NuStar Energy L.P.
Q1 2015 Earnings Call Transcript

Published: 22 Apr 2015

[Operator:]

Good morning. My name is John, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the NuStar Energy L.P. and NuStar GP Holdings, LLC First Quarter 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session Thank you. Chris Russell, Treasurer and VP of Investor Relations, you may begin your conference.

[Christopher C. Russell:]

Thank you, John. 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, we'd 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'll 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 section of our websites. Now, let me turn the call over to Brad.

[Bradley C. Barron:]

Good morning, and thanks for joining us today. As you may have seen in this morning's press release, 2015 is off to a great start, as we were able to cover our distribution 1.25 times in the first quarter. This marks the fourth consecutive quarter that we've covered our distribution. Let me walk you through some of the positive developments from the first quarter. At the beginning of the year, we purchased the remaining 50% interest in our Linden Terminal joint venture. This immediately accretive transaction had a positive effect on our first quarter results and has already provided synergies with our adjacent wholly-owned terminal. During the first quarter, we moved record and higher than expected Eagle Ford throughput volumes on our South Texas crude oil pipeline system. The late February completion of an expansion to our South Texas system contributed to these record volumes and increased the throughput capacity of our system to 340,000 barrels per day. Our storage segment also benefited from record Eagle Ford throughputs during the quarter as our Corpus Christi North Beach Terminal set records for the amount of crude that was loaded across its docks. During the quarter, we loaded an average of approximately 190,000 barrels per day and set a single day loading record of 805,000 barrels in early February. Although we're pleased with the performance of our South Texas system so far this year, we realized that our throughput volumes could be negatively affected as we progress throughout the remainder of the year if crude oil prices remain at current levels or decline further. We are cautiously optimistic that throughput levels in the Eagle Ford will remain strong, but remain conservative in our projections given the uncertainty exists in the crude markets. Now, let me spend a few minutes updating you on some of our internal growth projects. I'm happy to report that we completed construction on our Mont Belvieu 12-inch pipeline conversion project. If you recall, last year we signed a long-term agreement with Occidental Petroleum to ship NGLs on NuStar's currently idled 200-mile 12-inch pipeline between Mont Belvieu and Corpus Christi, Texas. We plan to commence line fill in May. Earlier this month, we announced that we increased naphtha storage capacity at our Edinburg terminal by 50,000 barrels to accommodate additional grades and volumes. We also extended our agreement with PMI for an additional 10-year to transport naphtha on our Burgos-Valley pipeline system to our Edinburg terminal. In addition, we continue to work with PMI to finalize the agreements associated with the proposed joint venture and wish the two companies will develop new pipeline infrastructure to transport LPGs and refined products from U.S. into northern Mexico. We hope to finalize the agreement in the second quarter. In the third quarter this year, we expect to complete the construction of 400,000 barrels of additional storage at our Corpus Christi North Beach Terminal. This additional storage will provide our customers with the flexibility to segregate and store additional grades of crude and condensate. In addition, we're actively looking for ways to further expand our operations in South Texas and increase our storage capacity at some of our facilities. Further details on these projects will be provided throughout the year as they develop. Now I'm going to turn the call over to Tom Shoaf, NuStar's Executive Vice President and CFO, so he can provide you with some additional detail on our first quarter results.

[Thomas R. Shoaf:]

