v3.7.0.1
Operating Segments (Notes)
 3 Months Ended
Mar. 31, 2017
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]  
Segment Disclosures
OPERATING SEGMENTS

We changed our operating segment presentation in the first quarter of 2017 to reflect our expanded gathering and processing assets and operations and how our chief operating decision maker (“CODM”) manages our business. With the completion of the North Dakota Gathering and Processing Assets acquisition on January 1, 2017, our gathering and processing assets and operations expanded significantly and enhanced our ability to offer integrated gathering and processing services to our customers. Given the business’s focus on providing integrated services along with the revised reporting structure implemented by management to assess performance and make resource allocation decisions, we have determined our operating segments, which are the same for reporting purposes, are the (i) Gathering and Processing segment and (ii) Terminalling and Transportation segment. Comparable prior period information for the newly presented Gathering and Processing segment has been recast to reflect our current presentation. No changes were deemed necessary to our Terminalling and Transportation segment.

In addition, as part of the CODM’s reevaluation of how it monitors and evaluates the business and allocates resources, management revised its methodology for the allocation of corporate general and administrative expenses which resulted in additional corporate costs being allocated to our Gathering and Processing segment for certain administrative activities associated with our gathering and processing business in the Rockies region. The change to our Terminalling and Transportation segment was nominal. Comparable prior period segment information has been recast to reflect our revised allocation methodology.

Our Gathering and Processing segment consists of crude oil and natural gas gathering systems in the Bakken Shale/Williston Basin area of North Dakota and Montana and the Green River Basin, Uinta Basin and Vermillion Basin in the states of Utah, Colorado and Wyoming as well as gas processing complexes and fractionation facilities. Our Terminalling and Transportation segment consists of crude oil and refined products terminals and marine terminals, storage facilities for crude oil, refined products and petroleum coke handling, rail-car unloading facilities and pipelines, which transport products and crude oil.

Our revenues are generated from commercial contracts we have entered into with Tesoro, under which Tesoro pays us fees, and from third-party contracts for gathering crude oil, natural gas and produced water, processing natural gas and distributing, transporting and storing crude oil, refined products, natural gas and natural gas liquids. The commercial agreements with Tesoro are described in Note 3 to our Annual Report on Form 10-K for the year ended December 31, 2016. We do not have any foreign operations.

Our operating segments are strategic business units that offer different services in various geographical locations. We evaluate the performance of each segment based on its respective operating income. Certain general and administrative expenses and interest and financing costs are excluded from segment operating income as they are not directly attributable to a specific operating segment. Identifiable assets are those used by the segment, whereas other assets are principally cash, deposits and other assets that are not associated with a specific operating segment.

SEGMENT INFORMATION (in millions)

 
Three Months Ended March 31,
 
2017
 
2016
Revenues
 
 
 
Gathering and Processing:
 
 
 
NGL sales
$
83

 
$
27

Gas gathering and processing
80

 
68

Crude oil and water gathering
39

 
35

Pass-thru and other revenue
43

 
32

Total Gathering and Processing Revenue
245

 
162

Terminalling and Transportation:
 
 
 
Terminalling revenues
145

 
108

Pipeline transportation revenues
30

 
30

Total Terminalling and Transportation
175

 
138

Total Segment Revenues
$
420

 
$
300

 
 
 
 
Segment Operating Income
 
 
 
Gathering and Processing
$
62

 
$
64

Terminalling and Transportation
98

 
63

Total Segment Operating Income
160

 
127

Unallocated general and administrative expenses
(10
)
 
(8
)
Interest and financing costs, net
(60
)
 
(44
)
Equity in earnings of equity method investments
2

 
4

Other income, net
—

 
6

Net Earnings
$
92

 
$
85

 
 
 
 
Capital Expenditures
 
 
 
Gathering and Processing
$
18

 
$
30

Terminalling and Transportation
27

 
30

Total Capital Expenditures
$
45

 
$
60



TOTAL IDENTIFIABLE ASSETS BY OPERATING SEGMENT (in millions)
 
March 31,
2017
 
December 31,
2016
Identifiable Assets
 
 
 
Gathering and Processing
$
4,054

 
$
3,392

Terminalling and Transportation
1,775

 
1,768

Other (a)
44

 
700

Total Identifiable Assets
$
5,873

 
$
5,860


(a)
Other consists mainly of $688 million in cash and cash equivalents as of December 31, 2016, of which $672 million was used to fund the acquisition of the North Dakota Gathering and Processing Assets on January 1, 2017, increasing the Gathering and Processing segment’s identifiable assets as of March 31, 2017.