BKEP - Earnings call transcript Q4 2018 | Blueknight Energy Partners, L.P.

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Operator

Good day, and welcome to the Blueknight Energy Partners Earnings Conference Call and Webcast. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. James Griffin, Blueknight's Chief Accounting Officer. Mr. ahead. go please Griffin,

James Griffin

quarter and to It we today's and Hurley, which Officer, will our the results Blueknight's brief Anita, December to will on I'll my operational provide on update influencing factors for Executive welcome financial fourth as financial for well a results you conference operating as year good external you, Chief ended is Blueknight. our XX, Mark morning. pleasure you discuss and Thank call our XXXX. performance, business, after update where

We will questions after remarks. prepared our then take your

may guidance, Before project that everyone results, are historical uncertainties. uncertainties contain forecasted results, subject statements These are not among we restrictions relating levels credit projected to debt to its to things, operating Energy the this obligation in include, uncertainties from future and historical exposure Partnership’s expected, otherwise. or XX risks various other and states. timing, whether credit or risks statements prove facility, publicly this materialize and forward-looking actual result as begin, certain I or materially statements Exchange crude any limited asphalt the of uncertainties information will and risks should may pipeline marketing We those and oil engaged our partnership other about are its statements. BlueKnight turn new revise and in objectives, or Mark future risk future outcomes events would crude and for information, future governmental our the is Securities cash conditions, that facts, terminalling the We customers, distribution a operations, discussed oil operations like future of the and and regulation, current including in are terminalling to storage assumptions Partnership's other call master petroleum I flows to segments, these no incorrect it included and not services. asphalt traded forward-looking and to other provide products. intentions facts call that in Hurley, taxation transportation oil financial filings and remind or production, without forward-looking expectations a of with over third-party terminalling Commission. with and undertakes market CEO. future financial factors Such our storage, the Partnership’s any underlying through crude services forward-looking crude gathering results in Partnership now publicly manage limitation, four operating statements or services, Statements Partners statements. on companies Mark? any oil, of If vary and services, integrated services, trucking update operations

Mark Hurley

Thanks external thanks Chief our will to BlueKnight. our an on James. change I influencing and us the update performance, financial Good Officer challenges you Accounting projects, and operational factors today. who our Griffin, dialed XXXX on year opportunities presented at update that with everyone and was then the James business. will morning, in you results. provide

in XXXX reducing oil with we second detailed of segment. a a we to business, improving allow consistent my that objectives flow distribution will and I business generate have as comments contracted However, look both should our today largest cash our us and Cushing here coverage. our meet crude at begin highly sit leverage storage

lower curve tangled driven back the build in crude for demand recent the storage, oil lower increasing. covered is backwardation throughput, and market late in inventories and inventories the the the the very steadily curve price XXXX, increased. supportive reversed market half led have are a Today, to of revenue. for demand Cushing. to lower Cushing storage at storage forward third a a inventories curve and we crude to The oil storage weak communications, rates by and the as low in structure lower forward The This mainly result As went however, of market storage began beginning price first spread quarter. in was

successful through have we As the effort are had XXXX. a fully leased of re-contracting a end and result, we

we Throughput increased seeing throughput Another in base are the addition us is positive, in for revenue storage a facility. our fees. to generator

doubt business predictably and XXXX had Coast good the quarter wet specifically returned conditions the operation asphalt. this earnings in and had have some We to another weather full no a Switching year. Southeast. to over see where are we challenging high This an seeing are East two solid in we and We improvement along confident will in XXXX. an throughput tanks segment hurricanes

are the we is times However, West. increased are We we seeing as market year. in in markets, where strong we do situations industry the The in XXXX. is communicated year-over-year high a at of some and in X% boost expecting key get locked are business this our in have volumes revenue in when many begin and demand particularly a the of forecasting we growth a portion spending substantial in infrastructure

in these In very margin. have addition, and year acquired made more up our historically happy two performed are XX% we the businesses facility well, the has of Oklahoma with than last of in April operating we Muskogee, investment. Together,

XXXX these segments of As for a on highly basis of today, have customers. revenue we approximately contracted of the XX% with creditworthy take-or-pay all from

I been segments. detail will are our some volumes systems. strong Oklahoma have cover ramping predictable expecting on now our crude, pipeline mentioned that our on move we flow Yesterday, release the from earnings and and on we year. up So, for cash transportation

