Cover Page
Cover Page - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 15, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 1-32225 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 20-0833098 | ||
Entity Address, Address Line One | 2828 N. Harwood, Suite 1300 | ||
Entity Address, City or Town | Dallas | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 75201-1507 | ||
City Area Code | 214 | ||
Local Phone Number | 871-3555 | ||
Title of 12(b) Security | Common Limited Partner Units | ||
Trading Symbol | HEP | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Smaller Reporting Company | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 1 | ||
Entity Common Stock, Shares Outstanding (in shares) | 105,440,201 | ||
Entity Registrant Name | HOLLY ENERGY PARTNERS LP | ||
Entity Central Index Key | 0001283140 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Auditor Information [Abstract] | |
Auditor Firm ID | 42 |
Auditor Name | Ernst & Young LLP |
Auditor Location | Dallas, Texas |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents (Cushing Connect VIEs: $8,881 and $18,259, respectively) | $ 14,381 | $ 21,990 |
Accounts receivable: | ||
Trade | 12,745 | 14,543 |
Affiliates | 56,154 | 47,972 |
Total accounts receivable | 68,899 | 62,515 |
Prepaid and other current assets | 11,033 | 9,487 |
Total current assets | 94,313 | 93,992 |
Properties and equipment, net (Cushing Connect VIEs: $— and $47,801, respectively) | 1,329,028 | 1,450,685 |
Operating lease right-of-use assets | 2,275 | 2,979 |
Net investment in leases (Cushing Connect VIEs: $100,042 and $—, respectively) | 309,303 | 166,316 |
Intangible assets, net | 73,307 | 87,315 |
Goodwill | 223,650 | 234,684 |
Equity method investments (Cushing Connect VIEs: $37,505 and $39,456, respectively) | 116,378 | 120,544 |
Other assets | 17,613 | 11,050 |
Total assets | 2,165,867 | 2,167,565 |
Accounts payable: | ||
Trade (Cushing Connect VIEs: $8,285 and $14,076, respectively) | 28,577 | 28,280 |
Affiliates | 11,703 | 18,120 |
Total accounts payable | 40,280 | 46,400 |
Accrued interest | 11,258 | 10,892 |
Deferred revenue | 14,585 | 11,368 |
Accrued property taxes | 4,542 | 3,992 |
Current operating lease liabilities | 620 | 875 |
Current finance lease liabilities | 3,786 | 3,713 |
Other current liabilities | 1,781 | 2,505 |
Total current liabilities | 76,852 | 79,745 |
Long-term debt | 1,333,049 | 1,405,603 |
Noncurrent operating lease liabilities | 2,030 | 2,476 |
Noncurrent finance lease liabilities | 64,649 | 68,047 |
Other long-term liabilities | 12,527 | 12,905 |
Deferred revenue | 29,662 | 40,581 |
Class B unit | 56,549 | 52,850 |
Partners’ equity: | ||
Common unitholders (105,440,201 units issued and outstanding at both December 31, 2021 and 2020) | 443,017 | 379,292 |
Total partners’ equity | 443,017 | 379,292 |
Noncontrolling interests | 147,532 | 126,066 |
Total equity | 590,549 | 505,358 |
Total liabilities and equity | $ 2,165,867 | $ 2,167,565 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Cash and cash equivalents | $ 14,381 | $ 21,990 |
Properties and equipment, net | 1,329,028 | 1,450,685 |
Net investment in leases | 309,303 | 166,316 |
Equity method investments | 116,378 | 120,544 |
Trade payable | $ 28,577 | $ 28,280 |
Common units issued (in shares) | 105,440,201 | 105,440,201 |
Common units outstanding (in shares) | 105,440,201 | 105,440,201 |
VIEs | ||
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Cash and cash equivalents | $ 8,881 | $ 18,259 |
Properties and equipment, net | 0 | 47,801 |
Net investment in leases | 100,042 | 0 |
Equity method investments | 37,505 | 39,456 |
Trade payable | $ 8,285 | $ 14,076 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | |||
Revenues: | $ 494,495 | $ 497,848 | $ 532,777 |
Operating costs and expenses: | |||
Operations (exclusive of depreciation and amortization) | 170,524 | 147,692 | 161,996 |
Depreciation and amortization | 93,800 | 99,578 | 96,705 |
General and administrative | 12,637 | 9,989 | 10,251 |
Goodwill impairment | 11,034 | 35,653 | 0 |
Total operating costs and expenses | 287,995 | 292,912 | 268,952 |
Operating income | 206,500 | 204,936 | 263,825 |
Other income (expense): | |||
Equity in earnings of equity method investments | 12,432 | 6,647 | 5,180 |
Interest expense | (53,818) | (59,424) | (76,823) |
Interest income | 29,925 | 10,621 | 5,517 |
Gain on sales-type lease | 24,677 | 33,834 | 35,166 |
Loss on early extinguishment of debt | 0 | (25,915) | 0 |
Gain on sale of assets and other | 6,179 | 8,691 | 272 |
Total other income (expense) | 19,395 | (25,546) | (30,688) |
Income before income taxes | 225,895 | 179,390 | 233,137 |
State income tax expense | (32) | (167) | (41) |
Net income | 225,863 | 179,223 | 233,096 |
Allocation of net income attributable to noncontrolling interests | (10,917) | (8,740) | (8,212) |
Net income attributable to the partners | $ 214,946 | $ 170,483 | $ 224,884 |
Limited partners’ per unit interest in earnings— basic (in USD per share) | $ 2.03 | $ 1.61 | $ 2.13 |
Limited partners’ per unit interest in earnings— diluted (in USD per share) | $ 2.03 | $ 1.61 | $ 2.13 |
Weighted average limited partners’ units outstanding, basic (in shares) | 105,440 | 105,440 | 105,440 |
Weighted average limited partners’ units outstanding, diluted (in shares) | 105,440 | 105,440 | 105,440 |
Affiliates | |||
Revenues: | |||
Revenues: | $ 390,849 | $ 399,809 | $ 411,750 |
Third parties | |||
Revenues: | |||
Revenues: | $ 103,646 | $ 98,039 | $ 121,027 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities | |||
Net income | $ 225,863 | $ 179,223 | $ 233,096 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 93,800 | 99,578 | 96,705 |
Gain on sale of assets | (5,567) | (1,015) | (229) |
Gain on sales-type lease | (24,677) | (33,834) | (35,166) |
Goodwill impairment | 11,034 | 35,653 | 0 |
Amortization of deferred charges | 3,757 | 3,319 | 3,081 |
Equity-based compensation expense | 2,557 | 2,193 | 2,532 |
Equity in earnings of equity method investments, net of distributions | 0 | 1,084 | (213) |
Loss on early extinguishment of debt | 0 | 25,915 | 0 |
(Increase) decrease in operating assets: | |||
Accounts receivable—trade | 1,798 | 4,188 | (6,399) |
Accounts receivable—affiliates | (8,182) | 1,744 | (2,930) |
Prepaid and other current assets | (255) | (1,272) | (372) |
Increase (decrease) in operating liabilities: | |||
Accounts payable—trade | 912 | 2,208 | 5,823 |
Accounts payable—affiliates | (6,417) | 1,383 | 2,515 |
Accrued interest | 366 | (2,314) | (96) |
Deferred revenue | (1,144) | (4,122) | (151) |
Accrued property taxes | 550 | 193 | 2,020 |
Other current liabilities | (724) | 200 | (220) |
Other, net | 424 | 1,303 | (2,935) |
Net cash provided by operating activities | 294,095 | 315,627 | 297,061 |
Cash flows from investing activities | |||
Additions to properties and equipment | (89,995) | (59,283) | (30,112) |
Purchase of interest in Cushing Connect Pipeline & Terminal | 0 | (2,438) | (17,886) |
Proceeds from sales of assets | 7,365 | 1,089 | 532 |
Distributions in excess of equity in earnings of equity investments | 4,165 | 882 | 1,206 |
Net cash used for investing activities | (78,465) | (59,750) | (46,260) |
Cash flows from financing activities | |||
Borrowings under credit agreement | 480,500 | 258,500 | 365,500 |
Repayments of credit agreement borrowings | (554,000) | (310,500) | (323,000) |
Redemption of senior notes | 0 | (522,500) | 0 |
Proceeds from issuance of senior notes | 0 | 500,000 | 0 |
Contributions from general partner | 0 | 988 | 320 |
Contribution from noncontrolling interests | 23,194 | 23,899 | 3,210 |
Distributions to HEP unitholders | (149,432) | (174,443) | (273,225) |
Distributions to noncontrolling interests | (10,743) | (9,770) | (9,000) |
Payments on finance leases | (3,549) | (3,602) | (2,471) |
Purchase of units for incentive grants | (1,958) | (698) | (1,470) |
Units withheld for tax withholding obligations | (590) | (334) | (423) |
Deferred financing costs | (6,661) | (8,714) | 0 |
Net cash used for financing activities | (223,239) | (247,174) | (240,559) |
Cash and cash equivalents | |||
Increase (decrease) for the year | (7,609) | 8,703 | 10,242 |
Beginning of year | 21,990 | 13,287 | 3,045 |
End of year | 14,381 | 21,990 | 13,287 |
Supplemental disclosure of cash flow information: | |||
Cash paid during the period for interest | $ 49,990 | $ 58,138 | $ 73,868 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Common Units | Noncontrolling Interests |
Balance at beginning of period at Dec. 31, 2018 | $ 515,561 | $ 427,435 | $ 88,126 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Capital contribution | 320 | 320 | |
Capital contribution - Cushing Connect | 22,548 | 22,548 | |
Distributions to HEP unitholders | (273,225) | (273,225) | |
Distributions to noncontrolling interests | (9,000) | (9,000) | |
Purchase of units for incentive grants | (1,470) | (1,470) | |
Amortization of restricted and performance units | 2,532 | 2,532 | |
Class B unit accretion | (3,231) | (3,231) | |
Other | 627 | 627 | |
Net income | 233,096 | 228,115 | 4,981 |
Balance at end of period at Dec. 31, 2019 | 487,758 | 381,103 | 106,655 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Capital contribution - Cushing Connect | 23,899 | 23,899 | |
Capital contribution - Cheyenne | 988 | 988 | |
Distributions to HEP unitholders | (174,443) | (174,443) | |
Distributions to noncontrolling interests | (9,770) | (9,770) | |
Purchase of units for incentive grants | (698) | (698) | |
Amortization of restricted and performance units | 2,193 | 2,193 | |
Class B unit accretion | (3,458) | (3,458) | |
Other | (334) | (334) | |
Net income | 179,223 | 173,941 | 5,282 |
Balance at end of period at Dec. 31, 2020 | 505,358 | 379,292 | 126,066 |
Increase (Decrease) in Partners' Equity [Roll Forward] | |||
Capital contribution - Cushing Connect | 23,194 | 23,194 | |
Distributions to HEP unitholders | (149,432) | (149,432) | |
Distributions to noncontrolling interests | (10,743) | (10,743) | |
Purchase of units for incentive grants | (1,958) | (1,958) | |
Amortization of restricted and performance units | 2,557 | 2,557 | |
Class B unit accretion | (3,699) | (3,699) | |
Other | (591) | (2,388) | 1,797 |
Net income | 225,863 | 218,645 | 7,218 |
Balance at end of period at Dec. 31, 2021 | $ 590,549 | $ 443,017 | $ 147,532 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | Description of Business and Summary of Significant Accounting Policies Holly Energy Partners, L.P. (“HEP”) together with its consolidated subsidiaries, is a publicly held master limited partnership. As of December 31, 2021, HollyFrontier Corporation (“HFC”) and its subsidiaries own a 57% limited partner interest and the non-economic general partner interest in HEP. We commenced operations on July 13, 2004, upon the completion of our initial public offering. In these consolidated financial statements, the words “we,” “our,” “ours” and “us” refer to HEP unless the context otherwise indicates. We own and operate petroleum product and crude oil pipelines, terminal, tankage and loading rack facilities and refinery processing units that support the refining and marketing operations of HFC and other refineries in the Mid-Continent, Southwest and Northwest regions of the United States. Additionally, we own a 75% interest in the UNEV Pipeline, LLC (“UNEV”), a 50% int erest in Osage Pipe Line Company, LLC (“Osage”), a 50% inte rest in Cheyenne Pipeline LLC, and a 50% interest in Cushing Connect Pipeline & Terminal LLC. On June 1, 2020, HFC announced plans to permanently cease petroleum refining operations at its Cheyenne refinery (the “Cheyenne Refinery”) and to convert certain assets at that refinery to renewable diesel production. HFC subsequently began winding down petroleum refining operations at the Cheyenne refinery on August 3, 2020. On February 8, 2021, HEP and HFC finalized and executed new agreements for HEP’s Cheyenne assets with the following terms, in each case effective January 1, 2021: (1) a ten-year lease with two five-year renewal option periods for HFC’s use of certain HEP tank and rack assets in the Cheyenne refinery to facilitate renewable diesel production with an annual lease payment of approximately $5 million, (2) a five-year contango service fee arrangement that will utilize HEP tank assets inside the Cheyenne refinery where HFC will pay a base tariff to HEP for available crude oil storage and HFC and HEP will split any profits generated on crude oil contango opportunities and (3) a $10 million one-time cash payment from HFC to HEP for the termination of the existing minimum volume commitment. On April 1, 2021, we sold our 156-mile, 6-inch refined product pipeline that connected HFC’s Navajo refinery to terminals in El Paso for gross proceeds of $7.0 million and recognized a gain on sale of $5.3 million. We operate in two reportable segments, a Pipelines and Terminals segment and a Refinery Processing Unit segment. Disclosures around these segments are discussed in Note 16. Our Pipelines and Terminals segment consists of: • 26 main pipeline segments • Crude gathering networks in Texas and New Mexico • 10 refined product terminals • 1 crude terminal • 1 lube terminal • 31,800 track feet of rail storage located at two facilities • 7 locations with truck and/or rail racks • Tankage at 6 of HFC's refining and renewable diesel facility locations Our Refinery Processing Unit segment consists of five refinery processing units at two of HFC's refining facility locations. We generate revenues by charging tariffs for transporting petroleum products and crude oil through our pipelines, by charging fees for terminalling and storing refined products and other hydrocarbons, providing other services at our storage tanks and terminals and by charging fees for processing hydrocarbon feedstocks through our refinery processing units. We do not take ownership of products that we transport, terminal, store or process, and therefore, we are not exposed directly to changes in commodity prices. Principles of Consolidation The consolidated financial statements include our accounts and those of subsidiaries and joint ventures that we control through an ownership interest greater than 50% or through a controlling financial interest with respect to variable interest entities. All significant intercompany transactions and balances have been eliminated. Certain prior period balances have been reclassified for consistency with current year presentation. Use of Estimates The preparation of financial statements in accordance with 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 those estimates. Cash and Cash Equivalents For purposes of the statements of cash flows, we consider all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. The carrying amounts reported on the balance sheets approximate fair value due to the short-term maturity of these instruments. Accounts Receivable The majority of the accounts receivable are due from affiliates of HFC or independent companies in the petroleum industry. Credit is extended based on evaluation of the customer's financial condition, and in certain circumstances, collateral such as letters of credit or guarantees, may be required. We reserve for doubtful accounts based on our historical loss experience as well as expected credit losses from current economic conditions and management’s expectations of future economic conditions. Credit losses are charged to the allowance for doubtful accounts when an account is deemed uncollectible and historically have been minimal. Properties and Equipment Properties and equipment are stated at cost. Properties and equipment acquired from HFC while under common control of HFC are stated at HFC's historical basis. Depreciation is provided by the straight-line method over the estimated useful lives of the assets, primarily 15 to 25 years for terminal facilities and tankage, 25 to 30 years for pipelines, 25 years for refinery processing units and 3 to 10 years for corporate and other assets. We depreciate assets acquired under capital leases over the lesser of the lease term or the economic life of the assets. Maintenance, repairs and minor replacements are expensed as incurred. Costs of replacements constituting improvements are capitalized. Intangible Assets Intangible assets include transportation agreements and acquired customer relationship intangible assets. Intangible assets are stated at acquisition date fair value and are being amortized over their useful lives using the straight-line method. Goodwill and Long-Lived Assets Goodwill represents the excess of our cost of an acquired business over the fair value of the assets acquired, less liabilities assumed. Goodwill is not amortized. We test goodwill at the reporting unit level for impairment annually and between annual tests if events or changes in circumstances indicate the carrying amount may exceed fair value. Our goodwill impairment testing first entails a comparison of our reporting unit fair values relative to their respective carrying values, including goodwill. If carrying value exceeds the estimated fair value for a reporting unit, we measure goodwill impairment as the excess of the carrying amount of the reporting unit over the estimated fair value of the reporting unit. The changes due to our new agreements with HFC related to our Cheyenne assets resulted in an increase in the net book value of our Cheyenne reporting unit during the first quarter of 2021 due to sales-type lease accounting, which led us to determine indicators of potential goodwill impairment for our Cheyenne reporting unit were present. Therefore, we performed an interim quantitative review of our Cheyenne reporting unit goodwill for the first quarter of 2021. The estimated fair value of our Cheyenne reporting unit was derived using a combination of income and market approaches. The income approach reflects expected future cash flows based on anticipated gross margins, operating costs, and capital expenditures. The market approaches include both the guideline public company and guideline transaction methods. Both methods utilize pricing multiples derived from historical market transactions of other like-kind assets. These fair value measurements involve significant unobservable inputs (Level 3 inputs). See Note 6 for further discussion of Level 3 inputs. Our interim impairment testing of our Cheyenne reporting unit goodwill identified an impairment charge of $11.0 million, which was recorded in the three months ended March 31, 2021. Our annual goodwill impairment testing for 2021 and 2019 was performed on a qualitative basis during the third quarters of 2021 and 2019. We assessed qualitative factors such as macroeconomic conditions, industry considerations, cost factors and reporting unit financial performance and determined it was not more likely than not that the fair value of our reporting units were less than the respective carrying value. Therefore, in accordance with GAAP, further testing was not required. Our annual impairment testing for 2020 was performed on a quantitative basis during the third quarter of 2020. The estimated fair value of our reporting units were derived using a combination of both income and market approaches as described above. Our annual testing of goodwill in 2020 identified an impairment charge of $35.7 million, which was recorded in the third quarter of 2020, related to our Cheyenne reporting unit. The following is a summary of our goodwill balances: December 31, December 31, (In thousands) Goodwill $ 270,336 $ 270,336 Accumulated impairment losses (46,686) (35,652) $ 223,650 $ 234,684 We evaluate long-lived assets, including finite-lived intangible assets, for potential impairment by identifying whether indicators of impairment exist and, if so, assessing whether the long-lived assets are recoverable from estimated future undiscounted cash flows. The actual amount of impairment loss, if any, to be recorded is equal to the amount by which a long-lived asset’s carrying value exceeds its fair value. Investment in Equity Method Investments We account for our interests in noncontrolling joint venture interests using the equity method of accounting, whereby we record our pro-rata share of earnings of these companies, and contributions to and distributions from the joint ventures as adjustments to our investment balances. The difference between the cost of an investment and our proportionate share of the underlying equity in net assets recorded on the investee's books is allocated to the various assets and liabilities of the equity method investment. The following table summarizes our recorded investments compared to our share of underlying equity for each investee. We are amortizing the differences as adjustments to our pro-rata share of earnings over the useful lives of the underlying assets of these joint ventures. Balance at December 31, 2021 Underlying Equity Recorded Investment Balance Difference (In thousands) Equity Method Investments Osage Pipe Line Company, LLC $ 9,996 $ 37,782 $ (27,786) Cheyenne Pipeline LLC 28,557 41,091 (12,534) Cushing Connect Terminal Holdings LLC 52,203 37,505 14,698 Total $ 90,756 $ 116,378 $ (25,622) Balance at December 31, 2020 Underlying Equity Recorded Investment Balance Difference (In thousands) Equity Method Investments Osage Pipe Line Company, LLC $ 10,044 $ 38,743 $ (28,699) Cheyenne Pipeline LLC 29,103 42,345 (13,242) Cushing Connect Terminal Holdings LLC 54,049 39,456 14,593 Total $ 93,196 $ 120,544 $ (27,348) Asset Retirement Obligations We record legal obligations associated with the retirement of certain of our long-lived assets that result from the acquisition, construction, development and/or the normal operation of our long-lived assets. The fair value of the estimated cost to retire a tangible long-lived asset is recorded in the period in which the liability is incurred and when a reasonable estimate of the fair value of the liability can be made. For our pipeline assets, the right-of-way agreements typically do not require the dismantling, removal and reclamation of the right-of-way upon cessation of the pipeline service. Additionally, management is unable to predict when, or if, our pipelines and related facilities would become obsolete and require decommissioning. Accordingly, we have recorded no liability or corresponding asset related to an asset retirement obligation for the majority of our pipelines as both the amounts and timing of such potential future costs are indeterminable. For our remaining assets, at December 31, 2021 and 2020, we have asset retirement obligations of $8.7 million and $9.0 million, respectively, that are recorded under “Other long-term liabilities” in our consolidated balance sheets. Class B Unit Under the terms of