Investments in Unconsolidated Entities

Investments in entities over which we have significant influence but not control are accounted for under 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, 2017	December 31,
Entity ⁽¹⁾	Type of Operation	Ownership Interest at December 31, 2017	2017		2016
Advantage Pipeline Holdings LLC (“Advantage Joint Venture”)	Crude Oil Pipeline	50%	$	69	$	—
BridgeTex Pipeline Company, LLC (“BridgeTex”)	Crude Oil Pipeline	50%	1,093		1,098
Butte Pipe Line Company	Crude Oil Pipeline	N/A	—		11
Caddo Pipeline LLC	Crude Oil Pipeline	50%	67		65
Cheyenne Pipeline LLC (“Cheyenne”)	Crude Oil Pipeline	50%	29		30
Diamond Pipeline LLC (“Diamond”)	Crude Oil Pipeline	50%	467		143
Eagle Ford Pipeline LLC (“Eagle Ford Pipeline”)	Crude Oil Pipeline	50%	378		372
Eagle Ford Terminals Corpus Christi LLC (“Eagle Ford Terminals”)	Crude Oil Terminal and Dock ⁽²⁾	50%	75		53
Frontier Aspen LLC	Crude Oil Pipeline	N/A	—		45
Midway Pipeline LLC	Crude Oil Pipeline	50%	20		—
Saddlehorn Pipeline Company, LLC	Crude Oil Pipeline	40%	217		213
Settoon Towing, LLC	Barge Transportation Services	50%	69		87
STACK Pipeline LLC (“STACK”)	Crude Oil Pipeline	50%	73		14
White Cliffs Pipeline, LLC	Crude Oil Pipeline	36%	199		212
Total Investments in Unconsolidated Entities			$	2,756	$	2,343


⁽¹⁾	Except for Eagle Ford Terminals, which is reported in our Facilities segment, the financial results from the entities are reported in our Transportation segment.


⁽²⁾	Asset is currently under construction by the entity and has not yet been placed in service.

On April 3, 2017, we and an affiliate of Noble completed the acquisition of Advantage Pipeline, L.L.C. for a purchase price of $133 million through a newly formed 50/50 joint venture (the “Advantage Joint Venture”). For our 50% share ($66.5 million), we contributed approximately 1.3 million common units with a value of approximately $40 million and approximately $26 million in cash. Through the acquisition, the Advantage Joint Venture owns a 70-mile, 16-inch crude oil pipeline located in the southern Delaware Basin (the “Advantage Pipeline”), which is contractually supported by a third-party acreage dedication and a volume commitment from our wholly-owned marketing subsidiary. Noble serves as operator of the Advantage Pipeline. We account for our interest in the Advantage Joint Venture under the equity method of accounting.

During the fourth quarter of 2017, we sold certain of our non-core pipelines in the Rocky Mountain region which included our ownership interests in Butte Pipe Line Company and Frontier Aspen LLC. Additionally, we and an affiliate of CVR Refining, LP (“CVR Refining”) formed a 50/50 joint venture, Midway Pipeline LLC, which acquired from us the Cushing to Broome crude oil pipeline system. The Cushing to Broome pipeline system connects CVR Refining’s Coffeyville, Kansas refinery to the Cushing, Oklahoma oil hub. We will continue to serve as operator of the pipeline. We account for our interest in Midway Pipeline LLC under the equity method of accounting.

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 certain of these transactions.

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. During the year ended December 31, 2017, we received $21 million as a return of investment from Settoon Towing, LLC related to the sale of certain of its marine assets.

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, 2017, 2016 and 2015, we made cash contributions of $398 million, $288 million and $245 million, respectively, to certain of our equity method investees. The contributions for 2017 and 2015 are net of $6 million and $53 million, respectively, of returns of cash contributions made during the periods. In addition, we capitalized interest of $18 million, $13 million and $8 million during the years ended December 31, 2017, 2016 and 2015, respectively, related to contributions to unconsolidated entities for projects under development and construction. We anticipate that we will make additional contributions to Eagle Ford Terminals, Eagle Ford Pipeline, BridgeTex, Diamond and STACK in 2018 related to ongoing projects by such entities.

Our investments in unconsolidated entities exceeded our share of the underlying equity in the net assets of such entities by $736 million and $758 million at December 31, 2017 and 2016, 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 at both December 31, 2017 and 2016 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,
	2017		2016
Current assets	$	311	$	303
Noncurrent assets	$	4,162	$	3,558
Current liabilities	$	129	$	241
Noncurrent liabilities	$	41	$	162



	Year Ended December 31,
	2017		2016		2015
Revenues	$	938	$	802	$	769
Operating income	$	650	$	469	$	441
Net income	$	640	$	452	$	424