* Fourth quarter net earnings of $66 million, or $0.49 per diluted common
limited partner unit
* Fourth quarter adjusted EBITDA up 65% to $155 million, full year 2015
adjusted EBITDA up 100% to $636 million
* Distributable cash flow up 104% to $104 million for fourth quarter, full
year 2015 distributable cash flow up 92% to $422 million
* Rockies natural gas business 2015 adjusted EBITDA contribution of $285
million, exceeding $275 million target
* Raised quarterly distribution 17% from prior year to $0.7800 per limited
partner unit
* Completed the Los Angeles Storage and Pipeline Assets acquisition from
Tesoro in November 2015
SAN ANTONIO
- February 1, 2016 - Tesoro Logistics LP (NYSE: TLLP) today reported
fourth quarter net earnings of $66 million, or $0.49 per diluted common limited
partner unit compared to a net loss of $13 million, or $0.34 per diluted common
limited partner unit in the fourth quarter 2014. Adjusted EBITDA for the fourth
quarter was $155 million, up $61 million or 65% from the fourth quarter 2014,
which was reduced by approximately $24 million of charges for expected future
remediation costs for the 2013 crude oil pipeline release at
Tioga, North Dakota
.
Three Months Ended Years Ended
December 31, December 31,
------------------------------ -----------------------------
2015 2014 2015 2014
--------- -------------------- --------- -------------------
(Includes (Includes
($ in millions) Predecessor) Predecessor)
Operating Income
Gathering $ 21 $ 9 $ 142 $ 47
Processing 28 6 105 6
Terminalling and
Transportation 66 42 226 173
--------- -------------------- --------- -------------------
Total Segment
Operating Income $ 115 $ 57 $ 473 $ 226
--------- -------------------- --------- -------------------
Net Earnings (Loss) $ 66 $ (13 ) $ 275 $ 79
Adjusted EBITDA (a)
Gathering $ 39 $ 26 $ 218 $ 69
Processing 39 10 160 10
Terminalling and
Transportation 87 65 310 259
--------- -------------------- --------- -------------------
Total Segment
Adjusted EBITDA (a) $ 165 $ 101 $ 688 $ 338
--------- -------------------- --------- -------------------
EBITDA (a) $ 154 $ 64 $ 621 $ 287
Adjusted EBITDA (a) $ 155 $ 94 $ 636 $ 318
Distributable Cash
Flow (a) $ 104 $ 51 $ 422 $ 220
Pro Forma
Distributable Cash
Flow (a) (b) $ 104 $ 50 $ 458 $ 219
Total Distributions
to be Paid $ 97 $ 70 $ 334 $ 217
Pro Forma
Distribution
Coverage Ratio (b)
(c) 1.07x 0.71x 1.37x 1.01x
___________________
(a) For more information on EBITDA, Adjusted EBITDA, Distributable Cash Flow
and Pro Forma Distributable Cash Flow, see "Reconciliation of Amounts Reported
under
U.S.
GAAP" and "Segment Reconciliation of Amounts Reported under
U.S.
GAAP".
(b) Reflects the adjustment to include the noncontrolling interest in QEP
Midstream Partners, LP ("QEPM") as controlling interest based on the pro forma
assumption that the merger of QEPM with TLLP occurred on December 2, 2014.
(c) The Distribution Coverage Ratio is calculated as Distributable Cash Flow
divided by total distributions to be paid for the respective periods. For the
three months and year ended December 31, 2015, the Distribution Coverage Ratio
was 1.07x and 1.26x, respectively. The Pro Forma Distribution Coverage Ratio is
calculated as Pro Forma Distributable Cash Flow divided by total distributions
to be paid for the respective periods.
"Tesoro Logistics delivered another strong operating quarter with year-over-year
volume, EBITDA and distributable cash flow growth," said Greg Goff, Chairman and
Chief Executive Officer of TLLP's general partner. "Adjusted EBITDA grew
approximately 65% versus last year's quarter through successful execution of our
organic growth objectives and contributions from our Rockies natural gas
business and
Los Angeles
Storage and Pipeline Assets acquisition. We also
delivered our 19th consecutive quarter of distribution growth, with our
announced distribution growing 4% quarter-over-quarter and 17% year-over-year."
Distributable cash flow for the fourth quarter was $104 million, up $53 million
or 104%, from the fourth quarter 2014. On January 20, 2016, the Company
announced its quarterly cash distribution of $0.7800 per limited partnership
unit or $3.12 on an annualized basis. The declared distribution represents a
17% increase over the fourth quarter 2014 distribution of $0.6675 per limited
partner unit paid in February 2015. This also represents the 19th consecutive
quarterly increase of approximately 4% or more. Distribution coverage ratio was
1.07 times for the fourth quarter. Pro forma distribution coverage ratio for the
full year 2015 was 1.37 times. Although TLLP completed the merger of QEPM in
July 2015, pro forma distribution coverage ratio reflects the adjustment to
include the noncontrolling interest in QEPM as controlling interest based on the
pro forma assumption that the merger of QEPM with TLLP occurred on January
1, 2015.
