USD Partners LP
811 Main Street, Suite 2800
Houston, TX 77002
_______________________________
(281) 291-0510
https://usdpartners.com
investorrelations@usdg.com
Annual Report
For the period ending December 31, 2024 (the “Reporting Period”)
Outstanding Shares
The number of shares outstanding of our Common Stock was:
33,774,427 as of March 8, 2025 (Current Reporting Period Date or More Recent Date)
33,774,427 as of December 31, 2024 (Most Recent Completed Fiscal Year End)
Shell Status
Indicate by check mark whether the company is a shell company (as defined in Rule 405 of the Securities Act of 1933,
Rule 12b-2 of the Exchange Act of 1934 and Rule 15c2-11 of the Exchange Act of 1934):
Yes: ☐
No: ☒
Indicate by check mark whether the company’s shell status has changed since the previous reporting period:
Yes: ☐
No: ☒
Change in Control
Indicate by check mark whether a Change in Control of the company has occurred during this reporting period:
Yes: ☐
No: ☒
1)
Name and address(es) of the issuer and its predecessors (if any)
In answering this item, provide the current name of the issuer and names used by predecessor entities, along with
the dates of the name changes.
USD Partners LP
Current State and Date of Incorporation or Registration: Delaware
Standing in this jurisdiction: (e.g. active, default, inactive): In Good Standing
Prior Incorporation Information for the issuer and any predecessors during the past five years:
N/A
Describe any trading suspension or halt orders issued by the SEC or FINRA concerning the issuer or its
predecessors since inception:
On November 15, 2023, USD Partners LP (the “Partnership”) received a written notice from the staff of
NYSE Regulation notifying the Partnership that NYSE Regulation had determined to commence
proceedings to delist the Partnership’s common units from the New York Stock Exchange (“NYSE”).
Trading in the Partnership’s common units on the NYSE was suspended after the market close on
November 15, 2023. NYSE Regulation reached its decision to delist the common units pursuant to
Section 802.01B of the NYSE’s Listed Company Manual because the Partnership had fallen below the
NYSE’s continued listing standard requiring listed companies to maintain an average global market
capitalization over a consecutive 30 trading day period of at least $15 million. The Partnership’s units
were formally delisted from the NYSE on December 1, 2023.
List any stock split, dividend, recapitalization, merger, acquisition, spin-off, or reorganization either currently
anticipated or that occurred within the past 12 months:
None.
Address of the issuer’s principal executive office:
811 Main Street, Suite 2800
Houston, TX 77002
Address of the issuer’s principal place of business:
☒ Check if principal executive office and principal place of business are the same address:
Has the issuer or any of its predecessors been in bankruptcy, receivership, or any similar proceeding in the past
five years?
No: ☒
Yes: ☐ If Yes, provide additional details below:
2)
Security Information
Transfer Agent
Name: Computershare
Phone: (877) 373-6374
Address: 150 Royall Street, Canton, MA 02021
Email: web.queries@computershare.com
Web Address: computershare.com/investor
Publicly Quoted or Traded Securities:
The goal of this section is to provide a clear understanding of the share information for its publicly quoted or
traded equity securities. Use the fields below to provide the information, as applicable, for all outstanding classes
of securities that are publicly traded/quoted.
Trading symbol:
USDP
Exact title and class of securities outstanding:
Common Units Representing Limited Partnership Interests
CUSIP:
903318 103
Par or stated value:
Not Applicable
Total shares authorized:
Not Applicable
Total shares outstanding:
33,774,427 Common Units as of March 8, 2025
Total number of shareholders of record:
10 as of February 26, 2025
Please provide the above-referenced information for all other publicly quoted or traded securities of the issuer.
Security Description:
The goal of this section is to provide a clear understanding of the material rights and privileges of the securities
issued by the company. Please provide the below information for each class of the company’s equity securities,
as applicable:
1. For common equity, describe any dividend, voting and preemption rights.
Distributions will be made as and when declared by the Board of Directors of the Partnership’s General
Partner, USD Partners GP LLC (the “General Partner”).
Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on
matters affecting our business and, therefore, limited ability to influence management’s decisions
regarding our business. Unitholders do not elect the General Partner or the board of directors of the
General Partner and have no right to elect the General Partner or the board of directors of the General
Partner on an annual or other continuing basis. The board of directors of the General Partner is chosen
by the members of the General Partner, which is indirectly owned by US Development Group, LLC
(“USD”).
The vote of the holders of at least 66 2/3% of all outstanding units voting together as a single class is
required to remove the General Partner. At August 1, 2024, our general partner and its affiliates owned
51.2% of the limited partnership interests entitled to vote in this matter (excluding any common units held
by our officers, directors, employees and certain other persons affiliated with the General Partner).
Furthermore, unitholders’ voting rights are further restricted by the partnership agreement provision
providing that any units held by a person that owns 20.0% or more of any class of units then outstanding,
other than the General Partner, its affiliates, their transferees, and persons who acquired such units with
the prior approval of the board of directors of the General Partner, cannot vote on any matter.
Our partnership agreement also contains provisions limiting the ability of unitholders to call meetings or to
acquire information about our operations, as well as other provisions limiting the unitholders’ ability to
influence the manner or direction of management.
2. For preferred stock, describe the dividend, voting, conversion, and liquidation rights as well as
redemption or sinking fund provisions.
Not Applicable.
3. Describe any other material rights of common or preferred stockholders.
4. Describe any material modifications to rights of holders of the company’s securities that have
occurred over the reporting period covered by this report.
None.
3)
Issuance History
The goal of this section is to provide disclosure with respect to each event that resulted in any changes to the total
shares outstanding of any class of the issuer’s securities in the past two completed fiscal years and any
subsequent interim period.
Disclosure under this item shall include, in chronological order, all offerings and issuances of securities, including
debt convertible into equity securities, whether private or public, and all shares, or any other securities or options
to acquire such securities, issued for services. Using the tabular format below, please describe these events.
A. Changes to the Number of Outstanding Shares for the two most recently completed fiscal years and
any subsequent period.
Indicate by check mark whether there were any changes to the number of outstanding shares within the past two
completed fiscal years:
No: ☐
Yes: ☒ (If yes, you must complete the table below)
Shares Outstanding Opening Balance
Date:
January 1,
2022
Common: 27,268,878
Preferred: 0
Date of
Transaction
Transaction type
(e.g., new
issuance,
cancellation,
shares returned to
treasury)
Number of
Shares
Issued (or
cancelled)
Class of
Securities
Value of
shares
issued
($/per
share)
at
Issuanc
e
Were the
shares
issued at
a discount
to market
price at
the time
of
issuance?
(Yes/No)
Individual/ Entity
Shares were
issued to.
***You must
disclose the
control person(s)
for any entities
listed.
Reason for share
issuance (e.g. for
cash or debt
conversion) -
OR-
Nature of
Services
Provided
Restricted or
Unrestricted
as of this
filing.
Exemption
or
Registration
Type.
February 16,
2022
New Issuance
351,031
Common
Units
Representing
Limited
Partnership
Interests
$5.85
No
See Note (A)
below
Issuance of
Common Units
upon vesting of
Phantom Units
issued to
directors,
employees and
consultants
Unrestricted
Registered
pursuant to
Form S-8
April 6, 2022
New Issuance
5,751,136
Common
Units
Representing
Limited
Partnership
Interests
$6.14
No
USD Group LLC
Issuance of
shares to an
affiliate of the
General Partner in
connection with
the sale of the
Hardisty South
Terminal to the
Partnership
Restricted
Private
Placement
April 15, 2022
New Issuance
8,386
Common
Units
Representing
Limited
Partnership
Interests
$6.20
No
Employee
Issuance of
Common Units
upon vesting of
Phantom Units
issued to
directors,
employees and
consultants
Unrestricted
Registered
pursuant to
Form S-8
August 15,
2022
New Issuance
1,756
Common
Units
Representing
Limited
Partnership
Interests
$5.25
No
Employee
Issuance of
Common Units
upon vesting of
Phantom Units
issued to
directors,
employees and
consultants
Unrestricted
Registered
pursuant to
Form S-8
February 16,
2023
New Issuance
377,420
Common
Units
Representing
Limited
Partnership
Interests
$3.54
No
See Note (A)
below
Issuance of
Common Units
upon vesting of
Phantom Units
issued to
directors,
employees and
consultants
Unrestricted
Registered
pursuant to
Form S-8
(A)
The following table details directors of the General Partner and officers of the Partnership who had Common Units issued upon
vesting of phantom units as of the dates set forth below. The remaining units issued in the table above were issued to other employees and
service providers of the General Partner.
Name
Title
Common Units Issued
February 16, 2022
Common Units Issued
February 16, 2023
Directors
Dan Borgen
Chairman of the Board, President and CEO
67,748
66,044
Francesco Ciabatti
Director
—
—
Schuyler Coppedge
Director
—
—
Mike Curry
Director
17,787
15,925
Doug Kimmelman
Director
Jane O’Hagan
Director
—
—
Brad Sanders
Director
37,167
48,088
G. Stacy Smith
Director
13,136
13,136
Jeffrey Wood
Director
13,136
13,136
Officers
Kyle Schornick
SVP & Chief Financial Officer
3,291
4,228
Joshua Ruple
EVP & Chief Operating Officer
32,150
26,910
Amanda Wendell
SVP & Chief Accounting Officer
2,928
2,701
Keith Benson
VP, General Counsel & Secretary
14,170
13,959
B. Promissory and Convertible Notes
Indicate by check mark whether there are any outstanding promissory, convertible notes, convertible debentures,
or any other debt instruments that may be converted into a class of the issuer’s equity securities:
No: ☒
Yes: ☐ (If yes, you must complete the table below)
4)
Issuer’s Business, Products and Services
The purpose of this section is to provide a clear description of the issuer’s current operations.
Ensure that these descriptions are updated on the Company’s Profile on www.OTCMarkets.com.
A. Summarize the issuer’s business operations (If the issuer does not have current operations, state “no
operations”)
USD Partners LP is a fee-based master limited partnership formed by our sponsor, USD Group LLC (USD), to
acquire, develop and operate midstream infrastructure and complementary logistics solutions for crude oil and
other energy-related products. We generate substantially all of our operating cash flows from take-or-pay
contracts with primarily investment grade and other high credit quality customers, including major integrated
oil companies and refiners. The Hardisty terminal facilitates the transportation of heavy crude oil from
Western Canada to key demand centers across North America. Our operations include railcar loading,
storage in onsite tanks, inbound pipeline connectivity, as well as other related logistics services. We also
provide one of our customers with leased railcars and fleet services to facilitate the transportation of liquid
hydrocarbons by rail. We generally do not take ownership of the products that we handle nor do we receive
any payments from our customers based on the value of such products.
August 31,
2023
New Issuance
15,820
Common
Units
Representing
Limited
Partnership
Interests
$0.59
No
Employees
Issuance of
Common Units
upon vesting of
Phantom Units
issued to
directors,
employees and
consultants
Unrestricted
Registered
pursuant to
Form S-8
Shares Outstanding on Date of This Report:
Ending Balance:
Date December 31, 2024 Common:
33,774,427
Preferred: 0
B. List any subsidiaries, parent company, or affiliated companies.
Subsidiaries of USD Partners LP
SCT Pipeline LLC
Delaware
Stroud Crude Terminal LLC
Delaware
USD Logistics Operations GP LLC
Delaware
USD Logistics Operations LP
Delaware
USDP CCR LLC
Delaware
USDP Finance Corp.
Delaware
USD Rail Canada ULC
British Columbia
USD Rail LP
Delaware
USD Terminals Canada ULC
British Columbia
USD Terminals Canada II ULC
Delaware
USD Terminals Canada III ULC
Delaware
USD Terminals LLC
Delaware
C. Describe the issuers’ principal products or services.
Our operations include railcar loading, storage in onsite tanks, inbound pipeline connectivity, as well as
other related logistics services. We also provide one of our customers with leased railcars and fleet
services to facilitate the transportation of liquid hydrocarbons by rail.
5)
Issuer’s Facilities
The goal of this section is to provide investors with a clear understanding of all assets, properties or facilities
owned, used or leased by the issuer and the extent in which the facilities are utilized.
In responding to this item, please clearly describe the assets, properties or facilities of the issuer. Describe the
location of office space, data centers, principal plants, and other property of the issuer and describe the condition
of the properties. Specify if the assets, properties, or facilities are owned or leased and the terms of their leases. If
the issuer does not have complete ownership or control of the property, describe the limitations on the ownership.
The Hardisty Terminal is an origination terminal where we load various grades of Canadian crude oil onto
railcars for transportation to end markets. The Hardisty Terminal has the designed takeaway capacity of
three and one-half unit trains per day, or approximately 262,500 barrels per day and consists of a fixed
loading rack with approximately 60 railcar loading positions, a unit train staging area and loop tracks
capable of holding five unit trains simultaneously. The terminal is also equipped with an onsite vapor
management system that allows our customers to minimize hydrocarbon loss while improving safety
during the loading process. Our Hardisty Terminal receives inbound deliveries of crude oil through a
direct pipeline connection from Gibson Energy Inc.’s, or Gibson’s, Hardisty storage terminal. We currently
own the Hardisty Terminal, but have agreed to see the terminal pursuant to a Forbearance Agreement
with our lenders. Refer to Note 1. Organization and Description of Business, Note 10. Debt and Note 21.
Subsequent Events in the attached financial statements for further information.
6)
All Officers, Directors, and Control Persons of the Company
Using the table below, please provide information, as of the period end date of this report, regarding all officers
and directors of the company, or any person that performs a similar function, regardless of the number of shares
they own.
In addition, list all individuals or entities controlling 5% or more of any class of the issuer’s securities.
If any insiders listed are corporate shareholders or entities, provide the name and address of the person(s)
beneficially owning or controlling such corporate shareholders, or the name and contact information (City, State)
of an individual representing the corporation or entity. Include Company Insiders who own any outstanding units
or shares of any class of any equity security of the issuer.
The goal of this section is to provide investors with a clear understanding of the identity of all the persons or
entities that are involved in managing, controlling or advising the operations, business development and
disclosure of the issuer, as well as the identity of any significant or beneficial owners.
The information in the table below is as of February 16, 2025.
Names of All Officers,
Directors, and Control
Persons
Affiliation with Company (e.g.
Officer Title /Director/Owner
of 5% or more)
Residential Address
(City / State Only)
Number of
shares
owned
Share
type/class
Ownership
Percentage
of Class
Outstanding
Daniel Borgen
Chairman, CEO and President
Houston, Texas
506,882(1)
Common Units
1.5%
Kyle Schornick
SVP, CFO
Houston, Texas
—(2)
Common Units
—
Joshua Ruple
EVP, COO
Spring, Texas
26,910(3)
Common Units
*
Amanda Wendell
SVP, CAO
Pearland, Texas
—(4)
Common Units
—
Keith Benson
VP, General Counsel &
Secretary
Bellaire, Texas
80,630(5)
Common Units
*
Francesco Ciabatti
Director
New York, New York
—
Common Units
—
Schuyler Coppedge
Director
San Diego, California
—
Common Units
—
Mike Curry
Director
Naples, Florida
1(6)
Common Units
*
Douglas Kimmelman
Director
Surfside, Florida
50,000
Common Units
—
Jane O’Hagan
Director
Calgary, Ontario,
Canada
—
Common Units
—
Brad Sanders
Director
Houston, Texas
418,477(7)
Common Units
1.2%
Stacy Smith
Director
Dallas, Texas
142,829
Common Units
*
Carl Wimberley
Director
Houston, Texas
—
Common Units
—
Jeff Wood
Director
Houston, Texas
54,432
Common Units
*
US Development Group,
LLC
>5% Owner (8)
n/a
17,308,226
Common Units
51.2%
____________
*
Represents ownership of less than 1%.
(1) Excludes 69,663 unvested phantom units.
(2) Excludes 8,368 unvested phantom units.
(3) Excludes 34,233 unvested phantom units.
(4) Excludes 7,015 unvested phantom units.
(5) Excludes 17,889 unvested phantom units.
(6) Excludes15,039 unvested phantom units.
(7) Excludes 37,703 unvested phantom units.
(8) US Development Group, LLC (“USD”), through its 100% ownership of USD Group LLC (which owns 100% of our General Partner), is the
indirect owner of 17,308,226 common units. USD is the parent company of USD Group LLC who holds the common units directly and is
the sole owner of the member interests of our general partner. USD Group LLC is managed by USD. USD is managed by a seven
person board of directors that includes Dan Borgen, Adam Altsuler, Mike Curry, Schuyler Coppedge, Douglas Kimmelman, Francesco
Ciabatti and Lieutenant General Leslie Smith, Ret.. The board of directors of USD exercises voting and dispositive power over the units
held by USD Group LLC, and acts by majority vote. Messrs. Borgen, Altsuler, Coppedge, Curry, Kimmelman, Ciabatti and Smith are thus
not deemed to have beneficial ownership of the units owned by USD Group LLC.
