NuStar Energy L.P.
Q2 2015 Earnings Call Transcript

Published: 24 Jul 2015

[Operator:]

Good morning. My name is Blair, and I'll be your conference operator today. At this time, I'd like to welcome everyone to NuStar Energy and NuStar GP Holdings, LLC Second 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, you may begin your conference.

[Christopher C. Russell:]

Thank you, Blair. Good morning and welcome, everybody, 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. Thanks for joining us today. As you can see from the results we released this morning, we had another great quarter and we covered our distribution yet again, even with continued volatility in the crude markets, turnaround activity at some of our customers' refineries and an unprecedented amount of rainfall in South Texas. Despite the rainfall as well as operational issues at third-party gas processing plant during the quarter, we experienced increased throughput volumes in the Corpus Christi, an average – a record of 193,000 barrels per day into our North Beach terminal, which benefited both the pipeline and storage segments. We also set another single-day loading record of 860,000 barrels across our docks in June. Total Eagle Ford volumes increased from about 218,000 barrels per day in the second quarter of 2014 to around 272,000 barrels per day in the second quarter of 2015. If crude oil prices remain at current levels, we still expect these throughput volumes to increase but more modestly in the back half of the year. Now, let me spend a few minutes updating you on some of our internal growth projects. At our last investor conference in May, we discussed six projects that are currently under development to increase distillate and propane supply throughout the Upper Midwest. Those include a project to build an eight-mile, eight-inch pipeline at our Conway, Kansas facility and an expansion at our Rock Rapids, Iowa terminal for additional propane supply to CHS, one of our largest Central East region customers. We expect to complete the CHS propane supply project by the end of this year and the remainder of the projects are scheduled to be completed by the first quarter of 2017. In May, we began filling our 12-inch pipeline between Mont Belvieu and Corpus Christi, Texas with propane and began operating the system. Unfortunately, shortly after starting up the line, we experienced a pressure reduction, and upon investigation, we identified an area of unexpected localized corrosion. We have suspended propane delivery service, and we are conducting further assessments. Our current estimate is that we should have the line back in full service in the fourth quarter of 2015. Turning to Corpus Christi, we remain on schedule to complete construction of 400,000 barrels of additional storage at our North Beach terminal in the third quarter. This additional storage will provide our customers with the flexibility to segregate and deliver processed condensate across our docks. In addition, we announced earlier this week that the Port of Corpus Christi approved a lease that will give us the space to develop another private marine and loading dock at our North Beach Terminal. We're currently developing plans for the new dock, which will be designed to load up the Suezmax-class vessels at rates up to 30,000 barrels per hour and the ability to expand to 50,000 barrels per hour. Once completed, this new dock would give us access to four loading docks in the Port of Corpus Christi, including two private docks, and allow us to load crude ships simultaneously on all four docks at a maximum rate close to 100,000 barrels per hour. Early estimates provide for completion of this fourth dock in the second quarter of 2017. With regard to our proposed joint venture with PMI, we realize that this process is taking longer than anticipated, but both PMI and NuStar remain committed to developing the new pipeline infrastructure to transport LPGs and refined products from the U.S. into Northern Mexico. We hope to finalize those agreements in the third quarter. Beyond the projects just mentioned, we continue to actively look for ways to further expand our operations within the Eagle Ford, and beyond the Eagle Ford into the Permian Basin, as well as to increase our storage capacity at some of our large terminal facilities. 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 second quarter results. Tom?

[Thomas R. Shoaf:]

Thanks, Brad, and good morning, everyone. For the second quarter of 2015, we reported EBITDA from continuing operations of $143 million compared to $140 million for the same period last year. EPU for the second quarter of 2015 came in at $0.54 per unit, which was at the high end of the guidance range of $0.45 to $0.55 per unit that we provided on last quarter's call. DCF from continuing operations available to limited partners for the quarter was $1.18 per unit, which exceeded our guidance range of $1 to $1.10 per unit and covered the distribution to limited partners by 1.08 times. During our segment performance, EBITDA in our pipeline segment increased to $86 million, which is $6 million higher than the second quarter of 2014. Total revenues for the segment increased 4% mainly due to the continued strength of our South Texas crude oil pipeline system. Additionally, operating expenses for the segment decreased 4% compared to the second quarter of 2014, primarily due to a decrease in power and maintenance costs for that period. Crude oil pipeline throughputs were up 10% compared to the second quarter of 2014, mainly due to a 25% increase in Eagle Ford throughputs compared to the same period last year. During the quarter, total Eagle Ford volumes increased from about 218,000 barrels per day in the second quarter of 2014 to around 272,000 barrels per day in the second quarter of 2015, while volumes strictly into our Corpus Christi North Beach terminal and ultimately across our docks increased 29% from 149,000 barrels per day to about 193,000 barrels per day, which was our highest quarterly average to date. Strong Eagle Ford throughputs were partially offset during the quarter by turnaround activity and unplanned operational issues at some of the refineries served by our crude oil pipelines. Throughputs on our refined products pipelines decreased 4% to 499,000 barrels per day mainly due to increased turnaround activity, lower demand on our East system and unfavorable weather and operational related issues on our ammonia line. Our storage segment generated $84 million of EBITDA, up $8 million from the second quarter of 2014. Throughput revenues increased 11%, which continue to benefit from increased Eagle Ford crude volumes shipped on the South Texas pipeline system. Storage revenues were up 8%, mainly due to increased revenues from us now owning 100% of the Linden terminal. Our fuels marketing segment earned $3 million of EBITDA during the quarter, down $2 million compared to the second quarter of 2014 mainly due to lower margins and sales volumes across the segment. NuStar G&A expenses were $27 million, $4 million higher than the second quarter of 2014, due in part to the expiration of the asphalt JV services agreement on June 30, 2014. Our interest expense net of interest of income was $33 million compared to the same quarter last year. Our June 30 debt balance was $3.1 billion while our debt-to-EBITDA ratio was 4.3 times. On July 23, NuStar Energy's board of directors declared a second quarter distribution of $1.095 per unit, which will be paid on August 13. NuStar GP Holdings' board also declared a second quarter distribution of $0.545 per unit, which will be paid on August 17. Now let me spend a few minutes talking about our projections for the third quarter and full year 2015. In the third quarter, we expect results to be negatively impacted by maintenance and turnaround activity at some of our customers' refineries and reduce throughput volume projections on some of our pipeline systems. We also expect maintenance and reliability capital spending to increase as we get into the back half of the year. Third quarter EBITDA results in the pipeline segment should be slightly higher than the third quarter of 2014 and second quarter of 2015, while EBITDA results in the storage segment should be higher than the third quarter of 2014 but lower than the second quarter of 2015. We expect third quarter EBITDA results in our fuels marketing segment to be lower than the third quarter of 2014 and comparable to the second quarter of 2015. During the third quarter of 2015, we expect G&A expenses to be in the range of $25 million to $27 million, depreciation and amortization expense to be around $53 million, and interest expense of approximately $34 million. Based on these projections, third quarter 2015 earnings per unit should be in the range of about $0.50 to $0.60 per unit while distributable cash flow from continuing operations per limited partner unit should be in the range of $0.95 to $1.05 per unit. With regard to the segment EBITDA guidance for the full-year 2015, we now expect our pipeline segment EBITDA to be $25 million to $45 million higher than 2014 due to reduced volume projections for the remainder of the year. Our storage segment EBITDA is now projected to be $20 million to $40 million higher than 2014 due to higher-than-expected storage throughputs in the first half of the year and favorable renewals at several of our terminals. 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 now expect spending in the $430 million to $450 million range, which includes both internal growth projects and acquisition spending. 2015 reliability capital spending is now projected to be $35 million to $45 million. And now let me turn it back over to Brad for any final remarks.

[Bradley C. Barron:]

Thank you, Tom. We're pleased with our solid second quarter and our year-to-date results. And where there may be challenges in the second half of the year, we still expect to cover the distribution for the full-year 2015 with the coverage ratio comparable to that of 2014. And we continue to focus on growing our core fee-based storage and pipeline operations as well as our distributable cash flow through organic internal growth projects and synergistic acquisitions. At this time, I'll turn it over to the operator and we can open it up for Q&A.

[Operator:]

Your first question comes from the line of Brian Zarahn from Barclays. Your line is open.

[Brian Joshua Zarahn:]

Good morning.

[Bradley C. Barron:]

Good morning.

[Brian Joshua Zarahn:]

On EBITDA guidance. Can you give a little more color on the change in the mix a little bit on the crude pipeline – on the pipeline segment? Is it – any impact from the Belvieu to Corpus NGL line? And is it – any impact also for the lower crude prices? And then, on the storage side of things, is it across the board crude and refined product storage or – a little more color on better results from that business?

[Bradley C. Barron:]

Yeah. On the pipeline segment, it's both those things. There's some from Mont Belvieu and there's some from just commodity prices and throughputs in general in South Texas, which we expect to go up, just not as rapidly as they have been going up. And I'll let Danny talk a little bit about the storage segment.

[Daniel S. Oliver:]

Storage segment were very still but very highly utilized across the segment. I think we're right at 98% utilized, but some of the contracts that we've been renewing, specifically lately at St. James, Linden and Amsterdam have been stronger than we were predicting. But it's really kind of across the board strong renewals in that segment.

[Brian Joshua Zarahn:]

But on the renewal, the rates are a little bit better than we thought. Were you able to have a longer duration or is it similar duration whenever you're contracting for those facilities?

[Bradley C. Barron:]

Similar durations. We're – right now, I think we have, let's see if I can find the number for you, we're right at 20%, 25%, 28% of our storage lease contracts are inside the year of exploration. About 52% are one to three years and about 20% are three years or greater.

[Brian Joshua Zarahn:]

And then looking at some of your growth projects, is Pemex, is that more of an update in the third quarter? Do you think the project will be finalized in the third quarter?

[Bradley C. Barron:]

We believe it'll be finalized. And we know it's taken a long time to get that done. A lot of that has to do with – we're really not negotiating commercial terms with PMI right now, but a lot of the delay I think has had to do with our JV partners, PMI negotiations with their customer who is Pemex.

[Brian Joshua Zarahn:]

Okay. And then on the Corpus stock expansion, is that anticipated to be more for crude or are you positioning more for condensate or just it could be flexibility for either?

[Bradley C. Barron:]

Flexibility for either.

[Brian Joshua Zarahn:]

Okay. And then the last one for me on the guidance for CapEx. Was the modest increase in expansion CapEx more for the new propane project? And then on maintenance, is that just more of a timing issue?

[Christopher C. Russell:]

Brian, this is Chris Russell. On the maintenance side, that's more of a timing issue. Some of the projects just got deferred into next year. On the strategic side, we're building some tanks at St. James that we didn't have. We've got those capital costs in the forecast now. We didn't have those in there initially. And we've also got a couple more tanks at Corpus that we've included in the strategic capital for this year.

[Brian Joshua Zarahn:]

Okay. And then on St. James, what's the – since that's now a definite project, what's the expansion?

[Christopher C. Russell:]

It's a couple of tanks that we're building down there. I'm not sure what the volume is. Danny, do you know?

[Daniel S. Oliver:]

Yeah. It's 600,000 or 700,000 barrels between the two tanks. Those should go into service in the first half of next year of

[Unknown Speaker:]

It's two 363s.

[Brian Joshua Zarahn:]

And so that gets you close to about 10 million barrels in St. James?

[Christopher C. Russell:]

Right.

[Daniel S. Oliver:]

Right.

[Brian Joshua Zarahn:]

Okay. Thanks, guys.

[Daniel S. Oliver:]

You bet.

[Bradley C. Barron:]

Thank you.

[Operator:]

Your next question comes from Steve Sherowski from Goldman Sachs. Your line is open.

[Steve C. Sherowski:]

Hey, good morning. Just a couple of quick ones. Apologies if I missed this. But is there any way you could quantify what the volume impact on the crude lines was from the floods in third-party processing plants being down in the second quarter?

[Daniel S. Oliver:]

That's kind of hard to do. But I think it probably cost us somewhere in the neighborhood of 5,000 barrels a day to 10,000 barrels a day starting around the end of May through the first half of July or the first week or so of July.

[Steve C. Sherowski:]

Got you. Okay. That helps. And for storage renewals, any way you can talk about roughly what rate on average you're seeing or what percentage you're seeing in terms of the increase in rates on like a weighted average basis?

[Daniel S. Oliver:]

No. I don't really have that. It's so different from location to location. I don't have that in front of me right now. Maybe we could get you some of that. I don't have that in front of me.

[Steve C. Sherowski:]

Okay. No, fair enough. And just a quick final question. What type of returns are you targeting for your new Corpus terminal? And can you comment on the CapEx spending?

[Daniel S. Oliver:]

No. I really don't think we can comment yet. We're still working on the final engineering on that project. As you saw earlier this week, we've got the lease signed with the port. We filed for permits. We're working with the Army Corps of Engineers. We've had initial drawings submitted, some initial engineering, but we've still got a little bit of work to do on the engineering of that project.

[Steve C. Sherowski:]

Got you. And is that project going to be backstopped by volume commitments from customers or just how are the contracts going to be structured?

[Daniel S. Oliver:]

It will be backstopped by commitments from customers.

[Steve C. Sherowski:]

Got you. Okay. That's it for me. Thank you.

[Daniel S. Oliver:]

You bet.

[Operator:]

Your next question comes from the line of Jeremy Tonet from JPMorgan. Your line is open.

[Jeremy B. Tonet:]

Good morning.

[Bradley C. Barron:]

Good morning.

[Daniel S. Oliver:]

Good morning.

[Jeremy B. Tonet:]

I was wondering, given the improvement in storage conditions that you – storage markets that you talked about, if you could comment on Piney Point and what you're seeing there.

[Bradley C. Barron:]

Not a lot at Piney Point. That's strictly a contango terminal. We're watching that very closely, staying in contact with some of our customers who would be interested in that. The steepness of the contango curve has just not been sufficient to warrant that interest yet. We have – basically, we have that terminal mothballed right now. It costs us very little to keep that terminal mothballed, just waiting for the right market conditions.

[Jeremy B. Tonet:]

That makes sense. And it might be a difficult question to answer, but just wanted to see if you could provide any general thoughts on project potential upstream of the dock, or what does new – with what you just talked about the Corpus, what could be the growth opportunity off that?

[Daniel S. Oliver:]

The dock is supported by a project upstream that would involve both pipe and storage, but it's too early to comment on that project right now.

[Jeremy B. Tonet:]

Got you. And could there be further upside even or what the magnitude of the impact could be if the export ban were to be changed?

[Daniel S. Oliver:]

Absolutely. Absolutely. But this project will – in fact, I think Brad mentioned it in his notes, but this project already and starting in August will allow for a segregated stream of processed condensate all the way through our system to and through North Beach.

[Jeremy B. Tonet:]

Great. That's helpful. And then just one last one for me. There's been some notable M&A deals announced in the MLP space recently and discussion of sector consolidation appears to be picking up. Do you see NuStar participating in this trend? I was just curious as to your appetite to engage in M&A. Do you see NS as more of a buyer or a seller or any thoughts there?

[Bradley C. Barron:]

Obviously, ourselves is more of a buyer than a seller. In terms of the trend, yeah, I mean, it's obvious that there is consolidation taking place, and we're always on the lookout for good deals. We prefer to grow organically and – but at some point, we will – and we're always actually looking for synergistic acquisitions.

[Jeremy B. Tonet:]

Great. Thanks for that.

[Operator:]

Your next question comes from the line of Mark Reichman from Simmons. Your line is open.

[Mark La France Reichman:]

Good morning. I just wanted to go back – someone had asked about the guidance in the pipeline segment. I just wanted to go back and revisit that a little bit. Last quarter, it seemed like you kind of raised your expectations in terms of the EBITDA contributions from the pipeline segment and now you've kind of moved it back to what's kind of your older expectations. And so, with the refined products, the turnaround doesn't seem like that would have much of a – probably have much of a revenue impact. So, just looking at the crude oil pipeline throughputs, what's your expectation, I mean, in terms of the crude oil throughput? I guess, what I'm kind of looking for is just little more specifics with how you might expect to end the year on just the crude oil pipelines? And just kind of specifically, what the driver is for the lowered expectations?

[Daniel S. Oliver:]

Yeah. Basically, we – this is Danny Oliver by the way. We still expect our crude volumes to grow through the end of the year. Just given the current price deck, we've assumed that that growth may be a little bit more modest than we have had expected last quarter. Of course, that's still subject to change. I can't predict the price of crude oil but the basis – that's what's behind the change in the guidance as far as the crude pipelines go.

[Mark La France Reichman:]

And when you're talking about growth, you were at, what, 506.3 barrels per day in the first quarter. Are you talking about from the average in 2014 or would you expect to finish at the end of the year higher or lower than the first quarter volumes?

[Daniel S. Oliver:]

So it's really all about our South Texas Crude System, the Eagle Ford barrels.

[Mark La France Reichman:]

Right.

