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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-36674 
USD PARTNERS LP
(Exact Name of Registrant as Specified in Its Charter)
Delaware 30-0831007
(State or Other Jurisdiction of Incorporation
or Organization)
 (I.R.S. Employer
Identification No.)
811 Main Street, Suite 2800
Houston, Texas 77002
(Address of Principal Executive Offices) (Zip Code)
(Registrant’s Telephone Number, Including Area Code): (281291-0510
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Units Representing Limited Partner InterestsUSDPNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  
As of May 2, 2022, there were 33,379,431 common units outstanding.




Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q, or this “Report,” to “USD Partners,” “USDP,” “the Partnership,” “we,” “us,” “our,” or like terms refer to USD Partners LP and its subsidiaries.
Unless the context otherwise requires, all references in this Report to (i) “our general partner” refer to USD Partners GP LLC, a Delaware limited liability company; (ii) “USD” refers to US Development Group, LLC, a Delaware limited liability company, and where the context requires, its subsidiaries; (iii) “USDG” and “our sponsor” refer to USD Group LLC, a Delaware limited liability company and currently the sole direct subsidiary of USD; (iv) “Energy Capital Partners” refers to Energy Capital Partners III, LP and its parallel and co-investment funds and related investment vehicles; and (v) “Goldman Sachs” refers to The Goldman Sachs Group, Inc. and its affiliates.
Cautionary Note Regarding Forward-Looking Statements
This Report includes forward-looking statements, which are statements that frequently use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “position,” “projection,” “should,” “strategy,” “target,” “will” and similar words. Although we believe that such forward-looking statements are reasonable based on currently available information, such statements involve risks, uncertainties and assumptions and are not guarantees of performance. Future actions, conditions or events and future results of operations may differ materially from those expressed in these forward-looking statements. Any forward-looking statement made by us in this Report speaks only as of the date on which it is made, and we undertake no obligation to publicly update any forward-looking statement. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from those in the forward-looking statements include: (1) the impact of the novel coronavirus (COVID-19) pandemic and related economic downturn and governmental regulations; (2) changes in general economic conditions and commodity prices, including as a result of the invasion of Ukraine by Russia and its regional and global ramifications; (3) the effects of competition, in particular, by pipelines and other terminal facilities; (4) shut-downs or cutbacks at upstream production facilities, refineries or other related businesses; (5) government regulations regarding oil production, including if the Alberta Government were to resume setting production limits; (6) the supply of, and demand for, terminal services for crude oil and biofuels; (7) the price and availability of debt and equity financing; (8) actions by third parties, including customers, lenders, construction-related services providers, and our sponsors; (9) hazards and operating risks that may not be covered fully by insurance; (10) disruptions due to equipment interruption or failure at our facilities or third-party facilities on which our business is dependent; (11) natural disasters, weather-related delays, casualty losses and other matters beyond our control; (12) changes in laws or regulations to which we are subject, including compliance with environmental and operational safety regulations, that may increase our costs or limit our operations; and (13) our ability to successfully identify and finance potential acquisitions, development projects and other growth opportunities. For additional factors that may affect our results, see “Risk Factors” and the other information included elsewhere in this Report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which is available to the public over the Internet at the website of the U.S. Securities and Exchange Commission, or SEC, (www.sec.gov) and at our website (www.usdpartners.com).


i


                PART I—FINANCIAL INFORMATION 
Item 1.     Financial Statements
USD PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31,
20222021
(unaudited; in thousands of US dollars, except per unit amounts)
Revenues
Terminalling services$28,185 $28,105 
Terminalling services — related party655 1,103 
Fleet leases — related party912 984 
Fleet services 24 
Fleet services — related party299 227 
Freight and other reimbursables78 156 
Total revenues30,129 30,599 
Operating costs
Subcontracted rail services3,252 3,141 
Pipeline fees6,060 6,046 
Freight and other reimbursables78 156 
Operating and maintenance3,034 2,832 
Operating and maintenance — related party2,206 2,090 
Selling, general and administrative3,223 3,056 
Selling, general and administrative — related party2,032 1,677 
Depreciation and amortization5,507 5,471 
Total operating costs25,392 24,469 
Operating income4,737 6,130 
Interest expense1,385 1,735 
Gain associated with derivative instruments(6,084)(3,076)
Foreign currency transaction loss (gain)47 (61)
Other income, net(23)(20)
Income before income taxes9,412 7,552 
Provision for income taxes421 224 
Net income$8,991 $7,328 
Net income attributable to limited partner interests$8,842 $7,204 
Net income per common unit (basic and diluted)$0.32 $0.27 
Weighted average common units outstanding27,440 27,030 

The accompanying notes are an integral part of these consolidated financial statements.
1



USD PARTNERS LP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended March 31,
20222021
(unaudited; in thousands of US dollars)
Net income
$8,991 $7,328 
Other comprehensive income — foreign currency translation552 375 
Comprehensive income
$9,543 $7,703 

The accompanying notes are an integral part of these consolidated financial statements.
2



