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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
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: 001-36710
Shell Midstream Partners, L.P.
(Exact name of registrant as specified in its charter)
Delaware46-5223743
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
150 N. Dairy Ashford, Houston, Texas 77079
(Address of principal executive offices) (Zip Code)
(832) 337-2034
(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 Units, Representing Limited Partner InterestsSHLXNew 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  ý    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 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.
Large accelerated filer ý
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ý
The registrant had 393,289,537 common units outstanding as of July 28, 2022.





SHELL MIDSTREAM PARTNERS, L.P.
TABLE OF CONTENTS
 
Page
                   Unaudited Consolidated Statements of Income
* SHELL and the SHELL Pecten are registered trademarks of Shell Trademark Management, B.V. used under license.



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
SHELL MIDSTREAM PARTNERS, L.P.
UNAUDITED CONSOLIDATED BALANCE SHEETS
June 30, 2022December 31, 2021
(in millions of dollars)
ASSETS
Current assets 
Cash and cash equivalents$325 $361 
Accounts receivable – third parties, net17 16 
Accounts receivable – related parties34 40 
Allowance oil30 22 
Prepaid expenses8 26 
Total current assets414 465 
Equity method investments966 974 
Property, plant and equipment, net634 654 
Operating lease right-of-use assets 3 3 
Other investments2 2 
Contract assets – related parties210 218 
Other assets – related parties2 2 
Total assets$2,231 $2,318 
LIABILITIES
Current liabilities
Accounts payable – third parties$8 $4 
Accounts payable – related parties17 17 
Deferred revenue – third parties3 2 
Deferred revenue – related parties39 31 
Accrued liabilities – third parties17 11 
Accrued liabilities – related parties18 24 
Debt payable – related party250 400 
Total current liabilities352 489 
Noncurrent liabilities
Debt payable – related party2,292 2,292 
Operating lease liabilities3 4 
Finance lease liabilities22 23 
Deferred revenue and other unearned income3 3 
Total noncurrent liabilities2,320 2,322 
Total liabilities2,672 2,811 
Commitments and Contingencies (Note 12)
(DEFICIT) EQUITY
Preferred unitholders (50,782,904 units issued and outstanding as of both June 30, 2022 and December 31, 2021)
(1,059)(1,059)
Common unitholders – public (123,832,233 units issued and outstanding as of both June 30, 2022 and December 31, 2021)
3,369 3,354 
Common unitholder – SPLC (269,457,304 units issued and outstanding as of both June 30, 2022 and December 31, 2021)
(2,455)(2,488)
Financing receivables – related parties(290)(293)
Accumulated other comprehensive loss(8)(8)
Total partners’ deficit(443)(494)
Noncontrolling interests2 1 
Total deficit(441)(493)
Total liabilities and deficit$2,231 $2,318 
The accompanying notes are an integral part of the consolidated financial statements.
3


SHELL MIDSTREAM PARTNERS, L.P.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Revenue
Transportation, terminaling and storage services – third parties$33 $39 $65 $80 
Transportation, terminaling and storage services – related parties84 86 163 164 
Product revenue – third parties2  2  
Product revenue – related parties16 9 27 15 
Lease revenue – related parties14 14 27 28 
Total revenue149 148 284 287 
Costs and expenses
Operations and maintenance – third parties17 11 32 22 
Operations and maintenance – related parties27 34 53 61 
Cost of product sold14 7 23 11 
Impairment of fixed assets   3 
General and administrative – third parties2 1 4 3 
General and administrative – related parties12 12 23 22 
Depreciation, amortization and accretion13 12 25 25 
Property and other taxes5 6 10 11 
Total costs and expenses90 83 170 158 
Operating income59 65 114 129 
Income from equity method investments97 105 205 207 
Other income9 10 19 24 
Investment and other income106 115 224 231 
Interest income8 7 16 15 
Interest expense22 21 43 42 
Income before income taxes151 166 311 333 
Income tax expense    
Net income151 166 311 333 
Less: Net income attributable to noncontrolling interests3 4 5 8 
Net income attributable to the Partnership$148 $162 $306 $325 
Preferred unitholder’s interest in net income attributable to the Partnership12 12 24 24 
Limited Partners’ interest in net income attributable to the Partnership’s common unitholders$136 $150 $282 $301 
Net income per Limited Partner Unit - Basic and Diluted:
Common – basic$0.35 $0.38 $0.72 $0.76 
Common – diluted$0.33 $0.36 $0.69 $0.73 
Distributions per Limited Partner Unit$0.3000 $0.3000 $0.6000 $0.7600 
Weighted average Limited Partner Units outstanding - Basic and Diluted:
Common units – public – basic123.8 123.8 123.8 123.8 
Common units – SPLC – basic269.5 269.5 269.5 269.5 
Common units – public – diluted123.8 123.8 123.8 123.8 
Common units – SPLC – diluted320.3 320.3 320.3 320.3 
The accompanying notes are an integral part of the consolidated financial statements.
4


