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Private & Confidential
Blueknight Investor Presentation May 2020
Downstream Terminalling Solutions for Tomorrow’s
Infrastructure and Transportation End Markets
2Private & Confidential
Legal Disclaimer
Forward-Looking Statements
This presentation includes forward-looking statements. Statements included in this presentation that are not historical facts (including, without limitation, any
statements about future financial and operating results, guidance, projected or forecasted financial results, objectives, project timing, expectations and intentions
and other statements that are not historical facts) are forward-looking statements. Such forward-looking statements are subject to various risks and uncertainties.
These risks and uncertainties include, among other things, the Partnership’s ability to pay future distributions, uncertainties relating to the Partnership’s debt levels
and restrictions in its credit facility, its exposure to the credit risk of our third-party customers, the Partnership’s future cash flows and operations, future market
conditions, current and future governmental regulation, future taxation and other factors discussed in the Partnership’s filings with the Securities and Exchange
Commission. If any of these risks or uncertainties materializes, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially
from those expected. The Partnership undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information,
future events or otherwise.
This presentation contains the non-GAAP financial measures of Adjusted EBITDA and total operating margin, excluding depreciation and amortization. Adjusted
EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, non-cash equity-based compensation, asset impairment charges, gains
and losses on asset sales and other select items which management feels decreases the comparability of results among periods. Operating margin, excluding
depreciation and amortization is defined as revenues from related parties and external customers less operating expenses, excluding depreciation and amortization.
The use of Adjusted EBITDA and operating margin, excluding depreciation and amortization should not be considered as alternatives to GAAP measures such as
operating income, net income or cash flows from operating activities. Adjusted EBITDA and operating margin, excluding depreciation and amortization are
presented because the Partnership believes they provide additional information with respect to its business activities and are used as supplemental financial
measures by management and external users of the Partnership’s financial statements, such as investors, commercial banks and others to assess, among other
things, the Partnership’s operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to
financing or capital structure.
Blueknight does not provide GAAP financial measures, including reconciliations, on a forward-looking basis because the partnership is unable to predict with
reasonable certainty impairments, depreciation and amortization, non-cash equity based compensation, the ultimate outcome of legal proceedings and acquisition
related expenses.
3Private & Confidential
Blueknight’s Robust and Unique Platform
Asphalt
Terminalling
• 8.8 million barrels of asphalt
and residual fuel oil storage
• 53 terminals across 26 states
• Largest independently
owned asphalt network
Pipeline and
Trucking
• OK pipeline system with
combined capacity of
50,000 bpd
• 63 trucks
• XTO crude oil dedication
and minimum volume
commitment
Downstream Terminalling Solutions for Tomorrow’s Infrastructure and Transportation End Markets
Asphalt Terminalling
Crude Oil Terminalling
Pipeline
Trucking
• Master limited partnership established in 2007 and
headquartered in Tulsa, Oklahoma
• Geographically-diversified, high-quality assets in
26 states
• Stable cash flows underpinned by long-term, take-
or-pay contracts and over 50% of revenue from
investment grade customers
• Common and preferred units on NASDAQ under
“BKEP” and “BKEPP”, respectively
2019 Operating Margin
Contribution
2019 Terminalling
Revenue %
Take-Or-Pay
Asphalt
Terminalling 80%
16%Crude Oil
Terminalling
93%
Crude Oil
Terminalling
• 6.6 million barrels of
Cushing, OK storage
• Operate additional 1.0
million barrels for
TransMontaigne
• Strong connectivity and
blending capability
Take-Or-Pay
Source: Company reports; note operating margin excludes depreciation and amortization
4Private & Confidential
Ergon Inc, a Leading Asphalt Marketer and Blueknight Sponsor
A Leading Energy
Company With Over Six
Decades of Market
Experience
Diversified Portfolio
• Private, family-owned, diversified company in petroleum, road construction materials and real estate
• Formed in 1954 and based in Jackson, Mississippi
• Largest customer of Blueknight with commercial services in 28 of the 53 asphalt facilities
• General partner of Blueknight since 2016
High Quality,
Supportive Sponsor
Midstream and Logistics Oil and GasAsphalt and EmulsionsRefining and Marketing
• Presence in over 12 countries worldwide, over 2,500 employees globally
• One of the largest asphalt emulsion marketers in the U.S.
