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~~September 30, 2021


☐			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: 001-38260

BP Midstream Partners LP

(Exact name of registrant as specified in its charter)


Delaware						82-1646447
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

501 Westlake Park Boulevard, Houston, Texas 77079

(Address of principal executive offices) (Zip Code)

(281) 366-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Units, Representing Limited Partner Interests	BPMP	New 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 ☒ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ 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

☐

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 ☒

As of ~~August~~November 48, 2021, the registrant had 104,794,540 common units outstanding.

BP MIDSTREAM PARTNERS LP

TABLE OF CONTENTS

Item			Page
PART I - Financial Information			3
1. Financial Statements (Unaudited)			3
Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Operations			4
Condensed Consolidated Statements of Changes in Equity			5
Condensed Consolidated Statements of Cash Flows			67
Notes to Condensed Consolidated Financial Statements (Unaudited)			78
2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2122
3. Quantitative and Qualitative Disclosures about Market Risk			3334
4. Controls and Procedures			3334
PART II - Other Information
1. Legal Proceedings			3435
1A. Risk Factors			3435
5. Other Information			3536
6. Exhibits			3536
Signature			3537

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (UNAUDITED)

BP MIDSTREAM PARTNERS LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30, 2021		December 31, 2020
	September 30, 2021		December 31, 2020
	(in millions of dollars)
ASSETS
Current assets
Cash and cash equivalents	$	~~137~~132.37	$	126.9
Accounts receivable – third parties	—		0.2
Accounts receivable – related parties	109.06		11.0
Prepaid expenses	~~2.4~~—		6.6
Other current assets	2.98		2.9
Total current assets	~~152~~145.61		147.6
Equity method investments (Note 3)	~~515~~511.75		519.9
Property, plant and equipment, net (Note 4)	7478.86		67.9
Other assets	3.5		3.5
Total assets	$	~~746~~738.67	$	738.9
LIABILITIES
Current liabilities
Accounts payable – third parties	$	2.7	$	1.9
Accounts payable – related parties	21.09		1.9
Deferred revenues and credits – related parties	25.36		1.8
Other current liabilities (Note 5)	87.24		7.8
Total current liabilities	1517.26		13.4
Long-term debt – related parties (Note 6)	468.0		468.0
Other liabilities	3.54		3.5
Total liabilities	~~486~~489.70		484.9
Commitments and contingencies (Note 10)
EQUITY
Common unitholders – Public (2021 – 47,837,828 issued and outstanding; 2020 – 47,821,790 units issued and outstanding); BP Holdco (2021 – 56,956,712 issued and outstanding; 2020 – 4,581,177 units issued and outstanding)	~~127~~119.74		800.5
Subordinated unitholders – BP Holdco (2021 – 0 issued and outstanding;2020 – 52,375,535 units issued and outstanding)	—		(680.2)
General partner	1.2		1.2
Total partners' capital	~~128~~120.96		121.5
Non-controlling interests	~~131~~129.01		132.5
Total equity	~~259~~249.97		254.0
Total liabilities and equity	$	~~746~~738.67	$	738.9

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

BP MIDSTREAM PARTNERS LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions of dollars, unless otherwise indicated)
Revenue
Third parties	$	0.83	$	0.86	$	1.69	$	12.84
Related parties	2826.50		3033.71		5783.3		6093.45
Total revenue	2926.3		3133.57		5885.92		6295.29
Costs and expenses
Operating expenses – third parties	3.84		3.16		710.37		610.84
Operating expenses – related parties	1.45		1.3		24.61		24.81
Maintenance expenses – third parties	01.34		10.43		12.15		1.69
Maintenance expenses – related parties	0.1		0.1		0.12		0.23
General and administrative – third parties	01.65		0.74		1.2.7		12.60
General and administrative – related parties	34.90		3.65		711.9		711.50
Depreciation	0.67		0.67		12.30		12.30
Property and other taxes	0.2		0.2		0.46		0.35
Total costs and expenses	1012.98		1110.01		2134.97		2232.12
Operating income	1813.45		2023.56		3750.05		4063.17
Income from equity method investments	2822.61		2627.86		5881.90		5885.17
Interest expense, net	1.10		1.95		23.2		56.38
Net income	4534.96		4549.47		93128.73		92142.96
Less: Net income attributable to non-controlling interests	5.4		4.84		1116.26		1015.60
Net income attributable to the Partnership	$	4029.52	$	4045.63	$	82111.57	$	82127.36
Net income attributable to the Partnership per limited partner unit – basic and diluted (in dollars):
Common units	$	0.3727	$	0.3842	$	01.7602	$	01.7719
Subordinated units	$	—	$	0.3842	$	0.18	$	01.7719
Weighted average number of limited partner units outstanding – basic and diluted (in millions):
Common units – public	47.8		47.8		47.8		47.8
Common units – BP Holdco	57.0		4.6		4448.89		4.6
Subordinated units – BP Holdco	—		52.4		52.4		52.4

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

BP MIDSTREAM PARTNERS LP

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

		Six Month Period Ended June 30, 2021
		Nine Month Period Ended September 30, 2021
		Partners' Capital
(in millions of dollars)		Common Unitholders		Subordinated Unitholders – BP Holdco		General Partner		Non-controlling Interests		Total
Balance at December 31, 2020		$	800.5	$	(680.2)	$	1.2	$	132.5	$	254.0
	Net income	31.3		9.5		1.2		5.8		47.8
	Distributions to unitholders ($0.3475 per unit) and general partner	(18.2)		(18.2)		(1.2)		—		(37.6)
	Conversion of subordinated units	(688.9)		688.9		—		—		—
	Unit-based compensation	0.1		—		—		—		0.1
	Distributions to non-controlling interests	—		—		—		(6.4)		(6.4)
Balance at March 31, 2021		124.8		—		1.2		131.9		257.9
	Net income	39.3		—		1.2		5.4		45.9
	Distributions to unitholders ($0.3475 per unit) and general partner	(36.4)		—		(1.2)		—		(37.6)
	Distributions to non-controlling interests	—		—		—		(6.3)		(6.3)
Balance at June 30, 2021		$127.7	~~127.7~~	$—	—	$1.2	~~1.2~~	$131.0	~~131.0~~	$259.9	~~259.9~~
	Net income	28.0		—		1.2		5.4		34.6
	Distributions to unitholders ($0.3475 per unit) and general partner	(36.4)		—		(1.2)		—		(37.6)
	Unit-based compensation	0.1		—		—		—		0.1
	Distributions to non-controlling interests	—		—		—		(7.3)		(7.3)
Balance at September 30, 2021		$	119.4	$	—	$	1.2	$	129.1	$	249.7

		Six Month Period Ended June 30, 2020
		Partners' Capital
(in millions of dollars)		Common Unitholders		Subordinated Unitholders – BP Holdco		General Partner		Non-controlling Interests		Total
Balance at December 31, 2019		$	791.3	$	(689.2)	$	1.2	$	136.9	$	240.2
	Net income	20.3		20.2		1.2		5.8		47.5
	Distributions to unitholders ($0.3475 per unit) and general partner	(18.2)		(18.2)		(1.2)		—		(37.6)
	Unit-based compensation	0.1		—		—		—		0.1
	Distributions to non-controlling interests	—		—		—		(6.7)		(6.7)
Balance at March 31, 2020		793.5		(687.2)		1.2		136.0		243.5
	Net income	19.7		19.7		1.2		4.8		45.4
	Distributions to unitholders ($0.3475 per unit) and general partner	(18.2)		(18.2)		(1.2)		—		(37.6)
	Distributions to non-controlling interests	—		—		—		(5.5)		(5.5)
Balance at June 30, 2020		$	795.0	$	(685.7)	$	1.2	$	135.3	$	245.8

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

BP MIDSTREAM PARTNERS LP

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH~~CHANGES ~~FLOWS~~ IN EQUITY

	Six Months Ended June 30,
	2021		2020
	(in millions of dollars)
Cash flows from operating activities
Net income	$	93.7	$	92.9
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	1.3		1.3
Non-cash expenses	0.1		0.1
Income from equity method investments	(58.9)		(58.1)
Distributions of earnings received from equity method investments	58.8		60.7
Changes in operating assets and liabilities
Accounts receivable	1.1		1.0
Prepaid expenses and other current assets	4.3		3.1
Accounts payable	1.0		(0.1)
Deferred revenues and credits – related parties	0.5		0.1
Other	(0.4)		(1.5)
Net cash provided by operating activities	101.5		99.5
Cash flows from investing activities
Capital expenditures	(7.5)		(1.3)
Distributions in excess of earnings from equity method investments	4.3		5.3
Net cash (used in) provided by investing activities	(3.2)		4.0
Cash flows from financing activities
Proceeds from issuance of debt – related parties	—		468.0
Repayment of debt – related parties	—		(468.0)
Distributions to unitholders and general partner	(75.2)		(75.2)
Distributions to non-controlling interests	(12.7)		(12.2)
Net cash used in financing activities	(87.9)		(87.4)
Net change in cash and cash equivalents	10.4		16.1
Cash and cash equivalents at beginning of the period	126.9		98.8
Cash and cash equivalents at end of the period	$	137.3	$	114.9
Supplemental cash flow information
Cash paid for interest	2.3		8.3
Non-cash investing transactions
Accrued capital expenditures	5.1		0.5

(UNAUDITED)


		Nine Month Period Ended September 30, 2020
		Partners' Capital
(in millions of dollars)		Common Unitholders		Subordinated Unitholders – BP Holdco		General Partner		Non-controlling Interests		Total
Balance at December 31, 2019		$	791.3	$	(689.2)	$	1.2	$	136.9	$	240.2
	Net income	20.3		20.2		1.2		5.8		47.5
	Distributions to unitholders ($0.3475 per unit) and general partner	(18.2)		(18.2)		(1.2)		—		(37.6)
	Unit-based compensation	0.1		—		—		—		0.1
	Distributions to non-controlling interests	—		—		—		(6.7)		(6.7)
Balance at March 31, 2020		793.5		(687.2)		1.2		136.0		243.5
	Net income	19.7		19.7		1.2		4.8		45.4
	Distributions to unitholders ($0.3475 per unit) and general partner	(18.2)		(18.2)		(1.2)		—		(37.6)
	Unit-based compensation	—		—		—		—		—
	Distributions to non-controlling interests	—		—		—		(5.5)		(5.5)
Balance at June 30, 2020		795.0		(685.7)		1.2		135.3		245.8
	Net income	22.0		22.1		1.2		4.4		49.7
	Distributions to unitholders ($0.3475 per unit) and general partner	(18.2)		(18.2)		(1.2)		—		(37.6)
	Unit-based compensation	0.1		—		—		—		0.1
	Distributions to non-controlling interests	—		—		—		(5.0)		(5.0)
Balance at September 30, 2020		$	798.9	$	(681.8)	$	1.2	$	134.7	$	253.0

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

BP MIDSTREAM PARTNERS LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended September 30,
	2021		2020
	(in millions of dollars)
Cash flows from operating activities
Net income	$	128.3	$	142.6
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	2.0		2.0

Non-cash expenses	0.2		0.2

Income from equity method investments	(81.0)		(85.7)
Distributions of earnings received from equity method investments	79.7		85.8
Changes in operating assets and liabilities
Accounts receivable	1.6		1.0
Prepaid expenses and other current assets	6.7		5.3
Accounts payable	1.0		(0.1)
Deferred revenues and credits – related parties	3.8		0.1
Other	(0.2)		(2.9)
Net cash provided by operating activities	142.1		148.3
Cash flows from investing activities
Capital expenditures	(13.2)		(2.0)
Proceeds from insurance claims	—		1.3
Distributions in excess of earnings from equity method investments	9.7		7.4
Net cash (used in) provided by investing activities	(3.5)		6.7
Cash flows from financing activities
Proceeds from issuance of debt – related parties	—		468.0
Repayment of debt – related parties	—		(468.0)
Distributions to unitholders and general partner	(112.8)		(112.8)
Distributions to non-controlling interests	(20.0)		(17.2)
Net cash used in financing activities	(132.8)		(130.0)
Net change in cash and cash equivalents	5.8		25.0
Cash and cash equivalents at beginning of the period	126.9		98.8
Cash and cash equivalents at end of the period	$	132.7	$	123.8
Supplemental cash flow information
Cash paid for interest	3.4		10.4
Non-cash investing transactions
Accrued capital expenditures	3.9		1.6

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

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

1. Business and Basis of Presentation

BP Midstream Partners LP (either individually or together with its subsidiaries, as the context requires, the “Partnership”) is a Delaware limited partnership formed on May 22, 2017 by BP Pipelines (North America) Inc. (“BP Pipelines”), an indirect wholly -owned subsidiary of BP p.l.c. (“BP”), a “foreign private issuer” within the meaning of the Securities Exchange Act of 1934, as amended.

Unless otherwise stated or the context otherwise indicates, all references to “we,” “our,” “us,” or similar expressions refer to the legal entity BP Midstream Partners LP. The term “our Parent” refers to BP Pipelines; any entity that wholly owns BP Pipelines, indirectly or directly, including BP and BP America Inc. (“BPA”), an indirect wholly -owned subsidiary of BP; and any entity that is wholly owned by the aforementioned entities, excluding BP Midstream Partners LP.

Business

BP Midstream Partners LP is a master limited partnership formed by BP Pipelines to own, operate, develop and acquire pipelines and other midstream assets. The Partnership's assets consist of interests in entities that own crude oil, natural gas, refined products and diluent pipelines and refined product terminals serving as key infrastructure for BP and other customers to transport onshore crude oil production to BP’s refinery in Whiting, Indiana (the “Whiting Refinery”) and offshore crude oil and natural gas production to key refining markets and trading and distribution hubs. Certain assets deliver refined products and diluent from the Whiting Refinery and other U.S. supply hubs to major demand centers.

As of ~~June~~September 30, 2021, the Partnership's assets consisted of the following:

•BP Two Pipeline Company LLC, which owns the BP#2 crude oil pipeline system (“BP2”).

•BP River Rouge Pipeline Company LLC, which owns the Whiting to River Rouge refined products pipeline system (“River Rouge”).

•BP D-B Pipeline Company LLC, which owns the Diamondback diluent pipeline system (“Diamondback”). BP2, River Rouge, and Diamondback, together, are referred to as the "Wholly -Owned Assets".

•28.5% ownership interest in Mars Oil Pipeline Company, LLC (“Mars”), which owns a major corridor crude oil pipeline system in the Gulf of Mexico.

•65% ownership interest and 100% managing member interest in Mardi Gras Transportation System Company, LLC ("Mardi Gras"), which holds the following investments in joint ventures located in the Gulf of Mexico:

•56% ownership interest in Caesar Oil Pipeline Company, LLC (“Caesar”),

•53% ownership interest in Cleopatra Gas Gathering Company, LLC (“Cleopatra”),

•65% ownership interest in Proteus Oil Pipeline Company, LLC (“Proteus”), and,

•65% ownership interest in Endymion Oil Pipeline Company, LLC (“Endymion”).

