Revenues (Notes)

9 Months Ended

Sep. 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 Accounting Standards Codification ("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 $298.1 million net property, plant, and equipment balance as of September 30, 2019, $247.6 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 September 30, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	5,281	$	221	$	5,502
Product Revenue - Third Party	—		65,407		65,407
Product Revenue - Affiliate	—		6,505		6,505
Lease Revenue - Affiliate ^{(1) (2)}	39,304		20,838		60,142
Total Revenue	$	44,585	$	92,971	$	137,556

⁽¹⁾ Disaggregated revenue for the three months ended September 30, 2019 may not be comparable to disaggregated revenue for the three months ended September 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 September 30, 2019, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.



	Three Months Ended September 30, 2018
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	3,653	$	64	$	3,717
Service Revenue - Affiliate	24,536		14,921		39,457
Product Revenue - Third Party	—		96,558		96,558
Product Revenue - Affiliate	—		9,017		9,017
Lease Revenue - Affiliate ⁽¹⁾	11,596		3,765		15,361
Total Revenue	$	39,785	$	124,325	$	164,110

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



	Nine Months Ended September 30, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	16,733	$	525	$	17,258
Product Revenue - Third Party	—		236,594		236,594
Product Revenue - Affiliate	—		23,078		23,078
Lease Revenue - Affiliate ^{(1) (2)}	112,694		55,758		168,452
Total Revenue	$	129,427	$	315,955	$	445,382

⁽¹⁾ Disaggregated revenue for the nine months ended September 30, 2019 may not be comparable to disaggregated revenue for the nine months ended September 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 $5.4 million of amortization expense for the nine months ended September 30, 2019, respectively, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.



	Nine Months Ended September 30, 2018
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	11,618	$	866	$	12,484
Service Revenue - Affiliate	67,593		39,068		106,661
Product Revenue - Third Party	—		307,268		307,268
Product Revenue - Affiliate	—		30,045		30,045
Lease Revenue - Affiliate ⁽¹⁾	32,031		9,822		41,853
Total Revenue	$	111,242	$	387,069	$	498,311

⁽¹⁾ Net of $4.2 million of amortization expense for the nine months ended September 30, 2018, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

As of September 30, 2019, we expect to recognize $1.1 billion in 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 September 30, 2019 were as follows (in thousands):



Remainder of 2019	$	43,663
2020	174,284
2021	174,023
2022	172,872
2023 and thereafter	491,927
Total expected revenue on remaining performance obligations	$	1,056,769