Oiltanking Partners Delivers Record Financial Results for the Fourth Quarter and Full Year 2013

 Oiltanking Partners Delivers Record Financial Results for the Fourth Quarter
                              and Full Year 2013

PR Newswire

HOUSTON, Feb. 24, 2014

HOUSTON, Feb. 24, 2014 /PRNewswire/ --Oiltanking Partners, L.P. (NYSE: OILT)
(the "Partnership") today reported fourth quarter 2013 net income of $34.5
million, or $0.69 per common unit, an increase of 127% over fourth quarter
2012 net income of $15.2 million, or $0.30 per unit. Net income for the full
year of 2013 increased 87% to $117.1 million, or $2.45 per common unit,
compared to net income for the full year of 2012 of $62.6 million, or $1.57
per unit.

Adjusted EBITDA increased 113% to $42.2 million for the fourth quarter of
2013, compared to $19.8 million for the fourth quarter of 2012. Adjusted
EBITDA for the year 2013 increased 80% to $145.3 million compared to $80.6
million for 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 in the financial tables below.

"The fourth quarter capped a year of records and milestones for the
Partnership," said Anne-Marie Ainsworth, President and Chief Executive Officer
of the Partnership's general partner. "In addition to across-the-board record
results for revenues, net income, Adjusted EBITDA and distributable cash flow,
we successfully achieved key operational milestones last year by increasing
our storage capacity by 23% and exceeding one million barrels of throughput
per day."

The Partnership's revenues increased by approximately $26.1 million, or 77%,
to $60.2 million during the fourth 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 $9.0
million due to new storage capacity of approximately 4.1 million barrels
placed into service throughout 2013 and, to a lesser extent, higher contract
rates. Throughput fee revenues grew by $15.3 million during the fourth
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, 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.

Operating expenses during the fourth quarter of 2013 were $12.1 million,
increasing by $2.7 million compared to the same period in 2012, primarily due
to higher costs associated with operations personnel, repairs and maintenance,
power and fuel, property taxes and insurance. Selling, general and
administrative expenses during the fourth quarter of 2013 were $5.8 million,
increasing by $1.0 million compared to the same period in 2012, primarily due
to an increase in the fixed fee charged to us under our services agreement
with our general partner and its affiliate.

On January 7, 2014, we announced an expanded terminal agreement with
Enterprise Products Partners, L.P. to further increase exports of LPG at the
Partnership's terminal on the Houston Ship Channel. Already one of the
world's largest, the LPG export terminal is expected to have total loading
capacity of more than 16 million barrels per month of low-ethane propane
and/or butane if the expansion is completed as planned by year-end 2015.
Under the expanded agreement with Enterprise, the Partnership will provide
additional dock capacity to load LPG vessels and land for Enterprise to expand
its export facility. The expanded agreement amends the agreement previously
announced in March 2013, and has a 50-year term beginning on February 1,
2014. The Partnership will continue to earn volume-based throughput fees and
participate in margin sharing on all customer vessels loaded at our Houston
facility under the expanded agreement.

"In 2014, we expect to deliver continued growth by executing on our previously
announced capital projects and capitalizing on our substantial organic growth
opportunities," commented Ms. Ainsworth. "As part of our ongoing Appelt
expansion projects, we expect to add another 3.7 million barrels of storage in
2014 and 2015 to our nearly 22 million barrels of current capacity. In
addition, we expect to complete the 24-inch pipeline to Crossroads Junction,
providing our terminal customers access to the origination point of Shell
Pipeline's Houston-to-Houma pipeline. Based on our current plans, we expect
to spend between $230 million and $250 million on capital expenditures in
2014."

During 2014, construction will continue on the 36-inch pipeline to Crossroads
Junction, which is expected to be completed by the end of the first quarter of
2015. We anticipate commencing construction on 3.1 million barrels of storage
capacity as part of our Appelt III expansion project during the third quarter
of 2014, after all relevant permits have been obtained. We expect to place
the additional tanks into service during the fourth quarter of 2015 and first
quarter of 2016. When the Appelt II and III expansion projects have been
completed, the Partnership's total storage capacity is projected to be nearly
29 million barrels.

