Aug 6, 2014
Executives
Noel Ryan - VP of IR Jennifer Straumins - President and COO Pat Murray - CFO
Analysts
Richard Roberts - Howard Weil Edward Westlake - Credit Suisse Cory Garcia - Raymond James TJ Schultz - RBC Roger Read - Wells Fargo Operator Good day, ladies and gentlemen and welcome to the Second Quarter 2014 Calumet Specialty Products Partners Earnings Conference Call. My name is Glenn, and I will be the moderator for today.
At this time, all participants are in listen-only mode and later, we will facilitate a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.
I would now like to turn the conference over to your host for today, Mr. Noel Ryan, Vice President of Investor Relations.
Please proceed.
Noel Ryan
Thank you, Glenn and good afternoon and welcome to the Calumet Specialty Products Partners’ second quarter 2014 results conference call. We appreciate you joining us today.
Leading today’s call is Jennifer Straumins, our President and COO, who will provide an update on our recent performance and outlook for the future. Next Pat Murray, our Chief Financial Officer will provide detail on our financial performance during the first quarter.
At the conclusion of our prepared remarks, we will open the call for questions. Before we proceed, allow me to remind everyone that during the course of this call, we may provide various forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934.
Such statements are based on the beliefs of our management as well as assumptions made by them and in each case based on the information currently available to them. Although our management believes that the expectations reflected in such forward-looking statements are reasonable, neither the Partnership, its general partner nor our management can provide any assurances that the expectations will prove to be correct.
Please refer to the Partnership’s press release that was issued this morning, as well as our latest filings with the Securities and Exchange Commission for a list of factors that may affect our actual results and could cause them to differ from our forward-looking statements made on this call. As I indicated in our press release issued earlier today.
As I indicated in the press release issued earlier today, you may download a PDF of the presentation slides that will accompany the remarks made on today’s conference call. You may now access these slides in the Investor Relations section of our website at calumetspeciality.com.
As I reminder, Calumet will host and analyst and Investor Day at the NASDAQ market site in New York this coming Monday, August 11, 2014 beginning at 1:30 PM Eastern Time. The entire event should last just under two hours and we’ll do webcast.
However should you wish to attend it in person; advance registration is required to IR department, who will be available to assist you. As always, this event is open to all investors and sell-side analysts following our company.
And with that, I’d like to hand the call over to Jennifer.
Jennifer Straumins
Thank you, Noel and good afternoon to all of you joining us on today’s call. If you could please turn to slide three in the slide deck for a high level overview of our second quarter results.
Calumet generated adjusted EBITDA of $39.3 million during the second quarter compared to $70 million in the prior year period. Without question it was a challenging quarter on a number of fronts.
Fortunately, many of the limiting factors that impacted our second quarter results, from expected refinery maintenance to elevated crude oil prices higher (Ph) during the third quarter. As we indicated in the form 8-K we filed with the SEC in late June, our Shreveport refinery which is our largest fuel and specialty products plant on a capacity basis conducted extended maintenance for approximately 30 days during May 2014.
This plant turned on a negatively impact of fuel and specialty products sales volumes during the second quarter and represented a single most significant factor driving the year-over-year decline in our results. The maintenance conduced at Shreveport which included multiple plant optimization and reliability improvement projects, reached completion in early June.
We are currently operating the refinery at elevated rates during the third quarter compare to the second quarter of 2014. Our second quarter performance was further impacted by a rapid escalation in crude oil prices throughout the early summer months which contributed to lower average refined product margins in both our business segments compared to the prior year period.
Notably, we did enact price increases across the majority of our specialty products offerings in response to high crude oil prices during the second quarter. However, given the timing of these increases we expect the full impact to be more fully reflected in our third quarter results with crude prices point back below 100 ounces per barrel in recent weeks.
Our specialty product segment stands a benefit from lower feedstock during the third quarter versus what we’ve experienced in the second quarter. One of the more significant -- I am sorry please turn to Slide 4.
One of the more significant wintertime at this year was the successful expansion of our revolving credit agreement which is our primary source of liquidity and excess of cash generated from operations. This was an opportunistic transaction that increased lending commitments under our ABL facility by 150 million to 1 billion and lowered our borrowing recent expense maturity of the ABL from 2016 to 2019.
We want to thank our banking syndicate and internal finance staff for arranging a more appropriate funding vehicle capable of supporting the cash needs of our partnership. Although we will dwell more deeply into current potential organic growth project on our Investor Day next week in New York, we are pleased to report that the construction of Dakota Prairie, Missouri esters plant expansion and the Montana refinery expansion, all remain on schedule.
