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Executives

Jennifer G. Straumins – President and Chief Operating Officer.

R. Patrick Murray – Vice President and Chief Financial Officer

Timothy R. Barnhart – Vice President, Operations of Calumet GP LLC

William A. Anderson – Vice President, Sales and Marketing of Calumet GP LLC

Calumet Specialty Products Partners, L.P. (CLMT) Analyst Day Conference Call May 22, 2012 2:00 PM ET

Jennifer G. Straumins

Good afternoon, I think, we are ready to get started here this today. I like to thank everybody for coming out to Calumet’s First Analyst Day at NASDAQ. And we’d like to thank NASDAQ for hosting us here this afternoon. And I’d like to thank all the Calumet employees that made the trip with us to support the company on this pretty special day.

With me today is Pat Murray our CFO, Tim Barnhart our VP of Operations and Bill Anderson, our VP of Sales and Marketing. Got our traditional forward-looking statements here, so you can’t hold anything we say, against this. Also this website is on our, I am sorry, this presentation is on our website and we also have flash drives in the front to came in, if you would like to take one with you.

Calumet is a leader in specialty hydrocarbon products. We produce a very wide variety of products to serve hundreds of applications. We produce Naphthenic and Paraffinic lubricating oils. We produce food grade white oil, Aliphatic and isoparaffinic solvents, USP and technical grade petrolatum, hydrocarbon gels. And polyol based synthetic lubricants. Calumet was started by the Fehsenfeld and Grube families back in 1990s. Those families own the GP today for Fred Fehsenfeld, the Chairman of our Board, and Bill Grube is our CEO and Vice Chairman of the Board. The families, the founding families still controlled approximately 30% of the outstanding common units.

As I mentioned Calumet is a Specialty products company, we produce over 1,500 specialty products at our eight production facilities. We’ve got 2,700 customers who purchase our products as a primary raw material for industrial consumer and automotive applications.

We employ 900 people across the U.S., and have eight operating facilities with crude throughput capacity of $135,000 barrels a day, and owned and operated several terminals with an aggregate storage capacity of 10 million barrels. We have a highly skilled management team with on average more than 25 years of refining experience and much of that experience has been at Calumet. As I mentioned Calumet was founded in 1990, we purchased our first refinery out of the bankruptcy situation.

And until 2006, when we went public we grew the company through cash, cash flow is generated by the assets. In those cases the business strategy at that point in time was defined underutilized and underperforming assets and reconfigure expand and saying the products that were produced at those facilities. Our business strategy has always been to have close relationships with major oil companies and take advantage of when they choose, so we have the space (inaudible). With a plant we bought our solvent facility that was purchased in 1995 was owned by Kerr-McGee.

We bought two plants from Pennzoil, a facilities, I’m sorry, two facilities in ConocoPhillips and our most recent acquisition, our large one that we did in October of last year. We’ve acquired the Superior Refinery from Murphy Oil. We did a small acquisition in January where we bought a specialty ester business from Ashland, and also bought a packaging plant in the Shreveport, Louisiana area.

The several key investment highlights primarily number one right now is our yield. We’re trading over 10% yield, which should be attractive in the space. In addition to our diversified products range is the approval time necessary to get our products approved to our customer end-use applications. We priced our products also crude and other feedstocks and have proven over the years the ability to pass on feedstock increases to our customers. And on the flip side when crude oil falls, our prices are sticky and slower to fall than they are to rise and so again as crude as fallen into lower 90s our specialty product margin should be very, very strong.

We have very strong relationships with the broad customer base. We’ve got over 2,700 active accounts and our sales team works very, very closely with these accounts to help develop new products and maintain these relationships over many, many years.

Our customer base is also very diversified with no one customer accounting for more than 50% of our sales. We’ve got a very conservative financial management policy that Pat will talk a lot more about, we’ve got a various conservative leverage profile and recognizing that we are a refinery operating as a Master Limited Partnership, we had a very conservative distribution coverage ratio policy of 1.2 to 1.5 times.

And I mentioned our experience management team has been together a long time and it’s proven over the years the ability to recognize underutilized assets acquire those and create a lot of profitability for the company.

Now, I’d like to turn the presentation over to Pat.

R. Patrick Murray

Thanks Jennifer. We appreciate everyone’s attendance today. Kind of building up what Jennifer was talking about and our commitment to our conservative financial strategy a few tenants of that are routed in sort of the foundation of Calumet and Specialty products, we think that inherently give us more stable free cash flow, we’re certainly lot more than a fuels refiner. We like the assets that we had and we’ve grown the business that way and really focused on the niche, niche acquisitions of specialty products or fuels plants that are well positioned and located.

Tim Barnhart will talk a lot about of our operations here shortly, and what you’ll see is, there’s a lot of operational synergies between our plants, we operate them as one complex try to find ways of making the feedstocks from one plant become products from another plants. There is just a lot of back in forth and we like to run the refineries that way to take care or take advantage of all of those various opportunities. We can also be very flexible in our specialty products marketing, which Bill Anderson will talk about truly find the greatest value across the Board for all of our specialty products.

And we’ll talk about our risk management program, which is our hedging program, where we are hedging primarily crack spreads on the Fuel Product segment. And there we employ a program of hedging a portion of our fuel production inherently that is the most volatile cash flow within our partnerships. And so we look at hedging that in a prudent non-speculative way. We’ll spend a little bit of time talking about that.

In terms of our target metrics in our capital structure, target debt-to-book cap of less than 50%. Target leverage is less than four times and again distribution coverage ratio that is a bit higher than many people participating in the space at 1.2 to 1.5 times. We think that’s prudent given the nature of our assets and its surface well over the years.

Jennifer mentioned it, I mean, the stock is yielding right now and subsequent to our most recent follow on over 10% yield compared well with all the other participants in the sector. We’re really proud of our track record of growth of adjusted EBITDA. We like to point investors to this metric. Adjusted EBITDA is basically a normal EBITDA adjusted for certain non-cash items the main one is mark-to-market accounting on our derivative instrument, so the unrealized gains or losses that have not yet been realized or settled are added back or subtracted from EBITDA to get to the adjusted EBITDA.

So that’s an important cash flow measurement for the partnership and overtime since 2004 up through LTM of March 31, almost a 30% annualized growth rate and you can see different step changes in our history, where we’ve added specialty products, acquisitions and the most recent of which is the Penreco acquisition in 2008.

And then building with the Superior, the niche refinery acquisition at the end of the third quarter of last year, Calumet has really undertaken a step change in its profitability. And as of end of first quarter almost $250 million of adjusted EBITDA that really only includes the impact of two full quarters of operations of the Superior refinery, so we’re very proud of this track record of growth.

Along with that the other measurements for us, DCF, which is basically adjusted EBITDA and taking out of that our replacement environmental CapEx, which is historically been fairly consistent overtime. Cash interest expense and turnaround costs as part of, we consider that part of separate category but also part of staying business type capital and then a very minor amount of income tax expense, get you down to DCF which is what MLPs trade on and focus on when they report their numbers to the investing community.

And again conservative on distribution, we think continuing to grow the distribution, we’ll show a slide later on the extraordinary growth we’ve had by that coverage here quarter-to-quarter in that target range of 1.2 to 1.5 times on an LTM basis as of March 31 were 1.6 times coverage.

The capital markets have provided us with a lot of financial flexibility. We’ve raised capital prudently overtime, primarily around acquisition activity. Since our IPO in 2006, we’ve raised approximately $1.7 billion in the equity and debt capital markets. We’ve used the proceeds for a variety of reasons, paying down debt, funding growth projects, acquisitions and our working capital requirements. We were very active last year in the capital markets. We transitioned from a term loan debt structure into unsecured notes. We completed our JV issue of notes in April, raising $400 million to pay off term-loan B and we raised equity before that time to make sure our capital structure was in balance.

So we really believe in a combination of those two forms of capital to stay balanced and if you look at the Superior acquisition at the end of September about $400 million acquisition we raised that with a pretty much even combination of debt and equity. We raised over $900 million in the equity and debt capital markets in 2011 and [duck] tailing into our most recent opportunistic equity offering which we completed earlier this month, which we were pleased to get that done.

In a lot of situations, we’ve raised capital after we’ve announced major acquisitions, this is one of the first times that we’ve actually raised capital more opportunistically. Based on kind of where we’re performing, prospects of the business, we feel very good about that capital raise that we just got done. That was about a $150 million which went to pay down borrowings on our revolver.

I commented on our balanced capital structure, just reviewing kind of where the capital structure is, showing here at the end of March what we reported to the public roughly a 2.8 leverage and about a fifty-fifty balance of debt to total book cap, but on a pro forma basis giving effect for a couple things, a full year of Superior earnings.

We reported publicly about $83 million of annual adjusted EBITDA contribution from the Superior refinery at the time we completed the acquisition released those numbers. So if you take half of that addition of another $40 some million plus the percentage from our equity offering that we just completed at the beginning of May. That gives us pro forma total debt to EBITDA of 2.1 times and then total debt to total book cap of about 44%.

So again, we remain committed to raising equity prudently when it makes sense we feel that the unsecured notes have offered us additional flexibility that we did not have with term loan B. So we’re very happy right now where the capital structure sits. We think it’s been managed very prudently. We would expect it to be considered, considered to be balanced today and are committed to keeping it balance going forward.

This is a quick summary of our senior notes. As I said before, we were in a term loan B that prior to April of last year had a lot of maintenance covenants in it. This is a set of unsecured notes. $400 million were issued in April 2011, the coupon on that is 9 and 38s. We followed up with a substantially identical offering in conjunction with the Superior acquisition of $200 million in September. These notes all mature in 2019, they are no called for four years, optional redemption starting in May of 2015.

Pretty standard set of covenants, probably a little more conservative but still in range of fixed charge coverage ratio of 2.5 times for debt incurrence. We have the flexibility to increase borrowings under revolving credit facility as the business go, continues to grow. So that that was important to us as we set these up. And there is a small almost ministerial basket of $25 million of additional indebtedness allowed. And then a 1.75 times fixed charge coverage ratio for restricted payments which covers our equity distributions to our unitholders and these notes are rated B3/B. We are rated B2/B on a corporate family basis by the rating agencies.

We rely on our revolving credit facility, we have an ABL revolver, pretty standard for refiners, works well in conjunction with the unsecured notes. Standard advance rates on inventory and accounts receivable. We’ve got a large agent of syndicate put together Bank of America serves as our agent, 13 lenders all combined in the facility. First priority lien on cash, AR and inventory pretty standard and it matures in 2016.

We grew the revolver twice last year. We increased the facility size from $375 million to $550 million in June for a greater flexibility as the business grows, but we included in Accordion for $300 million in anticipation of a possible additional growth that may require us to have more capacity. And upon the closing of the Superior acquisition, we increased or exercised the Accordion. We got more commitment. It was uncommitted Accordion that everyone in the bank group was very supportive of increasing their commitments up to $850 million collectively.