USD PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
20222021
(unaudited; in thousands of US dollars)
Cash flows from operating activities:
Net income$8,991 $7,328 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization5,507 5,471 
Gain associated with derivative instruments(6,084)(3,076)
Settlement of derivative contracts(273)(264)
Unit based compensation expense1,237 1,512 
Deferred income taxes144 (18)
Amortization of deferred financing costs272 207 
Changes in operating assets and liabilities:
Accounts receivable(5,060)(402)
Accounts receivable — related party154 (84)
Prepaid expenses, inventory and other assets2,360 884 
Other assets — related party65 (394)
Accounts payable and accrued expenses4,034 290 
Accounts payable and accrued expenses — related party906 (25)
Deferred revenue and other liabilities(1,529)1,212 
Deferred revenue and other liabilities — related party(16)4 
Net cash provided by operating activities10,708 12,645 
Cash flows from investing activities:
Additions of property and equipment(135)(483)
Net cash used in investing activities(135)(483)
Cash flows from financing activities:
Distributions(3,518)(3,183)
Payments for deferred financing costs(13) 
Vested phantom units used for payment of participant taxes(1,052)(857)
Repayments of long-term debt(5,000)(8,000)
Net cash used in financing activities(9,583)(12,040)
Effect of exchange rates on cash21 (95)
Net change in cash, cash equivalents and restricted cash1,011 27 
Cash, cash equivalents and restricted cash beginning of period
10,923 10,994 
Cash, cash equivalents and restricted cash end of period
$11,934 $11,021 

The accompanying notes are an integral part of these consolidated financial statements.
3



USD PARTNERS LP
CONSOLIDATED BALANCE SHEETS
March 31, 2022December 31, 2021
(unaudited; in thousands of US dollars, except unit amounts)
ASSETS
Current assets
Cash and cash equivalents$4,495 $3,747 
Restricted cash7,439 7,176 
Accounts receivable, net10,773 5,688 
Accounts receivable — related party2,817 2,953 
Prepaid expenses3,206 3,857 
Inventory1,667 3,027 
Other current assets1,567 129 
Other current assets — related party264 260 
Total current assets32,228 26,837 
Property and equipment, net131,446 133,102 
Intangible assets, net45,734 48,886 
Operating lease right-of-use assets4,214 5,658 
Other non-current assets8,855 4,881 
Other non-current assets — related party2,196 2,227 
Total assets$224,673 $221,591 
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities
Accounts payable and accrued expenses$11,527 $7,621 
Accounts payable and accrued expenses — related party2,393 1,486 
Deferred revenue5,850 6,889 
Operating lease liabilities, current3,285 4,674 
Other current liabilities8,011 7,223 
Other current liabilities — related party48 64 
Total current liabilities31,114 27,957 
Long-term debt, net161,275 166,003 
Operating lease liabilities, non-current778 793 
Other non-current liabilities6,297 7,751 
Total liabilities199,464 202,504 
Commitments and contingencies
Partners’ capital
Common units (27,619,909 and 27,268,878 outstanding at March 31, 2022 and December 31, 2021, respectively)
21,835 16,355 
General partner units (461,136 outstanding at March 31, 2022 and December 31, 2021)
2,119 2,029 
Accumulated other comprehensive income1,255 703 
Total partners’ capital25,209 19,087 
Total liabilities and partners’ capital$224,673 $221,591 

The accompanying notes are an integral part of these consolidated financial statements.
4



USD PARTNERS LP
THREE MONTHS CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
Three Months Ended March 31,
20222021
UnitsAmountUnitsAmount
(unaudited; in thousands of US dollars, except unit amounts)
Common units
Beginning balance at January 1,27,268,878 $16,355 26,844,715 $3,829 
Common units issued for vested phantom units351,031 (1,052)379,726 (857)
Net income— 8,842 — 7,204 
Unit based compensation expense— 1,149 — 1,425 
Distributions— (3,459)— (3,129)
Ending balance at March 31,
27,619,909 21,835 27,224,441 8,472 
General Partner units
Beginning balance at January 1,461,136 2,029 461,136 1,892 
Net income— 149 — 124 
Distributions— (59)— (54)
Ending balance at March 31,
461,136 2,119 461,136 1,962 
Accumulated other comprehensive income
Beginning balance at January 1,703 547 
Cumulative translation adjustment552 375 
Ending balance at March 31,
1,255 922 
Total partners’ capital at March 31,
$25,209 $11,356 

The accompanying notes are an integral part of these consolidated financial statements.
5



USD PARTNERS LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION
USD Partners LP and its consolidated subsidiaries, collectively referred to herein as we, us, our, the Partnership and USDP, is a fee-based, growth-oriented master limited partnership formed in 2014 by US Development Group, LLC, or USD, through its wholly-owned subsidiary, USD Group LLC, or USDG. We were formed to acquire, develop and operate midstream infrastructure and complementary logistics solutions for crude oil, biofuels and other energy-related products. We generate substantially all of our operating cash flows from multi-year, take-or-pay contracts with primarily investment grade customers, including major integrated oil companies, refiners and marketers. Our network of crude oil terminals facilitate the transportation of heavy crude oil from Western Canada to key demand centers across North America. Our operations include railcar loading and unloading, storage and blending in onsite tanks, inbound and outbound pipeline connectivity, truck transloading, as well as other related logistics services. We also provide our customers with leased railcars and fleet services to facilitate the transportation of liquid hydrocarbons by rail. We do not generally take ownership of the products that we handle, nor do we receive any payments from our customers based on the value of such products. We may on occasion enter into buy-sell arrangements in which we take temporary title to commodities while in our terminals. We expect such arrangements to be at fixed prices where we do not take commodity price exposure.
A substantial amount of the operating cash flows related to the terminal services that we provide are generated from take-or-pay contracts with minimum monthly commitment fees and, as a result, are not directly related to actual throughput volumes at our crude oil terminals. Throughput volumes at our terminals are primarily influenced by the difference in price between Western Canadian Select, or WCS, and other grades of crude oil, commonly referred to as spreads, rather than absolute price levels. WCS spreads are influenced by several market factors, including the availability of supplies relative to the level of demand from refiners and other end users, the price and availability of alternative grades of crude oil, the availability of takeaway capacity, as well as transportation costs from supply areas to demand centers.
Basis of Presentation
Our accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim consolidated financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and disclosures required by GAAP for complete consolidated financial statements. In the opinion of our management, they contain all adjustments, consisting only of normal recurring adjustments, which our management considers necessary to present fairly our financial position as of March 31, 2022, our results of operations for the three months ended March 31, 2022 and 2021, and our cash flows for the three months ended March 31, 2022 and 2021. We derived our consolidated balance sheet as of December 31, 2021 from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Our results of operations for the three months ended March 31, 2022 and 2021 should not be taken as indicative of the results to be expected for the full year due to fluctuations in the supply of and demand for crude oil and biofuels, timing and completion of acquisitions, if any, changes in the fair market value of our derivative instruments and the impact of fluctuations in foreign currency exchange rates. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Foreign Currency Translation
We conduct a substantial portion of our operations in Canada, which we account for in the local currency, the Canadian dollar. We translate most Canadian dollar denominated balance sheet accounts into our reporting currency, the U.S. dollar, at the end of period exchange rate, while most accounts in our statement of operations accounts are translated into our reporting currency based on the average exchange rate for each monthly period. Fluctuations in

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the exchange rates between the Canadian dollar and the U.S. dollar can create variability in the amounts we translate and report in U.S. dollars.
Within these consolidated financial statements, we denote amounts denominated in Canadian dollars with “C$” immediately prior to the stated amount.
US Development Group, LLC
USD and its affiliates are engaged in designing, developing, owning and managing large-scale multi-modal logistics centers and energy-related infrastructure across North America. USD is the indirect owner of our general partner through its direct ownership of USDG and is currently owned by Energy Capital Partners, Goldman Sachs and certain of USD’s management team.

2. NET INCOME PER LIMITED PARTNER INTEREST
We allocate our net income among our general partner and limited partners using the two-class method in accordance with applicable authoritative accounting guidance. Under the two-class method, we allocate our net income and any net income in excess of distributions to our limited partners, our general partner and the holder of the incentive distribution rights, or IDRs, according to the distribution formula for available cash as set forth in our partnership agreement. We allocate any distributions in excess of earnings for the period to our limited partners and general partner based on their respective proportionate ownership interests in us, as set forth in our partnership agreement after taking into account distributions to be paid with respect to the IDRs.
The formula for distributing available cash as set forth in our partnership agreement is as follows:
Distribution TargetsPortion of Quarterly
Distribution Per Unit
Percentage Distributed to Limited Partners
Percentage Distributed to
General Partner
(including IDRs) (1)
Minimum Quarterly Distribution
Up to $0.2875
98%2%
First Target Distribution
> $0.2875 to $0.330625
98%2%
Second Target Distribution
> $0.330625 to $0.359375
85%15%
Third Target Distribution
> $0.359375 to $0.431250
75%25%
Thereafter
Amounts above $0.431250
50%50%
    
(1)Calculated as if our general partner holds the original 2% general partner interest in us, which is currently 1.6%.

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We determined basic and diluted net income per limited partner unit as set forth in the following tables:
For the Three Months Ended March 31, 2022
Common
Units
General
Partner
Units
Total
(in thousands, except per unit amounts)
Net income attributable to general and limited partner interests in USD Partners LP (1)
$8,842 $149 $8,991 
Less: Distributable earnings (2)
3,633 3 3,636 
Excess net income$5,209 $146 $5,355 
Weighted average units outstanding (3)
27,440 461 27,901 
Distributable earnings per unit (4)
$0.13 
Underdistributed earnings per unit (5)
0.19 
Net income per limited partner unit (basic and diluted) (6)
$0.32 
    
(1)Represents net income allocated to each class of units based on the actual ownership of the Partnership during the period. There were no amounts attributed to the general partner for its incentive distribution rights.
(2)Represents the per unit distribution payable of $0.1235 per unit or $0.494 on an annualized basis for the three months ended March 31, 2022. Amounts presented for each class of units include a proportionate amount of the $167 thousand distributable to holders of the Equity classified Phantom Units pursuant to the distribution equivalent rights granted under the USD Partners LP 2014 Amended and Restated Long-Term Incentive Plan.
(3)Represents the weighted average units outstanding for the period.
(4)Represents the total distributable earnings divided by the weighted average number of units outstanding for the period.
(5)Represents the additional amount per unit necessary to distribute the excess net income for the period among our limited partners and our general partners according to the distribution formula for available cash as set forth in our partnership agreement.
(6)Our computation of net income per limited partner unit excludes the effects of 1,366,747 equity-classified phantom unit awards outstanding as they were anti-dilutive for the period presented.
For the Three Months Ended March 31, 2021
Common
Units
General
Partner
Units
Total
(in thousands, except per unit amounts)
Net income attributable to general and limited partner interests in USD Partners LP (1)
$7,204 $124 $7,328 
Less: Distributable earnings (2)
3,248 55 3,303 
Excess net income$3,956 $69 $4,025 
Weighted average units outstanding (3)
27,030 461 27,491 
Distributable earnings per unit (4)
$0.12 
Underdistributed earnings per unit (5)
0.15 
Net income per limited partner unit (basic and diluted)(6)
$0.27 
    
(1)Represents net loss allocated to each class of units based on the actual ownership of the Partnership during the period. There were no amounts attributed to the general partner for its incentive distribution rights.
(2)Represents the per unit distribution paid of $0.1135 per unit or $0.454 on an annualized basis for the three months ended March 31, 2021. Amounts presented for each class of units include a proportionate amount of the $161 thousand distributed to holders of the Equity-classified Phantom Units pursuant to the distribution equivalent rights granted under the USD Partners LP 2014 Amended and Restated Long-Term Incentive Plan.
(3)Represents the weighted average units outstanding for the period.
(4)Represents the total distributable earnings divided by the weighted average number of units outstanding for the period.
(5)Represents the additional amount per unit necessary to distribute the excess net income for the period among our limited partners and our general partners according to the distribution formula for cash as set forth in our partnership agreement.
(6)Our computation of net income per limited partner unit excludes the effects of 1,418,517 equity-classified phantom unit awards outstanding as they were anti-dilutive for the period presented.


