NuStar Energy LP (NS) 2008 Q1 法說會逐字稿

Good morning, my name is Jennifer, and I will 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 2008 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. (OPERATOR INSTRUCTIONS) Thank you. Mr. Meador, you may begin your conference.

Thank you operator. Good morning and welcome to our conference call to discuss NuStar Energy L.P. and NuStar GP Holdings LLC's first quarter 2008 earnings results. If you have not received the earnings releases, and would like copies of each, you may obtain them from our websites at NuStar Energy.com and NuStar GP.com. Attached to the earnings releases we have provided additional financial information for both companies, including information on NuStar Energy L.P.'s business segments. If after reviewing the attached tables you have questions on the information that is presented there, please feel free to contact us after the call.

In addition, we have posted slide materials that go along with the remarks this morning under the Investors' portion of the L.P. and GP websites, and I encourage you to have these available during the conference call.

With me today is Curt Anastasio, CEO and President of NuStar Energy L.P. and NuStar GP Holdings LLC; Steve Blank, our CFO, and other members of our management team.

Before we get started, we would like to remind you that during the course of this call, NuStar management will make certain statements concerning the future performance of NuStar, and other statements that will be forward-looking statements as defined by securities laws. These statements reflect our current views with regard to future events, and are subject to various risks, uncertainties, and assumptions. Actual results may materially differ from those discussed in the forward-looking statements, and you should refer to the additional information contained in NuStar Energy L.P.'s and NuStar GP Holdings LLC's Form 10Ks for the year ended December 31, 2007; and subsequent filings with the Securities and Exchange Commission. I'll now turn the call over to Curt.

Good morning, and thanks for joining us today for the first quarter 2008 earnings conference call. For those of you who are viewing the slide presentation that can be found on our website, we are now starting on slide number five of the presentation.

2008 is off to a great start, as I'm excited to report that we had the highest quarterly earnings in the partnership's history. Net income applicable to limited partners, distributable cash flow and EBITDA were all up significantly over the first quarter of last year. Net income applicable to the limiteds was $51.8 million, or $1.05 per unit, around 95% higher than the $26.7 million or $0.57 per unit we reported in the first quarter of last year; while distributable cash flow to limited partners was $1.42 per unit, or 41% higher than the $1.01 per unit reported last year.

One of the reasons for the significant increase in our earnings quarter-over-quarter was due to higher throughputs on our pipeline and terminaling assets that serve Valero Energy's McKee refinery. Even though we were able to recoup most of our losses through business interruption insurance, throughputs on our pipelines and terminals in 2007 were significantly impacted due to the fire that started at Valero's refinery in mid-February of last year.

Storage, lease and throughput revenues in our refined product terminals business segment were up nearly $12 million compared to last year, as we benefited from additional customer storage and throughputs at our St. Eustatius, Pt. Tupper, Piney Point, Vancouver, Portland, Amsterdam, and United Kingdom terminals.

Another reason our results were up significantly from last year, was the contribution from our refining and marketing business segment. Excluding the impact of the CITGO Asphalt acquisition, our marketing supply and trading business contributed an incremental $6.7 million of operating income compared to last year.

We also benefited from several non-recurring items, which have been included in "Other Income" on our income statement. One of those items was a $4.3 million gain, or $0.08 per unit, on the sale of an idle pipeline. The settlement of our business interruption insurance claim on the Valero McKee refinery fire, which amounted to $3.3 million, or $0.06 per unit also contributed to our earnings in the first quarter. And our results included a $1.8 million gain, or $0.04 per unit, relating to a non-cash foreign exchange gain on U.S. dollars held by our Canadian subsidiary.

Excluding the impact of these and other special items, adjusted earnings for the first quarter of 2008 would have been $43.8 million or $0.89 per unit, which still represents the highest first quarter earnings in the partnership's history.

I'd also like to note that at the time of the fourth quarter conference call, we had guided The Street to a range of $0.60 to $0.70 for earnings per unit for the first quarter of 2008. Our actual first quarter results came in higher than the guidance we provided, primarily due to higher than expected revenues on our pipelines and terminals, and lower than expected operating and G&A expenses.

With respect to NuStar Energy L.P.'s distribution, the board declared a quarterly distribution of $0.985 per unit, or $3.94 per unit on an annual basis, payable May 14 to unit holders of record on May 7. This distribution represents an increase of $0.07 per unit, or 7.7% over the $0.915 distribution for the first quarter of 2007. I'm also pleased to say that we had a strong coverage ratio of 1.44 times, applicable to the limited partners for the first quarter.

