NuStar Energy L.P.

Good morning and thank you for standing by. Welcome to the Q3 2021 New Star Energy LP Earnings Conference Call. At this time, all participants 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 then zero on your touchtone telephone. I would now like to turn the conference over to your host, Pam Smith. Vice President of Investor Relations. Please go ahead.

Good morning and welcome to today's call. On the call today are NuSTAR Energy LP's President and CEO, Brad Barron, and our Executive Vice President and CFO, Tom Schoaf, 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 Securities 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 US 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 today. We have a lot of positive news for you today on our successful closing on the sale of the Eastern US Terminal Package, our solid results for the third quarter, and also our expectations for full year 2021. Starting with the sale, in October, we announced that we closed on our $250 million sale of Eastern US terminal facilities to Sunoco LP. As promised, we're deploying those sales proceeds to lower our leverage, and we now expect our year-end debt to EBITDA metric to be below four times. We also continue to expect to self-fund all of our spending from our internally generated cash flows in 2021 and beyond. With the sale, we've taken another important step in executing on our plan to optimize our business and strengthen our balance sheet in order to focus 100% of our resources on our core asset footprint, including our refined products assets, our crude assets, which include our Permian and Corpus Christi systems and St. James facility, our West Coast renewable logistics network, and our ammonia system. Now to turn to some highlights of our third quarter results. This quarter, we once again delivered solid results under challenging conditions and demonstrated the strength and resilience of our assets as we generated adjusted EBITDA for the third quarter comparable to 3Q 2020 and up 5% over pre-pandemic 3Q 2019, as well as DCF up 10% over 3Q 2020 adjusted DCF. Starting with refined products, in the third quarter, we continued to see solid, steady refined product demand in the markets we serve. maintaining a strong 105% pre-pandemic demand on pace with second quarter of this year. Our third quarter refined product throughputs were up 16% over 3Q 2020 and up 8% over 3Q 2019. We continue to expect our refined product systems to perform at or above 100% of our pre-pandemic run rate for the remainder of 2021. Steady recovery in refined product demand has also continued to stoke rebound in U.S. refiners' demand for crude, which has contributed to higher throughputs for our crude pipelines in the third quarter, up 11% over 2Q21 and 3Q2020. Rebounding crude demand in the U.S. and abroad has in turn driven higher than forecasted global crude prices, which has lifted U.S. shale production primarily in the Permian Basin. Thanks once again to our Permian Crude Systems Core of the Core Premier Location, lowest producer costs, and highest product quality, we've seen strong volume improvement there. We're happy to report that in the third quarter, our Permian systems volumes grew to a record-breaking average of 502,000 barrels per day. That's up 12% over 2Q of this year, up 19% over 3Q last year, and up 11% over the peak pre-COVID quarterly average, which occurred in the first quarter of 2020. In October, our Permian volumes continued to rebound ahead of the rest of the Permian Basin, an increase to an average of 512,000 barrels a day. And we're now forecasting we will exit 2021 at around 514,000 barrels per day, which is up from the 500,000 barrels a day we forecasted in the second quarter. Looking back to the beginning of this year, we're even more encouraged by the fact that our Permian system is up an impressive 9% from the 470,000 barrels per day we expected back in February. We still forecast Eagle Ford and WTI volumes in our Corpus Christi crude system at our MBC levels for the rest of the year, but we've seen modest incremental improvement in recent months in WTI long-haul barrels from the Permian, which we hope is the early indication of future improvement with rising global demand. Improving global demand combined with sustained healthy U.S. shale production growth should increase U.S. crude exports over time, which should also improve volumes on our Corpus Christi crude system, as well as at our St. James Terminal. where we also expect to begin benefiting from inbound barrels from the reversal of cap line starting in 2022. Turning to our renewable fuel system on the West Coast, as we've discussed in prior quarters, through our West Coast Renewable Fuels Network, New Star plays an integral role in facilitating the low-carbon renewable fuels that significantly reduce emissions from transportation. New Star currently handles an impressive share of California's renewable fuels. According to the latest available data from the state of California for the second quarter of 2021, New Star handled about 7% of California's total biodiesel volumes, over 20% of California's ethanol, and close to 30% of the state's renewable diesel volumes. This data doesn't yet include the growing proportion of renewable jet that we handle in the region, which is substantial. We expect New Star's leadership in the low-carbon fuel transition in California and across the West Coast to continue to grow as we complete our planned tank conversion projects there. And we plan to continue to develop projects to expand our renewable fuel logistics services as low carbon fuel legislative mandates proliferate and customer demand increases. Turning to ammonia, throughput on our ammonia system was up 39% compared to the same quarter last year. As we touched on last quarter, we're working to increase our systems utilization even more through low spend, high return projects to connect and extend our system to new and current customers. These projects would supply ammonia for current applications like the fertilizer that augments U.S. food production as well as corn for ethanol production across the Midwest. And we're looking to ammonia's future as well. Green ammonia for existing applications and for exciting opportunities like renewable electricity generation and safe, efficient transportation for hydrogen to power fuel cell vehicles. We look forward to being able to provide more details on these projects to increase our ammonia systems utilization and profitability in the short and longer term at multiple locations on our system, which spans 2,000 miles from Louisiana up to and across the Mid-Continent. I'm proud of the part that NuSTAR plays today in transporting traditional ammonia to support our nation's food and ethanol production. We're also excited about NuSTAR's developing role in the future of ammonia and hydrogen. So we're pleased with the strong results that our business generated in the third quarter as the world has continued to bounce back from the lingering impact of the pandemic. We're expecting our full year 2021 results to demonstrate, once again, the strength and resilience of our assets, our employees, and our business. With that, I'll turn it over to Tom to give you more details on New Star's results and outlook.