News Releases

Calumet Specialty Products Partners, L.P. Reports Second Quarter 2011 Results
PR Newswire
INDIANAPOLIS

INDIANAPOLIS, Aug. 3, 2011 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) (the "Partnership," "Calumet," "we," "our" or "us") reported a net loss for the quarter ended June 30, 2011 of $7.7 million compared to a net loss of $0.9 million for the same quarter in 2010. These results include $15.1 million of debt extinguishment costs ($14.4 million of which were noncash) and $3.1 million of noncash unrealized derivative losses for the three months ended June 30, 2011 as compared to $8.0 million of noncash unrealized derivative losses in 2010. For the six months ended June 30, 2011, Calumet reported a net loss of $3.5 million compared to a net loss of $14.0 million for the same period in 2010. These results include $15.1 million of debt extinguishment costs ($14.4 million of which were noncash) and $3.5 million of noncash unrealized derivative losses for the six months ended June 30, 2011 as compared to $15.8 million of noncash unrealized derivative losses for the same period in 2010. Calumet reported net cash used in operating activities of $70.6 million for the six months ended June 30, 2011 as compared to cash provided by operating activities of $42.6 million for the same period in 2010.

Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined below) were $32.7 million and $40.8 million, respectively, for the quarter ended June 30, 2011 as compared to $21.6 million and $32.1 million, respectively, for the same quarter in 2010. Distributable Cash Flow (as defined below) for the quarter ended June 30, 2011 was $25.4 million compared to $7.2 million for the same quarter in 2010. The increase in Adjusted EBITDA quarter over quarter was due primarily to $7.9 million of insurance recoveries related to a settled claim with insurers for the failure of an environmental operating unit at the Shreveport refinery in the first quarter of 2010, partially offset by increased transportation expense. See the section of this press release titled "Non-GAAP Financial Measures" and the attached tables for discussion of EBITDA, Adjusted EBITDA, Distributable Cash Flow and other non-generally accepted accounting principles ("Non-GAAP") financial measures, definitions of these measures and reconciliations of such measures to the comparable GAAP measures.

"We are pleased with our results for the second quarter considering our production was limited by a three week shutdown of the ExxonMobil crude oil pipeline serving our Shreveport refinery during a portion of May and June caused by the recent Mississippi River flooding. Although specialty and fuel products production levels were higher quarter over quarter, we expect the third quarter to be further improved without the impact of the pipeline shutdown in the second quarter. We continue to focus on run rates to meet higher demand for our specialty products and to better benefit from improved fuel products crack spreads," said Bill Grube, Calumet's Chief Executive Officer and Vice Chairman of the Board. "As a result of these improvements in our operations and our outlook, we raised our quarterly distribution to $0.495 per unit for the second quarter of 2011, a $0.02 per unit increase over the first quarter of 2011. Also, we are working diligently towards closing our acquisition of the Superior refinery from Murphy Oil Corporation and look forward to working with the Superior refinery employees on the integration of this niche refinery into Calumet's refining assets," said Grube.

The net loss reported for the quarter increased $6.7 million quarter over quarter due primarily to $15.1 million debt extinguishment costs, of which $14.4 million were noncash, as well as increased interest expense of $3.3 million, partially offset by $7.9 million of insurance recoveries and a decrease in noncash unrealized derivative losses of $4.9 million, which may or may not be realized in the future as the derivatives are settled.

Gross profit by segment is as follows for the three and six months ended June 30, 2011 and 2010:




                         Three Months Ended                Six Months Ended
                              June 30,                         June 30,
                              --------                         --------
                           2011           2010            2011           2010
                           ----           ----            ----           ----
                              (Dollars in thousands, except per barrel
                                               data)
    Specialty
     products           $58,308        $46,400        $106,199        $69,826
    Fuel products        (7,743)         3,219          (8,770)        11,469
                         ------          -----          ------         ------
    Total gross
     profit (1)         $50,565        $49,619         $97,429        $81,295
                        =======        =======         =======        =======

    Specialty
     products
     gross profit
     per barrel          $20.84         $18.70          $19.50         $14.15
                         ======         ======          ======         ======
    Fuel products
     gross profit
     per barrel          $(2.94)         $1.39          $(1.83)         $2.55
                         ======          =====          ======          =====



    (1) We define specialty products and fuel products gross profit as
     sales less the cost of crude oil and other feedstocks and other
     production-related expenses, the most significant portion of which
     include labor, plant fuel, utilities, contract services, maintenance,
     depreciation and processing materials.

The increase in specialty products segment gross profit of $11.9 million quarter over quarter was due primarily to a 12.8% increase in sales volume and a 25.5% increase in the average selling price per barrel, partially offset by a 37.6% increase in the average cost of crude oil per barrel and higher operating costs, primarily repairs and maintenance.

The decrease in fuel products segment gross profit of $11.0 million quarter over quarter was due primarily to increased realized losses on derivatives of $27.1 million in our fuel products hedging program, a 39.0% increase in the cost of crude oil per barrel, and increased production of by-products partially offset by a 14.0% increase in sales volume and a 45.8% increase in selling prices per barrel, excluding the impact of realized hedging losses. Our fuels hedging program and refinery run rates being below expectations resulted in our diesel and jet fuel sales volumes being approximately 100% hedged at approximately $12.00 per barrel during the second quarter of 2011. This prevented us from fully realizing the benefit of increased market prices for fuels. Additionally, by-product production increased in the 2011 period as compared to the 2010 period due primarily to an increase in the mix of sour crude oil run rates at the Shreveport refinery.

The increase in specialty products segment gross profit of $36.4 million for the six months ended June 30, 2011 compared to the same period in 2010 was due primarily to a 10.3% increase in sales volumes and a 23.3% increase in the average selling price per barrel, partially offset by a 30.6% increase in the average cost of crude oil per barrel and higher operating costs, primarily repair and maintenance.

The decrease in fuel products segment gross profit of $20.2 million for the six months ended June 30, 2011 compared to the same period in 2010 was due primarily to increased realized losses on derivatives of $52.4 million in our fuel products hedging program, a 31.6% increase in the cost of crude oil per barrel, and increased production of by-products, partially offset by a 6.6% increase in sales volume and a 39.2% increase in selling prices per barrel, excluding the impact of realized hedging losses. Our fuel products hedging program and refinery run rates being below expectations resulted in our diesel and jet fuel sales volumes being approximately 100% hedged during the second quarter of 2011 at approximately $12.00 per barrel. This prevented us from realizing the benefit of increased market pricing for these products. Additionally, by-product production increased in the 2011 period as compared to the 2010 period due primarily to an increase in the mix of sour crude oil run rates at the Shreveport refinery.

Superior Refinery Asset Purchase Agreement

As previously announced, on July 25, 2011 Calumet signed a definitive asset purchase agreement to acquire the Superior, Wisconsin refinery and associated operating assets and inventories of Murphy Oil Corporation for total consideration of approximately $214.0 million, plus the market value of hydrocarbon inventories at closing and the reimbursement of certain capital expenditures to be incurred at the Superior refinery during the period from the execution of the purchase agreement to the closing, subject to customary purchase price adjustments. The estimated market value of the hydrocarbon inventories were approximately $260.0 million at June 30, 2011 and the estimated capital expenditures to be reimbursed are $4.0 million. The Superior refinery, which generated sales of approximately $1,091.0 million and EBITDA of approximately $56.0 million in 2010, on a historical basis, produces and markets gasoline, distillate, asphalt and specialty petroleum products. The assets to be acquired include the Superior, Wisconsin refinery and associated inventories, the Superior Refinery's wholesale marketing business and related assets and Murphy Oil's "SPUR" branded gasoline wholesale business and related assets. Calumet expects the acquisition to close by the end of the third quarter of 2011. For a reconciliation of the EBITDA of the business to be acquired to the net income of the business to be acquired, please read the Partnership's Current Report on Form 8-K filed with the Securities and Exchange Commission on July 28, 2011. Calumet intends to finance the Superior Acquisition primarily through a combination of equity and long-term debt financing and through borrowings under its revolving credit facility. Calumet's obligation to consummate the Superior Acquisition is not conditioned upon the receipt of financing.