• Refining & Marketing: refinery operations and marketing of crude oil and various refined products including
specialty naphthenic and paraffinic products
• Asphalt & Emulsions: production, marketing and distribution of paving and specialty asphalt products
• Midstream & Logistics: logistics support including a fleet of river, road and rail transportation equipment along
with numerous terminal locations and pipelines
• Oil & Gas: retail distribution network for propane, mid-river fleeting, refueling & supply and oil & gas
exploration and development
5Private & Confidential
MLP Organizational Structure with Two Public Securities
• Blueknight General Partner
ownership: Ergon, Inc.
• Two classes of publicly traded
equity (NASDAQ):
─ Series A Preferred Units:
BKEPP
─ Common Units: BKEP
Blueknight Energy Partners G.P., L.L.C. (DE)
BKEP Operating Subsidiaries
Blueknight Energy Partners, L.P. (DE)
Blueknight GP Holding, LLC (DE)
1.6% General Partner Interest
100.0% Ownership Interest
100.0% Ownership Interest
71.2% Limited Partner Interest
Ergon Asphalt & Emulsions, Inc.
100.0% Ownership Interest
Ergon, Inc.
27.2%
Limited
Partner
Interest
Ergon Asphalt Holding, LLC
Public Unitholders
$400 million Senior Secured
Credit Facility
(1) Market capitalization includes BKEP and BKEPP
(2) Market data as of 4/30/20
(3) Unit count and balance sheet data as of Q1 2020 filings
NASDAQ Tickers BKEP & BKEPP
Market Capitalization ($ millions) (1,2,3) $245
Enterprise Value ($ millions) (2,3) $516
Annual BKEP Distribution ($/unit) $0.16
Annual BKEPP Distribution ($/unit) $0.72
Source: Company reports
Highlights and Strategy
7Private & Confidential
Blueknight Investment Highlights
• Robust, geographically-diversified system of logistics terminalling solutions focused on niche end markets
• Largest independently-owned network of 53 asphalt terminals across the U.S. in major markets
• Highly strategic terminal at Cushing Interchange with 6.6 million barrels of crude oil storage
Unique Platform
of High-Quality
Terminal Assets
1
• Target long-term leverage of 3.5x and coverage on all distributions greater than 1.2x
• 2020 guidance with adjusted EBITDA outlook in-line with 2019; internally generated cash flow to fully fund 2020
distribution payments with expected coverage greater than 1.2x and debt leverage between 4.0x-4.25x
Disciplined
Financial Principles
and 2020 Guidance
3
• Stable earnings underpinned by 90%+ take-or-pay revenue, over 50% revenue from investment grade customers
• Minimal direct commodity exposure or dependence on U.S. upstream drilling activity and production
Strong Fee-Based
Cash Flow Profile
2
• Core Asphalt Terminalling business driven more by infrastructure/road construction trends than oil & gas
commodity markets; steady growth expected ahead for state and federal infrastructure spending
• Crude Oil Terminalling business in Cushing benefitting from deep 2020 crude oil contango market
Favorable
Industry Trends
Driving Continued
Market Growth
4
• Leverage existing asset footprint to grow alternative specialty terminalling business in niche product markets
• Focus on opportunistic consolidation of competitor non-core asphalt facilities in key strategic markets
Focused Strategic
Growth
Opportunities
5
• Seasoned management team with extensive and complementary industry experience
• Deep knowledge base and strong entrenched relationships within the highly specialized asphalt industry
Experienced
Management Team
6
8Private & Confidential
($20.0)
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
2014 2015 2016 2017 2018 2019
Asphalt Terminalling Services Crude Oil Terminalling Services Crude Oil Pipeline Services Crude Oil Trucking Services
48% 63%
25%
68%
24%
5%
80%
22%
93%
12%
80%
16%
2015 Crude Oil Contango Environment
53%
24%
Unique and Stable Platform of High-Quality Terminal Assets1
• Diversified provider of downstream terminalling solutions for infrastructure and niche transportation end markets
─ Robust platform of geographically diversified, high-quality terminal assets, representing 96% of total operating margin in 2019
─ Over 90% of terminalling revenues supported by take-or-pay contractual agreements
─ Minimal direct commodity exposure or dependence on U.S. upstream drilling activity and production
─ Reviewing strategic options for crude oil pipeline and trucking businesses, including potential joint venture or sale
Blueknight Operating Margin Contribution ($ in Millions)
Source: Company reports; note operating margin excludes depreciation and amortization
9Private & Confidential
Unique Platform of High-Quality Terminal Assets: Asphalt 1
• Asphalt Terminalling Services
─ Largest independently owned asphalt terminal network in the U.S.
