USD Partners LP
Q3 2017 Earnings Call Transcript

Published: 8 Nov 2017

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the USD Partners LP Second [ph] Quarter 2017 Results Conference Call. At this time, all participants have been placed in a listen only mode. The floor will be open for your questions, following the prepared remarks. [Operator Instructions] It is now my pleasure to hand over the program over to Ashley Zavala, Director of Finance and Investor Relations for opening remarks. Please go ahead.

[Ashley Zavala:]

Good morning, and thank you for joining our third quarter 2017 earnings call. With me today are Dan Borgen, our Chief Executive Officer; Adam Altsuler, our Chief Financial Officer; Brad Sanders, our Chief Commercial Officer; Josh Ruple, Chief Operating Officer, as well as several other members of our senior management team. Yesterday evening, we issued a press release announcing results for the three and nine months ended September 30, 2017. If you would like a copy of the press release, you can find one on our website at usdpartners.com. Before we proceed, please note that the safe harbor disclosure statement regarding forward-looking statements and last night's press release applies to statements of management on this call. Also, please note that information presented on today's call speaks only as of today, November 8, 2017. Any time-sensitive information provided may no longer be accurate at the time of any webcast replay or reading of the transcript. Finally, today's call will include discussion of non-GAAP financial measures. Please see last night's press release for reconciliations to the most comparable GAAP financial measures. And with that, I'll turn the call over to Dan Borgen.

[Dan Borgen:]

Thanks Ashley, good morning everybody and thanks for joining us. Like our format last year, Adam will start off with the financials, then I'd like to highlight a couple of our positive developments related to our Stroud and Hardisty terminals and as usual address a few questions that we expect are on your list or should be. So, Adam - with that Adam, I'll turn it over to you and let you cover the financials.

[Adam Altsuler:]

Thank you, Dan and thanks for, joining us on the call this morning. For the third quarter, we reported net cash provided by operating activities of 16.2 million, adjusted EBITDA of 13.4 million and distributable cash flow of 13.6 million. Relative to the third quarter of 2016, net cash provided by operating activities increased by 11%, while adjusted EBITDA and distributable cash flow decreased by 17% and 5% respectively. During the third quarter increased activity at our Hardisty terminal resulted in an increase in terminalling services revenue recognized as well as an increase in the associated operating costs. Activity at our Hardisty terminal reached two-year highs during the quarter. These increases were partially offset by the discontinuation of our operations at our San Antonio rail terminal following the conclusion of our customer contract in May of 2017 and the expiration of a customer contract at our Casper rail terminal in August 2017. Additionally, the partnership incurred approximately 900,000 of operating cost during the third quarter related to the Stroud terminal in preparation for the commencement of operations which included approximately 400,000 of depreciation expense. With regard to our Stroud acquisition, the partnership has spent approximately $1.2 million of growth capital expenditures on retrofit activities necessary to handle heavy grades of Canadian crude oil since the acquisition was completed on June 2. These efforts were completed on time and under the partnership's initial budget. And the partnership successfully commenced operations at the Stroud terminal on October 1 at planned. In current with Stroud acquisition, the partnership entered into a new multi-year take or pay terminalling services agreement with investment grade rated multinational energy company for use of approximately 50% of available capacity at the terminal from October 2017 through June 2020. The partnership expects the Stroud terminal to generate net cash flows from operating activities of approximately $1.5 million during the fourth quarter 2017 and approximately 10.2 million for the full-year 2018. As mentioned on our second quarter call, the partnership received tax refund of approximately 2.6 million during the third quarter in connection with Canadian income tax returns for 2016. The partnership expects to pay minimal cash taxes in the fourth quarter of 2017 and estimates its full-year 2018 net cash taxes paid to be in the range of 500,000 to 1 million. On October 26, the Partnership declared a quarterly cash distribution of $0.345 per unit or $1.38 per unit on an annualized basis which represents growth of 1.5% relative to the prior quarter and approximately 7% relative to the third quarter of '16. The distribution is payable on November 13 to unit holders of record as of the close of business on November 6. As mentioned, this marks the Partnerships' 10th consecutive quarterly increase and in addition the Partnership maintained distribution coverage of approximately 1.5 times for the quarter. As of September 30, the Partnership had net leverage of 3.2 times LTM adjusted EBITDA and total available liquidity of approximately 207 million including approximately 8 million of unrestricted cash and cash equivalents and undrawn borrowing capacity of 199 million on its $400 million senior secured credit facility subject to continued compliance with financial covenants. The partnership is in compliance with its financial covenants and has no maturities under senior secured credit facility until October 2019. And with that I with turn the call back over to Dan.