And the NuStar GP Holdings board declared a quarterly distribution of $0.36 per unit, or $1.44 per unit on an annual basis, payable May 16 to unit holders of record on May 7. This quarterly distribution represents an increase of $0.04 or a 12.5% increase over the $0.32 distribution paid in the first quarter of '07.

Turning to the next slide, you can see the status of our $400 million strategic capital program. Year-to-date we've already completed two very significant projects, including the third and final phase of our $50 million tank expansion at St. Eustatius in the Caribbean, and a part of the first phase of our $100 million Amsterdam expansion. The remainder of the projects, including work in Amsterdam, Texas City, St. James Louisiana, Linden, New Jersey, and Jacksonville, Florida, should be completed by year-end. These projects, and the $90 million or so completed last year, are the drivers of the $40 million EBITDA increase we are forecasting on the base business, in other words, pre-CARCO acquisition, in 2008 over 2007.

And we continue to evaluate the additional $500 million of organic growth projects we announced last quarter, and the $35 million of high return projects on the new asphalt business, and we'll have more information about those as they are further developed during the year. As you can see, these are projects we would expect to begin between 2009 and 2011.

Turning to the next slide, currently we're getting questions on how slower refined product demand, as a result of the weak economic growth in the United States, or potential demand destruction because of higher pump prices, might impact our throughputs on our pipeline and terminaling systems, as well as the new asphalt business. In the first quarter of 2008, despite a small decline in our pipeline throughputs as a result of turn-arounds at a couple of refineries we serve, and due to the seasonality of the business, we saw no material impact to our pipeline and terminal throughputs as a result of weaker economic growth, despite year-to-date demand for refined products being about 1% lower compared to last year. And as you can see from the chart on this slide, despite an estimated decline in GDP growth in the first and second quarters of 2008, we're expecting throughputs on our crude oil and refined product pipeline to remain steady for the full year.

Keep in mind starting on July 1 of '08 we expect to benefit from a 5.1% tariff increase on the majority of our crude and refined product pipelines as a result of the tariff adjustments based on the producer price index to be set by the Federal Energy Regulatory Commission.

Part of the reason we don't expect a material impact to our throughputs from a slowdown in refined product demand, is that our crude oil and refined product pipelines, and the associated terminals, are linked to refineries that are in major markets that have to be supplied. Refiners may run harder or easier for a relatively brief period, but overall they tend to run ratably, because they have the economic incentive to do so. It's really remarkable how steady our throughputs have been over the course of time, regardless of whether GDP is trending higher or trending lower.

And I'd like to reiterate that during the seven years we have been a public company at NuStar Energy, we have operated with oil prices ranging from $10 or $11 a barrel to now about $117 or $118 a barrel. We've been through economic expansions and economic slowdowns, and throughout that entire period we have increased cash flow, increased distribution payment and grown and strengthened the company significantly.

And on our terminaling business, most of our volumes are contracted, so a slowdown in refined product demand is not really a factor on this major part of our business. Keep in mind approximately 90% of our new terminal expansions are supported by contracts ranging from five to ten years.

With respect to the recently acquired asphalt business, we've looked back several years analyzing the impact of GDP growth on asphalt demand. Surprising what we find is that for each 1% drop in GDP asphalt demand declined only around .6%, so there's really not a significant impact to asphalt demand as a result of changes in GDP alone. So, long story short, although higher prices and slower economic growth are certainly something we need to monitor carefully, we do not expect a material impact to our business.

I'd like now to turn to focus on our new asphalt business, which starts on slide nine. First of all I want to say I'm grateful for the efforts of our employees to integrate the new asphalt business. A couple of weeks ago Bill Greehey, myself, and others from the management team got a chance to see both refineries in Paulsboro and Savannah up close. We were so impressed by the good condition of these refineries. CITGO may not have invested much growth capital in them, but they did take good care of these assets.

I'm also upbeat about the new management team and personnel we've hired. Our employees have already done a terrific job integrating these assets in the short time that we've owned them, and everyone I've met at the refineries is excited about joining NuStar and is focused now more than ever, since we've taken over. So you can tell that I'm very excited about owning these new assets and the future we have ahead of us.

