• Generated Net Cash Provided by Operating Activities of $11.7 million, Adjusted EBITDA⁽¹⁾ of $12.3 million and Distributable Cash Flow⁽¹⁾ of $9.9 million
• Reduced quarterly cash distribution to $0.111 per unit ($0.444 per unit on an annualized basis), representing a 70% decrease from the prior quarter's distribution, in order to strengthen the financial position of the Partnership and redeploy certain free cash flow to opportunistically pay down debt
• Reported a Net loss of $33.8 million due primarily to a non-cash impairment of the Partnership's goodwill associated with the Casper terminal resulting from the overall downturn in the crude market and the decline in the demand for petroleum products

"During the first quarter, we made the difficult decision to proactively strengthen our balance sheet by reducing our quarterly distribution in order to divert some of our free cash flow towards paying down debt," said Dan Borgen, the Partnership's Chief Executive Officer. "Given the current uncertainty in the energy industry, we believe this is a prudent initiative which will enhance long-term value for our unitholders. The Partnership's terminals continue to perform well under our long-term, take-or-pay contracts and we continue to be excited about our Sponsor's previously announced diluent recover unit ("DRU") project, which we expect will be placed into service in the second quarter of 2021. As a reminder, the Partnership executed long-term, multi-year renewals for the remaining capacity at its Hardisty Terminal with a subsidiary of ConocoPhillips, a portion of which will extend beyond 2030 pending the successful construction and completion of the DRU. We look forward to updating the market about the progress of our DRU project over the next several months."

Also, in association with the Partnership's Sponsor's recently announced joint venture with Gibson Energy Inc. ("Gibson") to construct a diluent recovery unit (the "DRU") adjacent to the Hardisty Terminal, a material amount of the Hardisty Terminal's current capacity will be extended beyond 2030 pending the successful construction and completion of the DRU. We expect that the DRU will be placed into service in the second quarter of 2021. The renewals contain take-or-pay terms with minimum monthly payments and rates that are consistent with those of the original terminalling services agreement with the customer.

The Partnership's operating results for the first quarter of 2020 relative to the same quarter in 2019 were primarily influenced by higher revenue at its Hardisty terminal due to increased rates on a portion of the terminalling services agreements that became effective July 1, 2019. In addition, the Partnership experienced higher revenue during the quarter associated with contracted throughput that exceeded the Partnership's existing capacity at its Hardisty terminal. Furthermore, in the third quarter of 2019, the Partnership entered into a terminalling services agreement with the Hardisty South facility owned by the Partnership's Sponsor to provide terminalling services for the contracted throughput that exceeded the Hardisty terminal's transloading capacity. Under this arrangement, the Partnership incurred operating costs payable to the Partnership's sponsor representing the same rate, on a per barrel basis, that the Partnership received in revenue for such contracted throughput.

The Partnership's operating expenses during the first quarter of 2020 increased over the same quarter in 2019, due primarily to a non-cash impairment of the goodwill associated with the Casper terminal recognized in the first quarter of 2020. The non-cash impairment of goodwill was due to the current economic conditions as a result of the COVID-19 pandemic, the overall downturn in the crude market and the decline in demand for petroleum products.

Net income for the quarter decreased as compared to the first quarter of 2019, primarily as a result of the operating factors discussed above and a non-cash loss associated with the five-year interest rate derivative instrument that the Partnership entered into in November 2017. The decreases were partially offset by lower interest expense incurred resulting from lower interest rates during the quarter partially offset by a higher weighted average balance of debt outstanding in the first quarter of 2020.

As of March 31, 2020, the Partnership had approximately $5 million of unrestricted cash and cash equivalents and undrawn borrowing capacity of $161 million on its $385 million senior secured credit facility, subject to the Partnership's continued compliance with financial covenants. Pursuant to the terms of the Partnership's Credit Agreement, the Partnership's borrowing capacity is currently limited to 4.5 times its trailing 12-month consolidated EBITDA, as defined in the Credit Agreement. As such, the Partnership's available borrowings under the senior secured credit facility including unrestricted cash and cash equivalents was approximately $28 million as of March 31, 2020. The Partnership was in compliance with its financial covenants, as of March 31, 2020.