With regard to the cost estimates in Montana and Missouri projects remain on budget. However, the joint venture has chosen to upwardly revise the total cost estimates on the Dakota Prairie refinery from $300 million to $350 million.
Currently, approximately 75% of the total scope of work is completely at Dakota Prairie, approximately 850,000 workers hours have been worked on site since breaking ground on March 24, 2013, again the total projected on-site worker hours is 1.3 million. And importantly, there has been no on-site injury since we began in March 2013.
The refinery remains on schedule for commissioning during the late fourth quarter of this year. During the second quarter, we completed the acquisition substantially all of the assets of Specialty Oilfield Solutions, which helps further build upon our oilfield service capabilities and as a complement to the Anchor Drilling Fluids acquisition, we announced in March.
We also invested in the first small scale commercial GTL plant in United State as joint venture partners and we announced an agreement to supply crude oil and market finished products for refinery being built in North Dakota. Each of these transactions has strategic significance for us and I will discuss them all individually in a moment.
Turning now to Slide 5 and 6, taking a look at the factors driving the variance in distributable cash flow during the second quarter versus the prior year period, lower turnaround cost were more than offset by a 40% decline in adjusted EBITDA when we’re dealing into the reason behind the decline in adjusted EBITDA, we see the Shreveport operated a little over 40% of capacity during the second quarter versus the 50% to 65% utilization in the prior four quarters. Recall that Shreveport produces both fuel and specialty products with the extended turnaround at refinery during May impacted sales volumes of both segments during the second quarter.
I think it is worth nothing that with the conclusion of Shreveport maintenance in Q2, we’ve completed major turnarounds in the last three and three of the last four quarters at our largest fuel refining facility. While any given year will include limited unit specific maintenance with several of our specialty products facility, we do not expect any plant-wise turnaround similar to what we’ve experienced during the past year until the next expected turnaround cycle commences our fuel refinery in 2018.
Importantly, even during the period impacted by heavy scheduled maintenance, our DCF is averaged between $20 million and $15 million per quarter during the past few years implying that we have either covered or been closed to covering or distribution despite significant maintenance related outages at a key facility. As you can see on the Slide 5, fuel products gross profit per barrel fell into the negative territory during the second quarter of 2014.
As a reminder when comparing our fuel gross profit per barrel to the 211 Gulf Coast crack spread, we need to add that drift operating expense per barrel in order to get an apples-to-apples comparison. We believe our direct operating expenses per barrel within our fuel segment are generally about $10 per barrel which implied the much improved capture rate versus the 211 crack spread on an adjusted basis.
And please turn the Slide 7, last week we acquired substantially all of the assets privately held Specialty Oilfield Solutions for a total cash consideration of approximately $30 million. Specialty Oilfield Solutions was founded in 2005 and is based Houston.
It is a full-service solids control and drilling fluids company with operations in the Marcellus, Eagle Ford, and Utica shale plays. This transaction further positions Calumet as one of the leading suppliers of specialty oil field products and services to the drilling industry, building upon the Partnership's acquisition of Anchor Drilling Fluids in March 2014.
SOS will operate as a subsidiary of Anchor Drilling Fluids which is wholly owned by Calumet. This transaction will enable Calumet to provide a more comprehensive offering that extends beyond drilling fluids to include solid controls equipments and services.
And on Slide 8, we will talk about the GTL joint venture. In early June, we announced our investment as a joint venture partner in the construction of a commercial Gas-To-Liquids plant that is expected to produce approximately 1100 barrels per day of refined products including waxes, drilling fluids, diesel and naphtha.
These products we’ve produced from natural gas. In Lake Charles, Louisiana Plant which is expected to be operational by late 2015 at the total estimated cost of $135 million.
The plant will be owned and operated by Juniper GTL LLC and is expected to funded through a combination of equity and senior secured debt. Calumet intends to invest 25 million in exchange for an equity interest of approximately 23% of the joint venture.
Business innovation has been a central theme in the Calumet growth story since our inception. From our construction of a new refinery in North Dakota capable of sourcing cost-advantaged Bakken crude oil to our proposed participation as an early adopter of GTL technology, Calumet continues to achieve profitable growth in part through forward-thinking strategic investments.
