Welcome to the 2019 Second Quarter Conference Call for Genesis Energy. Genesis has four business segments. The offshore pipeline transportation segment is engaged in providing the critical infrastructure to move oil produced from the long-lived world-class reservoirs from the Deepwater Gulf of Mexico to onshore refining centers.

The sodium minerals and sulfur services segment include trona and trona-based exploring, mining, processing, producing, marketing and selling activities as well as the processing of sour gas streams to remove sulfur at refining operations.

The onshore facilities and transportation segment is engaged in the transportation, handling, blending, storage and supply of energy products including crude oil and refined products. The marine transportation segment is engaged in the maritime transportation of primarily refined petroleum products.

Genesis operations are primarily located in Wyoming, Gulf Coast States and the Gulf of Mexico. During this conference call management may be making forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934.

The law provides Safe Harbor protection to encourage companies to provide forward-looking information. Genesis intends to avail itself of those Safe Harbor provisions and directs you to its most recently filed and future filings with the Securities Exchange Commission.

We also encourage you to visit our website at genesisenergy.com where a copy of the press release, we issued today is located. The press release also presents a reconciliation of non-GAAP financial measures to the most comparable GAAP financial measures. At this time, I would like to introduce Grant Sims, CEO of Genesis Energy, L.P. Mr.

Sims will be joined by Bob Deere, Chief Financial Officer; and Ryan Sims, Senior Vice President, Finance and Corporate Development..

Good morning and welcome to all. As mentioned in this morning's release, we are pleased to announce total segment margin of $184.1 million and a calculated bank leverage ratio 4.96 times for the second quarter. Leverage is down from 5.63 times just one year ago.

In fact, this is the first time and close to three years where Genesis has achieved a leverage ratio below 5. Despite several unexpected challenges over the previous 12 months, our diverse and market leading businesses continue to perform, allowing us to naturally deliver our balance sheet, a process we believe continues in the coming years.

By achieving a bank leverage ratio below 5, we will now benefit from a 25 basis point reduction in the pricing grid associated with the outstanding amounts under our senior secured credit facility.

This one combined with the Federal Reserve's recent 25 bps reduction of the Fed funds rate and potential further raising will translate into meaningful reductions in our borrowing costs on our floating rate debt which stood at $967 million that quarter end. In fact, this outstanding debt is down some $340 million from the year ago quarter.

We received approximately $290 million for the sale of our Wyoming assets. So over the last 12 months, we've managed to reduce total borrowings under our revolver by an additional $50 million.

During the quarter, our offshore pipeline transportation segments have consistent volumes across our asset footprint and continues to benefit from increasing activity in the deep water, including both infill drilling and new standalone development opportunities.

The quarter was highlighted by first oil flow in late June from the log operated Buckskin development. Buckskin is a subsea tie back to the existing Lucius production platform and is 100% dedicated for the life of its leads to our SEKCO system, our longest lateral in the Gulf of Mexico into our Poseidon system for ultimate transportation to shore.

The development has an anticipated peak production rate of 30 kbd and we expect to see a meaningful financial impact as production ramps throughout the second half of 2019. Importantly, the Buckskin development required zero capital expenditures from us and highlights the significant operating leverage of our offshore footprint.

It is also representative of the types of developments and opportunities we are seeing across our market leading asset base in the central Gulf of Mexico. In early July, we experienced temporary throughput disruptions on our offshore systems as the producing community shut in production as Hurricane Barry.

We experienced no permanent damage to our assets but do expect some negative financial impact to our third quarter results. Barry was an anomalous storm in terms of our operations in the Gulf, rather than a typical storm which approaches from the south and disruption normally only half some of our throughput.

Barry actually formed in Alabama moved south and then west before turning north. Temporarily shutting in almost all production in the central Gulf of Mexico. Given his path and speed, most production would have been expected to be offline for three or four days.

