10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

OR

o	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 1-36232

VALERO ENERGY PARTNERS LP

(Exact name of registrant as specified in its charter)

Delaware	90-1006559
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

One Valero Way

San Antonio, Texas

(Address of principal executive offices)

78249

(Zip Code)

(210) 345-2000

(Registrant’s telephone number, including area code)

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. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

The registrant had 67,354,766 common units and 1,374,268 general partner units outstanding at November 3, 2016.

VALERO ENERGY PARTNERS LP

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015	1
Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2016 and 2015	2
Consolidated Statements of Partners’ Capital for the Nine Months Ended September 30, 2016 and 2015	3
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015	4
Condensed Notes to Consolidated Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3. Quantitative and Qualitative Disclosures About Market Risk	45
Item 4. Controls and Procedures	45
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	46
Item 1A. Risk Factors	46
Item 6. Exhibits	46
SIGNATURE	48

i

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

VALERO ENERGY PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(In Thousands)

(Unaudited)

	September 30, 2016			December 31, 2015 (a)
ASSETS
Current assets:
Cash and cash equivalents	$	35,399		$	80,783
Receivables from related party	26,314			18,088
Receivables	3,416			—
Prepaid expenses and other	409			632
Total current assets	65,538			99,503
Property and equipment, at cost	1,198,363			1,176,843
Accumulated depreciation	(344,541		)	(325,562		)
Property and equipment, net	853,822			851,281
Deferred charges and other assets, net	2,957			3,322
Total assets	$	922,317		$	954,106
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Current portion of capital lease obligations	$	45		$	913
Accounts payable	7,454			9,264
Accrued liabilities	1,415			1,062
Accrued liabilities – related party	633			628
Taxes other than income taxes	2,276			1,276
Deferred revenue from related party	3,804			129
Total current liabilities	15,627			13,272
Debt and capital lease obligations, net of current portion	524,012			175,246
Notes payable to related party	370,000			370,000
Deferred income taxes	431			320
Other long-term liabilities	1,156			1,116
Commitments and contingencies
Partners’ capital:
Common unitholders – public (21,581,589 and 21,509,651 units outstanding)	534,688			581,489
Common unitholder – Valero (45,687,271 and 15,018,602 units outstanding)	(512,104		)	28,430
Subordinated unitholder – Valero (0 and 28,789,989 units outstanding)	—			(313,961		)
General partner – Valero (1,372,515 and 1,332,829 units outstanding)	(11,493		)	(5,805		)
Net investment	—			103,999
Total partners’ capital	11,091			394,152
Total liabilities and partners’ capital	$	922,317		$	954,106
(a) Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

See Condensed Notes to Consolidated Financial Statements.

1

VALERO ENERGY PARTNERS LP

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Unit Amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015 (a)			2016			2015 (a)
Operating revenues – related party	$	92,040		$	62,037		$	258,471		$	164,168
Costs and expenses:
Operating expenses (b)	24,089			27,482			72,461			80,812
General and administrative expenses (c)	4,094			3,731			12,174			11,000
Depreciation expense	11,319			13,760			34,652			34,702
Total costs and expenses	39,502			44,973			119,287			126,514
Operating income	52,538			17,064			139,184			37,654
Other income, net	76			29			210			166
Interest and debt expense, net of capitalized interest (d)	(3,672		)	(1,353		)	(9,582		)	(3,365		)
Income before income taxes	48,942			15,740			129,812			34,455
Income tax expense (benefit)	235			115			780			(62		)
Net income	48,707			15,625			129,032			34,517
Less: Net loss attributable to Predecessor	(3,002		)	(15,803		)	(15,422		)	(52,694		)
Net income attributable to partners	51,709			31,428			144,454			87,211
Less: General partner’s interest in net income	6,634			1,612			15,351			3,821
Limited partners’ interest in net income	$	45,075		$	29,816		$	129,103		$	83,390
Net income per limited partner unit – basic and diluted:
Common units	$	0.77		$	0.51		$	2.08		$	1.43
Subordinated units	$	0.29		$	0.49		$	1.73		$	1.40
Weighted-average limited partner units outstanding:
Common units – basic and diluted	53,899			30,698			42,597			30,279
Subordinated units – basic and diluted	12,517			28,790			23,326			28,790
Cash distribution declared per unit	$	0.3850		$	0.3075		$	1.0900		$	0.8775
(a) Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.
Supplemental information – each income statement line item reflected below includes expenses incurred for services or financing provided by related party as follows:
(b) Operating expenses – related party	$	12,986		$	12,278		$	38,521		$	36,368
(c) General and administrative expenses – related party	$	3,156		$	2,935		$	9,353		$	8,639
(d) Interest and debt expense – related party	$	1,649		$	589		$	4,799		$	1,357

See Condensed Notes to Consolidated Financial Statements.

2

VALERO ENERGY PARTNERS LP

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(In Thousands)

(Unaudited)

	Partnership
	Common Unitholders Public			Common Unitholder Valero			Subordinated Unitholder Valero			General Partner Valero			Net Investment			Total
Balance as of December 31, 2014 (a)	$	374,954		$	58,844		$	146,804		$	4,617		$	484,375		$	1,069,594
Net income (loss):
Attributable to Predecessor (b)	—			—			—			—			(52,694		)	(52,694		)
Attributable to partners	24,348			18,406			40,636			3,821			—			87,211
Net transfers from Valero Energy Corporation (b)	—			—			—			—			61,491			61,491
Allocation of Valero Energy Corporation’s net investment in the Houston and St. Charles Terminal Services Business	—			82,330			205,396			8,383			(296,109		)	—
Consideration paid to Valero Energy Corporation for the acquisition of the Houston and St. Charles Terminal Services Business	—			(186,625		)	(465,592		)	(19,003		)	—			(671,220		)
Units issued to Valero Energy Corporation in connection with the acquisition of the Houston and St. Charles Terminal Services Business	—			98,000			—			2,000			—			100,000
Noncash capital contributions from Valero Energy Corporation	—			4,493			9,620			405			—			14,518
Cash distributions to unitholders	(14,420		)	(10,736		)	(24,068		)	(2,318		)	—			(51,542		)
Distribution equivalent right payments	(9		)	—			—			—			—			(9		)
Unit-based compensation	103			—			—			—			—			103
Balance as of September 30, 2015 (b)	$	384,976		$	64,712		$	(87,204	)	$	(2,095	)	$	197,063		$	557,452
Balance as of December 31, 2015 (a)	$	581,489		$	28,430		$	(313,961	)	$	(5,805	)	$	103,999		$	394,152
Net income (loss):
Attributable to Predecessor	—			—			—			—			(15,422		)	(15,422		)
Attributable to partners	42,096			41,685			45,322			15,351			—			144,454
Net transfers from Valero Energy Corporation	—			—			—			—			15,030			15,030
Allocation of Valero Energy Corporation’s net investment in acquisitions	—			67,800			32,758			3,049			(103,607		)	—
Consideration paid to Valero Energy Corporation for acquisitions	—			(397,859		)	(153,067		)	(14,074		)	—			(565,000		)
Units issued to Valero Energy Corporation in connection with acquisitions	—			83,300			—			1,700			—			85,000
Conversion of subordinated units	—			(406,374		)	406,374			—			—			—
Units issued in public offering	6,096			—			—			58			—			6,154
Transfers to (from) partners	(73,075		)	75,765			—			(2,690		)	—			—
Noncash capital contributions from Valero Energy Corporation	—			11,057			12,084			679			—			23,820
Cash distributions to unitholders	(22,038		)	(15,908		)	(29,510		)	(9,761		)	—			(77,217		)
Distribution equivalent right payments	(14		)	—			—			—			—			(14		)
Unit-based compensation	134			—			—			—			—			134
Balance as of September 30, 2016	$	534,688		$	(512,104	)	$	—		$	(11,493	)	$	—		$	11,091
(a) Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.
(b) Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

See Condensed Notes to Consolidated Financial Statements.

3

VALERO ENERGY PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

	Nine Months Ended September 30,
	2016			2015 (a)
Cash flows from operating activities:
Net income	$	129,032		$	34,517
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	34,652			34,702
Deferred income tax expense (benefit)	301			(400		)
Changes in current assets and current liabilities	(2,179		)	(4,643		)
Changes in deferred charges and credits and other operating activities, net	406			341
Net cash provided by operating activities	162,212			64,517
Cash flows from investing activities:
Capital expenditures	(15,911		)	(30,748		)
Acquisitions from Valero Energy Corporation	(103,607		)	(296,109		)
Other investing activities, net	29			70
Net cash used in investing activities	(119,489		)	(326,787		)
Cash flows from financing activities:
Proceeds from debt borrowings	349,000			200,000
Repayment of debt and capital lease obligations	(868		)	(25,884		)
Proceeds from note payable to related party	—			160,000
Proceeds from issuance of common units	2,814			—
Proceeds from issuance of general partner units	58			—
Payment of offering costs	(373		)	—
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets	(376,393		)	(275,111		)
Cash distributions to unitholders and distribution equivalent right payments	(77,231		)	(51,551		)
Net transfers from Valero Energy Corporation	14,886			68,800
Net cash provided by (used in) financing activities	(88,107		)	76,254
Net decrease in cash and cash equivalents	(45,384		)	(186,016		)
Cash and cash equivalents at beginning of period	80,783			236,579
Cash and cash equivalents at end of period	$	35,399		$	50,563
(a) Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

See Condensed Notes to Consolidated Financial Statements.

4

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS AND BASIS OF PRESENTATION

Business

Valero Energy Partners LP (the Partnership) is a fee-based, master limited partnership formed by Valero (defined below) in July 2013 to own, operate, develop, and acquire crude oil and refined petroleum products pipelines, terminals, and other transportation and logistics assets.

References in this report to “Partnership,” “we,” “us,” or “our” refer to Valero Energy Partners LP, one or more of its subsidiaries, or all of them taken as a whole. References in this report to “Valero” refer collectively to Valero Energy Corporation and its subsidiaries, other than Valero Energy Partners LP, any of its subsidiaries, or its general partner.

We acquired from Valero the Houston and St. Charles Terminal Services Business on March 1, 2015, the Corpus Christi Terminal Services Business on October 1, 2015, the McKee Terminal Services Business on April 1, 2016, and the Meraux and Three Rivers Terminal Services Business on September 1, 2016. See Note 3 for further discussion of these acquisitions from Valero.

Our assets consist of crude oil and refined petroleum products pipeline and terminal systems in the United States (U.S.) Gulf Coast and U.S. Mid-Continent regions that are integral to the operations of ten of Valero’s refineries.

We generate operating revenues by providing fee-based transportation and terminaling services to Valero.

Basis of Presentation

Our consolidated financial statements include the accounts of the Partnership as well as our Predecessor (defined below). All intercompany accounts and transactions have been eliminated.

The acquisitions from Valero were accounted for as transfers of businesses between entities under the common control of Valero. As entities under the common control of Valero, we recorded these acquisitions on our balance sheet at Valero’s carrying value rather than fair value. Transfers between entities under common control are accounted for as though the transfer occurred as of the beginning of the period of transfer, and prior period financial statements and financial information are retrospectively adjusted to furnish comparative information. Accordingly, the Partnership’s financial statements and related notes have been retrospectively adjusted to include the historical results of the acquisitions from Valero for all periods presented prior to the effective dates of each acquisition. We refer to the historical results of the acquisitions from Valero prior to their respective acquisition dates as those of our “Predecessor.”

The combined financial statements of our Predecessor were derived from the consolidated financial statements and accounting records of Valero and reflect the combined historical financial position, results of operations, and cash flows of our Predecessor as if the acquisitions from Valero had been combined for periods prior to the effective dates of each acquisition.

There were no transactions between the operations of our Predecessor; therefore, there were no intercompany transactions or accounts to be eliminated in connection with the combination of those operations. In addition, our Predecessor’s statements of income include direct charges for the management and operation of our assets and certain expenses allocated by Valero for general corporate services, such as treasury, accounting,

5

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and legal services. These expenses were charged, or allocated, to our Predecessor based on the nature of the expenses. Prior to the acquisitions from Valero, our Predecessor transferred cash to Valero daily and Valero funded our Predecessor’s operating and investing activities as needed. Therefore, transfers of cash to and from Valero’s cash management system are reflected as a component of net investment and are reflected as a financing activity in our statements of cash flows. In addition, interest expense was not included on the net cash transfers from Valero.

The financial information presented for the periods after the effective dates of the acquisitions from Valero represents the consolidated financial position, results of operations, and cash flows of the Partnership.

These unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Financial information for the three and nine months ended September 30, 2016 and 2015 included in these Condensed Notes to Consolidated Financial Statements is derived from our unaudited financial statements. Operating results for the three and nine months endedSeptember 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These unaudited financial statements and notes thereto should be read in conjunction with the audited financial statements of the Partnership included in our Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on August 4, 2016, which reflect retrospective adjustments to the Partnership’s 2015 Form 10-K filed with the SEC on February 26, 2016 for the historical results of operations and financial position of the McKee Terminal Services Business.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Accounting Pronouncements Adopted During the Period

In April 2015, the provisions of Accounting Standards Codification (ASC) Subtopic 835-30, “Interest–Imputation of Interest,” were amended to simplify the presentation of debt issuance costs. The guidance requires that debt issuance costs related to a note be reported in the balance sheet as a direct deduction from the face amount of that note, consistent with debt discounts, and that amortization of debt issuance costs be reported as interest expense. In August 2015, these provisions were further amended with guidance from the SEC staff, which provides that the staff would not object to an entity deferring and presenting debt issuance costs related to a line-of-credit arrangement as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. These provisions were effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods. The adoption of this guidance effective January 1, 2016 did not affect our financial position or results of operations as our debt

6

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

issuance costs are associated with our revolving credit facility and therefore were not required to be reclassified.

Also in April 2015, the provisions of ASC Topic 260, “Earnings Per Share,” were amended to provide guidance on how master limited partnerships apply the two-class method of calculating earnings per unit for historical periods when they receive net assets in a dropdown transaction that is accounted for as a transaction between entities under common control as required under Subtopic 805-50, “Business Combinations–Related Issues.” The amendments specify that for purposes of calculating earnings per unit under the two-class method for periods before the date of a dropdown transaction, earnings or losses of a transferred business should be allocated entirely to the general partner. Qualitative disclosures are also required to describe how the rights to earnings or losses differ before and after the dropdown transaction for purposes of computing earnings per unit under the two-class method. These provisions were effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods. We have historically calculated our net income per unit after a dropdown transaction as prescribed by these provisions; therefore, the adoption of this guidance effective January 1, 2016 did not affect our financial position or results of operations, but resulted in additional disclosures as shown in Note 9.

In November 2015, the provisions of ASC Topic 740, “Income Taxes,” were amended to simplify the presentation of deferred income taxes. The amendments require that deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. The amendments are effective for financial statements for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted as of the beginning of any interim or annual period. Effective January 1, 2016, we adopted this guidance on a retrospective basis, but such adoption did not affect our financial position as we had no current deferred tax amounts to reclassify.

Accounting Pronouncements Not Yet Adopted

In May 2014, the ASC was amended and a new accounting standard, ASC Topic 606, “Revenue from Contracts with Customers,” was issued to clarify the principles for recognizing revenue. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual periods. We have been evaluating and continue to evaluate the provisions of this standard and its impact on our business processes, business and accounting systems, and financial statements and related disclosures. A multi-disciplined implementation team has gained an understanding of the standard’s revenue recognition model, is completing the review and documentation of our commercial agreements with Valero, and is analyzing whether enhancements are needed to our business and accounting systems.

In January 2016, the provisions of ASC Subtopic 825-10, “Financial Instruments–Overall,” were amended to enhance the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. These provisions are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. We are currently evaluating the effect that adopting this standard will have on our financial statements and related disclosures.

In February 2016, the ASC was amended and a new accounting standard, ASC Topic 842, “Leases,” was issued to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new standard is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within those annual periods, with early adoption permitted. We have been evaluating and continue

7

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

to evaluate the provisions of this standard and its impact on our business processes, business and accounting systems, and financial statements and related disclosures. A multi-disciplined implementation team has gained an understanding of the accounting and disclosure provisions of the standard and is in the process of analyzing the impacts to our business and accounting systems, including the development of new accounting systems to account for our leases and support the required disclosures.

3. ACQUISITIONS

Acquisitions in 2015

Houston and St. Charles Terminal Services Business

Effective March 1, 2015, we acquired two subsidiaries from Valero that own and operate crude oil, intermediates, and refined petroleum products terminals supporting Valero’s Houston Refinery (in Houston, Texas) and St. Charles Refinery (in Norco, Louisiana) for total consideration of $671.2 million, which consisted of (i) a cash distribution to Valero of $571.2 million and (ii) the issuance of 1,908,100 common units and 38,941 general partner units having an aggregate value of $100.0 million. We funded the cash distribution with $211.2 million of our cash on hand, $200.0 million of borrowings under our revolving credit facility, and $160.0 million of proceeds from a subordinated credit agreement we entered into with Valero. See Note 6 for further discussion of the borrowings under our revolving credit facility and this subordinated credit agreement.

Corpus Christi Terminal Services Business

Effective October 1, 2015, we acquired Valero’s Corpus Christi East Terminal and Corpus Christi West Terminal (collectively, the Corpus Christi Terminal Services Business) for total consideration of $465.0 million, which consisted of (i) a cash distribution to Valero of $395.0 million and (ii) the issuance of 1,570,513 common units and 32,051 general partner units having an aggregate value of $70.0 million. We funded the cash distribution with $395.0 million of proceeds from a subordinated credit agreement with Valero. The Corpus Christi Terminal Services Business is engaged in the business of terminaling crude oil, intermediates, and refined petroleum products at terminals in Corpus Christi, Texas and supports Valero’s Corpus Christi East and West Refineries. See Note 6 for further discussion of the borrowings under this subordinated credit agreement.

Acquisitions in 2016

McKee Terminal Services Business

Effective April 1, 2016, we acquired a subsidiary from Valero that owns and operates a crude oil, intermediates, and refined petroleum products terminal that supports Valero’s McKee Refinery (in Sunray, Texas) for total consideration of $240.0 million, which consisted of (i) a cash distribution to Valero of $204.0 million and (ii) the issuance of 728,775 common units and 14,873 general partner units having an aggregate value of $36.0 million. We funded the cash distribution with $65.0 million of our cash on hand and $139.0 million of borrowings under our revolving credit facility. See Note 6 for further discussion of the borrowings under our revolving credit facility.

8

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Meraux and Three Rivers Terminal Services Business

Effective September 1, 2016, we acquired Valero’s Meraux Terminal and Three Rivers Terminal (collectively, the Meraux and Three Rivers Terminal Services Business) for total consideration of $325.0 million which consisted of (i) a cash distribution to Valero of $276.0 million and (ii) the issuance of 1,149,905 common units and 23,467 general partner units having an aggregate value of $49.0 million. We funded the cash distribution with $66.0 million of our cash on hand and $210.0 million of borrowings under our revolving credit facility. See Note 6 for further discussion of the borrowings under our revolving credit facility.

9

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Presentation of Reported Financial Information

The following table presents our previously reported balance sheet as of December 31, 2015 (as presented in our Current Report on Form 8-K filed with the SEC on August 4, 2016 described in Note 1) retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business (in thousands).

	Valero Energy Partners LP (Previously Reported)			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
ASSETS
Current assets:
Cash and cash equivalents	$	80,783		$	—		$	80,783
Receivables from related party	18,088			—			18,088
Prepaid expenses and other	632			—			632
Total current assets	99,503			—			99,503
Property and equipment, at cost	1,110,399			66,444			1,176,843
Accumulated depreciation	(310,558		)	(15,004		)	(325,562		)
Property and equipment, net	799,841			51,440			851,281
Deferred charges and other assets, net	3,322			—			3,322
Total assets	$	902,666		$	51,440		$	954,106
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Current portion of capital lease obligations	$	913		$	—		$	913
Accounts payable	9,264			—			9,264
Accrued liabilities	1,062			—			1,062
Accrued liabilities – related party	628			—			628
Taxes other than income taxes	1,276			—			1,276
Deferred revenue from related party	129			—			129
Total current liabilities	13,272			—			13,272
Debt and capital lease obligations, net of current portion	175,246			—			175,246
Notes payable to related party	370,000			—			370,000
Deferred income taxes	320			—			320
Other long-term liabilities	1,116			—			1,116
Partners’ capital:
Common unitholders – public	581,489			—			581,489
Common unitholder – Valero	28,430			—			28,430
Subordinated unitholder – Valero	(313,961		)	—			(313,961		)
General partner – Valero	(5,805		)	—			(5,805		)
Net investment	52,559			51,440			103,999
Total partners’ capital	342,712			51,440			394,152
Total liabilities and partners’ capital	$	902,666		$	51,440		$	954,106

10

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables present our previously reported statements of income for the three and nine months ended September 30, 2015 (as presented in our Quarterly Report on Form 10-Q filed with the SEC on November 3, 2015) retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business (in thousands).

	Three Months Ended September 30, 2015
	Valero Energy Partners LP (Previously Reported)			Corpus Christi Terminal Services Business			McKee Terminal Services Business			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Operating revenues – related party	$	62,037		$	—		$	—		$	—		$	62,037
Costs and expenses:
Operating expenses	15,042			6,198			2,405			3,837			27,482
General and administrative expenses	3,444			91			66			130			3,731
Depreciation expense	10,684			1,279			1,125			672			13,760
Total costs and expenses	29,170			7,568			3,596			4,639			44,973
Operating income (loss)	32,867			(7,568		)	(3,596		)	(4,639		)	17,064
Other income, net	29			—			—			—			29
Interest and debt expense, net of capitalized interest	(1,353		)	—			—			—			(1,353		)
Income (loss) before income taxes	31,543			(7,568		)	(3,596		)	(4,639		)	15,740
Income tax expense	115			—			—			—			115
Net income (loss)	31,428			(7,568		)	(3,596		)	(4,639		)	15,625
Less: Net loss attributable to Predecessor	—			(7,568		)	(3,596		)	(4,639		)	(15,803		)
Net income attributable to partners	$	31,428		$	—		$	—		$	—		$	31,428

11

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Nine Months Ended September 30, 2015
	Valero Energy Partners LP (Previously Reported)			Corpus Christi Terminal Services Business			McKee Terminal Services Business			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Operating revenues – related party	$	164,168		$	—		$	—		$	—		$	164,168
Costs and expenses:
Operating expenses	47,280			17,089			5,763			10,680			80,812
General and administrative expenses	10,169			267			189			375			11,000
Depreciation expense	25,887			3,165			3,379			2,271			34,702
Total costs and expenses	83,336			20,521			9,331			13,326			126,514
Operating income (loss)	80,832			(20,521		)	(9,331		)	(13,326		)	37,654
Other income, net	166			—			—			—			166
Interest and debt expense, net of capitalized interest	(3,365		)	—			—			—			(3,365		)
Income (loss) before income taxes	77,633			(20,521		)	(9,331		)	(13,326		)	34,455
Income tax benefit	(62		)	—			—			—			(62		)
Net income (loss)	77,695			(20,521		)	(9,331		)	(13,326		)	34,517
Less: Net loss attributable to Predecessor	(9,516		)	(20,521		)	(9,331		)	(13,326		)	(52,694		)
Net income attributable to partners	$	87,211		$	—		$	—		$	—		$	87,211

12

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents our previously reported statement of cash flows for the nine months ended September 30, 2015 (as presented in our Quarterly Report on Form 10-Q filed with the SEC on November 3, 2015) retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business (in thousands).

	Nine Months Ended September 30, 2015
	Valero Energy Partners LP (Previously Reported)			Corpus Christi Terminal  Services  Business			McKee Terminal Services Business			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Cash flows from operating activities:
Net income (loss)	$	77,695		$	(20,521	)	$	(9,331	)	$	(13,326	)	$	34,517
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense	25,887			3,165			3,379			2,271			34,702
Deferred income tax benefit	(400		)	—			—			—			(400		)
Changes in current assets and current liabilities	(4,643		)	—			—			—			(4,643		)
Changes in deferred charges and credits and other operating activities, net	341			—			—			—			341
Net cash provided by (used in) operating activities	98,880			(17,356		)	(5,952		)	(11,055		)	64,517
Cash flows from investing activities:
Capital expenditures	(7,246		)	(18,799		)	(217		)	(4,486		)	(30,748		)
Acquisition of the Houston and St. Charles Terminal Services Business from Valero Energy Corporation	(296,109		)	—			—			—			(296,109		)
Other investing activities, net	70			—			—			—			70
Net cash used in investing activities	(303,285		)	(18,799		)	(217		)	(4,486		)	(326,787		)
Cash flows from financing activities:
Proceeds from debt borrowings	200,000			—			—			—			200,000
Repayment of debt and capital lease obligations	(25,884		)	—			—			—			(25,884		)
Proceeds from note payable to related party	160,000			—			—			—			160,000
Excess purchase price paid to Valero Energy Corporation over the carrying value of the Houston and St. Charles Terminal Services Business	(275,111		)	—			—			—			(275,111		)
Cash distributions to unitholders and distribution equivalent right payments	(51,551		)	—			—			—			(51,551		)
Net transfers from Valero Energy Corporation	10,935			36,155			6,169			15,541			68,800
Net cash provided by financing activities	18,389			36,155			6,169			15,541			76,254
Net decrease in cash and cash equivalents	(186,016		)	—			—			—			(186,016		)
Cash and cash equivalents at beginning of period	236,579			—			—			—			236,579
Cash and cash equivalents at end of period	$	50,563		$	—		$	—		$	—		$	50,563

13

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. RELATED-PARTY TRANSACTIONS

Agreements Effective with the Acquisitions in 2016

The following agreements became effective with our acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business, coinciding with the effective dates of each acquisition.