the transaction to acquire HFC's 75% interest in UNEV, we issued HFC a Class B unit comprising a noncontrolling equity interest in a wholly-owned subsidiary subject to redemption to the extent that HFC is entitled to a 50% interest in our share of annual UNEV earnings before interest, income taxes, depreciation, and amortization above $30 million beginning July 1, 2015, and ending in June 2032, subject to certain limitations. Such contingent redemption payments are limited to the unredeemed value of the Class B Unit. However, to the extent earnings thresholds are not achieved, no redemption payments are required. No redemption payments have been required to date. Pursuant to the terms of the transaction agreements, the Class B unit increases by the amount of each foregone incentive distribution and by a 7% factor compounded annually on the outstanding unredeemed balance through its expiration date. At our option, we may redeem, in whole or in part, the Class B unit at the current unredeemed value based on the calculation described. The Class B unit had a carrying value of $56.5 million at December 31, 2021, and $52.9 million at December 31, 2020. Revenue Recognition Revenues are generally recognized as products are shipped through our pipelines and terminals, feedstocks are processed through our refinery processing units or other services are rendered. The majority of our contracts with customers meet the definition of a lease since (1) performance of the contracts is dependent on specified property, plant, or equipment and (2) it is remote that one or more parties other than the customer will take more than a minor amount of the output associated with the specified property, plant, or equipment. Prior to the adoption of the new lease standard (see below), we bifurcated the consideration received between lease and service revenue. The new lease standard allows the election of a practical expedient whereby a lessor does not have to separate non-lease (service) components from lease components under certain conditions. The majority of our contracts meet these conditions, and we have made this election for those contracts. Under this practical expedient, we treat the combined components as a single performance obligation in accordance with Accounting Standards Codification (“ASC”) 606, which largely codified ASU 2014-09, if the non-lease (service) component is the dominant component. If the lease component is the dominant component, we treat the combined components as a lease in accordance with ASC 842, which largely codified ASU 2016-02. Several of our contracts include incentive or reduced tariffs once a certain quarterly volume is met. Revenue from the variable element of these transactions is recognized based on the actual volumes shipped as it relates specifically to rendering the services during the applicable quarter. The majority of our long-term transportation contracts specify minimum volume requirements, whereby, we bill a customer for a minimum level of shipments in the event a customer ships below their contractual requirements. If there are no future performance obligations, we will recognize these deficiency payments in revenue. In certain of these throughput agreements, a customer may later utilize such shortfall billings as credit towards future volume shipments in excess of its minimum levels within its respective contractual shortfall make-up period. Such amounts represent an obligation to perform future services, which may be initially deferred and later recognized as revenue based on estimated future shipping levels, including the likelihood of a customer’s ability to utilize such amounts prior to the end of the contractual shortfall make-up period. We recognize these deficiency payments in revenue when we do not expect we will be required to satisfy these performance obligations in the future based on the pattern of rights projected to be exercised by the customer. During the years ended December 31, 2021, 2020 and 2019, we recognized $17.5 million, $20.8 million and $16.0 million, respectively, of these deficiency payments in revenue, of which $0.5 million, $0.7 million and $0.6 million, respectively, related to deficiency payments billed in prior periods. As of December 31, 2021, deferred revenue reflected in our consolidated balance sheet related to shortfalls billed was $4.2 million. We have other cost reimbursement provisions in our throughput/storage agreements providing that customers (including HFC) reimburse us for certain costs. Such reimbursements are recorded as revenue or deferred revenue depending on the nature of the cost. Deferred revenue is recognized over the remaining contractual term of the related throughput agreement. Taxes billed and collected from our pipeline and terminal customers are recorded on a net basis with no effect on net income. Leases We adopted ASC 842 effective January 1, 2019, and elected to adopt using the modified retrospective transition method and practical expedients, both of which are provided as options by the standard and further defined below. Lessee Accounting - At inception, we determine if an arrangement is or contains a lease. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our payment obligation under the leasing arrangement. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our estimated incremental borrowing rate (“IBR”) to determine the present value of lease payments as most of our leases do not contain an implicit rate. Our IBR represents the interest rate which we would pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment. We use the implicit rate when readily determinable. Operating leases are recorded in operating lease right-of-use assets and current and noncurrent operating lease liabilities on our consolidated balance sheet. Finance leases are included in properties and equipment, current finance lease liabilities and noncurrent finance lease liabilities on our consolidated balance sheet. When renewal options are defined in a lease, our lease term includes an option to extend the lease when it is reasonably certain we will exercise that option. Leases with a term of 12 months or less are not recorded on our balance sheet, and lease expense is accounted for on a straight-line basis. In addition, as a lessee, we separate non-lease components that are identifiable and exclude them from the determination of net present value of lease payment obligations. Lessor Accounting - Customer contracts that contain leases are generally classified as either operating leases, direct finance leases or sales-type leases. We consider inputs such as the lease term, fair value of the underlying asset and residual value of the underlying assets when assessing the classification. Environmental Costs Environmental costs are expensed if they relate to an existing condition caused by past operations and do not contribute to current or future revenue generation. Liabilities are recorded when site restoration and environmental remediation, cleanup and other obligations are either known or considered probable and can be reasonably estimated. Such estimates require judgment with respect to costs, time frame and extent of required remedial and clean-up activities and are subject to periodic adjustments based on currently available information. Under the Omnibus Agreement and certain transportation agreements and purchase agreements with HFC, HFC has agreed to indemnify us, subject to certain monetary and time limitations, for environmental noncompliance and remediation liabilities associated with certain assets transferred to us from HFC occurring or existing prior to the date of such transfers. We have an environmental agreement with Delek with respect to pre-closing environmental costs and liabilities relating to the pipelines and terminals acquired from Delek in 2005, under which Delek will indemnify us subject to certain monetary and time limitations. Environmental costs recoverable through insurance, indemnification agreements or other sources are included in other assets to the extent such recoveries are considered probable. Income Tax We are subject to the Texas margin tax that is based on our Texas sourced taxable margin. The tax is calculated by applying a tax rate to a base that considers both revenues and expenses and therefore has the characteristics of an income tax. We are organized as a pass-through entity for U.S. federal income tax purposes. As a result, our partners are responsible for U.S. federal income taxes based on their respective share of taxable income. Net income for financial statement purposes may differ significantly from taxable income reportable to unitholders as a result of differences between the tax basis and financial reporting basis of assets and liabilities and the taxable income allocation requirements under the partnership agreement. Accounting Pronouncement Adopted During the Periods Presented Goodwill Impairment Testing In January 2017, Accounting Standard Update (“ASU”) 2017-04, “Simplifying the Test for Goodwill Impairment,” was issued amending the testing for goodwill impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under this standard, goodwill impairment is measured as the excess of the carrying amount of the reporting unit over the related fair value. We adopted this standard effective in the second quarter of 2019, and the adoption of this standard had no effect on our financial condition, results of operations or cash flows for the year ended December 31, 2019. Leases In February 2016, ASU No. 2016-02, “Leases” (“ASC 842”) was issued requiring leases to be measured and recognized as a lease liability, with a corresponding right-of-use asset on the balance sheet. We adopted this standard effective January 1, 2019, and we elected to adopt using the modified retrospective transition method, whereby comparative prior period financial information will not be restated and will continue to be reported under the lease accounting standard in effect during those periods. We also elected practical expedients provided by the new standard, including the package of practical expedients and the short-term lease recognition practical expedient, which allows an entity to not recognize on the balance sheet leases with a term of 12 months or less. Upon adoption of this standard, we recognized $78.4 million of lease liabilities and corresponding right-of-use assets on our consolidated balance sheet. See Notes 4 and 5 of Notes to the Consolidated Financial Statements for additional information on our lease policies. Credit Losses Measurement In June 2016, ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” was issued requiring measurement of all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This standard was effective January 1, 2020. Adoption of the standard did not have a material impact on our financial condition, results of operations or cash flows. Accounting Pronouncements - Not Yet Adopted In October 2021, Accounting Standards Update 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” was issued requiring that an acquiring entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers. This standard is effective for fiscal years beginning after December 15, 2022, and early adoption is permitted. We will evaluate the impact of this standard and consider early adoption, if applicable. |
Sinclair Acquisition
Sinclair Acquisition | 12 Months Ended |
Dec. 31, 2021 | |
Business Combinations [Abstract] | |
Sinclair Acquisition | Sinclair Acquisition HEP Transaction On August 2, 2021, HEP, The Sinclair Companies (“Sinclair”) and Sinclair Transportation Company, a wholly owned subsidiary of Sinclair (“STC”), entered into a Contribution Agreement (the “Contribution Agreement”) pursuant to which HEP will acquire all of the outstanding shares of STC in exchange for 21 million newly issued common units of HEP and cash consideration equal to $325 million (the “HEP Transaction”). On the same date, HFC, Sinclair and certain other parties entered into a Business Combination Agreement pursuant to which Sinclair will contribute all of the equity interests of Hippo Holding LLC, which owns Sinclair Oil Corporation, to a new HFC parent holding company that will be named “HF Sinclair Corporation” in exchange for 60,230,036 shares of common stock in HF Sinclair Corporation (the “HFC Transaction”, and together with the HEP Transaction, the “Sinclair Transactions”). The cash consideration for the HEP Transaction is subject to customary adjustments at closing for working capital of STC. The number of HEP common units to be issued to Sinclair at closing is subject to downward adjustment if, as a condition to obtaining antitrust clearance for the Sinclair Transactions, HEP agrees to divest a portion of its equity interest in UNEV Pipeline, LLC and the sales price for such interests does not exceed the threshold provided in the Contribution Agreement. The Contribution Agreement contains customary representations, warranties and covenants of HEP, Sinclair, and STC. The HEP Transaction is expected to close in 2022, subject to the satisfaction or waiver of certain customary conditions, including, among others, the receipt of certain required regulatory consents and clearance, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (the “HSR Act”), and the consummation of the HFC Transaction. On August 23, 2021, each of HFC and Sinclair filed its respective premerger notification and report regarding the Sinclair Transactions with the U.S. Department of Justice and the U.S. Federal Trade Commission (the “FTC”) under the HSR Act. On September 22, 2021, HFC and Sinclair each received a request for additional information and documentary material (“Second Request”) from the FTC in connection with the FTC’s review of the Sinclair Transactions. Issuance of the Second Request extends the waiting period under the HSR Act until 30 days after both HFC and Sinclair have substantially complied with the Second Request, unless the waiting period is terminated earlier by the FTC or the parties otherwise commit not to close the Sinclair Transactions for some additional period of time. HFC and Sinclair are cooperating with the FTC staff in its review and are working diligently to satisfy the closing conditions as soon as possible. The Contribution Agreement automatically terminates if the HFC Transaction is terminated, and contains other customary termination rights, including a termination right for each of HEP and Sinclair if, under certain circumstances, the closing does not occur by May 2, 2022 (the “Outside Date”), except that the Outside Date can be extended by either party by up to two 90 day periods to obtain any required antitrust clearance. Upon closing of the HEP Transaction, HEP’s existing senior management team will continue to operate HEP. Under the definitive agreements, Sinclair will be granted the right to nominate one director to the HEP board of directors at the closing. The Sinclair stockholders have also agreed to certain customary lock-up restrictions and registration rights for the HEP common units to be issued to the stockholders of Sinclair. HEP will continue to operate under the name Holly Energy Partners, L.P. |
Investment in Joint Venture
Investment in Joint Venture | 12 Months Ended |
Dec. 31, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in Joint Venture | Investment in Joint Venture On October 2, 2019, HEP Cushing LLC (“HEP Cushing”), a wholly-owned subsidiary of HEP, and Plains Marketing, L.P. (“PMLP”), a wholly-owned subsidiary of Plains All American Pipeline, L.P. (“Plains”), formed a 50/50 joint venture, Cushing Connect Pipeline & Terminal LLC (the “Cushing Connect Joint Venture”), for (i) the development and construction of a new 160,000 barrel per day common carrier crude oil pipeline (the “Cushing Connect Pipeline”) that connected the Cushing, Oklahoma crude oil hub to the Tulsa, Oklahoma refining complex owned by a subsidiary of HFC and (ii) the ownership and operation of 1.5 million barrels of crude oil storage in Cushing, Oklahoma (the “Cushing Connect JV Terminal”). The Cushing Connect JV Terminal went in service during the second quarter of 2020, and the Cushing Connect Pipeline was placed into service during the third quarter of 2021. Long-term commercial agreements were entered into to support the Cushing Connect Joint Venture assets. The Cushing Connect Joint Venture contracted with an affiliate of HEP to manage the construction and operation of the Cushing Connect Pipeline and with an affiliate of Plains to manage the operation of the Cushing Connect JV Terminal. The total Cushing Connect Joint Venture investment will generally be shared equally among the partners. However, we are solely responsible for any Cushing Connect Pipeline construction costs that exceed the budget by more than 10%. HEP estimates its share of the cost of the Cushing Connect JV Terminal contributed by Plains and Cushing Connect Pipeline construction costs are approximately $70 million to $75 million, including $4 million to $6 million of Cushing Connect Pipeline construction costs exceeding the budget by more than 10% to be borne solely by HEP. The Cushing Connect Joint Venture legal entities are variable interest entities (“VIEs”) as defined under GAAP. A VIE is a legal entity if it has any one of the following characteristics: (i) the entity does not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support; (ii) the at risk equity holders, as a group, lack the characteristics of a controlling financial interest; or (iii) the entity is structured with non-substantive voting rights. The Cushing Connect Joint Venture legal entities did not have sufficient equity at risk to finance their activities without additional financial support. Since HEP constructed and is operating the Cushing Connect Pipeline, HEP has more ability to direct the activities that most significantly impact the financial performance of the Cushing Connect Joint Venture and Cushing Connect Pipeline legal entities. Therefore, HEP consolidates those legal entities. We do not have the ability to direct the activities that most significantly impact the Cushing Connect JV Terminal legal entity, and therefore, we account for our interest in the Cushing Connect JV Terminal legal entity using the equity method of accounting. HEP's maximum exposure to loss as a result of its involvement with the Cushing Connect JV Terminal legal entity is not expected to be material due to the long-term terminalling agreements in place to support its operations. With the exception of the assets of HEP Cushing, creditors of the Cushing Connect Joint Venture legal entities have no recourse to our assets. Any recourse to HEP Cushing would be limited to the extent of HEP Cushing's assets, which other than its investment in Cushing Connect Joint Venture, are not significant. Furthermore, our creditors have no recourse to the assets of the Cushing Connect Joint Venture legal entities. |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Revenues are generally recognized as products are shipped through our pipelines and terminals, feedstocks are processed through our refinery processing units or other services are rendered. See Note 1 for further discussion of revenue recognition. Disaggregated revenues are as follows: Years Ended December 31, 2021 2020 2019 (In thousands) Pipelines $ 263,110 $ 265,834 $ 292,631 Terminals, tanks and loading racks 142,267 151,692 160,467 Refinery processing units 89,118 80,322 79,679 $ 494,495 $ 497,848 $ 532,777 Affiliates and th ird parties revenues on our consolidated statem ents of income were composed of the following lease and service revenues: Years Ended December 31, 2021 2020 2019 (In thousands) Lease revenues $ 336,062 $ 360,598 $ 378,311 Service revenues 158,433 137,250 154,466 $ 494,495 $ 497,848 $ 532,777 A contract liability exists when an entity is obligated to perform future services to a customer for which the entity has received consideration. Since HEP may be required to perform future services for these deficiency payments received, the deferred revenues on our balance sheets were considered contract liabilities. A contract asset exists when an entity has a right to consideration in exchange for goods or services transferred to a customer. Our consolidated balance sheets included the contract assets and liabilities in the table below. December 31, December 31, (In thousands) Contract assets $ 6,637 $ 6,306 Contract liabilities $ (4,185) $ (500) The contract assets and liabilities include both lease and service components. During the years ended December 31, 2021 and 2020, we recognized $0.5 million and $0.7 million, respectively, of revenue that was previously included in contract liability as of December 31, 2020 and 2019, respectively . During the twelve months ended December 31, 2021, 2020 and 2019, we also recognized $0.3 million and $0.6 million and $3.9 million, respectively, of revenue included in contract assets at December 31, 2021. As of December 31, 2021, we expect to recognize $1.6 billion in revenue related to our unfulfilled performance obligations under the terms of our long-term throughput agreements and operating leases expiring in 2022 through 2036. These agreements provide for changes in the minimum revenue guarantees annually for increases or decreases in the Producer Price Index (“PPI”) or Federal Energy Regulatory Commission (“FERC”) index, with certain contracts having provisions that limit the level of the rate increases or decreases. We expect to recognize revenue for these unfulfilled performance obligations as shown in the table below (amounts shown in table include both service and lease revenues): Years Ending December 31, (In millions) 2022 312 2023 275 2024 238 2025 172 2026 157 Thereafter 484 Total $ 1,638 Payment terms under our contracts with customers are consistent with industry norms and are typically payable within 10 to 30 days of the date of invoice. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Leases | Leases We adopted ASC 842 effective January 1, 2019, and elected to adopt using the modified retrospective transition method and practical expedients, both of which are provided as options by the standard and further defined in Note 1. See Note 1 for further discussion of lease accounting. Lessee Accounting As a lessee, we lease land, buildings, pipelines, transportation and other equipment to support our operations. These leases can be categorized into operating and finance leases. Our leases have remaining terms of less than 1 year to 23 years, some of which include options to extend the leases for up to 10 years. Finance Lease Obligations We have finance lease obligations related to vehicle leases with initial terms of 33 to 48 months. The total cost of assets under finance leases was $6.0 million and $6.4 million as of December 31, 2021 and December 31, 2020, respectively, with accumulated depreciation of $3.6 million and $3.4 million as of December 31, 2021 and December 31, 2020, respectively. We include depreciation of finance leases in depreciation and amortization in our consolidated statements of income. In addition, we have a finance lease obligation related to a pipeline lease with an initial term of 10 years with one remaining subsequent renewal option for an additional 10 years. Supplemental balance sheet information related to leases was as follows (in thousands, except for lease term and discount rate): December 31, 2021 December 31, 2020 Operating leases: Operating lease right-of-use assets, net $ 2,275 $ 2,979 Current operating lease liabilities 620 875 Noncurrent operating lease liabilities 2,030 2,476 Total operating lease liabilities $ 2,650 $ 3,351 Finance leases: Properties and equipment $ 6,031 $ 6,410 Accumulated amortization (3,632) (3,390) Properties and equipment, net $ 2,399 $ 3,020 Current finance lease liabilities 3,786 3,713 Noncurrent finance lease liabilities 64,649 68,047 Total finance lease liabilities $ 68,435 $ 71,760 Weighted average remaining lease term (in years) Operating leases 5.8 5.9 Finance leases 15.0 15.9 Weighted average discount rate Operating leases 4.8% 4.8% Finance leases 5.6% 5.6% Supplemental cash flow and other information related to leases were as follows: Year Ended Year Ended (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows on operating leases $ 1,142 $ 1,024 Operating cash flows on finance leases $ 4,104 $ 4,312 Financing cash flows on finance leases $ 3,549 $ 3,602 Maturities of lease liabilities were as follows: December 31, 2021 Operating Finance (In thousands) 2022 $ 690 $ 7,228 2023 603 7,374 2024 497 6,929 2025 443 6,470 2026 289 6,425 2027 and thereafter 501 67,463 Total lease payments 3,023 101,889 Less: Imputed interest (373) (33,454) Total lease obligations 2,650 68,435 Less: Current lease liabilities (620) (3,786) Long-term lease liabilities $ 2,030 $ 64,649 The components of lease expense were as follows: Years Ended December 31, 2021 2020 (In thousands) Operating lease costs $ 1,077 $ 983 Finance lease costs Amortization of assets 803 1,001 Interest on lease liabilities 3,953 4,126 Variable lease cost 215 222 Total net lease cost $ 6,048 $ 6,332 Lessor Accounting As discussed in Note 1, the majority of our contracts with customers meet the definition of a lease. See Note 1 for further discussion of the impact of adoption of this standard on our activities as a lessor. Substantially all of the assets supporting contracts meeting the definition of a lease have long useful lives, and we believe these assets will continue to have value when the current agreements expire due to our risk management strategy for protecting the residual fair value of the underlying assets by performing ongoing maintenance during the lease term. HFC generally has the option to purchase assets located within HFC refinery boundaries, including refinery tankage, truck racks and refinery processing units, at fair market value when the related agreements expire. During the year ended December 31, 2021, we entered into new agreements, and amended other agreements, with HFC related to our Cheyenne assets, Tulsa West lube racks, various crude tanks and new Navajo tanks, and the agreements we previously entered into relating to the Cushing Connect Pipeline became effective. These agreements met the criteria of sales-type leases since the underlying assets are not expected to have an alternative use at the end of the lease terms to anyone other than HFC. Under sales-type lease accounting, at the commencement date, the lessor recognizes a net investment in the lease, based on the estimated fair value of the underlying leased assets at contract inception, and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease. Therefore, we recognized a gain on sales-type leases during the year ended December 31, 2021 composed of the following: (In thousands) Net investment in leases $ 148,419 Properties and equipment, net (130,301) Deferred Revenue 6,559 Gain on sales-type leases $ 24,677 During the year ended December 31, 2020, one of our throughput agreements with Delek US Holdings, Inc. (“Delek”) was partially renewed. A component of this agreement met the criteria of a sales-type lease since the underlying asset is not expected to have an alternative use at the end of the lease term to anyone other than Delek. We recognized a gain on sales-type leases during the year ended December 31, 2020 composed of the following: (In thousands) Net investment in leases $ 35,319 Properties and equipment, net (1,485) Gain on sales-type leases $ 33,834 These sales-type lease transactions, including the related gains, were non-cash transactions. Lease income recognized was as follows: Years Ended December 31, 2021 2020 (In thousands) Operating lease revenues $ 326,902 $ 350,668 Direct financing lease interest income 2,089 2,096 Gain on sales-type leases 24,677 33,834 Sales-type lease interest income 27,836 8,481 Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable 9,160 9,929 For our sales-type leases, we included customer obligations related to minimum volume requirements in guaranteed minimum lease payments. Portions of our minimum guaranteed pipeline tariffs for assets subject to sales-type lease accounting are recorded as interest income with the remaining amounts recorded as a reduction in net investment in leases. We recognized any billings for throughput volumes in excess of minimum volume requirements as variable lease payments, and these variable lease payments were recorded in lease revenues. Annual minimum undiscounted lease payment receipts under our leases were as follows as of December 31, 2021: Operating Finance Sales-type Years Ending December 31, (In thousands) 2022 $ 283,882 $ 2,171 $ 42,102 2023 253,424 2,175 38,196 2024 217,321 2,192 34,967 2025 153,900 2,209 31,539 2026 139,983 2,227 31,539 Thereafter 418,354 36,610 247,867 Total lease payment receipts $ 1,466,864 47,584 426,210 Less: Imputed interest (31,213) (357,682) 16,371 68,528 Unguaranteed residual assets at end of leases — 229,337 Net investment in leases $ 16,371 $ 297,865 Net investments in leases recorded on our balance sheet were composed of the following: December 31, 2021 December 31, 2020 Sales-type Leases Direct Financing Leases Sales-type Leases Direct Financing Leases (In thousands) (In thousands) Lease receivables (1) $ 207,768 $ 16,371 $ 88,922 $ 16,452 Unguaranteed residual assets 90,097 — 64,551 — Net investment in leases $ 297,865 $ 16,371 $ 153,473 $ 16,452 (1) Current portion of lease receivables included in prepaid and other current assets on the balance sheet. |
Leases | Leases We adopted ASC 842 effective January 1, 2019, and elected to adopt using the modified retrospective transition method and practical expedients, both of which are provided as options by the standard and further defined in Note 1. See Note 1 for further discussion of lease accounting. Lessee Accounting As a lessee, we lease land, buildings, pipelines, transportation and other equipment to support our operations. These leases can be categorized into operating and finance leases. Our leases have remaining terms of less than 1 year to 23 years, some of which include options to extend the leases for up to 10 years. Finance Lease Obligations We have finance lease obligations related to vehicle leases with initial terms of 33 to 48 months. The total cost of assets under finance leases was $6.0 million and $6.4 million as of December 31, 2021 and December 31, 2020, respectively, with accumulated depreciation of $3.6 million and $3.4 million as of December 31, 2021 and December 31, 2020, respectively. We include depreciation of finance leases in depreciation and amortization in our consolidated statements of income. In addition, we have a finance lease obligation related to a pipeline lease with an initial term of 10 years with one remaining subsequent renewal option for an additional 10 years. Supplemental balance sheet information related to leases was as follows (in thousands, except for lease term and discount rate): December 31, 2021 December 31, 2020 Operating leases: Operating lease right-of-use assets, net $ 2,275 $ 2,979 Current operating lease liabilities 620 875 Noncurrent operating lease liabilities 2,030 2,476 Total operating lease liabilities $ 2,650 $ 3,351 Finance leases: Properties and equipment $ 6,031 $ 6,410 Accumulated amortization (3,632) (3,390) Properties and equipment, net $ 2,399 $ 3,020 Current finance lease liabilities 3,786 3,713 Noncurrent finance lease liabilities 64,649 68,047 Total finance lease liabilities $ 68,435 $ 71,760 Weighted average remaining lease term (in years) Operating leases 5.8 5.9 Finance leases 15.0 15.9 Weighted average discount rate Operating leases 4.8% 4.8% Finance leases 5.6% 5.6% Supplemental cash flow and other information related to leases were as follows: Year Ended Year Ended (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows on operating leases $ 1,142 $ 1,024 Operating cash flows on finance leases $ 4,104 $ 4,312 Financing cash flows on finance leases $ 3,549 $ 3,602 Maturities of lease liabilities were as follows: December 31, 2021 Operating Finance (In thousands) 2022 $ 690 $ 7,228 2023 603 7,374 2024 497 6,929 2025 443 6,470 2026 289 6,425 2027 and thereafter 501 67,463 Total lease payments 3,023 101,889 Less: Imputed interest (373) (33,454) Total lease obligations 2,650 68,435 Less: Current lease liabilities (620) (3,786) Long-term lease liabilities $ 2,030 $ 64,649 The components of lease expense were as follows: Years Ended December 31, 2021 2020 (In thousands) Operating lease costs $ 1,077 $ 983 Finance lease costs Amortization of assets 803 1,001 Interest on lease liabilities 3,953 4,126 Variable lease cost 215 222 Total net lease cost $ 6,048 $ 6,332 Lessor Accounting As discussed in Note 1, the majority of our contracts with customers meet the definition of a lease. See Note 1 for further discussion of the impact of adoption of this standard on our activities as a lessor. Substantially all of the assets supporting contracts meeting the definition of a lease have long useful lives, and we believe these assets will continue to have value when the current agreements expire due to our risk management strategy for protecting the residual fair value of the underlying assets by performing ongoing maintenance during the lease term. HFC generally has the option to purchase assets located within HFC refinery boundaries, including refinery tankage, truck racks and refinery processing units, at fair market value when the related agreements expire. During the year ended December 31, 2021, we entered into new agreements, and amended other agreements, with HFC related to our Cheyenne assets, Tulsa West lube racks, various crude tanks and new Navajo tanks, and the agreements we previously entered into relating to the Cushing Connect Pipeline became effective. These agreements met the criteria of sales-type leases since the underlying assets are not expected to have an alternative use at the end of the lease terms to anyone other than HFC. Under sales-type lease accounting, at the commencement date, the lessor recognizes a net investment in the lease, based on the estimated fair value of the underlying leased assets at contract inception, and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease. Therefore, we recognized a gain on sales-type leases during the year ended December 31, 2021 composed of the following: (In thousands) Net investment in leases $ 148,419 Properties and equipment, net (130,301) Deferred Revenue 6,559 Gain on sales-type leases $ 24,677 During the year ended December 31, 2020, one of our throughput agreements with Delek US Holdings, Inc. (“Delek”) was partially renewed. A component of this agreement met the criteria of a sales-type lease since the underlying asset is not expected to have an alternative use at the end of the lease term to anyone other than Delek. We recognized a gain on sales-type leases during the year ended December 31, 2020 composed of the following: (In thousands) Net investment in leases $ 35,319 Properties and equipment, net (1,485) Gain on sales-type leases $ 33,834 These sales-type lease transactions, including the related gains, were non-cash transactions. Lease income recognized was as follows: Years Ended December 31, 2021 2020 (In thousands) Operating lease revenues $ 326,902 $ 350,668 Direct financing lease interest income 2,089 2,096 Gain on sales-type leases 24,677 33,834 Sales-type lease interest income 27,836 8,481 Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable 9,160 9,929 For our sales-type leases, we included customer obligations related to minimum volume requirements in guaranteed minimum lease payments. Portions of our minimum guaranteed pipeline tariffs for assets subject to sales-type lease accounting are recorded as interest income with the remaining amounts recorded as a reduction in net investment in leases. We recognized any billings for throughput volumes in excess of minimum volume requirements as variable lease payments, and these variable lease payments were recorded in lease revenues. Annual minimum undiscounted lease payment receipts under our leases were as follows as of December 31, 2021: Operating Finance Sales-type Years Ending December 31, (In thousands) 2022 $ 283,882 $ 2,171 $ 42,102 2023 253,424 2,175 38,196 2024 217,321 2,192 34,967 2025 153,900 2,209 31,539 2026 139,983 2,227 31,539 Thereafter 418,354 36,610 247,867 Total lease payment receipts $ 1,466,864 47,584 426,210 Less: Imputed interest (31,213) (357,682) 16,371 68,528 Unguaranteed residual assets at end of leases — 229,337 Net investment in leases $ 16,371 $ 297,865 Net investments in leases recorded on our balance sheet were composed of the following: December 31, 2021 December 31, 2020 Sales-type Leases Direct Financing Leases Sales-type Leases Direct Financing Leases (In thousands) (In thousands) Lease receivables (1) $ 207,768 $ 16,371 $ 88,922 $ 16,452 Unguaranteed residual assets 90,097 — 64,551 — Net investment in leases $ 297,865 $ 16,371 $ 153,473 $ 16,452 (1) Current portion of lease receivables included in prepaid and other current assets on the balance sheet. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are derived using inputs (assumptions that market participants would use in pricing an asset or liability) including assumptions about risk. GAAP categorizes inputs used in fair value measurements into three broad levels as follows: • (Level 1) Quoted prices in active markets for identical assets or liabilities. • (Level 2) Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data. • (Level 3) Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes valuation techniques that involve significant unobservable inputs. Financial Instruments Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and debt. The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. Debt consists of outstanding principal under our revolving credit agreement (which approximates fair value as interest rates are reset frequently at current interest rates) and our fixed interest rate senior notes. The carrying amounts and estimated fair values of our senior notes were as follows: December 31, 2021 December 31, 2020 Financial Instrument Fair Value Input Level Carrying Fair Value Carrying Fair Value (In thousands) Liabilities: 5% Senior Notes Level 2 $ 493,049 $ 502,705 $ 492,103 $ 506,540 Level 2 Financial Instruments Our senior notes are measured at fair value using Level 2 inputs. The fair value of the senior notes is based on market values provided by a third-party bank, which were derived using market quotes for similar type debt instruments. See Note 10 for additional information. Non-Recurring Fair Value Measurements For gains on sales-type leases recognized during the years ended December 31, 2021 and 2020, the estimated fair value of the underlying leased assets at contract inception and the present value of the estimated unguaranteed residual asset at the end of the lease term are used in determining the net investment in leases and related gain on sales-type leases recorded. The asset valuation estimates include Level 3 inputs based on a replacement cost valuation method. During the years ended December 31, 2021 and 2020, we recognized goodwill impairment based on fair value measurements utilized during our goodwill testing (see Note 1). The fair value measurements were based on a combination of valuation methods including discounted cash flows and the guideline public company and guideline transaction methods; all of which are Level 3 inputs. |
Properties and Equipment
Properties and Equipment | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Properties and Equipment | Properties and Equipment The carrying amounts of our properties and equipment are as follows: December 31, December 31, (In thousands) Pipelines, terminals and tankage $ 1,527,697 $ 1,575,815 Refinery assets 348,882 348,882 Land and right of way 98,837 87,076 Construction in progress 26,446 58,467 Other 48,203 46,201 2,050,065 2,116,441 Less accumulated depreciation (721,037) (665,756) $ 1,329,028 $ 1,450,685 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible AssetsIntangible assets include transportation agreements and customer relationships that represent a portion of the total purchase price of certain assets acquired from Delek in 2005, from HFC in 2008 prior to HEP becoming a consolidated VIE of HFC, from Plains in 2017, and from other minor acquisitions in 2018. The carrying amounts of our intangible assets are as follows: Useful Life December 31, December 31, (In thousands) Delek transportation agreement 30 years $ 59,933 $ 59,933 HFC transportation agreements 10-15 years 75,131 75,131 Customer relationships 10 years 69,683 69,683 Other 20 years 50 50 204,797 204,797 Less accumulated amortization (131,490) (117,482) Intangible assets, net $ 73,307 $ 87,315 Amortization expense was $14.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. We estimate amortization expense to be $14.0 million for 2022, $9.9 million for 2023, and $9.1 million for 2024, 2025, and 2026. We have additional transportation agreements with HFC resulting from historical transactions consisting of pipeline, terminal and tankage assets contributed to us or acquired from HFC. These transactions occurred while we were a consolidated variable interest entity of HFC; therefore, our basis in these agreements is zero and does not reflect a step-up in basis to fair value. |
Employees, Retirement and Incen
Employees, Retirement and Incentive Plans | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Employees, Retirement and Incentive Plans | Employees, Retirement and Incentive Plans Direct support for our operations is provided by Holly Logistic Services, L.L.C., (“HLS”), an HFC subsidiary, which utilizes personnel employed by HFC who are dedicated to performing services for us. Their costs, including salaries, bonuses, payroll taxes, benefits and other direct costs, are charged to us monthly in accordance with an omnibus agreement that we have with HFC. These employees participate in the retirement and benefit plans of HFC. Our share of retirement and benefit plan costs was $8.7 million, $7.9 million and $7.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. These costs include retirement costs of $3.7 million, $3.4 million and $3.4 million for the years ended December 31, 2021, 2020 and 2019, respectively. Under HLS’s secondment agreement with HFC (the “Secondment Agreement”), certain employees of HFC are seconded to HLS to provide operational and maintenance services for certain of our processing, refining, pipeline and tankage assets, and HLS reimburses HFC for its prorated portion of the wages, benefits, and other costs related to these employees. We have a Long-Term Incentive Plan for employees and non-employee directors who perform services for us. The Long-Term Incentive Plan consists of five components: restricted or phantom units, performance units, unit options, unit appreciation rights and cash awards. Our accounting policy for the recognition of compensation expense for awards with pro-rata vesting (a significant proportion of our awards) is to expense the costs ratably over the vesting periods. As of December 31, 2021, we have two types of unit-based awards outstanding, which are described below. The compensation cost charged against income was $2.6 million, $2.2 million and $2.5 million for the years ended December 31, 2021, 2020 and 2019, respectively. We currently purchase units in the open market instead of issuing new units for settlement of all unit awards under our Long-Term Incentive Plan. As of December 31, 2021, 2,500,000 units were authorized to be granted under our Long-Term Incentive Plan, of which 753,425 have not yet been granted, assuming no forfeitures of the unvested units and full achievement of goals for the unvested performance units. Phantom Units Under our Long-Term Incentive Plan, we grant phantom units to non-employee directors and selected employees who perform services for us, with most awards vesting over a period of one The fair value of each phantom unit award is measured at the market price as of the date of grant and is amortized on a straight-line basis over the requisite service period for each separately vesting portion of the award. A summary of phantom unit activity and changes during the year ended December 31, 2021, is presented below: Phantom Units Units Weighted- Outstanding at January 1, 2021 (nonvested) 295,992 $ 14.48 Granted 51,670 18.93 Vesting and transfer of common units to recipients (137,566) 15.56 Forfeited (6,833) 15.54 Outstanding at December 31, 2021 (nonvested) 203,263 14.85 The grant date fair values of restricted or phantom units that were vested and transferred to recipients during the years ended December 31, 2021, 2020 and 2019 were $2.1 million, $2.0 million and $2.1 million, respectively. As of December 31, 2021, there was $1.8 million of total unrecognized compensation expense related to unvested phantom unit grants, which is expected to be recognized over a weighted-average period of 1.4 years. For the years ended December 31, 2020 and 2019, the grant date price applied to the number of restricted or phantom units awarded was $11.92 and $23.52, respectively. Performance Units Under our Long-Term Incentive Plan, we grant performance units to selected executives who perform services for us. Performance units granted are payable in common units at the end of a three-year performance period based upon meeting certain criteria over the performance period. Under the terms of our performance unit grants, some awards are subject to the growth in our distributable cash flow per common unit over the performance period while other awards are subject to “financial performance” and “market performance.” Financial performance is based on meeting certain earnings before interest, taxes, depreciation and amortization (“EBITDA”) targets, while market performance is based on the relative standing of total unitholder return achieved by HEP compared to peer group companies. The number of units ultimately issued under these awards can range from 0% to 200%. Although common units are not transferred to the recipients until the performance units vest, the recipients have distribution rights with respect to the target number of performance units subject to the award from the date of grant at the same rate as distributions paid on our common units. A summary of performance unit activity and changes for the year ended December 31, 2021, is presented below: Performance Units Units Outstanding at January 1, 2021 (nonvested) 77,472 Granted 10,128 Vesting and transfer of common units to recipients (10,881) Outstanding at December 31, 2021 (nonvested) 76,719 The grant date fair values of performance units vested and transferred to recipients were $0.4 million, $0.4 million and $0.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. Based on the weighted average fair value of performance units outstanding at December 31, 2021, of $1.4 million, there was $0.6 million of total unrecognized compensation expense related to nonvested performance units, which is expected to be recognized over a weighted-average period of 1.5 years. During the year ended December 31, 2021, we paid $2.0 million for the purchase of our common units in the open market for the issuance and settlement of unit awards under our Long-Term Incentive Plan. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt Instruments [Abstract] | |
