Q4 2021 NuStar Energy LP Earnings Call

February 3, 2022

Yeah.

Good day, and thank you for standing by and welcome to the Q4 2021, Neustar Energy L. P earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your <unk>.

Telephone please be advised that this call is being recorded if you will.

Prior to any further assistance. Please press star Zero I would now like to hand, the conference over to your host today, Brian Schmidt Vice President of Investor Relations you may begin.

Good morning, and welcome to today's call on.

On the call today are you start energy Lp's, President and CEO , Brad Barron and other members of our management team.

Before we get started we would like to remind you that during the course of this call Neustar management will make statements about our current views.

Performance at Neustar 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 refer to certain non-GAAP financial measures.

non-GAAP financial measures should not be considered as alternatives to GAAP measures reconciliations of certain of these non-GAAP financial measures to U S. GAAP, maybe found in our earnings press release with additional reconciliations located on the financials page of the investors section of the website at Neustar energy Dot com.

With that I will turn the call over to Brad.

Good morning, Thank you all for joining us before.

Before we get started I want to know what Tom's out of the office today for medical procedure. So I'll be providing you with both my overview and what would typically be Tom's discussion of the details on <unk> results for the full year of 2021, and <unk> as well as our positive outlook for 2022.

Looking back over 2021, I'm very proud of the progress we've made toward achieving our strategic priorities as well as the resilience and strength of our business. Once again demonstrated this past year.

At the beginning of 2021, we told you that we plan to take steps to lower our leverage fund dollar spending from internally generated cash flows and promote new star's commitment to ESG excellence.

Over the course of the year, we divested noncore assets and we control our spending and as promised we lowered our leverage significantly we closed out 2021 with a debt to EBITDA $3 nine nine times, a strong improvement from the 424 times at the end of 2020.

We also delivered on our commitment to fund our spending from our cash flows in 2021, we generated solid results and funded 112% of our strategic capital from excess adjusted DCF, which is up 11% over 2020.

And as we promised you reached significant milestones and reporting on our ESG performance in 2021 with the issuance of our inaugural sustainability report and the launch of our sustainability webpage.

Our sustainability report provides a great overview of our culture of responsibility, which is distinguished neustar throughout our 20 plus year history as our employees have always been committed to protecting and caring for each other our communities and the environment.

I'm also proud that in 2021, once again neustar outperformed our industry in terms of safety stewardship. The total recordable injury rate was <unk> 14 times better than the bulk terminal industry and over seven times better than the pipeline industry as a whole.

While last year brought its share of challenges.

<unk> delivered strong stable performance and solid results.

Even with the detrimental impact of February of 'twenty February 2021, as winter storm Yuri after adjusting for divestitures and other items, we generated 2021 EBITDA comparable to 2020.

Turning to our pipeline segment, our throughput grew 6% in 2021 compared to 2020 with <unk> 21 up 22% over the fourth quarter of 2020.

Our refined products pipeline has delivered consistent and strong results during both the delta and omicron waves, reflecting the strength of our assets and our position in the markets, we serve across the mid continent and throughout Texas.

Our fund product pipeline throughput was up 11% for the full year, 'twenty, one and up 16% quarter over quarter.

We also saw higher throughput on our crude pipelines of 25% for <unk> 'twenty, one over <unk> 2020, and up 4% for full year 'twenty one over 'twenty.

Our Permian system continued to rebound and grow our <unk>.

Systems volumes averaged around 516000 barrels per day for the fourth quarter of 'twenty, one a new record of 3% over third quarter of 'twenty, one and up 23% over the fourth quarter of 2020.

Our system's average barrels per day in 2021 was over 10% higher than 2000, Twenty's average and we exited 2021 more than 100000 barrels per day over our 2020 exit which is impressive.

But even more impressive is how much our system outpaced the Permian basin as a whole.

In 2021, our core of the core Permian systems average barrels per day grew by more than three times, the basins averaged 3% growth over the same period and.

And I'm pleased that the rig count on our system is running close to 30, which represents over 10% of the total number of rigs running across the entire Permian basin as of the end of January .

Looking ahead, we're encouraged by what we're hearing and seeing from our producers as well as the crude price outlook and we expect to exit 2022 between $560 to 570 <unk>.

Barrels per day or about 10% above our 2021 exit.