On April 23, 2020, the Partnership declared a quarterly cash distribution of $0.111 per unit ($0.444 per unit on an annualized basis), representing a 70% decrease from the prior quarter's distribution. The distribution is payable on May 15, 2020, to unitholders of record at the close of business on May 5, 2020. Given the current uncertainty in the energy industry, the board of directors made a proactive decision to strengthen the Partnership's financial position by reducing its quarterly distribution and redeploying certain free cash flow to opportunistically pay down debt. The decision to reduce the quarterly distribution was not driven by any material deterioration in the performance of the Partnership's underlying business, but rather represents a conscious effort to enhance long-term value by proactively strengthening the Partnership's balance sheet.

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USD Partners LP is a fee-based, growth-oriented master limited partnership formed in 2014 by US Development Group, LLC ("USD") to acquire, develop and operate midstream infrastructure and complementary logistics solutions for crude oil, biofuels and other energy-related products. The Partnership generates substantially all of its operating cash flows from multi-year, take-or-pay contracts with primarily investment grade customers, including major integrated oil companies and refiners. The Partnership's principal assets include a network of crude oil terminals that facilitate the transportation of heavy crude oil from Western Canada to key demand centers across North America. The Partnership's operations include railcar loading and unloading, storage and blending in on-site tanks, inbound and outbound pipeline connectivity, truck transloading, as well as other related logistics services. In addition, the Partnership provides customers with leased railcars and fleet services to facilitate the transportation of liquid hydrocarbons and biofuels by rail.

USD, which owns the general partner of USD Partners LP, is engaged in designing, developing, owning, and managing large-scale multi-modal logistics centers and energy-related infrastructure across North America. USD solutions create flexible market access for customers in significant growth areas and key demand centers, including Western Canada, the U.S. Gulf Coast and Mexico. Among other projects, USD is currently pursuing the development of a premier energy logistics terminal on the Houston Ship Channel with capacity for substantial tank storage, multiple docks (including barge and deepwater), inbound and outbound pipeline connectivity, as well as a rail terminal with unit train capabilities. For additional information, please visit texasdeepwater.com. Information on websites referenced in this release is not part of this release.

The Partnership defines Adjusted EBITDA as Net Cash Provided by Operating Activities adjusted for changes in working capital items, interest, income taxes, foreign currency transaction gains and losses, and other items which do not affect the underlying cash flows produced by the Partnership's businesses. Adjusted EBITDA is a non-GAAP, supplemental financial measure used by management and external users of the Partnership's financial statements, such as investors and commercial banks, to assess:

The Partnership believes that the presentation of Adjusted EBITDA and DCF in this press release provides information that enhances an investor's understanding of the Partnership's ability to generate cash for payment of distributions and other purposes. The GAAP measure most directly comparable to Adjusted EBITDA and DCF is Net Cash Provided by Operating Activities. Adjusted EBITDA and DCF should not be considered alternatives to Net Cash Provided by Operating Activities or any other measure of liquidity presented in accordance with GAAP. Adjusted EBITDA and DCF exclude some, but not all, items that affect Net Cash Provided by Operating Activities and these measures may vary among other companies. As a result, Adjusted EBITDA and DCF may not be comparable to similarly titled measures of other companies. Reconciliations of Net Cash Provided by Operating Activities to Adjusted EBITDA and DCF are presented on page 11 of this press release.

This press release contains forward-looking statements within the meaning of U.S. federal securities laws, including statements with respect to the ability of the Partnership and USD to achieve contract extensions, new customer agreements and expansions; the ability of the Partnership and USD to develop existing and future additional projects and expansion opportunities (including successful completion of USD's DRU) and whether those projects and opportunities developed by USD would be made available for acquisition, or acquired, by the Partnership; volumes at, and demand for, the Partnership's terminals; and the amount and timing of future distribution payments and distribution growth. Words and phrases such as "is expected," "is planned," "believes," "projects," "begin," "anticipates," "expects," "subject to" and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to the Partnership are based on management's expectations, estimates and projections about the Partnership, its interests and the energy industry in general on the date this press release was issued. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include the impact of the novel coronavirus (COVID-19) pandemic and related economic downturn and changes in general economic conditions and commodity prices, as well as those factors as set forth under the heading "Risk Factors" in the Partnership's most recent Annual Report on Form 10-K and in the Partnership's subsequent filings with the Securities and Exchange Commission (many of which may be amplified by the COVID-19 pandemic and the recent significant reductions in demand for and prices of crude oil, natural gas and natural gas liquids). The Partnership is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.