Debt | Debt Credit Agreement In April 2021, we amended our senior secured revolving credit facility (the “Credit Agreement”) decreasing the size of the facility from $1.4 billion to $1.2 billion and extending the maturity date to July 27, 2025. The Credit Agreement is available to fund capital expenditures, investments, acquisitions, distribution payments, working capital and for general partnership purposes. The Credit Agreement is also available to fund letters of credit up to a $50 million sub-limit and continues to provide for an accordion feature that allows us to increase commitments under the Credit Agreement up to a maximum amount of $1.7 billion. Our obligations under the Credit Agreement are collateralized by substantially all of our assets, and indebtedness under the Credit Agreement is guaranteed by our material, wholly-owned subsidiaries. The Credit Agreement requires us to maintain compliance with certain financial covenants consisting of total leverage, senior secured leverage, and interest coverage. It also limits or restricts our ability to engage in certain activities. If, at any time prior to the expiration of the Credit Agreement, HEP obtains two investment grade credit ratings, the Credit Agreement will become unsecured and many of the covenants, limitations, and restrictions will be eliminated. We may prepay all loans at any time without penalty, except for tranche breakage costs. If an event of default exists under the Credit Agreement, the lenders will be able to accelerate the maturity of all loans outstanding and exercising other rights and remedies. We were in compliance with the covenants as of December 31, 2021. Senior Notes On February 4, 2020, we closed a private placement of $500 million in aggregate principal amount of 5% senior unsecured notes due in 2028 (the “ 5% Senior Notes ” ). On February 5, 2020, we redeemed the existing $500 million 6% Senior Notes at a redemption cost of $522.5 million, at which time we recognized a $25.9 million early extinguishment loss consisting of a $22.5 million debt redemption premium and unamortized financing costs of $3.4 million. We funded the $522.5 million redemption with proceeds from the issuance of our 5% Senior Notes and borrowings under our Credit Agreement. The 5% Senior Notes are unsecured and impose certain restrictive covenants, including limitations on our ability to incur additional indebtedness, make investments, sell assets, incur certain liens, pay distributions, enter into transactions with affiliates, and enter into mergers. At any time when the 5% Senior Notes are rated investment grade by either Moody’s or Standard & Poor’s and no default or event of default exists, we will not be subject to many of the foregoing covenants. Additionally, we have certain redemption rights at varying premiums over face value under the 5% Senior Notes. Indebtedness under the 5% Senior Notes is guaranteed by our wholly-owned subsidiaries (other than Holly Energy Finance Corp. and certain immaterial subsidiaries). Long-term Debt The carrying amounts of our long-term debt are as follows: December 31, December 31, (In thousands) Credit Agreement Amount outstanding $ 840,000 $ 913,500 5% Senior Notes Principal 500,000 500,000 Unamortized premium and debt issuance costs (6,951) (7,897) 493,049 492,103 Total long-term debt $ 1,333,049 $ 1,405,603 Maturities of our long-term debt are as follows as of December 31, 2021: Years Ending December 31, (In thousands) 2022 $ — 2023 — 2024 — 2025 840,000 2026 — Thereafter 500,000 Total $ 1,340,000 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We lease certain facilities and pipelines under operating leases and finance leases, most of which contain renewal options. These operating leases have various termination dates through 2035. See Note 5 for a schedule of annual minimum undiscounted lease payments under our leases as of December 31, 2021. As of December 31, 2021, we expect to receive aggregate payments totaling $1.0 million over the life of our noncancelable sublease of office space, expiring in 2026. We also have other long-term contractual obligations consisting of long-term site service agreements with HFC, expiring in 2058 through 2066, for the provision of certain facility services and utility costs that relate to our assets located at HFC’s refinery and renewable diesel facilities. We are presenting obligations for the full term of these agreements; however, the agreements can be terminated with 180 day notice if we cease to operate the applicable assets. In addition, we have long-term contractual obligations associated with rights-of-way agreements, which have various termination dates through 2099. The related payments below include only obligations under the remaining non-cancelable terms of these agreements at December 31, 2021. At December 31, 2021, these minimum future contractual obligations and other miscellaneous obligations having terms in excess of one year are as follows: Years Ending December 31, (In thousands) 2022 $ 8,347 2023 8,254 2024 8,195 2025 6,661 2026 5,812 Thereafter 218,941 Total $ 256,210 We are a party to various legal and regulatory proceedings, none of which we believe will have a material adverse impact on our financial condition, results of operations or cash flows. We filed a business interruption claim with our insurance carriers related to a loss at HFC's Woods Cross Refinery that occurred in the first quarter 2018. During the year ended December 31, 2020, we reached a final settlement agreement regarding the amounts owed to us pursuant to our business interruption coverage, and we recognized a gain of $7.3 million, which was included in gain on sale of assets and other on our income statement for the year ended December 31, 2020. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions We serve HFC’s refinery and renewable diesel facilities under long-term pipeline, terminal and tankage throughput agreements, and refinery processing unit tolling agreements expiring from 2022 to 2036, and revenues from these agreements accounted for approximately 79% of our total revenues for the year ended December 31, 2021. Under these agreements, HFC agrees to transport, store, and process throughput volumes of refined product, crude oil and feedstocks on our pipelines, terminals, tankage, loading rack facilities and refinery processing units that result in minimum annual payments to us. These minimum annual payments or revenues are generally subject to annual rate adjustments on July 1st each year based on increases or decreases in the Producer Price Index (“PPI”) or FERC index. As of December 31, 2021, these agreements with HFC require minimum annualized payments to us of $352.8 million. If HFC fails to meet its minimum volume commitments under the agreements in any quarter, it will be required to pay us the amount of any shortfall in cash by the last day of the month following the end of the quarter. Under certain of these agreements, a shortfall payment may be applied as a credit in the following four quarters after its minimum obligations are met. Under certain provisions of the Omnibus Agreement, we pay HFC an annual administrative fee (currently $2.6 million) for the provision by HFC or its affiliates of various general and administrative services to us. This fee does not include the salaries of personnel employed by HFC who perform services for us on behalf of HLS or the cost of their employee benefits, which are charged to us separately by HFC. Also, we reimburse HFC and its affiliates for direct expenses they incur on our behalf. Related party transactions with HFC are as follows: • Revenues received from HFC were $390.8 million, $399.8 million and $411.8 million for the years ended December 31, 2021, 2020 and 2019, respectively. • HFC charged us general and administrative services under the Omnibus Agreement of $2.6 million for each of the years ended December 31, 2021, 2020 and 2019. • We reimbursed HFC for costs of employees supporting our operations of $61.2 million, $55.8 million and $55.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. • HFC reimbursed us $7.9 million, $10.0 million and $13.9 million for the years ended December 31, 2021, 2020 and 2019, respectively, for expense and capital projects. • We distributed $83.5 million, $95.2 million and $150.0 million in the years ended December 31, 2021, 2020 and 2019 respectively, to HFC as regular distributions on its common units. • Accounts receivable from HFC were $56.2 million and $48.0 million at December 31, 2021 and 2020, respectively. • Accounts payable to HFC were $11.7 million and $18.1 million at December 31, 2021 and 2020, respectively. • Revenues for the years ended December 31, 2021, 2020 and 2019 include $0.4 million, $0.5 million and $0.5 million, respectively, of shortfall payments billed to HFC in 2020, 2019 and 2018, respectively. Deferred revenue in the consolidated balance sheets at December 31, 2021 and 2020, includes $4.1 million and $0.4 million, respectively, relating to certain shortfall billings to HFC. • We received direct financing lease payments from HFC for use of our Artesia and Tulsa railyards of $2.1 million for each of the years ended December 31, 2021, 2020 and 2019 . • We recorded a gain on sales-type leases with HFC of $24.7 million and $35.2 million during the year ended December 31, 2021 and December 31, 2019, respectively, and we received sales-type lease payments of $28.9 million, $9.5 million and $4.8 million from HFC that were not included in revenues for the years ended December 31, 2021, 2020 and 2019, respectively. • HEP and HFC reached an agreement to terminate the existing minimum volume commitments for HEP's Cheyenne assets and enter into new agreements, which were finalized and executed on February 8, 2021, with the following terms, in each case effective January 1, 2021: (1) a ten-year lease with two five-year renewal option periods for HFC’s use of certain HEP tank and rack assets in the Cheyenne refinery to facilitate renewable diesel production with an annual lease payment of approximately $5 million, (2) a five-year contango service fee arrangement that will utilize HEP tank assets inside the Cheyenne refinery where HFC will pay a base tariff to HEP for available crude oil storage and HFC and HEP will split any profits generated on crude oil contango opportunities and (3) a $10 million one-time cash payment from HFC to HEP for the termination of the existing minimum volume commitment. On August 2, 2021, in connection with the Sinclair Transactions (described in Note 2 above), HEP and HFC entered into a Letter Agreement (“Letter Agreement”) pursuant to which, among other things, HEP and HFC agreed, upon the consummation of the Sinclair Transactions, to enter into amendments to certain of the agreements by and among HEP and HFC, including the master throughput agreement, to include within the scope of such agreements the assets to be acquired by HEP pursuant to the Contribution Agreement (described in Note 2 above). In addition, the Letter Agreement provides that if, as a condition to obtaining antitrust clearance for the Sinclair Transactions, HFC enters into a definitive agreement to divest its refinery in Davis County, Utah (the “Woods Cross Refinery”), then HEP would sell certain assets located at, or relating to, the Woods Cross Refinery to HFC in exchange for cash consideration equal to $232.5 million plus the certain accounts receivable of HEP in respect of such assets, with such sale to be effective immediately prior to the closing of the sale of the Woods Cross Refinery by HFC. The Letter Agreement also provides that HEP’s right to future revenues from HFC in respect of such Woods Cross Refinery assets will terminate at the closing of such sale. |
Partners' Equity, Income Alloca
Partners' Equity, Income Allocations and Cash Distributions | 12 Months Ended |
Dec. 31, 2021 | |
Partners' Capital [Abstract] | |
Partners' Equity, Income Allocations and Cash Distributions | Partners’ Equity, Income Allocations and Cash Distributions At December 31, 2021, HFC held 59,630,030 of our common units, constituting a 57% limited partner interest in us and held the non-economic general partner interest. Continuous Offering Program We have a continuous offering program under which we may issue and sell common units from time to time, representing limited partner interests, up to an aggregate gross sales amount of $200 million. As of December 31, 2021, HEP had issued 2,413,153 units under this program, providing $82.3 million in gross proceeds. Allocations of Net Income Net income attributable to the partners is allocated to the partners based on their weighted-average ownership percentage during the period. Cash Distributions We consider regular cash distributions to unitholders on a quarterly basis, although there is no assurance as to the future cash distributions since they are dependent upon future earnings, cash flows, capital requirements, financial condition and other factors. Within 45 days after the end of each quarter, we distribute all of our available cash (as defined in our partnership agreement) to unitholders of record on the applicable record date. The amount of available cash generally is all cash on hand at the end of the quarter; less the amount of cash reserves established by our general partner to provide for the proper conduct of our business, comply with applicable laws, any of our debt instruments, or other agreements; or provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters; plus all cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter. On January 21, 2022, we announced our cash distribution for the fourth quarter of 2021 of $0.35 pe r unit. The distribution was payable on all common units and was paid February 11, 2022, to all unitholders of record on February 1, 2022. We paid cash distributions totaling $149.4 million, $174.4 million and $273.2 million for the years ended December 31, 2021, 2020 and 2019, respectively. |
Net Income Per Limited Partner
Net Income Per Limited Partner Unit | 12 Months Ended |
Dec. 31, 2021 | |
Net Income per Limited Partner Unit [Abstract] | |
Net Income per Limited Partner Unit | Net Income Per Limited Partner Unit Basic net income per unit applicable to the limited partners is calculated as net income attributable to the partners, adjusted for participating securities’ share in earnings, divided by the weighted average limited partners’ units outstanding. Diluted net income per unit assumes, when dilutive, the issuance of the net incremental units from phantom units and performance units. To the extent net income attributable to the partners exceeds or is less than cash distributions, this difference is allocated to the partners based on their weighted-average ownership percentage during the period. Our dilutive securities are immaterial for all periods presented. Net income per limited partner unit is computed as follows: Years Ended December 31, 2021 2020 2019 (In thousands, except per unit data) Net income attributable to the partners $ 214,946 $ 170,483 $ 224,884 Less: Participating securities’ share in earnings (736) (387) — Net income attributable to common units 214,210 170,096 224,884 Weighted average limited partners' units outstanding 105,440 105,440 105,440 Limited partners' per unit interest in earnings - basic and diluted $ 2.03 $ 1.61 $ 2.13 |
Environmental
Environmental | 12 Months Ended |
Dec. 31, 2021 | |
Environmental Remediation Obligations [Abstract] | |
Environmental | Environmental We expensed $1.9 million, $1.6 million and $0.5 million for the years ended December 31, 2021, 2020 and 2019, respectively, for environmental remediation obligations. The accrued environmental liability related to environmental clean-up projects for which we have assumed liability or for which indemnity provided by HFC has expired reflected in our consolidated balance sheets was $3.9 million and $4.5 million as of December 31, 2021 and 2020, respectively, of which $2.4 million and $2.5 million, respectively, were classified as other long-term liabilities. These accruals include remediation and monitoring costs expected to be incurred over an extended period of time. Under the Omnibus Agreement and certain transportation agreements and purchase agreements with HFC, HFC has agreed to indemnify us, subject to certain monetary and time limitations, for environmental noncompliance and remediation liabilities associated with certain assets transferred to us from HFC and occurring or existing prior to the date of such transfers. As of December 31, 2021 and 2020, our consolidated balance sheets included additional accrued environmental liabilities of $0.3 million and $0.5 million for HFC indemnified liabilities, respectively, and other assets included equal and offsetting balances representing amounts due from HFC related to indemnifications for environmental remediation liabilities. |
Operating Segments
Operating Segments | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Operating Segments | Operating Segments Although financial information is reviewed by our chief operating decision makers from a variety of perspectives, they view the business in two reportable operating segments: (1) pipelines and terminals and (2) refinery processing units. These segments adhere to the accounting polices used for our consolidated financial statements. For a discussion of these accounting policies and a summary of our reportable operating segments' assets and derivation of revenue, see Note 1. Pipelines and terminals have been aggregated as one reportable segment as both pipelines and terminals (1) have similar economic characteristics, (2) similarly provide logistics services of transportation and storage of petroleum products, (3) similarly support the petroleum refining business, including distribution of its products, (4) have principally the same customers and (5) are subject to similar regulatory requirements. We evaluate the performance of each segment based on its respective operating income. Certain general and administrative expenses and interest and financing costs are excluded from segment operating income as they are not directly attributable to a specific reportable segment. Identifiable assets are those used by the segment, whereas other assets are principally equity method investments, cash, deposits and other assets that are not associated with a specific reportable segment. Years Ended December 31, 2021 2020 2019 (In thousands) Revenues: Pipelines and terminals - affiliate $ 301,731 $ 319,487 $ 332,071 Pipelines and terminals - third-party 103,646 98,039 121,027 Refinery processing units - affiliate 89,118 80,322 79,679 Total segment revenues $ 494,495 $ 497,848 $ 532,777 Segment operating income: Pipelines and terminals (1) $ 180,965 $ 176,611 $ 241,843 Refinery processing units 38,172 38,314 32,233 Total segment operating income 219,137 214,925 274,076 Unallocated general and administrative expenses (12,637) (9,989) (10,251) Interest and financing costs, net (23,893) (48,803) (71,306) Loss on early extinguishment of debt — (25,915) — Equity in earnings of unconsolidated affiliates 12,432 6,647 5,180 Gain on sales-type leases 24,677 33,834 35,166 Gain on sale of assets and other 6,179 8,691 272 Income before income taxes $ 225,895 $ 179,390 $ 233,137 Capital Expenditures: Pipelines and terminals $ 87,756 $ 59,108 $ 28,743 Refinery processing units 2,239 175 1,369 Total capital expenditures $ 89,995 $ 59,283 $ 30,112 December 31, 2021 December 31, 2020 (In thousands) Identifiable assets: Pipelines and terminals (2) $ 1,737,388 $ 1,729,547 Refinery processing units 294,452 305,090 Other 134,027 132,928 Total identifiable assets $ 2,165,867 $ 2,167,565 (1) Pipelines and terminals segment operating income included goodwill impairment charges of $11.0 million and $35.7 million for the years ended December 31, 2021 and 2020, respectively. (2) Includes goodwill of $223.7 million and $234.7 million as of December 31, 2021 and 2020, respectively. |
Supplemental Guarantor _ Non-Gu
Supplemental Guarantor / Non-Guarantor Financial Information | 12 Months Ended |
Dec. 31, 2021 | |
Supplemental Guarantor / Non-Guarantor Financial Information [Abstract] | |
