We are a leading independent producer of high-quality, specialty hydrocarbon
products in North America. We are headquartered in Indianapolis, Indiana, and
own specialty and fuel products facilities primarily located in northwest Louisiana,
northwest Wisconsin, northern Montana, western Pennsylvania, Texas, New Jersey
and eastern Missouri. We own and lease oilfield services locations in Texas,
Oklahoma, Louisiana, Arkansas, Colorado, Utah, Wyoming, Montana, New Mexico,
New York, North Dakota, Pennsylvania and Ohio. We own and lease additional facilities,
primarily related to production and distribution of specialty, fuel and oilfield
services products, throughout the United States (“U.S.”). Our business
is organized into three segments: specialty products, fuel products and oilfield
services. In our specialty products segment, we process crude oil and other
feedstocks into a wide variety of customized lubricating oils, white mineral
oils, solvents, petrolatums and waxes. Our specialty products are sold to domestic
and international customers who purchase them primarily as raw material components
for basic industrial, consumer and automotive goods. We also blend and market
specialty products through our Royal Purple, Bel-Ray, TruFuel and Quantum brands.
In our fuel products segment, we process crude oil into a variety of fuel and
fuel-related products, including gasoline, diesel, jet fuel, asphalt and heavy
fuel oils, and from time to time resell purchased crude oil to third party customers.
Our management team is dedicated to improving our operations by executing the
following strategies:
Maintain Sufficient Levels of Liquidity. We are actively focused on maintaining
sufficient liquidity to fund our operations and business strategies. In view
of current volatility in market conditions and as part of a broader effort to
maintain an adequate level of liquidity, the board of directors of our general
partner unanimously voted to suspend the then-current quarterly cash distribution
of $0.685 per unit, or $2.74 per unit on an annualized basis, effective beginning
the quarter ended March 31, 2016.
Concentrate on Stable Cash Flows. We intend to continue to focus on operating
assets and businesses that generate stable cash flows. Approximately 34.8% of
our sales and 82.8% of our gross profit in 2016 were generated by the sale of
specialty products, a segment of our business which is characterized by stable
customer relationships due to our customers’ requirements for the specialized
products we provide. In addition, we manage our exposure to crude oil price
fluctuations in this segment by passing on incremental feedstock costs to our
specialty products customers. In our fuel products segment, which accounted
for 61.7% of our sales and 11.8% of our gross profit in 2016, we seek to mitigate
our exposure to fuel products margin volatility by generally maintaining a fuel
products hedging program for crude oil basis differentials and fuel product
crack spreads. In the future, we intend to shift more of our focus to our specialty
products business to further reduce our exposure to commodity price volatility.
Develop and Expand Our Customer Relationships. Due to the specialized nature
of, and the long lead-time associated with, the development and production of
many of our specialty products, our customers are incentivized to continue their
relationships with us. We believe that our larger competitors do not work with
customers as we do from product design to delivery for smaller volume specialty
products like ours. We intend to continue to assist our existing customers in
their efforts to expand their product offerings, as well as marketing specialty
product formulations and services to new customers. By striving to maintain
our long-term relationships with our broad base of existing customers and by
adding new customers, we seek to limit our dependence on any one portion of
our customer base.
Enhance Profitability of Our Existing Assets. We have increased our focus on
identifying opportunities to improve our existing asset base and to increase
our throughput, profitability and cash flows. Historical examples include projects
designed to maximize the profitability of our acquired assets, such as: (1)
the enhancements at our San Antonio refinery completed in December 2013, which
allowed us to blend finished gasoline and increased the refinery’s production
capacity from 14,500 bpd to 18,000 bpd, (2) the more than doubling of esters
production capacity at our Missouri facility completed in December 2015, and
(3) the increase of production capacity at our Great Falls refinery from 10,000
bpd to 25,000 bpd, which was completed in February 2016. We intend to further
increase the profitability of our existing asset base through various low capital
requirement measures which may include changing the product mix of our processing
units, debottlenecking units as necessary to increase throughput, restarting
idle assets and reducing costs by improving operations. We also are increasing
our focus on optimizing current operations through improving reliability, product
quality enhancements, product yield improvements and energy savings initiatives.
