USD Partners (USDP) 6 Nov 182018 Q3 Earnings call transcript

Company Profile

Participants

Jennifer Waller	Associate Director, Financial Reporting and Investor Relations
Dan Borgen	Chief Executive Officer
Adam Altsuler	Chief Financial Officer
Brad Sanders	Chief Commercial Officer
Josh Ruple	Chief Operating Officer
Derek Walker	Bank of America
Michael Gyure	Janney
Lin Shen	HITE

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to USD Partners LP Third Quarter 2018 Results Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to Jennifer Waller, Associate Director, Financial Reporting and Investor Relations for opening remarks. Please go ahead.

Jennifer Waller

Good morning, and thank you for joining us. Welcome to our third quarter 2018 earnings call. Operating Dan Financial Chief Chief our Officer; Josh our are Altsuler, Officer; Commercial senior today as Ruple, Chief well our Brad Chief management me team. Borgen, members Executive our Adam Officer; several With other as of Officer, Sanders, our Yesterday issued release a announcing three for the evening, nine XXXX. months we and ended press results September XX,

one copy If the press find like can usdpartners.com. at a of on would website you you our release,

of disclosure on statement note night's that please presented transcript. of that provided any today, or Also, Harbor in on reading time-sensitive to as the proceed, please be forward-looking we last regarding information speaks may Safe press Any the today's only Before November no statements X, statements time accurate this note applied webcast of call release replay the XXXX. of information longer management the call. at

Please press Borgen. most today's will to financial include a discussion I’d Dan that, call financial to turn the non-GAAP of reconciliations like the night's over see measures. comparable And with for to Finally, last measures. GAAP call release

Dan Borgen

Thank once you, great all about all Thanks everybody And morning, Jennifer, all us. a lot right, said, a We've we're right. got right, to things actor, Matthew to And be here. great of as entertaining good talk excited McConaughey today. everybody. for joining

more now. remarks go scripted wasn't that to so remarks, So I'll scripted

our the between capacity several specifically are curves business indicate and continued takeaway for tailwinds respectively, years. momentum between will refinancing Current terminalling provide in with to to imbalance to for facility a pleased WTI efforts pleased barrel to around of pricing. to in continued continues the and WCS and we're assets. our announce today, our The So detail recontracting improved later. Adam credit and for $XX, Hardisty at another slightly our supply and forward quarter successful a Western our more We're that Partnership at positive $XX macro the announce also go Canada terminal. spreads the next

around year our evenings have significantly Canadian-based extension As well a its contracted whereby four result, Hardisty, at customer assets. position last increased as announced at doubling activity located we of by its strategically has picked more company the the a the execution with a capacity Since up infrastructure-focused oil our as than terminal. demand call,

increase significantly Second, of we another mid-XXXX, through from Hardisty Today, with over the to basis flows extension execution the will through These mid-XXXX. renewals current Partnership approximately XX% of years, previous the in replace year in extended three of Cenovus next contract increased a at July terminal's approximately the of extended position also which XXXX. generate the was approximately terminal starting and and on an Hardisty XX% cash Energy, XX% the estimated meaningful revenues are its terminal's four XX% Hardisty our for capacity X% capacity. renewed to annualized

to the Hardisty balance customers continue our and at the with remaining contracting available as terminal South Hardisty capacity work our as new We on well our customers expansion. limited of our

sponsor, recently expansion and barrels project to a Josh capacity Partnership approximately us is which Quick expected trackage. unit loading capacity Go or projects contracted, an an additional existing and liquidity active minimum pursuant rack The momentarily. of to it Once is rights and our has generate project by the with we terminal, jump of of give trains here believe attractive years additional back per that commitments, for distribution next expected approximately day. over per The agreements approximately been takeaway results, volume take-or-pay market the to approximately confirmed, service on the day fully XXX,XXX the commercial Adam on The will at us and with expansion the Hardisty Partnership, could train with recent owned opportunity going latest will are XX,XXX Partnership. South's and South infrastructure operating terminal with is of Hardisty an existing by financial Hardisty update has service all modifying is the into forward day XX% be Turning we'll X per group. average then cash it position, in ahead, by USD commercialized to building which or South add in January our two the day Adam. expansion. our Today, barrels terminal, one and moving USD to its present South. next drop-down four of developments. capacity start $XX.X year, Hardisty to Partnership's on through Hardisty our Group, off per update of unit coverage the design expansion. update development the is flow for million