Supplemental Guarantor / Non-Guarantor Financial Information | Supplemental Guarantor/Non-Guarantor Financial Information Obligations of HEP (“Parent”) under the 5% Senior Notes have been jointly and severally guaranteed by each of its direct and indirect 100% owned subsidiaries (“Guarantor Subsidiaries”). These guarantees are full and unconditional, subject to certain customary release provisions. These circumstances include (i) when a Guarantor Subsidiary is sold or sells all or substantially all of its assets, (ii) when a Guarantor Subsidiary is declared “unrestricted” for covenant purposes, (iii) when a Guarantor Subsidiary's guarantee of other indebtedness is terminated or released and (iv) when the requirements for legal defeasance or covenant defeasance or to discharge the senior notes have been satisfied. The following financial information presents condensed consolidating balance sheets, statements of comprehensive income, and statements of cash flows of the Parent, the Guarantor Subsidiaries and the Non-Guarantor subsidiaries. The information has been presented as if the Parent accounted for its ownership in the Guarantor Subsidiaries and the Guarantor Restricted Subsidiaries accounted for the ownership of the Non-Guarantor Non-Restricted Subsidiaries, using the equity method of accounting. Condensed Consolidating Balance Sheet December 31, 2021 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 1,273 $ (899) $ 14,007 $ — $ 14,381 Accounts receivable — 60,418 8,816 (335) 68,899 Prepaid and other current assets 353 9,680 1,304 (304) 11,033 Total current assets 1,626 69,199 24,127 (639) 94,313 Properties and equipment, net — 1,026,912 302,116 — 1,329,028 Operating lease right-of-use assets — 2,189 86 — 2,275 Net investment in leases — 309,301 100,032 (100,030) 309,303 Investment in subsidiaries 1,785,024 301,721 — (2,086,745) — Intangible assets, net — 73,307 — — 73,307 Goodwill — 223,650 — — 223,650 Equity method investments — 78,873 37,505 — 116,378 Other assets 8,118 9,495 — — 17,613 Total assets $ 1,794,768 $ 2,094,647 $ 463,866 $ (2,187,414) $ 2,165,867 LIABILITIES AND PARTNERS’ EQUITY Current liabilities: Accounts payable $ — $ 28,447 $ 12,168 $ (335) $ 40,280 Accrued interest 11,258 — — — 11,258 Deferred revenue — 14,085 500 — 14,585 Accrued property taxes — 3,364 1,178 — 4,542 Current operating lease liabilities — 545 75 — 620 Current finance lease liabilities — 5,566 — (1,780) 3,786 Other current liabilities 3 1,513 265 — 1,781 Total current liabilities 11,261 53,520 14,186 (2,115) 76,852 Long-term debt 1,333,049 — — — 1,333,049 Noncurrent operating lease liabilities — 2,030 — — 2,030 Noncurrent finance lease liabilities — 156,102 — (91,453) 64,649 Other long-term liabilities 340 11,760 427 — 12,527 Deferred revenue — 29,662 — — 29,662 Class B unit — 56,549 — — 56,549 Equity - partners 450,118 1,785,024 301,721 (2,093,846) 443,017 Equity - noncontrolling interests — — 147,532 — 147,532 Total liabilities and partners’ equity $ 1,794,768 $ 2,094,647 $ 463,866 $ (2,187,414) $ 2,165,867 Condensed Consolidating Balance Sheet December 31, 2020 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 1,627 $ (987) $ 21,350 $ — $ 21,990 Accounts receivable — 56,522 6,308 (315) 62,515 Prepaid and other current assets 349 8,366 772 — 9,487 Total current assets 1,976 63,901 28,430 (315) 93,992 Properties and equipment, net — 1,087,184 363,501 — 1,450,685 Operating lease right-of-use assets — 2,822 157 — 2,979 Net investment in leases — 166,316 — — 166,316 Investment in subsidiaries 1,789,808 286,883 — (2,076,691) — Intangible assets, net — 87,315 — — 87,315 Goodwill — 234,684 — — 234,684 Equity method investments — 81,089 39,455 — 120,544 Other assets 4,268 6,782 — — 11,050 Total assets $ 1,796,052 $ 2,016,976 $ 431,543 $ (2,077,006) $ 2,167,565 LIABILITIES AND PARTNERS’ EQUITY Current liabilities: Accounts payable $ — $ 30,252 $ 16,463 $ (315) $ 46,400 Accrued interest 10,892 — — — 10,892 Deferred revenue — 10,868 500 — 11,368 Accrued property taxes — 2,915 1,077 — 3,992 Current operating lease liabilities — 804 71 — 875 Current finance lease liabilities — 3,713 — — 3,713 Other current liabilities 5 2,491 9 — 2,505 Total current liabilities 10,897 51,043 18,120 (315) 79,745 Long-term debt 1,405,603 — — — 1,405,603 Noncurrent operating lease liabilities — 2,476 — — 2,476 Noncurrent finance lease liabilities — 68,047 — — 68,047 Other long-term liabilities 260 12,171 474 — 12,905 Deferred revenue — 40,581 — — 40,581 Class B unit — 52,850 — — 52,850 Equity - partners 379,292 1,789,808 286,883 (2,076,691) 379,292 Equity - noncontrolling interests — — 126,066 — 126,066 Total liabilities and partners’ equity $ 1,796,052 $ 2,016,976 $ 431,543 $ (2,077,006) $ 2,167,565 Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2021 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 365,889 $ 24,960 $ — $ 390,849 Third parties — 77,815 25,831 — 103,646 — 443,704 50,791 — 494,495 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 152,913 17,611 — 170,524 Depreciation and amortization — 76,666 17,134 — 93,800 General and administrative 3,647 8,990 — — 12,637 Goodwill impairment — 11,034 — — 11,034 3,647 249,603 34,745 — 287,995 Operating income (loss) (3,647) 194,101 16,046 — 206,500 Equity in earnings of subsidiaries 275,558 16,589 — (292,147) — Equity in earnings of equity method investments — 8,897 3,535 — 12,432 Interest expense (49,864) (8,174) — 4,220 (53,818) Interest income — 29,925 4,220 (4,220) 29,925 Gain on sales-type lease — 31,778 — (7,101) 24,677 Gain on sale of assets and other — 6,174 5 — 6,179 225,694 85,189 7,760 (299,248) 19,395 Income (loss) before income taxes 222,047 279,290 23,806 (299,248) 225,895 State income tax expense — (32) — — (32) Net income (loss) 222,047 279,258 23,806 (299,248) 225,863 Allocation of net income attributable to noncontrolling interests — (3,699) (7,218) — (10,917) Net income (loss) attributable to the Partnership 222,047 275,559 16,588 (299,248) 214,946 Other comprehensive income (loss) — — — — — Comprehensive income (loss) attributable to the Partnership $ 222,047 $ 275,559 $ 16,588 $ (299,248) $ 214,946 Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2020 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 374,108 $ 25,701 $ — $ 399,809 Third parties — 77,039 21,000 — 98,039 — 451,147 46,701 — 497,848 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 132,393 15,299 — 147,692 Depreciation and amortization — 82,442 17,136 — 99,578 General and administrative 3,227 6,762 — — 9,989 Goodwill Impairment — 35,653 — — 35,653 35,653 3,227 257,250 32,435 — 292,912 Operating income (loss) (3,227) 193,897 14,266 — 204,936 Equity in earnings of subsidiaries 254,608 15,409 — (270,017) — Equity in earnings of equity method investments — 5,105 1,542 — 6,647 Interest income 26 10,578 17 — 10,621 Interest expense (55,298) (4,126) — — (59,424) Gain on sales-type lease — 33,834 — — 33,834 Loss on early extinguishment of debt (25,915) — — — (25,915) Gain on sale of assets and other 289 3,535 4,867 — 8,691 173,710 64,335 6,426 (270,017) (25,546) Income (loss) before income taxes 170,483 258,232 20,692 (270,017) 179,390 State income tax expense — (167) — — (167) Net income (loss) 170,483 258,065 20,692 (270,017) 179,223 Allocation of net income attributable to noncontrolling interests — (3,457) (5,283) — (8,740) Net income (loss) attributable to the Partnership 170,483 254,608 15,409 (270,017) 170,483 Other comprehensive income (loss) — — — — — Comprehensive income (loss) attributable to the Partnership $ 170,483 $ 254,608 $ 15,409 $ (270,017) $ 170,483 Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2019 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 386,517 $ 25,233 $ — $ 411,750 Third parties — 94,083 26,944 — 121,027 — 480,600 52,177 — 532,777 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 147,387 14,609 — 161,996 Depreciation and amortization — 79,516 17,189 — 96,705 General and administrative 3,184 7,067 — — 10,251 3,184 233,970 31,798 — 268,952 Operating income (loss) (3,184) 246,630 20,379 — 263,825 Equity in earnings (loss) of subsidiaries 302,148 15,351 — (317,499) — Equity in earnings of equity method investments — 5,320 (140) — 5,180 Interest income — 5,517 — — 5,517 Interest expense (74,375) (2,448) — — (76,823) Gain on sales-type lease — 35,166 — — 35,166 Gain on sale of assets and other 295 (116) 93 — 272 228,068 58,790 (47) (317,499) (30,688) Income (loss) before income taxes 224,884 305,420 20,332 (317,499) 233,137 State income tax expense — (41) — — (41) Net income (loss) 224,884 305,379 20,332 (317,499) 233,096 Allocation of net income attributable to noncontrolling interests — (3,231) (4,981) — (8,212) Net income (loss) attributable to the Partnership 224,884 302,148 15,351 (317,499) 224,884 Other comprehensive income (loss) — — — — — Comprehensive income (loss) attributable to the Partnership $ 224,884 $ 302,148 $ 15,351 $ (317,499) $ 224,884 |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include our accounts and those of subsidiaries and joint ventures that we control through an ownership interest greater than 50% or through a controlling financial interest with respect to variable interest entities. All |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with 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 those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the statements of cash flows, we consider all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. The carrying amounts reported on the balance sheets approximate fair value due to the short-term maturity of these instruments. |
Accounts Receivable | Accounts Receivable The majority of the accounts receivable are due from affiliates of HFC or independent companies in the petroleum industry. Credit is extended based on evaluation of the customer's financial condition, and in certain circumstances, collateral such as letters of credit or guarantees, may be required. We reserve for doubtful accounts based on our historical loss experience as well as expected credit losses from current economic conditions and management’s expectations of future economic conditions. Credit losses are charged to the allowance for doubtful accounts when an account is deemed uncollectible and historically have been minimal. |
Properties and Equipment | Properties and Equipment Properties and equipment are stated at cost. Properties and equipment acquired from HFC while under common control of HFC are stated at HFC's historical basis. Depreciation is provided by the straight-line method over the estimated useful lives of the assets, primarily 15 to 25 years for terminal facilities and tankage, 25 to 30 years for pipelines, 25 years for refinery processing units and 3 to 10 years for corporate and other assets. We depreciate assets acquired under capital leases over the lesser of the lease term or the economic life of the assets. Maintenance, repairs and minor replacements are expensed as incurred. Costs of replacements constituting improvements are capitalized. |
Intangible Assets | Intangible Assets Intangible assets include transportation agreements and acquired customer relationship intangible assets. Intangible assets are stated at acquisition date fair value and are being amortized over their useful lives using the straight-line method. |
Goodwill and Long-Lived Assets | Goodwill and Long-Lived Assets Goodwill represents the excess of our cost of an acquired business over the fair value of the assets acquired, less liabilities assumed. Goodwill is not amortized. We test goodwill at the reporting unit level for impairment annually and between annual tests if events or changes in circumstances indicate the carrying amount may exceed fair value. Our goodwill impairment testing first entails a comparison of our reporting unit fair values relative to their respective carrying values, including goodwill. If carrying value exceeds the estimated fair value for a reporting unit, we measure goodwill impairment as the excess of the carrying amount of the reporting unit over the estimated fair value of the reporting unit. The changes due to our new agreements with HFC related to our Cheyenne assets resulted in an increase in the net book value of our Cheyenne reporting unit during the first quarter of 2021 due to sales-type lease accounting, which led us to determine indicators of potential goodwill impairment for our Cheyenne reporting unit were present. Therefore, we performed an interim quantitative review of our Cheyenne reporting unit goodwill for the first quarter of 2021. The estimated fair value of our Cheyenne reporting unit was derived using a combination of income and market approaches. The income approach reflects expected future cash flows based on anticipated gross margins, operating costs, and capital expenditures. The market approaches include both the guideline public company and guideline transaction methods. Both methods utilize pricing multiples derived from historical market transactions of other like-kind assets. These fair value measurements involve significant unobservable inputs (Level 3 inputs). See Note 6 for further discussion of Level 3 inputs. Our interim impairment testing of our Cheyenne reporting unit goodwill identified an impairment charge of $11.0 million, which was recorded in the three months ended March 31, 2021. Our annual goodwill impairment testing for 2021 and 2019 was performed on a qualitative basis during the third quarters of 2021 and 2019. We assessed qualitative factors such as macroeconomic conditions, industry considerations, cost factors and reporting unit financial performance and determined it was not more likely than not that the fair value of our reporting units were less than the respective carrying value. Therefore, in accordance with GAAP, further testing was not required. Our annual impairment testing for 2020 was performed on a quantitative basis during the third quarter of 2020. The estimated fair value of our reporting units were derived using a combination of both income and market approaches as described above. Our annual testing of goodwill in 2020 identified an impairment charge of $35.7 million, which was recorded in the third quarter of 2020, related to our Cheyenne reporting unit. The following is a summary of our goodwill balances: December 31, December 31, (In thousands) Goodwill $ 270,336 $ 270,336 Accumulated impairment losses (46,686) (35,652) $ 223,650 $ 234,684 We evaluate long-lived assets, including finite-lived intangible assets, for potential impairment by identifying whether indicators of impairment exist and, if so, assessing whether the long-lived assets are recoverable from estimated future undiscounted cash flows. The actual amount of impairment loss, if any, to be recorded is equal to the amount by which a long-lived asset’s carrying value exceeds its fair value. |
Investment in Equity Method Investments | Investment in Equity Method Investments We account for our interests in noncontrolling joint venture interests using the equity method of accounting, whereby we record our pro-rata share of earnings of these companies, and contributions to and distributions from the joint ventures as adjustments to our investment balances. The difference between the cost of an investment and our proportionate share of the underlying equity in net assets recorded on the investee's books is allocated to the various assets and liabilities of the equity method investment. |
Asset Retirement Obligations | Asset Retirement Obligations |
Class B Unit | Class B Unit Under the terms of the transaction to acquire HFC's 75% interest in UNEV, we issued HFC a Class B unit comprising a noncontrolling equity interest in a wholly-owned subsidiary subject to redemption to the extent that HFC is entitled to a 50% interest in our share of annual UNEV earnings before interest, income taxes, depreciation, and amortization above $30 million beginning July 1, 2015, and ending in June 2032, subject to certain limitations. Such contingent redemption payments are limited to the unredeemed value of the Class B Unit. However, to the extent earnings thresholds are not achieved, no redemption payments are required. No redemption payments have been required to date. Pursuant to the terms of the transaction agreements, the Class B unit increases by the amount of each foregone incentive distribution and by a 7% factor compounded annually on the outstanding unredeemed balance through its expiration date. At our option, we may redeem, in whole or in part, the Class B unit at the current unredeemed value based on the calculation described. The Class B unit had a carrying value of $56.5 million at December 31, 2021, and $52.9 million at December 31, 2020. |
Revenue Recognition | Revenue Recognition Revenues are generally recognized as products are shipped through our pipelines and terminals, feedstocks are processed through our refinery processing units or other services are rendered. The majority of our contracts with customers meet the definition of a lease since (1) performance of the contracts is dependent on specified property, plant, or equipment and (2) it is remote that one or more parties other than the customer will take more than a minor amount of the output associated with the specified property, plant, or equipment. Prior to the adoption of the new lease standard (see below), we bifurcated the consideration received between lease and service revenue. The new lease standard allows the election of a practical expedient whereby a lessor does not have to separate non-lease (service) components from lease components under certain conditions. The majority of our contracts meet these conditions, and we have made this election for those contracts. Under this practical expedient, we treat the combined components as a single performance obligation in accordance with Accounting Standards Codification (“ASC”) 606, which largely codified ASU 2014-09, if the non-lease (service) component is the dominant component. If the lease component is the dominant component, we treat the combined components as a lease in accordance with ASC 842, which largely codified ASU 2016-02. Several of our contracts include incentive or reduced tariffs once a certain quarterly volume is met. Revenue from the variable element of these transactions is recognized based on the actual volumes shipped as it relates specifically to rendering the services during the applicable quarter. The majority of our long-term transportation contracts specify minimum volume requirements, whereby, we bill a customer for a minimum level of shipments in the event a customer ships below their contractual requirements. If there are no future performance obligations, we will recognize these deficiency payments in revenue. In certain of these throughput agreements, a customer may later utilize such shortfall billings as credit towards future volume shipments in excess of its minimum levels within its respective contractual shortfall make-up period. Such amounts represent an obligation to perform future services, which may be initially deferred and later recognized as revenue based on estimated future shipping levels, including the likelihood of a customer’s ability to utilize such amounts prior to the end of the contractual shortfall make-up period. We recognize these deficiency payments in revenue when we do not expect we will be required to satisfy these performance obligations in the future based on the pattern of rights projected to be exercised by the customer. During the years ended December 31, 2021, 2020 and 2019, we recognized $17.5 million, $20.8 million and $16.0 million, respectively, of these deficiency payments in revenue, of which $0.5 million, $0.7 million and $0.6 million, respectively, related to deficiency payments billed in prior periods. As of December 31, 2021, deferred revenue reflected in our consolidated balance sheet related to shortfalls billed was $4.2 million. We have other cost reimbursement provisions in our throughput/storage agreements providing that customers (including HFC) reimburse us for certain costs. Such reimbursements are recorded as revenue or deferred revenue depending on the nature of the cost. Deferred revenue is recognized over the remaining contractual term of the related throughput agreement. Taxes billed and collected from our pipeline and terminal customers are recorded on a net basis with no effect on net income. |
Lessee Accounting | Lessee Accounting - At inception, we determine if an arrangement is or contains a lease. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our payment obligation under the leasing arrangement. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We use our estimated incremental borrowing rate (“IBR”) to determine the present value of lease payments as most of our leases do not contain an implicit rate. Our IBR represents the interest rate which we would pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment. We use the implicit rate when readily determinable. Operating leases are recorded in operating lease right-of-use assets and current and noncurrent operating lease liabilities on our consolidated balance sheet. Finance leases are included in properties and equipment, current finance lease liabilities and noncurrent finance lease liabilities on our consolidated balance sheet. When renewal options are defined in a lease, our lease term includes an option to extend the lease when it is reasonably certain we will exercise that option. Leases with a term of 12 months or less are not recorded on our balance sheet, and lease expense is accounted for on a straight-line basis. In addition, as a lessee, we separate non-lease components that are identifiable and exclude them from the determination of net present value of lease payment obligations. |
Lessor Accounting | Lessor Accounting - Customer contracts that contain leases are generally classified as either operating leases, direct finance leases or sales-type leases. We consider inputs such as the lease term, fair value of the underlying asset and residual value of the underlying assets when assessing the classification. |
Environmental Costs | Environmental Costs Environmental costs are expensed if they relate to an existing condition caused by past operations and do not contribute to current or future revenue generation. Liabilities are recorded when site restoration and environmental remediation, cleanup and other obligations are either known or considered probable and can be reasonably estimated. Such estimates require judgment with respect to costs, time frame and extent of required remedial and clean-up activities and are subject to periodic adjustments based on currently available information. Under the Omnibus Agreement and certain transportation agreements and purchase agreements with HFC, HFC has agreed to indemnify us, subject to certain monetary and time limitations, for environmental noncompliance and remediation liabilities associated with certain assets transferred to us from HFC occurring or existing prior to the date of such transfers. We have an |
