Sunoco 2012 Annual Report Download - page 51

by full year results of the 2010 acquisitions of controlling financial interests in the Mid-Valley and West Texas
Gulf pipelines and an increase in pipeline revenue per barrel ($32 million), which benefited from regulated tariff
increases and increased demand for West Texas crude oil. The improvements were partially offset by increased
operating expenses ($3 million) due primarily to increased property tax and utility expenses.
Crude Oil Acquisition and Marketing
Our Crude Oil Acquisition and Marketing segment reflects the sale of gathered and bulk purchased crude
oil. The crude oil acquisition and marketing operations generate substantial revenue and cost of products sold as
a result of the significant volume of crude oil bought and sold. However, the absolute price levels of crude oil
normally do not bear a relationship to gross profit, although the price levels significantly impact revenue and
costs of products sold. As a result, period-to-period variations in revenue and cost of products sold are not
generally meaningful in analyzing the variation in gross profit for the Crude Oil Acquisition and Marketing
segment. The operating results of the Crude Oil Acquisition and Marketing segment are affected by overall levels
of supply and demand for crude oil and relative fluctuations in market related indices. Generally, we expect a
base level of earnings from our Crude Oil Acquisition and Marketing segment that may be optimized and
enhanced when there is a high level of market volatility, favorable basis differentials and/or a steep contango or
backwardated structure. Our management believes gross profit, which is equal to sales and other operating
revenue less cost of products sold and operating expenses, is a key measure of financial performance for the
Crude Oil Acquisition and Marketing segment. Although we implement risk management activities to provide
general stability in our margins, these margins are not fixed and will vary from period to period.
The following table presents the operating results and key operating measures for our Crude Oil Acquisition
and Marketing segment for the periods presented:
Successor Predecessor
Period from Acquisition
(October 5, 2012) to
December 31, 2012(1)
Period from
January 1, 2012 to
October 4, 2012(1)
Three Months
Ended
December 31,
2011(2)
Nine Months
Ended
September 30,
2011(2)
Total
2011(2)
Year Ended
December 31,
2010(3)
(in millions, except for
barrel amounts) (in millions, except for barrel amounts)
Sales and other operating revenue
Unaffiliated customers ........... $2,747 $8,951 $3,135 $6,780 $ 9,915 $6,388
Affiliates ...................... 139 307 — 247 247 894
Intersegment revenue ............ 2 — — 1 1 —
Total sales and other operating
revenue ................... $2,888 $9,258 $3,135 $7,028 $10,163 $7,282
Depreciation and amortization
expense ....................... $ 11 $ 16 $ 5 $ 5 $ 10 $ 2
Impairment charge and related
matters (4) ..................... $ — $ 8 $ — $ — $ — $ —
Adjusted EBITDA ................ $ 81 $ 158 $ 68 $ 80 $ 148 $ 39
Crude oil purchases (thousands of
bpd) ......................... 669 674 690 654 663 638
Gross profit per barrel purchased
(cents) (5) ...................... 138.0 92.8 111.8 49.8 66.0 21.0
Average crude oil price (per barrel) . . . $88.20 $96.20 $94.02 $95.52 $ 95.14 $79.55
(1) The effective date of the acquisition for accounting and reporting purposes was deemed to be October 1,
2012. The activity from October 1, 2012 through October 4, 2012 was not material in relation to the
Partnership’s financial position, results of operations or cash flows.
(2) Includes results from the crude oil acquisition and marketing business acquired from Texon in August 2011
from the acquisition date.
(3) In the third quarter 2011, we realigned our reporting segments to separately report the results of the Crude
Oil Pipelines and Crude Oil Acquisition and Marketing segments, which had previously been combined. For
comparative purposes, all prior period amounts have been recast to reflect the new segment reporting.
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