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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ________________________________________

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
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 No.: 1-16335
 __________________________________

 Magellan Midstream Partners, L.P.
(Exact name of registrant as specified in its charter)
Delaware 73-1599053
(State or other jurisdiction of
incorporation or organization)
 (IRS Employer
Identification No.)
One Williams Center, P.O. Box 22186, Tulsa, Oklahoma 74121-2186
(Address of principal executive offices and zip code)
(918) 574-7000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common UnitsMMPNew York Stock Exchange

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  x    No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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  x    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.
Large accelerated filer x    Accelerated filer     Non-accelerated filer      
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 Exchange Act).    
Yes      No  x
As of April 28, 2021, there were 223,282,818 common units outstanding.




TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
 
ITEM 1.CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 4.CONTROLS AND PROCEDURES
PART II
OTHER INFORMATION
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.
INDEX TO EXHIBITS
SIGNATURES
 
1



Forward-Looking Statements

Except for statements of historical fact, all statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may be identified by words like “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “plans,” “potential,” “projected,” “scheduled,” “should,” “will” and other similar expressions. The absence of such words or expressions does not necessarily mean the statements are not forward-looking. Although we believe our forward-looking statements are reasonable, statements made regarding future results are not guarantees of future performance and are subject to numerous assumptions, uncertainties and risks that are difficult to predict, including those described in Part II, Item 1A – Risk Factors of this Quarterly Report on Form 10-Q. Actual outcomes and results may be materially different from the results stated or implied in such forward-looking statements included in this report. You should not put any undue reliance on any forward-looking statement.
 
The following are among the important factors that could cause future results to differ materially from any expected, projected, forecasted, estimated or budgeted amounts, events or circumstances we have discussed in this report:
 
overall demand for refined products, crude oil and liquefied petroleum gases;
price fluctuations for refined products, crude oil and liquefied petroleum gases and expectations about future prices for these products;
changes in the production of crude oil in the basins served by our pipelines;
changes in general economic conditions, interest rates and price levels;
changes in the financial condition of our customers, vendors, derivatives counterparties, lenders or joint venture co-owners;
our ability to secure financing in the credit and capital markets in amounts and on terms that will allow us to execute our business strategy, refinance our existing obligations when due and maintain adequate liquidity;
development and increasing use of alternative energy sources, including but not limited to natural gas, solar power, wind power, electric and battery-powered engines and geothermal energy, increased use of renewable fuels such as ethanol, biodiesel and renewable diesel, increased conservation or fuel efficiency, increased use of electric vehicles, as well as regulatory developments or other trends that could affect demand for our services;
changes in population in the markets served by our refined products pipeline system and changes in consumer preferences, driving patterns or rates of automobile ownership;
changes in the product quality, throughput or interruption in service of refined products or crude oil pipelines owned and operated by third parties and connected to our assets;
changes in demand for transportation or storage in our refined products or crude oil segments;
changes in supply and demand patterns for our facilities due to geopolitical events, the activities of the Organization of the Petroleum Exporting Countries (“OPEC”) and other non-OPEC oil producing countries with large production capacity, changes in U.S. trade policies or in laws governing the importing and exporting of petroleum products, technological developments or other factors;
our ability to manage interest rate and commodity price exposures;
changes in our tariff rates or other terms of service required by the Federal Energy Regulatory Commission or state regulatory agencies;
shut-downs or cutbacks at refineries, oil fields, petrochemical plants or other customers or businesses that use or supply our services;
the effect of weather patterns and other natural phenomena, including climate change, on our operations and demand for our services;
an increase in the competition our operations encounter, including the effects of capacity over-build in the areas where we operate;
the occurrence of natural disasters, epidemics, terrorism, sabotage, protests or activism, operational hazards, equipment failures, system failures or unforeseen interruptions;
2