March. forecast month running line. per price barrel second volume at inventory earnings are of when barrels the day will higher highest started crude in experience were combined quarter. $XX the the it system year normal the the the $XX to higher to as in expecting volumes our the into supporting seemed pipes. however in on be second half fourth prices prices We we pipeline some and the we up line October in a XX,XXX be started than crude to oil in shipped the since system approximately This We to Current a November. our range the in did second holds, higher plans crude executed in be QX, systems segment volumes dropped two significantly related amount impacts get impacted we and of carrying of If

second third to fourth have reduce party over transitioned have by to few we approximately trend We year. to intend of continue As last in capital the higher working the last able volumes months, XX% we from this the quarter. been quarter

on are pipeline that we million impairment encouraged for concluded analysis, system the $XX.X we of this to assess an utilization of by fourth experienced we segment us that charge Based warranted quarter. margins and in led pipeline recently increase system, While was pipeline operating in our the charge the took our impairment. the

has on the work due pipeline Cimarron been to As we on communicated project previously economic considerations. Express February halted announced XX,

upon million currently the that of project net to As million BlueKnight Cimarron of Ergon reduced of in are a $X of Cimarron Cimarron December project. and interest. sale the its X% put approximately principal spent could the spent amount XX, right be cost of BlueKnight. Ergon on pipeline of million will the per to by the to the overruns of Express XXXX XX% be Both total the pipeline the million annum. in the responsible $XX Express for cost exercises joint investment status total its put interest evaluating had assets $X extent the BlueKnight $XX to Express the anticipates plus BlueKnight at million venture BlueKnight plus interest $X by to for project

have are footprint crude $XX adjusted guidance in will around board range April. next be coverage. asphalt de-leveraging our distribution and sheet the But decision that objectives acquisition will Current half Looking our The that particularly X.X can are variability accomplish quarterly in of X XXXX and the of on we the in confident degree to by to Any improving the system. forward, second of oil our business. we met, pipeline a XXXX, strengthening down earnings fit low in by our we two balance driven these our in be goals. highest contracted revenue to in With XXXX priorities business opportunities these X.Xx the distribution volumes is in place for coverage while million high be our strategy growing plan again will those made EBITDA we range. target the have primarily

and distribution our at the balance With in it and turn objectives will James that do in Chief above the leverage is Griffin it mind, coverage, time. now Officer. to possible sheet James? reduction I we a will over Accounting

James Griffin

for Express XX our segment XX, we results as Net such of you, $XX.X financial million the project. impacted the XXXX. EBITDA crude Net reported and XX Thank Mark. ended net three previously net of for months for $XX.X XX, XXXX December by to million of interest, ended $XX to crude fourth mentioned XX XXXX. months ended cash Cimarron cash a release Adjusted XX, explained project. XXXX. in asset year-ended of was impairment the million the Distributable compared in the in for impairment a compared for period period compared as through $X.X related earnings charge Net same loss of XXXX. income million net ended $XX amortization was fourth quarter measures Net was compared was as same was the non-GAAP million charge charge $XX.X Yesterday million and XXXX XXXX December asset for as million XXXX months ended Adjusted for distributable compared flow the income for cash in to XXXX measures and $XX Express income the reconciliation for as as charge flow Cimarron XX million million related are Pipeline as XX, to XXXX $XX.X XX, impairment before XXXX. oil million in the the flow million same loss ended to period $XX.X the issued EBITDA taxes, months XX, adjusted compared the period $XX.X XX, related fourth pipeline loss $XX.X in of to December quarter for million to by Pipeline quarter same financial including Distributable in impairment or XX, same pipeline period to December ended million $XX.X sections related $X.X for the XXXX. the EBITDA to loss XX segment December period was XX million yesterday. was was the XXXX our a as services asset depreciation months the services seven same asset the million for $XX December to for $XX.X impacted earnings the in of well XXXX and million quarter Adjusted the for XXXX. oil the $X.X the to

