NEDERLAND, Texas, March 5, 2018 /PRNewswire/ -- OCI Partners
LP, a Delaware limited partnership
("we" or the "Partnership"), announced its results for the three
and twelve months ended December 31,
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
December 31, 2017
- Revenues increased 48% to $98
million compared to $66
million for the same period in 2016
- Net income improved to $13
million from a net loss of $17
million for the same period in 2016
- EBITDA increased 138% to $38
million compared to $16
million for the same period in 2016
- EBITDA and net income (loss) margins were 39% and 13%
respectively, compared to 24% and (26)%, respectively, during the
same period in 2016
Summary of Financial Results for the Twelve Months Ended
December 31, 2017
- Revenues increased 33% to $343
million compared to $258
million in 2016
- Net income improved to $24
million from a net loss of $51
million in 2016
- EBITDA increased 115% to $127
million compared to $59
million in 2016
- EBITDA and net income (loss) margins were 37% and 7%
respectively, compared to 23% and (20)%, respectively, in 2016
Placing of New $455M
Term Loan B
The Partnership previously announced on
February 20, 2018 the pricing of a
proposed $455 million term loan B
facility (the "Term Loan B Facility") and proposed $40 million revolving credit facility (the
"Revolving Credit Facility"). The Term Loan B Facility is expected
to be priced at LIBOR + 425 bps, mature in 2025, and include a
leverage-based stepdown provision. The Revolving Credit Facility
priced at LIBOR + 375 bps, with a maturity in 2020.
The Partnership intends to use the expected net proceeds of the
Term Loan B Facility to repay in full its existing $232 million facility and to repay in full
outstanding intercompany loans from OCI N.V. of $200 million.
The commitments in respect of the Term Loan B Facility and the
Revolving Credit Facility and the terms and conditions thereof
(including the applicable interest rates) remain subject to the
execution of the definitive documentation. The closing of the Term
Loan B Facility and Revolving Credit Facility is expected to occur
in March 2018 and is subject to
customary closing conditions.
Distributions
Based on the results of the three months ended December 31, 2017, the Board of Directors of the
general partner of the Partnership has approved a cash distribution
of $0.27 per common unit, or
approximately $23.5 million in the
aggregate. The cash distribution will be paid on April 6, 2018 to unitholders of record at the
close of business on March 23, 2018.
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
Our distribution of $0.27 with
respect to the three months ended December
31, 2017 reflects an average realized methanol price of
$319 per metric ton, an average
realized ammonia price of $246 per
metric ton, and an average natural gas price of $3.00 per MMBtu.
To assist investors in making the linkage between these prices
and potential future distributions, we provide below a sensitivity
analysis assuming 95% on stream time with 99% capacity
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
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.
We intend to review our run-rate quarterly distribution
following the expected closing of the Term Loan B facility to
reflect our capital structure and other factors.
Statement from President and Chief Executive Officer – Ahmed
El-Hoshy
"I am very pleased that we continued our excellent safety track
record throughout 2017 with no OSHA recordable or lost time
incidents. I would like to thank all our employees for their
continued support to maintaining a safe and healthy working
environment, which, given the nature of our operations, is of the
highest importance to us.
"Our ammonia and methanol production units operated efficiently
during the quarter and both experienced three days of downtime,
resulting in capacity utilization rates of 102% and 97%,
respectively.
"Methanol prices increased compared to the same quarter last
year and compared to the third quarter of 2017, benefiting from
good demand from both the Methanol-to-Olefins (MTO) sector in
China and global construction
activity, as well as tight supply. Our average realized methanol
price was $319 per metric ton in the
fourth quarter, an increase of 24% from $257 per metric ton in the same quarter last
year, and an increase of 7% from $299
per metric ton in the third quarter of 2017.
"After reaching multi-year low levels in the third quarter of
2017, ammonia prices increased throughout the fourth quarter,
driven by firming phosphate and urea end markets and several supply
curtailments in key export hubs. Our average realized ammonia price
was $246 per metric ton in the fourth
quarter, up 24% from $199 per metric
ton in the same quarter last year and up 33% from $185 per metric ton in the third quarter of
2017.
"I am very pleased with our operational and financial
performance during the quarter. EBITDA improved significantly
compared to the same quarter last year, mainly due to comparatively
higher sales volumes and higher realized methanol and ammonia
prices during the quarter, slightly lower natural gas costs of on
average $3.00 per MMBtu and our
continued focus on cost management.
"Looking forward to the first quarter of 2018, we expect our
business to benefit from a recent increase in methanol and ammonia
prices. The US weighted average methanol contract price continued
to increase in 2018 from $393 per
metric ton on average in the fourth quarter of 2017 to $490 per metric ton on average in the first
quarter of 2018. The monthly Tampa CFR ammonia contract price
increased from $345 per metric ton in
December to $355 per metric ton in
January, but has since then decreased to reach $305 per metric ton in March. On average, the
Tampa CFR ammonia contract price has been at higher levels in the
first quarter of 2018 than in the fourth quarter of 2017.
"We also look forward to closing our recently announced new Term
Loan B Facility and Revolving Credit Facility in the coming weeks,
which will allow us to markedly reduce our debt service costs and
increase maturities."
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Volume Weighted
Average Price of
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Volume Weighted
Average Price of
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Methanol and
Ammonia
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Natural
Gas
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($ per metric
ton)
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($ per
MMBtu)
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For Three-Months
Ended December 31,
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For Three-Months
Ended December 31,
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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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246
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199
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3.00
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3.10
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Methanol
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319
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257
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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 Three-Months
Ended December 31,
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For Three-Months
Ended December 31,
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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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85
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83
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102%
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99%
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Methanol
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222
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203
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97%
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88%
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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 Twelve-Months
Ended December 31,
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For Twelve-Months
Ended December 31,
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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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240
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258
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3.13
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2.57
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Methanol
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325
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213
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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 Twelve-Months
Ended December 31,
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For Twelve-Months
Ended December 31,
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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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312
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332
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94%
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100%
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Methanol
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822
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823
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90%
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90%
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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 twelve months ended
December 31, 2017 (dollars in
thousands).
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Three-Months Ended
December 31,
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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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12,684
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-17,353
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Add:
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Interest
expense
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5,803
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16,226
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Interest expense –
related party
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4,333
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1,532
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Income tax
expense
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214
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217
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Depreciation
expense
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15,249
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15,297
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EBITDA
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$
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38,283
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15,919
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Twelve-Months
Ended December 31,
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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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24,479
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-50,553
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Add:
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Interest
expense
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22,857
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45,096
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Interest expense –
related party
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17,339
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1,777
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Income tax
expense
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875
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806
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Depreciation
expense
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61,045
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61,441
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EBITDA
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$
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126,595
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58,567
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Conference Call with Management
The Partnership will hold a conference call on March 5, 2018, at 11:00
a.m. ET, during which the Partnership's senior management
will review the Partnership's financial results for the fourth
quarter ended December 31, 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 9982806. A replay of the conference call will be
made available until March 19, 2018
and the replay can be accessed by dialing (855) 859-2056 or (404)
537-3406 and entering the same conference code 9982806.
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; the occurrence
of operating hazards from accidents, fire, severe weather, floods
or other natural disasters; and the risk that the proposed Term
Loan B Credit Facility and/or Revolving Credit Facility does not
occur when or as expected or at all, or that the pricing of the
proposed Term Loan B Credit Facility and/or Revolving Credit
Facility is different than the expected pricing, the Partnership's
intended use of proceeds from the proposed Term Loan B Credit
Facility and/or borrowings under the Revolving Credit Facility. 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, 2017 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