SHELL MIDSTREAM PARTNERS, L.P.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net income$151 $166 $311 $333 
Other comprehensive income (loss), net of tax:
Remeasurements of pension and other postretirement benefits related to equity method investments, net of tax    
Comprehensive income$151 $166 $311 $333 
Less comprehensive income attributable to:
Noncontrolling interests3 4 5 8 
Comprehensive income attributable to the Partnership$148 $162 $306 $325 

The accompanying notes are an integral part of the consolidated financial statements.
5


SHELL MIDSTREAM PARTNERS, L.P.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS 
Six Months Ended June 30,
20222021
(in millions of dollars)
Cash flows from operating activities
Net income$311 $333 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, amortization and accretion25 25 
Amortization of contract assets - related parties7 8 
Impairment of fixed assets 3 
Undistributed equity earnings(32)(10)
Changes in operating assets and liabilities
Accounts receivable9 (5)
Allowance oil(7)(9)
Prepaid expenses and other assets17 16 
Accounts payable3  
Deferred revenue and other unearned income8 (5)
Accrued liabilities (5)
Net cash provided by operating activities341 351 
Cash flows from investing activities
Capital expenditures(7)(4)
May 2021 Transaction 10 
Contributions to investment (3)
Return of investment41 30 
Auger Divestiture 2 
Net cash provided by investing activities34 35 
Cash flows from financing activities
Repayments of credit facilities(150) 
Distributions to noncontrolling interests(5)(7)
Distributions to unitholders and general partner(260)(346)
Other contributions from Parent1  
Other contributions from noncontrolling interest1  
Prepayment fee on credit facility (2)
Receipt of principal payments on financing receivables3 2 
Repayment of principal on finance leases(1) 
Net cash used in financing activities(411)(353)
Net (decrease) increase in cash and cash equivalents(36)33 
Cash and cash equivalents at beginning of the period361 320 
Cash and cash equivalents at end of the period$325 $353 
Supplemental cash flow information
Non-cash investing and financing transactions:
Change in accrued capital expenditures$1 $1 
Other non-cash contributions from Parent1  
The accompanying notes are an integral part of the consolidated financial statements.
6


SHELL MIDSTREAM PARTNERS, L.P.
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN (DEFICIT) EQUITY
Partnership
(in millions of dollars)Preferred Unitholder SPLCCommon Unitholders PublicCommon Unitholder SPLCFinancing ReceivablesAccumulated Other Comprehensive LossNoncontrolling InterestsTotal
Balance as of December 31, 2021$(1,059)$3,354 $(2,488)$(293)$(8)$1 $(493)
Net income12 46 100 — — 2 160 
Distributions to unitholders(12)(37)(81)— — — (130)
Distributions to noncontrolling interests— — — — — (2)(2)
Principal repayments on financing receivables— — — 1 — — 1 
Balance as of March 31, 2022$(1,059)$3,363 $(2,469)$(292)$(8)$1 $(464)
Net income12 43 93 — — 3 151 
Other contributions from Parent— — 2 — — — 2 
Other contributions from noncontrolling interest— — — — — 1 1 
Distributions to unitholders(12)(37)(81)— — — (130)
Distributions to noncontrolling interests— — — — — (3)(3)
Principal repayments on financing receivables— — — 2 — — 2 
Balance as of June 30, 2022$(1,059)$3,369 $(2,455)$(290)$(8)$2 $(441)