Moving on from the Permian to our Corpus Christi crude system, we continue to see volumes closer of Nbc's.

With throughput averaging around 380000 barrels per day from <unk> to 'twenty, one and we're forecasting 2022 revenue from our Eagle Ford <unk> commitments at slightly above our MVC.

Improving global demand combined with sustained healthy U S shale production growth should increase U S crude exports over term, which should also improve volumes across our corpus Christi crude system.

Improving demand should also drive increased activity our St. James Terminal, where we're happy to report in January we began receiving inbound barrels from the reversal of cap line.

Turning next to our ammonia pipeline system.

Throughput on our ammonia system was up about 20% compared to <unk> 20.

And up 42% over <unk> 'twenty one.

As we've mentioned on prior calls we are working to increase our systems utilization, even more through low spend high return projects to connect and extend our system to new and current customers.

These projects with supply ammonia for traditional uses like the fertilizer that augments use food production as well as for corn for ethanol production across the Midwest.

We're also partnering with customers and potential customers to expand our utilization with green ammonia projects for existing applications and provisionary future opportunities like renewable electricity generation and safe efficient transportation of hydrogen powered fuel cell vehicles.

We look forward to provide more details later this year as we develop these projects to increase our ammonia system utilization and profitability in the short and longer term by supporting traditional ammonia needs today and participating in ammonia is renewable future.

Moving over to our West coast renewable fuels network, let me start with already playing an integral role in facilitating the west coast low carbon renewable fuels, which are continuing to significantly reduce emissions from transportation.

In 2021, our west coast storage assets generated over 27% of our total storage segment revenue as adjusted to reflect asset divestitures over one third of which was derived exclusively from our renewable fuel related services.

We expect new start leadership and the low carbon fuel transition in California and across the West coast to continue to grow as we continue to complete our capital projects there.

And we plan to continue to develop projects to expand our renewable fuels business as customer demand continues to grow.

In addition to the growing financial contribution of our West Coast Renewables network we.

We believe the network also demonstrates <unk> ability to anticipate and find profitable innovative ways to evolve their nations changing energy priorities.

With that overview of our 2021 performance I want to shift gears for a few minutes to.

To provide some more detail on our quarterly results.

For comparability keep in mind that our <unk> 'twenty. One results include a $5 million gain from insurance proceeds we received rebuild tanks at our <unk> terminal.

Backing that gain out our adjusted <unk> 21, net income was $52 million, which is up $2 million over <unk> 2020, adjusted net income of $50 million.

New starts for Q2 2021, DCF available to common limited partners was $63 million comparable to <unk> 2020, and our distribution coverage ratio to the common limited partners was 143 times.

Adjusted <unk> 'twenty, one EBITDA was $169 million down 7% compared to <unk> 2020, EBITDA of $181 million with that delta largely due to our successful divestitures.

Our pipeline segments <unk> 'twenty, one EBITDA was $149 million up $19 million or 15% compared to $130 million in <unk> 2020.

Thanks in large part to our Permian system, and our ammonia system, we had solid increases in our pipeline segments for Q2, 2021 throughput volumes compared to both <unk> 2020, and <unk> 21.

Our fourth quarter 2021 stores segment, EBITDA was $46 million, which was down 27 million compared to <unk> 2020, due to several factors, including the sale of the Eastern U S terminals in October of 'twenty, one and the Texas City terminal in December of 2020.

Timing of customer transitions and tank maintenance at certain terminals and residual global economic recovery challenges.

Our fourth quarter 2021 fuels marketing segment EBITDA was $5 million.

Up $3 million from the fourth quarter of 2020 due to stronger butane blending margins.

At the end of 2021, our debt balance was $3 2 billion, that's an 11% reduction from year end 2020.

Thanks for the progress we've made in lowering our debt balance over the course of the year. We were also able to reduce our interest expense in the fourth quarter by $6 million compared to the fourth quarter of the prior year.

As I noted in my introduction, we made substantial progress as promised and lowering our debt to EBITDA ratio in 'twenty, one, finishing 2021 with a debt to EBITDA ratio of 399 times and with $885 million available on our $1 billion unsecured revolving credit facility.

On a related note on Monday, we filed an 8-K announcing that we had renewed our revolver.

Pleased.

Our renewables renewals oversubscribed, allowing us to maintain our $1 billion unsecured revolver and extend the maturity of the facility and an additional 18 months to April of 2025.