Thanks, Brad, and good morning, everyone. For the first quarter of 2015, we reported EBITDA from continuing operations of $214 million and adjusted EBITDA from continuing operations of $158 million. With or without the $56 million gain associated with acquiring the remaining 50% of our Linden Terminal joint venture, EBITDA from continuing operations was the highest first quarter EBITDA ever reported in our history. 2015 DCF from continuing operations available to limited partners covered the distribution to the limited partners by 1.25 times, our highest first quarter distribution coverage since 2008. Adjusted EPU for the first quarter of 2015 improved 111% over the first quarter 2014 EPU to $0.76 per unit from $0.36 per unit, and exceeded our guidance range of $0.50 to $0.60 per unit. DCF from continuing operations available to limited partners for the quarter was $1.37 per unit, 37% higher than the $1 per unit generated in the first quarter of 2014, which again exceeded our guidance range of $1.15 to $1.25 per unit. Our first quarter results exceeded our guidance expectations, primarily due to higher than expected Eagle Ford throughput volumes, stronger than expected margins in our fuels marketing segment and some foreign exchange gains realized in the first quarter. During our segment performance, or turning to our segment performance, EBITDA in our pipeline segment to $89 million, which is $18 million higher than the first quarter of 2014. Within the segment, we experienced a 22% increase in total throughputs and a 21% increase in total revenues. First quarter throughputs on our crude oil pipeline system were up 41% and exceeded 0.5 million barrels per day for the first time in our history due to increased Eagle Ford throughputs and increased crude oil demand at one of our customer's refineries that was in turnaround in early 2014. Eagle Ford volumes increased 61% from about 180,000 barrels a day in the first quarter of 2014 to around 290,000 barrels per day in the first quarter of 2015. Throughputs on our refined products pipelines increased 7% to 506,000 barrels per day, benefiting from increased production at a customer's refinery that was in turnaround during last year's first quarter. Our storage segment generated $78 million of EBITDA, up $10 million from the first quarter 2014. Throughput revenues increased 15%, also benefiting from increased Eagle Ford crude volumes shipped on the South Texas Pipeline System. Storage revenues were up 13% due to increased revenues from us now owning a 100% of the Linden Terminal, as well as higher lease utilization rates at our St. Eustatius and Point Tupper terminals. These increased revenues were partially offset by reduced unit train activity at our St. James, Louisiana terminal. Our fuels marketing segment earned $10 million of EBITDA during the quarter, up slightly over the first quarter 2014. Stronger than expected margins on our bunkering operations were mostly offset by challenging market conditions in our heavy fuels trading operations. NuStar's G&A expenses were $25 million, $4 million higher than the first quarter of 2014, largely due to expiration of the asphalt JV services agreement on June 30, 2014. Our interest expense, net of interest income, was $32 million, down $1 million from last year's first quarter. Our March 31 debt balance was $3 billion, while our debt to EBITDA ratio was 4.1 times. On April 21, NuStar Energy's board of directors declared a first quarter distribution of $1.095 per unit, which will be paid on May 14. NuStar GP Holdings board also declared a first quarter distribution of $0.545 per unit, which will be paid on May 18. Now, let me spend a few minutes talking about our predictions for the second quarter and full year 2015. While our first quarter results were very strong, we expect our second quarter results to be negatively impacted by a 30-day turnaround at one of our customers' refineries, as well as seasonal increases in maintenance, operating expenses and reliability capital spending. Second quarter EBITDA results in the pipeline and storage segments should be higher than the second quarter of 2014, but lower than the first quarter of 2015. We expect second quarter EBITDA results in our fuels marketing segment to be lower than the second quarter of 2014 and the first quarter of 2015, as we feel bunkering margins will return to more historic norms. During the second quarter of 2015, we expect G&A expenses to be in the range of $24 million to $26 million, depreciation and amortization expense to be around $55 million and interest expense of approximately $33 million. Based on these projections, second quarter 2015 earnings per unit should be $0.45 to $0.55 per unit, while distributable cash flow from continuing operations per limited partner unit should be in the range of $1 to $1.10 per unit. With regard to segment EBITDA guidance for the full year of 2015, we now expect our pipeline segment EBITDA to be $35 million to $55 million higher than 2014 due to the higher than expected throughputs we experienced on our South Texas Crude Oil Pipeline System in the first quarter of 2015. Our storage segment EBITDA is still projected to be $10 million to $30 million higher than 2014, while we continue to expect 2015 EBITDA results in our fuels marketing segment to be in the range of $20 million to $30 million. With regard to 2015 strategic capital spending, we continue to expect spending in the $400 million to $420 million range, which includes internal growth and acquisition spending. 2015 reliability capital spending is now projected to be $45 million to $55 million. And now with that, let me turn it back over to Brad for any final remarks.

[Bradley C. Barron:]

With a record first quarter behind us and the projections Tom just provided you, we once again expect to cover the distribution for the full year 2015, with a coverage ratio comparable to that in 2014. Even with the uncertainty in the crude markets, we continue to focus on growing our core fee-based storage and pipeline operations that are executing our internal growth capital program, identifying synergistic acquisitions. We expect this strategy to allow us to continue to build strong foundation for DCF growth in the future. I turn it back over to you, Chris.

