Document
 
 
 
 
 
 
 
 
 
 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
 
(Mark One)
ý    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2018
OR 
¨    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from             to             
 Commission file number 1-9356 
 
Buckeye Partners, L.P.
(Exact name of registrant as specified in its charter)
 
Delaware
 
23-2432497
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification number)
 
 
 
One Greenway Plaza
 
 
Suite 600
 
 
Houston, TX
 
77046
(Address of principal executive offices)
 
(Zip Code)
 Registrant’s telephone number, including area code: (832) 615-8600
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨ 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý  No ¨ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
ý
 
Accelerated filer ¨ 
Non-accelerated filer
¨ 
 
Smaller reporting company ¨ 
(Do not check if a smaller reporting company)
 
Emerging growth company
¨
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ý 
Limited partner units and Class C Units outstanding as of July 27, 2018: 146,944,898 and 6,439,316, respectively.
 
 
 
 
 


Table of Contents

TABLE OF CONTENTS
 
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.
 
 
 
2.
 
 
 
3.
 
 
 
4.
 
 
 
5.
 
 
 
6.
 
 
 
7.

 
 
8.
 
 
 
9.
 
 
 
10.
 
 
 
11.
 
 
 
12.
 
 
 
13.
 
 
 
14.
 
 
 
15.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Table of Contents

PART I.  FINANCIAL INFORMATION 
Item 1.  Financial Statements 
BUCKEYE PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)
(Unaudited) 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Revenue:
 

 
 

 
 

 
 

Product sales
$
556,850

 
$
399,805

 
$
1,349,037

 
$
965,225

Transportation, storage and other services
383,989

 
410,396

 
774,907

 
814,249

Total revenue
940,839

 
810,201

 
2,123,944

 
1,779,474

 
 
 
 
 
 
 
 
Costs and expenses:
 

 
 

 
 

 
 

Cost of product sales
552,399

 
392,578

 
1,337,726

 
940,628

Operating expenses
156,505

 
162,107

 
311,373

 
323,529

Depreciation and amortization
66,569

 
64,838

 
130,707

 
130,326

General and administrative
21,792

 
24,346

 
45,081

 
46,083

Other, net
(2,123
)
 
(4,422
)
 
(16,153
)
 
(4,422
)
Total costs and expenses
795,142

 
639,447

 
1,808,734

 
1,436,144

Operating income
145,697

 
170,754

 
315,210

 
343,330

 
 
 
 
 
 
 
 
Other income (expense):
 

 
 

 
 

 
 

Earnings from equity investments
8,265

 
3,120

 
15,754

 
13,478

Interest and debt expense
(59,566
)
 
(56,424
)
 
(118,671
)
 
(112,309
)
Other expense
(297
)
 
(32
)
 
(612
)
 
(550
)
Total other expense, net
(51,598
)
 
(53,336
)
 
(103,529
)
 
(99,381
)
 
 
 
 
 
 
 
 
Income before taxes
94,099

 
117,418

 
211,681

 
243,949

Income tax expense
(782
)
 
(1,039
)
 
(1,272
)
 
(1,261
)
Net income
93,317

 
116,379

 
210,409

 
242,688

Less: Net income attributable to noncontrolling interests
(1,413
)
 
(3,657
)
 
(6,132
)
 
(6,390
)
Net income attributable to Buckeye Partners, L.P.
$
91,904

 
$
112,722

 
$
204,277

 
$
236,298

 
 
 
 
 
 
 
 
Earnings per unit attributable to Buckeye Partners, L.P.:
 
 

 
 

 
 

Basic
$
0.59

 
$
0.80

 
$
1.34

 
$
1.68

Diluted
$
0.59

 
$
0.80

 
$
1.33

 
$
1.67

 
 
 
 
 
 
 
 
Weighted average units outstanding:
 

 
 

 
 

 
 

Basic
153,258

 
140,826

 
151,093

 
140,603

Diluted
153,989

 
141,505

 
151,770

 
141,253

 
See Notes to Unaudited Condensed Consolidated Financial Statements.

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Table of Contents

BUCKEYE PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Net income
$
93,317

 
$
116,379

 
$
210,409

 
$
242,688

Other comprehensive income:
 
 
 
 
 

 
 

Unrealized gains (losses) on derivative instruments, net
8,936

 
(9,216
)
 
23,074

 
(6,231
)
Reclassification of derivative losses to net income, net
2,295

 
3,037

 
4,632

 
6,075

Changes in benefit plan assets and benefit obligations
(18
)
 
(161
)
 

 
16

Other comprehensive (loss) income from equity method investments
(21,720
)
 
24,855

 
(7,757
)
 
27,746

Total other comprehensive (loss) income
(10,507
)
 
18,515

 
19,949

 
27,606

Comprehensive income
82,810

 
134,894

 
230,358

 
270,294

Less: Comprehensive income attributable to noncontrolling interests
(1,413
)
 
(3,657
)
 
(6,132
)
 
(6,390
)
Comprehensive income attributable to Buckeye Partners, L.P.
$
81,397

 
$
131,237

 
$
224,226

 
$
263,904

 
See Notes to Unaudited Condensed Consolidated Financial Statements.

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Table of Contents

BUCKEYE PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit amounts)
(Unaudited)
 
June 30,
2018
 
December 31,
2017
Assets:
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
1,657

 
$
2,180

Accounts receivable, net
218,723

 
270,648

Construction and pipeline relocation receivables
11,529

 
11,047

Inventories
155,923

 
301,425

Derivative assets
53,547

 
34,959

Prepaid and other current assets
65,604

 
36,339

Total current assets
506,983

 
656,598

 
 
 
 
Property, plant and equipment
8,177,763

 
7,928,240

Less: Accumulated depreciation
(1,288,328
)
 
(1,192,448
)
Property, plant and equipment, net
6,889,435

 
6,735,792

 
 
 
 
Equity investments
1,482,081

 
1,494,412

Goodwill
1,007,355

 
1,007,313

 
 
 
 
Intangible assets
615,086

 
615,086

Less: Accumulated amortization
(288,629
)
 
(256,025
)
Intangible assets, net
326,457

 
359,061

 
 
 
 
Other non-current assets
38,635

 
51,483

Total assets
$
10,250,946

 
$
10,304,659

 
 
 
 
Liabilities and partners’ capital:
 

 
 

Current liabilities:
 

 
 

Line of credit
$
171,006

 
$
252,204

Accounts payable
86,326

 
160,777

Derivative liabilities
2,854

 
7,172

Accrued and other current liabilities
242,755

 
265,207

Total current liabilities
502,941

 
685,360

 
 
 
 
Long-term debt
4,877,890

 
4,658,321

Other non-current liabilities
90,526

 
92,656

Total liabilities
5,471,357

 
5,436,337

 
 
 
 
Commitments and contingent liabilities (Note 4)

 

 
 

 
 

Buckeye Partners, L.P. capital:
 

 
 

Limited Partners (146,944,570 and 146,677,459 units outstanding as of June 30, 2018 and December 31, 2017, respectively)
4,441,505

 
4,562,306

Class C Units (6,439,316 and zero units outstanding as of June 30, 2018 and December 31, 2017, respectively)
278,255

 

Accumulated other comprehensive income
48,580

 
28,631

Total Buckeye Partners, L.P. capital
4,768,340

 
4,590,937

Noncontrolling interests
11,249

 
277,385

Total partners’ capital
4,779,589

 
4,868,322

Total liabilities and partners’ capital
$
10,250,946

 
$
10,304,659

 
See Notes to Unaudited Condensed Consolidated Financial Statements.