7)
Legal/Disciplinary History
A. Identify and provide a brief explanation as to whether any of the persons or entities listed above in Section 6
have, in the past 10 years:
1. Been the subject of an indictment or conviction in a criminal proceeding or plea agreement or named
as a defendant in a pending criminal proceeding (excluding minor traffic violations);
To the best of the Company’s knowledge, none.
2. Been the subject of the entry of an order, judgment, or decree, not subsequently reversed,
suspended or vacated, by a court of competent jurisdiction that permanently or temporarily enjoined,
barred, suspended or otherwise limited such person’s involvement in any type of business, securities,
commodities, financial- or investment-related, insurance or banking activities;
To the best of the Company’s knowledge, none.
3. Been the subject of a finding, disciplinary order or judgment by a court of competent jurisdiction (in a
civil action), the Securities and Exchange Commission, the Commodity Futures Trading Commission,
a state securities regulator of a violation of federal or state securities or commodities law, or a foreign
regulatory body or court, which finding or judgment has not been reversed, suspended, or vacated;
To the best of the Company’s knowledge, none.
4. Named as a defendant or a respondent in a regulatory complaint or proceeding that could result in a
“yes” answer to part 3 above; or
To the best of the Company’s knowledge, none.
5. Been the subject of an order by a self-regulatory organization that permanently or temporarily barred,
suspended, or otherwise limited such person’s involvement in any type of business or securities
activities.
To the best of the Company’s knowledge, none.
6. Been the subject of a U.S Postal Service false representation order, or a temporary restraining order,
or preliminary injunction with respect to conduct alleged to have violated the false representation
statute that applies to U.S mail.
To the best of the Company’s knowledge, none.
B. Describe briefly any material pending legal proceedings, other than ordinary routine litigation incidental to the
business, to which the issuer or any of its subsidiaries is a party to or of which any of their property is the
subject. Include the name of the court or agency in which the proceedings are pending, the date instituted, the
principal parties thereto, a description of the factual basis alleged to underlie the proceeding and the relief
sought. Include similar information as to any such proceedings known to be contemplated by governmental
authorities.
None
8)
Third Party Service Providers
Provide the name, address, telephone number and email address of each of the following outside providers. You
may add additional space as needed.
Confirm that the information in this table matches your public company profile on www.OTCMarkets.com. If any
updates are needed to your public company profile, update your company profile.
Securities Counsel (must include Counsel preparing Attorney Letters).
Gibson, Dunn & Crutcher LLP
811 Main Street, Suite 3000
Houston, Texas 77002
(346) 718-6600
Investor Relations
USD Partners LP
811 Main Street, Suite 2800
Houston, Texas 77001
(281) 291-0510
investorrelations@usdg.com
9)
Disclosure & Financial Information
A. This Disclosure Statement was prepared by (name of individual):
Name:
Keith Benson
Title:
Vice President, General Counsel & Secretary
B. The following financial statements were prepared in accordance with:
☐ IFRS
☒ U.S. GAAP
C. The following financial statements were prepared by (name of individual):
Name:
Amanda Wendell
Title:
Senior Vice President, Chief Accounting Officer
Mrs. Wendell is USD Partners’ serving Chief Accounting Officer as of January 2024. Mrs. Wendell previously
held various leadership positions in USD Partners accounting department, serving as a Vice President since
2022 and the Corporate Controller since 2017. Before her tenure at USD, Mrs. Wendell worked as an auditor
in Houston at the public accounting firm, BDO. Mrs. Wendell has been a Certified Public Accountant since
2014, holding a Master of Science and a BBA in Accounting from Sam Houston State University.
The following unaudited consolidated financial statements of USD Partners LP are attached at the end of this
Disclosure Statement:
•
Consolidated Statements of Operations for the years ended December 31, 2024 and 2023
•
Consolidated Statements of Comprehensive Income (Loss) for years ended December 31, 2024 and
2023
•
Consolidated Statements of Cash Flows for the years December 31, 2024 and 2023
•
Consolidated Balance Sheets as of December 31, 2024 and December 31, 2023
•
Consolidated Statements of Partners’ Capital for years December 31, 2024 and 2023
•
Notes to the Consolidated Financial Statements of USD Partners LP
10) Issuer Certification
Principal Executive Officer:
The issuer shall include certifications by the chief executive officer and chief financial officer of the issuer (or any
other persons with different titles but having the same responsibilities) in each Quarterly Report or Annual Report.
The certifications shall follow the format below:
I, Daniel Borgen certify that:
1. I have reviewed this Disclosure Statement for USD Partners LP;
2. Based on my knowledge, this disclosure statement does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this disclosure statement; and
3. Based on my knowledge, the financial statements, and other financial information included or
incorporated by reference in this disclosure statement, fairly present in all material respects the
financial condition, results of operations and cash flows of the issuer as of, and for, the periods
presented in this disclosure statement.
March 10, 2025
/s/ Daniel Borgen
Chairman, CEO and President
Principal Financial Officer:
I, Kyle Schornick certify that:
1. I have reviewed this Disclosure Statement for USD Partners LP;
2. Based on my knowledge, this disclosure statement does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this disclosure statement; and
3. Based on my knowledge, the financial statements, and other financial information included or
incorporated by reference in this disclosure statement, fairly present in all material respects the
financial condition, results of operations and cash flows of the issuer as of, and for, the periods
presented in this disclosure statement.
March 10, 2025
/s/ Kyle Schornick
SVP, CFO
USD Partners LP and Subsidiaries
Consolidated Financial Statements
(Unaudited)
As of and for the Years Ended
December 31, 2024 and 2023
USD Partners LP and Subsidiaries
Contents
_____________________________________________________________________________________________
Part I : USD Partners LP and Subsidiaries Annual Financial Statements (unaudited) . . . . . . . . . . . .
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Consolidated Statements of Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Consolidated Statements of Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
Part II: Risk Factors - Unaudited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
Page
2
USD PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
2024
2023
(in thousands of US dollars, except per
unit amounts)
Revenues
Terminalling services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
31,115
$
57,917
Terminalling services — related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
2,835
Rail switching and demurrage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,056
—
Fleet leases — related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,493
1,332
Fleet services — related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
171
Freight and other reimbursables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63
244
Freight and other reimbursables — related party . . . . . . . . . . . . . . . . . . . . . .
2,106
359
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35,833
62,858
Operating costs
Subcontracted rail services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,221
10,021
Pipeline fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,690
16,875
Freight and other reimbursables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,169
603
Operating and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,429
5,462
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,989
12,539
Selling, general and administrative — related party . . . . . . . . . . . . . . . . . . .
3,539
7,095
Recovery of loss on assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,977)
—
Impairment of intangible and long-lived assets . . . . . . . . . . . . . . . . . . . . . . .
17,432
—
Gain on sale of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,079)
(34,061)
Loss on assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
831
2,977
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,405
6,204
Total operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53,649
27,715
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(17,816)
35,143
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,784
22,133
Gain associated with derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(5,892)
Foreign currency transaction loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(155)
342
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(308)
(272)
Income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(52,137)
18,832
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
203
1,059
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(52,340) $
17,773
Net income (loss) attributable to limited partner interest . . . . . . . . . . . . . $
(52,340) $
17,773
Net income (loss) per common unit (basic and diluted) . . . . . . . . . . . . . . . $
(1.55) $
0.53
Weighted average common units outstanding
33,774
33,716
For the Years Ended December 31,
Part I. USD Partners LP and Subsidiaries Annual Financial Statements (Unaudited)
USD PARTNERS LP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
For the Years Ended December 31,
2024
2023
(in thousands of US dollars)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(52,340) $
17,773
Other comprehensive income (loss) — foreign currency translation . . . .
(3,902)
1,182
Comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(56,242) $
18,955
The accompanying notes are an integral part of these consolidated financial statements.
4
USD PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
2024
2023
(in thousands of US dollars)
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(52,340) $
17,773
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,405
6,204
Gain associated with derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . .
—
(5,892)
Settlement of derivative contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
3,753
Unit based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,129
3,681
Gain on sale of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,079)
(34,061)
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(25)
Amortization of deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,004
3,915
Interest payment in kind
24,504
1,975
Recovery of loss on assets held for sale
(2,977)
—
Impairment of intangible and long-lived assets
17,432
—
Loss on assets held for sale
831
2,977
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
420
(253)
Accounts receivable — related party . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(576)
384
Prepaid expenses, inventory and other assets . . . . . . . . . . . . . . . . . . . . . .
(765)
1,824
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . .
1,501
(732)
Accounts payable and accrued expenses — related party . . . . . . . . . . . .
1,311
(534)
Deferred revenue and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,816)
(3,886)
Deferred revenue and other liabilities — related party . . . . . . . . . . . . . .
—
23
Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . .
1,984
(2,874)
Cash flows from investing activities:
Additions of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(648)
Internal-use software development costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(55)
Net proceeds from the sale of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,312
63,759
Net cash provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,312
63,056
Cash flows from financing activities:
Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(2,154)
Payments for deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11)
(7,196)
Vested equity units - paid in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(31)
—
Vested Phantom Units used for payment of participant taxes . . . . . . . . . . .
—
(674)
Repayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(23,716)
(45,568)
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(23,758)
(55,592)
Effect of exchange rates on cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(725)
47
Net change in cash, cash equivalents and restricted cash . . . . . . . . . . . . . . .
(2,187)
4,637
Cash, cash equivalents and restricted cash — beginning of year . . . . . . . . . .
10,417
5,780
Cash, cash equivalents and restricted cash — end of year . . . . . . . . . . . . . . . $
8,230
$
10,417
For the Years Ended December 31,
The accompanying notes are an integral part of these consolidated financial statements.
5
USD PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(unaudited)
December 31,
2024
2023
(in thousands of US dollars, except unit
amounts)
ASSETS
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,333
$
6,576
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,897
3,841
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,033
1,546
Accounts receivable — related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
601
25
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,117
1,559
Assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39,989
16,162
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
405
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51,970
30,114
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
57,123
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
49
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
5
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
1,168
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
51,970
$
88,459
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,090
$
1,715
Accounts payable and accrued expenses — related party . . . . . . . . . . . . . . . . . . . . . . . . .
1,990
615
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
2,177
Long-term debt, current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
181,991
167,183
Operating lease liabilities, current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
4
Liabilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,365
—
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,383
6,014
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
198,819
177,708
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
3,385
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
198,819
181,093
Commitments and contingencies (Note 13)
Partners’ capital
Common units (33,774,427 authorized and issued at December 31, 2024 and 2023) . . . .
(139,988)
(89,675)
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,861)
(2,959)
Total partners’ capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(146,849)
(92,634)
Total liabilities and partners’ capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
51,970
$
88,459
The accompanying notes are an integral part of these consolidated financial statements.
6
USD PARTNERS LP
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(unaudited)
For the Years Ended December 31,
2024
2023
Units
Amount
Units
Amount
(in thousands of US dollars, except per unit amounts)
Common units
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . .
33,774,427
$
(89,675)
33,381,187
$
(108,263)
Equity units vested . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(98)
—
—
Common units issued for vested Phantom Units . . . .
—
—
393,240
(674)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(52,340)
—
17,773
Unit based compensation expense . . . . . . . . . . . . . . .
—
2,125
—
3,643
Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
(2,154)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33,774,427
(139,988)
33,774,427
(89,675)
Accumulated other comprehensive loss
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,959)
(4,141)
Cumulative translation adjustment . . . . . . . . . . . . . . .
(3,902)
1,182
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,861)
(2,959)
Total partners’ capital at December 31, . . . . . . . . . . . . .
$
(146,849)
$
(92,634)
The accompanying notes are an integral part of these consolidated financial statements.
7
USD PARTNERS LP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
General
USD Partners LP and its consolidated subsidiaries, collectively referred to herein as we, us, our, the
Partnership and USDP, is a fee-based, master limited partnership formed in 2014 by US Development Group, LLC,
or USD, through its wholly-owned subsidiary, USD Group LLC, or USDG. We were formed to acquire, develop and
operate midstream infrastructure and complimentary logistics solutions for crude oil, biofuels and other energy-
related products. We generate substantially all of our operating cash flows from take-or-pay contracts with primarily
investment grade and other high credit quality customers, including major integrated oil companies, refiners and
marketers. The Hardisty terminal facilitates the transportation of heavy crude oil from Western Canada to key
demand centers across North America. Our operations include railcar loading, storage in onsite tanks, inbound
pipeline connectivity, as well as other related logistics services. We also provide one of our customers with leased
railcars and fleet services to facilitate the transportation of liquid hydrocarbons by rail. We do not generally take
ownership of the products that we handle, nor do we receive any payments from our customers based on the value of
such products.
A substantial amount of the operating cash flows related to the terminalling services that we provide are
generated from take-or-pay contracts with minimum monthly commitment fees and, as a result, are not directly
related to actual throughput volumes at our crude oil terminals. Throughput volumes at our terminals are primarily
influenced by the difference in price between Western Canadian Select, or WCS, and other grades of crude oil,
commonly referred to as spreads, rather than absolute price levels. WCS spreads are influenced by several market
factors, including the availability of supplies relative to the level of demand from refiners and other end users, the
price and availability of alternative grades of crude oil, the availability of takeaway capacity, as well as
transportation costs from supply areas to demand centers.
On March 31, 2023, we completed our divestiture of all of the equity interests in our Casper Terminal, which
included the Casper Crude to Rail, LLC and CCR Pipeline, LLC entities, for approximately $33.0 million in cash,
subject to customary adjustments. On December 20, 2023, we completed our divestiture of 100% of the equity
interest in our West Colton Terminal, which included West Colton Rail Terminal LLC, for approximately $31.3
million in cash, subject to customary adjustments. On April 26, 2024, we completed our divestiture of our Stroud
Terminal assets for approximately $20.1 million in cash, subject to customary adjustments. The Casper, West
Colton, and Stroud Terminals were included in our Terminalling Services segment. Refer to Note 3. Dispositions
and Entities Held for Sale for additional details regarding these dispositions.
The composition of our capital accounts was as follows at the specified dates:
December 31,
2024
2023
Common units held by the Public . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48.8 %
48.8 %
Common units held by USDG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51.2 %
51.2 %
100.0 %
100.0 %
8
Going Concern
We evaluate at each annual and interim period whether there are conditions or events, considered in the
aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date
that the consolidated financial statements are issued. Our evaluation is based on relevant conditions and events that
are known and reasonably knowable at the date that the consolidated financial statements are issued.
The maturity date of our Credit Agreement (as defined below) was November 2, 2024. The Credit Agreement
set forth certain milestones that we were required to achieve in the months leading up to the maturity of the Credit
Agreement, including milestones related to total contracted revenue. As a result of the maturity date (as modified by
the forbearance agreement discussed below) being within 12 months after the date that these financial statements
were issued, the amounts due under our Credit Agreement have been included in our going concern assessment.
On June 20, 2024 we entered into a Forbearance Agreement with the lenders under the Credit Agreement,
pursuant to which the lenders and administrative agent under the Credit Agreement agreed not to exercise any rights
or remedies arising from our failure or prospective failure to meet these milestones, so long as we are in compliance
with the stipulations set forth in the Forbearance Agreement. See Note 10. Debt for further details regarding the
Forbearance Agreement.
The Forbearance Agreement obligated the Partnership to adhere to an operating budget approved by the
administrative agent and included an obligation to repay borrowings with any cash on hand in excess of an agreed
maximum. The lenders under the Credit Agreement also required that we agree, among other things, to complete the
sale of the Hardisty Rail Terminal on or before January 31, 2025. The lenders have subsequently elected to extend
this date. As discussed further in Note 21. Subsequent Events, we expect that the banks will complete the sale of our
Hardisty Rail Terminal on or prior to mid-April 2025. After giving effect to the sale of our Hardisty Rail Terminal
and the use of proceeds, we will have sold substantially all of our assets, but expect to have substantial remaining
borrowings outstanding under our revolving credit facility. Upon completion of the sale, we expect that the lenders
will terminate the revolving credit facility and write off the remaining debt balance, following which the Partnership
intends to take steps to wind down or dissolve.
The conditions described above raise substantial doubt about our ability to continue as a going concern for the
next 12 months and we believe that subsequent to the completed sale of the Hardisty Terminal, we will not continue
as a going concern.
These consolidated financial statements do not include any adjustments that might result from the outcome of
this uncertainty, nor do they include adjustments to reflect the possible future effects of the recoverability and
classification of recorded asset amounts and classifications of liabilities that might be necessary should we be unable
to continue as a going concern.
