HOUSTON–(BUSINESS WIRE)–USD Partners LP (NYSE: USDP) (the “Partnership”) announced today its
operating and financial results for the three and twelve months ended
December 31, 2018. Financial highlights with respect to the fourth
quarter of 2018 include the following:

• Generated Net Cash Provided by Operating Activities of $12.9 million,
  Adjusted EBITDA of $13.7 million and Distributable Cash Flow of $10.9
  million
• Reported Net Income of $1.9 million
• Increased quarterly cash distribution to $0.36 per unit ($1.44 per
  unit on an annualized basis), delivering distribution growth of 4.0%
  for the full year 2018
• Ended quarter with $181.8 million of available liquidity and
  distribution coverage of 1.1x

“2018 was a very successful year for the Partnership,” said Dan Borgen,
the Partnership’s Chief Executive Officer. “Over the last twelve months,
we re-contracted approximately 80% of the Hardisty terminal’s current
cash flows, on an annualized basis, at meaningfully higher terminal
rates; we re-financed and extended our revolving credit facility; we’ve
grown our quarterly distribution consistent with our previous guidance;
and we announced an accretive growth project at our Casper Terminal. In
addition, our sponsor has completed the construction of the Hardisty
South expansion and we were excited to see that facility go into service
in January of this year.”

“Given our recent momentum in re-contracting, supported by multi-year,
take-or-pay agreements with primarily investment grade customers, we
expect to deliver annualized, mid-single digit distribution growth for
the full-year 2019 relative to the full-year 2018, subject to the
successful re-contracting of our remaining Hardisty and Stroud capacity
and the successful execution of our previously-announced organic growth
project at Casper,” said Mr. Borgen.

Market Update

During 2018, oil sands production facilities returned to normal
operating levels and new production capacity was and continues to be
brought online. Western Canadian crude oil supplies exceeded available
pipeline takeaway capacity, resulting in higher apportionment on export
pipelines and historically high storage levels. As a result, pricing of
Western Canadian Select, or WCS, crude oil fell significantly relative
to key benchmarks. This resulted in a substantial increase in customer
activity at the Partnership’s Hardisty origination terminal, as
strategically-located rail capacity has provided an export outlet for
growing oil sands production. In this environment, strategically-located
rail terminals, such as the Partnership’s Hardisty, Casper and Stroud
terminals, deliver critical takeaway and destination capacity and can
preserve substantial value for Western Canadian crude oil.

During the first quarter of 2019 to date, the WCS to West Texas
Intermediate, or WTI, crude oil spread has narrowed. We believe the
narrowing in the pricing spread is largely the result of the Alberta
Government’s announcement in December 2018 to curtail crude oil and
bitumen production by 325,000 barrels per day beginning January 1, 2019.
The Alberta Government’s objective is to reduce storage levels to a
targeted level to ensure more economical prices for a barrel of WCS. On
January 31, 2019, the Alberta Government announced that the crude oil
and bitumen production curtailment would be reduced to 250,000 bpd.
While the narrowed spread resulting from the curtailment cuts has caused
some crude-by-rail facilities in Canada to see reduced shipments, the
Partnership continues to see strong demand for capacity at its Hardisty
terminal, as it is considered a third-party industry solution for
producers in Western Canada and its customers are focused on long-term
solutions to takeaway constraints out of the region.

Production from the oil sands in Western Canada is projected to continue
to grow, and the expected timing of proposed export pipeline additions
remains uncertain. As such, forward curves in the market currently
reflect a discount for a barrel of WCS relative to a barrel of WTI of
approximately $21 for the next several years. Combined, these dynamics
create incentive for market participants to utilize rail transportation
to capture incremental value over that period.

Commercial and Development Update

Hardisty Terminal

In 2018, customer activity at the Partnership’s Hardisty origination
terminal increased substantially over the prior year. To date, the
Partnership has renewed and extended approximately 65% of the capacity
at the Hardisty terminal through mid-2022, with approximately 42%
extended through mid-2023 with customers under multi-year, take-or-pay
agreements. These contract renewals will generate meaningful increases
in revenue for the Partnership and are estimated to replace
approximately 80% of the Hardisty terminal’s current cash flows, on an
annualized basis, over the next three years starting in July 2019. The
Partnership is currently in discussions with the remaining customer at
the Hardisty terminal to extend its agreements currently expiring in
mid-2019 through mid-2020.

Additionally, US Development Group, LLC (“USDG”) pursuant to its
development rights at the Hardisty terminal, completed the Hardisty
South expansion (“Hardisty South”) in January 2019. The existing
Hardisty terminal, which is owned by the Partnership, has designed
capacity for two unit trains per day, or approximately 150,000 barrels
per day. Hardisty South, which is owned by USDG, adds one unit train per
day, or approximately 75,000 barrels per day, of takeaway capacity to
the terminal by modifying the existing loading rack and building
additional infrastructure and trackage. Once fully contracted, the
Hardisty South expansion could present an attractive acquisition
opportunity for the Partnership pursuant to its existing right of first
offer with respect to midstream projects developed by USDG.

