Welcome to the 2019 Fourth 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.

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Okay. The Sodium Minerals and Sulfur Services segment includes 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, the 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 and 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. For the quarter, our diversified businesses in total performed slightly better than our expectations and we ended the year towards the high-end of our revised annual guidance for adjusted EBITDA.

In our offshore pipeline transportation segment, we saw strong volumes across our platforms and pipelines as newer projects continued to ramp and sub-sea tiebacks and infield drilling more than offset any natural decline from our dedicated fields.

During the quarter we announced new contracts with Murphy Exploration & Production Company, USA, subsidiary of Murphy Oil, to support their operated Khaleesi / Mormont and Samurai field developments through the new King's Quay floating production system.

The King's Quay FBS will have the capacity to produce up to 80,000 barrels per day of oil and up to 100 million cubic feet of gas per day from the field development starting in mid-2022.

The King's Quay FBS will tie and subside or 100% own Shenzi lateral and the crude oil production will then be delivered 50% or 100% owned Cameron Highway system and 50% to 64% owned Poseidon crude oil system for delivery all the way to shore.

The associated gas production will tie in subsea and be gathered on our 100% owned Anaconda system, which ties into our 25.6% – 25.7% owned Nautilus gas system for transportation to shore.

Given the multiple opportunities for Genesis to handle both the oil and gas production from the King's Quay FBS and if the producers are able to achieve their anticipated volumes, we would reasonably expect to see a benefit of approximately 50 million to 60 million of annual incremental EBITDA associated with the King's Quay FBS.

During the quarter, the producing community also made a couple of significant announcements in the Gulf of Mexico. Chevron announced their Final Investment Decision or FID to sanction their $5.7 billion anchor project in Green Canyon.

Talos Energy and as they were acquiring a broad portfolio of Gulf of Mexico producing assets, exploration prospects and acreage from a variety of smaller companies for approximately $640 million.

We believe all of these announcements are indicative of the near, medium and long-term opportunity sets in the Gulf of Mexico and as the economics and production profiles of these projects are competing favorably against other opportunities sets in the company's portfolio.

Additionally, significant upstream players are seemingly dismissing any political uncertainty around the future of the Gulf of Mexico in 2021 and for decades to come. Our team continues to finalize agreements to move the total of what is anticipated to be an incremental 20,000 barrels per day to 25,000 barrels per day of new production on Poseidon.

These volumes are expected to come online in mid-2020 and will be life of lease dedications from several new tie back developments, so it will flow through one of our wholly owned laterals that connect subsea into Poseidon. In addition, we expect to see volumes from BP’s Atlantis Phase 3 development in the second half of 2020.

And we'll benefit from a full year production from LLOG’s buckskin development this year. No capital will be required by us to provide these incremental movements in 2020.

As a result, we remain on track with our third quarter comments and reasonably expecting segment margin in our offshore pipeline transportation segment to be up approximately 20 million to 30 million year-over-year in 2020.

As a reminder, these incremental volumes in 2020 are in advance of BP's Argos production facility which is scheduled to come online in mid-to-late 2021 and Murphy's King Quay FBS, which we just talked about, which is scheduled to come online in mid-2022, both of which will have a meaningful positive impact for our offshore pipeline transportation segment margin going forward.

Looking out longer-term, we remain in active discussions with the multiple producers regarding potential new developments that could come online in the 2023, 2025 timeframe.

These opportunities would be similar in size and scale as other recently announced projects, and could represent meaningful midterm opportunities for us including discretionary extensions and expansion of our existing assets.

We would reasonably expect these producers to come to an FID on these new developments sometime over the next 12 months to 24 months. However, unless and until the parties enter into a definitive agreement there is no direct guarantee that we will be successful in capturing some or any of these volumes.

In our onshore facilities and transportation segment, we experienced a ramp in crude by rail volumes throughout the quarter, as a result of curtailment relief granted in Alberta and we exited the year averaging approximately one train a day.

We have experienced a continued ramp above that in January and February and received nominations for March consistent with the first several months of this year. We have seen and expect no significant slow down or changes to volumes as a result of operating conditions on either the Canadian Pacific or the Canadian National railroads.

Furthermore, we have not seen any impacts from a fire at Exxon's Baton Rouge refinery last week. We continue to monitor all these situations to see if they might potentially impact volumes in the first half of 2020, but at this point we expect none.

During the quarter, we also saw increased volumes on our Texas pipeline as a result of increased offshore volumes that feed our Texas City terminal.

We remain encouraged with the additional activity in and around the Texas City and Houston markets, and believe there will be opportunities to further optimize our onshore pipelines and terminals with the increasing volumes from our offshore pipelines.