We have a letter of credit sublimit of $680 million and in times when we are not using our revolver for borrowings, it does service us well as a letter of credit facility, primarily for some of our crude oil suppliers. There is just one financial covenant under the revolver, it’s a springing fixed charge coverage ratio if excess availability falls below a certain level of which today we’re much, much higher than this threshold level. So, really not any type of maintenance covenant on the revolver.

And of course liquidity being paramount for us in our operation. This graphic shows kind of how we’ve grown overtime. We’ve increased the revolver that’s the blue line of commitment as it makes sense the primary growth path are being driven by our Superior acquisition. But you can see in the redline shows the borrowing base and that’s basically the level, but for certain reserves at which we can support borrowings and our availability, which is green.

You can see that that track record growing overtime as we’ve continued to use cash flows to reduce borrowings under the revolver, increase liquidity. Letter of credit, today, we have a couple of $100 million used under LCs and then borrowings, which is the yellow line, we show that pro forma as of March 31, because we had about $75 million drawn at the time of at March 31. We had a little more drawn about $150 million drawn at the time of our closing of the equity offering.

But just to give you an idea of where we are, ample liquidity today to run the business, a lot of flexibility for us. But it’s an important facility, obviously it moves up and down with commodity prices, this is the type of revolving credit facility we believe works well for us.

The next slide shows our capital expenditures and turnaround costs. Over the last couple of years also putting on here where we were for the first quarter, about $16 million of CapEx in the first quarter including our turnaround. We are budgeting to be just over $60 million for the full year. The blue and green sections of the bar chart are maintenance and environmental type CapEx, generally pretty consistent overtime.

We’ve got some environmental expenditures that we talked about in our filings that are required as part of sort of our ongoing compliance issues. We’ll spend a little more this year on that. That’s all part of global settlements we have with regulators as every refinery have-to-have. So we are budgeting a little more in that.

And then growth CapEx, Jennifer is going to talk about some of our growth CapEx initiatives. So we really look at those in terms of available cash flows helping to fund those as well. We’ve got some projects on the books, but lots of opportunities to do more things and typically we pay with those through operating cash flows as we go.

Our hedging program is very important to us. We like to explain to people what we are trying to do. We are trying to reduce our cash flow volatility from our underlying business. We don’t take speculative positions. We hedge cash flows that are existing in our business. Primarily that comes in the form of crack spread hedging in our fuel products segment where we are exposed to long-term changes in crack spreads.

We take a position of looking out more than one or two years, sometimes we go out three years, we’ve gone up to five years in times in our history. But ever since we got back into fuels production in 2004, we’ve hedged fuels. We think that’s an important part of our story of the stability of the cash flows.

So we take a portion of those positions and we hedge fuel product prices and WTI purchases and those two things in combination gives us a crack spread hedge. The majority of our crude oil purchases are WTI-linked, so these serve in most normal times as effective hedges and you would see those earnings running through our gross profit line.

We also do some natural gas hedging. We are a user, consumer of natural gas as plant fuel. We take more opportunistic positions here typically look at winter pricing. We haven’t done a whole of these types of hedges given the sort of absolute low level of natural gas prices, but we have added some position fairly recently on the natural gas side of the business.

And how do we put this type of a long-term program together and still kind of sleep at night from a liquidity standpoint in terms of margining because we are hedging long-term is that 15 million, 16 million barrels hedged. We know how crack spreads move. They are pretty volatile, they can move around. But we put a program in place, a collateral trust agreement that’s in place with our hedging counter parties. This was an important outcome of the bond offering, it freed up a lien that was available to put on our fixed assets.

So it allows those hedging counter parties to extend fairly significant credit lines to us as some are in over $100 million of open line with this lien in place that allows us to enter into those types of positions in the longer-term.

We also utilize that collateral trust agreement to include one of our most significant crude oil suppliers at our Superior refinery and they have extended us the credit line that’s over $100 million. So those types of lines in combination with adding a bunch of additional counter parties has allowed us to execute this strategy similar to how we were doing it under the term loan scenario, but not with the necessary concerns about liquidity.

These are crack spread hedges as of the end of the first quarter and you can see we enter the positions somewhat ratably overtime. Currently, we have probably about 65% to 70% of our future forward positions. Estimated production hedged in 2012 at an average crack spread of about $19 a barrel and this is why today there are market opportunities certainly for higher crack spread. This is why we don’t hedge everything. We always want to leave some exposure to the market for – to take advantage of positions, but at these higher levels we have been adding positions.

You can see in 2013 and 2014, there is a pretty meaningful step change into our average hedge position from 2012 up to 2013 of almost $6 a barrel in 2013. And so today, we are hedging in that crack spreads in that $25 to $30 barrel alone, which we think is a great price for us and very important, as we think about maintaining stability of our cash flows.

Okay, now I will turn it over to Tim Barnhart for a review of our operations. Tim.

Timothy R. Barnhart

Thank you. Good afternoon. For most of you that (inaudible), I’m going to give a lot of information [which you’ve seen] before hopefully I can talk about it in a little bit different way that makes a little bit more sense and maybe throw a few new facts.

This is our footprint geographically. Since 2006, we went from basically a small regional manufacture with assets primarily in North West Louisiana to a company that has a pretty significant footprint throughout the United States. And this is an overview of each of our facilities. Capacity, major production capacity is generally defined as crude distillation capacity for each facility that may not equilibrate they’re equal, the actual throughput capacity in the entire facility. And I’m going to talk about each one of these in turn, so I will kind of move on from this.