Income Tax | Income Tax We are subject to the Texas margin tax that is based on our Texas sourced taxable margin. The tax is calculated by applying a tax rate to a base that considers both revenues and expenses and therefore has the characteristics of an income tax. We are organized as a pass-through entity for U.S. federal income tax purposes. As a result, our partners are responsible for U.S. federal income taxes based on their respective share of taxable income. |
Accounting Pronouncement Adopted During the Periods Presented | Accounting Pronouncement Adopted During the Periods Presented Goodwill Impairment Testing In January 2017, Accounting Standard Update (“ASU”) 2017-04, “Simplifying the Test for Goodwill Impairment,” was issued amending the testing for goodwill impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under this standard, goodwill impairment is measured as the excess of the carrying amount of the reporting unit over the related fair value. We adopted this standard effective in the second quarter of 2019, and the adoption of this standard had no effect on our financial condition, results of operations or cash flows for the year ended December 31, 2019. Leases In February 2016, ASU No. 2016-02, “Leases” (“ASC 842”) was issued requiring leases to be measured and recognized as a lease liability, with a corresponding right-of-use asset on the balance sheet. We adopted this standard effective January 1, 2019, and we elected to adopt using the modified retrospective transition method, whereby comparative prior period financial information will not be restated and will continue to be reported under the lease accounting standard in effect during those periods. We also elected practical expedients provided by the new standard, including the package of practical expedients and the short-term lease recognition practical expedient, which allows an entity to not recognize on the balance sheet leases with a term of 12 months or less. Upon adoption of this standard, we recognized $78.4 million of lease liabilities and corresponding right-of-use assets on our consolidated balance sheet. See Notes 4 and 5 of Notes to the Consolidated Financial Statements for additional information on our lease policies. Credit Losses Measurement In June 2016, ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” was issued requiring measurement of all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This standard was effective January 1, 2020. Adoption of the standard did not have a material impact on our financial condition, results of operations or cash flows. Accounting Pronouncements - Not Yet Adopted In October 2021, Accounting Standards Update 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” was issued requiring that an acquiring entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers. This standard is effective for fiscal years beginning after December 15, 2022, and early adoption is permitted. We will evaluate the impact of this standard and consider early adoption, if applicable. |
Fair Value Measurements | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are derived using inputs (assumptions that market participants would use in pricing an asset or liability) including assumptions about risk. GAAP categorizes inputs used in fair value measurements into three broad levels as follows: • (Level 1) Quoted prices in active markets for identical assets or liabilities. • (Level 2) Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data. • (Level 3) Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes valuation techniques that involve significant unobservable inputs. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Goodwill | The following is a summary of our goodwill balances: December 31, December 31, (In thousands) Goodwill $ 270,336 $ 270,336 Accumulated impairment losses (46,686) (35,652) $ 223,650 $ 234,684 |
Schedule of Equity Method Investments | The following table summarizes our recorded investments compared to our share of underlying equity for each investee. We are amortizing the differences as adjustments to our pro-rata share of earnings over the useful lives of the underlying assets of these joint ventures. Balance at December 31, 2021 Underlying Equity Recorded Investment Balance Difference (In thousands) Equity Method Investments Osage Pipe Line Company, LLC $ 9,996 $ 37,782 $ (27,786) Cheyenne Pipeline LLC 28,557 41,091 (12,534) Cushing Connect Terminal Holdings LLC 52,203 37,505 14,698 Total $ 90,756 $ 116,378 $ (25,622) Balance at December 31, 2020 Underlying Equity Recorded Investment Balance Difference (In thousands) Equity Method Investments Osage Pipe Line Company, LLC $ 10,044 $ 38,743 $ (28,699) Cheyenne Pipeline LLC 29,103 42,345 (13,242) Cushing Connect Terminal Holdings LLC 54,049 39,456 14,593 Total $ 93,196 $ 120,544 $ (27,348) |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregated Revenue | Disaggregated revenues are as follows: Years Ended December 31, 2021 2020 2019 (In thousands) Pipelines $ 263,110 $ 265,834 $ 292,631 Terminals, tanks and loading racks 142,267 151,692 160,467 Refinery processing units 89,118 80,322 79,679 $ 494,495 $ 497,848 $ 532,777 |
Schedule of Revenues | Affiliates and th ird parties revenues on our consolidated statem ents of income were composed of the following lease and service revenues: Years Ended December 31, 2021 2020 2019 (In thousands) Lease revenues $ 336,062 $ 360,598 $ 378,311 Service revenues 158,433 137,250 154,466 $ 494,495 $ 497,848 $ 532,777 |
Schedule of Contract Asset and Contract Liability Balances | Our consolidated balance sheets included the contract assets and liabilities in the table below. December 31, December 31, (In thousands) Contract assets $ 6,637 $ 6,306 Contract liabilities $ (4,185) $ (500) |
Schedule of Future Performance Obligations | We expect to recognize revenue for these unfulfilled performance obligations as shown in the table below (amounts shown in table include both service and lease revenues): Years Ending December 31, (In millions) 2022 312 2023 275 2024 238 2025 172 2026 157 Thereafter 484 Total $ 1,638 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases was as follows (in thousands, except for lease term and discount rate): December 31, 2021 December 31, 2020 Operating leases: Operating lease right-of-use assets, net $ 2,275 $ 2,979 Current operating lease liabilities 620 875 Noncurrent operating lease liabilities 2,030 2,476 Total operating lease liabilities $ 2,650 $ 3,351 Finance leases: Properties and equipment $ 6,031 $ 6,410 Accumulated amortization (3,632) (3,390) Properties and equipment, net $ 2,399 $ 3,020 Current finance lease liabilities 3,786 3,713 Noncurrent finance lease liabilities 64,649 68,047 Total finance lease liabilities $ 68,435 $ 71,760 Weighted average remaining lease term (in years) Operating leases 5.8 5.9 Finance leases 15.0 15.9 Weighted average discount rate Operating leases 4.8% 4.8% Finance leases 5.6% 5.6% |
Schedule of Supplemental Cash Flow Information and Components of Lease Expense | Supplemental cash flow and other information related to leases were as follows: Year Ended Year Ended (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows on operating leases $ 1,142 $ 1,024 Operating cash flows on finance leases $ 4,104 $ 4,312 Financing cash flows on finance leases $ 3,549 $ 3,602 The components of lease expense were as follows: Years Ended December 31, 2021 2020 (In thousands) Operating lease costs $ 1,077 $ 983 Finance lease costs Amortization of assets 803 1,001 Interest on lease liabilities 3,953 4,126 Variable lease cost 215 222 Total net lease cost $ 6,048 $ 6,332 |
Schedule of Operating and Finance Lease Maturities | Maturities of lease liabilities were as follows: December 31, 2021 Operating Finance (In thousands) 2022 $ 690 $ 7,228 2023 603 7,374 2024 497 6,929 2025 443 6,470 2026 289 6,425 2027 and thereafter 501 67,463 Total lease payments 3,023 101,889 Less: Imputed interest (373) (33,454) Total lease obligations 2,650 68,435 Less: Current lease liabilities (620) (3,786) Long-term lease liabilities $ 2,030 $ 64,649 |
Sales-Type Lease, Gain Recognized | Therefore, we recognized a gain on sales-type leases during the year ended December 31, 2021 composed of the following: (In thousands) Net investment in leases $ 148,419 Properties and equipment, net (130,301) Deferred Revenue 6,559 Gain on sales-type leases $ 24,677 (In thousands) Net investment in leases $ 35,319 Properties and equipment, net (1,485) Gain on sales-type leases $ 33,834 |
Schedule of Lease Income | Lease income recognized was as follows: Years Ended December 31, 2021 2020 (In thousands) Operating lease revenues $ 326,902 $ 350,668 Direct financing lease interest income 2,089 2,096 Gain on sales-type leases 24,677 33,834 Sales-type lease interest income 27,836 8,481 Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable 9,160 9,929 |
Schedule of Minimum Undiscounted Lease Payments | Annual minimum undiscounted lease payment receipts under our leases were as follows as of December 31, 2021: Operating Finance Sales-type Years Ending December 31, (In thousands) 2022 $ 283,882 $ 2,171 $ 42,102 2023 253,424 2,175 38,196 2024 217,321 2,192 34,967 2025 153,900 2,209 31,539 2026 139,983 2,227 31,539 Thereafter 418,354 36,610 247,867 Total lease payment receipts $ 1,466,864 47,584 426,210 Less: Imputed interest (31,213) (357,682) 16,371 68,528 Unguaranteed residual assets at end of leases — 229,337 Net investment in leases $ 16,371 $ 297,865 |
Schedule of Net Investment in Leases | Net investments in leases recorded on our balance sheet were composed of the following: December 31, 2021 December 31, 2020 Sales-type Leases Direct Financing Leases Sales-type Leases Direct Financing Leases (In thousands) (In thousands) Lease receivables (1) $ 207,768 $ 16,371 $ 88,922 $ 16,452 Unguaranteed residual assets 90,097 — 64,551 — Net investment in leases $ 297,865 $ 16,371 $ 153,473 $ 16,452 (1) Current portion of lease receivables included in prepaid and other current assets on the balance sheet. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Amounts of Estimated Fair Values of Senior Notes | The carrying amounts and estimated fair values of our senior notes were as follows: December 31, 2021 December 31, 2020 Financial Instrument Fair Value Input Level Carrying Fair Value Carrying Fair Value (In thousands) Liabilities: 5% Senior Notes Level 2 $ 493,049 $ 502,705 $ 492,103 $ 506,540 |
Properties and Equipment (Table
Properties and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Properties and Equipment | The carrying amounts of our properties and equipment are as follows: December 31, December 31, (In thousands) Pipelines, terminals and tankage $ 1,527,697 $ 1,575,815 Refinery assets 348,882 348,882 Land and right of way 98,837 87,076 Construction in progress 26,446 58,467 Other 48,203 46,201 2,050,065 2,116,441 Less accumulated depreciation (721,037) (665,756) $ 1,329,028 $ 1,450,685 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets by Major Class | The carrying amounts of our intangible assets are as follows: Useful Life December 31, December 31, (In thousands) Delek transportation agreement 30 years $ 59,933 $ 59,933 HFC transportation agreements 10-15 years 75,131 75,131 Customer relationships 10 years 69,683 69,683 Other 20 years 50 50 204,797 204,797 Less accumulated amortization (131,490) (117,482) Intangible assets, net $ 73,307 $ 87,315 |
Employees, Retirement and Inc_2
Employees, Retirement and Incentive Plans (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Phantom Units | A summary of phantom unit activity and changes during the year ended December 31, 2021, is presented below: Phantom Units Units Weighted- Outstanding at January 1, 2021 (nonvested) 295,992 $ 14.48 Granted 51,670 18.93 Vesting and transfer of common units to recipients (137,566) 15.56 Forfeited (6,833) 15.54 Outstanding at December 31, 2021 (nonvested) 203,263 14.85 |
Schedule of Performance Units | A summary of performance unit activity and changes for the year ended December 31, 2021, is presented below: Performance Units Units Outstanding at January 1, 2021 (nonvested) 77,472 Granted 10,128 Vesting and transfer of common units to recipients (10,881) Outstanding at December 31, 2021 (nonvested) 76,719 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Instruments [Abstract] | |
Schedule of Long-term Debt Instruments | The carrying amounts of our long-term debt are as follows: December 31, December 31, (In thousands) Credit Agreement Amount outstanding $ 840,000 $ 913,500 5% Senior Notes Principal 500,000 500,000 Unamortized premium and debt issuance costs (6,951) (7,897) 493,049 492,103 Total long-term debt $ 1,333,049 $ 1,405,603 |
Schedule of Maturities of Long-term Debt | Maturities of our long-term debt are as follows as of December 31, 2021: Years Ending December 31, (In thousands) 2022 $ — 2023 — 2024 — 2025 840,000 2026 — Thereafter 500,000 Total $ 1,340,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future Contractual Obligations | At December 31, 2021, these minimum future contractual obligations and other miscellaneous obligations having terms in excess of one year are as follows: Years Ending December 31, (In thousands) 2022 $ 8,347 2023 8,254 2024 8,195 2025 6,661 2026 5,812 Thereafter 218,941 Total $ 256,210 |
Net Income Per Limited Partne_2
Net Income Per Limited Partner Unit (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Net Income per Limited Partner Unit [Abstract] | |
Schedule of Net Income per Limited Partner Unit | Net income per limited partner unit is computed as follows: Years Ended December 31, 2021 2020 2019 (In thousands, except per unit data) Net income attributable to the partners $ 214,946 $ 170,483 $ 224,884 Less: Participating securities’ share in earnings (736) (387) — Net income attributable to common units 214,210 170,096 224,884 Weighted average limited partners' units outstanding 105,440 105,440 105,440 Limited partners' per unit interest in earnings - basic and diluted $ 2.03 $ 1.61 $ 2.13 |
Operating Segments (Tables)
Operating Segments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | Years Ended December 31, 2021 2020 2019 (In thousands) Revenues: Pipelines and terminals - affiliate $ 301,731 $ 319,487 $ 332,071 Pipelines and terminals - third-party 103,646 98,039 121,027 Refinery processing units - affiliate 89,118 80,322 79,679 Total segment revenues $ 494,495 $ 497,848 $ 532,777 Segment operating income: Pipelines and terminals (1) $ 180,965 $ 176,611 $ 241,843 Refinery processing units 38,172 38,314 32,233 Total segment operating income 219,137 214,925 274,076 Unallocated general and administrative expenses (12,637) (9,989) (10,251) Interest and financing costs, net (23,893) (48,803) (71,306) Loss on early extinguishment of debt — (25,915) — Equity in earnings of unconsolidated affiliates 12,432 6,647 5,180 Gain on sales-type leases 24,677 33,834 35,166 Gain on sale of assets and other 6,179 8,691 272 Income before income taxes $ 225,895 $ 179,390 $ 233,137 Capital Expenditures: Pipelines and terminals $ 87,756 $ 59,108 $ 28,743 Refinery processing units 2,239 175 1,369 Total capital expenditures $ 89,995 $ 59,283 $ 30,112 December 31, 2021 December 31, 2020 (In thousands) Identifiable assets: Pipelines and terminals (2) $ 1,737,388 $ 1,729,547 Refinery processing units 294,452 305,090 Other 134,027 132,928 Total identifiable assets $ 2,165,867 $ 2,167,565 (1) Pipelines and terminals segment operating income included goodwill impairment charges of $11.0 million and $35.7 million for the years ended December 31, 2021 and 2020, respectively. (2) Includes goodwill of $223.7 million and $234.7 million as of December 31, 2021 and 2020, respectively. |
Supplemental Guarantor _ Non-_2
Supplemental Guarantor / Non-Guarantor Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Supplemental Guarantor / Non-Guarantor Financial Information [Abstract] | |
Schedule of Condensed Consolidating Balance Sheet | Condensed Consolidating Balance Sheet December 31, 2021 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 1,273 $ (899) $ 14,007 $ — $ 14,381 Accounts receivable — 60,418 8,816 (335) 68,899 Prepaid and other current assets 353 9,680 1,304 (304) 11,033 Total current assets 1,626 69,199 24,127 (639) 94,313 Properties and equipment, net — 1,026,912 302,116 — 1,329,028 Operating lease right-of-use assets — 2,189 86 — 2,275 Net investment in leases — 309,301 100,032 (100,030) 309,303 Investment in subsidiaries 1,785,024 301,721 — (2,086,745) — Intangible assets, net — 73,307 — — 73,307 Goodwill — 223,650 — — 223,650 Equity method investments — 78,873 37,505 — 116,378 Other assets 8,118 9,495 — — 17,613 Total assets $ 1,794,768 $ 2,094,647 $ 463,866 $ (2,187,414) $ 2,165,867 LIABILITIES AND PARTNERS’ EQUITY Current liabilities: Accounts payable $ — $ 28,447 $ 12,168 $ (335) $ 40,280 Accrued interest 11,258 — — — 11,258 Deferred revenue — 14,085 500 — 14,585 Accrued property taxes — 3,364 1,178 — 4,542 Current operating lease liabilities — 545 75 — 620 Current finance lease liabilities — 5,566 — (1,780) 3,786 Other current liabilities 3 1,513 265 — 1,781 Total current liabilities 11,261 53,520 14,186 (2,115) 76,852 Long-term debt 1,333,049 — — — 1,333,049 Noncurrent operating lease liabilities — 2,030 — — 2,030 Noncurrent finance lease liabilities — 156,102 — (91,453) 64,649 Other long-term liabilities 340 11,760 427 — 12,527 Deferred revenue — 29,662 — — 29,662 Class B unit — 56,549 — — 56,549 Equity - partners 450,118 1,785,024 301,721 (2,093,846) 443,017 Equity - noncontrolling interests — — 147,532 — 147,532 Total liabilities and partners’ equity $ 1,794,768 $ 2,094,647 $ 463,866 $ (2,187,414) $ 2,165,867 Condensed Consolidating Balance Sheet December 31, 2020 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) ASSETS Current assets: Cash and cash equivalents $ 1,627 $ (987) $ 21,350 $ — $ 21,990 Accounts receivable — 56,522 6,308 (315) 62,515 Prepaid and other current assets 349 8,366 772 — 9,487 Total current assets 1,976 63,901 28,430 (315) 93,992 Properties and equipment, net — 1,087,184 363,501 — 1,450,685 Operating lease right-of-use assets — 2,822 157 — 2,979 Net investment in leases — 166,316 — — 166,316 Investment in subsidiaries 1,789,808 286,883 — (2,076,691) — Intangible assets, net — 87,315 — — 87,315 Goodwill — 234,684 — — 234,684 Equity method investments — 81,089 39,455 — 120,544 Other assets 4,268 6,782 — — 11,050 Total assets $ 1,796,052 $ 2,016,976 $ 431,543 $ (2,077,006) $ 2,167,565 LIABILITIES AND PARTNERS’ EQUITY Current liabilities: Accounts payable $ — $ 30,252 $ 16,463 $ (315) $ 46,400 Accrued interest 10,892 — — — 10,892 Deferred revenue — 10,868 500 — 11,368 Accrued property taxes — 2,915 1,077 — 3,992 Current operating lease liabilities — 804 71 — 875 Current finance lease liabilities — 3,713 — — 3,713 Other current liabilities 5 2,491 9 — 2,505 Total current liabilities 10,897 51,043 18,120 (315) 79,745 Long-term debt 1,405,603 — — — 1,405,603 Noncurrent operating lease liabilities — 2,476 — — 2,476 Noncurrent finance lease liabilities — 68,047 — — 68,047 Other long-term liabilities 260 12,171 474 — 12,905 Deferred revenue — 40,581 — — 40,581 Class B unit — 52,850 — — 52,850 Equity - partners 379,292 1,789,808 286,883 (2,076,691) 379,292 Equity - noncontrolling interests — — 126,066 — 126,066 Total liabilities and partners’ equity $ 1,796,052 $ 2,016,976 $ 431,543 $ (2,077,006) $ 2,167,565 |
Schedule of Condensed Consolidating Statement of Comprehensive Income | Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2021 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 365,889 $ 24,960 $ — $ 390,849 Third parties — 77,815 25,831 — 103,646 — 443,704 50,791 — 494,495 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 152,913 17,611 — 170,524 Depreciation and amortization — 76,666 17,134 — 93,800 General and administrative 3,647 8,990 — — 12,637 Goodwill impairment — 11,034 — — 11,034 3,647 249,603 34,745 — 287,995 Operating income (loss) (3,647) 194,101 16,046 — 206,500 Equity in earnings of subsidiaries 275,558 16,589 — (292,147) — Equity in earnings of equity method investments — 8,897 3,535 — 12,432 Interest expense (49,864) (8,174) — 4,220 (53,818) Interest income — 29,925 4,220 (4,220) 29,925 Gain on sales-type lease — 31,778 — (7,101) 24,677 Gain on sale of assets and other — 6,174 5 — 6,179 225,694 85,189 7,760 (299,248) 19,395 Income (loss) before income taxes 222,047 279,290 23,806 (299,248) 225,895 State income tax expense — (32) — — (32) Net income (loss) 222,047 279,258 23,806 (299,248) 225,863 Allocation of net income attributable to noncontrolling interests — (3,699) (7,218) — (10,917) Net income (loss) attributable to the Partnership 222,047 275,559 16,588 (299,248) 214,946 Other comprehensive income (loss) — — — — — Comprehensive income (loss) attributable to the Partnership $ 222,047 $ 275,559 $ 16,588 $ (299,248) $ 214,946 Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2020 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 374,108 $ 25,701 $ — $ 399,809 Third parties — 77,039 21,000 — 98,039 — 451,147 46,701 — 497,848 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 132,393 15,299 — 147,692 Depreciation and amortization — 82,442 17,136 — 99,578 General and administrative 3,227 6,762 — — 9,989 Goodwill Impairment — 35,653 — — 35,653 35,653 3,227 257,250 32,435 — 292,912 Operating income (loss) (3,227) 193,897 14,266 — 204,936 Equity in earnings of subsidiaries 254,608 15,409 — (270,017) — Equity in earnings of equity method investments — 5,105 1,542 — 6,647 Interest income 26 10,578 17 — 10,621 Interest expense (55,298) (4,126) — — (59,424) Gain on sales-type lease — 33,834 — — 33,834 Loss on early extinguishment of debt (25,915) — — — (25,915) Gain on sale of assets and other 289 3,535 4,867 — 8,691 173,710 64,335 6,426 (270,017) (25,546) Income (loss) before income taxes 170,483 258,232 20,692 (270,017) 179,390 State income tax expense — (167) — — (167) Net income (loss) 170,483 258,065 20,692 (270,017) 179,223 Allocation of net income attributable to noncontrolling interests — (3,457) (5,283) — (8,740) Net income (loss) attributable to the Partnership 170,483 254,608 15,409 (270,017) 170,483 Other comprehensive income (loss) — — — — — Comprehensive income (loss) attributable to the Partnership $ 170,483 $ 254,608 $ 15,409 $ (270,017) $ 170,483 Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2019 Parent Guarantor Non-Guarantor Non-Restricted Subsidiaries Eliminations Consolidated (In thousands) Revenues: Affiliates $ — $ 386,517 $ 25,233 $ — $ 411,750 Third parties — 94,083 26,944 — 121,027 — 480,600 52,177 — 532,777 Operating costs and expenses: Operations (exclusive of depreciation and amortization) — 147,387 14,609 — 161,996 Depreciation and amortization — 79,516 17,189 — 96,705 General and administrative 3,184 7,067 — — 10,251 3,184 233,970 31,798 — 268,952 Operating income (loss) (3,184) 246,630 20,379 — 263,825 Equity in earnings (loss) of subsidiaries 302,148 15,351 — (317,499) — Equity in earnings of equity method investments — 5,320 (140) — 5,180 Interest income — 5,517 — — 5,517 Interest expense (74,375) (2,448) — — (76,823) Gain on sales-type lease — 35,166 — — 35,166 Gain on sale of assets and other 295 (116) 93 — 272 228,068 58,790 (47) (317,499) (30,688) Income (loss) before income taxes 224,884 305,420 20,332 (317,499) 233,137 State income tax expense — (41) — — (41) Net income (loss) 224,884 305,379 20,332 (317,499) 233,096 Allocation of net income attributable to noncontrolling interests — (3,231) (4,981) — (8,212) Net income (loss) attributable to the Partnership 224,884 302,148 15,351 (317,499) 224,884 Other comprehensive income (loss) — — — — — Comprehensive income (loss) attributable to the Partnership $ 224,884 $ 302,148 $ 15,351 $ (317,499) $ 224,884 |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | Apr. 01, 2021USD ($) | Jan. 01, 2021USD ($)renewalOption | Mar. 31, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2021USD ($)terminalprocessingUnitfacilitysegmenttrackFeet | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($) |
