Usd Partners Lp's Business Segments

We are a fee-based, growth-oriented master limited partnership formed in 2014 by US Development Group LLC, or USD, through its wholly-owned subsidiary USD Group LLC, or USDG, to acquire, develop and operate energy-related logistics assets, including rail terminals and other high-quality and complementary midstream infrastructure. Our principal assets consist of: (i) a crude oil origination terminal in Hardisty, Alberta, Canada, with capacity to load up to two 120-railcar unit trains per day, (ii) a crude oil terminal in Casper, Wyoming, with unit train-capable railcar loading capacity in excess of 100,000 barrels per day, or Bpd, and six customer-dedicated storage tanks with 900,000 barrels, or Bbls, of total capacity and (iii) two unit train-capable ethanol destination terminals in San Antonio, Texas, and West Colton, California. Our terminals provide critical infrastructure allowing our customers to transport energy-related products from multiple supply regions to numerous demand markets that are dependent on these products. In addition, we provide our customers with railcars and fleet services related to the transportation of liquid hydrocarbons and biofuels by rail under multi-year, take-or-pay contracts. Our railcar fleet consisted of 3,306 railcars which we leased from various railcar manufacturers and financial entities, including 2,108 coiled and insulated, or C&I, railcars.

We generate substantially all of our operating cash flow from multi-year, take-or-pay contracts for crude oil terminalling services, such as railcar loading for transportation to end markets, storage and blending in on-site tanks, as well as related logistics services. We do not take ownership of the products that we handle nor do we receive any payments from our customers based on the value of such products. We believe rail will continue as an important transportation option for energy producers, refiners and marketers due to its unique advantages relative to other transportation means. Specifically, rail transportation of energy-related products provides flexible access to key demand centers on a relatively low fixed-cost basis with faster physical delivery, while preserving the specific quality of customer products over long distances.

Generate stable and predictable fee-based cash flows. Substantially all of the operating cash flow we expect to generate is attributable to multi-year, take-or-pay agreements. We intend to continue to seek stable and predictable cash flows by executing additional long-term, take-or-pay agreements with existing and new customers.

Pursue accretive acquisitions. We intend to pursue strategic and accretive acquisitions of energy-related logistics assets related to the storage and transportation of liquid hydrocarbons and biofuels from both USD and third parties. We consistently evaluate and monitor the marketplace to identify acquisitions within our existing geographies and in new regions that may be pursued independently or jointly with USD.

Pursue organic growth initiatives. We intend to pursue organic growth projects and seek operational efficiencies that complement, optimize or improve the profitability of our assets. For example, our Casper terminal includes the foundation for two additional storage tanks, which if constructed, may result in additional long-term volume commitments and cash flows.

Maintain a conservative capital structure. We intend to maintain a conservative capital structure which, when combined with our focus on stable, fee-based cash flows, should afford us access to capital at a competitive cost. Consistent with our disciplined financial approach, we intend to fund the capital required for expansion and acquisition projects through a balanced combination of equity and debt financing. We believe this approach provides us the flexibility to effectively pursue accretive acquisitions and organic growth projects as they become available.

Maintain safe, reliable and efficient operations. We are committed to safe, efficient and reliable operations that comply with environmental and safety regulations. We strive to continually improve operating performance through our commitment to technologically-advanced logistics and operations systems, employee training programs and other safety initiatives and programs with railroads, railcar producers and first responders. All of our facilities currently meet or exceed applicable government safety regulations and are in compliance with recently enacted orders regarding the movement of liquid hydrocarbons and biofuels by rail. We believe these objectives are integral to the success of our business as well as to our access to growth opportunities.

USD Partners LP: Overview of Segments, Products, and Services

USD Partners LP, a publicly traded limited partnership, specializes in providing terminalling services primarily for energy-related products. The companys revenue model is built around charging fixed fees for handling these products on a multi-year, take-or-pay basis, which provides a stable cash flow without requiring ownership of the underlying commodities. As a result, USD Partners LP is insulated from the fluctuations in commodity prices, which may have an indirect effect on the business in the long run.

Terminalling Services

USD Partners LPs terminalling services are critical in facilitating the transportation of hydrocarbons and biofuels. The company currently operates several key terminals that serve different functions:

Hardisty Terminal

- Location: Hardisty, Alberta, Canada
- Operational Start: June 30, 2014
- Function: Origination terminal for loading Canadian crude oil onto railcars.
- Capacity: Able to load two 120-railcar unit trains daily, with a fixed loading rack featuring 30 loading positions and loop tracks accommodating five unit trains.
- Vapor Management: Equipped with a vapor management system that minimizes hydrocarbon loss and enhances safety procedures during loading.
- Connections: Inbound crude oil is received via a direct pipeline from Gibson Energy Inc.s Hardisty storage terminal, allowing efficient access to significant storage capacity and major producers.
- Contract Structure: Capacity is predominantly contracted through multi-year, take-or-pay agreements with major integrated oil companies, refiners, and marketers. Approximately 83% of utilization is tied to investment-grade customers.
- Fee Structure: Customers commit to fees based on minimum monthly commitments or throughput fees; unutilized capacity can yield credits for future fees.

Casper Terminal

- Location: Casper, Wyoming, USA
- Operational Start: September 2014
- Function: Crude oil storage, blending, and railcar loading terminal.
- Capacity: Comprises six customer-dedicated storage tanks totaling 900,000 barrels and supports railcar loading exceeding 100,000 barrels per day.
- Connections: Receives crude oil via a dedicated 24-inch diameter pipeline from the Spectra Energy Partners’ Express Pipeline; also has truck unloading capabilities.
- Modularity: The terminal’s design allows for expansion, including a second loading station and additional storage capacity, with minimal operational disruption.
- Contract Structure: Multi-year take-or-pay agreements with investment-grade refiners, providing customers the flexibility of minimum monthly commitment fees or throughput fees.

Ethanol Terminals

- Locations: San Antonio, Texas, and West Colton, California
- Function: Transloading terminals that facilitate the transfer of ethanol received by rail to trucks, serving local demand.
- Capacity: Each terminal has 20 railcar offloading positions and three truck loading positions.
- Strategic Advantage: Located close to major gasoline blending terminals, these facilities can capitalize on the anticipated increase of ethanol in transportation fuel due to changing regulations.
- Fee Structure: Fixed fees are prescribed based on the volume of ethanol transloaded, with arrangements catering to local market demands.

Fleet Services

USD Partners LP also engages in providing railcars and fleet management services. The company does not own the railcars but collaborates with partners for fleet services under master fleet services agreements structured on a multi-year basis:

- Scope of Services: Includes administrative support, railcar maintenance management, tracking, regulatory compliance, and sourcing of railcars.
- Dedicated Fleet: Approximately 75% of the fleet is utilized by customers of the Hardisty terminal, ensuring efficient service and reliability.
- Partners: Collaborates with major railcar supply companies to ensure timely access to high-quality railcars with advantageous procurement terms.
- Length of Contracts: Typically span five to nine years, incentivizing customers to maintain their terminal service relationships.

Overall, USD Partners LP’s strategic focus on providing essential terminalling services and fleet management in the energy sector positions it favorably within the midstream logistics market, while its fee structures and long-term customer commitments contribute to revenue stability and growth potential.