I'd like to remind investors that as shown here on this slide, NuStar remains predominantly in stable fee-based businesses, with nearly 80% of our assets continuing to generate fee-based cash flow from our refined product terminals, refined product and crude oil pipelines, and crude oil storage tanks. The remainder of the business, or a bit more than 20%, comes from the refining and marketing activities. So we still expect to generate the large majority of our income from the fee-based businesses we own. And in addition, our focus will continue to be on growing our business around these more traditional assets.

I'd also like to note that we've combined the recently acquired asphalt business with our existing marketing businesses in the new refining and marketing business segment, reported in the segmental information attached to the earnings release.

As you've probably noticed, we've been busy over the last several months raising money to finance the transactions, so I thought it would be timely to show our sources and use of the cash flow related to the financing of the acquisition on the next slide. On slide ten you see that the total value of the deal, including an estimate for the post-closing true-up of the inventory position is expected to be around $800 million. Of that, $450 million was the purchase price for the refinery and terminal assets, and $205 million was for inventories based on an agreed February 1 evaluation date.

The balance of the $800 million, or $145 million, is comprised of the inventory true-up value expected to be paid in the next few weeks. To finance this we stayed true to our target of 50% debt, 50% equity financing by raising $387 million in November of '07 and April '08 in common unit offerings; $347 million in an April '08 senior notes offering and we expect to finance the balance or around $66 million of inventories through borrowings on our revolver.

Proceeds from the common unit issuances and the senior notes offering went to pay off a $124 million bridge loan we took out just prior to completion of the asphalt acquisition and to pay off a portion of the borrowings outstanding under our revolving credit facility. So with the offerings behind us, we're in good shape to finance additional working capital requirements and internal growth projects in 2008, with around $600 million of liquidity currently under our revolver, and we continue to maintain our investment grade rating.

On the next slide I'd like to discuss briefly current supply and demand asphalt fundamentals for PADD I, or the east coast of the U.S. Everyone is aware, I'm sure, that we've seen a dramatic increase in the price of crude oil since the fourth quarter of 2007, continuing through the first and second quarters of this year. This has certainly squeezed margins not only for lighter, higher value products, such as gasoline, but also bottom of the barrel products like asphalt, which has led to lower asphalt margins. This has come at a time when demand for asphalt is typically very low, as in the fourth and first quarters, since asphalt is not being used to pave roads during much of that time. Fortunately, we avoided most of the negative margins, since we closed the deals on the acquisition in late March.

Going forward, our position is that, with crude oil prices as high as they are and the current bullish supply and demand fundamentals we see, we expect asphalt prices to increase over the next two to three months, thereby increasing the asphalt margins. With respect to some of the bullish supply and demand fundamentals we see for asphalt, we believe seasonal demand should ramp up during the second quarter. We typically see the paving season on the east coast start in April and continue through October.

As you can see on the chart on the top right, asphalt demand typically follows a bell shaped curve, with demand for asphalt being strongest in the second and third quarters and weaker in the first and fourth.

Also, asphalt inventories in PADD I are currently at low levels compared to last year, providing further support to our thesis for higher margins in 2008. The chart on the left of the page shows PADD I Asphalt inventories, which were running at high levels during the first nine months of 2007 but, by the end of the year, had declined significantly, falling below 2006 levels, which was a record year for asphalt margin and in line with the five year average. And on top of that, we've not seen nearly the level of asphalt imports to the U.S. east coast over the past six months as we have seen in recent years.

Our arrangement with Pedevesa, the Venezuelan National Oil Company, affords Venezuela the flexibility to cover their internal asphalt supply needs before having to offer any export quantities to NuStar. So, as a result, we're expecting this will help asphalt margins recover significantly over the weak fourth quarter and first quarter of 2008 levels we saw before we did the acquisition.

And although we do expect a certain amount of demand destruction due to higher asphalt prices, we've already taken this into account in our 2008 guidance. So we continue to be bullish on the long-term fundamentals of the asphalt business, given the coker is expected to be in service over the next few (inaudible), which has further tightened asphalt supplies resulting in higher margins.

I continue to be excited about the projects we've identified and are evaluating at both asphalt refineries as summarized on slide 12. As I previously mentioned, we've identified around $35 million of high return, quick payback projects at both refiners that can be completed in the next six months to 24 months. Most of these or around $21 million are projects that will generate higher annual refinery utilization and allow us greater flexibility in running alternative crude oil qualities.