XX for times. XX, was ended months coverage the ratio December XXXX X.XX distribution Our approximately

the X% offset by a as XXXXas on asphalt margin Form ended primarily acquired the report sales XXXX, In results for for Additional or annual of few March in asphalt three July Partnership’s to with December XXXX result of SEC we asphalt Ergon the filed highlights of the for generated XX, million information the regarding year be services XX, year year-ended excluding of each XX-K to facilities March facilities the at segment, increased XXXX. A be operating provided by of amortization compared will of two in $X.X terminalling XX, December XXXX in and segment. revenues XXXX. depreciation the operations partially ended December in Partnership’s to additional on our XXXX, XX, December

year-over-year that due amortization our million that XXXX storage April quarter XX, and a decreased barrel oil fourth terminalling storage were on the expired at a and expired as depreciation XXXX not contracts the crude crude The to forward expired a the barrel or on October primarily renewed operating services contract price result until storage the million curve margin the million of time contract backwardation and to Moving of expired. by of XX, replaced $X.X XXXX. contract segment, X.X $X.X excluding oil

under As oil barrels we of services up million to but crude today approximately contract, terms of have $X.X XX-months. storage remaining

losses depreciation crude our in tracking and $X.X crude the in at per to our than our segment, revenue losses increased trucking and the in services oil and in $X.X transported distance average excluding excluding crude operating XXXX amortization amortization XXXX, oil primarily margin million haul, barrel which XXXX, and remained in million our business. In segment, from both the marketing segment expense resulted in operating XXXX XXXX Next XXXX while depreciation by pipeline losses oil lower in shorter increase flat operating transported. the volume in

to due expenses is and XXXX. the expense primarily incentive lower December for decrease million for headcount to to compensation $XX in compared to XXXX Our general XXXX. million year in XX, and XXXX administrative in compensation ended decrease related XXXX The $XX.X reduce

well a pipeline fair basis investment by market included markdown our of impairments system to recoverable value historical Oklahoma in Asset our to as impairment estimated oil on due Express value expenses an as per line the in million related the Cimarron and to pipeline, related of Ergon’s a also our $X.X as of its indicated landfill impairment pushdown to crude rates related XXXX million cost to million average fill below barrel. $XX.X dropping $XX the

record we expense impairment XXXX, goodwill XXXX. in related services asset of sold impairment During fixed intangible asset to subsequently producer business a million April and of on $X.X that write-down including was field

to expenditures X.XX XX, at investments, to the X was capital Net total million. December leverage XXXX Moving ratio and our year-ended XX, our liquidity total capital maintenance consolidated December XXXX. $X.X

currently approximately our for in expenditures December to for to million reimbursable approximately concludes be and capital and prepared Operator, a Q&A the million, that session. totaled be I the $X.X over expansion to of $XX remarks XX, turn million products We expect our our expenditures capital million net growth $X.X each organic XXXX. capital to will you XXXX. expansion now to Our net expenditures maintenance $X.X year-ended for expenditures $XX.X

Operator

comes Instructions] TJ with The first from Schultz go Please Capital. RBC question [Operator ahead.

TJ Schultz

funding sales source? and acquisitions? indicated, focus about the deleveraging of the Just you thinking But of correct about finance the on the any talk forward. to misunderstood path I the businesses on would to priorities as how That me understandably, strategic use you path exclusively kind the other asphalt coverage and you ability consider as that. forward be color that you to if seemed as Just of some more asset more business are

James Griffin

Yes, absolutely TJ.

immediately the us size that asphalt past done in of and sites have acquired $XX history have looking cash. and that in XXXX between generating terminal them several out to this is that First over We of back company $XX all, the range there. acquisitions the us million There well XXXX. were like the there million been in wish and cost the very really of we we investment well, those fits the we successful for of more of

So, want real to focus it’s winner us. on a been because do that for we

year make with the As we point that or the of the XXXX, end do of of look we know we EBITDA have early us kinds forecasts see out down you kind have where at we a ranking - to those next investments. to room

the we get don't baked really go or But to Our the we sales plan to in weaker, take-or-pay maybe those. ourself gets system can that within But revenue it market or we fund and the will we any remains see do a out crude and our as to getting crude the strong, asset really now the do faster, a get of the bit I case, we driven mentioned the next and basis little position the will three if on we acquisitions. on is earnings slower. right so kinds quarters some - in in those volumes be where will variability variability market if four in do by delever

TJ Schultz

interest sense. the assets? makes It trying carry you put would understand option Express. the for time those to for just that? the then of on what be Like, the the some And cost on all. take I'm Cimarron for how line sell to you What's it just long Okay. may

Mark Hurley

common those with can there's quick are we materials used kinds decide kinds a the forward. obviously market if would might an lines then decision assets, Any in JV we around put, are the hard plans go exposure that very, and be industry, those the along Yes. Ergon by cost route. timing is Ergon And so been going reasonably the and to the that think usually sale for an assets. the that that we of very exercise we of owned of that situation But think assets of of have Ergon terms be very The done decision. in is have have any that we supportive manageable very

