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Corporate News Blog - USD Partners to Acquire Crude Oil Destination Terminal in Stroud, Oklahoma

LONDON, UK / ACCESSWIRE / June 7, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for USD Partners L.P. (NYSE: USDP). The Company announced on June 05, 2017, that it has acquired a crude oil terminal in Stroud, Oklahoma, in an attempt to facilitate rail-to-pipeline shipments of crude oil from the Company's Hardisty terminal in Western Canada to the Cushing, Oklahoma crude oil hub. Under terms of the transaction, the USD Partners has extended the term of take-or-pay terminalling services agreements related to 25% of the Hardisty terminal's available capacity by about one year. For immediate access to our complimentary reports, including today's coverage, register for free now at:


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The Announcement

Concurrent with the acquisition, the Company has entered into a new multi-year take-or-pay terminalling services agreement with an investment grade rated, multi-national energy Company for the use of about 50% of the Stroud's terminal's available capacity. The term of the agreement is scheduled to begin on October 01, 2017, and to conclude on June 30, 2020.

The Company expects this transaction to reinforce the strategic positioning of its Hardisty asset and confirms its long-held view that rail will continue as an important component of the transportation infrastructure in Western Canada. This pairing of Stroud destination terminal and origination terminals from the Company will enable multiple commercial opportunities and allow the Company to approach another cycle where growing crude oil production from Western Canada will probably exceed available takeaway capacity.

The Stroud Terminal

Located on a 76-acres property and including 104 railcar spots, the Stroud terminal offers the ability to unload one unit train per day, two 70,000 barrel onsite storage tanks and one truck bay. The terminal also includes a 120-inch diameter, 17-mile pipeline directly connected to the Cushing Hub. The Company has additionally obtained a lease for 300,000 barrels of crude oil tank storage at the Cushing hub to receive outbound shipments of crude oil from the Stroud terminal.

The Company granted USD Marketing, LLC, (USDM) the right to market the remaining capacity at the Stroud terminal in exchange for a per barrel marketing fee, in exchange for contributing its Hardisty rail slots to facilitate the origination of barrels for the Stroud customer. USDM will additionally fund any related capital costs associated with increasing the throughput or efficiency of the terminal to handle additional barrels. The Company also granted USD Group, LLC, the right to develop other projects around the Stroud terminal in exchange for the payment of market compensation for the use of Partnership's property for such development projects.

USD Partners Growth Prospects

USD Partners is a leading fee-based, growth-oriented master limited partnership formed in 2014, by US Development Group LLC to acquire, develop, and operate energy-related logistics assets. Currently, the Company's primary assets include:

1. a crude oil origination terminal in Hardisty, Alberta, Canada, with the capacity to load up to two 120-railcar unit trains per day;

2. a crude oil terminal in Casper, Wyoming, with unit train capable railcar loading capacity of over 100,000 barrels per day, and six dedicated storage tanks with 900,000 barrels of total capacity;

3. a unit train capable ethanol destination rail terminal in West Colton, California.

Financial Details

The all-in purchase price of $25.0 million represents about 2.5x the estimated 2018 adjusted EBITDA to be generated by the 33-month take-or-pay contract with the Stroud customer and includes approximately $2.2 million of one-time costs and anticipated growth capital expenditures to retrofit the Stroud terminal to handle heavy grades of Canadian crude oil. The transaction is expected to be accretive to the Company's 2018 and 2019 distribution cash flow per limited partner unit. The Partnership funded the transaction with available capacity under its revolving credit facility.

Last Close Stock Review

At the close of trading session on Tuesday, June 06, 2017, USD Partners' stock price rose 1.96% to end the day at $13.00. A total volume of 15.04 thousand shares were exchanged during the session. The Company's share price has soared 34.72% in the past twelve months. Shares of the Company have a PE ratio of 11.59 and have a dividend yield of 10.31%. The stock currently has a market cap of $304.85 million.

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SOURCE: Pro-Trader Daily