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MARTIN MIDSTREAM PARTNERS L.P.

MARTIN MIDSTREAM PARTNERS L.P.MMLPEarnings & Financial Report

Nasdaq · Energy · Wholesale-Petroleum Bulk Stations & Terminals

Martin Midstream Partners L.P. is a U.S.-based midstream energy services provider. It offers storage, transportation, distribution and processing solutions for crude oil, natural gas liquids, refined petroleum products and specialty chemicals, mainly serving customers across North American energy and industrial segments.

What changed in MARTIN MIDSTREAM PARTNERS L.P.'s 10-K — 2022 vs 2023

Top changes in MARTIN MIDSTREAM PARTNERS L.P.'s 2023 10-K

284 paragraphs added · 327 removed · 252 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

92 edited+13 added−43 removed134 unchanged
Risk Factors - Risks Related to our Business." Overview We are a publicly traded limited partnership with a diverse set of operations focused primarily primarily in the Gulf Coast region of the United States ("U.S.").
Risk Factors - Risks Related to our Business." Overview We are a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States ("U.S.").
The following is a listing of our terminals utilized in our land transportation business: Terminal Locations Texas Louisiana Arkansas Other Baytown Arcadia West Memphis Theodore, Alabama Beaumont Baton Rouge Smackover Tampa, Florida Beaumont Lube Bossier City Stephens Hattiesburg, Mississippi Channelview Jennings Kenova, West Virginia Corpus Christi Lake Charles Tennessee Pace, Florida Kilgore Reserve Chattanooga Mulberry, Florida Longview Kingsport Plainview Our major land transportation customers include energy, petrochemical, and chemical companies and Martin Resource Management Corporation.
The following is a listing of our terminals utilized in our land transportation business: Terminal Locations Texas Louisiana Arkansas Florida Baytown Arcadia West Memphis Tampa Beaumont Baton Rouge Smackover Pace Beaumont Lube Bossier City Stephens Mulberry Channelview Jennings Corpus Christi Lake Charles Tennessee Other Kilgore Reserve Chattanooga Theodore, Alabama Longview Kingsport Hattiesburg, Mississippi Plainview Kenova, West Virginia Our major land transportation customers include energy, petrochemical, and chemical companies and Martin Resource Management Corporation.
Our marine transportation business operates coastwise along the Gulf of Mexico and east coast of the U.S., as well as on the U.S. inland waterway system, primarily between domestic ports along the Gulf of Mexico, Intracoastal Waterway, the Mississippi River system and the Tennessee-Tombigbee Waterway system.
Our marine transportation business operates coastwise along the Gulf of Mexico and the east coast of the U.S., as well as on the U.S. inland waterway system, primarily between domestic ports along the Gulf of Mexico, Intracoastal Waterway, the Mississippi River system and the Tennessee-Tombigbee Waterway system.
Gulf Coast storage terminals (including our terminal in Beaumont, Texas) under third-party marine transportation agreements: Class of Equipment Number in Class Capacity/Horsepower Products Transported Offshore tank barge 1 10,500 long tons Molten sulfur Offshore tugboat 1 5,100 horsepower N/A Inland push boat 1 1,200 horsepower N/A Inland tank barge 2 2,500 long tons Molten sulfur We operate the following sulfur forming facility as part of our sulfur services business: Terminal Location Daily Production Capacity Products Stored Neches Beaumont, Texas 5,500 metric tons per day Molten, prilled and granulated sulfur We own the following manufacturing plants as part of our sulfur services business: Facility Location Annual Capacity Description Fertilizer plant Plainview, Texas 150,000 tons Fertilizer production Fertilizer plant Beaumont, Texas 146,000 tons Liquid sulfur fertilizer production Fertilizer plant Odessa, Texas 35,000 tons Dry sulfur fertilizer production Fertilizer plant Seneca, Illinois 36,000 tons Dry sulfur fertilizer production Fertilizer plant Cactus, Texas 20,000 tons Dry sulfur fertilizer production Industrial sulfur plant Nash, Texas 18,000 tons Emulsified sulfur production Sulfuric acid plant Plainview, Texas 150,000 tons Sulfuric acid production Competition.
Gulf Coast storage terminals (including our terminal in Beaumont, Texas) under third-party marine transportation agreements: Class of Equipment Number in Class Capacity/Horsepower Products Transported Offshore tank barge 1 10,500 long tons Molten sulfur Offshore tugboat 1 5,100 horsepower N/A Inland push boat 1 1,200 horsepower N/A Inland tank barge 2 2,500 long tons Molten sulfur We operate the following sulfur forming facility as part of our sulfur services business: Terminal Location Daily Production Capacity Products Stored Neches Beaumont, Texas 5,500 metric tons per day Molten, prilled and granulated sulfur 10 We own the following manufacturing plants as part of our sulfur services business: Facility Location Annual Capacity Description Fertilizer plant Plainview, Texas 150,000 tons Fertilizer production Fertilizer plant Beaumont, Texas 146,000 tons Liquid sulfur fertilizer production Fertilizer plant Odessa, Texas 35,000 tons Dry sulfur fertilizer production Fertilizer plant Seneca, Illinois 36,000 tons Dry sulfur fertilizer production Fertilizer plant Cactus, Texas 20,000 tons Dry sulfur fertilizer production Industrial sulfur plant Nash, Texas 18,000 tons Emulsified sulfur production Sulfuric acid plant Plainview, Texas 150,000 tons Sulfuric acid production Competition.
A "responsible party" includes the owner or operator of a facility or vessel or the lessee or permittee of the area in which an offshore facility is located. OPA assigns liability to each responsible party for oil removal costs and a variety of public and private damages including natural resource damages.
A "responsible party" includes the owner or operator of a facility or vessel or the lessee or permittee of the area in which an offshore facility is located. The OPA assigns liability to each responsible party for oil removal costs and a variety of public and private damages including natural resource damages.
Under OPA, vessels and shore facilities handling, storing, or transporting oil are required to develop and implement oil spill response plans, and vessels greater than 300 tons in weight must provide to the U.S. Coast Guard evidence of financial responsibility to cover the costs of cleaning up oil spills from such vessels.
Under the OPA, vessels and shore facilities handling, storing, or transporting oil are required to develop and implement oil spill response plans, and vessels greater than 300 tons in weight must provide to the U.S. Coast Guard evidence of financial responsibility to cover the costs of cleaning up oil spills from such vessels.
Nonetheless, in the aftermath of the Deepwater Horizon incident in 2010, Congress has from time to time considered oil spill related legislation that could have the effect of substantially increasing financial responsibility requirements and potential fines and damages for violations and discharges subject to OPA, and similar legislation.
Nonetheless, in the aftermath of the Deepwater Horizon incident in 2010, Congress has from time to time considered oil spill related legislation that could have the effect of substantially increasing financial responsibility requirements and potential fines and damages for violations and discharges subject to the OPA, and similar legislation.
We own the LaForce/Margaret Sue articulated barge unit, which is one of four vessels currently used to transport molten sulfur between U.S. ports on the Gulf of Mexico and Tampa, Florida. Phosphate fertilizer manufacturers consume a majority of the sulfur produced in the U.S., which they purchase directly from both producers and resellers.
We own the LaForce/Margaret Sue articulated tug and barge unit, which is one of four vessels currently used to transport molten sulfur between U.S. ports on the Gulf of Mexico and Tampa, Florida. Phosphate fertilizer manufacturers consume a majority of the sulfur produced in the U.S., which they purchase directly from both producers and resellers.
In addition, Martin Resource Management Corporation, through terminalling service agreements, pays us for terminalling and storage of fuels and lubricants at these terminal facilities and includes a provision for minimum volume throughput requirements. Our marine shore-based terminals are divided into two classes of terminals: (i) full service terminals and (ii) fuel and lubricant terminals. Full Service Terminals.
In addition, Martin Resource Management Corporation, through terminalling service agreements, pays us for terminalling and storage of fuels and lubricants at these terminal facilities and includes a provision for minimum volume throughput requirements. Our marine shore-based terminal operations are divided into two classes of terminals: (i) full service terminals and (ii) fuel and lubricant terminals. Full Service Terminals.
We currently own or lease, and have in the past owned or leased, properties that have been used for the manufacturing, processing, transportation and storage of petroleum products and by-products. Solid waste disposal practices within oil and gas related industries have improved over the years with the passage and implementation of various environmental laws and regulations.
We currently own or lease, and have in the past owned or leased, properties that have been used for the manufacturing, processing, transportation and storage of petroleum products and by-products. Solid waste disposal practices within oil and gas 15 related industries have improved over the years with the passage and implementation of various environmental laws and regulations.
These industrial ground sulfur products are also used in a variety of dusting and wettable sulfur applications such as rubber manufacturing, fungicides, sugar and animal feeds. We produce emulsified sulfur at our Nash, Texas facility. Emulsified sulfur is primarily used to control the sulfur content in the pulp and paper manufacturing processes. 11 • Sulfuric acid.
These industrial ground sulfur products are also used in a variety of dusting and wettable sulfur applications such as rubber manufacturing, fungicides, sugar and animal feeds. We produce emulsified sulfur at our Nash, Texas facility. Emulsified sulfur is primarily used to control the sulfur content in the pulp and paper manufacturing processes. • Sulfuric acid.
We developed our terminalling and storage assets by acquisition and upgrades of 5 existing facilities as well as developing our own properties strategically located near rail, waterways and pipelines. We anticipate further expansion of our terminalling facilities primarily through organic growth. At the Neches, Stanolind, and Tampa terminals, our customers are primarily energy and petrochemical companies.
We developed our terminalling and storage assets by acquisition and upgrades of existing facilities as well as developing our own properties strategically located near rail, waterways and pipelines. We anticipate further expansion of our terminalling facilities primarily through organic growth. At the Neches, Stanolind, and Tampa terminals, our customers are primarily energy and petrochemical companies.
In addition, a number of these 16 properties have been operated by third parties over whom we had no control as to such entities’ handling of petroleum, petroleum by-products or other wastes and the manner in which such substances may have been disposed of or released.
In addition, a number of these properties have been operated by third parties over whom we had no control as to such entities’ handling of petroleum, petroleum by-products or other wastes and the manner in which such substances may have been disposed of or released.
We believe our marine operations and our terminals are in substantial compliance with current applicable safety requirements. Occupational Safety and Health Regulations 18 The workplaces associated with our manufacturing, processing, terminal and storage facilities are subject to the requirements of the federal Occupational Safety and Health Act ("OSH Act") and comparable state statutes.
We believe our marine operations and our terminals are in substantial compliance with current applicable safety requirements. Occupational Safety and Health Regulations The workplaces associated with our manufacturing, processing, terminal and storage facilities are subject to the requirements of the federal Occupational Safety and Health Act ("OSH Act") and comparable state statutes.
We transport our fertilizer and industrial sulfur products to our customers using third-party common carriers. We utilize barge and rail shipments for large volume and long distance shipments where available. We manufacture and market the following sulfur-based fertilizer and related sulfur products: • Ammonium sulfate products.
We transport our fertilizer and industrial sulfur products to our customers using third-party common carriers. We utilize barge and rail shipments for large volume and long-distance shipments where available. 9 We manufacture and market the following sulfur-based fertilizer and related sulfur products: • Ammonium sulfate products.
Additionally, while some companies have significantly more terminalling and storage capacity than us, not all terminalling and storage facilities located in the markets we serve are equipped to properly handle specialty products such as asphalt, sulfur and anhydrous ammonia. 8 The principal competitive factors affecting our terminals, which provide fuel and lubricants distribution and marketing, as well as shore bases at certain terminals, are the locations of the facilities, availability of competing logistical support services and the experience of personnel and dependability of service.
Additionally, while some companies have significantly more terminalling and storage capacity than us, not all terminalling and storage facilities located in the markets we serve are equipped to properly handle specialty products such as asphalt, sulfur and anhydrous ammonia. 7 The principal competitive factors affecting our terminals, which provide fuel and lubricants distribution and marketing, as well as shore bases at certain terminals, are the locations of the facilities, availability of competing logistical support services and the experience of personnel and dependability of service.
Certain Relationships and Related Transactions, and Director Independence." 14 Commercial We have been and anticipate that we will continue to be both a significant customer and supplier of products and services offered by Martin Resource Management Corporation.
Certain Relationships and Related Transactions, and Director Independence." Commercial We have been and anticipate that we will continue to be both a significant customer and supplier of products and services offered by Martin Resource Management Corporation.
We may not be able to recover through insurance some or any of the damages, losses or costs that may result from potential physical effects of climate change. 17 Clean Water Act The Federal Water Pollution Control Act of 1972, as amended, also known the Clean Water Act and comparable state laws impose restrictions and strict controls regarding the discharge of pollutants, including hydrocarbon-bearing wastes, into state waters and waters of the U.S.
We may not be able to recover through insurance some or any of the damages, losses or costs that may result from potential physical effects of climate change. 16 Clean Water Act The Federal Water Pollution Control Act of 1972, as amended, also known the Clean Water Act and comparable state laws impose restrictions and strict controls regarding the discharge of pollutants, including hydrocarbon-bearing wastes, into state waters and waters of the U.S.
This terminal is used as our central hub for branded and private label packaged lubricants where we receive, package and ship heavy-duty, passenger car, and industrial lubricants to a network of retailers and distributors. In Kansas City, Missouri, we lease and operate a plant that specializes in the production, packaging and distribution of automotive, commercial and industrial greases.
This terminal is our central hub for branded and private label packaged lubricants where we receive, package and ship heavy-duty, passenger car, and industrial lubricants to a network of retailers and distributors. In Kansas City, Missouri, we lease and operate a plant that specializes in the production, packaging and distribution of automotive, commercial and industrial greases.
The significant difference between our full service terminals and our fuel and lubricant terminals is that our full service terminals generate additional revenues by providing shore bases to support our customer’s operating activities related to the offshore exploration and production industry.
The significant difference between our full service terminals and our fuel and lubricant terminals is that our full service terminals generate additional revenues by providing shore bases to support our customers' operating activities related to the offshore exploration and production industry.
We are and will continue to be closely affiliated with Martin Resource Management Corporation as a result of the following relationships. Ownership Martin Resource Management Corporation owns approximately 15.7% of the outstanding limited partner units.
We are and will continue to be closely affiliated with Martin Resource Management Corporation as a result of the following relationships. Ownership Martin Resource Management Corporation owns approximately 15.7% of the outstanding limited partnership units.
State and federal laws and regulations applicable to oil and natural gas wastes and properties have gradually become more strict and, under such laws and regulations, we could be required to remove or remediate previously disposed wastes or property contamination, including groundwater contamination, even under circumstances where such contamination resulted from past operations of third parties.
State and federal laws and regulations applicable to oil and natural gas wastes and properties have gradually become stricter and, under such laws and regulations, we could be required to remove or remediate previously disposed wastes or property contamination, including groundwater contamination, even under circumstances where such contamination resulted from past operations of third parties.
Fuel and Lubricant Terminals. We own or operate 11 fuel and lubricant terminals located in the Gulf Coast region of the U.S. that provide storage and handling services for lubricants and fuel oil.
Fuel and Lubricant Terminals. We own or operate nine fuel and lubricant terminals located in the Gulf Coast region of the U.S. that provide storage and handling services for lubricants and fuel oil.
Certain Relationships and Related Transactions, and Director Independence." Approval and Review of Related Party Transactions If we contemplate entering into a transaction, other than a routine or in the ordinary course of business transaction, in which a related person will have a direct or indirect material interest, the proposed transaction is submitted for consideration to the board of directors of our general partner or to our management, as appropriate.
Certain Relationships and Related Transactions, and Director Independence." Approval and Review of Related Party Transactions If we contemplate entering into a transaction, other than a routine or in the ordinary course of business transaction or as permitted under the Omnibus Agreement, in which a related person will have a direct or indirect material interest, the proposed transaction is submitted for consideration to the board of directors of our general partner or to our management, as appropriate.
The following is a summary description of the marine vessels we use in our marine transportation business : Class of Equipment Number in Class Capacity/Horsepower Products Transported Inland tank barges 5 Under 20,000 barrels Diesel fuel Inland tank barges 22 20,000 - 31,000 barrels Asphalt, crude oil, fuel oil and gasoline Inland push boats 15 800 - 2,650 horsepower N/A Offshore tank barge 1 59,000 barrels Diesel fuel Offshore tugboat 1 7,100 horsepower N/A Our largest marine transportation customers include major and independent oil and gas refining companies, petroleum marketing companies and Martin Resource Management Corporation.
We transport asphalt, fuel oil, gasoline, sulfur and other bulk liquids. 8 The following is a summary description of the marine vessels we use in our marine transportation business: Class of Equipment Number in Class Capacity/Horsepower Products Transported Inland tank barges 5 Under 20,000 barrels Diesel fuel Inland tank barges 22 20,000 - 31,000 barrels Asphalt, crude oil, fuel oil and gasoline Inland push boats 15 800 - 2,650 horsepower N/A Offshore tank barge 1 59,000 barrels Diesel fuel Offshore tugboat 1 7,100 horsepower N/A Our largest marine transportation customers include major and independent oil and gas refining companies, petroleum marketing companies and Martin Resource Management Corporation.
However, customers are placing an increased emphasis on the age of equipment, safety, environmental compliance, quality of service and the availability of a single source of supply of services. In addition to competitors that provide marine transportation services, we also compete with providers of other modes of transportation, such as rail, trucks and, to a lesser extent, pipelines.
However, customers are placing an increased emphasis on the age of equipment, safety, environmental compliance, quality of service and the availability of a single source of supply of services. In addition to competitors that provide marine transportation services, we also compete with providers of other modes of transportation, such as rail, truck and, to a lesser extent, pipeline.
Our sales to Martin Resource Management Corporation accounted for approximately 9%, 9%, and 13% of our total revenues for each of the years ended December 31, 2022, 2021 and 2020, respectively. For a more comprehensive discussion concerning the Omnibus Agreement and the other agreements that we have entered into with Martin Resource Management Corporation, please see "Item 13.
Our sales to Martin Resource Management Corporation accounted for approximately 14% and 9% of our total revenues for each of the years ended December 31, 2023 and 2022, respectively. For a more comprehensive discussion concerning the Omnibus Agreement and the other agreements that we have entered into with Martin Resource Management Corporation, please see "Item 13.