[Dan Borgen:]

Thank you, Adam, let me start with an update on the Stroud terminal. We are very proud that our team completed the final retrofit work on time and under budget. And as Adam said, we began operations on October 1 as a reason contemplated of our customer's agreement. A few of the folks out there have asked why our customer chose rail to pipe rather than the pipeline the entire way to Cushing. One reason which everyone is familiar with at this point is the expectation that Western Canada production will face pipeline takeaway constraints for at least the next few years. This is - and possibly longer. This is a long end view of ours and one that's increasingly shared by others in the industry including our customers. Rail is an established solution that is position provides scalability and timely takeaway. Additionally, rail provides a greater opportunity to control the specific quality of our customers' product over long distances. Remember there are multiple qualities of heavy crude sold out of western Canada, some of which have historically sold for higher prices than other grades. Our Stroud terminal pairs both of those capabilities with access to the Cushing hub, which provides optionality to maximize value to access to multiple refining centers across the United States. Also, our newly established origin to destination capabilities from Western Canada, directly to Cushing should build our case for Hardisty re-contracting and possible expansions. As we've said before we received inbounds from multiple customers as soon as we made the Stroud announcement and continue to have productive meaningful conversations on how we can meet their needs. We have approximately 50% of the current Stroud capacity available plus we're looking at opportunities to increase that capacity a bit further as customer demand requires. Next, we'd like to talk about Hardisty and the meaningful increase in activity we've seen there over the last several months. I'll ask Brad Sanders, our Chief Commercial Officer to give us an update on what we're seeing in Western Canada and whether our thesis has begun to play out. Brad?

[Brad Sanders:]

Thanks Dan, the short answer is yes. The activity at Hardisty has materially increased and its reach recently the two-year highs during the third quarter. So, we have seen activity improve and it's consistent with expectations, I'll remind the people in the phone of our thesis that is production has recently recovered from its recent disruptions and turnaround activities and more importantly as new projects have been brought online or being brought online this quarter, then we've seen apportionment levels return to the major export pipelines. I remind this group that for this quarter our expectation is we will see an additional 350,000 barrels a day of new production come online. This will continue to put pressure on the export pipelines and more importantly continue to put pressure on the Western Canadian select price which ultimately is what we believe the catalyst that drives our activity level, our increased activity level and our ability to commercialize through re-contracting and/or growth at Hardisty, Stroud and/or CCR. For you on the phone, the last time we spoke, the WCS the WTI spread was trading at approximately $9 a barrel, it's currently trading closer to $15 a barrel. So, it's widened significantly. And then secondarily the WCS to Brent spread was trading nearer $11 a barrel the last time we were on the phone together and it's currently trading closer to $22 a barrel. So, the macro stories intact, the prices are responding consistent with the macro story relative to the lack of takeaway capacity and that's driving people to see grow our solutions.

[Dan Borgen:]

Thank you Brad, appreciate that. Let's talk a little bit more about Hardisty. Still a critical hub for Canadian takeaway, how do we feel about position there versus other locations like Edmonton, will continue to go with Brad, Brad wants to take us down that path.

[Brad Sanders:]

Hardisty is critical. It's the largest storage hub in Western Canada. Currently has approximately 30 million barrels of storage. Specifically, our partner Gibson announced recently their plan to build an additional 1.1 million barrels of tankage at Hardisty. And that of course is underpinned by a long-term contract with an investment grade oil sands customer and that will bring their total to approximately 10 million barrels a day at Hardisty. So, in total, Hardisty tankage is growing. Our partner in particular is probably the leader in growth at Hardisty. This is driven by a number of things, one is the production we talked about, the increase in production, but specifically that production has - is either gathered directly into Hardisty or has the option to be gathered into Hardisty. And at Hardisty of course is where all but one of the major export pipelines originate, and or travels through, which is not the case for other hubs. So Hardisty is uniquely located and uniquely designed to participate in the growth story in Canada. So Hardisty is a critical part of the transportation infrastructure in Canada and we feel we are uniquely well positioned as we are the only existing unit train facility connected to that hub.

[Dan Borgen:]

Thank you Brad, I think that's right. I think everyone should be reading that isn't just saying, us saying this anymore, this is an industry fact that many are repeating and seeing factually in terms of the continued inventory builds large growth in rail takeaway and movements out of that area, out of Western Canada. Given all these things what are our current expectations for re-contracting at Hardisty and Casper including rates relative to our existing contracts. So, we call it the so what, so what all this mean, and what does it mean to us financially. So, Brad, walks us down that.

[Brad Sanders:]

Clearly the increased activity at Hardisty is a positive tailwind and the velocity and the quality of our discussions with our customers have improved. But I'll just walk through the three critical things again. So, the macro is in, which is important, we just walked through that and we ultimately the catalyst for any kind of commercialization or re-contracting discussions at our network of terminals is driven by the spreads which is a function of the underlying macro. So, the trend is in, the production is coming, the production that's been on that has been down because of unexpected outages is now returning and we're starting to see the spreads increase. So, we have a supported macro. Additionally, the railroads play may be one of the most critical parts in providing not only a competitive solution, but doing so in such a way that the participants are comfortable with that solution. And we've spent a lot of time with the leadership of the railroad to provide that solution and we are very excited and comfortable with their level of preparedness and willingness to participate in a very competitive fashion. So that's important to us. And then finally, we talk about curves, we talk about the variable costs at the railroads provide, but as a reminder, how important quality is to take away decisions made by producers and in some cases by refiners. So, I remind this group that we recently commercialized Stroud. During a period in time that there was no economic incentive for that commercialization simply by looking at the underlying curves, what really drove the commercialization of the asset was certainly a point of view that the market would win incent rail takeaway. But more importantly was the quality issue and the need for our customer, the desire for our customer to one, protect the quality of their production and two, to deliver that production to a point and location where they could be recognized for that value and achieve the highest netback. So as a reminder, quality really matters and that is critical. Specifically, as it relates to Casper, given these changes from a pricing standpoint, we expect activity at Casper to improve. If you think about we are now trading at $15 differentials to WTI, $22 differentials to Brent, then refiners now are basically in the money that it's worth their while to pursue and refine heavy Canadian relative to their alternatives. So, we expect the original value proposition of Casper is a pipe to rail, so we expect that activity to improve. But that's not the only thing that we're spending our time on. We're working on other strategies, hub strategies we'll call it that allow us to maximize the footprint of Hardisty from a storage build and break bulk, blending, but also a rail to pipe solution similar to what we've been able to commercialize at Stroud. So, there's a lot going on at Casper and with the underlying macro improving, we're excited about activity growing and opportunities improving. Finally, it's difficult to give specific guidance on rates given where we are in negotiations today and where we are from an overall macro. But our objective is and will be to balance term with right and we think we'll have that opportunity to do that given the underlying macro changes that we're now witnessing and the demand we see coming.

