 | ||||||
Depreciation | 117 | 116 | 96 | ||||||
General and administrative expenses | 64 | 69 | 65 | ||||||
Taxes other than income taxes | 35 | 33 | 33 | ||||||
Interest and debt expense | 115 | 101 | 52 | ||||||
Other expenses | 1 | 1 | 1 | ||||||
Total costs and expenses | 686 | 641 | 463 | ||||||
Income before income taxes | 800 | 528 | 410 | ||||||
Income tax expense | 4 | 4 | 2 | ||||||
Net income | 796 | 524 | 408 | ||||||
Less: Net income attributable to Predecessors | — | 63 | 107 | ||||||
Net income attributable to the Partnership | 796 | 461 | 301 | ||||||
Less: Preferred unitholders’ interest in net income attributable to the Partnership | 37 | 9 | — | ||||||
Less: General partner’s interest in net income attributable to the Partnership | 240 | 160 | 92 | ||||||
Limited partners’ interest in net income attributable to the Partnership | $ | 519 | 292 | 209 | |||||
Net cash provided by operating activities | $ | 892 | 724 | 492 | |||||
Adjusted EBITDA | $ | 1,137 | 754 | 471 | |||||
Distributable cash flow | $ | 854 | 572 | 380 |
Year Ended December 31 | |||||||||
2018 | 2017 | 2016 | |||||||
Wholly Owned Operating Data | |||||||||
Pipelines | |||||||||
Pipeline revenues (millions of dollars) | $ | 454 | 424 | 408 | |||||
Pipeline volumes(1) (thousands of barrels daily) | |||||||||
Crude oil | 1,016 | 916 | 940 | ||||||
Refined petroleum products and NGL | 929 | 950 | 881 | ||||||
Total | 1,945 | 1,866 | 1,821 | ||||||
Average pipeline revenue per barrel (dollars) | $ | 0.64 | 0.62 | 0.61 | |||||
Terminals | |||||||||
Terminal revenues (millions of dollars) | $ | 157 | 152 | 160 | |||||
Terminal throughput (thousands of barrels daily) | |||||||||
Crude oil(2) | 462 | 421 | 428 | ||||||
Refined petroleum products | 780 | 767 | 755 | ||||||
Total | 1,242 | 1,188 | 1,183 | ||||||
Average terminaling revenue per barrel (dollars) | $ | 0.34 | 0.35 | 0.37 | |||||
Storage, processing and other revenues (millions of dollars) | $ | 434 | 358 | 190 | |||||
Total operating revenues (millions of dollars) | $ | 1,045 | 934 | 758 | |||||
Joint Venture Operating Data(3) | |||||||||
Crude oil, refined petroleum products and NGL (thousands of barrels daily) | 652 | 472 | 293 |
Millions of Dollars | |||||||||
Year Ended December 31 | |||||||||
2018 | 2017 | 2016 | |||||||
Reconciliation to Net Income Attributable to the Partnership | |||||||||
Net income attributable to the Partnership | $ | 796 | 461 | 301 | |||||
Plus: | |||||||||
Net income attributable to Predecessors | — | 63 | 107 | ||||||
Net income | 796 | 524 | 408 | ||||||
Plus: | |||||||||
Depreciation | 117 | 116 | 96 | ||||||
Net interest expense | 114 | 99 | 52 | ||||||
Income tax expense | 4 | 4 | 2 | ||||||
EBITDA | 1,031 | 743 | 558 | ||||||
Plus: | |||||||||
Proportional share of equity affiliates’ net interest, taxes and depreciation | 101 | 66 | 45 | ||||||
Expenses indemnified or prefunded by Phillips 66 | 1 | 8 | 6 | ||||||
Transaction costs associated with acquisitions | 4 | 4 | 4 | ||||||
Less: | |||||||||
EBITDA attributable to Predecessors | — | 67 | 142 | ||||||
Adjusted EBITDA | 1,137 | 754 | 471 | ||||||
Plus: | |||||||||
Deferred revenue impacts* † | (6 | ) | 6 | 11 | |||||
Less: | |||||||||
Equity affiliate distributions less than proportional EBITDA | 64 | 29 | 28 | ||||||
Maintenance capital expenditures† | 62 | 50 | 22 | ||||||
Net interest expense | 114 | 100 | 52 | ||||||
Preferred unit distributions | 37 | 9 | — | ||||||
Distributable cash flow | $ | 854 | 572 | 380 |
Millions of Dollars | |||||||||
Year Ended December 31 | |||||||||
2018 | 2017 | 2016 | |||||||
Reconciliation to Net Cash Provided by Operating Activities | |||||||||
Net cash provided by operating activities | $ | 892 | 724 | 492 | |||||
Plus: | |||||||||
Net interest expense | 114 | 99 | 52 | ||||||
Income tax expense | 4 | 4 | 2 | ||||||
Changes in working capital | (20 | ) | (30 | ) | 28 | ||||
Undistributed equity earnings | 5 | 1 | (1 | ) | |||||
Deferred revenues and other liabilities | 42 | (43 | ) | (9 | ) | ||||
Other | (6 | ) | (12 | ) | (6 | ) | |||
EBITDA | 1,031 | 743 | 558 | ||||||
Plus: | |||||||||
Proportional share of equity affiliates’ net interest, taxes and depreciation | 101 | 66 | 45 | ||||||
Expenses indemnified or prefunded by Phillips 66 | 1 | 8 | 6 | ||||||
Transaction costs associated with acquisitions | 4 | 4 | 4 | ||||||
Less: | |||||||||
EBITDA attributable to Predecessors | — | 67 | 142 | ||||||
Adjusted EBITDA | 1,137 | 754 | 471 | ||||||
Plus: | |||||||||
Deferred revenue impacts* † | (6 | ) | 6 | 11 | |||||
Less: | |||||||||
Equity affiliate distributions less than proportional EBITDA | 64 | 29 | 28 | ||||||
Maintenance capital expenditures† | 62 | 50 | 22 | ||||||
Net interest expense | 114 | 100 | 52 | ||||||
Preferred unit distributions | 37 | 9 | — | ||||||
Distributable cash flow | $ | 854 | 572 | 380 |
• | $500 million of 3.750% Senior Notes due March 1, 2028. |
• | An additional $150 million of our 4.680% Senior Notes due February 15, 2045. |
• | $500 million of 3.550% Senior Notes due October 1, 2026. |
• | $625 million of 4.900% Senior Notes due October 1, 2046. |
• | The October 2017 Bakken Pipeline/Merey Sweeny Acquisition, consisting of a 25 percent interest in the Bakken Pipeline and a 100 percent interest in Merey Sweeny. |
• | The October 2016 Eagle Acquisition, consisting of various Phillips 66 pipeline and terminal assets. |
• | The May 2016 Subsequent Fractionator Acquisition, consisting of the remaining 75 percent interest in Phillips 66 Sweeny Frac LLC (Sweeny Frac LLC) and 100 percent of the Standish Pipeline. |
• | The March 2016 Initial Fractionator Acquisition, consisting of a 25 percent controlling interest in Sweeny Frac LLC. |
Millions of Dollars | |||||||||
2018 | 2017 | 2016 | |||||||
Capital expenditures and investments attributable to Partnership | |||||||||
Expansion | $ | 710 | 300 | 439 | |||||
Maintenance | 66 | 52 | 22 | ||||||
Total | 776 | 352 | 461 | ||||||
Capital expenditures attributable to Predecessors | — | 82 | 96 | ||||||
Total capital expenditures and investments | $ | 776 | 434 | 557 |
• | Development of Gray Oak Pipeline system, which will provide crude oil transportation from the Permian Basin and Eagle Ford to destinations in the Corpus Christi and Sweeny/Freeport markets on the Texas Gulf Coast. |
• | Contributions to Bayou Bridge for the construction of a pipeline from Nederland, Texas, to Lake Charles, Louisiana, and to continue progress on its pipeline segment from Lake Charles to St. James, Louisiana. |
• | Acquisition of certain southeast Louisiana NGL logistics assets comprising approximately 500 miles of pipelines and a storage cavern connecting multiple fractionation facilities, refineries and a petrochemical facility. |
• | Contributions to Sand Hills to increase capacity on its NGL system. |
• | Construction activities related to a new isomerization unit at the Phillips 66 Lake Charles Refinery. |
• | Acquisition of our 50-percent interest in STACK joint venture and contributions for subsequent pipeline expansion activities. |
• | Contributions to Dakota Access and ETCO for post-construction spending related to Bakken Pipeline. |
• | Construction activities related to the Palermo Rail Terminal, Sacagawea Crude Pipeline, the New Town injection point, Keene CDP Terminal and Sacagawea Gas Pipeline. |
• | Construction activities related to increasing storage capacity at Clemens Caverns. |
• | Spending associated with other return, reliability and maintenance projects in our Transportation and NGL business. |
Quarter Ended | Quarterly Cash Distribution Per Common Unit* (Dollars) | Total Quarterly Cash Distribution (Millions of Dollars) | Date of Distribution | |||||||||
December 31, 2018 | $ | 0.835 | $ | 171 | February 13, 2019 | |||||||
September 30, 2018 | 0.792 | 160 | November 13, 2018 | |||||||||
June 30, 2018 | 0.752 | 148 | August 13, 2018 | |||||||||
March 31, 2018 | 0.714 | 139 | April 30, 2018 | |||||||||
December 31, 2017 | 0.678 | 129 | February 13, 2018 | |||||||||
September 30, 2017 | 0.646 | 121 | November 13, 2017 | |||||||||
June 30, 2017 | 0.615 | 104 | August 11, 2017 | |||||||||
March 31, 2017 | 0.586 | 95 | May 12, 2017 |
Millions of Dollars | |||||||||||||||
Payments Due by Period | |||||||||||||||
Total | Up to 1 Year | Years 2-3 | Years 4-5 | After 5 Years | |||||||||||
Debt obligations (a) | $ | 3,075 | 50 | 450 | — | 2,575 | |||||||||
Interest on debt | 1,868 | 116 | 218 | 212 | 1,322 | ||||||||||
Operating lease obligations | 106 | 3 | 6 | 6 | 91 | ||||||||||
Purchase obligations (b) | 208 | 182 | 14 | 5 | 7 | ||||||||||
Other long-term liabilities: | |||||||||||||||
Asset retirement obligations | 11 | — | — | — | 11 | ||||||||||
Accrued environmental costs | 2 | 1 | — | — | 1 | ||||||||||
Total | $ | 5,270 | 352 | 688 | 223 | 4,007 |
(a) | See Note 11—Debt, in the Notes to Consolidated Financial Statements, for additional information. |
(b) | Represents any agreement to purchase goods or services that is enforceable and legally binding and that specifies all significant terms. Includes accounts payable reflected on our consolidated balance sheet. |
Millions of Dollars, Except as Indicated | ||||||||||||
Expected Maturity Date | Fixed-Rate Maturity | Weighted-Average Interest Rate | Floating Rate Maturity | Weighted-Average Interest Rate | ||||||||
At December 31, 2018 | ||||||||||||
2019 | $ | — | $ | 50 | 3.7 | % | ||||||
2020 | 300 | 2.6 | % | 25 | 1.9 | % | ||||||
2021 | — | 125 | 3.0 | % | ||||||||
2022 | — | — | ||||||||||
2023 | — | — | ||||||||||
Thereafter | 2,575 | 4.1 | % | — | ||||||||
Total | $ | 2,875 | $ | 200 | ||||||||
Fair value | $ | 2,660 | $ | 200 |
Millions of Dollars, Except as Indicated | ||||||||||||
Expected Maturity Date | Fixed-Rate Maturity | Weighted-Average Interest Rate | Floating Rate Maturity | Weighted-Average Interest Rate | ||||||||
At December 31, 2017 | ||||||||||||
2018 | $ | — | $ | 25 | 1.9 | % | ||||||
2019 | — | — | ||||||||||
2020 | 300 | 2.6 | % | 25 | 1.9 | % | ||||||
2021 | — | 50 | 1.9 | % | ||||||||
2022 | — | — | ||||||||||
Thereafter | 2,575 | 4.1 | % | — | ||||||||
Total | $ | 2,875 | $ | 100 | ||||||||
Fair value | $ | 2,918 | $ | 100 |
• | The continued ability of Phillips 66 to satisfy its obligations under our commercial and other agreements. |
• | Reductions in the volume of crude oil, NGL and refined petroleum products we transport, fractionate, process, terminal and store. |
• | Changes to the tariff rates with respect to volumes that we transport through our regulated assets, which rates are subject to review and possible adjustment by federal and state regulators. |
• | Changes in revenue we realize under the loss allowance provisions of our regulated tariffs resulting from changes in underlying commodity prices. |
• | Fluctuations in the prices and demand for crude oil, NGL and refined petroleum products. |
• | Changes in global economic conditions and the effects of a global economic downturn on the business of Phillips 66 and the business of its suppliers, customers, business partners and credit lenders. |
• | Potential liabilities associated with the risks and operational hazards inherent in transporting, fractionating, processing, terminaling and storing crude oil, NGL and refined petroleum products. |
• | Curtailment of operations due to severe weather disruption or natural disasters; riots, strikes, lockouts or other industrial disturbances; or failure of information technology systems due to various causes, including unauthorized access or attack. |
• | Accidents or other unscheduled shutdowns affecting our pipelines, processing, fractionating, terminaling, and storage facilities or equipment, or those of our suppliers or customers. |
• | Our inability to obtain or maintain permits in a timely manner, if at all, including those necessary for capital projects, or the revocation or modification of existing permits. |
• | Our inability to comply with government regulations or make capital expenditures required to maintain compliance. |
• | The failure to complete construction of announced and future capital projects in a timely manner and any cost overruns associated with such projects. |
• | Our ability to successfully execute growth strategies, whether through organic growth or acquisitions. |
• | The operation, financing and distribution decisions of our joint ventures. |
• | Costs or liabilities associated with federal, state and local laws and regulations relating to environmental protection and safety, including spills, releases and pipeline integrity. |
• | Costs associated with compliance with evolving environmental laws and regulations on climate change. |
• | Costs associated with compliance with safety regulations, including pipeline integrity management program testing and related repairs. |
• | Changes in the cost or availability of third-party vessels, pipelines, railcars and other means of delivering and transporting crude oil, NGL and refined petroleum products. |
• | Direct or indirect effects on our business resulting from actual or threatened terrorist incidents or acts of war. |
• | Our ability to comply with the terms of our credit facility, indebtedness and other financing arrangements, which, if accelerated, we may not be able to repay. |
• | Our ability to incur additional indebtedness or our ability to obtain financing on terms that we deem acceptable, including the refinancing of our current obligations; higher interest rates and costs of financing would increase our expenses. |
• | Changes in tax, environmental and other laws and regulations. |
• | The factors generally described in “Item 1A. Risk Factors” in this report. |
Page | |
/s/ Greg C. Garland | /s/ Kevin J. Mitchell | |
Greg C. Garland | Kevin J. Mitchell | |
Chairman of the Board of Directors and Chief Executive Officer Phillips 66 Partners GP LLC (the general partner of Phillips 66 Partners LP) | Director, Vice President and Chief Financial Officer Phillips 66 Partners GP LLC (the general partner of Phillips 66 Partners LP) | |
Consolidated Statement of Income | Phillips 66 Partners LP |
Millions of Dollars | |||||||||
Years Ended December 31 | 2018 | 2017 | 2016 | ||||||
Revenues and Other Income | |||||||||
Operating revenues—related parties | $ | 1,012 | 894 | 727 | |||||
Operating revenues—third parties | 33 | 40 | 31 | ||||||
Equity in earnings of affiliates | 439 | 223 | 114 | ||||||
Other income | 2 | 12 | 1 | ||||||
Total revenues and other income | 1,486 | 1,169 | 873 | ||||||
Costs and Expenses | |||||||||
Operating and maintenance expenses | 354 | 321 | 216 | ||||||
Depreciation | 117 | 116 | 96 | ||||||
General and administrative expenses | 64 | 69 | 65 | ||||||
Taxes other than income taxes | 35 | 33 | 33 | ||||||
Interest and debt expense | 115 | 101 | 52 | ||||||
Other expenses | 1 | 1 | 1 | ||||||
Total costs and expenses | 686 | 641 | 463 | ||||||
Income before income taxes | 800 | 528 | 410 | ||||||
Income tax expense | 4 | 4 | 2 | ||||||
Net income | 796 | 524 | 408 | ||||||
Less: Net income attributable to Predecessors | — | 63 | 107 | ||||||
Net income attributable to the Partnership | 796 | 461 | 301 | ||||||
Less: Preferred unitholders’ interest in net income attributable to the Partnership | 37 | 9 | — | ||||||
Less: General partner’s interest in net income attributable to the Partnership | 240 | 160 | 92 | ||||||
Limited partners’ interest in net income attributable to the Partnership | $ | 519 | 292 | 209 | |||||
Net Income Attributable to the Partnership Per Limited Partner Unit (dollars) | |||||||||
Common units—basic | $ | 4.22 | 2.60 | 2.20 | |||||
Common units—diluted | 4.00 | 2.59 | 2.20 | ||||||
Weighted-Average Limited Partner Units Outstanding (thousands) | |||||||||
Common units—basic | 122,769 | 112,045 | 95,240 | ||||||
Common units—diluted | 136,588 | 115,339 | 95,240 |
Consolidated Statement of Comprehensive Income | Phillips 66 Partners LP |
Millions of Dollars | |||||||||
Years Ended December 31 | 2018 | 2017 | 2016 | ||||||
Net Income | $ | 796 | 524 | 408 | |||||
Defined benefit plans | |||||||||
Plans sponsored by equity affiliates, net of income taxes | — | — | 1 | ||||||
Other comprehensive income | — | — | 1 | ||||||
Comprehensive Income | $ | 796 | 524 | 409 |
Consolidated Balance Sheet | Phillips 66 Partners LP |
Millions of Dollars | ||||||
At December 31 | 2018 | 2017 | ||||
Assets | ||||||
Cash and cash equivalents | $ | 1 | 185 | |||
Accounts receivable—related parties | 90 | 83 | ||||
Accounts receivable—third parties | 5 | 3 | ||||
Materials and supplies | 13 | 12 | ||||
Prepaid expenses and other current assets | 20 | 9 | ||||
Total current assets | 129 | 292 | ||||
Equity investments | 2,448 | 1,932 | ||||
Net properties, plants and equipment | 3,052 | 2,918 | ||||
Goodwill | 185 | 185 | ||||
Deferred rentals and other assets | 5 | 7 | ||||
Total Assets | $ | 5,819 | 5,334 | |||
Liabilities | ||||||
Accounts payable—related parties | $ | 22 | 21 | |||
Accounts payable—third parties | 88 | 39 | ||||
Accrued property and other taxes | 9 | 15 | ||||
Accrued interest | 36 | 34 | ||||
Short-term debt | 50 | 25 | ||||
Deferred revenues | 60 | 35 | ||||
Other current liabilities | 5 | 2 | ||||
Total current liabilities | 270 | 171 | ||||
Long-term debt | 2,998 | 2,920 | ||||
Asset retirement obligations and accrued environmental costs | 12 | 11 | ||||
Deferred income taxes | 7 | 5 | ||||
Deferred revenues and other liabilities | 23 | 66 | ||||
Total Liabilities | 3,310 | 3,173 | ||||
Equity | ||||||
Preferred unitholders (2018 and 2017—13,819,791) | 746 | 746 | ||||
Common unitholders—public (2018—55,343,918 units issued and outstanding; 2017—52,811,822 units issued and outstanding) | 2,485 | 2,274 | ||||
Common unitholder—Phillips 66 (2018 and 2017—68,760,137 units issued and outstanding) | 592 | 487 | ||||
General partner—Phillips 66 (2018 and 2017—2,480,051 units issued and outstanding) | (1,313 | ) | (1,345 | ) | ||
Accumulated other comprehensive loss | (1 | ) | (1 | ) | ||
Total Equity | 2,509 | 2,161 | ||||
Total Liabilities and Equity | $ | 5,819 | 5,334 |
Consolidated Statement of Cash Flows | Phillips 66 Partners LP |
Millions of Dollars | |||||||||
Years Ended December 31 | 2018 | 2017 | 2016 | ||||||
Cash Flows From Operating Activities | |||||||||
Net income | $ | 796 | 524 | 408 | |||||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||||
Depreciation | 117 | 116 | 96 | ||||||
Undistributed equity earnings | (5 | ) | (1 | ) | 1 | ||||
Deferred revenues and other liabilities | (42 | ) | 43 | 9 | |||||
Other | 6 | 12 | 6 | ||||||
Working capital adjustments | |||||||||
Accounts receivable | (8 | ) | (4 | ) | (58 | ) | |||
Materials and supplies | — | (1 | ) | (2 | ) | ||||
Prepaid expenses and other current assets | (11 | ) | (5 | ) | (2 | ) | |||
Accounts payable | 11 | 14 | 19 | ||||||
Accrued interest | 2 | 7 | 4 | ||||||
Deferred revenues | 30 | 21 | 10 | ||||||
Other accruals | (4 | ) | (2 | ) | 1 | ||||
Net Cash Provided by Operating Activities | 892 | 724 | 492 | ||||||
Cash Flows From Investing Activities | |||||||||
Bakken Pipeline/Merey Sweeny acquisition | — | (729 | ) | — | |||||
Eagle acquisition | — | — | (990 | ) | |||||
Restricted cash received from combination of business | — | 318 | — | ||||||
Collection of loan receivable | — | 8 | — | ||||||
Cash capital expenditures and investments | (738 | ) | (431 | ) | (584 | ) | |||
Return of investment from equity affiliates | 43 | 52 | 16 | ||||||
Net Cash Used in Investing Activities | (695 | ) | (782 | ) | (1,558 | ) | |||
Cash Flows From Financing Activities | |||||||||
Net contributions from (to) Phillips 66 to (from) Predecessors | — | (179 | ) | 45 | |||||
Acquisition of noncontrolling interest in Sweeny Frac LLC | — | — | (656 | ) | |||||
Issuance of debt | 675 | 2,008 | 2,118 | ||||||
Repayment of debt | (575 | ) | (2,152 | ) | (1,096 | ) | |||
Issuance of common units | 128 | 468 | 971 | ||||||
Issuance of preferred units | — | 737 | — | ||||||
Debt issuance costs | — | (6 | ) | (10 | ) | ||||
Distributions to General Partner associated with acquisitions | — | (234 | ) | (119 | ) | ||||
Quarterly distributions to preferred unitholders | (37 | ) | — | — | |||||
Quarterly distributions to common unitholders—public | (158 | ) | (112 | ) | (64 | ) | |||
Quarterly distributions to common unitholder—Phillips 66 | (202 | ) | (157 | ) | (119 | ) | |||
Quarterly distributions to General Partner—Phillips 66 | (216 | ) | (139 | ) | (76 | ) | |||
Other net cash contributions from Phillips 66 | 4 | 7 | 24 | ||||||
Net Cash Provided by (Used in) Financing Activities | (381 | ) | 241 | 1,018 | |||||
Net Change in Cash, Cash Equivalents and Restricted Cash | (184 | ) | 183 | (48 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 185 | 2 | 50 | ||||||
Cash, Cash Equivalents and Restricted Cash at End of Period | $ | 1 | 185 | 2 |
Consolidated Statement of Changes in Equity | Phillips 66 Partners LP | ||||||||||||||
Millions of Dollars | |||||||||||||||
Partnership | |||||||||||||||
Preferred Unitholders Public | Common Unitholders Public | Common Unitholder Phillips 66 | General Partner Phillips 66 | Accum. Other Comprehensive Loss | Net Investment— Predecessors | Total | |||||||||
December 31, 2015 | $ | — | 809 | 233 | (650 | ) | (2 | ) | 1,054 | 1,444 | |||||
Net income attributable to Predecessors | — | — | — | — | — | 107 | 107 | ||||||||
Net contributions to Phillips 66—Predecessors | — | — | — | — | — | 95 | 95 | ||||||||
Issuance of common units | — | 971 | — | — | — | — | 971 | ||||||||
Allocation of net investment to unitholders | — | — | 232 | 34 | — | (266 | ) | — | |||||||
Allocation of net investment—Predecessors and deemed net distributions to General Partner | — | — | — | (119 | ) | — | (990 | ) | (1,109 | ) | |||||
Net income attributable to the Partnership | — | 79 | 130 | 92 | — | — | 301 | ||||||||
Other comprehensive loss | — | — | — | — | 1 | — | 1 | ||||||||
Quarterly cash distributions to unitholders and General Partner* | — | (64 | ) | (119 | ) | (76 | ) | — | — | (259 | ) | ||||
Other contributions from Phillips 66 | — | — | — | 15 | — | — | 15 | ||||||||
December 31, 2016 | — | 1,795 | 476 | (704 | ) | (1 | ) | — | 1,566 | ||||||
Net income attributable to Predecessors | — | — | — | — | — | 63 | 63 | ||||||||
Net contributions from Phillips 66—Predecessors | — | — | — | — | — | 666 | 666 | ||||||||
Issuance of units | 737 | 467 | — | — | — | — | 1,204 | ||||||||
Allocation of net investment—Predecessors and deemed net distributions to General Partner | — | — | — | (681 | ) | — | (729 | ) | (1,410 | ) | |||||
Net income attributable to the Partnership | 9 | 124 | 168 | 160 | — | — | 461 | ||||||||
Quarterly cash distributions to unitholders and General Partner* | — | (112 | ) | (157 | ) | (139 | ) | — | — | (408 | ) | ||||
Other contributions from Phillips 66 | — | — | — | 19 | — | — | 19 | ||||||||
December 31, 2017 | 746 | 2,274 | 487 | (1,345 | ) | (1 | ) | — | 2,161 | ||||||
Cumulative effect of accounting change | — | 13 | 16 | 1 | — | — | 30 | ||||||||
Issuance of common units | — | 128 | — | — | — | — | 128 | ||||||||
Net income attributable to the Partnership | 37 | 228 | 291 | 240 | — | — | 796 | ||||||||
Quarterly cash distributions to unitholders and General Partner* | (37 | ) | (158 | ) | (202 | ) | (216 | ) | — | — | (613 | ) | |||
Other contributions from Phillips 66 | — | — | — | 7 | — | — | 7 | ||||||||
December 31, 2018 | $ | 746 | 2,485 | 592 | (1,313 | ) | (1 | ) | — | 2,509 |
Preferred Units Public | Common Units Public | Common Units Phillips 66 | General Partner Units Phillips 66 | Total Units | ||||||
December 31, 2015 | — | 24,138,750 | 58,349,042 | 1,683,425 | 84,171,217 | |||||
Units issued in a public equity offering | — | 18,996,152 | — | — | 18,996,152 | |||||
Units issued associated with acquisitions | — | — | 5,697,982 | 503,961 | 6,201,943 | |||||
December 31, 2016 | — | 43,134,902 | 64,047,024 | 2,187,386 | 109,369,312 | |||||
Units issued in a public equity offering | — | 3,372,716 | — | — | 3,372,716 | |||||
Units issued in private placement | 13,819,791 | 6,304,204 | — | — | 20,123,995 | |||||
Units issued associated with acquisitions | — | — | 4,713,113 | 292,665 | 5,005,778 | |||||
December 31, 2017 | 13,819,791 | 52,811,822 | 68,760,137 | 2,480,051 | 137,871,801 | |||||
Units issued in public equity offerings | — | 2,532,096 | — | — | 2,532,096 | |||||
December 31, 2018 | 13,819,791 | 55,343,918 | 68,760,137 | 2,480,051 | 140,403,897 |