Production growth over time, I talk a little bit about how our footprint has changed pretty dramatically from 2005, 2006 to today. You can also see that as we’ve bought assets, we bought at a pretty significant amount of production. You can also see the specialty products and for the fuel products. I think of note I guess on the fuel is a 9% jet is a pretty high percentage of jet I think for kind of our fuel products like. Pat talked earlier about how we try to create synergies most of various plants.

Obviously, we’ve got three refineries in the Shreveport area with Shreveport, Cotton Valley and Princeton, all within a pretty easy truck drive from each other. Each one of these plants provide feedstocks to the other plant and they also provide products to the others plants. Specifically, Cotton Valley (inaudible) refinery makes a very nice arbitrary power bottoms which is highly desirable feed to Shreveport as its a very high quality barrel for all the Cotton Valley [ATBs] come back to Shreveport.

Shreveport provides some incremental capacity to Cotton Valley by bringing back some tailored feeds in the solvent boiling point range. So Cotton Valley can maximize our solvent production on a per barrel fee basis. And Shreveport and Princeton also trade barrels around the diesel pool. Princeton makes some diesel out of their naphthenic refinery, that is transported to Shreveport and maybe in the ULSD without the increased capital costs of equipment at Princeton.

Our specialty products, our USP products, we can source feed from other Shreveport Princeton to Cotton Valley to any of those plants, if we choose and we spend a lot of time, a lot of effort on a monthly basis looking at whether it is more economic for us to and finally source feeds through our downstream unit plants or whether it’s more attractive to buy third-party feeds and bringing them into the mix.

Burnham, a terminal located in Chicago is uniquely positioned to be able to service the Midwest market. We service, Burnham services basically across all our products lines, Burnham terminal solvents like mineral oils, lubricating oils both paraffinic and naphthenic, so that the terminal was very key for us to be able to serve the Midwest market.

The last below this is something that we are working on right now and I’m pretty excited about. We are undergoing relatively large capital projects, one in Superior, Wisconsin and one in Shreveport, Louisiana to be able to source some of the distressed price up at Midwest crude’s into Shreveport via railcar. We are putting a crude loading facility into our Superior, Wisconsin refinery, and we are putting a crude unloading facility into our Shreveport, Louisiana refinery, has a lot of potential, we expect that we will be shipping crude from Superior to Shreveport sometime early in the third quarter.

Our Shreveport refinery is our largest refinery has proved distillation capacity of 60,000 barrels a day. It is a specialty refinery, it’s a lube refinery only really, it’s not a fully integrated refinery has though cat cracker, no alkylation unit, the backing gas oils of the back unit are manufactured into paraffinic lube oils, some most complex refinery having the Solomon Complexity rating of 11.8. And has a pretty unique configuration in that we have isodewaxing capability and solvent waxing capability for lubricant production in the facility.

Superior is our next largest facility, 35,000 barrels a day nameplate, 40,000 barrels a day nameplate crude distillation capacity. It is the fully integrated fuels refinery, services in niche market of any area around Superior, has a really unique advantage and that, it is the first domestic refiner of the Enbridge Pipeline System. So it has some very attractive in price crude oil. Our Princeton refinery naphthenic base oil refinery makes naphthenic lubes for the process industry. And you see on the slide, we also talk a little bit about our LyondellBasell marketing agreement.

We have a dual marketing agreement with LyondellBasell, I’ll talk about the second part of the agreement in a little bit later. But the first part of the agreement is that, we are the marketing arm for LyondellBasell's naphthenic lube production. So we have the ability again to source base oils from two facilities that service the process oil industry. Each of these refineries produce some unique products that are unique to them. So that allows us to have some deeper penetration into some specialty markets that I'm sure, Bill is going to talk about in a little bit.

But we do try to operate both Princeton and the naphthenic lube portion of the LyondellBasell agreement as a business complex. Look, excuse me, Cotton Valley, the other one of our refineries in Northwest Louisiana is a 10,000 barrel a day refinery that specializes in specialty solvent production. It runs primarily local crude, as I mentioned earlier that local crude has a very naturally occurring high viscosity index in the VGO cuts. So it marries up very well with the Shreveport facility, and we can run it very synergistically together.

This slide also talks about a long-term agreement we have to supply Phillips66 with some productions, and actually I'm screening up. We actually have some agreements both with Phillips66 and tolling arrangements both at, while primarily the Lake Charles refinery. So again, we can operate both of these facilities, so basically each one of these, the Cotton Valley plant and the Lake Charles tolling agreements both give us access to some unique solvents that have unique properties onto themselves and we can take to the marketplace and penetrate deeper.

This is the second half of the LyondellBasell processing agreement and it’s shown here with our Karns City facility. Our Karns City facility manufactures USP white oil and petrol items. Our toll agreement with the LyondellBasell facility also allows us, we actually pay Lyondell control process, USP pharmaceutical rate white oil for us. So there again, we have another situation where we have multiple manufacturing sites that we can mix and match our production based on product cost and based on logistics, based on feed stocks, based on availability and customer list.

Our Dickinson facility is another Penreco facility purchased at the same time as Karns City. It is primarily existed as a white oil manufacturer or USP white oil manufacturer. We are in the process today of refocusing a lot of that asset, you can see the picture in the low right-hand corner is a new while new to us biodiesel facility that we’re erecting at the Dickinson Facility.

We have some capacity in the system and at this point, we're looking at some underutilized assets at the Dickinson facility, and we’re viewing some other options for those assets, part of that is this biodiesel plant. This biodiesel plant allows us to manufacture biodiesel and again, these are biodiesel for the markets or use it entirely in blending diesels at both Superior and Shreveport.