Looking forward, we believe this project puts Calumet in a leadership position to capture promising GTL opportunities which we anticipate to arise given expectations for continued growth in domestic natural gas production in future years. Now turning to slides 9 and 10.
Since announcing our intent to build Dakota Prairie refinery with MDU Resources three years ago, several investor groups have come to the table speaking to build similar diesel hydro-skimming plants to address local demand for distillate throughout North Dakota, while some of these investor groups have come and gone, one group Dakota Oil Processing has moved forward with the development of a 20,000 barrel a day refinery in Trenton, North Dakota that is expected to commence operations in 2016. The team at Dakota oil processing came to us recently with the proposal that would position Calumet as a full proof supplier in market of finished products for the Trenton Refinery.
In mid-June, we signed a multi-year agreement that made this proposal official. While 2016 is two years off, this is deal is important on a number of levels.
First, this transaction further builds our ability to increase our crude oil marketing capabilities, something we talked about for a quite some time; and second, it allows us to participate in product flow stemming from two to three refineries operating in this name, the Dickinson and Trenton refinery. Third, it puts in a position to increase our presence in the Bakken shale.
And fourth, it allows us to pursue an asset wide strategy that stands to provide EBITDA uplift of new capital of investment on the part of Calumet. Further in the oilfield service business with Anchor and SOS, we are in the downstream with Dakota Prairie and Dakota Oil Processing, Calumet continues to build its presence in North Dakota, keeping true to our retail vertical integration strategy.
Looking ahead to the third quarter, market conditions have shifted in our favor. Pricing and demand for specialty products remain strong, crude oil prices are on the decline, demand for asphalt products is much improved from a year ago levels.
Our organic growth projects remain on track and possible less importantly our refineries are operating reliably with no planned maintenance on deck for the foreseeable future. Overall, we are looking to improve our performance as we transition into the remainder of the year having exited a tough second quarter.
With that, I will turn the call over to Pat.
Pat Murray
Thanks, Jennifer. Let’s all turn our attention to slide 12 for discussion of adjusted EBITDA.
We believe the non-GAAP measure of adjusted EBITDA is an important financial performance measure for the partnership. Adjusted EBTIDA is defined under our financing instruments decreased to $39.3 million in the second quarter of 2014, down from $70 million in the same quarter of 2013.
As illustrated in the chart on slide 12, the bulk of the year-over-year decline in adjusted EBITDA was due to declines in fuel products margins given the significant year-over-year decline in refined product crack spreads and lower sales volume due to extended Shreveport turnaround. We encourage investors to review the section of our earnings press release found on our website entitled non-GAAP financial measures and the attached tables for discussion and definitions as EBITDA, adjusted EBITDA and distributable cash flow and financial measures and reconciliations of these non-GAAP measures to the comparable GAAP measures.
Turning to slide 13, fuels refining economics declined significantly on a year-over-year basis during the second quarter. The benchmark Gulf Coast 211 crack spread averaged $19 per barrel during the three months ended June 30, 2014 compared to $24 per barrel in the same period last year.
The year-over-year decline in the 211 crack spread was driven primarily by a sharp drop in the diesel crack, and to a lesser degree, the gasoline crack. Crude oil price differentials remain volatile throughout the quarter, a factor which further impacted gross profit in the fuel segment.
Turning to slide 14. As we look to sources and uses of cash between the first and second quarters of this year, it’s important to highlight that factors that reduced our cash position from a 180 million to 15 million.
This decline in our cash position was expected and is partially offset by liquidity enhancement under our amended revolving credit facility which I will touch on shortly. Looking at the bridge, a significant use of cash during the period involved the increase in working capital, primarily inventory, which we expect to be temporary.
We are focused on working capital reduction initiatives that we expect to make progress on during the third quarter. Spending on the organic growth projects including our investment in Dakota Prairie refining was another significant use of cash in the period followed by turnaround spending at our Shreveport refinery.
Turning to slide 15. Calumet has been very opportunistic in both the debt and equity markets during the past two years raising more than 1.5 billion since January 2013 with which to support continued growth of the partnership.
In July, we completed a transaction that enabled us to increase the size of our revolving credit facility by a 150 million, lower our borrowing cost and extend the terms of the facility to 2019. This transaction also demonstrated strong support from our lending syndicate and includes a $500 million accordion lending feature should the need arise.
During the first quarter of 2014, we launched a $300 million at-the-market equity issuance program this program is not only more cost effective in terms of raising equity than a tradition overnight equity offering it also allows for an orderly transition of small volumes of units into the market. Importantly, this program is used by many MLPs and should be viewed as one of the many potential funding options available to us.
