USD Partners LP (USDP): History, Ownership, Mission, How It Works & Makes Money

Ever wondered how a master limited partnership focused on energy infrastructure, like USD Partners LP, navigated the volatile crude oil market? This entity, primarily known for acquiring, developing, and operating midstream infrastructure and logistics solutions for crude oil and biofuels, reported an Adjusted EBITDA of $15.0 million and Distributable Cash Flow of $9.8 million in the third quarter of 2023, just before filing for Chapter 11 bankruptcy protection in October 2023. What does this journey reveal about the complexities of energy logistics and MLP structures? Delve deeper to understand its history, ownership, operational mechanics, and the financial realities that shaped its path.

USD Partners LP (USDP) History

USD Partners LP emerged as a master limited partnership focused on acquiring, developing, and operating energy-related logistics assets. Its history is tied closely to its sponsor, USD Group LLC, a significant player in energy infrastructure development.

USD Partners LP Founding Timeline

Year established

USD Partners LP was formed as a Delaware limited partnership on June 5, 2014.

Original location

The principal executive offices were established in Houston, Texas.

Founding team members

The partnership was formed by its sponsor, USD Group LLC. Management derived from the experienced team at USD Group LLC.

Initial capital/funding

The partnership went public through an Initial Public Offering (IPO) on October 15, 2014, raising approximately $181 million in net proceeds by offering 10.5 million common units at $17.00 per unit. Initial assets were contributed by USD Group LLC.

USD Partners LP Evolution Milestones

USD Partners LP Transformative Moments

Initial Public Offering (2014)

The IPO was a pivotal moment, providing access to public capital markets which funded initial asset acquisitions from its sponsor and set the stage for future growth. It established the MLP structure, shaping its financial strategy for years.

Strategic Focus on Crude-by-Rail

The initial strategy heavily emphasized crude-by-rail logistics, particularly facilitating the movement of Canadian crude oil from Hardisty, Alberta, to US refineries. This defined its core business but also exposed it to the specific risks of that market segment.

Adaptation to Market Conditions

Throughout its public tenure, USDP had to adapt to volatile oil prices and evolving transportation economics. Decisions like the Casper divestiture reflected necessary adjustments to maintain financial health and operational focus, aligning with its core operational strengths and Mission Statement, Vision, & Core Values of USD Partners LP (USDP).

Going Private Transaction (2024)

The acquisition by its sponsor, USD Group LLC, completed in January 2024, marked the end of USDP's journey as a publicly traded entity. This significant shift consolidated ownership and took the partnership private, altering its capital structure and reporting requirements moving forward. The final transaction price was $0.71 per common unit. This move followed a period of declining unit prices and challenges faced by smaller MLPs in the public market. Distributions had been suspended in 2023 prior to the offer.

USD Partners LP (USDP) Ownership Structure

USD Partners LP operated as a Master Limited Partnership (MLP), primarily controlled by its General Partner, USD Group LLC, which held significant equity interests and managed its operations before its privatization.

USD Partners LP Current Status

As of the end of 2024, USD Partners LP is a private entity. Its common units ceased trading on the New York Stock Exchange (NYSE) following the completion of its acquisition by its sponsor, USD Group LLC, on January 23, 2024. This transition marked a significant shift from its previous public status, impacting its financial reporting and ownership visibility. Understanding its former public financials can still offer insights; you can explore more here: Breaking Down USD Partners LP (USDP) Financial Health: Key Insights for Investors.

USD Partners LP Ownership Breakdown

Following the take-private transaction completed in early 2024, the ownership structure simplified dramatically.

USD Partners LP Leadership

Post-acquisition, the leadership and strategic direction fall under the purview of the parent entity, USD Group LLC. Key figures guiding the integrated entity as of late 2024 include:

• Dan Borgen: Founder, Chairman, and Chief Executive Officer of USD Group LLC, overseeing the overall strategy and direction.
• USD Group LLC Executive Team: Manages the day-to-day operations and strategic initiatives of the combined assets, integrating the former USDP operations into the broader group structure. Specific roles previously held within USDP, like the CFO position held by Adam Altsuler leading up to the merger, were integrated or transitioned within the USD Group framework.

USD Partners LP (USDP) Mission and Values

USD Partners LP operates with a clear focus on providing essential energy infrastructure and logistics solutions, underpinning its strategic direction and operational priorities. While specific formal statements might not be widely publicized, the company's actions and communications point towards core principles guiding its business.

USD Partners LP's Core Purpose

The partnership's fundamental purpose revolves around the acquisition, development, and operation of midstream infrastructure and complementary logistics solutions for crude oil, biofuels, and other energy-related products. This operational focus directly impacts its overall performance, a topic explored further in Breaking Down USD Partners LP (USDP) Financial Health: Key Insights for Investors.

Official mission statement

An official, publicly stated mission statement for USD Partners LP isn't readily available in their primary investor communications as of early 2024. However, their operational mandate emphasizes connecting energy supply to demand centers reliably.

Vision statement

Similarly, a distinct vision statement outlining long-term aspirations isn't formally published. The partnership's vision is implicitly tied to growing its asset base and cash distributions through strategic acquisitions and organic development projects within the energy infrastructure space.

Company slogan

USD Partners LP does not appear to utilize a specific company-wide slogan in its public branding or investor materials.

Operational Priorities and Implied Values

Based on operational practices and management commentary, key priorities that reflect the partnership's underlying values include:

• Safety and Environmental Stewardship: Operating assets in a manner that prioritizes the safety of employees, contractors, and communities, alongside environmental responsibility.
• Reliability: Ensuring consistent and dependable service for customers who rely on their terminals and logistics networks.
• Operational Excellence: Striving for efficiency and effectiveness in all aspects of terminal operations and asset management.
• Stakeholder Value: Focusing on delivering stable cash flows and distributions to unitholders through disciplined operations and growth.

Cultural DNA

The culture appears centered on operational execution within the energy midstream sector. It involves managing complex logistics, maintaining infrastructure integrity, and navigating the dynamics of energy markets to support consistent performance and fulfill contractual obligations safely and efficiently.

USD Partners LP (USDP) How It Works

USD Partners LP primarily acquires, develops, and operates midstream infrastructure assets, focusing on energy-related logistics terminals critical for transporting crude oil and biofuels. The partnership generates revenue largely through long-term, fee-based contracts for the use of its terminal facilities.

USD Partners LP's Product/Service Portfolio

USD Partners LP's Operational Framework

The partnership operates by providing essential throughput and storage services at its terminals. Customers enter into multi-year contracts, often structured as take-or-pay or minimum volume commitments, which provide stable and predictable cash flows for USDP, largely insulating revenue from commodity price volatility. Operations emphasize safety, efficiency, and reliability in handling large volumes of energy products, primarily crude oil destined for refineries via rail. As of late 2023 reporting, reflecting the operational status quo for 2024, the Hardisty terminal remained a key asset with significant capacity connected to Canadian crude supply. You can learn more by Breaking Down USD Partners LP (USDP) Financial Health: Key Insights for Investors.

USD Partners LP's Strategic Advantages

• Long-Term Contracts: Secures revenue streams through multi-year, fee-based agreements with creditworthy counterparties, enhancing financial stability.
• Strategic Asset Locations: Terminals situated at key points in the North American energy infrastructure network, particularly for Canadian crude export via rail (Hardisty) and connections to major refining centers.
• Crude-by-Rail Niche: Specializes in crude-by-rail logistics, offering transportation flexibility compared to pipelines, especially valuable for certain crude grades or destinations.
• Fee-Based Revenue Model: Minimizes direct exposure to fluctuations in commodity prices, focusing instead on contracted volumes and service fees.

USD Partners LP (USDP) How It Makes Money

USD Partners LP primarily generated revenue through long-term, fee-based contracts for the terminalling and storage of crude oil and related products. This model aimed to provide stable cash flows largely independent of commodity price fluctuations.

USD Partners LP Revenue Breakdown (Fiscal Year 2023)

Note: USD Partners LP was acquired and taken private in January 2024. The following data reflects the final full fiscal year as a public entity.

USD Partners LP Business Economics

The partnership's economic engine was built on its network of crude oil terminals. The core strategy revolved around securing multi-year, take-or-pay contracts with customers.

• These contracts meant customers paid a minimum fee regardless of the actual volume shipped or stored, providing revenue stability.
• Operating costs included facility maintenance, labor, insurance, and property leases or taxes.
• Profitability depended heavily on maintaining high contract renewal rates and managing operating expenses effectively. Capital expenditures were necessary for maintaining and occasionally expanding terminal capacity.

USD Partners LP Financial Performance (Fiscal Year 2023)

In its last full year as a public entity (FY 2023), the partnership's financial health showed mixed signals. Total revenues reached approximately $125.8 million, largely supported by the fee-based contract structure. However, the partnership reported a significant net loss of about $40.7 million for the year, influenced by factors including non-cash impairment charges.

Key performance indicators watched closely by investors included Adjusted EBITDA and Distributable Cash Flow (DCF). For FY 2023, Adjusted EBITDA was reported at around $51.1 million, while DCF stood at approximately $30.5 million. These metrics offered a clearer view of operational cash generation capabilities. Understanding these figures requires a deeper look; you can find more details by Breaking Down USD Partners LP (USDP) Financial Health: Key Insights for Investors. The stability of these cash flows, despite the net loss, was a crucial element underpinning the partnership's operations before its transition to a private entity.

USD Partners LP (USDP) Market Position & Future Outlook

Following its acquisition and delisting in early 2024, USD Partners LP's assets operate within a new private structure, focusing on crude oil logistics and terminalling services primarily originating from Western Canada. Its future outlook hinges on optimizing these existing infrastructure assets, particularly the Hardisty terminal, and navigating the volatile dynamics of crude oil price differentials and transportation economics.

Competitive Landscape

USDP operated in a competitive segment of the North American midstream energy infrastructure sector, facing competition from pipeline operators and other rail terminal providers.

Market share is challenging to define precisely post-acquisition; USDP's assets represent a niche but important component of Canadian crude takeaway capacity, particularly via rail.

Opportunities & Challenges

The operational environment presents both growth avenues and potential hurdles.

Industry Position

USD Partners LP's assets hold a specialized position within the North American energy infrastructure landscape, primarily focused on facilitating the movement of heavy Canadian crude oil via rail to key U.S. refining markets. The Hardisty Rail Terminal remains a critical piece of infrastructure, offering shippers flexibility and an alternative to pipelines, especially valuable when pipeline capacity is constrained or differentials favor rail transport. While no longer a publicly traded entity, the underlying operations continue to play a role in the complex logistics network connecting Canadian supply with U.S. demand. Understanding the financial underpinnings of such operations remains crucial; you can explore related concepts here: Breaking Down USD Partners LP (USDP) Financial Health: Key Insights for Investors. The long-term value proposition depends heavily on sustained demand for Canadian crude, the competitiveness of rail versus pipelines, and the operational efficiency maintained under private ownership.