Our most recent plant purchase, manufacturing plant purchase is our Polyolester plant in the Louisiana, Missouri. This plan manufactures refrigerant compression lubricants and commercial aviation lubricants today, has the capacity of about £36 million a year, two parallel trains. We are very excited about some of the future opportunities for this plant both in a marketplace and from an expansion possibility, I’m sure Bill is going to talk about that more in a little bit.

But the reality is we closed one of its transaction in January that the plants run on real world, but we’re really trying to get our arms around how we want to expand, where we want to go with this in a long run. At roughly the same time that we purchased the Louisiana facility. We finished an agreement to purchase the true self packaging facility in Shreveport. Once again this facility, allows us a lot of synergies with our other plants.

It is a packaging plant, it can’t be a consumer of finished Shreveport base oil, finished Princeton base oils, and we have again the opportunity much like our USP plants to sit on a regular basis and decide whether we want to internally source product from our plant, to our new packaging plant to market, or whether we want to go out and source third party material.

You can see that is the state-of-the-art blending and packaging plant. We can’t do multiple size bottles, anything from hose to 4 ounce 2 cycle bottle. A fair amount of bulk storage capability and actually we have TruFuel. I am going to leave that for Bill because that’s a pretty entertaining story and I know it’s near and dear to his heart.

Distribution and terminal assets, you can see the list there, I will talk some about Burnham and how important Burnham is to our business model. You can see that the asphalt terminals that we acquired with the Superior acquisition are really integral to the Superior operations. Superior has a very large asphalt business, Shreveport as well has an asphalt business and this is another area of [wisdom] where we’re looking to grow into. So with that for the TruFuel piece, I’ll let Bill take out.

William A. Anderson

Good afternoon. Okay this slide you’ve seen a variation in the past. We’ve updated a little bit as we bought some of these new businesses that the slide gets a little longer. We’re including more applications of what our products go into. But over the last five to ten years, we really strive to grow our position in the consumer business industry, where we’re supplying products that are raw materials are main ingredients to a lot of people make it all sorts of different end use products that we come across everyday.

The left slide is more of your automotive industrial outdoor products. And then the middle picture shows a lot of the applications of our white oils and petrolatums, they go into baking, grain production, cosmetics, toothpaste, eyeliners, [the Vaseline] and all sorts of products in that area. Those are the main products that I focus on. So the waxes over, the asphalt and fuels more or less take care themselves. We do have an excellent asphalt team that is growing to handle the expanded production that we have coming out of Superior, and we look to always do the very best we can with selling our fuel products.

As Jennifer mentioned earlier, we have close to 3,000 active customers. No one customer takes up more than the few percent of what we sell. We’ve always had that mentality ever since I came the company is to have, everything spread out in lots of baskets that way no one industry can really drag us down if there is a problem with the sourcing a raw material that we have no control over or to the problem with selling that product to the industry or consumers, we like to be spread out so we can sell products and ship kind of where we are at. If one market is down, we’re kind of move out of that and slide into another market that consumes the same types of products, but a lot of main brand companies here.

Little different I am going to talk break out some slides and I talk a little bit about some end-use applications more on the industrial side. You might not know but oils are consumed in making the rubber products, all sorts of rubber products whether its tires, belts, hoses. Oil consumed is used in about 20% to 30% loading level into these goods. And what happens is the oil gets locked into the molecular structure in all those little, little chain connect, each little pocket, that’s where the oil fits and oil has to be compatible so it doesn’t break those bonds and release out.

Sometimes you might see a rubber product that’s older, and if you rub up against with the white shirt you get the black on your sleeve that oil is not staying in well in the rubber that was probably some Chinese stuff. Our oil stays in the rubber and you won’t get the staining or blooming effect.

Recently the tire industry made a change, it started in Europe where rubber companies had to quit using aromatic oils, because of carcinogenecy, so naphthenic was a natural switch. So as Tim was talking about with the Lyondell facility, if it’s so happen there is a Goodyear plant right across the street. And we’re very close to finalizing approval there to start supplying our naphthenic oil to that Goodyear facility so just not as many Goodyear plants we supply, but is the new business for Calumet.

Another large application for our naphthenic oil is transformers. All the full and head mounted and large transformers you see in the substations all have an oil inside of them. And the oil is used to cool the unit. Most of them have ways to circulate that oil, they spins on the side, the oil goes into, (inaudible) in between and cool the transformer. And the naphthenic oil is necessary because of the low temperature characteristics. You have to refine it to a certain level so that has really good oxidation stability so it won’t breakdown because manufacturers of transformers would like to see those last in the field for 20 to 25 years.

Refrigeration oil as Tim mentioned that the oils we’re making at the Louisiana Missouri facility, the ester is going to refrigeration. Our minerals made at Princeton also go into refrigeration applications. The mineral oils are more compatible with refrigerants that have been more traditionally used in the past is still a large segment of industry that uses those refrigerants that require our mineral oil.

The polyolesters are used fairly expensively in automotive and some of the newer generation of compressors, but the oil works as a lubricant to lubricate the compressor. Its also used as a coolant and it also is used to transport the refrigerant from the little compressor that sits inside the unit outside at your house, it draw, it goes in with the refrigerant into your house into the transfer box in your furnace in your basement. And as the heat goes across that coil, it pulls the cold air out, and then the air comes back to compressor and then recycles back to system. So the oil plays a very integral part of making that work in refrigerators, freezers, air conditioning units, and the automobile in your house all have compressors that consume our oils.