Moving from what we accomplished in 'twenty, one to what we see on the horizon for 2022.

We are encouraged by signs of continuing economic rebound.

Hard to continue to advance our strategic priorities this year.

Currently expect to generate full year 2022, EBITDA in the range of $700 million to $750 million the.

The midpoint of which represents a 6% growth over 2021, when adjusted for the sale of the Eastern U S terminals and other items.

Moving to our 2022 strategic capital spending.

Plan to spend $135 million to $165 million this year.

Of that total spending we're allocating approximately $55 million.

Growing our Permian system, which is scalable with our producers throughput volume needs and about $25 million to expand our west coast renewable fuels network.

In addition, we expect to spend 35% to $45 million on reliability in 2022.

Once again this year, we expect to self fund all of our 2022 spending from internally generated cash flows just as we did in 2021.

And we remain committed to continuing to improve our debt to EBITDA ratio in 2022.

We plan to continue to optimize and innovate across our footprint enhanced <unk> financial resilience and strength and build sustainable value for our unit holders.

And we are focused each and everyday on operating safely reliably and responsibly and on protecting our employees our communities and our planet.

221 was a strong year for new start and we're already working hard across our footprint to make sure that 2022 is even better.

With that I'll open up the call for Q&A.

And thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby we compile the Q&A roster and our first question comes from Theresa Chen from Barclays. Your line is now open.

Good morning.

I appreciate all the comments, Brian I wanted to follow up on the crude export side specifically.

Specifically given the recent uptick that we've seen in the macro data and.

Can you talk about the contracting outlook at our Corpus Christi, North Beach, I believe you have volumes turning over.

Mid 2023 timeframe and would like to know if there's any sort of like early blend and extend option with that.

Tariff.

Yes, we've engaged with our big customer there and we're having discussions with them, but there's nothing to announce at this time.

Yes.

Most of our other contracts Teresa will.

Well beyond that 23 timeline, we're just working on that one.

Got it.

And just shifting to the Permian.

And very robust.

Results.

Positive outlook would you mind, just giving some more color about your conversations with producers.

<unk>.

Anticipated growth plans.

Sure. So we anticipate.

More of what we saw in 2021 in terms of activity.

I think we've talked about this before that same level of activity just because of the nature of decline curves will yield the exact volume of growth, but still growth.

In terms of.

The public's disciplined in the market, we still have our assuming that is going to play out the same way in 2022.

If that's going to change they have not communicated that to us yet and it's not in our in.

Our guidance, but that would be something I would see as potential upside for the year, yes.

Yes.

And he said what we have in our forecast is more of what we saw last year, which is discipline them.

<unk>.

Public side, and then the smaller producers producing more so we feel good that we're balanced in that way.

And if something were to change in the big publics were too.

Break ranks and start producing more we would obviously benefit from that too.

Got it.

And maybe if you could opine on the takeaway situation potential changes there given the excess capacity on the crude side and the increasing concern of lack of takeaway capacity to come on.

The natural gas side, there's been a lot of commentary out there.

Around rationalization on the crude side potential compression to a gas pipe.

Given your relationship with the producers as well as your presence in the basin can you just opine on the likelihood of something like that to happen.

I think we are here in the <unk>.

Same thing.

We're looking at.

Some time out in the second half of 'twenty, three is where they start to see some constraints constraints on the gas side.

I don't know anything probably that you haven't already read but.

I know there are some discussions going on about.

Rationalizing some crude outbound.

Capacity.

And natural gas.

I don't know anything more about that.

What we've all read.

Okay. So maybe if I can ask it a different way Danny if one of the pipes were to rationalize your delivery point would that.

Make you alter the way that you currently.

Structuring your business out there would that make you have to you all for your contracts with producers potentially how should we think about that no because our system is connected to virtually every exit out of the basin and so.

The two places the two main places we go to in Midland and.

Colorado City.

<unk>.

We can go to any pipeline. So it's a shutting down we will just see more go into other outlets.

Understood. Thank you.

Thank you.

And thank you.

And our next question comes from Michael Blum from Wells Fargo. Your line is now open.

Thank you good morning, everybody.

Wanted to ask about terminal contract renewals.

122, just wanted to know how much of the portfolio is up for renewal.