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Subsequent to the current reporting period, effective April 1, 2022 our sponsor’s general partner interest in us was exchanged for a non-economic general partner interest, our sponsor’s IDRs were eliminated and we issued 5,751,136 common units to our sponsor in connection with our acquisition of the Hardisty South Terminal. Refer to Note 17. Subsequent EventsDrop Down Acquisition of Hardisty South Terminal for more information.
3. REVENUES
Disaggregated Revenues
We manage our business in two reportable segments: Terminalling services and Fleet services. Our segments offer different services and are managed accordingly. Our chief operating decision maker, or CODM, regularly reviews financial information about both segments in order to allocate resources and evaluate performance. As such, we have concluded that disaggregating revenue by reporting segments appropriately depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Refer to Note 12. Segment Reporting for our disaggregated revenues by segment. Additionally, the below tables summarize the geographic data for our revenues:
Three Months Ended March 31, 2022
U.S.CanadaTotal
(in thousands)
Third party
$7,336 $20,927 $28,263 
Related party
$1,866 $ $1,866 
Three Months Ended March 31, 2021
U.S.CanadaTotal
(in thousands)
Third party
$7,638 $20,647 $28,285 
Related party
$2,314 $ $2,314 
Remaining Performance Obligations
The transaction price allocated to the remaining performance obligations associated with our Terminal and Fleet services agreements as of March 31, 2022 are as follows for the periods indicated:
Nine months ending December 31, 20222023202420252026ThereafterTotal
(in thousands)
Terminalling Services (1) (2)
$51,913 $37,797 $19,551 $19,551 19,551 $89,609 $237,972 
Fleet Services896      896 
Total$52,809 $37,797 $19,551 $19,551 $19,551 $89,609 $238,868 
    
(1)A significant portion of our terminal services agreements are denominated in Canadian dollars. We have converted the remaining performance obligations associated with these Canadian dollar-denominated contracts using the year-to-date average exchange rate of 0.7895 U.S. dollars for each Canadian dollar at March 31, 2022.
(2)Includes fixed monthly minimum commitment fees per contracts and excludes constrained estimates of variable consideration for rate-escalations associated with an index, such as the consumer price index, as well as any incremental revenue associated with volume activity above the minimum volumes set forth within the contracts. Also excludes estimated constrained variable consideration included in certain of our terminal services agreements that is based on crude oil pricing index differentials.
We have applied the practical expedient that allows us to exclude disclosure of performance obligations that are part of a contract that has an expected duration of one year or less.

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Deferred Revenue
Our deferred revenue is a form of a contract liability and consists of amounts collected in advance from customers associated with their terminal and fleet services agreements and deferred revenues associated with make-up rights, which will be recognized as revenue when earned pursuant to the terms of our contractual arrangements. We currently recognize substantially all of the amounts we receive for minimum volume commitments as revenue when collected, since breakage associated with these make-up rights is currently approximately 99% based on our expectations around usage of these options. Accordingly, we had $0.1 million deferred revenues at March 31, 2022 for estimated breakage associated with the make-up rights options we granted to our customers. In addition, we had $1.4 million deferred revenues associated with make-up rights at December 31, 2021.
We also have deferred revenue that represents cumulative revenue that has been deferred due to tiered billing provisions. In such arrangements, revenue is recognized using a blended rate based on the billing tiers of the agreement, as the services are consistently provided throughout the duration of the contractual arrangement, which we included in “Other current liabilities” and “Other non-current liabilities” on our consolidated balance sheets.
The following table presents the amounts outstanding on our consolidated balance sheets and changes associated with the balance of our deferred revenue for the three months ended March 31, 2022:
December 31, 2021Cash Additions for Customer PrepaymentsBalance Sheet ReclassificationRevenue RecognizedMarch 31, 2022
(in thousands)
Deferred revenue (1)
$6,889 $5,850 $ $(6,889)$5,850 
Other current liabilities (2)
$5,062 $ $2,035 $(457)$6,640 
Other non-current liabilities (2)
$7,648 $561 $(2,035)$ $6,174 
    
(1)    Includes deferred revenue of $0.1 million and $1.4 million at March 31, 2022 and December 31, 2021, respectively, for estimated breakage associated with the make-up right options we granted our customers as discussed above.
(2)    Includes cumulative revenue that has been deferred due to tiered billing provisions included in certain of our Canadian dollar-denominated contracts, as discussed above. As such, the change in “Other current liabilities” has been increased by $78 thousand and “Other non-current liabilities” presented has been increased by $118 thousand due to the impact of the change in the end of period exchange rate between March 31, 2022 and December 31, 2021.