Fourth Quarter 2015 Financial and Operational Segment Results
Gathering
The Gathering segment generated $86 million of revenue in the fourth quarter,
which was up $35 million from $51 million in the fourth quarter 2014. Adjusted
EBITDA for the Gathering segment totaled $39 million in the fourth quarter
2015, up $13 million from the fourth quarter 2014. Adjusted EBITDA was reduced
by the environmental accrual of approximately $24 million. Crude oil gathering
volumes were up 37% year-over-year and 3% sequentially, driven by the
development of the Connolly Gathering System and additional volumes coming on
the Tesoro High Plains Pipeline system from third-party gathering systems.
Natural gas gathering volumes were up 5% year-over-year and down 1%
sequentially, in line with normal seasonal trends.
Processing
The Processing segment generated revenue of $73 million in the fourth quarter,
up $50 million from $23 million in the fourth quarter 2014, primarily
attributable to a full quarter ownership of the assets. Adjusted EBITDA for the
Processing segment totaled $39 million in the fourth quarter, up $29 million
from the fourth quarter 2014. NGL processing throughput was up 20% year-over-
year and flat sequentially, primarily due to NGL yield optimization.
Terminalling and Transportation
The Terminalling and Transportation segment generated $133 million of revenue in
the fourth quarter, which was up $17 million from $116 million in the fourth
quarter 2014. Adjusted EBITDA for the Terminalling and Transportation segment
totaled $87 million in the fourth quarter, up $22 million from the fourth
quarter 2014, primarily driven by contributions from the new Anacortes,
Washington terminal completed in November 2015 and contributions from the Los
Angeles Storage and Pipeline Assets drop down completed in November 2015.
Capital Expenditures
Capital expenditures for the fourth quarter totaled $59 million. This includes
$43 million of growth capital, of which approximately $3 million was reimbursed
and $16 million of maintenance capital, of which approximately $5 million was
reimbursed.
Strategic Update
"During 2015, we continued to execute our strategy to grow TLLP's integrated,
full-service logistics business. We completed several organic growth projects
during the year including the
Anacortes
terminal in November and the Connolly
Gathering System in December," added Goff. "We also completed the integration of
the Rockies natural gas business and the merger of QEPM, which for the full year
2015 contributed $285 million of adjusted EBITDA, exceeding our target of $275
million of adjusted EBITDA. The business delivered approximately $30 million of
synergies in the full year 2015, exceeding our $25 million synergy target.
Additionally, in November we acquired the Los Angeles Storage and Pipeline
Assets from Tesoro which further grew our portfolio of committed, fee-based
logistics assets."
TLLP recently announced several new projects that should position the Company
for future growth. These projects include a new High Plains pipeline expansion,
the Charging Eagle Gathering System in the Bakken region in
North Dakota
, a
compression and gathering project in the Uinta basin in the Rockies, and the Los
Angeles Refinery Interconnect Pipeline project.
On January 29, 2016, the Company made changes to its credit facilities to
increase available credit capacity by $700 million, lower borrowing costs and
improve financial covenants. TLLP syndicated a new $1.0 billion secured Dropdown
Credit Facility and decreased the aggregate available capacity on the Revolving
Credit Facility to $600 million from $900 million. Added Goff, "With strong
support from Tesoro, solid financial flexibility and continued opportunities for
growth, we believe TLLP is well positioned strategically in the current
challenging market environment."
Public Invited to Listen to Analyst Conference Call
At 11:00 a.m. CT tomorrow morning, TLLP will live broadcast its conference call
with analysts regarding fourth quarter and full year 2015 and other business
matters. Interested parties may listen to the live conference call over the
Internet by logging on to http://www.tesorologistics.com.
About Tesoro Logistics LP
Tesoro Logistics LP is a leading full-service logistics company operating
primarily in the Western and Mid-Continent regions of
the United States
. TLLP
owns and operates a network of over 3,500 miles of crude oil, refined products
and natural gas pipelines. TLLP also owns and operates 28 crude oil and refined
products truck and marine terminals and has over 15 million barrels of storage
capacity. In addition, TLLP owns and operates four natural gas processing
complexes and one fractionation facility. TLLP is a fee-based, growth oriented
Delaware
limited partnership formed by Tesoro Corporation and is headquartered
in
San Antonio, Texas
.