[Dan Borgen:]

Thank you Brad, just additional point to that. Obviously at Casper, we had - we created some space or space was created by one customer not renewing as we all know. We like the opportunity now to have that space available to be able to flex with a stronger demand market. We all know there's renewal risk in this space, we've talked about it before, it's commonplace. We'd like to marry up that renewal risk with heavy demand periods, obviously the fact supports us, it's not just us saying, the facts support the demand story. Therefore, we feel confident that we'll continue to see demand for all of our assets for take away both in our conventional use as well as storage as well as blending as well as rail to pipe like we did at Stroud. So, it's a proven concept. And for the same product type differentials optimization I'll call it that's available at Casper as well. So, we're working closely with several folks on that, great customers to be able realize that as well. Let me shift now to our distribution. We've recently achieved the milestone of our tenth consecutive distribution increase as Adam said, which we're proud to have accomplished given the challenging environment over the last few years. Recently, certain MLPs have chosen to moderate growth or in some cases cut distributions and order to increase coverage and/or reduced leverage. Adam, how would you say recent events in MLP sector impact our distribution growth policy going forward?

[Adam Altsuler:]

So, we definitely take all the recent events into consideration when determining our distribution policy. For 2017, we're on track to deliver 7.5% year-over-year growth on a full-year calendar basis and that's consistent with our guidance that we set earlier this year 5% to 10% growth. We continue to be comfortable with that range for this year. We also remain committed to maintain any conservative financial profile with distribution coverage of at least 1.1 times and net leverage at or below 3.5 times. So as a reminder, for the third quarter we had approximately 1.5 times distribution coverage and net leverage of approximately 3.2 times. So, over the next several months, we expect to gain greater clarity on some of the re-contracting efforts as a result of the macro events that are unfolding. And as always, we will keep an eye on any upcoming capital needs at the Partnership whether at Hardisty or at Casper. These outcomes will clearly influence our discussions with our board and the target level of distribution growth going forward. And as we've done historically, we will likely get guidance more towards the beginning of next year.

[Dan Borgen:]

Great, thank you Adam. Now, we want to talk about - spend a little time here and I'm going to ask Brad to discuss that as well. But talk about what we're doing at Texas Deepwater. We've been - we have a full team working on that on a daily basis and making great strides. I'll let Brad talk a little bit more about that as we talk about our Texas Deepwater Houston Ship Channel development project.

[Brad Sanders:]

We're very fortunate in our Stroud, Hardisty, Casper discussions uniquely when positioned to benefit from a macro event, increase in supply with challenging takeaway opportunities. And there aren't a lot of places in lower 48 where that's available at this time. So, we are excited about that, but here in the US now we've got a situation where we've got new production coming on at a significant rate and looking for ways to efficiently and effectively get to water. So, Houston remains very critical to that overall macro story. Here recently, we've had exports surpass 2.1 million barrels a day. When we compare that to this time last year, exports were somewhere around 400,000 barrels a day. So, the role of Houston as an export hub is significant and growing, so our property is uniquely positioned to participate in that macro event. As a reminder, we are fully permitted for up to 12 million barrels of liquid storage, multiple barge and deepwater docks, inbound and outbound pipeline connectivity as well as a unit train capable rail terminal. In addition to being focused on being fully permitted, we've spent most of our recent time and priority on improving and adding connectivity and that has been our key focus and we've made significant progress in that regard and we look forward to being able to share that progress with others in the future, near future. Our discussions have been, because of this increase in the macro story, our discussions have become more purposed and we've had meaningful discussions, not only with producers and refiners, but midstream companies who are constraint with their current infrastructure and looking for ways to improve upon that. So, we're pretty excited about those opportunities and the size of those opportunities. We're reminded that recently Magellan and Valero partnered on an opportunity here in the Houston ship channel and the scale of that opportunity was material. And those are basically singling the kind of opportunities that we're seeing and the kind of opportunities that we think are available to us as we continue our discussion to Texas deepwater.