[Daniel S. Oliver:]

So we expect the second half of 2015 to grow versus the first half of 2015 and certainly for many period in 2014. We've just leveled out some of that – some of our growth expectations in the second half of this year.

[Mark La France Reichman:]

So I had it like roughly around 550. I mean, would that be a reasonable expectation or -?

[Thomas R. Shoaf:]

Are you talking strictly crude, Mark?

[Mark La France Reichman:]

Yeah. Just crude oil pipeline.

[Thomas R. Shoaf:]

That's probably a little aggressive.

[Mark La France Reichman:]

Little aggressive. Okay. That was kind of a year-end run rate. Okay. That's helpful. And then on – I was just thinking, because actually the quarter came in pretty much in line with at least my expectations. And so a lot of this was already kind of known in the first quarter when you kind of raised your expectations and now you're lowering them. So I just didn't know if there was something drastically changed other than just – is it just primarily volumes -?

[Daniel S. Oliver:]

It's just volumes. But what's changed since the first quarter is now we're sitting on $50 crude.

[Mark La France Reichman:]

Well, yeah. Yeah. All right. Yeah, clearly. And then I wanted to also ask a little bit about the deal with CHS. That looks like a positive – kind of incremental positive project, maybe not as big a deal as the expansion of the dock space down in Corpus. But could you just provide a little more color on that particular project? And are there any other opportunities to expand along with that co-ops business?

[Daniel S. Oliver:]

I believe there is. We continue to talk – we have a very good relationship with CHS. We continue to talk to them about opportunities to help them out as they grow their business up there. Our current, I'll call it, a basket of projects is really six different projects, but they all have to do with either increasing propane supply up into the northern part of the system coming out of Conway or increasing refined products through peak periods in their peak demand seasons up into the northern part of that system. But all six of those projects are incremental or will provide incremental EBITDA to us. And as Brad mentioned, some of the propane project should come online here in the fourth quarter – we believe early in the fourth quarter of this year and the rest in the first quarter of 2017.

[Mark La France Reichman:]

Okay. And then just one last item. When you reported your earnings in the last quarter, was the FERC pipeline adjustment, was that pretty much in line with your expectations in terms of the tariff increase that you got beginning July 1, I mean, at that time?

[Daniel S. Oliver:]

Yes. Yeah, it was.

[Mark La France Reichman:]

Okay. Great. Well, thank you very much.

[Daniel S. Oliver:]

You're welcome.

[Bradley C. Barron:]

Thank you.

[Operator:]

Your next question comes from the line of Cory Garcia from Raymond James. Your line is open.

[Cory J. Garcia:]

Good morning, fellas. Just kind of circling back to the CHS question from just a second ago, I believe you guys referenced sort of a $50 million sort of number for CapEx regarding that project first – I mean, not if you correct me if I'm wrong there. But just wondering how that – or how we should use that kind of going from propane to obviously the remainder of the project that don't hit into 2017. Just trying to see how that contribution works its way through. What the step change is really 2016 versus 2017?

[Christopher C. Russell:]

Yeah. Cory, this Chris Russell. The EBITDA multiple is going to be our normal 2016 EBITDA multiple. I would say maybe a third of that CapEx comes online with the propane system in late 2015 and then the remaining two-thirds kind of ratchets up the last half of 2016 and early 2017.

[Cory J. Garcia:]

Okay. That's perfect. Thanks. And then also sort of switching focus from a bigger picture strategic standpoint and obviously potentially broadening your guys' reach, I know you guys referenced sort of the Permian in the past. Should we be thinking about if there is any project opportunity set there, it'll be more crude-related or is there even some NGL type of angles that you guys are exploring there?

[Bradley C. Barron:]

We're looking at both. And if you know anything about the Permian, it is the sort of the granddaddy of all the shale plays. And we think there's a lot of opportunity on multiple fronts with the Permian. So we're investigating several projects there.

[Cory J. Garcia:]

Okay. Great. Thanks for the color, guys.

[Operator:]

Your next question comes from the line of John Edwards from Credit Suisse. Your line is open. John Edwards - Credit Suisse Securities (USA) LLC (Broker) Yeah. Thanks for taking my question. Just if we could step back bigger picture, just given the kind of commodities price environment we're in, just bigger picture, maybe longer term in terms of your opportunity set that you're looking at, I mean, are you seeing it stay about the same? Are you seeing it fall off a bit, seeing it rise a bit? Maybe if you could just comment directionally how that's looking?

[Bradley C. Barron:]

I would say it's probably about the same. We have great relationships with really good customers, particularly in the Eagle Ford. And so I think there's more business to be done – to be built around those customers there. So we're looking at several projects there. So it is a challenging environment, but we do think there's still opportunity. John Edwards - Credit Suisse Securities (USA) LLC (Broker) Okay. So would it – kind of the CapEx run rate you're at right now, would that be pretty fair going forward the next couple of years would you say?

[Bradley C. Barron:]

That's what we'd like to target. John Edwards - Credit Suisse Securities (USA) LLC (Broker) Okay. Great. Thanks. That's all I had. Thank you.

[Operator:]

Your next question comes from the line of Selman Akyol from Stifel. Your line is open.

[Selman Akyol:]

Thank you. Good morning. Just going back to the pipeline segment real quick, in terms of your operational expenses for this quarter, is that a good run rate just going through the rest of the year the way you see things ramping up?

[Thomas R. Shoaf:]

I'm sorry. You mean, as far as throughputs go, Selman?

[Bradley C. Barron:]

No, OpEx -

[Thomas R. Shoaf:]

OpEx -

[Selman Akyol:]

On the OpEx expense, the $36 million?

[Thomas R. Shoaf:]

OpEx, we're probably going to see our maintenance expense pick up in the back half of the year, specifically in the pipeline segment. But OpEx in the storage segment should be pretty, pretty flat going forward I would think.

[Selman Akyol:]

All right. And then, could you give a little more color in terms of in and around your corrosion issues and how much pipeline was affected? And then I guess what are you doing in terms of looking at the rest of the line? It seems like if it was a small piece that would come back on maybe a little bit quicker. So I'm just wondering how big of an issue is it do you think you have on this pipeline?

[Bradley C. Barron:]

Like I said, we had an issue there. We've investigated it. We're conducting further assessments. And it's going to take a while to get that data in. So we'll know more, later in the year.

[Selman Akyol:]

Okay. And then, in terms of – did you guys say how far you are through your CapEx budgets? How much you've incurred so far in terms of the $400 million to $450 million?

[Thomas R. Shoaf:]

We did earlier -

[Selman Akyol:]

Year-to-date.

[Thomas R. Shoaf:]

We've spent – that $430 million to $450 million includes $140 million we spent on Linden. And then, we've spent about so if we backed that out. Selman, that leaves about $300 million to be spent on internal growth projects. And of that $300 million, we've spent about $140 million of that through the first half of the year.

[Selman Akyol:]

Okay. So -

[Thomas R. Shoaf:]

We're about halfway through the internal growth projects.

[Selman Akyol:]

Got you.

[Thomas R. Shoaf:]

– in terms of the guidance.

[Selman Akyol:]

Okay. And then, I guess, last kind of questions from me. But in terms of just looking at the balance sheet and everything, in terms of financing, the rest of this – can you just remind me on what your plans are for that?

[Bradley C. Barron:]

Yeah. I mean, right now, I think we have some anticipated equity possibly in the back half of the year. I'm still looking at and it's not imminent that we would need to issue any equity in the back half of the year. It's a very fine line there for us in terms of whether we'll need it or not. No real debt capital markets plans at this time for 2015. So, maybe a little equity. That's a big if. We're not really sure yet, but no debt.

[Selman Akyol:]

All right. Do you have an ATM in place?

[Bradley C. Barron:]

Well, we filed a shelf registration for the ATM. We renewed an old one that we had and we're in the process of putting an ATM out there, which we expect to do in the third quarter.

[Selman Akyol:]

All right. Thank you very much. Appreciate the time.

[Operator:]

Your next question comes from the line of Faisel Khan from Citigroup. Your line is open.

[Faisel H. Khan:]

Thanks. Good morning. Most of my questions have been answered, but I just have one question on the New York Harbor acquisition and the rest of your JV, can you just talk a little bit about what – how those assets are performing now that you have the full – you have sort of full control over the entire asset base?

[Daniel S. Oliver:]

Sure. It's performing very well. In fact, we've renewed some contracts in Linden that are a little better than we were anticipating. We're also working – in early stages of working a project for an expansion in that facility, which – hopefully, we have more to say about that maybe around the end of this year or early next year.