Turning to Slide 16, from a total liquidity perspective while the cash position has declined due to some of the near-term factors I mentioned earlier, our access to liquidity was provided for by our amended and restate credit facility has increased by $150 million since the start of the year. This facility remains our primary vehicle that assists us in funding the ongoing cash needs as a partnership.
Understandably, lowering leverage from currently levels overtime remains the priority for Calumet. Turning to Slide 17, due to a number of factors that we’ve touched on today, our second quarter performance was below our initial expectations.
The year-over-year decline in our adjusted EBITDA impacted both our distribution coverage and the leverage ratio. With LTM debt-to-adjusted EBITDA exceeding seven times as of June 30, 2014.
Despite challenging second quarter performance the third quarter looks more promising as Jennifer described with our key refineries operating at improved rates compared to the second quarter of 2014. Now turning to Slide 18, looking ahead for the remainder of 2014, we have hedged approximately 5.9 barrels of our anticipated fuel production.
We have locked in 2.6 million barrels of gasoline in an average price margin of $12.80 per barrel, 2.7 million barrels of diesel at an average margin of $27.56 per barrel and just under 1 million barrels of jet fuel at average margin of approximately $24.50 per barrel. Looking ahead 2015, we’ve begun to hedge more of our anticipated gasoline production.
Between first and second quarter of this year, we hedged 1.6 million barrels of anticipated 2015 gasoline production. We continue to seek to hedge up to 75% of our anticipated fuels production as far as four years out.
Currently, we have hedged positions out into 2016. Turning to Slide 19, we are updating our capital spending forecast for the full year 2014.
Total estimated spending including replacement environmental, turnaround in growth, capital project spending is 365 million to 410 million for the full year of 2014, up from prior forecast of 340 million to 385 million. An anticipated decline in replacement environmental spending is more than offset by slightly increase in Dakota Prairie refinery cost estimates, higher turnaround cost at Shreveport, and a portion of our investment in the Juniper GTL project.
Having completed turnarounds at Shreveport Superior, Montana and San Antonio refineries during the last 12 months, annualized turnaround CapEx is expected to be in the $20 million to $30 range until our next major turnaround cycle expecting in 2018. And with that, I will turn the call over to the operator so we can begin the Q&A session.
Operator?
Operator
(Operator Instructions). Your first question comes from the line of Richard Roberts from Howard Weil.
Please proceed.
Richard Roberts - Howard Weil
A couple of questions for me here I guess first, do have any idea of the opportunity cost from the down time at Shreveport in the quarter?
Jennifer Straumins
That opportunity cost was probably about $7 million.
Richard Roberts - Howard Weil
Okay great. Okay, so last quarter on the call, the idea of the potential for a separate logistics MLP came up but I was wondering if you guys have any updated thoughts or anything new maybe you could share on that front?
Jennifer Straumins
We have continued to work with several of our banking partners to evaluate the opportunities there and we are continuing to evaluate our asset base as to what would be appropriate assets to potentially be dropped down into logistic MLP.
Richard Roberts - Howard Weil
In recent 8-K you guys filed I guess about amount ago, you’ve talked about exploring strategic alternative for the Shreveport facility, can you give us any idea of what kind of options you’re looking at there?
Jennifer Straumins
Sure, there are a lot of options available there. There is some expansion project that we’re considering to modify and upgrade our products slate.
There are feedstock opportunities that we’re pursuing that would slightly modify the feedstock that we run at the facility and you always can look for joint venturing, partnership opportunities or an outright sale of the faculty. And we’re talking about Shreveport here but that’s true in the case any of our assets of product line.
Richard Roberts - Howard Weil
Okay and then maybe just one more for me. So I know on the fuel side, no more turnaround really plan until 2018, is there any notable maintenance that any of the facilities in your portfolio at all either in the back half of this year or in ’15?
Jennifer Straumins
We’ll have some minor down time in our Cotton Valley facility in late this year.
Operator
Your next question comes from the line of Edward Westlake with Credit Suisse. Please proceed.
Edward Westlake - Credit Suisse
Just focusing on this GTL investment I mean it seems like a $135,000 flowing barrel something like that well maybe slightly under that and then obviously you’ve got to buy gas and then you’re going to sell a chunk of diesel at a premium to wherever the oil price is. So I am just wondering is it really the specialty uplift that drive the economics of this project what sort of IRR do you think you could make at this sort of capital costs.
