NEDERLAND, Texas, Nov. 6, 2017 /PRNewswire/ -- OCI Partners
LP, a Delaware limited partnership
("we" or the "Partnership"), announced its results for the three
and nine months ended September 30,
2017. The Partnership owns and operates an integrated
methanol and ammonia production facility that is strategically
located on the Texas Gulf Coast near Beaumont.
Summary of Financial Results for the Three Months Ended
September 30, 2017
- Revenues increased 18% to $78
million compared to $66
million for the same period in 2016
- EBITDA increased 79% to $25
million compared to $14
million for the same period in 2016
- Net loss improved to $1 million
compared to a net loss of $12 million
for the same period in 2016
- EBITDA and net loss margins were 32% and (1)% respectively,
compared to 21% and (18)%, respectively, during the same period in
2016
Summary of Financial Results for the Nine Months Ended
September 30, 2017
- Revenues increased 28% to $245
million compared to $192
million for the same period in 2016
- EBITDA increased 105% to $88
million compared to $43
million for the same period in 2016
- Net income improved to $12
million compared to a net loss of $33
million for the same period in 2016
- EBITDA and net income (loss) margins were 36% and 5%
respectively, compared to 22% and (17)%, respectively, during the
same period in 2016
Hurricane Harvey
In late August 2017, Hurricane
Harvey caused extensive flooding and damage to residences and
businesses across Southeast Texas,
including Beaumont and surrounding
areas. The Partnership's equipment or facilities did not incur any
significant damage, but incurred some downtime due to the temporary
lack of availability of raw materials from our suppliers, who were
impacted by Hurricane Harvey. The methanol facility continued to
operate at high utilization rates during the storms, but was taken
offline on August 30 and resumed
production on September 3. The
ammonia facility ceased production on August
28, but production could not be resumed until September 13, due to inventory constraints and
reduced marine traffic caused by the temporary closure of the
Sabine-Neches waterway as a result of Hurricane
Harvey. The Partnership estimates the impact of the shutdown on
EBITDA to be approximately $3
million.
Distributions
Based on the results of the three months ended September 30, 2017, the Board of Directors of the
general partner of the Partnership has approved a cash distribution
of $0.08 per common unit, or
approximately $7.0 million in the
aggregate. The cash distribution will be paid on December 8, 2017 to unitholders of record at the
close of business on November 17,
2017. The amount of any subsequent quarterly cash
distributions will vary depending on our future earnings as well as
our cash requirements for working capital, capital expenditures,
debt service and other contractual obligations, and reserves for
future operating or capital needs.
Run-Rate Quarterly Distribution Guidance
Partnership distributions, including the distribution of
$0.08 being declared with respect to
the three months ended September 30,
2017, remain largely consistent with our prior run-rate
guidance, where the run-rate distribution amount is primarily
affected each quarter for changes in average realized prices of
methanol, ammonia and natural gas.
Our distribution with respect to the three months ended
September 30, 2017 reflects an
average realized methanol price of $299 per metric ton, an average realized ammonia
price of $185 per metric ton, and an
average natural gas price of $3.08
per MMBtu. The lost volume and additional expenses resulting from
the shutdown due to Hurricane Harvey had a negative impact of
approximately $0.04 on the
distribution for the three months ended September 30, 2017, based on average contribution
margins for the third quarter of 2017.
To assist investors in making the linkage between these prices
and potential future distributions, we provide below a sensitivity
analysis assuming full utilization:
- A $0.50 per MMBtu change in
annual average natural gas prices would result in an approximately
$0.25 impact on annual distributions
per common unit
- A $10 per metric ton change in
annual average methanol prices would result in an approximately
$0.10 impact on annual distributions
per common unit
- A $10 per metric ton change in
annual average ammonia prices would result in an approximately
$0.04 impact on annual distributions
per common unit
We intend to continue making distributions consistent with our
run-rate guidance, but there can be no assurance we will be able to
do so. In addition to the impact of commodity prices, our
distributions are subject to fluctuations in capacity utilization,
working capital, capital expenditures, debt service and other
contractual obligations, reserves for future operating or capital
needs and other factors, including overall business, regulatory and
financial considerations that may affect the availability of cash
to distribute. Please see "Forward-Looking Statements" below.
Statement from President and Chief Executive Officer – Ahmed
El-Hoshy
"Hurricane Harvey caused significant damage in Texas and affected many people in the
Beaumont and surrounding areas,
including our own employees. Despite the difficult circumstances,
all our employees came together as a team to help the impacted
employees, regardless of department and level, and I believe the
Partnership has come through the storm as a stronger organization.
We established a fund of $100,000 to
provide financial assistance, temporary housing and supplies to our
employees. In addition, the Partnership donated $100,000 to the Southeast Texas Emergency Relief Fund to help
in the relief and recovery efforts in the Beaumont community.