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Table of Contents

BUCKEYE PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited) 
 
Six Months Ended
June 30,
 
2018
 
2017
Cash flows from operating activities:
 

 
 

Net income
$
210,409

 
$
242,688

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 

 
 
Depreciation and amortization
130,707

 
130,326

Amortization of debt issuance costs, discounts and terminated interest rate swaps
7,828

 
8,722

Non-cash unit-based compensation expense
16,772

 
17,665

Gain on asset impairments, disposals and recoveries, net
(15,655
)
 
(4,621
)
Changes in fair value of derivatives, net
190

 
(29,484
)
Earnings from equity investments
(15,754
)
 
(13,478
)
Distributions of earnings from equity investments
15,613

 
17,700

Other non-cash items
1,785

 
1,105

Change in assets and liabilities, net of amounts related to acquisitions:
 

 
 
Accounts receivable, net
49,409

 
38,281

Construction and pipeline relocation receivables
(482
)
 
(2,762
)
Inventories
145,516

 
70,329

Prepaid and other current assets
(29,275
)
 
16,557

Accounts payable
(79,125
)
 
(45,361
)
Accrued and other current liabilities
(24,036
)
 
(8,164
)
Other non-current assets and liabilities
17,239

 
(3,282
)
Net cash provided by operating activities
431,141

 
436,221

Cash flows from investing activities:
 

 
 

Capital expenditures
(250,035
)
 
(202,961
)
Acquisition of and contribution to equity investments
(28,361
)
 
(1,150,000
)
Distributions from equity investments in excess of earnings
32,928

 
7,402

Acquisition working capital settlement
883

 

Proceeds from property disposals and recoveries
9,388

 
5,049

Net cash used in investing activities
(235,197
)
 
(1,340,510
)
Cash flows from financing activities:
 

 
 

Net proceeds from issuance of Units and exercise of Unit options
262,042

 
48,921

Payment of tax withholding on vesting of LTIP awards
(6,728
)
 
(8,305
)
Net proceeds from issuance of long-term debt
394,936

 

Repayment of long-term debt
(300,000
)
 

Borrowings under the BPL Credit Facility
1,294,180

 
865,890

Repayments under the BPL Credit Facility
(1,172,340
)
 
(505,890
)
Net (repayments) borrowings under the BMSC Credit Facility
(81,198
)
 
227,260

Acquisition of noncontrolling interest
(210,000
)
 

Contributions from noncontrolling interests
7,400

 
5,600

Distributions to noncontrolling interests
(12,602
)
 
(16,892
)
Distributions to LP unitholders
(372,157
)
 
(350,260
)
Net cash (used in) provided by financing activities
(196,467
)
 
266,324

Net decrease in cash and cash equivalents
(523
)
 
(637,965
)
Cash and cash equivalents — Beginning of period
2,180

 
640,340

Cash and cash equivalents — End of period
$
1,657

 
$
2,375

 
See Notes to Unaudited Condensed Consolidated Financial Statements.

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Table of Contents

BUCKEYE PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(In thousands)
(Unaudited)
 
 
Limited
 Partners
 
Class C
 Units
 
Accumulated
 Other Comprehensive
 Income (Loss)
 
Noncontrolling
 Interests
 
Total
Partners’ capital - January 1, 2018
$
4,562,306

 
$

 
$
28,631

 
$
277,385

 
$
4,868,322

Net income
198,923

 
5,354

 

 
6,132

 
210,409

Acquisition of noncontrolling interest
54,660

 
2,346

 

 
(267,006
)
 
(210,000
)
Distributions paid to unitholders
(373,529
)
 

 

 
1,372

 
(372,157
)
In-kind distribution to unitholders
(8,469
)
 
8,469

 

 

 

Net proceeds from issuance of Units

 
262,086

 

 

 
262,086

Amortization of unit-based compensation awards
16,772

 

 

 

 
16,772

Payment of tax withholding on vesting of LTIP awards
(6,728
)
 

 

 

 
(6,728
)
Distributions paid to noncontrolling interests

 

 

 
(14,034
)
 
(14,034
)
Contributions from noncontrolling interests

 

 

 
7,400

 
7,400

Other comprehensive income

 

 
19,949

 

 
19,949

Accrual of distribution equivalent rights
(2,386
)
 

 

 

 
(2,386
)
Other
(44
)
 
 
 

 

 
(44
)
Partners’ capital - June 30, 2018
$
4,441,505

 
$
278,255

 
$
48,580

 
$
11,249

 
$
4,779,589

 
 
 
 
 
 
 
 
 
 
Partners’ capital - January 1, 2017
$
4,437,316

 
$

 
$
(25,593
)
 
$
286,700

 
$
4,698,423

Net income
236,298

 

 

 
6,390

 
242,688

Distributions paid to unitholders
(351,718
)
 

 

 
1,458

 
(350,260
)
Net proceeds from issuance of LP Units
48,440

 

 

 

 
48,440

Amortization of unit-based compensation awards
17,665

 

 

 

 
17,665

Net proceeds from exercise of Unit options
481

 

 

 

 
481

Payment of tax withholding on vesting of LTIP awards
(8,305
)
 

 

 

 
(8,305
)
Distributions paid to noncontrolling interests

 

 

 
(16,892
)
 
(16,892
)
Contributions from noncontrolling interests

 

 

 
5,600

 
5,600

Other comprehensive income

 

 
27,606

 

 
27,606

Accrual of distribution equivalent rights
(1,972
)
 

 

 

 
(1,972
)
Other
(37
)
 

 

 
37

 

Partners’ capital - June 30, 2017
$
4,378,168

 
$

 
$
2,013

 
$
283,293

 
$
4,663,474

 
See Notes to Unaudited Condensed Consolidated Financial Statements.


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Table of Contents

BUCKEYE PARTNERS, L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
1. ORGANIZATION AND BASIS OF PRESENTATION
 
Organization
 
Buckeye Partners, L.P. is a publicly traded Delaware master limited partnership (“MLP”), and its limited partner units representing limited partnership interests (“LP Units”) are listed on the New York Stock Exchange under the ticker symbol “BPL.”  Buckeye GP LLC (“Buckeye GP”) is our general partner.  As used in these Notes to Unaudited Condensed Consolidated Financial Statements, “we,” “us,” “our,” the “Partnership” and “Buckeye” mean Buckeye Partners, L.P. and, where the context requires, include our subsidiaries.
 
We own and operate, or own a significant interest in, a diversified global network of integrated assets providing midstream logistic solutions, primarily consisting of the transportation, storage, processing and marketing of liquid petroleum products.  We are one of the largest independent liquid petroleum products pipeline operators in the United States in terms of volumes delivered, with approximately 6,000 miles of pipeline. We also use our service expertise to operate and/or maintain third-party pipelines and perform certain engineering and construction services for our customers. Our global terminal network, including through our interest in VTTI B.V. (“VTTI”), comprises more than 135 liquid petroleum products terminals with aggregate tank capacity of over 176 million barrels across our portfolio of pipelines, inland terminals and marine terminals located primarily in the East Coast, Midwest and Gulf Coast regions of the United States as well as in the Caribbean, Northwest Europe, the Middle East and Southeast Asia.  Our global network of marine terminals enables us to facilitate global flows of crude oil and refined petroleum products, offering our customers connectivity between supply areas and market centers through some of the world’s most important bulk liquid storage and blending hubs.  Our flagship marine terminal in The Bahamas, Buckeye Bahamas Hub Limited (“BBH”), is one of the largest marine crude oil and refined petroleum products storage facilities in the world and provides an array of logistics and blending services for the global flow of petroleum products. Our Gulf Coast regional hub, Buckeye Texas Partners LLC (“Buckeye Texas”), offers world-class marine terminalling, storage and processing capabilities. Through our 50% equity interest in VTTI, our global terminal network offers premier storage and marine terminalling services for petroleum product logistics in key international energy hubs. We are also a wholesale distributor of refined petroleum products in certain areas served by our pipelines and terminals.
 
Basis of Presentation and Principles of Consolidation
 
The unaudited condensed consolidated financial statements and the accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the U.S. Securities and Exchange Commission (“SEC”).  Accordingly, our financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation of our results of operations for the interim periods.  The unaudited condensed consolidated financial statements include the accounts of our subsidiaries controlled by us and variable interest entities of which we are the primary beneficiary. Intercompany transactions are eliminated in consolidation.

The preparation of consolidated financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses during the reporting period and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates and assumptions about future events and their effects cannot be made with certainty.  Estimates may change as new events occur, when additional information becomes available and if our operating environment changes. Actual results could differ from our estimates.

We believe that the disclosures in these unaudited condensed consolidated financial statements are adequate to make the information presented not misleading.  These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2017.

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Recently Adopted Accounting Guidance

Revenue from Contracts with Customers. Effective January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), applying the modified retrospective transition method, which required us to apply the new standard to (i) all new revenue contracts entered into after January 1, 2018, and (ii) revenue contracts which were not completed as of January 1, 2018. ASC 606 replaces existing revenue recognition requirements in GAAP and requires entities to recognize revenue at an amount that reflects the consideration to which we expect to be entitled in exchange for transferring goods or services to a customer. ASC 606 also requires certain disclosures regarding qualitative and quantitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The adoption of ASC 606 did not result in a transition adjustment nor did it have a material impact on the timing or amount of our revenue recognition. Please see Note 2 for additional information.

Recognition and Measurement of Financial Assets and Liabilities. Effective January 1, 2018, we adopted Accounting Standards Update (“ASU”) 2016-01, and it will be applied prospectively. This ASU issued a new standard related to certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Most prominent among the changes in this standard is the requirement for changes in the fair value of marketable equity investments, with certain exceptions, to be recognized through net income rather than other comprehensive income (“OCI”). Under the standard, marketable equity investments that do not have a readily determinable fair value are eligible for the measurement alternative. Using the measurement alternative, investments without readily determinable fair values will be valued at cost, with adjustments to fair value for changes in price or impairments reflected through net income. The adoption of this guidance did not have an impact on our unaudited condensed consolidated financial statements.