This earnings release contains certain statements that are "forward-looking"
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 concerning projects
positioning TLLP for future growth; continued opportunities for growth; TLLP's
strategic position in the current challenging market environment; and guidance
regarding throughput volume expectations for the first quarter of 2016. For more
information concerning factors that could affect these statements see our annual
report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form
8-K filed with the Securities and Exchange Commission. We undertake no
obligation to publicly release the result of any revisions to any such forward-
looking statements that may be made to reflect events or circumstances that
occur, or which we become aware of, after the date hereof.
Contact:
Investors:
Evan Barbosa, Investor Relations Manager, (210) 626-7202
Media:
Tesoro Media Relations, media@tsocorp.com, (210) 626-7702
TESORO LOGISTICS LP
FIRST QUARTER 2016 GUIDANCE
(Unaudited)
Throughput
Gathering
Crude oil gathering pipeline (Mbpd) 205 - 225
Crude oil gathering trucking (Mbpd) 25 - 35
Natural gas gathering (thousands of MMBtu/d) 1,000 - 1,050
Processing
NGL processing (bpd) 7,000 - 8,000
Fee-based processing (thousands of MMBtu/d) 700 - 750
Terminalling and Transportation
Terminalling (Mbpd) 960 - 990
Pipeline transportation (Mbpd) 850 - 880
Factors Affecting Comparability
On November 12, 2015, the Partnership purchased crude oil and refined product
storage and pipeline assets in
Los Angeles, California
(the "LA Storage and
Handling Assets") owned by subsidiaries of Tesoro Corporation, for a total
consideration of $500 million. The Partnership acquired 97 crude oil, feedstock,
and refined product storage tanks with combined capacity of 6.6 million barrels
and a 50% interest in a 16-mile pipeline that transports jet fuel from Tesoro's
Los Angeles refinery to the Los Angeles International Airport. The acquisition
price of $500 million included cash of approximately $250 million and the
issuance of common and general partner units to Tesoro, valued at approximately
$250 million.
During 2014, we entered into transactions with Tesoro and Tesoro Logistics GP,
LLC, our general partner, pursuant to which TLLP acquired from Tesoro three
truck terminals, ten storage tanks, two rail loading and unloading facilities
and a refined products pipeline (the "West Coast Logistics Assets") effective
July 1, 2014 for the terminals, storage tanks and rail facilities and effective
September 30, 2014 for the refined products pipeline. These transactions are
collectively referred to as the "
West Coast
Logistics Assets Acquisition" and
were transfers between entities under common control. Accordingly, the 2014
financial information of TLLP contained herein has been retrospectively adjusted
to include the historical results of the assets acquired in the
West Coast
Logistics Assets Acquisition for the periods presented. We refer to the
historical results of the
West Coast
Logistics Assets prior to its acquisition
date as our "Predecessor." Our financial results may not be comparable as our
Predecessor recorded revenues, general and administrative expenses and financed
operations differently than the Partnership. We entered into the Third Amended
and Restated Omnibus Agreement (the "Amended Omnibus Agreement") in connection
with the West Coast Logistics Assets Acquisition.
On December 2, 2014, we acquired QEP Field Services, LLC, which included an
approximate 56% limited partner interest in QEPM and 100% of the limited
liability company interests of QEPM's general partner, QEP Midstream Partners
GP, LLC from QEP Resources, Inc. (collectively the "Rockies Natural Gas Business
Acquisition"). On July 22, 2015, we acquired all remaining limited partner
interest in QEPM through the issuance of common units representing limited
partnership interests in TLLP. See "Factors Affecting the Comparability of Our
Financial Results" in our Annual Report on Form 10-K for the year ended
December 31, 2015 for more information on the impact of the Rockies Natural Gas
Business Acquisition and the acquisition of the West Coast Logistics Assets from
Tesoro. As a result of the Rockies Natural Gas Business Acquisition, we
introduced a new reporting segment (Processing) and acquired natural gas
gathering operations, which we have presented within our Gathering segment.
Non-GAAP Measures
Our management uses a variety of financial and operating measures to analyze
operating segment performance. Our management also uses additional measures that
are known as "non-GAAP" financial measures in its evaluation of past performance
and prospects for the future to supplement our financial information presented
in accordance with accounting principles generally accepted in
the United States of America
("
U.S.
GAAP"). These measures are significant factors in assessing
our operating results and profitability and include earnings before interest,
income taxes, loss attributable to Predecessors, and depreciation and
amortization expense ("EBITDA"), Adjusted EBITDA and Distributable Cash Flow. In
2015, we updated our presentation of EBITDA, Adjusted EBITDA and Distributable
Cash Flow to include noncontrolling interest in these calculations. Management
uses EBITDA and Adjusted EBITDA to manage our operations and business as a whole
without regard to amounts attributable to noncontrolling interests. As a result
of the change in EBITDA and Adjusted EBITDA, our definition of Distributable
Cash Flow was revised to adjust for noncontrolling interest amounts since they
continue to impact cash available for distribution to our unitholders.