[Christopher C. Russell:]

Okay. Now we're ready to open up to Q&A, John.

[Operator:]

Certainly. And our first question comes from the line of Steve Sherowski from Goldman Sachs.

[Steve C. Sherowski:]

Hi. Good morning. On the pipeline segment, your South Texas Phase 2 project, did that roughly contribute about half a quarter's worth of cash flow during the first quarter?

[Bradley C. Barron:]

Roughly that.

[Steve C. Sherowski:]

If I understood that correctly.

[Bradley C. Barron:]

That's correct.

[Steve C. Sherowski:]

Okay. And your Houston 12-inch line, when is – that's expected to come on next month, is that correct as well?

[Bradley C. Barron:]

That's correct. We'll start line fill in May.

[Steve C. Sherowski:]

Okay. And then, so I guess I'm just trying to drill down on guidance, so you've increased the midpoint of your year-over-year pipeline growth by roughly $10 million, but it looks like first quarter was up about $18 million year-over-year and I recognize that included a partial quarter contribution from the South Texas Phase 2 project and also the Phase 1 project, but it still seems like guidance is pretty conservative, which you alluded to in your opening remarks. I'm just trying to get a sense of, are you expecting throughput on these pipelines on your South Texas system to decline at all during the remaining half of the year, just what are your thoughts that really drove that are behind your guidance and what are you thinking later on in the year in terms of volume growth?

[Bradley C. Barron:]

Yeah. No. We're not expecting any decline in those volumes, although we have tempered the growth that we had originally expected in our budget on those lines. So I think on the Eagle Ford today we're doing right at 300,000 barrels a day average 290,000 barrels in the first quarter. But throughout the remainder of the year, we're expecting about 15,000 barrels a day of growth mostly in the fourth quarter due to some specific customer conversations that we're having. But that's about half of the growth that we had originally anticipated in our budget.

[Steve C. Sherowski:]

Okay. That's helpful. And obviously you had strong coverage this quarter, I guess, you expect full year coverage to be roughly in line with last year, any thoughts on growing your distribution or any changes to how you're thinking about that?

[Bradley C. Barron:]

We were taking bets on whether that'd be the first question.

[Steve C. Sherowski:]

Second question.

[Bradley C. Barron:]

Last year this time, the big question was, will we cut the distribution. We've worked our way out of that. And so the first step for us has been to secure the distribution. We feel like we've done that. Now the next step for us particularly in an uncertain market is to increase our distribution coverage ratio. When we feel like that is sufficient then we will entertain a distribution increase. We're not there yet, we're working towards that and that's really about all I can tell you.

[Steve C. Sherowski:]

Got you. Okay. That's helpful. And just a quick final question. Any thoughts on your potential project backlog. I think your – based on last guidance you're roughly in the $1.2 billion range of potential projects, has that changed at all or just how you're thinking about that?

[Bradley C. Barron:]

About right. I mean, the uncertainty in the crude oil markets makes it more difficult to do some of the big projects that you're looking at. It's harder for producers to want to commit, they don't know what the environment looks like, but we're still confident that we have a lot of good projects out there that are either bolt-on to what we are doing, synergistically what we're doing or maybe even some greenfield project. So, yeah, I'd say that's still a good number.

[Steve C. Sherowski:]

Okay. That's it from me. Thank you.

[Operator:]

Our next question comes from the line of Theresa Chen from Barclays Capital.

[Theresa Chen:]

Good morning. Following up on the last question about the project backlog, can you just give us an update on your discussion with customers on potentially exporting condensate from Corpus Christi?

[Bradley C. Barron:]

Sure. We've got active conversations going on with several of our customers in the Eagle Ford. We are in the process of building some additional storage in our South Texas Crude System that will allow us to segregate that stream. We have several customers that are processing condensate in the field. So we're working towards that goal and hope to be in a situation probably by the end of this year, where we can segregate those volumes for export.

[Theresa Chen:]

Got it. And on the Pemex pipeline project, could you provide us with some additional color on how that's going potentially, what do you think the cost of the project could be?

[Bradley C. Barron:]

We haven't given any guidance to that yet. It's a little early. We expect to complete our negotiations in all of the contracts here in the second quarter and then we'll be able to provide a little more color at that point.

[Theresa Chen:]

Understood. And in terms of storage, what are you seeing in terms of the general trends in crude and refined product storage rates for current contract renewals?