Commercial Agreements

We entered into additional schedules under our existing master terminal services agreement with respect to the McKee, Meraux, and Three Rivers terminals. The McKee terminal schedule has an initial term through April 1, 2026 and the Meraux and Three Rivers terminal schedules have initial terms through September 1, 2026. Each schedule provides Valero an option to renew for one additional five-year term and contains minimum throughput requirements and inflation escalators.

Amended and Restated Omnibus Agreement

We entered into amended and restated schedules to our amended and restated omnibus agreement with Valero that include the following modifications, among others:

• the indemnification obligations of Valero and the Partnership were extended to apply to the McKee, Meraux, and Three Rivers terminals;

• the administrative fee was increased from $11.2 million to $11.7 million per year in connection with the acquisition of the McKee Terminal Services Business in April 2016. The fee was increased again in September 2016 to $12.5 million per year in connection with the acquisition of the Meraux and Three Rivers Terminal Services Business. Each increase in 2016 will be prorated based on the number of days from the effective dates of each acquisition to December 31, 2016; and

• the grant to Valero of a right of first refusal with respect to the McKee, Meraux, and Three Rivers terminals.

Amended and Restated Services and Secondment Agreement

Our general partner entered into amended and restated exhibits to the amended and restated services and secondment agreement with Valero to provide for the additional secondment of employees to our general partner for the provision of services with respect to the McKee, Meraux, and Three Rivers terminals.

Lease and Access Agreements

We entered into a lease and access agreement with Valero with respect to the land on which the McKee terminal is located. This agreement has an initial term through April 1, 2026 with four automatic successive renewal periods of five years each. Either party may terminate the lease after the initial term by providing written notice. Initially, our base rent is $594,000 per year and is subject to an annual inflation escalator. We are also required to pay Valero a customary expense reimbursement for taxes, utilities, and similar costs incurred by Valero related to the leased premises.

14

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We entered into two lease and access agreements with Valero with respect to the land on which the Meraux and Three Rivers terminals are located. Each agreement has an initial term through September 1, 2026 with four automatic successive renewal periods of five years each. Either party may terminate each agreement after the initial term by providing written notice. Initially, our base rent under the Meraux and Three Rivers terminal agreements totals $971,000 per year and each agreement is subject to annual inflation escalators. We are also required to pay Valero a customary expense reimbursement for taxes, utilities, and similar costs incurred by Valero related to the leased premises.

Summary of Transactions

Receivables from related party consist of the following (in thousands):

	September 30, 2016			December 31, 2015
Trade receivables – related party	$	33,771		$	26,103
Due to related party	(7,457		)	(8,015		)
Receivables from related party	$	26,314		$	18,088

The amounts shown in our balance sheets as “deferred revenue from related party” represent the unearned revenues from Valero associated with Valero’s quarterly deficiency payment, which is the result of Valero not meeting its minimum quarterly throughput commitments under certain schedules of our master transportation services agreement and master terminal services agreement (collectively, the commercial agreements).

All of our operating revenues are generated by providing services to Valero under our commercial agreements with Valero. The cost of services provided to us by Valero, including the cost of financing provided to us by Valero in connection with certain acquisitions from Valero as more fully described in Notes 3 and 6, are reflected in the supplemental information disclosure on our statements of income.

Concentration Risk

All of our operating revenues were derived from transactions with Valero and all of the receivables from related party were due from Valero. Therefore, we are subject to the business risks associated with Valero’s business.

Leases

Certain schedules under our commercial agreements with Valero are considered operating leases under U.S. GAAP. These agreements contain minimum throughput requirements and escalation clauses to adjust transportation tariffs and terminaling and storage fees to reflect changes in price indices. Revenues from all of our commercial agreements with Valero that are considered operating leases are recorded within “operating revenues – related party” in our statements of income.

15

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The amounts shown in our statements of income as “operating revenues – related party” included revenues from our current commercial agreements with Valero that are considered operating leases are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Minimum rental revenues	$	60,133	$	32,207	$	164,659	$	79,684
Contingent rental revenues	10,710		6,407		28,271		15,389
Total lease revenues	$	70,843	$	38,614	$	192,930	$	95,073

As of September 30, 2016, future minimum rentals to be received related to these noncancelable commercial agreements were as follows (in thousands):

Remainder of 2016	$	68,206
2017	270,603
2018	270,603
2019	270,603
2020	271,344
Thereafter	1,245,319
Total minimum rental payments	$	2,396,678

16

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. PROPERTY AND EQUIPMENT

Major classes of property and equipment consisted of the following (in thousands):

	September 30, 2016
	Non-Leased Assets			Assets Under Operating Leases (a)			Total
Pipelines and related assets	$	227,495		$	46,964		$	274,459
Terminals and related assets	112,017			776,829			888,846
Other	9,488			—			9,488
Land	4,672			—			4,672
Construction-in-progress	20,898			—			20,898
Property and equipment, at cost	374,570			823,793			1,198,363
Accumulated depreciation	(116,029		)	(228,512		)	(344,541		)
Property and equipment, net	$	258,541		$	595,281		$	853,822

	December 31, 2015 (b)
	Non-Leased Assets			Assets Under Operating Leases (a)			Total
Pipelines and related assets	$	228,586		$	46,739		$	275,325
Terminals and related assets	276,263			580,194			856,457
Other	9,352			—			9,352
Land	4,672			—			4,672
Construction-in-progress	31,037			—			31,037
Property and equipment, at cost	549,910			626,933			1,176,843
Accumulated depreciation	(180,543		)	(145,019		)	(325,562		)
Property and equipment, net	$	369,367		$	481,914		$	851,281
(a) Represents assets owned by us for which we are the lessor (see Note 4). Certain assets acquired in the acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business that were initially classified as non-leased assets were reclassified to assets under operating leases subsequent to the acquisitions on April 1, 2016 and September 1, 2016, respectively, in connection with entering into schedules under our commercial agreements with Valero that are considered operating leases (see Note 4).
(b) Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business.

We have certain pipeline assets under capital lease agreements totaling $3.1 million and $14.9 million as of September 30, 2016 and December 31, 2015, respectively. Accumulated amortization on assets under capital leases was $3.1 million and $14.1 million as of September 30, 2016 and December 31, 2015, respectively. During 2016, certain pipeline assets under capital lease agreements were fully depreciated and were replaced with operating lease agreements.

17

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. DEBT

Revolving Credit Facility

We have a $750.0 million senior unsecured revolving credit facility agreement (the Revolver) that matures in November 2020. We have the option to increase the aggregate commitments under the Revolver to $1.0 billion, subject to certain restrictions. The Revolver also provides for the issuance of letters of credit of up to $100.0 million. Our obligations under the Revolver are jointly and severally guaranteed by our directly owned subsidiary, Valero Partners Operating Co. LLC. Borrowings on the Revolver bear interest at a variable rate, which was 1.81 percent as of September 30, 2016. Accrued interest is payable in arrears on each Interest Payment Date (as defined in the Revolver) and on the maturity date.

During the nine months ended September 30, 2016, we borrowed $139.0 million and $210.0 million under the Revolver in connection with the acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business, respectively. During the nine months ended September 30, 2015, we borrowed $200.0 million under the Revolver in connection with the acquisition of the Houston and St. Charles Terminal Services Business. See Note 3 for information about our acquisitions from Valero.

During the nine months ended September 30, 2016, we made no repayments under the Revolver. During the nine months ended September 30, 2015, we repaid $25.0 million under the Revolver. As of September 30, 2016, we had $524.0 million of borrowings outstanding and no letters of credit outstanding under the Revolver. As of December 31, 2015, we had $175.0 million of borrowings outstanding and no letters of credit outstanding under the Revolver.

Subordinated Credit Agreements

During 2015, we entered into two subordinated credit agreements with Valero (the Loan Agreements), under which we borrowed $160.0 million and $395.0 million (collectively, the loans) to finance a portion of the acquisitions of the Houston and St. Charles Terminal Services Business and the Corpus Christi Terminal Services Business, respectively, as described in Note 3. The loans mature on March 1 and October 1, 2020, respectively, and may be prepaid at any time without penalty. We are not permitted to reborrow amounts. The loans bear interest at the LIBO Rate (as defined in the Loan Agreements) plus the applicable margin. Accrued interest is payable in arrears on each Interest Payment Date (as defined in the Loan Agreements) and on each maturity date. As of September 30, 2016, the interest rate on each of the loans was 1.77 percent.

During the nine months ended September 30, 2016 and 2015, we made no repayments under the loans. As of September 30, 2016 and December 31, 2015, we had $370.0 million outstanding under the Loan Agreements.

Capitalized Interest

Capitalized interest was $13,000 and $6,000 for the three months ended September 30, 2016 and 2015, respectively, and $48,000 and $12,000 for the nine months endedSeptember 30, 2016 and 2015, respectively.

18

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. OPERATING LEASES

We have long-term operating lease commitments primarily with Valero for land used in the terminaling and transportation of crude oil and refined petroleum products. Certain leases contain escalation clauses and renewal options that allow for the same rental payment over the lease term or a revised rental payment based on fair rental value or negotiated value. Currently, one of our land leases with Valero does not contain a renewal option. We expect that, in the normal course of business, our leases will be renewed or replaced by other leases.

As of September 30, 2016, our future minimum rentals for leases having initial or remaining noncancelable lease terms in excess of one year were as follows (in thousands):

Remainder of 2016	$	2,798
2017	10,533
2018	10,490
2019	10,490
2020	10,490
Thereafter	62,988
Total minimum rental payments	$	107,789

Rental expense for all operating leases was $2.5 million and $1.9 million for the three months ended September 30, 2016 and 2015, respectively, and $7.1 million and $4.7 million for the nine months ended September 30, 2016 and 2015, respectively. Rental expense for the three and nine months ended September 30, 2015 has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business.

19

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. CASH DISTRIBUTIONS

Our partnership agreement prescribes the amount and priority of cash distributions that our limited partners and general partner will receive. Our distributions are declared subsequent to quarter end. The table below summarizes information related to our quarterly cash distributions that have been declared since January 1, 2015:

Quarterly Period Ended	Total Quarterly Distribution (Per Unit)		Total Cash Distribution (In Thousands)		Declaration Date	Record Date	Distribution Date
September 30, 2016	$	0.3850	$	32,175	October 24, 2016	November 3, 2016	November 10, 2016
June 30, 2016	0.3650		28,912		July 21, 2016	August 1, 2016	August 9, 2016
March 31, 2016	0.3400		25,608		April 21, 2016	May 2, 2016	May 10, 2016
December 31, 2015	0.3200		22,711		January 25, 2016	February 4, 2016	February 11, 2016
September 30, 2015	0.3075		20,164		October 15, 2015	November 2, 2015	November 10, 2015
June 30, 2015	0.2925		18,456		July 24, 2015	August 3, 2015	August 11, 2015
March 31, 2015	0.2775		17,266		April 21, 2015	May 1, 2015	May 12, 2015
December 31, 2014	0.2660		15,829		January 26, 2015	February 5, 2015	February 12, 2015

The following table reflects the allocation of total cash distributions to the general and limited partners and distribution equivalent right (DER) payments applicable to the period in which the distributions and DERs were earned (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
General partner’s distributions:
General partner’s distributions	$	644	$	404	$	1,734	$	1,118
General partner’s incentive distribution rights (IDRs)	5,600		982		12,462		2,076
Total general partner’s distributions	6,244		1,386		14,196		3,194
Limited partners’ distributions:
Common – public	8,336		5,305		23,495		15,137
Common – Valero	17,590		4,618		28,692		12,284
Subordinated – Valero	—		8,853		20,297		25,263
Total limited partners’ distributions	25,926		18,776		72,484		52,684
DERs	5		2		15		8
Total cash distributions, including DERs	$	32,175	$	20,164	$	86,695	$	55,886

20

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. NET INCOME PER LIMITED PARTNER UNIT

Distributions to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per limited partner unit.

We calculate net income available to limited partners based on the distributions pertaining to each period’s net income. After considering the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, limited partners, and other participating securities in accordance with the contractual terms of our partnership agreement and as prescribed under the two-class method. Participating securities include IDRs and awards under our Valero Energy Partners LP 2013 Incentive Compensation Plan (2013 ICP) that receive DERs. However, the terms of our partnership agreement limit the general partner’s incentive distribution to the amount of available cash, which, as defined in our partnership agreement, is net of reserves deemed appropriate. As such, IDRs are not allocated undistributed earnings or distributions in excess of earnings in the calculation of net income per limited partner unit.

Net losses of our Predecessor are allocated to the general partner. Subsequent to the effective dates of the acquisitions from Valero, we calculate net income available to limited partners based on the methodology described above.

Basic net income per limited partner unit is determined pursuant to the two-class method for master limited partnerships. The two-class method is an earnings allocation formula that is used to determine earnings to our general partner, common unitholders, and participating securities according to (i) distributions pertaining to each period’s net income and (ii) participation rights in undistributed earnings.

Diluted net income per limited partner unit is also determined using the two-class method, unless the treasury stock method is more dilutive. For the three and nine months ended September 30, 2016 and 2015, we used the two-class method to determine diluted net income per limited partner unit. We did not have any potentially dilutive instruments outstanding during the three and nine months ended September 30, 2016 and 2015.

Effective August 10, 2016, all of our subordinated units, which were owned by Valero, were converted on a one-for-one basis into common units. The subordinated units were only allocated earnings generated by us through the conversion date. See Note 10 for further discussion of the conversion of subordinated units.

21

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net income per unit was computed as follows (in thousands, except per unit amounts):

	Three Months Ended September 30, 2016
			Limited Partners
	General Partner		Common Units		Subordinated Units		Restricted Units		Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	644	$	25,926	$	—	$	—	$	26,570
General partner’s IDRs	5,600		—		—		—		5,600
DERs	—		—		—		5		5
Distributions and DERs declared	6,244		25,926		—		5		32,175
Undistributed earnings	390		15,533		3,607		4		19,534
Net income available to limited partners – basic and diluted	$	6,634	$	41,459	$	3,607	$	9	$	51,709
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding			53,899		12,517
Net income per limited partner unit – basic and diluted			$	0.77	$	0.29

22

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Three Months Ended September 30, 2015
			Limited Partners
	General Partner		Common Units		Subordinated Units		Restricted Units		Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	404	$	9,923	$	8,853	$	—	$	19,180
General partner’s IDRs	982		—		—		—		982
DERs	—		—		—		2		2
Distributions and DERs declared	1,386		9,923		8,853		2		20,164
Undistributed earnings	226		5,691		5,345		2		11,264
Net income available to limited partners – basic and diluted	$	1,612	$	15,614	$	14,198	$	4	$	31,428
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding			30,698		28,790
Net income per limited partner unit – basic and diluted			$	0.51	$	0.49

23

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Nine Months Ended September 30, 2016
			Limited Partners
	General Partner		Common Units		Subordinated Units		Restricted Units		Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	1,734	$	52,187	$	20,297	$	—	$	74,218
General partner’s IDRs	12,462		—		—		—		12,462
DERs	—		—		—		15		15
Distributions and DERs declared	14,196		52,187		20,297		15		86,695
Undistributed earnings	1,155		36,568		20,025		11		57,759
Net income available to limited partners – basic and diluted	$	15,351	$	88,755	$	40,322	$	26	$	144,454
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding			42,597		23,326
Net income per limited partner unit – basic and diluted			$	2.08	$	1.73

24

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Nine Months Ended September 30, 2015
			Limited Partners
	General Partner		Common Units		Subordinated Units		Restricted Units		Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	1,118	$	27,421	$	25,263	$	—	$	53,802
General partner’s IDRs	2,076		—		—		—		2,076
DERs	—		—		—		8		8
Distributions and DERs declared	3,194		27,421		25,263		8		55,886
Undistributed earnings	627		15,733		14,960		5		31,325
Net income available to limited partners – basic and diluted	$	3,821	$	43,154	$	40,223	$	13	$	87,211
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding			30,279		28,790
Net income per limited partner unit – basic and diluted			$	1.43	$	1.40

10. PARTNERS’ CAPITAL

Subordinated Unit Conversion

The requirements under our partnership agreement for the conversion of all of our outstanding subordinated units into common units were satisfied upon the payment of our quarterly cash distribution on August 9, 2016. Therefore, effective August 10, 2016, all of our subordinated units, which were owned by Valero, were converted on a one-for-one basis into common units. The conversion of the subordinated units does not impact the amount of cash distributions paid or the total number of outstanding units.

ATM Program

On September 16, 2016, we filed a prospectus supplement to our shelf registration statement (which was declared effective on September 1, 2016) and entered into an equity distribution agreement pursuant to which we may offer and sell from time to time our common units having an aggregate offering price of up to $350.0 million based on amounts and terms agreed to by us and at prices determined “at the market” at the time of sale (our ATM Program). During September 2016, we issued 65,980 common units under our ATM Program and received proceeds of $2.8 million (net of $39,000 of compensation paid with respect to the sales of these units).

25

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In October 2016, we issued 78,805 units that were sold in late September 2016. As a result, we had a receivable for $3.4 million (net of $34,000 of compensation paid with respect to the sales of these units) as of September 30, 2016 for which the cash was received by October 5, 2016.

Concurrent with the issuance of common units under our ATM Program, we issued 1,346 general partner units to our general partner on September 30, 2016 for $58,000 in order to maintain its 2.0 percent general partner interest in the Partnership.

Transfers to (from) Partners

Subsequent to the expiration of the subordination period on August 10, 2016, all of our common units have equal rights, including rights to distributions and to our net assets in the event of liquidation. As a result, a reallocation of the carrying values of our public common unitholders’ interest in us and Valero’s common unitholder interest in us is required when a change in ownership occurs in order for the portion of those carrying values associated with activity subsequent to the subordination period to be equal to the respective unitholders’ ownership interests (in units) in us. The transactions that resulted in transfers to (from) partners include the issuance of equity to Valero in connection with our acquisition of the Meraux and Three Rivers Terminal Services Business on September 1, 2016 and the issuance of equity under our ATM Program in September 2016.

Unit Activity

Activity in the number of units was as follows:

	Common				General Partner
	Public	Valero	Subordinated			Total
Balance as of December 31, 2014	17,255,208	11,539,989	28,789,989		1,175,102	58,760,288
Unit-based compensation	4,443	—	—		—	4,443
Units issued in connection with the acquisition of the Houston and St. Charles Terminal Services Business (see Note 3)	—	1,908,100	—		38,941	1,947,041
Balance as of September 30, 2015	17,259,651	13,448,089	28,789,989		1,214,043	60,711,772
Balance as of December 31, 2015	21,509,651	15,018,602	28,789,989		1,332,829	66,651,071
Unit-based compensation	5,958	—	—		—	5,958
Units issued in connection with acquisitions (see Note 3)	—	1,878,680	—		38,340	1,917,020
Conversion of subordinated units	—	28,789,989	(28,789,989	)	—	—
Units issued under ATM program	65,980	—	—		—	65,980
General partner units issued to maintain 2% interest	—	—	—		1,346	1,346
Balance as of September 30, 2016	21,581,589	45,687,271	—		1,372,515	68,641,375

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VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. SUPPLEMENTAL CASH FLOW INFORMATION

In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in thousands):

	Nine Months Ended September 30,
	2016			2015
Decrease (increase) in current assets:
Receivables from related party	$	(8,226	)	$	(6,354	)
Prepaid expenses and other	223			(33		)
Increase (decrease) in current liabilities:
Accounts payable	791			1,031
Accrued liabilities	353			(88		)
Accrued liabilities – related party	5			309
Taxes other than income taxes	1,000			470
Deferred revenue from related party	3,675			22
Changes in current assets and current liabilities	$	(2,179	)	$	(4,643	)

The above changes in current assets and current liabilities differ from changes between amounts reflected in the applicable balance sheets for the respective periods for the following reasons:

• amounts accrued for capital expenditures are reflected in investing activities when such amounts are paid; and

• amounts accrued for offering costs and debt issuance costs are reflected in financing activities when paid.

During the nine months ended September 30, 2016, we attributed $51.4 million of the total $204.0 million cash consideration paid for the acquisition of the McKee Terminal Services Business to the historical carrying value of this acquisition (an investing cash outflow). The remaining $152.6 million of the cash consideration represents the excess purchase price paid over the carrying value of this acquisition (a financing cash outflow).

During the nine months ended September 30, 2016, we attributed $52.2 million of the total $276.0 million cash consideration paid for the acquisition of the Meraux and Three Rivers Terminal Services Business to the historical carrying value of this acquisition (an investing cash outflow). The remaining $223.8 million of the cash consideration represents the excess purchase price paid over the carrying value of this acquisition (a financing cash outflow).

During the nine months ended September 30, 2015, we attributed $296.1 million of the total $571.2 million cash consideration paid for the acquisition of the Houston and St. Charles Terminal Services Business to the historical carrying value of this acquisition (an investing cash outflow). The remaining $275.1 million of cash consideration represents the excess purchase price paid over the carrying value of this acquisition (a financing cash outflow).

27

VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Noncash investing and financing activities for the nine months ended September 30, 2016 included:

• a capital contribution of $23.8 million for projects that were funded by Valero related primarily to the Houston, St. Charles, Corpus Christi, Meraux, and Three Rivers terminals. Valero agreed to fund these projects in connection with the acquisitions of the Houston and St. Charles Terminal Services Business, the Corpus Christi Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business;

• the issuance of 728,775 common units and 14,873 general partner units having an aggregate value of $36.0 million in connection with the acquisition of the McKee Terminal Services Business described in Note 3;

• the issuance of 1,149,905 common units and 23,467 general partner units having an aggregate value of $49.0 million in connection with the acquisition of the Meraux and Three Rivers Terminal Services Business described in Note 3;

• the conversion of all of our outstanding subordinated units into common units having an aggregate value of $406.4 million described in Note 10; and

• the transfers to (from) partners reflect the impact of ownership changes occurring as a result of the issuance of common units (i) to Valero for the acquisition of the Meraux and Three Rivers Terminal Services Business and (ii) under our ATM Program, described in Note 10.

Noncash investing and financing activities for the nine months ended September 30, 2015 included:

• a capital contribution of $14.5 million for projects that were funded by Valero related primarily to the Houston and St. Charles terminals. Valero agreed to fund these projects as part of the acquisition of the Houston and St. Charles Terminal Services Business; and

• the issuance of 1,908,100 common units and 38,941 general partner units having an aggregate value of $100.0 million in connection with the acquisition of the Houston and St. Charles Terminal Services Business described in Note 3.

The following is a reconciliation of the amounts presented as net transfers from Valero on our statements of partners’ capital and statements of cash flows (in thousands):

	Nine Months Ended September 30,
	2016		2015 (a)
Net transfers from Valero per statements of partners’ capital	$	15,030	$	61,491
Less: Noncash transfers from (to) Valero	144		(7,309		)
Net transfers from Valero per statements of cash flows	$	14,886	$	68,800
(a) Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business.

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VALERO ENERGY PARTNERS LP

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Noncash transfers from (to) Valero primarily represent the change in amounts accrued by our Predecessor for capital expenditures as we do not reflect capital expenditures in our statements of cash flows until such amounts are paid.

Cash flows related to interest and income taxes paid were as follows (in thousands):

	Nine Months Ended September 30,
	2016		2015
Interest paid	$	8,688	$	2,952
Income taxes paid	496		441

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of cash and cash equivalents approximates the carrying value due to the low level of credit risk of these assets combined with their market interest rates. The fair value measurement for cash and cash equivalents is categorized as Level 1 in the fair value hierarchy. Fair values determined by Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets.

The fair values of our debt and notes payable to related party approximate their carrying values as our borrowings bear interest based upon short-term floating market interest rates. The fair value measurement for these liabilities is categorized as Level 2 in the fair value hierarchy. Fair values determined by Level 2 utilize inputs that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

References in this report to “Partnership,” “we,” “us,” or “our” refer to Valero Energy Partners LP, one or more of its subsidiaries, or all of them taken as a whole. References in this report to “Valero” refer collectively to Valero Energy Corporation and its subsidiaries, other than Valero Energy Partners LP, any of its subsidiaries, or its general partner.

CAUTIONARY STATEMENT FOR THE PURPOSE OF SAFE HARBOR PROVISIONS OF THE

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Form 10-Q, including without limitation our disclosures below under the heading “OUTLOOK,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify our forward-looking statements by the words “anticipate,” “believe,” “expect,” “plan,” “intend,” “estimate,” “project,” “projection,” “predict,” “budget,” “forecast,” “goal,” “guidance,” “target,” “could,” “should,” “may,” and similar expressions.

Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to:

• the suspension, reduction, or termination of Valero’s obligation under our commercial agreements and our services and secondment agreement;

• changes in global economic conditions and the effects of the global economic downturn on Valero’s business and the business of its suppliers, customers, business partners, and credit lenders;

• a material decrease in Valero’s profitability;

• disruptions due to equipment interruption or failure at our facilities, Valero’s facilities, or third-party facilities on which our business or Valero’s business is dependent;

• the risk of contract cancellation, non-renewal, or failure to perform by Valero’s customers, and Valero’s inability to replace such contracts and/or customers;

• Valero’s ability to remain in compliance with the terms of its outstanding indebtedness;

• the timing and extent of changes in commodity prices and demand for Valero’s refined petroleum products;

• our ability to obtain credit and financing on acceptable terms in light of uncertainty and illiquidity in credit and capital markets;

• actions of customers and competitors;

• changes in our cash flows from operations;

• state and federal environmental, economic, health and safety, energy, and other policies and regulations, including those related to climate change and any changes therein, and any legal or regulatory investigations, delays, or other factors beyond our control;

• operational hazards inherent in refining operations and in transporting and storing crude oil and refined petroleum products;

• earthquakes or other natural disasters affecting operations;

• changes in capital requirements or in execution of planned capital projects;

• the availability and costs of crude oil, other refinery feedstocks, and refined petroleum products;

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• changes in the cost or availability of third-party vessels, pipelines, and other means of delivering and transporting crude oil, feedstocks, and refined products;

• direct or indirect effects on our business resulting from actual or threatened terrorist incidents or acts of war;

• weather conditions affecting our or Valero’s operations or the areas in which Valero markets its refined petroleum products;

• seasonal variations in demand for refined petroleum products;

• adverse rulings, judgments, or settlements in litigation or other legal or tax matters, including unexpected environmental remediation costs in excess of any accruals, which affect us or Valero;

• risks related to labor relations and workplace safety;

• changes in insurance markets impacting costs and the level and types of coverage available; and

• political developments.

Any one of these factors, or a combination of these factors, could materially affect our future results of operations and affect whether any forward-looking statements ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward-looking statements. We do not intend to update these statements unless we are required by the securities laws to do so.

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to publicly release any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

OVERVIEW

We are a fee-based master limited partnership that owns and operates crude oil and refined petroleum products pipeline and terminal systems in the U.S. Gulf Coast and U.S. Mid-Continent regions that are integral to the operations of ten of Valero’s refineries. Since our formation in 2013, we have acquired several businesses from Valero and began receiving fees for services provided by those businesses commencing on each respective acquisition date. The following businesses were acquired from Valero in 2015 and 2016 and are further described in Note 3 of Condensed Notes to Consolidated Financial Statements:

• On March 1, 2015, we acquired the Houston and St. Charles Terminal Services Business for total consideration of $671.2 million.

• On October 1, 2015, we acquired the Corpus Christi Terminal Services Business for total consideration of $465.0 million.

• On April 1, 2016, we acquired the McKee Terminal Services Business for total consideration of $240.0 million.

• On September 1, 2016, we acquired the Meraux and Three Rivers Terminal Services Business for total consideration of $325.0 million.

The acquisitions from Valero were accounted for as transfers of businesses between entities under the common control of Valero. Accordingly, the Partnership’s financial statements have been retrospectively adjusted to include the historical results of the acquired businesses for all periods presented prior to the effective date of each acquisition. We refer to the historical results of the acquired businesses prior to their respective

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acquisition dates as those of our “Predecessor.” See Notes 1 and 3 of Condensed Notes to Consolidated Financial Statements for a discussion of the basis of this presentation.

In connection with the acquisitions from Valero, we entered into commercial agreements with Valero and began recognizing terminaling revenues. We had not charged fees for services provided to Valero prior to each acquisition; therefore, our results of operations subsequent to the acquisitions are not comparable to our historical results of operations.

For the third quarter of 2016, we reported net income of $48.7 million and net income attributable to partners of $51.7 million. This compares to net income of $15.6 million and net income attributable to partners of $31.4 million for the third quarter of 2015.

• The increase in net income of $33.1 million in the third quarter of 2016 compared to the third quarter of 2015 was due primarily to $33.1 million of revenues generated by our Corpus Christi, McKee, Meraux, and Three Rivers terminals in the third quarter of 2016. As previously noted, the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business did not charge Valero for services provided prior to our acquisition of those businesses.

• Net income attributable to partners represents our results of operations and only includes the results of an acquired business for the period subsequent to the effective date of its acquisition. Therefore, the increase in net income attributable to partners of $20.3 million in the third quarter of 2016 compared to the third quarter of 2015 was due primarily to the comparable periods reflecting the results of operations of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from the date of their respective acquisition.

For the first nine months of 2016, we reported net income of $129.0 million and net income attributable to partners of $144.5 million. This compares to net income of $34.5 million and net income attributable to partners of $87.2 million for the first nine months of 2015.

• The increase in net income of $94.5 million in the first nine months of 2016 compared to the first nine months of 2015 was due primarily to higher revenues of $99.1 million generated by our Houston, St. Charles, Corpus Christi, McKee, Meraux, and Three Rivers terminals. As previously noted, the Houston and St. Charles Terminal Services Business, the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business did not charge Valero for services provided prior to our acquisition of those businesses.

• Net income attributable to partners represents our results of operations and only includes the results of an acquired business for the period subsequent to the effective date of its acquisition. Therefore, the increase in net income attributable to partners of $57.2 million in the first nine months of 2016 compared to the first nine months of 2015 was due primarily to the comparable periods reflecting the results of operations of the Houston and St. Charles Terminal Services Business, the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from the date of their respective acquisition.

Additional analysis of the changes in the components of net income is provided below under “RESULTS OF OPERATIONS.”

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OUTLOOK

Because our operating revenues are generated from fee-based arrangements with Valero, the amount of operating revenues we generate primarily depends on the volumes of crude oil and refined petroleum products that we transport through our pipelines and handle at our terminals. These volumes are primarily affected by refinery reliability and the supply of, and demand for, crude oil and refined petroleum products in the markets served by our assets. For 2016, we expect that Valero will transport volumes through our pipelines and throughput volumes at our terminals generally consistent with historical levels.

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RESULTS OF OPERATIONS

The following tables highlight our results of operations and our operating performance. The financial results for the three and nine months ended September 30, 2016 and 2015 represent our consolidated results of operations, adjusted for the acquisitions from Valero for the periods presented prior to the effective date of each acquisition. See Notes 1 and 3 of Condensed Notes to Consolidated Financial Statements for a discussion of the basis of this presentation. The narrative following these tables provides an analysis of our results of operations.

Results of Operations

(in thousands, except per unit amounts)

	Three Months Ended September 30,
	2016			2015			Change
Operating revenues – related party	$	92,040		$	62,037		$	30,003
Costs and expenses:
Operating expenses	24,089			27,482			(3,393		)
General and administrative expenses	4,094			3,731			363
Depreciation expense	11,319			13,760			(2,441		)
Total costs and expenses	39,502			44,973			(5,471		)
Operating income	52,538			17,064			35,474
Other income, net	76			29			47
Interest and debt expense, net of capitalized interest	(3,672		)	(1,353		)	(2,319		)
Income before income taxes	48,942			15,740			33,202
Income tax expense	235			115			120
Net income	48,707			15,625			33,082
Less: Net loss attributable to Predecessor	(3,002		)	(15,803		)	12,801
Net income attributable to partners	51,709			31,428			20,281
Less: General partner’s interest in net income	6,634			1,612			5,022
Limited partners’ interest in net income	$	45,075		$	29,816		$	15,259
Net income per limited partner unit – basic and diluted:
Common units	$	0.77		$	0.51
Subordinated units	$	0.29		$	0.49
Weighted-average limited partner units outstanding – basic and diluted:
Common units	53,899			30,698
Subordinated units	12,517			28,790

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Operating Highlights and Other Financial Information

(in thousands, except throughput, per barrel, and per unit amounts)

	Three Months Ended September 30,
	2016		2015		Change
Operating highlights:
Pipeline transportation:
Pipeline transportation revenues	$	18,371	$	21,322	$	(2,951	)
Pipeline transportation throughput (BPD) (a)	778,369		960,410		(182,041		)
Average pipeline transportation revenue per barrel (b)	$	0.26	$	0.24	$	0.02
Terminaling:
Terminaling revenues	$	73,534	$	40,580	$	32,954
Terminaling throughput (BPD)	2,394,292		1,335,659		1,058,633
Average terminaling revenue per barrel (b)	$	0.33	$	0.33	$	—
Storage revenues	$	135	$	135	$	—
Total operating revenues – related party	$	92,040	$	62,037	$	30,003
Capital expenditures:
Maintenance	$	3,352	$	1,465	$	1,887
Expansion	953		7,753		(6,800		)
Total capital expenditures	4,305		9,218		(4,913		)
Less: Capital expenditures attributable to Predecessor	1,113		8,024		(6,911		)
Capital expenditures attributable to Partnership	$	3,192	$	1,194	$	1,998
Other financial information:
Distribution declared per unit	$	0.3850	$	0.3075
Distribution declared:
Limited partner units – public	$	8,341	$	5,307
Limited partner units – Valero	17,590		13,471
General partner units – Valero	6,244		1,386
Total distribution declared	$	32,175	$	20,164

____________________

(a) Represents the sum of volumes transported through each separately tariffed pipeline segment.

(b) Average revenue per barrel is calculated as revenue divided by throughput for the period. Throughput is derived by multiplying the throughput barrels per day (BPD) by the number of days in the period.

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Operating revenues increased$30.0 million, or 48 percent, in the third quarter of 2016 compared to the third quarter of 2015. The increase was due to higher revenues of $33.1 million generated by our Corpus Christi, McKee, Meraux, and Three Rivers terminals in the third quarter of 2016 compared to the third quarter of 2015. Prior to being acquired by us, the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business did not charge Valero for services provided and, therefore, did not generate revenues. Effective with the acquisition dates, we entered into additional schedules to our commercial agreements with Valero with respect to the services we provide to Valero using the assets of the acquired businesses and began generating revenues with respect to these assets.

Operating expenses decreased$3.4 million, or 12 percent, in the third quarter of 2016 compared to the third quarter of 2015 due primarily to lower maintenance expense of $2.3 million related to inspection activity and lower waste handling costs of $449,000 at the Corpus Christi terminals.

General and administrative expenses increased$363,000, or 10 percent, in the third quarter of 2016 compared to the third quarter of 2015 due primarily to incremental costs of $221,000 related to the management fee charged to us by Valero related to our acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business.

Depreciation expense decreased$2.4 million, or 18 percent, in the third quarter of 2016 compared to the third quarter of 2015 due primarily to $2.8 million in accelerated depreciation related to the retirement of certain assets of the McKee Crude System in the third quarter of 2015, partially offset by an increase in depreciation expense on assets placed into service in the latter part of 2015 and the beginning of 2016, including expansion and improvement projects at our Houston and Meraux terminals.

“Interest and debt expense, net of capitalized interest” increased$2.3 million in the third quarter of 2016 compared to the third quarter of 2015 due primarily to interest expense incurred on borrowings under our revolving credit facility and under the subordinated credit agreements with Valero entered into in connection with the acquisitions. Interest expense on these incremental borrowings was approximately $1.9 million in the third quarter of 2016.

Our income tax expense is associated with the Texas margin tax. The relative amount of revenue we generate in Texas increased in connection with the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business in the third quarter of 2016 compared to the third quarter of 2015. As a result, our income tax expense has increased.

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Results of Operations

(in thousands, except per unit amounts)

	Nine Months Ended September 30,
	2016			2015			Change
Operating revenues – related party	$	258,471		$	164,168		$	94,303
Costs and expenses:
Operating expenses	72,461			80,812			(8,351		)
General and administrative expenses	12,174			11,000			1,174
Depreciation expense	34,652			34,702			(50		)
Total costs and expenses	119,287			126,514			(7,227		)
Operating income	139,184			37,654			101,530
Other income, net	210			166			44
Interest and debt expense, net of capitalized interest	(9,582		)	(3,365		)	(6,217		)
Income before income taxes	129,812			34,455			95,357
Income tax expense (benefit)	780			(62		)	842
Net income	129,032			34,517			94,515
Less: Net loss attributable to Predecessor	(15,422		)	(52,694		)	37,272
Net income attributable to partners	144,454			87,211			57,243
Less: General partner’s interest in net income	15,351			3,821			11,530
Limited partners’ interest in net income	$	129,103		$	83,390		$	45,713
Net income per limited partner unit –basic and diluted:
Common units	$	2.08		$	1.43
Subordinated units	$	1.73		$	1.40
Weighted-average limited partner units outstanding –basic and diluted:
Common units	42,597			30,279
Subordinated units	23,326			28,790

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Operating Highlights and Other Financial Information

(in thousands, except throughput, per barrel, and per unit amounts)

	Nine Months Ended September 30,
	2016		2015		Change
Operating highlights:
Pipeline transportation:
Pipeline transportation revenues	$	57,934	$	61,164	$	(3,230	)
Pipeline transportation throughput (BPD) (a)	849,015		964,380		(115,365		)
Average pipeline transportation revenue per barrel (b)	$	0.25	$	0.23	$	0.02
Terminaling:
Terminaling revenues	$	200,132	$	102,599	$	97,533
Terminaling throughput (BPD)	2,131,113		1,176,216		954,897
Average terminaling revenue per barrel (b)	$	0.34	$	0.32	$	0.02
Storage revenues	$	405	$	405	$	—
Total operating revenues – related party	$	258,471	$	164,168	$	94,303
Capital expenditures:
Maintenance	$	9,063	$	8,503	$	560
Expansion	6,848		22,245		(15,397		)
Total capital expenditures	15,911		30,748		(14,837		)
Less: Capital expenditures attributable to Predecessor	3,394		27,195		(23,801		)
Capital expenditures attributable to Partnership	$	12,517	$	3,553	$	8,964
Other financial information:
Distribution declared per unit	$	1.0900	$	0.8775
Distribution declared:
Limited partner units – public	$	23,510	$	15,145
Limited partner units – Valero	48,989		37,547
General partner units – Valero	14,196		3,194
Total distribution declared	$	86,695	$	55,886

____________________

(a) Represents the sum of volumes transported through each separately tariffed pipeline segment.

(b) Average revenue per barrel is calculated as revenue divided by throughput for the period. Throughput is derived by multiplying the throughput barrels per day (BPD) by the number of days in the period.

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Operating revenues increased$94.3 million, or 57 percent, for the first nine months of 2016 compared to the first nine months of 2015. The increase was due primarily to higher revenues of $99.1 million generated by our Houston, St. Charles, Corpus Christi, McKee, Meraux, and Three Rivers terminals. Prior to being acquired by us, the Houston and St. Charles Terminal Services Business, the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business did not charge Valero for services provided and, therefore, did not generate revenues. Effective with the acquisition dates, we entered into additional schedules to our commercial agreements with Valero with respect to the services we provide to Valero using the assets of the acquired businesses and began generating revenues with respect to these assets.

Operating expenses decreased$8.4 million, or 10 percent, for the first nine months of 2016 compared to the first nine months of 2015 due primarily to lower maintenance expense of $5.2 million at the Corpus Christi terminals related to inspection activity. Additionally, waste handling costs at the Corpus Christi and St. Charles terminals decreased $2.3 million in the first nine months of 2016.

General and administrative expenses increased$1.2 million, or 11 percent, for the first nine months of 2016 compared to the first nine months of 2015 due primarily to incremental costs of $714,000 related to the management fee charged to us by Valero related to our acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business, and an increase of $624,000 in costs related to being a separate publicly traded limited partnership. These increases were offset by lower transaction costs (legal and investment advisor fees) of $164,000 associated with the acquisition of businesses from Valero.

Depreciation expense decreased$50,000 in the first nine months of 2016 compared to the first nine months of 2015 due primarily to $2.8 million in accelerated depreciation related to the retirement of certain assets of the McKee Crude System in the third quarter of 2015, mostly offset by an increase in depreciation expense on assets placed into service in the latter part of 2015 and the beginning of 2016, including expansion and improvement projects at our Corpus Christi, St. Charles, and Meraux terminals.

“Interest and debt expense, net of capitalized interest” increased$6.2 million for the first nine months of 2016 compared to the first nine months of 2015 due primarily to interest expense incurred on borrowings under our revolving credit facility and under the subordinated credit agreement with Valero entered into in connection with the acquisitions. Interest expense on these incremental borrowings was approximately $5.2 million in the first nine months of 2016.

Our income tax expense (benefit) is associated with the Texas margin tax. During the first nine months of 2016, the relative amount of revenue we generate in Texas increased in connection with the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business. As a result, our income tax expense has increased.

During the first nine months of 2015, we reduced our deferred income tax liabilities due to a reduction in the relative amount of revenue we generate in Texas compared to our total revenue. This reduction was a result of the acquisition of the Houston and St. Charles Terminal Services Business (which includes operations in Louisiana). In addition, in June 2015, the Texas margin tax rate was reduced from 1 percent to 0.75 percent.

39

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

We expect our ongoing sources of liquidity to include cash generated from operations, borrowings under our revolving credit facility, and issuances of additional debt and equity securities. We may also enter into financing transactions with Valero in connection with acquisitions. We believe that cash generated from these sources will be sufficient to meet our short-term working capital requirements and long-term capital expenditure requirements and to make quarterly cash distributions.

On September 16, 2016, we filed a prospectus supplement to our shelf registration statement (which was declared effective on September 1, 2016) and entered into an equity distribution agreement pursuant to which we may offer and sell from time to time our common units having an aggregate offering price of up to $350.0 million based on amounts and terms agreed to by us and at prices determined “at the market” at the time of sale (our ATM Program). During September 2016, we issued 65,980 common units under our ATM Program and received proceeds of $2.8 million (net of $39,000 of compensation paid with respect to the sales of these units).

Concurrent with the issuance of common units under our ATM Program, we issued 1,346 general partner units to our general partner on September 30, 2016 for $58,000 in order to maintain its 2 percent general partner interest in the Partnership.

Distributions

On October 24, 2016, the board of directors of our general partner declared a distribution of $0.3850 per unit applicable to the third quarter of 2016, which equates to $32.2 million in total distributions to unitholders of record as of November 3, 2016. This quarterly distribution per unit is more than the minimum quarterly distribution of $0.2125 per unit.

Our distributions are declared subsequent to quarter end. The table below summarizes information related to our quarterly cash distributions that have been declared since January 1, 2015:

Quarterly Period Ended	Total Quarterly Distribution (Per Unit)		Total Cash Distribution (In Thousands)		Declaration Date	Record Date	Distribution Date
September 30, 2016	$	0.3850	$	32,175	October 24, 2016	November 3, 2016	November 10, 2016
June 30, 2016	0.3650		28,912		July 21, 2016	August 1, 2016	August 9, 2016
March 31, 2016	0.3400		25,608		April 21, 2016	May 2, 2016	May 10, 2016
December 31, 2015	0.3200		22,711		January 25, 2016	February 4, 2016	February 11, 2016
September 30, 2015	0.3075		20,164		October 15, 2015	November 2, 2015	November 10, 2015
June 30, 2015	0.2925		18,456		July 24, 2015	August 3, 2015	August 11, 2015
March 31, 2015	0.2775		17,266		April 21, 2015	May 1, 2015	May 12, 2015
December 31, 2014	0.2660		15,829		January 26, 2015	February 5, 2015	February 12, 2015

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The requirements under our partnership agreement for the conversion of all of our outstanding subordinated units into common units were satisfied upon the payment of our quarterly cash distribution on August 9, 2016. Therefore, effective August 10, 2016, all of our subordinated units, which were owned by Valero, were converted on a one-for-one basis into common units. The conversion of the subordinated units does not impact the amount of cash distributions paid or the total number of outstanding units.

Revolving Credit Facility

We have a $750.0 million senior unsecured revolving credit facility agreement (the Revolver) with a group of lenders that matures in November 2020. The Revolver includes a letter of credit sub-facility. In connection with the acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business, we borrowed $139.0 million and $210.0 million under the Revolver on April 1, 2016 and September 1, 2016, respectively.

As of September 30, 2016, we had $524.0 million of borrowings outstanding under the Revolver. See Note 6 of Condensed Notes to Consolidated Financial Statements for a description of the Revolver.

Subordinated Credit Agreements

During 2015, we entered into two subordinated credit agreements with Valero (the Loan Agreements) under which we borrowed $160.0 million and $395.0 million to finance a portion of the acquisitions of the Houston and St. Charles Terminal Services Business and the Corpus Christi Terminal Services Business, respectively.

As of September 30, 2016, we had $370.0 million outstanding under the Loan Agreements. See Note 6 of Condensed Notes to Consolidated Financial Statements for a description of the Loan Agreements.

Cash Flows Summary

Components of our cash flows are set forth below (in thousands):

	Nine Months Ended September 30,
	2016			2015 (a)
Cash flows provided by (used in):
Operating activities	$	162,212		$	64,517
Investing activities	(119,489		)	(326,787		)
Financing activities	(88,107		)	76,254
Net increase (decrease) in cash and cash equivalents	$	(45,384	)	$	(186,016	)
(a) Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business.

Operating Activities

Net cash provided by operating activities in the first nine months of 2016 was $162.2 million, which included net income of $129.0 million plus noncash adjustments (primarily for depreciation expense) of $35.4 million, partially offset by unfavorable changes in working capital of $2.2 million. See “RESULTS OF OPERATIONS” for further discussion of our operating results. The change in working capital was composed primarily of anincrease in receivables from related party of $8.2 million, partially offset by an increase in deferred revenue from related party of $3.7 million, as disclosed in Note 11 of Condensed Notes to

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Consolidated Financial Statements.The increase in receivables from related party was attributed primarily to billings related to our newly acquired McKee, Meraux, and Three Rivers terminals. The increase in deferred revenue from related party is associated with minimum volume commitments.

Net cash provided by operating activities in the first nine months of 2015 was $64.5 million, which included net income of $34.5 million plus noncash adjustments (primarily for depreciation expense) of $34.8 million, partially offset by unfavorable changes in working capital of $4.6 million. See “RESULTS OF OPERATIONS” for further discussion of our operating results. The change in working capital was composed primarily of an increase in receivables from related party of $6.4 million, partially offset by an increase in accounts payable of $1.0 million, as disclosed in Note 11 of Condensed Notes to Consolidated Financial Statements. The increase in receivables from related party was attributed primarily to an increase in billings related to the Houston and St. Charles Terminal Services Business, which had been recently acquired from Valero. The increase in accounts payable was due primarily to the timing of project expenditures.

Investing Activities

Cash used for investing activities in the first nine months of 2016 was $119.5 million, which was primarily impacted by the acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business on April 1, 2016 and September 1, 2016, respectively. In connection with the acquisitions, we paid $480.0 million in cash to Valero, and of this amount, $103.6 million represented Valero’s carrying value in the net assets transferred to us, which was reflected as an investing activity. The remaining cash paid of $376.4 million represented the excess purchase price paid over the carrying value and was reflected as a financing activity as described below.

Cash used for investing activities in the first nine months of 2015 was $326.8 million, which was primarily impacted by the acquisition of the Houston and St. Charles Terminal Services Business on March 1, 2015. In connection with the acquisition, we paid $571.2 million in cash to Valero, and of this amount, $296.1 million represented Valero’s carrying value in the net assets transferred to us, which was reflected as an investing activity. The remaining cash paid of $275.1 million represented the excess purchase price paid over the carrying value and was reflected as a financing activity as described below.

In addition, we and our Predecessor incurred capital expenditures of $15.9 million and $30.7 million for the first nine months of 2016 and 2015, respectively. See “Capital Expenditures” below for a discussion of the various maintenance and expansion projects.

Financing Activities

Cash used for financing activities in the first nine months of 2016 was $88.1 million, which consisted primarily of the $376.4 million of excess purchase price paid over the carrying value for the acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business as described above under “Investing Activities.” These cash outflows were offset by $349.0 million of borrowings under the Revolver in connection with these acquisitions and we reflected a net transfer from Valero of $14.9 million related to the cash flows associated with our Predecessor. In addition, we paid $77.2 million of cash distributions to limited partners and our general partner.

In the first nine months of 2015, our financing activities provided cash of $76.3 million, which consisted primarily of $200.0 million of borrowings under the Revolver and $160.0 million of proceeds from the loan agreement entered into in connection with the acquisition of the Houston and St. Charles Terminal Services Business. These cash inflows were offset by the $275.1 million of excess purchase price paid over the carrying value for the acquisition of the Houston and St. Charles Terminal Services Business as described above under

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“Investing Activities,” and we reflected a net transfer from Valero of $68.8 million related to the cash flows associated with our Predecessor. In addition, we paid $51.6 million of cash distributions to limited partners and our general partner.

See Notes 3 and 11 of Condensed Notes to Consolidated Financial Statements for additional information on the acquisitions discussed above, including consideration paid and the cash and noncash elements of the acquisitions.

Capital Expenditures

Our operations can be capital intensive, requiring investments to expand, upgrade, or enhance existing operations and to meet environmental and operational regulations. Our capital requirements consist of maintenance capital expenditures and expansion capital expenditures as those terms are defined in our partnership agreement. Examples of maintenance capital expenditures are those made to replace partially or fully depreciated assets, to maintain the existing operating capacity of our assets and to extend their useful lives, or other capital expenditures that are incurred in maintaining existing system volumes and related cash flows. In contrast, examples of expansion capital expenditures include those made to expand and upgrade our systems and facilities and to construct or acquire new systems or facilities to grow our business.

Our capital expenditures were as follows (in thousands):

	Nine Months Ended September 30,
	2016		2015 (a)
Maintenance	$	9,063	$	8,503
Expansion (b)	6,848		22,245
Total capital expenditures	$	15,911	$	30,748
(a) Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business.
(b) This table excludes amounts paid to Valero for the acquired businesses. See Note 3 of Condensed Notes to Consolidated Financial Statements for further discussion of our acquisitions.

Our capital expenditures in the first nine months of 2016 were primarily for:

• the construction of a connection to receive crude oil from the Seaway pipeline into our Lucas crude system;

• the improvement of assets at our Meraux, Three Rivers, St. Charles, and Houston terminals to extend the useful lives of the tanks; and

• the improvement of assets at our Lucas crude system for enhanced monitoring of pipeline shipments.

Our capital expenditures in the first nine months of 2015 were primarily for:

• the expansion and improvement of assets at our Corpus Christi, Meraux, St. Charles, and Houston terminals; and

• the construction of a connection to receive crude oil from the Seaway pipeline into our Lucas crude system.

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For the full year 2016, we expect our capital expenditures to be approximately $22.0 million. Our estimate consists of approximately $11.0 million for maintenance capital expenditures and approximately $11.0 million for expansion capital expenditures. We continuously evaluate our capital budget and make changes as conditions warrant. We anticipate that these capital expenditures will be funded from cash flows from operations. The foregoing capital expenditure estimate does not include any amounts related to strategic business acquisitions.

