NuStar Energy L.P.
Q1 2018 Earnings Call Transcript

Published: 27 Apr 2018

[Operator:]

Good day ladies and gentlemen, and welcome to the First Quarter 2018 NuStar Energy L.P. and NuStar GP Holdings, LLC Earnings Conference Call. [Operator Instructions]. As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference Mr. Chris Russell, Treasurer and Vice President - Investor Relations. Please go ahead, sir.

[Chris Russell:]

Thank you, Christy. Good morning everyone and welcome to today's call. On the call today are Brad Barron, NuStar Energy L.P. and NuStar GP Holdings, LLC's President and CEO, and Tom Shoaf, Executive Vice President and CFO, along with other members of our management team. Before we get started, I 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 make reference 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 Financials page of the Investors sections of our websites at nustarenergy.com and nustargpholdings.com. Now I'm going to the call over to Brad Barron.

[Brad Barron:]

Good morning. Thank you for joining us today. I have a lot of good news to share with you. For those of you who have listened in February, you know that our last earnings call laid out our path forward to financial healthy and growth, as well as adjustments to your 2018 forecast. On our call today I’m going to start by talking about our progress on our execution of the comprehensive plans we laid out. Then, before I turn it over to Tom for an overview of our quarterly results and an updated on our view of 2018, I’ll take you through several pieces of good news about our business, including some new growth projects, a small but immediately accretive bold-on acquisition with a major customer in our Central East System, an update on our view on our Permian System one year after acquisition and last, some encouraging developments at our St. Eustatius facility. With all that as a preview, let’s get started. During the most recent earnings call we laid out a comprehensive staged approach to best position NuStar for long term financial strength and sustainable growth, which includes simplifying our structure, restoring our coverage, lowering our leverage and minimize our need to access the equity capital markets. Since then we’ve made substantial progress on our simplification. In mid-March we filed a joint Form S-4 preliminary proxy statement to seek NSH unit holder approval and issue NS units to effectuate the simplification. We are in the process of responding to SEC comments to the Form S-4, and we expect to be positioned to schedule our unit holder vote and close by the end of the second quarter. We are happy with the progress we’ve made on the simplification, but we know that operating and developing our business and our diverse asset base is just as important and we are proud to report the good news that demonstrates we are doing just that. First, on projects and acquisitions. We are pleased to announce that we will be expanding on our existing pipeline assets in South Texas, as well as our terminal in Nuevo Laredo, Mexico, with projects to supply refined products to grow in markets in Mexico. For those of you who have followed NuStar over the years, you know that since Mexico’s energy reforms began, we have been excited about the new opportunities those reforms present for us. Since then, we’ve worked to position NuStar to take advantage of these opportunities by utilizing our existing assets in South Texas and Mexico to supply products to the Mexico market, and I’m happy to say we’ve accomplished just that. I am pleased to announce we have signed several long-term T&D agreements with strong, creditworthy customers to support a series of healthy-return capital projects to connect to third-party rail facilities in Corpus Christi, expand certain South Texas products pipeline systems and expand our Nuevo Laredo terminal. We expect to benefit from incremental revenue from these projects starting as soon as late 2018. We believe the Mexico market presents significant opportunities for future growth and I am proud of our team’s perseverance and creativity in developing these projects, which we believe will establish NuStar as one of the primary logistics providers for this burgeoning market. On the acquisition front, in mid-April we closed on an immediately accretive $38 million acquisition of CHS’s Council Bluff system, consisting of a 227-mile pipeline and 18 storage tanks at a very attractive multiple. This bolt-on system enhances our existing Central East System by increasing our overall system flexibility and allowing expansion into new markets, while at the same time enhancing our role as a key logistics provider to CHS. It’s hard to believe that next week will market our first anniversary as owner of the Permian System. We are happy to report that growth in the Permian Basin continues to exceed expectations. The Permian Basin overall has continued to outpace all other U.S. shell plays in growth, development and efficiency. There are now 453 rigs and the Permian is up over 30% from 342 when we acquired the system last May and our Permian system has consistently outpaced overall growth in the basin. Since last May our system throughput is up 117%, 250,000 barrels per day, with many nominations coming in at 275,000 barrels per day, significantly higher than the overall growth in the Permian volumes of 33% during the same period. Based on our producer’s projections, we expect to exit 2018 between approximately 360,000 to 380,000 barrels per day. I’m also happy to report strong interest for our open season for a second capacity expansion on our Permian Crude System, which will increase our total system capacity by approximately 70,000 barrels per day to 460,000 barrels per day. We expect this project to be completed by the end of July 2018. As you can see, one year in we remain extremely bullish on the Permian Basin in general and our Permian Crude System in particular. In addition to the Mexico spa projects in our Permian system, we are working on additional opportunities to expand utilization for our existing assets. Notably our first class terminal and dock in Corpus Christi and our unit train and dock facilities in St. James. Moving on to some encouraging developments at St. Eustatius, in our last call we told you we had reduced our expectations for PDVSA's utilization of terminal in 2018 due to a significant reduction in activity at the terminal in late 2017 and early 2018. I’m happy to report Q1 saw an uptick in PDVSA's activity, which is reflected in our first quarter results and we are continuing to benefit from that activity. As the year progresses, we are hopeful this trend will continue. I think it’s always a good segway to steal from [inaudible] on our 2018 expectations. In part because of this up-tick we are raising our adjusted EBITDA expectations for this year by $20 million. I believe our results demonstrate both the soundness on our plan to reposition NuStar and how hard all of our employees are working to operate our assets and develop our business. In fact, you may have noticed that EBITDA in all of our business segments, storage, pipeline and fuel marketing are up quarter-over-quarter, underscoring the continuing strength of our base business. With that, I’ll turn the call over Tom Shoaf, NuStar’s Executive Vice President & CFO to discuss our results and projections.