[Dan Borgen:]

Great. Thank you, Brad. Yeah. We are very bullish about that project and look forward to continuing to communicate more about that as we as we continue to develop. Another part of our strategy and many of you may have seen our press release around our entrance into the Mexico market. This is the culmination of about a two-year strategy to go in carefully into Mexico and, but I think everyone is aware of the deregulation in Mexico and the opportunities at that place for infrastructure and other things. I think that we are uniquely qualified and are taking a unique approach into that market, which gives us some competitive advantage there and we believe that that will continue to expand. We have identified and continued to work through the commercial terms to further expand several locations in the Mexico. The first one is our Casper facility. It took me about 20 times to be able to say that correctly, but we have commenced construction on the multi-modal transloading terminal there to improve the distribution of petroleum products in and around that surrounding area. That market includes over 1 million residents in close proximity and is located less than 150 miles from Mexico City. As is our custom, the initial development is supported by a multi-year take or pay contract with established operator in the area and - but we will have additional capacity available on the commencement of operations. We are actively marketing that capacity to third-parties today. We're also exploring similar opportunities, as I said, to replicate the strategy in other places in Mexico, all of which fits well within our Texas deepwater development that is well positioned to become an export hub. So, each one of our terminals that we develop have a standalone value, standalone take or pay commitment from solid customers, but then it's - we always ask ourselves how does it fit within the network. So, we're not going out on a limb, it fits our strategy, it fits our vision of tying well into our Texas deepwater export strategy, be it rail and water. In terms of what it means for the MLP, obviously still early days on that as we're in construction on that and as is our custom, we take the risk out of the terminal or the project upstairs before we would think about dropping it in to the entity MLP. So right now, we're focused on the construction phase and de-risking that opportunity at the parent. Lastly, I'd like to ask Brad to provide a quick update on a really exciting thing that we've talked about before that we think is the ultimate solution for Canadian heavy and I'll let Brad talk a little bit more about that.

[Brad Sanders:]

So, as you all know, we are very purposed about reinventing takeaway solutions in Canada and moving towards more of a bitumen versus a blended movement. So, but Dan of course is speaking to the development of a diluent recovery unit. As we move into the macro environment, where rail matters and people then want to and are open to discussions on how to improve on rail netbacks and as we move into the current environment, where pipeline uncertainty is quite high and as it relates to if and when, then we're excited about the opportunity to get in front of customers and talk about a solution that, in our opinion, is the ultimate solution that the industry should work towards and achieve. So, we and partner have strategically sat down with customers. We've had our initial round of discussions and to a person, all customers we have met with have requested CAs in order to continue with more detailed discussions. So, we're excited about that and looking forward to getting that done and moving forward with detailed discussions. As a reminder, the DRU rail solution does a number of things. First and foremost, it creates a safer solution and a safe solution, but also more efficiently, but the most critical part is it ultimately provides a takeaway solution for the industry that is competitive with pipelines. So, hopefully, we'll have more to report in the near future as we get these CAs assigned and we get into detailed discussions.

[Dan Borgen:]

All right. Very good. So, we've trademarked the DRU bit barrel, we're calling it DRU, D-R-U bit barrel, and that's approximately 98% of bitumen. As Brad said, it's nonhazardous, nonflammable. And not only is it a preferred commodity to transport, but it also frees up additional pipeline space that's current. So, if a customer has a commitment for pipeline space by converting into a DRU bill barrel, they free up that space as well and can optimize that. And so, we look forward to, as Brad said, talking more about that and moving that process forward. With that, I'll open it up to any questions. We're happy to always answer those and share with you all our thoughts. Thanks.

[Operator:]

[Operator Instructions] Our first question comes from [indiscernible] with Citigroup.

[Unidentified Analyst:]

Can you give us some more details on the recent, the QET Mexico contract, maybe any clarity on 10-year capacity contracted and regarding potential drop down timing, is that fair to say that that's something you might look to execute if you see delays in contracting other terminal capacity?

[Dan Borgen:]

Well, certainly, as we look at any assets upstairs to - as we've done with Stroud that was a nice additional piece, that helps offset some of the deferral of revenue that we have at Casper and as we develop new projects, we obviously look at that and if that's a way to help solve some of those shortfalls, we would certainly look at that as they qualify, as revenue qualifies and as it's brought on line. It is a multi-year because its upstairs are at the parent and we are commercializing other businesses. At this time, we don't disclose obviously the terms of that, but it's multi-year, it's take or pay. It would be something that as we get it constructed and it fits, and the market is right, we could certainly look to dropping it in at some point in the future.

[Brad Sanders:]

Yeah. And, I think right now, it's small, but we do intend to grow it and we do intend to replicate it in multiple markets. So, I think it's something that once we get scale and gets derisked, it will be something we consider dropping in.

[Dan Borgen:]

From a timing standpoint too on our operational start, it's a - we're calling it a first quarter '18 start, commercial start.

[Unidentified Analyst:]

Okay. And regarding Texas deepwater, are there any timelines you can speak of. So basically, any next steps or milestones you're looking at to achieve there near term or does it simply come down to signing up customers since permitting is complete or is there more that needs to be done.

[Dan Borgen:]

Yeah. I'd say that - the answer to all of that is yes, yes and yes. So, we have commercial operations on there today. It's cash flow positive and making money for us today from a rail and related activity, commercial activities. In addition to that, we're continuing to invest capital and we're just doing our major power drop into that facility, which is a multimillion dollar investment to grow that, to create the power to support the pumps and the connectivity that we've been working on that Brad mentioned. So, I would say that from a milestone, look for announcements soon, relative to new activity in the market. Obviously, you can't pick up a - or read it, say, pick up a paper, read it online about additional activity along the Houston ship channel, about shortage of tanks and docks. So again, we feel very positive around the demand on story related to export, blend, destination for heavy. Remember how this fits our overall vision from, again as a standalone asset, but also as a destination for heavy barrel coming out of Canada. We have approximately 600 rail car spots that we can land barrels, we can, in short order, begin loading unit trains of refined product to go to Mexico. We have capital plans on the books for that. So, it really fits a very standalone and network strategy for us, both on inbound rail, outbound rail, inbound pipe, outbound pipe, blend, barge capability, deepwater capability, all the things that are demand story today and we'll continue to be as long as we see the production levels that we're seeing, growing the United States and given the export capability and the need that our customers have for that. So, long answer to your question, but hopefully that answered it.

[Brad Sanders:]

And I would say, this is Brad. I would also say, critical is the macro story, the Canadian story is 2018, the domestic story is 2018. So that's a good way to think about when commercialization needs to happen.

[Unidentified Analyst:]

And just one last quick one for me and it seems that we had a pretty big uptick in Canadian rail movements, diverting to the east coast. Would you say that was simply higher Brent pricing and spreads that drove that, and did you actually see some of your volumes from that way as well?

[Dan Borgen:]

The answer from a macro standpoint is yes on the Brent being the driver. So, we've seen Brent widen relative to TI asking for barrels to be exported versus imported. So those East Coast refiners who have been importing crude based on Brent reached to domestic grades and yes, Canadian crude is moving to the east, where it's appropriate.

[Brad Sanders:]

In addition, obviously with the Ven backout - the Venezuelan backout and from a political sanction standpoint, we're seeing some of our refiner customers replacing some of that Ven heavy with Canadian heavy. I think you'll continue to see that as imported heavy. Dwindles then gets backed out, you'll see domestic refiners in the Gulf and elsewhere seek to replace that with Canadian heavy coming out of Canada. Obviously, the odds are there, the differentials are there, the refiners as Brad said earlier, the refinery buy is in the money. That's why - refiners love cheap feed or cheaper feed. And so, this gives them the opportunity to do that.