Customers of our full service terminals are primarily oil and gas exploration and production companies, oilfield service companies such as drilling fluids companies, marine transportation companies and offshore construction companies. 7 The following is a summary description of our full service terminals: Terminal Location Aggregate Capacity (barrels) End of Lease (Including Options) Harbor Island 1 Port Aransas, Texas 6,800 December 2039 Pelican Island Galveston, Texas 84,000 Own Theodore Theodore, Alabama 19,900 Own 1 A portion of this terminal is owned.
Customers of our full service terminals are primarily oil and gas exploration and production companies, oilfield service companies such as drilling fluids companies, marine transportation companies and offshore construction companies. 6 The following is a summary description of our full service terminals: Terminal Location Aggregate Capacity (barrels) End of Lease (Including Options) Harbor Island 1 Port Aransas, Texas 5,200 December 2039 Pelican Island Galveston, Texas 83,000 Own Theodore Theodore, Alabama 19,900 Own 1 A portion of this terminal is owned.
These plants are located in Texas and Illinois and manufacture primarily sulfur-based fertilizer products for wholesale distributors and industrial users. Demand for our sulfur products exists across the globe, and our asset base provides additional opportunities to handle increases in U.S. supply and access to foreign demand. • Natural Gas Liquids.
These plants are located in Texas and Illinois and manufacture primarily sulfur-based fertilizer products for wholesale distributors and industrial users. Demand for our sulfur products exists across the globe, and our asset base provides additional opportunities to handle increases in U.S. supply and access to foreign demand. • Specialty Products.
As of December 31, 2022, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units.
As of December 31, 2023, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units.
Members of our executive management team and the heads of our principal business lines have a significant amount of experience in the industries in which we operate. Our management team's experience and familiarity with our industry and businesses are important assets that assist us in implementing our business strategies.
Experienced Management Team and Operational Expertise . Members of our executive management team and the heads of our principal business lines have a significant amount of experience in the industries in which we operate. Our management team's experience and familiarity with our industry and businesses are important assets that assist us in 4 implementing our business strategies.
Reentry into the Paris Agreement, new legislation, or President Biden’s executive orders may result in the development of additional regulations or changes to existing regulations, which could have a material adverse effect on our business and that of our customers.
The Paris Agreement, the Dubai stocktake agreement, new legislation, and President Biden’s executive orders may result in the development of additional regulations or changes to existing regulations, which could have a material adverse effect on our business and that of our customers.
Our NGL customers consist of refiners, industrial processors and retail propane distributors. The majority of our NGL volumes are sold to refiners and industrial processors. Seasonality. The level of NGL supply and demand is subject to changes in domestic production, weather, inventory levels and other factors. While production is not seasonal, residential, refinery, and wholesale demand is highly seasonal.
The majority of our NGL volumes are sold to refiners and industrial processors. Seasonality. The level of NGL supply and demand is subject to changes in domestic production, weather, inventory levels and other factors. While production is not seasonal, residential, refinery, and wholesale demand is highly seasonal.
Our Relationship with Martin Resource Management Corporation Martin Resource Management Corporation is engaged in the following principal business activities: • distributing asphalt, marine fuel and other liquids; • providing marine bunkering and other shore-based marine services in Texas, Louisiana, Mississippi, Alabama, and Florida; • operating a crude oil gathering business in Stephens, Arkansas; 13 • providing crude oil gathering, refining, and marketing services of base oils, asphalt, and distillate products in Smackover, Arkansas; • providing crude oil marketing and transportation from the well head to the end market; • operating an environmental consulting company; • supplying employees and services for the operation of our business; and • operating, solely for our account, the asphalt facilities in Hondo, South Houston and Port Neches, Texas, and Omaha, Nebraska.
Our Relationship with Martin Resource Management Corporation Martin Resource Management Corporation is engaged in the following principal business activities: • distributing asphalt, marine fuel and other liquids; • providing marine bunkering and other shore-based marine services in Texas, Louisiana, Mississippi, Alabama, and Florida; • operating a crude oil gathering business in Stephens, Arkansas; 12 • providing crude oil gathering, refining, and marketing services of base oils, asphalt, and distillate products in Smackover, Arkansas; • providing crude oil marketing and transportation from the wellhead to the end market; • operating an environmental consulting company; • operating a butane optimization business; • supplying employees and services for the operation of our business; and • operating, solely for our account, the asphalt facilities owned by us in Hondo, South Houston and Port Neches, Texas, and Omaha, Nebraska.
In response to such studies, the U.S. Congress has from time to time considered climate change-related legislation to restrict GHG emissions. Many states have already taken legal measures to reduce emissions of GHGs, primarily through the planned development of GHG emission inventories and/or regional GHG cap and trade programs. Additionally, as a result of the April 2007 U.S.
In response to such studies, the U.S. Congress has from time to time considered climate change-related legislation to restrict GHG emissions. Many states have already taken legal measures to reduce emissions of GHGs, primarily through the planned development of GHG emission inventories and/or regional GHG cap and trade programs.
We have established a reputation in our industry as a reliable and cost-effective supplier of services to our customers and have a track record of safe and efficient operations at our facilities. Our management has also established long-term relationships with many of our suppliers and customers. We benefit from our management’s reputation and track record and from these long-term relationships.
Strong Industry Reputation and Established Relationships with Suppliers and Customers. We have established a reputation in our industry as a reliable and cost-effective supplier of services to our customers and have a track record of safe and efficient operations at our facilities. Our management has also established long-term relationships with many of our suppliers and customers.
Sulfuric acid production facility at our Plainview, Texas location processes molten sulfur to produce a dedicated supply of raw material sulfuric acid to our ammonium sulfate production plant. The sulfuric acid produced and not consumed by the captive ammonium sulfate production is sold to third parties. Our Sulfur Services Facilities.
We produce Sulfuric acid at our Plainview, Texas facility. This facility processes molten sulfur to produce a dedicated supply of raw material sulfuric acid to our ammonium sulfate production plant. The sulfuric acid produced and not consumed by the captive ammonium sulfate production is sold to third parties.
In addition, shortly after taking office in January 2021, President Biden issued a series of executive orders designed to address climate change, and new legislation to regulate GHG emissions has been periodically introduced into the U.S. Congress, but none have passed.
In addition, President Biden has issued a series of executive orders designed to address climate change, and new legislation to regulate GHG emissions has been periodically introduced into the U.S. Congress, but none have passed.
The United States Environmental Protection Agency has proposed strict new methane emission regulations for certain oil and gas facilities and the Inflation Reduction Act of 2022 (“IRA”) establishes a charge on methane emissions above certain limits from the same facilities. To date, such requirements have not had a substantial effect upon our operations.
The United States Environmental Protection Agency announced strict new methane emission regulations for certain oil and gas facilities in December 2023 and the Inflation Reduction Act of 2022 (“IRA”) established a charge on methane emissions above certain limits from the same facilities. To date, such requirements have not had a substantial effect upon our operations.
In the aggregate, our purchases from Martin Resource Management Corporation accounted for approximately 17%, 16%, and 19% of our total costs and expenses during for the years ended December 31, 2022, 2021 and 2020, respectively. Correspondingly, Martin Resource Management Corporation is one of our significant customers.
In the aggregate, our purchases from Martin Resource Management Corporation accounted for approximately 23% and 17% of our total costs and expenses during for the years ended December 31, 2023 and 2022, respectively. Correspondingly, Martin Resource Management Corporation is one of our significant customers.
We compete with large integrated NGL producers and marketers as well as small local independent marketers, primarily with respect to location, rates, terms and flexibility of service and supply. Exit from Butane Optimization Business.
We compete with large integrated NGL producers and marketers as well as small local independent marketers, primarily with respect to location, rates, terms and flexibility of service and supply.
We reimbursed Martin Resource Management Corporation for $161.6 million, $134.7 million and $125.3 million of direct costs and expenses for the years ended December 31, 2022, 2021 and 2020, respectively. There is no monetary limitation on the amount we are required to reimburse Martin Resource Management Corporation for direct expenses.
We reimbursed Martin Resource Management Corporation for $165.6 million and $161.6 million of direct costs and expenses for the years ended December 31, 2023 and 2022, respectively. There is no monetary limitation on the amount we are required to reimburse Martin Resource Management Corporation for direct expenses.
Our Growth Strategy The key components of our growth strategy are: • Establish Strategic Commercial Alliances . Many of our larger customers, which include major integrated energy companies, have established strategic alliances with midstream service providers such as us to address logistical and transportation challenges or to achieve operational synergies.
Many of our larger customers, which include major integrated energy companies, have established strategic alliances with midstream service providers such as us to address logistical and transportation challenges or to achieve operational synergies.
Martin Resource Management Corporation has approximately 1,570 employees of which 1,230 individuals, including 57 individuals represented by labor unions, provide direct support to our 19 operations as of December 31, 2022. Martin Resource Management Corporation employees are responsible for conducting our business and operating our assets on our behalf.
Martin Resource Management Corporation has approximately 1,619 employees of which 1,245 individuals, including 58 individuals represented by labor unions, provide direct support to our operations as of December 31, 2023. Martin Resource Management Corporation employees are responsible for conducting our business and operating our assets on our behalf.
However, pipelines are not able to transport some of the products we transport and are generally a less flexible form of transportation because they are limited to the fixed point-to-point distribution of commodities in high volumes over extended periods of time. Sulfur Services Segment Industry Overview.
However, pipelines are not able to transport some of the products we transport and are generally a less flexible form of transportation because they are limited to the fixed point-to-point distribution of commodities in high volumes over extended periods of time. Sulfur Services Segment We maintain an integrated system of transportation assets and facilities relating to our sulfur services.
We own and operate a diversified asset base that enables us to offer our customers an integrated distribution network consisting of terminalling, storage, packaging and other midstream logistical services for petroleum products and by-products in one of the world’s most active refining and petrochemical regions. Experienced Management Team and Operational Expertise .
Vertically Integrated Services Provided for U.S. Gulf Coast-Centric Asset and Operational Footprint. We own and operate a diversified asset base that enables us to offer our customers an integrated distribution network consisting of terminalling, storage, packaging and other midstream logistical services for petroleum products and by-products in one of the world’s most active refining and petrochemical regions.
Marine Shore-Based Terminals. We own or operate 14 marine shore-based terminals along the U.S. Gulf Coast from Theodore, Alabama to Corpus Christi, Texas. Our terminalling assets are located at strategic distribution points for the products we handle and are in close proximity to our customers.
Gulf Coast from Theodore, Alabama to Corpus Christi, Texas. Our terminalling assets are located at strategic distribution points for the products we handle and are in close proximity to our customers. We are one of the largest operators of marine shore-based terminals in the Gulf Coast region of the U.S.
Coast Guard and American Bureau of Shipping maintain a stringent regimen of vessel inspections, which tends to result in higher regulatory compliance costs for U.S.-flagged operators than for owners of vessels registered under foreign flags of convenience.
This results in lower shipyard costs both for new vessels and repairs than those paid by U.S.-flagged vessel owners. The U.S. Coast Guard and American Bureau of Shipping maintain a stringent regimen of vessel inspections, which tends to result in higher regulatory compliance costs for U.S.-flagged operators than for owners of vessels registered under foreign flags of convenience.
Our four primary business lines include: • Terminalling, processing, storage and packaging services for petroleum products and by-products, including the refining of naphthenic crude oil; • Land and marine transportation services for petroleum products and by-products, chemicals, and specialty products; • Sulfur and sulfur-based products processing, manufacturing, marketing, and distribution; and • Natural gas liquids ("NGL") marketing, distribution, and transportation services.
Our four primary business lines include: • Terminalling, processing, and storage services for petroleum products and by-products; • Land and marine transportation services for petroleum products and by-products, chemicals, and specialty products; • Sulfur and sulfur-based products processing, manufacturing, marketing, and distribution; and • Marketing, distribution, and transportation services for natural gas liquids ("NGL") and blending and packaging services for specialty lubricants and grease.
These documents are provided as soon as is reasonably practicable after their filing with the SEC. This website address is intended to be an inactive, textual reference only, and none of the material on this website is part of this report. These documents may also be found at the SEC’s website at www.sec.gov.
This website address is intended to be an inactive, textual reference only, and none of the material on this website is part of this report. These documents may also be found at the SEC’s website at www.sec.gov.
Natural gasoline is used as a component of motor gasoline, as a petrochemical feedstock and as a diluent. 12 Facilities. We purchase NGLs primarily from major domestic oil refiners and natural gas processors. We transport NGLs using MTI's land transportation fleet or by contracting with common carriers, owner-operators and railroad tank car transportation companies.
Ethane is almost entirely used as a petrochemical feedstock in the production of ethylene and propylene. We purchase NGLs primarily from major domestic oil refiners and natural gas processors. We transport NGLs using MTI's land transportation fleet or by contracting with common carriers, owner-operators and railroad tank car transportation companies.
On January 23, 2023, we declared a quarterly cash distribution of $0.005 per common unit for the fourth quarter of 2022, or $0.02 per common unit on an annualized basis, which was paid on February 14, 2023 to unitholders of record as of February 7, 2023.
On January 23, 2024, we declared a quarterly cash distribution of $0.005 per common unit for the fourth quarter of 2023, or $0.02 per common unit on an annualized basis, which was paid on February 14, 2024 to unitholders of record as of February 7, 2024. 3 Our Growth Strategy The key components of our growth strategy are: • Establish Strategic Commercial Alliances .
The following is a summary description of our fuel and lubricant terminals at: Terminal Location Aggregate Capacity (barrels) End of Lease (Including Options) Amelia Amelia, Louisiana 12,900 August 2023 Dock 193 3 Gueydan, Louisiana 11,000 May 2024 Fourchon Fourchon, Louisiana 80,900 May 2027 Fourchon 16 Fourchon, Louisiana 15,200 July 2048 Galveston T 2 Galveston, Texas 10,500 Own Jennings Bulk Plant Jennings, Louisiana 9,100 Own Lake Charles T Lake Charles, Louisiana 600 April 2023 Pascagoula 2, 4 Pascagoula, Mississippi 10,100 Own Port Arthur Port Arthur, Texas 16,300 November 2025 Port O'Connor 1 Port O'Connor, Texas — March 2023 Sabine Pass 2 Sabine Pass, Texas 16,100 September 2036 1 This terminal is currently in caretaker status and the lease will not be renewed at the end of the current option. 2 This terminal is currently in caretaker status. 3 A portion of this terminal is owned. 4 On February 14, 2023, we closed on the sale of the Pascagoula terminal.
The following is a summary description of our fuel and lubricant terminals at: Terminal Location Aggregate Capacity (barrels) End of Lease (Including Options) Amelia Amelia, Louisiana 13,000 August 2028 Dock 193 2 Gueydan, Louisiana 11,000 May 2024 Fourchon Fourchon, Louisiana 80,900 May 2027 Fourchon 16 Fourchon, Louisiana 15,200 July 2048 Galveston T 1 Galveston, Texas 10,500 Own Jennings Bulk Plant Jennings, Louisiana 7,600 Own Lake Charles T Lake Charles, Louisiana 1,000 February 2028 Port Arthur Port Arthur, Texas 16,400 November 2028 Sabine Pass 1 Sabine Pass, Texas 16,000 September 2036 1 This terminal is currently in caretaker status. 2 A portion of this terminal is owned.
All of these services must be in compliance with applicable environmental and other regulations. We successfully compete for terminal customers because of the strategic location of our terminals along the U.S. Gulf Coast, our integrated transportation services, our reputation, the prices we charge for our services and the quality and versatility of our services.
We successfully compete for terminal customers because of the strategic location of our terminals along the U.S. Gulf Coast, our integrated transportation services, our reputation, the prices we charge for our services and the quality and versatility of our services.
We own or operate 14 marine shore-based terminal facilities and 13 specialty terminal facilities located primarily in the Gulf Coast region of the U.S. with aggregate storage capacity of 2.7 million barrels.
We own or operate 12 marine shore-based terminal facilities and 9 specialty terminal facilities located primarily in the Gulf Coast region of the U.S. with aggregate storage capacity of 2.6 million barrels. Further, we own approximately 2.3 million barrels of underground storage capacity for NGLs.
This imbalance causes increases in inventories during summer months when consumption is low and decreases in inventories during winter months when consumption is high. In September, demand for normal butane typically increases with refineries entering the winter gasoline-blending season, resulting in upward pressure on prices. Abnormally cold weather can put extra upward pressure on propane prices during the winter. Competition.
This imbalance causes increases in inventories during summer months when consumption is low and decreases in inventories during winter months when consumption is high. Abnormally cold weather can put extra upward pressure on propane prices during the winter. Competition.
As a result, we are responsible for monitoring the ownership of our subsidiaries that engage in maritime transportation and for taking any remedial action necessary to ensure that no violation of the Jones Act ownership restrictions occurs. The Jones Act also requires that all U.S.-flagged vessels be manned by U.S. citizens.
Since we engage in maritime transportation between locations in the U.S., we are subject to the provisions of the law. As a result, we are responsible for monitoring the ownership of our subsidiaries that engage in maritime transportation and for taking any remedial action necessary to ensure that no violation of the Jones Act ownership restrictions occurs.
Martin Resource Management Corporation, owner of our general partner, which is privately owned, assumes a significant amount of the working capital demands and margin risk, providing stable fee-based cash flows to our limited partners. Terminalling and Storage Segment Industry Overview.
Martin Resource Management Corporation, owner of our general partner, which is privately owned, assumes a significant amount of the working capital demands and margin risk, providing stable fee-based cash flows to our limited partners. Terminalling and Storage Segment Specialty Terminal Operations We own or operate nine terminalling facilities providing storage, handling and transportation of various petroleum products and by-products.
On February 8, 2023, we completed the sale of $400.0 million in aggregate principal amount of our 11.50% senior secured second lien notes due 2028 (the “2028 Notes”).
On February 8, 2023, we completed the sale of $400.0 million in aggregate principal amount of our 2028 Notes.
Ethane is almost entirely used as a petrochemical feedstock in the production of ethylene and propylene. Propane is used as a petrochemical feedstock in the production of ethylene and propylene, as a fuel for heating, for industrial applications, as motor fuel and as a refrigerant.
