NuStar Energy L.P.

Good morning. At this time, I would like to welcome everyone to the New Star Energy LP's fourth quarter and full year 2020 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the conference over to Pam Schmidt, Vice President of Investor Relations. You may begin your conference.

Good morning, and welcome to today's call. On the call today are Brad Barron, New Start Energy LP's President and CEO, and Tom Schultz, Executive Vice President and CFO, along with other members of our management team. Before we get started, I would like to remind you that during the course of this call, NewSTAR management will make statements about our current views concerning the future performance of NewSTAR that are forward-looking statements. These statements are subject to various risks, uncertainties, and assumptions described in our filings with the Security and Exchange Commission. Actual results may differ materially from those described in the forward-looking statements. Also, throughout the call today, when we talk about our results, we will be describing our results from continuing operations. In other words, the results we refer to in this call will exclude the St. Eustatius facility we sold in July of 2019. During the course of this call, we will also refer to certain non-GAAP financial measures. These non-GAAP financial measures should not be considered as alternatives to GAAP measures. Reconciliations of certain of these non-GAAP financial measures to U.S. GAAP may be found in our earnings press release with additional reconciliations located on the financials page of the Investor section of our website at newstarenergy.com. With that, I will turn the call over to Brad.

Good morning. Thank you all for taking the time to join us. There's no two ways about it. It's good to have 2020 behind us. Perhaps because of the unparalleled challenges that last year presented for all of us, I'm prouder today than at any time in the past seven years since I started this job to report to you on how well NuSTAR has performed. Faced with historically difficult conditions, our employees stepped up and through hard work and prudent planning, including criticizing our capital program and significantly reducing our costs, we generated solid results in 2020. Last year, even though the pandemic depressed activity for much of the globe, we actually increased the number of barrels per day we throughput in both our pipeline and our storage segments over 2019. In fact, in 2020, New Star moved more than 817 million barrels of crude oil and refined products through our pipelines and terminals. That's six million more than 2019. I'm proud of the fact that we handled those barrels safely and responsibly, and once again in 2020, New Star outperformed our industry in terms of safety and environmental stewardship. Our days away, restricted, or transferred, or DART rate for 2020 was eight times better than the terminal industry average and two times better than the pipeline industry average And our total recordable incident rate, or TRIR, was seven times better than the terminal industry average and more than two times better than the pipeline industry average. I'm also proud that during 2020, NuSTAR generated adjusted EBITDA of $723 million, which is more than 8% above our 2019 EBITDA of $668 million. Growing our EBITDA by 8% would have been impressive in a normal year, but NuSTAR accomplished all this in a year that was anything but normal. a year in which the country and the world experienced some of the most difficult conditions in history. Our performance is a testament to our employees' perseverance, as well as the remarkable resilience and quality of our assets and the markets they serve. In our pipeline segment, after seeing refined product demand improve steadily through the summer, we continued to see stable, positive results all the way through December. On average, across our refined product systems for the month of December, we were at about 90% of typical demand. This was largely due to unplanned downtime at one of our customers' refineries, but we were back up to almost 100% in January and in line with pre-pandemic volumes. It's quite remarkable compared to other systems in different markets. We were also very pleased that our Permian crude volumes have continued to improve. Our systems volumes averaged around 418,000 barrels per day for the fourth quarter and rose to an average of 427,000 barrels per day during January. That steady upward trend has continued and we exited January at around 439,000 barrels per day. We believe that the volume we moved on our Permian system in January can be maintained in 2021 with about 16 active rigs, and that's without any ducks. So we've been encouraged that our rig count has risen above that number to around 20 rigs. That brings our systems count to more than 10% of the total number of rigs running across the entire Permian Basin as of the end of January. We believe our system's strong performance, even through the 2020's unprecedented challenges, is a continued reflection of its clear advantages, premier location, lowest producer costs, and highest product quality. It's also worth noting that none of our dedicated acreage is on federal lands. Our system's average barrels per day in 2020 was up more than 9% over 2019, which is more than twice the 4% growth rate average for the Permian Basin as a whole over the same period. Looking out to 2021, we're encouraged by the outsized share of the Permian's ducks that reside on our Permian crude system acreage. Our system typically transports about 10% of basin production, which is impressive, but we have about two times that, or about 20% of the Permian Basin's duck inventory on our footprint. We believe that the volume from completions of a little over half of those ducks, along with volume from rigs running on our system today, should support modest growth in our volumes in 2021, And we expect to exit 2021 between 470 and 480,000 barrels per day. Moving on from the Permian to our Corpus Christi crude system, we're seeing some indications of recovery in exports as well. After seeing our Corpus Christi exports dip below MVC's last May, we've been pleased with the ramp up we saw in the second half of 2020, with throughputs increasing from an average of 306,000 barrels per day in the second quarter to 369,000 barrels per day in January. 2021, we continue to forecast revenues for our Eagle Ford and WTI commitments slightly above the MBC levels. But I'm cautiously optimistic about some initial indications of recovery during January. Shifting over to our storage segment, we benefited last year from contango conditions in the spring. Many of those contracts continue into or through much of 2021. Starting in November, our St. James Terminal has also benefited from the resumption of unit train activity where we received Canadian heavy crude. And our West Coast Renewable Fuels Distribution System continued to grow as we executed on our projects there and further increased our market share. In the first half of 2020, NSAR handled about 5% of California's total biodiesel volumes, over 15% of California's ethanol, and close to 30% of the state's renewable diesel volumes. That's an impressive share of a key market that we've achieved with a relatively modest spend. And our market share along with our revenue is expected to keep ramping up through 2023 as we continue to execute on our planned projects there. In 2020, our West Coast storage assets generated about 20% of our total storage segment revenue, one-third of which was derived exclusively from renewable fuel-related services. As we continue to complete our 2021 West Coast projects, we expect renewable fuel-related services to grow and contribute about 35% of total West Coast revenue by year-end 2021 and approach 40% by year-end 2022. Our West Coast Renewables Network is growing and will continue to be the key to New Star's ability to thrive as we all navigate through the nation's evolving energy priorities. With that, I'll turn it over to Tom to give more details on New Star's fourth quarter and 2020 results.