We define adjusted EBITDA as EBITDA plus or minus amounts determined to be
"special items" by our management based on their unusual nature and relative
significance to earnings in a certain period. We define Distributable Cash Flow
as adjusted EBITDA plus or minus amounts determined to be "special items" by our
management based on their relative significance to cash flow in a certain
period. We define Pro Forma Distributable Cash Flow as Distributable Cash Flow
plus or minus adjustments for the acquisition of noncontrolling interest in
connection with the Merger. We provide complete reconciliation and discussion of
items identified as special items with our presentation of adjusted EBITDA and
Distributable Cash Flow. Prior periods have been adjusted to conform to current
presentation. EBITDA, adjusted EBITDA, Distributable Cash Flow and Pro Forma
Distributable Cash Flow are not measures prescribed by
U.S.
GAAP but are
supplemental financial measures that are used by management and may be used by
external users of our financial statements, such as industry analysts,
investors, lenders and rating agencies, to assess:
· our operating performance as compared to other publicly traded
partnerships in the midstream energy industry, without regard to historical cost
basis or financing methods;
· the ability of our assets to generate sufficient cash flow to make
distributions to our unitholders;
· our ability to incur and service debt and fund capital
expenditures; and
· the viability of acquisitions and other capital expenditure projects
and the returns on investment of various investment opportunities.
The
U.S.
GAAP measures most directly comparable to EBITDA and adjusted EBITDA
are net earnings and net cash from operating activities. EBITDA and adjusted
EBITDA should not be considered as an alternative to
U.S.
GAAP net earnings or
net cash from operating activities. EBITDA and adjusted EBITDA have important
limitations as analytical tools, because they exclude some, but not all, items
that affect net earnings and net cash from operating activities. We have updated
our Distributable Cash Flow to adjust for the impact of our noncontrolling
interest acquired in the Rockies Natural Gas Business. The
U.S.
GAAP measure
most directly comparable to Distributable Cash Flow and Pro Forma Distributable
Cash Flow is net earnings.
Investors and analysts use these financial measures to help analyze and compare
companies in the industry on the basis of operating performance. These non-GAAP
financial measures should not be considered in isolation or as a substitute for
analysis of revenues, operating expenses, segment operating income, or any other
measure of financial performance presented in accordance with
U.S.
GAAP. Our
definitions of these non-GAAP financial measures may not be comparable to
similarly titled measures of other companies, because they may be defined
differently by other companies in our industry, thereby diminishing their
utility.
TESORO LOGISTICS LP
RESULTS OF OPERATIONS
(Unaudited) (In millions, except unit and per unit amounts)
Three Months Ended Years Ended
December 31, December 31,
------------------------- ------------------------
2015 2014 2015 2014
------------ ------------ ------------ -----------
Revenues:
Gathering $ 86 $ 51 $ 339 $ 135
Processing 73 23 278 23
Terminalling and
Transportation 133 116 495 442
------------ ------------ ------------ -----------
Total Revenues 292 190 1,112 600
------------ ------------ ------------ -----------
Cost and Expenses:
Operating and maintenance
expenses, net (a) 120 97 411 265
General and administrative
expenses (b) 21 35 102 74
Depreciation and amortization
expenses 46 26 179 78
Loss (gain) on asset disposals
and impairments (c) 1 - 1 (4 )
------------ ------------ ------------ -----------
Total Costs and Expenses 188 158 693 413
------------ ------------ ------------ -----------
Operating Income 104 32 419 187
Interest and financing costs,
net (38 ) (46 ) (150 ) (109 )
Equity in earnings of
unconsolidated affiliates 1 1 7 1
------------ ------------ ------------ -----------
Earnings (Loss) Before Income
Taxes 67 (13 ) 276 79
Income Tax Expense 1 - 1 -
------------ ------------ ------------ -----------
Net Earnings (Loss) $ 66 $ (13 ) $ 275 $ 79
------------ ------------ ------------ -----------
Loss attributable to
Predecessors 3 5 17 23
Income attributable to
noncontrolling interest (1 ) (3 ) (20 ) (3 )
------------ ------------ ------------ -----------
Net Earnings (Loss)
Attributable to Partners 68 (11 ) 272 99
General partner's interest in
earnings, including incentive
distribution rights (22 ) (14 ) (73 ) (43 )
------------ ------------ ------------ -----------
Limited Partners' Interest in
Net Earnings (Loss) $ 46 $ (25 ) $ 199 $ 56
------------ ------------ ------------ -----------
Net Earnings (Loss) per
Limited Partner Unit:
Common - basic $ 0.49 $ (0.34 ) $ 2.33 $ 0.96
Common - diluted $ 0.49 $ (0.34 ) $ 2.33 $ 0.96
Subordinated - basic and
diluted $ - $ - $ - $ 0.62
Weighted Average Limited
Partner Units Outstanding:
Common units - basic 91.2 74.4 84.7 54.2
Common units - diluted 91.3 74.4 84.8 54.2
Subordinated units - basic and
diluted - - - 5.6
Cash Distributions per Unit
Paid During Period (d) $ 0.7500 $ 0.6425 $ 2.8350 $ 2.4125
_____________
(a) Operating and maintenance expenses include imbalance settlement gains of
$2 million and $3 million for the three months ended December 31, 2015 and
2014, respectively, and $8 million and $17 million for the years ended
December 31, 2015 and 2014, respectively. Also includes reimbursements primarily
related to pressure testing completed on the High Plains pipeline and repairs
and maintenance costs pursuant to the Amended Omnibus Agreement of $8 million
for both the three months ended December 31, 2015 and 2014, and $34 million and
$26 million for the years ended December 31, 2015 and 2014, respectively.