Operator

The go Josh with next from Golden question ahead. Please JPMorgan. comes

Josh Golden

either a end you're quarter updated number post get debt now? where at Can right I

Mark Hurley

number Sure. Yes. Today, we’ve through today. of XXXX off $XX about the by come down million just

Josh Golden

One comment, Mark.

point a projects. where the You about And time don't continue with incremental It year what in I look encourage anything that and an know of appreciate Thank I there risk time. and reality there problem was it to your I it And developing is organic was last is. taking a further partnership is discussion see doing you. business happened. at the to

Mark Hurley

appreciate be projects. those We're organic that. was and certainly your And comments. Well, lookout for the on I you, going to Thanks. acquisitions Josh. Thank

Operator

comes from ahead. go Please question next with The Capital. Beach Bailey Jeff

Jeff Bailey

on liability is topic imputed at XXX, the the interest. of Staying Cimarron, including what XXXX,

end liability X% including the for year You gave right what's the but it of interest? the carrier now the XXXX,

Mark Hurley

at Yes. expenditures the JV. of haven't same incremental There range that there. part It’s still been any on the

Jeff Bailey

So, million I mean, take$XX interest… or somewhere give in that ballpark the $XX with million,

Mark Hurley

anticipated That’s And that's what right. it remaining. we Yes.

Jeff Bailey

Can talked the mean own can sell this Blueknight Mesa them, was And about then selling Blueknight assets. to unilaterally put if process of you what the assets. half selling assets dose Alta be I those for those exercise

Mark Hurley

cost will would project be Well decision now question. both decision Good the Ergon structure Midstream the obviously so owned we a and debt Alta course Kingfisher Mesa come because did there. are assets to those by or this right between joint sell Right. assets two, of any and so

all Midstream. the sold were process of assets and help I’m construction be in actually Kingfisher Ergon, sorry, the facilitate so but likelihood as And Blueknight manager would Ergon by

Jeff Bailey

something true? like able the Mesa liquidate is oil want is where sell they that for hold maybe that to and assets, Alta assets or scenario unfavorable want an to not to So you're the there price doesn’t higher up

Mark Hurley

happening scenario frankly. between joint parties. a see that decision I don't decision out. But between playing don't a I two that two. it's it's see the Well,

Jeff Bailey

And and that would control buyer. what JV enjoys would if then essentially Mesa, happen of dedication just legally would there's what happen, to happen to would new a acreage Alta a to what change the JV, at Cimarron transfer the over the

Mark Hurley

joint to is I the on other through joint some by dedication control right. dedicated in fashion. owned to know you the venture we the partner transition assume when the acreage It’s side, of The change you other venture a and

Jeff Bailey

So the acreage…

Mark Hurley

venture. mechanics obviously, owned I’m on depending the what is of joint by the that situation sure acreage would not the but the be dedication

Jeff Bailey

you was acreage JV change it most as get was possibility? is from so far And Mesa out as when yanked under dedication control like if the Alta of know a a that or there the

Mark Hurley

I don't know see really I might that, circumstances what be can't automation speak but joint side. venture. that by don't dedication obviously, is being a to possibility, today, the acreage but owned the I clearly on the the

Jeff Bailey

to take Well guess, then the mind. that JV that don't JV, And the have Ergon I'll dissolved you the do the in project to back event first the you and that is I be if one exercised BlueKnight? put to or put expect offline

Mark Hurley

have put requirement. There it’s for the be and exercise to are a JV them not to does not dissolved to

Jeff Bailey

And purposes, plus exercised right quarter. of accounting his think the then in take I that James through that running the liability the Is for carried from event the that interest? one put for income James amount is the statement I on this the it charge Bill

Mark Hurley

flow $XX Ergon’s JV to its BlueKnight. down shows investment impairments so that's fourth it's written and earlier, into actually estimated done in on I was referenced of in a the charge down fair that’s million basis, The value down push that up quarter that

So the extent the the that that that Put be would that quarter. there's interest is in recognized incremental exercised time at to that

Jeff Bailey

figures exercised Put at then again sale? of on time you Do is the the related adjust to the adjusted based the and that at time expect

Mark Hurley

correct. That's

Jeff Bailey

little understand for line the down. James, more a adjustments, could Oklahoma the market write inventory cost wondering $X.X detail pipe you lower if justification the I correctly, or accounting that's If a million the I'm explain fill? of