Adam Altsuler

earnings with you joining for and Yesterday third Thank and XXXX thank this us on afternoon, operating quarter, XX-Q release, issue additional we for our of the included third financial plan details close you, after which the today. our our Dan, details market quarter the and we issued results quarter the call morning. to of

distribution August to relative terminal by distributable The to reported the net quarter million. times. of of operations Stroud The million, influenced third the approximately revenues of in the cash the ended Terminal during XXXX, XXXX. $X.X related October costs flow XXXX million, at additional results For same of the conclusion we at $XX.X quarter Partnership's agreement in XXXX Partnership's the primarily a commencement of customer net of and Casper and cash EBITDA the in X.X $XX.X adjusted were operating activities coverage quarter of income million Partnership of quarter, provided with third by and $XX.X the

accounts commencement customer our during a of payments a in of in XXXX, XXXX. of the primarily EBITDA Hardisty result the third Partnership's of decreased DCF by timing third of of increase at XX% agreement which for in received that to of customer relative provided the third operations incurred Partnership refund previously the payable in the due operating primarily million and addition, terminal, a to DCF, as is quarter Net cash quarter Adjusted gain $X.X Stroud with and at the EBITDA cash increased and decreased the balances. associated by of interest the a with non-cash of quarter Casper to was activity with receivable, the In derivatives XXXX, adjusted X%, substantial as income revenue decrease during XX% the by Net quarter XXXX. factors a and The quarter Terminal, XXXX. compared primarily deferred to as operating the at relative by third primarily into operating of terminal a as interest by approximately five instrument mentioned, the year the rates the increased coupled quarter increase XXXX, XXXX, cost result discussed interest activities we during we the receipts November of expense incremental rate to entered quarter XX% associated higher third already offset result that August XXXX. incurred increased due third accounts of conclusion partially the above of by a on and in

the quarterly of liquidity adjusted borrowing of Partnership and had million, financial to September subject prior The one-year million, from $X undrawn a new EBITDA facility this the the points ability and unrestricted XX, to secured a with of we unit The to covenants. borrowing borrowings X%, XX, new the later $X.XXXX per $XXX forth distribution The million cash unit payable leverage the to restated plan with maximum available is to $XXX back November year X. the cash conditions. option up is of declared total Partnership facility turn a basis that compliance lenders. third X.X% to set the covenants. range times, provides increased of of subject X.X% LTM a which on four November X.X charged to the distribution Partnership November with of Partnership's and $X.XX subject close XX cash XXXX, to leverage $XXX and with Dan. of the XXXX. amended syndicate facility on reduction which Form Partnership of certain the Partnership total its capacity subject a credit capacity of applicable and on facility over new and credit therein. On of a November annualized an of available includes represents over date ratio. growth certain of including XX agreement equivalents basis, on record the net filing to $XXX quarter of restated over the X, in of conditions of on week. We margin to with based million, the call quarter financial business commitments On is and a the Today, extensions, to committed the Partnership lenders I'll matures the X% amount continued request allows or senior its increase two, per is With October agreement at on net compliance maturity also is As of unitholders that, The in credit the the limits LIBOR-based of receiving and agreement X-K to on amended size million, satisfaction satisfaction

Dan Borgen

Thank well. you, as Adam. there appreciate stuff exciting the I of lot

activity there Houston in exciting to our Deepwater, update to Ship as Josh at extremely of I'm our we're the that and going an So ask which Mexico, as development, doing we're things our proud is us well on well. and progress development performing Brad give Texas very Channel

Brad Sanders

that Canadian a Maybe Currently, But Thank is this of We've update real levels north XX%. pipelines a past. between Canada in to new of light growing of ahead a talked and indicator again a the historical and first But for I'll macro give capacity apportioned. something as Hardisty development at to occurred market the Josh the give apportionments prior at through quick South. go can Canada has we're experienced the project that, and is heavy reminder, capacity, export an go in on these on things out closer we apportionment. also XX%, our you, imbalance Dan. update takeaway and as about lot bit supply historically is this is high

also experiencing levels as light So apportion well. – high for apportionment as in crude we're XX% as levels

got that clear the or grades find So indication are they everywhere historical the that new there only high. of takeaway to we and in course stranded is but at inventory seek we've This barrels, at which that is Hardisty, leads it's indicator options of for Canada, all of and opportunities, follow level out constraints demand not and tiers Canada.

are would at levels locations inventory full. as And these what we So historical at highs. describe directionally

a experienced then to to tariff the requires and earlier So what and fourth we Dan per between here is historical the of to per that discount that WCS levels widened this and in the third increase spoke $XX quarter has demand, from spread $XX that WTI to in new to an comment $XX in seek the XXXX. barrel, prices $XX that's barrel quarter, and

differential, $XX. just information, differential last prompt the differential, for trading today's your As prices, or the close the was spot at night's