The remaining projects, around $14 million, focus on increasing the energy efficiency of the plants, increasing the production of higher quality, higher value polymer-modified asphalts and improving the yields and quality of roofing flux and intermediate products.

Longer-term, we'll continue to evaluate other projects that focus on increased flexibility and year-round operations of the refineries to limit the seasonality of the asphalt business. For example, we'll evaluate the installation of the hydro treater at Paulsboro that will remove sulfur from some of the products we produce, making them more marketable.

On slide 13, we've provided updated guidance on the business for the second quarter and the full year of 2008. For the full year 2008, we still expect the EBITDA contribution from the base business to be about $40 million higher in 2008 than it was in 2007.

With the weaker asphalt margins exhibited in the market currently, we would expect the incremental EBITDA contribution from the asphalt business to be at the lower end of the $80 million to $120 million range we previously provided. Reliability CapEx is expected to be in the range of $60 million to $65 million for 2008 and includes about $10 million for the asphalt business, while strategic capital is expected to be in the range of $170 million to $180 million and includes about $30 million to $40 million for the asphalt business.

Looking at expense estimates for the second quarter, operating expenses associated with our asphalt business and which are included in cost of goods sold are expected to be in the range of $23 million to $24 million. Operating expense on the base business, between $105 million and $115 million; G&A expense in the range of $18 million to $19 million; DD&A around $34 million to $35 million; interest expense $26 million to $26.5 million and income tax expense around $2 million to $3.5 million (sic; see earnings release). I've also provided the typical product yields and 2006 production volumes of the asphalt refineries on the bottom right of the slide for your reference.

Looking forward, I laid out on slide 14 our business strategies going forward. First and foremost, our goal is to complete the remaining projects under the $400 million construction program on time and on budget. We've had an excellent track record on the projects we've already completed and I continue to see the remaining projects being on track with the schedule I provided earlier.

Second, our goal is to quickly integrate the recently acquired asphalt business into NuStar. We've already accomplished a lot in the short time we've owned the refineries. However we have some more work to do. Efforts continue to be focused on integrating the personnel, systems and the culture of the two refineries into NuStar's business, exploring opportunities to increase the value of the refineries and looking for further growth opportunities.

And with the many projects we've already identified at the refineries and are evaluating, the next step will be to prioritize and execute those projects. As I've mentioned, we're in a great position to build on the asset base, having identified about $35 million of high return quick payback projects that can be completed in the next six to 24 months. I expect that we will start pushing forward on those projects very soon. And we'll continue to evaluate other projects, focused on increased flexibility and year-round operations of the refineries. These are expected to be more long-term projects, at least one to two years out.

I also want to emphasize that I do not expect our proportion of traditional fee-based business to more volatile margin-based marketing and refining businesses to vary much, going forward. We will continue to grow our traditional pipeline transportation terminaling and storage operations, which make up the majority of what we already do.

As you know, we recently announced a $500 million construction program for 2009 through 2011 that's focused on expanding our pipeline and terminal systems. In addition, we continue to evaluate acquisitions focused on expanding our terminaling and storage position, both here in the U.S. and internationally. All of these are projects that would generate stable fee-based income.

We're also looking at expanding opportunities for our marketing businesses, primarily the asphalt marketing group. That group will be critical in getting our product to customers on the U.S. east coast and elsewhere through our network of owned and third party terminals and expanding our customer base, which includes asphalt paving contractors, governmental entities and asphalt roofing shingle manufacturers.

Finally, we believe it's extremely important, particularly in the current environment, to maintain our financial strength and an investment grade rating. As a result, we will stick to our disciplined approach to evaluating internal growth projects and acquisitions. All of this should allow NuStar to continue to provide further distribution growth to our unit holders.

Now, in conclusion, I'm excited about the future we have at NuStar and the many opportunities we have to increase unit holder value. So, at this time, operator, I'll open it up for questions and answers.

(OPERATOR INSTRUCTIONS)

Your first question comes from Michael Blum, from Wachovia. Your line is now open.

Hi; good morning.

Good morning.

A couple of questions; one, if you could just elaborate a little bit. I guess you said your intention is to maintain sort of the base business, if you will, at around 80%. How do you manage that? I mean, if you come up with an opportunity that, on the refining side, you know, that's significant. How do you balance that, versus maintaining more of the fee-based business?