Quarterly Distribution

On July 22, 2011, the Company declared a quarterly cash distribution of $0.495 per unit on all outstanding units, or $20.1 million for the second quarter of 2011 on all outstanding units. The distribution will be paid on August 12, 2011 to unitholders of record as of the close of business on August 2, 2011. This quarterly distribution of $0.495 equates to $1.98 per unit, or approximately $80.5 million on an annualized basis, and represents an increase of $0.02 per unit from the first quarter of 2011.

Operations Summary

The following table sets forth unaudited information about Calumet's operations. Facility production volume differs from sales volume due to changes in inventory.




                                Three Months
                                    Ended               Six Months Ended
                                  June 30,                  June 30,
                                  --------                  --------
     Sales volume
      (bpd):                  2011        2010        2011        2010
                              ----        ----        ----        ----
      Specialty products    30,747      27,264      30,089      27,271
      Fuel products         28,901      25,362      26,530      24,895
                            ------      ------      ------      ------
      Total  (1)            59,648      52,626      56,619      52,166

      Total feedstock
       runs (2)             61,853      57,169      58,986      52,774
      Facility
       production: (3)
      Specialty
       products:
        Lubricating oils    14,141      13,783      13,961      12,538
        Solvents            11,051       8,904      10,592       8,490
        Waxes                1,204       1,152       1,133       1,081
        Fuels                  435         978         533       1,063
        Asphalt and other
         by-products         8,961       6,075       8,495       5,921
                             -----       -----       -----       -----
    Total                   35,792      30,892      34,714      29,093
                            ------      ------      ------      ------
      Fuel products:
        Gasoline            10,266       8,710       9,619       8,743
        Diesel              11,424      10,875      11,095       9,936
        Jet fuel             5,429       5,326       4,303       5,290
        By-products          1,065         722         812         511
                             -----         ---         ---         ---
    Total                   28,184      25,633      25,829      24,480
                            ------      ------      ------      ------
      Total facility
       production (3)       63,976      56,525      60,543      53,573
                            ======      ======      ======      ======

____________



    (1)  Total sales volume includes sales from the production at our
     facilities and certain third-party facilities pursuant to supply
     and/or processing agreements and sales of inventories.

    (2)  Total feedstock runs represent the barrels per day of crude oil
     and other feedstocks processed at our facilities and at certain
     third-party facilities pursuant to supply and/or processing
     agreements. The increase in the total feedstock runs for the three
     months ended June 30, 2011 compared to the same quarter in 2010 is
     due primarily to the decision to increase crude oil run rates at our
     facilities because of favorable economics of running additional
     barrels, the failure of an environmental operating unit at our
     Shreveport refinery in 2010 and a planned turnaround at our
     Shreveport refinery in April 2010, partially offset by the impact of
     the approximately three week shutdown during May and June 2011 of
     the ExxonMobil crude oil pipeline serving our Shreveport refinery
     resulting from the Mississippi River flooding occurring during this
     period.  Additionally, the increase in feedstock runs for the six
     months ended June 30, 2011 compared to the same period in 2010 is
     due primarily to the operational reasons discussed above further
     offset by a planned turnaround at the Shreveport refinery in the
     first quarter of 2011.

    (3)  Total facility production represents the barrels per day of
     specialty products and fuel products yielded from processing crude
     oil and other feedstocks at our facilities and at certain third-
     party facilities, pursuant to supply and/or processing agreements,
     including such agreements with LyondellBasell. The difference
     between total facility production and total feedstock runs is
     primarily a result of the time lag between the input of feedstock
     and production of finished products and volume loss. The increase in
     production in the three and six months ended June 30, 2011 compared
     to the same periods in 2010 is due primarily to higher throughput
     rates at our Shreveport and Cotton Valley refineries period over
     period as discussed above in footnote 2 of this table.

Debt Restructuring

During the quarter ended June 30, 2011, Calumet restructured the majority of its outstanding long-term debt. Calumet issued 9 3/8% senior notes due 2019 and used a majority of the proceeds to repay borrowings under, and subsequently terminate its $435.0 million term loan facility, consisting of a $385.0 million term loan and a $50.0 million prefunded letter of credit to support crack spread hedging. Calumet also amended and restated its master derivative contracts with various hedging counterparties and entered into a collateral sharing agreement with these counterparties to continue to support our fuel products hedging program. Further, Calumet amended and restated its revolving credit facility to increase commitments from $375.0 million to $550.0 million, as well as amend its covenants and terms.

Revolving Credit Facility Capacity

On June 30, 2011, Calumet had availability under its revolving credit facility of $194.7 million, based on a $402.2 million borrowing base, $179.5 million in outstanding standby letters of credit, and outstanding borrowings of $28.1 million. Calumet believes that it will have sufficient cash flow from operations and borrowing capacity to meet its financial commitments, minimum quarterly distributions to unitholders, debt service obligations, contingencies and anticipated capital expenditures.

About the Partnership

The Partnership is a Delaware limited partnership formed on September 27, 2005 and is a leading independent producer of high-quality, specialty hydrocarbon products in North America. The Partnership processes crude oil and other feedstocks into customized lubricating oils, white oils, solvents, petrolatums, waxes and other specialty products used in consumer, industrial and automotive products. The Partnership also has contractual arrangements with Houston Refining and other third parties which provide additional volumes of finished products for its specialty products segment.

The Partnership also produces fuel products including gasoline, diesel and jet fuel. The Partnership is based in Indianapolis, Indiana and has five facilities located in northwest Louisiana, western Pennsylvania and southeastern Texas.

A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, August 3, 2011, to discuss the financial and operational results for the second quarter of 2011. Anyone interested in listening to the presentation may call 866-700-7441 and enter passcode 24145748. For international callers, the dial-in number is 617-213-8839 and the passcode is 24145748.

The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 52719103. International callers can access the replay by calling 617-801-6888 and entering passcode 52719103. The replay will be available beginning Wednesday, August 3, 2011, at approximately 4:00 p.m. until Wednesday, August 17, 2011.

The information contained in this press release is available on the Partnership's website at http://www.calumetspecialty.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements and information in this press release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "may," "intend," "believe," "expect," "anticipate," "estimate," "continue" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions.

Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the overall demand for specialty hydrocarbon products, fuels and other refined products; our ability to produce specialty products and fuels that meet our customers' unique and precise specifications; the impact of fluctuations and rapid increases or decreases in crude oil and crack spread prices, including the resulting impact on our liquidity; the results of the Partnership's hedging and other risk management activities; the ability of the Partnership to comply with the financial covenants contained in its debt instruments; the availability of, and the Partnership's ability to consummate, acquisition or combination opportunities; labor relations; the Partnership's access to capital to fund expansions, acquisitions and its working capital needs and its ability to obtain debt or equity financing on satisfactory terms; successful integration and future performance of acquired assets, businesses or third-party product supply and processing relationships; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; maintenance of the Partnership's credit ratings and ability to receive open credit from its suppliers; demand for various grades of crude oil and resulting changes in pricing conditions; fluctuations in refinery capacity; the ability to access sufficient crude oil supply through evergreen contracts and on the spot market; the effects of competition; continued creditworthiness of, and performance by, counterparties; the impact of current and future laws, rulings and governmental regulations, including guidance related to the Dodd-Frank Wall Street Reform and Consumer Protection Act; shortages or cost increases of power supplies, natural gas, materials or labor; hurricane or other weather interference with business operations; fluctuations in the debt and equity markets; accidents or other unscheduled shutdowns; satisfaction of the conditions to the closing of the Superior asset purchase agreement and the possibility that the Superior asset purchase agreement will not close; timing of the completion of the proposed Superior asset purchase agreement; the Partnership's plans for financing the Superior asset purchase agreement; the total aggregate purchase price to be paid by the Partnership at the closing under the Superior asset purchase agreement (including the final value of the hydrocarbon inventories at the closing and the final amount of capital expenditures incurred at the Superior refinery during the interim period to be reimbursed by the Partnership) and general economic, market or business conditions. Other factors that could cause our actual results to differ from our projected results are described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Other factors described herein, or factors that are unknown or unpredictable, could also have a material adverse effect on future results. Our forward looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward looking statement. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

All subsequent written and oral forward-looking statements concerning Calumet, Murphy Oil, the proposed transactions or other matters, and attributable to Calumet or Murphy Oil or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Calumet undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

We include in this release the non-GAAP financial measures EBITDA, Adjusted EBITDA and Distributable Cash Flow, and provide reconciliations of EBITDA, Adjusted EBITDA and Distributable Cash Flow to net loss and net cash provided by (used in) operating activities, our most directly comparable financial performance and liquidity measures calculated and presented in accordance with GAAP.