NGLs include propane, natural gasoline, normal butane, iso butane and ethane. Propane is used as a petrochemical feedstock in the production of ethylene and propylene, as a fuel for heating, for industrial applications, as motor fuel and as a refrigerant. Natural gasoline is used as a component of motor gasoline, as a petrochemical feedstock and as a diluent.
Foreign-flagged seamen generally receive lower wages and benefits than those received by U.S. citizen seamen. This requirement significantly increases operating costs of U.S.-flagged vessel operations compared to foreign-flagged vessel operations. Certain foreign governments subsidize their nations’ shipyards. This results in lower shipyard costs both for new vessels and repairs than those paid by U.S.-flagged vessel owners. The U.S.
The Jones Act also requires that all U.S.-flagged vessels be manned by U.S. citizens. Foreign-flagged seamen generally receive lower wages and benefits than those received by U.S. citizen seamen. This requirement significantly increases operating costs of U.S.-flagged vessel operations compared to foreign-flagged vessel operations. Certain foreign governments subsidize their nations’ shipyards.
We provide these terminalling and storage services on a fixed-fee basis and a significant portion of the contracts in this segment provide for minimum fee arrangements that are not based on the volumes handled.
We provide these terminalling and storage services on a fixed-fee basis and a significant portion of the contracts in this segment provide for minimum fee arrangements that are not based on the volumes handled. We believe that our terminalling, processing and storage for petroleum products and by-products would be difficult for our customers or competitors to replicate. • Transportation.
Pursuant to the terms of the Omnibus Agreement, we are prohibited from entering into certain material agreements with Martin Resource Management Corporation without the approval of the conflicts committee of our general partner ("Conflicts Committee").
Pursuant to the terms of the Omnibus Agreement, we are prohibited from entering into certain material agreements with Martin Resource Management Corporation without the approval of the conflicts committee of our general partner ("Conflicts Committee"). 13 For a more comprehensive discussion concerning the Omnibus Agreement and the other agreements that we have entered into with Martin Resource Management Corporation, please see "Item 13.
Financial Information about Segments Information regarding our operating revenues and identifiable assets attributable to each of our segments is presented in Note 18 to our consolidated financial statements included in this annual report on Form 10-K.
Financial Information about Segments Information regarding our operating revenues and identifiable assets attributable to each of our segments is presented in Note 18 to our consolidated financial statements included in this annual report on Form 10-K. 18 Access to Public Filings We provide public access to our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports filed with the U.S.
The refinery's capacity is dedicated to a subsidiary of Martin Resource Management Corporation through a long-term tolling agreement based on throughput rates and a monthly reservation fee. In Smackover, Arkansas, we own and operate a terminal used for lubricant blending, processing, packaging, marketing and distribution.
The refinery's capacity is dedicated to a subsidiary of Martin Resource Management Corporation through a long-term tolling agreement based on throughput rates and a monthly reservation fee.
The following is a summary description of our owned NGL facilities: NGL Facility Location Capacity Description Wholesale terminals Arcadia, Louisiana 2,200,000 barrels Underground and above ground NGL storage terminal Rail terminal Arcadia, Louisiana 24 railcars per day Railcar loading and unloading facility Spindletop storage facility Beaumont, Texas 90,695 barrels Above ground storage tank and pipeline connections In addition to the owned NGL facilities above, we lease underground storage capacity at two locations under short-term lease agreements.
The following is a summary description of our owned NGL facilities: NGL Facility Location Capacity Description Wholesale terminals Arcadia, Louisiana 2,300,000 barrels Underground and above ground NGL storage terminal Rail terminal Arcadia, Louisiana 24 railcars per day Railcar loading and unloading facility Spindletop storage facility Beaumont, Texas 91,000 barrels Above ground storage tank and pipeline connections Our NGL customers consist of industrial processors and retail propane distributors.
Some of these specialty products require treatment across a wide range of temperatures (between approximately -30 to +400 degrees Fahrenheit) to remain in liquid form, which our facilities are designed to accommodate.
Some of these specialty products require treatment across a wide range of temperatures (between approximately -30 to +400 degrees Fahrenheit) to remain in liquid form, which our facilities are designed to accommodate. These capabilities help us enhance relationships with our customers by offering them specialized services to handle their unique product requirements.
Driver availability plays a major role in each market participant's ability to generate revenue. Competition in our service regions is based primarily on freight rates, service, efficiency, and available capacity. Marine Transportation Industry Overview.
Driver availability plays a major role in each market participant's ability to generate revenue. Competition in our service regions is based primarily on freight rates, service, efficiency, and available capacity. Marine Transportation Operations We utilize a fleet of inland and offshore tows that provide marine transportation of petroleum products and by-products produced in oil refining.
For the years ended December 31, 2022, 2021, and 2020, the board of directors of our general partner approved reimbursement amounts of $13.5 million, $14.4 million and $16.4 million, respectively, reflecting our allocable share of such expenses.
For the years ended December 31, 2023 and 2022, the board of directors of our general partner approved reimbursement amounts of $14.0 million and $13.5 million, respectively, reflecting our allocable share of such expenses. The board of directors of our general partner will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.
We, through our affiliate Martin Transport, Inc., ("MTI") will also provide land transportation services of the ELSA produced by DSM. The Partnership expects to fund approximately $20.0 million in aggregate capital expenditures in connection with this joint venture and the Partnership’s related services in 2023 and 2024. Divestiture of Stockton, California Sulfur Terminal.
We, through our affiliate Martin Transport, Inc. ("MTI"), will also provide land transportation services of the ELSA produced by DSM. We expect to fund approximately $25.5 million in aggregate capital expenditures in connection with this joint venture and our related services. As of December 31, 2023, we have funded approximately $8.6 million toward ELSA-related project costs.
Our land transportation assets include approximately 700 trucks and 1,200 tank trailers which are based across 25 terminals strategically located throughout the U.S. Gulf Coast and southeastern U.S.
We operate a fleet of both land transportation and marine transportation assets that transport petroleum products and by-products, petrochemicals, and chemicals. Our land transportation assets include approximately 760 trucks and 1,425 tank trailers which are based across 25 terminals strategically located throughout the U.S. Gulf Coast and southeastern U.S.
In the U.S., recovered sulfur is mainly kept in liquid form from production to usage at a temperature of approximately 275 degrees Fahrenheit. Because of the temperature requirement, the sulfur industry uses specialized equipment to store and transport molten sulfur. We have the necessary assets and expertise to handle the unique requirements for transportation and storage of molten sulfur.
Because of the temperature requirement, the sulfur industry uses specialized equipment to store and transport molten sulfur. We have the necessary assets and expertise to handle the unique requirements for transportation and storage of molten sulfur.
In Beaumont, Texas, we own a terminal ("Spindletop Terminal") where we receive natural gasoline via pipeline, store the natural gasoline in above ground tanks, and then ship the product to our customers via other pipelines to which the facility is connected, referred to as the "Spindletop Terminal." Our fees for the use of this facility are based on the volume of barrels shipped from the terminal under an arrangement that includes a provision for minimum volume throughput requirements.
In Beaumont, Texas, we own a terminal ("Spindletop Terminal") where we receive natural gasoline via pipeline, store the natural gasoline in above ground tanks, and then ship the product to our customers via other pipelines to which the facility is connected.
As part of rejoining the Paris Agreement, President Biden announced that the U.S. would commit to a 50 to 52 percent reduction from 2005 levels of GHG emissions by 2030 and set the goal of reaching net-zero GHG emissions by 2050.
The EPA regulates GHG emissions under existing provisions of the federal CAA. Further, under the Paris Agreement, the U.S. has committed to a 50 to 52 percent reduction from 2005 levels of GHG emissions by 2030 and set the goal of reaching net-zero GHG emissions by 2050.
Competition. We compete with independent terminal operators and major energy and chemical companies that own their own terminalling and storage facilities. Many customers prefer to contract with independent terminal operators rather than terminal operators owned by integrated energy and chemical companies that may have refining or marketing interests that compete with the customers.
Many of our customers prefer to contract with independent terminal operators rather than terminal operators owned by integrated energy and chemical companies that may have refining or marketing interests that compete with them. Independent terminal owners generally compete on the basis of the location and versatility of terminals, service and price.
We are one of the largest operators of marine shore-based terminals in the Gulf Coast region of the U.S. These terminals are used to distribute and market fuel and lubricants. Additionally, full service terminals also provide shore bases for companies that are operating in the offshore exploration and production industry.
These terminals are used to distribute and market fuel and lubricants. Additionally, full service terminals also provide shore bases for companies that are operating in the offshore exploration and production industry. Customers are primarily oil and gas exploration and production companies and oilfield service companies, such as drilling fluid companies, marine transportation companies and offshore construction companies.
In general, we expect to increase our expenditures relating to compliance with likely higher industry and regulatory safety standards such as those described above. These expenditures cannot be accurately estimated at this time, but we do not expect them to have a material adverse effect on our business.
In general, we expect to increase our expenditures relating to compliance with likely higher industry and regulatory safety standards such as those described above.
The following is a summary description of our shore-based specialty terminals: Terminal Location Aggregate Capacity (in barrels) Products Description Tampa 1 Tampa, Florida 662,000 Asphalt, crude oil, and diesel Marine terminal, loading/unloading for vessels, barges, railcars and trucks Stanolind Beaumont, Texas 620,000 Asphalt, crude oil, sulfur, and sulfuric acid Marine terminal, marine dock for loading/unloading of vessels, barges, railcars and trucks Neches 2 Beaumont, Texas 526,000 Molten sulfur, formed sulfur, ammonia, asphalt, fuel oil, crude oil and sulfur-based fertilizer Marine terminal, loading/unloading for vessels, barges, railcars and trucks 1 The terminal is located on land owned by the Tampa Port Authority that was leased to us under a lease that expires in December 2026. 2 The Neches terminal is a deep water marine terminal located near Beaumont, Texas, on approximately 50 acres of land owned by us, and an additional 96 acres leased to us under terms of a 20-year lease that commenced on May 1, 2014 with three five-year options. 6 The following is a summary description of our non shore-based specialty terminals: Terminal Location Aggregate Capacity Products Description Smackover Refinery Smackover, Arkansas 7,700 barrels per day; 275,000 barrels of crude bulk storage; 647,000 barrels of lubricant storage Naphthenic lubricants, distillates, asphalt, crude oil Naphthenic rude refining facility Martin Lubricants Smackover, Arkansas 4.0 million gallons bulk storage Agricultural, automotive, and industrial lubricants and grease Lubricants packaging facility Martin Specialty Products 1 Kansas City, Missouri 14 million pounds of production capacity Automotive, commercial and industrial greases Grease manufacturing and packaging facility Martin Specialty Products Houston, Texas 16 million pounds of production capacity Commercial and industrial greases Grease manufacturing and packaging facility Martin Specialty Products 2 Phoenix, Arizona 6 million pounds of production capacity Commercial and industrial greases Grease manufacturing and packaging facility Hondo Asphalt Hondo, Texas 182,000 barrels Asphalt Asphalt processing and storage South Houston Asphalt Houston, Texas 95,000 barrels Asphalt Asphalt processing and storage Port Neches Asphalt Port Neches, Texas 17,500 barrels Asphalt Asphalt processing and storage Omaha Asphalt Omaha, Nebraska 112,000 barrels Asphalt Asphalt processing and storage Spindletop Beaumont, Texas 90,000 barrels Natural gasoline Pipeline receipts and shipments 1 This terminal contains a warehouse owned by third parties and leased under a lease that expires in December 2025 and can be extended by us for one five-year period. 2 This terminal contains a warehouse owned by third parties and leased under a lease that expires in October 2024 and can be extended by us for one five-year period.
The following is a summary description of our shore-based specialty terminals: Terminal Location Aggregate Capacity (in barrels) Products Description Tampa 1 Tampa, Florida 662,000 Asphalt, crude oil, and diesel Marine terminal, loading/unloading for vessels, barges, railcars and trucks Stanolind Beaumont, Texas 620,000 Asphalt, crude oil, sulfur, and sulfuric acid Marine terminal, marine dock for loading/unloading of vessels, barges, railcars and trucks Neches 2 Beaumont, Texas 526,000 Molten sulfur, formed sulfur, ammonia, asphalt, fuel oil, crude oil and sulfur-based fertilizer Marine terminal, loading/unloading for vessels, barges, railcars and trucks 1 The terminal is located on land owned by the Tampa Port Authority that was leased to us under a lease that expires in December 2026. 5 2 The Neches terminal is a deep water marine terminal located near Beaumont, Texas, on approximately 50 acres of land owned by us, and an additional 96 acres leased to us under terms of a 20-year lease that commenced on May 1, 2014 with three five-year options.
We provide specialized value-added services to our customers and believe we have become an integral part of their value chain. Fee-Based Contracts. We generate a significant amount of our cash flow from fee-based contracts with our customers, many of which are major and independent oil and gas companies with whom we have long-standing customer relationships.
We generate a significant amount of our cash flow from fee-based contracts with our customers, many of which are major and independent oil and gas companies with whom we have long-standing customer relationships. A majority of our fee-based contracts consist of reservation charges or minimum fee arrangements, which reduce the volatility of our cash flows due to volume fluctuations.
Environmental and Regulatory Matters 15 Our activities are subject to various federal, state and local laws and regulations, as well as orders of regulatory bodies, governing a wide variety of matters, including marketing, production, pricing, community right-to-know, protection of the environment, safety and other matters.
However, there can be no assurance that all risks are adequately insured against, that any particular claim will be paid by the insurer, or that we will be able to procure adequate insurance coverage at commercially reasonable rates in the future. 14 Environmental and Regulatory Matters Our activities are subject to various federal, state and local laws and regulations, as well as orders of regulatory bodies, governing a wide variety of matters, including marketing, production, pricing, community right-to-know, protection of the environment, safety and other matters.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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We have significant capital needs, and our ability to access the capital and credit markets to raise capital on favorable terms is limited by our debt level, industry conditions, and financial covenants in our debt instruments.
We have significant capital needs, and our ability to access the capital and credit markets to raise capital on favorable terms is limited by our debt level, industry conditions, and financial covenants in our debt instruments.
The natural decline in production in our operating regions and in other regions from which we source NGL supplies means our long-term success depends on our ability to obtain new sources of supplies of natural gas, NGLs and crude oil, which depends on certain factors beyond our control.
The natural decline in production in our operating regions and in other regions from which we source NGL supplies means our long-term success depends on our ability to obtain new sources of supplies of natural gas, NGLs and crude oil, which depends on certain factors beyond our control.
NASDAQ does not require a publicly traded partnership like us to comply with certain of its corporate governance requirements, and therefore, unitholders do not have the same protections afforded to shareholders of corporations subject to all NASDAQ requirements.
NASDAQ does not require a publicly traded partnership like us to comply with certain of its corporate governance requirements, and therefore, unitholders do not have the same protections afforded to shareholders of corporations subject to all NASDAQ requirements.
Our general partner may also cause us to issue an unlimited number of additional common units or other equity securities of equal rank with the common units, without unitholder approval, in a number of circumstances such as: • the issuance of common units in additional public offerings or in connection with acquisitions that increase cash flow from operations on a pro forma, per unit basis; • the conversion of subordinated units into common units; • the conversion of units of equal rank with the common units into common units under some circumstances; or • the conversion of our general partner's general partner interest in us as a result of the withdrawal of our general partner.
Our general partner may also cause us to issue an unlimited number of additional common units or other equity securities of equal rank with the common units, without unitholder approval, in a number of circumstances such as: • the issuance of common units in additional public offerings or in connection with acquisitions that increase cash flow from operations on a pro forma, per unit basis; • the conversion of subordinated units into common units; • the conversion of units of equal rank with the common units into common units under some circumstances; or • the conversion of our general partner's general partner interest in us as a result of the withdrawal of our general partner.
A successful IRS contest of the federal income tax positions we take could adversely affect the market for our common units and the costs of any contest will be borne by our unitholders, debt security holders and our general partner.
A successful IRS contest of the federal income tax positions we take could adversely affect the market for our common units and the costs of any contest will be borne by our unitholders, debt security holders and our general partner.
Entity level taxes on income from C corporation subsidiaries will reduce cash available for distribution, and an individual unitholder’s share of dividend and interest income from such subsidiaries would constitute portfolio income that could not be offset by the unitholder’s share of our other losses or deductions.
Entity level taxes on income from C corporation subsidiaries will reduce cash available for distribution, and an individual unitholder’s share of dividend and interest income from such subsidiaries would constitute portfolio income that could not be offset by the unitholder’s share of our other losses or deductions.
We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred.
We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred.
We have adopted certain valuation methodologies and monthly conventions for U.S. federal income tax purposes that may result in a shift of income, gain, loss and deduction among our unitholders. The IRS may challenge this treatment, which could adversely affect the value of our units.
We have adopted certain valuation methodologies and monthly conventions for U.S. federal income tax purposes that may result in a shift of income, gain, loss and deduction among our unitholders. The IRS may challenge this treatment, which could adversely affect the value of our units.
Martin Resource Management Corporation's directors and officers have a fiduciary duty to make these decisions in the best interests of the shareholders of Martin Resource Management Corporation without regard to the best interests of the unitholders; • Martin Resource Management Corporation may engage in limited competition with us; 37 • Our general partner is allowed to take into account the interests of parties other than us, such as Martin Resource Management Corporation, in resolving conflicts of interest, which has the effect of reducing its fiduciary duty to our unitholders; • Under our Partnership Agreement, our general partner may limit its liability and reduce its fiduciary duties, while also restricting the remedies available to our unitholders for actions that, without the limitations and reductions, might constitute breaches of fiduciary duty.
Martin Resource Management Corporation's directors and officers have a fiduciary duty to make these decisions in the best interests of the shareholders of Martin Resource Management Corporation without regard to the best interests of the unitholders; • Martin Resource Management Corporation may engage in limited competition with us; • Our general partner is allowed to take into account the interests of parties other than us, such as Martin Resource Management Corporation, in resolving conflicts of interest, which has the effect of reducing its fiduciary duty to our unitholders; • Under our Partnership Agreement, our general partner may limit its liability and reduce its fiduciary duties, while also restricting the remedies available to our unitholders for actions that, without the limitations and reductions, might constitute breaches of fiduciary duty.
