USD Partners Announces New Contract Supporting the Construction of Pipeline Connection & Additional Storage Capacity at Caspe...
December 12 2018 - 6:35AM
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20181212005356/en/
Investor Relations Contact:Adam Altsuler,
281-291-3995Senior Vice President, Chief Financial
Officeraaltsuler@usdg.com
Jennifer Waller, 832-991-8383Associate Director, Financial
Reporting and Investor Relationsjwaller@usdg.com
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