USD Partners Announces New Contract Supporting the Construction of Pipeline Connection and Additional Storage Capacity at Casper Terminal


Wednesday, December 12, 2018 6:35 am EST



Public Company Information:

"We are pleased to announce this strategic investment in our Casper Terminal"

HOUSTON--(BUSINESS WIRE)--USD Partners LP (NYSE:USDP) (the “Partnership”) announced today that it has entered into a three-year agreement at its Casper Terminal with a new multi-national, investment grade customer. The agreement, which was effective in September, contains take-or-pay terms for terminalling and storage services, as well as fees associated with actual throughput volumes and other services.

The agreement will support the construction of an outbound pipeline connection from the Casper Terminal to complement its current inbound pipeline connection to the Express Pipeline and an additional storage tank to facilitate blending and staging operations for the customer. The customer will utilize an existing tank at the Casper Terminal for a three-year term and a second tank, once constructed or available, for another three-year term. The construction of the second tank, if needed, is expected to be completed in the second half of 2019.

“We are pleased to announce this strategic investment in our Casper Terminal,” said Randy Balhorn, US Development Group’s Vice President of Business Development. “We have mentioned our hub strategy at Casper on previous public earnings calls, and this is the first step in realizing that vision. The outbound pipeline connection and additional storage capacity at Casper will contribute to the long-term sustainability of the terminal, giving our customers increased connectivity to various refining centers and pipeline networks.”

“We are excited to announce this accretive, organic growth project at the Partnership,” said Adam Altsuler, the Partnership’s Chief Financial Officer. “The Partnership intends to spend approximately $16 million of capital expenditures on the new pipeline connection and storage tank capacity at Casper, which we expect will be completed at an attractive build multiple between 3.0-5.0x Adjusted EBITDA, depending on actual throughput. The total spend will be funded from cash flows from operations and borrowings on our revolving credit facility.”

About USD Partners LP

USD Partners LP is a fee-based, growth-oriented master limited partnership formed in 2014 by US Development Group, LLC to acquire, develop and operate midstream infrastructure and complementary logistics solutions for crude oil, biofuels and other energy-related products. The Partnership generates substantially all of its operating cash flows from multi-year, take-or-pay contracts with primarily investment grade customers, including major integrated oil companies and refiners. The Partnership’s principal assets include a network of crude oil terminals that facilitate the transportation of heavy crude oil from Western Canada to key demand centers across North America. The Partnership’s operations include railcar loading and unloading, storage and blending in on-site tanks, inbound and outbound pipeline connectivity, truck transloading, as well as other related logistics services. In addition, the Partnership provides customers with leased railcars and fleet services to facilitate the transportation of liquid hydrocarbons and biofuels by rail.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of U.S. federal securities laws, including statements with respect to the Partnership’s ability to execute on its Casper hub strategy, the timing of completion of construction of the new tank and pipeline connection, the ability of the project to be accretive to the Partnership, the amount and source of the capital expenditures necessary to complete the project, the amount of expected EBITDA to be generated by the agreement and the EBITDA build multiple, and the long-term sustainability of the Casper terminal. Words and phrases such as “is expected,” “is planned,” “believes,” “projects,” and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to USD or the Partnership are based on management’s expectations, estimates and projections about USD, the Partnership and the energy industry in general on the date this press release was issued. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include the risk that failure to complete the construction of the new tank and pipeline on a timely basis during the fourth quarter of 2019 could result in the customer gaining the right to early terminate all or portions of the agreement; as well as construction and cost-related risks; risks associated with constructing and operating a terminal; changes in general economic conditions; the effects of competition, in particular, by pipelines and other terminalling facilities; the supply of, and demand for, rail terminalling services for crude oil, refined products and biofuels; hazards and operating risks that may not be covered fully by insurance; disruptions due to equipment interruption or failure at the Partnership’s terminals or third-party facilities on which our business is dependent; natural disasters, weather-related delays, casualty losses and other matters beyond our control; and changes in laws or regulations to which we are subject, including compliance with environmental and operational safety regulations, that may increase our costs. Additional factors that could cause actual results or events to differ materially from those described in the forward-looking statements are included under the heading “Risk Factors” in the Partnership’s most recent Annual Report on Form 10-K and in the Partnership’s subsequent filings with the Securities and Exchange Commission. Neither USD nor the Partnership is under any obligation (and each expressly disclaims any such obligation) to update or alter the forward-looking statements set forth in this press release, whether as a result of new information, future events or otherwise.

Adjusted EBITDA

The Partnership defines Adjusted EBITDA as Net Cash Provided by Operating Activities adjusted for changes in working capital items, interest, income taxes, foreign currency transaction gains and losses, and other items which do not affect the underlying cash flows produced by the Partnership’s businesses. Adjusted EBITDA is a non-GAAP, supplemental financial measure used by management and external users of the Partnership’s financial statements, such as investors and commercial banks, to assess:

  • the Partnership’s liquidity and the ability of the Partnership’s businesses to produce sufficient cash flows to make distributions to the Partnership’s unitholders; and
  • the Partnership’s ability to incur and service debt and fund capital expenditures.

The Partnership believes that the presentation of Adjusted EBITDA in this press release provides information that enhances an investor's understanding of the Partnership’s ability to generate cash for payment of distributions and other purposes. The GAAP measure most directly comparable to Adjusted EBITDA is Net Cash Provided by Operating Activities. Adjusted EBITDA should not be considered an alternative to Net Cash Provided by Operating Activities or any other measure of liquidity presented in accordance with GAAP. Adjusted EBITDA exclude some, but not all, items that affect Net Cash Provided by Operating Activities and these measures may vary among other companies. As a result, Adjusted EBITDA may not be comparable to similarly titled measures of other companies.


Investor Relations Contact:
Adam Altsuler, 281-291-3995
Senior Vice President, Chief Financial Officer

Jennifer Waller, 832-991-8383
Associate Director, Financial Reporting and Investor Relations