changes in general economic conditions, including market and macro-economic disruptions resulting from the COVID-19 pandemic and related governmental responses;
our ability to obtain adequate levels of insurance at a reasonable cost, and the potential for losses to exceed the insurance coverage we do obtain;
the treatment of us as a corporation for federal or state income tax purposes or if we become subject to significant forms of other taxation or more aggressive interpretation or increased assessments under existing forms of taxation;
our ability to identify expansion projects, accretive acquisitions and joint ventures with acceptable expected returns and to complete these projects on time and at projected costs;
our ability to successfully execute our capital allocation priorities including unit repurchases with acceptable expected returns;
the effect of changes in accounting policies and uncertainty of estimates, including accruals and costs of environmental remediation;
our ability to cooperate with and rely on our joint venture co-owners;
actions by rating agencies concerning our credit ratings;
our ability to timely obtain and maintain all necessary approvals, consents and permits required to operate our existing assets and to construct, acquire and operate any new or modified assets;
our ability to promptly obtain all necessary services, materials, labor, supplies and rights-of-way required for maintenance and operation of our current assets and construction of our growth projects, without significant delays, disputes or cost overruns;
risks inherent in the use and security of information systems in our business and implementation of new software and hardware;
changes in laws and regulations or the interpretations of such laws that govern our gas liquids blending activities or changes regarding product quality specifications or renewable fuel obligations that impact our ability to produce gasoline volumes through our gas liquids blending activities or that require significant capital outlays for compliance;
changes in laws and regulations to which we or our customers are or could become subject, including tax withholding requirements, safety, security, employment, hydraulic fracturing, derivatives transactions, trade and environmental, including laws and regulations designed to address climate change;
the cost and effects of legal and administrative claims and proceedings against us, our subsidiaries or our joint ventures;
the amount of our indebtedness, which could make us vulnerable to general adverse economic and industry conditions, limit our ability to borrow additional funds, place us at competitive disadvantages compared to our competitors that have less debt or have other adverse consequences;
the potential that our internal controls may not be adequate, weaknesses may be discovered or remediation of any identified weaknesses may not be successful;
the ability and intent of our customers, vendors, lenders, joint venture co-owners or other third parties to perform their contractual obligations to us;
petroleum product supply disruptions;
global and domestic repercussions from terrorist activities, including cyberattacks, and the government’s response thereto; and
other factors and uncertainties inherent in the transportation, storage and distribution of petroleum products and the operation, acquisition and construction of assets related to such activities.
 
This list of important factors is not exhaustive. The forward-looking statements in this Quarterly Report speak only as of the date hereof, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changes in assumptions or otherwise, unless required by law.

3



PART I
FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per unit amounts)
(Unaudited)
 
Three Months Ended
 March 31,
 20202021
Transportation and terminals revenue$458,395 $425,170 
Product sales revenue319,120 230,601 
Affiliate management fee revenue5,291 5,302 
Total revenue782,806 661,073 
Costs and expenses:
Operating149,508 130,604 
Cost of product sales249,236 184,867 
Depreciation, amortization and impairment63,534 58,128 
General and administrative36,908 46,580 
Total costs and expenses499,186 420,179 
Other operating income (expense)(511)(462)
Earnings of non-controlled entities43,660 39,052 
Operating profit326,769 279,484 
Interest expense55,900 56,979 
Interest capitalized(4,951)(508)
Interest income(420)(153)
Gain on disposition of assets(12,887) 
Other (income) expense807 1,059 
Income before provision for income taxes288,320 222,107 
Provision for income taxes756 789 
Net income$287,564 $221,318 
Basic net income per common unit$1.26 $0.99 
Diluted net income per common unit
$1.26 $0.99 
Weighted average number of common units outstanding used for basic net income per unit calculation
227,571 223,593 
Weighted average number of common units outstanding used for diluted net income per unit calculation
227,571 223,593 

    


See notes to consolidated financial statements.
4



MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, in thousands)
 
 Three Months Ended March 31,
 20202021
Net income$287,564 $221,318 
Other comprehensive income (loss):
Derivative activity:
Net loss on cash flow hedges(11,914) 
Reclassification of net loss on cash flow hedges to income
809 887 
Changes in employee benefit plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss(747) 
Curtailment gain1,703  
Recognition of prior service credit amortization in income(45)(45)
Recognition of actuarial loss amortization in income1,531 1,691 
Recognition of settlement cost in income969  
Total other comprehensive income (loss)(7,694)2,533 
Comprehensive income$279,870 $223,851 



























