NuStar Energy L.P.

Good day. Thank you for standing, Ben. Welcome to the New Star Energy First Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star zero on your touchdown telephone. As a reminder, this conference is being recorded. I would now like to hand the conference over to Ben Schmidt, Vice President of Investor Relations. You may begin.

Good morning, and welcome to today's call. On the call today are Brad Barron, NuSTAR Energy LP's President and CEO, and Tom Shope, Executive Vice President and CFO, along with other members of our management team. Before we get started, we would like to remind you that during the course of this call, NuSTAR management will make statements about our current views concerning the future performance of NuSTAR that are forward-looking statements. These statements are subject to the 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. 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 financial 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. As America recovers from the impact of COVID-19 and returns to normal activity and growth, I'm pleased to report NewSTAR turned in another solid quarter. Before I talk about the green shoots we see for market fundamentals and for improving activity across our system for the rest of the year, I want to touch briefly on the impact of mid-February's severe weather event, winter storm Uri. This made national headlines as it brought extreme temperatures, snow and ice to Texas and nearby states, and left millions of Texans without heat or water for days. Neustar's employees worked tirelessly to keep our assets up and running and brave the frigid weather to help our customers in the region. getting wells going again and installing pumps and generators to help address outages and ensure that the energy we all need continue to flow. As I noted above, despite the lingering effects of the pandemic on the global economy, as well as the unprecedented winter weather event that trimmed our results by a total of about $11 million, I'm pleased to report that New Star turned in another solid quarter. And without the storm's impact, earnings were comparable to the fourth quarter of 2020. As America begins to recover from the impact of COVID-19 and begins returning to normal activity and growth, we're seeing signs of stabilization and improvement across the U.S. and in New Start's footprint. U.S. refined product demand has improved as COVID vaccinations have continued to allow more and more Americans to return to normal day-to-day activities, and demand on New Start's refined product systems has been remarkably resilient. After returning to nearly 100% of pre-pandemic levels, our volumes dropped temporarily during February's storm. However, they recovered quickly. an average 95% of pre-pandemic demand for the first quarter, and that improvement has continued as we average slightly over 100% for the month of April. We continue to expect our refined product systems to perform at around 100% of our pre-pandemic run rate for the remainder of this year. As you would expect, stronger refined product demand is contributing to higher crude prices, which are improving expectations for U.S. shale production, particularly in the Permian Basin. which continues to outshine all other U.S. shale plays. Thanks to our Permian Systems core of the core premier location, lowest producer cost, and highest product quality, our rig count has continued to grow steadily. After dipping to nine rigs in August of 2020, our system's rig count has continued to see strong, steady growth in 2021, growing from 20 rigs in January to around 25 rigs in April. Those 25 rigs represent more than 10% of the total number of rigs running across the entire Permian Basin as of the end of April. Along with rig count, our system's volumes rose to an average 427,000 barrels per day for the month of January, and after dipping during February's severe weather, have gotten back on track, rebounding to an average of over 440,000 barrels per day in March and April. We reached 450,000 barrels per day as April ended. which is back up to the record-breaking quarterly average we saw pre-pandemic in first quarter 2020. Looking out to the rest of the year, we now expect to exit 2021 at around 500,000 barrels per day. Obviously, sustained U.S. shale production growth combined with improving global demand will drive U.S. export growth in the future, which will be positive for volumes on our Corpus Christi crude system. We expect to see volumes for our Eagle Ford and WTI commitments at our MVC levels through the end of 2021. As we've discussed on prior calls, we're also excited about our trajectory for growth from our renewable fuels distribution system on the West Coast. We currently handle an impressive share of California's renewable fuels. According to the latest data available from the state of California, in the first three quarters of 2020, NuSTAR handled about 6% of California's total biodiesel volumes, 18% of California's ethanol, and close to 30% of the state's renewable diesel volumes. We expect New Star's market share and renewable fuels network to continue to grow over time, along with our revenue, as California replaces conventional fuels with renewable diesel and other renewable fuels, and other states in the Northwest and beyond adopt similar low-carbon fuel standards to prioritize the renewable fuels our assets are positioned to facilitate. Our West Coast Renewable Fuels Network is a key component of New Star's plan to thrive as our nation's energy needs evolve. We're proud that New Start generated strong, stable results in 2020 through a global pandemic and market headwinds, and that we were able to do so again in the first quarter, even with the added challenge of a severe weather event. With that, I'll turn it over to Tom to give you more details on New Start's quarterly results.