I would like to thank all our employees for their commitment and
for keeping the plant operational during these unprecedented
weather conditions. As a result, we are fortunate that the storm
caused only minor disruptions to our operations. Our ammonia and
methanol production units experienced 17 and three days of downtime
during the quarter, resulting in capacity utilization rates of 86%
and 96%, respectively. Outside this downtime, we are pleased that
the plants have been running consistently at rates above nameplate
capacity and that repairs to the methanol unit in May 2017 have resulted in daily production rates
that are on average higher than we achieved before the downtime in
the second quarter.
Our average realized methanol price was $299 per metric ton in the third quarter, an
increase of 40% from $214 per metric
ton in the same quarter last year, but a decrease of 10% from
$331 per metric ton in the second
quarter of 2017. Our average realized ammonia price was
$185 per metric ton in the third
quarter, down 21% from $235 per
metric ton in the same quarter last year and down 36% from
$291 per metric ton in the second
quarter of 2017. Finally, our natural gas price averaged
$3.08 per MMBtu during the quarter,
up from $2.88 per MMBtu during the
third quarter of 2016.
We estimate the economic impact of the downtime during Hurricane
Harvey to be approximately $3 million
at the EBITDA level. This is a smaller impact than would be typical
for a 17-day shutdown of the ammonia plant, because of the
historically low level of ammonia prices during the quarter.
Despite this impact from Hurricane Harvey, as well as the higher
natural gas costs and the drop in ammonia prices year-over-year,
our third quarter EBITDA improved compared to the same quarter last
year, benefiting from the comparatively higher realized methanol
prices during the quarter.
Looking forward into the fourth quarter, we expect our business
to benefit from a recent increase in methanol and ammonia prices.
The US weighted average methanol contract price increased from
$370 per metric ton in August to
$382 per metric ton in September as a
result of better Methanol-to-Olefins (MTO) affordability and
healthy demand. The US weighted average methanol contract price has
been stable in recent months at $387
per metric ton in October and $383
per metric ton in November. Global methanol demand is expected to
remain underpinned by MTO affordability in China and the expected start-up of new MTO
units in the next 12 months. Traditional demand for methanol in
the United States has also
increased and is expected to remain strong in the near term due to
increased demand for downstream products used for building
materials.
Ammonia markets were weak in the third quarter of 2017. The
Tampa CFR ammonia contract price reached a multi-year low of
$190 per metric ton in August, a
price that is too low to incentivize imports into the United States, despite the United States being a deficit market for
ammonia. However, ammonia markets turned more bullish in September
and prices have steadily increased into the fourth quarter. The
Tampa CFR ammonia contract price reached $305 per metric ton in November. The price
increases have been driven by a rebound in prices of downstream
fertilizer products, in particular urea, and tight supply at key
export hubs, where the availability of merchant ammonia is limited,
partly due to outages and partly as a result of higher local
ammonia demand."
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Volume Weighted
Average Price of
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Volume Weighted
Average Price of
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Methanol and
Ammonia
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Natural
Gas
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($ per metric
ton)
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($ per
MMBtu)
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For The
Three-Months Ended September 30,
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For The
Three-Months Ended September 30,
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2017
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2016
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2017
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2016
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Ammonia
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185
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235
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3.08
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2.88
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Methanol
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299
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214
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Production
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Capacity
Utilization
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(in '000
tons)
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Rate %
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For The
Three-Months Ended September 30,
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For The
Three-Months Ended September 30,
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2017
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2016
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2017
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2016
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Ammonia
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72
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85
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86%
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102%
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Methanol
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220
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221
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96%
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96%
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Volume Weighted
Average Price of
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Volume Weighted
Average Price of
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Methanol and
Ammonia
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Natural
Gas
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($ per metric
ton)
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($ per
MMBtu)
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For The
Nine-Months Ended September 30,
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For The
Nine-Months Ended September 30,
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2017
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2016
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2017
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2016
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Ammonia
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237
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277
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3.17
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2.40
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Methanol
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327
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199
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Production
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Capacity
Utilization
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(in '000
tons)
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Rate %
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For The
Nine-Months Ended September 30,
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For The
Nine-Months Ended September 30,
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2017
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2016
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2017
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2016
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Ammonia
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227
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249
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92%
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100%
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Methanol
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599
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620
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88%
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91%
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Non-GAAP Financial Measure
EBITDA is defined as net income (loss) plus (i) interest expense
and other financing costs, (ii) income tax expense and (iii)
depreciation expense. EBITDA is used as a supplemental financial
measure by management and by external users of our unaudited
financial statements, such as investors and commercial banks, to
assess:
- the financial performance of our assets without regard to
financing methods, capital structure or historical cost basis;
and
- our operating performance and return on invested capital
compared to those of other publicly traded partnerships, without
regard to financing methods and capital structure.
