BP MIDSTREAM PARTNERS LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
|
|
(in millions of dollars)
|
|
ASSETS
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
137.3
|
|
|
$
|
126.9
|
|
|
Accounts receivable – third parties
|
|
—
|
|
|
0.2
|
|
|
Accounts receivable – related parties
|
|
10.0
|
|
|
11.0
|
|
|
Prepaid expenses
|
|
2.4
|
|
|
6.6
|
|
|
Other current assets
|
|
2.9
|
|
|
2.9
|
|
|
Total current assets
|
|
152.6
|
|
|
147.6
|
|
|
Equity method investments (Note 3)
|
|
515.7
|
|
|
519.9
|
|
|
Property, plant and equipment, net (Note 4)
|
|
74.8
|
|
|
67.9
|
|
|
Other assets
|
|
3.5
|
|
|
3.5
|
|
|
Total assets
|
|
$
|
746.6
|
|
|
$
|
738.9
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable – third parties
|
|
$
|
2.7
|
|
|
$
|
1.9
|
|
|
Accounts payable – related parties
|
|
2.0
|
|
|
1.9
|
|
|
Deferred revenues and credits – related parties
|
|
2.3
|
|
|
1.8
|
|
|
Other current liabilities (Note 5)
|
|
8.2
|
|
|
7.8
|
|
|
Total current liabilities
|
|
15.2
|
|
|
13.4
|
|
|
Long-term debt – related parties (Note 6)
|
|
468.0
|
|
|
468.0
|
|
|
Other liabilities
|
|
3.5
|
|
|
3.5
|
|
|
Total liabilities
|
|
486.7
|
|
|
484.9
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 10)
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
Common unitholders – Public (2021 – 47,837,828 issued and outstanding; 2020 – 47,821,790 units issued and outstanding); BP Holdco (2021 – 56,956,712 issued and outstanding; 2020 – 4,581,177 units issued and outstanding)
|
|
127.7
|
|
|
800.5
|
|
Subordinated unitholders – BP Holdco (2021 – 0 issued and outstanding;
2020 – 52,375,535 units issued and outstanding)
|
|
—
|
|
|
(680.2)
|
|
|
General partner
|
|
1.2
|
|
|
1.2
|
|
|
Total partners' capital
|
|
128.9
|
|
|
121.5
|
|
|
Non-controlling interests
|
|
131.0
|
|
|
132.5
|
|
|
Total equity
|
|
259.9
|
|
|
254.0
|
|
|
Total liabilities and equity
|
|
$
|
746.6
|
|
|
$
|
738.9
|
|
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
BP MIDSTREAM PARTNERS LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
(in millions of dollars, unless otherwise indicated)
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
Third parties
|
|
$
|
0.8
|
|
|
$
|
0.8
|
|
|
$
|
1.6
|
|
|
$
|
1.8
|
|
|
Related parties
|
|
28.5
|
|
|
30.7
|
|
|
57.3
|
|
|
60.4
|
|
|
Total revenue
|
|
29.3
|
|
|
31.5
|
|
|
58.9
|
|
|
62.2
|
|
|
Costs and expenses
|
|
|
|
|
|
|
|
|
|
Operating expenses – third parties
|
|
3.8
|
|
|
3.1
|
|
|
7.3
|
|
|
6.8
|
|
|
Operating expenses – related parties
|
|
1.4
|
|
|
1.3
|
|
|
2.6
|
|
|
2.8
|
|
|
Maintenance expenses – third parties
|
|
0.3
|
|
|
1.4
|
|
|
1.1
|
|
|
1.6
|
|
|
Maintenance expenses – related parties
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
General and administrative – third parties
|
|
0.6
|
|
|
0.7
|
|
|
1.2
|
|
|
1.6
|
|
|
General and administrative – related parties
|
|
3.9
|
|
|
3.6
|
|
|
7.9
|
|
|
7.5
|
|
|
Depreciation
|
|
0.6
|
|
|
0.6
|
|
|
1.3
|
|
|
1.3
|
|
|
Property and other taxes
|
|
0.2
|
|
|
0.2
|
|
|
0.4
|
|
|
0.3
|
|
|
Total costs and expenses
|
|
10.9
|
|
|
11.0
|
|
|
21.9
|
|
|
22.1
|
|
|
Operating income
|
|
18.4
|
|
|
20.5
|
|
|
37.0
|
|
|
40.1
|
|
|
Income from equity method investments
|
|
28.6
|
|
|
26.8
|
|
|
58.9
|
|
|
58.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
1.1
|
|
|
1.9
|
|
|
2.2
|
|
|
5.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
45.9
|
|
|
45.4
|
|
|
93.7
|
|
|
92.9
|
|
|
Less: Net income attributable to non-controlling interests
|
|
5.4
|
|
|
4.8
|
|
|
11.2
|
|
|
10.6
|
|
|
Net income attributable to the Partnership
|
|
$
|
40.5
|
|
|
$
|
40.6
|
|
|
$
|
82.5
|
|
|
$
|
82.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to the Partnership per limited partner unit – basic and diluted (in dollars):
|
|
|
|
|
|
|
|
|
|
Common units
|
|
$
|
0.37
|
|
|
$
|
0.38
|
|
|
$
|
0.76
|
|
|
$
|
0.77
|
|
|
Subordinated units
|
|
$
|
—
|
|
|
$
|
0.38
|
|
|
$
|
0.18
|
|
|
$
|
0.77
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of limited partner units outstanding – basic and diluted (in millions):
|
|
|
|
|
|
|
|
|
|
Common units – public
|
|
47.8
|
|
|
47.8
|
|
|
47.8
|
|
|
47.8
|
|
|
Common units – BP Holdco
|
|
57.0
|
|
|
4.6
|
|
|
44.8
|
|
|
4.6
|
|
|
Subordinated units – BP Holdco
|
|
—
|
|
|
52.4
|
|
|
52.4
|
|
|
52.4
|
|
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
BP MIDSTREAM PARTNERS LP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Month Period Ended June 30, 2021
|
|
|
|
Partners' Capital
|
|
|
|
|
|
|
|
(in millions of dollars)
|
Common Unitholders
|
|
Subordinated Unitholders – BP Holdco
|
|
General Partner
|
|
Non-controlling Interests
|
|
|
|
Total
|
|
Balance at December 31, 2020
|
$
|
800.5
|
|
|
$
|
(680.2)
|
|
|
$
|
1.2
|
|
|
$
|
132.5
|
|
|
|
|
$
|
254.0
|
|
|
|
Net income
|
31.3
|
|
|
9.5
|
|
|
1.2
|
|
|
5.8
|
|
|
|
|
47.8
|
|
|
|
Distributions to unitholders ($0.3475 per unit) and general partner
|
(18.2)
|
|
|
(18.2)
|
|
|
(1.2)
|
|
|
—
|
|
|
|
|
(37.6)
|
|
|
|
Conversion of subordinated units
|
(688.9)
|
|
|
688.9
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Unit-based compensation
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
0.1
|
|
|
|
Distributions to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.4)
|
|
|
|
|
(6.4)
|
|
|
Balance at March 31, 2021
|
124.8
|
|
|
—
|
|
|
1.2
|
|
|
131.9
|
|
|
|
|
257.9
|
|
|
|
Net income
|
39.3
|
|
|
—
|
|
|
1.2
|
|
|
5.4
|
|
|
|
|
45.9
|
|
|
|
Distributions to unitholders ($0.3475 per unit) and general partner
|
(36.4)
|
|
|
—
|
|
|
(1.2)
|
|
|
—
|
|
|
|
|
(37.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.3)
|
|
|
|
|
(6.3)
|
|
|
Balance at June 30, 2021
|
$
|
127.7
|
|
|
$
|
—
|
|
|
$
|
1.2
|
|
|
$
|
131.0
|
|
|
|
|
$
|
259.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Month Period Ended June 30, 2020
|
|
|
|
Partners' Capital
|
|
|
|
|
|
|
|
(in millions of dollars)
|
Common Unitholders
|
|
Subordinated Unitholders – BP Holdco
|
|
General Partner
|
|
