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Related Party Transactions
 12 Months Ended
Dec. 31, 2015
Related Party Transactions  
Related Party Transactions

 

Note 14—Related Party Transactions

 

Reimbursement of Expenses of Our General Partner and its Affiliates

 

We do not pay our general partner a management fee, but we do reimburse our general partner for all direct and indirect costs of services provided to us or incurred on our behalf, including the costs of employee, officer and director compensation and benefits allocable to us as well as all other expenses necessary or appropriate to the conduct of our business (other than expenses related to grants of AAP Management Units). We record these costs on the accrual basis in the period in which our general partner incurs them. Our partnership agreement provides that our general partner will determine the expenses that are allocable to us in any reasonable manner determined by our general partner in its sole discretion. Total costs reimbursed by us to our general partner for the years ended December 31, 2015, 2014 and 2013 were $648 million, $598 million and $567 million, respectively.

 

Transactions with Oxy

 

As of December 31, 2015, Oxy owned approximately 13% of the limited partner interests in our general partner and had a representative on the board of directors of GP LLC. During the three years ended December 31, 2015, we recognized sales and transportation revenues and purchased petroleum products from Oxy. These transactions were conducted at posted tariff rates or prices that we believe approximate market. A portion of these transactions was conducted under a crude oil buy/sell agreement that includes a multi-year minimum volume commitment. The impact to our Consolidated Statements of Operations from those transactions is included below (in millions):

 

 

 

Year Ended December 31,

 

 

 

2015

 

2014

 

2013

 

Revenues

 

$
866 

 

$
1,212 

 

$
1,309 

 

 

 

 

 

 

 

 

 

Purchases and related costs (1)

 

$
41 

 

$
925 

 

$
863 

 

 

(1)

Purchases and related costs include crude oil buy/sell transactions that are accounted for as inventory exchanges and are presented net in our Consolidated Statements of Operations.

 

We currently have a netting arrangement with Oxy. Our gross receivable and payable amounts with Oxy on our Consolidated Balance Sheets were as follows as of the dates indicated (in millions):

 

 

 

December 31,

 

 

 

2015

 

2014

 

Trade accounts receivable and other receivables

 

$
405 

 

$
489 

 

 

 

 

 

 

 

Accounts payable

 

$
363 

 

$
441 

 

 

In November 2014, we purchased Oxy’s 50% interest in BridgeTex. See Note 7 for further discussion. Also in November 2014, Oxy exchanged a portion of its interest in our general partner for Class A shares of PAGP and immediately sold such shares through a secondary public offering completed by PAGP.

 

Transactions with Equity Method Investees

 

We also have transactions with companies in which we hold an investment accounted for under the equity method of accounting (see Note 7 for information related to these investments). We recorded revenues of $17 million, $3 million and $33 million during the years ended December 31, 2015, 2014 and 2013, respectively. During the three years ended December 31, 2015, we utilized transportation services and purchased petroleum products provided by these companies. Costs related to these services totaled $164 million, $75 million and $79 million for the years ended December 31, 2015, 2014 and 2013, respectively. These transactions were conducted at posted tariff rates or contracted rates or prices that we believe approximate market. Receivables from our equity method investees totaled $14 million at December 31, 2015 and less than $1 million at December 31, 2014. Accounts payable to our equity method investees were $25 million and $6 million at December 31, 2015 and 2014, respectively.

 

In addition, we have an agreement to transport crude oil at posted tariff rates on a pipeline that is owned by an equity method investee, in which we own a 50% interest.  Our commitment to transport is supported by crude oil buy/sell agreements with third parties (including Oxy) with commensurate quantities.

 

Preferred Unit Issuance

 

In January 2016, we completed a private placement of preferred units. Certain of the purchasers of the preferred units or their affiliates are related parties. Kayne Anderson Capital Advisors, L.P. and certain of its affiliates and an affiliate of The Energy Minerals Group hold ownership interests in our general partner. In addition, certain of the current directors of our general partner are affiliated with certain of the purchasers. See Note 10 for additional information.