─ 8.8 million barrels of asphalt and residual fuel oil storage capacity
─ 53 terminals located across 26 states
─ Multiple loading/unloading logistics options, including truck, marine and rail
─ 80% of operating margin in 2019; 95% of 2019 revenue supported by take-or-
pay fixed-fee arrangements
─ Weighted average contract term approximately five years and recently
extending 19 of 53 sites to seven year terms
─ Historically very low customer turnover
─ High value, strategic locations in key urban centers: Austin, Denver,
Las Vegas, Little Rock, Memphis, Nashville, Salt Lake City, St. Louis
Location Facilities
Total Capacity
(thousands of barrels)
Alabama 1 295
Arizona 1 66
Arkansas 1 21
California 1 66
Colorado 4 401
Georgia 2 192
Idaho 1 285
Illinois 2 232
Indiana 1 156
Kansas 5 662
Missouri 3 662
Mississippi 1 202
Montana 1 123
Nebraska 1 292
New Jersey 1 459
Nevada 1 280
North Carolina 1 243
Ohio 1 38
Oklahoma 7 1,420
Pennsylvania 1 59
Tennessee 4 770
Texas 4 248
Utah 2 300
Virginia 2 635
Washington 3 468
Wyoming 1 220
Total 53 8,795
10Private & Confidential
Unique Platform of High-Quality Terminal Assets: Crude Oil 1
• Crude Oil Terminalling Services
─ Strategic crude oil terminal at Cushing Interchange with 34 tanks and 6.6 million barrels of storage capacity
─ Connections and access to all Cushing terminal facilities with a receiving and delivering capacity of 350,000 bpd
─ High quality blending services and capabilities
─ 1.0 million barrels of storage operated for TransMontaigne at Cushing
─ 16% of total operating margin in 2019; 85% of 2019 revenue supported by take-or-pay fixed-fee arrangements
─ Favorable market environment during periods of contango WTI market structure
Cushing Inboard/Outbound Connections
Illinois
Wink
Lubbock
Platteville/Lucerne/Riverside
Guernsey
St. James
Port Arthur
Freeport
Keystone
PonyExpress
Grand MesaSaddlehornWhitecliffs
Basin
Blueknight Pipeline
Seaway
Market-Link
11Private & Confidential
$0
$20
$40
$60
$80
$100
$120
$140
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
2014 2015 2016 2017 2018* 2019
WT
I ($
/b
bl)
BK
EP
Fre
e C
ash
Flo
w (
$ m
illi
on
)
Adjusted EBITDA WTI Price
Strong Fee-Based Cash Flow Profile 2
• Blueknight’s high-quality terminal assets generate stable, steady free cash
flow generation despite oil price volatility
• Asset base positioned for minimal direct commodity exposure or
dependence on upstream drilling activity and production
• Asphalt and Crude Oil Terminalling services underpinned by 95% and 85%
contracted take-or-pay fixed-fees, respectively
Source: Company reports, FactSet
Adjusted EBITDA vs. WTI
* 2018: BKEP divested three asphalt terminals and its producer field services business
2019 Terminalling Segments Revenue Mix
Take-or-Pay 95%
Variable5%
Asphalt
Terminalling
Take-or-Pay85%
Variable15%
Crude Oil
Terminalling
12Private & Confidential
Strong Fee-Based Cash Flow Profile: High-Quality Customer Base 2
Select Crude Oil Terminalling CustomersSelect Asphalt Terminalling Customers Select Transportation Customers
• Strong support from high-quality, stable customer base across all businesses
• Over 50% of revenue from terminalling customers are investment grade entities
• Asphalt Terminalling customers typically significant players in the industry
─ Weighted average contract term of approximately 5 years
─ Contract terms range from 5 to 10 years
• Crude Oil Terminalling customers typically trading and marketing firms and midstream entities
─ No upstream producers among customer base, minimal upstream counterparty risks
• XTO Energy primary customer of pipeline business, supported by minimum volume commitments and dedications
13Private & Confidential
• Target long-term leverage of 3.5x and coverage greater than 1.2x
• Committed to improving capital structure, reducing cost of capital and maintaining strong liquidity
• Operate within cash flow and grow business without public equity issuances
• Maximize risk-adjusted returns with excess cash through the following:
─ Disciplined investments in high-return, growth opportunities
─ May opportunistically pursue preferred unit buybacks at or near target leverage
