NuStar Energy LP (NS) 2015 Q2 法說會逐字稿

Good morning. My name is Blair and I will 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. (Operator Instructions). Thank you. Chris Russell, you may begin your conference.

Thank you Blair. Good morning and welcome, everybody, to today's call. On the call today are Brad Barron, NuStar Energy LP and NuStar GP Holding 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 will also make reference to certain non-GAAP financial measures. These non-GAAP financial measures should not be considered as alternatives to GAAP measures. Reconciliations of certain of these non-GAAP financial measures to US 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.

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 plants during the quarter, we experienced increased throughput volumes into Corpus Christi and averaged a record of 193,000 barrels per day into our Northeast 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 8-mile 8-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. 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 loading dock at our North Beach terminal. We are currently developing plans for the new dock, which will be designed to load up to 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 has taken longer than anticipated but both PMI and NuStar remain committed to developing the new pipeline infrastructure to transport LPGs and refined products from the US 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?

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 $1.10 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 this 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 pipeline 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 continued 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 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 reduced 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 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.

Thank you Tom. We are pleased with our solid second quarter and our year-to-date results. While there may be challenges in the second half of the year, we still expect to cover the distribution for the full-year 2015 with a 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 Instructions). Brian Zarahn, Barclays.

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 there any impact from the Belvieu to Corpus NGL line and is there any impact also for these lower crude prices? And then on the storage side of things, is it across the board crude and refined products storage or is -- a little more color on better results from that business.

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

Storage segment, we are, you know, still very highly utilized across the segment. I think we are right at 98% utilized. But some of the contract 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.

And then on the renewal, the rates are a little bit better than I thought. Were you able to have a longer duration? Or is it similar duration on the re-contracting for those facilities?

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

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

We believe it will be finalized and we know it's taken a long time to get that done. A lot of that has to do with we are 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.

Okay. And then on the Corpus dock expansion, is that anticipated to be more for crude or is your position more for condensate or just it could be flexibility for either?

Flexibility for either.

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?

Brian, this is Chris Russell. On the maintenance side, that's more of a timing issue. Some of those projects just got deferred into next year.

On the strategic side, we are 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 there initially. And we've also got a couple of more tanks at Corpus that we've included in the strategic capital for this year.

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

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

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

That's two 363s.

So, that will get you close to about 10 million barrels in St. James.

Right, right.

Okay. Thanks guys.

Steve Sherowski, Goldman Sachs.

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 and third-party processing plants being down in the second quarter?

That's kind of hard to do, but I think it probably cost us somewhere in the neighborhood of 5,000 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.

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

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 some of that. I don't have that in front of me.

Okay. 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 CapEx spending?

I really don't think we can comment yet. We are 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've filed for permits. We are 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.

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?

It will be backstopped by commitments from customers.

Got you, okay. That's it for me. Thank you.

Jeremy Tonet, JPMorgan.

Good morning. I was just 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.

Not a lot at Piney Point. That's strictly a contango terminal. We are 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 cost us very little, very little to keep that terminal mothballed. We're just waiting for the right market conditions.

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

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.

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?

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.

Great, that's helpful. And then just one last one from 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 seller or any thoughts there?

We obviously see ourselves as more of a buyer than a seller. In terms of the trend, yes, it's obvious that there is consolidation taking place and we are always on the lookout for good deals. We prefer to grow organically, but at some point we will -- and I was actually looking for synergistic acquisitions.

Great. Thanks for that.

Mark Reichman, Simmons.

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 seems 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 was kind of your old -- older expectations. And so with the refined products, the turnaround, it 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 is your expectation in terms of crude oil throughput? I guess what I'm kind of looking for is just a little more specifics with how you might expect to end the year on just the crude oil pipelines and kind of specifically what the driver is for the lowered expectations.

Basically -- 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 maybe a little bit more modest than we had expected last quarter. Of course, that's still subject to change. I can't predict the price of oil but the basis -- that's what's behind the change in the guidance as far as the crude pipelines go.

So, 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 first-quarter volumes?

So it's really all about our South Texas crude system, the Eagle Ford barrels. So, we expect the second half of 2015 to grow versus the first half of 2015 and certainly from any period in 2014. We've just leveled out some of that -- some of our growth expectations in the second half of this year.

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

Are you talking strictly crude Mark? This is Chris.