Delisting of Common Units on New York Stock Exchange
On November 15, 2023, we received a written notice from the staff of the New York Stock Exchange, or
NYSE, notifying us that NYSE had determined to commence proceedings to delist our common units from the
NYSE. Trading in the Partnership’s common units on the NYSE was suspended after the market close on
November 15, 2023. NYSE reached its decision to delist the common units pursuant to Section 802.01B of the
NYSE’s Listed Company Manual because the Partnership had fallen below the NYSE’s continued listing standard
requiring listed companies to maintain an average global market capitalization over a consecutive 30 trading day
period of at least $15 million.
On November 16, 2023, our common units were delisted from the NYSE. Our common units commenced
trading on the OTC Pink Market on November 16, 2023 under the symbol “USDP.” We are under no obligation to
develop or maintain a market in the common units. We cannot provide assurance that our common units will
continue to trade on the OTC Pink Market, that brokers will continue to provide public quotes of our common units,
that a market for our common units will develop or be maintained, or that the trading volume of our common units
will be sufficient enough to generate an efficient trading market. Holders of common units may not be able to sell or
otherwise transfer such common units.
9
US Development Group, LLC
USD and its affiliates are engaged in designing, developing, owning and managing large-scale multi-modal
logistics centers and energy-related infrastructure across North America. USD is the indirect owner of our general
partner through its direct ownership of USDG and is currently owned by Energy Capital Partners, Goldman Sachs
and certain members of USD’s management team.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Use of Estimates
We prepare our consolidated financial statements in accordance with accounting principles generally accepted
in the United States of America, or GAAP. Our preparation of these consolidated financial statements requires us to
make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. We regularly evaluate these estimates utilizing historical experience,
consultation with experts and other methods we consider reasonable in the circumstances. Nevertheless, actual
results may differ from these estimates. We record the effect of any revisions to these estimates in our consolidated
financial statements in the period in which the facts that give rise to the revision become known. Significant
estimates we make include, but are not limited to, the estimated lives of depreciable property and equipment,
recoverability of long-lived assets, the collectability of accounts receivable, the amounts of deferred revenue and
related prepaid pipeline fees.
Principles of Consolidation
The consolidated financial statements include our accounts and those of our wholly-owned subsidiaries on a
consolidated basis. All significant intercompany accounts and transactions have been eliminated in consolidation.
We consolidate the accounts of entities over which we have a controlling financial interest through our ownership of
the general partner or the majority voting interests of the entity.
Foreign Currency Translation
We conduct a substantial portion of our operations in Canada, which we account for in the local currency, the
Canadian dollar. We translate most Canadian dollar denominated balance sheet accounts into our reporting currency,
the U.S. dollar, at the end of period exchange rate, while most accounts in our statement of operations accounts are
translated into our reporting currency based on the average exchange rate for each monthly period. Fluctuations in
the exchange rates between the Canadian dollar and the U.S. dollar can create variability in the amounts we translate
and report in U.S. dollars.
Within these consolidated financial statements, we denote amounts denominated in Canadian dollars with
“C$” immediately prior to the stated amount.
Revenue Recognition
We recognize revenue from contracts with customers under the core principle to depict the transfer of control
to our customers of goods or services in an amount reflecting the consideration for which we expect to be entitled. In
order to achieve the core principle, we apply the following five step approach:
(1) identify the contract with a customer;
(2) identify the performance obligations in the contract;
(3) determine the transaction price;
(4) allocate the transaction price to the performance obligations in the contract; and
(5) recognize revenue when a performance obligation is satisfied.
We define a performance obligation as a promise in a contract to transfer a distinct good or service to the
customer. We allocate the transaction price in a contract to each distinct performance obligation, which we
10
recognize as revenue when, or as, the performance obligation is satisfied. For contracts with multiple performance
obligations, we allocate the transaction price in the contract to each performance obligation using our best estimate
of the standalone selling price for each distinct good or service in the contract, utilizing market-based and cost-plus
margin inputs. We have elected to account for sales taxes received from customers on a net basis.
We applied the right-to-invoice practical expedient to contracts for which we recognize revenue at the amount
to which we have the right to invoice for services performed.
Terminalling Services Revenues
Historically, we derived a majority of our revenues from contracts to provide terminalling services, which
included pipeline transportation, storage, loading and unloading of crude oil and related products from and into
railcars and trucks, as well as the transloading of biofuels from railcars into trucks. Our Terminal Services
Agreements are generally established under multi-year, take-or-pay arrangements that require monthly payments
from our customers for their minimum monthly volume commitments in exchange for our performance of the
terminalling services enumerated above. Variable consideration, such as volume-based pricing, included in our
agreements is typically resolved within the applicable accounting period.
We recognize revenue for the terminalling services we provide based upon the contractual rates set forth in
our agreements related to throughput volumes. We recognize revenue over time as we render services based on the
throughput volumes handled at our terminals as this best represents the value of the services we provide to
customers. All of the contracted capacity at our Hardisty Terminal is and West Colton Terminal was contracted
under agreements that contain “take-or-pay” provisions where we are entitled to the payment of minimum monthly
commitment fees from our customers, regardless of whether the specified throughput volume to which the customer
committed is achieved.
Our Terminal Services Agreements at our Hardisty Terminal generally grants and West Colton Terminal
granted our customers make-up rights that allow them to load volumes in excess of their minimum monthly
commitment in future periods, without additional charge, to the extent capacity is available for the excess volume.
The make-up rights typically expire, if unused, in subsequent periods up to 12 months following the period for
which the volumes were originally committed. We currently recognize substantially all of the amounts we receive
for minimum commitment fees as revenue when collected, since breakage associated with these make-up rights
options has varied between 97% and 100% based on our experience and expectations around usage of these options.
Breakage rates are regularly evaluated and modified as necessary to reflect our current experience and expectations.
If we do not expect to be entitled to a breakage amount, we defer the recognition of revenue associated with volumes
that are below the minimum monthly commitment until we determine that the likelihood that the customer will be
able to make up the minimum volume is remote. If we expect to be entitled to a breakage amount, we estimate the
expected breakage and recognize the expected breakage amount as revenue in proportion to the trend of rights
exercised by the customer.
Fleet Services Revenues
Our fleet services contract provides for the sourcing of railcar fleets and related logistics and maintenance
services. We record revenues for the fleet lease on a gross basis, since we are deemed the primary obligor for the
services.
We recognize revenue for our fleet lease and related party administrative services ratably over the lease
contract period as services are consistently provided throughout the period. Revenue for reimbursable costs is
recognized on a gross basis on our consolidated statements of operations as “Freight and other reimbursables,” as
the costs are incurred. We have deferred revenues for amounts collected in advance from our customer in our Fleet
services segment, which will be recognized as revenue as the underlying services are performed pursuant to the
terms of our lease contract.
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Income Taxes
We are not a taxable entity for U.S. federal income tax purposes or for a majority of the states that impose an
income tax. Taxes on our net income or loss are generally borne by our unitholders through the allocation of taxable
income, except for USD Rail LP, which, has elected to be classified as an entity taxable as a corporation. Our
provision for income taxes is predominantly attributable to Canadian federal and provincial income taxes imposed
on our operations based in Canada. We are also subject to franchise tax in the State of Texas, that is, computed on
our modified gross margin, which we have determined to be an income tax under the applicable accounting
guidance. Our current and historical provision for income taxes also reflects income taxes associated with
USD Rail LP.
We recognize deferred income tax assets and liabilities for temporary differences between the relevant basis
of our assets and liabilities for financial reporting and tax purposes. We record the impact of changes in tax
legislation on deferred income tax assets and liabilities in the period the legislation is enacted.
Pursuant to the authoritative accounting guidance regarding uncertain tax positions, we recognize the tax
effects of any uncertain tax position as the largest amount that will more likely than not be realized upon ultimate
settlement with the taxing authority having full knowledge of the position and all relevant facts. Under this criterion,
we evaluate the most likely resolution of an uncertain tax position based on its technical merits and on the outcome
that we expect would likely be sustained under examination.
Our policy is to recognize any interest or penalties related to the underpayment of income taxes as a
component of income tax expense or benefit. We have not historically incurred any significant interest or penalties
for the underpayment of income taxes.
Net income for financial statement purposes may differ significantly from the taxable income we allocate to
our unitholders as a result of differences between the tax basis and financial reporting basis of assets and liabilities
and the taxable income allocation requirements set forth in our partnership agreement. The aggregate difference in
the basis of our net assets for financial and tax reporting purposes compared to unitholders cannot be readily
determined because information regarding each partner’s tax attributes in us is not available.
Cash and Cash Equivalents
Cash and cash equivalents consist of all unrestricted demand deposits and funds invested in highly liquid
instruments with original maturities of three months or less. We periodically assess the financial condition of the
financial institutions where these funds are held and believe that our credit risk is minimal.
Inventory
Our expectation is that any inventory we may acquire is comprised of crude oil and held on a temporary basis
in connection with buy-sell agreements, in which we take title to commodities solely while in our terminals. We
record our inventory at cost, representing the amount we pay to purchase the crude oil, and account for it on a first-
in, first-out, or FIFO, basis. The purchase price we pay for the crude oil is set forth in our buy-sell agreements and is
determined from an indexed market price less an agreed-upon rate differential. The market prices at which we
ultimately sell the crude oil is determined based on the same indexed market price as the crude oil purchase, less an
agreed-upon rate differential that is smaller than the rate differential used to determine the cost. The difference
between the purchase price and the selling price establishes a fixed amount we receive, on a per barrel basis, when
the inventory is sold pursuant to the terms of our buy-sell arrangements, eliminating any commodity price exposure
to us. Based on the terms of our buy-sell arrangements, the selling price will always be greater than the cost of our
inventory. The resulting income we receive represents a fee for the terminalling services we provide our customers,
which we record net in “Terminalling services” revenues on our consolidated statement of income.
Accounts Receivable
Accounts receivable consists of billed and unbilled amounts due from our customers, which include crude oil
producing and petroleum refining companies, as well as marketers of petroleum, petroleum products and biofuels,
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for services we have provided. We perform ongoing credit evaluations of our customers. When appropriate, we use
the specific identification method to estimate allowances for credit losses based on our customers’ financial
condition and collection history, as well as other pertinent factors. Accounts are written-off against the allowance for
doubtful accounts when significantly past due and we have deemed the amounts uncollectible.
Capitalization Policies and Depreciation Methods
We record property and equipment at its original cost or fair value if acquired as part of a business
acquisition, which we depreciate on a straight-line basis over the estimated useful lives of the assets, which range
from three to 30 years. Our determination of the useful lives of property and equipment requires us to make various
assumptions when the assets are acquired or placed into service about the expected usage, normal wear and tear and
the extent and frequency of maintenance programs. Expenditures for repairs and maintenance are charged to expense
as incurred, while improvements that extend the service life or capacity of existing property and equipment are
capitalized. Upon the sale or retirement of an asset, the related costs and accumulated depreciation are removed from
the accounts and any gain or loss is recognized in our operating results.
During construction, we capitalize direct costs, such as labor, materials and overhead, as well as interest cost
we may incur on indebtedness at our incremental borrowing rate.
Assets Held For Sale
We classify long-lived assets intended to be sold as held for sale in the period in which all of the following
criteria are met: (1) management, having the authority to approve the action, commits to a plan to sell the asset or
disposal group; (2) the asset or disposal group is available for immediate sale in its present condition subject only to
terms that are usual and customary for sales of such assets; (3) an active program to locate a buyer and other actions
required to complete the plan to sell the asset or disposal group have been initiated; (4) the sale of the asset or
disposal group is probable, and transfer of the asset or disposal group is expected to qualify for recognition as a
completed sale within one year, except if events or circumstances beyond our control extend the period of time
required to sell the asset or disposal group beyond one year; (5) the asset is being actively marketed for sale at a
price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that
it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
We initially measure a long-lived asset or disposal group that is classified as held for sale at the lower of
carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the
period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived
asset or disposal group until the date of sale. We assess the fair value of a long-lived asset or disposal group less any
costs to sell each reporting period it remains classified as held for sale and report any subsequent changes as an
adjustment to the carrying value of the asset or disposal group, as long as the new carrying value does not exceed the
carrying value of the asset at the time it was initially classified as held for sale.
Upon determining that a long-lived asset or disposal group meets the criteria to be classified as held for sale,
we discontinue depreciation and amortization and report long-lived assets and liabilities of the disposal group in the
line items “Assets held for sale” and “Liabilities held for sale” in our consolidated balance sheets.
Internal-use Software
We capitalize certain internal-use software costs in accordance with Accounting Standard Codification, or
ASC, 350-40, which are included in intangible assets. ASC 350-40 requires assets to be recorded at the cost to
develop the asset and requires an intangible asset to be amortized over its useful life and for the useful life to be
evaluated every reporting period to determine whether events or circumstances warrant a revision to the remaining
period of amortization. If the estimate of useful life is changed, the remaining carrying amount of the intangible
asset is amortized prospectively over the revised remaining useful life. We currently are amortizing these assets over
a useful life of five years in the line item “Depreciation and amortization” in our consolidated statement of
operations. Maintenance of and minor upgrades to internal-use software are classified as selling, general, and
administrative expenses as incurred.
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Impairment of Long-lived Assets
We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate the
carrying amount of an asset may not be recoverable.
We consider a long-lived asset to be impaired when the sum of the estimated, undiscounted future cash flows
from the use of the asset and its eventual disposition is less than the carrying amount of the asset. Factors that
indicate potential impairment include: a significant decrease in the market value of the asset, operating income or
cash flows associated with the use of the asset and a significant change in the asset’s physical condition or use.
When alternative courses of action to recover the carrying amount of a long-lived asset are under
consideration, estimates of future undiscounted cash flows take into account possible outcomes and probabilities of
their occurrence. If the carrying amount of the long-lived asset is not recoverable based on the estimated future
undiscounted cash flows or when other methods of assessing fair value determine that fair value is less than the
carrying amount of the asset, an impairment loss is recognized to the extent the carrying amount exceeds the
estimated fair value of the long-lived asset. Refer to Note 7. Property and Equipment for further discussion.
Leases
We classify our leases as operating, financing or sales-type leases based on the criteria set forth in ASC 842
that considers whether a lease is economically similar to the purchase of a nonfinancial asset. We have adopted as
our accounting policy the definition of “substantially all” of the fair value of the underlying asset to mean 90% or
greater and a “major part” of the remaining economic life to mean 75% or greater in performing our classification
assessment. We exclude variable lease payments that are based on performance or use from our lease classification
determination. We include the exercise price of a purchase option when reasonable certainty exists that we will
exercise the option. We also include termination penalties unless it is reasonably certain that we will not exercise
any option to terminate the lease, and therefore will not incur the penalty. Lastly, we also include any residual value
guarantees that we provided to lessors in our classification determination.
Lessee Accounting
We have historically leased assets from third parties for use in our operations, which primarily included
railcars, buildings, storage tanks, equipment, offices, railroad track and land. We currently have noncancellable
operating leases for equipment and railcars. The general terms of our lease agreements require monthly payments in
advance, in arrears or upon receipt, some of which include variable payments attributable to index-based rate
escalations and freight associated with railcar returns. A majority of our leases do not include renewal options, or
rights to early termination of the lease agreements. However, on occasion we enter into lease agreements that have
renewal options. For these leases, we include the renewal options to extend the lease in our operating lease right-of-
use assets and liabilities when it is reasonably certain that we will exercise the renewal option. Additionally, our
leases do not include residual value guarantees, nor do they impose any significant covenants or restrictions on us.
As discussed below under Lessor Accounting, we effectively sublease all of our leased railcars to customers under
terms similar to the terms of our lease agreements with a railcar manufacturer from whom we lease the railcars. We
also historically leased a storage tank from a third-party provider of crude oil storage that we subleased to a
customer of our Stroud Terminal.
We have elected as an accounting policy not to apply the recognition requirements of ASC 842 to short-term
leases for all classes of assets underlying our leases. As a result, we recognize the lease payments we make as
expense in our consolidated statements of operations over the lease term, regardless of the underlying class of asset
being leased. We define a short-term lease as a lease that at the commencement date has a term of 12 months or less
and does not include an option to purchase the underlying asset that we are reasonably certain to exercise.
We deem a contract to be a lease when the terms of the agreement indicate we have the right to control the
use of an identified asset for a period of time in exchange for consideration. We establish our right to control the use
of an identified asset when the contract terms set forth our right to obtain substantially all of the economic benefits
from use of the identified asset, or to direct its use throughout the contract period. We consider substantially all of
the economic benefits to mean 90% or more of the utility of the identified asset.
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We have elected to apply the portfolio approach to account for our railcar leases due to our expectation that
this method would not significantly differ from an individual lease approach. Additionally, we have elected to use
the practical expedient that allows us not to separate amounts of contract consideration between lease and non-lease
components. Non-lease components of our agreements include maintenance of property, common area costs such as
cleaning and landscape services and reimbursement of the suppliers’ insurance, taxes or administrative costs.