•Together Endymion, Caesar, Cleopatra and Proteus are referred to as the “Mardi Gras Joint Ventures.”

•22.7% ownership interest in Ursa Oil Pipeline Company, LLC ("Ursa").

•25% ownership interest in KM Phoenix Holdings, LLC ("KM Phoenix").

We generate a majority of revenue by charging fees for the transportation of crude oil, refined products and diluent through our pipelines under agreements with minimum volume commitments ("MVC"). We do not engage in the marketing and trading of any commodities. All operations are conducted in the United States, and all long-lived assets are located in the United States. Partnership operations consist of one reportable segment.

Certain Partnership businesses are subject to regulation by various authorities including, but not limited to the Federal Energy Regulatory Commission ("FERC"). Regulatory bodies exercise statutory authority over matters such as common carrier tariffs, construction, rates and ratemaking and agreements with customers.

Basis of Presentation

Condensed consolidated financial statements have been prepared under the rules and regulations of the Securities and Exchange Commission (“SEC”). These rules and regulations conform to the accounting principles contained in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification, the single source of accounting principles generally accepted in the United States (“GAAP”).

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

Certain information and footnote disclosures normally included in the annual consolidated financial statements have been condensed or omitted from these condensed consolidated financial statements. The condensed consolidated financial statements as of ~~June~~September 30, 2021, and for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, included herein, are unaudited. These financial statements include all known accruals and adjustments necessary, in the opinion of management, for a fair presentation of our condensed consolidated financial position, results of operations and cash flows. Unless otherwise specified, all such adjustments are of a normal and recurring nature. The unaudited results of operations for the interim periods reported are not necessarily indicative of results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the "Partnership's 2020 10-K").

Partnership financial position, results of operations and cash flows consist of consolidated BP Midstream Partners LP activities and balances. All intercompany accounts and transactions within the financial statements have been eliminated for all periods presented.

Subordinated Unit Conversion

On February 11, 2021, we paid a cash distribution of $0.3475 per limited partner unit to unitholders of record on January 28, 2021, for the three months ended December 31, 2020. Following payment of the distribution, the board of directors of BP Midstream Partners GP LLC (our "General Partner") confirmed and approved that the financial tests required for conversion of our subordinated units had been met under the terms of the partnership agreement. As a result, on February 12, 2021, all of the Partnership's subordinated units were converted into common units on a one-for-one basis and the subordination period was terminated. Refer to Note 8 - Net Income Per Limited Partner Unit for additional information.

As a result of the completion of this conversion event, common units are presented on a combined basis in the condensed consolidated balance sheets and the condensed consolidated statements of changes in equity as of and for the period ended ~~June~~September 30, 2021. Prior periods have been reclassified in the comparative periods to conform to current period presentation in the condensed consolidated balance sheets and the condensed consolidated statements of changes in equity.

Take Private Proposal

On August 4, 2021, the board of directors of our General Partner received a non-binding preliminary proposal letter from BP Pipelines, through its wholly-owned subsidiary BP Midstream Partners Holdings LLC, to acquire all of our issued and outstanding common units not already owned by BP Pipelines or its affiliates at a to-be-determined fixed exchange ratio, at a value of $13.01 per each issued and outstanding publicly held common unit of the Partnership payable in newly-issued American Depositary Receipts ("ADRs") of BP p.l.c. (the "Proposal"). Under the Proposal, the exchange ratio would be determined based on a 30-day volume-weighted average closing price of ADRs of BP p.l.c. as of the day immediately preceding the signing of a merger agreement. The board of directors has appointed a conflicts committee to review, evaluate and negotiate the Proposal. The conflicts committee continues to evaluate the Proposal.

The proposed transaction is subject to a number of contingencies, including the approval of the conflicts committee of the board of directors of our General Partner, and the satisfaction of any conditions to the consummation of a transaction set forth in any definitive agreement concerning the transaction. There can be no assurance that such definitive documentation will be executed or that any transaction will materialize on the terms described above or at all.

Summary of Significant Accounting Policies

There have been no significant changes to accounting policies as disclosed in Note 2 - Summary of Significant Accounting Policies in the Partnership's 2020 10-K.

2. Revenue Recognition

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 customers. A performance obligation is our unit of account and it represents a promise in a contract to transfer goods or services to the customer. The contract transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is allocated to each performance obligation and recognized as revenue when or as the performance obligation is satisfied. The following is an ~~overview of our significant revenue stream, including a description of the respective performance obligations and related methods of revenue recognition.~~

~~Pipeline Transportation~~9

Revenue from pipeline transportation is comprised of tariffs and fees associated with the transportation of liquid petroleum products, generally at published tariffs and in certain instances, revenue from MVC 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. We record revenue for crude oil, refined products and diluent transportation during the period in which they are earned (i.e., either physical delivery of product has taken place or the services designated in the contract have been performed). Partnership services are typically billed on a monthly basis, and we generally do not offer extended payment terms. We accrue revenue based on services rendered but not billed for that accounting month.

Billings to BP Products North America Inc. ("BP Products") for deficiency volumes under its MVCs, if any, are recorded as deferred revenues and credits, a contract liability, on the condensed consolidated balance sheets, as BP Products has the right to make up the deficiency volumes within the measurement period specified by the agreements. Deferred revenue under these arrangements is recognized into revenue once it is deemed remote that the customer will meet its required annual MVC. If the

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

~~customer~~overview ~~does~~of ~~satisfy~~our ~~its~~significant ~~MVC~~revenue bystream, ~~shipping~~including ~~the~~a ~~deficiency~~description ~~volumes~~of ~~within~~ the ~~same~~respective ~~calendar~~performance ~~year,~~obligations itand ~~may~~related ~~receive~~methods ~~a refund~~ of ~~excess~~revenue ~~payments~~recognition.

WePipeline did not recognize deficiency revenue under the throughput and deficiency agreements with BP Products for the three and six months ended June 30, 2021. We recognized $6.0 million of deficiency revenue under the throughput and deficiency agreements with BP Products for the three and six months ended June 30, 2020.Transportation

Allowance Oil

The tariff for crude oil transportation at BP2 includes a fixed loss allowance (“FLA”). An FLA factor per barrel, a fixed percentage, is a separate fee that is considered a part of the transaction price under the applicable crude oil tariff to cover evaporation and other losses in transit. The amount of revenue recognized is a product of the quantity transported, the applicable FLA factor and the settlement price during the month the product is transported.

We recognized revenue of $3.0 million and $58.6 million in the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, related to the FLA arrangements with our Parent. In the three and ~~six~~nine months ended ~~June~~September 30, 2020, we recognized revenue of $01.86 million and $2.3.9 million, respectively, related to FLA arrangements with our Parent.

Disaggregation of Revenue

The following table provides information about disaggregated revenue:

	Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Transportation services revenue – third parties	$	0.83	$	0.86	$	1.69	$	12.84
Transportation services revenue – related parties	2826.50		3033.71		5783.3		6093.45
Total revenue	$	2926.3	$	3133.57	$	5885.92	$	6295.29

~~Future Performance Obligations~~10

The values in the table below represent the fixed portion of the MVC arrangements with our existing customer contracts, summarized as future performance obligations as of June 30, 2021. The unfulfilled performance obligations included in the table below are expected to be recognized in revenue in the specified periods:

	As of June 30, 2021
Remainder of 2021	$	55.2
2022	102.0
2023	98.2
Total	$	255.4

As of June 30, 2021 we have executed a Capital Recovery Fee Agreement with BP Products and commenced construction of an onshore capacity increase project. The agreement calls for fees of $6.0 million per year (payable in equal monthly installments) over a four-year period, beginning when the increased capacity becomes available for use.

Contract Balances

Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings and cash collections. Contract liabilities or deferred revenue and credits primarily relate to consideration received from customers for temporary deficiency quantities under minimum volume contracts that the customer has the right to make up in a future period, which we subsequently recognize as revenue or amounts we credit back to the customer in a future period.

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

	June 30, 2021		December 31, 2020
Receivables from contracts with customers – third parties	$	—	$	0.2
Receivables from contracts with customers – related parties	10.0		11.0
Deferred revenues and credits – related parties	2.3		1.8

Future Performance Obligations

The values in the table below represent the fixed portion of the MVC arrangements with our existing customer contracts, summarized as future performance obligations as of September 30, 2021. The unfulfilled performance obligations included in the table below are expected to be recognized in revenue in the specified periods:


	As of September 30, 2021
Remainder of 2021	$	31.8
2022	101.7
2023	97.9
Total	$	231.4

As of September 30, 2021, we have an executed Capital Recovery Fee Agreement with BP Products and commenced construction of an onshore capacity increase project. The agreement calls for fees of $6.0 million per year (payable in equal monthly installments) over a four-year period, beginning when the increased capacity becomes available for use.

Contract Balances

Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings and cash collections. Contract liabilities or deferred revenues and credits primarily relate to consideration received from customers for temporary deficiency quantities under minimum volume contracts that the customer has the right to make up in a future period, which we subsequently recognize as revenue or amounts we credit back to the customer in a future period.

The following table provides information about receivables from contracts with customers, contract assets and contract liabilities:


	September 30, 2021		December 31, 2020
Receivables from contracts with customers – third parties	$	—	$	0.2
Receivables from contracts with customers – related parties	9.6		11.0
Deferred revenues and credits – related parties	5.6		1.8

3. Equity Method Investments

We account for ownership interests in Mars, the Mardi Gras Joint Ventures, Ursa, and KM Phoenix using the equity method for financial reporting purposes. Financial results include the Partnership's proportionate share of Mars, the Mardi Gras Joint Ventures, Ursa and KM Phoenix, which is reflected in Income from equity method investments on the condensed consolidated statements of operations. We did not record any impairment loss on equity method investments during the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020.

The table below summarizes the balances and activities related for each equity method investment ("EMI") recorded as of and for the three and ~~six~~ nine months ended ~~June~~September 30, 2021 and 2020:

	Three Months Ended June 30, 2021							Three Months Ended June 30, 2020
	Three Months Ended September 30, 2021							Three Months Ended September 30, 2020
	Percentage Ownership	Distributions Received		Income from EMI		Carrying Value		Percentage Ownership	Distributions Received		Income from EMI		Carrying Value
Mars	28.5%	$	(123.1)	$	105.30	$	5355.10	28.5%	$	(1312.70)	$	1113.60	$	5455.3
Caesar	56.0%	(54.37)		4.25		115.31		56.0%	(3.49)		3.75		~~117~~116.39
Cleopatra	53.0%	(2.67)		12.90		~~113~~112.15		53.0%	(21.46)		1.2		115.51
Proteus	65.0%	(3.4.3)		3.12		6766.43		65.0%	(53.29)		32.6		7271.30
Endymion	65.0%	(69.62)		65.46		7875.60		65.0%	(4.89)		5.23		81.59
Others(1)	Various	(2.93)		21.78		8887.26		Various	(20.39)		12.50		8586.67
Total Equity Investments		$	(3226.93)	$	2822.61	$	~~515~~511.75		$	(3127.82)	$	2627.86	$	526.59

	Six Months Ended June 30, 2021							Six Months Ended June 30, 2020
	Percentage Ownership	Distributions Received		Income from EMI		Carrying Value		Percentage Ownership	Distributions Received		Income from EMI		Carrying Value
Mars	28.5%	$	(23.1)	$	22.1	$	53.1	28.5%	$	(26.7)	$	24.1	$	54.3
Caesar	56.0%	(9.2)		8.0		115.3		56.0%	(8.3)		8.2		117.3
Cleopatra	53.0%	(4.2)		3.0		113.1		53.0%	(5.3)		3.2		115.5
Proteus	65.0%	(8.1)		7.1		67.4		65.0%	(10.7)		7.7		72.3
Endymion	65.0%	(14.6)		13.9		78.6		65.0%	(10.7)		11.2		81.5
Others(1)	Various	(3.9)		4.8		88.2		Various	(4.3)		3.7		85.6
Total Equity Investments		$	(63.1)	$	58.9	$	515.7		$	(66.0)	$	58.1	$	526.5

(1) Includes ownership in Ursa (22.7%) and KM Phoenix (25%).

The following table presents aggregated selected income statement data for equity method investments on a 100% basis for the three and six months ended June 30, 2021 and 2020:

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

		Three Months Ended June 30,
	Nine Months Ended September 30, 2021							Nine Months Ended September 30, 2020
		2021				2020
	Percentage Ownership	Distributions Received		Income from EMI		Carrying Value		Percentage Ownership	Distributions Received		Income from EMI		Carrying Value
Statement of operations
Mars	28.5%	$	(26.2)	$	27.1	$	55.0	28.5%	$	(38.7)	$	37.1	$	55.3
Revenue		$	128.7			$	127.0
Caesar	56.0%	(13.9)		12.5		115.1		56.0%	(12.2)		11.7		116.9
Operating expenses		56.2				57.1
Cleopatra	53.0%	(6.9)		5.0		112.5		53.0%	(6.9)		4.4		115.1
Net income		72.6				70.0
Proteus	65.0%	(12.4)		10.3		66.3		65.0%	(14.6)		10.3		71.0
Endymion	65.0%	(23.8)		19.5		75.0		65.0%	(15.6)		16.5		81.9
Others(1)	Various	(6.2)		6.6		87.6		Various	(5.2)		5.7		86.7
Total Equity Investments		$	(89.4)	$	81.0	$	511.5		$	(93.2)	$	85.7	$	526.9

	Six Months Ended June 30,
	2021		2020
Statement of operations
Revenue	$	262.7	$	271.6
Operating expenses	113.6		121.4
Net income	149.2		150.5

(1) Includes ownership in Ursa (22.7%) and KM Phoenix (25%).

The following table presents aggregated selected income statement data for equity method investments on a 100% basis for the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30,
	2021		2020
Statement of operations
Revenue	$	106.7	$	132.7
Operating expenses	56.9		58.5
Net income	49.9		74.2


	Nine Months Ended September 30,
	2021		2020
Statement of operations
Revenue	$	369.4	$	404.3
Operating expenses	170.5		179.9
Net income	199.1		224.7

4. Property, Plant and Equipment

Property, plant and equipment consisted of the following:

	June 30, 2021		December 31, 2020
	September 30, 2021		December 31, 2020
Land	$	0.2	$	0.2
Rights-of-way assets	1.4		1.4
Buildings and improvements	6.9		6.9
Pipelines and equipment	95.5		95.3
Other	0.9		0.8
Construction in progress	1519.05		7.1
Property, plant and equipment	~~119~~124.94		111.7
Less: Accumulated depreciation	(45.18)		(43.8)
Property, plant and equipment, net	$	7478.86	$	67.9

~~There~~No ~~were no~~ impairments onof property, plant and equipment were recorded in the condensed consolidated statements of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020.