(b) General and administrative expenses include transaction costs related to
the Rockies Natural Gas Business Acquisition, Acquisitions from Tesoro and the
Northwest Products System acquisition of $1 million and $18 million in the three
months ended December 31, 2015 and 2014, respectively, and $2 million and $19
million in the years ended December 31, 2015 and 2014, respectively.
(c) Includes a $5 million gain related to the sale of the Boise Terminal for
the year ended December 31, 2014.
(d) On January 20, 2016, we declared a quarterly cash distribution of $0.7800
per limited partner unit for the fourth quarter of 2015.
TESORO LOGISTICS LP
RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP
(Unaudited) (In millions)
Three Months
Ended Years Ended
December 31, December 31,
------------------- ------------------
2015 2014 2015 2014
--------- --------- --------- --------
Reconciliation of EBITDA, Adjusted EBITDA
and Distributable Cash Flow to Net
Earnings Attributable to Partners:
Net earnings (loss) $ 66 $ (13 ) $ 275 $ 79
Loss attributable to Predecessor 3 5 17 23
Depreciation and amortization expenses,
net of
Predecessor expenses 46 26 178 76
Interest and financing costs, net of
capitalized interest 38 46 150 109
Income tax expense 1 - 1 -
--------- --------- --------- --------
EBITDA 154 64 621 287
Gain on sale of Boise Terminal (c) - - - (5 )
Acquisition costs included in general and
administrative
expenses (b) (e) 1 18 2 19
Billing of deficiency payments (f) - 10 13 10
Inspection and maintenance expenses
associated with the
Northwest Products System (g) - 2 - 7
--------- --------- --------- --------
Adjusted EBITDA 155 94 636 318
Interest and financing costs, net (h) (38 ) (30 ) (150 ) (86 )
Proceeds from sale of assets - - - 10
Maintenance capital expenditures, net (i) (19 ) (24 ) (54 ) (44 )
Net earnings attributable to
noncontrolling interest (j) (1 ) (3 ) (18 ) (3 )
Reimbursement for maintenance capital
expenditures (i) 5 3 9 7
Other adjustments for noncontrolling
interest (1 ) 8 (21 ) 8
Other non-cash operating activities 3 3 20 10
--------- --------- --------- --------
Distributable Cash Flow 104 51 422 220
Pro forma adjustment for acquisition of
noncontrolling
interest (k) - (1 ) 36 (1 )
--------- --------- --------- --------
Pro Forma Distributable Cash Flow $ 104 $ 50 $ 458 $ 219
--------- --------- --------- --------
Reconciliation of EBITDA to Net Cash from
Operating
Activities:
Net cash from operating activities $ 109 $ 27 $ 459 $ 166
Interest and financing costs, net 38 46 150 109
Changes in assets and liabilities 11 (11 ) 14 (5 )
Income tax expense 1 - 1 -
Net gain (loss) on asset disposals and
impairments (1 ) - (1 ) 4
Other non-cash operating activities (6 ) (2 ) (18 ) (8 )
Predecessor impact 2 4 16 21
--------- --------- --------- --------
EBITDA $ 154 $ 64 $ 621 $ 287
--------- --------- --------- --------
_____________
(e) Reflects acquisition costs included in general and administrative
expenses primarily related to the Rockies Natural Gas Business acquisition.
(f) Several of our contracts contain minimum volume commitments that allow us
to charge the customer a deficiency payment if the customer's actual throughput
volumes are less than its minimum volume commitments for the applicable period.