So significant. pretty it's

Going support a or term, of that But at will that level, given that will the should rail. that discounted refiners Dan forward the current do think strategy exit require expect such some in the turnaround situation, of and sweet as seasonal light coming their includes the be for short Canada key provide the on crude macro this is drivers for experienced periods. current it out that by heavy extraordinary spreads, traditional should out has have spread. and spreads of event we an that the crude allow mentioned, those for in and Midwest one They we now, remain

per the As so through as about XXXX, years, indicate of indication we're talking $XX spreads levels an $XX for barrel. five spreads to of next Bloomberg, the that, by published

CBR the pretty So for next for years. incentive significant five

than that So could simply indicates last that's solve. What material. it pipelines longer can is the imbalance

our on of times significantly quarter. comment Their the end railroads we service Hardisty to capacity the happy the the of on talked CBR our that their the Hardisty in with if report be to will improved. do critical fourth conference been growing terminal mind? don't that that, our moving the anticipate call, support given give from has railroads. want resources we've you South, has you demand Josh, We're an of and by allocation So is at how to able and/or railroads recently update many been good on support partnership to the

Josh Ruple

customers, railroad's just comments would the our increased been support. And support support you've metrics, as in at our to our improved railroads as the the have our the us railroad seen our facility discussions We've railroad help I to there in in Brad. mentioned, volumes. I throughputs, are there think customers with by with Hardisty. operating collective volumes to the and terminal the facility, regards Sure, right echo

as additional we permitted, in a down particular Hardisty the are XXX% relates project. way That the that an original Uniquely, project we three. ability of it well in executing train is Dan mentioned to phase of the for to mentioned, as the As we've South, preplanned add past. total

procured. activities. to construction engineered. which we're And about work project this to XX% in all so forward January and on budget, the proud put team within Really with We of are and We're position, us XXX% time, is on put the XXX% do the they've safely. to complete that deliver X the

Brad Sanders

Great, thank you Josh.

the South, before – leave at reported as contracted has Josh has Dan significantly I And our in on - assets an as the Dan to and capacity we as forward we're our we that Hardisty, so as facility both on Hardisty update given Hardisty forward. And original discussions both for One complete Hardisty move both or South. initial in utilization Hardisty to detail are or investment

really on that's comment me just Casper, news. Casper. So let good briefly

continue spot potential and We of terminal. third ongoing terminal are use the service the during at to the negotiating business customers those for agreements quarter with term currently

So ability use about of the a to wanting to with for we're risks and people – business. comfortable spot with are the talk associated now from getting asking facility type are standpoint, how excited that and business term about the

and we for future. additional the pipelines thankful to through the pursuing that. have downstream this to Also in connections other forward more in look near existing that reporting and we're the past on in a So strategy hub mentioned we're potential we area,

its So good we are we feel good investments the good improve Casper's And value We feel about we Casper. look really the – participants about or competitive feel position. we who about making position. that that

Stroud. the a customers Stroud now it the which on Oklahoma. or comments advantage people of are with at aligned an connected in a facility. is has terminal that Stroud Cushing at running – is our few terminal with at been just rail the as blending opportunities, which destination a means as is all a refinery call, reminder for basically on full destination Finally, the capacity, And critical Hardisty destination to that's Cushing Cushing the opportunities, – hub the

information, is to opportunity and Stroud we're And your The talked As Hardisty current we WCS very is so the and a significant. so now for using very, as that $XX. light WCS, between WTI spread current between marker is grades $XX, WCS into spread significant. the Cushing rail

to Stroud. our with Finally, on Hardisty, renew a discussions in renew Hardisty, our in in give to extending Texas you Mexico. then and discussions discussions at Josh at I high-level and be are finalizing conjunction asked we with complete, Dan, may to us light extend Deepwater update customers and

macro Houston is the very Deepwater couple that we're excited Texas reminder, a our As told. for key is, we of Channel Canadian Ship a about One just story reasons. opportunity

distribution water, the Texas has And been and our a and and getting working heavy create Deepwater is need in given Houston, hard on refining given lights. crudes. advantage to there destination light the access ability ultimately heavy to for facility Houston So at for run that given opportunities center Canadian both which the into is to an export we've crude-by-rail

So we priority that in the Canadian Texas lights. heavies do evacuate to X. becomes support both monetize No. How Deepwater need and of

been So of on lots progress. working that making we've and

for looking in does U.S. Mid-Continent. a light Secondarily, got has story, so South is Texas, outlets U.S. The the Permian, both growing production sweet but Canadian for

