NuStar Energy L.P.

Good day and thank you for standing by. Welcome to the New Star Energy fourth quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press Star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press Star 1-1 again. I would now like to hand the conference over to your speaker today, Pam Schmidt, Vice President, Investor Relations. You may begin.

Good morning and welcome to today's call. On the call today are New Star Energy LP's Chairman and CEO, Brad Barron, our Executive Vice President and CFO, Tom Shove, and our Executive Vice President of Business Development and Engineering, Danny Oliver, as well as other members of our management team. Before we get started, we would like to remind you that during the course of this call, New Star Management will make statements about our current views concerning the future performance of New Star 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, and if applicable, additional reconciliations may be 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 joining us today. I'm excited to tell you about our great fourth quarter and solid performance for full year 2022, as well as our positive outlook for 2023 and beyond. Let's get started with a few highlights from our fourth quarter 2022 results. We generated $197 million of total adjusted EBITDA in the fourth quarter, 16% higher than adjusted EBITDA in the fourth quarter of 21, and the highest fourth quarter in NewSTAR's history. Our pipeline segment EBITDA was up in the fourth quarter by 18% over the same period in 21, thanks in large part to the continued strong performance of our Permian crude system. Our Permian systems volumes hit another high in the fourth quarter. handing in a record-breaking average of 584,000 barrels per day. That's up 13% over the same quarter last year. Our mid-continent refined product systems once again delivered a solid, dependable revenue contribution in the fourth quarter of 22. In South Texas, we're pleased that our Corpus Christi crude system throughputs averaged over 368,000 barrels per day in the fourth quarter, which is above our MVCs for that system and 8% higher than our third quarter volumes. We're also encouraged by the continued improvement we saw in January on that system, as our average volumes rose to almost 400,000 barrels per day last month. Our fuels marketing segment also had a great fourth quarter, generating $12 million of EBITDA, up $7 million over the fourth quarter of 2021. With that, a few observations about 2022 before I turn it over to Tom. 2022's historic inflation and volatility made for a bumpy ride around the globe and across financial markets. Given that economic context, I'm particularly proud of our 2022 results, which demonstrate once again the stability and strength of New Star's business. Our 2022 revenue was up from growth in our Permian crude system, growth in our West Coast renewables network, the positive impact of indexation, the outperformance of our fuels marketing segment, and the steady, solid revenue contribution from our refined product systems. We generated higher adjusted full-year EBITDA for 2022 through a combination of revenue improvement and expense optimization, which helped mitigate some of the impact of 2022's historic inflation. And by continuing to high grade our capital spending program, we were once again able to self-fund our business, including our capital spending and our growth footprint in the Permian and on the West Coast. Through optimization and careful planning over the course of 2022, we were able to meaningfully reduce our leverage, which positioned us to get a head start on kicking off our plan to simplify our capital structure. And in November, we were able to repurchase about one-third of our Series D preferred units, while keeping our debt-to-EBITDA ratio under four times per year in 2022. We're now planning to redeem the remaining Series D units in 2023 and 2024, which is about two years ahead of our original schedule. I'm also proud that in 2022, once again, New Star outperformed our industry in terms of safety stewardship, With a total recordable injury rate, or TRIR, it was 13 times better than the bulk terminal industry and twice as good as the pipeline industry as a whole. And then we published our second sustainability report, which provides more information about the culture of responsibility that has distinguished NuSTAR throughout our history. And with that, I'll turn the call over to Tom.