We determine the discount rate for our leases by estimating a borrowing rate we would pay on a collateralized
basis over the term of the underlying lease, based on our creditworthiness and the interest rate environment at the
time we enter into the lease. We establish our credit quality by performing a synthetic credit analysis based on
operational, liquidity and solvency metrics, which are weighted to produce an estimated rating. We then develop an
interest rate curve for various periods of time by applying an adjustment factor to the risk free rates as established
from yields on U.S. Treasury securities. We utilize this interest rate curve to establish an approximate discount rate
based upon the term of the underlying lease.
We determine our right-of-use assets based on the initial measurement amount of the lease liability, as
discussed below, increased by any prepayments that we make to the lessor at or before the lease commencement
date and any initial direct costs we may incur, reduced by any incentive amounts we may receive.
We measure our lease liabilities based upon the discounted present value of the payment amounts we expect
to make over the noncancelable terms of the underlying leases. We exclude variable lease payments that are based
on performance or use in our measurement of the right of use assets and liabilities. We include in our measurement
of the right of use assets and lease liabilities the exercise price of purchase options when reasonable certainty exists
that we will exercise the option and any termination penalties when reasonable certainty exists that we will exercise
an option to terminate the lease. We also include any residual value guarantees provided to lessors to the extent that
we consider the likelihood we will have to pay the lessor at the end of the lease term for a deficiency to be probable.
Over the lease term, we amortize the right-of-use asset and record interest expense on the lease liability
recorded at commencement of the lease. Our statement of operations recognition of the expense is dependent on
whether the lease is classified as an operating, direct financing, or sales-type lease. We recognize amortization
expense and interest expense associated with operating leases as a single item of expense in our consolidated
statements of operations. We recognize amortization expense and interest expense associated with any direct
financing and sales-type leases as separate items of expense within our consolidated statements of operations.
We present all leases, where we are the lessee, on our balance sheet subject to the practical expedients we
have elected and capitalization limitations we have established.
Lessor Accounting
We effectively lease railcars and storage tanks to customers of our terminalling facilities to meet their
logistical needs for the movement of crude oil to refineries and market centers. Additionally, the related party
Terminal Services Agreement associated with renewable diesel at our West Colton Terminal was accounted for as
lease income to us. The general terms of our lease agreements require monthly payments, some of which include
variable payments attributable to index-based rate escalations and freight associated with railcar returns. Under the
master service agreements for the railcars we lease, we also charge a fee for the various freight monitoring,
scheduling, maintenance and related services we provide to customers that lease railcars from us, representing a non-
lease component that we account for separately. Our storage tank leases contain standard renewal options for periods
up to 12 months following the end of the initial lease term. Additionally, our storage tank leases include charges for
blending and mixing services as well as pump over charges, representing non lease components that we account for
separately. Our railcar master fleet services agreement and storage tank leases do not generally include rights to
early termination of the agreements, nor do they include residual value guarantees. None of the customers on our
storage tank leases or railcar master fleet services agreement have options to purchase the underlying assets. As
discussed above under Lessee Accounting, we effectively sublease all of our leased railcars to a customer under
terms similar to the terms of our lease agreement with the railcar manufacturer from whom we lease the railcars.
We recognize revenue from our lessor operating lease contracts that contain escalation clauses for fixed
amounts during the lease term, on a straight-line basis over the term of the lease in our consolidated statements of
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operations. The difference between fleet lease revenue and the amounts received under the lease contract are
included in “Other current assets — related party,” “Other non-current assets — related party,” “Other current
liabilities— related party” and “Other non-current liabilities — related party” in our Consolidated Balance Sheets.
We deem a contract to be a lease when the terms of the agreement indicate we have transferred to another
party the right to control the use of an identified asset for a period of time in exchange for consideration. We
determine that we have transferred the right to control the use of an identified asset when the contract terms set forth
the rights of another party to obtain substantially all of the economic benefits from use of the identified asset, or to
direct its use throughout the contract period. We consider substantially all of the economic benefits to mean 90% or
more of the utility of the identified asset during the contract term.
We allocate consideration in a contract between lease and non-lease components based upon the rates and
terms that are specified in our agreements. We recognize revenue from fees we charge for freight services related to
railcars and from fees we charge for blending, mixing and pump over charges related to our storage services
pursuant to the requirements of ASC 606 as set forth in our Revenue Policy.
We continue to depreciate property that we own and lease to third-party customers in accordance with our
standard depreciation policies. We record lease income typically on a straight-line basis over the lease term.
Refer to Note 8. Leases for further discussion.
Fair Value Measurements
We apply the authoritative accounting provisions for measuring fair value to our financial instruments and
related disclosures, which include cash and cash equivalents, accounts receivable, accounts payable, debt, and
derivative instruments. We define fair value as an exit price representing the expected amount we would receive to
sell an asset or pay to transfer a liability in an orderly transaction with market participants at the measurement date.
We employ a hierarchy which prioritizes the inputs we use for recurring fair value measurements into three
distinct categories based upon whether such inputs are observable in active markets or unobservable. We classify
assets and liabilities in their entirety based on the lowest level of input that is significant to the fair value
measurement. Our methodology for categorizing assets and liabilities that are measured at fair value pursuant to this
hierarchy gives the highest priority to unadjusted quoted prices in active markets and the lowest level to
unobservable inputs, summarized as follows:
•
Level 1 — Quoted prices in active markets for identical assets or liabilities.
•
Level 2 — Other significant observable inputs (including quoted prices in active markets for similar assets
or liabilities).
•
Level 3 — Significant unobservable inputs (including our own assumptions in determining fair value).
We use the cost, income or market valuation approaches to estimate the fair value of our assets and liabilities
when insufficient market-observable data is available to support our valuation assumptions.
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable as presented on
our consolidated balance sheets approximate fair value due to the short-term nature of these items. The fair value of
our accounts receivable and payables with affiliates cannot be determined due to the related party nature of these
items.
As of the date of this report, the fair value of the outstanding debt associated with the Credit Agreement
cannot be determined due to the ongoing bank-led process to sell the Hardisty Terminal in compliance with the
Forbearance Agreement, representing substantially all of our assets, as discussed further in Note 21. Subsequent
Events. After giving effect to the sale of our Hardisty Rail Terminal and the use of proceeds, we will have sold
substantially all of our assets, but expect to have substantial remaining borrowings outstanding under our revolving
credit facility. Upon completion of the sale, we expect that the lenders will terminate the revolving credit facility and
write off the remaining debt balance. As such, the fair value of the debt does not approximate its carrying value, as
the resolution of this process may impact the valuation.
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Derivative Financial Instruments
Our net income or loss and cash flows are subject to volatility stemming from changes in interest rates on our
variable rate debt obligations and fluctuations in foreign currency exchange rates. In order to manage our exposure
to fluctuations in interest rates and foreign currency exchange rates and the related risks to our unitholders, we have
historically used derivative financial instruments to offset a portion of these risks. Our program that utilized futures,
forwards, swaps, options and other financial instruments with similar characteristics, to reduce the risks associated
with volatility in our interest rates on our variable rate debt and the effects of foreign currency exposures related to
our Canadian subsidiaries, which have cash flows denominated in Canadian dollars. Under this program, our
strategy was for the changes in value of the derivative contracts to mitigate adverse changes in our cash flows
associated with the changes in interest rates and foreign currency exchange rates to the extent practical.
Economically, the derivative contracts helped us to limit our exposure such that the interest rates on our variable rate
debt and foreign currency exchange rates will effectively lie between the floor and the ceiling of the rates set forth in
the derivative contacts or otherwise fix the rates at a specified date and amount.
All of our derivative financial instruments were employed in connection with an underlying asset, liability
and/or forecast transaction and are not entered into for speculative purposes.
In accordance with the authoritative accounting guidance, we recorded all derivative financial instruments in
our consolidated balance sheets at fair market value as current or non-current assets or liabilities on a net basis by
counterparty. We do not designate, nor have we historically designated, any of our derivative financial instruments
as hedges of an underlying asset, liability and/or forecast transaction. To qualify for hedge accounting treatment as
set forth in the authoritative accounting guidance, very specific requirements must be met in terms of hedge
structure, hedge objective and hedge documentation. As a result, changes in the fair value of our derivative financial
instruments and the related cash settlement of matured contracts are recognized in “Gain associated with derivative
instruments” on our consolidated statements of operations and statement of cash flows. Refer to
Note 17. Derivative Financial Instruments.
Recently Adopted Accounting Pronouncements
Segment Reporting (ASU 2023-07)
In November 2023, the FASB, issued Accounting Standards Update No. 2023-07, or ASU 2023-07, which
amends Accounting Standards Codification Topic 280 to require enhanced disclosures about significant segment
expenses. Specifically, this amendment requires disclosure on an annual and interim basis of the following:
significant segment expenses that are regularly provided to the chief operating decision maker, or CODM, and
included within each reported measure of segment profit or loss, collectively referred to as the significant expense
principle, and an amount for other segment items by reportable segment and a description of its composition, where
the other segment items disclosed is the difference between segment revenue less the segment expenses disclosed
under the significant expense principle and each reported measure of segment profit and loss. In addition, the
amendment requires all annual disclosures about a reportable segment’s profit or loss and assets currently required
by Topic 280 in interim periods. It also clarifies that if the CODM uses more than one measure of a segment’s profit
or loss in assessing segment performance and deciding how to allocate resources, one or more of those additional
measures of segment profit may be reported. However, at least one of the reported segment profit or loss measures
(or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the
measurement principles used in measuring the corresponding amounts in the consolidated financial statements. In
other words, in addition to the measure that is most consistent with the measurement principles under generally
accepted accounting principles, or GAAP, reporting additional measures of a segment’s profit or loss that are used
by the CODM in assessing segment performance and deciding how to allocate resources may be included. The
amendment requires that the title and position of the CODM are disclosed and an explanation of how the CODM
uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to
allocate resources. Lastly the amendment requires that if there is a single reportable segment, all the disclosures
required by the amendments in ASU 2023-07 and all existing segment disclosures in Topic 280 be disclosed.
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The pronouncement was effective for fiscal years beginning after December 15, 2023 and interim periods
within fiscal years beginning after December 15, 2024. A public entity should apply the amendments in this Update
retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense
categories and amounts disclosed in the prior periods should be based on the significant segment expense categories
identified and disclosed in the period of adoption. Our adoption of this standard did not have a material impact on
our financial statements.
Recent Accounting Pronouncements Not Yet Adopted
Income Taxes (ASU 2023-09)
In December 2023, the FASB, issued Accounting Standards Update No. 2023-09, or ASU 2023-09, which
amends Accounting Standards Codification Topic 740 to require enhanced income tax disclosures. The amendments
in ASU 2023-09 require that public business entities on an annual basis disclose specific categories in the rate
reconciliation and provide additional information for some reconciling items, and provide an explanation, if not
otherwise evident, of the individual reconciling items disclosed, such as the nature, effect, and underlying causes of
the reconciling items and the judgment used in categorizing the reconciling items. In addition, qualitative disclosures
are required for state and local categories that make up greater than 50% of these income tax categories. This
amendment also requires all entities to disclose annually the amount of income taxes paid, net of refunds received,
disaggregated by federal, state and foreign taxes, and disaggregated by individual jurisdictions in which income
taxes paid is equal to or greater than five percent of total income taxes paid. In addition, disclosures are required for
disaggregation of domestic or foreign continuing operations income or loss before income taxes.
The pronouncement is effective for annual periods beginning after December 15, 2024. Early adoption is
permitted. The amendments to ASU 2023-09 should be applied on a prospective basis, however retrospective
application is permitted. We do not anticipate that our adoption of this standard will have a material impact on our
financial statements.
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (ASU 2024-03)
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, or ASU 2024-03, which
amends Accounting Standards Codification Topic 220 to require enhanced disclosures regarding specific expense
categories in the notes to the financial statements at interim and annual reporting periods for public business entities.
The amendments in ASU 2024-03 will require disclosure of the amounts of (a) purchases of inventory, (b) employee
compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization
recognized as part of oil and gas producing activities included in each relevant expense caption. A relevant expense
caption presented on the face of the income statement within continuing operations that contains any of the expense
categories listed in (a) - (e). The amendment also requires entities to include certain amounts that are already
required to be disclosed under current generally accepted accounting principles in the same disclosure as other
disaggregation requirements and to disclose a qualitative description of the amounts remaining in relevant expense
captions that are not separately disaggregated quantitatively. In addition, disclosure of the total amount of selling
expenses, and, in annual reporting periods, an entity’s definition of selling expenses, will be required.
The pronouncement is effective for annual periods beginning after December 15, 2026 and interim reporting
periods beginning after December 15, 2027. Early adoption is permitted. The amendments in ASU 2024-03 should
be applied on a prospective basis, however retrospective application is permitted. We do not anticipate that our
adoption of this standard will have a material impact on our financial statements.
3. DISPOSITIONS AND ENTITIES HELD FOR SALE
Casper Terminal Divestiture
On March 31, 2023 we completed our divestiture of 100% of the equity interests in our Casper Terminal,
which included the Casper Crude to Rail, LLC and CCR Pipeline, LLC entities, for approximately $33 million in
cash, subject to customary adjustments.
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The Casper Terminal entities had a carrying value of $26.8 million at the time of sale. The Casper Terminal
was included in our Terminalling services segment. The Casper crude oil terminal, located in Casper, Wyoming,
primarily consists of unit train-capable railcar loading capacity in excess of 100,000 barrels per day, six customer-
dedicated storage tanks with 900,000 barrels of total capacity and a six-mile, 24-inch diameter pipeline with a direct
connection from the Express Pipeline. We recognized a gain of $6.2 million from the sale of the terminal which we
recorded as “Gain on sale of business” in our consolidated statement of operations. The gain on sale of business that
resulted from the sale of the Casper Terminal was not subject to income tax as the entity is included within our
partnership structure. Therefore, no impact was reflected within the “Provision for income taxes” recognized in the
year ended December 31, 2024 or 2023 in our consolidated statements of operations.
West Colton Divestiture
On December 20, 2023, we completed our divestiture of 100% of the equity interest in our West Colton
Terminal, which included West Colton Rail Terminal LLC, for approximately $31.3 million in cash, subject to
customary adjustments.
The West Colton Terminal had a carrying value of $3.3 million at the time of the sale. The West Colton
Terminal was included in our Terminalling services segment. The West Colton Terminal, located in West Colton,
California, is a unit train-capable destination terminal that can transload up to 13,000 bpd of ethanol and renewable
diesel received from producers by rail onto trucks to meet local demand in the San Bernardino and Riverside
County-Inland Empire region of Southern California. The West Colton Terminal has 20 railcar offloading positions
and four truck loading positions. We recognized a gain of $27.9 million from the sale of the terminal which we
recorded as “Gain on sale of business” in our consolidated statement of operations for the year ended
December 31, 2023. We recognized an additional gain of $30 thousand from the sale of the terminal recorded as
“Gain on sale of business” in our consolidated statement of operations for the year ended December 31, 2024 related
to the final working capital adjustment. The gain on sale of business that resulted from the sale of the West Colton
Terminal was not subject to income tax as the entity is included within our partnership structure. Therefore, no
impact was reflected within the “Provision for income taxes” recognized in the year ended December 31, 2024 or
2023 in our consolidated statements of operations.
Stroud Terminal Assets Divestiture
On April 26, 2024 we completed our divestiture of our Stroud Terminal assets, which included the Stroud
Crude Terminal LLC assets and the SCT Pipeline LLC assets for approximately $20.1 million in cash, subject to
customary adjustments. As such, subsequent to the end of first quarter of 2024, we reevaluated the fair value of the
Stroud Terminal, taking into account the final purchase price of the assets. Refer to Note 7. Property and Equipment
for further details. The Stroud Terminal was included in our Terminalling services segment.
The Stroud Terminal, located in Cushing, Oklahoma, includes 76-acres with current unit train unloading
capacity of approximately 50,000 bpd, two onsite tanks with 140,000 barrels of capacity, one truck bay and a 12-
inch diameter, 17-mile pipeline with a direct connection to the crude oil storage hub in Cushing, Oklahoma. We
recognized a gain of $1.0 million from the sale of the terminal assets which we recorded in “Gain on sale of
business” in our consolidated statements of operations for the year ended December 31, 2024. The gain on sale of
assets of the Stroud Terminal were not subject to income tax as the entity is included within our partnership
structure. Therefore, no impact was reflected within the “Provision for income taxes” recognized in the year ended
December 31, 2024 or 2023 in our consolidated statements of operations.