See notes to consolidated financial statements.
5



MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
December 31,
2020
March 31,
2021
ASSETS(Unaudited)
Current assets:
Cash and cash equivalents$13,036 $4,073 
Trade accounts receivable
109,136 142,948 
Other accounts receivable
37,075 35,355 
Inventory167,389 212,773 
Commodity derivatives deposits34,165 40,029 
Other current assets44,392 42,967 
Total current assets405,193 478,145 
Property, plant and equipment8,352,825 8,370,208 
Less: accumulated depreciation2,091,134 2,143,840 
Net property, plant and equipment6,261,691 6,226,368 
Investments in non-controlled entities1,213,856 1,203,339 
Right-of-use asset, operating leases166,078 194,463 
Long-term receivables22,755 21,590 
Goodwill52,830 52,830 
Other intangibles (less accumulated amortization of $9,228 and $9,881 at December 31, 2020 and March 31, 2021, respectively)
44,925 44,272 
Restricted cash
9,411 8,878 
Other noncurrent assets20,243 18,343 
Total assets$8,196,982 $8,248,228 
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable$100,022 $102,199 
Accrued payroll and benefits52,490 40,035 
Accrued interest payable58,998 49,992 
Accrued taxes other than income68,313 48,481 
Deferred revenue98,897 98,710 
Accrued product liabilities79,166 137,976 
Commodity derivatives contracts, net22,372 20,792 
Current portion of operating lease liability27,533 26,661 
Other current liabilities50,783 35,917 
Total current liabilities558,574 560,763 
Long-term operating lease liability137,483 168,817 
Long-term debt, net4,978,691 4,996,142 
Long-term pension and benefits163,776 165,145 
Other noncurrent liabilities54,652 60,329 
Commitments and contingencies
Partners’ capital:
Common unitholders (223,120 units and 223,283 units outstanding at December 31, 2020 and March 31, 2021, respectively)
2,486,996 2,477,689 
Accumulated other comprehensive loss(183,190)(180,657)
Total partners’ capital2,303,806 2,297,032 
Total liabilities and partners’ capital$8,196,982 $8,248,228 



See notes to consolidated financial statements.
6



MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 Three Months Ended
March 31,
 20202021
Operating Activities:
Net income$287,564 $221,318 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and impairment expense63,534 58,128 
Gain on sale and retirement of assets(13,002) 
Earnings of non-controlled entities(43,660)(39,052)
Distributions from operations of non-controlled entities54,743 51,434 
Equity-based incentive compensation expense155 4,679 
Settlement gain, amortization of prior service credit and actuarial loss1,113 1,646 
Changes in operating assets and liabilities:
Trade accounts receivable and other accounts receivable29,988 (32,092)
Inventory112,007 (45,384)
Accounts payable7,926 10,235 
Accrued payroll and benefits(43,962)(12,455)
Accrued interest payable(16,792)(9,006)
Accrued taxes other than income(17,673)(19,832)
Accrued product liabilities(38,440)58,810 
Deferred revenue3,656 (187)
Other current and noncurrent assets and liabilities(2,536)(8,003)
Net cash provided by operating activities384,621 240,239 
Investing Activities:
Additions to property, plant and equipment, net(1)
(172,671)(29,952)
Proceeds from sale and disposition of assets332,789 656 
Investments in non-controlled entities(28,325)(1,865)
Net cash provided (used) by investing activities131,793 (31,161)
Financing Activities:
Distributions paid(234,774)(229,423)
Net commercial paper borrowings 17,000 
Payments associated with settlement of equity-based incentive compensation(14,700)(6,151)
Repurchases of common units(201,982) 
Net cash used by financing activities(451,456)(218,574)
Change in cash, cash equivalents and restricted cash64,958 (9,496)
Cash, cash equivalents and restricted cash at beginning of period84,599 22,447 
Cash, cash equivalents and restricted cash at end of period$149,557 $12,951 
Supplemental non-cash investing activities:
(1) Additions to property, plant and equipment
$(152,292)$(20,723)
 Changes in accounts payable and other current liabilities related to capital expenditures(20,379)(9,229)
 Additions to property, plant and equipment, net$(172,671)$(29,952)









