XML 45 R17.htm IDEA: XBRL DOCUMENT v3.22.2.2
Equity Method Investments
 9 Months Ended
Sep. 30, 2022
Equity Method Investments and Joint Ventures [Abstract]  
Equity Method Investments Equity Method Investments
In May 2019, the Partnership, through its wholly owned indirect subsidiary DKL Pipeline, LLC (“DKL Pipeline”), entered into a Contribution and Subscription Agreement (the “Contribution Agreement”) with Plains Pipeline, L.P. (“Plains”) and Red River Pipeline Company LLC (“Red River”). Pursuant to the Contribution Agreement, DKL Pipeline contributed $124.7 million, substantially all of which was financed by borrowings under the DKL Credit Facility, to Red River in exchange for a 33% membership interest in Red River and DKL Pipeline’s admission as a member of Red River. In addition, we contributed $0.4 million of startup capital pursuant to the Amended and Restated Limited Liability Company Agreement. Red River, which owns a crude oil pipeline running from Cushing, Oklahoma to Longview, Texas, completed a planned expansion project to increase the pipeline capacity and commenced operations on the completed expansion project in 2020. During the nine months ended September 30, 2022, we made no capital contributions. During the nine months ended September 30, 2021, we made additional capital contributions totaling $1.4 million based on capital calls received.
Summarized unaudited financial information for Red River on a 100% basis is shown below (in thousands):
September 30, 2022December 31, 2021
Current Assets$36,029 $28,735 
Non-current Assets$396,618 $403,692 
Current liabilities$10,169 $10,040 
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenues$25,340 $19,349 $69,475 $46,136 
Gross profit$17,210 $12,027 $46,476 $26,367 
Operating income$15,469 $11,871 $44,381 $25,866 
Net income$15,509 $11,853 $44,386 $25,843 
We have two joint ventures that have constructed separate crude oil pipeline systems and related ancillary assets, which are serving third parties and subsidiaries of Delek Holdings. We own a 50% membership interest in the entity formed with an affiliate of Plains All American Pipeline, L.P. ("CP LLC") to operate one of these pipeline systems (the "Caddo Pipeline") and a 33% membership interest in the entity formed with Rangeland Energy II, LLC ("Rangeland Energy") to operate the other pipeline system (the "Rio Pipeline"). During 2018, Rangeland Energy was acquired by Andeavor (which was subsequently acquired by Marathon Petroleum Corporation) and the legal entity in which we have an equity investment became Andeavor Logistics Rio Pipeline LLC ("Andeavor Logistics").
Combined summarized unaudited financial information for these two equity method investees on a 100% basis is shown below (in thousands):
September 30, 2022December 31, 2021
Current assets$19,561 $15,010 
Non-current assets$234,715 $242,599 
Current liabilities$3,688 $1,492 
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenues$11,949 $12,090 $32,402 $35,316 
Gross profit$7,014 $6,757 $18,472 $20,462 
Operating income$6,284 $6,300 $16,474 $19,022 
Net Income$6,306 $6,300 $16,501 $19,023 
The Partnership's investments in these three entities were financed through a combination of cash from operations and borrowings under the DKL Credit Facility. The Partnership's investment balances in these joint ventures were as follows (in thousands):
September 30, 2022December 31, 2021
Red River$143,729 $144,041 
CP LLC61,461 61,670 
Andeavor Logistics42,815 44,319 
Total Equity Method Investments248,005 250,030 
We do not consolidate any part of the assets or liabilities or operating results of our equity method investees. Our share of net income or loss of the investees will increase or decrease, as applicable, the carrying value of our investments in unconsolidated affiliates. With respect to our equity method investments, we determined that these entities do not represent variable interest entities and consolidation is not required. We have the ability to exercise significant influence over each of these joint ventures through our participation in the management committees, which make all significant decisions. However, since all significant decisions require the consent of the other investor(s) without regard to economic interest, we have determined that we have joint control and have applied the equity method of accounting. Our investment in these joint ventures is reflected in our pipelines and transportation segment.