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Revenues (Notes) | 9 Months Ended
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Sep. 30, 2022
Revenue from Contract with Customer [Abstract] |
Revenues | Revenues Within our pipeline and transportation and wholesale marketing and terminalling segments, 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 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 $1,178.3 million net property, plant, and equipment balance as of September 30, 2022, $429.4 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. As of the 3 Bear Acquisition, our revenue-generating activities include crude oil and natural gas gathering, processing and transportation operations, as well as water disposal and recycling operations, with third parties in the Delaware Basin of New Mexico. For natural gas gathering and processing contracts in which we perform midstream services and also purchase the processed products, we determine if the economic control of the commodities has passed from the producer to us, before or after we perform our services (if at all), to determine whether we are principal or agent in the ultimate sale of the processed product. As a result of these activities, we generate two principal types of revenues: •Product sales revenue - comprised of residual products as a result of our gathering services where 3 Bear meets the definition of the principal rather than an agent, and where such revenue is recognized upon satisfaction of the performance obligation, which is generally upon delivery •Gathering services revenue - comprised of fees charged for one or more of the following services: gathering, processing and transportation of natural gas; gathering, transportation and storage of NGLs; gathering, recycling and disposal of wastewater; and transportation, storage and distribution of crude oil, refined products and other hydrocarbon-based products. The contractual fees are generally related to the volume of natural gas, NGLs, water, crude oil or refined products that are gathered, transported, stored or processed and therefore is not directly impacted by commodity prices. The following tables represent a disaggregation of revenue for the pipeline and transportation and wholesale marketing and terminalling segments for the periods indicated (in thousands):
| Three Months Ended September 30, 2022
| Pipelines and Transportation |  | Wholesale Marketing and Terminalling |  | 3 Bear Operations |  | Consolidated
Service Revenue - Third Party | $ | 5,883 |  |  | $ | — |  |  | $ | 10,857 |  |  | $ | 16,740 |
Service Revenue - Affiliate (1) | 4,050 |  |  | 9,075 |  |  | — |  |  | 13,125 |
Product Revenue - Third Party | — |  |  | 102,703 |  |  | 47,432 |  |  | 150,135 |
Product Revenue - Affiliate | — |  |  | 24,185 |  |  | 2,593 |  |  | 26,778 |
Lease Revenue - Affiliate | 75,345 |  |  | 11,902 |  |  | — |  |  | 87,247 |
Total Revenue | $ | 85,278 |  |  | $ | 147,865 |  |  | $ | 60,882 |  |  | $ | 294,025 |
(1) Net of $1.8 million of amortization expense for the three months ended September 30, 2022, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.
| Three Months Ended September 30, 2021
| Pipelines and Transportation |  | Wholesale Marketing and Terminalling |  | Consolidated
Service Revenue - Third Party | $ | 5,323 |  |  | $ | 139 |  |  | $ | 5,462 |
Service Revenue - Affiliate (1) | 4,484 |  |  | 9,241 |  |  | 13,725 |
Product Revenue - Third Party | — |  |  | 60,645 |  |  | 60,645 |
Product Revenue - Affiliate | — |  |  | 34,325 |  |  | 34,325 |
Lease Revenue - Affiliate | 66,395 |  |  | 9,075 |  |  | 75,470 |
Total Revenue | $ | 76,202 |  |  | $ | 113,425 |  |  | $ | 189,627 |
(1) Net of $1.8 million of amortization expense for the three months ended September 30, 2021, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.
| Nine Months Ended September 30, 2022
| Pipelines and Transportation |  | Wholesale Marketing and Terminalling |  | 3 Bear Operations |  | Consolidated
Service Revenue - Third Party | $ | 15,978 |  |  | $ | — |  |  | $ | 15,457 |  |  | $ | 31,435 |
Service Revenue - Affiliate (1) | 12,065 |  |  | 25,863 |  |  | — |  |  | 37,928 |
Product Revenue - Third Party | — |  |  | 300,177 |  |  | 60,474 |  |  | 360,651 |
Product Revenue - Affiliate | — |  |  | 82,774 |  |  | 5,555 |  |  | 88,329 |
Lease Revenue - Affiliate | 213,646 |  |  | 35,367 |  |  | — |  |  | 249,013 |
Total Revenue | $ | 241,689 |  |  | $ | 444,181 |  |  | $ | 81,486 |  |  | $ | 767,356 |
(1) Net of $5.4 million of amortization expense for the nine months ended September 30, 2022, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.
| Nine Months Ended September 30, 2021
| Pipelines and Transportation |  | Wholesale Marketing and Terminalling |  | Consolidated
Service Revenue - Third Party | $ | 12,021 |  |  | $ | 358 |  |  | $ | 12,379 |
Service Revenue - Affiliate (1) | 9,505 |  |  | 25,877 |  |  | 35,382 |
Product Revenue - Third Party | — |  |  | 190,204 |  |  | 190,204 |
Product Revenue - Affiliate | — |  |  | 54,453 |  |  | 54,453 |
Lease Revenue - Affiliate | 190,086 |  |  | 28,514 |  |  | 218,600 |
Total Revenue | $ | 211,612 |  |  | $ | 299,406 |  |  | $ | 511,018 |
(1) Net of $5.4 million of amortization expense for the nine months ended September 30, 2021, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.
As of September 30, 2022, we expect to recognize $1.4 billion in future lease revenues, for periods up to financial year 2030, 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, 2022 were as follows (in thousands):
Remainder of 2022 |  | $ | 74,716 |
2023 |  | 291,514 |
2024 |  | 209,108 |
2025 |  | 183,804 |
2026 and thereafter |  | 604,928 |
Total expected revenue on remaining performance obligations |  | $ | 1,364,070 |

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI https://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 + Details
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