Oiltanking Partners, L.P. Reports Strong Financial Results For The Third Quarter Of 2013

   Oiltanking Partners, L.P. Reports Strong Financial Results For The Third
                               Quarter Of 2013

PR Newswire

HOUSTON, Nov. 6, 2013

HOUSTON, Nov. 6, 2013 /PRNewswire/ -- Oiltanking Partners, L.P. (NYSE: OILT)
(the "Partnership") today reported third quarter 2013 net income of $32.9
million, or $0.65 per unit, an increase of 120.6% over third quarter 2012 net
income of $14.9 million, or $0.38 per unit. Adjusted EBITDA increased 109.9%
to $41.0 million for the third quarter of 2013, compared to $19.5 million for
the third quarter of 2012. Adjusted EBITDA, which is a financial measure not
presented in accordance with U.S. generally accepted accounting principles
("GAAP"), is defined and reconciled to net income below.

The Partnership's revenues increased by approximately $25.2 million, or 75.6%,
to $58.5 million during the third quarter of 2013 compared to the same period
in 2012, due to higher storage service fee revenues, throughput fee revenues
and ancillary service fee revenues. Storage service fee revenue grew by $6.3
million due to new storage capacity placed into service in the first and third
quarters of 2013 and, to a lesser extent, due to contract escalation of
storage fees. Throughput fee revenues grew by $17.5 million during the third
quarter of 2013 due in large part to an increase in fees related to liquefied
petroleum gas ("LPG") exports at our Houston terminal and to a lesser extent
to fees generated on pipelines placed into service in the first quarter of
2013. A significant proportion of the increase in throughput fees was
attributable to amounts we received under a margin sharing arrangement with
our customer; the margin sharing fees received were in addition to the
volume-based throughput fees we earned under that arrangement.

"We continue to see very strong growth in all of our service categories," said
Anne-Marie Ainsworth, President and Chief Executive Officer of the
Partnership's general partner. "Our expansion projects and customer
agreements allowed us to deliver another quarter of record revenue, net income
and Adjusted EBITDA. We remain committed to the successful execution of our
growth plans in order to continue generating increasing distributable cash
flow per unit for our unitholders."

Operating expenses during the third quarter of 2013 were $11.3 million,
increasing by $2.3 million compared to the same period in 2012, primarily due
to higher costs associated with repairs and maintenance, operations personnel,
power and fuel and insurance. Selling, general and administrative expenses
during the third quarter of 2013 were $6.2 million, increasing by $1.4 million
compared to the same period in 2012, primarily due to an increase in the fixed
fee charged to us under the Services Agreement.

We have increased our estimated capital expenditures for the full year of 2013
to $150 million to $160 million, as we execute on our previously announced
growth projects. During October 2013, the Partnership placed into service 0.8
million barrels of storage capacity as part of its continuing Appelt I
construction project. Since July 2013, we have placed approximately 2.0
million barrels of Appelt I's total capacity of 3.2 million barrels into
service. The remaining 1.2 million barrels of storage at Appelt I are
expected to be completed by the end of 2013.

"We are proud to announce that we now have more than 20 million barrels of
active storage capacity," said Ms. Ainsworth. "Although 20 million barrels is
a significant milestone for the Partnership, our rapid growth continues as we
complete our previously announced projects on time and have recently announced
a new slate of organic investment projects."

On October 21, 2013, the Partnership declared an increase in its quarterly
cash distribution to $0.445 per unit, or $1.78 per unit on an annualized
basis, for all of its outstanding limited partner units. The third quarter
distribution represents our eighth consecutive quarterly increase since going
public in the third quarter of 2011, a 4.7% increase over the distribution of
$0.425 per unit for the second quarter of 2013 and an 18.7% increase over the
distribution of $0.375 per unit for the third quarter of 2012. The $18.2
million third quarter 2013 cash distribution is expected to be paid on
November 14, 2013. Distributable cash flow for the third quarter of 2013
provided distribution coverage of 2.05 times the amount needed for the
Partnership to fund the quarterly distribution to both the general and limited
partners and incentive distribution rights. The Partnership will retain cash
flow in excess of distributions paid to fund, in part, announced expansion
projects.

Distributable cash flow and distribution coverage ratio, which are non-GAAP
financial measures, are defined and reconciled to net income below.