James Griffin

right. That's

Jeff Bailey

correctly And I million that’s a the if remember capital. mean in $XXX other, that's pretty invested I - about

economic more the value third, size. the maybe and that a down fair justifications essentially than the accounting down by fair – a you talk took you So write for could the about of value

James Griffin

Sure.

projected on operating of we the – those indication case at determining impairments discounted evaluate any in a for on fair in future so we a our result have an for time cash system and this carrying as exit charge. basis loss cash discounted segment, generated assets was multiples and the look well for that projected the point the flows our an in of we value types future of was and of those flows time, as of that recoverability amount So at that market it the assets and based impairment

Jeff Bailey

that of if correctly significantly six say forward worse So it situation pipeline of see economics or you're I’m economics say going than operation mean, the ago. is months the have to you fair a understanding saying you year the I did deteriorated. that

James Griffin

increased the to we're going back that's estimates if it’s we're and I different a is utilization going they system now. – forward. we were Mark are But dependent area serve. are kind by prices and think on than year, I volume again what seeing of were heavily fair wind that the statement be our think being as what to we indicated in what encouraged very of clock a the seeing produced crude We're it's

Jeff Bailey

crude do say, prices the if So, down – you impairment to crude had attributed know write what would to you due if attribute prices, mostly to would to? due you or to you partially had broader to it's know picture you you the deteriorate what

James Griffin

through in the drives remarks, volume. me XXs And indicated volume in seeing that more two And are we're flowing that volumes what Yes, to earlier really good highly this crude sensitive area. It's drilling we right earnings is as pipes on dependent my the Jeff. prices the Let are volume address These the have today. the – volume, higher price. one. very that more supporting in of the in are I course,

stronger would for that a the if were see be pretty a impact good you good story system. seeing we'd on earnings, weak into pretty and on crude know us to the crude we're presumably, But so, very get you prices And would decline you see conversely volumes. volumes market and

Jeff Bailey

and words activity or so the change crude of competing due of lack lack in other not of continue – the an basins? price impairment in mostly future the pipelines to is much introduction to permanent So –

James Griffin

Well, the issue that's the worth that what right. pipelines competitive no time, much in of other of – area. drilling pipelines basins in It's is basin located. is then back but course as crude kind is more and price in it's the supporting to so And how goes the of activity basin at the are what price or not

Jeff Bailey

then you the And about X.X the of does that of for at the talked that that press Mark, of end Cimarron Ergon distribution in leverage a release coverage a the year you're ratio hoping exercises assume X.X put?

Mark Hurley

that it make that of doesn't the of we be think do or going assumptions put put timing be exercised, to the will exercise No payback We flexible will any forward. be the the plan very put. but about the for expect I

Jeff Bailey

put not So you're – going won't on Ergon a expect be you to and so the transaction you then? just mouth you not don't revolver - between put it on will and and it the –

Mark Hurley

understand not I’m would would I have question. It sure we to obligation to back that the Ergon. be an

Jeff Bailey

that would and on carry instead that balance that would Right X% the interest put saying pay was the and and assumption borrow that under the liability immediately, I you're you sheet but rate? you

Mark Hurley

Ergon you have the obligations don't the would we out, I that that mechanics have be worked in very of what Well supportive is tell indicated paid they'll back. that but

Jeff Bailey

your facility on credit Right right? but you're currently higher X% is what paying than

Mark Hurley

Yes.

Jeff Bailey

Ergon? put keeping of difficulty to wouldn't straight opposed having deal you facility on I'm a as it a why on So

Mark Hurley

we're at what way this point. at that do be jump or that we any locked might particular but maybe the time that way the not it, out we structure handle payback work Well into

Jeff Bailey

it can if that of BlueKnight, it XXXX, didn't to distribution more put? understood Ergon a if X.X because on by end I to ratio be the correctly expect put more the X.X reach back – assume But ratio so you you difficult we does it's the leverage coverage will

Mark Hurley

those will it would will my be more we by manageable targets circumstance. any Well, back comment. difficult, it and I be very be We very but think to think mean earlier to go I'll definition in

Jeff Bailey

been The report XXXX is XXXX in that going to is also financial year? the included reporting, XX-K that that weakness is be material or of XX-K the during going in out eliminated

Mark Hurley

our disclosed year that into forward so remediated, this be moving XX-Qs XXXX not throughout in will XX-K. we have As the that been

Jeff Bailey

And Thank then as I any news? James. missed CFO that. you, search, Mark, as far your

Mark Hurley

going we’ve weak well, It’s here candidates – number of where recently. seen a

were the so know in done optimistic two weeks. next here very have something And I we we'll you think

Operator

The from Investor. Please next Private question Jenkins, a ahead. comes Jim go

Jim Jenkins

Thanks for little to Yes. Cimarron pull XX and old my call. shares. Iran taking changed nervous. the able a XX,XXX I got and be cause to complete was we what years Will to I'm out?