Kind of what are your expectations for rates.

Upon renewal.

So we've got which is typical we've got about 40% of our revenue is up for renewal in the next 12 months.

Most of those renew without any issue we don't really have anything we're looking at that we're sweating and are not expecting any.

Change in rates, we have been in a backward dated market for so long all of our contracts are renewed at a backward dated market is already.

So I don't really see any further downside the thing we're focused on now as we try to keep our.

Terms on our contracts relatively short just so we can get another bite at the Apple if the markets improve.

Got it great Super helpful. I appreciate that also wanted to ask about leverage.

You've obviously made some good progress there.

Two years couple of years.

For 2022 do you what do you think you could take leverage to.

Do you have kind of a longer term target that youre sort of adding going forward.

So it sounds about here, so I'll answer that and what I'll say is we haven't we don't have a published leverage target we are as focused on.

Lowering our leverage overall, and we're particularly focused on addressing the series D is that come due in 2023.

So we're not do but they become redeemable in 2023 so.

Probably the biggest levers that we have are continuing to increase our EBITDA and then also to be laser focused on optimization within the organization and reducing spending so and.

And then we can use it.

Every available dollar to reduce leverage after that.

Got it thank you very much I appreciate it.

Yes.

And thank you.

And our next question comes from Jeremy Tonet from JP Morgan.

Your line is now open.

Hi, everyone. Good morning. This is Dan lock on for Jeremy I thought your comments on the ammonia system were interesting and.

I'm wondering if you could just talk about how you see the demand trending for the more traditional uses.

And also now it's very early days, but you mentioned partnering with customers potential customers.

On on.

Future opportunities around green hydrogen and just wondering if you could give us a sense of how advanced those talks are.

Sure well this is Danny Oliver again so.

In terms of our traditional demand agriculture demand is very strong.

Obviously, theres, an ethanol driver in El <unk>.

Behind that we expect that to continue.

What we are seeing new in terms of the green and Blue ammonia is interest from a particular customer.

Customers who are.

Have a business plan to ship, the blue or green ammonia.

Up up our system into the mid continent, and they will use that ammonia to as a source of hydrogen so they'll split the nitrogen from the hydrogen that destination and use the hydrogen to supply fleet vehicles that are being converted to hydrogen fuel cell. So those conversations are actually.

Quite progressed in the last few months.

I hope to have in the first half of this year hopefully some.

Some more be able to share with you some more details on that as they.

Work too.

Make sure that they have space on the line to support their their new business model. So I think we will have some definition around that sooner rather than later, even though it's probably a couple of years out from from an in service date.

Got it okay. Thanks, and then just a quick follow up on that I know you just mentioned, it's a couple of years out but.

Can you give us any sense of what the just the order of magnitude is on.

Capital outlay for.

A project like that.

So it won't be significant capital, we don't need to do anything to the pipeline.

We'll just be making connections so that's not fully vetted, yet on exactly where we will be making these connections but.

That's really all we have to do we don't have to expand capacity on the pipeline.

But I think we will see upside to two ways.

Just one the additional volume.

For new demand and then also.

Given that the discussion is around guaranteed space firms based on the line that should be a premium market as well.

Great got it thanks for those details.

Thank you.

And our next question comes from Selman <unk>.

From Stifel. Your line is now open.

Thank you.

Just a couple quick follow ups.

In terms of thinking about the Permian and you guys referenced.

You exited the year at 30 rigs can you say.

<unk> you expect to exit 'twenty two in terms of rig count.

Youre assuming.

We really don't.

We really don't forecast that we're forecasting connections as they are communicated to us by our.

Producers, but I will tell you that.

We think that at this level at around $5 20, or so that it takes about 23 rigs just to maintain our volumes and so we're above that and thats why not throw that 'twenty three rig number out there that's without.

Ducks, and we do have more than our fair share of ducks on our system. So.

The rig count along with the Ducks that will be converted over the course of the year.

Will is what's giving us the growth that we're forecasting one thing to also keep in mind about the Permian is the.

And the progress that we've seen over the last five years in terms of rig efficiencies just continued and continued through the pandemic and so the rigs are getting more and more efficient.

Good point.

I appreciate that.

I would anticipate this but.

No concerns over the seismic activity any of that.

Producers are having any issues with that.

No no.

Okay and then.

I know you talked a little bit about storage, but can you just maybe think about how we should think about this going forward I mean, we bottomed here with this quarter and I know that obviously comparisons are tough to do to the asset sales, but should we think about this as being the low point and we build from here.

Yes, I think so I don't see anything on the horizon.

That will change that we had in the fourth quarter of 'twenty. One we had some movement in customer contracts and so we had where we were switching customers at a couple of locations and so we had some gaps in.

And revenue coverage on some of that storage as we transition from one to the other and that transition has been done now so we shouldnt shouldnt see a repeat of that this year yeah. Another.

Another thing I would direct you to our west coast.

Predominance or dominance of our west coast.

Biofuels business, which is now over a quarter of our storage business and that's all long term long term and thats not going to diminish.

Okay, Great I appreciate the time thank.

Thank you.

And thank you and I am showing no further questions I would now like to turn the call back over to Pam Smith for closing remarks.

Thank you Justin.

I'd once again like to thank everyone for joining us on the call today. If anyone has additional questions. Please feel free to contact our investor relations.

Thanks, again and have a great day.

This concludes today's conference call. Thank you for participating and you may now disconnect.

Okay.

[music].

Yes.

[music].

Please be advised that this call is being recorded if you would.

Require any further assistance. Please press star zero I would now like to hand, the conference over to your host today.

<unk> Vice President of Investor Relations you may begin.

Good morning, and welcome to today's call.

On the call today are you start energy L. P 's, President and CEO , Brad Barron and other members of our management team.

Before we get started we would like to remind you that during the course of this call Neustar management will make statements about our current views concerning the future performance of Neustar 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 refer to certain non-GAAP financial measures.

These non-GAAP financial measures should not be considered as alternatives to GAAP measures reconciliations of certain of these non-GAAP financial measures to U S. GAAP, maybe found in our earnings press release with additional reconciliations located on the financials page of the investors section of our website at Neustar energy Dot com.

With that I will turn the call over to Brad.

Good morning, Thank you all for joining us.

Before we get started I will let you know that Tom is out of the office today for medical procedure. So I'll be providing you with both my overview and what would typically be Tom's discussion of the details on <unk> results for the full year 2021, and <unk> as well as our positive outlook for 2022.

At the beginning of 2021, we told you that we plan to take steps to lower our leverage fund all our spending from internally generated cash flows and promote new star's commitment to ESG excellence over.

Over the course of the year, we divested noncore assets and we control our spending and as promised we lowered our leverage significantly we closed out 2021 with a debt to EBITDA at 399 times, a strong improvement from the 424 times at the end of 2020.

I'm also proud that in 2021, once again <unk> outperformed our industry in terms of safety stewardship. The total recordable injury rate was <unk> 14 times better than the bulk terminal industry and over seven times better than the pipeline industry as a whole.

While last year brought its share of challenges new start delivered strong stable performance and solid results.

Even with the detrimental impact of February of 'twenty February 2021, as winter storm Yuri after adjusting for divestitures and other items, we generated 2021 EBITDA comparable to 2020.

Turning to our pipeline segment, our throughput grew 6% in 2021 compared to 2020 with <unk> 21 up 22% over the fourth quarter of 2020.

Our refined product pipeline throughput was up 11% for the full year, 'twenty, one and up 16% quarter over quarter.

We also saw higher throughput on our crude pipelines of 25% for <unk> 'twenty, one over <unk> 2020, and up 4% for full year 'twenty one over 'twenty.

Our Permian system continued to rebound and grow our.

Our systems volumes averaged around 516000 barrels per day for the fourth quarter of 'twenty, one a new record of 3% over third quarter of 2001 and up 23% over the fourth quarter of 2020.

Our system's average barrels per day in 2021 was over 10% higher than 2000, Twenty's average and we exited 2021 more than 100000 barrels per day over our 2020 exit which is impressive.

But even more impressive is how much our system outpaced the Permian basin as a whole.

In 2021, our core of the core Permian systems average barrels per day grew by more than three times the basin averaged 3% growth over the same period.

And I'm pleased that the rig count on our system is running close to 30, which represents over 10% of the total number of rigs running across the entire Permian basin as of the end of January .

Looking ahead, we're encouraged by what we're hearing and seeing from our producers as well as the crude price outlook and we expect to exit 2022 between $560 to 570000 barrels per day or about 10% above our 2021 exit.

