v2.3.0.15
Equity (Notes)
9 Months Ended
Sep. 30, 2011
Equity [Abstract] 
Equity [Text Block]
EQUITY

As of September 30, 2011, Tesoro owned 304,890 of our common units, 15,254,890 of our subordinated units and 622,649 of our general partner units (the 2% general partner interest), which together constitutes a 52% ownership interest in us. The Offering transactions were allocated in accordance with agreements signed concurrently with the Offering and the pro-rata ownership of the units held by Tesoro.

Equity Activity. The summarized changes in the carrying amount of our equity are as follows (in thousands):
 
 
 
 
Partnership
 
 
Tesoro Logistics LP Predecessor
 
 
Common - Public
 
Common -Tesoro
 
Subordinated - Tesoro
 
General Partner - Tesoro
 
Total
Balance at December 31, 2010
$
128,827

 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
128,827

Sponsor contribution of division equity to the Predecessor
3,486

 
 
—

 
—

 
—

 
—

 
3,486

Non-cash contributions
4,399

 
 
—

 
—

 
—

 
—

 
4,399

Predecessor loss through April 25, 2011
(6,622
)
 
 
—

 
—

 
—

 
—

 
(6,622
)
Balance at April 26, 2011
(date of the Offering)
$
130,090

 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
130,090

Net liabilities not assumed by Tesoro Logistics LP
4,389

 
 
—

 
—

 
—

 
—

 
4,389

Allocation of net Sponsor investment to unitholders
(134,479
)
 
 
—

 
10,654

 
72,083

 
51,742

 
—

Proceeds from initial public offering, net of underwriters' discount
—

 
 
304,527

 
(191
)
 
(9,615
)
 
(393
)
 
294,328

Offering costs
—

 
 
(2,975
)
 
(61
)
 
(3,036
)
 
(124
)
 
(6,196
)
Cash distributions
—

 
 
(3,660
)
 
(70,001
)
 
(217,087
)
 
(50,153
)
 
(340,901
)
Capital contribution
—

 
 
—

 
32

 
1,602

 
—

 
1,634

Partnership earnings April 25 through September 30, 2011
—

 
 
11,051

 
230

 
11,281

 
460

 
23,022

Other
—

 
 
—

 
—

 
—

 
42

 
42

Balance at September 30, 2011
$
—

 
 
$
308,943

 
$
(59,337
)
 
$
(144,772
)
 
$
1,574

 
$
106,408


Allocations of Net Income. Our partnership agreement contains provisions for the allocation of net income and loss to the unitholders and the general partner. For purposes of maintaining partner capital accounts, the partnership agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective percentage interest. Normal allocations according to percentage interests are made after giving effect, if any, to priority income allocations in an amount equal to incentive cash distributions allocated 100% to the general partner.

The calculation of net income allocated to the partners is as follows (in thousands, except per unit amounts):
Net Income Attributable to Tesoro Logistics LP Limited Partner Unit - Common Units
 
Three Months Ended
September 30, 2011
 
Nine Months Ended
September 30, 2011
Distributions (a)
$
5,339

 
$
9,073

Undistributed earnings
2,073

 
2,208

Limited partners' interest in net income subsequent to initial public offering
$
7,412

 
$
11,281

 
 
 
 
Net Income Attributable to Tesoro Logistics LP Limited Partner Unit - Subordinated Units
 
Three Months Ended
September 30, 2011
 
Nine Months Ended
September 30, 2011
Distributions (a)
$
5,339

 
$
9,073

Undistributed earnings
2,073

 
2,208

Limited partners' interest in net income subsequent to initial public offering
$
7,412

 
$
11,281

 
 
 
 
(a) Distributions declared per unit
$
0.35

 
$
0.5948

Incentive Distribution Rights. The following table illustrates the percentage allocations of available cash from operating surplus between the unitholders and our general partner based on the specified target distribution levels. The amounts set forth under marginal percentage interest in distributions are the percentage interests of our general partner and the unitholders in any available cash from operating surplus we distribute up to and including the corresponding amount in the column total quarterly distribution per unit target amount. The percentage interests shown for our unitholders and our general partner for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests set forth below for our general partner assume that there are no arrearages on common units, our general partner has contributed any additional capital necessary to maintain its 2% general partner interest and that our general partner owns all of the IDRs.
 
Total quarterly distribution per unit target amount
 
Marginal percentage interest in distributions
 
 
Unitholders
 
General Partner
 
Incentive Distribution Rights
Minimum Quarterly Distribution
$0.3375
 
 
98%
 
2%
 
—
First Target Distribution
Above $0.3375
up to $0.388125
 
98%
 
2%
 
—
Second Target Distribution
Above $0.388125
up to $0.421875
 
85%
 
2%
 
13%
Third Target Distribution
Above $0.421875
up to $0.506250
 
75%
 
2%
 
23%
Thereafter
Above $0.506250
 
 
50%
 
2%
 
48%

Cash distributions. Our partnership agreement, as amended, sets forth the calculation to be used to determine the amount and priority of cash distributions that the common and subordinated unitholders and general partner will receive. In accordance with our partnership agreement, on October 20, 2011, we declared a quarterly cash distribution totaling $10.9 million, or $0.35 per unit, or $1.40 per unit on an annualized basis. This distribution will be paid on November 14, 2011, to unitholders of record on November 4, 2011. On August 12, 2011, we paid a quarterly cash distribution totaling $7.6 million, or $0.2448 per unit. The quarterly cash distribution for the three months ended June 30, 2011 was calculated as the minimum quarterly cash distribution of $0.3375 per unit, or $1.35 per unit on an annualized basis, prorated for the period beginning April 26, 2011, the date TLLP commenced operations.

The allocation of total quarterly cash distributions to general and limited partners is as follows for the periods in which they apply. Our distributions are declared subsequent to quarter end; therefore, the amounts presented do not reflect distributions paid during the periods presented below (in thousands, except per unit amounts):
 
Three Months Ended
September 30, 2011
 
Nine Months Ended
September 30, 2011
General partner's interest
$
218

 
$
371

 
 
 
 
Limited partners' distribution:
 
 
 
Common
5,339

 
9,073

Subordinated
5,339

 
9,073

Total Cash Distributions
$
10,896

 
$
18,517

Cash distributions per unit applicable to limited partners
$
0.35

 
$
0.5948