Partnership
(in millions of dollars)Preferred Unitholder SPLCCommon Unitholders PublicCommon Unitholder SPLCFinancing ReceivablesAccumulated Other Comprehensive LossNoncontrolling InterestsTotal
Balance as of December 31, 2020$(1,059)$3,382 $(2,497)$(298)$(9)$23 $(458)
Net income12 48 103 — — 4 167 
Distributions to unitholders(12)(57)(104)— — — (173)
Distributions to noncontrolling interests— — — — — (4)(4)
Principal repayments on financing receivables— — — 1 — — 1 
Balance as of March 31, 2021$(1,059)$3,373 $(2,498)$(297)$(9)$23 $(467)
Net income12 47 103 — — 4 166 
Distributions to unitholders(12)(57)(104)— — — (173)
Distributions to noncontrolling interests— — — — — (3)(3)
May 2021 Transaction— — 31 — — (22)9 
Principal repayments on financing receivables— — — 1 — — 1 
Balance as of June 30, 2021$(1,059)$3,363 $(2,468)$(296)$(9)$2 $(467)
The accompanying notes are an integral part of the consolidated financial statements.

7


SHELL MIDSTREAM PARTNERS, L.P.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
Except as noted within the context of each note disclosure, the dollar amounts presented in the tabular data within these note disclosures are stated in millions of dollars.

1. Description of the Business and Basis of Presentation
Shell Midstream Partners, L.P. (“we,” “us,” “our,” “SHLX” or “the Partnership”) is a Delaware limited partnership formed by Shell plc on March 19, 2014 to own and operate pipeline and other midstream assets, including certain assets purchased from Shell Pipeline Company LP (“SPLC”) and its affiliates. We conduct our operations either through our wholly-owned subsidiary, Shell Midstream Operating LLC (the “Operating Company”), or through direct ownership. Our general partner is Shell Midstream Partners GP LLC (“general partner”). References to “Shell” or “Parent” refer collectively to Shell plc and its controlled affiliates, other than us, our subsidiaries and our general partner.

As of June 30, 2022, our general partner holds a non-economic general partner interest in the Partnership, and affiliates of SPLC own a 68.5% limited partner interest (269,457,304 common units) and 50,782,904 Series A perpetual convertible preferred units (the “Series A Preferred Units”) in the Partnership. These common units and preferred units, on an as-converted basis, represent a 72% interest in the Partnership. See Note 8 – (Deficit) Equity for additional details.

Take Private Proposal
On February 11, 2022, the Board of Directors of our general partner (the “Board”) received a non-binding, preliminary proposal letter from SPLC to acquire all of the Partnership’s issued and outstanding common units not already owned by SPLC or its affiliates at a value of $12.89 per each issued and outstanding publicly-held common unit (the “Proposal”). The Board appointed the conflicts committee to review, evaluate and negotiate the Proposal. Refer to Note 13 – Subsequent Events – Merger Agreement for additional information.

Description of the Business
We own, operate, develop and acquire pipelines and other midstream and logistics assets. As of June 30, 2022, our assets include interests in entities that own (a) crude oil and refined products pipelines and terminals that serve as key infrastructure to transport onshore and offshore crude oil production to Gulf Coast and Midwest refining markets and deliver refined products from those markets to major demand centers and (b) storage tanks and financing receivables that are secured by pipelines, storage tanks, docks, truck and rail racks and other infrastructure used to stage and transport intermediate and finished products. The Partnership’s assets also include interests in entities that own natural gas and refinery gas pipelines that transport offshore natural gas to market hubs and deliver refinery gas from refineries and plants to chemical sites along the Gulf Coast.