[Tom Shoaf:]

Thanks Brad and good morning everyone. Turning to our overall first quarter 2018 results, we generated net income of $126 million and EBITDA of $250 million, up significantly from the first quarter of 2017, mostly due to the contributions from our Permian Crud System acquisition and a $79 million gain associated with our January 2018 receipt of hurricane related insurance proceeds. We have received $100 million of insurance proceeds related to 2017 hurricane damage at our St. Eustatius terminal. We received $12.5 million in the fourth quarter of 2017 and the remaining $87.5 million in January 2018. We expect these proceeds to fully cover the cost of repairing the property damage, as well as most of our lost revenue over our $5 million insurance deductable. While the gain was reflected in our first quarter net income and EBITDA, it is important to note that the gain will only be recognized in DCF as the proceeds are spent over the next couple of years to repair the damage caused from the hurricane. Our DCF available to common limited partners was $92 million and our distribution coverage ratio to the common limited partners for the first quarter was 1.64x. The first quarter 2018 EBITDA and our pipeline segment was $94 million, up $6 million from the first quarter of 2017, largely due to contributions from our Permian Crud System that were partially offset by the negative impact of longer than usual winter season on our Ammonia Pipeline throughputs. First quarter 2018 EBITDA in our storage segment was $90 million, $4 million higher than the first quarter of 2017. Increased storage rates at our St. Eustatius terminal as a result of the terminal enhancements we made to the facility last year and a contract early termination payment from a storage customer replaced at our Linden terminal were partially offset by a decrease in revenues at our St. James terminal facility. Since our fourth quarter earnings call, as Brad said we saw encouraging uptick in PDVSA's income vessel activity and inventory balances at our St. Eustatius terminal and we were able to recognize short storage revenue owed to us under the contract from PDVSA in the first quarter. Our March 31 debt balance was $3.7 billion, while our debt-to-EBITDA ratio was 5.1x, below our credit agreement covenant threshold of 5.5x. On March 28, we amended our five year revolving credit amendment agreement, which among other things sets our covenant threshold at 5.25x for the remainder of 2018. On April 24, NuStar Energy declared the first quarter Series A preferred unit distribution of $0.53125 per unit. The first quarter Series B preferred unit distribution of $0.47657 per unit and the first quarter Series C preferred unit distribution of $0.5625 per unit, all three of which will be paid on June 15. As we anticipated, on April 24, NuStar Energy declared the first quarter common unit distribution of $0.60 per unit, it will be paid on May 14. In addition NuStar GP Holdings or NSH declared a first quarter distribution of $0.33 per unit which will be paid on May 16. The NSH distribution was calculated assuming that NSH unit holders are expected to receive 0.55 units of NS for each NSH unit they own after the closing of the upcoming simplification transaction. Turning to our 2018 projections, we now expect NuStar’s 2018 EBITDA to be in the range of $700 million to $750 million, which includes the $79 million gain associated with the cash received for hurricane related insurance proceeds I mentioned earlier. However, if you exclude the gain, we expect our 2018 adjusted EBITDA to be higher by approximately $20 million and in the range of $620 million to $670 million. We increased our guidance primarily to reflect the contribution from PDVSA related storage revenues at our St. Eustatius terminal, along with incremental EBITDA related to the pipeline and terminal acquisition from CHS, partly offset by lower pipeline revenue projections for the year as a roll out of change and accounting standards for revenue recognition and some softness in our storage segment due to continued backwardation in the forward pricing curve. With regard to 2018 capital spending, we continue to plan to spend $360 million to $390 million on strategic and other capital with approximately $190 million relating to the Permian Crude System. Our 2018 spending guidance also includes about $50 million of spending associated with the new strategic projects to supply refined products to Mexico that Brad mentioned earlier. Another $120 million is expected to be spent in 2019 to get these projects completed in the back half of 2019. These projects are expected to generate EBITDA multiples in the range of 5x to 7x and I am very excited about these projects. While we have added the Mexico supply projects to our 2018 plan, we have not increased our total strategic capital spending for the year. This is just one example of how we are strategically managing our spending. As always, we are developing good projects to generate strong returns now and in the future, but we are focused on insuring we spend only within our means. Regarding our reliability capital spending for 2018, we continue to expect to spend $80 million to $100 million of which approximately $35 million relates to hurricane repair spending at St. Eustatius, which is paid with insurance proceeds. Based on these projections we now expect our coverage ratio for 2018 to be in the range of 1.2x to 1.3x and we are still targeting a coverage ratio in the range of 1.3x to 1.4x in 2019. We expect our debt to EBITDA ratio to be around 4.7x by the end of 2018 and in the 4.0x to 4.3x range by the end of 2019. And with that, I’ll turn the call back over to Brad for his closing remarks.

