Sunoco 2015 Annual Report Download - page 47

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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 operates a logistics business,
consisting of a geographically diverse portfolio of integrated pipeline, terminalling, and acquisition and marketing assets which
are used to facilitate the purchase and sale of crude oil, natural gas liquids ("NGLs") and refined products. 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, NGLs and refined products 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, NGLs and refined
products. 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.
We are a consolidated subsidiary of Energy Transfer Partners, L.P. ("ETP"), the controlling member of our general partner.
In addition to our general partner interest, ETP also owns 76.5 million common units and Class B units, which represents a 27.1
percent limited partner ownership interest in the Partnership and all of our incentive distribution rights.
During the fourth quarter 2015, we realigned our reporting segments as a result of the continued investment in our organic
growth capital program which has served to increase the integration that exists between our assets that service each commodity.
This has also resulted in a shift in Management's strategic decision making process, resource allocation methodology, and
assessment of our financial results. The updated reporting segments are: Crude Oil, Natural Gas Liquids and Refined Products.
The new segmentation will provide our investors with a more meaningful view of our business that is consistent with that of
Management. For the purpose of comparability, all prior year segment disclosures have been recast to conform to the current
year presentation. Such recasts have no impact on previously reported consolidated earnings.
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 operational 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 $597 million during the three-year period ended December 31, 2015:
• West Texas Gulf Pipe Line Company - In December 2014, we acquired an additional 28.3 percent ownership
interest in 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 is now wholly-owned and continues to be reported in our Crude Oil
segment.
• EDF Trading - In May 2014, we acquired a crude oil purchasing and marketing business from EDF Trading North
America, LLC ("EDF"). The purchase consisted of a crude oil acquisition and marketing business and related assets
which handle 20 thousand barrels per day. The acquisition also included a promissory note that was convertible to
an equity interest in a rail facility (see Price River Terminal, below). The acquisition is included in our Crude Oil
segment.
• Price River Terminal - In May 2014, we acquired a 55 percent economic and voting interest in Price River
Terminal, LLC ("PRT"), a rail facility in Wellington, Utah. The terms of the acquisition provide PRT's
noncontrolling interest holders the option to sell their interests to the Partnership at a price defined in the purchase
agreement. Since we acquired a controlling financial interest in PRT, the entity was reflected as a consolidated
subsidiary from the acquisition date and is included in the Crude Oil segment.