See notes to consolidated financial statements.
7



MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL
(Unaudited, in thousands)

Common Unitholders Accumulated Other Comprehensive LossTotal Partners’ Capital
Balance, January 1, 2020$2,877,105 $(162,077)$2,715,028 
Comprehensive income:
Net income287,564 — 287,564 
Total other comprehensive income (loss)— (7,694)(7,694)
Total comprehensive income (loss)287,564 (7,694)279,870 
Distributions(234,774)— (234,774)
Equity-based incentive compensation expense155 — 155 
Repurchases of common units(201,982)— (201,982)
Issuance of common units in settlement of equity-based incentive plan awards
600 — 600 
Payments associated with settlement of equity-based incentive compensation
(14,700)— (14,700)
Other(220)— (220)
Three Months Ended March 31, 2020$2,713,748 $(169,771)$2,543,977 
Balance, January 1, 2021$2,486,996 $(183,190)$2,303,806 
Comprehensive income:
Net income221,318 — 221,318 
Total other comprehensive income (loss)— 2,533 2,533 
Total comprehensive income (loss)221,318 2,533 223,851 
Distributions(229,423)— (229,423)
Equity-based incentive compensation expense4,679 — 4,679 
Issuance of common units in settlement of equity-based incentive plan awards
520 — 520 
Payments associated with settlement of equity-based incentive compensation
(6,151)— (6,151)
Other(250)— (250)
Three Months Ended March 31, 2021$2,477,689 $(180,657)$2,297,032 











See notes to consolidated financial statements.
8






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Organization, Description of Business and Basis of Presentation

Organization

Unless indicated otherwise, the terms “our,” “we,” “us” and similar language refer to Magellan Midstream Partners, L.P. together with its subsidiaries. Magellan Midstream Partners, L.P. is a Delaware limited partnership, and its common units are traded on the New York Stock Exchange under the ticker symbol “MMP.” Magellan GP, LLC, a wholly-owned Delaware limited liability company, serves as its general partner.

Description of Business

We are principally engaged in the transportation, storage and distribution of refined petroleum products and crude oil.  As of March 31, 2021, our asset portfolio consisted of:

our refined products segment, comprised of our approximately 9,800-mile refined petroleum products pipeline system with 54 connected terminals, as well as 25 independent terminals not connected to our pipeline system and two marine storage terminals (one of which is owned through a joint venture); and

our crude oil segment, comprised of approximately 2,200 miles of crude oil pipelines, a condensate splitter and 37 million barrels of aggregate storage capacity, of which approximately 27 million barrels are used for contract storage. Approximately 1,000 miles of these pipelines, the condensate splitter and 30 million barrels of this storage capacity (including 24 million barrels used for contract storage) are wholly-owned, with the remainder owned through joint ventures.

The following terms are commonly used in our industry to describe products that we transport, store, distribute or otherwise handle through our petroleum pipelines and terminals:

refined products are the output from crude oil refineries that are primarily used as fuels by consumers. Refined products include gasoline, diesel fuel, aviation fuel, kerosene and heating oil.  Diesel fuel, kerosene and heating oil are also referred to as distillates;

transmix is a mixture that forms when different refined products are transported in pipelines. Transmix is fractionated and blended into usable refined products;

liquefied petroleum gases, or LPGs, are liquids produced as by-products of the crude oil refining process and in connection with natural gas production. LPGs include butane and propane;

blendstocks are products blended with refined products to change or enhance their characteristics such as increasing a gasoline’s octane or oxygen content. Blendstocks include alkylates, oxygenates and natural gasoline;

crude oil, which includes condensate, is a naturally occurring unrefined petroleum product recovered from underground that is used as feedstock by refineries, splitters and petrochemical facilities; and

renewable fuels, such as ethanol, biodiesel and renewable diesel, are fuels derived from living materials and typically blended with other refined products as required by government mandates.