4. RESTRICTED CASH
We include in restricted cash amounts representing a cash account for which the use of funds is restricted by a facilities connection agreement among us and Gibson Energy Inc., or Gibson, that we entered into during 2014 in connection with the development of our Hardisty Terminal. The collaborative arrangement is further discussed in Note 9. Collaborative Arrangement.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within our consolidated balance sheets to the amounts shown in our consolidated statements of cash flows for the specified periods:
March 31,
20222021
(in thousands)
Cash and cash equivalents$4,495 $3,066 
Restricted Cash7,439 7,955 
Total cash, cash equivalents and restricted cash$11,934 $11,021 


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5. PROPERTY AND EQUIPMENT
Our property and equipment is comprised of the following asset classifications as of the dates indicated:
March 31, 2022December 31, 2021Estimated
Depreciable Lives
(Years)
(in thousands)
Land$10,344 $10,298 N/A
Trackage and facilities130,257 129,242 
10-30
Pipeline32,735 32,735 
20-30
Equipment18,088 17,944 
3-20
Furniture68 67 
5-10
Total property and equipment191,492 190,286 
Accumulated depreciation(60,853)(58,045)
Construction in progress (1)
807 861 
Property and equipment, net$131,446 $133,102 
    
(1)The amounts classified as “Construction in progress” are excluded from amounts being depreciated. These amounts represent property that has not been placed into productive service as of the respective consolidated balance sheet date.
Depreciation expense associated with property and equipment totaled $2.3 million for each of the three months ended March 31, 2022 and 2021.
6. LEASES
Lessee
We have noncancellable operating leases for railcars, buildings, storage tanks, offices, railroad tracks, and land.
Three Months Ended March 31, 2022
Weighted-average discount rate
5.9 %
Weighted average remaining lease term in years
2.51
Our total lease cost consisted of the following items for the dates indicated:
Three Months Ended March 31,
20222021
(in thousands)
Operating lease cost
$1,515 $1,479 
Short term lease cost
31 44 
Variable lease cost
18 18 
Sublease income
(1,281)(1,348)
Total
$283 $193 

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The maturity analysis below presents the undiscounted cash payments we expect to make each period for property that we lease from others under noncancellable operating leases as of March 31, 2022 (in thousands):
2022$3,382 
2023147 
2024115 
2025114 
2026117 
Thereafter
505 
Total lease payments
$4,380 
Less: imputed interest
(317)
Present value of lease liabilities
$4,063 
Lessor
We serve as an intermediary to assist our customers with obtaining railcars. In connection with our leasing of railcars from third parties, we simultaneously enter into lease agreements with our customers for noncancellable terms that are designed to recover our costs associated with leasing the railcars plus a fee for providing this service. In addition to these leases we also have lease income from storage tanks and lease income from our related party terminal services agreement associated with transloading renewable diesel at our West Colton Terminal that commenced in December 2021. Refer to Note 10. Transactions with Related Parties for additional discussion.
Three Months Ended March 31,
20222021
(in thousands, except weighted average term)
Lease income (1)
$2,486 $2,185 
Weighted average remaining lease term in years
3.58
        
(1)Lease income presented above includes lease income from related parties. Refer to Note 10. Transactions with Related Parties for additional discussion of lease income from a related party. In addition, lease income as discussed above totaling $1.6 million and $1.2 million for the three months ended March 31, 2022 and 2021, respectively, is included in “Terminalling services” and “Terminalling services — related party” revenues on our consolidated statements of operations.

The maturity analysis below presents the undiscounted future minimum lease payments we expect to receive from customers each period for property they lease from us under noncancellable operating leases as of March 31, 2022 (in thousands): 
2022$6,665 
20232,656 
20242,663 
20252,656 
20262,430 
Total
$17,070 


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7. INTANGIBLE ASSETS
The composition, gross carrying amount and accumulated amortization of our identifiable intangible assets are as follows as of the dates indicated:
March 31, 2022December 31, 2021
(in thousands)
Carrying amount:
Customer service agreements$125,960 $125,960 
Other106 106 
Total carrying amount126,066 126,066 
Accumulated amortization:
Customer service agreements(80,264)(77,115)
Other(68)(65)
Total accumulated amortization(80,332)(77,180)
Total intangible assets, net$45,734 $48,886 
Amortization expense associated with intangible assets totaled $3.2 million for the three months ended March 31, 2022 and 2021.

8. DEBT
In November 2018, we amended and restated our revolving senior secured credit agreement, which we originally established in October 2014. We refer to the amended and restated senior secured credit agreement executed in November 2018 as the Credit Agreement and the original senior secured credit agreement as the Previous Credit Agreement. Our Credit Agreement amended and restated in its entirety our Previous Credit Agreement.
On October 29, 2021, we entered into an amendment to our Credit Agreement, referred to as the Credit Agreement, as amended, with a syndicate of lenders. The Credit Agreement, as amended, extends the maturity date of the agreement by one year. The aggregate borrowing capacity of the facility is $275 million and reflects the resignation of Citibank, N.A. as administrative agent and swing line lender under the facility and the appointment of Bank of Montreal as the successor administrative agent and swing line lender under the facility.
Our Credit Agreement, as amended, matures on November 2, 2023. Our Credit Agreement, as amended, provides us with the ability to request an additional one-year maturity date extension, subject to the satisfaction of certain conditions including consent of the lenders, and allows us the option to increase the maximum amount of credit available up to a total facility size of $390 million, subject to receiving increased commitments from lenders and satisfaction of certain conditions. The Credit Agreement, as amended, keeps the financial covenants substantially consistent with our Credit Agreement.
Our Credit Agreement, as amended, and any issuances of letters of credit are available for working capital, capital expenditures, general partnership purposes and continue the indebtedness outstanding under the Previous Credit Agreement. The Credit Agreement, as amended, includes an aggregate $20 million sublimit for standby letters of credit and a $20 million sublimit for swingline loans. Obligations under the Credit Agreement, as amended, are guaranteed by our restricted subsidiaries (as such term is defined therein) and are secured by a first priority lien on our assets and those of our restricted subsidiaries, other than certain excluded assets.