19
Hardisty Terminal and USD Rail Held for Sale
As discussed in more detail in Note 10. Debt, we entered into a Forbearance Agreement associated with our
Credit Agreement and have therefore classified most of the assets and liabilities associated with our Hardisty
Terminal and USD Rail entities as held for sale as of September 30, 2024. The “Income (loss) before income taxes”
for our Hardisty Terminal was an $8.5 million loss and $17.7 million in income for the years ended December 31,
2024 and 2023, respectively. The following table presents the detail of the assets and liabilities that are classified as
held for sale on our consolidated balance sheet as of December 31, 2024:
(in thousands)
Accounts receivable - related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
218
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
264
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33,009
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,537
Other asset, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
921
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40
Assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
39,989
Deferred revenue, current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,857
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
327
Operating lease liabilities, current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,111
Operating lease liabilities, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,426
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,644
Liabilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
10,365
December 31, 2024
4. REVENUES
We have included in the discussion below, information regarding our revenues from contracts with
customers. Refer to Note 2. Summary of Significant Accounting Policies for further discussion of our revenue
recognition accounting policy.
Disaggregated Revenues
We manage our business in two reportable segments: Terminalling services and Fleet services. Our segments
offer different services and are managed accordingly. Our chief operating decision maker, or CODM, regularly
reviews financial information about both segments in order to allocate resources and evaluate performance. As such,
we have concluded that disaggregating revenue by reporting segments appropriately depicts how the nature, amount,
timing, and uncertainty of revenue and cash flows are affected by economic factors. Refer to Note 14. Segment
Reporting for our disaggregated revenues by segment and summarized geographic data.
Remaining Performance Obligations
The transaction price allocated to the remaining performance obligations associated with our Terminal
services agreements as of December 31, 2024 are as follows for the periods indicated:
2025
2026
2027
2028
2029
Thereafter
Total
(in thousands)
Terminalling Services (1)(2) . . . $ 22,117 $ 21,480 $ 21,480 $ 21,480 $ 21,480 $ 34,010 $ 142,047
20
(1) A significant portion of our Terminal Services Agreements are denominated in Canadian dollars. We have converted the remaining
performance obligations associated with these Canadian dollar-denominated contracts using the year-to-date average exchange rate of 0.7301
U.S. dollars for each Canadian dollar at December 31, 2024.
(2) Includes fixed monthly minimum commitment fees per contract and excludes constrained estimates of variable consideration for rate-
escalations associated with an index, such as the consumer price index, as well as any incremental revenue associated with volume activity
above the minimum volumes set forth within the contracts.
We have applied the practical expedient that allows us to exclude disclosure of performance obligations that
are part of a contract that has an expected duration of one year or less.
Deferred Revenue
Our deferred revenue is a form of a contract liability and consists of amounts collected in advance from
customers associated with their terminal and fleet services agreements and deferred revenues associated with make-
up rights, which will be recognized as revenue when earned pursuant to the terms of our contractual arrangements.
We currently recognize substantially all of the amounts we receive for minimum volume commitments as revenue
when collected, since breakage associated with these make-up rights is currently approximately 99% based on our
expectations around usage of these options. Accordingly, we had $0.2 million deferred revenue at
December 31, 2024 for estimated breakage associated with the make-up rights options we granted to our customers.
At December 31, 2023, we had $0.4 million deferred revenue associated with make-up rights.
We also have deferred revenue that represents cumulative revenue that has been deferred due to tiered billing
provisions or contract liabilities. In such arrangements, revenue is recognized using a blended rate based on the
billing tiers of the agreement, as the services are consistently provided throughout the duration of the contractual
arrangement. These amounts are currently recorded in “Liabilities held for sale” on our consolidated balance sheets
as of December 31, 2024.
The following tables present the amounts outstanding on our consolidated balance sheets and changes
associated with the balance of our deferred revenue for the years ended December 31, 2024 and 2023 recorded in
“Liabilities held for sale”:
December 31,
2023
Cash
Additions for
Customer
Prepayments
Balance Sheet
Reclassification
Revenue
Recognized
December 31,
2024
(in thousands)
Deferred revenue (1) . . . . . . . . . . .
$
2,177 $
1,857 $
— $
(2,177) $
1,857
Contract liabilities (2)
. . . . . . . . . . .
$
4,145 $
(264) $
— $
(760) $
3,121
(1) Includes deferred revenue of $0.2 million and $0.4 million at December 31, 2024 and December 31, 2023, respectively, for estimated
breakage associated with the make-up right options we granted our customers as discussed above. The balance as of December 31, 2024 was
included in “Liabilities held for sale” on our consolidated balance sheet.
(2) Includes cumulative revenue that has been deferred due to tiered billing provisions included in certain of our Canadian dollar-denominated
contracts, as discussed above. As such, the change in contract liabilities recorded as “Liabilities held for sale” as of December 31, 2024 has
been decreased by $0.3 million due to the impact of the change in the end of period exchange rate between December 31, 2024 and
December 31, 2023.
December 31,
2022
Cash
Additions for
Customer
Prepayments
Balance Sheet
Reclassification
Revenue
Recognized
December 31,
2023
(in thousands)
Deferred revenue (1) . . . . . . . . . . .
$
3,562 $
2,177 $
— $
(3,562) $
2,177
Other current liabilities . . . . . . . . .
$
5,681 $
— $
826 $
(5,746) $
761
Other non-current liabilities (2) . . .
$
3,943 $
267 $
(826) $
— $
3,384
(1) Includes deferred revenue of $0.4 million at December 31, 2023 and 2022, respectively, for estimated breakage associated with the make-up
right options we granted our customers as discussed above.
21
(2) Includes cumulative revenue that has been deferred due to tiered billing provisions included in certain of our Canadian dollar-denominated
contracts, as discussed above. As such, the change in “Other current liabilities” and “Other non-current liabilities” presented, has each been
increased by $0.1 million due to the impact of the change in the end of period exchange rate between December 31, 2023 and 2022.
Accounts Receivable
The balances of “Accounts receivable, net” and “Accounts receivable - related party” were $2.2 million and
$0.4 million as of December 31, 2022, respectively.
5. RESTRICTED CASH
We include in restricted cash amounts representing a cash account for which the use of funds is restricted by a
facilities connection agreement among us and Gibson Energy Inc., or Gibson, that we entered into during 2014 in
connection with the development of our Hardisty Terminal. The collaborative arrangement is further discussed in
Note 11. Collaborative Arrangement.
In addition, we have an indemnity escrow account of $2.1 million included in our restricted cash amounts
associated with the divestiture of our Stroud Terminal that is required to be held for one year from the
April 26, 2024 closing date of the terminal. Refer to Note 3. Dispositions and Entities Held for Sale for a further
discussion of the Stroud Terminal divestiture.
We also had an indemnity escrow account of $2.0 million included in our restricted cash amounts at
December 31, 2023 associated with the divestiture of our Casper Terminal that was required to be held for one year
from the March 31, 2023 closing date of the sale of the terminal.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within our
consolidated balance sheets to the amount shown in our consolidated statements of cash flows for the specified
periods:
December 31,
2024
2023
(in thousands)
Cash and cash equivalents (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,333 $
6,576
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,897
3,841
Total cash, cash equivalents and restricted cash . . . . . . . . . . . . . . . . . . . . . $
8,230 $
10,417
(1) There were no cash equivalents at December 31, 2024 and 2023.
6. ACCOUNTS RECEIVABLE
We had no allowances for credit losses at December 31, 2024 and 2023. In addition, we had no bad debt
expense for the years ended December 31, 2024 and 2023 in our consolidated statements of operations.
22
7. PROPERTY AND EQUIPMENT
Our property and equipment is composed of the following asset classifications as of the dates indicated:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
2,876
N/A
Trackage and facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
80,200
10-30
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
13,840
3-20
Furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
65
5-10
Total property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
96,981
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(40,038)
Construction in progress (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
180
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
57,123
December 31,
Estimated
Useful Lives
(Years)
2024
2023
(in thousands)
(1) The amounts classified as “Construction in progress” are excluded from amounts being depreciated. These amounts represent property that
has not been placed into productive service as of the respective consolidated balance sheet date.
As discussed in further detail below, our entire property and equipment balance is classified as held for sale and
recorded in “Assets held for sale” on our consolidated balance sheet at December 31, 2024. Refer to
Note 3. Dispositions and Entities Held for Sale for further discussion.
Depreciation
Depreciation expense associated with property and equipment totaled $2.4 million and $6.1 million for the
years ended December 31, 2024 and 2023, respectively.
We did not capitalize any interest costs for the years ended December 31, 2024 and 2023 related to our
property and equipment.
Hardisty Terminal
In June 2024, we entered into a forbearance agreement under our existing Credit agreement. Under this
agreement we have agreed to sell our Hardisty Terminal. Refer to Note 10. Debt for further discussion regarding the
forbearance agreement. We determined that the agreement to sell our Hardisty Terminal was an event that required
us to evaluate our Hardisty Terminal asset group for impairment.
When alternative courses of action to recover the carrying amount of a long-lived asset are under
consideration, estimates of future undiscounted cash flows take into account possible outcomes and probabilities of
their occurrence. If the carrying amount of the long-lived asset is not recoverable based on the estimated future
undiscounted cash flows or when other methods of assessing fair value determine that fair value is less than the
carrying amount of the asset, an impairment loss is recognized to the extent the carrying amount exceeds the
estimated fair value of the long-lived asset.
The critical assumptions used in the analysis include the following:
1) Cumulative present value of free cash flow of C$37.3 million
2) Annualized EBITDA of C$10.7 million
3) Terminal value discount factor of 26%
4) Exit multiple range of 4.0x to 5.0x
We determined the fair value of our Hardisty Terminal based on a third party appraisal. The estimate of fair
value required the use of significant unobservable inputs representative of a Level 3 fair value measurement.
23
As a result of the impairment analysis discussed above, we determined that the carrying value of our Hardisty
Terminal asset group exceeded the fair value of the Hardisty terminal as of June 30, 2024, the date of our evaluation.
As a result, we recognized a non-cash impairment loss of C$23.9 million (USD $17.4 million) for the three and six
months ended June 30, 2024, to write down the property, plant and equipment of the terminal to its fair market
value, the charge for which we have included in “Impairment of long-lived assets” within our consolidated
statements of operations. The Hardisty Terminal is included in our Terminalling services segment as reported in our
segment results included in Note 14. Segment Reporting.
In July 2024 we classified our Hardisty Terminal as held for sale in our consolidated balance sheets. Refer to
Note 21. Subsequent Events for further discussion regarding the sale.
As a result of classifying our Hardisty Terminal as held for sale, we evaluate the terminal’s fair value on a
quarterly basis. As such, we assessed the fair value of the Hardisty Terminal at December 31, 2024. Our estimate of
fair value for the Hardisty Terminal required us to use significant unobservable inputs representative of Level 3 fair
value measurements. Accordingly we assessed the fair value of the Hardisty Terminal less the estimated cost to sell
the assets. As a result of this analysis, we recognized a $0.8 million loss presented as “Loss on assets held for sale”
on our consolidated statement of operations for the year ended December 31, 2024.
Stroud Terminal
During the second quarter of 2023 our board of directors of our general partner approved the sale of the
Stroud Terminal and we classified it as held for sale in our consolidated balance sheets. The Stroud Terminal is
included in our Terminalling Services Segment. Property and equipment is the only significant class of assets at our
Stroud Terminal.
As a result of classifying our Stroud Terminal as held for sale, we evaluated the terminal’s fair value on a
quarterly basis. In January 2024, we entered into an exclusivity agreement with a third party regarding the potential
sale of the Stroud Terminal, which among other items, contemplated a purchase price for the asset. As such, we
assessed a fair value of the Stroud Terminal at December 31, 2023, taking into account the purchase price
contemplated from the aforementioned agreement, less the cost to sell the asset. As a result of this analysis, we
recognized a $3.0 million loss presented as “Loss on assets held for sale” on our consolidated statement of
operations in our annual report for the year ended December 31, 2023.
We closed the sale of our Stroud Terminal assets on April 26, 2024. As such, subsequent to the end of first
quarter of 2024, we reevaluated the fair value of the Stroud Terminal as of March 31, 2024, taking into account the
final purchase price of the assets and determined that the purchase price less the estimated costs to sell the assets was
higher than the original carrying value of the assets. Accordingly, we recognized a $3.0 million recovery of the loss
on the assets held for sale, presented as “Recovery of loss on assets held for sale” for the year ended
December 31, 2024 on our consolidated statement of operations. Refer to Note 3. Dispositions and Entities Held for
Sale for further discussion of the sale of the Stroud Terminal Assets.
As indicated above, our estimate of fair value for the Stroud Terminal required us to use significant
unobservable inputs representative of Level 3 fair value measurements, including our reevaluation of the fair value
taking into account the purchase price contemplated in the exclusivity agreement.
8. LEASES
Lessee
Historically, we had noncancelable operating leases for railcars, buildings, storage tanks, offices, railroad
tracks, and land. We currently have noncancellable operating leases for equipment and railcars. As of September 30,
2024, all of the balances associated with our lease agreements were classified as held for sale and are therefore
recorded as “Assets held for sale” and “Liabilities held for sale” in our consolidated balance sheet as of December
31, 2024. Refer to Note 3. Dispositions and Entities Held for Sale for additional discussion.
24
For the Year Ended December 31,
2024
2023
Weighted-average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.9 %
4.1 %
Weighted average remaining lease term in years . . . . . . . . . . . . . . . . .
4.00 years
0.38 years
Our total lease cost consisted of the following items for the dates indicated:
For the Year Ended December 31,
2024
2023
(in thousands)
Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,363 $
1,469
Short term lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
265
Variable lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
8
Sublease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,493)
(1,332)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(43) $
410
The maturity analysis below presents the undiscounted cash payments we expect to make each period for
property that we lease from others under noncancelable operating leases as of December 31, 2024 (in thousands):
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,812
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,812
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,812
2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Total lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
7,252
Less: imputed interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,715)
Present value of lease liabilities (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
5,537
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,813
(1) The amounts for lease liabilities are recorded in “Liabilities held for sale.”
Lessor
We serve as an intermediary to assist our customers with obtaining railcars. In connection with our leasing of
railcars from third parties, we simultaneously enter into lease agreements with our customers for noncancelable
terms that are designed to recover our costs associated with leasing the railcars plus a fee for providing this service.
Historically, we also had lease income from storage tanks and lease income from our related party Terminal Services
Agreement associated with transloading renewable diesel at our West Colton Terminal that commenced in
December 2021 and was sold to a third party in December 2023.
For the Year Ended December 31,
2024
2023
(in thousands, except lease term)
Lease income (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,496 $
4,451
Weighted average remaining lease term in years . . . . . . . . . . . . . .
4.00 years
(1) Lease income presented above includes lease income from related parties. Refer to Note 12. Transactions with Related Parties for additional
discussion of lease income from a related party. In addition, lease income as discussed above totaling $3.1 million for the year ended
December 31, 2023 and is included in “Terminalling services” and “Terminalling services — related party” revenues on our consolidated
statement of operations. There was no lease income included in “Terminalling services” or “Terminalling Services - related party” revenues
for the year ended December 31, 2024.
25
The maturity analysis below presents the undiscounted future minimum lease payments we expect to receive
from customers each period for property they lease from us under noncancelable operating leases as of
December 31, 2024 (in thousands):
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,040
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,040
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,040
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
8,160
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2,040
9. INTANGIBLE ASSETS
The composition, gross carrying amount and accumulated amortization of our identifiable intangible assets
are as follows as of the dates indicated:
December 31, 2024
December 31, 2023
(in thousands)
Carrying amount:
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
56
Total carrying amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
56
Accumulated amortization:
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(7)
Total accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(7)
Total intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
49
Our current intangible assets, originated as internally developed software for internal use. At
December 31, 2024, our intangibles are classified as held for sale and therefore are recorded in “Assets held for sale”
in our consolidated balance sheet. Refer to Note 3. Dispositions and Entities Held for Sale for further information.
Amortization expense associated with intangible assets totaled $5 thousand and $108 thousand for the years
ended December 31, 2024 and 2023, respectively. All of our intangibles are held for sale, therefore we do not expect
any further amortization expense over the next five years. Refer to Note 21. Subsequent Events for further
information.
10. DEBT
Credit Agreement
In November 2018, we amended and restated our revolving senior secured credit agreement, which we
originally established in October 2014. We refer to the amended and restated senior secured credit agreement
executed in November 2018, including all amendments through November 20, 2023, as the Credit Agreement.