[Brad Barron:]

Thank you, Tom. On our last call we set out in detail our step comprehensive plan to strategically position the company for sustainable future growth, strength, flexibility and unit holder value. And as we have described, we are executing on our plan to simplify our structure, reduce our leverage and maximize our ability to fund our future growth. At the same time our employees have continued to work hard to operate safely and efficiently to provide world class service and to develop projects to drive growth and provide logistical solutions at competitive rates. We are making progress and we believe that all we’ve accomplished this quarter, up in every segment quarter-over-quarter demonstrate that NuStar is on the path on financial strength and flexibility and growth. We are excited about our future, and after hearing all our good news we hope our investors are too. With that, we’ll open up the call for Q&A.

[Operator:]

Thank you. [Operator Instructions]. Our first question comes from the line of Jeremy Tonet of JPMorgan. Your line is open.

[Unidentified Analyst:]

Good morning. This is Bill on for Jeremy. What was the navigator EBITDA during the quarter, and can you refresh us on the CapEx needed to hit the targets outlined at the acquisition?

[Tom Shoaf:]

The Permian EBITDA was $12 million for the quarter and the capital to hit the targets points is about $500 million in total over the next – I mean 2017 and 2020.

[Unidentified Analyst:]

Okay, thanks. And then what was the amount of the Linden termination payment that you mentioned?

[Tom Shoaf:]

$6 million.

[Danny Oliver:]

Yeah, we really can’t get into too many specifics on that because its customer specific that the deal as a whole was in that – on a net present value basis better for us than leaving them where they were. We were able to lease, re-lease the tanks to another party.

[Unidentified Analyst:]

Okay thanks, and then can you share more detail on the projects to Mexico and will those all go into service at the end of 2018. As you mentioned, some of the revenue will come on then or would they be more staggered?

[Danny Oliver:]

A little more staggered than that. There is some interim service that we’ll provide at the end of 2018, but the projects, the full effect of the projects will occur starting in mid-2019 through the end of 2019. Our customers are going to come out with their more specific announcements, probably pretty soon and we are going to wait and let them do that. But I think given the $180 million in capital that Tom shared with you, the five to seven EBITDA multiple that he shared with you and of course Brad mentioned that they are all supported by long term take or pay agreements with these customers, I think will help you model that.

[Brad Barron:]

One thing I want to emphasize about that capital spend is about $50 million of that in 2018. And we lowered our overall capital spend to accommodate those projects. So this does not increase our capital spend in our 2018.