We use the term petroleum products to describe any, or a combination, of the above-noted products.
 
9






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Basis of Presentation

In the opinion of management, our accompanying consolidated financial statements which are unaudited, except for the consolidated balance sheet as of December 31, 2020, which is derived from our audited financial statements, include all normal and recurring adjustments necessary to present fairly our financial position as of March 31, 2021, the results of operations for the three months ended March 31, 2020 and 2021 and cash flows for the three months ended March 31, 2020 and 2021. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021 for several reasons. Profits from our gas liquids blending activities are realized largely during the first and fourth quarters of each year.  Additionally, gasoline demand, which drives transportation volumes and revenues on our refined products pipeline system, generally trends higher during the summer driving months.  Further, the volatility of commodity prices impacts the profits from our commodity activities and the volume of petroleum products we transport on our pipelines. 

Pursuant to the rules and regulations of the Securities and Exchange Commission, the financial statements in
this report have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the U.S. for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current period’s presentation.

Use of Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities that exist at the date of our consolidated financial statements, as well as their impact on the reported amounts of revenue and expense during the reporting periods. Actual results could differ from those estimates.

New Accounting Pronouncements

None.

2.Segment Disclosures

Our reportable segments are strategic business units that offer different products and services. Our segments are managed separately because each segment requires different marketing strategies and business knowledge. Management evaluates performance based on segment operating margin, which includes revenue from affiliates and third-party customers, operating expenses, cost of product sales, other operating (income) expense and earnings of non-controlled entities.
We believe that investors benefit from having access to the same financial measures used by management. Operating margin, which is presented in the following tables, is an important measure used by management to evaluate the economic performance of our core operations. Operating margin is not a GAAP measure, but the components of operating margin are computed using amounts that are determined in accordance with GAAP. A reconciliation of operating margin to operating profit, which is the nearest comparable GAAP financial measure, is
10






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


included in the tables below (presented in thousands). Operating profit includes depreciation, amortization and impairment expense and general and administrative (“G&A”) expense that management does not consider when evaluating the core profitability of our separate operating segments.
 Three Months Ended March 31, 2020
 Refined ProductsCrude OilIntersegment
Eliminations
Total
Transportation and terminals revenue$314,319 $145,658 $(1,582)$458,395 
Product sales revenue312,986 6,134  319,120 
Affiliate management fee revenue1,584 3,707  5,291 
Total revenue628,889 155,499 (1,582)782,806 
Operating expense105,882 46,772 (3,146)149,508 
Cost of product sales233,342 15,894  249,236 
Other operating (income) expense(1,892)2,403  511 
Earnings of non-controlled entities(14,220)(29,440) (43,660)
Operating margin305,777 119,870 1,564 427,211 
Depreciation, amortization and impairment expense46,059 15,911 1,564 63,534 
G&A expense26,654 10,254  36,908 
Operating profit$233,064 $93,705 $ $326,769 
 
 Three Months Ended March 31, 2021
 Refined ProductsCrude OilIntersegment
Eliminations
Total
Transportation and terminals revenue$310,768 $116,214 $(1,812)$425,170 
Product sales revenue201,431 29,170  230,601 
Affiliate management fee revenue1,550 3,752  5,302 
Total revenue513,749 149,136 (1,812)661,073 
Operating expense94,853 39,202 (3,451)130,604 
Cost of product sales154,742 30,125  184,867 
Other operating (income) expense(239)701  462 
Earnings of non-controlled entities(9,171)(29,881) (39,052)
Operating margin273,564 108,989 1,639 384,192 
Depreciation, amortization and impairment expense39,585 16,904 1,639 58,128 
G&A expense33,583 12,997  46,580 
Operating profit$200,396 $79,088 $ $279,484 

 


