Segment Margin

Segment Margin is defined below and reconciled later in this press release to income before income taxes. Segment Margin for the fourth quarter and full year of 2012 increased 39% and 30%, respectively, over the comparable 2011 periods primarily reflecting the impact of acquisitions and higher volumes in our pipeline transportation and supply and logistics segments.

Segment results for the fourth quarters and full years of 2012 and 2011 were as follows:
         
Three Months Ended Year Ended
December 31, December 31,
2012     2011 2012     2011
(in thousands)

Pipeline transportation
$ 27,112 $ 17,269 $ 96,539 $ 67,908
Refinery services 19,373 19,731 72,883 74,618
Supply and logistics   26,836   15,742   92,911   59,975
Total Segment Margin (1) $ 73,321 $ 52,742 $ 262,333 $ 202,501
 

(1) We define Segment Margin as revenues less product costs, operating expenses (excluding non-cash charges, such as depreciation and amortization), and segment general and administrative expenses, plus our equity in distributable cash generated by our equity investees. In addition, our Segment Margin definition excludes the non-cash effects of our stock appreciation rights plan and includes the non-income portion of payments received under direct financing leases. A reconciliation of Segment Margin to income before income taxes is presented for periods presented in the table at the end of this release.
 

Pipeline transportation Segment Margin for the fourth quarter and full year of 2012 increased 57% and 42%, respectively, over the comparable 2011 periods. The contribution from our interests in the Gulf of Mexico pipelines that we acquired in 2012 and higher crude oil tariff revenues were the primary factors increasing Segment Margin. Full year 2012 results were offset by the contribution by CHOPS, which declined by $6.4 million from 2011 due to ongoing improvements being made by producers at several connected fields. Improvements at those fields were substantially completed late in the third quarter of 2012, and total throughput levels on the pipeline have returned to levels last seen in the first quarter of 2011.

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