Usd Partners Lp

Ladies and gentlemen, thank you for standing by and welcome to the USD Partners LP first quarter 2023 results conference call. At this time, all participants have been placed in a listen-only mode. The floor will be open for your questions following the prepared remarks. If you would like to ask a question at that time, please press star 1. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. When asking a question, we ask that you please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn the call over to Jennifer Waller, Senior Director of Financial Reporting and Investor Relations, for opening remarks. Please go ahead.

Good morning, and thank you for joining us. Welcome to our first quarter 2023 earnings call. With me today are Dan Borgen, our Chief Executive Officer, Adam Altzler, our Chief Financial Officer, Brad Sanders, our Chief Commercial Officer, Josh Ruppel, our Chief Operating Officer, as well as several other members of our senior management team. Yesterday evening, we issued a press release announcing results for the three months ended March 31, 2023. If you would like a copy of the press release, you can find one on our website at usdpartners.com. Before we proceed, please note that the Safe Harbor Disclosure Statement regarding forward-looking statements in last night's press release applies to the statements of management on this call. Also, please note that information presented on today's call speaks only as of today, May 4, 2023. Any time-sensitive information provided may no longer be accurate at the time of any webcast replay or reading of the transcript. Finally, today's call will include discussion of non-GAAP financial measures. Please see last night's press release for reconciliations to the most comparable GAAP financial measures. And with that, I'll turn the call over to Dan Borgen.

Thank you, Jennifer. Good morning, and thank everyone for joining us on the call today. During the quarter, the partnership continued to see challenging market conditions surrounding the Canadian heavy crude oil macro. Short-term market for Dilbit has continued to be difficult and volatile. but we are still working to secure drill bit business to fill current and near-term capacity at the Hardesty Terminal. We remain primarily focused on transitioning from transloading drill bit to transloading longer-term, more sustainable drill bit at the Hardesty Terminal through expansions to our sponsor's Diluent Recovery Unit joint venture. Over the years, we've experienced fluctuations in the demand for our drill bit by rail egress solution during similar cycles within the industry. As a reference, examples of this include the lower volumes transloaded at our hardship terminal in both 2016 and 2020, respectively, when market conditions were also challenging. However, we recovered and renewed our volumes, and life to date, we have improved. transloaded approximately 158 million barrels of crude oil at the Hardesty Terminal, and we remain confident in the value that the Hardesty Terminal has to offer to the industry. We've progressed our discussions with multiple potential customers regarding the expansion of our Drew Bitt by Rail network and remain encouraged that these discussions could lead to additional long-term take-or-pay commitments that will benefit the partnership. The successful completion of the first phase of our sponsor's Hardesty DRU joint venture project enhanced the sustainability and quality of the partnership's cash flows by significantly increasing the average tenor of a portion of the terminal services agreements at the partnership's Hardesty terminal. As a reminder, Drewbit creates enhanced blending and net-back opportunities for our customers with a lower carbon footprint and offers an egress solution that moves a safer, non-hazardous, non-flammable product to new end markets. We remain encouraged and are pleased with the great customer that we have that helped pioneer this program. To date, we've moved approximately 22 million barrels of Drewbit through the Harder C Terminal, Pending our successful planned 50,000 barrel a day expansion of the DRU, we'd be handling approximately 30 million barrels of Drew Bit per year through the Hardesty Terminal. Brad will talk more about the Stroud Terminal in a moment, but I would just like to remind everyone that we've handled approximately 48 million barrels of crude oil at the terminal since we acquired it in 2017. The Stroud Terminal has more than paid for itself during our ownership, but we're not done there. Like at Hardesty, discussion with potential customers are underway to transition the shroud terminal to heavier grades of crude oil. As we continue to navigate the recontracting cycle, the Board of Directors of the partnerships, General Partner, made the difficult decision to suspend the partnerships' quarterly distribution and to utilize free cash flow to support the partnerships' operations and to potentially pay down debt. Given all of this, we believe this proactive measure, coupled with management's review of strategic alternatives, was the prudent thing to do and will best position the partnership for both recontracting or for refinancing or replacement of our senior secured credit facility before it matures later this year. This wasn't a decision we made lightly by any means. As a reminder, the sponsor currently owns approximately 51% of the partnership. and is very aligned with other unit holders, both in seeing the partnership continue to return cash to unit holders, as well as, more importantly, in seeing the partnership achieve long-term, sustainable success. While this was a difficult decision, we remain steadfast in our commitment to providing value to our unit holders, as we have in the past, and are hopeful that we will be able to restore our distribution in the future if we are able to renew or replace customer agreements at our terminals. Next, Adam is going to give an update on the partnership's financial results and our liquidity position. Then we'll jump back, and Brad will talk about recent market and commercial developments. Adam.