Moving on from the Permian to our Corpus Christi crude system, we continue to see volumes closer nbc's.

With throughput averaging around 380000 barrels per day for 2021, and we're forecasting 2022 revenue from our Eagle Ford and WD commitments at slightly above our MVC.

Improving global demand combined with sustained healthy U S shale production growth should increase U S crude exports over time, which should also improve volumes across our corpus Christi crude system.

Improving demand should also drive increased activity at our St. James Terminal, where we're happy to report in January we began receiving inbound barrels from the reversal of cap line.

Turning next to our ammonia pipeline system.

Throughput on our ammonia system was up about 20% compared to <unk> 20.

And up 42% over <unk> 'twenty one.

As we've mentioned on prior calls we are working to increase our systems utilization, even more through low spend high return projects to connect and extend our system to new and current customers.

These projects with supply ammonia for traditional uses like the fertilizer that augments use food production as well as for corn for ethanol production across the Midwest.

We're also partnering with customers and potential customers to expand our utilization with green ammonia projects for existing applications and for visionary future opportunities like renewable electricity generation and safe efficient transportation of hydrogen powered fuel cell vehicles.

We look forward to provide more details later this year as we develop these projects to increase our ammonia systems utilization and profitability in the short and longer term by supporting traditional ammonia needs today and participating in ammonia is renewable future.

Moving over to our West coast renewable fuels network.

Start with already playing an integral role in facilitating the west coast low carbon renewable fuels, which are continuing to significantly reduce emissions from transportation.

In 2021, our west coast storage assets generated over 27% of our total store segment revenue as adjusted to reflect asset divestitures over one third of which was derived exclusively from our renewable fuel related services.

We expect new start leadership and the low carbon fuel transition in California and across the West coast to continue to grow as we continue to complete our capital projects there.

And we plan to continue to develop projects to expand our renewable fuels business as customer demand continues to grow.

In addition to the growing financial contribution of our West Coast Renewables network.

We believe the network also demonstrates <unk> ability to anticipate and find profitable innovative ways to evolve our nation's changing energy priorities.

With that overview of our 2021 performance I want to shift gears for a few minutes <unk>.

Provide some more detail on our quarterly results.

For comparability keep in mind that our <unk> 'twenty. One results include a $5 million gain from insurance proceeds we received rebuild tanks at our <unk> terminal.

Backing that gain out our adjusted <unk> 21, net income was $52 million, which is up $2 million over <unk> 2020, adjusted net income of $50 million.

New stores for 2021, DCF available to common limited partners was $63 million comparable to <unk> 2020, and our distribution coverage ratio to the common limited partners was 143 times.

Adjusted <unk> 'twenty, one EBITDA was $169 million down 7% compared to <unk> 2020, EBITDA of $181 million with that delta largely due to our successful divestitures.

Our pipeline segments for Q2, 'twenty, one EBITDA was $149 million up $19 million or 15% compared to $130 million in <unk> 2020.

Thanks in large part to our Permian system, and our ammonia system, we had solid increases in our pipeline segments for Q2, 2021 throughput volumes compared to both <unk> 2020, and <unk> 21.

Economic recovery challenges.

Our fourth quarter 2021 fuels marketing segment, EBITDA was $5 million up 3 million from the fourth quarter of 2020 due to stronger butane blending margins.

At the end of 2021, our debt balance was $3 2 billion Thats, an 11% reduction from year end 2020.

Thanks to the progress we made in lowering our debt balance over the course of the year. We were also able to reduce our interest expense in.

In the fourth quarter by $6 million compared to the fourth quarter of the prior year.

On a related note on Monday, we filed an 8-K announcing that we had renewed our revolver.

Very pleased that our renewable renewal was oversubscribed, allowing us to maintain our $1 billion unsecured revolver and extend the maturity of the facility and an additional 18 months to April of 2025.

Moving from what we accomplished in 'twenty, one to what we see on the horizon for 2022.

We are encouraged by signs of continuing economic rebound.

Hard to continue to advance our strategic priorities this year.

We currently expect to generate full year 2022, EBITDA in the range of $700 million to $750 million.

The midpoint of which.

It represents a 6% growth over 2021, when adjusted for the sale of the Eastern U S terminals and other items.