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Our long-term debt balances included the following components as of the specified dates:
March 31, 2022December 31, 2021
(in thousands)
Credit Agreement, as amended$163,000 $168,000 
Less: Deferred financing costs, net
(1,725)(1,997)
Total long-term debt, net$161,275 $166,003 
We determined the capacity available to us under the terms of our Credit Agreement, as amended, was as follows as of the specified dates:
March 31, 2022December 31, 2021
(in millions)
Aggregate borrowing capacity under Credit Agreement, as amended$275.0 $275.0 
Less: Amounts outstanding under the Credit Agreement, as amended163.0 168.0 
Available under the Credit Agreement, as amended, based on capacity$112.0 $107.0 
Available under the Credit Agreement, as amended, based on covenants (1)
$66.9 $80.0 
    
(1)    Pursuant to the terms of our Credit Agreement, as amended, our borrowing capacity, currently, is limited to 4.5 times our trailing 12-month consolidated EBITDA.
The weighted average interest rate on our outstanding indebtedness was 2.71% and 2.35% at March 31, 2022 and December 31, 2021, respectively, without consideration to the effect of our derivative contracts. In addition to the interest we incur on our outstanding indebtedness, we pay commitment fees of 0.375% on unused commitments, which rate will vary based on our consolidated net leverage ratio, as defined in our Credit Agreement, as amended. At March 31, 2022, we were in compliance with the covenants set forth in our Credit Agreement, as amended.
Interest expense associated with our outstanding indebtedness was as follows for the specified periods:
Three Months Ended March 31,
20222021
(in thousands)
Interest expense on the Credit Agreement, as amended$1,113 $1,528 
Amortization of deferred financing costs272 207 
Total interest expense$1,385 $1,735 

9. COLLABORATIVE ARRANGEMENT
We entered into a facilities connection agreement in 2014 with Gibson under which Gibson developed, constructed and operates a pipeline and related facilities connected to our Hardisty Terminal. Gibson’s storage terminal is the exclusive means by which our Hardisty Terminal receives crude oil. Subject to certain limited exceptions regarding manifest train facilities, our Hardisty Terminal is the exclusive means by which crude oil from Gibson’s Hardisty storage terminal may be transported by rail. We remit pipeline fees to Gibson for the transportation of crude oil to our Hardisty Terminal based on a predetermined formula. Pursuant to our arrangement with Gibson, we incurred pipeline fees of $6.1 million and $6.0 million for the three months ended March 31, 2022 and 2021, respectively, which are presented as “Pipeline fees” in our consolidated statements of operations.

10. TRANSACTIONS WITH RELATED PARTIES
Nature of Relationship with Related Parties
USD is engaged in designing, developing, owning and managing large-scale multi-modal logistics centers and other energy-related infrastructure across North America. USD is also the sole owner of USDG and the ultimate

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parent of our general partner. USD is owned by Energy Capital Partners, Goldman Sachs and certain members of its management.
USDG is the sole owner of our general partner and at March 31, 2022, owns 11,557,090 of our common units representing a 41.2% limited partner interest in us. As of March 31, 2022, a value of up to $15.0 million of these common units were subject to a negative pledge supporting USDG’s revolving line of credit for working capital. USDG also provides us with general and administrative support services necessary for the operation and management of our business.
USD Partners GP LLC, our general partner, owns all 461,136 of our general partner units representing a 1.6% general partner interest in us, as well as all of our incentive distribution rights as of March 31, 2022. Pursuant to our partnership agreement, our general partner is responsible for our overall governance and operations. However, our general partner has no obligation to, does not intend to and has not implied that it would, provide financial support to or fund cash flow deficits of the Partnership.
USD Marketing LLC, or USDM, is a wholly-owned subsidiary of USDG organized to promote contracting for services provided by our terminals and to facilitate the marketing of customer products.
USD Terminals Canada II ULC, or USDTC II, is an indirect, wholly-owned Canadian subsidiary of USDG, organized for the purposes of pursuing expansion and other development opportunities associated with our Hardisty Terminal, pursuant to the Development Rights and Cooperation agreement between our wholly-owned subsidiary USD Terminals Canada ULC, or USDTC, and USDG. USDTC owns the legacy crude oil loading facility we refer to as the Hardisty Terminal. USDTC II completed construction of the Hardisty South expansion, or Hardisty South, which commenced operations in January 2019. Hardisty South, which has been owned and operated by USDTC II through March 31, 2022, added one and one-half 120-railcar unit trains of transloading capacity per day, or approximately 112,500 barrels per day, of takeaway capacity to the terminal by modifying the existing loading rack and building additional infrastructure and trackage.
USD Clean Fuels LLC, or USDCF, is a newly formed subsidiary of USD organized for the purpose of providing production and logistics solutions to the growing market for clean energy transportation fuels.
Omnibus Agreement
We are party to an omnibus agreement with USD, USDG and certain of their subsidiaries, or the Omnibus Agreement, including our general partner, pursuant to which we obtain and make payments for specified services provided to us and for out-of-pocket costs incurred on our behalf. We pay USDG, in equal monthly installments, the annual amount USDG estimates will be payable by us during the calendar year for providing services for our benefit. The Omnibus Agreement provides that this amount may be adjusted annually to reflect, among other things, changes in the scope of the general and administrative services provided to us due to a contribution, acquisition or disposition of assets by us or our subsidiaries, or for changes in any law, rule or regulation applicable to us, which affects the cost of providing the general and administrative services. We also reimburse USDG for any out-of-pocket costs and expenses incurred on our behalf in providing general and administrative services to us. This reimbursement is in addition to the amounts we pay to reimburse our general partner and its affiliates for certain costs and expenses incurred on our behalf for managing our business and operations, as required by our partnership agreement.
The total amounts charged to us under the Omnibus Agreement for the three months ended March 31, 2022 and 2021 was $2.0 million and $1.7 million, respectively, which amounts are included in “Selling, general and administrative — related party” in our consolidated statements of operations. We had a payable balance of $2.4 million and $1.4 million with respect to these costs at March 31, 2022 and December 31, 2021, respectively, included in “Accounts payable and accrued expenses related party” in our consolidated balance sheets.
Marketing Services Agreement - Stroud Terminal
In connection with our purchase of the Stroud Terminal, we entered into a Marketing Services Agreement with USDM, or the Stroud Terminal MSA, in May 2017, whereby we granted USDM the right to market the