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Ownership percentage, controlling interest | 57.00% | |||||||
Lease term | 10 years | |||||||
Lease renewal period options | renewalOption | 2 | |||||||
Lease renewal option period | 5 years | |||||||
Annual lease payment due | $ 5,000 | |||||||
Service fee arrangement period | 5 years | |||||||
Payment due for termination of commitment | $ 10,000 | |||||||
Proceeds from Sale of Property, Plant, and Equipment | $ 7,365 | $ 1,089 | $ 532 | |||||
Gain on sale of asset | $ 5,567 | 1,015 | 229 | |||||
Number of reportable segments | segment | 2 | |||||||
Goodwill impairment | $ 11,034 | 35,653 | 0 | |||||
Asset retirement obligation | $ 8,700 | 9,000 | ||||||
Factor compound rate | 7.00% | |||||||
Carrying value of Class B units | $ 56,549 | 52,850 | ||||||
Contract revenue recognized | 17,500 | 20,800 | 16,000 | |||||
Deficiency payments bill in prior periods | 500 | 700 | $ 600 | |||||
Operating lease right-of-use assets, net | 2,275 | $ 2,979 | $ 78,400 | |||||
Cheyenne Pipeline LLC | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Goodwill impairment | $ 11,000 | $ 35,700 | ||||||
Shortfall Payments | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Deferred revenue | $ 4,200 | |||||||
156 Mile, 6 Inch Refined Product Pipeline | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Proceeds from Sale of Property, Plant, and Equipment | $ 7,000 | |||||||
Gain on sale of asset | $ 5,300 | |||||||
Terminal Facilities and Tankage | Minimum | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Estimated useful lives of assets (in years) | 15 years | |||||||
Terminal Facilities and Tankage | Maximum | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Estimated useful lives of assets (in years) | 25 years | |||||||
Pipelines, terminals and tankage | Minimum | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Estimated useful lives of assets (in years) | 25 years | |||||||
Pipelines, terminals and tankage | Maximum | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Estimated useful lives of assets (in years) | 30 years | |||||||
Refinery Processing Units | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Estimated useful lives of assets (in years) | 25 years | |||||||
Corporate and Other Assets | Minimum | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Estimated useful lives of assets (in years) | 3 years | |||||||
Corporate and Other Assets | Maximum | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Estimated useful lives of assets (in years) | 10 years | |||||||
Pipelines and terminals | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Number of pipeline segments | segment | 26 | |||||||
Number refined product terminals | terminal | 10 | |||||||
Number of crude terminals | terminal | 1 | |||||||
Number of lube terminals | terminal | 1 | |||||||
Rail storage (in track feet) | trackFeet | 31,800 | |||||||
Number of storage facilities | facility | 2 | |||||||
Number of locations with truck or rail racks | facility | 7 | |||||||
Number of HFC refining facility locations | facility | 6 | |||||||
Refinery processing units | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Number of HFC refining facility locations | facility | 2 | |||||||
Number of refinery processing units | processingUnit | 5 | |||||||
UNEV Pipeline | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Interest percentage owned in UNEV earnings | 50.00% | |||||||
UNEV Pipeline | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Ownership percentage in equity method investment | 75.00% | |||||||
UNEV acquisition, contingent consideration | $ 30,000 | |||||||
Osage Pipe Line Company, LLC | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Ownership percentage in equity method investment | 50.00% | |||||||
Cheyenne Pipeline LLC | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Ownership percentage in equity method investment | 50.00% | |||||||
Cushing Connect Pipeline | ||||||||
Description of Business and Summary of Significant Accounting Policies [Line Items] | ||||||||
Ownership percentage in equity method investment | 50.00% |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Schedule of Goodwill (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Goodwill | $ 270,336 | $ 270,336 |
Accumulated impairment losses | (46,686) | (35,652) |
Total goodwill | $ 223,650 | $ 234,684 |
Description of Business and S_6
Description of Business and Summary of Significant Accounting Policies - Schedule of Equity Method Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Other Ownership Interests [Line Items] | ||
Underlying Equity | $ 90,756 | $ 93,196 |
Equity method investments | 116,378 | 120,544 |
Difference | (25,622) | (27,348) |
Osage Pipe Line Company, LLC | ||
Other Ownership Interests [Line Items] | ||
Underlying Equity | 9,996 | 10,044 |
Equity method investments | 37,782 | 38,743 |
Difference | (27,786) | (28,699) |
Cheyenne Pipeline LLC | ||
Other Ownership Interests [Line Items] | ||
Underlying Equity | 28,557 | 29,103 |
Equity method investments | 41,091 | 42,345 |
Difference | (12,534) | (13,242) |
Cushing Connect Terminal Holdings LLC | ||
Other Ownership Interests [Line Items] | ||
Underlying Equity | 52,203 | 54,049 |
Equity method investments | 37,505 | 39,456 |
Difference | $ 14,698 | $ 14,593 |
Sinclair Acquisition (Details)
Sinclair Acquisition (Details) - STC $ in Millions | Aug. 02, 2021USD ($)nominationextensionOptionshares |
Business Acquisition [Line Items] | |
Newly issued common units transferred in transaction (in shares) | 21,000,000 |
Transaction cash considerations transferred | $ | $ 325 |
Number of termination date extension periods in transaction | extensionOption | 2 |
Transaction termination date extension period | 90 days |
Number of director nominations granted in transaction | nomination | 1 |
HF Sinclair Corporation | Common Stock | |
Business Acquisition [Line Items] | |
Newly issued common units transferred in transaction (in shares) | 60,230,036 |
Investment in Joint Venture (De
Investment in Joint Venture (Details) - Cushing Connect Joint Venture bbl in Thousands, $ in Millions | Oct. 02, 2019bbl | Dec. 31, 2021USD ($) |
Schedule of Equity Method Investments [Line Items] | ||
Barrels of crude oil per day | bbl | 160 | |
Barrels of crude oil, value | bbl | 1,500 | |
Percent of budget which construction costs are payable by HEP | 10.00% | |
Minimum | ||
Schedule of Equity Method Investments [Line Items] | ||
Expected construction costs | $ 70 | |
Expected construction costs, exceeding budget by more than 10% | 4 | |
Maximum | ||
Schedule of Equity Method Investments [Line Items] | ||
Expected construction costs | 75 | |
Expected construction costs, exceeding budget by more than 10% | $ 6 |
Revenues - Schedule of Disaggre
Revenues - Schedule of Disaggregated Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Disaggregated revenue | $ 494,495 | $ 497,848 | $ 532,777 |
Pipelines | |||
Disaggregation of Revenue [Line Items] | |||
Disaggregated revenue | 263,110 | 265,834 | 292,631 |
Terminals, tanks and loading racks | |||
Disaggregation of Revenue [Line Items] | |||
Disaggregated revenue | 142,267 | 151,692 | 160,467 |
Refinery processing units | |||
Disaggregation of Revenue [Line Items] | |||
Disaggregated revenue | $ 89,118 | $ 80,322 | $ 79,679 |
Revenues - Schedule of Lease an
Revenues - Schedule of Lease and Service Revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue from External Customer [Line Items] | |||
Lease revenues | $ 336,062 | $ 360,598 | $ 378,311 |
Revenues: | 494,495 | 497,848 | 532,777 |
Service revenues | |||
Revenue from External Customer [Line Items] | |||
Revenues: | $ 158,433 | $ 137,250 | $ 154,466 |
Revenues - Schedule of Contract
Revenues - Schedule of Contract Asset and Liability Balances (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 6,637 | $ 6,306 |
Contract liabilities | $ (4,185) | $ (500) |
Revenues - Narrative (Details)
Revenues - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |||
Deferred revenue recognized. billed prior period | $ 0.5 | $ 0.7 | |
Revenue included in contract assets | 0.3 | $ 0.6 | $ 3.9 |
Performance obligation revenue | $ 1,638 |
Revenues - Schedule of Future P
Revenues - Schedule of Future Performance Obligations (Details) $ in Millions | Dec. 31, 2021USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 1,638 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 312 |
Satisfaction period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 275 |
Satisfaction period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 238 |
Satisfaction period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 172 |
Satisfaction period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 157 |
Satisfaction period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Unfulfilled performance obligation revenue | $ 484 |
Satisfaction period |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | Dec. 31, 2021USD ($)renewalOption | Dec. 31, 2020USD ($) |
Lessee, Lease, Description [Line Items] | ||
Finance lease term | 10 years | |
Cost of assets under finance leases | $ 6,031 | $ 6,410 |
Accumulated depreciation of assets under finance leases | $ 3,632 | $ 3,390 |
Number of renewal options | renewalOption | 1 | |
Finance lease extension option term | 10 years | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease term | 1 year | |
Minimum | Vehicles | ||
Lessee, Lease, Description [Line Items] | ||
Finance lease term | 33 months | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease term | 23 years | |
Operating lease renewal term | 10 years | |
Maximum | Vehicles | ||
Lessee, Lease, Description [Line Items] | ||
Finance lease term | 48 months |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2019 |
Operating leases: | |||
Operating lease right-of-use assets, net | $ 2,275 | $ 2,979 | $ 78,400 |
Current operating lease liabilities | 620 | 875 | |
Noncurrent operating lease liabilities | 2,030 | 2,476 | |
Total operating lease liabilities | 2,650 | 3,351 | |
Finance leases: | |||
Properties and equipment | 6,031 | 6,410 | |
Accumulated amortization | (3,632) | (3,390) | |
Properties and equipment, net | $ 2,399 | $ 3,020 | |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Properties and equipment, net (Cushing Connect VIEs: $— and $47,801, respectively) | Properties and equipment, net (Cushing Connect VIEs: $— and $47,801, respectively) | |
Current finance lease liabilities | $ 3,786 | $ 3,713 | |
Noncurrent finance lease liabilities | 64,649 | 68,047 | |
Total finance lease liabilities | $ 68,435 | $ 71,760 | |
Weighted average remaining lease term (in years) | |||
Operating leases | 5 years 9 months 18 days | 5 years 10 months 24 days | |
Finance leases | 15 years | 15 years 10 months 24 days | |
Weighted average discount rate | |||
Operating leases | 4.80% | 4.80% | |
Finance leases | 5.60% | 5.60% |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows on operating leases | $ 1,142 | $ 1,024 | |
Operating cash flows on finance leases | 4,104 | 4,312 | |
Financing cash flows on finance leases | $ 3,549 | $ 3,602 | $ 2,471 |
Leases - Operating and Finance
Leases - Operating and Finance Lease Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Operating | ||
2022 | $ 690 | |
2023 | 603 | |
2024 | 497 | |
2025 | 443 | |
2026 | 289 | |
2027 and thereafter | 501 | |
Total lease payments | 3,023 | |
Less: Imputed interest | (373) | |
Total lease obligations | 2,650 | $ 3,351 |
Less: Current lease liabilities | (620) | (875) |
Long-term lease liabilities | 2,030 | 2,476 |
Finance | ||
2022 | 7,228 | |
2023 | 7,374 | |
2024 | 6,929 | |
2025 | 6,470 | |
2026 | 6,425 | |
2027 and thereafter | 67,463 | |
Total lease payments | 101,889 | |
Less: Imputed interest | (33,454) | |
Total lease obligations | 68,435 | 71,760 |
Less: Current lease liabilities | (3,786) | (3,713) |
Long-term lease liabilities | $ 64,649 | $ 68,047 |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | ||
Operating lease costs | $ 1,077 | $ 983 |
Amortization of assets | 803 | 1,001 |
Interest on lease liabilities | 3,953 | 4,126 |
Variable lease cost | 215 | 222 |
Total net lease cost | $ 6,048 | $ 6,332 |
Leases - Gain on Sales-Type Lea
Leases - Gain on Sales-Type Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | |||
Net investment in leases | $ 148,419 | $ 35,319 | |
Properties and equipment, net | (130,301) | (1,485) | |
Deferred Revenue | 6,559 | ||
Gain on sales-type leases | $ 24,677 | $ 33,834 | $ 35,166 |
Leases - Schedule of Lease Inco
Leases - Schedule of Lease Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | |||
Operating lease revenues | $ 326,902 | $ 350,668 | |
Direct financing lease interest income | 2,089 | 2,096 | |
Gain on sales-type leases | 24,677 | 33,834 | $ 35,166 |
Sales-type lease interest income | 27,836 | 8,481 | |
Lease revenues relating to variable lease payments not included in measurement of the sales-type lease receivable | $ 9,160 | $ 9,929 |
Leases - Schedule of Minimum Un
Leases - Schedule of Minimum Undiscounted Lease Payments (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Operating | ||
2022 | $ 283,882 | |
2023 | 253,424 | |
2024 | 217,321 | |
2025 | 153,900 | |
2026 | 139,983 | |
Thereafter | 418,354 | |
Total lease payment receipts | 1,466,864 | |
Finance | ||
Finance and Sales-type | ||
2022 | 2,171 | |
2023 | 2,175 | |
2024 | 2,192 | |
2025 | 2,209 | |
2026 | 2,227 | |
Thereafter | 36,610 | |
Total lease payment receipts | 47,584 | |
Less: Imputed interest | (31,213) | |
Lease receivables | 16,371 | |
Unguaranteed residual assets at end of leases | 0 | |
Net investment in leases | 16,371 | $ 16,452 |
Sales-type | ||
Finance and Sales-type | ||
2022 | 42,102 | |
2023 | 38,196 | |
2024 | 34,967 | |
2025 | 31,539 | |
2026 | 31,539 | |
Thereafter | 247,867 | |
Total lease payment receipts | 426,210 | |
Less: Imputed interest | (357,682) | |
Lease receivables | 68,528 | |
Unguaranteed residual assets at end of leases | 229,337 | |
Net investment in leases | $ 297,865 | $ 153,473 |
Leases - Net Investments in Lea
Leases - Net Investments in Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Sales-type Leases | ||
Lessor, Lease, Description [Line Items] | ||
Lease receivables | $ 207,768 | $ 88,922 |
Unguaranteed residual assets | 90,097 | 64,551 |
Net investment in leases | 297,865 | 153,473 |
Direct Financing Leases | ||
Lessor, Lease, Description [Line Items] | ||
Lease receivables | 16,371 | 16,452 |
Unguaranteed residual assets | 0 | 0 |
Net investment in leases | $ 16,371 | $ 16,452 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - 5% Senior Notes - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Stated interest rate, senior notes | 5.00% | |
Carrying Value | ||
Debt Instrument [Line Items] | ||
Senior notes | $ 493,049 | $ 492,103 |
Level 2 | Fair Value | ||
Debt Instrument [Line Items] | ||
Senior notes | $ 502,705 | $ 506,540 |
Properties and Equipment (Detai
Properties and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Properties and equipment, gross | $ 2,050,065 | $ 2,116,441 | |
Less accumulated depreciation | (721,037) | (665,756) | |
Properties and equipment, net | 1,329,028 | 1,450,685 | |
Depreciation expense | 79,200 | 85,000 | $ 82,600 |
Asset abandonment costs | 1,100 | 1,000 | $ 1,300 |
Pipelines, terminals and tankage | |||
Property, Plant and Equipment [Line Items] | |||
Properties and equipment, gross | 1,527,697 | 1,575,815 | |
Refinery assets | |||
Property, Plant and Equipment [Line Items] | |||
Properties and equipment, gross | 348,882 | 348,882 | |
Land and right of way | |||
Property, Plant and Equipment [Line Items] | |||
Properties and equipment, gross | 98,837 | 87,076 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Properties and equipment, gross | 26,446 | 58,467 | |
Other | |||
Property, Plant and Equipment [Line Items] | |||
Properties and equipment, gross | $ 48,203 | $ 46,201 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets, gross | $ 204,797,000 | $ 204,797,000 | |
Less accumulated amortization | (131,490,000) | (117,482,000) | |
Intangible assets, net | 73,307,000 | 87,315,000 | |
Amortization expense | 14,000,000 | 14,000,000 | $ 14,000,000 |
Estimated amortization expense for 2022 | 14,000,000 | ||
Estimated amortization expense for 2023 | 9,900,000 | ||
Estimated amortization expense for 2024 | 9,100,000 | ||
Estimated amortization expense for 2025 | 9,100,000 | ||
Estimated amortization expense for 2026 | 9,100,000 | ||
Basis in transportation agreements | $ 0 | ||
Delek transportation agreement | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 30 years | ||
Intangible assets, gross | $ 59,933,000 | 59,933,000 | |
HFC transportation agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets, gross | $ 75,131,000 | 75,131,000 | |
HFC transportation agreements | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 10 years | ||
HFC transportation agreements | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 15 years | ||
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 10 years | ||
Intangible assets, gross | $ 69,683,000 | 69,683,000 | |
Other | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful Life | 20 years | ||
Intangible assets, gross | $ 50,000 | $ 50,000 |
Employees, Retirement and Inc_3
Employees, Retirement and Incentive Plans - Retirement and Benefit Plan Costs (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021USD ($)componentplanshares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Retirement and benefit costs | $ 8.7 | $ 7.9 | $ 7.3 |
Retirement costs | $ 3.7 | 3.4 | 3.4 |
Number of long-term incentive plan components | component | 5 | ||
Number of incentive-based award plans | plan | 2 | ||
Compensation costs | $ 2.6 | $ 2.2 | $ 2.5 |
Long-term Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Units authorized to be granted (in shares) | shares | 2,500,000 | ||
Units not yet granted (in shares) | shares | 753,425 |
Employees, Retirement and Inc_4
Employees, Retirement and Incentive Plans - Phantom Units (Details) - Phantom Share Units (PSUs) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||
Units outstanding at beginning of period (in shares) | 295,992 | ||
Granted (in shares) | 51,670 | ||
Vesting and transfer of full ownership to recipients (in shares) | (137,566) | ||
Forfeited (in shares) | (6,833) | ||
Units outstanding at end of period (in shares) | 203,263 | 295,992 | |
Weighted- Average Grant-Date Fair Value | |||
Weighted-average grant-date fair value of units outstanding at beginning of period (in USD per share) | $ 14.48 | ||
Weighted-average grant-date fair value of units granted (in USD per share) | 18.93 | ||
Weighted-average grant-date fair value of units vesting and transfer to common units to recipients (in USD per share) | 15.56 | $ 11.92 | $ 23.52 |
Weighted-average grant-date fair value of units forfeited (in USD per share) | 15.54 | ||
Weighted-average grant-date fair value of units outstanding at end of period (in USD per share) | $ 14.85 | $ 14.48 | |
Grant date fair value of vested units transferred to recipients | $ 2.1 | $ 2 | $ 2.1 |
Unrecognized compensation related to nonvested units | $ 1.8 | ||
Weighted average recognition period | 1 year 4 months 24 days | ||
Minimum | |||
Weighted- Average Grant-Date Fair Value | |||
Award vesting period | 1 year | ||
Maximum | |||
Weighted- Average Grant-Date Fair Value | |||
Award vesting period | 3 years |
Employees, Retirement and Inc_5
Employees, Retirement and Incentive Plans - Performance Units (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement, Nonvested [Roll Forward] | |||
Payments for repurchase of common units | $ 1,958 | $ 698 | $ 1,470 |
Performance Shares | |||
Share-based Compensation Arrangement, Nonvested [Roll Forward] | |||
Units outstanding at beginning of period (in shares) | 77,472 | ||
Granted (in shares) | 10,128 | ||
Vesting and transfer of common units to recipients (in shares) | (10,881) | ||
Units outstanding at end of period (in shares) | 76,719 | 77,472 | |
Grant date fair value of vested units transferred to recipients | $ 400 | $ 400 | $ 300 |
Value of performance units vested and expected to vest | 1,400 | ||
Unrecognized compensation related to nonvested units | $ 600 | ||
Weighted average recognition period | 1 year 6 months | ||
Long-term Incentive Plan | Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Performance period | 3 years | ||
Range of performance units earned, minimum | 0.00% | ||
Range of performance units earned, maximum | 200.00% | ||
Share-based Compensation Arrangement, Nonvested [Roll Forward] | |||
Payments for repurchase of common units | $ 2,000 |
Debt - Credit Agreement (Detail
Debt - Credit Agreement (Details) - USD ($) | Apr. 30, 2021 | Mar. 31, 2021 |
Debt Instrument [Line Items] | ||
Maximum borrowing capacity under revolving credit agreement | $ 1,200,000,000 | $ 1,400,000,000 |
Line of credit maximum accordion feature | 1,700,000,000 | |
Letter of Credit | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity under revolving credit agreement | $ 50,000,000 |
Debt - Senior Notes (Details)
Debt - Senior Notes (Details) - USD ($) | Feb. 05, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Feb. 04, 2020 |
Debt Instrument [Line Items] | |||||
Loss on early extinguishment of debt | $ 0 | $ 25,915,000 | $ 0 | ||
5% Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount of senior note | $ 500,000,000 | ||||
Stated interest rate, senior notes | 5.00% | ||||
Principal | $ 500,000,000 | 500,000,000 | |||
Unamortized discount | $ 6,951,000 | $ 7,897,000 | |||
6% Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate, senior notes | 6.00% | ||||
