Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

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Related Party Transactions
6 Months Ended
Jun. 30, 2017
Related Party Transactions [Abstract]  
Related Party Transactions
Related Party Transactions
Sales and Receivables
Sales to related parties include motor fuels and asphalt sold to other Alon Energy subsidiaries at prices substantially determined by reference to market commodity pricing information. These sales are included in net sales in the consolidated statements of operations. Accounts receivable from related parties includes sales of motor fuels and is shown separately on the consolidated balance sheets.
Costs Allocated from Alon Energy
The Partnership is a subsidiary of Alon Energy and is operated as a component of the integrated operations of Alon Energy. As such, the executive officers of Alon Energy, who are employed by another subsidiary of Alon Energy, also serve as executive officers of the General Partner and Alon Energy’s other subsidiaries.
Effective July 1, 2017, with the completion of the merger between Delek and Alon Energy, Delek indirectly owns 100% of our General Partner and 81.6% of our limited partner interest. As the owner of the General Partner, Delek is responsible for appointing all members of the board of directors of our General Partner, including all of our General Partner’s independent directors.
(a)
Corporate Overhead Allocations
Alon Energy performs general corporate and administrative services and functions for us and their other subsidiaries, which include accounting, treasury, cash management, tax, information technology, insurance administration and claims processing, legal, environmental, risk management, audit, payroll and employee benefit processing and internal audit services. Alon Energy allocates the expenses actually incurred in performing these services to the Partnership based primarily on the estimated amount of time the individuals performing such services devote to our business and affairs relative to the amount of time they devote to the business and affairs of Alon Energy’s other subsidiaries. The management of Alon Energy and the General Partner consider these allocations to be reasonable. We record the amount of such allocations as selling, general and administrative expenses. Our allocation for selling, general and administrative expenses were $3,116 and $4,245, for the three months ended June 30, 2017 and 2016, respectively, and $5,766 and $7,665 for the six months ended June 30, 2017 and 2016, respectively.
(b)
Labor Costs
As we are operated as a component of Alon Energy’s integrated operations, we have no employees. As a result, employee expense costs for Alon Energy employees working in our operations have been allocated to us and recorded as payroll expense in direct operating expenses and selling, general and administrative expenses. The allocated portion of Alon Energy’s employee expense costs included in direct operating expenses were $7,451 and $7,070 for the three months ended June 30, 2017 and 2016, respectively, and $14,474 and $14,332 for the six months ended June 30, 2017 and 2016, respectively. The allocated portion of Alon Energy’s employee expense costs included in selling, general and administrative expenses were $947 and $1,280 for the three months ended June 30, 2017 and 2016, respectively, and $1,967 and $2,235 for the six months ended June 30, 2017 and 2016, respectively.
(c)
Insurance Costs
Insurance costs related to the Big Spring refinery and wholesale marketing operations are allocated to us by Alon Energy based on estimated insurance premiums on a stand-alone basis relative to Alon Energy’s total insurance premium. Our allocation for insurance costs included in direct operating expenses were $1,118 and $1,512 for the three months ended June 30, 2017 and 2016, respectively, and $2,246 and $2,372 for the six months ended June 30, 2017 and 2016, respectively.
Leasing Agreements
In June 2014, we entered into six-year lease agreements with a subsidiary of Alon Energy to lease equipment at the Big Spring refinery. The lease agreements were effective July 1, 2014 and require fixed monthly payments amounting to $4,920 annually. Related to these agreements, we recorded selling, general and administrative expense of $1,230 for the three months ended June 30, 2017 and 2016 and $2,460 for the six months ended June 30, 2017 and 2016.
Transactions with Delek US Holdings, Inc.
We have transactions with Delek that occur in the ordinary course of business. We had purchases, net of sales, of crude oil, products and RINs from Delek of $19,458 and $371 for the three months ended June 30, 2017 and 2016, respectively, and $22,239 and $785 for the six months ended June 30, 2017 and 2016, respectively. Accounts payable includes a balance outstanding to Delek of $1,824 at June 30, 2017.
Distributions
During the six months ended June 30, 2017, we paid cash distributions of $30,638, or $0.49 per unit, of which $24,990 was paid to Alon Energy. During the six months ended June 30, 2016, we paid cash distributions of $5,001, or $0.08 per unit, of which $4,080 was paid to Alon Energy.