We generate revenue from the transportation, terminaling and storage of crude oil, refined products, and intermediate and finished products through our pipelines, storage tanks, docks, truck and rail racks, generate income from our equity and other investments, and generate interest income from financing receivables on certain logistics assets. Our operations consist of one reportable segment. 













8


The following table reflects our ownership interests as of June 30, 2022:
SHLX Ownership
Pecten Midstream LLC (“Pecten”)100.0 %
Sand Dollar Pipeline LLC (“Sand Dollar”)100.0 %
Triton West LLC (“Triton”)100.0 %
Zydeco Pipeline Company LLC (“Zydeco”) (1)
100.0 %
Mattox Pipeline Company LLC (“Mattox”)79.0 %
Amberjack Pipeline Company LLC (“Amberjack”) – Series A/Series B
75.0% / 50.0%
Mars Oil Pipeline Company LLC (“Mars”)71.5 %
Odyssey Pipeline L.L.C. (“Odyssey”)71.0 %
Bengal Pipeline Company LLC (“Bengal”)50.0 %
Crestwood Permian Basin LLC (“Permian Basin”)50.0 %
LOCAP LLC (“LOCAP”)41.48 %
Explorer Pipeline Company (“Explorer”)38.59 %
Poseidon Oil Pipeline Company, L.L.C. (“Poseidon”)36.0 %
Colonial Enterprises, Inc. (“Colonial”)16.125 %
Proteus Oil Pipeline Company, LLC (“Proteus”)10.0 %
Endymion Oil Pipeline Company, LLC (“Endymion”)10.0 %
Cleopatra Gas Gathering Company, LLC (“Cleopatra”)1.0 %
(1) Prior to May 1, 2021, we owned a 92.5% ownership interest in Zydeco and SPLC owned the remaining 7.5% ownership interest.

Basis of Presentation
Our unaudited consolidated financial statements include all subsidiaries required to be consolidated under generally accepted accounting principles in the United States (“GAAP”). Our reporting currency is U.S. dollars, and all references to dollars are U.S. dollars. The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete annual financial statements. The year-end consolidated balance sheet data was derived from audited financial statements. During interim periods, we follow the accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021 (our “2021 Annual Report”), filed with the United States Securities and Exchange Commission (“SEC”), unless otherwise described herein. The unaudited consolidated financial statements for both the three and six months ended June 30, 2022 and June 30, 2021 include all adjustments we believe are necessary for a fair statement of the results of operations for the interim periods presented. These adjustments are of a normal recurring nature unless otherwise disclosed. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. These unaudited consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and notes thereto included in our 2021 Annual Report.

Our consolidated subsidiaries include Pecten, Sand Dollar, Triton, Zydeco, Odyssey and the Operating Company. Asset acquisitions of additional interests in previously consolidated subsidiaries and interests in equity method and other investments are included in the financial statements prospectively from the effective date of each acquisition. In cases where these types of acquisitions are considered acquisitions of businesses under common control, the financial statements are retrospectively adjusted.

Summary of Significant Accounting Policies
The accounting policies are set forth in Note 2 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements of our 2021 Annual Report. There have been no significant changes to these policies during the six months ended June 30, 2022.