"We remain focused on expansion opportunities that will deliver continued
growth in distributable cash flow per unit to our investors," added
Ainsworth. "Our low leverage and robust distribution coverage give us
substantial financial flexibility as we continue to evaluate more than $400
million in potential capital projects and acquisitions."

On January 21, 2014, the Partnership declared an increase in its quarterly
cash distribution to $0.47 per unit, or $1.88 per unit on an annualized basis,
for all of its outstanding limited partner units. The fourth quarter
distribution represents our ninth consecutive quarterly increase since going
public in the third quarter of 2011, a 6% increase over the distribution of
$0.445 per unit for the third quarter of 2013 and a 21% increase over the
distribution of $0.39 per unit for the fourth quarter of 2012. The $20.7
million fourth quarter 2013 cash distribution was paid on February 14, 2014.
Distributable cash flow for the fourth quarter of 2013 provided distribution
coverage of 1.88 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 in the financial
tables below.

Conference Call
The Partnership will hold a conference call to discuss its fourth quarter 2013
financial results on February 25, 2014, at 10:00 a.m. Eastern Time (9:00 a.m.
Central Time). To participate in the call, dial (480) 629-9722 and ask for
the Oiltanking call 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 March 7,
2014 by calling (303) 590-3030 and using the pass code 4666713#.

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 the most
directly comparable financial measures calculated and presented in accordance
with GAAP. The Partnership believes investors benefit from having access to
the same financial measures used by its management. These non-GAAP financial
measures are commonly employed by management, financial analysts and investors
to evaluate our performance from period to period and to compare our
performance with the performance of our peers.

The Partnership defines Adjusted EBITDA as net income before net interest
expense, income tax expense, depreciation and amortization expense and other
income, as further adjusted to exclude certain other items management deems
appropriate, including gains and losses on disposals of fixed assets and
property casualty indemnification. Adjusted EBITDA is a non-GAAP supplemental
financial performance measure management and other third parties, such as
industry analysts, investors, lenders and rating agencies, may use to assess:
(i) the Partnership's financial performance as compared to the performance of
its peers, without regard to historical cost basis or financing methods, and
(ii) the viability of proposed projects and acquisitions and determine 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 is another non-GAAP financial measure used by the
Partnership's management. The Partnership defines distributable cash flow as
net income before (i) depreciation and amortization expense; (ii) gains or
losses on disposal of fixed assets and property casualty indemnification; and
(iii) other (income) expense; less maintenance capital expenditures.
Maintenance capital expenditures are capital expenditures (as defined by GAAP)
resulting from improvements to and major renewals of existing assets. Such
expenditures serve to maintain existing operations but do not generate
additional revenues. Management believes distributable cash flow is useful to
investors because it removes non-cash items from net income and provides
visibility regarding the Partnership's cash available for distribution to
unitholders.

The Partnership defines distribution coverage ratio for any given period as
the ratio of distributable cash flow during such period to the total
distribution payable to all 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 presentation of
these measures may not be comparable to similarly titled measures of other
companies in the industry because the Partnership may define these measures
differently than 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.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per unit data)
(Unaudited)
                                      Three Months Ended  Year Ended
                                      December31,        December31,
                                      2013      2012      2013       2012
Revenues                              $ 60,154  $ 34,061  $ 210,950  $ 135,497
Costs and expenses:
Operating                             12,127    9,386     43,910     36,025
Selling, general and administrative   5,792     4,841     21,765     18,856
Depreciation and amortization         5,600     3,828     20,407     15,901
(Gain) loss on disposal of fixed      (176)     —         (329)      13
assets
Gain on property casualty             (303)     —         (303)      —
indemnification
Total costs and expenses              23,040    18,055    85,450     70,795
Operating income                      37,114    16,006    125,500    64,702
Other income (expense):
Interest expense                      (2,246)   (560)     (7,393)    (1,654)
Interest income                       26        2         30         33
Other income                          1         66        13         140
Total other expense, net              (2,219)   (492)     (7,350)    (1,481)
Income before income tax expense      34,895    15,514    118,150    63,221
Income tax expense                    (383)     (336)     (1,087)    (576)
Net income                            $ 34,512  $ 15,178  $ 117,063  $ 62,645
Allocation of net income to partners:
Net income allocated to general       $ 7,623   $ 237     $ 22,096   $ 1,489
partner
Net income allocated to common        $ 14,287  $ 5,807   $ 48,326   $ 30,578
unitholders
Net income allocated to subordinated  $ 12,602  $ 5,807   $ 46,641   $ 30,578
unitholders
Earnings per limited partner unit:
Common unit (basic and diluted)       $ 0.69    $ 0.30    $ 2.45     $ 1.57
Subordinated unit (basic and diluted) $ 0.65    $ 0.30    $ 2.40     $ 1.57
Weighted average number of limited
partner units outstanding:
Common units (basic and diluted)      20,580    19,450    19,735     19,450
Subordinated units (basic and         19,450    19,450    19,450     19,450
diluted)



OILTANKING PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands, except unit amounts)
(Unaudited)
                                                          December31,
                                                          2013       2012
Assets:
Current assets:
Cash and cash equivalents                                 $ 17,332   $ 7,071
Receivables:
Trade                                                     18,013     12,160
Affiliates                                                127        615
Other                                                     613        313
Notes receivable, affiliate                               100,000    28,000
Prepaid expenses and other                                1,502      1,290
Total current assets                                      137,587    49,449
Property, plant and equipment, net                        585,826    418,289
Intangible assets                                         3,739      —
Other assets, net                                         1,822      1,482
Total assets                                              $ 728,974  $ 469,220
Liabilities and partners' capital:
Current liabilities:
Accounts payable and accrued expenses                     $ 38,104   $ 29,399
Current maturities of long-term debt, affiliate           2,500      2,500
Accounts payable, affiliates                              4,264      2,049
Total current liabilities                                 44,868     33,948
Long-term debt, affiliate, less current maturities        188,300    146,800
Deferred revenue                                          2,159      2,544
Total liabilities                                         235,327    183,292
Commitments and contingencies
Partners' capital:
 Common units (22,049,901 and 19,449,901 units issued
and outstanding at December 31, 2013 and 2012,            418,435    248,176
respectively)
 Subordinated units (19,449,901 units issued and       50,611     36,354
outstanding at December 31, 2013 and 2012)
General partner's interest                                24,601     1,398
Total partners' capital                                   493,647    285,928
Total liabilities and partners' capital                   $ 728,974  $ 469,220



OILTANKING PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                                       Year Ended December 31,
                                                       2013          2012
Cash flows from operating activities:
Net income                                             $  117,063    $  62,645
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                          20,407        15,901
(Gain) loss on disposal of fixed assets                (329)         13
Gain on property casualty indemnification              (303)         —
Amortization of deferred financing costs               196           165
Changes in assets and liabilities:
Trade and other receivables                            (5,850)       (6,599)
Federal income taxes due to parent                     —             (1,210)
Prepaid expenses and other assets                      (523)         (57)
Accounts receivable/payable, affiliates                2,703         1,682
Accounts payable and accrued expenses                  (248)         2,847
Deferred revenue                                       1,185         (133)
 Total adjustments from operating activities        17,238        12,609
Net cash provided by operating activities              134,301       75,254
Cash flows from investing activities:
Issuance of notes receivable, affiliate                (111,000)     (52,000)
Collections of notes receivable, affiliate             39,000        39,300
Payments for purchase of property, plant and equipment (180,672)     (149,827)
Proceeds from sale of property, plant and equipment    440           —
Purchase of intangible assets                          (3,739)       —
Net cash used in investing activities                  (255,971)     (162,527)
Cash flows from financing activities:
Borrowings under loan agreement, affiliate             50,000        125,000
Borrowings under credit agreement, affiliate           100,000       6,000
Payments under notes payable, affiliate                (2,500)       (2,500)
Payments under credit agreement, affiliate             (106,000)     —
Net proceeds from issuance of common units             154,317       —
Debt issuance costs                                    (225)         (1,250)
Contribution from general partner                      3,271         —
Distributions paid to partners                         (66,932)      (56,742)
Net cash provided by financing activities              131,931       70,508
Net increase (decrease) in cash and cash equivalents   10,261        (16,765)
Cash and cash equivalents — Beginning of period        7,071         23,836
Cash and cash equivalents — End of period              $  17,332     $  7,071



OILTANKING PARTNERS, L.P.
SELECTED OPERATING DATA
(Unaudited)
Operating data:
                                       Three Months Ended  Year Ended
                                       December31,        December31,
                                       2013        2012    2013     2012
Storage capacity, end of period        21.7        17.7    21.7     17.7
(mmbbls) (1) (3)
Storage capacity, average (mmbbls) (3) 21.1        17.7    19.3     17.6
Terminal throughput (mbpd) (2)         1,143.8     823.0   1,064.3  822.2
Vessels per period                     245         218     914      879
Barges per period                      730         887     3,228    3,233
Trucks per period                      9,361       3,326   30,910   11,307
Rail cars per period                   156         1,390   4,914    7,979



(1) Represents million barrels ("mmbbls").
(2) Represents thousands of barrels per day ("mbpd").
(3) Amounts do not reflect approximately 0.2 million barrels of storage
    capacity placed into service in January 2014.



Revenues by service category:
(In thousands)
                              Three Months Ended  Year Ended
                              December31,        December31,
                              2013      2012      2013       2012
Storage service fees          $ 32,824  $ 23,781  $ 120,245  $ 97,591
Throughput fees               23,599    8,328     79,663     29,096
Ancillary service fees        3,731     1,952     11,042     8,810
Total revenues                $ 60,154  $ 34,061  $ 210,950  $ 135,497



OILTANKING PARTNERS, L.P.
SELECTED FINANCIAL DATA
Non-GAAP Reconciliations
(In thousands)
(Unaudited)
                                       Three Months Ended  Year Ended
                                       December31,        December31,
                                       2013      2012      2013       2012
Reconciliation of Adjusted EBITDA
andDistributable cash flow from net
income:
Net income                             $ 34,512  $ 15,178  $ 117,063  $ 62,645
Depreciation and amortization          5,600     3,828     20,407     15,901
Income tax expense                     383       336       1,087      576
Interest expense, net                  2,220     558       7,363      1,621
(Gain) loss on disposal of fixed       (176)     —         (329)      13
assets
Gain on property casualty              (303)     —         (303)      —
indemnification
Other income                           (1)       (66)      (13)       (140)
Adjusted EBITDA                        $ 42,235  $ 19,834  $ 145,275  $ 80,616
Interest expense, net                  (2,220)   (558)     (7,363)    (1,621)
Income tax expense                     (383)     (336)     (1,087)    (576)
Maintenance capital expenditures       (1,216)   (1,276)   (3,111)    (3,682)
Distributable cash flow                $ 38,416  $ 17,664  $ 133,714  $ 74,737
Cash distributions (1)                 $ 20,469  $ 15,492  $ 71,909   $ 58,560
Distribution coverage ratio            1.88x     1.14x     1.86x      1.28x



    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:
Adjusted EBITDA for year ended December 31, 2013            $ 145,275
Total debt, including current portion at December 31, 2013  $ 190,800
Debt/Adjusted EBITDA Ratio                                  1.31x

SOURCE Oiltanking Partners, L.P.

Website: http://www.oiltankingpartners.com
 
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