USD Partners Announces New Renewable Diesel Contract at West Colton Terminal & the Creation by US Development Group of USD Cl...
June 28 2021 - 4:20PM
Business Wire
USD Partners LP (NYSE:USDP) (“USDP” or the “Partnership”)
announced today that the Partnership has entered into a Terminal
Services Agreement with USD Clean Fuels LLC (“USDCF”), a
newly-formed subsidiary of US Development Group, LLC (“USDG”). The
Terminal Services Agreement provides for the inbound shipment of
renewable diesel on rail and the outbound shipment of the product
on tank trucks to local consumers. The agreement has an initial
term of five years with a target commencement date of December 1,
2021, and is supported by a minimum throughput commitment to USDCF
from an investment-grade rated, refining customer as well as a
performance guaranty from USDG.
“We are excited to announce this very accretive opportunity at
the Partnership. This opportunity is incremental to our existing
ethanol business at West Colton and is projected to generate
additional Adjusted EBITDA of approximately $2.0 million per year
at the Partnership over the five-year term,” said Adam Altsuler,
the Partnership’s Chief Financial Officer. “Total capital
associated with the opportunity is approximately $1.8 million,
which we intend to fund from cash flows from operations.”
USDCF is a newly-created entity formed by USDG, the
Partnership’s sponsor, to focus on providing production and
logistics solutions to the growing market for clean energy
transportation fuels.
“USDG has created USD Clean Fuels in response to a structural
shift in demand associated with decarbonizing the transportation
fuels sector,” said Brad Sanders, Executive Vice President and
Chief Commercial Officer for USDG. “We believe our assets,
capabilities and vision are ideally suited to serve our customers’
growth plans in clean fuels in terms of both geography and product
offering (renewable diesel, sustainable aviation fuel, etc.). We
are thrilled to be able to bring cleaner and sustainable industry
solutions to California fuel markets, and we look forward to more
announcements in the future as the industry and clean fuels markets
continue to evolve.”
In connection with the execution of the Terminal Services
Agreement, the Partnership entered into a Marketing Agreement with
USDCF granting USDCF the right to market and develop renewable
diesel growth projects at the West Colton terminal. Additionally,
USDG entered into to an amended and restated Omnibus Agreement with
the Partnership to extend the term of the Partnership’s right of
first offer on any midstream infrastructure assets that the sponsor
may develop, construct, or acquire, which would include any
renewable diesel growth projects at the West Colton Terminal, for
an additional five years, subject to certain conditions. The
Partnership’s right of first offer was otherwise set to expire in
October of 2021.
About USD Partners LP
USD Partners LP is a fee-based, growth-oriented master limited
partnership formed in 2014 by US Development Group, LLC (“USD”) 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, refiners and marketers. 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.
US Development Group, LLC, which owns the general partner of USD
Partners LP, is engaged in designing, developing, owning, and
managing large-scale multi-modal logistics centers and
energy-related infrastructure across North America. USDG solutions
create flexible market access for customers in significant growth
areas and key demand centers, including Western Canada, the U.S.
Gulf Coast and Mexico. Among other projects, USDG, along with its
partner Gibson Energy, Inc., is pursuing long-term solutions to
transport heavier grades of crude oil produced in Western Canada
through the construction of a Diluent Recovery Unit at the Hardisty
terminal. USDG is also currently pursuing the development of a
premier energy logistics terminal on the Houston Ship Channel with
capacity for substantial tank storage, multiple docks (including
barge and deepwater), inbound and outbound pipeline connectivity,
as well as a rail terminal with unit train capabilities. For
additional information, please visit texasdeepwater.com.
Information on websites referenced in this release is not part of
this release.
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 ability of the Partnership, USDG and USDCF to
generate future Adjusted EBITDA; amount and timing of future
capital expenditure; business prospects of USDCF; and the ability
of the Partnership, USDG and USDCF to develop future additional
projects and expansion opportunities and whether those projects and
opportunities developed by USDCF would be owned by USDCF and
whether they would be subject to the Partnership’s right of first
offer. Words and phrases such as “plans,” “expects,” “will,”
“would,” “believes,” 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 the Partnership are based on
management’s expectations, estimates and projections about the
Partnership, its interests 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 impact of the novel coronavirus (COVID-19) pandemic and
related economic downturn and changes in general economic
conditions and commodity prices, as well as those factors set forth
under the heading “Risk Factors” and elsewhere 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
(many of which may be amplified by the COVID-19 pandemic and the
significant reductions in demand for, and fluctuations in the
prices of, crude oil, natural gas and natural gas liquids). The
Partnership is under no obligation (and expressly disclaims any
such obligation) to update or alter its forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
Category: Operations
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version on businesswire.com: https://www.businesswire.com/news/home/20210628005794/en/
Adam Altsuler, (281) 291-3995 Executive Vice President, Chief
Financial Officer aaltsuler@usdg.com
Jennifer Waller, (832) 991-8383 Director, Financial Reporting
& Investor Relations jwaller@usdg.com
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