Revenues

12 Months Ended

Dec. 31, 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 the FERC index (refer to Note 4 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. Delek Holdings, directly or indirectly, accounted for 44.8%, 36.6% and 28.9% of our total revenues for the years ended December 31, 2019, 2018 and 2017, respectively. Sunoco LP accounted for 14.5%, 15.9% and 9.0% of our total revenues for the years ended December 31, 2019, 2018 and 2017, respectively.

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 $295.0 million net property, plant, and equipment balance as of December 31, 2019, $284.3 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):



	Year Ended December 31, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	23,107	$	623	$	23,730
Service Revenue - Affiliate	—		35,208		35,208
Product Revenue - Third Party	—		299,248		299,248
Product Revenue - Affiliate	—		31,941		31,941
Lease Revenue - Affiliate ^{(1) (2)}	155,211		38,654		193,865
Total Revenue	$	178,318	$	405,674	$	583,992

⁽¹⁾Disaggregated revenue for the year ended December 31, 2019 may not be comparable to disaggregated revenue for the year ended December 31, 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 $7.2 million of amortization expense for the year ended December 31, 2019, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.



	Year Ended December 31, 2018
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	15,149	$	870	$	16,019
Service Revenue - Affiliate	93,300		53,750		147,050
Product Revenue - Third Party	—		400,781		400,781
Product Revenue - Affiliate	—		35,252		35,252
Lease Revenue - Affiliate ⁽¹⁾	45,118		13,389		58,507
Total Revenue	$	153,567	$	504,042	$	657,609

⁽¹⁾ Net of $6.0 million of amortization expense for the year ended December 31, 2018, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

As of December 31, 2019, we expect to recognize approximately $1.0 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 December 31, 2019 were as follows (in thousands):



2020	174,284
2021	174,023
2022	172,872
2023	166,873
2024 and thereafter	293,314
Total expected revenue on remaining performance obligations	$	981,366