Yes, just crude oil pipeline.

That's probably a little aggressive.

A little aggressive? Okay. That was kind of a year-end run rate. Okay. That is 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? I mean costs or --?

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

Yes, yes, clearly. And then I wanted to also ask a little bit about the deal with CHS. That looked 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 you know, are there any other opportunities to expand along with that co-ops business?

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 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 projects 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.

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?

Yes it was.

Okay, great. Thank you very much.

Cory Garcia, Raymond James.

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. Obviously, 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 projects 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.

Yes, Cory. This is Chris Russell. EBITDA multiple is going to be our normal 6 to 8 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 into early 2017.

Okay, that's perfect. Thanks. And also sort of switching focus from a bigger picture strategic standpoint and obviously potentially broadening you 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 will be more crude-related or is there even some NGL type of angles that you guys are exploring there?

We are looking at both. And if you know anything about the Permian, you know it is 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 are investigating several projects there.

Okay, great. Thanks for the color, guys.

John Edwards, Credit Suisse.

Just if we could step back, bigger picture, just given the kind of commodities price environment we are in, just bigger picture maybe longer-term in terms of your opportunity set that you are looking at, are you seeing it stay about the same? Are you seeing it fall off a bit? Are you seeing it rise a bit? Maybe if you could just comment directionally how that's looking.

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 are looking at several projects there. And so it is a challenging environment but we do think there's still opportunity.

Okay, so would it -- kind of the CapEx run rate you are at right now, would that be pretty fair going forward the next couple of years would you say?

That's what we'd like to target.

Okay, great. Thanks. That's all I had. Thank you.

Selman Akyol, Stifel.

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?

I'm sorry, you mean as far as through puts go Selman?

On the OpEx expense of $36 million.

You know, OpEx, we are probably going to see our main expense pick up in the back half of the year, specifically in the pipeline segment but OpEx in the storage segment should be pretty flat going forward I would think.

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 it 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?

You know, like I said, we had an issue there. We've investigated and we are 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.

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 year-to-date?

We didn't but we've spent -- that $430 million to $450 million includes $140 million we spent on Linden and then we spent about -- so you back that out, Selman, and 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. So, we are about halfway through the internal growth project (technical difficulty) that guidance.

And then I guess last kind of questions for 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?

Yes, right now, I think we have some anticipated equity possibly in the back half of the year, so looking at that. It's not imminent that we would need to issue any equity in the back half of the year. It's just 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.

All right, and do you have an ATM in place?

We filed the 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.

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

Faisel Khan, Citigroup.

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

Sure. It's performing very well. In fact, we've renewed some contracts in Linden that -- a little that are then we were anticipating. We are also working -- in the 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.

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?

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

Okay, so the docks aren't -- would you say the docks aren't being fully utilized because of maybe you are not having as much storage as you would like or how would you describe it?

Correct, correct.

And then would that -- if you increase the storage, what's the -- when you think about the dock capacity there, like what's the percentage that's being utilized right now and what could it be going forward?

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

Okay, got you. And just so I understood the last question on the ATM, so right now, you haven't issued any equity under your old ATM program. Is that right or --?

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

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

Louis Shamie, Zimmer Partners.

My question was just mostly around the Corpus Christi potential dock expansion. I just wanted a little bit more of a broad view of what's gone on around there, how it relates with the sort of Phase II of your Eagle Ford project. And if put in the context of potential competition, a lot of other midstream guys have infrastructure in that area and they are about similar projects. So sort of where do you stand with that and the competitive landscape?

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 the dock. As Brad mentioned in his notes, we been setting records, single day records of 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, while we are very busy in Corpus now and utilizing our docks, we do have some expansion plans that we are 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.

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

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

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

It's a little early for that.

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 the next few years?

It's hard to talk about expectations because, you know, the LLS spreads vary. And we certainly saw in the first half of this year those spreads were almost flat to WTI to LLS. 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.

Got it. Okay, thank you very much.

Lin Shen, HITE.

Just a very quick question about Corpus Christi. I'm just wondering like what are the current destinations to receive crude or product 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?

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. I think your question further asks what would happen if the crude export ban were lifted. There is a great potential for the ships to go almost anywhere. Mexico has talked about projects with the United States to take US crude into Mexico. We'd be well-positioned to handle that crude as well.

Okay, great. Thank you.

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

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.

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