Oiltanking Partners, L.P. (OILT)

OILT 
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Industry: Energy
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Oiltanking Partners LP (OILT)

Q2 2013 Earnings Call

August 8, 2013, 11:30 am ET

Executives

Mark Buscovich, Manager Financial Planning & Analysis and Investor Relations

Anne-Marie Ainsworth - President, Chief Executive Officer, Director of the General Partner

Robert McCall - Senior Vice President - Commercial and Business Development

Jonathan Ackerman - Chief Financial Officer, Vice President of the General Partner

Ken Owen - Terminal Manager

Analysts

Brian Zarahn - Barclays

James Carreker - US Capital Advisors

Matthew Phillips - Clarkson Capital

Cory Garcia - Raymond James

Selman Akyol - Stifel

Presentation

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Oiltanking Partners' second quarter earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator instructions.) The conference is being recorded today, August 8, 2013.

I would now like to turn the conference over to Mark Buscovich. Please go ahead, sir.

Mark Buscovich

Thank you, operator. Good morning, everyone and welcome to today's conference call to discuss Oiltanking Partners' second quarter 2013 results. On the call this morning, is Anne-Marie Ainsworth, President and CEO of the partnership's General Partner, Bo McCall, Senior Vice President of Commercial and Business Development, Jonathan Ackerman, Vice President and Chief Financial Officer as well as Ken Owen, former CFO and current Terminal Manager, along with other members of the management team.

After market close yesterday, we issued a press release announcing our financial results which is available on our partnership's website at oiltankingpartners.com. You can also access a replay of today's call from the Investor Relations section of the partnerships' website or view a recorded replay until August 14, 2013. Information on how to access the replay was provided in yesterday's earning release. Information reported on the call speaks only as of today Thursday, August 8, 2013 therefore you are advised that any contents of this information may no longer be accurate as of the time of any request.

Before I turn the call over to Anne-Marie, 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 and opinions, views or beliefs with respect to future events, and are based at 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 any 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 will turn the call over Anne-Marie

Anne-Marie Ainsworth

Thank you, Mark. Good morning, everyone. We appreciate you joining us on the call today. As Mark mentioned, our new Chief Financial Officer, Jon Ackerman is with us today. Jon joined Oiltanking on July 1. He brings with him a wealth of transaction experience and knowledge of the energy and MLP industry. He comes to us from UBS Investment Bank, where he specialized in advising clients on complex M&A and capital markets transactions. Before joining UBS, he was an attorney, both in private practice and as a policy advisor in Washington DC. Jon is also a CPA, having begun his career in public accounting. All of us at Oiltanking are excited to have Jon onboard.

Ken Owen our previous CFO is also in the room with me today. In his new role, Ken will oversee the operations of our Houston terminal as well as the ongoing Appelt expansion. The partnership will benefit from the financial acumen and analytical rigor Ken will bring to the operating side of our business. I want to thank him for his extraordinary contributions as CFO. He has been invaluable during the partnerships' IPO and building out the finance and accounting team and as a strategic partner. Ken will start at the terminal, September 1, and will continue to work with Jon to ensure a smooth transition until then.

Turning to our performance. We are very pleased with our results during the second quarter of 2013 as we achieved a number of significant milestones for the partnership and Oiltanking. For the second quarter of 2013, we averaged over 1.1 million barrels per day of throughput volumes of crude, LPG and refine products. We generate record storage service and throughput fee revenues and just two weeks ago, we put the first of many tanks at our new Appelt facility in service.

The strong operational and financial results were driven by continued growth in our storage fee revenues and higher throughput volumes. The increase in storage service fees during the second quarter was primarily due to the new tanks we placed in service in the first quarter of this year and to a lesser extent due to an increase in the average monthly rate we earned per barrel stored.

We also saw a robust increase in throughput service fees this quarter due to the new pipelines we placed in service during the first quarter and, more significantly, due to the continued very strong LPG export market. Bo will discuss this business and related trends in more detail momentarily but, needless to say, we are pleased with how this business is performing, both as it relates to the straight volume throughput as well as the margin sharing component that we earned during the quarter. After the close of the second quarter, we brought online the final tank in the four tank expansion project at our Houston terminal. We now have our 1.1 million barrel expansion completely in service and backed by long-term fixed fee contract.

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