~~5. Other Current Liabilities~~12

	June 30, 2021		December 31, 2020
Accrued capital expenditures	$	5.1	$	4.1
Accrued interest payable – related parties	0.8		0.9
Current portion of environmental remediation obligation	0.5		0.4
Current portion of lease liabilities	0.1		0.1
Accrued liabilities	1.7		2.3
Other current liabilities	$	8.2	$	7.8

6. Debt

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

~~which is calculated as total indebtedness to consolidated EBITDA, not to exceed~~ 5.0 toOther ~~1.0,~~Current subject to a temporary increase in such ratio to 5.5 to 1.0 in connection with certain material acquisitions. Simultaneous with this transaction, we entered into a First Amendment to Short Term Credit Facility Agreement whereby the lender added a provision that indebtedness under both the term loan and the credit facility shall not exceed $600 million. All other terms of the credit facility remain the same.Liabilities

Other current liabilities consisted of the following:

As of June 30, 2021, the Partnership was in compliance with the covenants contained in the term loan facility and the credit facility. There were $468 million of outstanding borrowings under the term loan at June 30, 2021 and December 31, 2020. Interest charges and fees were $1.1 million and $2.2 million for the three and six months ended June 30, 2021, respectively. Interest charges and fees were $2.0 million and $5.6 million for the three and six months ended June 30, 2020, respectively.


	September 30, 2021		December 31, 2020
Accrued capital expenditures	$	3.9	$	4.1
Accrued interest payable – related parties	0.8		0.9
Current portion of environmental remediation obligation	0.5		0.4
Current portion of lease liabilities	0.1		0.1
Accrued liabilities	2.1		2.3
Other current liabilities	$	7.4	$	7.8

~~Indebtedness under the term loan bears interest at the 3-month LIBOR plus 0~~6.~~73%.~~ ~~For~~Debt the three and six months ended June 30, 2021, the weighted average interest rates for our long-term debt were 0.92% and 0.93%, respectively. For the three and six months ended June 30, 2020, the weighted average interest rates for our long-term debt were 1.69% and 2.28%, respectively.

On February 24, 2020, we entered into a $468 million Term Loan Facility Agreement ("term loan") with an affiliate of BP. On March 13, 2020, proceeds were used to repay outstanding borrowings under the existing credit facility ("credit facility"). Refer to Note 9 - Debt in the Partnership's 2020 10-K for additional information. The term loan has a final repayment date of February 24, 2025, and provides for certain covenants, including the requirement to maintain a consolidated leverage ratio, which is calculated as total indebtedness to consolidated EBITDA, not to exceed 5.0 to 1.0, subject to a temporary increase in such ratio to 5.5 to 1.0 in connection with certain material acquisitions. Simultaneous with this transaction, we entered into a First Amendment to Short Term Credit Facility Agreement whereby the lender added a provision that indebtedness under both the term loan and the credit facility shall not exceed $600 million. All other terms of the credit facility remain the same.

As of September 30, 2021, the Partnership was in compliance with the covenants contained in the term loan facility and the credit facility. There were $468 million of outstanding borrowings under the term loan at September 30, 2021 and December 31, 2020. Interest charges and fees were $1.1 million and $3.3 million for the three and nine months ended September 30, 2021, respectively. Interest charges and fees were $1.5 million and $7.1 million for the three and nine months ended September 30, 2020, respectively.

Indebtedness under the term loan bears interest at the 3-month LIBOR plus 0.73%. For the three and nine months ended September 30, 2021, the weighted average interest rates for our long-term debt were 0.87% and 0.91%, respectively. For the three and nine months ended September 30, 2020, the weighted average interest rates for our long-term debt were 1.18% and 1.91%, respectively.

7. Related Party Transactions

Related party transactions include transactions with our Parent and its affiliates, including those entities in which our Parent has an ownership interest but over which it does not have control. In addition to the Take Private Proposal section discussed in Note 1 - Business and Basis of Presentation, the MVC and FLA arrangements discussed in Note 2 - Revenue Recognition and the credit facility and term loan in Note 6 - Debt, we have entered into the following transactions with related parties:

Omnibus Agreement

The Partnership has entered into an omnibus agreement with BP Pipelines and certain of its affiliates, including ~~BP Midstream Partners GP LLC (~~our "General Partner"). This agreement addresses, among other things, (i) the Partnership's obligation to pay an annual fee for general and administrative services provided by BP Pipelines and its affiliates, (ii) the Partnership's obligation to reimburse BP Pipelines for personnel and other costs related to the direct operation, management and maintenance of the assets and (iii) the Partnership's obligation to reimburse BP Pipelines for services and certain direct or allocated costs and expenses incurred by BP Pipelines or its affiliates on behalf of the Partnership.

BP Pipelines will indemnify us for all known and certain unknown environmental liabilities that are associated with the ownership or operation of Partnership assets and due to occurrences on or before October 30, 2017, subject to certain limitations. Specifically, under our omnibus agreement, indemnification for any unknown environmental liabilities was limited to liabilities due to occurrences on or before October 30, 2017, which were identified prior to October 30, 2020. We continue to maintain indemnification by our General Partner for matters previously discovered. To the extent that unknown environmental liabilities arise relating to prior ownership, the Partnership will be liable.

~~Further, the omnibus agreement addresses the granting of a license from BPA to the Partnership with respect to use of certain BP trademarks and trade name.~~13

Related Party Revenue

We provide crude oil, refined products and diluent transportation services to related parties and generate revenue through published tariffs. We have commercial arrangements with BP Products that include MVCs. Refer to Note 10 - Related Party Transactions in the Partnership's 2020 10-K for additional information regarding these agreements.

Revenue from related parties was $28.5 million and $57.3 million for the three and six months ended June 30, 2021, respectively, and $30.7 million and $60.4 million for the three and six months ended June 30, 2020, respectively.

We recognized no deficiency revenue under the throughput and deficiency agreements with BP Products for the three and six months ended June 30, 2021. We recognized $6.0 million deficiency revenue for the three and six months ended June 30, 2020. The Partnership recorded $2.3 million and $1.8 million in Deferred revenues and credits on the condensed consolidated balance sheets at June 30, 2021 and December 31, 2020, respectively.

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

Further, the omnibus agreement addresses the granting of a license from BPA to the Partnership with respect to use of certain BP trademarks and trade name.

Related Party Revenue

Revenue from related parties was $26.0 million and $83.3 million for the three and nine months ended September 30, 2021, respectively, and $33.1 million and $93.5 million for the three and nine months ended September 30, 2020, respectively.

We recognized no deficiency revenue under the throughput and deficiency agreements with BP Products for the three and nine months ended September 30, 2021. We recognized $5.1 million and $11.1 million deficiency revenue for the three and nine months ended September 30, 2020, respectively. The Partnership recorded $5.6 million and $1.8 million in Deferred revenues and credits on the condensed consolidated balance sheets at September 30, 2021 and December 31, 2020, respectively.

Related Party Expenses

All employees performing services on behalf of Partnership operations are employees of our Parent. Our Parent also procures insurance policies on our behalf and performs certain general corporate functions for us related to finance, accounting, treasury, legal, information technology, human resources, shared services, government affairs, insurance, health, safety, security, employee benefits, incentives, severance and environmental functional support. Personnel and operating costs incurred by our Parent on our behalf are included in either Operating expenses – related parties or General and administrative – related parties in the condensed consolidated statements of operations, depending on the nature of the service provided.

We paid our Parent an annual fee of $14.0 million in 2020 in the form of monthly installments under the omnibus agreement for general and administrative services provided by our Parent and its affiliates. The annual fee was adjusted to $15.5 million per year, payable in equal monthly installments, beginning on January 1, 2021. We also reimburse our Parent for personnel and other costs related to the direct operation, management and maintenance of the assets and services and certain direct or allocated costs and expenses incurred by our Parent or its affiliates on our behalf pursuant to the terms in the omnibus agreement.

For the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, we recorded the following amounts for related party expenses, which also included the expenses related to share-based compensation discussed below:

	Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Operating expenses—related parties	$	1.45	$	1.3	$	24.61	$	24.81
Maintenance expenses—related parties	0.1		0.1		0.12		0.23
General and administrative—related parties	34.90		3.65		711.9		711.50
Total costs and expenses—related parties	$	5.46	$	54.09	$	1016.62	$	1015.54

Share-based Compensation

Our Parent operates share option plans and equity-settled employee share plans. These plans typically have a three-year performance or restricted period during which the units accrue net notional dividends, which are treated as having been reinvested. Leaving employment will normally preclude the conversion of units into shares, but special arrangements apply for participants that leave for qualifying reasons.

Share-based compensation related to the employees of our Parent who provide services to us is charged to the Partnership pursuant to the terms of the omnibus agreement. The Partnership also issued its own unit-based compensation under a long-term incentive plan. Refer to Note 11 - Unit-Based Compensation.

~~Non-controlling Interests~~14

Non-controlling interests consist of the 35% ownership interest in Mardi Gras held by our Parent at June 30, 2021 and 2020. Net income attributable to non-controlling interests is the product of the non-controlling interests ownership percentage and the net income of Mardi Gras. We report Non-controlling interests as a separate component of equity on the condensed consolidated balance sheets and Net income attributable to non-controlling interests on the condensed consolidated statements of operations.

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

Non-controlling Interests

Non-controlling interests consist of the 35% ownership interest in Mardi Gras held by our Parent at September 30, 2021 and 2020. Net income attributable to non-controlling interests is the product of the non-controlling interests ownership percentage and the net income of Mardi Gras. We report Non-controlling interests as a separate component of equity on the condensed consolidated balance sheets and Net income attributable to non-controlling interests on the condensed consolidated statements of operations.

8. Net Income Per Limited Partner Unit

The following table details the distributions declared and/or paid for the periods presented:

Three Months Ended	Date Paid or to be Paid	General Partner		Limited Partners' Common Units		Limited Partners' Subordinated Units		Total		Distributions per Limited Partner Unit (in dollars)
December 31, 2019	February 13, 2020	$	1.2	$	18.2	$	18.2	$	37.6	$	0.3475
March 31, 2020	May 14, 2020	1.2		18.2		18.2		37.6		0.3475
June 30, 2020	August 13, 2020	1.2		18.2		18.2		37.6		0.3475
September 30, 2020	November 12, 2020	1.2		18.2		18.2		37.6		0.3475
December 31, 2020	February 11, 2021	1.2		18.2		18.2		37.6		0.3475
March 31, 2021	May 13, 2021	1.2		36.4		—		37.6		0.3475
June 30, 2021	August 12, 2021	1.2		36.4		—		37.6		0.3475
September 30, 2021	November 11, 2021	1.2		36.4		—		37.6		0.3475

Earnings in excess of distributions (Distributions in excess of earnings) are allocated to the limited partners based on their respective percentage interests. Payments made to the Partnership’s unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per unit.

In addition to the common and subordinated units, the Partnership also identified the incentive distribution rights ("IDRs") currently held by the General Partner as a participating security and uses the two-class method when calculating the net income per unit applicable to limited partners that is based on the weighted-average number of common units outstanding during the period.

Following the payment of the distribution on February 11, 2021, the financial tests required for the conversion of our subordinated units were satisfied under the terms of our partnership agreement. As a result, on February 12, 2021, all of the Partnership's subordinated units were converted into common units on a one-for-one basis and the subordination period was terminated. Following the conversion, we continue to use the two-class method when calculating the net income per unit applicable to limited partners. The remaining classes of participating securities are common units and IDRs.

When calculating basic earnings per unit under the two-class method for a master limited partnership, net income for the current reporting period is reduced by the amount of available cash that will be distributed to the General Partner and limited partners for that reporting period. The following tables show the allocation of net income to arrive at net income per limited partner unit for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income attributable to the Partnership	$	40.5	$	40.6	$	82.5	$	82.3
Less:
Incentive distribution rights currently held by the General Partner	1.2		1.2		2.4		2.4
Limited partners' distribution declared on common units	36.4		18.2		72.8		36.4
Limited partners' distribution declared on subordinated units	—		18.2		—		36.4
Net income attributable to the Partnership in excess of distributions	$	2.9	$	3.0	$	7.3	$	7.1

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

			Three Months Ended June 30, 2021
	Three Months Ended September 30,				Nine Months EndedSeptember 30,
			General Partner		Limited Partners' Common Units		Limited Partners' Subordinated Units		Total
	2021		2020		2021		2020
Distributions declared			$	1.2	$	36.4	$	—	$	37.6
Net income attributable to the Partnership	$	29.2	$	45.3	$	111.7	$	127.6
Net income attributable to the Partnership in excess of distributions			—		2.9		—		2.9
Less:
Net income attributable to the Partnership			$	1.2	$	39.3	$	—	$	40.5
Incentive distribution rights currently held by the General Partner	1.2		1.2		3.6		3.6
Weighted average units outstanding:
Limited partners' distribution declared on common units	36.4		18.2		109.2		54.6
Basic and Diluted					104.8		—
Limited partners' distribution declared on subordinated units	—		18.2		—		54.6
Net income per limited partner unit (in dollars):
(Distributions in excess of net income) Net income attributable to the Partnership in excess of distributions	$	(8.4)	$	7.7	$	(1.1)	$	14.8
Basic and Diluted					$	0.37	$	—

	Six Months Ended June 30, 2021
	Three Months Ended September 30, 2021
	General Partner		Limited Partners' Common Units		Limited Partners' Subordinated Units		Total
Distributions declared	$	21.42	$	7236.84	$	—	$	7537.26
Net income attributable to the Partnership in excess of distributions	—		(2.2)		9.5		7.3
Distributions in excess of net income	—		(8.4)		—		(8.4)
Net income attributable to the Partnership	$	21.42	$	7028.60	$	~~9.5~~—	$	8229.52
Weighted average units outstanding:
Basic and Diluted(1)			92.6		52.4
Basic and Diluted			104.8		—
Net income per limited partner unit (in dollars):
Basic and Diluted(1)			$	0.76	$	0.18
Basic and Diluted			$	0.27	$	—


	Nine Months Ended September 30, 2021
	General Partner		Limited Partners' Common Units		Limited Partners' Subordinated Units		Total
Distributions declared	$	3.6	$	109.2	$	—	$	112.8
(Distributions in excess of net income) Net income attributable to the Partnership in excess of distributions	—		(10.6)		9.5		(1.1)
Net income attributable to the Partnership	$	3.6	$	98.6	$	9.5	$	111.7
Weighted average units outstanding:
Basic and Diluted(1)			96.6		52.4
Net income per limited partner unit (in dollars):
Basic and Diluted(1)			$	1.02	$	0.18

(1)The 52.4 million weighted average subordinated units outstanding and $0.18 net income per limited partner unit have been calculated only for the period prior to conversion. All of the subordinated units were converted into common units on February 12, 2021.

On April 15, 2021, the Partnership declared a cash distribution of $0.3475 per limited partner unit to unitholders of record on April 29, 2021, for the three months ended March 31, 2021. All of the subordinated units were converted into common units on February 12, 2021. As a result, on the date of record, there were no subordinated units outstanding, and therefore, no portion of the cash distribution was allocated to the limited partners' subordinated units. However, pursuant to the requirements of the two-class method, and as stated above, the net income per unit amount applicable to the subordinated units has been calculated for the period of time the units were outstanding prior to their conversion.