Classification of Certain Cash Receipts and Cash Payments. Effective January 1, 2018, we adopted ASU 2016-15, applying the retrospective transition method. This ASU requires changes in the presentation of certain items, including but not limited to debt prepayment or debt extinguishment costs; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies and distributions received from equity method investees. The adoption of this guidance did not have a material impact on our unaudited condensed consolidated financial statements.

Business Combinations. Effective January 1, 2018, we adopted ASU 2017-01, and it will be applied prospectively to future business combinations. This ASU clarifies the definition of a business in order to assist entities with evaluating whether transactions should be accounted for as acquisitions/disposals of assets or businesses. The guidance provides a screen to help entities determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of assets is not a business. If the threshold of the screen is not met, the guidance further clarifies that the set of assets is not a business unless it includes an input and a substantive process that together significantly contribute to the ability to create output.

Retirement Benefits. Effective January 1, 2018, we adopted ASU 2017-07, which improves the presentation of net periodic pension and postretirement benefit costs. The interest cost, expected return on plan assets, actuarial loss due to settlements, and the amortization of unrecognized loss have been reclassified from operating expenses to other expense, applying the retrospective transition method. We elected to apply the practical expedient which allows us to reclassify amounts disclosed previously in the retirement benefits note as the basis for applying retrospective presentation for comparative periods as it is impracticable to determine the disaggregation of the cost components for amounts capitalized and amortized in those periods. On a prospective basis, the components of net periodic benefit costs discussed above will not be included in amounts capitalized in property, plant, and equipment. The adoption of this guidance did not have a material impact on our unaudited condensed consolidated financial statements. In connection with the adoption of ASU 2017-07, using the retrospective transition method, we reclassified $0.2 million and $0.7 million of expenses related to our Retirement Income Guarantee Plan and unfunded post-retirement benefit plan, originally included in operating expenses for the three and six months ended June 30, 2017, respectively, to other expense. Such reclassifications had no impact on net income.

Modifications to Share-Based Payment Awards. Effective January 1, 2018, we adopted ASU 2017-09, and it will be applied prospectively to future modifications of our unit-based awards, if any. This guidance clarifies when changes in the terms or conditions of share-based payment awards must be accounted for as modifications under existing guidance. The guidance requires that entities apply modification accounting unless the award’s fair value, vesting conditions and classification as an equity or liability instrument are the same immediately before and after the change.


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Tax Cuts and Jobs Act. In December 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was passed into law. The Tax Act makes changes to the U.S. tax code including, but not limited to (i) reducing the U.S. federal corporate income tax rate from a top rate of 35% to 21% effective January 1, 2018, (ii) requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that may electively be paid over eight years, and (iii) accelerated first-year expensing of certain capital expenditures.
    
Shortly after the Tax Act was enacted, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) which provides guidance on accounting for the Tax Act’s impact. SAB 118 provides a measurement period, which in no case should extend beyond one year from the Tax Act enactment date, during which an entity acting in good faith may complete the accounting for the impacts of the Tax Act under ASC Topic 740. In accordance with SAB 118, the entity must reflect the income tax effects of the Tax Act in the reporting period in which the accounting under ASC Topic 740 is complete. With the exception of federal and state income taxes from Buckeye Development & Logistics I LLC (“BDL”), the Partnership’s federal and certain state income taxes are the responsibility of the partners and are not reflected in these consolidated financial statements. Accordingly, the Tax Act did not have a material impact on our unaudited condensed consolidated financial statements or on our disclosures. We continue to evaluate certain aspects of the Tax Act and have recorded certain adjustments to our deferred taxes.

Recent Accounting Guidance Not Yet Adopted

Improvements to Nonemployee Share-Based Payment Accounting.  In May 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-07 which conformed the current nonemployee share-based accounting with employee share-based accounting. The new standard is effective as of January 1, 2019, and early adoption is permitted. We expect to adopt this standard on January 1, 2019. We do not believe our adoption of this guidance will have a material impact on our consolidated financial statements or on our disclosures.

Derivatives and Hedging. In August 2017, the FASB issued ASU 2017-12 which amends and simplifies existing guidance in order to improve the financial reporting of hedging relationships to better align risk management activities in financial statements and make targeted improvements to simplify the application of current guidance related to the assessment of hedge effectiveness. The amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early application permitted. The new guidance requires prospective application, with a cumulative effect adjustment to the beginning balance of partners’ capital for existing hedging relationships. We expect to adopt this standard on January 1, 2019. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements.

Goodwill Impairment.  In January 2017, the FASB issued ASU 2017-04 simplifying the test for goodwill impairment. The guidance eliminates Step 2 from the goodwill impairment test, which required entities to calculate the implied fair value of a reporting unit’s goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Under the new guidance, entities will recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value. The guidance must be applied using a prospective approach and is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. We expect to adopt this standard on January 1, 2020. We do not believe our adoption of this guidance will have a material impact on our consolidated financial statements or on our disclosures.

Measurement of Credit Losses on Financial Instruments.  In June 2016, the FASB issued ASU 2016-13 which replaces the current incurred loss impairment method with a method that reflects expected credit losses on financial instruments. The new standard is effective as of January 1, 2020, and early adoption is permitted as of January 1, 2019. We expect to adopt this standard on January 1, 2020. We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements.

Leases. In February 2016, the FASB issued ASU 2016-02 requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for leases with lease terms greater than twelve months. This update also requires enhanced disclosures regarding the amount, timing and uncertainty of cash flows arising from leases. The guidance must be applied using a modified retrospective approach. Our project team continues to (i) evaluate the provisions of the standard; (ii) assess and implement changes to business processes and controls; and (iii) evaluate the impact the adoption of this guidance will have on our consolidated financial statements, including our disclosures. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2018 and interim periods within those annual periods, with early adoption permitted. We expect to adopt this guidance on January 1, 2019.


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2. REVENUE FROM CONTRACTS WITH CUSTOMERS

The majority of our service-based revenue is derived from fee-based transportation, terminalling, and storage services that we provide to our customers. We also generate revenue from the marketing and sale of petroleum products. We recognize revenues from customer fees for services rendered or by selling petroleum products. Under ASC 606, we recognize revenue over time or at a point in time, depending on the nature of the performance obligations contained in the respective contract with our customer. A performance obligation is a promise in a contract to transfer goods or services to the customer. The contract transaction price is allocated to each performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. In certain situations, we recognize revenue pursuant to guidance in the Accounting Standards Codification other than ASC 606. These situations primarily relate to leases and derivatives. The adoption of ASC 606 did not have a material impact on the timing or amount of our revenue recognition. The following is an overview of our significant revenue streams, including a description of the respective performance obligation and related method of revenue recognition.

Pipeline Transportation

Revenue from pipeline operations is comprised of tariffs and fees associated with the transportation of liquid petroleum products generally at published tariffs, and in certain instances, revenue from committed capacity contracts at negotiated rates. Tariff revenue is recognized either at the point of delivery or at the point of receipt, pursuant to specifications outlined in the respective tariffs. Revenue associated with capacity reservation is recognized ratably over the respective term, regardless of whether the capacity is actually utilized. Our tariffs generally include product loss allowance factors intended to, among other things, compensate for losses due to evaporation, measurement tolerances, and other product losses in transit. We value the difference of allowance volumes to actual losses at the estimated net realizable value in the period the variance occurred, and the result is recorded as an adjustment to pipeline transportation revenue. The majority of our contracts have a single performance obligation to provide pipeline transportation service, and the performance obligation is primarily satisfied over time as transportation services are provided, whereby progress is generally measured based on the volume of product transported. Our services are typically billed on a weekly basis and we generally do not offer extended payment terms. In addition, we have certain agreements that require counterparties to throughput a minimum volume over an agreed-upon period. Revenue pursuant to such agreements is recognized at the earlier of when the volume is throughput or proportionally if we determine the customer is not expected to meet its commitment.