Orchex is a horticultural spray oil. We take a very narrow boiling range base oil at our Shreveport facility. There is a lot of scientific discovery that was founded by Exxon years ago to develop this market, which we are looking forward the narrow boiling range is key because it’s very safe to the fruit and the trees. If the boiling range is very wide, it would kill the plants or the bushes. What they do is they take the oil and they emulsify it and then it’s sprayed up on to the trees and once the water evaporates, it leaves a thin oil layer on there that suffocates the larva of the bugs so it acts as a pesticide and then also works well as a fungicide to keep black fungus or anything forming on the oranges. Also works on fruits, nuts, other vegetables, grapes, bananas, we sell this product all throughout the Western Hemisphere.

Petrolatum and hydrocarbon gels basically this is a Vaseline type product and it is formulated into all kinds of products that you see in your medicine cabinet at home, Vicks VapoRub, Carmex, body washes like Olive & Aloe all consume a lot of petrolatum.

Our gels is a proprietary product that still under pattern that Penreco had developed and it goes into products like the gel candle and sort of clear candle that you see, this is gelled hydrocarbon material. The orange Pledge uses this gel material to give the thickness, when you spray it and it leaves that helps to be the nice oilish shine behind on the furniture and a new addition with the Krylon Glitter Blast we just developed that product we’re showing Williams in the past year and they have marketed out to the sort of Michaels in the craft markets in various colors and I just use some in my home. My daughter has to do a race car for the race this week and a cardboard we need to close and carry into it the decorate and we use the bunch of Glitter Blast and looks very cool.

We also on our solvent side make some solvents that serve the copper industry. Years ago when they make copper they had smelters back in the 50s, 60s, 70s and smelters are big energy consumers to produce a lot of pollution and as timely by new technology was developed to get the copper out of the ore and solvent extraction is one method. And so what they do is set of cooking the ore to get the copper to metals to melt out. They now leach sulfuric acid on to the ore, which grabs the copper that collected in ponds, that they put it into an extraction process where they utilize our solvent.

The solvent grabs the copper and some other things inflows it and then all the inner materials sink below and then they strip it off. And then that goes into a further process and they make at the very end of the day, they’re making a very high quality, its 99.9% pure copper plate that then conserve the copper industry and we sell that product through here in the United States, Mexico down in the Chile and have worked in the past developing business as far as Australia.

Been in oil business, we’ve got a good feel for what’s going on in the drilling market, just so happens a lot of these natural gas mines over the last several years has been kind of right where we’re at, and so it’s been a really nice little suite spot for us that use our solvents as three in a row. In the past, most few folks use diesel fuel as their lubricant and they’re drilling, most of the states now have mandated that they use a clean solvent to do this work, something has no aromatics, no BTX, no sulfurs.

We produce that kind of material at our Cotton Valley and (inaudible) location and then we also keep product at Karns City at the white oil facility that has tanks for solvents, so we rail solvents up to that location. So you could see we’re really suited. We’re sitting right on top of Marcellus. We’re sitting on Haynesville then we’re not that far from Eagle Ford and some of the other developments in West Texas. So we’ve have been growing in our drilling business for lubricants dramatically over the last several years.

Moving there about esters, one of our large customers is BP Air and they use the esters for making all the modern lubricants for jet engines, esters are also using the hydraulic oils, they are really unique and that they can take very high temperature stress, but they also operate at very cold temperatures. So it’s got perpetual that application when you are down here at sea level or going up to 40,000 feet. Some of the oils like hydraulic oils are actually mixed with some of the products that we’ll make at our Princeton facility. It’s a blend of esters and naphthenics. So similar to the refrigerational business, we’re kind of bringing in a product line where we already know some of the customers and participate in the industry. So it’s been a pretty smooth transition.

And now to TruFuel when we acquired the business of TruSouth, they have a retail product. And we’ve been watching this product closely and kind of helping with developing it. What it is, it’s a premix, 2-Cycle fuels for 2-Cycle equipment. So instead of going to the gas station and getting a gallon of gas, going to the hardware store and getting a little bottle of oil and then having the mix it just right at home, we pre do it, it’s ready to go. Its pre mixed we make 40 to 1 and 50 to 1, and then we also sell a straight fuel for the 4-Cycle engines. So it’s continent because it’s ready to use, there’s no mass, you know what they have several different big jugs of gasoline in your grange, but performance is fantastic, it’s a high acting material. We don’t have any olefins or anything or any benzene in the fuel so it won’t gum up or varnish your equipment and it’s got a great package of lubricants in there.

When you are mixing yourself and go to the hardware store you are buying a little bottle of oil and that’s kind of a price point material for the retailer. So they are going to use whatever the cheapest oil they can buy. We’re using the most expensive oil you can put in, we’re using synthetic oils, and friction modifiers and fuel stabilizers to make sure that our fuel is performed and make sure (inaudible). So it’s real legal retail product that we’re helping them to roll out in a bigger way during 2010.

The market is quite large, a lots of handheld power equipment in operation, a 11 million of new pieces equipment sold annually and kind of estimate there is about 200 million gallons of blended fuels utilized with this kind of equipment across the U.S. every year. So we’re kind of in early stages at this point. So I’d say we are in the major retailers like Home Depot and Lowe’s and Wal-mart, Tractor Supply Co do a private-label Craftsman product for Sears. We’re in Aces and [HWIs] and pretty much all the major small engine equipment dealers and retailers. So it’s a great new product for us and we’re looking to drill significantly down the road.

And with that I will turn it back over to Jennifer. I don’t think I’m in the right page.

Jennifer G. Straumins

We’ve seen a lot of changes in our industry over the last four years or so. We’ve seen a lot of the majors leave the space, and again that’s where Calumet itself. We like to be in places where the major oil companies don’t want to be, and as they tend to focus more and more of their efforts on exploration production and 100s of 1000s of barrel a day fuel refineries. We’ve been able to go in and take advantage of that by buying these niche assets that we’ve been made our own.

In the specialty space that we operate in, comprises only 1.2% of total U.S. Refining capacity its 214,000 barrels a day out of $1.7 million barrels a day of fuel production in the U.S. Calumet ranks 3rd an overall base oil production behind ExxonMobil and Motiva. And so, as we hope Exxon will continue to choose the lease basis like this and we’ll continue to be – we’ll be able to continue to grow.

So while we’ve continued to add assets, we’ve also continued to add market share as people have left these markets. 2004 Pennzoil, Shell and ExxonMobil all exited the naphthenic lube business, and while we’ve didn’t acquire any assets, but this we’re able to grow our margin and grow our market share with their exit. We’ve bought product lines out of Exxon twice in the past, one was the Oritech pesticide business that Bill mentioned and the other was a naphthenic customer list as Exxon exited that space. We’ve seen Conoco leave the space. We’ve seen Pennzoil leave the space and again all opportunities for us to grow.

So our growth strategy, since becoming a public company, I already mentioned prior to becoming public we would buy underutilized disadvantaged assets, since going public where an acquisition has to be accretive day one. We’ve changed our focus to well run, well managed assets much like the Superior asset and the Ashland asset that we acquired over the last six months or so.

We want to continue to focus on this niche asset, you know we find that the majors don’t give them a lot of attention and don’t give them a lot of capital and we can comment and give them the attention in the capital will necessary to make them even more profitable then they were when we acquired them.

We continue to look for geographic diversification and that’s one thing that Superior gave us. Vertical integration is also very important in our growth strategy. We’ve got a lot – with 2,700 customers we’ve got a lot of acquisition targets to choose from a lot of our customers, our family-owned small businesses that [they will] take our products and create much higher value niche products and their own personal spaces. And we’ve got a lot of those that we would like to acquire, you know the Esters business and TruSouth are both examples of vertical integration acquisitions that we’ve been able to do.

And then finally increasing total refining capacity and Superior is a great example of us being able to do that. And that has helped to spread the risk among more-and-more assets.

And then finally our goal is to maximize cash – the cash flow contribution of our existing assets through internal growth projects. And Pat mentioned a little bit about the amount of internal growth money that we’ve spent some of the numbers that weren’t not [on this graph] go back to 2004, 2006 M&A when we invested hundreds of million of dollars of capital at Shreveport.

And since 2008 we’ve invested $700 million in acquisitions and $500 million in growth CapEx, with that major Shreveport expansion and then this regular growth CapEx across all facilities. We grow a lot of growth CapEx that we’re working on right now to continue to feel our organic growth. And as we – I take a lot of questions from investors on, the crack spreads are great right now what are we going to do with all the excess cash flow. We’re going raise distributions payoff debt or do internal growth and that’s one of nice things about a lot of these projects that they are all two year payback or less type of projects that we can do as we have the cash flow coming to the business.

Tim mentioned really the highest priority one right now. We are doing rail projects that both Superior and as Shreveport in order to get cheaper crude into the Shreveport area, where a lot of the crude that we bring into Shreveport, while it is WTI price-linked, a lot of it is LLS priced as well and buying enable to get that pipeline Bakken crude into Superior and then rail it down the Shreveport will be able to recognize Superior economics at one of our largest Southern facilities.

Tim also mentioned the biodiesel project for doing at Dickinson and that’s a several million dollar project, very excited about all the opportunities we have to repurpose that facility and really turn it around or doing rocks expansion projects at Shreveport and at Karns City and during that – we did a PDA expansion at Shreveport last year and continue to grow in the asphalt business with Superior opened the doors to a lot of [asphalt 10 million] opportunities and we will continue to grow in our specialty asphalt business through our emulsion products and through additional terminals.

We are spending a lot of money on the TruFuel advertising campaign this year. You will start to see some commercials, if you live in certain parts of the country to try and get the word out about this pretty unique project that so far not where many people know about. And then finally, we are working on an Esters expansion at our Louisiana Missouri facility. Our plan is to grow the production there between 50% and 60% over the next 18 months or so. So that will allow us a lot of new market opportunities for those products.

There are some distribution growth aside from the growth projects. The high compounded return of our EBITDA, our strong distribution growth is really another reason to consider an investment in Calumet. Since 2009, we’ve grown that 23.1% on average per year and no reason why it shouldn’t continue to grow, our markets are strong, our plants are running well, we’ve spent a lot of time and effort turning around Shreveport over the last two years and all of our recent acquisitions are very accretive and doing very, very well.

So I’m really looking forward to what 2012 brings for Calumet and really appreciate the support of all of our investors and our research analysts and our employees. And we would like to gone a long way there. Thank you guys for coming out today and for taking the time to listen to our story and we’d be happy to answer any questions that people have at this point in time.

Question-and-Answer Session

Jennifer G. Straumins

Yes, we did a good job. (Inaudible) have any questions. Yes sir.

Unidentified Analyst

(Inaudible) how much of your improvement recently is doing the spread between WTI and Brent crude oil prices and how much your margin be effective in the future as this spread narrows with an ability to bring WTI out of the Cushing area which now causes WTI to be sort of a cheap group.

Jennifer G. Straumins

Sure, as I mentioned, lot of the crudes that we do source into our Louisiana facilities are WTI price points. Several years, 18 months ago, our average weight in crude price to the whole company was basically WTI. We’ve seen that number rise dramatically, and now we’re not buying LLS price barrels or Brent price barrels for the most part. We have seen our crude costs go up, because our local suppliers can’t take those barrels and go to Gulf.

So we’ve seen our crude costs go up. Really, I think what’s contributing to the success of the company over the last couple of years is, as we mentioned Superior, but that’s – that just part of the story.

Now the other parts of it are growing in our market share. We’ve seen our margins increase and part of that again a lot of our competitors do run Brent price crude. So we do, we’re recognizing higher margins in our specialty business. We’re recognizing higher crack spreads.

A big part of the story there’re Shreveport and what we’ve been able to do there. We’ve replaced the lot of the management team there. We’ve invested a substantial amount of capital there. We’ve run rigorous training programs there. And we’ve seen the reliability and the performance of that facility increase greatly over the last 18 months. And it’s still has a long way to go. So I’m very optimistic about what that plant will continue to contribute. I mean, if you look back to the EBITDA graphs that we had, 2010 that was a blip. We had a fire in that facility and it was down for part of the year. And had a lot of lost opportunity there in that year, and really since then we’ve focused a lot of our efforts and turning that facility around. So again the best is yet to come.

Unidentified Analyst

Hi, could you give us a ballpark estimates for the size of the internal growth projects in terms of both the capital expenditures and potential EBITDA contributions?

Jennifer G. Straumins

For this year for what we have committed to, we’ll spend between $10 million and $15 million of growth CapEx with a contribution of $7 million to $10 million a year of EBITDA.

Unidentified Analyst

Thank you.

Unidentified Analyst

So, can you talk about the external growth opportunities that you’re seeing in terms of for that [M&A] or what else would be there, I know you have that, I mean you’re contemplating that refinery, I think in North Dakota. But just in terms of what sorts of opportunities whether they’re more specialty for traditional refined products and kind of the size that you’re looking at of the different opportunity side of the size that you’re looking at?

Jennifer G. Straumins

Sure, the M&A market is very active right now. Obviously, refining is a pretty hard space to be in. Bakken is a pretty hard space to be in. We have the pleasure of looking at several different opportunities right now. Pat mentioned our opportunistic equity raised of 6 million units earlier this month. We continue to work. We’re very active in the M&A markets and hope that we’ll have a lot more risk to say about that here before the summer is over. The unique thing about Calumet, one of the things are like most about Calumet as we can, one week look at a $300 million acquisition, in the next week look at a $50 million acquisition, and the very different and we’re seeing opportunities both on the fuel side of the business and on the specialty side of the business.

And I’d say we would like to continue to grow both sides of that states as we can. And you’ve mentioned the North Dakota opportunity, again to remind everybody that is a project if the members of our general partner are working on in that Snort part of the NLPs. But a site has been selected for that and engineering studies are continuing for that. So we’re still nothing that could be dropped down into the NLP once it becomes accretive set. All of the upfront capital will be invested by the members of the GP.

Unidentified Analyst

Thanks.

Unidentified Analyst

Jennifer, can you talk about what specialty products do you see a lot of organic growth potential, and also what about the any growth, additional growth for exports?

Jennifer G. Straumins

Sure, let me talk about exports first. We talk about our specialty products having lengthy approval processes. And I’d say that’s even more through on an export basis. And when a recession hit in 2008 and 2009, we’ve really up our export efforts, and we’re just now started to see those take place. We’re seeing a lot of transformer oil opportunity is exist down in South America where spending a lot of time focusing on developing our product lines in South Africa, there is a lot of wax and petrolatum opportunities there.

As well as developing our Orchex brand and Spray Oil brand over in Africa. We are – so that is a good area focused for us to grow. Lot of our specialty products, these are mature product lines, it’s a mature market, I’d say one of biggest areas of growth as Bill mentioned are the drilling fluids, as they outlaw the use of diesel fuel and some of these drilling and fracing operations, our clean solvents are great drop in replacement for those. And we could sell every drop and then some of our solvents into the spaces we chose to remain diversified, but we continue to see that area grow for us. And again, transform oils is another big area of growth as the global economy continues to grow there is a much, much need for these types of oils worldwide.

Unidentified Analyst

Can you walk through your evaluation process of, when you are evaluating potential product line expansions, and also any thoughts of ethane based products going forward given achieved is to come?

Jennifer G. Straumins

I didn’t hear. I’m sorry, I didn’t hear the last part of your question.

Unidentified Analyst

Ethane based products as oppose to that oil?

Jennifer G. Straumins

And I’m not quite sure what you mean by ethnic-based products, where petrolatums go into a wide variety of ethnic-based hair care products…

Unidentified Analyst

No, no ethane.

R. Patrick Murray, II

Ethane.

Unidentified Analyst

Ethane.

Jennifer G. Straumins

Ethane?

Unidentified Analyst

Yes.

Jennifer G. Straumins

We don’t do anything with ethane, because that’s why I couldn’t understand the question. What do we look at as we trying to grow product line, really barriers to entry, who else can participate in it and how long is this opportunity going to be there. How much it will impact our existing product lines and our existing operations and those are all things that we look out as we expect whether to expand or not.

All right. Thank you guys very much. And thank you Devin for helping with the Q&A.

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