[Bradley C. Barron:]

I think we're minus Piney Point, which is a mothballed facility we have. We're about 99% fully utilized in our storage segment, so it's a healthy market. I think the contango in the crude market has bolstered that segment for us and we're starting to see some indications of strengthening in prices, but it's solid.

[Theresa Chen:]

Okay. Thank you. And last one from me, so in regards to your CapEx guidance, the organic CapEx guidance for full year, can you just give us a sense of what you think that will be in the first quarter? How the cadence of that guidance will be broken out throughout the year?

[Thomas R. Shoaf:]

First quarter, the strategic capital spending was $68.3 million and then we also had the acquisition of the Linden terminal for another $142.5 million and then our liability spending in the first quarter was $6.8 million.

[Theresa Chen:]

Thank you very much.

[Operator:]

Our next question comes from the line of Shneur Gershuni from UBS.

[Shneur Z. Gershuni:]

Hey, good morning, guys.

[Bradley C. Barron:]

Good morning.

[Shneur Z. Gershuni:]

Just kind of want to ask some follow ups on some of the questions that have already been asked. I guess starting with the Pemex contract, I mean, are you guys at the stage where everything in principal is basically been agreed to and it's just lawyers trading paperwork at this point or is there still like an active negotiation actually occurring?

[Bradley C. Barron:]

No, we're really working on finalizing the legal documents, that's where we're at.

[Shneur Z. Gershuni:]

Okay. So this is just dealing with the government entity and it just always takes longer.

[Bradley C. Barron:]

Correct.

[Shneur Z. Gershuni:]

Okay. And then, just kind of wanted to follow up – just sort of on your guidance for this year and so forth, I mean, I kind of want to know – or I was wondering if you can isolate what in your opinion was somewhat temporary versus what you sort of think about is kind of on an ongoing basis? I mean, do we view this step-up in the pipeline segment is really just sort of a temporary step-up and you know that's why you're sort of hesitant on making more bullish coverage statements and growth statements and so forth?

[Bradley C. Barron:]

I think – yeah, we can answer that. I think the step-up in pipeline volumes, we expect that to remain steady over the year. I think what we want to convey is that the growth won't be ramping up as fast as what we had budgeted for. In terms of things that could change throughout the year, one big thing is bunker margins were very strong in the first quarter and we see that probably normalizing through the second half of the year. Another thing that contributed to a very strong first quarter is that most of our maintenance CapEx takes place in the second and third. So you have very little of that in the first quarter, you see that ramping up in the second, which will bring it down from the first quite a bit. So, are there other things, Tom?

[Thomas R. Shoaf:]

No, that was pretty much it.

[Shneur Z. Gershuni:]

So...

[Thomas R. Shoaf:]

We've got customer turnaround in the second quarter as well that will mute the results there.

[Bradley C. Barron:]

Right.

[Shneur Z. Gershuni:]

So, I mean – so the strong coverage for the quarter is pretty strong. I mean, maybe you take a couple of basis points off for a couple of – a couple of things that worked the right way, but it's still a solid number in your opinion and that's the way we should look at it, correct?

[Bradley C. Barron:]

I mean, it was a great quarter and we plan to have a great year. What I'm trying to convey is the second quarter isn't going to be nearly as strong as the first.

[Shneur Z. Gershuni:]

Okay. That's fair. And then in terms of the distribution growth – and yes, I know you went from – is it going to be there last year to now we're asking about growth and so forth. I was wondering if maybe you can expand a little bit on the sign posts that you're looking for. I think you mentioned you want to build coverage next and so forth. Is there kind of a number that you want to get to coverage wise? Does your net debt to EBITDA leverage ratio also play into that as you triangulate as to when to step forward? Do some of the new projects, do you want to hold back some cash potentially for that? Is retained DCF sort of part of your philosophy now as well? So if you can sort of expand the discussion a little bit as to how we should be thinking about how you're thinking when it finally comes time to raise it?

[Thomas R. Shoaf:]

Sure. I mean, the way we look at it is we need a strong foundation in order to weather any sort of storm. We don't want to live close to the edge on the distribution coverage ratio. So we want to make sure that there's enough cushion built in that we can weather anything that comes our way. What is that number? I can't tell you exactly. Is it 1.07 times? Is it 1.1 times? Who knows. There's not a precise number in mind. Probably the more important thing is we need visibility towards for big streams of DCF coming our way. And as we continue to execute on our projects, those things will develop.

[Shneur Z. Gershuni:]

Does the fact that you potentially have a lot of project potentially cause you to want to retain DCF and run a higher coverage ratio to help fund that for a period of time? Or you would just sort of view each project on its own merits and raise the equity that's necessary?

[Thomas R. Shoaf:]

No, it's not really about trying to fund the projects. We have plenty of capital to do that. It's more about – some of these projects we have in development that we've talked about, getting those to a point where they are viable, they are working, it's a project that's in construction, and we can see that EBITDA coming in on those projects is going to be imminent. So once we start bringing some of that backlog into the front and getting some of those projects across the finish line, we've talked about PMI and some others, we can feel a little better about talking about distribution increases.

[Shneur Z. Gershuni:]

Okay. Cool. All right. Thank you very much, guys.

[Bradley C. Barron:]

Thank you.

[Operator:]

Our next question comes from the line of Cory Garcia from Raymond James.

[Cory J. Garcia:]

Good morning, fellows. Great quarter.

[Bradley C. Barron:]

Thank you.

[Cory J. Garcia:]

If we take a look at the St. James market and then perhaps some potentially changing dynamics in that market from a crude standpoint, several of potential projects bringing more the inland shale crude into that market over the next couple of years, what sort of storage expansion opportunities or even sort of participation in other projects should we look at and as we see maybe potentially leveraging that growth of your current and potential St. James assets?

[Bradley C. Barron:]

We would expect any one of those changes in the market, maybe the reversal of cap line, some other pipelines coming over from the Beaumont area coming into Louisiana would generate additional storage interest, we're waiting for those to happen. But we do think that any of those would probably generate some additional interest.

[Cory J. Garcia:]

Okay. So right now it's more of a wait and see as those projects come to fruition?

[Bradley C. Barron:]

Right.

[Cory J. Garcia:]

Got you. Okay. Thank you, guys.

[Operator:]

Our next question comes from the line of Mark Reichman from Simmons.

[Mark La France Reichman:]

Thank you. Just had a couple of questions. First, on the transportation segment, it seems like the operating expenses were at least lower relative to my expectations. Did they come in pretty normal to your expectations or was there something there in terms of lower operating expenses within the transportation segment?

[Thomas R. Shoaf:]

No, I think they came in pretty much along our expectations, Mark.

[Mark La France Reichman:]

Okay. And then on the projects, mainly the naphtha project that was announced, you talked about the agreement was revised with a slight increase in throughput commitment, but you've added roughly, what, 80,000 barrels of storage capacity. Could you just maybe provide some additional color on what the upside to NuStar is within that segment going forward as a result of that contract? And then with regard to the propane project, I think you'd mentioned in your last call that if you could get an agreement struck within the first quarter that you would expect that project to commence service in the second half of 2016. And so this modest delay in terms of getting the contracts finalize, that has no impact on the timing of the project, right?

[Bradley C. Barron:]

Well, let me address your second question first. The propane line is – we're commencing line-fill in May. It will be in service in May.

[Thomas R. Shoaf:]

He's talking about PMI.

[Bradley C. Barron:]

Oh, it's PMI, okay. Yeah, we're out late 2016, early 2017 now on that project going into service. On the naphtha project, basically what happened there is we had an agreement with PMI to – they ship one grade of naphtha, this allows us to ship two different grades. We increased their T&D commitment by 1,000 barrels a day, but the biggest thing is we were able to renew that contract for 10 years.

[Mark La France Reichman:]

Okay. And when you...

[Bradley C. Barron:]

That's a real upside there.

[Mark La France Reichman:]

Yeah. Well, I mean – but in terms of the additional cost of constructing the additional 50,000 barrels of capacity, I mean are the economics better now as a result of your – in terms of the new contract as it applies to your expanded capital commitment to that project?

[Thomas R. Shoaf:]

Yes, because we were able to increase the volumes. Without being able to ship two grades of naphtha, they would have reduced their commitment to us on a volume basis significantly. It's worth about $4.1 million a year.

[Mark La France Reichman:]

Okay, great. And then, I guess lastly, there has been talk about conversion of a bulk terminal in Vancouver in order to receive crude by rail. And I was just wondering where that project stands, if there is any color you can provide there?

