Throughput And Deficiency Agreement

A small business can benefit from a debit contract if it needs equipment or service to start operating. For example, an aspiring contractor who has just opened a delivery business could provide service to a local carrier at a fixed price for six months. Services may include the use of vehicles, drivers and related transportation costs. Whether the price of gasoline rises or falls over the six-month period, the new contractor always pays the same amount of money for each delivery based on the terms of the contract. If the small contractor expects gas prices to escalate, they position themselves to save money for gasoline over a six-month period with the conclusion of the debit contract. The oil and gas industry mainly uses flow contracts, although there are periods when flows are used between manufacturers and materials suppliers. In both cases, debits are specialized agreements that define a product or service, use and service life. For example, an oil company could operate an oil pipeline for one year by entering into flow contact with the pipe carrier. The conclusion of a contract with such strict restrictions has its drawbacks, but there are also advantages for these restrictions. By entering into a debit contract with the pipeline, the oil company has a form of transportation guaranteed at its discretion for one year; The pipeline has a form of guaranteed payment for one year. Regardless of the actual use of the pipeline throughout the year, this is a win-win situation for both parties, as equipment and funding are provided for both parties. In the third quarter, the pipeline`s crude throughput was more than 1.6 million barrels of oil equivalent per day, slightly lower than in the second quarter of 2019. The portfolio`s rate of return remained high during the quarter, with a record rate at which the rate was the highest since the IPO of BPMP.

CEO Rip Zinsmeister commented on the third quarter results as follows: “The strong operational and financial development of our asset portfolio during the quarter, despite the division`s headwinds on Enbridge`s main line and the weather in the Gulf of Mexico, continues to demonstrate the resilience and stability of cash production in our portfolio. We have reached the highest throughput of our BP2 pipeline since BPMP`s IPO. Based on the continued dynamics we see in the evolution of the underlying asset value and our confidence in the outlook until the end of the year, we expect us to be available for the 2019 distribution forecast at the top of our year. We have now achieved seven consecutive quarters of increased distribution, and with our next quarterly distribution, we expect teen distribution to grow in mid-2019. Compared to the second quarter of 2019, the result reflected an increase in onshors pipeline revenue due to higher throughput on BP2 and Diamondback, as well as an annual mid-year rate increase in the three onshor pipelines. In addition, during the quarter, $2.4 million was recorded as loss-making revenues under the Diamondback debit and deficit agreement.

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