The amount of cash we can distribute on our common units principally depends upon the amount of net cash generated from our operations, which will fluctuate from quarter to quarter based on, among other things: • the costs of acquisitions, if any; • the prices of petroleum products and by-products; • fluctuations in our working capital; • the level of capital expenditures we make; • restrictions contained in our debt instruments and our debt service requirements; • our ability to make working capital borrowings under our credit facility; and 22 • the amount, if any, of cash reserves established by our general partner in its discretion.
The amount of cash we can distribute on our common units principally depends upon the amount of net cash generated from our operations, which will fluctuate from quarter to quarter based on, among other things: • the costs of acquisitions, if any; • the prices of petroleum products and by-products; • fluctuations in our working capital; • the level of capital expenditures we make; • restrictions contained in our debt instruments and our debt service requirements; • our ability to make working capital borrowings under our credit facility; and • the amount, if any, of cash reserves established by our general partner in its discretion.
Potential conflicts of interest between us, Martin Resource Management Corporation and our general partner could occur in many of our day-to-day operations including, among others, the following situations: • Officers of Martin Resource Management Corporation who provide services to us also devote significant time to the businesses of Martin Resource Management Corporation and are compensated by Martin Resource Management Corporation for that time; • Neither our Partnership Agreement nor any other agreement requires Martin Resource Management Corporation to pursue a business strategy that favors us or utilizes our assets or services.
Potential conflicts of interest between us, Martin Resource Management Corporation and our general partner could occur in many of our day-to-day operations including, among others, the following situations: • Officers of Martin Resource Management Corporation who provide services to us also devote significant time to the businesses of Martin Resource Management Corporation and are compensated by Martin Resource Management Corporation for that time; 36 • Neither our Partnership Agreement nor any other agreement requires Martin Resource Management Corporation to pursue a business strategy that favors us or utilizes our assets or services.
Ratings are subject to revision or withdrawal at any time by the rating agencies, and we cannot assure you that we will maintain our current credit ratings. The industry in which we operate is highly competitive, and increased competitive pressure could adversely affect our business and operating results. 32 We compete with similar enterprises in our respective areas of operation.
Ratings are subject to revision or withdrawal at any time by the rating agencies, and we cannot assure you that we will maintain our current credit ratings. The industry in which we operate is highly competitive and increased competitive pressure could adversely affect our business and operating results. We compete with similar enterprises in our respective areas of operation.
Current and prospective non-U.S. unitholders should consult their tax advisors regarding the impact of these rules on an investment in our common units. 41 We treat a purchaser of our common units as having the same tax benefits without regard to the seller's identity. The IRS may challenge this treatment, which could adversely affect the value of the common units.
Current and prospective non-U.S. unitholders should consult their tax advisors regarding the impact of these rules on an investment in our common units. We treat a purchaser of our common units as having the same tax benefits without regard to the seller's identity. The IRS may challenge this treatment, which could adversely affect the value of the common units.
Martin Resource Management Corporation and its affiliates may engage in limited competition with us. 21 If Martin Resource Management Corporation were ever to file for bankruptcy or otherwise default on its obligations under its credit facility, amounts we owe under our credit facility may become immediately due and payable and our results of operations could be adversely affected. The U.S.
Martin Resource Management Corporation and its affiliates may engage in limited competition with us. If Martin Resource Management Corporation were ever to file for bankruptcy or otherwise default on its obligations under its credit facility, amounts we owe under our credit facility may become immediately due and payable and our results of operations could be adversely affected. The U.S.
Since we do not own or operate these pipelines or other facilities, their continuing operation in their current manner is not within our control. If any of these third-party facilities become partially or fully unavailable, or if the quality specifications for their facilities change so as to restrict our ability to utilize them, our revenues could be adversely affected.
Since we do not own or operate these pipelines, storage, or other facilities, their continuing operation in their current manner is not within our control. If any of these third-party facilities become partially or fully unavailable, or if the quality specifications for their facilities change so as to restrict our ability to utilize them, our revenues could be adversely affected.
Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, increased cost of operations, or otherwise harm our business. The regulatory environment surrounding data privacy and protection is constantly evolving and can be subject to significant change. New data protection laws pose increasingly complex compliance challenges and potentially elevate our costs.
Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, increased cost of operations, or otherwise harm our business. 32 The regulatory environment surrounding data privacy and protection is constantly evolving and can be subject to significant change. New data protection laws pose increasingly complex compliance challenges and potentially elevate our costs.
An individual unitholders’ share of dividend and interest income from MTI or other C corporation subsidiaries would constitute portfolio income that could not be offset by the unitholders’ share of our other losses or deductions. Unitholders may be subject to state, local and foreign taxes and return filing requirements as a result of investing in our common units.
An individual unitholders’ share of dividend and interest income from MTI or other C corporation subsidiaries would constitute portfolio income that could not be offset by the unitholders’ share of our other losses or deductions. Unitholders may be subject to state and local taxes and return filing requirements as a result of investing in our common units.
In addition, the obligation to withhold will be imposed on the broker instead of the transferee (and we will generally not be required to withhold from the transferee amounts that should have been withheld by the transferee but were not withheld). These withholding obligations will apply to transfers of our common units occurring on or after January 1, 2023.
In addition, the obligation to withhold will be imposed on the broker instead of the transferee (and we will generally not be required to withhold from the transferee amounts that should have 40 been withheld by the transferee but were not withheld). These withholding obligations will apply to transfers of our common units occurring on or after January 1, 2023.
Any decrease in supplies of natural gas, NGLs or crude oil could adversely affect our business and operating results. Our NGL and sulfur-based fertilizer products are subject to seasonal demand and could cause our revenues to vary. The highly competitive nature of our industry could adversely affect our results of operations and ability to make distributions to our unitholders.
Any decrease in supplies of natural gas, NGLs or crude oil could adversely affect our business and operating results. Our NGL and sulfur-based fertilizer products are subject to seasonal demand and could cause our revenues to vary. 19 The highly competitive nature of our industry could adversely affect our results of operations and ability to make distributions to our unitholders.
Our and our subsidiaries’ ability to access capital markets could also be limited by a downgrade of our credit ratings. Credit rating agencies perform independent analysis when assigning credit ratings. The analysis includes a number of criteria including, but not limited to, business composition, market and operational risks, as well as various financial tests.
Our and our subsidiaries’ ability to access capital markets could also be limited by a downgrade of our credit ratings. 31 Credit rating agencies perform independent analysis when assigning credit ratings. The analysis includes a number of criteria including, but not limited to, business composition, market and operational risks, as well as various financial tests.
Tax Risks 38 The U.S. Internal Revenue Service ("IRS") could treat us as a corporation for tax purposes, which would substantially reduce the cash available for distribution to unitholders. The anticipated after-tax economic benefit of an investment in us depends largely on our classification as a partnership for federal income tax purposes.
Tax Risks The U.S. Internal Revenue Service ("IRS") could treat us as a corporation for tax purposes, which would substantially reduce the cash available for distribution to unitholders. The anticipated after-tax economic benefit of an investment in us depends largely on our classification as a partnership for federal income tax purposes.
A new owner of our general partner could replace the directors and officers of our general partner with its own designees and control the decisions taken by our general partner. Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable time or price.
A new owner of our general partner could replace the directors and officers of our general partner with its own designees and control the decisions taken by our general partner. 35 Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable time or price.
As a result, we may make cash distributions during periods when we record losses and may not make cash distributions during periods when we record net income. Restrictions in our debt instruments could prevent us from making distributions to our unitholders or limit our ability to pursue opportunities that would increase our distributions to unitholders.
As a result, we may make 21 cash distributions during periods when we record losses and may not make cash distributions during periods when we record net income. Restrictions in our debt instruments could prevent us from making distributions to our unitholders or limit our ability to pursue opportunities that would increase our distributions to unitholders.
Unitholders may be required to file state, local and foreign income tax returns and pay state and local income taxes in some or all of the various jurisdictions in which we do business or own property and may be subject to penalties for failure to comply with those requirements.
Unitholders may be required to file state and local income tax returns and pay state and local income taxes in some or all of the various jurisdictions in which we do business or own property and may be subject to penalties for failure to comply with those requirements.
In addition to federal income taxes, unitholders may be subject to other taxes, such as state, local and foreign income taxes, unincorporated business taxes and estate, inheritance, or intangible taxes that are imposed by the various jurisdictions in which we do business or own property.
In addition to federal income taxes, unitholders may be subject to other taxes, such as state and local income taxes, unincorporated business taxes and estate, inheritance, or intangible taxes that are imposed by the various jurisdictions in which we do business or own property.
If our lenders do declare us in default and accelerate repayment, we may be required to refinance our debt on unfavorable terms, which could negatively impact our results of operations and our ability to make distributions to our unitholders.
If our lenders do declare us in default and accelerate repayment, 37 we may be required to refinance our debt on unfavorable terms, which could negatively impact our results of operations and our ability to make distributions to our unitholders.
Unitholders may be subject to state, local and foreign taxes and return filing requirements as a result of investing in our common units. There are limits on the deductibility of our losses that may adversely affect our unitholders.
Unitholders may be subject to state and local taxes and return filing requirements as a result of investing in our common units. There are limits on the deductibility of our losses that may adversely affect our unitholders.
Further, any acquisition could result in: • post-closing discovery of material undisclosed liabilities of the acquired business or assets; • the unexpected loss of key employees or customers from the acquired businesses; • difficulties resulting from our integration of the operations, systems and management of the acquired business; and • an unexpected diversion of our management's attention from other operations. 25 If any future acquisitions are unsuccessful or result in unanticipated events or if we are unable to successfully integrate acquisitions into our existing operations, such acquisitions could adversely affect our results of operations, cash flow and ability to make distributions to our unitholders.
Further, any acquisition could result in: • post-closing discovery of material undisclosed liabilities of the acquired business or assets; • the unexpected loss of key employees or customers from the acquired businesses; • difficulties resulting from our integration of the operations, systems and management of the acquired business; and • an unexpected diversion of our management's attention from other operations. 24 If any future acquisitions are unsuccessful or result in unanticipated events or if we are unable to successfully integrate acquisitions into our existing operations, such acquisitions could adversely affect our results of operations, cash flow and ability to make distributions to our unitholders.
For example, our Partnership Agreement: • permits our general partner to make a number of decisions in its "sole discretion." This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or any limited partner; • provides that our general partner is entitled to make other decisions in its "reasonable discretion," which may reduce the obligations to which our general partner would otherwise be held; • generally provides that affiliated transactions and resolutions of conflicts of interest not involving a required vote of unitholders must be "fair and reasonable" to us and that, in determining whether a transaction or resolution is "fair and reasonable," our general partner may consider the interests of all parties involved, including its own; and 35 • provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for errors of judgment or for any acts or omissions if our general partner and those other persons acted in good faith.
For example, our Partnership Agreement: • permits our general partner to make a number of decisions in its "sole discretion." This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or any limited partner; 34 • provides that our general partner is entitled to make other decisions in its "reasonable discretion," which may reduce the obligations to which our general partner would otherwise be held; • provides that affiliated transactions and resolutions of conflicts of interest not involving a required vote of unitholders must be "fair and reasonable" to us and that, in determining whether a transaction or resolution is "fair and reasonable," our general partner may consider the interests of all parties involved, including its own; and • provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for errors of judgment or for any acts or omissions if our general partner and those other persons acted in good faith.
Treasury regulations permit publicly traded partnerships to use a monthly simplifying convention that is similar to 42 ours, but they do not specifically authorize all aspects of the proration method we have adopted.
Treasury regulations permit publicly traded partnerships to use a monthly simplifying convention that is similar to ours, but they do not specifically authorize all aspects of the proration method we have adopted.
Unitholders did not elect our general partner or its directors and will have no right to elect our general partner or its directors on an annual or other continuing basis. Holdings, the sole member of MMGP, elects the board of directors of our general partner.
Unitholders did not elect 33 our general partner or its directors and will have no right to elect our general partner or its directors on an annual or other continuing basis. Holdings, the sole member of MMGP, elects the board of directors of our general partner.
Numerous governmental authorities, such as the EPA and analogous state agencies, have the power to enforce compliance with these laws and regulations and the permits 29 issued under them, oftentimes requiring difficult and costly actions.
Numerous governmental authorities, such as the EPA and analogous state agencies, have the power to enforce compliance with these laws and regulations and the permits issued under them, oftentimes requiring difficult and costly actions.
No provision in our Partnership Agreement, or 36 in any other agreement we have with our general partner or Martin Resource Management Corporation, prohibits our general partner or its affiliates from acquiring more than 80% of our common units.
No provision in our Partnership Agreement, or in any other agreement we have with our general partner or Martin Resource Management Corporation, prohibits our general partner or its affiliates from acquiring more than 80% of our common units.
These hazards and risks, many of which are beyond our control, include: • accidents on rivers or at sea and other hazards that could result in releases, spills and other environmental damages, personal injuries, loss of life and suspension of operations; • leakage of NGLs and other petroleum products and by-products; • fires and explosions; 27 • damage to transportation, terminalling and storage facilities and surrounding properties caused by natural disasters; and • terrorist attacks or sabotage.
These hazards and risks, many of which are beyond our control, include: 26 • accidents on rivers or at sea and other hazards that could result in releases, spills and other environmental damages, personal injuries, loss of life and suspension of operations; • leakage of NGLs and other petroleum products and by-products; • fires and explosions; • damage to transportation, terminalling and storage facilities and surrounding properties caused by natural disasters; and • terrorist attacks or sabotage.
Operations at our facilities and at the facilities owned or operated by our suppliers and customers could be partially or completely shut down, temporarily or permanently, as the result of any number of circumstances that are not within our control, such as: • catastrophic events, including hurricanes; • environmental remediation; • labor difficulties; and • disruptions in the supply of our products to our facilities or means of transportation.
Operations at our facilities and at the facilities owned or operated by our suppliers and customers could be partially or completely shut down, temporarily or permanently, as the result of any number of circumstances that are not within our control, such as: • catastrophic events, including hurricanes; • environmental remediation; • labor difficulties; and • disruptions in the supply of our products to our facilities or modes of transportation.
We own property and/or conduct business in several states, many of which impose a personal income tax and also impose income taxes on corporations and other entities. We may do business or own property in other states or foreign countries in the future. It is the unitholder's responsibility to file all federal, state, local and foreign tax returns.
We own property and/or conduct business in several states, many of which impose a personal income tax and also impose income taxes on corporations and other entities. We may do business or own property in other states in the future. It is the unitholder's responsibility to file all federal, state and local tax returns.
The Final Regulations provide for a ten year transition period during which certain taxpayers that either obtained a favorable private letter ruling or treated income under a reasonable interpretation of the statute or prior proposed regulations as qualifying income may continue to treat such income as qualifying income.
The QI Regulations provide for a ten-year transition period during which certain taxpayers that either obtained a favorable private letter ruling or treated income under a reasonable interpretation of the statute or prior proposed regulations as qualifying income may continue to treat such income as qualifying income.
For example, in February 2021, we experienced Winter Storm Uri ("Uri"), an unprecedented storm bringing extreme cold temperatures to Texas and the surrounding areas, which resulted in gulf coast refineries running at reduced rates or halting operations entirely.
For example, in February 2021, we experienced Winter Storm Uri ("Uri"), an unprecedented storm bringing extreme cold temperatures and freezing precipitation to Texas and the surrounding areas, which resulted in Gulf Coast refineries running at reduced rates or halting operations entirely.
As of December 31, 2022, the maximum federal income tax rate applicable to such qualified dividend income that is allocable to individuals was 20% (plus a 3.8% net investment income tax that applies to certain net investment income earned by individuals, estates and trusts).
As of December 31, 2023, the maximum federal income tax rate applicable to such qualified dividend income that is allocable to individuals was 20% (plus a 3.8% net investment income tax that applies to certain net investment income earned by individuals, estates and trusts).
We may not be able to effect any of these actions on satisfactory terms or at all. Further, agreements we may enter into in the future governing our indebtedness could further restrict our ability to make quarterly distributions to our unitholders.
We may not be able to undertake any of these actions on satisfactory terms or at all. Further, agreements we may enter into in the future governing our indebtedness could further restrict our ability to make quarterly distributions to our unitholders.
It also could affect the amount of taxable gain from our unitholders' sale of units and could have a negative impact on the value of the units or result in audit adjustments to our unitholders' tax returns without the benefit of additional deductions. 43
It also could affect the amount of taxable gain from our unitholders' sale of units and could have a negative impact on the value of the units or result in audit adjustments to our unitholders' tax returns without the benefit of additional deductions. 42
As of December 31, 2022, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units and 100% of the ownership interests in MMGP. MMGP owns a 2% general partnership interest in us.
As of December 31, 2023, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units and 100% of the ownership interests in MMGP. MMGP owns a 2% general partnership interest in us.
As a result of purchasing units, our unitholders will be treated as having consented to some actions and conflicts of interest that, without such consent, might otherwise constitute a breach of fiduciary or other duties under applicable state law; • Our general partner determines which costs incurred by Martin Resource Management Corporation are reimbursable by us; • Our Partnership Agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered on terms that are fair and reasonable to us or from entering into additional contractual arrangements with any of these entities on our behalf; • Our general partner controls the enforcement of obligations owed to us by Martin Resource Management Corporation; • Our general partner decides whether to retain separate counsel, accountants or others to perform services for us; • The audit committee of our general partner retains our independent auditors; • In some instances, our general partner may cause us to borrow funds to permit us to pay cash distributions, even if the purpose or effect of the borrowing is to make incentive distributions; and • Our general partner has broad discretion to establish financial reserves for the proper conduct of our business.
As a result of purchasing units, our unitholders will be treated as having consented to some actions and conflicts of interest that, without such consent, might otherwise constitute a breach of fiduciary or other duties under applicable state law; • Our general partner determines which costs incurred by Martin Resource Management Corporation are reimbursable by us; • Our Partnership Agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered on terms that are fair and reasonable to us or from entering into additional contractual arrangements with any of these entities on our behalf; • Our general partner controls the enforcement of obligations owed to us by Martin Resource Management Corporation; • Our general partner decides whether to retain separate counsel, accountants or others to perform services for us; • The audit committee of our general partner retains our independent auditors; • In some instances, our general partner may cause us to borrow funds to permit us to pay cash distributions; and • Our general partner has broad discretion to establish financial reserves for the proper conduct of our business.