In certain contracts, if a customer makes a deficiency payment, that customer
may be entitled to offset gathering fees or processing fees in one or more
subsequent periods to the extent that such customer's throughput volumes in
those periods exceed its minimum volume commitment. Depending on the specific
terms of the contract, revenue under these agreements may be classified as
deferred revenue and recognized once all contingencies or potential performance
obligations associated with these related volumes have either been satisfied
through the gathering or processing of future excess volumes of natural gas, or
are expected to expire or lapse through the passage of time pursuant to terms of
the applicable agreement. During December 2015 and 2014, we invoiced QEP Field
Services, LLC ("QEPFS") customers for deficiency payments. We did not recognize
$13 million and $10 million of revenue for 2015 and 2014, respectively, however,
we are entitled to the cash receipt from such billing. The timing and amount of
deficiency billings vary based on actual shortfall and terms under the
applicable agreements.
(g) Includes costs from detailed inspection and maintenance programs on the
Northwest Products System, which improved the integrity of the Northwest
Products Pipeline. The purchase price of the Northwest Products System was
reduced to compensate the Partnership for assuming responsibilities to perform
this work.
(h) Interest and financing costs, net exclude capitalized interest, $7 million
of reimbursed premiums from Tesoro during the year ended December 31, 2014 and
$16 million in fees for an alternative financing arrangement related to the
Rockies Natural Gas Business Acquisition during the three months and year ended
December 31, 2014.
(i) Maintenance capital expenditures include expenditures required to ensure
the safety, reliability, integrity and regulatory compliance of our assets.
Maintenance capital expenditures, net included in the Distributable Cash Flow
calculation are presented net of Predecessors' amounts and the noncontrolling
interest portion of maintenance capital expenditures.
(j) Excludes $2 million of undistributed QEPM earnings prior to the closing
of the merger of QEPM with TLLP for the year ended December 31, 2015, that
unitholders of QEPM were entitled to receive, but TLLP unitholders received as a
result of the merger.
(k) Reflects the adjustment to include the noncontrolling interest in QEPM as
controlling interest based on the pro forma assumption that the Merger occurred
on December 2, 2014.
TESORO LOGISTICS LP
SELECTED OPERATING SEGMENT DATA
(Unaudited)
(In millions, except volumes, revenue per barrel, revenue per MMBtu)
Three Months Ended Years Ended
December 31, December 31,
----------------------- ----------------------
2015 2014 2015 2014
----------- ----------- ----------- ----------
Gathering Segment
Revenues
Crude oil gathering pipeline
revenues $ 35 $ 24 $ 123 $ 66
Crude oil gathering trucking
revenues 9 16 46 58
Gas gathering revenues (l) 42 11 170 11
----------- ----------- ----------- ----------
Total Revenues 86 51 339 135
----------- ----------- ----------- ----------
Costs and Expenses:
Operating and maintenance expenses 45 34 119 72
General and administrative
expenses 2 2 10 5
Depreciation and amortization
expenses 17 6 67 11
Loss on asset disposals and
impairments 1 - 1 -
----------- ----------- ----------- ----------
Total Costs and Expenses 65 42 197 88
----------- ----------- ----------- ----------
Gathering Segment Operating Income $ 21 $ 9 $ 142 $ 47
----------- ----------- ----------- ----------
Volumes
Crude oil gathering pipeline
throughput (bpd) 205,268 150,051 187,836 123,355
Average crude oil gathering
pipeline revenue per barrel (m) $ 1.86 $ 1.69 $ 1.79 $ 1.46
Crude oil gathering trucking
volume (bpd) 28,200 54,896 38,461 49,339
Average crude oil gathering
trucking revenue per barrel (m) $ 3.27 $ 3.22 $ 3.25 $ 3.23
Gas gathering throughput
(thousands of MMBtu/d) 1,102 1,046 1,077 1,046
Average gas gathering revenue per
MMbtu (m) $ 0.42 $ 0.41 $ 0.43 $ 0.41
_____________
(l) Natural gas gathering revenues and volumes relate to the operations
acquired in the Rockies Natural Gas Business Acquisition.
(m) Management uses average revenue per barrel, average revenue per MMBtu and
average keep-whole fee per gallon of NGLs to evaluate performance and compare
profitability to other companies in the industry. There are a variety of ways to
calculate these measures; other companies may calculate these in different ways.
We calculate average revenue per barrel as revenue divided by total throughput
(barrels). We calculate average revenue per MMBtu as revenue divided by total
volume (MMBtu). We calculate average keep-whole fee per gallon as revenue
divided by total volume (gallons). Investors and analysts use these financial
measures to help analyze and compare companies in the industry on the basis of
operating performance. These financial measures should not be considered as an
alternative to segment operating income, revenues and operating expenses or any
other measure of financial performance presented in accordance with
U.S.
GAAP.
