Sunoco 2012 Annual Report Download - page 84

Big Sandy, Texas for $11 million. The buyer also assumed a $1 million environmental liability
associated with the assets. The net book value of the assets sold and liability transferred approximated
the sale price. In connection with the sale, the Partnership also agreed to cancel existing throughput and
deficiency agreements in exchange for cash payments of $11 million. The Partnership recognized a
total gain of $11 million related primarily to the contract settlement. The gain was recorded as $6 and
$5 million within the Terminal Facilities and Refined Products Pipelines segments, respectively.
• In July 2010, the Partnership acquired a butane blending business from Texon for $152 million
including the fair value of its refined product inventory. The acquisition included patented technology
for blending of butane into refined products, contracts with customers currently utilizing the patented
technology, butane inventories and other related assets. Goodwill was recognized related to expected
synergies with the Partnership’s terminal facilities. The acquisition was included within the Terminal
Facilities segment.
• In July 2010, the Partnership exercised its rights to acquire an additional ownership interest in West
Shore Pipeline Company (“West Shore”) from an affiliate of BP for $6 million, increasing its
ownership interest from 12.3 percent to 17.1 percent. West Shore owns approximately 650 miles of
common carrier refined products pipelines that originate in Chicago, Illinois and services delivery
points from Chicago to Wisconsin. The investment is accounted for as an equity method investment
within the Partnership’s Refined Products Pipelines segment, with the equity income recorded based on
the Partnership’s ownership percentage from the date of acquisition.
• In July 2010, the Partnership exercised its rights to acquire an additional ownership interest in Mid-
Valley from an affiliate of BP for $58 million, increasing its ownership interest from 55.3 percent to
91.0 percent. Mid-Valley owns, and the Partnership is the operator of, an approximately 1,000-mile
common carrier pipeline, which originates in Longview, Texas and terminates in Samaria, Michigan.
The pipeline provides crude oil to a number of refineries, primarily in the midwest United States.
In August 2010, the Partnership exercised similar rights to acquire an additional ownership interest in
West Texas Gulf from an affiliate of BP for $27 million, increasing its ownership interest from 43.8
percent to 60.3 percent. West Texas Gulf owns, and the Partnership is the operator of, an
approximately 600-mile common carrier crude oil pipeline system which originates from the West
Texas oil fields at Colorado City and extends to Longview, Texas where deliveries are made to several
pipelines, including Mid-Valley.
As the Partnership acquired a controlling financial interest in both Mid-Valley and West Texas Gulf,
the joint ventures were reflected as consolidated subsidiaries of the Partnership from their respective
acquisition dates. The acquisitions were included within the Crude Oil Pipelines segment from the
respective acquisition dates. Gains attributable to the re-measurement of the previously held equity
interests in Mid-Valley and West Texas Gulf totaling $128 million were recognized in “Gain on
investments in affiliates” in the consolidated statement of comprehensive income for the year ended
December 31, 2010. The fair value of the Partnership’s pre-acquisition equity interests in Mid-Valley
and West Texas Gulf, $90 and $72 million, respectively, were determined based on the amounts paid
by the Partnership, which were equal to the offers of other prospective acquirers (level 1 observable
inputs). The Partnership used the same methodology to determine the fair value of the noncontrolling
interests.
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