	Three Months Ended June 30, 2020
	General Partner		Limited Partners' Common Units		Limited Partners' Subordinated Units		Total
Distributions declared	$	1.2	$	18.2	$	18.2	$	37.6
Net income attributable to the Partnership in excess of distributions	—		1.5		1.5		3.0
Net income attributable to the Partnership	$	1.2	$	19.7	$	19.7	$	40.6
Weighted average units outstanding:
Basic and Diluted			52.4		52.4
Net income per limited partner unit (in dollars):
Basic and Diluted			$	0.38	$	0.38

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

	Six Months Ended June 30, 2020
	Three Months Ended September 30, 2020
	General Partner		Limited Partners' Common Units		Limited Partners' Subordinated Units		Total
Distributions declared	$	21.42	$	3618.42	$	3618.42	$	7537.26
Net income attributable to the Partnership in excess of distributions	—		3.68		3.59		7.17
Net income attributable to the Partnership	$	21.42	$	4022.0	$	3922.91	$	8245.3
Weighted average units outstanding:
Basic and Diluted			52.4		52.4
Net income per limited partner unit (in dollars):
Basic and Diluted			$	0.7742	$	0.7742

Distributions declared to BP Holdco for the three and six months ended June 30, 2021 totaled $21.0 million and $42.0 million, respectively; including $1.2 million and $2.4 million, respectively, for IDRs distributed to our Parent in respect of its ownership of our common units and IDRs.


	Nine Months Ended September 30, 2020
	General Partner		Limited Partners' Common Units		Limited Partners' Subordinated Units		Total
Distributions declared	$	3.6	$	54.6	$	54.6	$	112.8
Net income attributable to the Partnership in excess of distributions	—		7.4		7.4		14.8
Net income attributable to the Partnership	$	3.6	$	62.0	$	62.0	$	127.6
Weighted average units outstanding:
Basic and Diluted			52.4		52.4
Net income per limited partner unit (in dollars):
Basic and Diluted			$	1.19	$	1.19

Distributions declared to BP Holdco for the three and ~~six~~nine months ended ~~June~~September 30, ~~2020~~2021 totaled $21.0 million and $4263.0 million, respectively; including $1.2 million and $23.46 million, respectively, for IDRs distributed to our Parent in respect of its ownership of our common units, ~~subordinated units~~ and IDRs.

Distributions declared to BP Holdco for the three and nine months ended September 30, 2020 totaled $21.0 million and $63.0 million, respectively; including $1.2 million and $3.6 million, respectively, for IDRs distributed to our Parent in respect of its ownership of our common units, subordinated units and IDRs.

9. Fair Value Measurements

The carrying amounts of accounts receivable, other current assets, accounts payable, and other current liabilities approximate their fair values due to their short-term nature.

The carrying value of borrowings under the term loan as of ~~June~~September 30, 2021 and December 31, 2020 approximate fair value as the interest rates are reflective of market rates.

10. Commitments and Contingencies

Legal Proceedings

The Partnership is a party to ongoing legal proceedings in the ordinary course of business. For each outstanding legal matter, if any, we will evaluate the merits of the case, exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. While the outcome of these proceedings cannot be predicted with certainty, we do not believe the ~~results of these proceedings, individually or in the aggregate, will have a material adverse effect on the Partnership's business, financial condition, results of operations or liquidity.~~

~~Indemnification~~17

Under our omnibus agreement, our Parent will indemnify us for certain environmental liabilities, litigation and other matters attributable to the ownership or operation of our assets prior to our ownership. For the purposes of determining the indemnified amount of any loss suffered or incurred by the Partnership, the Partnership’s ownership of 28.5% in Mars, and 65% in Mardi Gras, and Mardi Gras’ 56% ownership in Caesar, 53% ownership in Cleopatra, 65% ownership in Endymion and 65% ownership in Proteus will be considered. Indemnification for certain identified environmental liabilities is subject to a cap of $25 million without any deductible. Other matters covered by the omnibus agreement are subject to a cap of $15.0 million and an aggregate deductible of $0.5 million before we are entitled to indemnification. Indemnification for any unknown environmental liabilities was limited to liabilities due to occurrences on or before October 30, 2017, which were identified prior to October 30, 2020. We continue to maintain indemnification by our General Partner for matters previously discovered. To the extent that unknown environmental liabilities arise relating to prior ownership, the Partnership will be liable.

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

~~breach~~results of ~~their~~these ~~representations~~proceedings, ~~warranties~~individually or ~~covenants contained~~ in the ~~Interest Purchase Agreement~~aggregate, ~~subject~~will tohave ~~certain~~a ~~limitations~~material ~~and~~adverse ~~survival~~effect ~~periods.~~on ~~This agreement covers~~ the Partnership’'s ~~ownership~~business, offinancial ~~22.7%~~condition, inresults ~~Ursa~~of ~~and~~operations ~~25%~~or ~~in KM Phoenix~~liquidity.

Indemnification

The Interest Purchase Agreement contains customary representations, warranties and covenants of our Parent and the Partnership. Our Parent, on the one hand, and the Partnership, on the other hand, have agreed to indemnify each other and their respective affiliates, officers, directors and other representatives against certain losses, including those resulting from any breach of their representations, warranties or covenants contained in the Interest Purchase Agreement, subject to certain limitations and survival periods. This agreement covers the Partnership’s ownership of 22.7% in Ursa and 25% in KM Phoenix.

Environmental Matters

We are subject to federal, state, and local environmental laws and regulations. We record provisions for environmental liabilities based on management’s best estimates, using all information that is available at the time. In making environmental liability estimations, we consider the material effect of environmental compliance, pending legal actions against us and potential third-party liability claims. Often, as the remediation evaluation and effort progress, additional information is obtained, requiring revisions to estimated costs. We are indemnified by our Parent under the omnibus agreement against environmental cleanup costs for incidents that occurred prior to Partnership ownership. Revisions to the estimated environmental liability for conditions that are not indemnified under the omnibus agreement with our Parent are reflected in the Partnership's condensed consolidated statements of operations in the year in which they are probable and reasonably estimable.

We accrued $3.5 million and $3.4 million for environmental liabilities at ~~June~~September 30, 2021 and December 31, 2020, respectively. These balances are broken down on the condensed consolidated balance sheets as follows:

	Balance sheet location	~~June~~September 30, 2021		December 31, 2020
Current portion of environmental remediation obligations	Other current liabilities	$	0.5	$	0.4
Long-term portion of environmental remediation obligations	Other liabilities	3.0		3.0
Total		$	3.5	$	3.4

	Balance sheet location	June 30, 2021		December 31, 2020
Current portion of indemnification assets	Other current assets	$	0.5	$	0.4
Non-current portion of indemnification assets	Other assets	3.0		3.0
Total		$	3.5	$	3.4

The balances are related to incidents that occurred prior to our ownership and are entirely indemnified by our Parent. As a result, we recorded corresponding indemnification assets $3.5 million and $3.4 million at September 30, 2021 and December 31, 2020, respectively. These balances are broken down on the condensed consolidated balance sheets as follows:


	Balance sheet location	September 30, 2021		December 31, 2020
Current portion of indemnification assets	Other current assets	$	0.5	$	0.4
Non-current portion of indemnification assets	Other assets	3.0		3.0
Total		$	3.5	$	3.4

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

Griffith Station Incident

On June 13, 2019, a building fire occurred at the Griffith Station on BP2. Management performed an evaluation of the assets and determined that an impairment was required. We have incurred $0.1 million and $0.23 million for response expense during the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. Reimbursable costs associated with the incident are offset with an insurance receivable, of which $2.5 million is outstanding under "Other current assets" on our condensed consolidated balance sheets as of ~~June~~September 30, 2021 and December 31, 2020. In the event that insurance proceeds exceed the receivable balance, such amounts would be recognized as a gain. Refer to Note 13 - Commitments and Contingencies in the Partnership's 2020 10-K for additional information.

11. Unit-Based Compensation

Long-Term Incentive Plan

On October 26, 2017, the General Partner adopted the BP Midstream Partners LP 2017 Long Term Incentive Plan (the “LTIP”). Awards under the LTIP are available for eligible officers, directors, employees and consultants of the General Partner and its affiliates, who perform services for the Partnership. The LTIP allows the Partnership to grant unit options, unit appreciation rights, restricted units, phantom units, unit awards, cash awards, performance awards, distribution equivalent rights, substitute awards and other unit-based awards. The maximum aggregate number of common units that may be issued pursuant to the awards granted under the LTIP shall not exceed 5,502,271, subject to proportionate adjustment in the event of unit splits and similar events.

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

Unit-Based Awards under the LTIP

The following is a summary of phantom unit award activities of the Partnership’s common units for the nine months ended September 30, 2021:

	Phantom Units
	Number of Units (in units)	Weighted Average Grant Date Fair Value per Unit (in dollars)
Outstanding at December 31, 2020	16,038	$	14.03
Granted	18,534	12.00
Vested	(16,038)	14.03
Outstanding at June 30, 2021	18,534	$	12.00
Outstanding at September 30, 2021	18,534	$	12.00

For the three and ~~six~~nine months ended ~~June~~September 30, 2021, total compensation expense recognized for phantom unit awards were approximately $56 thousand and $~~111~~167 thousand, respectively. For the three and ~~six~~nine months ended ~~June~~September 30, 2020, total compensation expense recognized for phantom unit awards was approximately $5657 thousand and $~~119~~176 thousand, respectively. The unrecognized compensation cost related to phantom unit awards was approximately $~~146~~90 thousand at ~~June~~September 30, 2021, which is expected to be recognized over a weighted average period of 0.74 years.

12. Variable Interest Entity

Mardi Gras is a Delaware limited liability company and a pass-through entity for U.S. federal and state income tax purposes. Mardi Gras holds equity interests in the Mardi Gras Joint Ventures and accounts for them as equity method investments. Mardi Gras does not have any other operations or activities. The remaining interests in each of the Mardi Gras Joint Ventures are owned by unaffiliated third-party investors. Each of the Mardi Gras Joint Ventures is managed by its respective management committee, and decisions made by these management committees require approval of two or more members that are not affiliates with equity interest holdings meeting certain thresholds.

We have 65% ownership interest and 100% managing member interest in Mardi Gras. The remainder of the economic interest in Mardi Gras was held 34% by BP Pipelines and 1% by an affiliate of BP. Through our managing member interest in Mardi Gras, we have the right to vote 100% of Mardi Gras’ interest in each of the Mardi Gras Joint Ventures. We determined that Mardi Gras is a variable interest entity because (i) we hold disproportional voting rights as compared to our economic interest in Mardi Gras, and (ii) substantially all of Mardi Gras’ activities involve or are conducted on behalf of our Parent, which holds disproportionately few voting rights.

The managing member interest in Mardi Gras provides us with the unilateral power to direct the activities of Mardi Gras that most significantly impact its economic performance including the right to exercise the voting rights of BP for each of the Mardi Gras Joint Ventures. In addition, our obligations to absorb the expected losses of and the right to receive the residual returns from Mardi Gras relative to our economic ownership is significant to Mardi Gras. As a result, we are the primary beneficiary of Mardi Gras and consolidate Mardi Gras.19

We have the obligation to provide financial support to Mardi Gras if all members unanimously determine that additional capital contributions are necessary to fund Mardi Gras’ operations. The assets of Mardi Gras can only be used to satisfy its own obligations, which were zero at June 30, 2021 and December 31, 2020. Under the current limited liability company agreement of Mardi Gras, creditors of Mardi Gras, if any, do not have any recourse to the general credit of the Partnership.

The financial position of Mardi Gras at June 30, 2021 and December 31, 2020, its financial performance for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020, as reflected in the condensed consolidated financial statements, are as follows:

	June 30, 2021		December 31, 2020
Balance sheet
Equity method investments	$	374.4	$	378.5
Non-controlling interests	131.0		132.5

BP MIDSTREAM PARTNERS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions of dollars, unless otherwise indicated)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Statement of operations
Income from equity method investments	$	15.6	$	13.7	$	32.0	$	30.3
Less: Net income attributable to non-controlling interests	5.4		4.8		11.2		10.6
Net impact on Net income attributable to the Partnership	$	10.2	$	8.9	$	20.8	$	19.7

	Six Months Ended June 30,
	2021		2020
Statement of cash flows
Cash flows from operating activities
Distributions of earnings received from equity method investments	$	31.9	$	29.8
Cash flows from investing activities
Distribution in excess of earnings from equity method investments	4.2		5.2
Cash flows from financing activities
Distributions to non-controlling interests	(12.7)		(12.2)
Net change on the Partnership's cash and cash equivalents	$	23.4	$	22.8

We have the obligation to provide financial support to Mardi Gras if all members unanimously determine that additional capital contributions are necessary to fund Mardi Gras’ operations. The assets of Mardi Gras can only be used to satisfy its own obligations, which were zero at September 30, 2021 and December 31, 2020. Under the current limited liability company agreement of Mardi Gras, creditors of Mardi Gras, if any, do not have any recourse to the general credit of the Partnership.

The financial position of Mardi Gras at September 30, 2021 and December 31, 2020, its financial performance for the three and nine months ended September 30, 2021 and 2020 and cash flows for the nine months ended September 30, 2021 and 2020, as reflected in the condensed consolidated financial statements, are as follows:


	September 30, 2021		December 31, 2020
Balance sheet
Equity method investments	$	368.9	$	378.5
Non-controlling interests	129.1		132.5


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Statement of operations
Income from equity method investments	$	15.3	$	12.6	$	47.3	$	42.9
Less: Net income attributable to non-controlling interests	5.4		4.4		16.6		15.0
Net impact on Net income attributable to the Partnership	$	9.9	$	8.2	$	30.7	$	27.9


	Nine Months Ended September 30,
	2021		2020
Statement of cash flows
Cash flows from operating activities
Distributions of earnings received from equity method investments	$	47.3	$	41.9
Cash flows from investing activities
Distribution in excess of earnings from equity method investments	9.7		7.4
Cash flows from financing activities
Distributions to non-controlling interests	(20.0)		(17.2)
Net change on the Partnership's cash and cash equivalents	$	37.0	$	32.1

13. Subsequent Events

We have evaluated subsequent events through the issuance of these condensed consolidated financial statements. Based on this evaluation, it was determined that no subsequent events occurred, other than the ~~items~~item noted below, that require recognition or disclosure in the condensed consolidated financial statements.

Distribution

On ~~July~~October 1514, 2021, we declared a cash distribution of $0.3475 per limited partner unit to unitholders of record on ~~July~~October 2928, 2021, for the three months ended ~~June~~September 30, 2021. The distribution, combined with distributions to our General Partner, will be paid on ~~August~~November 1211, 2021, and will total $37.6 million, with $16.6 million distributed to our non-affiliated common unitholders, and $21.0 million, including $1.2 million for IDRs distributed to our Parent in respect of its ownership of our common units and IDRs.

~~Take Private Proposal~~20

On August 4, 2021, the board of directors of our General Partner received a non-binding preliminary proposal letter from BP Pipelines, through its wholly-owned subsidiary BP Midstream Partners Holdings LLC, to acquire all of our outstanding common units not already owned by BP Pipelines or its affiliates at a to be determined fixed exchange ratio at a value of $13.01 per each issued and outstanding publicly held common unit of the Partnership payable in newly-issued American Depositary Receipts ("ADRs") of BP p.l.c. (the "Proposal"). The exchange ratio will be determined based on a 30-day volume weighted average closing price of ADRs of BP p.l.c. as of the day immediately preceding the signing of a merger agreement. The board of directors will appoint a conflicts committee to review, evaluate and negotiate the Proposal.

The proposed transaction is subject to a number of contingencies, including the approval of the conflicts committee of the board of directors, and the satisfaction of any conditions to the consummation of a transaction set forth in any definitive agreement concerning the transaction. There can be no assurance that definitive documentation will be executed or that any transaction will materialize on the terms described above or at all.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q (the “Quarterly Report”) includes various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). All statements other than statements of historical fact included in this Quarterly Report, regarding the Partnership's strategy, future growth, future operations, future actions, the continued effects of the global coronavirus disease (“COVID-19”) pandemic on demand, the effects of the continued volatility of commodity prices and the related macroeconomic and political environment, volumes, capital requirements, conditions or events, future operating results or the ability to generate sales, our potential exposure to market risks, statements relating to the expected amount of cash available for distribution and level of distributions, financial position, estimated revenues and losses, projected cost, prospects, plans and objectives of management, are forward-looking statements.

When used in this Quarterly Report, you can identify our forward-looking statements by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “plan,” “predict,” “project,” “seek,” “target,” “could,” “may,” “should,” “would” or other similar expressions that convey the uncertainty of future events or outcomes, although not all forward-looking statements contain such identifying words. When considering forward-looking statements, you should carefully consider the risk factors and other cautionary statements described under the heading “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2020, under Part II, Item 1A of our Quarterly Reports and other cautionary statements contained in this filing.

We base forward-looking statements on our current expectations and assumptions about future events and currently available information as to the outcome and timing of future events. We caution you that these statements are not guarantees of future performance as they involved assumptions that, while made in good faith, may prove to be incorrect, and involve risks and uncertainties we cannot predict. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecast in the forward-looking statements.

Forward-looking statements may include statements about:

•AThe ~~decline~~outcome ~~in global crude oil demand and crude oil prices for an uncertain period~~ of ~~time and~~ the ~~potential~~non-binding ~~resulting~~preliminary ~~significant~~proposal ~~reduction~~made ofby ~~domestic~~BP ~~crude~~Pipelines ~~oil~~to ~~and~~acquire ~~natural~~all ~~gas~~of ~~production and significant declines in the actual or expected volumes transported through~~ our ~~pipelines~~issued and~~/or~~ ~~the~~outstanding ~~reduction~~common ~~of commercial opportunities that might otherwise be available to us~~units.

•~~Uncertainty~~Volatility ~~regarding~~in ~~the~~global ~~easing~~crude ofoil ~~restrictions~~demand onand ~~various~~crude ~~commercial,~~oil ~~social~~prices ~~and~~for ~~economic~~an ~~activities~~uncertain byperiod ~~applicable~~of ~~authorities,~~time asand ~~well as~~ the potential ~~reinstatement~~resulting significant reduction of ~~such~~domestic ~~restrictions,~~crude oil and natural gas production and significant declines in ~~response~~the toactual or expected volumes transported through our pipelines and/or the ~~spread~~reduction of ~~COVID-19~~commercial opportunities that might otherwise be available to us.

•Uncertainty regarding the ~~timing,~~easing ~~pace and extent~~ of anrestrictions ~~economic~~on ~~recovery~~various incommercial, ~~the~~social ~~United States~~ and ~~elsewhere,~~economic ~~which~~activities inby ~~turn~~applicable ~~will~~authorities, ~~likely~~as ~~affect~~well ~~demand~~as ~~for crude oil and therefore~~ the ~~demand~~potential ~~for~~reinstatement ~~the~~of ~~midstream~~such ~~services~~restrictions, wein ~~provide~~response ~~and~~to the ~~commercial~~spread ~~opportunities~~of ~~available~~COVID-19, toincluding usnew virus strains.

•Uncertainty regarding the timing, pace and extent of economic growth in the United States and elsewhere, which in turn will likely affect demand for crude oil and therefore the demand for the midstream services we provide and the commercial opportunities available to us.

•The impact of current or future actions or expectations of governments, investors, financial markets, or other stakeholders regarding our environmental, social and governance ("ESG") profile or of any actions we may take or goals we may establish regarding such profile and our related business strategy.

•The possibility of cybersecurity breaches and other disruptions or failures of our information systems.

•The impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations, including increased focus by the federal and state governments to develop renewable energy and climate-related policies.

•Our inability to perform our obligations under our contracts, whether due to non-performance by third parties, including our customers or counterparties, market constraints, third-party constraints, legal constraints (including governmental orders or guidance), or other factors.

•The continued ability of BP and any non-affiliate customers to satisfy their obligations under commercial and other agreements and the impact of lower market prices for crude oil, natural gas, refined products and diluent including the ability to satisfy such obligations as they may be impacted by the effects of COVID-19.

•The volume of crude oil, natural gas, refined products and diluent we transport or store and the prices that we can charge our customers.

•The tariff rates with respect to volumes that we transport through our regulated assets, which rates are subject to review and possible adjustment imposed by federal and state regulators.

•Changes in revenue that we realized under the fixed loss allowance provisions fees and tariffs resulting from changes in underlying commodity prices.

•Fluctuations in the prices for crude oil, natural gas, refined products and diluent.

•The level of onshore and offshore production and demand for crude oil, natural gas, refined products and diluent.

•Our ability to successfully integrate any future assets acquisitions and realize the anticipated benefits of such acquisitions.

•Changes in global economic conditions and the effects of a global economic downturn on the business of BP and the business of its suppliers, customers, business partners and credit lenders.

•Liabilities associated with the risks and operational hazards inherent in transporting and/or storing crude oil, natural gas, refined products and diluent.

•The impact of hurricanes and other severe weather disruptions to our offshore pipelines in the Gulf of Mexico, such as the recent impact of Hurricane Ida.

•Curtailment of operations or expansion projects due to unexpected leaks or spills; severe weather disruption; riots, strikes, lockouts or other industrial disturbances; or failure of information technology systems due to various causes, including unauthorized access or attack.

•Costs or liabilities associated with federal, state and local laws and regulations relating to environmental protection and safety, including spills, releases and pipeline integrity.

•Costs associated with compliance with evolving environmental laws and regulations on climate change.

•Costs associated with compliance with safety regulations and system maintenance programs, including pipeline integrity management program testing and related repairs.

•Changes in tax status.

•Changes in the cost or availability of third-party vessels, pipelines, rail cars and other means of delivering and transporting crude oil, natural gas, refined products and diluent.

•Direct or indirect effects on our operations resulting from actual or threatened terrorist incidents or acts of war.

•Changes in, and availability to us of the equity and debt capital markets.

Many of the foregoing risks and uncertainties may continue to be exacerbated by the COVID-19 pandemic and any consequent worsening of the global business and economic environment. New factors emerge from time to time, and it is not possible for us to predict all such factors. Should one or more of the risks or uncertainties described in this Quarterly Report occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Partnership or persons acting on the Partnership's behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Unless otherwise stated or the context otherwise indicates, all references to “we,” “our,” “us,” refer to the legal entity BP Midstream Partners LP (the "Partnership"). The term “our Parent” refers to BP Pipelines (North America), Inc. (“BP Pipelines”), any entity that wholly owns BP Pipelines, indirectly or directly, including BP America Inc. and BP p.l.c. (“BP”), and any entity that is wholly owned by the aforementioned entities, excluding BP Midstream Partners LP.

The following management discussion and analysis of financial conditions and results of operations should be read in conjunction with the unaudited financial statements and accompanying notes in this quarterly report and our Annual Report on Form 10-K for the year ended December 31, 2020 (the "Partnership's 2020 10-K"). All amounts are in millions of dollars, unless otherwise indicated.

Partnership Overview

We are a fee-based, growth-oriented master limited partnership formed by BP Pipelines, an indirect wholly -owned subsidiary of BP, to own, operate, develop and acquire pipelines and other midstream assets. For additional information regarding the assets and interests owned by the Partnership, refer to Note 1 - Business and Basis of Presentation in the Notes to Condensed Consolidated Financial Statements.

Take Private Proposal

Business Environment, Market Conditions and Outlook

The impacts to the energy industry from the decline and subsequent volatility in demand for petroleum and petroleum-based products resulting from the response to the global outbreak of COVID-19 have been unprecedented. Management continues to monitor the uneven macro environment. For risks associated with these and other factors, refer to “Item 1A. Risk Factors” in this Quarterly Report.

21Management continues to work closely with BP Pipelines, as operator of our assets under the omnibus agreement, to ensure appropriate practices are adopted for continued functioning of our assets as well as mitigation strategies for any office or worksite where COVID-19 may be detected.

~~Management~~In ~~continues~~the tothird ~~work~~quarter ~~closely~~of ~~with~~2021, BPwe ~~Pipelines,~~experienced asa ~~operator~~reduction ofin volumes on our ~~assets~~onshore ~~under~~pipelines compared to the ~~Omnibus~~second ~~Agreement~~quarter of 2021. On BP2, tothis ~~ensure~~was ~~appropriate~~a ~~practices~~result ~~are~~of ~~adopted~~apportionment ~~for~~on ~~continued~~the ~~functioning~~Enbridge ofmainline ~~our~~and ~~assets~~Whiting asrefinery ~~well~~feedstock asoptimization. ~~mitigation~~With ~~strategies~~respect ~~for~~to ~~any~~Diamondback, ~~office~~we orexperienced ~~worksite~~lower ~~where~~throughput ~~COVID-19~~due ~~may~~to bereduced ~~detected~~demand from shippers of diluent. We did not experience any significant impacts on River Rouge.

Hurricane Ida

In late August 2021, Hurricane Ida formed and threatened catastrophic damage to the U.S. Gulf Coast along its path. In response, producers in the Gulf of Mexico, including BP, suspended production at platforms and evacuated offshore workers. Additionally, operators performed impact assessments when it was safe to do so. Caesar, Cleopatra, Proteus and Endymion were able to return to normal operating service at different points in September 2021.

While no damage was directly incurred by any of the assets held by the Mars joint venture that we have an interest in, damage to the West Delta-143 facility was discovered after a comprehensive damage assessment and resulted in the facility remaining offline for repairs. On November 5, 2021, the West Delta-143 offshore facilities safely re-started operations. With the facilities now operational, the Mars Oil Pipeline has resumed normal operations as producers ramp up production.

Shippers provided notice that, effective as of August 29, 2021, Hurricane Ida constituted an event of force majeure under their current contracts, which has since been cancelled consistent with the resumption of normal operations of the Mars Oil Pipeline. We estimate that this outage caused a reduction of approximately $8 million to $10 million to our cash available for distribution during the third quarter of 2021 relative to our financial outlook. For more information, refer to our risk factor titled “Hurricanes and other severe weather conditions, natural disasters or other adverse events or conditions could damage our pipeline systems or disrupt the operations of our customers, which could adversely affect our operations and financial condition.”

COVID-19

~~The highly contagious Delta variant of COVID-19, first detected in the U.S. in March 2021, spread globally during the second quarter of 2021.~~ Uncertainties related to COVID-19 continue to affect the oil and gas industry, including the possibility of renewed restrictions on various commercial, social, and economic activities, thereby impacting the demand for crude oil, natural gas, refined products.

~~Potential Impacts to Demand and Our Operations~~23

InTo limit the ~~second~~impact ~~quarter~~ of ~~2021~~COVID-19, weBP ~~experienced~~and aour ~~reduction~~other incustomers, ~~volumes~~as onwell as third-party operators of our pipelines, have implemented various protocols for both onshore ~~pipelines~~and ~~compared~~offshore personnel; however, these protocols may not prove to ~~the~~be ~~first~~successful. ~~quarter~~There is risk of ~~2021.~~decreased Onvolumes ~~BP2,~~with ~~this~~respect ~~was~~to aour ~~result~~offshore ofoperations ~~apportionment~~if onoperators take actions to reduce operations in response to demand volatility or the ~~Enbridge~~inability ~~mainline~~to ~~and~~control ~~refinery~~COVID-19 ~~feedstock~~infections ~~optimization.~~on ~~With~~platforms ~~respect~~and are required to ~~Diamondback~~shut-in. Additionally, we ~~experienced~~expect ~~lower~~the ~~throughput~~shippers ason ~~demand~~our ~~for~~offshore ~~diluent~~pipelines ~~returned~~ to ~~normal~~continue ~~seasonal~~to ~~levels.~~find Webuyers ~~did~~for ~~not~~their ~~experience~~production; ~~any~~however, ~~significant~~they ~~impacts~~may onnot ~~River~~be ~~Rouge~~successful.

BPAs ~~Products~~noted ~~previously~~above, ~~executed~~BP ~~new~~Pipelines ~~MVC~~and ~~agreements~~the ~~for a three~~third-~~year~~party ~~term~~operators ~~which~~of ~~continue~~our toassets ~~provide~~have ~~downside~~taken ~~protection~~steps ~~to the Partnership, however the minimum volume thresholds were reduced from 2020 levels for BP2~~ and ~~Diamondback.~~continue Asto aactively ~~result,~~work weto ~~could~~mitigate ~~experience~~any acontinuing ~~negative financial~~ impact ifof ~~volumes~~the ~~shipped~~COVID-19 pandemic on our ~~pipelines~~operations, ~~remain~~financial ~~below~~condition, ~~such~~cash ~~minimum~~flows ~~commitments~~and ~~due to reduced consumer demand~~liquidity. ~~Refer to Part I~~However, ~~Item~~there 1is ~~and~~no 2,certainty ~~Business~~that ~~and Properties — Our Commercial Agreements with BP — Minimum Volume Commitment Agreements in~~ the ~~Partnership's~~measures ~~2020~~we ~~10-K~~take ~~for~~will ~~additional~~be ~~information~~ultimately sufficient.

Demand declined on our offshore pipelines in the second quarter of 2021 due to a slower ramp up in production from offshore major projects and new wells and higher maintenance activity by offshore producers. For our offshore joint ventures, we expect demand to be resilient, as offshore projects are larger capital projects planned over many years and less impacted by temporary changes in capital investment. To limit the impact of COVID-19, BP and our other customers, as well as third-party operators of our pipelines, have implemented various protocols for both onshore and offshore personnel; however, these protocols may not prove to be successful. There is risk of decreased volumes with respect to our offshore operations if operators take actions to reduce operations in response to demand declines or increasingly limited storage availability or are unable to control COVID-19 infections on platforms and are required to shut-in. Additionally, we expect the shippers on our offshore pipelines to continue to find buyers for their production; however, they may not be successful.

We continue to monitor our liquidity position. As of June 30, 2021, our liquidity was $269.3 million, consisting of $137.3 million of cash and cash equivalents and $132.0 million available under our existing credit facility with BP. Our only outstanding indebtedness is $468.0 million borrowed under our term loan with an affiliate of BP, and there are no principal payments due until 2025. We are in compliance with the covenants contained in both our revolving credit facility and term loan, both of which include the requirement to maintain a consolidated leverage ratio, which is calculated as total indebtedness to consolidated EBITDA, not to exceed 5.0 to 1.0, subject to a temporary increase in such ratio to 5.5 to 1.0 in connection with certain material acquisitions. For additional information, refer to “Capital Resources and Liquidity” and Note 6 - Debt for additional information.

As noted above, BP Pipelines and the third-party operators of our assets have taken steps and continue to actively work to mitigate the evolving challenges and continuing impact of the COVID-19 pandemic on our operations, financial condition, cash flows and liquidity. However, there is no certainty that the measures we take will be ultimately sufficient.

How We Evaluate Our Operations

Partnership management uses a variety of financial and operating metrics to analyze performance. These metrics are significant factors in assessing operating results and profitability and include: (i) safety and environmental metrics, (ii) revenue (including FLA) from throughput and utilization; (iii) operating expenses and maintenance spend; (iv) Adjusted EBITDA (as defined below); and (v) cash available for distribution (as defined below).

Preventative Safety and Environmental Metrics

We are committed to maintaining and improving the safety, reliability and efficiency of Partnership operations. As noted above, we have worked with BP Pipelines and the third-party operators of our assets to ensure that COVID-19 response and business continuity plans have been implemented across all of our assets and operations. We have implemented reporting programs requiring all employees and contractors of our Parent who provide services to us to record environmental and safety related incidents. The Partnership's management team uses these existing programs and data to evaluate trends and potential interventions to deliver on performance targets. We integrate health, occupational safety, process safety and environmental principles throughout Partnership operations to reduce and eliminate environmental and safety related incidents.

Throughput

We have historically generated substantially all of our revenue under long-term agreements or FERC-regulated generally applicable tariffs by charging fees for the transportation of products through our pipelines. The amount of revenue we generate under these agreements depends in part on the volumes of crude oil, natural gas, refined products and diluent on our pipelines. Refer to Part I, Item 1 and 2, Business and Properties — Our Commercial Agreements with BP — Minimum Volume Commitment Agreements in the Partnership's 2020 10-K for additional information.

Volumes on pipelines are primarily affected by the supply of, and demand for, crude oil, natural gas, refined products and diluent in the markets served directly or indirectly by Partnership assets. Results of operations are impacted by our ability to:

•utilize any remaining unused capacity on, or add additional capacity to, Partnership pipeline systems;

•increase throughput volumes on Partnership pipeline systems by making connections to existing or new third-party pipelines or other facilities, primarily driven by the anticipated supply of and demand for crude oil, natural gas, refined products and diluent;

•identify and execute organic expansion projects; and

•increase throughput volumes via acquisitions.

Storage Utilization

Storage utilization is a metric that we use to evaluate the performance of our storage and terminalling assets. We define storage utilization as the percentage of the contracted capacity in barrels compared to the design capacity of the tank.

Operating Expenses and Total Maintenance Spend

Operating Expenses

Management seeks to maximize profitability by effectively managing operating expenses. These expenses are comprised primarily of labor expenses (including contractor services), general materials, supplies, minor maintenance, utility costs (including electricity and fuel) and insurance premiums. Utility costs fluctuate based on throughput volumes and the grades of crude oil and types of refined products we handle. Other operating expenses generally remain relatively stable across broad ~~ranges of throughput volumes but can fluctuate from period to period depending on the mix of activities performed during that period.~~

2324

~~Total~~ranges ~~Maintenance~~of ~~Spend~~throughput -volumes ~~Wholly~~but ~~Owned~~can ~~Assets~~fluctuate from period to period depending on the mix of activities performed during that period.

~~We calculate~~ Total Maintenance Spend as- ~~the~~Wholly-Owned sum of maintenance expenses and maintenance capital expenditures, excluding any reimbursable maintenance capital expenditures. We track these expenses on a combined basis because it is useful to understanding total maintenance requirements. Total Maintenance Spend for the six months ended June 30, 2021 and 2020, respectively, is shown in the table below:Assets

	Six Months Ended June 30,
	2021		2020
	(in millions of dollars)
Wholly Owned Assets
Maintenance expenses	$	1.2	$	1.8
Maintenance capital expenditures	1.8		1.2
Maintenance capital recovery(1)	(1.1)		(0.6)
Total Maintenance Spend – Wholly Owned Assets	$	1.9	$	2.4

We calculate Total Maintenance Spend as the sum of maintenance expenses and maintenance capital expenditures, excluding any reimbursable maintenance capital expenditures. We track these expenses on a combined basis because it is useful to understanding total maintenance requirements. Total Maintenance Spend for the nine months ended September 30, 2021 and 2020, respectively, is shown in the table below:


	Nine Months Ended September 30,
	2021		2020
	(in millions of dollars)
Wholly-Owned Assets
Maintenance expenses	$	2.7	$	2.2
Maintenance capital expenditures	2.4		1.5
Maintenance capital recovery(1)	(1.5)		(0.7)
Total Maintenance Spend – Wholly-Owned Assets	$	3.6	$	3.0

(1)Relates to the portion of maintenance capital for the Griffith Station Incident reimbursable by insurance.

The Partnership seeks to maximize profitability by effectively managing maintenance expenses, which consist primarily of safety and environmental integrity programs. We seek to manage maintenance expenses on owned and operated pipelines by scheduling maintenance over time to avoid significant variability in maintenance expenses and minimize impact on cash flows, without compromising our commitment to safety and environmental stewardship.

Maintenance expenses represent the costs we incur that do not significantly extend the useful life or increase the expected output of property, plant and equipment. These expenses include pipeline repairs, replacements of immaterial sections of pipelines, inspections, equipment rentals and costs incurred to maintain compliance with existing safety and environmental standards, irrespective of the magnitude of such compliance expenses. Maintenance expenses may vary significantly from period to period because certain expenses are the result of scheduled safety and environmental integrity programs, which occur on a multi-year cycle and require substantial outlays.

Maintenance capital expenditures represent expenditures to sustain operating capacity or operating income over the long term. Examples of maintenance capital expenditures include expenditures made to purchase new or replacement assets or extend the useful life of existing assets. These expenditures includes repairs and replacements of storage tanks, replacements of significant sections of pipelines and improvements to an asset’s safety and environmental standards.

Adjusted EBITDA and Cash Available for Distribution

The Partnership defines Adjusted EBITDA as net income before net interest expense, income taxes, gain or loss from disposition of property, plant and equipment, and depreciation and amortization, plus cash distributed to the Partnership from equity method investments for the applicable period, less income from equity method investments. The Partnership defines Adjusted EBITDA attributable to the Partnership as Adjusted EBITDA less Adjusted EBITDA attributable to non-controlling interests. We present these financial measures because we believe replacing our proportionate share of our equity method investments’ net income with the cash received from such equity method investments more accurately reflects the cash flow from our business, which is meaningful to our investors.

We compute and present cash available for distribution and define it as Adjusted EBITDA attributable to the Partnership less maintenance capital expenditures attributable to the Partnership, net interest paid/received, cash reserves, income taxes paid and net adjustments from volume deficiency payments attributable to the Partnership. Cash available for distribution does not reflect changes in working capital balances.

Adjusted EBITDA and cash available for distribution are non-GAAP supplemental financial measures, which are metrics that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

•operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or financing methods;

•ability to generate sufficient cash to support decisions to make distributions to our unitholders;

•ability to incur and service debt and fund capital expenditures; and

•viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

We believe that the presentation of Adjusted EBITDA and cash available for distribution provides useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA and cash available for distribution are net income and net cash provided by operating activities, respectively. Adjusted EBITDA and cash available for distribution should not be considered as an alternative to GAAP net income or net cash provided by operating activities.

Adjusted EBITDA and cash available for distribution have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities. You should not consider Adjusted EBITDA or cash available for distribution in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, because Adjusted EBITDA and cash available for distribution may be defined differently by other companies in our industry, our definition of Adjusted EBITDA and cash available for distribution may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. Refer to “Reconciliation of Non-GAAP Measures” section below for the reconciliation of net income and cash provided by operating activities to Adjusted EBITDA and cash available for distribution.

Factors Affecting Our Business

Partnership business can be negatively affected by sustained downturns or slow growth in the economy in general and is impacted by shifts in supply and demand dynamics, the mix of services requested by the customers of our pipelines, competition and changes in regulatory requirements affecting our customers’ operations. The ultimate magnitude and duration of the COVID-19 pandemic, resulting governmental restrictions on the mobility of consumers and the related impact on demand and the U.S. and global economy and capital markets is uncertain. As of the date of this Quarterly Report, all of our assets remain operational.

Customers

BP is our primary customer. Total revenue from BP represented 98.9% and 97.38% of our revenues for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively. Total revenue from BP represented 9798.52% and 97.15% of our revenues for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively. BP’s volumes represented approximately 9498.61% and 95.7% of the aggregate total volumes transported on the Wholly -Owned Assets for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively. BP’s volumes represented approximately 9496.21% and 9394.86% of the aggregate total volumes transported on the Wholly -Owned Assets for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively.

In addition, we transport and store crude oil, natural gas and diluent for a mix of third-party customers, including crude oil producers, refiners, marketers and traders, and Partnership assets are connected to other crude oil, natural gas and diluent pipeline systems. In addition to serving directly connected Midwestern U.S. and Gulf Coast markets, our pipelines have access to customers in various regions of the United States and Canada through interconnections with other major pipelines. Customers use our transportation and terminalling services for a variety of reasons. Producers of crude oil require the ability to deliver their product to market and frequently enter into firm transportation contracts to ensure that they will have sufficient capacity available to deliver their product to delivery points with greatest market liquidity. Marketers and traders generate income from buying and selling crude oil, natural gas, refined products and diluent to capitalize on price differentials over time or between markets. Our customer mix can vary over time and largely depends on the crude oil, natural gas, refined products and diluent supply and demand dynamics in our markets.

Regulation

Interstate common carrier pipelines are subject to regulation by various federal, state and local agencies including the FERC, the Environmental Protection Agency and the Department of Transportation. On December 17, 2020, in Docket No. RM20-14-000, FERC issued an order establishing a new index level of PPI-FG plus 0.78% for the five-year period commencing July 1, 2021 ("December 2020 Order"). However, requests for rehearing of the December 2020 ~~order~~Order ~~establishing this indexing amount~~ were filed with FERC, and those requests remain pending, with rehearing granted for purposes of extending the time FERC has to review these requests. FERC issued a notice on May 14, 2021, providing the final change in the PPI-FG that determines the oil pricing index factor to be applied for the index year starting July 1, 2021. The oil pricing index factor, ~~calculated~~utilizing as the ~~percent~~oil ~~change~~pricing inindex ~~the~~factor ~~annual~~established ~~average~~in ~~PPI-FG~~the ~~plus~~December an2020 ~~index level of 0.78%~~Order, resulted in a negative percent change for the index year July 1, 2021, through June 30, 2022. A negative percent change means that the ceiling level for certain of an oil pipelines’ rates may decrease and, if the actual transportation rate would be above such ceiling level, the rate also must decrease to be equal to or

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June 30, 2022. A negative percent change means that the ceiling level for certain of an oil pipelines’ rates may decrease and, if the actual transportation rate would be above such ceiling level, the rate also must decrease to be equal to or less than the applicable ceiling. Accordingly, the Partnership and Mars Oil Pipeline Company, LLC filed to reduce their rates, effective July 1, 2021. FERC’s final application of its indexing rate methodology for the next five-year term of index rates will be determined based on the outcome of the requests for rehearing of the December 2020 Order, and any changes to FERC’s index level may impact our revenues associated with any transportation services we may provide pursuant to rates adjusted by the FERC oil pipeline index.

On May 27, 2021, the Department of Homeland Security’s Transportation Security Administration (“TSA”) announced Security Directive Pipeline-2021-01 that requires us, as a critical pipeline owner, to report confirmed and potential cybersecurity incidents to the DHS Cybersecurity and Infrastructure Security Agency (“CISA”) and to designate a Cybersecurity Coordinator. It also requires BP Pipelines and the third-party operators of our assets to review current practices as well as to identify any gaps and related remediation measures to address cyber-related risks and report the results to TSA and CISA within 30 days. We designated a Cybersecurity Coordinator, developed a plan to comply with mandatory reporting timeframes and completed the vulnerability assessment required under this directive on June 25, 2021. On July 20, 2021, the TSA issued a second Security Directive. We ~~are~~have ~~continuing~~evaluated ~~to evaluate~~ the impacts of this second directive to our pipeline business and ~~are~~have ~~committed~~made tosignificant ~~complying~~progress in ~~a timely fashion~~compliance.

Refer to Part I, Item 1 and 2, Business and Properties in the Partnership's 2020 10-K for additional information on federal, state and local regulations affecting our business.

Acquisition Opportunities

The Partnership plans to pursue acquisitions of complementary assets from BP as well as third parties subject to market conditions ~~(including potential effects of COVID-19)~~ and our ability to obtain attractive financing. We may also pursue acquisitions jointly with BP Pipelines. BP Pipelines has granted us a right of first offer with respect to its retained ownership interest in Mardi Gras and all of its interests in midstream pipeline systems and assets related thereto in the contiguous United States and offshore Gulf of Mexico that were owned by BP Pipelines when we were established. Neither BP nor any of its affiliates are under any obligation, however, to sell or offer to sell us additional assets or to pursue acquisitions jointly with us, and we are under no obligation to buy any additional assets from them or to pursue any joint acquisitions with them. We will focus our acquisition strategy on transportation and midstream assets within the crude oil, natural gas and refined products sectors. We believe that we are well positioned to acquire midstream assets from BP, and particularly BP Pipelines, as well as third parties, should such opportunities arise. Identifying and executing acquisitions will be a key part of our strategy. However, if we do not make acquisitions on economically acceptable terms, our future growth will be limited, and the acquisitions we do make may reduce, rather than increase, our available cash.

Financing

We expect to fund future capital expenditures primarily from external sources, including borrowings under our credit facility and potential future issuances of equity and debt securities.

We intend to make cash distributions to unitholders at a minimum distribution rate of $0.2625 per unit per quarter ($1.05 per unit on an annualized basis). Based on the terms of our cash distribution policy, we expect that we will distribute to unitholders and the General Partner, as the holder of IDRs, most of the cash generated by operations.

Griffith Station Incident

On June 13, 2019, a building fire occurred at the Griffith Station on BP2. Management performed an evaluation of the assets and determined that an impairment was required. We have incurred $0.1 million and $0.23 million for response expense during the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. Reimbursable costs associated with the incident are offset with an insurance receivable, of which $2.5 million is outstanding under "Other current assets" on our condensed consolidated balance sheets as of ~~June~~September 30, 2021 and December 31, 2020. In the event that insurance proceeds exceed the receivable balance, such amounts would be recognized as a gain. Refer to Part II, Item 8, Note 13 - Commitments and Contingencies in the Partnership's 2020 10-K for additional information.

Results of Operations

The following tables and discussion contain a summary of condensed consolidated results of operations for the three and six months ended June 30, 2021 and 2020.

	Three Months EndedJune 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(in millions of dollars)
Revenue	$	29.3	$	31.5	$	58.9	$	62.2
Costs and expenses
Operating expenses	5.2		4.4		9.9		9.6
Maintenance expenses	0.4		1.5		1.2		1.8
General and administrative	4.5		4.3		9.1		9.1
Depreciation	0.6		0.6		1.3		1.3
Property and other taxes	0.2		0.2		0.4		0.3
Total costs and expenses	10.9		11.0		21.9		22.1
Operating income	18.4		20.5		37.0		40.1
Income from equity method investments	28.6		26.8		58.9		58.1
Interest expense, net	1.1		1.9		2.2		5.3
Net income	45.9		45.4		93.7		92.9
Less: Net income attributable to non-controlling interests	5.4		4.8		11.2		10.6
Net income attributable to the Partnership	$	40.5	$	40.6	$	82.5	$	82.3
Adjusted EBITDA*	$	51.9	$	52.9	$	101.4	$	104.7
Less: Adjusted EBITDA attributable to non-controlling interests	6.3		5.5		12.7		12.2
Adjusted EBITDA attributable to the Partnership	$	45.6	$	47.4	$	88.7	$	92.5
* See Reconciliation of Non-GAAP Measures below.

	Three Months Ended June 30,				Six Months Ended June 30,
Pipeline throughput (thousands of barrels per day)(1)	2021		2020		2021		2020
Onshore
BP2	282		260		288		273
Diamondback	45		61		55		71
River Rouge	64		59		63		66
Total Wholly Owned Assets	391		380		406		410
Offshore
Mars	484		501		491		519
Caesar	171		159		163		172
Cleopatra(2)	20		17		18		19
Proteus	220		209		240		217
Endymion	220		209		240		217
Mardi Gras Joint Ventures	631		594		661		625
Ursa	68		87		72		91
Average revenue per barrel ($ per barrel)(3)
Total Wholly Owned Assets	$	0.82	$	0.74	$	0.80	$	0.75
Mars	1.29		1.36		1.31		1.38
Mardi Gras Joint Ventures	0.59		0.62		0.57		0.61
Ursa	1.03		0.92		0.93		0.89

Results of Operations

The following tables and discussion contain a summary of condensed consolidated results of operations for the three and nine months ended September 30, 2021 and 2020.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions of dollars)
Revenue	$	26.3	$	33.7	$	85.2	$	95.9
Costs and expenses
Operating expenses	4.9		4.9		14.8		14.5
Maintenance expenses	1.5		0.4		2.7		2.2

General and administrative	5.5		3.9		14.6		13.0

Depreciation	0.7		0.7		2.0		2.0

Property and other taxes	0.2		0.2		0.6		0.5
Total costs and expenses	12.8		10.1		34.7		32.2
Operating income	13.5		23.6		50.5		63.7
Income from equity method investments	22.1		27.6		81.0		85.7

Interest expense, net	1.0		1.5		3.2		6.8
Net income	34.6		49.7		128.3		142.6
Less: Net income attributable to non-controlling interests	5.4		4.4		16.6		15.0
Net income attributable to the Partnership	$	29.2	$	45.3	$	111.7	$	127.6


	Three Months Ended September 30,				Nine Months Ended September 30,
Pipeline throughput (thousands of barrels per day)(1)	2021		2020		2021		2020
Onshore
BP2	259		253		278		266
Diamondback	24		59		44		67
River Rouge	59		75		62		69
Total Wholly-Owned Assets	342		387		384		402

Offshore
Mars	334		479		439		506

Caesar	178		143		168		162
Cleopatra(2)	21		15		19		18
Proteus	205		200		228		211
Endymion	205		200		228		211
Mardi Gras Joint Ventures	609		558		643		602

Ursa	50		57		65		80

Average revenue per barrel ($ per barrel)(3)
Total Wholly-Owned Assets	$	0.83	$	0.80	$	0.81	$	0.77
Mars	1.31		1.17		1.31		1.31
Mardi Gras Joint Ventures	0.59		0.59		0.58		0.59
Ursa	0.76		0.93		0.89		0.90

(1)Pipeline throughput is defined as the volume of delivered barrels.

(2)Natural gas is converted to oil equivalent at 5.8 million cubic feet per one thousand barrels.

(3)Based on reported revenues from transportation and allowance oil divided by delivered barrels over the same time period.

Three Months Ended ~~June~~September 30, 2021 Compared to Three Months Ended ~~June~~September 30, 2020

Total revenue from wholly -owned assets decreased by approximately $27.24 million or ~~7.0~~22% for the three months ended ~~June~~September 30, 2021, compared to the three months ended ~~June~~September 30, 2020, due to the following factors:

•Decrease of $65.01 million from the recognition of deficiency revenue in the prior period.

•~~Increase~~Decrease of $23.27 million in ~~FLA~~tariff revenue ~~from BP2~~ driven by ana ~~increase~~decrease inof ~~throughput~~$2.4 ~~volume~~million ~~and~~on anRiver Rouge, a $1.6 million decrease on Diamondback, partially offset by a increase inof ~~FLA~~$0.3 ~~prices~~million ~~realized~~on BP2.

•Increase of $1.64 million in ~~tariff~~FLA revenue from BP2 driven by an increase ofin ~~$1.5~~throughput ~~million~~volume onand ~~BP2,~~an ~~a $0.8 million~~ increase onin ~~River~~FLA ~~Rouge,~~prices ~~partially offset by a decrease of $0~~realized.~~7 million on Diamondback.~~

•Throughput volume ~~increased~~decreased by 14.1 million barrels driven by a 21.05 million ~~increase~~decrease on ~~BP2~~River Rouge, ~~a 0~~3.52 million ~~increase~~decrease on ~~River Rouge~~Diamondback, partially offset by a 10.46 million ~~decrease~~increase on ~~Diamondback~~BP2.

~~Operating~~Maintenance expenses increased by $01.81 million or ~~18.2~~275% for the three months ended ~~June~~September 30, 2021, compared to the three months ended ~~June~~September 30, 2020, ~~primarily~~due ~~attributable~~ to ~~$0.6~~increased ~~million~~pipeline ~~increase~~inspection ~~in insurance expense~~ and ~~$0.2~~repair ~~million increase in rights-of-way expense~~activity.

~~Maintenance~~General and administrative expenses ~~decreased~~increased by $1.16 million or ~~73.3~~41% for the three months ended ~~June~~September 30, 2021, compared to the three months ended ~~June~~September 30, 2020, primarily due to ~~onshore~~costs ~~pipeline~~associated ~~repairs~~with ~~completed~~the inTake ~~2020~~Private Proposal.

Income from equity method investments ~~increased~~decreased by $15.85 million or ~~6.7~~20% for the three months ended ~~June~~September 30, 2021, compared to the three months ended ~~June~~September 30, 2020, primarily due to ~~higher~~the ~~Mardi~~impacts ~~Gras~~of ~~Joint~~Hurricane ~~Ventures volumes partially offset by lower throughput on Mars~~Ida.

28Interest expense decreased by $0.5 million or 33% in the three months ended September 30, 2021, compared to the three months ended September 30, 2020, due to lower interest rates tied to LIBOR.

Interest expense decreased by $0.8 million or 42.1% in the three months ended June 30, 2021, compared to the three months ended June 30, 2020, due to lower interest rates tied to LIBOR.

Net income attributable to non-controlling interests increased by $0.6 million or 12.5% for the three months ended June 30, 2021, compared to the three months ended June 30, 2020 due to the increase in earnings from the Mardi Gras investments in the period.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Total revenue from wholly owned assets decreased by approximately $3.3 million or 5.3% for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, due to the following factors:

•Decrease of $6.0 million from the recognition of deficiency revenue in the prior period.

•Decrease of $0.6 million in tariff revenue driven by a decrease of $2.0 million on Diamondback, a $0.7 million decrease on River Rouge, partially offset by an increase of $2.1 million on BP2.

•Increase of $3.3 million in FLA revenue from BP2 driven by an increase in throughput volume and an increase in FLA prices realized.

•Throughput volume decreased by 1.2 million barrels driven by a 3.1 million decrease on Diamondback, a 0.6 million decrease on River Rouge, partially offset by a 2.5 million increase on BP2.

Operating expenses increased by $0.3 million or 3.1% for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, primarily attributable to $1.0 million increase in insurance expense offset by lower variable expenses driven by lower volumes.

Maintenance expenses decreased by $0.6 million or 33.3% for the six months ended June 30, 2021, compared to the six months ended June 30, 2020 due to onshore pipeline repairs completed in 2020.

Income from equity method investments increased by $0.8 million or 1.4% for the six months ended June 30, 2021 compared to the six months ended June 30, 2020 primarily due to a decrease in operating costs partially offset by lower revenue.

Interest expense, net decreased by $3.1 million or 58.5% in the six months ended June 30, 2021, compared to the six months ended June 30, 2020, due to lower interest rates tied to LIBOR.

Net income attributable to non-controlling interests increased by $0.6 million or 5.7% for the six months ended June 30, 2021, compared to the six months ended June 30, 2020 due to the increase in earnings from the Mardi Gras investments in the period.

Net income attributable to non-controlling interests increased by $1.0 million or 23% for the three months ended September 30, 2021, compared to the three months ended September 30, 2020, due to the increase in earnings from Mardi Gras in the period.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Total revenue from wholly-owned assets decreased by approximately $10.7 million or 11% for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, due to the following factors:

•Decrease of $11.1 million from the recognition of deficiency revenue in the prior period.

•Decrease of $4.3 million in tariff revenue driven by a decrease of $3.6 million on Diamondback, a $3.1 million decrease on River Rouge, partially offset by an increase of $2.4 million on BP2.

•Increase of $4.7 million in FLA revenue from BP2 driven by an increase in throughput volume and an increase in FLA prices realized.

•Throughput volume decreased by 5.2 million barrels driven by a 6.3 million decrease on Diamondback, a 2.0 million decrease on River Rouge, offset by a 3.1 million increase on BP2.

Operating expenses increased by $0.3 million or 2% for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, primarily attributable to an increase in insurance expense.

Maintenance expenses increased by $0.5 million or 23% for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, due to increased pipeline inspection and repair activity.

General and administrative expenses increased by $1.6 million or 12% for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, primarily due to costs associated with the Take Private Proposal.

Income from equity method investments decreased by $4.7 million or 5% for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to the impacts of Hurricane Ida.

Interest expense, net decreased by $3.6 million or 53% in the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, due to lower interest rates tied to LIBOR.

Net income attributable to non-controlling interests increased by $1.6 million or 11% for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, due to the increase in earnings from Mardi Gras in the period.

Reconciliation of Non-GAAP Measures

The following tables present a reconciliation of Adjusted EBITDA to net income and to net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

	Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in millions of dollars)
Reconciliation of Adjusted EBITDA and Cash Available for Distribution to Net Income
Net income	$	4534.96	$	4549.47	$	93128.73	$	92142.96
Add:
Depreciation	0.67		0.67		12.30		12.30
Interest expense, net	1.10		1.95		23.2		56.38
Cash distributions received from equity method investments	3226.93		3127.82		6389.14		6693.02
Less:
Income from equity method investments	2822.61		2627.86		5881.90		5885.17
Adjusted EBITDA	5140.95		5251.95		~~101~~141.49		~~107~~158.49
Less:
Adjusted EBITDA attributable to non-controlling interests	67.3		5.50		1220.70		1217.2
Adjusted EBITDA attributable to the Partnership	4533.62		4746.45		88121.79		95141.27
Add:
Net adjustments from volume deficiency agreements	03.62		(12.71)		04.80		(13.67)
Maintenance capital recovery(1)	1.0.4		—0.1		1.15		0.67
Less:
Net interest paid/(received)	1.1		02.81		23.23		810.01
Maintenance capital expenditures	1.0.6		0.53		12.84		1.25
Cash reserves(2)	~~(0.3)~~—		1(0.27)		—		(2.3.0)
Cash available for distribution attributable to the Partnership	$	4535.41	$	4342.28	$	86121.67	$	87130.31

(1)Relates to the portion of maintenance capital for the Griffith Station Incident reimbursable by insurance.

(2)Reflects cash reserved due to timing of interest payment(s).

3031

	Six Months Ended June 30,
	Nine Months Ended September 30,
	2021		2020
	(in millions of dollars)
Reconciliation of Adjusted EBITDA and Cash Available for Distribution to Net Cash Provided by Operating Activities
Net cash provided by operating activities	$	~~101~~142.51	$	99148.53
Add:
Interest expense, net	23.2		56.38
Distribution in excess of earnings from equity method investments	49.37		57.34
Less:
Changes in other assets and liabilities	612.59		23.64
Non-cash adjustments	0.12		0.12
Adjusted EBITDA	~~101~~141.49		~~107~~158.49
Less:
Adjusted EBITDA attributable to non-controlling interests	1220.70		1217.2
Adjusted EBITDA attributable to the Partnership	88121.79		95141.27
Add:
Net adjustments from volume deficiency agreements	04.80		(13.67)
Maintenance capital recovery(1)	1.15		0.67
Less:
Net interest paid/(received)	23.23		810.01
Maintenance capital expenditures	12.84		1.25
Cash reserves(2)	—		(2.3.0)
Cash available for distribution attributable to the Partnership	$	86121.67	$	87130.31

(1)Relates to the portion of maintenance capital for the Griffith Station Incident reimbursable by insurance.

(2)Reflects cash reserved due to timing of interest payment(s).

Capital Resources and Liquidity

Currently, we expect our primary ongoing sources of liquidity to be cash generated from operations (including distributions from our equity method investments), and, as needed, borrowings under our existing credit facility. The entities in which we own an interest may also incur debt. We believe that cash generated from these sources will be sufficient to meet our short-term working capital requirements and long-term capital expenditure requirements and to make quarterly cash distributions.

Based upon current expectations for the fiscal year 2021, we believe that our cash on hand, cash flow from operations and borrowings available under our credit facility will be sufficient to fund our operations for 2021. As of ~~June~~September 30, 2021, our liquidity was $~~269~~264.37 million, consisting of $~~137~~132.37 million of cash and cash equivalents and $132.0 million available under our existing credit facility with BP. Our only outstanding indebtedness is $468.0 million borrowed under our term loan with an affiliate of BP, and there are no principal payments due until 2025.

Additionally, there is risk of decreased volumes with respect to the offshore operations if operators take actions to reduce operations in response to demand declines or increasingly limited storage availability or are unable to control COVID-19 infections on platforms and are required to shut-in. In the longer term, if there was a decrease in demand and such decrease persisted throughout 2021 or longer, we may not be able to continue to generate similar levels of operating cash flow and our liquidity and capital resources may not be sufficient to make our current levels of cash distributions to unitholders or even meet our minimum quarterly distribution. We continue to actively work to mitigate the continuing challenges and impact of COVID-19 on our operations, financial condition, cash flows and liquidity. However, there is no certainty that the measures we take will be ultimately sufficient.

Cash Distributions

The board of directors of our General Partner has adopted a cash distribution policy pursuant to which we intend to pay a minimum quarterly distribution of $0.2625 per unit per quarter, which equates to approximately $27.5 million per quarter, or $110.0 million per year in the aggregate, based on the number of common units outstanding as of ~~June~~September 30, 2021. We intend to pay such distributions to the extent we have sufficient cash after the establishment of cash reserves and the payment of expenses, including payments to our General Partner and its affiliates.

Subordinated Unit Conversion

On April 15, 2021, the Partnership declared a cash distribution of $0.3475 per limited partner unit to unitholders of record on April 29, 2021, for the three months ended March 31, 2021. All of the subordinated units were converted into common units on February 12, 2021. As a result, on the date of record, there were no subordinated units outstanding, and therefore, no portion of the cash distribution was allocated to the limited partners' subordinated units. Refer to Note 8 - Net Income Per Limited Partner Unit for additional information.

February 12, 2021. As a result, on the date of record, there were no subordinated units outstanding, and therefore, no portion of the cash distribution was allocated to the limited partners' subordinated units. Refer to Note 8 - Net Income Per Limited Partner Unit for additional information.

Revolving Credit Facility

On October 30, 2017, the Partnership entered into a $600.0 million unsecured revolving credit facility agreement with an affiliate of BP. The credit facility terminates on October 30, 2022 and provides for certain covenants, including the requirement to maintain a consolidated leverage ratio, which is calculated as total indebtedness to consolidated EBITDA (as defined in the credit facility), not to exceed 5.0 to 1.0, subject to a temporary increase in such ratio to 5.5 to 1.0 in connection with certain material acquisitions. In addition, the limited liability company agreement of our General Partner requires the approval of BP Holdco prior to the incurrence of any indebtedness that would cause our leverage ratio to exceed 4.5 to 1.0.

The credit facility also contains customary events of default, such as (i) nonpayment of principal when due, (ii) nonpayment of interest, fees or other amounts, (iii) breach of covenants, (iv) misrepresentation, (v) cross-payment default and cross-acceleration (in each case, to indebtedness in excess of $75.0 million) and (vi) insolvency. Additionally, the credit facility limits our ability to, among other things: (i) incur or guarantee additional debt, (ii) redeem or repurchase units or make distributions under certain circumstances; and (iii) incur certain liens or permit them to exist. Indebtedness under this facility bears interest at the 3-month London Interbank Offered Rate ("LIBOR") plus 0.85%. This facility includes customary fees, including a commitment fee of 0.10% and a utilization fee of 0.20%.

In the fourth quarter of 2018, we borrowed $468.0 million from the credit facility. This amount was outstanding at December 31, 2019, and repaid on March 13, 2020 using funds from the Term Loan Facility Agreement.

Term Loan Facility Agreement

On February 24, 2020, the Partnership entered into a $468.0 million Term Loan Facility Agreement ("term loan") with an affiliate of BP. On March 13, 2020, proceeds were used to repay outstanding borrowings under the existing credit facility. The term loan has a final repayment date of February 24, 2025, and provides for certain covenants, including the requirement to maintain a consolidated leverage ratio, which is calculated as total indebtedness to consolidated EBITDA, not to exceed 5.0 to 1.0, subject to a temporary increase in such ratio to 5.5 to 1.0 in connection with certain material acquisitions. Simultaneous with this transaction, we entered into a First Amendment to Short Term Credit Facility Agreement ("First Amendment") whereby the lender added a provision that indebtedness under both the term loan and credit facility shall not exceed $600.0 million. All other terms of the credit facility remain the same. As of ~~June~~September 30, 2021, the Partnership was in compliance with the covenants contained in the credit facility and term loan.

Cash Flows from Operations

Operating Activities. We generated $~~101~~142.51 million and $99148.53 million in cash flow from operating activities in the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. The $26.02 million ~~increase~~decrease in cash flows from operating activities ~~resulted~~was ~~from~~primarily ~~a $3.9 million increase from changes in working capital offset by a $1.9 million net decrease from operations principally~~ due to a decrease in ~~revenue and~~ distributions of earnings received from equity method investments~~, partially offset by a decrease in interest expense~~.

Investing Activities. Cash flow used by investing activities was $3.25 million and cash flows generated by investing activities was $46.07 million in the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. The $710.2 million decrease was ~~primarily~~ due to a $11.2 million increase in capital expenditures, the absence of $1.3 million in proceeds from insurance claims, partially offset by a $2.3 million increase in distributions in excess of earnings from equity method investments.

32Financing Activities. Cash flow used in financing activities was $132.8 million and $130.0 million in the nine months ended September 30, 2021 and 2020, respectively. The $2.8 million increase in cash outflow was due to higher distributions to non-controlling interests.

a $6.2 million increase in capital expenditures and $1.0 million decrease in distributions in excess of earnings from equity method investments.

Financing Activities. Cash flow used in financing activities was $87.9 million and $87.4 million in the six months ended June 30, 2021 and 2020, respectively. The $0.5 million increase in cash outflow was due to higher distributions to non-controlling interests.

Capital Expenditures

Our operations can be capital intensive, requiring investment to expand, upgrade or enhance existing operations and to meet environmental and operational regulations. Our capital requirements consist of maintenance capital expenditures and expansion capital expenditures, both as defined in our partnership agreement. We are required to distinguish between maintenance capital expenditures and expansion capital expenditures in accordance with our Partnership agreement.

~~A summary of capital expenditures associated with ongoing projects related to the Wholly Owned Assets, for the six months ended June 30, 2021 and 2020, is shown in the table below:~~33

	Six Months Ended June 30,
	2021		2020
	(in millions of dollars)
Cash spent on expansion capital expenditures	$	5.7	$	0.1
Cash spent on maintenance capital expenditures	1.8		1.2
Increase in accrued capital expenditures	1.0		0.3
Decrease in capital expenditures reimbursable to our Parent	(0.3)		—
Total capital expenditures incurred	$	8.2	$	1.6

A summary of capital expenditures associated with ongoing projects related to the Wholly-Owned Assets, for the nine months ended September 30, 2021 and 2020, is shown in the table below:

Capital expenditures reported on the condensed consolidated statement of cash flows for the six months ended June 30, 2021 were $7.5 million. We incurred $5.7 million expansion capital expenditures for an onshore capacity increase project and $1.8 million maintenance capital expenditures primarily associated with the Griffith Station Electrical and Controls project. Capital expenditures reported on the condensed consolidated statement of cash flows for the six months ended June 30, 2020 were $1.3 million.


	Nine Months Ended September 30,
	2021		2020
	(in millions of dollars)
Cash spent on expansion capital expenditures	$	10.8	$	0.5
Cash spent on maintenance capital expenditures	2.4		1.5
(Decrease) increase in accrued capital expenditures	(0.2)		1.3
Decrease in capital expenditures reimbursable to our Parent	(0.3)		—
Total capital expenditures incurred	$	12.7	$	3.3

Capital expenditures reported on the condensed consolidated statement of cash flows for the nine months ended September 30, 2021 were $13.2 million. We incurred $10.8 million expansion capital expenditures for an onshore capacity increase project and $2.4 million maintenance capital expenditures primarily associated with the Griffith Station Electrical and Controls project. Capital expenditures reported on the condensed consolidated statement of cash flows for the nine months ended September 30, 2020 were $2.0 million.

Contractual Obligations

There were no material changes to contractual obligations as disclosed in the Partnership's 2020 10-K.

Off-Balance Sheet Arrangements

The Partnership has not entered into any transactions, agreements or other contractual arrangements that would result in off-balance sheet liabilities.

Critical Accounting Policies and Estimates

There have been no material changes to critical accounting policies as disclosed in the Partnership's 2020 10-K.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information about market risks for the three and ~~six~~nine months ended ~~June~~September 30, 2021, does not differ materially from that discussed under Item 7A of the Partnership's 2020 10-K.

Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Partnership's management, with the participation of the principal executive officer and principal financial officer, evaluated the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in the reports that are filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Based upon that evaluation, the Partnership's principal executive officer and principal financial officer concluded that our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended), were effective at a reasonable assurance level as of September 30, 2021.

principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Based upon that evaluation, the Partnership's principal executive officer and principal financial officer concluded that our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended), were effective at a reasonable assurance level as of June 30, 2021.

Changes in Internal Control Over Financial Reporting

There were no changes in the Partnership's system of internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarterly period ended ~~June~~September 30, 2021 that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

As disclosed in Note 10 - Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements, the Partnership is a party to ongoing legal proceedings in the ordinary course of business, and the disclosure set forth in that footnote relating to certain legal proceedings is incorporated herein by reference.

Item 1A. RISK FACTORS

The Partnership is subject to various risks and uncertainties in the course of business. Security holders and potential investors in the Partnership's securities should carefully consider the risk factors set forth below and set forth under “Risk Factors” in the Partnership's 2020 10-K.

Compliance with and changes in cybersecurity requirements has a cost impact on our business, and failure to comply with such laws and regulations could have an impact on our assets, costs, revenue generation and growth opportunities.

In the second quarter of 2021, the Department of Homeland Security’s Transportation Security Administration (“TSA”) announced two new security directives. These directives require critical pipeline owners to comply with mandatory reporting measures and provide vulnerability assessments. We may be required to expend significant additional resources to respond to cyberattacks, to continue to modify or enhance our protective measures, or to assess, investigate and remediate any critical infrastructure security vulnerabilities. Any failure to remain in compliance with these government regulations may results in enforcement actions which may have a material adverse effect on our business and operations.

Our business could be negatively impacted by cyberattacks targeting our computer and telecommunications systems and infrastructure, or targeting those of our third-party service providers.

Our business, like other companies in the oil and gas industry, has become increasingly dependent on digital technologies, including technologies that are managed by third-party service providers on whom we rely to help us collect, host or process information. Such technologies are integrated into our business operations and used as a part of our production and distribution systems in the U.S. and abroad, including those systems used to transport production to market, to enable communications and to provide a host of other support services for our business. Use of the internet and other public networks for communications, services and storage, including “cloud” computing, exposes all users (including our business) to cybersecurity risks.

While BP and our third-party service providers commit resources to the design, implementation and monitoring of our information systems, there is no guarantee that our security measures will provide absolute security. Despite these security measures, BP may not be able to anticipate, detect, or prevent cyberattacks, particularly because the methodologies used by attackers change frequently or may not be recognized until launched, and because attackers are increasingly using techniques designed to circumvent controls and avoid detection. BP and our third-party service providers may therefore be vulnerable to security events that are beyond our control, and we may be the target of cyber-attacks, as well as physical attacks, which could result in information security breaches and significant disruption to our business. Such data breaches and cyberattacks could compromise our operational or other capabilities and cause significant damage to our business and our reputation.

BP information systems have experienced threats to the security of our digital infrastructure, but none of these have had a significant impact on our business, operations or reputation relating to such attacks. BP maintains a 24/7 dedicated security operations center to anticipate, detect and prevent cyberattacks; however, there is no assurance that we will not suffer such losses or breaches in the future.

As cyberattacks continue to evolve, we may be required to expend significant additional resources to respond to cyberattacks, to continue to modify or enhance our protective measures, or to investigate and remediate any information systems and related infrastructure security vulnerabilities. We may also be subject to regulatory investigations or litigation relating from cybersecurity issues.

Hurricanes and other severe weather conditions, natural disasters or other adverse events or conditions could damage our pipeline systems or disrupt the operations of our customers, which could adversely affect our operations and financial condition.

The operations of our offshore pipelines could be impacted by severe weather conditions or natural disasters, including hurricanes, or other adverse events or conditions. Additionally, such adverse events or conditions could impact our customers,

and they may be unable to utilize our pipeline systems. The susceptibility of our assets to storm damage could be aggravated by wetland and barrier island erosion. In addition, neither we nor the entities in which we own an interest that own these offshore pipeline systems carry named windstorm insurance for any of our offshore pipeline systems. Weather-related risks could have a material adverse effect on our ability to continue operations and on our financial condition, results of operations and cash flows.

For example, during the third quarter of 2021, the operations of our offshore pipelines were adversely affected by Hurricane Ida, resulting in a reduction of approximately $8 million to $10 million to our cash available for distribution during the third quarter of 2021 relative to our financial outlook. Such events have been, and may in the future be material and may cause a serious business disruption or serious damage to our pipeline systems which could affect such systems’ ability to transport crude oil and natural gas. Additionally, such severe weather conditions may be exacerbated by climate change.

There can be no assurances that we will enter into a definitive agreement with BP Pipelines related to BP Pipelines’ proposal to acquire all of our Common Units that it does not already own, or that we will complete any transaction contemplated by such an agreement.

On August 4, 2021, the board of directors of our General Partner received a non-binding preliminary proposal letter from BP Pipelines, through its wholly-owned subsidiary BP Midstream Partners Holdings LLC, to acquire all of our issued and outstanding common units not already owned by BP Pipelines or its affiliates (the "Proposal"). While the Conflicts Committee has been engaged by our General Partner to evaluate the Proposal and any potential transaction with BP Pipelines related to the Proposal (the “Potential Transaction”), there can be no assurances that we will enter into a definitive agreement with BP Pipelines related to any Potential Transaction. Furthermore, should we enter into a definitive agreement with BP Pipelines, we anticipate that the consummation of any Potential Transaction will be subject to a number of conditions, and there can be no assurances that such conditions will be satisfied or waived or that any Potential Transaction will be completed in a timely manner or at all.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS

BP MIDSTREAM PARTNERS LP

INDEX TO EXHIBITS

ExhibitNo.

Exhibit Description

Incorporated by Reference

FiledHerewith

FurnishedHerewith

Form

Exhibit

Filing Date

SECFile No.

3.1

Certificate of Limited Partnership of BP Midstream Partners LP.

S-1

3.1

9/11/2017

333-220407

3.2

Amended and Restated Agreement of Limited Partnership of BP Midstream Partners LP dated October 30, 2017.

10-Q

3.2

12/6/2017

001-38260

3.3

Certificate of Formation of BP Midstream Partners GP LLC.

S-1

3.3

9/11/2017

333-220407

3.4

First Amended and Restated Limited Liability Company Agreement of BP Midstream Partners GP LLC.

S-1

3.4

9/11/2017

333-220407

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32*

Certifications pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

The following financial information from BP Midstream Partners LP’s Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2021, formatted in iXBRL (Inline Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Changes in Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Condensed Consolidated Financial Statements.

104

The cover page from BP Midstream Partners LP’s Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2021, formatted in iXBRL.

* Pursuant to SEC Release No. 33-8212, this certification will be treated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” as part of such report for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of Section 18 of the Exchange Act, and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act, except to the extent that the registrant specifically incorporates it by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 5, 2021	BP MIDSTREAM PARTNERS LP
Date: November 9, 2021	BP MIDSTREAM PARTNERS LP
	By:	BP MIDSTREAM PARTNERS GP LLC,
		its general partner
	By:	/s/ Jack T. Collins
		Jack T. Collins
		Chief Financial Officer and Director

3537

Filing Compare · BP Midstream Partners LP