We have obtained favorable private letter rulings from the IRS in the past as to what constitutes "qualifying income" within the meaning 39 of Section 7704(d)(1)(E) of the Code and we expect to rely upon these private letter rulings for purposes of the ten year transition rule contained in the Final Regulations.
We have obtained favorable private letter rulings from the IRS in the past as to what constitutes "qualifying income" within the meaning of Section 7704(d)(1)(E) of the Code and we expect to rely upon these private letter rulings for purposes of the ten-year transition rule contained in the QI Regulations.
The price volatility of petroleum products and by-products could reduce our liquidity and results of operations and ability to make distributions to our unitholders. We purchase petroleum products and by-products, such as molten sulfur, fuel oils, NGLs (including normal butane), lubricants, and other bulk liquids and sell these products to wholesale and bulk customers and to other end users.
The price volatility of petroleum products and by-products could reduce our liquidity and results of operations and ability to make distributions to our unitholders. We purchase petroleum products and by-products, such as molten sulfur, fuel oils, NGLs, lubricants, and other bulk liquids and sell these products to wholesale and bulk customers and to other end users.
Our sulfur-based fertilizer products are subject to seasonal demand and could cause our revenues to vary. The demand for our sulfur-based fertilizer products experience an increase in demand during the spring, which increases the revenue generated by this business line in this period compared to other periods.
Our sulfur-based fertilizer products are subject to seasonal demand and could cause our revenues to vary. The demand for our sulfur-based fertilizer products generally experiences an increase in demand during the spring, which increases the revenue generated by this business line in this period compared to other periods.
The level of activity is subject to large fluctuations in response to relatively minor changes in a variety of factors that are beyond our control, including: • prevailing oil and natural gas prices and expectations about future prices and price volatility; • the ability of exploration and production companies to drill in other basins that have more attractive rates of return; • the cost of offshore exploration for and production and transportation of oil and natural gas; • worldwide demand for oil and natural gas (e.g., the reduced demand following the recent COVID-19 pandemic; • consolidation of oil and gas and oil service companies operating offshore; • availability and rate of discovery of new oil and natural gas reserves in offshore areas; • local and international political and economic conditions and policies; • technological advances affecting energy production and consumption; • weather conditions; • climate change; • environmental regulation; and • the ability of oil and gas companies to generate or otherwise obtain funds for exploration and production 23 As a result of the decline in commodity prices over the last several years, offshore development activity in the Gulf of Mexico declined substantially, diminishing demand for our terminalling and storage services.
The level of activity is subject to large fluctuations in response to relatively minor changes in a variety of factors that are beyond our control, including: • prevailing oil and natural gas prices and expectations about future prices and price volatility; • the ability of exploration and production companies to drill in other basins that have more attractive rates of return; • the cost of offshore exploration for and production and transportation of oil and natural gas; • worldwide demand for oil and natural gas • consolidation of oil and gas and oil service companies operating offshore; • availability and rate of discovery of new oil and natural gas reserves in offshore areas; • local and international political and economic conditions and policies; • technological advances affecting energy production and consumption; • weather conditions; • climate change; • environmental regulation; and • the ability of oil and gas companies to generate or otherwise obtain funds for exploration and production As a result of the decline in commodity prices over the last several years, offshore development activity in the Gulf of Mexico declined substantially, diminishing demand for our terminalling and storage services.
We are unable to predict whether any of these changes or other proposals will ultimately be enacted. Any such changes could negatively impact the value of an investment in our common units. On January 24, 2017, the U.S.
We are unable to predict whether any of these changes or other proposals will ultimately be enacted. Any such changes could negatively impact the value of an investment in our common units. In 2017, the U.S.
The significant reduction in refinery utilization as a result of reduced refined products demand 28 significantly impacted our Transportation and NGL segments. As the volume of products produced or purchased by refineries was been reduced, demand for our services decreased.
The significant reduction in refinery utilization as a result of reduced refined products demand significantly impacted our Transportation and NGL segments. As the volume of products produced or purchased by refineries has been reduced, demand for our services decreased.
For instance, while our credit facility had $275.0 million in lender commitments at December 31, 2022, the amount we were able to borrow was limited by the financial covenants contained therein. Fluctuations in interest rates could materially affect our financial results Borrowings under our credit facility are at variable rates.
For instance, while our credit facility had $175.0 million in lender commitments at December 31, 2023, the amount we were able to borrow was limited by the financial covenants contained therein. Fluctuations in interest rates could materially affect our financial results Borrowings under our credit facility are at variable rates.
Based on our floating rate debt outstanding as of December 31, 2022, a 100 basis point increase in interest rates on this amount of debt would result in an increase in interest expense and a corresponding decrease in net income of approximately $1.7 million annually. 24 We are exposed to counterparty risk in our credit facility and hedging agreements and we may not be able to access funds under our credit facility if there is a default.
Based on our floating rate debt outstanding as of December 31, 2023, a 100 basis point increase in interest rates on this amount of debt would result in an increase in interest expense and a corresponding decrease in net income of approximately $0.4 million annually. 23 We are exposed to counterparty risk in our credit facility and hedging agreements, and we may not be able to access funds under our credit facility if there is a default.
Adverse weather conditions, including droughts, hurricanes, tropical storms, ice storms, extreme cold weather and other severe weather, could reduce our results of operations and ability to make distributions to our unitholders.
Adverse weather conditions, including droughts, hurricanes, tropical storms, ice storms, extreme cold weather and other severe weather, exacerbated by climate change, could reduce our results of operations and ability to make distributions to our unitholders.
The loss of any of these services and products provided by Martin Resource Management Corporation could have a material adverse impact on our results of operations, cash flow and ability to make distributions to our unitholders. Additionally, we provide terminalling and storage, processing and marine transportation services to Martin Resource Management Corporation to support its businesses under various commercial contracts.
Additionally, we provide terminalling and storage, processing and marine transportation services to Martin Resource Management Corporation to support its businesses under various commercial contracts. The loss of Martin Resource Management Corporation as a customer could have a material adverse impact on our results of operations, cash flow and ability to make distributions to our unitholders.
If the Jones Act were to be modified to permit foreign competition that would not be subject to the same U.S. government imposed costs, we may need to lower the prices we charge for our services in order to compete with foreign competitors, which would adversely affect our cash flow and ability to make distributions to our unitholders. 31 Our marine transportation business could be adversely affected if the U.S.
If the Jones Act were to be modified or eliminated to permit foreign competition that would not be subject to the same U.S. government-imposed costs, we may need to lower the prices we charge for our services in order to compete with foreign competitors, which would adversely affect our cash flow and ability to make distributions to our unitholders.
The Final Regulations include "reserved" paragraphs for fertilizer and hedging, which the U.S. Department of the Treasury plans to address in future proposed and final Treasury regulations ("Treasury regulations"). We are unable to predict how such future regulations may treat fertilizer or hedging activities, but such regulations could impact our ability to treat certain activities as generating qualifying income.
Department of the Treasury plans to address in future proposed and final Treasury regulations. We are unable to predict how such future regulations may treat fertilizer or hedging activities, but such regulations could impact our ability to treat certain activities as generating qualifying income.
If we incur material liabilities that are not fully covered by insurance, such as liabilities resulting from accidents on rivers or at sea, spills, fires or explosions, our results of operations and ability to make distributions to our unitholders could be adversely affected. 20 The price volatility of petroleum products and by-products could reduce our liquidity and results of operations and ability to make distributions to our unitholders.
If we incur material liabilities that are not fully covered by insurance, such as liabilities resulting from accidents on rivers or at sea, spills, fires or explosions, our results of operations and ability to make distributions to our unitholders could be adversely affected.
Government purchases or requisitions any of our vessels under the Merchant Marine Act. We are subject to the Merchant Marine Act of 1936, which provides that, upon proclamation by the U.S. President of a national emergency or a threat to the national security, the U.S.
Our marine transportation business could be adversely affected if the U.S. Government purchases or requisitions any of our vessels under the Merchant Marine Act. We are subject to the Merchant Marine Act of 1936, which provides that, upon proclamation by the U.S. President of a national emergency or a threat to the national security, the U.S.
Thus, at this time and through the transition period, we believe that the Final Regulations will not significantly impact the amount of our gross income that we are able to treat as qualifying income.
Thus, at this time and through the end of 2027, we believe that the QI Regulations will not significantly impact the amount of our gross income that we are able to treat as qualifying income.
Unitholders may be allocated COD income, and income tax liabilities arising therefrom may exceed cash distributions or the value of the units. The ultimate effect of any such allocations will depend on the unitholder's individual tax position with 40 respect to its units.
Unitholders may be allocated COD income, and income tax liabilities arising therefrom may exceed cash distributions or the value of the units. The ultimate effect of any such allocations will depend on the unitholder's individual tax position with respect to its units. Unitholders are encouraged to consult their tax advisor with respect to the consequences to them of COD income.
With respect to some of these private letter rulings, the income that we derived from certain affected activities will be treated as qualifying income only until the end of the ten year transition period.
With respect to some of these private letter rulings, the income that we derived from certain affected activities will be treated as qualifying income only until the end of the ten-year transition period which, in our case, is December 31, 2027.
Debt we owe or incur in the future could limit our flexibility to obtain financing, to pursue other business opportunities, and to pay distributions to our unitholders. As of December 31, 2022, we had approximately $516.1 million in principal amount of debt outstanding (including $171.0 million outstanding under our credit facility).
Debt we owe or incur in the future could limit our flexibility to obtain financing, to pursue other business opportunities, and to pay distributions to our unitholders. 22 As of December 31, 2023, we had approximately $442.5 million in principal amount of debt outstanding (including $42.5 million outstanding under our credit facility).
If our unitholders sell their common units, they will recognize gain or loss equal to the difference between the amount realized and their tax basis in those common units.
Tax gain or loss on the disposition of our common units could be different than expected. If our unitholders sell their common units, they will recognize gain or loss equal to the difference between the amount realized and their tax basis in those common units.
The United States Environmental Protection Agency has proposed strict new methane emission regulations for certain oil and gas facilities and the IRA establishes a charge on methane emissions above certain limits from the same facilities.
In December 2023, the United States Environmental Protection Agency announced final strict new methane emission regulations for certain oil and gas facilities and the IRA established a charge on methane emissions above certain limits from the same facilities.
Due to COVID-19 protocols, many of our employees and those of our service providers, vendors and customers have been accessing computer systems remotely where their cybersecurity protections may be less robust and our cybersecurity procedures and safeguards may be less effective.
Many of our employees and those of our service providers, vendors and customers may access computer systems remotely where their cybersecurity protections may be less robust and our cybersecurity procedures and safeguards may be less effective.
If the IRS makes audit adjustments to our income tax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced.
If the IRS makes audit adjustments to our income tax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced. 20 Unitholders may be required to pay taxes on income from us, including their share of income from the cancellation of debt, even if they do not receive any cash distributions from us.
We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred.
The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders. 41 We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred.
For example, the IRA, signed into law in August 2022 by President Biden, includes incentives to increase renewable energy, such as wind and solar electric generation, and encourages consumers to use these alternative energy sources.
Our business could be impacted by initiatives to address greenhouse gases and climate change and incentives to conserve energy or use alternative energy sources. For example, the IRA, signed into law in August 2022 by President Biden, includes incentives to increase renewable energy, such as wind and solar electric generation, and encourages consumers to use these alternative energy sources.
Our business is subject to compliance with environmental laws and regulations that could expose us to significant costs and liabilities and adversely affect our results of operations and ability to make distributions to our unitholders.
We may lose customers and future business opportunities to our competitors and any such losses could adversely affect our results of operations and ability to make distributions to our unitholders. 28 Our business is subject to compliance with environmental laws and regulations that could expose us to significant costs and liabilities and adversely affect our results of operations and ability to make distributions to our unitholders.
For example, if we sell assets and use the proceeds to repay existing debt or fund capital expenditures, you may be allocated taxable income and gain resulting from the sale without receiving a cash distribution.
Additionally, we may engage in transactions to delever the partnership and manage our liquidity that may result in income to our unitholders without a corresponding cash distribution. 39 For example, if we sell assets and use the proceeds to repay existing debt or fund capital expenditures, you may be allocated taxable income and gain resulting from the sale without receiving a cash distribution.
As of December 31, 2022, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units and all of the ownership interests in MMGP, our general partner. 34 Unitholders' voting rights are further restricted by our Partnership Agreement provision prohibiting any units held by a person owning 20% or more of any class of units then outstanding, other than our general partner, its affiliates, their transferees and persons who acquired such units with the prior approval of our general partner's directors, from voting on any matter.
Unitholders' voting rights are further restricted by our Partnership Agreement provision prohibiting any units held by a person owning 20% or more of any class of units then outstanding, other than our general partner, its affiliates, their transferees and persons who acquired such units with the prior approval of our general partner's directors, from voting on any matter.
If these officers and employees do not or cannot devote sufficient attention to the management and operation of our business, our results of operations and ability to make distributions to our unitholders may be reduced.
If these officers and employees do not or cannot devote sufficient attention to the management and operation of our business, our results of operations and ability to make distributions to our unitholders may be reduced. 29 Our loss of significant commercial relationships with Martin Resource Management Corporation could adversely impact our results of operations and ability to make distributions to our unitholders.
Our business could also be adversely affected if the operations of our customers and suppliers experienced significant interruptions. Our operations are dependent upon our terminalling and storage facilities and various means of transportation. We are also dependent upon the uninterrupted operations of certain facilities owned or operated by our suppliers and customers.
Our business could be adversely affected if operations at our transportation, terminalling and storage and distribution facilities experienced significant interruptions. Our business could also be adversely affected if the operations of our customers and suppliers experienced significant interruptions. Our operations are dependent upon our terminalling and storage facilities and various modes of transportation.
We could incur losses due to impairment in the carrying value of our long-lived assets Increasing energy prices could adversely affect our results of operations. Decreasing energy prices could adversely affect our results of operations.
The price volatility of petroleum products and by-products could reduce our liquidity and results of operations and ability to make distributions to our unitholders. We could incur losses due to impairment in the carrying value of our long-lived assets Increasing energy prices could adversely affect our results of operations. Decreasing energy prices could adversely affect our results of operations.
Unitholders may be subject to limitations on their ability to deduct interest expenses incurred by us. Tax-exempt entities and non-U.S. persons face unique tax issues from owning common units that may result in adverse tax consequences to them. We treat a purchaser of our common units as having the same tax benefits without regard to the seller's identity.
Tax gain or loss on the disposition of our common units could be different than expected. Unitholders may be subject to limitations on their ability to deduct interest expenses incurred by us. Tax-exempt entities and non-U.S. persons face unique tax issues from owning common units that may result in adverse tax consequences to them.
Such processes potentially could cause serious damage to our terminal facilities, which could affect our ability to provide our processing, terminalling, storage and transportation services in the manner presently provided or in a manner consistent with our present plans. Additionally, such processes could impact our customers who operate along the U.S.
Gulf Coast and offshore could be impacted by subsidence and coastal erosion. Such processes potentially could cause serious damage to our terminal facilities, which could affect our ability to provide our processing, terminalling, storage and transportation services in the manner presently provided or in a manner consistent with our present plans.
Our marine transportation operations can be significantly delayed, impaired or postponed by adverse weather conditions, such as fog in the winter and spring months and certain river conditions.
Weather in these regions is sometimes severe (including tropical storms and hurricanes) and can be a major factor in our day-to-day operations. Our marine transportation operations can be significantly delayed, impaired or postponed by adverse weather conditions, such as fog in the winter and spring months and certain river conditions.
As noted above, we are also subject to the possibility of cyberattacks, which themselves may result in a violation of these laws. 33 Risks Relating to an Investment in the Common Units Units available for future sales by us or our affiliates could have an adverse impact on the price of our common units or on any trading market that may develop.
Risks Relating to an Investment in the Common Units Units available for future sales by us or our affiliates could have an adverse impact on the price of our common units or on any trading market that may develop.
The requirements that our vessels be U.S. built and manned by U.S. citizens, the crewing requirements and material requirements of the Coast Guard and the application of U.S. labor and tax laws significantly increase the costs of U.S. flagged vessels when compared with foreign-flagged vessels.
If we fail to comply with these requirements, our vessels lose their eligibility to engage in coastwise trade within U.S. domestic waters. 30 The requirements that our vessels be U.S. built and manned by U.S. citizens, the crewing requirements and material requirements of the Coast Guard and the application of U.S. labor and tax laws significantly increase the costs of U.S. flagged vessels when compared with foreign-flagged vessels.
Our loss of significant commercial relationships with Martin Resource Management Corporation could adversely impact our results of operations and ability to make distributions to our unitholders. Martin Resource Management Corporation provides us with various services and products pursuant to various commercial contracts.
Martin Resource Management Corporation provides us with various services and products pursuant to various commercial contracts. The loss of any of these services and products provided by Martin Resource Management Corporation could have a material adverse impact on our results of operations, cash flow and ability to make distributions to our unitholders.
The adoption and implementation of new or more stringent international, federal, or state legislation, regulations, or other regulatory initiatives that impose more stringent standards for GHG emissions from oil and natural gas producers or their midstream services providers such as ourselves could result in increased costs of compliance or costs of consuming, and thereby reduce demand for or erode value for, the petroleum products and by-products that we process, store and transport. 26 Additionally, political, financial, and litigation risks may result in our customers restricting or cancelling oil and natural gas production activities, which could result in reduced demand for our services.
Moreover, societal pressures or political or other factors may shape the success of such claims, without regard to the company’s causation of or contribution to the asserted damage, or to other mitigating factors. 25 The adoption and implementation of new or more stringent international, federal, or state legislation, regulations, or other regulatory initiatives that impose more stringent standards for GHG emissions from oil and natural gas producers or their midstream services providers such as us could result in increased costs of compliance or costs of consuming, and thereby reduce demand for or erode value for, the petroleum products and by-products that we process, store and transport.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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A description of our legal proceedings is included in "Item 8. Financial Statements and Supplementary Data, Note 19. Commitments and Contingencies", and is incorporated herein by reference.
A description of our legal proceedings is included in "Item 8. Financial Statements and Supplementary Data, Note 19. Commitments and Contingencies" and is incorporated herein by reference. 44

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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On January 23, 2023, we declared a quarterly cash distribution of $0.005 per common unit for the fourth quarter of 2022, or $0.02 per common unit on an annualized basis, which was paid on February 14, 2023 to unitholders of record as of February 7, 2023.