However residual non-very related weather delays the sake remaining of production and transportation facilities by one day. Once our and other folks were to redeploy offshore locations, a third party provider the largest communication system in the Gulf experience issues restoring service.

As a result, what we would have expected to be a three or four day – three to four day event turned into an eight to nine day event affecting some 90% of the throughput on our offshore systems.

While we hope we do not experience any additional downtime in the third quarter, any additional disruptions could further negatively affect the third quarter’s results. We remain on track to exit 2019 with an incremental 40 to 50 kbc of long term dedicated volume across our footprint relative to the fourth quarter of 2018.

Our team continues to work diligently to finalize agreements to add significant incremental volumes we have previously disclosed.

The fundamentals and activity levels in the Gulf of Mexico remain very strong and we continue to be excited about our ability to add incremental dedicated volumes to our market leading position, with little to no capital required. During the quarter, our onshore facilities and transportation segment performed as expected.

Rail volumes delivered from Canada to our Baton Rouge complex resumed in April with increased volumes in May, June and July that exceeded the minimum take-or-pay volumes which allowed our main customer to utilize all of the pre-paid credits they accrued in the first quarter.

However, we expect August and September volumes to ramp down as the current near term differential does not support movements, but in the aggregate, we should see similar volumes in the third quarter as we experienced in the second quarter.

We continue to monitor the easing of production curtailments by the government of Alberta and as they continue to reduce the self-imposed production curtailments through the remainder of 2019. We believe market conditions should exist or return to fourth quarter 2018 volumes by the end of 2019 and into 2020 in our Baton Rouge complex.

Turning to our sodium minerals and sulfur services segment. During the quarter, we experienced lower production volumes due to a longer than anticipated plan move of our longwall mining machine. During the move, we proactively completed several additional debottlenecking projects and maintenance related items.

The longwall move along with the additional work we perform has successfully been completed and we expect to run at or near slightly expanded full capacity for the foreseeable future.

We remain on track for our full year estimate in our soda ash business for 2019 as we continue to expect higher volumes along with stronger export pricing in the second half of the year.

Our view of the international market supply demand balance for the remainder of the year remains unchanged and we believe prices are likely to strengthen in the coming years.

Our refinery services business performed as expected despite some unexpected challenges, including unplanned turnarounds and production issues at a number of our host refineries. So far in the third quarter our refinery services business has experienced some supply chain disruptions beyond our control to some of our South American customers.

If not restored in short order, third quarter bargain could be negatively affected by a million or two. Our marine transportation segment continues to perform as expected and segment margin increased slightly for the sixth quarter in a row.

As previously discussed, we continue to remain optimistic that we have seen the bottom for the quarterly segment contribution from our entire fleet of assets, and recent strength in near term day rates and utilization rates is reflective of an improving market.

In summary, our businesses generated financial results that provided 1.39 times coverage to our common unitholders, inclusive of a full quarter of cash distributions paid to our preferred unitholders, and a sequentially decreasing leverage ratio below 5.08 times to 4.96 times.

Our target coverage ratio, including all preferred cash distributions, remains 1.4 times to 1.6 times and we expect our quarterly distribution rate will remain at $0.55 per common unit for the foreseeable future.

As we look towards the second half of the year, it is likely we will end up towards the lower end of our previous adjusted EBITDA guidance for 2019 of $685 million to $715 million.

Notwithstanding generally non-recurring challenges which can arise in any quarter unless the noise from the first half of the year, I mean largely in the past other than a couple of things mentioned earlier, the long term fundamentals across our businesses are strong and appear to us to be getting stronger.

We continue to believe the fourth quarter of 2019 remains more indicative of our businesses going into 2020. And we are confident that the growth anticipated from our existing footprint will keep us on track to naturally deliver our balance sheet and achieve our long term leverage target of four times in the coming years.

We intend to be prudent, diligent and intelligent and achieving and maintaining the financial flexibility to allow the partnership to opportunistically build long term value for all our stakeholders without ever losing our commitment to safe, reliable and responsible operations.