11






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


3.Revenue

Statement of Income Disclosures

The following tables provide details of our revenues disaggregated by key activities that comprise our performance obligations by operating segment (in thousands):
Three Months Ended March 31, 2020
Refined ProductsCrude OilIntersegment EliminationsTotal
Transportation$178,456 $86,782 $ $265,238 
Terminalling40,386 3,309  43,695 
Storage55,075 29,183 (1,582)82,676 
Ancillary services32,240 7,076  39,316 
Lease revenue8,162 19,308  27,470 
Transportation and terminals revenue
314,319 145,658 (1,582)458,395 
Product sales revenue312,986 6,134  319,120 
Affiliate management fee revenue
1,584 3,707  5,291 
Total revenue
628,889 155,499 (1,582)782,806 
Revenue not under the guidance of ASC 606, Revenue from Contracts with Customers:
Lease revenue(1)
(8,162)(19,308) (27,470)
(Gains) losses from futures contracts included in product sales revenue(2)
(121,047)(2,722) (123,769)
Affiliate management fee revenue
(1,584)(3,707) (5,291)
Total revenue from contracts with customers under ASC 606
$498,096 $129,762 $(1,582)$626,276 

(1) Lease revenue is accounted for under Accounting Standards Codification (“ASC”) 842, Leases.
(2) The impact on product sales revenue from futures contracts falls under the guidance of ASC 815, Derivatives and Hedging.
12






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Three Months Ended March 31, 2021
Refined ProductsCrude OilIntersegment EliminationsTotal
Transportation$193,427 $55,046 $ $248,473 
Terminalling32,791 6,117  38,908 
Storage49,157 29,262 (1,812)76,607 
Ancillary services31,246 7,946  39,192 
Lease revenue4,147 17,843  21,990 
Transportation and terminals revenue
310,768 116,214 (1,812)425,170 
Product sales revenue201,431 29,170  230,601 
Affiliate management fee revenue
1,550 3,752  5,302 
Total revenue
513,749 149,136 (1,812)661,073 
Revenue not under the guidance of ASC 606, Revenue from Contracts with Customers:
Lease revenue(1)
(4,147)(17,843) (21,990)
(Gains) losses from futures contracts included in product sales revenue(2)
48,437 5,356  53,793 
Affiliate management fee revenue
(1,550)(3,752) (5,302)
Total revenue from contracts with customers under ASC 606
$556,489 $132,897 $(1,812)$687,574 

(1) Lease revenue is accounted for under ASC 842, Leases.
(2) The impact on product sales revenue from futures contracts falls under the guidance of ASC 815, Derivatives and Hedging.
Balance Sheet Disclosures

The following table summarizes our accounts receivable, contract assets and contract liabilities resulting from contracts with customers (in thousands):
December 31, 2020March 31, 2021
Accounts receivable from contracts with customers$108,843 $141,387 
Contract assets$12,220 $11,429 
Contract liabilities$102,964 $100,824 

For the three months ended March 31, 2021, we recognized $66.4 million of transportation and terminals revenue that was recorded in deferred revenue as of December 31, 2020.

13






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Unfulfilled Performance Obligations

The following table provides the aggregate amount of the transaction price allocated to our unfulfilled performance obligations (“UPOs”) as of March 31, 2021 by operating segment, including the range of years remaining on our contracts with customers and an estimate of revenues expected to be recognized over the next 12 months (dollars in thousands):
Refined ProductsCrude OilTotal
Balances at March 31, 2021$2,047,797 $1,197,666 $3,245,463 
Remaining terms
1 - 17 years
1 - 11 years
Estimated revenues from UPOs to be recognized in the next 12 months
$389,591 $260,319 $649,910 


4.Investments in Non-Controlled Entities

Our equity investments in non-controlled entities at March 31, 2021 were comprised of:
EntityOwnership Interest
BridgeTex Pipeline Company, LLC (“BridgeTex”)30%
Double Eagle Pipeline LLC (“Double Eagle”)50%
HoustonLink Pipeline Company, LLC (“HoustonLink”)50%
MVP Terminalling, LLC (“MVP”)(1)
50%
Powder Springs Logistics, LLC (“Powder Springs”)50%
Saddlehorn Pipeline Company, LLC (“Saddlehorn”)30%
Seabrook Logistics, LLC (“Seabrook”)50%
Texas Frontera, LLC (“Texas Frontera”)50%
(1) Subsequent to March 31, 2021, we sold a portion of our interest in MVP (see Note 15 – Subsequent Events for further detail of this transaction).

