Sunoco 2013 Annual Report Download - page 45

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The following table presents the operating results and key operating measures for our Crude Oil Pipelines segment for the
periods presented:
Successor Predecessor
Three Months
Ended
December 31,
2013
Nine Months
Ended
September 30,
2013
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
Nine Months
Ended
September 30,
2011
(in millions, except for barrel amounts) (in millions, except for barrel amounts)
Sales and other operating revenue
Unaffiliated customers $ 85 $ 210 $ 70 $ 187 $ 55 $ 141
Affiliates — — — — — 6
Intersegment revenue 54 146 40 101 31 86
Total sales and other operating revenue $ 139 $ 356 $ 110 $ 288 $ 86 $ 233
Depreciation and amortization expense $ 23 $ 67 $ 22 $ 19 $ 6 $ 19
Adjusted EBITDA $ 102 $ 247 $ 72 $ 203 $ 58 $ 149
Pipeline throughput (thousands of barrels per day
("bpd")) 2,009 1,817 1,584 1,546 1,577 1,591
Pipeline revenue per barrel (cents) 75.2 71.7 75.6 68.0 58.9 53.7
(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 our financial position, results of operations or cash flows.
Adjusted EBITDA for the Crude Oil Pipelines segment for the fourth quarter 2013 increased $30 million compared to the
period from October 5, 2012 to December 31, 2012. This increase was due primarily to higher throughput volumes ($30
million) largely attributable to expansion projects which began operating during 2013 and strong demand for West Texas crude
oil. Results also benefited from lower maintenance and integrity management costs ($2 million) which were offset by
increased utility costs associated with higher throughput volumes and lower pipeline operating gains ($2 million).
Adjusted EBITDA for the Crude Oil Pipelines segment increased $44 million to $247 million for the nine months ended
September 30, 2013, compared to $203 million for the period from January 1, 2012 to October 4, 2012. The increase in
Adjusted EBITDA was due primarily to higher throughput volumes ($49 million) largely attributable to our pipeline expansion
projects in Texas and Oklahoma and higher pipeline tariffs ($19 million). These improvements were partially offset by higher
operating expenses ($24 million) driven primarily by lower pipeline operating gains, increased environmental remediation
expenses, higher utility costs associated with higher throughput volumes and increased maintenance costs.
Adjusted EBITDA for the Crude Oil Pipelines segment for the period from October 5, 2012 to December 31, 2012
increased $14 million compared to the prior year period due primarily to higher pipeline tariffs which were the result of organic
projects placed into service during 2012 and an improved mix of higher tariff movements driven by strong demand for West
Texas crude oil ($24 million). These improvements were partially offset by lower pipeline operating gains ($3 million), higher
maintenance and integrity management costs ($3 million) and increased selling, general and administrative expenses ($3
million).
Adjusted EBITDA for the Crude Oil Pipelines segment increased $54 million to $203 million for the period from
January 1, 2012 to October 4, 2012, as compared to $149 million for the nine months ended September 30, 2011. The increase
in Adjusted EBITDA was driven primarily by higher pipeline fees which benefited from tariff increases relative to the prior
year period, organic growth projects and an improved mix of pipeline movements which benefited from the demand for West
Texas crude oil ($61 million). Partially offsetting these improvements were increased selling, general and administrative
expenses ($7 million) and overall volume reductions ($6 million).
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.