Jennifer Straumins
Well we’ve not disclosed the IRR for this project. And again this is a very small investment for Calumet.
Quite honestly the EBITDA that we will be generating from our portion of facility will be a very small part of our overall EBITDA. The bigger opportunity -- going back to the initial part of your question, you’re correct, there is substantial margin uplift from the specialty products part of the barrel.
The [indiscernible] our high margin as well as some of the other products that come off. So that’s again where we are putting our toe in the water, so to speak, trying to decide if we want to invest in other technology in the GTL area or move forward with the larger facility somewhere else in the United States.
Edward Westlake - Credit Suisse
So this is a sort of a pilot plan I mean obviously some of the other majors are building much, much larger plants, who have built much larger plants been there. So I am just wondering who do you think the economics stack up against the global competition overall all competing technologies?
Jennifer Straumins
I think the economics are comparable on a dollars per barrel basis with some of the largest facilities and again this plant is focusing on a specialty products part of the barrel where a lot of the other facilities are focusing totally on the fuels part.
Edward Westlake - Credit Suisse
And you said dipping your toes, we shouldn’t anticipate building in lots and lots more CapEx as you decide to roll out plans in this sort of area.
Jennifer Straumins
No, not at this time.
Edward Westlake - Credit Suisse
And just coming back to more the earnings, you made an intriguing comment about demand for asphalts having improved I mean I guess I get that the oil prices reduced and that will help your margins in 3Q. But intrigued by that comment because that would be probably a change in the market for asphalts?
Jennifer Straumins
Well, if you recall we’ve done a substantial amount of work on our distribution network for asphalt over the last year with our joint venture with Allstate Materials in Albany, New York and then the additional asphalt terminal in the Muskogee, Oklahoma. So by broadening our market diversification our geographic diversification it helped enhance to the demand for those barrels.
Edward Westlake - Credit Suisse
Right. So it’s not unit demand that just your share is not getting better or your ability to get that asphalt to market is improving.
Jennifer Straumins
That’s correct.
Edward Westlake - Credit Suisse
Okay. And then if I may just one more.
Just on the North Dakota I mean obviously as we get closer to start up on Q4 or it was in the Q1, maybe talk a little bit about how normally refineries take time to ramp up, maybe talk about you ramp up plans? But also just from modeling purposes what sort of yield should we assume for the refinery?
Jennifer Straumins
The yields for the refinery are about 8,000 a day of diesel and 6,000 barrels a day of [indiscernible] and the balance is a [indiscernible] type of product that we will be selling into the crude market in Canada is the plan for that. And as far as ramp up goes, we’ve got about 2.5 to 3 months of ramp up budgeted and our models you are correct and so to bring something new online it takes time to line out and work out the things if you will.
Edward Westlake - Credit Suisse
And follow on question on that. The pricing of diluents when you present your EBITDA estimates for these projects, have you based it on historical relationships with diluent prices or have you been a bit more conservative.
Jennifer Straumins
We’ve been a bit more conservative.
Edward Westlake - Credit Suisse
Any idea of the --
Jennifer Straumins
That diluent market price can swing from WTI plus or minus $10 a barrel, there is quite a bit of volatility in that number.
Operator
Your next question comes from the line of Cory Garcia with Raymond James. Please proceed.
Cory Garcia - Raymond James
One I guess quick housekeeping item. I know the size will uptake in selling cost, I apologize I missed it but how much of that is simply a function of the sort of the integration cost involved with all the acquisitions or is that, I am really just trying to get a better idea of the appropriate quarterly run rate for that particular cost.
Jennifer Straumins
That run rate will actually probably go out now with SOS being, their sales team being part of that number. There really are no integration costs in that number, that’s just straight selling expenses and people.
Cory Garcia - Raymond James
Now again try not to jump going ahead of the analyst day will keep as to sort of what’s already in your ’14 backlog. Can you update us in terms of that sort of a 305 to 335 growth CapEx, how much is that inclusive logistics if any?
Jennifer Straumins
I guess part of that depends on how you define -- if you are talking about how you would up that growth, how much of it would be available to drop down into logistics MLP?
Cory Garcia - Raymond James
Yes that sort of the angle I am looking at.
Jennifer Straumins
So it really depends on how deeply you want to define logistics, I mean obviously [indiscernible] has taken tank farms and dropped those into their logistics MLP. You should say 35% to 50% of that CapEx could be around logistic assets.
Cory Garcia - Raymond James
It’s definitely along how I thought. Appreciate it.
Jennifer Straumins
Really aggressive and how you define logistics.
Cory Garcia - Raymond James
Yes, now that makes perfect sense. Thank you.
Operator
Your next comes from the line of TJ Schultz with RBC. Please proceed.
TJ Schultz - RBC
Just beyond looking at the potential assets for a logistic MLP just trying to understand what else is on the table, I mean, is there still the potential to put or to separate specialty and fuels into structure so that fuels is variable?
Jennifer Straumins
We’ve looked at that that’s not our preferred way to go at this time.
TJ Schultz - RBC
Okay and then just kind of asking again on timing, you’re talking to your banking partners here but how far along are you in the process. Is this something we should expect more details on next week or is this something that is going to take a while?
Jennifer Straumins
We’ll provide a few more details next week. We’ve got a special presentation to our Board of Directors in September to review some of these opportunities and the options available to us.
I’d say we would have a lot more of information for you on the November earnings calls. And as we’ve said last quarter, we expect it will take us nine months or so to get all the work done before we will be ready to do anything.
Operator
(Operator Instructions) And your next question comes from the line of Roger Read with Wells Fargo. Please Proceed.
Roger Read - Wells Fargo
Guess I’d like to maybe come at the Dakota Prairie thing slightly different than the questions asked already, are there any particular critical path items we need to be aware of at this point, anything on the equipment side, labor side, et cetera?
Jennifer Straumins
Few different critical path items, the main one is the construction of the reactor for the diesel hydrotreater which has been done in Europe and that reactor was finished and put on a boat last week and is expected to arrive in Houston on August 19th and will be transported to North Dakota. So that is on schedule.
The construction and commissioning of a wastewater treatment facility at the refinery is also a critical path item and we have received the equipment and the permits necessary to build that. So again on schedule and looking like it’s on budget.
Those were the two main critical path items.
Roger Read - Wells Fargo
Okay thanks and then anchor now you’ve added I believe a full quarter or at least close enough certainly once we go through July, how is that performing relative to expectations and then just in terms of what seems to be reasonably good drilling activity levels, any comments you can offer there in terms of positive impacts on margins pricing et cetera or is there any cost inflation you need to be aware of in that business?
Jennifer Straumins
Number one, the integration is going very well. The business continues to grow at elevated rate compared to historical levels.
It’s far surpassing our expectations from an EBITDA standpoint and we really don’t speak a lot publically about the comps and prices associated with this business where we’re actually honestly still working through how we’re going to be reporting this, what metrics and KPIs will be sharing with public as we continue to grow this part of the business. Can you give us a few months on that, I’d appreciate it.
We did complete the construction of an additional mud plant in Midland, Texas. So we're pleased about that we will be able to increase rig count in that area due to that project finishing.
Roger Read - Wells Fargo
Okay great. The last question I had was on the specialty product side one of your major competitors added some capacity earlier this year, you’ve talked about being able to raise prices recently and then obviously the benefit of following crude prices is helping margins out, but just as a broad market comment how is new capacity in the market affecting you or affecting the market in general?
Jennifer Straumins
The market is fairly well balanced at this point in time. There are other refiners on turnaround and having some maintenance issues that have kept the supply of paraffinic base oil fairly well balanced with demand.
We do caution as these refineries experiencing planned and unplanned down time, come back on line, we do expect to see length in paraffin liquid market.
Roger Read - Wells Fargo
So all good for now but we’ll keep our eyes open.
Jennifer Straumins
Right.
Roger Read - Wells Fargo
Okay and then I know this is probably a bigger item for Monday and if you don’t want to answer until then, that’s fine with me, but any thoughts on CapEx for ’15 at this point or maybe just general terms flat higher lower is a way to think about it?
Jennifer Straumins
Maintenance in environmental CapEx between $50 and $60 million year on average and we will not have any major turnaround expense next year just minor routine return on expense more or like 2012 type of levels. Growth CapEx, our growth projects are driven by ability to raise capital and the types of returns, don’t have anything outside of the announcement major projects that we are contemplating at this point for ’15.
Operator
I would now like to turn the call over to Jennifer Straumins for closing remarks.
Jennifer Straumins - President and COO
Thank you for joining us on today’s call. Should you have any additional questions, please don’t hesitate to contact Noel Ryan, our VP of Investor Relations and we look forward to seeing some of you guys on Monday in New York.
Thanks. Operator