In addition, in the first quarter of 2019, USDG executed a new
multi-year, take-or-pay terminalling services agreement with the Alberta
Petroleum Marketing Commission, or APMC, an agent of the Government of
Alberta. The agreement is for transloading capacity at the Hardisty rail
terminal starting in January 2020 and contains take-or-pay terms with
minimum monthly payments. The agreement will support further expansion
at USDG’s Hardisty South and will provide additional capacity beyond the
APMC commitment. This expansion will be funded by USDG, pursuant to its
development rights at the Hardisty terminal.

Casper Terminal

During 2018, the Partnership executed a multi-year terminal services
agreement as well as other short-term agreements in order to further
execute on its hub strategy at the Partnership’s Casper terminal. The
new agreement supports the construction of an outbound pipeline
connection from the Casper Terminal to complement the terminal’s current
inbound pipeline connection to the Express Pipeline and potentially an
additional storage tank to facilitate blending and staging operations
for the customer. The customer will utilize an existing tank at the
Casper Terminal for a three-year term and a second tank, once
constructed or available, for another three-year term. The construction
of the second tank, if needed, and the outbound pipeline connection are
expected to be completed in the second half of 2019. As of December 31,
2018, the Partnership has spent approximately $8.2 million on the
outbound pipeline connection and is on schedule for an in-service date
in the second half of 2019.

Fourth Quarter 2018 Liquidity, Operational and Financial Results

Substantially all of the Partnership’s cash flows are generated from
multi-year, take-or-pay terminal service agreements related to its crude
oil terminals, which include minimum monthly commitment fees. The
Partnership’s customers include major integrated oil companies, refiners
and marketers, the majority of which are investment-grade rated.

The Partnership’s results during the fourth quarter of 2018 relative to
the same quarter in 2017 were primarily influenced by additional
revenues and costs at the Partnership’s Stroud terminal due to
additional contracts that were executed in March and April of 2018. The
Casper terminal also generated additional cash flow during the fourth
quarter of 2018, associated with the three-year agreement that became
effective September 2018. In addition, as a result of a substantial
increase in customer activity at its Hardisty terminal, the Partnership
incurred incremental operating costs during the fourth quarter of 2018
as compared to 2017.

Net Cash Provided by Operating Activities increased by 26% relative to
the fourth quarter of 2017, due to higher cash flows from the Stroud and
Casper terminals discussed above, coupled with the timing of receipts
and payments on accounts receivable, accounts payable and deferred
revenue balances. As a result, Adjusted EBITDA increased by 8% and
Distributable Cash Flow increased by 9% relative to the fourth quarter
of 2017.

Net income for the quarter decreased by 20% as compared to the fourth
quarter of 2017, primarily as a result of the operating factors
discussed above, partially offset by a non-cash loss associated with the
five-year interest rate derivative instrument that the Partnership
entered into in November 2017 and increased interest expense incurred
associated with higher interest rates during the fourth quarter of 2018.

As of December 31, 2018, the Partnership had total available liquidity
of $181.8 million, including $6.4 million of unrestricted cash and cash
equivalents and undrawn borrowing capacity of $175.4 million on its $385
million senior secured credit facility, subject to continued compliance
with financial covenants. The Partnership is in compliance with its
financial covenants.

On January 31, 2019, the Partnership declared a quarterly cash
distribution of $0.36 per unit ($1.44 per unit on an annualized basis),
which represents growth of 0.7% over the prior quarter and 4.0% for the
full year 2018. The distribution was paid on February 19, 2019, to
unitholders of record at the close of business on February 11, 2019.

Effective January 1, 2018, the Partnership adopted the requirements of
Accounting Standards Update 2014-09, or ASC 606, which provides a single
comprehensive model for entities to use in accounting for revenue
arising from contracts with customers. The Partnership adopted ASC 606
by applying the full retrospective approach, resulting in the
restatement of prior period financial statements to comply with the new
standard.

Fourth Quarter 2018 Conference Call Information

The Partnership will host a conference call and webcast regarding fourth
quarter 2018 results at 11:00 a.m. Eastern Time (10:00 a.m. Central
Time) on Thursday, March 7, 2019.

To listen live over the Internet, participants are advised to log on to
the Partnership’s website at www.usdpartners.com
and select the “Events & Presentations” sub-tab under the “Investors”
tab. To join via telephone, participants may dial (877) 266-7551
domestically or +1 (339) 368-5209 internationally, conference ID
7006219. Participants are advised to dial in at least five minutes prior
to the call.

An audio replay of the conference call will be available for thirty days
by dialing (800) 585-8367 domestically or +1 (404) 537-3406
internationally, conference ID 7006219. In addition, a replay of the
audio webcast will be available by accessing the Partnership’s website
after the call is concluded.