Three Months Ended Years Ended
December 31, December 31,
----------------------- ----------------------
2015 2014 2015 2014
----------- ----------- ----------- ----------
Processing Segment (n)
Revenues
NGL processing revenues $ 25 $ 7 $ 96 $ 7
Fee-based processing revenues 26 6 107 6
Other processing revenues 22 10 75 10
----------- ----------- ----------- ----------
Total Revenues 73 23 278 23
----------- ----------- ----------- ----------
Costs and Expenses:
Operating and maintenance expenses 34 12 125 12
General and administrative
expenses - 1 4 1
Depreciation and amortization
expenses 11 4 44 4
----------------------- ----------- ----------
Total Costs and Expenses 45 17 173 17
----------- ----------- ----------- ----------
Processing Segment Operating
Income $ 28 $ 6 $ 105 $ 6
----------- ----------- ----------- ----------
Volumes
NGL processing throughput (bpd) 7,824 6,532 7,594 6,532
Average keep-whole fee per barrel
of NGL (m) $ 35.00 $ 35.51 $ 34.46 $ 35.51
Fee-based processing throughput
(thousands of
MMBtu/d) 748 693 743 693
Average fee-based processing
revenue per MMBtu (m) $ 0.38 $ 0.30 $ 0.39 $ 0.30
Terminalling and Transportation
Segment
Revenues
Terminalling revenues $ 102 $ 89 $ 377 $ 333
Pipeline transportation revenues 31 27 118 109
----------- ----------- ----------- ----------
Total Revenues 133 116 495 442
----------- ----------- ----------- ----------
Costs and Expenses:
Operating and maintenance expenses 41 51 167 181
General and administrative
expenses 8 7 34 29
Depreciation and amortization
expenses 18 16 68 63
Gain on asset disposals and
impairments - - - (4 )
----------- ----------- ----------- ----------
Total Costs and Expenses 67 74 269 269
----------- ----------- ----------- ----------
Terminalling and Transportation
Segment Operating
Income $ 66 $ 42 $ 226 $ 173
----------- ----------- ----------- ----------
Volumes
Terminalling throughput (bpd) (o) 943,436 911,118 934,697 917,280
Average terminalling revenue per
barrel (m)(o) $ 1.19 $ 1.07 $ 1.11 $ 1.00
Pipeline transportation throughput
(bpd) (o) 840,945 813,546 824,710 821,716
Average pipeline transportation
revenue per barrel (m)(o) $ 0.39 $ 0.37 $ 0.39 $ 0.36
___________________
(n) Processing volumes relate to operations acquired in the Rockies Natural
Gas Business Acquisition on December 2, 2014. Per day calculations only reflect
the period of 2014 that TLLP owned the Rockies Natural Gas Business.
(o) The Terminalling and Transportation segment includes predecessor results
of operations and volumes related to the West Coast Logistics Assets from
inception through June 30, 2014 for the terminals, storage tanks and rail
facilities, and through September 29, 2014 for the refined products pipeline.
TESORO LOGISTICS LP
RECONCILIATION TO AMOUNTS UNDER U.S. GAAP
(Unaudited) (In millions)
Three Months
Ended Years Ended
December 31, December 31,
----------------- -----------------
2015 2014 2015 2014
-------- -------- --------- -------
Reconciliation of Gathering Segment Operating
Income to
Adjusted EBITDA:
Gathering segment operating income $ 21 $ 9 $ 142 $ 47
Depreciation and amortization expenses 17 6 67 11
Equity in earnings of unconsolidated
affiliates 1 1 7 1
-------- -------- --------- -------
Gathering Segment EBITDA 39 16 216 59
Billing of deficiency payments (f) - 10 2 10
-------- -------- --------- -------
Gathering Segment Adjusted EBITDA $ 39 $ 26 $ 218 $ 69
-------- -------- --------- -------
Three Months
Ended Years Ended
December 31, December 31,
----------------- -----------------
2015 2014 2015 2014
-------- -------- --------- -------
Reconciliation of Processing Segment
Operating Income to
Adjusted EBITDA:
Processing segment operating income $ 28 $ 6 $ 105 $ 6
Depreciation and amortization expenses 11 4 44 4
-------- -------- --------- -------
Processing Segment EBITDA 39 10 149 10
Billing of deficiency payments (f) - - 11 -
-------- -------- --------- -------
Processing Segment Adjusted EBITDA $ 39 $ 10 $ 160 $ 10
-------- -------- --------- -------
Three Months
Ended Years Ended
December 31, December 31,
----------------- ------------------
2015 2014 2015 2014
-------- -------- --------- --------
Reconciliation of Terminalling and
Transportation
Segment Operating Income to Adjusted
EBITDA:
Terminalling and Transportation segment
operating income $ 66 $ 42 $ 226 $ 173
Loss attributable to Predecessor 3 5 17 23
Depreciation and amortization expenses, net
of
Predecessor expense 18 16 67 61
-------- -------- --------- --------
Terminalling and Transportation Segment
EBITDA 87 63 310 257
Gain on sale of Boise Terminal (c) - - - (5 )
Inspection and maintenance expenses