Our Marine Transportation segment continued to perform as expected and reported increased segment margin for the eighth consecutive quarter. We experienced strong utilization and improving day rates across our inland and offshore fleets.

IMO 2020 appears to be having a positive impact on our inland, black oil barges as refiners need to get the intermediate refined barrel to the right location. Upwards of 90% of our barges are typically contracted to provide services to refiners moving their intermediate products from one location to another.

The Corps of Engineers is undertaking significant repair and maintenance of locks on the Mississippi River and its major tributaries this summer. As a result, we anticipate a near-term reduction in “practical supply” as movements in and out of such region take longer and are less efficient than normal.

As a result, demand and day-rates in our brown water fleet should improve. We are also seeing increased demand for our blue water vessels. Our clean fleet is benefiting from certain competitive dynamics on the East Coast as well as more required product movements because of the closure of refining capacity in Philadelphia.

Our larger offshore vessels are benefiting from increased movements of crude oil as more and more barrels reach the Gulf Coast, where the Gulf Coast refiners basically have limited incremental demand for those types of barrels. Turning to our sodium minerals and sulfur services segment.

Our legacy refinery services business performed as expected in the quarter, and importantly it appears most of the production and market interruptions it faced in the second half of 2019 are largely behind us as we move into 2020.

As we mentioned on our third quarter call, we were then seeing signs of slowdown in the demand for soda ash globally, particularly in Asia.

We believed this was tied mainly to the ongoing economic uncertainty around the U.S.-China trade war, but also to decelerating GDP resulting from tightening monetary policies by most central banks in early 2019, which policies appear to have been reversed in the second half of last year.

Nonetheless, this demand trend accelerated into the end of the quarter as customers continued to be longer and respective finished goods, like flat glass and soda ash inventory. At the same time, it appears that Genesis and the other U.S. producers made and marketed more soda ash in the fourth quarter compared to the years earlier quarters.

As a result, price fell in the export markets to clear this demand/supply imbalance, and we experienced our lowest quarter of financial contribution from our soda ash operations, of just over $38 million, since we acquired the business in 2017.

Unfortunately, most contract prices for the subsequent year are negotiated in the preceding December and January timeframe. Even though most domestic prices are set on a multi-year basis, many subject to caps and collars, our export contracts and negotiated prices are much shorter in duration.

Given the dynamics going into the price negotiations described above, we expect export prices, which represent approximately half of our total annual sales, to be significantly lower in 2020 than they have been in the prior 2.5 years since we acquired the operations.

Experience has shown, because of the nature of the mix of contracts, it can take anywhere from four quarters to eight quarters for the underlying fundamentals to get back on historical trend.

During the first quarter 2020, we have continued to monitor the impacts from the coronavirus in China and the potential impact that may have on synthetic production of soda ash demand in the region. China like the U.S.

is a net exporter of soda ash and synthetic production out of China competes head-to-head with our exports in natural production from the U.S. It is too early to tell that to determine the net effects of reduced supply from and reduce demand in China and potentially reduce demand from other economies throughout Asia.

Having said that, we continue to believe in the long-term fundamentals of the business and the cost competitive advantage natural soda ash enjoys over synthetically produced product. We remain confident that the market will need, and we can easily and profitably place, the incremental tons coming from our Granger expansion beginning in mid-2022.

According to third party reports, soda ash demand outside of China is estimated to increase approximately 4 million tons between 2019 and 2023 and approximately 9 million tons between 2019 and 2028.

To put it in perspective, our Granger expansion of an incremental 700,000 or so tons per year represents less than 20% of the estimated demand increase between now and 2023 and only some 8% of the estimated demand increase through 2028.

Furthermore, some of our competitors including but not limited to Solvay and general resources are also seeing these global demand forecast and thus have announced our own respective natural production expansions that would add incremental natural production to the market over the next few years.

Even with all of these proposed expansions, natural gas production is expected to represent somewhere between 25% and 30% of overall supply to the global market, thus requiring higher cost synthetic production to be produced to satisfy the increasing future demand. Therefore, we're competent that prices will rise over the period of 2019 to 2028.

While our soda Ash business will no doubt be significantly weaker this year, our belief in the longer term fundamentals reinforce our view. We will work through these broader economic uncertainties and get back to the historical trend line for demand growth and pricing.

As we look beyond 2020, we have a very good line of sight on significantly improving financial performance. First, we would reasonably expect our existing soda ash operations to return to trend and add some $40 million or $50 million a year by 2022 at the latest.