9


2. Acquisitions and Other Transactions

May 2021 Transaction
Effective May 1, 2021, Triton sold to Equilon Enterprises LLC d/b/a Shell Oil Products US (“SOPUS”), as designee of SPLC, substantially all of the assets associated with its clean products truck rack terminal and facility in Anacortes, Washington (the “Anacortes Assets”). In exchange for the Anacortes Assets, SPLC paid Triton $10 million in cash and transferred to the Operating Company, as designee of Triton, SPLC’s 7.5% interest in Zydeco (the “May 2021 Transaction”). Effective May 1, 2021, the Partnership owned a 100.0% ownership interest in Zydeco.
The May 2021 Transaction closed pursuant to a Sale and Purchase Agreement dated April 28, 2021 between Triton and SPLC, effective May 1, 2021 (the “May 2021 Sale and Purchase Agreement”). The May 2021 Sale and Purchase Agreement contains customary representations, warranties and covenants of Triton and SPLC. SPLC, on the one hand, and Triton, on the other hand, have agreed to indemnify each other and their respective affiliates, officers, directors and other representatives against certain losses resulting from any breach of their representations, warranties or covenants contained in the May 2021 Sale and Purchase Agreement, subject to certain limitations and survival periods.

In connection with the May 2021 Transaction, the Partnership and SPLC entered into a Termination of Voting Agreement dated April 28, 2021 and effective May 1, 2021, under which they agreed to terminate the Voting Agreement dated November 3, 2014 between the Partnership and SPLC, relating to certain governance matters for their respective direct and indirect ownership interests in Zydeco.

Auger Divestiture
In anticipation of the intended divestiture of the 12” segment of the Auger pipeline, we recorded an impairment charge of approximately $3 million during the first quarter of 2021. In the second quarter of 2021, we executed an agreement to divest this segment of the Auger pipeline, effective June 1, 2021 (the “Auger Divestiture”). We received approximately $2 million in cash consideration for this sale. The remainder of the Auger pipeline continues to operate under the ownership of Pecten.

3. Related Party Transactions
Related party transactions include transactions with SPLC and Shell, including those entities in which Shell has an ownership interest but does not have control. See Note 1 – Description of the Business and Basis of Presentation – Take Private Proposal for additional information regarding the Proposal.

Acquisition Agreements
We have entered into several acquisition and other related agreements with SPLC and Shell. See Note 4 – Related Party Transactions – Acquisition Agreements in the Notes to Consolidated Financial Statements of our 2021 Annual Report for additional information.

Omnibus Agreement
We, our general partner, SPLC and the Operating Company entered into an Omnibus Agreement effective February 1, 2019 (the “2019 Omnibus Agreement”).

The 2019 Omnibus Agreement addresses, among other things, the following matters:

our payment of an annual general and administrative fee of approximately $10 million for the provision of certain services by SPLC;
our obligation to reimburse SPLC for certain direct or allocated costs and expenses incurred by SPLC on our behalf; and
our obligation to reimburse SPLC for all expenses incurred by SPLC as a result of us becoming and continuing as a publicly-traded entity; we will reimburse our general partner for these expenses to the extent the fees relating to such services are not included in the general and administrative fee.

Trade Marks License Agreement
We, our general partner and SPLC entered into a Trade Marks License Agreement with Shell Trademark Management Inc. effective as of February 1, 2019. The Trade Marks License Agreement grants us the use of certain Shell trademarks and trade names and expires on January 1, 2024 unless earlier terminated by either party upon 360 days’ notice.
10


Tax Sharing Agreement
For a discussion of the Tax Sharing Agreement, see Note 4 – Related Party Transactions – Tax Sharing Agreement in the Notes to Consolidated Financial Statements of our 2021 Annual Report.

Other Agreements
We have entered into several customary agreements with SPLC and Shell. These agreements include pipeline operating agreements, reimbursement agreements and services agreements. See Note 4 – Related Party Transactions – Other Agreements in the Notes to Consolidated Financial Statements of our 2021 Annual Report for additional information.

Partnership Agreement
On April 1, 2020, we executed the Second Amended and Restated Agreement of Limited Partnership of Shell Midstream Partners, L.P. (the “Second Amended and Restated Partnership Agreement”), which amended and restated the Partnership’s First Amended and Restated Agreement of Limited Partnership dated November 3, 2014 in its entirety. Under the Second Amended and Restated Partnership Agreement, we reorganized our capital structure, and our general partner or its assignee agreed to waive a portion of the distributions that would otherwise have been payable on the common units issued to SPLC as part of the transactions completed in April 2020, in an amount of $20 million per quarter for four consecutive fiscal quarters, beginning with the distribution made with respect to the second quarter of 2020 and ending with the distribution made with respect to the first quarter of 2021. For additional information on the transactions completed in April 2020, see Note 3 – Acquisitions and Other Transactions in the Notes to Consolidated Financial Statements of our 2021 Annual Report.