EBITDA should not be considered as an alternative to net income,
operating income, net cash provided by operating activities or any
other measure of financial performance or liquidity presented in
accordance with GAAP. EBITDA may have material limitations as a
performance measure because it excludes items that are necessary
elements of our costs and operations. In addition, EBITDA presented
by other companies may not be comparable to our presentation
because each company may define EBITDA differently.
EBITDA margin is defined as EBITDA divided by revenues. EBITDA
margin is used as a supplemental financial measure by the
Partnership's management in its analysis of our operating
performance.
The tables below reconcile EBITDA to net income, its most
directly comparable financial measure calculated and presented in
accordance with GAAP, for the three months and nine months ended
September 30, 2017 (dollars in
thousands).
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Three-Months Ended
September 30,
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2017
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2016
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Net loss
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$
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(523)
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(11,697)
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Add:
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Interest
expense
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5,782
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10,104
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Interest expense –
related party
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4,265
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143
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Income tax
expense
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102
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556
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Depreciation
expense
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15,269
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15,253
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EBITDA
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$
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24,895
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14,359
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Nine-Months Ended
September 30,
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2017
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2016
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Net income
(loss)
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$
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11,795
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(33,199)
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Add:
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Interest
expense
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17,054
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28,869
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Interest expense –
related party
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13,006
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245
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Income tax
expense
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661
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589
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Depreciation
expense
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45,796
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46,144
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EBITDA
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$
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88,312
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42,648
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Conference Call with Management
The Partnership will hold a conference call on November 6, 2017, at 10:00
a.m. ET, during which the Partnership's senior management
will review the Partnership's financial results for the third
quarter ended September 30, 2017 and
provide an update on corporate developments. Callers may listen to
the live presentation, which will be followed by a question and
answer segment, by dialing (816) 287-5664 and entering the
conference code 3296719. A replay of the conference call will be
made available until November 20,
2017 and the replay can be accessed by dialing (855)
859-2056 or (404) 537-3406 and entering the same conference code
3296719.
About OCI Partners LP
OCI Partners LP (NYSE: OCIP) owns and operates an integrated
methanol and ammonia production facility that is strategically
located on the Texas Gulf Coast near Beaumont. The Partnership is headquartered in
Nederland, Texas and currently has
a methanol production design capacity of 912,500 metric tons per
year and an ammonia production design capacity of 331,000 metric
tons per year.
Notice to Foreign Investors
This release is intended to be a qualified notice to nominees as
provided for under Treasury Regulation Section 1.1446-4(b)(4) and
(d). Please note that 100% of the Partnership's distributions to
foreign investors are attributable to income that is effectively
connected with a United States
trade or business. Accordingly, all of the Partnership's
distributions to foreign investors are subject to federal income
tax withholding at the highest applicable effective tax rate.
Nominees, and not the Partnership, are treated as the withholding
agents responsible for withholding on the distributions received by
them on behalf of foreign investors.
Forward-Looking Statements
This press release contains forward-looking statements.
Statements that are predictive in nature, that depend upon or refer
to future events or conditions or that include the words "believe,"
"expect," "anticipate," "intend," "could," "estimate" and other
expressions that are predictions of or indicate future events and
trends and that do not relate to historical matters identify
forward-looking statements. These forward-looking statements
involve certain risks and uncertainties, including, among others,
the following: our business plans may change as the methanol and
ammonia industry and markets warrant; the demand and sales prices
for methanol, ammonia and their derivatives may decrease due to
market, governmental and other factors; we may be unable to obtain
economically priced natural gas and other feedstocks; we may be
unable to successfully implement our business strategies, including
the completion of significant capital programs; the occurrence of
shutdowns (either temporary or permanent) or restarts of existing
methanol and ammonia facilities (including our own facility); the
timing and length of planned and unplanned downtime; and the
occurrence of operating hazards from accidents, fire, severe
weather, floods or other natural disasters. For more information
concerning factors that could cause actual results to differ
materially from those conveyed in the forward-looking statements,
please refer to the "Risk Factors" section of the Partnership's
Annual Report on Form 10-K for the year ended December 31, 2016 and in the Partnership's other
filings with the Securities and Exchange Commission, copies of
which are available to be viewed or downloaded at
www.ocipartnerslp.com by selecting "SEC Filings" on the "Financial
Reporting" sub-tab found under the "Investor and Media Relations"
tab, as well as on the SEC's website at www.sec.gov. Interested
investors may obtain a hard copy of the Partnership's Annual Report
on Form 10-K, including the Partnership's financial statements,
free of charge by selecting "Annual Report" on the "Financial
Reporting" sub-tab found under the "Investor and Media Relations"
tab. The Partnership undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events, changed circumstances or otherwise,
unless required by law.
Contacts:
Hans
Zayed
Director of Investor Relations
Phone: +1 917-817-5159
hans.zayed@oci.nl
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SOURCE OCI Partners LP