Moving to our 2022 strategic capital spending.

Plan to spend $135 million to $165 million this year.

Of that total spending we're allocating approximately $55 million.

Growing our Permian system, which is scalable with our producers throughput volume needs and about $25 million to expand our west coast renewable fuels network.

In addition, we expect to spend 35% to $45 million on reliability in 2022.

Once again this year, we expect to self fund all of our 2022 spending from internally generated cash flows just as we did in 2021.

And we remain committed to continuing to improve our debt to EBITDA ratio in 2022.

We plan to continue to optimize and innovate across our footprint enhanced new stars financial resilience and strength and build sustainable value for our unitholders.

And we are focused each and everyday on operating safely reliably and responsibly and on protecting our employees our communities and our planet.

<unk> hundred 21 was a strong year for Neustar and we're already working hard across our footprint to make sure that 2022 is even better.

With that I will open up the call for Q&A.

And thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby we compile the Q&A roster.

And our first question comes from Theresa Chen from Barclays. Your line is now open.

Good morning.

I appreciate all the comments, Brian I wanted to follow up on the crude export side.

Typically given the recent uptick that we've seen in the macro data.

Can you talk about the re contracting outlook at our Corpus Christi North Beach I believe you have some volumes turning over.

Mid 2023 timeframe and would like to know if there is any sort of like early blend and extend option with that.

Tariffs.

Potentially be.

Yes, we have engaged with our big customer there and we're having discussions with them, but there's nothing to announce at this time.

Most of our other contracts juries are well beyond that 23 timeline, we're just working on that one.

Got it.

And just shifting to the Permian.

Very robust.

<unk>.

Positive outlook.

You mind, just giving some more color about your conversations with producers there and.

Anticipated growth plans.

So we anticipate.

More of what we saw in 2021 in terms of activity.

I think we've talked about this before that same level of activity just because of the nature of the decline curves of loan yield the exact volume of growth, but still growth.

In terms of.

The public's disciplined in the market, we still have our assuming that is going to play out the same way in 2022.

If that's going to change they have not communicated that to us yet and it's not in our.

In our guidance that that would be something I would see as potential upside for the year.

Turning to what Andy said, what we have in our forecast is more of what we saw last year, which is discipline on the on the.

Public side, and then the smaller producers producing more so we feel good that we're balanced in that way.

And if something were to change in the big publics were too.

Break ranks and start producing more we would obviously benefit from that too.

Got it.

And maybe if you could opine on the takeaway situation potential changes there given the excess capacity on the crude side and the increasing concern of lack of takeaway capacity to come on the natural gas side, there's been a lot of commentary out there.

Around rationalization on the crude side potential compression to a gas pipe.

Just given your relationships with the producers as well as your presence in the basin can you just.

Pine on the likelihood of something like that to happen.

I think we're hearing the same thing you are looking at.

Sometime mountain second half of 'twenty, three is where they start to see some contract constraints on the gas side.

Don't know anything probably that you have already read that.

I know there are some discussions going on about.

Rationalizing some crude outbound.

Capacity.

Natural gas.

I don't know anything more about that than.

What we've all read.

Okay. So maybe if I can ask it a different way Danny if one of the pipes were to rationalize a problem.

Our it delivery points would that have.

Thank you alter the way that you currently.

The structure of your business out there would that make you have to alter your contracts with producers potentially how should we think about that.

No because our system is connected to virtually every exit out of the basin and so.

The two places the two main places we go to in Midland and.

Colorado City.

We can go to any pipeline. So if they shut one down and we'll just see more go into other outlets.

Understood. Thank you.

Thank you.

And thank you.

And our next question comes from Michael Blum from Wells Fargo. Your line is now open.

Thank you good morning, everybody. Good morning wanted to ask about terminal contract renewals in 2022, just wanted to know how much of the portfolio is up for renewal.

Kind of what are your expectations for rates upon renewal.

So we've got which is typical we've got about 40% of our revenue is up for renewal in the next 12 months.

Most of those renew without any issue.

We don't really have anything we're looking at that we're sweating and are not expecting any.

Change in rates, we have been in a backward dated market for so long all of our contracts have renewed at a backward dated market is already.

So I don't really see any further downside the thing we're focused on now as we try to keep our.

The terms on our contracts relatively short just so we can get another bite at the Apple if the markets improve.