Principal | 500,000,000 | ||||
Redemption cost | $ 522,500,000 | ||||
Loss on early extinguishment of debt | 25,900,000 | ||||
Debt redemption premium | $ 22,500,000 | ||||
Unamortized discount | $ 3,400,000 |
Debt - Long-Term Debt (Details)
Debt - Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Amount outstanding | $ 840,000 | $ 913,500 |
Total long-term debt | $ 1,333,049 | 1,405,603 |
5% Senior Notes | ||
Debt Instrument [Line Items] | ||
Stated interest rate, senior notes | 5.00% | |
Principal | $ 500,000 | 500,000 |
Unamortized premium and debt issuance costs | (6,951) | (7,897) |
Senior notes | $ 493,049 | $ 492,103 |
Debt - Maturities by Year (Deta
Debt - Maturities by Year (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2022 | $ 0 |
2023 | 0 |
2024 | 0 |
2025 | 840,000 |
2026 | 0 |
Thereafter | 500,000 |
Total | $ 1,340,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2021 | |
Long-term Purchase Commitment [Line Items] | ||
Lease payment receivable | $ 1,466,864 | |
Contractual Obligation, Fiscal Year Maturity [Abstract] | ||
Gain from to settlement agreement | $ 7,300 | |
Site Service Commitments | ||
Contractual Obligation, Fiscal Year Maturity [Abstract] | ||
2022 | 8,347 | |
2023 | 8,254 | |
2024 | 8,195 | |
2025 | 6,661 | |
2026 | 5,812 | |
Thereafter | 218,941 | |
Total | 256,210 | |
Sublease Of Office Space | ||
Long-term Purchase Commitment [Line Items] | ||
Lease payment receivable | $ 1,000 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | Aug. 02, 2021USD ($) | Jan. 01, 2021USD ($)renewalOption | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Related Party Transaction [Line Items] | |||||
Revenues: | $ 494,495 | $ 497,848 | $ 532,777 | ||
Accounts receivables due | 56,154 | 47,972 | |||
Accounts payable due | 11,703 | 18,120 | |||
Lease income | 2,100 | 2,100 | 2,100 | ||
Gain on sales-type leases | 24,677 | 33,834 | 35,166 | ||
Sales-type lease payments received | 28,900 | 9,500 | 4,800 | ||
Lease term | 10 years | ||||
Lease renewal period options | renewalOption | 2 | ||||
Lease renewal option period | 5 years | ||||
Annual lease payment due | $ 5,000 | ||||
Service fee arrangement period | 5 years | ||||
Payment due for termination of commitment | $ 10,000 | ||||
HFC | |||||
Related Party Transaction [Line Items] | |||||
Minimum annualized payments received | 352,800 | ||||
Administrative fee | 2,600 | 2,600 | 2,600 | ||
Revenues: | 390,800 | 399,800 | 411,800 | ||
Reimbursements for expense and capital projects | 7,900 | 10,000 | 13,900 | ||
Distributions on common units | 83,500 | 95,200 | 150,000 | ||
Accounts receivables due | 56,200 | 48,000 | |||
Accounts payable due | 11,700 | 18,100 | |||
Revenues including shortfall payments | 400 | 500 | 500 | ||
Deferred revenue | $ 4,100 | 400 | |||
HFC | Woods Cross Refinery | |||||
Related Party Transaction [Line Items] | |||||
Cash considerations receivable under agreement | $ 232,500 | ||||
HFC | Revenue Benchmark | Revenue from Rights Concentration Risk | |||||
Related Party Transaction [Line Items] | |||||
Percentage of total revenue | 79.00% | ||||
Annual Administrative Fee | HFC | |||||
Related Party Transaction [Line Items] | |||||
Administrative fee | $ 2,600 | ||||
Reimbursements Paid | HFC | |||||
Related Party Transaction [Line Items] | |||||
Expense of employees supporting operations | $ 61,200 | $ 55,800 | $ 55,100 |
Partners' Equity Income Allocat
Partners' Equity Income Allocations and Cash Distributions (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 21, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Limited Partners' Capital Account [Line Items] | ||||
Partners' capital units held by controlling interest (in shares) | 59,630,030 | |||
Ownership percentage, controlling interest | 57.00% | |||
Value of common units available to issue and sell under offering program | $ 200 | |||
Units issued under offering program (in shares) | 2,413,153 | |||
Proceeds from common unit issuance program | $ 82.3 | |||
Number of days post quarter end cash is distributed | 45 days | |||
Cash distributions | $ 149.4 | $ 174.4 | $ 273.2 | |
Subsequent Event | ||||
Limited Partners' Capital Account [Line Items] | ||||
Cash distribution declared (in USD per share) | $ 0.35 |
Net Income Per Limited Partne_3
Net Income Per Limited Partner Unit (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net Income per Limited Partner Unit [Abstract] | |||
Net income attributable to the partners | $ 214,946 | $ 170,483 | $ 224,884 |
Less: Participating securities’ share in earnings | (736) | (387) | 0 |
Net income attributable to common units | $ 214,210 | $ 170,096 | $ 224,884 |
Weighted average limited partners’ units outstanding, basic (in shares) | 105,440 | 105,440 | 105,440 |
Weighted average limited partners’ units outstanding, diluted (in shares) | 105,440 | 105,440 | 105,440 |
Limited partners’ per unit interest in earnings— basic (in USD per share) | $ 2.03 | $ 1.61 | $ 2.13 |
Limited partners’ per unit interest in earnings— diluted (in USD per share) | $ 2.03 | $ 1.61 | $ 2.13 |
Environmental (Details)
Environmental (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Environmental Exit Cost [Line Items] | |||
Environmental remediation expense | $ 1.9 | $ 1.6 | $ 0.5 |
Accrued environmental liabilities | 3.9 | 4.5 | |
Affiliates | |||
Environmental Exit Cost [Line Items] | |||
Accrued environmental liabilities | 0.3 | 0.5 | |
Other Noncurrent Liabilities | |||
Environmental Exit Cost [Line Items] | |||
Accrued environmental liabilities | $ 2.4 | $ 2.5 |
Operating Segments (Details)
Operating Segments (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of reportable segments | segment | 2 | ||
Revenues: | $ 494,495 | $ 497,848 | $ 532,777 |
Segment operating income: | 206,500 | 204,936 | 263,825 |
Unallocated general and administrative expenses | (12,637) | (9,989) | (10,251) |
Interest and financing costs, net | (23,893) | (48,803) | (71,306) |
Loss on early extinguishment of debt | 0 | (25,915) | 0 |
Equity in earnings of equity method investments | 12,432 | 6,647 | 5,180 |
Gain on sales-type lease | 24,677 | 33,834 | 35,166 |
Other income | 6,179 | 8,691 | 272 |
Income before income taxes | 225,895 | 179,390 | 233,137 |
Capital Expenditures: | 89,995 | 59,283 | 30,112 |
Identifiable assets: | 2,165,867 | 2,167,565 | |
Goodwill impairment | 11,034 | 35,653 | 0 |
Goodwill | 223,650 | 234,684 | |
Affiliates | |||
Segment Reporting Information [Line Items] | |||
Revenues: | 390,849 | 399,809 | 411,750 |
Third parties | |||
Segment Reporting Information [Line Items] | |||
Revenues: | 103,646 | 98,039 | 121,027 |
Pipelines and terminals | |||
Segment Reporting Information [Line Items] | |||
Capital Expenditures: | 87,756 | 59,108 | 28,743 |
Refinery processing units | |||
Segment Reporting Information [Line Items] | |||
Revenues: | 89,118 | 80,322 | 79,679 |
Capital Expenditures: | 2,239 | 175 | 1,369 |
Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Revenues: | 494,495 | 497,848 | 532,777 |
Segment operating income: | 219,137 | 214,925 | 274,076 |
Operating Segments | Pipelines and terminals | |||
Segment Reporting Information [Line Items] | |||
Segment operating income: | 180,965 | 176,611 | 241,843 |
Identifiable assets: | 1,737,388 | 1,729,547 | |
Operating Segments | Pipelines and terminals | Affiliates | |||
Segment Reporting Information [Line Items] | |||
Revenues: | 301,731 | 319,487 | 332,071 |
Operating Segments | Pipelines and terminals | Third parties | |||
Segment Reporting Information [Line Items] | |||
Revenues: | 103,646 | 98,039 | 121,027 |
Operating Segments | Refinery processing units | |||
Segment Reporting Information [Line Items] | |||
Revenues: | 89,118 | 80,322 | 79,679 |
Segment operating income: | 38,172 | 38,314 | $ 32,233 |
Identifiable assets: | 294,452 | 305,090 | |
Other | |||
Segment Reporting Information [Line Items] | |||
Identifiable assets: | $ 134,027 | $ 132,928 |
Supplemental Guarantor _ Non-_3
Supplemental Guarantor / Non-Guarantor Financial Information - Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2019 |
Current assets: | |||
Cash and cash equivalents | $ 14,381 | $ 21,990 | |
Accounts receivable | 68,899 | 62,515 | |
Prepaid and other current assets | 11,033 | 9,487 | |
Total current assets | 94,313 | 93,992 | |
Properties and equipment, net | 1,329,028 | 1,450,685 | |
Operating lease right-of-use assets | 2,275 | 2,979 | $ 78,400 |
Net investment in leases (Cushing Connect VIEs: $100,042 and $—, respectively) | 309,303 | 166,316 | |
Investment in subsidiaries | 0 | 0 | |
Intangible assets, net | 73,307 | 87,315 | |
Goodwill | 223,650 | 234,684 | |
Equity method investments | 116,378 | 120,544 | |
Other assets | 17,613 | 11,050 | |
Total assets | 2,165,867 | 2,167,565 | |
Current liabilities: | |||
Accounts payable | 40,280 | 46,400 | |
Accrued interest | 11,258 | 10,892 | |
Deferred revenue | 14,585 | 11,368 | |
Accrued property taxes | 4,542 | 3,992 | |
Current operating lease liabilities | 620 | 875 | |
Current finance lease liabilities | 3,786 | 3,713 | |
Other current liabilities | 1,781 | 2,505 | |
Total current liabilities | 76,852 | 79,745 | |
Long-term debt | 1,333,049 | 1,405,603 | |
Noncurrent operating lease liabilities | 2,030 | 2,476 | |
Noncurrent finance lease liabilities | 64,649 | 68,047 | |
Other long-term liabilities | 12,527 | 12,905 | |
Deferred revenue | 29,662 | 40,581 | |
Class B unit | 56,549 | 52,850 | |
Equity - partners | 443,017 | 379,292 | |
Equity - noncontrolling interests | 147,532 | 126,066 | |
Total liabilities and equity | 2,165,867 | 2,167,565 | |
Eliminations | |||
Current assets: | |||
Cash and cash equivalents | 0 | 0 | |
Accounts receivable | (335) | (315) | |
Prepaid and other current assets | (304) | 0 | |
Total current assets | (639) | (315) | |
Properties and equipment, net | 0 | 0 | |
Operating lease right-of-use assets | 0 | 0 | |
Net investment in leases (Cushing Connect VIEs: $100,042 and $—, respectively) | (100,030) | 0 | |
Investment in subsidiaries | (2,086,745) | (2,076,691) | |
Intangible assets, net | 0 | 0 | |
Goodwill | 0 | 0 | |
Equity method investments | 0 | 0 | |
Other assets | 0 | 0 | |
Total assets | (2,187,414) | (2,077,006) | |
Current liabilities: | |||
Accounts payable | (335) | (315) | |
Accrued interest | 0 | 0 | |
Deferred revenue | 0 | 0 | |
Accrued property taxes | 0 | 0 | |
Current operating lease liabilities | 0 | 0 | |
Current finance lease liabilities | (1,780) | 0 | |
Other current liabilities | 0 | 0 | |
Total current liabilities | (2,115) | (315) | |
Long-term debt | 0 | 0 | |
Noncurrent operating lease liabilities | 0 | 0 | |
Noncurrent finance lease liabilities | (91,453) | 0 | |
Other long-term liabilities | 0 | 0 | |
Deferred revenue | 0 | 0 | |
Class B unit | 0 | 0 | |
Equity - partners | (2,093,846) | (2,076,691) | |
Equity - noncontrolling interests | 0 | 0 | |
Total liabilities and equity | (2,187,414) | (2,077,006) | |
Parent | |||
Current assets: | |||
Cash and cash equivalents | 1,273 | 1,627 | |
Accounts receivable | 0 | 0 | |
Prepaid and other current assets | 353 | 349 | |
Total current assets | 1,626 | 1,976 | |
Properties and equipment, net | 0 | 0 | |
Operating lease right-of-use assets | 0 | 0 | |
Net investment in leases (Cushing Connect VIEs: $100,042 and $—, respectively) | 0 | 0 | |
Investment in subsidiaries | 1,785,024 | 1,789,808 | |
Intangible assets, net | 0 | 0 | |
Goodwill | 0 | 0 | |
Equity method investments | 0 | 0 | |
Other assets | 8,118 | 4,268 | |
Total assets | 1,794,768 | 1,796,052 | |
Current liabilities: | |||
Accounts payable | 0 | 0 | |
Accrued interest | 11,258 | 10,892 | |
Deferred revenue | 0 | 0 | |
Accrued property taxes | 0 | 0 | |
Current operating lease liabilities | 0 | 0 | |
Current finance lease liabilities | 0 | 0 | |
Other current liabilities | 3 | 5 | |
Total current liabilities | 11,261 | 10,897 | |
Long-term debt | 1,333,049 | 1,405,603 | |
Noncurrent operating lease liabilities | 0 | 0 | |
Noncurrent finance lease liabilities | 0 | 0 | |
Other long-term liabilities | 340 | 260 | |
Deferred revenue | 0 | 0 | |
Class B unit | 0 | 0 | |
Equity - partners | 450,118 | 379,292 | |
Equity - noncontrolling interests | 0 | 0 | |
Total liabilities and equity | 1,794,768 | 1,796,052 | |
Guarantor Restricted Subsidiaries | |||
Current assets: | |||
Cash and cash equivalents | (899) | (987) | |
Accounts receivable | 60,418 | 56,522 | |
Prepaid and other current assets | 9,680 | 8,366 | |
Total current assets | 69,199 | 63,901 | |
Properties and equipment, net | 1,026,912 | 1,087,184 | |
Operating lease right-of-use assets | 2,189 | 2,822 | |
Net investment in leases (Cushing Connect VIEs: $100,042 and $—, respectively) | 309,301 | 166,316 | |
Investment in subsidiaries | 301,721 | 286,883 | |
Intangible assets, net | 73,307 | 87,315 | |
Goodwill | 223,650 | 234,684 | |
Equity method investments | 78,873 | 81,089 | |
Other assets | 9,495 | 6,782 | |
Total assets | 2,094,647 | 2,016,976 | |
Current liabilities: | |||
Accounts payable | 28,447 | 30,252 | |
Accrued interest | 0 | 0 | |
Deferred revenue | 14,085 | 10,868 | |
Accrued property taxes | 3,364 | 2,915 | |
Current operating lease liabilities | 545 | 804 | |
Current finance lease liabilities | 5,566 | 3,713 | |
Other current liabilities | 1,513 | 2,491 | |
Total current liabilities | 53,520 | 51,043 | |
Long-term debt | 0 | 0 | |
Noncurrent operating lease liabilities | 2,030 | 2,476 | |
Noncurrent finance lease liabilities | 156,102 | 68,047 | |
Other long-term liabilities | 11,760 | 12,171 | |
Deferred revenue | 29,662 | 40,581 | |
Class B unit | 56,549 | 52,850 | |
Equity - partners | 1,785,024 | 1,789,808 | |
Equity - noncontrolling interests | 0 | 0 | |
Total liabilities and equity | 2,094,647 | 2,016,976 | |
Non-Guarantor Non-Restricted Subsidiaries | |||
Current assets: | |||
Cash and cash equivalents | 14,007 | 21,350 | |
Accounts receivable | 8,816 | 6,308 | |
Prepaid and other current assets | 1,304 | 772 | |
Total current assets | 24,127 | 28,430 | |
Properties and equipment, net | 302,116 | 363,501 | |
Operating lease right-of-use assets | 86 | 157 | |
Net investment in leases (Cushing Connect VIEs: $100,042 and $—, respectively) | 100,032 | 0 | |
Investment in subsidiaries | 0 | 0 | |
Intangible assets, net | 0 | 0 | |
Goodwill | 0 | 0 | |
Equity method investments | 37,505 | 39,455 | |
Other assets | 0 | 0 | |
Total assets | 463,866 | 431,543 | |
Current liabilities: | |||
Accounts payable | 12,168 | 16,463 | |
Accrued interest | 0 | 0 | |
Deferred revenue | 500 | 500 | |
Accrued property taxes | 1,178 | 1,077 | |
Current operating lease liabilities | 75 | 71 | |
Current finance lease liabilities | 0 | 0 | |
Other current liabilities | 265 | 9 | |
Total current liabilities | 14,186 | 18,120 | |
Long-term debt | 0 | 0 | |
Noncurrent operating lease liabilities | 0 | 0 | |
Noncurrent finance lease liabilities | 0 | 0 | |
Other long-term liabilities | 427 | 474 | |
Deferred revenue | 0 | 0 | |
Class B unit | 0 | 0 | |
Equity - partners | 301,721 | 286,883 | |
Equity - noncontrolling interests | 147,532 | 126,066 | |
Total liabilities and equity | $ 463,866 | $ 431,543 | |
5% Senior Notes | |||
Condensed Financial Statements, Captions [Line Items] | |||
Stated interest rate, senior notes | 5.00% |
Supplemental Guarantor _ Non-_4
Supplemental Guarantor / Non-Guarantor Financial Information - Comprehensive Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | |||
Revenues: | $ 494,495 | $ 497,848 | $ 532,777 |
Operating costs and expenses: | |||
Operations (exclusive of depreciation and amortization) | 170,524 | 147,692 | 161,996 |
Depreciation and amortization | 93,800 | 99,578 | 96,705 |
General and administrative | 12,637 | 9,989 | 10,251 |
Goodwill impairment | 11,034 | 35,653 | 0 |
Total operating costs and expenses | 287,995 | 292,912 | 268,952 |
Operating income | 206,500 | 204,936 | 263,825 |
Equity in earnings of subsidiaries | 0 | 0 | 0 |
Equity in earnings of equity method investments | 12,432 | 6,647 | 5,180 |
Interest expense | (53,818) | (59,424) | (76,823) |
Interest income | 29,925 | 10,621 | 5,517 |
Gain on sales-type lease | 24,677 | 33,834 | 35,166 |
Loss on extinguishment of debt | 0 | (25,915) | 0 |
Gain on sale of assets and other | 6,179 | 8,691 | 272 |
Total other income (expense) | 19,395 | (25,546) | (30,688) |
Income before income taxes | 225,895 | 179,390 | 233,137 |
State income tax expense | (32) | (167) | (41) |
Net income | 225,863 | 179,223 | 233,096 |
Allocation of net income attributable to noncontrolling interests | (10,917) | (8,740) | (8,212) |
Net income attributable to the partners | 214,946 | 170,483 | 224,884 |
Other comprehensive income (loss) | 0 | 0 | 0 |
Comprehensive income (loss) attributable to the Partnership | 214,946 | 170,483 | 224,884 |
Parent | |||
Revenues: | |||
Revenues: | 0 | 0 | 0 |
Operating costs and expenses: | |||
Operations (exclusive of depreciation and amortization) | 0 | 0 | 0 |
Depreciation and amortization | 0 | 0 | 0 |
General and administrative | 3,647 | 3,227 | 3,184 |
Goodwill impairment | 0 | 0 | |
Total operating costs and expenses | 3,647 | 3,227 | 3,184 |
Operating income | (3,647) | (3,227) | (3,184) |
Equity in earnings of subsidiaries | 275,558 | 254,608 | 302,148 |
Equity in earnings of equity method investments | 0 | 0 | 0 |
Interest expense | (49,864) | (55,298) | (74,375) |
Interest income | 0 | 26 | 0 |
Gain on sales-type lease | 0 | 0 | 0 |
Loss on extinguishment of debt | (25,915) | ||
Gain on sale of assets and other | 0 | 289 | 295 |
Total other income (expense) | 225,694 | 173,710 | 228,068 |
Income before income taxes | 222,047 | 170,483 | 224,884 |
State income tax expense | 0 | 0 | 0 |
Net income | 222,047 | 170,483 | 224,884 |
Allocation of net income attributable to noncontrolling interests | 0 | 0 | 0 |
Net income attributable to the partners | 222,047 | 170,483 | 224,884 |
Other comprehensive income (loss) | 0 | 0 | 0 |
Comprehensive income (loss) attributable to the Partnership | 222,047 | 170,483 | 224,884 |
Guarantor Restricted Subsidiaries | |||
Revenues: | |||
Revenues: | 443,704 | 451,147 | 480,600 |
Operating costs and expenses: | |||
Operations (exclusive of depreciation and amortization) | 152,913 | 132,393 | 147,387 |
Depreciation and amortization | 76,666 | 82,442 | 79,516 |
General and administrative | 8,990 | 6,762 | 7,067 |
Goodwill impairment | 11,034 | 35,653 | |
Total operating costs and expenses | 249,603 | 257,250 | 233,970 |
Operating income | 194,101 | 193,897 | 246,630 |
Equity in earnings of subsidiaries | 16,589 | 15,409 | 15,351 |
Equity in earnings of equity method investments | 8,897 | 5,105 | 5,320 |
Interest expense | (8,174) | (4,126) | (2,448) |
Interest income | 29,925 | 10,578 | 5,517 |
Gain on sales-type lease | 31,778 | 33,834 | 35,166 |
Loss on extinguishment of debt | 0 | ||
Gain on sale of assets and other | 6,174 | 3,535 | (116) |
Total other income (expense) | 85,189 | 64,335 | 58,790 |
Income before income taxes | 279,290 | 258,232 | 305,420 |
State income tax expense | (32) | (167) | (41) |
Net income | 279,258 | 258,065 | 305,379 |
Allocation of net income attributable to noncontrolling interests | (3,699) | (3,457) | (3,231) |
Net income attributable to the partners | 275,559 | 254,608 | 302,148 |
Other comprehensive income (loss) | 0 | 0 | 0 |
Comprehensive income (loss) attributable to the Partnership | 275,559 | 254,608 | 302,148 |
Non-Guarantor Non-Restricted Subsidiaries | |||
Revenues: | |||
Revenues: | 50,791 | 46,701 | 52,177 |
Operating costs and expenses: | |||
Operations (exclusive of depreciation and amortization) | 17,611 | 15,299 | 14,609 |
Depreciation and amortization | 17,134 | 17,136 | 17,189 |
General and administrative | 0 | 0 | 0 |
Goodwill impairment | 0 | 0 | |
Total operating costs and expenses | 34,745 | 32,435 | 31,798 |
Operating income | 16,046 | 14,266 | 20,379 |
Equity in earnings of subsidiaries | 0 | 0 | 0 |
Equity in earnings of equity method investments | 3,535 | 1,542 | (140) |
Interest expense | 0 | 0 | 0 |
Interest income | 4,220 | 17 | 0 |
Gain on sales-type lease | 0 | 0 | 0 |
Loss on extinguishment of debt | 0 | ||
Gain on sale of assets and other | 5 | 4,867 | 93 |
Total other income (expense) | 7,760 | 6,426 | (47) |
Income before income taxes | 23,806 | 20,692 | 20,332 |
State income tax expense | 0 | 0 | 0 |
Net income | 23,806 | 20,692 | 20,332 |
Allocation of net income attributable to noncontrolling interests | (7,218) | (5,283) | (4,981) |
Net income attributable to the partners | 16,588 | 15,409 | 15,351 |
Other comprehensive income (loss) | 0 | 0 | 0 |
Comprehensive income (loss) attributable to the Partnership | 16,588 | 15,409 | 15,351 |
Eliminations | |||
Revenues: | |||
Revenues: | 0 | 0 | 0 |
Operating costs and expenses: | |||
Operations (exclusive of depreciation and amortization) | 0 | 0 | 0 |
Depreciation and amortization | 0 | 0 | 0 |
General and administrative | 0 | 0 | 0 |
Goodwill impairment | 0 | 0 | |
Total operating costs and expenses | 0 | 0 | 0 |
Operating income | 0 | 0 | 0 |
Equity in earnings of subsidiaries | (292,147) | (270,017) | (317,499) |
Equity in earnings of equity method investments | 0 | 0 | 0 |
Interest expense | 4,220 | 0 | 0 |
Interest income | (4,220) | 0 | 0 |
Gain on sales-type lease | (7,101) | 0 | 0 |
Loss on extinguishment of debt | 0 | ||
Gain on sale of assets and other | 0 | 0 | 0 |
Total other income (expense) | (299,248) | (270,017) | (317,499) |
Income before income taxes | (299,248) | (270,017) | (317,499) |
State income tax expense | 0 | 0 | 0 |
Net income | (299,248) | (270,017) | (317,499) |
Allocation of net income attributable to noncontrolling interests | 0 | 0 | 0 |
Net income attributable to the partners | (299,248) | (270,017) | (317,499) |
Other comprehensive income (loss) | 0 | 0 | 0 |
Comprehensive income (loss) attributable to the Partnership | (299,248) | (270,017) | (317,499) |
Affiliates | |||
Revenues: | |||
Revenues: | 390,849 | 399,809 | 411,750 |
Affiliates | Parent | |||
Revenues: | |||
Revenues: | 0 | 0 | 0 |
Affiliates | Guarantor Restricted Subsidiaries | |||
Revenues: | |||
Revenues: | 365,889 | 374,108 | 386,517 |
Affiliates | Non-Guarantor Non-Restricted Subsidiaries | |||
Revenues: | |||
Revenues: | 24,960 | 25,701 | 25,233 |
Affiliates | Eliminations | |||
Revenues: | |||
Revenues: | 0 | 0 | 0 |
Third parties | |||
Revenues: | |||
Revenues: | 103,646 | 98,039 | 121,027 |
Third parties | Parent | |||
Revenues: | |||
Revenues: | 0 | 0 | 0 |
Third parties | Guarantor Restricted Subsidiaries | |||
Revenues: | |||
Revenues: | 77,815 | 77,039 | 94,083 |
Third parties | Non-Guarantor Non-Restricted Subsidiaries | |||
Revenues: | |||
Revenues: | 25,831 | 21,000 | 26,944 |
Third parties | Eliminations | |||
Revenues: | |||
Revenues: | $ 0 | $ 0 | $ 0 |