Argos is scheduled to come on-line in the second half of 2021, which represents potentially $30 million to $40 million of incremental annualized EBITDA. King's Quay is scheduled to come on-line in the first half of 2022, which represents potentially $50 million to $60 million of incremental annualized EBITDA.

Finally, assuming a return to trend on soda ash pricing, the Granger expansion is expected to add potentially $60 million of incremental annualized EBITDA beginning in mid-2022.

Therefore, given a starting point of being very close to cash flow neutral this year as we described in the earnings release and taking into account the meaningful new EBITDA discussed above, we believe we will be able to de-lever our balance sheet and restore and maintain our financial flexibility to capitalize on future discretionary opportunities.

As always, we intend to be prudent, diligent and intelligent in 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..

[Operator Instructions] Your first question comes from the line of Shneur Gershuni [UBS Investment Bank]..

Hi. Good morning, everyone. Maybe we can start off with the soda ash guidance for this year and do appreciate all the color that you gave. I was trying to understand how you're accounting for the coronavirus.

Is it – are you saying from where you are right now, you're basically accounting for the worst of the inventory build right now and that in theory China's position as a net exporter could add – if it recovers faster, is that the recovery or so of some form that, that could make things better or worse from where you are? I'm just trying to understand how we should be thinking about the impact given that China as a net exporter?.

At this point our implied guidance on soda ash is independent of any effects of the coronavirus. We just don't know export data out of China is do, generally speaking we’re good at the 20th to the 24th after the sub-preceding month and so we just haven't seen it yet.

So we do know that there are several large synthetic soda ash production facilities in Wuhan providence, which we would anticipate are completely shutdown. But again, we don't know the net effect within the dynamics within the Chinese economy. So as you stated or as in the question, yes, the kind of the U.S.

domestic exporters' coming out typically the Pacific Northwest, the marginal competition is with synthetic production coming out of China into the non-China Asian markets..

Okay. So effectively the way to think about it, as long as they're – the net exporting position stays roughly the same, even if their imports are down a lot. But if their exports are down a lot as well too, the impact could be effectively muted and we should sort of be thinking of more of the global market.

That's sort of the right way to think about it?.

We think that's sort of the right way to think about at this point..

Okay, great. Just two follow-up questions. If I remember correctly from your prepared remarks, you sort of talked about two, $620 million of cash outflows for this year.

I was wondering if you can sort of walk us through the assumptions, I'm trying to understand, is the Granger JV fully funded from a CapEx perspective for 2020 and that's why the outflows are that low?.

That's correct. We believe that the – given the structure of the redeemable preferred that we put in place that it doesn't stress the internal balance sheets, there's no cash payments associated with that during the construction period. And the sources of the funds are under draws under if you will, or issuance of the redeemable preferred.

So as we look at it and how we manage the business and how our banks think about it also is basically there are recurring obligations in the zip code with $620 million and that includes all of the cash taxes, senior secured interest expense, all of the run rate on the senior unsecured on the bond complex, maintenance capital spent, the preferred distributions and common distribution.

So on top of that, we have around $25 million worth of, as we said around $25 million worth of budget to growth capital and around $20 million of AROs, which are really kind of non-recurring and it's – the majority of which is associated with an asset, which we think that we can sell either by the end of 2021 or certainly, I mean, 2020 or certainly in 2021 and a multiple of those encouraged.

So kind of at the mid-point of our EBITDA guidance that's where we think that we are cash flow neutral..

Okay. And one final question if I may. If I recall, you did a big financing earlier this year.

If you reduced all of your upcoming maturities and reduced your credit facility balances to almost zero, is that sort of a correct characterization that there's really no maturity or lingering type of issues that we need to be thinking about in the near term while you go through the soda ash issue?.

The senior secured facility as it currently exists has a term going through I think may of 2022 and the first maturity of a bond is sometime in 2023. I'm not sure what month in 2023. So what we did with the refinancing was basically issued 28s and called the 22s and stuck them at the end of the maternity ladder..

And you took down your balance on your revolver as well?.

No. It was basically equal to the issuance that we redeem..

Got it. Perfect. Alright, thank you very much. That does it for me..

Thank you..

Your next question comes from the line of Kyle May [Capital One Securities]..

Good morning. I wanted to ask about your assumptions for crude-by-rail volumes coming out of Canada. Based on the information in the press release, it sounded kind of lumpy through the year.

So just wondering if you could walk us through your assumptions and then how we should think about this segment of the business beyond 2020?.

Well that in part is why we ranged the overall EBITDA here.

I think as we said on the third quarter call, if we just average one train a day, which is approximately 70,000 barrels a day for the year of 2020, we would expect everything else the same, that the contribution margin from onshore facilities and transportation would be $10 million higher than it was in 2019.