As always, we'd like to recognize the efforts and commitment of all those with whom we are fortunate enough to work. With that. I'll turn it back to the moderator for any questions..

Thank you. [Operator Instructions] Your first question comes from a line of TJ Schultz..

Great. Hey, Grant, this is TJ. I think just first, as you think about offshore, when would you expect to finalize adding some of those dedicated volumes in the 2020, 2022 timeframe? I think you’ve talked in the past about some specific dedicated volumes in 2020 and the 80,000 barrels per day range.

So just trying to understand when the next potential bucks can type zero, CapEx time can occur?.

I think that again, we gave the estimate, I think in the last quarterly call, I think that we’re basically dotting I’s and crossing the T’s on a number of those.

As a practical matter, I mean due to logistical reasons of proximity to our existing systems and the capacity that we have where some of our competitor, pipelines don’t have incremental capacity, I think it’s – there is probability of us not getting to the finish line on a contracted basis is basically zero on most of the things that we mentioned last time.

So I do think that we have incremental volumes coming in 2020, and then even larger ones in 2021, especially with towards the end of 2021 or early 2022 with Mad Dog 2 coming on. So our ramp that we intimated and gave some guidance on in previous quarterly calls, I think is still very much impact..

Okay, understood. And then the leverage plan.

You talked about getting the four times in the coming years, as you think about your ability to pursue some potential growth projects, whether that’s expansion of soda ash or additional offshore pipes? Just your thoughts on the ability to finance some of this more meaningful growth, should it arise just in the context of your average goals would be helpful? Thanks..

I think that certainly in the offshore when combined with the downstream economics that to the extent that and these are discretionary expenditures, but the aggregate return profiles of what we would be is incremental capital will be spend in the Gulf of Mexico. Again taking into account the downstream economics, there less than five times deal.

So including the longer term take or pay to guarantee that if you will not take timing or reserve risk in most cases.

So, we view those as in essence financeable under almost any kind of scenario with the flexibility that we have under revolver where we would get material project, EBITDA credit from the strength of the take or pay agreements that we have with people. On the other opportunities in the soda ash business.

I think that we have discussed the grinder optimization project which we do believe that at the end of the day on a run rate basis, it’s less than a five times deal. The difficulty there is a little bit that it is a three year construction period.

So we would look at other ways to potentially finance that without recognizing that we have a three year capital span and it would kind of bridges if you will to where we’re closer to the incremental EBITDA contribution that we would expect from it the three years once we have idea..

Got it. Understood. Thanks..

Thank you..

Okay, thank you. And your next question comes from a line of Shneur Gershuni..

Actually, Shneur Gershuni but good morning, everyone. Just a couple of quick questions here. Maybe partially to follow-up on TJ’s questions.

So when you’re thinking about FID in the project and so forth, are you sort of thinking about like a sales leaseback type of arrangement or some of those JV structures that we saw with target and some of the others? Is that sort of the structure that you’re thinking about? Or are we thinking about it incorrectly?.

I’m not sure that we’re precluding any structures at this point. But what we are trying to do is come up with a structure that we feel allows us to start the project, get it under construction, recognizing that there is a three year lag before incrementally, but it does not conflict with our otherwise the leveraging goals.

So I’m not prepared at this point to discuss the various structures that are under consideration, but that’s what we’re trying to achieve. Shneur..

Okay. That makes perfect sense. And I think the last time we met that you had noted that you were updating the original expansion plans.

I think we’re done in 2013 or 2014, somewhere in that time zone? Has that happened, are the cost materially higher and so forth? I’m just kind of curious if you’ve sort of at least made it through that the revaluation process?.

I think that– we’re well into that and that we believe that we’re in the color plus or minus $325 million range in today’s dollars to fully affect the 700,000 time plus expansion of Granger..

Okay. And then just switching gears a little bit here, nice to see the debt balance come down and so forth.