─ Distribution growth underpinned by sustainable growth and coverage greater than 1.2x
Balance Sheet
Capital
Investment and
Allocation
Financial
Management
• Focus on growing long-term, fee-based cash flows from high-quality customers
• Maintain robust forecast process and economics to best reflect outlook and financial metrics
• Ensure high-quality reporting and messaging on strategy, industry dynamics and financial results
• Pursue attractive, low-cost sources of capital for potential larger opportunities
3 Disciplined Financial Principles and 2020 Guidance
2020 Guidance
• Well positioned to showcase and develop its unique strength and core competencies within the
terminalling business in 2020 despite turmoil in both energy and broader markets
• 2020 guidance:
─ Adjusted EBITDA in-line with 2019
─ Coverage greater than 1.2x
─ Leverage between 4.0 and 4.25x
14Private & Confidential
Favorable Industry Trends Driving Continued Market Growth4
• Blueknight’s asphalt terminal business driven
largely by transportation construction trends at
federal, state and local levels
• Terminal usage not dependent on E&P drilling
or oil production activity
• ARTBA forecasting steady 3.9% CAGR of U.S.
asphalt-related transportation construction from
2018-24 to $164.6 billion for:
─ Public highway and street work
─ Private highway work
─ Private driveway and parking lot work
• New federal infrastructure spending legislation
proposed
─ U.S. Senate: July 2019 vote to authorize
$287 billion for surface transportation needs
─ Congressional Democrats: proposed $329
billion surface transportation spending plan
─ Trump Administration: considering $2
trillion infrastructure stimulus plan in
response to coronavirus pandemic market
impacts
Source: American Road & Transportation Builders Association
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
E
2020E
2021E
2022E
2023E
2024E
Public Highway, Street & Related Work Private Driveway & Parking Lot
Private Highway & Bridge Work
2020 Asphalt Transportation Construction Activity ($ in Billions)
15Private & Confidential
Focused Strategic Growth Opportunities5
• Strategic focus to transition towards a pure-play
terminalling entity
─ 2019 operating margin contribution
• Asphalt Terminalling: 80%
• Crude Oil Terminalling: 16%
• Asphalt Terminalling system well optimized
operationally
─ Consistent, stable annual operating margin
contribution per site
─ 3Q strongest seasonal period from peak paving
demand in summer months
• Future growth prospects
─ Leverage existing assets to further develop
advanced, customized terminalling solutions
─ Focus on growing terminalling business in new,
specialty niche product markets
─ Heated storage tank infrastructure in place to
leverage into renewable diesel and heavy oil
markets
─ Evaluate opportunistic terminal acquisitions
Asphalt Segment Operating Margin Per Terminal
($ thousand/terminal)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2016 2017 2018 2019*
* 2019: Asphalt Terminalling results negatively impacted by severe weather events in 2Q19
Quarterly Seasonality
2016-19
(% of annual total)
1Q 22%
2Q 23%
3Q 30%
4Q 25%
Source: Company reports; note operating margin excludes depreciation and amortization
16Private & Confidential
Focused Strategic Growth Opportunities: Acquisition Targets5
• Blueknight operates the largest independently-owned U.S. network of 53 asphalt terminals
• Blueknight has a long history of successful asphalt terminal acquisitions, totaling approximately $175 million and representing 26% of
current system facilities since May 2015
• Asphalt market characteristics
─ Highly fragmented ownership: refiners, midstream entities, construction materials companies, paving contractors
─ Terminals generally either (1) standalone, asphalt-only facilities, or (2) integrated into broader product terminals
• Opportunistic acquisition targets
─ Refiner-owned, standalone facilities
─ Materials company-owned, standalone facilities
─ Standalone, non-integrated facilitiesBlueknight Historical Asphalt Acquisitions
Purchase Price
Date Terminal Facility Seller ($ millions)
Mar 2018 Muskogee, OK Frontier Terminal, LLC $22.0
Cummins Investment Corp.