Terminalling and Storage Services

Revenue from storage and terminalling operations is recognized as services are performed. Storage and terminalling revenue includes storage fees, which are generated as we provide storage capacity, and terminalling or throughput fees, which are generated when we receive and redeliver liquid petroleum products from and to pipelines, sea-going vessels, trucks, or rail-cars. We generate revenue through a combination of month-to-month and multi-year storage capacity and terminalling service arrangements. The majority of our contracts have a single performance obligation to provide storage and terminalling services that is primarily satisfied over time as these services are provided. Storage fees for contract capacity are typically recognized in revenue ratably over the term of the contract, regardless of the amount of the contracted storage capacity utilized by the customer. Terminalling fees, as applicable, are recognized as the liquid petroleum product is delivered to a connecting carrier or to a customer’s designated mode of transport, which could include a pipeline, truck, marine vessel, or rail-car or, in certain situations, as product is received, based on the volume of product handled. As discussed above with respect to transportation services, progress in performing terminalling services is generally measured based upon the volume of product handled. Certain of our terminalling and storage services arrangements include product loss allowance provisions intended to, among other things, compensate for losses due to evaporation, measurement tolerances, and other product recoveries and losses. We value the difference of allowance volumes to actual losses at the estimated net realizable value in the period the variance occurred, and the result is recorded as an adjustment to terminalling and storage services revenue. We have certain contracts containing tiered pricing or volume based discounts, which are recognized in revenue as a purchase option to acquire additional services in the period the services are performed. In addition, we have certain agreements that require counterparties to throughput a minimum volume over an agreed-upon period. Revenue pursuant to such agreements is recognized at the earlier of when the volume is throughput or proportionally if we determine the customer is not expected to meet its commitment. Revenue from other ancillary services is recognized as services are rendered. Our services are typically billed on a monthly basis and we generally do not offer extended payment terms.


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Merchant Services

Revenue from the sale of petroleum products, which are sold on a wholesale basis, is recognized at the time title to the product sold transfers to the purchaser, which generally occurs upon delivery of the product to the purchaser or its designee. Our contracts contain a single performance obligation to sell a particular petroleum product, which is generally satisfied as quantities are delivered to our customer. Our commodity sales are typically billed at the time product is delivered and we generally do not offer extended payment terms.

Operation and Construction Services

Revenue from contract operation and construction services for facilities and pipelines not directly owned by us is recognized as the services are performed. Contract and construction services revenue typically includes costs to be reimbursed by the customer plus an operator fee. Our contracts have a single performance obligation to provide operation and construction services, which is satisfied over time as services are provided. Revenue is generally recognized utilizing costs incurred to measure our progress in fulfilling our performance obligation. Our services are typically billed on a monthly basis and we generally do not offer extended payment terms.

Contract Balances

Contract assets primarily relate to our rights to consideration for completed performance obligations that are not billable at the reporting date. We recognize contract assets in situations where revenue recognition occurs prior to billing the customer based on our rights under the contract. Contract assets are transferred to accounts receivable when the rights become unconditional, which is generally upon billing.

Contract liabilities primarily relate to consideration received from customers in advance of completing the performance obligation. We recognize contract liabilities under these arrangements as revenue once all contingencies or potential performance obligations have either been satisfied by the (i) transportation of volumes, (ii) performance of terminalling and storage services, or (iii) expiration of the customer’s rights under the contract. We also recognize contract liabilities in revenue to the extent it is determined that an amount of volume associated with a minimum volume commitment payment will not be shipped by the customer in a future period.

The following table provides information about receivables from contracts with customers, contract assets and contract liabilities from contracts with customers (in thousands):
 
June 30,
2018
 
December 31, 2017
Receivables from contracts with customers
$
199,330

 
$
245,280

Contract assets
25,881

 
13,999

Contract liabilities
(27,376
)
 
(15,778
)

During the three and six months ended June 30, 2018, we reclassified approximately $0.1 million and $13.8 million, respectively, of contract assets at the beginning of the period to receivables as a result of the rights to the consideration becoming unconditional and billable. Revenue recognized during the three and six months ended June 30, 2018 from amounts included in contract liabilities at the beginning of the period was approximately $1.0 million and $6.6 million, respectively.

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The following table includes estimated revenue associated with contractual commitments in place, which are expected to be recognized in revenue in the specified period related to future performance obligations as of the end of the reporting period (in thousands):
 
Estimated Revenue (1)
Remainder of 2018
$
213,494

2019
272,107

2020
185,453

2021
113,456

Thereafter
230,468

Total
$
1,014,978

                                                      
(1)
Excludes revenue arrangements accounted for as leases in the amount of $112.7 million for the remainder of 2018, $201.8 million for 2019, $194.2 million for 2020, $175.9 million for 2021, and $173.6 million thereafter.

Our contractually committed revenue disclosure, for purposes of the tabular presentation above, excludes estimates of variable rate escalation clauses in our contracts with customers and is generally limited to contracts which have fixed pricing and minimum volume terms and conditions. Our contractually committed revenue disclosure generally excludes remaining performance obligations on contracts with index-based pricing or variable volume attributes.

3. ACQUISITIONS AND INVESTMENTS
 
South Texas Transactions

In April 2018, as part of our strategy to serve the volume growth in crude oil and related products from the Permian Basin, we expanded our marine terminal presence in Corpus Christi, Texas, through the following transactions, (i) acquired our business partner’s 20% interest in our Buckeye Texas consolidated subsidiary, and (ii) formed a joint venture (the “South Texas Gateway Terminal”) to develop a new deep-water, open access marine terminal in Ingleside, Texas at the mouth of Corpus Christi Bay with Phillips 66 Partners LP (“Phillips 66 Partners”) and Gray Oak Gateway Holdings (“Andeavor”).

We acquired our partner’s interest in Buckeye Texas for $210 million, and as a result we now own 100% of Buckeye Texas. The change in our ownership interest was accounted for as an equity transaction representing the acquisition of a noncontrolling interest.

The South Texas Gateway Terminal, to be constructed and operated by us, will initially offer 3.4 million barrels of crude oil storage capacity, connectivity to the Gray Oak pipeline and two deep-water vessel docks capable of berthing very large crude carrier petroleum tankers as part of the initial scope of construction. The Gray Oak pipeline will provide crude oil transportation from West Texas to destinations in the Corpus Christi and Sweeny/Freeport markets. Both the terminal and the pipeline are expected to be placed in service by the end of 2019. South Texas Gateway Terminal is supported by long-term minimum volume throughput commitments from credit-worthy customers, including our partners. We own a 50% interest in South Texas Gateway Terminal and Phillips 66 Partners and Andeavor each own a 25% interest. During the three months ended June 30, 2018, we contributed an initial $28.4 million and committed to fund our proportionate share of the construction costs. We account for our interest in South Texas Gateway Terminal, which is included in our Global Marine Terminals segment, using the equity method of accounting.


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Business Combination

Duck Island terminal acquisition

In December 2017, we acquired Duck Island Terminal LLC, a liquid petroleum products terminalling business in Trenton, New Jersey, for approximately $26.1 million, net of cash acquired of $2.4 million. The final working capital settlement of $0.9 million was received in the first quarter of 2018. The assets of this entity are reported in our Domestic Pipelines & Terminals segment. The purchase price has been allocated on a preliminary basis to assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with amounts exceeding the fair value recorded as goodwill, which represent expected synergies from combining the acquired assets with our existing operations. Fair values have been developed using recognized business valuation techniques, with inputs classified as Level 3 within the fair value hierarchy.  The purchase price has been allocated to tangible and intangible assets acquired as follows (in thousands):
Current assets, including cash acquired of $2,444
$
8,989

Property, plant and equipment
18,306

Intangible assets
2,200

Goodwill
2,811

Current liabilities
(3,516
)
Environmental liabilities
(299
)
Allocated purchase price
$
28,491


Adjustments to the preliminary purchase price allocation during the six months ended June 30, 2018 resulted in nominal decreases to current assets and current liabilities, with a corresponding increase to goodwill.

Unaudited Pro forma Financial Results for Duck Island terminal acquisition

Our unaudited condensed consolidated statements of operations do not include earnings from the terminalling business prior to December 20, 2017, the closing date of the acquisition. Unaudited pro forma financial information for this acquisition was not prepared because the impact was immaterial to our financial results for the three and six months ended June 30, 2018.

VTTI Acquisition

In January 2017, we acquired an indirect 50% equity interest in VTTI for cash consideration of $1.15 billion (the “VTTI Acquisition”). We own VTTI jointly with Vitol S.A. (“Vitol”). VTTI is one of the largest independent global marine terminal businesses which, through its subsidiaries and partnership interests, owns and operates approximately 58 million barrels of petroleum products storage across 14 terminals located on five continents. These marine terminals are predominately located in key global energy hubs, including Northwest Europe, the Middle East and Southeast Asia, and offer world-class storage and marine terminalling services for liquid petroleum products. We and VIP Terminals Finance B.V., a subsidiary of Vitol, have equal board representation and voting rights in the VTTI joint venture. We account for this investment using the equity method of accounting. The earnings from our equity investment in VTTI are reported in our Global Marine Terminals segment. In addition, we include our proportionate share of our equity method investments’ unrealized gains and losses in OCI in our unaudited condensed consolidated financial statements.
 
The fair values used to calculate the excess net investment in VTTI were primarily developed using an income approach, with inputs classified as Level 3 within the fair value hierarchy. The excess net investment was $584.4 million at the acquisition date and was comprised of the following components: (i) $240.7 million related to the excess of the fair values of identifiable property, plant and equipment and intangible assets over their carrying values, which is being amortized on a straight-line basis over the estimated useful lives of these underlying assets of approximately 28 years; and (ii) $343.7 million of implied goodwill, which is not subject to amortization. The amortization of the excess net investment is included in earnings from equity investments on our unaudited condensed consolidated statements of operations.

In September 2017, VTTI acquired all of the outstanding publicly held units of VTTI Energy Partners LP, formerly a publicly traded master limited partnership (“VTTI MLP”), for an aggregate cash consideration of $473.6 million (the “VTTI Merger”). In connection with the VTTI Merger, VTTI MLP merged with and into a direct wholly owned subsidiary of VTTI. We funded our 50% share of the aggregate cash consideration, in the amount of $236.8 million, excluding transaction costs, through a capital contribution to VTTI, using borrowings under our $1.5 billion revolving credit facility with SunTrust Bank (the “Credit Facility”).


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4. COMMITMENTS AND CONTINGENCIES
 
Claims and Legal Proceedings
 
In the ordinary course of business, we are involved in various claims and legal proceedings, some of which are covered by insurance.  We are generally unable to predict the timing or outcome of these claims and proceedings.  Based upon our evaluation of existing claims and proceedings and the probability of losses relating to such contingencies, we have accrued certain amounts relating to such claims and proceedings, none of which are considered material.

Environmental Contingencies
 
At June 30, 2018 and December 31, 2017, we had $39.1 million and $41.0 million, respectively, of environmental remediation liabilities unrelated to claims and legal proceedings.  Costs ultimately incurred may be in excess of our estimates, which may have a material impact on our financial condition, results of operations or cash flows.  At June 30, 2018 and December 31, 2017, we had $4.8 million and $5.3 million, respectively, of receivables related to these environmental remediation liabilities covered by insurance or third-party claims.

5. INVENTORIES
 
Our inventory amounts were as follows at the dates indicated (in thousands):
 
June 30,
2018
 
December 31,
2017
Liquid petroleum products (1)
$
134,011

 
$
280,934

Materials and supplies
21,912

 
20,491

Total inventories
$
155,923

 
$
301,425

                                                      
(1)
Ending inventory was 63.7 million and 142.1 million gallons of liquid petroleum products as of June 30, 2018 and December 31, 2017, respectively.
 
At June 30, 2018 and December 31, 2017, approximately 90% and 85% of our liquid petroleum products inventory volumes were designated in a fair value hedge relationship, respectively.  Because we generally designate inventory as a hedged item upon purchase, hedged inventory is valued at current market prices with the change in value of the inventory reflected in our unaudited condensed consolidated statements of operations. 

6. PREPAID AND OTHER CURRENT ASSETS
 
Prepaid and other current assets consist of the following at the dates indicated (in thousands):
 
June 30,
2018
 
December 31,
2017
Prepaid insurance
$
17,095

 
$
7,146

Margin deposits
2,592

 
7,989

Contract assets
25,881

 
13,999

Prepaid taxes
5,781

 
2,865

Other
14,255

 
4,340

Total prepaid and other current assets
$
65,604

 
$
36,339



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7. EQUITY INVESTMENTS
 
The following table presents earnings (loss) from equity investments for the periods indicated (in thousands): 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
Segment
 
2018
 
2017
 
2018
 
2017
VTTI B.V.
Global Marine Terminals
 
$
4,882

 
$
326

 
$
9,272

 
$
8,715

West Shore Pipe Line Company
Domestic Pipelines & Terminals
 
2,466

 
1,799

 
4,792

 
3,141

Muskegon Pipeline LLC
Domestic Pipelines & Terminals
 
431

 
468

 
756

 
802

Transport4, LLC
Domestic Pipelines & Terminals
 
221

 
271

 
450

 
444

South Portland Terminal LLC
Domestic Pipelines & Terminals
 
441

 
256

 
660

 
376

South Texas Gateway Terminal LLC (1)
Global Marine Terminals
 
(176
)
 

 
(176
)
 

Total earnings from equity investments
 
 
$
8,265

 
$
3,120

 
$
15,754

 
$
13,478

                                                      
(1)
In April 2018, we formed the South Texas Gateway Terminal joint venture. For additional information, see Note 3.

Summarized combined income statement data for our equity method investments are as follows for the periods indicated (amounts represent 100% of investee income statement data in thousands):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Revenue
$
145,622

 
$
133,355

 
$
290,690

 
$
260,039

Operating income
40,027

 
39,784

 
89,809

 
85,429

Net income
26,382

 
23,821

 
51,132

 
53,933

Net income attributable to investee
25,170

 
15,795

 
48,129

 
39,782


8. LONG-TERM DEBT

Extinguishment of Debt

In January 2018, we repaid in full the $300.0 million principal amount and $9.1 million of accrued interest outstanding under our 6.050% notes, using funds available under our Credit Facility.

Notes Offerings

In January 2018, we issued $400.0 million of junior subordinated notes (“Junior Notes”) maturing on January 22, 2078, which are redeemable at Buckeye’s option, in whole or in part, on or after January 22, 2023. The Junior Notes bear interest at a fixed rate of 6.375% per year up to, but not including, January 22, 2023. From January 22, 2023, the Junior Notes will bear interest at a floating rate based on the Three-Month London Interbank Offered Rate (“LIBOR”) plus 4.02%, reset quarterly. Total proceeds from this offering, after underwriting fees, expenses, and debt issuance costs, were $394.9 million. We used the net proceeds from this offering to reduce indebtedness outstanding under our Credit Facility and for general partnership purposes.

Current Maturities Expected to be Refinanced

We have classified $400.0 million of 2.650% notes due on November 15, 2018 as long-term debt in the unaudited condensed consolidated balance sheet at June 30, 2018 because we have the intent and the ability to refinance these obligations on a long-term basis under our Credit Facility. At June 30, 2018, we had $1,038.1 million of additional borrowing capacity under our Credit Facility.

Credit Facility

At June 30, 2018, we had a $459.5 million outstanding balance under the Credit Facility. The weighted average interest rate for borrowing under the Credit Facility was 3.3% during the six months ended June 30, 2018.

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9. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We are exposed to financial market risks, including changes in interest rates and commodity prices, in the course of our normal business operations.  We use derivative instruments to manage such risks.
 
Interest Rate Derivatives

From time to time, we utilize forward-starting interest rate swaps to hedge the variability of the forecasted interest payments on anticipated debt issuances that may result from changes in the benchmark interest rate until the expected debt is issued. When entering into interest rate swap transactions, we become exposed to both credit risk and market risk. We are subject to credit risk when the change in fair value of the swap instrument is positive and the counterparty may fail to perform under the terms of the contract. We are subject to market risk with respect to changes in the underlying benchmark interest rate that impacts the fair value of the swaps. We manage our credit risk by entering into swap transactions only with major financial institutions with investment-grade credit ratings. We manage our market risk by aligning the swap instrument with the existing underlying debt obligation or a specified expected debt issuance, generally associated with the maturity of an existing debt obligation. We designate the swap agreements as cash flow hedges at inception and expect the changes in values to be highly correlated with the changes in value of the underlying borrowings.

During 2016, we entered into eleven forward-starting interest rate swaps with a total aggregate notional amount of $500.0 million, in anticipation of the issuance of debt on or before November 15, 2018. We expect to issue new fixed-rate debt on or before November 15, 2018 to repay the $400.0 million of 2.650% notes that are due on November 15, 2018, as well as to fund capital expenditures and other general partnership purposes, although no assurances can be given that the issuance of fixed-rate debt will be possible on acceptable terms.

During the three and six months ended June 30, 2018, unrealized gains of $5.7 million and $20.4 million, respectively, were recorded in accumulated other comprehensive income (“AOCI”) to reflect the change in the fair values of the forward-starting interest rate swaps.

Commodity Derivatives

Our Merchant Services segment primarily uses exchange-traded refined petroleum product futures contracts to manage the risk of market price volatility on its refined petroleum product inventories and its physical derivative contracts, which we designated as fair value hedges, with changes in fair value of both the futures contracts and physical inventory reflected in earnings. Our Merchant Services segment also uses exchange-traded refined petroleum contracts to hedge expected future transactions related to certain gasoline inventory that we manage on behalf of a third party, which are designated as cash flow hedges, with the effective portion of the hedge reported in OCI and reclassified into earnings when the expected future transaction affects earnings. Any gains or losses incurred on the derivative instruments that are not effective in offsetting changes in fair value or cash flows of the hedged item are recognized immediately in earnings.
Additionally, our Merchant Services segment enters into exchange-traded refined petroleum product futures contracts on behalf of our Domestic Pipelines & Terminals segment to manage the risk of market price volatility on the gasoline-to-butane pricing spreads associated with our butane blending activities managed by a third party. These futures contracts are not designated in a hedge relationship for accounting purposes. Physical forward contracts and futures contracts that have not been designated in a hedge relationship are marked-to-market through earnings.

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The following table summarizes the notional volumes of the net long (short) positions of our commodity derivative instruments outstanding at June 30, 2018 (amounts in thousands of gallons):
 
 
Volume
 
 
Derivative Purpose 
 
Current
 
Long-Term
 
 
Derivatives NOT designated as hedging instruments:
 
 

 
 

 
 
Physical fixed-price derivative contracts
 
(7,212
)
 
(429
)
 
 
Physical index derivative contracts
 
34,189

 

 
 
Futures contracts for refined petroleum products
 
1,127

 
714

 
 
 
 
 
 
 
 
Hedge Type
Derivatives designated as hedging instruments:
 
 

 
 

 
 
Cash flow hedge futures contracts
 

 

 
Cash Flow Hedge
Futures contracts for refined petroleum products
 
(57,162
)
 

 
Fair Value Hedge

Our futures contracts designated as fair value hedges relate to our inventory portfolio and extend to the fourth quarter of 2018. Our futures contracts relate to forecasted purchases and sales of refined petroleum products and extend to the fourth quarter of 2019.

In accordance with the Chicago Mercantile Exchange (“CME”) rulebook, variation margin transfers are considered settlement payments, thereby reducing the corresponding derivative asset and liability balances for our exchange-settled derivative contracts. These settlement payments result in realized gains and losses on derivatives.


































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The following table sets forth the fair value of each classification of derivative instruments and the derivative instruments’ location on our unaudited condensed consolidated balance sheets at the dates indicated (in thousands):
    
June 30, 2018
 
Derivatives NOT Designated as Hedging Instruments
 
Derivatives Designated as Hedging Instruments
 
Derivative Carrying Value
 
Netting Balance Sheet Adjustment (1)
 
Net Total
Physical fixed-price derivative contracts
$
1,077

 
$

 
$
1,077

 
$
(155
)
 
$
922

Physical index derivative contracts
215

 

 
215

 
(1
)
 
214

Interest rate derivative contracts

 
52,411

 
52,411

 

 
52,411

Total current derivative assets
1,292

 
52,411

 
53,703

 
(156
)
 
53,547

Physical fixed-price derivative contracts
14

 

 
14

 

 
14

Total non-current derivative assets
14

 

 
14

 

 
14

Physical fixed-price derivative contracts
(2,989
)
 

 
(2,989
)
 
155

 
(2,834
)
Physical index derivative contracts
(21
)
 

 
(21
)
 
1

 
(20
)
Total current derivative liabilities
(3,010
)
 

 
(3,010
)
 
156

 
(2,854
)
Physical fixed-price derivative contracts
(36
)
 

 
(36
)
 

 
(36
)
Total non-current derivative liabilities
(36
)
 

 
(36
)
 

 
(36
)
Net derivative (liabilities) assets
$
(1,740
)
 
$
52,411

 
$
50,671

 
$

 
$
50,671

 
                                                      
(1)
Amounts represent the netting of physical fixed and index contracts’ assets and liabilities when a legal right of offset exists.  Futures contracts are subject to settlement through margin requirements and are additionally presented on a net basis.
 
December 31, 2017
 
Derivatives NOT Designated as Hedging Instruments
 
Derivatives Designated as Hedging Instruments
 
Derivative Carrying Value
 
Netting Balance Sheet Adjustment (1)
 
Net Total
Physical fixed-price derivative contracts
$
2,582

 
$

 
$
2,582

 
$
(63
)
 
$
2,519

Physical index derivative contracts
455

 

 
455

 
(9
)
 
446

Interest rate derivative contracts

 
31,994

 
31,994

 

 
31,994

Total current derivative assets
3,037

 
31,994

 
35,031

 
(72
)
 
34,959

Total non-current derivative assets

 

 

 

 

Physical fixed-price derivative contracts
(7,226
)
 

 
(7,226
)
 
63

 
(7,163
)
Physical index derivative contracts
(18
)
 

 
(18
)
 
9

 
(9
)
Total current derivative liabilities
(7,244
)
 

 
(7,244
)
 
72

 
(7,172
)
Total non-current derivative liabilities

 

 

 

 

Net derivative (liabilities) assets
$
(4,207
)
 
$
31,994

 
$
27,787

 
$

 
$
27,787

                                                      
(1)
Amounts represent the netting of physical fixed and index contracts’ assets and liabilities when a legal right of offset exists.  Futures contracts are subject to settlement through margin requirements and are additionally presented on a net basis.
 
At June 30, 2018, open refined petroleum product derivative contracts (represented by the physical fixed-price contracts, and physical index contracts noted above) varied in duration in the overall portfolio, but did not extend beyond November 2019.  In addition, at June 30, 2018, we had refined petroleum product inventories that we intend to use to satisfy a portion of the physical derivative contracts.
 

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The gains and losses on our derivative instruments recognized in income were as follows for the periods indicated (in thousands):
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
Location
 
2018
 
2017
 
2018
 
2017
Derivatives NOT designated as hedging instruments:
 
 
 

 
 

 
 

 
 

Physical fixed-price derivative contracts
Product sales
 
$
(1,659
)
 
$
4,465

 
$
(305
)
 
$
6,952

Physical index derivative contracts
Product sales
 
(17
)
 
17

 
160

 
1

Physical fixed-price derivative contracts
Cost of product sales
 
552

 
(549
)
 
(53
)
 
(82
)
Physical index derivative contracts
Cost of product sales
 
424

 
175

 
426

 
338

Futures contracts for refined products
Cost of product sales
 
(2,265
)
 
(710
)
 
(4,563
)
 
(800
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
Location
 
2018
 
2017
 
2018
 
2017
Derivatives designated as fair value hedging instruments:
 
 
 
 
 

 
 

 
 

Futures contracts for refined products
Cost of product sales
 
$
(10,013
)
 
$
19,274

 
$
(4,306
)
 
$
52,851

Physical inventory - hedged items
Cost of product sales
 
9,530

 
(20,349
)
 
3,540

 
(40,700
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
Location
 
2018
 
2017
 
2018
 
2017
Ineffectiveness excluding the time value component on fair value hedging instruments:
 
 
 
 
 

 
 

 
 

Fair value hedge ineffectiveness (excluding time value)
Cost of product sales
 
$
(114
)
 
$
(1,671
)
 
$
(196
)
 
$
(2,630
)
Time value excluded from hedge assessment
Cost of product sales
 
(369
)
 
596

 
(570
)
 
14,781


The change in value recognized in OCI and the losses reclassified from AOCI to income attributable to our derivative instruments designated as cash flow hedges were as follows for the periods indicated (in thousands):
 
Gain (Loss) Recognized in OCI on Derivatives for the
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
Derivatives designated as cash flow hedging instruments:
 

 
 

 
 

 
 

Interest rate derivative contracts
$
5,656

 
$
(12,173
)
 
$
20,417

 
$
(10,463
)
Commodity derivatives
3,280

 
2,957

 
2,657

 
4,232

Total
$
8,936

 
$
(9,216
)
 
$
23,074

 
$
(6,231
)

 
 
 
Loss Reclassified from AOCI to Income (Effective Portion) for the
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
Location
 
2018
 
2017
 
2018
 
2017
Derivatives designated as cash flow hedging instruments:
 
 
 

 
 

 
 

 
 

Interest rate derivative contracts
Interest and debt expense
 
$
(2,295
)
 
$
(3,037
)
 
$
(4,632
)
 
$
(6,075
)
Total
 
 
$
(2,295
)
 
$
(3,037
)
 
$
(4,632
)
 
$
(6,075
)



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Over the next twelve months, we expect to reclassify $5.0 million of net losses attributable to interest rate derivatives from AOCI to earnings as an increase to interest and debt expense. These net losses consist of $11.2 million of amortization of hedge losses on settled forward-starting interest rate swaps, partially offset by $6.2 million of amortization of hedge gains on settled forward-starting interest rate swaps settled in November 2017 and forecasted hedge gains on forward-starting interest rate swaps that we expect to settle in late 2018. Additionally, the unrealized gains and losses for refined petroleum products designated as cash flow hedges at June 30, 2018, of $0.2 million, are estimated to be realized and reclassified from AOCI to product sales over the next twelve months. The ineffective portion of the change in fair value of cash flow hedges was not material for the three and six months ended June 30, 2018 and 2017.

10. FAIR VALUE MEASUREMENTS
 
We categorize our financial assets and liabilities using the three-tier fair value hierarchy as follows:
 
Recurring
 
The following table sets forth financial assets and liabilities measured at fair value on a recurring basis, as of the measurement dates indicated, and the basis for that measurement, by level within the fair value hierarchy (in thousands):
 
June 30, 2018
 
December 31, 2017
 
Level 1
 
Level 2
 
Level 1
 
Level 2
Financial assets:
 

 
 

 
 

 
 

Physical fixed-price derivative contracts
$

 
$
1,091

 
$

 
$
2,582

Physical index derivative contracts

 
215

 

 
455

Interest rate derivatives

 
52,411

 

 
31,994

 
 
 
 
 
 
 
 
Financial liabilities:
 

 
 

 
 

 
 

Physical fixed-price derivative contracts

 
(3,025
)
 

 
(7,226
)
Physical index derivative contracts

 
(21
)
 

 
(18
)
Futures contracts for refined products

 

 

 

Fair value
$

 
$
50,671

 
$

 
$
27,787

 
The values of the Level 1 derivative assets and liabilities were based on quoted market prices obtained from the New York Mercantile Exchange. The values for exchange-settled commodity derivatives at June 30, 2018 are presented in accordance with the CME rulebook, which deems that these instruments are settled daily via variation margin payments. As a result of this rulebook guidance, CME-settled derivatives, primarily comprised of our futures contracts for refined petroleum products, are considered to have no fair value at the balance sheet date for financial reporting purposes; however, the derivatives remain outstanding and subject to future commodity price fluctuations until they are settled in accordance with their contractual terms.

The values of the Level 2 interest rate derivatives were determined using fair value estimates obtained from our counterparties, which are verified using other available market data, including cash flow models which incorporate market inputs including the implied forward LIBOR yield curve for the same period as the future interest rate swap settlements. Credit value adjustments (“CVAs”), which are used to reflect the potential nonperformance risk of our counterparties, are considered in the fair value assessment of interest rate derivatives. We determined that the impact of CVAs is not significant to the overall valuation of interest rate derivatives as of June 30, 2018 and December 31, 2017.

The values of the Level 2 commodity derivative contracts were calculated using market approaches based on observable market data inputs, including published commodity pricing data, which is verified against other available market data, and market interest rate and volatility data.  Level 2 physical fixed-price derivative assets are net of CVAs determined using an expected cash flow model, which incorporates assumptions about the credit risk of the derivative contracts based on the historical and expected payment history of each customer, the amount of product contracted for under the agreement and the customer’s historical and expected purchase performance under each contract.  The Merchant Services segment determined CVAs are appropriate because few of the Merchant Services segment’s customers entering into these derivative contracts are large organizations with nationally recognized credit ratings.  The CVAs were nominal as of June 30, 2018 and December 31, 2017. As of June 30, 2018 and December 31, 2017, the Merchant Services segment did not hold any net liability derivative position containing credit contingent features.
 

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Financial instruments included in current assets and current liabilities are reported in the unaudited condensed consolidated balance sheets at amounts which approximate fair value due to the relatively short period to maturity of these financial instruments.  The fair values of our fixed-rate debt were estimated by observing market trading prices and by comparing the historic market prices of our publicly issued debt with the market prices of the publicly issued debt of other MLPs with similar credit ratings and terms.  The fair values of our variable-rate debt approximates the carrying amount since the associated interest rates are market-based. The carrying value and fair value of our debt, using Level 2 input values, were as follows at the dates indicated (in thousands):
 
June 30, 2018
 
December 31, 2017
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
Fixed-rate debt
$
3,944,235

 
$
3,849,403

 
$
4,241,963

 
$
4,384,336

Variable-rate debt
1,104,661

 
1,109,546

 
668,562

 
668,904

Total debt
$
5,048,896

 
$
4,958,949

 
$
4,910,525

 
$
5,053,240

 
In addition, our pension plan assets are measured at fair value on a recurring basis, based on Level 1 and Level 3 inputs.

We recognize transfers between levels within the fair value hierarchy as of the beginning of the reporting period.  We did not have any transfers between Level 1 and Level 2 during the six months ended June 30, 2018 and 2017, respectively.
 
Non-Recurring
 
Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.  For the three and six months ended June 30, 2018 and 2017, there were no significant fair value adjustments related to such assets or liabilities reflected in our unaudited condensed consolidated financial statements.

11. UNIT-BASED COMPENSATION PLANS
 
We award unit-based compensation to employees and directors primarily under the 2013 Long Term Incentive Plan of Buckeye Partners, L.P. (the “LTIP”), which was approved by the Partnership’s unitholders in June 2013 and subsequently amended and restated in June 2017. The LTIP replaced the 2009 Long-Term Incentive Plan (the “2009 Plan”), which was merged with and into the LTIP, and no further grants have since been made under the 2009 Plan. We formerly awarded options to acquire LP Units to employees pursuant to the Buckeye Partners, L.P. Unit Option and Distribution Equivalent Plan (the “Option Plan”). 
 
We recognized compensation expense related to awards under the LTIP and the Option Plan of $8.0 million and $9.0 million for the three months ended June 30, 2018 and 2017, respectively. For the six months ended June 30, 2018 and 2017, we recognized compensation expense of $16.8 million and $17.7 million, respectively.

LTIP
 
As of June 30, 2018, there were 2,142,251 LP Units available for issuance under the LTIP.
 
Deferral Plan under the LTIP
 
We also maintain the Buckeye Partners, L.P. Unit Deferral and Incentive Plan, as amended and restated effective December 13, 2016 (the “Deferral Plan”), pursuant to which we issue phantom and matching units under the LTIP to certain employees in lieu of cash compensation at the election of the employee. During the six months ended June 30, 2018, 149,726 phantom units (including matching units) were granted under this plan. These grants are included as granted in the LTIP activity table below.
 
Awards under the LTIP
 
During the six months ended June 30, 2018, the Compensation Committee of the board of directors of Buckeye GP (the “Board”) granted 349,271 phantom units to employees (including the 149,726 phantom units granted pursuant to the Deferral Plan, as discussed above), 18,000 phantom units to independent directors of Buckeye GP and 273,944 performance units to employees.


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The following table sets forth the LTIP activity for the periods indicated (in thousands, except per unit amounts):
 
Number of
LP Units
 
Weighted
Average
Grant Date
Fair Value
per LP Unit (1)
Unvested at January 1, 2018
1,450

 
$
64.04

Granted (2)
641

 
51.50

Performance adjustment (3)
39

 
73.17

Vested
(395
)
 
72.65

Forfeited
(22
)
 
58.69

Unvested at June 30, 2018
1,713

 
$
57.57

                                                      
(1)
Determined by dividing the aggregate grant date fair value of awards by the number of awards issued. The weighted-average grant date fair value per LP Unit for forfeited and vested awards is determined before an allowance for forfeitures.
(2)
Includes both phantom and performance awards. Performance awards are granted at a target amount but, depending on our performance during the vesting period with respect to certain pre-established goals, the number of LP Units issued upon vesting of such performance awards can be greater or less than the target amount.
(3)
Represents the LP Units issued in excess of target amounts for performance awards that vested during the six months ended June 30, 2018 as a result of our above target performance with respect to applicable performance goals.

At June 30, 2018, $50.0 million of compensation expense related to the unvested LTIP is expected to be recognized over a weighted average remaining period of 2.0 years.
 
We ceased making additional grants under the Option Plan following the adoption of the 2009 Plan. At December 31, 2017, there was no unrecognized compensation cost related to unvested options, as all options were vested and exercised as of November 24, 2017. The total intrinsic value of options exercised during each of the six months ended June 30, 2018 and 2017 were zero and $0.2 million, respectively.

12. PARTNERS’ CAPITAL AND DISTRIBUTIONS

Our LP Units and Class C Units represent limited partnership interests, which give the holders thereof the right to participate in distributions and to exercise the other rights and privileges available to them under our partnership agreement. The partnership agreement provides that, without prior approval of our limited partners holding an aggregate of at least two-thirds of the outstanding LP Units and Class C Units (voting together as a single class), we cannot issue any limited partnership interests of a class or series having preferences or other special or senior rights over the LP Units and Class C Units.

Equity Offering

In March 2018, we issued approximately 6.2 million Class C Units in a private placement for aggregate gross proceeds of $265.0 million. The net proceeds were $262.1 million, after deducting issuance costs of approximately $2.9 million. We used the net proceeds from this offering to reduce the indebtedness outstanding under our Credit Facility, to partially fund growth capital expenditures and for general partnership purposes.