Non-controlling Interests
|
|
|
|
Total
|
|
Balance at December 31, 2019
|
$
|
791.3
|
|
|
$
|
(689.2)
|
|
|
$
|
1.2
|
|
|
$
|
136.9
|
|
|
|
|
$
|
240.2
|
|
|
|
Net income
|
20.3
|
|
|
20.2
|
|
|
1.2
|
|
|
5.8
|
|
|
|
|
47.5
|
|
|
|
Distributions to unitholders ($0.3475 per unit) and general partner
|
(18.2)
|
|
|
(18.2)
|
|
|
(1.2)
|
|
|
—
|
|
|
|
|
(37.6)
|
|
|
|
Unit-based compensation
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
0.1
|
|
|
|
Distributions to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.7)
|
|
|
|
|
(6.7)
|
|
|
Balance at March 31, 2020
|
793.5
|
|
|
(687.2)
|
|
|
1.2
|
|
|
136.0
|
|
|
|
|
243.5
|
|
|
|
Net income
|
19.7
|
|
|
19.7
|
|
|
1.2
|
|
|
4.8
|
|
|
|
|
45.4
|
|
|
|
Distributions to unitholders ($0.3475 per unit) and general partner
|
(18.2)
|
|
|
(18.2)
|
|
|
(1.2)
|
|
|
—
|
|
|
|
|
(37.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.5)
|
|
|
|
|
(5.5)
|
|
|
Balance at June 30, 2020
|
$
|
795.0
|
|
|
$
|
(685.7)
|
|
|
$
|
1.2
|
|
|
$
|
135.3
|
|
|
|
|
$
|
245.8
|
|
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
BP MIDSTREAM PARTNERS LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
|
|
|
(in millions of dollars)
|
|
Cash flows from operating activities
|
|
|
|
|
|
Net income
|
|
$
|
93.7
|
|
|
$
|
92.9
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
|
|
|
|
|
Depreciation
|
|
1.3
|
|
|
1.3
|
|
|
|
|
|
|
|
|
Non-cash expenses
|
|
0.1
|
|
|
0.1
|
|
|
|
|
|
|
|
|
Income from equity method investments
|
|
(58.9)
|
|
|
(58.1)
|
|
|
Distributions of earnings received from equity method investments
|
|
58.8
|
|
|
60.7
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
Accounts receivable
|
|
1.1
|
|
|
1.0
|
|
|
Prepaid expenses and other current assets
|
|
4.3
|
|
|
3.1
|
|
|
Accounts payable
|
|
1.0
|
|
|
(0.1)
|
|
|
Deferred revenues and credits – related parties
|
|
0.5
|
|
|
0.1
|
|
|
Other
|
|
(0.4)
|
|
|
(1.5)
|
|
|
Net cash provided by operating activities
|
|
101.5
|
|
|
99.5
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Capital expenditures
|
|
(7.5)
|
|
|
(1.3)
|
|
|
Distributions in excess of earnings from equity method investments
|
|
4.3
|
|
|
5.3
|
|
|
Net cash (used in) provided by investing activities
|
|
(3.2)
|
|
|
4.0
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Proceeds from issuance of debt – related parties
|
|
—
|
|
|
468.0
|
|
|
Repayment of debt – related parties
|
|
—
|
|
|
(468.0)
|
|
|
Distributions to unitholders and general partner
|
|
(75.2)
|
|
|
(75.2)
|
|
|
Distributions to non-controlling interests
|
|
(12.7)
|
|
|
(12.2)
|
|
|
Net cash used in financing activities
|
|
(87.9)
|
|
|
(87.4)
|
|
|
Net change in cash and cash equivalents
|
|
10.4
|
|
|
16.1
|
|
|
Cash and cash equivalents at beginning of the period
|
|
126.9
|
|
|
98.8
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
137.3
|
|
|
$
|
114.9
|
|
|
Supplemental cash flow information
|
|
|
|
|
|
Cash paid for interest
|
|
2.3
|
|
|
8.3
|
|
|
Non-cash investing transactions
|
|
|
|
|
|
Accrued capital expenditures
|
|
5.1
|
|
|
0.5
|
|
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
1. Business and Basis of Presentation
BP Midstream Partners LP (either individually or together with its subsidiaries, as the context requires, the “Partnership”) is a Delaware limited partnership formed on May 22, 2017 by BP Pipelines (North America) Inc. (“BP Pipelines”), an indirect wholly owned subsidiary of BP p.l.c. (“BP”), a “foreign private issuer” within the meaning of the Securities Exchange Act of 1934, as amended.
Unless otherwise stated or the context otherwise indicates, all references to “we,” “our,” “us,” or similar expressions refer to the legal entity BP Midstream Partners LP. The term “our Parent” refers to BP Pipelines; any entity that wholly owns BP Pipelines, indirectly or directly, including BP and BP America Inc. (“BPA”), an indirect wholly owned subsidiary of BP; and any entity that is wholly owned by the aforementioned entities, excluding BP Midstream Partners LP.
Business
BP Midstream Partners LP is a master limited partnership formed by BP Pipelines to own, operate, develop and acquire pipelines and other midstream assets. The Partnership's assets consist of interests in entities that own crude oil, natural gas, refined products and diluent pipelines and refined product terminals serving as key infrastructure for BP and other customers to transport onshore crude oil production to BP’s refinery in Whiting, Indiana (the “Whiting Refinery”) and offshore crude oil and natural gas production to key refining markets and trading and distribution hubs. Certain assets deliver refined products and diluent from the Whiting Refinery and other U.S. supply hubs to major demand centers.
As of June 30, 2021, the Partnership's assets consisted of the following:
•BP Two Pipeline Company LLC, which owns the BP#2 crude oil pipeline system (“BP2”).
•BP River Rouge Pipeline Company LLC, which owns the Whiting to River Rouge refined products pipeline system (“River Rouge”).
•BP D-B Pipeline Company LLC, which owns the Diamondback diluent pipeline system (“Diamondback”). BP2, River Rouge, and Diamondback, together, are referred to as the "Wholly Owned Assets".
•28.5% ownership interest in Mars Oil Pipeline Company, LLC (“Mars”), which owns a major corridor crude oil pipeline system in the Gulf of Mexico.
•65% ownership interest and 100% managing member interest in Mardi Gras Transportation System Company, LLC ("Mardi Gras"), which holds the following investments in joint ventures located in the Gulf of Mexico:
•56% ownership interest in Caesar Oil Pipeline Company, LLC (“Caesar”),
•53% ownership interest in Cleopatra Gas Gathering Company, LLC (“Cleopatra”),
•65% ownership interest in Proteus Oil Pipeline Company, LLC (“Proteus”), and,
•65% ownership interest in Endymion Oil Pipeline Company, LLC (“Endymion”).
•Together Endymion, Caesar, Cleopatra and Proteus are referred to as the “Mardi Gras Joint Ventures.”