[Unidentified Analyst:]

Great. Thanks for taking my questions.

[Operator:]

Thank you our next question is from Theresa Chen of Barclays. Your line is open.

[Theresa Chen:]

Hi, just to clarify on the Permian Gathering System, what was the run rate for the quarter and where is it currently now?

[Brad Barron:]

We are at 250,000 barrels a day right now. That’s been about the last week of activity.

[Tom Shoaf:]

The run rate for the quarter Theresa was about 210,000.

[Theresa Chen:]

Great, thank you.

[Brad Barron:]

We’ll ramp it up, I think we’ve got nominations in May of 275,000.

[Theresa Chen:]

Got it. On the St. Eustatius facility, I understand that you saw an uptick in activity and you know revenue is booked. Just curious to know if the customer actually paid the cash or were you able to monazite some of the inventory.

[Brad Barron:]

No, we don’t get into details. We don’t want to get into the details about each of our customs, as Danny said on the Linden thing. What I can tell you is that our customer is current and we value the relationship.

[Theresa Chen:]

Okay, on the CHS acquisition, so in terms of the accretive multiple, can you give a range of what that was and if the $38 million is included in your strategic CapEx or is it…

[Tom Shoaf:]

Yeah, the $38 million is not included in the strategic CapEx, and the range of multiple on that was about – it was a very attractive multiple, I don’t – now that we don’t want to give out the exact multiple but it was very attractive.

[Theresa Chen:]

Okay. In terms of the ETE cash bid that came out in your S-4, can you talk about your thought process on that and maybe why you didn’t consider at least having conversation just in the context of fiduciary responsibility and such.

[Brad Barron:]

So with regard to the ETE letter and the details of that are fully disclosed in our S-4 and you can understand we have an ongoing, an active merger agreement and an active S-4 and so I would direct you to the S-4 for details about any of that and what we’d like to do is keep the focus on this call and this quarter and the outlook for 2018.

[Theresa Chen:]

Understood! Thank you very much.

[Tom Shoaf:]

Theresa, this is Tom. On the CHS acquisition, I think we are expecting, you know 2018 EBITDA contribution of about $5.6 million and on an annualized basis that would be about $8 million of EBITDA.

[Theresa Chen:]

Great. And actually if I can slip another one is there. For your funding lease this year how – what are you seeing in the prep markets today?

[Tom Shoaf:]

Well, I mean the prep market is there right, and so we are continuing to work on our financing plan that we laid out last quarter. The common equity markets are still challenged. We are considering new issue in securities in the second quarter in the public and/or the private markets to help us reach our debt leverage targets by the end of the year. So we are seeing that they are there.

[Theresa Chen:]

Thank you again.

[Brad Barron:]

Okay.

[Operator:]

Thank you. Our next question is from Shneur Gershuni of UBS. Your line is open.

[Shneur Gershuni:]

Hi, good morning guys. Just wanted to confirm a couple of things here. First, the CapEx range, has it changed, the 300 to 500 that you put out at the beginning of the year with respect to some of the new projects that you have laid out there? Are we within the range?

[Tom Shoaf:]

Well, we are still within that range there. The 360 to 390 we talked about today, that’s the same guidance range that’s on the fourth quarter call as well.

[Shneur Gershuni:]

Okay, so everything incremental now today was kind of contemplating just not specifically outlined. Is that the way to think about it?

[Brad Barron:]

No, we’ll be done as we’ve adjusted our overall capital spending to make room for these particular projects.

[Shneur Gershuni:]

Got it. Okay, that makes sense. And then secondly, I may have missed this, but did you say that you were at 5.25x leverage metrics with respect to your covenant compliance?

[Brad Barron:]

No, I didn’t. I said we were at 5.1x and we’re allowed 5.5x this quarter.

[Shneur Gershuni:]

Okay, and in calculating that number with the insurance proceeds, would that count in EBITDA in terms of how we would calculate that on a go forward basis?

[Brad Barron:]

No, the insurance proceeds don’t count.

[Shneur Gershuni:]

Okay, and is there anything that you know obviously you know there is a difference in how banks calculate compliance with leverage governance versus how we would look at it from a GAAP perspective. Can you walk us through some of the difference in adjustments that we would be thinking about?

[Tom Shoaf:]

On the debt side your back out the junior sub notes. That’s a $400 million issuance that is excluded. That squeezes equity under the bank facility, that’s the big thing on the debt side. And then on the EBITDA side we get material project adjustments for any large material projects we spend money, over $25 million and we also get to pro-forma the EBITDA for any large acquisitions or any acquisitions we make for that matter. So we’re still pro-forming EBITDA for the Permian acquisition, a small amount and we’ll be pro-forming EBITDA on the CHS acquisition.

[Shneur Gershuni:]

Okay, so putting that together there, that you’ve got a little bit of room at 5.1x versus 5.5x. Do you feel comfortable, especially given Q1 performance that the distribution thought was adequate that was announced last quarter?

[Brad Barron:]

Yeah, we factored all of this in determining the right distribution and so yeah, I would say yes. I mean, like I said we’ve got a financing plan where we plan to execute on and with all that we plan to you know lower our leverage this year from where it is currently.

[Shneur Gershuni:]

Great, perfect. Thank you very much guys. I appreciate the color.

[Brad Barron:]

Yeah, thank you.

[Operator:]

Thank you. Our next question is from Ryan Levine of Citi. Your line is open.

[Ryan Levine:]

Good morning. Which South Texas product system is NuStar planning on expanding? Is it only the eight inch, yeah the eight inch Laredo line at this point or is it also the Mont Belvieu to Corpus line that was in dispute.

[Brad Barron:]

The Mont Belvieu to Corpus line isn’t part of this, but several of our pipelines, certainly that Laredo pipeline is one of them, but we got several more coming out of Corpus heading that way that are being expanded as well.

[Ryan Levine:]

Okay. Is it also south of the border or only in the U.S.?

[Brad Barron:]

We only have one pipeline – well only one pipeline involved in this project that crosses the border. That’s the pipeline that crosses from Laredo to Nuevo Laredo. That will be expanded and then we’re also expanding the terminal in Nuevo Laredo adding storage and truck rack capabilities there.

[Ryan Levine:]

Is there perceived to be any political risk with the election coming up associated with these projects?

[Brad Barron:]

We don’t believe so and our contracts cover that.

[Ryan Levine:]

Okay, and then on the financing front…

[Tom Shoaf:]

Just want to make one point. Our projects here back lagged long term throughput and efficiency ratings.

[Ryan Levine:]

Okay, so a change in administration wouldn’t impacts that, is that what you’re saying?

[Tom Shoaf:]

Right.

[Ryan Levine:]

Okay, and then on the financing plan, the $400 million target. If the EBITDA is going up by $20 million, part of which is the recent acquisition, does that reduce your capital needs by directionally $100 million or is the $400 million target still appropriate?

[Brad Barron:]

I think we’ve given a range out there that we’re targeting and so I don’t think it necessarily decreases what we’re looking for in our financing plan. So, I think we’re still on target with what we have set.

[Ryan Levine:]

Okay, and for the St. Eustatius, PDVSA contract, you highlighted the $20 million increase in EBITDA for 2018. Is the whole $20 million associated with St. Eustatius or is that only about $15 million and that the acquisitions also a component?

[Brad Barron:]

No, the $20 million various different items Ryan. Part of that is the St. Eustatius revenue we talked about, part of it is the CHS, the EBITDA from the CHS acquisition and then there are some offsets going the other way. You know we got some weakness in the storage markets that we are taking into account going forward and we also had some impacts from the revenue recognition accounting adjustments.

[Ryan Levine:]

Okay, and the last question. On the financing plan, is there any potential to monetize less core assets or is that no longer on the table?

[Brad Barron:]

I mean, yeah there is the potential of that, sure.

[Ryan Levine:]

Okay, thank you.

[Operator:]

Thank you. Our next question is from Robert Balsano of B. Riley, FBR. Your line is open.

[Robert Balsano:]

Hey, good morning. Congrats on a strong quarter!

[Brad Barron:]

Thank you.

[Robert Balsano:]

Just a couple of quick questions; a lot has been answered already. To elaborate on Shneur’s question on CapEx, so I understand that CapEx is not changing. Some of the stuff has basically been prioritized, but those projects that were you know pulled out of ’18, were those cancelled or pushed to 2019. Are they still on the table for future investments?

[Brad Barron:]

Some are still on the table. I wouldn’t say we cancelled anything. We just prioritized you know our continued development.