Houston excited to into for pretty those opportunities area, water refiners type we're coming major and those of the that So outlets. there are for about and pipelines looking opportunity distribution to provide discussions the the

either consistent positioned access continue with And to or because access light refiners uniquely in we're our products. know, participate actually crude option opportunity continue and crude the also of – we the connectivity story that it, grow. light create water, exporting as to our exports to products but again Finally, who to exporting of

that there and and about going with uniquely finally, as with NGL opportunities on, that the products. to positioned go we we're on that. the out do to gas is you uniquely Josh, are to domestic and Mont with from going associated a the grades are gas hubs standpoint excited Canadian natural So all then processors, production that liquids natural potentially And that. And that? production the add with – anything NGL to reach got who to gatherers, location creating Y fractionate export folks Belvieu is for

Josh Ruple

The and only – sense our permitting capabilities thing, kind Brad, fortunately uniqueness, using in to and ability regards a are in we status our that of I would unique our your add execute. term that Texas and fully to also all service on water mentioned are develop assets commercial Deepwater, mentioned. we to Brad past calls, that as required the we've the of land, air at in to that permitted opportunities location, past are the

potential ability which us it deep the commercial engineering, are now, scale, to unique got good path for where we've on our to traditional things regards all planning down want opportunity our to with So the and line We're we and procurement, a all real been and time real those a has do right we're perspective. in from goals. aligned are development commercial be technically, them of things development

Brad Sanders

you. thank Great,

products So in finally through the macro Mexico exported, of need is light need imported. now. quickly products be light in that a where again is But try Mexico get position update, to to and to be this support we'll

there the U.S., we're So that here uniquely in on terminals refiners focused provide opportunities for particular. for creating destination export in

we to needs there on work they're to make and live them. customers terminals strategy the is grow then So the that that Cuauhtemoc, we've sure at two gone meeting that and Queretaro our them planned way work, to of they existing our and our for

the capability those assets destination here to about capability consistent property network network build at create where at we full And Houston – Ship rail that our relationships standpoint Josh, make finally, fact to a So get standpoint. them once from support by and want we then two do. And terminals. developing is then a our grow assets we've leverage value, operating. we that railroad that's with from that destination a those the those update and strategy then to origination and successful. the to ability excited that we both what got Deepwater have capability, maximized We're specifically Texas any plan Channel, your

Josh Ruple

the point, Cuauhtemoc. working mentioned Queretaro grow two completed We're two time, As within we to budget. And already Brad's plans at you many and for and in meet locations. and those goal, relationships goals locations Mexico, network we've expansion facilities strong, as those we to activities of activities on the diligence works at Mexico. all railroad pre-due on and got are are The in our poised

Dan Borgen

update. that appreciate guys, Great

before we me questions Let to let some usually things as ourselves move Q&A – ask with me of of challenging in about couple start are we maybe industry. that things here, to a kind do the happening

two the completely with strongly table conclusion. customers, – – very existing We it us It's are All that, commercial for assignments industrial who about conclusion Dan, with the time do logic a me not? do let team diluent right, that deep The is, drivers is right yes, discussions with with you're have unit. So is And to three for answer are that. about in are recovery now. our we completely. The that. Is going that DRU quarters. the or now you probably reach we're start sound. in something to to at the talked with And going feel

additional that at excess in of creates for market. customer years. And XX our efficiently product wants. tight creates terms non-haz, Just produces availability in it It are a that non-flammable the best – a be takes It product, rates. to transported business can which heavier a summarize, refining it

confident in more So on that, to Brad, really that? we add we're where we extremely that. feel and about like

Brad Sanders

rail the simply would is parity. at catalyst I Yes. we're say

since better a their And people solution. are and DRU been rail so to rail takeaway, solution, question the a rail has better committed is there is

So that's the catalyst there.

Dan Borgen

a goal challenge in have product be to that product, down growing there moving support preferred these able the refining and the of that blend with big to – really solutions of community a light to types intermediates. a go for heavier that wants once Canada Government to to our solve

answer about questions So as that happy more to necessary.

do the that in thing that? some are want our the recent to in Another development shut-ins answer industry, business? affecting market the how you of Brad, production

Brad Sanders

I can.

the So the factual announcements rely we do is and announcements, themselves. on things, that's two all can

be First – day, that careful very and risks production, thing do very material. are decisions and to XX,XXX what costs you not it. I'm do, they are and diligent would mean, on makes in is about produce may those I consider it's sense. what shutting a what they're would existing There the they about say I assuming when and be why variable producers barrels

that commercial not the can is three really demand discussions, that we So second thing material trains is greater are produce indicative very than which of that a they're our indicative being at the Hardisty. day

a from the would just make. would commercial I be perspective, comments So two those

Dan Borgen

All right.

