Sunoco 2014 Annual Report Download - page 81

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79
8. Investment in Affiliates
The active corporate joint ventures own products pipeline systems. The 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 13.3% 9.4%
Yellowstone Pipe Line Company 14.0% 14.0%
West Shore Pipe Line Company 17.1% 17.1%
Wolverine Pipe Line Company 31.5% 31.5%
Bayview Refining Company, LLC 49.0% —%
SunVit Pipeline LLC 50.0% 50.0%
In the second quarter 2014, the Partnership entered into a joint agreement to form Bayview Refining Company, LLC
("Bayview"). Bayview will construct and operate a facility that will process crude oil into intermediate petroleum products. The
Partnership will fund construction of the facility through contributions proportionate to its 49 percent economic and voting
interests, with the remaining portion funded by the joint owner through a promissory note entered into with the Partnership.
Through December 31, 2014, the joint owners have made contributions totaling $33 million. The facility is expected to
commence operations in the second half of 2015. Bayview is a variable interest entity of which the Partnership is not the
primary beneficiary. As a result, the Partnership's investment in Bayview is reflected as an equity method investment within the
Crude Oil Acquisition and Marketing segment.
In connection with the formation of Bayview, the joint owners agreed to guarantee the obligations of Bayview with
respect to certain third-party operating agreements over a ten-year term. The fair value of the liability recognized in connection
with the guarantee was not material in relation to the Partnership’s financial position at December 31, 2014.
In the first quarter 2014, the Partnership exercised its rights to acquire an additional ownership interest in Explorer
Pipeline Company ("Explorer") from an affiliate of Chevron for $42 million, increasing the Partnership's ownership interest
from 9.4 to 13.3 percent. Explorer owns approximately 1,850 miles of refined products pipelines running from the Gulf Coast
of the United States to the Chicago, Illinois area. The fair value of the investment was estimated based on the fair value of the
consideration transferred. The investment continues to be accounted for as an equity method investment within the
Partnership's Products Pipelines segment, with the equity income recorded based on the Partnership's ownership percentage for
each period presented.
In the third quarter 2013, the Partnership entered into an agreement to form SunVit Pipeline LLC ("SunVit"), a joint
venture with Vitol, Inc. ("Vitol"), in which each party will maintain a 50 percent economic and voting interest. SunVit will
construct and own a crude oil pipeline, which will originate in Midland, Texas and run to Garden City, Texas. The new pipeline
will connect to the Partnership's existing pipelines and along with the Partnership's Permian Express 2 pipeline project, and
provide additional takeaway capacity from the Permian Basin. SunVit is expected to commence operations in 2015. Under the
terms of the joint venture agreement, each owner will fund construction of the pipeline and operating expenses in proportion
with its ownership interest. Through December 31, 2014, the Partnership and Vitol have made contributions totaling $70
million. SunVit is reflected as an equity method investment within the Partnership's Crude Oil Pipelines segment.
At December 31, 2014, the Partnership's investments in Explorer Pipeline Company, Yellowstone Pipe Line Company,
West Shore Pipe Line Company and Wolverine Pipe Line Company included net excess investment amounts of $125 million.
The excess investment is the difference between the investment balances and the Partnership's equity in the net assets of the
entities. The Partnership has not provided additional financial support to any of the refined products joint ventures during the
2012 through 2014 periods.
The Partnership had $48 million of undistributed earnings from its investments in corporate joint ventures within Equity
at December 31, 2014. During the years ended December 31, 2014 and 2013; and the periods from October 5, 2012 to
December 31, 2012 and from January 1, 2012 to October 4, 2012, the Partnership recorded equity income of $25, $21, $5 and
$15 million, respectively, and received dividends of $14, $14, $6 and $5 million, respectively, from its investments in corporate
joint ventures.