ORGANIZATION AND DESCRIPTION OF BUSINESS

General

USD Partners LP and its consolidated subsidiaries, collectively referred to herein as we, us, our, the Partnership and USDP, is a fee-based, growth-oriented master limited partnership formed in 2014 by US Development Group LLC, or USD, through its wholly-owned subsidiary USD Group LLC, or USDG, to acquire, develop and operate energy-related logistics assets, including rail terminals and other high-quality and complementary midstream infrastructure. We generate substantially all of our operating cash flow from multi-year, take-or-pay contracts for crude oil terminalling services, such as railcar loading for transportation to end markets, storage and blending in on-site tanks, as well as related logistics services. In addition, we provide our customers with railcars and fleet services related to the transportation of liquid hydrocarbons and biofuels by rail under multi-year, take-or-pay contracts. We do not take ownership of the products that we handle nor do we receive any payments from our customers based on the value of such products.

From the time of our formation in June 2014, our capital accounts included an approximate 2.0% general partner interest held by USD Partners GP LLC, a wholly-owned subsidiary of USDG, that held all of our limited partner interests. At December 31, 2013, the capital accounts of our subsidiaries were wholly-owned by USDG.

Our capital accounts were distributed as follows at December 31:



	2015		2014
Common units held by the Public	47.1	%	42.8	%
Common units held by USDG	4.7	%	5.1	%
Subordinated units held by USDG	45.4	%	49.1	%
Class A units held by management	0.8	%	1.0	%
General partner interest held by USD Partners GP LLC	2.0	%	2.0	%
	100.0	%	100.0	%

Initial Public Offering

On October 15, 2014, we completed the initial public offering, or IPO, of 9,120,000 of our common units for proceeds of approximately $145 million after underwriting discounts, commissions and structuring fees. On the same date, we entered into a five year senior secured credit agreement with a consortium of lenders with an aggregate capacity of $300 million comprised of a $200 million revolving credit facility and a $100 million term loan. The term loan facility was used to fund a $100 million distribution to USDG and is guaranteed by USDG. We also completed other transactions in connection with the closing of our IPO pursuant to which USDG conveyed to us its ownership interests in each of its subsidiaries that own or operate the Hardisty, San Antonio and West Colton terminals and the railcar business. In exchange for these ownership interests, we: (1) issued to USDG 1,093,545 of our common units and all 10,463,545 of our subordinated units (2) assumed $30 million of borrowings under a senior secured credit agreement payable to Bank of Oklahoma and (3) granted USDG the right to receive $100 million. Additionally, we issued to our general partner 427,083 General Partner Units, representing a 2.0% general partner interest in us, as well as all of our incentive distribution rights, or IDRs.

In contemplation of the IPO of our common units, the board of directors of our general partner granted 250,000 Class A units, representing limited partner interests in USDP, to key employees in August 2014. The awards issued are performance-based awards that contain distribution equivalent rights. We determined the grant date of these awards, as defined within the relevant accounting guidance, to be the day on which the IPO was effective, or October 8, 2014. Assuming certain conditions are met, Class A units become eligible to convert into common units in four equal tranches beginning no earlier than January 1, 2016, at a conversion factor ranging from 1.0 to 2.0.

Unless the context otherwise requires, references to the Predecessor, we, our, us or like terms, when used in a historical context (periods prior to October 15, 2014), refer to the following subsidiaries, collectively, that were contributed to the Partnership in connection with our IPO: San Antonio Rail Terminal LLC, or SART, USD Logistics Operations GP LLC, USD Logistics Operations LP, USD Rail LP, USD Rail Canada ULC, USD Terminals Canada ULC, or USDTC, West Colton Rail Terminal LLC, or WCRT, USD Terminals International S.A.R.L., and USD Rail International S.A.R.L., collectively referred to as the Contributed Subsidiaries. The Predecessor also includes the membership interests in the following five subsidiaries of USD which operated crude oil rail terminals that were sold in December 2012 (the "Sale") to a large energy transportation, terminalling and pipeline company, referred to as the Acquirer: Bakersfield Crude Terminal LLC, Eagle Ford Crude Terminal LLC, Niobrara Crude Terminal LLC, St. James Rail Terminal LLC, or SJRT, and Van Hook Crude Terminal LLC, collectively known as the Discontinued Operations. As a result of the Sale, another subsidiary, USD Services LLC, or USDS, ceased operations and is also included in the results of Discontinued Operations. Refer to Note 21 - Discontinued Operations for additional details.

Casper Terminal Acquisition

On November 17, 2015, we completed our acquisition of all of the membership interests of Casper Crude to Rail, LLC, or the Casper terminal, from Casper Crude to Rail Holdings, LLC for approximately $225.8 million. The Casper crude oil terminal, located in Casper, Wyoming, primarily consists of unit train-capable railcar loading capacity in excess of 100,000 barrel per day, six customer-dedicated storage tanks with 900,000 barrels of total capacity and a six-mile, 24-inch diameter pipeline with a direct connection from Spectra Energy Partners' Express Pipeline. Refer to Note 4 - Acquisition of Casper Crude to Rail, LLC for additional details regarding this acquisition.

US Development Group LLC

USD and its affiliates are engaged in designing, developing, owning and managing large-scale multi-modal logistics centers and energy-related infrastructure assets across North America. USD is the indirect owner of USDG and our general partner and is currently owned by Energy Capital Partners, Goldman Sachs and certain of USD's management team members.