•22.7% ownership interest in Ursa Oil Pipeline Company, LLC ("Ursa").
•25% ownership interest in KM Phoenix Holdings, LLC ("KM Phoenix").
We generate a majority of revenue by charging fees for the transportation of crude oil, refined products and diluent through our pipelines under agreements with minimum volume commitments ("MVC"). We do not engage in the marketing and trading of any commodities. All operations are conducted in the United States, and all long-lived assets are located in the United States. Partnership operations consist of one reportable segment.
Certain Partnership businesses are subject to regulation by various authorities including, but not limited to the Federal Energy Regulatory Commission ("FERC"). Regulatory bodies exercise statutory authority over matters such as common carrier tariffs, construction, rates and ratemaking and agreements with customers.
Basis of Presentation
Condensed consolidated financial statements have been prepared under the rules and regulations of the Securities and Exchange Commission (“SEC”). These rules and regulations conform to the accounting principles contained in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification, the single source of accounting principles generally accepted in the United States (“GAAP”).
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
Certain information and footnote disclosures normally included in the annual consolidated financial statements have been condensed or omitted from these condensed consolidated financial statements. The condensed consolidated financial statements as of June 30, 2021, and for the three and six months ended June 30, 2021 and 2020, included herein, are unaudited. These financial statements include all known accruals and adjustments necessary, in the opinion of management, for a fair presentation of our condensed consolidated financial position, results of operations and cash flows. Unless otherwise specified, all such adjustments are of a normal and recurring nature. The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the "Partnership's 2020 10-K").
Partnership financial position, results of operations and cash flows consist of consolidated BP Midstream Partners LP activities and balances. All intercompany accounts and transactions within the financial statements have been eliminated for all periods presented.
Subordinated Unit Conversion
On February 11, 2021, we paid a cash distribution of $0.3475 per limited partner unit to unitholders of record on January 28, 2021, for the three months ended December 31, 2020. Following payment of the distribution, the board of directors of our General Partner confirmed and approved that the financial tests required for conversion of our subordinated units had been met under the terms of the partnership agreement. As a result, on February 12, 2021, all of the Partnership's subordinated units were converted into common units on a one-for-one basis and the subordination period was terminated. Refer to Note 8 - Net Income Per Limited Partner Unit for additional information.
As a result of the completion of this conversion event, common units are presented on a combined basis in the condensed consolidated balance sheets and the condensed consolidated statements of changes in equity as of and for the period ended June 30, 2021. Prior periods have been reclassified in the comparative periods to conform to current period presentation in the condensed consolidated balance sheets and the condensed consolidated statements of changes in equity.
Summary of Significant Accounting Policies
There have been no significant changes to accounting policies as disclosed in Note 2 - Summary of Significant Accounting Policies in the Partnership's 2020 10-K.
2. Revenue Recognition
We recognize revenue over time or at a point in time, depending on the nature of the performance obligations contained in the respective contract with customers. A performance obligation is our unit of account and it represents a promise in a contract to transfer goods or services to the customer. The contract transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is allocated to each performance obligation and recognized as revenue when or as the performance obligation is satisfied. The following is an overview of our significant revenue stream, including a description of the respective performance obligations and related methods of revenue recognition.
Pipeline Transportation
Revenue from pipeline transportation is comprised of tariffs and fees associated with the transportation of liquid petroleum products, generally at published tariffs and in certain instances, revenue from MVC contracts at negotiated rates. Tariff revenue is recognized either at the point of delivery or at the point of receipt, pursuant to specifications outlined in the respective tariffs. We record revenue for crude oil, refined products and diluent transportation during the period in which they are earned (i.e., either physical delivery of product has taken place or the services designated in the contract have been performed). Partnership services are typically billed on a monthly basis, and we generally do not offer extended payment terms. We accrue revenue based on services rendered but not billed for that accounting month.
Billings to BP Products North America Inc. ("BP Products") for deficiency volumes under its MVCs, if any, are recorded as deferred revenues and credits, a contract liability, on the condensed consolidated balance sheets, as BP Products has the right to make up the deficiency volumes within the measurement period specified by the agreements. Deferred revenue under these arrangements is recognized into revenue once it is deemed remote that the customer will meet its required annual MVC. If the
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
customer does satisfy its MVC by shipping the deficiency volumes within the same calendar year, it may receive a refund of excess payments.
We did not recognize deficiency revenue under the throughput and deficiency agreements with BP Products for the three and six months ended June 30, 2021. We recognized $6.0 million of deficiency revenue under the throughput and deficiency agreements with BP Products for the three and six months ended June 30, 2020.
Allowance Oil
The tariff for crude oil transportation at BP2 includes a fixed loss allowance (“FLA”). An FLA factor per barrel, a fixed percentage, is a separate fee that is considered a part of the transaction price under the applicable crude oil tariff to cover evaporation and other losses in transit. The amount of revenue recognized is a product of the quantity transported, the applicable FLA factor and the settlement price during the month the product is transported.
We recognized revenue of $3.0 million and $5.6 million in the three and six months ended June 30, 2021, respectively, related to the FLA arrangements with our Parent. In the three and six months ended June 30, 2020, we recognized revenue of $0.8 million and $2.3 million, respectively, related to FLA arrangements with our Parent.
Disaggregation of Revenue
The following table provides information about disaggregated revenue:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2021
|
2020
|
|
2021
|
2020
|
|
Transportation services revenue – third parties
|
$
|
0.8
|
|
$
|
0.8
|
|
|
$
|
1.6
|
|
$
|
1.8
|
|
|
Transportation services revenue – related parties
|
28.5
|
|
30.7
|
|
|
57.3
|
|
60.4
|
|
|
Total revenue
|
$
|
29.3
|
|
$
|
31.5
|
|
|
$
|
58.9
|
|
$
|
62.2
|
|
Future Performance Obligations
The values in the table below represent the fixed portion of the MVC arrangements with our existing customer contracts, summarized as future performance obligations as of June 30, 2021. The unfulfilled performance obligations included in the table below are expected to be recognized in revenue in the specified periods:
|
|
|
|
|
|
|
|
|
As of June 30, 2021
|
|
Remainder of 2021
|
$
|
55.2
|
|
|
2022
|
102.0
|
|
|
2023
|
98.2
|
|
|
Total
|
$
|
255.4
|
|
As of June 30, 2021 we have executed a Capital Recovery Fee Agreement with BP Products and commenced construction of an onshore capacity increase project. The agreement calls for fees of $6.0 million per year (payable in equal monthly installments) over a four-year period, beginning when the increased capacity becomes available for use.
Contract Balances
Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings and cash collections. Contract liabilities or deferred revenue and credits primarily relate to consideration received from customers for temporary deficiency quantities under minimum volume contracts that the customer has the right to make up in a future period, which we subsequently recognize as revenue or amounts we credit back to the customer in a future period.
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
The following table provides information about receivables from contracts with customers, contract assets and contract liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
December 31, 2020
|
|
Receivables from contracts with customers – third parties
|
$
|
—
|
|
$
|
0.2
|
|
|
Receivables from contracts with customers – related parties
|
10.0
|
|
11.0
|
|
|
Deferred revenues and credits – related parties
|
2.3
|
|
1.8
|
|
3. Equity Method Investments
We account for ownership interests in Mars, the Mardi Gras Joint Ventures, Ursa, and KM Phoenix using the equity method for financial reporting purposes. Financial results include the Partnership's proportionate share of Mars, the Mardi Gras Joint Ventures, Ursa and KM Phoenix, which is reflected in Income from equity method investments on the condensed consolidated statements of operations. We did not record any impairment loss on equity method investments during the three and six months ended June 30, 2021 and 2020.