Noncontrolling Interests
The noncontrolling interest for Odyssey consists of GEL Offshore Pipeline LLC’s (“GEL”) 29% retained ownership interest as of both June 30, 2022 and December 31, 2021.

Other Related Party Balances
Other related party balances consist of the following:
June 30, 2022December 31, 2021
Accounts receivable$34 $40 
Prepaid expenses7 23 
Other assets2 2 
Contract assets (1)
210 218 
Accounts payable (2)
17 17 
Deferred revenue39 31 
Accrued liabilities (3)
18 24 
Debt payable (4)
2,542 2,692 
Finance lease liability2 2 
Financing receivables (1)
290 293 
(1) Refer to the section entitled Sale Leaseback below for additional details. Financing receivables are presented as a component of (deficit) equity.
(2) Accounts payable reflects amounts owed to SPLC for reimbursement of third-party expenses incurred by SPLC for our benefit.
(3) As of June 30, 2022, Accrued liabilities reflects $15 million of accrued interest and $3 million of other accrued liabilities. As of December 31, 2021, Accrued liabilities reflects $15 million of accrued interest and $9 million of other accrued liabilities. Other accrued liabilities are primarily related to the accrued operations and maintenance expenses on the Norco Assets (as defined below).
(4) Debt payable reflects borrowings outstanding after taking into account unamortized debt issuance costs of $2 million as of both June 30, 2022 and December 31, 2021.

Related Party Credit Facilities
We have entered into five credit facilities with Shell Treasury Center (West) Inc. (“STCW”), an affiliate of the Partnership: the 2021 Ten Year Fixed Facility, the Ten Year Fixed Facility, the Seven Year Fixed Facility, the Five Year Revolver due July 2023 and the Five Year Revolver due December 2022. On June 30, 2021, Zydeco entered into a termination of revolving loan facility agreement with STCW to terminate the 2019 Zydeco Revolver. For definitions and additional information regarding these credit facilities, see Note 6 – Related Party Debt in this report and Note 8 – Related Party Debt in the Notes to Consolidated Financial Statements of our 2021 Annual Report.
11



Related Party Revenues and Expenses
We provide crude oil transportation, terminaling and storage services to related parties under long-term contracts. We entered into these contracts in the normal course of our business. Our revenue from related parties for the three and six months ended June 30, 2022 and June 30, 2021 is disclosed in Note 9 – Revenue Recognition.

The following table shows related party expenses, including certain personnel costs, incurred by Shell and SPLC on our behalf that are reflected in the accompanying unaudited consolidated statements of income for the indicated periods. Included in these amounts, and disclosed below, is our share of operating and general corporate expenses, as well as the fees paid to SPLC under certain agreements.
 
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Allocated operating expenses$12 $13 $23 $27 
Major maintenance costs (1)
2 2 3 3 
Insurance expense (2)
5 5 10 10 
Other (3)
8 14 17 21 
Operations and maintenance – related parties$27 $34 $53 $61 
Allocated general corporate expenses$7 $7 $13 $12 
Management Agreement fee2 3 5 5 
Omnibus Agreement fee3 2 5 5 
General and administrative – related parties$12 $12 $23 $22 
(1) Major maintenance costs are expensed as incurred in connection with the maintenance services of the Norco Assets (as defined below). Refer to section entitled Sale Leaseback below for additional details.
(2) Prior to November 1, 2021, the majority of our insurance coverage was provided by a wholly-owned subsidiary of Shell, with the remaining coverage provided by third-party insurers. After November 1, 2021, a third-party insurer provided and continues to provide the first 5% of our insurance coverage with the remaining coverage provided by an affiliate of Shell as a reinsurer.
(3) Other expenses primarily relate to salaries and wages, other payroll expenses and special maintenance.