[Robert Balsano:]

Okay. And then just kind of a modeling question. Well, I’m looking at the pipeline segment and revenue per barrel. The average revenue per barrel for the quarter looks like it dipped down a little bit with higher volumes. How do we think about those revenues, those margins moving forward? Is this a good run-rate or is it…

[Brad Barron:]

Well, I don’t know. Let us take that one offline. You know I’m not – I’m trying to think out loud here. Yeah, let’s take that one offline.

[Robert Balsano:]

Alright, that’s it for now. Thanks guys.

[Brad Barron:]

Thank you.

[Operator:]

Thank you. Our next question is from Michael Blum of Wells Fargo. Your line is open.

[Michael Blum:]

Hey, good morning everyone.

[Brad Barron:]

Good morning.

[Michael Blum:]

Maybe can you expand a little bit, you mentioned in the storage segment seeing a little weakness due to backwardation. Can you just talk about maybe the magnitude of that and in terms of the rate structure, you know how that works in terms of when contracts roll over or how real time do those tariffs adjust based on the shape of the curve. Thanks.

[Brad Barron:]

Yeah, so you know first of all, as is always the case in storage, it’s very regional. We have some regions that have been really completely unaffected. Specifically in the UK we haven’t seen a significant softening or really any softening of rates there, plus we have some – a new project going online beginning of this year, so we’re seeing EBITDA increase in the UK. We’re seeing the same thing on the West Coast, no deterioration of pricing. Some small, but very good projects coming online throughout the year, so we’re seeing increases in EBITDA there as well. But we see – where we’ve seen really the bulk of the headwinds is on the East Coast, specifically at our Linden Terminal we had a couple of contracts up for renewal earlier this year, and then also at St. James we had a contract come up at the end of the first quarter and rates are you know different there today. But it’s been for the most part kind of limited to those areas, but the renewals and the affects of that backwardation is fully baked into the guidance that we’ve given you.

[Tom Shoaf:]

So Michael, you ask how responsive this is to the shape of the curve. I think you have to look at you know how your renewals are spread out over time and so ours are about a third within a year you know. Another third of this you know one to three years and in the remainder of greater than three years. So it doesn’t respond – the entire segment doesn’t respond immediately either up or down.

[Brad Barron:]

And even in that third say that’s in the first year, not all of them are impacted by market structure.

[Michael Blum:]

Got it, thank you very much.

[Operator:]

Thank you. [Operator Instructions] Our next question is from Selman Akyol of Stifel. Your line is open.

[Selman Akyol:]

Thank you. Just one quick one, can you talk a little bit about recontracting how that’s going to set Eustatius in the Eagle Ford in particular.

[Brad Barron:]

Well, at St. Eustatius we’re always talking to potential customers about coming into the terminal. I think we really don’t want to re-contract there. We think that we’ve been able to weather what’s been going on in Venezuela with PDVSA and certainly their rates justify a little additional hand holding that we do with them. So, while we are talking to new customers about coming into the terminal, we prefer to continue to work with PDVSA at St. Eustatius. As far as the Eagle Ford goes, we are having success in re-contracting the first parts of commitments that is up for renewal in August of this year. We’ve got about 45% of our overall Eagle Ford commitments up this year, another 20% in summer of next year, about 10% in summer of ‘20 and then another roughly 25% out in 2023. But these that are coming up for renewal in August of this year, we are having success in re-contracting those volumes, albeit at different rates than the initial open seasons given the capacity that’s available in South Texas.

[Selman Akyol:]

Got you, and then just kind of going back to your comments on Eustatius. I mean it sounds like a different tone than what it was last quarter. Would you say you are more optimistic in relationship to PDVSA now?

[Brad Barron:]

I would say we are much more optimistic as I think Tom alluded to. When we were at the end of 2017 and early 2018, we had seen some volumes drop off and were concerned about that. But after the end of the year as we got into the first quarter of it in 2018 we saw those volumes really ramping up and a willingness of PDVSA to work with us to continue that business.

[Selman Akyol:]

All right, thanks very much.

[Operator:]

Thank you, and that does conclude our Q&A session for today. I’d like to turn the call back over to Mr. Chris Russell for any future remarks.

[Chris Russell:]

Thank you, Christy. I would like to thank everybody for joining us on the call today. Anybody has any additional questions, please feel free to reach out to NuStar’s Investor Relations department. Thank you and have a great day.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program and you may all disconnect. Everyone have a great day.