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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-31219
SUNOCO LOGISTICS PARTNERS L.P.
(Exact name of registrant as specified in its charter)
Delaware 23-3096839
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1818 Market Street, Suite 1500, Philadelphia, PA 19103
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (866) 248-4344
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Units representing limited partnership interests New York Stock Exchange
Senior Notes 6.125%, due May 15, 2016 New York Stock Exchange
Senior Notes 5.50%, due February 15, 2020 New York Stock Exchange
Senior Notes 4.65%, due February 15, 2022 New York Stock Exchange
Senior Notes 3.45%, due January 15, 2023 New York Stock Exchange
Senior Notes 4.25%, due April 1, 2024 New York Stock Exchange
Senior Notes 6.85%, due February 15, 2040 New York Stock Exchange
Senior Notes 6.10%, due February 15, 2042 New York Stock Exchange
Senior Notes 4.95%, due January 15, 2043 New York Stock Exchange
Senior Notes 5.30%, due April 1, 2044 New York Stock Exchange
Senior Notes 5.35%, due May 15, 2045 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of
this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of "large accelerated filer," "accelerated filer," "non-accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The aggregate value of the Common Units held by non-affiliates of the registrant (treating all executive officers and directors of the registrant and holders
of 10 percent or more of the Common Units outstanding (including the General Partner of the registrant, Sunoco Partners LLC, as if they may be affiliates of
the registrant)) was $6.7 billion as of June 30, 2014, based on $47.11 per unit, the closing price of the Common Units as reported on the New York Stock
Exchange on that date. At February 25, 2015, the number of the registrant’s Common Units outstanding were 229,588,587.
DOCUMENTS INCORPORATED BY REFERENCE: NONE

Table of contents

  • Page 1
    ... file number 1-31219 to SUNOCO LOGISTICS PARTNERS L.P. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 23-3096839 (I.R.S. Employer Identification No.) 1818 Market Street, Suite 1500, Philadelphia, PA 19103 (Address...

  • Page 2
    ... CORPORATE GOVERNANCE EXECUTIVE COMPENSATION SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SECURITYHOLDER MATTERS CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE PRINCIPAL ACCOUNTING FEES AND SERVICES EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

  • Page 3
    ... we buy and sell; An increase in the competition encountered by our terminals, pipelines, and crude oil, refined products and NGLs acquisition and marketing operations; Changes in the financial condition or operating results of joint ventures or other holdings in which we have an equity ownership...

  • Page 4
    ... of crude oil, refined products, and natural gas liquids ("NGLs"). The principal executive offices of Sunoco Partners LLC, our general partner, are located at 1818 Market Street, Suite 1500, Philadelphia, Pennsylvania 19103 (telephone (866) 248-4344). Our website address is www.sunocologistics.com...

  • Page 5
    ... purchasers of crude oil from producers in the state, and our crude oil acquisition and marketing business is the primary shipper on our Oklahoma system. In December 2014, we acquired an additional 28.3 percent ownership interest in the West Texas Gulf Pipe Line Company ("West Texas Gulf") from...

  • Page 6
    ...and trading locations; storing inventory during contango market conditions (when the price of crude oil for future delivery is higher than current prices); buying and selling crude oil of different grades, at different locations in order to maximize value; transporting crude oil on our pipelines and...

  • Page 7
    ...enter into exchanges to acquire crude oil of a desired quality in exchange for a common grade crude oil or to acquire crude oil at locations that are closer to our end markets, thereby reducing transportation costs. Generally, we enter into contracts with producers at market prices for a term of one...

  • Page 8
    ... United States with the majority located on our pipeline systems. Approximately 500 crude oil truck drivers are employed by an affiliate of our general partner and we own and operate a proprietary fleet of approximately 335 crude oil transport trucks. The crude oil truck drivers pick up crude oil at...

  • Page 9
    ... of prices. Nederland Terminal The Nederland Terminal, located on the Sabine-Neches waterway between Beaumont and Port Arthur, Texas, is a large marine terminal providing storage and distribution services for refiners and other large transporters of crude oil and NGLs. The terminal receives, stores...

  • Page 10
    ... via our pipelines. The table below summarizes the average daily number of barrels of crude oil and refined products delivered to the Philadelphia refinery from the Fort Mifflin Terminal Complex in each of the years presented: Year Ended December 31, 2014 2013 (in thousands of bpd) 2012 Crude oil...

  • Page 11
    ... based on throughput, blending services and storage for clean products and dark oils. The table below summarizes the total average daily throughput for the Eagle Point Terminal in each of the years presented: Year Ended December 31, 2014 2013 (in thousands of bpd) 2012 Crude oil throughput Refined...

  • Page 12
    ... Pipe Line Company (4) (1) 13.3% 14.0% 17.1% 31.5% 1,850 700 650 700 (2) (3) (4) The system, which is operated by Explorer employees, originates from the refining centers of Beaumont, Port Arthur and Houston, Texas, and extends to Chicago, Illinois, with delivery points in the Houston, Dallas...

  • Page 13
    ... and Terminal Control Operations Almost all of our pipelines are operated via satellite, microwave, and frame relay communication systems from central control rooms located in Sugar Land, Texas and Montello, Pennsylvania. The Sugar Land control center primarily monitors and controls our Crude Oil...

  • Page 14
    ... of the Nederland Terminal are its refinery customers' docks and other terminal facilities located in the Beaumont, Texas area. The majority of the throughput at our crude oil terminal facilities in the northeast relates to refining operations at PES's Philadelphia refinery. In 2012, we entered...

  • Page 15
    ... of operations, financial position or expected cash flows. Environmental Regulation General Our operations are often subject to complex federal, state, and local laws and regulations relating to the protection of health and the environment, including laws and regulations which govern the handling...