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capacity at the Stroud Terminal in excess of the original capacity of our initial customer in exchange for a nominal per barrel fee. USDM is obligated to fund any related capital costs associated with increasing the throughput or efficiency of the terminal to handle additional throughput. Upon expiration of our contract with the initial Stroud customer in June 2020, the same marketing rights now apply to all throughput at the Stroud Terminal in excess of the throughput necessary for the Stroud Terminal to generate Adjusted EBITDA that is at least equal to the average monthly Adjusted EBITDA derived from the initial Stroud customer during the 12 months prior to expiration. We also granted USDG the right to develop other projects at the Stroud Terminal in exchange for the payment to us of market-based compensation for the use of our property for such development projects. Any such development projects would be wholly-owned by USDG and would be subject to our existing right of first offer, or ROFO, with respect to midstream projects developed by USDG. Payments made under the Stroud Terminal MSA during the periods presented in this Report are discussed below under the heading “Related Party Revenue and Deferred Revenue.
Marketing Services Agreement - West Colton Terminal
In June 2021, we entered into a new Terminal Services Agreement with USDCF that is supported by a minimum throughput commitment to USDCF from an investment-grade rated, refining customer as well as a performance guaranty from USD. The Terminal Services Agreement provides for the inbound shipment of renewable diesel on rail at our West Colton Terminal and the outbound shipment of the product on tank trucks to local consumers. The new Terminal Services Agreement has an initial term of five years and commenced on December 1, 2021. We have modified our existing West Colton Terminal so that it now has the capability to transload renewable diesel in addition to the ethanol that it has been transloading.
In exchange for the new Terminal Services Agreement at our West Colton Terminal with USDCF discussed above, we also entered into a Marketing Services Agreement in June 2021, or the West Colton MSA, with USDCF pursuant to which we agreed to grant USDCF marketing and development rights pertaining to future renewable diesel opportunities associated with the West Colton Terminal in excess of the initial renewable diesel Terminal Services Agreement simultaneously executed in June 2021 between us and USDCF. These rights entitle USDCF to market all additional renewable diesel opportunities at the West Colton Terminal during the initial term of the USDCF agreement, and following the initial term of that agreement, all renewable diesel opportunities at the West Colton Terminal in excess of the throughput necessary to generate Adjusted EBITDA for the West Colton Terminal that is at least equal to the average monthly Adjusted EBITDA derived from the initial USDCF agreement during the 12 months prior to expiration of that agreement’s initial five-year term. Pursuant to the West Colton MSA, USDCF will fund any related capital costs associated with increasing the throughput or efficiency of the terminal to handle additional renewable diesel opportunities. In addition, we granted USDCF the right to develop other renewable diesel projects at the West Colton Terminal in exchange for a per barrel fee covering our associated operating costs. Any such development projects would be wholly-owned by USD and would be subject to the ROFO with respect to midstream infrastructure developed by USD. There have been no payments made under the West Colton MSA during the periods presented in this Report.
Hardisty Terminal Services Agreement
We entered into a Terminal Services Agreement with USDTC II in 2019, whereby Hardisty South will provide terminal services for a third-party customer of our Hardisty Terminal for contracted capacity that exceeds the transloading capacity currently available. We incurred $2.1 million for the three months ended March 31, 2022 and 2021, which amounts are included in “Operating and maintenance expense related party” in our consolidated statements of operations. These costs represent the same rate, on a per barrel basis, that we received as revenue from our third-party customer, which is included in “Terminalling Services” revenue in our consolidated statements of operations. Additionally, in conjunction with the agreement, we recorded a contract asset of $2.5 million at both March 31, 2022 and December 31, 2021 on our consolidated balance sheet in “Other current assets related party” and “Other non-current assets related party”, representing prepaid expense associated with this agreement due to tiered billing provisions in the related terminal services agreements.