Well, obviously, since we still believe in the longer-term bullish - you know, we were bullish on the fundamentals in the asphalt business. If we see a good opportunity, we'll certainly be interested in having it. But we're not going to transform our company into a company that's mainly margin-based businesses. The majority of our business is and will be the more traditional fee-based pipeline terminal business.

So, I see the balance coming from - we've identified sort of in our pipeline another $500 million of what I'll call fee-based businesses. So that goes on that side of the scale. And as other opportunities come up, we'll do the best opportunities that present themselves to our company. But that gives us -- those projects in the pipeline give us a high degree of comfort that we're going to be able to maintain relatively close to the balance that we have today, between fee-based and margin-based.

Okay great and then, is it still your intention to sort of pay up 50% on the cash flow from the asphalt business?

Yes. All of our plans assume the 50% holdback that we've previously described.

Okay and then the last question; if you could just talk about the thought process in not raising the distribution, given that you had a pretty high coverage ratio and a very strong quarter.

Yes. We've had a great quarter, obviously, which gives us a good running start for evaluating what we can do for distribution increases this year. But we just acquired a sizable business that is a more volatile margin-based business. And we just acquired it right at the end of the first quarter. We want to get a quarter under our belt, especially in the current environment, with this business and have our management team and the board evaluate where we go on distribution increase at that point for the second quarter.

But obviously, especially given the strong start we had in the first quarter, we're going to be taking a very serious look at this for the second quarter. So, so far so good but we want to get a full quarter under our belts before we -- we want to be sure we're prudent on the next proposed distributing increase.

Okay. Thanks, Curt.

Our next question comes from Gabe Moreen from Merrill Lynch. Your line is now open.

Hi everybody, it's Todd Kincaid calling in for Gabe Moreen. I just had a quick question. Going forward, do you plan on breaking out any additional operating metrics for, like, the asphalt business like the three quarter margins?

Yes. I mean I think we absolutely do plan to do that. We want to be sure that we do it in a way, though, that's meaningful to people because, in the asphalt business, as you might appreciate, it's not quite as easy to do as you could for a complex refiner who might require a 3-2-1 or a 6-3-2-1 crack or something because you don't have a futures market for asphalt. And even some of the intermediate products we make are not that well reflected in futures markets for a widely traded product.

So yes, we do plan to come up with something that at least is a proxy for our forward look on the business. And I have here Mike Hoeltzel who's in charge of Corporate Development who's been working on that. Mike, you want to comment any further on that?

Yes. I believe what we put in throughputs for asphalt production and looking at some type of margin that we could release on our website in our future announcements. But for now, we're just sticking with giving you EBITDA ranges, which gets you there pretty easily without boring you with all the deep complexities of how to calculate an asphalt market.

All right, great. Thanks very much.

Sure.

Our next question comes from Ross Payne from Wachovia. Your line is now open.

First question on increasing the flexibility of your asphalt plants is that in anticipation that more of your supplies will come from other sources, other than Venezuela?

We have a seven-year contract with Venezuela that, in fact, they are honoring. And we expect them to continue to honor it. We don't have any indication at all to the contrary. It's a good deal for both sides. They're getting a good price and we're getting good crude oil. But I think that it behooves us to have that flexibility and that optionality, especially as we look to running these refineries more year-round.

To do that, you need to modify the product slate some too so that, when asphalt sales are relatively weak, like they were this year - they are every year in the fourth quarter and first quarter -- to have a product offering that brings you an attractive return from the market place. And that will provide opportunities to all, to the feed stocks, you know, somewhat here and there, to make that product slate.

So I don't really see it as a -- it should not signal to you in any way an expectation that we're not going to run the Venezuelan crude. We have a contract and they're supplying it. And we expect them to continue to supply.

Okay, so that's more on the new product side than on the supply side, obviously.

Yes.

Also on the terminals, you talked about contracts. Is that volume based? Is it for a percentage? How do you negotiate (inaudible) those contracts.

No. Our new contracts, those long-term contracts I alluded to, are rentals, effectively rentals. So people are renting capacity and the revenue is not dependent on a base load of throughput or not - you have the opportunity for incremental revenue under some of those contracts if there are additional tank turns or there's so-called excess throughput. But that's upside, so it's independent of throughputs.

Okay, that's what I was thinking there. Also on the marketing side in asphalt, that's obviously variable. What percentage of the 21% is marketing versus asphalt currently?

Well let's see, if you look at the current results we can do it.

Well, I would say asphalt - of that is approximately 20 something percent shown on that pie chart. It's probably 15% or 16% would be asphalt marketing.