For a discussion of services performed by Shell on our behalf, see Note 1 – Description of Business and Basis of Presentation – Basis of Presentation – Expense Allocations in the Notes to Consolidated Financial Statements of our 2021 Annual Report.

Pension and Retirement Savings Plans
Employees who directly or indirectly support our operations participate in the pension, postretirement health and life insurance and defined contribution benefit plans sponsored by Shell, which include other Shell subsidiaries. Our share of pension and postretirement health and life insurance costs for the three and six months ended June 30, 2022 were $1 million and $2 million, respectively, and for the three and six months ended June 30, 2021 were $1 million and $3 million, respectively. Our share of defined contribution benefit plan costs for both the three and six months ended June 30, 2022 and June 30, 2021 were less than $1 million and $1 million, respectively. Pension and defined contribution benefit plan expenses are included in either General and administrative – related parties or Operations and maintenance – related parties in the accompanying unaudited consolidated statements of income, depending on the nature of the employee’s role in our operations.

Equity and Other Investments
We have equity and other investments in various entities. In some cases, we may be required to make capital contributions or other payments to these entities. See Note 4 – Equity Method Investments for additional details.

Sale Leaseback
Pursuant to the terminaling services agreements entered into among Triton, SOPUS and Shell Chemical LP (“Shell Chemical”) related to certain logistics assets at the Shell Norco Manufacturing Complex (the “Norco Assets”), the Partnership receives an annual net payment of $140 million, which is the total annual payment pursuant to the terminaling service agreements of $151 million, less $11 million, which primarily represents the allocated utility costs from SOPUS related to the Norco Assets. The annual payments are subject to annual Consumer Price Index (“CPI”) adjustments. See Note 9 – Revenue Recognition for additional details.

12


The transfer of the Norco Assets, combined with the terminaling services agreements, were accounted for as a failed sale leaseback under Accounting Standards Codification (“ASC”) Topic 842, Leases (the “lease standard”). As a result, the transaction was treated as a financing arrangement in which the underlying assets were not recognized in property, plant and equipment of the Partnership as control of the Norco Assets did not transfer to the Partnership, and instead were recorded as financing receivables from SOPUS and Shell Chemical.

We recognize interest income on the financing receivables on the basis of an imputed interest rate of 11.1% related to SOPUS and 7.4% related to Shell Chemical. The following table shows the interest income and cash principal payments received on the financing receivables for the three and six months ended June 30, 2022 and June 30, 2021:

Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Cash payments for interest income$10 $7 $16 $15 
Cash payments on principal of the financing receivables1 1 2 2 

The terminaling services agreements associated with the Norco Assets have operation and maintenance service components and major maintenance service components (together “service components”). Consistent with our operating lease arrangements, we allocate a portion of the arrangement’s transaction price to any service components within the scope of ASC Topic 606, Revenue from Contracts with Customers (“the revenue standard”) and defer the revenue, if necessary, until the point at which the performance obligation is met. We present the revenue earned from the service components under the revenue standard within Transportation, terminaling and storage services – related parties in the unaudited consolidated statements of income. See Note 9 – Revenue Recognition for additional details related to revenue recognized on the service components and amortization of the contract assets.

4. Equity Method Investments
For each of the following investments, we have the ability to exercise significant influence over these investments based on certain governance provisions and our participation in the significant activities and decisions that impact the management and economic performance of the investments.

Equity method investments comprise the following as of the dates indicated:
June 30, 2022December 31, 2021
OwnershipInvestment AmountOwnershipInvestment Amount
Mattox79.0%$149 79.0%$156 
Amberjack – Series A / Series B
75.0% / 50.0%
336 
75.0% / 50.0%
359 
Mars71.5%147 71.5%150 
Bengal50.0%84 50.0%85 
Permian Basin50.0%78 50.0%80 
LOCAP