On January 23, 2024, we declared a quarterly cash distribution of $0.005 per common unit for the fourth quarter of 2023, or $0.02 per common unit on an annualized basis, which was paid on February 14, 2024 to unitholders of record as of February 7, 2024.
Item 5. Market for Our Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities Market Information and Holders Our common units are traded on the NASDAQ under the symbol "MMLP." As of March 2, 2023, there were approximately 198 holders of record and approximately 9,499 beneficial owners of our common units.
Item 5. Market for Our Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities Market Information and Holders Our common units are traded on the NASDAQ under the symbol "MMLP." As of February 21, 2024, there were approximately 186 holders of record and approximately 8,500 beneficial owners of our common units.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Certain Covenants and Events of Default 61 The terms of the 2028 Notes Indenture, among other things, limit the ability of the Partnership and certain of its subsidiaries to make distributions and other restricted payments, sell assets, make investments, create liens on assets, enter into sale and leaseback transactions, and consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries.
Certain Covenants and Events of Default The terms of the 2028 Notes Indenture, among other things, limit the ability of the Partnership and certain of its subsidiaries to make distributions and other restricted payments, sell assets, make investments, create liens on assets, enter into sale and leaseback transactions, and consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries.
We define Distributable Cash Flow as Net Cash Provided by (Used in) Operating Activities less cash received (plus cash paid) for closed commodity derivative positions included in Accumulated Other Comprehensive Income (Loss), plus changes in operating assets and liabilities which (provided) used cash, less maintenance capital 48 expenditures and plant turnaround costs.
We define Distributable Cash Flow as Net Cash Provided by (Used in) Operating Activities less cash received (plus cash paid) for closed commodity derivative positions included in Accumulated Other Comprehensive Income (Loss), plus changes in operating assets and liabilities which (provided) used cash, less maintenance capital expenditures and plant turnaround costs.
Critical Accounting Policies and Estimates 46 Our discussion and analysis of our financial condition and results of operations are based on the historical consolidated financial statements included elsewhere herein. We prepared these financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP" or "GAAP").
Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based on the historical consolidated financial statements included elsewhere herein. We prepared these financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP" or "GAAP").
To compensate for these limitations, we believe that it is important to consider net income (loss) and net cash provided by (used in) operating activities as determined under GAAP, as well as adjusted EBITDA, to evaluate our overall performance. Distributable Cash Flow.
To compensate for these limitations, we believe that it is important to consider net income (loss) and net cash provided by (used in) operating activities as determined under GAAP, as well as adjusted EBITDA, to evaluate our overall performance. Distributable Cash Flow and Adjusted Free Cash Flow.
The 2028 Notes and the guarantees thereof rank effectively senior to all of the Issuers’ existing and future unsecured indebtedness to the extent of the value of the collateral securing the 2028 Notes and such guarantees. Maturity and Interest The 2028 Notes will mature on February 15, 2028.
The 2028 Notes and the guarantees thereof rank effectively senior to all of the Issuers’ existing and future unsecured indebtedness to the extent of the value of the collateral securing the 2028 Notes and such guarantees. 61 Maturity and Interest The 2028 Notes will mature on February 15, 2028.
The amended credit facility includes financial covenants that are tested on a quarterly basis, based on the rolling four quarter period that ends on the last day of each fiscal quarter, that require maintenance of: • a minimum Interest Coverage Ratio (as defined in the amended credit facility) of at least 2.00:1.00; • a maximum Total Leverage Ratio of not more than 4.75:1.00, stepping down to 4.50:1.00 on March 31, 2025; and 59 • a maximum First Lien Leverage Ratio (as defined in the amended credit facility) of not more than 1.50:1.00.
The amended credit facility includes financial covenants that are tested on a quarterly basis, based on the rolling four quarter period that ends on the last day of each fiscal quarter, that require maintenance of: 60 • a minimum Interest Coverage Ratio (as defined in the amended credit facility) of at least 2.00:1.00; • a maximum Total Leverage Ratio of not more than 4.75:1.00, stepping down to 4.50:1.00 on March 31, 2025; and • a maximum First Lien Leverage Ratio (as defined in the amended credit facility) of not more than 1.50:1.00.
Distributable Cash Flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity is generally determined by the unit's yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder. Adjusted Free Cash Flow.
Distributable Cash Flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity is generally determined by the unit's yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder.
Discussions of the year ended December 31, 2020 that are not included in this Annual Report on Form 10-K and year-to-year comparisons of the year ended December 31, 2021 and the year ended December 31, 2020 can be found in “Management’s Discussion and Analysis of Financial Condition and the Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021.
Discussions of the year ended December 31, 2021 that are not included in this Annual Report on Form 10-K and year-to-year comparisons of the year ended December 31, 2022 and the year ended December 31, 2021 can be found in “Management’s Discussion and Analysis of Financial Condition and the Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.
Our impairment analyses require management to use judgment in estimating future cash flows and useful lives, as well as assessing the probability of different outcomes. Applying this impairment review methodology, no impairment was recorded during the years ended December 31, 2022 or 2021.
Our impairment analyses require management to use judgment in estimating future cash flows and useful lives, as well as assessing the probability of different outcomes. Applying this impairment review methodology, no impairment was recorded during the years ended December 31, 2023 or 2022.
On January 23, 2023, we declared a quarterly cash distribution of $0.005 per common unit for the fourth quarter of 2022, or $0.02 per common unit on an annualized basis, which was paid on February 14, 2023 to unitholders of record as of February 7, 2023.
On January 23, 2024, we declared a quarterly cash distribution of $0.005 per common unit for the fourth quarter of 2023, or $0.02 per common unit on an annualized basis, which was paid on February 14, 2024 to unitholders of record as of February 7, 2024.
Seasonality A substantial portion of our revenues is dependent on sales prices of products, particularly NGLs and fertilizers, which fluctuate in part based on winter and spring weather conditions. The demand for NGLs is strongest during the winter heating season and refinery blending season. The demand for fertilizers is strongest during the early spring planting season.
Seasonality A substantial portion of our revenues is dependent on sales prices of products, particularly fertilizers and NGLs, which fluctuate in part based on spring and winter weather conditions. The demand for fertilizers is strongest during the early spring planting season. The demand for NGLs is strongest during the winter heating season.
The letter of credit fee, the commitment fee and the applicable margins for our interest rate vary quarterly based on our Total Leverage Ratio (as defined in the amended credit facility, being generally computed as the ratio of total funded debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) and are as follows: Leverage Ratio ABR Loans Term SOFR Rate Loans and Letters of Credit Less than 3.00 to 1.00 1.75 % 2.75 % Greater than or equal to 3.00 to 1.00 and less than 3.50 to 1.00 2.00 % 3.00 % Greater than or equal to 3.50 to 1.00 and less than 4.00 to 1.00 2.25 % 3.25 % Greater than or equal to 4.00 to 1.00 and less than 4.50 to 1.00 2.50 % 3.50 % Greater than or equal to 4.50 to 1.00 2.75 % 3.75 % The applicable margin for LIBOR borrowings at December 31, 2022 was 3.50%.
The letter of credit fee, the commitment fee and the applicable margins for our interest rate vary quarterly based on our Total Leverage Ratio (as defined in the amended credit facility, being generally computed as the ratio of total funded debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) and are as follows: Leverage Ratio ABR Loans Term SOFR Rate Loans and Letters of Credit Less than 3.00 to 1.00 1.75 % 2.75 % Greater than or equal to 3.00 to 1.00 and less than 3.50 to 1.00 2.00 % 3.00 % Greater than or equal to 3.50 to 1.00 and less than 4.00 to 1.00 2.25 % 3.25 % Greater than or equal to 4.00 to 1.00 and less than 4.50 to 1.00 2.50 % 3.50 % Greater than or equal to 4.50 to 1.00 2.75 % 3.75 % The applicable margin for Adjusted Term SOFR borrowings at December 31, 2023 was 3.25%.
The following table evaluates the potential impact of estimates utilized during the periods ended December 31, 2022 and 2021: Description Judgments and Uncertainties Effect if Actual Results Differ from Estimates and Assumptions Impairment of Long-Lived Assets We periodically evaluate whether the carrying value of long-lived assets has been impaired when circumstances indicate the carrying value of the assets may not be recoverable.
The following table evaluates the potential impact of estimates utilized during the periods ended December 31, 2023 and 2022: 48 Description Judgments and Uncertainties Effect if Actual Results Differ from Estimates and Assumptions Impairment of Long-Lived Assets We periodically evaluate whether the carrying value of long-lived assets has been impaired when circumstances indicate the carrying value of the assets may not be recoverable.
By leveraging our existing assets located in Plainview, Texas and installing the ELSA Facility as required, DSM will produce ELSA that meets the strict quality standards required by the recent advances in semiconductor manufacturing. In addition to owning a 10% non-controlling interest in DSM, we will be the exclusive provider of feedstock to the ELSA Facility.
By leveraging our existing assets located in Plainview, Texas and installing additional facilities (the “ELSA Facility”) as required, DSM will produce ELSA that meets the strict quality standards required by the recent advances in semiconductor manufacturing. In addition to owning a 10% non-controlling interest in DSM, we will be the exclusive provider of feedstock to the ELSA Facility.
Certain Relationships and Related Transactions, and Director Independence." Non-GAAP Financial Measures To assist management in assessing our business, we use the following non-GAAP financial measures: earnings before interest, taxes, and depreciation and amortization ("EBITDA"), adjusted EBITDA (as defined below), distributable cash flow available to common unitholders (“Distributable Cash Flow”), and free cash flow after growth capital expenditures and principal payments under finance lease obligations ("Adjusted Free Cash Flow").
Certain Relationships and Related Transactions, and Director Independence." 49 Non-GAAP Financial Measures To assist management in assessing our business, we use the following non-GAAP financial measures: earnings before interest, taxes, and depreciation and amortization ("EBITDA"), adjusted EBITDA (as defined below), adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow available to common unitholders (“Distributable Cash Flow”), and free cash flow after growth capital expenditures and principal payments under finance lease obligations ("Adjusted Free Cash Flow").
We conduct impairment testing using present economic conditions, as well as future expectations. Based upon the most recent annual review as of August 31, 2022, no goodwill impairment exists within our reporting units for the year ended December 31, 2022.
We conduct impairment testing using present economic conditions, as well as future expectations. Based upon the most recent annual review as of August 31, 2023, no goodwill impairment exists within our reporting units for the years ended December 31, 2023. No goodwill impairment was recorded during the year ended December 31, 2022.
After giving effect to our then current borrowings, outstanding letters of credit and the financial covenants contained in our credit facility, we had the ability to borrow approximately $62.7 million in additional amounts thereunder as of December 31, 2022.
After giving effect to our then current borrowings, outstanding letters of credit and the financial covenants contained in our credit facility, we had the ability to borrow approximately $109.0 million in additional amounts thereunder as of December 31, 2023.
On October 19, 2022, Martin ELSA Investment LLC, our affiliate, entered into definitive agreements with Samsung C&T America, Inc. and Dongjin USA, Inc., an affiliate of Dongjin Semichem Co., Ltd., to form DSM. DSM will produce and distribute ELSA.
Electronic Level Sulfuric Acid Joint Venture. On October 19, 2022, Martin ELSA Investment LLC, our affiliate, entered into definitive agreements with Samsung C&T America, Inc. and Dongjin USA, Inc., an affiliate of Dongjin Semichem Co., Ltd., to form DSM Semichem LLC (“DSM”). DSM will produce and distribute electronic level sulfuric acid (“ELSA”).
At December 31, 2022, we had outstanding irrevocable letters of credit in the amount of $20.8 million, which were issued under our credit facility. Off Balance Sheet Arrangements.
Letters of Credit . At December 31, 2023, we had outstanding irrevocable letters of credit in the amount of $9.2 million, which were issued under our credit facility. Off Balance Sheet Arrangements.
The board of directors of our general partner approved the following reimbursement amounts: Year Ended December 31, Variance Percent Change 2022 2021 (In thousands) Board approved reimbursement amount $ 13,491 $ 14,386 $ (895) (6)% The amounts reflected above represent our allocable share of such expenses.
The board of directors of our general partner approved the following reimbursement amounts: Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Board approved reimbursement amount $ 13,982 $ 13,491 $ 491 4% The amounts reflected above represent our allocable share of such expenses.
Further, extraordinary weather events, such as hurricanes, have in the past, and could in the future, impact our Terminalling and Storage, Sulfur Services, and Transportation business segments. 62 Impact of Inflation Inflation did not have a material impact on our results of operations in 2022, 2021 or 2020.
Further, extraordinary weather events, such as hurricanes, have in the past, and could in the future, impact our Terminalling and Storage, Sulfur Services, and Transportation business segments. Impact of Inflation Inflation did not have a material impact on our results of operations in 2023, 2022 or 2021. Inflation may increase the cost to acquire or replace property, plant and equipment.
After giving effect to our then current borrowings, letters of credit, and the financial covenants contained in our credit facility, we had the ability to borrow approximately $62.7 million in additional amounts thereunder as of December 31, 2022. At December 31, 2022, our credit facility was scheduled to mature on August 31, 2023.
After giving effect to our then current borrowings, letters of credit, and the financial covenants contained in our credit facility, we had the ability to borrow approximately $109.0 million in additional amounts thereunder as of December 31, 2023.
Martin Resource Management Corporation also licenses certain of its trademarks and trade names to us under the Omnibus Agreement. We are both an important supplier to and customer of Martin Resource Management Corporation. All of these services and goods are purchased and sold pursuant to the terms of a number of agreements between us and Martin Resource Management Corporation.
We are both an important supplier to and customer of Martin Resource Management Corporation. All of these services and goods are purchased and sold pursuant to the terms of a number of agreements between us and Martin Resource Management Corporation.
We believe that Adjusted Free Cash Flow is important to investors, lenders, commercial banks and research analysts since it reflects the amount of cash available for reducing debt, investing in additional capital projects, paying distributions, and similar matters. Our calculation of Adjusted Free Cash Flow may or may not be comparable to similarly titled measures used by other entities.
We believe that Adjusted Free Cash Flow is important to investors, lenders, commercial banks and research analysts since it reflects the amount of cash available for reducing debt, investing in additional capital projects, paying distributions, and similar matters.
At December 31, 2022, we had cash and cash equivalents of $0.05 million and available borrowing capacity of $83.6 million under our credit facility with $171.0 million of borrowings outstanding.
At December 31, 2023, we had cash and cash equivalents of $0.05 million and available borrowing capacity of $123.3 million under our credit facility with $42.5 million of borrowings outstanding.
Our four primary business lines include: • Terminalling, processing, storage and packaging services for petroleum products and by-products including the refining of naphthenic crude oil; • Land and marine transportation services for petroleum products and by-products, chemicals, and specialty products; • Sulfur and sulfur-based products processing, manufacturing, marketing, and distribution; and • NGL marketing, distribution, and transportation services.
Our four primary business lines include: • Terminalling, processing, and storage services for petroleum products and by-products; • Land and marine transportation services for petroleum products and by-products, chemicals, and specialty products; • Sulfur and sulfur-based products processing, manufacturing, marketing, and distribution; and • Marketing, distribution, and transportation services for NGLs and blending and packaging services for specialty lubricants and grease.
Liquidity and Capital Resources General Our primary sources of liquidity to meet operating expenses, service our indebtedness, pay distributions to our unitholders and fund capital expenditures have historically been cash flows generated by our operations, borrowings under our credit facility, and access to debt and equity capital markets, both public and private.
The board of directors of our general partner will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually. 58 Liquidity and Capital Resources General Our primary sources of liquidity to meet operating expenses, service our indebtedness, fund capital expenditures and pay distributions to our unitholders have historically been cash flows generated by our operations, borrowings under our credit facility and access to debt and equity capital markets, both public and private.
Net cash used in investing activities for the year ended December 31, 2022 increased $5.4 million. An increase in cash used of $12.2 million resulted from higher payments for capital expenditures and plant turnaround costs in 2022. Offsetting this increase, net proceeds from the sale of property, plant and equipment increased $7.1 million.
Net cash used in investing activities for the year ended December 31, 2023 increased $9.0 million. An increase in cash used of $6.7 million resulted from higher payments for capital expenditures and plant turnaround costs in 2023 combined with a decrease of $2.3 million in net proceeds received from the sale of property, plant and equipment.
Services revenues increased slightly as a result of a contractually prescribed, index-based fee adjustment. Products Revenues. Products revenues increased $57.2 million as a result of a 43% rise in average sulfur services sales prices. Products revenues decreased an offsetting $23.7 million due to a 12% decrease in sales volumes, primarily related to a 30% decrease in fertilizer volumes.
Services revenues increased as a result of a contractually prescribed, index-based fee adjustment. Products revenues. Products revenues decreased $51.3 million as a result of a 31% drop in average sulfur services sales prices. Products revenues increased an offsetting $12.0 million due to a 10% rise in sales volumes, primarily related to a 20% increase in fertilizer volumes.
As of December 31, 2022, we had $171.0 million outstanding under the credit facility and $20.4 million of outstanding irrevocable letters of credit, leaving a maximum amount available to be borrowed under our credit facility for future borrowings and letters of credit of $83.6 million.
As of December 31, 2023, we had $42.5 million outstanding under the credit facility and $9.2 million of outstanding irrevocable letters of credit, leaving a maximum amount available to be borrowed under our credit facility for future borrowings and letters of credit of $123.3 million.
For more information about the potential physical effects of climate change and environmental regulation on our business, see our environmental and climate change related risk factors in Section 1A “Risk Factors.” Subsequent Events Quarterly Distribution.
As of December 31, 2023, we have funded approximately $8.6 million toward ELSA related project costs. 47 For more information about the potential physical effects of climate change and environmental regulation on our business, see our environmental and climate change related risk factors in Section 1A “Risk Factors.” Subsequent Events Quarterly Distribution.
Inflation may increase the cost to acquire or replace property, plant and equipment. It may also increase the costs of labor and supplies. In the future, increasing energy prices for products consumed by our operations, such as diesel fuel, natural gas, chemicals, and other supplies, could adversely affect our results of operations.