EBITDA, Adjusted EBITDA and Distributable Cash Flow are used as supplemental financial measures by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others, to assess:

    --  the financial performance of our assets without regard to financing
        methods, capital structure or historical cost basis;

    --  the ability of our assets to generate cash sufficient to pay interest
        costs and support our indebtedness;

    --  our operating performance and return on capital as compared to those of
        other companies in our industry, without regard to financing or capital
        structure; and

    --  the viability of acquisitions and capital expenditure projects and the
        overall rates of return on alternative investment opportunities.

We believe that these non-GAAP measures are useful to analysts and investors as they exclude transactions not related to our core cash operating activities and provide metrics to analyze our ability to pay distributions. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations.

We define EBITDA for any period as net income plus interest expense (including debt issuance and extinguishment costs), taxes and depreciation and amortization. We define Adjusted EBITDA for any period as: (1) net income (loss) plus (2)(a) interest expense; (b) income taxes; (c) depreciation and amortization; (d) unrealized losses from mark to market accounting for hedging activities; (e) realized gains under derivative instruments excluded from the determination of net income; (f) non-cash equity based compensation expense and other non-cash items (excluding items such as accruals of cash expenses in a future period or amortization of a prepaid cash expense) that were deducted in computing net income; (g) debt refinancing fees, premiums and penalties and (h) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense; minus (3)(a) unrealized gains from mark to market accounting for hedging activities; (b) realized losses under derivative instruments excluded from the determination of net income and (c) other non-recurring expenses and unrealized items that reduced net income for a prior period, but represent a cash item in the current period.

We define Distributable Cash Flow for any period as Adjusted EBITDA less replacement capital expenditures, turnaround costs, cash interest expense (consolidated interest expense less non-cash interest expense) and income tax expense. Distributable Cash Flow is used by us and our investors to analyze our ability to pay distributions.

The definitions of Adjusted EBITDA and Distributable Cash that are presented in this release have been updated to reflect the calculation of "Consolidated Cash Flow" contained in the indenture governing our 2019 Notes. We are required to report Consolidated Cash Flow to the holders of our 2019 Notes and Adjusted EBITDA to the lenders under our revolving credit facility, and these measures are used by them to determine our compliance with certain covenants governing those debt instruments. Adjusted EBITDA and Distributable Cash Flow that are presented in this release for prior periods have been updated to reflect the use of the new calculations.

EBITDA, Adjusted EBITDA and Distributable Cash Flow should not be considered alternatives to net income, operating income, net cash provided by operating activities or any other measure of financial performance presented in accordance with GAAP. In evaluating our performance as measured by EBITDA, Adjusted EBITDA and Distributable Cash Flow, management recognizes and considers the limitations of these measurements. EBITDA, Adjusted EBITDA and Distributable Cash Flow do not reflect our obligations for the payment of income taxes, interest expense or other obligations such as capital expenditures. Accordingly, EBITDA, Adjusted EBITDA and Distributable Cash Flow are only three of the measurements that management utilizes. Moreover, our EBITDA, Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of another company because all companies may not calculate EBITDA, Adjusted EBITDA and Distributable Cash Flow in the same manner. The following table presents a reconciliation of both net income loss to EBITDA, Adjusted EBITDA and Distributable Cash Flow, and Distributable Cash Flow, Adjusted EBITDA and EBITDA to net cash provided by (used in) operating activities, our most directly comparable GAAP financial performance and liquidity measures, for each of the periods indicated.


                  CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per unit data)

                                              For the Three
                                              Months Ended
                                                June 30,
                                                --------
                                             2011            2010
                                             ----            ----

    Sales                                $733,770        $514,652
    Cost of sales                         683,205         465,033
                                          -------         -------
    Gross profit                           50,565          49,619
    Operating costs and expenses:
      Selling, general and
       administrative                      10,467           8,321
      Transportation                       22,691          19,956
      Taxes other than income taxes         1,203           1,098
      Insurance recoveries                 (7,910)             -
      Other                                   703             480
                                              ---             ---
    Operating income                       23,411          19,764
                                           ------          ------
    Other income (expense):
      Interest expense                    (10,544)         (7,277)
      Debt extinguishment costs           (15,130)             -
      Realized loss on derivative
       instruments                         (2,370)         (5,297)
      Unrealized loss on derivative
       instruments                         (3,124)         (8,008)
      Other                                   274               9
                                              ---             ---
    Total other expense                   (30,894)        (20,573)
                                          -------         -------
    Net loss before income taxes           (7,483)           (809)
    Income tax expense                        168              98
                                              ---             ---
    Net loss                              $(7,651)          $(907)
                                          =======           =====
    Allocation of net loss:
      Net loss                            $(7,651)          $(907)
      Less:
       General partner's interest in
        net loss                             (153)            (18)
       Holders of incentive
        distribution rights                    -              -
                                             ---            ---
      Net loss attributable to
       limited partners                   $(7,498)          $(889)
                                          =======           =====
      Weighted average limited
       partner units outstanding -
       basic and diluted                   39,886          35,359
                                           ======          ======
      Limited partners' interest
       basic and diluted net loss
       per unit                            $(0.19)         $(0.03)
                                           ======          ======
    Cash distributions declared
     per limited partner  unit             $0.495          $0.455
                                           ======          ======



                                           For the Six Months
                                                 Ended
                                               June 30,
                                               --------
                                               2011             2010
                                               ----             ----

    Sales                                $1,339,010         $999,269
    Cost of sales                         1,241,581          917,974
                                          ---------          -------
    Gross profit                             97,429           81,295
    Operating costs and expenses:
      Selling, general and
       administrative                        20,995           15,491
      Transportation                         45,766           40,202
      Taxes other than income taxes           2,563            2,123
      Insurance recoveries                   (8,698)              -
      Other                                   1,238              808
                                              -----              ---
    Operating income                         35,565           22,671
                                             ------           ------
    Other income (expense):
      Interest expense                      (18,025)         (14,711)
      Debt extinguishment costs             (15,130)              -
      Realized loss on derivative
       instruments                           (1,984)          (5,858)
      Unrealized loss on derivative
       instruments                           (3,541)         (15,766)
      Other                                     103              (50)
                                                ---              ---
    Total other expense                     (38,577)         (36,385)
                                            -------          -------
    Net loss before income taxes             (3,012)         (13,714)
    Income tax expense                          438              260
                                                ---              ---
    Net loss                                $(3,450)        $(13,974)
                                            =======         ========
    Allocation of net loss:
      Net loss                              $(3,450)        $(13,974)
      Less:
       General partner's interest in
        net loss                                (69)            (279)
       Holders of incentive
        distribution rights                      -               -
                                               ---             ---
      Net loss attributable to
       limited partners                     $(3,381)        $(13,695)
                                            =======         ========
      Weighted average limited
       partner units outstanding -
       basic and diluted                     38,373           35,355
                                             ======           ======
      Limited partners' interest
       basic and diluted net loss
       per unit                              $(0.09)          $(0.39)
                                             ======           ======
    Cash distributions declared
     per limited partner  unit                $0.97            $0.91
                                              =====            =====


    CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
      CONDENSED CONSOLIDATED BALANCE SHEETS
         (In thousands, except unit data)

