USD Partners LP (USDP) - Get Report (the "Partnership") announced today that it has taken measures in response to the novel coronavirus/COVID-19 outbreak, and that all of its terminals remain and are expected to remain fully operational. Measures being taken by the Partnership and its service providers include full sanitizing of all surfaces multiple times daily, split crew changes, practicing social distancing wherever practical, and full lock-down of facilities except for approved contractors and services providers.
The Partnership reaffirmed that substantially all of its cash flows are generated from multi-year, take-or-pay terminalling services agreements related to its crude oil terminals, which include minimum monthly commitment fees. The Partnership's customers include major integrated oil companies, refiners and marketers, the majority of which are investment-grade rated. The Partnership's Hardisty and Stroud terminals are currently contracted at 100% of their capacities under multi-year take-or-pay terminalling services agreements with mainly investment-grade rated customers. The Casper terminal's capacity is currently partially contracted under multi-year agreements with an investment-grade multi-national customer and a producer customer that provide for take-or-pay terms for terminalling and storage services and variable fees associated with actual throughput volumes and other services. For the year ended December 31, 2019, the Hardisty and Stroud terminals contributed approximately 67% and 22% of the Partnership's Terminalling Services Segment Adjusted EBITDA, respectively, while the Casper terminal contributed approximately 9% of the Partnership's Terminalling Services Segment Adjusted EBITDA. Segment Adjusted EBITDA is a measure calculated in accordance with Generally Accepted Accounting Principles ("GAAP").
"This is a difficult time for our industry," remarked Dan Borgen, Chief Executive Officer and President. "Our core business is sound and our customer profile is strong. We continue to be bullish on our ability to renew and extend our contracts at the Partnership's Hardisty terminal, particularly in connection with potential growth opportunities at our Sponsor's Diluent Recovery Unit (DRU) joint venture project, and our ability to identify and secure future opportunities at the Cushing hub via the Partnership's Stroud Terminal. In addition, we continue to monitor the challenges relating to the Casper Terminal's cash flow and work with existing and potential new customers to expand our business opportunities at the terminal, including opportunities that may result from Enbridge Inc.'s planned 50,000 bpd expansion of its Express Pipeline through the use of drag reducing agent and pump stations."
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 network of crude oil terminals facilitates 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.
USD, 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. USD 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 is 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.
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 impact of current market and commodity price conditions on the Partnership's business; the operations of the Partnership's terminals; the responsive measures related to COVID-19; the benefits of current customer agreements; volumes at, and demand for, the Partnership's terminals and Enbridge's announced expansion of the Express Pipeline; and the availability of and ability to leverage potential opportunities. Words and phrases such as "expect," "plan," "believe," "will," "continue," "opportunities," 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, market and world conditions, governmental regulations, the impact of a pandemic, 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 those as set forth 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, many of which are beyond the control of the Partnership. 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.
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