Disciplined Approach to Strategic and Complementary Acquisitions. Our senior
management team is focused on acquiring assets and product lines where we can
enhance operations and improve profitability. In the future, we intend to continue
pursuing prudent, accretive acquisitions that will benefit our company over
the long term. We intend to reduce our leverage over time and maintain sufficient
liquidity to execute our acquisition strategy. We also may pursue strategic
acquisitions of assets or agreements with third parties that offer the opportunity
for operational efficiencies, the potential for increased utilization and expansion
of facilities, or the expansion of product offerings principally in our specialty
products segment. In addition, we may pursue selected acquisitions. Since 2011
we have completed the following acquisitions to enhance and diversify our existing
specialty products, fuel products and oilfield services segments:
Superior, Wisconsin, refinery (“Superior”) — a refinery that
produces and sells gasoline, diesel, asphalt and heavy fuel oils acquired in
September 2011 (“Superior Acquisition”).
Calumet Packaging, LLC (“Calumet Packaging”) — formerly known
as TruSouth Oil, LLC, a specialty petroleum packaging and distribution company
acquired in January 2012.
Louisiana, Missouri, (“Missouri”) facility — an aviation and
refrigerant synthetic lubricants business acquired in January 2012.
Royal Purple, Inc. (“Royal Purple”) — a leading independent
formulator and marketer of specialty synthetic lubricants and greases acquired
in July 2012.
Montana Refining Company, Inc. (“Great Falls”) — a refinery
that produces and sells gasoline, diesel, jet fuel and asphalt products acquired
in October 2012.
San Antonio, Texas, refinery (“San Antonio”) — a refinery
that produces and sells diesel, gasoline, jet fuel, other fuel products and
solvents acquired in January 2013.
Crude oil logistics assets — crude oil loading facilities and related
assets in North Dakota and Montana acquired in August 2013.
Bel-Ray Company, LLC (“Bel-Ray”) — a manufacturer and global
distributor of high-performance synthetic lubricants and greases acquired in
December 2013.
United Petroleum, LLC assets (“United Petroleum”) — a marketer
and distributor of high performance lubricants acquired in February 2014.
ADF Holdings, Inc., the parent company of Anchor Drilling Fluids USA, Inc. (subsequently
converted to Anchor Drilling Fluids, LLC (“Anchor Drilling Fluids”)
— an independent provider and marketer of drilling fluids and completion
fluids to the oil and gas exploration industry acquired in March 2014.
Oilfield services assets — a full-service drilling fluids and solids control
company with primary operations in the Eagle Ford, Marcellus and Utica shale
formations acquired from Specialty Oilfield Services, Ltd. in August 2014.
The San Antonio refinery, located on a 32 acre site in San Antonio, Texas,
has aggregate crude oil throughput capacity of 21,000 bpd and processes light
crude oil from south Texas, including the Eagle Ford shale formation, into a
variety of transportation fuels, petrochemical and refinery feedstocks, and
aliphatic solvents. The San Antonio refinery consists of six major processing
units including crude oil fractionation, naphtha hydrotreating, catalytic reforming,
distillate hydrotreating, aromatic saturation and specialty fractionation. The
refinery has approximately 200,000 barrels of storage capacity in 65 tanks and
related loading and unloading facilities and utilities.
Currently, the San Antonio refinery produces diesel, jet fuel, gasoline, other
fuel products and a variety of aliphatic solvents. The San Antonio refinery
is compliant with federal regulations for ultra-low sulfur diesel. The San Antonio
refinery ships products by railcar and truck service. Product sales are primarily
made through spot agreements and short-term contracts. The San Antonio refinery
purchases crude oil and intermediate products from various suppliers and receives
crude oil by pipeline originating from its crude oil terminal in Elmendorf,
Texas (“Elmendorf”), providing reliable access to high quality crude
oil from Texas, primarily the Eagle Ford shale formation. The San Antonio refinery
has a long term agreement with TexStar Midstream Logistics, L.P. (“TexStar”)
under which TexStar operates the Karnes North Pipeline System (“KNPS”),
which transports crude oil from Karnes City, Texas, to Elmendorf. Currently,
the San Antonio refinery receives at least 12,000 bpd of crude oil at the refinery
through the KNPS-Elmendorf terminal supply route. Elmendorf has aggregate storage
capacity of approximately 200,000 barrels.
Since acquiring the San Antonio refinery, we have expanded the refinery’s
capabilities by adding 6,500 bpd of crude oil throughput capacity and adding
additional processing and blending facilities which allow the San Antonio refinery
to blend up to 6,000 bpd of finished gasoline. Additionally, we completed a
project in December 2015 that provides us the capability to take a portion of
the San Antonio refinery’s diesel and jet fuel production and convert
it into up to 3,000 bpd of higher margin solvent products that meet customer
requirements for low aromatic content. We are also beginning to integrate the
San Antonio refinery into our other specialty products operations by producing
intermediate feedstocks which our Shreveport refinery utilizes in the production
of lubricating oils.