Our Credit Agreement was scheduled to mature on November 2, 2023. Under a series of letter agreements,
the maturity date was extended while we negotiated an amendment with our lenders. On November 21, 2023, we
entered into another amendment, or the Amendment, which among other things extended the maturity date to
November 2, 2024 and waived prior defaults under the Credit Agreement. The Amendment also provided that
interest owing on each loan under the Credit Agreement after the effective date, shall be paid in kind by ratably
increasing the amount of principal of the applicable loan by the amount of such interest due, on a quarterly basis, on
each applicable interest payment date. In accordance with the Amendment, we are required to prepay, subject to
certain exceptions, the loans under the Credit Agreement in an aggregate amount equal to 100% of the net cash
proceeds from the sale of any property by us or our subsidiaries. The Amendment also requires that our West Colton
Terminal be sold, subject to certain conditions. Furthermore, if we have in excess of $6.0 million of unrestricted
26
cash at the end of any calendar month, such amounts in excess of $6.0 million are required to be used to prepay any
loans under the Credit Agreement. The Amendment also required that upon the earlier of the sale of the West Colton
Terminal or December 22, 2023, the Loan Parties must maintain unrestricted cash of at least $2.0 million, tested on
a weekly basis. In addition, the Amendment required us to appoint a new independent director to the board of
directors, or the Board, and delegate to that director certain rights, powers and authority over certain material
transactions and actions that we undertake, which serve the function of the Chief Restructuring Officer, or CRO
required and defined by the Amendment. In addition, no additional borrowings may be made after
November 21, 2023. Therefore, at December 31, 2024, we have no available capacity under our Credit Agreement.
In addition, amongst other covenants, we must comply with several dated milestones contained within the
Amendment that require us to: (i) reduce our expenses to approximately $3 million per year as determined by the
CRO; (ii) enter into additional contracts at the Hardisty Terminal by specified dates; (iii) provide a structured
payment agreement to refinance or repay the outstanding debt on our Credit Agreement in its entirety by a specified
date; and (iv) reduce the conflicts committee to two persons, including the CRO. If we are unable to comply with the
milestones defined within the Amendment and we are unable to negotiate an extension of such milestones, an event
of default will occur under the Credit Agreement and, among other things, we may potentially be required to sell the
Hardisty Terminal, the proceeds of which would be used to repay the Credit Agreement.
Also on November 21, 2023, as required by the Amendment to the Credit Agreement, we entered into a Side
Letter to the Amended and Restated Omnibus Agreement, or the Omnibus Agreement, with USD, USDG, as defined
below, and certain other of their subsidiaries. Among other things, the Side Letter provides that the maximum
amount of expenses incurred as part of the Administrative Fee that are fixed and would otherwise be payable by us
under the Omnibus Agreement are not permitted to exceed approximately $1.5 million during the period from
November 1, 2023 to the maturity date of our Credit Agreement and will be classified as a liability until such time as
we have paid our Credit Agreement in full. In addition, all employee related general and administrative expenses
paid by us are limited to specified amounts during the same period, and are subject to further reduction upon the sale
of our West Colton or Stroud Terminals. Additionally, the payment of corporate general and administrative costs
that are reimbursable by us under the Omnibus Agreement are subject to the approval of the CRO.
Obligations under the Credit Agreement are guaranteed by our restricted subsidiaries (as such term is defined
therein) and are secured by a first priority lien on our assets and those of our restricted subsidiaries, other than
certain excluded assets.
On June 21, 2024 we entered into an agreement, or the Forbearance Agreement, with the lenders and
administrative agent under our existing Credit Agreement. The Forbearance Agreement was amended on
November 1, 2024. Pursuant to the Forbearance Agreement, subject to certain terms and conditions, the lenders have
agreed to forbear through at least January 31, 2025, from exercising any rights or remedies arising from certain
events of default and certain prospective events of default related to our failure to satisfy certain milestones under
the Credit Agreement including the maturity of the agreement and other loan documents so long as we are in
compliance with the stipulations set forth in the Forbearance Agreement.
In exchange for agreeing to enter into the Forbearance Agreement, the lenders under the Credit Agreement
will require us to, among other things, complete the sale of our Hardisty Terminal on or before January 31, 2025.
The Termination Date of our Forbearance Agreement may be extended beyond January 31, 2025, in the discretion of
the administrative agent. At this time the administrative agent has elected to extend the date as the anticipated sale of
our Hardisty Terminal has been announced. Refer to Note 21. Subsequent Events for further discussion. The
Forbearance Agreement also obligates us to adhere to an operating budget approved by the administrative agent and
includes an obligation to repay borrowings with any cash on hand in excess of an agreed maximum.
Our borrowings under the Credit Agreement bear interest equal to the sum of Adjusted Term SOFR for the
interest period plus 6.75%.
Our Credit Agreement contains affirmative and negative covenants that, among other things, limit or restrict
our ability and the ability of our restricted subsidiaries to incur or guarantee debt, incur liens, make investments,
make restricted payments, engage in certain business activities, engage in mergers, consolidations and other
27
organizational changes, sell, transfer or otherwise dispose of assets, enter into burdensome agreements or enter into
transactions with affiliates on terms that are not at arm’s length, in each case, subject to exceptions.
The Credit Agreement contains events of default, including, but not limited to (and subject to grace periods in
circumstances set forth in the Credit Agreement the failure to pay any principal, interest or fees when due, failure to
perform or observe any covenant (subject in some cases to certain grace periods or other qualifications), any
representation, warranty or certification made or deemed made in the agreements or related loan documentation
being untrue in any material respect when made, default under certain material debt agreements, commencement of
bankruptcy or other insolvency proceedings, certain changes in our ownership or the ownership of our general
partner, certain material judgments or orders, ERISA events, the invalidity of the loan documents, failure to add the
CRO to the Board or the Conflicts Committee or provide the CRO with the authorizations granted by the Board
necessary to act on behalf of the Loan Parties or termination of the CRO by the General Partner, unless otherwise in
accordance with the Credit Agreement, or failure to complete the West Colton Terminal sale by the date specified in
the Credit Agreement or the gross proceeds from such sale are less than the amount specified in the Credit
Agreement. Upon the occurrence and during the continuation of an event of default under the Credit Agreement, the
lenders may, among other things, terminate their commitments, declare any outstanding loans to be immediately due
and payable and/or exercise remedies against us and the collateral as may be available to the lenders under the
agreements and related documentation or applicable law. The CRO, at the direction of the lenders, may also
commence an out-of-court process for the sale of all or substantially all of our assets upon the occurrence and during
the continuation of an event of default under the Credit Agreement.
Our long-term debt balances included the following components as of the specified dates:
December 31,
2024
2023
(in thousands)
Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
181,991 $
181,202
Less: Deferred financing costs, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(14,019)
Less: Long-term debt, current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(181,991) $
(167,183)
Total long-term debt, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
—
The weighted average interest rate on our outstanding indebtedness was 11.31% and 12.42% at
December 31, 2024 and 2023, respectively. At December 31, 2024, we were not in compliance with the covenants
set forth in our Credit Agreement, however, under the forbearance agreement discussed above, the lenders have
agreed to forbear from exercising any rights or remedies arising from this noncompliance.
Interest expense associated with our outstanding indebtedness was as follows for the specified periods:
2024
2023
(in thousands)
Interest expense on Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
20,780 $
18,218
Amortization of deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,004
3,915
Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
34,784 $
22,133
For the Years Ended December 31,
Supplier Financing Agreement
We have agreements with a third party that allows a provider of some of our received services to finance
payment obligations from us with a designated third-party financial institution associated with insurance for certain
of our terminals. The extended payment terms that we have with this supplier for these arrangements is nine months
from the execution of the insurance contract. We are not required to provide collateral to the financial institution.
The following table presents the amounts outstanding on our consolidated balance sheets and changes
associated with the balance of our supplier finance agreements for the year ended December 31, 2024 and 2023:
28
2023
2022
(in thousands)
Beginning balance at January 1, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
52 $
19
New agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
470
Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(52)
(437)
Ending balance at December 31, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
52
Our outstanding payment obligation under these arrangements was $52 thousand at December 31, 2023 and
was recorded in “Other current liabilities” on our consolidated balance sheets. We had no outstanding payment
obligation under these arrangements at December 31, 2024
11. COLLABORATIVE ARRANGEMENT
We entered into a facilities connection agreement in 2014 with Gibson under which Gibson developed,
constructed and operates a pipeline and related facilities connected to our Hardisty Terminal. Gibson’s storage
terminal is the exclusive means by which our Hardisty Terminal receives crude oil. Subject to certain limited
exceptions regarding manifest train facilities, our Hardisty Terminal is the exclusive means by which crude oil from
Gibson’s Hardisty storage terminal may be transported by rail. We remit pipeline fees to Gibson for the
transportation of crude oil to our Hardisty Terminal based on a predetermined formula. Pursuant to our arrangement
with Gibson, we incurred pipeline fees of $10.7 million and $16.9 million for the years ended December 31, 2024
and 2023, respectively, which are presented as “Pipeline fees” in our consolidated statements of operations.
12. TRANSACTIONS WITH RELATED PARTIES
Nature of Relationship with Related Parties
USD is engaged in designing, developing, owning and managing large-scale multi-modal logistics centers and
other energy-related infrastructure across North America. USD is also the sole owner of USDG and the ultimate
parent of our general partner. USD is owned by Energy Capital Partners, Goldman Sachs and certain members of its
management.
USDG is the sole owner of our general partner and at December 31, 2024, owns 17,308,226 of our common
units representing a 51.2% limited partner interest in us. USDG also provides us with general and administrative
support services necessary for the operation and management of our business.
USD Partners GP LLC, our general partner, pursuant to our partnership agreement, is responsible for our
overall governance and operations. However, our general partner has no obligation to, does not intend to and has not
implied that it would, provide financial support to or fund cash flow deficits of the Partnership.
USD Marketing LLC, or USDM, is a wholly-owned subsidiary of USDG organized to promote contracting
for services provided by our terminals and to facilitate the marketing of customer products.
Historically, USD Clean Fuels LLC, or USDCF, was a subsidiary of USD organized for the purpose of
providing production and logistics solutions to the growing market for clean energy transportation fuels prior to its
sale in December 2023.
Omnibus Agreement
We are a party to an omnibus agreement with USD, USDG and certain of their subsidiaries, or the Omnibus
Agreement, including our general partner that provide for the following:
•
our payment of an annual amount to USDG for providing certain general and administrative services by
USDG and its affiliates and executive management services by officers of our general partner. We also
incur and pay additional amounts that are based on the costs actually incurred by USDG and its affiliates in
providing the services;
29
•
our right of first offer, or ROFO, to acquire any additional midstream infrastructure that USD and USDG
may construct or acquire in the future;
•
our obligation to reimburse USDG for any out-of-pocket costs and expenses incurred by USDG in
providing general and administrative services (which reimbursement is in addition to certain expenses of
our general partner and its affiliates that are reimbursed under our partnership agreement), as well as any
other out-of-pocket expenses incurred by USDG on our behalf; and
•
an indemnity by USDG for certain environmental and other liabilities, and our obligation to indemnify
USDG and its subsidiaries for events and conditions associated with the operation of our assets that occur
after October 15, 2014, and for environmental liabilities related to our assets to the extent USDG is not
required to indemnify us.
So long as USDG controls our general partner, the Omnibus Agreement will remain in full force and effect. If
USDG ceases to control our general partner, either party may terminate the Omnibus Agreement, provided that the
indemnification obligations will remain in full force and effect in accordance with their terms.
As previously discussed in further detail in Note 10. Debt, in November 2023, we entered into a Side Letter to
the Amended and Restated Omnibus Agreement, as required by the November 2023 Amendment to the Credit
Agreement.
Payment of Annual Fee and Reimbursement of Expenses
We pay USDG, in equal monthly installments, the annual amount USDG estimates will be payable by us
during the calendar year for providing services for our benefit. The Omnibus Agreement provides that this amount,
which included a fixed annual fee of $1.5 million and $3.1 million for the years ended December 31, 2024 and 2023,
respectively, may be adjusted annually to reflect, among other things, changes in the scope of the general and
administrative services provided to us due to a contribution, acquisition or disposition of assets by us, or our
subsidiaries, or for changes in any law, rule or regulation applicable to us, which affects the cost of providing the
general and administrative services. We also reimburse USDG for any out-of-pocket costs and expenses incurred on
our behalf in providing general and administrative services to us. This reimbursement is in addition to the amounts
we pay to reimburse our general partner and its affiliates for certain costs and expenses incurred on our behalf for
managing our business and operations, as required by our partnership agreement.
The total amounts charged to us under the Omnibus Agreement for the years ended December 31, 2024 and
2023 was $3.5 million and $7.1 million, respectively, which amounts are included in “Selling, general and
administrative — related party” in our consolidated statements of operations. We had a payable balance of $2.0
million and $0.6 million with respect to these costs at December 31, 2024 and 2023, respectively, included in
“Accounts payable and accrued expenses — related party” in our consolidated balance sheets.
Indemnification
USDG indemnifies us for liabilities, subject to an aggregate deductible of $500,000 relating to:
•
the consummation of the transactions in connection with USDG’s initial contribution of assets to us in
October 2014;
•
events and conditions associated with any assets retained by USDG; and
•
all tax liabilities attributable to the assets contributed to us that arose prior to the closing of USDG’s initial
contribution of assets to us in October 2014.
Related Party Revenue and Deferred Revenue
We previously entered into a Terminal Services Agreement at our West Colton Terminal with USDCF that
became effective in December 2021 and concluded when the West Colton Terminal was sold in December 2023. We
included amounts received pursuant to the arrangement as revenue in the table below under “Terminalling services
— related party” in our consolidated statements of operations.
30
We also have agreements to provide fleet services for USDM, which includes reimbursement to us for certain
out-of-pocket expenses we incur. We received revenue from USDM for the lease of 200 railcars pursuant to the
terms of an existing agreement with us that was extended in January 2024 until December 31, 2028, which is
included in the table below under “Fleet leases — related party” and “Fleet Services — related party” and in our
consolidated statements of operations.
Our related party revenue from USD and affiliates are presented below in the following table for the indicated
periods:
2024
2023
(in thousands)
Terminalling services — related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
2,835
Fleet leases — related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,493
1,332
Fleet services — related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
171
Freight and other reimbursables — related party . . . . . . . . . . . . . . . . . . . . . .
2,106
359
$
3,599 $
4,697
For the Years Ended December 31,
We had the following amounts outstanding with USD and affiliates on our consolidated balance sheets as
presented below in the following table for the indicated periods (1) :
December 31,
2024
2023
(in thousands)
Accounts receivable — related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
601 $
25
(1)
Does not include amounts payable to related parties associated with the Omnibus Agreement, as discussed above.
13. COMMITMENTS AND CONTINGENCIES
From time to time, we may be involved in legal, tax, regulatory and other proceedings in the ordinary course
of business. We do not believe that we are currently a party to any such proceedings that will have a material
adverse impact on our financial condition or results of operations.
14. SEGMENT REPORTING
We manage our businesses in two reportable segments: Terminalling services and Fleet services. The
Terminalling services segment charges minimum monthly commitment fees under multi-year take-or-pay contracts
to load and unload various grades of crude oil into and from railcars, as well as fixed fees per gallon to transload
ethanol and renewable diesel from railcars, including related logistics services. We also facilitate rail-to-pipeline
shipments of crude oil. Our terminalling services segment also charges minimum monthly fees to store crude oil in
tanks that are leased to our customers. The Fleet services segment provides our customer with railcars and fleet
services related to the transportation of liquid hydrocarbons under take-or-pay contracts. Corporate activities are not
considered a reportable segment, but are included to present shared services and financing activities which are not
allocated to our established reporting segments.
31
Our segments offer different services and are managed accordingly. Our CODM is comprised of a committee
consisting of our Chief Executive Officer, Chief Operating Officer and our Chief Financial Officer. Our CODM
regularly reviews financial information about both segments in order to allocate resources and evaluate performance.
Our CODM assesses segment performance based on the cash flows produced by our established reporting segments
using Segment Adjusted EBITDA. Segment Adjusted EBITDA is a measure disclosed in accordance with GAAP.
We define Segment Adjusted EBITDA as “Net income (loss)” of each segment adjusted for depreciation and
amortization, interest, income taxes, changes in contract assets and liabilities, deferred revenues, foreign currency
transaction gains and losses and other items which do not affect the underlying cash flows produced by our
businesses. As such, we have concluded that disaggregating revenue by reporting segments appropriately depicts
how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
Terminalling
services
Fleet
services
Corporate
Total
(in thousands)
Revenues
Terminalling services . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
31,115 $
— $
— $
31,115
Terminalling services — related party . . . . . . . . . . . . . . .
—
—
—
—
Rail switching and demurrage . . . . . . . . . . . . . . . . . . . . . .
1,056
—
—
1,056
Fleet leases — related party . . . . . . . . . . . . . . . . . . . . . . .
—
1,493
—
1,493
Fleet services — related party . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
Freight and other reimbursables . . . . . . . . . . . . . . . . . . . .
63
—
—
63
Freight and other reimbursables — related party . . . . . . .
—
2,106
—
2,106
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32,234
3,599
—
35,833
Operating costs
Subcontracted rail services . . . . . . . . . . . . . . . . . . . . . . . .
6,221
—
—
6,221
Pipeline fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,690
—
—
10,690
Freight and other reimbursables . . . . . . . . . . . . . . . . . . . .