[Faisel H. Khan:]

So, would the scope of that expansion be more product storage or more dock capacity. What's sort of the demand from customers for additional services?

[Bradley C. Barron:]

It's more of product storage and we have sufficient capacity on our docks there to handle the expansion that we're contemplating.

[Faisel H. Khan:]

Okay. So the docks aren't – when you say the docks aren't being fully utilized because of maybe you're not having as much storage as you'd like or how would you describe it?

[Bradley C. Barron:]

Correct. Correct.

[Faisel H. Khan:]

And with that, if you increase the storage, I mean, what's the thing with the dock capacity there? What's the percentages being utilized right now and what could it be going forward?

[Bradley C. Barron:]

Well, it's probably 50% to 60% now. So we've got room for additional storage across those docks.

[Faisel H. Khan:]

Okay. Got you. And as I understood, the last question on the ATM. So, right now you're not – you haven't issued any equity under your old ATM program. Is that right or -?

[Bradley C. Barron:]

No, we didn't. It was just a tiny bit that was done few years ago, but no. Effectively no. We really haven't issued anything under it.

[Faisel H. Khan:]

Okay. Got it. Thanks for the time. Appreciate it.

[Operator:]

Your next question comes from the line of Louis Shamie from Zimmer Partners. Your line is open.

[Louis Shamie:]

Hi. Good morning, everyone. So my question was just mostly around the Corpus Christi potential dock expansion. I just wanted a little bit more of a broad deal of what's going on around there, how it relates with the sort of Phase 2 of your Eagle Ford project? And put it in the context of potential competition, lot other midstream guys have infrastructure in that area and they've got similar projects. So, sort of where do you stand with that in the competitive landscape?

[Daniel S. Oliver:]

I think we have probably the greatest capacity to load Eagle Ford crude out in the Corpus area. Our customers experience very little demurrage or time waiting on a dock. As Brad mentioned in his notes, we've been setting records of almost – single-day records, almost 900,000 barrels. That's very important when you have several ships show up at the same time and want to get their crude out. But again, that's why we're very busy in Corpus now and utilizing our docks. We do have some expansion plans that we're working on. And it's nice to be able to grow these pipeline demands and things like that, but you have to take care of business at the dock or it just doesn't all work.

[Louis Shamie:]

So the idea would be that you'd come up with some plans and then go into an open season or something like that to market it?

[Daniel S. Oliver:]

It may or may not involve an open season, but we do have some definite, specific expansion projects that we're working in the Eagle Ford right now.

[Louis Shamie:]

Got it. Can you talk a little bit about what the potential capital spend would be for those plans?

[Daniel S. Oliver:]

It's a little early for that.

[Louis Shamie:]

Okay. And then the last thing I wanted to ask about was the St. James rail facility. What have you guys been seeing there and what's your expectation of how that performs over next few years?

[Daniel S. Oliver:]

It's hard to talk about expectations because the LLS spreads vary and we certainly saw on the first half of this year those spreads were almost flat to WTI to LSS. And those volumes in St. James went to basically nothing or down to our contract minimums. But we've seen here just in the last couple of months is those spreads have improved, and we've seen some incremental volume coming back over those systems.

[Louis Shamie:]

Got it. Okay. Thank you very much.

[Daniel S. Oliver:]

Good.

[Operator:]

Your next question comes from the line of Lin Shen from HITE. Your line is open.

[Lin Shen:]

Hey, good morning. Just – we have a quick question about Corpus Christi. Just wondering like what are the current destination to receive crude or products from your Corpus Christi dock now? And do you think that their same destination will be used to have enough capacity to receive your expansion project?

[Bradley C. Barron:]

Right now, ships leave our Corpus Christi facility and they head up the coast to refining centers in Houston. They head up to Louisiana. Some of the ships head up to Canada. So I would think – and I think your question further ask, what would happen at the crude export ban. We're lifted. There's a great potential for those ships to go almost anywhere. Mexico has talked about projects with the United States to take U.S. crude into Mexico. We'll be well positioned to handle that crude as well.

[Lin Shen:]

Okay. Great. Thank you.

[Bradley C. Barron:]

You're welcome.

[Operator:]

There are no further audio questions at this time. I will turn the call back over to the presenters.

[Christopher C. Russell:]

Thank you, Blair. I would once again like to thank everybody for joining us on the call today. If you have any additional questions, please feel free to call NuStar Investor Relations. Thank you.

[Operator:]

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