these producers from refiners things obviously, in have have is take can So a for the delay types much some to side maintenance opportunities they looking cheap of you as to environments, typically looking – when to offline, as continue feed. and opposite the run you and taking

you've cheaper seen they're think procurement some more our of for well customers long-term themselves And public better securing assets additionally, feeds. and long-term announcements refining stating position the store to I as of same. the from

at and Hardisty continue we both that to Casper. at see So

it's to more look business and the in – again do that not future. So forward certainly more think we that our – about but but impactful answer I take-or-pay need can to discussing be. we as

two three publicly on We before, will strong or that? MLP the looking we've happening thing our We at as there, of very what's we market, for don't months been are look terminals. what's the at opportunities unitholders. structure, constantly – at best have terms announcing answers activity said the in the and We've today. any past In we

to do react hard out certain market will to day just things control cannot to there We are to that. some work create We the that. favorably to will able but try every continue be continue we that very there, But proud working to we'll extensions delivering They're of terminals. we're our and of very that and results favorable hard I'm terms – in and value of extremely our and expect. our agreements, the at those commercializing expanding new unitholders terms most team. trust And

will look – open to right. continue as up maximize returns. those that, at forward to present and to themselves With you. look but we options hearing the they to floor So All from I'll questions

Operator

comes of Instructions] of the first Bank Derek line question Your Walker of [Operator you. from America. Thank

Derek Walker

Hi, good morning, guys.

Dan Borgen

Good morning.

Adam Altsuler

Hi, Derek.

Derek Walker

the on far. thus Congratulations progress

about And I You that level? about the to the just then to of is make Just and have around a cash couple you right. of a million color that a contract compare difference. I'm those sort it how the XX% the follow-up the right? there like the Am of capacity If the mentioned revenue I USD sure sort there. do renewal, – $XX Dan, at rates. want that Hardisty questions I of increases. is the I seems just appreciate flow here. what increase numbers around on is, and bit annual there math like the It the to of mentioned on a does seems quick thinking thinking

Adam Altsuler

Derek. Hey, Adam. It’s

of on about just math. XX% it. we're It's basically we've the on terminal. work great to the trying that way and XX% at obviously the disclosed communicate terminal. replaced to about thinking very It's X, and the We taking way of it So July based revenue attributable the the we're that's EBITDA capacity after the the Hardisty XXXX, consistent with

us, gave you precisely. that if gross number were much up, get to So you pretty the you

more of Hardisty relative on project. size little the to on work wanted growth the color give we On that. a nice South, So bit

the compare that we but to it's a in we case, contracted. has project, of don't so anything And obviously have capacity XX% to disclosed that new because been

if EBITDA can I So capacity, somewhat you you full there. an get of number that implied gross guess, up to then

Derek Walker

I'm out just figure – that that renewed Right. what's less then does currently? to being I than is guess And trying

Adam Altsuler

South. different Hardisty our That's Those things. are two

sorry, expansion talked relative the I'm about Hardisty first South terminal. Hardisty day. XX,XXX a Hardisty barrels So is the the was XX,XXX barrels is barrels is to project, day day which a which one One, a XXX,XXX about we –

Derek Walker

Casper. switching just Then Adam. Thanks okay. gears to Okay,

is of kind negotiations term see in of mentioned October, Casper you're plays You kind right know that that. think around right ended now I now? some of it. by a that the sort Do contracting to of into that out didn't in contract there year-end? around I happening you Any thoughts how

Brad Sanders

Brad. Derek, how This you? is are

Derek Walker

Brad. Good,

Brad Sanders

not So given that of heightened given that railroad U.S. car a decided reason, that In going higher, in railroad safety requirements, to and the happening where going costs, customer renew differentiating on lots is there's one certain critical driving uncertainty, new new new on freight the And changes standpoint. other good space, types. becoming demands and contract. what's from for that's between costs, car car two, words,

and allows meets they the uncertainty, which that customer could difficult all for given between create that solution figure date with early year, how what create for So a very discussions exchange through uncertainty. agreed them that to they go it to of to a railroads us. they decision the to work asked and cancellation us needs was until – prepared for that out next gets be to what the that, that contract we've agreement into make October bridge then In to is agreement an a

the that and good of in feel with them. industrial with that customer we CCR that get we will continue contract use a So logic will