63
2,106
—
2,169
Operating and maintenance . . . . . . . . . . . . . . . . . . . . . . . .
2,082
1,347
—
3,429
Selling, general and administrative . . . . . . . . . . . . . . . . . .
1,920
81
12,527
14,528
Recovery of loss on assets held for sale . . . . . . . . . . . . . .
—
—
(2,977)
(2,977)
Impairment of intangible and long-lived assets . . . . . . . .
17,432
—
—
17,432
Gain on sale of business . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
(1,079)
(1,079)
Loss on assets held for sale . . . . . . . . . . . . . . . . . . . . . . . .
—
—
831
831
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . .
2,405
—
—
2,405
Total operating costs . . . . . . . . . . . . . . . . . . . . . . . .
40,813
3,534
9,302
53,649
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . .
(8,579)
65
(9,302)
(17,816)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
—
34,783
34,784
Gain associated with derivative instruments . . . . . . . . . . .
—
—
—
—
Foreign currency transaction loss (gain) . . . . . . . . . . . . . .
332
(18)
(469)
(155)
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(277)
—
(31)
(308)
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . .
203
—
—
203
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(8,838) $
83 $ (43,585) $
(52,340)
Total assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
44,532 $
6,149 $
1,289 $
51,970
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
— $
— $
—
For the Year Ended December 31, 2024
(1) All property and equipment as well as certain other assets in our Terminalling and Fleet Services segments have been recorded in “Assets
held for sale” in our Consolidated Balance Sheet at December 31, 2024. See Note 3. Dispositions and Entities Held for Sale and Note 21.
Subsequent Events for further discussion.
32
Terminalling
services
Fleet
services
Corporate
Total
(in thousands)
Revenues
Terminalling services . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
57,917 $
— $
— $
57,917
Terminalling services — related party . . . . . . . . . . . . . . .
2,835
—
—
2,835
Rail switching and demurrage . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
Fleet leases — related party . . . . . . . . . . . . . . . . . . . . . . .
—
1,332
—
1,332
Fleet services — related party . . . . . . . . . . . . . . . . . . . . .
—
171
—
171
Freight and other reimbursables . . . . . . . . . . . . . . . . . . . .
244
—
—
244
Freight and other reimbursables — related party . . . . . . .
202
157
—
359
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61,198
1,660
—
62,858
Operating costs
Subcontracted rail services . . . . . . . . . . . . . . . . . . . . . . . .
10,021
—
—
10,021
Pipeline fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,875
—
—
16,875
Freight and other reimbursables . . . . . . . . . . . . . . . . . . . .
446
157
—
603
Operating and maintenance . . . . . . . . . . . . . . . . . . . . . . .
4,108
1,354
—
5,462
Selling, general and administrative . . . . . . . . . . . . . . . . .
3,657
71
15,906
19,634
Recovery of loss on assets held for sale . . . . . . . . . . . . . .
—
—
—
—
Impairment of intangible and long-lived assets . . . . . . . .
—
—
—
—
Gain on sale of business . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
(34,061)
(34,061)
Loss on assets held for sale . . . . . . . . . . . . . . . . . . . . . . . .
—
—
2,977
2,977
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . .
6,204
—
—
6,204
Total operating costs . . . . . . . . . . . . . . . . . . . . . . . . . .
41,311
1,582
(15,178)
27,715
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . .
19,887
78
15,178
35,143
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
—
22,120
22,133
Gain associated with derivative instruments . . . . . . . . . . .
—
—
(5,892)
(5,892)
Foreign currency transaction loss (gain) . . . . . . . . . . . . . . .
165
5
172
342
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(212)
—
(60)
(272)
Provision for (benefit from) income taxes . . . . . . . . . . . . .
1,109
(50)
—
1,059
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . $
18,812 $
123 $
(1,162) $
17,773
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
82,192 $
39 $
6,228 $
88,459
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
648 $
— $
— $
648
For the Year Ended December 31, 2023
33
Segment Adjusted EBITDA
The following tables present the computation of Segment Adjusted EBITDA, which is a measure disclosed in
accordance with GAAP, for each of our segments for the periods indicated:
Terminalling Services Segment
2024
2023
(in thousands)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(8,838) $
18,812
Interest income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(273)
(193)
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,405
6,204
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
203
1,109
Foreign currency transaction loss (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
332
165
Impairment of intangible and long-lived assets . . . . . . . . . . . . . . . . . . . . . . .
17,432
—
Non-cash deferred amounts (2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(803)
(3,652)
Segment Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
10,458 $
22,445
For the Years Ended December 31,
(1) Represents foreign exchange transaction amounts associated with activities between our U.S. and Canadian subsidiaries.
(2) Represents the change in non-cash contract assets and liabilities associated with revenue recognized at blended rates based on tiered rate
structures in certain of our customer contracts and deferred revenue associated with deficiency credits that are expected to be used in the
future prior to their expiration. Amounts presented are net of the corresponding prepaid Gibson pipeline fee that will be recognized as
expense concurrently with the recognition of revenue.
For the Years Ended December 31,
Fleet Services Segment
2024
2023
(in thousands)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
83 $
123
Benefit from income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(50)
Foreign currency transaction loss (gain) (1) . . . . . . . . . . . . . . . . . . . . . . . . . .
(18)
5
Segment Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
65 $
78
(1) Represents foreign exchange transaction amounts associated with activities between our U.S. and Canadian subsidiaries.
The following tables summarize the geographic data for our continuing operations. Revenues are attributed to
countries based on the local currency of our reporting subsidiaries for which the obligation is performed.
U.S.
Canada
Total
(in thousands)
Revenues
Third party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
883 $
31,351 $
32,234
Related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,599 $
— $
3,599
Long-lived assets (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
33,009 $
33,009
For the Year Ended December 31, 2024
34
U.S.
Canada
Total
(in thousands)
Revenues
Third party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
6,568 $
51,593 $
58,161
Related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,695 $
2 $
4,697
Long-lived assets (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
57,123 $
57,123
For the Year Ended December 31, 2023
(1) Includes property and equipment less accumulated depreciation and excludes intangible assets, operating lease right-of-use assets, long-term
derivative assets and long-term deferred tax assets. All long-lived assets are reported in “Assets held for sale” at December 31, 2024 on our
consolidated balance sheet.
15. INCOME TAXES
U.S. Federal and State Income Taxes
We are treated as a partnership for U.S. federal and most state income tax purposes, with each partner being
separately taxed on their share of our taxable income. We have elected to classify one of our subsidiaries, USD Rail
LP, as an entity taxable as a corporation for U.S. federal income tax purposes due to treasury regulations that do not
permit the income of this subsidiary to be classified as “qualifying income” as such term is defined in §7704(d) of
the Internal Revenue Code of 1986 as amended, or the Code. We are also subject to state franchise tax in the state of
Texas, which is treated as an income tax under the applicable accounting guidance. Our U.S. federal income tax
expense is based on the statutory federal income tax rate of 21% as applied to USD Rail LP’s taxable loss of
$0.6 million and $0.2 million for the years ended December 31, 2024 and 2023, respectively.
Foreign Income Taxes
Our Canadian operations are conducted through entities that are subject to Canadian federal and Alberta
provincial income taxes which are determined using the combined federal and provincial income tax rate of 23%
representing a 15% federal income tax rate and a 8% provincial income tax rate, applicable to the taxable income of
our Canadian operations for the years ended December 31, 2024 and 2023. The combined income tax rate of 23%
was also used to compute the deferred income tax expense, representing the impact of temporary differences that are
expected to reverse in the future.
Consolidated Provision for Income Taxes
The domestic and foreign components of our income (loss) before income taxes is presented in the following
table:
2024
2023
(in thousands)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(35,437) $
15,555
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(16,700)
3,277
Income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(52,137) $
18,832
Years Ended December 31,
35
Effective Income Tax Rate Reconciliation
The following table presents a reconciliation of our income tax based on the U.S. federal statutory income tax
rate to our effective income tax rate:
Years Ended December 31,
2024
2023
(in thousands)
Income tax expense (benefit) at the U.S. federal statutory rate . . $
(10,949)
21 % $
3,955
21 %
Amount attributable to partnership not subject to income tax . . .
7,357
(14) %
(3,331)
(17) %
Foreign income tax rate differential . . . . . . . . . . . . . . . . . . . . . . .
(330)
1 %
67
— %
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(97)
— %
(117)
(1) %
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,222
(8) %
485
3 %
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
203
— % $
1,059
6 %
The annual effective income tax rate as shown above incorporates the applicable income tax rates of the
various domestic and foreign tax jurisdictions to which we are subject and is presented in the following table:
2024
2023
(in thousands)
Current income tax expense
U.S. federal income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
(25)
Canadian federal and provincial income tax expense . . . . . . . . . . . . . .
203
1,109
Total current income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
203
1,084
Deferred income tax benefit
U.S. federal income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(25)
Total change in deferred income tax benefit . . . . . . . . . . . . . . . . . . . .
—
(25)
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
203 $
1,059
Years Ended December 31,
Our deferred income tax assets and liabilities reflect the income tax effect of differences between the carrying
amounts of our assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Our deferred income tax assets are included in “Other non-current assets” and deferred income tax liabilities are
36
included in “Other non-current liabilities” on our consolidated balance sheets. Major components of deferred
income tax assets and liabilities associated with our operations were as follows as of the dates indicated:
U.S.
Foreign
Total
(in thousands)
Deferred income tax assets
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
92 $
92
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
4,686
4,686
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
326
326
Operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . .
157
—
157
Total deferred income tax assets
157
5,104
5,261
Deferred income tax liabilities
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(33)
—
(33)
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
Total deferred income tax liabilities
(33)
—
(33)
Valuation allowance
(124)
(5,104)
(5,228)
Deferred income tax, net . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
— $
—
December 31, 2024
U.S.
Foreign
Total
(in thousands)
Deferred income tax assets
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
51 $
51
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
1,754
1,754
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
354
354
Operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . .
40
—
40
Total deferred income tax assets
40
2,159
2,199
Deferred income tax liabilities
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(900)
(900)
Total deferred income tax liabilities
—
(900)
(900)
Valuation allowance
(40)
(1,259)
(1,299)
Deferred income tax liability, net . . . . . . . . . . . . . . . . . . . . $
— $
— $
—
December 31, 2023
We had $0.7 million loss carryforwards for U.S. federal tax purposes remaining at December 31, 2024. We
had loss carryforwards for Canadian tax purposes of $1.2 million and $1.5 million as of December 31, 2024 and
2023, respectively. The portion of our Canadian losses for capital items amount to $0.2 million and do not expire
under currently enacted Canadian tax law, while $1.0 million of the losses relates to Canadian operating losses and
will expire between 2034 and 2043.
We are subject to examination by the taxing authorities for the years ended December 31, 2021 through
December 31, 2023. We did not have any significant unrecognized income tax benefits or any income tax reserves
for uncertain tax positions as of December 31, 2024 and 2023.
37
16. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK
The following tables provide the total and percentage of revenues attributable to a single customer from
which 10% or more of total revenues are derived:
Total Revenues
by Major
Customer
(in thousands)
Percentage of
Total
Company
Revenues
Percentage of
Customer
Revenues in
Terminalling
Services
Segment
Customer A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
22,426
63 %
100 %
Customer B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,743
24 %
100 %
Customer C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
— %
— %
Customer D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
— %
— %
For the Year Ended December 31, 2024
Total Revenues
by Major
Customer
(in thousands)
Percentage of
Total
Company
Revenues
Percentage of
Customer
Revenues in
Terminalling
Services
Segment
Customer A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
20,687
33 %
100 %
Customer B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
13,538
22 %
100 %
Customer C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
10,640
17 %
100 %
Customer D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
6,512
10 %
100 %
For the Year Ended December 31, 2023
A substantial portion of our revenues are from a limited number of customers. Our revenues are derived
mainly from railcar loading and unloading, storage and other terminalling services as well as railcar fleet services.
The concentration of these customers in the energy industry may impact our overall exposure to credit risk, either
positively or negatively, since our customers may be similarly affected by changes in commodity prices, regulation,
and other economic factors. We seek high-quality customers with investment grade credit ratings and perform
ongoing credit evaluations of our customers.
17. DERIVATIVE FINANCIAL INSTRUMENTS
Our net income, or loss, and cash flows are subject to fluctuations resulting from changes in interest rates on
our variable rate debt obligations and from changes in foreign currency exchange rates, particularly with respect to
the U.S. dollar and the Canadian dollar. We have historically used interest rate derivative instruments, specifically
swaps, on our variable rate debt and to manage the risks associated with market fluctuations in interest rates to
reduce volatility in our cash flows. We have not historically designated, nor do we expect to designate, our
derivative financial instruments as hedges of the underlying risk exposure. All of our financial instruments are
employed in connection with an underlying asset, liability and/or forecasted transaction and are not entered into for
speculative purposes.
Interest Rate Derivatives
In October 2022, we terminated and settled our existing interest rate swap and simultaneously entered into a
new interest rate swap. The new interest rate swap was a five-year contract with a $175.0 million notional value that
fixed SOFR to 3.956% for the notional value of the swap agreement instead of the variable rate that we pay under
our Credit Agreement. The swap was to be settled monthly through the termination date in October 2027.
On October 10, 2023, based on the terms of a Letter Agreement associated with our Credit Agreement
discussed above in Note 10. Debt, we terminated and settled our existing interest rate swap for cash proceeds of
$2.6 million. Per the terms of the October Letter Agreement, the proceeds from this settlement were sent directly to
38
Bank of Montreal, the administrative agent of our Credit Agreement and were applied to the outstanding interest
balance on our Credit Agreement on October 12, 2023.
Derivative Positions
We have not designated our derivative financial instruments as hedges of our interest rates exposure. As a
result, changes in the fair value of these derivatives are recorded as “Gain associated with derivative instruments” in
our consolidated statements of operations. The gains or losses associated with changes in the fair value of our
derivative contracts do not affect our cash flows until the underlying contract is settled by making or receiving a
payment to or from the counterparty. In connection with our derivative activities, we recognized the following
amounts during the periods presented:
2024
2023
(in thousands)
Gain associated with derivative instruments . . . . . . . . . . . . . . . . . . . . . . $
— $
(5,892)
Years Ended December 31,
Historically, we determined the fair value of our derivative financial instruments using third-party pricing
information that is derived from observable market inputs, which we classify as level 2 with respect to the fair value
hierarchy.
18. PARTNERS’ CAPITAL
Our common units represent limited partner interests in us and are entitled to participate in partnership
distributions and to exercise the rights and privileges available to limited partners under our partnership agreement.
Pursuant to the terms of the First Amendment to the USD Partners LP Amended and Restated 2014 Long-
Term Incentive Plan, which we refer to as the Amended LTIP Plan, our phantom unit awards, or Phantom Units,
granted to directors and employees of our general partner and its affiliates, which are classified as equity, are
converted into our common units upon vesting. As of December 31, 2024, awards of 469,964 Phantom units vested.
In addition, 131,517 Phantom Units were voluntarily forfeited associated with these vestings. The vested units were
paid in cash based on the fair value of our common units on the respective vesting dates. Additional information and
discussion regarding our unit based compensation plans is included below in Note 19. Unit Based Compensation.
We had 795,200 and 1,416,324 equity-classified Phantom Unit awards outstanding at December 31, 2024 and
2023, respectively, all of which were anti-dilutive and therefore excluded in our calculation of net income per
limited partner unit.
Our partnership agreement does not require us to pay cash distributions on a quarterly or other basis. The
amount of distributions we pay under our cash distribution policy and the decision to make any distribution are
determined by our general partner and restricted by our lenders.
19. UNIT BASED COMPENSATION
Long-term Incentive Plan
On December 14, 2022, our Board of Directors approved the Amended LTIP Plan. The amendment increased
the number of Phantom Units authorized for issuance under the Amended LTIP Plan to 7,154,167. In 2023, the
board of directors of our general partner, acting in its capacity as the general partner, approved the grant of 714,725
Phantom Units to directors and employees of our general partner and its affiliates under our Amended LTIP Plan.
There were no grants of Phantom Units in 2024. At December 31, 2024, we had 3,882,221 Phantom Units remaining
available for issuance. The Phantom Units are subject to all of the terms and conditions of the Amended LTIP Plan
and the Phantom Unit award agreements, which are collectively referred to as the Award Agreements. When a grant
is approved by the board of directors, award amounts for each of the grants are generally determined by reference to
a specified dollar amount based on an allocation formula which included a percentage multiplier of the grantee’s
base salary, among other factors, converted to a number of units based on the closing price of one of our common
39
units preceding the grant date, as determined by the board of directors of our general partner and quoted on the
applicable public market.
