Revenues (Notes)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

We generate revenue by charging fees for gathering, transporting, offloading and storing crude oil; for storing intermediate products and feed stocks; for distributing, transporting and storing refined products; for marketing refined products output of Delek Holdings' Tyler and Big Spring refineries; and for wholesale marketing in the west Texas area. A significant portion of our revenue is derived from long-term commercial agreements with Delek Holdings, which provide for annual fee adjustments for increases or decreases in the CPI, PPI or FERC index (refer to Note 3 for a more detailed description of these agreements). In addition to the services we provide to Delek Holdings, we also generate substantial revenue from crude oil, intermediate and refined products transportation services for, and terminalling and marketing services to, third parties primarily in Texas, New Mexico, Tennessee and Arkansas. Certain of these services are provided pursuant to contractual agreements with third parties. Payment terms require customers to pay shortly after delivery and do not contain significant financing components.

The majority of our commercial agreements with Delek Holdings meet the definition of a lease because: (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 Delek Holdings will take more than a minor amount of the output associated with the specified property, plant or equipment. As part of our adoption of ASC 842, Leases ("ASC 842"), we applied the permitted practical expedient to not separate lease and non-lease components under the predominance principle to designated asset classes associated with the provision of logistics services. We have determined that the predominant component of the related agreements currently in effect is the lease component. Therefore, the combined component is accounted for under the applicable lease accounting guidance. Of our $301.5 million net property, plant, and equipment balance as of June 30, 2019, $251.4 million is subject to operating leases under our commercial agreements. These agreements do not include options for the lessee to purchase our leasing equipment, nor do they include any material residual value guarantees or material restrictive covenants.

The following table represents a disaggregation of revenue for each reportable segment for the periods indicated (in thousands):



	Three Months Ended June 30, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	7,477	$	184	$	7,661
Product Revenue - Third Party	—		85,763		85,763
Product Revenue - Affiliate	—		7,187		7,187
Lease Revenue - Affiliate ^{(1) (2)}	36,731		18,000		54,731
Total Revenue	$	44,208	$	111,134	$	155,342

⁽¹⁾ Disaggregated revenue for the three months ended June 30, 2019 may not be comparable to disaggregated revenue for the three months ended June 30, 2018 as a result of our adoption of ASC 842, under which we applied the predominance principle and opted to not separate lease and non-lease components.

⁽²⁾ Net of $1.8 million of amortization expense for the three months ended June 30, 2019, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.



	Three Months Ended June 30, 2018
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	3,714	$	493	$	4,207
Service Revenue - Affiliate	23,160		14,581		37,741
Product Revenue - Third Party	—		108,993		108,993
Product Revenue - Affiliate	—		794		794
Lease Revenue - Affiliate ⁽¹⁾	10,870		3,675		14,545
Total Revenue	$	37,744	$	128,536	$	166,280

⁽¹⁾ Net of $1.8 million of amortization expense for the three months ended June 30, 2018, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.



	Six Months Ended June 30, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	11,451	$	304	$	11,755
Product Revenue - Third Party	—		171,187		171,187
Product Revenue - Affiliate	—		16,573		16,573
Lease Revenue - Affiliate ^{(1) (2)}	73,390		34,920		108,310
Total Revenue	$	84,841	$	222,984	$	307,825

⁽¹⁾ Disaggregated revenue for the six months ended June 30, 2019 may not be comparable to disaggregated revenue for the six months ended June 30, 2018 as a result of our adoption of ASC 842, under which we applied the predominance principle and opted to not separate lease and non-lease components.

⁽²⁾ Net of $3.6 million of amortization expense for the six months ended June 30, 2019, respectively, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.



	Six Months Ended June 30, 2018
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	7,965	$	802	$	8,767
Service Revenue - Affiliate	43,057		24,147		67,204
Product Revenue - Third Party	—		210,710		210,710
Product Revenue - Affiliate	—		21,028		21,028
Lease Revenue - Affiliate ⁽¹⁾	20,435		6,057		26,492
Total Revenue	$	71,457	$	262,744	$	334,201

⁽¹⁾ Net of $2.4 million of amortization expense for the six months ended June 30, 2018, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

As of June 30, 2019, we expect to recognize $1.1 billion in service and lease revenues related to our unfulfilled performance obligations pertaining to the minimum volume commitments and capacity utilization under the non-cancelable terms of our commercial agreements with Delek Holdings. Most of these agreements have an initial term ranging from five to ten years, which may be extended for various renewal terms. We disclose information about remaining performance obligations that have original expected durations of greater than one year.

Our unfulfilled performance obligations as of June 30, 2019 were as follows (in thousands):



Remainder of 2019	$	87,325
2020	174,284
2021	174,023
2022	172,872
2023 and thereafter	491,927
Total expected revenue on remaining performance obligations	$	1,100,431