It may also increase the costs of labor and supplies. In the future, increasing energy prices for products consumed by our operations, such as diesel fuel, natural gas, chemicals, and other supplies, could adversely affect our results of operations. An increase in price of these products would increase our operating expenses which could adversely affect net income.
During the year ended December 31, 2022, the outstanding balance of our credit facility has ranged from a low of $141.5 million to a high of $219.0 million. The amended credit facility is guaranteed by substantially all of our subsidiaries, other than Martin ELSA Investment LLC.
From February 8, 2023 through December 31, 2023, the level of outstanding draws on our amended credit facility ranged from a low of $42.5 million to a high of $138.0 million. The amended credit facility is guaranteed by substantially all of our subsidiaries, other than Martin ELSA Investment LLC.
Net cash provided by operating activities for the year ended December 31, 2022 decreased $19.6 million primarily as a result of a decrease in operating results and non-cash items of $15.2 million combined with an unfavorable variance in changes in working capital of $5.2 million. Net cash used in investing activities.
Net cash provided by operating activities for the year ended December 31, 2023 increased $121.3 million, primarily as a result of a favorable variance in changes in working capital of $114.0 million combined with an increase in operating results and non-cash items of $11.1 million. Net cash used in investing activities.
We do not have any off-balance sheet financing arrangements. 58 Description of Our Indebtedness Credit Facility At December 31, 2022, we maintained a $275.0 million credit facility that was scheduled to mature on August 31, 2023.
We do not have any off-balance sheet financing arrangements. 59 Description of Our Indebtedness Credit Facility At December 31, 2023, we maintained a $175.0 million credit facility that matures February 8, 2027.
The GAAP measure most directly comparable to Distributable Cash Flow and Adjusted Free Cash Flow is Net Cash Provided by (Used in) Operating Activities.
Our calculation of Adjusted Free Cash Flow may or may not be comparable to similarly titled measures used by other entities. 50 The GAAP measure most directly comparable to Distributable Cash Flow and Adjusted Free Cash Flow is Net Cash Provided by (Used in) Operating Activities.
For the years ended December 31, 2022, 2021 and 2020, the board of directors of our general partner approved reimbursement amounts of $13.5 million, $14.4 million and $16.4 million, respectively, reflecting our allocable share of such expenses.
For the years ended December 31, 2023 and 2022, the board of directors of our general partner approved reimbursement amounts of $14.0 million and $13.5 million, respectively, reflecting our allocable share of such expenses. The board of directors of our general partner will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.
We, through our affiliate MTI, will also provide land transportation services to end-users of the ELSA produced by DSM. The Partnership expects to fund approximately $20.0 million in aggregate capital expenditures in connection with this joint venture and the Partnership’s related services in 2023 and 2024. Divestiture of Stockton, California Sulfur Terminal.
We, through our affiliate MTI, will also provide land transportation services of the ELSA produced by DSM. We expect to fund approximately $25.5 million in aggregate capital expenditures in connection with this joint venture.
Cost of products sold. An 52% increase in product cost impacted cost of products sold by $49.7 million, resulting from an increase in commodity prices. A 12% decrease in sales volumes resulted in an offsetting decrease in cost of products sold of $18.0 million. Margin per ton increased $9.90, or 20%. Operating expenses.
Cost of products sold. A 33% decrease in product cost impacted cost of products sold by $42.0 million, resulting from reduced commodity prices. A 10% increase in sales volumes resulted in an offsetting increase in cost of products sold of $8.8 million. Margin per ton decreased $13.97, or 23%. Operating expenses.
Depreciation and amortization . Depreciation and amortization decreased as a result of recent disposals, offset by recent capital expenditures. Other operating income, net.
Selling, general and administrative expenses . Selling, general and administrative expenses increased primarily due to increased employee-related expenses. Depreciation and amortization . Depreciation and amortization increased as a result of recent capital expenditures, offset by recent disposals. Other operating income, net.
The increase in operating expenses is primarily a result of increased employee-related expenses of $24.2 million, pass through expenses (primarily fuel) of $14.0 million, insurance premiums of $2.0 million, lease expense of $1.7 million, and outside towing of $1.6 million. Selling, general and administrative expenses . Selling, general and administrative expenses increased primarily due to increased employee-related expenses.
Additionally, ancillary revenue decreased $9.8 million . Operating expenses . The increase in operating expenses is primarily a result of increased employee-related expenses of $5.2 million, lease expense of $5.1 million, insurance premiums of $3.0 million, shop expenses of $0.7 million and outside towing of $0.7 million, offset by a decrease in pass through expenses (primarily fuel) of $6.6 million.
Non-GAAP Financial Measures The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the years ended December 31, 2022 and 2021, which represents EBITDA, Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow Reconciliation of Net Loss to EBITDA and Adjusted EBITDA Year Ended December 31, 2022 2021 (in thousands) Net loss $ (10,334) $ (211) Adjustments: Interest expense 53,665 54,107 Income tax expense 7,927 3,380 Depreciation and amortization 56,280 56,751 EBITDA 107,538 114,027 Adjustments: (Gain) loss on disposition of property, plant and equipment (5,669) 534 Gain on involuntary conversion of property, plant and equipment — (196) Unrealized mark-to-market on commodity derivatives — (207) Lower of cost or market and other non-cash adjustments 12,850 — Unit-based compensation 161 384 Adjusted EBITDA 114,880 114,542 49 Reconciliation of Net Cash provided by Operating Activities to Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow Year Ended December 31, 2022 2021 (in thousands) Net cash provided by operating activities $ 16,148 $ 35,729 Interest expense 1 50,513 50,740 Current income tax expense 2,183 948 Lower of cost or market and other non-cash adjustments 12,850 — Loss on exchange of senior unsecured notes — — Non-cash impact related to exchange of senior unsecured notes — — Commodity cash flow hedging gains reclassified to earnings 901 — Net cash received for closed commodity derivative positions included in AOCI (85) (816) Changes in operating assets and liabilities which (provided) used cash: Accounts and other receivables, inventories, and other current assets 38,179 42,936 Trade, accounts and other payables, and other current liabilities (4,428) (14,346) Other (1,381) (649) Adjusted EBITDA 114,880 114,542 Adjustments: Interest expense (53,665) (54,107) Income tax expense (7,927) (3,380) Deferred income taxes 5,744 2,432 Amortization of deferred debt issuance costs 3,152 3,367 Payments for plant turnaround costs (5,176) (4,109) Maintenance capital expenditures (19,074) (14,115) Distributable Cash Flow 37,934 44,630 Principal payments under finance lease obligations (279) (2,707) Expansion capital expenditures (6,883) (4,705) Adjusted Free Cash Flow 30,772 37,218 1 Net of amortization of debt issuance costs and discount and premium, which are included in interest expense but not included in net cash provided by operating activities. 50 Results of Operations The results of operations for the years ended December 31, 2022, 2021, and 2020 have been derived from our consolidated financial statements.
Non-GAAP Financial Measures The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the years ended December 31, 2023 and 2022, which represents EBITDA, adjusted EBITDA, adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow, and adjusted free cash flow: Reconciliation of Net Loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business Year Ended December 31, 2023 2022 (in thousands) Net loss $ (4,549) $ (10,334) Adjustments: Interest expense 60,290 53,665 Income tax expense 5,918 7,927 Depreciation and amortization 49,895 56,280 EBITDA 111,554 107,538 Adjustments: Gain on disposition of property, plant and equipment (1,373) (5,669) Loss on extinguishment of debt 5,121 — Lower of cost or net realizable value and other non-cash adjustments (12,850) 12,850 Unit-based compensation 163 161 Adjusted EBITDA 102,615 114,880 Adjustments: Plus: net loss associated with butane optimization business 2,256 20,015 Plus: lower of cost or net realizable value and other non-cash adjustments 12,850 (12,850) Adjusted EBITDA after giving effect to the exit of the butane optimization business $ 117,721 $ 122,045 51 Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA, Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business, Distributable Cash Flow, and Adjusted Free Cash Flow Year Ended December 31, 2023 2022 (in thousands) Net cash provided by operating activities $ 137,468 $ 16,148 Interest expense 1 54,112 50,513 Current income tax expense 1,732 2,183 Lower of cost or market and other non-cash adjustments (12,850) 12,850 Commodity cash flow hedging gains reclassified to earnings — 901 Net cash received for closed commodity derivative positions included in AOCI — (85) Changes in operating assets and liabilities which (provided) used cash: Accounts and other receivables, inventories, and other current assets (97,149) 38,179 Trade, accounts and other payables, and other current liabilities 16,891 (4,428) Other 2,411 (1,381) Adjusted EBITDA 102,615 114,880 Plus: net loss associated with butane optimization business 2,256 20,015 Plus: lower of cost or net realizable value and other non-cash adjustments 12,850 (12,850) Adjusted EBITDA after giving effect to the exit of the butane optimization business 117,721 122,045 Adjustments: Interest expense (60,290) (53,665) Income tax expense (5,918) (7,927) Deferred income taxes 4,186 5,744 Amortization of deferred debt issuance costs 3,978 3,152 Amortization of discount on notes payable 2,200 — Payments for plant turnaround costs (4,825) (5,176) Maintenance capital expenditures (24,277) (19,074) Distributable Cash Flow 32,775 45,099 Principal payments under finance lease obligations (9) (279) Expansion capital expenditures (11,034) (6,883) Adjusted Free Cash Flow $ 21,732 $ 37,937 1 Net of amortization of debt issuance costs and discount, which are included in interest expense but not included in net cash provided by operating activities. 52 Results of Operations The results of operations for the years ended December 31, 2023 and 2022 have been derived from our consolidated financial statements.
No goodwill impairment was recorded during the years ended December 31, 2021 or 2020. 47 Our Relationship with Martin Resource Management Corporation Martin Resource Management Corporation directs our business operations through its ownership of our general partner and under the Omnibus Agreement.
Our Relationship with Martin Resource Management Corporation Martin Resource Management Corporation directs our business operations through its ownership of our general partner and under the Omnibus Agreement.
Operating expenses increased due to an increase in marine fuel expense of $2.1 million, outside towing of $1.2 million, insurance premiums and claims of $0.5 million, contract labor of $0.4 million, repairs and maintenance of marine assets of $0.3 million, and assist tugs of $0.3 million. Selling, general and administrative expenses.
Operating expenses decreased due to a decrease in outside towing of $1.1 million, marine fuel expense of $0.7 million, insurance premiums and claims of $0.3 million, contract labor of $0.3 million, and repairs and maintenance of marine assets of $0.3 million. Offsetting these decreases, employment expenses increased $0.4 million combined with a $0.1 million increase in utilities expense.
Net cash provided by (used in) financing activities. Net cash provided by (used in) financing activities for the year ended December 31, 2022 increased $29.9 million primarily as a result of a $30.6 million increase in net proceeds from long-term debt.
Net cash provided by (used in) financing activities. Net cash (used in) provided by financing activities for the year ended December 31, 2023 decreased $112.3 million primarily as a result of a $99.3 million decrease in net borrowings from long-term debt combined with increased debt issuance costs of $14.2 million.
In addition, due to the covenants in our credit facility, our financial and operating performance impacts the amount we are permitted to borrow under that facility. The Partnership is in compliance with all debt covenants as of December 31, 2022 and expects to be in compliance for the next twelve months.
In addition, due to the covenants in our credit facility, our financial and operating performance impacts the amount we are permitted to borrow under that facility.
In addition, revenue at our specialty terminals increased $0.7 million as a result of $0.6 million in throughput revenue and $0.1 million in service revenue. Our shore-based terminals increased $0.5 million due to $1.0 million in throughput revenue, offset by a reduction in space rent of $0.5 million. Products revenues.
Service revenues increased $2.8 million. Revenue at our shore-based terminals increased $2.6 million, including $2.4 million in fuel throughput and $0.4 million in drilling fluids commission, offset by a reduction in space rent of $0.2 million.
In addition, if any event of default exists under our amended credit facility, the lenders may commence foreclosure or other actions against the collateral. 2025 Senior Secured Notes and Indenture Pursuant to our exchange offer (the “the Exchange Offer”) to certain eligible holders of our 7.25% senior unsecured notes due 2021 (the “2021 Notes”), we and Martin Midstream Finance Corp., our wholly owned subsidiary (collectively the "Issuers") issued $292.0 million in aggregate principal amount of the Issuers’ 11.50% senior secured second lien notes due 2025 (the "2025 Notes").
In addition, if any event of default exists under our amended credit facility, the lenders may commence foreclosure or other actions against the collateral. 2028 Senior Secured Notes and Indenture General On February 8, 2023, the Issuers issued $400.0 million aggregate principal amount of their 11.50% senior secured second lien notes due 2028 (the "2028 Notes").
The board of directors of our general partner will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually. We are required to reimburse Martin Resource Management Corporation for all direct expenses it incurs or payments it makes on our behalf or in connection with the operation of our business.
We are required to reimburse Martin Resource Management Corporation for all direct expenses it incurs or payments it makes on our behalf or in connection with the operation of our business. Martin Resource Management Corporation also licenses certain of its trademarks and trade names to us under the Omnibus Agreement.
Interest Expense Comparative Components of Interest Expense, Net for the Years Ended December 31, 2022 and 2021 Year Ended December 31, Variance Percent Change 2022 2021 (In thousands) Credit facility $ 9,654 $ 9,498 $ 156 2% Senior notes 38,903 39,303 (400) (1)% Amortization of deferred debt issuance costs 3,152 3,367 (215) (6)% Amortization of debt premium — — — Other 1,948 1,916 32 2% Finance leases 8 23 (15) (65)% Capitalized interest — — — Total interest expense, net $ 53,665 $ 54,107 $ (442) (1)% 56 Indirect Selling, General and Administrative Expenses Year Ended December 31, Variance Percent Change 2022 2021 (In thousands) Indirect selling, general and administrative expenses $ 16,914 $ 16,129 $ 785 5% Indirect selling, general and administrative increased primarily due to increases in employee-related expenses of $1.2 million and professional fees of $0.3 million, offset by a $0.9 million decrease in the indirect expenses allocated from Martin Resource Management Corporation.
Other operating income (loss), net represents gains and losses from the disposition of property, plant and equipment. 57 Interest Expense Comparative Components of Interest Expense, Net for the Years Ended December 31, 2023 and 2022 Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Credit facility $ 7,587 $ 9,654 $ (2,067) (21)% Senior notes 45,352 38,903 6,449 17% Amortization of deferred debt issuance costs 3,978 3,152 826 26% Amortization of debt discount 2,200 — 2,200 Other 1,483 1,948 (465) (24)% Finance leases 1 8 (8) (100)% Capitalized interest (310) — (310) Total interest expense, net $ 60,290 $ 53,665 $ 6,625 12% Indirect Selling, General and Administrative Expenses Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Indirect selling, general and administrative expenses $ 16,030 $ 16,914 $ (884) (5)% Indirect selling, general and administrative expenses decreased primarily due to decreases in employee-related expenses of $1.4 million, offset by a $0.9 million increase in the indirect expenses allocated from Martin Resource Management Corporation.
Interest Rate Risk We are subject to interest rate risk on our credit facility due to the variable interest rate and may enter into interest rate swaps to reduce this variable rate risk.
The Partnership is in compliance with all debt covenants as of December 31, 2023 and expects to be in compliance for the next twelve months. 62 Interest Rate Risk We are subject to interest rate risk on our credit facility due to the variable interest rate and may enter into interest rate swaps to reduce this variable rate risk.
Other operating income, net represents gains from the disposition of property, plant and equipment. 54 Sulfur Services Segment Comparative Results of Operations for the Years Ended December 31, 2022 and 2021 Year Ended December 31, Variance Percent Change 2022 2021 (In thousands) Revenues: Services $ 12,337 $ 11,799 $ 538 5% Products 166,827 133,243 33,584 25% Total revenues 179,164 145,042 34,122 24% Cost of products sold 127,018 95,287 31,731 33% Operating expenses 15,335 10,203 5,132 50% Selling, general and administrative expenses 6,081 5,284 797 15% Depreciation and amortization 11,099 10,432 667 6% 19,631 23,836 (4,205) (18)% Other operating income, net 4,555 129 4,426 3,431% Operating income $ 24,186 $ 23,965 $ 221 1% Sulfur (long tons) 452.0 456.0 (4.0) (1)% Fertilizer (long tons) 211.0 301.0 (90.0) (30)% Sulfur services volumes (long tons) 663.0 757.0 (94.0) (12)% Services Revenues.
Other operating income, net represents gains from the disposition of property, plant and equipment. 55 Sulfur Services Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Revenues: Services $ 13,430 $ 12,337 $ 1,093 9% Products 127,565 166,827 (39,262) (24)% Total revenues 140,995 179,164 (38,169) (21)% Cost of products sold 93,842 127,018 (33,176) (26)% Operating expenses 13,143 15,335 (2,192) (14)% Selling, general and administrative expenses 5,925 6,081 (156) (3)% Depreciation and amortization 10,690 11,099 (409) (4)% 17,395 19,631 (2,236) (11)% Other operating income, net 17 4,555 (4,538) (100)% Operating income $ 17,412 $ 24,186 $ (6,774) (28)% Sulfur (long tons) 478.0 452.0 26.0 6% Fertilizer (long tons) 254.0 211.0 43.0 20% Sulfur services volumes (long tons) 732.0 663.0 69.0 10% Services revenues.
This region is a major hub for petroleum refining, natural gas gathering and processing, and support services for the exploration and production industry. Significant Recent Developments Issuance of 2028 Notes to Refinance Existing Secured Notes . On February 8, 2023, we completed the sale of $400.0 million in aggregate principal amount of our 2028 Notes.
This region is a major hub for petroleum refining, natural gas gathering and processing, and support services for the exploration and production industry. Significant Recent Developments Exit from Butane Optimization Business. In the second quarter of 2023, we completed the previously announced exit of our butane optimization business at the conclusion of the butane selling season.
Service revenues increased $4.9 million. Revenue at our Smackover Refinery increased $3.7 million, including $2.7 million in natural gas surcharge revenue, $0.9 million in reservation fees and $0.8 million in throughput fees, offset by a decrease of $0.8 million in pipeline revenue.
Revenue at our Smackover refinery decreased $1.8 million as a result of decreased pipeline revenue of $4.6 million, offset by increases in throughput revenue of $1.1 million, reservation fees of $1.1 million and natural gas surcharge of $0.8 million. Cost of products sold. Cost of products sold remained relatively consistent. Operating expenses.
Inland and offshore revenues increased $12.2 million and $2.5 million, respectively, primarily related to higher utilization and transportation rates. Revenue was also impacted by an increase in pass-through revenue (primarily fuel) of $5.1 million. Land Transportation Revenues.
Inland revenues increased $7.4 million primarily related to transportation rates. Revenue was also impacted by a decrease in pass-through revenue (primarily fuel) of $2.9 million. Land Transportation Revenues. Freight revenue increased primarily due to a 25% increase in load count combined with a 1% increase in total miles, which resulted in a $7.0 million increase.
Set forth below is a description of our cash flows for the periods indicated. 57 Cash Flows - Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 The following table details the cash flow changes between the years ended December 31, 2022 and 2021: Year Ended December 31, Variance Percent Change 2022 2021 (In thousands) Net cash provided by (used in): Operating activities $ 16,148 $ 35,729 $ (19,581) (55)% Investing activities (24,644) (19,241) (5,403) (28)% Financing activities 8,489 (21,394) 29,883 140% Net increase (decrease) in cash and cash equivalents $ (7) $ (4,906) $ 4,899 100% Net cash provided by operating activities.
Cash Flows - Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following table details the cash flow changes between the years ended December 31, 2023 and 2022: Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Net cash provided by (used in): Operating activities $ 137,468 $ 16,148 $ 121,320 751% Investing activities (33,660) (24,644) (9,016) (37)% Financing activities (103,799) 8,489 (112,288) (1,323)% Net increase (decrease) in cash and cash equivalents $ 9 $ (7) $ 16 229% Net cash provided by operating activities.
Environmental Matters Our operations are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdictions in which these operations are conducted. We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during 2022, 2021 or 2020. 63
We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during 2023, 2022 or 2021. 63
Selling, general and administrative expenses increased $0.8 million in employee related expenses. Depreciation and amortization. Depreciation and amortization increased as a result of increased amortization of turnaround costs with a slight offset due to certain assets being fully depreciated. Other operating income, net.
Operating expenses decreased primarily as a result of lease expense of $4.9 million and natural gas utilities of $1.1 million. Selling, general and administrative expenses. Selling, general and administrative expenses increased primarily as a result of increased employee-related expenses. Depreciation and amortization. Depreciation and amortization decreased primarily as a result of assets being fully depreciated, offset by recent capital expenditures.
An increase in price of these products would increase our operating expenses which could adversely affect net income. We cannot provide assurance that we will be able to pass along increased operating expenses to our customers.
We cannot provide assurance that we will be able to pass along increased operating expenses to our customers. Environmental Matters Our operations are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdictions in which these operations are conducted.
The $0.2 million gain for the year ended December 31, 2021 is due to insurance proceeds received related to structural damage at one of our shore-based terminals. 53 Transportation Segment Comparative Results of Operations for the Years Ended December 31, 2022 and 2021 Year Ended December 31, Variance Percent Change 2022 2021 (In thousands) Revenues $ 239,275 $ 161,180 $ 78,095 48% Operating expenses 176,198 129,449 46,749 36% Selling, general and administrative expenses 8,215 7,670 545 7% Depreciation and amortization 14,567 15,719 (1,152) (7)% 40,295 8,342 31,953 383% Other operating income, net 1,062 74 988 1,335% Operating income $ 41,357 $ 8,416 $ 32,941 391% Marine Transportation Revenues .
Other operating loss, net represents gains and losses from the disposition of property, plant and equipment. 54 Transportation Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Revenues $ 240,926 $ 239,275 $ 1,651 1% Operating expenses 184,334 176,198 8,136 5% Selling, general and administrative expenses 9,787 8,215 1,572 19% Depreciation and amortization 14,879 14,567 312 2% 31,926 40,295 (8,369) (21)% Other operating income, net 1,775 1,062 713 67% Operating income $ 33,701 $ 41,357 $ (7,656) (19)% Marine Transportation Revenues .
Total Contractual Obligations A summary of our total contractual obligations as of December 31, 2022 is as follows (dollars in thousands): Payments due by period Type of Obligation Total Obligation Less than One Year 1-3 Years 3-5 Years Due Thereafter Credit facility 1 $ 171,000 $ — $ — $ 171,000 $ — 11.5% senior secured notes, due 2025 291,381 — 291,381 — — 10.0% senior secured notes, due 2024 53,750 — 53,750 — — Operating leases 45,756 12,151 17,760 8,792 7,053 Finance lease obligations 9 9 — — — Interest payable on finance lease obligations — — — — — Interest payable on fixed long-term debt obligations 80,218 38,884 41,334 — — Total contractual cash obligations $ 642,114 $ 51,044 $ 404,225 $ 179,792 $ 7,053 1 The credit facility was amended on February 8, 2023 to extend the maturity date to February 8, 2027.
Total Contractual Obligations A summary of our total contractual cash obligations as of December 31, 2023 is as follows (dollars in thousands): Payments due by period Type of Obligation Total Obligation Less than One Year 1-3 Years 3-5 Years Due Thereafter Credit facility $ 42,500 $ — $ — $ 42,500 $ — 11.5% senior secured notes, due 2028 400,000 — — 400,000 — Operating leases 70,054 18,345 30,542 15,734 5,433 Interest payable on fixed long-term debt obligations 188,926 46,000 92,000 50,926 — Total contractual cash obligations $ 701,480 $ 64,345 $ 122,542 $ 509,160 $ 5,433 The interest payable under our credit facility is not reflected in the above table because such amounts depend on the outstanding balances and interest rates, which vary from time to time.
Selling, general and administrative expenses increased primarily as a result of increased employee-related expenses. Depreciation and amortization. Depreciation and amortization remained relatively consistent. Other operating loss, net. Other operating loss, net represents gains and losses from the disposition of property, plant and equipment. Gain on involuntary conversion of property, plant and equipment.
Selling, general and administrative expenses. Selling, general and administrative expenses remained relatively consistent. Depreciation and amortization. Depreciation and amortization decreased as a result of the sale of Stockton assets in the third quarter of 2022, offset by recent capital expenditures. Other operating income, net.
Our NGL average sales price per barrel increased $10.66, or 18%, resulting in an increase to products revenues of $75.9 million. The increase in average sales price per barrel was a result of an increase in market prices. Product sales volumes decreased 19%, decreasing revenues $91.5 million. Cost of products sold .
Product revenues decreased $102.2 million due to the exit of the butane optimization business in the second quarter 2023. For the remaining products, sales volumes decreased 19%, lowering revenues by $62.9 million, primarily related to a 20% decrease in NGL sales volume. Our average sales price per barrel decreased $8.56, or 8%, decreasing revenues by $28.7 million.
Removed
Exit from Butane Optimization Business. In January 2023, we announced that we anticipate the exit of our butane optimization business at the conclusion of the butane selling season during the second quarter of 2023. Electronic Level Sulfuric Acid Joint Venture.
Added
Going forward, with respect to butane, we will operate as a fee-based butane logistics business, primarily utilizing our north Louisiana underground storage assets, which have both truck and rail capability. This logistics business will also utilize our truck transportation assets for fee-based product movements.
Removed
On October 7, 2022, we closed on the sale of our Stockton Sulfur Terminal to Gulf Terminals LLC for net proceeds of approximately $5.25 million, which were used to reduce outstanding borrowings under our credit facility.
Added
As a result of this new business model, we will no longer carry butane inventory going forward, enabling us to reduce commodity risk exposure, cash flow and earnings volatility, and working capital requirements.
Removed
We recorded an impairment charge of $3.1 million and $1.3 million in our Terminalling and Storage and Transportation segments, respectively, during the year ended December 31, 2020.
Added
The following revenues and costs, which are included in the historical financial results for the years ended December 31, 2023 and 2022 will not be incurred under the new fee-based butane logistics business model. 2023 2022 Products revenue $ 70,539 $ 172,756 Cost of products sold 72,283 190,677 Selling, general and administrative expenses 512 2,094 $ (2,256) $ (20,015) Issuance of 2028 Notes to Refinance Existing Secured Notes .
Removed
The following table sets forth our operating revenues and operating income by segment for the years ended December 31, 2022, 2021, and 2020. 51 Operating Revenues Revenues Intersegment Eliminations Operating Revenues after Eliminations Operating Income (loss) Operating Income Intersegment Eliminations Operating Income (loss) after Eliminations (In thousands) Year Ended December 31, 2022: Terminalling and storage $ 228,793 $ (6,509) $ 222,284 $ 18,902 $ (4,009) $ 14,893 Natural gas liquids 398,425 (3) 398,422 (16,268) 14,415 (1,853) Sulfur services 179,164 — 179,164 24,186 9,960 34,146 Transportation 239,275 (20,267) 219,008 41,357 (20,366) 20,991 Indirect selling, general and administrative — — — (16,914) — (16,914) Total $ 1,045,657 $ (26,779) $ 1,018,878 $ 51,263 $ — $ 51,263 Year Ended December 31, 2021: Terminalling and storage $ 185,629 $ (6,597) $ 179,032 $ 15,462 $ (4,677) $ 10,785 Natural gas liquids 414,043 — 414,043 25,566 12,532 38,098 Sulfur services 145,042 — 145,042 23,965 9,007 32,972 Transportation 161,180 (16,866) 144,314 8,416 (16,862) (8,446) Indirect selling, general and administrative — — — (16,129) — (16,129) Total $ 905,894 $ (23,463) $ 882,431 $ 57,280 $ — $ 57,280 Year Ended December 31, 2020: Terminalling and storage $ 191,041 $ (6,877) $ 184,164 $ 23,969 $ (1,816) $ 22,153 Natural gas liquids 247,484 (5) 247,479 9,660 12,444 22,104 Sulfur services 108,020 (13) 108,007 29,001 7,255 36,256 Transportation 150,285 (17,793) 132,492 1,781 (17,883) (16,102) Indirect selling, general and administrative — — — (17,909) — (17,909) Total $ 696,830 $ (24,688) $ 672,142 $ 46,502 $ — $ 46,502 52 Terminalling and Storage Segment Comparative Results of Operations for the Years Ended December 31, 2022 and 2021 Year Ended December 31, Variance Percent Change 2022 2021 (In thousands) Revenues: Services $ 86,664 $ 81,762 $ 4,902 6% Products 142,129 103,867 38,262 37% Total revenues 228,793 185,629 43,164 23% Cost of products sold 116,117 83,081 33,036 40% Operating expenses 58,748 52,972 5,776 11% Selling, general and administrative expenses 6,626 6,052 574 9% Depreciation and amortization 28,234 28,210 24 —% 19,068 15,314 3,754 25% Other operating loss, net (166) (48) (118) (246)% Gain on involuntary conversion of property, plant and equipment — 196 (196) (100)% Operating income $ 18,902 $ 15,462 $ 3,440 22% Shore-based throughput volumes (gallons) 85,569 50,526 35,043 69% Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — —% Services revenues.
Added
On February 8, 2023, we completed the sale of $400.0 million in aggregate principal amount of our 2028 Notes.
Removed
A 31% increase in average sales price combined with a 4% increase in sales volumes at our blending and packaging facilities resulted in a $38.0 million increase in products revenues. Cost of products sold.
Added
The following table sets forth our operating revenues and operating income by segment for the years ended December 31, 2023 and 2022.
Removed
A 34% increase in average cost per gallon combined with a 4% increase in sales volumes at our blending and packaging facilities resulted in a $32.8 million increase in cost of goods sold. Operating expenses. Operating expenses increased primarily as a result of natural gas utilities of $3.8 million and employee-related expenses of $1.6 million. Selling, general and administrative expenses.
Added
Operating Revenues Revenues Intersegment Eliminations Operating Revenues after Eliminations Operating Income (loss) Operating Income Intersegment Eliminations Operating Income (loss) after Eliminations (In thousands) Year Ended December 31, 2023: Terminalling and storage $ 95,459 $ (8,945) $ 86,514 $ 14,532 $ (8,856) $ 5,676 Specialty products 346,863 (86) 346,777 17,109 13,226 30,335 Sulfur services 140,995 — 140,995 17,412 13,024 30,436 Transportation 240,926 (17,249) 223,677 33,701 (17,394) 16,307 Indirect selling, general and administrative — — — (16,030) — (16,030) Total $ 824,243 $ (26,280) $ 797,963 $ 66,724 $ — $ 66,724 Year Ended December 31, 2022: Terminalling and storage $ 92,612 $ (12,419) $ 80,193 $ 1,189 $ (12,291) $ (11,102) Specialty products 540,636 (123) 540,513 1,445 22,697 24,142 Sulfur services 179,164 — 179,164 24,186 9,960 34,146 Transportation 239,275 (20,267) 219,008 41,357 (20,366) 20,991 Indirect selling, general and administrative — — — (16,914) — (16,914) Total $ 1,051,687 $ (32,809) $ 1,018,878 $ 51,263 $ — $ 51,263 53 Terminalling and Storage Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Revenues $ 95,459 $ 92,612 $ 2,847 3% Cost of products sold 75 19 56 295% Operating expenses 57,393 63,177 (5,784) (9)% Selling, general and administrative expenses 2,070 1,967 103 5% Depreciation and amortization 21,030 26,094 (5,064) (19)% 14,891 1,355 13,536 999% Other operating loss, net (359) (166) (193) (116)% Operating income $ 14,532 $ 1,189 $ 13,343 1,122% Shore-based throughput volumes (gallons) 162,363 85,017 77,346 91% Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — —% Services revenues.
Removed
Freight revenue increased primarily due to a 25% increase in load count combined with a 7% increase in total miles, which resulted in a $34.4 million increase. Additionally, ancillary revenue increased $23.8 million . Operating expenses .
Added
In addition, revenue at our specialty terminals increased $1.9 million primarily as a result of higher throughput and storage revenue attributable to contractually prescribed, index-based fee adjustments.
Removed
Other operating income, net increased $4.4 million as a result of a net gain from the disposition of property, plant and equipment during 2022. 55 Natural Gas Liquids Segment Comparative Results of Operations for the Years Ended December 31, 2022 and 2021 Year Ended December 31, Variance Percent Change 2022 2021 (In thousands) Products Revenues $ 398,425 $ 414,043 (15,618) (4)% Cost of products sold 403,922 375,239 28,683 8% Operating expenses 4,540 4,061 479 12% Selling, general and administrative expenses 4,069 6,098 (2,029) (33)% Depreciation and amortization 2,380 2,390 (10) —% (16,486) 26,255 (42,741) (163)% Other operating income (loss), net 218 (689) 907 132% Operating income (loss) $ (16,268) $ 25,566 $ (41,834) (164)% NGLs Volumes (barrels) 5,791 7,121 (1,330) (19)% Products Revenues.
Added
Other operating income, net represents gains from the disposition of property, plant and equipment. 56 Specialty Products Segment Comparative Results of Operations for the Years Ended December 31, 2023 and 2022 Year Ended December 31, Variance Percent Change 2023 2022 (In thousands) Products revenues $ 346,863 $ 540,636 (193,773) (36)% Cost of products sold 319,200 526,043 (206,843) (39)% Operating expenses 78 118 (40) (34)% Selling, general and administrative expenses 7,120 8,728 (1,608) (18)% Depreciation and amortization 3,296 4,520 (1,224) (27)% 17,169 1,227 15,942 1,299% Other operating income (loss), net (60) 218 (278) (128)% Operating income $ 17,109 $ 1,445 $ 15,664 1,084% NGL sales volumes (Bbls) 3,681 5,791 (2,110) (36) % Other specialty products volumes (Bbls) 367 391 (24) (6) % Total specialty products volumes (Bbls) 4,048 6,182 (2,134) (35) % Products revenues.
Removed
Our average cost per barrel increased $13.81, or 26%, increasing cost of products sold by $98.3 million. The increase in average cost per barrel was a result of an increase in market prices. The decrease in sales volume of 19% resulted in a $88.4 million decrease to cost of products sold.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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At December 31, 2022, we had no outstanding hedge positions. See Note 11, "Derivative Instruments and Hedging Activities," in Item 8 for further information on our outstanding derivatives. All outstanding commodity derivative positions were closed prior to December 31, 2022. Interest Rate Risk.
At December 31, 2023, we had no outstanding hedge positions. See Note 11, "Derivative Instruments and Hedging Activities," in Item 8 for further information on our outstanding derivatives. All outstanding commodity derivative positions were closed prior to December 31, 2023. Interest Rate Risk.
Based on the amount of unhedged floating rate debt owed by us on December 31, 2022, the impact of a 100 basis point increase in interest rates on this amount of debt would result in an increase in interest expense and a corresponding decrease in net income of approximately $1.7 million annually.
Based on the amount of unhedged floating rate debt owed by us on December 31, 2023, the impact of a 100 basis point increase in interest rates on this amount of debt would result in an increase in interest expense and a corresponding decrease in net income of approximately $0.4 million annually.
We are exposed to changes in interest rates as a result of our credit facility, which had a weighted-average interest rate of 7.81% as of December 31, 2022.
We are exposed to changes in interest rates as a result of our credit facility, which had a weighted-average interest rate of 8.80% as of December 31, 2023.
We are not exposed to changes in interest rates with respect to our 2024 Notes and 2025 Notes as these obligations are fixed rate. Based on the quoted prices for identical liabilities in markets that are not active at December 31, 2022, the estimated fair value of the 2024 Notes and 2025 Notes was $54.1 million and $290.7 million, respectively.
We are not exposed to changes in interest rates with respect to our 2028 Notes as these obligations are at a fixed rate. Based on the quoted prices for identical liabilities in markets that are not active at December 31, 2023, the estimated fair value of the 2028 Notes was $414.5 million.
Market risk is estimated as the potential decrease in fair value of our long-term debt resulting from a hypothetical increase of a 100 basis point increase in interest rates.
Market risk is estimated as the potential decrease in fair value of our long-term debt resulting from a hypothetical increase of a 100 basis point increase in interest rates. Such an increase in interest rates at December 31, 2023 would result in a $12.2 million decrease in the fair value of our 2028 Notes. 64
Removed
Such an increase in interest rates at December 31, 2022 would result in a $0.04 million decrease in the fair value of our 2024 Notes and a $0.5 million decrease in the fair value of our 2025 Notes. 64

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