We serve as operator of BridgeTex, HoustonLink, MVP, Powder Springs, Saddlehorn, Texas Frontera and the pipeline activities of Seabrook. We receive fees for management services as well as reimbursement or payment to us for certain direct operational payroll and other overhead costs. The management fees we receive are reported as affiliate management fee revenue on our consolidated statements of income. Cost reimbursements we receive from these entities in connection with our operating services are included as reductions to costs and expenses on our consolidated statements of income and totaled $1.2 million and $0.5 million during the three months ended March 31, 2020 and 2021, respectively.

14






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


We recorded the following revenue and expense transactions from certain of these non-controlled entities in our consolidated statements of income (in thousands):
Three Months Ended March 31,
20202021
Transportation and terminals revenue:
BridgeTex, pipeline capacity and storage$10,748 $10,740 
Double Eagle, throughput revenue$1,600 $976 
Saddlehorn, storage revenue$566 $580 
Operating expenses:
Seabrook, storage lease and ancillary services$6,899 $5,310 
Other operating income:
Seabrook, gain on sale of air emission credits$1,410 $ 

Our consolidated balance sheets reflected the following balances related to transactions with our non-controlled entities (in thousands):
December 31, 2020
Trade Accounts ReceivableOther Accounts ReceivableOther Accounts PayableLong-Term Receivables
BridgeTex$355 $27 $970 $— 
Double Eagle$277 $— $— $— 
HoustonLink$— $— $144 $— 
MVP$— $467 $2,297 $— 
Powder Springs$— $— $— $10,223 
Saddlehorn$— $121 $— $— 
Seabrook$— $— $7,274 $— 

March 31, 2021
Trade Accounts ReceivableOther Accounts ReceivableOther Accounts PayableLong-Term Receivables
BridgeTex$263 $12 $1,308 $— 
Double Eagle$310 $— $— $— 
HoustonLink$— $— $149 $— 
MVP$— $633 $862 $— 
Powder Springs$101 $96 $— $10,293 
Saddlehorn$— $175 $— $— 
Seabrook$— $105 $2,528 $— 

We entered into a long-term terminalling and storage contract with Seabrook for exclusive use of dedicated tankage that provides our customers with crude oil storage capacity and dock access for crude oil imports and exports on the Texas Gulf Coast (see Note 7 – Leases for more details regarding this lease).

15






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


The financial results from MVP, Powder Springs and Texas Frontera are included in our refined products segment and the financial results from BridgeTex, Double Eagle, HoustonLink, Saddlehorn and Seabrook are included in our crude oil segment, each as earnings of non-controlled entities.

A summary of our investments in non-controlled entities (representing only our proportionate interest) follows (in thousands):
Investments at December 31, 2020$1,213,856 
Additional investment1,865 
Earnings of non-controlled entities:
Proportionate share of earnings39,505 
Amortization of excess investment and capitalized interest
(453)
Earnings of non-controlled entities39,052 
Less:
Distributions from operations of non-controlled entities
51,434 
Investments at March 31, 2021$1,203,339 

5.Inventory

Inventory at December 31, 2020 and March 31, 2021 was as follows (in thousands): 
December 31, 2020March 31,
2021
Refined products$79,473 $94,098 
Crude oil32,431 47,993 
Liquefied petroleum gases26,734 20,926 
Transmix23,397 44,940 
Additives5,354 4,816 
Total inventory$167,389 $212,773 



16






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


6.Debt
Long-term debt at December 31, 2020 and March 31, 2021 was as follows (in thousands):
 December 31,
2020
March 31,
2021
Commercial paper$ $17,000 
3.20% Notes due 2025
250,000 250,000 
5.00% Notes due 2026
650,000 650,000 
3.25% Notes due 2030
500,000 500,000