Slide 1: August 2015 Partnership Overview
August 2015 Partnership Overview
Slide 2: Cautionary Statements
Cautionary Statements This presentation may contain forward-looking statements within the meaning of U.S. federal securities laws. These statements can be identified by the use of forward-looking terminology including “may,” “believe,” “will,” “expect,” “anticipate,” “estimate,” “continue,” or other
Slide 3: Overview of USD Partners LP
Overview of USD Partners LP a\ USD Partners LP
Slide 4: Overview of USD Partners LP
Overview of USD Partners LP Hardisty Rail Terminal Hardisty Crude Oil Hub • Formed in 2014 by US Development Group, LLC (“USDG”) to acquire, develop and operate energy-related rail terminals and other high quality complementary midstream assets • Stable and predictable cash flows generated primarily
Slide 5: Multiple Levers to Drive Growth
Multiple Levers to Drive Growth Development projects and other assets owned by sponsor High quality third party terminals and complementary midstream infrastructure Optimize and further improve profitability of existing asset base Drop Downs Acquisitions Organic Projects 5
Slide 6: Financial Flexibility to Execute on Growth Opportunities
Partnership has >$250 million of available liquidity – ~$38 million of unrestricted cash plus ~$228 million of revolver capacity, as of 6/30/2015 – Conservative leverage profile with <1.0x Net Debt / Adjusted EBITDA¹ – Revolver capacity automatically expands to $300 million as term loan is repaid; a
Slide 7: Sponsored by Proven Developer and Industry Innovator
• A pioneer of the hydrocarbon-by-rail concept, USDG has a track record of providing sustainable industry solutions • USDG is a proven developer of unit train-capable terminals – Built and/or operated 14 unit train-capable origination and destination terminals with aggregate capacity of over 725,000
Slide 8: Market Update and Selected Opportunities
Market Update and Selected Opportunities
Slide 9: Market Access for Growing Canadian Production is Critical
Market Access for Growing Canadian Production is Critical • Oil sands heavy production expected to increase by 1 MMbpd or nearly 50% by the early 2020s¹ • Local refining and outbound pipeline capacity insufficient for expected growth in Western Canadian production • Permitting continues to present c
Slide 10: Planned Hardisty Terminal Expansion
Planned Hardisty Terminal Expansion • Will add capacity for two additional unit trains per day – Additional rail staging track, second loading rack and batch integrity system – Rack and batching flexibility to target heavier grades of crude (Railbit, DRUbit and bitumen) from WCSB • Engineering and p
Slide 11: Benefits of Rail Demonstrated by Our Customers
Benefits of Rail Demonstrated by Our Customers Source: USDP Internal, Association of American Railroads (map), H1 2015 earnings call transcripts Note: Red circles represent destinations of trains loaded at our Hardisty rail terminal. Eastern Canada U.S. East Coast WA State California Arkansas Texas
Slide 12: Expected Benefits of Railing a Heavier Crude Oil Barrel
Expected Benefits of Railing a Heavier Crude Oil Barrel Producer Benefits • Volume uplift: Ability to ship more bitumen per barrel than what will flow in pipelines (i.e., improve upon the 70 / 30 bitumen / diluent pipeline blend) • Reduced diluent needs (costs) • Quality preservation • Eliminates co
Slide 13: Partnership Highlights
Partnership Highlights Relationship with Sponsor & ECP Strategically Located Assets Stable and Predictable Cash Flows Multiple Growth Levers Financial Flexibility 13
Slide 14: Appendix
Appendix 4 RS a\ USD Partners LP
Slide 15: USD Partners LP Structure & Overview
USD Partners LP Structure & Overview USD Group LLC (the “Sponsor”) USD Partners GP LLC (GP & IDRs) Public Unitholders Hardisty Rail Terminal (Phase I) San Antonio Rail Terminal West Colton Rail Terminal Railcar Fleet Services Hardisty Expansions 100% Ownership Interest 100% Ownership Interest 2.0% G
Slide 16: Sustainable Advantages of Rail
Rail enables a number of advantages for both producers and refiners Sustainable Advantages of Rail Long-Term, Sustainable Energy Infrastructure Solution Cost Speed Market Optionality Quality Preservation • Less upfront investment and maintenance capital required • Reduced financial commitments – 5 –
Slide 17: Hardisty Rail Terminal at Canada's Largest Storage Hub
Hardisty Rail Terminal at Canada’s Largest Storage Hub • Origination terminal that commenced operations in June 2014 • Only unit train-capable crude-by-rail terminal located at the Hardisty hub, the primary location for storing and originating crude oil from Western Canada with over 20 million barre
Slide 18: Strategically Located Ethanol Destination Terminals
West Colton Rail Terminal Blending Facilities Strategically Located Ethanol Destination Terminals Industry Infrastructure Needs Addressed: • Fragmented production • Pipelines disadvantaged and trucks uneconomical • Significant regional imbalances • Regulatory pressures regarding gasoline blending Ov
Slide 19: Our Modern Railcar Fleet
• USDP provides customers access to railcars, as well as railcar-specific services related to the transportation of crude oil, ethanol and other liquid hydrocarbons, including scheduling, regulatory reporting, maintenance, etc. • We believe this access incentivizes customers to commit to USDP’s term
Slide 20: Sponsor Partnered with ECP to Accelerate Growth
• In September 2014, Energy Capital Partners, an energy infrastructure-focused private equity firm with over $13 billion in capital commitments, purchased a meaningful equity interest in USDG • USDG utilized the resulting proceeds to realign its shareholder base, fund several existing growth project
Slide 21: Strong Safety Record Distinguishes Us in the Marketplace
We are committed to safe, efficient and reliable operations that comply with environmental and safety regulations • All USDP facilities meet or exceed all government health and safety regulations • USDG has been nationally recognized by the National Safety Council for its outstanding safety record f
Slide 22: Non-GAAP Measures
Non-GAAP Measures We define Adjusted EBITDA as net income before depreciation and amortization, interest and other income, interest and other expense, unrealized gains and losses associated with derivative instruments, foreign currency transaction gains and losses, income taxes, non-cash expense rel
Slide 23: Adjusted EBITDA and DCF Reconciliation
Adjusted EBITDA and DCF Reconciliation 23