In addition to the above-mentioned capital expenditures, Valero funded $23.8 million of capital projects primarily related to the Houston, St. Charles, Corpus Christi, and Meraux terminals. Valero agreed to fund these projects in connection with the acquisitions from Valero. See Note 11 of Condensed Notes to Consolidated Financial Statements for further description of these noncash activities.

Contractual Obligations

As of September 30, 2016, our contractual obligations included debt and capital lease obligations, operating leases, purchase obligations, and other long-term liabilities. During the nine months ended September 30, 2016, we borrowed $139.0 million and $210.0 million under the Revolver in connection with the acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business, respectively. In addition, in connection with the acquisitions from Valero, we entered into lease and access agreements with Valero with respect to the land on which each terminal is located. See Notes 4 and 6 of Condensed Notes to Consolidated Financial Statements for a full description of the lease and access agreements and the Revolver. There were no material changes outside the ordinary course of business with respect to our contractual obligations during the nine months endedSeptember 30, 2016.

Regulatory Matters

Rate and Other Regulations

Our interstate common carrier crude oil and refined petroleum products pipeline operations are subject to rate regulation by the Federal Energy Regulatory Commission under the Interstate Commerce Act and Energy Policy Act. Our pipelines and terminal operations are also subject to safety regulations adopted by the Department of Transportation, as well as to state regulations. For more information on federal and state regulations affecting our business, please read our annual report on Form 10-K for the year ended December 31, 2015.

Environmental Matters and Compliance Costs

We are subject to extensive federal, state, and local environmental laws and regulations. These laws, which change frequently, regulate the discharge of materials into the environment or otherwise relate to protection of the environment. Compliance with these laws and regulations may require us to remediate environmental damage from any discharge of petroleum or chemical substances from our facilities or require us to install additional pollution control equipment on our equipment and facilities. Our failure to comply with these or any other environmental or safety-related regulations could result in the assessment of administrative, civil, or criminal penalties, the imposition of investigatory and remedial liabilities, and the issuance of injunctions that may subject us to additional operational constraints.

There were no significant changes to our environmental matters and compliance costs during the nine months endedSeptember 30, 2016.

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CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. As of September 30, 2016, there were no significant changes to our critical accounting estimates since the date our annual report on Form 10-K for the year ended December 31, 2015 was filed.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices. Because we do not take ownership of or receive any payments based on the value of the crude oil or refined petroleum products that we handle and do not engage in the trading of any commodities, we have no direct exposure to commodity price fluctuations.

Our commercial agreements with Valero are indexed to inflation to mitigate our exposure to increases in the cost of labor and materials used in our business.

Debt incurred under our Revolver and our Loan Agreement bears interest at a variable rate and exposes us to interest rate risk. Unless interest rates increase significantly in the future, our exposure to interest rate risk should be minimal. We had debt of $524.0 million and notes payable to related party totaling $370.0 million as of September 30, 2016.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15 (e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that our disclosure controls and procedures were effective as of September 30, 2016.

(b) Changes in internal control over financial reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 2015.

Item 6. Exhibits

Exhibit No.	Description
10.01	Contribution Agreement, dated September 1, 2016, by and between Valero Terminaling and Distribution Company and Valero Energy Partners LP—incorporated by reference to Exhibit 10.01 to the Partnership’s Current Report on Form 8-K dated and filed September 1, 2016 (SEC File No. 1-36232).
10.02	Amended and Restated Omnibus Agreement, dated July 1, 2014, by and among the various parties thereto—incorporated by reference to Exhibit 10.2 to the Partnership’s Current Report on Form 8-K dated and filed July 1, 2014 (SEC File No. 1-36232).
10.03	Amendment and Restatement of Schedules to Amended and Restated Omnibus Agreement, dated September 1, 2016, by and among the various parties thereto—incorporated by reference to Exhibit 10.03 to the Partnership’s Current Report on Form 8-K dated and filed September 1, 2016 (SEC File No. 1-36232).
10.04	Amended and Restated Services and Secondment Agreement, dated March 1, 2015, by and among Valero Services, Inc., Valero Refining Company-Tennessee, L.L.C., Valero Refining-Texas, L.P., and Valero Energy Partners GP LLC—incorporated by reference to Exhibit 10.04 to the Partnership’s Current Report on Form 8-K dated March 1, 2015, and filed March 5, 2015 (SEC File No. 1-36232).
10.05	Amendment and Restatement of Exhibits to Amended and Restated Services and Secondment Agreement, dated September 1, 2016, by and among Valero Services, Inc., Valero Refining Company-Tennessee, L.L.C., Valero Refining-Texas, L.P., and Valero Energy Partners GP LLC—incorporated by reference to Exhibit 10.05 to the Partnership’s Current Report on Form 8-K dated and filed September 1, 2016 (SEC File No. 1-36232).
10.06	Master Terminal Services Agreement, dated December 16, 2013, by and between Valero Partners Operating Co. LLC and Valero Marketing and Supply Company—incorporated by reference to Exhibit 10.7 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232).
10.07	Terminal Services Schedule (Meraux Terminal), dated September 1, 2016, by and between Valero Partners Operating Co. LLC and Valero Marketing and Supply Company—incorporated by reference to Exhibit 10.07 to the Partnership’s Current Report on Form 8-K dated and filed September 1, 2016 (SEC File No. 1-36232).

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10.08	Terminal Services Schedule (Three Rivers Terminal), dated September 1, 2016, by and between Valero Partners Operating Co. LLC and Valero Marketing and Supply Company—incorporated by reference to Exhibit 10.08 to the Partnership’s Current Report on Form 8-K dated and filed September 1, 2016 (SEC File No. 1-36232).
10.09	Lease and Access Agreement, dated September 1, 2016, between Valero Refining-Meraux LLC and Valero Partners Meraux, LLC—incorporated by reference to Exhibit 10.09 to the Partnership’s Current Report on Form 8-K dated and filed September 1, 2016 (SEC File No. 1-36232).
10.10	Lease and Access Agreement, dated September 1, 2016, between Diamond Shamrock Refining Company, L.P. and Valero Partners Three Rivers, LLC—incorporated by reference to Exhibit 10.10 to the Partnership’s Current Report on Form 8-K dated and filed September 1, 2016 (SEC File No. 1-36232).
10.11	Equity Distribution Agreement, dated September 16, 2016, by and among Valero Energy Partners LP, Valero Energy Partners GP LLC, Barclays Capital Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC—incorporated by reference to Exhibit 1.1 to the Partnership’s Current Report on Form 8-K dated and filed September 16, 2016 (SEC File No. 1-36232).
*31.01	Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer.
*31.02	Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer.
**32.01	Section 1350 Certifications (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
***101	Interactive Data Files

______________

* Filed herewith.

** Furnished herewith.

*** Submitted electronically herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VALERO ENERGY PARTNERS LP
(Registrant)
By:	Valero Energy Partners GP LLC
	its general partner
By:	/s/ Donna M. Titzman
	Donna M. Titzman
	Senior Vice President,
	Chief Financial Officer and Treasurer
	(Duly Authorized Officer and Principal
	Financial and Accounting Officer)

Date: November 8, 2016

48

EX-31.01

Exhibit 31.01

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph W. Gorder, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Valero Energy 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.

Date: November 8, 2016

/s/ Joseph W. Gorder

Joseph W. Gorder

Chief Executive Officer, Valero Energy Partners GP LLC

(the general partner of Valero Energy Partners LP)

EX-31.02

Exhibit 31.02

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Donna M. Titzman, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Valero Energy 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.

Date: November 8, 2016

/s/ Donna M. Titzman

Donna M. Titzman

Senior Vice President, Chief Financial Officer and Treasurer, Valero Energy Partners GP LLC

(the general partner of Valero Energy Partners LP)

EX-32.01

Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Valero Energy Partners LP (the Company) on Form 10-Q for the quarter ended September 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Joseph W. Gorder

Joseph W. Gorder

Chief Executive Officer

Valero Energy Partners GP LLC

(the general partner of Valero Energy Partners LP)

November 8, 2016

A signed original of the written statement required by Section 906 has been provided to Valero Energy Partners LP and will be retained by Valero Energy Partners LP and furnished to the Securities and Exchange Commission or its staff upon request.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Valero Energy Partners LP (the Company) on Form 10-Q for the quarter ended September 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Donna M. Titzman

Donna M. Titzman

Senior Vice President, Chief Financial Officer and Treasurer

Valero Energy Partners GP LLC

(the general partner of Valero Energy Partners LP)

November 8, 2016

A signed original of the written statement required by Section 906 has been provided to Valero Energy Partners LP and will be retained by Valero Energy Partners LP and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 03, 2016
Entity Information
Entity Registrant Name	VALERO ENERGY PARTNERS LP
Entity Central Index Key	0001583103
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Common Unitholders Public [Member]
Entity Information
Entity Common Stock, Units Outstanding		67,354,766
General Partner Valero [Member]
Entity Information
Entity Common Stock, Units Outstanding		1,374,268

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Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	[1]
Current assets:
Cash and cash equivalents	$ 35,399	$ 80,783
Receivables from related party	26,314	18,088
Receivables	3,416	0
Prepaid expenses and other	409	632
Total current assets	65,538	99,503
Property and equipment, at cost	1,198,363	1,176,843	[2]
Accumulated depreciation	(344,541)	(325,562)	[2]
Property and equipment, net	853,822	851,281	[2]
Deferred charges and other assets, net	2,957	3,322
Total assets	922,317	954,106
Current liabilities:
Current portion of capital lease obligations	45	913
Accounts payable	7,454	9,264
Accrued liabilities	1,415	1,062
Accrued liabilities – related party	633	628
Taxes other than income taxes	2,276	1,276
Deferred revenue from related party	3,804	129
Total current liabilities	15,627	13,272
Debt and capital lease obligations, net of current portion	524,012	175,246
Notes payable to related party	370,000	370,000
Deferred income taxes	431	320
Other long-term liabilities	1,156	1,116
Commitments and contingencies
Partners’ capital:
Total partners’ capital	11,091	394,152
Total liabilities and partners’ capital	922,317	954,106
Limited Partner [Member] | Common Unitholders Public [Member]
Partners’ capital:
Limited partners	534,688	581,489
Total partners’ capital	534,688	581,489
Limited Partner [Member] | Common Unitholder Valero [Member]
Partners’ capital:
Limited partners	(512,104)	28,430
Total partners’ capital	(512,104)	28,430
Limited Partner [Member] | Subordinated Unitholder Valero [Member]
Partners’ capital:
Limited partners	0	(313,961)
Total partners’ capital	0	(313,961)
General Partner Valero [Member]
Partners’ capital:
General partner – Valero	(11,493)	(5,805)
Total partners’ capital	(11,493)	(5,805)
Net Investment [Member]
Partners’ capital:
Net investment	0	103,999
Total partners’ capital	$ 0	$ 103,999

[1] Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

[2] Financial information has been retrospectively adjusted for the acquisitions of the Meraux and Three Rivers Terminal Services.

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Consolidated Balance Sheets (Parenthetical) - shares	Sep. 30, 2016	Dec. 31, 2015
Limited Partner [Member] | Common Unitholders Public [Member]
Partners’ capital:
Limited partner, units outstanding	21,581,589	21,509,651
Limited Partner [Member] | Common Unitholder Valero [Member]
Partners’ capital:
Limited partner, units outstanding	45,687,271	15,018,602
Limited Partner [Member] | Subordinated Unitholder Valero [Member]
Partners’ capital:
Limited partner, units outstanding	0	28,789,989
General Partner Valero [Member]
Partners’ capital:
General partner – Valero, units outstanding	1,372,515	1,332,829

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Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended			9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015		Sep. 30, 2016	Sep. 30, 2015
Operating revenues – related party		$ 92,040	$ 62,037	[1]	$ 258,471	$ 164,168	[1]
Costs and expenses:
Operating expenses (b)	[2]	24,089	27,482	[1]	72,461	80,812	[1]
General and administrative expenses (c)	[3]	4,094	3,731	[1]	12,174	11,000	[1]
Depreciation expense		11,319	13,760	[1]	34,652	34,702	[1]
Total costs and expenses		39,502	44,973	[1]	119,287	126,514	[1]
Operating income		52,538	17,064	[1]	139,184	37,654	[1]
Other income, net		76	29	[1]	210	166	[1]
Interest and debt expense, net of capitalized interest (d)	[4]	(3,672)	(1,353)	[1]	(9,582)	(3,365)	[1]
Income before income taxes		48,942	15,740	[1]	129,812	34,455	[1]
Income tax expense (benefit)		235	115	[1]	780	(62)	[1]
Net income		48,707	15,625	[1]	129,032	34,517	[1]
Less: Net loss attributable to Predecessor		(3,002)	(15,803)	[1]	(15,422)	(52,694)	[1]
Net income attributable to partners		51,709	31,428		144,454	87,211
Less: General partner’s interest in net income		6,634	1,612		15,351	3,821
Limited partners’ interest in net income		$ 45,075	$ 29,816		$ 129,103	$ 83,390
Net income per limited partner unit – basic and diluted:
Common units		$ 0.77	$ 0.51		$ 2.08	$ 1.43
Subordinated units		$ 0.29	$ 0.49		$ 1.73	$ 1.40
Weighted-average limited partner units outstanding:
Common units – basic and diluted		53,899	30,698		42,597	30,279
Subordinated units – basic and diluted		12,517	28,790		23,326	28,790
Cash distribution declared per unit		$ 0.3850	$ 0.3075		$ 1.0900	$ 0.8775

[1] Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

[2] Includes operating expenses – related party of $12,986 thousand and $12,278 thousand for the three months ended September 30, 2016 and 2015, respectively, and $38,521 thousand and $36,368 thousand for the nine months ended September 30, 2016 and 2015, respectively.

[3] Includes general and administrative expenses – related party of $3,156 thousand and $2,935 thousand for the three months ended September 30, 2016 and 2015, respectively, and $9,353 thousand and $8,639 thousand for the nine months ended September 30, 2016 and 2015, respectively.

[4] Includes interest and debt expense – related party of $1,649 thousand and $589 thousand for the three months ended September 30, 2016 and 2015, respectively, and $4,799 thousand and $1,357 thousand for the nine months ended September 30, 2016 and 2015, respectively.

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Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Supplemental information:
(b) Operating expenses – related party	$ 12,986	$ 12,278	$ 38,521	$ 36,368
(c) General and administrative expenses – related party	3,156	2,935	9,353	8,639
(d) Interest and debt expense – related party	$ 1,649	$ 589	$ 4,799	$ 1,357

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Consolidated Statements of Partners' Capital (Unaudited) - USD ($) $ in Thousands		Total	Limited Partner [Member] Common Unitholders Public [Member]	Limited Partner [Member] Common Unitholder Valero [Member]	Limited Partner [Member] Subordinated Unitholder Valero [Member]	General Partner Valero [Member]	Net Investment [Member]
Beginning balance at Dec. 31, 2014	[1]	$ 1,069,594	$ 374,954	$ 58,844	$ 146,804	$ 4,617	$ 484,375
Increase (Decrease) in Partners' Capital Roll Forward
Net loss attributable to Predecessor	[2]	(52,694)	0	0	0	0	(52,694)
Net income attributable to partners		87,211	24,348	18,406	40,636	3,821	0
Net transfers from Valero Energy Corporation	[2]	61,491	0	0	0	0	61,491
Allocation of Valero Energy Corporation’s net investment in acquisitions		0	0	82,330	205,396	8,383	(296,109)
Consideration paid to Valero Energy Corporation for acquisitions		(671,220)	0	(186,625)	(465,592)	(19,003)	0
Units issued to Valero Energy Corporation in connection with acquisitions		100,000	0	98,000	0	2,000	0
Noncash capital contributions from Valero Energy Corporation		14,518	0	4,493	9,620	405	0
Cash distributions to unitholders		(51,542)	(14,420)	(10,736)	(24,068)	(2,318)	0
Distribution equivalent right payments		(9)	(9)	0	0	0	0
Unit-based compensation		103	103	0	0	0	0
Ending balance at Sep. 30, 2015	[2]	557,452	384,976	64,712	(87,204)	(2,095)	197,063
Beginning balance at Dec. 31, 2015	[1]	394,152	581,489	28,430	(313,961)	(5,805)	103,999
Increase (Decrease) in Partners' Capital Roll Forward
Net loss attributable to Predecessor		(15,422)	0	0	0	0	(15,422)
Net income attributable to partners		144,454	42,096	41,685	45,322	15,351	0
Net transfers from Valero Energy Corporation		15,030	0	0	0	0	15,030
Allocation of Valero Energy Corporation’s net investment in acquisitions		0	0	67,800	32,758	3,049	(103,607)
Consideration paid to Valero Energy Corporation for acquisitions		(565,000)	0	(397,859)	(153,067)	(14,074)	0
Units issued to Valero Energy Corporation in connection with acquisitions		85,000	0	83,300	0	1,700	0
Conversion of subordinated units		0	0	(406,374)	406,374	0	0
Units issued in public offering		6,154	6,096	0	0	58	0
Transfers to (from) partners		0	(73,075)	75,765	0	(2,690)	0
Noncash capital contributions from Valero Energy Corporation		23,820	0	11,057	12,084	679	0
Cash distributions to unitholders		(77,217)	(22,038)	(15,908)	(29,510)	(9,761)	0
Distribution equivalent right payments		(14)	(14)	0	0	0	0
Unit-based compensation		134	134	0	0	0	0
Ending balance at Sep. 30, 2016		$ 11,091	$ 534,688	$ (512,104)	$ 0	$ (11,493)	$ 0

[1] Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

[2] Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016		Sep. 30, 2015	[1]
Cash flows from operating activities:
Net income	$ 129,032		$ 34,517
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	34,652		34,702
Deferred income tax expense (benefit)	301		(400)
Changes in current assets and current liabilities	(2,179)		(4,643)
Changes in deferred charges and credits and other operating activities, net	406		341
Net cash provided by operating activities	162,212		64,517
Cash flows from investing activities:
Capital expenditures	(15,911)		(30,748)
Acquisitions from Valero Energy Corporation	(103,607)		(296,109)
Other investing activities, net	29		70
Net cash used in investing activities	(119,489)		(326,787)
Cash flows from financing activities:
Proceeds from debt borrowings	349,000		200,000
Repayment of debt and capital lease obligations	(868)		(25,884)
Proceeds from note payable to related party	0		160,000
Proceeds from issuance of common units	2,814		0
Proceeds from issuance of general partner units	58		0
Payment of offering costs	(373)		0
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets	(376,393)		(275,111)
Cash distributions to unitholders and distribution equivalent right payments	(77,231)		(51,551)
Net transfers from Valero Energy Corporation	14,886		68,800
Net cash provided by (used in) financing activities	(88,107)		76,254
Net decrease in cash and cash equivalents	(45,384)		(186,016)
Cash and cash equivalents at beginning of period	80,783	[2]	236,579
Cash and cash equivalents at end of period	$ 35,399		$ 50,563

[1] Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

[2] Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

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Business and Basis of Presentation

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BUSINESS AND BASIS OF PRESENTATION

1. BUSINESS AND BASIS OF PRESENTATION

Business

Valero Energy Partners LP (the Partnership) is a fee-based, master limited partnership formed by Valero (defined below) in July 2013 to own, operate, develop, and acquire crude oil and refined petroleum products pipelines, terminals, and other transportation and logistics assets.

References in this report to “Partnership,” “we,” “us,” or “our” refer to Valero Energy Partners LP, one or more of its subsidiaries, or all of them taken as a whole. References in this report to “Valero” refer collectively to Valero Energy Corporation and its subsidiaries, other than Valero Energy Partners LP, any of its subsidiaries, or its general partner.

We acquired from Valero the Houston and St. Charles Terminal Services Business on March 1, 2015, the Corpus Christi Terminal Services Business on October 1, 2015, the McKee Terminal Services Business on April 1, 2016, and the Meraux and Three Rivers Terminal Services Business on September 1, 2016. See Note 3 for further discussion of these acquisitions from Valero.

Our assets consist of crude oil and refined petroleum products pipeline and terminal systems in the United States (U.S.) Gulf Coast and U.S. Mid-Continent regions that are integral to the operations of ten of Valero’s refineries.

We generate operating revenues by providing fee-based transportation and terminaling services to Valero.

Basis of Presentation

Our consolidated financial statements include the accounts of the Partnership as well as our Predecessor (defined below). All intercompany accounts and transactions have been eliminated.

The acquisitions from Valero were accounted for as transfers of businesses between entities under the common control of Valero. As entities under the common control of Valero, we recorded these acquisitions on our balance sheet at Valero’s carrying value rather than fair value. Transfers between entities under common control are accounted for as though the transfer occurred as of the beginning of the period of transfer, and prior period financial statements and financial information are retrospectively adjusted to furnish comparative information. Accordingly, the Partnership’s financial statements and related notes have been retrospectively adjusted to include the historical results of the acquisitions from Valero for all periods presented prior to the effective dates of each acquisition. We refer to the historical results of the acquisitions from Valero prior to their respective acquisition dates as those of our “Predecessor.”

The combined financial statements of our Predecessor were derived from the consolidated financial statements and accounting records of Valero and reflect the combined historical financial position, results of operations, and cash flows of our Predecessor as if the acquisitions from Valero had been combined for periods prior to the effective dates of each acquisition.

There were no transactions between the operations of our Predecessor; therefore, there were no intercompany transactions or accounts to be eliminated in connection with the combination of those operations. In addition, our Predecessor’s statements of income include direct charges for the management and operation of our assets and certain expenses allocated by Valero for general corporate services, such as treasury, accounting, and legal services. These expenses were charged, or allocated, to our Predecessor based on the nature of the expenses. Prior to the acquisitions from Valero, our Predecessor transferred cash to Valero daily and Valero funded our Predecessor’s operating and investing activities as needed. Therefore, transfers of cash to and from Valero’s cash management system are reflected as a component of net investment and are reflected as a financing activity in our statements of cash flows. In addition, interest expense was not included on the net cash transfers from Valero.

The financial information presented for the periods after the effective dates of the acquisitions from Valero represents the consolidated financial position, results of operations, and cash flows of the Partnership.

These unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Financial information for the three and nine months ended September 30, 2016 and 2015 included in these Condensed Notes to Consolidated Financial Statements is derived from our unaudited financial statements. Operating results for the three and nine months endedSeptember 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These unaudited financial statements and notes thereto should be read in conjunction with the audited financial statements of the Partnership included in our Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on August 4, 2016, which reflect retrospective adjustments to the Partnership’s 2015 Form 10-K filed with the SEC on February 26, 2016 for the historical results of operations and financial position of the McKee Terminal Services Business.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Accounting Pronouncements Adopted During the Period

In April 2015, the provisions of Accounting Standards Codification (ASC) Subtopic 835-30, “Interest–Imputation of Interest,” were amended to simplify the presentation of debt issuance costs. The guidance requires that debt issuance costs related to a note be reported in the balance sheet as a direct deduction from the face amount of that note, consistent with debt discounts, and that amortization of debt issuance costs be reported as interest expense. In August 2015, these provisions were further amended with guidance from the SEC staff, which provides that the staff would not object to an entity deferring and presenting debt issuance costs related to a line-of-credit arrangement as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. These provisions were effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods. The adoption of this guidance effective January 1, 2016 did not affect our financial position or results of operations as our debt issuance costs are associated with our revolving credit facility and therefore were not required to be reclassified.

Also in April 2015, the provisions of ASC Topic 260, “Earnings Per Share,” were amended to provide guidance on how master limited partnerships apply the two-class method of calculating earnings per unit for historical periods when they receive net assets in a dropdown transaction that is accounted for as a transaction between entities under common control as required under Subtopic 805-50, “Business Combinations–Related Issues.” The amendments specify that for purposes of calculating earnings per unit under the two-class method for periods before the date of a dropdown transaction, earnings or losses of a transferred business should be allocated entirely to the general partner. Qualitative disclosures are also required to describe how the rights to earnings or losses differ before and after the dropdown transaction for purposes of computing earnings per unit under the two-class method. These provisions were effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods. We have historically calculated our net income per unit after a dropdown transaction as prescribed by these provisions; therefore, the adoption of this guidance effective January 1, 2016 did not affect our financial position or results of operations, but resulted in additional disclosures as shown in Note 9.

In November 2015, the provisions of ASC Topic 740, “Income Taxes,” were amended to simplify the presentation of deferred income taxes. The amendments require that deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. The amendments are effective for financial statements for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted as of the beginning of any interim or annual period. Effective January 1, 2016, we adopted this guidance on a retrospective basis, but such adoption did not affect our financial position as we had no current deferred tax amounts to reclassify.

Accounting Pronouncements Not Yet Adopted

In May 2014, the ASC was amended and a new accounting standard, ASC Topic 606, “Revenue from Contracts with Customers,” was issued to clarify the principles for recognizing revenue. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual periods. We have been evaluating and continue to evaluate the provisions of this standard and its impact on our business processes, business and accounting systems, and financial statements and related disclosures. A multi-disciplined implementation team has gained an understanding of the standard’s revenue recognition model, is completing the review and documentation of our commercial agreements with Valero, and is analyzing whether enhancements are needed to our business and accounting systems.

In January 2016, the provisions of ASC Subtopic 825-10, “Financial Instruments–Overall,” were amended to enhance the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. These provisions are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. We are currently evaluating the effect that adopting this standard will have on our financial statements and related disclosures.