About USD Partners LP

USD Partners LP is a fee-based, growth-oriented master limited
partnership formed in 2014 by US Development Group, LLC (“USDG”) to
acquire, develop and operate midstream infrastructure and complementary
logistics solutions for crude oil, biofuels and other energy-related
products. The Partnership generates substantially all of its operating
cash flows from multi-year, take-or-pay contracts with primarily
investment grade customers, including major integrated oil companies,
refiners and marketers. The Partnership’s network of crude oil terminals
facilitates the transportation of heavy crude oil from Western Canada to
key demand centers across North America. The Partnership’s operations
include railcar loading and unloading, storage and blending in on-site
tanks, inbound and outbound pipeline connectivity, truck transloading,
as well as other related logistics services. In addition, the
Partnership provides customers with leased railcars and fleet services
to facilitate the transportation of liquid hydrocarbons and biofuels by
rail.

USDG, which owns the general partner of USD Partners LP, is engaged in
designing, developing, owning, and managing large-scale multi-modal
logistics centers and energy-related infrastructure across North
America. USDG solutions create flexible market access for customers in
significant growth areas and key demand centers, including Western
Canada, the U.S. Gulf Coast and Mexico. Among other projects, USDG is
currently pursuing the development of a premier energy logistics
terminal on the Houston Ship Channel with capacity for substantial tank
storage, multiple docks (including barge and deepwater), inbound and
outbound pipeline connectivity, as well as a rail terminal with unit
train capabilities. For additional information, please visit
texasdeepwater.com.

Non-GAAP Financial Measures

The Partnership defines Adjusted EBITDA as Net Cash Provided by
Operating Activities adjusted for changes in working capital items,
changes in restricted cash, interest, income taxes, foreign currency
transaction gains and losses, adjustments related to deferred revenue
associated with minimum monthly commitment fees and other items which do
not affect the underlying cash flows produced by the Partnership’s
businesses. Adjusted EBITDA is a non-GAAP, supplemental financial
measure used by management and external users of the Partnership’s
financial statements, such as investors and commercial banks, to assess:

• the Partnership’s liquidity and the ability of the Partnership’s
  businesses to produce sufficient cash flows to make distributions to
  the Partnership’s unitholders; and
• the Partnership’s ability to incur and service debt and fund capital
  expenditures.

The Partnership defines Distributable Cash Flow, or DCF, as Adjusted
EBITDA less net cash paid for interest, income taxes and maintenance
capital expenditures. DCF does not reflect changes in working capital
balances. DCF is a non-GAAP, supplemental financial measure used by
management and by external users of the Partnership’s financial
statements, such as investors and commercial banks, to assess:

• the amount of cash available for making distributions to the
  Partnership’s unitholders;
• the excess cash being retained for use in enhancing the Partnership’s
  existing businesses; and
• the sustainability of the Partnership’s current distribution rate per
  unit.

The Partnership believes that the presentation of Adjusted EBITDA and
DCF in this press release provides information that enhances an
investor’s understanding of the Partnership’s ability to generate cash
for payment of distributions and other purposes. The GAAP measure most
directly comparable to Adjusted EBITDA and DCF is Net Cash Provided by
Operating Activities. Adjusted EBITDA and DCF should not be considered
alternatives to Net Cash Provided by Operating Activities or any other
measure of liquidity or performance presented in accordance with GAAP.
Adjusted EBITDA and DCF exclude some, but not all, items that affect
cash from operations and these measures may vary among other companies.
As a result, Adjusted EBITDA and DCF may not be comparable to similarly
titled measures of other companies.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of U.S. federal securities laws, including statements with
respect to the ability of the Partnership and USDG to achieve contract
extensions, new customer agreements and expansions; the ability of the
Partnership and USDG to develop existing and future additional projects
and expansion opportunities and whether those projects and opportunities
developed by USDG would be made available for acquisition, or acquired,
by the Partnership; volumes at, and demand for, the Partnership’s
terminals; the price of WCS relative to WTI and other crude benchmarks,
and the drivers causing such pricing spreads; and the amount and timing
of future distribution payments and distribution growth. Words and
phrases such as “is expected,” “is planned,” “believes,” “projects,” and
similar expressions are used to identify such forward-looking
statements. However, the absence of these words does not mean that a
statement is not forward-looking. Forward-looking statements relating to
the Partnership are based on management’s expectations, estimates and
projections about the Partnership, its interests and the energy industry
in general on the date this press release was issued. These statements
are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict. Therefore,
actual outcomes and results may differ materially from what is expressed
or forecast in such forward-looking statements. Factors that could cause
actual results or events to differ materially from those described in
the forward-looking statements include the risk that failure to complete
the construction of the new tank and pipeline at the Partnership’s
Casper facility by December 2019 could result in the new customer at
that facility gaining the right to early terminate all or portions of
the agreement, as well as those as set forth under the heading “Risk
Factors” in the Partnership’s most recent Annual Report on Form 10-K and
in the Partnership’s subsequent filings with the Securities and Exchange
Commission. The Partnership is under no obligation (and expressly
disclaims any such obligation) to update or alter its forward-looking
statements, whether as a result of new information, future events or
otherwise.

Contacts

Adam Altsuler
Senior Vice President, Chief Financial Officer
(281)
291-3995
[email protected]

Jennifer Waller
Associate Director, Financial Reporting & Investor
Relations
(832) 991-8383
[email protected]

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