Mark Hurley

question, than where don't the it's amount And we much forecasts would sorry. are evaluating on really with the another as – all the did we're about Jim? economics now area go are any that's talked determines that's is you volume right I drilling have We're Well, of future so basically is we’ll changed think project. produced we've change, better is the pipeline of more say, complicated that can a amount potential have right and I’m why those is drilling sales. where drilling, and economics Obviously, looking and obviously at scenarios what that. asset I the in in you revenue Did now. understood, and

Jim Jenkins

will improve, things finance you work If Yes. additional how or sell continue to shares that you will to pipeline it?

Mark Hurley

to project some, we’d were of execute has right The to been way know with sort improve, have finance things that. today project. as – evaluation have BlueKnight. this step we're in of into we And that partner, been supplying owner general been JV. of that the funding had down forward would go half our of eventually we're the support the be who go, a planned about if now, the obviously, we do some you dropped But Well, to

Jim Jenkins

Okay.

Mark Hurley

the But now, we're in just evaluation stage we're – Jim. just

Just…

Jim Jenkins

right. forward then. to the Good. on in All future that look comment some I

Mark Hurley

Sure.

Okay.

Jim Jenkins

your still I’m investor. happy

in there. hang Let's

Mark Hurley

Thank you very much.

Operator

Wreschner Never [Harrison question next Summer]. with comes The from

Unidentified Analyst

to want to quick one to this to to Wells Ergon the Just are ask more on questions. - payment Fargo that earlier on Want but was facility? take allowed touched million two $XX you put

Mark Hurley

repeat sorry. Harrison, question. that you I'm can

Unidentified Analyst

Wells Fargo the make facility? to Ergon allowed off you the Are payments to

Mark Hurley

to leverage around There us to drawing is restrictions specific than that a not payment particular on that revolver with that the anything nothing the covenant other from we work our preclude would transaction. make There's today.

Unidentified Analyst

my guess covenants be think question within do if need those you’ll is be? I you the to payment make

Mark Hurley

us Yes. to to plans with be around their supportive that well. those Ergon has covenants us of work And indicated and as are

Unidentified Analyst

guys and you I I late announced the think dividend an last declaration the was When May. was time, April think cut Cimarron

came the that an of be the that $X.XX new going of would pipeline? to without Cimarron anticipation there $X.XX going was Cimarron you that when part So the forward this a made was level anticipation of or

Mark Hurley

The $X.XX time. items were at - of both plan the of part those the

effect the immediately took into distribution XXXX. However, be $X.XX has around of gone quarter and was The Cimarron anticipated dropdown to first XXXX. obviously

So, that a same plan. of all the part was of

Unidentified Analyst

I I'm I being Cimarron that assume decided $X.XX is completed $X.XX, obviously was delay, timing I you was on guess there that in on appreciate saying QX a So, XXXX. when but dependent, would

So, decided Cimarron within going was on you math $X.XX when the forward number.

that tracking already You’re right? end. Is that

Mark Hurley

Yes.

Unidentified Analyst

Okay.

Mark Hurley

Yes. That’s correct.

Unidentified Analyst

kind at That is when helpful forward. going of look that definitely I

to that's focus In makes I'm asphalt’s hearing sense? going terms what is be primary forward. the that acquisitions, going Does of

Mark Hurley

we think We've out as terms certainly some a It Yes. far with as think be that's are - many there we we as there. I record a in as correct. more go but opportunities. priority had And will I great what more are we there our like, out growth track look those. of for not think top that's some there, think

Unidentified Analyst

asphalt levered we're it is kind be use undersized the where sell which looking maybe a the business, for us, delever, just good make around storage at and refocus business, to might a or the which looking and of off, we're on. you know right now size Does better makes of time do tack better But, a pipeline and sense proceeds keep but at much So, than those. those market block these these frankly, Obviously, these the sense keep is or is a refocus to in is was put to think particular. it there glowing? reason the you and the it on kind going for to storage it are good key is

Mark Hurley

quite mean, frequently. sitting the don't We at at look now, on to think place. them block. quite But, some assets look options a have Right we good we have any some, frequently. we I put it strategic in we do plans

other at things more And sorts combined with value sale not do footprint. assets for a companies like any know generate of crude know to expecting this assets, where at of both things looking be, point you about companies Those talk so, joint ventures there we're you might we bigger might some however.