[Dan Borgen:]

As a reminder, light suites are priced to export, heavy suites for net import or heavy or net importers. So, it's an activity that leads to displacement of imports.

[Operator:]

[Operator Instructions] Our next question comes from Mike Gyure with Janney.

[Mike Gyure:]

Can you just talk a little bit about I guess the environment you're seeing as far as rail rates going through your network, if you're seeing sort of an uptick in that. Or I guess what you're seeing there, returns there?

[Dan Borgen:]

Good to hear from you Mike. So, obviously, let me speak generally and then I'll speak to maybe our relationships with railroads, but as we think about railroads, railroads like heavy demand periods because they have the opportunity to ramp pricing up generally speaking to that demand story. I think that fortunately, we have been working with the railroads for some time in partnership to help understand this market and when it's coming and what duration and what the term is. And so, we have - we've been able to do some unique agreements with the railroads that lock pricing in for - on behalf of our customers. So, let me step back and just talk a little bit about, for instance Stroud and the importance of rail into that. Not only did we have to get the opportunity to acquire the asset, CPS that acquired the asset, but we also had to negotiate rail rates over term to support the transportation of that in a competitive way. Also, supply the rail cars caused them to be supplied to the customer that did not have rail cars to support that business. So, a variety of different things to come together to do that, much of which has a rail component to it, as you heard me say. So, I think that when we can give term and we can give volume commitments, we get a more preferred rate structure, which is locked in and drives to longer term - mid to longer term profitability for the entire project. So, as a general rule, yes, you're going to see manifest rates up. You're going to see some unit train rates up. And because that's the nature of these. The railroads tend to share track, obviously, with other commodities, grain, lessening coal, but still coal, other potash, other products and commodities across their network and so they seek to have those lines of business compete for profitability across those lines and get best use out of it, as you would imagine. So - but again, we've been very fortunate with our long-term relationships with railroads to really try to set in place long-term strategies that meet everyone's objectives and assure profitability over a several year period. Hopefully that answers that without getting too much in the weeds.

[Mike Gyure:]

And then maybe a follow up on the Stroud terminal, sort of maybe contract structure. The guidance that you gave relating to the net cash flows, is there a working capital component with that, and if so, I guess how does that work?

[Adam Altsuler:]

Yeah. There was not a working capital component in the numbers that I expressed on the call today.

[Dan Borgen:]

He answers quicker than I do. Doesn't he? So anyway, any other questions?

[Operator:]

There are no further questions at this time.

[Dan Borgen:]

Okay. Well, folks, really appreciate the time. Obviously, there's a lot going on in the space, a lot going on in the market. I hope you all can see in the marketplace and you hear us say it and you have heard us say it, but I hope you're getting confirming evidence, fact based evidence that demand is growing, demand is on, demand is real. We take that, so what should be less risk in execution, given these periods of renewals that we have coming. We continue to see headwinds for alternative means of transportation that are coming out of Western Canada from a timing standpoint and just the volume to support those large capital commitments. We still see rail as a driving - meaningful way of moving product successfully, safely, ratably out of those markets and as we then move into more of a DRU bit barrel, as we talked about that a DRU bit barrel is not going to, once it's conformed, once it's transitioned to a DRU bit barrel, then it will forever, unless it's converted back beyond rail or truck or other means, but not in a pipeline, because it will be too heavy. Now again, that's what our refining customers are wanting is a true, neat, I'll call it, heavy barrel that they can then blend in the spec with a high-quality blend component, again looking to do that at our blend facilities at our Texas deepwater facility. So again, trying to draw in the network capability that we're providing that's I think is unique and will be a - driving successful story for USD Partners. So, we appreciate the time today. Everybody have a great rest of the week. We look forward to communicating further as developments happen. Thank you.

[Operator:]

Ladies and gentlemen, this will conclude the USD Partners third quarter 2017 earnings results. You may now disconnect your lines.