Phantom unit awards generally represent rights to receive our common units upon vesting. However, with
respect to the awards granted to directors and employees of our general partner and its affiliates domiciled in
Canada, for each Phantom Unit that vests, a participant is entitled to receive cash for an amount equivalent to the
closing market price of one of our common units on the vesting date. Each Phantom Unit granted under the Award
Agreements includes an accompanying distribution equivalent right, or DER, which entitles each participant to
receive payments at a per unit rate equal in amount to the per unit rate for any distributions we make with respect to
our common units. The Award Agreements granted to employees of our general partner and its affiliates generally
contemplate that the individual grants of Phantom Units will vest in four equal annual installments based on the
grantee’s continued employment through the vesting dates specified in the Award Agreements, subject to
acceleration upon the grantee’s death or disability, or involuntary termination in connection with a change in control
of the Partnership or our general partner. Awards to independent directors of the board of our general partner and an
independent consultant typically vest over a one-year period following the grant date.
The following table presents the award activity for our Equity-classified Phantom Units:
Phantom unit awards at December 31, 2022 . . . . . . . . . . . .
39,408
1,328,964 $
6.91
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39,408
616,758 $
3.54
Vested (1)(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(39,408)
(549,014) $
7.74
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(19,792) $
5.31
Phantom unit awards at December 31, 2023
39,408
1,376,916 $
5.02
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
— $
—
Vested (1)(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(39,408)
(417,420) $
5.68
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(164,296) $
5.96
Phantom unit awards at December 31, 2024 . . . . . . . . . . . .
—
795,200 $
4.46
Independent
Director and
Consultant
Phantom Units
Employee
Phantom Units
Weighted-
Average Grant
Date Fair Value
Per Phantom
Unit
(1) Equity Phantom Unit grants to employees vested on February 16, 2024, May 1, 2024, June 2, 2024, October 2, 2024 and November 1, 2024
at the closing price for our common units as quoted on the applicable public market. Payments of $90 thousand were made, for Equity
Phantom Units granted to employees that vested for the year ended December 31, 2024. There were no payments for equity units that vested
for employees for the year ended December 31, 2023.
(2) Equity Phantom Unit grants to Directors and independent consultants vested on February 16, 2024, at the closing price for our common units
as quoted on the NYSE, resulting in payments of $9 thousand for the vested Phantom Units. There were no payments for equity units vested
for Directors and independent consultants for the year ended December 31, 2023.
40
The following table presents the award activity for our Liability-classified Phantom Units:
Phantom unit awards at December 31, 2022 . . . . . . . . . . .
13,136
56,847 $
6.27
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,136
45,423 $
3.54
Vested (1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13,136)
(44,101) $
6.00
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
— $
—
Phantom unit awards at December 31, 2023
13,136
58,169 $
4.24
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
— $
—
Vested (1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13,136)
— $
3.54
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(917) $
4.27
Phantom unit awards at December 31, 2024 . . . . . . . . . . .
—
57,252 $
4.40
Independent
Director and
Consultant
Phantom Units
Employee
Phantom Units
Weighted-
Average Grant
Date Fair Value
Per Phantom
Unit
(1) Phantom Units granted to employees domiciled in Canada vested on April 26, 2023 August 31, 2023, and December 31, 2023 at the closing
price for our common units as quoted on the applicable public market. We paid $17 thousand for Phantom Units granted to employees
domiciled in Canada that vested for the year ended December 31, 2023. There were no payments for units vested for employees domiciled in
Canada for the year ended December 31, 2024.
(2) Phantom Unit grants to Directors and independent consultants domiciled in Canada vested on February 16, 2024 and 2023, at the closing
price for our common units as quoted on the NYSE, resulting in our payment of $3 thousand and $47 thousand, respectively, for the vested
Phantom Units.
The total fair value of all Phantom Units that vested in 2024 and 2023 was $0.1 million and $2.1 million,
respectively, which included cash payments of $102 thousand and $63 thousand respectively, for Liability-classified
and Equity-classified Phantom units in 2024 and Liability-classified Phantom Units in 2023.
The fair value of each Phantom Unit on the grant date is equal to the closing market price of our common
units on the grant date. We account for the Phantom Unit grants to independent directors and employees of our
general partner and its affiliates domiciled in Canada that are paid out in cash upon vesting, throughout the requisite
vesting period, by revaluing the unvested Phantom Units outstanding at the end of each reporting period and
recording a charge to compensation expense in “Selling, general and administrative” in our consolidated statements
of operations and recognizing a liability in “Other current liabilities” in our consolidated balance sheets. With
respect to the Phantom Units granted to consultants, independent directors and employees of our general partner and
its affiliates domiciled in the United States, we amortize the initial grant date fair value over the requisite service
period using the straight-line method with a charge to compensation expense in “Selling, general and
administrative” in our consolidated statements of operations, with an offset to common units within the Partners’
Capital section of our consolidated balance sheet.
We recognized $2.1 million and $3.7 million of compensation expense associated with outstanding Phantom
Units for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we have
unrecognized compensation expense associated with our outstanding Phantom Units totaling $2.0 million, which we
expect to recognize over a weighted average period of 1.63 years. We have elected to account for actual forfeitures
as they occur rather than using an estimated forfeiture rate to determine the number of awards we expect to vest.
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We made payments to holders of the Phantom Units pursuant to the associated DERs we granted to them
under the Award Agreements as follows:
Years Ended December 31,
2024
2023
(in thousands)
Equity-classified Phantom Units (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
169
Liability-classified Phantom Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
9
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
178
(1) We reclassified $112 thousand and $11 thousand for the years ended December 31, 2024 and 2023, respectively, to unit based compensation
expense for DERs paid in relation to Phantom Units that have been forfeited.
20. SUPPLEMENTAL CASH FLOW INFORMATION
The following table provides supplemental cash flow information for the periods indicated:
For the Years Ended December 31,
2024
2023
(in thousands)
Cash paid for income taxes, net (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
834 $
1,587
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1 $
12,600
Cash paid for operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,356 $
1,579
(1)
Includes the net effect of tax refunds of $190 thousand received in the third and fourth quarters of 2024 and $11 thousand received in the
second quarter of 2023 associated with prior period Canadian tax .
Non-cash investing activities
For the year ended December 31, 2023, we had non-cash investing activities for capital expenditures for
property and equipment that were financed through “Accounts payable and accrued expenses” and “Accounts
payable and accrued expenses — related party” and an accrued reimbursement associated with our collaborative
arrangement included in “Accounts receivable, net” as presented in the table below for the periods indicated:
For the Year Ended December 31,
2024
2023
(in thousands)
Property and equipment financed through Accounts payable and accrued expenses
$
— $
720
Accrued reimbursement of property and equipment
$
— $
133
We recorded $6.6 million and $0.8 million of right-of-use lease assets and the associated liabilities on our
consolidated balance sheet as of December 31, 2024 and 2023, respectively, representing non-cash activities
resulting from either new, extended, cancelled or declassified lease agreements. See Note 2. Summary of Significant
Accounting Policies and Note 8. Leases for further discussion.
Non-cash financing activities
The Amendment to our Credit Agreement provides that interest owed on each loan under the Credit
Agreement after the effective date, shall be paid in kind by ratably increasing the amount of principal of the
applicable loan by the amount of such interest due, on a quarterly basis, on each applicable interest payment date.
For the years ended December 31, 2024 and 2023, the amount of interest paid in kind was $24.5 million and $2.0
million, respectively. In addition, we incurred loan fees of $9.8 million, for the year ended December 31, 2023 that
were added to the amount of principal outstanding on the Credit Agreement and also classified as deferred financing
costs, representing non-cash financing activities.
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21. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through March 10, 2025 the date on which the consolidated
financial statements were available to be issued.
Credit Agreement Activity
Subsequent to December 31, 2024, we repaid $32 thousand under the terms of our Credit Agreement and
incurred additional paid in kind interest of $3.4 million. As of March 10, 2025, we had amounts outstanding of
$185.4 million under the Credit Agreement.
Expected Sale of Hardisty Terminal
We expect to complete the sale of our Hardisty Rail Terminal on or prior to mid-April 2025. We are obligated
to sell the Hardisty Rail Terminal by the lenders under our revolving credit agreement as a condition to entering into
a forbearance agreement, pursuant to which the lenders agreed to forbear from exercising any rights or remedies
arising from certain events of default and certain prospective events of default related to our failure to satisfy certain
milestones under the revolving credit agreement. The sale is subject to satisfaction of conditions, including receipt of
third-party consents and exercise, or waiver, of certain rights of first refusal with respect to the sale of our Hardisty
Rail Terminal.
The sale of the Hardisty Rail Terminal was conducted by an independent investment bank approved by the
lenders under the revolving credit agreement. In accordance with the Forbearance Agreement, the sale of the
Hardisty Rail Terminal was approved on behalf of the board of directors, by the CRO, and the holder of a majority
of our outstanding common units. We expect the sale of the Hardisty Rail Terminal to be completed on or prior to
mid-April 2025. After giving effect to the sale of our Hardisty Rail Terminal and the use of proceeds, we will have
sold substantially all of our assets, but expect to have substantial remaining borrowings outstanding under our
revolving credit facility. Upon completion of the sale, we expect that the lenders will terminate the revolving credit
facility and write off the remaining debt balance, following which we expect to take steps to wind down or dissolve
the Partnership and its subsidiaries.
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Risk Factors
An investment in our common units involves a high degree of risk. We are subject to various risks and
uncertainties in the ordinary course of our business. Investors are advised to carefully review the information
presented in this report, including the risks discussed below, before making an investment decision. Investors are
also advised to read carefully the risks discussed under “Risks Inherent in Our Master Limited Partnership
Ownership Structure” and “Tax Risks Inherent in an Investment in Us” under “Risk Factors” in our Annual Report
on Form 10-K for the year ended December 31, 2022 (available on the SEC’s website and our website), as well as
our Annual Report for the year ended December 31, 2023 (available on our website). We may be subject to
additional risks and uncertainties that we currently consider immaterial or that are unknown to us but may have a
material impact on our business, financial condition and results of operations. An investor in our common units
should not expect our common units to have any value following the sale of the Hardisty Rail Terminal.
Risks Related to our Indebtedness and the Winding Down of Our Business
We expect to soon complete the sale of the Hardisty Rail Terminal, which is our last remaining material asset,
and, after giving effect to the sale, there will not be proceeds available for distribution to our unitholders.
In January 2025, we entered into a definitive agreement to sell the Hardisty Rail Terminal, which is our last
remaining material asset. As discussed below, we are obligated under the Forbearance Agreement to complete the
sale of the Hardisty Rail Terminal. After giving effect to the sale of the Hardisty Rail Terminal and payment of the
proceeds to our lenders, we will have sold substantially all of our assets but we will still have substantial remaining
borrowings outstanding under our revolving credit facility. There will be no proceeds from the Hardisty Rail
Terminal sale distributed to common unitholders. Upon completion of the sale, we intend to take steps to wind down
or dissolve but given the large deficiency claim owed under our revolving credit facility, we do not expect any value
to be available for distribution to creditors.
Events of default may occur under our Credit Agreement. If an event of default occurs and the lenders under
the Credit Agreement accelerate the obligations thereunder, we do not expect to be able to repay the
obligations that become immediately due.
Events of default may occur under our Credit Agreement. If an event of default occurs and lenders under our
Credit Agreement accelerate the obligations thereunder, we do not expect to be able to repay the obligations that
become immediately due and will have severe liquidity restraints. We are currently not projected to have sufficient
cash on hand or available liquidity to repay the Credit Agreement upon the maturity date or if, after an event of
default, the lenders declare all outstanding indebtedness under the Credit Agreement to be immediately due and
payable, to the extent the lenders do not agree to a forbearance or provide a further waiver or amendment. On
November 21, 2023, we entered into an amendment to our Credit Agreement, or the Amendment, which, among
other things, extended the maturity date under the Credit Agreement to November 2, 2024, and waived prior defaults
under the Credit Agreement. Pursuant to the Amendment, we agreed to appoint a new director to the Board and
delegate to such director certain authorities related to actions that we must undertake, including, among other things,
actions related to assets, new material agreements, modifying existing contracts, vetoing transactions with terminal
servicing counterparties or shared facility counterparties. In addition, pursuant to the Amendment, we delegated to
the conflicts committee for the Board certain decision-making with respect to the commencement of certain
proceedings under debtor relief laws, including the commencement of any bankruptcy proceeding. The Amendment
also provides that interest incurred under the Credit Agreement after the effective date of the Amendment will be
paid in kind by increasing the amount of principal due under the Credit Agreement and sets forth certain milestones
that we must achieve in the months leading up to maturity, including milestones related to total contracted revenue.
If we fail to timely achieve these milestones, an event of default will occur under the Credit Agreement.
On June 21, 2024, we entered into an agreement (the Forbearance Agreement) with the lenders and
administrative agent under our existing Credit Agreement. The Forbearance Agreement was amended on
November 1, 2024. Pursuant to the Forbearance Agreement, as amended, subject to certain terms and conditions, the
Part II. Risk Factors - Unaudited
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lenders agreed to forbear through at least January 31, 2025, from exercising any rights or remedies arising from
certain events of default and certain prospective events of default related to our failure to satisfy certain milestones
under the Credit Agreement including the maturity of the agreement and other loan documents so long as we are in
compliance with the stipulations set forth in the Forbearance Agreement. In exchange for agreeing to enter into the
Forbearance Agreement, the lenders under the Credit Agreement required us to, among other things, complete the
sale of our Hardisty Terminal. Pursuant to the provisions of the Forbearance Agreement, the Termination Date of
our Forbearance Agreement has been extended beyond January 31, 2025, by the lenders on a weekly basis to
provide a reasonable opportunity to complete such sale, but the lenders may fail to grant further extensions, which
would result in the occurrence of the Termination Date of our Forbearance Agreement, and a failure to complete the
sale could be deemed a default under the Forbearance Agreement. The Forbearance Agreement also obligates us to
adhere to an operating budget approved by the administrative agent and includes an obligation to repay borrowings
with any cash on hand in excess of an agreed maximum.
We cannot make assurances that we will obtain extensions, waivers or additional forbearance from any
defaults or events of default under the Credit Agreement, and our lenders would be entitled to exercise all remedies
against us, including acceleration of the debt. If our lenders declare all outstanding indebtedness under the Credit
Agreement to be immediately due and payable, we do not have sufficient assets to pay in full the indebtedness due
under the Credit Agreement and the value of our common units would be zero.
Our asset sales generate taxable income allocable to unitholders, and income tax liabilities arising therefrom
may exceed the value of a unitholder’s investment in us. Upon closing of the Hardisty Rail Terminal sale and
the application of proceeds therefrom, we will not be able to repay our remaining indebtedness in full, and
therefore we may recognize cancellation of indebtedness income.
We expect that we will recognize a significant amount of cancellation of debt income, or CODI, which will
be allocated to our unitholders in our taxable year that includes the date of the closing of the Hardisty Rail Terminal
sale, which closing we expect to occur in our 2025 taxable year.
The amount of CODI generally will be equal to the excess of the adjusted issue price of our debt over the
value of the consideration received by debtholders in partial payment of our debt. We will not make a corresponding
cash distribution with respect to such allocation of CODI. Therefore, any CODI will cause a unitholder to be
allocated income with respect to our units with no corresponding distribution of cash to fund the payment of the
resulting tax liability to such unitholder. Such CODI, as with other items of our income, gain, loss, and deduction
that are allocated to our unitholders, will be taken into account in the taxable income of the holders of our units.
CODI is not itself an additional tax due but is an amount that must be reported as ordinary income by the unitholder,
potentially increasing such unitholder’s tax liabilities.
Our unitholders may not have sufficient tax attributes (including allocated past and current losses from our
activities, including any loss arising from the sale of the Hardisty Rail Terminal) available to offset such allocated
CODI. Moreover, CODI that is allocated to our unitholders will be ordinary income, and, as a result, it may not be
possible for our unitholders to offset such CODI by claiming capital losses with respect to the disposition of their
units, even if such units are cancelled for no consideration in connection with our liquidation. Importantly, certain
exclusions that are available with respect to CODI generally do not apply at the partnership level, and any solvent
unitholder that is not in a Chapter 11 proceeding will be unable to rely on such CODI exclusions.
Each unitholder’s tax situation is different. The ultimate impact on each unitholder will depend on the
unitholder’s individual tax position with respect to its units. Additionally, certain of our unitholders may have more
losses available than other of our unitholders, and such losses may be available to offset some or all of the CODI
that will be allocated to our unitholders. Accordingly, unitholders are highly encouraged to consult, and depend on,
their own tax advisors in evaluating whether to invest in our units.
We will not be making any distributions to our common unitholders.
While our common units are quoted on OTC under the symbol “USDP”, there will be no proceeds from the
sale of the Hardisty Rail Terminal distributed to common unitholders and the Partnership has no additional assets to
distribute to common unitholders, so the Partnership will not be making any future distributions to such unitholders.
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