Unidentified Analyst

run And in down should I saw guess it’s drop that a $XX closer is forward? that, rate obviously, $XX million to lower $XX drop? million to from run that – led this to we anticipate that I should And think a we like we anticipate quarter, SG&A is rate more million? a going a what

Mark Hurley

had We've year. some accurate. reductions you're that's that's headcount Yes, there. seeing throughout last And the what

Unidentified Analyst

securities Is to as repaying there that about opposed them Ergon in cash? any talk

Mark Hurley

the cash a We looked We all the payback. there. at options prefer all and possibilities

Unidentified Analyst

Okay.

Mark Hurley

not the rather Just staying because and we current dilute year further.

Operator

The next Please question with Kevin comes Allstate Investments. ahead. from Roth go

Kevin Roth

My question has set been go. to I'm all answered so

Operator

The is from ahead. up question Please a follow next with Capital. Bailey go Jeff Beach

Jeff Bailey

and a I'm any pipe the it's size but storage really about mostly mean would subjecting of partly looks BlueKnight vicissitudes intended into Cushing asked we I the questioner market to asking for what Cushing, and could why we a out partnership around it won't that partnership Cushing from extremely given an understand back could achieve you just contracted have distribution the of XXXX, know so crude storage XXXX which that previous to explain stabilize and go at you investors wanted difficult the I was given like like objectives, storage the that I contributed make aren’t a Cimarron asset backwardation to I assets. was year what time? Cushing for and to its small pretty it was was guess the going forward volatile challenge a the if then and sense to the come

Mark Hurley

the volatile understand I concern, it a around premise asset. the being but

though involved year it I if business history you consistently years and in and has of over very back go in the those to mean year-in, certainly a not think lower you had a earnings was scenario some we EBITDA last expiring of of storm generates weak five kind the led $ million that look market of you million see a XX perfect so last, see or if what six actually really middle $XX between will XXXX. But contracts revenue. BlueKnight you'll go been it where I in of back we and year-out that's had in

take able many of diversifying we've keep backwardated out sequence experienced been timing Well, for want we it markets working However, a the there without is it's the been times business to volatility we generating and those what and the to mix. customer do enter on attractive very is cash us.

going operational one and And that one customers of good for contract origins expiring interested we have So and so the But pipeline on too the right for out would've that's for companies of pipeline destinations in a customers and Cushing. finding pipeline fit portfolio that was in projects last those much are Pipeline time. Express Cimarron talked a that work not diversifying of in build who to at really it have then lot been and STACK won't storage why be the and and volume we're need pipelines really going to Cushing. needs

So that the stability find to deals revenue. are bring kind of and we to want more those that

Jeff Bailey

that only viable Is there prices type Cimarron if your that Cimarron hedging Alta about then question convinced you're in rock with is the oil the mean way. any great to Mesa I a bet of it's thought rock make has some again.

is I they the your in sell. field. or decided this hedge we've about addition, Cimarron next-door some at since any towel mean over thought that and to bought to way there In new Encana thrown got bet you've with as your just in in neighbor point trying time Kingfisher there

Mark Hurley

middle at the at we middle in exposure but that, we the equation, made the option. But we haven’t of any looked we Then have of to in not that, we understand obviously choices of conclusion, just obviously because well a here. so so any right have number now. want the understand look come which think we’re we asset we’re we scenarios including Well, sale to

Operator

would like for any to question-and-answer now This conference remarks. Hurley closing the turn I session. concludes our back over to Mark

Mark Hurley

Yes.

And today. interest the speak BlueKnight. to well. So, all round you who as as following It the always all in your much a dialed today. happy call was We very you with questions Appreciate in thank questions. of good for appreciate

thank you, again, and So you thank Anita.

Operator

conference Thank you Thank now attending presentation. has concluded. you. This for today's

disconnect. now You may

Blueknight Energy Partners (BKEP) 12 Mar 192018 Q4 Earnings call transcript