So we are ranging it a little bit as you look in the aggregate from the $640 million to $680 million. At this point, as I said in the prepared remarks and the press release, we have a clear visibility through the first quarter, but we've not yet received nominations for April.

And given just the dynamics of pipelining out of Canada, as we mentioned in the press releases, there's less diluent required, therefore there's more capacity in the second and third quarter typically. And so we don't know yet how that may or may not affect the economics.

But suffice it to say, in the first quarter we’re averaging over the 70 kbd i.e., over the one train a day and we would expect that in the fourth quarter also, we’re just a little bit uncertain on the second and third quarter..

Got it. That's helpful. And then appreciate the EBITDA contribution you provided for some of the long-dated projects.

But just wondering if you can give us an update on your thinking around the leverage ratio projections or when you may hit some of the targets you have in mind?.

Yes, what we didn't kind of expect was the – while we consider it to be a cyclical fall and contribution of soda ash which we'll recover, but, so if – again, if you kind of do the arithmetic, actually in 2021 or 2022 with the addition of the everything that we threw out there with and everything else the same, we would, there's close to 200 million of incremental EBITDA.

So if everything else is the same, you can kind of get your hands around the arithmetic of being paying down cash, at the same time the denominator of trailing EBITDA increasing.

So it's probably in the 2021, 2022 type timeframe that we start getting down into the low-4% from our perspective of managing the leverage calculation or the leverage covenant..

Okay. Got it. That's all for me..

Thank you..

Your next question comes from the line of TJ Schultz, [RBC Capital Markets]..

Hey, good morning.

Just a follow up on soda ash, you mentioned I think due to the mix of contracts that the recoveries historically can take from four to eight quarters, so with that, you point to a recovery in cash flow by 2022, so are you locked-in now for the next two years or could you reset contracts at the end of this year and 2021 is kind of still to be determined?.

Yes, it's a good question and I will put some more color around it. As I said in the – as we said in the prepared remarks, and then in the press release, the domestic contracts are typically under call it two to three, sometimes five-year contracts, most of which are subject to annual redeterminations.

And most of those are subject to a gap some colors around the pricing. So those are kind of fixed if you will within a band for a period of time. As a general proposition, as I said half of our sales go to export markets.

And then, this is very general but half of it goes – half of that, so a quarter of the total sales going into Latin America, which typically are one-year contracts. Not all, but typically are one-year contracts. And then the other half of the exports or quarter of total sales go into Asia and those are typically three to six month contracts.

So in any given year, contract-year, the only thing that can really move or be re-determined primarily and then this is very general, but are the agent contracts if you will, but then after four quarters and you can reset the Latin American contracts to the higher price.

So I'll just give a little historical perspective, I'm not going to talk about the absolute price levels, because I'm uncomfortable doing that, given that there are only five domestic suppliers and other – we have other arrangements for exports through ANSAC.

But the – in the last two occurrences where we saw export prices dip this low within 12 months, prices had recovered 15% within the subsequent 12 months they had recovered an additional 12% to 15%.

So I think that, that's why we said typically we've seen historically that it takes – it can take because of the nature of the contracting and the terms can take four to eight quarters before we can get back on trend..

Okay, great. Thanks for that. I have just two quick clarification on some of the guidance you gave for 2020. First, what's the maintenance CapEx to be spent for 2020 that you include in the cash obligations? And then what cash flow impact in 2020 is there from re-contracting the Phoenix? Thanks..

The maintenance capital spent as currently budgeted is around $60 million to be spent in 2020. The American Phoenix, I would say in today's market probably, but it's directionally correct because six or nine months ago it was probably $20,000 a day re-contracting risk.

I would say today it's somewhere in the order, if it worked to re-price in today's market, I think it's probably close to a $5,000 a day. So not a large in the overall scheme of things, not a large amount of re-contracting risk..

Great. Thanks, Grant..

Your next question comes from the line of Sunil Sibal, [Seaport Global Securities]..

Yes. Hi. Good morning guys.

I just want to see you remind us, where do your covenants, say it on the leverage metrics for the next few quarters?.

It's at 5.5% for the remaining term of the senior secured credit facility..

Okay. And you are low-5% at the end of 2019, considering, there be some more variability with all that's going on in China and all that.

Could you talk a little bit about the levers you may have a level to a kind of scale comfortably within 5% – 5.5%?.

We say even in stress situations to the downside, that we don't perceive any issues, we’d sustain comfortably within the 5.5%..

Okay. That's all I had. Thanks..

Thank you..

There are no further questions at this time..

Okay. Thanks everyone and we'll talk to you soon..

This does concludes today's conference. You may now disconnect..