  • Page 16
    ... of operations, financial position or expected cash flows. Environmental Remediation Contamination resulting from releases of refined products and crude oil is not unusual within the petroleum pipeline industry. Historic releases along our pipelines, gathering systems, and terminals as a result...

  • Page 17
    ... these sites is not material in relation to our operations, financial position or cash flows at December 31, 2014. We have implemented an extensive inspection program to prevent releases of crude oil, refined products or NGLs into the environment from our pipelines, gathering systems, and terminals...

  • Page 18
    ... will materially interfere with their use in the operation of our business. Employees We have no employees. To carry out the operations of Sunoco Logistics Partners L.P., our general partner and its affiliates employed approximately 2,250 people at December 31, 2014 who provide direct support to the...

  • Page 19
    ...related benefits of owning our securities, could be materially and adversely affected. On October 5, 2012, Sunoco, Inc. ("Sunoco") was acquired by Energy Transfer Partners, L.P. ("ETP"). Prior to this transaction, Sunoco (through its wholly-owned subsidiary Sunoco Partners LLC) served as our general...

  • Page 20
    ... affect our results of operations, financial position or cash flows. The volume of crude oil transported through our crude oil pipelines, terminal facilities and acquisition and marketing assets depends on the availability of attractively priced crude oil produced or received in the areas served...

  • Page 21
    ... our earnings. At December 31, 2014, our consolidated balance sheet reflected $1.36 billion of goodwill and $770 million of intangible assets. Accounting principles generally accepted in the United States require us to test goodwill for impairment on an annual basis or when events or circumstances...

  • Page 22
    ...action, significant government penalties, liability to government agencies for natural resource damages, personal injury, or property damage to private parties, and significant business interruption. We own or lease a number of properties that have been used to store or distribute crude oil, refined...

  • Page 23
    ...and stored in our pipeline systems and terminal facilities and could require the construction of additional storage to segregate products with different specifications. We may be unable to recover these costs through increased revenues. In addition, the operations of our butane blending services are...

  • Page 24
    ...and governmental agencies for a specific period of time. Our loss of these rights, through our inability to renew rights-of-way contracts on acceptable terms, or increased costs to renew such rights could have a material adverse effect on our results of operations, financial condition and cash flows...

  • Page 25
    .../or loss of sales. Our business is highly dependent on financial, accounting and other data processing systems and other communications and information systems. We process a large number of transactions on a daily basis and rely upon the proper functioning of computer systems. If a key system was to...

  • Page 26
    ... to provide funds for our future operating expenditures. In addition, the partnership agreement provides that our general partner may reduce available cash by establishing cash reserves for the proper conduct of our business, to comply with applicable law or agreements to which we are a party...

  • Page 27
    ... the amount and timing of asset purchases and sales, capital expenditures, borrowings, issuance of additional partnership securities, and reserves, each of which can affect the amount of cash available for distribution to our unitholders and the amount received by our general partner in respect of...

  • Page 28
    ... obligations to the same extent as a general partner if a state or federal court determined that: • • we had been conducting business in any state without complying with the applicable limited partnership statute; or the right or the exercise of the right by the unitholders as a group to remove...

  • Page 29
    RISKS RELATED TO OUR DEBT References under this heading to "we," "us," and "our" mean Sunoco Logistics Partners Operations L.P. We may not be able to obtain funding, or obtain funding on acceptable terms, to meet our future capital needs. Global market and economic conditions have been, and continue...

  • Page 30
    ... or Sunoco Logistics Partners L.P.'s, as applicable, cash on hand at the end of such quarter, less cash reserves for certain purposes. The controlling owner of our general partner and the board of directors of Sunoco Logistics Partners L.P.'s general partner will determine the amount and timing of...

  • Page 31
    ..., including ETP and its affiliates, sold or transferred their partnership interests in us. Our termination would, among other things, result in the closing of our taxable year for all of our unitholders which could result in us filing two tax returns (and unitholders receiving two Schedule K-1s...

  • Page 32
    ... units, may be modified by administrative, legislative or judicial interpretation at any time. For example, from time to time, members of Congress propose and consider substantive changes to the existing federal income tax laws that affect publicly traded partnerships. One such legislative proposal...

  • Page 33
    ...reportable by the Unitholder and any cash distributions received by the Unitholder as to those units could be fully taxable as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan of their units are urged to modify any applicable...

  • Page 34
    ... gain or loss attributable to such assets to the capital accounts of our Unitholders and our General Partner. Although we may from time to time consult with professional appraisers regarding valuation matters, including the valuation of our assets, we make many of the fair market value estimates...

  • Page 35
    ... cannot be reasonably determined at this time. However, the Partnership does not expect there to be a material impact to its results of operations, cash flows or financial position. In September 2013, the Pennsylvania Department of Environmental Protection ("PADEP") issued a Notice of Violation and...

  • Page 36
    PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SECURITYHOLDER MATTERS AND PURCHASES OF EQUITY SECURITIES Our common units are listed on the New York Stock Exchange under the symbol "SXL" beginning on February 5, 2002. At the close of business on February 25, 2015, there were 64 ...

  • Page 37
    ... financial statements and the accompanying notes of Sunoco Logistics Partners L.P. included in Item 8. "Financial Statements and Supplementary Data." The tables also should be read together with Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations...

  • Page 38
    ... joint ventures: Explorer Pipeline Company, Wolverine Pipe Line Company, West Shore Pipe Line Company ("West Shore"), Yellowstone Pipe Line Company, Bayview Refining Company, LLC ("Bayview"), SunVit Pipeline LLC ("SunVit"), Mid-Valley Pipeline Company ("Mid-Valley") and West Texas Gulf Pipe Line...

  • Page 39
    ... expense Impairment charge and other related matters Provision for income taxes Non-cash compensation expense Unrealized losses/(gains) on commodity risk management activities Amortization of excess equity method investment Proportionate share of unconsolidated affiliates' interest, depreciation and...

