Annual report pursuant to Section 13 and 15(d)

California Renewable Fuels Facility

v3.6.0.2
California Renewable Fuels Facility
12 Months Ended
Dec. 31, 2016
Business Combinations [Abstract]  
Mergers, Acquisitions and Dispositions Disclosures
California Renewable Fuels Facility
On March 1, 2016, we acquired control of the California renewable fuels facility which initially provides for us to receive approximately 77% of earnings and distributions of the facility. We increased our original 32% ownership and obtained control of the California renewable fuels facility after certain operational milestones were achieved. Our share of earnings and distributions will change upon the achievement of certain cash distribution milestones. In each case following the achievement of cash distribution milestones and assuming no further dilution to any of the members in the facility, our share of earnings and distributions will be reduced to approximately 57% and then be increased to approximately 62%, at which time the percentage will become fixed. We contributed to the facility total cash in the amount of $27,109.
Our California renewable fuels facility began operations in February 2016. The facility converts approximately 3,000 barrels per day of tallow and other feedstocks into renewable fuels, which are replacements for petroleum-based fuels. Our California renewable fuels facility generates environmental credits in the form of renewable identification numbers, California low-carbon fuels standards credits and blender’s tax credits, which are all recorded in net sales.
Acquisitions achieved in stages require that in the period the acquiring company achieves control, that it recognize 100% of the fair value of the net assets at that time. Additionally, the existing equity interests of the company and of non-controlling interest are required to be recorded at fair value. The fair value of the facility was estimated by applying the market approach. Based on our analysis as of March 1, 2016, there was no gain recorded for the revaluation of our previous equity interests. The fair value of the assets and liabilities recorded into our consolidated financial statements are as follows:
Current assets
 
$
19,060

Other assets
 
10,704

Property, plant and equipment
 
51,619

Current liabilities
 
(20,401
)
Fair value of net assets assumed
 
60,982

Non-controlling interest
 
(37,774
)
Fair value of net assets assumed, less non-controlling interest
 
$
23,208


Beginning March 1, 2016, we have consolidated the California renewable fuels facility as part of our refining and marketing segment in our consolidated financial statements. Our consolidated statements of operations include the facility’s revenues of $147,954 and operating income of $24,060 for the year ended December 31, 2016.