Dan Borgen

the Further to Again, availability customer the of the that, end to facility. the and to it's type Derek, on quarter. now between cars car the continues of differential those use just in the re-echo, rail

customer their to coming try year. some USD this come Casper cars help market Our the they with online marketing and cars starting help bridge in available, into next arm those we're new of as support which to to going has

others. Berkshire being the a at services which for it's railroad by reminder, type is the car customer car car, And of cars the XXXJ the the is particular company, a type that additional approved and So railroad Fe, only are called currently basically Burlington a time that requiring that standard. utilized the car that lag has availability car facility, a railroad versus on that Northern time. standard servicing an Santa A industry of that stipulated industry rail is this and XXXR Casper, which

our with customers. want safest the Obviously work to continued we've modern USDP, car possible. most and So we at

will have support earlier, to cars, those procured some I those as be put to of said and We customers. marketplace our help looking the into

Derek Walker

The And Appreciate quick a relative with quarter customer? just that agreement follow-up the contract the we there? works fourth bridge just how the should bridge I'm that. to any sure agreement, implications that was not on previously color. for expect the

Adam Altsuler

a the agreement take-or-pay a right of Yes, for bridge is basis. volume on now amount lesser

will next – color We'll longer-term give adjustment January the So more year. or you sign a we be in there downward towards part contract of early there. once the

Derek Walker

And is Thanks firmed then customers. And Is – I right. expect DRU. unit sort with just in to you guess, sort that one that all around for two maybe me one or up? then, you're when be mentioned, units? just do that multiple just the from you DRU discussions unit of get Okay, of one Adam. last Dan, will

Dan Borgen

Yes, we’ve got – that. thanks, Derek, on

could could – is So two We're currently. respective for it yes, DRUs different for be area. two through It at that be at areas. it two one working

the the from and Obviously, we We've with engineering try prefer on around completed. I said discussions that in resolve of active the teams that. that not all got winter. to earlier, as that a in of are launch and monthly to to discussion ready that the issues standpoint. to go commercial would meeting We around We're basis dead remaining

to we something look than the summer. and bit we after something So you do be on sooner of as first that the more announce add have little later. Brad, a be the into probably forward And to on But year it that get that? would would

Brad Sanders

is rail catalyst we're No. Again, in parity. the

this So benefits And time it the the down. are significant. to get is

benefits as the required some lower commitments that is pipelines do Secondarily, than sheet DRU the the commitment one to a of are asking. the of much balance

So their we're And sheets can. competing trying in our effectively balance more as really asks they pipelines. are as from to interested customers manage seeing take-or-pay

So is of this timing discussions support kind the and kind the really discussions, right of having the we're circumstances quality good, of the now.

Dan Borgen

we ours, as the DRUBIT, It's barrels barrels their name to impactful for DRU obviously. it's call of out – in the And XX,XXX what and XXX,XXX product. well trademark business as of

the done if producer, they're out pipeline that's and the to shortage better need see a why a And than several can of that why pulling strong the to that very table later. that so indicator years you on next get and sooner at netback they there's over

Derek Walker

guys. the thanks Appreciate Great, color.

Dan Borgen

Sure, Derek.

Operator

of Instructions] next comes your line of Janney. Michael from Thank [Operator Gyure question the And you.

Dan Borgen

Good morning, Mike.

Michael Gyure

Can Good moving you I on little everything guys have morning, utilized – you Stroud almost color fully that guys. think asset plans opportunities talk all I capacity you guess, forward? of on Thanks a touched being bit on the for what today. the and, expansion sort or what

Brad Sanders

a Yes macro I'll from macro speak a – standpoint. from I think

get of story got but this light it. think to sense, would – if is we've be, light want by We we so we've Permian story got Stroud, if able issues the a can a Cushing, But is, key have – about in of you of our to out do so crude. it Canadian in And I export do Stroud is all to on grow. infrastructure necessary. Cushing, get the whatever in – do Stroud. is being can supported Stroud. we story there's grow the would there once one I also people to that There is an Josh We've can. to of worried capacity heavy is interesting really we with of makes get Bakken our out got but capacity, also pipe, grow also how What's we to the there story the

Mike, of on a now to So that needs there right is and why. what be uncertainty, lot

things, at months that inventory And it where the wasn't inventory it So now. low ago happen at we're at Cushing unique levels can but it's and in hub historically at today, we you're it's Cushing historically Cushing at six were and today. levels it's higher sense the that and

versus our export. When grow, it's because just uncertainty question and I here, I'm, lights import it not of answer is investment parts way most it's handle the kind of whether moving heavy, lot we're more require volume, a which it's part. whether on figure some the handle one there the makes whether sense versus to will So trying to out it's it's

anything So Josh?

