XML 27 R9.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Related Party Transactions | 3 Months Ended
--- | ---
Mar. 31, 2018
Related Party Transactions [Abstract] |
Related Party Transactions | Related Party Transactions Commercial Agreements The Partnership has a number of long-term, fee based commercial agreements with Delek under which we provide various services, including crude oil gathering and crude oil, intermediate and refined products transportation and storage services, and marketing, terminalling and offloading services to Delek. Most of these agreements have an initial term ranging from five to ten years, which may be extended for various renewal terms at the option of Delek. In November 2017, Delek opted to renew certain of these agreements for subsequent five-year terms expiring in November 2022. In the case of our marketing agreement with Delek in respect to the Tyler refinery, the initial term has been extended through 2026. The fees under each agreement are payable to us monthly by Delek or certain third parties to whom Delek has assigned certain of its rights and are generally subject to increase or decrease on July 1 of each year, by the amount of any change in various inflation-based indices, including the Federal Energy Regulatory Commission ("FERC") oil pipeline index or various iterations of the consumer price index and the producer price index ("PPI"); provided, however, that in no event will the fees be adjusted below the amount initially set forth in the applicable agreement. In most circumstances, if Delek or the applicable third party assignee fails to meet or exceed the minimum volume or throughput commitment during any calendar quarter, Delek, and not any third party assignee, will be required to make a quarterly shortfall payment to us equal to the volume of the shortfall multiplied by the applicable fee, subject to certain exceptions as specified in the applicable agreement. Carry-over of any volumes or revenue in excess of such commitment to any subsequent quarter is not permitted. See our Annual Report on Form 10-K for a more complete description of certain of our commercial agreements and other agreements with Delek. During the quarter ended March 31, 2018, we entered into the following material agreements with Delek:
Asset/Operation |  | Initiation Date |  | Initial/Maximum Term (years) (1) |  | Service |  | Minimum Throughput Commitment (bpd) |  | Fee (2)
Pipelines, Storage and Throughput Facilities Agreement (Big Spring): |  |  |  |  |  |  |  |  |  |
Crude Oil and Refined Products Throughput |  | March 1, 2018 |  | 10/15 |  | Pipeline Throughput |  | 104,300 |  | $0.05/bbl
Rail Offloading |  | March 1, 2018 |  | 10/15 |  | Offloading Services |  | 4,500 |  | $0.40/bbl
Terminalling |  | March 1, 2018 |  | 10/15 |  | Dedicated Terminalling Services |  | 29,250 |  | $0.66/bbl
Storage |  | March 1, 2018 |  | 10/15 |  | Storage |  | N/A |  | $1,374,630/month
Asphalt Services Agreement (Big Spring): |  |  |  |  |  |  |  |  |  |
Terminalling |  | March 1, 2018 |  | 10/15 |  | Dedicated Asphalt Terminalling |  | 1,020 to 2,380 based on seasonality |  | $8.30/bbl
Storage |  | March 1, 2018 |  | 10/15 |  | Storage |  | N/A |  | $456,490/month
Marketing Agreement (Big Spring): |  |  |  |  |  |  |  |  |  |
Marketing Services |  | March 1, 2018 |  | 10/15 |  | Dedicated Marketing and Selling |  | 65,000 |  | $0.50 - $0.71/bbl
(1) Maximum term gives effect to the extension by (i) the Partnership of the Pipelines, Storage and Throughput Facilities Agreement and Asphalt Services Agreement pursuant to the terms thereof and (ii) Delek of the Marketing Agreement pursuant to the terms thereof. Maximum term excludes the impact of the automatic annual renewal of these agreements, unless terminated by either party, subsequent to the extension. (2) Fees payable to the Partnership by Delek. Big Spring Pipeline, Storage and Throughput Facilities Agreement. In connection with the Big Spring Asset Acquisition, Alon USA, LP, a Texas limited partnership and an indirect, wholly-owned subsidiary of Delek (“Alon USA, LP”), and DKL Big Spring, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Partnership (the "Buyer"), entered into the Pipelines, Storage and Throughput Facilities Agreement (Big Spring Refinery Logistics Assets and Duncan Terminal) (the “Logistics Agreement”). Under the Logistics Agreement, the Buyer will provide storage and throughput services at certain of the Big Spring Logistics Assets for Alon USA, LP. The Buyer will act as bailee of crude oil and refined petroleum products owned by Alon USA, LP or its assignee held in such assets owned and operated by the Buyer. The Buyer will charge fees to Alon USA, LP based on throughput volumes received or delivered ranging from $0.05 to $0.66 per barrel and related storage fees depending on the type of service or product. The fees under the Logistics Agreement may be adjusted annually for inflation. The initial term of the Logistics Agreement is ten years; the Buyer has a one-time option to extend the Logistics Agreement for up to five additional years; and the Logistics Agreement will continue on a year-to-year basis following such renewal term unless terminated by either party. Big Spring Asphalt Services Agreement. In connection with the Big Spring Asset Acquisition, Alon USA, LP and the Buyer entered into the Big Spring Asphalt Services Agreement (the “Asphalt Services Agreement”). Under the Asphalt Services Agreement, the Buyer will provide asphalt storage and handling services at certain of the Big Spring Logistics Assets (such assets, the “Asphalt Facilities”). The Buyer will provide services to Alon USA, LP at the Asphalt Facilities and serve as bailee of all raw materials, and other hydrocarbons, used to make asphalt products owned by Alon USA, LP or its assignee held in the Asphalt Facilities. The Buyer will charge fees to Alon