[Bradley C. Barron:]

We're still working through the permitting process on that. And so there is really not much else to say about other than we're diligently pursuing the permit.

[Mark La France Reichman:]

Is the permit – whose – is that Vancouver?

[Bradley C. Barron:]

Uh-huh.

[Mark La France Reichman:]

Okay. And then what would be – what type of, I mean, is it premature to talk about maybe the timing of commencement of the service from the point of receiving the permit and in terms of what kind of volumes you might envision?

[Bradley C. Barron:]

Yeah. I mean I think the volumes there would be fairly small. The project is, currently, the air permit is less than 40,000 barrels a day or 50,000 barrels a day?

[Mark La France Reichman:]

Okay, okay.

[Bradley C. Barron:]

It is less than 50,000 barrels a day.

[Mark La France Reichman:]

Okay.

[Bradley C. Barron:]

So as rail projects like that go, it's relatively small.

[Mark La France Reichman:]

Yeah. Okay, great. Thank you very much and good quarter.

[Bradley C. Barron:]

Thank you.

[Operator:]

Our next question comes from the line of Matt Niblack from HITE.

[Matt Niblack:]

My questions were answered. Thank you.

[Bradley C. Barron:]

Thank you.

[Operator:]

Our next question comes from the line of Selman Akyol from Stifel.

[Selman Akyol:]

Thank you. Good morning. Couple of quick follow-up questions. As it relates to the pipeline expenses, I mean down pretty sharply from Q4 and I know you've got Phase 2 coming online, you got the NGL pipeline coming online. So is that kind of a base rate and then incremental for those other pipelines coming on?

[Thomas R. Shoaf:]

As far as the base rate goes, Selman, I think, I'm looking real quick, they should increase a little bit as they go through the years, because we're going to have more maintenance cost hit us in the second quarter and the third quarter. So that's probably the low point of the year, to be honest with you, as far as OpEx goes.

[Selman Akyol:]

Okay.

[Thomas R. Shoaf:]

As Brad said earlier, our maintenance tends to pick up in the second and third quarters and so we should be higher as we go through the year.

[Selman Akyol:]

Okay. And then, previously on Piney Point, you said that storage just really works in a contango market. I was just kind of wondering what's going on with that asset right now?

[Bradley C. Barron:]

Well, it's still currently mothballed. We still don't have any contango on the gasoline side. The contango on the distillate side is not very steep. The last time I looked a few days ago, I think it was about $0.50 a barrel per month. That's not going to pay for time value of money alone, much less storage. So the markets have improved, they're just not quite there to generate that kind of interest yet.

[Selman Akyol:]

All right, thanks. And then last one. Maintenance capital, looks like it's up at the midpoint slightly from your previous guidance. Anything going on there?

[Thomas R. Shoaf:]

We just increased the amount of our API 653 tank maintenance work. We've got some tanks coming on that need scheduled maintenance this year, so we increased the spending because of that.

[Selman Akyol:]

All right. Thanks very much.

[Operator:]

Our next question comes from the line of Jeremy Tonet from JPMorgan.

[Jeremy B. Tonet:]

Good morning.

[Bradley C. Barron:]

Good morning.

[Jeremy B. Tonet:]

Congrats on the strong quarter there. Thanks for all the color this morning. I just want to go, touch on the M&A market and see if the Linden Terminal, if that was just kind of a one-off opportunity or if you guys were exploring that now and do you see opportunities out there or are bid/ask spreads pretty wide, any thoughts on that would be helpful?

[Bradley C. Barron:]

The sellers' expectations are still fairly high on some of the stuff. So we're actively looking for good bolt-on acquisitions that are synergistic with our current operations. We're not looking to step outside of what we currently do. So it needs to be synergistic to what we have in our current expertise, but we are actively looking all the time.

[Jeremy B. Tonet:]

That's helpful. That's it from me. Thank you.

[Operator:]

We have no additional audio questions. I turn the call back over to the presenters.

[Christopher C. Russell:]

Okay. Thank you, John. We appreciate everybody for joining us on the call this morning. If you have any additional questions, please feel free to call NuStar's Investor Relations department. Thank you.

[Operator:]

This concludes today's conference call. You may now disconnect.