Okay and as you grow that, is marketing going to grow the most, I assume? Or you see it just being a combination of items?

It's probably a combination of items. I mean really what we're looking at now is kind of growing the marketing across the board, not just in asphalt. But Paul, why don't you..?

I would just say the full year; I guess we expect asphalt to be considerably higher than the trading piece of it, of the marketing. Is that the question?

But not in a proportion sense; in total sales, yes, but proportionately I wouldn't necessarily think that pie chart slice would change that much.

Of the whole business, you're correct. Of just the marketing is what I was speaking to. But of the whole business it will stay relatively constant. Yes, you're absolutely right.

And finally on this $35 million of growth Cap Ex here in the refining side of the business, how quick is that payback?

Well I think the estimated EBITDA, and again some of these projects are in early stages; but the estimated EBITDA, I think, is about $21 million or so from the $35 million investment. And some of it would come toward the end of this year, but for the most part you'd see it in '09.

Very nice return. Okay, that's it for me then, thanks.

Your next question comes from Barry Gleischer from NuStar; your line is now open.

Correction; first I'm not from NuStar. I'm a unit holder of NuStar and congratulations on a great quarter and doing such a great job for us. Now my question concerns - the Federal Energy Regulatory Commission, came out with new guidelines last Thursday on interstate pipelines. So my question is, do we know what the downside would be upon the implementation of FERC regulations on our pipelines that are subject to the regulations, where we can't use market based contracts?

I don't think we see any downside from those, but fortunately I have with me here Mary Morgan, who is in charge of Marketing and Development, who follows that for us. Mary, do you want to comment further on that?

I think the thing that you're probably referring to had to do with the Commission announcement that they would allow MLPs to be included in the proxy group, and certain other items that go into -- can be considered cost of service rate making. And all of those are things that our industry has been a proponent of and should be positive for us. All of the developments over the last six months to a year, including (inaudible) regarding income tax allowance and everything have been generally positive for our industry. So I really don't see any downside there.

My question would concern whether they came out with statements that they would not allow any allowance for the expenses of MLPs that have GPs as partners, so that they wouldn't allow anything for that. So my question would be there may have been one or two negative aspects in their announcement. I agree with the positive aspects that you spoke about, but there are one or two negative aspects and - but that would only be concerned with our pipelines that are subject to their regulations, and don't have market-based contracts. So perhaps I should rephrase my question, and ask this; what percentage of our revenues are subject to FERC regulated deferred regulations?

It's the majority of our pipeline revenue but our pipeline and terminal revenue is really less than half of the overall revenue of the company. So let me clarify though; the things you're alluding to, we can talk to you offline about it, but I don't think we're reading it the same way you are, that there were negative aspects to these latest pronouncements. So maybe we can leave it at that for now rather than debating it on the phone. We'd be very happy - if you were to contact Mark Meador, head of Investor Relations, we'll be very happy to try to clarify this further with you.

Okay, thank you very much, and a great quarter again.

Thank you.

And our next question comes from Brian Zaharan from Lehman Brothers. Your line is now open.

Good morning.

Good morning.

Could you comment on how rising labor and material costs could impact your future growth projects?

Yes. What we see to this point is that despite increases in labor and materials, we've been able to manage projects on time and on budget. Going forward you have to take all those costs into account and make sure the marketplace supports paying you an adequate return on investing in projects based on those higher costs. To this point it has, fortunately.

We've looked at very strong markets; we've invested a lot of money in terminals, and the market has supported paying us a good return, despite those higher costs. And when you think about it, it's not entirely surprising, because the whole energy structure has moved up in cost. And so the infrastructure piece, whether you're talking about terminals or some other aspect of the supply chain, proportionately still is a relatively minor piece of the overall energy supply chain cost structure.

So as that whole structure moves up, we've been able to pass through, if you will, our higher costs to people who play in that energy supply chain, just because, proportionately, it looks affordable to them, based on the kind of returns they can get elsewhere in the supply chain. I hope I haven't confused you, but I think that's the reason why we have not seen that materially impact our project economics and our growth opportunities.

So is it reasonable to continue to assume EBITDA multiples of roughly six to seven times on these growth projects?

On projects, yes, yes.

Okay, thank you.

You're welcome.

(Operator Instructions) We have no further questions in queue.

Thank you operator. If you have any further questions, please call NuStar. Thank you for joining us today.

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