In February 2016, the ASC was amended and a new accounting standard, ASC Topic 842, “Leases,” was issued to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new standard is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within those annual periods, with early adoption permitted. We have been evaluating and continue to evaluate the provisions of this standard and its impact on our business processes, business and accounting systems, and financial statements and related disclosures. A multi-disciplined implementation team has gained an understanding of the accounting and disclosure provisions of the standard and is in the process of analyzing the impacts to our business and accounting systems, including the development of new accounting systems to account for our leases and support the required disclosures.

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Acquisitions

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

ACQUISITIONS

3. ACQUISITIONS

Acquisitions in 2015

Houston and St. Charles Terminal Services Business

Effective March 1, 2015, we acquired two subsidiaries from Valero that own and operate crude oil, intermediates, and refined petroleum products terminals supporting Valero’s Houston Refinery (in Houston, Texas) and St. Charles Refinery (in Norco, Louisiana) for total consideration of $671.2 million, which consisted of (i) a cash distribution to Valero of $571.2 million and (ii) the issuance of 1,908,100 common units and 38,941 general partner units having an aggregate value of $100.0 million. We funded the cash distribution with $211.2 million of our cash on hand, $200.0 million of borrowings under our revolving credit facility, and $160.0 million of proceeds from a subordinated credit agreement we entered into with Valero. See Note 6 for further discussion of the borrowings under our revolving credit facility and this subordinated credit agreement.

Corpus Christi Terminal Services Business

Effective October 1, 2015, we acquired Valero’s Corpus Christi East Terminal and Corpus Christi West Terminal (collectively, the Corpus Christi Terminal Services Business) for total consideration of $465.0 million, which consisted of (i) a cash distribution to Valero of $395.0 million and (ii) the issuance of 1,570,513 common units and 32,051 general partner units having an aggregate value of $70.0 million. We funded the cash distribution with $395.0 million of proceeds from a subordinated credit agreement with Valero. The Corpus Christi Terminal Services Business is engaged in the business of terminaling crude oil, intermediates, and refined petroleum products at terminals in Corpus Christi, Texas and supports Valero’s Corpus Christi East and West Refineries. See Note 6 for further discussion of the borrowings under this subordinated credit agreement.

Acquisitions in 2016

McKee Terminal Services Business

Effective April 1, 2016, we acquired a subsidiary from Valero that owns and operates a crude oil, intermediates, and refined petroleum products terminal that supports Valero’s McKee Refinery (in Sunray, Texas) for total consideration of $240.0 million, which consisted of (i) a cash distribution to Valero of $204.0 million and (ii) the issuance of 728,775 common units and 14,873 general partner units having an aggregate value of $36.0 million. We funded the cash distribution with $65.0 million of our cash on hand and $139.0 million of borrowings under our revolving credit facility. See Note 6 for further discussion of the borrowings under our revolving credit facility.

Meraux and Three Rivers Terminal Services Business

Effective September 1, 2016, we acquired Valero’s Meraux Terminal and Three Rivers Terminal (collectively, the Meraux and Three Rivers Terminal Services Business) for total consideration of $325.0 million which consisted of (i) a cash distribution to Valero of $276.0 million and (ii) the issuance of 1,149,905 common units and 23,467 general partner units having an aggregate value of $49.0 million. We funded the cash distribution with $66.0 million of our cash on hand and $210.0 million of borrowings under our revolving credit facility. See Note 6 for further discussion of the borrowings under our revolving credit facility.

Presentation of Reported Financial Information

The following table presents our previously reported balance sheet as of December 31, 2015 (as presented in our Current Report on Form 8-K filed with the SEC on August 4, 2016 described in Note 1) retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business (in thousands).

	Valero Energy Partners LP (Previously Reported)			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
ASSETS
Current assets:
Cash and cash equivalents	$	80,783		$	—		$	80,783
Receivables from related party	18,088			—			18,088
Prepaid expenses and other	632			—			632
Total current assets	99,503			—			99,503
Property and equipment, at cost	1,110,399			66,444			1,176,843
Accumulated depreciation	(310,558		)	(15,004		)	(325,562		)
Property and equipment, net	799,841			51,440			851,281
Deferred charges and other assets, net	3,322			—			3,322
Total assets	$	902,666		$	51,440		$	954,106
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Current portion of capital lease obligations	$	913		$	—		$	913
Accounts payable	9,264			—			9,264
Accrued liabilities	1,062			—			1,062
Accrued liabilities – related party	628			—			628
Taxes other than income taxes	1,276			—			1,276
Deferred revenue from related party	129			—			129
Total current liabilities	13,272			—			13,272
Debt and capital lease obligations, net of current portion	175,246			—			175,246
Notes payable to related party	370,000			—			370,000
Deferred income taxes	320			—			320
Other long-term liabilities	1,116			—			1,116
Partners’ capital:
Common unitholders – public	581,489			—			581,489
Common unitholder – Valero	28,430			—			28,430
Subordinated unitholder – Valero	(313,961		)	—			(313,961		)
General partner – Valero	(5,805		)	—			(5,805		)
Net investment	52,559			51,440			103,999
Total partners’ capital	342,712			51,440			394,152
Total liabilities and partners’ capital	$	902,666		$	51,440		$	954,106

The following tables present our previously reported statements of income for the three and nine months ended September 30, 2015 (as presented in our Quarterly Report on Form 10-Q filed with the SEC on November 3, 2015) retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business (in thousands).

	Three Months Ended September 30, 2015
	Valero Energy Partners LP (Previously Reported)			Corpus Christi Terminal Services Business			McKee Terminal Services Business			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Operating revenues – related party	$	62,037		$	—		$	—		$	—		$	62,037
Costs and expenses:
Operating expenses	15,042			6,198			2,405			3,837			27,482
General and administrative expenses	3,444			91			66			130			3,731
Depreciation expense	10,684			1,279			1,125			672			13,760
Total costs and expenses	29,170			7,568			3,596			4,639			44,973
Operating income (loss)	32,867			(7,568		)	(3,596		)	(4,639		)	17,064
Other income, net	29			—			—			—			29
Interest and debt expense, net of capitalized interest	(1,353		)	—			—			—			(1,353		)
Income (loss) before income taxes	31,543			(7,568		)	(3,596		)	(4,639		)	15,740
Income tax expense	115			—			—			—			115
Net income (loss)	31,428			(7,568		)	(3,596		)	(4,639		)	15,625
Less: Net loss attributable to Predecessor	—			(7,568		)	(3,596		)	(4,639		)	(15,803		)
Net income attributable to partners	$	31,428		$	—		$	—		$	—		$	31,428

	Nine Months Ended September 30, 2015
	Valero Energy Partners LP (Previously Reported)			Corpus Christi Terminal Services Business			McKee Terminal Services Business			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Operating revenues – related party	$	164,168		$	—		$	—		$	—		$	164,168
Costs and expenses:
Operating expenses	47,280			17,089			5,763			10,680			80,812
General and administrative expenses	10,169			267			189			375			11,000
Depreciation expense	25,887			3,165			3,379			2,271			34,702
Total costs and expenses	83,336			20,521			9,331			13,326			126,514
Operating income (loss)	80,832			(20,521		)	(9,331		)	(13,326		)	37,654
Other income, net	166			—			—			—			166
Interest and debt expense, net of capitalized interest	(3,365		)	—			—			—			(3,365		)
Income (loss) before income taxes	77,633			(20,521		)	(9,331		)	(13,326		)	34,455
Income tax benefit	(62		)	—			—			—			(62		)
Net income (loss)	77,695			(20,521		)	(9,331		)	(13,326		)	34,517
Less: Net loss attributable to Predecessor	(9,516		)	(20,521		)	(9,331		)	(13,326		)	(52,694		)
Net income attributable to partners	$	87,211		$	—		$	—		$	—		$	87,211

The following table presents our previously reported statement of cash flows for the nine months ended September 30, 2015 (as presented in our Quarterly Report on Form 10-Q filed with the SEC on November 3, 2015) retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business (in thousands).

	Nine Months Ended September 30, 2015
	Valero Energy Partners LP (Previously Reported)			Corpus Christi Terminal  Services  Business			McKee Terminal Services Business			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Cash flows from operating activities:
Net income (loss)	$	77,695		$	(20,521	)	$	(9,331	)	$	(13,326	)	$	34,517
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense	25,887			3,165			3,379			2,271			34,702
Deferred income tax benefit	(400		)	—			—			—			(400		)
Changes in current assets and current liabilities	(4,643		)	—			—			—			(4,643		)
Changes in deferred charges and credits and other operating activities, net	341			—			—			—			341
Net cash provided by (used in) operating activities	98,880			(17,356		)	(5,952		)	(11,055		)	64,517
Cash flows from investing activities:
Capital expenditures	(7,246		)	(18,799		)	(217		)	(4,486		)	(30,748		)
Acquisition of the Houston and St. Charles Terminal Services Business from Valero Energy Corporation	(296,109		)	—			—			—			(296,109		)
Other investing activities, net	70			—			—			—			70
Net cash used in investing activities	(303,285		)	(18,799		)	(217		)	(4,486		)	(326,787		)
Cash flows from financing activities:
Proceeds from debt borrowings	200,000			—			—			—			200,000
Repayment of debt and capital lease obligations	(25,884		)	—			—			—			(25,884		)
Proceeds from note payable to related party	160,000			—			—			—			160,000
Excess purchase price paid to Valero Energy Corporation over the carrying value of the Houston and St. Charles Terminal Services Business	(275,111		)	—			—			—			(275,111		)
Cash distributions to unitholders and distribution equivalent right payments	(51,551		)	—			—			—			(51,551		)
Net transfers from Valero Energy Corporation	10,935			36,155			6,169			15,541			68,800
Net cash provided by financing activities	18,389			36,155			6,169			15,541			76,254
Net decrease in cash and cash equivalents	(186,016		)	—			—			—			(186,016		)
Cash and cash equivalents at beginning of period	236,579			—			—			—			236,579
Cash and cash equivalents at end of period	$	50,563		$	—		$	—		$	—		$	50,563

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Related-Party Transactions

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

RELATED-PARTY TRANSACTIONS

4. RELATED-PARTY TRANSACTIONS

Agreements Effective with the Acquisitions in 2016

The following agreements became effective with our acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business, coinciding with the effective dates of each acquisition.

Commercial Agreements

We entered into additional schedules under our existing master terminal services agreement with respect to the McKee, Meraux, and Three Rivers terminals. The McKee terminal schedule has an initial term through April 1, 2026 and the Meraux and Three Rivers terminal schedules have initial terms through September 1, 2026. Each schedule provides Valero an option to renew for one additional five-year term and contains minimum throughput requirements and inflation escalators.

Amended and Restated Omnibus Agreement

We entered into amended and restated schedules to our amended and restated omnibus agreement with Valero that include the following modifications, among others:

• the indemnification obligations of Valero and the Partnership were extended to apply to the McKee, Meraux, and Three Rivers terminals;

• the administrative fee was increased from $11.2 million to $11.7 million per year in connection with the acquisition of the McKee Terminal Services Business in April 2016. The fee was increased again in September 2016 to $12.5 million per year in connection with the acquisition of the Meraux and Three Rivers Terminal Services Business. Each increase in 2016 will be prorated based on the number of days from the effective dates of each acquisition to December 31, 2016; and

• the grant to Valero of a right of first refusal with respect to the McKee, Meraux, and Three Rivers terminals.

Amended and Restated Services and Secondment Agreement

Our general partner entered into amended and restated exhibits to the amended and restated services and secondment agreement with Valero to provide for the additional secondment of employees to our general partner for the provision of services with respect to the McKee, Meraux, and Three Rivers terminals.

Lease and Access Agreements

We entered into a lease and access agreement with Valero with respect to the land on which the McKee terminal is located. This agreement has an initial term through April 1, 2026 with four automatic successive renewal periods of five years each. Either party may terminate the lease after the initial term by providing written notice. Initially, our base rent is $594,000 per year and is subject to an annual inflation escalator. We are also required to pay Valero a customary expense reimbursement for taxes, utilities, and similar costs incurred by Valero related to the leased premises.

We entered into two lease and access agreements with Valero with respect to the land on which the Meraux and Three Rivers terminals are located. Each agreement has an initial term through September 1, 2026 with four automatic successive renewal periods of five years each. Either party may terminate each agreement after the initial term by providing written notice. Initially, our base rent under the Meraux and Three Rivers terminal agreements totals $971,000 per year and each agreement is subject to annual inflation escalators. We are also required to pay Valero a customary expense reimbursement for taxes, utilities, and similar costs incurred by Valero related to the leased premises.

Summary of Transactions

Receivables from related party consist of the following (in thousands):

	September 30, 2016			December 31, 2015
Trade receivables – related party	$	33,771		$	26,103
Due to related party	(7,457		)	(8,015		)
Receivables from related party	$	26,314		$	18,088

The amounts shown in our balance sheets as “deferred revenue from related party” represent the unearned revenues from Valero associated with Valero’s quarterly deficiency payment, which is the result of Valero not meeting its minimum quarterly throughput commitments under certain schedules of our master transportation services agreement and master terminal services agreement (collectively, the commercial agreements).

All of our operating revenues are generated by providing services to Valero under our commercial agreements with Valero. The cost of services provided to us by Valero, including the cost of financing provided to us by Valero in connection with certain acquisitions from Valero as more fully described in Notes 3 and 6, are reflected in the supplemental information disclosure on our statements of income.

Concentration Risk

All of our operating revenues were derived from transactions with Valero and all of the receivables from related party were due from Valero. Therefore, we are subject to the business risks associated with Valero’s business.

Leases

Certain schedules under our commercial agreements with Valero are considered operating leases under U.S. GAAP. These agreements contain minimum throughput requirements and escalation clauses to adjust transportation tariffs and terminaling and storage fees to reflect changes in price indices. Revenues from all of our commercial agreements with Valero that are considered operating leases are recorded within “operating revenues – related party” in our statements of income.

The amounts shown in our statements of income as “operating revenues – related party” included revenues from our current commercial agreements with Valero that are considered operating leases are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Minimum rental revenues	$	60,133	$	32,207	$	164,659	$	79,684
Contingent rental revenues	10,710		6,407		28,271		15,389
Total lease revenues	$	70,843	$	38,614	$	192,930	$	95,073

As of September 30, 2016, future minimum rentals to be received related to these noncancelable commercial agreements were as follows (in thousands):

Remainder of 2016	$	68,206
2017	270,603
2018	270,603
2019	270,603
2020	271,344
Thereafter	1,245,319
Total minimum rental payments	$	2,396,678

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Property and Equipment

9 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

5. PROPERTY AND EQUIPMENT

Major classes of property and equipment consisted of the following (in thousands):

	September 30, 2016
	Non-Leased Assets			Assets Under Operating Leases (a)			Total
Pipelines and related assets	$	227,495		$	46,964		$	274,459
Terminals and related assets	112,017			776,829			888,846
Other	9,488			—			9,488
Land	4,672			—			4,672
Construction-in-progress	20,898			—			20,898
Property and equipment, at cost	374,570			823,793			1,198,363
Accumulated depreciation	(116,029		)	(228,512		)	(344,541		)
Property and equipment, net	$	258,541		$	595,281		$	853,822

	December 31, 2015 (b)
	Non-Leased Assets			Assets Under Operating Leases (a)			Total
Pipelines and related assets	$	228,586		$	46,739		$	275,325
Terminals and related assets	276,263			580,194			856,457
Other	9,352			—			9,352
Land	4,672			—			4,672
Construction-in-progress	31,037			—			31,037
Property and equipment, at cost	549,910			626,933			1,176,843
Accumulated depreciation	(180,543		)	(145,019		)	(325,562		)
Property and equipment, net	$	369,367		$	481,914		$	851,281
(a) Represents assets owned by us for which we are the lessor (see Note 4). Certain assets acquired in the acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business that were initially classified as non-leased assets were reclassified to assets under operating leases subsequent to the acquisitions on April 1, 2016 and September 1, 2016, respectively, in connection with entering into schedules under our commercial agreements with Valero that are considered operating leases (see Note 4).
(b) Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business.

We have certain pipeline assets under capital lease agreements totaling $3.1 million and $14.9 million as of September 30, 2016 and December 31, 2015, respectively. Accumulated amortization on assets under capital leases was $3.1 million and $14.1 million as of September 30, 2016 and December 31, 2015, respectively. During 2016, certain pipeline assets under capital lease agreements were fully depreciated and were replaced with operating lease agreements.

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Debt

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

DEBT

6. DEBT

Revolving Credit Facility

We have a $750.0 million senior unsecured revolving credit facility agreement (the Revolver) that matures in November 2020. We have the option to increase the aggregate commitments under the Revolver to $1.0 billion, subject to certain restrictions. The Revolver also provides for the issuance of letters of credit of up to $100.0 million. Our obligations under the Revolver are jointly and severally guaranteed by our directly owned subsidiary, Valero Partners Operating Co. LLC. Borrowings on the Revolver bear interest at a variable rate, which was 1.81 percent as of September 30, 2016. Accrued interest is payable in arrears on each Interest Payment Date (as defined in the Revolver) and on the maturity date.

During the nine months ended September 30, 2016, we borrowed $139.0 million and $210.0 million under the Revolver in connection with the acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business, respectively. During the nine months ended September 30, 2015, we borrowed $200.0 million under the Revolver in connection with the acquisition of the Houston and St. Charles Terminal Services Business. See Note 3 for information about our acquisitions from Valero.

During the nine months ended September 30, 2016, we made no repayments under the Revolver. During the nine months ended September 30, 2015, we repaid $25.0 million under the Revolver. As of September 30, 2016, we had $524.0 million of borrowings outstanding and no letters of credit outstanding under the Revolver. As of December 31, 2015, we had $175.0 million of borrowings outstanding and no letters of credit outstanding under the Revolver.

Subordinated Credit Agreements

During 2015, we entered into two subordinated credit agreements with Valero (the Loan Agreements), under which we borrowed $160.0 million and $395.0 million (collectively, the loans) to finance a portion of the acquisitions of the Houston and St. Charles Terminal Services Business and the Corpus Christi Terminal Services Business, respectively, as described in Note 3. The loans mature on March 1 and October 1, 2020, respectively, and may be prepaid at any time without penalty. We are not permitted to reborrow amounts. The loans bear interest at the LIBO Rate (as defined in the Loan Agreements) plus the applicable margin. Accrued interest is payable in arrears on each Interest Payment Date (as defined in the Loan Agreements) and on each maturity date. As of September 30, 2016, the interest rate on each of the loans was 1.77 percent.

During the nine months ended September 30, 2016 and 2015, we made no repayments under the loans. As of September 30, 2016 and December 31, 2015, we had $370.0 million outstanding under the Loan Agreements.

Capitalized Interest

Capitalized interest was $13,000 and $6,000 for the three months ended September 30, 2016 and 2015, respectively, and $48,000 and $12,000 for the nine months endedSeptember 30, 2016 and 2015, respectively.

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Operating Leases

9 Months Ended

Sep. 30, 2016

Leases, Operating [Abstract]

OPERATING LEASES

7. OPERATING LEASES

We have long-term operating lease commitments primarily with Valero for land used in the terminaling and transportation of crude oil and refined petroleum products. Certain leases contain escalation clauses and renewal options that allow for the same rental payment over the lease term or a revised rental payment based on fair rental value or negotiated value. Currently, one of our land leases with Valero does not contain a renewal option. We expect that, in the normal course of business, our leases will be renewed or replaced by other leases.

As of September 30, 2016, our future minimum rentals for leases having initial or remaining noncancelable lease terms in excess of one year were as follows (in thousands):

Remainder of 2016	$	2,798
2017	10,533
2018	10,490
2019	10,490
2020	10,490
Thereafter	62,988
Total minimum rental payments	$	107,789

Rental expense for all operating leases was $2.5 million and $1.9 million for the three months ended September 30, 2016 and 2015, respectively, and $7.1 million and $4.7 million for the nine months ended September 30, 2016 and 2015, respectively. Rental expense for the three and nine months ended September 30, 2015 has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business.

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Cash Distributions

9 Months Ended

Sep. 30, 2016

Partners' Capital [Abstract]

CASH DISTRIBUTIONS

8. CASH DISTRIBUTIONS

Our partnership agreement prescribes the amount and priority of cash distributions that our limited partners and general partner will receive. Our distributions are declared subsequent to quarter end. The table below summarizes information related to our quarterly cash distributions that have been declared since January 1, 2015:

Quarterly Period Ended	Total Quarterly Distribution (Per Unit)		Total Cash Distribution (In Thousands)		Declaration Date	Record Date	Distribution Date
September 30, 2016	$	0.3850	$	32,175	October 24, 2016	November 3, 2016	November 10, 2016
June 30, 2016	0.3650		28,912		July 21, 2016	August 1, 2016	August 9, 2016
March 31, 2016	0.3400		25,608		April 21, 2016	May 2, 2016	May 10, 2016
December 31, 2015	0.3200		22,711		January 25, 2016	February 4, 2016	February 11, 2016
September 30, 2015	0.3075		20,164		October 15, 2015	November 2, 2015	November 10, 2015
June 30, 2015	0.2925		18,456		July 24, 2015	August 3, 2015	August 11, 2015
March 31, 2015	0.2775		17,266		April 21, 2015	May 1, 2015	May 12, 2015
December 31, 2014	0.2660		15,829		January 26, 2015	February 5, 2015	February 12, 2015

The following table reflects the allocation of total cash distributions to the general and limited partners and distribution equivalent right (DER) payments applicable to the period in which the distributions and DERs were earned (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
General partner’s distributions:
General partner’s distributions	$	644	$	404	$	1,734	$	1,118
General partner’s incentive distribution rights (IDRs)	5,600		982		12,462		2,076
Total general partner’s distributions	6,244		1,386		14,196		3,194
Limited partners’ distributions:
Common – public	8,336		5,305		23,495		15,137
Common – Valero	17,590		4,618		28,692		12,284
Subordinated – Valero	—		8,853		20,297		25,263
Total limited partners’ distributions	25,926		18,776		72,484		52,684
DERs	5		2		15		8
Total cash distributions, including DERs	$	32,175	$	20,164	$	86,695	$	55,886

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Net Income Per Limited Partner Unit

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

NET INCOME PER LIMITED PARTNER UNIT

9. NET INCOME PER LIMITED PARTNER UNIT

Distributions to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per limited partner unit.

We calculate net income available to limited partners based on the distributions pertaining to each period’s net income. After considering the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, limited partners, and other participating securities in accordance with the contractual terms of our partnership agreement and as prescribed under the two-class method. Participating securities include IDRs and awards under our Valero Energy Partners LP 2013 Incentive Compensation Plan (2013 ICP) that receive DERs. However, the terms of our partnership agreement limit the general partner’s incentive distribution to the amount of available cash, which, as defined in our partnership agreement, is net of reserves deemed appropriate. As such, IDRs are not allocated undistributed earnings or distributions in excess of earnings in the calculation of net income per limited partner unit.

Net losses of our Predecessor are allocated to the general partner. Subsequent to the effective dates of the acquisitions from Valero, we calculate net income available to limited partners based on the methodology described above.

Basic net income per limited partner unit is determined pursuant to the two-class method for master limited partnerships. The two-class method is an earnings allocation formula that is used to determine earnings to our general partner, common unitholders, and participating securities according to (i) distributions pertaining to each period’s net income and (ii) participation rights in undistributed earnings.

Diluted net income per limited partner unit is also determined using the two-class method, unless the treasury stock method is more dilutive. For the three and nine months ended September 30, 2016 and 2015, we used the two-class method to determine diluted net income per limited partner unit. We did not have any potentially dilutive instruments outstanding during the three and nine months ended September 30, 2016 and 2015.

Effective August 10, 2016, all of our subordinated units, which were owned by Valero, were converted on a one-for-one basis into common units. The subordinated units were only allocated earnings generated by us through the conversion date. See Note 10 for further discussion of the conversion of subordinated units.

Net income per unit was computed as follows (in thousands, except per unit amounts):

	Three Months Ended September 30, 2016
			Limited Partners
	General Partner		Common Units		Subordinated Units		Restricted Units		Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	644	$	25,926	$	—	$	—	$	26,570
General partner’s IDRs	5,600		—		—		—		5,600
DERs	—		—		—		5		5
Distributions and DERs declared	6,244		25,926		—		5		32,175
Undistributed earnings	390		15,533		3,607		4		19,534
Net income available to limited partners – basic and diluted	$	6,634	$	41,459	$	3,607	$	9	$	51,709
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding			53,899		12,517
Net income per limited partner unit – basic and diluted			$	0.77	$	0.29

	Three Months Ended September 30, 2015
			Limited Partners
	General Partner		Common Units		Subordinated Units		Restricted Units		Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	404	$	9,923	$	8,853	$	—	$	19,180
General partner’s IDRs	982		—		—		—		982
DERs	—		—		—		2		2
Distributions and DERs declared	1,386		9,923		8,853		2		20,164
Undistributed earnings	226		5,691		5,345		2		11,264
Net income available to limited partners – basic and diluted	$	1,612	$	15,614	$	14,198	$	4	$	31,428
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding			30,698		28,790
Net income per limited partner unit – basic and diluted			$	0.51	$	0.49

	Nine Months Ended September 30, 2016
			Limited Partners
	General Partner		Common Units		Subordinated Units		Restricted Units		Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	1,734	$	52,187	$	20,297	$	—	$	74,218
General partner’s IDRs	12,462		—		—		—		12,462
DERs	—		—		—		15		15
Distributions and DERs declared	14,196		52,187		20,297		15		86,695
Undistributed earnings	1,155		36,568		20,025		11		57,759
Net income available to limited partners – basic and diluted	$	15,351	$	88,755	$	40,322	$	26	$	144,454
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding			42,597		23,326
Net income per limited partner unit – basic and diluted			$	2.08	$	1.73

	Nine Months Ended September 30, 2015
			Limited Partners
	General Partner		Common Units		Subordinated Units		Restricted Units		Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	1,118	$	27,421	$	25,263	$	—	$	53,802
General partner’s IDRs	2,076		—		—		—		2,076
DERs	—		—		—		8		8
Distributions and DERs declared	3,194		27,421		25,263		8		55,886
Undistributed earnings	627		15,733		14,960		5		31,325
Net income available to limited partners – basic and diluted	$	3,821	$	43,154	$	40,223	$	13	$	87,211
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding			30,279		28,790
Net income per limited partner unit – basic and diluted			$	1.43	$	1.40

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Partners' Capital

9 Months Ended

Sep. 30, 2016

Partners' Capital Notes [Abstract]

PARTNERS' CAPITAL

10. PARTNERS’ CAPITAL

Subordinated Unit Conversion

The requirements under our partnership agreement for the conversion of all of our outstanding subordinated units into common units were satisfied upon the payment of our quarterly cash distribution on August 9, 2016. Therefore, effective August 10, 2016, all of our subordinated units, which were owned by Valero, were converted on a one-for-one basis into common units. The conversion of the subordinated units does not impact the amount of cash distributions paid or the total number of outstanding units.