Josh Ruple

execute. we engineer our maybe a Brad, And we I would in lag our any Stroud. sense thing time to constriction any development target that to have of commercial with physical you potential that is plans add those development, goal do described. really to out place at only our ability the restraints in is, the of our as of isn't your all And or there to point to No, opportunities

position realities to and opportunities. able be quickly commercial So we'll a real, be as these those become in to execute capture

Brad Sanders

is open as if that, a asset macro solution people, when light sweet heavy all our think that we're wasn't viewed the above I because the people, we all a and not that it and strength Yes, of to any as it saw and supporting ability most buy our solution. to

to ourselves to challenge we be and any So open all.

Michael Gyure

I lastly, I'll other aim out rail sure of talk already like And perfect. you what sort rail is you not do can bit competitive but guess, little a know I about, there? customers little little do I have bit then landscape maybe a talk, about landscape at, Canada guess, than out. can or the the of That's for I'm competitive bit a you you trying guys? to who out of looking that Great. this But

Brad Sanders

in contribute and Dan of terminals terminals therefore, critical are of think are are certainly that can to play objectives and their are one what Josh the remarks. and Sure. I the start and, drivers need what to defines I'll my say, kind railroads not. what that and would you about But

that there towards going capability. and about standpoint. both only and they're locomotives, And regard, about bottom where the a in to to a their that are not where been production that things, the naturally production line have to you support they're behind that is defining have human desire important, where whatever railroads is the and very them. deploy don't So production kind Canada capital isn't. capital, on. have through Canada also There you in coming their purposed going managing operating opportunity are is required last if of capability they certain just where unit by or ratio you think own and It’s maximize other crude-by-rail of think a they surprised is to that and lean be from train really like and those were terminalling efficient about There's terminals handful think them line trying time to to about cycle the the

is So constraint prices. production the creating that certainly evident not by that's and not new certainly production

Cenovus of when Certainly you is description. up and we think into fits between, So does, asset all would our the Edmonton would work in probably as say as support XX% the to about that the against together all there possible. make which production things, of And put XX% then that most credit, Hardisty, facility, crude to asset gets they their because any by rail, is those that coming to hard I Hardisty of competitive and to others. And demand. they

to rail is, be for going the or takeaways the demand to there's railroads So willing support. are able more bottom than line

Dan Borgen

Yes.

environments, to these clear kind anything Let available market me and milk every haul dynamics of add vessel, is truck, to Canada. In be going out of truck, crude that. almost to utilized

so So some being even some of efficiencies – the volume. generally are used. large see We'll of and we'll manifest the those not and see good but they're those, single of not

particular that's an mentioned Edmonton, of that. Brad one to So terminal, and controls all really third-party customer's not who is clear open that certainly barrels

The So Bruderheim producers. by consumed third-party facility single it's two one, is mostly terminal. not a true

can the Canada. industry that industry system available Hardisty, at of multi-customer, efficient open and that's again strategically be or and once coming true the routing terminal – most that solution true we're very out for located, So on

to when those that winners to most will, pick they all be you and efficient look with. and at losers, going if pick, things, So you of railroads the can are ones they're going

the best carrier, to continued the we a all volume other having a we're it's they they're and kinds can. as the the right high place, mentioned routing, the But it's power traffic Canada and growing as it's it's those obligation netbacks, customers, things. and speed support out it's going common to because an – from at operation. right availability, of the from of right looking best the That's efficient they to it's very railroads accumulation, as be terminals the well very utilization, as pull crew some of have right Now – why loading

there, So a train everybody that we Does that is move and can which product of can unit out ratable you, what have operation very clear help truly Mike? wants.

Michael Gyure

it. Yes, that’s Appreciate great. guys. Thanks

Dan Borgen

bet. You

Brad Sanders

Thank you.

Operator

Lin of from comes line the question next Shen of HITE. Your

Lin Shen

morning. good Hey,

Dan Borgen

morning. Good

Lin Shen

for taking Thanks call. my

Dan Borgen

You bet, doing? how you

Lin Shen

years, of Good, And couple thanks. is One that also of up been all cars heard the Northern Bakken the across ramping lot thing Canada. of that locations lack of given bottleneck and see for crude-by-rail the in now volume railcars I a we one Permian, the have is retired. past

the about a Can bottleneck of you for kind So railcar do talk the see railcars supply? now. little what you

Brad Sanders

Sure.

that question down you I break to think two into have it parts.

there space individual the of to to got you've and individual demand. have moves. the and railcars really servicing volume or of a origin-destination plenty railcars you type rail that's by of to required and pairs perspective, railcar quality service the the about First, capable From also ready understand of think a those crude-by-rail on capable whole, railcar service then railroads are crude to the and

to And the be relative the mentioned, Dan to cars. XXXJ, build Dan next to The mentioned, are middle right cars to need of building year, more the through solution support those as customers of demand that volumetric a railroads, cars specification, rail. to is new working service plenty certain come crude For there now, origin of the as end that specification, certain destinations XXXJs need. for by transition to plans will to there. is there And

