NuStar Energy L.P.

Good day, and thank you for standing by. Welcome to the New Star Energy LP second quarter 2023 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised, today's conference is being recorded. I would now like to hand the conference over to your speaker today, Pam Schmidt, 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 Chairman and CEO, Brad Barron, and our Executive Vice President and CFO, Tom Schoaf, as well as our Executive Vice President of Business Development and Engineering, Danny Oliver, 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 alternative to GAAP measures. Reconciliations of certain of these non-GAAP financial measures to U.S. 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 to hear about our solid quarterly results, our progress on our strategic initiatives, and our positive outlook for the rest of 2023. Let's get started with a few highlights of our second quarter results. We generated $169 million of total EBITDA in the second quarter. comparable to second quarter 2022 adjusted EBITDA of 174 million. Our pipeline segment EBITDA was up around 5% in the second quarter over the same period in 2022. Our fine product systems and our ammonia system continues to deliver solid, dependable revenue contributions in the second quarter, with throughputs up around 3% compared to the same period in 2022, reflecting the strength of these assets in our position in the markets we serve in the mid-continent and throughout Texas. Our McKee system continued to perform well with higher revenues and throughputs versus the same period last year due to increased demand across the system, as well as the customer's maintenance issues in 2Q22. Moving on to our Permian crude system, our Permian crude system's volumes averaged 508,000 barrels per day, down slightly compared to the same quarter last year. Our 2Q Permian volumes reflected some producer-specific operational issues and delays, as we've seen in the first half of the year that we expect to be resolved as we move into the back half of 2023. As those issues are resolved and those producers ramp up activity, we expect volumes to pick up. In fact, we've already seen an uptick in July with volumes averaging near 530,000 barrels per day, and yesterday's volumes were close to 540,000 barrels per day. We continue to expect to exit 2023 in the range of 570 to just under 600,000 barrels per day. Since our system's capex scales up and down with our producer's needs, if our exit rate comes in at the lower end of that range, we would expect reduced capex to mitigate the impact of lower volumes. Turning to our fuels marketing segment, after a near record-breaking 2022, our fuels marketing segment is at 223, generating 7 million EBITDA, comparable to the segment's second quarter 22 results. With that, a few observations about 2023 before I turn it over to Tom. looking to the full year for our business as a whole. Even though macroeconomic uncertainty has persisted so far this year, Neustar continues to expect to generate total adjusted EBITDA of $700 to $760 million. As we've mentioned in prior calls, we proactively mitigated some of the impact of inflation in 23 through the $100 million expense optimization initiative we kicked off in early 2022. And Neustar's results will again benefit from provisions of our pipeline tariffs and contracts that provide for annual rate escalations linked to the preceding year's PPI or the FERCS index. Through optimization and careful planning, we've been able to continue to meaningfully reduce our leverage, and we are ahead of schedule with our plan to simplify our capital structure. In June and July, we repurchased another one-third of the remaining Series D preferred units, leaving only about a third of the original issuance still outstanding. Last quarter, We mentioned we were planning to redeem all the remaining Series D by the end of 2024, which was already about two years ahead of our original schedule. By accelerating the repayment of the Series D preferred units over the course of this past year, while at the same time taking necessary steps to protect our healthy debt to EBITDA metric, we have demonstrated our commitment to continuing to improve our balance sheet. You can expect us to remain focused on that improvement in the second half of 23 and 24 and beyond. Once again, in 2023, We expect to self-fund all of our spending, including all of our OPEX, all of our growth capital, and our distributions. And we also continue to expect to finish the year with a healthy debt to EBITDA ratio or metric below four times. And with that, I'll turn the call over to Tom.