Class C Units represent a separate class of our limited partnership interests. The Class C Units are substantially similar in all respects to our existing LP Units, except that Buckeye has the option to pay distributions on the Class C Units in cash or by issuing additional Class C Units, with the number of Class C Units issued based upon the volume-weighted average price per LP Unit, less a discount of 12.5%, for the 10 trading days immediately preceding the date the distributions are declared.

The Class C Units will convert into LP Units on a one-for-one basis at the earliest of (i) March 2, 2020, (ii) the date on which the Partnership delivers notice to the holders of the Class C Units that the Class C Units have converted, (iii) the date on which a change of control of the Partnership occurs, (iv) the business day following any notice or press release from the Partnership of a cash distribution for any quarterly period in an amount less than $1.2625 per LP Unit and (v) the date on which the Partnership issues any class or series of LP Units having preferences or senior rights over the LP Units and Class C Units.
 

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Table of Contents

At-the-Market Offering Program

Our equity distribution agreement (the “Equity Distribution Agreement”) with J.P. Morgan Securities LLC, BB&T Capital Markets, a division of BB&T Securities, LLC, BNP Paribas Securities Corp., Deutsche Bank Securities Inc., Jefferies LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, and SMBC Nikko Securities America, Inc. (collectively, the “ATM Underwriters”) expired on January 15, 2018. During the six months ended June 30, 2018, no LP Units were sold under the Equity Distribution Agreement.
 
Summary of Changes in Outstanding Units
 
The following is a summary of changes in Buckeyes outstanding LP Units and Class C Units for the periods indicated (in thousands):
 
LP Units
 
Class C Units
 
Total
Units outstanding at January 1, 2018
146,677

 

 
146,677

LP units issued pursuant to the LTIP (1)
268

 

 
268

Issuance of Class C Units

 
6,221

 
6,221

Issuance of Class C Units in lieu of quarterly cash distributions

 
218

 
218

Units outstanding at June 30, 2018
146,945

 
6,439

 
153,384

                                                      
(1) The number of LP Units issued represents issuance net of tax withholding.
 
Distributions
 
Cash distributions are paid for LP Units and for distribution equivalent rights (“DERs”) with respect to certain unit-based compensation awards outstanding as of each respective period. Actual cash distributions on our LP Units totaled $373.5 million ($2.5250 per LP Unit) and $351.7 million ($2.4875 per LP Unit) during the six months ended June 30, 2018 and 2017, respectively. We also made distributions in-kind to our Class C unitholders by issuing approximately 218,000 Class C Units during the six months ended June 30, 2018.
 
On August 3, 2018, we announced a quarterly distribution of $1.2625 per LP Unit that will be paid on August 20, 2018 to unitholders of record on August 13, 2018.  Based on the LP Units and DERs with respect to certain unit-based compensation awards outstanding as of June 30, 2018, cash expected to be distributed to LP unitholders on August 20, 2018 is estimated to be approximately $186.8 million. We also expect to issue approximately 275,000 Class C Units to our Class C unitholders in lieu of cash distributions on August 20, 2018.
 

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13. EARNINGS PER UNIT
 
The following tables set forth the calculation of basic and diluted earnings per unit, attributable to Buckeye’s unitholders (including LP Units and Class C Units), taking into consideration net income allocable to participating securities, as well as the reconciliation of basic weighted average units outstanding to diluted weighted average units outstanding (in thousands, except per unit amounts):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Net income attributable to unitholders
$
90,665

 
$
112,722

 
$
201,789

 
$
236,298

 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Weighted average units outstanding - basic
153,258

 
140,826

 
151,093

 
140,603

Earnings per unit - basic
$
0.59

 
$
0.80

 
$
1.34

 
$
1.68

 
 
 
 
 
 
 
 
Diluted:
 

 
 

 
 

 
 

Weighted average units outstanding - basic
153,258

 
140,826

 
151,093
 
140,603

Effect of dilutive securities
731

 
679

 
677
 
650

Weighted average units outstanding - diluted
153,989

 
141,505

 
151,770

 
141,253

Earnings per unit - diluted
$
0.59

 
$
0.80

 
$
1.33

 
$
1.67


14. BUSINESS SEGMENTS
 
We operate and report in three business segments: (i) Domestic Pipelines & Terminals; (ii) Global Marine Terminals; and (iii) Merchant Services.  All inter-segment revenues, expenses, operating income, assets and liabilities have been eliminated. 

 Domestic Pipelines & Terminals
 
The Domestic Pipelines & Terminals segment receives liquid petroleum products from refineries, connecting pipelines, vessels, trains, and bulk and marine terminals, transports those products to other locations for a fee, and provides bulk liquid storage and terminal throughput services.  The segment also has butane blending capabilities and provides crude oil services, including train loading/unloading, storage and throughput. This segment owns and operates pipeline systems and liquid petroleum products terminals in the continental United States, including three terminals owned by the Merchant Services segment but operated by the Domestic Pipelines & Terminals segment, and two underground propane storage caverns.  Additionally, this segment provides turn-key operations and maintenance of third-party pipelines and performs pipeline construction management services typically for cost plus a fixed or variable fee.
 
Global Marine Terminals
 
The Global Marine Terminals segment, including through its interest in VTTI, provides marine accessible bulk storage and blending services, rail and truck rack loading/unloading along with petroleum processing services in the New York Harbor on the East Coast and Corpus Christi, Texas in the Gulf Coast region of the United States, as well as The Bahamas, Puerto Rico and St. Lucia in the Caribbean, Northwest Europe, the Middle East and Southeast Asia.  The segment owns and operates, or owns a significant interest in, 21 liquid petroleum product terminals, located in these key domestic and international energy hubs, that enable us to facilitate global flows of crude and refined petroleum products, offer connectivity between supply areas and market centers, and provide premier storage, marine terminalling, blending, and processing services to a diverse customer base.


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Table of Contents

Merchant Services
 
The Merchant Services segment is a wholesale distributor of refined petroleum products, through bulk and rack sales, in the United States and the Caribbean. The segment’s products include gasoline, natural gas liquids, ethanol, biodiesel and petroleum distillates such as heating oil, diesel fuel, kerosene and fuel oil.  The segment owns three terminals, which are operated by the Domestic Pipelines & Terminals segment.  The segment’s customers consist principally of product wholesalers as well as major commercial users of these refined petroleum products.

Financial Information by Segment

For the three and six months ended June 30, 2018 and 2017, no customer contributed 10% or more of consolidated revenue.

The following tables provide information about our revenue types by reportable segment for the periods indicated (in thousands). Prior periods have been disaggregated for comparison purposes.
 
Three Months Ended June 30,
 
2018
 
Domestic Pipelines & Terminals
 
Global Marine Terminals
 
Merchant Services
 
Intersegment Eliminations
 
Total
Revenue from contracts with customers
 
 
 
 
 
 
 
 
 
Pipeline transportation
$
127,959

 
$

 
$

 
$
(2,163
)
 
$
125,796

Terminalling and storage services
100,981

 
99,927

 

 
(9,730
)
 
191,178

Product sales

 
7

 
455,185

 
(1,889
)
 
453,303

Other services
10,694

 
320

 
1,920

 
(15
)
 
12,919

Total revenue from contracts with customers
239,634

 
100,254

 
457,105

 
(13,797
)
 
783,196

Revenue from leases
11,065

 
42,889

 

 

 
53,954

Commodity derivative contracts, net
(819
)
 

 
104,508

 

 
103,689

Total revenue
$
249,880

 
$
143,143

 
$
561,613

 
$
(13,797
)
 
$
940,839


 
Three Months Ended June 30,
 
2017
 
Domestic Pipelines & Terminals
 
Global Marine Terminals
 
Merchant Services
 
Intersegment Eliminations
 
Total
Revenue from contracts with customers
 
 
 
 
 
 
 
 
 
Pipeline transportation
$
123,819

 
$

 
$

 
$
(4,208
)
 
$
119,611

Terminalling and storage services
106,053

 
123,930

 

 
(6,154
)
 
223,829

Product sales

 
3,880

 
307,027

 
(1,282
)
 
309,625

Other services
14,562

 
328

 
2,538

 
(32
)
 
17,396

Total revenue from contracts with customers
244,434

 
128,138

 
309,565

 
(11,676
)
 
670,461

Revenue from leases
9,119

 
39,718

 

 

 
48,837

Commodity derivative contracts, net
96

 

 
90,903

 
(96
)
 
90,903

Total revenue
$
253,649

 
$
167,856

 
$
400,468

 
$
(11,772
)
 
$
810,201


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Table of Contents

 
Six Months Ended June 30,
 
2018
 
Domestic Pipelines & Terminals
 
Global Marine Terminals
 
Merchant Services
 
Intersegment Eliminations
 
Total
Revenue from contracts with customers