Sunoco 2014 Annual Report Download - page 43

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with the consolidated financial statements of Sunoco Logistics
Partners L.P. Among other things, those consolidated financial statements include more detailed information regarding the basis
of presentation for the following information.
Overview
We, Sunoco Logistics Partners L.P. or "SXL," are a Delaware limited partnership which is principally engaged in the
transport, terminalling and storage of crude oil, refined products and natural gas liquids ("NGLs"). In addition to logistics
services, we also own acquisition and marketing assets which are used to facilitate the purchase and sale of crude oil, refined
products and NGLs. Our portfolio of geographically diverse assets earns revenues in 35 states located throughout the United
States. Revenues are generated by charging tariffs for transporting crude oil, refined products and NGLs through our pipelines,
as well as by charging fees for various services at our terminal facilities. Revenues are also generated by acquiring and
marketing crude oil, refined products and NGLs. Generally, our commodity purchases are entered into in contemplation 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, Sunoco (through its wholly-owned subsidiary Sunoco Partners LLC) served as our general partner and owned a two
percent general partner interest, all of our incentive distribution rights, and a 32.4 percent limited partner interest in SXL. In
connection with the acquisition, Sunoco’s general and limited partner interests in us were contributed to ETP, resulting in a
change in control of our general partner. As a result, we became a consolidated subsidiary of ETP and elected to apply "push-
down" accounting, which required our assets and liabilities to be adjusted to fair value on the closing date, October 5, 2012. The
effective date of the acquisition for accounting and reporting purposes was deemed to be October 1, 2012. Due to the application
of "push-down" accounting, our consolidated financial statements and certain footnote disclosures are presented in two distinct
periods to indicate the application of two different bases of accounting during those periods. The periods prior to the acquisition
date, October 5, 2012, are identified as "Predecessor" and the periods from October 5, 2012 forward are identified as
"Successor," and our operating results for the years ended December 31, 2014, 2013 and 2012 are presented in comparative
periods. We performed an analysis and determined that the activity from October 1, 2012 through October 4, 2012 was not
material in relation to our financial position, results of operations or cash flows. Therefore, operating results between October 1,
2012 and October 4, 2012 have been included within the "Successor" period ended December 31, 2012.
In July 2013, the limited liability agreement of Sunoco Partners LLC was amended to reflect the addition of ETE Common
Holdings, LLC ("ETE Holdings") as an owner of a 0.1 percent membership interest in our general partner. ETE Holdings is a
wholly-owned subsidiary of Energy Transfer Equity, L.P., and an affiliate of ETP. This change in the ownership of the general
partner did not impact our consolidated financial statements. Subsequent to the amendment, we remain a consolidated subsidiary
of ETP. In addition, the 67.1 million common units owned by Sunoco Partners LLC were assigned to ETP.
Strategic Actions
Our primary business strategies focus on generating stable cash flows by increasing pipeline and terminal throughput,
utilizing our acquisition and marketing assets to maximize value, pursuing economically accretive organic growth opportunities,
and continuing to improve operating efficiencies and reduce costs. We also utilize our pipeline systems to take advantage of
market dislocations. We believe these strategies will result in continuing increases in distributions to our unitholders. As part of
our strategy, we have undertaken several initiatives including the acquisitions and growth capital programs described below.
Acquisitions
We completed four acquisitions for a total of $466 million during the three-year period ended December 31, 2014:
2014 Acquisitions
• West Texas Gulf Pipe Line Company - In December 2014, we acquired an additional 28.3 percent ownership
interest in the West Texas Gulf Pipe Line Company ("West Texas Gulf") from Chevron Pipe Line Company,
increasing our controlling financial interest to 88.6 percent. The remaining noncontrolling interest in West Texas
Gulf was acquired in January 2015. The pipeline continues to be reported in the Crude Oil Pipelines segment.