  • Page 40
    ... Net change in working capital pertaining to operating activities Unrealized losses/(gains) on commodity risk management activities Amortization of excess equity method investment Proportionate share of unconsolidated affiliates' interest, depreciation and provision for income taxes Non-cash accrued...

  • Page 41
    ... services; upgrade the service capabilities at the Eagle Point and Nederland terminals; and invest in the previously announced Mariner and Allegheny Access projects. We also acquired the Marcus Hook Industrial Complex from Sunoco for $60 million in 2013. Cash flows related to expansion capital...

  • Page 42
    ... Oil Acquisition and Marketing Crude oil purchases (thousands of bpd) Gross profit per barrel purchased (cents)(4) Average crude oil price (per barrel) Terminal Facilities (5) Terminal throughput (thousands of bpd) Refined products terminals Nederland terminal Refinery terminals Products Pipelines...

  • Page 43
    ... of or simultaneously with corresponding sale transactions involving physical deliveries, which enables us to secure a profit on the transaction at the time of purchase. On October 5, 2012, Sunoco, Inc. ("Sunoco") was acquired by Energy Transfer Partners, L.P. ("ETP"). Prior to this transaction...

  • Page 44
    ... as the Marcus Hook Industrial Complex, our crude pipelines, our bulk marine terminals and our patented blending technology. Expansion capital expenditures in 2015 will also include continued progress on our previously announced growth projects: Mariner East 1 and Mariner East 2 Mariner East 1 is...

  • Page 45
    ... to markets in Eastern Ohio and Western Pennsylvania. The pipeline is expected to commence start up operations by the end of the first quarter 2015. Conservative Capital Structure Our goal is to maintain substantial liquidity and a conservative capital structure. Sunoco Logistics Partners Operations...

  • Page 46
    ...31, 2014 Year Ended December 31, 2013 Three Months Ended December 31, 2013 Nine Months Ended September 30, 2013 (in millions, except per unit data) Statements of Income Sales and other operating revenue: Unaffiliated customers Affiliates Gain on divestment and related matters Total revenues Cost...

  • Page 47
    ...by our general partner. During the first quarter 2013, we also changed our measure of segment profit from operating income to the revised presentation of Adjusted EBITDA. This change did not impact our reportable segments. Prior period amounts have been recast to conform to current presentation. 45

  • Page 48
    ... was driven by improved operating performance in the Crude Oil Pipelines, Terminal Facilities, and Products Pipelines segments. Lower net interest expense also contributed to the increase, where higher capitalized interest in connection with our expansion capital program was largely offset by...

  • Page 49
    ... to Sunoco Logistics Partners L.P. was $102 and $139 million for the fourth quarter 2013 and the period from October 5, 2012 to December 31, 2012, respectively. The $37 million decrease was driven by decreased operating performance from the Crude Oil Acquisition and Marketing and Products Pipelines...

  • Page 50
    ... service in 2013 and 2014 to support the demand for West Texas crude oil. This improvement was partially offset by lower average pipeline revenue per barrel ($9 million) and higher operating expenses ($29 million) which included lower pipeline operating gains, higher environmental remediation costs...

  • Page 51
    ... prices. In the first quarter 2012, we recognized a non-cash impairment charge related to a cancelled software project. Represents total segment sales and other operating revenue minus cost of products sold and operating expenses, divided by total crude oil purchases. Adjusted EBITDA for the Crude...

  • Page 52
    ...Unaffiliated customers Affiliates Intersegment revenue Total sales and other operating revenue Depreciation and amortization expense Impairment charge and other related matters (2) Adjusted EBITDA Terminal throughput (thousands of bpd) Refined products terminals Nederland terminal Refinery terminals...

  • Page 53
    ... financial position, results of operations or cash flows. Excludes amounts attributable to equity ownership interests in corporate joint ventures which are not consolidated. Adjusted EBITDA for the Products Pipelines segment increased $29 million to $85 million for the year ended December 31, 2014...

  • Page 54
    ... and for general partnership purposes. Cash Flows and Capital Expenditures Operating Activities Cash flows from operating activities are primarily driven by earnings, excluding the impact of non-cash items; the timing of cash receipts and disbursements related to accounts receivable and payable; and...

  • Page 55
    ... related to the timing of cash receipts and payments related to accounts receivable and payable, respectively, and increased levels of operating inventories. Investing Activities Cash flows used in investing activities relate primarily to our capital expenditures, including maintenance and expansion...

  • Page 56
    ...a crude oil acquisition and marketing business, a controlling financial interest in a rail facility, and the acquisition of additional ownership interest in West Texas Gulf. In 2013, acquisitions consisted of the acquisition of the Marcus Hook Industrial Complex from Sunoco. Our capital expenditures...

  • Page 57
    ... financial statements are prepared at any given point in time. The critical accounting policies identified by our management are as follows: Long-Lived Assets. The cost of long-lived assets (less estimated salvage value, in the case of properties, plants and equipment), is generally depreciated...

  • Page 58
    ... shipping rights, and technology related assets, which consist of patented technology associated with our butane blending services. Customer relationship intangible assets represent the estimated economic value assigned to certain relationships acquired in connection with business combinations...

  • Page 59
    ... purchase price for each facility would be established based on a fair value amount determined by designated third parties. • Inter-Refinery Pipeline Lease: In September 2012, Sunoco assigned its lease for the use of our inter-refinery pipelines between the Philadelphia and Marcus Hook refineries...

  • Page 60
    ... pay ETP an annual administrative fee that includes expenses incurred by ETP and its affiliates to perform centralized corporate functions, such as legal, accounting, engineering, information technology, insurance, and other corporate services, including the administration of employee benefit plans...

  • Page 61
    ... an affiliated account. In the fourth quarter 2013, we established separate cash accounts to process our own cash receipts and disbursements. Upon completion of the transition for our customers and vendors in the third quarter 2014, we ceased participation in Sunoco's cash management program. ITEM...

  • Page 62
    ... and the actual year-end market prices of the underlying commodities by the contract volume amounts. For additional information concerning our commodity market risk activities, see Note 15 to the consolidated financial statements included in Item 8. "Financial Statements and Supplementary Data." 60

  • Page 63
    ... ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management of Sunoco Logistics Partners L.P. (the "Partnership") is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as...

  • Page 64
    ... Company Accounting Oversight Board (United States), the consolidated financial statements of the Partnership as of and for the year ended December 31, 2014, and our report dated February 26, 2015 expressed an unqualified opinion on those financial statements. /s/ GRANT THORNTON LLP Philadelphia...

  • Page 65
    ..., 2014 and 2013. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board...

  • Page 66
    ... of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform...

  • Page 67
    SUNOCO LOGISTICS PARTNERS L.P. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions, except per unit amounts) Successor Year Ended December 31, 2014 Revenues Sales and other operating revenue: Unaffiliated customers Affiliates (Note 4) Gain on divestment and related matters (Note 19) Total ...

  • Page 68
    ... 31, 2014 2013 Assets Cash and cash equivalents Advances to affiliated companies (Note 4) Accounts receivable, affiliated companies (Note 4) Accounts receivable, net Inventories (Note 6) Other current assets Total Current Assets Properties, plants and equipment Less accumulated depreciation and...

  • Page 69
    ...in joint venture interests Acquisitions (Note 3 and 12) Change in long-term note receivable, affiliated companies Proceeds from divestments and related matters Net cash used in investing activities Cash Flows from Financing Activities: Distributions paid to limited and general partners Distributions...

  • Page 70
    ... acquisition Other Balance at December 31, 2013 Net Income Adjustment to affiliate's pension funded status Total comprehensive income Issuance of limited partner units to the public Non-cash compensation expense Distribution equivalent rights Payment of statutory withholding on issuance under LTIP...

  • Page 71
    ... FINANCIAL STATEMENTS 1. Organization and Basis of Presentation Sunoco Logistics Partners L.P. (the "Partnership" or "SXL") is a publicly traded Delaware limited partnership that owns and operates a logistics business, consisting of a geographically diverse portfolio of complementary crude oil...

  • Page 72
    ...variable interest entity. At December 31, 2014, the Partnership held a controlling financial interest in Inland Corporation ("Inland"), Mid-Valley Pipeline Company ("MidValley"), West Texas Gulf Pipe Line Company ("West Texas Gulf"), and Price River Terminal, LLC ("PRT"), and as such, these entities...

  • Page 73
    ... services to ETP and its affiliates (including Sunoco). Sales of crude oil, refined products and NGLs to affiliated entities are priced using market-based rates. Affiliated entities pay fees for transportation or terminalling services based on the terms and conditions of an established agreement...

  • Page 74
    ...is tested for impairment annually in the fourth quarter, or more often if events or changes in circumstances indicate that the carrying value of goodwill may exceed its estimated fair value. The Partnership determined during 2014, 2013 and 2012 that goodwill was not impaired. Management's process of...

  • Page 75
    ..., plants and equipment associated with Inland, Mid-Valley and West Texas Gulf. Long-Term Incentive Plan The Partnership accounts for the compensation cost associated with all unit-based payment awards at fair value and reports the related expense within operating expenses and selling, general and...

  • Page 76
    ... (level 3) within the fair value hierarchy established by the Financial Accounting Standards Board ("FASB"). The Partnership generally applies a "market approach" to determine fair value. This method uses pricing and other information related to market transactions for identical or comparable assets...

  • Page 77
    ... quarter 2013, the Partnership acquired Sunoco's Marcus Hook Industrial Complex and related assets (the "Marcus Hook Industrial Complex") for $60 million in cash, including acquisition costs. The acquisition included terminalling and storage assets located in Pennsylvania and Delaware and commercial...

  • Page 78
    ... tariff rates on the respective pipeline. • • • • • Advances to/from Affiliate Through the third quarter 2014, the Partnership participated in Sunoco's centralized cash management program pursuant to a treasury services agreement. Under the program, the Partnership's cash receipts...

  • Page 79
    ... consist of revenues from ETP and its affiliated entities related to sales of crude oil and refined products and services, including pipeline transportation, terminalling, storage and blending. Capital Contributions During the years ended December 31, 2014, 2013 and 2012, the Partnership issued...

  • Page 80
    ... to SXL per limited partner unit for the periods presented: Successor Year Ended December 31, 2014 2013 Period from Acquisition, October 5, 2012 to December 31, 2012 Predecessor Period from January 1, 2012 to October 4, 2012 (in millions) (in millions) Weighted average number of units outstanding...

  • Page 81
    ... Partnership's ownership percentages in corporate joint ventures as of December 31, 2014 and 2013 were as follows: Successor December 31, 2014 2013 Explorer Pipeline Company Yellowstone Pipe Line Company West Shore Pipe Line Company Wolverine Pipe Line Company Bayview Refining Company, LLC SunVit...

  • Page 82
    ...due to limited competition, to provide products or services to the customers. The customer relationship intangible assets are amortized on a straight-line basis over their respective economic lives. Technology-related intangible assets consist of the Partnership's patents for blending of butane into...

  • Page 83
    ... 4,160 Cash payments for interest related to long-term debt, net of capitalized interest (Note 2), were $64, $83, $2 and $87 million for the years ended December 31, 2014 and 2013; the periods from October 5, 2012 to December 31, 2012 and from January 1, 2012 to October 4, 2012, respectively. 81

  • Page 84
    ...which expires in April 2015. The facility is available to fund West Texas Gulf's general corporate purposes, including working capital and capital expenditures. The credit facility also limits West Texas Gulf, on a rolling four-quarter basis, to a minimum fixed charge coverage ratio of 1.00 to 1. In...

  • Page 85
    ... position, results of operations or cash flows at December 31, 2014. 12. Equity Offerings In July 2012, the Partnership converted 7.9 million Class A units to common units that were originally issued to Sunoco in connection with the acquisition of the Eagle Point Tank Farm and related assets. Prior...

  • Page 86
    ... first quarter 2014, the Partnership filed a registration statement establishing a $250 million ATM program. The program allows for the Partnership to issue common units directly to the public and raise capital in a timely and efficient manner to finance its growth capital program, while supporting...

  • Page 87
    ... Partners LLC Long-Term Incentive Plan ("LTIP") for employees and directors of the general partner who perform services for the Partnership. The LTIP is administered by the independent directors of the Compensation Committee of the general partner's board of directors with respect to employee awards...

  • Page 88
    ... of the Partnership's time-vested awards is based on the grant date market price of the Partnership's common units. The Partnership recognizes compensation expense on a straight-line basis over the requisite service period, and estimates forfeitures over the requisite service period when recognizing...

  • Page 89
    ...United States' generally accepted accounting principles. The Partnership accounts for derivatives that do not qualify as normal purchases and sales at fair value. The Partnership currently does not utilize derivative instruments to manage its exposure to prices related to crude oil purchase and sale...

  • Page 90
    ... material during 2014, 2013 or 2012. All realized gains and losses associated with refined products derivative contracts are recorded in earnings in the same line item associated with the forecasted transaction (either sales and other operating revenue or cost of products sold). The Partnership had...

  • Page 91
    ...revenue 1 (2) (7) Sales and other operating revenue (4) Cost of products sold (11) Cost of products sold $ The Partnership had deferred hedging losses of approximately $17 million in the accumulated other comprehensive loss component of equity prior to the acquisition of the general partner by ETP...

  • Page 92
    ...a crude oil pipeline company in Texas, which is expected to be operational in 2015. The Crude Oil Acquisition and Marketing segment gathers, purchases, markets and sells crude oil principally in the mid-continent United States. The segment consists of approximately 335 crude oil transport trucks and...

  • Page 93
    ..., blending and other ancillary services and are primarily sourced by the Products Pipelines; the Nederland Terminal, a 25 million barrel marine crude oil and NGLs terminal on the Texas Gulf Coast; a 2 million barrel refined product and NGL terminal near Philadelphia, Pennsylvania; one inland and...

  • Page 94
    ... the Partnership's business segments and reconciles total segment Adjusted EBITDA to net income attributable to SXL for the periods presented: Successor Year Ended December 31, 2014 Sales and other operating revenue (1) Crude Oil Pipelines Crude Oil Acquisition and Marketing Terminal Facilities...

  • Page 95
    ... Products Pipelines equity ownership interest in joint ventures. The following table provides consolidated balance sheet information concerning the Partnership's business segments as of December 31, 2014, 2013 and 2012, respectively: Crude Oil Pipelines Crude Oil Acquisition and Marketing Terminal...

  • Page 96
    ...2014 Sales and other operating revenue: Unaffiliated customers Affiliates Gross profit (3) Operating income, (loss) Net Income (Loss) Net Income attributable to noncontrolling interests Net Income (Loss) attributable to Sunoco Logistics Partners L.P. Less: General Partner's interest Limited Partners...

  • Page 97
    .... For purposes of the following footnote, Sunoco Logistics Partners L.P. is referred to as "Parent Guarantor" and Sunoco Logistics Partners Operations L.P. is referred to as "Subsidiary Issuer". All other consolidated subsidiaries of the Partnership are collectively referred to as "Non-Guarantor...

  • Page 98
    ... (Loss) Year Ended December 31, 2014 (Successor) (in millions) NonGuarantor Subsidiaries Parent Guarantor Revenues Sales and other operating revenue: Unaffiliated customers Affiliates Total Revenues Costs and Expenses Cost of products sold Operating expenses Selling, general and administrative...

  • Page 99
    ... (Loss) Year Ended December 31, 2013 (Successor) (in millions) NonGuarantor Subsidiaries Parent Guarantor Revenues Sales and other operating revenue: Unaffiliated customers Affiliates Total Revenues Costs and Expenses Cost of products sold Operating expenses Selling, general and administrative...

  • Page 100
    ...from October 5, 2012 to December 31, 2012 (Successor) (in millions) NonGuarantor Subsidiaries Parent Guarantor Revenues Sales and other operating revenue: Unaffiliated customers Affiliates Total Revenues Costs and Expenses Cost of products sold Operating expenses Selling, general and administrative...

  • Page 101
    ...October 4, 2012 (Predecessor) (in millions) NonGuarantor Subsidiaries Parent Guarantor Revenues Sales and other operating revenue: Unaffiliated customers Affiliates Gain on divestment and related matters Total Revenues Costs and Expenses Cost of products sold Operating expenses Selling, general and...

  • Page 102
    ...$ Parent Guarantor Assets Cash and cash equivalents Accounts receivable, affiliated companies Accounts receivable, net Inventories Other current assets Total Current Assets Properties, plants and equipment, net Investment in affiliates Long-term note receivable, affiliate Goodwill Intangible assets...

  • Page 103
    ... Parent Guarantor Assets Cash and cash equivalents Advances to affiliated companies Accounts receivable, affiliated companies Accounts receivable, net Inventories Other current assets Total Current Assets Properties, plants and equipment, net Investment in affiliates Goodwill Intangible assets, net...

  • Page 104
    ...: Capital expenditures Investments in joint ventures Acquisitions Change in long-term note receivable, affiliated companies Intercompany Net cash provided by (used in) investing activities Cash Flows from Financing Activities: Distributions paid to limited and general partners Distributions...

  • Page 105
    ... limited partner units under LTIP Repayments under credit facilities Borrowings under credit facilities Net proceeds from issuance of long-term debt Advances to affiliated companies, net Contributions attributable to acquisition from affiliate Net cash used in financing activities Net change in cash...

  • Page 106
    ... Payments of statutory withholding on net issuance of limited partner units under LTIP Repayments under credit facilities Borrowings under credit facilities Advances to affiliated companies, net Net cash provided by (used in) financing activities Net change in cash and cash equivalents Cash and cash...

  • Page 107
    ...Payments of statutory withholding on net issuance of limited partner units under LTIP Repayments under credit facilities Borrowings under credit facilities Repayments of senior notes Advances to affiliated companies, net Net cash provided by (used in) financing activities Net change in cash and cash...

  • Page 108
    ... in the Partnership's reports under the Exchange Act is accumulated and communicated to management, including the President and Chief Executive Officer and the Chief Financial Officer of Sunoco Partners LLC (the Partnership's general partner), as appropriate, to allow timely decisions regarding...

  • Page 109
    ...10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Board of Directors Our general partner, Sunoco Partners LLC, a Pennsylvania limited liability company, manages our operations and activities. The membership interests in our general partner are owned 99.9 percent by Energy Transfer Partners...

  • Page 110
    ... Chief Operating Officer and Director of ETP's general partner, they each recuse themselves from Compensation Committee decisions relating to equity compensation awards, including awards under the Sunoco Partners LLC Long-Term Incentive Plan (the "LTIP"), to executive officers of the general partner...

  • Page 111
    ... counsel or other advisors. No material actions were taken by the Board because of communications from unitholders or others received during 2014. Directors and Executive Officers of Sunoco Partners LLC (our General Partner) Our directors are elected by ETP and ETE Holdings. Our executive officers...

  • Page 112
    ... Board in creating and executing the Partnership's strategic plan. Mr. Salinas was elected to the Board in October 2012, and was elected contemporaneously as the Chief Financial Officer of our general partner. Mr. Salinas has served as Chief Financial Officer of ETP's general partner since June 2008...

  • Page 113
    ... Resources Officer in January 2013. Prior to that, she was Director, Human Resources & Administration for the Partnership since March 2011. Prior to that, she was Director, Human Resources, PSG for Sunoco, Inc. from April 2010 to March 2011 and was Vice President, Executive Development and Corporate...

  • Page 114
    ... 16(a) of the Securities Exchange Act of 1934 requires the directors and executive officers of our general partner, as well as persons who own more than ten percent of the common units representing limited partnership interests in us, to file reports of ownership and changes of ownership on Forms...

  • Page 115
    ... limited partner interest in us. Mr. Salinas is the Chief Financial Officer of ETP's general partner. During 2014, Mr. Salinas' primary business responsibilities were for ETP, but he also rendered services to us principally in respect of capital market and financing matters. The compensation...

  • Page 116
    ... compensation competitive with that of other executive officers and key management employees employed by publicly traded limited partnerships of similar size and in similar lines of business; • motivate executive officers and key employees to achieve strong financial and operational performance...

  • Page 117
    ... establish its own financial performance objectives in advance for purposes of determining whether to approve any annual bonuses, and the Compensation Committee does not utilize any formulaic approach to determine annual bonuses. For 2014, annual bonuses were determined under the Sunoco Partners LLC...

  • Page 118
    ... with the general partner and its affiliates. Longterm incentive awards are based upon the common units representing limited partnership interests in us, although they may be payable in common units, or in cash. The Compensation Committee administers the LTIP and, in its discretion, may terminate or...

  • Page 119
    ..., a portion of Mr. Salinas' annual long-term incentive compensation has been approved and awarded by the Compensation Committee of our general partner in recognition of his services to the Partnership. In December 2014, Mr. Salinas received an equity award from the Partnership in the form of 9,502...

  • Page 120
    ...ratably over the vesting period. For cash compensation, the accounting rules require us to record it as an expense at the time the obligation is accrued. Because we are a partnership, and our general partner is a limited liability company, Internal Revenue Code ("Code") Section 162(m) does not apply...

  • Page 121
    ... salaried employees, including the NEOs of our general partner who participate in this plan. On October 31, 2014, Sunoco terminated the SCIRP. Distributions of benefits from the SCIRP will be made following approval from the Internal Revenue Service ("IRS") and Pension Benefit Guaranty Corporation...

  • Page 122
    ...in October 2014. Our general partner has adopted the Energy Transfer Partners GP, L.P. Severance Plan (the "Severance Plan"), which provides for payment of certain severance benefits in the event of a qualifying termination (as that term is defined in the Severance Plan) to all salaried employees on...

  • Page 123
    ... each of 2014, 2013 and 2012 (or such shorter period of time during which such individual served as an executive officer of the general partner): Change in Pension Value and Nonqualified Deferred Compensation Earnings (3) ($) Name and Principal Position Year Salary ($) Unit Awards ($) (1) Non...

  • Page 124
    ... employees who were affected by the plan's termination received the cash value of their outstanding account balances from Sunoco. Mr. Hennigan received payment of his outstanding cash balance at December 31, 2012. Ms. Shea-Ballay received payment of her outstanding cash balance at February 2013...

  • Page 125
    ...of plan-based awards to NEOs in 2014: All Other Unit Awards: Number of Units (2) (3) (#) Grant Date Fair Value of Unit Awards ($) Name Grant Date (1) M. J. Hennigan President and Chief Executive Officer M. Salinas, Jr. Chief Financial Officer K. Shea-Ballay Senior Vice President, General Counsel...

  • Page 126
    ... Financial Officer K. Shea-Ballay Senior Vice President, General Counsel & Secretary K. Lauterbach Senior Vice President, Lease Acquisitions 12/5/2014 12/5/2013 1/24/2013 12/5/2014 12/5/2013 1/24/2013 12/5/2014 12/5/2013 1/24/2013 7/24/2012 D. Chalson Senior Vice President, Operations 12/5/2014...

  • Page 127
    ... on vesting was determined by multiplying the number of common units to be issued upon vesting by the closing market price of our common units on the date prior to the vesting date. These amounts do not reflect the value of units withheld by our general partner to satisfy tax withholding obligations...

  • Page 128
    PENSION BENEFITS Our general partner is a participating employer in certain Sunoco pension and retirement plans. Our NEOs are eligible to participate in such plans. The table below shows the estimated annual retirement benefits payable to a covered executive based upon the final average pay formula ...

  • Page 129
    ...Plan for Former Sunoco Executives. Mr. Salinas is employed by ETP's general partner and does not participate in any of the Sunoco pension benefit plans. (4) The Sunoco, Inc. Retirement Plan The SCIRP is a qualified defined benefit retirement plan that covers most salaried and many hourly employees...

  • Page 130
    ... the same actuarial factors applicable under the SCIRP. Payment of benefits is made upon termination of employment, except that payment of amounts subject to Code Section 409A is delayed until six months after separation from service for any specified employee as defined under Code Section 409A. No...

  • Page 131
    ... salary deferrals made by the NEOs in 2014 under the ETP NQDC Plan, a deferred compensation plan that permits eligible highly compensated employees to defer a portion of their salary and/or bonus until retirement, or termination of employment or other designated distribution event. Under the...

  • Page 132
    ... the ETP Deferred Compensation Plan for Former Sunoco Executives. OTHER POTENTIAL POST-EMPLOYMENT PAYMENTS Certain plans, as described below, provide for payments of benefits to the NEOs in connection with termination, or separation from employment, retirement, or a change in control of our general...

  • Page 133
    ... plans applicable to terminated or retirement eligible employees, as described in the Voluntary Termination section above. Vacation Benefits: Each NEO would receive payment for his or her accrued vacation, which benefit is generally provided to active employees of the Partnership's general partner...

  • Page 134
    ... the SCIRP and Pension Restoration Plan would be paid according to the terms of those plans applicable to terminated or retirement eligible employees, as described in the Voluntary Termination section above. Long Term Disability: • An NEO would receive benefits, including Social Security, up to 60...

  • Page 135
    ... Post-Employment Payments"; the triggering event occurred on December 31, 2014; the transaction price per Partnership unit is $41.78, which was the price at the close on December 31, 2014; pension lump-sum values are based on applicable segment interest rates under the Pension Protection Act...

  • Page 136
    Sunoco Logistics Partners L.P. Other Potential Post-Employment Payments as of December 31, 2014 Michael J. Hennigan President and Chief Executive Officer Voluntary Termination ($) Termination for Cause ($) Involuntary Termination Not for Cause ($) Change in Control ($) Type of Benefit Death ($) ...

  • Page 137
    ... Mr. Salinas currently serves as Chief Financial Officer of ETP. Severance benefits for Mr. Salinas would be paid by ETP. Reflects intrinsic values of accelerated vesting of equity awards at an assumed closing price of $41.78 (closing price of the Partnership on December 31, 2014). Values include...

  • Page 138
    ... Logistics Partners L.P. Other Potential Post-Employment Payments as of December 31, 2014 Kathleen Shea-Ballay Senior Vice President, General Counsel and Secretary Voluntary Termination ($) Termination for Cause ($) Involuntary Termination Not for Cause ($) Change in Control ($) Type of Benefit...

  • Page 139
    Sunoco Logistics Partners L.P. Other Potential Post-Employment Payments as of December 31, 2014 Kurt Lauterbach Senior Vice President, Lease Acquisitions Involuntary Termination Not for Cause ($) Type of Benefit Voluntary Termination ($) Death ($) Disability ($) Termination for Cause ($) ...

  • Page 140
    Sunoco Logistics Partners L.P. Other Potential Post-Employment Payments as of December 31, 2014 David R. Chalson Senior Vice President, Operations Voluntary Termination ($) Termination for Cause ($) Involuntary Termination Not for Cause ($) Change in Control ($) Type of Benefit Death ($) ...

  • Page 141
    ... under applicable state law. Our program of compensation for non-employee directors was approved by our general partner following the consummation of the Merger and became effective during the 2013 calendar year. This director compensation program consists of an annual cash retainer and equity award...

  • Page 142
    ...-employee directors of our general partner (and to Messrs. McCrea, Welch and Mason, as described above) in 2014: Fees Earned or Paid in Cash (1) ($) Unit Awards (2) ($) All Other Compensation (3) ($) Name Total ($) Steven R. Anderson Independent Director, Chair of Conflicts Committee and Member...

  • Page 143
    ... general partner of ETP. During 2014, none of the members of the Compensation Committee served as executive officers of any company with respect to which any of our officers served on such company's compensation committee or board of directors, and none of the directors of our general partner served...

  • Page 144
    ..." in the Partnership's Annual Report on SEC Form 10-K for the fiscal year ended December 31, 2014, for filing with the Securities and Exchange Commission. Respectfully submitted on February 25, 2015 by the members of the Compensation Committee of the Board of Directors of Sunoco Partners LLC: Scott...

  • Page 145
    ... Board of the Company. The Company is the general partner of the Partnership. Our management is responsible for the financial statements and the reporting process, including the internal control over financial reporting. The independent registered public accounting firm is responsible for expressing...

  • Page 146
    ...to our consolidated financial statements for fiscal 2014 for additional detail regarding the unit split. EQUITY COMPENSATION PLAN INFORMATION (1) (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (b) Weighted average exercise price of outstanding options...

  • Page 147
    ... business address given for OppenheimerFunds, Inc. in the Schedule 13G is Two World Financial Center, 225 Liberty Street, New York, New York 10281. Goldman Sachs Asset Management, L.P., a Delaware limited partnership, together with GS Investment Strategies, LLC, a Delaware limited liability company...

  • Page 148
    ... ownership of the common units representing limited partnership interests of ETP as of February 25, 2015 by directors of our general partner, by each NEO and by all directors and NEOs of our general partner as a group. Unless otherwise noted, each individual exercises sole voting or investment power...

  • Page 149
    ...our consolidated financial statements for fiscal 2014 for additional detail regarding the unit split. On October 5, 2012, Sunoco, Inc. ("Sunoco") was acquired by Energy Transfer Partners, L.P. ("ETP"). Prior to this transaction, Sunoco (through its wholly-owned subsidiary Sunoco Partners LLC) served...

  • Page 150
    ... the term of the transaction, the capital investment required, and the revenues expected from the transaction. With respect to other related party transactions, we have in place a Code of Business Conduct and Ethics that is applicable to all directors, officers and employees of the Partnership and...

  • Page 151
    ... Committee of the general partner's board of directors is responsible for pre-approving all audit services, and permitted non-audit services, to be performed by the independent registered public accounting firm for the Partnership, or its general partner. The Committee reviews the services to be...

  • Page 152
    ... file No. 1-31219, filed August 4, 2010) Certificate of Limited Partnership of Sunoco Logistics Partners L.P. (incorporated by reference to Exhibit 3.1 to Form S-1 Registration Statement, file No. 333-71968, filed October 22, 2001) Certificate of Limited Partnership of Sunoco Logistics Operations...

  • Page 153
    ... Line Company, Sun Oil Line of Michigan (Out) LLC, MidContinent Pipe Line (Out) LLC, Sun Pipe Line Services (Out) LLC, Atlantic Petroleum Delaware Corporation, Atlantic Pipeline (Out) L.P., Sunoco Partners LLC, Sunoco Partners Lease Acquisition & Marketing LLC, Sunoco Logistics Partners L.P., Sunoco...

  • Page 154
    ...., Sunoco Logistics Partners L.P., Sunoco Logistics Partners Operations L.P., Sunoco Partners Marketing & Terminals L.P., Sunoco Pipeline L.P., and Sunoco Partners LLC (incorporated by reference to Exhibit 10.8 of Form 10K, File No. 1-31219, filed April 1, 2002) Inter-Refinery Pipeline Lease, dated...

  • Page 155
    ... 99.1 of Form 8-K, File No. 1-31219, filed May 2012) The following consolidated financial information from Sunoco Logistics Partners L.P.'s Annual Report on Form 10-K for the year ended December 31, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of...

  • Page 156
    ... Securities Exchange Act of 1934, this report has been signed below by or on behalf of the following persons on behalf of the registrant and in the capacities indicated on February 26, 2015. STEVEN R. ANDERSON* Steven R. Anderson Director of Sunoco Partners LLC, General Partner of Sunoco Logistics...

  • Page 157
    ... operating lease rental expense, which is that portion deemed to be interest. Represents income before income tax expense for all consolidated entities, including Inland Corporation, Mid-Valley Pipeline Company, West Texas Gulf Pipe Line Company and Price River Terminal, LLC. Represents dividends...

  • Page 158
    ... GP LLC Sunoco Partners Lease Acquisition & Marketing LLC Sunoco Partners Marketing & Terminals L.P. Sunoco Pipeline L.P. Sunoco Pipeline Acquisition LLC Sun Pipe Line Company of Delaware LLC Mid-Valley Pipeline Company West Texas Gulf Pipe Line Company Excel Pipeline LLC Inland Corporation Price...

  • Page 159
    ... REGISTERED PUBLIC ACCOUNTING FIRM We have issued our reports dated February 26, 2015, with respect to the consolidated financial statements and internal control over financial reporting included in the Annual Report of Sunoco Logistics Partners L.P. on Form 10K for the year ended December 31, 2014...

  • Page 160
    ... representing limited partnership interests) and debt of Sunoco Logistics Partners Operations L.P. (as issuer of debt securities), and in the Registration Statement (Form S-8 No. 333-96897) pertaining to the Sunoco Partners LLC Long-Term Incentive Plan of Sunoco Logistics Partners L.P. of our report...

  • Page 161
    ... capacity as a director or officer, or both, of the Company, as hereinafter set forth opposite his or her signature, to sign and to file the Sunoco Logistics Partners L.P. Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 2014, and any and...

  • Page 162
    ... and Chief Executive Officer (Principal Executive Officer) Director Director Director Director Director (Chairman) Director Chief Accounting Officer and Controller (Principal Accounting Officer) ATTEST: /s/ KATHLEEN SHEA-BALLAY Kathleen Shea-Ballay Senior Vice President, General Counsel and...

  • Page 163
    ...Hennigan, President and Chief Executive Officer of Sunoco Partners LLC, the general partner of the registrant Sunoco Logistics Partners L.P., certify that: 1. 2. I have reviewed this annual report on Form 10-K of Sunoco Logistics Partners L.P.; Based on my knowledge, this report does not contain any...

  • Page 164
    ...I, Martin Salinas, Jr., Chief Financial Officer of Sunoco Partners LLC, the general partner of the registrant Sunoco Logistics Partners L.P., certify that: 1. 2. I have reviewed this annual report on Form 10-K of Sunoco Logistics Partners L.P.; Based on my knowledge, this report does not contain any...

  • Page 165
    ... Chief Executive Officer and Martin Salinas, Jr., being respectively, the Chief Financial Officer, of Sunoco Partners LLC, the general partner of the registrant Sunoco Logistics Partners L.P., do each certify that the registrant's Annual Report on Form 10-K for the year ended December 31, 2014 fully...