Notes to Consolidated Financial Statements | Phillips 66 Partners LP |
Level 1: | Quoted prices in an active market for identical assets or liabilities. |
Level 2: | Observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly through market-corroborated inputs. |
Level 3: | Unobservable inputs that are significant to the fair value of assets or liabilities. |
Millions of Dollars | |||||||||
Percentage Ownership | Carrying Value | ||||||||
2018 | 2017 | ||||||||
Bakken Pipeline | 25.00 | % | $ | 608 | 621 | ||||
Bayou Bridge Pipeline, LLC (Bayou Bridge) | 40.00 | 277 | 173 | ||||||
DCP Sand Hills Pipeline, LLC (Sand Hills) | 33.34 | 601 | 515 | ||||||
DCP Southern Hills Pipeline, LLC (Southern Hills) | 33.34 | 206 | 209 | ||||||
Explorer Pipeline Company (Explorer) | 21.94 | 115 | 118 | ||||||
Gray Oak Pipeline, LLC (Gray Oak) | 75.00 | 288 | — | ||||||
Paradigm Pipeline LLC (Paradigm) | 50.00 | 145 | 131 | ||||||
Phillips 66 Partners Terminal LLC (Phillips 66 Partners Terminal) | 70.00 | 71 | 53 | ||||||
South Texas Gateway Terminal LLC (South Texas Gateway Terminal) | 25.00 | 20 | — | ||||||
STACK Pipeline LLC (STACK) | 50.00 | 117 | 112 | ||||||
Total equity investments | $ | 2,448 | 1,932 |
Millions of Dollars | |||||||||
2018 | 2017 | 2016 | |||||||
Bakken Pipeline | $ | 177 | 69 | — | |||||
Bayou Bridge | 14 | 12 | 3 | ||||||
Sand Hills | 119 | 81 | 62 | ||||||
Southern Hills | 37 | 27 | 26 | ||||||
Explorer | 43 | 21 | 23 | ||||||
Gray Oak | 1 | — | — | ||||||
Paradigm | 10 | (1 | ) | (2 | ) | ||||
Phillips 66 Partners Terminal | 28 | 8 | — | ||||||
South Texas Gateway Terminal | — | — | — | ||||||
STACK | 10 | 6 | 2 | ||||||
Total equity in earnings of affiliates | $ | 439 | 223 | 114 |
Millions of Dollars | |||||||||
2018 | 2017 | 2016 | |||||||
Revenues | $ | 2,294 | 1,406 | 840 | |||||
Income before income taxes | 1,536 | 853 | 494 | ||||||
Net income | 1,518 | 778 | 408 | ||||||
Current assets | 751 | 577 | 243 | ||||||
Noncurrent assets | 9,561 | 8,571 | 3,437 | ||||||
Current liabilities | 3,008 | 354 | 396 | ||||||
Noncurrent liabilities | 496 | 3,001 | 231 |
Estimated Useful Lives | Millions of Dollars | |||||||
2018 | 2017 | |||||||
Land | $ | 19 | 19 | |||||
Buildings and improvements | 3 to 30 years | 89 | 88 | |||||
Pipelines and related assets* | 10 to 45 years | 1,398 | 1,372 | |||||
Terminals and related assets* | 25 to 45 years | 710 | 671 | |||||
Rail racks and related assets* | 33 years | 137 | 137 | |||||
Processing and related assets* | 25 years | 842 | 837 | |||||
Caverns and related assets* | 25 to 45 years | 584 | 583 | |||||
Construction-in-progress | 216 | 47 | ||||||
Gross PP&E | 3,995 | 3,754 | ||||||
Less: accumulated depreciation | 943 | 836 | ||||||
Net PP&E | $ | 3,052 | 2,918 |
Millions of Dollars | ||||||
2018 | 2017 | |||||
Beginning balance January 1 | $ | 185 | 185 | |||
Activity during the year | — | — | ||||
Ending balance December 31 | $ | 185 | 185 |
Millions of Dollars | ||||||
2018 | 2017 | |||||
Asset retirement obligations | $ | 11 | 10 | |||
Accrued environmental costs | 2 | 1 | ||||
Total asset retirement obligations and accrued environmental costs | 13 | 11 | ||||
Less: Asset retirement obligations and accrued environmental costs due within one year | 1 | — | ||||
Long-term asset retirement obligations and accrued environmental costs | $ | 12 | 11 |
Millions of Dollars | ||||||
2018 | 2017 | |||||
Balance at January 1 | $ | 10 | 9 | |||
Accretion of discount | 1 | 1 | ||||
New obligations | — | — | ||||
Changes in estimates of existing obligations | — | — | ||||
Balance at December 31 | $ | 11 | 10 |
Millions of Dollars | |||||||||
2018 | 2017 | 2016 | |||||||
Net income attributable to the Partnership | $ | 796 | 461 | 301 | |||||
Less: General partner’s distributions declared (including IDRs)* | 236 | 158 | 91 | ||||||
Limited partners’ distributions declared on preferred units* | 37 | 9 | — | ||||||
Limited partners’ distributions declared on common units* | 382 | 291 | 205 | ||||||
Distributions less than net income attributable to the Partnership | $ | 141 | 3 | 5 |
2018 | |||||||||
Limited Partners’ Common Units | General Partner (including IDRs) | Limited Partners’ Preferred Units | Total | ||||||
Net income attributable to the Partnership (millions): | |||||||||
Distributions declared | $ | 382 | 236 | 37 | 655 | ||||
Distributions less than net income attributable to the Partnership | 137 | 4 | — | 141 | |||||
Net income attributable to the Partnership (basic) | 519 | 240 | 37 | 796 | |||||
Dilutive effect of preferred units(1) | 28 | ||||||||
Net income attributable to the Partnership (diluted) | $ | 547 | |||||||
Weighted-average units outstanding—basic | 122,768,582 | ||||||||
Dilutive effect of preferred units(1) | 13,819,791 | ||||||||
Weighted-average units outstanding—diluted | 136,588,373 | ||||||||
Net income attributable to the Partnership per limited partner unit—basic (dollars) | $ | 4.22 | |||||||
Net income attributable to the Partnership per limited partner unit—diluted (dollars) | 4.00 |
2017 | |||||||||
Limited Partners’ Common Units | General Partner (including IDRs) | Limited Partners’ Preferred Units | Total | ||||||
Net income attributable to the Partnership (millions): | |||||||||
Distributions declared | $ | 291 | 158 | 9 | 458 | ||||
Distributions less than net income attributable to the Partnership | 1 | 2 | — | 3 | |||||
Net income attributable to the Partnership (basic) | 292 | 160 | 9 | 461 | |||||
Dilutive effect of preferred units(1) | 7 | ||||||||
Net income attributable to the Partnership (diluted) | $ | 299 | |||||||
Weighted-average units outstanding—basic | 112,044,824 | ||||||||
Dilutive effect of preferred units(1) | 3,294,032 | ||||||||
Weighted-average units outstanding—diluted | 115,338,856 | ||||||||
Net income attributable to the Partnership per limited partner unit—basic (dollars) | $ | 2.60 | |||||||
Net income attributable to the Partnership per limited partner unit—diluted (dollars) | 2.59 |
2016 | |||||||
Limited Partners’ Common Units | General Partner (including IDRs) | Total | |||||
Net income attributable to the Partnership (millions): | |||||||
Distributions declared | $ | 205 | 91 | 296 | |||
Distributions less than net income attributable to the Partnership | 4 | 1 | 5 | ||||
Net income attributable to the Partnership | $ | 209 | 92 | 301 | |||
Weighted-average units outstanding—basic and diluted | 95,239,901 | ||||||
Net income attributable to the Partnership per limited partner unit—basic and diluted (dollars) | $ | 2.20 |
Millions of Dollars | ||||||
2018 | 2017 | |||||
2.646% Senior Notes due February 2020 | $ | 300 | 300 | |||
3.605% Senior Notes due February 2025 | 500 | 500 | ||||
3.550% Senior Notes due October 2026 | 500 | 500 | ||||
3.750% Senior Notes due March 2028 | 500 | 500 | ||||
4.680% Senior Notes due February 2045 | 450 | 450 | ||||
4.900% Senior Notes due October 2046 | 625 | 625 | ||||
Tax-exempt bonds due April 2020 and April 2021, at 1.885% and 1.935% at December 31, 2018, and 2017, respectively | 75 | 100 | ||||
Revolving credit facility due January 2019 and October 2021 at weighted-average rate of 3.669% at year-end 2018 | 125 | — | ||||
Debt at face value | 3,075 | 2,975 | ||||
Net unamortized discounts and debt issuance costs | (27 | ) | (30 | ) | ||
Total debt | 3,048 | 2,945 | ||||
Less: Short-term debt | 50 | 25 | ||||
Long-term debt | $ | 2,998 | 2,920 |
• | $500 million of 3.750% Senior Notes due March 1, 2028. |
• | An additional $150 million of our 4.680% Senior Notes due February 15, 2045. |
Millions of Dollars | |||||||||
2018 | 2017* | 2016* | |||||||
Pipelines | $ | 454 | 424 | 408 | |||||
Terminals | 157 | 152 | 160 | ||||||
Storage, processing and other revenues | 434 | 358 | 190 | ||||||
Total operating revenues | $ | 1,045 | 934 | 758 |
Millions of Dollars | |||
2019 | $ | 778 | |
2020 | 777 | ||
2021 | 765 | ||
2022 | 753 | ||
2023 | 711 | ||
Remaining years | 2,287 | ||
Total future operating revenues* | $ | 6,071 | |
*Includes $3.3 billion of future lease revenues from agreements with Phillips 66. See Note 15—Leases, for additional information on future minimum payments to be received related to these agreements. |
Millions of Dollars | |||
2019 | $ | 712 | |
2020 | 713 | ||
2021 | 709 | ||
2022 | 697 | ||
2023 | 655 | ||
Thereafter | 2,188 | ||
Total* | $ | 5,674 |
Millions of Dollars | |||
2019 | $ | 3 | |
2020 | 3 | ||
2021 | 3 | ||
2022 | 3 | ||
2023 | 3 | ||
Thereafter | 91 | ||
Total minimum lease payments | $ | 106 |
Millions of Dollars | |||||||||
2018 | 2017 | 2016 | |||||||
Capital Expenditures and Investments | |||||||||
Cash capital expenditures and investments | $ | 738 | 431 | 584 | |||||
Change in capital expenditure accruals | 38 | 3 | (27 | ) | |||||
Total capital expenditures and investments | $ | 776 | 434 | 557 |
Millions of Dollars | |||||||||
2018 | 2017 | 2016 | |||||||
Capital Expenditures and Investments | |||||||||
Capital expenditures attributable to Predecessors | $ | — | 82 | 96 | |||||
Capital expenditures and investments attributable to the Partnership | 776 | 352 | 461 | ||||||
Total capital expenditures and investments | $ | 776 | 434 | 557 |
Millions of Dollars | |||||||||
2018 | 2017 | 2016 | |||||||
Other Noncash Investing and Financing Activities | |||||||||
Dividend of loan receivable to Phillips 66 by Predecessor | $ | — | 51 | — | |||||
Certain liabilities of acquired assets retained by Phillips 66(1) | — | — | 50 | ||||||
Cash Payments | |||||||||
Interest and debt expense | $ | 109 | 96 | 40 |
Millions of Dollars | |||||||||
2018 | 2017 | 2016 | |||||||
Interest and Debt Expense | |||||||||
Incurred | |||||||||
Debt | $ | 119 | 100 | 56 | |||||
Other | 3 | 2 | 1 | ||||||
122 | 102 | 57 | |||||||
Capitalized | (7 | ) | (1 | ) | (5 | ) | |||
Expensed | $ | 115 | 101 | 52 | |||||
Other Income | |||||||||
Co-venturer contractual make-whole payments | $ | — | 7 | — | |||||
Interest income | 1 | 3 | — | ||||||
Other | 1 | 2 | 1 | ||||||
Total other income | $ | 2 | 12 | 1 |
Millions of Dollars | |||||||||
2018 | 2017 | 2016 | |||||||
Operating and maintenance expenses | $ | 214 | 189 | 104 | |||||
General and administrative expenses | 60 | 64 | 56 | ||||||
Interest and debt expense | — | — | 3 | ||||||
Total | $ | 274 | 253 | 163 |
Millions of Dollars | ||||||
2018 | 2017 | |||||
Deferred rentals and other assets | $ | 4 | 5 | |||
Deferred revenues | 60 | 33 | ||||
Deferred revenues and other liabilities | 18 | 61 |
Selected Quarterly Financial Data (Unaudited) |
Millions of Dollars | Per Common Unit | |||||||||||||||
Total Revenues and Other Income | Income Before Income Taxes | Net Income | Net Income Attributable to the Partnership | Limited Partners’ Interest in Net Income Attributable to the Partnership | Net Income Attributable to the Partnership | |||||||||||
Basic | Diluted | |||||||||||||||
2018 | ||||||||||||||||
First | $ | 355 | 174 | 172 | 172 | 110 | 0.91 | 0.87 | ||||||||
Second | 354 | 186 | 186 | 186 | 121 | 0.99 | 0.94 | |||||||||
Third | 384 | 217 | 217 | 217 | 144 | 1.17 | 1.10 | |||||||||
Fourth | 393 | 223 | 221 | 221 | 144 | 1.16 | 1.09 | |||||||||
2017 | ||||||||||||||||
First | $ | 262 | 110 | 110 | 97 | 65 | 0.60 | 0.60 | ||||||||
Second | 277 | 120 | 119 | 103 | 66 | 0.61 | 0.61 | |||||||||
Third | 299 | 132 | 131 | 99 | 56 | 0.51 | 0.51 | |||||||||
Fourth | 331 | 166 | 164 | 162 | 105 | 0.86 | 0.83 |
Name | Position with Phillips 66 Partners GP LLC | Age* | ||
Greg C. Garland | Chairman of the Board of Directors and Chief Executive Officer | 61 | ||
Robert A. Herman | Director and Vice President | 59 | ||
Timothy D. Roberts | Director and Vice President, Operations | 57 | ||
Kevin J. Mitchell | Director and Vice President and Chief Financial Officer | 52 | ||
Rosy Zuklic | Vice President and Chief Operating Officer | 45 | ||
Chukwuemeka A. Oyolu | Vice President and Controller | 49 | ||
Joseph W. O’Toole | Director | 80 | ||
Mark A. Haney | Director | 64 | ||
P.D. (David) Bairrington | Director | 63 |
• | Phillips 66 makes available to our General Partner the services of the Phillips 66 employees who serve as the executive officers of our General Partner. |
• | Our General Partner is obligated to reimburse Phillips 66 for an allocated portion of the costs that Phillips 66 incurs in providing compensation and benefits to certain Phillips 66 employees, including the executive officers of our General Partner who devote at least a majority of their working time to our business (but not the executive officers of our General Partner who devote less than a majority of their working time to our business). |
• | Our General Partner pays an operational and administrative support fee to Phillips 66 to cover, among other things, the services provided to us by the executive officers of our General Partner who devote less than a majority of their working time to our business. |
• | Greg C. Garland, Chairman of the Board of Directors and Chief Executive Officer. |
• | Kevin J. Mitchell, Vice President and Chief Financial Officer. |
• | Chukwuemeka A. Oyolu, Vice President and Controller. |
• | J. T. (Tom) Liberti, Vice President and Chief Operating Officer. |
Adjusted EBITDA | 40 percent |
Operating Excellence | 35 percent |
Adjusted Controllable Cost | 15 percent |
High-Performing Organization | 10 percent |
• | An amount equal to one and one-half or two times (one and one-half times in the case of Mr. Liberti) the sum of the executive’s base salary and current target annual bonus. |
• | An amount equal to the present value of the increase in pension benefits that would result from crediting the executive with an additional one and one-half or two years of age and service under the pension plan (one and one-half years in the case of Mr. Liberti). |
• | An amount equal to the cost of certain welfare benefits for an additional one and one-half or two years (one and one-half years in the case of Mr. Liberti). |
• | Continued eligibility for a pro rata portion of the annual bonus paid with respect to the year of termination. |
• | Layoff treatment under compensation plans that generally allows the executive to retain grants of Phillips 66 restricted stock and restricted stock units, and maintain eligibility for Phillips 66 PSP awards for ongoing periods in which the NEO had participated for at least one year. |
• | An amount equal to two or three times (two times in the case of Mr. Liberti) the sum of the executive’s base salary and the higher of current target annual bonus or the average of the two most recent bonus payments. |
• | An amount equal to the present value of the increase in pension benefits that would result from crediting the executive with an additional two or three years of age and service under the pension plan (two years in the case of Mr. Liberti). |
• | An amount equal to Phillips 66’s cost of certain welfare benefits for an additional two or three years (two years in the case of Mr. Liberti). |
• | Continued eligibility for a pro rata portion of the annual bonus paid with respect to the year of termination. |
• | P.D. (David) Bairrington |
• | Mark A. Haney |
• | Joseph W. O’Toole |
Name and Principal Position | Year | Salary(2)($) | Stock Awards(3)($) | Stock Options(4)($) | Non-Equity Incentive Compensation Plan(5)($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(6)($) | All Other Compensation(7)($) | Total($) | |||||||||||||||
Greg C. Garland, Chief Executive Officer(1) | 2018 | — | — | — | — | — | — | — | |||||||||||||||
2017 | — | — | — | — | — | — | — | ||||||||||||||||
2016 | — | — | — | — | — | — | — | ||||||||||||||||
Kevin J. Mitchell, Vice President and Chief Financial Officer(1) | 2018 | — | — | — | — | — | — | — | |||||||||||||||
2017 | — | — | — | — | — | — | — | ||||||||||||||||
2016 | — | — | — | — | — | — | — | ||||||||||||||||
Chukwuemeka A. Oyolu, Vice President and Controller(1) | 2018 | — | — | — | — | — | — | — | |||||||||||||||
2017 | — | — | — | — | — | — | — | ||||||||||||||||
2016 | — | — | — | — | — | — | — | ||||||||||||||||
J.T. (Tom) Liberti, Vice President and Chief Operating Officer | 2018 | 378,460 | 495,781 | 146,899 | 359,537 | — | 33,053 | 1,413,730 | |||||||||||||||
2017 | 364,604 | 424,707 | 144,160 | 236,993 | 297,439 | 25,522 | 1,493,425 | ||||||||||||||||
2016 | 354,136 | 451,672 | 138,498 | 239,042 | 354,369 | 26,440 | 1,564,157 |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair Value of Stock and Option Awards(4) ($) | |||||||||||||||||||||||||||
Name | Grant Date(1) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||
Mr. Liberti | — | 189,230 | 473,075 | — | — | — | — | — | — | — | ||||||||||||||||||||||
2/6/2018 | — | — | — | — | — | — | 1,699 | — | — | 161,150 | ||||||||||||||||||||||
2/6/2018 | — | — | — | — | 3,528 | 7,056 | — | — | — | 334,631 | ||||||||||||||||||||||
2/6/2018 | — | — | — | — | — | — | — | 7,100 | 94.850 | 146,899 |
Name | Grant Date (1) | Option Awards (2) | Stock Awards | ||||||||||||||||
Number of Securities Underlying Unexercised Options Exercisable(3)(#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (4)(#) | Market Value of Shares or Units of Stock That Have Not Vested($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (5)(#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested($) | ||||||||||||
Mr. Liberti | 2/2/2016 | 5,466 | 2,734 | 78.620 | 2/2/2026 | ||||||||||||||
2/7/2017 | 2,833 | 5,667 | 78.475 | 2/7/2027 | |||||||||||||||
2/6/2018 | — | 7,100 | 94.850 | 2/6/2028 | |||||||||||||||
37,943 | 3,268,789 | 14,246 | 1,227,293 |
Option Awards | Stock Awards(1) | |||||||||||
Name | Number of Shares Acquired on Exercise(#) | Value Realized on Exercise($) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting($) | ||||||||
Mr. Liberti | 18,100 | 920,114 | 5,156 | 474,949 |
Name | Plan Name | Number of Years Credited Service(1)(#) | Present Value of Accumulated Benefit(2)($) | Payments During Last Fiscal Year($) | |||||||
Mr. Liberti | Phillips 66 Retirement Plan—Title 1 | 18 | 913,735 | — | |||||||
Phillips 66 Key Employee Supplemental Retirement Plan(3) | — | 1,432,419 | — | ||||||||
Phillips 66 Supplemental Executive Retirement Plan | — | 1,234,186 | — |
Name | Beginning Balance($) | Executive Contribution in Last Fiscal Year($) | Registrant Contribution in Last Fiscal Year(2)($) | Aggregate Earnings in Last Fiscal Year(3)($) | Aggregate Withdrawals/Distributions($) | Aggregate Balance at Last Fiscal Year-End(4)($) | ||||||||||||
Mr. Liberti(1) | 56,931 | — | 4,379 | (2,617 | ) | — | 58,693 |
Executive Benefits and Payments Upon Termination | Involuntary Not-for-Cause Termination (Not CIC)($) | Involuntary or Good Reason for Termination (CIC)($) | Death($) | Disability($) | ||||||||
Severance payment | 1,188,270 | 1,679,491 | — | — | ||||||||
Accelerated equity(1) | — | — | — | — | ||||||||
Life insurance | — | — | 380,904 | — | ||||||||
1,188,270 | 1,679,491 | 380,904 | — |
Name | Fees Earned or Paid in Cash(1)($) | Unit Awards(2)($) | Option Awards($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings($) | All Other Compensation(3)($) | Total($) | ||||||||||||||
P.D. (David) Bairrington | 80,000 | 80,024 | — | — | — | 15,000 | 175,024 | ||||||||||||||
Mark A. Haney | 85,000 | 80,024 | — | — | — | 1,018 | 166,042 | ||||||||||||||
Joseph W. O’Toole | 85,000 | 80,024 | — | — | — | 13,500 | 178,524 |
Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights(3) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |||||||
(a) | (b) | (c) | ||||||||
Equity compensation plans approved by security holders | 12,582 | (2) | $ | — | 2,477,325 | |||||
Equity compensation plans not approved by security holders | — | — | — | |||||||
Total | 12,582 | $ | — | 2,477,325 |
Name and Address | Common Units Beneficially Owned | Percentage of Common Units Beneficially Owned | Series A Preferred Units Beneficially Owned | Percentage of Series A Preferred Units Beneficially Owned | ||||||||
Phillips 66 Project Development Inc.(1) 2331 CityWest Blvd. Houston, TX 77042 | 68,760,137 | 55.4 | % | — | — | |||||||
Tortoise Capital Advisors, L.L.C. (2) 11550 Ash Street Suite 300 Leawood, KS 66211 | 11,083,615 | 8.9 | % | — | — | |||||||
Stonepeak Screwdriver SPV LLC (3) 717 5th Avenue New York, NY 10022 | — | — | 11,608,624 | 84.0 | % |
Name of Beneficial Owner* | Common Units Beneficially Owned | Percentage of Common Units Beneficially Owned | ||||
NEOs and Directors | ||||||
Greg C. Garland | 35,000 | ** | ||||
Kevin J. Mitchell | — | ** | ||||
J.T. (Tom) Liberti(1) | 37,496 | ** | ||||
Robert A. Herman | 25,000 | ** | ||||
Timothy D. Roberts | — | ** | ||||
Chukwuemeka A. Oyolu | 5,000 | ** | ||||
Joseph W. O’Toole | 35,000 | ** | ||||
Mark A. Haney | 29,418 | ** | ||||
P.D. (David) Bairrington | 10,000 | ** | ||||
All Directors and Executive Officers as a Group (9 Persons) | 176,914 | ** |
Name of Beneficial Owner | Total Common Stock Beneficially Owned | Restricted/Deferred Stock Units(1) | Options Exercisable Within 60 Days(2) | Percentage of Total Outstanding | ||||||||
NEOs and Directors | ||||||||||||
Greg C. Garland | 363,775 | 298,615 | 808,628 | ** | ||||||||
Kevin J. Mitchell | 38,613 | 28,115 | 76,366 | ** | ||||||||
J.T. (Tom) Liberti(3) | 22,504 | 29,235 | 16,232 | ** | ||||||||
Robert A. Herman | 31,132 | 67,362 | 152,565 | ** | ||||||||
Timothy D. Roberts | 3,642 | 19,232 | 48,032 | ** | ||||||||
Chukwuemeka A. Oyolu | 7,815 | 20,497 | 20,932 | ** | ||||||||
Joseph W. O’Toole | — | — | — | — | ||||||||
Mark A. Haney | — | — | — | — | ||||||||
P.D. (David) Bairrington | — | — | — | — | ||||||||
All Directors and Executive Officers as a Group (9 Persons) | 467,481 | 463,056 | 1,122,755 | ** |
Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Operational Stage | ||
Distributions of available cash to our General Partner and its affiliates | We generally make cash distributions of 98 percent to the unitholders pro rata, including Phillips 66 Project Development Inc., as a holder of 68,760,137 common units, and 2 percent to our General Partner, assuming it makes any capital contributions necessary to maintain its 2 percent general partner interest in us. In addition, if distributions exceed the minimum quarterly distribution and target distribution levels, the incentive distribution rights held by our General Partner will entitle our General Partner to increasing percentages of the distributions, up to 48 percent of the distributions above the highest target distribution level. |
Payments to our General Partner and its affiliates | Under our partnership agreement, we are required to reimburse our General Partner and its affiliates for all costs and expenses that they incur on our behalf for managing and controlling our business and operations. Except to the extent specified under our amended omnibus agreement, amended and restated operational services agreement and tax sharing agreement, our General Partner determines the amount of these expenses and such determinations must be made in good faith under the terms of our partnership agreement. Under our amended omnibus agreement, we reimburse Phillips 66 for expenses incurred by Phillips 66 and its affiliates in providing certain operational support and general and administrative services to us, including the provision of executive management services by certain officers of our General Partner. The expenses of other employees are allocated to us based on the amount of time actually spent by those employees on our business. These reimbursable expenses also include an allocable portion of the compensation and benefits of employees and executive officers of other affiliates of our General Partner who provide services to us. We also reimburse Phillips 66 for any additional out-of-pocket costs and expenses incurred by Phillips 66 and its affiliates in providing general and administrative services to us. The costs and expenses for which we are required to reimburse our General Partner and its affiliates are not subject to any caps or other limits. Under our amended and restated operational services agreement, we pay Phillips 66 for any direct costs actually incurred by Phillips 66 in providing our pipelines, terminals, processing and storage facilities with certain maintenance, operational, administrative and construction services. Under our tax sharing agreement, we reimburse Phillips 66 for our share of state and local income and other taxes incurred by Phillips 66 as a result of our results of operations being included in a combined or consolidated tax return filed by Phillips 66 with respect to taxable periods on or after the completion of the initial public offering (the Offering). |