USA, LP based on throughput volumes delivered of $8.30 per barrel and related storage fees. The fees under the Asphalt Services Agreement may be adjusted annually for inflation. The initial term of the Asphalt Services Agreement is ten years; the Buyer has a one-time option to extend the Asphalt Services Agreement for up to five additional years; and the Asphalt Services Agreement will continue on a year-to-year basis following such renewal term unless terminated by either party. Big Spring Marketing Agreement. Concurrent with the Big Spring Asset Acquisition, Alon USA, LP and the Buyer entered into the Marketing Agreement (the “Marketing Agreement”). Under the Marketing Agreement, the Buyer will provide Alon USA, LP with services for the marketing and selling of certain refined petroleum products that are produced or sold from the refinery near Big Spring, Texas. The Buyer will charge Alon USA, LP fees for such marketing and selling services of $0.50 to $0.71 per barrel depending on the type of product. The fees under the Marketing Agreement may be adjusted annually for inflation. The initial term of the Marketing Agreement is ten years; Alon USA, LP has a one-time option to extend the Marketing Agreement for up to five additional years; and the Marketing Agreement will continue on a year-to-year basis following such renewal term unless terminated by either party. Omnibus Agreement. The Partnership entered into an omnibus agreement with Delek, our general partner, Delek Logistics Operating, LLC, Lion Oil Company and certain of the Partnership's and Delek's other subsidiaries on November 7, 2012, which was subsequently amended and restated on July 26, 2013, February 10, 2014, March 31, 2015 and August 3, 2015 and was further amended effective March 1, 2018 in connection with the Big Spring Asset Acquisition (collectively, as amended, the "Omnibus Agreement"). In conjunction with the March 1, 2018 amendment, our obligation to pay an annual fee to Delek for their provision of centralized corporate services to the Partnership was increased to $3.9 million annually. Pursuant to the terms of the Omnibus Agreement, we were reimbursed by Delek for certain capital expenditures in the amount of $2.3 million and $3.1 million during the three months ended March 31, 2018 and 2017, respectively. These amounts are recorded in other long-term liabilities and are amortized to revenue over the life of the underlying revenue agreement corresponding to the asset. Ad ditionally, we were reimbursed or indemnified, as the case may be, for costs incurred in excess of certain amounts related to certain asset failures, pursuant to the terms of the Omnibus Agreeme nt. During the three months ended March 31, 2018, we recorded an increase to accounts receivable from related parties of $6.1 million for these matters for which we were or expect to be reimbursed, which was recorded as a reduction to operating expense. We were reimbursed a nominal amount for these matters during the three months ended March 31, 2017. Summary of Transactions Revenues from affiliates consist primarily of revenues from gathering, transportation, storage, offloading, Renewable Identification Numbers, wholesale marketing, and products terminalling services provided primarily to Delek based on regulated tariff rates or contractually based fees and product sales. Affiliate operating expenses are primarily comprised of amounts we reimburse Delek, or our general partner, as the case may be, for the services provided to us under the First Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement"). These expenses could also include reimbursement and indemnification amounts from Delek, as provided under the Omnibus Agreement. Additionally, the Partnership is required to reimburse Delek for direct or allocated costs and expenses incurred by Delek on behalf of the Partnership and for charges Delek incurred for the management and operation of our logistics assets, including an annual fee for various centralized corporate services, which are included in general and administrative services. In addition to these transactions, we purchase finished products and bulk biofuels from Delek, the costs of which are included in cost of goods sold. A summary of revenue, purchases from affiliates and expense transactions with Delek and its affiliates is as follows (in thousands):
|  | Three Months Ended March 31,
|  | 2018 |  | 2017
Revenues |  | $ | 61,644 |  |  | $ | 36,619 |
Purchases from affiliates |  | $ | 83,401 |  |  | $ | 8,928 |
Operating and maintenance expenses |  | $ | 7,489 |  |  | $ | 7,096 |
General and administrative expenses |  | $ | 957 |  |  | $ | 1,693 |
Quarterly Cash Distributions Our common and general partner unitholders and the holders of incentive distribution rights ("IDRs") are entitled to receive quarterly distributions of available cash as it is determined by the board of directors of our general partner in accordance with the terms and provisions of our Partnership Agreement. In February 2018, we paid quarterly cash distributions of $22.8 million, of which $16.2 million were paid to Delek and our general partner. In February 2017, we paid quarterly cash distributions of $20.5 million, of which $14.2 million were paid to Delek and our general partner. On April 26, 2018, our general partner's board of directors declared a quarterly cash distribution totaling $24.0 million, based on the available cash as of the date of determination for the end of the first quarter of 2018, payable on May 15, 2018, of which $17.2 million is expected to be paid to Delek and our general partner, including the payment for the IDRs.

X
- References No definition available. + Details
Name: | us-gaap_RelatedPartyTransactionsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 + Details
Name: | us-gaap_RelatedPartyTransactionsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration