Common use of Lease Operations Clause in Contracts

Lease Operations. Based on the terms of certain natural gas gathering, transportation and processing agreements, the Partnership is considered to be the lessor under several implicit operating lease arrangements in accordance with GAAP. The Partnership’s primary implicit lease operations relate to a natural gas gathering agreement in the Marcellus shale for which it earns a fixed-fee for providing gathering services to a single producer using a dedicated gathering system. As the gathering system is expanded, the fixed-fee charged to the producer is adjusted to include the additional gathering assets in the lease. The primary term of the natural gas gathering arrangement expires in 2023 and will continue thereafter on a year to year basis until terminated by either party. Other significant implicit leases relate to a natural gas processing agreement in the Marcellus shale and a natural gas processing agreement in the Southern Appalachia region for which the Partnership earns minimum monthly fees for providing processing services to a single producer using a dedicated processing plant. The primary term of these natural gas processing agreements expire during 2030 and 2023. The Partnership’s revenue from its implicit lease arrangements, excluding executory costs, totaled approximately $89 million in 2015 and $14 million in 2014 and 2013. Based on the terms of the Partnership’s fee-based transportation services agreement with MPC, HSM is also considered to be a lessor of its marine equipment in accordance with GAAP. The Partnership’s implicit lease arrangements related to the processing facilities contain contingent rental provisions whereby the Partnership receives additional fees if the producer customer exceeds the monthly minimum processed volumes. During the year ended December 31, 2015, the Partnership received less than $1 million in contingent lease payments. No contingent lease payments were received for the year ended December 31, 2014. The following is a schedule of minimum future rentals on the non-cancellable operating leases as of December 31, 2015: 2016 $ 265 2017 276 2018 279 2019 282 2020 283 2021 and thereafter 588 Total minimum future rentals $ 1,973 The following schedule summarizes the Partnership’s investment in assets held for operating lease by major classes as of December 31, 2015: Natural gas gathering and NGL transportation pipelines and facilities $ 619 Natural gas processing facilities 753 Barges 360 Towing vessels 91 Construction in progress 110 Property, plant and equipment 1,933 Less: accumulated depreciation (170 ) Total property, plant and equipment $ 1,763 As of December 31, 2014, we had no investment in assets held for operating lease.

Lease Operations. Based on the terms of certain natural gas gathering, transportation and processing agreements, the Partnership is considered to be the lessor under several implicit operating lease arrangements in accordance with GAAP. The Partnership’s primary implicit lease operations relate to a natural gas gathering agreement in the Marcellus shale Shale for which it earns a fixed-fee for providing gathering services to a single producer using a dedicated gathering system. As the gathering system is expanded, the fixed-fee charged to the producer is adjusted to include the additional gathering assets in the lease. The primary term of the natural gas gathering arrangement expires in 2023 and will continue thereafter on a year to year basis until terminated by either party. Other significant implicit leases relate to a natural gas processing agreement in the Marcellus shale Shale and a natural gas processing agreement in the Southern Appalachia region for which the Partnership earns minimum monthly fees for providing processing services to a single producer using a dedicated processing plant. The primary term of these natural gas processing agreements expire during 2030 2023 and 20232030. Based on the terms of the Partnership’s fee-based transportation services and storage services agreements with MPC, the Partnership is also considered to be a lessor of its pipelines, marine equipment and storage facilities in accordance with GAAP. The Partnership’s revenue from its implicit lease arrangements, excluding executory costs, totaled approximately $89 586 million in 2016, $127 million in 2015 and $14 million in 2014 and 2013. Based on the terms of the Partnership’s fee-based transportation services agreement with MPC, HSM is also considered to be a lessor of its marine equipment in accordance with GAAP2014. The Partnership’s implicit lease arrangements related to the processing facilities contain contingent rental provisions whereby the Partnership receives additional fees if the producer customer exceeds the monthly minimum processed volumes. During the year years ended December 31, 2016 and 2015, the Partnership received $7 million and less than $1 million million, respectively, in contingent lease payments. No contingent lease payments were received for the year ended December 31, 2014. The following is a schedule of minimum future rentals rental revenue on the non-cancellable operating leases as of December 31, 20152016: 2016 (In millions) Intercompany Third Party Total 2017 $ 265 2017 276 232 $ 197 $ 429 2018 279 226 200 426 2019 282 228 202 430 2020 283 230 201 431 2021 131 185 316 2022 and thereafter 588 542 460 1,002 Total minimum future rentals $ 1,973 1,589 $ 1,445 $ 3,034 The following schedule summarizes the Partnership’s investment in assets held for operating lease by major classes as of December 31, 2016 and 2015: (In millions) 2016 2015 Natural gas gathering and NGL transportation pipelines and facilities $ 650 $ 619 Natural gas processing facilities 844 753 Pipelines and related assets 307 253 Barges 388 360 Terminals and related assets 839 42 Towing vessels 91 91 Construction in progress 110 275 147 Property, plant and equipment 1,933 3,394 2,265 Less: accumulated depreciation (170 843 ) (289 ) Total property, plant and equipment equipment, net $ 1,763 As of December 31, 2014, we had no investment in assets held for operating lease.2,551 $ 1,976