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Oiltanking Partners (OILT)

Q4 2012 Earnings Conference Call

March 7, 2013 10:00 AM ET


Mark Buscovich - Manager FP&A & IR

Anne-Marie Ainsworth - President & CEO

Bo McCall - SVP of Commercial & Business Development

Ken Owen - VP & CFO


John Tysseland - Citi Group

Jerren Holder - Barclays Capital

Cory Garcia - Raymond James

Jeremy Tonet - JPMorgan



Welcome to the Oiltanking Partners Fourth Quarter Earnings Conference Call. (Operator Instructions). This conference is being recorded today March 7, 2013. I would now like to turn the conference over to Mark Buscovich, Manager FP&A and IR. Please go ahead sir.

Mark Buscovich

Thank you operator. Good morning everyone and welcome to today’s conference call to discuss Oiltanking Partners fourth quarter and full year 2012 results. After the markets closed yesterday we issued a press release announcing our financial results which is available on our website at You can also access a replay of today’s call from the investor relation section of the partnerships website or be recorded replay until March 14.

Information on how to access the replay was provided in yesterday’s earning release. Information reported on the call speaks only as of today March 7, 2013 and therefore you’re advised that any time sensitive information may no longer be accurate as of the time of any replay.

Before I turn the call over to Anne, I would like to remind you that certain statements made by management during the conference call will include the use of statements that are forward-looking in nature, and the statements made during this call that refer to management's expectations or future predictions are forward-looking statements and reflect management's current expectations, opinions, views, or beliefs with respect to future events, and are based on what we believe are reasonable assumptions. No assurance can be given, however, that these events will occur; and therefore, many factors could cause results to differ from management's expectations and actual results may differ materially from those projected in forward-looking statements. Material factors that could cause our actual results to differ from our projected results are described in our filings with the SEC. We expressly disclaim any obligations to update or revise any forward-looking statements made during this call and request that you refer to the forward-looking statements made in our earnings press release for additional information. With that, I'll turn the call over to Anne-Marie Ainsworth, President and Chief Executive Officer of the Partnerships (inaudible).

Anne-Marie Ainsworth

Good morning everyone. We appreciate you joining us on the conference call today. Also with me this morning is Bo McCall, Senior Vice President of Commercial and Business Development and Ken Owen, Vice President and Chief Financial Officer as well as additional members of management. I’ll begin by sharing with you how pleased I’m to have joined such an exceptional team here at Oiltanking Partners. Carlin Conner and this group have done an outstanding job building our storage, terminaling and pipeline assets developing a top tier customer base as well as anticipating and responding to the extra-ordinary growth opportunities that have emerged over the last few years. I have inherited a very strong foundation and I’m excited to be in a position to help steer the partnership during the next chapter of growth. The fourth quarter of 2012 was a record quarter for the partnership, the strong results were driven by growth in our storage fee revenues and higher throughput volumes of liquidities liquified petroleum gas or LPG exports. In fact during the fourth quarter we averaged a record 823,000 barrels per day of product through our facilities via our advantaged waterfront, pipeline and rail connectivity and truck handling facilities.

And the opportunities for expansion are continuing to grow, the flow of crude oil and natural gas liquids to the Gulf Coast region is continuing to and my expectation is that volumes will remain high as domestic oil and gas producers maintain robust levels of activity in many of the developing shale plays and as Canadian production makes its way to the Gulf Coast. These increasing volumes are continuing to drive the need for crude oil and product storage by our customer base which includes most of the major refiners in the Gulf Coast area.

Over the next several years we’re expecting to continue to see an increase in crude volumes to be a pipeline, rail car and truck and a continued growth in demand for product exports. We’re responding to this demand by constructing additional crude oil storage capacity and pipeline. In the fourth quarter of 2013 we placed into service our new pipeline projects and three 275,000 barrel tanks, a fourth tank will go into service during the second quarter. As we previously announced Appelt Phase I is expected to be operational by the end of this year and Appelt Phase II is on track and is expected to be in service by the end of 2014. Phase II is similar in size to Phase I and the volume is also contracted with high quality customers on a long term basis.

The first two Phases of Appelt once complete will bring total partnership storage capacity to over 25 million barrels by the end of 2014. Yesterday we announced a $44 million project we’re very excited about, Bo will speak in more detail about the project but I’ll mention that the (inaudible) construction project and plans to significantly increase our ability to export LPGs and our terminal on the Houston Ship Channel has been in the works for some time now. We’re very pleased to be moving forward and expanding the partnerships, long term relationship with enterprise product partners, due to our key role in the logistical supply chain of crude oil refined petroleum products, chemical feedstock’s and LPGs, we’re continuing to see demand for our services beyond our announced expansion plans. As mentioned we’ve additional land for storage, tank expansion, a world class deep water dock system with expansion capabilities as well as excellent pipeline connectivity to the major refiners and third party pipelines in the Gulf Coast area.

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