Recent Developments
On November 6, 2013, we announced approximately $200 million in expansion
projects to construct two new crude oil pipelines and additional storage
capacity at our Appelt facility. The Partnership intends to construct two new
crude oil pipelines connecting our Houston terminal with Crossroads (sometimes
referred to as Moore Road) Junction, a critical distribution point for the
Houston market, for a total cost of approximately $98 million. Our expansion
projects will include a new 24-inch pipeline to Crossroads Junction that will
give our terminal customers access to the origination point of Shell
Pipeline's Houston-to-Houma pipeline (the "HoHo Pipeline"), which is scheduled
to transport crude oil from the Houston area eastbound to refining centers in
Texas and Louisiana. The Partnership also intends to construct a new 36-inch
pipeline to Crossroads Junction that will give our terminal customers access
to the termination point of TransCanada Corporation's Gulf Coast Pipeline from
Cushing, which is expected to connect to the Keystone XL pipeline if approved
and constructed. The 24-inch pipeline is expected to be completed by the end
of 2014, and the 36-inch pipeline is expected to be completed by the end of
the first quarter of 2015.

The Partnership also announced a new phase of construction at our Appelt
facility to add a total of 3.5 million barrels of new storage for a total cost
of approximately $101 million. The storage will be built in two phases. The
largest component, which is named Appelt III, will include 3.1 million barrels
of storage and a new manifold on 26 acres of land adjacent to our existing
Appelt II facility. In addition, we will construct a new 390,000 barrel
storage tank that we expect to be completed before Appelt III is in service.
Upon completion of these projects, the total storage capacity at our Appelt
property will be nearly 10 million barrels.

The new 390,000 barrel Appelt storage tank is expected to be completed by the
end of 2014, with construction anticipated to begin during the fourth quarter
of 2013. We anticipate commencing construction on Appelt III's 3.1 million
barrels of storage capacity during the third quarter of 2014, after all
relevant permits have been obtained, and placing this storage into service
during the fourth quarter of 2015 and first quarter of 2016. When the Appelt
I, II and III expansion projects have been completed, the Partnership's total
storage capacity is projected to be nearly 29 million barrels.

"The Partnership's strong results confirm our strategy of being the logistics
provider of choice for our customers and meeting their growing demands for our
services by executing on our organic growth plans," added Ainsworth. "We
continue to build on our solid track record of identifying expansion projects
that deliver EBITDA and distributable cash flow growth. We will continue to
pursue additional growth opportunities in the form of expansion projects and
acquisitions as existing, as well as potential customers, continue to express
strong interest in making future commitments."

Conference Call
The Partnership will hold a conference call to discuss its third quarter 2013
financial results on November 7, 2013, at 10:30 a.m. Eastern Time (9:30 a.m.
Central Time). To participate in the call, dial (480) 629-9722 and ask for
the Oiltanking call ten minutes prior to the start time, or access it live
over the internet at www.oiltankingpartners.com on the "Investor Relations"
page of the Partnership's website.

A replay of the audio webcast will be available shortly after the call on the
Partnership's website. A telephonic replay will be available through November
14, 2013 by calling (303) 590-3030 and using the pass code 4645353#.

Oiltanking Partners, L.P. is a growth-oriented master limited partnership
engaged in independent storage and transportation of crude oil, refined
petroleum products and liquefied petroleum gas. We are the logistics provider
of choice to major integrated oil companies, distributors, marketers and
chemical and petrochemical companies. Our core assets are strategically
located along the Gulf Coast of the United States on the Houston Ship Channel
and in Beaumont, Texas. For more information, visit
www.oiltankingpartners.com.

Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking
statements reflect the Partnership's current expectations, opinions, views or
beliefs with respect to future events, based on what it believes are
reasonable assumptions. No assurance can be given, however, that these events
will occur. Important factors that could cause actual results to differ from
forward-looking statements include, but are not limited to: adverse economic
or market conditions, changes in demand for the products that we handle or for
our services, increased competition, changes in the availability and cost of
capital, operating hazards and the effects of existing and future government
regulations. These and other significant risks and uncertainties are
described more fully in the Partnership's filings with the U.S. Securities and
Exchange Commission (the "SEC"), available at the SEC's website at
www.sec.gov. The Partnership has no obligation and, except as required by
law, does not undertake any obligation, to update or revise these statements
or provide any other information relating to such statements.

Use of Non-GAAP Financial Measures
This news release and the accompanying schedules include the non-GAAP
financial measures of Adjusted EBITDA, distributable cash flow, distribution
coverage ratio and the ratio of debt to Adjusted EBITDA, which may be used
periodically by management when discussing our financial results with
investors and analysts. The accompanying schedules of this news release
provide reconciliations of these non-GAAP financial measures to their most
directly comparable financial measures calculated and presented in accordance
with GAAP. Adjusted EBITDA, distributable cash flow, distribution coverage
ratio and the ratio of debt to Adjusted EBITDA are presented because
management believes these metrics provide additional information and metrics
relative to the performance of our business, such as the cash distributions we
expect to pay to our unitholders. These metrics are commonly employed by
financial analysts and investors to evaluate the operating and financial
performance of the Partnership from period to period and to compare it with
the performance of other publicly traded partnerships within the industry.
You should not consider Adjusted EBITDA, distributable cash flow, distribution
coverage ratio and the ratio of debt to Adjusted EBITDA in isolation or as a
substitute for analysis of the Partnership's results as reported under GAAP.
Because Adjusted EBITDA, distributable cash flow, distribution coverage ratio
and the ratio of debt to Adjusted EBITDA may be defined differently by other
companies in the Partnership's industry, the Partnership's presentation of
Adjusted EBITDA, distributable cash flow, distribution coverage ratio and the
ratio of debt to Adjusted EBITDA may not be comparable to similarly titled
measures of other companies, thereby diminishing its utility.

The Partnership defines Adjusted EBITDA as net income (loss) before net
interest expense, income tax expense (benefit), depreciation and amortization
expense and other income, as further adjusted to exclude certain other
non-cash and non-recurring items, including gains and losses on disposals of
fixed assets. Adjusted EBITDA is not a presentation made in accordance with
GAAP. Adjusted EBITDA is a non-GAAP supplemental financial performance
measure management and external users of the consolidated financial
statements, such as industry analysts, investors, lenders and rating agencies,
may use to assess: (i) the Partnership's financial performance as compared to
other publicly traded partnerships in the midstream energy industry, without
regard to historical cost basis or financing methods, and (ii) the viability
of proposed projects and acquisitions and determine overall rates of returns
on investment in various opportunities. The GAAP measure most directly
comparable to Adjusted EBITDA is net income. Adjusted EBITDA has important
limitations as an analytical tool because it excludes some but not all items
affecting net income.

Distributable cash flow, which is a financial measure included in the
schedules to this press release, is another non-GAAP financial measure used by
the Partnership's management. The Partnership defines distributable cash flow
as the Partnership's net income (loss) before (i) depreciation and
amortization expense; (ii) gains or losses on disposal of fixed assets; and
(iii) other (income) expense; less maintenance capital expenditures. The
Partnership's management believes distributable cash flow is useful to
investors because it removes non-cash items from net income and provides a
clearer picture of the Partnership's cash available for distribution to its
unitholders.

The Partnership defines distribution coverage ratio for any given period as
the ratio of distributable cash flow during such period to the total quarterly
distribution payable to all common and subordinated unitholders, the general
partner interest and incentive distribution rights.

The Partnership defines the ratio of debt to Adjusted EBITDA for any given
period as the ratio of total outstanding debt, including the current portion
at the end of such period to Adjusted EBITDA for the latest twelve month
period.

Adjusted EBITDA, distributable cash flow, distribution coverage ratio and the
ratio of debt to Adjusted EBITDA should not be considered alternatives to net
income, operating income, cash flow from operations, or any other measure of
financial performance presented in accordance with GAAP.

The Partnership believes investors benefit from having access to the same
financial measures used by its management. Further, the Partnership believes
these measures are useful to investors because these measures are one of the
bases for comparing the Partnership's operating and financial performance with
that of other companies with similar operations, although the Partnership's
measures may not be directly comparable to similar measures used by other
companies. Please see the attached reconciliations of Adjusted EBITDA,
distributable cash flow, distribution coverage ratio and the ratio of debt to
Adjusted EBITDA.

Contact Information:

Mark Buscovich
Manager, FP&A and IR
ir@oiltankingpartners.com
(855) 866-6458

— Tables to Follow —



OILTANKING PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per unit data)

(Unaudited)
                                  Three Months Ended  Nine Months Ended
                                  September30,       September30,
                                  2013      2012      2013       2012
Revenues                          $ 58,531  $ 33,327  $ 150,796  $ 101,436
Costs and expenses:
Operating                         11,339    8,993     31,783     26,639
Selling, general and              6,235     4,824     15,973     14,015
administrative
Depreciation and amortization     5,336     4,039     14,807     12,073
(Gain) loss on disposal of fixed  (153)     —         (153)      13
assets
Total costs and expenses          22,757    17,856    62,410     52,740
Operating income                  35,774    15,471    88,386     48,696
Other income (expense):
Interest expense                  (2,496)   (487)     (5,147)    (1,094)
Interest income                   1         2         4          31
Other income (expense)            (7)       1         12         74
Total other expense, net          (2,502)   (484)     (5,131)    (989)
Income before income tax expense  33,272    14,987    83,255     47,707
Income tax expense                (389)     (80)      (704)      (240)
Net income                        $ 32,883  $ 14,907  $ 82,551   $ 47,467
Allocation of net income to
partners:
Net income allocated to general   $ 7,413   $ 297     $ 14,473   $ 1,173
partner
Net income allocated to common    $ 12,735  $ 7,305   $ 34,039   $ 23,147
unitholders
Net income allocated to           $ 12,735  $ 7,305   $ 34,039   $ 23,147
subordinated unitholders
Earnings per limited partner
unit:
Common unit (basic and diluted)   $ 0.65    $ 0.38    $ 1.75     $ 1.19
Subordinated unit (basic and      $ 0.65    $ 0.38    $ 1.75     $ 1.19
diluted)
Weighted average number of
limited partnerunits
outstanding:
Common units (basic and diluted)  19,450    19,450    19,450     19,450
Subordinated units (basic and     19,450    19,450    19,450     19,450
diluted)



OILTANKING PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit amounts)

(Unaudited)
                                                 September30,  December31,
                                                 2013           2012
Assets:
Current assets:
Cash and cash equivalents                        $   16,530     $   7,071
Receivables:
Trade                                            24,553         12,160
Affiliates                                       113            615
Other                                            147            313
Note receivable, affiliate                       2,000          28,000
Prepaid expenses and other                       2,406          1,290
Total current assets                             45,749         49,449
Property, plant and equipment, net               550,133        418,289
Intangible assets, net                           3,739          —
Other assets, net                                1,553          1,482
Total assets                                     $   601,174    $   469,220
Liabilities and partners' capital:
Current liabilities:
Accounts payable and accrued expenses            $   43,489     $   29,399
Current maturities of long-term debt, affiliate  2,500          2,500
Accounts payable, affiliates                     2,483          2,049
Total current liabilities                        48,472         33,948
Long-term debt, affiliate, less current          230,750        146,800
maturities
Deferred revenue                                 2,255          2,544
Total liabilities                                281,477        183,292
Commitments and contingencies
Partners' capital:
 Common units (19,449,901 units issued and
outstanding atSeptember 30, 2013 and December   258,486        248,176
31, 2012)
 Subordinated units (19,449,901 units issued
and outstanding at September 30, 2013 and        46,664         36,354
December 31, 2012)
General partner's interest                       14,547         1,398
Total partners' capital                          319,697        285,928
Total liabilities and partners' capital          $   601,174    $   469,220



OILTANKING PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)
                                                         Nine Months Ended
                                                         September30,
                                                         2013       2012
Cash flows from operating activities:
Net income                                               $  82,551  $ 47,467
Adjustments to reconcile net income to net cash provided
by operatingactivities:
Depreciation and amortization                            14,807     12,073
(Gain) loss on disposal of fixed assets                  (153)      13
Amortization of deferred financing costs                 144        118
Changes in assets and liabilities:
Trade and other receivables                              (12,227)   (1,981)
Prepaid expenses and other assets                        (1,106)    (457)
Accounts receivable/payable, affiliates                  936        (1,847)
Accounts payable and accrued expenses                    1,800      2,380
Deferred revenue                                         1,093      (341)
Total adjustments from operating activities         5,294      9,958
Net cash provided by operating activities                87,845     57,425
Cash flows from investing activities:
Issuance of notes receivable, affiliate                  (7,000)    (20,000)
Collections of notes receivable, affiliate               33,000     35,300
Payments for purchase of property, plant and equipment   (135,854)  (80,756)
Proceeds from sale of property, plant and equipment      264        —
Purchase of intangible assets                            (3,739)    —
Net cash used in investing activities                    (113,329)  (65,456)
Cash flows from financing activities:
Borrowings under loan agreement, affiliate               50,000     35,000
Borrowings under credit agreement, affiliate             86,000     —
Payments under notes payable, affiliate                  (2,050)    (2,050)
Payments under credit agreement, affiliate               (50,000)   —
Debt issuance costs                                      (225)      (750)
Distributions paid to partners                           (48,782)   (41,856)
Net cash provided by (used in) financing activities      34,943     (9,656)
Net increase (decrease) in cash and cash equivalents     9,459      (17,687)
Cash and cash equivalents — Beginning of period          7,071      23,836
Cash and cash equivalents — End of period                $  16,530  $ 6,149



OILTANKING PARTNERS, L.P.

SELECTED OPERATING DATA

(Unaudited)
Operating data:
                                     Three Months Ended  Nine Months Ended
                                     September30,       September30,
                                     2013        2012    2013       2012
Storage capacity, end of period      19.9        17.7    19.9       17.7
(mmbbls) (1) (3)
Storage capacity, average (mmbbls)   19.6        17.7    19.5       17.6
(3)
Terminal throughput (mbpd) (2)       1,095.2     787.0   1,037.6    821.9
Vessels per period                   250         229     669        679
Barges per period                    879         793     2,498      2,346
Trucks per period                    9,411       2,613   21,549     7,981
Rail cars per period                 1,170       1,701   4,758      6,589

________________
(1) Represents million barrels ("mmbbls").
(2) Represents thousands of barrels per day ("mbpd").
    During the first and third quarters of 2013, we placed into service net
(3) storage capacity of approximately 0.9 million barrels and 1.4 million
    barrels, respectively. Amounts do not reflect approximately 0.8 million
    barrels of storage capacity placed into service in October 2013.



Revenues by service category:
(In thousands)
                              Three Months Ended  Nine Months Ended
                              September 30,       September 30,
                              2013      2012      2013       2012
Storage service fees          $ 30,843  $ 24,563  $ 87,421   $ 73,810
Throughput fees               24,146    6,672     56,064     20,768
Ancillary service fees        3,542     2,092     7,311      6,858
Total revenues                $ 58,531  $ 33,327  $ 150,796  $ 101,436



OILTANKING PARTNERS, L.P.

SELECTED FINANCIAL DATA

Non-GAAP Reconciliations

(In thousands)

(Unaudited)
                                   Three Months Ended  Nine Months Ended
                                   September30,       September30,
                                   2013      2012      2013       2012
Reconciliation of Adjusted EBITDA
andDistributable cash flow from
net income:
Net income                         $ 32,883  $ 14,907  $ 82,551   $ 47,467
Depreciation and amortization      5,336     4,039     14,807     12,073
Income tax expense                 389       80        704        240
Interest expense, net              2,495     485       5,143      1,063
(Gain) loss on disposal of fixed   (153)     —         (153)      13
assets
Other (income) expense             7         (1)       (12)       (74)
Adjusted EBITDA                    $ 40,957  $ 19,510  $ 103,040  $ 60,782
Interest expense, net              (2,495)   (485)     (5,143)    (1,063)
Income tax expense                 (389)     (80)      (704)      (240)
Maintenance capital expenditures   (900)     (1,254)   (1,895)    (2,406)
Distributable cash flow            $ 37,173  $ 17,691  $ 95,298   $ 57,073
Cash distributions (1)             $ 18,150  $ 14,886  $ 51,440   $ 43,068
Distribution coverage ratio        2.05x     1.19x     1.85x      1.33x

_____________
    Amounts represent cash distributions declared for our limited partner
(1) units, general partner interest and incentive distribution rights, as
    applicable, for each respective period.



Reconciliation of Debt to Adjusted EBITDA Ratio:
2013 Latest Twelve Months (LTM) Adjusted EBITDA (as of September
30, 2013):
Adjusted EBITDA for the nine months ended September 30, 2013        $ 103,040
2012 Adjusted EBITDA (1)                                            80,616
Less: Adjusted EBITDA for the nine months ended September 30,      (60,782)
2012
2013 Latest Twelve Months (LTM) Adjusted EBITDA (as of September    $ 122,874
30, 2013)
Total debt, including current portion at September 30, 2013         $ 233,250
Debt/Adjusted EBITDA Ratio                                          1.9x

_____________
    Please refer to the press release of Oiltanking Partners, L.P. issued
(1) March 6, 2013, for a reconciliation of Adjusted EBITDA for the year ended
    December 31, 2012 from net income.

SOURCE Oiltanking Partners, L.P.

Website: http://www.oiltankingpartners.com
 
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