ATM Program

On September 16, 2016, we filed a prospectus supplement to our shelf registration statement (which was declared effective on September 1, 2016) and entered into an equity distribution agreement pursuant to which we may offer and sell from time to time our common units having an aggregate offering price of up to $350.0 million based on amounts and terms agreed to by us and at prices determined “at the market” at the time of sale (our ATM Program). During September 2016, we issued 65,980 common units under our ATM Program and received proceeds of $2.8 million (net of $39,000 of compensation paid with respect to the sales of these units).

In October 2016, we issued 78,805 units that were sold in late September 2016. As a result, we had a receivable for $3.4 million (net of $34,000 of compensation paid with respect to the sales of these units) as of September 30, 2016 for which the cash was received by October 5, 2016.

Concurrent with the issuance of common units under our ATM Program, we issued 1,346 general partner units to our general partner on September 30, 2016 for $58,000 in order to maintain its 2.0 percent general partner interest in the Partnership.

Transfers to (from) Partners

Subsequent to the expiration of the subordination period on August 10, 2016, all of our common units have equal rights, including rights to distributions and to our net assets in the event of liquidation. As a result, a reallocation of the carrying values of our public common unitholders’ interest in us and Valero’s common unitholder interest in us is required when a change in ownership occurs in order for the portion of those carrying values associated with activity subsequent to the subordination period to be equal to the respective unitholders’ ownership interests (in units) in us. The transactions that resulted in transfers to (from) partners include the issuance of equity to Valero in connection with our acquisition of the Meraux and Three Rivers Terminal Services Business on September 1, 2016 and the issuance of equity under our ATM Program in September 2016.

Unit Activity

Activity in the number of units was as follows:

	Common				General Partner
	Public	Valero	Subordinated			Total
Balance as of December 31, 2014	17,255,208	11,539,989	28,789,989		1,175,102	58,760,288
Unit-based compensation	4,443	—	—		—	4,443
Units issued in connection with the acquisition of the Houston and St. Charles Terminal Services Business (see Note 3)	—	1,908,100	—		38,941	1,947,041
Balance as of September 30, 2015	17,259,651	13,448,089	28,789,989		1,214,043	60,711,772
Balance as of December 31, 2015	21,509,651	15,018,602	28,789,989		1,332,829	66,651,071
Unit-based compensation	5,958	—	—		—	5,958
Units issued in connection with acquisitions (see Note 3)	—	1,878,680	—		38,340	1,917,020
Conversion of subordinated units	—	28,789,989	(28,789,989	)	—	—
Units issued under ATM program	65,980	—	—		—	65,980
General partner units issued to maintain 2% interest	—	—	—		1,346	1,346
Balance as of September 30, 2016	21,581,589	45,687,271	—		1,372,515	68,641,375

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Supplemental Cash Flow Information

9 Months Ended

Sep. 30, 2016

Supplemental Cash Flow Information [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

11. SUPPLEMENTAL CASH FLOW INFORMATION

In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in thousands):

	Nine Months Ended September 30,
	2016			2015
Decrease (increase) in current assets:
Receivables from related party	$	(8,226	)	$	(6,354	)
Prepaid expenses and other	223			(33		)
Increase (decrease) in current liabilities:
Accounts payable	791			1,031
Accrued liabilities	353			(88		)
Accrued liabilities – related party	5			309
Taxes other than income taxes	1,000			470
Deferred revenue from related party	3,675			22
Changes in current assets and current liabilities	$	(2,179	)	$	(4,643	)

The above changes in current assets and current liabilities differ from changes between amounts reflected in the applicable balance sheets for the respective periods for the following reasons:

• amounts accrued for capital expenditures are reflected in investing activities when such amounts are paid; and

• amounts accrued for offering costs and debt issuance costs are reflected in financing activities when paid.

During the nine months ended September 30, 2016, we attributed $51.4 million of the total $204.0 million cash consideration paid for the acquisition of the McKee Terminal Services Business to the historical carrying value of this acquisition (an investing cash outflow). The remaining $152.6 million of the cash consideration represents the excess purchase price paid over the carrying value of this acquisition (a financing cash outflow).

During the nine months ended September 30, 2016, we attributed $52.2 million of the total $276.0 million cash consideration paid for the acquisition of the Meraux and Three Rivers Terminal Services Business to the historical carrying value of this acquisition (an investing cash outflow). The remaining $223.8 million of the cash consideration represents the excess purchase price paid over the carrying value of this acquisition (a financing cash outflow).

During the nine months ended September 30, 2015, we attributed $296.1 million of the total $571.2 million cash consideration paid for the acquisition of the Houston and St. Charles Terminal Services Business to the historical carrying value of this acquisition (an investing cash outflow). The remaining $275.1 million of cash consideration represents the excess purchase price paid over the carrying value of this acquisition (a financing cash outflow).

Noncash investing and financing activities for the nine months ended September 30, 2016 included:

• a capital contribution of $23.8 million for projects that were funded by Valero related primarily to the Houston, St. Charles, Corpus Christi, Meraux, and Three Rivers terminals. Valero agreed to fund these projects in connection with the acquisitions of the Houston and St. Charles Terminal Services Business, the Corpus Christi Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business;

• the issuance of 728,775 common units and 14,873 general partner units having an aggregate value of $36.0 million in connection with the acquisition of the McKee Terminal Services Business described in Note 3;

• the issuance of 1,149,905 common units and 23,467 general partner units having an aggregate value of $49.0 million in connection with the acquisition of the Meraux and Three Rivers Terminal Services Business described in Note 3;

• the conversion of all of our outstanding subordinated units into common units having an aggregate value of $406.4 million described in Note 10; and

• the transfers to (from) partners reflect the impact of ownership changes occurring as a result of the issuance of common units (i) to Valero for the acquisition of the Meraux and Three Rivers Terminal Services Business and (ii) under our ATM Program, described in Note 10.

Noncash investing and financing activities for the nine months ended September 30, 2015 included:

• a capital contribution of $14.5 million for projects that were funded by Valero related primarily to the Houston and St. Charles terminals. Valero agreed to fund these projects as part of the acquisition of the Houston and St. Charles Terminal Services Business; and

• the issuance of 1,908,100 common units and 38,941 general partner units having an aggregate value of $100.0 million in connection with the acquisition of the Houston and St. Charles Terminal Services Business described in Note 3.

The following is a reconciliation of the amounts presented as net transfers from Valero on our statements of partners’ capital and statements of cash flows (in thousands):

	Nine Months Ended September 30,
	2016		2015 (a)
Net transfers from Valero per statements of partners’ capital	$	15,030	$	61,491
Less: Noncash transfers from (to) Valero	144		(7,309		)
Net transfers from Valero per statements of cash flows	$	14,886	$	68,800
(a) Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business.

Noncash transfers from (to) Valero primarily represent the change in amounts accrued by our Predecessor for capital expenditures as we do not reflect capital expenditures in our statements of cash flows until such amounts are paid.

Cash flows related to interest and income taxes paid were as follows (in thousands):

	Nine Months Ended September 30,
	2016		2015
Interest paid	$	8,688	$	2,952
Income taxes paid	496		441

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of cash and cash equivalents approximates the carrying value due to the low level of credit risk of these assets combined with their market interest rates. The fair value measurement for cash and cash equivalents is categorized as Level 1 in the fair value hierarchy. Fair values determined by Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets.

The fair values of our debt and notes payable to related party approximate their carrying values as our borrowings bear interest based upon short-term floating market interest rates. The fair value measurement for these liabilities is categorized as Level 2 in the fair value hierarchy. Fair values determined by Level 2 utilize inputs that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Our consolidated financial statements include the accounts of the Partnership as well as our Predecessor (defined below). All intercompany accounts and transactions have been eliminated.

The acquisitions from Valero were accounted for as transfers of businesses between entities under the common control of Valero. As entities under the common control of Valero, we recorded these acquisitions on our balance sheet at Valero’s carrying value rather than fair value. Transfers between entities under common control are accounted for as though the transfer occurred as of the beginning of the period of transfer, and prior period financial statements and financial information are retrospectively adjusted to furnish comparative information. Accordingly, the Partnership’s financial statements and related notes have been retrospectively adjusted to include the historical results of the acquisitions from Valero for all periods presented prior to the effective dates of each acquisition. We refer to the historical results of the acquisitions from Valero prior to their respective acquisition dates as those of our “Predecessor.”

The combined financial statements of our Predecessor were derived from the consolidated financial statements and accounting records of Valero and reflect the combined historical financial position, results of operations, and cash flows of our Predecessor as if the acquisitions from Valero had been combined for periods prior to the effective dates of each acquisition.

There were no transactions between the operations of our Predecessor; therefore, there were no intercompany transactions or accounts to be eliminated in connection with the combination of those operations. In addition, our Predecessor’s statements of income include direct charges for the management and operation of our assets and certain expenses allocated by Valero for general corporate services, such as treasury, accounting, and legal services. These expenses were charged, or allocated, to our Predecessor based on the nature of the expenses. Prior to the acquisitions from Valero, our Predecessor transferred cash to Valero daily and Valero funded our Predecessor’s operating and investing activities as needed. Therefore, transfers of cash to and from Valero’s cash management system are reflected as a component of net investment and are reflected as a financing activity in our statements of cash flows. In addition, interest expense was not included on the net cash transfers from Valero.

The financial information presented for the periods after the effective dates of the acquisitions from Valero represents the consolidated financial position, results of operations, and cash flows of the Partnership.

These unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Financial information for the three and nine months ended September 30, 2016 and 2015 included in these Condensed Notes to Consolidated Financial Statements is derived from our unaudited financial statements. Operating results for the three and nine months endedSeptember 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These unaudited financial statements and notes thereto should be read in conjunction with the audited financial statements of the Partnership included in our Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on August 4, 2016, which reflect retrospective adjustments to the Partnership’s 2015 Form 10-K filed with the SEC on February 26, 2016 for the historical results of operations and financial position of the McKee Terminal Services Business.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. On an ongoing basis, we review our estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.

Debt Issuance Costs

In April 2015, the provisions of Accounting Standards Codification (ASC) Subtopic 835-30, “Interest–Imputation of Interest,” were amended to simplify the presentation of debt issuance costs. The guidance requires that debt issuance costs related to a note be reported in the balance sheet as a direct deduction from the face amount of that note, consistent with debt discounts, and that amortization of debt issuance costs be reported as interest expense. In August 2015, these provisions were further amended with guidance from the SEC staff, which provides that the staff would not object to an entity deferring and presenting debt issuance costs related to a line-of-credit arrangement as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. These provisions were effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods. The adoption of this guidance effective January 1, 2016 did not affect our financial position or results of operations as our debt issuance costs are associated with our revolving credit facility and therefore were not required to be reclassified.

Net Income per Limited Partner Unit

Also in April 2015, the provisions of ASC Topic 260, “Earnings Per Share,” were amended to provide guidance on how master limited partnerships apply the two-class method of calculating earnings per unit for historical periods when they receive net assets in a dropdown transaction that is accounted for as a transaction between entities under common control as required under Subtopic 805-50, “Business Combinations–Related Issues.” The amendments specify that for purposes of calculating earnings per unit under the two-class method for periods before the date of a dropdown transaction, earnings or losses of a transferred business should be allocated entirely to the general partner. Qualitative disclosures are also required to describe how the rights to earnings or losses differ before and after the dropdown transaction for purposes of computing earnings per unit under the two-class method. These provisions were effective for annual reporting periods beginning after December 15, 2015, and interim periods within those annual periods. We have historically calculated our net income per unit after a dropdown transaction as prescribed by these provisions; therefore, the adoption of this guidance effective January 1, 2016 did not affect our financial position or results of operations, but resulted in additional disclosures as shown in Note 9.

Income Taxes

In November 2015, the provisions of ASC Topic 740, “Income Taxes,” were amended to simplify the presentation of deferred income taxes. The amendments require that deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. The amendments are effective for financial statements for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted as of the beginning of any interim or annual period. Effective January 1, 2016, we adopted this guidance on a retrospective basis, but such adoption did not affect our financial position as we had no current deferred tax amounts to reclassify.

Accounting Pronouncements Not Yet Adopted

In May 2014, the ASC was amended and a new accounting standard, ASC Topic 606, “Revenue from Contracts with Customers,” was issued to clarify the principles for recognizing revenue. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual periods. We have been evaluating and continue to evaluate the provisions of this standard and its impact on our business processes, business and accounting systems, and financial statements and related disclosures. A multi-disciplined implementation team has gained an understanding of the standard’s revenue recognition model, is completing the review and documentation of our commercial agreements with Valero, and is analyzing whether enhancements are needed to our business and accounting systems.

In January 2016, the provisions of ASC Subtopic 825-10, “Financial Instruments–Overall,” were amended to enhance the reporting model for financial instruments regarding certain aspects of recognition, measurement, presentation, and disclosure. These provisions are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. We are currently evaluating the effect that adopting this standard will have on our financial statements and related disclosures.

In February 2016, the ASC was amended and a new accounting standard, ASC Topic 842, “Leases,” was issued to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new standard is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within those annual periods, with early adoption permitted. We have been evaluating and continue to evaluate the provisions of this standard and its impact on our business processes, business and accounting systems, and financial statements and related disclosures. A multi-disciplined implementation team has gained an understanding of the accounting and disclosure provisions of the standard and is in the process of analyzing the impacts to our business and accounting systems, including the development of new accounting systems to account for our leases and support the required disclosures.

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Consolidated balance sheet, statements of income, and statement of cash flows

The following table presents our previously reported balance sheet as of December 31, 2015 (as presented in our Current Report on Form 8-K filed with the SEC on August 4, 2016 described in Note 1) retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business (in thousands).

	Valero Energy Partners LP (Previously Reported)			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
ASSETS
Current assets:
Cash and cash equivalents	$	80,783		$	—		$	80,783
Receivables from related party	18,088			—			18,088
Prepaid expenses and other	632			—			632
Total current assets	99,503			—			99,503
Property and equipment, at cost	1,110,399			66,444			1,176,843
Accumulated depreciation	(310,558		)	(15,004		)	(325,562		)
Property and equipment, net	799,841			51,440			851,281
Deferred charges and other assets, net	3,322			—			3,322
Total assets	$	902,666		$	51,440		$	954,106
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Current portion of capital lease obligations	$	913		$	—		$	913
Accounts payable	9,264			—			9,264
Accrued liabilities	1,062			—			1,062
Accrued liabilities – related party	628			—			628
Taxes other than income taxes	1,276			—			1,276
Deferred revenue from related party	129			—			129
Total current liabilities	13,272			—			13,272
Debt and capital lease obligations, net of current portion	175,246			—			175,246
Notes payable to related party	370,000			—			370,000
Deferred income taxes	320			—			320
Other long-term liabilities	1,116			—			1,116
Partners’ capital:
Common unitholders – public	581,489			—			581,489
Common unitholder – Valero	28,430			—			28,430
Subordinated unitholder – Valero	(313,961		)	—			(313,961		)
General partner – Valero	(5,805		)	—			(5,805		)
Net investment	52,559			51,440			103,999
Total partners’ capital	342,712			51,440			394,152
Total liabilities and partners’ capital	$	902,666		$	51,440		$	954,106

The following tables present our previously reported statements of income for the three and nine months ended September 30, 2015 (as presented in our Quarterly Report on Form 10-Q filed with the SEC on November 3, 2015) retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business (in thousands).

	Three Months Ended September 30, 2015
	Valero Energy Partners LP (Previously Reported)			Corpus Christi Terminal Services Business			McKee Terminal Services Business			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Operating revenues – related party	$	62,037		$	—		$	—		$	—		$	62,037
Costs and expenses:
Operating expenses	15,042			6,198			2,405			3,837			27,482
General and administrative expenses	3,444			91			66			130			3,731
Depreciation expense	10,684			1,279			1,125			672			13,760
Total costs and expenses	29,170			7,568			3,596			4,639			44,973
Operating income (loss)	32,867			(7,568		)	(3,596		)	(4,639		)	17,064
Other income, net	29			—			—			—			29
Interest and debt expense, net of capitalized interest	(1,353		)	—			—			—			(1,353		)
Income (loss) before income taxes	31,543			(7,568		)	(3,596		)	(4,639		)	15,740
Income tax expense	115			—			—			—			115
Net income (loss)	31,428			(7,568		)	(3,596		)	(4,639		)	15,625
Less: Net loss attributable to Predecessor	—			(7,568		)	(3,596		)	(4,639		)	(15,803		)
Net income attributable to partners	$	31,428		$	—		$	—		$	—		$	31,428

	Nine Months Ended September 30, 2015
	Valero Energy Partners LP (Previously Reported)			Corpus Christi Terminal Services Business			McKee Terminal Services Business			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Operating revenues – related party	$	164,168		$	—		$	—		$	—		$	164,168
Costs and expenses:
Operating expenses	47,280			17,089			5,763			10,680			80,812
General and administrative expenses	10,169			267			189			375			11,000
Depreciation expense	25,887			3,165			3,379			2,271			34,702
Total costs and expenses	83,336			20,521			9,331			13,326			126,514
Operating income (loss)	80,832			(20,521		)	(9,331		)	(13,326		)	37,654
Other income, net	166			—			—			—			166
Interest and debt expense, net of capitalized interest	(3,365		)	—			—			—			(3,365		)
Income (loss) before income taxes	77,633			(20,521		)	(9,331		)	(13,326		)	34,455
Income tax benefit	(62		)	—			—			—			(62		)
Net income (loss)	77,695			(20,521		)	(9,331		)	(13,326		)	34,517
Less: Net loss attributable to Predecessor	(9,516		)	(20,521		)	(9,331		)	(13,326		)	(52,694		)
Net income attributable to partners	$	87,211		$	—		$	—		$	—		$	87,211

The following table presents our previously reported statement of cash flows for the nine months ended September 30, 2015 (as presented in our Quarterly Report on Form 10-Q filed with the SEC on November 3, 2015) retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business (in thousands).

	Nine Months Ended September 30, 2015
	Valero Energy Partners LP (Previously Reported)			Corpus Christi Terminal  Services  Business			McKee Terminal Services Business			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Cash flows from operating activities:
Net income (loss)	$	77,695		$	(20,521	)	$	(9,331	)	$	(13,326	)	$	34,517
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense	25,887			3,165			3,379			2,271			34,702
Deferred income tax benefit	(400		)	—			—			—			(400		)
Changes in current assets and current liabilities	(4,643		)	—			—			—			(4,643		)
Changes in deferred charges and credits and other operating activities, net	341			—			—			—			341
Net cash provided by (used in) operating activities	98,880			(17,356		)	(5,952		)	(11,055		)	64,517
Cash flows from investing activities:
Capital expenditures	(7,246		)	(18,799		)	(217		)	(4,486		)	(30,748		)
Acquisition of the Houston and St. Charles Terminal Services Business from Valero Energy Corporation	(296,109		)	—			—			—			(296,109		)
Other investing activities, net	70			—			—			—			70
Net cash used in investing activities	(303,285		)	(18,799		)	(217		)	(4,486		)	(326,787		)
Cash flows from financing activities:
Proceeds from debt borrowings	200,000			—			—			—			200,000
Repayment of debt and capital lease obligations	(25,884		)	—			—			—			(25,884		)
Proceeds from note payable to related party	160,000			—			—			—			160,000
Excess purchase price paid to Valero Energy Corporation over the carrying value of the Houston and St. Charles Terminal Services Business	(275,111		)	—			—			—			(275,111		)
Cash distributions to unitholders and distribution equivalent right payments	(51,551		)	—			—			—			(51,551		)
Net transfers from Valero Energy Corporation	10,935			36,155			6,169			15,541			68,800
Net cash provided by financing activities	18,389			36,155			6,169			15,541			76,254
Net decrease in cash and cash equivalents	(186,016		)	—			—			—			(186,016		)
Cash and cash equivalents at beginning of period	236,579			—			—			—			236,579
Cash and cash equivalents at end of period	$	50,563		$	—		$	—		$	—		$	50,563

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Related-Party Transactions (Tables)

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

Summary of related-party transactions

Receivables from related party consist of the following (in thousands):

	September 30, 2016			December 31, 2015
Trade receivables – related party	$	33,771		$	26,103
Due to related party	(7,457		)	(8,015		)
Receivables from related party	$	26,314		$	18,088

Lessor disclosure of operating leases

The amounts shown in our statements of income as “operating revenues – related party” included revenues from our current commercial agreements with Valero that are considered operating leases are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Minimum rental revenues	$	60,133	$	32,207	$	164,659	$	79,684
Contingent rental revenues	10,710		6,407		28,271		15,389
Total lease revenues	$	70,843	$	38,614	$	192,930	$	95,073

As of September 30, 2016, future minimum rentals to be received related to these noncancelable commercial agreements were as follows (in thousands):

Remainder of 2016	$	68,206
2017	270,603
2018	270,603
2019	270,603
2020	271,344
Thereafter	1,245,319
Total minimum rental payments	$	2,396,678

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Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2016

Property, Plant and Equipment [Abstract]

Major classes of property and equipment

Major classes of property and equipment consisted of the following (in thousands):

	September 30, 2016
	Non-Leased Assets			Assets Under Operating Leases (a)			Total
Pipelines and related assets	$	227,495		$	46,964		$	274,459
Terminals and related assets	112,017			776,829			888,846
Other	9,488			—			9,488
Land	4,672			—			4,672
Construction-in-progress	20,898			—			20,898
Property and equipment, at cost	374,570			823,793			1,198,363
Accumulated depreciation	(116,029		)	(228,512		)	(344,541		)
Property and equipment, net	$	258,541		$	595,281		$	853,822

	December 31, 2015 (b)
	Non-Leased Assets			Assets Under Operating Leases (a)			Total
Pipelines and related assets	$	228,586		$	46,739		$	275,325
Terminals and related assets	276,263			580,194			856,457
Other	9,352			—			9,352
Land	4,672			—			4,672
Construction-in-progress	31,037			—			31,037
Property and equipment, at cost	549,910			626,933			1,176,843
Accumulated depreciation	(180,543		)	(145,019		)	(325,562		)
Property and equipment, net	$	369,367		$	481,914		$	851,281
(a) Represents assets owned by us for which we are the lessor (see Note 4). Certain assets acquired in the acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business that were initially classified as non-leased assets were reclassified to assets under operating leases subsequent to the acquisitions on April 1, 2016 and September 1, 2016, respectively, in connection with entering into schedules under our commercial agreements with Valero that are considered operating leases (see Note 4).
(b) Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business.