You sort of talked about the lower you triggered the lower rate by getting under five times, just given where the 10 years at today, does it make sense at this point right now, to possibly turn out a portion of what’s your facility just sort of take advantage of where rates are today, broadly speaking?.

I mean, I think on any kind of historic basis that there’s clearly been a fairly dramatic recovery in energy, unsecured paper. On the other hand, it’s still a couple hundred bits wide where we could price currently in.

We do have a fairly clear in our mind fairly clear path forward is paying down continuing to pay down over the coming years’ outstanding revolver.

So other than some existing maturities that we think that we could roll and extend by doing an early call on reasonably flat where we – the current coupon on them I don’t see this we’re in a big – there’s a lot of impetus for us to firm out our statements on the revolver..

So you’re effectively saying you’re comfortable with the amount that’s drawn on the revolver today that it just given where commodity prices have shaken, they’ve added a lot of volatility, and so have drilling plans and so forth.

You don’t think it’s prudent to take down a little bit further?.

We don’t have any concerns about the current outstanding so..

All right, perfect. Thank you very much, guys. Appreciate it..

Thank you..

Thank you. [Operator Instructions] Our next question comes from line of Ethan Bellamy..

Hey guys, good morning. You seem pretty confident about soda ash pricing in the medium and long term.

Could you peel the onion for us there a little bit and will that hold if we see worsening globally economic condition?.

Yeah, I mean, I don’t know that we are under a significant worldwide recession, but I think that, there could be some reduction and at least the demand growth, but again, we see demand growing. Not necessarily in the EU, the U.S. or China proper, but certainly in Southeast Asia and glass demand as well as lithium demand and in South America.

So as long as we have increasing demand with no increasing whether or not it’s 100,000 tons a year, 900,000 tons a year, without incremental natural supply coming on, we still see that the markets very balanced. We’re currently aware of at least two, not inconsequential supply disruptions.

So, which are going to be ultimately solved and hopefully for their cycles sooner rather than later, but we certainly see the demand supply balance in the cost advantage of natural production vis-à-vis synthetic production which is currently as a practical matter serving the, the incremental demand is that fundamental is fundamentally isn’t changing in our view at this point..

Okay, that’s helpful. And then in the Marine business, it looks like your utilization is held up and looks pretty good there.

Should we expect that going forward and what does the rate environment look like right now?.

I’d say that, yeah.

We expect the utilization to hold up based upon fundamentals so I think that we’ve talked in previous calls relative to IMO2020 could actually for our style and barge or England barge certainly with the internal heaters could added incremental demand because of getting the right barrel right intermediate refined barrel to the right refinery location to meet the IMO standards.

So we think utilization remains high. We are seeing at the margin incrementally increasing spot rates, which I think the litmus test that we’ve actually had some customers talk start talking to us about firming up, which means and how we view that as in their mind, they believe that rates are going to go up so they’re trying to lock in.

So I think fundamentally, we feel reasonably comfortable that as we’ve said, we put out a bottom it’s baby steps for the six consecutive quarter in a row. We’ve had marginally improved performance out of the overall side. But so, but we’ve also been cited that we don’t expect it to be running back to 2014, 2015 levels anytime soon..

Thanks, Grant. One last question. Very big picture, there are a lot of assets for sale as an IPO log jam.

Do you guys, are you actively looking at the M&A or consolidation opportunities that are out there?.

We’re not active and I mean, I don’t make a lot of comments on that. But I would say that we’re we don’t look at things like that.

We believe that we are focused on continuing to deliver on our promises and taking advantage of the opportunities that we have off of our existing footprint which we think the return profiles in the long term value creation are far superior to participate in frothy M&A activities..

Good to hear. Thank you very much..

Okay, thank you. [Operator Instructions] There are no more questions at this time, presenters..

Okay, well, thanks everyone and I will talk to you in 90 days or so. Thank you..

Thank you. That concludes today’s presentation. We may ask you to disconnect your lines..