associated with the
Northwest Products System (g) - 2 - 7
-------- -------- --------- --------
Terminalling and Transportation Segment
Adjusted
EBITDA $ 87 $ 65 $ 310 $ 259
-------- -------- --------- --------
TESORO LOGISTICS LP
SELECTED FINANCIAL DATA
(Unaudited) (In millions)
Three Months
Ended Years Ended
December 31, December 31,
------------------ ------------------
2015 2014 2015 2014
-------- --------- --------- --------
Capital Expenditures (p)
Growth $ 43 $ 83 $ 243 $ 200
Maintenance (i) 16 26 53 50
-------- --------- --------- --------
Total Capital Expenditures $ 59 $ 109 $ 296 $ 250
-------- --------- --------- --------
Three Months
Ended Years Ended
December 31, December 31,
------------------ ------------------
2015 2014 2015 2014
-------- --------- --------- --------
Capital Expenditures, Net of Reimbursements
(p)
Growth $ 40 $ 79 $ 224 $ 186
Maintenance (i) 11 24 44 44
-------- --------- --------- --------
Total Capital Expenditures $ 51 $ 103 $ 268 $ 230
-------- --------- --------- --------
_____________
(p) Total capital expenditures include spending related to the Predecessors
prior to each respective acquisition date. These expenditures were primarily for
maintenance capital projects and totaled $1 million and $3 million for the three
months and year ended December 31, 2015, respectively, and $2 million and $6
million for the three months and year ended December 31, 2014, respectively.
Three Months
Ended Years Ended
December 31, December 31,
----------------- -----------------
2015 2014 2015 2014
-------- -------- --------- -------
General and Administrative Expenses
Gathering $ 2 $ 2 $ 10 $ 5
Processing - 1 4 1
Terminalling and Transportation 8 7 34 29
Unallocated 11 25 54 39
-------- -------- --------- -------
Total General and Administrative Expenses $ 21 $ 35 $ 102 $ 74
-------- -------- --------- -------
Three Months
Ended Years Ended
December 31, December 31,
----------------- ------------------
2015 2014 2015 2014
-------- -------- --------- --------
Distributions to the Partners of TLLP
Limited partner's distributions on common
units (q) $ 73 $ 53 $ 259 $ 171
General partner's distributions 2 2 6 5
General partner's incentive distribution
rights 22 15 69 41
-------- -------- --------- --------
Total Distributions to be Paid $ 97 $ 70 $ 334 $ 217
-------- -------- --------- --------
Distribution Coverage Ratio (r) 1.07x 0.73x 1.26x 1.01x
Pro Forma Distribution Coverage Ratio (r) 1.07x 0.71x 1.37x 1.01x
___________________
(q) Includes distributions on subordinated units for the year ended December
31, 2014.
(r) The Distribution Coverage Ratio is calculated as Distributable Cash Flow
divided by total distributions to be paid for the respective periods. The Pro
Forma Distribution Coverage Ratio is calculated as Pro Forma Distributable Cash
Flow divided by total distributions to be paid for the respective periods.
TESORO LOGISTICS LP
BALANCE SHEET DATA
(Unaudited) (In millions)
Years Ended December 31,
------------------------------
2015 2014
-------------- -------------
Cash and cash equivalents $ 16 $ 19
Debt, net of unamortized issuance costs (s) 2,844 2,544
_____________
(s) Total debt, net of unamortized issuance costs, includes $305 million and
$260 million of borrowings outstanding under our revolving credit facility as of
December 31, 2015 and December 31, 2014, respectively. We have retrospectively
adjusted the December 31, 2014 balance to be reflected net of unamortized
issuance costs to conform to current year presentation.
TESORO LOGISTICS LP
RECONCILIATION OF EBITDA TO AMOUNTS UNDER U.S. GAAP
(Unaudited) (In millions)
Rockies Natural Gas Business 2015
EBITDA attributable to TLLP
---------------------------------------
Reconciliation of Operating Income to
EBITDA and Adjusted EBITDA:
Operating income $ 179
Depreciation and amortization expenses 93
---------------------------------------
EBITDA 272
Billing of deficiency payments (f) 13
---------------------------------------
Adjusted EBITDA $ 285
---------------------------------------
Rockies Natural Gas Business 2015
Projected Annual EBITDA attributable
to TLLP
---------------------------------------
Reconciliation of Projected Net Earnings
to Projected Annual EBITDA:
Projected net earnings $ 93
Depreciation and amortization expenses 96
Interest and financing costs, net 86
---------------------------------------
Projected Annual EBITDA $ 275
---------------------------------------
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(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Tesoro Logistics LP via GlobeNewswire
[HUG#1982910]
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