Got it great Super helpful. I appreciate that I also wanted to ask about leverage.

You've obviously made some good progress there.

Last few years couple of years.

For 2022 do you what do you think you could take leverage to end.

Do you have kind of a longer term target that you are sort of going for.

So it sounds about here, so I'll answer that and what I'll say is we haven't we don't have a published leverage target what we are as focused on.

Lowering our leverage overall, and we're particularly focused on addressing the series D is that come due in 2023.

So we're not do but they become redeemable in 2023 so.

Probably the biggest levers that we have are continuing to increase our EBITDA and then also to be laser focused on optimization within the organization and reducing spending so that we can use every available dollar to reduce leverage after that.

Got it thank you very much I appreciate it.

And thank you.

And our next question comes from Jeremy Tonet from Jpmorgan. Your line is now open.

Hi, everyone. Good morning, This is Dan lock on for Jeremy.

Your comments on the ammonia system are interesting.

<unk>.

Wondering if you could just talk about her.

How you see the demand trending for the more traditional uses.

And also now it's very early days, but you mentioned partnering with customers potential customers.

On future opportunities around green hydrogen and just wondering if you could give us a sense of how advanced those talks are.

Sure.

Danny Oliver again, so in.

In terms of our traditional demand agriculture demand is very strong.

Obviously, theres, an ethanol driver partly behind that we expect that to continue.

What we're seeing new in terms of the green and Blue ammonia is interest from a particular customer.

Customers who are.

Have a business plan to ship, the blue or green ammonia.

Quite progressed in the last few months.

I hope to have in the first half of this year hopefully some.

Some more be able to share with you some more details on that as they.

Work too.

Got it okay. Thanks, and then just a quick follow up on that I know you just mentioned it a couple of years out but.

Can you give us any sense of what the just the order of magnitude is on capital outlay for.

Projects like that so it wont be significant capital, we don't need to do anything to the pipeline.

We'll just be making connections so that's not fully vetted, yet on exactly where we will be making these connections but.

That's really all we have to do we don't have to expand capacity on the pipeline.

But I think we will see upside in two ways.

Just one the additional volume.

For new demand and then also.

Given that the discussion is around guaranteed space firm space on the line that should be a premium market as well.

Great got it thanks for those details.

Thank you.

And our next question comes from Selman <unk> from Stifel. Your line is now open.

Thank you.

Just a couple quick follow ups.

In terms of thinking about the Permian and you guys referenced.

You exited the year at 30 rigs can you say, where you expect to exit 'twenty two in terms of rig count.

Your silly.

We really don't.

We really don't forecast that we're forecasting connections as they are communicated to us by our.

Producers, but I'll tell you that.

Ducks, and we do have more than our fair share of ducks on our system. So the rig count along with the ducks that will be converted over the course of the year.

<unk>.

Is what's giving us the growth that we're forecasting one thing to also keep in mind about the Permian is.

And the progress that we've seen over the last five years in terms of rig efficiencies just continued and continue through the pandemic and so the rigs are getting more and more efficient.

Good point.

I appreciate that.

I wouldn't anticipate this but.

No concerns over the seismic activity any of that.

Producers are having any issues with that.

Okay and then.

I know you talked a little bit about storage, but can you just maybe think about how we should think about this going forward I mean, we bottomed here with this quarter and I know, obviously comparisons are tough to do to the asset sales, but should we think about this as being the low point and we build from here.

Yes, I think so I don't see anything on the horizon.

That would change that we had in the fourth quarter of 'twenty. One we had some movement in customer contracts and so we had where we were switching customers at a couple of locations and so we had some gaps in.

And revenue coverage on some of that storage as we transition from one to the other than that that transition has been done now so we shouldnt shouldnt see a repeat of that this year.

The other thing I would direct you to our west coast.

Predominance or dominance of our west coast.

Our biofuels business, which is now over a quarter of our storage business and that's all long term long term and thats not going to diminish.

Okay, Great I appreciate the time.

Thank you.

And thank you and I am showing no further questions I would now like to turn the call back over to Pam Smith for closing remarks.

Thank you Justin.

I'd once again like to thank everyone for joining us on the call today. If anyone has additional questions. Please feel free to contact our investor relations.

Thanks, again and have a great day.

This concludes today's conference call. Thank you for participating and you may now disconnect.

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