The Cotton Valley refinery, located on a 77 acre site in Cotton Valley, Louisiana
(“Cotton Valley”), currently has aggregate crude oil throughput
capacity of 13,500 bpd, hydrotreating capacity of 6,200 bpd and processes crude
oil into specialty solvents and residual fuel oil. The residual fuel oil is
an important feedstock for the production of specialty products at our Shreveport
refinery. We believe the Cotton Valley refinery produces the most complete,
single-facility line of paraffinic solvents in the U.S.
The Cotton Valley refinery consists of three major processing units that include
a crude unit, a hydrotreater and a fractionation train, approximately 625,000
barrels of storage capacity in 74 storage tanks and related loading and unloading
facilities and utilities. Since our acquisition of the Cotton Valley refinery
in 1995, we have expanded the refinery’s capabilities by installing a
hydrotreater that removes aromatics, increased the crude unit processing capability
to 13,500 bpd and reconfigured the refinery’s fractionation train to improve
product quality, enhance flexibility and lower utility costs.
The Princeton refinery, located on a 208 acre site in Princeton, Louisiana
(“Princeton”), currently has aggregate crude oil throughput capacity
of 10,000 bpd and processes naphthenic crude oil into lubricating oils and asphalt.
In addition, feedstock is made for the Shreveport refinery for further processing
into ultra-low sulfur diesel. The asphalt produced at Princeton may be further
processed or blended for coating and roofing product applications at the Princeton
refinery or transported to the Shreveport refinery for further processing into
bright stock.
Missouri Facility
The Missouri facility, located on a 22 acre site in Louisiana, Missouri, develops
and produces polyolester synthetic lubricants for use in refrigeration compressors,
commercial aviation and polyolester base stocks. In December 2015, we completed
a project to double the production capacity of the facility from 35 million
pounds to 75 million pounds per year. The facility has approximately 35,000
barrels of storage capacity in 64 tanks and related loading and unloading facilities
and utilities. The facility receives its fatty acids and alcohol feedstocks
and additives by truck and railcar under supply agreements or spot agreements
with various suppliers.
The Missouri facility utilizes the latest batch esterification processes designed
to ensure blending accuracy while maintaining production flexibility to meet
customer needs.
Calumet Packaging
The Calumet Packaging facility, located on a 10 acre site in Shreveport, Louisiana,
develops, blends and packages high performance synthetic lubricants, fuels and
solvent products for use in industrial, commercial and automotive applications.
The Calumet Packaging facility’s processing capability includes state-of-the-art
blending and packaging equipment. The facility has approximately 75,000 barrels
of storage capacity and related loading and unloading facilities. The facility
receives its base oil feedstocks and additives by truck under supply agreements
or spot agreements with various suppliers.
Royal Purple
The Royal Purple facility, located on a 28 acre site in Porter, Texas, develops,
blends and packages high performance synthetic lubricants and fluid additive
products for use in industrial, commercial and automotive applications. The
Royal Purple facility’s processing capability includes ten in-house packaging
and production lines. Outsourced packaging services for specific products are
also used. The facility has approximately 30,500 barrels of storage capacity
in 91 tanks and related loading and unloading facilities. The facility receives
its base oil feedstocks and additives by truck under supply agreements or spot
agreements with various suppliers.
Bel-Ray
The Bel-Ray facility, located on a 32 acre site in Wall Township, New Jersey,
blends and packages high performance synthetic lubricants and greases for use
primarily in aerospace, automotive, energy, food, marine, military, mining,
motorcycle, powersports, steel and textiles applications. The Bel-Ray facility’s
processing capability includes 24 blending tanks and packaging production lines.
In addition, the Bel-Ray facility has approximately 13,000 barrels of storage
capacity in 63 tanks and related loading and unloading facilities and utilities.
The Bel-Ray facility receives its base oil feedstocks and additives by truck
under supply agreements or spot agreements with various suppliers.
The Bel-Ray facility is designed with batch processing technology and is also
designed to maximize blending flexibility to meet customer needs. The packaging
operations utilize both in-house packaging equipment and outsourced packaging
services for specific products.
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