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Operating Leases (Tables)

9 Months Ended

Sep. 30, 2016

Leases, Operating [Abstract]

Future minimum rentals for leases having initial or remaining noncancelable lease terms in excess of one year

As of September 30, 2016, our future minimum rentals for leases having initial or remaining noncancelable lease terms in excess of one year were as follows (in thousands):

Remainder of 2016	$	2,798
2017	10,533
2018	10,490
2019	10,490
2020	10,490
Thereafter	62,988
Total minimum rental payments	$	107,789

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Cash Distributions (Tables)

9 Months Ended

Sep. 30, 2016

Partners' Capital [Abstract]

Distributions made to unitholders

The table below summarizes information related to our quarterly cash distributions that have been declared since January 1, 2015:

Quarterly Period Ended	Total Quarterly Distribution (Per Unit)		Total Cash Distribution (In Thousands)		Declaration Date	Record Date	Distribution Date
September 30, 2016	$	0.3850	$	32,175	October 24, 2016	November 3, 2016	November 10, 2016
June 30, 2016	0.3650		28,912		July 21, 2016	August 1, 2016	August 9, 2016
March 31, 2016	0.3400		25,608		April 21, 2016	May 2, 2016	May 10, 2016
December 31, 2015	0.3200		22,711		January 25, 2016	February 4, 2016	February 11, 2016
September 30, 2015	0.3075		20,164		October 15, 2015	November 2, 2015	November 10, 2015
June 30, 2015	0.2925		18,456		July 24, 2015	August 3, 2015	August 11, 2015
March 31, 2015	0.2775		17,266		April 21, 2015	May 1, 2015	May 12, 2015
December 31, 2014	0.2660		15,829		January 26, 2015	February 5, 2015	February 12, 2015

The following table reflects the allocation of total cash distributions to the general and limited partners and distribution equivalent right (DER) payments applicable to the period in which the distributions and DERs were earned (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
General partner’s distributions:
General partner’s distributions	$	644	$	404	$	1,734	$	1,118
General partner’s incentive distribution rights (IDRs)	5,600		982		12,462		2,076
Total general partner’s distributions	6,244		1,386		14,196		3,194
Limited partners’ distributions:
Common – public	8,336		5,305		23,495		15,137
Common – Valero	17,590		4,618		28,692		12,284
Subordinated – Valero	—		8,853		20,297		25,263
Total limited partners’ distributions	25,926		18,776		72,484		52,684
DERs	5		2		15		8
Total cash distributions, including DERs	$	32,175	$	20,164	$	86,695	$	55,886

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Net Income Per Limited Partner Unit (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Computation of net income per unit

Net income per unit was computed as follows (in thousands, except per unit amounts):

	Three Months Ended September 30, 2016
			Limited Partners
	General Partner		Common Units		Subordinated Units		Restricted Units		Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	644	$	25,926	$	—	$	—	$	26,570
General partner’s IDRs	5,600		—		—		—		5,600
DERs	—		—		—		5		5
Distributions and DERs declared	6,244		25,926		—		5		32,175
Undistributed earnings	390		15,533		3,607		4		19,534
Net income available to limited partners – basic and diluted	$	6,634	$	41,459	$	3,607	$	9	$	51,709
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding			53,899		12,517
Net income per limited partner unit – basic and diluted			$	0.77	$	0.29

	Three Months Ended September 30, 2015
			Limited Partners
	General Partner		Common Units		Subordinated Units		Restricted Units		Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	404	$	9,923	$	8,853	$	—	$	19,180
General partner’s IDRs	982		—		—		—		982
DERs	—		—		—		2		2
Distributions and DERs declared	1,386		9,923		8,853		2		20,164
Undistributed earnings	226		5,691		5,345		2		11,264
Net income available to limited partners – basic and diluted	$	1,612	$	15,614	$	14,198	$	4	$	31,428
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding			30,698		28,790
Net income per limited partner unit – basic and diluted			$	0.51	$	0.49

	Nine Months Ended September 30, 2016
			Limited Partners
	General Partner		Common Units		Subordinated Units		Restricted Units		Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	1,734	$	52,187	$	20,297	$	—	$	74,218
General partner’s IDRs	12,462		—		—		—		12,462
DERs	—		—		—		15		15
Distributions and DERs declared	14,196		52,187		20,297		15		86,695
Undistributed earnings	1,155		36,568		20,025		11		57,759
Net income available to limited partners – basic and diluted	$	15,351	$	88,755	$	40,322	$	26	$	144,454
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding			42,597		23,326
Net income per limited partner unit – basic and diluted			$	2.08	$	1.73

	Nine Months Ended September 30, 2015
			Limited Partners
	General Partner		Common Units		Subordinated Units		Restricted Units		Total
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner’s IDRs	$	1,118	$	27,421	$	25,263	$	—	$	53,802
General partner’s IDRs	2,076		—		—		—		2,076
DERs	—		—		—		8		8
Distributions and DERs declared	3,194		27,421		25,263		8		55,886
Undistributed earnings	627		15,733		14,960		5		31,325
Net income available to limited partners – basic and diluted	$	3,821	$	43,154	$	40,223	$	13	$	87,211
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding			30,279		28,790
Net income per limited partner unit – basic and diluted			$	1.43	$	1.40

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Partners' Capital (Tables)

9 Months Ended

Sep. 30, 2016

Partners' Capital Notes [Abstract]

Activity in the number of units

Activity in the number of units was as follows:

	Common				General Partner
	Public	Valero	Subordinated			Total
Balance as of December 31, 2014	17,255,208	11,539,989	28,789,989		1,175,102	58,760,288
Unit-based compensation	4,443	—	—		—	4,443
Units issued in connection with the acquisition of the Houston and St. Charles Terminal Services Business (see Note 3)	—	1,908,100	—		38,941	1,947,041
Balance as of September 30, 2015	17,259,651	13,448,089	28,789,989		1,214,043	60,711,772
Balance as of December 31, 2015	21,509,651	15,018,602	28,789,989		1,332,829	66,651,071
Unit-based compensation	5,958	—	—		—	5,958
Units issued in connection with acquisitions (see Note 3)	—	1,878,680	—		38,340	1,917,020
Conversion of subordinated units	—	28,789,989	(28,789,989	)	—	—
Units issued under ATM program	65,980	—	—		—	65,980
General partner units issued to maintain 2% interest	—	—	—		1,346	1,346
Balance as of September 30, 2016	21,581,589	45,687,271	—		1,372,515	68,641,375

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Supplemental Cash Flow Information (Tables)

9 Months Ended

Sep. 30, 2016

Supplemental Cash Flow Information [Abstract]

Supplemental cash flow disclosures

In order to determine net cash provided by operating activities, net income is adjusted by, among other things, changes in current assets and current liabilities as follows (in thousands):

	Nine Months Ended September 30,
	2016			2015
Decrease (increase) in current assets:
Receivables from related party	$	(8,226	)	$	(6,354	)
Prepaid expenses and other	223			(33		)
Increase (decrease) in current liabilities:
Accounts payable	791			1,031
Accrued liabilities	353			(88		)
Accrued liabilities – related party	5			309
Taxes other than income taxes	1,000			470
Deferred revenue from related party	3,675			22
Changes in current assets and current liabilities	$	(2,179	)	$	(4,643	)

Cash flows related to interest and income taxes paid were as follows (in thousands):

	Nine Months Ended September 30,
	2016		2015
Interest paid	$	8,688	$	2,952
Income taxes paid	496		441

Reconciliation of net transfers from Valero

The following is a reconciliation of the amounts presented as net transfers from Valero on our statements of partners’ capital and statements of cash flows (in thousands):

	Nine Months Ended September 30,
	2016		2015 (a)
Net transfers from Valero per statements of partners’ capital	$	15,030	$	61,491
Less: Noncash transfers from (to) Valero	144		(7,309		)
Net transfers from Valero per statements of cash flows	$	14,886	$	68,800
(a) Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business.

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Business and Basis of Presentation (Details) - Majority Shareholder [Member]	9 Months Ended
	Sep. 30, 2016 refineries
Business and Basis of Presentation (Textual)
Number of Valero owned refineries	10
Houston and St. Charles Terminal Services Business [Member]
Business and Basis of Presentation (Textual)
Effective date of acquisition	Mar. 01, 2015
Corpus Christi Terminal Services Business [Member]
Business and Basis of Presentation (Textual)
Effective date of acquisition	Oct. 01, 2015
McKee Terminal Services Business [Member]
Business and Basis of Presentation (Textual)
Effective date of acquisition	Apr. 01, 2016
Meraux and Three Rivers Terminal Services Business [Member]
Business and Basis of Presentation (Textual)
Effective date of acquisition	Sep. 01, 2016

XML

Acquisitions (Details) $ in Thousands							3 Months Ended			9 Months Ended
		Sep. 01, 2016 USD ($) shares	Apr. 01, 2016 USD ($) subsidiaries shares	Oct. 01, 2015 USD ($) shares		Mar. 01, 2015 USD ($) subsidiaries shares	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)		Sep. 30, 2016 USD ($) shares		Sep. 30, 2015 USD ($) shares		Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)		Sep. 30, 2015 USD ($)		Dec. 31, 2014 USD ($)
Current assets:
Cash and cash equivalents				$ 50,563	[1]		$ 35,399	$ 50,563	[1]	$ 80,783	[2]	$ 236,579	[1]	$ 35,399	$ 80,783	[2]	$ 50,563	[1]	$ 236,579	[1]
Receivables from related party														26,314	18,088	[2]
Prepaid expenses and other														409	632	[2]
Total current assets														65,538	99,503	[2]
Property and equipment, at cost														1,198,363	1,176,843	[2],[3]
Accumulated depreciation														(344,541)	(325,562)	[2],[3]
Property and equipment, net														853,822	851,281	[2],[3]
Deferred charges and other assets, net														2,957	3,322	[2]
Total assets														922,317	954,106	[2]
Current liabilities:
Current portion of capital lease obligations														45	913	[2]
Accounts payable														7,454	9,264	[2]
Accrued liabilities														1,415	1,062	[2]
Accrued liabilities – related party														633	628	[2]
Taxes other than income taxes														2,276	1,276	[2]
Deferred revenue from related party														3,804	129	[2]
Total current liabilities														15,627	13,272	[2]
Debt and capital lease obligations, net of current portion														524,012	175,246	[2]
Notes payable to related party														370,000	370,000	[2]
Deferred income taxes														431	320	[2]
Other long-term liabilities														1,156	1,116	[2]
Partners’ capital:
Total partners’ capital														11,091	394,152	[2]	557,452	[1]	1,069,594	[2]
Total liabilities and partners’ capital														922,317	954,106	[2]
Consolidated Statements of Income
Operating revenues – related party							92,040	62,037	[1]	258,471		164,168	[1]
Costs and expenses:
Operating expenses	[4]						24,089	27,482	[1]	72,461		80,812	[1]
General and administrative expenses	[5]						4,094	3,731	[1]	12,174		11,000	[1]
Depreciation expense							11,319	13,760	[1]	34,652		34,702	[1]
Total costs and expenses							39,502	44,973	[1]	119,287		126,514	[1]
Operating income							52,538	17,064	[1]	139,184		37,654	[1]
Other income, net							76	29	[1]	210		166	[1]
Interest and debt expense, net of capitalized interest	[6]						(3,672)	(1,353)	[1]	(9,582)		(3,365)	[1]
Income before income taxes							48,942	15,740	[1]	129,812		34,455	[1]
Income tax expense							235	115	[1]	780		(62)	[1]
Net income							48,707	15,625	[1]	129,032		34,517	[1]
Less: Net loss attributable to Predecessor							(3,002)	(15,803)	[1]	(15,422)		(52,694)	[1]
Net income attributable to partners							51,709	31,428		144,454		87,211
Cash flows from operating activities:
Net income (loss)							48,707	15,625	[1]	129,032		34,517	[1]
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense							11,319	13,760	[1]	34,652		34,702	[1]
Deferred income tax benefit										301		(400)	[1]
Changes in current assets and current liabilities										(2,179)		(4,643)	[1]
Changes in deferred charges and credits and other operating activities, net										406		341	[1]
Net cash provided by operating activities										162,212		64,517	[1]
Cash flows from investing activities:
Capital expenditures										(15,911)		(30,748)	[1]
Acquisitions from Valero Energy Corporation										(103,607)		(296,109)	[1]
Other investing activities, net										29		70	[1]
Net cash used in investing activities										(119,489)		(326,787)	[1]
Cash flows from financing activities:
Proceeds from debt borrowings										349,000		200,000	[1]
Repayments of Debt and Capital Lease Obligations										(868)		(25,884)	[1]
Proceeds from note payable to related party										0		160,000	[1]
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets										(376,393)		(275,111)	[1]
Cash distributions to unitholders and distribution equivalent right payments										(77,231)		(51,551)	[1]
Net transfers from Valero per statements of cash flows										14,886		68,800	[1]
Net cash provided by (used in) financing activities										(88,107)		76,254	[1]
Net decrease in cash and cash equivalents										(45,384)		(186,016)	[1]
Cash and cash equivalents at beginning of period				50,563	[1]					80,783	[2]	236,579	[1]
Cash and cash equivalents at end of period							$ 35,399	50,563	[1]	$ 35,399		$ 50,563	[1]
Acquisitions (Textual)
Units issued in connection with acquisitions | shares										1,917,020		1,947,041
Proceeds from debt borrowings										$ 349,000		$ 200,000	[1]
Proceeds from note payable to related party										0		160,000	[1]
Valero Energy Partners LP [Member]
Current assets:
Cash and cash equivalents				50,563				50,563		80,783		236,579			80,783		50,563		236,579
Receivables from related party															18,088
Prepaid expenses and other															632
Total current assets															99,503
Property and equipment, at cost															1,110,399
Accumulated depreciation															(310,558)
Property and equipment, net															799,841
Deferred charges and other assets, net															3,322
Total assets															902,666
Current liabilities:
Current portion of capital lease obligations															913
Accounts payable															9,264
Accrued liabilities															1,062
Accrued liabilities – related party															628
Taxes other than income taxes															1,276
Deferred revenue from related party															129
Total current liabilities															13,272
Debt and capital lease obligations, net of current portion															175,246
Notes payable to related party															370,000
Deferred income taxes															320
Other long-term liabilities															1,116
Partners’ capital:
Total partners’ capital															342,712
Total liabilities and partners’ capital															902,666
Consolidated Statements of Income
Operating revenues – related party								62,037				164,168
Costs and expenses:
Operating expenses								15,042				47,280
General and administrative expenses								3,444				10,169
Depreciation expense								10,684				25,887
Total costs and expenses								29,170				83,336
Operating income								32,867				80,832
Other income, net								29				166
Interest and debt expense, net of capitalized interest								(1,353)				(3,365)
Income before income taxes								31,543				77,633
Income tax expense								115				(62)
Net income								31,428				77,695
Less: Net loss attributable to Predecessor								0				(9,516)
Net income attributable to partners								31,428				87,211
Cash flows from operating activities:
Net income (loss)								31,428				77,695
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense								10,684				25,887
Deferred income tax benefit												(400)
Changes in current assets and current liabilities												(4,643)
Changes in deferred charges and credits and other operating activities, net												341
Net cash provided by operating activities												98,880
Cash flows from investing activities:
Capital expenditures												(7,246)
Acquisitions from Valero Energy Corporation												(296,109)
Other investing activities, net												70
Net cash used in investing activities												(303,285)
Cash flows from financing activities:
Proceeds from debt borrowings												200,000
Repayments of Debt and Capital Lease Obligations												(25,884)
Proceeds from note payable to related party												160,000
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets												(275,111)
Cash distributions to unitholders and distribution equivalent right payments												(51,551)
Net transfers from Valero per statements of cash flows												10,935
Net cash provided by (used in) financing activities												18,389
Net decrease in cash and cash equivalents												(186,016)
Cash and cash equivalents at beginning of period				50,563						80,783		236,579
Cash and cash equivalents at end of period								50,563				50,563
Acquisitions (Textual)
Proceeds from debt borrowings												200,000
Proceeds from note payable to related party												160,000
Limited Partner [Member] | Common Unitholders Public [Member]
Partners’ capital:
Limited partners														534,688	581,489	[2]
Total partners’ capital														534,688	581,489	[2]	384,976	[1]	374,954	[2]
Costs and expenses:
Less: Net loss attributable to Predecessor										0		0	[1]
Net income attributable to partners										42,096		24,348
Limited Partner [Member] | Common Unitholders Public [Member] | Valero Energy Partners LP [Member]
Partners’ capital:
Limited partners															581,489
Limited Partner [Member] | Common Unitholder Valero [Member]
Partners’ capital:
Limited partners														(512,104)	28,430	[2]
Total partners’ capital														(512,104)	28,430	[2]	64,712	[1]	58,844	[2]
Costs and expenses:
Less: Net loss attributable to Predecessor										0		0	[1]
Net income attributable to partners										$ 41,685		$ 18,406
Acquisitions (Textual)
Units issued in connection with acquisitions | shares										1,878,680		1,908,100
Limited Partner [Member] | Common Unitholder Valero [Member] | Valero Energy Partners LP [Member]
Partners’ capital:
Limited partners															28,430
Limited Partner [Member] | Subordinated Unitholder Valero [Member]
Partners’ capital:
Limited partners														0	(313,961)	[2]
Total partners’ capital														0	(313,961)	[2]	(87,204)	[1]	146,804	[2]
Costs and expenses:
Less: Net loss attributable to Predecessor										$ 0		$ 0	[1]
Net income attributable to partners										45,322		40,636
Limited Partner [Member] | Subordinated Unitholder Valero [Member] | Valero Energy Partners LP [Member]
Partners’ capital:
Limited partners															(313,961)
General Partner Valero [Member]
Partners’ capital:
General partner – Valero														(11,493)	(5,805)	[2]
Total partners’ capital														(11,493)	(5,805)	[2]	(2,095)	[1]	4,617	[2]
Costs and expenses:
Less: Net loss attributable to Predecessor										0		0	[1]
Net income attributable to partners										$ 15,351		$ 3,821
Acquisitions (Textual)
Units issued in connection with acquisitions | shares										38,340		38,941
General Partner Valero [Member] | Valero Energy Partners LP [Member]
Partners’ capital:
General partner – Valero															(5,805)
Net Investment [Member]
Partners’ capital:
Net investment														0	103,999	[2]
Total partners’ capital														0	103,999	[2]	197,063	[1]	484,375	[2]
Costs and expenses:
Less: Net loss attributable to Predecessor										$ (15,422)		$ (52,694)	[1]
Net income attributable to partners										0		0
Net Investment [Member] | Valero Energy Partners LP [Member]
Partners’ capital:
Net investment															52,559
Corpus Christi Terminal Services Business [Member] | Adjustments for Acquisitions of Businesses Under Common Control [Member]
Current assets:
Cash and cash equivalents				0				0				0					0		0
Consolidated Statements of Income
Operating revenues – related party								0				0
Costs and expenses:
Operating expenses								6,198				17,089
General and administrative expenses								91				267
Depreciation expense								1,279				3,165
Total costs and expenses								7,568				20,521
Operating income								(7,568)				(20,521)
Other income, net								0				0
Interest and debt expense, net of capitalized interest								0				0
Income before income taxes								(7,568)				(20,521)
Income tax expense								0				0
Net income								(7,568)				(20,521)
Less: Net loss attributable to Predecessor								(7,568)				(20,521)
Net income attributable to partners								0				0
Cash flows from operating activities:
Net income (loss)								(7,568)				(20,521)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense								1,279				3,165
Deferred income tax benefit												0
Changes in current assets and current liabilities												0
Changes in deferred charges and credits and other operating activities, net												0
Net cash provided by operating activities												(17,356)
Cash flows from investing activities:
Capital expenditures												(18,799)
Acquisitions from Valero Energy Corporation												0
Other investing activities, net												0
Net cash used in investing activities												(18,799)
Cash flows from financing activities:
Proceeds from debt borrowings												0
Repayments of Debt and Capital Lease Obligations												0
Proceeds from note payable to related party												0
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets												0
Cash distributions to unitholders and distribution equivalent right payments												0
Net transfers from Valero per statements of cash flows												36,155
Net cash provided by (used in) financing activities												36,155
Net decrease in cash and cash equivalents												0
Cash and cash equivalents at beginning of period				0								0
Cash and cash equivalents at end of period								0				0
Acquisitions (Textual)
Proceeds from debt borrowings												0
Proceeds from note payable to related party												0
McKee Terminal Services Business [Member] | Adjustments for Acquisitions of Businesses Under Common Control [Member]
Current assets:
Cash and cash equivalents				0				0				0					0		0
Consolidated Statements of Income
Operating revenues – related party								0				0
Costs and expenses:
Operating expenses								2,405				5,763
General and administrative expenses								66				189
Depreciation expense								1,125				3,379
Total costs and expenses								3,596				9,331
Operating income								(3,596)				(9,331)
Other income, net								0				0
Interest and debt expense, net of capitalized interest								0				0
Income before income taxes								(3,596)				(9,331)
Income tax expense								0				0
Net income								(3,596)				(9,331)
Less: Net loss attributable to Predecessor								(3,596)				(9,331)
Net income attributable to partners								0				0
Cash flows from operating activities:
Net income (loss)								(3,596)				(9,331)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense								1,125				3,379
Deferred income tax benefit												0
Changes in current assets and current liabilities												0
Changes in deferred charges and credits and other operating activities, net												0
Net cash provided by operating activities												(5,952)
Cash flows from investing activities:
Capital expenditures												(217)
Acquisitions from Valero Energy Corporation												0
Other investing activities, net												0
Net cash used in investing activities												(217)
Cash flows from financing activities:
Proceeds from debt borrowings												0
Repayments of Debt and Capital Lease Obligations												0
Proceeds from note payable to related party												0
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets												0
Cash distributions to unitholders and distribution equivalent right payments												0
Net transfers from Valero per statements of cash flows												6,169
Net cash provided by (used in) financing activities												6,169
Net decrease in cash and cash equivalents												0
Cash and cash equivalents at beginning of period				0								0
Cash and cash equivalents at end of period								0				0
Acquisitions (Textual)
Proceeds from debt borrowings												0
Proceeds from note payable to related party												0
Meraux and Three Rivers Terminal Services Business [Member] | Adjustments for Acquisitions of Businesses Under Common Control [Member]
Current assets:
Cash and cash equivalents				0				0		0		0			0		$ 0		$ 0
Receivables from related party															0
Prepaid expenses and other															0
Total current assets															0
Property and equipment, at cost															66,444
Accumulated depreciation															(15,004)
Property and equipment, net															51,440
Deferred charges and other assets, net															0
Total assets															51,440
Current liabilities:
Current portion of capital lease obligations															0
Accounts payable															0
Accrued liabilities															0
Accrued liabilities – related party															0
Taxes other than income taxes															0
Deferred revenue from related party															0
Total current liabilities															0
Debt and capital lease obligations, net of current portion															0
Notes payable to related party															0
Deferred income taxes															0
Other long-term liabilities															0
Partners’ capital:
Total partners’ capital															51,440
Total liabilities and partners’ capital															51,440
Consolidated Statements of Income
Operating revenues – related party								0				0
Costs and expenses:
Operating expenses								3,837				10,680
General and administrative expenses								130				375
Depreciation expense								672				2,271
Total costs and expenses								4,639				13,326
Operating income								(4,639)				(13,326)
Other income, net								0				0
Interest and debt expense, net of capitalized interest								0				0
Income before income taxes								(4,639)				(13,326)
Income tax expense								0				0
Net income								(4,639)				(13,326)
Less: Net loss attributable to Predecessor								(4,639)				(13,326)
Net income attributable to partners								0				0
Cash flows from operating activities:
Net income (loss)								(4,639)				(13,326)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense								672				2,271
Deferred income tax benefit												0
Changes in current assets and current liabilities												0
Changes in deferred charges and credits and other operating activities, net												0
Net cash provided by operating activities												(11,055)
Cash flows from investing activities:
Capital expenditures												(4,486)
Acquisitions from Valero Energy Corporation												0
Other investing activities, net												0
Net cash used in investing activities												(4,486)
Cash flows from financing activities:
Proceeds from debt borrowings												0
Repayments of Debt and Capital Lease Obligations												0
Proceeds from note payable to related party												0
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets												0
Cash distributions to unitholders and distribution equivalent right payments												0
Net transfers from Valero per statements of cash flows												15,541
Net cash provided by (used in) financing activities												15,541
Net decrease in cash and cash equivalents												0
Cash and cash equivalents at beginning of period				0						0		0
Cash and cash equivalents at end of period								$ 0				0
Acquisitions (Textual)
Proceeds from debt borrowings												0
Proceeds from note payable to related party												0
Meraux and Three Rivers Terminal Services Business [Member] | Limited Partner [Member] | Common Unitholders Public [Member] | Adjustments for Acquisitions of Businesses Under Common Control [Member]
Partners’ capital:
Limited partners															0
Meraux and Three Rivers Terminal Services Business [Member] | Limited Partner [Member] | Common Unitholder Valero [Member] | Adjustments for Acquisitions of Businesses Under Common Control [Member]
Partners’ capital:
Limited partners															0
Meraux and Three Rivers Terminal Services Business [Member] | Limited Partner [Member] | Subordinated Unitholder Valero [Member] | Adjustments for Acquisitions of Businesses Under Common Control [Member]
Partners’ capital:
Limited partners															0
Meraux and Three Rivers Terminal Services Business [Member] | General Partner Valero [Member] | Adjustments for Acquisitions of Businesses Under Common Control [Member]
Partners’ capital:
General partner – Valero															0
Meraux and Three Rivers Terminal Services Business [Member] | Net Investment [Member] | Adjustments for Acquisitions of Businesses Under Common Control [Member]
Partners’ capital:
Net investment															51,440
Majority Shareholder [Member]
Current assets:
Receivables from related party														$ 26,314	$ 18,088
Cash flows from financing activities:
Net transfers from Valero per statements of cash flows										$ 14,886		68,800	[7]
Majority Shareholder [Member] | Houston and St. Charles Terminal Services Business [Member]
Cash flows from investing activities:
Acquisitions from Valero Energy Corporation												(296,100)
Cash flows from financing activities:
Proceeds from debt borrowings						$ 200,000
Proceeds from note payable to related party						$ 160,000
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets												(275,100)
Acquisitions (Textual)
Effective date of acquisition										Mar. 01, 2015
Number of subsidiaries acquired | subsidiaries						2
Value of consideration transferred for acquisition						$ 671,200
Cash consideration transferred to acquire businesses						571,200
Consideration transferred for acquisition, units issued						100,000						$ 100,000
Payments to acquire business, cash on hand						211,200
Proceeds from debt borrowings						200,000
Proceeds from note payable to related party						$ 160,000
Majority Shareholder [Member] | Houston and St. Charles Terminal Services Business [Member] | Limited Partner [Member] | Common Unitholder Valero [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions | shares						1,908,100						1,908,100.0
Majority Shareholder [Member] | Houston and St. Charles Terminal Services Business [Member] | General Partner Valero [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions | shares						38,941						38,941.000
Majority Shareholder [Member] | Corpus Christi Terminal Services Business [Member]
Cash flows from financing activities:
Proceeds from note payable to related party				395,000
Acquisitions (Textual)
Effective date of acquisition										Oct. 01, 2015
Value of consideration transferred for acquisition				465,000
Cash consideration transferred to acquire businesses				395,000
Consideration transferred for acquisition, units issued				70,000
Proceeds from note payable to related party				$ 395,000
Majority Shareholder [Member] | Corpus Christi Terminal Services Business [Member] | Limited Partner [Member] | Common Unitholder Valero [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions | shares				1,570,513
Majority Shareholder [Member] | Corpus Christi Terminal Services Business [Member] | General Partner Valero [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions | shares				32,051
Majority Shareholder [Member] | McKee Terminal Services Business [Member]
Cash flows from investing activities:
Acquisitions from Valero Energy Corporation										$ (51,400)
Cash flows from financing activities:
Proceeds from debt borrowings			$ 139,000
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets										$ (152,600)
Acquisitions (Textual)
Effective date of acquisition										Apr. 01, 2016
Number of subsidiaries acquired | subsidiaries			1
Value of consideration transferred for acquisition			$ 240,000
Cash consideration transferred to acquire businesses			204,000
Consideration transferred for acquisition, units issued			36,000							$ 36,000
Payments to acquire business, cash on hand			65,000
Proceeds from debt borrowings			$ 139,000
Majority Shareholder [Member] | McKee Terminal Services Business [Member] | Limited Partner [Member] | Common Unitholder Valero [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions | shares			728,775							728,775
Majority Shareholder [Member] | McKee Terminal Services Business [Member] | General Partner Valero [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions | shares			14,873							14,873
Majority Shareholder [Member] | Meraux and Three Rivers Terminal Services Business [Member]
Cash flows from investing activities:
Acquisitions from Valero Energy Corporation										$ (52,200)
Cash flows from financing activities:
Proceeds from debt borrowings		$ 210,000
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets										$ (223,800)
Acquisitions (Textual)
Effective date of acquisition										Sep. 01, 2016
Value of consideration transferred for acquisition		325,000
Cash consideration transferred to acquire businesses		276,000
Consideration transferred for acquisition, units issued		49,000								$ 49,000
Payments to acquire business, cash on hand		66,000
Proceeds from debt borrowings		$ 210,000
Majority Shareholder [Member] | Meraux and Three Rivers Terminal Services Business [Member] | Limited Partner [Member] | Common Unitholder Valero [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions | shares		1,149,905								1,149,905
Majority Shareholder [Member] | Meraux and Three Rivers Terminal Services Business [Member] | General Partner Valero [Member]
Acquisitions (Textual)
Units issued in connection with acquisitions | shares		23,467								23,467

[1] Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

[2] Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

[3] Financial information has been retrospectively adjusted for the acquisitions of the Meraux and Three Rivers Terminal Services.