So are many make cars the our we've really aren't available moves, got it's for because statement not customers and can't blanket a are. there cars and need. the those And system in that – but plenty you support to there certain deploying others

they moves fill need building those leasing of are come in folks to are For cars cars will do those and/or those currently that short the that next XXXJ, mid supply so working end and and are other specific to to year. hard

Lin Shen

Great.

are impacted? that most So requirement, location are they're Gulf the location Coast To impacted which are because which car XXXJ impacted? or of mostly only us, most XXXJ

Brad Sanders

is the who to Coast, wouldn't actually you got deliver is. there that are think can And I I would many Gulf – Gulf location Coast. to about I think specific the railroad the a that's singular carrier say carriers – there many carriers that most cars impacted. to

to that for I for are an are. railroad the constraints with or And as the spec. where towards restriction mentioned, carrier, origins And Dan one BNSF is XXXJ think taking And origin that's think got the a defines that dealing BNSF, to When and be the it's think about particular we moving timing be more the place. is really that the those we careful. I constraint, origins the about here. is reality constraint of only are to by serviced thinking BNSF careful got that where very we

have or be ourselves of it, cars As isn't this to process and mentioned market, I transition thing. this year. been midyear XXXJs. planning a I'll the have We for builders been ready And transition next and the this for will call part tracking following earlier, new the come ultimately, lessors that this, this of and

a destination constraint, So plans And think I for constraint. place origins, mitigate I in origin think don't to car there supply. of it's some the it's are an those short

Dan Borgen

to the is In new who didn't addition XXXJ conversion an that customers have with that, existing to for the railroads. agreement

the railroad, what an XXXJ over had had – that of – grandfathered the existing if car, if you a to transition into new you desire. you into of the Therefore, car, that's due agreement. you that agreement plenty agreement if an So shipper to into were and duration time with your multiyear you're

Your that. change carriers like is do you to if to option two

said, that there's I that's – one only a current transition plan. has As carrier

as plenty starting So usually in cars be of bottom there's cars surplus will next and a – happens line be overbuilt probably those year. of It'll is there's there coming.

those wait so on longer opportunist trying to Those that price today should in softer cars. will some costs those those cars. see of little the are a bit And can pay that some highest be

position on themselves most mid next fortunately, take and those of year. to of availability ability cars to to hold or cars of So the surplus of the customers advantage coming our have strategically the

Lin Shen

you Appreciate very it. much. Thank Great.

Dan Borgen

question. Good bet. You

Operator

turn like other no at to back Borgen questions now for this remarks. to Dan There I floor would are closing over any the time.

Dan Borgen

Thank you.

and out with a it's afterwards bullish extremely business. we're serious that our in great but the lion who be call it I about we're to door. discussed, we've today. business those sense as this listen you bit is the started time – the I But business So call hope a about now. lightheartedness, the The is can of on

We industry. But demand have high seeing high assets. seeing for demand, we're obviously echoed higher by margins. the in others We're

continue. to that expect We

seen for and exactly all are market amount by think cheap revenue I who we feed don't have third the refiners why parties customers tremendous in producers lost who tremendous opportunities utilizing seeking that assets. know have solutions. today you lost there's the through here. our opportunity, why There's of That's are

not we're think and as the of part of And relatively as beauty opportunity and publicly balanced to, the to well. you think small DRU, will too numbers. When heard we they're – it's two of elongate to takeaway in losing reportedly through it can't some and $XXX portion that and revenue, been this these them a that leave you've I customers million afford not secure have a why is to portfolio will Now have that three the cycles. rail move as day portfolio. leave say, a I Certainly, because that's can see for our we

I to know Deepwater the on and elsewhere communicate said very that getting of there. to huge Casper, So Hardisty, we announce relatively that tailwinds are Mexico, should soon. The happen. both we was agreements able are we agreements This to The humbly. terms we to in supported to market forward be working been, done. being like that it be commercial weekly, we we're have for here look We years. commercial look this dynamics today the several continue at and new going we're solid to has And – forward curve able bullish. Obviously, – seems

our appreciate the committed Fortunately, operating, appreciate proud works we to right the are their team, who in opportunities, we team, we much. and assets of get in that proud banks, proud team, our Partnership that just our extremely to business to the positioned our strategy of to strategy it of proud business a have our the point in of is everyone place where USDG people have today terms in great – but of investors, us our of very confidence where and these and level support again, And continue we our happening. and hard

you and you. again So future say with I to Thank soon. thank forward look announcements very that, will we

Operator

call. today's conclude does That conference

You disconnect. now may

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