                                  June 30,          December
                                     2011            31, 2010
                                   ---------           --------
                                (Unaudited)
                 ASSETS
    Current assets:
      Cash and cash
       equivalents                        $55                $37
      Accounts receivable:
        Trade                         203,749            157,185
        Other                           2,436                776
                                        -----                ---
                                      206,185            157,961
      Inventories                     258,665            147,110
      Prepaid expenses and
       other current assets             3,656              1,909
      Deposits                         14,829              2,094
                                       ------              -----
    Total current assets              483,390            309,111
    Property, plant and
     equipment, net                   607,422            612,433
    Goodwill                           48,335             48,335
    Other intangible
     assets, net                       26,170             29,666
    Other noncurrent
     assets, net                       30,907             17,127
                                       ------             ------
    Total assets                   $1,196,224         $1,016,672
                                   ==========         ==========
          LIABILITIES AND
         PARTNERS' CAPITAL
    Current liabilities:
      Accounts payable               $236,169           $146,730
      Accounts payable -
       related party                    1,380             27,985
      Accrued salaries, wages
       and benefits                     7,975              7,559
      Taxes payable                     8,360              7,174
      Other current
       liabilities                      7,146             16,605
      Current portion of
       long-term debt                     942              4,844
      Derivative liabilities          137,885             32,814
                                      -------             ------
    Total current
     liabilities                      399,857            243,711
      Pension and
       postretirement benefit
       obligations                      8,426              9,168
      Other long-term
       liabilities                      1,069              1,083
      Long-term debt, less
       current portion                428,440            364,431
                                      -------            -------
    Total liabilities                 837,792            618,393
    Commitments and
     contingencies
    Partners' capital:
      Limited partners'
       interest (39,779,778
       units and 35,279,778
       units issued and
       outstanding at                 462,458          407,773
         June 30, 2011 and
          December 31, 2010,
          respectively)
      General partner's
       interest                        19,302             18,125
      Accumulated other
       comprehensive loss            (123,328)           (27,619)
                                     --------            -------
    Total partners' capital           358,432            398,279
                                      -------            -------
    Total liabilities and
     partners' capital             $1,196,224         $1,016,672
                                   ==========         ==========


             CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (In thousands)

                                                     For the Six Months
                                                            Ended
                                                          June 30,
                                                          --------
                                                      2011             2010
                                                      ----             ----
    Operating activities
    Net loss                                       $(3,450)        $(13,974)
    Adjustments to reconcile net loss to
     net cash provided by (used in)
     operating activities:
      Depreciation and amortization                 28,964           29,502
      Amortization of turnaround costs               5,746            4,100
      Non-cash interest expense                      1,655            1,906
      Non-cash debt extinguishment costs            14,401               -
      Provision for doubtful accounts                  255              (91)
      Unrealized loss on derivative
       instruments                                   3,541           15,766
      Other non-cash activities                        338            1,114
      Changes in assets and liabilities:
        Accounts receivable                        (48,479)         (27,323)
        Inventories                               (111,555)          (9,583)
        Prepaid expenses and other current
         assets                                     (1,747)          (1,324)
        Derivative activity                          5,699            1,443
        Turnaround costs                            (7,501)          (8,548)
        Deposits                                   (12,735)           3,589
        Accounts payable                            62,834           48,584
        Accrued salaries, wages and benefits           383             (603)
        Taxes payable                                1,186              166
        Other liabilities                           (9,473)          (2,143)
        Pension and postretirement benefit
         obligations                                  (620)             (14)
                                                      ----              ---
    Net cash provided by (used in)
     operating activities                          (70,558)          42,567
    Investing activities
    Additions to property, plant and
     equipment                                     (20,635)         (17,017)
    Proceeds from insurance claim -
     equipment                                       1,942               -
    Proceeds from sale of equipment                    130              121
                                                       ---              ---
    Net cash used in investing
     activities                                    (18,563)         (16,896)
    Financing activities
    Proceeds from borrowings - revolving
     credit facility                               692,543          489,489
    Repayments of borrowings - revolving
     credit facility                              (675,285)        (480,249)
    Repayments of borrowings - term loan
     credit facility                              (367,385)          (1,925)
    Payments on capital lease
     obligations                                      (534)            (743)
    Proceeds from equity offering, net              92,290              793
    Proceeds from senior notes offering            400,000               -
    Debt issuance costs                            (17,582)              -
    Contribution from Calumet GP, LLC                1,970               18
    Common units repurchased for vested
     phantom unit grants                              (620)            (248)
    Distributions to partners                      (36,258)         (32,788)
                                                   -------          -------
    Net cash provided by (used in)
     financing activities                           89,139          (25,653)
                                                    ------          -------
    Net increase in cash and cash
     equivalents                                        18               18
    Cash and cash equivalents at
     beginning of period                                37               49
                                                       ---              ---
    Cash and cash equivalents at end of
     period                                            $55              $67
                                                       ===              ===
    Supplemental disclosure of cash flow
     information
    Interest paid                                  $11,830          $13,074
    Income taxes paid                                 $116              $89
                                                      ====              ===


                 CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
    UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA, ADJUSTED EBITDA,
                        AND DISTRIBUTABLE CASH FLOW
                              (In thousands)

                              Three Months
                                 Ended              Six Months Ended
                               June 30,                 June 30,
                               --------                 --------
                              2011            2010        2011           2010
                              ----            ----        ----           ----
    Reconciliation of
     Net Loss to
     EBITDA and
     Adjusted
       EBITDA and
        Distributable
        Cash Flow:

      Net loss             $(7,651)          $(907)    $(3,450)      $(13,974)
        Add:
         Interest expense   10,544           7,277      18,025         14,711
         Debt
          extinguishment
          costs             15,130              -      15,130             -
         Depreciation and
          amortization      14,532          15,098      28,964         29,502
         Income tax
          expense              168              98         438            260
                               ---             ---         ---            ---
      EBITDA               $32,723         $21,566     $59,107        $30,499
                           -------         -------     -------        -------
        Add:
         Unrealized loss
          on derivatives    $3,124          $8,008      $3,541        $15,766
         Realized gain on
          derivatives, not
          included in net
          loss               1,394             372       5,137          1,442
         Amortization of
          turnaround costs   2,533           1,960       5,746          4,100
         Non-cash equity
          based
          compensation       1,067             230       1,963            452
                             -----             ---       -----            ---
      Adjusted EBITDA      $40,841         $32,136     $75,494        $52,259
                           -------         -------     -------        -------
        Less:
         Replacement
          capital
          expenditures (1)  $3,505         $10,893      $7,596        $16,342
         Cash interest
          expense (2)        9,887           6,318      16,370         12,805
         Turnaround costs    1,914           7,608       7,501          8,548
         Income tax
          expense              168              98         438            260
                               ---             ---         ---            ---
    Distributable
     Cash Flow             $25,367          $7,219     $43,589        $14,304
                           =======          ======     =======        =======

    (1)  Replacement capital expenditures are defined as those capital
    expenditures which do not increase operating capacity or reduce
    operating costs and exclude turnaround costs.

    (2)  Represents consolidated interest expense less non-cash interest
    expense.


                  CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
    UNAUDITED RECONCILIATION OF DISTRIBUTABLE CASH FLOW, ADJUSTED EBITDA
      AND EBITDA TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
                                (In thousands)

                                               Six Months Ended
                                                June 30, 2011
                                                -------------
                                               2011             2010
                                               ----             ----
    Reconciliation of
     Distributable Cash Flow,
     Adjusted EBITDA and EBITDA
     to net cash
       provided by (used in)
        operating activities:
    Distributable Cash Flow                 $43,589          $14,304
      Add:
        Replacement capital
         expenditures (1)                     7,596           16,342
        Turnaround costs                      7,501            8,548
        Cash interest expense (2)            16,370           12,805
        Income tax expense                      438              260
                                                ---              ---
    Adjusted EBITDA                         $75,494          $52,259
                                            =======          =======
      Less:
        Unrealized loss on derivative
         instruments                          3,541           15,766
        Realized gains on
         derivatives, not included in
         net loss                             5,137            1,442
        Non-cash equity based
         compensation                         1,963              452
        Amortization of turnaround
         costs                                5,746            4,100
                                              -----            -----
    EBITDA                                  $59,107          $30,499
                                            =======          =======
      Add:
        Unrealized loss on derivative
         instruments                          3,541           15,766
        Cash interest expense (2)           (16,370)         (12,805)
        Non-cash equity based
         compensation                         1,963              452
        Amortization of turnaround
         costs                                5,746            4,100
        Income tax expense                     (438)            (260)
        Provision for doubtful
         accounts                               255              (91)
        Debt extinguishment costs              (729)               -
      Changes in assets and
       liabilities:
        Accounts receivable                 (48,479)         (27,323)
        Inventory                          (111,555)          (9,583)
        Other current assets                (14,482)           2,265
        Turnaround costs                     (7,501)          (8,548)
        Derivative activity                   5,699            1,443
        Accounts payable                     62,834           48,584
        Other liabilities                    (7,904)          (2,580)
        Other, including changes in
         noncurrent assets and
         liabilities                         (2,245)             648
                                             ------              ---
    Net cash provided by (used
     in) operating activities              $(70,558)         $42,567
                                           ========          =======

    (1)  Replacement capital expenditures are defined as those capital
    expenditures which do not increase operating capacity or reduce
    operating costs and exclude turnaround costs.

    (2)  Represents consolidated interest expense less non-cash interest
    expense.


                  CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
                  EXISTING COMMODITY DERIVATIVE INSTRUMENTS
                             As of June 30, 2011

    Fuel Products Segment

    The following table provides a summary of Calumet's derivatives and
    implied crack spreads for their crude oil, diesel and gasoline
    swaps, all of which are designated as hedges.



    Swap Contracts by                              Implied
     Expiration Dates   Barrels                      Crack
    -----------------   -------                     -------
                                                    Spread
                        Purchased       BPD        ($/Bbl)
                        ---------       ---        -------
    Third Quarter
     2011               1,610,000      17,500        $12.75
    Fourth Quarter
     2011               1,334,000      14,500         12.16
    Calendar Year
     2012               5,626,000      15,372         13.27
    Calendar Year
     2013               2,864,000       7,847         23.90
                        ---------                     -----
    Totals             11,434,000
    Average price                                    $15.73

    At June 30, 2011, the Partnership had the following put options
    related to jet fuel crack spreads in its fuel products segment, none
    of which are designated as hedges.



                                                Average      Average
                                                -------      -------
    Jet Fuel Put
     Option Crack
     Spread Contracts
     by Expiration                                Bought
     Dates               Barrels      Sold Put      Put
    -----------------    -------                --------     -------
                        Purchased      BPD      ($/Bbl)      ($/Bbl)
                        ---------      ---      -------      -------
    Fourth Quarter
     2011                 184,000     2,000        $4.75        $7.00
    Totals                184,000
    Average price                                  $4.75        $7.00

    Specialty Products Segment

    At June 30, 2011 the Company did not have any derivative positions
    outstanding related to crude oil purchases in its specialty products
    segment.

SOURCE Calumet Specialty Products Partners, L.P.

SOURCE: Calumet Specialty Products Partners, L.P.

Calumet Specialty Products Partners, L.P. Reports Second Quarter 2011 Results

PR Newswire

INDIANAPOLIS, Aug. 3, 2011 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) (the "Partnership," "Calumet," "we," "our" or "us") reported a net loss for the quarter ended June 30, 2011 of $7.7 million compared to a net loss of $0.9 million for the same quarter in 2010. These results include $15.1 million of debt extinguishment costs ($14.4 million of which were noncash) and $3.1 million of noncash unrealized derivative losses for the three months ended June 30, 2011 as compared to $8.0 million of noncash unrealized derivative losses in 2010. For the six months ended June 30, 2011, Calumet reported a net loss of $3.5 million compared to a net loss of $14.0 million for the same period in 2010.  These results include $15.1 million of debt extinguishment costs ($14.4 million of which were noncash) and $3.5 million of noncash unrealized derivative losses for the six months ended June 30, 2011 as compared to $15.8 million of noncash unrealized derivative losses for the same period in 2010.  Calumet reported net cash used in operating activities of $70.6 million for the six months ended June 30, 2011 as compared to cash provided by operating activities of $42.6 million for the same period in 2010.

Earnings before interest expense, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA (as defined below) were $32.7 million and $40.8 million, respectively, for the quarter ended June 30, 2011 as compared to $21.6 million and $32.1 million, respectively, for the same quarter in 2010. Distributable Cash Flow (as defined below) for the quarter ended June 30, 2011 was $25.4 million compared to $7.2 million for the same quarter in 2010. The increase in Adjusted EBITDA quarter over quarter was due primarily to $7.9 million of insurance recoveries related to a settled claim with insurers for the failure of an environmental operating unit at the Shreveport refinery in the first quarter of 2010, partially offset by increased transportation expense. See the section of this press release titled "Non-GAAP Financial Measures" and the attached tables for discussion of EBITDA, Adjusted EBITDA, Distributable Cash Flow and other non-generally accepted accounting principles ("Non-GAAP") financial measures, definitions of these measures and reconciliations of such measures to the comparable GAAP measures.

"We are pleased with our results for the second quarter considering our production was limited by a three week shutdown of the ExxonMobil crude oil pipeline serving our Shreveport refinery during a portion of May and June caused by the recent Mississippi River flooding.  Although specialty and fuel products production levels were higher quarter over quarter, we expect the third quarter to be further improved without the impact of the pipeline shutdown in the second quarter.  We continue to focus on run rates to meet higher demand for our specialty products and to better benefit from improved fuel products crack spreads," said Bill Grube, Calumet's Chief Executive Officer and Vice Chairman of the Board. "As a result of these improvements in our operations and our outlook, we raised our quarterly distribution to $0.495 per unit for the second quarter of 2011, a $0.02 per unit increase over the first quarter of 2011.  Also, we are working diligently towards closing our acquisition of the Superior refinery from Murphy Oil Corporation and look forward to working with the Superior refinery employees on the integration of this niche refinery into Calumet's refining assets," said Grube.

The net loss reported for the quarter increased $6.7 million quarter over quarter due primarily to $15.1 million debt extinguishment costs, of which $14.4 million were noncash, as well as increased interest expense of $3.3 million, partially offset by $7.9 million of insurance recoveries and a decrease in noncash unrealized derivative losses of $4.9 million, which may or may not be realized in the future as the derivatives are settled.  

Gross profit by segment is as follows for the three and six months ended June 30, 2011 and 2010:



Three Months Ended


Six Months Ended


June 30,


June 30,


2011


2010


2011


2010


(Dollars in thousands, except per barrel data)

Specialty products

$

58,308


$

46,400


$

106,199


$

69,826

Fuel products

(7,743)


3,219


(8,770)


11,469

Total gross profit (1)

$

50,565


$

49,619


$

97,429


$

81,295









Specialty products gross profit per barrel

$

20.84


$

18.70


$

19.50


$

14.15

Fuel products gross profit per barrel

$

(2.94)


$

1.39


$

(1.83)


$

2.55




(1) We define specialty products and fuel products gross profit as sales less the cost of crude oil and other feedstocks and other production-related expenses, the most significant portion of which include labor, plant fuel, utilities, contract services, maintenance, depreciation and processing materials.



The increase in specialty products segment gross profit of $11.9 million quarter over quarter was due primarily to a 12.8% increase in sales volume and a 25.5% increase in the average selling price per barrel, partially offset by a 37.6% increase in the average cost of crude oil per barrel and higher operating costs, primarily repairs and maintenance.

The decrease in fuel products segment gross profit of $11.0 million quarter over quarter was due primarily to increased realized losses on derivatives of $27.1 million in our fuel products hedging program, a 39.0% increase in the cost of crude oil per barrel, and increased production of by-products partially offset by a 14.0% increase in sales volume and a 45.8% increase in selling prices per barrel, excluding the impact of realized hedging losses.  Our fuels hedging program and refinery run rates being below expectations resulted in our diesel and jet fuel sales volumes being approximately 100% hedged at approximately $12.00 per barrel during the second quarter of 2011. This prevented us from fully realizing the benefit of increased market prices for fuels.  Additionally, by-product production increased in the 2011 period as compared to the 2010 period due primarily to an increase in the mix of sour crude oil run rates at the Shreveport refinery.

The increase in specialty products segment gross profit of $36.4 million for the six months ended June 30, 2011 compared to the same period in 2010 was due primarily to a 10.3% increase in sales volumes and a 23.3% increase in the average selling price per barrel, partially offset by a 30.6% increase in the average cost of crude oil per barrel and higher operating costs, primarily repair and maintenance.

The decrease in fuel products segment gross profit of $20.2 million for the six months ended June 30, 2011 compared to the same period in 2010 was due primarily to increased realized losses on derivatives of $52.4 million in our fuel products hedging program, a 31.6% increase in the cost of crude oil per barrel, and increased production of by-products, partially offset by a 6.6% increase in sales volume and a 39.2% increase in selling prices per barrel, excluding the impact of realized hedging losses.  Our fuel products hedging program and refinery run rates being below expectations resulted in our diesel and jet fuel sales volumes being approximately 100% hedged during the second quarter of 2011 at approximately $12.00 per barrel.  This prevented us from realizing the benefit of increased market pricing for these products.  Additionally, by-product production increased in the 2011 period as compared to the 2010 period due primarily to an increase in the mix of sour crude oil run rates at the Shreveport refinery.

Superior Refinery Asset Purchase Agreement

As previously announced, on July 25, 2011 Calumet signed a definitive asset purchase agreement to acquire the Superior, Wisconsin refinery and associated operating assets and inventories of Murphy Oil Corporation for total consideration of approximately $214.0 million, plus the market value of hydrocarbon inventories at closing and the reimbursement of certain capital expenditures to be incurred at the Superior refinery during the period from the execution of the purchase agreement to the closing, subject to customary purchase price adjustments.  The estimated market value of the hydrocarbon inventories were approximately $260.0 million at June 30, 2011 and the estimated capital expenditures to be reimbursed are $4.0 million. The Superior refinery, which generated sales of approximately $1,091.0 million and EBITDA of approximately $56.0 million in 2010, on a historical basis, produces and markets gasoline, distillate, asphalt and specialty petroleum products.   The assets to be acquired include the Superior, Wisconsin refinery and associated inventories, the Superior Refinery's wholesale marketing business and related assets and Murphy Oil's "SPUR" branded gasoline wholesale business and related assets.  Calumet expects the acquisition to close by the end of the third quarter of 2011.  For a reconciliation of the EBITDA of the business to be acquired to the net income of the business to be acquired, please read the Partnership's Current Report on Form 8-K filed with the Securities and Exchange Commission on July 28, 2011.  Calumet intends to finance the Superior Acquisition primarily through a combination of equity and long-term debt financing and through borrowings under its revolving credit facility.  Calumet's obligation to consummate the Superior Acquisition is not conditioned upon the receipt of financing.

Quarterly Distribution

On July 22, 2011, the Company declared a quarterly cash distribution of $0.495 per unit on all outstanding units, or $20.1 million for the second quarter of 2011 on all outstanding units. The distribution will be paid on August 12, 2011 to unitholders of record as of the close of business on August 2, 2011. This quarterly distribution of $0.495 equates to $1.98 per unit, or approximately $80.5 million on an annualized basis, and represents an increase of $0.02 per unit from the first quarter of 2011.

Operations Summary

The following table sets forth unaudited information about Calumet's operations. Facility production volume differs from sales volume due to changes in inventory.



Three Months Ended


Six Months Ended


June 30,


June 30,

Sales volume (bpd):

2011


2010


2011


2010

Specialty products

30,747


27,264


30,089


27,271

Fuel products

28,901


25,362


26,530


24,895

Total  (1)

59,648


52,626


56,619


52,166









Total feedstock runs (2)

61,853


57,169


58,986


52,774

Facility production: (3)








Specialty products:








Lubricating oils

14,141


13,783


13,961


12,538

Solvents

11,051


8,904


10,592


8,490

Waxes

1,204


1,152


1,133


1,081

Fuels

435


978


533


1,063

Asphalt and other by-products

8,961


6,075


8,495


5,921

Total

35,792


30,892


34,714


29,093

Fuel products:








Gasoline

10,266


8,710


9,619


8,743

Diesel

11,424


10,875


11,095


9,936

Jet fuel

5,429


5,326


4,303


5,290

By-products

1,065


722


812


511

Total

28,184


25,633


25,829


24,480

Total facility production (3)

63,976


56,525


60,543


53,573




____________

(1)  Total sales volume includes sales from the production at our facilities and certain third-party facilities pursuant to supply and/or processing agreements and sales of inventories.


(2)  Total feedstock runs represent the barrels per day of crude oil and other feedstocks processed at our facilities and at certain third-party facilities pursuant to supply and/or processing agreements. The increase in the total feedstock runs for the three months ended June 30, 2011 compared to the same quarter in 2010 is due primarily to the decision to increase crude oil run rates at our facilities because of favorable economics of running additional barrels, the failure of an environmental operating unit at our Shreveport refinery in 2010 and a planned turnaround at our Shreveport refinery in April 2010, partially offset by the impact of the approximately three week shutdown during May and June 2011 of the ExxonMobil crude oil pipeline serving our Shreveport refinery resulting from the Mississippi River flooding occurring during this period.  Additionally, the increase in feedstock runs for the six months ended June 30, 2011 compared to the same period in 2010 is due primarily to the operational reasons discussed above further offset by a planned turnaround at the Shreveport refinery in the first quarter of 2011.


(3)  Total facility production represents the barrels per day of specialty products and fuel products yielded from processing crude oil and other feedstocks at our facilities and at certain third-party facilities, pursuant to supply and/or processing agreements, including such agreements with LyondellBasell. The difference between total facility production and total feedstock runs is primarily a result of the time lag between the input of feedstock and production of finished products and volume loss. The increase in production in the three and six months ended June 30, 2011 compared to the same periods in 2010 is due primarily to higher throughput rates at our Shreveport and Cotton Valley refineries period over period as discussed above in footnote 2 of this table.  



Debt Restructuring

During the quarter ended June 30, 2011, Calumet restructured the majority of its outstanding long-term debt.  Calumet issued 9 3/8% senior notes due 2019 and used a majority of the proceeds to repay borrowings under, and subsequently terminate its $435.0 million term loan facility, consisting of a $385.0 million term loan and a $50.0 million prefunded letter of credit to support crack spread hedging.  Calumet also amended and restated its master derivative contracts with various hedging counterparties and entered into a collateral sharing agreement with these counterparties to continue to support our fuel products hedging program.  Further, Calumet amended and restated its revolving credit facility to increase commitments from $375.0 million to $550.0 million, as well as amend its covenants and terms.

Revolving Credit Facility Capacity

On June 30, 2011, Calumet had availability under its revolving credit facility of $194.7 million, based on a $402.2 million borrowing base, $179.5 million in outstanding standby letters of credit, and outstanding borrowings of $28.1 million. Calumet believes that it will have sufficient cash flow from operations and borrowing capacity to meet its financial commitments, minimum quarterly distributions to unitholders, debt service obligations, contingencies and anticipated capital expenditures.

About the Partnership

The Partnership is a Delaware limited partnership formed on September 27, 2005 and is a leading independent producer of high-quality, specialty hydrocarbon products in North America. The Partnership processes crude oil and other feedstocks into customized lubricating oils, white oils, solvents, petrolatums, waxes and other specialty products used in consumer, industrial and automotive products. The Partnership also has contractual arrangements with Houston Refining and other third parties which provide additional volumes of finished products for its specialty products segment.

The Partnership also produces fuel products including gasoline, diesel and jet fuel. The Partnership is based in Indianapolis, Indiana and has five facilities located in northwest Louisiana, western Pennsylvania and southeastern Texas.

A conference call is scheduled for 1:00 p.m. ET (12:00 p.m. CT) on Wednesday, August 3, 2011, to discuss the financial and operational results for the second quarter of 2011. Anyone interested in listening to the presentation may call 866-700-7441 and enter passcode 24145748. For international callers, the dial-in number is 617-213-8839 and the passcode is 24145748.

The telephonic replay of the conference call is available in the United States by calling 888-286-8010 and entering passcode 52719103. International callers can access the replay by calling 617-801-6888 and entering passcode 52719103. The replay will be available beginning Wednesday, August 3, 2011, at approximately 4:00 p.m. until Wednesday, August 17, 2011.

The information contained in this press release is available on the Partnership's website at http://www.calumetspecialty.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements and information in this press release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "may," "intend," "believe," "expect," "anticipate," "estimate," "continue" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature.  These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us.  While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate.  All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions.  

Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections.  Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the overall demand for specialty hydrocarbon products, fuels and other refined products; our ability to produce specialty products and fuels that meet our customers' unique and precise specifications; the impact of fluctuations and rapid increases or decreases in crude oil and crack spread prices, including the resulting impact on our liquidity; the results of the Partnership's hedging and other risk management activities; the ability of the Partnership to comply with the financial covenants contained in its debt instruments; the availability of, and the Partnership's ability to consummate, acquisition or combination opportunities; labor relations; the Partnership's access to capital to fund expansions, acquisitions and its working capital needs and its ability to obtain debt or equity financing on satisfactory terms; successful integration and future performance of acquired assets,  businesses or third-party product supply and processing relationships; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; maintenance of the Partnership's credit ratings and ability to receive open credit from its suppliers; demand for various grades of crude oil and resulting changes in pricing conditions; fluctuations in refinery capacity; the ability to access sufficient crude oil supply through evergreen contracts and on the spot market; the effects of competition; continued creditworthiness of, and performance by, counterparties; the impact of current and future laws, rulings and governmental regulations, including guidance related to the Dodd-Frank Wall Street Reform and Consumer Protection Act; shortages or cost increases of power supplies, natural gas, materials or labor; hurricane or other weather interference with business operations; fluctuations in the debt and equity markets; accidents or other unscheduled shutdowns;  satisfaction of the conditions to the closing of the Superior asset purchase agreement and the possibility that the Superior asset purchase agreement will not close; timing of the completion of the proposed Superior asset purchase agreement; the Partnership's plans for financing the Superior asset purchase agreement;  the total aggregate purchase price to be paid by the Partnership at the closing under the Superior asset purchase agreement (including the final value of the hydrocarbon inventories at the closing and the final amount of capital expenditures incurred at the Superior refinery during the interim period to be reimbursed by the Partnership) and general economic, market or business conditions. Other factors that could cause our actual results to differ from our projected results are described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof.  Other factors described herein, or factors that are unknown or unpredictable, could also have a material adverse effect on future results.  Our forward looking statements are not guarantees of future performance, and actual results and future performance may differ materially from those suggested in any forward looking statement.  All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing.  We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

All subsequent written and oral forward-looking statements concerning Calumet, Murphy Oil, the proposed transactions or other matters, and attributable to Calumet or Murphy Oil or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above.  Calumet undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

We include in this release the non-GAAP financial measures EBITDA, Adjusted EBITDA and Distributable Cash Flow, and provide reconciliations of EBITDA, Adjusted EBITDA and Distributable Cash Flow to net loss and net cash provided by (used in) operating activities, our most directly comparable financial performance and liquidity measures calculated and presented in accordance with GAAP.

EBITDA, Adjusted EBITDA and Distributable Cash Flow are used as supplemental financial measures by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others, to assess:

  • the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;

  • the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness;

  • our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure; and

  • the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

We believe that these non-GAAP measures are useful to analysts and investors as they exclude transactions not related to our core cash operating activities and provide metrics to analyze our ability to pay distributions. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations.

We define EBITDA for any period as net income plus interest expense (including debt issuance and extinguishment costs), taxes and depreciation and amortization. We define Adjusted EBITDA for any period as: (1) net income (loss) plus (2)(a) interest expense; (b) income taxes; (c) depreciation and amortization; (d) unrealized losses from mark to market accounting for hedging activities; (e) realized gains under derivative instruments excluded from the determination of net income; (f) non-cash equity based compensation expense and other non-cash items (excluding items such as accruals of cash expenses in a future period or amortization of a prepaid cash expense) that were deducted in computing net income; (g) debt refinancing fees, premiums and penalties and (h) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense; minus (3)(a)  unrealized gains from mark to market accounting for hedging activities; (b) realized losses under derivative instruments excluded from the determination of net income and (c) other non-recurring expenses and unrealized items that reduced net income for a prior period, but represent a cash item in the current period.

We define Distributable Cash Flow for any period as Adjusted EBITDA less replacement capital expenditures, turnaround costs, cash interest expense (consolidated interest expense less non-cash interest expense) and income tax expense. Distributable Cash Flow is used by us and our investors to analyze our ability to pay distributions.

The definitions of Adjusted EBITDA and Distributable Cash that are presented in this release have been updated to reflect the calculation of "Consolidated Cash Flow" contained in the indenture governing our 2019 Notes.  We are required to report Consolidated Cash Flow to the holders of our 2019 Notes and Adjusted EBITDA to the lenders under our revolving credit facility, and these measures are used by them to determine our compliance with certain covenants governing those debt instruments.  Adjusted EBITDA and Distributable Cash Flow that are presented in this release for prior periods have been updated to reflect the use of the new calculations.  

EBITDA, Adjusted EBITDA and Distributable Cash Flow should not be considered alternatives to net income, operating income, net cash provided by operating activities or any other measure of financial performance presented in accordance with GAAP. In evaluating our performance as measured by EBITDA, Adjusted EBITDA and Distributable Cash Flow, management recognizes and considers the limitations of these measurements. EBITDA, Adjusted EBITDA and Distributable Cash Flow do not reflect our obligations for the payment of income taxes, interest expense or other obligations such as capital expenditures. Accordingly, EBITDA, Adjusted EBITDA and Distributable Cash Flow are only three of the measurements that management utilizes. Moreover, our EBITDA, Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of another company because all companies may not calculate EBITDA, Adjusted EBITDA and Distributable Cash Flow in the same manner. The following table presents a reconciliation of both net income loss to EBITDA, Adjusted EBITDA and Distributable Cash Flow, and Distributable Cash Flow, Adjusted EBITDA and EBITDA to net cash provided by (used in) operating activities, our most directly comparable GAAP financial performance and liquidity measures, for each of the periods indicated.

CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)



For the Three Months Ended


For the Six Months Ended


June 30,


June 30,


2011


2010


2011


2010









Sales

$

733,770


$

514,652


$

1,339,010


$

999,269

Cost of sales

683,205


465,033


1,241,581


917,974

Gross profit

50,565


49,619


97,429


81,295

Operating costs and expenses:








Selling, general and administrative

10,467


8,321


20,995


15,491

Transportation

22,691


19,956


45,766


40,202

Taxes other than income taxes

1,203


1,098


2,563


2,123

Insurance recoveries

(7,910)



(8,698)


Other

703


480


1,238


808

Operating income

23,411


19,764


35,565


22,671

Other income (expense):








Interest expense

(10,544)


(7,277)


(18,025)


(14,711)

Debt extinguishment costs

(15,130)



(15,130)


Realized loss on derivative instruments

(2,370)


(5,297)


(1,984)


(5,858)

Unrealized loss on derivative instruments

(3,124)


(8,008)


(3,541)


(15,766)

Other

274


9


103


(50)

Total other expense

(30,894)


(20,573)


(38,577)


(36,385)

Net loss before income taxes

(7,483)


(809)


(3,012)


(13,714)

Income tax expense

168


98


438


260

Net loss

$

(7,651)


$

(907)


$

(3,450)


$

(13,974)

Allocation of net loss:








Net loss

$

(7,651)


$

(907)


$

(3,450)


$

(13,974)

Less:








General partner's interest in net loss

(153)


(18)


(69)


(279)

Holders of incentive distribution rights




Net loss attributable to limited partners

$

(7,498)


$

(889)


$

(3,381)


$

(13,695)

Weighted average limited partner units outstanding — basic and diluted

39,886


35,359


38,373


35,355

Limited partners' interest basic and diluted net loss per unit

$

(0.19)


$

(0.03)


$

(0.09)


$

(0.39)

Cash distributions declared per limited partner  unit

$

0.495


$

0.455


$

0.97


$

0.91




CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)



June 30, 2011


December 31, 2010


(Unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$

55


$

37

Accounts receivable:




Trade

203,749


157,185

Other

2,436


776


206,185


157,961

Inventories

258,665


147,110

Prepaid expenses and other current assets

3,656


1,909

Deposits

14,829


2,094

Total current assets

483,390


309,111

Property, plant and equipment, net

607,422


612,433

Goodwill

48,335


48,335

Other intangible assets, net

26,170


29,666

Other noncurrent assets, net

30,907


17,127

Total assets

$

1,196,224


$

1,016,672

LIABILITIES AND PARTNERS' CAPITAL




Current liabilities:




Accounts payable

$

236,169


$

146,730

Accounts payable — related party

1,380


27,985

Accrued salaries, wages and benefits

7,975


7,559

Taxes payable

8,360


7,174

Other current liabilities

7,146


16,605

Current portion of long-term debt

942


4,844

Derivative liabilities

137,885


32,814

Total current liabilities

399,857


243,711

Pension and postretirement benefit obligations

8,426


9,168

Other long-term liabilities

1,069


1,083

Long-term debt, less current portion

428,440


364,431

Total liabilities

837,792


618,393

Commitments and contingencies




Partners' capital:




Limited partners' interest (39,779,778 units and 35,279,778 units issued and outstanding at

  June 30, 2011 and December 31, 2010, respectively)

462,458


407,773

General partner's interest

19,302


18,125

Accumulated other comprehensive loss

(123,328)


(27,619)

Total partners' capital

358,432


398,279

Total liabilities and partners' capital

$

1,196,224


$

1,016,672




CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



For the Six Months Ended


June 30,


2011


2010

Operating activities




Net loss

$

(3,450)


$

(13,974)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:




Depreciation and amortization

28,964


29,502

Amortization of turnaround costs

5,746


4,100

Non-cash interest expense

1,655


1,906

Non-cash debt extinguishment costs

14,401


Provision for doubtful accounts

255


(91)

Unrealized loss on derivative instruments

3,541


15,766

Other non-cash activities

338


1,114

Changes in assets and liabilities:




Accounts receivable

(48,479)


(27,323)

Inventories

(111,555)


(9,583)

Prepaid expenses and other current assets

(1,747)


(1,324)

Derivative activity

5,699


1,443

Turnaround costs

(7,501)


(8,548)

Deposits

(12,735)


3,589

Accounts payable

62,834


48,584

Accrued salaries, wages and benefits

383


(603)

Taxes payable

1,186


166

Other liabilities

(9,473)


(2,143)

Pension and postretirement benefit obligations

(620)


(14)

Net cash provided by (used in) operating activities

(70,558)


42,567

Investing activities




Additions to property, plant and equipment

(20,635)


(17,017)

Proceeds from insurance claim - equipment

1,942


Proceeds from sale of equipment

130


121

Net cash used in investing activities

(18,563)


(16,896)

Financing activities




Proceeds from borrowings — revolving credit facility

692,543


489,489

Repayments of borrowings — revolving credit facility

(675,285)


(480,249)

Repayments of borrowings — term loan credit facility

(367,385)


(1,925)

Payments on capital lease obligations

(534)


(743)

Proceeds from equity offering, net

92,290


793

Proceeds from senior notes offering

400,000


Debt issuance costs

(17,582)


Contribution from Calumet GP, LLC

1,970


18

Common units repurchased for vested phantom unit grants

(620)


(248)

Distributions to partners

(36,258)


(32,788)

Net cash provided by (used in) financing activities

89,139


(25,653)

Net increase in cash and cash equivalents

18


18

Cash and cash equivalents at beginning of period

37


49

Cash and cash equivalents at end of period

$

55


$

67

Supplemental disclosure of cash flow information




Interest paid

$

11,830


$

13,074

Income taxes paid

$

116


$

89




CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA, ADJUSTED EBITDA, AND DISTRIBUTABLE CASH FLOW

(In thousands)



Three Months Ended


Six Months Ended


June 30,


June 30,


2011


2010


2011


2010

Reconciliation of Net Loss to EBITDA and Adjusted

  EBITDA and Distributable Cash Flow:
















Net loss

$

(7,651)


$

(907)


$

(3,450)


$

(13,974)

Add:








Interest expense

10,544


7,277


18,025


14,711

Debt extinguishment costs

15,130



15,130


Depreciation and amortization

14,532


15,098


28,964


29,502

Income tax expense

168


98


438


260

EBITDA

$

32,723


$

21,566


$

59,107


$

30,499

Add:








Unrealized loss on derivatives

$

3,124


$

8,008


$

3,541


$

15,766

Realized gain on derivatives, not included in net loss

1,394


372


5,137


1,442

Amortization of turnaround costs

2,533


1,960


5,746


4,100

Non-cash equity based compensation

1,067


230


1,963


452

Adjusted EBITDA

$

40,841


$

32,136


$

75,494


$

52,259

Less:








Replacement capital expenditures (1)

$

3,505


$

10,893


$

7,596


$

16,342

Cash interest expense (2)

9,887


6,318


16,370


12,805

Turnaround costs

1,914


7,608


7,501


8,548

Income tax expense

168


98


438


260

Distributable Cash Flow

$

25,367


$

7,219


$

43,589


$

14,304


(1)  Replacement capital expenditures are defined as those capital expenditures which do not increase operating capacity or reduce operating costs and exclude turnaround costs.


(2)  Represents consolidated interest expense less non-cash interest expense.



CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

UNAUDITED RECONCILIATION OF DISTRIBUTABLE CASH FLOW, ADJUSTED EBITDA AND EBITDA TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

(In thousands)



Six Months Ended


June 30, 2011


2011


2010

Reconciliation of Distributable Cash Flow, Adjusted EBITDA and EBITDA to net cash

  provided by (used in) operating activities:




Distributable Cash Flow

$  43,589


$  14,304

Add:




Replacement capital expenditures (1)

7,596


16,342

Turnaround costs

7,501


8,548

Cash interest expense (2)

16,370


12,805

Income tax expense

438


260

Adjusted EBITDA

$  75,494


$  52,259

Less:




Unrealized loss on derivative instruments

3,541


15,766

Realized gains on derivatives, not included in net loss

5,137


1,442

Non-cash equity based compensation

1,963


452

Amortization of turnaround costs

5,746


4,100

EBITDA

$  59,107


$  30,499

Add:




Unrealized loss on derivative instruments

3,541


15,766

Cash interest expense (2)

(16,370)


(12,805)

Non-cash equity based compensation

1,963


452

Amortization of turnaround costs

5,746


4,100

Income tax expense

(438)


(260)

Provision for doubtful accounts

255


(91)

Debt extinguishment costs

(729)


Changes in assets and liabilities:




Accounts receivable

(48,479)


(27,323)

Inventory

(111,555)


(9,583)

Other current assets

(14,482)


2,265

Turnaround costs

(7,501)


(8,548)

Derivative activity

5,699


1,443

Accounts payable

62,834


48,584

Other liabilities

(7,904)


(2,580)

Other, including changes in noncurrent assets and liabilities

(2,245)


648

Net cash provided by (used in) operating activities

$  (70,558)


$  42,567


(1)  Replacement capital expenditures are defined as those capital expenditures which do not increase operating capacity or reduce operating costs and exclude turnaround costs.


(2)  Represents consolidated interest expense less non-cash interest expense.



CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

EXISTING COMMODITY DERIVATIVE INSTRUMENTS

As of June 30, 2011


Fuel Products Segment


The following table provides a summary of Calumet's derivatives and implied crack spreads for their crude oil, diesel and gasoline swaps, all of which are designated as hedges.




Swap Contracts by Expiration Dates


Barrels

Purchased




BPD



Implied Crack

Spread ($/Bbl)

Third Quarter 2011

1,610,000


17,500


$  12.75

Fourth Quarter 2011

1,334,000


14,500


12.16

Calendar Year 2012

5,626,000


15,372


13.27

Calendar Year 2013

2,864,000


7,847


23.90

Totals

11,434,000





Average price





$    15.73


At June 30, 2011, the Partnership had the following put options related to jet fuel crack spreads in its fuel products segment, none of which are designated as hedges.






Jet Fuel Put Option Crack Spread Contracts by Expiration Dates


Barrels

Purchased




BPD


Average

Sold Put

($/Bbl)


Average

Bought Put

($/Bbl)

Fourth Quarter 2011

184,000


2,000


$  4.75


$  7.00

Totals

184,000







Average price






$  4.75


$  7.00



Specialty Products Segment


At June 30, 2011 the Company did not have any derivative positions outstanding related to crude oil purchases in its specialty products segment.  



SOURCE Calumet Specialty Products Partners, L.P.

CONTACT: Jennifer Straumins, +1-317-328-5660, jennifer.straumins@calumetspecialty.com

Web Site: http://www.calumetspecialty.com