Summary

Results for the Quarter:

• Net income of $0.4 million for the three months ended December 31, 2017, as compared to $2.0 million for the same period in 2016. Net income for the fourth quarter ended December 31, 2017, was impacted by a $2.4 million asset impairment charge related to the crude oil trucking and producer field services business segment.

• Operating income of $3.6 million for the three months ended December 31, 2017, as compared to $3.4 million for the same period in 2016.

• Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) of $14.1 million for the fourth quarter ended December 31, 2017, as compared to $17.1 million for the same period in 2016.

• Distributable cash flow of $8.6 million for the quarter ended December 31, 2017, as compared to $10.5 million for the same period in 2016. Adjusted EBITDA and distributable cash flow, including a reconciliation of such measures to net income, are explained in the section of this release entitled “Non-GAAP Financial Measures.”

Results for the Year:

• Net income of $20.0 million for the twelve months ended December 31, 2017, as compared to a net loss of $4.8 million for the same period in 2016. Net income for the twelve months ended December 31, 2017, was impacted by a $2.4 million asset impairment charge related to the crude oil trucking and producer field services business segment. Net income for the twelve months ended December 31, 2016, was impacted by a $25.8 million asset impairment charge primarily associated with the cancellation of the Knight Warrior pipeline project.

• Operating income of $28.8 million for the twelve months ended December 31, 2017, as compared to $6.5 million for the same period in 2016.

• Adjusted EBITDA of $70.1 million for the twelve months ended December 31, 2017, as compared to $69.8 million for the same period in 2016.

• Distributable cash flow of $48.2 million for the twelve months ended December 31, 2017, as compared to $46.6 million for the same period in 2016.

• Distribution coverage ratio for the twelve months ended December 31, 2017, was approximately 1.0 times.

Additional information regarding the Partnership’s results of operations will be provided in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2017, to be filed with the SEC on March 8, 2018.

 Comments from BKEP CEO Mark Hurley:

“Highlighting our 2017 results is the 14% operating margin increase in our asphalt terminalling services segment. This increase, while impacted during the year by wetter-than-normal weather conditions, was achieved by solid throughput at our facilities and the full-year results of the nine terminals we acquired from Ergon in October 2016.

Also, on December 1, 2017, we completed the acquisition of the Bainbridge, Georgia, terminal, which was the first drop-down from Ergon.

“In the crude oil terminalling services segment, while our Cushing terminal remained fully contracted throughout the year, a flat forward curve negatively impacted our storage rates as we renewed contracts during the year. As a result, terminalling services revenues and operating margin narrowed as compared to the prior year.

“Our crude oil pipeline business was impacted in 2017 by our out-of-service pipeline in Oklahoma, which limited our volumes. However, at year-end, I am pleased to report we secured an alternative route for our pipeline and construction has started with a return to service anticipated by the end of the second quarter of 2018.

Once complete, we will nearly double our Oklahoma pipeline capacity and will be able to transport multiple grades of crude oil from the active producing regions of Oklahoma to our terminal in Cushing. The increased capacity comes at a time when increases in crude oil prices have bolstered producer and marketer confidence.

“While 2017 presented challenges in our crude oil businesses, we are optimistic for 2018. We intend to integrate our three crude oil business segments during the year which should increase utilization of our assets.

The restoration of service on our Oklahoma pipeline will allow our customers to transport multiple grades of crude oil to Cushing, where they will be able to take advantage of our crude terminalling service offerings. We also expect to expand our crude oil marketing footprint to better utilize the capacity of our systems.

We also continue to work on a substantial pipeline project in the STACK, and we expect both our trucking and storage businesses will benefit from the completion of this project. We expect both transportation businesses to return to positive cash flow in 2018.

“In addition to growth projects within the crude oil business and the acquisition of the Muskogee terminal, we have opportunities in front of us to acquire and/or construct additional product terminals.

These transactions fit both our size and return profile. We anticipate capitalizing on one or more of these opportunities in 2018.

“Our fully-diluted distribution coverage ratio for 2017 and 2016 was 1.0 times. Our leverage ratio for the fourth quarter of 2017 was 4.6 times, and we maintained our common unit distribution at $0.1450 for the quarter.

“As we move into 2018, we are anticipating earnings growth over 2017. Excluding any additional projects, we anticipate asphalt operating margin in the $67.0 million to $70.0 million range in 2018, increasing from $64.6 million in 2017.

We expect our crude oil businesses to exit 2018 on an annual operating margin run-rate of $18.0 million to $20.0 million, increasing to approximately $22.0 million to $24.0 million in 2019 based on stabilization of the crude oil storage market and increasing volumes on our Oklahoma pipeline systems.”

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