Withdrawal or removal of our General Partner | If our General Partner withdraws or is removed, its general partner interest and its incentive distribution rights will either be sold to the new general partner for cash or converted into common units, in each case for an amount equal to the fair market value of those interests. |
Liquidation Stage | ||
Liquidation | Upon our liquidation, the partners, including our General Partner, will be entitled to receive liquidating distributions according to their respective capital account balances. |
Millions of Dollars | ||||||
2018 | 2017 | |||||
Fees | ||||||
Audit fees(1) | $ | 1.3 | 1.7 | |||
Audit-related fees | — | — | ||||
Tax fees | — | — | ||||
All other fees | — | — | ||||
Total | $ | 1.3 | 1.7 |
(a) | 1. | Financial Statements and Supplementary Data The financial statements and supplementary data listed in the Index to Financial Statements, which appears on page 58, are filed as part of this Annual Report on Form 10-K. |
2. | Financial Statement Schedules Financial statement schedules are omitted because they are not required, not significant, not applicable or the information is shown in the Financial Statements or the Notes to Consolidated Financial Statements. | |
3. | Exhibits The exhibits listed in the Index to Exhibits, which appears on pages 121 to 125, are filed as part of this Annual Report on Form 10-K. |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | Exhibit Number | Filing Date | SEC File No. | |
S-1 | 3.1 | 3/27/2013 | 333-187582 | |||
8-K | 3.1 | 10/10/2017 | 001-36011 | |||
8-K | 3.2 | 10/10/2017 | 001-36011 | |||
8-K | 4.1 | 2/23/2015 | 001-36011 | |||
8-K | 4.3 | 10/17/2016 | 001-36011 | |||
8-K | 4.5 | 10/17/2016 | 001-36011 | |||
8-K | 4.1 | 10/10/2017 | 001-36011 | |||
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the partnership has not filed with this Annual Report on Form 10-K certain instruments defining the rights of holders of long-term debt of the partnership and its subsidiaries because the total amount of securities authorized thereunder does not exceed 10 percent of the total assets of the partnership and its subsidiaries on a consolidated basis. The partnership agrees to furnish a copy of such agreements to the Commission upon request. | ||||||
S-1/A | 10.1 | 6/27/2013 | 333-187582 | |||
8-K | 10.1 | 11/21/2014 | 001-36011 | |||
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | Exhibit Number | Filing Date | SEC File No. | |
8-K | 10.1 | 10/5/2016 | 001-36011 | |||
8-K | 10.1 | 9/25/2017 | 001-36011 | |||
8-K | 2.1 | 2/17/2015 | 001-36011 | |||
10-K | 10.7 | 2/12/2016 | 001-36011 | |||
8-K | 2.1 | 2/18/2016 | 001-36011 | |||
8-K | 2.1 | 5/4/2016 | 001-36011 | |||
8-K | 2.1 | 10/11/2016 | 001-36011 | |||
8-K | 2.1 | 9/25/2017 | 001-36011 | |||
8-K | 10.2 | 7/30/2013 | 001-36011 | |||
8-K | 10.1 | 3/3/2014 | 001-36011 | |||
8-K | 10.1 | 12/2/2014 | 001-36011 | |||
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | Exhibit Number | Filing Date | SEC File No. | |
8-K | 10.1 | 3/2/2015 | 001-36011 | |||
8-K | 10.1 | 3/1/2016 | 001-36011 | |||
8-K | 10.1 | 10/17/2016 | 001-36011 | |||
10-K | 10.19 | 2/17/2017 | 001-36011 | |||
8-K | 10.1 | 10/10/2017 | 001-36011 | |||
8-K | 10.2 | 10/10/2017 | 001-36011 | |||
10-Q | 10.1 | 07/27/2018 | 001-35349 | |||
8-K | 10.9 | 7/30/2013 | 001-36011 | |||
8-K | 10.4 | 3/1/2016 | 001-36011 | |||
8-K | 10.3 | 3/1/2016 | 001-36011 | |||
10-Q | 10.3 | 5/1/2015 | 001-36011 |
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | Exhibit Number | Filing Date | SEC File No. | |
10-Q | 10.4 | 5/1/2015 | 001-36011 | |||
10-Q | 10.5 | 5/1/2015 | 001-36011 | |||
10-Q | 10.6 | 5/1/2015 | 001-36011 | |||
10-K | 10.37 | 2/12/2016 | 001-36011 | |||
10-K | 10.38 | 2/12/2016 | 001-36011 | |||
8-K | 1.1 | 6/6/2016 | 001-36011 | |||
8-K | 10.3 | 10/10/2017 | 001-36011 | |||
8-K | 10.1 | 7/26/2013 | 001-36011 | |||
10-Q | 10.12 | 8/20/2013 | 001-36011 | |||
10-Q | 10.13 | 8/20/2013 | 001-36011 | |||
Incorporated by Reference | ||||||
Exhibit Number | Exhibit Description | Form | Exhibit Number | Filing Date | SEC File No. | |
101.INS* | XBRL Instance Document. | |||||
101.SCH* | XBRL Taxonomy Extension Schema Document. | |||||
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | |||||
101.LAB* | XBRL Taxonomy Extension Labels Linkbase Document. | |||||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. | |||||
* Filed herewith. | ||||||
** Compensatory plan or arrangement. | ||||||
† Confidential treatment has been requested for certain portions of this Exhibit pursuant to a confidential treatment request filed with the Securities and Exchange Commission on February 16, 2016. Such portions have been omitted and filed separately with the Securities and Exchange Commission. | ||||||
†† Confidential treatment has been requested for certain portions of this Exhibit pursuant to a confidential treatment request filed with the Securities and Exchange Commission on October 10, 2017. Such portions have been omitted and filed separately with the Securities and Exchange Commission. |
PHILLIPS 66 PARTNERS LP | ||
By: Phillips 66 Partners GP LLC, its general partner | ||
Date: | February 22, 2019 | /s/ Greg C. Garland |
Greg C. Garland Chairman of the Board of Directors and Chief Executive Officer |
Signature | Title | |
/s/ Greg C. Garland | Chairman of the Board of Directors | |
Greg C. Garland | and Chief Executive Officer | |
(Principal executive officer) | ||
Phillips 66 Partners GP LLC | ||
/s/ Kevin J. Mitchell | Director, Vice President | |
Kevin J. Mitchell | and Chief Financial Officer | |
(Principal financial officer) | ||
Phillips 66 Partners GP LLC | ||
/s/ Chukwuemeka A. Oyolu | Vice President and Controller | |
Chukwuemeka A. Oyolu | (Principal accounting officer) | |
Phillips 66 Partners GP LLC |
/s/ P.D. Bairrington | Director | |
P.D. (David) Bairrington | Phillips 66 Partners GP LLC | |
/s/ Mark A. Haney | Director | |
Mark A. Haney | Phillips 66 Partners GP LLC | |
/s/ Robert A. Herman | Director | |
Robert A. Herman | Phillips 66 Partners GP LLC | |
/s/ Joseph W. O’Toole | Director | |
Joseph W. O’Toole | Phillips 66 Partners GP LLC | |
/s/ Timothy D. Roberts | Director | |
Timothy D. Roberts | Phillips 66 Partners GP LLC | |
Company Name | Incorporation Location |
ACE Pipeline Holdings LLC | Delaware |
ACE Pipeline LLC | Delaware |
Gray Oak Holdings LLC | Delaware |
Merey Sweeny LLC | Delaware |
Phillips 66 Alliance Hydrogen Pipeline LLC | Delaware |
Phillips 66 Carrier LLC | Delaware |
Phillips 66 DAPL Holdings LLC | Delaware |
Phillips 66 ETCO Holdings LLC | Delaware |
Phillips 66 Partners Finance Corporation | Delaware |
Phillips 66 Partners Holdings LLC | Delaware |
Phillips 66 Sand Hills LLC | Delaware |
Phillips 66 Southern Hills LLC | Delaware |
Phillips 66 Sweeny Frac LLC | Delaware |
(1) | Registration Statement (Form S-3 No. 333-222178) of Phillips 66 Partners LP, |
(2) | Amendment No. 1 to the Registration Statement (Form S-3 No. 333-221353) of Phillips 66 Partners LP, |
(3) | Registration Statement (Form S-3 No. 333-217734) of Phillips 66 Partners LP, and |
(4) | Registration Statement (Form S-8 No. 333-190195) of Phillips 66 Partners LP; |
/s/ Ernst & Young LLP |
• | Registration Statement No. 333-190195 on Form S-8 of Phillips 66 Partners LP, |
• | Amendment No. 1 to Registration Statement No. 333-221353 on Form S-3 of Phillips 66 Partners LP, and |
• | Registration Statement Nos. 333-217734 and 333-222178 on Form S-3 of Phillips 66 Partners LP. |
1. | I have reviewed this Annual Report on Form 10-K of Phillips 66 Partners LP; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Greg C. Garland | |
Greg C. Garland | |
Chairman of the Board of Directors and Chief Executive Officer | |
Phillips 66 Partners GP LLC (the general partner of Phillips 66 Partners LP) |
1. | I have reviewed this Annual Report on Form 10-K of Phillips 66 Partners LP; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Kevin J. Mitchell | |
Kevin J. Mitchell | |
Director, Vice President and Chief Financial Officer | |
Phillips 66 Partners GP LLC (the general partner of Phillips 66 Partners LP) |
(1) | The Report fully complies with the requirements of Sections 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 Partnership. |
/s/ Greg C. Garland | |
Greg C. Garland | |
Chairman of the Board of Directors and Chief Executive Officer | |
Phillips 66 Partners GP LLC (the general partner of Phillips 66 Partners LP) |
/s/ Kevin J. Mitchell | |
Kevin J. Mitchell | |
Director, Vice President and Chief Financial Officer | |
Phillips 66 Partners GP LLC (the general partner of Phillips 66 Partners LP) |
Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Jan. 31, 2019 |
Jun. 29, 2018 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Phillips 66 Partners LP | ||
Entity Central Index Key | 0001572910 | ||
Trading Symbol | PSXP | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2,756 | ||
Entity Common Units, Units Outstanding (in shares) | 124,104,055 |
Consolidated Statement of Comprehensive Income - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | |||
Net Income | $ 796 | $ 524 | $ 408 |
Plans sponsored by equity affiliates, net of income taxes | 0 | 0 | 1 |
Other comprehensive income | 0 | 0 | 1 |
Comprehensive Income | $ 796 | $ 524 | $ 409 |
Consolidated Balance Sheet (Parenthetical) - shares |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
General partner—Phillips 66 units issued (in shares) | 2,480,051 | 2,480,051 |
General partner—Phillips 66 units outstanding (in shares) | 2,480,051 | 2,480,051 |
Non-public | ||
Preferred units, issued (in shares) | 13,819,791 | 13,819,791 |
Preferred units, outstanding (in shares) | 13,819,791 | 13,819,791 |
Common Units | Public | ||
Common units issued (in shares) | 55,343,918 | 52,811,822 |
Common units outstanding (in shares) | 55,343,918 | 52,811,822 |
Common Units | Non-public | Phillips 66 | ||
Common units issued (in shares) | 68,760,137 | 68,760,137 |
Common units outstanding (in shares) | 68,760,137 | 68,760,137 |
Consolidated Statement of Changes in Equity (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Common Units | |||
Cash distribution paid per common unit (in USD per share) | $ 2.936 | $ 2.405 | $ 1.975 |
Business and Basis of Presentation |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Business and Basis of Presentation [Abstract] | |
Business and Basis of Presentation | Business and Basis of Presentation Unless otherwise stated or the context otherwise indicates, all references to “Phillips 66 Partners,” “the Partnership,” “us,” “our,” “we,” or similar expressions refer to Phillips 66 Partners LP, including its consolidated subsidiaries. References to Phillips 66 may refer to Phillips 66 and/or its subsidiaries, depending on the context. References to our “General Partner” refer to Phillips 66 Partners GP LLC, and references to Phillips 66 PDI refer to Phillips 66 Project Development Inc., the Phillips 66 subsidiary that holds a limited partner interest in us and wholly owns our General Partner. Description of the Business We are a Delaware limited partnership formed in 2013 by Phillips 66 Company and Phillips 66 Partners GP LLC (our General Partner), both wholly owned subsidiaries of Phillips 66. On August 1, 2015, Phillips 66 Company transferred all of its limited partner interests in us and its 100 percent interest in our General Partner to its wholly owned subsidiary, Phillips 66 Project Development Inc. (Phillips 66 PDI). We are a growth-oriented master limited partnership formed to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum products and natural gas liquids (NGL) pipelines, terminals and other midstream assets. Our operations consist of crude oil, refined petroleum products and NGL transportation, processing, terminaling and storage assets. We conduct our operations through both wholly owned and joint venture operations. The majority of our wholly owned assets are associated with, and are integral to the operation of, nine of Phillips 66’s owned or joint venture refineries. We primarily generate revenue by providing fee-based transportation, terminaling, processing, storage and NGL fractionation services to Phillips 66 and other customers. Our equity affiliates primarily generate revenue from transporting and terminaling NGL, refined petroleum products and crude oil. Since we do not own any of the NGL, crude oil and refined petroleum products we handle and do not engage in the trading of NGL, crude oil and refined petroleum products, we have limited direct exposure to risks associated with fluctuating commodity prices, although these risks indirectly influence our activities and results of operations over the long term. Basis of Presentation We have acquired assets from Phillips 66 that were considered transfers of businesses between entities under common control. This required the transactions to be accounted for as if the transfers had occurred at the beginning of the period of transfer, with prior periods retrospectively adjusted to furnish comparative information. We refer to these pre-acquisition operations as those of our “Predecessors.” The combined financial statements of our Predecessors were derived from the accounting records of Phillips 66 and reflect the combined historical results of operations, financial position and cash flows of our Predecessors as if such businesses had been combined for all periods presented. All intercompany transactions and accounts within our Predecessors have been eliminated. The assets and liabilities of our Predecessors in these financial statements have been reflected on a historical cost basis because the transfer of the Predecessors to us occurred within the Phillips 66 consolidated group. The consolidated statement of income also includes expense allocations for certain functions performed by Phillips 66, including operational support services such as engineering and logistics and allocations of general corporate expenses related to executive oversight, accounting, treasury, tax, legal, information technology and procurement. These allocations were based primarily on the relative carrying values of properties, plants and equipment and equity-method investments, or number of terminals and pipeline miles, and secondarily on activity-based costs. Our management believes the assumptions underlying the allocation of expenses from Phillips 66 are reasonable. Nevertheless, the financial results of our Predecessors may not include all of the actual expenses that would have been incurred had our Predecessors been a stand-alone publicly traded partnership during the periods presented. |
Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Consolidation Principles and Investments Our consolidated financial statements include the accounts of majority-owned, controlled subsidiaries. The equity method is used to account for investments in affiliates in which we have the ability to exert significant influence over the affiliates’ operating and financial policies, including any variable interest entities of which we are not the primary beneficiary. Undivided interests in pipelines are consolidated on a proportionate basis. Net Investment—Predecessors “Net Investment—Predecessors” represents Phillips 66’s historical investment in the contributed businesses, our Predecessors’ accumulated net earnings after taxes, and the net effect of transactions with, and allocations from, Phillips 66 prior to the acquisition of the businesses from Phillips 66. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities. Actual results could differ from these estimates. Common Control Transactions Businesses acquired from Phillips 66 and its subsidiaries are accounted for as common control transactions whereby the net assets acquired are combined with ours at their carrying value. Any difference between carrying value and recognized consideration is treated as a capital transaction. To the extent that such transactions require prior-period financial information to be retrospectively adjusted to furnish comparative information, historical net equity amounts prior to the transaction date are reflected in “Net Investment—Predecessors.” Cash consideration up to the carrying value of net assets acquired is presented as an investing activity in our consolidated statement of cash flows. Cash consideration in excess of the carrying value of net assets acquired is presented as a financing activity in our consolidated statement of cash flows. Revenue Recognition Revenues are primarily recognized for pipeline transportation, terminaling, storage, processing and fractionation services generated under long-term agreements. A significant portion of our revenues are derived from Phillips 66. The majority of our agreements for transportation, terminaling, storage, processing and fractionation services with Phillips 66 are considered operating leases under GAAP. For these leases, the lease and service elements of revenue are separated with the service element recognized under the revenue standard and the lease element recognized under the lease standard. The separation of the lease and service elements is based on an analysis of service-related and lease-related costs for each contract, adjusted for representative profit margins. Revenues from fixed minimum volume commitments are recognized over the performance obligation period for stand-ready service contracts. Revenues from the variable element of these stand-ready contracts and other contracts without fixed elements are recognized based on the actual volumes transported, stored, processed and fractionated at contractual rates because the actual volumes specifically relate to our efforts to transfer the distinct services. Generally, our services are billed and payments are received on a monthly basis. Billings to Phillips 66 for shortfall volumes under its quarterly minimum volume commitments are recorded as “Deferred revenues” in our consolidated balance sheet, as Phillips 66 generally has the right to make up the shortfall volumes in the following four quarters. For the lease element of the contracts, the deferred revenue will be recognized at the earlier of when shortfall volumes are made up, when the make-up rights contractually expire or when we determine the system will not have the necessary capacity to enable a customer to make up the shortfall volumes. For the service element of the contracts, the deferred revenue will be recognized when the performance obligation is complete or it is probable that the shortfall volumes will not be made up. Billings for tolling services relating to maintenance turnaround activities are billed in advance of such activities. These billings are initially recorded as “Deferred revenues” in our consolidated balance sheet and are recognized when the maintenance turnaround activity commences. Deferred revenue relating to maintenance turnaround operating expenses is recognized in the period the work is performed. Deferred revenue relating to capital projects performed concurrently with a maintenance turnaround is recognized ratably over the remaining tolling services agreement once the equipment is placed into service. At the time the Clemens Caverns commenced operations, the caverns had not reached total planned working capacity contracted under the storage agreement. During the build-out of the remaining capacity, a portion of the monthly storage fees was deferred. The deferred revenue is being recognized over the remaining term of the agreement as additional storage capacity was placed into service. Cash Equivalents Cash equivalents are highly liquid, short-term investments that are readily convertible to known amounts of cash and will mature within 90 days or less from the date of acquisition. We carry these at cost plus accrued interest, which approximates fair value. Imbalances We do not purchase or produce NGL, crude oil or refined petroleum product inventories. We experience imbalances as a result of variances in meter readings and in other measurement methods, and volume fluctuations within our NGL, crude oil and refined petroleum products systems due to pressure and temperature changes. Certain of our transportation contracts provide for the shipper to pay a contractual loss allowance, which is valued using quoted market prices of the applicable commodity being shipped. These contractual loss allowances, which are received from the shipper irrespective of, and independently calculated from, actual volumetric gains or losses, are recorded as revenue. Any actual volumetric gains or losses are valued using quoted market prices of the applicable commodities and are recorded as decreases or increases to operating and maintenance expenses, respectively. Fair Value Measurements We measure assets and liabilities requiring fair value presentation or disclosure using the price that would be received to sell an asset or paid to transfer a liability (i.e., an exit price), and disclose such amounts according to the quality of valuation inputs under the following hierarchy:
We classify the fair value of an asset or liability based on the lowest level of input significant to its measurement. A fair value initially reported as Level 3 will be subsequently reported as Level 2 if the unobservable inputs become inconsequential to its measurement, or corroborating market data becomes available. Asset and liability fair values initially reported as Level 2 will be subsequently reported as Level 3 if corroborating market data becomes unavailable. The carrying amounts of our trade receivables and payables approximate fair value. Nonrecurring Fair Value Measurements We apply the fair value measurements criteria to determine the fair value of nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis, primarily asset retirement obligations and, when impaired, long-lived assets. Properties, Plants and Equipment (PP&E) PP&E is recorded at cost. Costs of maintenance and repairs, which are not significant improvements, are expensed when incurred. Depreciation of PP&E is determined by the individual-unit-straight-line method or the group-straight-line method (for those individual units that are highly integrated with other units). Capitalized Interest Interest from external borrowings is capitalized on major projects with an expected construction period of six months or longer. Capitalized interest is added to the cost of the underlying asset’s PP&E or the applicable equity investment and is amortized over the useful life of the asset. Major Maintenance Activities Costs for planned integrity management projects are expensed in the period incurred. These types of costs include inspection services, contractor repair services, materials and supplies, equipment rentals and labor costs. Impairment of PP&E PP&E used in operations are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in the future cash flows expected to be generated by an asset group. If, upon review, the sum of the undiscounted expected future pretax cash flows of an asset group is less than the carrying value of the asset group, including applicable liabilities, then the carrying value is written down to estimated fair value and the write down is reported as an impairment in the period in which the determination is made. Individual assets are grouped for impairment purposes at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets—generally at the pipeline system, terminal, or processing or fractionation system level. Since there usually is a lack of quoted market prices for our long-lived assets, the fair value of potentially impaired assets is typically determined based on the present value of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants or based on a multiple of operating cash flow validated with historical market transactions of similar assets where possible. The expected future cash flows used for impairment reviews and related fair value calculations are based on estimated future throughputs, tariffs and fees, operating costs and capital project decisions, considering all available evidence at the date of review. Impairment of Investments in Nonconsolidated Entities Investments in nonconsolidated entities are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred. When indicators exist, the fair value is estimated and compared to the investment carrying value. If any impairment is judgmentally determined to be other than temporary, the carrying value of the investment is written down to fair value. The fair value of the impaired investment is determined based on quoted market prices, if available, or upon the present value of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants and a market analysis of comparable assets, if appropriate. Goodwill Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in the acquisition of a business. Goodwill is not amortized, but rather is tested for impairment annually and when events or changes in circumstances indicate that the fair value of the reporting unit with goodwill has been reduced below carrying value. The majority of our goodwill is related to acquisitions from Phillips 66. In these common control transactions, the net assets acquired are recorded at Phillips 66’s historical carrying value, including any associated goodwill. We have one reporting unit for goodwill impairment testing. Asset Retirement Obligations and Environmental Costs Fair values of legal obligations to abandon or remove long-lived assets are recorded in the period in which the obligation arises. When the liability is initially recorded, we capitalize this cost by increasing the carrying amount of the related PP&E. Over time, the liability is increased for the change in its present value, and the capitalized cost in PP&E is depreciated over the useful life of the related asset. Our estimate may change after initial recognition, in which case we record an adjustment to the liability and PP&E. Environmental expenditures are expensed or capitalized, depending upon their future economic benefit. Expenditures relating to an existing condition caused by past operations, and those having no future economic benefit, are expensed. Liabilities for environmental expenditures are recorded on an undiscounted basis (unless acquired in a business combination) when environmental assessments or cleanups are probable and the costs can be reasonably estimated. Income Taxes We follow the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of our assets and liabilities. Our operations are treated as a partnership for federal and state income tax purposes, with each partner being separately taxed on its share of taxable income. Therefore, we have excluded income taxes from these consolidated financial statements, except for the income tax provision resulting from state laws that apply to entities organized as partnerships. Our tax provision is computed as if we were a stand-alone tax paying entity. Any interest and penalties related to income taxes would be reported in interest and debt expense and operating and maintenance expenses, respectively, in our consolidated statement of income. |
Changes in Accounting Principles |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Changes in Accounting Principles [Abstract] | |
Changes in Accounting Principles | Changes in Accounting Principles Effective January 1, 2018, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The amendment provides a screen for determining when a transaction involves an acquisition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset, or a group of similar identifiable assets, then the screen is met and the transaction is not considered an acquisition of a business. If the screen is not met, the amendment requires that to be considered a business, the operation must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create an output. The guidance may reduce the number of future transactions accounted for as business acquisitions. At the time of adoption, this ASU had no impact on our consolidated financial statements. Effective January 1, 2018, we adopted ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The majority of this ASU’s provisions amend only the presentation or disclosures of financial instruments; however, one provision could also affect net income. Equity investments reported under the cost method or the lower of cost or fair value method of accounting, in accordance with previous GAAP, are now reported at fair value with changes in fair value recognized in net income. For equity investments that do not have readily determinable fair values, we elected to carry such investments at cost less impairments, if any, adjusted up or down for price changes in similar financial instruments issued by the investee, when and if observed. At the time of adoption, this ASU had no material impact on our consolidated financial statements. Effective January 1, 2018, we adopted ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” using the modified retrospective transition method applied to all contracts. Under the new revenue recognition guidance, recognition of revenue involves a multiple step approach including: (i) identifying the contract with the customer, (ii) identifying the separate performance obligations, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations and (v) recognizing the revenue as the performance obligations are satisfied. Additional disclosures are required to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On January 1, 2019, an equity-method investee adopted this ASU without a material impact. We recorded a noncash cumulative effect adjustment of $30 million to increase the opening balance of our equity as of January 1, 2018. This adjustment reflected amounts recorded by us and our equity-method investees related to the acceleration of revenue recognition on certain minimum volume commitment contracts with recovery provisions. Certain agreements for transportation, terminaling and fractionation services with Phillips 66 are considered operating leases under FASB Accounting Standards Codification (ASC) 840, “Leases.” We identified the separate lease and service elements of our revenue under these operating leases and applied ASU No. 2014-09 only to the service element, while the lease element continued to be accounted for under ASC 840. See Note 13—Operating Revenues, for additional information. |
Acquisitions |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions 2018 Acquisitions Gray Oak Pipeline Project Acquisition See the “Gray Oak” section of Note 5—Equity Investments, for a discussion of our acquisition of this project and its ownership structure. 2017 Acquisitions Bakken Pipeline/Merey Sweeny Acquisition In September 2017, we entered into a Contribution, Conveyance and Assumption Agreement (CCAA) with subsidiaries of Phillips 66 to acquire a 25 percent interest in each of Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO), together referred to as the Bakken Pipeline, and a 100 percent interest in Merey Sweeny, L.P., predecessor to Merey Sweeny LLC (both referred to herein as Merey Sweeny). Collectively, the assets acquired in the acquisition are referred to as the Bakken Pipeline/Merey Sweeny Acquisition. We paid Phillips 66 total consideration of $1.65 billion, consisting of $372 million in cash, the assumption of $588 million of promissory notes payable to Phillips 66 and a $450 million term loan under which Phillips 66 was the obligor, and the issuance of 4,713,113 common units to Phillips 66 PDI and 292,665 general partner units to our General Partner to maintain its 2 percent general partner interest. The Bakken Pipeline/Merey Sweeny Acquisition closed in October 2017. Pursuant to the tolling services agreement entered into with Phillips 66 and related to Merey Sweeny operations, we received $53 million from Phillips 66 for the prepayment of services related to Merey Sweeny’s next scheduled maintenance turnaround, which was recorded as deferred revenue in our consolidated balance sheet as of the acquisition date. The Bakken Pipeline/Merey Sweeny Acquisition was considered a common control transaction. 2016 Acquisitions During 2016, we and a co-venturer formed STACK Pipeline LLC (STACK), a 50/50 joint venture. In addition, we acquired an additional 2.48 percent interest in Explorer Pipeline Company (Explorer). See Note 5—Equity Investments, for information regarding our equity investments. River Parish Acquisition In November 2016, we acquired the River Parish NGL System, a non-affiliated party’s NGL logistics assets, located in southeast Louisiana, consisting of pipelines and storage caverns connecting multiple third-party fractionation facilities, refineries and a petrochemical plant. At the acquisition date, we recorded $183 million of PP&E and $3 million of goodwill. Our acquisition accounting was finalized in early 2017 with no change to the provisional amounts recorded in 2016. Fractionator Acquisitions Initial Fractionator Acquisition. In February 2016, we entered into a CCAA with subsidiaries of Phillips 66 to acquire a 25 percent controlling interest in Phillips 66 Sweeny Frac LLC (Sweeny Frac LLC) for total consideration of $236 million (the Initial Fractionator Acquisition). Total consideration consisted of the assumption of a $212 million note payable to a subsidiary of Phillips 66 and the issuance of 412,823 common units to Phillips 66 PDI and 8,425 general partner units to our General Partner to maintain its 2 percent general partner interest. The Initial Fractionator Acquisition closed in March 2016. Subsequent Fractionator Acquisition. In May 2016, we entered into a CCAA with subsidiaries of Phillips 66 to acquire the remaining 75 percent interest in Sweeny Frac LLC and 100 percent of the Standish Pipeline for total consideration of $775 million (the Subsequent Fractionator Acquisition). Total consideration consisted of the assumption of $675 million of notes payable to a subsidiary of Phillips 66 and the issuance of 1,400,922 common units to Phillips 66 PDI and 286,753 general partner units to our General Partner to maintain its 2 percent general partner interest in us after also taking into account the public offering we completed in May 2016. The Subsequent Fractionator Acquisition closed in May 2016. Eagle Acquisition In October 2016, we entered into a CCAA with subsidiaries of Phillips 66 to acquire certain pipeline and terminal assets supporting four Phillips 66-operated refineries (the Eagle Acquisition). We paid Phillips 66 total consideration of $1,305 million, consisting of $1,109 million in cash and the issuance of 3,884,237 common units to Phillips 66 PDI and 208,783 general partner units to our General Partner to maintain its 2 percent general partner interest. The Eagle Acquisition closed in October 2016. The Fractionator Acquisitions and the Eagle Acquisition were considered common control transactions. In connection with the acquisitions from Phillips 66, we entered into commercial agreements with Phillips 66 and amended the omnibus and operational services agreements with Phillips 66. See Note 21—Related Party Transactions, for additional information on our commercial and other agreements with Phillips 66. |
Equity Investments |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Investments | Equity Investments The following table summarizes our equity investments at December 31:
Earnings (losses) from our equity investments were as follows:
Distributions received from our equity affiliates were $477 million, $274 million, and $131 million in 2018, 2017 and 2016, respectively. Gray Oak In April 2018, we entered into a Purchase and Sale Agreement with Phillips 66 PDI to acquire its 100 percent interest in Gray Oak Holdings LLC (Holdings LLC), a limited liability company that, at that time, owned a 100 percent interest in Gray Oak Pipeline, LLC (Gray Oak). Gray Oak is developing and constructing the Gray Oak Pipeline system which, upon completion, will provide crude oil transportation from the Permian Basin and Eagle Ford to destinations in the Corpus Christi and Freeport markets on the Texas Gulf Coast. The pipeline system is expected to be placed in service by the end of 2019. We accounted for the acquisition of Holdings LLC as an acquisition of assets under common control accounting. Also in April 2018, a co-venturer acquired a 25 percent interest in Gray Oak, along with sufficient voting rights over key governance provisions such that we no longer could assert control over Gray Oak. As a result, we (through our consolidated subsidiary Holdings LLC) began using the equity method of accounting for our investment in Gray Oak at that time. In December 2018, a third party exercised its option to acquire a 35 percent interest in Holdings LLC. Because Holdings LLC’s sole asset was its 75 percent ownership interest in Gray Oak, which is considered a financial asset, and because certain restrictions were placed on the third party’s ability to transfer or sell its interest in Holdings LLC during the construction of the Gray Oak Pipeline, the legal sale of the 35 percent interest did not qualify as a sale under GAAP. Rather, the third party’s cash contributions to Holdings LLC expected in 2019 to fund its share of previously incurred and future construction costs plus a premium to us will be a long-term obligation on our consolidated balance sheet, and those cash inflows to Holdings LLC will be a financing cash inflow on our consolidated statement of cash flows. After construction of the Gray Oak Pipeline is completed, these restrictions expire, and the sale will be recognized under GAAP. We will continue to control and consolidate Holdings LLC after sale recognition, and therefore the third party’s 35 percent interest will be recharacterized from a long-term obligation to a noncontrolling interest in our financial statements at that time. Also at that time, the premium paid will be recharacterized from a long-term obligation to a gain in our consolidated statement of income. During January and February of 2019, the third party contributed an aggregate of $294 million into Holdings LLC, which Holdings LLC used to fund its portion of Gray Oak’s cash calls. In February 2019, another party exercised its option to acquire a 10 percent interest in Gray Oak, which reduced Holdings LLC’s ownership interest to 65 percent. As a result of the exercised options, our effective ownership in the pipeline system is now 42.25 percent. Gray Oak is considered a variable interest entity (VIE) because it does not have sufficient equity at risk to fully fund the construction of all assets required for principal operations. We have determined we are not the primary beneficiary because we and our co-venturer jointly direct the activities of the Gray Oak Pipeline that most significantly impact economic performance. At December 31, 2018, our maximum exposure to loss was $373 million, which represented guaranteed purchase obligations of $85 million and the aggregate book value of our equity method investment in Gray Oak of $288 million. South Texas Gateway Terminal In April 2018, we acquired a 25 percent interest in the South Texas Gateway Terminal under development by a co-venturer. This marine terminal will connect to the Gray Oak Pipeline in Corpus Christi, Texas, and it will have two deepwater docks and an initial storage capacity of 6.5 to 7 million barrels. The terminal is expected to begin operations in mid-2020. South Texas Gateway Terminal is considered a VIE because it does not have sufficient equity at risk to fully fund the construction of all assets required for principal operations. We have determined we are not the primary beneficiary because we and our co-venturers jointly direct the activities of the terminal that most significantly impact economic performance. At December 31, 2018, our maximum exposure to loss was $20 million, which represented the aggregate book value of our equity investment in South Texas Gateway Terminal. Bakken Pipeline In October 2017, we acquired a 25 percent interest in the Bakken Pipeline system as part of the Bakken Pipeline/Merey Sweeny Acquisition. Dakota Access owns a pipeline system that delivers crude oil from the Bakken/Three Forks production area in North Dakota to Patoka, Illinois, and ETCO owns a connecting crude oil pipeline system from Patoka, Illinois, to Nederland, Texas. These two pipeline systems collectively form the Bakken Pipeline system, which is operated by a co-venturer. The Bakken Pipeline system went into service in June 2017. We have a positive basis difference of $51 million for this investment, which represents capitalized interest incurred during construction of the pipeline and a capital contribution disbursed to the co-venturer. The positive basis difference is being amortized over periods between 19 and 44 years. See Note 4—Acquisitions, for additional information. STACK STACK is a joint venture that owns and operates a crude storage terminal and a common carrier pipeline that transports crude oil from the Sooner Trend, Anadarko Basin, Canadian and Kingfisher Counties play in northwestern Oklahoma to Cushing, Oklahoma. We have a positive basis difference of $40 million for this investment, which is due to the co-venturer’s contributed assets being recorded at their historical book value. The positive basis difference is being amortized over 43 years. Bakken Joint Ventures Phillips 66 Partners Terminal and Paradigm are two joint ventures with Paradigm Midstream, LLC that own and operate midstream logistics infrastructure in North Dakota. Phillips 66 Partners Terminal owns the Palermo Terminal and Paradigm owns the Sacagawea pipeline and Keene Terminal. We account for both joint ventures under the equity method of accounting due to governance provisions that require supermajority or unanimous voting on all decisions that significantly impact the governance, management and economic performance of the joint ventures. Sand Hills Sand Hills is a joint venture with DCP Partners that owns an NGL pipeline system that extends from the Permian Basin and Eagle Ford to facilities along the Texas Gulf Coast and the Mont Belvieu market hub. The Sand Hills Pipeline system is operated by DCP Partners. Southern Hills Southern Hills is a joint venture with DCP Partners that owns an NGL pipeline system that extends from the Midcontinent region to the Mont Belvieu, Texas market hub. The Southern Hills Pipeline system is operated by DCP Partners. We have a negative basis difference of $92 million for this investment, which originated when the pipeline, formerly known as Seaway Products, was sold by Phillips 66 to a related party. The negative basis difference represents a deferred gain and is being amortized over 43 years. Explorer Explorer owns and operates a pipeline system that extends from the Texas Gulf Coast to Indiana. The Explorer Pipeline system transports refined petroleum products to more than 70 major cities in 16 U.S. states. We have a positive basis difference of $84 million for this investment, which represents fair value adjustments attributable to ownership increases in the pipeline. The positive basis difference is being amortized over periods between 9 and 17 years. Bayou Bridge Bayou Bridge is a joint venture that owns a pipeline that delivers crude oil from Nederland, Texas, to Lake Charles, Louisiana. The Bayou Bridge Pipeline is operated by our co-venturer. An extension of the pipeline from Lake Charles to St. James, Louisiana, is expected to be in service in March 2019. Summarized 100 percent financial information for all equity investments is presented on a combined basis below:
From acquisition date forward. |
Major Customer and Concentration of Credit Risk |
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Dec. 31, 2018 | |
Major Customer and Concentration of Credit Risk [Abstract] | |
Major Customer and Concentration of Credit Risk | Major Customer and Concentration of Credit Risk Phillips 66 accounted for 96 percent, 95 percent, and 95 percent of our total operating revenues for the years ended December 31, 2018, 2017 and 2016, respectively. Through our wholly owned and joint venture operations, we provide crude oil, refined petroleum products and NGL pipeline transportation, terminaling and storage, and crude oil gathering, NGL fractionation, crude oil processing, and rail-unloading services to Phillips 66 and other related parties. We are potentially exposed to concentration of credit risk primarily through our accounts receivable with Phillips 66. These receivables have payment terms of 30 days or less and are settled against any existing payables we may have to Phillips 66 through Phillips 66’s interaffiliate settlement process. We monitor the credit worthiness of Phillips 66, which has an investment grade credit rating. |
Properties, Plants and Equipment |
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Properties, Plants and Equipment | Properties, Plants and Equipment Our investment in PP&E, with the associated accumulated depreciation, at December 31 was:
*Assets for which we are the lessor. See Note 15—Leases. |
Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill The carrying amount of goodwill was as follows:
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Assets Retirement Obligations and Accrued Environmental Costs |
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Asset Retirement Obligations and Accrued Environmental Costs | Asset Retirement Obligations and Accrued Environmental Costs Asset retirement obligations and accrued environmental costs at December 31 were:
Asset Retirement Obligations We have asset retirement obligations we are required to perform under law or contract once an asset is permanently taken out of service. These obligations primarily relate to the abandonment or removal of certain pipelines. Most of these obligations are not expected to be paid until many years in the future. During 2018 and 2017, our asset retirement obligations changed as follows:
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Net Income Per Limited Partner Unit |
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Partners' Capital Notes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Limited Partner Unit | Net Income Per Limited Partner Unit Net income per limited partner unit applicable to common units is computed by dividing the limited partners’ interest in net income attributable to the Partnership by the weighted-average number of common units outstanding for the period. Because we have more than one class of participating securities, we use the two-class method to calculate the net income per unit applicable to the limited partners. As of December 31, 2018 and 2017, the classes of participating securities included common units, general partner units and incentive distribution rights (IDRs). For the year ended December 31, 2016, basic and diluted net income per unit were the same because we did not have potentially dilutive common or subordinated units outstanding. For the years ended December 31, 2018 and 2017, respectively, our preferred units are potentially dilutive securities and were dilutive to net income per limited partner unit. See Note 12—Equity, for additional information related to our preferred units. Net income earned by the Partnership is allocated between the limited partners and the General Partner (including the General Partner’s IDRs) in accordance with our partnership agreement, after giving effect to priority income allocations to the holders of the preferred units. First, earnings are allocated based on actual cash distributions declared to our unitholders, including those attributable to the General Partner’s IDRs. To the extent net income attributable to the Partnership exceeds or is less than cash distributions, this difference is allocated based on the unitholders’ respective ownership percentages, after consideration of any priority allocations of earnings. For the diluted net income per limited partner unit calculation, the preferred units are assumed to be converted at the beginning of the period into common limited partner units on a one-for-one basis, and the distribution formula for available cash in our partnership agreement is recalculated, using the original available cash amount increased only for the preferred distributions which would not have been paid after conversion. When our financial statements are retrospectively adjusted after a dropdown transaction, the earnings of the acquired business, prior to the closing of the transaction, are allocated entirely to our General Partner and presented as net income (loss) attributable to Predecessors. The earnings per unit of our limited partners prior to the close of the transaction do not change as a result of a dropdown transaction. After the closing of a dropdown transaction, the earnings of the acquired business are allocated in accordance with our partnership agreement as previously described.
*Distributions declared are attributable to the indicated periods.
(1) The dilutive effect of the preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.
(1) The dilutive effect of the preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.
On January 22, 2019, the Board of Directors of our General Partner declared a quarterly cash distribution of $0.835 per common unit attributable to the fourth quarter of 2018. This distribution was paid February 13, 2019, to unitholders of record as of February 1, 2019. |
Debt |
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Debt | Debt Debt at December 31 was:
The fair value of our fixed-rate and floating-rate debt is estimated based on observable market prices and is classified in level 2 of the fair value hierarchy. The fair value of our fixed-rate debt amounted to $2,660 million and $2,918 million at December 31, 2018 and 2017, respectively. The fair value of our floating-rate debt approximated carrying value of $200 million and $100 million at December 31, 2018 and 2017, respectively. Maturities of borrowings outstanding at December 31, 2018, inclusive of net unamortized discounts and debt issuance costs, for the five-year period ending 2023 were $50 million in 2019, $324 million in 2020 and $125 million in 2021. 2017 Senior Notes In October 2017, we closed on a notes offering (2017 Notes Offering) of $650 million aggregate principal amount of unsecured senior notes consisting of:
Interest on the Senior Notes due 2028 is payable semiannually in arrears on March 1 and September 1 of each year, commencing on March 1, 2018. The Senior Notes due 2045 are an additional issuance of our Senior Notes due 2045, and interest is payable semiannually in arrears on February 15 and August 15 of each year. Total proceeds received from the 2017 Notes Offering were $643 million, net of underwriting discounts. We utilized the net proceeds to repay the remaining balances on the promissory notes and term loan assumed in the Bakken Pipeline/Merey Sweeny Acquisition and for general partnership purposes. Revolving Credit Facility At December 31, 2018, we had borrowings of $125 million outstanding under our $750 million revolving credit facility established by our Credit Agreement dated June 7, 2013, as amended (the Credit Agreement). No amounts were outstanding as of December 31, 2017. We have the option to increase the overall capacity of the Credit Agreement by up to an additional $250 million for a total of $1 billion, subject to, among other things, the consent of the existing lenders whose commitments will be increased or any additional lenders providing such additional capacity. We also have the option to extend the Credit Agreement for two additional one-year terms after its October 3, 2021, maturity date, subject to, among other things, the consent of the lenders holding the majority of the commitments and of each lender extending its commitment. Outstanding borrowings under the Credit Agreement bear interest, at our option, at either: (a) the Eurodollar rate in effect from time to time plus the applicable margin; or (b) the base rate (as described in the Credit Agreement) plus the applicable margin. The pricing levels for the commitment fee and interest-rate margins are determined based on our credit ratings in effect from time to time. Outstanding borrowings bearing interest at the Eurodollar rate become due and payable on the revolving credit facility’s termination date. Outstanding borrowings bearing interest at the base rate plus the applicable margin become due and payable on the earlier of the revolving credit facility’s termination date or the fourteenth business day after such borrowings were made. We may at any time and from time to time prepay outstanding borrowings under the Credit Agreement, in whole or in part, without premium or penalty. The Credit Agreement requires that the Partnership’s ratio of total debt to EBITDA for the prior four fiscal quarters must be no greater than 5.0:1.0 as of the last day of each fiscal quarter (and 5.5:1.0 during the period following certain specified acquisitions). Tax-Exempt Bonds In connection with the Bakken Pipeline/Merey Sweeny Acquisition, we assumed four $25 million tranches of tax-exempt bonds issued by the Brazos River Harbor Navigation District. We repaid one tranche in 2018, with another maturing in 2020 and two in 2021. The tranches accrue interest monthly based on a daily rate derived by the remarketing agent for the bonds. The interest rates are designed to represent the lowest rate acceptable by the tax-exempt, variable-rate bond market and approximate the tax-exempt bonds trading at par. Senior Bonds In May 2017 and prior to their maturity, we repaid Merey Sweeny senior bonds assumed in the Bakken Pipeline/Merey Sweeny Acquisition with a carrying value of $136 million on the repayment date, which resulted in an immaterial gain. |
Equity |
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Dec. 31, 2018 | |
Equity [Abstract] | |
Equity | Equity ATM Programs Our initial $250 million continuous offering of common units, or at-the-market (ATM) program, was completed in June 2018. At that time, we commenced issuing common units under our second $250 million ATM program. For the year ended December 31, 2018, on a settlement date basis, we had issued an aggregate of 2,532,096 common units under our ATM programs, generating net proceeds of $128 million. During the year ended December 31, 2017, on a settlement-date basis, we issued an aggregate of 3,372,716 common units under our ATM Program, generating net proceeds of $173 million. Since inception through December 31, 2018, we had issued an aggregate of 6,250,964 common units under our ATM programs, generating net proceeds of $320 million, after broker commissions of $3 million. The net proceeds from sales under the ATM programs are used for general partnership purposes, which may include debt repayment, acquisitions, capital expenditures and additions to working capital. Issuances of common units under our ATM programs can reduce our General Partner’s interest below 2 percent. We expect the General Partner’s interest to be periodically restored to 2 percent in connection with dropdown transactions or through direct equity contributions. However, these future contributions from our General Partner cannot be assured. At December 31, 2018, our General Partner’s interest was slightly less than 2 percent. Common Unit Offerings In October 2017, we completed a private placement of 6,304,204 common units representing limited partner interests at a price of $47.59 per common unit, for total proceeds of $295 million, net of underwriting discounts and commissions. The net proceeds were used in part to fund the cash portion of the Bakken Pipeline/Merey Sweeny Acquisition. See Note 4—Acquisitions, for additional information. In August 2016, we completed a public offering of 6,000,000 common units representing limited partner interests at a price of $50.22 per common unit. We received proceeds of $299 million from the offering, net of underwriting discounts and commissions. We utilized the net proceeds to repay the Initial Note assumed as part of the Initial Fractionator Acquisition and to repay other short-term borrowings incurred to fund our acquisition of an additional interest in Explorer and our contribution to form STACK. See Note 4—Acquisitions and Note 11—Debt, for additional information. In May 2016, we completed a public offering, consisting of an aggregate of 12,650,000 common units representing limited partner interests at a price of $52.40 per common unit. We received proceeds of $656 million from the offering, net of underwriting discounts and commissions. We utilized the net proceeds to partially repay debt assumed as part of the Subsequent Fractionator Acquisition. See Note 4—Acquisitions and Note 11—Debt, for additional information. Preferred Unit Offering In October 2017, we completed the private placement of 13,819,791 perpetual convertible preferred units (preferred units) representing limited partner interests at a price of $54.27 per preferred unit. We received proceeds of $737 million from the offering, net of offering and transaction expenses. The net proceeds were used in part to fund the cash portion of the Bakken Pipeline/Merey Sweeny Acquisition. The preferred units rank senior to all common units with respect to distributions and rights upon liquidation. The holders of the preferred units are entitled to receive cumulative quarterly distributions equal to $0.678375 per unit, beginning for the quarter ended December 31, 2017, with a prorated amount from the date of issuance. Following the third anniversary of the issuance of the preferred units, the holders of the preferred units will receive as a quarterly distribution the greater of $0.678375 per unit or the amount of per-unit distributions paid to common unitholders as if such preferred units had converted into common units immediately prior to the record date. The holders of the preferred units may convert their preferred units into common units, on a one-for-one basis, at any time after the second anniversary of the issuance date, in full or in part, subject to minimum conversion amounts and conditions. After the third anniversary of the issuance date, we may convert the preferred units into common units at any time, in whole or in part, subject to certain minimum conversion amounts and conditions, if the arithmetic average of the volume-weighted trading price of our common units is greater than $73.2645 per unit for the 20 day trading period immediately preceding the conversion notice date and the average trading volume of the common units is at least 100,000 for the preceding 20 trading days. The conversion rate for the preferred units shall be the quotient of (a) the sum of (i) $54.27, plus (ii) any unpaid cash distributions on the applicable preferred unit, divided by (b) $54.27. The holders of the preferred units are entitled to vote on an as-converted basis with the common unitholders and have certain other class voting rights with respect to any amendment to our partnership agreement that would adversely affect any rights, preferences or privileges of the preferred units. In addition, upon certain events involving a change in control, the holders of preferred units may elect, among other potential elections, to convert their preferred units to common units at the then change of control conversion rate. |
Operating Revenues |
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Operating Revenues | Operating Revenues Disaggregated Revenues Total operating revenues disaggregated by type of service were as follows:
*Sales and other operating revenues for the years ended December 31, 2017 and 2016 are presented in accordance with accounting standards in effect prior to our adoption of ASU No. 2014-09 as of January 1, 2018. See Note 3—Changes in Accounting Principles, for further discussion regarding our adoption of ASU No. 2014-09. For the year ended December 31, 2018, lease revenues were $599 million and service revenues were $446 million. Lease and service revenues were recorded in the “Operating revenues—related parties” and “Operating revenues—third parties” lines on our consolidated statement of income. Contract-Related Assets and Liabilities Our contract assets primarily represent amounts owed to us by our customers, mainly Phillips 66. At December 31, 2018 and January 1, 2018, lease receivables were $53 million and $49 million, respectively, and service receivables were $41 million and $37 million, respectively. Our contract liabilities primarily represent payments from our customers, mainly Phillips 66, for volume throughput less than the contractually required minimum throughput volumes. These deficiency payments are deferred and recognized at the earlier of the period in which our customers make up the shortfall volumes or when it is probable our customers will not make up the shortfall volumes prior to the expiration of the contractual make-up period. Our contract liabilities are included in the “Deferred revenues” and “Deferred revenues and other liabilities” lines on our consolidated balance sheet. At December 31, 2018, and January 1, 2018, total deferred revenues were $79 million and $93 million, respectively, of which $6 million and $13 million, respectively, are contract liabilities related to the service element. Service-related revenues recognized during the year ended December 31, 2018, that were included in the contract liability balance at January 1, 2018, were $11 million. For the twelve months ended December 31, 2018, there were no material differences between the amount that we recognized as revenues relating to minimum throughput deficiency payments compared to the amount that would have been recognized prior to the adoption of the new revenue recognition standard. Remaining Performance Obligations We typically have long-term contracts with our customers, most of which have original durations of up to 15 years. The average remaining duration of these contracts is nine years. At December 31, 2018, future revenues expected to be recognized for the fixed component of the transaction price of our remaining performance obligations from contracts with our customers with an original expected duration of greater than one year were:
For the remaining performance obligation, we applied the exemption for variable prices allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer distinct goods or service as part of a performance obligation. |
Contingencies |
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Dec. 31, 2018 | |
Contingencies [Abstract] | |
Contingencies | Contingencies From time to time, lawsuits involving a variety of claims that arise in the ordinary course of business are filed against us. We also may be required to remove or mitigate the effects on the environment of the placement, storage, disposal or release of certain chemical, mineral and petroleum substances at various sites. We regularly assess the need for accounting recognition or disclosure of these contingencies. In the case of all known contingencies (other than those related to income taxes), we accrue a liability when the loss is probable and the amount is reasonably estimable. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or other third-party recoveries. In the case of income-tax-related contingencies, we use a cumulative probability-weighted loss accrual in cases where sustaining a tax position is less than certain. Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements. As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures. Estimates particularly sensitive to future changes include any contingent liabilities recorded for environmental remediation, tax and legal matters. Estimated future environmental remediation costs are subject to change due to such factors as the uncertain magnitude of cleanup costs, the unknown time and extent of such remedial actions that may be required, and the determination of our liability in proportion to that of other potentially responsible parties. Estimated future costs related to tax and legal matters are subject to change as events evolve and as additional information becomes available during the administrative and litigation processes. Environmental We are subject to federal, state and local environmental laws and regulations. We record accruals for contingent environmental liabilities based on management’s best estimates, using all information that is available at the time. We measure estimates and base liabilities on currently available facts, existing technology, and presently enacted laws and regulations, taking into account stakeholder and business considerations. When measuring environmental liabilities, we also consider our prior experience in remediation of contaminated sites, other companies’ cleanup experience, and data released by the U.S. Environmental Protection Agency or other organizations. We consider unasserted claims in our determination of environmental liabilities, and we accrue them in the period they are both probable and reasonably estimable. In the future, we may be involved in additional environmental assessments, cleanups and proceedings. See Note 9—Asset Retirement Obligations and Accrued Environmental Costs, for a summary of our accrued environmental liabilities. Legal Proceedings Under our amended omnibus agreement, Phillips 66 provides certain services for our benefit, including legal support services, and we pay an operational and administrative support fee for these services. Phillips 66’s legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor the legal proceedings against us. The process facilitates the early evaluation and quantification of potential exposures in individual cases and enables tracking of those cases that have been scheduled for trial and/or mediation. Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, Phillips 66’s legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required. At December 31, 2018 and 2017, we did not have any material accrued contingent liabilities associated with litigation matters. Indemnification and Excluded Liabilities Under our amended omnibus agreement and pursuant to the terms of various agreements under which we acquired assets from Phillips 66, Phillips 66 will indemnify us, or assume responsibility, for certain environmental liabilities, tax liabilities, litigation and any other liabilities attributable to the ownership or operation of the assets contributed to us and that arose prior to the effective date of each acquisition. These indemnifications and exclusions from liability have, in some cases, time limits and deductibles. When Phillips 66 performs under any of these indemnifications or exclusions from liability, we recognize non-cash expenses and associated non-cash capital contributions from our General Partner, as these are considered liabilities paid for by a principal unitholder. |
Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases Lessor We have certain services agreements with Phillips 66 that are considered operating leases under GAAP. These agreements include escalation clauses to adjust transportation tariffs and terminaling and storage fees to reflect changes in price indices. Revenues from these agreements are recorded within “Operating revenues—related parties” on our consolidated statement of income. As of December 31, 2018, future minimum payments to be received related to these agreements were estimated to be:
*Includes $2.4 billion of future service revenues from agreements with Phillips 66 that are considered as operating leases. Lessee We have operating lease agreements with Phillips 66 for the land underlying or associated with certain assets. Due to the economic infeasibility of canceling these leases, we consider them non-cancellable. For the year ended December 31, 2018, total operating lease rental expense was $3 million. As of December 31, 2018, the future minimum lease payments for our operating lease obligations were:
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Employee Benefit Plans |
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Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Pension and Retirement Savings Plans Neither we nor our subsidiaries have any employees. Our General Partner has the sole responsibility for providing the employees and other personnel necessary to conduct our operations. All of the employees that conduct our wholly owned businesses are employed by Phillips 66. Those employees participate in the pension, postretirement health insurance and defined contribution benefit plans sponsored by Phillips 66. Most employees of Phillips 66 who provide direct support to our operations do so under the provisions of the amended and restated operational services agreement, which fees include a burden for benefit costs. |
Unit-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Unit-Based Compensation | Unit-Based Compensation In 2013, the Board of Directors of our General Partner adopted the Phillips 66 Partners LP 2013 Incentive Compensation Plan (the ICP). Awards under the ICP are available for officers, directors and employees of our General Partner or its affiliates, and any consultants or other individuals who perform services for the Partnership. The ICP allows for the grant of unit awards, restricted units, phantom units, unit options, unit appreciation rights, distribution equivalent rights, profits interest units and other unit-based awards. The ICP limits the number of common units that may be delivered pursuant to awards to 2,500,000, subject to proportionate adjustment in the event of unit splits and similar events. From the closing of our initial public offering through December 31, 2018, we have only issued phantom units to non-employee directors under the ICP. A phantom unit entitles the recipient to receive cash equal to the fair market value of a common unit on the date the phantom unit is settled after the vesting period (settlement date), and to also receive a distribution equivalent each quarter between the grant date and the settlement date in an amount equal to any cash distributions paid on a common unit during that time. During the year ended December 31, 2018, we granted a total of 4,326, phantom units to three non-employee directors of the Partnership. For the years ended December 31, 2017 and 2016, we granted a total of 4,794 and 4,880 phantom units, respectively. On the grant date, phantom units awarded to non-employee directors become non-forfeitable; therefore, we immediately recognize expense equal to the grant-date fair value of the award. Phantom units awarded under the ICP do not have voting rights. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We are not a taxable entity for U.S. federal income tax purposes or for the majority of states that impose an income tax. Taxes on our net income are borne generally by our partners through the allocation of taxable income. Our income tax provision results from state laws that apply to entities organized as partnerships. For us, this is primarily Texas. At December 31, 2018 and 2017, we had a deferred tax liability of $7 million and $5 million, respectively. The net deferred tax liability was primarily associated with PP&E and equity investments. Our effective tax rate was less than one percent for the years ended December 31, 2018, 2017 and 2016. As of December 31, 2018 and 2017, we had no liability reported for uncertain tax positions. We also did not have any interest or penalties related to income taxes for the years ended December 31, 2018, 2017 and 2016. Texas tax returns for the years 2013 and forward are subject to examination. |
Cash Flow Information |
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Cash Flow Information | Cash Flow Information The acquisitions discussed below had cash and noncash elements. The common and general partner units issued to Phillips 66 in the Bakken Pipeline/Merey Sweeny and Eagle acquisitions were assigned no value, because the cash consideration and any debt assumed exceeded the historical net book value of the acquired assets for each acquisition. Accordingly, the units issued for these acquisitions had no impact on partner capital balances, other than changing ownership percentages. See Note 4—Acquisitions, for additional information. Bakken Pipeline/Merey Sweeny Acquisition The historical book value of the net assets acquired in the Bakken Pipeline/Merey Sweeny Acquisition in 2017 was $729 million. Total cash consideration and assumed debt immediately repaid to Phillips 66 at acquisition totaled $963 million. Of this total, $729 million was an investing cash outflow, and the remaining $234 million was deemed a cash distribution to our General Partner (a financing cash outflow). The remaining balance of debt assumed in the acquisition of $447 million was a noncash financing activity that increased debt and decreased our General Partner’s capital account. Eagle Acquisition We attributed $990 million of the total $1,109 million cash consideration paid in 2016 to the historical book value of the assets acquired (an investing cash outflow). The remaining $119 million of excess cash consideration was deemed a distribution to our General Partner (a financing cash outflow). Subsequent Fractionator Acquisition The historical book value of the net assets acquired in the Subsequent Fractionator Acquisition in 2016 was $871 million. Of this amount, $656 million was a financing cash outflow, representing the acquisition of the noncontrolling interest in Sweeny Frac LLC, through the repayment of a portion of the debt assumed in the transaction. The remaining debt financing balance of $19 million represented a noncash investing and financing activity. The remaining $196 million of book value was attributed to the common and general partner units issued (a noncash investing and financing activity). Initial Fractionator Acquisition The Initial Fractionator Acquisition in 2016 was a noncash transaction. The historical book value of the net assets of our 25 percent interest acquired was $283 million. Of this amount, $212 million was attributed to the note payable assumed (a noncash investing and financing activity). The remaining $71 million was attributed to the common and general partner units issued (a noncash investing and financing activity). Our capital expenditures and investments consisted of:
(1)Certain liabilities of acquisitions were retained by Phillips 66, pursuant to the terms of various agreements under which we acquired assets from Phillips 66 since our initial public offering. See Note 14—Contingencies, for additional information on these excluded liabilities associated with acquisitions. Restricted Cash At December 31, 2018, the Partnership did not have any restricted cash. The restrictions on the cash received in February 2017, as a result of the retrospective adjustment for the Bakken Pipeline/Merey Sweeny Acquisition, were fully removed in the second quarter of 2017 when Merey Sweeny’s outstanding debt that contained lender restrictions on the use of cash was paid in full. |
Other Financial Information |
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Other Financial Information | Other Financial Information
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Related Party Transactions |
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Related Party Transactions | Related Party Transactions Commercial Agreements We have entered into long-term, fee-based commercial agreements with Phillips 66 to provide transportation, terminaling, storage, stevedoring, fractionation, processing, and rail terminal services. Under these agreements, Phillips 66 commits to provide us with minimum transportation, throughput or storage volumes, or minimum monthly service fees. If Phillips 66 does not meet its minimum volume commitments, Phillips 66 pays us a deficiency payment based on the calculation described in the agreement. Amended and Restated Operational Services Agreement Under our amended and restated operational services agreement, we reimburse Phillips 66 for providing certain operational services to us in support of our pipelines, terminaling, processing, and storage facilities. These services include routine and emergency maintenance and repair services, routine operational activities, routine administrative services, construction and related services and such other services as we and Phillips 66 may mutually agree upon from time to time. Amended Omnibus Agreement The amended omnibus agreement addresses our payment of an operating and administrative support fee and our obligation to reimburse Phillips 66 for all other direct or allocated costs and expenses incurred by Phillips 66 in providing general and administrative services. Additionally, the omnibus agreement addresses Phillips 66’s indemnification to us and our indemnification to Phillips 66 for certain environmental and other liabilities. Further, it addresses the granting of a license from Phillips 66 to us with respect to the use of certain Phillips 66 trademarks. Tax Sharing Agreement Under our tax sharing agreement, we reimburse Phillips 66 for our share of state and local income and other taxes incurred by Phillips 66 due to our results of operations being included in a combined or consolidated tax return filed by Phillips 66. Any reimbursement is limited to the tax that we (and our subsidiaries) would have paid had we not been included in a combined group with Phillips 66. Phillips 66 may use its tax attributes to cause its combined or consolidated group to owe no tax; however, we would nevertheless reimburse Phillips 66 for the tax we would have owed, even though Phillips 66 had no cash expense for that period. Related Party Transactions Significant related party transactions included in our total costs and expenses were:
We pay Phillips 66 a monthly operational and administrative support fee under the terms of our amended omnibus agreement in the amount of $8 million. In prior periods, the monthly fee paid to Phillips 66 was $1 million from July 26, 2013 through February 28, 2014, $2 million from March 1, 2014, to March 1, 2015, $3 million from March 2, 2015, to October 13, 2016, and $7 million from October 14, 2016 to October 6, 2017. The increases over time reflect the growth in our operations. The operational and administrative support fee is for the provision of certain services, including: logistical services; asset oversight, such as operational management and supervision; corporate engineering services, including asset integrity and regulatory services; business development services; executive services; financial and administrative services (including treasury and accounting); information technology; legal services; corporate health, safety and environmental services; facility services; human resources services; procurement services; investor relations; tax matters; and public company reporting services. We also reimburse Phillips 66 for all other direct or allocated costs incurred on behalf of us, pursuant to the terms of our amended omnibus agreement. The classification of these charges between operating and maintenance expenses and general and administrative expenses is based on the functional nature of the services performed for our operations. Under our amended and restated operational services agreement, we reimburse Phillips 66 for the provision of certain operational services to us in support of our pipeline, rail rack, processing, terminaling, and storage facilities. Additionally, we pay Phillips 66 for insurance services provided to us and recoveries under these policies are recorded as an offset to our expenses. Operating and maintenance expenses also include volumetric gains and losses associated with volumes transported by Phillips 66. Other related party balances in our consolidated balance sheet at December 31 consisted of the following, all of which were related to Phillips 66:
Equity Affiliate Guarantees Dakota Access and ETCO are parties to a $2.5 billion project financing transaction entered into in August 2016 to fund the construction of the Bakken Pipeline. In July 2017, as owners of Dakota Access and ETCO, Phillips 66 and its co-venturers each issued a guarantee intended to cover their pro rata shares of interest expense for rolling six-month periods after the calculation date. In October 2017, as part of the Bakken Pipeline/Merey Sweeny Acquisition, Phillips 66 Partners substituted its guarantee for that of Phillips 66. Each co-venturer’s guarantee has a maximum guarantee amount which changes over time. Our maximum exposure under the guarantee amounted to $17 million at December 31, 2018. We guaranteed the payment of our portion of certain purchase obligations of Gray Oak. At December 31, 2018, our maximum potential amount of future payments to third parties under the guarantee was estimated to be $85 million. Payment would be required if Gray Oak defaults on these obligations. |
New Accounting Standards |
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New Accounting Standards [Abstract] | |
New Accounting Standards | New Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will continue to be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. Similarly, lessors will be required to classify leases as sales-type, financing or operating, with classification affecting the pattern of income recognition in the income statement. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards, as well as substantive control have been transferred through a lease contract. The ASU also requires additional disclosures. Public business entities should apply the guidance in ASU No. 2016-02 for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. We will adopt ASU No. 2016-02 by recognizing a cumulative-effect adjustment to our opening consolidated balance sheet as of our January 1, 2019, adoption date. As of the adoption date, we expect to recognize ROU assets and operating lease liabilities on our consolidated balance sheet of approximately $45 million. For revenue from contracts classified as leases, we will not split the lease and service elements, but will combine and report them as lease revenue. Any deferred revenue arising from minimum volume commitments under lease contracts will be recognized once the contractual recovery period provision has expired. The adoption of this ASU is not expected to have a material impact on our consolidated statements of income and cash flows. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The new standard amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which may result in earlier recognition of losses. Public business entities should apply the guidance in ASU No. 2016-13 for annual periods beginning after December 15, 2019, including interim periods within those annual periods. Early adoption will be permitted for annual periods beginning after December 15, 2018. We are evaluating the provisions of ASU No. 2016-13, and currently do not expect it to have a material impact on our consolidated financial statements. |
Selected Quarterly Financial Data (Unaudited) |
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Selected Quarterly Financial Data (Unaudited) |
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||
Basis of Presentation | Basis of Presentation We have acquired assets from Phillips 66 that were considered transfers of businesses between entities under common control. This required the transactions to be accounted for as if the transfers had occurred at the beginning of the period of transfer, with prior periods retrospectively adjusted to furnish comparative information. We refer to these pre-acquisition operations as those of our “Predecessors.” The combined financial statements of our Predecessors were derived from the accounting records of Phillips 66 and reflect the combined historical results of operations, financial position and cash flows of our Predecessors as if such businesses had been combined for all periods presented. All intercompany transactions and accounts within our Predecessors have been eliminated. The assets and liabilities of our Predecessors in these financial statements have been reflected on a historical cost basis because the transfer of the Predecessors to us occurred within the Phillips 66 consolidated group. The consolidated statement of income also includes expense allocations for certain functions performed by Phillips 66, including operational support services such as engineering and logistics and allocations of general corporate expenses related to executive oversight, accounting, treasury, tax, legal, information technology and procurement. These allocations were based primarily on the relative carrying values of properties, plants and equipment and equity-method investments, or number of terminals and pipeline miles, and secondarily on activity-based costs. Our management believes the assumptions underlying the allocation of expenses from Phillips 66 are reasonable. Nevertheless, the financial results of our Predecessors may not include all of the actual expenses that would have been incurred had our Predecessors been a stand-alone publicly traded partnership during the periods presented. |
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Consolidation Principles and Investments | Consolidation Principles and Investments Our consolidated financial statements include the accounts of majority-owned, controlled subsidiaries. The equity method is used to account for investments in affiliates in which we have the ability to exert significant influence over the affiliates’ operating and financial policies, including any variable interest entities of which we are not the primary beneficiary. Undivided interests in pipelines are consolidated on a proportionate basis. |
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Net Investment-Predecessor | Net Investment—Predecessors “Net Investment—Predecessors” represents Phillips 66’s historical investment in the contributed businesses, our Predecessors’ accumulated net earnings after taxes, and the net effect of transactions with, and allocations from, Phillips 66 prior to the acquisition of the businesses from Phillips 66. |
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities. Actual results could differ from these estimates. |
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Common Control Transactions | Common Control Transactions Businesses acquired from Phillips 66 and its subsidiaries are accounted for as common control transactions whereby the net assets acquired are combined with ours at their carrying value. Any difference between carrying value and recognized consideration is treated as a capital transaction. To the extent that such transactions require prior-period financial information to be retrospectively adjusted to furnish comparative information, historical net equity amounts prior to the transaction date are reflected in “Net Investment—Predecessors.” Cash consideration up to the carrying value of net assets acquired is presented as an investing activity in our consolidated statement of cash flows. Cash consideration in excess of the carrying value of net assets acquired is presented as a financing activity in our consolidated statement of cash flows. |
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Revenue Recognition | Revenue Recognition Revenues are primarily recognized for pipeline transportation, terminaling, storage, processing and fractionation services generated under long-term agreements. A significant portion of our revenues are derived from Phillips 66. The majority of our agreements for transportation, terminaling, storage, processing and fractionation services with Phillips 66 are considered operating leases under GAAP. For these leases, the lease and service elements of revenue are separated with the service element recognized under the revenue standard and the lease element recognized under the lease standard. The separation of the lease and service elements is based on an analysis of service-related and lease-related costs for each contract, adjusted for representative profit margins. Revenues from fixed minimum volume commitments are recognized over the performance obligation period for stand-ready service contracts. Revenues from the variable element of these stand-ready contracts and other contracts without fixed elements are recognized based on the actual volumes transported, stored, processed and fractionated at contractual rates because the actual volumes specifically relate to our efforts to transfer the distinct services. Generally, our services are billed and payments are received on a monthly basis. Billings to Phillips 66 for shortfall volumes under its quarterly minimum volume commitments are recorded as “Deferred revenues” in our consolidated balance sheet, as Phillips 66 generally has the right to make up the shortfall volumes in the following four quarters. For the lease element of the contracts, the deferred revenue will be recognized at the earlier of when shortfall volumes are made up, when the make-up rights contractually expire or when we determine the system will not have the necessary capacity to enable a customer to make up the shortfall volumes. For the service element of the contracts, the deferred revenue will be recognized when the performance obligation is complete or it is probable that the shortfall volumes will not be made up. Billings for tolling services relating to maintenance turnaround activities are billed in advance of such activities. These billings are initially recorded as “Deferred revenues” in our consolidated balance sheet and are recognized when the maintenance turnaround activity commences. Deferred revenue relating to maintenance turnaround operating expenses is recognized in the period the work is performed. Deferred revenue relating to capital projects performed concurrently with a maintenance turnaround is recognized ratably over the remaining tolling services agreement once the equipment is placed into service. At the time the Clemens Caverns commenced operations, the caverns had not reached total planned working capacity contracted under the storage agreement. During the build-out of the remaining capacity, a portion of the monthly storage fees was deferred. The deferred revenue is being recognized over the remaining term of the agreement as additional storage capacity was placed into service. |
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Cash Equivalents | Cash Equivalents Cash equivalents are highly liquid, short-term investments that are readily convertible to known amounts of cash and will mature within 90 days or less from the date of acquisition. We carry these at cost plus accrued interest, which approximates fair value. |
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Imbalances | Imbalances We do not purchase or produce NGL, crude oil or refined petroleum product inventories. We experience imbalances as a result of variances in meter readings and in other measurement methods, and volume fluctuations within our NGL, crude oil and refined petroleum products systems due to pressure and temperature changes. Certain of our transportation contracts provide for the shipper to pay a contractual loss allowance, which is valued using quoted market prices of the applicable commodity being shipped. These contractual loss allowances, which are received from the shipper irrespective of, and independently calculated from, actual volumetric gains or losses, are recorded as revenue. Any actual volumetric gains or losses are valued using quoted market prices of the applicable commodities and are recorded as decreases or increases to operating and maintenance expenses, respectively. |
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Fair Value Measurements | Fair Value Measurements We measure assets and liabilities requiring fair value presentation or disclosure using the price that would be received to sell an asset or paid to transfer a liability (i.e., an exit price), and disclose such amounts according to the quality of valuation inputs under the following hierarchy:
We classify the fair value of an asset or liability based on the lowest level of input significant to its measurement. A fair value initially reported as Level 3 will be subsequently reported as Level 2 if the unobservable inputs become inconsequential to its measurement, or corroborating market data becomes available. Asset and liability fair values initially reported as Level 2 will be subsequently reported as Level 3 if corroborating market data becomes unavailable. The carrying amounts of our trade receivables and payables approximate fair value. Nonrecurring Fair Value Measurements We apply the fair value measurements criteria to determine the fair value of nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis, primarily asset retirement obligations and, when impaired, long-lived assets. |
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Properties, Plants and Equipment (PP&E) | Properties, Plants and Equipment (PP&E) PP&E is recorded at cost. Costs of maintenance and repairs, which are not significant improvements, are expensed when incurred. Depreciation of PP&E is determined by the individual-unit-straight-line method or the group-straight-line method (for those individual units that are highly integrated with other units). |
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Capitalized Interest | Capitalized Interest Interest from external borrowings is capitalized on major projects with an expected construction period of six months or longer. Capitalized interest is added to the cost of the underlying asset’s PP&E or the applicable equity investment and is amortized over the useful life of the asset. |
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Major Maintenance Activities | Major Maintenance Activities Costs for planned integrity management projects are expensed in the period incurred. These types of costs include inspection services, contractor repair services, materials and supplies, equipment rentals and labor costs. |
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Impairment of PP&E | Impairment of PP&E PP&E used in operations are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in the future cash flows expected to be generated by an asset group. If, upon review, the sum of the undiscounted expected future pretax cash flows of an asset group is less than the carrying value of the asset group, including applicable liabilities, then the carrying value is written down to estimated fair value and the write down is reported as an impairment in the period in which the determination is made. Individual assets are grouped for impairment purposes at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets—generally at the pipeline system, terminal, or processing or fractionation system level. Since there usually is a lack of quoted market prices for our long-lived assets, the fair value of potentially impaired assets is typically determined based on the present value of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants or based on a multiple of operating cash flow validated with historical market transactions of similar assets where possible. The expected future cash flows used for impairment reviews and related fair value calculations are based on estimated future throughputs, tariffs and fees, operating costs and capital project decisions, considering all available evidence at the date of review. |
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Impairment of Investments in Nonconsolidated Entities | Impairment of Investments in Nonconsolidated Entities Investments in nonconsolidated entities are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred. When indicators exist, the fair value is estimated and compared to the investment carrying value. If any impairment is judgmentally determined to be other than temporary, the carrying value of the investment is written down to fair value. The fair value of the impaired investment is determined based on quoted market prices, if available, or upon the present value of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants and a market analysis of comparable assets, if appropriate. |
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Goodwill | Goodwill Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in the acquisition of a business. Goodwill is not amortized, but rather is tested for impairment annually and when events or changes in circumstances indicate that the fair value of the reporting unit with goodwill has been reduced below carrying value. The majority of our goodwill is related to acquisitions from Phillips 66. In these common control transactions, the net assets acquired are recorded at Phillips 66’s historical carrying value, including any associated goodwill. We have one reporting unit for goodwill impairment testing. |
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Asset Retirement Obligations and Environmental Costs | Asset Retirement Obligations and Environmental Costs Fair values of legal obligations to abandon or remove long-lived assets are recorded in the period in which the obligation arises. When the liability is initially recorded, we capitalize this cost by increasing the carrying amount of the related PP&E. Over time, the liability is increased for the change in its present value, and the capitalized cost in PP&E is depreciated over the useful life of the related asset. Our estimate may change after initial recognition, in which case we record an adjustment to the liability and PP&E. Environmental expenditures are expensed or capitalized, depending upon their future economic benefit. Expenditures relating to an existing condition caused by past operations, and those having no future economic benefit, are expensed. Liabilities for environmental expenditures are recorded on an undiscounted basis (unless acquired in a business combination) when environmental assessments or cleanups are probable and the costs can be reasonably estimated. |
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Income Taxes | Income Taxes We follow the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of our assets and liabilities. Our operations are treated as a partnership for federal and state income tax purposes, with each partner being separately taxed on its share of taxable income. Therefore, we have excluded income taxes from these consolidated financial statements, except for the income tax provision resulting from state laws that apply to entities organized as partnerships. Our tax provision is computed as if we were a stand-alone tax paying entity. Any interest and penalties related to income taxes would be reported in interest and debt expense and operating and maintenance expenses, respectively, in our consolidated statement of income. |
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New Accounting Pronouncement | Effective January 1, 2018, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business with the objective of adding guidance to assist in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The amendment provides a screen for determining when a transaction involves an acquisition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset, or a group of similar identifiable assets, then the screen is met and the transaction is not considered an acquisition of a business. If the screen is not met, the amendment requires that to be considered a business, the operation must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create an output. The guidance may reduce the number of future transactions accounted for as business acquisitions. At the time of adoption, this ASU had no impact on our consolidated financial statements. Effective January 1, 2018, we adopted ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The majority of this ASU’s provisions amend only the presentation or disclosures of financial instruments; however, one provision could also affect net income. Equity investments reported under the cost method or the lower of cost or fair value method of accounting, in accordance with previous GAAP, are now reported at fair value with changes in fair value recognized in net income. For equity investments that do not have readily determinable fair values, we elected to carry such investments at cost less impairments, if any, adjusted up or down for price changes in similar financial instruments issued by the investee, when and if observed. At the time of adoption, this ASU had no material impact on our consolidated financial statements. Effective January 1, 2018, we adopted ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” using the modified retrospective transition method applied to all contracts. Under the new revenue recognition guidance, recognition of revenue involves a multiple step approach including: (i) identifying the contract with the customer, (ii) identifying the separate performance obligations, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations and (v) recognizing the revenue as the performance obligations are satisfied. Additional disclosures are required to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On January 1, 2019, an equity-method investee adopted this ASU without a material impact. We recorded a noncash cumulative effect adjustment of $30 million to increase the opening balance of our equity as of January 1, 2018. This adjustment reflected amounts recorded by us and our equity-method investees related to the acceleration of revenue recognition on certain minimum volume commitment contracts with recovery provisions. Certain agreements for transportation, terminaling and fractionation services with Phillips 66 are considered operating leases under FASB Accounting Standards Codification (ASC) 840, “Leases.” We identified the separate lease and service elements of our revenue under these operating leases and applied ASU No. 2014-09 only to the service element, while the lease element continued to be accounted for under ASC 840. See Note 13—Operating Revenues, for additional information. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will continue to be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. Similarly, lessors will be required to classify leases as sales-type, financing or operating, with classification affecting the pattern of income recognition in the income statement. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards, as well as substantive control have been transferred through a lease contract. The ASU also requires additional disclosures. Public business entities should apply the guidance in ASU No. 2016-02 for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted. We will adopt ASU No. 2016-02 by recognizing a cumulative-effect adjustment to our opening consolidated balance sheet as of our January 1, 2019, adoption date. As of the adoption date, we expect to recognize ROU assets and operating lease liabilities on our consolidated balance sheet of approximately $45 million. For revenue from contracts classified as leases, we will not split the lease and service elements, but will combine and report them as lease revenue. Any deferred revenue arising from minimum volume commitments under lease contracts will be recognized once the contractual recovery period provision has expired. The adoption of this ASU is not expected to have a material impact on our consolidated statements of income and cash flows. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The new standard amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which may result in earlier recognition of losses. Public business entities should apply the guidance in ASU No. 2016-13 for annual periods beginning after December 15, 2019, including interim periods within those annual periods. Early adoption will be permitted for annual periods beginning after December 15, 2018. We are evaluating the provisions of ASU No. 2016-13, and currently do not expect it to have a material impact on our consolidated financial statements. |
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Net Income Per Limited Partner Unit | Net income per limited partner unit applicable to common units is computed by dividing the limited partners’ interest in net income attributable to the Partnership by the weighted-average number of common units outstanding for the period. Because we have more than one class of participating securities, we use the two-class method to calculate the net income per unit applicable to the limited partners. As of December 31, 2018 and 2017, the classes of participating securities included common units, general partner units and incentive distribution rights (IDRs). For the year ended December 31, 2016, basic and diluted net income per unit were the same because we did not have potentially dilutive common or subordinated units outstanding. For the years ended December 31, 2018 and 2017, respectively, our preferred units are potentially dilutive securities and were dilutive to net income per limited partner unit. See Note 12—Equity, for additional information related to our preferred units. Net income earned by the Partnership is allocated between the limited partners and the General Partner (including the General Partner’s IDRs) in accordance with our partnership agreement, after giving effect to priority income allocations to the holders of the preferred units. First, earnings are allocated based on actual cash distributions declared to our unitholders, including those attributable to the General Partner’s IDRs. To the extent net income attributable to the Partnership exceeds or is less than cash distributions, this difference is allocated based on the unitholders’ respective ownership percentages, after consideration of any priority allocations of earnings. For the diluted net income per limited partner unit calculation, the preferred units are assumed to be converted at the beginning of the period into common limited partner units on a one-for-one basis, and the distribution formula for available cash in our partnership agreement is recalculated, using the original available cash amount increased only for the preferred distributions which would not have been paid after conversion. When our financial statements are retrospectively adjusted after a dropdown transaction, the earnings of the acquired business, prior to the closing of the transaction, are allocated entirely to our General Partner and presented as net income (loss) attributable to Predecessors. The earnings per unit of our limited partners prior to the close of the transaction do not change as a result of a dropdown transaction. After the closing of a dropdown transaction, the earnings of the acquired business are allocated in accordance with our partnership agreement as previously described. |
Equity Investments (Tables) |
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Schedule of Equity Investments | The following table summarizes our equity investments at December 31:
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Schedule Of Earnings From Equity Investments | Earnings (losses) from our equity investments were as follows:
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Summary of Financial Information | Summarized 100 percent financial information for all equity investments is presented on a combined basis below:
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Properties, Plants and Equipment (Tables) |
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Property, Plant and Equipment | Our investment in PP&E, with the associated accumulated depreciation, at December 31 was:
*Assets for which we are the lessor. See Note 15—Leases. |
Goodwill (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The carrying amount of goodwill was as follows:
|
Assets Retirement Obligations and Accrued Environmental Costs (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Retirement Obligations and Accrued Environmental Costs [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Asset Retirement Obligations and Accrual for Environmental Costs | Asset retirement obligations and accrued environmental costs at December 31 were:
|
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Schedule of Change in Asset Retirement Obligation | During 2018 and 2017, our asset retirement obligations changed as follows:
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Net Income Per Limited Partner Unit (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Partners' Capital Notes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Distributions Declared, Partners Interest in Partnership Net Income and Net Income per Unit by Class |
*Distributions declared are attributable to the indicated periods.
(1) The dilutive effect of the preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.
(1) The dilutive effect of the preferred units assumes the reallocation of net income to the limited and general partners, including a reallocation associated with IDRs, pursuant to the available cash formula in the partnership agreement.
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Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Debt at December 31 was:
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Operating Revenues (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | Total operating revenues disaggregated by type of service were as follows:
*Sales and other operating revenues for the years ended December 31, 2017 and 2016 are presented in accordance with accounting standards in effect prior to our adoption of ASU No. 2014-09 as of January 1, 2018. See Note 3—Changes in Accounting Principles, for further discussion regarding our adoption of ASU No. 2014-09. |
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Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | At December 31, 2018, future revenues expected to be recognized for the fixed component of the transaction price of our remaining performance obligations from contracts with our customers with an original expected duration of greater than one year were:
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Future Minimum Rental Income | As of December 31, 2018, future minimum payments to be received related to these agreements were estimated to be:
*Includes $2.4 billion of future service revenues from agreements with Phillips 66 that are considered as operating leases. |
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Schedule of Future Minimum Payments for Operating Leases | For the year ended December 31, 2018, total operating lease rental expense was $3 million. As of December 31, 2018, the future minimum lease payments for our operating lease obligations were:
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Cash Flow Information (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Capital Expenditures, Noncash Investing and Financing Activities and Cash Payments | Our capital expenditures and investments consisted of:
(1)Certain liabilities of acquisitions were retained by Phillips 66, pursuant to the terms of various agreements under which we acquired assets from Phillips 66 since our initial public offering. See Note 14—Contingencies, for additional information on these excluded liabilities associated with acquisitions. |
Other Financial Information (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Information |
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Related Party Transactions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Related Party Charges | Significant related party transactions included in our total costs and expenses were:
Other related party balances in our consolidated balance sheet at December 31 consisted of the following, all of which were related to Phillips 66:
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Selected Quarterly Financial Data (Unaudited) (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data (Unaudited) |
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Business and Basis of Presentation (Details) - Phillips 66 - refinery |
Dec. 31, 2018 |
Aug. 01, 2015 |
---|---|---|
Variable Interest Entity [Line Items] | ||
Entities under common control, ownership percentage transferred, wholly owned | 100.00% | |
Number of refineries most of our assets are connected to | 9 |
Summary of Significant Accounting Policies (Details) |
12 Months Ended |
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Dec. 31, 2018
reporting_unit
| |
Accounting Policies [Abstract] | |
Number of reporting units | 1 |
Changes in Accounting Principles (Details) $ in Millions |
Dec. 31, 2017
USD ($)
|
---|---|
Changes in Accounting Principles [Abstract] | |
Cumulative effective of accounting principle | $ 30 |
Acquisitions (Narrative) (Details) $ in Millions |
1 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2017
USD ($)
shares
|
Oct. 31, 2016
USD ($)
refinery
shares
|
May 31, 2016
USD ($)
shares
|
Mar. 31, 2016
USD ($)
shares
|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2018
USD ($)
|
Apr. 30, 2018 |
Dec. 31, 2017
USD ($)
|
Nov. 30, 2016
USD ($)
|
|
Business Acquisition [Line Items] | |||||||||
Goodwill | $ 185 | $ 185 | $ 185 | ||||||
River Parish Acquisition | Phillips 66 | |||||||||
Business Acquisition [Line Items] | |||||||||
Business combination, plant, property and equipment | $ 183 | ||||||||
Goodwill | $ 3 | ||||||||
Sweeny Fractionator Acquisition | Phillips 66 | Phillips 66 | |||||||||
Business Acquisition [Line Items] | |||||||||
Entities under common control, percentage of voting interests received | 25.00% | ||||||||
Sweeny Frac Remaining Seventy Five Percent And Standish Pipeline Acquisition | Phillips 66 | Phillips 66 | Standish Pipeline | |||||||||
Business Acquisition [Line Items] | |||||||||
Entities under common control, percentage of voting interests received | 100.00% | ||||||||
Sweeny Frac Remaining Seventy Five Percent And Standish Pipeline Acquisition | Phillips 66 Sweeny Frac LLC | Phillips 66 | Phillips 66 | |||||||||
Business Acquisition [Line Items] | |||||||||
Entities under common control, percentage of voting interests received | 75.00% | ||||||||
Eagle Acquisition | Phillips 66 | Phillips 66 | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of refineries most of our assets are connected to | refinery | 4 | ||||||||
Gray Oak Pipeline, LLC (Gray Oak) | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage Ownership | 75.00% | ||||||||
Bakken Pipeline | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage Ownership | 25.00% | 25.00% | |||||||
Explorer Pipeline Company (Explorer) | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage Ownership | 21.94% | ||||||||
Equity method investment ownership percentage acquired | 2.48% | ||||||||
STACK Pipeline LLC (STACK) | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage Ownership | 5000.00% | 50.00% | |||||||
STACK Pipeline LLC (STACK) | Plains All American Pipeline, L.P. | |||||||||
Business Acquisition [Line Items] | |||||||||
Percentage Ownership | 5000.00% | ||||||||
Common Control Transaction | Phillips 66 | |||||||||
Business Acquisition [Line Items] | |||||||||
General partner interest, percent | 2.00% | 2.00% | 2.00% | ||||||
Common Control Transaction | Merey Sweeny | Phillips 66 | Phillips 66 | |||||||||
Business Acquisition [Line Items] | |||||||||
Entities under common control, percentage of voting interests received | 100.00% | ||||||||
Common Control Transaction | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Common Units | |||||||||
Business Acquisition [Line Items] | |||||||||
Equity interest issued (in units) | shares | 4,713,113 | ||||||||
Common Control Transaction | Bakken Pipeline and MSLP Acquisition | Phillips 66 | General Partner Units | |||||||||
Business Acquisition [Line Items] | |||||||||
Equity interest issued (in units) | shares | 292,665 | ||||||||
Common Control Transaction | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66 | |||||||||
Business Acquisition [Line Items] | |||||||||
Consideration transferred | $ 1,650 | ||||||||
Cash consideration | 372 | ||||||||
Deferred revenues and other liabilities | 53 | ||||||||
Common Control Transaction | Sweeny Fractionator Acquisition | Phillips 66 | General Partner Units | |||||||||
Business Acquisition [Line Items] | |||||||||
Equity interest issued (in units) | shares | 8,425 | ||||||||
Common Control Transaction | Sweeny Fractionator Acquisition | Phillips 66 | Phillips 66 | |||||||||
Business Acquisition [Line Items] | |||||||||
Entities under common control, percentage of voting interests received | 25.00% | ||||||||
Consideration transferred | $ 236 | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Long-term Debt | $ 212 | ||||||||
Common Control Transaction | Sweeny Fractionator Acquisition | Phillips 66 | Phillips 66 | Common Units | |||||||||
Business Acquisition [Line Items] | |||||||||
Equity interest issued (in units) | shares | 412,823 | ||||||||
Common Control Transaction | Sweeny Frac Remaining Seventy Five Percent And Standish Pipeline Acquisition | Phillips 66 | General Partner Units | |||||||||
Business Acquisition [Line Items] | |||||||||
Equity interest issued (in units) | shares | 286,753 | ||||||||
Common Control Transaction | Sweeny Frac Remaining Seventy Five Percent And Standish Pipeline Acquisition | Phillips 66 | Phillips 66 | |||||||||
Business Acquisition [Line Items] | |||||||||
Consideration transferred | $ 775 | ||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Long-term Debt | $ 675 | ||||||||
Common Control Transaction | Sweeny Frac Remaining Seventy Five Percent And Standish Pipeline Acquisition | Phillips 66 | Phillips 66 | Common Units | |||||||||
Business Acquisition [Line Items] | |||||||||
Equity interest issued (in units) | shares | 1,400,922 | ||||||||
Common Control Transaction | Eagle Acquisition | Phillips 66 | Common Units | |||||||||
Business Acquisition [Line Items] | |||||||||
Equity interest issued (in units) | shares | 3,884,237 | ||||||||
Common Control Transaction | Eagle Acquisition | Phillips 66 | General Partner Units | |||||||||
Business Acquisition [Line Items] | |||||||||
Equity interest issued (in units) | shares | 208,783 | ||||||||
Common Control Transaction | Eagle Acquisition | Phillips 66 | Phillips 66 | |||||||||
Business Acquisition [Line Items] | |||||||||
Consideration transferred | $ 1,305 | ||||||||
Cash consideration | $ 1,109 | ||||||||
Common Control Transaction | Gray Oak Pipeline, LLC (Gray Oak) | Gray Oak Holdings LLC | Phillips 66 | Phillips 66 PDI | |||||||||
Business Acquisition [Line Items] | |||||||||
Entities under common control, percentage of voting interests received | 100.00% | ||||||||
Notes Payable | Common Control Transaction | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66 | |||||||||
Business Acquisition [Line Items] | |||||||||
Consideration transferred, liabilities incurred | 588 | ||||||||
Loans Payable | Common Control Transaction | Bakken Pipeline and MSLP Acquisition | Phillips 66 | Phillips 66 | |||||||||
Business Acquisition [Line Items] | |||||||||
Consideration transferred, liabilities incurred | $ 450 |
Equity Investments (Schedule of Equity Investments) (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Apr. 30, 2018 |
Dec. 31, 2017 |
Oct. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|---|
Schedule of Equity Method Investments [Line Items] | |||||
Carrying Value | $ 2,448 | $ 1,932 | |||
Bakken Pipeline | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage Ownership | 25.00% | 25.00% | |||
Carrying Value | $ 608 | 621 | |||
Bayou Bridge Pipeline, LLC (Bayou Bridge) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage Ownership | 40.00% | ||||
Carrying Value | $ 277 | 173 | |||
DCP Sand Hills Pipeline, LLC (Sand Hills) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage Ownership | 33.34% | ||||
Carrying Value | $ 601 | 515 | |||
DCP Southern Hills Pipeline, LLC (Southern Hills) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage Ownership | 33.34% | ||||
Carrying Value | $ 206 | 209 | |||
Explorer Pipeline Company (Explorer) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage Ownership | 21.94% | ||||
Carrying Value | $ 115 | 118 | |||
Gray Oak Pipeline, LLC (Gray Oak) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage Ownership | 75.00% | ||||
Carrying Value | $ 288 | 0 | |||
Paradigm Pipeline LLC (Paradigm) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage Ownership | 50.00% | ||||
Carrying Value | $ 145 | 131 | |||
Phillips 66 Partners Terminal LLC (Phillips 66 Partners Terminal) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage Ownership | 70.00% | ||||
Carrying Value | $ 71 | 53 | |||
South Texas Gateway Terminal LLC (South Texas Gateway Terminal) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage Ownership | 25.00% | 25.00% | |||
Carrying Value | $ 20 | 0 | |||
STACK Pipeline LLC (STACK) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Percentage Ownership | 50.00% | 5000.00% | |||
Carrying Value | $ 117 | $ 112 |
Equity Investments (Schedule Of Earnings From Equity Investments) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Schedule of Equity Method Investments [Line Items] | |||
Equity in earnings of affiliates | $ 439 | $ 223 | $ 114 |
Bakken Pipeline | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity in earnings of affiliates | 177 | 69 | 0 |
Bayou Bridge Pipeline, LLC (Bayou Bridge) | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity in earnings of affiliates | 14 | 12 | 3 |
DCP Sand Hills Pipeline, LLC (Sand Hills) | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity in earnings of affiliates | 119 | 81 | 62 |
DCP Southern Hills Pipeline, LLC (Southern Hills) | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity in earnings of affiliates | 37 | 27 | 26 |
Explorer Pipeline Company (Explorer) | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity in earnings of affiliates | 43 | 21 | 23 |
Gray Oak Pipeline, LLC (Gray Oak) | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity in earnings of affiliates | 1 | 0 | 0 |
Paradigm Pipeline LLC (Paradigm) | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity in earnings of affiliates | 10 | (1) | (2) |
Phillips 66 Partners Terminal LLC (Phillips 66 Partners Terminal) | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity in earnings of affiliates | 28 | 8 | 0 |
South Texas Gateway Terminal LLC (South Texas Gateway Terminal) | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity in earnings of affiliates | 0 | 0 | 0 |
STACK Pipeline LLC (STACK) | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity in earnings of affiliates | $ 10 | $ 6 | $ 2 |
Equity Investments (Narrative) (Details) - USD ($) $ in Millions |
2 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Feb. 22, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Apr. 30, 2018 |
Oct. 31, 2017 |
|
Schedule of Equity Method Investments [Line Items] | ||||||
Distributions received from affiliates | $ 477 | $ 274 | $ 131 | |||
Equity investments | 2,448 | 1,932 | ||||
Gray Oak Pipeline, LLC (Gray Oak) | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Co-venture ownership interest | 25.00% | |||||
VIE, maximum loss exposure | 373 | |||||
Guarantor obligations | $ 85 | |||||
Ownership interest, percentage | 75.00% | |||||
Equity investments | $ 288 | 0 | ||||
South Texas Gateway Terminal LLC (South Texas Gateway Terminal) | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership interest, percentage | 25.00% | 25.00% | ||||
Equity investments | $ 20 | 0 | ||||
Bakken Pipeline | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership interest, percentage | 25.00% | 25.00% | ||||
Equity investments | $ 608 | 621 | ||||
Basis difference | $ 51 | |||||
STACK Pipeline LLC (STACK) | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership interest, percentage | 50.00% | 5000.00% | ||||
Equity investments | $ 117 | 112 | ||||
Basis difference | $ 40 | |||||
Amortization period of basis difference, in years | 43 years | |||||
DCP Southern Hills Pipeline, LLC (Southern Hills) | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership interest, percentage | 33.34% | |||||
Equity investments | $ 206 | 209 | ||||
Basis difference | $ (92) | |||||
Amortization period of basis difference, in years | 43 years | |||||
Explorer Pipeline Company (Explorer) | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership interest, percentage | 21.94% | |||||
Equity investments | $ 115 | $ 118 | ||||
Basis difference | $ 84 | |||||
Third Party | Gray Oak Holdings LLC | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Percentage Of Ownership | 35.00% | |||||
Minimum | Bakken Pipeline | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Amortization period of basis difference, in years | 19 years | |||||
Minimum | Explorer Pipeline Company (Explorer) | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Amortization period of basis difference, in years | 9 years | |||||
Maximum | Bakken Pipeline | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Amortization period of basis difference, in years | 44 years | |||||
Maximum | Explorer Pipeline Company (Explorer) | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Amortization period of basis difference, in years | 17 years | |||||
Gray Oak Holdings LLC | Common Control Transaction | Phillips 66 | Phillips 66 PDI | Gray Oak Pipeline, LLC (Gray Oak) | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Entities under common control, percentage of voting interests received | 100.00% | |||||
Subsequent Event | Gray Oak Pipeline, LLC (Gray Oak) | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Effective ownership interest, percentage | 42.25% | |||||
Ownership interest, percentage | 65.00% | |||||
Subsequent Event | Third Party | Gray Oak Pipeline, LLC (Gray Oak) | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Percentage Of Ownership | 10.00% | |||||
Gray Oak Holdings LLC | Subsequent Event | Third Party | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Committed Capital, Cash Calls | $ 294 |
Equity Investments (Summarized Financial Information) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Equity Method Investments and Joint Ventures [Abstract] | |||
Revenues | $ 2,294 | $ 1,406 | $ 840 |
Income before income taxes | 1,536 | 853 | 494 |
Net income | 1,518 | 778 | 408 |
Current assets | 751 | 577 | 243 |
Noncurrent assets | 9,561 | 8,571 | 3,437 |
Current liabilities | 3,008 | 354 | 396 |
Noncurrent liabilities | $ 496 | $ 3,001 | $ 231 |
Major Customer and Concentration of Credit Risk (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Phillips 66 | Customer Concentration Risk | Sales Revenue, Services, Net | |||
Concentration Risk [Line Items] | |||
Percentage of total transportation and terminaling services revenues | 96.00% | 95.00% | 95.00% |
Properties, Plants and Equipment (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Property, Plant and Equipment [Line Items] | ||
Gross PP&E | $ 3,995 | $ 3,754 |
Less: accumulated depreciation | 943 | 836 |
Net PP&E | 3,052 | 2,918 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Gross PP&E | 19 | 19 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Gross PP&E | $ 89 | 88 |
Buildings and improvements | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Buildings and improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 30 years | |
Pipelines and related assets | ||
Property, Plant and Equipment [Line Items] | ||
Gross PP&E | $ 1,398 | 1,372 |
Pipelines and related assets | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 10 years | |
Pipelines and related assets | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 45 years | |
Terminals and related assets | ||
Property, Plant and Equipment [Line Items] | ||
Gross PP&E | $ 710 | 671 |
Terminals and related assets | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 25 years | |
Terminals and related assets | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 45 years | |
Rail racks and related assets | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 33 years | |
Gross PP&E | $ 137 | 137 |
Processing and related assets | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 25 years | |
Gross PP&E | $ 842 | 837 |
Caverns and related assets | ||
Property, Plant and Equipment [Line Items] | ||
Gross PP&E | $ 584 | 583 |
Caverns and related assets | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 25 years | |
Caverns and related assets | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 45 years | |
Construction-in-progress | ||
Property, Plant and Equipment [Line Items] | ||
Gross PP&E | $ 216 | $ 47 |
Goodwill (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Goodwill [Roll Forward] | ||
Beginning balance January 1 | $ 185 | $ 185 |
Activity during the year | 0 | 0 |
Ending balance December 31 | $ 185 | $ 185 |
Assets Retirement Obligations and Accrued Environmental Costs (Summary of Asset Retirement Obligations and Accrued Environmental Costs) (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Asset Retirement Obligations and Accrued Environmental Costs [Abstract] | |||
Asset retirement obligations | $ 11 | $ 10 | $ 9 |
Accrued environmental costs | 2 | 1 | |
Total asset retirement obligations and accrued environmental costs | 13 | 11 | |
Less: Asset retirement obligations and accrued environmental costs due within one year | 1 | 0 | |
Long-term asset retirement obligations and accrued environmental costs | $ 12 | $ 11 |
Assets Retirement Obligations and Accrued Environmental Costs (Schedule of Change in Asset Retirement Obligation) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||
Balance at January 1 | $ 10 | $ 9 |
Accretion of discount | 1 | 1 |
New obligations | 0 | 0 |
Changes in estimates of existing obligations | 0 | 0 |
Balance at December 31 | $ 11 | $ 10 |
Net Income Per Limited Partner Unit Net Income Per Limited Partner Unit (Schedule of Net Income By Class of Participating Securities Distributions ) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Limited Partners' Capital Account [Line Items] | |||||||||||
Net income attributable to the Partnership | $ 221 | $ 217 | $ 186 | $ 172 | $ 162 | $ 99 | $ 103 | $ 97 | $ 796 | $ 461 | $ 301 |
Distributions declared | 655 | 458 | 296 | ||||||||
Distributions less than net income attributable to the Partnership | 141 | 3 | 5 | ||||||||
General Partner | |||||||||||
Limited Partners' Capital Account [Line Items] | |||||||||||
Net income attributable to the Partnership | 240 | 160 | 92 | ||||||||
Distributions declared | 236 | 158 | 91 | ||||||||
Distributions less than net income attributable to the Partnership | 4 | 2 | 1 | ||||||||
Preferred Unitholders Public | |||||||||||
Limited Partners' Capital Account [Line Items] | |||||||||||
Net income attributable to the Partnership | 37 | ||||||||||
Preferred Unitholders Public | Limited Partner | |||||||||||
Limited Partners' Capital Account [Line Items] | |||||||||||
Net income attributable to the Partnership | 37 | 9 | |||||||||
Distributions declared | 37 | 9 | 0 | ||||||||
Distributions less than net income attributable to the Partnership | 0 | 0 | |||||||||
Common Units | Limited Partner | |||||||||||
Limited Partners' Capital Account [Line Items] | |||||||||||
Net income attributable to the Partnership | 519 | 292 | 209 | ||||||||
Distributions declared | 382 | 291 | 205 | ||||||||
Distributions less than net income attributable to the Partnership | $ 137 | $ 1 | $ 4 |
Net Income Per Limited Partner Unit (Schedule of Net Income By Class of Participating Securities) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Partners' Capital [Abstract] | |||||||||||