Dec 2017 Bainbridge, GA Ergon $10.2
Oct 2016 Birmingport, AL Nashville, TN Ergon $108.8
Chandler, AZ Ennis, TX
Wolcott, KS Mt. Pleasant, TX
Yellow Creek, MS Pleasanton, TX
Memphis, TN
Feb 2016 Dumfries, VA Axeon Specialty Products $19.0
Wilmington, NC
May 2015 Cheyenne, WY Simon Contractors $13.9
Source: Company reports
17Private & Confidential
Experienced Management Team6
• Mark Hurley, Chief Executive Officer
─ CEO of Blueknight’s General Partner since September 2012
─ 2010-2012: served as the Senior Vice President, Crude Oil and Offshore of Enterprise Products, LLC, led newly formed crude oil
and offshore business segment
─ 1981-2009: began career at Shell, lastly as President of Shell Pipeline Co., LP.
─ Bachelor of Science in chemical engineering from North Carolina State University
• Andrew Woodward, Chief Financial Officer
─ CFO of Blueknight’s General Partner since April 2019
─ Previously served at Andeavor Logistics (NYSE: ANDX) as Vice President, Finance and Treasurer, appointed as principal financial
officer and prior head of investor relations
─ Prior to ANDX, served in corporate development at Andeavor (NYSE: ANDV)
─ Served as Vice President at RBC Capital Markets within the energy investment banking group
─ Master of Business Administration from the University of Texas at Austin, Bachelor of Arts in economics and philosophy from
Colorado College
• Jeffrey Speer, Chief Operating Officer
─ Chief Operating Officer of Blueknight’s General Partners since July 2013
─ 2009-2013: served as Blueknight’s Senior Vice President-Operations and Vice President of Operations of the partnership’s asphalt
and emulsion subsidiary
─ Prior to Blueknight, served as Vice President of Operations for Koch Industries, Inc. with operational responsibility for Koch’s
crude oil, pipeline and trucking divisions in Oklahoma, Texas and Canada and Koch’s agricultural and asphalt businesses
─ Bachelor of Science in mechanical engineering from Kansas State University
Appendix
19Private & Confidential
Financial Reconciliations to Non-GAAP Financial Measures
The following table presents a reconciliation of adjusted EBITDA to net income for the periods shown:
Twelve Months Ended
December 31,
($ in thousands) 2014 2015 2016 2017 2018 2019
Net Income (loss) $ 27,572 $ 6,396 $ (4,840) $ 20,045 $ (42,047) $ 18,412
Interest expense 12,268 11,202 12,554 14,027 16,860 15,975
Income taxes 469 323 260 166 198 63
Depreciation and amortization 26,045 27,228 30,820 31,139 29,359 25,533
Non-cash equity-based compensation 2,322 2,825 3,417 2,280 2,284 1,183
Asset impairment expense - 22,404 25,761 2,400 53,068 2,476
(Gain) loss on sale of assets (2,464) (6,137) (108) 975 (149) (453)
Other (2,079) (267) 1,783 - 555 443
Adjusted EBITDA $ 64,133 $ 63,974 $ 69,647 $ 71,032 $ 60,128 $ 63,632
20Private & Confidential
Financial Reconciliations to Non-GAAP Financial Measures
Twelve Months Ended
December 31,
($ in thousands)2014 2015 2016 2017 2018 2019
Operating margin, excluding depreciation and amortization
Asphalt terminalling services operating margin $ 41,244 $ 48,212 $ 56,769 $ 64,623 $ 66,327 $ 60,360
Crude oil terminalling services operating margin 18,818 18,842 20,048 17,977 8,778 11,765
Crude oil pipeline services operating margin 10,457 7,694 4,347 (1,700) (3,604) 3,298
Crude oil trucking services operating margin 7,907 1,304 1,829 (434) (442) 410
Total operating margin, excluding depreciation and amortization $ 78,426 $ 76,052 $ 82,993 $ 80,466 $ 71,059 $ 75,833
Depreciation and amortization (26,045) (27,228) (30,820) (31,139) (29,359) (25,533)
General and administrative expense (17,498) (18,976) (20,029) (17,112) (15,995) (14,095)
Asset impairment expense - (21,996) (25,761) (2,400) (53,068) (2,476)
Gain/(loss) on sale of assets 2,464 6,137 108 (975) 149 453
Operating income $ 37,347 $ 13,989 $ 6,491 $ 28,840 $ (27,214) $ 34,182
The following table presents a reconciliation of operating margin, excluding depreciation and amortization, to total
operating income for the periods shown: