Investments in Unconsolidated Entities

Investments in entities over which we have significant influence but not control are accounted for by the equity method. We do not consolidate any part of the assets or liabilities of our equity investees. Our share of net income or loss is reflected as one line item on our Consolidated Statements of Operations entitled “Equity earnings in unconsolidated entities” and will increase or decrease, as applicable, the carrying value of our investments in unconsolidated entities on our Consolidated Balance Sheets. We evaluate our equity investments for impairment in accordance with FASB guidance with respect to the equity method of accounting for investments in common stock. An impairment of an equity investment results when factors indicate that the investment’s fair value is less than its carrying value and the reduction in value is other than temporary in nature.

Our investments in unconsolidated entities consisted of the following (in millions, except percentage data):



		Ownership Interest at December 31, 2016	December 31,
Entity	Type of Operation	Ownership Interest at December 31, 2016	2016		2015
BridgeTex Pipeline Company, LLC (“BridgeTex”)	Crude Oil Pipeline	50%	$	1,098	$	1,082
Butte Pipe Line Company	Crude Oil Pipeline	22%	11		9
Caddo Pipeline LLC	Crude Oil Pipeline	50%	65		28
Cheyenne Pipeline LLC (“Cheyenne”)	Crude Oil Pipeline	50%	30		—
Diamond Pipeline LLC (“Diamond”)	Crude Oil Pipeline ⁽¹⁾	50%	143		38
Eagle Ford Pipeline LLC	Crude Oil Pipeline	50%	372		382
Eagle Ford Terminals Corpus Christi LLC (“Eagle Ford Terminals”)	Crude Oil Terminal and Dock ⁽¹⁾	50%	53		29
Frontier Aspen LLC	Crude Oil Pipeline	50%	45		48
Saddlehorn Pipeline Company, LLC	Crude Oil Pipeline	40%	213		103
Settoon, Towing LLC	Barge Transportation Services	50%	87		84
STACK Pipeline LLC (“STACK”)	Crude Oil Pipeline	50%	14		—
White Cliffs Pipeline, LLC	Crude Oil Pipeline	36%	212		224
Total Investments in Unconsolidated Entities			$	2,343	$	2,027


⁽¹⁾	Asset is currently under construction by the entity and has not yet been placed in service.

In June 2016, we sold 50% of our investment in Cheyenne, and in August 2016 we sold 50% of our investment in STACK. As a result of these transactions, we now account for our remaining 50% equity interest in such entities under the equity method of accounting. See Note 6 for additional information related to these transactions.

In November 2014, we acquired a 50% interest in BridgeTex from Oxy. BridgeTex owns a crude oil pipeline that extends from Colorado City in West Texas to a crude oil terminal in East Houston, which we believe is complementary to our existing West Texas assets. We paid cash of $1.088 billion, including working capital adjustments of $13 million, for our interest in BridgeTex.

Distributions received from unconsolidated entities are classified based on the nature of the distribution approach, which looks to the activity that generated the distribution. We consider distributions received from unconsolidated entities as a return on investment in those entities to the extent that the distribution was generated through operating results, and therefore classify these distributions as cash flows from operating activities in our Consolidated Statement of Cash Flows. Other distributions received from unconsolidated entities are considered a return of investment and classified as cash flows from investing activities on the Consolidated Statement of Cash Flows.

We generally fund our portion of development, construction or capital expansion projects of our equity method investees through capital contributions. Our contributions to these entities increase the carrying value of our investments and are reflected in our Consolidated Statements of Cash Flows as cash used in investing activities. During the years ended December 31, 2016, 2015 and 2014, we made cash contributions of $288 million, $245 million and $158 million, respectively, to certain of our equity method investees. The contributions amount for 2015 is net of $53 million of cash received as a return of our investment. In addition, we capitalized interest of $13 million and $8 million during the years ended December 31, 2016 and 2015, respectively, related to contributions to unconsolidated entities for projects under development and construction. We anticipate that we will make additional contributions related to ongoing projects at BridgeTex, Diamond, Eagle Ford Terminals and STACK over the next few years.

Our investments in unconsolidated entities exceeded our share of the underlying equity in the net assets of such entities by $736 million and $760 million at December 31, 2016 and 2015, respectively. Such basis differences are included in the carrying values of our investments on our Consolidated Balance Sheets. The portion of the basis differences attributable to depreciable or amortizable assets is amortized on a straight-line basis over the estimated useful life of the related assets, which reduces “Equity earnings in unconsolidated entities” on our Consolidated Statements of Operations. The portion of the basis differences attributable to goodwill is not amortized. The basis difference is primarily related to our acquisition of an interest in BridgeTex in 2014.

Summarized Financial Information of Unconsolidated Entities

Combined summarized financial information for all of our unconsolidated entities is shown in the tables below (in millions). None of our unconsolidated entities have noncontrolling interests.



	December 31,
	2016		2015
Current assets	$	303	$	365
Noncurrent assets	$	3,558	$	2,901
Current liabilities	$	241	$	231
Noncurrent liabilities	$	162	$	184



	Year Ended December 31,
	2016		2015		2014
Revenues	$	802	$	769	$	531
Operating income	$	469	$	441	$	301
Net income	$	452	$	424	$	285