Distributions declared | $ 655 | $ 458 | $ 296 | ||||||||
Distributions less than net income attributable to the Partnership | 141 | 3 | 5 | ||||||||
Net income attributable to the Partnership | $ 221 | $ 217 | $ 186 | $ 172 | $ 162 | $ 99 | $ 103 | $ 97 | $ 796 | $ 461 | $ 301 |
Dilutive effect of preferred units (in shares) | 13,819,791 | 3,294,032 | |||||||||
Net income attributable to the Partnership per limited partner unit—basic (in usd per share) | $ 1.16 | $ 1.17 | $ 0.99 | $ 0.91 | $ 0.86 | $ 0.51 | $ 0.61 | $ 0.60 | |||
Net income attributable to the Partnership per limited partner unit—diluted (in usd per share) | $ 1.09 | $ 1.10 | $ 0.94 | $ 0.87 | $ 0.83 | $ 0.51 | $ 0.61 | $ 0.60 | |||
Common Units | |||||||||||
Partners' Capital [Abstract] | |||||||||||
Weighted-average units outstanding—basic and diluted (in shares) | 95,239,901 | ||||||||||
Net income attributable to the Partnership (diluted) | $ 299 | ||||||||||
Weighted-average units outstanding—basic (in shares) | 122,768,582 | 112,044,824 | 95,240,000 | ||||||||
Weighted-average units outstanding—diluted (in shares) | 136,588,373 | 115,338,856 | |||||||||
Net income attributable to the Partnership per limited partner unit—basic (in usd per share) | $ 4.22 | $ 2.60 | $ 2.20 | ||||||||
Net income attributable to the Partnership per limited partner unit—diluted (in usd per share) | $ 4.00 | $ 2.59 | 2.20 | ||||||||
Net income attributable to the Partnership per limited partner unit—basic and diluted (in usd per share) | $ 2.20 | ||||||||||
Preferred Unitholders Public | |||||||||||
Partners' Capital [Abstract] | |||||||||||
Net income attributable to the Partnership | $ 37 | ||||||||||
Limited Partner | |||||||||||
Partners' Capital [Abstract] | |||||||||||
Dilutive effect of preferred units | 28 | $ 7 | |||||||||
Limited Partner | Common Units | |||||||||||
Partners' Capital [Abstract] | |||||||||||
Distributions declared | 382 | 291 | $ 205 | ||||||||
Distributions less than net income attributable to the Partnership | 137 | 1 | 4 | ||||||||
Net income attributable to the Partnership | 519 | 292 | 209 | ||||||||
Net income attributable to the Partnership (diluted) | 547 | ||||||||||
Limited Partner | Preferred Unitholders Public | |||||||||||
Partners' Capital [Abstract] | |||||||||||
Distributions declared | 37 | 9 | 0 | ||||||||
Distributions less than net income attributable to the Partnership | 0 | 0 | |||||||||
Net income attributable to the Partnership | 37 | 9 | |||||||||
General Partner | |||||||||||
Partners' Capital [Abstract] | |||||||||||
Distributions declared | 236 | 158 | 91 | ||||||||
Distributions less than net income attributable to the Partnership | 4 | 2 | 1 | ||||||||
Net income attributable to the Partnership | $ 240 | $ 160 | $ 92 |
Net Income Per Limited Partner Unit (Narrative) (Details) |
Jan. 22, 2019
$ / shares
|
---|---|
Cash Distribution | Subsequent Event | |
Net Income per Limited Partner Unit [Line Items] | |
Quarterly cash distribution declared, per limited partner unit (in usd per share) | $ 0.835 |
Debt (Summary of Long-Term Debt) (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
Oct. 31, 2017 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Debt, Long-term and Short-term, Combined Amount | $ 3,075,000,000 | $ 2,975,000,000 | |
Unamortized discounts and debt issuance costs | (27,000,000) | (30,000,000) | |
Total debt | 3,048,000,000 | 2,945,000,000 | |
Short-term debt | 50,000,000 | 25,000,000 | |
Long-term debt | 2,998,000,000 | 2,920,000,000 | |
Tax-exempt bonds due April 2020 and April 2021, at 1.885% and 1.935% at December 31, 2018, and 2017, respectively | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 75,000,000 | $ 100,000,000 | |
Interest rate, stated percentage | 1.885% | 1.935% | |
Senior Notes | 2.646% Senior Notes due February 2020 | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 300,000,000 | $ 300,000,000 | |
Interest rate, stated percentage | 2.646% | ||
Senior Notes | 3.605% Senior Notes due February 2025 | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 500,000,000 | 500,000,000 | |
Interest rate, stated percentage | 3.605% | ||
Senior Notes | 3.550% Senior Notes due October 2026 | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 500,000,000 | 500,000,000 | |
Interest rate, stated percentage | 3.55% | ||
Senior Notes | 3.750% Senior Notes due March 2028 | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 500,000,000 | 500,000,000 | |
Interest rate, stated percentage | 3.75% | 3.75% | |
Senior Notes | 4.680% Senior Notes due February 2045 | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 450,000,000 | 450,000,000 | |
Interest rate, stated percentage | 4.68% | 4.68% | |
Senior Notes | 4.900% Senior Notes due October 2046 | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 625,000,000 | 625,000,000 | |
Interest rate, stated percentage | 4.90% | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Long-term Line of Credit | $ 125,000,000 | $ 0 | |
Weighted average interest rate | 3.669% | ||
Bakken Pipeline and MSLP Acquisition | Tax-exempt bonds due April 2020 and April 2021, at 1.885% and 1.935% at December 31, 2018, and 2017, respectively | |||
Debt Instrument [Line Items] | |||
Long-term debt, gross | $ 25,000,000 |
Debt (Narrative) (Details) |
1 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Oct. 31, 2017
USD ($)
|
May 31, 2017
USD ($)
|
Dec. 31, 2018
USD ($)
agreement
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Debt Instrument [Line Items] | |||||
Repayments of principal, 2019 | $ 50,000,000 | ||||
Repayments of principal, 2020 | 324,000,000 | ||||
Repayments of principal, 2021 | 125,000,000 | ||||
Unamortized discounts and debt issuance costs | 27,000,000 | $ 30,000,000 | |||
Credit Agreement | |||||
Repayment of debt | 575,000,000 | $ 2,152,000,000 | $ 1,096,000,000 | ||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility | 125,000,000 | ||||
Credit Agreement | |||||
Revolving credit agreement borrowing capacity | 750,000,000 | ||||
Maximum borrowing capacity under option | $ 1,000,000,000.0 | ||||
Number or renewals available to extend the term of the credit agreement | agreement | 2 | ||||
Note payable term, in years | 1 year | ||||
Debt to EBITDA, ratio | 5.0 | ||||
Debt to EBITDA, acquisitions, ratio | 5.5 | ||||
Tax-exempt bonds due April 2020 and April 2021, at 1.885% and 1.935% at December 31, 2018, and 2017, respectively | |||||
Debt Instrument [Line Items] | |||||
Interest rate, stated percentage | 1.885% | 1.935% | |||
Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 650,000,000 | ||||
Proceeds from debt, net of issuance costs | 643,000,000 | ||||
Senior Notes | 2.646% Senior Notes due February 2020 | |||||
Debt Instrument [Line Items] | |||||
Interest rate, stated percentage | 2.646% | ||||
Senior Notes | 3.605% Senior Notes due February 2025 | |||||
Debt Instrument [Line Items] | |||||
Interest rate, stated percentage | 3.605% | ||||
Senior Notes | 3.550% Senior Notes due October 2026 | |||||
Debt Instrument [Line Items] | |||||
Interest rate, stated percentage | 3.55% | ||||
Senior Notes | 3.750% Senior Notes due March 2028 | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 500,000,000 | ||||
Interest rate, stated percentage | 3.75% | 3.75% | |||
Senior Notes | 4.680% Senior Notes due February 2045 | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 150,000,000 | ||||
Interest rate, stated percentage | 4.68% | 4.68% | |||
Senior Notes | 4.900% Senior Notes due October 2046 | |||||
Debt Instrument [Line Items] | |||||
Interest rate, stated percentage | 4.90% | ||||
Notes Payable | |||||
Credit Agreement | |||||
Repayment of debt | $ 136,000,000 | ||||
Maximum | Revolving Credit Facility | |||||
Credit Agreement | |||||
Amount by which the revolving credit agreement borrowing capacity may be increased | $ 250,000,000 | ||||
2019 | Tax-exempt bonds due April 2020 and April 2021, at 1.885% and 1.935% at December 31, 2018, and 2017, respectively | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 25,000,000 | ||||
2020 | Tax-exempt bonds due April 2020 and April 2021, at 1.885% and 1.935% at December 31, 2018, and 2017, respectively | |||||
Debt Instrument [Line Items] | |||||
Senior notes | 25,000,000 | ||||
2021 | Tax-exempt bonds due April 2020 and April 2021, at 1.885% and 1.935% at December 31, 2018, and 2017, respectively | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 25,000,000 | ||||
Fair Value, Inputs, Level 2 | Tax-exempt bonds due April 2020 and April 2021, at 1.885% and 1.935% at December 31, 2018, and 2017, respectively | |||||
Debt Instrument [Line Items] | |||||
Debt, fair value | 200,000,000 | $ 100,000,000 | |||
Fair Value, Inputs, Level 2 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Debt, fair value | $ 2,660,000,000 | $ 2,918,000,000 |
Equity (Details) |
1 Months Ended | 3 Months Ended | 12 Months Ended | 24 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2017
USD ($)
d
$ / shares
shares
|
Aug. 31, 2016
USD ($)
shares
|
May 31, 2016
USD ($)
$ / shares
shares
|
Dec. 31, 2017
$ / shares
|
Dec. 31, 2018
USD ($)
shares
|
Dec. 31, 2017
USD ($)
shares
|
Dec. 31, 2016
USD ($)
shares
|
Dec. 31, 2018
USD ($)
shares
|
Jun. 30, 2018
USD ($)
|
Aug. 31, 2017
$ / shares
|
|
Limited Partners' Capital Account [Line Items] | ||||||||||
Number of common units issued in public offering (in shares) | shares | 2,532,096 | 3,372,716 | 18,996,152 | |||||||
Units issued in preferred offering (in shares) | shares | 20,123,995 | |||||||||
Issuance of preferred units | $ | $ 0 | $ 737,000,000 | $ 0 | |||||||
Common Units | ||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||
Number of common units issued in public offering (in shares) | shares | 6,000,000 | 12,650,000 | ||||||||
Issuance of common units | $ | $ 299,000,000 | $ 656,000,000 | ||||||||
Units issued in preferred offering (in shares) | shares | 6,304,204 | |||||||||
Price per common limited partner unit (in usd per share) | $ / shares | $ 47.59 | $ 52.40 | $ 50.22 | |||||||
Partners' capital account, private sale of units net of offering costs | $ | $ 295,000,000 | |||||||||
Preferred Unitholders Public | ||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||
Units issued in preferred offering (in shares) | shares | 13,819,791 | 13,819,791 | ||||||||
Price per common limited partner unit (in usd per share) | $ / shares | $ 54.27 | |||||||||
Issuance of preferred units | $ | $ 737,000,000 | |||||||||
Cumulative distribution, quarterly for three years (in usd per share) | $ / shares | $ 0.678375 | |||||||||
Average of the volume-weighted trading price, threshold (in usd per share) | $ / shares | $ 73.2645 | |||||||||
Preferred units, convertible, threshold consecutive trading days | d | 20 | |||||||||
Convertible threshold average trading volume common units (in shares) | shares | 100,000 | |||||||||
At The Market Offering Program | Common Units | ||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||
Number of common units issued in public offering (in shares) | shares | 2,532,096 | 3,372,716 | 6,250,964 | |||||||
Issuance of common units | $ | $ 128,000,000 | $ 173,000,000 | $ 320,000,000 | |||||||
Brokers commissions | $ | $ 3,000,000 | |||||||||
Maximum | At The Market Offering Program | Common Units | ||||||||||
Limited Partners' Capital Account [Line Items] | ||||||||||
Equity offering program, authorized amount | $ | $ 250,000,000 |
Operating Revenues (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Revenue from External Customer [Line Items] | ||
Lease revenue | $ 599 | |
Revenue | 446 | |
Contract with customer, asset | 41 | $ 37 |
Deferred revenue | 79 | 93 |
Contract with customer, liability | 6 | 13 |
Contract with customer, liability, revenue recognized | $ 11 | |
Customer contracts, average remaining duration | 9 years | |
Lease Agreements | ||
Revenue from External Customer [Line Items] | ||
Receivables | $ 53 | $ 49 |
Maximum | ||
Revenue from External Customer [Line Items] | ||
Customer contracts, term | 15 years |
Operating Revenues Disaggregated Revenues (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Revenue from External Customer [Line Items] | |||
Revenues | $ 33 | $ 40 | $ 31 |
Pipelines | |||
Revenue from External Customer [Line Items] | |||
Revenues | 454 | 424 | 408 |
Terminals | |||
Revenue from External Customer [Line Items] | |||
Revenues | 157 | 152 | 160 |
Storage, processing and other revenues | |||
Revenue from External Customer [Line Items] | |||
Revenues | 434 | 358 | 190 |
Oil and gas service | |||
Revenue from External Customer [Line Items] | |||
Revenues | $ 1,045 | $ 934 | $ 758 |
Operating Revenues Remaining Performance Obligations (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue from External Customer [Line Items] | |
Remaining performance obligation | $ 778 |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue from External Customer [Line Items] | |
Remaining performance obligation | $ 777 |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue from External Customer [Line Items] | |
Remaining performance obligation | $ 765 |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue from External Customer [Line Items] | |
Remaining performance obligation | $ 753 |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue from External Customer [Line Items] | |
Remaining performance obligation | $ 711 |
Expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue from External Customer [Line Items] | |
Remaining performance obligation | $ 2,287 |
Expected timing of satisfaction | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Revenue from External Customer [Line Items] | |
Remaining performance obligation | $ 6,071 |
Phillips 66 | Lease Agreements | Phillips 66 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Revenue from External Customer [Line Items] | |
Remaining performance obligation | $ 3,300 |
Leases (Schedule of Future Minimum Operating Lease Income) (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Affiliated Entity | |
Future Minimum Payments to be Received | |
Total | $ 2,400 |
Phillips 66 | |
Future Minimum Payments to be Received | |
2019 | 712 |
2020 | 713 |
2021 | 709 |
2022 | 697 |
2023 | 655 |
Thereafter | 2,188 |
Total | $ 5,674 |
Leases (Schedule of Future Minimum Payments for Operating Leases) (Details) - Phillips 66 $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2019 | $ 3 |
2020 | 3 |
2021 | 3 |
2022 | 3 |
2023 | 3 |
Thereafter | 91 |
Total minimum lease payments | $ 106 |
Leases (Narrative) (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Phillips 66 | |
Operating Leases, Rent Expense, Net [Abstract] | |
Operating lease rental expense | $ 3 |
Unit-Based Compensation (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018
director
shares
|
Dec. 31, 2017
shares
|
Dec. 31, 2016
shares
|
|
Phantom Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of non-employee directors | director | 3 | ||
Phillips 66 Partners LP 2013 Incentive Compensation Plan | Phantom Units | Non Employee Directors | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of phantom units granted (in shares) | 4,326 | 4,794 | 4,880 |
Phillips 66 Partners LP 2013 Incentive Compensation Plan | Common Units | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of common units that may be delivered under the ICP Plan (in shares) | 2,500,000 |
Income Taxes (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Effective tax rate, percentage (less than) | 1.00% | 1.00% | 1.00% |
Deferred tax liability | $ 7,000,000 | $ 5,000,000 | |
Unrecognized tax benefits | 0 | 0 | |
Income tax penalties and interest expense | $ 0 | $ 0 | $ 0 |
Cash Flow Information (Narrative) (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Oct. 06, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Business Acquisition [Line Items] | ||||
Note payable assumed attributable to historical book value | $ 0 | $ 0 | $ 656,000,000 | |
Restricted Cash | 0 | |||
Limited Partner | Phillips 66 | Gold Line/Medford And Bayway/Ferndale/Cross-Channel Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Value assigned to common and general partner units issued to Phillips 66 | 0 | |||
General Partner | ||||
Business Acquisition [Line Items] | ||||
Distributions to General Partner associated with acquisitions | 0 | $ 234,000,000 | 119,000,000 | |
General Partner | Phillips 66 | Gold Line/Medford And Bayway/Ferndale/Cross-Channel Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Value assigned to common and general partner units issued to Phillips 66 | $ 0 | |||
Common Control Transaction | Phillips 66 | Phillips 66 | Bakken Pipeline and MSLP Acquisition | ||||
Business Acquisition [Line Items] | ||||
Assets acquired | $ 729,000,000 | |||
Cash consideration | 963,000,000 | |||
Debt financing balance | 447,000,000 | |||
Business acquisitions | 729,000,000 | |||
Common Control Transaction | Phillips 66 | Phillips 66 | Eagle Acquisition | ||||
Business Acquisition [Line Items] | ||||
Cash consideration | 1,109,000,000 | |||
Business acquisitions | 990,000,000 | |||
Common Control Transaction | Phillips 66 | Phillips 66 | Sweeny Frac Remaining Seventy Five Percent And Standish Pipeline Acquisition | ||||
Business Acquisition [Line Items] | ||||
Assets acquired | 871,000,000 | |||
Debt financing balance | 19,000,000 | |||
Note payable assumed attributable to historical book value | 656,000,000 | |||
Value assigned to common and general partner units issued to Phillips 66 | 196,000,000 | |||
Common Control Transaction | Phillips 66 | Phillips 66 | Sweeny Fractionator Acquisition | ||||
Business Acquisition [Line Items] | ||||
Assets acquired | 283,000,000 | |||
Debt financing balance | $ 212,000,000 | |||
Entities under common control, percentage of voting interests received | 25.00% | |||
Common Control Transaction | Phillips 66 | General Partner | Phillips 66 | Bakken Pipeline and MSLP Acquisition | ||||
Business Acquisition [Line Items] | ||||
Distributions to General Partner associated with acquisitions | $ 234,000,000 | |||
Common Control Transaction | Phillips 66 | General Partner | Phillips 66 | Eagle Acquisition | ||||
Business Acquisition [Line Items] | ||||
Distributions to General Partner associated with acquisitions | $ 119,000,000 | |||
Common Control Transaction | Phillips 66 | Common Partner And General Partner | Phillips 66 | Sweeny Fractionator Acquisition | ||||
Business Acquisition [Line Items] | ||||
Value assigned to common and general partner units issued to Phillips 66 | $ 71,000,000 |
Cash Flow Information (Summary of Cash Flow Information) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Capital Expenditures and Investments | |||
Cash capital expenditures and investments | $ 738 | $ 431 | $ 584 |
Change in capital expenditure accruals | 38 | 3 | (27) |
Total capital expenditures and investments | 776 | 434 | 557 |
Capital Expenditures and Investments | |||
Capital expenditures attributable to Predecessors | 0 | 82 | 96 |
Capital expenditures and investments attributable to the Partnership | 776 | 352 | 461 |
Total capital expenditures and investments | 776 | 434 | 557 |
Other Noncash Investing and Financing Activities | |||
Dividend of loan receivable to Phillips 66 by Predecessor | 0 | 51 | 0 |
Certain liabilities of acquired assets retained by Phillips 66(1) | 0 | 0 | 50 |
Cash Payments | |||
Interest and debt expense | $ 109 | $ 96 | $ 40 |
Other Financial Information (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Interest and Debt Expense | |||
Incurred, Debt | $ 119 | $ 100 | $ 56 |
Incurred, Other | 3 | 2 | 1 |
Incurred, Total | 122 | 102 | 57 |
Interest Costs Capitalized Adjustment | (7) | (1) | (5) |
Expensed | 115 | 101 | 52 |
Other Income | |||
Co-venturer contractual make-whole payments | 0 | 7 | 0 |
Interest income | 1 | 3 | 0 |
Other | 1 | 2 | 1 |
Total other income | $ 2 | $ 12 | $ 1 |
Related Party Transactions (Summary of Related Party Charges) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Related Party Transactions [Abstract] | |||
Operating and maintenance expenses | $ 214 | $ 189 | $ 104 |
General and administrative expenses | 60 | 64 | 56 |
Interest and debt expense | 0 | 0 | 3 |
Total | 274 | 253 | 163 |
Operating and maintenance expenses | $ 354 | $ 321 | $ 216 |
Related Party Transactions (Narrative) (Details) - USD ($) $ in Millions |
7 Months Ended | 12 Months Ended | 19 Months Ended | |||
---|---|---|---|---|---|---|
Feb. 28, 2014 |
Dec. 31, 2018 |
Oct. 06, 2017 |
Feb. 28, 2015 |
Oct. 13, 2016 |
Aug. 31, 2016 |
|
Dakota Access LLC and Energy Transfer Crude Oil Company, LLC | ||||||
Related party agreements and fees | ||||||
Guarantor obligations | $ 17 | |||||
Phillips 66 | Amended Omnibus Agreement | Phillips 66 | ||||||
Related party agreements and fees | ||||||
Administrative fees expense by month | $ 1 | 8 | $ 7 | $ 2 | $ 3 | |
Gray Oak Pipeline, LLC (Gray Oak) | ||||||
Related party agreements and fees | ||||||
Guarantor obligations | $ 85 | |||||
Dakota Access LLC and Energy Transfer Crude Oil Company, LLC | ||||||
Related party agreements and fees | ||||||
Contractual obligation | $ 2,500 |
Related Party Transactions (Other Related Party Balances) (Details) - Phillips 66 - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Related Party Transaction [Line Items] | ||
Deferred rentals and other assets | $ 4 | $ 5 |
Deferred revenues | 60 | 33 |
Deferred revenues and other liabilities | $ 18 | $ 61 |
New Accounting Standards - Additional Information (Details) - Scenario, Forecast - Accounting Standards Update 2016-02 $ in Millions |
Jan. 01, 2019
USD ($)
|
---|---|
Item Effected [Line Items] | |
Operating lease, right-of-use asset | $ 45 |
Operating lease, liability | $ 45 |
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Selected Quarterly Financial Information [Abstract] | |||||||||||
Total Revenues and Other Income | $ 393 | $ 384 | $ 354 | $ 355 | $ 331 | $ 299 | $ 277 | $ 262 | $ 1,486 | $ 1,169 | $ 873 |
Income Before Income Taxes | 223 | 217 | 186 | 174 | 166 | 132 | 120 | 110 | 800 | 528 | 410 |
Net income | 221 | 217 | 186 | 172 | 164 | 131 | 119 | 110 | 796 | 524 | 408 |
Net income attributable to the Partnership | 221 | 217 | 186 | 172 | 162 | 99 | 103 | 97 | 796 | 461 | 301 |
Limited partners’ interest in net income attributable to the Partnership | $ 144 | $ 144 | $ 121 | $ 110 | $ 105 | $ 56 | $ 66 | $ 65 | $ 519 | $ 292 | $ 209 |
Net income attributable to the Partnership per limited partner unit—basic (in usd per share) | $ 1.16 | $ 1.17 | $ 0.99 | $ 0.91 | $ 0.86 | $ 0.51 | $ 0.61 | $ 0.60 | |||
Net income attributable to the Partnership per limited partner unit—diluted (in usd per share) | $ 1.09 | $ 1.10 | $ 0.94 | $ 0.87 | $ 0.83 | $ 0.51 | $ 0.61 | $ 0.60 |
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