The table below summarizes the balances and activities related for each equity method investment ("EMI") recorded as of and for the three and six months ended June 30, 2021 and 2020:
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|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021
|
|
Three Months Ended June 30, 2020
|
|
|
Percentage Ownership
|
Distributions Received
|
Income from EMI
|
Carrying Value
|
|
Percentage Ownership
|
|
Distributions Received
|
Income from EMI
|
Carrying Value
|
|
Mars
|
28.5%
|
$
|
(12.1)
|
|
$
|
10.3
|
|
$
|
53.1
|
|
|
28.5%
|
|
$
|
(13.7)
|
|
$
|
11.6
|
|
$
|
54.3
|
|
|
Caesar
|
56.0%
|
(5.3)
|
|
4.2
|
|
115.3
|
|
|
56.0%
|
|
(3.4)
|
|
3.7
|
|
117.3
|
|
|
Cleopatra
|
53.0%
|
(2.6)
|
|
1.9
|
|
113.1
|
|
|
53.0%
|
|
(2.4)
|
|
1.2
|
|
115.5
|
|
|
Proteus
|
65.0%
|
(3.4)
|
|
3.1
|
|
67.4
|
|
|
65.0%
|
|
(5.2)
|
|
3.6
|
|
72.3
|
|
|
Endymion
|
65.0%
|
(6.6)
|
|
6.4
|
|
78.6
|
|
|
65.0%
|
|
(4.8)
|
|
5.2
|
|
81.5
|
|
|
Others(1)
|
Various
|
(2.9)
|
|
2.7
|
|
88.2
|
|
|
Various
|
|
(2.3)
|
|
1.5
|
|
85.6
|
|
|
Total Equity Investments
|
|
$
|
(32.9)
|
|
$
|
28.6
|
|
$
|
515.7
|
|
|
|
|
$
|
(31.8)
|
|
$
|
26.8
|
|
$
|
526.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021
|
|
Six Months Ended June 30, 2020
|
|
|
Percentage Ownership
|
Distributions Received
|
Income from EMI
|
Carrying Value
|
|
Percentage Ownership
|
Distributions Received
|
Income from EMI
|
Carrying Value
|
|
Mars
|
28.5%
|
$
|
(23.1)
|
|
$
|
22.1
|
|
$
|
53.1
|
|
|
28.5%
|
$
|
(26.7)
|
|
$
|
24.1
|
|
$
|
54.3
|
|
|
Caesar
|
56.0%
|
(9.2)
|
|
8.0
|
|
115.3
|
|
|
56.0%
|
(8.3)
|
|
8.2
|
|
117.3
|
|
|
Cleopatra
|
53.0%
|
(4.2)
|
|
3.0
|
|
113.1
|
|
|
53.0%
|
(5.3)
|
|
3.2
|
|
115.5
|
|
|
Proteus
|
65.0%
|
(8.1)
|
|
7.1
|
|
67.4
|
|
|
65.0%
|
(10.7)
|
|
7.7
|
|
72.3
|
|
|
Endymion
|
65.0%
|
(14.6)
|
|
13.9
|
|
78.6
|
|
|
65.0%
|
(10.7)
|
|
11.2
|
|
81.5
|
|
|
Others(1)
|
Various
|
(3.9)
|
|
4.8
|
|
88.2
|
|
|
Various
|
(4.3)
|
|
3.7
|
|
85.6
|
|
|
Total Equity Investments
|
|
$
|
(63.1)
|
|
$
|
58.9
|
|
$
|
515.7
|
|
|
|
$
|
(66.0)
|
|
$
|
58.1
|
|
$
|
526.5
|
|
(1) Includes ownership in Ursa (22.7%) and KM Phoenix (25%).
The following table presents aggregated selected income statement data for equity method investments on a 100% basis for the three and six months ended June 30, 2021 and 2020:
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
|
Statement of operations
|
|
|
|
|
|
Revenue
|
|
$
|
128.7
|
|
|
$
|
127.0
|
|
|
Operating expenses
|
|
56.2
|
|
|
57.1
|
|
|
Net income
|
|
72.6
|
|
|
70.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
|
Statement of operations
|
|
|
|
|
|
Revenue
|
|
$
|
262.7
|
|
|
$
|
271.6
|
|
|
Operating expenses
|
|
113.6
|
|
|
121.4
|
|
|
Net income
|
|
149.2
|
|
|
150.5
|
|
4. Property, Plant and Equipment
Property, plant and equipment consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
Land
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
Rights-of-way assets
|
|
1.4
|
|
|
1.4
|
|
|
Buildings and improvements
|
|
6.9
|
|
|
6.9
|
|
|
Pipelines and equipment
|
|
95.5
|
|
|
95.3
|
|
|
Other
|
|
0.9
|
|
|
0.8
|
|
|
Construction in progress
|
|
15.0
|
|
|
7.1
|
|
|
Property, plant and equipment
|
|
119.9
|
|
|
111.7
|
|
|
Less: Accumulated depreciation
|
|
(45.1)
|
|
|
(43.8)
|
|
|
Property, plant and equipment, net
|
|
$
|
74.8
|
|
|
$
|
67.9
|
|
There were no impairments on property, plant and equipment for the three and six months ended June 30, 2021 and 2020.
5. Other Current Liabilities
Other current liabilities consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
Accrued capital expenditures
|
|
$
|
5.1
|
|
|
$
|
4.1
|
|
|
Accrued interest payable – related parties
|
|
0.8
|
|
|
0.9
|
|
|
Current portion of environmental remediation obligation
|
|
0.5
|
|
|
0.4
|
|
|
Current portion of lease liabilities
|
|
0.1
|
|
|
0.1
|
|
|
Accrued liabilities
|
|
1.7
|
|
|
2.3
|
|
|
Other current liabilities
|
|
$
|
8.2
|
|
|
$
|
7.8
|
|
6. Debt
On February 24, 2020, we entered into a $468 million Term Loan Facility Agreement ("term loan") with an affiliate of BP. On March 13, 2020, proceeds were used to repay outstanding borrowings under the existing credit facility ("credit facility"). Refer to Note 9 - Debt in the Partnership's 2020 10-K for additional information. The term loan has a final repayment date of February 24, 2025, and provides for certain covenants, including the requirement to maintain a consolidated leverage ratio,
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
which is calculated as total indebtedness to consolidated EBITDA, not to exceed 5.0 to 1.0, subject to a temporary increase in such ratio to 5.5 to 1.0 in connection with certain material acquisitions. Simultaneous with this transaction, we entered into a First Amendment to Short Term Credit Facility Agreement whereby the lender added a provision that indebtedness under both the term loan and the credit facility shall not exceed $600 million. All other terms of the credit facility remain the same.
As of June 30, 2021, the Partnership was in compliance with the covenants contained in the term loan facility and the credit facility. There were $468 million of outstanding borrowings under the term loan at June 30, 2021 and December 31, 2020. Interest charges and fees were $1.1 million and $2.2 million for the three and six months ended June 30, 2021, respectively. Interest charges and fees were $2.0 million and $5.6 million for the three and six months ended June 30, 2020, respectively.
Indebtedness under the term loan bears interest at the 3-month LIBOR plus 0.73%. For the three and six months ended June 30, 2021, the weighted average interest rates for our long-term debt were 0.92% and 0.93%, respectively. For the three and six months ended June 30, 2020, the weighted average interest rates for our long-term debt were 1.69% and 2.28%, respectively.
7. Related Party Transactions
Related party transactions include transactions with our Parent and its affiliates, including those entities in which our Parent has an ownership interest but over which it does not have control. In addition to the MVC and FLA arrangements discussed in Note 2 - Revenue Recognition and the credit facility and term loan in Note 6 - Debt, we have entered into the following transactions with related parties:
Omnibus Agreement
The Partnership has entered into an omnibus agreement with BP Pipelines and certain of its affiliates, including BP Midstream Partners GP LLC (our "General Partner"). This agreement addresses, among other things, (i) the Partnership's obligation to pay an annual fee for general and administrative services provided by BP Pipelines and its affiliates, (ii) the Partnership's obligation to reimburse BP Pipelines for personnel and other costs related to the direct operation, management and maintenance of the assets and (iii) the Partnership's obligation to reimburse BP Pipelines for services and certain direct or allocated costs and expenses incurred by BP Pipelines or its affiliates on behalf of the Partnership.
BP Pipelines will indemnify us for all known and certain unknown environmental liabilities that are associated with the ownership or operation of Partnership assets and due to occurrences on or before October 30, 2017, subject to certain limitations. Specifically, under our omnibus agreement, indemnification for any unknown environmental liabilities was limited to liabilities due to occurrences on or before October 30, 2017, which were identified prior to October 30, 2020. We continue to maintain indemnification by our General Partner for matters previously discovered. To the extent that unknown environmental liabilities arise relating to prior ownership, the Partnership will be liable.
Further, the omnibus agreement addresses the granting of a license from BPA to the Partnership with respect to use of certain BP trademarks and trade name.
Related Party Revenue
We provide crude oil, refined products and diluent transportation services to related parties and generate revenue through published tariffs. We have commercial arrangements with BP Products that include MVCs. Refer to Note 10 - Related Party Transactions in the Partnership's 2020 10-K for additional information regarding these agreements.
Revenue from related parties was $28.5 million and $57.3 million for the three and six months ended June 30, 2021, respectively, and $30.7 million and $60.4 million for the three and six months ended June 30, 2020, respectively.
We recognized no deficiency revenue under the throughput and deficiency agreements with BP Products for the three and six months ended June 30, 2021. We recognized $6.0 million deficiency revenue for the three and six months ended June 30, 2020. The Partnership recorded $2.3 million and $1.8 million in Deferred revenues and credits on the condensed consolidated balance sheets at June 30, 2021 and December 31, 2020, respectively.
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
Related Party Expenses
All employees performing services on behalf of Partnership operations are employees of our Parent. Our Parent also procures insurance policies on our behalf and performs certain general corporate functions for us related to finance, accounting, treasury, legal, information technology, human resources, shared services, government affairs, insurance, health, safety, security, employee benefits, incentives, severance and environmental functional support. Personnel and operating costs incurred by our Parent on our behalf are included in either Operating expenses – related parties or General and administrative – related parties in the condensed consolidated statements of operations, depending on the nature of the service provided.
We paid our Parent an annual fee of $14.0 million in 2020 in the form of monthly installments under the omnibus agreement for general and administrative services provided by our Parent and its affiliates. The annual fee was adjusted to $15.5 million per year, payable in equal monthly installments, beginning on January 1, 2021. We also reimburse our Parent for personnel and other costs related to the direct operation, management and maintenance of the assets and services and certain direct or allocated costs and expenses incurred by our Parent or its affiliates on our behalf pursuant to the terms in the omnibus agreement.
For the three and six months ended June 30, 2021 and 2020, we recorded the following amounts for related party expenses, which also included the expenses related to share-based compensation discussed below:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Operating expenses—related parties
|
|
$
|
1.4
|
|
|
$
|
1.3
|
|
|
$
|
2.6
|
|
|
$
|
2.8
|
|
|
Maintenance expenses—related parties
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
General and administrative—related parties
|
|
3.9
|
|
|
3.6
|
|
|
7.9
|
|
|
7.5
|
|
|
Total costs and expenses—related parties
|
|
$
|
5.4
|
|
|
$
|
5.0
|
|
|
$
|
10.6
|
|
|
$
|
10.5
|
|
Share-based Compensation
Our Parent operates share option plans and equity-settled employee share plans. These plans typically have a three-year performance or restricted period during which the units accrue net notional dividends, which are treated as having been reinvested. Leaving employment will normally preclude the conversion of units into shares, but special arrangements apply for participants that leave for qualifying reasons.
Share-based compensation related to the employees of our Parent who provide services to us is charged to the Partnership pursuant to the terms of the omnibus agreement. The Partnership also issued its own unit-based compensation under a long-term incentive plan. Refer to Note 11 - Unit-Based Compensation.
Non-controlling Interests
Non-controlling interests consist of the 35% ownership interest in Mardi Gras held by our Parent at June 30, 2021 and 2020. Net income attributable to non-controlling interests is the product of the non-controlling interests ownership percentage and the net income of Mardi Gras. We report Non-controlling interests as a separate component of equity on the condensed consolidated balance sheets and Net income attributable to non-controlling interests on the condensed consolidated statements of operations.
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
8. Net Income Per Limited Partner Unit
The following table details the distributions declared and/or paid for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Date Paid or
to be Paid
|
General Partner
|
Limited Partners' Common Units
|
Limited Partners' Subordinated Units
|
Total
|
Distributions per Limited Partner Unit (in dollars)
|
|
December 31, 2019
|
February 13, 2020
|
$
|
1.2
|
|
$
|
18.2
|
|
$
|
18.2
|
|
$
|
37.6
|
|
$
|
0.3475
|
|
|
March 31, 2020
|
May 14, 2020
|
1.2
|
|
18.2
|
|
18.2
|
|
37.6
|
|
0.3475
|
|
|
June 30, 2020
|
August 13, 2020
|
1.2
|
|
18.2
|
|
18.2
|
|
37.6
|
|
0.3475
|
|
|
December 31, 2020
|
February 11, 2021
|
1.2
|
|
18.2
|
|
18.2
|
|
37.6
|
|
0.3475
|
|
|
March 31, 2021
|
May 13, 2021
|
1.2
|
|
36.4
|
|
—
|
|
37.6
|
|
0.3475
|
|
|
June 30, 2021
|
August 12, 2021
|
1.2
|
|
36.4
|
|
—
|
|
37.6
|
|
0.3475
|
|
Earnings in excess of distributions are allocated to the limited partners based on their respective percentage interests. Payments made to the Partnership’s unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per unit.
In addition to the common and subordinated units, the Partnership also identified the incentive distribution rights ("IDRs") currently held by the General Partner as a participating security and uses the two-class method when calculating the net income per unit applicable to limited partners that is based on the weighted-average number of common units outstanding during the period.
Following the payment of the distribution on February 11, 2021, the financial tests required for the conversion of our subordinated units were satisfied under the terms of our partnership agreement. As a result, on February 12, 2021, all of the Partnership's subordinated units were converted into common units on a one-for-one basis and the subordination period was terminated. Following the conversion, we continue to use the two-class method when calculating the net income per unit applicable to limited partners. The remaining classes of participating securities are common units and IDRs.
When calculating basic earnings per unit under the two-class method for a master limited partnership, net income for the current reporting period is reduced by the amount of available cash that will be distributed to the General Partner and limited partners for that reporting period. The following tables show the allocation of net income to arrive at net income per limited partner unit for the three and six months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net income attributable to the Partnership
|
$
|
40.5
|
|
|
$
|
40.6
|
|
|
$
|
82.5
|
|
|
$
|
82.3
|
|
|
Less:
|
|
|
|
|
|
|
|
|
Incentive distribution rights currently held by the General Partner
|
1.2
|
|
|
1.2
|
|
|
2.4
|
|
|
2.4
|
|
|
Limited partners' distribution declared on common units
|
36.4
|
|
|
18.2
|
|
|
72.8
|
|
|
36.4
|
|
|
Limited partners' distribution declared on subordinated units
|
—
|
|
|
18.2
|
|
|
—
|
|
|
36.4
|
|
|
Net income attributable to the Partnership in excess of distributions
|
$
|
2.9
|
|
|
$
|
3.0
|
|
|
$
|
7.3
|
|
|
$
|
7.1
|
|
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021
|
|
|
|
|
General Partner
|
|
Limited Partners' Common Units
|
|
Limited Partners' Subordinated Units
|
|
Total
|
|
Distributions declared
|
|
$
|
1.2
|
|
|
$
|
36.4
|
|
|
$
|
—
|
|
|
$
|
37.6
|
|
|
Net income attributable to the Partnership in excess of distributions
|
—
|
|
|
2.9
|
|
|
—
|
|
|
2.9
|
|
|
Net income attributable to the Partnership
|
$
|
1.2
|
|
|
$
|
39.3
|
|
|
$
|
—
|
|
|
$
|
40.5
|
|
|
Weighted average units outstanding:
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
104.8
|
|
|
—
|
|
|
|
|
Net income per limited partner unit (in dollars):
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
$
|
0.37
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021
|
|
|
|
|
General Partner
|
|
Limited Partners' Common Units
|
|
Limited Partners' Subordinated Units
|
|
Total
|
|
Distributions declared
|
|
$
|
2.4
|
|
|
$
|
72.8
|
|
|
$
|
—
|
|
|
$
|
75.2
|
|
|
Net income attributable to the Partnership in excess of distributions
|
—
|
|
|
(2.2)
|
|
|
9.5
|
|
|
7.3
|
|
|
Net income attributable to the Partnership
|
$
|
2.4
|
|
|
$
|
70.6
|
|
|
$
|
9.5
|
|
|
$
|
82.5
|
|
|
Weighted average units outstanding:
|
|
|
|
|
|
|
|
|
Basic and Diluted(1)
|
|
|
|
92.6
|
|
|
52.4
|
|
|
|
|
Net income per limited partner unit (in dollars):
|
|
|
|
|
|
|
|
|
Basic and Diluted(1)
|
|
|
|
$
|
0.76
|
|
|
$
|
0.18
|
|
|
|
(1)The 52.4 million weighted average subordinated units outstanding and $0.18 net income per limited partner unit have been calculated only for the period prior to conversion. All of the subordinated units were converted into common units on February 12, 2021.
On April 15, 2021, the Partnership declared a cash distribution of $0.3475 per limited partner unit to unitholders of record on April 29, 2021, for the three months ended March 31, 2021. All of the subordinated units were converted into common units on February 12, 2021. As a result, on the date of record, there were no subordinated units outstanding, and therefore, no portion of the cash distribution was allocated to the limited partners' subordinated units. However, pursuant to the requirements of the two-class method, and as stated above, the net income per unit amount applicable to the subordinated units has been calculated for the period of time the units were outstanding prior to their conversion.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020
|
|
|
|
|
General Partner
|
|
Limited Partners' Common Units
|
|
Limited Partners' Subordinated Units
|
|
Total
|
|
Distributions declared
|
|
$
|
1.2
|
|
|
$
|
18.2
|
|
|
$
|
18.2
|
|
|
$
|
37.6
|
|
|
Net income attributable to the Partnership in excess of distributions
|
—
|
|
|
1.5
|
|
|
1.5
|
|
|
3.0
|
|
|
Net income attributable to the Partnership
|
$
|
1.2
|
|
|
$
|
19.7
|
|
|
$
|
19.7
|
|
|
$
|
40.6
|
|
|
Weighted average units outstanding:
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
52.4
|
|
|
52.4
|
|
|
|
|
Net income per limited partner unit (in dollars):
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
$
|
0.38
|
|
|
$
|
0.38
|
|
|
|
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020
|
|
|
|
|
General Partner
|
|
Limited Partners' Common Units
|
|
Limited Partners' Subordinated Units
|
|
Total
|
|
Distributions declared
|
|
$
|
2.4
|
|
|
$
|
36.4
|
|
|
$
|
36.4
|
|
|
$
|
75.2
|
|
|
Net income attributable to the Partnership in excess of distributions
|
—
|
|
|
3.6
|
|
|
3.5
|
|
|
7.1
|
|
|
Net income attributable to the Partnership
|
$
|
2.4
|
|
|
$
|
40.0
|
|
|
$
|
39.9
|
|
|
$
|
82.3
|
|
|
Weighted average units outstanding:
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
52.4
|
|
|
52.4
|
|
|
|
|
Net income per limited partner unit (in dollars):
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
$
|
0.77
|
|
|
$
|
0.77
|
|
|
|
Distributions declared to BP Holdco for the three and six months ended June 30, 2021 totaled $21.0 million and $42.0 million, respectively; including $1.2 million and $2.4 million, respectively, for IDRs distributed to our Parent in respect of its ownership of our common units and IDRs.
Distributions declared to BP Holdco for the three and six months ended June 30, 2020 totaled $21.0 million and $42.0 million, respectively; including $1.2 million and $2.4 million, respectively, for IDRs distributed to our Parent in respect of its ownership of our common units, subordinated units and IDRs.
9. Fair Value Measurements
The carrying amounts of accounts receivable, other current assets, accounts payable, and other current liabilities approximate their fair values due to their short-term nature.
The carrying value of borrowings under the term loan as of June 30, 2021 and December 31, 2020 approximate fair value as the interest rates are reflective of market rates.
10. Commitments and Contingencies
Legal Proceedings
The Partnership is a party to ongoing legal proceedings in the ordinary course of business. For each outstanding legal matter, if any, we will evaluate the merits of the case, exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. While the outcome of these proceedings cannot be predicted with certainty, we do not believe the results of these proceedings, individually or in the aggregate, will have a material adverse effect on the Partnership's business, financial condition, results of operations or liquidity.
Indemnification
Under our omnibus agreement, our Parent will indemnify us for certain environmental liabilities, litigation and other matters attributable to the ownership or operation of our assets prior to our ownership. For the purposes of determining the indemnified amount of any loss suffered or incurred by the Partnership, the Partnership’s ownership of 28.5% in Mars, and 65% in Mardi Gras, and Mardi Gras’ 56% ownership in Caesar, 53% ownership in Cleopatra, 65% ownership in Endymion and 65% ownership in Proteus will be considered. Indemnification for certain identified environmental liabilities is subject to a cap of $25 million without any deductible. Other matters covered by the omnibus agreement are subject to a cap of $15.0 million and an aggregate deductible of $0.5 million before we are entitled to indemnification. Indemnification for any unknown environmental liabilities was limited to liabilities due to occurrences on or before October 30, 2017, which were identified prior to October 30, 2020. We continue to maintain indemnification by our General Partner for matters previously discovered. To the extent that unknown environmental liabilities arise relating to prior ownership, the Partnership will be liable.
The Interest Purchase Agreement contains customary representations, warranties and covenants of our Parent and the Partnership. Our Parent, on the one hand, and the Partnership, on the other hand, have agreed to indemnify each other and their respective affiliates, officers, directors and other representatives against certain losses, including those resulting from any
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
breach of their representations, warranties or covenants contained in the Interest Purchase Agreement, subject to certain limitations and survival periods. This agreement covers the Partnership’s ownership of 22.7% in Ursa and 25% in KM Phoenix.
Environmental Matters
We are subject to federal, state, and local environmental laws and regulations. We record provisions for environmental liabilities based on management’s best estimates, using all information that is available at the time. In making environmental liability estimations, we consider the material effect of environmental compliance, pending legal actions against us and potential third-party liability claims. Often, as the remediation evaluation and effort progress, additional information is obtained, requiring revisions to estimated costs. We are indemnified by our Parent under the omnibus agreement against environmental cleanup costs for incidents that occurred prior to Partnership ownership. Revisions to the estimated environmental liability for conditions that are not indemnified under the omnibus agreement with our Parent are reflected in the Partnership's condensed consolidated statements of operations in the year in which they are probable and reasonably estimable.
We accrued $3.5 million and $3.4 million for environmental liabilities at June 30, 2021 and December 31, 2020, respectively. These balances are broken down on the condensed consolidated balance sheets as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet location
|
June 30, 2021
|
December 31, 2020
|
|
Current portion of environmental remediation obligations
|
Other current liabilities
|
$
|
0.5
|
|
$
|
0.4
|
|
|
Long-term portion of environmental remediation obligations
|
Other liabilities
|
3.0
|
|
3.0
|
|
|
Total
|
|
$
|
3.5
|
|
$
|
3.4
|
|
The balances are related to incidents that occurred prior to our ownership and are entirely indemnified by our Parent. As a result, we recorded corresponding indemnification assets $3.5 million and $3.4 million at June 30, 2021 and December 31, 2020, respectively. These balances are broken down on the condensed consolidated balance sheets as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet location
|
June 30, 2021
|
December 31, 2020
|
|
Current portion of indemnification assets
|
Other current assets
|
$
|
0.5
|
|
$
|
0.4
|
|
|
Non-current portion of indemnification assets
|
Other assets
|
3.0
|
|
3.0
|
|
|
Total
|
|
$
|
3.5
|
|
$
|
3.4
|
|
Griffith Station Incident
On June 13, 2019, a building fire occurred at the Griffith Station on BP2. Management performed an evaluation of the assets and determined that an impairment was required. We have incurred $0.1 million and $0.2 million for response expense during the three and six months ended June 30, 2021 and 2020, respectively. Reimbursable costs associated with the incident are offset with an insurance receivable, of which $2.5 million is outstanding under "Other current assets" on our condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020. In the event that insurance proceeds exceed the receivable balance, such amounts would be recognized as a gain. Refer to Note 13 - Commitments and Contingencies in the Partnership's 2020 10-K for additional information.
11. Unit-Based Compensation
Long-Term Incentive Plan
On October 26, 2017, the General Partner adopted the BP Midstream Partners LP 2017 Long Term Incentive Plan (the “LTIP”). Awards under the LTIP are available for eligible officers, directors, employees and consultants of the General Partner and its affiliates, who perform services for the Partnership. The LTIP allows the Partnership to grant unit options, unit appreciation rights, restricted units, phantom units, unit awards, cash awards, performance awards, distribution equivalent rights, substitute awards and other unit-based awards. The maximum aggregate number of common units that may be issued pursuant to the awards granted under the LTIP shall not exceed 5,502,271, subject to proportionate adjustment in the event of unit splits and similar events.
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
Unit-Based Awards under the LTIP
The following is a summary of phantom unit award activities of the Partnership’s common units for the six months ended June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phantom Units
|
|
|
Number of Units (in units)
|
|
Weighted Average Grant Date Fair Value per Unit (in dollars)
|
|
Outstanding at December 31, 2020
|
16,038
|
|
|
$
|
14.03
|
|
|
Granted
|
18,534
|
|
|
12.00
|
|
|
Vested
|
(16,038)
|
|
|
14.03
|
|
|
|
|
|
|
|
Outstanding at June 30, 2021
|
18,534
|
|
|
$
|
12.00
|
|
For the three and six months ended June 30, 2021, total compensation expense recognized for phantom unit awards were approximately $56 thousand and $111 thousand, respectively. For the three and six months ended June 30, 2020, total compensation expense recognized for phantom unit awards was approximately $56 thousand and $119 thousand, respectively. The unrecognized compensation cost related to phantom unit awards was approximately $146 thousand at June 30, 2021, which is expected to be recognized over a weighted average period of 0.7 years.
12. Variable Interest Entity
Mardi Gras is a Delaware limited liability company and a pass-through entity for U.S. federal and state income tax purposes. Mardi Gras holds equity interests in the Mardi Gras Joint Ventures and accounts for them as equity method investments. Mardi Gras does not have any other operations or activities. The remaining interests in each of the Mardi Gras Joint Ventures are owned by unaffiliated third-party investors. Each of the Mardi Gras Joint Ventures is managed by its respective management committee, and decisions made by these management committees require approval of two or more members that are not affiliates with equity interest holdings meeting certain thresholds.
We have 65% ownership interest and 100% managing member interest in Mardi Gras. The remainder of the economic interest in Mardi Gras was held 34% by BP Pipelines and 1% by an affiliate of BP. Through our managing member interest in Mardi Gras, we have the right to vote 100% of Mardi Gras’ interest in each of the Mardi Gras Joint Ventures. We determined that Mardi Gras is a variable interest entity because (i) we hold disproportional voting rights as compared to our economic interest in Mardi Gras, and (ii) substantially all of Mardi Gras’ activities involve or are conducted on behalf of our Parent, which holds disproportionately few voting rights.
The managing member interest in Mardi Gras provides us with the unilateral power to direct the activities of Mardi Gras that most significantly impact its economic performance including the right to exercise the voting rights of BP for each of the Mardi Gras Joint Ventures. In addition, our obligations to absorb the expected losses of and the right to receive the residual returns from Mardi Gras relative to our economic ownership is significant to Mardi Gras. As a result, we are the primary beneficiary of Mardi Gras and consolidate Mardi Gras.
We have the obligation to provide financial support to Mardi Gras if all members unanimously determine that additional capital contributions are necessary to fund Mardi Gras’ operations. The assets of Mardi Gras can only be used to satisfy its own obligations, which were zero at June 30, 2021 and December 31, 2020. Under the current limited liability company agreement of Mardi Gras, creditors of Mardi Gras, if any, do not have any recourse to the general credit of the Partnership.
The financial position of Mardi Gras at June 30, 2021 and December 31, 2020, its financial performance for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020, as reflected in the condensed consolidated financial statements, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
Balance sheet
|
|
|
|
|
Equity method investments
|
$
|
374.4
|
|
|
$
|
378.5
|
|
|
Non-controlling interests
|
131.0
|
|
|
132.5
|
|
BP MIDSTREAM PARTNERS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in millions of dollars, unless otherwise indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Statement of operations
|
|
|
|
|
|
|
|
|
Income from equity method investments
|
$
|
15.6
|
|
|
$
|
13.7
|
|
|
$
|
32.0
|
|
|
$
|
30.3
|
|
|
Less: Net income attributable to non-controlling interests
|
5.4
|
|
|
4.8
|
|
|
11.2
|
|
|
10.6
|
|
|
Net impact on Net income attributable to the Partnership
|
$
|
10.2
|
|
|
$
|
8.9
|
|
|
$
|
20.8
|
|
|
$
|
19.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2021
|
|
2020
|
|
Statement of cash flows
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
Distributions of earnings received from equity method investments
|
$
|
31.9
|
|
|
$
|
29.8
|
|
|
Cash flows from investing activities
|
|
|
|
|
Distribution in excess of earnings from equity method investments
|
4.2
|
|
|
5.2
|
|
|
Cash flows from financing activities
|
|
|
|
|
Distributions to non-controlling interests
|
(12.7)
|
|
|
(12.2)
|
|
|
Net change on the Partnership's cash and cash equivalents
|
$
|
23.4
|
|
|
$
|
22.8
|
|
13. Subsequent Events
We have evaluated subsequent events through the issuance of these condensed consolidated financial statements. Based on this evaluation, it was determined that no subsequent events occurred, other than the items noted below, that require recognition or disclosure in the condensed consolidated financial statements.
Distribution
On July 15, 2021, we declared a cash distribution of $0.3475 per limited partner unit to unitholders of record on July 29, 2021, for the three months ended June 30, 2021. The distribution, combined with distributions to our General Partner, will be paid on August 12, 2021, and will total $37.6 million, with $16.6 million distributed to our non-affiliated common unitholders, and $21.0 million, including $1.2 million for IDRs distributed to our Parent in respect of its ownership of our common units and IDRs.
Take Private Proposal
On August 4, 2021, the board of directors of our General Partner received a non-binding preliminary proposal letter from BP Pipelines, through its wholly-owned subsidiary BP Midstream Partners Holdings LLC, to acquire all of our outstanding common units not already owned by BP Pipelines or its affiliates at a to be determined fixed exchange ratio at a value of $13.01 per each issued and outstanding publicly held common unit of the Partnership payable in newly-issued American Depositary Receipts ("ADRs") of BP p.l.c. (the "Proposal"). The exchange ratio will be determined based on a 30-day volume weighted average closing price of ADRs of BP p.l.c. as of the day immediately preceding the signing of a merger agreement. The board of directors will appoint a conflicts committee to review, evaluate and negotiate the Proposal.
The proposed transaction is subject to a number of contingencies, including the approval of the conflicts committee of the board of directors, and the satisfaction of any conditions to the consummation of a transaction set forth in any definitive agreement concerning the transaction. There can be no assurance that definitive documentation will be executed or that any transaction will materialize on the terms described above or at all.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q (the “Quarterly Report”) includes various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). All statements other than statements of historical fact included in this Quarterly Report, regarding the Partnership's strategy, future growth, future operations, future actions, the continued effects of the global coronavirus disease (“COVID-19”) pandemic on demand, the effects of the continued volatility of commodity prices and the related macroeconomic and political environment, volumes, capital requirements, conditions or events, future operating results or the ability to generate sales, our potential exposure to market risks, statements relating to the expected amount of cash available for distribution and level of distributions, financial position, estimated revenues and losses, projected cost, prospects, plans and objectives of management, are forward-looking statements.
When used in this Quarterly Report, you can identify our forward-looking statements by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “plan,” “predict,” “project,” “seek,” “target,” “could,” “may,” “should,” “would” or other similar expressions that convey the uncertainty of future events or outcomes, although not all forward-looking statements contain such identifying words. When considering forward-looking statements, you should carefully consider the risk factors and other cautionary statements described under the heading “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2020, under Part II, Item 1A of our Quarterly Reports and other cautionary statements contained in this filing.
We base forward-looking statements on our current expectations and assumptions about future events and currently available information as to the outcome and timing of future events. We caution you that these statements are not guarantees of future performance as they involved assumptions that, while made in good faith, may prove to be incorrect, and involve risks and uncertainties we cannot predict. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecast in the forward-looking statements.
Forward-looking statements may include statements about:
•A decline in global crude oil demand and crude oil prices for an uncertain period of time and the potential resulting significant reduction of domestic crude oil and natural gas production and significant declines in the actual or expected volumes transported through our pipelines and/or the reduction of commercial opportunities that might otherwise be available to us.
•Uncertainty regarding the easing of restrictions on various commercial, social and economic activities by applicable authorities, as well as the potential reinstatement of such restrictions, in response to the spread of COVID-19.
•Uncertainty regarding the timing, pace and extent of an economic recovery in the United States and elsewhere, which in turn will likely affect demand for crude oil and therefore the demand for the midstream services we provide and the commercial opportunities available to us.
•The impact of current or future actions or expectations of governments, investors, financial markets, or other stakeholders regarding our environmental, social and governance ("ESG") profile or of any actions we may take or goals we may establish regarding such profile and our related business strategy.
•The possibility of cybersecurity breaches and other disruptions or failures of our information systems.
•The impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations, including increased focus by the federal and state governments to develop renewable energy and climate-related policies.
•Our inability to perform our obligations under our contracts, whether due to non-performance by third parties, including our customers or counterparties, market constraints, third-party constraints, legal constraints (including governmental orders or guidance), or other factors.
•The continued ability of BP and any non-affiliate customers to satisfy their obligations under commercial and other agreements and the impact of lower market prices for crude oil, natural gas, refined products and diluent including the ability to satisfy such obligations as they may be impacted by the effects of COVID-19.
•The volume of crude oil, natural gas, refined products and diluent we transport or store and the prices that we can charge our customers.
•The tariff rates with respect to volumes that we transport through our regulated assets, which rates are subject to review and possible adjustment imposed by federal and state regulators.
•Changes in revenue that we realized under the fixed loss allowance provisions fees and tariffs resulting from changes in underlying commodity prices.
•Fluctuations in the prices for crude oil, natural gas, refined products and diluent.
•The level of onshore and offshore production and demand for crude oil, natural gas, refined products and diluent.
•Our ability to successfully integrate any future assets acquisitions and realize the anticipated benefits of such acquisitions.
•Changes in global economic conditions and the effects of a global economic downturn on the business of BP and the business of its suppliers, customers, business partners and credit lenders.
•Liabilities associated with the risks and operational hazards inherent in transporting and/or storing crude oil, natural gas, refined products and diluent.
•The impact of hurricanes and other severe weather disruptions to our offshore pipelines in the Gulf of Mexico.
•Curtailment of operations or expansion projects due to unexpected leaks or spills; severe weather disruption; riots, strikes, lockouts or other industrial disturbances; or failure of information technology systems due to various causes, including unauthorized access or attack.
•Costs or liabilities associated with federal, state and local laws and regulations relating to environmental protection and safety, including spills, releases and pipeline integrity.
•Costs associated with compliance with evolving environmental laws and regulations on climate change.
•Costs associated with compliance with safety regulations and system maintenance programs, including pipeline integrity management program testing and related repairs.
•Changes in tax status.
•Changes in the cost or availability of third-party vessels, pipelines, rail cars and other means of delivering and transporting crude oil, natural gas, refined products and diluent.
•Direct or indirect effects on our operations resulting from actual or threatened terrorist incidents or acts of war.
•Changes in, and availability to us of the equity and debt capital markets.
Many of the foregoing risks and uncertainties may continue to be exacerbated by the COVID-19 pandemic and any consequent worsening of the global business and economic environment. New factors emerge from time to time, and it is not possible for us to predict all such factors. Should one or more of the risks or uncertainties described in this Quarterly Report occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements.
All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Partnership or persons acting on the Partnership's behalf may issue.
Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.