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Hardisty Shared Facilities Agreement
USDTC facilitates the provision of services on behalf of USDTC II pursuant to the terms of a shared facilities agreement, which includes all subcontracted railcar loading, operating, maintenance, pipeline and management services for the entire Hardisty Terminal, including Hardisty South owned by USDTC II. USDTC passes through a proportionate amount of the cost of such services to USDTC II. Our financial statements only reflect the cost incurred by USDTC.
Contribution Agreement
On March 27, 2022, we entered into a Contribution, Conveyance and Assumption agreement, or the Contribution Agreement, with our sponsor to acquire 100% of the entities owning the Hardisty South Terminal assets from USDG as well as eliminate the IDRs and economic general partner interest of our Sponsor for a total consideration of $75.0 million in cash and approximately 5,751,136 common units representing limited partner interests in us. Refer to Note 17. Subsequent Events for further discussion.
Related Party Revenue and Deferred Revenue
We have agreements to provide terminal and fleet services for USDM with respect to our Hardisty Terminal and terminal services with respect to our Stroud Terminal, which also include reimbursement to us for certain out-of-pocket expenses we incur, discussed in more detail below. Additionally, as previously discussed, we also entered into a new Terminal Services Agreement at our West Colton Terminal with USDCF that became effective December 31, 2021.
In connection with our purchase of the Stroud Terminal, we also entered into a Marketing Services Agreement with USDM, as discussed above. Pursuant to the terms of the agreement, we receive a fixed amount per barrel from USDM in exchange for marketing the additional capacity available at the Stroud Terminal. Effective August 2021, upon the commencement of the contract changes associated with the successful completion of the DRU project, the existing customer elected to fully terminate the volume commitments attributable to USDM at the Stroud Terminal, and therefore effective August 2021, we are no longer receiving a fixed fee payment from USDM. However, the Marketing Services Agreement is still effective for any future customer contracts obtained by USDM at the Stroud Terminal.
We include amounts received pursuant to these arrangements as revenue in the table below under “Terminalling services — related party” in our consolidated statements of operations.
Additionally, we received revenue from USDM for the lease of 200 railcars pursuant to the terms of an existing agreement with us, which is included in the table below under “Fleet leases — related party” and “Fleet services — related party” and in our consolidated statements of operations.
Our related party revenues from USD and affiliates are presented below in the following table for the indicated periods:
Three Months Ended March 31,
20222021
(in thousands)
Terminalling services — related party$655 $1,103 
Fleet leases — related party912 984 
Fleet services — related party299 227 
$1,866 $2,314 

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We had the following amounts outstanding with USD and affiliates on our consolidated balance sheets as presented below in the following table for the indicated periods:
March 31, 2022December 31, 2021
(in thousands)
Accounts receivable — related party
$2,817 $2,953 
Accounts payable and accrued expenses — related party (1)
$42 $63 
Other current and non-current assets — related party (2)
$2,460 $2,487 
Other current liabilities — related party (3)
$48 $64 
        
(1)Does not include amounts payable to related parties associated with the Omnibus Agreement, as discussed above.
(2)Includes a contract asset associated with the Hardisty Terminal Services Agreement with USDTC II, as discussed above.
(3)Represents a contract liability associated with a lease agreement with USDM and cumulative revenue that has been deferred due to tiered billing provisions.
Cash Distributions
We paid the following aggregate cash distributions to USDG as a holder of our common units and to USD Partners GP LLC as sole holder of our general partner interest and IDRs.
Distribution Declaration DateRecord DateDistribution
Payment Date
Amount Paid to
 USDG
Amount Paid to
USD Partners GP LLC
(in thousands)
January 26, 2022February 9, 2022February 18, 2022$1,398 $56 
11. COMMITMENTS AND CONTINGENCIES
From time to time, we may be involved in legal, tax, regulatory and other proceedings in the ordinary course of business. We do not believe that we are currently a party to any such proceedings that will have a material adverse impact on our financial condition or results of operations.
12. SEGMENT REPORTING
We manage our business in two reportable segments: Terminalling services and Fleet services. The Terminalling services segment charges minimum monthly commitment fees under multi-year take-or-pay contracts to load and unload various grades of crude oil into and from railcars, as well as fixed fees per gallon to transload ethanol and renewable diesel from railcars, including related logistics services. We also facilitate rail-to-pipeline shipments of crude oil. Our Terminalling services segment also charges minimum monthly fees to store crude oil in tanks that are leased to our customers. The Fleet services segment provides customers with railcars and fleet services related to the transportation of liquid hydrocarbons under multi-year, take-or-pay contracts. Corporate activities are not considered a reportable segment, but are included to present shared services and financing activities which are not allocated to our established reporting segments.
Our segments offer different services and are managed accordingly. Our CODM regularly reviews financial information about both segments in order to allocate resources and evaluate performance. Our CODM assesses segment performance based on the cash flows produced by our established reporting segments using Segment Adjusted EBITDA. Segment Adjusted EBITDA is a measure calculated in accordance with GAAP. We define Segment Adjusted EBITDA as “Net income (loss)” of each segment adjusted for depreciation and amortization, interest, income taxes, changes in contract assets and liabilities, deferred revenues, foreign currency transaction gains and losses and other items which do not affect the underlying cash flows produced by our businesses. As such, we have concluded that disaggregating revenue by reporting segments appropriately depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

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Three Months Ended March 31, 2022
Terminalling
services
Fleet
services
CorporateTotal
(in thousands)
Revenues
Terminalling services$28,185 $ $ $28,185 
Terminalling services — related party655   655 
Fleet leases — related party
 912  912 
Fleet services
    
Fleet services — related party 299  299 
Freight and other reimbursables
78   78 
Total revenues
28,918 1,211  30,129 
Operating costs
Subcontracted rail services
3,252   3,252 
Pipeline fees6,060   6,060 
Freight and other reimbursables
78   78 
Operating and maintenance
4,247 993  5,240 
Selling, general and administrative
1,296 57 3,902 5,255 
Depreciation and amortization
5,507   5,507 
Total operating costs
20,440 1,050 3,902 25,392