[4] Includes operating expenses – related party of $12,986 thousand and $12,278 thousand for the three months ended September 30, 2016 and 2015, respectively, and $38,521 thousand and $36,368 thousand for the nine months ended September 30, 2016 and 2015, respectively.

[5] Includes general and administrative expenses – related party of $3,156 thousand and $2,935 thousand for the three months ended September 30, 2016 and 2015, respectively, and $9,353 thousand and $8,639 thousand for the nine months ended September 30, 2016 and 2015, respectively.

[6] Includes interest and debt expense – related party of $1,649 thousand and $589 thousand for the three months ended September 30, 2016 and 2015, respectively, and $4,799 thousand and $1,357 thousand for the nine months ended September 30, 2016 and 2015, respectively.

[7] Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business.

XML

Related-Party Transactions, Agreements (Details) - Majority Shareholder [Member]	9 Months Ended
	Sep. 30, 2016 USD ($) lease_agreements renewal	Sep. 01, 2016 USD ($)	Apr. 01, 2016 USD ($)	Oct. 01, 2015 USD ($)
Omnibus Agreement [Member]
Related Party Agreements and Transactions (Textual)
Annual administrative fee | $		$ 12,500,000	$ 11,700,000	$ 11,200,000
McKee Terminal Services Business [Member] | Commercial Agreements [Member]
Related Party Agreements and Transactions (Textual)
Agreement expiration date, initial term	Apr. 01, 2026
Number of renewal options	1
Duration of renewal option	5 years
McKee Terminal Services Business [Member] | Lease Agreements [Member]
Related Party Agreements and Transactions (Textual)
Agreement expiration date, initial term	Apr. 01, 2026
Number of renewal options	4
Number of lease agreements | lease_agreements	1
Duration of renewal option, lease and access agreement	5 years
Base rent for lease agreement | $	$ 594,000
Meraux and Three Rivers Terminal Services Business [Member] | Commercial Agreements [Member]
Related Party Agreements and Transactions (Textual)
Agreement expiration date, initial term	Sep. 01, 2026
Number of renewal options	1
Duration of renewal option	5 years
Meraux and Three Rivers Terminal Services Business [Member] | Lease Agreements [Member]
Related Party Agreements and Transactions (Textual)
Agreement expiration date, initial term	Sep. 01, 2026
Number of renewal options	4
Number of lease agreements | lease_agreements	2
Duration of renewal option, lease and access agreement	5 years
Base rent for lease agreement | $	$ 971,000

XML

Related-Party Transactions Related-Party Transactions, Receivables (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Receivables from related party	$ 26,314	$ 18,088	[1]
Majority Shareholder [Member]
Trade receivables – related party	33,771	26,103
Due to related party	(7,457)	(8,015)
Receivables from related party	$ 26,314	$ 18,088

[1] Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

XML

Related-Party Transactions Related-Party Transactions, Leases (Details) - Majority Shareholder [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Operating Leases, Lease Revenue
Minimum rental revenues	$ 60,133	$ 32,207	$ 164,659	$ 79,684
Contingent rental revenues	10,710	6,407	28,271	15,389
Total lease revenues	70,843	$ 38,614	192,930	$ 95,073
Future Minimum Rentals to be Received on Noncancelable Lease Agreements
Remainder of 2016	68,206		68,206
2017	270,603		270,603
2018	270,603		270,603
2019	270,603		270,603
2020	271,344		271,344
Thereafter	1,245,319		1,245,319
Total minimum rental payments	$ 2,396,678		$ 2,396,678

XML

Property and Equipment (Details) - USD ($) $ in Thousands		Sep. 30, 2016	Dec. 31, 2015
Non-Leased Assets
Property and equipment excluding assets subject to operating lease, at cost		$ 374,570	$ 549,910	[1]
Accumulated depreciation, property and equipment excluding assets subject to operating lease		(116,029)	(180,543)	[1]
Property and equipment excluding assets subject to operating lease, net		258,541	369,367	[1]
Assets Under Operating Leases
Assets under operating leases, at cost	[2]	823,793	626,933	[1]
Accumulated depreciation, assets under operating leases	[2]	(228,512)	(145,019)	[1]
Assets under operating leases, net	[2]	595,281	481,914	[1]
Property and Equipment, Total
Property and equipment, at cost		1,198,363	1,176,843	[1],[3]
Accumulated depreciation		(344,541)	(325,562)	[1],[3]
Property and equipment, net		853,822	851,281	[1],[3]
Capital Leases (Textual)
Assets under capital lease agreements		3,100	14,900
Accumulated amortization on assets under capital lease agreements		3,100	14,100
Pipelines and Related Assets [Member]
Non-Leased Assets
Property and equipment excluding assets subject to operating lease, at cost		227,495	228,586	[1]
Assets Under Operating Leases
Assets under operating leases, at cost	[2]	46,964	46,739	[1]
Property and Equipment, Total
Property and equipment, at cost		274,459	275,325	[1]
Terminals and Related Assets [Member]
Non-Leased Assets
Property and equipment excluding assets subject to operating lease, at cost		112,017	276,263	[1]
Assets Under Operating Leases
Assets under operating leases, at cost	[2]	776,829	580,194	[1]
Property and Equipment, Total
Property and equipment, at cost		888,846	856,457	[1]
Other [Member]
Non-Leased Assets
Property and equipment excluding assets subject to operating lease, at cost		9,488	9,352	[1]
Assets Under Operating Leases
Assets under operating leases, at cost	[2]	0	0	[1]
Property and Equipment, Total
Property and equipment, at cost		9,488	9,352	[1]
Land [Member]
Non-Leased Assets
Property and equipment excluding assets subject to operating lease, at cost		4,672	4,672	[1]
Assets Under Operating Leases
Assets under operating leases, at cost	[2]	0	0	[1]
Property and Equipment, Total
Property and equipment, at cost		4,672	4,672	[1]
Construction-in-Progress [Member]
Non-Leased Assets
Property and equipment excluding assets subject to operating lease, at cost		20,898	31,037	[1]
Assets Under Operating Leases
Assets under operating leases, at cost	[2]	0	0	[1]
Property and Equipment, Total
Property and equipment, at cost		$ 20,898	$ 31,037	[1]

[1] Financial information has been retrospectively adjusted for the acquisitions of the Meraux and Three Rivers Terminal Services.

[2] Represents assets owned by us for which we are the lessor (see Note 4). Certain assets acquired in the acquisitions of the McKee Terminal Services Business and the Meraux and Three Rivers Terminal Services Business that were initially classified as non-leased assets were reclassified to assets under operating leases subsequent to the acquisitions on April 1, 2016 and September 1, 2016, respectively, in connection with entering into schedules under our commercial agreements with Valero that are considered operating leases (see Note 4).

[3] Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

XML

Debt, Revolving Credit Facility (Details) - USD ($)				9 Months Ended
	Sep. 01, 2016	Apr. 01, 2016	Mar. 02, 2015	Sep. 30, 2016	Sep. 30, 2015		Dec. 31, 2015
Revolving Credit Facility (Textual)
Borrowings under the Revolver				$ 349,000,000	$ 200,000,000	[1]
Line of Credit [Member] | Revolving Credit Facility [Member]
Revolving Credit Facility (Textual)
Line of credit facility, maximum borrowing capacity				$ 750,000,000
Line of credit facility, expiration date				Nov. 20, 2020
Line of credit facility, higher borrowing capacity option				$ 1,000,000,000
Line of credit facility, interest rate at period end				1.81%
Borrowings under the Revolver	$ 210,000,000	$ 139,000,000	$ 200,000,000
Repayment on the Revolver				$ 0	$ 25,000,000
Line of credit facility, amount outstanding				524,000,000			$ 175,000,000
Line of Credit [Member] | Letter of Credit [Member]
Revolving Credit Facility (Textual)
Line of credit facility, maximum borrowing capacity				100,000,000
Line of credit facility, amount outstanding				$ 0			$ 0

[1] Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

XML

Debt, Subordinated Credit Agreements (Details)			9 Months Ended
	Oct. 01, 2015 USD ($)	Mar. 01, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)		Dec. 31, 2015 USD ($) loan_agreements
Subordinated Credit Agreement (Textual)
Subordinated credit agreements, borrowings			$ 0	$ 160,000,000	[1]
Subordinated credit agreements, amounts outstanding			370,000,000			$ 370,000,000	[2]
Majority Shareholder [Member] | Houston and St. Charles Terminal Services Business [Member]
Subordinated Credit Agreement (Textual)
Subordinated credit agreements, borrowings		$ 160,000,000
Majority Shareholder [Member] | Corpus Christi Terminal Services Business [Member]
Subordinated Credit Agreement (Textual)
Subordinated credit agreements, borrowings	$ 395,000,000
Subordinated Debt [Member] | Majority Shareholder [Member]
Subordinated Credit Agreement (Textual)
Number of subordinated credit agreements entered | loan_agreements						2
Subordinated credit agreements, repayments			0	0
Subordinated credit agreements, amounts outstanding			$ 370,000,000			$ 370,000,000
Subordinated Debt [Member] | Majority Shareholder [Member] | Houston and St. Charles Terminal Services Business [Member]
Subordinated Credit Agreement (Textual)
Subordinated credit agreements, borrowings				160,000,000
Subordinated credit agreements, maturity date			Mar. 01, 2020
Subordinated credit agreements, rate at period end			1.77%
Subordinated Debt [Member] | Majority Shareholder [Member] | Corpus Christi Terminal Services Business [Member]
Subordinated Credit Agreement (Textual)
Subordinated credit agreements, borrowings				$ 395,000,000
Subordinated credit agreements, maturity date			Oct. 01, 2020
Subordinated credit agreements, rate at period end			1.77%

[1] Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

[2] Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

XML

Debt, Capitalized Interest (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Capitalized Interest (Textual)
Interest costs incurred, capitalized	$ 13,000	$ 6,000	$ 48,000	$ 12,000

XML

Operating Leases (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Future Minimum Rentals on Operating Leases
Remainder of 2016	$ 2,798		$ 2,798
2017	10,533		10,533
2018	10,490		10,490
2019	10,490		10,490
2020	10,490		10,490
Thereafter	62,988		62,988
Total minimum rental payments	107,789		107,789
Operating Leases (Textual)
Rental expense for operating leases	$ 2,500	$ 1,900	$ 7,100	$ 4,700

XML

Cash Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands									3 Months Ended		9 Months Ended
	Oct. 24, 2016	Aug. 09, 2016	May 10, 2016	Feb. 11, 2016	Nov. 10, 2015	Aug. 11, 2015	May 12, 2015	Feb. 12, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Quarterly Cash Distributions
Total quarterly distribution (per unit)		$ 0.3650	$ 0.3400	$ 0.3200	$ 0.3075	$ 0.2925	$ 0.2775	$ 0.2660	$ 0.3850	$ 0.3075	$ 1.0900	$ 0.8775
Distributions		$ 28,912	$ 25,608	$ 22,711	$ 20,164	$ 18,456	$ 17,266	$ 15,829	$ 32,175	$ 20,164	$ 86,695	$ 55,886
General Partner’s Distribution, Including Incentive Distribution Rights [Member]
Quarterly Cash Distributions
Distributions									6,244	1,386	14,196	3,194
General Partner Valero [Member]
Quarterly Cash Distributions
Distributions									644	404	1,734	1,118
General Partner IDRs [Member]
Quarterly Cash Distributions
Distributions									5,600	982	12,462	2,076
Limited Partner, Common and Subordinated Units [Member]
Quarterly Cash Distributions
Distributions									25,926	18,776	72,484	52,684
Common Unitholders Public [Member]
Quarterly Cash Distributions
Distributions									8,336	5,305	23,495	15,137
Common Unitholder Valero [Member]
Quarterly Cash Distributions
Distributions									17,590	4,618	28,692	12,284
Subordinated Unitholder Valero [Member]
Quarterly Cash Distributions
Distributions									0	8,853	20,297	25,263
Distribution Equivalent Rights [Member]
Quarterly Cash Distributions
Distributions									$ 5	$ 2	$ 15	$ 8
Subsequent Event [Member]
Quarterly Cash Distributions
Total quarterly distribution (per unit)	$ 0.3850
Distributions	$ 32,175

XML

Net Income Per Limited Partner Unit (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner's IDRs	$ 26,570	$ 19,180	$ 74,218	$ 53,802
General partner’s IDRs	5,600	982	12,462	2,076
DERs	5	2	15	8
Distributions and DERs declared	32,175	20,164	86,695	55,886
Undistributed earnings	19,534	11,264	57,759	31,325
Net income available to limited partners – basic and diluted	$ 51,709	$ 31,428	$ 144,454	$ 87,211
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding	53,899	30,698	42,597	30,279
Net income per limited partner unit – basic and diluted	$ 0.77	$ 0.51	$ 2.08	$ 1.43
General Partner Valero [Member]
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner's IDRs	$ 644	$ 404	$ 1,734	$ 1,118
General partner’s IDRs	5,600	982	12,462	2,076
Distributions and DERs declared	6,244	1,386	14,196	3,194
Undistributed earnings	390	226	1,155	627
Net income available to limited partners – basic and diluted	6,634	1,612	15,351	3,821
Limited Partner [Member] | Limited Partner, Common Units [Member]
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner's IDRs	25,926	9,923	52,187	27,421
Distributions and DERs declared	25,926	9,923	52,187	27,421
Undistributed earnings	15,533	5,691	36,568	15,733
Net income available to limited partners – basic and diluted	$ 41,459	$ 15,614	$ 88,755	$ 43,154
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding	53,899	30,698	42,597	30,279
Net income per limited partner unit – basic and diluted	$ 0.77	$ 0.51	$ 2.08	$ 1.43
Limited Partner [Member] | Subordinated Unitholder Valero [Member]
Allocation of net income to determine net income available to limited partners:
Distributions, excluding general partner's IDRs	$ 0	$ 8,853	$ 20,297	$ 25,263
Distributions and DERs declared	0	8,853	20,297	25,263
Undistributed earnings	3,607	5,345	20,025	14,960
Net income available to limited partners – basic and diluted	$ 3,607	$ 14,198	$ 40,322	$ 40,223
Net income per limited partner unit – basic and diluted:
Weighted-average units outstanding	12,517	28,790	23,326	28,790
Net income per limited partner unit – basic and diluted	$ 0.29	$ 0.49	$ 1.73	$ 1.40
Limited Partner [Member] | Restricted Units [Member]
Allocation of net income to determine net income available to limited partners:
DERs	$ 5	$ 2	$ 15	$ 8
Distributions and DERs declared	5	2	15	8
Undistributed earnings	4	2	11	5
Net income available to limited partners – basic and diluted	$ 9	$ 4	$ 26	$ 13

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Partners' Capital (Details) - USD ($)		1 Months Ended		9 Months Ended
	Sep. 30, 2016	Oct. 31, 2016	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	[1]	Sep. 16, 2016	Dec. 31, 2015	[2]
Partners’ capital:
Public offering of common units				65,980
Net proceeds from issuance of common limited partner units				$ 2,814,000	$ 0
Compensation paid on issuance of common limited partner units				373,000	0
Receivables	$ 3,416,000		$ 3,416,000	$ 3,416,000				$ 0
General partner units issued				1,346
Contributions from Valero				$ 58,000	$ 0
Public Offering [Member]
Partners’ capital:
Aggregate offering price of common units							$ 350,000,000
Net proceeds from issuance of common limited partner units			2,800,000
Compensation paid on issuance of common limited partner units			$ 39,000
General Partner Valero [Member]
Partners’ capital:
Contributions from Valero	$ 58,000
Majority Shareholder [Member]
Partners’ capital:
General partner ownership interest, percentage	2.00%
Majority Shareholder [Member] | Meraux and Three Rivers Terminal Services Business [Member]
Partners’ capital:
Effective date of acquisition				Sep. 01, 2016
Limited Partner [Member] | Common Unitholders Public [Member]
Partners’ capital:
Public offering of common units				65,980
Limited Partner [Member] | Common Unitholders Public [Member] | Public Offering [Member]
Partners’ capital:
Public offering of common units			65,980
General Partner Valero [Member]
Partners’ capital:
General partner units issued				1,346
General Partner Valero [Member] | General Partner Valero [Member]
Partners’ capital:
General partner units issued	1,346
Subsequent Event [Member] | Public Offering [Member]
Partners’ capital:
Compensation paid on issuance of common limited partner units		$ 34,000
Subsequent Event [Member] | Limited Partner [Member] | Common Unitholders Public [Member] | Public Offering [Member]
Partners’ capital:
Public offering of common units		78,805

[1] Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

[2] Financial information has been retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

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Partners' Capital Partners' Capital, Unit Activity (Details) - shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Partners' Capital Roll Forward (Units)
Beginning balance	66,651,071	58,760,288
Unit-based compensation	5,958	4,443
Units issued in connection with acquisitions	1,917,020	1,947,041
Public offering of common units	65,980
General partner units issued	1,346
Ending balance	68,641,375	60,711,772
General Partner Valero [Member]
Partners' Capital Roll Forward (Units)
Beginning balance	1,332,829	1,175,102
Units issued in connection with acquisitions	38,340	38,941
General partner units issued	1,346
Ending balance	1,372,515	1,214,043
Limited Partner [Member] | Common Unitholders Public [Member]
Partners' Capital Roll Forward (Units)
Beginning balance	21,509,651	17,255,208
Unit-based compensation	5,958	4,443
Public offering of common units	65,980
Ending balance	21,581,589	17,259,651
Limited Partner [Member] | Common Unitholder Valero [Member]
Partners' Capital Roll Forward (Units)
Beginning balance	15,018,602	11,539,989
Units issued in connection with acquisitions	1,878,680	1,908,100
Conversion of subordinated units	28,789,989
Ending balance	45,687,271	13,448,089
Limited Partner [Member] | Subordinated Unitholder Valero [Member]
Partners' Capital Roll Forward (Units)
Beginning balance	28,789,989	28,789,989
Conversion of subordinated units	(28,789,989)
Ending balance	0	28,789,989

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Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands					9 Months Ended
		Sep. 01, 2016	Apr. 01, 2016	Mar. 01, 2015	Sep. 30, 2016	Sep. 30, 2015
Decrease (increase) in current assets:
Receivables from related party					$ (8,226)	$ (6,354)
Prepaid expenses and other					223	(33)
Increase (decrease) in current liabilities:
Accounts payable					791	1,031
Accrued liabilities					353	(88)
Accrued liabilities – related party					5	309
Taxes other than income taxes					1,000	470
Deferred revenue from related party					3,675	22
Changes in current assets and current liabilities					(2,179)	(4,643)	[1]
Reconciliation of Net Transfers from/to Valero
Net transfers from Valero per statements of cash flows					14,886	68,800	[1]
Cash Flows Related to Interest and Income Taxes Paid
Interest paid					8,688	2,952
Income taxes paid					496	441
Supplemental Cash Flow Elements (Textual)
Cash consideration paid attributed to the historical carrying value of assets acquired					103,607	296,109	[1]
Cash consideration paid in excess of the carrying value of assets acquired					376,393	275,111	[1]
Noncash capital contributions from Valero Energy Corporation					$ 23,820	$ 14,518
Units issued in connection with acquisitions					1,917,020	1,947,041
Limited Partner [Member] | Common Unitholder Valero [Member]
Supplemental Cash Flow Elements (Textual)
Noncash capital contributions from Valero Energy Corporation					$ 11,057	$ 4,493
Units issued in connection with acquisitions					1,878,680	1,908,100
Limited Partner [Member] | Subordinated Unitholder Valero [Member]
Supplemental Cash Flow Elements (Textual)
Noncash capital contributions from Valero Energy Corporation					$ 12,084	$ 9,620
General Partner Valero [Member]
Supplemental Cash Flow Elements (Textual)
Noncash capital contributions from Valero Energy Corporation					$ 679	$ 405
Units issued in connection with acquisitions					38,340	38,941
Majority Shareholder [Member]
Reconciliation of Net Transfers from/to Valero
Net transfers from Valero per statements of partners’ capital					$ 15,030	$ 61,491	[2]
Less: Noncash transfers from Valero					144
Less: Noncash transfers to Valero	[2]					(7,309)
Net transfers from Valero per statements of cash flows					14,886	68,800	[2]
Supplemental Cash Flow Elements (Textual)
Noncash capital contributions from Valero Energy Corporation					23,800
Majority Shareholder [Member] | Limited Partner [Member] | Common Unitholder Valero [Member]
Supplemental Cash Flow Elements (Textual)
Noncash conversion of subordinated units issued					406,400
Majority Shareholder [Member] | Limited Partner [Member] | Subordinated Unitholder Valero [Member]
Supplemental Cash Flow Elements (Textual)
Noncash conversion of subordinated units converted					(406,400)
Majority Shareholder [Member] | McKee Terminal Services Business [Member]
Supplemental Cash Flow Elements (Textual)
Cash consideration paid attributed to the historical carrying value of assets acquired					51,400
Cash consideration transferred to acquire businesses			$ 204,000
Cash consideration paid in excess of the carrying value of assets acquired					152,600
Consideration transferred for acquisition, units issued			$ 36,000		$ 36,000
Majority Shareholder [Member] | McKee Terminal Services Business [Member] | Limited Partner [Member] | Common Unitholder Valero [Member]
Supplemental Cash Flow Elements (Textual)
Units issued in connection with acquisitions			728,775		728,775
Majority Shareholder [Member] | McKee Terminal Services Business [Member] | General Partner Valero [Member]
Supplemental Cash Flow Elements (Textual)
Units issued in connection with acquisitions			14,873		14,873
Majority Shareholder [Member] | Meraux and Three Rivers Terminal Services Business [Member]
Supplemental Cash Flow Elements (Textual)
Cash consideration paid attributed to the historical carrying value of assets acquired					$ 52,200
Cash consideration transferred to acquire businesses		$ 276,000
Cash consideration paid in excess of the carrying value of assets acquired					223,800
Consideration transferred for acquisition, units issued		$ 49,000			$ 49,000
Majority Shareholder [Member] | Meraux and Three Rivers Terminal Services Business [Member] | Limited Partner [Member] | Common Unitholder Valero [Member]
Supplemental Cash Flow Elements (Textual)
Units issued in connection with acquisitions		1,149,905			1,149,905
Majority Shareholder [Member] | Meraux and Three Rivers Terminal Services Business [Member] | General Partner Valero [Member]
Supplemental Cash Flow Elements (Textual)
Units issued in connection with acquisitions		23,467			23,467
Majority Shareholder [Member] | Houston and St. Charles Terminal Services Business [Member]
Supplemental Cash Flow Elements (Textual)
Cash consideration paid attributed to the historical carrying value of assets acquired						296,100
Cash consideration transferred to acquire businesses				$ 571,200
Cash consideration paid in excess of the carrying value of assets acquired						275,100
Noncash capital contributions from Valero Energy Corporation						14,500
Consideration transferred for acquisition, units issued				$ 100,000		$ 100,000
Majority Shareholder [Member] | Houston and St. Charles Terminal Services Business [Member] | Limited Partner [Member] | Common Unitholder Valero [Member]
Supplemental Cash Flow Elements (Textual)
Units issued in connection with acquisitions				1,908,100		1,908,100.0
Majority Shareholder [Member] | Houston and St. Charles Terminal Services Business [Member] | General Partner Valero [Member]
Supplemental Cash Flow Elements (Textual)
Units issued in connection with acquisitions				38,941		38,941.000

[1] Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business from Valero Energy Corporation. See Notes 1 and 3.

[2] Financial information has been retrospectively adjusted for the acquisitions of the Corpus Christi Terminal Services Business, the McKee Terminal Services Business, and the Meraux and Three Rivers Terminal Services Business.